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Analyst Meet / AGM - Analyst Meet

Non-AP loan portfolio to touch five-year high of Rs 4000 crore by end March 2015

SKS Microfinance

29-Jul-2014, 05:16
SKS Microfinance conducted an analyst meet on 28 July 2014 to discuss company financial performance for the quarter ended June 2014 and prospects. Dilli Raj, President addressed the meet:
Highlights:

SKS completed QIP of Rs 398 crore in Q1FY2015, which helped to double the capital adequacy ratio to 39.6% at end June 2014 from 20% at end March 2014. The capital adequacy ratio stands substantially above the regulatory requirement of 15%.
Capital raising also led to upgrading of SKS credit rating for bank borrowings to A1+ from A1 for short-term facilities and to A+ from A for long-term facilities for an aggregate sum of Rs 2000 crore, while cutting the cost of borrowing by 1.2% qoq.
Loan disbursements surged 40% yoy to Rs 1160 crore in Q1FY2015. The company has targeted the disbursements of Rs 6000 crore for FY2015.
Non-AP Portfolio stood at Rs 2783 crore at end June 2014 up 39% yoy and 7% qoq. The company expects the non-AP loan portfolio to touch five-year high of Rs 4000 crore by end March 2015.
The un-availed deferred tax benefit of Rs 542 crore will be available to offset tax on future taxable income.
Given the carried forward tax loss, no tax provision was required for Q1FY15.
The company avoids direct agri business, while focuses only on non-farm sector. The company has only 3-4% direct agri business exposure
As per the company, if the 70% of the loan amount is spent on income generation, the borrower will be able to repay.
As per the company, there are only 43 microfinance institutions registered with RBI, while top eight companies account for 90% of the market share.
During Q1FY2015, the income (part of other income) from sales of Nokia mobile phones and solar lamp to customer stood at Rs 6.5 crore. The company sold about 2 lakh Nokia mobile phones in Q1FY2015 compared to 2.6 lakh in full FY2014.
The company has also earned Rs 6.5 crore of services sees in Q1FY2015.
Regarding the opportunity to work as Business Correspondents for bank, the company looks at it to reduce operating cost. As per the company, if the bank could open account for about 25% of its customer, the operating cost of the company would ease.
The company has recorded Rs 9 crore of recoveries from written off accounts, entirely in the AP book. The company expects the recovery in written off account to run at the same pace in quarter ahead.
Out of about Rs 1400 crore written off accounts in the AP, the company expects to recover at least Rs 400 crore.
The company is focusing on states such as Madhya Pradesh, Maharashtra, Bihar, UP for business expansion.
Any benefit from economies of scales, consolidation and reduction in cost of borrowings is immediately passed on to the customers.
The average loan ticket size stood at Rs 8000 crore in FY2014.