SKS Microfinance, the largest microfinance lender in the country, is focussing on improving internal efficiencies after having turned the corner recently. The company posted a profit of 1.2 crore in the last quarter, after seven consecutive quarters of losses.
The company had to drastically prune its operations in Andhra Pradesh, which contributed about 30 per cent of its portfolio, when the crisis hit the MFI industry a little over two years ago. It was also forced to trim its branches from about 2,500 to about 1,100. Simultaneously, the staff strength was also brought down to 11,000 from over 25,000 earlier.
The company’s top officials said that the situation was much improved now and that there was also greater regulatory ease with the industry. Recoveries of loans lent in States other than Andhra Pradesh were at 99.8 per cent, M.R.Rao, CEO and Managing Director, SKS Microfinance, said.
He said, “We had seven million customers (including 2 million in AP) two years ago. Now it is down to 3 million, post the Andhra Pradesh MFI crisis. Although our customer base has come down, the number of locations (villages) where we are delivering neighbourhood credit has gone up in non-AP states. We want more efficiency.” In this context, the company had undertaken a ‘lean six sigma enterprise’ initiative a few months ago. The aim of this initiative is to reduce costs, increase efficiencies and provide better services for the customer.
Elaborating, he said, these initiatives would help company officials retrieve documents faster, save time, reduce costs with better route management for collections, besides offering staggered timings for field staff ( sangam managers) to ensure uninterrupted use of computer at its branches.
Bank funds
Dilli Raj, CFO, SKS Microfinance, said the company’s access to bank funds had improved considerably. Giving details, he said, bank funds in calendar 2012 were Rs 2,150 crore, more than double what was available in the earlier year. He added that the fund raising exercise last year had ensured that capital adequacy was a more than comfortable 39 per cent.
Asked if this was not a case of over capitalisation, Dilli Raj said that given the backdrop of the crisis, it was important to have the cushion of extra capital and provide comfort to all stakeholders. Clarifying that the recent sale of partial stake by some investors was minimal, he said that promoter investors and private equity investors continued to place confidence in the company. He said, “Our new priorities are compliance-oriented growth, governance, risk management and audit rigour”.