SKS Microfinance Ltd, the only listed microfinance company in India, said on Thursday it planned to reduce its headcount by a third and shut some branches in Andhra Pradesh state amid mounting losses.
SKS' business in Andhra Pradesh, which was a microfinance hub earlier, has been hit after the state government imposed a set of restrictive laws in October 2010 curtailing microfinance activity.
The move scared away many sector investors and prompted some small to mid-sized lenders to the poor to shut shop.
SKS, which employs 3,400 people in Andhra Pradesh, will cut 1,200 jobs, the company said in a statement, adding that it has decided to close 78 of the 180 branches it operates in the state.
The lender said it was not planning to close its business in Andhra Pradesh, where its loan portfolio shrunk to Rs 236 crore in the March quarter from Rs 1,311 crore a year ago as it was forced to write off some credit.
"The microfinance business in Andhra Pradesh has come to a standstill," M R Rao, chief executive officer of SKS, said in the statement, adding that its business in the state would remain "cash neutral" due to the prevailing market conditions.
SKS' loss in the January-March quarter more than quadrupled to Rs 330 crore, reflecting the sliding fortunes of the country's beleaguered microfinance sector. It has been posting losses for the last six quarters.
The company, however, said on Thursday it was not facing any liquidity or solvency issues and that it had healthy cash and bank balances.
SKS has been beset with slowing business and a boardroom struggle that has sent its stock plummeting after a successful initial public offering in 2010 in which it raised $358 million. It saw the exit of its founder Vikram Akula in November 2011.
Shares in SKS, which the market values at $122 million, fell 0.1% on Thursday to Rs 88.60, while the BSE Sensex dropped 0.4%. The stock is down 92% since its market debut.