A day after Vikram Akula stepped down as the executive chairman of SKS Microfinance, the firm's chief financial officer, S Dilli Raj, tells Somasroy Chakraborty the board did not force Akula to resign. Edited excerpts:
Did the SKS board ask Akula to give his resignation?
The board did not exert any pressure on him to quit. He wanted to leave the company on his own, for personal reasons. Hence, the board accepted his resignation. The senior management continues to remain the same. So, there would not be any issue in running the company.
Was Akula given a severance package?
There was no severance package, as he has resigned on his own. But Vikram has signed a confidentiality and non-competing agreement with SKS. So, he would get some compensation on those grounds. We would not like to disclose the amount he would get. But I can assure you, it would not make any material difference to the company's financial performance.
SKS has decided to diversify its business ventures. What businesses are you planning to enter?
We have already started the gold loan business on a pilot basis, through 50 branches. The book size is around Rs 20 crore, and we would seek to grow this. We have also started giving loans for mobile phones, but this is only for our customers. Last year, we gave 350,000 customers loans to buy mobile phones. This year, we are targeting 500,000 customers. We are also looking to provide working capital to kirana store owners. We would also re-launch our retail insurance business. When we started in July 2008, we facilitated the sale of 2.8 million insurance policies in 14 months. But our internal systems were not capable of handling those volumes and hence, we discontinued it. We would re-enter this business in the next financial year.
Going forward, would the share of revenue from these businesses be higher than that from micro-lending?
Microfinance would continue to be our primary business. The share of microfinance would continue to account for over 85 per cent of our total business.
There is talk that you may write off your entire micro-loan portfolio in Andhra Pradesh.
We have no such plans at this moment. We have written-off some loans in Andhra Pradesh because of the crisis. The portfolio currently stands at Rs 822 crore, compared with Rs 1,500 crore earlier. In the worst case scenario — even if the collections from Andhra Pradesh become zero and we have to write off the entire loan portfolio there — we are adequately capitalised to continue our operations in the rest of the country. Our capital adequacy ratio is a healthy 47 per cent.
Are you looking to exit the Andhra Pradesh microfinance market?
Currently, all our future receivables are from outside Andhra Pradesh. We have been expanding across India in the past few years. Before the crisis started in October 2010, around 75 per cent of our business came from Andhra Pradesh.
By when do you plan to raise Rs 900 crore?
We are looking to raise the funds through a qualified institutional placement in January. Our investors have shown interest in investing more money in the company. We are also in talks with external investors. Based on the initial feedback, we are confident of being able to raise the funds.