Moving to Mumbai; would reduce headcount in the state by 1,200
SKS Microfinance no longer wants to be known as an Andhra-based company. It has decided to shift its headquarters to Mumbai.
It was from Andhra Pradesh (AP) that the microfinance institution (MFI) had grown to become the country’s largest microlender. The state had until recently been the hub of MFI activities but that has changed after various regulatory curbs on their operations. “For credit givers,” chief financial officer S Dilli Raj told Business Standard, “an AP-MFI means it has non-performing assets. Everybody seems to be seeing a difference between an AP-based MFI and a non-AP-based MFI”.
The shift to Mumbai for the only listed MFI in the country is expected to take six months to a year. “Moving to the financial capital will help us in resource mobilisation,” Raj said. That apart, SKS’ loan portfolio on Thursday is outside the state. “We also don’t want to increase our net exposure in AP. So, there is no point (in being here),” he added.
In a statement on Thursday, it said it would reduce headcount in Andhra Pradesh by 1,200 and close 78 branches. The company employs 3,400 employees across 180 branches in the state.
“We are not closing our Andhra operations. We are only rationalising the Andhra Pradesh workforce,” said managing director M R Rao. He said it was imperative that AP operations remain cash-neutral “in the interest of fairness to all stakeholders”.
According to Sonam H Udasi, research institutional head, IDBI Capital, investors are now looking at AP exposure and non-AP exposure of an MFI before making investment decisions. For MFIs with AP exposure, getting credit is becoming difficult.
More From This Section
SKS has operations in 18 states. It has brought down exposure in Andhra Pradesh to Rs 236 crore from a high of Rs 1,491 crore in October 2010, by writing off Rs 272 crore in the fourth quarter of 2011-12. Consequently, it had incurred a loss of Rs 330 crore in Q4 last year.
But in the fourth quarter of 2011-12, the company announced an 11 per cent quarter-on-quarter portfolio growth to Rs 1,320 crore in its non-AP operations. From now on, Raj said, the company’s non-AP portfolio would increase in each quarter.
SKS had raised Rs 1,650 crore through a public issue in July 2010.
The operations of MFIs in AP were drastically affected after the state government passed legislation aimed at curtailing aggressive recovery practices and multiple lending by the institutions.
In 2009, Lanco Infratech, another listed company with roots in the state, shifted its corporate headquarters from Hyderabad.
According to a Lanco spokesperson, most of the company’s projects were in the north and north-east. Hence, it shifted its headquarters to Gurgaon for effective supervision. “Even when the headquarters were in Hyderabad, the top management used to be in Delhi. So, we have shifted and the company is now saving a lot of money that was earlier spent on travel,” he added.