The Public Issue of SKS Microfinance Limited, the largest MFI in India in terms of total value of loans outstanding, number of borrowers, or members, and number of branches (according to the October 2009 CRISIL report titled India Top 50 Microfinance Institutions), has been assigned IPO grade 4/5 indicating above average fundamentals. The public issue of SKS Microfinance Ltd., the first-ever microfinance company in India to tap the capital market, is opening on July 28, 2010.
The grading reflects SKSML's position as one of the largest players in the Indian micro finance industry having pan India operations with a well diversified portfolio. The grading takes into account track record of the promoters, experienced board of directors and strong management profile. The grading also takes into account good corporate governance practices adopted by the company including presence of various committees and independence of the board. The grading considers the strong financial position with healthy margins including good asset quality, comfortable capital adequacy ratio, comfortable liquidity position and access to diverse sources of institutional funding. The grading also considers the strong industry growth in recent period with good prospects for future growth on account of large unmet potential demand.
Earlier CRISIL has assigned an MFI grading of “mfR1” to SKS Microfinance Limited, the largest MFI in India in terms of total value of loans outstanding, number of borrowers, and number of branches, according to the October 2009 CRISIL report titled India Top 50 Microfinance Institutions, or the CRISIL Report. The grading is assigned on an eight-point scale with “mfR1” being the highest and “mfR8” being the lowest; a high grading denotes a greater degree of scalability and sustainability. CRISIL's MFI Grading is a measure of the overall performance of an MFI on a broad range of parameters under MICROS - CRISIL's Evaluation Framework. An MFI Grading is CRISIL's current opinion on the ability of the MFI to conduct its operations in a scalable and sustainable manner. The universe for evaluating institutions under the MFI Grading service consists of MFIs operating across the world. MFI Grading is not a comment on debt repayment capability. MICROS, the broad analytical framework adopted by CRISIL to evaluate MFIs, is to a large extent similar to the ones used by banks, financial institutions and other financial intermediaries.
SKSML is one of the largest players in the Indian micro finance industry, lending to women borrowers organised as joint liability groups. It was founded by Dr. Vikram Akula, who has more than 10 years of experience in the field of microfinance. SKSML was incorporated on September 22, 2003 under the Companies Act, 1956 and was registered as a non deposit taking non banking financial company (NBFC-ND) with the Reserve Bank of India (RBI) in 2005. It converted from a Private Limited to a Public Limited Company, with effect from May 20, 2009. As on March 31, 2010, major shareholders of the company include Sequoia Capital India II LLC, Sandstone Investment Partners I, Kismet Microfinance and SKS MBTs (mutual benefit trusts).
As on March 31, 2010, the company operated in 19 states with 2,029 branches covering 57 lakh active borrowers with total AUM of Rs.4,321 crore including assigned portfolio of Rs.1,384 crore. SKSML reported income of Rs.958 crore and net profit of Rs.174 crore for FY10. Reported capital adequacy ratio was comfortable at 28.5% as on March 31, 2010. SKSML has been able to raise funds (both equity and debt) at regular intervals during the last few years. It has plans of mobilizing funds through initial public offering (IPO) in the current financial year which will make it the first MFI to be listed in India and the third pure MFI in the world1 to mobilize funds through IPO.
