Shares of SKS Microfinance slumped 7.26% on the Bombay Stock Exchange (BSE) on Friday following the microlender?s announcement that it expects an operational loss between R30 and R50 crore in the first quarter ended June.
?An increase in the amount of loans assigned by SKS Microfinance towards the end of the quarter ended March 31 resulted in increased levels of cash and bank balances of about R689.98 crore as of March 31 that was not quickly redeployed, which in turn resulted in a relatively lower outstanding portfolio of loans,? the company said in a filing to the exchange.
The Hyderabad-based firm pointed out that these factors resulted in an insufficient operational income to meet the finance costs, personnel expenses and operating expenditure of the company.
?As a consequence of these factors and current business conditions, the company expects to incur an operational loss in the first quarter of financial year 2012-13 that may range between R30 crore and R50 crore or higher and adverse financial performance of the company may continue for the rest of the financial year 2012-13,? SKS said in a statement. Shares of the company closed at R84.30 on Friday at BSE.
The microlender is one of the worst hit by a wave of loan defaults since late 2010 after Andhra Pradesh tightened rules governing the sector following allegations of aggressive loan-recovery practices and usurious interest rates charged to borrowers.
Board decides to launch QIP
In a separate filing to BSE, the board has decided to open a qualified institutional placement (QIP) through issue of equity shares.
The company said it has fixed the floor price of R75.40 a share for the QIP. The board has approved preferential allotment of 44.5 lakh equity shares at an issue price of R75.40 a share to Kumaon Investment Holdings, a unit of WestBridge Ventures II LLC, one of the company?s promoters.
The sale is aimed at raising money to help the company weather its troubles.
