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 SKS Microfinance Limited – Q4 and annual results for FY 2010-11

• Income up 32% at Rs 1270cr for FY  11 from Rs 959 cr in FY 10

• Aggressive provisioning by company, far more stringent than required by RBI, increases credit cost from Rs 51 cr in FY10 to Rs 317 cr in FY 11

• Despite higher provisioning, company records a net profit of Rs 111 cr for the year  FY11

• Provisioning results in a loss of Rs 70 cr for Q4

• Robust  Net worth Rs 1781 cr; cash and bank balances Rs 558 cr;

• CAR 45% compared to mandatory 15%

• Incremental credit limits of  Rs 5338 cr  in FY 11

• Disbursements  of  Rs 7831 cr in FY 11, compared to Rs 7618 cr in FY 10

• To  open  50 branches  exclusively  for lending  against Gold jewellry  in Q1- FY-12

 Mumbai , May 6^th, 2011: The country’s largest microfinance lender, SKS Microfinance Limited today announced an  aggressive provisioning policy while declaring its results for Q4 as well as the annual results for the fiscal 2010-11.

The provisioning is far more stringent than the norms recommended by policy guidelines laid down by the RBI, and results in the credit cost for the year rising to Rs 317cr for  FY11, compared to Rs Rs 51 cr in FY 10.

Commenting on the reasons for doing this, Mr S Dilliraj, CFO, SKS said, “We could have  merely followed  Provisioning  norms as per RBI prudential norms , which would have resulted in profit for Q4. However, we took a conscious decision to adopt  more stringent provisioning norms  in pursuance of our  sector leadership  role”

As a direct result of this provisioning, SKS declared a net loss of Rs 70 cr for the quarter, compared to a net profit of Rs 34 cr on a QoQ basis.

The company’s topline for the year, however, increased 32% to Rs 1279 cr, compared to Rs 959 cr in the previous fiscal. PAT for FY11 was Rs 111 cr, compared to Rs 174 cr the previous fiscal.

In spite of the provisioning, necessitated by the AP MF Act, the company’s financial foundations remain sound.

At the end of FY 11, SKS had a net worth of Rs 1781 cr, and a capital adequacy ratio of 45%. Cash and bank balances amount to Rs 558 cr

The company had welcomed the recommendations made by the Malegam Committee, which were recently adopted almost completely by the RBI, thereby providing a positive framework for the sector going forward especially the retention of the priority sector lending by MFI

<span style="font-size: 10pt;" calibri="" ,="" sans-serif="" ;="">About SKS Microfinance Limited:

<span style="font-size: 10pt;" calibri="" ,="" sans-serif="" ;="">SKS Microfinance Limited (SKS) is a non-banking finance company (NBFC), registered and regulated by Reserve Bank of India, whose mission is to eradicate poverty by providing financial services to the poor.

<span style="font-size: 10pt;" calibri="" ,="" sans-serif="" ;="">SKS operates across 19 states of India. They include: Andhra Pradesh, Karnataka, Maharashtra, Orissa, Madhya Pradesh, Bihar, Uttar Pradesh, Rajasthan, Uttaranchal, Himachal Pradesh, Haryana, West Bengal, Jharkhand, Chhattisgarh, Gujarat, Kerala, Tamil Nadu, Punjab and Delhi.

SKS has been recipient of many received awards, which include Social and Corporate Governance Award by BSE, NASSCOM Foundation for Best Corporate Social Responsibility Practice (2007), Social Performance Reporting Award (MFIs) - Silver Category for Social Performing rating conducted by MIX market (2009) etc. SKS was founded by Dr Vikram Akula, who has been conferred the award of Young Global Leader by World Economic Forum and Business Transformation Entrepreneur of the Year by Ernst & Young (2010). He was named by TIME magazine as one of the 100 Most Influential People in the World (2006).