In a strong signal to the Andhra Pradesh (AP) government,which has cracked down on microfinance institutions,SKS Microfinance has decided to curtail its operations in the state by reducing the employee headcount by 1,200 and closing down 78 branches. SKS is also looking at shifting its headquarters to Mumbai as its AP operations have almost come to a halt while work in 13 other states are progressing well.
Closing down branches and reducing headcount are painful decisions,but these have become urgent in view of the present financial situation, said MR Rao,MD and CEO.
We have brought down the residual Andhra Pradesh exposure to Rs 236 crore from a high of Rs 1,491 crore in October 2010 by writing off Rs 1,120 crore, he said.
The company has incurred a loss of Rs 1,360 crore during the year ended March 2012. SKS reiterated that the company is not facing any liquidity or solvency issues. The company had written off Rs 272 crore outstanding in its AP portfolio.