SKS to lay off 1,200 field staff

HYDERABAD: With no respite in sight, a battered SKS Microfinance Limited, on Thursday, confirmed what had been suspected all along - it is firing employees to cut “excess flab” and moving out of Andhra Pradesh, its place of origin and where it met its Waterloo.As part of rationalization, 1,200 of the total 3,400 field staff in the state will be shown the door, while 78 out of 180 branches will cease to exist. About 40 employees are understood to have protested the company’s decision at its office in Kundanbagh Thursday.SKS said it was compelled to downsize, as the AP-crisis - which erupted in October, 2010 following borrower suicides - was bleeding the company with losses pegged at over Rs 1,360 crore for the year ended March, 2012.“Closing down branches and reducing headcount are extremely painful decisions for us but these have become urgent in view of the present financial situation. We recognize the invaluable contributions made by our colleagues in AP in shaping the company as one of the largest MFI companies in India. However, the microfinance business in AP has come to a standstill,” said M R Rao, managing director & CEO of SKS.The country’s only listed MFI, however, will not completely shut operations in AP. But according to Rao, it was imperative to remain cash neutral in the state, which once accounted for over a quarter of the total micro loans business in India.Though it’s for the first time the company formally announced layoffs, SKS has been trimming staff since the last few quarters. Having shed its tag as the largest MFI in terms of assets, SKS’ workforce was reduced by 29 per cent from 22,733 in March, 2011 to 16,194 in March, 2012.Similarly, from 7.3 million borrowers in March, 2011, the number of borrowers plunged to 5.3 million as on March, 2012. Similarly, active borrowers reduced from 6.2 million in March, 2011 to 4.2 million in March, 2012.It lost nearly two million borrowers in the last one year and weary of the business sentiment, the company has decided to put on hold new customer additions until the financial year 2014.