SKS Micro Finance – First Results post-Listing

Since this was the first result declared after the company’s IPO during July-August 2010, I think it was nice of the management to present comparable financials for the previous year comparable quarter (June 2009) and preceding quarter (March 2010) as well. The management also mentioned that the business is cyclical with larger business being derived in the 2nd half (Oct to Mar). It is interesting to note that while the management has indeed provided quarterly disbursements for the past three years, none of the other data, including the Income Statement (Profit & Loss Account) have not been provided for the other quarters (i.e. not provided for quarters ending Sep-09 and Dec-09). In light of the management’s own admission that their business is cyclical and the fact that these were the first results declared after the listing the financial details for the intervening quarters would have helped analysts better. It should be remembered that beginning October 1st we have entered the earnings season for the second quarter results, i.e. for the quarter ending September 2010; while SKSMicro has declared these results for the first quarter, i.e. quarter ending June 2010. Hence, I believe that these results for the first quarter, i.e. June 2010 could have been announced earlier. One surprise, and investors do not like surprises – especially without explanations – was the firing of the CEO. Though the whole new management team was announced, the reasons for firing the erstwhile CEO was only hinted at during the conference call as performance related. Having ensured a spectacular listing, investors were left guessing the nature of performance issues within the management. This, in short, isn’t being investor friendly or transparent within a few months of listing. A recent example is that of Mark Hurd, the ex CEO of HP. While he was fired, the Board of HP in clear words spelt out the reasons for the same. Whether investors agree with it or not; or view it as too harsh is a separate matter – the fact is that HP clearly laid out to the investors the reasons for firing its CEO. That is indeed being transparent. The result presentation is available here.

Changes - The old paves way for the New

This is a new post in a long long time. Be rest assured that I shall now be regular in updating this blog and it shall indeed be alive once again. During this result season – Q2 FY11 (Jun-Sep 2010) – I shall not analyse the financial results of comapanies. Here I intend analyse the management’s reporting and corporate governance standards. What I shall also attempt doing is to highlight – without prejudice to the management – how the results releases from investors and analysts point of view could have been more meaningful. Do note that I shall not have access to any more or less information than analysts, and hence I indeed would be biased to that extent. I shall, thus, focus more on investor relations and corporate governance related facets and issues; and from time to time also give my take and analysis on the various economic parameters. Do send me feedback if I should also be covering some other critical aspects. I will look forward to your bouquets and brickbats.