There is a lot of value left to be extracted from Spandana Sphoorty, and the company is “fully committed” towards achieving its Vision 2025 goals, MD and CEO Shalab Saxena told FE on reports that Yes Bank will likely take over the microfinance firm.
“There is a lot of value that has to be extracted from the company. Secondly, when we presented the FY25 vision plan to the board in July last year, everybody was completely in sync, saying this was the right plan to get the best out of Spandana,” Saxena said. “Just because there is an opportunity, it does not mean you fall for it.”
Saxena, the former chief of Bharat Financial Inclusion, took charge of Spandana when it was sailing through rough waters in March 2022. Former promoter and co-founder Padmaja Reddy had alleged that Kedaara Capital, the private equity majority shareholder in Spandana, wanted to sell the MFI to Axis Bank at a “throwaway price”.
Saxena chose kitchen sinking as his first major task, and it was an eye-opener. The MFI’s gross non-performing assets (GNPAs) zoomed to 18.7% as of March 31, 2022, from 5.5% in December 2021.
“We had a tough last year, and when the new management joined in March 2022, we assessed the situation and during Q1FY23 we wrote off whatever we thought was a portfolio that should have been written-off,” he said.
Since Q1FY23, the GNPA ratio gradually decreased and stood at 2.07% as of March 2023. Saxena said he was “very confident” that GNPAs would come down to less than 2% by the end of the current fiscal. Customers have started making timely repayments and realised that their chances of getting a second loan after a default will be slim.
Spandana does have a weekly repayment model for borrowers. “Since I have taken over, we have launched around 250 branches where weekly repayments can be made… this is a high-touch model and it gives you the opportunity to meet the customer 52 times in a year, against 12 in a monthly model,” Saxena said.
In line with the vision plan, the MFI will grow its overall assets under management to Rs 15,000 crore by FY25. As of March 2023, the AUM stood at Rs 8,511 crore, which will rise to more than Rs 11,500 crore by the end of the current fiscal, he said.