Spandana Sphoorty provides key business updates, including disbursement ramp-up and equity capital infusion

24 Feb 2022 , 09:39 AM

Spandana Sphoorty Financial Limited at its Board Meeting on February 14, 2021, announced its results for the quarter that ended December 21, 2021. Spandana’s business demonstrated a robust performance in the quarter, which was the first one to be completed post the management transition at the Company.  It reported a consolidated net profit of Rs45.1 crore, as compared to a loss in the previous quarter.

Cash collection in December and January continued to be robust at ~Rs4,450 mm per month, ~5% more than the October and November transition period, despite an ~11% Q-o-Q reduction in AuM (assets under management) due to the natural run-down of the book. February collections continue to stay similarly strong.

The Company continues to fulfil all lender repayments/commitments as per the scheduled dates,  and is also pleased to announce the receipt and drawdown of a new debt sanction from an incumbent lender — the first since the management transition, as the Company returns to its growth path.

The incremental operational cash generation of Rs750-1,000 mm per month, along with the new debt drawdown, several other sanctions in pipeline, and the planned equity capital raise will provide the company with enough dry powder to ramp-up disbursements very rapidly.

The company has already resumed its regular disbursal activity in January 2022, and has disbursed ~Rs3,000 mm of new loans in the month of February so far, and is expected to disburse more than 10,000 mm in Q4FY21-22.

Spandana has made significant progress in its new, upgraded IT systems implementation over the last three months. It includes a Microsoft Azure-based cloud environment with live backups, access to web-based technology at any time and from anywhere, encrypted architecture with latest security protocols, a comprehensive audit trail with robust maker-checker systems and a tightly integrated system from Loan Origination to General Ledger.

The organisation has stabilised post the management transition, with the addition of a very strong CTO from a very reputed private sector bank. Employee attrition is at 3% in the current quarter — one of the lowest levels in the company’s history — and continued hiring is in progress to further augment the team. This will provide a robust foundation from which to drive sustainable growth and profitability.

The Board also announced its unanimous decision to raise INR 3,000 mm this quarter through a preferential allotment to support the Company’s future growth plans, subject to receiving all relevant shareholder and regulatory approvals. The Company’s existing promoter shareholder, Kedaara Capital, and a significant long-term shareholder, Valiant, are committed to support Spandana though its journey, and will subscribe to shares in the preferential allotment at a price of Rs. 459 per share, which is a ~23% premium to yesterday’s closing price.

Spandana’s board and the leadership remain committed to grow the company and take it to greater heights, assuring trust and confidence to its customers, and promising stability and growth to its employees.