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Here's the secret behind SKS' mess up
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  • Here's the secret behind SKS' mess up

Here's the secret behind SKS' mess up

FP Staff • December 20, 2014, 07:03:34 IST
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Read on to know about why SKS Microfinance lost its glory.

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Here's the secret behind SKS' mess up

“You can’t be a brand manager for Disney, selling products to kids and allow some adult or porn thing to show up. SKS ruined their brand. They should present themselves as a business, and not as do-gooders,” said Vinod Khosla, founder, Khosla Ventures, and one of the most prominent investors in SKS Microfinance in an interview to Economic Times.

Wrong branding coupled with inefficient client management led to SKS’ downfall, Khosla said. Microfinance is required by the poor who do not have the capability to speak for themselves or access credit easily.

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And it is fulfilling this need that makes catering to the clients extremely important for SKS. But given a chance, Khosla would invest in SKS all over again and blames politicians for the downfall of microfinance as well.

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[caption id=“attachment_128442” align=“alignleft” width=“380” caption=“SKS lost its glory after Andhra Pradesh government slammed a law on them asking microfinance companies not to pressurise villagers for payment.Reuters”] ![](https://images.firstpost.com/wp-content/uploads/2011/11/microfin3801.jpg "microfin380") [/caption]

SKS Microfinance, a child of promoter Vikram Akula, listed with much pomp and splendour last year, the first microfinance company to do so. But it soon lost its glory after Andhra Pradesh government slammed a law on them asking microfinance companies not to pressurise villagers for payment. Business has been bad with SKS reporting losses for three quarters now. The stock has fallen to Rs 175 from a high of Rs 1,219 in October last year.

Khosla is a self admitted capitalist and says NGOs and other “non capitalist” ventures do not deploy capital efficiently and therefore do not work. However, he believes investment though completely based on returns must also impact the economy.

Khosla, who is looking out to invest in alternative energy companies and solutions says, he is not ready to invest in a product that will be 10 percent better than an existing one. He would rather take greater risks and invest in a product that is “300 percent better.” In that case, even if a dozen project fails, one spectacular success will compensate for all.

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