Akula quits SKS, Ravikumar is interim chairman

Mumbai: Founder and executive chairman of the country`s only listed micro finance institution SKS Microfinance Vikram Akula today resigned from the board in wake of the huge losses suffered by the Hyderabad-based firm. Akula, who had a troubled association with the company, would continue with SKS as a "consultant" till March 2012 and "assist with the transition."

The company did not give any reason for his resignation. Terming the resignation of Akula as "voluntary", it said it has appointed P H Ravikumar as its interim Non-executive Chairman. After his resignation Akula said, "The current leadership is well equipped to take SKS into the next phase of its evolution. I will, of course, remain committed to the sector, and will continue my involvement in the industry at a policy level. I will also be involved in a mobile banking initiative."

Speaking to reporters after a board meeting, SKS Chief Financial Officer Dilli Raj told reporters, "Ravikumar, who has been an independent director with us for the past five years and chair of the audit committee for the past four years, has been appointed as non-executive Chairman for the interim." Raj said no severance package has been given to Akula.

"On the issue of compensation, I confirm there is no severance package. If there is compensation, that is not material in comparison with our annual operating expenditure."  The company had signed certain non-compete and confidentiality agreements with Akula, who founded the company in December 1997 and made history when his IPO was overbought 14 times and was listed with 11 per cent premium over issue price of Rs 985 in July 2010.

"The company has signed certain agreements with Akula relating to confidentiality, non-compete clauses etc," Raj said, without going into specifics. Raj also denied reports that there was pressure from the board on Akula to hang up his boots. Akula now holds around 3 per cent stake in the company, in which PE firm Catamaran, set up by Infosys Co- Founder N R Narayanamurhty, is a major investor.

"Vikram turned an idealistic vision into a business that today serves millions of rural women. I have witnessed first hand the amazing impact SKS has had in India. But a lot more needs to be done," Vinod Khosla co-founder of Sun Microsystems and a significant shareholder in SKS said. Akula, who founded SKS in late 1997, led the organisation until 2004 and became its poster boy with the massive success of the IPO. Then he joined McKinsey & Co in Chicago, only to return to SKS in 2005 and convert it to a for-profit company.

Shares of SKS closed 4.98 per cent higher at Rs 116 on the BSE today. SKS was the first micro finance firm to go public in South Asia. SKS shares had touched a lifetime high of Rs 1402.30 on September 28, 2010. But soon the bumpy ride began and the scrip fell to Rs 640 on November 18 after crisis hit the Rs 20,000-crore sunshine industry in Andhra Pradesh, its largest market, following an Ordinance that massively curbed the industry`s operations.

The AP Ordinance followed a spate of suicides by farmers, allegedly due to coercive methods adopted by collection agents. SKS had also witnessed some low moments following the ouster of CEO Suresh Gurmani in October last year. Gurmani, who was at the helm of the microfinance lender at the time of its dazzling IPO, was replaced by M R Rao.