Spandana Sphoorthy, former MD Padmaja Reddy heading for truce over dues

Sources say many details yet to be worked out, and that it isn't clear if talks will lead to a comprehensive pact to end strife. Clarity expected in 10-15 days, they add

Spandana Sphoorty Financial Ltd (SSFL), Micro Finance Institution backed by private equity fund Kedaara, and Padmaja Reddy, its founder and former managing director are moving toward some understanding on payment of dues and clearing related party transactions.

Sources said the conversations are ongoing between the company and Padmaja Reddy. It pertains to payment of dues by and her relationship with MFI and lawsuits she has filed to avoid legal battles.

While there is some understanding on dues, many details are yet to be worked out. It was not clear if this would lead to a comprehensive pact to end strife. Clarity is expected in 10-15 days, sources added.

Dues pertain to Spandana Mutual Benefit Trust, which worked as collection agent for MFI. There are also dues to third-party firm Abhiram Marketing, where Reddy holds a substantial stake.

Company declined to comment on negotiations with Reddy for settlement. Reddy confirmed that talks are on but declined to dwell on details.

Reddy quit abruptly in November 2021 following differences of opinion with Private equity investor about the future, especially selling MFI. Later, she filed suit in court seeking reinstatement as the head of the NBFC-MFI while the lender appointed Shalabh Saxena as managing director. Saxena was working earlier with the MFI unit of IndusInd Bank.

Reddy and family would continue to hold about 16-17 per cent stake in MFI.
 
Meanwhile, Reddy has begun financing business – predominantly secured credit products like gold loans, loans against property. She along with a few investors have acquired a Kolkata-based non-banking finance company.

In the aftermath of events in November, Spandana Sphoorty, the Hyderabad-based MFI, had put disbursements on hold to put the house in order. It resumed disbursements in the fourth quarter with the aim to lend Rs 1,000 crore till March 2022. Its assets under management (AUM) shrunk from Rs 8,157 crore in March 2021 to Rs 6,695 crore in December 2021.
Its stock closed 2.2 per cent lower at Rs 427.4 on BSE.