Vikram Akula, once the poster boy of India’s microfinance sector, on Wednesday stepped down as executive chairman of SKS Microfinance, which he founded in 1998, because of the growing rift between him and the top management.
The move will see Akula losing his control on the microfinance firm, as he does not own equity shares in the company other than the 2.6 million stock options given to him in two tranches. This is the second high-profile departure from SKS after the unceremonious exit of the firm’s former chief executive, Suresh Gurumani, last year.
“Vikram Akula has stepped down as chairperson and member of the board of SKS Microfinance. He will remain a consultant to the company until the end of March 2012 to assist with the transition,” the company said in a statement.
SKS appointed P H Ravikumar, who has been a board member for five years, as the interim non-executive chairman of the company with immediate effect.
Ravikumar was the managing director and chief executive of National Commodities and Derivatives Exchange (NCDEX) and currently heads Invent Assets Securitisation and Reconstruction.
Akula said while he would continue to remain involved with the microfinance industry, he would soon start a mobile banking venture.
"I will also be involved in a mobile banking initiative. This type of technology -- with its ability to help lower costs and increase convenience -- will create an improved platform for microfinance," he said.
According to senior officials, SKS has signed "certain agreements with Vikram relating to confidentiality, non-competence, etc". Akula has also not been given any severance package.
While no official statement was issued on the circumstances that led to Akula's resignation, sources said the board was not satisfied with his involvement in the company at a time when the firm was facing a crisis with mounting losses, deteriorating asset quality, poor loan recoveries and the absence of fresh funding.
"Vikram was not able to provide a strategic direction. He did not give adequate time when it was needed, and stayed overseas for many months. The board was obviously not pleased," said a source familiar with the development, requesting anonymity.
SKS was the fastest growing micro-lender in the country till 2009 and its initial public offer, first ever by a microfinance firm and the only one till date, was a grand success. The issue was oversubscribed 14 times and SKS raised over Ra 1,600 crore.
However, the company’s earnings have been shrinking since October 2010 when the Andhra Pradesh government introduced a new legislation curbing micro-lending activities in the state. In July-September 2011, SKS’s net loss widened to Ra 385 crore from Ra 219 crore in the previous quarter.
The company is currently looking to raise up to Ra 900 crore through a qualified institutional placement to support its expansion plans.
SKS shares have lost 87 per cent in the past one year, touching a low of Ra 104.45 on the National Stock Exchange. The shares on Wednesday ended at Ra 115.45, up five per cent from the previous close.
