Mumbai: Vikram Akula, founder and chairman of India’s lone listed microlender SKS Microfinance Ltd, stepped down as the executive chairman of the company on Wednesday. P.H. Ravi Kumar, an independent director, was appointed as interim non-executive chairman with immediate effect.
The nomination committee of the board will look for a permanent chairman; no time frame has been given for this.
The SKS board, after a three-hour meeting in the office of one of its investors, Sandstone Capital Advisors Pvt. Ltd, at Mumbai’s business district Nariman Point, accepted Akula’s resignation.
“It is a voluntary resignation,” chief financial officer Dilli Raj said after the meeting. “I confirm that the company has signed certain agreements with Vikram relating to confidentiality, non-compete, etc.”
Akula said in an SKS statement that he will be involved in a mobile banking initiative and continue to be involved in the microlending industry “at a policy level”.
Akula will not be given a severance package, Raj said. “There is no severance package. Other obligation, if there is, on compensation, I assure you that it is not material in comparison to our annual operating expenses for the year.”
Akula has stock options amounting to around 3% of the firm’s shares.
SKS shares gained 4.98% to close at Rs 116 apiece on Wednesday on BSE, while the Sensex lost 2.27%.
Akula was present only during the first half of the board meeting; he left after signing the exit agreements.
Chief executive M.R. Rao and Raj left the meeting half way through, but came back later. An SKS spokesperson said the duo left for a “scheduled business meeting”.
Akula was scheduled to meet select journalists, but the meeting was cancelled.
“I am confident that the current leadership of SKS 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 policy level,” Akula said in the statement.
Akula’s exit will not hurt the proposed Rs 900 crore qualified institutional placement (QIP) of SKS shares, announced earlier this month, Raj said.
“We are in touch with our investors. This is not going to alter the QIP plan and there is substantial interest from retail and institutional investors. We are communicating with our investors constantly,” he added.
“It is a positive development. A lot of problems Indian microfinance is facing today came about due to poor governance in firms such as SKS, which came to light during its IPO (initial public offering). Someone had to take the responsibility,” said Samit Ghosh, MD & CEO of Ujjivan Financial Services Pvt Ltd, a microlender.
SKS’ board has decided on major restructuring of the firm’s business model. Microfinance will no longer be a core business. Raj said the company will give details on the restructuring on Thursday.
SKS was the largest microfinance institution in the country until recently, when it lost the top slot to Kolkata-based Bandhan Financial Services Pvt. Ltd in terms of the total loan book.
SKS’ total loan book stood at Rs 2,635 crore in September. Bandhan has given loans worth Rs 2,713 crore.
SKS posted a loss of Rs 384.54 crore in the three months ended September compared with a loss of Rs 218.74 crore in the preceding quarter and a net profit of Rs 80.54 crore in the year-ago period.
Total income declined to Rs 123 crore in the September quarter from Rs 367 crore a year earlier.
SKS has seen a drastic 34% decline in its net worth since March because it wrote off loans given to borrowers in Andhra Pradesh, its largest market. Its net worth slipped to Rs 1,181 crore in September from Rs 1,780.82 crore in March.
Total provisions and write-offs rose 21 times to Rs 353.34 crore in the September quarter from Rs 17.3 crore in the same quarter last year.