Business Today

I am back in a proactive role: Akula

SKS Microfinance founder and executive chairman Vikram Akula talks about the changes at the top of the company.

E. Kumar Sharma        Last Updated: October 7, 2010  | 11:39 IST

At its board meeting on Monday, October 4, SKS Microfinance passed a resolution to terminate the appointment of Suresh Gurumani as  Managing Director and Chief Executive Officer and to "withdraw all powers and authorities granted to him or otherwise enjoyed by him in the company as managing director and CEO, with immediate effect." Deputy CEO M.R. Rao takes his place. Business Today's E. Kumar Sharma caught up with SKS founder and executive chairman Vikram Akula to find out the reasons for the change at the top. Edited excerpts:

{mosimage}BT: Vikram, just about 50 days after an initial public offering, the board of SKS has sacked its CEO. What's the reason for this sudden change?

Akula: I can only tell you that the changes as far as my role and that of M.R. Rao did not happen yesterday but were made in the first week of September when I moved into the executive chair role (from being a Non Executive Chairman earlier).

BT: Two years ago, you told BT: "We have become larger than some of the small banks in India and we need a professional banker." That was the reason for appointing Suresh Gurumani, 46 then, from Barclays Bank. So why is he out now?

Akula: It is the decision of the board.

BT: Vikram, people say that part of the problem is that you like to micromanage and want to be always in control. How true is that?

Akula: We are at such a scale and size that it is physically impossible to micromanage the company. My style has been to give a very long rope and empower people to do things but when I think that the things could harm the company then I will definitely step in . This is after all my life's work.

BT: The stock markets have not approved of your move as you would have noticed from the slide in the stock price after the news announcement (the stock lost 6 per cent on the day the Gurumani was fired). How do you propose to make good the loss and allay investor fears?

Akula: Our performance will speak for itself. Also, MR and I are back in a proactive role is significant as we are the people who had been with the company in the trenches and got it to where it is today, and will therefore deliver the performance the way it has been in the past.

BT: We have spoken to a range of people after the developments at SKS and there were concerns in some quarters that perhaps there were differences over issues of financial accounting that led to the changes at SKS. Your comment.

Akula: The separation (with Suresh Gurumani) has nothing to do with any financial irregularity. The company is in good shape and in fact we have submitted our first quarter results to a voluntary limited audit review by Ernst & Young (and will do it again with our second quarter results). Also, we were upgraded by credit rating agency Crisil on September 24 (Crisil had assigned a P1+ rating for SKS' short term debt programme). All this shows a very strong financial health of the company.

BT: What is your stake in the company and what do you see as your role going forward?

Akula: There is no change in my stake. I continue to hold 3.4 per cent of the company in the form of stock options. As for my role, look, I am playing and I will play an active role as the executive chair and will be involved in the day-to-day responsibility of growth of the company.

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