India?s largest microfinance institution SKS Microfinance, which should have been focussing on its core mission of alleviating poverty, has been hogging headlines for the wrong reasons. Vikram Akula, founder and chairman of SKS, has been embroiled in a controversy relating to the exit of the company?s former CMD Suresh Gurumani. Late Monday evening, the press was told that Akula would meet it the following day to clear the air. Akula turned up on Tuesday with two directors of the company, Sumir Chadha of Sequoia and Paresh Patel of Sandstone Capital. But he struggled to answer journalists who wanted to know whether there had been a power tussle between Akula and Gurumani, and how it was that the board had sanctioned a hefty raise and a bonus for Gurumani and thereafter asked him to go. The answers were quite unconvincing.
All three directors noted there had been no problem with Gurumani?s performance, but said Gurumani was not the right person to lead SKS in its second phase of growth, in which the company would be rolling out secured lending products. Akula initially denied inter-personal issues between the senior management and Gurumani but later conceded there had been some differences. The directors went to great lengths to point out that CEOs were sacked across the world. It?s not surprising that Sequoia and Sandstone Capital supported Akula at the conference; they are, after all, shareholders in SKS and would not want to see the value of their investments erode. SKS stock was down more than 3% on Wednesday.
Earlier this week, a shareholder with 18 shares challenged the board?s decision to oust Gurumani. The AP High Court ordered that Gurumani should continue being on the board. Gurumani, insiders say, had a mind of his own and disagreed with Akula on some of the business decisions. This did not go well with Akula as he wanted total control, said a board member who added that the board learnt of the interpersonal differences only on September 7, 2010. The board may not have any issues with Gurumani but, ultimately, Akula had his way. According to two directors on the SKS board, Gurumani will walk away with the notice period pay and the stocks that have been vested.