Chairman of India’s Largest Microlender, SKS Microfinance, Vikram Akula, resigned

Vikram Akula, founder and chairman of India’s largest and only listed microlender, SKS Microfinance, resigned from his posts in the company on 23 November 2011. Akula who started SKS in 1998 stayed at its helm for 14 years.

Independent director P H Ravi Kumar who has been on SKS board for the last five years was appointed interim non-executive chairman with immediate effect. Akula will stay on as a consultant till the end of March 2012 to assist with the transition.
 
Akula was lately under tremendous pressure from the board to resign as executive chairman in the larger interest of the company, which has seen a massive decline in its financial fortunes since the controversial sacking of CEO Suresh Gurumani in early October 2010.
 
The Dispute

The board members had proposed that SKS Microfinance should diversify into offering loans against gold, housing loans, loans for purchasing mobile, working capital loans to kirana stores and other secured and unsecured loans. Accordingly, the board members sought shareholders' approval to scale these businesses into new verticals and amend the main objects of the Memorandum of Association. Akula was not in favour of this.

SKS Microfinance

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 1600 crore.

The company’s earnings however started 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.