Srei Infra CEO Rakesh Bhutoria steps down on salary issue: Company filing

Srei Infrastructure Finance (Srei) on Wednesday said its chief executive officer (CEO) Rakesh Kumar Bhutoria has resigned, mainly on account of the salary payment issue that has impacted team morale.

"We wish to inform you that Rakesh Kumar Bhutoria has stepped down from the position of the Chief Executive Officer of the company to explore alternative sectors," Srei Infra said in a regulatory filing.

Considering the salary payment issues arising out of the Trust and Retention Account (TRA) operationalised by the bankers, it has been impacting team morale, it added.

"Bhutoria has been relieved with effect from close of working hours on 15th September, 2021. We will shortly be announcing a replacement for the said position," it said further. He had joined Srei Infra in November 2018.

A degree holder in engineering and Master of Management Studies (MMS), he previously worked as the Group EVP and Head-Commercial Banking and Strategic Initiatives at IDFC Bank.

PTI had on Tuesday reported that Bhutoria has resigned from the company, and Srei has appointed a headhunter to find a replacement.

The company has also shortlisted a few candidates, and the board of directors has interacted with the potential candidates as part of the interview process.

When contacted, Bhutoria said he will now be exploring a couple of opportunities in the asset management space.

The Kolkata-based NBFC has been battling a human resource crisis since December last year with nearly 230-250 people leaving the Srei group, as the pandemic-induced economic crisis created an asset-liability mismatch.

Subsequently, the lenders of Srei group took control of its finances, in a bid to recover their dues. They also capped the salaries of the top level executives to Rs 50 lakh per annum, which was lifted in April this year.

Bhutoria's remuneration in the fiscal year ended March 2021 fell by nearly 18 per cent to Rs 2.59 crore against Rs 3.11 crore a year ago, as per Srei's annual report for 2020-21.

For FY21, the CEO and other senior management members voluntarily reduced their pay in the range of 20 to 25 per cent, it said in the report.

Chairman Hemant Kanoria had voluntarily reduced his pay by 30 per cent and had also relinquished the remuneration payable to him with effect from November 1, 2020.

The chief operating officer (COO) of the company's fully-owned subsidiary Srei Equipment Finance Ltd (SEFL) had left in April. The company secretaries of SIFL and SEFL had resigned in March and May, respectively.

The head of treasury and head of corporate communications also left recently.

While Srei and its board have written to banks several times for the release of arrears and overdue payments of provident fund and taxes, nothing has happened on the ground.

At the behest of the board, Srei has also intimated the regulator (RBI) about their grievances.

It is learnt that the top-level employees (including those who have left) are now exploring seeking legal recourse to get their dues.

Srei group owes around Rs 18,000 crore to around 15 lenders, including Axis Bank, UCO Bank and State Bank of India.

Srei said its total liabilities are around Rs 18,000 crore of bank loans, and another nearly Rs 10,000 crore of external commercial borrowings and bonds. Realisable assets, including arbitration awards, are higher.

Srei, which is mainly a holding company now after transferring its business to subsidiary Srei Equipment Finance (SEFL) in November 2019, expressed full confidence regarding paying back its creditors.

A reworked repayment schedule has been chalked out with the lenders to clear their dues.

In October 2020, the company proposed to pay its dues (principal and interest) to banks and all creditors in a structured and orderly manner over time.

"However, we have still not been able to conclude the discussions with our lenders and move forward. Over the last three decades, Srei has already paid Rs 30,000 crore as interest and paid back another Rs 20,000 crore interest to banks. There has never been any delay in loan servicing by Srei in the past before Covid-19 ravaged the country," it said.

On the capital raise front, SEFL has attracted interest of two foreign players for equity infusion. Srei approved a QIP a few months back.

Srei group mainly serves the MSME and infrastructure sector.

Stock of Srei Infra closed at Rs 8.78 apiece on BSE, up 4.90 per cent from the previous close.