SKS Microfinance Founder and Chairman Vikram Akula is a star in his own right, and his trademark kurta pyjama that stands out in the backdrop of dark-suited fellow professionals is certainly not the only reason for his exalted status. After all, Akula is leading an institution that is well on its way to becoming the world’s biggest micro-lender.
The 41-year-old poster boy of the Indian microfinance industry is also extremely articulate and is not known to be at a loss for words. In that context, his statement early this week that “inter-personal issues” led to the ouster of Suresh Gurumani as managing director and CEO just 15 days after the company’s listing lacks conviction.
This was not exactly the kind of response one would expect from the chairman of a listed company. For, we are talking about the ouster of an MD of a listed entity and not the sharing of a gift between two quarrelling school children.
SKS has said it is only following its principle of allowing “graceful and dignified exits” to people and does not want to give out the details of what led to Gurumani’s removal and that there were no “financial irregularities and performance issues” involved. In any case, there is nothing illegal about the removal of an MD and CEO of a company by the board.
SKS is on the dot on the illegality issue, but off track on the disclosure. Investors obviously have the right to know the circumstances that forced the SKS action. Many say the attitude shows how Akula and the SKS brass are yet to realise that a listed company can’t be the playground of a few big boys. Others are more benevolent: “You have to give them some more time to mature. It takes time to realise that you are now under the public glare.”
The reasons may be known shortly at the court-mandated extraordinary general meeting (EGM) that will put to vote the continuance of Gurumani as the company’s non-executive director. The disclosure is important as the timing of the sacking is intriguing. No one knows whether “inter-personal issues” are strong enough reasons for shunting out a CEO barely a month after a successful listing.
During his interaction with the media, Akula also said that Gurumani’s inability to handle the changing dynamics of the microfinance industry in India was also a reason for his ouster. “Post our IPO, the dynamics of the microfinance sector changed,” Akula said. No one knows how the “dynamics of an industry” can change in just 15 days.
What makes it even more intriguing is that just three months back, the SKS board had approved a proposal to raise Gurumani’s remuneration substantially. Ask Akula and the answer is that the board could not perceive the pace of the change in the industry even though the senior management may have been aware of it!
Though both sides are not talking about it, industry circles say the actual reason for the clash between the chairman and the CEO was their differences over how to take SKS forward. The roles were divided: while Akula would handle broader public and policy matters and “help” the management devise strategy, Gurumani would look after daily operations and the investor interface. But it was obviously difficult for Akula, who had built SKS brick by brick, to restrict himself to a “helping” brief.
“It started as ‘we have differences but have a healthy respect for each other’ kind of stuff, but the gulf between the two widened after Akula came back into the company last month as executive chairman from his earlier position as non-executive chairman,” says an industry observer.
While Gurumani, an ex-Barclays and Standard Chartered banker, wanted a cautious approach and avoid reckless growth, Akula planned to innovate and expand across products and services for the poor. For example, the company wants to launch new products like micro-housing, loans against gold, and even sell mobile phones. Yet, when Gurumani shed his initial reluctance and launched micro-health insurance, SKS stopped it after the initial not-so-encouraging response, without giving the CEO enough time to stabilise the product. Gurumani has also spoken about his keenness to put in place controls and more risk management structures but some board members worried that these measures would be too costly.
Akula had earlier gone public with his belief in the wisdom of teams and his “dream” of taking power away from himself as most start-ups have failed because they depended on just one founder. He had also spoken about the reasons for bringing in people like Gurumani since he (Akula) is not a banker and wanted people who were smarter than him.
In the end, however, the CEO found himself outsmarted by the founder-chairman and his board.
