SKS faced power tussles in past too

The board of directors sacked SKS Microfinance MD & CEO Suresh Gurumani after a few months of an IPO of Rs 1650 crores. The reason could be that SKS Microfinance founder and executive chairman MrVikram Akula had interpersonal issues with Suresh Gurumani. Previously, some senior management had left the organization on the same grounds. According to information, the board of directors all voted in favor of  termination of Suresh Gurumani.  There were no performance or business ethics issues to implicate Suresh Gurumani . 

With repeated actions of the executive chairman and board to terminate senior management on interpersonal issues, there appears marked disrespect for corporate governance. Should owners of listed companies, where public money is involved, be allowed to settle personal scores in this manner? Read the article from Times of India below to assess for yourself.

“HYDERABAD: Even as the reasons for the unceremonious sacking of Hyderabad-based SKS Microfinance’s MD and CEO Suresh Gurumani continue to be shrouded in mystery , it now emerges that this is not the first time that India’s largest MFI has seen a change of guard in such an abrupt fashion.

Industry insiders, who have witnessed the rapid rise of SKS Microfinance from an Andhra Pradesh-based MFI to one of the largest MFIs in the world in less than a decade , point out how power tussles and hasty departures at the top have been the norm than exception in the company . While the manner in which Gurumani, who joined the company in December 2008, was given the boot within months of a successful IPO of Rs 1,650 crore has already sent alarm bells ringing over the flouting of corporate governance norms, whispers have been growing louder about personality clashes and differences of opinion with SKS Microfinance founder and executive chairman Vikram Akula precipitating the crisis . While, TOI’s attempts to reach Akula were unsuccessful , news agencies on Tuesday quoted him as admitting that Gurumani was fired because of “interpersonal issues with senior management” . But industry sources point out that on more than one occasion people at the helm of SKS like Praseeda Kunam and Raghunatha Reddy had to leave within days of Akula’s return to an active role in the company’s affairs.”

Read more at SKS faced power tussles in past too at Times of India site.

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8 comments on “SKS faced power tussles in past too

  1. Totally agree with you Sonia, it is a complete disrespect to corporate governance!!!

    After becoming a public listed company such actions of promoters/ previous owners have a huge impact on employees and investors. Complete meaning of corporate governance is lost.

    • Hi Hardeep,

      Thanks for the support. I think financial institutions world over are losing their capacity for ethics, corporate governance and humanity in their drive to get more and more power and money.

      Sonia

  2. While this matter is subjudice, what is key here is not just a general corporate governance issue but a specific one on how really independent are the independent directors, to act as the intended checks and balances, on the Board?

    The report that the ‘entire board agreed with the decision’ needs to be qualified with the opinion[s], if there were any, of the independent directors. The ‘unanimous’ decisions may just be the final decision after a protracted discussion, all of which may have not been reported. It would be interesting to know if such inputs were indeed there on this decision at SKS.

    • Sridhar,

      You have riased very valid points. In my personal opinion, the independent directors are not really independent when promoters or owners are talking of their own interest. The second point, I was quite surprised in reading in the media that only one director was not present hence the vote was not counted. And all the others voted in favour of termination. Media has not really clairfied the stance taken by Mr. Narayan Murthy, as he is one of the directors. He generally is known to uphold goverance issues and the promoter would not be in a real position to influence him. He has ost facto asked them to patch up. Let us see what the results are.

      Sonia

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