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According to sources, investors in the company have been applying considerable pressure on the firm to oust Akula. The company's board is scheduled to meet in Mumbai to discuss the matter on Wednesday. His successor is to be announced shortly. The firm's shares prices on the BSE shrunk to R110.50 on Tuesday, hitting a new low, reflecting the mood surrounding the company.
SKS Microfinance's IPO was one of the most successful in 2010, with the issue being over-subscribed 14 times, raising R1,654 crore in the process. It also attracted high-profile investors like George Soros and Narayana Murthy. Akula's proposed resignation comes in the backdrop of heavy losses in the second quarter. Last week, the company had reported a net loss of R384 crore for the second quarter, on account of lower income and higher provisioning. The company had booked a profit of R80.55 crore in the July-September quarter of the previous fiscal.
Revenues of the company also declined to R122.99 crore during the quarter, from R366.56 crore during the year-ago period. During the quarter, SKS's provisions against bad loans rose to R353 crore, a 20-fold jump from R17 crore during the corresponding period last year. The micro finance industry has come under intense scrutiny after a string of farmer suicides in Andhra Pradesh, leading to the creation of an Act to regulate their activities in the state. The Act has hampered micro-finance activity in the state and MFIs that were accused of charging very high interest rates on the loans are now finding it hard to get funds from banks. Andhra Pradesh accounted for a significant revenue chunk for SKS.
Following the fund crunch, earlier this month, the company's board had approved a proposal to raise R900 crore through a sale of shares to private institutional investors to support its business.
Source: Financial Express
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