SKS Microfinance takes Narayana Murthy's help

Infosys co-founder NR Narayana Murthy , whose venture capital fund Catamaran is sitting on a fortune with the listing of SKS Microfinance, has advised the firm to make a statement to contain further damage.



Following this, a draft statement, prepared by the SKS management, has been circulated among the board members two days ago, according to persons familiar with the matter. None of the independent directors has so far responded to the statement, the persons said.

The draft makes an attempt to explain the events that led to the sacking of SKS chief executive Suresh Gurumani—a decision that not only turned controversial for the country’s largest microfinance company but also dragged the entire sector into the harsh media glare.

According to the draft, whose contents were described to ET, during the IPO road shows, a number of investors desired that Vikram Akula , the SKS founder, should return to a full-time executive role in the company. This view was also shared by the rating agencies, says the draft.

“Mr Murthy thinks that the market is still not fully comfortable and feels that the board must make a statement along the lines of what the company management has been explaining to the regulator... In fact, Mr Akula spelt this out, along with what a possible statement could read like, in a mail to all board members,” said a company official.

“Most of the directors are yet to take a stand on the course of action, but some of them may push for a settlement with Mr Gurumani at the next SKS board meeting,” said another person familiar with the developments.

Mr Murthy is a member of the SKS advisory council, and the fund he floated received shares at a discount before SKS’ maiden equity issue. While Mr Akula wrote the mail after consulting Mr Murthy, it is possible that the latter is yet to approve the draft statement.

NRN’s possible statement

Mr Akula has also suggested a possible statement that the Infosys mentor, who has been avoiding the press on SKS, can make if the media approaches him. Mr Murthy did not respond to a set of email questions.

The SKS spokesman was not available for comments. Mr Akula was appointed as the executive chairman of SKS on September 7 while Mr Gurumani was sacked on October 4. Mr Gurumani was appointed CEO in early 2008, prior to which Mr Akula was the CEO.

According to the draft statement, the board had requested Mr Akula to become the executive chairman. Later, the appointment led to “interpersonal issues and conflicts” with Mr Gurumani, the draft adds.

via Economic Times