‘The board felt that Rao is best suited for the next phase of our growth’ | business | Hindustan Times
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‘The board felt that Rao is best suited for the next phase of our growth’

business Updated: Oct 12, 2010 22:05 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Barely eight days after the termination of Suresh Gurumani, the CEO and managing director of SKS Microfinance, the recently-listed company’s chairman Vikram Akula on Tuesday was not forthcoming.

He kept reiterating that Gurumani was removed because of “interpersonal conflict” with the rest of the management and he was not the best man to lead the company in the next phase of growth. In an interview to Hindustan Times, Akula said that there was no issue related to financial irregularities and performance. Excerpts:

What led to the termination of a performing CEO just after a successful IPO?
Post-IPO the dynamics in the microfinance industry have changed. SKS is about to enter its second phase of growth through the launch of new products like micro-housing and loans against loans, which require deep and intimate knowledge of understanding of microfinance. Also, there has been some misunderstanding at grassroot level.

On July 16, the board revised the salary of Gurumani. Did the industry dynamics change so much in two months?
When the salary was revised, the board was not aware of these developments within the management. Separation as an agenda came up on September 27 and while the board tried for settlement, it decided to terminate him as that could not materialise.

So was he not fit for this growth phase of SKS?
The board felt that someone who has intimate knowledge of not only the board room but also of the field was the right person to lead SKS. They felt that in the changed dynamics of microfinance, someone like M.R. Rao, who has been the chief operating officer for four years, will be the best person to lead the company.

How are Gurumani and Rao different on performance?
The board made the decision that the next phase of growth requires a person who has a deep intimate knowledge of microfinance; that Rao certainly exhibits. The board also felt that my 20 years of experience in the industry along with Rao are best suited for the next phase of growth.

So do you think it was wrong in selecting Gurumani initially?
The company has performed very well in the last two years, so the management decision to pick Gurumani is justified. The change is for the next phase, and Rao is best suited.