India: SKS Microfinance Slumps After Terminating Appointment of a Key Executive

Oct 2010
Mumbai, India, October, 04 2010 - SKS Microfinance plunged 5.48% at Rs. 1,281 at 15:20 IST on BSE after the company's board approved terminating the appointment of a top executive with immediate effect.

The announcement was made during market hours today, 4 October 2010

Meanwhile, the BSE Sensex was up 36.83 points, or 0.18%, to 20,481.87

On BSE, 3.11 lakh shares were traded in the counter as against an average daily volume of 5.55 lakh shares in the past 34 trading sessions since its debut on 16 August 2010.

The stock hit a high of Rs. 1,390 and a low of Rs. 1,235 so far during the day. The stock had hit a record high of Rs. 1,490.70 on 28 September 2010 and a record low of Rs. 1,036 on 16 August 2010.

Hyderabad-based SKS Microfinance had settled at Rs. 1088.58, a 10.51% premium over the initial public offering (IPO) price of Rs. 985 per share, on its debut on 16 August 2010.

The stock had underperformed the market over the past one month till 1 October 2010, gaining 8.13% compared with the Sensex's 12.30% jump.

The large-cap micro finance firm has an equity capital of Rs. 71.97 crore. Face value per share is Rs. 10.

SKS Microfinance said it has withdrawn all powers and authorities granted to Suresh Gurumani, managing director and chief executive officer, without giving any specific reason for the action taken. The company has appointed M.R. Rao as chief executive and managing director for three years with effect from 4 October 2010.

Meanwhile, the company also accepted the resignation of Ashish Lakhanpal from directorship of the company with immediate effect. Ashish tendered his resignation so that the board composition complies with the requirements of the listing agreement in connection with the prescribed ratio for independent and non-independent directors.

Reportedly Suresh Gurmani, a chartered accountant, had joined SKS Microfinance as the CEO in November 2008. Gurmani had a five-year contract from 1 April 2009 to expire on 31 March 2014, draft red herring prospectus filed by the company while floating an initial public offer showed.

SKS Microfinance is India's largest microfinance company in terms of total value of loans outstanding, number of borrowers and number of branches. It is engaged in providing microfinance services to individuals from poor segments of rural India.

The company's net profit jumped 265.5% to Rs. 66.70 crore on 82.30% rise in total income to Rs. 313.62 crore in Q1 June 2010 over Q1 June 2009.


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