Akula vs SKS: There's Rs 4 crore in play now

Troubled microfinance lender SKS Microfinance is once again in the news- for all the wrong reasons. It seems like more differences have emerged between the former poster boy of microfinance and founder of SKS, Vikram Akula, who resigned in late November 2011, and the company over employee stock options that Akula had exercised but later opted to withdraw.

Akula, who founded SKS Microfinance in 1997, resigned from his post late last year due to growing differences with the company’s management. However, Akula slapped a legal notice on SKS demanding a refund of around Rs 4 crore that he paid to exercise 906,734 options on the grounds that the shares were never allotted to him by the company, reports the Business Standard.

[caption id=“attachment_216457” align=“alignleft” width=“380” caption=“Akula was never allotted the shares because he did not pay tax on the shares and had not fulfilled all his legal obligations after exercising his options rights. AFP”]  [/caption]

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In its defence, the company said that Akula was never allotted the shares because he did not pay tax on the shares and had not fulfilled all his legal obligations after exercising his options rights.

“Subject to completion of all appropriate post-exercise actions to the satisfaction of the company, including receipt of requisite amounts towards tax obligations considered appropriate by the company, the company shall allot 906,734 equity shares to the grantee,” SKS had said in a notice to the Bombay Stock Exchange last year. The shares, the company said, would only be allotted once the tax was paid.

Akula’s resignation came just as the problems at SKS spiralled from bad to worse. Battered by low recoveries on its loans in Andhra Pradesh, the company had to take a huge hit on its balance sheet, which resulted in its stock tanking from Rs 1,320 in September 2000 to a mere Rs 136 in February 2012!

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As _Firstpost_ noted earlier, the microfinance company has booked losses of Rs 1,100.8 crore since March 2011, wiping out nearly 60 percent of the funds raised during its initial public offer of Rs 1,628.78 crore.

As per an Economic Times report, the options were exercised at a price of around Rs 49 a share. “…but for Akula, the total cost per share, including tax, would have worked out to Rs 102. This is because a tax of 30.9 percent is charged on the perquisite value, which is the difference between the previous day’s closing price of the stock and the exercise price,” said the report. Based on this, Akula was required to pay a tax of around Rs 4.7 crore.

In an emailed response to Business Standard, Akula has said that the company had not accepted the withdrawal of notice, even though 10 weeks have passed, which prompted him to send the legal notice.

The company said that it will review all legal as well as corporate governance aspects before accepting Akula’s demands.