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Paul the Octopus passes away.

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India, Malaysia sign CECA; set $15 bn trade target

Kuala Lumpur: Seeking to give new impetus to the bilateral relations, India and Malaysia today formally announced firming up of Comprehensive Economic Cooperation Agreement (CECA) to boost trade and decided on a range of other engagements in various sectors, including defence, reports PTI.

The two sides signed five pacts in various areas after wide-ranging talks between prime minister Manmohan Singh and his Malaysian counterpart Mohd Najib Tun Abdul Razak and resolved to impart strategic dimension to their relations.

Signing a document with regard to announcement of CECA, the two leaders said the agreement, aimed at allowing freer movement of goods, services and investments, would come into effect on 1st July next year.

"Today marks a turning point in India, Malaysia relations," Mr Singh told a press conference after the meeting.

He said the discussions with Mr Razzak had laid the basis for multi-faceted partnership between the two countries.

The two prime ministers also launched the CEO's Forum, which is expected to help forge closer and deeper economic engagement between business and industry of the two countries.

"India welcomes greater investment from Malaysia in infrastructure and manufacturing sector and Indian companies would also want to do business in Malaysia," Mr Singh said.

Mr Razzak said Malaysia would be happy to share India's economic success and join its journey for economic development of the country.

"We must give new impetus to this relationship. I indicated to prime minister Singh that Malaysia is ready for deeper and more intensive relationship," he said

Mr Razzak said the two countries have set a trade target of $15 billion by 2015 and expressed confidence CECA will help achieve it.

Noting that expansion of mutual investment would contribute to reciprocal economic growth of both countries, the two leaders agreed to enhance cooperation and support at government level to further strengthen existing bilateral collaboration in infrastructure development.

The involvement in infrastructure projects, particularly in the construction industry, is expected to provide bigger opportunities in investment through joint business and governmental collaboration, the two leaders said.


SKS Board backs down; wants to settle with sacked CEO Suresh Gurumani instead of taking issue to EGM

It is learnt that the microfinance company feels that going to the EGM will only lead to washing of more dirty linen in public. The sacked CEO may also not prefer staying on the board of the company

After unceremoniously sacking its CEO, Suresh Gurumani, the board of directors of SKS Microfinance Limited seem set for a settlement with him rather than take the matter of his sacking to the Extraordinary General Meeting (EGM).

Moneylife learns that at its board meeting on Friday, 22nd October, the SKS Microfinance board is understood to have decided that going to the EGM at this time - as directed by the Andhra Pradesh Court - would only lead to the washing of more dirty linen in public. Our sources say that although SKS's founder Vikram Akula and director Paresh Patel of Sandstone Capital were in favour of sticking to the decision of sacking Mr Gurumani, the other independent directors apparently did not want to precipitate the situation.

Mr Gurumani who attended the meeting, is understood to have left, once the board decided that it would work at an amicable settlement. He is also understood to have said that he is not in favour of continuing in the board. While there are no media reports on the proceedings of the board meetings, Moneylife learns that the board spent a lot of time discussing the Andhra Pradesh Ordinance to regulate microfinance and its possible impact on SKS's business.

On 4th October, the board of the Hyderabad-based company had terminated the services of Mr Gurumani four years ahead of the expiry of his contract and named MR Rao as his successor. Mr Gurumani had a five-year contract from April 1, 2009 to expire on March 31, 2014. The company in its notification to stock exchanges did not attribute any reason to his termination.

Now that the SKS board wants an end to the public spat over his sacking, Gurumani's settlement will, in all probability, be what was being discussed before his sacking: 1.25 lakh stock options and payment of a year's salary (a stunning Rs2 crore a year in a microfinance company). As we had reported earlier, the settlement fell through because Mr Gurumani rejected the many onerous conditions that were included in his severance deal. It was then that the board decided to sack him and has not managed to offer a credible explanation for its actions. A more acceptable new settlement is now being worked out and Mr Gurumani clearly wants to keep quiet until he cashes his cheque.

Mr Gurumani's employment terms apparently specified that if he was terminated 'with cause', he would lose all his stock options. Given this deal, we learn that the company tried to find a 'cause' for sacking. This means that Suresh Gurumani will walk away a very rich man after just two years as head of a company that claims to alleviate the problems of India's unbanked poor.

Meanwhile, as SKS's stock prices continue to tumble and the board grapples with the new Andhra government ordinance, a shareholder told us, "Isn't it amazing that a company which claims to deal with India's poorest and needy persons does not have a single board director who is from among the people it lends to."

Every board member of SKS Microfinance has been with a foreign bank or private equity company with an Ivy League background. It probably explains why the company felt it could get away with sacking a CEO without reason just a couple of months after a major IPO.

Atul Takle, who is in charge of communications at SKS Microfinance has written to us to say: "As you are aware, proceedings of board meetings are privileged information and we would not be able to comment on those."

Interestingly, SKS Microfinance has made no announcement to the stock exchanges about their proposed change of mind and the fact that a settlement in favour of former CEO Suresh Gurumani would involve a big payout at a time when the company is already facing serious issues over the structure of the microfinance business.



Rambabu Shastri

7 years ago

Village Moneylender in:
1. Corporate garb.
2. Full suit
3. Drives Mercedes
4. Wears Gucci.
5. Talks in American.

In short, our first multi-national moneylenders.

Rajan Alexander

7 years ago

When we started out in development a couple of decades ago, we instinctly targeted to reduce the influence of money lenders, if not eliminate them completely. Why? They were the traditional oppressors and exploiters in society. But today, we find MFIs have filled up the vacuum. MFIs believe that “having access to expensive credit is better than no credit” on one hand and “the observed rate is where demand equals supply”. The result is an “Animal Farm” situation where we are now not able to distinguish between “pigs” and “humans” and vice versa. In fact, money-lenders have got a face-over by packaging themselves as MFIs. A good example is Mohd Yunis of Grameen Bank comes from a traditional money-lending caste. And of course, he got the Nobel Prize for Peace while the Nobel Committee todate have yet to confer the prize to Mahatma Gandhi, the apostle of Peace!

The IPO of SKS, one of the largest MFIs in India, saw it over-subscribed by 15 times; their Ten-Rupee share was priced at a premium of Rs 975 - showing how much the market had confidence on their profitability while “banking with the poor”. PMFIs argue that they have to charge high rates to maintain profitability. Profitability, which even private banks couldn’t match! Profitability that permits SKS to pay Rs 1 crore as bonuses to their just fired CEO!

And how do they attain profitability?

A month ago, SKS in the state of Andhra Pradesh was accused of a series of farmer suicides that prompted the state government to introduce new restrictions on the microfinance industry by seeking to cap lending rates and end coercive means of recovery. Last week alone, Andhra Pradesh police arrested three loan agents of SKS Microfinance and Spandana Sphoorty Financial Ltd. after borrowers complain that they were illegally pressured by the agents to repay their small loans around $1,300.

The state’s share of outstanding microfinance loans represents nearly 40% of the sector’s total portfolio, according to ratings agency CRISIL, a credit rating agency. Now if MFI is all about access to the poor, we can ask the question, why the clamour to be concentrated in a state which belong to top-five in development in the country? We would have thought they would have gone to the five lying at the bottom rung of the country. But no, they avoid it like plague. It is easy to see they do this on repayment potential of states. The interests MFIs pursue are interests of self sustenance and their own growth. The poor is hardly in the radar except for rhetoric.

The sooner MFIs are seen as profit entreprises, the better. The longer they pretend they are pro-poor, the longer they discredit the NGO sector who gave birth to a Frankenstein.


7 years ago

Now here is a case where a big corporation is walking away without listening to public demand for an explanation.Very often it is seen thet public demand is stifled with a internal policy which demands that things dont come out . Somtimes as is the case however the man in the middle of the storm gets a better deal to keep quite .But really a corporation with a Narayanan Murthy on board as a investor ,does the public not feel shortchanged ? .Corporate Governance here is being given a mere lip service as is done more often in the corporate world. However a moral stand should be taken by the star studded board by coming out with a disclosure as to why the CEO is being given a GOLDEN PARACHUTE even before breaking any sweat.Is there somthing so fundamentally wrong with him suddenly that they have discovered and so disgusting that cant be discussed in public.Well the outgoing SEBI CHAIRMAN could maybe just find this as the right stage to go in a blaze of glory.And step on some toes .

R Balakrishnan

7 years ago

The Board is just a rubber stamp. The CEO runs the co. Gurumani was perhaps hired at the insistence of the PE guys to be a decorative piece. Unfortuanately, the owners thought that they could get rid of him cheap, once he had servied his purpose.
This co shows us of everything that is greed related. One allotment made just six months before the IPO at one third the IPO price! Was it a small price to pay for the success of the IPO? Greed and need matched.
ESOP's were funded by the co. Shareholding change history is a conundrum.
Profitability can only fall.
Good that the excreta is hitting the ceiling after the first microfinance IPO.
Regulators, as usual, sleeping.

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