SKS loses Rs.4 crore a day, seeks govt nod to pay brass more

Even as it lost Rs.4.27 crore every day in the quarter ended September, SKS Microfinance is seeking the Centre’s approval to pay managerial remuneration in excess of the limits prescribed under the Companies Act, 1956.

Since the company has no profits, it would require an approval of the central government for payment of remuneration in excess of the said limits, SKS told bourses.

“The company is in the process of making an application to the central government in this regard, for payment of such excess remuneration to the managerial personnel. Pending final outcome of the company’s application, managerial remuneration has been accrued only to the extent of the limits prescribed under the relevant provisions of the Companies Act, 1956,” SKS said.
Losses rose to Rs.384.54 crore in the quarter ended September 30, 2011, against Rs.218.74 crore in the quarter ended June, and a profit of Rs.80.54 crore in the second quarter of the previous financial year.

Revenues fell to Rs.122.99 crore from Rs.366.57 crore in the same period a year before.

Section 198 of the Companies Act, 1956, puts a maximum limit of 11% of the net profit in any financial year on the managerial remuneration payable by a public company or a private company - which is a subsidiary of a public company — to its directors including any managing or whole time director or manager.
Section 198 (4), as amended in 1988, provides that if in any financial year a company has no profits or its profits are inadequate, the company shall not pay its directors by way of remuneration any sum except with the approval of the central government.

According to last fiscal’s annual report, managing director M R Rao was paid Rs.1.48 crore while CFO S Dilli Raj was paid Rs.1.01 crore. Another three employees get over Rs.5 lakh a month.

SKS’ chairman Vikram Akula gets about 1% of the profits and for the year ended March 2011, he was paid about Rs.1.75 crore.