N Srinivasan chalks way out, demerges CSK from India Cements

Mumbai(PTI): Preempting SC verdict asking him to choose between BCCI post and CSK ownership, cement baron makes franchise a wholly-owned subsidiary of his company

Judgement isn’t far away. With the winter vacation over, the Supreme Court may announce its verdict in the IPL spot-fixing and betting scandal anytime now. That said, suspended BCCI president N Srinivasan has already chalked out a well-planned exit route for his company, India Cements.

The ‘plan’, not unlike the functioning of the cricket body, is complex and grand. Even as Srinivasan’s counsel repeated argued that his franchise, Chennai Super Kings, should not be penalised for the wrongdoing of his son-in-law, Gurunath Meiyappan, India Cements — which owns CSK — was allegedly busy ‘demerging’ the IPL franchise and converting it into a wholly-owned subsidiary.

Interestingly, neither the BCCI nor India Cements cared to inform the special bench of Justices TS Thakur and FM Ibrahim Kalifullah that India Cements had decided to hive off CSK, run as a division of the company, into a wholly-owned subsidiary.

Well, dna has reliably learnt that the demerger proposal was taken up for consideration by the India Cements board at its meeting on September 26, 2014. The board decided to float CSK as a new, wholly-owned subsidiary, effective January 1, 2015. The new company has been named Chennai Super Kings Cricket Ltd.

The demerger would certainly provide CSK the leverage to grow, but the big issue here is that this the apex court should have been intimated.

“This simply means that the shares of CSK Cricket Ltd can now be easily sold to any other company if Srinivasan is asked to choose between his BCCI post and CSK ownership. This certainly seems to be a back-door route to exit the franchise,” said petitioner and Cricket Association of Bihar secretary Aditya Verma.

Converting CSK into a 100 per cent subsidiary will not affect the person(s) who control the franchise, as India Cements continues to own it. This also means that the allegations against Srinivasan regarding the ‘conflict of interest’ remain as it is, but it gives India Cements increased flexibility in fund-raising even by selling a stake to some other company!

For instance, someone wanting to invest only in CSK would have earlier found it difficult as India Cements has multiple businesses in one entity. It will become simpler to sell a stake in CSK with the franchise housed in a separate subsidiary.

Verma is now planning to plead before the court to cancel the demerger and stop India Cements from selling CSK stakes to any outsider till the verdict is delivered.

Verma also cited the case of Deccan Chargers, whose contract the BCCI terminated. A new team, Sunrisers Hyderabad, then came into existence. There was some unholy alliance between the Sunrisers and India Cements because Srinivasan’s company paid Rs 60 crore to Kalaignar TV Pvt Ltd — an accused firm facing trial in the 2G scam — in 2011. This was certainly a way found by Srinivasan to put his company’s shares into another IPL franchise,” alleged Verma.

Former IPL commissioner Lalit Modi had also reportedly raised suspicions that this was Srinivasan’s helping a group by way of indirect investment for the Sunrisers Hyderabad franchise through Kalaignar TV.

Posted by on January 5, 2015. Filed under Sports World. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.