Srinivasan's return to BCCI may not be easy.
© AFP
India Cements shares fell as much as 12 per cent on Tuesday ahead of a key Supreme Court hearing that may decide the fate of its Indian Premier League team, Chennai Super Kings. Suspended BCCI president N. Srinivasan is the managing director of India Cements. He is among 13 persons who were probed by a court-appointed inquiry committee investigating allegations of corruption in IPL 2013.
Srinivasan has been slammed by the Supreme Court for conflict of interest. The top court has taken exception to the fact that he heads Chennai Super Kings as well as the BCCI. CSK is the most successful team in the IPL, having won the title twice. Srinivasan's son-in-law Gurunath Meiyappan has been indicted by the probe panel for betting. Meiyappan has been identified as a CSK team official. According to IPL rules, CSK can face termination. (Srinivasan Slammed by Supreme Court for Conflict of Interest | IPL Spot-Fixing: A Timeline )
Financially, CSK is not very important for India Cements. During 2013-14, it contributed just Rs 166 crore in revenues, which is just 3.7 per cent of India Cements' total revenue of Rs 4,497 crore during the fiscal year. However, the termination of CSK will have a negative impact on India Cements brand, analysts say.
A possible termination may also lead to potential one-time loss for the company. India Cements had acquired CSK in 2008 for a total consideration of $91 million (nearly Rs 550 crore at 60 rupees per dollar). This money is payable over a period of 10 years to BCCI in equal instalments. (Meiyappan Indicted for Betting )
The termination of CSK will also put an end to the ambitious growth plans India Cements has planned for its cricketing franchise. In September 2014, India Cements had announced a demerger of CSK in to a wholly-owned subsidiary. (Tendulkar Tight-Lipped Over Mudgal Report )
India Cements' vice-chairman and MD Srinivasan reportedly nurtures the ambition of turning CSK in to a billion-dollar entity.
For Srinivasan, who leads the promoter group in India Cements with a 28.23 per cent stake, the stakes are higher because the Supreme Court will also decide whether he can return as the boss of BCCI, the top body that controls all cricketing activities in the country. (BCCI AGM Scheduled on December 17 )
As of 12.50 pm., India Cements shares were down 10 per cent at Rs 93.90 on the BSE. The stock underperformed the broader Sensex, which traded 0.5 per cent lower. The Supreme Court hearing begins at 2 PM.
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