New Delhi: India Cements transferred the franchise rights of IPL team CSK at a net asset value of Rs 7.83 crore to a wholly-owned subsidiary, Chennai Super Kings Cricket Ltd (CSKCL) but sold its entire stake in the arm to another trust for just Rs 5 lakh.
The BCCI approved the transfer of the franchise rights to CSKCL subject to the condition that India Cement provided a parent company guarantee that subsidiary would meet all the obligations under franchise agreement of IPL.
The cricket board also approved the sale by India Cements of its entire stake holding in CSKCL aggregating to 50,000 shares of Rs 10 each to a trust called India Cements Shareholder Trust for just Rs 5 lakh.
"During the quarter under review (March 2015), the franchise rights in Indian Premier League (IPL) were transferred to Chennai Super Kings Cricket Ltd (CSKCL), a wholly-owned subsidiary at its net asset value as at March 31, 2014 as per books at Rs 7.83 crore," India Cements said in a filing to the BSE.
It said BCCI approved the transfer subject to the condition that ICL (India Cements Ltd) shall provide a parent company guarantee for "guaranteeing performance/compliance by CSKCL of the obligations of the franchise under the franchise agreement.
Also, ICL and CSKCL were required to enter into a tripartite "Novation Agreement" with BCCI-IPL "whereby from the effective date, CSKCL shall inter alia step into all obligations of ICL under the Franchise Agreement without any further act or deed", it added.
The company further said its board of directors in their meeting held of February 23, 2015 had "approved the sale of entire stake holding in CSKCL aggregating to 50,000 shares of Rs 10 each to a trust called India Cements Shareholder Trust aggregating Rs 5 lakh."
It further said three of the independent directors of India Cements are the trustees of the trust.
"The trust has been established for the purpose of distribution of the said shares, in due course, purchased from the company by the trust to all non-promoter shareholders of India Cements Ltd," it added.
Moreover, the company added: "The shares that the promoters are entitled to shall be allotted to another trust established for the benefit of ex-cricketers of ICL."
In January Supreme Court barred India Cements Vice-Chairman & Managing Director N Srinivasan, who was then President of BCCI, from contesting any polls of the cricket board unless he gave up ownership of the IPL team.