India Cements stock down 17% since IPL probe

India Cements stock down 17% since IPL probe

The markets have reacted adversely to the India Cements stock following latest allegations of spot-fixing and subsequent arrest of three players of the Rajasthan Royals IPL team and a number of bookies over the past week. Since May 16, the stock has fallen over 17 per cent when its closing price was Rs 89 a share, according to exchange data.

On Wednesday, the possibility of the Mumbai police questioning the role of son-in-law of India Cements Vice-Chairman & MD and Chennai Super Kings (CSK) owner N Srinivasan (who also heads the Board of Control for Cricket in India or BCCI) in connection with the ongoing spot fixing controversy negatively impacted the share price of the company. The stock closed at Rs 76.05 on Wednesday on the BSE, 10.16 per cent down from its previous close, but well above its 52-week low of Rs 70.90.

India Cements executives were not available for comment. Srinivasan's son-in-law Gurunath Meiyappan is currently Team Principal and CEO of CSK, while his Roopa is a director on the board of India Cements.

India Cements had bought CSK in 2008 for a consideration of $91 million to be paid to the BCCI over 10 years in equal instalments starting from 2008, the first edition of the Indian Premier League (IPL). The venture has been a money spinner for the company, apart from giving it much needed brand visibility to markets in northern and western India, as it is predominantly a South India-based company.

At a presentation in July 2009, India Cements had said that according to the 10-year media rights contract signed with BCCI, CSK would get Rs 24 crore for the first five years and Rs 48 crore for the next five years.

Besides, other streams of revenue from the cricketing venture include gate money, merchandise sales and sponsorship.

The company’s market capitalisation currently stands at Rs 2,336 crore. The company's Joint President - Corporate Finance, V M Mohan had said last August that IPL contributed about Rs 20 crore to the company's EDITDA in the first quarter of FY2012. An analyst at financial services firm Angel Broking, on condition of anonymity, said, “The annual EDITDA contribution is around Rs 30 crore.”

The March 31, 2013 shareholding pattern of India Cements, which reported 59.52 per cent decline in its fourth quarter (2012-13) net profit at Rs 26.28 crore year-on-year, shows that promoters including Srinivsan held 28.23 per cent of the equity, while foreign institutional investors held 31.57 per cent.

Mutual Funds and insurance companies held 15.17 per cent.

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