Why Srinivasan should step down from India Cements too

Is there any reason for N Srinivasan to remain vice-chairman and managing director of India Cements after all the controversies surrounding the IPL?

According to an editorial in the Business Standard, there is nothing, the whole cricket spot fixing issue has brought to focus Srinivasan and India Cements’ dubious corporate governance practice.

For one, his claims that his son-in-law Gurunath Meiyappan was only an enthusiastic supporter of India Cements-owned Chennai Super Kings (CSK) are hollow.

“…If he (Meiyappan) had no involvement with the Chennai Super Kings, why did the board (BCCI) feel the need to “suspend” him (from involving in cricket and in CSK)?” the newspaper asks.

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Earlier, India Cements has said in a statement that Meiyappan is not the owner or CEO/Team Principal of CSK.

“Gurunath is only one of the members (Honorary) of the management team of Chennai Super Kings. India Cements follows zero tolerance policy and if anyone is proved guilty, strict action will be taken immediately. India Cements assures full co-operation with BCCI and the law enforcement authorities,” the company had said.

But Meiyappan had presented himself as a representative of CSK. According to an NDTV report, Meiyappan had flashed a ‘Team Owner’ accreditation card of CSK whenever he wanted to use the facilities of all IPL venues.

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Hence, Srinivasan’s claim that Meiyappan was just an “enthusiastic” supporter does not hold any water. So is the statement from Indian Cements.

According to a lawyer quoted in this Business Line report, India Cements will not be able to distance itself from Meiyappan.

Technically, the company’s claims may be true. But what Meiyappan had been doing contradicts this.

In his past interviews and tweets, Meiyappan had indicated that he was very much involved with the CSK team, the report quoted a legal expert as saying.

“The question should be asked: should someone with the approach to governance that Mr Srinivasan has demonstrated in this case be running a listed company?” the BS editorial says.

And the answer definitely is no. But then, how many companies in India can claim to have a clean corporate governance record?

Investors in India Cements should be asking why was Meiyappan allowed to pretend as if he was the owner of CSK, which is actually the company’s asset.

Apart from this is another issue that raises doubts about Srinivasan’s poor governance is the conflict of interest in him serving as chief of India Cements that owns CSK and at the same as Chairman of BCCI.

This makes it clear that “Srinivasan’s grasp of such matters as conflict of interest and transparency is tenuous”, the BS says.

But are investors really bothered about such issues? Are they willing to throw such unpleasant questions at Srinivasan and India Cements?

Though there is no indication that they are, investors have pummelled India Cements shares ever since Meiyappan and Srinivasan figured in the spot-fixing scandal. The stock is down over 18 percent in the last week.

Equities expert SP Tulsian told CNBC-TV18 today that he will stay away from the stock considering the controversies surrounding the IPL and the company.

“…You may see any kind of action happening against the company. Even of you take the franchise value also, that is also seen moving in doldrums. So taking all this into consideration, as such the overall cement sector has not been doing well.”

[caption id=“attachment_822499” align=“alignleft” width=“380”] Is there any reason for N Srinivasan to remain vice-chairman and managing director of India Cements after all the controversies surrounding the IPL? PTI[/caption]

“Amongst the space, India Cements has always remained laggard. Even though I have been keeping my positive stance on the cement stocks, many of them, but even from the core business as well as the other IPL controversies going on, I won’t be taking a view on the stock,” he added.

After a week of sharp fall, India Cements shares today ended up 2.6 percent at Rs 72.25.