India Cements gets board approval to demerge CSK

The hive off would help the new sport subsidiary to expand operations

In line with the company's restructuring plans to focus on its core business of cement manufacturing and sales, India Cements' Board of Directors today approved a proposal to demerge its Indian Premier League (IPL) franchisee Chennai Super Kings (CSK) into a wholly-owned subsidiary.

With the hive off, CSK could also leverage its potential to grow, according to sources close to the development. The company, in an announcement today said that the effective date of transfer will be January 1, 2015, subject to necessary approvals.

Sources said that the hive off would help the company to focus on the core business along with expand the CSK brand and its operations. The brand, which has been working on becoming a popular brand for all seasons, unlike the other teams which are active during the season of IPL. With the hive off, it could increase marketing of merchandise and introduce more products.

Besides, it could also look at looking at other sports also. It may be noted that N Srinivasan, managing director of India Cements has interest in various sports and games categories including cricket, golf and chess and the company has several activities to support various sports items.

Another possibility is to add a partner into the sports business, which could happen eventually. It could look at such an opportunity also if needed, after conducting a proper valuation of the sports subsidiary, they added.

India Cements has said that CSK has helped the company to build its brand image across the country, especially in the states of Western markets.

The cement major bagged CSK for a total consideration to operate the franchise for about $91 million, payable over a period of ten years to BCCI in equal installments commencing from 2008, the year India Cement bid Chennai franchise.

CSK has clocked a revenue of Rs 166 crore in 2013-14. The franchise gets revenue shared by BCCI-IPL from the sale of media rights and sponsorship income. Besides local revenue like gate collections, team sponsors, uniform sponsors etc.

CSK has sponsors like Aircel, Gulf oil, GST global. CSK won IPL trophies in 2010 and 2011 and IPL Champion League in 2010.

Since 2013, CSK is also organising CSK Super Cup , a multi-sport inter corporate tournament. It covers chess, cricket, table tennis, badminton, athletics, snooker.