FIPB defers foreign equity proposal for Jaipur IPL firm

The Foreign Investment Promotion Board (FIPB) has deferred a proposal by Jaipur IPL Cricket Private Limited (JIPL) to raise 100 per cent foreign equity amounting to $5.8 million by way of issue of shares to Mauritius-based Emerging Media. The funding was to pay franchise fees to the Board of Control for Cricket in India (BCCI). JIPL operates the team, Rajasthan Royals.

Under the proposal to FIPB, JIPL wanted to issue shares to Emerging Media (EM) against payment of $5.8 million made by Badale to BCCI-IPL. The payments were to be adjusted by BCCI against the first installment of franchisee fee payable by JIPL.

FIPB at a meeting today said: “JIPL applied for 100 per cent foreign equity participation in the company by means of which EM promoter Manoj Badale intended to gain controlling stake in it. The proposal has been deferred as the Department of Revenue has opposed the same on grounds of treaty shopping. The Board has decided to wait for comments from the Department of Sports on the matter.”

JIPL is a 100 per cent owned subsidiary of EM Sporting Holdings Limited, Mauritius (EM). Four companies — Tresco International Limited, promoted by Suresh Chellaram (44.15 per cent); Emerging Media (IPL) Limited, owned by Badale (32.41 per cent); Blue Water Estate Limited, promoted by Lachlan Murdroch (11.74 per cent); and Kuki Investments Limited, promoted by Bal Krishan Kundra and Usha Rani Kundra (11.70 per cent) — account for stakes in EM.

The decision follows close on the heels of questions raised over former IPL commissioner Lalit Modi’s association with the team through his brother-in-law Suresh Chellaram. Reports have also surfaced of Shilpa Shetty and beau Raj Kundra’s names not featuring in ownership papers of the company.

If the approval came through, Emerging Media would have accounted for 99.96 per cent stake in JIPL, while 0.04 per cent would have remained with Emerging Media (IPL) as a nominee of EM.

According to FIPB sources, JIPL intimated the Board that the source of funds for the amount paid by Badale was supported by undertakings of Badale, Chellaram and Murdroch. It also furnished the details of the payments made to BCCI by EM in 2008.

The sources added that JIPL’s proposal had been turned down in October 2009 on grounds that it was unable to provide “satisfactory proof of receipt of foreign exchange”.

Revealing details, the sources said in January 2008, Badale remitted $5.05 million to IPL’s bank account as performance deposit for the bid. As the first season of IPL was to commence in March/April 2008, another $2.39 million was remitted by Badale personally to JIPL for hiring staff and bidding for the cricket team. JIPL used some of the funds to partly pay the balance it owed to IPL. The remaining amount of $0.77 million was paid directly by EM to BCCI in June 2008.