Losing the day job

N Srinivasan's commitment to corporate governance is shaky

N Srinivasan, president of the Board of Control for Cricket in India, and vice-chairman and managing director of Chennai-based India Cements, told journalists in a combative news conference on Sunday that he would not resign as head of the BCCI. This is in spite of the fact that his son-in-law Gurunath Meiyappan has been remanded in police custody till May 29, and the evidence of his involvement with a betting syndicate appears to be mounting; Mr Meiyappan has been "suspended" by the BCCI from involvement in cricket in general and the Chennai Super Kings team in the Indian Premier League (IPL) in particular. The Chennai Super Kings is, of course, owned by Mr Srinivasan's India Cements; but Mr Srinivasan insists that his son-in-law was merely an "enthusiastic" supporter of the team. There is considerable evidence against that claim as well, not least the fact that Mr Meiyappan was present when IPL players were being auctioned - and, in any case, if he had no involvement with the Chennai Super Kings, why did the board feel the need to "suspend" him?

Given Mr Srinivasan's brazen refusal to resign, it becomes difficult to force him out. A three-quarters majority of the BCCI's senior members is needed to dismiss him, and it became clear during the Sunday meeting at Kolkata that the numbers weren't forthcoming. However, what has also become even more clear is that Mr Srinivasan's grasp of such matters as conflict of interest and transparency is tenuous. But he is not just the head of the BCCI, a nominally independent society registered under a Tamil Nadu law; he is also the effective head of a major listed company, India Cements, with a turnover of Rs 4,200 crore. 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? Mr Srinivasan personally controls 0.14 per cent of the company; but, through various family members and trusts, the promoter's share of India Cements is 28 per cent. Surely the public shareholders should be asking: what is his commitment to corporate governance? After all, the Chennai IPL team was a company property; what was the vice-chairman's son-in-law doing apparently pretending to run it? Foreign institutional investors, especially The Bank of New York Mellon, own 31.5 per cent; institutions controlled by the Indian state own another chunk of just over 15 per cent. Isn't the evidence of Mr Srinivasan's lack of commitment to the norms of corporate governance raising questions for them?

Remember, it is not as if India Cements is doing very well financially. Quite the opposite, in fact. It has lost more than 20 per cent in value over the past week, a Rs 500-crore loss. Last Monday, it reported a fall in net profits of almost 60 per cent in the final quarter of the 2012-13 financial year. This caps an awful five years in which India Cements has lost 60 per cent of its value. To set that in context, the cement sector as a whole gained about 50 per cent in value over the same period. The performance of India Cements is unlikely to inspire its shareholders. The BCCI may be stuck with Mr Srinivasan, whatever his performance. But surely India Cements need not be.