Two days ago, Sanjiv Goenka (see left) — who has business interests in power, real estate and media — jumped into the Indian Premier League (IPL) bandwagon and purchased the Pune franchise. The Street turned sour, fearing funds would flow out from CESC coffers.
In an interview with Arindam Majumder and Ishita Ayan Dutt, Goenka says no funds from any listed companies will be used for the cricket venture and the franchise makes business sense, as it gives branding opportunity to group companies. Excerpts:
The Street is apprehensive that money from your listed companies might be used for the franchise. How do you assuage the fears of investors?
It is very clear that we will not use the money of any of our listed companies to support any of our sporting ventures.
How are you going to fund the venture?
I have multiple unlisted companies that clock in profit of around Rs 500 crore.
My dividend income from listed companies is close to Rs 100 crore a year. It is absolutely not necessary to fund it from the books of the listed companies.
Just to give an example, NPCL has Rs 200 crore and Spencer’s Hotels has Rs 200 crore cash flow a year. Not that those will be used.
What will be the total expenses for the franchise?
It is very difficult to give a definite figure.... I have to pay BCCI (the Board of Control For Cricket in India) Rs 16 crore for two years, which amounts to Rs 32 crore.
Then, let’s factor in operational losses. It depends on the attendance at the stadiums. Roughly, there will be a loss of around Rs 15-20 crore. I have done my homework.
You said the acquisition makes business sense and it is not at all for vanity. Can you please elaborate?
Whatever amount I end up spending from my pocket for the franchise, I get branding. Anyway, we have an annual budget for media blitz. If we spend for cricket out of that, it will definitely help in brand building. That’s how it is a simple, conscious decision.
Can it be considered as a pre-IPO brand-building exercise for Spencer’s?
Possibly. The IPO is going to happen very soon.
You have the franchise for two years. Is it then fair to conclude that Spencer's IPO will happen in two years?
Yes, very much.
Would you be looking at other sports?
Definitely, let's see what opportunities come up. Other sporting events are emerging — tennis, badminton, kabaddi. For the immediate term, it will be football and cricket. But we will definitely expand our interests.
Like football, will you develop cricket?
Cricket doesn't need development. In football there are two elements — one is the game and the other is the philanthropy element. Cricket is a purely commercial decision.
Photograph: Reuters
