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Commentary

Sahara Exits Cricket: Posturing Or Court Order?

The Subrata Roy led Sahara group, in a press release, has decided to sever all ties with the BCCI, India’s leading private cricket management body. They will no longer be the Indian team sponsor and will give up the IPL Team (Pune) that they had recently bought. The official reasons are that they have been sidelined in decision making, that rules were twisted to other IPL teams’ benefit, that they didn’t get a lot of what they asked for and considered fair, and that BCCI is getting to be quite arrogant and biased.

That might all be true, and this might indeed be posturing to try and get the BCCI a notch down.

But there’s another story behind the scenes. On Jan 20, 2012, the Supreme Court ordered Sahara to either give a bank guarantee or mark “unencumbered, sequestered immovable property” under attachment of the court. A SEBI order found Sahara in violation of the securities laws, and they had recommended the return of all the money taken as “optionally convertible debentures”. According to some articles, the money involved could be as high as 17,000 cr. Much of this has been pushed into real estate, but the situation there is murky – some of the properties are mortgaged elsewhere, some others only include development rights (not land ownership) and so on. The “unencumbered” piece of the SC order means Sahara needs to find real money. The supreme court has given Sahara three weeks.

Now three weeks from Jan 20 is Feb 10, 2012 – the coming friday. The exit-from-cricket announcement does free some cash, and the timing is very convenient. Just saying.