Sun TV charges into Deccan, bags Hyderabad’s IPL franchise

B L :HYDERABAD/CHENNAI, OCT. 25:2012

To pay Rs 85 crore a year for five years

 

The Kalanithi Maran-owned Sun TV Network, Chennai-based media and entertainment conglomerate, has entered cricket’s smash-hit, limited over, T20 format IPL Championships. On Thursday, it won the Hyderabad franchise with a bid of Rs 85.05 crore per year.

The decision by the Board of Control for Cricket in India (BCCI) could officially mean curtains

 for Deccan Chargers, owned by the Hyderabad-based Deccan Chronicle 

Holdings Ltd (DCHL), publishers of Deccan Chronicle.

The IPL Governing Council, which met in Mumbai on Thursday to open the bids for a new IPL franchise, selected Sun TV. The next bidder in line was PVP Ventures with Rs 69.03 crore. Incidentally, the Hyderabad-based PVP Ventures, which is into film financing and realty, reportedly offered nearly Rs 1,000 crore to buy out the beleaguered Deccan Chargers franchise.

 In a statement, the BCCI said the franchisee fee offered by Sun TV represents a premium of over 100 per cent of that paid by Deccan Chronicle for the Hyderabad franchise in 2008. The present contract for the franchisee is for five years, which would mean Sun TV will have to pay around Rs 425 crore for the period.

Sun Group CFO SL Narayanan said getting into the IPL would not strain group finances. “We have done our math carefully. If anything, the IPL operations will be hugely free cash flow positive over the five-year period starting with the season of 2013,” he told Business Line.

The Deccan Chargers, winners of the second edition of the IPL, ran into trouble with its owner hit by a financial crisis. And, it was put up for sale. Though PVP Ventures emerged the lone bidder, Deccan Chronicle rejected the claim.

After a hectic search for a buyer, DCHL announced on October 12 that Kamala Landmarc, a Mumbai-based realty firm, would buy the team. However, as it failed to furnish the mandatory bank guarantee of Rs 100 crore by 5 p.m. on that day, as stipulated by the Bombay High Court, the BCCI announced the termination of the Chargers team.

On September 15, the Cricket Control Board floated the tenders for a new IPL franchise after terminating the Deccan Chargers’ contract.

In its regulatory filing to the stock exchange, Sun TV has said the franchise will be for as long as the league continues. So, after five years, an amount equal to 20 per cent of the franchisee income received in that year has to be paid in four quarterly instalments to BCCI.

The share price of Sun TV today lost 3.5 per cent to close the day at Rs 343.65 on BSE with over 1.97 lakh shares changing hands.

Bank can freeze account into which it mistakenly credited money: High Court

B L : SMuralidaran :25th October 2012

Andhra Pradesh High Court in Ganesh Cotton Traders, Guntur, v. The General Manager, UCO Bank, Kolkata & Others.

 

When a bank inadvertently omits to upload the stop payment instruction issued by its account holder and the cheque is thus credited to the account of the payee despite such instruction, the bank is well within its rights to freeze the account of the payee till he returns the money with interest.

This was the view taken by the Andhra Pradesh High Court in Ganesh Cotton Traders, Guntur, v. The General Manager, UCO Bank, Kolkata & Others.

 One Lakshmi Ganesh Textiles (P) Ltd had issued a cheque in favour of the petitioner for some Rs 24 lakh for which a stop payment advice was issued to the bank due to dispute in quality and quantity of goods purchased from it. It was a post-dated cheque and the stop payment advice was received and acknowledged by the bank well before the date mentioned on the cheque.

 It was therefore clearly the bank’s fault that it did not upload the stop payment instruction to the system as a result of which the cheque was cleared on presentation by the petitioner’s bank. Nearly half of the amount thus credited was used by the petitioner in the course of his business. It was at this point that the respondent bank wrote to the petitioner’s bank and got the account of the petitioner frozen.

The AP High Court sustained this action of the respondent bank on the ground that on issue of stop payment instruction, the money did not belong to the payee in the first place in terms of section 72 of the Indian Contract Act, the negligence of the bank notwithstanding. It went on to hold that a person into whose account a wrong credit is made is duty bound to return it along with interest.

Banks may have to put up with rising NPA levels for another year: Bankers

BL :Oct 21,2012

Banks may have to put up with rising NPA (non-performing asset) levels for another year, as grim economic conditions would continue to affect the profitability of companies across sectors such as power, steel, telecom, mining and textile. 

However, the situation is not yet “alarming” for Indian banks, as they are sufficiently cushioned by capital adequacy. This was the dominant view at a panel discussion organised by the Indian School of Business on the banking sector.

R. Venkatachalam, Deputy Managing Director of State Bank of India, felt the worst is over as far as NPAs are concerned for the Indian banking industry. “There are indications of NPA levels dipping and that we are on a recovery path,” he said.

He was, however, countered by Piyush Agrawal, MD and Country Risk Head of Citibank India, P. Rudran, CEO of Asset Reconstruction Company of India Ltd, and Ehsan Syed, Director, India Ratings and Research, a Fitch Group company.

Piyush made it clear that he was not “as bullish” as Venkatachalam on this, adding that the industry may sea “some real (positive) action” after 12 months. 

Rudran was also emphatic that the worst is not yet over. “See the power sector — all gas-based projects are suffering. The telecom industry has not yet become an NPA, but the time is not far off. Unless the economy shows positive signs of improvement, the NPA levels will not come down,” he said.

The bad assets with Indian banks have doubled in the three years from Rs 68,000 to Rs 1.37 trillion, while restructured assets trebled during the period from Rs 75,000 to Rs 2.18 trillion.

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