India Cements Ltd.’s shares declined to a two-week low after a panel probing betting allegations suspended the company’s cricket franchise for two years.
The stock fell 3.8 percent to 90.70 rupees on Tuesday in Mumbai, after tumbling as much as 6.5 percent earlier. A committee comprising three former Supreme Court judges led by R.M. Lodha released a report in New Delhi, indicting some individuals involved in the Indian Premier League for misconduct and bringing disrepute to the game.
Chennai Super Kings, a franchise owned by the cement maker based in the southern Indian city, was suspended for two years, while the betting-accused Gurunath Meiyappan, a son-in-law of India Cements Vice Chairman N. Srinivasan, was handed a life ban from all cricket-related activity.
“The verdict will impact the valuation of India Cements,” Chokkalingam G., managing director at Equinomics Research Pvt., said by phone on Tuesday. “The real and the potential value of the company will go down. Their core business is also not doing so great.”
Sales at India Cements have dropped in six of the last eight quarters, while the company reported a group loss in the financial year ended March 2014. Profit had declined in four of the prior five years, data compiled by Bloomberg show. The stock’s valuation fell to 9.3 times projected 12-month earnings last month, the cheapest since February 2014.
Mumbai police arrested Meiyappan in May 2013 on charges of placing bets on IPL matches, a practice that’s illegal in India. He was a member of the team managing Chennai Super Kings.
Srinivasan’s office said he was traveling and he couldn’t be contacted on his mobile phone. India Cements spokesman Balu V. Balasubramanian declined to comment in a text message.
The committee also suspended Rajasthan Royals, a franchise controlled by Raj Kundra, for two years after finding the U.K.- based businessman guilty of misconduct. He was banned for life from all cricket-related activity as well.
The Board of Control for Cricket in India is “committed to ensuring transparency and cleansing the sport in order to restore the faith and confidence of millions of cricket loving people,” Chairman Jagmohan Dalmiya said in a statement.
The Indian Premier League, popularly known as IPL locally, uses the short-format Twenty20 game in its annual tournaments involving as many as eight teams. Chennai Super Kings featured Indian national team’s captain Mahendra Singh Dhoni as its lead player, while Rajasthan Royals included stars such as Australia’s Shane Watson.