MUMBAI: RPSG Group chairman Sanjiv Goenka has defended the mammoth Rs 7090 crore purchase price to secure the Lucknow franchise in the Indian Premier League, the general industry sentiment that his company overbid massively notwithstanding.
“I don’t think it’s a high value. It is a fair value. One is bound to face an operating loss but one doesn’t bid these numbers based on passion. There is an economic and scientific decision behind bidding these high numbers,” Goenka told NDTV.
“Today I am getting an IPL team for a net present value of Rs 2,100 -2,250 crore now… that is the way I look at it. With maybe year four or year five, with the permission of BCCI, I could actually dilute 25%. By that time, I expect the valuation to be Rs 10,000 crore and if I dilute 25% at a value of Rs 10,000 crore, the entire thing becomes free for me,” he told the channel.
Investors did not quite share Goenka’s optimism though, as the firm’s share price crashed 5.73% to Rs 797.25 per share at BSE at end of the trade on Tuesday.
Goenka chose the Lucknow franchise over the Ahmedabad one as he felt he could connect with the people of the north Indian state where his company have operations.
“We have operations in Uttar Pradesh. We do power distribution there. We have a very big presence in the northern state. Closer by in Chandigarh, we have the power distribution rights. So for North India, that becomes like a hinterland,” Goenka told Cricbuzz in an interview.
The RPSG Group also owns the Indian Super League franchise ATK Mohun Bagan and have been spending big on the team ahead of the new season.
