Debt-ridden Deccan Chargers' attempt to find a buyer ended in an anti-climax today with the IPL team rejecting the only bid they received, throwing the future of the beleaguered franchise into uncertainty.
Deccan Chronicle Holdings, the owner of Deccan Chargers, reportedly received a bid of Rs 900 crore from PVP Ventures Limited, a Hyderabad-based company engaged in urban infrastructure and financing movies, but surprisingly chose to reject it at the auction as it considered the price and terms unacceptable.
The BCCI has now been forced to take a decision on the fate of Chargers at its Working Committee meeting here on September 15.
"The price and terms of payments were not acceptable to Deccan Chargers. The BCCI assisted the Deccan Chargers and we also looked at the eligibility criteria, whether they are fit and proper.
"We found that the party was acceptable to us. After that it was between Deccan Chargers and the bidder, there the BCCI was not involved. But they informed us that the price and terms were not suitable, so they didn't accept it," BCCI President N Srinivasan told reporters.
Asked if a new tender will be floated since the lone bid has been rejected, Srinivasan said, "You have to ask Deccan Chargers, now it's upto them. The franchise is on (exist). The BCCI has issued a notice to the franchise to clear certain defects. We have given them some time, but that is between BCCI and the franchise."
Although there was no official word from either the BCCI or the franchise, it is learnt that the bankers played a significant role in rejecting the only bid.
The development, however, has not gone down well with the BCCI which was keen to resolve the issues surrounding the franchise early and there was a strong indication that Deccan Chargers' contract could be terminated.
The BCCI later issued a press release and said the Board had no role in Chargers' decision to reject the bid.
"The bid that was received by Deccan Chronicle Holdings Limited met the BCCI's eligibility and suitability criteria. The bid was then reviewed by Deccan Chronicle Holdings Limited who, in its discretion and with no role being played by BCCI, rejected the bid on the basis of the payment terms offered by the bidder," BCCI Secretary Sanjay Jagdale said in the release.
"The Invitation to Tender that was announced on 6 September 2012 by Deccan Chronicle Holdings Limited, under the aegis of BCCI, concluded today under the observation of Mr. Narvekar, appointed by the Mumbai High Court," said Jagdale.
A top BCCI official indicated that the Chargers' contract could be terminated at the Working Committee meeting and a new tender could be floated. There was also a possibility that the PVP company could be given the team.
"We will discuss the entire issue now and see what can be done. It is now up to the Working Committee to take a final decision on the issue," the official said.
Another top BCCI official expressed surprise that the bid of Rs 900 crore was rejected by Chargers.
"We are very surprised that a bid of Rs 900 crore plus has been rejected by Chargers. We thought that for a company that is in financial mess, the offer was a good one as it would have helped them clear their players' payment from the last edition. I guess they are being governed by the banks and that is the reason for rejecting the offer," the official said.
On what will be the next step for the BCCI, he said, "We need to wait till 5pm on September 15 when the time-frame of one month given to Deccan Chargers ends. If they don't pay the players' salaries, obviously the team would cease to exist. In any case they did a very wrong thing by mortgaging a BCCI property (IPL team) to the bank."
According to IPL constitution, the BCCI has right to encash the bank guarantee and pay the players' salaries from it. There is a precedent when Kochi Tuskers Kerala team was disbanded and BCCI encashed the bank guarantee.
Deccan Chronicle Holdings purchased the Hyderabad franchise for Rs. 428 crore in 2008. At the auction, the base price was said to be around Rs 750 crore.
The winning bidder had to meet BCCI's eligibility criteria and other requirements. This was the first time an entire IPL franchise has been put on the block by its owners, although Rajasthan Royals sold a small stake in 2009 to the actress Shilpa Shetty and her husband Raj Kundra.
According to the tender notice, which had appeared a few days' back in national newspapers, "under this invitation to tender issued by DCHL, the winning bidder will acquire from the DCHL on an "as is where is" basis the right to own and operate the IPL team currently known as Deccan Chargers, which is and will continue to be based in Hyderabad and which competes in the Indian Premier League and which has the opportunity (if applicable and subject to qualification) to compete in each and any CLT20 which is staged from 2013 onwards".
The term "as is where is" means that the new buyer will have to use the name Deccan Chargers and will have to clear the liabilities of the current owner.
According to the IPL constitution, five per cent of the bidding amount will be acquired by the BCCI.
Earlier in June, DCHL had appointed investment banking institution, Religare to find a potential buyer but they were unable to find one, who would readily buy the team with its financial liabilities.
PVP Ventures Group is owned by Potluri Vara Prasad, a successful entrepreneur having interests in infrastructure, movies and financing.
He was named as accused number 19 in the alleged disproportionate assets case against Y S Jaganmohan Reddy.
The group has interests in realty, media and entertainment. PVP Ventures Limited, one of the group companies was formed via a takeover of SSI Ltd in Chennai on February 27, 2007 resulting in a group with assets in excess of USD 300 million and poised to be one of the fastest growing firms in South India.
Prasad, a mechanical engineer by education, is an influential film financier and the maker of the recent bilingual Tamil and Telugu film 'Eega' (Housefly) that is said to have grossed more than Rs 125 crore.
He floated a couple of companies in USA and UK and later successfully sold them for good profits.