"We are saddened by the development of a negative environment surrounding the aid programmes of a charity to further the political gain of some elements. We don't want the Superstar (Rajinikanth) to be subjected to an uncomfortable and embarrassing situation," Lyca's Gnanam Foundation said.
The actor, currently filming "2.0" produced by Lyca, was slated to hand over houses to 150 displaced Tamils at an event in Vavuniya in North Sri Lanka on April 9, built by the foundation.
"Consequently, it is with profound regret that we inform you that the events planned on 9th of April in Jaffna and Mr Rajinikanth's visit to Sri Lanka have been cancelled," the foundation said in a statement.
However, Lyca Gnanam Village will be officially opened as planned on April 10, 2017 and the houses will be handed over to the recipients, it added.
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Some of its business competitors were still continuing to make such allegations, it claimed.
It also took exception to "some Tamil Nadu politicians who repeatedly speak out in support of those who are attempting to gain petty advantage by spreading rumours like these."
"We suspect that these politicians are repeatedly spreading these fabricated and baseless rumours due to their obligations to our business competitors," it charged, but did not name anybody.
"We humbly request that those who are concerned about and support the Sri Lankan Tamils let us continue our efforts to alleviate the suffering of our people," it added.
"Our motive is not to oppose Rajinikanth or Lyca or seek
publicity. If Lyca thinks so, it is sheer imagination," VCK founder Thol Thirumavalavan said.
Lauding Rajinikanth for his "maturity" in understanding the issue in the right context, he asked what kind of political mileage one could derive out of this issue.
The former MP said there was no need for him to take a stand opposed to Lyca and that he was never opposing their rehabilitation efforts for Tamils.
VCK only did not find the present situation "conducive" for the actor to visit Sri Lanka, Thirumavalavan said, adding, his party opposed it as it wanted to ensure Lankan government did not gain advantage out of the event.
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Later Velmurugan also denied he was raking up the issue for publicity.
He said it was Lyca which was trying to gain publicity by "dragging" politicians like him in the issue.
"Actually, we had requested Rajinikanth through a close friend, asking him to not to attend the event as it would be politicised by the Lankan government for its own advantage. We never had anything to do with Lyca," he told