The high-profile founder of the Indian Premier League (IPL) Lalit Modi today got a fresh commitment of support, and money, from his father, industrialist K K Modi.
Modi senior, who is trustee of the Rs 4,500-crore Modi Group, said he was ready to invest money in any sports venture of Lalit Modi, even if it is a cricket property like IPL.
“I am ready to invest $100 million to whatever it takes to get going and create new properties of sports,” K K Modi said. “But Lalit has to give time. Also he cannot do anything in cricket, as that would be a conflict of interest. But, if he severes his ties with BCCI (the Board of Control for Cricket in India), I see no problem in backing him for a cricket property like IPL.”
He also said companies forming the Modi group might be sold off if Lalit Modi and his two siblings, Samir and Charu Bhartia, did not reach an agreement.
According to internal valuation, the shareholding of the Modis in the companies, including the flagship Godfrey Philips, Indo Fil Chemicals and Modi Entertainment, is worth Rs 9,000 crore.
“All the shares of each company are held through a trust and currently there are four equal beneficiaries,” said K K Modi. “I am the trustee currently. However, after I am not there, the three children have to unanimously elect a trustee in my place who will have a tenure of three years. If they cannot agree, the shares will be sold and the money divided among them equally.”
This means, Lalit Modi, who had raised a storm in the Indian cricket world by his handling of IPL, would inherit at least Rs 3,000 crore. That is enough money to buy the two new IPL franchisees of Pune and Kochi.
Modi said under the agreement, a merchant banker would be appointed to value the various companies before the sale.
The children have the option of bidding for any of these companies with their share of the money if they so desire.
The Modi family had been at the centre of a bitter battle between K K Modi and his brothers more than a decade ago. The family’s business was then divided between the brothers.
Modi said each of his children has been given permission to carry on a business they want to do on their own. They can run the business as an independent entity or merge it with Godfrey Phillips if they so desire. So, while Lalit Modi ran Modi Entertainment, which has a joint venture with fashion channel FTV, his younger brother, Samir, was into cosmetics.
Explaining the role of the family member, including Lalit, K K Modi said: “None of the children are hands-on. We leave the running of the business to CEOs and professional managers... we look at the overall direction for the group. That’s why I also get time for chamber work, my daughter does work in education and Lalit can devote time to cricket.”
K K Modi also said that the government’s recent decision to ban foreign direct investment in tobacco would not impact their partnership with Philip Morris. “Our growth will no get impacted and we have already launched the Marlboro brand in India.” Morris, which has 25 per cent equity in the company, is believed to have made an offer to buy out Modi from the company, but the deal never went through. Instead, Modi bought over 10 per cent of Philip Morris’s stake and upped his holding to over 47 per cent.
