Shilpa-Raj stake is legitimate :RR

After questions were raised about why they're not mentioned in ownership documents for the Rajasthan Royals, Shilpa Shetty and husband Raj, along with their co-owners, have said they're legitimate stakeholders in the Jaipur team of the Indian Premier League (IPL).

On Monday, Shashank Manohar, president of the Board of Control forCricket in India (BCCI), said that the parentage of the Royals seems uncertain. "We are asking Modi, how can he sign an agreement with A when the bid came from B. Modi made a statement that the entire world knows who the shareholders are but the fact is that not even the Governing Council members know about Rajasthan Royals. I did not find the names of Shilpa Shetty and Raj Kundra in the papers and they claim to be stakeholders."

An alarmed Shilpa Shetty tweeted on Monday "Woke up & heard on TV that we're not co-owners of RR! There's no doubt Raj is a stake holder & I'm the brand ambassador."

Forty per cent of the Royals franchise is owned by Suresh Chellaram, Modi's wife's brother-in-law. The board says that if shares were transferred to Shilpa and her husband after they invested in the Royals, no transfer fee has been paid.

Here's the full statement from Rajasthan Royals:

Rajasthan Royals would like to clarify certain misconceptions about the franchise, which have been raised through the media.

The Rajasthan Royals franchise bid was successful, with full compliance of BCCIguidelines, in a process conducted with the committee members of BCCI in January 2008. Full details of the consortium bid structure and the way the company would be set up were contained in the original submission to the BCCI in January 2008. The structure has been completely transparent and in accordance with regulatory guidelines ever since.

The corporate structure was established in accordance with the details provided in the bid submission shortly after the bid. It was not established prior to the bid, as we obviously did not know if the bid would be successful. Moreover, the time allotted between the Invitation to Tender (27 December 2007), and the bid submission date (23 January 2008), would not have allowed sufficient time to incorporate the intended structure with an Indian entity.

The investors agreed to submit the bid using a consortium, led by UK-based Emerging Media (IPL) Ltd. The other entities in the consortium were disclosed in the bid submission documents.

Subsequently, on 8 March 2008, an Indian company Jaipur IPL Cricket Pvt Ltd was incorporated, as detailed in the bid submission. We then executed the franchise agreement on 14 April 2008. The ownership of the consortium did not change between the award of the bid on 23 January 2008 and the signing of the franchise agreement on 14 April 2008.

As part of our strategy to broaden our shareholder base, in February 2009 Kuki Investments Ltd (Raj Kundra and Family) acquired an 11.7% stake in EM Sporting Holdings Limited, the parent company of Jaipur IPL Cricket Pvt Ltd, which was fully disclosed to the BCCI/IPL.

According to the BCCI/IPL rules, the IPL was entitled to 5% of the increase in the pro-rata value of the franchise. In February 2009 the Rajasthan Royals contacted the BCCI to agree the precise definition, to agree the amount that needed to be paid, and we are still awaiting a response. For absolute clarity the payment has been fully accrued for within our accounts.

The current shareholders of EM Sporting Holdings Limited, who all have multiple business interests and independent means, are as follows: Emerging Media (IPL) Ltd (Manoj Badale - 32.4%), Tresco International Ltd (Suresh Chellaram Family - 44.2%), Blue Water Estate Ltd (Lachlan Murdoch - 11.7%) and Kuki Investments Ltd (Raj Kundra & Family - 11.7%). There are no other shareholders.

In accordance with regulatory filings, we subsequently volunteered to make a full disclosure application (in July 2009) through the Government's FIPB (Foreign Investment Promotion Board) process. The relevant information submitted in that application, including details of the structure, now appears to be publicly available. Our application was not initially accepted due to a miscommunication of submission timings. Our subsequent application in January 2010 has not been rejected. We are well advanced towards fulfilling the procedural steps and additional information requests necessary to satisfy the FIPB.

Rajasthan Royals have always conducted themselves with integrity and look forward to co-operating with the BCCI to ensure continued public support for the IPL.