The takeover battle for the Central Depository Services Ltd (CDSL) has taken a new twist with the resignation of MR Mayya, who on Friday stepped down as chairman of the listing committee of the BSE. Mayya will, however, remain an independent director on the CDSL board.
This is the second high profile exit from BSE in less than a month. Earlier, Jagdish Capoor had stepped down as chairman of the BSE board, citing poor health. However, people familiar with the development attribute Capoor?s exit to sharp differences among BSE board members over stake hike in CDSL and the way Marketplace Technologies was converted into a100% subsidiary of BSE.
Speaking over the phone, Mayya confirmed his resignation but denied any differences. The grapevine has it that Mayya was unhappy with the way BSE interfered in the independent functioning of CDSL. The last straw for him was the stiff opposition to the depository?s plans to acquire new office space.
This decision was unanimously approved by the CDSL board in November.
After that a sub-panel—comprising MR Mayya, chairman and independent director SS Thakur, managing director VV Raut, BSE nominee Prakash R Kacholia and Bank of India nominee A Kuppuswamy—approved the proposal to buy 43,000 sq ft in the Ruby Mills compound for Rs 65 crore. Then BSE did a volte-face, terming the move as unnecessary expenditure. This took the CDSL top management by surprise as it had paid a token advance of over Rs 1 crore for the property. CDSL apparently wants to move out of the BSE premises, since free movement was becoming a problem there with multiple security checks. Further, it could reduce costs ? it pays Rs 2.5-crore rent to BSE a year.
The CDSL board, which met on Friday, will meet again next week to finalise whether to go ahead with the real estate deal. CDSL board members have apparently asked for more details about the deal, including a cost-benefit analysis.
According to a CDSL board member, more than the real estate, the real fight is over the control of CDSL. The conflict started after the CDSL management, including some BSE board members, opposed the BSE proposal to raise its stake in the depository to 51% from 36.6%. Several CDSL shareholders are against BSE hiking its stake, as they fear CDSL will lose some of its key members to the rival depository, if it becomes a subsidiary of BSE. Out of the 498 depository participants registered with CDSL, around 120 are exclusive members of the National Stock Exchange. But a 51% stake in CDSL will boost the valuation of BSE, which is mulling an IPO. CDSL valuation, according to experts, is between Rs 800 and Rs 1,200 crore.