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Quess Corp to end JV pact with East Bengal FC

Abhishek Law Kolkata | Updated on July 30, 2019 Published on July 30, 2019

Bengaluru-based Quess Corp is planning to exit its investment in the century-old Kolkata-based football club, East Bengal. Quess has been the title sponsor for the club for over a year now, and owns a majority stake in it through a joint-venture arrangement. The exit is likely to happen in the next six to nine months.

East Bengal FC is one of the legacy football giants in India and has participated in all major tournaments, except the Indian Super League. The exit plan, which has already been put in motion, was confirmed by the company’s Chairman and Managing Director, Ajit Abraham Isaac, during an earnings call last week.

“We (have) already started talking to our other relevant stakeholders to monetise this asset (investment in East Bengal). We have also been talking to a few possible investors. We are confident that by the end of this season, we will most probably not be there in that club,” he said, responding to a query.

A football season in India begins from August and continues until May of next year.

“By the next two to three quarters, we will be out of this arrangement,” he added. It is not clear whether the exit will be complete or partial. The CMD remained unavailable for comments regarding the details of the exit plan.

Quess East Bengal FC, in a late evening Instagram post, however, said: “Some news reports have been published about the continuity of our relationship with EBFC, about which more clarity will emerge.”

The NSE-listed Quess Corp, in 2018, announced that it will hold a majority stake — 70 per cent — in a joint venture between itself and East Bengal football club.

The club brought in Quess to improve finances and shore up merchandising. However, there have been reports over dissatisfaction between Quess and the East Bengal club’s top brass over participation in football tournaments and other issues.

The company ran the football team last season and made considerable investments, to the tune of ₹20 crore, sources said. Attempts have also been made to shore-up sponsorship income; already, three sponsorships have been signed this year, sources said.

Loss-Making

According to the earnings call, Quess continues to make losses through its investment in the club. An investor presentation by the company said that losses have been reduced to ₹3.80 crore in Q1 FY20 (April to June), as against the ₹11.80 crore in Q4 FY19 (Jan-March).

“When we invested in East Bengal Club, we had a three-year investment horizon there. So this is the second year,” Issac said during the call adding, “so our idea for the current year is to contain our losses and make it as minimum as possible. And at the same time look for an exit from this investment.”

Published on July 30, 2019
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