Vikram Limaye's cricket role not good for IDFC

IDFC board should discuss issue and prepare a plan, says proxy firm

The appointment of IDFC managing director & CEO Vikram Limaye as a cricket administrator raised concerns on his ability to focus on his primary role, said proxy advisory firm Institutional Investor Advisory Services (IiAS). Investors should be concerned about the amount of time he spends on his additional responsibilities, it added.

On Tuesday, the Supreme Court named Limaye as a member of four-member team led by former Comptroller and Auditor General Vinod Rai to manage affairs of Board of Control of Cricket in India (BCCI). Rai is the chairman of IDFC. The move was part of the court's efforts to reform the administration of the much loved sport in line with recommendations of a panel headed by former chief justice of India R M Lodha.

"Vikram Limaye's recent appointment is likely to distract him from his core responsibility. Not only has he become responsible to administer the recommendations of the Lodha Panel, he has also been charged with representing the board at the ICC meeting scheduled in the first week of February 2017. Given the time commitment that this role appears to require, investors must question whether this will distract him from his primary responsibilities of running IDFC Limited, a NIFTY 200 company with a market capitalisation of over Rs 8,500 crore," IiAS said in a report.

Key management personnel (KMP) are required to devote all their time to the business: that is essential to their role and responsibilities, it added.

Since the acceptance of the additional responsibilities has implications for IDFC's stakeholders, IDFC's board should have convened to discuss this additional responsibility for the company's Managing Director and CEO, argued the proxy firm.

"Conflicted members, which includes Vikram Limaye and Vinod Rai, IDFC's Chairperson, should have abstained from the discussion. Alternatively, the independent (non-conflicted) directors should have met to assess the implications of the situation. It is not clear if any of this seems to have happened," IiAS said.

It wanted the board to clarify the board's expectation of his time commitment to BCCI and their plan to address this gap. "What happens if Limaye's time commitment exceeds their earlier expectation? What steps does the board propose to take? In the eventuality that Limaye is unable to manage both roles and chooses to take on the BCCI responsibility full time, has the board identified a successor?" are other questions that require answers.

Limaye is the latest addition to the list of corporate India distracted by cricket. Executive Directors of listed companies - Chirayu Amin, chairperson and CEO, Alembic Pharmaceuticals, N Srinivasan, vice-chairperson and managing director of India Cements and Lalit Modi, executive director till August 2010, Godfrey Phillips have taken positions in BCCI.

Sports in India (be it cricket, kabaddi, hockey of any other) needs a boost and corporate India's sponsorship of the larger cause is necessary. But, it need not be at the cost of investors--  corporate India could use non-executive directors to hold the mantle, or hire talent to manage the cause. KMPs must have single minded-focus on the business, the report said.