KIL criticises Kirloskar Brothers board for suggesting shareholders to vote against forensic audit

Kirloskar Industries Ltd on Monday hit out at the board of Kirloskar Brothers Ltd for recommending shareholders to vote against a resolution demanding a forensic audit of the affairs of the company by an external agency at the upcoming extraordinary general meeting on December 8. In October, Kirloskar Industries Ltd (KIL) along with Atul Kirloskar and Rahul Kirloskar, who together hold 24.92 per cent in Kirloskar Brothers Ltd (KBL), had requisitioned for an extraordinary general meeting (EGM) of KBL, amid the simmering feud between the Kirloskar brothers with KBL Chairman and Managing Director Sanjay Kirloskar on one side and Atul and Rahul on the other.

They had demanded that being a listed entity KBL should justify the rationale and basis on which it spent amounts aggregating to approximately Rs 274 crore towards payment of professional illegal expenses and consultancy charges ever since their dispute arose around 2016.

Also, KIL had demanded that the audit must look into the conduct of the KBL board, especially the independent directors.


Last month while calling for the EGM on December 8, KBL board advised its shareholders to reject the resolution saying as "the requisitionists are not justified in questioning the independence of the Independent Directors or the decisions of the board" to initiate legal proceedings to protect the interest of the company.

In a statement filed on stock exchanges on Monday, KIL Managing Director Mahesh Chabbria said, "As a measure of good corporate governance, every public listed company should be in a position to offer itself to scrutiny by an auditor when substantial expenses incurred are being questioned and minority shareholders' interests are involved."

He further said, "It is also disturbing to see that the KBL Board has, instead of leaving the decision to its shareholders, gone ahead and specifically recommended that the shareholders vote against this resolution. I wonder what would happen if it is subsequently found that KBL did incur such legal expenses that it was not entitled to spend."

Chabbria alleged that the "conduct of the KBL Board does not appear to be transparent and raises serious concerns about discharge of fiduciary responsibilities and upholding governance standards."

As the largest minority shareholder, he said, "we feel, therefore, it is our duty to make the KBL Board accountable to all stakeholders rather than allowing KBL to be run as a personal fiefdom of its Chairman and Managing Director."

The Kirloskar brothers have been in a feud over the deed of family settlement for the assets of the more than 130-year-old Kirloskar group.