Kirloskar siblings clash over KBL legal expenses

The Kirloskar family dispute has escalated with Sanjay Kirloskar-led Kirloskar Brothers (KBL) putting out a notice on the stock exchanges calling an extraordinary general meeting (EGM) on December 8. The EGM is in response to the demand from Atul Kirloskar-controlled Kirloskar Industries (KIL) that an independent forensic auditor be appointed to conduct an external forensic audit on KBL's legal expenses, aggregating to ₹274 crore.

KIL is one of the largest shareholders of KBL, holding 23.91% of KBL's voting capital. KIL demanded verification of expenses incurred by Kirloskar Brothers on legal, professional, and consultancy charges over the past six years. KIL also sought verification of records, books of accounts, minutes, and other documents. It also wanted to know whether the KBL board sought any independent legal advice about the deed for family settlement (DFS) in view of the pending personal disputes amongst the promoter family.

The requisition notes said Atul Kirloskar and Rahul Kirloskar, who are also part of the company's promoter group, have consented to be fellow requisitioners on the said matter along with KIL.


The Kirloskar siblings have disagreed over several matters related to the DFS entered on September 11, 2009, which covers them and companies under their control. The matters are being heard in various courts in Pune, Mumbai High Court, and the Supreme Court.

While calling for EGM, KBL said the company's legal expenses are primarily due to litigation triggered by Atul and Rahul Kirloskar and businesses controlled by them, and investigations about their insider trading in KBL shares.

"Atul and Rahul Kirloskar or their controlled entities have not voted against any of the resolutions for adoption of the audited balance sheet and profit and loss account of KBL till date, including legal expenses," the KBL notice said.

It stated that the bulk of expenses towards legal and consultancy charges, approximately ₹274 crore, has been paid to consultants including BCG, KPMG and Roland Berger, concerning the company's growth and business.

The company's legal fees over the last seven years aggregated to approximately ₹70 crore, including legal expenses relating to tax matters, labour matters, arbitrations, international projects, and property documents, which are unconnected with the litigations presently ongoing with the requisitionists.

Shares of Kirloskar Brothers, which gained 23% in the last three months, declined 1% on Thursday to close at ₹384.20. Kirloskar Industries stock rallied 34% in the last three months to close flat on Thursday at ₹2,020.

Both Kirloskar Brothers and Kirloskar Industries did not respond to ET's queries until Thursday press time.