Kirloskar Brothers Limited (KBL) on Sunday refuted allegations that it had spent Rs 274 crore towards payment of professional legal expenses and consultancy charges in the personal dispute of its Chairman and Managing Director Sanjay Kirloskar against his brothers Rahul and Atul.
Kirloskar Pneumatic Co Ltd Executive Chairman Rahul Kirloskar and Kirloskar Oil Engines Ltd Executive Chairman Atul Kirloskar had on Saturday accused KBL of “mis-utilising shareholder resources of a publicly listed company and misusing regulatory machinery” after being cleared of insider trading charges by the Securities Appellate Tribunal (SAT).
Rahul and Atul had stated that being a listed entity, KBL should justify the rationale and basis on which the company “has been spending huge amounts aggregating to approximately Rs 274 crore towards payment of professional and legal expenses” ever since their dispute arose in 2016.
The brothers have been in a feud over the deed of family settlement for the assets of the more than 130-year-old Kirloskar Group.
“We wish to clarify that the legal fees over the last seven years is a total of approximately Rs 70 crore,” KBL said in a statement.
These expenses are towards tax matters, labour matters, arbitration pertaining to project business, cases related to domestic and international projects, patents, property documents and for overseas business as KBL is the only multinational in the group with manufacturing subsidiaries in four continents, it added.
The statement further said, “They have wrongly assumed that all these expenses are legal expenses. Major portion of the said Rs 274 crore is professional fees paid to various Indian and overseas reputed consultants to improve the company’s business.”
For a company with a consolidated turnover of over Rs 2,500 crore per annum, KBL said, its “legal expenses of Rs 70 crore over last seven years is logical and does not support any allegation made.”
Kirloskar Industries Ltd (KIL) is the largest shareholder and has not written to KBL over the last several years on their concerns for payment of professional and legal expenses ever since the disputes arose, it added.
“In fact they have voted in favour of accounts and dividends every year. And now in 2022, Atul Kirloskar, Chairman of KIL has issued a statement with these baseless allegations,” KBL asserted.
On Saturday, Rahul Kirloskar said as per the SAT order there was no insider trading by him and his brother Atul “when we had sold the shares of the Kirloskar Brothers Ltd (KBL) to Kirloskar Industries Ltd back in 2010. Consequently, the SAT order exonerates us from the charges of insider trading and fraudulent trade practices leveled against us by SEBI.”
He further said SAT also stated that the SEBI order was passed on the basis of complaints filed by KBL, which had also filed an appeal before SAT for “enhancement of penalties and disgorgement of amounts” against them.
“It is evident from the order that it was KBL alone on the basis of which the investigation had started against us… It is also evident that KBL was not satisfied with the penalty levied by SEBI and in fact filed an appeal against that penalty being not sufficient,” Rahul added.