Being a listed company, Kirloskar Brothers Limited (KBL) should justify the rationale and basis on which it has been spending approximately ₹274 crores towards payment of professional and legal expenses for Sanjay Kirloskar, demanded Atul and Rahul Kirloskar. 

Rahul and Atul Kirloskar, on Saturday, raised questions over corporate governance of Kirloskar Brothers Ltd, led by Sanjay Kirloskar following the Securities Appellate Tribunal’s (SAT) decision to set aside the insider trading order passed against them by SEBI.

SEBI had passed the order on the grounds that there was no unpublished price-sensitive information (UPSI) and consequently, there was no insider trading by Rahul and Atul Kirloskar when they had sold shares of Kirloskar Brothers Limited to Kirloskar Industries Limited way back in 2010.

“Consequently, the SAT Order exonerates us from the charges of insider trading and fraudulent trade practices levelled against us by SEBI. The Tribunal’s order strengthens our faith in the Indian justice system. The Order also states that the SEBI order was passed on the basis of complaints filed by Kirloskar Brothers Limited. KBL had also filed an appeal before the SAT for enhancement of penalties and disgorgement of amounts against us, which has been set aside by SAT on the ground that KBL is not an aggrieved person by the decision of SEBI,” Rahul and Atul Kirloskar said in a press statement following the virtual press conference.

The duo added it was 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 insufficient. SAT has concluded that KBL was not an aggrieved party and therefore, had no locus to file these proceedings.

“It is, therefore, evident that KBL is participating in trying to facilitate Sanjay Kirloskar in his disputes against us by initiating complaints and taking action for which it doesn’t even have locus in the first place and in the process, mis-utilising shareholder resources of a public listed company and misusing regulatory machinery,” the duo added.  

“Being a listed company, Kirloskar Brothers Limited should justify the rationale and basis on which Kirloskar Brothers Limited has been spending huge amounts aggregating to approximately ₹274 crores towards payment of professional and legal expenses ever since the disputes arose since on or about 2016. This amount tantamounts to more than 60 per cent of the PAT of KBL for the same period, which many shareholders are questioning. Such expenditure appears to have been incurred for facilitating private disputes of KBL’s Managing Director and his family, thereby, causing losses to public shareholders,” Atul and Rahul Kirloskar said.

Meanwhile, KBL sources said that the Company will issue a statement and also challenged the figure of expenses quoted by Atul and Rahul Kirloskar.  

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