Kirloskar Industries' Board seeks forensic audit on Kirloskar Brothers

The  Board of Directors of Kirloskar Industries, led by Atul and Rahul Kirloskar, has sought an Extraordinary General Meeting (EGM) of the shareholders of Kirloskar Brothers, a listed entity, to conduct a forensic audit on the latter. Kirloskar Brothers is a company managed by their brother, Sanjay Kirloskar.

The EGM was requisitioned following statements made by KBL that it spent Rs 274 crores on legal, professional fees and consultancy charges. Of this, KBL clarified that it incurred around Rs 70 crores as legal expenses over the last 7 years. "This along with certain recent orders passed against KBL, raise certain serious and important questions in relation to  the conduct of affairs of the KBL board especially of the independence of the independent directors, the decision-making process pertaining to initiation of legal proceedings by KBL, and  expending huge legal expenses towards initiating such legal proceedings," the company said in a filing to the stock exchanges.

Kirloskar Industries said an independent external entity should be appointed to conduct a forensic audit in the affairs of KBL for investigation and verification of all records, books of accounts, minutes books, other documents of KBL and conduct of the Board of Directors of KBL, including independent directors.

KIL raised questions whether the KBL Board, especially the independent directors of KBL, verified the claims made by Sanjay Kirloskar in relation to the Deed of Family Settlement (DFS), in order to ensure that they have not been misled by the claims made by  Sanjay Kirloskar. Besides, KIL said whether the KBL Board, including independent directors, sought any independent legal advice pertaining to the same, especially in view of the pending personal disputes amongst the promoter family.

The brothers are already fighting a legal war for division of family assets. The matter is now pending in the Supreme Court after an arbitration among the brothers failed.