Kirloskar Brothers shareholders reject resolution of forensic audit

Kirloskar Brothers (KBL) on Monday (12 December) said its shareholders have rejected a resolution pertaining to a forensic audit in the affairs of the company by an external agency.

KBL on 8 December 2022 called for an extraordinary general meeting (EGM) of its shareholders to consider and approve forensic audit of the affairs of the company by an external agency.

The company infomed on Monday that 63.99% of the shareholders voted against the resolution while 36.01% were in favour of the resolution proposed by Kirloskar Industries (KIL).

KIL along with Atul Kirloskar and Rahul Kirloskar who collectively holds 24.92% of KBL's voting capital had sent to the board of the company a special notice and requisition under section 100 subsection 2 clause A of the Company's Act 2013.

This requisition dated 21st October 2022 had called for the appointment of an independent forensic auditor for conducting a forensic audit to investigate and verify the expenses incurred by KBL on legal, professional consultancy charges over the past six years and the affairs of the company.

It had also sought investigation to verify all records, books of accounts, minutes books, and other documents of the company besides examining the conduct of the board of directors, including independent directors.

India's two proxy advisory firms, Institutional Investor Advisory Services India (IiAS) and Stakeholders Empowerment Services (SES), had advised shareholders against voting for a forensic audit ofKBL, citing a lack of compelling reasons and a possible attempt by requisitioners to settle private or family issues.

The promoter family has been embroiled in a dispute related to a Deed of Family Settlement (DFS) dated 11 September 2009 for the assets of the Kirloskar Group. Sanjay Kirloskar and KBL allege that a faction of the promoter family (Atul Kirloskar, Rahul Kirloskar and their group companies) have breached the DFS by entering into a directly competitive business through their entity, Kirloskar Oil Engines, by acquisition of controlling stake in La-Gajjar Machineries. This has resulted in litigation involving KBL, its promoters and other Kirloskar group companies along with their promoters.

On the BSE, shares of KBL were down 2.33% at Rs 360.75 while KIL were up 0.96% at Rs 1843.15.

KBL is a pump manufacturing company involved in engineering and manufacture of systems for fluid management. On a consolidated basis, net profit of KBL surged 411.67% to Rs 30.70 crore and sales rose 15% to Rs 864 crore in Q2 September 2022 over Q2 September 2021.

KIL has presence in the wind energy generation sector. On a consolidated basis, net profit of KIL declined 9.14% to Rs 69.05 crore and sales rose 81.40% to Rs 1787.11 crore in Q2 September 2022 over Q2 September 2021.

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