The results of the extraordinary general body meeting (EGM) of Kirloskar Brothers (KBL) held in Pune on Thursday are expected by Monday morning. Voting on the resolutions for carrying out a forensic audit of KBL ended on Thursday.
The EGM was called by Kirloskar Industries, a company managed and controlled by Atul and Rahul Kirloskar and was chaired by KBL’s non-executive independent director, MS Unnikrishnan. None of the Kirloskar brothers or their family members spoke at the EGM.
Mahesh Chhabria, MD, Kirloskar (KIL) which has a 23.91% holding in Kirloskar Brothers, said knowing fully well that their resolution would be defeated by the brute majority, KIL wanted to highlight serious corporate governance issues and the lack of transparency in managing the affairs of KBL. Chhabria said he did not understand why there was so much resistance to conducting a forensic audit.
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The proxy advisory firms had recommended that the resolution should be voted against but they were expecting that the KBL board acted in good faith, he said. He was not satisfied with the expense figures shared by KBL for professional, legal and consultancy expenses which did not add up. KBL had admitted to spending Rs 70 crore towards legal expenses. KIL wanted the company to claw back legal expenses from our KBL CMD’s personal wealth.
KIL said the independent directors of KBL had chosen to disregard their fiduciary responsibility and had acted against the letter and spirit of corporate governance. The KBL board too specifically recommended that the shareholders vote against this resolution instead of leaving it to the shareholders to decide, Chhabria said.
The KIL MD disagreed with KBL about the losses of Rs 1 crore per day suffered because of the “so-called breach” of the Deed of Family Settlement and the acquisition of La Gajjar Machineries by Kirloskar Oil Engines. Sanjay Kirloskar, CMD of KBL and his family own 39.9% of KBL, institutional shareholders own around 10% and others including retail own 26% of KBL.