Proxy advisory firm Stakeholders Empowerment Services (SES) has advised shareholders against voting for a forensic audit of Kirloskar Brothers (KBL), citing a lack of compelling reasons and a possible attempt by requisitioners to settle private or family issues.
This follows a similar recommendation from proxy firm Institutional Investor Advisory Services India Limited (IiAS).
SES said the proposed resolution was not in the interest of the investor and requisitioners appear to approach shareholders with a mala fide intent.
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SES said the proposal for a forensic audit lacks proper rationale and given the history of the disputes between the parties, it may be a tool to settle individual scores.
The proxy firm said it were against the appointment of an independent and reputed external entity as an independent forensic auditor to conduct a forensic audit to investigate expenses incurred by Kirloskar Brothers on legal, professional and consultancy charges over the past six years.
SES’s view was that the request has not come from the regulator or minority shareholder but from one set of promoter shareholders, who appears to be at loggerheads with another.
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Kirloskar Industries’ Atul Kirloskar and Rahul Kirloskar, who requisitioned this EGM, have a combined shareholding of around 25%. The requisitioners have not provided compelling reasons for demanding a forensic audit of the company, SES said. While the legality of such a resolution is not in question, the rationality of this requisition has to be assessed, it said. There are various suits and claims initiated by KBL in the past seven years, given the alleged violation by Rahul Kirloskar and Atul Kirloskar of the deed of family settlement (DFS) so it is undoubtedly a case of dispute between two sets of promoters and there is an apparent attempt to pressurise one party against the other using their financial muscle to achieve their individual objective, SES said.