New twist to rivalry as Kirloskar siblings trade charges over legal fees

Sanjay Kirloskar-led Kirloskar Brothers Ltd refutes claim made by siblings Atul and Rahul that the firm paid Rs 274 crore in professional and legal expenses

The rivalry between the Kirloskar siblings took a fresh turn with Kirloskar Brothers Ltd (KBL), led by Sanjay Kirloskar, hitting back at Atul and Rahul Kirloskar, saying the company has not paid very high legal fees as claimed by them.

The three are the sons of Chandrakant Kirloskar and the grandsons of noted industrialist S L Kirloskar.

In a statement, KBL said the claims (made by Atul and Rahul) that the firm paid Rs 274 crore towards professional and legal expenses ever since the disputes arose in 2016 is not correct. "We wish to clarify that the legal fees over the last seven years is a total of approx Rs 70 crore. These expenses are towards tax matters, labour matters, arbitration pertaining to project business, cases related to domestic and international projects, patents, property documents and for overseas business as KBL is the only MNC in the group with manufacturing subsidiaries in four continents," the statement said.

"For a company with a consolidated turnover of over Rs 2,500 crore per annum, legal expenses of Rs 70 crore over the last seven years is logical and does not support any allegation made," the statement said. "Kirloskar Industries (KIL) is the largest shareholder and has not written to KBL over the last several years on their concerns for "payment of professional and legal expenses ever since the disputes arose since on or about 2016. In fact, they have voted in favour of accounts and dividends every year. And now in 2022, Atul Kirloskar, Chairman of KIL has issued a statement with these baseless allegations."

"They have wrongly assumed that all these expenses are legal expenses. A major portion of the said Rs 274 crore is professional fees paid to various Indian and overseas reputed consultants to improve the company's business," the company said.

Soon after the Securities Appellate Tribunal set aside a Sebi order against Atul and Rahul Kirloskar on insider trading, both brothers had issued a statement saying KBL had filed an appeal before SAT for enhancement of penalties and disgorgement of amounts against them. "This appeal has been set aside by SAT on the ground that KBL is not an aggrieved person by the decision of Sebi," the statement said on Saturday.

"It is 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 not sufficient. SAT has come to a conclusion 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 brothers said.

"Being a listed company, Kirloskar Brothers should justify the rationale and basis on which Kirloskar Brothers Limited has been spending huge amounts aggregating to approximately 274 crore towards payment of professional and legal expenses ever since the disputes arose since on or about 2016. This amount works out 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," the brothers said.