Appointment, or as contested, the re-appointment of Kishor Chaukar as director on the board of Kirloskar Brothers Ltd (KBL) has become the latest flashpoint in the Kirloskar family squabble.
KBL on September 25 announced that a special resolution to re-appoint Chaukar as an independent director had failed to get the required 75 percent of votes from the shareholders during the annual general meeting.
Chaukar, a former Tata group veteran, was appointed as an independent director at KBL in 2015, and his term got over in April this year. The industry veteran was the managing director at ICICI Securities & Finance before joining the Tata group, where he was on the board of Tata Teleservices.
However, the special resolution to re-appoint him at KBL could garner votes from only 65.66 percent of the shareholders, with the rest - 34.34 percent - voting against it. Interestingly, much of the votes polled against the resolution came from the Promoter & Promoter Group category of shareholders, revealing fissures in the already delicate relationship between the three Kirloskar brothers.
While Sanjay Kirloskar leads KBL, his siblings - Atul and Rahul - have a substantial say in the company proceedings through their ownership of Kirloskar Industries Ltd (KIL) which has 23.91 percent stake in KBL.
A KIL spokesperson confirmed the company voted against Chaukar’s reappointment.
“Mr. Chaukar’s re-election as an independent director of KBL would not have been in the interests of KBL’s shareholders considering what KIL believes is the deceitful manner in which KBL had been attempting to push through Mr. Chaukar’s reappointment as a purported independent director," the spokesperson told Moneycontrol in a statement.
In fact, in May this year, KIL had shot off letters to Registrar of Companies and to the KBL Board, alleging an attempt was being made to "appoint" Chaukar through an ordinary resolution that requires only a simple majority, or more than 50 percent of the total votes cast.
On the other hand, KIL argued, Chaukar's was a re-appointment and needed a special resolution.
Individually too, Rahul and Atul hold minor stakes in KBL and voted against the special resolution. In fact, a spokesperson for the Kirloskar family, excluding the Sanjay Kirloskar branch, said "the entire family" has voted against the appointment.
"The correspondence engaged by Mr. Chaukar with one of the promoters - Rahul - created suspicion about his independence," the spokesperson further said.
Apart from Chaukar's appointment, KIL and the two brothers also voted against the appointment of MS Unnikrishnan, managing director and chief executive officer of Thermax. The third resolution, to appoint a director in place of Alok Kirloskar, their nephew and son of Sanjay Kirloskar, was voted against too. But these two were ordinary resolutions and easily got the required simple majority.
These two resolutions polled exactly the same percentage of votes for, and against, them, as the one to re-appoint Chaukar.
KBL declined to comment.
Taken to NCLT
Atul and Rahul have now taken the matter to the National Company Law Tribunal (NCLT), where KIL has already filed a suit alleging Sanjay and the board of 'mismanagement' of KBL.
The spokesperson said KIL has filed a "fresh application to its existing suit at NCLT Mumbai, highlighting the continued acts of oppression against minority shareholders and mismanagement of KBL by Mr. Sanjay Kirloskar and members of his immediate family”.
KIL had filed the original petition in 2017.
To know more about the family fight, read: The many fights of the Kirloskar Brothers. Who will win the next round?
The much contested deed of family settlement, or DFS, again featured in the latest round of fight between the brothers. The DFS was done in 2009, but has done little to bring truce in the family.
Sources said Chaukar, in his mail to Rahul, had evoked the DFS to ask for their support. But here, there are two versions.
While some argue that Chaukar told Rahul and Atul were bound by the DFS to support his re-appointment to KBL’s board, others contend it. They counter that Chaukar was raising the DFS to underline the non-compete clause, which had created a major rift between the siblings.