From left to right: Atul, Sanjay, and Rhul Kirloskar.
Sanjay Kirloskar-run Kirloskar Brothers Ltd (KBL) on July 27 filed a complaint with the Securities and Exchange Board of India (SEBI) alleging that some companies run by brothers Atul Kirloskar and Rahul Kirloskar have misled investors by usurping its over 130-year-old legacy and passing it off as their own.
In a letter sent to SEBI, the company has complained that the intimations filed by Kirloskar Oil Engines Limited (KOEL), Kirloskar Industries Limited (KIL), Kirloskar Pneumatic Company Limited (KPCL) and Kirloskar Ferrous Industries Limited (KFIL) on the BSE and the National Stock Exchange are against the interests of its shareholders and that of the investing public. These companies are run by Atul and Rahul Kirloskar.
The complaint refers to press releases, titled ‘Kirloskars Limitless', issued by the companies on their new mission and vision.
“The 130-year-old legacy is that of Kirloskar Brothers Limited, which KOEL is seeking to falsely rely upon and usurp,” it said in the letter. “The legacy, if any, of the company which now bears the corporate name KOEL, is only 12 years (and the legacy of KIL, ARKA Fincap, KPCL, KFIL and Kirloskar Chillers Private Limited (KCPL) is far less than 130 years); despite which KOEL is seeking to misrepresent its and those companies’ legacy as a 130-year-old legacy, based on which they are embarking on a limitless journey”.
The letter, which accuses the four companies separately of the same violation, also pointed out that the claim by the companies that “the conglomerate has been an integral part of India’s industrial revolution” is misleading because it is KBL that holds the status and mentions it on its website.
The claims are in violation Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with the stock exchanges, KBL added.
Besides, Kirloskar Industries is not entitled to be a licensee of the trademark and copyright Kirloskar, since it is not a shareholder of Kirloskar Proprietary Limited (KPL), an entity in which extended members of the family hold equal stake. The entity, which was formed as per the Deed of Family Settlement (DFS) during the spilt in September 2009, cannot pass on trademarks to any other company other than the signatories.
KBL has called for necessary corrective steps and actions, and levy of penalties, against these companies.
“You are requested to take this letter of ours on your files and records and as the market regulator immediately initiate necessary corrective steps and actions, including passing cease and desist orders against each of KOEL, KIL, KPCL and KFIL, under the SEBI Act, 1992, SEBI LODR, 2015 and the SEBI PFUTP Regulations, having regard to the interest of the investor community, the general public and the market,” it said.
Founded in 1888 by Laxmanrao Kirloskar, Kirloskar Brothers is the flagship company of the $2.1 billion Kirloskar Group with interests in manufacturing industrial pumps for water supply projects, oil and gas and power plants.
Earlier today, the Supreme Court stayed the Bombay High Court's order directing arbitration to solve the dispute. Sanjay Kirloskar had requested the apex court to quash the Bombay High Court order for arbitration in the case relating to assets of KBL under the Deed for Family Settlement. The apex court also urged the brothers to consider the resolution of the family dispute through mediation.
According to Kirloskar Industries, run by Atul and Rahul Kirloskar, the letter “contains a large number of factual inaccuracies and misstatements”.
“Nothing contained in the entire Press Release even remotely makes any reference to KBL let alone "attempting to pass off the legacy and track record of Kirloskar Brothers Limited as that of their own", a spokesperson said.
“We would like to point out that each of these companies is a part of the ‘Kirloskar Group’ that was founded by
Laxmanrao Kashinath Kirloskar the great grandfather of Atul Kirloskar, Sanjay Kirloskar and Rahul Kirloskar each of whom is the 4th generation of the Kirloskar family and are promoters of each of these companies as well as that of Kirloskar Brothers Limited,” the spokesperson pointed out.
“The press release makes a reference to: ‘In line with our founder's vision of ensuring that all products are a step ahead of time, the companies will constantly innovate with an eye on the future’. Obviously, this is the reference to the vision of our group’s founder Laxmanrao Kashinath Kirloskar. Further, it is mischievously and incorrectly stated in KBL’s letter that "KOEL, was incorporated only in 2009 and does not have nor can it claim to have a 130-year-old legacy and that the 130-year-old legacy is that of Kirloskar Brothers Limited, which KOEL is seeking to falsely rely upon and usurp," the spokesperson added.
The group that split in 2010 has seen battles on several fronts between brothers Sanjay, Atul and Rahul. The complaint to SEBI follows crucial cases such as a lawsuit filed by Sanjay in which he is seeking Rs 750 crore in damages from his brothers for losses caused to him because of the violation of non-compete clause in the DFS.
The DFS clause states that no one in the family will compete with any other member in business. For instance, if one brother is manufacturing pumps, the other one would not engage in the same business. According to KBL, this clause has been violated by Rahul and Atul who have taken a stake in a pump manufacturing company, namely La Gajjar Machineries Pvt Ltd.