OPINION | KRBL episode is a milestone in ensuring board accountability

There’s only one other known instance of an Independent Director raising governance issues in a public resignation letter.

Most resignation letters from employees to CFOs to Independent Directors simply state that the resignation is for ‘personal reasons’. However, the recent resignation of Anil Kumar Chaudhary as an Independent Director of KRBL Limited, a listed entity, has caused shockwaves in India Inc.

Chaudhary, former Chairman of SAIL and a veteran industry insider, spared no words in his resignation letter addressed to the Chairman, Board of Directors of KRBL Limited.

Spotlight on governance

In his resignation letter dated 8 September 2025, Chaudhary stated, inter alia, that “certain issues have persisted that, despite my earnest efforts to address them through constructive dialogue, continue to pose professional and ethical dilemmas. These include, among others:

* Inconsistencies in the recording of Minutes of the Board and Committee Meetings

* Instances of information being withheld, impacting informed decision-making

* Unjust write-off of certain export receivables without adequate deliberation

* Concerns regarding the use of CSR funds

* Arbitrary distribution of Variable Pay and Annual Increments to Persons Holding Office or Place of Profit

* Significant changes to the Object Clause undertaken without comprehensive discussion

* Undue interference by the invitees in the proceedings of the Board and Committee Meetings”

These are not petty matters to be brushed under the carpet. Instead, these issues warrant a broader review of governance, ethics, culture and compliance at KRBL Limited. An independent forensic review should be commissioned immediately to determine if the issues in the letter are isolated or systemic issues of deviance and fraud. Specifically, the forensic review must determine:

i) whether the write-off of certain export receivables indicates fraudulent revenue recognition or non-existent sales to fake customers;

ii) whether payment of variable pay and increments were legitimate;

iii) whether there was any misuse or diversion of CSR funds; and

iv) whether the pattern of withholding information with the Board extended to Related Party Transactions and other matters that impact the integrity of financial statements.

Unsatisfactory record of Independent Directors

Independent Directors in India have a poor track record of protecting stakeholders as they are reluctant to question management despite significant red flags.  Instead, they resign quietly for personal reasons.

Chaudhary stands out as a trailblazer and lone warrior by highlighting governance issues with specificity in his resignation letter.

There’s only one other known instance of an Independent Director raising governance issues in a public resignation letter. However, it was too late. SEBI had already investigated and issued a letter against Gensol Engineering’s promoters for fraud, fund diversion, and mismanagement.

Arun Menon’s resignation letter came a day after the SEBI order, but it expressed concerns about Gensol’s capital structure and leverage and stated that he had previously wanted to resign but was dissuaded.

Chaudhary’s letter has put the spotlight back on the role of Independent Directors in enhancing governance at listed companies. The question now, is how will this letter be viewed and treated by KRBL, its Board and, other Independent Directors?

Reaction by company and other ID’s

KRBL initially informed BSE and NSE about Chaudhury’s resignation on 9 September 2025 as a routine corporate event, but it didn’t include the resignation letter. Markets dismissed the resignation of an Independent Director, likely assuming it was similar to other resignations of Independent Directors at listed companies.

On 13 September 2025, KRBL amended its filing to the stock exchange(s) and included Chaudhury’s resignation letter. This led to a swift and brutal market reaction, with KRBL stock losing around 15% of its value from its close on 9 September 2025.

KRBL announced on 15 September 2025 that it plans to appoint an external agency to address Chaudhary’s concerns. However, management reassurances about the company’s systems and processes were met with scepticism, leading to a 16% decline in the stock’s value from September 9, 2025.

Conspicuously, other Independent Directors of the Board of KRBL have remained silent thus far. One wonders as to what has transpired between and amongst promoter and Executive Directors on the one hand and Independent Directors on the other hand.

New era of board accountability

Chaudhary’s letter heralds a new era of better governance and ethics at listed companies in India. This is perhaps the first time ever in the history of India Inc. that an Independent Director has publicly castigated a listed entity for poor governance with specific line instances of unethical practices.

India Inc. must answer this clarion call for improving governance, engage with Board members and encourage dissent and divergent views. Further, Independent Directors can and should boldly address missteps in ethics and governance especially since the SEBI Chief has called upon Board members to do so.

In fact, the SEBI Chairman, Mr. Tuhin Kanta Pandey, while speaking at the 2025 Annual Directors’ Conclave stated that: "A board that never disagrees is not aligned - it's asleep. Divergent views, when rooted in purpose and mutual respect, strengthen the board. They test assumptions, lead to deeper discussions, and enable constructive decision-making".

It is time for Independent Directors to lead the change at India Inc.

(Vidya Rajarao is the founder and CEO of Fraudopedia. She is a Certified Fraud Examiner and an expert forensic accountant.) 

Views are personal and do not represent the stand of this publication.