Kirloskar Family Dispute: SAT to Hear Matter on January 16, 2025

January 16, 2025, marks the critical juncture for the prolonged dispute among members of the Kirloskar family. The Securities and Exchange Board of India (SEBI) directive is at the center of the dispute, which mandates Kirloskar Oil Engines Limited (KOEL) to disclose a 2009 Deed of Family Settlement (DFS). The case highlights the tension between corporate governance requirements and familial agreements within promoter-driven businesses.

Kirloskar Dispute: Key Points For Investors

The Deed of Family Settlement (DFS)

The DFS, signed in 2009, was established to allocate business ownership and responsibilities among the Kirloskar family members. This included the distribution of assets and control within the family business. A key component of the agreement was the sale of shares, including:

• KOEL: In line with the family settlement, KOEL sold Toyota JV shares worth Rs 250 crore to Vikram Kirloskar and his nominees, adhering to the terms outlined in the DFS.
• Kirloskar Brothers Limited (KBL): Sanjay Kirloskar, Chairman of KBL, also sold his stake and transferred funds in accordance with the settlement.

Alleged Violations and Mounting Tensions

• Allegations Imposed by KBL: KBL has accused KOEL of violating the DFS due to its acquisition of La Gajjar Machineries in 2017, which they argue directly competes with KBL’s pump business. KBL escalated the issue to the Supreme Court, where the matter remains unresolved.
• SEBI’s Directive: SEBI has insisted that the DFS has material implications for shareholders under the Listing Obligations and Disclosure Requirements (LODR). The capital market regulator stated that non-disclosure of the DFS creates “information asymmetry” and undermines regulatory certainty.

KOEL’s Appeal to SAT

KOEL stated that the DFS is a private family agreement and is not relevant to the obligations of a listed entity. They have dismissed SEBI’s directive as an “ignorant interpretation” of laws. In addition, KOEL has filed an appeal with the Securities Appellate Tribunal (SAT), which was submitted on January 4, 2025. The hearing is scheduled for January 16, 2025, when the tribunal will assess the case.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.