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    Proxy advisor for voting against audit of KBL's legal costs

    Synopsis

    Sanjay Kirloskar-led Kirloskar Brothers (KBL) called an extraordinary general meeting (EGM) on December 8 in response to the demand from Atul Kirloskar-controlled Kirloskar Industries (KIL) that an independent forensic auditor be appointed to conduct an external forensic audit on KBL's legal expenses, aggregating to ₹274 crore.

    Kirloskar BrothersAgencies
    Shares of Kirloskar Brothers declined 2.32% on Monday to close at ₹374 on the BSE.
    Mumbai: Proxy advisory firm Institutional Investor Advisory Services (IiAS) has recommended voting against appointing an independent forensic auditor for Kirloskar Brothers to investigate and verify expenses incurred by the company on legal charges.

    Sanjay Kirloskar-led Kirloskar Brothers (KBL) called an extraordinary general meeting (EGM) on December 8 in response to the demand from Atul Kirloskar-controlled Kirloskar Industries (KIL) that an independent forensic auditor be appointed to conduct an external forensic audit on KBL's legal expenses, aggregating to ₹274 crore.

    IiAS, in a report, said KBL's legal expenses, at about 2% of revenues, are comparable to several of the S&P BSE 100 companies. "The company has disclosed that of the ₹274 crore spent over seven years in professional, consulting, and legal expenses, ₹70 crore related to legal expenses alone, of which an estimated ₹28 crore with an average of ₹4 crore annually over seven years is towards the litigation related to the family dispute," IiAS said in a report.

    The proxy agency said the questions raised by the requisitionists do not necessarily warrant a forensic audit at this stage, given KBL's disclosures. However, it added that the board must address the shareholders' questions on whether it has independently ascertained that KBL must participate in the family dispute.

    KIL is one of the largest shareholders of KBL, holding 23.91% of KBL's voting capital. KIL demanded verification of expenses incurred by Kirloskar Brothers on legal, professional, and consultancy charges over the past six years. KIL also sought verification of records, books of accounts, minutes, and other documents. It also wanted to know whether the KBL board sought any independent legal advice about the deed for family settlement (DFS) in view of the pending personal disputes amongst the promoter family.

    "Whether in acquiring La-Gajjar Machineries Private Limited by Kirloskar Oil Engines Limited, the Deed of Family Settlement has been violated is pending before the courts. Should the courts decide against KBL and Sanjay Kirloskar in this question, we expect the board will, in good faith, claw back these legal expenses from Sanjay Kirloskar's wealth," the IiAS report said.

    Shares of Kirloskar Brothers declined 2.32% on Monday to close at ₹374 on the BSE.




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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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