MUMBAI :
Mumbai: The Indian Securities and Exchange Board (Sebi) on Wednesday, through three orders, imposed sanctions on the three Kirloskar brothers for acts of fraud while trading in the shares of Kirloskar Brothers Ltd (KBL) in 2010. Kirloskar Industries Ltd, for the another has been charged for breach of listing regulations.
While KIL is controlled by younger brothers Atul and Rahul Kirloskar, Kirloskar Brothers is majority owned by Sanjay Kirloskar.
KIL faces a penalty of ₹5 lakh, Atul and Rahul along with 6 others have to vomit ₹16.6 million rupees of illegal profits plus a penalty of ₹14.6 crore, Sanjay Kirloskar and his wife, the full liability due to illicit earnings and the penalty is ₹42.7 lakh
Mint had first reported on August 12 that Sebi had found KBL’s promoters in violation of the Prevention of Fraudulent and Unfair Business Practices (PFUTP) through a notice of cause.
The matter concerns a case from a decade ago in which the developer group sold a 13.5% stake in KBL to KIL, damaging the interests of minority investors.
KBL’s promoter group sold 10.72 million shares worth of KBL on October 6, 2010 ₹275 million rupees in the company to Kirloskar Industries. KBL’s financial situation as of September 2010 had deteriorated in all respects.
The promoters, including Gautam Kulkarni, Rahul Kirloskar, Atul Kirloskar, Alpana Kirloskar, Jyotsna Kulkarni and Arti Kirloskar were direct beneficiaries of the sale, Sebi said. The directors of KIL, on the other hand, have been accused of failing to fulfill their duty to act in good faith and with due diligence in the performance of their duties in the interest of KIL, resulting in fraud, Sebi said in the order.
Sebi argued that few KIL directors had induced KIL to buy shares in the promoter group and thus sell KBL shares to KIL at a disadvantageous time for KIL and its minority shareholders.
Therefore, directors and promoters had fraudulently inflicted unfair treatment on minority shareholders of KIL and violated the provisions, Sebi said.
Sanjay Kirloskar and his wife, on the other hand, faced insider trading charges when they sold KBL shares on October 10, 2010 prior to the information on the loss of capital from the investment / advances granted to the subsidiary Kirloskar Construction and Engineers Ltd by canceling the loan / advances to the tune of Rs. 67.47 million rupees was made public in April 2011.
The shares were sold to Prakar Investments Private Limited, where Sanjay Kirloskar and his wife Pratima Kirloskar are the owners and Sanjay is the president and managing director.
A spokesperson for KIL and KBL did not immediately offer comment.
The three brothers have been embroiled in a legal battle since 2018. Atul and Rahul filed a company petition alleging mismanagement at KBL when it did not allow the two to increase their stake in the company.
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