Stage is set for high tension drama in two well known business families from Pune around the SEBI’s LODR guidelines regarding disclosure of Family Arrangements.
In Kirloskar household, KOEL (Atul and Rahul Kirloskar), is challenging the LODR implementation, something that Sanjay Kirloskar has been vehemently insisting on. Similarly, in Kalyani family, Sugandha Hiremath nee Kalyani and her husband Jai Hiremath, both promoters of HIKAL Ltd, are all set to take on Baba Kalyani for not following LODR guidelines. They have made a disclosure to SEBI regarding the 1993 and 1994 Family Arrangements.
Kirloskar Oil Engines Ltd (KOEL) is set to challenge the Securities and Exchange Board of India (SEBI) before the Securities Appellate Tribunal (SAT), with the first hearing scheduled for January 16. The appeal arises from SEBI’s directive dated December 30, 2024, which advised KOEL to disclose the Deed of Family Settlement (DFS) under Regulation 30A of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations 2015. KOEL’s disclosure filing to the stock exchanges on January 4, 2025, confirmed the company’s decision to contest SEBI’s stance.
The dispute revolves around a family settlement intended to transfer ownership, management, and control of Kirloskar businesses among family members. SEBI flagged this agreement, asserting that it mandated disclosures under the amended LODR Regulations 2015. These amendments, made in 2023, were designed to ensure transparency in cases where promoter agreements could impact ownership, management, or control of listed entities.
At the heart of the controversy is an alleged breach of the settlement by Atul and Rahul Kirloskar and selective implementation of the family deed. Under their leadership, KOEL acquired a pump manufacturer, a move which violates the non-compete clause. However, the sale of Toyota joint venture shares worth Rs. 250 crores to Vikram Kirloskar indicate adherence to one of the terms of the family deed.
SEBI’s view was that the family settlement—referred to as the Deed of Family Settlement (DFS)— has binding on listed entities managed by the family members and promoters.
In its last letter to KOEL dated 30th Dec 2024, SEBI also clarified that while the civil suit pertains to specific legal relief, its own mandate is to ensure compliance with LODR provisions. By asserting its jurisdiction, SEBI aims to uphold the principles of transparency and investor protection.
Promoters of Hikal Ltd have submitted deed of Family Arrangement to SEBI in compliance of the Listing Obligations and Disclosure Requirements (LODR). On January 13, Hikal’s company secretary and compliance officer wrote to SEBI attaching the 1993 and 1994 deeds of family arrangements. He has also attached two letters from the promoters Sugandha and Jai Hiremath.
The 1993 Family Arrangement was arrived at between Dr Neelkanth Kaylani and Baba Kalyani. It stated that shares of Hikal will go to Sugandha and Jai. It goes on to state that Sulochana Kalyani’s (Dr Neelkanth’s wife) share will go to Gaurishankar Kalyani, Baba and Sugandha’s younger brother.
The 1994 Arrangement submitted to SEBI is a letter from N Vaghul, former chairman and managing director of ICICI. This arrangement between the father and son also talks about Hikal shares held by Kalyani group companies to be transferred to Sugandha and Jai. It adds that Baba Kalyani will take control of Kalyani group companies.
The disclosures reveal that the Hiremaths have already initiated proceedings in Bombay High Court against Baba Kalyani and his group companies for not adhering to the two Arrangements. They have accused Baba for benefitting from the Arrangements but not fulfilling his promise to hand over Hikal shares to the Hiremaths. Sugandha Hiremath has also initiated proceedings in Pune court seeking 1/3rd share in family wealth.
