Kalyani firm trains guns on Hikal compliance officer | Mint

Kalyani firm trains guns on Hikal compliance officer

Baba Kalyani chairman and managing director of Bharat Forge, the flagship company of the Kalyani Group. (Mint)
Baba Kalyani chairman and managing director of Bharat Forge, the flagship company of the Kalyani Group. (Mint)


  • Kalyani Investment, a co-promoter of Hikal, wrote to Sebi on 29 November that the compliance officer unfairly restricted it from buying Hikal shares at the behest of the Hiremaths

MUMBAI : The conflict between Bharat Forge Ltd’s promoter Baba N. Kalyani and sister Sugandha Hiremath has escalated with a Kalyani group company requesting the market regulator to order the removal of the compliance officer of Hikal Ltd, a speciality chemicals company jointly owned by the Kalyanis and the Hiremaths. It has also called for action against Hikal’s audit committee.

Kalyani Investment Co. Ltd (KICL), a co-promoter of Hikal, wrote to the Securities and Exchange Board of India (Sebi) on 29 November that the compliance officer unfairly restricted it from buying Hikal shares at the behest of the Hiremaths. The company asked Sebi to investigate the actions of the Hiremaths, the compliance officer, and the members of Hikal’s audit committee for a “coordinated scheme" to solely benefit the Hiremaths.


The letter accused Hikal’s board and audit committee of “gross abuse of powers and dereliction of duties". Mint has seen a copy of the letter.

“...there is a total breakdown in the governance function in Hikal, wherein the entire governance function was acting hand in glove with Jai Hiremath (chairman, Hikal) and Sugandha Hiremath (Baba Kalyani’s sister) to further their agenda of usurping sole control over Hikal," the letter said. This was done to restrict free transferability of Hikal shares in the open market, it said. Such “collusive" conduct shows the listed firm is being run to “further the personal agenda of the Hiremaths", the Kalyani company alleged.

In response to a Mint query, Rajasekhar Reddy, company secretary and compliance officer, Hikal, under the instruction of Jai Hiremath, said, “We are not aware of any such letter written by KICL to Sebi and we will deal with the same appropriately if and when we receive any communication from Sebi in this regard."


Reddy said, “We would like to clarify that the earlier complaint made by KICL (to Sebi) regarding misusing governance mechanisms of Hikal to restrict free transferability of shares of the company in the open market was already disposed of by Sebi on the basis of submissions made by the compliance officer."

Reddy further said while disposing of the matter, the regulator observed that the “rejection of pre-clearance applications by the compliance officer was in terms of applicable regulations and the code of conduct framed by the company."

The conflict started when Amit Kalyani, son of Baba Kalyani, who is a director on the boards of both KICL and Hikal, tried to buy Hikal’s shares from the open market. The move was blocked by Hikal’s compliance officer and audit committee. As Hikal’s co-promoter, KICL holds 31.36% in the firm.

On 13 March 2023, KICL submitted a pre-clearance application to Hikal’s compliance officer for purchasing a 1.94% stake, stating it did not hold any unpublished price sensitive information (UPSI) pertaining to Hikal. A day later, Hikal’s compliance officer said he was reviewing the application, and on 16 March, disclosed the application to stock exchanges. Trading volumes in Hikal spurted after the disclosure, which KICL called “creating a false market". The same day, KICL received a letter from the compliance officer rejecting the application, without assigning any reason.

Aggrieved by the rejection, on 17 March, KICL conveyed the matter to Hikal’s audit committee, which Kannan Unni chairs. The same day, Hikal’s compliance officer wrote to KICL that the latter’s application was rejected since Amit Kalyani, was privy to “UPSI pertaining to Hikal".

In its letter to Sebi, KICL said this was an afterthought by the compliance officer “to obfuscate the true reason for the illegal rejection of the application".

Also, KICL said if Amit Kalyani was indeed in possession of UPSI, the company would have closed the trading window at the time of pre-clearance application, which was not done.

“This in our view, was sufficient proof that no UPSI in fact existed or was shared with Amit Kalyani," argued KICL in the Sebi letter. A few months earlier, the compliance officer approved Ashok Vishwanath Hiremath’s (brother of Jai Hiremath) pre-clearance application to raise stake despite the possibility of him possessing similar UPSI, Kalyani said.

Also, KICL, in its latest letter said, “The non-entry in Hikal’s structural digital database abundantly displays that the rejection of the pre-clearance was done for extraneous reasons at the behest of the Hiremaths…"

To be sure, following a complaint by the Kalyanis alleging misgovernance at Hikal, on 16 November 2023, Sebi issued a warning letter to Hikal’s compliance officer. The letter failed to consider the serious implications of the actions of the compliance officer, Kalyani Investment said.

Queries sent to Sebi, KICL and Kannan Unni remained unanswered.

The feud between the Hiremaths and the Kalyanis began after Sugandha’s brother, Baba Kalyani, refused to transfer Hikal shares (held through KICL) in Hiremath’s name—something that was allegedly promised to the Hiremath couple, according to a 1994 note by Kalyani’s father.

After Sugandha and Baba’s mother passed away in February this year, Hiremaths have been allegedly denied any transfer in Hikal stake as a gift to the Hiremaths.

According to Sugandha’s earlier contention, there was a 1993 memorandum of understanding (MoU) signed by him (Kalyani) and their father, and then another agreement in 1994 signed in the presence of Narayanan Vaghul, then chairman of ICICI Bank and Suresh Shankar Nadkarni, then chairman of Sebi.

Over arguments that the Kalyanis breached the agreement, the Hiremath family moved the Bombay high court in April, seeking a transfer of Hikal shares held by KICL.

Reddy said, “You are aware that there is a dispute in relation to majority shareholders of Hikal, and this dispute is sub-judice before the Bombay high court, and needs to be borne in mind in viewing the credibility and accuracy of the allegations referred to in your mail."

According to the Kalyanis’ latest letter to Sebi, the Hiremaths are, on all fronts, including by way of litigation before the Bombay high court, seeking to usurp sole control over Hikal.

“They are seeking to dispossess KICL, a listed company, from its assets being its shareholding in Hikal, by alleging that it is to be bound by a family arrangement that it was not even party to, and the very existence of which is under question," added the letter.

"It may be a part of the shareholders' agreement that required both the promoter families to secure an approval from the compliance officer before raising their stake in the firm. Otherwise, a compliance officer's or audit committee approval is not required before buying shares in the company," a securities law expert said on condition of anonymity. "Also, as far as the demanded action against the compliance officer is concerned, if Hikal is able to prove the materiality of the event or the rationale behind stopping the Kalyanis' attempted share purchase, a Sebi action may be averted."

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