The rift at TD Power Systems (TDPS) has escalated, with founder Vijay Kirloskar threatening to move the Central Vigilance Commission (CVC) over alleged lapses in disclosure in the 2011 initial public offering (IPO) prospectus of the Bengaluru-based electrical equipment-maker.
Earlier this month, governance firm InGovern Research Services wrote a letter to market regulator Securities and Exchange Board of India (Sebi) and stock exchanges urging them to probe any misstatement and vital suppression of facts in the IPO document of TDPS in public interest.
Based on documents obtained from a whistleblower, InGovern said that the IPO disclosure stating TDPS had not entered into any shareholders agreement was a “patent misstatement” since Kirloskar, Nikhil Kumar, Mohib Khericha and TDPS had entered into a ‘Share Purchase and Shareholders Agreement’ dated July 18, 2001.
In response to InGovern’s note and news articles, TDPS issued a clarification in a communication to the stock exchanges on October 18, stating: “The aforesaid share purchase & shareholders’ agreement dated July 18, 2001 was entered into only between Nikhil Kumar, Mohib Khericha and the company, which was terminated on January 6, 2011. Vijay Kirloskar was not a party to the said share purchase & shareholders’ agreement as published in the article. It is also to be noted that, in terms of the company’s records, Vijay Kirloskar was neither a shareholder nor a director of the company as on the date of the aforesaid share purchase & shareholders’ agreement dated July 18 2001.”
“We also wish to state that certain statements in the subject report are matters sub judice and thus we are constrained from providing clarifications,” it further said.
In a letter dated October 24, Kirloskar has said, “TDPS is aware of these misstatements/omissions made by it in its IPO prospectus. TDPS has deliberately (at the instance of some of its promoters) made misleading disclosures and has obfuscated and not clarified the real issue in hand and now sought to contend that these are ‘matters sub-judice’, which they undeniably are not.”
The letter added that if “..the misleading communications and conduct of TDPS, its irregularities/non-disclosures are not promptly investigated, our clients will now be constrained to approach the CVC and other relevant authorities and also take further steps as required.”
Kirloskar had established TDPS in 1999. He resigned as its chairman and director in June 1999, and the TDPS board nominated Khericha as the director.
Earlier this year, Kirloskar had moved the Karnataka High Court against TDPS’s promoters, including Khericha and Kumar, staking claim on 25.1 million of its shares worth over Rs 500 crore.