Murugappa group family feud: Woman heir wants to exit holding firm; to take legal action after family's response

Valli Arunachalam, the eldest daughter of former Murugappa group chairman, late MV Murugappan, wants to exit the holding company by selling her immediate family's 8.15 per cent stake to her uncles, but wants a board position if they don't agree with her proposal. She has consulted legal advisers in Mumbai but will take action only after hearing the family's response to her proposal. Valli Arunachalam has also demanded a board position in the holding company, Ambadi Investments Ltd (AIL), if her uncles are unwilling to buy the stake held by her mother, sister and herself together.

MV Murugappan, who was the patriarch of the group for 20 years, passed away in September 2017, bequeathing everything for his wife Valli Murugappan and daughters. According to his will, the Murugappa family business spanned over five generations. The family holds 91 per cent stake in the public unlisted company.

"They have been delaying the matter for the last two years and didn't give any definite answer for our offer. In August 2019, we asked for a board position. I have been repeatedly following up with them and asked them for meeting, but it has fallen on deaf ears. Every branch of the third generation has a representation on the Ambadi board, except ours," Arunachalam told Business Today.

By law, she said, they could appoint an additional director with the shareholders' nod. Arunachalam had also tabled a proposal with valuation. "We expected that they would come back with a counter valuation. But they didn't," she said. There are six families of inheritors in the third generation of the Murugappa family. "If the family purchases the shares at a fair value, we could exit from the company," she added.

Rating agency CRISIL had recently said the aggregate market value of Ambadi Investments' direct shareholding in the listed group companies stood at Rs 9,484 crore as on October 14, 2019. The Rs 37,000 crore Chennai-based Murugappa group was founded in 1900, and is one of India's leading business conglomerates. The group has 28 businesses including nine listed companies.

The major companies associated with the group are Carborundum Universal, Cholamandalam Financial Holdings, Cholamandalam Investment and Finance Company, Cholamandalam MS General Insurance Company, Coromandel International, Coromandel Engineering Company, EID Parry (India), Parry Agro Industries, Shanthi Gears and Tube Investments of India and Wendt (India) Ltd.

Arunachalam said: "I am a nuclear scientist by training. But my work experience has been in the semiconductor technologies. At present, I am a freelance independent technology consultant based out of New York. My mother lives in Chennai and sister is in Bangalore. My mother, sister and I are in agreement, but the uncles and their families have delayed the matter by not responding to our request," she said.

Arunachalam said she had sought legal advice on the matter, but hoped the matter would be resolved within the family only. "Recently, the family circulated some internal memo that they sent to the management a week back. They said they hoped to settle the matter amicably. So, I wrote to them and asked to come up with a concrete offer. But I haven't heard from them yet," she said. "I hope there will be action behind words. Not just empty words. I will wait for the solution, before taking legal action," she said. She said if they were unwilling to buy the shares at fair value, she would ask for the board representation.

Arunachalam said the board position would give her visibility into the operations of the holding company. "At present, we have no visibility whatsoever. Just like every other families in the group, I want to know about the operations. I will execute my duties as a board member and ensure the stakeholders' interests are protected," she said.

It's for the first time that a male member has passed away without a male heir in the Murugappa family. Also, it would be first time that a family branch would exit from the Murugappa family business if Arunachalam and her family sell their stake.

Gender Inequality

Arunachalam said the Murugappa group was following "archaic practices" like keeping women out of business. "Women are making inroads in all walks of corporate life and heading big institutions. In this day, I am finding it difficult to imagine that one of the leading business houses in the south (India) is still following archaic practices. It is important to change with the time," she said.  

In a public forum, she said, the present patriarch MV Subbiah was asked about the group practice of not allowing family women in managerial position in the businesses. "He endorsed that policy. To add salt to the wound, he went on to sigh that there are 11 boys and just one girl in the current generation. The corporate leaders speaking in this manner is insensitive to the millions of women in the workforce," she added.

In another incident, present Chairman A Vellayan said the group kept women out of the family business, she alleged. With a doctorate in nuclear engineering, Arunachalam has over 23 years of experience in multinational companies. Her sister Vellachi Murugappan has a decade-long experience in IT companies and is an electronic engineer. "Our skills are readily transferable to any family business and we are ready to take on any professional challenge," she said.

Also read: Eldest daughter of Murugappa family fights for board position in male-dominated group