Outside the hallowed halls of the Madras High Court, just across Chennai’s NSC Bose Road, is a slice of Old Madras frozen in time. From single-storied law firms and the neighborhood Saravana Bhavan, to the city’s famous Armenian Church — one of the oldest in India — Parry’s Corner is replete with iconic, yet non-descript buildings. Perhaps one of three noticeably significant establishments is Dare House, located a couple of blocks down NSC Bose Road, opposite the High Court premises. It is here that a 120-year-old commercial legacy resides, one that the city has made its own — the headquarters of Chennai-based Murugappa Group.
While the Murgappa Group has been in operation since 1900, it was only in the 1930s that it shifted base to Chennai. Founded by A M Murugappa Chettiar as a money-lending and banking establishment in Burma, it took a few decades before the group became the diverse conglomerate that it is today. In fact, it wasn’t till the 1940s that the group set up two of its most well-known businesses — TI Cycles (present-day Tube Investments of India Limited) and the Coromandel Engineering Company. The next decade, the group formed what is today another listed entity, Carborundum Universal Limited. As on date, the Murugappa Group has 28 registered businesses, including ten listed companies, including the likes of EID Parry Limited, Cholamandalam Investment and Finance Company Limited and Coromandel Fertilizers Limited. With a footprint in bicycles, engineering, fertilizers and finance, the group is valued at just under 40,000 crore and employs 50,000.
Through these years of growth and diversification, one constant has remained: the Murugappa Chettiar family has ensured that it has stayed at the helm of business. This has remained the case even as the group took ten businesses public, and branched into multiple verticals. As on date, five generations of the Murugappa family have and continue to run business from Dare House, in Parrys Corner. Although relatively muted, one criticism surrounding the Murugappa Group has persisted: only male heirs to the family have been picked to succeed generations past. That could soon change, if one of the Murugappa scions has her way.
In the group's family tree published on its website, only male heirs are listed. This means that although the Murugappa family has eight branches as on date, only seven are mentioned on the family tree. The reason: the Late MV Murugappan's branch of the family tree gave rise to two daughters and no sons. Murugappan was the son of AMM Vellayan Chettiar and the grandson of the group's founder, AM Murugappa Chettiar.
The Murugappa Group's family tree on the group's website lists only male heirs
When Valli Arunachalam, her mother and sister jointly inherited an 8.15% stake in the group from her father, MV Murugappan who passed away in 2017, it should have guaranteed one of them a place on the board of Ambadi Investments that owns controlling stake of the group. Only, it didn’t since none of them were male scions. Valli hopes to change that. “My father, in his will, bequeathed everything to me, my younger sister and my mother, and clearly stated his wish to give us equal rights and to represent our branch in the family business,” said Valli, to a business daily.
In a series of media interactions, Valli has elaborated on how hers is a fight for all women seeking to break the glass ceiling, and against corporate patriarchy. She does make a fair point. Any Murugappa Group family tree, including one on the company’s website, displays only male heirs who hold positions of power at the Murugappa boardroom. To most journalists covering the group in Chennai, this comes as no surprise. Renowned and recognized for its conservative approach to doing business, Ambadi Investments quite simply has no place for its female scions. Staying true to patriarchal Chettiar practices, the eight families that have descended from Murugappa Chettiar have preferred to let their daughters merge with the families they marry into as opposed to taking over the business.
Valli Aruncahalam’s Legal High Ground
While all seemed well for all of 117 years, trouble began brewing when M V Murugappan died in 2017, leaving no male heirs. Valli has said that her father had long hoped his branch of the family would receive fair valuation of their assets, but that wish was not honoured by existing members of the board when Valli gave the board the option of buying out her shares at what she calls a “fair price”. The only remaining option was to seek visibility for their 8.15 percent stake in Ambadi Investments, and therefore a seat at the boardroom. As of November 2019, no decision had been taken by the all-male board at Ambadi Investments on both requests. Clearly, the Murugappa scion had enough, deciding that she would take the fight to the seven remaining branches of the Murugappa family, each of whom has a position of the Ambadi board.
“There can be no legal clauses in Ambadi Investments’ articles of association, which prevent Valli Arunachalam from occupying a board position,” said legal expert, K Satish Kumar, “Either the articles of association or any legal document cannot be discriminatory against any particular gender when it comes to a seat at the board, it cannot and must not discriminate against women."
This means that on the face of it, Valli’s claim may hold the legal high ground vis-à-vis her claim to a seat at the Ambadi Investments board. Backing her claim is the amendment to the Hindu Succession Act 2005, which allows daughters to inherit equally as sons. Being MV Murugappan’s eldest daughter, Valli’s claim has all the legal credibility it needs.
Valli Arunachalam may have taken a family feud public, and caused a boardroom battle. But the Murugappa Group has had its share of controversy in the past. In 2015, market watchdog SEBI, had levelled insider trading charges against then-chairman, A Vellayan. Terming the charges a “far-fetched and tenuous conjecture”, Vellayan chose to temporarily step aside as executive chairman, paving the way for his cousin, MM Murugappan to take over the reins in the interim. Speaking to this reporter, Murugappan had said that Vellayan stepping down was in keeping with the company’s adherence to “family values and tradition”.
Exactly a year later, in 2016, Vellayan was cleared of all charges. Speaking to this reporter again, Vellayan played down the controversy. “Sometimes these things happen,” he told me, “As long as they (SEBI) have realized within time, that it (the charges) was wrong and have disposed it off, I’m happy.” What was more surprising though, that two less than two years since his reinstatement, Vellayan chose to step down as executive chairman of the group once and for all, allowing Murugappan to take over as fulltime chairman of the Murugappa Group.
New Ideas, Old Thinking?
Under Murugappan, the group charted an ambitious expansion plan and strived hard to bring about a professional edge and a young look to a 120-year-old corporate entity. Last year, the Murugappa Group increased its capex from Rs 753 crore in FY 19 to Rs 1,200 crore in FY 20. “This will go predominantly into our manufacturing companies like the phosphoric acid plant and pilot plants across companies to support our R&D applications,” Murugappan told this reporter on the sidelines of the announcement in early 2019, “Tube Investments of India is looking to expand capacity and de-bottleneck operations. So, our capex for FY20 will go into a good mix of capability, IT infrastructure and R&D.”
Just as the Murugappa Group has begun charting its next move, Valli Arunachalam’s claim to a position on the board may be a fly in its ointment. But the fact remains that any attempt by the group to be seen as young, modern and with the times, could fall flat on its face should it continue to normalize gender bias in 2020. It’s high time that one of Chennai's most well-known business empires drops the patriarchy and lets its female scions stand up and be counted.