Members of the Murugappa Family are at peace with each other, again. Or at least that’s what they claim. The news broke on a sleepy Sunday (August 20) afternoon in Chennai via a media release emailed to journalists covering the company.
“The Murugappa family is pleased to announce that its members have agreed to settle the disputes and differences between the family branch of late Mr. M V Murugappan (including Mrs. Valli Arunachalam and Mrs. Vellachi Murugappan), on one side, and the rest of the family members, on the other side,” said a statement from the family.
The Setting:
For generations, the administration of the 123-year-old Murugappa Group, founded by Dewan Bahadur A M Murugappa Chettiar, has comprised male members of the founder’s family. The tradition extended to when the group was governed by Ambadi Investments Limited (AIL), the holding company of the group’s 28 businesses, including nine listed companies.
There are no women at the board of AIL. Biological probability has favoured the Murugappas, for each branch of the family has given rise to male off-springs. Women in the family have been married off, without the option of a seat at the table or an active key role in any of the group companies. This arrangement continued until MV Murugappan, grandson of Dewan Bahadur A M Murugappa Chettiar, died in 2017 leaving behind two daughters and no sons.
The Problem:
In January 2020, Valli Arunachalam, MV Murugappan’s elder daughter — by virtue of which she is also her family’s karta as per the Hindu Undivided Family Act — staked a claim for a board position at AIL for either herself or her sister Vellachi. The only problem: the all-male board wasn’t willing to let go of tradition and have a woman sit at the table.
Valli then demanded that their 8.15 percent stake be bought out at a “fair price”. There was reluctance from the board to effect such a purchase as well, with some reports claiming that the offer was well below market standards.
The Murugappa scion graduated from the University of Madras and went on to get an MPhil in Physics, from the university. She then went onto do a PhD in Nuclear Engineering at the Texas A&M University. Since 2015, Valli Arunachalam has worked as an independent semiconductor technology consultant, after stints at Motorola and IBM, among other companies.
Some reports had unnamed sources from the Murugappa Family claiming that Valli’s demand for a board position was based on her succession right. “That’s not true,” she said in an exclusive chat with CNBC-TV18 managing editor Shereen Bhan in 2020, “We asked for it based on our shareholding.”
This interview also marked Valli’s first appearance on Indian television. The Murugappa Group did not respond to multiple requests for interviews.
Valli’s claim was simple: women at the Murugappa Group haven’t been given the chance to prove their mettle. That ought to change, and Valli and Vellachi would try hard to effect that change, even if it meant initiating legal proceedings against the might of the Murugappa Group. They walked the talk, by filing appeals against the family in the National Company Law Tribunal (NCLT).
The Fight:
Valli and Vellachi’s case had legal high ground. AIL’s Articles of Association do not discriminate on the basis of gender, its all-male tradition notwithstanding. But there were setbacks too. Valli and her family did not hold the minimum 10 percent shareholding requirement as per Section 244 of the Companies Act to plead mismanagement against the AIL board.
The sisters later filed a waiver petition in order to proceed with their appeal — a move strongly opposed by counsel for AIL, but allowed by the tribunal. The family tussle, which had by now begun taking legal proportions, seemed to have the makings of a long-drawn courtroom battle.
Earlier, while responding to reports of the Murugappa Family alleging that the sisters’ demand for a place on the board was based on their perceived succession right, Valli trained her guns on her second-cousin and Murugappa Group Chairman, MM Murugappan.
“The current executive chairman of the group, MM Murugappan, came on the board three months after his father’s passing at the age of 23,” she told CNBC-TV18 in 2020, “So, the excuses they have given us do not hold ground because it’s okay for male heirs to be inducted to the board without requisite training in the companies, while qualified females cannot be inducted to the board. It does not make sense.”
The Settlement:
“As part of the family arrangement, the parties have also agreed that all legal proceedings between the family groups will be withdrawn as per the terms of the family arrangement after all agreed steps specified in the family settlement have been completed,” the Murugappa statement added, as it signaled the truce between Valli and Vellachi, and the rest of the family.
One of the key takeaways of the truce is that the Murugappa Family had entered into Memorandum of Understanding with Valli and Vellachi by way of terms of a family arrangement within. This, the statement said, was done in the presence of advisors.
“The family members are committed to undertake the necessary transactions to effect the family arrangement within the next 90 days,” said the statement, hinting that members of the Murugappa Family may have finally agreed to purchase the MV Murugappan family branch’s 8.21 percent stake at what the sisters may have deemed to be a fair market valuation. However, this is not conclusive, owing to a confidentiality clause.
“The terms of the family arrangement itself are confidential”, said representatives of the family, who added that all outstanding issues between members of the Murugappa Family have been resolved amicably.
Win For Women In Business?
Did Valli Arunachalam get her seat at the board? No. Did she win suitable compensation for her family’s share in the business? Perhaps. The Murugappa Family settlement is also unlikely to have an impact on the group’s listed companies: “No listed company forming part of the Murugappa Group is a party to the family arrangement,” said the Murugappa release.
However, what the Murugappa Family feud will be long-remembered for, is a David-vs-Golliath battle that saw the elder daughter of a century-old patriarchal Indian business house, take on the might of its empire.
“I’m not radioactive! Not yet!” Valli Arunachalam quipped in that 2020 CNBC-TV18 interview, while making a point about her academic credentials, and taking a dig at the Murugappa Family’s reluctance to have her sit at the board.
What the US-educated PhD in Nuclear Physics probably did not know back then, is that her shot at ruffling feathers within her family could well set a precedent for women in business, at the boardroom, and millions of women born into generational patriarchy, for many generations to come.
First Published: Aug 21, 2023 8:25 PM IST
