Chennai-based Murugappa Group is 119 years old. The family tree on the company’s website shows five generations of the Murugappan family – 21 people, and strikingly, all of them men. Not that the patriarchs of the Murugappa Group never had daughters – but the custom in the company has been that while the sons take over the running of the business, the daughters get married and become a part of another family. However, one woman is now questioning this practice and is fighting for a seat on the board of Murugappa Group’s holding company.
Valli Arunachalam is the daughter of the late MV Murugappan – who was the grandson of Murugappa Group founder Dewan Bahadur AM Murugappa Chettiar. MV Murugappan, who died in 2017, left the 8.15% stake he held in Ambadi Investments to his wife and his two daughters. Ambadi Investments is the holding company of the Rs 37,000-crore family-run conglomerate. Two years on, Valli – who is MV Murugappan’s elder daughter – has neither been able to sell their stake to another family member, nor get a seat on the board of Ambadi – which as a shareholder is a right she can seek to exercise and be voted on.
And according to Valli, her gender is what is stopping the family from considering her request and inducting her into the board. In an interview to TNM, Valli says she’s not only fighting for her right – she also hopes to set a larger precedent against gender discrimination.
A seat at the table
“It was my father’s wish that we sell the holding company shares to the family and settle it internally,” says Valli, who is a technology consultant with a PhD in nuclear engineering, “And that is exactly what my mother, sister and I have been trying to do for over two years.”
“But the family is unwilling to buy the shares. They say they don’t have the money to buy out our stake. Then it is only a fair ask that we, being part of the larger group of stakeholders, have a position on the board so we can steward our share in the company,” Valli says, explaining her position.
(Source- Murugappa website)
The Murugappa Group, founded in 1900 is a massive business conglomerate headquartered in Chennai that has 28 businesses, including nine listed companies. Some of the major companies of the group include Cholamandalam Financial, Coromandel Engineering, Parry Agro. Some popular brands from the group include BSA and Hercules bicycles and Parry’s sugar. The group is currently run by the men of the fourth generation, with MM Murugappan being the executive chairman.
Ambadi investments is the holding company of the group and has direct shareholding in the group companies. Ninety one percent of Ambadi Investments is held by the Murugappan family. Of this, 8.15% now belongs to Valli, her sister and her mother.
Considering it’s 2020, India’s succession laws don’t stand in the way of Valli’s demand. Nor do the articles of association of the company, according to Valli. “There is no clause in the articles of association that deny a person’s claim based on gender,” Valli says.
Valli points out the Hindu Succession Act 2005 was amended to allow daughters to inherit equally as sons, and in any event the stake to Valli, her sister and her mother has been willed to them. And as MV Murugappan’s eldest daughter, Valli says she is a rightful heir. In fact, some of the listed group companies name Valli Arunachalam as a shareholder in the promoter group in the capacity of ‘Karta’ in the Hindu Undivided Family (HUF) for her father MV Murugappan.
“I'm holding these shares in the listed companies in my father’s capacity as his heir. And that is in accordance with the amendment to the Hindu Succession Act 2005. So, when the Hindu Succession Act itself allows for women to be head of the Hindu Undivided Family (HUF) – why can’t women also be part of the family business? Why should we be excluded?” Valli asks.
But Valli is demanding a seat on the board not only as a consequence of succession and her father’s will, but as a large shareholder.
‘Lack of experience’ as euphemism for gender bias?
Valli says she has been told that she cannot be inducted onto the board because she doesn’t have an ‘intimate working knowledge of the company’. Ironically, women of the Murugappan family have never been given an opportunity to gain any experience on that front, Valli alleges.
“When they said I don’t have a working knowledge of the company, I told them that women were never given the opportunity. To this, I was told that women have never asked to be on the board,” she says.
“But here I am. I have been repeatedly asking for it for the past two years. So why are they discriminating against me based on my gender?” Valli asks.
Valli also points out that the current Executive Chairman, MM Murugappan, was inducted to the board three months after his father passed away. He was 23 years old at the time and fresh out of college. “Now tell me, what experience could he have had in the inner workings of the company at that age? Yet, he was inducted to the board by right of succession. When I presented them with this fact, they did not respond,” says Valli.
Further, Valli says she has actively shown interest in the functioning of a company, like any shareholder, large or small would.
Setting a larger precedent
Despite her demand being ignored for over two years, Valli says she is willing to settle the matter amicably, especially because it was her father’s wish. She has been in constant communication with the family, urging them to come up with a concrete plan to deal with the issue. According to Valli, there are several ways this can be settled without having to take legal recourse. But both parties have to come to the table and have discussions to figure the way forward.
“If there is a will, there is a way. Intent has to be there. My mother, my sister and I have the intent. Do they?” she asks.
Through her fight, Valli hopes to set a larger precedent against gender discrimination. “if I take this step forward, I hope that I will trigger a chain reaction that other women will see – and gain the confidence to fight as well. This will then have a cascading effect. Of course, changes like this take time. But as long as we are moving forward, that is a positive thing, a step in the right direction,” Valli says.
Murugappa Group’s response
TNM reached out to the Murugappa Group but we did not receive a response. So far, the Group has not responded to any media house on record.
However, after reports emerged of Valli’s demands for her place in the company, MM Murugappan wrote to employees. "You may have read an article in some business newspapers today, quoting Mrs Valli Varunachalam, one of the daughters of late MV Murugappan, about demands she has made in respect of her shareholding in Ambadi Investments Ltd (AIL), a holding company of the Murugappa Group. While the Murugappa family and the board of AIL are handling this matter, it is unfortunate that Mrs Arunachalam has taken recourse to the press,” CNBC TV18 quotes him as saying.
IANS quoted a ‘longtimer in the group’ who stayed anonymous: "It has been the group's practice not to bring in women into running the business, be it daughters or daughters-in-law. The female members of the Murugappa family are involved in running the schools owned by the group or come for other major functions.”