Dismantling Murugappa Advisory Board not in investor interest: Arunachalam

She says she learnt about the development from media reports, not from the family

The recent decision to dismantle its two-decade-old non-statutory Corporate Advisory Board by the Murugappa group is not in the interest of the shareholders, said Valli Arunachalam, a family member of the Rs 38,000 crore Group. She also claimed that her family was not part of the decision making.

Last month, it was decided that the group and individual companies would now be led by senior family members, instead of the board, which was led by a family member and five outsiders. The Board was formed in January 2000 as part of a ‘new millennium strategy’, under a new corporate governance structure. Senior members earlier said that instead of the Murugappa Corporate Advisory Board, they would be playing a direct role in the companies by mentoring youngsters and professionals.

Responding to the development, Arunachalam said, "We learnt about this from media reports, not from the family. This is certainly a major corporate restructuring of the Murugappa Group. The family should have respected all major promoters shareholders and exhibited integrity and responsibility by including them in the decision making process".

"Restructuring clearly seems to have been done to safeguard the family interest, rather than shareholders' interest," she said.

Murugappa Group did not respond to Business Standard's query on her claims immediately.

 

Arunachalam added, "It is a family business. Until recently, my late father was an integral part of the Group. Every family branch has representation and is a promoter of the Group and it is only reasonable that all the family branches be informed of such a major restructuring."

While refusing to comment on the Board's dismantling, she said, from her 24 years of work experience in Fortune 500 MNCs, the Corporate Advisory is an extremely valuable resource to business groups. They are instrumental in building synergies across various businesses, in establishing and maintaining a strong value system. They also provide diversity and objectives in the leadership thought process on matters ranging from succession planning to business strategies.

"We will take next steps after discussing with our advisors," said Arunachalam, adding that branches of the Group family did not respond to her family offer to buy Arunachalam family's stake.  On whether she is talking to some body outside to sell the stake, she did not comment.

Valli Arunachalam, the daughter of the conglomerate’s executive chairman late MV Murugappan, is taking on the male members on the board of Ambadi Investments Limited (AIL), the group’s holding company. 

Arunachalam said she was ready to take the battle to courts after her bid for a seat on the male-only board of AIL was rejected by other family members at the company’s annual general meeting a day earlier.

Valli, her sister Vellachi Murugappan and their mother M V Valli Murugappan, collectively hold 8.15 per cent stake in Ambadi, a stake they inherited from M V Murugappan