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Valli Arunachalam issues legal notice to Murugappa family members, others

The development comes after the shareholders of AIL voted against the induction of Arunachalam into its board

Murugappa Group | Hindu Undivided Family

T E Narasimhan  |  Chennai 

Valli Arunachalam, karta, MV Murugappa Hindu Undivided Family
Valli Arunachalam

Valli Arunachalam (pictured), together with her mother M V Valli Murugappan and sister Vellachi Murugappan, has issued a legal notice to the Murugappa family members, Ambadi Investments (AIL), and others in relation to implementing her father’s Will.

The development comes after the family members of voted overwhelmingly against the proposal to appoint 59-year-old Arunachalam to the board of AIL at the firm’s annual general meeting (AGM) on September 21. AIL is a holding company (holdco) of the $5-billion-plus (or Rs 38,100 crore)

“We have decided to seek legal remedies with respect to our ongoing efforts to settle my father’s Will. Accordingly, we issued legal notices to the Murugappa family members, AIL management, the company, and other people in relation thereto,” said New York-based Arunachalam.

“It was a big step for us and a very unfortunate one, as we have worked tirelessly over the course of three years to bring about an amicable settlement of my father’s interests in AIL. With the family voting unanimously to reject my appointment to the AIL board, we have seemingly reached the end of the road for an amicable settlement,” said the eldest daughter of former executive chairman M V Murugappan.

She claimed her family tried for an amicable settlement and tried inter alia a proposal for the engagement of an independent mediator. “Each entreaty has been met with some combination of silence, combativeness, false assurances, and delaying tactics”.

Arunachalam alleged that “after three years, the family’s tactics are nothing more than a robe to conceal their socially regressive gender bias. With only female heirs, the historically male-dominated family business is effectively asking that my family assume a second-class standing in AIL without the rights or privileges enjoyed by other families (many of whom have equal economic interests)”. She claimed that a considerable portion of her late father’s estate is tied to AIL, and it is entirely unreasonable to expect her family to relinquish control and visibility over these holdings to the broader Murugappa family.

“To date, no logical or legally valid explanation has been provided by the Murugappa family as to why my family should be subordinated in this manner,” said Arunachalam, adding that no one in the family, all of whom are shareholders in the company, has come forward to support her. Instead, they have been united in casting her out as a pariah for daring to challenge the family’s male-only business hierarchy.

At the AIL’s AGM last month, 91.36 per cent of the shareholders, mostly family members of of the Chennai-based holdco that controls the financial services-to-agro commodity conglomerate Murugappa, voted against the resolution which proposed Arunachalam’s candidature for directorship in AIL.

She had earlier laid two proposals before other branches of the Murugappa group family — either give a board berth to her or her sister, or buy her family’s 8.15-per cent stake in AIL at a ‘fair value’. Arunachalam, her sister, and their mother hold the stake together. Her father, a former chairman of Carborundum Universal, passed away in September 2017.

Arunachalam has been battling for the right to be recognised as her father’s successor to the board for a long time. She would have been the first woman director of AIL if the shareholders had favoured the resolution. AIL is registered with the Reserve Bank of India as a ‘systemically important non-deposit accepting core investment company’ (CIC). As a CIC, the company is primarily a holdco, holding investments in its subsidiaries and other group firms.

Founded in 1900, Murugappa Group currently controls more than two dozen companies, including nine listed ones — Coromandel International, EIborundum Universal, Tube Investments of India, Wendt (India), Cholamandalam Financial Holdings, and Cholamandalam Investment and Finance Company, among others.

The company’s consolidated profit before tax dropped 35 per cent in 2019-20 to Rs 637.17 crore, from Rs 979.14 crore, a year ago. The profit for the year stood at Rs 616.53 crore, compared to Rs 962.86 crore a year ago — a drop of 35 per cent. Total income rose to Rs 442.40 crore, from Rs 409.79 crore.

The promoter holding as of March 31 stood at 45.75 per cent, while the promoter group holding was 48.98 per cent, the balance held with others.

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First Published: Thu, October 08 2020. 12:01 IST