Valli Arunachalam denied board seat in Murugappa Group, here's why

The shareholders’ denial of entry to Valli Arunachalam, the daughter of Murugappa Group’s late patriarch MV Murugappan, in the group’s board shows how women continue to be treated in the male-dominated world of business, particularly in Tamil Nadu.

The 59-year-old is the eldest daughter of late Murugappan, former chairman of the group. Murugappan, the son of A M M Vellayan Chettiar and the grandson of the group’s founder A M Murugappa Chettiar, died on September 19, 2017. 

Valli has been trying to get a seat on the board of Ambadi Investments Limited (AIL), the holding company of the group, since then.

Valli and her sister Vellachi, a tech professional, and their mother M V Valli Murugappan, had inherited 8.15 percent stake in the group. Following the death of her father, Valli gave two options to the group — either induct her into the board or buy the stake at a fair value. But, the group management has not considered either option.

Related News: Country’s richest woman Roshni Nadar becomes HCL Tech Chairperson

It is in this backdrop that the group’s annual general meeting took place on September 21. During the meeting, about 92 percent of shareholders of AIL voted against Valli’s entry into the board.

No place for women

Born in 1884, AM Murugappa Chettiar started a banking business in the then Burma (now Myanmar) in 1900. 

His son AMM Murugappa Chettiar was born in 1902 in Pallathur, a village in Sivagangai district where the Chettiar community is thickly populated.

In 1940, due to the World War II, the economy of Burma got disrupted and the family of Murugappa Chettiar moved to India. In 1948, they launched two companies TI Cycles (now Tube Investments of India Limited) and Coromandel Engineering Company. In 1954, they founded Carborundum Universal Madras India Limited (currently known as Carborundum Universal Limited). 

The group now manages 28 businesses in different verticals, such as engineering, finance, insurance, agriculture and chemicals, with an annual turnover of nearly Rs 40,000 crore and and employee strength of 50,000.

Had Valli got the shareholders’ approval, she would been the first woman to take a place on the board of the 120-year-old business empire. But the Chettiar family, in keeping with the community tradition, did not deem it fit to allow women into the business.

“It is the policy of the group since its inception to not allow women on the board,” said business journalist Sushila Ravindranath, who has authored the business book ‘Surge: Tamil Nadu’s growth story’. “They can’t do it in a public listed company (law requires the boards of public limited companies to have women). However, AIL is not a public limited company. The AIL Board has rejected her entry saying it’s a family controlled group. We don’t know what the memorandum of understanding between the family members is. We don’t know whether it is legally done, but it is possible since the board has no outsiders,” she said. 

Related News: As Mistrys seek to sell Tata stakes, valuation emerges as the key challenge

The unusual situation has arisen because Murugappan doesn’t have a son, she said.

“They don’t allow son-in-law’s in the business because it may create complications. They believe in family unity. Other companies like TVS Group, though a holding company, are run by individuals. But, here, the closely knit family runs the business. Usually, families come apart in the third generation, but Murugappa’s is the only one that has kept the family together for five generations. By not letting women on the Board, it doesn’t mean they have gone down but they have grown” said Ravindranath.

The keeping of women at bay has followed in the Group to an extent that in the family tree of Murugappa Chettiar found in the Group’s website has only male heirs and has left out the daughters of MV Murugappan.

Why Murugappan hasn’t adopted a son?

“Chettiar families are essentially Hindu undivided families and the status of a member is only acquired by birth or by adoption,” said Dr A Punitha, assistant professor, directorate of distance education, Pondicherry University, whose doctorate thesis was about ‘Nattukottai Chettiars’. “Once a family is established, the jointness of food and worship, the ownership of property and ‘coparcenery’ is acquired by the members by birth. This usually consists of son and grandsons. The daughters are not considered, the reason being they are married off with a fortune of wealth and jewellery from the house,” she said.

Related News: Hinduja brothers in legal dispute over letter dividing $11 billion fortune

The Chettiar community has the practice of a couple adopting a son in case they don’t have a heir or have only daughters. A family needs a minimum of one son to continue the initials or the name of the family. “But there are some rules for adoption. For example, the boy should be only from the same clan. Usually the son of the brothers are preferred. Unlike in other communities, Chettiars even adopt a grown boy. This adoption of a grown boy into a new family keeps up the cordial relation between the families through the boy,” writes Punitha in her thesis.

“AMM Vellayan, the 40-year-old son of AM Murugappa Chettiar, was shot dead in Burma in 1945. The devastated AM Murugappa Chettiar requested his eldest son to adopt the second son of Vellayan. It was customary, as the eldest son AMM Murugappa Chettiar only had two daughters. This helped the AMM family’s unity and ensured the growth of the business into the conglomerate that it is now,” she said.

Related News: Reliance announces 15-year plan to build itself as new energy company

The second-generation’s tale is getting repeated in the fourth generation. MV Murugappan had only two daughters, but he did not adopt a son. “In the olden days, they would adopt a son even if they had a daughter. But, over the years, the practice has faded with only those who don’t have a child adopting a son. May be MV Murugappan was forward-thinking and he was happy with his daughters. However, the rules of running a business varies from family to family,” said Punitha.