The shareholders of Ambadi Investments (AIL), the holding company (holdco) of the Rs 38,100-crore Murugappa Group, have voted against the induction of 59-year-old Valli Arunachalam, the eldest daughter of former executive chairman M V Murugappan, into its board.
At the annual general meeting held on Thursday, 91.36 per cent of the shareholders of the Chennai-based holding company that controls the financial services-to-agro commodity conglomerate voted against the resolution, while 8.64 per cent voted in favour.
Arunachalam had sent a notice in August, proposing her candidature for directorship. 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 Vellachi Murugappan, and their mother M V Valli Murugappan hold the stake together. Her father, a former chairman of Carborundum Universal, passed away in September, 2017.
While the Murugappa spokesperson did not comment as “it’s a family matter”, US-based Arunachalam issued a statement, saying “The question remains why a female heir with a doctorate degree, 24 years work experience in Fortune 500 multinational companies, and numerous patents and publications to her name, cannot be inducted into the board, even three years after her father’s death….”
She hinted at exploring the legal route to protect her rights. A statement issued by her said “It seems the family is more concerned about protecting its draconian perspectives and practices, even if it means forcing us to take the battle to courts. We will not shy away this time….”
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.
- Arunachalam’s family holds 8.15% stake in Ambadi Investments, the holding company of the group
- Under the Hindu Succession (Amendment) Act, 2005, women can become the karta or head of the family, and daughters can become co-parceners and inherit as much as sons
- Arunachalam is the karta of the MVM Hindu Undivided Family
- She has been seeking a board seat in AIL
She also alleged that the group promoters have a gender bias against women entering the family business. Hence, she and her sister were denied a board berth at AIL after their father’s death. She said that after her father’s demise, her family did not have board representation at AIL, which is managed by an eight-member all-male board.
Under the Hindu Succession (Amendment) Act, 2005, women can become the karta or head of the family, and daughters can become co-parceners and inherit as much as sons. Arunachalam is the karta of the MVM Hindu Undivided Family, which holds stake in AIL.
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 companies.
Founded in 1900, the Murugappa Group currently controls more than two dozen companies, including nine listed ones — Coromandel International, EID Parry, Shanthi Gears, Carborundum Universal, Tube Investments of India, Wendt, Cholamandalam Financial Holdings and Cholamandalam Investment 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.
Article source: https://www.business-standard.com/article/companies/murugappa-family-votes-to-keep-valli-arunachalam-out-of-holding-co-board-120092201030_1.html