Not bound by right of first refusal: Murugappa female heir

Chennai: Fifty-nine year old US based technology consultant Valli Arunachalam and a member of the Murugappa Group categorically said she or her family members are not legally bound by any right of first refusal clause that may be there in the agreement between shareholders of Ambadi Investments Limited.

The Ambadi Investments is the family holding company of the promoters of the Rs 37,000 crore industrial conglomerate Murugappa Group which is now caught in the midst of a gender bias controversy.

She also declined to comment whether she would also like the group to consider her or her sister as a candidate for the post of Executive Chairman after the incumbent M.M. Murugappan retires.

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“As we have consistently stated, we have offered the shares to the family. Our last communication to them some time back on this subject requested for a time bound response,” Arunachalam told IANS in an interview.

“We are not legally bound by any right of first refusal. The offer of shares to the family was only out of respect and deference to what we believe was our father’s wish,” Arunachalam added.

Queried whether she is open to sell the stakes to outsiders Arunachalam said: “While we have offered the shares to the family consistent with what we believe is our father’s wish, we have clarified that it is only our preference to do so.”

Arunachalam, a doctorate in nuclear engineering, is alleging the group promoters have a gender bias against women getting into family business and hence she and her sister were denied a board berth in Ambadi Investments after their father M.V. Murugappan’s death in 2017.

She has laid two demands to the other branches of the Murugappa group family – give a board berth to her or her sister Vellachi Murugappan or buy her family 8.15 per cent stakes in Ambadi Investments at a fair value.

She said her family also holds stakes in the group’s listed companies.

Arunachalam said after her father’s demise, her family does not have a board representation in Ambadi Investments.

Murugappan was on the Ambadi Investments’ board since 1969 until sometime in 2016, when he resigned due to health reasons.

Queried whether any valuation of her family’s holdings in Ambadi Investments have been carried out, Arunachalam said: “We believe it would be inappropriate for us to share information regarding valuation of a holding company of listed companies. Therefore, at this point of time, I cannot comment on this question. But I will say that it is a well thought out and reasoned value that we have presented.”

As per a credit rating report by Crisil Ltd done in November 2019, the value of direct holdings of Ambadi Investments in the listed companies of the Murugappa Group was about Rs 9,484 crore.

In addition, the company has stakes in several profitable unlisted companies. Apart from the enterprise valuation, a buyer has to pay a premium as ‘control premium’.

Arunachalam said the other members of the family have not responded to her latest communication following a media report that the latter are open for an amicable settlement.

Asked whether the family offered a board berth to her or her sister’s son in Ambadi Investments, Arunachalam replied in negative.

Interestingly, that the unwritten ‘male only’ rule in the Ambadi Investments’ board room was there for a long time including when Arunachalam’s father Murugappan was alive.

Responding to that she said: “My father and I never discussed this. However, I have checked with my mother and she has confirmed that my father often expressed his displeasure against exclusion of women from the management of the family business, albeit to the resistance of other family members.

“I do hope you can see the distinction between ownership and management. Having said that, as we have stated in the past, given that we propose to exit, we believe that our father would have preferred that we offer our stake in the family business to the rest of the family. To that extent, indeed, our father did believe that ownership of the business should ideally remain within the family (and which would be no different from any other family owned business),” she said.

According to Arunachalam, barring her mother, sister and herself, no other women in the family starting from her father’s generation hold anything more than a token shareholding in Ambadi Investments.

“Therefore to your point, I do have reason to believe that my father did not subscribe to the rule that women should be excluded from board positions. Also, during his lifetime, our father was not faced with a situation that a male member had passed away leaving behind only female heirs. I can assure you, that he was far too much of a gentleman to have left such female heirs unattended, should he have been faced with such an unprecedented situation,” Arunachalam remarked.

Arunachalam said her father Murugappan did not ‘want’ the family stakes to be sold as they are theirs to keep until such time as they please.

But having proposed to exit, she believes that her father would have preferred that the stakes be offered to rest of the family.

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