restructure Family Business
the Murugappa Group
Another iconic family-run business of Chennai, the $ 5 billion turnover Murugappa group, is repositioning the leadership of unit companies aligning these with families. Till recently the group had the senior most family member designated as chairman of the group: in the early stages under AMM Murugappa Chettiar (1902-1965) the group entered into a number of foreign collaborations and emerged a large light engineering conglomerate that was nurtured by AMM, his younger brother AMM Arunachalam and their nephew M V Arunachalam. The chairmanship passed on, in due course, to AMM Arunachalam and thence to M V Arunachalam. During the tenure of MVA, the group expanded through acquisitions of the two-centuries’ old EID Parry. This helped it diversify activities to sanitaryware, fertilizers, sugar, confectionary … The baton passed to MVA’s brother M V Subbiah.
The group expanded by buying the shares of the American giant Chevron in Coromandel Fertilizers. M A Alagappan, who succeeded Subbiah, further expanded the activities into financial services like Cholamandalam Investments, Chola MS Insurance… A Vellayan, who succeeded Alagappan, expanded the agro business. This continued under MM Murugappan, also of the third generation. The successive generations of scions equipped themselves with higher education in foreign institutions and to much wider exposure to industrial practices.
In the new arrangement the operations are brought broadly under three groups:
- The agri inputs division with A Vellayan as Chairman and Arun Alagappan as the Executive Vice Chairman. The two sons of Vellayan, Arun and Narayanan, are in senior executive positions in Coromandel International.
- Tube Investments of India and Cholamandalam Finance have Vellayan Subbiah and Arun Murugappan at the top.
- The third group under the lead of MM Murugappan along with MM Venkatachalam will manage EID Parry, CUMI and Chola MS Insurance
Another senior member A Venkatachalam will manage Coromandel Prodorite.
So far the group has kept their lady members outside. The next stage may perhaps be to work on apportioning the group shares to the individual units of the group.
In this new arrangement with the responsibilities and ownership defined more sharply, one can expect a much higher rate of growth, both organic and through acquisitions. The recent acquisition of CG Power is a major landmark after that of EID-Parry.
The group has been free from sentimental attachment. Look at the ease with which the group sold an iconic company like Parrys Confectionary, the century-old sanitaryware business of Parryware, even its landmark building, the TIAM house, the engineering and travel businesses.Parrys pioneered sugar production in Tamil Nadu in 1842. For decades the business has been profitable and the industry expanded with acquisitions at Pettavaitalai and set up state-of-the-art units at Pudukottai and Kakinada. With the uncertain and cyclical performance of the sugar industry in the south, Parry may opt to exit the sugar sector; but with the new ethanol policy, making ethanol as profitable as sugar, Parry can also return to the old plan of developing the Kakinada unit as a profitable base for exports.
C R Narayana Rao LLP
C R Narayana Rao LLP is an illustrious firm of architects and has been associated with the evolution of architecture in this part of the country. The firm has designed several of the iconic structures like the Tidel Park, multiplex theatres, industrial structures… The pioneering work of Narayana Rao has been continued by his two sons, C N Srinivasan, an engineer and C N Raghavendran, an architect. These were supported, in course of time, by their children C S Sumitra and C S Raghuraman (of CNS) and C R Aravind (of CNR). L Venkatesh, nephew of CNS and CNR, was another senior architect of the firm. Raghuraman’s wife, Kavitha, Aravind’s wife Sushma are other prominent executives.
The company has been working together in unison and expanded the clientele by the day. CNS has been concentrating on industrial projects and buildings and CNR’s focus was on a range of specialised projects. Now the family seems to have split into two independent businesses. With business expanding there should be enough and more for both. -SV
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