Rats and Riches Divide Chettinad Royals

Published: 31st May 2015 06:00 AM  |   Last Updated: 30th May 2015 11:00 PM   |  A+A-

CHENNAI: Family feuds are always ugly. Even more so, when it is father and son grappling for the reins, and accrued benefits, of a 103-year-old corporate house. Spanning 15 companies and Rs 5,000 crore in turnover—the house traces its lineage back to the pioneer of industry in Tamil Nadu, Raja Sir Annamalai Chettiar. Now throw in a sprawling estate in Chennai city estimated to be worth more than Rs 1,500 crore and several other assets, and it is only a matter of time before trouble comes home to roost.

The Chettinad Group, and the family that controls it, have been in the midst of an extended tussle for dominance and control for several years now. On one side is Raja Annamalai Chettiar’s grandson, 83-year-old M A M Ramaswamy—the ‘Chettiar Raja’. On the other end of the story is the son, the 43-year-old M A M R Muthiah—born Ayyapan and adopted by Ramaswamy and his wife Sigapi Achi in 1995—is the heir to the corporate throne. Ramaswamy has been a public figure in the south. Once estimated by Forbes in 2012 to be the 88th richest man in India, he has been highly visible. He has also been a Rajya Sabha MP on a Janata Dal(S) ticket in 2004.

The centre of power for the Chettinad Group, Chettinad House, saw a midnight drama play out early Sunday (May 24) morning when a pitched battle between the employees and henchmen of father and son erupted when Muthiah’s office in the estate was intruded upon by Ramaswamy’s men. The latest bone of contention between the father and son duo was the issue of 40 dead rats. “There were more than 40 dead rats in the room,” said Ramaswamy, adding, “More than 40 of Muthiah’s men had come into the house and beaten up my servant. They also took photographs of some documents. He has taken 90 per cent of my assets, he wants the rest too. He wants to kill me. He is no longer my son,” he said. According to Muthiah, his men were only reacting to the fact that his father’s men had locked his office. According to sources, this is only the latest of a long series of incidents, most ensuing in the privacy of boardrooms and the family home that has plagued the family controlling the Rs 4000 crore edifice.

The tug of war irrevocably attracted the scrutiny of the larger public in August last year, when M Manuneethi Cholan, the registrar of companies in Chennai, was picked up by the CBI for accepting a Rs 10 lakh bribe from Ramaswamy. The reason? To declare null and void any decision that was to be taken at the Annual General Body Meeting (AGM) of Chettinad Cements that was to be held the next day. “He knew that it was going to be a bad AGM for him,” said one shareholder to The Sunday Standard. The AGM, which Ramaswamy could not attend, defeated a motion to reappoint him to the board and consequently disqualified him from the chairmanship of the flagship of the group.

Ramaswamy’s loss of the chairmanship was only the final nail in his loss of control over the highly diversified conglomerate. “Ever since Muthiah was brought into the management of the group in 1999-2000, he has been running the show and Ramaswamy has only been playing a supporting role,” said an industry insider.

M A M Ramaswamy.PNG 

When Ramaswamy’s wife passed away on March 24, 2006, the relation between the father and the son grew worse when Ramaswamy began noticing that Muthiah had brought into his fold several of the top officials of the group’s companies. When taken over by the Tamil Nadu Govenment, Annamalai University, over which Ramaswamy had enjoyed complete control, had a deficit of Rs 272.6 crore and a liability of Rs 238 crore. With no university to divert him, he had begun to take a more active interest in the group and there-in lay the problem.

The primary issue, among a plethora of smaller ones, is reportedly a vast gulf in opinion between the two on how to run the business. Muthiah, in fact, was reported to have recently said that his father would not accept any compromises. The business, according to Muthiah, cannot be run his father’s way.

Shareholders, that The Sunday Standard spoke to, say that Muthiah is a shrewd and canny businessman who has managed to turn a stagnant company around. In 1999, the Chettinad Cements results saw the listed concern seeing a turnover of Rs 600 crore. In 2014, it was close to Rs 4,000 crore. He has also substantially increased the businesses of other group companies including Chettinad Logistics and Power, say sources. Most recently, the group revealed that it has lined up nearly Rs 4,000 crore in investments in cement and logistics. The group has also forayed into health, security services and entered into a 30-year agreement to design, build and operate the terminal at Ennore Port.

Muthiah also has a firm hand on the equity of the group. His wife Geetha controlled holding companies, and he together hold 74 per cent of the group’s equity. Ramaswamy holds only 24 percent. However, sources say that the properties and other assets are still in Ramaswamy’s name.

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