1. Regional caFe: Decoding the Chettiars

Regional caFe: Decoding the Chettiars

The inheritance feud between Chettinad Group chairman MAM Ramaswamy and his adopted son MAMR Muthiah, who is in control of Chettinad Cement, has its roots in history

By: | Published: June 30, 2015 12:16 AM

Once dominated by family businesses, Chennai has changed beyond recognition since liberalisation. It has become a hub for automobile companies and has a large presence of MNCs. The IT industry and BPOs are also major job providers. However, family businesses have not walked into the sunset. Those who learnt to reinvent themselves post-liberalisation—TVS, Amalgamations, Murugappa, MRF—are doing well. But the early pioneers—the Chettiars, who established banks, educational institutions and ventured into industry—are no longer the leaders, with the exception of the Murugappa Group. Chettiars are today worried by the lack of interest in entrepreneurship among its younger members.

The community is close knit and conservative. They do not wash their dirty linen in public. There are, of course, exceptions. It was well known in Chennai that Chettinad Group chairman MAM Ramaswamy and his adopted son, who is in control of Chettinad Cement, have been at loggerheads. Ramaswamy was removed as the chairman of the company last year at the AGM. The Registrar of Companies, Chennai, M Manuneethi Cholan, was arrested by CBI for allegedly accepting a R10 lakh bribe from Ramaswamy to declare resolutions of the August 27 shareholder meet, in which he was removed, as null and void. It is open warfare since. This family is known to be the first family among the Chettiars.

“On my death my son should not light my funeral pyre,” said Ramaswamy dramatically, formally disowning MAMR Muthiah, who was adopted by Ramswamy and his wife Sigappi Achi in 1996. Ramaswamy has said that whatever little property and shares he owns are being bequeathed to two charities—the Dr MAM Ramaswamy Chettiar of Chettinad Charitable Trust and the Dr MAM Ramaswamy Chettiar Trust.

Declaring total war on Ayyappan (Muthiah’s name before adoption), Ramaswamy says he and his late wife had been cheated of all their property and trusteeships, including control of Chettinad Cement, the company started by his father. Ramaswamy also founded the Chettinad Health City by selling the land around the Chettinad Palace and depositing proceeds in the Rajah Muthiah Education and Charitable Trust.

Muthiah claims his father is being influenced by a small coterie around him. He has controlling interest in the companies from the shares he was handed over and from what he has been buying in the market. Chettinad Cement was delisted a year ago. Muthiah says he has infused life into Chettinad Cement. Industry sources agree that he has professionalised the set-up, introduced automation, expanded into new markets and has cut staff and costs. The father is known to be a gentleman who ran companies in feudal style and cut a lot of slack with his trusted employees.

Trouble began for Ramaswamy in 2012 when the state government took administrative control of Annamalai University, which his grandfather founded in 1929, following reports of financial irregularities. Ramaswamy, as pro-chancellor, had complete authority over it since 1984 when his father died. With the university slipping out of his hands, a valuable cash cow died. Muthiah started tightening purse strings. He claims he did not want this to happen to Chettinad Cement as well.

Contrary to popular belief, all Chettiars are not wealthy. The Nattukottai Chettiars hail from Chettinad, a cluster of villages in Sivagangai district. They were traders or moneylenders who went to Calcutta in the 18th century. Then they moved to Ceylon, Burma and then what was known as Straits, Malaya and other islands. The Dutch invited them to Sumatra and the French to IndoChina. In all these countries, European banks were not willing to lend to the locals who were small traders, labourers and shopkeepers. They came to be known for their integrity and honesty. Banks lent to them. They, in turn, lent to locals and collected interest. Chettiars started setting up small banks. They crashed when some bigger European banks went belly up in the early 20th century. Only larger families with wider investments and larger businesses survived. At the time of Independence, more of these Chettiars were employees than employers.

A few families went on to found educational institutions, banks and industries. The founder of the Chettinad family was SRMM Muthiah Chettiar. His eldest son and second son’s families were involved in the founding of Indian Bank and Indian Overseas Bank (IOB). MCT Muthiah Chettiar broke away from Indian Bank to set up IOB to help overseas Indians. He also set up United India Assurance and made a daring entry to the industry promoting Travancore Rayons. He died young—in an air crash when he was 49. Later, when banks and insurance were nationalised, his heirs were traumatised and did not launch anything big.

The founder’s youngest son Annamalai Chettiar started India’s first private university in 1929, the Annamalai University. The King of England conferred the title of Raja of Chettinad on Annamalai. His son MA Muthiah Chettiar inherited Chettinad Group, while another son MA Chidambaram founded the SPIC Group (which is doing badly) after branching out on his own. When MA Muthiah Chettiar passed away, MAM Ramaswamy had to step in. Both brothers did not have children. His brother’s widow Meena Muthiah adopted a son and she too has fallen out with him. But there was no song and dance about the parting of ways. Ramaswamy and his cousin AC Muthiah, who had been estranged for years, have come together now. AC Muthiah will take over Ramaswamy’s trust after his time.

Nobody knows whether MAMR Muthiah can be disadopted legally. However, as this drama plays out, the Chettiar community has pulled ranks behind MAM Ramaswamy.

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