All data from public. Just for acedmic propose

1. Strategy Leadership
International Team:
Xiang X,
Jan E.A.N,
Kamil T,
Guang L
Stefania D V,
Charlotte L

2. Agenda
Murugappa Group Brief
Evolution of Governance (90’s to 2000’s)
Main Changes to Maintain Group Efficiency
Recommendations for Murugappa

3. A brief overview
•
Headquartered in Chennai, India.
•
More than 32,000 employees globally.
•
Strong alliances with huge international companies.
•
Business origins dates back to 1900 when Dewan Bahadur
Murugappa Chettiar established a money-lending & banking business.
•
Diversification in the area of business a frequently repeated practice,
with products ranging from bicycles to general insurance to fertilizers
etc.
•
Leadership models have changed throughout the times but always a
family-run group.

4. Global Presence

5. Ownership structure
- Governed by the Murugappa
Corporate Board (MCB), headed
by A Vellayan as its Executive
Chairman.
USD 4.4 Billion
Conglomerate
28 Businesses
in 22 fields

6. Group Structure
Fertilizers, pesticides &
specialty nutrients
Tubes, stripe for
industrial and
automative
Non-life
insurance
products
Abrasive,
Refractories,
Electro mineral
and Industrial
Ceramics
Financial
services
High yielding
plantation
Sugar, neem
producer
Special Purpose Grinding
Machines and tools

7. Leadership
Family Tree
4 Generations
(From 1884-Now)
(The Kartha System)

8. Mission & Strategy
 As it is a group so there can’t be a single mission that runs through
different companies rather a philosophy that the group basis its
business on: it is an extract from: the ancient Indian treatise on
wealth creation and governance, the Arthashastra:
"The fundamental principle of economic activity is that no man
you transact with will lose, then you shall not.“
 If one had to define a mission for the group it would basically be to
become a global group providing diverse types of high-quality
products.
 The broader business strategy that has been practiced since the
inception of the business is to continue to diversify, capitalizing on
any slight opportunity that may be present in the market.

9. Values
‘Treat people with respect and concern;
Provide opportunities to learn, contribute and advance;
Recognize and reward initiative, innovativeness and creativity

10. Values & Beliefs; Rules
•
•
•
•
•
•
•
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Adhere to ethical norms in all dealings with share holders, employees,
customers, financial institutions and government.
Provide value for money to customers through quality products and services.
Treat our people with respect and concern,; provide opportunities to learn,
contribute and advance; recognize and reward initiate, innovativeness and
creativity.
Maintain an organizational climate conductive to trust, open communication
and team spirit& maintain a style of operations befitting our size, but reflecting
moderation and humility.
Manage environment effectively for harnessing opportunities.
Discharge responsibilities to various sections of society and preserve
environment.
Grow in an Accelerated manner, consistent with values and beliefs by
continuous organization renewal.
In addition to that the basic rule for leadership in the family is the Kartha:
Family’s elder, male family leader in charge of guiding and choreographing the
course of the family. The Kartha would be the oldest male family member.

11. Agenda
Murugappa Group Brief
Evolution of Governance (90’s to 2000’s)
Main Changes to Maintain Group Efficiency
Recommendations for Murugappa

12. Main Financials
Sales Composition
PBT Composition
-
2011-2012 EBITDA
Growth Achieved: 20%
-
2011-2012 Gross Sales:
22314 Crore India
Rupees.

13. Decision-making Structure
Evolution from 90’s to 2000’s
Before 90’s
Decision Maker
1990 - 1999
After 2000’s
Family Head
(AMM)
Seven Family
Members
(CEOs)
Non family
members (CEOs)
1990 - 1999
Independent finance,
HR, Operation, etc. No
information sharing
and decision
communication.
Main Business Units
“With governance and
mentor from BOD”

14. Limits of decision-making structur
1. No flexible in term of decision making
(slow process in taking decision)
2. Emotion evolved in business decision
3. Family members are focus on individual
business units
4. Limited communication between family
members in term of group business
5. Inadequacy of governance in all business
units
6. Belonging of the family is the condition to
be CEO => not a criteria of performance
7. System of mentor/ the older form the next
CEO => no vision from the outside
8. No share of experience
9. No possible to negotiate the process from
supplier as a group

15. Governance Structure in 1990
In 1990, start of
liberation
process and
opening Indian
economy,
Murugappa family
decide to become
company as
group in formal
way.
Power path
Murugappa Corporate Board (MCB)
Murugappa Corporate Board (MCB)
CEO
CFO
COO
Family
Member
Consultant
Non
Family
Non
Family
MV Arunachaiam
Role of MCB
Increase the exchange ideas,
advice and knowledge for their
family ownership companies
AMM
family kartha
Career path
PARRY’S
Confectionery
CEO
Family
CEO
Family
CEO
Family
CEO
Family
CEO
Family
CEO
Family
CEO
Family
President
Non Family
President
Non Family
President
Non Family
President
Non Family
President
Non Family
President
Non Family
President
Non Family

16. Governance Structure in 1999
Murugappa Corporate Board (MCB)
Murugappa Corporate Board (MCB)
5 Full Time Directors
Chairman
3 Part Time Directors
Function: External vision
from outside
VC - Strategy: Algy (Family)
Director - HR: Venhy (Family)
Director: Reghavan
Director: Masti
Director: Natalies
Director – Technology: Murugu (Family)
M V Subbiah
(family kartha)
Director – Marketing: A Vellayan (Family)
Director – Finance: Purtho (Non Family)
Role of 5 Directors
-Functional responsibility
for the group
-Mentor CEO
-Mentor for young family
5 Family member move to MCB
from 7 different companies
Non Family CEO: all promoted from within
PARRY’S
Confectionery
CEO
CEO
CEO
Non Family
Non Family
President
Non Family
CEO
CEO
Non Family
Non Family
Non Family
President
President
President
President
Non Family
Non Family
Non Family
Non Family
Non Family
CEO
CEO
Non Family
President
President
Non Family
Non Family

17. Agenda
Murugappa Group Brief
Evolution of Governance (90’s to 2000’s)
Main Changes to Maintain Group Efficiency
Recommendations for Murugappa

18. Conflicting risks
• MBC and company CEOs: MBC is powerless in
decisions making process
• Shareholder and MBC: rights and
responsibilities are not clear
• Family female numbers and male members:
opportunity not equal
• Company CEOs: fight for resources

19. Decision to prevent risks
• Non-family professional manager steps up to Group
CEO after Subbiah retire. Build an independent and
effective board of directors
• Set up shareholder board, separate the rights and
responsibility of shareholder board from those of MBC.
Establish a Shareholders' Communication system to
increase transparency and to maximize shareholder
value
• Kartha only acts as a leader inside family

20. Agenda
Murugappa Group Brief
Evolution of Governance (90’s to 2000’s)
Main Changes to Maintain Group Efficiency
Recommendations for Murugappa

21. Developing a Family Constitution
Why is a written constitution necessary?
- To minimize the potential conflict the Group might face
during generation transaction periods;
- To keep the family’s focus on important strategic
issues;
- To help sustain and grow the Group;

22. Developing a Family Constitution
What should the constitution focus on?
-The Group’s values and beliefs
– as developed in 1987 under the leadership of MV
– set to reinforce the family’s input and the kartha’s role;
– with regards to business process, customers, employees,
stockholders and business ethics;
- The Group’s strategic goals
– namely the governing structure in charge of setting strategic goals
- The Group’s ownership and management by family
members
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–
–
–
criteria for transition and succession;
rules regarding salary, benefits and dividend allocation;
decision making;
family meetings;

23. Thank you !