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Chaos at Chettinad house
In the evolution of family businesses there are inevitable dissensions and partitions.

An organic cell in the human body splits continuously. This also happens in the development of commercial enterprises. We saw this with the Birlas, the Mafatlals, the Thapars, the Ambanis… at the national level.

The south, a later entrant into business development, had spawned family businesses that also got split with the proliferation of the progenies of the original founders. With a few exceptions, these had not been smooth or split on fair terms. The problem related largely to the allocation of the assets. We noticed this in the businesses of the Kotharis, the KCP, Chemplast-India Cements, to name a few.


The father-son feudal disdain

In most of these, the splitting begins with differences among the siblings or the cousins. The spat at Chettinad house is different: the quarrel is between the father and the adopted son, MAM Ramaswamy and MAMR Muthiah. Primarily the clash is based on the generational difference between the feudal approach of the father and the entrepreneurial urge of the son. I trace the evolution through three generations.

Annamalai Chettiar, a patriarch among the Nagarathar community, had a lot of interest in Southeast Asia. Focusing on the traditional business of money lending. He set up the Annamalai University and also expanded into trading. His elder son M A Muthiah Chettiar(MAM)who also dabbled in politics, pursued this. The large investments in A&F Harvey Mills, Indian Bank and other establishments were further reinforced by  prized dealerships in steel and cement to name a few. All these were flourishing businesses. Muthiah Chettiar did not have significant interest in  industry; but the vast investments in trading and land were highly lucrative.

R Venkataraman(RV) as Tamil Nadu Minister of Industry, acquired licences for setting up industrial units through the development corporations of Tamil Nadu. He used to persuade businessmen and budding entrepreneurs to take these licences, backing them with liberal funding by financial institutions. He offered MAM a licence to set up a cement plant at Karur. After much persuasion, RV succeeded in making him accept this. A wet process cement mill of 300-tpd capacity was initially set up.


Insatiable appetite for land...

Muthiah Chettiar had an insatiable appetite for acquiring land. He escaped the rigours of the urban land ceiling act by transferring these large scale to charitable trusts. The vast property in Egmore that stretched from Marshalls Road right up to Presidency Club was distributed among different trusts including one for Tamil, Sanskrit and other Languages. Likewise Annamalai Mandram and properties to the north that housed the Southern India Chamber of Commerce, were saved for him. Hundreds of acres, east of the Santhome High Road, right up to the seashore came under the Chettinad family. With the massive rise in land prices, the value of these properties zoomed to thousands of crore of rupees.

The poor quality of management by Muthiah Chettiar and his son MAM Ramaswamy resulted in the stunted growth of several of the institutions. But soaring land prices helped make the billionaire duo, multi-billionaires.

The other son of founder Annamalai Chettiar, M A Chidambaram, took the route of the industry. The Automobile Products of India Ltd that produced the Lambretta scooters and later the Southern Petrochemical

Industries Corporation and the several units around it emerged under the leadership of Chidambaram and his son A C Muthiah.


Charity begins at home

Time was when the philanthropic Vaisya community set up charities with the intention of service to the community and the society as a whole. The very many choultries built by these in the George Town area offered these for marriages and other religious functions along with vessels and other amenities at very modest charges. I remember dozens of marriages performed in these located around Kothaval Chavadi offered at such low tariff of  around Rs 100.

Look at the contrast today where marriage halls built by such charitable trusts charge few lakhs of rupees per day with an add-on for every facility. In the typical domino’s effect, the cost for all other services also escalate. What charity!  And the promoter-industry barons control the incomes generated by such charities.

P Chidambaram, a scion of Annamalai Chettiar, perhaps understood these more than others. Sadly, unable to curb these as finance minister, he was content to collect a share by bringing these under the service tax net.


MAMR, the racing raja…

Ramaswamy was content with his hobby of rearing horses. He made his name and fame as the racing Raja and had control over the vast properties of the Madras Race Club, the Presidency Club, and the like. He had little interest outside racing. His enormous wealth induced crafty Deve Gowda to get him elected as a member of the Rajya Sabha on the Janata Dal, Karnataka ticket cutting across the traditional divide between the two states. Ramaswamy, not quite known for his articulation or interest in politics, did not make any impact as a MP of the Rajya Sabha.  During his tenure from July 2004 to June 2010, his overall attendance was 6 per cent! I don’t think anyone heard him speak on any issue during his stint as MP. Unlike  his cousin,

A C Muthiah, he did not evince any interest in the activities of the Southern India Chamber of Commerce and Industry  nor in the Tamil Isai Sangam.

In running the Chettinad Cement Corporation, MAMR used to invite other leading public figures like S Narayanaswamy, N C Krishnan and D Rangaswamy to be the chairman. One could witness the raja lavishing the departing body with expensive silk.

The adopted son of Ramaswamy has been focusing on business. Seizing opportunities for growth in cement, he has expanded into new locations and built capacity for around 15 million tonnes. The operations have been profitable thanks to cartelisation and the boom in cement prices. The frequent skirmishes and differences in approach between Muthiah and Ramaswamy had reached a boiling point with the father disowning his adopted son and trying to annul the adoption. His present moves are to save the vast properties under the charities. One estimate puts their value in excess of Rs 10,000 crore. Burying the earlier quarrel with cousin AC Muthiah, MAMR has announced the nomination of A C Muthiah as his successor. Much earlier, he transferred the Tamil Isai Sangam, the Annamalai Mandram... to ACM.

Because of gross mismanagement, Annamalai University has been taken over by the government. Sadly, the university that in its initial years was centre of culture, Tamil and music, earned the odium for charging hefty capitation fees for engineering, medical and other professional courses as also for manipulating marks and results of professional undergraduate courses. The university also pioneered the practice in Tamil Nadu for awarding honorary doctorates to politicians in power and to the dilution of standards for the selection of vice-chancellors.

The present fight also led to complaints of tax evasion leading to widespread raids by the Income tax department of the offices of Chettinad group.

Charity has begun at home. Will this break the home?

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