The Murugappas: Distinguished Philanthropic Family
Image: Raju Patil for Forbes India
t could have been a scene from the climax of 3 Idiots, except that it happened in Chennai and way back in the ’70s.
The pace of urbanisation during that period along the coast of Tamil Nadu told on fishermen in an interesting way. They couldn’t get wood for the catamarans. They didn’t relish the prospect of going inland for wood, when they should be going to the sea to fish. To top that, there was shortage of people who could make catamarans like they used to—sturdy and safe (to the extent a catamaran can be safe).
They approached CV Seshadri, who had taken early retirement from IIT Kanpur, and had settled down in Chennai to work in AM Murugappa Chettiar Research Centre (MCRC), an institute founded by the Murugappa family. His solution: Do away with the wood and use high density polyethylene instead. The material was more buoyant and could hold more weight; it was also resistant to corrosion by sea water. (The catamarans are still being used near Chennai). Some time later, the fishermen came to him with another problem: The fish in the areas they went to had dwindled. Again his solution was simple: He and his team built a device that made sound that was attractive to fish. In the ocean, fish gathered around these devices—the fish now came to the fishermen.
K Raghunandanan, who heads MCRC, says Seshadri, till he passed away in 1995, was a passionate proponent of appropriate technology and Gandhian engineering. The research centre continues to build solutions that are low-cost, effective, decentralised, often building on traditional knowledge. Its work, in the areas of food, energy and technology, spans biofuels, health and nutrition (spirulina utilisation), paper from alternative materials, low-cost housing, organic farming and effluent treatment. “Our aim is to bridge science and technology with the economics of local areas,” he says.
Raghunandanan, an IIT alumnus, is a Murugappa veteran of 25 years. Before he moved to MCRC, he headed the sugar company EID Parry, owned by the Murugappa Group.
Both MCRC’s work and Raghunandanan’s background shed some light on how the Murugappa family approaches philanthropy. It’s not flashy; it has been around for a long time, and has worked steadily with admirable consistency. In short, the approach is to help the local community, do it without fanfare, but use the best professionals.
This applies to its other community initiatives as well, which are run by the AMM Foundation. The Foundation runs four schools, a polytechnic and four hospitals. All are aimed at the poor. At its school in Ambattur, 70 percent of the students are first generation learners. The 200-bed Sir Ivan Stedeford Hospital’s waiting room is filled with patients who cannot afford health care in privately run institutions. Pointing to a few cars parked in its campus one recent afternoon, N Mahatvaraj, secretary of AMM Foundation, said: “We also get rich patients which, I suppose, says something about the quality of the service here.”
In terms of scale, Murugappa is no Tata or Birla. Its revenues, at $4.4 billion, are less even than Infosys’, a relatively recent entrant into the world of business. It’s widely seen as a conservative group, even though there are signs of aggression: A Vellayan, who took over as Murugappa Group executive chairman three years ago, wants to grow its revenues at twice the growth rate of GDP and in recent months, the group has been building its brand through a series of campaigns. Yet, it is generally believed even by those within the group that its steady stride will not turn into a racy sprint.
But, in the world of family businesses, it holds a special place for three reasons. First, in an environment where families split in two or three generations, all its members have stayed together for four generations, even as a fifth is entering the business.
Second, it has a reputation for high ethical standards. Arun Alagappan, a fourth generation family member, now with TI Cycles, says the first thing the Murugappas did after taking over an ailing EID Parry was to sell off the only profitable unit it had—a liquor business—because it was against its values. His father, MA Alagappan, told Forbes India earlier that it considered getting into telecom, but decided not to “because the way even the first sets of licences were given would have gone against our values”.
Third, it’s approach to professionalising the business is considered to be a model for other family businesses. Back in 1999, it created a governance structure that brought in professionals to lead individual business units, and family members took up board positions. “The new structure was innovative for the business and for India. At once, it allowed family members on the board to focus on strategic areas across businesses for the benefit of the entire organisation,” said John Ward, an authority on family businesses and a professor at Kellogg School of Management, in a speech at International Institute for Management Development, Switzerland. The overall sense one gets is, ‘Go by the rule book, follow the processes, and all will be well with the business.’