Ambadi Investments' stake in Murugappa group Rs 9,484 cr in Oct 19

The value of direct holdings of Ambadi Investments Ltd in the listed companies of the Murugappa Group was about Rs 9,484 crore, states a November 2019 credit rating report by Crisil Limited.

The Ambadi Investments is the family holding company of the promoters of the Rs 37,000 crore industrial conglomerate Murugappa Group which is now caught in the midst of a gender bias controversy.

However, a perception strategist is of the view that the controversy will not have any impact on the group or its brand in the short or in the long run.

The Murugappa Group and Ambadi Investments hit the headlines recently with the US-based Valli Arunachalam, the daughter of late M.V. Murugappan, alleging that the group promoters have a gender bias against women getting into family business and hence she and her sister were denied a board berth in Ambadi Investments Ltd after their father's death in 2017.

According to Arunachalam, her family holds about 8.15 per cent stake in Ambadi Investments.

According to the Crisil report, Ambadi Investments' financial flexibility is healthy, supported by the market value of its investments in group's listed companies - E.I.D. Parry India Ltd (38.47 per cent shareholding), Carborundum Universal Ltd (29.63 per cent), Tube Investments of India Ltd (36.36 per cent), Cholamandalam Investment and Finance Company (4.31 per cent) and Cholamandalam Financial Holdings Ltd (37.91 per cent).

"The market value of AIL's (Ambadi Investments) direct shareholding in these companies was Rs 9,484 crore, as on October 14, 2019. This provides healthy cover of over 20 times for the rated debt. AIL may retain its current holdings except to retire the rated debt," Crisil said.

In its report on Ambadi Investments, the credit rating agency Crisil, on November 13, 2019, reaffirmed its A1+ rating for the company's Rs 150 crore commercial paper programme.

According to the report, Ambadi Investments is likely to receive steady dividend inflows from its direct shareholding in the Murugappa group's operating companies.

The credit rating agency said the dividend inflow for Ambadi Investments is expected to be sufficient to meet internal fund requirements.

Crisil said Ambadi Investments has strong liquidity supported by debt free balance sheet and healthy cash accruals of over Rs 80 crore annually.

For the year ended March 31, 2019, Ambadi Investments had a total income of Rs 145 crore and a profit after tax of Rs 128 crore.

According to Crisil, Ambadi Investments has a diversified investment portfolio and benefits from strong risk profiles of the listed companies in the group as well as the strong reputation of the Murugappa group.

To a query on how the 'gender bias' allegation to impact the Murugappa group's reputation Jhon Arokiasamy, perception strategist, Persona Leaders told that "there are two aspects to the issue, legalese and the public perception that is playing out for both the parties concerned".

"Unfortunately, when it comes to female gender diversity of corporate boards the Indian average is abysmally low in comparison to the western average which is even around 40 per cent where some companies even meet the critical mass capacity,", said Arokiasamy, who has handled corporate crisis scenarios in the past and is now a noted poll strategist.

According to him, the holding company of Murugappa group family Ambadi Investments may have a temporary setback of being perceived as one lacking gender diversity or being biased to female gender despite the fact that it may not be a mandatory requirement probably as in this case.

"Also, I don't think it would have any major adverse impact on the other brands of the group now or in the longer run," Arokiasamy added.

(Venkatachari Jagannathan can be contacted at v.jagannathan@.in)

( With inputs from IANS )