It's been 55 years since Virginia Slims declared, “You Have Come a Long Way Baby”, to entice women to smoke. This week, one wonders where we stand in the fight for gender equality. On the one hand, India can boast of two women presidents, a de facto and one de jure prime minister, a finance/defence minister, and number of self-made billionaire women, global and national chief executive officer (CEOs). Plus there are legally-mandated representations on corporate boards. On the other, the events at Raymond Ltd (Raymond) and the Murugappa group suggest that women have more mountains to climb before achieving true equality in the boardroom.
Completely Repugnant
Over the decades, Raymond’s advertising tag line—The Complete Man—built a powerfully positive image of a sophisticated company. This image has been systematically torn down, first by chairman and managing director (CMD) Gautam Singhania’s war with his father, Vijaypat Singhania, a Padma Bhushan awardee, aviator and former chairman of the company. Mr Singhania (senior) is vocal about how he was thrown out of his home and his company and has poured his heartbreak and anguish in his autobiography, An Incomplete Life.
Even as the ugly father-son dispute was simmering down, an even more sordid scandal has erupted. Nawaz Modi Singhania, Gautam’s wife of 32 years, has accused her husband of violence against her and their daughter. Nawaz Singhania, a director on the Raymond board, also runs a fitness centre. Earlier this month, she posted videos on social media of how she was publicly humiliated by being prevented from attending Raymond’s annual Diwali party for the staff, to which she was reportedly invited. On the very day the videos went viral, Gautam Singhania posted an announcement, also on social media, that he was splitting up from his wife.
Immediately thereafter, Ms Singhania gave media interviews about how she was hospitalised in September after facing domestic violence. She also staked a claim to 75% of the family assets for herself and their two daughters. These developments have caused Raymond’s share price to slump by 18% so far and forced Gautam Singhania to reach out to the board and employees to reassure them that his personal issues would not affect the company which, he said, was thriving. It is unlikely that anyone was convinced.
What should be of more interest to investors is Ms Singhania's interview with Business Today in November. It raises concerns about the role of family members on corporate boards and their understanding of fiduciary responsibility. She was apparently told, “don’t ever open your mouth… don’t ask questions, don't make any comments. Why? Because you are just an angootha-chhaap for me. A finger print signatory.” She claims to have remained ‘deaf, dumb, mute’ on the board because Gautam Singhania insisted that she could not step down ‘if you want me to support you and the kids’.
While one sympathises with Ms Singhania’s personal predicament, these remarks by the director of a company, with a market-capitalisation of over Rs10,000 crore, call into question whether family members as directors understand their role and fiduciary responsibility at all.
In the interview, Ms Singhania also explains her attempt to attend the Diwali party, while she was still recovering from injuries. She appears to believe that playing the perfect hostess and giving out awards was significant aspect of her duty, even though her estrangement from the CMD was known to corporate and media circles. It indicates worrying confusion about her spousal duty and her role as a director.
Having stood by her husband’s actions for all these years, Ms Singhania now sees herself as a ‘whistle-blower’ who is worried about the ‘smallest shareholder’ and ‘pensioner’. She alleges that ‘company funds are used wrongly for personal wrongdoing’ and that the ‘authorities have been after him (Gautam Singhania) for a long time to find out the source of his income’.
The proxy advisory service, Institutional Investor Advisory Services of India Limited, has raised these issues in a letter addressed to the independent directors of Raymond on 28th November. It has asked the directors to seek legal advice and safeguard the interests of the company and its stakeholders in, what threatens to be, an acrimonious public battle. Interestingly, it has asked that both Nawaz Modi and Gautam Singhania should be asked ‘to take time off from their responsibilities as board members’. The proxy firm has asked a lot of questions about brand image, and behaviour of company promoters and management which themselves raise more questions about whether proxy advisors will apply these standards to all the companies they track, or whether regulators need to step in. But that is the subject of another column.
Not Good Enough
While Nawaz Singhania consented to being a rubber-stamp director, the esteemed Murugappa group worked hard to exclude two highly educated women of the family from the board of directors and legally negotiated their removal from the ‘promoter’ category. Tellingly, the stakeholders seem unconcerned, as is evident from the share prices of all Murugappa group entities. Each of their boards, with their mandatory women directors, has chosen to remain silent since 2017, happy to treat it as a family matter. The group has received no missives or advice from proxy advisors either. The silver lining is that the two Murugappa women, Dr Valli Arunachalam and her sister Vellachi Murugappam, appear to have secured a substantial financial settlement in exchange for being 'de-recognised' as part of the promoter group and denied board directorships.
As our columnist V Ranganathan wrote recently (Read: Murugappa Group: Felicitous Finish to a Family Feud!), this puts a quiet lid on a dispute that has been simmering since the death of MV Murugappan in 2017. Although details of the private settlement remain unknown, Mr Ranganathan notes that the family recently sold large blocks of shares in group companies to raise over Rs620 crore which may be part of the cash settlement with the two women members.
While the Murugappa family has mostly evaded public scandal, this case exposes gender inequality on corporate boards and questions the effectiveness of mandating board seats for women. Valli Arunachalam, who led the fight, holds a doctorate in nuclear engineering and is an advocate for women empowerment and girls' education. Unfortunately, this was a battle she lost.
Ironically, each group company complies with the legal requirement to have women independent directors. The Carborundum Universal board has Soundara Kumar; Tube Investments has Sasikala Varadachari – both former bankers – while Meghna Apparao and Rca Godbole serve on EID Parry's board. It begs the question: Why doesn't the Murugappan family view equally distinguished women within their family as board-worthy?
According to Prime Database, 10 years after amendment to the Companies Act, one out of five directors on Indian boards is a woman. Academic studies have confirmed the positive impact of legally-mandated gender diversity on Indian corporate boards. If that weren’t enough, India’s marketing companies have been quick to latch on to what The Guardian describes as ‘hashtag feminism’ or ‘femvertising’, where cosmetics and jewellery companies essentially sell their products packaged in #empowerment themes just as Virginia Slims sold its cigarettes in the 1970s. Perhaps the Singhania and Murugappa cases will prompt deeper scrutiny into whether these are anomalies or warrant further examination.
Very disappointed in the Murugappa group. Appears to be desperate misogynism. Willing to pay Ms. Valli rather than have a woman on the Board. Pathetic. While TVS has brought women to the forefront and so has TaFE group (though family women) but not Murugappa. Still medieval. As for Raymond, one long back stopped investing in or patronising its products. The rot clearly starts from the top and Singhania has shown his true colors. What a tragedy for what was once a famed brand.
I have no sympathy for women who stay married to scums for too long (applicable even to men who stay married to crazy and malicious women). She made herself look worse with the gold digger tag. It's a tragedy on both sides if you ask me. It's just one dysfunctional mess after another, with both parties being losers and the biggest losers being their kids.
but allegation of insider trading after so many ye
1 year ago
in an extremely gender biased country it is always truth definitely you have heard any women leader of the past character assassination is the common feature so male dominated society anywhere in the world would not like female on the helm even most gender equal country like finland so india is not worthy to be mentioned in this affair
The chicanery in political parties is far worse, splitting, joining other parties, abandoning the manifesto etc etc is far worse as they command the commanding heights of the country and economy. We are all scared of their ruthless power
Although it is controvercial but fiddling with the hundu code bill and the succession laws has its direct bearing on the rise of these kinds of cases. Giving equal shares to sisters means entry of her husband and her kids in the business who belongs to a different clan and may have different set of moralities and standards. Those may not be inline with the family ethos thus resuting in family feuds. Traditionally a man is expeted to take care of his parents in their old age and his wife also expected to join him. But now equal rights to sisters have given men a deep sense of anguish. This is the consiquence of destroying age old time tested hindu family structure. And for a wife especially who contribute little in the foundation of the company, asking leagal equality in business in not right. Wife can and must become an equial partner when they jointly start a business and if she starts a business she can have all by herself.
AS you sow so you reap. As the saying goes, the wheel seems to be turning full circle for Gautam Singhania. He threw out his father unceremoniously . Is it the beginning of his end? Seems so. The can of worms opened will not die so soon. At least now , the lady has opened up. Unfortunately, the looser is the Company and shareholders.
The trust deed may have a clause that only male members can be trustees and in case the deed is mandated by a court order and not the trust act then the gender equality will not apply
These issues also highlight how easily a section of the society can make allegations without worrying about evidence, & get away with it, even if the allegations are false.
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