Vellayan quits Murugappa board
A day after market regulator Securities and Exchange Board of India charged Murugappa Group Chairman A Vellayan and three others with insider trading, Vellayan decided to step down as chairman of the Murugappa Group’s corporate board.
Murugappa Group chairman A Vellayan resigned a day after the Securities and Exchange Board of India (Sebi) charged him and three others with insider trading. Vellayan says he has also decided to take legal action.
Murugappa Group said Sebi's observation linking Vellayan to trades by two individuals in shares of Sabero Organics Gujarat, a company that was acquired by Coromandel International in May 2011, is based on suspicion. The only link sought to be made by Sebi between Vellayan and these transactions is that one AR Murugappan is a distant relative (son of a grand aunt) and had a property transaction with Vellayan long before the Sabero transaction was even thought about.
“Sebi has jumped to the conclusion that the trades could potentially be attributed to suspected communication of unpublished price sensitive information about the Sabero deal by A Vellayan to this distant relative,” the company said.
“The link drawn in this interim order is not a conclusive finding. A Vellayan is resolute in defending the serious harm to reputation caused by this order and will take appropriate action as legally advised,” the statement said.
The spokesperson said Vellayan will extend full cooperation to Sebi to complete investigations expeditiously, apart from seeking redress against the premature measures adopted.
“In keeping with family values and tradition, he has stepped aside from the chairmanship of the Murugappa Group Corporate Board and of Coromandel International and EID Parry India until this matter is resolved,” said the spokesperson.
The details of who will take charge as the chairman hasn’t been decided, a spokesperson said.
The group says it is one of the first Indian corporates to begin the process of transformation from being a family-owned to a professionally managed organisation. The ownership and operational management of the companies were seperated in September 1999.
As a logical conclusion to this decision, M V Subbiah, a family member, relinquished his office and ceased to be part of the Murugappa corporate board, in January 2004, at the age of retirement. The various businesses were entrusted to chief executive officers from outside the family.