The Murugappa Group is a major conglomerate with its headquarters in

Chennai. Starting in the early 1890s the Group was formed in Myanmar,
then Burma, by the entrepreneur Dewan Bahadur A. M. Murugappa
Chettiar as a moneylending and banking business. By 1947. when India
achieved independence, the Group had entered into insurance, rubber,
stockbroking, textiles, and trading often through opportunistic expansion
through quick, though unplanned, entrepreneurial actions. The sagacity,
insight, and political acumen of the senior Chettiar, rill his death in 1949,
STRATEGISING AT enabled the business family to take timely actions to manoeuvre through a
business environment continually buffeted by epoch-making events like
MURUGAPPA the Great Depression, World War II, and India's independence. On the
GROUP way, some businesses prospered while others withered away.

During the highly controlled and regulated environment in India from

Murugappa group is the the 1950s through the 1990s, the Group ventured into several unrelated
holding company for businesses while concentrating and integrating in quite a few of them. In
a group of businesses. 1949, for instance, Tube Investments of India was established to
The group holds manufacture bicycles at Ambattur in Tamil Nadu in collaboration with the
diversified interests in UK's Tube Investments. Eventually, the business became vertically
abrasives, engineering, integrated manufacturing a wide range of bicycle-related components
farm inputs, sugar, such as tubes, strips, lamps and chains. Another venture Carborundum
confectionery, Universal was established in 1954, in association with Carborundum, USA,
plantations, bio- and Universal Grinding, UK, to make abrasives and grinding wheels. It
went on to become a highly integrated business producing its own raw
products, chemicals,
materials (bauxite), conducting mining and calcining, producing grains
nutraceuticals, and making the final products.
insurance, and financial A milestone year in the Group's history could well be 1979, when some
services of the companies floated public issues to garner funds for implementing
expansion strategies. The following decade witnessed a succession of
acquisitions, mergers, and divestments all lending to a situation when the
Murugappa Group formally rook shape in 1989. Acquisitions were a
necessity since growth through new ventures was not possible owing to
the stringent licensing regime.
In 1981, came a major acquisition in the form of BID Parry that was
acquired from financial institutions. BID Parry was a sick unit having a
diversified base in businesses such as ceramics, confectionary, fertilizers,
electronics, and sugar. The Murugappa Group initiated a turnaround
strategy. The next decade till the dawn of liberalization in India in 1991,
was interspersed with continual restructuring mainly involving a
combination of divestment, takeover, and entering into joint ventures.
The Murugappa Group emerged as a professional group in 1993, ready
to take advantage of the myriad opportunities that the emerging business
environment offered. History repeated itself with the Group venturing into
international markets. New businesses like bio-pesticides, ceramics7
colours, nutraceuticals, and information technology were incorporated in
the business portfolio. Nearly a decade of effort went into consolidation
and focusing on core businesses.
The professionalization of management at Murugappa Group was done
by creating the Murugappa Corporate Board (MCB), composed of family
members. The new business environment realities in India required rapid
response capability from the Group especially pertaining to the
reorganization of the business portfolio. M.Y Subbiah, grandson of founder
A.M. Murugappa, led the way for a new governance structure as he
stepped down in 1999. Professional managers were brought in to head in-
dividual business units while family members moved to board positions on
the MCB.
Corporate strategies of Murugappa Group center around consolidating
in core businesses with strategic thrust being on concentration,
expansion through the means of technology upgradation, and global
collaborations. During its 115 years history the Group has done around
40 acquisitions and joint ventures giving it ample expertise to manage the
difficult task of merging entities and running partnerships. Yet, inherent
weaknesses such as over reliance on old economy businesses such as
sugar and inability to stake a timely claim in the emerging businesses
such as telecommunications continue to haunt die Group.
In 2014, the Rs. 24,300-crore Murugappa Group is one of India's leading
conglomerates with 28 businesses, including 11 listed companies deriving
about half of its revenue from agri-based businesses. It operates in the
seven core businesses of abrasives, bio-products, engineering, fertiliser,
finance, plantations, and sanitary ware. The fourth generation is in
command with the fifth generation being groomed to take over as family
members are expected to retire at 65 years.
Murugappa group is one of the oldest family-run business houses in the
world. The group has always maintained a low profile and somehow never
felt the need to be visible as a group entity in India. This is typical of its
humility despite being the only Indian company to win the international
Institute for Management Development (IMD) award in 2001 for the 'best
managed family-run business. Its professionalization as a family group has
attracted attention internationally with Kellogg School of Management
including a company case on the Murugappa Group in its family business
programme.
Questions
1. Trace the historical development of the Murugappa Group
highlighting the major strategic changes at each point of
transition of independence (1947), regulation era (1950-90) and
post-liberalization (1990sonwards).
2. Point out, at least, three major factors that account for the success
of the Murugappa Group.
3. What could be the likely dangers ahead for the Murugappa
Group in the highly liberalized and globalized business
environment?
4. What lessons do you learn about strategic management from this
review case on Murugappa Group?