MC EXCLUSIVE Vellayan Subbiah to exit Cholamandalam Investment Finance as part of Murugappa family settlement

Murugappa Group

• Vellayan Subbiah to leave Cholamandalam, shift to Tube, CG Power
• Murugappa family splits ownership among three promoter factions
• Settlement follows two years of negotiations over group assets

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Murugappa Group scion Vellayan Subbiah has reached a settlement with other promoter branches to re-align ownership across key group companies, people familiar with the matter said, with the agreement paving the way for him to give up stake exposure linked to Cholamandalam Investment and Finance while consolidating his position in Tube Investments of India and CG Power and Industrial Solutions.

The arrangement, finalised after more than two years of negotiations, forms part of a broader plan by the Murugappa family to separate ownership of the century-old conglomerate among three promoter factions while preserving business continuity. Under the settlement, Subbiah is expected to relinquish exposure to Cholamandalam Investment — the group’s flagship lending arm — and instead retain and strengthen his alignment with Tube Investments and CG Power, including taking over or retaining stakes tied to those companies from within the extended promoter structure, the people cited above said.

Emails sent to Vellayan Subbiah and Murugappa Group did not elicit a response till the time of publication.

The realignment follows prolonged internal discussions on how to divide the diversified business empire — which reported more than $9 billion in revenue in FY23 — after five generations of joint ownership through family holding company Ambadi Investments.

Negotiations had earlier run into hurdles because of sharp valuation divergence across group companies. As reported by The Economic Times on August 19, 2024, the turnaround of businesses overseen by Subbiah — particularly CG Power, Tube Investments and Cholamandalam Finance — had become a key sticking point in share-swap discussions among family factions.

Cholamandalam Investment later issued a clarification regarding its executive chairman.

In a clarification sent to both the BSE and the National Stock Exchange of India, the Murugappa Group company said it had received a statement from Subbiah’s office rejecting the report and affirming that he continues in his role for his approved five-year term from April 1, 2025 to March 31, 2030.

The filing added that there has been no change in management control or ownership structure across group businesses and that the existing leadership arrangement "continues unchanged." It reiterated that Subbiah and M A M Arunachalam oversee key group firms including Tube Investments of India, CG Power and Industrial Solutions and Cholamandalam Investment along with their subsidiaries.

The transformation of CG Power proved especially consequential. Since Tube Investments acquired control in 2020, the company has deleveraged, restored profitability and benefited from strong investor interest in domestic manufacturing, railways, power equipment and electronics supply chains. Its stock has risen sharply since the takeover, making it one of the group’s most valuable listed assets. Tube Investments itself has expanded beyond its legacy engineering base into green mobility, contract manufacturing and specialised industrial segments, further strengthening its market position.

Cholamandalam Investment, meanwhile, has scaled into one of India’s most valuable non-bank lenders, with a market capitalisation exceeding Rs 1 lakh crore. The uneven appreciation in these businesses complicated attempts to carve out three equal promoter blocs, with one faction seeking revisions to earlier share-swap assumptions and another resisting reopening agreed terms, people aware of the discussions said.

Promoter ownership across Murugappa companies is largely routed through holding vehicles rather than individual shareholdings, but the value concentration highlights why these three firms became central to the negotiations. The promoter group’s roughly 51–52 percent stake in Cholamandalam Investment is worth about ₹55,000–₹60,000 crore at current market levels. In Tube Investments, promoter ownership of about 45–46 percent translates into a holding valued near ₹20,000–₹22,000 crore. Through Tube Investments’ controlling position in CG Power, the promoter group effectively holds about 58–59 percent of that company, valued at roughly ₹45,000–₹50,000 crore.

Beyond these, the family controls about 56–57 percent in Coromandel International, worth roughly ₹18,000–₹20,000 crore, around 42–43 percent in Carborundum Universal valued near ₹9,000–₹10,000 crore, and close to 44–45 percent in EID Parry, worth roughly ₹3,500–₹4,000 crore. Tube Investments also indirectly controls about 70 percent of Shanti Gears, valued at roughly ₹2,500–₹3,000 crore.

The final arrangement appears to align ownership more closely with operational leadership. Subbiah, a fourth-generation member of the family, is widely credited within the group with steering the revival of CG Power and expanding Tube Investments into new manufacturing and mobility segments, making those businesses natural anchors for his promoter bloc under the new structure.

The Murugappa Group, which spans nearly 30 companies across fertilisers, engineering, financial services, abrasives, sugar and mobility solutions, operates under a long-standing governance charter separating ownership from management.