The Murugappa Group has a corporate governance policy that promotes the highest levels of transparency and accountability to all stakeholders. It is a system by which all business corporations within the Group are directed and controlled. It deals with laws, procedures, practices and implicit rules that determine the Group company's ability to take informed managerial decisions vis-a-vis its principal stakeholders – shareholders, creditors, customers, the state and employees.

	An independent and effective board of directors
	Good audit process and reporting
	Transparency
	Participation of shareholders in decision making
	Maximising shareholder value
	Meeting social obligations

The Murugappa Group is committed to the highest standards of corporate governance in all its activities and processes. It is one of the first Indian corporates to begin the process of transformation from being a family-owned business to a professionally managed organisation.

In January 2004, on attaining the age of retirement, M V Subbiah — a family member — relinquished his office and ceased to be part of the Murugappa Corporate Board (MCB). This was the logical conclusion of a process of transformation that began in November 1999, when the Murugappa Corporate Board (MCB) was formed with family members and three independent directors. The various businesses were entrusted to competent professional CEOs from outside the family.

In April 2001, Subbiah stepped down as chairman and handed over the reins to N S Raghavan, a non-family professional who became the non-executive chairman of the Murugappa Corporate Board. In October 2002, yet another professional — P S Pai — took over as executive chairman from Raghavan, who continues to be a director on the MCB.On completion of his tenure, P S Pai handed over charge to M A Alagappan, Vice Chairman and Director Strategy. M A Alagappan assumed the office of Executive Chairman of Murugappa Group on 25 October 2006. Effective the same date, A Vellayan, Director — Marketing took over as Vice Chairman and Director -Strategy.

The Murugappa Group's disclosure norms are ahead of Indian standards and are moving towards international practices. The boards of Group companies comprise eminent individuals from various disciplines, more than half being independent directors.

Each board has an audit committee, where directors, management and auditors deal with matters relating to financial reporting obligations, internal controls, review of accounting policies, and management of financial risks. It monitors compliance with laws, regulations and its own code of business conduct. The scope of the activities of the audit committee includes all matters set out in Clause 49 of the listing agreements with the stock exchanges, read with Section 292A of the Companies Act, 1956.

The shareholders / investors grievance committee handles redress of shareholder and investor complaints like transfer of shares, non-receipt of balance sheet, and non-receipt of declared dividends. It usually meets four times a year.

The remuneration and nomination committee recommends the salary (including annual increments, perquisites and commission / incentives) as well as retirement and other benefits to be paid to the company's managing / wholetime director (MD / WTD), other directors and senior management, within the overall ceiling fixed by the board. It also recommends appointments, reappointments and the tenure of office of executive and non-executive directors.

The management committee takes decisions about policies and other important issues concerning the management.

The whistleblower policy, introduced by the director HR and approved by the Murugappa Corporate Board (MCB), strengthens the Murugappa Group's Corporate Governance Policy by providing employees and other stakeholders an independent and safe communication channel to raise serious concerns. The policy is being adopted separately by each company statutory board in the Group. The policy will cover all Murugappa Group companies including associate companies and joint ventures. Its scope extends to employees, customers, suppliers and contractors.

C R Rajan, Director — Management Development Centre, is the ombudsman who receives all complaints under this policy and ensures appropriate action. He is authorised by the MCB and the statutory board.

His contact details are:
Tel: 044 25306444 or
Fax: 044 25306868
E-mail: ombudsperson@corp.murugappa.com

The Group companies have obtained the approval of their members for allowing shareholders to vote on important issues such as alteration in the memorandum of association, sale of whole or a substantial part of the undertaking; sale of investments exceeding 25 per cent of equity; issue of shares through preferential allotment or private placement; corporate restructuring, by postal ballot.

Each year all listed Group companies file a report on corporate governance, making all statutory disclosures. Half-yearly reports are sent to each shareholder's residence. Quarterly results are widely publicised, including on the companies' websites.

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