Responding to ET Now on whether or not any of the allegations posed a real problem, Arul Selvan D from Cholamandalam Funding mentioned the claims lacked consistency and context.
“There isn’t a consistency in the way in which these allegations have been approached. Completely different years have been selectively used to inflate numbers and painting a bigger difficulty, with out recognising that legal guidelines on related-party disclosures have developed over time. At each level, the corporate ensured compliance with the regulation prevailing then. Making use of present disclosure norms retrospectively and saying issues weren’t disclosed earlier is totally incorrect. This appears extra about creating consideration than elevating real points, although such criticism is a part of a democratic course of.”
Addressing allegations of fund diversion by means of insurance coverage transactions, together with the ₹3,040 crore switch from Cholamandalam MS Common Insurance coverage to different Murugappa Group entities, Arul Selvan D defined the enterprise rationale. “Cholamandalam MS is a basic insurance coverage firm providing merchandise to a number of corporates. A big a part of its enterprise is with Chola Finance, the place we offer motor, well being and life insurance coverage to our debtors. As a bunch coverage, we’re capable of supply insurance coverage at a lot decrease prices, which helps prospects throughout emergencies similar to hospitalisation, accidents or the dying of a borrower.”
He added that these insurance coverage covers are essential for Chola’s largely ‘earn-and-pay’ buyer base. “Insurance coverage ensures that the borrower’s household will not be burdened with mortgage repayments throughout emergencies. Even a one-month disruption in revenue could make it troublesome for purchasers to pay EMIs, and medical insurance coverage helps them handle such conditions and proceed servicing their loans.”
Explaining the transaction construction, he mentioned, “Premiums are paid to the insurance coverage firm and, like every regular transaction, commissions are paid again to Chola. Earlier, insurance coverage company enterprise was routed by means of group corporations, because it made operational sense. This has since modified as a consequence of IRDAI laws, and Chola itself is now the insurance coverage agent. For the final couple of years, insurance coverage revenue has been booked straight in our books.”
On allegations of extreme funds to members of the family, key managerial personnel and auditors, Arul Selvan D mentioned such criticism overlooks the energetic government roles performed by promoter members of the family. “Most members of the family maintain government positions and are deeply concerned in day-to-day enterprise operations. They don’t seem to be non-executive promoters. Their contribution is seen, and compensation is aligned with trade requirements.” He emphasised that every one remuneration follows due course of. “Salaries and commissions are authorized by the board and shareholders and are benchmarked to trade practices.”
Responding to issues round funds made to Murugappa Administration Companies, he defined that these associated to an earlier group-level governance construction. “On the group degree, we earlier had a company board with inside and exterior consultants overseeing finance, HR and IT to make sure frequent practices throughout corporations. Funds had been made for these providers.”
He added that the construction was later streamlined because the group expanded. “From FY22, the group was reorganised into three verticals as a result of scale of operations. As every vertical constructed its personal administration framework, prices paid to Murugappa Administration Companies diminished considerably.”
Concluding, Arul Selvan D expressed disappointment that the allegations had been raised with out engagement. “These points may have been clarified by means of dialogue. As a substitute, conclusions had been drawn with out understanding the total context, creating an pointless controversy.”
