Responding to ET Now on whether any of the allegations posed a genuine challenge, Arul Selvan D from Cholamandalam Investment said the claims lacked consistency and context.
“There is no consistency in the way these allegations have been approached. Different years have been selectively used to inflate numbers and portray a larger issue, without recognising that laws on related-party disclosures have evolved over time. At every point, the company ensured compliance with the law prevailing then. Applying current disclosure norms retrospectively and saying things were not disclosed earlier is completely incorrect. This seems more about creating attention than raising genuine issues, though such criticism is part of a democratic process.”
Addressing allegations of fund diversion through insurance transactions, including the ₹3,040 crore transfer from Cholamandalam MS General Insurance to other Murugappa Group entities, Arul Selvan D explained the business rationale. “Cholamandalam MS is a general insurance company offering products to multiple corporates. A large part of its business is with Chola Finance, where we provide motor, health and life insurance to our borrowers. As a group policy, we are able to offer insurance at much lower costs, which helps customers during emergencies such as hospitalisation, accidents or the death of a borrower.”
He added that these insurance covers are critical for Chola’s largely ‘earn-and-pay’ customer base. “Insurance ensures that the borrower’s family is not burdened with loan repayments during emergencies. Even a one-month disruption in income can make it difficult for customers to pay EMIs, and medical insurance helps them manage such situations and continue servicing their loans.”
Explaining the transaction structure, he said, “Premiums are paid to the insurance company and, like any normal transaction, commissions are paid back to Chola. Earlier, insurance agency business was routed through group companies, as it made operational sense. This has since changed due to IRDAI regulations, and Chola itself is now the insurance agent. For the last couple of years, insurance income has been booked directly in our books.” On allegations of excessive payments to family members, key managerial personnel and auditors, Arul Selvan D said such criticism overlooks the active executive roles played by promoter family members. “Most family members hold executive positions and are deeply involved in day-to-day business operations. They are not non-executive promoters. Their contribution is visible, and compensation is aligned with industry standards.” He emphasised that all remuneration follows due process. “Salaries and commissions are approved by the board and shareholders and are benchmarked to industry practices.”
Responding to concerns around payments made to Murugappa Management Services, he explained that these related to an earlier group-level governance structure. “At the group level, we earlier had a corporate board with internal and external experts overseeing finance, HR and IT to ensure common practices across companies. Payments were made for these services.”
He added that the structure was later streamlined as the group expanded. “From FY22, the group was reorganised into three verticals due to the scale of operations. As each vertical built its own management framework, costs paid to Murugappa Management Services reduced significantly.”
Concluding, Arul Selvan D expressed disappointment that the allegations were raised without engagement. “These issues could have been clarified through discussion. Instead, conclusions were drawn without understanding the full context, creating an unnecessary controversy.”
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