Battle for control breaks out in The Hindu very divided family

A bitter battle has broken out among family members for control of one of the country's oldest and most respected media companies, Kasturi & Sons Ltd, the publisher of the 132-year-old English newspaper The Hindu and business daily The Hindu Business Line.

At the heart of this battle is the proposed retirement of publisher and the group Editor-in-Chief N Ram and his decision to dig his heels in.

The first casualty in the battle is N Murali, Ram's younger brother and the company's managing director. He was divested of his powers this week and replaced with K Balaji, a member of the extended family and also a board member. According to people close to the developments, the board is split, one group supporting Ram and the other seeking his retirement.

The sources claimed that at a meeting held last September, Murali, who also looked after administrative processes at the company, proposed governance norms for retirement of family members on the board.

"While the retirement age for all employees at Kasturi is 60 years, there was no such stipulation for board members. It was proposed by Murali that 65 years be set as the retirement age for board members," said the sources.

The Kasturi board of directors has 12 members, descending from four cousins — G Narasimhan (father of N Ram, N Ravi, N Murali); S Parthasarathy (father of Malini Parthasarathy, Nirmala Lakshman and Nalini Krishnan); S Rangarajan (father of Ramesh Rangarajan, Vijaya Arun and Akila Iyengar) and G Kasturi (father of K Balaji, K Venugopal and Lakshmi Srinath).

According to the faction opposed to Ram, all members at the meeting agreed to the proposal and Ram, who turns 65 this May, was identified as the first member to step down from the board followed by Murali and N Ravi, who will turn 65 in August 2011 and 2013 respectively.

It was also decided, these sources said, that after Ram's retirement, Ravi would take over as Editor-in-Chief of the group while Malini Parthasarathy would be appointed the editor of The Hindu and Venugopal the editor of The Hindu Business Line.

In a follow-up meeting held in February, however, Ram is said to have declined to give up the positions he holds across the company, including the board membership, the sources said.

However, in an email response, Ram said: "No retirement age has been stipulated for directors or the editor-in-chief or editor etc. No retirement age is stipulated in the Memorandum and Articles of Association of the Company."

On whether he had agreed to give up all positions in May this year, he said that was "completely, utterly wrong."

Prior to the meeting in February, Ram is said to have recruited two family members in the company: Narayan Lakshman, son of Nirmala Lakshman; and Vidya Ram, his daughter.

A PhD from London School of Economics, Narayan was hired as the Washington correspondent of The Hindu whereas Vidya, a graduate from the Columbia School of Journalism, was appointed the European correspondent of The Hindu Business Line.

This was strongly objected to by Murali, Ravi and Malini Parthasarthy, among other members, who alleged that these appointments were made without the board's consent and proper governance norms were not adhered to.

They also pointed out several alleged financial irregularities in the way in which Kasturi's resources, financial as well as editorial, were used to further the interests of some board members.

The family members had another stormy meeting on March 20 where the issue of retirement and, also, the norms for induction of family members on the board were supposed to be discussed. "Instead of these issues, the pro-Ram faction targeted Murali alleging he was trying to tarnish the image of the company," a source said.

Murali was eventually removed from the position of the MD. A formal announcement to this effect, however, has not been made as yet.

Meanwhile, Ram declined to comment on whether the board had decided to divest Murali of his powers saying it was an internal matter of the company.

On allegations of irregularities in appointments of family members, he said: "Any appointment of a relative of a Director that needed approval by both the Board of Directors and Shareholders before going to the central government was approved unanimously without a murmur of dissent by any Director or Shareholder. Every one of the 12 Directors of the Company approved every such appointment."

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