COBRAPOST INVESTIGATION LOOTWALLAHS: QUESTIONS ABOUT CORPORATE GOVERNANCE IN INDIA Part - II

New Delhi (Tuesday: December 23, 2025): A Cobrapost investigation, based on a detailed examination of statutory filings and corporate and financial disclosures, has identified transactions aggregating approximately Rs. 10,262 crore involving Cholamandalam Investment & Finance Company Ltd. and a network of related parties, including Murugappa Group entities, family members, and key management personnel. Our investigation further indicates that portions of these funds were routed onward through additional transactions, the nature and purpose of which merit closer regulatory scrutiny.

The investigation also notes that the flagship company of the 125-year-old Murugappa Group reported cash deposits totalling around Rs. 25,089 crore across more than a dozen banks over the past six years. The figures cited are approximations derived from disclosed records and may vary if officially examined by a competent statutory authority vested with full investigatory powers.

Still in aggregate, the scale and structure of these transactions raise significant questions regarding related party disclosures, corporate governance practices, and the sourcing and deployment of funds in a listed financial institution handling large volumes of public and institutional capital. These transactions raise serious questions under the Companies Act, 2013, the Bharatiya Nyaya Sanhita (BNS), and SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations, particularly with respect to related-party arrangements, corporate governance, and end-use of funds.

While publishing this story, Cobrapost has anonymised and redacted the sensitive data in keeping with privacy and commercial confidentiality considerations, especially of those third parties.

The principal recipient entities identified in this analysis include Chola Business Services Ltd. (CBSL) and Murugappa Management Services. CBSL is a privately held company owned and controlled by promoters of the Murugappa Group. Our  analysis indicates that transactions aggregating approximately Rs. 4103 crore were undertaken by Cholamandalam Investment & Finance Company Ltd. (CIFCL) with Chola Business Services Ltd. (CBSL), while transactions amounting to around Rs. 3040 crore were undertaken by Cholamandalam MS General Insurance Company Limited (CMGICL) which were essentially related party transactions (RPTs).

The analysis further shows that transactions totalling approximately Rs. 675 crore were recorded across 17 Murugappa Group companies—both listed and unlisted—and routed to Murugappa Management Services, based on a review of filings and disclosures. Of this amount, Rs. 103.77 crore originated from CIFCL. The examination of subsequent transactions indicates that portions of these amounts were transferred onward to Murugappa Group family members and senior management personnel through CBSL and Murugappa Management Services.

Taken together, the RPTs identified in this analysis aggregate to approximately Rs. 10,134.76 crore.

In addition to group entities including related parties, the analysis identifies rating agencies, auditing firms, non-profit organisations such as Isha Foundation, sports bodies, and trade associations among the recipients of funds paid by CIFCL and other Murugappa Group companies. Based on filings and related records reviewed by Cobrapost, these entities together received approximately Rs. 127.98 crore during the period under examination.

The transactions examined in this report aggregate to around Rs. 10,262 crore across CIFCL and CMGICL. However, disclosures amounting to only about Rs. 2161 crore appear to have been made by the companies involved as RPTs, based on available records.

Our review further indicates that CBSL made payments to certain individuals following its receipt of these funds. One such recipient identified in the records is Venkatachalam A, a member of the promoter group, who was paid salary totalling approximately Rs. 16.50 crore by CBSL between 2023 and 2025. In addition, transactions reviewed by us show that Venkatachalam A received compensation amounting to about Rs. 18.60 crore from Murugappa Management Services during the same broader period, as detailed later in this report.

Murugappa Management Services, a privately held company within the Murugappa Group, is identified in the filings reviewed by Cobrapost as a recipient of transactions aggregating approximately Rs. 675 crore from 17 Murugappa Group companies. The analysis further indicates that, following receipt of these amounts, Murugappa Management Services made payments to various individuals, including members of the Murugappa family and key management personnel (KMP).

Based on records examined by us, payments made by Murugappa Management Services to family members and senior executives together amount to approximately Rs. 353 crore over the period under review. One of the recipients identified in the filings is Ravichandran Venkatachalam (Ravichandran V), a member of the Murugappa family and head of Coromandel International Ltd., who received payments exceeding Rs. 55 crore.

The review also identifies multiple other family members who received payments running into several crores of rupees, recorded as salary, professional fees, or a combination of both. Among senior management personnel, Ramesh K.B. Menon, the Group’s human resources head, is reflected as having received payments totalling approximately Rs. 54 crore between FY 2017–18 and FY 2021–22.

Examination of available records indicates that these payments do not appear to have been reported as RPTs in the filings reviewed, an issue discussed in greater detail later in the story.

Analysis of the companies’ financial statements reviewed by Cobrapost indicates that a number of these transactions were recorded under heads such as commission, professional fees, and work contracts. The manner in which these payments have been classified and disclosed raises questions regarding their commercial rationale, related-party disclosure, and accounting treatment.

The main findings, based on statutory filings and related disclosures, can be summed up as follows:

• CIFCL has made cash deposits of around Rs. 25,089 crore across 14 banks varying between 2019-20 and 2024-25. These figures are approximations derived from accessed data and may vary upon examination by a competent authority.    

• The NBFC also operates in insurance and has reportedly earned a commission of Rs. 942 crore between 2024 and 2025. Its revenue from commission earned has increased by leaps and bounds. Since a substantial part of CIFCL's revenues come from financing vehicles and homes, the question arises whether the company is indulging in bundling insurance with vehicle loans, a practice prohibited by regulatory agencies like IRDAI.        
• One of the many insurance companies CIFCL works for is Cholamandalam MS General Insurance, a related company. CMGICL has diverted funds worth Rs. 3040 crore to nine Murugappa Group companies.

1. An examination of CMGICL’s disclosures shows that these transactions were recorded under heads such as insurance commission, work contracts, and professional fees. The structure, classification, and disclosure of these transactions form a central part of the governance and compliance issues analysed in this report.
2. Based on the records examined, transactions aggregating approximately Rs. 1,578 crore were reported with several Murugappa Group entities, including around Rs. 1,036 crore recorded as professional fees paid to nine related companies.
3. The concentration and disclosure of these transactions raise questions regarding their impact on stakeholders, including minority shareholders and joint venture partners, an issue discussed in detail later in this report.
4. Filings reviewed by Cobrapost indicate that CMGICL disclosed related-party transactions amounting to approximately Rs. 116 crore, while additional transactions identified in this analysis do not appear to have been reflected as RPT disclosures in the filings examined.
5. Cobrapost’s review of CIFCL’s available disclosures similarly indicates that several transactions identified in this analysis do not appear to have been reported as related-party transactions (RPTs), an issue examined in subsequent sections of this investigation.

• Filings reviewed indicate that CIFCL reported payments aggregating more than Rs. 1,654 crore in the form of work contracts with over a dozen Murugappa Group entities. Based on the disclosures examined, these transactions do not appear to have been reflected as RPTs in the company’s filings for the relevant periods.

            The recipient entities identified in the records include:

• EID Parry India Ltd.
• Parry Enterprises India Ltd.
• Murugappa Management Services Pvt. Ltd.
• Coromandel Engineering Co. Ltd.
• Cholamandalam Distribution Services
• Cholamandalam Home Finance Ltd.
• Cholamandalam Securities Ltd.
• Cholamandalam MS Risk Services Ltd.
• Cholamandalam MS General Insurance Company Limited
• Net Access India Ltd.
• Chola Business Services Ltd.

• Chola Business Services Ltd. (CBSL), a privately held Murugappa Group entity, is reflected as the principal recipient of work-contract payments recorded by CIFCL. Of the work-contract transactions aggregating approximately Rs. 1,654 crore identified in this analysis, payments amounting to about Rs. 1,628.36 crore were recorded in favour of CBSL.
• The review further indicates that CIFCL recorded professional-fee payments totalling approximately Rs. 642.95 crore to five Murugappa Group companies. In addition, filings examined by Cobrapost reflect payments aggregating about Rs. 19.70 crore to 12 senior Murugappa family members, recorded as professional fees and salary. Taken together, these payments amount to approximately Rs. 662.65 crore, as per the records reviewed.
• CBSL recorded payments aggregating approximately Rs. 4,103 crore from CIFCL over multiple years. These payments are reflected in the records as consideration for staffing and related services, including transactions dating back to periods prior to FY 2015.Following receipt of these amounts, CBSL recorded payments to other entities and individuals through subsequent transactions, as detailed later in this report.

• CBSL claimed additional deductions aggregating approximately Rs. 180 crore under Section 80JJAA of the Income Tax Act in connection with staffing deployed at CIFCL.
• CIFCL has reported related-party transactions amounting to approximately Rs. 2,045 crore in its filings for the relevant periods.
• The records reviewed further reflect payments made by CBSL to certain entities and individuals, including Mysore Club, Murugappa Management Services Pvt. Ltd., and Venkatachalam A, following the receipt of funds from CIFCL.
• Venkatachalam A received salary payments totalling approximately Rs. 16.50 crore between FY 2023–24 and FY 2024–25..

• Murugappa Management Services Pvt. Ltd., a promoter-controlled Murugappa Group company, received transactions aggregating approximately Rs. 675 crore from 17 group companies over the period FY 2017–18 to FY 2024–25. Of this amount, approximately Rs. 103.77 crore originated from CIFCL, based on the records examined.

            The review further indicates that, following receipt of these amounts, Murugappa             Management Services recorded payments to various entities and individuals             through subsequent transactions, the details of which are examined in the sections             that follow:

• Murugappa Management Services paid an estimated Rs. 365 crore to dozens of individuals, a slew of entities including related companies, rating agencies, insurance companies, sports bodies like BCCI, among others.
• Out of the Rs. 365 crore, the Murugappa family members and their close associates have together received Rs. 353.04 crore. The top beneficiaries, among a dozen prominent family members, who have benefitted out of these diversions, are:
  • Ravichandran V, who received more than Rs. 55 crore.
  • MM Venkatachalam, who received more than Rs. 44 crore.   
  • MM Murugappan, who received about Rs. 42.53 crore.
  • Murugappa Vellayan Subbiah, who received Rs. 34.84 crore.
  • Murugappan Arunachalam Alagappan, who received Rs. 35.47 crore.

• Ramesh KB Menon and Srinivasan N, two of the eight Murugappa Group top management officials identified, have also received Rs. 54 crore and Rs. 21 crore, respectively.
• In addition, Muruguppa Management Services has paid sums worth Rs. 5.70 crore to four of the dozens of Muruguppa Group companies, including Ambadi Investments Ltd., the Murugappa family's holding company.
• There doesn’t seem to have been required regulatory compliance with regard to these RPTs.

• Except partial disclosures by CMGICL and CIFCL, there has been no adequate disclosure with regard to all the RPTs examined by Cobrapost. Companies have to comply with RPT disclosure requirements mandated by the  Companies Act 2013, SEBI's LODR Regulations, and the Indian Accounting Standards.

• CIFCL has paid four credit rating agencies and five auditing firms more than Rs. 103 crore in professional fee which varies wildly and is arguably quite excessive. There is some element of conflict of interest in these transactions.
• CIFCL has paid Rs. 20.94 crore to 21 non-profit trade bodies and religious organizations in what was part of diverted funds. Isha Foundation and Isha Leadership Academy, for instance, have together received around Rs. 1.99 crore from CIFCL. Curiously, these payments have been made in work contracts. Though these payments look like donations in nature, the company has shown them as expenses to perhaps circumvent CSR guidelines.
• Cobrapost has sample catalogued 38 borrower entities which have paid CIFCL an upward of Rs. 80 crores in interest against the loans. However, only a few of them have filed charge registers declaring their outstanding debts which makes the NBFC's lending practices questionable.   

In compliance with best journalistic practices, Cobrapost has sent questionnaires to relevant companies and individuals, and we received the following response from the Chola Secretariat which is reproduced verbatim as follows:

We are in receipt of your email dated 22nd December 2025 (claiming to publish report/have press conference within 24 hours) sent to multiple email ids of the employees/companies in the Group seeking several information/clarifications on the individual employees/ business operations of the entities that are duly audited and submitted with the relevant regulatory bodies.

We confirm that all transactions of the businesses are carried out as per the laws of land in due compliance with the applicable regulatory guidelines. The individuals/businesses will respond to appropriate authorities whenever required.

Any further emails/publication/press meet on the above with an inherent criminal intention to blackmail or tarnish the image of our businesses/group/family members, will face the full force of the law at your own costs and consequences.

Authorised signatory

The above email had no signatures of the authorised signatory or his/her name. The response carries no answers to any of our multiple questions regarding the findings of our investigation. Cobrapost denies that any criminal intention to blackmail or tarnish the image of the Murugappa Group or their family members. Cobrapost also denounces this blatant attempt to intimidate journalists and media.

Before we analyze and discuss in detail how the funds were primarily moved between CIFCL and other entities, it will be in order to explain the corporate structure of the Murugappa Group.

Background of the Murugappa Group: The Murugappa Group's origin traces back to 1900, the year when its founder Dewan Bahdur AM Murugappa Chettiar made his foray into money lending business in the then Burma, now Myanmar. Over a period of 125 years, the group has grown by leaps and bounds to graduate into a conglomerate of 29 business entities – 10 among them are listed – and numerous subsidiaries, spread across sectors as diverse as finance, engineering, manufacturing, agriculture, and insurance, among others. In fact, there are more than 100 companies/subsidiaries both inland and offshore in the umbrella group. The BSA and Hercules bicycles manufactured by TI Cycles, which was set up in 1949 in collaboration with Tube Investments of UK, are considered marquee brands of the group so is Parry in sugar. The net worth of the group was estimated at US$ 9.8 billion in 2024, according to the Forbes magazine.  

After the death of the family patriarch, the baton passed on to two of his sons – AMM Murugappa Chettiar and AMM Arunachalam – as his middle son AMM Vellayan Chettiar died four years before in 1945. As gleaned from the family tree available in public domain and reproduced here, among the third generation who together drove the legacy further were MM Muthuiah, the only son of AMM Murugappa Chettiar; MV Aurnachalam, MV Murugappan, MV Subbiah, the three sons of AMM Vellayan Chettiar; and MA Murugappan and MA Alagappan, the two sons of AMM Arunachalam. The fourth generation consists of MM Murugappan, who is at the top of the Murugappa family hierarchy and chairman of the group, and his sibling MM Venkatachalam, his cousins A Vellayan and A Venkatachalam, both sons of MV Arunachalam; S Vallayan, son of MV Subbiah; Arun Murugappan, son of MA Murugappan; and finally, Arun Alagappan, son of the third-generation member of the Murugappa family, MA Alagappan. A Vellayan, chairman emeritus of Coromandel International and former chairman of the Murugappa Group, died on November 17, 2025.   

These details, where the fifth generation has been left out, are necessary to understand how and who among all these family members run which Murugappa Group companies, as some of them have been involved in the transactions that Cobrapost is going to unravel in the story here. One of the most interesting facts that has emerged from our analysis is that the rise in the Murugappa Group's  fortune coincided with the rise of Cholamandalam Investment & Finance Company Ltd. as the main pivot driving the growth of the group. CIFCL has, in fact, seen an unprecedented growth in the recent decade.

Although the Murugappa Group operates through a large number of companies and subsidiaries, Cobrapost’s review of statutory filings and disclosures has identified the following 14 companies—apart from Cholamandalam Investment & Finance Co. Ltd., Chola Business Services Ltd., and Murugappa Management Services Pvt. Ltd.—that feature in the transactions examined in this report and form part of the broader web of transaction flows analysed below:

• Coromandel International Limited,
• CG Power & Industrial Solutions Ltd.,
• EID Parry India,
• Tube Investments of India Ltd.,
• Cholamandalam Ms General Insurance Company Limited,
• Carborundum Universal,
• Cholamandalam Financial Holdings Ltd.,
• Ambadi Enterprises Ltd.,
• New Ambadi Estates Pvt. Ltd.
• Parry Enterprises India Limited,
• Parry Agro Industries Ltd.
• Shanthi Gears Ltd.
• Southern Energy Development
• Chola Insurance Distribution
• Ambadi Investments Ltd.

Set up by the Murugappa family in 1972, Cholamandalam Investment & Finance Co. Ltd. (CIFCL) is the flagship of the Murugappa Group, initially headed by AMM Arunachalam. Vellayan Subbiah, alias Vellayan S or aka S Vellayan, the fourth-gen member of the Murugappas clan, heads the non-banking finance company (NBFC) as chairman and non-executive director. Ravindra Kumar Kundu is its Managing Director.

The lending arm of the group is in the business of financing vehicles, homes, home equity, and SME; providing investment advisory services, a variety of other financial services, and stock broking. As of June 2025, 49.90 per cent of the total CIFCL stake is held by Murugappa family members who are promoters of the company, while foreign institutional investors (FIIs), domestic institutional investors (DIIs), and retail investors hold, respectively, 27.96 percent, 16.05 percent, and 6.07 percent stake.

A detailed breakdown of CIFCL's shareholding pattern since 2020 is as follows: 

     Source: https://www.screener.in/company/CHOLAFIN/#shareholding Annexure 1.

The details of the promoters' shareholding are provided here:

However, the entire business line of CIFCL sustains on monies borrowed from banks, financial institutions, and general public. According to the information available in public domain, the total outstanding loan – euphemistically called assets under management (AUM) – is anything between Rs. 1,99,867 crore and Rs. 2,07,875 crore. To be precise, CIFCL's outstanding liabilities stood at Rs. 2,01,647 crore as on March 31, 2025. As the table below shows, the borrowings by CIFCL have in the recent years risen exponentially. From Rs. 50,567 crore in 2019, the borrowings have increased more than threefold to Rs. 1,74,946 crore.  

According to the annual report filed by CIFCL for the 2024–25 fiscal year, its liabilities include Rs. 1,74,946 crore in borrowings and Rs. 3074 crore in other liabilities, an amount so enormous that it cannot be wished away by any yardstick when we consider its worth. The net worth of CIFCL is estimated at Rs. 8171.84 crore, way below its total exposure in terms of outstanding liabilities. Even if measured on the basis of the current market capitalization, it's worth estimated at around Rs. 1,24,000 crore falls short of its liabilities by a mile.

A detailed account of the liabilities and assets for the past six years is provided in the table here:                                                 

Note: Refer Page 44–45 of Annual Report 2024–25 attached as Annexure 2.

Of these outstanding liabilities, borrowings comprise approximately Rs. 30,134 crore in debentures, Rs. 76,466 crore in bank term loans, Rs. 12,349 crore in external commercial borrowings, and Rs. 44,976 crore in rupee term loans from financial institutions. These figures are based on disclosures reviewed by Cobrapost.

Our analysis of related filings and transaction records further examines transactions aggregating approximately Rs. 10,262 crore involving various entities and individuals, including Murugappa family members and KMP. The structure, disclosure, and commercial rationale of these transactions form a central part of the issues analysed in this report, particularly in the context of the stated purposes of the underlying borrowings.

We have identified the following serious issues:

• • Massive cash deposits made in 14 banks.
  • Diversion of funds to promoters’ entities.
  • Huge related party transactions by CIFCL over a decade.
  • Non-disclosure of all RPTs in violation of the disclosure requirements mandated under the Companies Act of 2013, SEBI's LODR Regulations, and the Indian Accounting Standards.    
  • Transfer of funds to related entities by CMGICL at the expense of its Japanese joint venture partner.
  • Huge of payouts to individuals and entities, including charities, in the name of professional fee, commission/brokerage, and work contracts.
  • Questionable practices in disbursal of loans where borrower entities have not filed charge register.       

One aspect that warrants closer examination is the scale of cash deposits reported by CIFCL across 14 banks. The volume and frequency of these cash transactions are significant and raise questions regarding monitoring, reporting, and oversight mechanisms applicable to such transactions within the banking system.

Here is a detailed analysis of what we found.

I. Unexplained Massive Cash Deposits with Over a dozen Banks

Analysis of statutory filings and other documents reveals that CIFCL has made cash deposits with over a dozen banks in the past seven years or so on a scale which is enormous. It has deposited around Rs. 25,089 crore in 14 banks between 2019 and 2025. Of these banks, eight are private entities and six are public sector banks. The names of the banks involved are here:

While Cobrapost has reviewed relevant statutory filings and other documents to collate and analyze the data, there may be mismatch between different filings. The reasons could be software glitches, human error and unknown variables. Though the data produced here are approximations, they can vary significantly on the upper side if an audit is conducted by competent authorities.  

As the table given next illustrates, ICICI Bank Ltd tops the list of all the recipients of cash deposits. Around Rs. 13,360 crore were deposited in a period of seven years. State Bank India follows with deposits of Rs. 4607.45 crore. Punjab National Bank, another public sector bank, is the fourth highest recipient of cash deposits with an upward of Rs. 561 crore. IndusInd Bank, another private bank which is owned by the Hinduja Group, has also received around Rs. 256 crore in cash deposits in a period of two years between 2019–2020. A small finance company like Fino Fintech has received more than Rs. 1329 crore in cash deposits that too in a single year.

Relevant statutory filings have been reviewed by Cobrapost and this table represents the conclusions derived thereof. Cobrapost has taken due care to anonymize and redact the data thus previewed because of privacy concerns. The data provided are approximations and may vary significantly.   

The scale and pattern of cash deposits reported by a non-banking finance company such as CIFCL raise important questions regarding the operation of regulatory monitoring and reporting frameworks applicable to such transactions.

Under the Prevention of Money Laundering Act (PMLA) and related rules, banks are required to file Suspicious Transaction Reports (STRs) with the Financial Intelligence Unit–India (FIU-IND) in respect of transactions that meet prescribed thresholds or indicators. FIU-IND, established following the enactment of the PMLA in 2002, functions as the central agency for receiving, processing, and analysing such reports. The manner in which large-value cash transactions of the kind examined in this report are monitored, reported, and reviewed by banks and regulators—including the Reserve Bank of India (RBI) as the banking sector’s statutory regulator—forms a key area of regulatory oversight that merits closer examination.

We have accessed the annual statements of Axis Bank and IndusInd Bank as case studies to analyze in what manner the cash deposits were made. Interestingly, cash transactions/deposits made with these banks differ from what CIFCL's book would have one believe. The details of cash deposits in the past seven financial years are provided in the next two successive tables.

A. Cash Deposits Made by CIFCL with Axis Bank

As the table here shows, cash deposits were made in the CIFCL account with Axis Bank using three modes: cash management services (CMS), cash deposits by individuals, and cash deposits directly with the branch of the bank. These deposits were made through hundreds of transactions with CMS registering highest number of entries. 

 Note: These figures are base on the review of statements. The number presented here is for the period starting FY 2019 to FY 2025 and differs from the value mentioned in the table before which is for the period FY 2022 to FY 2025.

The cash deposits made by CIFCL through CMS in its account saw steady volumes for two consecutive years – Rs. 929.04 crore in 2019–20 and Rs. 702.53 crore in 2020–21. Then, they gradually reduced but not diminished. Similarly, cash deposits received by bank branches saw steady volumes for three consecutive years – Rs. 1539.11 crore in 2019–20, Rs. 1421.97 crore in 2020–21, and Rs. 788.83 crore in 2021–22. Though cash deposits made by individuals was not substantial, it saw a steady increase except in 2024–25. The total cash deposits CIFCL made with Axis Bank stood at Rs. 7297.14 crore for FY 2019-20 to 2024–25.

B. Cash Deposits Made by CIFCL with IndusInd Bank

For making cash deposits with IndusInd Bank, however, CIFCL used only CMS as the table illustrates, totalling Rs. 200.72 crore between 2019–20 and 2024–25.

The pattern of cash deposits examined in this report has following implications for how credit risk and loan servicing practices are assessed within the lending framework applicable to non-banking finance companies (NBFCs):

• Questionable Credit Quality of Customers: As it is evident from the tables above, a large portion of loan servicing by customers is in the form of cash, which is deposited to the bank account of CIFCL. It is a standard practice that the debt servicing is conducted by all banking and lending institutions through structured equated monthly installments (EMIs) debited straightaway from a borrower's account. An Electronic Clearing System (ECS) mandate is obtained from the borrower before a loan agreement is executed and the loan is disbursed. The borrower is informed of the duration of the loan, his monthly liability and due date of EMIs through ECS, again a standard procedure. Then there are digital forms of payment as well.

It is only when a customer defaults on the payment of EMIs through this procedure or fails digital servicing, the lenders seek remittances against defaulted payments/EMIs in cash through their staff members or collection agents. Cash receipts are provided to the borrower then and there.

The cash deposits made in this manner also bring into question the credit risk they involve.

Cash collection is never envisaged by financial/lending institutions when they assess the credit risk. The current instance of large cash collection and deposits to bank accounts only gives an impression that quality of borrowers is poor. They are not regular in discharging their liabilities by not servicing the loan properly and regularly.

• Non-compliance of Income Tax Law and KYC Obligations: Section 269T of the Income Tax Act, 1961 makes it mandatory for each entity to disclose in their tax audit report the identity of each person and PAN details if receipts in excess of Rs. 20,000 in cash are made by the person in any financial year. While making cash deposits worth thousands of crores of rupees with several banks, CIFCL has failed in this mandatory compliance.

According to sources, the company has not filed the identity of a large number of customers while making cash deposits. This is seemingly in contravention of the Income Tax Act and RBI guidelines, too, which put the onus of strict KYC compliance on an NBFC for individuals making deposits on its behalf, including authorized agents and brokers. The objective of the guidelines issued vide RBI Master Circular dated July 1, 2010 is to prevent money laundering activities by NBFCs (Master Circular 'Know Your Customer' (KYC) Guidelines – Anti Money Laundering Standards (AML) -'Prevention of Money Laundering Act, 2002 - Obligations of NBFCs in terms of Rules notified thereunder’ enclosed as Annexure 3). Rule 3 of the guidelines states in unambiguous terms:

As regards deposits collected by persons authorised by NBFCs including brokers/agents etc. inasmuch as such persons are collecting the deposits on behalf of the NBFC, it shall be the sole responsibility of the NBFC to ensure full compliance with the KYC guidelines by such persons. The NBFC should make available all information to the Bank to verify the compliance with the KYC guidelines and accept full consequences of any violation by the persons authorised by NBFCs including brokers/agents etc. who are operating on its behalf.

Given the scale of cash deposits and the information available in public disclosures regarding the source and aggregation of remittances, the transaction patterns identified in this report raise questions that may warrant scrutiny within the regulatory framework of the PMLA. Such patterns are typically examined by enforcement and supervisory authorities like Enforcement Directorate under applicable PMLA provisions, including those relating to the identification, reporting, and scrutiny of high-value cash transactions.

• Concealment of Actual Non-performing Assets: As mentioned above, when the borrowers who have missed their payment obligations through regular banking channels using standard procedures, the lenders receive cash collections from them. This time lag may breach the prudential norms window of non-performing asset provisioning requirement. It is apparent that substantial of CIFCL's turnover over the last 5 years is in the form of cash. This, therefore, leads us to believe that GNPA disclosed by CIFCL may be an understatement hiding the true picture. 
• Credit Rating Agency and Conflict of Interest: A credit rating of AA+ that Crisil Ratings Limited assigned to CIFCL may have taken into account the excellent asset quality of CIFCL. However, the rating agency may not have factored in the large cash collections which carry certain inherent risks and delinquencies.

As is mentioned elsewhere in the story, the independence of rating agencies is questionable as there are conflict of interest issues.

Cobrapost’s review of audit reports and financial disclosures raises questions regarding the treatment and disclosure of certain revenue streams, including cash-based collections reflected in the segmental information examined in this report.

The analysis also notes that CIFCL made substantial payments towards audit and professional services to statutory auditors and, in certain instances, to related or affiliated entities of those audit firms. The scale and variation of these payments, when viewed alongside the auditors’ independence obligations under applicable auditing standards and professional codes, highlight potential issues of independence and conflict of interest that merit closer examination.

These aspects—relating to audit scope, disclosure, and fee structures—are examined in greater detail later in this report, with reference to applicable accounting standards, regulatory guidelines, and publicly available records.

II. How Murugappa Group's Insurance Arm Funded Nine In-House Companies

Apart from financing homes, vehicles, and small businesses, among others, Cholamandalam Investment & Finance Co. Ltd. is also engaged in the distribution of insurance products. Although the Insurance Regulatory and Development Authority of India (IRDAI) regulates a finance company from operating as an insurer simultaneously, a company can sell insurance products as a corporate agent of any licensed insurance operator. CIFCL is registered as a corporate agent (Registration No. CA0874) with IRDAI authorized to act as a life/non-life (composite) agent (see the IRDAI List of Corporate Agents enclosed as Annexure 4).

Our analysis shows that Cholamandalam MS General Insurance Company Limited, the insurance arm of the Murugappa Group, recorded payments amounting to approximately Rs. 331.53 crore as commission to Cholamandalam Investment & Finance Company Ltd. (CIFCL) between FY 2024 and FY 2025. Based on the disclosures examined, these payments do not appear to have duly reflected as related-party transactions in the filings reviewed.

We further identified transactions aggregating approximately Rs. 3040 crore reported by CMGICL with nine Murugappa Group entities during the period under review, the structure and disclosure of which form a central part of the issues flagged in this report.

While analyzing hundreds of transactions that CIFCL has conducted over a decade or so, Cobrapost came across receipts of an upward of Rs. 942 crore the finance company has earned in commission by selling insurance between 2024 and 2025. The star performer of the 125-year-old Murugappa Group must have sold thousands of policies and insurance products to earn Rs. 287.56 crore in 2024 in commission, which more than doubled to Rs. 654.52 crore a year later. Curiously enough, one of the three insurance companies CIFCL works for as a corporate agent is from the Murugappa Group's own stable, CMGICL. As illustrated in the table here, of Rs. 942 crore CIFCL received in commission from all three insurers in the past two years, Rs. 331.53 crore came from CMGICL.     

            .

The commissions which CMGICL paid CIFCL are legally speaking RPTs. But CMGICL failed to make full disclosures of all RPTs it entered with not only with CIFCL but also other Murugappa Group entities.

The insurer appears to have disclosed approximately half of the related-party transactions identified in this analysis. The extent and completeness of these disclosures raise questions when assessed against the disclosure requirements prescribed under the Companies Act, 2013, the Indian Accounting Standards, and SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations.

Interestingly, CIFCL has its own policy on RPTs which was formulated in April 2022 in line with the LODR Regulations. The policy aims to put in place a structured oversight mechanism for identification/monitoring, approval, and disclosure of RPTs (CIFCL's Policy on Related Party Transactions enclosed as Annexure 5, available online at https://share.google/QQKPFqpRM9e2y8bYR).

It is important to mention here the three significant clauses of the policy. Clause 7 of the policy outlines the guidelines for determining the arm's length basis of transactions. These guidelines involve determining, to quote the clause, whether the terms of the transaction are fair and would apply on the same basis if the transaction did not involve a Related Party; whether there are any compelling business reasons to enter into the transaction and the nature of alternative transactions, if any; where the transaction would affect the independence of an Independent Director; whether the transaction poses any consequential potential reputational risk issues; whether the transaction would present an improper conflict of interest for any Director or KMP, taking into account the size of the transaction, the overall financial position of the Director/KMP or other Related Party, the direct or indirect nature of the Directors, 'KMPs' or other Related Party's interest in the transaction and the ongoing nature of any proposed relationship."

Clause 9 lays down the review procedure when an unapproved RPT has taken place. To quote the clause:

In the event the Company becomes aware of a Related Party Transaction with a Related Party that has not been approved under this Policy prior to its consummation, the matter shall be reviewed by the Audit Committee. The Audit Committee shall consider all the relevant facts and circumstances pertaining to the failure of reporting such Related Party Transaction to the Audit Committee under this Policy, and shall take any such action it deems appropriate.

In any case, where the Audit Committee determines not to ratify a Related Party Transaction that has been commenced without its approval, the Audit Committee, as appropriate, may direct additional actions including, but not limited to, immediate discontinuation or rescission of the transaction. In connection with any review of a Related Party Transaction, the Audit Committee has authority to modify or waive any procedural requirements of this Policy.

In cases where the Board and/or shareholders' approval is required for a Related Party Transaction but such approval has not be obtained, and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting within three months from the date on which such Related Party Transaction was entered into, such Related Party Transaction shall be voidable at the option of the Board or, as the case may be, of the shareholders.                         

Clause 10 is about the need of making mandatory disclosures about RPTs. "The company shall make necessary disclosures as per the requirements under the Companies Act, SEBI  LODR Regulations and Indian Accounting Standards, as the case may be within the prescribed timelines."

In spite of these policy formulations, the company has been spectacular in its lackadaisical performance in following up its own policy. Other companies exposed in this story too have failed to make proper RPT disclosures. The only exceptions are CBSL and CMGICL but they too have made part disclosures. 

For a detailed analysis on how the related parties play out is provided in Box I (HOW THE MURUGAPPAS EXERCISE CONTROL THROUGH AMBADI INVESTMENTS LTD).                              

A substantial portion of CIFCL’s revenues is derived from vehicle financing. In the broader finance industry, loans for vehicles, homes, and personal purposes are often accompanied by insurance products, which may be offered by lenders acting as corporate agents of licensed insurers.

At the same time, regulatory guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) expressly prohibit the compulsory bundling of insurance products with a primary lending product, as well as any practice that induces a borrower to purchase insurance exclusively from a particular corporate agent.

Against this regulatory backdrop, the structure and growth of insurance-related commission income associated with vehicle lending form an important area of analysis in this report, particularly in assessing compliance with applicable insurance distribution norms.

A detailed discussion on regulatory provisions discouraging forced insurance selling is provided in 

here:  

Regulatory Provisions Prohibiting Forced Insurance Selling  

IRDAI has from time to time issued guidelines in the form of regulations to restrain insurance companies from indulging in forced insurance selling and other malpractices.

Regulation 21(ii) of IRDAI (Registration of Corporate Agents) Regulations, 2015, for instance, "expressly forbids compelling the customers to buy insurance". The proviso which relates to conflict of interest makes it clear that "where the insurance is sold as an ancillary product along with a principal business product, the corporate agent or its shareholder or its associate shall not compel the buyer of the principal business product to necessarily buy the insurance product through it (refer to the IRDAI (Registration of Corporate Agents) Regulations, 2015 enclosed as Annexure 6).

It also makes it mandatory for a corporate agent to submit a certificate with the IRDAI "on half yearly basis certifying that there is no forced selling of an insurance product to any prospect". A memo issued by IRDAI in August 2916 to all banks and NBFCs, borne out of complaints of malpractices the authority had received, was unambiguous in what was expected of the entities acting as corporate agents. Top on the list of complaints underlined in the memo was "compulsory bundling of insurance products with bank's products despite express unwillingness of customers" (refer to IRDAI memo titled Complaints of Misselling /Unfair Business Practices by Banks/NBFCs' enclosed as Annexure 7). Directing corporate agents to desist from such practices, the memo stated, "Instead the banks/NBFCs should have a system which should proactively detect and discourage such kinds of misselling/forced selling/wrong selling." It remains in the realm of bureaucratic labyrinthine if CIFCL filed any certificate testifying there was no indulgence in forced selling.

IRDAI's May 2016 Guidelines for Corporate Governance for Insurers in India also leave no room for complacence with regard to RPTs. Provision 3A of these guidelines lays down a regulatory framework for an insurance company to come clean on any conflict of interest (refer to the IRDAI Guidelines for Corporate Governance for Insurers in India enclosed as Annexure 8). It mandates the Board of Directors of the company to formulate a policy on RPTs. "Where it is proposed to enter into a contract or arrangement with Related parties as defined in Companies Act 2013, the disclosures by directors and necessary approvals as required under Section 184, 177(4)(iv) and 188 of Companies Act 2013, read with relevant Rules thereunder, shall be obtained." The guidelines also state that no auditor, actuary, director and key management personnel cannot "hold two positions in the insurance company that could  lead to conflict or potential conflict of interest".

___________________________________________________________________________________           

As noted earlier, our investigation indicates that CMGICL recorded insurance commission payments amounting to approximately Rs. 331.53 crore to CIFCL. Given the shareholding and control structure within the Murugappa Group, these payments fall within the category of RPTs as defined under applicable accounting and regulatory frameworks.

We further identified transactions aggregating approximately Rs. 3040 crore reported by CMGICL with nine Murugappa Group entities during the period under review. The disclosure, classification, and structure of these transactions and the questions around them form a central part of our report.

A. Examination of Commission, Work-Contract, and Fee Payments by Cholamandalam MS General Insurance  

Apart from the insurance commissions paid by CMGICL to its corporate agent, CIFCL, as discussed earlier, we have identified transactions aggregating approximately Rs. 3,040 crore recorded by CMGICL under heads such as commission, work contracts, and professional fees.

CMGICL is a company with a reported net worth of approximately Rs. 3,106 crore as of June 30, 2025. According to its disclosures, the company reported gross written premiums of about Rs. 8,328 crore in FY 2024–25.

The scale, structure, and disclosure of these transactions form a key part of the analysis that follows.

• An examination of CMGICL’s filings reviewed by Cobrapost indicates that transactions recorded by the insurer during the period under review were classified under categories such as insurance commission, work contracts, and professional fees. Similar categories of transactions are also examined elsewhere in this report in relation to CIFCL.

• Over the last nine years, CMGICL reported receipt of insurance commission aggregating approximately Rs. 5,869 crore, based on disclosures reviewed.

• Of this amount, transactions aggregating approximately Rs. 1,578 crore were recorded with Murugappa Group entities, as reflected in the filings examined.

• The records further reflect work-contract payments totalling approximately Rs. 426 crore to six Murugappa Group companies during the same period.

• In addition, professional-fee payments aggregating approximately Rs. 1,036 crore were recorded in favour of nine Murugappa Group companies, based on the disclosures reviewed.

But before we delve further, we would like to throw some light on the company first. CMGICL is a joint venture of Cholamandalam Financial Holdings, a Murugappa Group company, and Mitsui Sumitomo Group of Japan. The shareholding pattern is tabulated as under: 

Source: CMGICL Annual Report for the year 2024–25 enclosed as Annexure 9.

As the table shows, the shareholding of CMGICL is a subsidiary of Cholamandalam Financial Holding by virtue of holding 60 percent stake in the general insurer. Since CMGICL is a subsidiary of listed company, it has to fulfill all the regulatory compliance and reporting obligations as applicable to any listed entity.

CMGICL has collected a cumulative premium of Rs. 47,087 crore and earned has a commission of Rs. 5869 crore by selling general insurance products over the last nine years. A detailed breakdown of premium collected and commission earned by CMGICL between 2017 and 2025 is provided here:

Source: Annual Report of Cholamandalam MS General Insurance for FY 2017 to 2025 attached as Annexure 10.

An examination of the data set out in the table below indicates that a substantial portion of the insurance commission reported by CMGICL was recorded in favour of entities associated with the Murugappa Group.

The commission payments reflected in the filings show that amounts aggregating approximately Rs. 1,578 crore were recorded as paid to six Murugappa Group entities, as detailed below. It is, however, interesting to note that a large portion of commission detailed in the table above has been paid to entities related to the Murugappa Group.

The details of the commission paid to six Murugappa Group entities amounting to Rs. 1578 crore are provided here:

Our analysis suggests there have been even larger diversions of funds in the form of contracts and professional fee to nine Murugappa Group entities. These diversions amount to a massive Rs. 1462 crore which are discussed next. The data set out in the table above reveals that CMGICL reported insurance commission receipts aggregating approximately Rs. 5,869 crore over the last nine years. Based on the filings reviewed by Cobrapost, commission payments totalling around Rs. 1,578 crore—approximately 27 percent of the reported commission—were recorded in favour of Murugappa Group entities.

The concentration and disclosure of these commission payments raise questions regarding their implications for stakeholders, including minority shareholders and joint-venture partners like Japanese JV partner Mitsui Sumitomo Insurance Company Limited, an issue examined in the context of applicable disclosure and governance frameworks. Based on the disclosures reviewed, corresponding related-party disclosures for these transactions do not appear to have been reflected in the filings of either the remitting or the recipient entities.

In addition to commission payments, we have identified further transactions recorded by CMGICL under heads such as work contracts and professional fees with nine Murugappa Group entities, aggregating approximately Rs. 1462 crore. The structure, classification, and disclosure of these transactions are analysed in the sections that follow.

(a.) Payments in the Form of Work Contracts

As mentioned earlier, one of the reasons stated for the transfer of funds from CMGICL was for the purpose of work contracts to six related companies. These companies are Chola Insurance Distribution Services, Cholamandalam Investment & Finance Company Ltd., Murugappa Management Services Ltd., Cholamandalam MS Risk Services Ltd., Net Access India Ltd, and Chola Business Services. The total payouts made by CMGICL to these six Murugappa Group companies is estimated at around Rs. 426 crore. The details of the transactions are illustrated in the table here:

As the table below shows, CBSL and Chola Insurance Distribution Services have received, respectively, Rs. 214.80 crore and Rs. 208.86 crore in the forms work contarct.

.

(b.) Payments in the Form of Professional Fee

Out of the funds transferred by CMGICL, Rs. 1036 crore was paid to nine of the Murugappa Group companies in the form of professional fee. The year-wise breakdown of all these questionable transactions has been illustrated in the tables here.     

These Murugappa Group companies got Rs. 106 crore between 2022 and 2025, as illustrated in the table here. Put together, the companies received Rs. 1036.30 crore in professional fee.

In final analysis, CMGICL has stated various means – insurance commission, work contracts, and professional fee – to divert funds worth Rs. 3040 crore. The transaction details are summed up here:

Although CMGICL paid around Rs. 3040 crore in various forms as discussed above, the Murugappa Group listed company did not seem to have made adequate disclosures about these RPTs as mandated by the Companies Act of 2013, SEBI's LODR guidelines, the Indian Accounting Standards, and finally the IRDA guidelines. The general insurer has made disclosures about only two RPTs worth Rs. 116 crore as detailed in the table here:

(Refer Annexure  5: Related Party Transaction Section)

The issue of partial disclosure of RPTs assumes significance when assessed against the disclosure and governance requirements prescribed under the Companies Act, 2013 and applicable accounting and regulatory frameworks.

Regulatory authorities, in appropriate cases, examine whether incomplete or selective disclosure of RPTs attracts provisions relating to concealment, misstatement, or breach of fiduciary obligations under the Companies Act and other applicable laws, including the Bharatiya Nyaya Sanhita (BNS). Under Indian corporate and criminal law frameworks, matters involving disclosure accuracy, RPTs, and fiduciary conduct are examined by regulatory and enforcement authorities to determine whether statutory thresholds for liability, penalties, or other consequences are attracted. These legal provisions are discussed in detail in the sections that follow in BOX II (NON-DISCLOSURE OF RELATED PARTY TRANSACTIONS: LEGAL FRAMEWORK AND REGULATORY SCRUTINY).     

The Insurance Regulatory and Development Authority (IRDA) Act of 1999 obligates an insurance company and its directors to make disclosures when they enter into a contract or arrangement with related parties. The Act also mandated an insurance company to disclose RPTs in their financial statements. Further, Section 37 of the IRDA Act, which deals with any entity working as a licensed corporate insurance agent, obligates the agent to make related party disclosure. Under these provisions, IRDAI may scrutinise the registration of CMGICL, as an insurer, and Cholamandalam Investment & Finance Co. Ltd., as a corporate agent.

In addition to IRDAI's various regulatory interventions, the Securities and Exchange Board of India (SEBI) has in recent years broadened the ambit of RPTs including entities within promoter group irrespective of shareholding (The LODR Sixth Amendment Regulations, 2021 enclosed as Annexure 11). The guidelines stipulate prior approval from audit committee and shareholders, and detailed disclosures of these transactions to the SEBI. We have provided a detailed discussion on how important it is for a corporate entity to make full disclosures on all RPTs as required by the Companies Act, the Indian Accounting Standards, SEBI's LODR Regulations, Bharatiya Nyaya Sanhita (BNS), and other statutes applicable to fund diversions (refer to BOX II).   

Our analysis leads us to the most important question as to why CMGICL did not disclose such large RPTs seemingly in violation of the mandatory requirements of the Indian Accounting Standards (Annexure 12 & 13) and the SEBI and IRDAI guidelines.

The concentration of commission payments and other transactions with Murugappa Group entities identified raises questions regarding their implications for other stakeholders, including CMGICL’s joint-venture partner, Mitsui Sumitomo Insurance Company Limited. Based on the filings reviewed by Cobrapost, commission payments aggregating approximately 30 percent of CMGICL’s reported insurance commission over the relevant period were recorded in favour of Murugappa Group entities. These payments were in addition to amounts recorded under work contracts and professional fees, as detailed in the preceding sections.

The disclosure and treatment of these transactions are examined in this report in the context of applicable related party and governance frameworks governing joint ventures and listed insurers. Cobrapost’s analysis identifies a set of payments and transaction pathways that warrant closer examination in the context of related party disclosures and intermediary arrangements.

• The records reviewed indicate that CMGICL reported transactions involving Chola Insurance Distribution Services Pvt. Ltd., a Murugappa Group entity, which appears in the transaction flow for payments made to various companies and individuals. The structure and disclosure of these arrangements form part of the issues examined in this report.
• Based on the filings examined, entities reflected as recipients of payments routed through Chola Insurance Distribution Services include DHFL Sales and Services Limited, Reliance Communication Limited, IndusInd Marketing & Financial Services Pvt. Ltd., and Group M Media India Pvt. Ltd. These entities are not insurance companies, and the commercial context of such payments is examined in the sections that follow.
• The records reviewed show that DHFL Sales and Services Limited received payments aggregating approximately Rs. 65.28 crore in FY 2016–17 through Chola Insurance Distribution Services. IndusInd Marketing & Financial Services Pvt. Ltd. is reflected as having received payments totalling approximately Rs. 14.47 crore between FY 2016–17 and FY 2018–19, while Reliance Communication Limited received payments aggregating approximately Rs. 3.67 crore in FY 2016–17 and FY 2019–20 through the same intermediary.
• The filings further reflect that other Murugappa Group entities, including Coromandel International Limited, Net Access India Limited, Murugappa Management Services, and Arunachalam Customer Care Service, appear in similar transaction records.
• In addition, the disclosures reviewed indicate that K. Senthil Kumar, identified as an area manager with CMGICL, received commission payments aggregating approximately Rs. 4.64 crore during FY 2023–24 and FY 2024–25. The nature and disclosure of these payments are examined in the context of applicable governance and disclosure norms.

The scope and structure of the transactions identified underscore the importance of comprehensive disclosure, as fuller reporting would have enabled a more complete public and regulatory assessment of the company’s operations and governance practices.

III. Transfer oF Funds Worth Rs. 1654 Cr Through Work Contracts

The analysis of filings reviewed by us indicates that CMGICL recorded transactions aggregating approximately Rs. 3040 crore under heads such as work contracts and professional fees with various Murugappa Group companies, including CIFCL.

In a similar vein, the records examined show that CIFCL recorded work contract payments totalling more than Rs. 1654 crore with over a dozen Murugappa Group entities. The use of work-contract arrangements as a mode for these payments is a recurring feature across the transactions examined and forms a key aspect of the analysis that follows.

After analyzing all these RPTs, Cobrapost has found the following elements characterizing them:

• CIFCL has awarded work contracts to a dozen Murugappa Group entities and paid them sums worth more than Rs. 1654.11 crore.
• Of all these entities, Chola Business Services turns out to be the highest grosser receiving Rs. 1628.36 crore in work contracts.
• Parry Enterprises India Ltd. is second on the list having received Rs. 16.94 crore in a similar manner.
• Cholamandalam Home Finance and CMGICL, the most unlikely candidates, too have received huge payments against work contracts.
• The NBFC does not seem to have made adequate disclosures about these RPTs.

As the table here illustrates, CIFCL paid 13 Murugappa Group entities a staggering amount of Rs. 1654.11 crore at various period of time between  2015-16 and 2024-25.

Of all the companies, CBSL received more than Rs. 1628 crore as detailed in the table. The company received this massive payout through half a dozen transactions in a single year, 2018-19. Among these beneficiaries is AMM Foundation, a home-grown non-profit. Though the amount paid to the Murugappa family NGO is not big, it raises a question as to why a payout which could have been a donation was given for a work contract for a sum as paltry as Rs. 19,364.

The transactions identified in this analysis fall within the category of related-party transactions (RPTs) when assessed against applicable accounting and regulatory definitions.

Examination of CIFCL’s disclosures reveals that RPT reporting appears only from FY 2022–23 onwards, while transactions identified in earlier periods do not appear to have been reflected as RPT disclosures in the filings reviewed. This disclosure pattern forms a key aspect of the governance issues examined in this report.

The acts and omissions of incomplete or delayed disclosure of RPTs (RPTs) is covered under multiple statutory and regulatory frameworks, including the Companies Act, 2013, SEBI’sLODR Regulations, and the Indian Accounting Standards. These frameworks empower regulatory and enforcement authorities to examine whether disclosure practices meet statutory requirements and, where appropriate, whether further action is warranted under applicable civil or criminal provisions. The scope and application of these provisions, including those relating to misstatement, concealment, or fiduciary conduct, are matters for determination by competent authorities under the Companies Act and other applicable laws, including the Bharatiya Nyaya Sanhita (BNS).

Regulators such as SEBI are vested with supervisory and enforcement powers under the SEBI Act to examine such matters and to take action in accordance with law, where warranted.

IV. Paying Professional Fee Worth more than Rs. 662 Cr to Related Parties

Examination of CIFCL’s filings indicates that the company recorded professional fee payments to a number of Murugappa Group entities during the period under review. Based on the disclosures examined, professional fee payments aggregating approximately Rs. 642.95 crore were recorded in favour of five Murugappa Group companies. The filings further reflect that CIFCL recorded payments aggregating approximately Rs. 19.70 crore to 12 senior Murugappa family members, classified as professional fees and salary. Taken together, these payments amount to approximately Rs. 662.65 crore, as per the records reviewed.

The names of these recipient in-house companies are CBSL, Murugappa Management Services, Cholamandalam Home Finance Ltd., Net Access India Ltd., and Cholamandalam Securities Ltd. Among them,  CBSL. alone received a sum of Rs. 430.51 crore paid in professional fee by CIFCL. Murugappa Management Services made Rs. 138.28 crore in professional fee that was paid by CIFCL in 2015-16 and 2021-22, through eight transactions, the last two taking place in 2021–22. Murugappa Management Services has been used as an SPV for fund diversions, as discussed elsewhere in the story.

The table given here is illustrative enough. 

These related entities together received payments aggregating more than Rs. 642.95 crore over the period from FY 2015–16 to FY 2024–25.

Analysis of CIFCL’s disclosures indicates that corresponding related party transaction (RPT) disclosures for these payments do not appear to have been reflected in the filings reviewed. The adequacy and completeness of such disclosures are examined in this report with reference to the requirements under the Companies Act, SEBI’s LODR Regulations, and the Indian Accounting Standards.

The table illustrates that a number of payments were recorded under the head of professional fees. The classification, disclosure, and related-party treatment of these payments form a central part of the issues examined in this report. An examination of CIFCL’s filings reveals that corresponding RPT disclosures for these payments do not appear to have been reflected in the filings examined, an issue highlighted in this report against applicable disclosure frameworks.

Apart from these related parties, 12 individuals have together received more than Rs. 19.70 crore in the form of professional fee and salary. Most of these recipients are prominent members of the Murugappa clan – Arun Alagappan, Vellayan S, Arun Venkatachalam, MM Murugappan, MAM Arunachalam, M Arunachalam, and Valli Arunachalam. Arun Alagappan, who is chairman of the Murugappa Group, is the top grosser receiving Rs. 12.50 crore in salary between 2017-18 and 2021-22. He is followed by Vellayan S and Subbiah S, receiving more than Rs. 2.25 crore and Rs. 1.03 crore, respectively.

The table above makes another important revelation which again renders these transactions questionable. The Murugappa family members are either on the payroll of or are consultant to CIFCL. All these transactions raise serious questions of corporate governance.

As noted earlier, an examination of CIFCL’s filings indicates that RPT disclosures corresponding to the payments identified in the tables above do not appear to have been reflected in the company’s filings for the relevant periods. The records examined further indicate that Murugappa Group entities which received professional fee aggregating approximately Rs. 642.95 crore similarly do not appear to have reflected corresponding related party disclosures in their filings. The disclosure of these payments by both the remitting and the recipient entities is examined in this report in the context of applicable statutory and accounting frameworks. Issues relating to the completeness and timing of RPT disclosures are governed by statutory and regulatory frameworks under the Companies Act, 2013, SEBI’s LODR Regulations, and applicable accounting standards.

Where disclosure practices fall short of prescribed requirements, regulatory and enforcement authorities are empowered to examine whether such conduct attracts consequences under these frameworks, including provisions relating to misstatement, concealment, or fiduciary obligations. The relevant legal provisions and their scope are outlined in BOX II (NON-DISCLOSURE OF RELATED PARTY TRANSACTIONS: LEGAL FRAMEWORK AND REGULATORY SCRUTINY).

V. TRANSACTIONS AGGREGATING RS. 4103 CRORE RECORDED WITH CHOLA BUSINESS SERVICES

Chola Business Services Ltd., a privately held company within the Murugappa Group, features prominently in the transaction records examined in this report. Filings reviewed by Cobrapost indicate that CBSL recorded receipts aggregating approximately Rs. 4103 crore from CIFCL over multiple years. As discussed earlier, work contract payments recorded in favour of CBSL amount to approximately Rs. 1628.36 crore, based on the disclosures examined. Examination of CIFCL’s filings reviewed by Cobrapost indicates that corresponding RPT disclosures for these payments do not appear to have been reflected in the filings reviewed.

In addition to work contract payments, the records examined show that CIFCL recorded further payments to CBSL under various service-related heads over multiple years, including transactions dating back to periods prior to FY 2015. The nature, classification, and disclosure of these payments are analyzed in detail in the sections that follow.

According to the Cobrapost analysis:

• CBSL works as a manpower supplier for CIFCL.
• It has received Rs. 4103 crore from CIFCL between 2015 and 2025 in what is defined as related party transactions.
• CIFCL has disclosed only Rs. 2045 crore of these RPTs that took place between 2022 and 2025. 
• The non-disclosure of Rs. 2058 crore paid by CIFCL to CBSL is seemingly not in conformity with regulatory guidelines laid down by the Companies Act, SEBI's LODR Regulations, and Indian Accounting Standards.
• CBSL has made some questionable disbursals further down and the beneficiaries are Mysore Club, Murugappa Management Services and Venkatachalam A, one of the promoters of the Murugappa Group and family members. Venkatachalam has been paid salary worth Rs. 16.50 crore between 2023 and 2025.
• The company has also received Rs. 214.80 crore from Cholamandalam MS General Insurance in professional fee and work contracts as discussed elsewhere in the story.
• It is worthwhile to note that the company has claimed Rs. 180 crore between 2018 and 2025 in deduction under Section 80JJAA of the Income Tax Act for additional hiring of irregular/fake employees with CIFCL.

To provide context to the transactions examined in this section, it is useful to outline the shareholding pattern of CBSL and the ownership relationships within the Murugappa Group. This helps explain how control, related-party relationships, and transaction flows are structured among the group entities discussed in this report. The shareholding of CBSL is tabulated below:

Source: Shareholding pattern of Chola Business Services enclosed as Annexure 14.

As it can be gleaned from the table above, Chola Insurance Distribution Services Pvt. Ltd. (CIDSPL) owns almost 48 percent of CBSL, whereas Ambadi Investments and Kartik Investments own 19 percent each. Interestingly, CIDSPL has Ambadi Investments as its majority shareholder owning 50 percent of all its stake. CIFCL and CBSL each hold 19 percent stake in the company which is in the business of selling insurance as a corporate agent. The shareholding pattern of CIDSPL is illustrated in the table here: