Serious differences among family members have emerged at one of India's oldest business houses, Godrej Group, over future business strategy and the development of a prized Mumbai land parcel.
Besides the friction over direction of the future of the more than 100-year-old conglomerate, the bone of contention between family patriarchs Jamshyd Godrej and Adi Godrej is also a 1,000-acre plot in Mumbai's Vikhroli suburb and they have sought the intervention of some of India’s top businessman and lawyers to help resolve the differences, said people intimately familiar with the matter.
Jamshyd Godrej, who controls the unlisted Godrej & Boyce, has roped in banker and industry veteran Nimesh Kampani and lawyer Zia Mody as advisors while Adi and Nadir Godrej have Kotak Mahindra Bank's Uday Kotak and legal veteran Cyril Shroff on their side.
The people quoted above, who spoke on the condition of anonymity, said the advisors are tasked to discuss the points of differences between the two and help parties reach acceptable solutions.
“With the involvement of legal eagles, the matter is no more a family matter,” one of them said.
Godrej Group, set up in 1897 by Ardeshir Godrej, has revenue of over $5 billion with interests spanning from real estate to fast moving consumer goods.
Adi and Nadir Godrej control the group's three listed companies, namely; Godrej Consumer Products Ltd (GCPL), Godrej Properties Ltd and Godrej Agrovet.
Jamshyd-controlled Godrej & Boyce has 4.64 percent stake in Godrej Properties and 7.34 percent in GCPL.
Apart from this, Jamshyd Godrej and family's trust owns 8.66 percent in Godrej Industries.
The group, as explained above, is intertwined as most family-owned businesses in India have been since their beginnings. The differences have emerged as the family grew in size, and the younger generation joined the ranks where their leadership styles differed.
“As families grow, they have to evolve a long-term strategy for growth,” said another person, who is directly involved in the negotiations.
Godrej Properties, listed in 2010, has claimed to have sold real estate worth over Rs 5,000 crore in 2016 alone. Adi Godrej is chairman of the company and his son Pirojsha Godrej is executive chairman.
As part of the family arrangement reached in 2011, the land parcel in Vikhroli owned by Godrej & Boyce but is 'co-developed' with Godrej Properties who receives a 10 percent fee of the total revenue generated from the development. The design and construction costs borne by Godrej & Boyce.
Godrej & Boyce has a total land parcel of 3,000 acres, nearly two-thirds of this land is covered in mangroves and hence cannot be developed as these trees act as "lungs" of India's financial capital.
E-mail queries sent by CNBC-TV18 to each of the advisors and Godrej Group went unanswered.
Source: CNBC-TV 18