The Godrej Group, the Rs 1.76 lakh crore conglomerate that started its industrial journey five decades before Independence by selling locks to the citizens of a then crime-prone Bombay, is reportedly in advanced stages of talks to conclude the formal division of its diverse businesses, top industry executives familiar with the development told the Economic Times.
Moneycontrol could not verify the report independently.
At present, the Godrej family is divided into two factions: Godrej Industries & Associates, spearheaded by Adi Godrej and his brother Nadir, and Godrej & Boyce Manufacturing Company (G&B), which involves cousins Jamshyd Godrej and Smitha Godrej Crishna. These factions are on the verge of finalising a formal split of their business verticals, involving a wide array of sectors such as engineering, appliances, security solutions, agricultural products, real estate, and consumer products, the report mentioned.
According to the officials, talks are ongoing within the family council to resolve crucial matters, notably the post-split usage of the Godrej brand name, potential royalty payments, and the valuation of land assets currently held by G&B.
The ongoing talks are grappling with several legal challenges, primarily focused on disentangling equity cross holdings and effectively dividing approximately 3,400 acres of valuable land parcels held by G&B. These complexities highlight the intricacies involved in the process of formalizing the division of business and assets within the Godrej family, the report said.
"There have been some issues that need ironing out on the land parcel. Given tax implications, it is difficult to move the parcel out of G&B," the financial daily quoted an official as saying.
"That has thrown up a challenging task that almost required arbitration. How the valuation - and in turn an equitable proposition for both parties - would work out has been the main point of conflict."
Officials aware of the the confidential discussions have indicated that the Godrej family has been engaging in amicable talks, prioritising the best interests of all stakeholders, including consumers. These closed-door negotiations are focused on ensuring a smooth transition that will not disrupt the operations of any of the existing companies.
"As we know, the Godrej family has always operated in harmony despite different shareholder views and will close this amicably, too," the official cited above told the daily.
Top investment banker Nimesh Kampani and noted corporate lawyer Zia Mody are reportedly advising Jamshyd Godrej, while Asia's richest banker Uday Kotak and Cyril Shroff's legal firm Cyril Amarchand Mangaldas have led discussions from the Adi Godrej side, executives aware of the talks said.
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