Godrej Fiasco: Firm Looks at Board Exits and Disinvestment

The Godrej family has started division by exiting the boards of each other’s companies and will soon divest their stakes. The separation is between the two branches of the family, where Adi Godrej and his brother Nadir are on one side and their cousins Jamshyd Godrej and his sister Smita Godrej are on the other side.

What Has Happened Till Now?

Earlier this year, Adi and Nadir Godrej resigned from the Godrej & Boyce Board and Jamshyd Godrej relinquished his seat on the boards of GCPL and Godrej Properties.

The Godrej Industries and Associates are run by Adi and Nadir Godrej and Godrej and Jamshyd Godrej and his sister lead Boyce.

Godrej Group Companies

The Godrej Group has a well-diversified portfolio, The Godrej Group comprises five listed companies which are GCPL(Godrej Consumer Products Limited), Godrej Properties, Godrej Industries, Godrej Agrovet and Astec Lifesciences, valued collectively at Rs 2.34 lakh crore at close of markets on Thursday. The five listed firms reported nearly Rs 42,172 crore in revenue and Rs.4,065 crore in profit in FY23. On the other hand, Godrej and Boyce is a privately held company. The conglomerate operates diverse businesses including engineering, appliances, security solutions, agricultural products, real estate, and consumer products.

Stake in G&B and GCPL

Five family members, Adi Godrej, Nadir Godrej, Jamshyd Godrej, Smita Godrej Crishna and Rishad Godrej, 15.3% each in G&B, while the Pirojsha Godrej Foundation holds around 23%. 

Godrej Industries holds a 23.74% stake in GCPL, while G&B and Godrej Seeds and Genetics own 7.33% and 27.42%, respectively. Godrej Seeds and Genetics is a privately held company with Tanya Arvind Dubash, Smita Godrej Crishna and Nisaba Godrej as directors.

The FMCG company is the biggest among all the listed companies of Godrej Group and has a market capitalization of around Rs.1.20 Lakh Crores.

What Has Been Said?

Executives close to the matter said.” Real estate estimated at Rs.3400 crores, primarily in Mumbai suburbs, will remain under Godrej and Boyce(G&B) and there will be a separate agreement that will be worked out for governing these ownership rights.

Conclusion: This complete division and divestment in one sense will lead to a less complicated ownership structure and a clear business structure. Though both sides owned shares in each other’s business, there was no operational influence from any of the other sides.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.