The way the Godrejs have completed a “peaceful, amicable and mature” bifurcation of their multi-billion dollar locks-to-aerospace-to-land bank group last week so “to maintain family harmony and to better align ownership in acknowledgement of the differing visions of the family members”, comes in stark contrast to the largest business break-up that India Inc has witnessed in the Ambani brothers who publicly and legally spat for over a year to accept a break-up mother Kokilaben Ambani sewed up in June 2005.
This is also in starker contrast to the same sad stories still played out among the Murugappas in Chennai, the Kirloskars, the Kalyanis and the Chhabrias of Finolex in Pune, the Singhanias of Raymond in Mumbai and the Singhs of Fortis in Delhi. And the only exception we’ve today other than the Godrejs is by another Parsi blood—the Shapoorji Pallonjis.
“The Godrej family settlement was ‘locked’ with the elegance and dignity that the family is known for. No controversies, just all clean like their soaps,” is how the RPG Group chairman Harsh Goneka put it on X.
Well after the wee hours of April 30, the 127-year old group with over Rs 1.8 lakh crore in market capitalisation, informed stock exchanges that their families led by Adi and his cousin Jamshyd have agreed to divide the conglomerate into two branches under which Adi and his brother Nadir will keep the listed entities, while cousin Jamshyd will get the control of the unlisted companies led by Godrej & Boyce and all other associated entities along with the massive land bank that runs into over 3,500 acres, making them the largest land owner in the megapolis.
The new entities are known as Godrej Enterprises Group led by Adi and brother Nadir, and Godrej Industries led by Jamshyd and his sister Smita Crishna, the statement said, which according to many analysts explained as the proof of India Inc and large promoters led companies growing in professionalism and corporate governance maturity.
The peaceful division allows both the groups to use the Godrej brand name, royalty payments, and development over 1,000 acres of land in the northeastern suburb of Vikroli worth around Rs 1 lakh crore given that an acre there comes for around Rs 80 crore.
“To preserve mutual respect, goodwill, amity and harmony and to manage diverse expectations and varied strategic directions desired by each family branch, the family branches have agreed on a settlement among the family branches,” read the settlement, the negotiations for which began nearly five years ago.
The families termed the split as “an ownership realignment of the shareholdings in the group companies to help maximise the strategic direction, focus, and agility, and to accelerate the process of creating long-term value for shareholders and stakeholders.”
Business families are increasingly realising the need for an amicable settlements, as other way is to destruction for self as well as for shareholders and splits like the Godrejs ensure shareholder value is not hit, according to governance and market experts who point out how family feuds have destroyed shareholders wealth in recent years, be it in the case of the Ambanis (as only Mukesh’s group could grow manifold after the bitter split sewed up by the mother Kokilaben three years after the founder Dhirubhai Ambani passed away in July 2002 without a proper will, as the nearly a dozen Anil group companies have vanished into thin air and there is just one firm Reliance Infrastructure that’s a going concern now), the Murugappas, the Kirloskars, the Kalyanis (Baba Kalyani and sister Sugandha Hiremath over ownership of Hikal) the Chbabrias of Finolex or the Singh brothers of Fortis or the Singhanias of Rayond group.
Business families like the Godrej group are increasingly realising that an amicable settlement is better. Else, the wealth of all shareholders gets destroyed, opined Shriram Subramanian, founder and managing director of Ingovern Research.
How the break-up has been handled by the Godrej brothers shows dignity in the whole process. Unlike other business families, there was no acrimony, and after this, the focus of each subgroup will be much sharper leading to better value creation, said Amabareesh Baliga, an independent equity analyst puts it.
Uday Kotak, who along with noted corporate lawyers Cyril Shroff and Zia Mody and Nimesh Kampani of JM Financial, were the key advisors to the families, said the split ensures that even next generation flourishes as “the Godrejs family has high integrity and quality and even the next generation will flourish”.
According to the details of the deal, Nadir Godrej, 73, will be the chairperson of Godrej Industries Group (GIG), and his son Pirojsha will be the executive vice-chairperson and will succeed Nadir as chairperson in August 2026. This group operates through five listed companies-- Godrej Industries, Godrej Consumer Products, Godrej Properties, Godrej Agrovet and Astec Lifesciences. Godrej Consumer is the biggest with a market capitalisation of Rs 1.26 lakh crore as of April 30.
The 75-year-old Jamshyd will head the Godrej Enterprises Group (GEG) that operates across aerospace, aviation, defence and liquid engines among others. Godrej & Boyce and holding firm of Godrej Industries were founded in 1897 and are the main entities in the GEG. Jamshyd will be the chairman and managing director of GEG and Smita and her daughter Nyrika Holkar will be executive directors.
In the run-up to the break-up plan, the families had formed a family council to iron out two critical points: the usage of the Godrej brand name after the split, including possible royalty payments; and land valuations currently held by Godrej & Boyce.
That to make the split so nuanced and professional, both the sides have quit the boards of companies in rival camps. Accordingly, Adi and Nadir resigned from the Godrej & Boyce board, while Jamshyd left his seat on the boards of GCPL and Godrej Properties.
The Vikhroli land by some estimates has a development potential of trillions of rupees and of this the group can develop at least 1,000 acres, while about 1,750 acres are protected mangroves which are home to rare plants and birds. About 300 acres are encroached upon. The developable 1,000-acres are worth over Rs 1 lakh crore given the land price in the suburb that sniffs at Rs 100 crore for an acre or over Rs 30,000/sqft of a built-up space.
No feud, no acrimony in the process
This bifurcation is in starker contrast to the same sad stories still played out among the Murugappas in Chennai, the Kirloskars, the Kalyanis and the Chhabrias of Finolex in Pune, the Singhanias of Raymond in Mumbai and the Singhs of Fortis
Who gets what in the bifurcation
Adi and his brother Nadir will keep the listed entities, while cousin Jamshyd will get the control of the unlisted companies led by Godrej & Boyce and all other associated entities along with the massive land bank