126-year-old-godrej-family-empire-navigates-amicable-split-of-Rs 176-lakh-crore-conglomerate

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According to sources familiar with the matter, the Godrej family, overseeing a massive conglomerate valued at ₹1.76 lakh crore, is on the verge of a friendly separation. This sprawling conglomerate boasts a diverse range of businesses, spanning engineering solutions, home appliances, security solutions, agricultural products, real estate, and consumer goods.

The impending split involves two main factions within the 126-year-old family empire: Godrej Industries & Associates, led by siblings Adi and Nadir Godrej, and Godrej & Boyce Manufacturing Company (G&B), helmed by their cousins Jamshyd Godrej and Smitha Godrej Crishna.

The discussions within the family council revolve around two crucial aspects: the use of the Godrej brand name post-separation, including potential royalty arrangements, and the valuation of land assets currently held by G&B.

Offering guidance to Jamshyd Godrej are prominent investment banker Nimesh Kampani and corporate lawyer Zia Mody. Meanwhile, banker Uday Kotak and Cyril Shroff's legal firm Cyril Amarchand Mangaldas are leading discussions on behalf of Adi Godrej's faction. Notably, Pirojsha Godrej, Adi Godrej's son and chairman of Godrej Properties, has been directly involved in these deliberations.

The Godrej family's structure and holdings are organized into five branches, each represented by Adi Godrej, Nadir Godrej, Jamshyd Godrej, Smita Crishna (Jamshyd's sister), and Rishad Godrej (cousin of Adi, Nadir, and Jamshyd). Each of these branches holds a 15.3% stake in G&B, with the Pirojsha Godrej Foundation holding approximately 23%.

Godrej Industries Limited functions as a holding company with diverse interests encompassing consumer goods, agriculture, real estate, chemicals, and financial services. It also serves as an incubator for new ventures. The company holds a 64.89% stake in Godrej Agrovet Ltd, a 23.74% stake in Godrej Consumer Ltd, and a 47.34% stake in Godrej Properties Ltd.

The conglomerate comprises five publicly listed firms: Godrej Industries, Godrej Consumer Products, Godrej Properties, Godrej Agrovet, and Astec LifeSciences. Together, these firms had a combined market capitalization of Rs 1.76 lakh crore as of the latest available data. In the fiscal year 2023, these entities reported revenue of nearly Rs 42,172 crore and profits of Rs 4,065 crore.

Ownership of Godrej Industries is distributed among 28 family members. Rishad Naoroji holds 12.65%, while Jamshyd Naoroji Godrej and Nyrika Holkar possess 9.34% and 8.01%, respectively.

Among the listed firms, Godrej Consumer Products is the largest, with a market capitalization of Rs 1.01 lakh crore as of the latest data.

In the first quarter of fiscal year 2024, Godrej Consumer Products Limited (GCPL) reported a 7.6% decrease in consolidated net profit, which amounted to Rs 318.82 crore compared to Rs 345.12 crore in the same period the previous year. However, total revenue for the first quarter stood at Rs 3,448.91 crore, marking a 10.36% increase from Rs 3,124.97 crore in the corresponding period last year. GCPL's India revenue for the June quarter rose by 8.43%, reaching Rs 2,005.48 crore.

GCPL attributed the decline in net profit for the quarter to exceptional expenses totaling Rs 81.78 crore, including Rs 77.52 crore related to the acquisition of Raymond Consumer Care Business and Rs 4.26 crore for other restructuring costs. The company reported a 23.4% growth in earnings before interest, tax, depreciation, and amortization (EBITDA), reaching Rs 642.8 crore, with an EBIDTA margin of 18.6%, up 240 basis points from the same quarter the previous year. GCPL noted that consolidated sales grew by 10%, driven by a 10% increase in volume and a constant currency growth of 15% year-on-year.

Meanwhile, Godrej Industries reported a 13% YoY decline in consolidated net profit for the June quarter, amounting to Rs 178 crore compared to Rs 204 crore in the corresponding period of the previous fiscal year. Total revenue for the quarter stood at Rs 4,893 crore, marking a 15% YoY increase from Rs 4,242 crore.

The sales growth was attributed to a 10% YoY increase in volume in constant currency terms. Within the conglomerate, the home care category saw a 14% growth, the personal care segment recorded a 2% growth, while the chemical segment's revenue for the June 2023 quarter decreased to Rs 726 crore from Rs 1,000 crore in the year-ago period. Exports for Q1FY24 amounted to Rs 214 crore.

In the real estate sector, Godrej Industries reported a total booking value of Rs 2,254 crore for Q1FY24, with 2.25 million square feet of area sold during the quarter. The company also added four new projects with an estimated saleable area of 3.7 million square feet.