Godrej group split: Setting new examples
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.