The Godrej Group, with assets valued at an impressive Rs 1.76-lakh-crore, is reportedly advancing in the pivotal stages of negotiations to formally divide its multifaceted business operations. This sprawling conglomerate encompasses diverse sectors such as engineering solutions, home appliances, security solutions, agricultural products, real estate, and consumer goods.
Key to this development is the presence of two influential factions within the Godrej family: one is Godrej Industries & Associates, led by prominent figures Adi Godrej and his brother Nadir, while the other segment comprises Godrej & Boyce Manufacturing Company (G&B), headed by cousins Jamshyd Godrej and Smitha Godrej Crishna.
The central point of discussion within the family council currently revolves around two critical aspects. Firstly, there is deliberation on the continued use of the esteemed Godrej brand name following the division, including the potential implications of royalty payments. Secondly, the council is examining the valuations of the vast land holdings presently under the purview of Godrej & Boyce Manufacturing Company (G&B).
For guidance and counsel in navigating these intricate discussions, two eminent advisors have been enlisted. Top investment banker Nimesh Kampani and corporate lawyer Zia Mody are reportedly offering their expertise to Jamshyd Godrej’s camp, while banker Uday Kotak and the legal team at Cyril Amarchand Mangaldas are leading the discussions on behalf of Adi Godrej.
Notably, Pirojsha Godrej, the son of Adi Godrej and Chairman of Godrej Properties, is actively participating in these deliberations, further highlighting the family’s commitment to the division process.
The complex family structure of the Godrej family is characterized by five distinct branches. Adi Godrej, Nadir Godrej (Adi’s brother), Jamshyd Godrej, Smita Crishna (Jamshyd’s sister), and Rishad Godrej (cousin of Adi, Nadir, and Jamshyd) each hold a 15.3 percent stake in Godrej & Boyce Manufacturing Company (G&B). Additionally, the Pirojsha Godrej Foundation maintains approximately a 23 percent stake.
Godrej Industries Limited serves as a holding company with extensive interests in various sectors, including consumer goods, agriculture, real estate, chemicals, and financial services. It also functions as an incubator for new ventures. The company holds a 64.89 percent stake in Godrej Agrovet Ltd, a 23.74 percent stake in Godrej Consumer Ltd, and a 47.34 percent stake in Godrej Properties Ltd.
The conglomerate comprises five publicly listed firms: Godrej Industries, Godrej Consumer Products, Godrej Properties, Godrej Agrovet, and Astec LifeSciences. These entities collectively possessed a market capitalization of Rs 1.76-lakh-crore as of the last trading day. In the fiscal year 2023, the five listed companies reported revenues of nearly Rs 42,172 crore and profits amounting to Rs 4,065 crore.
The promoter-holding structure of Godrej Industries involves ownership distributed among 28 family members. Notably, Rishad Naoroji owns 12.65 percent, while Jamshyd Naoroji Godrej and Nyrika Holkar possess 9.34 percent and 8.01 percent, respectively.
Godrej Consumer Products stands out as the largest among the listed firms, boasting a market capitalization of Rs 1.01-lakh-crore as of the most recent valuation.
In terms of financial performance, Godrej Consumer Products Limited (GCPL) reported a consolidated net profit decline of 7.6 percent during Q1 FY24, with figures totaling Rs 318.82 crore compared to Rs 345.12 crore in the corresponding quarter of the previous fiscal year. Nevertheless, total revenue for the first quarter reached Rs 3,448.91 crore, reflecting a notable 10.36 percent increase compared to Rs 3,124.97 crore during the same period in the previous year. GCPL’s Indian revenue experienced an 8.43 percent rise to Rs 2,005.48 crore in the June quarter, up from Rs 1,849.41 crore a year earlier.
For GCPL, the net profit decline in the June quarter was attributed to expenses related to exceptional items amounting to Rs 81.78 crore. These items included Rs 77.52 crore associated with the acquisition of Raymond Consumer Care Business and Rs 4.26 crore for other restructuring costs.
GCPL reported a robust growth in earnings before interest, tax, depreciation, and amortization (EBITDA) at 23.4 percent, reaching Rs 642.8 crore. The EBITDA margin also expanded by 240 basis points, landing at 18.6 percent compared to the same quarter the previous year. The company noted a 10 percent growth in sales, driven by a 10 percent increase in volume and constant currency growth of 15 percent year-on-year.
Meanwhile, Godrej Industries reported a 13 percent year-on-year decline in consolidated net profit during the June quarter of fiscal year 2024, with figures falling to Rs 178 crore from 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 percent year-on-year increase compared to Rs 4,242 crore in the same period the previous year.
The sales growth was attributed to a 10 percent year-on-year volume growth in constant currency. The consolidated EBITDA for the quarter witnessed an impressive 28 percent year-on-year growth.
In terms of specific business segments, the home care category experienced a notable 14 percent growth, while the personal care segment recorded a 2 percent growth. However, the revenue for the chemical segment in the June 2023 quarter decreased to Rs 726 crore from Rs 1,000 crore in the corresponding period of the previous year. Export figures for Q1 FY24 amounted to Rs 214 crore.
In the real estate sector, Godrej Industries witnessed a total booking value of Rs 2,254 crore during Q1 FY24, with 2.25 million square feet of area sold. The company also introduced four new projects with an estimated saleable area of 3.7 million square feet.
The division and restructuring discussions within the Godrej Group mark a critical juncture in the conglomerate’s history. As negotiations continue, the outcome will significantly impact the future direction and operations of the various entities under its umbrella.
