BT Buzz: Failure to meet ambitious target divides Godrej family

In 2011, Adi Godrej, Nadir Godrej and their cousin Jamshyd Godrej formulated a dream target to grow the Godrej Group 10 times in 10 years. According to the target, the combined revenue of five Godrej group companies -- Godrej Consumer Products (GCPL), Godrej Industries (GIL) and Godrej Properties (GPL) managed by Adi's family; Jamshed's Godrej & Boyce (G&B) and Nadir's Godrej Agrovet -- should jump to Rs 1.5 lakh crore by March 2021. Each of these companies had separate targets in sync with that of the group.

Cut to 2019. There are just two financial years left to achieve the decided the target. According to the March 2019 numbers of four listed companies (only Jamshyd's business is unlisted), the revenue has touched Rs 30,000 crore. G&B made revenues of around Rs 10,000 crore in March 2018. Altogether, revenues would come to around Rs 40,000 crore and fall short of Rs 90,000 crore to achieve the target.

According to the industry experts, as the Godrej family members couldn't achieve the scheduled revenue growth that they had planned, it might have forced them to pursue the growth aggressively. Especially, by bringing clarity on the share of profits, while developing the family's 1000 acre land near the mangroves at Vikhroli in Mumbai suburbs.

On Thursday, reports surfaced that Godrej clan has differences over developing the Vikhroli land and has appointed advisors and top law firms to untangle the land holdings. Adi and Jamshyd Godrej in a statement, however, said, "We have been working on a long-term strategy plan for the group for several years. As part of this exercise, we have sought advice from external partners to help us think through options."

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The revival plan of Godrej group started with the entry of fourth generation in the business in the 90s and 2000s. Adi Godrej's eldest daughter Tanya Dubash, who joined the business in 1992, launched a rebranding exercise in 2008, the most visible part of which was a savvier logo that's uniform across all group companies. With the rebranding, the Godrej portfolio has gained share by growing ahead of the market, across audited categories by 10 per cent. It led to the designing of a growth target.

Around the same time, the third generation (Adi, Jamshyd and Nadir) agreed to allocate separate responsibilities for the next generation so that no one treads on the other's toes. As Tanya took charge of marketing and communications, her younger sister Nisaba looked after strategy, human resource and innovation. Pirojsha, their younger brother, was deputed to build the real estate business GPL.

Jamshyd's son Navroze, who completed studies from Institute of Design at Illinois Institute of Technology in 2005, was given responsibilities to design and to innovate products of G&B. The latest entrant from the family to business is Nyrika, the daughter of Smita (Jamshyd's sister) and Vijay Crishna, who joined the business of G&B about four years back.

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The younger generation wanted to grow the business organically and through acquisitions. GCPL was one of the fastest growing businesses in the group -- its revenue grew to around Rs 10,300 crore in the last financial year, compared to Rs 2,500 crore in March 2011. GCPL's rise in the last decade has coincided with Nisa's entry and the three-by-three agenda GCPL implemented, which is growth in three continents - Asia, Africa, and Latin America - across three categories, which are hair care, soaps, and household insecticides. She set up GCPL's M&A cell in 2008, which went on to make a string of acquisitions in Indonesia and African and Latin American countries, catapulting it into the big league of consumer goods companies in the country. Following her performance, Nisaba was made appointed executive chairperson of GCPL in 2017.

Pirojsha, a graduate in economics from Wharton, was made the chairman of GPL three months before that. Under his leadership, GPL has grown as one of the fastest growing real estate companies in India. But it failed to achieve the growth targets, which were envisaged by the group. GPL's revenue of Rs 2,817 crore and profit of Rs 253 core in March 2019 are not in line with the growth vision. In one of the interviews in 2014, Pirojsha said GPL could touch the target of Rs 20,000 crore even sooner than 2021. The new numbers indicate that the company can't reach the target.

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Tanya is continuing as an executive director and chief brand officer at the group level. She is also the chairperson of Nature's Basket, but the Godrejs, in a surprise move, have agreed to sell the retail chain to R P Sanjiv Goenka Group-owned Spencer's Retail for Rs 300 crore.

Another surprise earlier was Jamshyd's son Navroze's exit from executive roles. The heir apparent at G&B had relinquished his role as executive director last year and paved the way for the elevation of his cousin Nyrika Holkar. Navroze was working on an organisational transformation initiative to reinvent the company with a focus on design, innovation and consumer. He is believed to have ushered in a culture that was more collaborative. He was expected to become managing director but his abrupt resignation meant that Nyrika, who is married to the scion of the erstwhile royal family of Indore Yeshwant Rao Holkar, will get a chance to hone her leadership at the top level of the white goods and engineering firm. She is the executive director now and leads the legal and corporate advisory functions for all Godrej & Boyce companies. She is involved in talent management, portfolio strategy, knowledge management and risk management across the businesses. She is also involved in the turnaround of Godrej & Boyce's Electrical and Electronics Business.

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In short, Vikhroli land development is important for the growth of GPL. But Jamshyd's firm G&B, which owns it, wants to have a clarity on what they will get in return.