Godrej Group heading to split its Rs 1.76-lakh-crore conglomerate, family council discussing division terms: Report

The Godrej Group, which is worth Rs 1.76-lakh-crore, is reportedly in the advanced stages of crucial negotiations to conclude the formal division of its diverse businesses, The Economic Times reported on Tuesday.
The conglomerate has businesses ranging from engineering solutions, home appliances, security solutions, agricultural products, real estate, and consumer products.

There are two factions of the Godrej family - one is Godrej Industries & Associates, led by Adi Godrej and his brother Nadir. Godrej & Boyce Manufacturing Company (G&B) is another wing, with cousins Jamshyd Godrej and Smitha Godrej Crishna at the helm.

The family council is reportedly discussing two critical points - one: usage of the Godrej brand name after the split, including possible royalty payments, and land valuations currently held by G&B.

Top investment banker Nimesh Kampani and corporate lawyer Zia Mody are reportedly advising Jamshyd Godrej, while banker Uday Kotak and Cyril Shroff's legal firm Cyril Amarchand Mangaldas have led discussions from the Adi Godrej side. Officials said that Pirojsha Godrej, son of Adi Godrej and chairman of Godrej Properties, had also been directly involved in the discussion.

The family tree and holdings

There are five family branches in the Godrej family, under Adi Godrej, Nadir Godrej (brother of Adi), Jamshyd Godrej, Smita Crishna (sister of Jamshyd) and Rishad Godrej (cousin of Adi, Nadir, Jamshyd) hold 15.3 per cent each in G&B, while the Pirojsha Godrej Foundation holds around 23 per cent.

Godrej Industries Limited is a holding company with wide interests in consumer goods, agriculture, real estate, chemicals and financial services, and also acts as the incubator for new businesses. It has a 64.89 per cent stake in Godrej Agrovet Ltd, a 23.74 per cent stake in Godrej Consumer Ltd and a 47.34 per cent stake in Godrej Properties Ltd.

The group has five listed firms - Godrej Industries, Godrej Consumer Products, Godrej Properties, Godrej Agrovet, and Astec LifeSciences. These five, together, had a market capitalisation of Rs 1.76 lakh crore on Friday. The five listed firms reported nearly Rs 42,172 crore in revenue, and Rs 4,065 crore in profits in FY23.

Godrej Industries promoter-holding is divided among 28 family members. Rishad Naoroji owns 12.65 per cent, Jamshyd Naoroji Godrej and Nyrika Holkar own 9.34 per cent and 8.01 per cent, respectively.

Godrej Consumer Products is the biggest among the listed firms, with a market capitalisation of Rs 1.01 lakh crore as of Friday.

Q1 results

In Q1 FY24, Godrej Consumer Products Limited (GCPL) said its consolidated net profit fell 7.6 per cent at Rs 318.82 crore for the April-June quarter of fiscal year 2024 from Rs 345.12 crore in the same quarter a year ago.

The total revenue in the first quarter stood at Rs 3,448.91 crore, 10.36 per cent up from Rs 3,124.97 crore in the year-ago period, the company said in an exchange filing.

GCPL's India revenue rose 8.43 per cent at Rs 2,005.48 crore during the June quarter from Rs 1,849.41 crore a year ago.

According to the company, its net profit in the June quarter declined because of the expenses on exceptional items of Rs 81.78 crore comprising Rs 77.52 crore on account of the acquisition of Raymond Consumer Care Business and Rs 4.26 crore on account of other restructuring costs.

The FMCG company reported 23.4 per cent growth in earnings before interest, tax, depreciation and amortization (EBIDTA) at Rs 642.8 crore, and EBIDTA margin at 18.6 per cent, up 240 basis points from same quarter last year.

“Consolidated sales grew 10 per cent, led by a 10 per cent growth in volume and constant currency growth of 15 per cent year-on-year," GCPL said in its statement.

Godrej Industries reported a 13% year-on-year (YoY) decline in its consolidated June quarter net profit at Rs 178 crore from Rs 204 crore in the year-ago period. The total revenue for the said quarter stood at Rs 4,893 crore, up 15 per cent YoY as against Rs 4,242 crore in the corresponding period of the last financial year.

The sales growth came on the back of 10 per cent YoY volume growth in constant currency, the company said in its filing to the exchanges. The consolidated EBITDA grew 28% per cent YoY.

The home care category grew by 14 per cent, the personal care segment's growth was recorded at 2 per cent, while chemical's segment revenue for the June 2023 quarter was down to Rs 726 crore down from Rs 1,000 crore in the year-ago period. The exports for Q1FY24 stood at Rs 214 crore.

Its real estate business in Q1FY24 witnessed a total booking value of Rs 2,254 crore with 2.25 million square feet of area sold during the quarter. The company added four new projects with an estimated saleable area of 3.7 million square feet.

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