Recently, on April 30th, 2024, the Godrej Group Officially announced the split deal of the 127-year-old conglomerate. On May 1st 2024, the group officially sealed the split deal and will be headed by two groups/branches, i.e. Godrej Industries Group (GIG), and Godrej Enterprises Group (GEG).
(Note: We have already presented a detailed video on the impact of Godrej Split. Go through it for more information.)
Reason of the Split
After years of negotiation, the group has finally decided to restructure the shareholding pattern in the group and will operate as two different entities, i.e. Godrej Enterprises and Godrej Industries, according to the latest filing of April 30th, 2024.
The realignment of the structure will be implemented only after obtaining the regulatory approvals, soon after which these two entities will continue to operate its business under the Godrej Group.
According to the group, the current generation which will be leading the group in future has different perspectives and opinions, therefore the group has decided to formally split the ownership with harmony in order to avoid feud and disagreement.
The Split Deal
The Godrej Group has reached on to an agreement of splitting this Rs.59,000 crore ($7 billion) empire into two branches named Godrej Industries Group (GIG) which will be headed by Adi Godrej and his brother Nadir Godrej and their families.
While the second group which will be Godrej Enterprises Group (GEG) will be headed by their cousins Jamshyd Godrej and his niece Nyrika Holkar (daughter of Smita Godrej Crishna).
The brothers Adi Godrej and Nadir Godrej will have the full ownership and right over the five publicly listed companies under the group, i.e. Godrej Consumer Products, Godrej Properties, Astec Lifesciences, Godrej Agrovet, and Godrej Industries.
The chairman of the group will be Nadir Godrej, and will be headed by Adi Godrej. However, in August 2026, the chairmanship ship of the group will be handed over to Adi Godrej’s son Pirojsha Godrej.
On the other hand, Jamshyd and his sister Smita will have the full control and ownership of the closely unlisted Godrej & Boyce and its affiliates, as well as a land bank, and a 3,400 acres of prime property in Mumbai, which includes a 3,000-acre parcel land in Vikhroli, Mumbai.
Some people who know about the Vikhroli land, estimate that it has a development potential of over Rs.1 lakh crore, and can develop 1,000 acres, while around 1,750 acres of the land is covered with plants and birds.
Their other cousin, Rishad, who also owns a stake in the company, will have no formal role in the conglomerate deal, however, upon his death the shares will be distributed among the other members of the company.
The Shareholding Pattern
Earlier these two branches used to hold their shares across the group and also in each other’s company, however, now they will transfer their shares and interests after stepping down from their positions from the boards of the company for having a clean and easy separation.
According to a report by TOI, the Jamshyd and Smita will hand over their shares to the listed companies like Godrej Properties and Godrej Consumer Products to Adi and Nadir Godrej. Adi and Nadir Godrej too will diversify and transfer their shares to Jamshyd and Smita.
Upon this share transfer and diversification, both the group will continue to use the Godrej Group name and its roof for their respective business and functions and will contribute to the company’s success.
- The Godrej heads Adi, Nadir, Jamshyd, Smita, and Rishad, each of them owns around 10% of stake in Godrej & Boyce Company, while 27% is being held by Godrej Investments.
- The combined value of the Godrej family stake is worth Rs.1.54 trillion.
- While the other 24% of the company shares are being held by Pirojsha Godrej Foundation (which is a philanthropic trust set up by the family).
- The five listed companies of the Godrej Group which are now under Adi and Nadir Godrej have a market cap of Rs. 2.4 lakh crore (around $29 million), a profit of around Rs.4,175 crore ($500 million), and revenue of over Rs.41,750 crore ($5 million).
- Godrej & Boyce has a revenue of over $2 billion and $72 million as the pre-tax profit.
Split Effect on Stocks
Amid the news of the split of the group in 2023, it resulted in a mere effect on the stocks, and the majority of the stocks resulted good and healthy returns to the investors. The five listed companies have given returns upto 51% so far.
However, for the current year, i.e. 2024, according to the people having deep knowledge of the internal matter, see no major immediate impact or effect on the stock from a point of view for additional gains for the listed entities.
While for land parcel under Godrej & Boyce, the development is already being listed and priced out in the market. If the land is developed by Godrej Properties, then it will have a positive stock result.
Future of Godrej
Stating about the future of the company, Nadir Godrej, the head of Godrej Industries Group (GIG) said, that the company was founded in 1897, on the belief of building economic independence for India and will continue to respect those values and trust, and are looking forward to building and maintaining this legacy with more focus and agility, regardless of the Godrej group split.
On the other hand Jamshyd Godrej stated that Godrej & Boyce has always been driven and works on the strong purpose of building nation. With this future family agreement now in the correct place, the company will further focus on their growth and business.
Yeah, Godrej has really gathered all the attention of the market with its group split news!