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Godrej Group heading to split its Rs 1.76-lakh-crore dissolving its enormous conglomerate

The formidable Godrej Group is considering the nuanced ramifications of dissolving its enormous conglomerate, which is valued at an astounding Rs 1.76 lakh crore. The family council has been intensely preoccupied with discussions of the utmost importance since being entrusted with this momentous deliberation. Their keen interest has been drawn to two key issues: the use of the venerable Godrej brand name following the split, which may involve royalty considerations; and the complex evaluation of the sizable land holdings currently held by the venerable Godrej & Boyce Manufacturing Company.

According to The Economic Times, the Godrej Group, a monolithic organization of enormous size, is currently advanced in these convoluted negotiations. The Group has a broad range of businesses in its portfolio, including engineering solutions, consumer goods, real estate, home appliances, security systems, and agricultural products.

Two separate factions appear in the tangled web of the Godrej family. The first is made up of Godrej Industries & Associates, which is headed by the dependable Adi Godrej and his regarded brother Nadir. Under the name Godrej & Boyce Manufacturing Company (G&B), the experienced cousins Jamshyd Godrej and Smitha Godrej Crishna lead the second faction.

Two crucial concerns are currently the subject of intensive discussion by the revered family council, which is tasked with determining the direction of this enormous company. First, future plans for royalty payments as well as the use of the Godrej brand name after split. Second, the complex appraisal of the vast land holdings that G&B is today responsible for.

Legends from the fields of finance and law have been called upon to provide their wise advise in this high-stakes story. According to reports, renowned investment banker Nimesh Kampani and skilled corporate lawyer Zia Mody are providing strategic advice to Jamshyd Godrej. Adi Godrej has organized his forces on the opposing front with the help of eminent banker Uday Kotak and the legal expertise of Cyril Shroff’s prestigious business, Cyril Amarchand Mangaldas. Notably, Pirojsha Godrej, the Chairman of Godrej Properties and the scion of Adi Godrej, has been actively involved in these important conversations.

Five different branches of the Godrej family tree may be seen, each of which is connected to a sizeable interest in G&B. Together, Adi Godrej, Nadir Godrej, Jamshyd Godrej, Smita Crishna (Jamshyd’s sister), and Rishad Godrej (Adi, Nadir, Jamshyd’s cousin) own 15.3 percent of G&B’s equity. The Pirojsha Godrej Foundation also holds a sizeable investment, estimated to be over 23 percent.

A key holding company within the conglomerate, Godrej Industries Limited, casts a wide net over a diverse range of industries. Its holdings in Godrej Agrovet Ltd, Godrej Consumer Ltd, and Godrej Properties Ltd total a dominating 64.89 percent, a sizeable 23.74 percent, and a daunting 47.34 percent.

Five publicly traded companies are under the control of this enormous conglomerate: Godrej Industries, Godrej Consumer Products, Godrej Properties, Godrej Agrovet, and Astec LifeSciences. As of the most recent trading day, these firms collectively commanded a market valuation of an astounding Rs 1.76 lakh crore. In the fiscal year 2023, these five behemoths posted combined revenues of around Rs 42,172 crore and profits of Rs 4,065 crore.

A group of 28 family members form the promoter-holding consortium within Godrej Industries’ complex organizational structure. Jamshyd Naoroji Godrej and Nyrika Holkar each claim interests of 9.34 percent and 8.01 percent, respectively, while Rishad Naoroji claims control over 12.65 percent of the holdings.

According to latest assessments, Godrej Consumer Products dominates the list of listed conglomerate companies with a market capitalisation of more than Rs 1.01 lakh crore.

Godrej Consumer Products Limited (GCPL) declared a consolidated net profit of Rs. 318.82 crore for the first quarter of the fiscal year 2024. This amount marked a little 7.6 percent decline from the total of Rs 345.12 crore for the same time the previous year. With total revenues for the quarter hitting Rs 3,448.91 crore, representing a remarkable 10.36 percent rise compared to the year-ago quarter, GCPL reported a significant uptick on the revenue front.

When compared to the same quarter last year, when GCPL’s revenues were at Rs 1,849.41 crore, they increased significantly by 8.43 percent to reach Rs 2,005.48 crore during the June quarter. Notably, this period’s decline in net profit can be attributable to unusual costs totaling Rs 81.78 crore, of which Rs 77.52 crore was spent on the purchase of Raymond Consumer Care Business and Rs 4.26 crore on other restructuring charges.

A noteworthy accomplishment in terms of EBIDTA growth, which soared by an astonishing 23.4 percent to reach Rs 642.8 crore, underlies this financial success. An important indicator of operational efficiency, the EBIDTA margin, saw a notable increase of 240 basis points over the same quarter the year prior, culminating at 18.6%.

GCPL emphasized its strong performance in its official statement, claiming consolidated sales growth of 10%, led by a 10% increase in volume and an admirable 15% year-over-year growth in constant currency terms.

Godrej Industries, on the other hand, recorded a 13% year-over-year fall in consolidated net profit for the June quarter of fiscal year 2024, coming in at Rs 178 crore as opposed to Rs 204 crore during the same period last year. The overall revenue picture, however, was more upbeat, with total revenues for the quarter rising by a strong 15% year over year to reach Rs 4,893 crore as opposed to Rs 4,242 crore in the same period last year.

According to the corporation, a strong volume gain of 10% year over year in constant currency terms served as the foundation for this increase in sales. Notably, there was a notable 28 percent year-over-year increase in the combined EBITDA.

The performance of several divisions within the portfolio of the company is uneven. Personal care saw only a modest 2 percent rise, compared to the excellent 14 percent growth shown in the home care sector. The revenue for the chemical business, in comparison, fell for the quarter ending in June 2023, falling from Rs 1,000 crore in the comparable period to Rs 726 crore. The first quarter of the fiscal year 2024 had exports of Rs 214 crore.

Godrej Industries had a successful quarter in the real estate sector, selling 2.25 million square feet of property for a total booking value of Rs 2,254 crore. The company also launched four new projects, totaling an estimated 3.7 million square feet of saleable space.

 

 

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