MUMBAI: The Godrej family has agreed not to compete among themselves for six years except in the real estate business, following a split in the 127-year-old locks-to-land development group. After the non-compete period, they are free to venture into each other’s domain but not under the Godrej brand.
Adi Godrej and his younger brother Nadir, as part of the family settlement agreement, will have exclusive rights to use the Godrej brand in FMCG (cosmetics, cleaning supplies, toiletries, foods, beverages), financial services, pharmaceuticals, diagnostics, and chemicals businesses.
Their cousin Jamshyd and his sister Smita Crishna will have exclusive rights to use the Godrej brand in defence, consumer durables, medical devices, construction materials, interior design, electric mobility, software services and security products businesses.
However, both groups can use the brand name in the real estate development & marketing business. Jamshyd and Smita have interests in real estate through the unlisted Godrej & Boyce while Adi and Nadir control the listed Godrej Properties.
None of the Godrej group companies will have to pay royalty for the brand. The non-compete period came into play on April 30. According to the agreement, after the six-year period, “a family group can enter into the exclusive business of the other family group, without the use of the Godrej brand including in their corporate names”.
Both the groups, however, can venture into areas where neither has a presence, using the Godrej brand with group-level differentiators, as these have been agreed upon as shared spaces for business. For instance, medical services, hospitals, hospitality and education.
Non-compete covenants are standard in family settlement agreements. In March, the TVS family executed a memorandum of understanding to avoid competition among themselves for a defined period.
From promoters to public shareholders
Siblings Jamshyd Godrej and Smita Crishna will be classified as public shareholders once the ownership realignment in Godrej group’s listed entities is completed.
Currently, they are part of the promoter group in listed Godrej entities. According to Sebi rules, if a promoter wants to be classified as a public shareholder, they cannot own more than 15% in a listed entity. According to the family settlement arrangement, Jamshyd and Smita, who are classified as promoters of listed Godrej companies, will become eligible to be classified as public shareholders after the completion of the realignment and will make an application for the same.
