Godrej deal raises scope for new real estate firm

For long, Godrej & Boyce Mfg Co. Ltd owned the group’s land assets, while Godrej Properties Ltd did the property development. Following the division, Nyrika Holkar, whose family branch will own Godrej & Boyce, is free to build a real estate business, while her older cousin Pirojsha Adi Godrej from the other branch leads Godrej Properties.

Under the family agreement disclosed to the exchanges on Tuesday night, Jamshyd Godrej-owned Godrej & Boyce Manufacturing Co. Ltd cannot buy new land for six years under a non-compete pact, which will take effect when the Competition Commission of India clears it. 

Once the non-compete period is over, Godrej & Boyce can buy land, but not under Godrej brand name, according to executives familiar with the settlement process.

Nyrika, 42, is the daughter of Smita and Vijay Crishna and niece of Jamshyd Godrej, chairman of Godrej & Boyce.

Godrej & Boyce retains the right to list its real estate business, although the group has no immediate plan to do so, according to an executive briefed on the development.

It is unclear how much land Godrej & Boyce owns across the country, but the Group is estimated to own about 3,000 acres in Vikhroli, an eastern suburb of Mumbai. 

Mint could not ascertain the commercial and financial arrangement between Godrej & Boyce and Godrej Properties, including if any loans were made by Godrej & Boyce to Godrej Properties.

Spokespersons for both Godrej groups declined to comment. When approached, Godrej family members said they have collectively decided not to talk to the media about the realignment.

Separate statements

Unlisted Godrej & Boyce, which clocked ₹14,573.9 crore in revenue in FY23, counts 14 business divisions, including consumer appliances, storage and security solutions and electrical and electric motors. It has manufacturing plants in four cities in Maharashtra, two in Uttarakhand and Punjab, Tamil Nadu and Gujarat.

The company got about ₹300 crore in rent income in 2023 from leasing its commercial real estate, according to a note from rating agency Crisil.

Pirojsha, 43, is the chairman of Godrej Properties, which was founded in 1990 and listed on stock exchanges in 2010. It ended with ₹2,252.6 crore in revenue in FY23.

On Tuesday, Godrej & Boyce and Godrej Properties said in separate press releases that the two companies will continue the memorandum of understanding for developing the Vikhroli land as and when Godrej & Boyce is “desirous of developing the land”.

“Considering both the Groups have agreed to continue with the MoU for the Vikhroli land, there does not appear to be any immediate material impact for Godrej Properties,” said a Mumbai-based analyst at foreign brokerage. “We will wait for clarity from the two groups on the future of the two real estate businesses before coming to any conclusion.”

Godrej Properties’ bookings surged 135% year-on-year in the fourth quarter ended 31 March, totaling over ₹9,500 crore. “This is the highest-ever quarterly sales announced to date by any publicly listed real estate developer in India,” the company said in a statement at the time, adding that it would “significantly exceed our bookings guidance of ₹14,000 crore for FY24″.

A complex task

Adi Godrej’s great uncle, Ardeshir, a Parsi entrepreneur, and his brother, founded the Godrej group in 1897, beginning with locks, safes and soaps. Ardeshir did not have children, and the business came to be run by his three nephews, including Adi’s father.

Nadir Godrej took over as chair of Godrej Industries in 2021, after his older brother Adi took over as chairman emeritus.

Settling land ownership between the family members of Adi and Nadir in one family branch, and Jamshyd and Smita in the other, was one of the complex tasks, according to an executive, with discussions continuing for over two years, before a settlement was announced on Tuesday night.

“The ABG (Adi Barjorji Godrej)/ NBG (Nadir Barjorji Godrej) Family will have the exclusive right to adopt, use, own and register the ‘Godrej’ name and brand in connection with development, marketing of real estate projects and real estate services relating to sale and/or purchase, of real estate projects, and the business of leasing or licensing to third parties,” reads the family agreement, sent to the exchanges on Tuesday.

“The JNG (Jamshyd Naoroji Godrej) / SVC (Smita Vijay Crishna) Family will have the exclusive right to adopt, use, own and register the ‘Godrej’ name and brand for the real estate development business and the leasing/licensing business carried out in respect of any land parcels (including the land in Vikhroli) owned by, or leased as of January 1, 2024 on a long-term basis, to the JNG Family and/or SVC Family, directly or indirectly through their Affiliates (“G&B Existing Land Holdings”) or any real estate asset class developed over the Existing G&B land Parcels by the JNG Family and/or SVC Family, directly or indirectly through their Affiliates,” said the filing.