Mumbai: Following a division in the 27-year-old conglomerate, the Godrej family has agreed to avoid competing for six years, with real estate being the exception. After the non-compete period, the family members can venture into each other's domains but not under the Godrej brand name.
Brand Rights Division
Adi Godrej and his younger brother Nadir will be granted exclusive rights to employ the Godrej brand for FMCG (cosmetics, cleaning supplies, toiletries, foods, beverages), financial services, pharmaceuticals, diagnostics, and chemicals businesses.
Jamshyd and his sister Smita Crishna will possess exclusive rights to the Godrej brand in defense, consumer durables, medical devices, construction materials, interior design, electric mobility, software services, and security product sectors.
Both groups will be allowed to use the brand name in the real estate development and marketing sectors. Jamshyd and Smita have real estate interests through the unlisted Godrej & Boyce, while Adi and Nadir own the listed Godrej Properties.
Non-Compete Clause
None of the Godrej companies will need to pay royalties on the brand. The non-compete clause became effective on April 30. The agreement outlines that after six years, '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 groups can explore areas where neither has a presence, leveraging the Godrej brand with group-level differentiators, as these have been designated as shared business spaces. Examples include medical services, hospitals, hospitality, and education.
Non-compete covenants are common in family settlement agreements. In March, the TVS family agreed to avoid competition for a set period.
From Promoters to Public Shareholders
Once the ownership realignment in the Godrej group’s listed entities is completed, siblings Jamshyd and Smita Crishna will become public shareholders. They are currently part of the promoter group for the listed Godrej entities. According to Sebi regulations, a promoter who wishes to be classified as a public shareholder cannot own more than 15% of a listed entity. According to the family settlement arrangement, Jamshyd and Smita, classified as promoters once the realignment is completed, will apply for it.