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business | IST

Godrej may see restructuring after dispute in family, says corporate lawyer Ranina

Mini

A day after CNBC-TV18 reported about serious differences among family members at Godrej Group, one of India's oldest business houses, over its future business strategy and the development of a prized Mumbai plot, the group has confirmed the development in a statement.

A day after CNBC-TV18 reported about serious differences among family members at Godrej Group, one of India's oldest business houses, over its future business strategy and the development of a prized Mumbai plot, the group has confirmed the development in a statement.
Besides the friction over the future business strategy, the bone of contention between family patriarchs Jamshyd Godrej and Adi Godrej is also a 1,000-acre plot in Mumbai's Vikhroli suburb. The 100-year-old conglomerate has sought the intervention of top businessmen and lawyers to help resolve the differences, according to people familiar with the matter.
The statement, issued by Adi Godrej and Jamshyd Godrej on Thursday, reads: “We have been working on a long term strategy plan for the Group for several years. As part of this exercise, we have sought advice from external partners to help us think through options. The family regrets the sensationalist media coverage of these normal and private family discussions.”
According to corporate lawyer HP Ranina, Godrej is too big a group to consider itself to be really private. “Splitting is part of the strategy and that is why they have legal advisors to ensure that the split is done in a seamless manner. As far as long term strategy is concerned, I am sure that they would have management consultants like McKinsey or somebody else to do that. But if they are referring matters to lawyer firms, then it is a clear indication that there is going to be some type of re-organisation and therefore they want lawyers to advise them on the re-organisation and the splitting up of assets. This of course is a clear indication that the group is about to split in an appropriate manner and it may be called re-organisation,” he noted.
Ranina has pointed out that the group owns a lot of property and is already a large player in various consumer segments and real estate, and therefore, to  some extent the public has to be taken into confidence . "You just can’t brush it under the carpet by saying it is all private because Godrej is too big a group now to consider itself to be really private,” the lawyer opined.
“There will be huge complications, I don’t think anything can be done in a simple way because there are public investors involved, regulators involved; so any type of change has to be notified to the regulators. The tax implications are immense because the authorities will definitely not allow any type of leakage of revenues. The tax authorities are going to take the stand that there will be tax liability and then you will have to fight it for the next 20 years. So tax implications will be substantial,” Ranina added.