Differences cropped up between the cousins over a pact for joint development of land
The mandate given to external partners includes evaluating the possibility of a revision of the existing revenue-sharing agreement between Godrej and Boyce and Godrej Properties
Mumbai: The Godrej family has sought advice from external partners to help rework a pact related to landholdings of group companies, Adi Godrej, chairman of the Godrej Group and Jamshyd Godrej, chairman of Godrej and Boyce, said in a joint statement on Thursday.
The statement follows reports that differences had cropped up between the cousins over an existing agreement between Godrej and Boyce and Godrej Properties Ltd for joint development of land held by the former, according to several newspaper reports on Thursday. Revenue sharing is a part of this agreement.
The statement said that the advice from external partners was sought as part of a long-term strategy plan for the group.
Mint has learnt that the mandate given to external partners —a law firm and two domestic investment banks—includes evaluating the possibility of a revision of the existing revenue-sharing agreement between the two companies.
The talks are currently focused on 3,400 acres held by Godrej and Boyce, which are being developed by Godrej Properties, the real estate development arm of the Godrej family, according to two people aware of the ongoing negotiations.
Of the total landholdings, 1,750 acres are occupied by mangroves, 1,000 acres are undergoing development, around 300 acres have been encroached upon and the rest are scattered across Mumbai. Of the 1,000 acres, 34 acres are being developed by Godrej Properties as a mixed-use development under the Trees brand comprising residential towers, offices and a five-star hotel.
According to the people cited above, the current round of talks began soon after changes were notified in the new Mumbai Development Plan, which has opened up a large chunk of land in Mumbai marked as non-development zone (NDZ) for affordable housing projects. Under the new norms, a major portion of the 3,000-acre Godrej land earlier under NDZ can now be developed.
At present, Adi and Nadir Godrej control the group’s three listed entities—Godrej Consumer Products Ltd, Godrej Properties Ltd and Godrej Agrovet Ltd. Jamshyd Godrej heads Godrej and Boyce, the holding company of the Godrej Group in which all Godrej family members hold a stake. The Godrej family’s trust owns 8.66% in Godrej Industries Ltd, which in turn holds 53.65% in Godrej Properties and 23.75% in Godrej Consumer. Godrej and Boyce holds 4.64% in Godrej Properties and 7.34% in Godrej Consumer.
According to an internal pact between Godrej Properties with Godrej and Boyce, the former is supposed to act as the development manager for “some of its (Godrej and Boyce) lands parcels and has entered into limited liability partnership agreements with Godrej & Boyce and Godrej Industries for the development of certain real estate projects", according to the prospectus filed by Godrej Properties during its initial public offering in 2010.
Jayshree Upadhayay contributed to this story.
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