Godrej Group — Near-Perfect Example Of Professionalisation

Even as the $5.7-billion Godrej Group announced an amicable and formal ownership and management division, it was not a sudden event that happened overnight. Instead, for the fifth-generation 127-year-old group, it had been in the works for several years with steady milestones towards this final goal.

In 2021, when Adi Godrej was 79 years old, he stepped down as the executive chairperson of the holding company, Godrej Industries. About a decade ago, Adi and Parmeshwar's three children, Tanya, Nisaba, and Pirojsha, joined the group in various executive capacities after completing their higher studies. One development to note, perhaps not surprisingly, is that in 2026, when Nadir steps down from the top leadership of the group, it will be the son Pirojsha who will take charge, and not one of the daughters, who are reportedly older than him.

Interestingly, the professionalisation of the group had started quite some time ago, which today has Mohit Malhotra, Sudhir Sitapati and Balram Yadav as the business unit heads. In fact, Nitin Nabar, who was the head and executive director of Godrej Industries, retired from the company on Tuesday after 39 years with the group. Perhaps such professional changes also signal the incoming new leadership within the group. By and large, the Godrej Group is a near-perfect example of how professionalisation works.

The professionals themselves have a clear succession plan years before they take over the leadership, and they also know that family members will be there to oversee and manage, which today would be the young generation. There is no lack of clarity. The professionals are also exposed to the best global management practices like Eli Goldratt's Theory of Constraints, for example.

The division perhaps was not as complicated as many other family businesses because there were two distinct family groups: one led by brothers Adi and Nadir, and the other led by siblings Jamshyd and Smita Godrej Crishna. That a woman family member had ownership and management responsibilities from the early days of the group points to its progressive outlook. In fact, her husband, Vijay Crishna, was also part of the group management more than a decade ago, until their children, Freyan and Nyrika, joined the group.

While traditionally, the Godrej Group was in legacy areas of manufacturing, today, it has moved into many sunrise industries like aerospace, financial services, information technology, and food and agriculture. Over the generations, it has tried to maintain its ethos and values.

Looking ahead, is everything hunky-dory? Yes and no.

Even though the family division has been well-received and largely considered fair, there have been reports in the recent past that the 3000-acre land bank, mostly in Vikhroli, was a source of possible contention.

The second area that might receive some attention in the future is the fact that the Adi-Nadir group has inherited the listed companies, while the closely held companies are with the Jamshyd-Smita group. Unlocking the value of the latter, especially of Godrej & Boyce, will be something to look out for. The five listed companies have a market capitalisation of $29 billion.

Interestingly, like Tata Trusts, which hold 66 per cent of the holding company Tata Sons, 24 per cent of Godrej and Boyce is owned by the Pirojsha Godrej Foundation (founded in 1972), one of the four trusts of the group which funds significant charitable activities. There have been reports of late that Tata Sons might go public. It will be useful to watch out for how it will pan out in Godrej & Boyce.

The writer is a New Delhi-based journalist and co-author of the recent book, Beyond Three Generations: The Definitive Guide to Building Enduring Indian Family Businesses.

Disclaimer: The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.