The Annual General Meeting (AGM) held on September 6 elected Bina Modi to the top position, with an overwhelming 86.6 per cent of shareholders voting in favor of her appointment
In a recent turn of events, the chairperson of Godfrey Phillips, Bina Modi, has said that the legacy of her husband, KK Modi, is not for sale. While ruling out the possibility of selling group companies to end the long overdue conflict with her two sons, Samir and Lalit Modi, she said, “KK Modi's legacy is not for sale. It has to be kept alive.”
This was reported by the Economic Times. On being asked if there is any solution to the current conflict, the 80-year-old chairperson and managing director of the company said that her sons would get their due inheritance from the company.
Just to give some background, the conflict between Bina Modi and her sons started after the death of KK Modi. The patriarch's trust deed, which he left behind following his death in 2019, is the source of the family conflict. The estimated valuation of the inheritance ranges from Rs 11,000 crore to Rs 30,000 crore.
Amid the ongoing dispute, Bina Modi reportedly said, “The companies are not for sale. Not in my lifetime. If there are other solutions, I am open to them.”
Media reports suggest that the family deeds of KK Modi have shared an equal portion of the family's wealth with his three children and wife. Charu Modi, the daughter of KK Modi and also his successor, has sided with her mother in the conflict.
The development comes soon after the company’s general meeting, where Bina Modi was appointed as the chairperson and managing director of the company.
The Annual General Meeting (AGM) held on September 6 appointed Bina Modi in the top position, with 86.6 per cent of shareholders voting for her appointment. Her appointment is for a duration of five years, effective November 14.
The company also ousted her son, Samir Modi, from the board. Further, the board decided to leave the position vacant for now rather than appointing a replacement or holding an election to fill the seat. Meanwhile, Charu Modi has been selected as the executive director of the company.
In a regulatory filing, the company said, “We would like to inform you that Mr. Samir Kumaar Modi has retired by rotation w.e.f. the conclusion of the 87th Annual General Meeting (the AGM) of the company held today, i.e., 6th September 2024. Consequently, Mr. Samir Kumaar Modi has also ceased to be an Executive Director of the company with effect from the said date and time.”
Read: Family Feud V: The Modis
The development comes as a setback for Samir Modi and a win for his mother, who recently got the right to vote in the general meeting by the Delhi High Court.
The court rejected a plea by Samir Modi and Ruchir Modi (son of Lalit Modi) where the two insisted that his Bina Modi should not be allowed to vote at the company’s general meeting.
In his plea, Ruchir Modi stated that the family’s true assets should be sold and distributed among the four branches of the family. Ruchir Modi also alleged that Bina Modi excluded his family from the benefits of the trust. As a response to this, Bina Modi claimed that the charges by Ruchir were similar to those of his father, Lalit Modi.
Meanwhile, in an earlier interaction with Financial Express on September 4, Samir Modi called his mother a ‘dictator’. Further, he said that the company's board is ‘defunct’, and there is a possibility that the business would lose everything at the hands of an inexperienced head (Bina Modi).
He reportedly said, “But you see, you cannot question Hitler. Can you question Dr. Bina Modi? Of course, you can’t question Dr. Modi.”
A Bit About Godfrey Phillips
Godfrey Phillips is a tobacco manufacturing company that is a part of the Modi Enterprises. With more than 800,000 retailers, the company is one of the largest FMCG companies.
Along with tobacco, the company also has a strong confectionery portfolio with offerings present in the international market. Under a license agreement with Philip Morris, the company also manufactures Marlboro.
In terms of its financials, the company’s net profit reduced from Rs 254.44 crore during the April-June period a year ago to Rs 228.55 crore for the first quarter ended in June 2024. However, its revenue from operations increased to Rs 1,440.81 crore from Rs 1,245.39 crore in the same period a year ago.
Godfrey Phillips is the flagship company of the Modi enterprise. Some of the other group companies include Infofil, Modicare, and Colorbar.
What is the Way Out?
The Modi family has been constantly affected by its family disagreements. The family business, expanded by Gujarmal Modi, was one of the biggest conglomerates in the ’70s and ’80s. However, it split into several companies after disagreements between brothers KK Modi, BK Modi, SK Modi, UK Modi, and VK Modi.
As of now, based on the current situation, the family hasn’t reached any agreement about any possible settlement.
Family businesses are messy, which in turn affects the functioning of the business. Speaking to Outlook Business earlier, Mehul Bheda, partner at Dhruva Advisors, a consultancy, said that these disputes hinder the growth of India Inc. He said, “Operations are impacted because time and energy are spent on these feuds. Long-running disputes have a negative bearing on the business.”
The Modi family dispute is just one example of several disagreements in business families in India including the Ambanis, Birlas, Munjals, and Bajajs. While it is hard to pinpoint a way out to end these conflicts, some suggest that family constitutions are of immense help to run these businesses.
Radhika Gaggar, partner and co-head of private client practices at law firm Cyril Amarchand Mangaldas told Outlook Business earlier, "For any large, multi-generational family in its third or fourth generation, a family constitution is of immense help to them in just documenting their understanding about how they are going to govern themselves, how they are going to enter the family business and how they are going to work with professionals."
Outlook Business wrote a detailed cover story for the August edition on family disputes that can be accessed from here.