New Delhi: The proposed sale of cigarette-to-retail major Godfrey Phillips India has uncovered a messy family dispute as Lalit Modi, one of key members in the family-run trust that controls the company, coming out in the open in the favour of asset sale and going against his mother Bina Modi's appointment as President and Managing Director of the entity.
On Tuesday, a day after reports said that Godfrey Phillips India would be put on the block, the company clarified that there has not been any discussion on the sale of the company. Terming the reports as rumours, the company, in a regulatory filing, said that it has also received a clarification from its "significant promoter" that there has been no decision to put its assets on sale.
"It is neither engaged nor privy to any such discussions on rumoured potential transaction by its promoters. The company has also received a clarification from its significant promoter that there has been no decision to put its assets on sale," it said.
On Monday, reports surfaced that the Indian promoters of the tobacco-retail major would sell their stake in the company.
Lalit Modi, of the IPL fame but out of the country for the last few years, differs on the issue and has been open about the his support for and the likelihood of the company's sale. In fact, he has even tweeted that not just Godfrey Philips India, but every other asset of the K.K. Modi Family Trust would be up for sale.
"Unfortunately I have decided post the passing away of my #father that all #assets owned by our #family should be sold in its entirety," said one of his tweets.
The latest addition to the long list of family feuds in mega Indian business houses comes against the backdrop of the death of K.K. Modi's death in November last year.
Post his death, his wife Bina Modi was appointed as the President and Managing Director of the company. In 2014, she joined the company as an independent director.
K.K. Modi, the patriarch of one of the country's oldest and significant business houses left behind a trust deed, few clauses of which have triggered the likelihood of asset sale by the family.
Letters written by Lalit Modi to the board of directors of Godfrey Philips of India says that the trust deed states that the entire assets of the family will be sold if there is no unanimous decision among all the trustees on whether to partially or fully sell the family business.
However, the other three trustees, Bina Modi, Samir Modi and Charu Modi, were opposed to the proposed sale.
The copy of a consent letter, tweeted by Lalit Modi who is currently in London, said: "We, Bina Modi, the Managing Trustee and Charu Modi, Lalit Kumar Modi and Samir Kumar Modi being the trustees under the trst deed have decided to sell whole of the trust fund comprising of various assets including the family controlled businesses in accordance with clause 11 of the trust deed".
However, the consent letter dated November 30, 2019 was signed by only Lalit Modi. The four trustees met in Dubai on November 30 to consider the clauses in the deed relating to sale of the assets.
According to Lalit Modi, no trustee can now stop the sale and even the required time period to halt the triggered process has passed.
"It is not up to any trustee to say no sale. Only unanimous vote could have resulted in no sale that too in first 30 days. Post there is no provision to avoid it," Modi said in a one of his tweets on Tuesday.
"All companies/land /investments in any other companies - and assets listed on http://modi.com will be on sale except - colorbar/ego/Beacon Travels and education businesses. Which will be retained to be run by Samir / BINA / Charu. Rest on sale. Including indofil."
Going a step further, Lalit Modi also said that he was opposed to the appointment of his mother at the top.
"I did not approve #Binamodi to run the #empire as she is not qualified to run such large corporation and will dilute our value. Thus the sale of all companies, properties etc,has been approved at the first trust meeting on 30/11/2019. The full sale must be completed by 29/11/2020."
Apart from manufacturing its own cigarrete brands including 'Four Square', Godfrey Philips also produces the 'Marlboro' in India. It also runds '24SEVEN', India's first twenty-four hours convenience store chain, among other brands.
The holding of Indian promoters in the company is 47 per cent, which largely includes that of the family trust and related people and companies. Philip Morris Global Brands Inc, the maker of the world famous Marlboro, also is a promoter and holds 25 per cent stake.
The market capitalisation of the company as of Tuesday is Rs 7,137.47 crore, which makes the valuation of the Indian promoters stake at close to Rs 3,500 crore.
Apart from Godfrey Phillips India, the other companies, run by the trust include Modicare and Indofil Industries Ltd, which Lalit Modi says, would also be up for sale.