With the 127-year-old Godrej Group splitting, the two separate entities — Godrej Industries (led by Adi and Nadir Godrej) and Godrej Enterprises (Godrej & Boyce) — will be free to use the brand name for their current businesses.
The two sides can use the Godrej brand name — ranked among the top 50 in the country by Brand Finance in 2023 — without the levy of a royalty fee and with the commitment to strengthen the heritage of the brand for existing businesses only, group executives as well as a filing to the stock exchanges said.
“The family members of the two sides have entered into a brand and non-compete agreement which specifies that the right to use the Godrej brand name is limited to current businesses. In the event, they enter into each other’s businesses after six years, which is the non-compete period, they cannot use the Godrej name,” senior corporate lawyer HP Ranina told FE.
Ranina also said if family members of the two sides get into new areas of business that has no conflict with existing businesses, even then the Godrej brand name cannot be used.
Brand experts see this as a means to protect brand value as the group expands into newer areas in the future.
“There is a long history attached to the Godrej Group. And consumers over generations have grown up using Godrej products. So, as far as existing businesses are concerned, the Godrej brand name stays. If newer businesses are added, the Godrej brand name will not be used in part to prevent brand erosion,” N Chandramouli, chief executive officer (CEO) at Mumbai-based TRA Research, a brand advisory and insights firm, said.
Valued at over $3 billion in terms of brand value, according to experts that FE spoke to, the split, said Santosh Desai, brand consultant and CEO, Futurebrands, was in the works for a few years now.
“Stakeholders including investors were aware that family members of the Godrej Group were working on a settlement for some time. Second, a split will allow the two sides to pursue their vision for the businesses they control. This will prevent acrimony in the future,” Desai said.
Experts said that family-owned businesses in India are beginning to understand the relevance of succession planning and the need for transparent family pacts to prevent future conflict. Some may even take a cue from the Godrej family split to sort out contentious issues around brand usage and new business areas.
In March 2024, the Venu Srinivasan group, which controls TVS Motor Company, entered into a unique pact which prevented family members from competition among themselves. Srinivasan, chairman emeritus of TVS Motor and his son Sudarshan Venu, MD of TVS Motor, said they would not use the TVS trademark in relation to businesses such as tractors and farm equipment. While Mallika Srinivasan, CMD, tractors and farm equipment (TAFE) and wife of Venu Srinivasan along with daughter Lakshmi Venu, deputy MD of TAFE Motors and Tractors, a subsidiary of TAFE, said they would not use certain trademarks (including TVS) in two-wheelers and three-wheelers, among other areas.