Godfrey Phillips sale: Family working to solve differences, says Lalit Modi

In an attempt at an “amicable settlement”, Lalit Modi, son of the late industrialist K K Modi, on Thursday said “all family members are working on a solution to safeguard the interest of shareholders”. 

He also reiterated that the group flagship, the tobacco company Godfrey Phillips India (GPI), was not fully conversant with the efforts of the Modi family on an “amicable solution to some issues that are in the process of discussion”.

The new move comes just days after Lalit Modi, through a series of tweets, had declared war on his family members, saying that all key assets of the K K Modi group were up for sale. These included GPI, Indofil Industries, and Modicare.

The differences between him and his family members — Bina, the mother; Samir, the brother; and Charu, the sister — came out into the open when he said that while three trustees wanted to “continue to run the business his feeling was that after his father’s demise the value of the assets will deplete”. 

He also questioned the ability of his mother to take over as president and managing director of GPI after his father. 

However, in a regulatory filing, GPI hit back, clarifying that it was neither engaged in nor privy to any discussion on “rumoured potential transaction” by its promoters. It added the company had received clarification from its significant promoter that there had been no decision to put its assets on sale.

However, Lalit Modi in his statement on Thursday stuck to his stand that the “best possible solution is, if the family group and majority shareholders allow new strategic investments in the group”. He said this was the only way to tap the growth potential of this market comprehensively.

 

 

Sources in the know say Lalit Modi is trying to persuade his family members at this stage because he sees global advantages in the route he’s recommended. “He’s hopeful they will be persuaded,” a source involved in the negotiations said. However, Samir Modi, when contacted, did not respond to any queries.

Lalit Modi had cited clauses in the family trust, which controls shares in various companies and in which all the family members are equal partners, to build his case. However, citing clauses of the trust deed, Lalit Modi said that unlike K K Modi, his mother did not have the same powers and the authority to manage and administer the trust fund, including the family-controlled business.

The trust clause states that Bina Modi will continue to be the managing trustee and have the authority to take decisions, which will be final and binding on all, provided it has been agreed to continue to keep the trust and not dispose of all assets at the meeting to be held within 30 days. 

The board of trustees had decided unanimously three options earmarked in the deed — continue to own and manage the businesses, to sell part of the trust fund, or sell the whole trust fund.

As the decision in the meeting among the trustees on any of these clauses was not unanimous (Lalit Modi had a different view), according to Modi, it would automatically trigger the sale clause under clause 4.2 of the trust deed.