Godrej Industries buys stake in housing finance arm for Rs 406 crore

Fair value of assets & liabilities acquired have been determined provisionally based on independent valuation report; goodwill of Rs 294.50 crore has been recognised

The Godrej group is untangling cross-holdings among group companies, with Godrej Capital, a subsidiary of Godrej Industries, buying a 95 per cent stake in Godrej Housing Finance for Rs 406 crore in cash. The shares have been acquired from Anamudi Real Estates LLP, a Godrej family investment firm.

Godrej Capital was earlier known as Pyxis Holdings and is currently operating as a financial institution and offers home loans and plot loans. The fair value of assets and liabilities acquired have been determined provisionally based on an independent valuation report. Goodwill of Rs 294.50 crore has been recognised, being excess of consideration transferred over the provisional fair value of net assets acquired, in accordance with IND AS 103 'Business Combinations', the company said in a disclosure to the stock exchanges.

The company said the Group believes that the information provides a reasonable basis for estimating the fair values of assets and liabilities of Godrej Housing Finance, but the potential for measurement period adjustments exists based on a continuing review of matters related to the acquisition.

The Godrej group, with four listed entities and unlisted Godrej & Boyce Mfg Co Ltd, have appointed bankers and lawyers to help them value the companies and divide the group assets amicably. The two sides, Adi Godrej and Jamshyd Godrej families, are also looking at ways to divide the land bank currently owned by Godrej and Boyce.

As part of their plan to reduce cross holdings in group companies, the BSE-listed Godrej Industries, chaired by group patriarch Adi Godrej, has acquired shares worth Rs 997 crore from their family trusts in Godrej Properties. At the same time, the trusts used the proceeds to acquire shares in Godrej Industries for Rs 870 crore.

According to the statistics submitted to the stock exchanges, BNG Family Trust, HNG Family Trust, NG Family Trust, PG Family Trust and SNG Family trust sold 0.42 per cent stake each in Godrej Properties to Godrej Industries and then used the proceeds to buy 0.75 per cent stake each in the GIL. The sellers of GIL shares were Anamudi Real Estate and Godrej Seeds and Genetics — two other unlisted holding companies of the Godrej family.

Vijay Crishna, a non-executive, non-independent director on the boards  of Godrej Industries and Godrej Agrovet, also quit from both boards citing his advancing age.  Crishna is married to Smita Crishna-Godrej, who owns one-fifth stake in the Godrej family assets. Smita’s brother Jamshyd runs Godrej & Boyce — the consumer products company of the Godrej group. The Godrej family is trying to untangle the group’s equity and land holding among their members from the last few years.

The five senior members of the Godrej family — Adi, Nadir, Jamshyd, Smita and their cousin, Rishad — own 15.3 per cent stakes each in Godrej and Boyce. The rest of the stake is owned by Pirojsha Godrej Foundation. According to Godrej family tradition, each family’s stake is equally divided among their children to avoid any dispute in the future.

When contacted, a Godrej Industries spokesperson said: “The Godrej family has been working on a long-term strategic plan for the group for the last few years to ensure best value for its shareholders. As part of this exercise, we have also sought advice from external partners. These discussions between the family remain ongoing.”