Bhupesh Bhandari: A family entertainer
Like a Karan Johar film, the entire Modi family has come together at the end
Three large business families split in the 1980s: the Birlas, the Shrirams and the Modis. The split in the Modi family was the bitterest of the three. Claims and counter-claims were made. Accusations were hurled. Brothers called each other names in public. Mistrust was rampant. For the banks and financial institutions that had loaned money to the Modis, it was a bigger headache. Some of the companies had gone sick, thanks to the infighting and mismanagement. But there were intricate cross-holdings between the group companies, which made their ownership very diffuse. These had to be sorted out before the liabilities could be fixed. When there was no sign of disentanglement, the banks and financial institutions blacklisted the Modis under the “group approach”. Some of them tried to get over it by branching out on their own. But the stigma stayed.
The feud, it appears, is now more or less settled. The five sons of the late Gujarmal Modi (KK, VK, SK, BK and UK) got together on Monday in Mumbai to celebrate BK’s 63 rd birthday. According to KK and BK, there are no conflicts left with the banks and financial institutions. All money owed by companies like Modi Industries and Modi Spinning has been repaid. The last ownership tussle was between VK and BK over Modi Rubber. But BK has exited the company by selling his share to VK, and that has ended the dispute. So there is no conflict left within the family. KK says that the money owed to the workers has also been paid.
It is learnt that the five brothers have been brought together by their six sisters, who convinced them to end their differences. Incidentally, the six sisters inherited none of the businesses their father and uncle (the late Kedar Nath Modi) had built. All the assets (and the liabilities) went to the sons. This is an anomaly that some of Gujarmal Modi’s sons now want to correct. KK, for instance, has made his daughter (Charu) an equal inheritor along with his two sons (Lalit and Samir).
KK has also taken steps to ensure his children don’t fight over business in the days to come. So he has put all his shares (Godfrey Phillips, Indofil Industries and Modicare) in a trust which has four beneficiaries: he and his wife (Bina), and the three children. KK is the managing trustee; Bina will take over after him. The articles of the trust say that the beneficiaries will appoint a person unanimously to run the business for a period of three years, after which the person can seek reappointment. If they don’t agree, merchant bankers will take over the businesses and sell them; the money will be divided between the beneficiaries. KK knows that this money will be 50 per cent or 70 per cent of the real value; so there would be little incentive for the children to sell. The erosion in the Modi group’s brand equity because of the incessant fights is clearly too recent in his memory.
The attention is now likely to move to Modinagar, the industrial complex on the road from Delhi to Meerut. In the old days, when the Modis were one of the biggest business families in the country, a host of goods from hurricane lanterns to sugar, fabric, khandsari and vanaspati ghee were made here. Modinagar was a complete township with schools for the children of workers and officers, hospitals, officers’ colonies and workers’ quarters. Some units are still functional — electrodes, sugar, alcohol and pharmaceuticals. Most others are closed. With the dues to the banks and financial institutions cleared, the Modis have got large parcels of that land back.
The next step proposed by some of the brothers is to set up a residential city there, which could cater to Delhi as well as Meerut. A trust has been set up to pool all the land that has been freed from the banks and financial institutions – another sign of the new-found bonhomie – and develop the township. Some of them have even hired consultants to design the city. But that would require agreement between all. At least three of the Modis (KK, VK and BK) have become non-resident Indians or are in the process of doing so, and have business interests abroad. Whether they would be interested in the development of the Modinagar real estate is a moot question. All of them have grown-up children (the eldest in the next generation, Lalit, is close to 50); their buy-in too is essential.
What this has also done is given a new lease of life to the charities (schools and hospitals) Gujarmal Modi had started. BK got control of the Gujarmal Modi hospital in south Delhi after he exited Modi Rubber in favour of VK. He plans to spend almost Rs 1,000 crore to upgrade this hospital from 100 beds to 550 beds. Future Hospital of Singapore, which is part of the Parkway group, has been appointed technical consultant. BK wants the hospital to specialise in heart ailments. Similarly, the schools and hospitals at Modinagar have come to VK, who, it is learnt, is keen to revive them. Like a Karan Johar film, the entire family has come together at the end.