Companies

Godfrey Phillips sale: KK Modi’s family divided over assets to be sold

PALAK SHAH Mumbai | Updated on January 28, 2020

Key differences emerge between Lalit Modi and his mother Bina Modi

KK Modi, the patriarch one of India’s oldest business houses who passed away in November 2019, left behind a trust deed, the legal clauses of which have now triggered the sale of Godfrey Phillips India (GPI) and all the other assets of the family.

Per letters written to the GPI board by Lalit Modi, who is a key member of the family trust and is now in London, the 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, differences among the KK Modi family members — mainly Lalit Modi and his mother Bina Modi — have emerged on this aspect.

According to Lalit Modi, Bina Modi does not have the requisite qualification and experience to be at the helm of an important listed company like GPI. He has even asked the company to reconsider its decision to appoint Bina Modi as the President and Managing Director of GPI for five years.

Per letters reviewed by BusinessLine, GPI has approached a few global investment bankers to sell their entire stake in the company. GPI is jointly owned by KK Modi Family Trust, which owns a 47 per cent stake in the company and Philip Morris Global Brands, Inc, which holds a 25 per cent stake.

Family trust

All assets of the KK Modi family have been entrusted with the KK Modi Family Trust. Although Bina Modi was interested in keeping the assets and the company in the trust, Lalit Modi wants the assets sold, sources close to the family told BusinessLine. However, per a letter dated January 8, by Ruchier Modi, the director of GPI, “The Family Trust Deed accords Mrs Bina Modi, absolute and unqualified right, power and authority to decide on directorships/management positions of the members of the KK Modi Family in the companies owned and/or controlled by the Family Trust. In accordance with the aforesaid powers and authority, the KK Modi Family Trust recommends Mrs Bina Modi for appointment as Managing Director of Godfrey Phillips India Ltd.

Accordingly, this intimation may be deemed as recommendation for appointment of the Managing Director under the provisions of the Shareholders Agreement dated 28th May, 2009 between Philip Morris International Finance Corporation, Philip Morris Products SA, Modi shareholders and Godfrey Philips India Ltd.”

Lalit Modi’s letter to GPI said: “The meeting of the board of trustees of the KK Modi Family Trust took place on November 30, 2019, at Dubai. In this meeting no unanimous decision in terms of clause of the trust deed was reached; therefore, as per the deed, the entire trust fund including all Family Controlled Businesses be sold got triggered automatically.”

What the deed says

Under the trust deed, the next step is that the entire process of sale has to be concluded within a year and the proceeds distributed in the manner stated. According to Lalit Modi’s letter, “Unlike powers available to late Mr KK Modi under the Trust Deed, Mrs Bina Modi was not vested with all the powers and authorities to administer and manage the Trust Fund including the Family Controlled Businesses. This was also clear from the Trust Deed.”

Published on January 28, 2020

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