Godrej family agreement: Non-compete clause and brand usage terms

The Godrej family, renowned for its extensive business ventures, has struck an agreement to refrain from competing against one another for six years, except in the real estate sector. This accord comes in the wake of a split within the family's 127-year-old conglomerate, which encompasses ventures ranging from locks to land development. Following the lapse of this non-compete period, family members may explore each other's businesses, albeit without utilising the Godrej brand.

Under the terms of the family settlement agreement, Adi Godrej and his sibling Nadir will wield exclusive rights to employ the Godrej brand in sectors like financial services, FMCG, and pharmaceuticals. Conversely, their cousin Jamshyd and his sister Smita Crishna will wield the brand in defence, consumer durables, and related industries. However, both factions retain the liberty to utilise the brand in real estate development and marketing endeavours.

Remarkably, neither faction is obligated to remit royalties for employing the Godrej brand during this period. Furthermore, they may jointly explore novel business sectors like hospitality, medical services, and education. This collaborative approach fosters innovation and minimises internal business competition.

Standard practice in family settlements, non-compete agreements aim to prevent internal competition. The Godrej family's decision aligns with this precedent, reflecting a similar resolution made by the TVS family recently.

Furthermore, Jamshyd Godrej and Smita Crishna are slated to transition from being part of the promoter group to becoming public shareholders once the ownership realignment within the Godrej group’s listed entities is finalised. This transition adheres to SEBI regulations, enabling them to seek classification as public shareholders upon the completion of the realignment process.