Tobacco major Godfrey Phillips is at a critical crossroads as it grapples with leadership and governance challenges stemming from a prolonged family dispute. The upcoming Annual General Meeting (AGM) on September 6 is set to be crucial for the company, particularly in relation to the reappointment of Bina Modi as managing director and the potential exclusion of Samir Modi from the board of directors.
In an interview with CNBC-TV18, Samir Modi, executive director of Godfrey Phillips, addressed the ongoing internal conflict that has intensified since the death of KK Modi in 2019. The battle for control among his heirs — Bina Modi, Samir Modi, and Lalit Modi — has reached a boiling point, casting a shadow over the company’s future.
Samir Modi willing to sell Godffrey to end dispute
Modi has expressed his willingness to resolve the familial strife, recognising that the conflict is detrimental to the company’s interests and shareholder value. He asserted, “Whatever it takes to end the fight… businesses cannot be suffered, and shareholders cannot be taken for a ride.” Modi highlighted the adverse effects of the dispute on shareholders, employees, and the overall viability of the business, stressing the need for swift resolution to preserve the company’s value.
However, Modi is cautious about selling the business merely to end the dispute. He maintains that while it is crucial to preserve value, decisions should be based on the company’s long-term health rather than personal grievances. Modi has been engaging with shareholders, advocating for decisions that serve the company’s best interests rather than being influenced by family conflicts.
Samir Modi’s reappointment to board of directors
The controversy surrounding Modi’s exclusion from the board has been a focal point of the dispute. The Nomination and Remuneration Committee (NRC) has rejected his bid for reappointment, raising concerns about the committee’s independence and fairness. Modi questioned the NRC’s impartiality, suggesting that its decisions are swayed by ongoing family tensions.
Modi highlighted that he was initially appointed for a five-year term, which he believes should protect his position until 2026. He has voiced concerns that the NRC’s actions are biased and not in the best interest of the company.
Bina Modi’s reappointment as MD
Proxy advisory firms played a significant role in shaping opinions about the company’s governance. While some firms, such as US-based Glass Lewis, support Bina Modi’s removal, others, such as SES led by JN Gupta, advocate for the removal of all family members from the board to establish a professional management structure.
Modi acknowledged the need for a professional board but argued that the inheritance dispute should not cloud judgment regarding board composition. He emphasised his experience in the tobacco industry and his commitment to the business, arguing that his expertise should be valued despite the familial conflict.
As the AGM approaches, the decisions made will be pivotal in determining the future direction of Godfrey Phillips and whether it can overcome its internal challenges to maintain its position in the industry.
First Published: Aug 29 2024 | 12:47 PM IST