Relatives thwarted Gharda’s earlier move to sell his stake

MUMBAI: The tiff between Godrej group, Dr Gharda and his estrange relatives might topple the succession moves in Gharda Chemicals.

One is to form two separate boards of directors and trustees to manage the company and take care of the 60% stake. The other is to sell his stake to an outside bidder. But in this, he is being stymied by his relatives who hold 33% as well as by the Godrej group. Any significant change in the management will need the support of at least 75% of shareholders, something Mr Gharda has been unable to garner.

His relatives had thwarted Mr Gharda’s attempts to sell his stake earlier when DuPont offered to buy his share. Though the chemical engineer had agreed to it, his relatives had refused to give assent. Interestingly, in a recent interview, Mr Gharda termed his relatives “dissenting shareholders.”

Adi Godrej, CMD of the Godrej group, confirmed the disagreement, but declined to offer any comments. “There is an issue regarding the shareholding, but I would not like to discuss it,” he said. People close to the Godrej group say that it may also be interested in taking a controlling interest in GCL.

Mr Gharda refused to comment on the issue. However, a top official in the company said, “we are contesting the Godrej group’s claim. We don’t recognise their shareholding.”

Godrej Industries — another esteemed member of the Parsi business clan — acquired the shares, when a Gharda family member sold the shares to the Godrej family several years back. Godrej Industries manufactures oleochemicals and has been an investor in GCL for a long time. However, top lawyers say Gharda will not be able to legally contest the claim if the relevant papers are in order with Godrej Industries. GCL has a broad product basket that includes agrochemicals and veterinary drugs.

Almost 60% of GCL’s Rs 700-crore revenues last year came from its overseas operations. It has operating companies in the US, with offices in Canada. Moreover, the company has offices in South America, in-including Argentina and Brazil. Through its London office, GSL also has a wide network with formulators in Europe,Gharda is a rich prize for a prospective buyer. The company, known for its R&D expertise, has famously warded off competition from multinationals in national and international markets. Its R&D, led by Mr Gharda himself, is also in the middle of various projects, results of which can determine the company’s future.

The company claims to have 200 researchers on its pay rolls. Other than inheriting GCL’s product basket and considerable R&D expertise, the buyer will increase its presence in the US and European markets.