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Godfrey Phillips India, other KK Modi businesses up for sale

Godfrey Phillips sells Marlboro brand of cigarettes and is among the country’s largest tobacco manufacturers.

, ET Bureau|
Last Updated: Jan 28, 2020, 09.23 AM IST
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Godfrey Phillips India, other KK Modi businesses up for sale
Godfrey Phillips India, other KK Modi businesses up for sale
Kolkata: The KK Modi Family Trust is said to have put its stake in Godfrey Phillips India, which sells the Red & White and Four Square brands of cigarettes, and other family controlled assets on sale as members of the trust have failed to reach a consensus on running the businesses after the demise of the family patriarch.

Documents reviewed by ET showed that besides the listed tobacco company, which has a market value of about Rs 7,500 crore as of Monday, the family-owned wellness brand Modicare is also on sale.

Shares of Godfrey Philips have climbed 12% in a month – and 4.3% Monday – to Rs 1,438.75 apiece on the BSE.

The sale proposal is in line with a provision of the 2006 trust deed executed by KK Modi , who expired late last year. As per provisions of the deed, Bina Modi, wife of the late KK Modi, became the managing trustee and held a meeting with co-trustees -- her sons Lalit Modi and Samir Modi, and daughter Charu Modi -- on November 30, 2019 in Dubai.

Since the Dubai meeting failed to reach a consensus decision, a process of sale of the listed tobacco entity and 57 other assets has been initiated.

Lalit Modi is the former commissioner of the Indian Premier League.

It is learnt that Titus Advisors, a Delhi-based legal firm, has written on behalf of the family trust to investment bankers such as Credit Suisse, JP Morgan, Goldman Sachs and Morgan Stanley for assisting the sale process. "There is a possibility that the Trust may consider disposal of its Trust Fund," the letter said.

"Yes, all assets of the KK Modi group are going on sale. I mean all. The other three trustees wanted to continue running the business, but I felt that post my father passing away, the value will deplete. I voted for sale," Lalit Modi said in a Twitter message.

Bina Modi, responding to a query, told ET: "The information that you have received is incorrect. In any event, since the terms of the private family trust are confidential, I will not be able to comment."

Mails to Lalit Modi, Samir Modi, and Charu Modi remained unanswered.

The trust was to decide unanimously in relation to the trust fund which includes the family controlled business, whether a) to continue to own and manage all assets of the trust fund, or b) to sell part of the trust fund comprising of various assets including family controlled businesses or c) to sell the whole of the trust fund. The group has transferred all family shareholdings into the trust.

As per provisions of the trust deed, Bina Modi assumed the office of managing trustee. According to the deed, a meeting of the trust was required to be held within 30 days of KK Modi’s demise. KK Modi breathed his last on November 2, 2019.

“If the board of trustees is unable to take any decision… unanimously, then the entire trust fund including all family controlled businesses shall be sold off,” the deed further said.

The interest of the KK Modi family in Godfrey is held through KK Modi Family Trust and its underlying investment companies. In between, Bina Modi was appointed as president and managing director of GPI for five years with effect from November 14, apparently on the recommendation of the nomination and remuneration committee of the board.

“Mrs Bina Modi shall continue to be the Managing Trustee and shall have complete authority to take all decisions on any matter relating to Trust Fund including family controlled businesses and her decisions shall be final and binding on all the beneficiaries and Trustees provided that it has been agreed to continue to keep the Trust and not dispose of all the assets,” the deed said.

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