Another prominent Indian business dynasty is breaking up. Late on Tuesday, the family helming the Godrej group announced that the 127-year-old conglomerate would be split into two distinct business groups: Godrej Enterprises and Godrej Industries.

Now, when it comes to Indian family-led businesses, when there’s a split in the empire or disputes within, things usually get bitter and messy. Take the case of Vijaypat Singhania, former chairman of Raymond, and his son Gautam Singhania, who are still engaged in a property dispute. Or, the Ambanis, Hindujas or Kirloskars, wherein a division of the business has led to a public display of animosity.

But that doesn’t seem like the case here. What stands out in the Godrej split is the apparent lack of bad blood—at least none in public. And perhaps the amicable nature of it was also noted by the markets.

After the announcement, shares of most Godrej group companies jumped by up to 9% in Thursday's trading session on the BSE. The market was closed on Wednesday on account of Maharashtra Day.

“The realignment has been arrived at in a respectful and mindful way to maintain harmony and to better align ownership in acknowledgement of the differing visions of the Godrej family members,” the official statement announcing the split said.

The statement added that the split would help maximize “strategic direction, focus, agility, and will accelerate the process of creating long-term value for shareholders and all other stakeholders”.

Let’s look at the details.

A clean division: The control of the Godrej Industries Group—comprising listed firms Godrej Industries, Godrej Consumer Products, Godrej Properties, Godrej Agrovet and Astec Lifesciences—rests with Adi Godrej and his brother Nadir Godrej, along with their immediate families. Godrej Consumer Products is the biggest among the five listed firms. GIG will be helmed by Nadir Godrej as chairperson.

On the other side, their cousins Jamshyd Godrej and Smita Crishna-Godrej will control Godrej Enterprises Group, comprising Godrej & Boyce and its diverse affiliates as well as a land bank—including a prime property in Vikhroli, Mumbai. GEG will be overseen by Jamshyd as chairperson and MD. Joining him in leadership is Nyrika Holkar, daughter of Smita, as the executive director. GEG has no listed entities and has a presence in various industries such as aerospace, aviation, defence, furniture and IT software industries.

In the run-up to the split, both sides stepped off the boards of companies slated to be part of the other faction. So, Adi and Nadir Godrej stepped down from the board of Godrej & Boyce, while Jamshyd exited the boards of Godrej Consumer Products and Godrej Properties.

According to an NDTV Profit report, the two factions, which have shares in various companies within the group, will transfer their equity interests after resigning from their board positions.

While some members may still continue to own a small number of shares in the companies under control of the other faction, there will be no special privileges as owners. Shares held by either group cannot be transferred to competitors without permission of the other.

Notably, the conglomerate also said that the Godrej trademark would be jointly owned and shared by both family groups. The family has also agreed to not compete among themselves for six years, with the exception of one business—realty.

So, the Godrejs have managed to do what most others have failed to achieve: A perfect slice in the middle with no controversies. But how?

“It is rare,” says Kavil Ramachandran, professor and senior advisor at Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business, Hyderabad. However, he explains that the neatness of the division depends on two factors. “One, quality and maturity of emotional relationship existing among the members, which is a function of the trust existing among them. Two, the parties involved must be aware of the economic consequences of their decisions. They had several well managed businesses that already are siloed,” he tells The Morning Context.

Passing the baton: Before we look at the possible reasons for the split, here’s a little bit about the lineage of this business family. The Godrej enterprise was founded in 1897 by Ardeshir Godrej and his brother Pirojsha Burjorji Godrej. With Ardeshir having no sons, leadership transitioned to Pirojsha, who had four children—Sohrab, Dosa, Naval and Burjor. Over time, Naval's lineage—Jamshyd and Smita—and Burjor's descendants—Adi and Nadir—emerged as custodians of the company.

Now, the split—after all these years—is largely owing to the diverse interests and perspectives, especially among the newer generations. Managing such a diverse group as a unanimous whole with two very distinct branches of the Godrej family would have definitely been challenging. It’s likely that differences in how each side of the family saw the company’s growth trajectory was what ultimately prompted a split that would be beneficial for both sides.

“The negotiations stretched over 4 years. This included the Covid period too. These sort of matters move slowly but the good thing here was the family was very dignified and took advice seriously,” Cyril Shroff, managing partner of Cyril Amarchand Mangaldas, the legal counsel for Adi Godrej and Nadir, said. Noting that the process was “complex”, Shroff added that “in the end there were solutions for everything.”

This division process, which has been labelled “dignified” by industry watchers, nearly serves as a blueprint for future such splits in family businesses.

But this isn’t where the Godrej story ends. There’s the next generation and subsequent succession planning. Adi’s children have already assumed key leadership roles across various companies—daughter Nisaba runs Godrej Consumer Products, daughter Tanya Dubash is executive director of Godrej Industries and son Pirojsha leads Godrej Properties. Pirojsha is also slated to take over as chairman of GIG in 2026, according to the statement.

We know now that the smooth split was primarily due to the pre-existing demarcation between the Adi-Nadir and Jamshyd-Smita business factions. However, it remains to be seen whether the path for succession for the next generation will be as straightforward.

Professor Ramachandran believes that it would be too “speculative to talk about the next phase of succession. In several cases, we notice a stronger coming together within branches after the group has gone through a split, that too if it is protracted. The Godrej family also didn’t have it very easy”.

Needless to say, this “realignment” awaits relevant regulatory approvals.

But the positive market reaction reflects its confidence in the division.

The market reaction: Ramachandran suggests that since all listed companies fall on Adi’s side of the split, “the market must have felt that there won’t be any ownership-related confusion emerging from this split”. Besides, “the three children of Adi have proven to be very capable business leaders,” he added.

“The restructuring takes off the confusion among investors and is a welcome move. As time goes by, there will be more clarity among shareholders as the group has a complex structure that has legs in both the listed and unlisted market,” Kranthi Bathini of Wealth Mills said.

According to Sachin Jain, head of investments at Sukvi Ventures, historically, such splits have led to increased valuations of group companies due to clear alignment of powers and transparent shareholding patterns. Well-defined ownership structures can help establish a clear vision and businesses can navigate forward with unanimity, which is always good news for stakeholders.