Chairman, Godrej Group
1240 ET Now Trading Calls 18 Dec 2012 04min 31sec Godrej Agrovet Stake Sale Mr Adi Godrej Chairman, Godrej Group 08 04am
About Adi Godrej
Adi Godrej announced the launch of Godrej Wealth, a wealth management business targeting ₹1 lakh crore in assets under management by 2031. He described financial services as an area of significant opportunity in India and said wealth management was a logical next step after entering lending businesses five years ago through Godrej Capital, which includes an NBFC and a housing finance company. Godrej stated the investment in the wealth management business would be at most around ₹500 crore, focused on technology and personnel. Godrej also said Godrej Capital is expected to list within five years, by March 2031, with the exact timing dependent on market conditions and business performance. He noted that the group plans to enter allied businesses such as asset management over the next few years, but will proceed step by step. In Godrej Consumer Products, he mentioned a recent small acquisition of the men's face wash brand Must Talk.
Transcript (14 segments)
✨ AI-enhanced transcript with speaker attribution
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Interviewer0:01
Straight off, let's now connect with Mr. Adi Godrej, Chairman of the Godrej Group, and talk about the stake sale. Godrej Agrovet has decided to sell stake to Temasek, a Singapore-based investor. Mr. Godrej, good morning. Thank you for joining us. First, outline the importance of this deal and what it means for the company and for the group.
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Adi Godrej0:23
Well, Godrej Agrovet is a very rapidly growing part of our group. It's in agribusinesses such as animal feed, agri inputs, oil palm plantation, poultry, and some other food products. Temasek showed interest in a private equity investment, so we've agreed to sell slightly less than 20% shareholding. This will be a combination of primary investment, where they will subscribe to shares of Godrej Agrovet, and partially secondary, where shareholders such as Godrej Industries and some Godrej family members will sell shares. The funding will be used in Godrej Agrovet for its expansion, and by the shareholders to invest in other Godrej Group projects to fulfill the 10 by 10 plans, where we expect the group to grow 10 times in 10 years.
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Interviewer1:33
After this deal, Mr. Godrej, what will be the total holding of promoters in Godrej Industries, and indirectly, by how much will Godrej Industries' holding in Godrej Agrovet come down?
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Adi Godrej1:49
Godrej Industries' holding in Agrovet will come down a little bit. Currently at 75%, the family holding, which is to 25%, will also come down a little bit. Some of the shares will be primary shares into Godrej Agrovet.
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Interviewer2:03
By when would this transaction be complete, and when will the funds come onto your books?
Godrej Industries has a very healthy debt-equity ratio. Was there a real need to raise money?
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Adi Godrej2:24
No, there's no need to raise money. This is a combination, but clearly, Godrej Industries will be investing further into its growth and growth in other growth companies.
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Interviewer2:33
Mr. Godrej, I was just reading somewhere and you've said that the investment is going to be a combination of both primary and secondary investment. Could you highlight that for us and give us a breakup of both?
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Adi Godrej2:47
No, we wouldn't like to break up, but some of the funds, around 600 or slightly less than 600 crores, will be invested into Godrej Agrovet where they'll issue new shares. Some of it will be shares held by Godrej Industries and Godrej family members, which will be sold to Temasek.
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Interviewer3:09
Give me a sense on the valuations, Mr. Godrej. How do you evaluate?
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Adi Godrej3:16
The valuation is around 1,800 and something odd crore for the company.
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Interviewer3:23
Mr. Godrej, it was good chatting with you. Appreciate you taking the time out and joining us. Right now, Godrej Industries is going to be a stock to watch out for in trade today after that 570 crore rupees stake sale. In fact, let's stay over the subject. Let's also hear what Jamshed Godrej, MD of Godrej & Boyce, had to say on this particular deal.
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Jamshed Godrej3:45
Temasek, as an investment arm, has been investing in agricultural businesses around Asia, so this was a natural thing for them. Since they have liked to invest with our group, and they have done extremely well by investing with GCPL, they've already made a huge amount of money, more than they expected. So, I think they probably think that they will make the same amount of money eventually when they exit, whenever that is, five years, ten years down the road, in GCPL.
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Interviewer4:21
Let's take a break. When we come back, we'll talk technicals with our experts.