Godrej group’s new holding firms boost capital base

Godrej group spokespersons did not respond to an email sent on Thursday seeking comments on the moves. The authorised capital of the company was increased from ~25 lakh, divided into 250,000 equity shares of ~10 each to ~5.35 crore divided into 2.25 million equity shares of ~10 each and 3.1 million preference shares of ~10 each, by an ordinary resolution at an extraordinary general meeting on 16 March, the company said in a footnote to its new articles of association. The new articles, adopted in March, laid down the various rules, including those to be followed while issuing new shares, further rise in capital, shareholder rights, dividend and redemption, if any.

Following the expansion of the capital, the shareholders of Vora Soaps also cleared a proposal to capitalise reserves and surplus of about ~1.1 crore to issue bonus shares to the shareholders. The board cleared the issuance of 1.1 million — 7 per cent — non-cumulative redeemable preference shares of ~10 each as bonus shares, redeemable within 20 years from the date of allotment. The shares were to be credited as fully paid-up preference shares to the holders of the equity shares in proportion of 11 fully paid-up preference shares of ~10/- each for every two equity shares held by them. The issue was on 17 March. The resolution added “the 7 per cent non-cumulative redeemable preference shares so distributed shall… be treated as an increase in the issued, subscribed and paid-up capital of the company,” the resolution, signed by Nisaba on 21 March, said. An explanatory statement to the resolution said “the proposal for issuance of bonus shares is made to provide liquidity to reward the members.” Similarly, Godrej Seeds, which is a subsidiary of Godrej Agrovet, saw a rights issue of 7,845 equity shares. This works to about a 13 per cent increase in the capital base of the company. In terms of authority given to the board by the articles of association of the company, Godrej Agrovet… is… allotted and issued 7,845 equity shares of ~10 each at par, the resolution said. Adi’s younger brother Nadir Godrej is the chairman of Godrej Agrovet.

The fresh issue would also have the effect of diluting the holdings of former Godrej Seeds director Dharmender Kumar, who was issued 6,000 shares in the company as sweat equity in FY14. The sweat equity was in recognition of “specialised knowledge and rich experience” of Kumar used for the benefit of the company.

While before the rights issue, Kumar’s holding was 10 per cent, it would now fall to 8.8 per cent. Hyderabad-based Kumar and other directors P N Kherkede, B S Yadav and S Varadaraj stepped down from Godrej Seeds on March 15 after Nisaba Godrej, Dubash and Crishna stepped in.