And Dysfunctional Ones

8216;Our family was less cohesive than others8217;, is one of those rare diplomatic statements you get to hear from the generally earthy K...

8216;Our family was less cohesive than others8217;, is one of those rare diplomatic statements you get to hear from the generally earthy K.K. Modi, eldest son of the Modi Group8217;s founder Rai Bahadur Gujar Mal Modi. From the time Gujar Mal founded the group, till around the 80s, the Modis were seen as a fast-growing group with interests spanning from chemicals to sponge iron. They even had a town named after them.

Today, with just the odd exception, the Modis hardly figure in India8217;s industrial lexicon today. Except, perhaps, in the offices of India8217;s government-owned financial institutions FIs, where a bitter battle is still being played for the control of Modi Rubber Limited.

K.N. Modi, Gujarmal8217;s brother, owns Modipon Limited 8212; ranked 167 in terms of market capitalisation on April 1, 1991, the company has fallen to 1,165 today. B.K. Modi8217;s Modi Xerox is down from 89th rank to 208. K.K. Modi8217;s tobacco firm Godfrey Philips, however, has seen its market cap improve, and its rank go up from 176 in 1991 to 121 today.

The decline of the Modis, of course, is the classic story of too many children bickering for a non-expanding pie. And thanks to criminally heavy taxes during the 70s and the 80s, the group8217;s shareholdings were made through a myriad web of holding firms and cross-holdings that made it impossible for the family members to go their own way even when they wanted to.

Group founder Rai Bahadur Gujar Mal Modi had one brother K N Modi. Gujar Mal had five sons namely K K Modi, V K Modi, S K Modi, B K Modi and U K Modi. The family has further expanded with K K Modi having two sons Samir and Lalit looking after Modi Entertainment and Modicare respectively and a daughter Charu. VK has one son Alok. The third brother SK has one son and two married daughters. Fourth brother B K Modi has one son Dilip, while UK has a daughter Meghna and two minor sons.

KN Modi has three sons YK, MK and DK. MK has one son Manish and two married daughters. YK has one son Prashant and two daughters, while DK has two sons Kapil and Manav.

With Rai Bahadur8217;s five sons at the helm of affairs and his four nephews K N Modi8217;s sons, it was hardly surprising that the group headed towards a bitter split in 1989. The family, as K.K. Modi puts it, 8216;became too big and there was no unanimity in terms of business decisions and investment plans.8217; 8216;In fact8217;, he adds, 8216;in 1989 it was difficult to divide the asset because all of us had share in every business.8217;

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Take Modi Rubber Ltd, initially a flagship company of the undivided Modi family 8212; after the split, it went to BK and VK which had a 24 percent stake in it. But, Modipon Ltd which went to MK was a promoter-shareholder of Modi Rubber, so MK also owned shares in Modi Rubber. And thanks to the firms huge borrowing from them, the financial institutions collectively hold 44 per cent in the company and are the largest shareholder. While the FIs want to exit Modi Rubber, the Modis internal fights ensured they couldn8217;t make a joint offer to the FIs 8212; BK and VK made an offer, but MK was not allowed to participate by the stock market regulator. Currently the company is closed.

So while several family members have separate businesses and are doing well, KK Modi admits the fight with his uncle8217;s clan still continues.