The executive director of tobacco maker Godfrey Phillips India fires fresh salvo in the family feud with his mother Bina Modi, demands royalty of Rs389.6 crore from the company
Samir Modi, Executive director of Godfrey Phillips India
Image: Madhu Kapparath
In a fresh turn in the ongoing family feud of the late industrialist KK Modi, Samir Modi has sought a royalty payment of Rs389.6 crore from tobacco manufacturing company Godfrey Phillips India (GPI) for using the intellectual property rights (IPR) of the retail chain brand 24Seven.
In a letter sent to the board of GPI on June 5, Samir, KK Modi's younger son and the founder-president of 24Seven, claimed that the IPR of the convenience retail grocery chain vests in Twenty Four Seven Retail Stores (TFSRS) and its use was allowed in consideration of the payment of royalty. “While the 24Seven Retail Division was growing, I didn’t want to burden the business with royalty costs. I, therefore, agreed to defer such payment,” Modi underlines in an email, a copy of which was accessed by Forbes India from one of the senior officials of the company. “Royalty is required to be paid to TFSRS from June 2005 till July 31, 2024,” says Modi, who is an executive director of GPI, and is embroiled in a bitter fight with his mother Bina Modi over an inheritance battle pegged over Rs25,000 crore.
The royalty demand puts a wrench in the potential sale of 24Seven, which was reportedly put on the block after GPI decided to exit from the loss-making retail business division in April this year. “If GPI doesn’t own the brand, then what are the potential suitors of 24Seven buying,” one of the high-ranking GPI officials underlined, adding that Samir Modi owns the IP rights of 24Seven brand, which has 154 stores across Delhi-NCR, Chandigarh, Punjab, Haryana, and Hyderabad. “Would they (the suitors) buy just the outlets without the brand,” the official wondered, requesting anonymity. In FY23, 24Seven reportedly posted a revenue of Rs396 crore. “The retail business division had a negative net worth as of March 31, 2023,” Godfrey Phillips India highlighted in its regulatory filings.
A demand for royalty caps up a roller-coaster ride for 24Seven, which was started in 2004. Explaining the pending royalty amount of Rs389.6 crore, Samir Modi has sought 7 percent of total sales of Rs3,289.4 crore from June 2005 till March 31, 2024. “This amount includes interest of Rs159.3 crore @18 percent per annum for each year of royalty due,” Modi highlights in his letter, adding that a royalty of Rs4.72 crore is also due for April and May this year. “We have a further right to charge royalty for June and July when the actual sales figures are made available,” he writes.
When contacted, Samir Modi declined to comment. An email sent to tobacco maker GPI, which sells the Marlboro brand of cigarettes, also remained unanswered.