Wadias’ family fight

Though much water has flown under the bridge in 50 years since then, Nusli remains as combative as ever. This time, at the other end is none other than his younger son, Jehangir Wadia, better known as ‘Jeh’. According to sources in the know, the father and son are at loggerheads over the functioning and financial performance of some Wadia group companies. “Jeh is bright but his views are as strong as his father’s,” says an insider.

The family spat became public in March. Jehangir, 48, resigned as Managing Director of Go Airlines, rebranded as Go First. Within a month, he stepped down from another family business, Bombay Dyeing and Manufacturing Company, where he was managing director. The rift soon widened further. At the end of August, he quit the boards of the remaining listed group companies, Britannia Industries and Bombay Burmah Trading Corp.

The draft red herring prospectus (DRHP) of IPO-bound Go Airlines (India) Ltd. revealed the dispute in detail. It says the trademarks, which primarily consist of the terms “Go”, “GoAir” and “Fly Smart”, apart from logo and associated trademarks and service marks, are owned by Jehangir’s company — Go Holdings. The flagship company, Go Airlines, has been using these trademarks since 2004 without any written agreement with Go Holdings, except for four years (2006-09 and 2013-14).

In March this year, Go Holdings made two applications to the Registrar of Trade Marks, for registration of two word marks — “Go Airlines” and “www.goair.in”. In April, Jehangir again filed an application with the National Internet Exchange of India for transfer of 115 domain names registered in the name of Go Airlines (India) Ltd from domain registrar M/s. Net4India Ltd to M/s. Network Solutions. Experts say the moves indicate that Jehangir wants to restrain the aviation business from using the trademarks. Go Airlines, which Nusli heads as Chairman, opposed the applications of Jehangir and his firm. Moreover, Go Airlines applied for registration of the ‘Go Air’ word marks in its name. Go Airlines intends to pursue legal options to establish ownership of all trademarks and domain names, its DRHP said.

The board and shareholders of Go Airlines had approved Jehangir’s re-appointment as managing director for five years until December 2025. It was subject to certain terms and conditions, the company said. However, Jehangir did not execute the agreement with the company to formalise his re-appointment, it added. He left the company in December.

Jehangir also did not pursue re-appointment to the board of Britannia. According to Britannia’s annual report, the board has decided not to fill the vacancy. The annual report of Bombay Burmah carried a similar notice, which said a resolution would be brought before shareholders at the annual general meeting.

What Went Wrong?

Jehangir, who launched the airline in 2005, had been appointed managing director of Bombay Dyeing in 2011. Those days he used to work 16 hours a day from either group headquarters in Lower Parel or Wadia family residence, the Beach House at Prabhadevi. In contrast to his flamboyant elder brother, Ness Wadia, Jehangir was seen as more tuned towards the family business, which was why people close to the family expected that Nusli would choose him as his heir. Jehangir prepared a detailed plan to revive the business of the legacy bed-and-bath brand Bombay Dyeing. He wanted to steer the company into new categories, including branded accessories, casual attire, home solutions, even furniture.

But it was not easy. Most of his ideas remained on the drawing board. The real estate subsidiary, Bombay Realty, helped Bombay Dyeing book a bonanza profit of ₹1,228 crore in FY19, but it was a one-time affair. Bombay Dyeing posted a loss of ₹469 crore in the last financial year because of the Covid 19 pandemic and the resultant lockdowns. “A loss is indigestible to Nusli,” says the insider.

Go Airlines posted a loss of ₹1,270 crore in FY20 compared to ₹386 crore in the previous year. Total loss in the first nine months of the last financial year (until December 2020) was ₹470 crore. In fact, after the outbreak of the pandemic, every airline has made losses due to travel restrictions. The Wadias have given around ₹2,000 crore cash and non-fund-based support to keep the airline afloat during this period. “They provided around ₹1,500 crore in the March-May period this year. This included a ₹1,000 crore bridge loan, which the Wadias raised by pledging the securities, owned by them,” says an executive.

The no-frills carrier is now getting ready to file the red herring prospectus for the ₹3,600 crore IPO. It received market regulator Sebi’s approval for an IPO in August. The bridge loan provided by the promoters will be repaid from the IPO proceeds, say sources. “The airline has interest-bearing debt of ₹2,200 crore, including the new bridge loan. All these will be cleared using the IPO proceeds,” says a source.

After Jehangir’s exit, Go Air announced the appointment of former Spirit Airlines CEO Ben Baldanza as vice chairman of the board. The company said the appointment would be part of a long-term plan to professionalise the management. Such moves have yielded results for the Wadia group in the past. The most valuable company in the stable, Britannia Industries, is run by professionals. For eight years until 2014, it was headed by Vinita Bali as Managing Director, followed by the present Managing Director, Varun Berry. Britannia, which posted a profit of ₹1,850 crore in the last financial year, is valued at ₹98,000 crore. The market value of Bombay Dyeing is less than ₹1,900 crore, while Bombay Burmah is around ₹8,000 crore. Another listed firm, National Peroxide, is valued at ₹1,300 crore.

Having run Go Air, which continues to incur losses, Jehangir’s report card is not stellar. But he is a seasoned businessman. “The issues between father and son will be sorted out soon and Jeh will return to key roles. His elder brother Ness also wants him back,” says one of the sources. Until recently, Ness Wadia was known to the outside world for his ownership of Punjab Kings franchise of the Indian Premier League with Bollywood actor Preity Zinta.

Succession Troubles

How will the father-son feud affect succession in the Wadia group? Kavil Ramachandran, Professor and Executive Director, Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business, says, “There are likely to be ownership inheritance challenges if family members have major feuds. This is particularly severe in small families where the fight is between father and son or between siblings of similar ages,” he says.

The Wadia family, which entered the world of business as ship builders in 1736, will have to bury the hatchet. “Nusli Wadia, at 77, is not young enough to take responsibilities of the group and steer the future strategy,” Ramachandran adds. At a time when traditional business houses such as Reliance Industries, Tatas and Adanis are becoming aggressive and foraying into new sectors, the Wadias struggling to steady their ship and retain their inherited wealth, including the thousands of acres of land.

“Group companies will have to undergo digital transformation and deal with the new demands of the market. Britannia has great products, but grappling with inflationary pressures is affecting its profitability. Bombay Dyeing will have to reinvent its business. The realty business is moving at a snail’s pace,” says an executive with a rival group.

Have the Wadias lost the fire in the belly after being in business for seven generations? “They were focused on fame and fights, rather than business, for many years,” says an industrialist. Nusli Wadia was part of many corporate brawls during 1970s and 1980s when he fought governments and businesses such as the late Dhirubhai Ambani’s Reliance Industries. Wadia also backed Cyrus Mistry in his fight against Ratan Tata, and as a result, was removed as independent director of three Tata Group companies. Wadia retaliated by filing defamation cases against Tata Sons and Ratan Tata.

While the backchannel works to end the feud amicably, the tough stand taken by both sides will make it hard for the peacemakers to prevail.