Godrej Group chairman Adi Godrej has accused former employee and business partner Arumugham Mahendran, who is planning to launch new products that will compete with popular Godrej brands Good Knight and Hit, for ethical and legal breach, The Economic Times reported.
Mahendaran had worked closely with Godrej for around 15 years and was managing director of Godrej Consumer Products Ltd till he left the group in 2013 to launch insect repellents under the brand DND through his new venture Global Consumer Products.
He was also a small shareholder in at least four Godrej group companies. The newly floated venture is being backed by the private equity giant Goldman Sachs.
“Him launching household insecticides is both a serious ethical and legal breach…I am also very surprised that global investors like Goldman Sachs are allowing this to happen under their watch,” Adi Godrej told the paper.
Separate email queries sent to the two companies seeking further information on the aforesaid development did not elicit any response by the time of filing this article.
Mahendran and family own 20% of Global Consumer Products while the remaining is held by Goldman Sachs and Mitsui which has invested Rs 315 crore in the firm. It recently got its second round of funding of $30 million from the Japanese investor.
On the other side, Mahendran told the paper that “In spite of my not having a non-compete agreement with Godrej, it was on ethical grounds that I chose not to enter the insecticide business for three years.”
Godrej’s Good Knight and Hit are almost synonymous with insect repellents in the country with share of 39% and 5%, respectively. Other dominant brands are Mortein from Reckitt Benckiser, All Out from SC Johnson Products and Maxo from Jyothy Laboratories.
Global Consumer Products has been a pure-play foods and beverage company and launched its first brand LuvIt chocolates in April last year, which completes with major brands such as Cadbury, Nestle, Ferrero Rocher and Amul.
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