Godrej Properties, real estate arm of the Godrej Group, has posted a 68 per cent jump in net profits in the September quarter. Pirojsha Godrej, managing director and chief executive officer, talks to Raghavendra Kamath on their plans. Edited excerpts:
What led to the jump in net profit?
We have been launching several projects successfully. We said last year that we were adding lot of new ones and these would lead to strong growth next year. I think that is what is unfolding. In the Gurgaon project, we sold a million sq ft in a single day. Besides good pricing, I think the Godrej brand does give us good advantage.
You have seen some slowing in the Ahmedabad project and analysts say there is a lot of competition from other developers. What is your strategy to push sales there?
Ahmedabad has seen a bit of a slowdown in the market. We have had the best inventory available there and sold 90 per cent of that. We will now be launching fresh phases in that project from this quarter. We expect that to bring good momentum in sale of the project. But, certainly, Ahmedabad has underperformed in the past few months; yet, it outperformed all the expectations the year before. We have sold more than four million sq ft now.
Last year, you signed 10 new agreements or deals. Do you think you will be able to maintain that pace?
We have signed four projects so far this year and exploring several exciting opportunities. But wether we would be able to match last year’s numbers, I would not be able tell you that.
How many new projects do you plan to launch in the remaining part of this financial year?
We are looking at launching the second phase of the Gurgaon project, Godrej Central in Chembur (Mumbai), our commercial project Godrej BKC (Mumbai) and additional launches in Pune, Ahmedabad and Kolkata.
Analysts have concerns about your debt. Do you have a specific plan to reduce it?
We know our debt has got suddenly got attention in the analyst community and media. But we continue to operate our business, which makes sense. We think some amount of debt is good. It allows us faster growth and allows us to undertake many new projects. Our debt has come down by Rs 135 crore in the second quarter and debt to equity was 1.08:1
But given our residential-focused strategy, we think our debt will come down over the next two to three years, though it could go up or down on a quarterly basis.
Will you stop undertaking commercial projects?
We will stop seeking opportunities in commercial real estate for now and restrict our focus on the residential segment
What is the status on your BKC (Bandra-Kurla Complex, Muimbai) project with Jet? Have you finalised any private equity partner?
We will launch the project in the current quarter and are evaluating how much will be leased and sold. We are still talking to PE players on the divestment.
The progress on your agreement with the APG group?
The agreement is in place and we are evaluating opportunities to deploy our capital. This will be entirely focused on residential.
The response for your Vikhroli (Mumbai) project?
We have sold 40 per cent of the launch in the third tower, launched recently. The first two are sold out.
Analysts say your Kolkata and Chandigarh commercial projects are moving slowly.
Kolkata is a difficult market. We are looking at different opportunities and talking to investors and companies prevalent in Kolkata. Chandigarh is more manageable.
What is your outlook on residential sales in your projects?
I think it has been robust and seen strong response in major cities. Gurgaon is the best example. In Bangalore, we’ve sold 0.25 mn sq ft in Godrej E City. In Mumbai, we have seen good response. We expect a good response in Chembur (Mumbai). Broadly, we feel there’s been very good traction in residential sales.
What will be your focus markets now?
We are very focused on the NCR (National Capital Region), Mumbai and Bangalore.
Are you disappointed that the Reserve Bank did not cut rates yesterday?
As a developer, we are disappointed, Things would be better if rates are lowered. Though, even if the rates are not reduced, we will show good growth, given the kind of bookings we have received.