One has to be careful about risk and not over-leverage, but also take a contrarian view and not follow the herd. PIROJSHA GODREJ, MD AND CEO, GODREJ PROPERTIES
Having reported a net profit gain of 67.5 per cent at Rs 32.58 crore in the second quarter ended September 2012, Godrej Properties has decided to maintain its strategy of aggressive launches to drive growth. The key focus continues to be on developing residential real estate.
Though such an approach when the industry is going through a marked slowdown is bound to be fraught with challenges, Pirojsha Godrej, Managing Director and CEO, is upbeat. “Maintaining execution efficiency through our busy launch calendar is going to be both a challenge and an opportunity. In addition, some of our commercial projects in tier II cities have not done as well as we anticipated, so getting that right will be a challenge,” he said.
Projects in pipeline
Some of the company’s more recent launches have been in Mumbai, Bangalore and the NCR. Currently, the company has 17 projects in the pipeline, to be launched in the next 6 to 12 months.
Asked whether it is too ambitious a target, given the state of the industry, with developers remaining cautious on new launches, Godrej said: “Overall, launches have slowed down, but it depends on the developer and the cities in question. The Gurgaon market continues to be exceptionally strong with huge demand, and pricing is also moving up, whereas the Mumbai market is currently subdued.”
Stating that the economic condition notwithstanding, the aspiration of every Indian is still to own a house, he added, two factors affect this decision — affordability and their confidence on the timing. “Realty is a cyclical business where things can change quickly and the change can be quite sharp at both ends. So, just when people think they don’t want to launch any new projects I think it is exactly the right time to launch projects because by the time you execute them and the project is ready to sell, the markets are likely to have picked up. One has to be careful about risk and not over-leverage, but also take a contrarian view and not follow the herd,” he added.
Pirojsha further stated the company was not looking to raise capital in the near future. “We have already raised capital through our IPP in March and we have created the new investment platform with groups like APG and others, so we are pretty confident that we do not need to raise any more capital as of now,” he added.