Companies

Godrej Properties will be our fastest growing biz: Adi Godrej

R. Yegya Narayanan Coimbatore | Updated on November 26, 2013

A file photo of Adi Godrej.   -  Business Line

Godrej Properties Ltd will emerge the “fastest growing business” of the Godrej Group and the Rs 700 crore rights issue has increased its ability to launch new projects in important markets, according to Godrej Group Chairman, Adi Godrej.

Speaking at an earnings conference call of Godrej Industries Ltd, transcript of which was provided to the stock exchanges, he said Godrej Properties’ rights issue was the “largest” in the first half of the current fiscal.

He said this mobilisation has, apart from strengthening its balance sheet, enhanced the company’s “ability to continue to add value accretive new projects in key markets”.

Right time for new products

Adi Godrej, reaffirming his view, said that “Godrej Properties will be our fastest growing business’. He said unlike other businesses like that of Godrej Consumer Products or Godrej Agrovet, the Group need not be worried about market share or growth of Godrej Properties. He felt that the present time was the most appropriate time to launch new projects since “the cost of getting into new projects at this time will be reasonable”. At present, many developers and land owners were under “liquidity pressure”, providing the company with “strong opportunity to add new projects at attractive terms”.

He said it was this growth prospect of Godrej Properties that made the company to raise capital and opt for the rights issue route rather than going for any other instrument like QIP, since “we did not want the promoter shareholding to dilute”. This was the reason behind Godrej Industries subscribing to the rights issue and he expected this to pay a good dividend to the company in the future.

Answering a query on when GPL’s return on net worth would start to improve, Pirojsha Godrej, MD and CEO, Godrej Properties, pointed out that it took time for the benefits of new real estate projects to kick in and reflect on the company balance sheet. The company has now about 40 projects, over half of which were added in the last 30 months. He was confident of these investments becoming “very, very ROCE accretive” but with a time lag.

Commercial projects

He felt that another reason was that in some older commercial projects the company had “lost in much more capital than we have intended’ because of poor performance of the commercial markets in places like Kolkata and Chandigarh. He said “we have learnt the lessons from that” and was making the “best efforts to exit these commercial projects” which however was taking time.

Pirojsha Godrej said the company has got Rs 600 crore to Rs 700 crore “locked in, in three projects” in Chandigarh and Kolkata. But he felt that the balance sheet of GPL “is the strongest that it has been in the last many years”. The net debt level of Rs 1,200 crore as at the end of September 2013 was the lowest in the past two or three years and the benefits of the projects launched would start reflecting on the balance sheet in the coming quarters.

On the prospects of the nearly 147 acre township project of GPL at Panvel in Navi Mumbai, he said the Panvel Airport would be a “huge boon to the project”. (The Navi Mumbai airport project is facing opposition from some villagers and it is reported Maharashtra Government is looking at reclaimed land from the sea as an alternative for land acquisition). GPL was working on the design and approval process for the township project which he was confident of bringing ` to the market very soon’.

The shares of GPL closed at Rs 177.25, down by Rs 3.50, on the BSE today.

Published on November 26, 2013

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