Mohit Malhotra, MD and CEO of Godrej Properties, tells Shubhra Tandon that the company is looking to be a participant in the ongoing consolidation phase in real estate, and is open to acquiring projects as well as companies, should an opportunity arise. Edited excerpts:
Having mastered the joint venture (JV) and joint development (JD) model in real estate, Godrej Properties (GPL) now plans to acquire land in an opportunistic manner. While 80% of the business will still be through JV and JD model, the firm is open to land acquisitions at distressed valuations. Mohit Malhotra, MD and CEO of Godrej Properties, tells Shubhra Tandon that the company is looking to be a participant in the ongoing consolidation phase in real estate, and is open to acquiring projects as well as companies, should an opportunity arise. Edited excerpts:
What is going to be the focus for Godrej Properties in FY21?
Focus is to continue to grow and take the benefit of the opportunity that has got created in this crisis. Our focus is on adding more new projects at attractive terms, and focus on growing our sales besides all the issues in the environment. FY21 will be about continuing what we are already doing.
What are your thoughts on consolidation in the sector and will GPL look to be a participant in this phase?
Yes, consolidation is accelerating in a big way and we ourselves are getting huge benefit from this trend. In terms of our strategy, we are looking at land parcels at distressed valuations and we are also open to any good M&A opportunity.
On the M&A front, are you looking at acquiring projects or some companies, too?
We are open to all options. In addition, we will also look at land parcels both for outright acquisition or development through JV and JD model.
So far you have focused on only JV and JD model, but now you are also open to acquiring land. What is propelling this change in strategy?
Over the last few quarters, we have looked at opportunistic acquisitions of land parcels. As much as 80% of our model will still remain JD and JV, the remaining 20% we are looking at acquiring land parcels if it fits our strategy and is an attractive proposition.
What is the launch pipeline looking like and is it in anyway impacted by Covid-19?
Launch pipeline has got impacted by Covid not because of sales challenge but due to delay in approvals as government offices are facing their own set of challenges. However, we are hopeful of maintaining the launch guidance of 22 projects that we have given at the start of the year.
Revenues were lowest in 38 quarters and the customer inflows also hit the lowest in 17 quarters in Q1. Do you think you will be able to make up for this in the rest of the year?
We have had the best quarter last quarter, where our sales grew by 70% on a quarter-on-quarter basis despite the Covid-19 going on. We also had a high adoption of digital channels by the customers. We are very happy with our quarterly performance. In terms of customer collections, we had a setback because of the lockdown, construction had come to a grinding halt and most of our collections are linked to construction milestones so that got delayed. Registrations are delayed because the registration offices were not working fully. But all of that is now getting resolved and things are getting back on track.
How is the execution looking like on the ground with regards to the labour situation and construction?
Labour strength had gone down from the peak to as low as 30% in Q1. Now, we have come back to around 60-65% of the peak strength and hopefully by the end of this quarter we should come back to 100% mark. Things have definitely improved but not to the levels as before.
If the situation is not still looking up, how do you plan to make up for whatever has been lost in the rest of the year? What will be your strategy?
The strategy is very clear as we are working with our contractors to see how we can fast-track construction in the remaining quarters. Some things will get delayed, but we are hoping that we will able to make up for the lost time and haven’t yet given up on that front. Overall the collections might be impacted because of the challenges in the market today. So collections might be impacted, but on sales (bookings) front, we are very confident that we will end the year on a good note