Godrej Properties, the real estate arm of the Godrej group is among the few realty companies in the Indian market that is bucking the sluggish trend in the sector.
Godrej Properties, the real estate arm of the Godrej group is among the few realty companies in the Indian market that is bucking the sluggish trend in the sector. The company is hoping to double its full year sales booking numbers in the current financial year, from the Rs 2,600 crore levels, that it recorded in 2014-2015. On a consolidated level, the company closed December 2015 ended quarter with a 10% year-on-year growth in its net profit at Rs 52 crore. The total income declined by 16.5% y-o-y to Rs 450 crore, however, earnings before tax depreciation and amortisation increased by 30% to Rs 108 crore. Pirojsha Godrej, managing director & CEO, Godrej Properties speaks to Shubhra Tandon of on the company’s performance. Excerpts:
The booking numbers from the recent project launches look good, but the quarter sales number are still subdued. What are the reasons?
Due to the accounting standards for revenue recognition in real estate, in addition to sales, projects need to have reached a certain level of construction to be included in revenue, which means bookings done at launch show up as revenue in subsequent quarters once revenue recognition thresholds are met. That is why while our operational new sales have increased by 122%, our reported revenue has declined.
GPL recorded a two-fold y-o-y jump in residential bookings. What has aided these volumes?
What you see now is something that we have been working towards in the last few years. We have launched more number of projects and they have got good response from customers. We have worked on the design, understanding our customer needs, and improved our capabilities which is reflecting in our booking numbers. In BKC as well, there was skepticism in market regarding a commercial project, but we were sure that by the time the project reaches advanced stage of completion, office market will be much better. Similarly with The Trees, the approvals etc took a lot of time and led to delays, but ultimately the project did well. We have made sales bookings of R862 crore, and sold 93% of 348 apartments launched within one month of launch.
How are the depressed market sentiments impacting Godrej Properties?
There is no doubt that the residential market is slow, and we are also seeing that post the launch stage, and as projects get into regular sales stage, sales activity tends to slow down. However, we also benefit from this sluggish environment as it gives us more opportunities to launch new projects.
How did the residential prices fare during the quarter and did you take any price increases in the third quarter?
Prices are not going up, maybe a 5%-10% increase in some projects.
At what levels are you looking to close FY16 in terms of area launched and sales?
We are unlikely to launch many new projects in Q4, maybe one in Bangalore. We launched 9 projects till the third quarter, and there could be launch of new phases in the same. We may launch second phase of The Trees by March, which will be about 3.4 lakh sq ft of residential. In terms of sales bookings, we are already at Rs 4,422 crore, and expect to see 100% y-o-y sales growth.