We've had strong bookings since March despite Covid crisis: Pirojsha Godrej

In a Q&A, the chairman of Godrej Properties says collections, which are linked to construction milestones, have also improved

Godrej Properties posted a loss before tax of Rs 14.69 crore in the June quarter of FY21, as compared to a profit before tax of Rs Rs 140 crore in Q1FY20. Though the firm’s collections from customers and cashflows have declined in Q1FY21, Pirojsha Godrej, chairman of the company, tells Raghavendra Kamath that the business metrics are improving due to improvement in construction. Excerpts.

Your collections from customers were about 40 per cent of pre-covid levels. What is the position in the current quarter? Is it improving?

Collections are better now. They are linked to the achievement of construction milestones and in Q1, there was barely any construction with a complete lockdown in April and most of May. Our labour strength has now reached 60 per cent of pre-Covid levels so we believe both construction and collections will improve in the coming quarters.

Net debt has also risen by Rs 590 crore. Do you see it increasing in the coming quarters?

Debt has gone up for similar reasons mentioned earlier. We have entered new projects, and business development payments and construction payments for Q4 need to be made. Our debt levels will continue to go up in the coming quarters as we get a large number of new projects ready for launch. Operating cash flows are weak compared to last year but they will be close to break-even going forward. We are confident the investments we are making this year will create strong operating cash flows in the years ahead as our new projects are launched.

Your 10:90 payment plan has helped in sales booking but hit cashflows. Will you continue with that?

Each project will now have its own payment plan linked to the project strategy and funding requirements. 

The company has 15 million sq ft of launches planned in FY21. Will you go ahead with that?

As long as regulatory approvals are received in time, we will go ahead with our planned launches. We will, of course, have to be agile and tweak our strategy if needed after gauging the market environment.

Are you tweaking your launches, pricing, size of apartments and so on to suit the current environment?

We are constantly re-evaluating project dynamics and customer requirements, but as of now there have been no changes to pricing and apartment sizing.

When do you expect a broad-based recovery in residential real estate?

It is difficult to predict but we believe the recovery will likely start from next calendar year. It depends a lot on factors outside of the sector such as when the pandemic ends, how the government acts to stimulate the economy and the real estate sector and so on. Demand will eventually return as it always does.

What makes you confident about the recovery?

Going into the crisis, affordability was the best since 2001 with interest rates at extremely low levels. Many people who want the security of home ownership in the face of this pandemic are thinking of buying homes. We have seen strong bookings since March despite the current crisis, so we believe things will continue to pick up in the quarters ahead.

What kind of surge have you seen in distressed opportunities and have you signed any deals in this segment in the last quarter and this quarter?

We are seeing a lot of interesting opportunities to acquire new projects and expect this momentum to continue. We didn’t add any new projects during Q1 but have a strong pipeline that we expect will fructify in the coming quarters.

How are you planning to use the Rs 1,000 crore NCD funds?

We will use the overall liquidity from our QIP last year and NCD issuance this year to ensure we are able to continue to fund business development and will do our best to emerge stronger from this crisis by gaining market share and meeting all our customer commitments.