Godrej Properties To Buy Land Worth Rs 5,000-6,000 Crore Amid Stress

The company intends to deploy the capital in the next two-three years either through direct purchases or joint ventures involving land, Mohit Malhotra, managing director and chief executive officer at Godrej Properties Ltd., told BloombergQuint in an interview. “We are following a counter-cyclical strategy in the market.  We feel that the current distress environment presents a unique opportunity for good players like us.”

Demand for apartments hasn’t recovered since the November 2016 overnight cash ban and a stricter housing law protecting buyers against fraud. A slowing economy and a liquidity stress aggravated the slump, stalling projects. The government set up a Rs 25,000-crore fund to help 1,600 stressed projects with 4.58 lakh units worth Rs 50,000 crore.

Large companies, including Godrej Properties, however, found an opportunity during the slowdown because of easier access to capital. “We have done two rounds of fund-raising over the last two years. Right now, we are sitting at a close to Rs 3,000 crore of cash in our balance sheet and have a deployable pool of Rs 5,000-6000 crore,” Malhotra said. “As of now, we are looking to deploy capital and not looking to raise any more capital.”

While Malhotra said the company wasn’t approached by the government’s Alternative Investment Fund, developers and banks have pitched stressed projects for evaluation.

“We are not looking to enter brownfield projects where construction has already started,” he said. The company is looking at cases where a developer is in need of cash flow and has good quality land banks, he said. “The money which we are giving to them is now used to complete their projects. We are indirectly participating in it, not directly.”

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