Business India u the magazine of the corporate world Corporate Reports

sanjay borade Making its mark

GPL has bucked the market trend with its strong brand and diversified portfolio

odrej Properties Ltd (g p l), the volume in 2014, when its Godrej: its launch. At Godrej Infinity, real estate development arm of sales grew five-fold to cross encouraging Pune, it sold more than 200 Gthe 118-year-old , 1 million sq ft. Both its new- performance apartments in just 10 days, seems to be unfazed by the ongoing ly-launched projects in Gur- with a booking value of `120 slowdown in the real estate sector. gaon were a big hit. In Godrej crore; average price: `6,000 per During 2014-15, the company clocked Oasis, over 200 flats (booking value: sq feet. The company has success- a 56 per cent growth in its revenue of `250 crore; average price: `7,140 per fully launched another of its residen- `1,843 crore. While the property sales sq ft) and in Godrej Aria, over 250 tial projects, Godrej Prana, in Pune, in the country’s residential market flats (booking value: `285 crore; within one year of signing the devel- continue to be depressed (down by average price: `7,100 per sq ft) were opment agreement and has sold over around 40 per cent), g p l registered its sold in the launch quarter itself. In 2,40,000 sq ft of space at an average highest ever sales (booking value) of a short period of time, the company rate of `4,800 per sq ft. `2,398 crore (area: 2.6 million sq ft) has added four projects in n c r and Enthused by the response of Phase during the year. Besides, it also sold already launched four of these proj- I, g p l launched Phase II of Godrej commercial space (300,000 sq ft) of ects with an overwhelming success. United in Bengaluru ahead of its `383 crore. In fact, the company has g p l’s cumulative sales volume in n c r schedule. And, in 12 months, it sold sold real estate worth `8,000 crore in currently stands at 3 million sq ft. 524,000 sq ft of space, valued at `324 the last three years. In , the company suc- crore at an average price: `6,200 per In a market where new launches cessfully launched its second town- sq ft. were few and far between, the com- ship project, Godrej City in Panvel While developers across various pany has generated exceptional and sold 600,000 sq ft of space, markets have struggled, g p l has con- response in the case of its new with a booking value of `343 crore tinued its impeccable track record of launches. Despite being a new player (average price: `7,500 per sq feet) in execution and timelines. In fact, the (which entered just four years ago) in 2014-15. g p l also launched Phase II last fiscal was also the best ever year the n c r market, which is faced with of its premium residential project, for the company in terms of project supply overhang, g p l has pulled off Godrej Central, in Chembur and has deliveries. The company delivered a phenomenal performance. In fact, so far sold close to 600,000 sq ft of 3.5 million sq ft of space, involving the company emerged as the larg- space, worth over `870 crore; aver- five residential projects and a pres- est developer in Gurgaon by sales age price: `14,500 per sq feet) since tigious commercial project – Godrej

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with two other Godrej group compa- Gurgaon. With this, the company nies – Godrej Industries and Godrej currently boasts of a robust develop- & Boyce – will also have residential ment pipeline of about 110 million and retail developments, besides a sq ft, involving around 49 projects, at five star hotel. a residential and commercial mix of g p l has collaborated with several 90:10. These projects are spread across of the world’s most renowned archi- 12 major cities – Chandigarh, Gurg- tects and engineering consultants to aon, Ahmedabad, Kolkata, Nagpur, design this futuristic project of The Mumbai, Pune, Hyderabad, Manga- Trees. Pelli Clarke Pelli Architects, lore, Bengaluru, Chennai and Kochi. the lead architect for the master plan “Under difficult market condi- as well as for Godrej One, is well tions, where builders are struggling known for designing architectural to sell their products, g p l has not land marks such as Petronas Tow- only shown a great deal of resilience, ers in Kuala Lumpur, International but also posted an encouraging per- Finance Center II in Hong Kong and formance. Buyers have reposed full Bloomberg headquarters in New faith in its offering, capability and York City. Larsen & Toubro has con- track record. Moreover, its corporate structed Godrej One, which is cer- identity and brand value have also tified as leed Platinum, globally extended much needed comfort to recognised as the highest rating for the buyers, who are currently tread- sustainable design. ing cautiously,” says Ashok Kumar, Of the five residential projects managing director, Cresa Partners, a delivered last fiscal year, g p l has real estate advisory firm. delivered 228 apartments (1.6 mil- “Undoubtedly, the market is lion sq ft) in phase II of its Godrej depressed. But some of the develop- Garden City (g c c), Ahmedabad. Ear- ers which have come up with the lier, in October 2013, the company right kind of products at the right Godrej 1: prestigious project had handed over 624 apartments in locations have been successful. More- 13 towers in Phase I of this project. over, it is also a test of their various One – which currently hosts the cor- The average rate in g c c is currently capabilities and their ability to con- porate office of g p l . The 760,000-sq around `3,500 per sq ft. In this 250- vince the home buyers with the right ft modern office building in Vikhroli, acre mega township project, it is kind of offering,” says Samantak Das, Mumbai, will be the new headquar- going to deliver some 13,000 apart- chief economist & director, research, ters of the Godrej Group. All corpo- ments and villas in a phased manner. Knight Frank India. rate offices of its group companies The company is executing this proj- “Over the last few years, we have will also be based in this iconic office ect jointly with Shree Siddhi Group, put up a concerted effort to ramp building, which will have other Ahmedabad. The master plan for up our capabilities,” says Pirojsha corporate tenants too. This pre- the project has been created by Godrej, 34, managing director & c e o, mium office space is a part of g p l’s world-renowned architects Skidmore, g p l . “We have done a lot of work in 34-acre mix-use project – The Trees Owings and Merrill (s o m ), which has improving our processes and perfor- – launched four years ago. The proj- designed numerous landmark proj- mance in critical areas like project ect, the joint development (60:40) ects across the globe, including the selection and planning, execution Burj Khalifa in Dubai. g c c is one quality and cost, and consistent sales Shareholding pattern of the two projects in India and growth. While some of the results of amongst 17 worldwide to be chosen these efforts are already evident, we as a partner by the Clinton Climate believe there is much more ahead,” Initiative, with the goal of achieving he adds. Pirojsha, under the guidance a climate-positive development. of his father, , has played PromoterPromoters a key role in leading the company 74.91%74.91% Robust development through a phase of rapid growth in This apart, g p l has delivered four res- the last few years. From being a small Others FII idential projects, one each in Mum- player six-seven years ago, the com- 13.87% 10.04% bai, Nagpur, Bengaluru and Gurgaon, pany has come up to be established during the last fiscal year. It has also as one of the leading and fastest added to its development portfo- growing companies in the real estate DII lio five new projects (total saleable sector. In fact, it emerged as the sec- 1.18% area: about 8 million sq ft) in cities ond largest developer in the country like Mumbai, Bengaluru, Kolkata and by sales volume in 2014-15, Prestige

u 54 u August 3-16, 2015 Business India u the magazine of the corporate world Corporate Reports of Bangalore being the largest. about `200 crore as revenue and 250 Since his appointment as exec- employees in 2008-09. Today, it has utive director in 2008, Pirojsha has over 900 employees on its roll. The been involved in a leadership capac- revenue has also swelled manifold. In ity in all key areas of the company’s fact, in the last seven years or so, the operations. When in April 2012, he company has grown at a c ag r of over took over the rein of g p l , he became 40 per cent. It has created a pan India the youngest chief executive in the presence, with projects in 12 cities. It group. The youngest of group chair- has got over 20 projects under devel- man Adi Godrej’s three children, opment in Mumbai, eight in Bengal- he joined the company in 2004 as uru, six in Pune, five in n c r , four in a management trainee. His elder sis- Kolkata and two each in Hyderabad ter Tanya oversees marketing for and Chennai. This apart, the com- the group, while sister Nisaba heads pany has footprint in smaller cities Godrej BKC: ready by next year human resources and innovations. like Mangalore, Kochi, Nagpur, Chan- Named after Godrej group founder digarh and Ahmedabad. Though pri- almost all its projects are coming up Pirojsha Burjorji Godrej (1882-1972), marily into residential, the company in joint development with partners he has a Bachelor’s degree in econom- has a mix of both residential and com- – mostly landowners. This model ics from Wharton School, University mercial projects. In residential itself, has helped the company expand of Pennsylvania, a Masters in Inter- it is well-diversified both in terms of its business quickly without much national Affairs from s i pa , Columbia segment and geography. strain on the capital front. Besides, it University, and a Masters in Business has been able to ramp up its devel- Administration from Columbia Busi- Asset-light model opment and other capabilities by ness School. Widely travelled (over 60 “Pirojsha has redesigned the strategy, channelising resources. countries) and a self-confessed foodie, organisation structure, and execu- In joint development, the com- Pirojsha is keen on political affairs tion capabilities of Godrej Proper- pany shares the revenue with the and has undertaken summer intern- ties to position it for exponential partner depending upon the price ships at the Senate Office of Hillary growth in the years to come. These of the land and other development Clinton in New York and at the min- changes have already started provid- aspects. Its share may vary from 80 istry of external affairs, New Delhi. ing strong results and are likely to per cent to as low as 20 per cent. He also loves to collect rare books, provide even stronger results in the The company has also created a manuscripts and memorabilia. future,” says Adi Godrej, chairman, special investment platform with Over the last few years, Pirojsha Godrej Group. Dutch pension services provider apg- has proved his leadership ability and How did g p l manage to pull led global investors. The Godrej-apg also his ability to face adverse condi- off this kind of performance – that platform (29:71), formed in July 2012 tions. After taking a year-long break too, in a not so favourable market with a total corpus size of `1,100 from company’s affairs to complete condition? The company did a few crore, has helped g p l to explore the an m b a from Columbia Business things that have not only helped it opportunities in different markets, School in 2007, he resumed office face the headwinds effectively, but without deviating from its capital- just a few weeks before the Lehman also gain the desired momentum efficient land sourcing strategy. In Brothers meltdown. The Indian real and mass. It has continued with cases where landowners don’t want estate market was heading for a dif- its differentiated asset-light busi- to be part of the joint development ficult phase. Though established in ness model, where it doesn’t own but instead want upfront exit, the 1990, the company had very little in the land, but instead enters into an platform comes into play. It buys the pipeline at that time. There was agreement with the landowner. The the land and acts as landowner/ only one project in Bengaluru. There company thus focusses primarily joint development partner, and were no new projects in markets like on the development aspects of the thus allows g p l to maintain its asset Mumbai and Pune. project, as also carrying out the job light model. The company has fully The company had a narrow base of of sales and marketing. Currently, deployed this corpus in four of its res- idential projects of which two are in FinancialsFina n c r and one each in Bengaluru and Mumbai. In Bengaluru, the platform (` crore) FY2011 FY2012 FY2013 FY2014 FY2015 has recently bought 18 acres of land Revenue 447 770 1037 1179 1843 off Kanakpura Road from realty firm EBITDA 289 208 296 358 341 Puravankara Projects Ltd. PAT 143 129 197 236 235 “Even as we want to pursue our OPM (%) 39.73 20.51 27.55 23.96 13.95 asset-light business model, we don’t Networth 911 1442 1429 1793 1847 want to miss any opportunities in our key markets,” says Pirojsha. “Our

u 55 u August 3-16, 2015 Corporate Reports Business India u the magazine of the corporate world s a

nj a mapping of the customer habits a

y b across projects is carried out to pre-

or pare customised marketing activ- a

de ities for the target customers. On the brand-building front, research and brand health evaluation studies are conducted on a regular basis to understand brand recall and saliency in the minds of customers. The com- pany has built up a team of fresh and young talent (average age: below 35 years), who have been roped in from across various sectors.

Rich dividends g p l has boosted its sales channel significantly. Apart from offering online booking through its own web- site, it has tied up with online por- Jithendran: the entire value chain has been revamped tals like Magicbricks and 99acres to further enhance customer access. It investment platform with apg has our next phase of growth,” says K.T. has also partnered with e-commerce helped us in meeting this objective Jithendran, executive director, g p l , player Snapdeal to offer online book- and scaling up our portfolio with- who heads the business develop- ing of its real estate projects. Cur- out being impacted on the capital ment, marketing and sales functions rently, over 20 per cent of GPL’s sales front. Going ahead too, we would of the company. He joined the com- take place through online channels. like to continue with this approach pany in 1994, and was elevated to his Besides, the company has created a of ours”. On being asked why he current position in May 2010. A civil strong network of 3,000-odd chan- joined g p l , among the group’s small- engineer from the Indian Institute nel partners, which include local and est businesses back then, he says: “It of Technology, Kharagpur, he then national brokers, international prop- was quite a small business but one went to the Indian Institute of Man- erty consultants as also wealth man- that had a lot of opportunity. Also, agement, Calcutta and completed an agement firms. Currently, almost one thing that appealed to me was Advanced Management Programme 50 per cent of sales are happening that none of my other family mem- from Harvard Business School. through channel partners bers were too involved with this busi- While g p l , as a part of the Godrej The company has set up regional ness and it was at a size, where I could group, enjoys strong brand equity, offices in all key markets of the make an impact as compared to some it has initiated several measures on country and recently also opened its of the more established companies.” the sales and marketing side in lieu first representative office in Dubai While the asset-light model has of the changing market dynamics. to engage directly with the Indian helped the company to expand its Today almost 80 per cent of buyers diaspora across the g c c market. g p l portfolio, it has left it with the much- are in the age group of 30-40 years. is also looking to open international required resources that can be used for The company has tried to revamp offices in Singapore, Hong Kong and ramping up its development ability as the entire set-up and make it con- the US in future. Over the years, the also sales and marketing capabilities. temporary, where the most sophisti- company has constantly been engag- Over the last few years, the company cated tools are used for effective and ing with customers through various has put in place a concerted effort to efficient results. It has also started a exhibitions and events in interna- improve upon its processes in criti- customer-profiling exercise, where tional markets including Dubai, the cal areas. g p l has gone on to bench- UK, Singapore, Hong Kong, Austra- mark its processes. It has revamped lia, Africa and the US. In fact, these the entire delivery system. efforts have paid rich dividends as “We are focussing on our process the company managed to generate capabilities in a big way. The entire 25 per cent of sales volume from its value chain has been revamped international sales last year as against in pursuit of excellence. While we 8 per cent in the previous year. will continue to pursue our efforts “Our efforts have started bear- towards adding more value to the ing fruit and this has provided us system, today we certainly have a with the much-needed motivation robust structure which has put up to carry them forward in a focused a perfect setting to take us through Gold County Villa revised manner. We have put up a robust

u 56 u August 3-16, 2015 Business India u the magazine of the corporate world Corporate Reports and dynamic system, which also facilitates several newer concepts including cross selling of proper- ties among our regional offices,” says Girish Shah, chief marketing offi- cer, g p l , who joined the company in 2010 as vice-president, sales & mar- keting. Prior to this, he had worked with Reliance a d a Group, Kingfisher Airlines and Johnson & Johnson. These initiatives on the part of the company have helped it to lever- age its brand value further in the real estate market, which is passing through a transition phase. In fact, they feel that, in a difficult market condition, the buyers often look for some trusted brand on which they can bank on and here corporate developers like Godrej, Mahindras, Tatas, l&t and others often have an Godrej Icon: standing tall edge over their traditional counter- parts. Going forward, as the market brand with well-diversified offering trying to reduce our exposure to the matures and the organised supply in terms of products and geography. commercial sector as per our asset increases, home buyers will increas- The company is present across all light strategy and this process will ingly look for reputed and trusted segments of the market. In residen- continue going ahead as well. We names and brands for quality as well tial, it has judicious mix of premium, have monetised a big chunk of our as security. Today, brands already mid-segment and affordable proper- assets and some more to follow,” account for over 40 per cent of res- ties. In the last two-three years, the says Pirojsha. idential sales and this number will company has strategically reduced its While it is acting as development only increase in coming years. exposure in the commercial segment manager, it also closely monitors the “Godrej is a solid brand which by monetising its assets and aims execution process, it engages reputed infuses tremendous confidence in the to focus on residential development names like l&t, Shapoorji Pallonji minds of consumers. In a market like going ahead. In fact, it is planning to and others to ensure construction real estate where so much of money sell about `2,000 crore worth of com- quality. It has been engaging the best is at stake, credibility and security is mercial assets in the next few years, architects, designers and town plan- paramount. In fact, Godrej will be which will also help it to reduce its ners for its projects. Incidentally, g p l able to derive more value out of its debt of `2,764 crore (2014-15). In its is the first company to be certified brand equity in real estate than other under-construction commercial proj- as iso for their eco-friendly green segments (like f m c g ) of its presence,” ect – Godrej b kc – in Bandra-Kurla- building construction. says Harish Bijoor, c e o, Harish Bijoor Complex in Mumbai, the company “As a landowner, we have been Consults Inc, and a brand expert. has been able to sell 3,50,000 sq ft of associated with g p l in two proj- “g p l’s brand equity is a big differ- space out of the total saleable area of ects in Mumbai and our experience entiating factor in this market,” says around 1.30 million sq ft. The proj- has been more than satisfactory,” Paresh Karia of Easy2own Estate, a ect, expected to be ready by the next says Nandan Damani, managing Mumbai-based national property year, is being developed in joint ven- director, Simplex Realty (formerly broker. “Buyers are increasingly look- ture with Jet Airways. Simplex Mills). “It has got all the req- ing for credible names which can uisite capabilities to carry out quality live up to their expectations in terms A solid brand developments. Given an opportu- of quality and delivery. g p l’s proj- “For the last few years, we have been nity, we would always like to be its ects have invoked an encouraging partner”. Simplex was a landowner response in this otherwise sluggish Leverage indicators and jd partner in two of g p l’s Mum- market condition” he add. Easy2own bai projects – Godrej Glenelg, a lux- Estate is also part of g p l’s network Mar 2015 Dec 2014 ury project located in Mumbai’s of channel partners but sells prop- Net debt (` crore) 2,764 2,605 upmarket area of Cuffe Parade, and erties of other major developers too Net debt/equity ratio 1.50 1.35 Godrej Planet, a high-end residen- – including Hiranandani, Brigade, Average borrowing tial project in Mahalaxmi, Mumbai, Kolte Patil and Embassy. cost (% YTD) 11.18 11.27 with 380 units of varying configura- g p l has adequately backed up its tions across five towers of 48 storeys

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nj bank in Vikhroli and the group will a

y b be keen to see g p l participating in

or the development of this land par- a

de cel. It will also provide g p l a robust pipeline in the land-starved Mumbai market,” says Kumar. On a one year high/low of `309/220, g p l’s stock currently quotes at `260 (July 29, 2015), with a mar- ket capitalisation of `5,184 crore. The stock got listed on January 5, 2010 at `510 (ipo: offer price `490). “The real estate market has stabilised, even as a few pockets have shown some con- cerns. The fundamentals continue to be intact. The market is expected to gain its momentum in the next two-three quarters,” says Shailesh Shah: putting up a robust and dynamic system Puranik, managing director of Mumbai-based Puranik Builders. each, with contemporary design and and exited with a return in three mul- With all these developments in open spaces. tiples. Throughout the association, place, g p l has positioned itself quite “In g p l , buyers are finding a wide they have been quite professional in well in the market to start its next range of options. It has also estab- their approach. Still we are constantly phase of growth. The company’s lished a track record of its own by in touch with them to explore oppor- differentiated asset-light model has delivering projects within the stipu- tunities,” says K.G. Krishnamurthy, helped it to not only face the diffi- lated time frame. In fact, g p l’s prop- managing director and c e o, h d f c cult market condition effectively erties are commanding a premium Property Venture Ltd. but also expand its portfolio both in in this depressed market,” says Mon- “In a short very limited period, terms of projects and geography. In ica Mehta of Mumbai-based Prop- g p l has made a very good progres- fact, due to this approach, the com- erty Junction, a national broker & sion. The company’s asset-light pany has grown very rapidly in the channel partner of g p l . model has worked quite well in the last few years with a sizeable portfo- While home buyers have reposed backdrop of a strong brand value lio to offer to the market. Its diver- their faith in g p l , private equity it commands in the market. In sified offering with a judicious mix investors are not far behind. They fact, it has set ideal precedence for of properties and locations, has pro- too find its projects an attractive the industry,” says Pranay Vakil, vided it with a much-needed where- investment proposition. pe players founder and chairman, Praron Con- withal to face the market vagaries. like Milestone Capital, Sun Apollo, sultancy, who is also an indepen- In the last two-three years, the Red Fort, Motilal Oswal, h d f c Ven- dent director on the board of g p l . company has consciously tried to tures Trustee Co and ask group have g p l’s independent board also com- reduce its exposure to the com- done project level investments in prises names like Keki Dadiseth, ex mercial market by monetising its various projects of g p l . “As a devel- chairman, Hindustan Unilever and commercial assets in pursuit to its oper, g p l has made a rapid progres- Lalita Gupte, chairperson, ic ic i Ven- capital-efficient, asset-light business sion in the last few years. It has built ture Funds. model. This move should augur well up the much-needed capabilities. for the company. While pursuing Moreover, it has lived up to its brand Calling the shots joint development, the company has image with its delivery and quality,” g p l is now suitably placed with its built up its execution and sales/mar- states Sunil Rohkale, c e o & manag- robust pipeline. Moreover, the com- keting capabilities in a big way. In ing director, ask group, which has pany has at its disposal the group’s fact, the company is today much bet- invested `100 crore in 2012 in g p l’s massive land bank of about 1,500 ter placed to leverage its brand value residential project, Godrej Central acres in Vikhroli, Mumbai. It is in a market, which is undergoing a in Chembur, Mumbai. This redevel- already undertaking a 34-acre mixed transition. As the organised supply opment project currently under con- use project – The Tree – whereas of properties increases and the mar- struction will have a saleable area of another premium residential proj- ket matures, developers with brand 600,000 sq ft. ect, Godrej Platinum, is also being equity and credibility will have a “We had invested in one of GPL’s constructed in the same compound distinct edge and that is where devel- projects in Bangalore (Godrej Woods- belonging to the group company, oper like g p l will call the shots. man Estate) some time back with a Godrej & Boyce. u ARBIND GUPTA total investment of around `46 crore “g p l has at its disposal a huge land [email protected]

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