गोदरेज प्रॉपर्टीज

बीएसई: 533150  |  NSE: GODREJPROP  |  ISIN: INE484J01027  |  Construction & Contracting - Real Estate

खोजें गोदरेज प्रॉपर्टीज कनेक्शन Mar 18
अध्यक्षीय भाषण साल : Mar '19

Dear Shareholders,

I’m happy to be writing to you after a successful year for Godrej Properties. We strive to be the most ethical, most customer-centric, and highest caliber residential real estate developer in India. I’m pleased to say that this year, we made significant progress toward those goals. We’ve strengthened our capabilities in many critical areas of operations, we have bolstered our balance sheet through a timely equity raise and strong operating cash flows, and we have extended our competitive advantages. As a result, in FY 2019, your company continued to be a key beneficiary of the consolidation that has been gathering pace in the Indian real estate sector.

Godrej Properties just completed its best ever year, measured by the value and volume of real estate sold. We achieved this with bookings of INR 5,316 crore, with the second half of the financial year contributing two thirds of the sales for the year. We sold more than 6,900 homes, at an average of 19 homes per day; we also sold INR 187 crore worth of commercial space during the year. We have sold more than 1.1 million square feet, with a booking value of over INR 900 crore, in each of our focus markets of Mumbai, Pune, NCR and Bangalore. We accomplished this through a combination of strong new launches -- with sales of INR 3,062 crore -- and sustained momentum in sales from existing inventory, which hit INR 2,254 Cr in FY19.

Our reported accounts for the year were strong. For FY19, our total income increased by 57%, and stood at INR 3,236 crore, EBITDA increased by 111% to INR 597 crore, and net profit increased by 191% to INR 253 crore. It is, however, important to keep in mind that new IndAS accounting standards dictate that the P&L and operating performance for a given period do not necessarily align. Project completion accounting, which only recognizes revenues from projects once they are completed, means that the current period accounts reflect largely what the company sold three years ago. For rapidly growing companies there is a further disconnect, as certain costs, such as marketing costs for a higher base of sales, need to be expensed out immediately. These peculiarities ensure that reported earnings will significantly lag operations, will be lumpy, and will therefore, not be the best way to track your company’s near term operating performance.

We continue to focus on four key metrics - beyond P&L accounting - to measure near term operating performance. The first metric we track is imputed return on capital, which is calculated by dividing the estimated profit created through operations within a period by the actual capital employed. The management team is incentivized to optimize this metric through sales growth, margin enhancement, and capital efficiency. The second important metric we track is operating cash flow, which for the real estate industry, is the most critical performance measure, and is significantly linked to scale and efficiency. A third metric we have introduced is customer net promoter score, which is a rating of our performance provided to us directly by our customers. We believe this metric is the best representation of our overall execution because it incentivizes not only expedited construction delivery timelines, but also leading design innovation, outstanding construction quality, and exceptional customer service. Fourth, we incentivize the team based on expected medium term earnings achieved through new projects added within the period. This combination of metrics is the best way to measure your company’s progress towards long-term value creation. In FY19, we had strong results on each of these four metrics, and will build on this momentum in the year ahead.

The medium term goals we communicated two years ago - to consistently be amongst the leading developers by value of residential real estate sales in each of the markets we operate in and to consistently deliver a Return on Equity (ROE) in excess of 20% -- remain the key financial focus areas for your company.

This year, there were two important developments that impact the timing of achievement of our ROE goal. First, the introduction of IndAS accounting creates a two-year delay in revenue recognition from the previous norm that measured percentage completion. Second, your company has raised over 3,000 crore of fresh equity capital in two tranches in the first quarters of FY19 and FY20, thereby more than doubling the company’s current net worth. The timing of this significant equity raise will benefit our long-term progress towards being the largest residential real estate developer in India, and towards taking our ROE to 20%. But in the short term, this new capital will significantly dampen reported ROEs over the next three years, because the additional capital will immediately reflect, while the profits from the projects enabled by that capital will only increase once the projects are completed. A better way of tracking our progress against our stated goals will be to evaluate the quality and quantity of new projects we add, the ability to successfully scale our sales numbers across the cities we operate in, and our operating cash flows.

We are reducing our project timelines, in line with global best practices, to bridge the gap between operating results and reported accounts created by this IndAS change. We have done this with our flagship project, The Trees, where our first residential phase was completed in 32 months - more than a year ahead of timelines we’d committed to our customers. We are upgrading our capabilities and construction technologies to ensure we deliver accelerated project timelines across the board.

Our equity raise was specifically timed to take advantage of a countercyclical investment strategy - a good bet in a long-cycle industry like real estate. Current market dynamics, where the NBFC crisis has further worsened an already challenged liquidity environment for our competitors, provide us an opportunity to strengthen our business development pipeline. We are valuing and structuring all new additions to our portfolio with an eye towards enhancing your company’s growth trajectory in the coming years. We will also be in a position to deploy larger amounts of capital to improve our economic interest in new projects. This will allow us to benefit from overall growth in sales, as the number of projects we develop increases, as well as from the growth in our share of profit from each sale.

This was our best ever year for business development in terms of area added and the expected future profit from this area. We added 11 new projects with a saleable area of approximately 31 million square feet. This includes a portfolio of 6 projects measuring 25 million square feet in the Pune market. This is GPL’s largest ever business development deal, and makes us leaders in the Pune market. We also added two projects in Mumbai, including an exciting project in Bandra. From a business development perspective, we remain confident and optimistic about the year ahead, given our relative financial and operating advantages in the current market.

The real estate sector is notoriously cyclical. Typically, healthy demand leads developers to overcommit supply, which creates pressure on pricing and eventually leads to a real estate down cycle. Then, when conditions are difficult, developers tend to postpone or cancel planned supply, which, over time, as demand increases, leads to the next up cycle in the sector. The Indian real estate market has been in a down cycle for the past seven years. However, all the typical indicators of the end of this down cycle are now present. First, the weak market, combined with difficulties in the financial sector, means that supply has been low and is likely to remain low for the next couple of years. At the same time, residential real estate is more affordable than it has been in over fifteen years because over the past five years interest rates have declined by 300 basis points, incomes have risen by over 50%, and property prices have been flat. To us, these are clear predictors of a demand revival and an imminent cyclical recovery. We are going to strengthen our portfolio with deals at attractive terms, and then launch those projects at a time we expect a very favorable demand environment. It is time to accelerate.

The team at Godrej Properties is exceptional. While many of our peers are in a defensive crouch, we are confident in our ability to accelerate because we have a strong, empowered, and accountable team who are motivated by the opportunity, while remaining committed to our values of sustainability, diversity, and humility.

I am grateful to every team member at Godrej Properties for their tremendous commitment and outstanding results. We would like to thank our customers, joint venture partners, and business associates for their support. Finally, we owe thanks to you, our shareholders, for your continued belief in Godrej Properties.

Best Wishes,

Pirojsha Godrej

Executive Chairman

Godrej Properties

स्रोत: रेलीगरे टेचनोवा

न्यूज़ फ़्लैश

  • MARKET CUES : FIIs ने कैश में `271 Cr की बिकवाली की
  • MARKET CUES : DIIs ने कैश में `309 Cr की खरीदारी की
  • MARKET CUES : FIIs ने F&O में `58 Cr की बिकवाली की
  • MARKET CUES : इंडेक्स फ्यूचर्स में `299 Cr की बिकवाली की
  • MARKET CUES : इंडेक्स ऑप्शंस में `413 Cr की खरीदारी की
  • MARKET CUES : स्टॉक फ्यूचर्स में `124 Cr की बिकवाली की
  • HSBC ON CASTROL : BUY रेटिंग, लक्ष्य बढ़ाकर `165/Sh
  • MS ON FUTURE RETAIL : Overweight रेटिंग, लक्ष्य घटाकर `540/Sh
  • CREDIT SUISSE ON ITC : Outperform रेटिंग, लक्ष्य `330/Sh
  • MORGAN STANLEY ON GRASIM : Overweight रेटिंग, लक्ष्य `875/Sh

अभी देखें

प्रॉपर्टी गुरु




(August 06, 2018)

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