Godrej Construction focusing more on infrastructure as realty slowdown bites more

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The lingering liquidity crisis and demand slowdown in its bread-and-butter real estate business since the past three-four years have resulted in the construction materials business unit of Godrej Construction shifting focus to urban infrastructure, a senior company official has said.

The construction materials business arm is a strategic business unit of the diversified Godrej & Boyce Mfg Co and is also eyeing a 20 per cent jump in revenue this fiscal to Rs 300 crore from Rs 250 crore last fiscal, Anup Mathew, senior vice-president and business head at Godrej Construction, told PTI.

"One of the important things we have spotted while the realty sector has been under stress is that the government is focusing a lot more on urban infrastructure now. With increasing budgetary spends, we see good demand for construction materials business going ahead," he said.

He said the company has already bagged an order from Metro 3 corridor and three packages from the Metro 4 corridor to supply ready-mix-concrete/such products.

Godrej Construction offers a wide range of construction materials which include specially engineered ready-mix concrete products, AAC blocks, recycled concrete blocks and pavers for different types of applications.

It also has reduced its supply to real estate developers due to uncertainty on payments, as most players are grappling with liquidity crisis.

"Earlier we were supplying RMC and recycled concrete products only to the real estate sector. But with the sector going through a difficult phase for the past many years, we changed our strategy to focus on urban infrastructure," Matthew explains.

Whether they plan to increase manufacturing capacity, he says, "we would prefer to be asset-light. Our model is to have strategic partnerships with vendors to scale up as and when needed. We can put up our new plants at project sites itself."

He further says the company wants to concentrate on a few markets like Mumbai, Bengaluru and Pune where it has its manufacturing facilities.

However, Mathew notes that when real estate sector revives, their revenue from the construction materials business can also go up and take the total revenue to Rs 500 crore over the next few years.

Godrej Construction is also into developing modern living spaces and leasing commercial realty space.