Company says most significant impact of Covid-19 is the reverse migration of workers which will impact construction activities across the country. Expects to see improved business from second half of FY 2021
Godrej Properties, the real estate arm of Godrej Group, on August 5 reported a consolidated net loss of Rs 20.23 crore for the quarter ended June 2020.
Godrej's net profit was nearly Rs 90 crore in the year-ago period.
The company’s total income has also declined to Rs 195.66 crore in the first quarter of the fiscal, from Rs 713.84 crore in the corresponding period of the previous year, the firm said in a regulatory filing.
During the last fiscal year, net profit stood at Rs 267.21 crore on a total income of Rs 2,914.59 crore.
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In the first quarter of the financial year 2021, the company witnessed total booking value of Rs 1,531 crore and total booking volume of 2.51 million sq. ft. as compared to a total booking value of Rs 897 crore and total booking volume of 1.35 million sq. ft. in the first quarter of the financial year 2020.
It raised Rs 1,000 crore in July through the allotment of unsecured, redeemable, non-convertible debentures on a private placement basis for a term of 3 years at 7.5 percent, the lowest NCD rate achieved in the real estate industry.
It leased around 2 lakh sq. ft. of office space to A.P. Moller – Maersk’s business units at Godrej Two.
In a regulatory filing, the company said that during the June quarter the consolidated profit of the company is negative as due to the lockdown, there was very limited construction during the quarter and as a result, no new projects achieved revenue recognition.
“Cash collections which depend on construction milestones were also impacted. This led to an accounting loss and negative operating cash flow for the quarter,” it said.
On the impact of the COVID-19 pandemic on the business and the expected quantum of loss/damage caused, the company said that the most significant impact of Covid-19 is the reverse migration of workers which will impact construction activities across the country.
“This is expected to cause project execution delays and working capital issues for financially weak developers. While the start of FY21 has been muted due to the lockdown and its subsequent toll on economic activity, we believe customers would eventually return to the market in the second half of the financial year to partially mitigate the demand impact in earlier quarters.
"While we do expect the demand to catch up within the year, we believe the customers would expect relaxed payment plans. We also expect some increase in customer outstanding owing to the pessimistic liquidity environment,” it said in a regulatory filing.
With operations resuming in the construction sites located in the non-containment zones in accordance with the directives issued by the Central, State Government and Local Administration Guidelines, the Company expects to see improved business from second half of FY 2021.
As for the schedule, if any, for restarting the operations, the company said that in line with respective state Government and local administration's guidelines, the construction activity has begun on 90 percent sites with 42 percent workforce strength of pre-Covid times.
The company remains positive about the long-term direction of the sector on back of higher consumer confidence and increasing affordability due to declining interest rates and stagnant real estate prices, it said.
“With the lockdown in place for most of the quarter, construction activities during the period were extremely limited leading to almost no revenue recognition and to poor operating cash flows. At the same time, our teams demonstrated agility by relying on digital sales tools to achieve strong sales thereby delivering our highest ever market share in a quarter,” said Pirojsha Godrej, Executive Chairman, Godrej Properties Limited.
“While we expect poor reported earnings and cash flows this financial year due to the lockdown and the major impact this has had on our annual construction plan, we expect strong momentum in both portfolio project additions and new project launches during the rest of the financial year. The current crisis will add further momentum to the process of consolidation that is underway in the sector and we will continue to focus on rapidly growing our market share,” he said.