Realty arm will emerge as top earner for Godrej

MUMBAI: The Rs 7,500 crore Godrej group expects realty arm, Godrej Properties, to be its top profit earner in the next five years. Godrej Properties plans to tap the capital markets this fiscal.

Godrej group also has planned a capex of Rs 1,000 crore for this fiscal, with major portion of it going to Godrej Properties, Godrej Consumer Products Ltd  (GPCL) and the consumer durables arm.

“In the next five years, Godrej Properties would top the chart of group companies from profit point of view, to be followed by fast moving consumer goods and consumer durables arms. The real estate business is growing much faster, compared with the other two,” Godrej Group chairman, Adi B Godrej told DNA Money.

Realty sector was growing at the rate of 20% annually.  About Rs 3 lakh crore worth projects are completed annually, with the demand still surpassing the supply side, he added.

“We would dilute 10% of our total capital and raise about a couple of hundred crores from the markets during this financial year depending on the stock market and property market scenario,” said Godrej.

Asked if other group companies would also look at entering the bourses, he added: “Other group companies are not capital intensive and there is no need for major finances. Hence, we have no plans to list other companies.”

Godrej Properties, which is developing more than 20 million sq ft, is also looking at entering the national capital region (NCR) and Chennai this year. It also aims to promote and develop a couple of integrated townships, which would require more than 100 acres of land. The developer may also convert two of its projects into IT-SEZs, for which it has land under possession.

“We will create 2 SEZs, where we have land in possession. We will not get into the land acquisition issues,” Godrej said. He refused to name the locations where these SEZs will come up.

GCPL recently entered into a 50:50 joint venture with a Sweden firm, SCA Hygiene Products, and plans to set up a greenfield facility in India in 2 years.

The company had entered into an agreement with SCA Hygiene Products, Sweden, to form a joint venture to manufacture and market paper-based absorbent hygiene products, including sanitary napkins, in India

Godrej is now importing the Snuggy Baby diapers from China. Once the manufacturing base is set up, the products would be sold and marketed through GCPL network.

“We are actively scouting for acquisition and joint ventures for the growth of household and consumer product expansion. The potential markets that we are looking include China, Indonesia, Egypt, Brazil and Nigeria. If we want to be a major player in a particular market in FMCG sector, we need to manufacture the products in that country itself,” Godrej said.

Presently 25% of the sales come from international operations and the company sees this to grow to a 50:50 proportion in the coming years. GPCL has also started exporting its hair colour products to the UK and African markets after the Sikkim facility got  operational. GCPL has sales of Rs 200 crore per annum from the domestic market and Rs 300 crore from foreign markets.

In retail, Godrej is present in Aadhar, Natures Basket and Godrej Lifespace formats. The Aadhar format caters to the rural markets wherein it has a super market which sells agro specific products primarily, along with consumer and other apparel products. It has 46 such stores in 8 states, and plans to have 120 such by this year. Natures Basket outlets offers fresh vegetables and fruits along with other gourmet products. Six stores in this format are operational in Mumbai. There are about 40 Godrej Lifespace stores, which offers GCPL products along with some imported stuff.