Godrej Properties to raise Rs 600 cr through IPO

Godrej Properties, which is developing 2-crore sq ft of real estate space across the country, will go in for an initial public offer (IPO) to offload 10 per cent of its stake. The IPO is expected to fetch Rs 400-600 crore.

"We will be offloading 10 per cent in the second half of this fiscal. Presently, Godrej Industries owns 82 per cent stake, while the Godrej family owns 18 per cent in the company," Godrej Group Chairman Adi Godrej said here today.

With the offloading, Godrej Industries' holding would come down to 75 per cent and the family's to around 15 per cent, Godrej said. Merchant bankers for the issue will be appointed shortly.

"We are in discussions with 3-4 of them and a decision will be taken very soon," he said, without revealing their identities.

While Godrej declined to reveal the issue size, saying it was too early to talk about this," industry sources feel the issue could be anywhere between Rs 400 crore and Rs 600 crore.

Not ruling out any pre-equity placements, Godrej said that it was not on the radar at the time.

Elaborating on the company's expansion plans, Godrej said property development would be a thrust area for the group and in five years, Godrej Properties could emerge as the largest player within the group.

As part of its expansion plans, Godrej Properties is eyeing new markets like Chennai, Kochi, the National Capital Region (NCR) and Goa. The company is presently active in Mumbai, Pune, Kolkata, Bangalore and Hyderabad.

Godrej said one-third of the real estate development was residential while the rest was commercial, which included offices, IT parks and malls.

The company is presently engaged in the development of the tallest residential towers in the country. The towers will have 50-storeys. Five such towers are being built in the posh Mahalakshmi area of Mumbai, he said, adding "of course, taller towers are now being planned in places like Hyderabad."

On the proposed repealing of the Urban Land Ceiling Act by the Maharashtra government in the near future, Godrej expected it to greatly benefit property development in the already-congested metropolis as vast areas of land would get released for development.

He said both the Centre and all states barring Maharashtra, Andhra Pradesh and West Bengal had repealed the Act.

Calling for the immediate scrapping of both the Urban Land Ceiling Act and octroi, Godrej said their continuation severely handicapped the economic progress of the state. "It is high time Maharashra abolished them," he said.

States which have done away with these outdated laws have progressed far ahead of Maharashtra, once the citadel of industry in the country, he said.

On Floor Space Index (FSI), the area allowed to be developed by the authorities in a given plot, Godrej said the restrictions were ridiculous and should be done away with soon.

"Maharashtra has the most restrictive FSI in the country and India the most restrictive in the world," he said, adding that while Maharashtra has an FSI of 1.3, Hyderabad 3 and Kolkata 6, other places such as Hong Kong and Shanghai had FSIs of 10 each and Manhattan in New York, even higher at over 20.

He disputed claims that Godrej Properties was developing residential accommodation only for the top-end segment of the population, saying that there were several properties on the outskirts of Mumbai such as Thane and Kalyan, which were very much in demand.

Asked about the existence of under-the-table transactions in the real estate industry, Godrej said as far as his company was concerned, every transaction was cheque-based.

Confident that the high economic growth momentum would be maintained in the future, he said that he did not expect any slowdown in property requirements.

"Real estate prices are now stabilising and in certain areas, falling marginally, but demand is expected to only grow," he said.