Godrej Properties Tie-Up With Godrej&Boyce To Develop Vikhroli Project

Godrej Properties, the real estate development arm of Godrej Group, has entered into an agreement with Godrej&Boyce (G&B) to develop a new project, on the latter's property, on the Eastern Express Highway in Vikhroli, Mumbai. The potential saleable area will be up to 8.0 lakh sq ft, and is likely to comprise of premium residences as-well-as a small component of convenience retail.

As per the agreement, Godrej Properties will act as a development manager and will work with G&B on the conceptualisation, design, sales and marketing of the project. It will receive a fee equal to10% of the total revenue generated from the development. The cost for design and construction will be borne by G&B in its role as owner and developer, while the cost for sales and marketing will be financed by Godrej Properties. 

If we take the current rate of properties in the locality, which comes roughly to 15000 per sq ft, the companies will be able to generate approximately Rs 1200 crore after selling the properties. Godrej Properties services fee comes to Rs 120 crore before adjusting sale and marketing expenses. It will increase the earnings per share of the company by Rs 0.60 (annualised).  

In the December quarter FY14, the company performance has been satisfactory as it has recorded a 14% increase in EBITDA on account of cost optimisation. The bottomline of the company has grown by 17% YoY to Rs 60 crore against Rs 51 crore in Q3FY13. 

In the December quarter, the company had 17 ongoing projects and 20 projects were in the pipeline in residential segment, while 6 ongoing projects and 6 forthcoming projects in commercial segment across the country. Most of the forthcoming projects are waiting for approval from the concerned authorities.