Chairman, Godrej Group
510 CNBC Earnings Central 05 May 2012 04min 31sec Mr Adi Godrej & Mr Pirojsha Godrej Godrej Properties 14 01pm
About Adi Godrej
Adi Godrej announced the launch of Godrej Wealth, a wealth management business targeting ₹1 lakh crore in assets under management by 2031. He described financial services as an area of significant opportunity in India and said wealth management was a logical next step after entering lending businesses five years ago through Godrej Capital, which includes an NBFC and a housing finance company. Godrej stated the investment in the wealth management business would be at most around ₹500 crore, focused on technology and personnel. Godrej also said Godrej Capital is expected to list within five years, by March 2031, with the exact timing dependent on market conditions and business performance. He noted that the group plans to enter allied businesses such as asset management over the next few years, but will proceed step by step. In Godrej Consumer Products, he mentioned a recent small acquisition of the men's face wash brand Must Talk.
Transcript (11 segments)
✨ AI-enhanced transcript with speaker attribution
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Host0:02
Let's cut across to Adi Godrej, chairman of Godrej Properties, who is detailing their Q4 earnings.
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Adi Godrej0:06
Ten new projects were finalized during the last financial year, and there is excellent momentum in our Vikhroli projects. Vikhroli will be a very large future and current development opportunity for Godrej Properties. Our net profits and margins were affected primarily because of minority interest which came from past private equity deals, but our profit before exceptional income etc. were also up about 50%. The number of projects and constructed area has grown very smartly and will continue to grow in financial year 13 very, very strongly. And we have already signed two new agreements, two new deals in financial year 13, in this current financial year. So that's a summary. I think you have been given all the details of the results etc., and Pirojsha and I will be very happy to answer any questions.
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Analyst1:28
Anybody has any particular question? The debt equity ratio now is about 1.06 at the end of the quarter, and that has come down from just about two at the end of Q3. So there's been a significant reduction in the debt equity. Do you have any further plans to... because analysts say that it is one of the highest?
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Adi Godrej1:53
No, you know, we've said that we're quite comfortable with the debt equity ratio in the range of 1 to 1.5 to one. We think that allows us to both manage our business prudently but also capture the kind of opportunities that are available. We will continue to look to improve cash flows from operations from exiting commercial projects, but we don't think our gearing level is at a concerning level at all anymore. At 1 to one debt equity ratio, the cost of capital if you look at the weighted average cost of debt and equity, that's ideal.
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Analyst2:30
Can you give us a next figure? About 1,500 crores which are the commercial... for this?
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Adi Godrej2:35
We're doing several commercial projects. Most important ones are two projects we're doing in Mumbai: one in Vikhroli, a project called Godrej One, which is a 750,000 square foot grade A commercial office building, and another one in Bandra Kurla Complex in partnership with Jet Airways, which is a 1.2 million square foot office building again in the heart of Bandra Kurla Complex. We also have some IT projects in Kolkata: two projects, Godrej Waterside and Godrej Genesis, and one commercial office project in Chandigarh called Godrej.
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Analyst3:16
Mr. Godrej, I say that this BKC project is a little bit of a stretch on your balance sheet. Do you have... I would like to hear your views on that, as well as do you have any plans to sell any stake in that project?
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Adi Godrej3:28
You know, it is a more capital intensive project than one of our typical projects. At the same time, it is a very large project in the most desirable commercial location in India. We are very confident that the project will do well. We will, of course, continue to evaluate opportunities to reduce the capital employed in the project, but we don't have anything firm in place at this stage.
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Analyst3:55
But Godrej is saying that GIC has called off this deal because of the unviability in...
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Adi Godrej4:00
You discuss private equity and other investment deals with many people, and then of course some solidify and some don't. So that's part of any negotiation and any discussion. Not everything.
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Host4:13
That was Godrej Properties outlining their Q4 numbers. The company says that they've seen a significant reduction in their debt equity ratio. Their debt stands now at 1,000 crores, and the company's also going to look at improving their cash flows from operations in FY13. But it's time for a short break now. We'll be back in a minute.