GLOBAL ECONOMY
In 2023, the global economy faced a complex scenario characterized by persistent inflation, geopolitical tensions, tightening monetary policies, and ongoing pandemic repercussions, all contributing to a decline in growth. According to the World Economic Output (WEO) update, global growth slowed from 3.5% in CY2022 to 3.0% in CY2023. Central Banks raised interest rates in CY2023 to counter inflationary pressures. Despite challenges such as supply chain disruptions and elevated inflation, major economies received support from fiscal stimulus, monetary policies, trade agreements, international aid, green initiatives, and technological investments.
The International Monetary Fund (IMF) projects moderate and stable growth for CY2024 & CY2025 at 3.2%, albeit lower than the historical average of 3.1%. This expectation reflects sluggish economic activity, primarily attributed to a slowdown in advanced economies. The growth rate of these economies, which stood at 1.6% in CY2023, is anticipated to remain sluggish at 1.7% to 1.8% over the next two years due to policy tightening, financial sector turmoil, high inflation, the ongoing conflict between Israel and Gaza, and the lingering effects of four years of the COVID pandemic.
The slow growth rate persists amidst a cost-of-living crisis triggered by disruptions in energy and food markets due to Russias conflict in Ukraine, coupled with global monetary tightening to address inflationary pressures and reduced fiscal support. However, the resilience seen in the United States and several significant emerging market economies, along with continued fiscal support in China, will bolster global growth.
Inflation rates are declining more rapidly than anticipated across most regions, supported by tight monetary policies. Combined with a modest uptick in economic activity, this sets the stage for a softer-than-expected economic slowdown.
In advanced economies, growth rates are forecasted to reach 1.7% in CY2024, improving to 1.8% in CY2025. The US demonstrates resilient consumption and investment, while Euro area activity is expected to remain sluggish. Among emerging markets and developing economies, growth is estimated at 4.2% in CY2025. China faces challenges from its real estate crisis, tax hikes, spending cuts, and weakening confidence, yet it is anticipated to grow at 4.6% in CY2024 due to increased government spending. India is set to maintain its position as the fastest-growing large economy, driven by robust domestic demand.
Global inflation is projected to decrease from an estimated 6.8% in CY2023 to 5.9% in CY2024 and further to 4.5% in 2025, primarily due to accelerated disinflation in advanced economies. Declining inflationary pressures vary by country
but generally stem from reduced core inflation, influenced by ongoing tight monetary policies, softened labor markets, and impacts from lower energy prices. The IMF forecasts a 2.3% decline in oil prices in CY2024, while non-fuel commodity prices are expected to drop by 0.9%. Heightened tensions in the Gaza-Israel region, which accounts for approximately 35% of global oil exports, could lead to supply shocks if the conflict escalates. Continued trade distortions and geopolitical fragmentation are anticipated to persist, exerting pressure on global trade levels.
The risks to global economic growth are balanced, with potential upside from quicker disinflation, slower withdrawal of fiscal support measures, robust economic expansion in China, and advancements in supply-side reforms. Conversely, downside risks include spikes in commodity prices due to geopolitical or weather-related disruptions, ongoing core inflation necessitating tighter monetary policies, potential slowdowns in Chinese growth, and potential disruptions from abrupt fiscal consolidations.
INDIAN ECONOMY
The Indian economy continues to strengthen despite the global headwinds. As per the First Advance Estimates (FAE) released by the National Statistical Office (NSO), real Gross Domestic Product (GDP) is expected to grow by 7.3%, in FY2023-24, underpinned by strong investment activity 1.
For FY2024-25, growth, while still healthy, may see a moderation to 6.8%-7% as per various estimates due to high interest rates and lower fiscal impulse would temper demand and the net tax impact would normalize. Also, the uneven economic growth of some trading partners and escalation of geopolitical uncertainties can drag down exports.
Support will come from other areas. Household consumption is expected to improve as continued disinflation will prop up the purchasing power of consumers. Secondly, healthy rabi sowing and good kharif output assuming a normal monsoon will support agricultural income. Thirdly, prospects of fixed investment remain bright owing to an upturn in the private capex cycle, improved business sentiments, healthy balance sheets of corporates and banks as well as the governments continued thrust on capital expenditure. A sustained economic growth will lead India to become the 3rd largest and an upper middle-income economy in years to come.
Improving the outlook for global trade and increasing integration in the global supply chain will support net external demand. Headwinds from geopolitical tensions, volatility in international financial markets and geoeconomic
fragmentation, however, pose risks to the outlook. The Reserve Bank of India (RBI) has kept the Repo Rate unchanged since February 2023 to manage retail inflation within its target range, which has consistently stayed above the 4% mark. In July 2023, Consumer Price Index (CPI) inflation rose to 7.44%, the highest level seen since September 2022. The CPI has since eased and is hovering around 5%. The RBI anticipates a 4.5% inflation for FY2025. Economists expect the RBI MPC to maintain the repo rate at 6.5%, marking the seventh consecutive unchanged rate. Indian banks, with approximately 70% of assets in floating-rate loans, face less exposure to interest rate risks compared to their global counterparts. This arrangement allows them to benefit from rising rates and reduces potential losses on bond holdings as interest rates climb.
The World Bank expects India to grow by 6.6% in FY2024-25 after an estimated growth of 7.5% in the previous financial year.
Although the short-term outlook appears challenging due to rising interest rates, external supply shocks, and geopolitical tensions, we believe the government is taking appropriate measures to ensure a sustainable growth trajectory for the country. The union budget presented this year strongly supports the long-term growth of Indias real estate sector through its focus on urban infrastructure and the digital economy. The governments significantly expanded capital expenditure target for the year is expected to generate job opportunities and stimulate higher economic activity.
REAL ESTATE SECTOR
In FY2024, the real estate sector saw remarkable growth, driven by strong housing demand, stable interest rates, and a robust economy. Real estate investments in India reached $5.1 billion, with a substantial portion allocated to land acquisitions, representing 40% of total investments. This trend expanded to tier 2 and tier 3 cities, highlighting real estates attractiveness as an investment avenue, including options like direct purchases, Real-Estate-Investment-Trusts (REITs), and Mortgage-backed-Securities (MBS).
FY2024 was a milestone year for Indias real estate sector, with record-breaking sales and sustained growth. Despite a notable increase in new launches, inventory levels remained stable or decreased in tier-1 cities, highlighting strong demand. The residential segment excelled, driven by stable interest rates, a robust economy, and evolving consumer preferences. The demand for Commercial office space recovered from slowdown induced by remote work trends and global economic slowdown, while the retail real estate sector experienced a robust revival, surpassing pre-pandemic consumption levels.
RESIDENTIAL REAL ESTATE MARKET
In CY2023, Indias residential real estate sector demonstrated resilience with sustained strong demand. Property sales surged significantly higher than the previous year. This robust performance reflects enduring demand fueled by a robust economic rebound, favorable affordability, and positive macroeconomic conditions. However, challenges like
soaring raw material costs, consumer inflation, and increased borrowing expenses emerged.
The lockdown periods led to heightened savings and minimal income disruptions among mid to high-income segments, bolstering sustained demand. Additionally, the real estate sector found relief in the RBIs decision to maintain the policy repo rate. The sector experienced notable changes in underlying factors during CY2023, indicating evolving market dynamics, as per property consultant Knight Frank 1. The sales performance in CY2023 demonstrated significant strength. The total value of homes sold in CY2023 rose by 38% compared to the total sales value for all of CY2022.
The Knight Frank Affordability Index, which monitored the ratio of Equated Monthly Instalment (EMI) to income for households, showed signs of improvement after a brief decline in affordability levels observed in CY2022. This improvement was driven by stronger-than-anticipated economic momentum, and inflation levels remaining within the central banks tolerance band. These factors resulted in higher income levels that offset the rise in prices and interest rates.
Although there was only a marginal overall improvement in affordability, Mumbai remained the only city surpassing the affordability threshold of 50%, with Ahmedabad retaining its position as the most affordable housing market at 21% affordability. Other cities like Pune and Kolkata followed closely at 24% in CY2023. Affordability levels across cities significantly improved compared to pre-pandemic CY2019 levels, with NCRs affordability index rising from 34% in CY2019 to 27% in CY2023, and Bengaluru increasing from 32% in CY2019 to 26% in CY2023.
The surge in demand led to a rapid pace of residential development, with annual unit launches reaching nine-year peaks. Despite rising inventory levels, the Quarters to Sell (QTS) metric decreased from 8.7 in H2 CY2020 to 5.9 quarters (less than 18 months) in H2 CY2023, reflecting robust market fundamentals amid growing demand and development activity.
The real estate market experienced an unprecedented surge in CY2023, surpassing expectations and setting new records. This has created significant opportunities for both domestic and international investors, driving the economy forward. Overall, the residential sector remains a focal point for growth, fueled by sustained demand and stable economic conditions.
NCR
In CY2023, NCR maintained a steady performance, with robust growth seen in homebuying demand within the primary residential market. The milestone of 60,002 residential units sold was achieved, marking the highest level since CY2013. The year CY2023 witnessed a 3% year-on-year (YoY) increase in residential sales volume compared to CY2022, driven partly by pent-up demand following the pandemic. However, delays in purchasing decisions arose due to a scarcity of ready-to-move-in projects in preferred locations, somewhat hindering sales growth.
Over the past two years, the share of residential products with ticket sizes > INR 10 mn in the total sales volume consistently surged in the NCR. This categorys share expanded from 37% in CY2021 to 65% in CY2023. Homebuyer preference for products priced upwards of INR 10 mn remained strong, reflecting a trend where spacious homes with high-end amenities are redefining post-pandemic living for high-net-worth individuals.
In contrast to residential sales, new launches in CY2023 experienced a slight decline of 1% compared to CY2022, dropping from 63,233 units to 62,649 units. Despite this decrease, developers continued to introduce new projects to capitalize on the demand for new homes and prioritized acquiring new land for future project pipelines.
MMR
In CY2023, the Mumbai real estate market experienced robust growth despite global challenges, retaining its position as the top market with 86,871 units sold, marking the highest sales in eleven years. This surge stemmed from a positive economic outlook, increased disposable income among buyers, a shift towards larger homes, and a fear of missing out on opportunities in the flourishing market amidst rising prices.
Sales surged during festive seasons like Navratri, Dussehra, and Diwali, which traditionally witness heightened real estate activities due to positive sentiments and developer strategies of introducing new projects with attractive payment plans.
The momentum in new project launches remained strong, with Mumbai witnessing 93,051 new units introduced in CY2023, the highest since CY2014. The residential market in Mumbai is poised for continued growth, driven by strong consumer demand fueled by ongoing infrastructural developments, rising affluence, and evolving consumer preferences.
Bengaluru
Bengalurus residential real estate market in CY2023 showed resilience despite rising borrowing costs and economic challenges from tech sector volatility and funding constraints in the startup ecosystem. The city experienced a nine-year high in residential sales volume, reaching 54,046 units, indicating sustained interest in home ownership. This strong sales performance boosted developer confidence, leading to an increase in large-scale project launches with 51,126 units introduced during the year, marking a multi-year high and attracting both local and non-local developers.
Residential prices in Bengaluru grew by 9% YoY, with a weighted average price of INR 63,505/sq m. The price growth is primarily driven by demand as the hybrid work structure and return to office are encouraging people, especially those in the IT sector, to move back to the city. To meet this demand, residential supply in the city is also increasing, as seen in the multi-year high launches in 2023. Looking ahead, as supply aligns with demand, price growth is expected to moderate in 2024. Nevertheless, Bengalurus real estate market is expected to remain vibrant due to the citys growing economic profile.
Pune
In CY2023, Punes real estate market experienced significant growth, with 49,266 units sold, marking a 13% YoY increase. This surge was propelled by migrant workers and heightened demand during festive seasons. New project launches also rose by 10% YoY to 42,437 units, indicating a preference for larger homes with dedicated workspaces. The growth was particularly prominent in the West Zone, which accounted for 41% of total sales, driven by Punes status as an IT hub and focused infrastructure development efforts. This evolution has positioned Pune as a pivotal housing destination, prompting leading developers to actively pursue opportunities in this burgeoning market.
OFFICE MARKET
The office market across major Indian cities demonstrated resilience in CY2023, despite global challenges. Bengalurus average rentals grew by 6.6% YoY to INR 930/sq m/month, driven by increased demand in key micro markets like PBD East and ORR. Mumbais office rents rose by 3.6% YoY, supported by improved infrastructure and new metro lines. The National Capital Region (NCR) saw unprecedented growth in office leasing, reaching a decadal high of 0.9 mn sq m in transaction volume, with a 14% increase over CY2022.
In Bengaluru, the acceleration of firms returning to office and growth in India-facing businesses boosted demand, while stable inflow from western markets supported Mumbais rental growth. NCRs office market saw a decline in vacancies to 12.3% due to record leasing in CY2023, indicating a positive trend for market health. Punes office rents also rose moderately by 2% YoY, reflecting increased transactions amid limited supply.
BUDGET 2024 - TAKEAWAYS
This years union budget was supportive to fostering longterm growth in Indias real estate sector, emphasizing urban infrastructure development and the digital economy. The Governments heightened emphasis on infrastructure capital expenditure sets a favorable backdrop for real estate opportunities. Key measures in this regard include:
Inclusive Development
Despite COVID-19 challenges, PMAY (Rural) is close to its three crore houses target, with plans for two crores more houses in five years. The PMAY scheme for affordable housing includes PMAY (Urban) and PMAY (Rural), with a total allocation of ?80,671 crore, of which ?54,500 crore is for PMAY (Rural). PM-SVANidhi successfully supported 78 lakh street vendors with credit. The government aims for holistic development, envisioning Viksit Bharat by 2047.
Housing
The PM Awas Yojana announced plans for 2 crore houses in the future, but details about the urban wing were lacking. Additionally, a target of 1 crore houses for rooftop solarization was set, offering urban households 300 units of free electricity monthly. The Budget highlighted a new scheme for middle-class urban residents in rented housing, slums, chawls, or unauthorized colonies, allowing them to buy or build their own homes.
Urban Reforms
The ongoing municipal reforms featured an incentivization package and a fifty-year loan to states, with a focus on capital project utilization and urban planning reforms to boost municipal bond creditworthiness.
BUDGET 2024 - KEY TAKEAWAYS FOR CLIMATE CHANGE
The Union Budget for FY 2024-25 reflects Indias resolute stride towards sustainability, harnessing renewable energy, and fostering sustainable development amidst the pressing global climate challenges. Emphasizing "Amrit Kaal," the budget outlines an ambitious pathway to achieve a "Prosperous Bharat in harmony with nature, modern infrastructure, and opportunities for all," aiming for net-zero emissions by 2070. The capital expenditure outlay has been raised by 11.1%, with Indias Real GDP expected to expand at a rate of 7.3%. The governments commitment to stimulating growth through infrastructure development is underscored by its decision to expand the PM Awas Yojana (Grameen), aiming to construct an additional two crore homes over the next five years in response to the growing number of households. The fund allocation has risen to ?80,671 crore, up from the previous years budget estimate of ?79,590 crore. Furthermore, the initiative to provide one crore households with up to 300 units of free electricity each month through rooftop solarization aligns with this strategic focus on bolstering infrastructure and sustainable development.
The government is set to enhance the electric vehicle infrastructure, supporting the production and expansion of charging stations. It aims to boost the use of electric buses across public transportation systems with the help of a payment security mechanism. Budget allocations reflect this focus: funding for Solar Power (Grid) has risen from ?4,970 crore in 2023-24 to ?8,500 crore in 2024-25. In a similar vein, investment in the National Green Hydrogen Mission has increased from ?297 crore to ?600 crore. These increases highlight the governments commitment to advancing renewable energy and fostering eco-friendly practices. Additionally, a systematic integration of compressed biogas with natural gas for vehicles and homes will be initiated.2
During the 26th session of the Conference of the Parties (COP-26) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2021, India set forth ambitious climate objectives. The country has updated its goals for 2030, aiming to achieve 500 GW of non-fossil fuel energy capacity, meet 50% of its energy needs with renewable resources, cut the carbon intensity of its economy by 45% from 2005 levels, and reach carbon neutrality by 2070. The following COP-27, convened in Sharm El-Sheikh, Egypt, marked a shift from setting goals to implementing them, with
1 (Key Features of Budget 2024-2025, 2024)
2 (Key Features of Budget 2024-2025, 2024)
3 Buildings - Breakthrough Agenda Report 2023 - Analysis - IEA
a spotlight on the adaptation agenda and the integration of technology. Support was garnered for financing the achievement of these climate goals and advancing the development of models for a low carbon transition. The promotion of carbon credits and the establishment of carbon markets to assist in the transition towards low carbon emissions were also emphasized. At COP28, India articulated a stance on climate action, underscoring its achievements, commitments, and the principle of climate justice as central to global efforts. The country highlighted its progress towards its Nationally Determined Contributions (NDCs), including a significant reduction in emission intensity and a substantial increase in non-fossil fuel-based electric capacity ahead of its 2030 targets. To reach net-zero emissions by 2070, blending compressed biogas with CNG and PNG will be gradually enforced. Moreover, by 2030, there are plans to install coal gasification and liquefaction facilities with a capacity of 100 metric tonnes. In pursuit of Indias net-zero goal by 2070, key initiatives include: allocating viability gap funding for 1 GW of offshore wind energy, establishing a 100 MT coal gasification and liquefaction capacity by 2030 to decrease imports, mandating phased blending of CBG with CNG and PNG, and offering financial support for biomass aggregation machinery.
The 2024-25 Union Budget presents a blueprint that combines technology, environmental sustainability, and economic advancement. It is geared towards creating jobs by investing in renewable energy, eco-friendly fuels, and sustainable farming. The budgets financial provisions are aimed at supporting a green revival and fulfilling climate commitments in a thorough and inclusive manner.
IMPACT OF CLIMATE CHANGE ON REAL ESTATE SECTOR
In 2022, emissions from buildings, covering both operational (26%) and embodied emissions (7%), made up about a third of total energy system emissions. The emissions intensity of cement production has increased by close to 10% since 2015, which is challenging to decarbonize. The rest stems from direct on-site emissions, predominantly from electricity use for lighting and air conditioning. Theres a significant yet unexplored opportunity to reduce emissions, hindered by the ongoing reliance on fossil fuel-driven assets, the absence of potent energy-efficiency mandates, and a deficit in investments towards sustainable buildings3 .
Due to the nature of business, the real estate sector is a significant contributor to the GDP of India. It is also responsible for nearly one-fifth of the nations emissions, and 33% of total energy consumption. Considering Indias rigorous climate objectives, including the goal of Net-Zero by 2070, the Indian real estate sector is required to act quickly and effectively. As climate change increasingly affects economies and this sector, there are both physical and transitional risks that could harm assets and the markets they are part of, either directly or indirectly.
Real estate portfolios are exposed to various risks, including the impact of climate change, which can cause damage to
properties through extreme weather events. These impacts can be chronic, reflecting long-term trends, or acute, indicating severe short-term occurrences, and vary by location or in response to efforts to shift towards a low-carbon economy. The urgency for drastic measures is underscored by the observable effects of climate change, such as escalating temperatures, rising sea levels, and increased frequency of extreme weather events. Additionally, environmental hazards adversely affect the ability to provide safe, healthy, and adequate working conditions, alongside job availability. Climate change exacerbates risks to occupational health and safety, with high temperatures already contributing to a 1.4% loss in working hours in 1995. Studies suggest that without addressing climate change, and with an expected temperature increase of 1.3?C by 2030, we could see a productivity loss of 2.2%, equating to 80 million full-time jobs. Recognizing their contribution to climate change, real estate firms must urgently implement innovative strategies to adapt their buildings, operations, workforce, products, and services to these significant and impending changes.
In recent years, theres been a noticeable uptick in worldwide investments aimed at diminishing the energy consumption of buildings. This move by the real estate sector towards minimizing its environmental footprint marks a positive trend. Governments, policymakers, investors, and the general populace are shifting their views on climate change and are taking bold actions to counteract its effects. The creation of tools that encourage eco-friendly building practices and the widespread acceptance of green building certifications are helping more areas to align their construction activities with the goals of the Paris Agreement. While the surge in investment is indeed encouraging, it also highlights the necessity of engaging with additional external partners to leverage technology effectively, ensuring seamless operations, accountability, and transparency.
OPPORTUNITIES
Housing Demand
A combination of economic growth, increasing income levels, and the perception that housing prices are stabilizing has led to a notable uptick in the demand for homes. This trend is evident as potential buyers, previously on the sidelines, are now entering the market as first-time homeowners or existing homeowners looking for larger spaces. The shift towards remote and hybrid work models is further influencing the desire for more spacious living arrangements. Employers offering flexible work options continue to be a significant factor in this trend, as it allows employees the freedom to live further from the office, thereby boosting demand for residential properties in various segments.
Sector Consolidation
The Indian real estate sector, characterized by its highly fragmented nature, has been undergoing a significant consolidation phase for several years. This consolidation has been accelerated by various factors, including the pandemic, which has effectively sidelined less robust participants. The current environment in the real estate industry poses challenges to the entry of new competitors. With the trend
leaning towards a smaller number of dominant developers in each region, this period of consolidation offers an attractive chance for current real estate firms to meet the increasing demand for housing.
Affordable housing
The segment of affordable housing remains a pivotal area for developers and a primary focus for the government. As per the new Union budget, a housing for Middle Class scheme is to be launched to encourage the middle class to buy their own houses. The Pradhan Mantri Awas Yojana (PMAY) is close to achieving 3 crore houses, additional 2 crore houses are targeted for the next 5 years, as discussed above. This shows that the affordable housing market is projected to experience a surge in demand, bolstered by an anticipated economic revival and increasing income levels.
Digital Real Estate Sales
Digital marketing has become a key strategy for real estate developers to boost sales and connect with customers. Since the pandemic, their marketing efforts have expanded beyond attracting new customers and building brand awareness to include creating personal connections digitally. Thanks to technology that allows property purchases online, developers have seen strong sales, even during lockdown periods. Theyre using digital tools to engage with potential buyers, present project details, offer virtual tours, and target Non-Resident Indians (NRIs) to increase sales. Advanced technologies like virtual reality, augmented reality, and AI-driven chatbots are increasingly employed to offer tailored services to potential clients. Moving forward, developers will need to keep up with technological advancements, as the share of real estate transactions conducted online is expected to grow.
THREATS & CHALLENGES Regulatory Hurdles
The real estate industry is subject to extensive regulation, and any negative adjustments in governmental policies or the regulatory framework can negatively influence the sectors performance. Significant delays in procedures related to acquiring land, determining land use, initiating projects, and obtaining construction approvals are common. Changes in policy applied retrospectively, along with regulatory obstacles, could affect profitability and diminish the appeal of both the sector and the companies active within it.
Monetary Tightening and Funding Issues
In recent years, the landscape of real estate financing has shown a marked divergence. Well-established developers with lower debt levels have continued to secure funding with relative ease, benefiting from the selective approach of lenders, while those with weaker financial standings have encountered challenges in accessing capital. The performance of the real estate sector is intricately connected to the broader economic recovery and the prevailing monetary policies. The RBI has maintained an accommodative stance to bolster economic growth. However, it is anticipated that there will be a shift towards tighter monetary policies as efforts intensify
to manage persistent inflation. The budding economic revival, coupled with potential increases in interest rates, may pose challenges for the real estate sector shortly. Higher housing loan costs and an escalation in financing costs for developers, who are already contending with margin pressures due to the rising prices of commodities, could have implications.
Shortage of Manpower & Technology
As the countrys second-largest employment provider, the real estate sector relies significantly on manual labor. The pandemic severely impacted this sector due to labor shortages, disrupting project completion schedules. Consequently, theres a pressing need for the adoption of alternative construction methods that are less dependent on manual labor and more on technology.
ABOUT GODREJ PROPERTIES LIMITED
Godrej Properties Limited (GPL), part of the venerable Godrej Group founded in 1897, stands out as a leading entity in Indias real estate sector. Upholding the Groups ethos of innovation, sustainability, and excellence, Godrej Properties has been synonymous with trust and quality for over a century. With a focus on leveraging advanced design and technology, GPL is committed to exceeding stakeholder expectations by crafting exceptional and innovative spaces, rooted in deep consumer understanding. At its core, GPL believes in the power of collaboration to achieve excellence, partnering with premier designers, architects, and contractors both in India and internationally. This approach ensures that every development not only meets the present needs of its residents and communities but is also durable and forward-thinking, reflecting the best the world has to offer in real estate.
A. Leveraging the Godrej Brand
The ‘Godrej brand is well-recognized throughout India due to its long history in the market, the diverse sectors the Godrej Group operates in, and the trust it has built over time. This strong brand reputation aids in several business activities, such as establishing joint development agreements, moving into new cities and markets, and forming business partnerships. Godrej Properties Limited (GPL) has also entered the plotted development space in Tier-2 cities, recognizing their sales potential. The brand has been crucial in developing solid relationships with customers, service providers, partners, investors, and lenders, helping us secure a strong position in the industry. Additionally, GPLs binding arrangements with Godrej & Boyce appointing GPL as the development manager for developing all its lands in Vikhroli further provides an opportunity to enhance the scope of our portfolio.
B. Sales Momentum
This year marks the 7th consecutive year of record annual sales for GPL, underscoring the strength of our brand and the quality of our products. Your company reached INR 22,527 crore booking value in FY24, a growth of 84% year-on-year and 61% above guidance for FY24. This success was driven by an enhanced mix of projects and a significant 31% increase in sales volume. Your company stands as the largest developer in India by sales value in FY24. This surge was the result of launching 26 new projects or phases in FY2023-24.
Sales momentum significantly increased in the second half of the year, with Q4 FY2023-24 being our most successful quarter ever, contributing ?9,519 Crore, or 42% of our annual booking value. This was the highest quarterly sales announced to date by any publicly listed real estate developer in India.
Sales were driven by superlative consumer demand in some key new project launches. 4 projects i.e. Godrej Zenith, Godrej Aristocrat and Godrej Tropical Isle in NCR as well as Godrej Reserve in MMR achieved a booking value of more than INR 2,000 crore. Your companys bookings in NCR in FY 24 grew 180% to over INR 10,000 crore and in MMR grew 114% to over INR 6,500 crore.
As the challenges of recent global disruptions begin to recede, we are optimistic that a revival in the real estate sector, coupled with our robust balance sheet and a strong pipeline of projects, will enable us to boost sales momentum in the coming year. Below is a brief on our performance in key markets.
NCR
In FY2023-24, the NCR region remained GPLs top-performing area, marking yet another year of record-breaking sales driven by enthusiastic responses to new launches and consistent sales performance. The company achieved sales of 7.50 million sq. ft., an increase of 110% year-over-year, and booking value increase of 180% YoY to ?10,016 Crore. This impressive sales outcome was supported by several successful new projects and phase launches, alongside sustained sales from ongoing developments.
A significant highlight this year was the outstanding performance of Godrej Zenith, Godrej Aristocrat and Godrej Tropical Isle, each of them achieving a booking value of more than INR 2,000 crore. Godrej Zenith in Sector 89, Gurugram was the best ever launch for your company, achieving a booking value of ?3,008 Crore across 2.08 million sq. ft. Godrej Aristocrat in Sector 49, Gurugram achieved a booking value of ?2,877 Crore across 1.46 million sq. ft. while Godrej Tropical Isle in Sector 146 Noida achieved a booking value of ?2,098 Crore across 1.56 million sq. ft.. Furthermore, Godrej Parkland Estate in sector 41, Kurukshtra reported booking value of ?627 Crore across 1.39 million sq. ft. and 3 projects, Godrej Woods, Godrej 101 and Godrej South Estate, each reported booking value of more than ?200 Crore in FY2023-24, driven by sustenance sales and a strong market reception to new phase launches.
Mumbai
Sales in Mumbai reached approximately 4.10 million sq. ft., generating a booking value of ?6,545 Crore, marking a 114% increase year-over-year. This strong sales figure performance was fueled by the launch of 9 new projects/phases over the year, along with sustained sales momentum from ongoing projects. Notably, Godrej Reserve in Kandivali recorded sales of 1.51 million sq. ft., achieving a booking value of ?2,693 Crore, positioning it as one of our standout projects for the year. Godrej Avenue Eleven in Mahalaxmi, another standout project, reported sales of 0.24 million sq. ft., with a booking value of ?755 Crore. Furthermore, Godrej City achieved a booking value of ?546 Crore across 0.84 million sq. ft., Godrej Horizon achieved a booking value of ?470 Crore across 0.21
million sq. ft., Godrej Ascend achieved booking value of ?468 Crore across 0.39 million sq. ft., Godrej Vistas achieved a booking value of ?438 Crore across 0.17 million sq. ft. and 2 projects i.e. Godrej Urban Park and Godrej Tranquil achieved booking value of more than ?200 Crore each in FY2023-24.
Pune
In Pune, total sales reached about 3.27 million sq. ft., with a booking value of ?2,686 Crore, marking a 26% increase year-over-year. This sales achievement was propelled by the launch of 6 new projects/phases over the year and solid sales performance from ongoing projects. New project launches in Hinjewadi namely ‘The Gale, led to Maanhinje together with all its phases achieving sales of 1.01 million sq. ft. and a booking value of ?832 Crore. On the back of 2 new launches, all phases of Mahalunge together achieved sales of 0.81 million sq. ft. and a booking value of ?652 Crore. Our new project, Godrej Emerald Waters, launched in 3 parts, recorded sales of 0.54 million sq. ft., with a booking value of ?578 Crore. The combined phases in Manjri accounted for sales of 0.53 million sq. ft., with a booking value of ?398 Crore. The combined phases in Mamurdi also achieved a booking value of just under ?200 Crore.
Bengaluru
In Bengaluru, total sales reached around 3.00 million sq. ft., generating a booking value of ?2,460 Crore, a increase of 10% compared to the previous year. This was driven by the introduction of two new phases over the year in Godrej Ananda and Godrej Park Retreat, along with strong sales from ongoing projects. Godrej Ananda registered sales of 1.40 million sq. ft., with a booking value of ?998 Crore, while Godrej Park Retreat registered sales of 0.69 million sq. ft., with a booking value of ?596 Crore. 2 other projects Godrej Splendour and Godrej Athena carried the momentum from last years launch and achieved booking value of ?457 Crore and ?385 Crore respectively, from sale of 0.59 million sq. ft. and 0.28 million sq. ft. respectively.
Other Cities
Your company also achieved sales of around 2.13 million sq. ft., generating a booking value of ?820 Crore, a decrease of 33% compared to the previous year, from markets outside of the above. There were 4 project/phase launches in markets of Nagpur, Kolkata and Chennai. Godrej Forest Estate and Godrej Orchard Estate in Nagpur achieved sales of booking value of ?375 Crore and ?129 Crore respectively, from sale of 1.12 million sq. ft. and 0.29 million sq. ft. respectively. Godrej Seven in Kolkata reached sales of 0.36 million sq. ft., with a booking value of ?195 Crore and Godrej Sunrise Estate in Chennai reached sales of 0.24 million sq. ft., with a booking value of ?63 Crore.
D. Business Development
The financial year FY2023-24 is a landmark year for Godrej Properties as it marked our entry into Hyderabad market with 2 new deals which materialized in the last quarter. During this period, we introduced 10 new residential projects, characterized by a high degree of economic interest. These projects, which cover a saleable area of approximately
oon
18.93 million sq. ft., carry an anticipated revenue potential of around ?21,225 Crore. This figure notably exceeds the initial annual forecast of ?15,000 Crore in estimated booking value. The strategic locations of these projects are poised to bolster our continued rapid growth and significantly enhance our companys margin profile, particularly as most of these projects are entirely owned by us.
The ongoing consolidation in the real estate sector, accelerated by the pandemic, continues to present significant opportunities for companies like GPL to further their business development. With growth capital at our disposal, we plan to concentrate on opportunistic investments and expand our project portfolio in FY2023-24. Below is the list of residential deals signed by GPL in FY2023-24
Original agreement for sale of land was entered into by GPL in 2014, the deal has been revived recently and GPL now expects to launch the first phase of development on this land in the current financial year.
E. Customer Centricity
FY2023-24 demonstrates GPLs commitment to delivering top-notch customer experience while balancing exponential growth and scale. Our performance, measured through the Net Promoter System, which we adopted in FY2018- 19, reflects the impact of our customer experience and the customer advocacy it creates. In FY2023-24, we continued our upward trajectory and delivered an all-time high NPS since its inception in 2018.
| Survey Year | FY 2018 19* | FY 2019 20* | FY 2020 21* | FY 2021 22 | FY 2022 23 |
20^ |
| Relationship NPS Survey Responses | 9,306 | 12,283 | 8,857 | 8,806 | 13,332 | 14,267 |
| Combined relationship NPS | 28% | 61% | 42% | 55% | 65% | 68% |
*NPS Scores for FY2018-19, FY2019-20, FY2020-21 are revised to only account for completed responses to the survey and discard any customer response that was filled but not submitted.
We sharpened our focus towards actualizing our Purpose to bring Joy to our customers. The major highlights of our efforts for enhanced customer experience in FY2023-24 are as follows:
1. Improving experiences during key moments of truth:
A. Operating at scale: In FY2023-24
a. We welcomed 15000+ customers,
b. Completed 13,000+ registrations, and
c. Handed over 7,400+ homes
d. Facilitated 20,000+ customer site visits
B. Quality as a talking point: The monthly construction newsletters were detailed with the companys initiatives on quality.
C. Focus on Handover Experience: In FY2023-24, we continued to strengthen our systems for delivering joy during handover and post-possession.
2. Technology as a service:
A. The Godrej Properties Ltd. Mobile App, launched in FY2021-22, empowers customers to manage all aspects of their purchases at their fingertips. Continuing customer delight through the App, the Godrej Properties Ltd Mobile App continued to maintain a 4+ rating with 4.3 on Playstore (1000+ ratings) and 4.4 on Appstore (300+ ratings). The ratings resonate with the voices of over 73%+ of our existing customers, who have started using the App.
B. Adding another layer of convenience for the customers, we expanded the payment functionality on the App to allow our customers to make payments using Debit cards and Credit cards in addition to Netbanking.
F. Global recognition for sustainability initiatives
GPL has been included in the leadership index of emerging markets and has secured a place in the sustainability yearbook of the prestigious S&Ps Dow Jones Sustainability Index (DJSI), affirming commitment to ESG excellence. DJSI is globally recognized as a leading benchmark for corporate sustainability, assessing companies based on ESG performance and transparency. GPLs achievement in the DJSI underscores a proactive approach to sustainability, with strategic enhancements across various dimensions such as climate strategy, human rights, occupational health & safety, and information security/cybersecurity governance. By aligning practices with the rigorous criteria set forth by DJSI, GPL demonstrates leadership in sustainable real estate development. This recognition within the DJSI framework reflects dedication to driving positive change and fostering long-term value creation while meeting evolving expectations of stakeholders in the global sustainability landscape. The DJSI which comprise indices tracking the financial performance of companies recognized as leaders in environmental, social, and governance (ESG) practices. Being included in the DJSI signifies a companys dedication to sustainability. DJSI selects "global, sustainable stocks" and features indices of world-leading companies known for their exceptional business operations with a strong emphasis on sustainability. S&P Global conducts an annual sustainability
assessment and ranking based on economic, social, and environmental indicators in alignment with sustainable business development guidelines.
G. Health and Safety Management System
At GPL, safety is our top priority and a critical component for achieving our ambitious business growth goals. We are committed to the health and safety of our employees and all stakeholders, as outlined in the GPL Health & Safety Policy. To ensure a strong safety culture where every employee takes responsibility for safety, GPL has implemented a robust health and safety management system certified to the ISO 45001:2018 international standard. Our safety management system follows a proactive PDCA cycle, emphasizing leadership commitment, consultation, and participation at all levels and functions to achieve a "Score Zero" safety record. We have established predefined safety processes and standard operating procedures (SOPs), including comprehensive safety checks and inspections starting from the contractor prequalification stage. Each location has a dedicated safety team tasked with promoting safety awareness among employees and implementing various training programs as part of our monthly safety activity plan. Additionally, our Health and Safety Management system undergoes regular assessment by certifying agencies through surveillance audits to ensure continual improvement and compliance.
Visible Safety Leadership
Visible Safety Leadership is an essential aspect of GPLs safety management system, as outlined in the GPL Health & Safety Policy. This policy reflects the commitment of top management to implement and monitor occupational health and safety (OH&S) measures within GPL. This commitment includes ensuring a safe workplace, compliance with OH&S regulations, soliciting stakeholder input, and continuously improving safety processes.
With the objective of making OH&S a business imperative that enables operational excellence, GPL engaged with top management to reinforce safety practices through visible leadership. This initiative involves three levels of Management Review Meetings (MRM) to assess organizational performance and promote a positive safety culture. MRM Level 1, chaired by the COO at the Head Office, is followed by Level 2, chaired by the Operations Head at the regional level, and Level 3, chaired by the Project Manager at the project level. Additionally, GPL has implemented a "Safety Involvement Index" mechanism to encourage active participation of Operations Heads in various OH&S initiatives at project sites.
Contract Health and Safety Management System
The Contract Health and Safety Management System is a proactive approach that begins well before contract awarding. It involves evaluating prospective contractors through a prequalification (PQ) procedure, assessing business risks, and developing mitigation plans based on the contractors PQ score. Preference is given to contractors who are ISO 45001 certified during the pre-qualification stage. A joint safety kick-off meeting briefs the contractor, and the subsequent mobilization phase is monitored and audited by a safety and health infra tracker. Contractors are required to sign a formal
undertaking while implementing the site health and safety plan, which includes standard operating procedures (SOPs), work instructions, and guidelines to ensure compliance during work execution on-site.
Hazard Identification and Risk Assessment (HIRA)
One crucial aspect of the GPL Safety System is assessing risks using an approved risk matrix before commencing any activity. At each site, a cross-functional Hazard Identification and Risk Assessment (HIRA) team is formed to identify hazards, evaluate associated risks, and develop control measures following the hierarchy of control. While the main responsibility of this team is conducting a comprehensive HIRA exercise, they also provide workers with training on hazards, risks, and control measures. The implementation of these controls on-site is enforced through the Permit to Work system.
Training and Awareness Campaign
We prioritize skill development, competence building, and awareness as the key pillars of our safety and health management system at GPL. Our focus revolves around conducting awareness campaigns, skill training sessions, motivational initiatives, and health camps. In the current reporting year, we organized safety training for over 34715 safety people across offices and construction sites. All crucial stakeholders received necessary training and awareness programs in preparation for the implementation of ISO 45001:2018.
We have formalized the process of identifying training needs and creating a training calendar for safety sessions at sites, effectively executing multiple programs to cultivate a robust safety culture across all project sites. National Safety Day, World Environment Day, Road Safety Week, and Fire Service Day are commemorated at our sites, serving as vital platforms for raising awareness about health and safety. Safety communications play a pivotal role in our Safety Management System, promoting safety awareness and fostering a strong safety culture throughout GPL. Additionally, GPL has conducted Safety Assessment exercises to assess the safety awareness levels among the execution team.
To further enhance safety culture and reinforce operational controls, we conduct safety campaigns on various topics such as the usage of cell phones at construction sites, rope-suspended platforms, fire prevention and control, and safety in-store management. The "horizontal deployment of learnings" initiative aids in developing a positive safety culture and continual improvement across GPL, aimed at preventing the recurrence of any unfortunate incidents.
Safety Audit
The safety audit serves as a regular evaluation of our entire occupational health and safety management system, encompassing policies and programs designed to prevent workplace accidents or incidents. We adhere to a stringent safety audit process in alignment with ISO 45001 requirements, conducting audits quarterly. Our qualified internal safety auditors oversee the audit, while our online safety audit portal efficiently monitors and manages the process. Through analysis of the safety audit findings, we
pinpoint gaps and areas for enhancement within our health and safety management system.
External Recognition
Achieving third-party recognition and accolades on health and safety systems endorses the organizations reputation, brand value, and safety system implementation. GPL received over 70 external recognitions and accolades in the reporting year, including international and national safety awards such as the RoSPA (Royal Society for the Prevention of Accidents), British Safety Council International Safety Award, National Safety Council India, Global Safety Summit, and ICC National OH&S. These remarkable recognitions and accolades indicate a well-established and effective health and safety management system.
Health Surveillance Program
As part of our Health Surveillance Programme for workers at project locations, we conduct pre-employment medical examinations. Personnel responsible for operating machinery or driving vehicles undergo comprehensive medical assessments upon joining and at regular intervals thereafter.
H. Human Capital
At GPL, weve experienced significant business growth in the past year and are dedicated to sustaining this momentum. Consequently, our employee count has surged by 26% over the last year, rising from 2391 to 3015 employees.
We attribute our operational success to our dedicated team of Godrejites, who are instrumental in driving our aspirations for the future. At GPL, we take pride in fostering an inspiring workplace culture characterized by agility and high performance, aimed at attracting, nurturing, and retaining top talent.
As part of the esteemed 127-year-old Godrej Group, we cherish a legacy founded on strong values of trust, integrity, and respect. Meanwhile, our ambitious growth plans provide exceptional career prospects, even at the early stages of ones professional journey.
People philosophy
Our philosophy stands tall and proud on three principles:
• Your Canvas: "Our organization is growing and we want you to grow with us." We have an internal talent marketplace and encourage our people to apply for aspirational roles. With our empowering culture, our people get a chance to lead early on.
• Tough Love: "Go ahead and challenge yourself! Weve got your back." We believe the race for the future is not for the faint-hearted. We expect a lot from our people and differentiate basis performance and potential through career opportunities and rewards.
• Whole self: "We are selfish about your happiness." Simply because happier people make for a more fun culture at Godrej.
Building talent from within
We prioritize internal talent development and actively cultivate the next generation of leaders within our organization. Rather than solely considering seniority and tenure, we place emphasis on performance and potential, making early investments in promising individuals. Over the past two years, 6 out of 7 openings on the Management Committee have been filled by internal candidates. Furthermore, 68% of our zonal leadership positions are held by individuals who have been groomed internally.
Diversity
At GPL, our goal is to cultivate an inclusive environment where every employee feels valued, irrespective of their race, ethnicity, gender, gender identity, sexual orientation, or disability.
Currently, cis-women represent 28.78% of our workforce, positioning us as a leader in the industry in this regard. We celebrate the achievements of our women leaders, with 3 serving on the GPL Management Committee and 6 as Profit & Loss Leaders. In achieving LGBTQIA+ and persons with disabilities (PwD) representation, we are making significant progress. Presently, we have 55 LGBTQIA+ employees and 7 Persons with Disabilities (PwD).
Cis-Women:
In our Graduate Campus Program, weve made it a priority to enhance the representation of women in real estate and operations, with over 68% of our entry-level campus hires being women this year. In Operations among campus hiring, we achieved a milestone of 46% diversity representation for the first time ever. Additionally weve launched initiatives like EmpowHER, an Employee Resource Group (ERG) aimed at providing networking and professional development opportunities for women within GPL. Our mission is to empower, engage, and retain women employees, with the aim to have 35% representation across all cohorts of Cis-Women, LGBTQIA+, PwD employees by the end of FY25.
LGBTQ:
We continue to support the Pride Internship Program, which has successfully transitioned 23 interns into full-time employees or contract staff. Moreover, we launched Employer Assisted Accommodation Program which ensures safe housing for transgender, genderqueer, and gender non-conforming employees, with 8 guesthouses currently available.
We celebrated the 1st anniversary of the Queers & Allies ERG that was launched year as our LGBTQ representation doubled over last year.
In addition to our existing inclusive policies such as a gender- neutral anti-harassment policy, same-sex partner benefits, gender-neutral adoption benefits, gender transition support, and gender-neutral washrooms.
We launched Queering Workspaces, a project to connect with LGBTQ community to share stories of persons working in the corporate space and celebrate their participation.
PwD:
The ThisAbleMe campaign that we launched this year seeks to enhance awareness, job mapping, accessibility, and representation for persons with disabilities. Through a video series inspired by Super Mario, we showcase employees with disabilities navigating GPLs environments, fostering understanding and allyship.
We empower dyslexic thinking by providing reasonable accommodation through providing extra time in our verbal and numerical assessments at time of hiring.
Our All-Inclusive Model Site in Maan-Hinje, Pune, pioneers a new approach to creating accessible spaces for all user groups, including wheelchair users, visually and hearing impaired individuals, and more. Gender-neutral washrooms, accessible pathways, and ergonomic design features promote inclusivity. Additionally, we have launched an initiative called Silent Site in Pune which focuses on equal employment opportunities for individuals with speech and hearing impairments. We have a sign language interpreter on site to facilitate smooth communication by eliminating any communication barriers.
Our commitment to Diversity, Equity, and Inclusion (DEI) extends beyond workforce representation; we strive to create a workplace where everyone feels valued, empowered, and heard.
Agile, decentralized operating model
In the last three years, we have made agility a core focus of our operating model. We have designed our operations to be mostly site-based, with 69% of our employees working at the site level. To support this, we have increasingly decentralized decision-making at the last mile. As part of this effort, we have launched detailed RAPIDs this year, which give zonal and site leadership more power in making over 53% of decisions.
Campus
Our company is committed to bringing fresh talent into the industry and Indian corporate world. Every year, we provide employment opportunities to graduates and interns from top B-Schools through our Gallop (BLP) and Gurukul programs, which allow them to work on projects with early impact. In the past year, we have increased our intake from B-School campuses with a pool of partner campuses including ISB (for P&L roles),XLRI, IIM Indore, and IIM Lucknow.
Additionally, this year we have relaunched our Graduate Campus Program, which will result in approximately 150+ new hires across various departments including Sales, Operations, Customer Centricity, Legal, and Finance. Furthermore, we have also expanded our recruiting efforts to include premier graduate campuses such as IITs, NITs, Lady Shri Ram College, Hansraj College, Miranda House, St Xaviers Kolkata, NLSIU Bangalore, NLU Delhi, and Christ University.
Learning & development
In FY 2024, we launched "GPL Alchemy," our in-house learning academy, to amplify and ramp up our organization-wide capabilities in different functional and leadership areas. Our vision is to create a best-in-class in-house learning academy, and we have partnered with leading experts and institutions wherever necessary to leverage outside-in knowledge and best practices while continuing to reinforce it with internal subject matter experts (SMEs). All the learning tracks on GPL Alchemy have been designed through a rigorous diagnostics exercise, and we assure that everyone will have varied constructive takeaways from the programs.
Our foundation at Alchemy consists of five vital business tracks aligned with our organizations Long-Range Plan (LRP): Profitability, Growth (Sales & BD), Customer, Design, and Quality. Over the nine months following the launch, GPL Alchemy covered approximately 1400 unique employees in its various learning programs with a cumulative Net Promoter Score (NPS) of 60+.
What uniquely differentiates GPL Alchemy is the way we design our learning initiatives:
• We have a 360-degree understanding of training needs for stakeholders across all levels.
• Our curriculum is designed into Foundational, Strategic, and Advanced levels to bridge the gap between current and future outcomes in line with adult learning principles.
• We establish training effectiveness through the institutionalization of new ways of working for the target audience.
Heres a glimpse of various GPL Alchemy learning initiatives in FY24:
• The Profitability track, with five modules focusing on Financial Acumen, Real Estate Finance, strategic levers, and lenses to enhance profitability and robust decisionmaking, covered 75 P&L and other allied functions.
• The Design track, with modules on Product Frameworks to standardize landscapes, clubhouses, facades, also included masterclasses with leading industry faculty.
• Our Sales Academy was launched with a focus on building Sales Essentials capabilities in Year 1.
• The Business Development track, in partnership with Simon Horton of Negotiation Mastery, focused on Deal Negotiation.
• We also launched the Customer Centricity track with Customer Essentials in the first leg.
Employee well- being Hybrid Work
We have maintained our flexible work policy post-COVID by adopting a hybrid in-office model. We recognize the advantages of remote work, including the ability for individuals to prioritize their holistic well-being and enhance productivity through focused work. However, we also acknowledge the importance of in-person interactions for fostering impactful collaborations and conversations.
Mental Health Support
Our Employee Assistance Programme provides confidential mental wellness support through a team of expert counselors, available round the clock. Additionally, we have partnered with Inner Hour, a mental health platform, to offer self-help tools and confidential mental wellness sessions for employees and their families. Our focus is on assisting employees in managing personal and work-related concerns, empowering them to navigate sensitive situations both within and outside the workplace effectively.
Unlimited Sick Leave
We remain committed to offering 100% trust-based sick leave to all employees, allowing them to access sick leave whenever necessary based on their needs.
Harmony Hours
We introduced specific hours (8PM-8AM) in the workday where employees must avoid any kind of two-way official communication (meetings, calls, mails, texts). This was done to enable individuals to have focused time for themselves and their families.
Amber - Employee Listening
We introduced Amber, a Smart HR assistant which interacts with employees on various touchpoints with employees to continuously hear feedback from them & same is utilized by HR team to resolve issues faced by employees in day to day working.
Culture of recognition
We firmly believe in the power of recognition to enhance strategic clarity among our team members. It serves to underscore the organizational significance of key focus areas and exemplary behaviors. Through esteemed platforms such as the Spot Recognition scheme, Quarterly Regional awards, and Annual GPL Legends Awards, we honor and acknowledge employees who consistently demonstrate outstanding performance and embody our core values.
Recognizing the importance of acknowledgment, weve also introduced the OneGPL awards to further motivate our employees. However, its worth noting that the GPL Legends Awards stand as our pinnacle national recognition platform. Reserved for celebrating the most significant achievements of the previous fiscal year, this prestigious award honors the exceptional contributions of our top performers.
I. Internal Control System and their adequacy
GPL has implemented an internal control framework aimed at safeguarding and protecting all assets from unauthorized use or disposition, while ensuring that transactions are duly authorized, recorded, and reported accurately. This comprehensive framework encompasses internal controls over financial reporting, which uphold the integrity of the companys financial statements and mitigate the risk of fraudulent activities. The Corporate Audit & Assurance department meticulously issues well-documented operating procedures and authorities embedded with appropriate controls. These protocols are implemented at the outset of any activity and are continuously monitored throughout the process to identify and address any significant changes.
As part of their audit procedures, the department conducts thorough reviews of key processes to assess the adequacy of controls in place. Our internal controls undergo rigorous testing for effectiveness across all project sites and functions by the Corporate Audit team. Management periodically reviews the findings to initiate corrective actions where necessary, ensuring continuous improvement and adherence to best practices.
THREATS, RISKS AND CONCERNS
1. Industry Cyclicality
The Inherent cyclical nature of the real estate market, which can be influenced by various macroeconomic factors, changes in governmental policies, fluctuations in supply and demand dynamics, availability of consumer financing, and market liquidity. Our company has strategically structured its business model to mitigate these risks by diversifying through owned projects, joint ventures, residential platforms, and development management services across India. However, any future significant downturn in industry and the overall investment climate may adversely impact business.
2. Statutory Approvals
In the operational landscape of the Indian real estate sector, regulatory oversight from central, state, and local governments plays a pivotal role. Compliance with a plethora of laws and regulations, encompassing land acquisition, property transfer, registration, and land usage policies, is imperative for real estate developers. Notably, the regulatory framework varies significantly across different states. At present, several projects within our portfolio are in their initial planning phases, where the timely acquisition of approvals holds paramount importance. Any potential delays in obtaining these approvals may necessitate reevaluation and adjustment of project timelines.
3. Climate Change- Threats and Challenges for Real Estate Sector
The real estate industry in India is currently confronting significant shifts attributed to the impacts of climate change, with expectations of heightened intensity in the forthcoming years. These shifts present a spectrum of challenges and risks, broadly categorized into two main types: Physical and Transitional. Physical risks encompass both acute and chronic effects of climate change, including infrastructure damage at construction sites, disruptions to logistics routes, and decreased workforce efficiency due to heatwaves. On the other hand, transitional risks emerge from the transition towards a low-carbon economy, manifesting across four key categories: reputational, market, technology, and policy. In our management analysis, we have outlined a summary of pertinent physical and transitional risks that bear relevance to our firms operations. As extreme weather events increase in frequency and severity, real estate leaders across the globe are ramping up efforts to better understand and mitigate the impact of climate-related hazards on assets. 1
1 2024 Global Sustainability Outlook: Top Five Themes in Real Estate -
Urban Land Magazine (uli.org)
A summary of relevant physical and transitional risks material to the firm are listed below 1
| Nature of Risk | Material Risk | Description |
| Transition Risks | Increasing regulatory and policy pressure | The sector faces impacts from increasing regulation and new policies, including stricter building standards, carbon pricing, and additional reporting requirements. These changes are expected to shape operational strategies and decisionmaking processes within the industry. |
| Cost of indirect emissions | Increasing costs associated with carbon-intensive building materials will necessitate a revision of our approach to construction, refurbishment, and demolition activities. While we may not have direct control over these emissions, our influence can mitigate their magnitude. As sustainability becomes paramount, we must adapt our strategies to minimize environmental impact and manage construction costs effectively | |
| Shifting market preferences | As climate change awareness escalates, tenants and buyers increasingly demand emissions reduction efforts from the real estate sector. This shift in preferences towards high-efficiency buildings with renewable energy sources presents new risks for the industry. | |
| Change in investor sentiment | In striving to align our portfolios with climate objectives, we endeavor to offset emissions within our portfolio, thereby mitigating the impact of high-emitting buildings, while also prioritizing investments in low-emission real estate assets. | |
| Reputation risk | Failure to take action to decarbonize may lead to increased public scrutiny on the real estate sectors contribution to emissions reduction. |
1 https://www. unepfi.org/wordpress/wp-content/uploads/2023/03/Real-Estate-Sector-Risks-Briefing.pdf
| Nature of Risk Physical Risks | Material Risk Sea level rise and coastal flooding (Acute) | Description As sea levels continue to rise, coastal flooding events will occur with greater frequency and intensity, leading to heightened property damage and elevated expenses for repair and maintenance. |
| Inland flooding | As sea levels continue to rise, coastal flooding events will occur with greater | |
| (Acute) | frequency and icntensity, leading to heightened property damage and elevated expenses for repair and maintenance. | |
| Extreme storms and wind (Acute) | The heightened severity and frequency of extreme storms, such as hurricanes, present significant risks to our commercial real estate portfolio. These events have the potential to cause extensive damage worth billions of dollars and can adversely impact the near-term value of our properties. | |
| Wildfires (Acute) | Considering the escalating intensity and severity of wildfires, millions of residential and commercial properties constructed in high-risk areas face an elevated threat of destruction. | |
| Subsidence (Acute) | As trajectory of real estate holdings, it is evident that a growing number of properties face an increased risk of subsidence in the coming years. This poses a substantial threat to the structural stability of buildings. | |
| Heat and water stress (Chronic) | As temperatures continue to rise, buildings will face heightened cooling demands, resulting in elevated operational expenses. Additionally, escalating water stress will drive up operating costs through increased water rates, necessitating enhanced water efficiency measures and compliance with stringent water usage regulations. | |
Additionally, climate change also offers some opportunities for the real estate sector to manage these risks and grow in a sustained manner. The most relevant opportunities for GPL are:
• Energy management of real estate assets: The longterm strength of any real estate portfolio hinges on effective energy management. The 2022 energy crisis and carbon markets highlight the importance of meticulous energy demand mapping. This approach not only optimizes operational costs but also aligns with evolving regulations, like the governments 2022 Energy Conservation Amendment Bill mandating non-fossil fuel sources for high-consumption buildings. By proactively embracing sustainable energy solutions and exceeding these standards, forward-thinking real estate companies can ensure the long-term value and environmental responsibility of their assets.
• Sustainable building materials and efficiency measures: To ensure long-term value and environmental responsibility, the company prioritizes sustainable building practices throughout the asset lifecycle. This includes incorporating lower carbon footprint materials and implementing energy-efficient technologies like sensor-operated lighting systems. These actions not only contribute to cost savings but also align with the evolving regulatory landscape. For example, as per Government of Indias provision of the Energy Conservation (Amendment) Bill (2022), the Energy Conservation Building Code has been redefined as Energy Conservation and Sustainable Building Code. National Building code of India 2016 1 have also included a new and updated chapter on sustainability.
• Environmental and social stewardship: Incorporating robust environmental and social practices within our
1 National Building Code - Bureau of Indian Standards (bis.gov.in) operations, such as achieving Zero Waste to Landfill, is paramount for mitigating the adverse effects of our buildings, particularly newer constructions, on local communities and the environment. By fostering symbiotic relationships between our real estate assets and existing ecosystems and communities, we strive for holistic growth within the sector.
OUTLOOK
In FY2023-24, the real estate sector, including GPL, achieved remarkable milestones, marked by record-high sales, collections, project completions, and successful business development endeavors.
Post-pandemic, there has been a notable shift in the operational landscape of developers, emphasizing responsiveness to end-user demand and embracing innovation and digital transformation. We anticipate that FY2024-25 will sustain this positive sales momentum, underpinned by a robust structural framework, consistent demand, and housing loan rates that, while somewhat elevated, remain relatively affordable.
Amidst ongoing commodity cost inflation, which poses a challenge to operating margins, real estate entities, including GPL, have adeptly managed to absorb price escalations. However, potential interest rate adjustments to curb inflation may raise capital costs, thereby potentially disadvantaging weaker market players while benefiting financially robust developers like GPL.
GPLs solid financial standing, coupled with its reputation for exemplary execution, positions it favorably to capitalize on the prevailing cyclical upturn. We anticipate continued strong sales and operational performance in FY2024-25, driven by our promising project pipeline, robust balance sheet, and proven expertise in execution.
KEY FINANCIAL RATIOS (BASIS CONSOLIDATED FINANCIAL STATEMENTS)
In accordance with SEBI (Listing Obligations and Disclosure requirements 2018) (Amendment) Regulations 2018, the Company is required to give details of significant changes (Change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios.
| Ratios | 2024 | 2023 | Definition | ¦Explanation |
| Trade
Receivables Turnover |
6.79 | 5.13 | Trade Receivables Turnover = Revenue from Operations/ Average Trade Receivables | Improvement in Trade Receivable Turnover Ratio is mainly on account of improvement in collection cycle during current year as compared to previous year |
| Inventory
Turnover |
0.10 | 0.14 | Inventory Turnover = (Cost of Material Consumed + Changes in inventories of finished goods and construction work- in-progress) / Average Inventory | Decrease in Inventory turnover ratio is majorly on account of increase in inventory due to addition of new projects during current year |
| Interest
Coverage Ratio |
1.53 | 2.15 | Interest Coverage Ratio - Earning before interest, taxes, depreciation and amortisation expenses / Finance Costs (excludes interest accounted on customer advance) | Interest coverage ratio decreased on account of higher interest outgo due to increase in debt during current year as compared to previous year |
| Current Ratio | 1.43 | 1.46 | Current Ratio - Current Assets / Current Liabilities | Current Ratio decreased marginally on account of increase in current liabilities mainly due to increase in advances received against sale of units |
| Net Debt- Equity Ratio | 0.62 | 0.39 | Net Debt-Equity Ratio = (Current Borrowing + Non-current Borrowing - Cash and Bank Balances - Fixed Deposits - Liquid Investments) / Total Equity (excludes non-controlling interest) | Net Debt Equity Ratio changed mainly due to increase in debt and utilization of cash and bank balance for business development activity during the year |
| Operating Profit Margin (Adjusted EBITDA Margin) %) | 31.6% | 37.3% | Earnings before interest, taxes, depreciation, amortisation expenses and interest included in cost of sales / Total Income including Share of profit / (loss) of joint ventures and associate (net of tax) | Decrease in Adjusted EBITDA Margin is mainly on account of change in mix of projects which are recognised in revenue, increase in Advertisement & Marketing expense due to higher launches done during the year and onetime provision made towards structural repair and maintenance and other ancillary expense for Godrej Summit, NCR project during current year as compared to previous year |
| EBITDA % | 27.4% | 33.1% | Profit before tax + Finance cost + Finance cost included in Cost of Sales + Depreciation and amortization expense/ Total Income including Share of profit / (loss) of joint ventures and associate (net of tax) | Decrease in EBITDA Margin is mainly on account of change in mix of projects which are recognised in revenue, increase in Advertisement & Marketing expense due to higher launches done during the year and onetime provision made towards structural repair and maintenance and other ancillary expense for Godrej Summit, NCR project during current year as compared to previous year |
| Net Profit Margin % | 16.6% | 19.1% | Profit for the year attributable to equity holders of the parent / Total Income including Share of profit / (loss) of joint ventures and associate (net of tax) | Decrease in Net Profit Margin is mainly on account of change in mix of projects which are recognised in revenue, increase in Advertisement & Marketing expense due to higher launches done during the year and onetime provision made towards structural repair and maintenance and other ancillary expense for Godrej Summit, NCR project during current year as compared to previous year |
| Return on Net Worth | 7.5% | 6.4% | Profit / (Loss) for the year / Average Equity | Improvement in Return on Net Worth is mainly on account of increase in profit recognised during the year |
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