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Business News/ Companies / News/  Despite sluggish demand, Lodha sets a sales target of Rs9,000 crore
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Despite sluggish demand, Lodha sets a sales target of Rs9,000 crore

The real estate firm looks to deliver 6,000 homes in 2015-16 and scale up its commercial office development

Lodha Developers managing director Abhishek Lodha. Photo: Aniruddha Chowdhury/MintPremium
Lodha Developers managing director Abhishek Lodha. Photo: Aniruddha Chowdhury/Mint

Bengaluru: At a time when the real estate sector is facing tepid sales and stagnant home prices, Lodha Developers Pvt. Ltd, which clocked the highest residential sales in 2014-15 beating DLF Ltd, has set an ambitious sales target of earning 9,000 crore in 2015-16.

The Mumbai-based firm, which plans to deliver 6,000 homes in this fiscal, is also considering going public, scaling up its commercial office development portfolio and entering Bengaluru in the medium term, said a top company executive.

Lodha made about 7,800 crore in new sales by selling around 5,500 homes in 2014-15 while DLF, India’s largest developer by market value, clocked less at 3,850 crore.

For 2015-16, DLF has set a conservative home sales target of 3,500-4,000 crore, factoring in the weak demand in the National Capital Region, its core market.

“Unless something goes terribly wrong, or there are major shocks in the system, we are looking to do about 9,000 crore of new sales this year. We also intend to deliver a little over 6,000 homes this year," said Abhishek Lodha, managing director of Lodha Developers.

Lodha, which is predominantly present in Mumbai and has one ongoing project each in Hyderabad and Pune, plans to enter Bengaluru in another three years or so.

“We want to take the brand and our development capability to Bangalore. We also see significant growth opportunities both in the office and residential segments in Pune. Our office portfolio tends to get overshadowed by our residential plans, but we have started a million sq. ft of office space in the New Cuffe Parade project and a significant amount of office space construction in Palava," Lodha said.

The company recently underwent a reorganization of roles between brothers Abhishek and Abhinandan Lodha. While Abhishek took charge of the family’s real estate business, deputy managing director Abhinandan will head the financial services business.

“By this December, we would have an operational financial services business that will be run by Abhinandan and I will focus on the real estate business. The shareholding pattern remains unchanged," Abhishek said.

The firm, which sold 6.7 million sq. ft (residential sales) in 2014-15, has total land reserves of more than 4,760 acres or a development pipeline of 388 million sq. ft, higher than any of its peers, an India Ratings and Research note said in August.

Property advisory Knight Frank valued Lodha’s assets at about $11 billion ahead of its $200 million bond issue in March.

However, Lodha’s diversified portfolio is concentrated in a handful of large projects. Its four largest projects are Palava City in Dombivali, the Park in Worli (including Trump Tower), New Cuffe Parade in Wadala and World Towers in Upper Worli. Palava, which is under way, alone is spread across 4,500 acres and already has 12,000 people living in it.

“We sell across price points and create locations by building large-sized projects that we do in phases, leading to an upgradation in value," Lodha said.

In September, Lodha launched a separate business vertical to develop super-luxury projects, starting with Mumbai and London, when most realty firms have moved to mid-market projects, finding it difficult to sell expensive homes.

This year, it plans to launch its first project at Mumbai’s Altamount Road under its new The Luxury Collection and subsequently, a property at Grosvenor Square, in central London, that it bought from the Canadian government for over £300 million (around 3,050 crore) in 2013.

“This is perhaps one of the toughest times for the residential sector in the country. Lodha is one group that has stood out, continued to build like a mach-ine and sell, maybe slower than it normally would," said Shishir Baijal, chairman and managing director, Knight Frank India.

“So far, they have not spread themselves too much, but the challenge would be, if they were to expand geographically, will they be able to replicate the success in Mumbai?" he said.

Despite the high sales figures, analyst reports indicate that the company’s robust performance is weighed down by its high debt levels, at about 11,900 crore.

The company has receivables from sold flats of about 12,000 crore and from under-construction units (that are not sold) of about 25,000 crore.

“We have a lot of well-wishers who are suggesting we go for an IPO, and we are contemplating it, but it won’t happen this year," Lodha said. “We won’t make any significant additions to our current debt levels this year. We are looking at how we can further strengthen our financial performance; do we look at the capital markets exercise or through public markets?"

In 2010, Lodha had planned to raise about 2,790 crore through an IPO but eventually postponed it indefinitely. This time around, it’s expected to be far bigger.

“Lodha will hit the market with its IPO at the right time. There’s not much appetite for a real estate IPO in the current market conditions, so Lodha’s IPO, which is expected to be a fairly big one, will happen only sometime next year," said a person familiar with the matter, who didn’t wish to be named.

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Published: 04 Oct 2015, 11:40 PM IST
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