Mumbai: Godrej Properties Ltd (GPL) on Thursday said its June quarter net profit fell 65.41% from a year ago to 34.30 crore on higher expenses, fewer new bookings and a change in accounting standards.

Total income during the period grew 18.9% to 1,066.73 crore from a year ago.

ICICI Securities said in a note that in the first quarter of this fiscal, earnings may be skewed as builders begin switch to new accounting IND-AS 115 system that requires them to switch to project completion method from percentage completion method. Under the new system, revenue will be booked only after a project is completed and the customer has taken possession of house/flat.

“We have just completed an eventful start to the year. The new accounting standards fundamentally change the way we recognize revenues and will lead to more volatility in reported earnings," said Pirojsha Godrej, executive chairman, Godrej Properties Ltd.

During the reporting quarter, its booking value stood at 820 crore, down by 44.36% at 1,474 crore. The company saw a booking of 1.17 million sq. ft of residential space as against 1.8 million sq. ft in first quarter of last fiscal.

The retrospective adoption of IND-AS 115 has also led the company to write down 744.11 crore from its networth. Post adoption of the new accounting system, the company’s networth stands at 1,496.18 crore against as 2,240.29 crore as of 31 March 2018. The new norm requires builders to write back all the revenues and profits booked till date on ongoing residential/commercial sale projects which are not 100% complete.

In a 10 July report, brokerage firm ICICI Securities had said the introduction of IND-AS 115 is expected to complicate matters further as revenue recognition for a number of projects may now get pushed to fiscal 2020-21.

During the first quarter this financial year, Godrej Properties raised 1,000 crore by allotting preferential shares to Gamnat Pte Ltd, a GIC-managed investment firm. The company will use the proceeds of the fund to support growth opportunities across India’s leading real estate markets.

“We successfully raised 1,000 crore through a preferential issue in June 2018. This will help us to accelerate the scale of expansion in our top four focus markets and capitalize on the many opportunities in the business development space," Godrej said adding the company will regain its sales momentum given the launch pipeline it has for the year.

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