Due to rising debt and falling sales, Macrotech Developers, formerly Lodha Group has laid off around 400 employees. The debt of the firm has crossed Rs 25,600 crore. However, the country’s largest realty firm said it had laid off employees after conducting their performance reviews. The retrenchments at the company promoted by Mumbai BJP chief Mangal Prabhat Lodha comes at a time when the economic growth has slumped to low of 6 per cent which has led many to fear if the spectre of job losses across sectors awaits next.
When our correspondent Nikhil Sagare spoke to Mangesh Ambekar a broker from Smart Makaan he said, “Slowdown has not affected the real estate industry much. Actual buyers are coming to buy property. They derive benefit from the government sponsored housing projects.”
The Lodha group company was downgraded with a negative outlook by two global ratings agencies in August, Moody’s Investors and Service and Fitch Ratings on concerns of liquidity and falling sales. According to a recent ratings issued by India Ratings, a division of Fitch the gross debt of Macrotech rose 13 per cent to Rs 25,640 in FY 19.
Jayprakash Poojari broker from Square Properties said, “Slowdown has affected the real estate industry as sales have declined. Work has stalled. Builders have increased rates of properties and there is lack of buyers in the market. Situation will improve depending upon the policies framed by the government.”
With more than 37 under-construction projects across India and acquisitions on foreign shores as well, Macrotech employs over 3,700 people across India. In Mumbai also seen as country’s high rise capital the group has undertaken several projects in the luxury housing segment including World One Tower in Lower Parel. According to the group’s website it has so far constructed 54.77 million square feet of buildable area across various consumption segments.
Anuj Puri, Chairman – ANAROCK Property Consultants said, “The returns on investments in residential real estate have dropped from two or even three-digit values to low single-digit or, in many locations, even negative returns over the last few years. This naturally keeps investors at bay – and investors need to be in the driver’s seat for the market to revive. The ROI from housing currently clocks in at a meagre 2-3% even in the most favourable markets across Indian cities.”
“The company, across its projects gives direct and indirect employment to nearly 50,000 persons. These lay-off are a part of our annual performance appraisals,” a spokesperson said.
The impacted jobs include mid-to-junior level employees of the company and also contractual resources, sources said.
These mid-to-junior level employees and contract workers, including engineers, architects and sales people, were working at various projects, said the source.
The president of Association of Property Professionals, a forum of brokers, Ashwin Jain said lay-offs have become common in the realty space. He added there was an expectation that after the elections, things would get back to normalcy, but it hasn’t happened yet.
Lodha currently has nearly 42 under-construction residential projects, including The World Towers and Lodha Park, comprising several high rises in central Mumbai, as well as affordable housing project like the Palava City.
According to rating agency ICRA, central Mumbai alone has unsold inventory worth Rs 45,000 crore as of end June. In volume terms, the micro-market accounts for 32 per cent of the total unsold units in the megapolis.
Due to the prevalent market conditions, its second attempt to hit the capital market with Rs 4,500-crore IPO was deferred once again.