Godrej Properties is ready to repurchase all the units sold in the Godrej Summit project in Sector 104, Gurgaon. This decision comes after the concrete used in the construction was found to be contaminated with chloride, causing corrosion in the steel reinforcement when mixed with water.
According to Executive Chairperson Pirojsha Godrej, only around 50 residents have shown interest in selling back their units, and so far, 10 agreements have been executed. The total sales in the project amounted to a little over ₹1,000 crores.
Godrej stated that they believe only a small portion of the sales might be returned, but the offer is open to any customer, and they view all the customers as potential liabilities. However, most customers have expressed interest in remaining in the project.
The discussion during the earnings call for the first quarter results of the company was largely centred around the Gurgaon project. A defect in one of the apartments prompted a quality audit, which revealed the concrete contamination issue. The building was completed in phases during 2017 and 2018.
The buyback price for the units will be linked to their original sale price, which was in the range of ₹5,000-7,000 per square foot at the time of launch. Godrej emphasized that the company acted swiftly to prioritize the safety and financial security of their customers.
For those residents who choose to stay in their units during the repair period, the company will provide rentals. The estimated cost of repairs and any customer claims is ₹155 crores, which has already been accounted for in the June quarter results, leading to a corresponding reduction in profits.
Godrej believes it can make claims against the contractors involved in the project, although they have not yet taken legal action against them. Once the units are repurchased, they will be repaired and subsequently resold.
Additionally, Godrej revealed that the company plans to conduct audits of buildings they have constructed and sold near Godrej Summit, as well as across their national portfolio, to ensure the quality and safety of their projects.
Source- Business line
