November 14, 2011 / 4:53 AM / 6 years ago

Godrej group not cutting property prices - Chairman

Chairman of The Godrej Group Adi Godrej speaks during a televised debate on "The Indian Spring: Seeking Independence from Corruption" at the World Economic Forum (WEF) India Economic Summit in Mumbai November 13, 2011.Vivek Prakash

MUMBAI (Reuters) - Godrej group sees better demand ahead in residential projects and is not cutting property prices, while it faces a slowdown in demand in its consumer durables business, Chairman Adi Godrej said on Monday.

"Working capital for residential is less and demand is also better. We are not cutting prices, our prices are going up," Godrej said at the sidelines of a World Economic Forum event in Mumbai.

A group firm Godrej Properties develops properties across 10 cities in India and had raised $100 million via an initial public offering (IPO) in January 2010.

Real estate firms in Asia's third largest economy have come under pressure as the interest rates have been on the rise for past several quarters, while the sales from the projects is sluggish.

"Overall there is a slowdown as mortgage rates are high. We have added a lot of projects and our growth in the first half was 80 percent, but that does not signify the industry," he added.

Shares in Godrej Properties, now valued by the market at $943 million, rose 10 percent in 2011 so far, bucking the downward trend for the BSE benchmark that lost 15.5 percent during the same period.

In October, the Mumbai-based firm's board has approved raising upto 7.50 billion rupees through means including a qualified institutional placement, a rights issue and a private placement.

Godrej Consumer, another group firm engaged in consumer durables, is facing a slowdown in demand as prices had to be raised across the board, Godrej added.

"It is hard to maintain margins in the current environment. Margins have been sacrificed across the board."

The firm, wich has interests in chemicals, animal feed, processed food and beverages, posted a 24 percent rise in its July-September net profit to 928.3 million rupees on net sales of 13.99 billion rupees.

Shares of Godrej Consumer, valued by the market at $2.65 billion, rose 4 percent in 2011 so far.

At 10:55 a.m., Godrej Properties shares were trading 0.5 percent higher at 678 rupees, while Godrej Consumer shares were down 1.12 percent to 404.55 rupees, while the benchmark was up 0.7 percent at 17,313.10.

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Reporting by Swati Pandey, Writing by Ketan Bondre; Editing by Subhadip Sircar

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