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Godrej Properties prepared to buy back all units in contaminated Gurgaon building

Priya Singh | 2023-12-30

The earnings call to discuss the first quarter results of the company was partly dominated by the Gurgaon project
Godrej Properties is prepared to buy back all the units that it has sold in Godrej Summit in Gurgaon, a project in which the concrete used was found to be contaminated with chloride that causes corrosion in the steel reinforcement when mixed with water.

Executive Chairperson Pirojsha Godrej said that so far only about 50-odd residents have expressed interest in selling back their units of which 10 agreements have been executed. The sales in the project were a little over ₹1,000 crore.

“Our sense is that only a small portion of that (the total sales) is likely to come back, but, of course, the offer is open to any customer...we see the potential liability as all the customers,” Godrej told analysts. He added that most customers were interested in remaining in the project.
The earnings call to discuss the first quarter results of the company was partly dominated by the Gurgaon project, where a defect in one of the apartments led to a quality audit of the building by an external expert resulting in the discovery of the contamination in the concrete. The building was completed in phases in 2017 and 2018.
Godrej said that the buyback price would be linked to the sale price of the units which had been in the range of ₹5,000-7,000 a square feet at the time of the launch. He added that the company had acted promptly to ensure safety of the customers and their financial security.

Those who were staying put would be provided rentals during the period of the repairs. The cost of repairs as well as any customer claims has been estimated at ₹155 crore, which has been provided in the June quarter results, reducing the profits by that amount.

The company believes that it can make a claim against the contractors though it has yet to take legal action against them.

The units bought back will be resold after they have been repaired.

Godrej also said that the company would undertake audits of buildings that it had constructed and sold in the vicinity of Godrej Summit s well of its national portfolio