“Mid-Income, Affordable Housing with Annuity Asset Will Assist Our Growth”

Macrotech Developers, formerly Lodha Developers Ltd, plans to reduce its leverage levels significantly over the next 18 months, after witnessing maximum growth from its affordable housing and rental businesses. It also expects disciplined growth, going forward.

In a fireside chat at the Mint India Investment Summit and Awards 2020, Abhishek Lodha, managing director and chief executive officer (CEO), Macrotech Developers, spoke in detail about the ongoing slowdown and liquidity crisis, and why it’s a myth that only big developers will survive the prolonged period of lull.

“Going forward, we are looking at disciplined growth. Our growth will come from mid-income and affordable housing, along with annuity assets. Last 2.5 years, we were in the midst of consolidation and we also got ‘fat’ because liquidity was easily available. We have disciplined ourselves, reduced leverage. We will halve our leverage over the next 18-odd months. And, because we deliver, consumers are keen to buy our products and pay on time. If you focus on delivery, then sales and cash flows will happen,” Lodha said.

Macrotech’s collections (from customers) till February were at 7,600 crore, and it is on track to achieve 8,000 crore this fiscal year.

It also wants to expand outside the Mumbai Metropolitan Region (MMR), which has so far been its key market.

On Wednesday, Lodha Developers International Ltd, a subsidiary of Macrotech Developers, said it has repaid ₹2,550 crore for the redemption of its March 2020 dollar bonds, along with accrued interest. It had an outstanding $325 million senior notes due on 13 March 2020, which, along with interest, amounted to $344 million in total.

Lodha said the company repaid ₹1,300 crore of debt in the last quarter. In the March quarter, it plans to pay off another ₹1,300 crore.

This year, Lodha also expects about 60% of the company’s sales to come from affordable housing.

Last year, the Mumbai-based real estate firm delivered about 8,000 affordable homes, or ₹4,000 crore-plus of inventory, which the government classifies as affordable homes.

“…It is important to understand that it’s not just about affordable housing, but about the quality of affordable homes. A person spending ₹30-70 lakh is putting a greater percentage of his wealth into a house than those buying ₹5 crore or ₹10 crore homes.

It’s very important for affordable homebuyers that the quality is good, the property is delivered on time and the whole ecosystem of school, hospital, retail and sports is available. I don’t think there is enough quality affordable housing in the country right now, but when you do it well, the demand for it is quite phenomenal,” Lodha said.

India’s real estate sector has been grinding through a protracted slowdown, which has only worsened due to the ongoing liquidity crisis among non-banking financial companies (NBFCs).