Godrej Properties to invest Rs 155 crore to repair housing project in Gurugram; offers to buy-back flats

Realty firm Godrej Properties on Wednesday said its board has approved Rs 155 crore for repair work in its completed housing project 'Godrej Summit' at Gurugram, in Haryana after chloride was found in concretes used in the buildings.

Godrej Properties also announced an offer to buy back flats or provide rentals to all the unit holders of the project.

There are around 1,000 flat owners in this project. In February last year, a partial collapse of a residential tower in the Chintels Paradiso project in Gurugram led to the death of two women.

 Widespread corrosion of steel reinforcement in structures was found in many towers of this society.

Godrej Properties informed that its arm Godrej Projects Development Ltd (GPDL), which completed the Godrej Summit project in phases in 2017 and 2018, recently appointed an external expert to undertake a detailed independent assessment of a quality issue discovered in the project.

"This assessment identified the presence of chloride in the concrete used in the project, which when in contact with water, leads to corrosion of steel reinforcement. The external experts further advised that with the required repair and maintenance framework, the building is expected to perform as per its intended design life," the company informed in a regulatory filing.

Accordingly, Godrej Properties said that an estimated amount of Rs 155 crore towards repair, maintenance, customer claims, or any ancillary costs has been provided in the unaudited financial results of the company for the quarter ended June and approved by the board on Wednesday.

GPDL said it has the ability to claim against the contractors who constructed the Godrej Summit project.

"GPDL has also made an offer to buy back units or provide rentals to all the unit holders of the project and will account for the buyback if and when the intending customers execute the relevant documentation with GPDL," the filing said.

According to sources, few flat owners have availed this buy-back offer.

The company, however, feels that there would be no impact on profit and loss statement as those flats will be sold again after the repair work, they added.

GDPL had developed this project, comprising a total saleable area of 2.1 million square feet, in partnership with the landowner. It had an economic interest of 65 per cent in the project in terms of sharing of saleable area, according to an investor presentation.

Apart from Chintels Paradiso project, a housing society in Gurugram comprising over 700 flats, constructed by the state-owned NBCC, was also declared unsafe.

Following these developments, structural audit has been conducted by many developers suo motto or at the direction of local administration.

Godrej Properties, which is part of business conglomerate Godrej Group, is one of the leading real estate firms in the country. 

It has a major presence in Mumbai-Metropolitan Region (MMR), Delhi-NCR, Pune and Bengaluru.