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Godrej Properties Ltd (GPL), one of India's leading real estate developers, has been grappling with challenges related to its residential project, Godrej Summit, located in Gurugram. Over 100 homebuyers of this project have chosen a buyback offer from the company following the identification of certain flaws in the construction quality. This decision comes after Godrej Properties announced in August 2023 that it would spend up to INR 155 crore for repair work on the project.
The Godrej Summit project, comprising 1,100 residential units across 11 towers, faced scrutiny due to issues related to the quality of construction materials. The company had appointed an external expert to conduct an independent assessment, which revealed the presence of chloride in the concrete used, leading to corrosion of steel reinforcement. This discovery prompted GPL to allocate funds not only for repairs but also for a buyback option for those homeowners seeking to exit the project.
During the Q3 FY24 earnings call, Pirojsha Godrej, Executive Chairperson of GPL, stated that the repair work is progressing, with the expectation of completion by the end of the current calendar year. The company revealed that, so far, around 10% of the customers have opted for the buyback option, representing a little over 100 apartments. Godrej anticipates this number to increase to about 200 over the next few months.
The financial commitment for the repair work stands at INR 155 crore, out of which the company has spent approximately INR 20 to 25 crore. Additionally, GPL estimates spending INR 100 to INR 200 crore for the buyback. Pirojsha Godrej expressed confidence in fully recovering the money spent on the buyback by reselling the repaired apartments once the restoration process is complete.
Despite the company's efforts to address the concerns of homeowners, some residents remain dissatisfied with the progress of the repair work. They have cited slow-paced construction and delays in the provision of structural safety audit reports as points of contention. The developer initially set a deadline of November 2023 for the completion of repairs, later extending it to June 2024, and now, it has been further extended until December 2024.
In response to the concerns raised by homeowners, GPL emphasized its commitment to the well-being and satisfaction of residents. The company has actively engaged with residents to offer collaborative solutions and support throughout the process. The rectification process is guided by IIT Delhi, a leading institution in India, and supervised by a government empowered structural engineer.
While Godrej Properties faces challenges in balancing the expectations of homeowners and completing the necessary repairs, the company remains committed to delivering on its promises and ensuring the quality and safety of the Godrej Summit project.
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