Godrej Group to enter into housing financial service | Pirojsha Godrej to ET Now

The Godrej Group has now entered in financial space. It will be launching Godrej Housing Finance. With the launch of Godrej Housing Finance company, the group aims to build a long term sustainable retail financial services business. The company is aiming for the balance sheet of rupees 10,000 crores. Joining in the Godrej Housing Finance Chairman Pirojsha Godrej, speaks on what prompted the company to enter into the housing finance space? How does the company view at the competitive landscape in the housing finance sector as the banks offer very low interest rates? What will be the differentiating factor for Godrej Housing Finance?

Okay well meantime here’s a very interesting announcement coming in from the goldbridge group the group has now entered the financial space um it’s now is going to launch goldridge housing finance and with the launch the housing finance company the group aims to build a long-term sustainable retail financial services business they are in fact aiming for a balance

Sheet of 10 000 uh crore rupees uh let’s bring on board then the management uh to talk about this launch uh thank you so much sir for joining in today on the show so to start with what prompted you to get into the housing finance space share with us the rationale for this decision it’s great to be with you and we’re very excited at goldridge to be launching our

Entry into financial services through a housing finance company called cordridge housing finance our decision to enter this space and to specifically focus initially on the housing finance space was led by a few things i think firstly we see the space itself is a very large one and one that offers a lot of opportunities from a risk perspective we think that housing

Finance is probably the most secure part of the lending universe given that it’s backed by a very real asset we also had quite a lot of insights from our experience through goodreads properties from a developer perspective and have a few thoughts on how best to offer flexibility to customers and offer the right package alongside a developer to to a customer so we

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Hope those learnings will help us scale this business but i think that combination of a great opportunity a good placement within that opportunity given our experience in goodreads properties and of course the advantages the goldridge brand offers us in terms of its ability to access customers and low-cost capital all of which contributed to our decision to enter

This space okay how do you view this competitive landscape in the housing finance sector because banks are obviously offering very low interest rates we have also seen consolidation within the nba fc space as well so how do you wish to grow your you know your presence in this very competitive scenario what will be the differentiating factor for goldbridge housing

Finance yes you know i think the the competitive landscape is very interesting at the on the one hand as you rightly pointed out some of the strongest financial institutions in the country some of the leading banks are paying a lot of attention to housing finance at the moment on the other hand this uh this part of the financial services sector has been driven

To a considerable extent by nbfcs over the last few years and they have been given recent events in that sector a lot of challenges a lot of players who had significant market share now exiting that market so i think it’s a industry that is in flux there is quite a lot of dislocation and those are moments that typically lend themselves to opportunities for new

Players to come in and get some market share and that’s very much uh what we hope to do um certainly we will have to compete with with leading institutions who are very competitive cost of capital given their ability to take deposits we’re happy to say that we’re launching the business with home loans starting at 6.69 which we believe is the lowest rate offered

Currently in india by any housing finance player and we hope to you know use that as a launching pad and do our best given our insights into the real estate sector to scale this business and gain some market share in the years ahead how much investment are you planning to make in goldridge housing finance and how will it be done how much you know will the parent

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Sort of pump in into woodridge housing we expect to initially fund this business entirely through equity capital from the goodrich group’s balance sheet and we expect the initial funding requirements for the first three years to be somewhere in the range of one thousand to fifteen hundred crore and as i said we we expect to fund that entirely ourselves i think

At that stage we will evaluate three years down the line whether it makes sense to put in more capital from the group or whether to look at any kind of external source of equity capital and i think you know we haven’t really gotten that far yet but certainly the initial investment will be entirely made through the group’s balance sheet okay the unit pandemic has

Resulted of course in increased awareness for own homes where does the bulk of the demand come from and is affordable housing going to be you know a focus area for you you know i think over over the years we expect to have a broad-based uh business that covers a lot of different segments to start with we’re focusing on the top metro cities in the country which

Are mumbai and cr bangalore and pune we’ve we’re going to be starting with a strategic partnership with goodrich properties and offering loans for the first few months to customers off code rich properties across these four markets we’ve seen as you rightly pointed out that the pandemic has actually dramatically increased the customer’s intent for home ownership

Given people’s increased preference for the security that that offers um and one of the advantages that customers have at the moment is that the cost of financing a home is at decadal low so i think overall interest rates are at the lowest levels they’ve been in india in many many years and i think that dramatically enhances affordability and counteracts uh some

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Of the nervousness people might be facing due to job insecurity and the like so we do think that the sec while the sect the residential property sector has gone through a down cycle now for the last seven or so years we do think some green shoots are starting to become visible and the affordability because of low interest rates and flat property prices over a long

Period is at quite interesting level so we we do expect to see benefits from that and go to charging finance as well okay um can you take us through you know your loan book your revenue targets that you’ve set for the next few years and what’s your overall outlook for the company’s growth as a group we believe in only entering businesses with a very long-term

Perspective so this is not a business that we’re seeing as a short-term or tactical opportunity we hope to have this become another pillar of the group’s growth over the next several decades um you know i think that we’re obviously just launching this week so the initial targets are just that very preliminary but we’d like to see a loan book size in the first

Three years of about 10 000 crore and maybe over the first six or seven years taking that to about 30 000 okay thank you so much for joining in and we wish you all the very best for your foray into uh housing finance um that’s of course the management speaking on how essentially um you know business could look like and what it would look like you know for this

New uh you know this new foray

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Godrej Group to enter into housing financial service | Pirojsha Godrej to ET Now By ET NOW