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Shares Godrej Properties Drops 3.85% after Defence Ministry’s Objection to Mumbai Project

24 May 20243 mins read by Angel One
The Defence Ministry halts Godrej Properties' Rs.7,000 crore Mumbai project near Kandivali, citing non-compliance with 2011 guidelines on construction proximity.
Shares Godrej Properties Drops 3.85% after Defence Ministry’s Objection to Mumbai Project
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The Defence Ministry has called for a halt to the construction of a residential project by Godrej Properties in Mumbai, which has an estimated revenue potential of Rs.7,000 crore. According to the reports, the ministry’s objections are due to the project’s proximity to the Central Ordnance Depot (COD) in Kandivali, Mumbai.

The Godrej Reserve development covers an 18.6-acre land parcel. As per the company’s FY24 regulatory filing, about 1.91 million sq ft has already been launched, with bookings amounting to 1.51 million sq ft valued at Rs.2,693 crore.

Proximity to Defence Establishment

The Defence Ministry has requested the Municipal Corporation to issue a ‘stop-work notice’, arguing that the site is within 500 metres of the COD Kandivali complex and that Union government guidelines from May 2011 prohibit construction within 100 metres of any defense establishment. Additionally, within the 100-500 metre range, construction is restricted to a maximum of four storeys and requires a no-objection certificate (NOC) from the Defence Ministry.

Godrejs’ Compliance Stance

Godrej Properties has asserted that they initiate all projects only after securing necessary approvals from relevant authorities. The company reinstated that In this case, too, all requisite approvals from concerned authorities and RERA (Real Estate Regulatory Authority) are intact and that they have not received communication from any concerned authority citing any non-compliance.

Implications for Godrej Properties 

This dispute might potentially impact Godrej Properties’  reputation and significant revenue expectations from the project as the company navigates the complexities of compliance and regulatory approvals amid the Defence Ministry’s concerns.

Market Reaction

Godrej Properties’ stock dropped today amid the Defence Ministry concerns. The stock, which closed at Rs.2,812.95 the previous day, fell by 3.85% to a low of Rs.2,704.50 on Friday after opening at Rs.2,756.60.

Conclusion: In conclusion, the Defence Ministry’s intervention brings out the importance of balancing urban development ambitions with the required rules set by the authorities, a challenge that developers like Godrej Properties must carefully manage in order to sustainably build projects.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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