INDIA’S LEADING real estate company, Macrotech Developers Limited, formerly known as Lodha Developers, has laid off over 250 people raising concerns over company’s rising debt profile.
The retrenchments at the company come at a time when falling sales and the economic slowdown have led to a liquidity freeze in India’s real estate market. The group is promoted by Mumbai BJP president Mangal Prabhat Lodha, who is also the party’s sitting MLA from the Malabar Hill Assembly seat in Mumbai.
When contacted, Abhishek Lodha, Chief Executive Officer and Managing Director, confirmed that the “firm had let go of 250 employees”.
But he claimed that employees were laid off based on their performance. “We have hired 200 people this fiscal and let go of 250 due to performance and project completions. We have had a great sales performance in the first five months (of 2019-20) and will continue to hire,” he said, adding that the sales during the first five months were to the tune of Rs 3,000 crore.
In August, two global rating agencies — Moody’s Investors Service and Fitch — had downgraded the corporate family rating of the company citing concerns over liquidity managements.
With more than 37 underconstruction projects across India and acquisitions on foreign shores as well, the Lodha Group employs over 3,700 people across India. In Mumbai, also seen as the country’s high-rise capital, the group has undertaken several projects in the luxury housing segment, including the World One Tower in Lower Parel, which is being promoted by the group as the next tallest tower in the world.
According to the group’s website, it has so far constructed 54.77 million square feet of buildable area across various consumption segments.
While Mangal Prabhat Lodha is not a serving director with the company, the Opposition in Maharashtra did not miss the opportunity to take a dig at the ruling BJP.
“The economy has hit a slow down mode owing to wrong policies of the government. We have been complaining about job losses, but BJP leaders at the Centre and the state have kept denying it. But now that a firm promoted by their Mumbai unit president itself has laid off people as a cost-cutting measure, the BJP should stop being in a denial mode,” said former state minister Nawab Malik, also the president of Mumbai NCP.
While the construction sector is a big income source for the government and also a big job generator, several leading developers have been struggling on account of liquidity crunch in recent times. Last month, the National Company Law Tribunal had admitted insolvency proceedings against another leading construction firm, Housing Development and Infrastructure Limited.
In response to a demand raised by industry bodies, the state government had last month slashed construction premiums across segments, granting the construction industry a Rs 2,200-crore stimulus to tide over the liquidity crisis. The Centre, meanwhile, is also expected to announce some concession measures to ease the situation.