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Disclaimer
Certain statements made in this presentation may not be based on historical information or facts and may be “forward looking statements,” including those relating to general business plans and strategy of Sobha Developers Ltd. (“Sobha"), its future outlook and growth prospects, and future developments in its businesses and its competitive and regulatory environment. Actual results may differ materially from these forward-looking statements due to a number of factors, including future changes or developments in Sobha's business, its competitive environment, its ability to implement its strategies and initiatives and respond to technological changes and political, economic, regulatory and social conditions in India. This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer, or a solicitation of any offer, to purchase or sell, any shares and should not be considered as a recommendation that any investor should subscribe for or purchase any of Sobha's shares. Neither this presentation nor any other documentation or information (or any part thereof) delivered or supplied under or in relation to the shares shall be deemed to constitute an offer of or an invitation by or on behalf of Sobha.
Sobha, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The information contained in this presentation, unless otherwise specified is only current as of the date of this presentation. Sobha assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events, or otherwise. Unless otherwise stated in this document, the information contained herein is based on management information and estimates. The information contained herein is subject to change without notice and past performance is not indicative of future results. Sobha may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revision or changes. This presentation may not be copied and disseminated in any manner.
THE INFORMATION PRESENTED HERE IS NOT AN OFFER OR SOLICITATION OF ANY OFFER TO PURCHASE OR SELL ANY EQUITY SHARES OR ANY OTHER SECURITY OF SOBHA.
This presentation is not for publication or distribution, directly or indirectly, in or into the United States, Canada or Japan.
These materials are not an offer or solicitation of any offer of securities for purchase or sale in or into the United States, Canada or Japan.
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Company Overview
The Leading Real Estate Player in South India
Promoted by Mr. P.N.C. Menon and Mrs. Sobha Menon in 1995
– Mr. P.N.C Menon has over three decades of national and international experience in the real estate & construction industry
– Established the brand “Sobha” with focus on quality and timely delivery
Business Segments
– Completed approximately 30.8 MM sq. ft. of development and construction till date
– Real Estate developer with focus on Residential projects
– Contractual projects for institutional clients – Infosys, Taj, Dell, HP, HCL Tech
– In-house manufacturing of interiors and glazing for contractual and residential use
Unique ‘Backward Integration’ Model
– Provides key competencies & in-house resources to deliver a project from “conceptualization to completion”
Demonstrated expertise in construction of modern and innovative structures
– Infosys – Global Education Centre, Mysore and Employee Care Centre, Pune
Strong track record of performance, consistent growth and profitability
Vision : Transform the way people perceive ‘Quality’
4
Real Estate Development & Contractual Business
NCR
Chennai
Mysore
Mangalore
Trivandrum
Calicut
Palakkad
Bangalore
Chandigarh Baddi – H.P
Jaipur
Mumbai
Pune
Hyderabad
Bhubaneswar
Coimbatore
Completed quality residential, commercial and contractual projects spanning 30.8 MM sq. ft.
Demonstrated execution capabilities in 19 cities
Delivered 16.9 MM sq ft of high quality space to Infosys Technologies
Real Estate Developer with extensive land bank of c.3,036(1) acres at prime locations across 10 cities in India
Kolkata
Thrissur
Roorkee
Note1. Includes land bank owned, under joint development and under MoU
Status of Projects Residential Commercial Contractual
No. SaleableArea
(MM sq. ft.)
No. DevelopedArea
(MM sq. ft.)
140 18.3
5.9
12
34
1.7
0.46
No. SaleableArea
(MM sq. ft.)
No. (MM sq. ft.)
190
65
Completed 10.7
Ongoing
Total
8.9
38
25
30.8
15.2
5
Strong Track Record
Despite a challenging year, Sobha continued operations at all its 65 sites across 15.2 MM sq. ft. Sobha generated positive operating cash flows of INR 1827 MM in FY 2009
2,2134,652 6,273
11,89414,363
9,917
0
5,000
10,000
15,000
20,000
FY04 FY05 FY06 FY07 FY08 FY09
129 347885
1,6152,283
1,097
0500
1,0001,5002,0002,500
FY04 FY05 FY06 FY07 FY08 FY09
Profit After Tax(1)
(INR MM)Total Revenues(1)
(INR MM)
Consistently executing c.6 MM sq. ft. of area on a yearly basis for the past 3 years
Despite witnessing difficult markets in FY09, Sobha has demonstrated a strong
revenue CAGR of 35% for FY04 - FY09
Note1. Standalone Financials
6
Strong Execution Track Record
Sobha Sunflower – Bangalore
Real Estate Development
Sobha Iris – BangaloreSobha Daffodil – Bangalore
Sobha Mayflower – Bangalore
7
Strong Execution Track Record
Contractual Projects
Geodesic Dome Multiplex – MysoreInfosys Food Court - Bangalore
Infosys SDB 3, PuneInfosys GEC 2, Mysore
8
Unique ‘Backward Integration’ Model
SOBHA’S UNIQUE BACKWARD INTEGRATION
MODEL
INTERIORSDIVISION
GLAZING & METAL DIVISION
BUILDING MATERIALSDIVISION
MECHANICAL, ELECTRICAL & PLUMBING PRACTICE
ARCHITECTURE, STRUCTURAL &
INTERIOR STUDIO
PROJECT IMPLEMENTATION
TEAM
Backward Integration
■ Assured premium quality
■ Better and timely execution
■ Better planning of resources
Expertise in Constructing Innovative Structures
Conceptualization to Completion
9
Economic Crisis: Impact on Sobha
Sobha as a part of its growth strategy, acquired land banks at various locations to
meet long term business needs
Slowdown in sales volumes due to the economic crisis
Resultant cash flow mismatch
Leading to a sharp increase in financial leverage
10
Sobha: Building Resilience
Restructuring of short term debt to longer term maturities
Identifying partners at project (SPV) level
Infusion of additional equity at entity level
Sale of plotted developments; liquidation of surplus land parcels to boost cash flows
Focus on revival of sales volume of Sobha products, with aggressive marketing and innovative offers
Launch of tailor made projects for groups of customers; working on the concept of moderately priced housing – focus on middle class clients in prime locations
Focus on execution of contractual projects with reputed clients to obtain repeat orders and generate stable / positive cash flows
Focus on cost reduction through value engineering and innovation
Deleveraging Strategies
Operational Strategies
11
Deleveraging the Balance Sheet
Consolidated Balance Sheet as at March 31, 2009 (1)
Sources of Funds Amount (INR MM) Amount (US$ MM) (2)
Net-Worth 10,875 214
Deferred Tax Assets 31 1
Minority Interest 249 5
Secured Loans 18,783 370
Uses of Funds Amount (INR MM) Amount (US$ MM) (2)
Fixed Assets 2,248 44
Investments 27 1
Cash 214 4
Other Current Assets 34,042 671
Less: Current Liabilities & Provisions 6,117 121
Unsecured Loans 538 11
Total 30,445 600
Total 30,445 600
Notes1. Audited Balance Sheet2. Using exchange rate of US$ 1 = INR 50.73 as on Mar 31, 2009
Restructuring of short term debt to longer term maturities
12
Deleveraging the Balance Sheet (cont’d)
Infusion of Private Equity at the SPV level
– INR 884 MM : Pan Atlantic (FY 09)
– INR 2,250MM(1) : Purna Partners (FY 10)
Monetization of surplus land parcels
– Realigned its strategy to focus on development of strategic land banks with near term development horizon
– Diversifying risk by partnering with joint developers at identified locations
– Monetizing surplus land banks
Note1. INR 250MM out of INR 2,250MM has already been received by Sobha Developers
Raise Equity Capital
– Raise equity and reduce leverage on the balance sheet
13
Ongoing Projects Provide Visibility in Cash Flows
Strong Pipeline of Ongoing Real Estate Projects offering c.9.3 MM sq. ft. of saleable area expected to
be completed over the next 2 – 3 years
Revenues from completion of ongoing projects + reduction in unsold inventory
– Ensures near term cash flows
Substantial portion of the cost on ongoing projects is already incurred
– Low outstanding commitments
34 contractual projects spanning over 5.9 MM sq. ft. being executed
Residential & Commercial Projects
Saleable Area (sq. ft.)
Bangalore
Trissur
Pune
Coimbatore
Sun CrestSun Beam 2Sun Beam 1LavenderSun ScapeAlthea Chrysanthemum Beryl - Phase IAmethystSobha PetuniaBasil - Phase IMoonstone CinnamonBeryl - Phase IIAzalea AdamusSaffronLifestyle Sobha SundewSobha FiorellaSobha OfficesLifestyle - Club House
Sobha TopazSobha JadeSobha MalachiteSobha LifestyleSobha City - Club House
Sobha Carnation - Phase 1
Sobha EmeraldHarishree Garden - Phase IISobha Emerald - Club House .02Total
0.20.20.20.10.50.40.90.30.6
0.10.1
0.1
0.1.02
0.50.60.10.2.03
0.3
0.30.3
9.3
0.50.50.20.40.30.1
1.2
0.1
14
Refining Sales & Marketing Strategies
Proactively lowering sales prices to boost
sales
Widened sales and distribution channel
Considering re-designing apartment sizes to
build more ‘moderate’ cost homes in
Bangalore & Coimbatore
Targeting new market segments – Sobha
Garrison developed for defense personnel
Sobha Garrison
– Customized product targeted at armed forces personnel
– Soft launch has witnessed strong demand
– Comprises quality residences being constructed to be sold exclusively to serving and retired defense personnel
15
Why Sobha?
Strong South India Presence
and Brand Equity Robust Organization
Structure and Strong Management Team
High Cash Flow Visibility
Focus on Residential
Projects
Land Bank substantially paid
for
Proven Execution
Capabilities
Strong Pipeline of Ongoing and
Forthcoming Projects
SOBHA: Well poised to take advantage of the revival in the Indian Real Estate market
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Appendix
17
Backward Integration: World Class Manufacturing Facilities
Interiors & Furnishing Division Glazing & Metal Works Division Concrete Products Division
Total Factory area : 0.8 MM sq ft Factory area : 0.3 MM sq ft Factory area : 0.4 MM sq ft
Workforce : 955 Workforce : 784 Workforce : 91
PRODUCTS
Manufacturing wood based products such as doors, windows, paneling, cabinets, cupboards & furniture
Manufacture of Economy, Deluxe, Super Deluxe & Premium Mattresses from Furnishing division
PRODUCTS
Metal / Steel fabrication
Aluminum door and windows structure
Glass works
PRODUCTS
Manufacture of wide range of concrete products such as concrete blocks, pavers, kerb stones, water drainage channels, paving slabs and elite landscape products
18
Financials at a Glance
Consolidated Financials as at March 31 (1) (INR MM)
Financial Performance 2008-09 2007-08
Turnover 9,888 14,382
Total 30,445 27,940
Profit Before Depreciation, Interest and Tax (PBDIT)
2,936 3,774
Profit Before Interest and Tax (PBIT) 2,575 3,424
Financial Position
Shareholder’s Fund 11,123 10,109
Borrowed Funds 19,322 17,831
Net Fixed Assets 2,248 2,142
Investments 58 39
Net Current Assets 28,139 25,759
Profit Before Tax (PBT) 1,501 2,791
Profit After Tax (PAT) 1,099 2,309
Total 30,445 27,940
Notes1. Audited Financials