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Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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Page 1: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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Page 2: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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.

Page 3: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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’

Page 4: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 5: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 6: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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Strong Execution Track Record

Sobha Sunflower – Bangalore

Real Estate Development

Sobha Iris – BangaloreSobha Daffodil – Bangalore

Sobha Mayflower – Bangalore

Page 7: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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Strong Execution Track Record

Contractual Projects

Geodesic Dome Multiplex – MysoreInfosys Food Court - Bangalore

Infosys SDB 3, PuneInfosys GEC 2, Mysore

Page 8: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 9: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 10: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 11: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 12: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 13: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 14: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 15: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 16: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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Appendix

Page 17: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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

Page 18: Disclaimer - SOBHA Certain statements ... Moonstone Cinnamon Beryl - Phase II Azalea Adamus Saffron Lifestyle Sobha Sundew Sobha Fiorella Sobha Offices Lifestyle - Club House

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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