The report stated that the company is open to “even 49% participation from private equity players at a special purpose vehicle (SPV) level.
Sobha Developers is reportedly in talks with banks, financial institutions and private funds to restructure over Rs10bn of its total debt of about Rs18bn, according to a report in a business daily. "We feel that banks, financial institutions and funds have agreed to support us. A clearer picture will emerge in the next 2-3 weeks," said J.C. Sharma, Managing Director, Sobha Developers.
Sharma added that the company had no overdue in principal payment, nor were there any interest delays. "We are confident that we could bring down the debt-equity ratio to less than 1:1," he said. The current debt equity ratio is 1.56:1. The company is open to even 49% participation from private equity players at a special purpose vehicle (SPV) level.
Thursday, March 26, 2009
Wednesday, March 25, 2009
Revenue down 50%, Sobha Developers cuts workforce
The firms’ managing director J.C. Sharma said unlike the real estate sector, the income from our contractual business has been steady & we don’t really have to look out for customers
Sobha Developers Ltd, a leading realty firm in south India, has witnessed its monthly revenue reduce by more than half, from Rs. 120 crore to Rs. 50 crore. With sales down, Sobha has been forced to cut its 3,000-strong workforce by about 30%, to 2,170.
However, with revenue from the real estate sector going down, the company's other source of income, its contractual business, has been the saving grace. “Unlike the real estate sector, the income from our contractual business has been steady and we don’t really have to look out for customers,” said J.C. Sharma, managing director of the Bangalore-based company, which is expecting a Rs. 400 crore turnover from the contractual business by 2010 and has completed over 120 contractual projects for various corporate customers such as Infosys Technologies Ltd, Hewlett Packard and Dell Inc.
Sobha’s net profit fell by 88% to Rs. 7.5 crore and revenue by 49% to Rs. 181 crore in the December quarter against the same period a year ago. The developer is also in the last leg of restructuring its debt of Rs. 1900 crore. “We are restructuring over Rs. 1,000 crore and are in the final stage of getting approvals from various financial institutions,” said Sharma.
The company is also looking at various funding options ranging from equity dilution, private equity funding at project level as well as land sales. Mint had earlier reported that the developer would try to sell parts of its 3,000-acre land bank—the process seems to have started. It has managed to sell land worth Rs100 crore over the last few months.
Sales have not picked up even after developers such as Sobha are trying out various out-of-the-box marketing techniques such as its recent Home Mela. The two-day property exhibition that showcased 18 different properties of the company concluded with only six apartments being sold.
Sobha, which till now, focused on high-end and luxury apartments and villas is finally joining the affordable housing bandwagon. It is launching its first budget housing project in the next three-four months in Bangalore, though officials didn’t divulge pricing details.
“Contractual work in real estate has also been hit as most corporates have stalled expansion plans. Which is why we find lot of contractual business coming in for developers from industrial or education sectors. Like Sobha, we will find more developers going in for debt restructuring to pull down high interest rates on short term loans and converting them to long-term loans,” said Abhinav Bhandari, research analyst (construction and infrastructure) with Pioneer Invest Corp Ltd.
Sobha Developers Ltd, a leading realty firm in south India, has witnessed its monthly revenue reduce by more than half, from Rs. 120 crore to Rs. 50 crore. With sales down, Sobha has been forced to cut its 3,000-strong workforce by about 30%, to 2,170.
However, with revenue from the real estate sector going down, the company's other source of income, its contractual business, has been the saving grace. “Unlike the real estate sector, the income from our contractual business has been steady and we don’t really have to look out for customers,” said J.C. Sharma, managing director of the Bangalore-based company, which is expecting a Rs. 400 crore turnover from the contractual business by 2010 and has completed over 120 contractual projects for various corporate customers such as Infosys Technologies Ltd, Hewlett Packard and Dell Inc.
Sobha’s net profit fell by 88% to Rs. 7.5 crore and revenue by 49% to Rs. 181 crore in the December quarter against the same period a year ago. The developer is also in the last leg of restructuring its debt of Rs. 1900 crore. “We are restructuring over Rs. 1,000 crore and are in the final stage of getting approvals from various financial institutions,” said Sharma.
The company is also looking at various funding options ranging from equity dilution, private equity funding at project level as well as land sales. Mint had earlier reported that the developer would try to sell parts of its 3,000-acre land bank—the process seems to have started. It has managed to sell land worth Rs100 crore over the last few months.
Sales have not picked up even after developers such as Sobha are trying out various out-of-the-box marketing techniques such as its recent Home Mela. The two-day property exhibition that showcased 18 different properties of the company concluded with only six apartments being sold.
Sobha, which till now, focused on high-end and luxury apartments and villas is finally joining the affordable housing bandwagon. It is launching its first budget housing project in the next three-four months in Bangalore, though officials didn’t divulge pricing details.
“Contractual work in real estate has also been hit as most corporates have stalled expansion plans. Which is why we find lot of contractual business coming in for developers from industrial or education sectors. Like Sobha, we will find more developers going in for debt restructuring to pull down high interest rates on short term loans and converting them to long-term loans,” said Abhinav Bhandari, research analyst (construction and infrastructure) with Pioneer Invest Corp Ltd.
Sunday, March 22, 2009
New Pricing By Sobha Developers
Hello All,
I have received a few emails from people complaining about the new pricing strategy adopted by Sobha Developers. In the press there is a lot of news about price reduction and it seems that Sobha Marketing team is also talking a lot about it. Effectively they seem to have reduced the price for their property on a per sq ft basis, but if you happen to get a chance to look into the details, you would know what it really is. They have considerably increased the prices elsewhere, like:
Share of Land - Cost of that seems to have been increased by nearly 100% or more
Car parking - Increase of nearly 50%
Club House - Increase of nearly 50%. In some cases even 100%.
Other charges like Electricity and Water Supply have also increased by 25%.
I am not sure if the above price increase is in tandem with the actual cost increase. However i would suggest new buyers to check all these well in advance. They seem to have reduced prices in some place and increased prices in some other places, so net affect balances out.
So bottom line is - dont get carried away by this "so called" price reduction. It might be not be true as you might be thinking. Get down and see the details carefully and make your judgement.
I have received a few emails from people complaining about the new pricing strategy adopted by Sobha Developers. In the press there is a lot of news about price reduction and it seems that Sobha Marketing team is also talking a lot about it. Effectively they seem to have reduced the price for their property on a per sq ft basis, but if you happen to get a chance to look into the details, you would know what it really is. They have considerably increased the prices elsewhere, like:
Share of Land - Cost of that seems to have been increased by nearly 100% or more
Car parking - Increase of nearly 50%
Club House - Increase of nearly 50%. In some cases even 100%.
Other charges like Electricity and Water Supply have also increased by 25%.
I am not sure if the above price increase is in tandem with the actual cost increase. However i would suggest new buyers to check all these well in advance. They seem to have reduced prices in some place and increased prices in some other places, so net affect balances out.
So bottom line is - dont get carried away by this "so called" price reduction. It might be not be true as you might be thinking. Get down and see the details carefully and make your judgement.
Friday, March 20, 2009
Interview with DNA of J C Sharma, Managing Director - Sobha Developers Ltd
Reproduced from - http://www.dnaindia.com/report.asp?newsid=1241040
The slowdown in the real estate sector has created a buyers' market. With prices getting more realistic, this is the best time to go shopping for a property, says JC Sharma, managing director of Sobha Developers.
In a chat with DNA Sharma spoke about the industry's prospects, the company's foray into affordable housing and its plans to put some land parcels on sale. Excerpts:
When will the realty sector hit the road to recovery?
I feel the worst is behind us. The market is highly under-penetrated and still favours customers. Developers who reduced rates have seen good sales.There won't be any further erosion in prices. We are also focusing on below-the-line marketing and promotion.
Do you expect property prices to nosedive further?
Going by the current land and construction costs, we have reached a saturation point when it comes to reductions. There can't be further cuts by any measure. The prices have stabilised and the interest rates are back to 2005-2006 levels. Demand will increase with the rise in consumers' confidence levels.
What is Sobha's current inventory?
We have 23 projects in Bangalore, Pune, Coimbatore and Trichur, which will be completed by end of 2010-2011.
Would you raise money to fund your existing projects?
We have already invested Rs 1,000 crore in existing projects.We have credit lines available from banks and customer deposits, which is helping us. I won't say that we are in a comfortable position now, but we are definitely much more relaxed as compared to what we were 3-4 months back. We are looking to raise money for under-funded or non-funded projects and not for land acquisitions. However, I won't be able to tell you how much money will be raised. We are also in talks with PEs and VCs for funding current and future projects.
Would you complete your projetcs on schedule?
There have been delays in some of the projects that are now on the verge of completion. Projects which are 6 months to a year-old will be completed on time.
Do you plan to sell your land bank?
We have 3,000 acres of land and yes, we are looking to sell part of the land parcels. These measures are to see us through the difficult times and support our business, so that the perception of market and customer comfort get a boost.
Are you looking to restructure debt?
We have requested our banks and financial institutions to look at Sobha's revised cash flow. In principle, we are getting a positive response and the process should be completed by mid-April.
How do you plan to hold on to your niche in the market?
For us, both sales and margins are important. Slowdown made us realise we should not limit our focus to one segment. It taught us a positive lesson and will help us expand our market share.We are looking at a couple of new launches in Bangalore in the residential space. We are de-focusing (lowering focus) on commercial projects and would like to wait for the market to pick up. We are waiting for our core business to pick up -- residential and contractual properties. We plan to launch our affordable housing project in Bangalore by 2010 followed by Coimbatore.
The slowdown in the real estate sector has created a buyers' market. With prices getting more realistic, this is the best time to go shopping for a property, says JC Sharma, managing director of Sobha Developers.
In a chat with DNA Sharma spoke about the industry's prospects, the company's foray into affordable housing and its plans to put some land parcels on sale. Excerpts:
When will the realty sector hit the road to recovery?
I feel the worst is behind us. The market is highly under-penetrated and still favours customers. Developers who reduced rates have seen good sales.There won't be any further erosion in prices. We are also focusing on below-the-line marketing and promotion.
Do you expect property prices to nosedive further?
Going by the current land and construction costs, we have reached a saturation point when it comes to reductions. There can't be further cuts by any measure. The prices have stabilised and the interest rates are back to 2005-2006 levels. Demand will increase with the rise in consumers' confidence levels.
What is Sobha's current inventory?
We have 23 projects in Bangalore, Pune, Coimbatore and Trichur, which will be completed by end of 2010-2011.
Would you raise money to fund your existing projects?
We have already invested Rs 1,000 crore in existing projects.We have credit lines available from banks and customer deposits, which is helping us. I won't say that we are in a comfortable position now, but we are definitely much more relaxed as compared to what we were 3-4 months back. We are looking to raise money for under-funded or non-funded projects and not for land acquisitions. However, I won't be able to tell you how much money will be raised. We are also in talks with PEs and VCs for funding current and future projects.
Would you complete your projetcs on schedule?
There have been delays in some of the projects that are now on the verge of completion. Projects which are 6 months to a year-old will be completed on time.
Do you plan to sell your land bank?
We have 3,000 acres of land and yes, we are looking to sell part of the land parcels. These measures are to see us through the difficult times and support our business, so that the perception of market and customer comfort get a boost.
Are you looking to restructure debt?
We have requested our banks and financial institutions to look at Sobha's revised cash flow. In principle, we are getting a positive response and the process should be completed by mid-April.
How do you plan to hold on to your niche in the market?
For us, both sales and margins are important. Slowdown made us realise we should not limit our focus to one segment. It taught us a positive lesson and will help us expand our market share.We are looking at a couple of new launches in Bangalore in the residential space. We are de-focusing (lowering focus) on commercial projects and would like to wait for the market to pick up. We are waiting for our core business to pick up -- residential and contractual properties. We plan to launch our affordable housing project in Bangalore by 2010 followed by Coimbatore.
Saturday, March 7, 2009
Sobha promoters may sell 26% to raise Rs 600 crore
Reproduced from: http://economictimes.indiatimes.com/Stocks-in-News/Sobha-promoters-may-sell-26-to-raise-Rs-600-crore/articleshow/4230932.cms
Promoters of Sobha Developers, a Bangalore-based realty major, are hoping to raise Rs 600 crore this year through sale of up to 26% stake or by unlocking value from the company’s land bank. The company has already identified land parcels, amounting to 400 acres, across Bangalore, Chennai, Kerala, Hyderabad and Pune for divestment. Some of these land parcels in Bangalore are in Minerva Mill, Bangalore East and Thanisandra. Sobha’s total land bank assets are in the region of 3,000 acres.
“We are open to all options, including raising equity at the entity level,” Sobha managing director JC Sharma told ET. Sobha has been talking to a host of big private equity funds for stake dilution. The company may be looking at deploying these funds in its ongoing projects. Sobha, a residential segment leader in Bangalore, has nearly 1,400 apartment units under development, which are scheduled to be ready in two to three years.
Also, in a deviation from its model of selling constructed apartments and villas, Sobha has entered the business of selling plots of land. It is looking at selling 15 acres as large-sized plotted development in Bangalore’s Thanisandra area. These plots carry an approximate tag of Rs 3,000 per sq ft.
Realty trackers say, companies may look at monetising their land banks by selling them off as plots. “It is difficult to offload a large parcel of land in the current scenario. So, carving such a parcel into several plots is more doable. Besides, companies do not have to incur construction costs and a long gestation period,” a consultant said. A year ago, valuations of realty companies soared based on their land bank assets. Today, with falling realty prices and negative buying sentiments, many realtors are looking at unconventional options to meet liquidity requirements.
Promoters of Sobha Developers, a Bangalore-based realty major, are hoping to raise Rs 600 crore this year through sale of up to 26% stake or by unlocking value from the company’s land bank. The company has already identified land parcels, amounting to 400 acres, across Bangalore, Chennai, Kerala, Hyderabad and Pune for divestment. Some of these land parcels in Bangalore are in Minerva Mill, Bangalore East and Thanisandra. Sobha’s total land bank assets are in the region of 3,000 acres.
“We are open to all options, including raising equity at the entity level,” Sobha managing director JC Sharma told ET. Sobha has been talking to a host of big private equity funds for stake dilution. The company may be looking at deploying these funds in its ongoing projects. Sobha, a residential segment leader in Bangalore, has nearly 1,400 apartment units under development, which are scheduled to be ready in two to three years.
Also, in a deviation from its model of selling constructed apartments and villas, Sobha has entered the business of selling plots of land. It is looking at selling 15 acres as large-sized plotted development in Bangalore’s Thanisandra area. These plots carry an approximate tag of Rs 3,000 per sq ft.
Realty trackers say, companies may look at monetising their land banks by selling them off as plots. “It is difficult to offload a large parcel of land in the current scenario. So, carving such a parcel into several plots is more doable. Besides, companies do not have to incur construction costs and a long gestation period,” a consultant said. A year ago, valuations of realty companies soared based on their land bank assets. Today, with falling realty prices and negative buying sentiments, many realtors are looking at unconventional options to meet liquidity requirements.
Sobha Developers - Not Giving Refund of booking amount
Fellow folk in woe!
I booked an apartment with Sobha Developers in Aug 08 paying Rs 3 lacs as the booking advance. Since I was having problems getting a bank loan and my financial situation was not permitting me to go ahead with the purchase I canceled the booking in Sept’08 and was promised the refund in a fortnight. After repeated calls/emails and a personal visit to meet the management in their Wilson Garden office, I have been informed in a mail last week that they will refund the amount only when they sell the apartment to another customer. This reportedly is their policy which is not mentioned in any document that I have in my possession.
I need some advise from any of you on how to get my money back and also to alert fellow buyers on this scam perpetrated by Sobha wherein they get interest free sums and sit on it leaving their customers in a lurch. This is from a company that unhesitatingly levies 24% interest for every day’s delay in payment of their dues.
SS
I booked an apartment with Sobha Developers in Aug 08 paying Rs 3 lacs as the booking advance. Since I was having problems getting a bank loan and my financial situation was not permitting me to go ahead with the purchase I canceled the booking in Sept’08 and was promised the refund in a fortnight. After repeated calls/emails and a personal visit to meet the management in their Wilson Garden office, I have been informed in a mail last week that they will refund the amount only when they sell the apartment to another customer. This reportedly is their policy which is not mentioned in any document that I have in my possession.
I need some advise from any of you on how to get my money back and also to alert fellow buyers on this scam perpetrated by Sobha wherein they get interest free sums and sit on it leaving their customers in a lurch. This is from a company that unhesitatingly levies 24% interest for every day’s delay in payment of their dues.
SS
Friday, March 6, 2009
Sobha Developers to begin work of Commercial space
Sobha Developers will launch the work of the commercial space in the Sobha City at Puzekkal in Thrissur shortly.
Talking to reporters here on Wednesday, Sobha Developers regional director P Ramakrishnan said that the 3.5 lakh sqft. commercial part of the integrated township under development by Sobha will comprise a world class business hotel, entertainment and amusement centre, air conditioned mall with food court, restaurants, four-screen multiplex, gaming arcade and ayurvedic spa.
The township encircling a 6.5-acre man-made lake will have 1.8 million sqft. for the residential space consisting of 65 premium villas and 648 apartments. The company has registered sale of 34 per cent of the residential space so far.
Talking to reporters here on Wednesday, Sobha Developers regional director P Ramakrishnan said that the 3.5 lakh sqft. commercial part of the integrated township under development by Sobha will comprise a world class business hotel, entertainment and amusement centre, air conditioned mall with food court, restaurants, four-screen multiplex, gaming arcade and ayurvedic spa.
The township encircling a 6.5-acre man-made lake will have 1.8 million sqft. for the residential space consisting of 65 premium villas and 648 apartments. The company has registered sale of 34 per cent of the residential space so far.
Thursday, March 5, 2009
Fitch withdraws Sobha Developers' rating
Fitch Ratings has today withdrawn the 'F2+(ind)' rating assigned to India-based Sobha Developers Limited's INR1,000m Short-term debt, as there is no outstanding instrument under the ratings. The company has confirmed that the instrument was fully paid off in June 2008. Fitch will no longer provide analytical coverage on the issuer.
Cash crunch cripples Sobha Developers' projects - unable to pay suppliers - offers them apartments instead
Bangalore-based real estate major Sobha Developers may be running out of elbow room, when it comes to managing its cash flow. Recent reports that the company was looking to sell a 26% stake to raise cash, may be just the tip of the iceberg. CNBC-TV18’s Sunanda Jayaseelan delvees deeper.
Sobha Developers was planning to build a 5-star hotel, but the project that was announced two years ago has been put on hold and the land is now being used as a venue for a Home Mela, marketing apartments developed by the builder. The company has a 99 year lease on this land, and CNBC-TV18 has learnt that it is talking to several players to sell this lease.
When contacted specifically on this latest development, the management simply said it has now decided not to go ahead with the hotel project, and refused to explain why. But sources said that cash flow problems may be forcing the company to rethink its aggressive expansion plans, and stick to its core business.
CNBC-TV18 has also learnt that Sobha Developers is now asking its suppliers to accept apartments instead of cash. A cement supplier who meets close to 70% of Sobha's cement demands says the company owes him close to Rs 90 lakh for supplies over the last 3 months.
He said the company has asked him to accept apartments instead and he refused. A steel supplier, who meets around 35% of the developer's steel needs, says he's in the same boat.
When contacted, the company said, “There is no stated policy as to offer apartments to vendors. In the past also suppliers have taken apartments. "
But sources believe that such apartments are being offered at huge discounts. But most suppliers are reluctant to accept these terms, and say they would rather wait till the company's cash flow situation improves.
Sobha Developers was planning to build a 5-star hotel, but the project that was announced two years ago has been put on hold and the land is now being used as a venue for a Home Mela, marketing apartments developed by the builder. The company has a 99 year lease on this land, and CNBC-TV18 has learnt that it is talking to several players to sell this lease.
When contacted specifically on this latest development, the management simply said it has now decided not to go ahead with the hotel project, and refused to explain why. But sources said that cash flow problems may be forcing the company to rethink its aggressive expansion plans, and stick to its core business.
CNBC-TV18 has also learnt that Sobha Developers is now asking its suppliers to accept apartments instead of cash. A cement supplier who meets close to 70% of Sobha's cement demands says the company owes him close to Rs 90 lakh for supplies over the last 3 months.
He said the company has asked him to accept apartments instead and he refused. A steel supplier, who meets around 35% of the developer's steel needs, says he's in the same boat.
When contacted, the company said, “There is no stated policy as to offer apartments to vendors. In the past also suppliers have taken apartments. "
But sources believe that such apartments are being offered at huge discounts. But most suppliers are reluctant to accept these terms, and say they would rather wait till the company's cash flow situation improves.
Wednesday, March 4, 2009
Sobha Developers - Sobha Hillview: Arbitrary Changes in Maintenance Charges
Sobha has now sent letters to all the property owners in their Hill View project that as against the agreed provision of payment of Rs.2 lacs as deposit for maintenance, they have now proposed Rs.36 per sq.ft. per year as maintenance charge and further Rs.38 per sq.ft. as sinking fund.
This is completely outside the scope of the agreement. All the flat owners must immediately write back to sobha resisting any such move.
Sobha hill view projects are delayed by 12 months. Pls make sure they pay you the rent in terms of the agreement.
This is completely outside the scope of the agreement. All the flat owners must immediately write back to sobha resisting any such move.
Sobha hill view projects are delayed by 12 months. Pls make sure they pay you the rent in terms of the agreement.
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