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.
Thursday, March 5, 2009
Cash crunch cripples Sobha Developers' projects - unable to pay suppliers - offers them apartments instead
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.
Friday, February 27, 2009
An NRI Customer - Sobha has never lived up to my expectations
Hi All,
I am one of those Booked at Sobha Suncrest for a 3 bed room flat. First we have been promised March 2009, now they are sending a mail that for interiors in June 2009, and possession in October 2009, and then later in December 2009 for a livable condition. Sobha is not talking about any compensation for their delay. They had their share from us collecting the Quarterly installments, charging heavy fines as interest even for one day late in payment, and charging heavily on Outstation cheques.(promised no charges for outstation cheques while booking )
Sobha has never lived up to their expectations. All dreams about the Sobha Suncrest is shattered.
Based on their promises as NRI we have had plans of relocating ourselves in April 2009 and it is frustrating dealing with them.
I am one of those Booked at Sobha Suncrest for a 3 bed room flat. First we have been promised March 2009, now they are sending a mail that for interiors in June 2009, and possession in October 2009, and then later in December 2009 for a livable condition. Sobha is not talking about any compensation for their delay. They had their share from us collecting the Quarterly installments, charging heavy fines as interest even for one day late in payment, and charging heavily on Outstation cheques.(promised no charges for outstation cheques while booking )
Sobha has never lived up to their expectations. All dreams about the Sobha Suncrest is shattered.
Based on their promises as NRI we have had plans of relocating ourselves in April 2009 and it is frustrating dealing with them.
Sunday, February 22, 2009
Sobha Developers - Sobha Hillview: Delay in Delivery
Hello all,
By now, you all must have got the mail from Col. Narula regarding further delay in handing over Suncrest flats. My assessment is that this delay will further extend as much of the work has come to a stand still. The common facilities like the club house, parking, STP etc., are not progressing at all. Unless these are completed, Sobha will not register and hand-over the flats. And on top of this, there is no mention of any compensation from them for this delay.
Unless we ALL come together to pressurize Sobha to act and finish the project soonest, things won't move. By all, I mean the entire Hillview project's flat owners. We share all the common facilities with Sunbeam and Sunscape. Plus there is strength in numbers.
I am willing to create an online petition for this purpose. We also need to evaluate what our options are - consumer court, arbitration, bad publicity in various forums etc. If any of you know or is a legal expert, please let me know.
Unless we move fast and decisively, I see no light at the end of this tunnel.
Regards,
Natarajan
By now, you all must have got the mail from Col. Narula regarding further delay in handing over Suncrest flats. My assessment is that this delay will further extend as much of the work has come to a stand still. The common facilities like the club house, parking, STP etc., are not progressing at all. Unless these are completed, Sobha will not register and hand-over the flats. And on top of this, there is no mention of any compensation from them for this delay.
Unless we ALL come together to pressurize Sobha to act and finish the project soonest, things won't move. By all, I mean the entire Hillview project's flat owners. We share all the common facilities with Sunbeam and Sunscape. Plus there is strength in numbers.
I am willing to create an online petition for this purpose. We also need to evaluate what our options are - consumer court, arbitration, bad publicity in various forums etc. If any of you know or is a legal expert, please let me know.
Unless we move fast and decisively, I see no light at the end of this tunnel.
Regards,
Natarajan
Friday, February 20, 2009
Sobha Developers still in talks for rescheduling debt
The company has seen its net profit fall by 88% to Rs7.5 crore and revenue by 49% to Rs181 crore in the December quarter compared with a year ago.
Bangalore: In December 2006, P.N.C. Menon, chairman of Sobha Developers Ltd, was so happy after his company raised Rs570 crore through an initial public offering that he donated 70kg of gold to Guruvayur temple in Kerala.
A little over two years later, the developer is requesting lenders to reschedule Rs1,800 crore in debt that was due on 31 December.
“We are still in the process of negotiation to reschedule the dates for payment, which is basically trying to turn our short-term loans into long-term loans,” managing director J.C. Sharma told Mint on Thursday. The company has seen its net profit fall by 88% to Rs7.5 crore and revenue by 49% to Rs181 crore in the December quarter compared with a year ago.
To be sure, the property developer in southern India is not alone in its plight. India’s real estate firms are reeling under a fund crunch and falling property values. Their market value has also been declining, reflected in the Bombay Stock Exchange’s realty index shedding 85.25% in 12 months when its benchmark Sensex index fell 49.97%.
New Delhi-based Unitech Ltd announced this month that it has rescheduled at least 75% of its debt of Rs25 billion due by March, the Reuters news agency reported.
The sharp decline in property markets has led DLF Ltd, the country’s largest real estate developer by market value, to plan selling assets and reorganizing debt in the coming quarters, as reported in Mint on 2 February.
Sobha Developers is now trying various ways to push sales, earn cash and repay some high-interest debts. After failing to sell even after announcing a blanket 8% discount in November on all its properties, it is now trying out a new way to gather people to showcase various properties lying unsold for months.
Through a two-day seminar-cum-exhibition this weekend, a first of its kind for the developer, Sobha Home Mela will display 18 of its residential properties in different Bangalore neighbourhoods. For the first time, it will sell plots in north Bangalore. The exhibition is scheduled to be held on a 1.5-acre plot on Church Street in Bangalore’s central business district that the company has been trying to sell.
“The seminars and discussions are primarily meant to brief buyers about the current slowdown and about the various benefits attached to home-buying in the present situation,” Sharma said. “Properties on display range from below Rs2,000 per sq. ft to above Rs6,000 per sq. ft.”
In a report after Sobha’s December quarter results, Mumbai-based brokerage Angel Broking Ltd said the developer did not have any project launches between October and December last year as its net sales slumped.
Sobha’s maiden venture in northern India in partnership with QVC Realty, a Rs2,000 crore integrated township in Gurgaon near Delhi, has also been indefinitely delayed. It has also stalled its Mysore residential venture.
According to a 30 January report by Centrum Broking Pvt. Ltd, the company went on an overdrive to aggressively acquire land, mostly in Bangalore, after its public stock offering, borrowing heavily for the purpose.
Shobha Developers’ stock has plunged 90.76% from Rs875—its 52-week high on 29 February last year—to Rs80.80 on Thursday.
Bangalore: In December 2006, P.N.C. Menon, chairman of Sobha Developers Ltd, was so happy after his company raised Rs570 crore through an initial public offering that he donated 70kg of gold to Guruvayur temple in Kerala.
A little over two years later, the developer is requesting lenders to reschedule Rs1,800 crore in debt that was due on 31 December.
“We are still in the process of negotiation to reschedule the dates for payment, which is basically trying to turn our short-term loans into long-term loans,” managing director J.C. Sharma told Mint on Thursday. The company has seen its net profit fall by 88% to Rs7.5 crore and revenue by 49% to Rs181 crore in the December quarter compared with a year ago.
To be sure, the property developer in southern India is not alone in its plight. India’s real estate firms are reeling under a fund crunch and falling property values. Their market value has also been declining, reflected in the Bombay Stock Exchange’s realty index shedding 85.25% in 12 months when its benchmark Sensex index fell 49.97%.
New Delhi-based Unitech Ltd announced this month that it has rescheduled at least 75% of its debt of Rs25 billion due by March, the Reuters news agency reported.
The sharp decline in property markets has led DLF Ltd, the country’s largest real estate developer by market value, to plan selling assets and reorganizing debt in the coming quarters, as reported in Mint on 2 February.
Sobha Developers is now trying various ways to push sales, earn cash and repay some high-interest debts. After failing to sell even after announcing a blanket 8% discount in November on all its properties, it is now trying out a new way to gather people to showcase various properties lying unsold for months.
Through a two-day seminar-cum-exhibition this weekend, a first of its kind for the developer, Sobha Home Mela will display 18 of its residential properties in different Bangalore neighbourhoods. For the first time, it will sell plots in north Bangalore. The exhibition is scheduled to be held on a 1.5-acre plot on Church Street in Bangalore’s central business district that the company has been trying to sell.
“The seminars and discussions are primarily meant to brief buyers about the current slowdown and about the various benefits attached to home-buying in the present situation,” Sharma said. “Properties on display range from below Rs2,000 per sq. ft to above Rs6,000 per sq. ft.”
In a report after Sobha’s December quarter results, Mumbai-based brokerage Angel Broking Ltd said the developer did not have any project launches between October and December last year as its net sales slumped.
Sobha’s maiden venture in northern India in partnership with QVC Realty, a Rs2,000 crore integrated township in Gurgaon near Delhi, has also been indefinitely delayed. It has also stalled its Mysore residential venture.
According to a 30 January report by Centrum Broking Pvt. Ltd, the company went on an overdrive to aggressively acquire land, mostly in Bangalore, after its public stock offering, borrowing heavily for the purpose.
Shobha Developers’ stock has plunged 90.76% from Rs875—its 52-week high on 29 February last year—to Rs80.80 on Thursday.
Saturday, February 14, 2009
Sobha Developers Ltd - Sobha Moonstone Bad experience
I have paid advance in 2006 for Sobha Moonstone with a promise from builder that permissions would come in 2 to 3 months. At last permission has come in the month of Feb 2008. At the time of sale agreement down payment of 25% is made. Even after one year construction has not started. There is no communication from the builder. Whenever you reach CRM they say "Construction will start very soon". Huge amount of Pre EMI money is lost in this game. Construction is delayed by at least 2 years as of today.
Risks with this builder:
1) Construction agreement is one sided. One particular clause which says "If you modify the apartment builder is not liable for any penality charges for delay". Technically the project can be delayed for ever but till if you changed your flooring from Vitrified tiles to granite Sobha is never liable for any payments.
2) Lack of communication: Once booking amount is paid they will never contact you again. You are at their mercy.
3) Escalation Mechanism: They don't understand nor respect any escalations.
4) Penalty clauses: On cancellation of either parties fault you will lose 25% during booking time and 5% on total construction cost of the apartment (Not on the money you paid so far, total construction cost)
5) For any reason if they are unable to build only option is to move to some other apartment, you will never get back money. You can join http://groups.google.com/group/sobha-moonstone google groups.
Risks with this builder:
1) Construction agreement is one sided. One particular clause which says "If you modify the apartment builder is not liable for any penality charges for delay". Technically the project can be delayed for ever but till if you changed your flooring from Vitrified tiles to granite Sobha is never liable for any payments.
2) Lack of communication: Once booking amount is paid they will never contact you again. You are at their mercy.
3) Escalation Mechanism: They don't understand nor respect any escalations.
4) Penalty clauses: On cancellation of either parties fault you will lose 25% during booking time and 5% on total construction cost of the apartment (Not on the money you paid so far, total construction cost)
5) For any reason if they are unable to build only option is to move to some other apartment, you will never get back money. You can join http://groups.google.com/group/sobha-moonstone google groups.
Wednesday, January 28, 2009
Sobha Developers - Highly over-rated builder
I fully agree with all the comments made in other reviews. In today’s times of economic turmoil, It is better to go for a readily available apartment than to wait for eternity to get one completed.
However if you choose to go for Sobha and that too one being still completed, then these are the things that you need to be aware of -
- Sobha will make sure that all the terms and conditions are in their favor.
- Any modifications that you ask Sobha to execute, they will botch these up big time. However, they will charge you a bomb for these modifications
- Payment is linked to completed floors. Hence to get money as fast as possible, they just keep on raising floors without completing the apartments on the floor. Once the entire payment is made, they take their sweet time to complete the project
- Their Service team comprises immature folks who do not know how to interact with customers. The turnover of these folks and Sales guys is very high. So you don’t know whom to talk to if anything goes wrong - Believe me a lot of financial stuff goes wrong and no coincidence that this is always in Sobha’s favor
- Sobha is well known for delays in handing over projects. Average is more than a year!
- They will not leave any stone unturned in extracting as much money as possible through heads like VAT, Service tax, BWSSB, KEB and Registration. They do not produce any receipts as proofs of payments made. Nor will they show any proofs when they decide to hike these charges arbitrarily
- The top management is completely unapproachable. Mails and calls will go unanswered.
However if you choose to go for Sobha and that too one being still completed, then these are the things that you need to be aware of -
- Sobha will make sure that all the terms and conditions are in their favor.
- Any modifications that you ask Sobha to execute, they will botch these up big time. However, they will charge you a bomb for these modifications
- Payment is linked to completed floors. Hence to get money as fast as possible, they just keep on raising floors without completing the apartments on the floor. Once the entire payment is made, they take their sweet time to complete the project
- Their Service team comprises immature folks who do not know how to interact with customers. The turnover of these folks and Sales guys is very high. So you don’t know whom to talk to if anything goes wrong - Believe me a lot of financial stuff goes wrong and no coincidence that this is always in Sobha’s favor
- Sobha is well known for delays in handing over projects. Average is more than a year!
- They will not leave any stone unturned in extracting as much money as possible through heads like VAT, Service tax, BWSSB, KEB and Registration. They do not produce any receipts as proofs of payments made. Nor will they show any proofs when they decide to hike these charges arbitrarily
- The top management is completely unapproachable. Mails and calls will go unanswered.
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