Sobha Eyes Slum Redevelopment, SEZs

June 5, 2008	(Be the first to rate this story!)  Loading ...
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Sobha Developers, a Bangalore-based realty major focused on residential space, is looking at diversifying its portfolio through slum redevelopment schemes and special economic zones (SEZs), retail and commercial projects.

Executive director Raghav Menon said the company would build an SEZ in either Tamil Nadu or Kerala. “We haven’t decided on the place yet. We will also enter retail and commercial project development,” he added.

Sobha is planning projects in Delhi, Hyderabad, Pune, Mysore, Kerala and Orissa, Menon said. The Mysore project will kick off next month with an investment of Rs 100 crore.

The announcement, however, follows disappointing fourth quarter results posted by Sobha last week. Its topline grew by a mere 20% at Rs 1,423 crore against Rs 1,187 crore last fiscal. Sobha posted a net profit growth of 41% year-on-year to Rs 228 crore as against 82.5% (Rs 162 crore) in FY 2007.

In the next three years, the company has to pay Rs 660-crore loans taken for land acquisition. The developer has a land bank of 4,024 acre, most of which is in Bangalore. According to an analyst from a foreign brokerage, Bangalore is facing a price correction. “The returns estimates have been lowered and Sobha’s strategy of developing other locations could help,” the analyst added.

Angel Broking research analyst Sailesh Kanani said the company is facing a cash crunch and diversification into retail and commercial spaces could help it open another source of income. “It can also tap real estate investment trusts (Reits) that are doing well abroad,” he said.

Menon, however, denied that the company was facing liquidity crunch and said it was self-sufficient. “We are not looking at private equity investment as of now. But we are looking for good projects for joint venture development,” he said.

News Published Under:   Real Estate India, Real Estate Developers |

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