Sobha to launch projects worth Rs 2,800 crore

Sobha Developers, the Bangalore-based publicly held real estate developer, is positioning itself on the springboard as it envisages launching projects worth Rs 2,800 crore over the next 12-18 months covering 8 million square feet. This statement is perhaps is one of the most encouraging one to come from one of the established developers as the real estate market is looking to come out of the woods of global recession.

As of March 31, 2009, Sobha with a topline of Rs 1400 crore, completed 12.46 million sq.ft residential ô commercial in-house projects and 18.30 million sq.ft of contractual projects. In addition the company has more than 30 projects aggregating 9.30 Mn.sqft under construction in residential category and also 34 projects aggregating 5.85 million sq ft under contracts from Infosys and other companies.

A senior company official told Business Standard that during December a total of 100 units were sold and the operations are cash flow positive, “A fact which was not there during the corresponding period of last year.”

He added that the company is generating cash to repay loans without any hassles and they have been able to secure further line of credit to the tune of Rs 200 crore for various projects. “Banks are also now comfortable in approving housing loans for retail consumers and we are feeling the positive effects of this,” he added.

The company which during the past two quarters took concrete efforts to reduce its leverage on debt has managed to bring down the ratio to 0.8 from a peak of 1.6 on a debt of close to Rs 1,900 crore. “The debt now is at Rs 1450 crore and we intend to have the leverage at 0.7 by March 2010 and get it further down to 0.5 by March 2011,” the official detailed.

Sobha Developers, which has a land bank of 3030 acres, is looking to sell two land parcels in Bangalore covering a total area of close to 44 acres which should fetch Rs 120 crore. In addition to this, the company is also hawking a land parcel of 103 acres in Pune which is expected to fetch Rs 250 crore. These moves come after Sobha raised Rs 530 crore through the Qualified Institutional Placement route during September 2009 and raised another Rs 225 crore by offloading stake in few special purpose vehicles.

The company official further detailed that they are developing the concept of Sobha Value Homes and it be will launched in Bangalore and Coimbatore to start with. “Of the 8 million sft of fresh development we are planning to start, 20-25 per cent will be for this,” he added.