Sobha has land reserves worth over Rs 10,000 cr in 7 cities

Bangalore-based Sobha Developers has land reserves (title on lands from which the company can derive economic returns) and land arrangements (contractual arrangements for land acquisition entered into by the company with third party entities) to the tune of 6,000 acres. They are estimated to be valued over Rs 10,000 crore in seven cities in India.

The company said that it has land reserves and land arrangements that form an asset for its business and has made partial payments for lands comprising land reserves and land arrangements.

In its draft red herring prospectus before the Securities and Exchange Board of India (Sebi), the company said that reserves (land bank) stood at 2,593 acres, representing about 118 million square feet of developed or area that can be developed in 78 locations in seven cities in India.

On the other hand, land arrangements are around 3,456 acres, representing an aggregate of 117 million square feet of developed or potential developed area spread over 13 locations in three cities across India.

Sobha Developers said it had retained Cushman & Wakefield, an international property consultant, to undertake the land valuation. As per Cushman & Wakefield, as on July 7, the net value of Sobha Developers land reserves stood between Rs 7,035.60 crore and Rs 7,776.20 crore and after deducting the developer's margin, the value of the land reserves is between Rs 3,971.70 crore and Rs 4,389.80 crore.

With regard to the net present value of the land arrangements, it is between Rs 4,347.80 crore and Rs 4,805.40 crore and after deducting the developer's margin, the land value of the arrangements is between Rs 2,306 crore and Rs 2,548.70 crore.

The company claims that it follows backward integration, which means that it has built the key competencies and inhouse resources to deliver a project from its conceptualisation to completion.

"Our backward integration includes an architectural and design studio for our team of qualified architects, concrete block-making plant, metal and glazing factory, interiors and wood-working factory, mechanical, electrical and plumbing division and project management team," it said.

"Our backward integration model also ensures that we are not dependant on third party suppliers for key products and services required in the process of development and construction of our projects. We have a dedicated concrete block making unit which centres around a completely automated super block machine imported from Germany for a production capacity of around 10 million concrete blocks per annum," it further added.