What is the reason for your robust performance in FY2012?
In FY 2011-12, real estate developers in Bangalore saw headwinds (interest rate and liquidity challenges) and did not see expected volumes. But at Sobha, 2009 onwards, reducing debt and launching new projects has been our strategy. We did not invest in additional land bank, did not go for new (unrelated) diversification and ensured new launches were at attractive prices.
You achieved 18 per cent growth in sales volumes for FY12. What are your expectations for FY13?
We will continue launching more projects in multiple cities. This approach of launching a good volume of projects and keeping prices reasonable in the markets we operate in gives us the confidence that we should be doing better numbers than what we achieved in FY12.
A little over 70 per cent of your sales came from Bangalore. Will this share come down?
Though Bangalore should also see good growth, our launch in other cities would mean the proportion would come down. We did about 2.4 million sq ft in FY12 in Bangalore, out of overall sales of 3.3 mn sq ft, which is about 72 per cent. The share of Bangalore to overall volumes has peaked. There is scope for more growth in other cities, without compromising on growth in Bangalore.
What is the size of your land bank and your debt to equity ratio targets?
Our land bank is about 2,500 acres across the country, with about a third in Bangalore. We continue to generate free cash flow every quarter and would look at reducing our debt to equity ratio from 0.6 to 0.5 in the current fiscal (2012-13).
Are there signs of a slowdown or price moderation in the Bangalore residential market?
There is no stagnation of prices in Bangalore. The economy is doing well. The information technology sector, due to muted guidance (expectation) has looked depressed, but we have seen healthy growth. Bangalore continues to absorb the highest amount of commercial lease space in India and this position continues to hold for the past 10-12 years. People getting new jobs in the IT/other sectors will also need new homes over a period of time. This stagnation cannot happen in Bangalore in isolation. This market should sustain the growth rates it has achieved over the past couple of years.
