Sobha Developers

Dear Shareholder,
 
 It is my privilege to present to you the 14th Annual Report of Sobha
 Developers Limited for the financial year 2008-09.
 
 The year witnessed unprecedented events globally on the economic front.
 What started as the sub-prime crisis in the US soon engulfed the entire
 world economy leading to severe recession, worst since the Great
 Depression of the ‘30s. India, despite its cautionary economic policies
 has been no exception. Real Estate industry has been one of the worst
 affected by the recession. A highly levered sector was caught in a
 vicious cycle when lenders tightened their purse strings and cost of
 borrowing increased.
 
 Sobha has had a positive cash flow throughout the year. However with
 the credit crunch in the market coupled with a gearing of 1.74,
 liquidity has become critical. This has been further aggravated by a
 steep reduction in sales as customers started deferring property
 purchase decisions expecting price corrections.
 
 The extraordinary situation demanded extraordinary measures. Sobha has
 shown exemplary resilience in adapting to the changed scenario and has
 initiated aggressive measures such as (a) inviting new investment at
 entity/ SPV level, (b) rescheduling the debt portfolio, (c) offering
 none- core land holdings for sale (d) offering innovative and improved
 products through our highly trained delivery and quality teams, (e)
 presenting the cost conscious customer ‘value for money’ products
 through value engineering and cost optimization, (f) creating a new
 portfolio of products including affordable homes with undiluted
 quality, (g) rationalizing manpower resources and motivating them to
 take on additional responsibilities - the response from the dedicated
 Sobha team has been marvelous; the ease with which this has been
 accomplished demonstrates that sincerity of purpose and appropriate
 communication can draw the best out of people in crisis situations, (h)
 aggressive sales push through innovative marketing and (i) renewed
 customer orientation and focus. We have initiated all the above steps
 while continuing our operations without disruption to the progress of
 the projects.
 
 The results of the above actions have started bringing in positive
 changes in the operations. The financial results bear only partial
 testimony to this. I am confident that in the years to come our actions
 will translate into better numbers.
 
 feel that the economic revival is not too far away and 2010 will see a
 resurgence of the markets. Thanks to the measures initiated by
 Government of India to boost economic growth, inflation has been
 brought under control and liquidity improved. The new Government is
 widely expected to push the economic reforms aggressively leading to
 economic stability and growth. It is well appreciated that the
 stability of the realty sector is extremely crucial for general
 economic growth. The sectors strong capacity to create large number of
 jobs needs to be underscored.
 
 Sobha, with its cutting edge quality bias, innovative product range,
 adherence to legal perfection and ability to deliver projects on
 schedule, will be one of the biggest beneficiaries of an economy on its
 path to recovery. It will be amongst the foremost real estate players
 to take full advantage of the impending turnaround.
 
 The global economic crisis has its silver linings too. It has sprung
 unknown challenges to governments and corporations. Resilience marks
 the leader from the rest. Resilience is so intrinsically related to the
 day-to-day ethos of the organization that it can create significant
 payback in terms of helping to refocus on what is important to the
 organization and its people. Sobha has demonstrated its resilience now
 more than ever.
 
 consider the interests of our shareholders paramount. I look forward to
 your continued support in our relentless pursuit for excellence.
 
 Place: Bengaluru                                   P.N.C. Menon
 Date : May 18, 2009                                    Chairman