Sobha Developers eyes Rs 2000cr sales in FY13

Sobha Developers has revealed its sales figures for Q1 and the company has posted a very good performance with a 26% increase in land sales year-on-year (YoY), with the figure standing at 840,000 sq ft. The value of revenues made in Q1 is up 58% YoY at Rs 480 crore.

JC Sharma, Vice Chairman of Sobha Developers attributes the reason for its good results to revenues coming from the projects developed last year in the Delhi NCR region and Chennai. He is also optimistic about taking the company's sales figure to Rs 2,000 crore in FY13.

Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.

Q: What is going so right in the Bangalore market, is this demand that is across the board for the entire residential property sector or is it something that Sobha has been able to crack?

A: We do not know whether the demand is across all realty companies but, what we do understand is that the quality of the demand still remains very good. Especially, as far as Sobha is concerned, in this quarter we also got the benefit of what we had done last year in NCR and Chennai. We have got the benefit in Q1, which was not available in the earlier quarter.

Q: Your realizations have moved up decently in a quarter on quarter basis, particularly held by Gurgaon. Do you see them holding up, do you have enough demand to see this kind of a performance in Q2-Q3 as well, which are traditionally better quarters?

A: Yes. We do not see the prices to come down in the near future, whether it’s in Bangalore, Gurgaon or Chennai. We still work in the interest of the environment, the land prices and input cost still remains very high and within that we do believe that a price point of Rs 5,000 in Bangalore, about Rs 9,000 in Gurgaon or about Rs 4,500 in Chennai can hold on.

Q: There are tell-tale stories about IT companies not recruiting or not doing final recruitments after giving initial letters to their candidates. Will not that begin to cast some kind of a downward pressure? You think that you will be able to maintain this kind of a prorata performance every quarter of FY13?

A: I do believe that we should be doing new sales of Rs 2000 crore in this financial year and we should be achieving that. As far as IT sector demand is concerned, we are looking at people who have been in the IT sector for the last 10-15 years and two-thirds of the IT companies' population today has been recruited in the last seven years.

These are going to be our future customers and keeping that in mind, we do believe that in the next 7-10 years, as far as real estate in Bangalore is concerned will be greatly benefited due to this IT sector demand.

Q: Will you be able to reduce your debt further? You did bring it down when you last reported numbers to Rs 1,140 crore thereabouts, will it come down further in the quarter that you will announce numbers for in FY13?

A: Operationally, we generate a positive cash flow. If it is not invested, definitely it is going to bring down the debt. So we can assure that the company will continue to generate operating cash surplus now as well as in the future. Keeping that in mind, if this money is not invested, definitely it will get reflected in the debt.