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Directors Report of Sobha Ltd.

Mar 31, 2016

Dear Member(s),

The have pleasure in presenting the Twenty First Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2016.

(Rs. in million)

Standalone Consolidated

Particulars 2015-16 2014-15 2015-16 2014-15

Total Revenue 18,184.97 24,016.47 18,784.38 24,554.78

Operating Expenditure 13,554.80 18,811.19 13,616.90 18,232.56

Earnings before Interest, Depreciation and Amortisation 4,630.17 5,205.28 5,167.48 6,322.22

Depreciation and Amortisation 585.84 688.60 634.01 722.68

Finance Cost 1,529.22 1,522.86 1,724.87 1,883.42

Profit Before Tax 2,515.11 2,993.82 2,808.60 3,716.12

Tax Expenses

-Current Tax 255.03 624.28 359.59 843.46

- Deferred tax charge / (credit) 890.89 571.89 907.61 626.45 - MAT Credit Entitlement - (193.20) - (193.20)

Profit after Tax 1,369.19 1,990.85 1,541.40 2,439.41

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the balance sheet relates and the date of this report.

BUSINESS AND OPERATIONS

A. Business Overview

Sobha Limited is a public limited company with its equity shares listed on National Stock Exchange of India Limited and BSE Limited. The authorized share capital of the Company is Rs. 2,000,000,000 divided into 150,000,000 equity shares of Rs. 10 each and 5,000,000 preference shares of Rs. 100 each. The issued, subscribed and paid-up capital of the Company is Rs. 980,638,680 divided into 98,063,868 equity shares of Rs. 10 each. During the year under review, there was no change in the capital structure of the Company.

The operations of the Company can be categorised into two main verticals:

- Construction and development of residential and commercial projects

- Contractual projects

A summary of completed and ongoing projects as on March 31, 2016 has been detailed in the Management Discussion and Analysis Report titled as Management Report forming part of the Annual Report.

B. Financial Overview

Standalone

During the financial year 2015-16, the Company has on a standalone basis, registered total revenues of Rs. 18,184.97 million as compared to Rs. 24,016.47 million in the previous year, a decrease of 24.28 % y-o-y. The Profit before Tax and Profit after Tax have declined by 15.99 % and 31.23 % respectively.

Consolidated

The consolidated revenues of the Company during the financial year 2015-16 was Rs. 18,784.38 million, a decrease of 23.50 % from the previous year. The Profit before Tax was lower by 24.42% and Profit after Tax (after considering minority interest) by 35.60% as compared to the financial year 2014-15.

Transfer to Reserves

An amount of Rs. 136.92 million is proposed to be transferred out of the current profits to the General Reserve.

Dividend

The Board of Directors has, subject to the approval of the shareholders in the ensuing Annual General Meeting, recommended a dividend of Rs. 2 per equity share of Rs. 10 each.

C. Operational Overview

Completed Projects

During the year under review, the Company has executed and handed over 9 real estate projects covering an area of 5.59 Million Square Feet of developable area and 16 contractual projects covering an area of 5.51 Million Square Feet resulting in an aggregate development of 11.10 million square feet.

The Company has completed 111 real estate projects and 278 contractual projects covering about 81.64 million square feet of area since inception.

Ongoing Projects

The Company currently has 40 ongoing residential projects aggregating to 41.20 million square feet of developable area. It has 27 ongoing contractual projects aggregating to 8.07 million square feet under various stages of construction.

The Company has a geographic presence in 25 cities and 13 states across India.

BUYBACK OF EQUITY SHARES

The Board of Directors at their meeting held on May 19, 2016, have approved a buyback proposal for purchase by the Company of up to 2,275,000 shares of Rs. 10 each (representing 2.32% of total equity capital) from shareholders of the Company on a proportionate basis by way of a tender offer route at a price of Rs. 330 per equity share for an aggregate amount not exceeding Rs. 750.75 million in accordance with the provision of the Companies Act, 2013 and SEBI (Buy Back of Securities) Regulations, 1998.

CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, there were no changes in the directors and key managerial personnel of the Company.

CHANGES IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

During the year under review, there were no changes in subsidiaries, joint ventures and associates of the Company.

SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS / COURTS

During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

BOARD OF DIRECTORS AND ITS COMMITTEES

A. Composition of the Board of Directors

As on date, the Board of Directors of the Company comprises of eight Directors of which five are Non- Executive Independent Directors. The composition of the Board of Directors is in compliance with Clause 49 of the Listing Agreement / Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149 of the Companies Act, 2013.

The Company has received necessary declarations from the Independent Directors stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement / Regulation 16 of Listing Regulations.

B. Meetings:

During the year under review, the Board of Directors met 4 times on the following dates

- May 12, 2015

- August 07, 2015

- November 13, 2015

- February 05, 2016

In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on May 11, 2015.

C. Appointment of Director

The term of office of Mr. Ravi PNC Menon, Chairman (DIN: 02070036) will cease at the close of the financial year 2016-17 and he is eligible for re-appointment. The Board of Directors based on the recommendation of Nomination, Remuneration and Governance Committee, have approved the reappointment of Mr. Ravi PNC Menon as Chairman of the Company for a further period of five years subject to the approval of the members in the ensuing Annual General Meeting.

D. Re-appointment of Director Retiring by Rotation

In terms of Section 152 of the Companies Act, 2013, Mr. J C Sharma, Vice Chairman and Managing Director (DIN: 01191608) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors based on the recommendation of Nomination, Remuneration and Governance Committee, have recommended the re-appointment of Mr. J C Sharma, Vice Chairman and Managing Director, retiring by rotation.

The Notice convening the Annual General Meeting includes the proposals for appointment / re- appointment of the Directors. Brief resumes of the Directors proposed to be appointed / re-appointed have been provided as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of their expertise in specific functional areas and the names of the companies in which they hold directorship and membership / chairmanship of the Board Committees have also been included.

E. Committees of the Board

During the year under review, there were no changes in the composition of the Committees of the Board. A detailed note on the Committees of the Board of Directors is given in the Corporate Governance Report forming part of the Annual Report.

F. Performance Evaluation

Pursuant to the provisions of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the Companies Act, 2013, the Board undertook an evaluation of itself and its committees. The Board, excluding the independent director being evaluated, also assessed the performance and the potential of each of the independent directors with a view to maximising their contribution to the Board. As contemplated by the Act, the independent directors at a meeting conducted a review of the performance of the Chairman after taking into account the views of the non-executive members of the Board. At the same meeting, the review of the executive directors was also carried out.

The process put in place by the Board, in accordance with the Companies Act, 2013 and the relevant provisions of the Listing Agreement / Listing Regulations, is aimed at improving the performance of the Board, its committees and its members.

G. Directors'' Responsibility Statement

In terms of the requirements of Section 134(5) of the Companies Act, 2013, we, on behalf of the Board of Directors, hereby confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the annual accounts has been prepared on a going concern basis; and

e) internal financial controls to be followed by the company has been laid down and such internal financial controls are adequate and were operating effectively.

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDIT RELATED MATTERS

A. Audit Committee

The powers, role and terms of reference of the Audit Committee are in consonance with the requirements mandated under Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement / Regulation 18 of Listing Regulations. The Audit Committee comprises of the following members:

1. Mr. R V S Rao (Independent Director) - Chairman

2. Mr. M Damodaran (Independent Director) - Member

3. Dr. S K Gupta (Independent Director) - Member

4. Mr. Anup Shah (Independent Director) - Member

5. Mr. J C Sharma (Vice Chairman and Managing Director) - Member

During the period under review, the suggestions put forth by the Audit Committee were duly considered and accepted by the Board of Directors. There were no instances of non-acceptance of such recommendations.

B. Statutory Auditors

At the Annual General Meeting of the Company held on July 11, 2014, S.R. Batliboi & Associates LLP (Firm Registration Number 101049W/E300004) were re-appointed as the Statutory Auditors of the Company for a period of 3 years which is subject to annual ratification by the members of the Company in terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014. The members may ratify the appointment of S.R. Batliboi & Associates LLP as the Statutory Auditors of the Company for the financial year 2016-17.

There are no qualifications or adverse remarks in the Statutory Auditors'' Report which require any explanation from the Board of Directors. The Statutory Auditors have expressed an unmodified opinion in the audit reports in respect of the audited financial statements for the financial year ended March 31, 2016.

C. Secretarial Audit

The Secretarial Audit Report for the year ended March 31, 2016 issued by Mr. Nagendra D Rao, Practicing Company Secretary in accordance with the provisions of Section 204 of the Companies Act, 2013 is provided separately in the Annual Report. There are no qualifications or adverse remarks in the Secretarial Audit Report which require any explanation from the Board of Directors.

D. Cost Audit

The Cost Audit Report for the financial year 2014- 15 was filed with the Ministry of Corporate Affairs, New Delhi within the due date prescribed under The Companies (Cost Records and Audit) Rules, 2014. There are no qualifications or adverse remarks in the Cost Audit Report which require any explanation from the Board of Directors.

Based on the recommendations of the Audit Committee, the Board of Directors have re- appointed M/s. Srinivas and Co, Cost Accountants (Firm Registration No: 000278) as the Cost Auditors of the Company for the financial year 2015-16. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors for the financial year 2015-16 is subject to ratification by the shareholders of the Company. The Notice convening the Annual General Meeting contains the proposal for ratification of the remuneration payable to the Cost Auditors.

E. Internal Financial Controls

There are adequate internal financial controls in place with reference to the financial statements. During the year under review, these controls were tested and no significant weakness was identified either in the design or operation of the controls.

POLICY MATTERS

A. Nomination and Remuneration Policy

The Nomination, Remuneration and Governance Committee of the Board of Directors has formulated a Nomination and Remuneration Policy containing the criteria for determining qualifications, positive attributes and independence of a director and policy relating to the remuneration for the directors, key managerial personnel and senior management personnel of the Company. The Nomination and Remuneration Policy is available on the website of the Company at http://www.sobha.com/investor- relations-downloads-pol.php and relevant extracts from the Policy are reproduced in Annexure A to this report.

B. Risk Management Framework

The Company has developed and implemented a risk management framework detailing the various risks faced by the Company and methods and procedures for identification, monitoring and mitigation of such risks. The Board of Directors of the Company have constituted a Risk Management Committee which is entrusted with the task of monitoring and reviewing the risk management plan and procedures of the Company. The risk management function is complimentary to the internal control mechanism of the Company and supplements the audit function.

C. Corporate Social Responsibility Policy

The Corporate Social Responsibility Policy, as formulated by the Corporate Social Responsibility Committee and approved by the Board of Directors is available on the website of the Company at http://www. sobha.com/investor-relations-downloads-pol.php.

In terms of Section 134 of the Companies Act, 2013 read with The Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on Corporate Social Responsibility activities of the Company is given in Annexure B to this report.

D. Vigil Mechanism

The Company has established a vigil mechanism to promote ethical behaviour in all its business activities and has in place a mechanism for employees to report any genuine grievances, illegal, unethical behaviour, suspected fraud or violation of laws, rules and regulation or conduct to the Chief Vigilance Officer and the Audit Committee of the Board of Directors. The Policy also provides for adequate protection to the whistle blower against victimisation or discriminatory practices. The Policy is available on the website of the Company at http://www.sobha. com/investor-relations-downloads-pol. php.

OTHER MATTERS

A. Debentures

During the year under review, the Company has issued various Secured Redeemable Non-Convertible Debentures aggregating to Rs. 3,250,000,000 (Rupees Three Hundred and Twenty Five Crores) on private placement basis in multiple tranches.

B. Deposits

The Company has not accepted any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under review and there are no outstanding deposits as on date.

C. Transfer to Investor Education and Protection Fund

In compliance of Section 205C of the Companies Act, 1956, the dividends pertaining to the financial year 2007-08 which were lying unclaimed with the Company was transferred to the Investor Education and Protection Fund during the financial year 2015- 16. The details of unclaimed dividend transferred to the Investor Education and Protection Fund has been detailed in the Corporate Governance Report forming part of the Annual Report.

D. Human Resources

Employee relations continue to be cordial and harmonious at all levels and in all divisions of the Company. The Board of Directors would like to express their sincere appreciation to all the employees for their continued hard work and steadfast dedication.

As a part of the policy for Prevention of Sexual Harassment in the organisation, the Company has in place an Internal Complaints Committee for prevention and redressal of complaints of sexual harassment of women at work place in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 and relevant rules thereunder. No complaints were received by the Committee during the period under review.

As on March 31, 2016, the Company has an organisational strength of 2,724 employees.

A separate section on the Employees is provided in the Annual Report.

E. Awards and Recognition

During the financial year 2015-16, the Company was bestowed with various awards and recognitions, the details of which are given in a separate section of the Annual Report.

F. Corporate Governance

A certificate from Mr. Nagendra D Rao, Practicing Company Secretary affirming compliance with the various conditions of Corporate Governance in terms of the Listing Regulations is given in Annexure C to this report.

A detailed report on Corporate Governance forms part of the Annual Report.

G. Code of Conduct

As prescribed under Clause 49 of the Listing Agreement / Regulation 17 of the Listing Regulations, a declaration signed by the Vice Chairman and Managing Director affirming compliance with the Code of Conduct by the Directors and senior management personnel of the Company for the financial year 2015-16 forms part of the Corporate Governance Report.

H. Management Discussion and Analysis Report

In accordance with the requirements of the Listing Agreement / Listing Regulations, the Management Discussion and Analysis Report titled as Management Report is presented in a separate section of the Annual Report.

I. Extract of Annual Return

In terms of Section 134 of the Companies Act, 2013 read with Rules 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return of the Company for the financial year 2015-16 is provided in Annexure D to this report.

J. Particulars of Loans, Guarantees and Investments

In terms of Section 134 of the Companies Act, 2013, the particulars of loans, guarantees and investments given by the Company under Section 186 of the Companies Act, 2013 is detailed in Notes to Accounts of the Financial Statements.

K. Related Party Transactions

During the year, the Company has not entered into any contract / arrangement / transaction with a related party which can be considered as material in terms of the policy on related party transactions laid down by the Board of Directors. The related party transactions undertaken during the financial year 2015 - 16 are detailed in Notes to Accounts of the Financial Statements.

L. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the particulars of conservation of energy, technology absorption, and foreign exchange earnings and outgo are set out in Annexure E to this report.

M. Remuneration Details of Directors, Key Managerial Personnel and Employees

The details of remuneration of directors, key managerial personnel and the statement of employees in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been provided in Annexure F to this report.

N. Financial Position and Performance of Subsidiaries, Joint Ventures and Associates

In terms of Section 134 of the Act and Rule 8(1) of the Companies (Accounts) Rules, 2014, the financial position and performance of subsidiaries are given as an Annexure to the Consolidated Financial Statements.

O. Additional Information to Shareholders

All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company''s website (www. sobha.com) on a regular basis.

ACKNOWLEDGEMENTS

The Directors would like to place on record their sincere appreciation to the Company''s customers, vendors, and bankers for their continued support to the Company during the year. The Directors also wish to acknowledge the contribution made by employees at all levels for steering the growth of the organisation. We thank the Government of India, the State Governments and other government agencies for their assistance and cooperation and look forward to their continued support in future. Finally, the Board would like to express its gratitude to the members for their continued trust, co-operation and support.

For and on behalf of the Board of Directors of

Sobha Limited

Place: Bangalore Ravi PNC Menon J C Sharma

Date: May 19,2016 Chairman Vice Chairman & Managing Director


Mar 31, 2015

Dear Member(s),

We have pleasure in presenting the Twentieth Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2015.

(Rs. in million)

Standalone Consolidated

Particulars 2014-15 2013-14 2014-15 2013-14

Total Revenue 24,016.47 21,287.66 24,554.78 21,837.63

Operating Expenditure 18,811.19 16,126.54 18,232.56 15,708.45

Earnings before Interest, 5,205.28 5,161.12 6,322.22 6,129.18 Depreciation and Amortisation

Depreciation and 688.60 655.84 722.68 689.92 Amortisation

Finance Cost 1,522.86 1,368.65 1,883.42 1,734.44

Profit before tax 2,993.82 3,136.63 3,716.12 3,704.82

Tax Expenses

* Current Tax 624.28 699.55 843.46 996.28

* Deferred tax charge 571.89 371.66 626.45 371.66 / (credit)

* MAT Credit Entitlement (193.20) - (193.20) -

profit after tax 1,990.85 2,065.42 2,439.41 2,336.88

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the balance sheet relates and the date of this report.

Business and Operations

A. Business Overview

Sobha Limited is a public limited company with its equity shares listed on National Stock Exchange of India Limited and the Bombay Stock Exchange Limited. The authorized share capital of the Company is Rs. 2,000,000,000 divided into 150,000,000 equity shares of Rs. 10 each and 5,000,000 preference shares of Rs. 100 each. The issued, subscribed and paid-up capital of the Company is Rs. 980,638,680 divided into 98,063,868 equity shares of Rs. 10 each. During the year under review, there was no change in the capital structure of the Company.

The operations of the Company can be categorised into two main verticals:

* Construction and development of residential and commercial projects

* Contractual projects

A summary of completed and ongoing projects as on March 31, 2015 has been detailed in the Management Discussion and Analysis Report titled as Management Report forming part of the Annual Report.

B. Financial Overview Standalone

During the financial year 2014-15, the Company has on a standalone basis, registered total revenues of Rs. 24,016.47 million as compared to Rs. 21,287.66 million in the previous year, an increase of 12.82% y-o-y. The Profit before Tax and Profit after Tax have declined by 4.55% and 3.61% respectively.

Consolidated

The consolidated revenues of the Company during the financial year 2014-15 was Rs. 24,554.78 million, a growth of 12.44% from the previous year. The Profit before Tax was higher by 0.31% and Profit after Tax (after considering minority interest) by 1.26% as compared to the financial year 2013-14.

Transfer to Reserves

An amount of Rs. 199 million is proposed to be transferred out of the current profits to the General Reserve.

Dividend

The Board of Directors has, subject to the approval of the shareholders in the ensuing Annual General Meeting, recommended a dividend of Rs. 7.00 per equity share of Rs. 10 each.

C. Operational Overview Completed Projects

During the year under review, the Company has executed and handed over 10 real estate projects covering an area of 4.36 million square feet and 15 contractual projects covering an area of 3.25 million square feet resulting in an aggregate development of 7.61 million square feet.

The Company has completed 102 real estate projects in 5 cities and 262 contractual projects in 24 cities covering overall 70.54 million square feet of area since inception.

Ongoing Projects

The Company currently has 48 ongoing residential projects located in 8 cities aggregating to 41.81 million square feet of developable area. It has 27 ongoing contractual projects located in 9 cities aggregating to 9.31 million square feet under various stages of construction.

The Company has a geographic presence in 24 cities and 13 states across India.

Change in the name of the Company

The name of the Company was changed from ''Sobha Developers Limited'' to ''Sobha Limited'' with effect from August 18, 2014. There was no change in the nature of business of the Company on account of the change in name.

Changes in directors and Key Managerial Personnel

During the year under review, Dr. Punita Kumar-Sinha (DIN: 05229262) was appointed as an Additional Director in the capacity of a Non - Executive Independent Director for a consecutive term of five years with effect from October 06, 2014.

During the year under review, Mr. Ganesh Venkataraman resigned from the position of Chief Financial Officer of the Company. Mr. Subhash Mohan Bhat was appointed as the Chief Financial Officer with effect from February 16, 2015.

Changes in Subsidiaries, Joint Ventures and Associates

During the year under review, Sobha Nandambakkam Developers Limited (Formerly Sobha Nandambakkam Developers Private Limited and Tirur Cybercity Developers Private Limited) and Sobha Tambaram Developers Limited (Formerly Sobha Tambaram Developers Private Limited and Megatech Software Private Limited) became wholly-owned subsidiaries of the Company within the meaning of Section 2(87) of the Companies Act, 2013 with effect from March 16, 2015.

Significant or Material Orders Passed by Regulators / Courts

During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Board of directors and its Committees

A. Composition of the Board of directors

As on date, the Board of Directors of the Company comprises eight Directors of which five are Non- Executive Independent Directors. The composition of the Board of Directors is in compliance with Clause 49 of the Listing Agreement and Section 149 of the Companies Act, 2013.

The Company has received necessary declarations from the Independent Directors stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

B. Meetings

During the year under review, the Board of Directors met 4 times on the following dates

* May 22, 2014

* August 08, 2014

* November 12, 2014

* February 12, 2015

In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on February 12, 2015.

C. Appointment of Director

In terms of Section 152 of the Companies Act, 2013, Dr. Punita Kumar-Sinha (DIN: 05229262) who was appointed as an Additional Director in the capacity of a Non - Executive Independent Director for a consecutive term of five years commencing from October 06, 2014 holds office up to the ensuing Annual General Meeting. Being eligible, Dr. Punita Kumar-Sinha offers herself for appointment as a Director of the Company in the capacity of a Non - Executive Independent Director. The Board of Directors based on the recommendation of Nomination, Remuneration and Governance Committee, have recommended the appointment of Dr. Punita Kumar-Sinha as a Non - Executive Independent Director of the Company.

D. Re-appointment of Director Retiring by Rotation

In terms of Section 152 of the Companies Act, 2013, Mr. Ravi PNC Menon, Chairman (DIN: 02070036) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors based on the recommendation of Nomination, Remuneration and Governance Committee, have recommended the re-appointment of Mr. Ravi PNC Menon, Chairman, retiring by rotation.

The Notice convening the Annual General Meeting includes the proposals for appointment / re-appointment of the Directors. Brief resumes of the Directors proposed to be appointed / re-appointed have been provided as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of their expertise in specific functional areas and the names of the companies in which they hold directorship and membership / chairmanship of the Board Committees, as stipulated under Clause 49 of the Listing Agreement, have also been included.

E. Committees of the Board

During the year under review, the Nomination, Remuneration and Governance Committee of the Board of Directors was reconstituted. Dr. S K Gupta, Independent Director and Mr. Ravi PNC Menon, Chairman were inducted as members and Mr. J C Sharma resigned from the membership of the Committee. The terms of reference of the Committee were aligned with the requirements of Clause 49 of the Listing Agreement and Section 178 of the Companies Act, 2013.

The terms of reference of Audit Committee and Stakeholders Relationship Committee were also aligned with the requirements of Clause 49 of the Listing Agreement and the Companies Act, 2013.

A detailed note on the Committees of the Board of Directors is given in the Corporate Governance Report forming part of the Annual Report.

F. Performance Evaluation

Pursuant to the provisions of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the Companies Act, 2013, the Board undertook an evaluation of itself and its committees. The Board, excluding the independent director being evaluated, also assessed the performance and the potential of each of the independent directors with a view to maximising their contribution to the Board. As contemplated by the Act, the independent directors at a meeting conducted a review of the performance of the Chairman after taking into account the views of the non-executive members of the Board. At the same meeting, the review of the executive directors was also carried out.

The process put in place by the Board, in accordance with the Companies Act, 2013 and the relevant provisions of the Listing Agreement, is aimed at improving the performance of the Board, its committees and its members.

G. Directors'' Responsibility Statement

In terms of the requirements of Section 134(5) of the Companies Act, 2013, we, on behalf of the Board of Directors, hereby confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis; and

e) the directors had laid down internal financial controls to be followed by the company and such internal financial controls are adequate and were operating effectively.

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Audit Related Matters

A. Audit Committee

The powers, role and terms of reference of the Audit Committee are in consonance with the requirements mandated under Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Audit Committee comprises of the following members:

1. Mr. R V S Rao (Independent Director) - Chairman

2. Mr. M Damodaran (Independent Director) - Member

3. Dr. S K Gupta (Independent Director) - Member

4. Mr. Anup Shah (Independent Director) - Member

5. Mr. J C Sharma (Vice Chairman and - Member Managing Director)

During the period under review, the suggestions put forth by the Audit Committee were duly considered and accepted by the Board of Directors. There were no instances of non-acceptance of such recommendations.

B. Statutory Auditors

At the Annual General Meeting of the Company held on July 11, 2014, S.R. Batliboi & Associates LLP (Firm Registration Number 101049W) were re- appointed as the Statutory Auditors of the Company for a period of 3 years which is subject to annual ratification by the members of the Company in terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014. The members may ratify the appointment of S.R. Batliboi & Associates LLP as the Statutory Auditors of the Company for the financial year 2015-16.

There are no qualifications or adverse remarks in the Statutory Auditors'' Report which require any explanation from the Board of Directors.

C. Secretarial Audit

The Secretarial Audit Report for the year ended March 31, 2015 issued by Mr. Nagendra D Rao, Practicing Company Secretary in accordance with the provisions of Section 204 of the Companies Act, 2013 is provided separately in the Annual Report. There are no qualifications or adverse remarks in the Secretarial Audit Report which require any explanation from the Board of Directors.

D. Cost Audit

Based on the recommendations of the Audit Committee, the Board of Directors have re- appointed M/s. Srinivas and Co, Cost Accountants (Firm Registration No: 000278) as the Cost Auditors of the Company for the financial year 2014-15. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors for the financial year 2014-15 is subject to ratification by the shareholders of the Company. The Notice convening the Annual General Meeting contains the proposal for ratification of the remuneration payable to the Cost Auditors.

The Cost Audit Report for the financial year 2013- 14 was filed with the Ministry of Corporate Affairs, New Delhi on September 27, 2014 within the due date prescribed under The Companies (Cost Audit Report) Rules, 2011.

E. internal Financial Controls

There are adequate internal financial controls in place with reference to the financial statements. During the year under review, these controls were evaluated and no significant weakness was identified either in the design or operation of the controls.

Policy Matters

A. Nomination and Remuneration Policy

The Nomination, Remuneration and Governance Committee of the Board of Directors has formulated a Nomination and Remuneration Policy containing the criteria for determining qualifications, positive attributes and independence of a director and policy relating to the remuneration for the directors, key managerial personnel and senior management personnel of the Company. The Nomination and Remuneration Policy is available on the website of the Company at http://www.sobha.com/investor- relations-downloads-pol.php and relevant extracts from the Policy are reproduced in Annexure A to this report.

B. Risk Management Framework

The Company has developed and implemented a risk management framework detailing the various risks faced by the Company and methods and procedures for identification, monitoring and mitigation of such risks. The Board of Directors of the Company have constituted a Risk Management Committee which is entrusted with the task of monitoring and reviewing the risk management plan and procedures of the Company. The risk management function is complimentary to the internal control mechanism of the Company and supplements the audit function.

C. Corporate Social Responsibility Policy

The Corporate Social Responsibility Policy, as formulated by the Corporate Social Responsibility Committee and approved by the Board of Directors is available on the website of the Company at http:// www.sobha.com/investor-relations-downloads-pol. php.

In terms of Section 134 of the Companies Act, 2013 read with The Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on Corporate Social Responsibility activities of the Company is given in Annexure B to this report.

D. Vigil Mechanism

The Company has established a vigil mechanism to promote ethical behaviour in all its business activities and has in place a mechanism for employees to report any genuine grievances, illegal, unethical behaviour, suspected fraud or violation of laws, rules and regulation or conduct to the Chief Vigilance Officer and the Audit Committee of the Board of Directors. The Policy also provides for adequate protection to the whistle blower against victimisation or discriminatory practices. The Policy is available on the website of the Company at http://www.sobha. com/investor-relations-downloads-pol.php.

Other Matters

A. Debentures

During the year under review, the Company has not issued any debentures. As on date, the Company does not have any outstanding debentures.

B. Deposits

The Company has not accepted any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under review.

C. Transfer to investor Education and Protection Fund

In compliance of Section 205C of the Companies Act, 1956, the dividends pertaining to the financial year 2006-07 which were lying unclaimed with the Company was transferred to the Investor Education and Protection Fund during the financial year 2014- 15. The details of unclaimed dividend transferred to the Investor Education and Protection Fund has been detailed in the Corporate Governance Report forming part of the Annual Report.

D. Human Resources

Employee relations continue to be cordial and harmonious at all levels and in all divisions of the Company. The Board of Directors would like to express their sincere appreciation to all the employees for their continued hard work and steadfast dedication.

As a part of the policy for Prevention of Sexual Harassment in the organisation, the Company has in place an Internal Complaints Committee for prevention and redressal of complaints of sexual harassment of women at work place in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 and relevant rules thereunder. No complaints were received by the Committee during the period under review.

As on March 31, 2015, the Company has an organisational strength of 3,046 employees.

A separate section on the Employees is provided in the Annual Report.

E. Awards and Recognition

During the financial year 2014-15, the Company was bestowed with various awards and recognitions, the details of which are given in a separate section of the Annual Report.

F. Corporate Governance

A detailed report on Corporate Governance and a certificate from Mr. Nagendra D Rao, Practicing Company Secretary affirming compliance with the various conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

G. Code of Conduct

As prescribed under Clause 49 of the Listing Agreement, a declaration signed by the Vice Chairman and Managing Director affirming compliance with the Code of Conduct by the Directors and senior management personnel of the Company for the financial year 2014-15 forms part of the Corporate Governance Report.

H. Management discussion and Analysis Report

In accordance with the requirements of the Listing Agreement, the Management Discussion and Analysis Report titled as Management Report is presented in a separate section of the Annual Report.

i. Extract of Annual Return

In terms of Section 134 of the Companies Act, 2013 read with Rules 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return of the Company for the financial year 2014-15 is provided in Annexure C to this report.

J. Particulars of Loans, Guarantees and investments

In terms of Section 134 of the Companies Act, 2013, the particulars of loans, guarantees and investments given by the Company under Section 186 of the Companies Act, 2013 is detailed in Notes to Accounts of the Financial Statements.

K. Related Party transactions

During the year, the Company has not entered into any contract / arrangement / transaction with a related party which can be considered as material in terms of the policy on related party transactions laid down by the Board of Directors. The related party transactions undertaken during the financial year 2014 - 15 are detailed in Notes to Accounts of the Financial Statements.

L. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the particulars of conservation of energy, technology absorption, and foreign exchange earnings and outgo are set out in Annexure D to this report.

M. Remuneration details of directors, Key Managerial Personnel and Employees

The details of remuneration of directors, key managerial personnel and the statement of employees in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been provided in Annexure E to this report.

N. Financial Position and Performance of Subsidiaries, Joint Ventures and Associates

In terms of Section 134 of the Companies Act, 2013 and Rule 8(1) of the Companies (Accounts) Rules, 2014, the financial position and performance of subsidiaries are given as an Annexure to the Consolidated Financial Statements.

O. Additional information to Shareholders

All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company''s website (www. sobha.com) on a regular basis.

Acknowledgements

The Directors would like to place on record their sincere appreciation to the Company''s customers, vendors, and bankers for their continued support to the Company during the year. The Directors also wish to acknowledge the contribution made by employees at all levels for steering the growth of the organisation. We thank the Government of India, the state governments and other government agencies for their assistance and cooperation and look forward to their continued support in future. Finally, the Board would like to express its gratitude to the members for their continued trust, cooperation and support.

For and on behalf of the Board of directors of Sobha Limited



Place: Bangalore Ravi PNC Menon J C Sharma date: May 12, 2015 Chairman ViceChairman & Managing director


Mar 31, 2013

Dear Member,

The have pleasure in presenting the Eighteenth Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2013.

(Rs. in million)

Particulars Standalone Consolidated

2012-13 2011-12 2012-13 2011-12

Total Revenue 18,106.94 14,028.41 18,700.59 14,143.72

Operating Expenditure 13,240.76 9,626.56 13,162.89 9,413.47

Earnings before Interest, Depreciation and 4,866.18 4,401.85 5,537.70 4,730.25 Amortisation

Depreciation and Amortisation 559.65 387.78 593.73 387.78

Finance Cost 1,428.66 1,061.71 1,70490 1,165.39

Profit Before Tax 2,877.87 2,952.36 3,239.07 3,177.08

Tax Expenses

- Current Tax 604.40 586.90 760.74 719.59

- Deferred tax charge / (credit) 307.74 404.16 307.74 404.16

- MAT credit entitlement - (47.20) - (47.20)

Profit after Tax 1,965.73 2,008.50 2,170.59 2,100.53

Minority Interest - - (1.20) 40.99

Profit for the year 1,965.73 2,008.50 2,171.79 2,059.54

Financial Overview Performance

During the financial year 2012-13, the Company has on a standalone basis, registered total revenue of Rs. 18,106.94 million as compared to Rs. 14,028.41 million in the previous year, showing an increase of 29.07 % Y-O-Y. EBITDA has increased from Rs. 4,401.85 million in 2011-12 to Rs. 4,866.18 million, an increase of 10.55 %.

The consolidated revenue of the Company during the financial year 2012-13 was Rs. 18,700.59 million, a growth of 32.22 % from the previous year. EBITDA has increased from Rs. 4,730.25 million in 2011-12 to Rs. 5,537.70 million, an increase of 17.07 %.

Transfer to Reserves

An amount ofRs. 200 million is proposed to be transferred out of the current profits to the General Reserve.

Dividend

The Board of Directors has, subject to the approval of the shareholders in the Annual General Meeting, recommended a dividend of Rs. 7 per equity share of Rs. 10 each.

Debentures

During the year under review, the Company has not issued any debentures. As on date, the Company does not have any outstanding debentures.

Deposits

The Company has not accepted any deposits in terms of the provisions of Section 58A of the Companies Act, 1956, during the year under review.

Operational Overview

Completed Projects

During the year under review, the Company has executed and handed over 6 residential projects covering an area of 1.48 million square feet and 19 contractual projects covering an area of 2.98 million square feet resulting in an aggregate development of 4.46 million square feet.

The Company has completed 85 residential projects and 228 contractual projects covering about 56.25 million square feet of area since inception.

Ongoing Projects

The Company currently has 43 ongoing residential projects aggregating to 25.83 million square feet of developable area and 38 ongoing contractual projects aggregating to 10.65 million square feet under various stages of construction.

Forthcoming Projects

During the financial year 2013-14, the Company proposes to launch projects (residential and commercial) measuring about 12.02 million square feet in which it has an economic interest of approximately 8.95 million square feet of developable area in various cities including Bangalore, Thrissur, Kochi, Kozhikode and Chennai.

The Company has a geographic presence in 23 cities and 13 states across India.

Business Overview

Sobha Developers Limited is a public limited company with its equity shares listed on National Stock Exchange of India Limited and the Bombay Stock Exchange Limited. The issued, subscribed and paid-up capital of the Company is Rs. 980,638,680 (Rupees Ninety Eight Crores Six Lakhs Thirty Eight Thousand Six Hundred and Eighty only) divided into 98,063,868 (Nine Crores Eighty Lakhs Sixty Three Thousand Eight Hundred and Sixty Eight only) equity shares ofRs. 10 each. During the year under review, there was no change in the capital structure of the Company.

The operations of the Company can be categorised into two main verticals:

- Construction and development of residential and commercial projects

- Contractual projects

A summary of completed and ongoing projects as on March 31, 2013 has been detailed in the Management Discussion and Analysis Report titled as Management Report forming part of the Annual Report.

Divisions

The backward integration business model of the Company is ably supported by its three divisions which act as the conduit of resources and expertise required for the execution of projects.

Glazing Division

- The Glazing Division is engaged in the business of metal fabrication such as aluminum windows and doors, structural and architectural glazing.

- The division has facilities in Bangalore and Chennai.

Interiors Division

- The Interiors Division specialises in wood work and in manufacturing wood and wood-based products.

- The division has facilities in Bangalore and Hosur.

Concrete Products Division

- The Concrete Products Division is engaged in the manufacture of a wide range of concrete products such as hollow and solid concrete blocks, medium and heavy duty concrete pavers and varieties of concrete paving slabs.

- The division has facilities in Bangalore, Gurgaon and Pune.

Subsidiaries

As on date, the Company has four subsidiaries, the details of which are enumerated below. Further, the financial statements of the subsidiaries have been reviewed by the Audit Committee and the minutes of the same have been placed before the Board of Directors as stipulated under Clause 49 of the Listing Agreement. No subsidiary of the Company is a material non-listed Indian subsidiary as defined under the Listing Agreement.

A. Sobha Developers (Pune) Limited

Sobha Developers (Pune) Limited is a wholly- owned subsidiary of the Company. It was incorporated on February 13, 2007 and became a subsidiary of the Company with effect from July 01,2011.

Sobha Developers (Pune) Limited is presently executing a residential project, "Sobha Forest View", situated at Hosahalli Village, Uttarahalli Hobli, Bangalore South Taluk, Bangalore.

B. Sobha Assets Private Limited

Sobha Assets Private Limited was incorporated as a wholly-owned subsidiary of the Company on March 13, 2012.

Sobha Assets Private Limited has been identified as a Special Purpose Vehicle of the Company to develop a Modern Agricultural Market Complex in Byatarayanapura, Bangalore on PPP (Public Private Partnership) scheme between the APMC (Agriculture Produce Marketing Committee), Government of Karnataka and the Company.

C. Sobha Highrise Ventures Private Limited

Sobha Highrise Ventures Private Limited is a subsidiary of the Company. It was incorporated on May 28, 2012 and became a subsidiary of the Company with effect from August 09, 2012. As on date, the Company holds an economic interest in Sobha Highrise Ventures Private Limited to an extent of 50.0003%.

Pursuant to a joint venture between the Company, Winona SA Investments LLC and SA Winona Ventures Limited, Sobha Highrise Ventures Private Limited has been identified as a Special Purpose Vehicle to develop a proposed 100 % FDI (subject to performance conditions) Compliant residential project situated at Doddanekkundi Village, Varthur Hobli, Bangalore East Taluk, Bangalore.

D. Sobha City

The Company had earlier formed a Partnership Firm under the name and style of "Sobha City" with Tree Hill Estates Private Limited for the construction and development of Sobha City Project located in Thrissur, Kerala with a profit sharing ratio of 70:30.

During the financial year 2012-13, Tree Hill Estates Private Limited has retired as a Partner from "Sobha City" and Sobha Developers (Pune) Limited has been inducted as a Partner. As on date, the Company holds the entire economic interest in "Sobha City".

Statement relating to subsidiaries

Pursuant to the general exemption granted by the Ministry of Corporate Affairs vide General Circular No. 2/2011 dated February 08, 2011, the balance sheet, statement of profit and loss and other documents of subsidiary companies as prescribed under Section 212 of the Companies Act, 1956, have not been attached. As stipulated in the Circular, the Company has disclosed the requisite financial information of the subsidiaries in the Annual Report. Further, the annual accounts and the related detailed information of the subsidiaries shall be provided to the Members upon request and the same shall also be available for inspection on any working day during business hours at the registered office of the Company and the respective subsidiary companies.

Governance Structure

Board of Directors

As on date, the Board of Directors of the Company comprises seven Directors of which four are Non- Executive Independent Directors in terms of Clause 49 of the Listing Agreement.

Cessation

Mr. P.N.C. Menon, the Founder Chairman, resigned from the directorship of the Company with effect from June 30, 2012. As part of the succession planning, Mr. P.N.C. Menon who had led the Company for 17 years, had expressed his desire to be relieved of the day-to-day responsibilities of running the Company. In gratitude and acknowledgement of his immense contribution to the Company and to ensure that the Company continues to benefit from his wisdom and guidance, the Board of Directors has conferred upon him the title of Chairman Emeritus.

Appointment

Mr. Ravi PNC Menon was reappointed as a Whole- Time Director by the members of the Company for a period of five years commencing from April 01, 2012 in the Annual General Meeting held on June 30, 2012.

In view of the significant contributions made by Mr. Ravi PNC Menon, the Board of Directors based on the recommendation ofthe Nomination, Remuneration and Governance Committee, has appointed Mr. Ravi PNC Menon as the Chairman of the Company with effect from June 30, 2012.

Re-appointment

In terms of Sections 255 and 256 of the Companies Act, 1956 and Articles 107, 108 and 109 of Articles of Association of the Company, Dr. S.K Gupta and Mr. R.V.S. Rao, Independent Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Notice convening the Annual General Meeting includes the proposals for re-appointment of the Directors. Brief resumes of the Directors proposed to be appointed / re-appointed have been provided as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of their expertise in specific functional areas and the names of the companies in which they hold directorship and membership / chairmanship of the Board Committees, as stipulated under Clause 49 of the Listing Agreement, have also been included.

Board Committees

During the year under review, the scope of the Investors''Grievance Committee was enhanced and the Committee was renamed as the Investor Relations Committee with effect from August 07, 2012.

The Board of Directors, in its meeting held on January 31, 2013, had constituted a Risk Management Committee which is entrusted with the responsibility of establishing policies to monitor and evaluate the risk management systems of the Company.

A detailed note on the Committees of the Board of Directors is given in the Corporate Governance Report forming part of the Annual Report.

Internal Control and Internal Audit

The Company has in place well-defined internal control mechanisms and comprehensive internal audit programmes with the activities of the entire organisation under its ambit. The internal audit programme is reviewed and approved by the Audit Committee at the beginning of each financial year and progress reports are placed before the Committee on a quarterly basis.

Audit Recommendations

During the period under review, the suggestions put forth by the Audit Committee were duly considered and accepted by the Board of Directors. There were no instances of non-acceptance of such recommendations.

Auditors

S.R. Batliboi & Associates LLP, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of SR. Batliboi & Associates LLP as the statutory auditors of the Company subject to the approval of the members at the Annual General Meeting.

There are no qualifications or adverse remarks in the Auditors''Report which require an explanation from the Board of Directors.

Secretarial Audit

The Secretarial Audit Report for the year ended March 31, 2013 issued by Mr. Nagendra D Rao, Practicing Company Secretary confirming compliance with all the applicable provisions of Corporate Laws and the Listing Agreement is provided separately in the Annual Report.

Human Resources

Employees form the cornerstone of Sobha Developers Limited. With well-established policies and employee- friendly measures, the Company ensures the development and wellbeing of all its employees.

The Leadership, Development and Training Department of the Company organises and conducts extensive training and motivational programmes on myriad subjects. Cultivation of leadership abilities, augmentation of occupational skills and enhancement of employee morale are the prime focus of these programmes. They result in the overall development of the employees which in turn contributes to the growth of the Company.

Innovation lies at the heart of every sustainable and viable business model. The Company has a strong Value Engineering Department which plays an active and key role in the development and implementation of advanced and modern techniques of construction. At SOBHA, employees are also given ample opportunities to suggest and develop new and innovative ideas, methods and techniques which assist in improving the efficiency levels of the Company. An organisation- wide event is conducted on an annual basis wherein employees are given a platform to exhibit their innovations. The most adaptable and inventive ideas are recognised and aptly rewarded.

Employee relations continue to be cordial and harmonious at all levels and in all divisions of the Company. The Board of Directors would like to express their sincere appreciation to all the employees for their continued hard work and dedication.

As on March 31, 2013, the Company has an organisational strength of 2,879 employees.

A separate section on the Employees is provided in the Annual Report.

Quality, Safety and Technology

The Company''s commitment to quality is reflected in its vision ''Transform the way people perceive Quality''. At SOBHA, emphasis is laid on delivery of products which conform to international benchmarks of quality.

The Department of Quality, Safety and Technology (QST) is entrusted with the responsibility of ensuring adherence to established quality and safety parameters. It meticulously monitors the working of various project sites and periodically reports to the Board of Directors on the safety performance of the Company. It is also responsible for inducting the latest in construction technology thereby enabling project delivery at par with relevant specifications, norms and standards.

The department predominantly focuses on quality of construction, establishment and review of safety standards, infrastructure execution, civil maintenance works, geo-technical aspects, drawing detail development and import / implementation of new tools and materials for process upgradation.

Corporate Social Responsibility

At SOBHA, being a responsible corporate citizen is given utmost priority. The Corporate Social Responsibility of the Company is discharged under the aegis of Sri Kurumba Trust, a public charitable trust. A detailed report on the CSR initiatives and activities are given in a separate section on Corporate Social Responsibility which forms part of the Annual Report.

Awards and Recognitions

During the financial year 2012-13, the Company was bestowed with various awards and recognitions, the details of which are given in a separate section of the Annual Report.

Statutory Information

Directors'' Responsibility Statement

The Director''s Responsibility Statement, setting out compliance with the accounting and financial reporting requirements specified under Section 217(2AA) of the Companies Act, 1956, in respect of the financial statements, is furnished below and on behalf of the Board of Directors, it is hereby confirmed that:

i) In the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any.

ii) The Directors had selected the accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and the profit of the Company for that period.

iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv) The Directors had prepared the annual accounts on a "going concern" basis.

Disclosure of Employees

The statement of employees in receipt of remuneration exceeding the limits prescribed under Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time has been provided as an Annexure to this report.

Transfer to Investor Education and Protection Fund

During the financial year 2013-14, the Company will be required to transfer to the Investor Education and Protection Fund, the share application money received during the Initial Public Offer of the Company which is due for refund and lying unclaimed with the Company in terms of Section 205C of the Companies Act, 1956. The applicants are requested to claim the share application money before transfer of the amount to the said Fund. The details of the unclaimed share application money together with the procedure for claiming the same has been detailed in the Corporate Governance Report and the Notice convening the Annual General Meeting forming part of the Annual Report.

Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo

In terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, the particulars of conservation of energy, technology absorption, research and development, foreign exchange earnings and outgo are set out as an Annexure to this report.

Corporate Governance

A detailed report on Corporate Governance and a certificate from Mr. Nagendra D Rao, Practicing Company Secretary affirming compliance with the various conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

Code of Conduct

As prescribed under Clause 49 of the Listing Agreement, a declaration signed by the Vice Chairman and Managing Director affirming compliance with the Code of Conduct by the Directors and senior management personnel of the Company for the financial year 2012-13 forms part of the Corporate Governance Report.

Management Discussion and Analysis Report

In accordance with the requirements of the Listing Agreement, the Management Discussion and Analysis Report titled as Management Report is presented in a separate section of the Annual Report.

Additional Information to Shareholders

All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company''s website (wwwsobha.com) on a regular basis.

Acknowledgements

The Directors would like to place on record their sincere appreciation to the Company''s customers, vendors, and bankers for their continued support to the Company during the year. The Directors also wish to acknowledge the contribution made by employees at all levels for sustaining and driving the growth of the organisation. We thank the Government of India, the state governments and other government agencies for their assistance and cooperation and look forward to their continued support in future. Finally, the Board would like to express its gratitude to the members for their continued trust, cooperation and support.

For and on behalf of the Board of Directors of

Sobha Developers Limited Place: Bangalore Ravi PNC Menon J.C. Sharma

Date: May10,2013 Chairman Vice Chairman & Managing Director


Mar 31, 2012

The have pleasure in presenting the seventeenth annual report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2012.

Financial Highlights

(Rs in million) Standalone Results Consolidated Results Particulars 2011-12 2010-11 2011-12 2010-11

Total Revenue 14,028.41 13,825.96 14,143.72 13,996.13

Total Expenditure 9,626.56 10,266.78 9,413.47 10,344.55

Earnings before Interest, Depreciation and Amortisation 4,401.85 3,559.18 4,730.25 3,651.58

Depreciation and Amortisation 387.78 277.73 387.78 277.73

Finance Cost 1,061.71 845.49 1,165.39 859.67

Profit before Tax 2,952.36 2,435.96 3,177.08 2,514.18

Tax Expenses

- Current Tax 586.90 629.53 719.59 686.73

- Deferred tax charge / (credit) 404.16 (22.27) 404.16 (22.27)

- MAT credit utilisation / (entitlement) (47.20) 4.10 (47.20) 4.10

Profit After Tax 2,008.50 1,824.60 2,100.53 1,845.62

Minority Interest - - 40.99 32.90

Share of (Profit)/ Loss of Associate - - - (0.20)

Profit for the year 2,008.50 1,824.60 2,059.54 1,812.92

Result of Operations

During the year under review, the Company has executed and handed over 9 residential projects covering an area of 3.14 million square feet and 18 contractual projects covering an area of 2.08 million square feet resulting in an aggregate development of 5.22 million square feet. The Company has completed 79 residential projects and 209 contractual projects covering about 51.80 million square feet of area since inception. The Company currently has 38 ongoing residential projects aggregating to 23.04 million square feet of developable area and 47 ongoing contractual projects aggregating to 10.05 million square feet under various stages of construction.

The Company has a geographic presence in 22 cities and 13 states across India. During the year under review, the Company has expanded its operations into three new locations, namely, Gurgaon, Mysore and Chennai.

Transfer to Reserves

An amount of Rs 201 million is proposed to be transferred out of the current profits to the General Reserve.

Dividend

The Board of Directors has, subject to the approval of the shareholders in the Annual General Meeting, recommended a dividend at the rate of Rs5 per equity share of Rs10 each resulting in a dividend rate of 50 % for the financial year 2011-2012.

Debentures

During the year under review, the Company has not issued any debentures. The Company has redeemed various series of non-convertible debentures aggregating Rs 750 million. As on date, there are no debentures due for redemption.

Deposits

The Company has not accepted any deposits in terms of the provisions of Section 58A of the Companies Act, 1956, during the year under review.

Business

The Company's main operations can be bifurcated into:

- Development and construction of residential and commercial projects

- Contractual projects

A summary of completed and ongoing projects as on March 31, 2012 has been detailed in the Management Report forming part of the annual report.

Manufacturing Divisions The Company follows a backward integration business model wherein the resources and expertise required for executing a project from conceptualisation to completion are sourced from the following divisions

A. Glazing Division

The Glazing Division is engaged in the business of metal fabrication such as aluminum windows and doors, structural and architectural glazing. The division has factories in Bangalore and Chennai.

B. Interiors Division

The Interiors Division of the Company, located at Bangalore, specialises in woodwork and in manufacturing wood and wood-based products. It has also established a factory which is engaged in the manufacture of mattresses under the brand name "Sobha Restoplus".

C. Concrete Products Division

The Concrete Products Division of the Company is engaged in the manufacture of a wide range of concrete products such as hollow and solid concrete blocks, medium and heavy duty concrete pavers and varieties of concrete paving slabs. The division has factories in Bangalore, Gurgaon and Pune.

Shifting of Registered Office

During the year under review, the registered office of the Company was shifted from E-106, Sunrise Chambers, #22, Ulsoor Road, Bangalore - 560 042 to a self-owned premises situated at 'Sobha', Sarjapur-Marathahalli Outer Ring Road (ORR), Devarabisanahalli, Bellandur Post, Bangalore - 560 103 with effect from December 19, 2011.

Board of Directors

As on date, the Board of Directors of the Company comprise of eight Directors of which four are Independent Directors.

In view of the significant contributions made by Mr. Ravi Menon and Mr. J.C. Sharma, the Board of Directors, based on the recommendations of the Nomination, Remuneration and Governance Committee, has appointed Mr. Ravi Menon as the Co-Chairman and Mr. J.C. Sharma as Vice Chairman and Managing Director of the Company with effect from May 06, 2012.

In terms of Section 255 and 256 of the Companies Act, 1956 and Article 107, 108 and 109 of Articles of Association of the Company, Mr. M. Damodaran and Mr. Anup Shah, both Independent Directors, are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Notice convening the Annual General Meeting also includes the proposals for the re-appointment of the Directors. Brief resumes of the Directors proposed to be appointed/ re-appointed have been provided as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of their expertise in specific functional areas and the names of the companies in which they hold Directorship and Membership/ Chairmanship of the Board Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, has also been included.

Board Committees

During the year under review, the Company has reconstituted the Share Transfer Committee of the Board of Directors on two occasions.

Mr. P. Ramakrishnan, Deputy Managing Director, was co-opted as a member of the Committee with effect from August 09, 2011. Mr. PN.C. Menon, Chairman, stepped down from the membership of the Committee due to his inability to attend the meetings with effect from May 06, 2012.

The Company had reconstituted the Executive Selection and Remuneration Committee as Nomination, Remuneration and Governance Committee with effect from May 06, 2012.

Auditors

M/s S.R. Batliboi & Associates, Chartered Accountants, statutory auditors of the Company retired at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s S.R. Batliboi & Associates, Chartered Accountants as the statutory auditors of the Company.

There are no observations or adverse remarks in the Auditors' Report, which require any explanation by the Board of Directors.

Subsidiaries

A. Sobha Developers (Pune) Private Limited The Company had earlier entered into a joint venture agreement with Pan Atlantic Investments Limited, a Limited Liability Company registered in Dubai, for the purpose of construction and development of residential townships in India. Sobha Developers (Pune) Private Limited, a company incorporated under the Companies Act, 1956, was identified as a Special Purpose Vehicle (SPV) for the aforesaid purpose.

Pan Atlantic Investments Limited, which initially held 81% of the equity interest in the SPV, expressed its desire to exit from the investment. After negotiations, the Company agreed to buy the investment in accordance with the applicable laws, rules, and guidelines.

As per the Exit Agreement entered into with Pan Atlantic Investments Limited, the Company has, during the year under review, purchased the entire shareholding of Sobha Developers (Pune) Private Limited and it has consequently become a subsidiary of the Company within the meaning of Section 4 (1) (b) of the Companies Act, 1956, with effect from July 01, 2011.

Sobha Developers (Pune) Private Limited is presently executing a residential project, "Sobha Forest View", situated at Hosahalli Village, Uttarahalli Hobli, Bangalore South Taluk, Bangalore.

B. Sobha Assets Private Limited

During the year under review, Sobha Assets Private Limited was incorporated as a wholly owned subsidiary on March 13, 2012.

The financial statements of the subsidiaries have been reviewed by the Audit Committee and the minutes of the same have been placed before the Board of Directors as stipulated under Clause 49 of the Listing Agreement. None of the aforesaid subsidiary is a material non-listed Indian subsidiary as defined under the Listing Agreement.

Pursuant to the general exemption granted by the Ministry of Corporate Affairs vide General Circular No. 2/2011, dated February 08, 2011, the balance sheet, statement of profit and loss and other documents of subsidiary companies as prescribed under Section 212 (8) of the Companies Act, 1956, have not been attached. As stipulated in the circular, the Company has disclosed the requisite financial information of the subsidiaries in the annual report. Further, the annual accounts and the related detailed information of the subsidiaries shall be provided to the Members upon request and the same shall also be available for inspection on any working day during the business hours at the registered office of the Company and the respective subsidiary companies.

Human Resources

Sobha Developers Limited, one of the leading companies in the Real Estate and construction sector in India, has an organisational strength of 2,502 employees as on March 31, 2012.

The Company has an in-house training and learning department which specialises in organising and conducting extensive training and motivational programmes on varied topics. Primarily focusing on the augmentation of occupational skills and enhancement of employee morale, these programmes contribute to the overall development of the employees and in turn contribute to the growth of the Company.

Employees are given ample opportunities to suggest and develop new and innovative ideas, methods and techniques which assist in improving the efficiency levels of the Company.

Employee relations continue to be cordial and harmonious at all levels and in all divisions of the Company. The Board of Directors would like to express their sincere appreciation to all the employees for their continued hard work and dedication.

A separate section on Employees is provided in the Annual Report.

Quality, Safety and Technology In line with our vision, 'Transform the way people perceive Quality1, the Company gives utmost importance to delivery of products conforming to international standards of quality. The Department of Quality, Safety and Technology (QST), which is responsible for this function, monitors the working of various project sites, ensures adherence to established quality and safety parameters and is also responsible for inducting the latest in construction technology thereby enabling project delivery at par with relevant specifications, norms and standards.

The department gives prominence to the quality of construction, safety standards, infrastructure execution, civil maintenance works, geo-technical aspects, drawing detail development and importing/ implementing new tools and materials for process upgradation.

Corporate Governance

A detailed report on Corporate Governance and a certificate from a Practicing Company Secretary affirming compliance with the various conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the annual report.

Responsibility Statement of the Board of Directors The Director's Responsibility Statement, setting out compliance with the accounting and financial reporting requirements specified under Section 217 (2AA) of the Companies Act, 1956, in respect of the financial statements, is furnished below and on behalf of the Board of Directors, it is hereby confirmed that

i. In the preparation of the annual accounts, the applicable accounting standards had been followed along with the proper explanation relating to material departures, if any.

ii. The Directors had selected the accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and the profit of the Company for that period.

iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv. The Directors had prepared the annual account on a "going concern" basis.

Corporate Social Responsibility

Sobha Developers Limited is a responsible corporate citizen and conscientiously works towards fulfiling its Corporate Social Responsibility. A separate section on Corporate Social Responsibility forms part of the annual report.

Code of Conduct

As prescribed under Clause 49 of the Listing Agreement, a declaration signed by the Vice Chairman and Managing Director affirming compliance with the Code of Conduct by the Directors and senior management personnel of the Company for the financial year 2011-12 is annexed and forms part of Corporate Governance Report.

Disclosure of Employees The statement of employees in receipt of remuneration exceeding the limits prescribed under Section 217 (2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time is attached herewith as an Annexure to this report.

Secretarial Audit Report

The Secretarial Audit Report for the year ended March 31, 2012, issued by a Practicing Company Secretary confirming compliance with all the applicable provisions of Corporate Laws and the Listing Agreement is provided separately in the Annual Report.

Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo In terms of Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988, the particulars of conservation of energy, technology absorption, research and development, foreign exchange earnings and outgo are set out as an Annexure to this report.

Additional Information to Shareholders All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company's website(www.sobha.com) and it is updated on a regular basis.

Management Discussion and Analysis Report In accordance with the requirements of the Listing Agreement, the Management Discussion and Analysis Report titled as Management Report is presented in a separate section of the Annual Report.

Acknowledgments

The Directors would like to place on record their sincere appreciation to the Company's customers, vendors, and bankers for their continued support to the Company during the year. The Directors also wish to place on record their appreciation for the contribution made by the employees at all levels for sustaining and spurring the organisation's growth. We thank the Government of India, the state governments and other government agencies for their assistance and cooperation and look forward to their continued support in future. Finally, the Board would like to express its gratitude to the members for their continued trust, cooperation, and support.

For and on behalf of the Board of Directors of Sobha Developers Limited

Place: Dubai Ravi Menon J.C. Sharma

Date: May 06, 2012 Co-Chairman vice Chairman & Managing Director


Mar 31, 2011

We have pleasure in presenting the Sixteenth Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2011.

FINANCIAL HIGHLIGHTS

(Rs. in Million)

Stand Alone Results Consolidated Results

Particulars 2010-11 2009-10 2010-11 2009-10

Net sales and other income 14,643.15 11,192.83 14,813.32 11,337.23

Profit before interest, depreciation and tax 3,143.03 2,424.63 3,235.42 2,501.85

Finance charges 429.33 498.82 443.51 520.84

Depreciation 277.73 323.10 277.73 323.10

Profit before Tax 2,435.97 1,602.71 2,514.18 1,657.91

Provision for Tax - Current 629.53 261.00 686.73 299.69

- Deferred tax credit (22.27) (20.83) (22.27) (20.83)

- MAT Credit Utilisation/ Entitlement 4.10 (4.10) 4.10 (410)

Wealth tax - 0.02 - 0.02

Net profit after tax 1,824.61 1,366.62 1,845.62 1,383.13

Less: Minority Interest - - 32.90 42.15

Share of Profit/ (Loss) of Associate - - (0.20) 0.01

Profit available for appropriations 1,824.61 1,366.62 1,812.92 1,340.97

Appropriations

Proposed dividend (Includes tax on dividend) 343.05 286.81 343.05 286.81

Transfer to General Reserve 183.00 140.00 183.00 140.00

Balance carried to Balance Sheet 1,298.56 939.81 1,286.87 914.16

RESULT OF OPERATIONS

During the year under review, our Company has executed and handed over 11 residential projects covering an area of 4.12 million square feet and 25 contractual projects covering an area of 2.20 million square feet resulting in an aggregate development of 6.32 million square feet. Since inception, the Company has completed 71 residential projects and 191 contractual projects covering about 42.68 million square feet of area. The Company currently has 23 ongoing residential projects aggregating to 6.99 million square feet and 38 ongoing contractual projects aggregating to 7.42 million square feet under various stages of construction. The company has a geographic presence in 20 cities and 12 states across India.

TRANSFER TO RESERVES

An amount of Rs.183.00 million is proposed to be transferred out of the current profits to the General Reserve.

DIVIDEND

The Board of Directors recommend dividend at the rate of Rs. 3.00 for every equity share of Rs. 10 each resulting in a dividend rate of 30% for the financial year 2010 - 2011.

BUSINESS

The Company’s main operations can be divided into

1. Development and construction of residential and commercial projects

2. Contractual projects

The summary of the completed and ongoing projects as on March 31, 2011 have been detailed in the Management Discussion Analysis Report.

DEBENTURES

During the year under review, the Company has not issued any Debentures. The Company has redeemed various series of Non- Convertible Debentures aggregating Rs. 250 million.

DEPOSITS

The Company has not accepted any deposits in terms of provisions of Section 58A of the Companies Act, 1956, during the year under review.

DIRECTORS

As on date, the Board of Directors of the Company comprise of eight directors of which four are independent directors.

During the year, the shareholders in the fifteenth Annual General Meeting of the Company had reappointed Mr. P. N. C. Menon as a Wholetime Director designated as Chairman, Mr. Ravi Menon as a Wholetime Director designated as Vice Chairman and Mr. J. C. Sharma as Managing Director for a period of five years effective from April 01, 2010. Mr. P. Ramakrishnan who was earlier appointed as an Additional Director was appointed as a Wholetime Director for a period of five years and designated as Deputy Managing Director of the Company with effect from April 01, 2010.

In terms of Article 107, 108 and 109 of Articles of Association, Dr. S.K. Gupta and Mr. R.V. S. Rao, Independent Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Notice convening the Annual General Meeting includes the proposals for the re-appointment of the Directors. Brief resumes of the Directors proposed to be re-appointed, nature of their expertise in specific functional areas and names of the companies in which they hold directorship/ membership/ chairmanship of the Board Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges have been provided as an annexure to the Notice convening the Annual General Meeting.

AUDITORS

M/s S. R. Batliboi & Associates, Chartered Accountants, statutory auditors of the Company retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s S. R. Batliboi & Associates, Chartered Accountants as the statutory auditors of the Company.

The Auditors had given certain observations in their Paragraph 4 of their report and the Board feels it expedient to address the same as follows:

The Registrar of Companies, Karnataka during the course of technical scrutiny conducted in the year 2007 had observed that the Company during the earlier years has undertaken certain transactions without the prior approval of the Central Government required under Section 297 of the Companies Act, 1956. These transactions were done on an arms length basis and in the normal course of business. The Company has filed an application for composition under Section 621A of the Companies Act, 1956 earlier and the same is pending before the Hon’ble Company Law Board, Chennai Bench, Chennai. However the Company has obtained necessary approvals for transactions covered under Section 297 of the Companies Act, 1956 undertaken during the year.

SUBSIDIARIES

There are no subsidiaries of the Company within the meaning of Section 4 of the Companies Act 1956 except investments as detailed in the financial statements forming part of the Annual Report.

HUMAN RESOURCES

Sobha Developers Limited is one of the leading real estate companies in India with a total workforce of 2,224 as on March 31, 2011. The Company aims to contribute to the overall development of its employees through extensive training and motivational programmes. It also strives to create an atmosphere of creativity by encouraging the employees to take initiative and further the Company’s growth through innovative ideas and techniques.

Employee relations continue to be cordial and harmonious at all levels and in all divisions of the Company. The Board of Directors would like to express their appreciation to employees for their hard work and dedication.

However during the year there was an illegal stoppage of work by certain contractual workmen for a period of 71 days in the Interiors Division of the Company. The Department of Labour, Government of Karnataka ruled that this strike by such contractual workmen is illegal and based on this the operations were resumed in the Interiors Division of the Company. The impact of the strike was minimal on the operations of the Company as a whole and the Interiors Division is confident of meeting its delivery milestones.

A separate section on the Employees function is provided in the Annual Report.

QUALITY, SAFETY AND TECHNOLOGY

The Company gives paramount importance to deliver products conforming to world class quality standards. The Department of Quality, Safety and Technology (QST) is entrusted with the responsibility of monitoring the qualitative and safety aspects of works in our various projects. It is also responsible for inducting the latest construction technology thereby enabling project delivery on par with relevant specifications, norms and standards.

The department lays emphasis on the quality of construction, safety standards, infrastructure execution, civil maintenance works, geotechnical aspects, drawing detail development and importing/ implementing new tools and material for process up gradation.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance and a Certificate from the Practicing Company Secretary regarding compliance with conditions of Corporate Governance have been furnished in the Annual Report.

RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORS

The Director’s Responsibility Statement, setting out compliance with the accounting and financial reporting requirements specified under Section 217(2AA) of the Companies Act, 1956, in respect of the financial statements, is furnished below and on behalf of the Board of Directors, it is hereby confirmed that:

i. In the preparation of the annual accounts, the applicable accounting standards had been followed along with the proper explanation relating to material departures, if any.

ii The Directors had selected the accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

iv. The Directors had prepared the annual account on a “going concern” basis.

CORPORATE SOCIAL RESPONSIBILITY

Sobha Developers is a responsible corporate citizen and is committed to Corporate Social Responsibility. A separate section on Corporate Social Responsibility forms part of the Annual Report.

CODE OF CONDUCT

Pursuant to Clause 49 of the Listing Agreement, the declaration signed by the Managing Director affirming compliance of the Code of Conduct by the Directors and senior management personnel of the Company for the financial year 2010-11 is annexed and forms part of the Directors’ and Corporate Governance Report

DISCLOSURE OF EMPLOYEES

The statement of employees in receipt of remuneration exceeding the limits prescribed under Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time is attached herewith as an annexure to this report.

SECRETARIAL AUDIT REPORT

The Company has appointed Mr. Nagendra D Rao, Practicing Company Secretary to conduct the Secretarial Audit for the year ended March 31, 2011. The Secretarial Audit Report confirming compliance with all the applicable provisions of corporate laws and the Listing Agreement is provided separately in the Annual Report.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules,1988, the particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo are set out as an annexure to this report.

ADDITIONAL INFORMATION TO SHAREHOLDERS

The Company ensures prompt and timely dissemination of all the latest information on the Company’s projects and matters of interest to the investors such as financial results, investor presentations, press releases etc through the Company’s website www.sobha.com.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the requirements of the Listing Agreement, the Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.

ACKNOWLEDGMENTS

The Directors would like to place on record their sincere appreciation to the Company’s customers, vendors, and bankers for their continued support to the Company during the year. The Directors also wish to place on record their appreciation for the contribution made by employees at all levels for sustaining the organizational growth especially during the challenging times. We thank the Government of India, state governments and other government agencies for their assistance and cooperation and look forward to their continued support in future. Finally, the Board expresses its gratitude to the members for their continued trust, cooperation and support.

For and on behalf of the Board of Directors

Ravi Menon J C Sharma Vice Chairman Managing Director

Place: Bangalore Date : May 10, 2011


Mar 31, 2010

We have pleasure in presenting the fifteenth annual report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2010.

Financial Highlights

(Rs. in Million)

Particulars 2009-10 2008-09

Net sales and other income 11,192.83 9,917.05

Profit before interest, 2,597.21 2,867.70 depreciation and tax

Finance charges 671.40 1,052.14

Depreciation 323.10 360.33

Profit before Tax 1,602.71 1,455.23

Provision for Tax - Current 261.00 374.00

- Fringe benefit - 4.00

- Deferred (20.83) (20.00)

- MAT Credit (4.10) - Entitlement

Wealth tax 0.02 0.45

Net profit after tax 1,366.62 1,096.78

Add: Balance of profit brought 3,259.23 2,418.74 forward

Profit available for 4,625.85 3,515.52 appropriations

Appropriations -

Proposed dividend 286.81 85.29 (Includes tax on dividend)

Transfer to General Reserve 140.00 -

Transfer to Debenture - 171.00

Redemption Reserve

Balance carried to Balance 4,199.04 3,259.23 Sheet

Result of Operations

After the unprecedented and dramatic changes in the macro economic environment during the last financial year, there has been significant improvement in the economic situation and general outlook especially during the later part of the financial year under review.

We have successfully overcome the challenges of the economic downturn through a series of measures like further capital infusion, monetization of land parcels, product innovation, aggressive marketing strategy and ensuring better control over costs.

We can see the benefits of the above measures in terms of higher sales, improved cash flows and significant reduction in debt.

During the year under review, our Company has executed and handed over 10 residential projects covering an area of 1.82 million square feet and 26 contractual projects covering an area of 3.75 million square feet resulting in aggregate development of 5.57 million square feet.

Transfer to Reserves

An amount of Rs. 140.00 million is proposed to be transferred out of the current profit and Rs. 276.35 million from the Debenture Redemption Reserve to the General Reserve aggregating the total transfer to reserves at Rs. 416.35 million.

Dividend

The Directors propose to recommend dividend at the rate of Rs. 2.50 for every equity share of Rs. 10 each resulting in a dividend rate of 25% for the financial year 2009 – 2010.

Business

The Company’s main operations can be divided into

1. Development and construction of residential and commercial projects

2. Contractual projects

The summary of the projects completed and ongoing as on March 31, 2010 have been detailed in the Management Discussion Analysis Report.

Qualified Institutional Placement

During the year, the Company has issued 25,162,135 equity shares of Rs. 10 each at a premium of Rs. 199.40 per equity share to Qualified Institutional Buyers in terms of Chapter XIII A of the erstwhile Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000. Consequently, the paid up share capital of the Company has increased from 72,901,733 equity shares of Rs. 10 each to 98,063,868 equity shares of Rs. 10 each.

Utilization of QIP Proceeds

The Audit Committee and the Board of Directors of the Company have taken on record the following statement of utilization of the proceeds of the amounts raised by the Company consequent to the issue of 25,162,135 equity shares of Rs. 10 each at a premium of Rs. 199.40 per equity share to Qualified Institutional Buyers in terms of Chapter XIII A of the erstwhile Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000.

(Rs. in Million)

Gross proceeds 5,269

Less: Expenses incurred (gross of service tax) 175

Net proceeds 5,094 Utilization

Loan repayments 3,995

Working capital 935

Interest payments 144

Refund of share application money 20

Total Utilization 5,094

Debentures

During the year under review, the Company has not issued any Debentures. The Company has redeemed various series of Non- Convertible Debentures aggregating Rs. 1,630.10 million.

Deposits

The Company has not accepted any deposits in terms of provisions of Section 58A of the Companies Act, 1956, during the year under review.

Directors

There are eight directors on the Board of Directors of the Company.

Mr. M Damodaran who was appointed as an Additional Director effective from January 29, 2010, holds office up to the date of the forthcoming annual general meeting and is eligible for re- appointment.

Mr. P Ramakrishnan who was appointed as an Additional and Wholetime Director effective from January 29, 2010 and designated as Deputy Managing Director from April 01, 2010 holds office up to the date of the forthcoming annual general meeting and is eligible for re-appointment.

In terms of Article 107, 108 and 109 of Articles of Association, Mr. Anup Shah and Mr. R V S Rao, Independent Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The term of office of Mr. P N C Menon, Mr. Ravi Menon and Mr. J C Sharma ceases during the financial year 2010 – 11 and the proposals for re-appointment are included in the notice convening the Annual General Meeting.

The Notice convening the Annual General Meeting includes the proposals for the re-appointment of Directors. Brief resumes of the Directors proposed to be re-appointed, nature of their expertise in specific functional areas and names of the companies in which they hold directorship / membership / chairmanship of the Board Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges have been provided as an annexure to the Notice convening the Annual General Meeting.

Auditors

M/s S R Batliboi & Associates, Chartered Accountants, statutory auditors retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s S R Batliboi & Associates, Chartered Accountants as the statutory auditors of the Company.

The Auditors had given certain observations in their report and the Board feels it expedient to address the same as follows:

1. Paragraph 4 of the Auditors Report:

The Registrar of Companies, Karnataka during the course of Technical Scrutiny had observed that the Company during the earlier years has undertaken certain transactions without the prior approval of the Central Government required under Section 297 of the Companies Act, 1956. These transactions were done on an arms length basis and in the normal course of business. The Company has fled an application for composition under Section 621A of the Companies Act, 1956 and the outcome of the application is awaited. However the Company has obtained the necessary approvals for such transactions undertaken during the year under review

2. Clause iii(a) and iii(b) of the Annexure referred to in Paragraph 3 of the Audit Report:

The transactions in the nature of loans referred were undertaken by the Company when the status of the Company was a Private Company. These transactions were done within the framework of applicable laws and in the normal course of business. These transactions are not prejudicial to the interests of the Company. The Company has been making adequate disclosures for these transactions at appropriate places.

3. Clause xi of the Annexure referred to in Paragraph 3 of the Audit Report:

Due to slowdown in the market in which the Company is operating, requests were made to the lenders to reschedule or roll over its near term obligations. The Company had made these requests before the due dates of repayment and in accordance with the applicable monetary policies initiated by the Reserve Bank of India. However the said delay was during the first quarter of the financial year under review and prior to the Company raising further capital by way of Qualified Institutional Placement. The Company post issue of equity shares has not delayed the repayments and there is no overdue outstanding in respect of debenture holders and banks as at close of the financial year.

Subsidiaries

There are no subsidiaries of the Company within the meaning of Section 4 of the Companies Act 1956 except investments as detailed in the financial statements forming part of the Annual Report.

Human Resources

Sobha Developers aims to align HR practices with business goals, motivate people for higher performance and build a world class working environment. We continue to develop and retain the best available talent through training and motivational programs. Our Company strives to implement the best of HR practices so as to ensure that talent retention is ensured at all levels. Employee relations continued to be cordial and harmonious at all levels and in all divisions of the Company during the year. A separate section on the Human Resources function is provided in the Annual Report.

Quality

The Department of Quality, Safety and Technology (QST) holds the responsibility to monitor all quality and safety works in our various projects and to introduce the latest construction technology so as to enable project delivery on par with relevant specifications, norms and standards. The department focuses on construction quality and safety aspects, infrastructure execution, civil maintenance works, geotechnical aspects, drawing detail development and importing / implementing new tools and material for process up gradation.

Corporate Governance

A detailed report on Corporate Governance and a Certificate from the Practicing Company Secretary regarding compliance with conditions of Corporate Governance has been furnished in the Annual Report.

Responsibility Statement of the Board of Directors

The Director’s Responsibility Statement, setting out compliance with the accounting and financial reporting requirements specified under Section 217(2AA) of the Companies Act, 1956, in respect of the financial statements, is furnished below and on behalf of the Board of Directors, it is hereby confirmed that:

i. In the preparation of the annual accounts, the applicable accounting standards had been followed along with the proper explanation relating to material departures, if any.

ii. The directors had selected the accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. The Directors had prepared the annual accounts on a “going concern” basis.

Corporate Social Responsibility

Sobha Developers is a responsible corporate citizen and is committed to Corporate Social Responsibility. A separate section on Corporate Social Responsibility forms part of the Annual Report.

Awards & Recognitions

We are glad to report the following awards and recognition received during the financial year 2009-10

i. Prof. Vasanth Rao Trophy in recognition of being the second best company practicing Value Engineering in India by the Indian Value Engineering Society for the year 2008–2009.

ii. Special Mention for ‘Te Terminal Building - Bangalore Infosys Food Court’ project in the Recreational Architecture category of Architecture + Design & Spectrum Foundation Architecture Awards 2009.

iii. Bayer Technology has recognized the Company as “Te Best Contractor, working with safe practices at the site” for their contractual project being executed by the Company.

Code of Conduct

Pursuant to Clause 49 of the Listing Agreement, the declaration signed by the Managing Director affirming the compliance of Code of Conduct by the Directors and senior management personnel for the financial year 2009-10 is annexed and forms part of the Directors and Corporate Governance Report.

Disclosure of Employees

The statement of employees in receipt of remuneration exceeding the limits prescribed under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is attached herewith as an annexure to this report.

Secretarial Audit Report

The Company has appointed Mr. Nagendra D Rao, Practicing Company Secretary to conduct the Secretarial Audit for the financial year ended March 31, 2010. The Secretarial Audit Report confirming compliance with all the applicable provisions of corporate laws and the Listing Agreement is provided separately in the Annual Report.

Implementation of IFRS

Consequent to the issue of the road map for implementation of International Financial Reporting Standards (IFRS) in India, the Company has constituted a core team to ensure a smooth transition. The Company has also engaged consultants for this purpose and is committed to meeting the time lines for implementation. Training sessions for the members of the Audit Committee were conducted to understand the impact and implications of the new accounting standards.

Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo

In terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, the particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo are set out as an annexure to this report.

Additional information to Shareholders

We provide all the latest information on the Company’s projects, matters of interest to the investors like financial information, investor presentations, press releases, etc., on our website www.sobha.com

Management Discussion and Analysis Report

In accordance with the requirements of the Listing Agreement, the Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.

Acknowledgements

The Directors would like to place on record their sincere appreciation to the Company’s customers, vendors, and bankers for their continued support to the Company during the year. The Directors also wish to place on record their appreciation to the contribution made by employees at all levels for sustaining the organizational growth especially during the challenging times. We thank the Government of India, state governments and other government agencies for their assistance and cooperation and look forward to their continued support in future. Finally, the Board expresses its gratitude to the members for their continued trust, cooperation and support.

For and on behalf of the Board of Directors

Place: Bangalore Ravi Menon J C Sharma

Date: April 27, 2010 Vice Chairman Managing Director

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