Real estate company Sobha Developers' net profit has come down almost 30 per cent to Rs 41 crore during the second quarter of this fiscal.

“Net profit is subdued because of new sales not getting into the profit and loss account during this quarter,” Mr J.C. Sharma, Managing Director, Sobha Developers, told Business Line.

The company had new sales of Rs 488 crore during the quarter, of which “we have been able to book revenue of Rs 214 crore”, he pointed out. Real estate companies generally book revenues on new launches only after 25 per cent of construction costs have been incurred in that project. The company has also seen a 41 per cent increase in average sales realisation at Rs 5,196 per sq ft during the second quarter.

Land monetisation

Besides, the company also benefited from land monetisation of Rs 114 crore last year, and “on that we recognised profit before tax of Rs 34 crore. If that is excluded, the second quarter is ahead both year-on-year and sequentially,” said Mr Sharma.

Sobha Developers launched 5.13 million sq ft of new projects during the quarter, which is expected to generate Rs 1,100 crore of revenue during the course of project completion. “When this happens, it will give us much better visibility on cash-flow,” he said.

The company had restructured Rs 990 crore debt in 2009. Currently, its debt is at Rs 1,362 crore, and saw an increase of Rs 65 crore “despite generating operating cash surplus of Rs 127 crore,” he said. The company hopes to bring down debt-equity ratio to 0.5 from the current 0.71.

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