DECLARATION

I hereby declare that the report of the project work entitled An organizational study on Sobha Developers Limited, is based on my own work carried out during the course of my study under the supervision of Mrs. Bindu Krishnakumar. I assert that the statements made and conclusions drawn are an outcome of the project work. I further declare that to the best of my knowledge and belief that the project report does not contain any part of any work which has been submitted for the award of any other degree/diploma/certificate in this University or any other University.

Reshma K.M 108001151039

ACKNOWLEDGMENT

I owe a great many thanks to a great many people who helped and supported me during the writing of this report. My deepest thanks to Mrs Bindu Krishnakumar, the Guide of the project for guiding and correcting various documents of mine with attention and care. She has taken pain to go through the project and make necessary correction as and when needed. My deep sense of gratitude to Mr. Srinivas Shetty Assisstant General Manager-HR, Sobha Developers for his support and guidance. Thanks and appreciation to the helpful people at Sobha Developers Limited, for their support. I would also thank my Institution and my faculty members without whom this project would have been a distant reality. I also extend my heartfelt thanks to my family and well-wishers.

CONTENTS

COMPANY PROFILE MANAGERIAL ORGANIZATIONAL STRUCTURE HR DEPARTMENT FINANCE DEPARTMENT MARKETING DEPARTMENT CASE STUDY SUGGESTIONS

4-5 6-7 8-29 30-42 43-56 57-64 65-66

COMPANY PROFILE

COMPANY PROFILE

Mr. PNC Menon is the founder and the chairman of the Sobha Group companies. Set up in 1995, this company has unique value systems that have created an unparalleled name in the real estate industry. A company where quality meets consistency, technology meets aesthetics and passion meets perfection. As of December 31 st, 2009, in the past 14 years since its inception, Sobha has completed 57 residential projects and 158 contractual projects covering about 35.56 million square feet of area in 17 cities across India. The company currently has 27 ongoing residential projects aggregating to 8.55 Mn. Sq.ft, while 5.48 Mn sq.ft volumes of contractual projects are under various stages of construction and design. The company is constantly executing about 6 million sq.ft of work for the past 3 years. This clearly puts Sobha on the top of the execution chart. Of the many accolades it has received the Best Executed Project in India award for Sobha Malachite, Bangalore in 2007 at the CNBC Real Estate Awards is proof of its credentials as a brand synonymous with quality. In order to fuel its growth plans Sobha Developers went public through its initial public offering in December 2006, an event that created history when the issue got over subscribed a record of 126 times. On this strong foundation is based the business plan for the future. Sobha is already developing integrated townships in Kerala with diversification into Retail and Hotels bringing Sobha Lifestyle Products like the Sobha Restoplus Spring Mattresses and furniture to suit discerning tastes of a niche group of customers. The strength of Sobha lies in a sustained quality edge, backward integration, the trust it has earned from its clients, transparency in all dealings at every stage and excellent customer service. Mr. Menon encourages every member of his team to be a specialist in his/her own field of expertise and core capability. He says, Let the drive for perfection start from within.

Sobha brings to its clientele, signature projects with world-class infrastructure

MANAGERIAL ORGANIZATIONAL STRUCTURE

MANAGERIAL ORGANIZATIONAL STRUCTURE

HR DEPARTMENT

JOB DESCRIPTION

VP-HR
HR policies and procedures. Assessment of department resources. Recruitment. Training and Development. Performance Management/Promotion process. Compensation management. HR initiatives. Employee relations. Grievance handling. System improvement (ISO compliance).

Assistant General Manager

To implement statutory compliance in contractual projects and LMS (Lotus Manpower Services). Training on social security schemes. Statutory Administration. Benefits Administration. Liaison with Government bodies. Interaction with labor contractors. Handling Industrial Relations.

Manager HR
9

Recruitment and selection. Compensation. Reference checks for managers and above. Cost control. Preparation and release of recruitment and advertisement. Custody of personnel records (Managers). Co-ordination with placement consultant.

Deputy Managers HR
Training in house and external for soft skills. Performance Management. Induction. ISO Documentation and compliance. Exit Interview.

Assistant Manager HR
Recruitment and selection. Campus Interview Scheduling. Database creation. Co-ordination with placement consultants. Induction. Web posting and maintenance. Cost control.

10

Senior Executive/Executive HR
Preparation of Interview call letters, appointment orders, promotion letters, increment letters. Joining formalities. Updating of records. Follow up for conformations, increments. Maintainenace of HR files. Staff attendance of all offices and projects (HRD/F/15, HRD/F/16 and HRD/F/19). MIS for various heads. ERP entry and updation. Reference Checks for below managerial level. Coordination with accounts department in all routine matters related to HR. Statutory compliances ESI nomination etc. Conformations, transfers movements, service letters, address proof letters, termination. Custody of employees files (other than managers). Database maintenance. Posting of jobs in websites. Sorting of application and scheduling of interviews coordination. Separation activities final clearance, Exit interviews. Coordination with bank in opening of saving bank A/c for salary purpose. Keeping of HR stationery. Training documentation. ESI card, ATM card, ID card distribution. Coordination for salary inputs. Payroll.
11

RECRUITMENT PROCESS

The goal of recruitment is to assists in the building of business capabilities for the present and future by: Providing resources with the appropriate skills, mindset, and competencies needed by the business.
12

 Providing the business with world class leaders.

Selection policy
Recruitment in Sobha group is merit based programme and the requirements of the job and suitability of the candidate alone shall be determining factor in the selection and placement of applicants. Candidates should be assessed not only for their technical/professional competence, experience and knowledge demand by the job but also due weightage shall be given for the personal attributes and qualities. In order to speed up the recruitment process and reduce process time, the following authority schedule will be followed for granting final approval for shortlisted candidates.

Posting within India o GMs and above: chairman o Sr.Managers Asst.GMs: MD o Below and up to Managers :ED(S)

Posting Abroad o Managers and above : chairman

o

Others : ED(S)

Ex-employees may be re-employed provided their service in the company and nature of separating was without blemish and care is taken that no disparity is created with the existing employee in terms of level, emoluments etc. Hiring new employee shall not be made where needs can be filled through transfer of qualified and deserving employees. Candidates for technical positions like fresh engineers and fresh site supervisors shall require to undergo a written test and those scoring a minimum of 60% shall only be considered for further screening.
13

The educational qualifications specified for each relevant categories is indicated in the Annexure 1.

Annexure -1
Educational specification for recruitment Office staff Sr.No
1.

Category
Vice - president

Education
Graduation from a recognized university/Graduation in engineering preferably with a post-graduation in management/professional qualification in the respective field of operation. Same as above Same as above Same as above Same as above Same as above

2. 3. 4. 5. 6.

General Manager Dy.GM/Asst.GM Senior Manager Manager Asst.Manager/Dy.Manager Sr.Executive Executive Junior Executive 10. Assistant Trainee

7. 8. 9.

Same as above Same as above

Graduation university from a recognized

Same as above Same as above

11.

Projects

Sr. No. 1.

Category
Vice-president

Education
Graduation in engineering from a recognized university in the relevant discipline preferably with a P.G in management/professional qualification in the respective field of operation.

14

2.

General manager Assistant Manager Senior Manager Manager Assistant Manager/Dy.Manager

Same as above Same as above Same as above Same as above Graduation in engineering from a recognized university in the relevant discipline Same as above Same as above Same as above Same as above Diploma in engineering from a recognized university in the relevant discipline Same as above Graduation from a recognized university/diploma in engineering Same as above

3.
4. 5. 6.

7. 8. 9. 10. 11.

Project Engineer Senior site Engineer Site Engineer Engineer Senior supervisor

12. 13. 14.

Site supervisor Storekeeper Store assistant

Resourcing The following sources of recruitment may be used based on:

Maximizing coverage Ensuring the best quality and Minimizing time and cost

a) Web based recruitment HR department shall develop relationships with identified websites to ensure business specific and cost effective sourcing.
15

b) Existing database All applications received shall be entered in to a candidate database maintained by HR and shall be considered for current and future requirements.

c) Recruitment advertisements If the number of positions is very large and heterogeneous in nature, then advertisements shall be considered as a mode of recruitment.

d) Placement agencies HR will develop long term relationships with identified placement agencies to ensure business specific sourcing. Sourcing shall be initiated only after a service contract is executed with the identified placement agencies by HR.

e) Campus recruitment The list of campuses for specific categories shall be compiled by HR including discipline to be considered in each institute.

f) Employee referrals The employee referral scheme will be open during specific period announced by HR and will be applicable only to those specifically announced. All referred candidates will be required to go through the regular company selection process. The designated employee referral coordinator in HR will confirm the final status to the employee as soon as the interview process is complete. In case the employee does not hear from the designated employee referral coordinator within 30 days, the employee can contact HR.

Selection process The recruitment process shall start with a manpower requisition for all replacement vacancies and for all manpower requirements exceeding the yearly approved manpower members.

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GREIVANCE REDRESSAL

Sobha strives to recruit and promote employees solely on the basis of the qualifications and abilities required for the job. They are an equal opportunity employee that is committed to hire hiring employees regardless of gender, race, creed or origin. It is their intention to provide a fair and equitable treatment to our employee at levels. Sobha is also committed to providing a safe and healthy of work environment that preserves and protects the dignity of our employees and is free from abuse and harassment in our offices or sites, wherever they are located. At the same time, it is also expected that their employees will avoid activities which are in conflict with their commitments to their jobs. Infringements of this code of conduct will constitute a serious breach of the contract of employment and will result in termination of employment. It is the duty of every employee to uphold this doctrine with a high standard of corporate conduct.
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An independent grievance committee has been set up to monitor compliance with the above policy. The committee comprises of chairman, managing director, executive director (in charge of HR) and executive director (in charge of corporate audit). A staff member who feels that he/she has been subjected to harassment may forward a written complaint in strict confidence through courier in a sealed envelope, to any member of the Grievance committee who will endeavor to ensure that the complaint is investigated and suitable action is taken. No anonymous complained will be entertained. It is assured that no employee will suffer as a consequence of bringing to the attention of the committee, a breach or suspected breach of these principles. Employees are also encouraged to write to the committee on any matter of importance including process breach, omissions and commissions which has a direct or indirect impact on the organization.

Grievance handling

Sl.No 1.

Activity
Individual employee to contact HR dept. in case of any grievance. Representative of employee relations team from HR dept. would interact with employee and discuss with VP-HR.

Responsibility
Employee

Time frame
Immediate

2.

Deputy manager-HR

Within 1 day of grievance

3.

Representative of employee relations team would provide solution as per VP-HR direction.

Deputy manager-HR

Within 3 grievance

days

of

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PERFORMANCE APPRAISAL AND DEVELOPMENT REVIEW

Performance Assessment At least once a year, performance will be formally assessed against the agreed targets. Where feasible 360 degree feedback may be introduced at an appropriate stage. An integral part of this assessment will be an evaluation of the targets achieved in terms of both the quality of the results and the specific value and business behavior displayed. The assessment should be discussed with the manager. Honesty, fairness, courage and openness are crucial for this process.

Personal development plan Performance assessment will review how far the agreed personal development targets have been met. Based on analysis of the gaps and skills and competencies, managers will agree on learning, training and development action plans. The organization will provide opportunities; the individual is expected to take advantage. The process will encompass all
19

managers. Where the performance is below standard, actions will be agreed jointly. Long term potential will be assured and the outcome is shared.

Performance appraisal reports

All permanent employs will be appraised as per plan set by HR. It is the responsibilities of Human Resource Department to initiate process of periodical appraisal process are circulated by HR. All appraisal reports shall be received back in Human Resources Department which will form one of the basis for deciding annual increments, in addition to initiating action on training and development needs for individual and teams.

Diverse Performance Reports If an employees performance is found unsatisfactory during the performance and development review, the following steps must be taken:

The employee will be advised of the shortfalls in his/her performance and be placed on a performance and skills improvement program. The improvement programmed will specify the performance and skills standards that must be achieved and will set a time for an interim review. This will normally take 6 months. At the end of stipulated period, a performance and development review will be under taken. If the employees performance still fails to meet standards, the employment contract may be terminated.

20

PROMOTIONS

General principles Company believes in providing growth opportunities to internal candidates. It also invests its resources in developing internal talent to avail these opportunities. Promotions do recognizes the performance in the current job. However, promotion is an outcome of performance of certain defined quality in the current job as well as the potential to handle high level jobs. Promotions are not time bound. While promotions take in to consideration the performance as assessed by the superiors in the current job, the policy ensures that these decisions are not subjective and are not unduly in favor to someone. Therefore, while justification for promoting someone is important. The need to justify no promotion to someone else of similar background is also necessary. There shall be an apex Review committee which acts as moderator and balance promotions across the company discipline wise, function wise which also ensures that there is equity and parity in promotions in different departments/locations. The
21

review committee currently comprises of managing director and executive director in charge of HR and corporate audit.

Process It shall be the responsibility of HR to provide the committee relevant data about employees background/performance rating/previous experience if any, etc. The process will start in December every year and must conclude by April. In April, the promotions will be announced and the letters issued department heads are required to submit their recommendations as a part of the appraisal process to the committee not later than January end. The Review Committee is expected to analyze the data in the following manner: A list of people recommended V/s list of people not recommended who otherwise meet the criteria.

Discipline

wise/function wise/grade wise list of people recommended/not recommended who otherwise meet the criteria.

List of people recommended against vacancy. List of people recommended against no vacancy.

Guidelines Department heads make the recommendation, then if found necessary they will require meeting the committee separately and justifying their recommendation. However, the decision of the committee shall be binding. Broadly the recommendations are classified as against the vacancy or the man has the high caliber but no vacancy or there is neither vacancy nor caliber. But the department head wants to recommend him as a stagnated frustrated case. After meeting the department heads and understanding from them their justification for each case. The review committee arrives at a consensus and makes its final decision. Even if one of the members of the committee has a dissenting view, the recommendation will be dropped. In exceptional cases, the committee may consult Chairman for decision. In all cases involving managers reporting directly to chairman, the decision will be taken by him.
22

Approval process As regard the promotions up to Assistant Manager Level the committee will go purely by guidelines, views, justification given by the department heads. Normally, in such cases there is no need for the committee to meet individual concerned. However in a rare case, they may call a person for personal feedback. However the employees proposed to enter the Manager cadre will have a personal discussion with the committee. Purpose of the discussion is to ensure that the person entering management cadre ha a potential for further growth and is evaluated for his development needs. The committee will also probe and ascertain the career interest of the employee towards his operation job/technical job/specialized job etc. it will also validate these aspirations and provides reality check if necessary.

EMPLOYEE TERMINATION

Resignation Managers and above

An employee wishing to resign from employment with the company may do so in writing to the concerned director/ head of the department giving three months notice to expire on any day of the month or pay three months basic salary in lieu of notice.

Deputy managers and below An employee wishing to resign from employment with the company may do so in writing to the concerned head of the department, giving one month notice to expire on any day of the months or pay one months salary in lieu of notice.

Exit interviews An exit interview will be conducted before the expiry of the notice period. It will be conducted between the employee and human resource manager. In case of senior managers
23

above the rank of general manager the interview shall be conducted on or before the last working day of the resigned employee.

Guidelines for conducting Exit interviews

a. Before the interview Meeting the reporting person and communicate your intention to conduct an exit interview. Keep the superior informed of the time and place of the same. Go through the personal file of the individual as a memory refreshing exercise. Gather data regarding past appraisals/increments/family details etc. from the personal file or from very trusted sources.

b. During the interview The session should start with an attempt to get the atmosphere right. Make sure that the person is comfortable. It may be helpful to have recapitulation of what the employee has been engaged in since his date of joining focusing on the positive aspects. Ask open ended questions as they call for descriptive answers which create openings for further questioning. Avoid making copious notes during the interview. The interview can decide when to get the exit interview form filled by the employee. He may do it as a part of the interview or after the interview. Summarize the session at the end of the interview to clarify the gathered information.

c. After the interview Record the observations and findings in the form and file exit interview report in the personal file. It is important to bring up the findings of the interview in future.
24

Termination of employment contracts An employees appointment may be terminated on any of the following grounds: a. Gross misconduct b. For cause c. Continued unsatisfactory performance

a. Gross misconduct Where in the opinion of the terminating authority action or actions taken by an employee is/are so grave as to constitute gross misconduct ; his appointment may be terminated summarily.

b.

For cause An employee may be terminated for cause other than gross misconduct. Where an investigation may be necessarily before cause can be definitely established. E.g. misappropriation of company funds, an employee may be suspended from duty with full pay. Legal opinion, if necessary may be sought as before termination of employment for cause. Terminal payments Any employee whose employment is terminated for cause and or gross misconduct will be entitled to:

Full salary up to the date of termination. Own contribution to the provident/pension fund plus accrued interest. Severance allowance, as per statutory provisions, if applicable. Payment in lieu of accrued leave. Repatriation costs, if applicable.

No other payment shall be made whatsoever.

25

In case of misappropriation, all steps will be taken to ensure recovery of the amount and terminal payments will be paid only after recovery.

c. Continued unsatisfactory performance An employees appointment may be terminated due to unsatisfactory performance. Overall responsibility for handling a case lies clearly with human resource manager, however with written authorization from managing director/ executive director, before any action is finalized. The human resource manager will have responsibility for the collection of all information and consultation with other departments. The concerned employee will be given every opportunity to defend him/herself. Evidence of termination must be fully documented so as to present a well prepared, sound and clear cut case to the employee. Evidence should include: Written performance development reviews. Properly recorded interviews, signed by appraiser and employee.

Recorded warning, giving details of unsatisfactory performance and likely consequences.

Letters of termination Upon termination an employee will receive: A letter from the human resource department modifying him of the decision to terminate his service. This letter will also give details of the terminal payments due to the employee. In all cases of termination, a copy of the letter notifying the employee of the decision together with the employees acknowledgement thereof will be filled in human resource department.

Retirement Normal retirement The normal retirement age is 60 years. Early retirement
26

Early retirement may be allowed on medical grounds at the discretion of the management after attaining 50 years of age.

Retirement benefits The retirement benefits include such as provident fund and gratuity.

Provident fund Company has a potential fund operated by P.F commissioner under the Employees provident fund act. Contribution: Every month employee contributes 12% of his salary. This amount is deducted from employees salary every month and deposited in the fund. Company makes the matching contribution out of which 8.33% of salary goes to the Employees to Pension Scheme and balance to provident fund A/c employees contribution. Interest: Interest is calculated at the rate announced by the government under the Provident fund act. Voluntary contribution: Members can make voluntary contribution over and above 12% up to a maximum of 8%. Annual statements: Every year the fund distributes the annual statement of the balance including the contribution and the interest to the members

Gratuity Company makes the gratuity payment to the employee on his separation from the company based on the terms and condition, defined under the payment of Gratuity act. Gratuity is paid to all the employees irrespective of the cadre. Gratuity is computed on the basis of the last drawn basic salary of the employee. Gratuity is paid for any employees separating from the services of the company with the company who has completed minimum 5 years of continuous service with the company. Gratuity is calculated on the basis of 15 days salary for every completed year of service and for the period of 6 months or more. To calculate the 15 days salary the per day salary is calculated by dividing the monthly salary by 26. All the other terms and conditions of the act apply to the gratuity payment.

27

Gratuity payment is taxed as per the provisions of Income Tax Act and payment of gratuity act in force. Benefits are not payable one is still in service. An employee who is in service will not be allowed to withdraw or discontinue contributions. .

REMUNERATION

Reward and recognition The objective of Sobhas reward policies is to attract, retain and motivate outstanding employees. Our guiding principles are: Pay for responsibility Pay for performance Pay for potential Pay for results Pay for competively

Implementation Each job is assigned a grade and a pay scale. Each job within a grade has a pay scale based on assessment of the size, scope and market value of the job. Managers performance, skills, competencies and potential are assessed at least once each year. Pay scales are renewed periodically. In addition to pay, performance linked incentive bonus schemes are designed to motivate and retain talent.
28

Sustained high performance list The definition of sustained high performance is continued demonstration of most outstanding performance through experience and/or skills. Sustained high performance reflects the accumulation of knowledge and experience through individual involved in the same job. Selecting managers for the sustained high performance list focuses on:

Track record for the last three years; At least 3 examples of value creation, contribution to top to bottom line; Completion of major projects; Examples of innovation, entrepreneurship, leadership

DEVELOPMENT AND TRAINING

Learning policy Learning has been identified by Sobha as a key building blocks for delivering outstanding performance, hence a high performance organization. Continuous learning is therefore to be encouraged and implemented as a systematic and sustainable corporate action plus individual efforts.

Options On the job learning Local learning Operational visits

On the job learning The line manager and the individual shall identify and agree on work that can bridge gaps identified in the PDP process and reinforce skills required. She/ he will then arrange relevant opportunities/activities/tasks etc.

29

Local learning

The line manager shall identify any learning events that will bridge gaps identified in PDP, functional or business strategic needs she/he will then recommend specific learning events or learning material available in centers, library etc.

Operational visits

Visits to other locations including international visits should be resorted to in order to learn latest developments outside the group/country. All senior managers are encouraged to travel abroad at least once a year. This is mandatory for managers in functions like architect, research and development, purchase etc.

30

FINANCE DEPARTMENT

31

FINANCIALS AT A GLANCE

(Rs in million except earnings per share, rate of dividend and debt equity ratio)

Particulars Financial performance Turnover

2010-11

2009-10

2008-09

2007-08

2006-07

14,643

11,193 2,425

99,917 2,867

14,363 3,674

11,894 2,596

Profit before 3,143 depreciation interest and tax(PBDIT) Depreciation 278

323 2,102

360 2,507

350 3,324

244 2,352

Profit before 2,865 interest and tax(PBIT) Interest tax(PBT) Profit after 1,825 tax(PAT) Earnings per 18.61 share(Rs) Dividend: Equity 294 429

499 1,603 1,367 14.91

1052 1,455 1,097 15.04

615 2,709 2,283 31.32

486 1,866 1,615 24.26

Profit before 2,436

245 25

73 10

474 65

401 55

Rate of 30 dividend (%) Financial position Shareholders 18,566 fund

17,085

10,895

9,883

8,155

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Borrowed funds Total Debt ratio Net assets

12,110 30,676

14,540 31,625 0.85 2,061 429 29,135 31,625

19,122 30,017 1.76 2,248 362 27,407 30,017

17,630 27,514 1.78 2,142 294 25,078 27,513

5,837 13,992 0.72 1,948 527 11,517 13,992

equity 0.65 fixed 2,041 516

Investments

Net current 28,119 assets Total 30,676

CATEGORIES OF SAREHOLDERS AS ON MARCH 31, 2011

Category Clearing member

Shares 92,799

% 0.09

Other bodies corporate Corporate institutions Foreign investors Mutual funds Nationalized banks Non nationalized banks NRI Nonresident(non repatriable) Office bearers Overseas corporate bodies Public

1,461,706

1.49 0.56 30.21 4.04 0.01 0.20 0.02 0.05 0.00 2.66
33

financial 543,869 institutional 29,620,839 3,958,742 10,850 195,673 22,751 47,628 11 2,612,505

Promoters Relatives of director Other directors Trusts GIC and its subsidiaries Foreign venture capital Total

59,331,35 45,030 79,271 4,085 34,759 2,000 98,063,868

60.5 0.05 0.08 0.00 0.04 0.00 100

FINANCIAL RESULTS AND OVERALL PERFORMANCE OF THE COMPANY

BUSINESS

The overall performance of the company during the current financial period has been excellent. The net sales of the company stood at Rs.14, 560.89 million for the year ended March 31, 2011 showing an increase of 30.71% from Rs.11, 139.92 million during last year and net profit before tax was Rs.243, 496 million for the year ended March 31,2011 resulting an increase of 52% from Rs.1602.71 million during the corresponding previous year. The analysis of financial statements, viz balance sheet and cash flow are given below. Balance sheet With a net worth of Rs.18, 566.23 million and debt equity ratio of 0.65 as on March 31, 2011, the company has consistently improved its financial position and the leverage ratio. The company has met stakeholders interests in time during the year including commitments towards repayment of loan, interest servicing to banks and payments of statutory dues. Shareholders funds The share capital remained constant at Rs.980.64 million as on March 31, 2011 while reserves and surplus have increased from Rs.16, 104.04 million as on March 31, 2010 to Rs.17, 585.59 million as on March 31, 2011 showing healthy capital gearing ratio. Loan funds
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Secured loan saw a reduction from Rs.14, 465.85 million as on March 31, 2010 to Rs.12, 026.17 million as on March 31, 2011, showing a better debt equity ratio in the current year. Unsecured loans marginally went up from Rs.74.50 million as on March 31, 2010, to Rs.83.48 million as on March 31, 2011. Fixed assets Gross fixed assets grew marginally to Rs.3, 147.69 million from Rs.2, 942.11 million mainly on account of additions in the asset blocks of plant and machinery, building, computers etc. Investments Trade and non-trade investments of the company increased from Rs.429.35 million as on March 31, 2010 to Rs.516.09 million as on March 31, 2011. Deferred tax assets(Net) Deferred tax assets/liability represents timing differences in the financial and tax books primarily arising from depreciation of assets with different rates and expenditure disallowed under section 43B of the Income Tax Act, 1961, which are allowed in the year of payment. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets (Net) increased from Rs.51.52 million as on March 31.2010 to Rs.73.79 million as on March 31, 2011. Current assets, loans and advances Inventories were brought down from Rs.10, 173.94 million as on, March31, 2011. A major portion of inventory was attributed to work in progress which was reduced from Rs.9882.39 million as on March 31, 2010 to Rs.9193.91 million as on March 31, 2011. Sundry debtors were Rs.3, 913.93 million and Rs.4, 165.80 million as on March 31.2011 and March 31, 2010 respectively. Since the ownership of apartments is transferred to clients only upon fully settlement of their dues, the company considers the debtors as food and realizable. Loans and advances were Rs.21, 516.60 million as on March 31, 2011 as compared to Rs.20, 093.23 million as on March 31, 2010. Advances are primarily towards amounts paid in advance for purchase of land or other and services to be received in future. The company considers the advances/deposits towards land as good since these advances are backed by arrangements/memoranda of understanding/agreements executed by the company and the company/seller/intermediary in the course of obtaining clear and marketable titles free from all encumbrances.
35

With good collection efforts, the overall debtors were brought down from Rs.4,165.80 million as on March 31, 2010 to Rs.3, 913.93 million as on March 31, 2011. Cash and bank balances reduced from Rs.800.36 million as on March 31, 2010 to Rs.275.35 million as on March 31, 2011, mostly held in current account and deposit account maintained at various banks. The deposit accounts represent deposits for short tenures, margin money deposits towards loan escrow account and other non-fund based utilization of limits. Current liabilities and provisions Current liabilities include sundry creditors for supply of materials and provision of services, bank O/D, advance from customers and interest accrued but not due and other liabilities. This has increased from Rs.5, 613.9 million as on March 31, 2010 to Rs.6, 455.31 million as on March 31, 2011. Advances from customers in current liabilities denote monies received for the delivery of final products on future dates and amount received towards this income is yet to be recognized in the books of accounts. Provisions include proposed dividend, corporate dividend tax, provision for leave encashment and gratuity, provision for taxation etc. Total provisions were Rs.537.09 million as on March 31, 2010 and Rs.931.70 million as on March 31, 2011.

BALANCE SHEET

(Rs. in millions) Balance as at March 31

36

2011 SOURCES OF FUNDS Shareholders funds: Share capital Reserves and Surplus 980.64 17,585.59 18,566.23 Loan funds: Secured loans Unsecured loans 12,026.17 83.48 12,109.65 30,675.88 APPLICATION OF FUNDS Fixed assets: Gross block Less: Accumulated depreciation/amortization Net block 3,147.69 1,774.92 1,372.77

2010

980.64 16,104.04 17,084.68

14,465.85 74.50 14,540.35 3,1625.03

2,942.11 1,512.97 1,429.14 631.97 2061.11 429.35 51.52

Capital work in progress including capital 668.01 advances 2040.78 Investments Deferred tax(Net) Current assets, loans and advances: Inventories Sundry debtors Cash and bank balances Loans and advances 9,721.35 3,913.93 275.35 21,516.60 35,432.23 Less: Current liabilities and provisions Current liabilities Provisions Net current assets
37

516.09 73.79

10,173.94 4,165.80 800.36 20,093.23 35,233.33

6,455.31 931.70 7,387.01 30,675.88

5,613.19 537.09 6,150.28 3,1625.03

Cash flow Operating activities Net cash generated from operating activities was Rs.4, 143.60 million in fiscal 2011. Net cash generated from operating activities consisted of profit before tax of Rs.2, 435.96 million as adjusted for interest expenses of Rs.352.36 million and non-cash items such as depreciation and amortization of Rs.277.73 million. This amount was partially offset by a decrease in cash generated from working capital movements which was primarily due to increase in loan and advances amounting to Rs.506.26 million. Meanwhile, there was a also a Rs.863.74 million decrease in inventory, Rs.251.87 million decrease in debtors and a Rs.862.32 million increase in current liabilities and provisions. As against above, net cash used in operating activities was Rs.3, 277.63 million in fiscal 2010. The company had a PBT of Rs.1, 602.71 million, which was adjusted for and interest expenses of Rs.438.11 million and non-cash items such as depreciation and amortization of Rs.323.10 million. This amount was offset by a decrease in cash generated from working capital movements which was primarily due to an increase in debtors of Rs.612.56 million. Meanwhile there was also Rs.569.28 million decrease in
38

inventory, Rs.523.74 million decrease in loans and advances and Rs.623.57 million in current liabilities and provisions. Investing activities Net cash used in investing activities was Rs.218.68 million in fiscal 2011. We had used Rs.229.78 million for the purchase of fixed assets, which was partially offset in a small way by way of Rs.5.44 million, generated from the sale of fixed assets and Rs.15.61 million towards interest received during the period. As against above position, net cash used in investing activities was Rs.124.07 million in fiscal 2010. We had used Rs.650 million for the purchase of investments and Rs.139.41 million for the purchase of fixed assets, which was primarily offset by Rs.650 million generated from the sale of investments.

Financing activities Net cash used in financing activities Rs.4, 449.93 million in fiscal 2011, which primarily included Rs.6, 408.27 million for the repayment of secured loans and interest payment of Rs.1, 732.12 million. There was also an outflow due to dividend paid amounting to Rs.245.46 million. This amount was partially offset by Rs.3, 968.59 million coming from proceeds of fresh inflows from secured loans. Net cash used in financing activities was Rs.2, 563.71 million in fiscal 2010, which primarily included Rs.6, 407.21 million for the repayment of secured loans and interest payment of Rs.2, 447.98 million. There was also an outflow due to refund to share application money amounting to Rs.474.70 million. This amount was partially offset by 5,094 million coming from proceeds of issue of shares and Rs.1, 838 million fresh inflows from secured loans.

39

CASH FLOW STATEMENT

(Rs. in million)

Year ended March 31 2011 A. CASH FLOW FROM OPERATING ACTIVITIES PBT Adjustment for: Share in profits for partnership firm Depreciation/amortization (Profit)/loss on sale of fixed assets Dividend income Interest income Interest expenses
40

2010

2,435.96

1,602.71

(76.79) 277.73 (3.06) (15.60) 352.36

67.73) 323.10 (3.90) (0.36) (7.89) 438.11

Operating profit before working capital changes

2,790.60

2,284.04

Movements in working capital: (increase)/decrease in inventories (increase)/decrease in debtors (increase)/decrease in loans and advances increase/(decrease) in current liabilities and provisions Cash generated from/(used in) operations Direct taxes paid (net) 863.74 251.87 (506.26) 862.32 4,442.27 (298.67) 569.28 (612.56) 523.74 623.57 3,388.07 (110.44) 3,277.63

Net cash generated from/(used in) operating activities- 4,143.60 (A) B. CASH FLOW FROM INVESTING ACTIVITIES Purchased of fixed assets Proceeds from sales of fixed assets Purchase of investments Purchase of equity investments Sale of investments Interest received Dividends received Net cash(used in)/from investing activities-(B) (229.78) 5.44 (9.95) 15.61 (218.68)

(139.41) 6.94 (650.00) 650 8.04 0.36 (124.07)

C. CASH FLOW FROM FINANCING ACTIVITES Refund of share application money Proceeds from issue of shares(net) Proceeds from secured loans Repayment of secured loans Proceeds for unsecured loans Interest paid(gross) Dividends paid
41

3,968.59 (6,408.27) 8.98 (1,732.12) (245.46)

(474.70) 5,094.00 1,838 (6,407.21) (2,447.98) (72.43)

Tax on dividend paid Net cash(used in)/from financing activities-(C)

(41.65) (4,449.93)

(93.39) (2,563.71)

Net increase/(decrease) in cash or cash equivalent(A+B+C) Cash and cash equivalents as at the beginning of the year Cash and cash equivalents as at the end of the year

(525.01) 800.36 275.35

589.85 210.5 800.36

Components of cash and cash equivalents* Cash on hand Balances with banks: On current A/C On deposit A/c 157.07 113.91 275.35 430.17 365.96 800.36 4.37 4.23

*Cash and cash equivalents as March 31, 2011 included restricted cash and bank balances of Rs.115.30 million (previous year-Rs.83.77 million)

42

MARKETING DEPARTMENT

43

SOBHA PROJECTS ON SALE AS ON 30TH MAY 2011

Project name

location

Land area (acre s)

Type of apartmen ts

No. of unit s 203 40

No.of floors

Number of bedroom area(sft)

Rate/s ft In Rs 3757 3919

Total cost Rs. (approx. all incl) 68 L to 79L 3 BR91.50 L to 1.02 Cr. 94.5 L 1.2 Cr. 73L 77L -

Sobha cinnamon-2 Sobha cinnamon-1

Off sarjapur road Off sarjapur road 3.9

Luxury apartment Super luxury apartment Super luxury apartment Luxury apartment Super luxury apartment Super luxury plus apartment 7.0 Super luxury apartment

G+10 G+10

3 BR-1451 to 1710 3 BR-1916 to 2165

Sobha classic

Sarjapurring road Banshankari extension Banshankari extension

outer

6.9

243

G+13

3 BR- 1752 to 2070 1511 1540 1661 1894 2237 2250 to to

44144814 38024052 43064560 46034853

Sobha forest view- pine Sobha forest view- maple Sobha forest view-oak

100 240

G+20 G+20

87 L 1.04 Cr. 1.231.30Cr.

13.28 Banshankari extension

152

G+19

to

Sobha dewflower

Sarakki nagar

road,JP

231

G+4

3BR2123.60 2672.69

to

75028500 Duple x-9004

3 BR1.95 to 2.4Cr. 4 BR2.8 to 2.95 Cr. Duplex3.7

4 BR3124.30 to 3138.58 4 BR Duplex3467.163489.33 Sobha suncrest Sobha Elite Off kanakapura road(BSK 6th stage) Tumkur road(kennmetal vidia factory) Tumkur 1.5 Super luxury apartment Luxury apartment Dream 72 G+9 2 BR- 15351590 3 BR-16511789 2 BR-1196-

3280

2 BR- 60 L 74 L-83L

160

G+15

33343534 3208-

Sobha Aspire

192

G+15

2 BR-54

44

road(kennmetal vidia factory)

20.3

series

1251 3 BR-14041459

3408

to 59L 3 BR-62 to 67.4 L

Sobha Althea

Yelahanka (dodaballapur Rd,CRPF,Railwhe el)

8.0

Super luxury apartment

176

G+16

3 BR-20122128 4 BR-29372997 Penthouse3278-4387

33793775

3 BR80L to 89 L Penthous e-1.37 Cr.

Sobha chrysanthem um Sobha moonstone Sobha lifestyle

Thanisandra(naga wara Jn) Dasarahalli(off hebbal ring road) Devanahalli

9.0

Luxury apartment Super luxury apartment Presidenti al villas

509

G+12

3 BR-17741790) 3 BR-18042097 Plot area5000 (3851.70sft4303.84) 10000(6136. 32 sft)

38023955 34213846 -

77 -81L

1.9

106

G+10

3 BR-8094 L 4 BR-35.85 Cr.

5.5

165

G+1

Sobha saffron

Off Hosur Rd(kudulu)(3.5 km from spring field) novel sys Hebbal ring road near manyata tech park

0.6

Row house

16

G+1& 2

4 BR-3429

5107

4 BR2.15 Cr.

Sobha petunia

4.0

Super luxury apartment

156

G+13

3 BR-22743302 4 BR-34963738 4 BR Penthouse3497-4972

47506050

3 BR1.63-2.08 Cr. 4 BR2.2-2.4 Cr. 4 BR Penthous e-2.553.25 Cr.

SOBHA PROJECTS IN OTHER CITIES

Project name location Land area Type of No. of No.of Number of Rate/sft Total cost

45

(acres)

apartments

units

floors

bedroom area(sft)

In Rs

Rs. (approx. all incl)

Sobha TopazSobha city Sobha jadeSobha city Sobha lifestyle

Thrissur

3.35

Super luxury apartments

216

G+26

3 BR1676-2186 4 BR3068

2956-3181

3 BR-6772 L 4 BR-93L1.1 Cr.

Thrissur

Super luxury apartments Super luxury villas

216

Thrissur

40

G+1

3 BR3038-3363 4 BR-4227 & 4774

4672-5683

3 BR1.77-1.87 Cr.

Sobha Turquois e Sobha carnation

Coimbatore

Row house

95

Pune

5.6

Super luxury apartments

116

B+G+9

3 BR2165.012326.68 4 BR2823.372857.02 4 BR Duplex3223.51 4 BR Penthouse3863.66

3 BR3655-4055

3 BR-91L100L

4 BR3655-4055 4 BR Duplex3902-4202 4 BR Penthouse4900

4 BR1.16-1.30 Cr. 4 BR Duplex1.40-1.51 Cr. 4 BR Penthouse2.08 Cr.

Sobha Ivory(to be launched)

Pune

3.8

Luxury apartments

140

B+G+11

3 BR1459.321906.39

Under discussion

Under discussion

ADVERTISEMENT
46

Sobha developers follow aggressive advertising. They have categorized the advertisement into two: Above the level advertisement (ATL) and Below the level advertisement (BTL). Above the level advertisement includes media, hoarding, radio etc. Below the level advertisement includes events, exhibition, campaigns etc. They do international campaigns too.

CLIENTS Sobha has many prestigious clients on its roster such as IT giant Infosys, Hewlett Packard, Dell, Taj group, MICO and Timken to name a just a few. Through quality execution and dedicated customer focus, the company has earned itself prestigious client all over Gulf and neighboring countries. The clients include citizens of Oman, including the Diwan of Royal Court who oversees workforce for the palaces and royalty.

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) Customer relationship management is a unique model based on the concept of customer delight. Being a modular organization, customer relations is established with a team of professionals, each executive taking care of a set of clients from start to hand over of a project and one year thereafter. It is CRM executives, who are in touch with the clients and are the front face of the organization. A great force in keeping the brand intact and liasoning with customers on a regular basis, making sure their needs are understood and delivered as per the process/ guidelines set by the organization. These executives make sure that the needs of the customer are understood. They ensure effective and efficient communication, timely deliveries as per specification and the use of a customer centric approach.

POSTIONING Sobha developers have positioned their products at premium segment. The cost is 20% to 30% higher compared to other builders. This is because of their quality. Deliverable quality at Sobha is in the attention to the minutest details in systems, processes, design and execution.

SEGMENTATION Segmentation at Sobha developers Ltd is done by doing a buyer segment analysis. Segmentation is done after the bookings takes place. A proforma of the analysis is shown below:
47

Buyer Segment Analysis

Sl no. 1 2 3 4 5 6 7 8 9 10 11 12 Industry IT IT-ES/BPO/KPO Manufacturing Financial Services Hospitality Services Medical/Pharmaceutica l Media/Entertainment Travel/Transport Retail Services Telecom Others Details not Mentioned Total 0 Total % 64% 3% 9% 7% 0% 3% 0% 1% 1% 1% 7% 5%

48

Industry

Sl no. 1

Function Software Development Sales & Marketing HR/Administratio n Finance Production Legal Operations Others 49 Details not Mentioned Total

Total

% 58%

9%

3 4 5 6 7 8 9

3% 7% 6% 0% 7% 3% 7% 0

Function

50

Sl no. 1 2 3 4 5 6 7

Annual Income Less than 5 Lakhs 5 - 15 Lakhs 15 - 25 Lakhs 20-30 Lakhs 25 - 50 Lakhs 50 Lakhs & above Details not provided Total

Total

% 1% 39% 17% 11% 13% 7% 11%

Annual Income

51

Sl no. 1 2 3 4 5 6 7 8

Age Below 21 21-26 27-31 32-36 37-41 42-46 47 & above Details Not Provided Total

Total

% 0% 3% 24% 32% 13% 13% 12% 3%

52

Sl no. 1 2 3 4 5

No. of years in the present address 1-5 years 6-10 years 11-15 years 16 years & above Details not provided Total

Total

% 50% 23% 2% 8% 17%

No. of years in the present address

Sl no. 1 2

Geographic Location Bangalore Mumbai 53

Total

% 57% 3%

3 4 5 6 7 8 9 10

New Delhi Chennai Singapore U.S.A U.A.E U.K. Other cities / states in India Other countries Total 0

1% 5% 1% 11% 1% 1% 13% 6%

Geographic location

Sl no. 1 2 3

Sobha Customer Yes No Details Provided Total Not 54

Total

% 15% 81% 5%

Sobha customer

Sl no. 1 2 3 4

Regional Location East West North South Total

Total

% 60% 4% 7% 29%

55

Regional location

From the above analysis we can see that IT people buy more. People of the age group 32-36 with an annual income of Rs 5-15 lakhs are targeted.

56

CASE STUDY

57

CASE STUDY

By studying the whole organization we can see that backward integration is what makes Sobha Developers stand out from other builders.

BACKWARD INTEGRATION Backward integration is an approach of a company to increase its level of control on its inputs. In the Business world of today, it is not very uncommon for a corporation to acquire a supplier or a vendor or to create facilities of its supplier that are important to the welfare of the company. This process of acquiring existing suppliers or creating a supply chain of its own is referred as Backward Integration. The process of Backward Integration involves in integrating of the supply chain within the corporate family. It usually begins when a company becomes aware that the product or service line offered by one of the companys suppliers is especially more appealing. This appeal may be built on the fact that the products that are currently purchased have worked out very well, and are helping to improve the quality and bottom line. Two types of integration is possible- Full Backward Integration and Lower degree Backward Integration. Full Backward Integration happens when a company incorporates the value chain of a supplier in to its own value chain. This generally happens when the company acquires a supplier or expands its operations to carry out the activities of its supplier. A lower degree of Backward Integration is commonly known as Supply Chain optimization or also as Supply Chain panning Decision of Backward Integration is made usually considering the following:

In the strategy development process, Backward Integration may be considered as a strategic process.

When analyzing industry dynamics, using Porters five forces model, Backward Integration is an action to decrease the bargaining power of the supplier.

Backward integration may be a path for reducing transaction costs.

In some cases, Backward Integration occurs because of demand of the situation; a company wishes to acquire a company. For example, a vendor who supplies goods to a few companies may be in financial trouble. These companies are not comfortable in building trust and relationship with any new vendor, a working association is established where each of these
58

companies contributes resources to the purchase and continued operation of the vendor. This is often a win-win situation for both vendor and the companies. The vendor stays in business, and the customers continue to get the products they have come to rely upon over a period of time, often at a reduced rate. Another application of Backward Integration involves easy scheduling of supply chain as per the requirement, which is usually not easy to have with an external vendor. It is also a mean of minimizing input costs, a customer or a group of customers may initiate a buyout of the vendor. Backward Integration helps to bring supplier power under their control, allowing each customer to better manage their individual input costs, and perhaps generate more revenue from other clients of the newly acquired vendor. The strengths of Backward Integration are:

Economies of scale
It refers to the decrease in per unit cost with the increase in output. In this the initial investment of capital is spread over an increased number of units of outputs, and therefore, the marginal cost of producing a good is less than the average total cost per unit. Backward Integration helps in this by decreasing the per unit input cost.

Economies of scope
In economies of scope the average total cost of production decreases as a result of increasing the number of different goods produced.

Cost reduction
It is the cost of producing goods in a manufacturing enterprise. Backward Integration has a direct effect on this.

Competitiveness
It is a comparative concept of the ability and performance of a company to sell and supply goods in a given market. The competitiveness of the company improves with the reduction in the input cost.

Reduction in the threat from powerful suppliers

The threat from powerful suppliers is no more there as the company is not dependent on them with Backward Integration.
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 Higher degree of control over the entire value chain

Since the value chain of the supplier gets integrated with the internal supply chain with Backward Integration, the company has higher degree of control over the entire value chain. However, the company has to have competences to undertake an expanded role in the enlarged value chain.

BACKWARD INTEGRATION AT SOBHA Sobha has developed in-house expertise to meet all crucial aspects of construction. With inhouse design studios and a trained and skilled work force the company has the best in talent and technology. Sobha developers is perhaps the only construction company in India and the world that has all its activities fully backward integrated. Apart from having architectural, mechanical and electrical expertise for design and execution, its other manufacturing facilities produce interior, metal and glazing and concrete products. The factories are state-of-the-art and have a built up area of over 600,000 sq.ft, comparable to the best the world over. With superior infrastructure in place, quality of the end product and its timely delivery is achieved. At Sobha they believe that, Backward Integration is the way forward.

BACKWARD INTEGRATION IN OTHER COMPANIES Backward Integration is followed in many companies. Some of them are:

Tata Steel
Capitalizing on the favorable environment for steel in the global market, Tata Steel has been making all the right moves to position itself in strategic locations. In their view globalization is a method by which you put the right part of the value chain in its right place in the world, and link it up properly finishing facilities in places where customers exist, and primary manufacturing facilities in places where manufacturing is competitive. Tata Steel's two major acquisitions in 2004-2005 are good examples of how the company is implementing this growth strategy.

The year 2005 was a good year for the company. It began with the investment in NatSteel Asia, and ended with the company bagging Thai steel major Millennium Steel. The NatSteel acquisition not only allowed Tata Steel to establish a beachhead in seven countries across the
60

region, namely Singapore, Thailand, China, Malaysia, Vietnam, the Philippines and Australia, but also provided it with a customer base for close to two million tonnes of steel. As a brand, NatSteel's strong equity in the region was yet another strategic gain for Tata Steel. The company's strong human resources and management effectiveness is also an inheritance of immense value. The acquisition of Millennium Steel, Thailand's dominant steel producer, consolidated Tata Steel's gains from the NatSteel deal. Millennium's three operating units give the company a cumulative capacity to produce 1.2 million tonnes of steel per annum through the electric arc furnace route. Along with a long products rolling capacity of 1.7 million tonnes a year, geared towards the construction and automotive sector, Millenium provides Tata Steel strategic space in the heart of the ASEAN region, enhancing its market position in South East Asia. At home Meanwhile, Tata Steel has not been quiet on the domestic front either. The company's plans for organic growth and backward integration in India are progressing at an impressive pace. An MoU has been signed for setting up a five-million tonne greenfield integrated steel plant in the Bastar region of Chhattisgarh. And, after the completion of its one-million tonne expansion programme at Jamshedpur, Tata Steel has now initiated a further two-million tonne expansion programme. Plans have also been announced for setting up of a large integrated greenfield steel plant in Jharkhand, with an initial capacity of 5 million tonne per annum. Work is also in progress to set up a six-million tonne integrated, steel-cum-mining, project in Orissa.

Pepsi
Pepsi Set Backward Integration for Tropicana. As a first step towards backward integration for its pure juice business Tropicana, PepsiCo India Holdings is came into contract farming of citrus fruits like oranges and keanu. PunjabJallowal, was chosen as apt locations. Pepsi also plans to give its juice brandwhich has seen many hurdles in the nascent and niche juice marketa renewed thrust. Tropicana business which was earlier being run under a separate company called Tropicana Beverages Company. It was integrated with PepsiCo in 2001. The changes happened in the wake of merger of the cola majors three international beverage unitsPepsi-Cola International, Tropicana International and Gatrorade Internationalinto one single new company PepsiCo Beverages International (PBI). Tropicana now operates as a functional beverages division of the cola major.

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Currently, in terms of market share, Tropicana is believed to trail behind rival Real (from the Dabur stable) which claims to have a 55 per cent market share of the estimated Rs 100-crore branded juice market. The three-phase project involving trials, nursery and contract farming, is being pursued jointly by Pepsi and the Punjab Agro Export Corporation. In the first phase, Pepsiwith technical help and expertise of Tropicana Coplans to import processing-focused citrus variety from multiple sources like California, Florida and Brazil into Jallowal, Punjab. These varietiesthe first lot of trees is arriving in a months time will be then monitored in a 10,000 sq.ft screening house or a quarantine facility which has been developed by Pepsi. Based on the response, this will be followed by setting up a facility for nurseries and gradually five to six demonstration sites will be set up from where seeds will be given to farmers. Typically, this should happen in three years period. Pepsi, is not investing much at the moment except in the quarantine facility and technical know-how. The long-term objective is to go for contract farming. Tropicana juicesavailable in orange, apple, grape variantsare currently imported in a concentrate form which is later reconstituted at a plant in Baramati, near Pune, and vacuum packed into Tetrapacks after paying an import duty. Pepsi is already involved into contract farming of potatoes, tomatoes, groundnut and chillies. Its export turnover is nearly about Rs 350 crore.

Reliance Industries
The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of US$ 58 billion. The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India. Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain. The Group's activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fiber intermediates, plastics and chemicals), textiles, retail, infotel and special economic zones.

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Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products. Major Group Companies are Reliance Industries Limited, including its subsidiaries and Reliance Industrial Infrastructure Limited.

Apollo
Apollo Tyres is open up in order to the prospect of buying rubber plantations as being the climbing commodity prices have been deteriorating the net profit margins related to the company. It is consistently wide open for all kinds of backward integration based on the necessity of the hour to fight soaring rubber prices, a major raw material as for tyre. The company is additionally going over contracts along with suppliers to alter rubber prices, as well as keeping a leaner together with efficient inventory as well as working on the way to better production efficiency to get over elevated prices of rubber.

SUGGESTIONS Even though backward integration is one of the best methods of cost cutting, Sobha developers should try other methods too. They can conduct As Build Audits where superintendent and estimator should audit the use of materials to verify estimate and correct construction technique. While estimating building designs, they can do a Elemental Method of cost analysis process, which consists of subdividing the cost of the building into its functional elements. The advantage of Elemental cost analysis over the traditional Trade analysis, especially in the early design process is that it takes into account the materials that is used and determines the cost of each element but the function they perform may be similar. Furthermore this type of analysis is extremely straightforward and provides a framework for determining cost for projects at the early stages of design. Another method that can help Construction Company like Sobha is computer modeling. It is more energy efficient and cost effective. It allows designers, engineers and contractors to input data into the system and then, using algorithms, it breaks this down in terms of areas of focus. For Example: - If you are creating an office you can model the office space and then use the system to assess what the day lighting will be for the occupants. You can find out whether there is enough daylight or not. So early in the process you get the feedback that you need to create more windows or reflectors to allow more daylight in. The concept behind it is to build for today, in a way that doesn't compromise future generations. Sobha developers can also opt for Horizontal integration. Horizontal integration is a practice in businesses by which companies that produce a similar product or provide a similar service merge. By doing so the company can increase its share in the market. The goal of
63

horizontal integration is not to control all aspects of production, from raw materials to the final product. It is, instead, to be able to produce a large number of the same product or similar products and to control a large share of the market. With help of Horizontal integration they can enter into new markets easily.

64

SUGGESTIONS

65

SUGESSTIONS
Sobha Developers Limited is an organization with mature practices which has stood the test of time, and as such there is very little scope for improvement. However, there is one aspect which I feel could be improved. This concerns with the recruitment and hiring process. Sobha Developers have incorporated employee referral scheme for hiring and recruitment for quite some time now. But there is a flaw in the current scheme as the process for hiring and recruitment through referrals is quite different from that of hiring and recruitment through the normal route. The organization can make this process more stream lined, so that the process for hiring will remain the same whether the recruitment takes place through referrals or otherwise. This will help to reduce any discrepancies or issues which may arise due to the different processes, like over hiring/ under hiring through the employee referral scheme.

In order to stream line the process of hiring through referral with that of the normal hiring process, the Organization needs to device a tool which will act as a common repository of all the resumes whether they are through referral or otherwise. Sobha Developers have a software department of their own, which can develop such a tool, or there are other third party tools available in the market which does the same.

This will make the management of the hiring and recruitment process much simpler and more organized than it is currently.

66