Sobha Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the Twenty Sixth Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2021.

FINANCIAL HIGHLIGHTS

(Rs. in million)

Particulars Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Total Revenue 21,911.51 38,304.87 21,904.00 38,256.59
Operating Expenditure 14,650.33 26,488.29 14,346.34 26,386.16
Earnings before Interest, Depreciation and Amortisation 7,261.18 11,816.58 7,557.66 11,870.43
Depreciation and Amortisation 754.96 673.52 793.67 722.85
Finance Cost 5,759.58* 6,732.28* 6,012.14** 6,816.03**
Profit Before Tax 746.64 4,410.78 751.85 4,331.55
Tax Expenses 91.25 1,515.99 129.09 1,514.86
Profit after Tax 655.39 2,894.79 622.76 2,816.69

* Includes notional interest accrued on advance from customers as per Ind AS 115, 2,515 million, 3,558 million for the year ended March 31, 2021 and year ended March 31, 2020 respectively.

** Includes notional interest accrued on advance from customers as per Ind AS 115, 2,650 million, 3,558 million for the year ended March 31, 2021 and year ended March 31, 2020 respectively.

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

BUSINESS AND OPERATIONS

A. BUSINESS OVERVIEW

The Company is operating in the following two segments:

• Construction and development of residential and commercial projects

• Contractual projects

A summary of completed and ongoing projects as on March 31, 2021 has been detailed in the Management Discussion and Analysis Report titled ‘Management Report forming part of the Annual Report.

B. FINANCIAL OVERVIEW

Standalone

During the Financial Year 2020-21, the Company has on a standalone basis, earned total revenues of 21,911.51 million as comparedto 38,304.87millionintheprevious year, a decrease of 42.80% y-o-y. The Profit before Tax during the year was 746.64 million as against 4,410.78 million in the previous year, decreased by 83.07% and Profit after Tax during the year was 655.39 million as against 2,894.79 million in the previous year, that is, decreased by 77.36%.

Consolidated

The consolidated revenues of the Company during the financial year 2020-21 were 21,904.00 million, a decrease of 42.74% from the previous year. The Profit before Tax decreased by 82.64% and Profit after Tax (after considering minority interest) decreased by 77.89% as compared to the financial year 2019-20.

Transfer to Reserves

Your Directors propose to transfer 65.54 million of the current profits to the General Reserve.

Dividend

The Board of Directors, subject to the approval of the shareholders at the ensuing Annual General Meeting are pleased to recommend a dividend of 3.50/- per equity share of 10/- each.

C. OPERATIONAL OVERVIEW

Completed Projects

During the year under review, the Company executed and handed over 0.23 million square feet real estate projects and 2.33 million square feet of contractual projects resulting in an aggregate development of 2.56 million square feet.

The Company has completed construction of 112.30 million square feet of area since inception.

Ongoing Projects

The Company currently has real estate projects aggregating 30.11 million square feet of developable area. It has 5.64 million square feet of ongoing contractual projects which are under various stages of construction. The Company has a geographic presence in 27 cities across 14 states in India.

SHARE CAPITAL RELATED MATTERS

A. SHARE CAPITAL

The authorized share capital of the Company is 2,000,000,000 divided into 150,000,000 equity shares of 10 each and 5,000,000 preference shares of 100 each. At the beginning of the year under review, the Issued, subscribed and fully paid up capital was 948,458,530 divided into 94,845,853 equity shares of 10 each. There was no change in the issued, subscribed and fully paid up share capital of the Company during the year under review. Sobha Limited is a public limited company and its equity shares are listed on National Stock Exchange of India Limited and BSE Limited.

B. BUYBACK OF EQUITY SHARES

There was no buyback offer made by the Company during the period under review.

C. CHANGES IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

During the year under review, there was no change in Subsidiaries, Joint Ventures and Associates.

However, Sobha Highrise Ventures Private Limited, a wholly owned subsidiary of the Company, during the year, acquired the entire shares of Annalakshmi Land Developers Private Limited making it a wholly owned subsidiary of Sobha Highrise Ventures Private Limited. With this acquisition, as on the date of this report, the Company has six direct subsidiaries and six step down subsidiaries.

The details of subsidiaries, step down subsidiaries and associates are given elsewhere in the Annual Report.

BOARD OF DIRECTORS AND ITS COMMITTEES

A. COMPOSITION OF THE BOARD OF DIRECTORS

As on 31st March, 2021, the Board of Directors of the Company comprises of seven Directors of which, four are Non-Executive Independent Directors and three are Executive Directors. The composition of the Board of Directors is in compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) 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 Regulation 25(8) of the Listing Regulations.

B. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Mr. Jagadish Nangineni has resigned from the position of Deputy Managing Director and Whole-time Director with effect from February 24, 2021. Except the above, there were no changes in the key managerial personal of the company.

C. MEETINGS

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

• June 27, 2020

• August 07, 2020

• November 07, 2020

• February 12, 2021

In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on 31st March, 2021.

D. RE-APPOINTMENT OF DIRECTORS RETIRING BY ROTATION

Pursuant to the provisions 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, Director retiring by rotation.

The Notice convening the Annual General Meeting includes the proposal for re-appointment of Mr. J C Sharma, as a Director. A brief resume of Mr. J C Sharma has been provided as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of Mr. J C Sharmas expertise in specific functional areas and the names of the companies in which he holds directorship and membership / chairmanship of the Board Committees have also been provided in the Notice convening the Annual General Meeting.

E. PERFORMANCE EVALUATION

In terms of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance and that of its statutory committees - the Audit Committee, Stakeholder Relationship Committee, Nomination, Remuneration and Governance Committee and that of Individual Directors.

The Board assessed the performance and the potential of each of the Independent Directors with a view to maximizing their contribution to the Board. As envisaged by the Act, the Independent Directors reviewed the performance of the Chairman of the Board at a meeting especially called for that purpose. At the same meeting, a review of the Executive Directors were also carried out.

F. DIRECTORS RESPONSIBILITY STATEMENT

According to the information and explanations obtained, pursuant to Section 134(5) of the Companies Act, 2013, your Directors hereby confirm that:

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

b) the directors have 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 was 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 have been prepared on a going concern basis;

e) internal financial controls to be followed by the Company have been laid down and such internal financial controls are adequate and were operating effectively; and

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 composition of the Audit Committee as on 31st March 2021 was:

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

2. Mr. Sumeet Puri (Independent Director) - Member

3. Mr. J C Sharma (Vice Chairman and Managing Director) - Member The terms of reference, powers, role and responsibilities of the Audit Committee are in accordance with the requirements mandated under Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. During the period under review, the advice and suggestions recommended 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 Twenty Second Annual General Meeting held on 4th August, 2017, the members appointed M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022), as Statutory Auditors of the Company for a period of 5 years from the conclusion of the Twenty Second Annual General Meeting until the conclusion of the Twenty Seventh Annual General Meeting. The Statutory Auditors expressed an unmodified opinion in the audit reports with respect to audited financial statements for the financial year ended March 31, 2021. There are no qualifications or adverse remarks in the Statutory Auditors Report which require any explanation from the Board of Directors.

C. SECRETARIAL AUDIT

Secretarial Audit of the Company for the year ended March 31, 2021 was conducted by Mr. Nagendra D Rao, Practicing Company Secretary. The Secretarial Audit Report issued by Mr. Nagendra D Rao, in accordance with the provisions of Section 204 of the Companies Act, 2013 is provided separately in the Annual Report (Annexure A).

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 2019-20 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 were 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 2020-21. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors for the financial year 2020-21 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 AUDIT AND INTERNAL FINANCIAL CONTROLS

The in-house Internal Audit Team is responsible for assurance with regard to the effectiveness, accuracy and efficiency of the internal control systems and processes in the Company. The Companys Audit Team is independent, designed to add value and empowered to improve the Companys processes. It helps the Company accomplish its objectives by bringing a systematic, disciplined approach for evaluating and improving the effectiveness of risk management, control and governance processes. There are adequate internal financial controls in place with reference to the financial statements. During the year under review, the Internal Audit Department and the Statutory Auditors tested these controls and no significant weakness was identified either in the design or operations of the controls. A report issued by the Statutory Auditors, M/s. B S R & Co. LLP, on the Internal Financial Controls forms a part of the Annual Report.

POLICY MATTERS

A. NOMINATION AND REMUNERATION POLICY

The Nomination, Remuneration and Governance Committee of the Board of Directors is responsible for recommending the appointment of the directors and senior management to the Board of Directors of the Company. The Company has in place 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 Committee also postulates the methodology for effective evaluation of the performance of individual directors, committees of the Board and the Board as a whole which should be carried out by the Board, committee or by an independent external agency and reviews its implementation and compliance. The Nomination and Remuneration Policy is available on the Companys website: https: //w w w.sobha.com /wp - content / uploads/2020/10/153630165920180907.pdf Extracts from the policy are reproduced in Annexure B to this report.

B. THE RISK MANAGEMENT FRAMEWORK

The Company has developed and implemented a risk management framework detailing the various internal and external risks faced by the Company and methods and procedures for identifying, monitoring and mitigating such risks. The Board of Directors of the Company has constituted a Risk Management Committee which is entrusted with the task of evaluating, monitoring and reviewing the risk management plan and procedures of the Company. The risk management function is supporting the internal control mechanism of the Company and supplements the internal and statutory audit functions. There were no offence or fraud that needs to be reported by the Statutory Auditors as per Section 143 (12) of the Companies Act, 2013.

C. CORPORATE SOCIAL RESPONSIBILITY POLICY

The Company believes that its achievements do not refer only to its growth but are also spread to society. Accordingly, under the aegis of its CSR arm, Sri Kurumba Educational & Charitable Trust, it has adopted three village panchayats - Vadakkenchery, Kizhakkenchery and Kannambra in Palakkad district of Kerala, each consisting of 2 villages, to improve the lifestyle of the people at the grassroot level. The Corporate Social Responsibility Policy, as formulated by the Corporate Social Responsibility Committee and approved by the Board of Directors is available on the Companys website at: https: //w w w.sobha.com /wp - content / uploads/2020/10/158036284320200130.pdf In terms of Section 134 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on the Corporate Social Responsibility activities of the Company is given in Annexure C to this report.

D. VIGIL MECHANISM

The Company has established a vigil mechanism to promote ethical behaviour in all its business activities. It has in place a mechanism for employees and directors to report any genuine grievances, illegal, unethical behaviour, suspected fraud or violation of laws, rules and regulations or conduct to the 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 Companys website at: https: //w w w.sobha.com /wp - content / uploads/2020/10/153630159420180907.pdf During the year under review, the Company did not receive any complaints relating to unethical behaviour, actual or suspected fraud or violation of the Companys code of conduct from any employee or Directors.

OTHER MATTERS

A. DEBENTURES

There were no outstanding debentures as on the closure of the financial year ended 31st March, 2021.

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. As such, no amount of principal or interest was outstanding as on date of this report.

C. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

In compliance with Section 124 of the Companies Act, 2013, the dividends pertaining to the financial year 2012-13 which were lying unclaimed with the Company were transferred to the Investor Education and Protection Fund during the financial year 2020-21. The details of unclaimed dividends transferred to the Investor Education and Protection Fund have been detailed in the Corporate Governance Report forming part of the Annual Report.

As required under Section 124 of the Companies Act, 2013 and the Rules made thereunder, 2,574 equity shares, in respect of which dividend had not been claimed by the shareholders for seven consecutive years or more, were transferred to the Investor Education and Protection Fund during the year under review. The details of the shares and shareholders are available on the Companys website.

D. 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 Companys operations in future.

E. HUMAN RESOURCES

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

As on March 31, 2021, the Company had an organisational strength of 3,061 employees. Details about the Employees are provided in a separate section of the Annual Report.

F. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has adopted a policy for the prevention and redressal of sexual harassment at the workplace. Pursuant to the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an Internal Complaints Committee for prevention and redressal of complaints of sexual harassment of women at the workplace. No complaints were received by the Company during the year under review.

G. AWARDS AND RECOGNITIONS

During financial year 2020-21, the Company was conferred with various awards and recognitions, the details of which are given in a separate section of the Annual Report.

H. CORPORATE GOVERNANCE

In accordance with Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on Corporate Governance forms part of this report. 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 D to this report.

I. CODE OF CONDUCT

The Company has laid down a Code of Conduct for the Directors as well as for all senior management of the Company. As prescribed under 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 financial year 2020-21 forms part of the Corporate Governance Report.

J. DISCLOSURE ON CONFIRMATION WITH SECRETARIAL STANDARDS

The Directors confirm that the Secretarial Standards issued by the Institute of Company Secretaries of India have been complied with pursuant to the Companies Act, 2013 and rules made thereunder.

K. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

L. ANNUAL RETURN

In accordance with the Companies Act, 2013, the annual return in the prescribed format is available under the link https://www.sobha. com/investor-relationsdownloads.php

M. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

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

N. RELATED PARTY TRANSACTIONS

During the year, the Company did not enter 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. Related party transactions, if any, pursuant to the Listing Regulations were approved by the Audit Committee from time to time prior to entering into the transactions. The related party transactions undertaken during financial year 2020-21 are detailed in the Notes to Accounts of the Financial Statements.

Further, during the year under review, there were no contracts or arrangements with related parties referred to in subsection (1) of Section 188 of the Companies Act, 2013. Therefore, there is no requirement to report any transaction in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 and the rules made thereunder.

O. 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 details of energy conservation, technology absorption, foreign exchange earnings and outgoings are given as Annexure E to this report.

P. REMUNERATION DETAILS OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES

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 is provided in Annexure F to this report.

Q. 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 the subsidiaries are given as an annexure to the Consolidated Financial Statements.

R. BUSINESS RESPONSIBILITY REPORT

As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report is given in Annexure G to this report.

S. 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 Companys website (www.sobha.com) on a regular basis.

ACKNOWLEDGEMENTS

The Directors would like to place on record their sincere appreciation to the Companys 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
Sd/- Sd/-
Place: Bangalore Ravi PNC Menon T P Seetharam
Date: June 22, 2021 Chairman Whole-time Director