Sobha Ltd Management Discussions

(3) Net surplus to shareholders decreased due to reduction in profit

During the year the borrowings of the Company have been rated by:

- ICRA as AA- (Stable)

- India Ratings and Research (Ind-Ra) as IND AA- (Stable)

• During FY 2024-25 the company has completed total developable area of 7.40 Million Square feet amounting to 4.73 Million square feet of saleable built-up area:

o In Real Estate we completed 7.21 million square feet of developable area translating to 4.54 Million square feet of saleable built-up area comprising of 3008 homes across 9 cities

o In contractual we delivered 0.19 million square feet of project in Bengaluru

• Launched 8 new projects across 4 cities with total saleable area of 8.76 Million square feet

• As on 31^st March 2025, the company has 39.72 Million Square Feet of developable area (saleable built-up area of 28.60 Million Square feet) in Real Estate and 3.86 million square feet of developable area in contractual projects under construction

Following are the financial performance of the Real Estate Vertical:

SOBHA has developed overall 143.65 million square feet of area since inception. The Company has been maintaining its consistency of launching new projects and construction progress. Projects under construction are excluded from the purview of overall execution.

Residential real estate operations of the Company are currently spread across 11 cities with developable area of 39.72 Million Square feet under construction.

During the year, Sobha achieved new sales totalling 4.68 million square feet with total sales value of Rs. 62,765 million, and average price realization of Rs. 13,412 per square feeot. Sobhas share of the sales value was Rs. 49,605 million. This demonstrates that customers trust Brand Sobha as their preferred choice for quality homes.

Despite commercial products, Sobhas prime focus remains on residential business to generate positive cash flows through speedy delivery & revenue realisation and to ensure appropriate investment in the best available opportunities.

In FY2025, Company has launched 8 new projects with total saleable built-up area of 8.76 Million square feet.

*DM refers to project under Development Management Model

SOBHA has completed 7.21 million square feet of developable area and 4.54 million square feet of saleable built-up area comprising of 3,008 homes.

Completion is taken on basis of Tower/Wing for apartment projects and in case of Villas/row houses/Plots basis individual unit completion.

Since inception, Company has completed real estate projects measuring 84.31 million square feet of developable area amounting to 61.28 million square feet of saleable built-up area.

The Company is currently executing 43.58 million square feet of developable area amounting to 32.46 million square feet of saleable built-up area in real estate and contractual verticals put together.

SOBHA currently has ongoing real estate projects aggregating 39.72 million square feet of developable area amounting to 28.60 million square feet of saleable built-up area spread across 11 cities.

As of March 31, 2025, the company has two commercial malls in this business vertical. The first is SOBHA City Mall in Thrissur, which commenced operations in December 2015. It total leasable area of 0.32 million square feet.

The second offering in this vertical is the "1 SOBHA" mall in Bengaluru, with a total leasable area of 0.23 million square feet. The launch of "1 SOBHA" mall in Bengaluru signifies Sobhas entry into the citys commercial shopping space.

Sobha has primarily focused on the residential real estate category since its inception, with only a sporadic presence in the commercial segment. Although the company has developed landmark commercial projects such as Thrissurs most iconic landmark, the "SOBHA City Mall," its presence in this segment has remained relatively limited. Now, the company has renewed its focus on commercial developments, with several projects underway in multiple cities.

SOBHA City Mall at Thrissur has a total leasable area of 0.32 million square feet out of which our share of leasable area is 0.28 million square feet. It commenced its operations from December 2015.

1 SOBHA Mall in Bengaluru has a total leasable area of 0.23 million square feet of which our share of leasable area being 0.15 million square feet.

SOBHA City Mall in Thrissur, has a total developable area of 0.43 million square feet and the "1 SOBHA" mall in Bengaluru, has a total developable area of 0.23 million square feet.

Following is the performance of the Contracts Vertical:

During the year 2024-25, revenue from this vertical contributed around 8% to the Companys turnover. The contracts vertical has been executing orders ranging from civil structures, finishes, MEP works, metal and glazing works and interior furnishings for various reputed clients. Total ongoing contractual orders under execution is 3.86 million Square Feet.

While Sobha values long-standing relationships with a select group of clients - who contribute a major share of the total work done in this vertical - there is an emphasis on diversifying the client base to reduce Sobhas risk portfolio. The company is actively involved in major contractual projects across India, supporting geographical diversity and a multi-client approach. Corporate clients include the Lulu Group, Biocon, Dell, Bosch, Syngene, Taj Hotels, HCL, Wipro, Infosys, ITC Hotels, Huawei Technologies, Manipal Group, GAR Corporation, and others.

Sobhas ability and capacity to deliver high-quality, custom- designed turnkey projects, along with its domain knowledge to address tough challenges, have earned a loyal customer base for the contract division. In the contractual vertical, Sobha has a presence in 27 cities across 14 states.

During the financial year 2024-25, the Company has completed 0.19 million square feet in Bengaluru. Since inception, SOBHA has completed 59.35 million square feet of area for various clients in 27 cities across India. The company has executed over 42.37 million square feet of area for single and largest client, Infosys.

Note: Others include Durgapur, Noida, Greater Noida, Salem, Baddi, Indore, Kolkata, Palakad, Thrissur, Ooty, Kozhikode and Mumbai.

SOBHA has ongoing contractual projects aggregating 3.86 million square feet of development in 2 cities. In Bengaluru we are executing 3.37 million square feet and in Sonipat 0.49 million square feet.

Following is the performance of the Manufacturing and Retail Sales Vertical:

SOBHA has pioneered complete vertical integration in Real Estate industry in India. It is the only Company with own manufacturing facilities to cater to building materials. Company has the infrastructure, capabilities, skills and resources to deliver a project from conceptualisation to completion with all in-house teams, backed by this unique strength. This gives the company an absolute control over the product quality and execution timelines to meet requisite standards. Construction materials manufactured in our own facility help us to ensure that the products are superior in quality and the Company has a minimal dependence on external suppliers. We believe this model has been one of the most important factors for our successful execution track record without compromising on the quality.

Our manufacturing divisions comprises of Glazing and Metal Works, Interiors and Furnishing Works and Concrete Works, which supplements our core business of real estate and contracting. Each of these manufacturing divisions is also a profit centre by itself and is efficiently servicing 3^rd party clients as well.

Under retail sales division, Company manufactures wide range of mattresses and also provide one-stop solution for home buyers, allowing them the flexibility to furnish and decorate their homes through a wide range of interior packages available online and at our retail stores under metercube sub-brand.

The Company owns one of the largest Glazing and Metal factories in India operated in Bengaluru. The facility is spread across 99,943 sq. ft. state of the art manufacturing unit. The factory is equipped with advanced machineries like CNC profile cutting machine, TIG welding machines, ACP routing machine, Milling machines etc. Apart from Bengaluru unit, the Company has established Glazing and Metal Works Divisions in Kancheepuram (Tamil Nadu) and Sonipat (Haryana). The Products manufactured in the said facilities include aluminum doors, windows, structural glazing, MS and SS metal fabrications, aluminum composite panel, SS cladding, architectural metal works and pre-engineered buildings.

The interior and furnishing division of the Company is one of the largest wood working /joinery facilities in India. The division has two highly mechanized factories with total floor area of 2,55,000 Sq. ft. located at Bommasandra, Bengaluru.

The division is equipped with imported machineries from Spain, Italy, and Germany. The Company has Interiors Division in Alwar, Rajasthan also. The product range includes large scale corporate and residential interiors, solid wood veneer paneled doors and MDF paneled doors, customized joinery works like paneling, partitions, tables, loose furniture like chairs, sofas, Cots and modular kitchens etc.

The Company has a fully automated concrete product division which uses remote controlling systems. The manufacturing facility in Bengaluru spread over 348,477 Sq.ft. manufactures various concrete products of international quality. The unit has the imported technologies from Germany (Masa Plant) and England. In addition, the Company has opened concrete products divisions in Gurugram and Pune also.

The units are manufacturing ready-to-use products, including concrete blocks, pavers, kerb stones, water drainage channels, paving slabs, and landscape related products. The facility has a production capacity of 28,000 nos of Blocks/ day or 20 million nos of Landscaping products.

The company manufactures mattresses under "SOBHA Restoplus" brand which includes multiple mattress combinations. The mattresses come in a variety of designs and features, from pocketed, bonnell, re-bonded and foam to rolled, coir and pure latex mattresses.

metercube is our one-stop solution for home buyers, allowing them the flexibility to furnish and decorate their homes through a wide range of interior packages available online. metercubes interior packages offer, among others, semi-finished options with kitchens and wardrobes, as well as fully furnished homes for living rooms and bedrooms.

Indias real estate market in 2024-25 was characterized by strong sales growth, surge in new project launches, and robust price growth across both residential and office segments, supported by strong economic fundamentals, shifting consumer preferences, and the agility demonstrated by developers in responding to evolving market demands.

A defining feature of this period is the ongoing premiumization of the housing sector. There is a clear shift towards premium and luxury housing in the segment priced between Rs. 20-50 million. This trend reflects a growing appetite among buyers for high-quality, amenity- rich living spaces, and is driving developers to focus on upscale projects.

Despite the surge in premium housing, the market is also contending with a rise in unsold inventory, particularly in higher ticket size segments. However, this increase is counterbalanced by strong sales velocity and a notable decline in Quarters to Sell (QTS) metrics, signaling that the market remains fundamentally healthy. The ability to maintain a balance between supply and demand, even as inventory builds up in certain segments, highlights the resilience of the sector.

The office market is another area of strength, demonstrating exceptional resilience and adaptability. Record levels of office space absorption, declining vacancy rates, and the rapid expansion of flexible workspaces are testament to the sectors capacity to evolve in response to changing business needs. These trends underscore the enduring appeal of Indian office real estate to both domestic and international occupiers.

Government policy and infrastructure development continue to play a pivotal role in supporting the sectors growth. Initiatives aimed at providing housing for all, significant upgrades to urban infrastructure, and a series of pro-business reforms have collectively created a supportive environment that encourages investment and sustains momentum across the industry.

It is also important to recognize the nuanced dynamics at play within individual micro-markets. Each major city exhibits its own unique trends: Bengaluru and Pune are leading the way in both absorption and price growth, reflecting strong demand and limited supply. In contrast, the National Capital Region (NCR) and Hyderabad are grappling with higher levels of unsold inventory, even as luxury segments in Delhi-NCR continue to perform well. Chennai, meanwhile, has managed to maintain a steady and balanced profile, avoiding the extremes seen in other markets.

The Reserve Bank of Indias recent 3 consecutive interest rate cuts, resulting in a total reduction of 100 basis points in 2025 so far, bode well for the real estate sector. With lower borrowing costs making home loans more affordable, encouraging more buyers - particularly in the mid- and premium housing segments. This is expected to stimulate demand and drive sales growth.

As Indias real estate sector enters 2025, the combination of premiumization, a balanced supply-demand equation, office market resilience, benign interest rates, and supportive policy measures positions it for continued success. The sectors ability to adapt to shifting consumer preferences and market conditions will be crucial in sustaining this trajectory. Ongoing infrastructure upgrades and a focus on meeting diverse market needs are expected to further bolster growth, cementing Indias status as a global real estate powerhouse.

Indias real estate sector is experiencing renewed momentum, underpinned by strong urban demand, rising disposable incomes, and a favorable policy environment. Sobha Limited, backed by its established brand equity, proven execution capabilities, and strategic presence in key geographies, is well-positioned to leverage this upward trajectory. The growing preference for high-quality housing, consolidation within the sector favoring organized players, and the increasing adoption of digital sales channels further strengthen the Companys growth prospects. Moreover, sustained government focus on affordable housing and large-scale infrastructure development presents substantial long-term opportunities for expansion and value creation.

While the industry outlook remains optimistic, several challenges persist. Regulatory delays, policy uncertainties, and inflationary trends in construction materials continue to exert pressure on project costs and timelines. Prolonged approval processes and evolving compliance requirements can further impact operational efficiency. In addition, a tight labor market and rising input costs may affect the pace of execution. Interest rate fluctuations and tighter monetary policies also have the potential to dampen homebuyer sentiment and affect affordability, especially in pricesensitive segments, thereby posing risks to sustained sectoral momentum.

For more detailed information on Risks and Concerns, please refer to the Boards Report on page number 155.

For more detailed information on Internal Controls, please refer to the Boards Report on page number 69.

At the heart of our continued growth and success is a strong and engaged workforce. In the financial year 202425, we remained focused on nurturing a high-performance culture, enhancing employee well-being, and building organizational capabilities aligned with our strategic goals.

We continued to invest in attracting, retaining, and developing top talent across all levels. Structured training programs and leadership development initiatives were strengthened to support the personal and professional growth of employees. Over 64120 nos of training man hours were delivered this year, covering technical, functional and behavioural competencies.

Fostering an inclusive and collaborative work environment remains a key priority. Our annual employee engagement survey reflected a good participation rate with good scores in some of the key dimensions of a great place to work such as Credibility, Pride and Camaraderie. Initiatives such as wellness programs contributed positively to employee morale and productivity.

The company maintained its commitment to employee well-being by strengthening health and safety protocols and maintaining a zero-tolerance approach to unsafe practices. We ensured compliance with all statutory requirements and implemented proactive measures for a safe and supportive work environment.

Going forward, the HR function will continue to align closely with business strategy, with an emphasis on digital HR transformation, workforce agility, and leadership development. Our priority remains to empower our people and build a future-ready organization.

SOBHAs organisational strength as on 31^st March 2025 was 4483 employees excluding 22 consultants as against 3814 as on 31^st March 2024.

A comparative table depicting the employee strength as against the cumulative delivery is given below:

Training and developing employees is a must for any organization to be successful. This can be done through ensuring that the employees skills, abilities, and knowledge are constantly updated both to meet world standards and also to satisfy discerning and demanding customers needs. Training also helps employees move up in their career paths and helps them take on more responsibilities. SOBHA too benefits as a company through this training as it helps it to plan succession roles, address the challenges of changing technologies and opens up the possibilities of widening the scope of the work that it does.

At SOBHA, the organisational training and development plan includes in-house and external workshops /seminars as per need.

The trainings provided to employees has resulted in boosting productivity, increasing employee satisfaction, fostering organizational learning culture, creating a safe working environment and the upgradation and updation of technology. It has also led to improvements in leadership and management skills and quality, higher productivity, and the resultant optimum ROI.

Training at SOBHA is broadly divided into Technical, Behavioural, Sales and Adhoc.

Project Execution employees are trained at different levels to help them become the best in class by mastering the latest technological developments in the field.

During FY 2024-25, 87 technical training and induction programmes were conducted in which 566 employees out of 820 employees were trained including renominations. These trainings were conducted for employees working in Bengaluru, Kerala, Chennai, Pune, NCR, Ahmedabad, Hyderabad and other locations where SOBHA has projects.

A total of 4 batches aggregating to 88 employees were trained for a total period of 42 days.

Technician Supervisor Training: A total of 47 programs were conducted for both Sobha and non-Sobha Rolls in which 312 employees out of 427 employees including renominations were trained during this year.

At SOBHA behavioural training is equally important as it helps empower employees to leverage their positive skills. Behavioural training helps enhance employees ability to handle conflicts, helps in creating win-win situations, accommodating changes and flexibility and following a dynamic approach. Since behavioural training polishes skills and develops talent, it also contributes to an individuals overall development. Behavioural training at SOBHA covers a range of subjects including team building, time management and developing motivational, leadership and interpersonal skills.

During 2024-25, 96 behavioural training programmes were conducted for employees at different levels in which 904 employees out of 1272 employees including renominations were trained.

In addition, 179 Adhoc (Behavioural, Technical and Technician Supervisor) training programmes were also conducted during the year which were attended by 1282 employees at different levels.

Sales Training: A total of 49 batches aggregating to 192 training programs covering 2404 employees (a 4-day module).

Other Training programs: A total of 59 department centric programs attended by 1719 employees.

In all, the Leadership Development and Training department has conducted 1091 training programmes covering 14181 participants including employees of non-Sobha rolls during the year FY 2024-25.

SOBHAs training wing, SOBHA Academy, conducts training on a regular basis. The Company assesses employee performance to gauge employee skills and provide them requisite training for enhancing their skills.

Ensuring a healthy and safe work environment involves developing safe, high quality, and environment friendly processes, working practices, and activities that prevent or reduce the risk of harm to the people working in that environment. It also involves complying with environmental regulations such as managing waste or air emissions for reducing the companys carbon footprint.

At SOBHA, procedures are in place for identifying workplace hazards and reducing accidents and exposure to harmful situations and substances thus providing a safe work environment to its workers. This includes training employees in accident prevention, accident response, emergency preparedness, and use of protective clothing and equipment.

SOBHA is an ISO 9001, ISO 14001, and OHSAS 18001 certified company for its quality, environment, and safety management systems.

SOBHA strives to ensure that its construction, development activities, and real estate operations are environmental friendly. The company complies with all environmental and occupational health and safety laws and regulations such as the Water (Prevention & Control of Pollution) Act, 1974; amendment 1988 and the rules made thereunder, the Air (Prevention & Control of Pollution) Act, 1981 and the rules and orders made thereafter; the Environment (Protection) Rules, 1986 and amendments made thereafter, Environmental Impact Assessment Notification, 2006; and Hazardous Waste (Management, Handling & Trans boundary movement) Rules, 2008 and amendments made thereafter, Construction and Demolition Waste Management Rules, 2016 and the amendment made thereafter, across all its projects wherever applicable. The company also focuses on minimizing emissions and increasing the use of renewable resources both in its construction activities and during the operations phase in its manufacturing facilities where all attempts are made to keep the carbon footprint low by following the best industry practices.

The company has installed a pre-cast unit for its construction activities. Instead of using the conventional block work or bricks for its construction activities, The company uses pre-cast elements which come with many advantages. They are fast to make, consume less labour, lead to minimal wastage, and do not need plastering work. These pre-cast elements use minimum resources while also reducing wastage at the same time.

The company practices energy conservation by installing solar panels for lighting common areas and solar water heaters in all its projects. Some of the highlights in its energy saving measures are:

• The SOBHA Glazing and Metal Works Division provided with 225kW and the SOBHA Interiors Division provided with 750kW roof top solar power plants as an alternate source of energy.

• At the SOBHA corporate office, 80% of the power is wheeled from the solar power plant.

• Around 2.3 million units of solar power were used across SOBHAs facilities which resulted in saving the carbon footprint by 1,700 tons.

• Use of heat pumps and solar water heaters instead of geysers to reduce power consumption.

Rainwater harvesting is another effort by the company for addressing the acute problem of water scarcity. Rainwater harvesting has emerged as one of the most viable options for meeting the water requirements of an increasing population. Rainwater harvesting also helps restore depleted aquifers thus enhancing sustainable water yields in areas surrounding SOBHAs project sites.

Rainwater harvesting is done in two ways: through collection tanks for roof-based runoffs and through recharge tanks with recharge bores/percolation pits for land-based runoffs. Wherever feasible in residential projects, even surface runoff is collected in storage tanks and after treatment the water is used for primary purposes further reducing the demand for external fresh water. Water from the terrace runoffs is treated and re-used thus reducing the need for getting water from external sources or extracting groundwater to meet a projects requirements.

The company uses specially designed Sewage Treatment Plants (STPs) to treat the waste water generated in its buildings. The treated water is used for secondary activities like flushing toilets, watering the landscape areas, cleaning the common areas, and at construction sites for dust suppression. The STPs help reduce a projects consumption of fresh water in its various activities.

STPs use a hybrid technology - the Activated Sludge Process (ASP) - Extended Aeration System (EAS) or Sequential Batch Reactor (SBR) followed by the Ultra Filtration (UF) technology for enhancing the quality of the final treated sewage. This process conforms with the standards set by the Pollution Control Board and also Screw Press is provided for sludge dewatering where it compresses the sludge to remove moisture producing dried sludge for easy disposal.

Acoustic enclosures are being provided for air blowers to mitigate noise pollution that can possibly be caused in the vicinity. Ozonators are being provided at STPs exhaust and fresh air ducts to remove odour and also improve the quality of air for the operators working inside the plant room. Air curtains are also provided at the STPs entrance to prevent the odour from escaping into the open area. The company has regular educational programmes for its construction workers on the dos and donts of using natural resources. The company also constructs dedicated STPs for camps where the construction workers stay.

The company has been successfully using Organic Waste Converters (OWCs) across all its projects in India. It is mandatory to use solid waste management plants during the operational phase of all projects. The integrated solid waste management system operates on the principle of the 4Rs - Reduce, Re-use, Recycle, and Recover.

Waste is segregated at the household level into organic/ inorganic waste and collected in separate bins. Organic waste is converted into compost using Organic Waste Converters. The compost is used as organic manure for the landscape and plantations at project sites. Inorganic waste is given to authorized waste recyclers for further processing.

Air curtains are provided at the OWC rooms entrances to prevent the odour escaping from the OWC rooms into the open area. Fly catchers are provided to prevent houseflies, insects etc. from entering the OWC rooms. A weighing scale is provided in the OWC rooms to track the quantity of organic waste generated at the project site.

Organic waste generated in and around the projects during the construction stages is diverted to nearby piggery farms and the local municipal corporation while the inorganic waste is handed over to authorized waste recyclers. All these efforts help the company in restoring eco-sanitation wherever it works.

For ensuring safe and healthy drinking water, The company provides treated water with Pressure Sand Filters and Reverse Osmosis units in all its projects. The RO treated water is provided at one point in the kitchen for drinking, while water for non-potable domestic purposes is supplied after basic treatment. Dual Media Filter followed by

Softener & Centralized Reverse Osmosis system. The treated water from the RO system is provided for both Domestic & Drinking usage. The soft water is blended in order to maintain the TDS level to <400 ppm for domestic usage. TDS level of <100 ppm is maintained for Drinking water.

The company has a functional chemical laboratory and a microbiological laboratory at the SOBHA Academy to analyse water samples for physicochemical and microbiological parameters. This laboratory is managed by qualified personnel and equipped with instruments like the pH meter, DO meter with probe, COD reactor, spectroflex meter, BOD incubator, centrifuge, a water distillation unit, laminar flow, biological incubator, electron microscope, digital colony counter, and autoclave which are essential for ascertaining the quality of the water from physicochemical and microbiological points of view.

Safety is integrated in the companys core processes to help inculcate the value of Health and Safety among its workforces. The Company strongly believes that Environment Occupational Health and Safety (EOHS) are an integral part of our day-to-day activities at the workplace. Continuous efforts are made to raise awareness and understanding about the value of safety and health programmes across the spectrum including management leadership and workers. A systematic approach at finding and fixing hazards in the workplace form a part of these programmes.

The EOHS management system at the company is effective as it is partnered by an effective leadership and owned by every employee of the Company. This shows a demonstrably strong commitment to Occupational Health, Safety and Environment from the top management in implementing industrial best practices and achieving the Companys goal of zero accidents.

• Revised the company logo for all the safety documents i.e checklist, format and training records.

• Planed EOHS policy new background design and company new logo.

• Zero Non-Compliance regarding Safety PPE at PAN India projects.

• Revised and implemented all the project and workmen camp signages as per IS 9457.

• Revised and implemented fall protection (Safety nets) colour code from green to tan.

• Implemented China camp accommodation facilities for workmen.

• Govt. officials from Factories audited few projects and submitted closure reports on time.

• Achieved 79% of trainings on Health and Safety measures for all the permanent, Contractor (Technicians) and sub-contractor employees.

• Projects & offices, for all the pantry, canteen food handlers initiated & implemented a specific health check-up by our Inhouse Doctors.

• FY 2024-25, Achieved ZERO fatal Accidents with

58.00 million Manhours worked for PAN India Projects.

• Sobha Marina one Winning National Safety Award (NSC-Kerala chapter) in 1^st position for the 3^rd consecutive time for construction category.

• Sobha Marina One Kochi received certificate of appreciation from (NSCI) National Safety Council of India Safety Awards 2024.

• Sobha Metropolis, Sobha Atlantis and Sobha Whispering Hills received certificate of appreciation from (NSC) National Safety Council -Kerala Chapter Awards 2024.

CSR at SOBHA is a sincere devotion that stems out of genuine concern and drive to provide comprehensive and sustainable social development to rural India. It is in this context that Sri PNC Menon, Founder and Chairman emeritus of SOBHA Limited, established Sri Kurumba Educational and Charitable Trust in 1994. The Trust has been in existence for more than three decades s for the holistic development of the marginalised families in Kizhakkencherry, Vadakkencherry and Kannambra Grama Panchayats of Palakkad District. In 2006, the Trust initiated GRAAMASOBHA, a unique social development initiative, under which numerous social welfare projects are implemented.

During these 30 years of period, tremendous changes have been witnessed in the lives of the people in the target area of the Trust, among which, the Trust has played a pivotal role in the social empowerment of these families facilitating quality life-building resources, facilities and services.

In this social engineering process, education has been the core premise on which the Trust undertook most of our activities and programs in an institutional format and have been successful to a large extent in revamping the educational narratives in this otherwise backward district of the state. The SOBHA Academy and SOBHA ICON have played a crucial role in transforming the lives of many families by providing quality education. In parallel, SOBHA Health Care has extended free healthcare services, ensuring access to essential medical support. Collectively, the Trust has brought about significant improvements in the livelihoods of people across the three Panchayats.

The Trust had identified nearly 4,525 needy families (around 17,311 people) in 2016, in a comprehensive survey. Beneficiary identity cards were issued to the adopted families. As a result, the Trust has detailed an authentic data about each beneficiary and his or her individual requirements. Based on the data, the Graamasobha model was developed. The lives of thousands of underprivileged citizens are getting positively transformed through this growth model, which has a bottom-up approach towards poverty alleviation in a long-term perspective. The beneficiary families have been selected through an in-depth scientific poverty mapping called Social Empowerment Mapping Exercise (SEME) with the following objectives:

• To identify and enlist genuine beneficiary families from the three panchayats (6 villages) using defined norms and terms.

• To generate qualitative and multi- dimensional Baseline Reports on the target families, so that

specific programs and activities can be implemented for their benefit.

• To devise target-based, area-specific empowerment programs and activities in key human development areas like education, health, employment, housing, etc.

• To design an effective mechanism to measure and monitor progress and the pace of the empowerment programs of the Trust.

• Education

• Healthcare

• Looking after the aged and needy

• Women empowerment

• Green initiatives

The SOBHA Academy, with a view of uplifting the weaker sections of the society through quality and free education, has been rendering its selfless service in the three panchayats, viz. Kizhakkenchery, Vadakkenchery and Kannambra since its inception. The school provides its entire services free of cost. It is one of the several humanitarian educational, healthcare and women empowerment activities undertaken by the Trust. Focused mainly on the holistic development of students, The SOBHA Academy admits only children from socio economic deprived sections. All applications are scrutinised to ensure that only the deserving candidates are given access to the free and quality education the Academy provides. Selected students undergo a medical fitness test and the final selection of students is done through an open draw. Every academic year, 90 girls are admitted to LKG through the process of drawing lots. The Sobha Academy embraced the National Education Policy-2020 by initiating the Preparatory Class or Balavatika 1 (Pre-KG) on its campus, aligning with CBSE directives.

The Academy, which follows the CBSE curriculum, provides all academic and related expenses-such as fees, books, stationery, clothing, transportation, food, and healthcare- completely free of charge. During 2024-25, 1,170 students were on the rolls from Pre-KG to Class 12.

Achieving academic excellence is at the heart of the endeavour of all educators and academic institutions. An important measure of this pursuit is how the institution has performed, the most important of which is the annual Board Examinations conducted by the CBSE.

We are proud to acknowledge that we have good results, achievement in academics, co-curricular and extracurricular activities throughout the session. During the 2024-25 academic year, many students achieved impressive results, reflecting the steadily improving academic performance at The SOBHA Academy.

The SOBHA Academy has demonstrated its commitment to academic and creative excellence through several key initiatives. "Spellapalooza 2024", held on December 14, 2024 with 15 schools participating, concluded with SOBHA Academy winning the championship and featured an inspiring speech by Chief Guest Mr. P Vijayan IPS, ADGP Histrio Fest 2024, conducted on December 31, 2024 showcased student talent in dance, drama, and music, with performances like Roommates and traditional dances, and was graced by theatre artist Dr. N R Gramprakash. On January 18, 2025 SOBHA STEAM fest 2025 celebrated innovation with 390 students exhibiting projects across STEAM disciplines, in the presence of Chief Guest Dr. Kannan C S Warrier, Director of the Kerala Forest Research Institute. These events reflect the Academys dedication to fostering inquiry, creativity, and well-rounded growth.

The SOBHA Academy has actively invested in professional development to enhance teaching effectiveness and leadership. Four teachers participated in the Our Responsibility towards Children training by Mission Better Tomorrow at Sri Kurumba Auditorium. A three-day Digital Skilling and Upskilling Workshop (May 14-16, 2024) led by Mr. Mujeeb Rahman focused on ICT integration, Microsoft tools, cyber safety, and AI literacy in education. The Leadership Training for Teachers conducted by the Centre for Learning Leadership and Excellence (June 3-5, 2024) empowered 72 educators through insightful sessions led by expert trainers. In November 2024, a series of Capacity Building Programs covered topics like the National Curriculum Framework, innovative pedagogies, and language instruction strategies. Additionally, teachers attended CBSE training sessions organised by the Palakkad District Sahodaya, focusing on curriculum planning and classroom management, fostering collaboration and continual improvement.

Icon was started in 2010 as a constructive step towards improving the academic performance and communication skills of students in our CSR area. It has three segments:

• An Academic Advancement Program for high school students (8^th-10^th).

• An intensive Higher Secondary Education Program (11^th - 12^th) towards college enrolment.

• A mentoring program for UG studies.

Sobha Icon, a social empowerment education initiative of the Trust, has brought wonders to the three otherwise lesser-known panchayats in Keralas Palakkad district by sending their children for education to premier centres of learning across the country. Icon is an illustrative case for educational policy makers about what happens to students from disadvantaged families, when quality educational resources, facilities, and services are provided in a sustained manner by a committed team with a sense of purpose. Icon has designed a replicable model for driving students toward personal excellence.

The Icon is not an affiliated school but a teaching and learning centre that functions within the scope of the Kerala State Council for Open and Lifelong Education. A total of 211 students were enrolled across all three segments during the 2024-25 academic year.

Students are provided with books, uniforms, and food in addition to regular and tuition classes by qualified teachers, and undergo a series of personal development activities along with their studies. Students are exposed to real- world life problems and opportunities and are motivated to pursue higher goals. There are no failures so far. In fact, it has a consistent record of academic excellence and hundred percent college enrolment. 48 out of the 56 students who appeared for the class 12^th board exam secured A1 in all subjects and 51 students scored more than 95 percent. Many programmes were arranged for the personality development and capacity-building of students and they also attended many workshops such as "Out of the box thinking through mathematics" by IIT Madras. Teachers too received training on effective teaching and they successfully completed a course titled "Teach 2030".

UG admissions of all alumni students have completed, with Icons receiving admissions from different universities across the countries. As usual, Icon students have received admissions to prestigious universities like Plaksha, LPU, St. Thomas, CVV, NIFT, IHM-KOVALAM, Ambedkar Law University, Victoria College, Azim Premji University, Vidyashilp University, etc. Twenty-seven students appeared for the HCL TechBee Aptitude Test.

Established in February 2007 by Sri Kurumba Educational and Charitable Trust to provide Primary Health Care facilities to the residents of the SOBHA Hermitage, students of The SOBHA Academy and identified Below Poverty Line (BPL) families of Kizhakkencherry, Vadakkencherry and Kannambra Panchayaths of Palakad District at 100% free of cost.

• Cardiac and Pulse Oxiymetry

• Centralised Oxygen, Suction provision

• 3 and 12 Channel E.C.Gs

• Digital Ultra Sound Scanning System and ECHO Test

• 300 MA X-Ray with computerised Radiology (CR)

• Laboratory with Automatic Haematology and Biochemistry Analysers

• Minor Operation Theatre

• Pharmacy

• Ophthalmology Department with Automatic Digital Equipment, Auto refractometer, Slit lamp, indirect ophthalmoscope and direct ophthalmoscope.

• Dental Department with Ultra-Modern Unit with PLANMECA RVG Unit, Intra Oral Camera, Fiber Optic Twin Beam Micro Motors.

• Physiotherapy Unit with Short Wave Diathermy, Ultra Sound Therapy, Interferential Therapy, Traction Unit (Cervical and Lumbar), TENS, Wax Therapy and Portable TENS.

During the financial year 2024-25, a total of 33,451 individuals benefited from various health services under SOBHA Health Care initiatives. This includes 22,567 General OP patients, 1,353 Dental OP patients, 759 Ophthalmology OP cases, 707 Physiotherapy patients, and 37 Clinical Psychology consultations. In addition, 6,819 patients were reached through Medical Camps, 131 Home Care Visits were made, and 1,078 individuals received treatment through Ahalia Eye Camps. The patient inflow has increased by more than 70% compared to the previous years total of 19,178, reflecting the programs significantly growing outreach and impact.

As part of its outreach efforts, SOBHA Health Care has been actively conducting medical camps across the three Panchayats, bringing essential healthcare services directly to underserved communities. In the financial year

2024-25, a total of 84 medical camps were organised, benefiting 6,819 patients. These camps have seen growing demand and appreciation from the public. In addition, the Home Care Visits initiative focused on bedridden patients who are unable to attend camps or visit the health centre. In 2024-25, 131 patients were reached through this initiative, receiving both physical and mental care. Family members were also guided on providing appropriate support, ensuring holistic well-being for patients and caregivers alike.

In collaboration with Ahalia Foundation Eye Hospital, SOBHA Health Care organised eye camps across various locations throughout the year. A total of 1,078 patients benefited from the camps, receiving diagnoses for common vision issues, corrective measures, and referrals for advanced treatment when required. The initiative significantly contributed to improving eye health and awareness in the region.

SOBHAs CSR initiatives extend their focus to include care for the elderly, alongside their commitment to supporting the youth. SOBHA Hermitage, established with the specific purpose of offering shelter and assistance to seniors from marginalised communities, now stands as a model old age home. In addition to providing accommodation, SOBHA Hermitage ensures residents have access to essential amenities for a comfortable lifestyle, including independent living spaces, a library, communal television area, and internet facilities. Round-the-clock medical care, overseen by paramedical staff with on-call doctor services, is also available, alongside an in-house clinic. Cultural and social events, as well as birthday celebrations for residents, are regularly organised at the Hermitage.

The hostel facility for students at The SOBHA Academy, initiated on June 18^th, 2022, remains operational, accommodating 138 girls from the 9^th, 10^th, 11^th, and 12^th grades.

Owning a home isnt merely an aspiration; it constitutes the cornerstone of familial social security. This issue is particularly acute among the impoverished segments of society. The absence of safe and affordable housing can precipitate an array of social, economic, and health challenges, including homelessness, poverty, and even criminality. Furthermore, its a dilemma unlikely to be fully eradicated. Due to assorted social and economic factors, the realisation of homeownership remains elusive for many underprivileged families in India.

In response to this pressing need, SOBHA, leveraging its Corporate Social Responsibility (CSR) arm, has undertaken sincere endeavours to construct and deliver safe and

secure residences to rural communities in need. The principal objective of this initiative is to afford shelter and stability to those dwelling in substandard housing conditions or experiencing homelessness. The overarching vision is the comprehensive advancement of these families and, by extension, the broader societal progress.

• As a pilot phase, 10 families were identified and provided with houses on their own land in 2022.

• After the pilot phase, we started the first phase of this majestic project and identified 100 families to avail this benefit.

• All the 100 completed homes have been handed over to the beneficiaries on March 9^th, 2024 and the foundation stone laying ceremony of another 120 homes as part of Phase II was also conducted on the same date.

• These 120 families include 13 families having no land of their own and were handed over 5 cents of land and a home. The homes were handed over to the beneficiaries ceremoniously on February 9, 2025.

• Foundation stones were laid for another 120 homes on March 31,2025 as part of Phase III of this project.

The key handover of the 120 ready-to-occupy homes was ceremoniously conducted by Sri K. Rajan, Honble Minister for Revenue and Housing, Government of Kerala, and the foundation stone laying ceremony of the 120 homes under Phase III of the project was officialy inaugurated by Dr. R. Bindu, Honble Minister for Higher Education and Social Justice, Government of Kerala. Both ceremonies were graced by several other distinguished guests, including MLAs, government officials, and leaders from across the political line.

So far 230 homes have been handed over in Kizhakkencherry Panchayat.

A comprehensive rehabilitation package for the young mothers (widows) living in the Hermitage is in operation. Special free of cost arrangements are in place for their living, safety, security and welfare. The widowed mothers and their children live together. All mothers have been encouraged to continue their education and many have completed their graduation. All are employed at The SOBHA Academy and received a good remuneration which they can save. One of the young mothers obtained postgraduation and is employed at The SOBHA Academy as a qualified teacher. Their children are admitted to The

SOBHA Academy, where they obtain quality education. For those young mothers whose children have grown up, individual self-contained flats have been constructed and allotted for each family. Also provides required vegetables, provisions, fruits, milk and dresses to these families free of cost. There are 14 young mothers and their 21 children living at the young mothers quarters currently. Support is also provided if they want to get remarried. It is remarkable that out of 23, 7 young widows have been remarried with the support of the Trust.

Financial support of Rs. 5,000 is extended to several widowed mothers and their children through the Rural Womens Empowerment initiative. It has taken 50 widowed mothers and their children belonging from the project area under its wing. They are provided with a basic monthly living allowance, clothing, medical and other personal accessories. The Trust meets the educational expenses of their children, giving them adequate opportunity to come up in life.

One of the greatest problems faced by our society is the inability of parents to get their daughters married due to lack of resources and poverty. It was common for marriages to get cancelled after engagement, and for brides to be abandoned after marriage. Many parents even fall into a debt trap by taking loans against their property or selling their property to see their daughters being wed. Mass weddings aided by the Trust provide a practical remedy to this problem.

The Trust conducts social weddings that are free from the fangs of dowry and till date, 697 weddings have been conducted. Approximately forty women get married each year and provides basic resources to the couples to help them begin their wedded life. The couple and their parents are also given pre-marriage counselling.

The SOBHA Community Centre is a beautiful and spacious structure for the less-privileged. It plays host to various community mobilisation programs, including medical camps, orientation and training classes and social weddings.

The Trust provides nutritious meals to elderly and vulnerable individuals from Kizhakkencherry Panchayat at Sri Kurumba Auditorium. Currently, 64 people are served

twice a day, with a capacity to serve up to 100 individuals. The meals are delivered ensuring that the elderly and vulnerable have access to consistent, nourishing food.

Focuses on providing food to 350 people in Palakkad and plans to provide meals to 650 students in nearby government schools. So far 77,339 meals have been served.

Meals for school children will be prepared at Sri Kurumba Auditorium and served in large containers. The menu includes nutritious options such as Lemon Rice, Tomato Rice, Coconut Rice, Idli, and two side dishes, with plans to add boiled eggs weekly for the children. Employees are encouraged to volunteer, dedicating a few hours each quarter to tasks such as food delivery, packing, and other responsibilities, with the most impactful role being participation in the food delivery team.

SOBHAs green philosophy of development is widely accepted across the spectrum. Furthermore, several green initiatives are underway in the CSR project areas. The entire campus was constructed with minimum carbon footprint and without making much change to the natural surroundings. Large-scale rain harvesting methods and processes are in place, and planting of more than 3000 trees and herbs and preserving the existing flora and fauna to the largest extent possible has been undertaken. The Trust cultivates vegetables, fruits and paddy at Moolamcode, Anakkappara and Mangalam for in-house use. The Trust also has large waste management plants to process the waste generated here. All the CSR project campuses are plastic-free, smoking-free and alcohol-free, thus striving to achieve a sustainable lifestyle. The power laundry at SOBHA Hermitage runs on a steam generator by a boiler to conserve electrical energy. Solar panels are also installed at SOBHA Hermitage, which amounts to around 30% of total energy consumption.

• Modelled on The SOBHA Academy, one school is proposed to be constructed in Bengaluru catering to 1200 girl children.

• Modelled on SOBHA Icon, many scaled models are planned across the state.

• A replicable model village incorporated with Sustainable Development Goals (SDGs) is planned which will have the potential to make a significant impact across the globe. The model village aims to provide a blueprint for replicable, scalable, and sustainable development in India that can be adapted to different regions and cultures, nationally and internationally. This is an effort to consolidate and strengthen the social, economic, educational, and health interventions since 1994 and putting them in a new format to make it more impactful and measurable, and showcasing the holistic interventions to national and global policy and decision makers. This will also motivate capable people to follow similar paths. The new format will be called SOBHAGraam.

• Additional classrooms and a 750-seater auditorium for The SOBHA Academy.

• A 900-capacity girls dormitory.

• Administrative building-cum-guest accommodation .

• Devi Home at Moolamcode for 72 elderly women and 72 young orphan girls.

• A fully residential university in Uttar Pradesh that will provide free world-class education to young women from the most economically disadvantaged families across India.

Research and Development (R&D) is about seeking technological advances, which involve overcoming obstacles and resolving uncertainty. R&D in the construction industry could relate to the innovative use of materials or overcoming problems on site. During this year the focus of the Research & Development Department was on process and product improvement. This is a much- needed focus as it contributes to SOBHAs strength and helps it retain its self-reliant nature while providing best in class products to its consumers.

• The use of bus bar raising main system in multistoried buildings ensures efficient power distribution, minimizing power losses and voltage drops, leading to enhanced reliability and stability of the electrical supply.

• Installation of HT meters allows for accurate monitoring and measurement of electricity consumption in projects with higher power requirements, facilitating precise billing and management of energy usage for optimized efficiency and cost savings.

• Introducing prepaid smart energy meters offers several benefits, including real-time monitoring of energy consumption, remote payment options, and better control over electricity usage.

• Ceiling-mounted exhaust fans in toilets improve ventilation, helping to remove stale air, odors, and moisture efficiently.

• Installation of LED lights in common areas for reducing power consumption.

• Optimizing the Power consumptions by using of light sensors in staircases, lobbies, and all toilets in apartments.

• Grid connected roof top solar power generation for partial common area load by utilizing maximum terrace space.

• Mechanization and optimization of manpower by using advanced machineries for example: - GI STRIP straightening machine.

• For Water Treatment Plants, Dual Media Filter (combining sand and carbon media) is being used instead of a conventional sand filter, significantly improving water filtration quality.

• A new technology called Power Drain has been adopted in one of our projects to effectively manage and mitigate basement seepage.

• Use of FRP (Fibre Reinforced Plastic) manhole covers on Overhead Tanks enhances maintenance convenience and offers greater durability.

• Readymade polymer concrete drains are now being used at ramp entrances to improve aesthetics and ensure smoother user experience.

• Customized Ductile Iron (DI) gratings have been developed specifically for use in landscaped areas, ensuring both strength and design compatibility.

o Study of alternate tile grout material for setting time and its colour.

o Study of different types of tile beads to increase the productivity of the mason and also aesthetics.

o The features in lift are checked across different vendors, and the requirements are standardised.

The companys financial position and the results of its operations are subject to certain risks and liabilities that may affect its performance and ability to achieve its objectives. These are factors that the Company believes could lead to its actual results differing materially from expected and previous results. However, there are other risks and uncertainties that may also affect the Companys performance and ability to achieve its objectives not currently known to the Company or deemed immaterial. The company has a robust risk management and internal control system in place. Real estate and allied risks can be caused by several factors, which could be within and outside of a companys control. It is, therefore, important that a company have a solid risk mitigation and management policy in place.

1. Risk assessment planning

2. Risk identification

3. Risk rating

4. Evaluation and risk response

5. Reporting

6. Periodic monitoring and review

Our risk assessment focuses on short-term risks and emerging risks in the risk areas such as strategic, operational, financial, legal and compliance. SOBHA has implemented an Enterprise Risk Management (ERM) program through which it reviews and assesses significant risks regularly to ensure it has internal controls.

Risk governance architecture consists of the Board, Audit Committee and Risk Management Committee at the top of the pyramid enabling oversights functions of the risk management system. Operational and functional heads, along with a strong and independent internal audit function, facilitate the oversight functions by providing valuable inputs in the form of information, data and reports on various external and internal risks-both existing and emerging - thereby enabling the Committees and Board to take timely action and aiding decision-making. At the bottom of the pyramid lies the risks affecting the operations and impeding the growth of the organisation.

The company recognises that risk is inherent to any business activity and that managing risk effectively is critical to the immediate and future success of the Company. The Companys risk management process enables it to identify, assess and prioritize, manage and respond, and ultimately monitor and report the risks in its operations, supply chain, sales, and marketing support functions. In order to achieve the key objective, the risk management process establishes a structured and disciplined approach to risk management, in order to guide decisions on key risks.

SOBHA recognises risk assessment, monitoring and mitigation as a continuous process closely embedded in the business processes and aiding managements decision-making. This may be understood through the risk management chart provided below:

This system helps the company respond appropriately to risks and achieve its objectives, ensuring compliance with the applicable RERA law and its statutory obligations.

The listing agreement with the stock exchanges mandates the identification, minimization and periodic review of these risks and uncertainties. However, it is not possible for the Company to implement controls to adequately respond to all the risks that it may face and there can be no complete assurance provided that the steps that it undertakes to address certain risks will manage these risks effectively, or at all.

The Companys Risk Management Committee evaluates risks for each category. It assists in identifying and assessing risks to that appropriate mitigation mechanisms may be devised. The Audit Committee reviews and advises the management on all categories of risks that the Company faces, the exposure in each category and on the acceptable and appropriate levels of these exposures. It also monitors the steps taken by the management to control such exposures and ensures that the overall risk exposure is within the Companys risk capacity and risk appetite. The Board of Directors of the Company are also apprised of the risks faced by the Company and timely risk management measures taken for mitigating them.

The Company has strong systems in place for each kind of risk that it may face in the course of conducting its business.

Natural disasters include earthquakes, fires, droughts, floods, or global pandemics (such as COVID), and manmade disasters include acts of terrorism and war.

Insurance coverage is an appropriate way of managing disaster-related risks. Apart from a sufficient insurance coverage, the company also takes appropriate measures to ensure that the structural design of its buildings conforms to the applicable construction standards in the various regions it operates in. The properties of the Company are insured against natural risks, like fire, flood, earthquakes, etc., with periodical review of adequacy, rates and risks covered under professional advice.

Interest rates, inflation and exchange rate risks are amongst the important macroeconomic indicators which are subject to several factors which primarily have to do with the government, monetary and tax policies, domestic/ international economic and political conditions and other factors beyond a companys control. Changes in interest rates may increase a companys cost of borrowing and impact its profitability. These risk factors will be a driving factor in the development of the real estate sector.

A sluggish economy or even recession in a specific industry, such as IT/ITES, can lead to a decrease in sales or market rates for residential projects. In extreme cases of an economic downturn, a company may also run the risk of customer insolvency though the registration of property happens only on the receipt of all the dues from a customer. These factors could decrease the revenue generation from some or all the companys businesses, adversely impacting its business and future growth. Further, uncertainties in the national or global economic scenario, a changing demographic profile of the country and inflation also have a bearing on the functioning of a company operating in real estate and allied sectors.

The company is confident that with the economic and sector specific reforms introduced by the government in the recent past, the outlook for long-term demand for the real estate sector in India is stable and positive. The emergence of Tier-II and Tier-III cities, urbanization, large- scale employment opportunities in Tier-II cities and larger numbers of nuclear families will contribute to a substantial increase in demand for real estate and corporate space in the future.

Changes in government policy, social and civil unrest, and political developments in or affecting India could impact the Companys business interests. Specific laws and policies affecting real estate, foreign investments and other matters affecting investments in the companys securities could also change.

In this industry, the time required to liquidate a real estate property can vary depending on the quality and location of the property. As a result, the Company may not be able to liquidate its assets promptly in response to economic, real estate market or other conditions.

Modern day businesses, including those in the real estate sector, are customer-centric and driven by market sentiment and competition. Though everyone aspires to own a home, there is a chance that the decision to purchase the same be deferred due to certain changes in existing economic or market conditions.

The company has devised a detailed compliance checklist system to monitor and obtain the approvals from different authorities as per applicable laws and regulations at various stages of project construction to ensure smooth completion of projects.

For any construction company, land is a primary input. Non-availability of an appropriate parcel of land at a strategic place and at a reasonable price can lead to an increase in its prices, thereby having an adverse impact on the companys performance. Further, availability of land, its use and development are subject to approvals by various local authorities under applicable local laws and regulations. This makes the price of land volatile. A drop in land prices may erode the book value carrying the cost of land, which in turn could affect a companys profitability.

The Company takes strategic decisions with respect to land acquisition. Effective methodologies are in place for managing the land portfolio. Requisite due diligence is conducted before acquiring land or entering partnerships for joint ventures or joint development.

Local, state and central regulatory bodies control the real estate sector through laws and regulations governing the acquisition, construction and development of land including zoning, permitted land use, fire safety standards, height of buildings and access to water and other utilities. SOBHAs business is subject to all these laws and regulations. Any delay in obtaining an approval under these laws and regulations will expose the business to higher risks.

We are actively working with industry bodies, regulators, and the government to understand the issues impacting the industry and developing legal frameworks to address these issues in time to minimise any impact.

The company is involved in some legal proceedings relating to the lands it owns and claims in relation to taxation matters. Any adverse decision here may have a significant impact on the companys business, prospects, and financials.

The residential real estate sector is highly competitive. Other developers undertaking similar projects within the same regional markets are in direct competition with the company. Due to the fragmented nature of the real estate development business, adequate information about small and medium level competitors projects may not be available and the company could run the risk of underestimating the supply in the market.

The company operates in twelve cities in real estate that contribute to the Companys revenue. A sizeable portion of sales from real estate operations is generated in Bengaluru. A decline in the revenue in this real estate market or a shift in customer loyalty may have an adverse effect on its business and operating results. Contractual businesses depend solely on orders received from corporate entities for their construction requirements. A substantial portion of the revenue from contractual projects is generated from major clients operating in the information technology sector.

The Company has a dedicated and robust in-house sales and marketing team, which is entrusted with the task of generating enquiries for its products and transforming them into sales. This reduces dependency on external agents and brokers.

The company also has a dedicated Customer Relationship Management (CRM) Department to cater to customer feedback, resolving their queries and grievances, addressing their issues, streamlining the purchase process and receiving feedback. An online portal has been designed for customers where they can share their views and check the status of the projects. The CRM Departments core responsibility is ensuring smooth and hassle-free transfers of products to the satisfaction of the customers.

Construction activities, which are a major contributor to companys revenue, are capital-intensive and require a significant expenditure on land acquisition and development. An efficient borrowing strategy has placed the company ahead of its competition with respect to borrowing costs. However, the company is subject to risks normally associated with debt financing and may be required to dedicate a portion of its cash flows towards the repayment of its debt commitments. It may not be possible to generate adequate cash flows in certain extreme scenarios to service principal and interest payments. In certain cases, lenders also have the right to recall a loan. Such an event could impact companys liquidity and credit rating.

In most cases, the company develops properties on a joint venture basis. Credit risks arise when its JV partners do not discharge their obligations and, in such circumstances, the company may be required to make additional investments in a joint venture or become liable for the other partys obligations.

The company has a proven record in servicing its debt obligations. The gearing levels of the Company have been efficiently managed in previous fiscal years, bringing down the gearing ratio. Every investment avenue is evaluated based on the risks and rewards attached to it.

Real estate projects are vulnerable to several implementational problems, such as regulatory compliances. These may cause project start up delays, construction delays, cost overruns and unavailability of skilled labour, accidents, and quality gaps. The companys operations may be unfavourably impacted if these risks are not mitigated on a real-time basis.

The company has adopted a standard process for ensuring product quality. Technology related to the industry is upgraded periodically by comparing it to global standards, which helps minimize implementation risks. The in-house Quality, Safety and Technology Department is in-charge of addressing quality issues of the products.

Many times, operations of a real estate project are subject to budget overruns due to several factors like increase in construction costs, growing subcontracted service costs and increase in labour costs. Increased operating expenses may affect companys profit margins if it is not able to sell the properties with desired margins. There is a chance of reduction in demand if the selling price of unsold properties is increased.

If suppliers of raw materials curtail, discontinue, or disrupt the supply of materials, companys ability to meet its material requirements for projects could be impaired, which could lead to a disruption in construction schedules and projects may not be completed on time.

Vendors supplying key materials have longstanding relationships with the company. Since the Company is a backward integrated organization, key inputs are sourced in-house, reducing dependency on external suppliers.

The construction industry is highly dependent on workforce and its ability to retain that workforce. Employee attrition could have an adverse impact on companys businesses. companys performance could also be affected if it is unable to identify, attract and retain key employees like engineers and architects.

Employee attrition rate in the Company is below the industry/sector average. To minimize attrition and retain talent, company has adopted effective and employee friendly policies.

Although the company is a backward integrated company, expanding into new businesses or new geographies exposes it to new risks, such as low levels of familiarity with the development of properties in the specific area or market for new project development. Competitors may not only be better known in these markets but may also enjoy better relationships with vendors/ suppliers/ landowners/ joint-venture partners and customers.

Taking calculated risks is a part of all businesses. A business growth depends on the Companys ability to absorb the risks related to the sector. After a careful evaluation of the risks, SOBHA has been steadily expanding its geographic presence in the real estate domain. This diversification has reduced its dependency on a single market, Bengaluru, which at one point accounted for all its sales. Bengaluru now contributes about 65 per cent of its sales.

Companys foray into new geographies is based on a thorough analysis of prevailing market conditions and the regulatory environment. Several contractual projects have been successfully executed in different cities across India and hence, there is a good understanding of the local factors at play. The Company also engages locally available workforce resources.

The company uses an Enterprise Resource Planning system for integrating its core and backend activities like architecture, engineering, projects, and costing. A breakdown of existing IT systems or a delay in implementation could disrupt the Companys ability to track, record and analyse the work in progress, or result in the loss of valuable data. These risks relate to the following:

• System capability

• System reliability

• Data integrity risks

• Coordinating and interfacing risks

• Information Security

The company has a strong IT team to support all IT-related matters. The Company has also begun implementing the new ERP system, wherein we have done away with redundant and non-value add processes to make us more agile; optimized processes that help reduce time in decision making; identified roadblocks that came in the way of taking quicker and relevant actions; cleaned up thousands of data fields and data sets that affected data integrity; and introduced new and robust processes that make us more efficient as a team and work with greater speed.

As a customer-centric organization, we need to regularly give updates to customers, interact with third parties, and service providers. Today, a lot of emphasis is given to realtime information, which inadvertently means exposing our system and data to the outside world. Although a lot of care is taken through digital certification and methodologies, there continue to remain concerns over different security risks associated with it.

The company has strong IT infrastructure to support the increased usage of digital platforms and combat cybersecurity threats. The Company provides continuous training and education to employees on cybersecurity to minimise the occurrence of any threat.