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We are looking to replicate the Dubai model in Mumbai: PNC Menon

PNC Menon and son Ravi of the Sobha Group will focus on Dubai, US and India in the next 15 years

Manu Balachandran
Published: Jul 17, 2024 01:45:43 PM IST
Updated: Jul 18, 2024 02:53:02 PM IST

PNC Menon, founder, Sobha Group
Image: Vikas KhotPNC Menon, founder, Sobha Group Image: Vikas Khot

Since he first forayed into India’s real estate sector in 1995, PNC Menon has built the Sobha Group, named after his wife, into a global luxury real estate powerhouse. His Sobha Limited, the Indian arm, has a market capitalisation in excess of ₹20,000 crore while his Dubai-based Sobha Realty clocks in annual revenues of AED 6.5 billion, emerging as the third largest real estate player in Dubai in less than a decade.

Much of Menon’s success has been attributed to the group’s backward integration model, something he claims has been recognised as a case study at Harvard Business School. Under the model, the company manufactures everything from facades to furniture and concrete, and has phased out outsourced vendors typical for real estate developers to ensure quality and timely completion.

 

In an interview with Forbes India at Sobha Hartland, the group’s flagship property in Dubai, Menon and his son, Ravi PNC Menon, chairman of Sobha Limited and co-chairman of Sobha Realty, spoke about the group’s India expansion plans, foray into the US, and jewellery business. Excerpts:

Q. How do you look back at your journey, beginning from Palakkad in Kerala? 

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PNC Menon: I was born in Palakkad in Kerala. My father was in business, and he passed away when I was 10. I dropped out of university and came to Oman when I was 27. In Kerala, I had accidentally met somebody from Oman, and that became a partnership for a long period. It was a lot of struggle because I had only $7.5 when I came here. From there, it has been a tough and good journey. The turning point was when we started in India. That has grown to a reasonably large company. And then we started in Dubai.  

 

Q. Do you reckon that Sobha has achieved everything it needed to? 

Menon: Currently, we do $5 billion. And the global dream is to do about $15 billion. India should be getting closer to $3.5 billion or $4 billion. So the total should be about $20 billion. We will soon be starting in the US. I’ve come to an international market (Dubai), and done very well. When I came to Oman, I was shocked to see what was happening around me. I went to a hotel and they were putting up a false ceiling. I had not seen anything like that. So I learnt everything on the ground. 

That inquisitiveness continues. I still want to know certain things and learning is never-ending. Of course, you need a vision. Officially, I’m retiring at the end of this year. But I will not retire. I’ve got the designation of chairman emeritus, so I will do that plus we are expanding to other areas. One is in furniture and the other is jewellery.  

 

Q. Why jewellery?  

Menon: We have got a great brand, and we are honest. You need a lot of trust in this business. We are thinking of 17 shops in the beginning, and I’ll be hands-on. He (Ravi) will pursue real estate. 

Also read: Inside Sobha Realty's ambitious plans: From Dubai to Mumbai and the US

 

Q. Those are big shoes for you to fill, Ravi? 

Ravi Menon: It’s a long way to go for me. Every day is a challenge, so you learn something all the time.

 

Q. Are you considering expanding to other markets in the Gulf or will you only be considering the US for now?  

Menon: Dubai is good enough in the Gulf. If you look at the US, and the size of the market, it’s 9 million sq km, 330 million people and the per capita GDP is over $8,000. With all that put together, we can set the horizon to touch $15 billion. We have more or less finished our land buying. And we will be closing the deal before the end of the year. Ravi is 40 and he has a lot of time. I’m not going to be part of that.  

Q. Do you have enough brand capital in the US? 

Menon: So long as you can deliver high international standards, you can survive anywhere in this business. And we have that capability. There is a big advantage when you are backward integrated. 

 

Q. You are also making elaborate plans for Mumbai. Can you tell us about those?    

Menon: I have a dream that we have to show something which India has not seen. And that opportunity is there only in Mumbai. We are going to follow the same methodology that we do here in Dubai. When you do that, it becomes expensive. The cost will go up and the only place in India which can pay that is Mumbai. Hopefully, we should be breaking ground next year. 

Ravi: We are looking at entering Mumbai because it has several micro-markets. So we’re exploring and are quite open. Coming from doing developments in Bengaluru and some of the other places, you’re used to doing clean land. Mumbai has a different challenge. We’re still evaluating costs. We’re trying to understand and starting with a smaller development of about 300,000 sq ft.

There are a few operators, pan-India, who are operating only from Mumbai and doing large volumes. So we have a lot of hope. Hopefully, we can replicate the Dubai model and Mumbai can absorb that sort of price. 

 

Q. Across India, what is your game plan going forward? 

Menon: The target is to make sure that, in five years, we should have ₹10,000 crore of equity capital. Equity is important because it’s a cyclical business. Across the rest of India, we plan to do ₹10,000 crore of business in Delhi, ₹6,000 crore in Bengaluru, and all the others put together could be another ₹5,000 crore in four years. We are targeting ₹30,000 crore in annual sales, and Mumbai could contribute around ₹10,000 crore. 

Q India, Dubai and the US will be your focus markets now.

Menon: I don’t think we need another country apart from India, Dubai and the US. I will say that, for the next 15 years, we don’t have to look at anything else. There will be enough opportunity.  

 

Q. And what about succession?  

Menon: That’s all done. When I die, the entire thing goes to my wife. After her death, it gets divided (apart from Ravi, Menon has two daughters). Fifty percent of my wealth goes to charity. I am putting up a university in Delhi, and we are spending ₹1,200 crore. It is the first university in India where everything is free. It is only for girls, called Sobha University.

(This story appears in the 26 July, 2024 issue of Forbes India. To visit our Archives, click here.)

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