COVER STORY / P N C Menon Destination Kerala

COVER STORY / P N C Menon
14 / Destination Kerala • February 2016

Real Estate Mogul P N C Menon shares with Destination Kerala
his humble beginning, the challenges posed by business cycles,
his obsession with philanthropy and future plans
i n t e rv i e w by jose k u n n a p pa l ly
p h oto co u r t e sy: sobha group
JUGGLING
BUSINESS AND
PHILANTHROPY
WITH ELAN
February 2016 • Destination Kerala / 15

COVER STORY / P N C Menon
In March 2013, Puthan Neduvakkatt
Chenthamaraksha Menon or P
N C Menon stunned the corporate
world by pledging half of his fortune
(estimated then to be $600 mn) to
philanthropy - the first Malayali to
do so and one among very few Indians.
But making it to select lists has
always been Menon’s destiny. He has
been on the Forbes billionaires list
for many years in a row now.
From Rs. 50 in his pocket when
he landed in Oman in the 70s, Menon
has come a very long way. As
Founder and Chairman Emeritus of
one of India’s largest and the only
full-fledged backward integrated
real estate companies, Sobha Limited,
and Chairman of Middle East’s
formidable real estate conglomerate
Sobha LLC, Menon’s business
interests today span hospitality,
manufacturing, education and
retail, apart from real estate and
construction. From building royal
palaces, including one for the Sultan
of Brunei, to spectacular hotels
for Taj and ITC, and plush offices
for Infosys, HP, Dell and Biocon,
Menon has in the last four decades
established a highly respectable and
trusted brand name for Sobha, a
$900-mn business that he runs in
the name of his spouse.
Menon met Destination Kerala at
his plush villa at Dubai’s Emirates
Hills. Over cups of the best South
Indian coffee in town, he answered
all the questions posed to him with
passion and genuineness. Here are
the excerpts.
How do you see the recent rate cuts
and relaxation of FDI? Are these
enough to resuscitate the real estate
sector?
Both are good decisions to
catalyze positive market sentiment.
Ours is a cyclical business so there
is nothing new in what is happening
on the performance side. But yes,
market cycles can be unpredictable.
The critical thing is to manage
the debt to equity ratio well. As a
guiding principle, we strive to keep
debt low so that when the negative
market cycle hits, we can survive.
From three core verticals (residential,
contractual, manufacturing) now you
have a fourth vertical in commercial?
As an organisation we have not
concentrated so far on the Commercial
segment. My son Ravi (Chairman,
Sobha Limited listed on Indian
bourses) strongly believes that we
need real assets. We are targeting to
16 / Destination Kerala • February 2016

create 20 mn sq. ft. of commercial
space in the next 10 years.
Sobha City, the largest mixed use
project of its kind in your home State,
is now a reality in your home town.
What does it mean to you personally?
It is a very emotional experience
for me as I grew up in Thrissur
(though my native is Palakkad).
Sobha City is a landmark retail-real
estate destination in itself. It’s a landmark
in my life too. It is heartening
for me to see Sobha City becoming
one of the most successful projects
in Kerala.
How has the experience been? What
is the financial viability of such a
large-scale project in our State?
Lot of people thought I was
insane to do Sobha City in Thrissur
primarily because of the scale
at which we were planning this
project and the fact that I do not live
there. We bought that 60-acre land
parcel from Jose Alukkas, who is
into real estate, and was keen to sell
out. But I had a vision. In my view,
since we have a large population
living outside our State and country
with reasonably good appreciation
for high-end amenities in life, they
would be most welcoming of this
lifestyle if we can offer them even
30% of the experience they are accustomed
to abroad. However, we
have delivered 100% and they have
wholeheartedly embraced it.
Usually in family-owned businesses,
succession planning is a mess. How
did you plan so well in advance and
what does it mean for the family?
In our case, I knew Ravi will be
my successor and rightly so. Why
should one wait until one is unwell
or incapacitated? Ravi joined
the business in 2004. We worked
together for almost 10 years. When
the transition finally happened towards
the end of 2013, we were both
convinced that Ravi was fully prepared
to carry the legacy forward.
Fortunately, I remain healthy and I
am always available for any guidance
that he requires.
Looking back, was the construction of
Infosys’ first campus in Bengaluru in
2008 the real turning point?
Yes, it was a significant turning
point in our growth trajectory. I
have to say the association with Infosys
and Narayana Murthy helped
us in creating ‘brand Sobha.’ Given
our history and long-standing relationship,
we continue to build every
Infosys facility across India, and as
you are aware, these are very large
projects and among the best mega
workspaces in this part of the world.
Your group employs over 25,000
people. How many are from Kerala?
That is an old number. By the
end of 2016, as a group we will be
employing close to 50,000 people
and you can say about 15% of the
workforce is from Kerala.
P N C MENON WITH
SON RAVI P N C MENON
‘‘MY DREAM PROJECT IN KERALA IS AN ISLAND
DEVELOPMENT. VALANTHAKAD ISLAND NEAR
KOCHI IS OWNED BY US. WE ARE YET TO
RECEIVE THE PERMISSION OF THE GOVT.’’
What are the major projects planned
in Kerala?
We have two land parcels in Kochi.
The Marine Drive project is being
co-developed with Puravankara.
We will launch this project in 2017.
My dream project in Kerala is an
island development. Valanthakad Island
near Kochi is owned by us. We
have asked the Kerala Government
for permission to do an integrated
technology project which has the
potential to be a unique project the
whole nation could be proud of. We
are yet to receive the permission.
How much money have you invested
in Kerala so far?
Approximately Rs. 800-1000 crore
has been invested in Kerala so far.
Recently you forayed into hospitality.
Will we see a Strada hotel in Kerala?
Strada is a 3 & 4 star business
hotel and resort concept. Despite
the diverse base of hotel products
in today’s global markets, my team
and I view this as a very unique
product. Similar to other products
that we have created, customers will
have to experience Strada in order
to fully appreciate and understand it.
We will do at least 10 hotels outside
February 2016 • Destination Kerala / 17

COVER STORY / P N C Menon
India before we come to India which
is one of the largest markets and certainly
the one that we want to tap.
Sobha is the only real estate company
in India to undertake world-class
backward integration. How did this
thinking come about?
This was born out of necessity
more than by design. We decided to
expand to India way back in 1994.
So, 21 years ago when we were
looking at things like door frames,
aluminum composite panels or concrete
pavers, these were not meeting
our quality expectations - which we
were accustomed to in the Gulf. So,
instead of compromising on quality,
we decided to manufacture these
products for our requirements. It
was a necessity to integrate backwards.
Today, this strategy continues
to be a focal point of our business
and forms a core aspect of our differentiation,
relative to industry
peers.
Do these businesses only cater to your
needs or they serve third parties too?
How do you see their prospects?
When we started the manufacturing
division, it was to take care
of our high quality requirements to
deliver world-class projects in India.
But today, this division runs independently
and delivers about 75%
of its total output to third parties. It
is one of the standalone and selfsufficient
revenue generating entities
for the Group.
Sobha has always been known for
premium real estate. And then came
Sobha Dream Acres. What is the
rationale?
I have to admit it was a completely
different thinking and not mine. If
I had my way I would have stuck to
the premium positioning of Sobha
which I am used to. However, Ravi
had a different take. As Chairman of
Sobha Limited, he has the autonomy
to do what is best for the India business
based on market realities there.
AGE
67 years
BORN IN
Mulankot (Palakkad)
FAMILY
Wife: Sobha
Children: Bindu, Ravi, Revathy;
7 grand children
LOVES TO DO
Read; I don’t read fiction
anymore; spending time
with my grandchildren
FAVOURITE HOLIDAY
DESTINATION
I don’t holiday. London is my
most favorite place on earth
FAVORITE GADGET
I am not a gadget freak.
I use them only for
functional purposes
DRIVES
I don’t drive anymore as
I stopped when I turned 50.
I like to drive the Mercedes S500
and the Bentley Continental
FAVOURITE CUISINE
Kerala & Indian, Chinese, Italian,
Arabic – in that order
FAVOURITE MOVIE / MUSIC
I do not see movies anymore. I
love music but do not get the time.
I pray or work while commuting.
A COMPANY YOU ADMIRE
Google, FB and Apple; Infosys
A LEADER YOU ADMIRE
I compete with myself. The
Menon who is delivering is trying
to catchup with the Menon who
envisions. Let me first win there.
If not for business leaders,
I certainly admire Dubai ruler
H R H Sheikh Mohammed
Bin Rashid Al Maktoum and
Singapore’s first prime minister
late Lee Kuan Yew
With Sobha Dream Acres we created
a very high quality product pretty
quickly as it is pre-cast and offered
it at an attractive price. And it was a
spectacular success.
In retrospect, what was the most difficult
phase in your journey? 2008?
No doubt 2008 was the worst
time to be in business. I was 60 years
old then. The economic recession
was not something the world had
seen before. Those who are alive today
and in business have only heard
about The Great Depression of the
1930s. By the grace of God, we
could restructure during that time
and come out in good shape. If you
have equity of $100, you should not
borrow more than $50 is the most
important lesson I learned in 2008.
And I guess others too.
Debt stands even now at Rs. 2000 cr.
What are your plans to pare down
debt further?
I see it as growth capital which
we need considering how fast we are
growing. Instead of bringing down
debt we will take equity up, to touch
Rs. 3000 cr.
It is widely reported that Developers
are holding unsold stock of nearly 12
to 15 quarters, which should not be
more than six quarters?
I cannot comment on other
players in the real estate sector but
on the whole, I think this is exaggerating
the problem. In the case of
Sobha, I don’t think we have any unsold
stock. Many companies cannot
even afford to hold unsold inventory
of more than a few quarters. I do not
think there is finished stock in large
numbers remaining unsold as it is
not viable at all.
Are there any new announcements
that you can make now?
We are partnering with a GCC
State government for a mega integrated
township project and we
should be able to conclude the mo-
18 / Destination Kerala • February 2016

P N C MENON
WITH KIDS AT
SOBHA ACADEMY
THE COASTAL REGULATION ZONE (CRZ) ACT IS A BIG CHALLENGE IN
INDIA. ESPECIALLY IN STATES LIKE KERALA, WITH ABOUT 600 KM OF
COASTLINE, THE CRZ NORMS SHOULD BE REVISITED
dalities in six months’ time. We will
make a joint announcement soon.
Which are the signature projects
Sobha is currently executing across
the world?
Sobha Hartland is a mixed-use
freehold development in Mohammed
Bin Rashid Al Maktoum City,
3 km away from Dubai’s iconic Burj
Khalifa. Along with Meydan we are
developing the AED 35-billion Mohammed
Bin Rashid Al Maktoum
City - District One. Crystal Towers,
a twin-tower mixed-use development
located in Dubai Marina is
another.
The island project in Kerala is
something I really want to pursue
but there are some challenges that
need to be addressed in terms of
policies.
Look at Singapore which is an
island. All the development is on
the sea side. The Coastal Regulation
Zone (CRZ) Act is a big challenge
in India. Especially in States
like Kerala, with about 600 km of
coastline, the CRZ norms should be
revisited. We should be allowed to
develop our coastline with sufficient
environmental safeguards for the
benefit of our local economy.
How did you choose interior design
as your career after graduating in
Commerce?
I did not graduate as I had to
drop out of the university. My dad
was a businessman whom I lost
when I was 10. So I had to take care
of the family and I struggled to complete
my primary school education.
I believe business is in my blood.
Getting into interior designing was
not an accident per se. You can say it
was 50% accident and 50% destiny.
How did you land up in Oman and
launch Services and Trade Group?
It was an accidental meeting with
a gentleman - Brig Gen Suleiman
Al Adawy from Oman - in a hotel
lobby in Kochi. He had come to
Kochi to buy a fishing boat and I
had gone to the hotel for some other
work. We happened to talk and after
that, he said, “Ours is a new country.
There are many opportunities. Why
don’t you come over and we can do
something together?’’ After so many
years, we are still together.
When you decided to expand your
business, what were the reasons to opt
for investing in India?
When I look back, the decision to
invest in India has been one of the
greatest decisions in my business
life. India is a strong, fast growing
market for Sobha Group even
when I look at our business globally.
Sobha is decently established there.
We are in every major city in India
except Mumbai.
February 2016 • Destination Kerala / 19

COVER STORY / P N C Menon
30 schools globally in the next five
years before we look at India and
Kerala.
RECEIVING PRAVASI
BHARATIYA SAMMAN AWARD
FROM DR. PRATIBHA PATIL,
FORMER PRESIDENT OF INDIA
You have committed half of your
wealth to charity. What was your
inspiration?
I told you that I went through a
lot of tough times in my childhood.
May be that is the reason why about
35 years ago I started feeling that I
should share whatever wealth I create
with the society. I did not have
any wealth then but I had this clear
thinking. I am not doing anyone any
favor; it’s my responsibility.
What is the scale of humanitarian
work that your Group does?
This year I may be spending
about Rs.40 cr in corporate social
responsibility initiatives. My dream
is to spend every year $100 mn
(Rs.700 cr) which we hope to be able
to do in the next five years. I have
pledged half of my personal wealth
for philanthropy.
What are you plans for investment in
the education sector?
We are already into education in
the philanthropic arena. Currently,
we do this only in Kerala and we will
be expanding to Bengaluru and New
Delhi soon. As a business we are
running the Hartland International
School but that is my son-in-law’s
enterprise. We have two schools
in Dubai (one is operational now
within Sobha Hartland in Mohammed
Bin Rashid Al Maktoum City
and the second one will open for the
academic year of 2017); the third
will come up in Singapore as very
recently the government granted us
permission.The plan is to open 20-
Is Kerala, according to you, moving in
the right track with its IT and Tourismfocused
development agenda?
I am certain Kerala cannot go
into factory mode. We have to be
dependent on three sectors namely
IT, Tourism and Financial Management.
And services sector of course.
Kerala has tremendous potential in
these areas. Unfortunately, a lack
of consensus on economic development
among political parties is
retarding our growth. A common
agenda created by all political parties
for economic development is
what can do wonders for Kerala. If
this also happens at the Union Government
level then in the next 10-15
years we can become as successful as
Singapore.
How better can Kerala channelize
NRK remittance to productive investment?
We can achieve a lot if we have
a common economic agenda and
leverage the cooperative model
for channeling NRK investments.
I believe if a group of NRKs come
together and start a cooperative
funded by their personal investments,
it can do wonders in every
field. The government should limit
its role to being that of a facilitator
and regulator.
MENON WITH N R
NARAYANA MURTHY
OF INFOSYS
RECEIVING AWARD
FROM KERALA CHIEF
MINISTER OOMMEN
CHANDY
20 / Destination Kerala • February 2016

SOBHA CITY
THRISSUR
It is said you are a perfectionist to
the core. How does this manifest in
your personal life and as a business
head?
Perfectionism is probably a gene.
I do not think it is developed or
cultivated. It is an evolving trait.
Through opportunity and exposure
that gene gets perfected. I am
a stickler for time. I run a business
that is fully compliant with the laws
of the land; no shortcuts whatsoever.
I can never accept a compromise
when it comes to the quality of a
Sobha project. We have to deliver
more than what we promise. These
are some of the ways I see my perfectionism
manifest.
What does money mean to you?
There is no denying money is
very important for all of us. But
that should not be the main motivation
for business; success is more
important to me. I see money as a
by-product of my success. In that
sense it gives me happiness. If you
start chasing money, you will compromise
many things dear to you,
and success will evade you.
How does a day in the busy life of P N
C Menon look like?
I start my day at 4.50 am. I do
yoga regularly in the morning. I
reach office at 8.30 am and work all
through the day without a break. I
wind up by 8 pm and come home to
spend time with family. I indulge in
some reading and retire to bed no
later than 10 pm.
Fridays I generally do not work.
On Saturdays I work half a day with
my leadership team though our offices
are closed.
Any political aspirations?
(Laughs) I’m a citizen of Oman. I
have no political aspirations whatsoever.
WITH H R H SHEIKH
MOHAMMED BIN
RASHID AL MAKTOUM,
VICE PRESIDENT &
PRIME MINISTER OF
UAE AND RULER OF
DUBAI
February 2016 • Destination Kerala / 21