Sobha Group Real Estate: Backward Integration for Quality
From humble beginnings in Kerala, India, Mr. PNC Menon built a reputation for quality, detail, and trustworthiness, earning him major construction commissions in the Gulf region. This paved the way for venturing into real estate development in Dubai, UAE. Striving to control quality and schedule, his firm, Sobha Middle East, self-performs a wide range of tasks - an unusual set of choices in the global real estate and construction industry. In mid-2018, the 70 year old entrepreneur and his team are contemplating their longer term strategy, particularly regarding land acquisition, construction strategy, and financing. Is the backward integration model replicable and sustainable? Meanwhile, sitting in Bangalore, PNC Menon's son Ravi Menon, Chairman of publicly listed Sobha India, is facing a typical in-house versus outsource decision. Sobha India had pioneered the backward integration strategy prior to Dubai. Ravi Menon and his team are deciding on the structural system for Sobha Bellahalli complex of 5,000 apartments in Bangalore. Should they deploy a cast in place structural frame or invest in a precast concrete manufacturing plant on site? Additionally, should they purchase local ready-mix concrete or invest in their own mixing and batching plant? The cost and schedule implications will influence bidding strategy in an upcoming land joint venture. Father and son, on both sides of the continent, have a lot to think about.