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PROPOSAL FOR A NEW MARKETING STRATEGY FOR TNPL

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Boating/Pleasure Boating/Yachting Industry & its Evolution in India

Italian Trade Commission, Mumbai


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India overview


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Geography

  • Total Area : 3.28 million sq km

  • Land Boundaries : 14,103 km

  • 29 States & 6 Union Territories

  • Long coastline of 7,517 kilometers (4,671 miles)

    • Indian Ocean on the south

    • Arabian Sea on the west

    • Bay of Bengal on the east

  • The mainland coast consists of

    • 43% sandy beaches

    • 11% rocky coast including cliffs

    • 46% mudflats or marshy coast

  • Geography and Coast line


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    Population and Demographics

    • India is second most populous country in the world with a population of 1.17 billion

    • Population growth rate is 1.548%

      • Young country - 35% population under 15 yrs; 75% under 40 years

    • Gender ratio- 933 females to 1000 males

    • Literacy rate is 64.8% (53.7% for females and 75.3% for males).

    • About one-fourth of the population (0.28 billion) lives in urban areas.

      • National Language : Hindi, spoken by 33% population; 14 officially recognized languages

      • English: widely used in business and everyday life

    Population and Demographics

    Source: Census of India


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    Income wise distribution of households

    Income Groupings

    Annual household income of Rs 1 million and above (> US$ 22,000 in nominal terms, and $ 115,000 in PPP terms)

    Annual income of Rs 0.2 -0.5 million (US$ 4,500-11,000 in nominal terms, and $ 23,000-58,000 in PPP terms)

    Families living in poverty conditions, with very low disposable income

    Annual income ranging from Rs 0.5 to Rs. 1 million (US$ 11,000 to 22,000 in nominal terms, and $ 58,000-115,000 in PPP terms)

    Source: NCAER - India’s premier economics research agency


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    No. of households with income > Rs. 1 million (in major cities)

    Income Groupings

    High Net worth Individuals (HNIs)

    • India has over 120,000 HNIs

    • The average net worth of the Indian HNIs has gone up to $3.6 million, compared to the global average of $4 million.

    • India recorded the fastest growth in the HNI population worldwide in 2007-08, growing by more than 23%.

    • India also has over 1,080 Ultra-High Net worth Individuals (individuals with an investible surplus exceeding US$30 million), whose combined wealth was estimated to be $ 116 billion at the end of 2007

    • Per capita income in 2008-09 - Rs 31,278.

    • Wealthiest cities: Mumbai, Delhi, Kolkata Chennai and Hyderabad / Bangalore

    • 150,000 households with annual income > Rs. 5 mn (75,000 euros)

    • 25% of population is below poverty line

    Source: Skyline India, World Wealth Report, prepared by Merrill Lynch and Cap Gemini


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    Indian Economy

    • GDP growth average 8.8% from 2003-04 to 2007-08 (over 6% in 2008-09)

    • Increasing importance of trade and external capital inflows. The share of merchandise trade increased to over 35% of GDP in 2007-08 from 23.7% in 2003-04.

    • The 11th five year plan (2007-12) targets 8-10% growth per year for Indian economy.


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    Pleasure Boating & Yachting Industry


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    Yachts Nomenclature

    Pleasure Boating & Yachting Industry

    • A yacht is a recreational boat that covers two different classes of watercraft:

    • Sailing Yachts:

      • Sailing Yachts range in overall length from about 20 ft (6 m) to well over 100 ft (30 m).

      • The motive force being the wind which makes sailing more economical and environmentally friendly

    • Power Yachts:

      • Motor yachts typically have one or two internal combustion engines that burn diesel fuel making it more expensive to operate than sailing yachts.

    In western markets, yachts are classified according to 5 major categories:

    Due to the unorganized nature of the Indian yacht industry, the classifications are different:- Small Boats, Dhow class, Sail boats, Large Motor Boats, Speed motor Boats, Sailing yachts


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    Origin & Evolution in India

    Pleasure Boating & Yachting Industry


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    Market size

    Pleasure Boating & Yachting Industry

    • As of 2008, 300 boats were registered in India:

      • 120 luxury yachts & 150 speed boats

      • Almost 200 boats and about 50 yachts in Mumbai and Goa

      • Foreign brands had a dominant share

    • Now, approximately 120 boats are sold every year, of which more than 80% are speed boats

    • Popular sizes range from 15ft to 35 ft in overall length.

    • Wide price range - from Rs 3 million for speed boats to over Rs 1 billion for super luxury yachts

    Current revenue estimated to range from Rs 1.5 billion to Rs 5 billion per year, depending on which types of luxury yachts get sold in the year

    For instance, in 2007-08, a single Ferretti accounted for almost 50% of the value of boats sold in India

    The industry is growing at more than 100% p.a. in value terms

    - Share of luxury yachts expected to increase over the years


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    IMPORTS

    In 2007-08, Italy was by far the leading source of imports (with 24.4% share), followed by USA, UAE and other European countries.

    Above data also supports the industry feedback that the demand for yachts in India has increased exponentially in the last two years

    Source: Ministry of Commerce and Industry


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    Major destinations

    Pleasure Boating & Yachting Industry

    • Location is a key element and constraint in the development of yachting as a national phenomenon in India

    • At present, Mumbai, Goa and Kochi are the only yachting destinations in India

    Kochi

    Goa

    Mumbai

    • The maritime gateway for peninsular India and one of the best ports in Asia.

    • Strategically located on the busy international sea route

      • 11 nautical miles from the Gulf-Singapore-Far East route

      • 70 nautical miles off Suez-Singapore-Far East

    • During 2009-10, more than 50 luxury ships touched Kochi

    • Goa is known as a “Tourist Paradise",

    • A firm favorite with travelers around the world - 12% of all foreign tourist arrivals in India.

    • Close to Mumbai

    • Biggest location for yachting in India.

    • Has a strong boating heritage with three sailing clubs

    • Natural harbor withmiles of sheltered coastline

    • Geographical proximity to another yachting hub, Dubai

    • Prior to the boat show in February/March 2007, there were around 20-30 pleasure boats but since then the number has increased to more than 100.


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    Yachting Destinations in India


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    Marinas

    Pleasure Boating & Yachting Industry

    Absence of marinas is the biggest challenge and constraint before the Indian yacht industry.

    Uneven sea and high concentration of pollutants, particularly sulphur, has made potential coastal suburbs devoid of any docking facilities for large ships or even water sports.

    • High political sensitivity, greater priority always given to fishermen for allocation of harbor space.

    • The best waters around Mumbai city have already been taken over by local fishermen and would require huge compensations to be taken over for marinas

    No national or state level policy for marinas, anywhere in India, presents major risks for entrepreneurs who wish to develop marinas in India.

    People didn’t buy yachts because they never had a proper docking place for their yacht

    Vicious circle

    While no developer wanted to develop marina as they never saw enough demand from boat owners.


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    Factors for growth


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    The Kochi International Marina

    • India's first ‘world class’ Marina commissioned at Kochi in April 2010

    • Located between Kochi Marine Drive and Bolgatty Island

    • Built at a cost of Rs 82 million, designed and developed by Ocean Blue Marinas

    • Capacity: Currently, it has docking, storage, maintenance and other facilities for berthing 34 yachts. In the second phase, to be expanded to accommodate 50 yachts

    • Other facilities: Marina house (with 24 rooms, including 4 suites), a health club, caféteria and recreation facilities, and a golf course

    Marinas and other infrastructure

    Some serious recent attempts have been made to set up marinas in India

    • Maharashtra Maritime Board has come up with a draft legislation on regulatory framework required to set up a marinas in the state of Maharashtra.

    • The naval base off the Mumbai harbour may soon have a marina. The total cost of the project is estimated to be Rs 18 billion.

    • Ocean Blue Marinas, which had set up a modern marina for the Mumbai boat show, has 15 projects in Goa, Kochi, and Chennai and along the coasts of Maharashtra and Gujarat.

    • A business tycoon from Goa is planning to build a 300-boat marina in Sancoale village, in Mormugao Taluka, at the mouth of the Zuari River in Goa with an investment of Rs 1 billion.


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    • Tourism being aggressively promoted by Govt.

    • Foreign Tourist Arrivals (FTAs) increased from 2.38 million in 2002 to 5.11 million 2009

    • Foreign Exchange Earnings (FEEs) from tourism increased from Rs. 150 billion in 2002 to Rs. 549 billion in 2009

    • Niche tourism like heliport tourism, medical tourism, wellness tourism, adventure tourism, cruise tourism and caravan tourism have been on the rise

    • Decline in FTAs in 2009 by 3.3% over previous year (world average decline 4.6%)

    Tourism Promotion


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    • The Cruise Shipping Policy (Ministry of Shipping) was approved on 26th June, 2008, aimed at

      • making India a cruise tourism destination with state-of-the-art infrastructure and other facilities

      • to attract the right segment of the foreign tourists

      • to popularize cruise shipping with Indian tourists;

    • Tax exemptions for the cruise operators

    • The Ministry sanctioned Rs.145 million in 2008-09 to Cochin Port Trust for Cruise Tourism infrastructure development at Cochin Port

    • increase in Cruise Arrivals

    • Mumbai Port handled 66,681 domestic and 24,400 international tourists for cruise shipping in 2008

    • Over 48% increase in international cruise vessels at Indian ports, and a hike of 28 per cent in cruise liners which operate only within Indian ports, catering mostly to domestic tourists

    Cruise Tourism


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    Rising Income Levels

    Rising Income Levels

    • Number of salaried taxpayers earning more than Rs 10 million has grown at a CAGR of 65% over the past two years touching 5,000 in fiscal 2008.

    • High rate of growth of High Net Worth individuals


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    • The Boat India Show 2008 was held at Kochi

    • The popular Volvo Ocean Race stopped by at Kochi for a fortnight, Dec 1-14, 2008

    • Vasco da Gama Rally 2009-10: The last leg from Mumbai to Goa was flagged off on 26th of April 2010. The rally starting from Alanya Marina in Turkey in October 2009, has yachts varying in size from 9 m to 17 m from Holland France, USA, Italy, UK, Germany, Belgium, Switzerland, Italy and France

    • People have spent close to Rs 4 billion on pleasure boats since Mumbai hosted India’s first international boat exhibition – signifying the influence these shows have had in India

    • The makeshift marina near the Gateway of India which had 20-30 boats earlier now has 100 boats.

    • Events such as the Volvo Ocean Race 2009, the boat India 2008 have done a great deal in enhancing India’s position as a major shipping destination

    High Visibility Through Major Events


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    Ownership profile


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    • Majority of the boats (75%) are owned by Individuals

      • 50% of the owners are in the age group of 40-60 years while another 33% are 60 years +

      • With fractional ownership concept gaining ground, bulk of the owners are CEOs/Partners/Owners of companies

    • Speed boats with overall length less than 31 ft are most preferred

    • 95% of boats are purchased as luxury boats; only 5% are ‘utility boats’ – mostly in and around Mumbai

    Ownership Pattern

    • 25% boats owned by corporates (UB group, Indiabulls Financial Services, Ispat Inc (L N Mittal), Essar Steel, Reliance-ADAG…)

    Source: Royal Bombay Yacht Club, Interviews


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    Owns the 95 m long (311 ft) Indian Empress costing approximately Rs 4.43 billion. Indian Empress is largely used for his private parties.

    The Indian ‘Yacht Club’ (WHO’s WHO)

    Vijay Mallya Chairman, UB Group

    Owns India’s first indigenously designed yacht—MY Ashena, a tri-deck luxury yacht. It’s one of the few in the world that is entirely made of wood.

    Gautam Singhania CMD, Raymond

    Purchased a 34 meter super luxury yacht from Italy, costing approx. Rs. 4 billion. The yacht has about 5500 sq.m. area across upper and lower decks.

    Anil Ambani, Chairman of Reliance- ADAG

    This famous celebrity recently bought a private yacht worth Rs 2.5-3 crore.

    Salman Khan, popular Bollywood star

    Sold a 50 footer Sunseeker, which he picked up in London in 2008. He also bought another 84 footer (The Sunseeker 80)

    Riyhad Kundanmal Director, Ocean Crest Marine


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    • Mumbai accounts for 60% of the pleasure boats in India. The Gateway of India in Mumbai, caters to almost 200 boats of various sizes and shapes.

    • Besides Mumbai, Goa and Kochi, the number of yachts owners in non-coastal cities like New Delhi and Hyderabad is increasing

    Usage Pattern

    • Luxury boats are valued and fully utilized by their owners.

    • Boat owners who don’t use the vessels often, offer their boats on charter in order to cover maintenance costs.

    Source: Field Survey interview


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    Market Segmentation: Demand Side

    • 30% of the owners rate maintenance provision as their top selection priority.

    • Pleasure boats particularly super luxury products have a high maintenance cost, generally ranging from 5 to 15% of the price tag.

    Source: Field Survey interview


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    Time Sharing

    forms of ownership

    • Time sharing is a membership based system in which members are allocated specific number of usage hours during the assigned period.

    • These memberships are not transferrable and non extendable and have no right on the yacht

    Club Privada, with 48 members, is India’s first luxury boat club to launch the time sharing concept. The Club offers time share options with a choice of yachts, including super luxury $2 million Azimut 50 and Larson Cabrio 350.

    The Azimut 50 costs Rs. 3.1 million for 30 days over three years

    Cabrio 350 costs Rs. 1.6 million for 13 days every year for three years

    The club recently initiated a Points System wherein 500 points are given to the members for Rs 0.5 million lump sum payment, which in turn can be redeemed on an hourly basis as per requirement.

    Source: Field Survey interview, Yachting Association of India Joint Secretary General, Commodore Ajay Narang


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    Fractional Ownership

    forms of ownership

    The yacht is shared typically 5-6 persons, one ‘owner’ member and other ‘sharer’ members

    Aquasail is a company that promotes fractional ownership. The contract between Aquasail & an Owner is typically for a 5 year period. Aquasail manages all the maintenance and running costs for the boat through the period of the contract while customer also receives annual payments.

    Many dealers have started approaching clients with this proposition.

    • Benefits of fractional ownership:

    • The member gets to use high quality boat without paying full purchase & maintenance costs.

    • No hassles of maintenance, servicing since all are taken care of by the maintenance company.

    • Members also have the right to sell their share at any point of time.

    • Together owners can rent the yacht during extra days too and share profit.

    • Problems faced under fractional ownership:

    • Diverging budgetary preferences

    • Free riding among the members

    • Simplistic and inflexible scheduling agreements

    • Differences in willingness to do maintenance

    • Poor asset care and use

    • Lack of communication between owners


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    Charter Services

    forms of ownership

    • While investing in a yacht, one important factor to bear in mind is its potential for charters

    • By chartering a yacht for about 10 weeks a year, the owners can pay operating expenses for a full year

    • Club Privada has entered into charter market, by renting yacht facilities for Rs.150,00 -Rs.30,000 per hour for 8-12 people occupancy.

    • Vijay Mallaya, of UB group, charters his mega yacht, which costs about $700,000 a week.

    • License to charter can only be obtained at the time of purchase of the yacht when it is registered with the concern authorities in India

    Financing & Insurance

    • Indian financial institutions have not yet adopted marine financing options.

    • The only bank active in this field is Yes Bank, where in a dedicated team is handling this.

    • Usually all insurance companies provide marine insurance

    • Hull insurance policy in India is not too much conclusive, it has been taken from Europe but when compared to environmental variance and sea conditions in Europe and India, there is a vast difference


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    supply side scenario


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    Market Segmentation: supply side

    • Most yacht manufacturing companies operate through a dealer model

    • Dealers are usually people well renowned in sailing circles and their own links and contacts play an important role in lead conversion

    • The scenario is no different in India where almost all foreign manufactures have a presence through dealers, and operate on multi brand models

    • The absence of multiple dealers of a particular brand and the fact that the market is value driven enables the customer to enjoy a good scope of bargaining

    .

    Recently, dealers have started giving discounts and reducing their margins to increase sales. Starting from a target margin of about 30%, the dealers usually settle for a margin as low as 8%, depending upon the client’s bargaining power and the dealer’s urgency to make a sale


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    Market Segmentation: supply side

    Key tactics – Sales generation

    • Word of mouth publicity is the most effective method of sales generation, accounting for 49% of the sales.

    • Exhibitions and Boat Shows are a recent development in India and are likely to emerge as an important avenue for sales generation.

    Key Attributes in a Dealer

    • 50% of the customers identify dealers according to the brands that they deal in

    • Only 20% choose on the basis of the maintenance and services offered.

    Source: Field Survey interview


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    Market Presence of Major Manufacturers

    Although the official import statistics indicate that Italian companies have about 25% market share, the feedback received from industry players during primary research, puts the share of Italian companies at a dominant 45% in value terms.

    Source: Field Survey interview


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    Gulf Craft Inc.

    • Operating since 1982 in UAE, the company holds a pre-eminent position in the global leisure marine market offering a wide array of products.

    • Six sales were recorded through them during 2007-08.

    • Manufactures high speed boats and yachts, ranging from 30 – 140 feet, with an annual production of 600 boats.

    • Exports more than 70 % of its output and its super-luxury vessels are to be found in virtually every major harbour of the world.

    • Gulf craft has product range under 3 distinct brands - the Majesty, SilverCraft and Oryx range of boats and mega-yachts.

    • West Coast Marine is their exclusive dealer

    Sealine

    • Founded in 1972, Sealine is currently one of Europe's largest luxury boat builders, producing over 300 boats a year.

    • Its product range comprises Sports Cruisers (25’-47’) and Fly bridges (34’-60’).

      • T series

      • F series

      • S series (entry level S25 to the commanding SC47)

    • With international sales and dealer network comprising over 40 dealers, Sealine has representation across the globe.

    Maxum

    • A Brunswick Corporation brand and a member of the Brunswick Boat Group, Maxum is the acknowledged leader in recreational boating for more than 15 years.

    • Maxum boats pass through the popular PRO® System which ensures highest quality parts and manufacturing processes at the best prices.

    • Maxum is known for manufacturing the following types of yachts:

      • Speed boats

      • Sport Cruisers

      • Sport Yachts

    Ferretti

    • With a current production run of around 60 units, this Italian group is focusing on top-end yacht including Fly bridge.

    • 460 (46’) and 550 were the first two motor yachts delivered by Ferretti and were the first luxury motor yachts to arrive In India.

    • Recently set up shop in India through Marine Solutions, India’s premier yacht retail company.

    • Group consists of about 10 design and production companies including Pershing S.p.A, Itama Cantieri Navali S.p.A, Riva S.p.A. among others.

    Profiling of Major Manufacturers


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    Azimut

    • Azimut which is positioned as the epitome of luxury , has a range of around 300 nautical miles

    • Amerglass, a modern Dutch shipyard producing boats in fiberglass are their dealers. Products consisted of sailing boats, motor cruisers and finally motor yachts from different makers: British Powles, Westerly

    • The product of a joint-venture with Amerglass, the first fiberglass motor cruiser developed, the AZ 43 BALI, was an instant success.

    • Models available are: Fly- 39E, 42E, 43, 46E, 47, 50, 55E, 62E, 68E, 75, 80, 85, 98, 105,116; Open- 103S

    • Sorenstam Ventures and New Wave are two among few dealers of the yacht manufacturer.

    Princess Yachts

    • British motor yacht maker based in the city of Plymouth, Devon, England.

    • Founded in Plymouth in 1965 as Marine Projects (Plymouth) Ltd, it was bought in 1981 by South African businessman Graham J. Beck, who sold the business to French businessman Bernard Arnualt's investment group, L Capital, a division of LVMH for £200million in June 2008.

    • Their current model program includes a series of flybridge yachts ranging from the Princess 42 at 44 feet, 3 inches (13,5 metres) to the Princess 95 at 95 feet 3 inches (29,3 metres), and a series of sporting yachts, designated as V-Boats and ranging from 42 to 85 feet.

    Nautilus Yachts

    • Kochi based yacht manufacturing company manufacturing high-powered air-conditioned single cabin boats of 16 feet costing Rs.1-2 million as well as ones costing more than Rs.20 million with more cabins and electronic fish-finders.

    • Kochi based yacht manufacturing company

    • It manufactures high-powered air-conditioned single cabin boats of 16 feet costing Rs.1-2 million as well as ones costing more than Rs.20 million with more cabins and electronic fish-finders.

    Aicon

    • The Aicon Group is one of the most dynamic operators in the design, construction and commercialization of Fly bridge and Open yachts, both in Italy and abroad.

    • Launched only on 1999, Aicon has established itself as one of the major Italian operators in this sector with a strong presence in Europe, and, more recently the United States and China.

    • Dealer network covers the USA, the EMEA countries (Europe, the Middle East and Africa), Russia and Asia

    • Available in India in open boats and flybridge version.

    Profiling of Major Manufacturers

    Grady White Boats

    • One of the most successful boatbuilding companies in the world since 1959, Grady-White Boats has a legendary reputation for designing and producing outstanding fiberglass boats.

    • Dealer: New Wave takes care of its sales in India.


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    Bayliner

    • Leading manufacturer of recreational boats established in 1957.

    • company operates as a subsidiary of Brunswick Corporation, which acquired Bayliner's former parent company US Marine in 1986.

    • Bayliner facilities are located in Pipestone, Minnesota, Roseburg, Oregon, and Cumberland, Maryland, in the United States; and in Reynosa, Tamaulipas, in Mexico.

    Sunseeker International

    • UK luxury motor yacht manufacturer. .

    • Their headquarters and assembly factory is in Poole Harbour, at Poole in Dorset, England. The company has been making motor boats since 1979.

    Sea Ray

    • A brand of pleasure boats owned by the Brunswick Corporation.

    • It was founded as an independent company, Ray Industries, in 1959 in Detroit, Michigan by C.N. Ray. That company was bought by Brunswick for $350 million in 1986.

    • At the time, the purchase made Brunswick the largest pleasure boat producer in the world.

    M&M Yachts:

    • Exclusive dealers to Riva yachts, often known as ‘pride of Ferretti group.

    New Wave

    • Deals with yachting, power boats or water sports from various brands like Azimut, Cobalt boats, Larson, Grady white.

    • Assist customers with certification by authorities, insurance, transportation to India, customs, commissioning and other regulatory issues.

    • tied up with Ocean Blue Boating Services Pvt. Ltd. (OBBSPL) for servicing and maintenance

    • OBBSPL currently is based out of Dharamtar, Alibaug, with a 10,000 sq/ft waterfront, all weather workshop and storage facility with capabilities to perform the basic services to a full yacht refurbishment.

    • OBBSPL offers a 24-hour call service for Break Down and towing Service around the Mumbai area.

    Aquasail

    • Founded in 2004 by Shakeel Kudrolli, India’s premier yachtsman.

    • Aquasail has established itself in the market by forging several tie ups with some of the world’s best brands, bringing a range of dinghies, power and sail boats to India.

    • The brands that Aquasail represent are the World’s leaders in their categories like Laser Performance, Hobie Catamarans and Kayaks, NeilPryde Windsurfing and Cabrinha Kiteboarding. T

    • he highly desirable Beneteau with its sleek French design and luxurious interiors is the ultimate style statement in sailing yachts & powerboats.

    Profiling of Major Manufacturers


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    Marine Solutions

    • Established in 2001, Marine Solutions is India's first professionally managed company dedicated to the leisure boating industry.

    • Represents premier international brands in every category of the boating business in India. Some models include Ferretti Yachts, Custom Line and Mochi Craft among others

    • Marine Solutions has sales and service offices in Mumbai, Goa and Kolkata; engine workshop in Cotton Green, Bombay; and boat yard in Mora, 15 minutes by speed boat from Mumbai.

    • Offers clients exclusive service at the Panjim Yacht Station in Goa and at moorings off the Gateway of India in Mumbai.

    Aquamarine Services

    • The company is exclusive distributors of U.K based Princess Yachts in India.

    • Provides a seamless ownership experience for customers including boat selection with tailor made specifications, registrations, crew, management and maintenance.

    • Offersluxury charter services on Princess Flybridge yachts and fractional ownership programs on a range of Princess Yachts.

    West Coast Marine

    • The companystarted in 1994, it has 156 employees, enjoys 75% market share in servicing the yachts and 30% in sales.

    • The company focuses more on service as they are managing 110 yachts as of now in Mumbai.

    • Company operates on backward integration model i.e. they create their brand name through after sales service they provide to their customers.

    • They also provide yacht financing in association with Yes Bank. Majesty Yachts, North Star, Hanse, Silver Craft are few brands which the dealer caters to.

    Infinity Yachts

    • Infinity Yachts is a division of Infinity Group.

    • The Group, through its division Infinity cars has a proven expertise in dealership and services for high end, lifestyle vehicle brands.

    • Infinity Yachts represents Maxum (entry level sports cruiser) and Sealine (sports cruiser & flybridge) which belong to Brunswick and Aicon (luxury motor yacht) from Italy. These brands are among the global leaders in their size segment.

    Leading Yacht Dealers

    Ocean Crest Marine

    Larson Boats

    • Larson Boats founded in 1913 deals in the manufacture of the most affordable and dependable boats.

    • Larson offers 24 models ranging from 18' to 37'.

    • Sorenstam (Dadar, Mumbai) is the dealer taking care of its sales in India.

    • Ocean Crest Marine currently has outlets in Dharamtar creek and Revas port in Mandwa.

    • A showroom in South Mumbai is also in the offering.


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    Regulatory Framework


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    Government policy

    Regulatory Framework

    • Indian Pleasure boat industry is covered by Inland Vessels Act

    • As there are no specific rules and regulations designated for pleasure boats in India, the owners face regulations applicable to carriers or cargo vessels.

    • The Cruise Shipping Policy (Ministry of Shipping) was approved on 26th June, 2008, aimed at

      • making India a cruise tourism destination with state-of-the-art infrastructure and other facilities

      • to attract the right segment of the foreign tourists

      • to popularize cruise shipping with Indian tourists;

    Registration

    • Registration is one of the most important aspects of yacht ownership, mandatory for motor boats

    • Any vessel which has provision for sailing does not require registration by law, however registration is practiced in all cases for easy navigation.

    • Vessels under 15 tonnes have been exempted and thus do not require registration with any authority.

    • Commercial liners are registered with the Director General of Shipping and smaller coastal or inland water vessels are registered with the respective State Maritime Boards

    According to Daily News Analysis the total no of boats registered till 2007 was 269 an increase of 73 over previous year’s 196. However primary sources estimate that approximately 120 boats are sold every year, which shows that not all are registered.


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    Maharashtra Maritime Board

    Regulatory Framework

    • Maharashtra Maritime Board is the nodal agency that takes care of the regulatory and developmental framework of the state's maritime activities.

    • The board has taken a number of initiatives - development of the marine front including setting up of several cargo jetties, ferry wharfs, larger port terminals, inland water transport system, shipyards etc

    • MMB ports which are supported by 400 employees across five regional offices. presently handle 10 percent of the total cargo handled by minor ports in the country.

    • As boats are not compulsorily registered with any authority, there is no checking of the log books, verification of the men working on it.


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    Import Duty

    Regulatory Framework

    • Imports of Yachts and other vessels for pleasure or sports attract Custom Duty at a rate of 34.13%.

    • However, when the owner shows it as a tool to business, the custom duty is zero.

    Taxes

    • Mumbai, which has the highest concentration of yachts in India, levies 5.5% Octroi on yachts and pleasure boats.

    • There is no Octroi in Goa.


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    The Yachting Association of India (YAI)

    Industry Bodies

    • Formally constituted on 15 May 1960

    • Recognized as the governing authority for sailing, windsurfing, motor boating, powerboat racing and personal watercraft, at sea and on inland waters in India

    • Affiliated to the International Sailing Federation (ISAF), which is recognised by the International Olympic Committee (IOC) as the governing authority for sailing worldwide

    • Currently 14 class associations affiliated to the YAI

    • Currently 40 clubs affiliated to the YAI, spread over the various parts of the country.

    Indian Olympic Association

    • IOA the apex Sports Organization of Olympic Sport in the country

    • Each Olympic and Non-Olympic Sport has a Federation at the National level and is affiliated/recognized to/ by IOA.


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    Regulatory Framework: Industry Bodies

    The Royal Bombay Yacht Club (RBYC)

    • Founded in 1846, holds its importance in terms of the registrations and services offered.

    • The total no. of boats registered with them was 185 of which speed boats were the dominant category

    • The RBYC has what's called a Seabird Class of Boats and their sister club, the Colaba Sailing Club has a Lightning Class of boats..

    Source: Royal Bombay Yacht Club


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    Demand Potential


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    Demand according to the present scenario

    Demand Potential

    • The potential demand for yachts and pleasure boats in India over the next 10 years is estimated by two methods:

      • Growing universe of the individual buyers

      • Yachts as a part of the expanding luxury market

    Growing universe of Individual buyers

    3 crucial components comprising the universe:

    • HNIs

    • The HNI population as of December 2007 stands at 0.12 million, growing at a CAGR of 19% p.a

    • CEOs/MDs

    • Universe is limited only to the CEOs and MDs of top 100 BSE listed companies earning over Rs 10 million a year. This segment has been growing at 22%p.a. since last three years(2006-08).

    • BOLLYWOOD CELEBRITIES & SPORTSPERSONS

    • This section of the universe is pegged to grow at a CAGR of 20% p.a.


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    • The total size of the universe as of 2008 was 0.120 million.

    • According to industry sources, approximately 120 boats are sold every year, indicating that only 0.1% of the universe buys boat every year.

    Demand Potential: Growing universe of the individual buyers

    The yacht industry would be able to sell approximately 4300 boats over a decade (2008-2018).


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    Demand Potential: Yachts as a part of the expanding luxury market

    Yachts as a part of the expanding luxury market

    • Luxury goods market in India was pegged at USD 4.35 billion in 2006 which is expected to triple to 14.35 billion in 2010.

    • According to Daily News Analysis the total no of boats registered till 2006 was 196.

    • As per primary research 95% of the boats are sold for luxury purposes, which mean that 186 boats cater to the luxury market.

    • Given the value of the luxury goods market in 2006 and assuming the average price of boat to be Rs 5 million, the share of the yacht industry in luxury goods market is estimated to be 0.54%.


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    The luxury goods market is pegged to reach US$ 14.35 billion in 2010

    Demand Potential: Yachts as a part of the expanding luxury market

    Using the share of the yacht industry in luxury market as obtained from 2006 data

    The estimated size of the luxury yacht market in 2010 would be US$ 71.75 million, which translates into a total of 574 boats in 2010

    Assuming a similar trend to continue for the following eight years, the total no. boats in the market is projected to touch approximately 4,800

    Considering both the methods, an average figure of 4500 boats seems to be a realistic estimate for the year 2018.


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    Potential demand

    Demand Potential

    Assuming that the industry is no longer constrained by infrastructure and regulatory issues,

    Given the assumptions and taking into account increasing awareness, a realistic estimate of at least 0.3% of the universe buying a boat every year seems possible.

    Accordingly, the Indian market offers a potential for sales of around 13,000 boats over the next ten years.


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    CONCLUSIONS & RECOMMENDATIONS


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    Conclusions

    Conclusions

    • Indian Pleasure boating and Yachting industry is still in a nascent stage of development, with only about 300 boats registered

    • Currently reported to be growing at more than 100% per year, both in volume and value terms

    • The main factors driving the growth of the Indian market are rising income levels and the increasing number of high/ultra-high net worth individuals in India; increasing popularity of cruise tourism, and organization of boat shows, exhibitions and other promotional events.

    • Several new marinas are in planning/implementation state, which will a large extent address the problem of inadequate infrastructure,

    • In terms of market presence of manufacturers, Italian companies have a 45% market share, followed by UAE based companies (25%) and other European companies.

    • The growth of the market is constrained to an extent, due to lack of regulatory framework, both at the central as well as state level.

    • Based on the present market scenario, with estimated sales of about 120 boats a year in the recent years, the demand for additional boats over the next 10 years, i.e. 2009 to 2018 is projected to be about 4500 numbers.

    • However, in a likely scenario of regulatory and infrastructure issues being adequately addressed, the total potential demand could be 13,000 boats over the next 10 years.


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    Recommendations

    RECOMMENDATIONS

    • Selection and appointment of dealers is the key to success

    • High visibility in the market, through active participation in boat shows, exhibitions and trade promotion events is extremely important to create brand awareness.

    • While having a presence in key locations like Mumbai, Goa and Kochi is essential, it is also important target non coastal cities as well

    • Offering a package of fractional ownership options or financing tie-up with a bank can be a strong USP.

    • Provision of maintenance and boat management services

    • Developing the pre-owned yacht market could be a unique niche in the Indian market. In world boating industry, about 42% of all new boats are sold by the first owner within seven years.


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