Boating/Pleasure Boating/Yachting Industry & its Evolution in India Italian Trade Commission, Mumbai

India overview

Geography and Coast line 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

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 Age Group Population (est. for 2010) % share 0-4 126,352,821 10.74% 5-9 146,795,878 12.47% 10-14 142,826,236 12.14% 15-19 114,648,126 9.74% 20-24 102,691,195 8.73% 25-29 95,436,173 8.11% 30-39 165,707,919 14.08% 40-49 118,001,662 10.03% 50-59 73,492,332 6.25% 60+ 90,789,656 7.72% Total 1,176,742,000   Source: Census of India

Families living in poverty conditions, with very low disposable income 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 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) 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 Source: NCAER - India’s premier economics research agency

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 HNI – Net investible assets of 1 mn USD 2008 – no. in India came down to 84,000 Though India posted the fastest rate of growth in 2007 Source: World Wealth Report from Merrill Lynch and Capgemini 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

Indian Economy Economy Profile (2008-09) GDP at Factor Cost 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. Indian Economy Economy Profile (2008-09) GDP at Factor Cost (current prices) US$1.072 trillion Forex Reserves US$ 252 billion Exports US$ 185.3 billion Imports US$ 303.7 billion FDI inflows US$ 35.18 billion

Pleasure Boating & Yachting Industry

Pleasure Boating & Yachting Industry 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 Particulars Length Top speed Sports & Utility Boats Up to 40 ft 40 knots Small Yachts 40-80 ft 25-30 knots Super Yachts 100-200ft 15-40 knots Mega Yachts 200-300ft 20 knots Giga Yachts >300 ft

Pleasure Boating & Yachting Industry Origin & Evolution in India Pleasure Boating & Yachting Industry 1830s Yachting was introduced in the 1830s by the erstwhile Maharajas, Nawabs and Governors. The first recorded race sailed on 06 Feb 1830 in Bombay (now Mumbai). 1950 Till 1950s, the five active sailing clubs were based at Bombay, Madras, Bangalore, Barrack pore and Nainital 1960 The Yachting Association of India (YAI) was constituted in 1960 for promoting the sport. It is affiliated to the International Sailing Federation (ISAF). There are currently 40 clubs affiliated to the YAI, spread over the various parts of India 1990s Prior to 1990, imports of personal boats was banned in India. After 1990s imports were allowed, but was too tedious. Government allowed manufacturers to import wood which promoted boat building in India in a big way. 2000s India included in premiere international yachting events - Volvo Ocean Race 2008-09, Vasco da Gama International Ocean Race 2010 India’s first marina inaugurated in Kochi

Pleasure Boating & Yachting Industry 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

Imports of Yachts and Other Vessels for Pleasure/Sports US$ 2.66 million US$ 20.96 million Imports of Yachts and Other Vessels for Pleasure/Sports (Value in US$ million)   2006-07 2007-08 2008-09 Italy 0.06 5.07 11.18 UAE 0.23 1.16 0.49 USA 1.01 2.54 2.38 France 0.22 0.85 1.62 UK 0.14 0.78 0.25 Germany 0.01 0.57 - Others 0.99 9.99 1.82 Total 2.66 20.96 17.72 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

Pleasure Boating & Yachting Industry 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 Biggest location for yachting in India. Has a strong boating heritage with three sailing clubs Natural harbor with miles 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. 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

Yachting Destinations in India

Pleasure Boating & Yachting Industry 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.

Factors for growth

Marinas and other infrastructure The Kochi International Marina Marinas and other infrastructure 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 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.

Tourism Promotion 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%) Year Foreign Tourist Arrivals (in million nos.) % Change Over Previous Year Foreign Exchange Earnings (Rs. In Billion) Percentage Change Over Previous Year Foreign Exchange Earnings (in Million US$) 2000 2.65 6.7 156.26 20.6 3,460 15 2001 2.54 -4.2 150.83 -3.5 3,198 (-)7.6 2002 2.38 -6 150.64 -0.1 3,103 (-)3.0 2003 2.73 14.3 207.29 37.6 4,463 43.8 2004 3.46 26.8 279.44 34.8 6,170 38.2 2005 3.92 13.3 331.23 18.5 7,493 21.4 2006 4.45 13.5 390.25 17.8 8,634 15.2 2007 5.08 443.6 13.7 10,729 24.3 2008 5.28 4 507.3 14.4 11,747 9.5 2009 5.11 -3.3 549.6 8.3 11,394

Cruise Tourism 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 Year No. of cruise tourists 2003-04 28,000 2004-05 27,760 2005-06 1,52,827 2006-07 2,40,307 2009-10 (target) 600,000

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

High Visibility Through Major Events 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

Ownership profile

Ownership Pattern 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

The Indian ‘Yacht Club’ (WHO’s WHO) Owns the 95 m long (311 ft) Indian Empress costing approximately Rs 4.43 billion. Indian Empress is largely used for his private parties. Yachts one can order in India UTILITY BOATS INDICATIVE PRICES* Lancer 21 Rs. 1.7 million Monterey 18 Rs. 2.0 million Silver Craft 31 SF (Dolphin 31) Rs. 4.5 million Sea Ray 350 Sundancer Rs. 10.5 million Regal Sports Boat 3050 Rs. 8.2 million Larson Cabrio 310 Rs. 8.4 million Touring 36 Rs. 6.1 million YACHTS Majesty 44 Rs. 30 million Azimut 43 Rs. 45 million Princess 42 Rs. 38 million Sunseeker 45 Ferretti 460 Rs. 48 million Majesty 66 Rs. 100 million Azimut 68 E Rs. 190 million Princess 67 Rs. 180 million Sunseeker Manhattan 66 Rs. 185 million Ferretti 681 Rs. 210 million MEGA YACHTS Majesty 101 Rs. 240 million Azimut 103 S Rs. 480 million Ferretti 110 CL Rs. 600 million SUPER YACHTS Custom Line 112 Rs 940 million Pershing 115 Rs. 1.28 billion Alibi Rs. 4 billion *Prices are inclusive of import duties Source: Industry 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

Mumbai accounts for 60% of the pleasure boats in India 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

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

forms of ownership Time Sharing 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

Many dealers have started approaching clients with this proposition. 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

forms of ownership Charter Services Financing & Insurance 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

supply side scenario

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 Market Segmentation: supply side . 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

Market Segmentation: supply side Key tactics – Sales generation Market Segmentation: supply side 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

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

Profiling of Major Manufacturers Gulf Craft Inc. Maxum Profiling of Major Manufacturers 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 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 Sealine Ferretti 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. 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 Azimut 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. Profiling of Major Manufacturers 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. 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. 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. Princess Yachts Aicon 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. 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 Bayliner New Wave Profiling of Major Manufacturers 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. 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. 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. M&M Yachts: Aquasail Exclusive dealers to Riva yachts, often known as ‘pride of Ferretti group. 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. 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.

Marine Solutions West Coast Marine Leading Yacht Dealers 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. The company started 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. Aquamarine Services Infinity Yachts 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. 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. Larson Boats Ocean Crest Marine 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.

Regulatory Framework

Regulatory Framework Government policy 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.

Regulatory Framework Maharashtra Maritime Board 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.

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.

Industry Bodies The Yachting Association of India (YAI) 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.

Regulatory Framework: Industry Bodies The Royal Bombay Yacht Club (RBYC) Regulatory Framework: Industry Bodies 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

Demand Potential

Demand Potential Demand according to the present scenario 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.

Demand Potential: Growing universe of the individual buyers 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 Year HNI (growing at a CAGR of 19%) CEOs/MDs growing at a CAGR of 22%) Bollywood celebrities & sportspersons (growing at a CAGR of 20%) Total size of the universe (No.) Market size in No. of Boats each year (0.1% of universe buys boat every year) 2008 120,000 77 288 120,365   2009 142,800 94 346 143,240 143 2010 175,644 115 415 176,174 176 2011 216,042 141 498 216,680 217 2012 265,732 171 597 266,500 267 2013 326,850 209 717 327,776 328 2014 402,026 255 860 403,141 403 2015 494,492 311 1,032 495,835 496 2016 608,225 380 1,238 609,843 610 2017 748,116 463 1,486 750,066 750 2018 920,183 565 1,783 922,532 923 Total market potential over 10 years 4,312 The yacht industry would be able to sell approximately 4300 boats over a decade (2008-2018).

Demand Potential: 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%. 2006   No. of boats in the market until 2006 Value in Rs million (taking average price to be Rs 5 million) Value in USD million (taking average exchange rate as 40 Rs per US$) Yacht industry 186 931 23.275 Luxury goods market (Source: The Economic Times ATKearney India Luxury Review 2007) 4,350 Share of the yacht industry in luxury goods market (%) 0.54

Demand Potential: Yachts as a part of the expanding luxury market 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 Year Total no of boats in the market 2006 196 2007 256 2008 334 2009 437 2010 574 2011 750 2012 979 2013 1,279 2014 1,670 2015 2,181 2016 2,848 2017 3,720 2018 4,858 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.

Demand Potential Potential demand 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.  Year HNI CEOs Bollywood celebrities & sportspersons Total No. of Boats likely to be sold each year  2006 79,318 52 200 79,570   2007 97,561 63 240 97,864 2008 120,000 77 288 120,365 2009 142,800 94 346 143,240 430 2010 175,644 115 415 176,174 529 2011 216,042 141 498 216,680 650 2012 265,732 171 597 266,500 800 2013 326,850 209 717 327,776 983 2014 402,026 255 860 403,141 1,209 2015 494,492 311 1,032 495,835 1,488 2016 608,225 380 1,238 609,843 1,830  Total number of boats (2009-2018) 12,935 Accordingly, the Indian market offers a potential for sales of around 13,000 boats over the next ten years.

CONCLUSIONS & RECOMMENDATIONS

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.

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.