Boating - Pleasure Boating - Yachting Industry - Final Report - Ace Global[1]

7/31/2019 Boating - Pleasure Boating - Yachting Industry - Final Report - Ace Global[1]

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The Boating | Pleasure | Yachting Industryin India

Market Research 2009


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Submitted To:

Italian Trade Commission, Mumbai (INDIA)

Prepared By:

Ace Global Private Limited

Boating/Pleasure Boating/Yachting Indus

& its Evolution in In


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Boating/Pleasure Boating/Yachting Industry

& its Evolution in IndiaTable of Contents

Executive Summary 1

Chapter 1 India Overview 6

Economy 6

Demography 6

Climate 7

Coast Line 7

Tourism 7

Income Groupings 8

High Net worth Individuals 9

Chapter 2 Pleasure Boating & Yachting Industry 11

Yachts Nomenclature 11

Origin & Evolution in India 12

Market Size 12

Imports 13

Major destinations 13

Marinas 16 Factors driving growth 18

Chapter 3 Market Segments 20

Individual owners 20

Corporate Buyers 23

Concentration CityWise 23


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Forms of Ownership 24

o Time Sharing

o Fractional Ownership

Charter Services 26 The Supply Side 27

Major Manufacturers 28

Major Dealers 33

The Indian Yacht Club (WHOs WHO) 35

Chapter 4 Regulatory Framework 36

Government Policy 36

Registration 36

Maharashtra Maritime Board 36

Imports 37

Other Taxes 37

Industry bodies 37

SWOT Analysis 39

Chapter 5 Demand Potential 41

Potential demand 43

Chapter 6 Conclusions & Recommendations 46

ANNEXURES


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Executive Summary

India Overview

India is the seventh-largest country by geographical area with a total land area of 3,287,263 square kilometers (1,269,219 sq mi)

With its recent trillion dollar economy status anda Gross Domestic Product (GDP) growthexceeding 9% annually for three yearscontinuously, and with a 7% growth expected for2009, it is still holding its ground in the midst of the current global financial crisis

Income groupings: According to Indiaspremier economics research agency NCAER,there in all 206.5 million households acrossthe country of which around 1.2 million homes have an annual income of Rs 1 millionand above, about 21% of the households areconcentrated in Mumbai.

HNIs: India recorded the fastest growth inthe HNI population worldwide in 2007-08,growing by more than 23%. To 120,000 HighNet worth Individuals. The average net

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

Pleasure Boating & Yachting Industry

Market Size: Presently there are less than 300boats registered in India, including around120 luxury yachts and over 150 speed boats,

with foreign brands enjoying a dominantshare. According to industry sources,approximately 120 boats are sold every year,of which more than 80% are speed boats. Thepopular sizes of boats purchased in Indiaranges from 15-35 ft in overall length. Thecurrent revenue of Indias pleasure boating industry is estimated to range from Rs 1.5billion to Rs 5. However, the industry isgrowing at more than 100% p.a. in volumeand value terms, and one can expect the shareof luxury yachts to increase over the years.

Major Destinations: The nature of yachting limits the locations to only the few cities withgood waterfronts and marinas. At present,Mumbai, Goa and Kochi are the only yachting destinations in India. Mumbai is by far thebiggest location for yachting and leisure boatsin India.

Marinas: In India, the absence of marinas isthe biggest challenge and constraint beforethe yacht industry. Some of the major issues

are: Uneven Sea and high concentration of

pollutants particularly sulphur has madepotential coastal suburbs devoid of any docking facilities for large ships or even

water sports. Absence of national or state level policy

for marinas, which presents major risksfor entrepreneurs who wish to develop


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marinas in India. This leads to a viciouscircle: people didnt buy yachts becausethey never had a proper docking placefor their yacht; while no developer

wanted to develop marina as they never

saw enough demand from boatowners.

However some serious recent attempts havebeen made by the state maritime boards to set upmarinas in India. The lead has been taken by theMaharashtra Maritime Board 1, which has comeup with draft legislation on regulatory framework required to set up a marina in the state of Maharashtra. The Kerala TourismDevelopment Corp has announced it will set up

a 'marina' at the Bolghatty Isle in Kochi. With afew other projects lined up, the situation is likely to improve in the coming years.

Factors driving growth

Income: According to data compiled by income-tax department, the number of salaried taxpayers earning more than Rs.10 million has grown at a CAGR of 65%over the past two years, touching 5000 infiscal 2008. Also, the number of people in

the income bracket of Rs 5 million-10million has more than doubled. Withrising income levels and more peopleentering into the highest income bracket,yacht industry is sure to benefit.

Cruise arrival: There has been a markedincrease in Cruise Arrivals in India which

1 Maharashtra Maritime Board is a regulatory body

is playing a major role in promoting theIndian yacht industry. Mumbai Port, thehome port for cruise tourism handled66,681 domestic tourists and 24,400international tourists for cruise shipping

in 2007. In order to promote the CruiseIndustry, the government has introducedtax exemptions for the cruise operators.

The government is hopeful that such amove will help increase cruise passengerlandings from the current 0.2 million to 1million by 2010.

Popular events: The fact that buyershave spent close to Rs 4 billion onpleasure boats since Mumbai hostedIndias first international boat exhibitionin 2007, signifies the degree of influencethese events have had and the awarenessthat they have created. Amongst the otherpopular events, the important ones were

The Boat India 2008 which was held atKochi and the Volvo Ocean Racestopped by at Kochi for a fortnight, Dec1-14, 2008.

Market Segments

Demand Side

Pleasure boat owners can be classified into twocategories, Individual and Corporate Owners.

Individual Owners are buyers who own boatsfor their personal use, either as transport orleisure. Majority of boats in India are owned by individuals. Speed boats less than 31ft and Sailing


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According to Daily News Analysis the totalnumber of boats registered till 2007 was 269 (196in 2006). However primary sources estimate thatapproximately 120 boats were sold every year inthe last few years, which indicates that not allboats are registered.

Imports: Custom duty on imported yachts is34.13%. In addition to this, 5.5% Octroi is payablein Mumbai.

Some of the key industry bodies are:

The Yachting Association of India (YAI) Indian Olympic Association Maharashtra Maritime Board

The Royal Bombay Yacht Club (RBYC)

Market Potential

Based on the present market scenario, withestimated sales of about 120 boats a year in therecent years, the demand for additional boats overthe next 10 years, i.e. 2009 to 2018 is projected tobe about 4500 numbers. However, in a likely scenario of regulatory and infrastructure issuesbeing adequately addressed, the total potentialdemand could be 13,000 boats over the next 10years.

Recommendations

Pointers for strategic decisions by Italian yachtmanufacturers planning to enter the Indianmarket:

- Selection and appointment of dealers is thekey to success, in addition to generation of sales, the dealers play a very important role interms of helping potential buyers in arranging finance from banks, handling the importformalities, warranty service and variousoptions in maintenance backup and boatmanagement.

- High visibility in the market, can be achieved

through active participation in boat shows,exhibitions, trade promotion andcollaboration with yacht clubs and otherindustry bodies.

- While having a presence in key locations likeMumbai, Goa and Kochi is essential, it is alsoimportant target non coastal cities as well,

which have high concentration of potentialcustomers.

- High capital investment being one of the mainissues for the potential buyers, offering a

package of fractional ownership options orfinancing tie-up with a bank can be a strong USP.

- Provision of maintenance and boatmanagement services: Almost one-third of theyacht owners surveyed during the study ratemaintenance provision as their top selectionpriority.


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- Developing the pre-owned yacht marketcould be a unique niche in the Indian market.Given that globally about 42% of all new boats are sold within seven years, there couldbe a substantial pre-owned boats market

within the next 5 years. Companies could alsoexplore the possibility of offering pre-ownedboats from other countries (duty refurbishedand certified).


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Chapter 1 India Overview

India is the seventh-largest country by geographical area with a total land area of

3,287,263 square kilometers (1,269,219 sq mi). Itsthe second-most populous country, and the largestdemocracy in the world.

Economy

India has transformed in the past fifteen yearsfrom a closed market to a liberal market driveneconomy, with a significant involvement of theprivate sector, including foreign enterprises.

With its recent trillion dollar economy status, ithas seen remarkable economic growth over thelast couple of years. With a Gross DomesticProduct (GDP) growth exceeding 9% annually forthree years continuously, and with a 7% growthexpected for 2009, it is still holding its ground inthe midst of the current global financial crisis. Theeconomy is broad-based, with well developedagriculture, industrial and service sectors,including high technology and knowledge-basedsectors.

Services are the chief source of economic growth,accounting for more than half of India's output,and involving less than one third of its labor force .

Economy Profile (2007 08) GDP at Factor Cost (current prices )

$1.06 trillion

Forex Reserves US$ 309.7 billion

Exports US$ 155.5billion

Imports US$ 235.9 billion

FDI inflows US$ 29.9 billion

Demography

India is the worlds second most populous country (after China), with a population of nearly 1.15billion people and a gender ratio of 933 females to1000 males.


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Population growth rate is 1.58% p.a. Literacy rate is 64.8% (53.7% for females

and 75.3% for males). Nearly one-fourth of the population (0.28

billion) lives inurban areas.

Given its cultural diversity, scores of languages and dialects are spoken in thecountry. Hindi is the national language, whileEnglish is the business language.

India is a federal union of states comprising twenty-eight states and seven union territories.

ClimateBecause of India's size, its climate depends notonly on the time of year, but also the location. In

general, temperatures tend to be cooler in thenorth, especially between September and March.

The south is coolest between November to January. In June, winds and warm surface currentsbegin to move northwards and westwards,heading out of the Indian Ocean and into the

Arabian Gulf. This creates a phenomenon knownas the south-west monsoon, and it brings heavy rains to the west coast. Between October andDecember, a similar climatic pattern called thenorth-east monsoon appears in the Bay of Bengal,bringing rains to the east coast. In addition to thetwo monsoons, there are two other seasons,spring and autumn.

Coast Line

Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal on

the east, India has a coastline of 7,517 kilometers(4,671 miles). Of this, 5,423 kilometers(3,370 miles) belong to peninsular India, and2,094 kilometers (1,301 mi) to the Andaman,Nicobar, and Lakshadweep Islands. According to

the Indian naval hydrographic charts, themainland coast consists of 43% sandy beaches,11% rocky coast including cliffs, and 46%mudflats or marshy coast.

Tourism

Tourism is in a high growth phase in the country

Tourism Facts, 2007

Foreign Tourist Arrivals in India 5.08 mn

Domestic Tourist Visits to all States/UTs

526.57 mn

Foreign Exchange Earnings from Tourism (in US$)

US$10.73 bn

Share of India in International Tourism Arrivals

0.56%

Share of India in Tourist Arrivals 2.76%


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Income Groupings

According to Indias premier economics researchagency National Council for Applied EconomicResearch (NCAER), of the total 206.5 millionhouseholds across the country, the incomegroupings are as follows:

Globals: The top of the income pyramidhas around 1.2 million homes with anannual household income of Rs 1 millionand above (> US$ 22,000 in nominalterms, and $ 115,000 in PPP terms)

Strivers: The second layer has 2.4 million

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

Seekers: The third tier has 10.9 million homes with an annual income of Rs 0.2 -0.5 million (US$ 4,500-11,000 in nominalterms, and $ 23,000-58,000 in PPP terms)

The bottom of the pyramid is made up by the remaining 192 million homesincluding 101 million families living inpoverty conditions, with very low disposable income (91 million households- Aspirers; and 101 million households -Deprived)


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The data for the number of households in theincome bracket of above Rs. 1 million for themajor Indian cities is presented in the table below:

Indian Cities No. of Households(having income of more than Rs. 1million)

Hyderabad 71,717

Delhi 152,515Bangalore 115,439

Urban in Thane 84,887

Mumbai 250,909

Pune 109,061

High Net worth Individuals

According to the World Wealth Report, preparedby Merrill Lynch and Cap Gemini, India has over120,000 High Net worth Individuals (HNIs), i.e.individuals having a wealth of more than onemillion US dollars, besides their primary residence.

The average net worth of the Indian HNIs hasgone up to $3.6 million, compared to the globalaverage of $4 million.

Spearheaded by the annual growth of 9 %followed by a splurge in the stock markets, Indiarecorded the fastest growth in the HNIpopulation worldwide in 2007-08, growing by more than 23%.

Source: Sky line India

Source: Ace Global estimates


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India also has over 1,080 Ultra-High Net worthIndividuals (individuals with an investible surplusexceeding US$30 million), whose combined

wealth was estimated to be $ 116 billion at the endof 2007.

The universe of High Net worth Individuals inIndia consists mainly of industrialist families,followed by sports and movie stars, besides anumber of self-made business persons, including professionals and financial investors.


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Chapter 2Pleasure Boating & Yachting Industry

Yachts Nomenclature A yacht is a recreational boat that covers twodifferent classes of watercraft: -

Sailing Yachts : Sailing Yachts can range inoverall length (Length over allLOA, inyachting parlance) from about 20 ft (6 m) to

well over 100 ft (30 m). The motive forcebeing the wind, sailing is more economicaland environmentally friendly than any other

means of propulsion. Power Yachts: Motor yachts typically have

one or two internal combustion engines thatburn diesel fuel making it more expensive tooperate than sailing yachts.

Usually in the western markets, yachts areclassified according to 5 major categories:

Particulars Length Top speed

Sports & Utility Boats Up to 40 ft 40 knotsSmall Yachts 40 80 ft 2530 knotsSuper Yachts 100 200ft 1540 knotsMega Yachts 200 300ft 20 knotsGiga yachts >300 ft


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However, due to the unorganized nature of theIndian yacht industry, the classifications aredifferent:- Small Boats, Dhow class, Sail boats, Large Motor Boats, Speed motor Boats, Sailing yachts

Origin & Evolution in India

Yachting was introduced in India in the 1830s by the erstwhile Maharajas, Nawabs andGovernors. The first recorded race sailed on06 Feb 1830 in Bombay (now Mumbai).

Till 1950s, the five active sailing clubs werebased at Bombay, Madras, Bangalore, Barrack pore and Nainital.

The Yachting Association of India (YAI) was constituted in 1960 for promoting thesport in the country. It is affiliated to theInternational Sailing Federation (ISAF). Thereare currently 40 clubs affiliated to the YAI,spread over the various parts of India

Prior to Indias liberalization, imports of personal boats was banned in India. After1990s imports were allowed, but was tootedious. Government allowed manufacturersto import wood which promoted boatbuilding in India in a big way.

Market Size

Indias pleasure boat industry is rather nascent.Presently there are less than 300 boats registeredin India, including around 120 luxury yachts and

over 150 speed boats, with foreign brandsenjoying a dominant share. According to industry sources, it was only after the 2007 boat exhibitionof Mumbai that the interest and awareness among the people shot up. Now approximately 120 boats

are sold every year, of which more than 80% arespeed boats.

The popular sizes of boats purchased in Indiaranges from 15-35 ft in overall length. Given theenormous price range in leisure boats, ranging from Rs 3 million for speed boats to over Rs 1billion for super luxury yachts, the revenueturnovers can be misleading.

The current revenue of Indias pleasure boating

industry is estimated to range from Rs 1.5 billionto Rs 5 billion per year, depending on which typesof luxury yachts get sold in the year. For instance,in 2007-08, a single Ferretti accounted for almost50% of the value of boats sold in India. However,the industry is growing at more than 100% p.a. in


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volume and value terms, and one can expect theshare of luxury yachts to increase over the years.

Imports

As per the official import data compiled by Ministry of Commerce and Industry, the totalimports of yachts and other vessels forpleasure/sports in 2007-08 were valued at US$20.81 million, representing a almost 8 timesincrease over the previous year. Italy was by farthe leading source of imports (with 24.4% share),followed by USA, UAE and other Europeancountries.

Imports of Yachts and Other Vessels for Pleasure/Sports (Value in US$ million)

2006 2007 2007 2008Italy 0.06 5.07UAE 0.23 1.16USA 1.01 2.54France 0.22 0.85UK 0.14 0.78Germany 0.01 0.57Others 0.97 9.84Total 2.64 20.81

The above data also supports the industry feedback that the demand for yachts in India hasincreased exponentially in the last two years.

Major destinations

Location is a key element and constraint in thedevelopment of yachting as a nationalphenomenon in India. The nature of yachting limits the locations to only the few cities withgood waterfronts and marinas. At present,Mumbai, Goa and Kochi are the only yachting destinations in India: Refer Annex 1 for major sea

ports

Mumbai : Mumbai is by far the biggestlocation for yachting and leisure boats inIndia. It has a strong boating heritage withthree sailing clubs in the city- The RoyalBombay Yacht Club, Colaba Sailing Club andthe Bombay Sailing Association. It has a


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natural harbor with miles of shelteredcoastline with great places to sail to. The

water sports center of Mumbai facilitates allkind of water sports, like Boat sailing, Para-sailing, Water Skiing, Canoeing, Kayaking, Jet

boats, Wind Surfing and Rowing. The sailing season is between October and June. Thegeographical proximity to another yachting hub, Dubai, with miles of natural harbor and asheltered coastline dotted with picturesqueseaside towns, helps making Mumbai a greatyachting hub with luxury yachts (size ranging from 30 ft to 100 ft and more) dotting theharbor.

The quayside off Mumbais Gateway of India

is already clogged with boats of all sizes, usesand types, and people frequently jump fromone vessel to another to reach their own.Prior to the boat show in February/March2007, there were around 20-30 pleasure boatsbut since then the number has increased tomore than 100.

Kochi: Formerly known as Cochin is acity in the Indian state of Kerala, one of

the principal seaports of the country. Ithas an estimated population of 600,000,

with an extended metropolitan populationof about 1.5 million, making it the largesturban agglomeration and the secondlargest city in Kerala after the capital. Theport is strategically located on the busy international sea route just 11 nautical

miles from the Gulf-Singapore-Far Eastroute and 70 nautical miles off Suez-Singapore-Far East while Mumbai is 430nautical miles off. Kochi is the maritimegateway for peninsular India and one of

the best ports in Asia. In 2007, a record43 cruisers had arrived, which includedmaiden voyages of some of the worldsmost famous and largest vessels likeQueen Victoria and Queen Mary II,thanks to its old world village charmcombined with the modern facilities. Italso has a good transport, communicationnetwork and magnificent beauty andgreenery of Kochi. Currently yachts andboats sailing-in from the Gulf region haveno intermediate berthing place for themonce they leave Dubai.

Goa: Variously known as "Pearl of theOrient" and a "Tourist Paradise", the stateof Goa is not too far from Mumbai. It isIndia's smallest state in terms of area andthe fourth smallest in terms of population. The innumerable beaches,magnificent scenic beauty and thearchitectural splendors of its temples,churches and old houses have made Goaa firm favorite with travelers around the

world. Located on the west coast of Indiain the region known as the Konkan.

Tourism is Goa's primary industry: ithandles 12% of all foreign tourist arrivalsin India. The number of yachts docked at


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Panjim, Goas capital, is increasing as it isa renowned place for vacation homes among Indians.


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Marinas

In India, the absence of marinas is the biggestchallenge and constraint before the yacht industry.Uneven sea and high concentration of pollutantsparticularly sulphur has made potential coastalsuburbs devoid of any docking facilities for largeships or even water sports. Due to such reasonsbreak water and water flushing systems become

very important. Given the high political sensitivity,greater priority has always been given to fishermenfor allocation of harbor space. The best watersaround Mumbai city have already been taken overby local fishermen and would require hugecompensations be taken over for marinas.

On the other hand, there is no national or statelevel policy for marinas, anywhere in India, whichpresents major risks for entrepreneurs who wishto develop marinas in India. This leads to a

vicious circle: people didnt buy yachts becausethey never had a proper docking place for theiryacht; while no developer wanted to developmarina as they never saw enough demand fromboat owners.

Under these circumstances, boats and yachts aremoored in rather rudimentary conditions in India.Mumbais two major locations: the Gateway of India and Alibag, which is 15 km off the Gateway,have over 150 boats jostling for space with no


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facilities for repairs, spares and other amenitiesusually found in any docking location elsewhere.

For special events, such as boat shows,inexpensive and makeshift pontoons are used in

India. These can be made out of wood, plastic andconcrete, and can accommodate 40-50 boats at atime. A pontoon made out of plastic costs aroundRs 0.4 million.

However, there have been some serious recentattempts to set up marinas in India, and somesupport is also forthcoming from the statemaritime boards. The lead has been taken by theMaharashtra Maritime Board2, which has come up

with a draft legislation on regulatory framework

required to set up a marina in the state of Maharashtra, The regulation is still not on publicdomain for review and comment, but its contents

would specify the policy of the state, define theroles and responsibilities of various actors, andalso provide guidelines for developers in terms of land acquisition, investments, licensing arrangements and other rights.

Similarly, Goa and Kerala have announced somemarina initiatives. Some marina projects that havebeen announced are featured below:- The Kerala Tourism Development Corp has

announced it will set up a 'marina' at theBolghatty Isle in `Kochi to solve the problemof parking of yachts and boats. This will bethe first ever marina in the country. Its said to

2 Maharashtra Maritime Board is a regulatory body

contain a cruise terminal which will house afive-star hotel, shopping malls, food courts, aKerala village etc. It will also be the worldsonly marina with a golf course.

- Oyster Rock, the naval base off the Mumbai

harbour may soon have a marina. The totalcost of the project is estimated to be Rs 18billion

- A business tycoon from Goa and a keen watersports lover, Umaji V Chowgule, MD, Goa

Yacht Haven Pvt Ltd. is planning to build a300-boat marina in Sancoale village, inMormugao Taluka, at the mouth of the ZuariRiver in Goa with an investment of Rs 1billion.

- A leisure boating and coastal cruising center in Vasco, Goa which would cater to 400 boats isexpected to be operational by October 2009.

This project has already incurred aninvestment of Rs 1 billion

The development of marinas is critical for thegrowth of the boating industry in India. It will notonly boost the waterfront real estate and tourismindustries, but also provide employmentopportunities. It is estimated that a 400- berth

marina usually generates 400 direct plus 600indirect jobs, and can include a range of amenities:ranging from yacht docking, boat sales andrepairs, recreation zones, water sports, hotels,restaurants, etc.

Aquasail has completed a feasibility study forabout six marina projects. The company, which


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has targeted Kochi, Chennai and Goa, is now waiting for official permission to build its firstmarina by the year end at any of the three centres.

Ocean Blue Marinas, which had set up a modern

marina for the Mumbai boat show, has 15 projectsin Goa, Kochi, and Chennai and along the coastsof Maharashtra and Gujarat.

Factors driving growth

Income : With rising income levels and morepeople entering into the highest incomebracket, yacht industry is sure to ride thehighest growth wave. According to data

compiled by income-tax department, thenumber of salaried taxpayers earning morethan Rs 10 million has grown at a CAGR of 65% over the past two years touching 5,000 infiscal 2008. Also, the number of people in the

income bracket of Rs 5 million- 10 million hasmore than doubled from 4,400 persons infiscal 2006 to 10,500 in fiscal 2008. High rateof growth of High Net Worth individuals isgoing to play a major role.

Cruise Tourism : There has been a markedincrease in Cruise Arrivals in India which isplaying a major role in promoting the Indianyacht industry. Mumbai Port, the home portfor cruise tourism had handled 66,681domestic tourists and 24,400 internationaltourists for cruise shipping. There has been anincrease of over 48 per cent in internationalcruise vessels which call at Indian ports. Anda hike of 28 per cent in cruise liners whichoperate only within Indian ports, catering mostly to domestic tourists.

In order to promote the Cruise Industry, thegovernment has introduced tax exemptionsfor the cruise operators. The government ishopeful that such a move will help increasecruise passenger landings from the current 0.2million to 1 million by 2010. At present, thereis no Indian firm operating cruises along

Indian shores. From India 0.16 million people went on long cruises in 2007.


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Popular Events : The fact that people havespent close to Rs 4 billion on pleasure boatssince Mumbai hosted Indias firstinternational boat exhibition signifies thedegree of influence that these shows have hadand the awareness that they have created. Themakeshift marina near the Gateway of India

which had 20-30 boats earlier now has 100boats. Events such as the Volvo Ocean Race2009- the premiere round-the-globe yachting event, coming to India for the very first timehave done a great deal in enhancing Indiasposition as a major shipping destination.

Another major event, the Boat India 2008held at Kochi, received a huge response withall the major regional, national and

international players participating in it. Thetheme of The Boat India 08 was Trends, New concepts, Technology and all other servicesand products linked with the boat industry.


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Chapter 3 Market Segments

A boat industry customer is usually well aware andhas adequate knowledge of the market. Since its aluxury product, the customer values theproposition and knows that its a long termcommitment which is why he weighs variousattributes before making a purchase.

Source: Primary Research

30% of the owners rate maintenance provision astheir top selection priority. Pleasure boatsparticularly super luxury products have a highmaintenance cost, generally ranging from 5 to15% of the price tag. 21% of the owners rate priceas the most important factor while only 14% goby the brand names.

Pleasure boat owners can be classified into twocategories, Individual and Corporate Owners

Individual owners

Individual Owners are buyers who own boats fortheir personal use, either as transport or leisure.Majority of boats in India are owned by individuals

Source: Royal Bombay Yacht Club

Speed boats and Sailing Boats are two mostpopular segments among the individual buyers.Since the price of the boat increases with theincrease in length, speed boats with an overalllength less than 31 ft seems to be the mostpreferred category.


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Individual buyers can be further segmented intothe following categories:

Utility Buyer and Luxury Buyer

A luxury buyer purchases a yacht for leisure. It iseither used for commuting to distant weekendgetaways or social parties and leisure. These aregenerally large in size and range between 45-100feet. Yachts in cities like Kochi & Goa mostly belong to this category.

A utility buyer purchases a yacht for businesstravel, usually between his plush residential home

and distant work location within the city premises. Although comprising only 5%, deteriorating traffic conditions in the major city of Mumbai hasled to a recent increase in their number. Utility yachts generally range between 20-40 feet in sizeand are mostly limited to Mumbai andneighboring suburbs, according to the RMYC.

Age

50% of the boat buyers lie between the age groupof 40-60 years while another 33% in 60 years plus

group. This shows that pleasure boat owners aregenerally people who have accumulated wealthover period of years, and buy it more towardstheir retirement age. With fractional ownershipconcept gaining grounds in the country, whichallows multiple owners to a yacht, a significantchunk of this age group is formed by theCEOs/Partners/Owners of companies in theservice sector.

Gender

Boating remains a mans pursuit, and the majority of boat owners are males. However, it is estimatedthat 20 % of boat owners are female. Irrespectiveof ownership, ladies are important decisioninfluencers in boat purchases in India.


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Professional Background

Luxury boats are more commonly bought forbusiness and personal leisure. With Indias

booming service sector and its top executivesdrawing hefty salary packages, the number of luxury boats owners has increased to 20 % fromservice sector. However, considering the amountgoes in purchasing and then maintaining the yacht,majority of the buyers are businessmen..

Usage Pattern

Luxury boats are valued and fully utilized by their

owners. Usage by owners also includes party orhosting their friends even on standing yacht atdocking place. Considering the fact that yachtrequires huge maintenance cost, boat owners whodont use these vessels often, opt to provide theirboats on charter in order to cover maintenancecosts.


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Corporate Buyers

A corporate owner is a company or firm thatowns a luxury boat to be used as a commuting

vessel of its top executives to distant officelocations or for leisure and parties.

Owners/ partners of firms often register theirpersonal yachts under companys name, so as tosave tax by showing it as a business expenditure.Few cases observed are United Breweries UBgroup, Indiabulls Financial Services, Ispat Inc (LN Mittal), Essar Steel, and Reliance -ADAG.

Speed boats are most popular amongst thecorporates too and constitute 81% of the totalboats, majority of which are the large sized speedboats.

An interesting contrast from individual ownerscan been seen that while only 15 % of individualsowned large sized speed boats , a significant 38 %corporate own large sized speed boats.

Concentration City-Wise

Mumbai constitutes 80% of the pleasure boats inIndia. The Gateway of India in Mumbai, catering to almost 200 boats of various sizes and shapes, isthe largest in India. Additionally, boat ownersfrom neighboring cities also dock their boats atMumbai or Goa. With a heritage for sailing through Royal Bombay Yacht Club, Colaba Sailing Club, etc. in the city, the drive for sailing hasincreased in the recent past. With maximum

number of yacht dealers and boat shows being conducted, Mumbai along with Kochi are themost talked about cities in Indian pleasure boating industry.


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In addition to buyers from neighboring cities, asignificant emerging trend is the number of yachtsowners emerging from Indias non-coastal majorcities like New Delhi and Hyderabad. With dealerstaking responsibility for maintenance and security,

high net worth individuals and corporate alike,from distant cities are increasingly buying yachtsfor leisure. Aquamarine Leisure is one of thedealers with an office in New Delhi to cater to thegrowing interest in the city.

FORMS OF OWNERSHIP

a) Time Sharing

Time sharing is a membership based system in which members are allocated specific number of usage hours during the assigned period. Thesememberships are not transferrable and nonextendable and have no right on the yacht.

Club Privada , with a strength of 48 members, isIndias first luxury boat club that launched thetime sharing concept in India 3. Club Privada offers

time share options with a choice of yachts,including super luxury $2 million Azimut 50 andLarson Cabrio 350. The clubs innovative businessmodel facilitate the customers with a fully crewed,maintained luxury yacht and the lifestyle without

3 Source- Yachting Association of India Joint Secretary General, Commodore Ajay Narang)

any burdensome costs of maintenance, berthing and insurance associated with its ownership. Theclub proposes to diversify its fleet and introducemore specialized boats like ocean-going yachts,top-end fishing boats, high-speed sports boats,

party boats, houseboats in the future.

The Azimut 50 costs Rs. 3.1 million for 30 daysover three years and the Larson Cabrio 350 costsRs. 1.6 million for 13 days every year for threeyears. The club recently initiated a Points Systemto attract more members, wherein 500 points aregiven to the members for Rs 0.5 million lump sumpayment, which in turn can be redeemed on anhourly basis as per requirement.


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b) Fractional Ownership

In this ownership the yacht is shared by two ormore individuals, typically 5-6 people, one ownermember and other sharer members. The sharermember uses the yacht for dedicated no. of daysor he may even rent it out to other shareholdersor outsiders (hotels/resorts/individuals/touroperators/etc). The fractional owners own a shareof one boatpossessing equity in that purchase.

Aquasail is a company that promotes fractionalownership as one of their flagship offerings.

When a customer orders a boat with Aquasail, hegets a preferential price. The contractbetween Aquasail & an Owner is typically for a 5year period. Aquasail manages all the maintenanceand running costs for the boat through the periodof the contract while customer also receivesannual payments. Many dealers have startedapproaching clients with this proposition. Indiabeing a new entrant into the industry, this modelpromotes the concept of luxury yachting.

Benefits of fractional ownership :

The member gets to use high quality boat without paying the full purchase andother maintenance costs.

No hassles of maintenance, servicing,staffing the boat; since all are taken careof by the maintenance company.

Easy and convenient scheduling of sharing services maintained by provider.

Members also have the right to sell theirshare at any point of time.

Together owners can rent the yachtduring extra days too and share profit. Inmost cases, a maintenance firm isappointed to take care of the yacht on afixed fee basis.

Problems faced under fractional ownership:

Diverging budgetary preferences Free riding among the members Competition for planning & management

control Simplistic and inflexible scheduling

agreements Differences in willingness to do

maintenance Poor asset care and use Lack of communication between owners Improper management of expenditures


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Charter Services

While investing in a yacht, one important factor tobear in mind is its potential for charters. With alow usage rate and maintenance cost being as highas 5% p.a. of the price of the yacht, owning ayacht would be all about paying hefty prices andtaxes every year.

By chartering a yacht for about 10 weeks a year,the owners can pay operating expenses for a fullyear. The charter market has allowed people tobuy boats a little larger than they would have

wanted to invest in, had they not seen it as asource of revenue to help defray their operating

costs.Club Privada

has also entered into chartermarket, by renting yacht facilities for Rs.15000-Rs.30000 per hour for 8-12 people occupancy.

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

License to charter can only be obtained at the timeof purchase of the yacht when it is registered withthe concern authorities in India.

Financing and Insurance:Indian financial

institutions have not yet adopted marine financing options. Usually, there is term loan provided tothe owner if he asks for, but there is no loanagainst yachts or boat loans in the market. Theonly bank active in this field is Yes Bank , wherein a dedicated team is handling this.

Yacht insurance starts from construction phaseitself. Yachts are usually shipped in open deck.Insurance is required for shipping, lifting, journey,docking, etc. Amount depends on ownersdiscretion.

Usually all insurance companies provide marineinsurance. Hull insurance policy in India is not toomuch conclusive, it has been taken from Europebut when compared to environmental varianceand sea conditions in Europe and India, there is a

vast difference

Many Indian dealers, like Marine solutions, helptheir clients to get financing and insurance donefrom abroad as they believe that financialinstitutions expertise is not up to the mark inmarine industry.


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THE SUPPLY SIDE

Most yacht manufacturing companies operatethrough a dealer model with presence in variouscountries of the world. The reason behind is toshowcase quality and to use a push strategy topenetrate into the market. Dealers of yachts areusually people well renowned in sailing circles andtheir own links and contacts play an importantrole in lead conversion.

The scenario is no different in India where almostall foreign manufactures have a presence throughdealers, and operate on multi brand models. AsIndia is not a big market, the renowned brandshave only one or two dealers in the whole country.

The absence of multiple dealers of a particularbrand and the fact that the market is value drivenenables the customer to enjoy a good scope of bargaining. Recently, dealers have started giving discounts and reducing their margins to increasesales. Starting from a target margin of about 30%,the dealers usually settle for a margin as low as8%, depending upon the clients bargaining powerand the dealers urgency to make a sale.

Word of mouth seems to be the most effectivemethod of sales generation, accounting for 49%of the sales. Dealer contacts and links prove to beonly the second best source. Exhibitions and boatshows are a recent development in India and arelikely to emerge as an important avenue for salesgeneration.

According to the primary research feedback, 50%of the customers identify dealers according to thebrands that they deal in, while only 20% chooseon the basis of the maintenance and servicesoffered.

Source: Primary Research


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Major Manufacturers

In the absence of organised production of yachtsand pleasure boats in India, the market is catered

by international companies present in Indiathrough sales representatives. Although theofficial import statistics indicate that Italiancompanies have about 25% market share, thefeedback received from industry players during primary research, puts the share of Italiancompanies at a dominant 45% in value terms.

Some of the leading manufacturers present inIndia are profiled below:

a) GULF CRAFT INC .

Background: Gulf Craft Inc, an Ajman-basedcompany began its operations in 1982 in UAE.

Today, in the world of category-based specialistmanufacturers, Gulf Craft Inc holds a pre-eminent

position in the global leisure marine marketoffering a wide array of products. It manufactureshigh speed boats and yachts, ranging from 30 140 feet, with an annual production capacity of 600 boats. Gulf Craft Inc now exports more than

70 per cent of its output and its super-luxury vessels are to be found in virtually every majorharbour of the world.

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

- Majesty Yachts offers a range of luxury fly-bridge yachts, with an extensive rangefrom 42 140 ft luxury yachts, super

yachts and custom built yachts.- Silver Craft range combines advancedhull designs, superior performance andevolving styles. Dolphin Super Deluxe(DSD 31) i.e. SilverCraft 31SF - has beenone of the most favored boats among Indian owners.

- The Oryx Sports Cruisers are known forcombining Power and Performance withexceptional styling, rigid and robust Hulls.

These are built for superior luxury andcomfort and are in 36 ft and 40 ft options(and now a 46 ft too).

Dealer : West Coast Marine , lead by worldfamous Indian yachtsman Mr. Aashim Mongia(Arjuna Awardee for sailing) are exclusive dealersfor the entire range of boats and mega-yachts of Gulf Craft Inc.


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Since the boats are directly imported from U.A.E.,they provide a huge benefit to their ownersthrough reduced freightage, and have theunbeatable More Boat per Boat advantage overits European and US counterparts.

Six sales were recorded through them during 2007-08.

b) M AXUM

Background: A Brunswick Corporation brandand a member of the Brunswick Boat Group,Maxum is the acknowledged leader in recreationalboating for more than 15 years. Maxum boats passthrough the popular PRO System which ensures

highest quality parts and manufacturing processesat the best prices.

- Speed boats : Maxum speed boats aresleek, nimble and responsive that featureergonomically designed cockpits, roomy transom storage and supersized swimplatforms.

- Sport Cruisers : Maxum Sport Cruiserhas the added conveniences of privateheads, full galleys, spacious sleeping

quarters and Sunbrella fabrics throughout. A Maxum owner can enjoy innovationslike Smart Craft digital gauges and JBLcertified stereo installation.

- Sport Yachts: Maxum Sport Yachts addan exciting twist to the world of luxury offering the ergonomically designed dualhelm seating, oversized lounge areas, air-

conditioned cabins and an impressivegalley.

c) SEALINE

Background: Founded in 1972, Sealine iscurrently one of Europe's largest luxury boatbuilders, producing over 300 boats a year. Itsproduct range comprises Sports Cruisers (25-47)and Fly bridges (34-60). With international salesand dealer network comprising over 40 dealers,Sealine has representation across the globe.

- T series: In quality, design, and style, the T-series offers owners a new dimensionof luxury from the Sealine range

- F series: Reinventing its class, the award- winning F-series has an enviablereputation for space, comfort, quality, andSealine signature innovations

- S series: From the entry level S25 to thecommanding SC47, the S-series capturesthe true meaning of intelligent designbalanced with a sports pedigree

d) FERRETTI

The Italian company is one of the leaders in yachtmanufacturing and technology with pioneeredrevolutionary designs and technologies. With acurrent production run of around 60 units, thegroup is focusing on top-end yacht including Fly bridge. The 460 (46) and 550 were the first twomotor yachts delivered by Ferretti and were the


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first luxury motor yachts to arrive in the country. The company has recently set up shop in Indiathrough Marine Solutions , Indias premier yachtretail company.

The group consists of the following design andproduction companies:

- Pershing S.p.A. (high performance opencruisers, 11 to 35 meters)

- Ferretti Yachts division (flybridgemotoryachts, 14 to 27 meters)

- Itama Cantieri Navali S.p.A (openmotoryachts, 13 to 23 meters)

- the American Bertram Yacht, Inc. (sportfisherman motoryachts, 12 to 22 meters)

- Riva S.p.A. (open and flybridgemotoryachts, 10 to 35 meters)

- Apreamare S.p.A. in Sorrento (gozzosorrentino, 7 to 20 meters)

- Mochi Craft division (lobster boats, 13 to23 meters)

- Custom Line division (maxi yachts incomposite materials from 30 to 34 meters

with two decks) and,- CRN S.p.A., (maxi yachts in composite

materials from 39 to 43 meters with 3

decks and steel mega yachts from 46 to120 meters.- Marine Solutions, India's premier Yacht

retail company promoting the yachting lifestyle in the country represents Ferretti

Yachts in India.

e) A ZIMUT

This super-yacht is positioned as the epitome of luxury, with opulent owner and guest suites and

an exquisite childrens room fitted with bunk beds; it also has two flight decks and separate crew quarters to ensure guest privacy. The Azimut has arange of around 300 nautical miles and cancomfortably cater to two families with kids on a

weekend trip or even a private party of around 15people on an evening cruise.


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Amerglass, a modern Dutch shipyard producing boats in fiberglass, conferred the first dealershipcontract in Italy on the newly-founded power boatmanufacturer Azimut. The business developedquickly, adding the distribution of sailing boats,

motor cruisers and finally motor yachts fromdifferent makers: British Powles, Westerly, andothers.

The product of a joint-venture with Amerglass,the first fiberglass motor cruiser developed, the

AZ 43 BALI, was an instant success. The range of motorcruisers extended downwards with the introduction in 1977 of the AZ 32 Targamodel: soon after, a full range of successful luxury Motor cruiser and Motor yacht models came onto

the market.

Models available are:

Fly- 39E, 42E, 43, 46E, 47, 50, 55E, 62E, 68E, 75,80, 85, 98, 105,116.

Open- 103S

Dealer : Sorenstam Ventures and New Wave aretwo among few dealers of the yacht manufacturer.

f) Nautilus Yachts

This is a 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 thanRs.20 million with more cabins and electronicfish-finders.

g) Princess Yachts

Princess Yachts International is a British motoryacht 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 soldthe business to French businessman Bernard

Arnualt's investment group, L Capital, a divisionof LVMH for 200million in June 2008.

Their current model program includes a series of flybridge yachts ranging from the Princess 42 at 44feet, 3 inches (13,5 metres) to the Princess 95 at95 feet 3 inches (29,3 metres), and a series of sporting yachts, designated as V-Boats andranging from 42 to 85 feet.

h) A ICON

The Aicon Group is one of the most dynamicoperators in the design, construction andcommercialization of Fly bridge and Open yachts,both in Italy and abroad. Although the group waslaunched only on 1999, Aicon has establisheditself as one of the major Italian operators in thissector with a strong presence in Europe, and,more recently the United States and China.

Aicon is present in the United States and has adealer network that covers the USA, the EMEAcountries (Europe, the Middle East and Africa),Russia and recently moved into Asia with the


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creation of Aicon International Trading (Shanghai) Co. Ltd.

Aicon pays particular attention to the design andthe style of its luxury yachts, which are built not

only to be aesthetically beautiful, but also to beextremely comfortable, functional and seaworthy.

The industrialization of all phases of theproduction process and the use of the latesttechnology help make every Aicon yacht unique interms of luxury, technology and quality. It isavailable in India in open boats and flybridge

version.

i) B AYLINER

It is a leading manufacturer of recreational boatsestablished in 1957. The company operates as asubsidiary of Brunswick Corporation, whichacquired Bayliner's former parent company USMarine in 1986. Bayliner facilities are located inPipestone, Minnesota, Roseburg, Oregon, andCumberland, Maryland, in the United States; andin Reynosa, Tamaulipas, in Mexico.

j) SUNSEEKER INTERNATIONAL

It is a UK luxury motor yacht manufacturer. Their

headquarters and assembly factory is in PooleHarbour, at Poole in Dorset, England. Thecompany has been making motor boats since1979.

k) SEA R AY

It is a brand of pleasure boats owned by theBrunswick Corporation. It was founded as anindependent company, Ray Industries, in 1959 in

Detroit, Michigan by C.N. Ray. That company wasbought by Brunswick for $350 million in 1986. Atthe time, the purchase made Brunswick the largestpleasure boat producer in the world.

l) L ARSON BOATS

Background: Larson Boats founded in 1913 onthe banks of the Mississippi River in Little Falls,Minnesota deals in the manufacture of the mostaffordable and dependable boats. Larson offers 24

models ranging from 18' to 37'.

Dealer: Sorenstam (Dadar, Mumbai) is the dealertaking care of its sales in India.

m) GRADY WHITE BOATS

Background : One of the most successfulboatbuilding companies in the world since 1959,Grady-White Boats has a legendary reputation fordesigning and producing outstanding fiberglass

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


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Major Dealers

Marine Solutions: Established in 2001,Marine Solutions claims to be India's firstprofessionally managed company dedicated to the leisure boating industry.

The company exclusively representspremier international brands in every category of the boating business in India.Concerns include the elegant Italianmodels from Ferretti Yachts, Custom Line,Mochi Craft and Pershing of the FerrettiGroup, Jeanneau sail and motor yachtsfrom France, the iconic American SeaRay TM sports boats and sports cruisers,

Kawasaki's Jetski TM

personal water crafts,the complete range of leisure and Milproinflatable boats of the world famousZodiac name, Sunstream boatlifts andmarine propulsion options and commercialboats from Mercury Marine.

Services provided include help in choosing the right product, handling the import,commissioning the boat, warranty serviceand various options in maintenance

backup and boat management.

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

They also offer clients exclusive service at

the Panjim Yacht Station in Goa and atmoorings off the Gateway of India inMumbai.

West Coast Marine: The company started in 1994, it has 156 employees,enjoys 75% market share in servicing theyachts and 30% in sales. The company focuses more on service as they aremanaging 110 yachts as of now inMumbai. Company operates on backwardintegration model i.e. they create theirbrand name through after sales servicethey provide to their customers. They alsoprovide yacht financing in association with

Yes Bank. Majesty Yachts, North Star,Hanse, Silver Craft are few brands

which the dealer caters to.

Aquamarine Services: The company isexclusive distributors of U.K basedPrincess Yachts in India. They alsoprovide a seamless ownership experiencefor customers including boat selection withtailor made specifications, registrations,crew, management and maintenance. They

also offer luxury charter services onPrincess Flybridge yachts and fractionalownership programs on a range of Princess Yachts.

Infinity Yachts: Infinity Yachts is adivision of Infinity Group. The Group,through its division Infinity cars has a


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proven expertise in dealership and servicesfor high end, lifestyle vehicle brands.Infinity Yachts represents Maxum (entry level sports cruiser) and Sealine (sportscruiser & flybridge) which belong to

Brunswick and Aicon (luxury motor yacht)from Italy. These brands are among theglobal leaders in their size segment.

New Wave: New Wave Distributors(India) Pvt. Ltd deals with yachting, powerboats or water sports from various brandslike Azimut, Cobalt boats, Larson,Grady white . After selection of the vessel,they also assist customers with certificationby authorities, insurance, transportation toIndia, customs, commissioning and otherregulatory issues. For servicing andmaintenance they have tied up with OceanBlue Boating Services Pvt. Ltd. (OBBSPL).

OBBSPL has an up to-date service centre with European service specialists andtrained local staff that have been involvedin the Luxury yacht industry in other partsof the World. OBBSPL currently is based

out of Dharamtar, Alibaug, with a 10,000sq/ft waterfront, all weather workshop andstorage facility with capabilities to performthe basic services to a full yachtrefurbishment. OBBSPL offers a 24-hourcall service for Break Down and towing Service around the Mumbai area.

M&M Yachts: Exclusive dealers to Rivayachts, often known as pride of Ferrettigroup.

Ocean Crest Marine: Ocean CrestMarine currently has outlets in Dharamtarcreek and Revas port in Mandwa. Ashowroom in South Mumbai is also in theoffering.

Aquasail : was founded in 2004 by ShakeelKudrolli, Indias premier yachtsman.

Aquasail has established itself in themarket by forging several tie ups withsome of the worlds best brands, bringing arange of dinghies, power and sail boatsto India . The brands that Aquasailrepresent are the Worlds leaders in theircategories like Laser Performance ,Hobie Catamarans and Kayaks,NeilPryde Windsurfing and Cabrinha Kiteboarding. The highly desirableBeneteau with its sleek French design andluxurious interiors is the ultimate stylestatement in sailing yachts & powerboats.


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The Indian Yacht Club (WHOs WHO)

Vijay Mallya Chairman, UB Group ownsthe 95 m long (311 ft) Indian Empresscosting approximately Rs 4.43 billion.Indian Empress is largely used for hisprivate parties.

Gautam Singhania CMD, RaymondGroup has Indias first indigenously designed yachtMY Ashena, a tri-deck luxury yacht. Its one of the few in the

world that is entirely made of wood. Vinod Mittal MD, Ispat Group recently

acquired the Ferretti 550 (55 footer)luxury yacht. The yacht has two guestcabins and a master cabin.

Riyhad Kundanmal Director, OceanCrest Marine sold a 50 footer Sunseeker,

which he picked up in London in 2008.He also bought another 84 footer (TheSunseeker 80)

Rajen Mariwala , Managing Director of Hindustan Polyamides & Fibres Limited-acquired a 36-footer Jeanneau (Rs 10million)

Anil Ambani, Chairman of Reliance-

ADAG, has recently purchased a 34meter super luxury yacht from Italy,costing approx. Rs. 4 billion. The yachthas about 5500 sq.m. area across upperand lower decks.

Shah Rukh Khan, popular Bollywoodstar.

Yachts one can order in IndiaUTILITY BOATS INDICATIVE PRICES*Lancer 21 Rs. 1.7 millionMonterey 18 Rs. 2.0 million

Silver Craft 31 SF (Dolphin 31)

Rs. 4.5 million

Sea Ray 350 Sundancer Rs. 10.5 millionRegal Sports Boat 3050 Rs. 8.2 millionLarson Cabrio 310 Rs. 8.4 millionTouring 36 Rs. 6.1 millionYACHTSMajesty 44 Rs. 30 millionAzimut 43 Rs. 45 millionPrincess 42 Rs. 38 millionSunseeker 45 Rs. 45 million

Ferretti 460 Rs. 48 millionMajesty 66 Rs. 100 millionAzimut 68 E Rs. 190 millionPrincess 67 Rs. 180 millionSunseeker Manhattan 66

Rs. 185 million

Ferretti 681 Rs. 210 millionMEGA YACHTSMajesty 101 Rs. 240 millionAzimut 103 S Rs. 480 millionFerretti 110 CL Rs. 600 millionSUPER YACHTS Custom Line 112 Rs 940 millionPershing 115 Rs. 1.28 billionAlibi Rs. 4 billion

*Prices are inclusive of import duties Source: Industry


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Chapter 4Regulatory Framework

Government Policy

Indian Pleasure boat industry is covered by Inland Vessels Act. (Attached in Annex 2 )

As there are no specific rules and regulationsdesignated for pleasure boats in India, the ownersface regulations applicable to carriers or cargo

vessels.

Registration

Registration is one of the most important aspectsof yacht ownership, as the registry

provides proof of title offers the security of mortgages to the

Banks and to the potential buyers confirms that the yacht is free from any

encumbrances.

The Registration Number is required to be placedon back and front of the yacht. For motor boats,registration is mandatory. Any vessel which hasprovision for sailing does not require registrationby law, however registration is practiced in allcases for easy navigation.

Vessels under 15 tonnes have been exempted andthus do not require registration with any authority.Commercial liners are registered with theDirector General of Shipping and smallercoastal or inland water vessels are registered with

the respective State Maritime Boards .

Maharashtra Maritime Board

Maharashtra Maritime Board is the nodal agency that takes care of the regulatory anddevelopmental framework of the state's maritimeactivities. Over the years, the board has taken anumber of initiatives to harness the potential of itscoastline. These include development of the

marine front including setting up of several cargojetties, ferry wharfs, larger port terminals, inland

water transport system, shipyards etc. MMB portspresently handle 10 percent of the total cargohandled by minor ports in the country. MMBactivities across the state are supported by 400employees in five regional offices.

As boats are not compulsorily registered with any authority, there is no checking of the log books,


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verification of the men working on it. According to Daily News Analysis the total no of boatsregistered till 2007 was 269 an increase of 73 overprevious years 196. However primary sourcesestimate that approximately 120 boats are sold

every year, which shows that not all are registered.

Source: Daily News Analysis

From the data obtained from Royal Bombay

Yacht Club, the total no. of boats registered withthem was 185 of which speed boats were thedominant category.

After 26/11 terror attacks, the intelligenceagencies directed both the central and stategovernments to ensure that all private yachts areregistered either with DGS or state maritimeboards. However, as per industry feedback,

both the authorities are refusing to register theboats citing technical reasons.

Imports

Imports of Yachts and other vessels for pleasureor sports attract Custom Duty at a rate of 34.13%.However, when the owner shows it as a tool tobusiness, the custom duty is zero.

Other Taxes

Mumbai, which has the highest concentration of yachts in India, levies 5.5% Octroi on yachts andpleasure boats. However, there is no Octroi inGoa.

Industry bodies

Some of the national and state level industry bodies of the yacht industry are:

The Yachting Association of India (YAI)

The Yachting Association of India (YAI) wasformally constituted on 15 May 1960 and wasregistered under the Societies Registration ActXXVI of 1961 on the 22 December 1964 atCalcutta, West Bengal. The YAI is also officially recognised by the Indian Olympic Association and

Year No. Of Boats

2006 196

2007 269


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the Ministry of Youth Affairs and Sports,Government of India as the governing authority for sailing, windsurfing, motor boating, powerboatracing and personal watercraft, at sea and oninland waters in India. As such the YAI is

responsible for promoting the sport in thecountry, developing and training of judges,umpires and other administrators of the sport andrepresenting the sailors in all matters concerning the sport. The YAI is affiliated to theInternational Sailing Federation (ISAF), which isrecognised by the International OlympicCommittee (IOC) as the governing authority forsailing worldwide. There are currently 14 classassociations affiliated to the YAI, ranging fromthe smallest, the Optimist Dingy to the largest,and the J 24 class. There are currently 40 clubsaffiliated to the YAI, spread over the various partsof the country.

Indian Olympic Association

IOA the apex Sports Organization of OlympicSport in the country is responsible for the Indiancontingents participation in the Olympic Games,Commonwealth Games, Asian Games (Outdoor-Indoor-Beach) and South Asian Games. EachOlympic and Non-Olympic Sport has aFederation at the National level and isaffiliated/recognized to/ by IOA. A specialfeature of the Indian Olympic Association is that,in addition to the national federation for eachsport, there are State Olympic Associations in

various States in the country. The State bodiescontrolling the different sports are affiliated to the

national federations and to the State Olympic Associations

The Royal Bombay Yacht Club (RBYC)

This is a yacht club in the Colaba area of Mumbai,India. It was founded in 1846 as the Bombay Yacht Club. It holds its importance in terms of theregistrations and services offered.

The RBYC has what's called a Seabird Class of Boats and their sister club, the Colaba Sailing Clubhas a Lightning Class of boats. The RBYC alsohas Optimist class of boats for children in theages of 8 and 15. The charges are levied for theboat and not on the number of people going

sailing. An afternoon sail from 2 pm to 6 pm would cost Rs. 50/- on a weekday and Rs. 150/-on a weekend.


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SWOT ANALYSIS OF THE INDIAN YACHT INDUSTRY

STRENGTH

Presence of established global brands Market in a high growth phase

Less traffic on water ways than road ways

Less polluting and time efficient mode of commuting

The industry has the potential to create employment as each yacht on an average gives employment to 10

people for maintaining and crewing.

WEAKNESS

Absence of Marinas in India, resulting in severe shortage of proper docking facilities. Temporary pontoons made of plastic, does not go well with the luxury positioning of the industry

High degree of government intervention in marine infrastructure development in India

Limited technical expertise and infrastructure for boat servicing and maintenance

High initial investment (including custom duty of about 35%) and maintenance cost of boats

No specified rules and regulations for the pleasure boating industry

Lack of clarity on regulatory responsibilities of central and state governments, relating to registration etc.

OPPORTUNITIES Growing number of high net-worth individuals

Pre owned boat market expected to flourish

Market growing market via fractional ownership options, time share, charter programs.

With Marina coming up in Kochi and plans going on for Mumbai, huge opportunity lies in the industry.

With more Boat Shows/ world sea races happening, India is being recognized as a luxury yacht market.


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An ideal marina, like Dubai or Phuket, will bring a new mode of entertainment to the industry.

If Government improves regulation structure, privatize marine infrastructure development, India could be

a good stopover on the world sea route. This will in turn boost tourism industry and employments.

THREATS

Slow pace of marine infrastructure development could adversely affect the growth of the industry.

With coastal erosion reported on sea shores near Mumbai and Goa, environmental authorities may create

obstacles in future.

In a chicken and egg situation, private players find it a high risk task to build marinas without much

demand for yachts in market.

In absence of sheer volume, a significant low margin of 5-8% makes it a relatively unattractive market for

new dealers to enter.


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Chapter 5 Demand Potential

Demand according to the present scenario

The potential demand for yachts and pleasureboats in India over the next 10 years can beestimated by two methods :

- Growing universe of the individualbuyers

- Yachts as a part of the expandingluxury market

Growing universe of the individualbuyers 4

There are 3 crucial components comprising theuniverse:

HNIs 5: The HNI population as of December 2007 stands at 0.12 million,growing at a CAGR of 19% p.a.

4 For calculation purposes, corporate ownerships areignored, as theres no observable trend in their demandpattern. Moreover individual buyers have a major share.5 To avoid double counting, the HNI populationexcluding the CEOs/MDs of top 100 BSE listedcompanies, bollywood celebrities and sportspersonshas been taken into consideration.

CEOs/MDs : Since yacht is a luxury product and not every CEO or MD of acompany falls in the same income

bracket, our universe is limited only tothe CEOs and MDs of top 100 BSElisted companies earning over Rs 10million a year. This segment has beengrowing at 22%p.a. since last three years.

Bollywood celebrities andsportspersons : The booming Bollywoodindustry and other similar fields haveconstantly been producing potentialbuyers particularly in the younger agegroup. The same follows in the field of sports particularly cricket. This section of the universe is pegged to grow at a CAGR of 20% p.a.


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Year HNI(growing at a

CAGR of 19%)

CEOs/MDsgrowing at a

CAGR of 22%)

Bollywoodcelebrities &sportspersons(growing at a

CAGR of 20%)

Total sizeof the

universe(No.)

Market size in No.of Boats each year(0.1% of universebuys boat every

year)

2006 79,318 52 200 79,5702007 97,561 63 240 97,8642008 120,000 77 288 120,365 2009 142,800 94 346 143,240 1432010 175,644 115 415 176,174 1762011 216,042 141 498 216,680 2172012 265,732 171 597 266,500 2672013 326,850 209 717 327,776 3282014 402,026 255 860 403,141 4032015 494,492 311 1,032 495,835 496

2016 608,225 380 1,238 609,843 6102017 748,116 463 1,486 750,066 7502018 920,183 565 1,783 922,532 923

Total market potential over 10 years 4,312

The total size of the universe as of December2007 end was 0.123 million. According toindustry sources, approximately 120 boats are sold

every year, indicating that only 0.1% of theuniverse buys boat every year. By following thesimilar trend, taking into consideration thegrowing size of the universe, the yacht industry

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

Yachts as a part of the expanding luxurymarket

If luxury is about indulging, sans theboundaries, then owning a yacht is theultimate in luxury travel for the Indianmillionaires. People are not just investing in

Yachts but are indulging in it. The luxury travel is not just limited to the usualsuspects in metros, tier II cities and non-metros too are throwing up business. Statistics


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show that, luxury goods market in India waspegged at USD 4.35 billion in 2006 which isexpected 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 the dataobtained through primary research 95% of the

boats are sold for luxury purposes, which meanthat 186 boats cater to the luxury market. Giventhe value of the luxury goods market in 2006 andassuming the average price of boat to be Rs 5million, the share of the yacht industry in luxury goods market is estimated to be 0.54%.

Since the luxury goods market is pegged to reachUS$ 14.35 billion in 2010, using the share of theyacht industry in luxury market as obtained from2006 data, the estimated size of the luxury yacht

market in 2010 would be US$ 71.75 million, whichtranslates into a total of 574 boats in 2010 (againtaking Rs. 5 million as the average price).

Now considering that the total number of boats isexpected to increase to 574 by 2010, the CAGR over a period of four years (2006-2010) isapproximately 30.6 %. Assuming a similar trend to

continue for the following eight years, the totalno. boats in the market is projected to touchapproximately 4,800.

2006No. of boatsin themarket until2006

Value in Rsmillion (takingaverage price tobe Rs 5 million)

Value in USDmillion (takingaverage exchangerate as 40 Rs perUS$)

Yacht industry 186 931 23.275 Luxury goods market (Source: TheEconomic Times ATKearney IndiaLuxury Review 2007)

4,350

Share of the yacht industry in luxury goods market (%) 0.54


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Considering both the methods, an averagefigure of 4500 boats seems to be a realisticestimate for the year 2018.

Potential demand

Given the current status of the industry withinfrastructure and regulatory framework being themajor impediment to the growth, the assessmentof the true market potential becomes a criticalissue. Taking into account the increase in incomelevels and awareness among people, along withthe assumption that the industry is no longerconstrained by infrastructure and regulatory

issues , the market potential can be estimated asfollows:

The universe of the potential buyers consists of the HNIs, CEOs/MDs of top 100 BSE listed

companies, Bollywood celebrities andsportspersons. Considering that only 120 boats aresold every year indicates that only 0.1% of theuniverse buys a boat every year. Taking intoaccount the assumptions and increasing awareness, a realistic estimate of at least 0.3% of the universe buying a boat every year seemspossible. Accordingly, the Indian market offers apotential for sales of around 13,000 boats over thenext ten years.

Year Total no of boats in the market

2006 1962007 2562008 3342009 4372010 5742011 7502012 9792013 1,2792014 1,6702015 2,1812016 2,8482017 3,7202018 4,858


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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 2017 748,116 463 1,486 750,066 2,250 2018 920,183 565 1,783 922,532 2,768

Total number of boats (2009 2018) 12,935


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6. CONCLUSIONS &RECOMMENDATIONS

Conclusions

Pleasure boating and Yachting industry in India isstill in a nascent stage of development, with only about 300 boats registered. Even though the

Yachting Association of India was formed in1960, it is only in the recent years that the markethas picked up, and is currently reported to begrowing at more than 100% per year, both in

volume and value terms.

The main factors driving the growth of the Indianmarket are rising income levels and the increasing number of high/ultra-high net worth individualsin India; increasing popularity of cruise tourism,and organisation of boat shows, exhibitions andother promotional events in various parts of thecountry, which have contributed significantly tothis heightened interest. Charters and hiring of luxury yachts for parties etc. is also becoming popular among corporate as well as wealthy individuals. Several new marinas are inplanning/implementation state, which will a largeextent address the problem of inadequateinfrastructure, clearing the way for furtherexpansion of the market for yachts and pleasureboats.

A large number of the worlds leading yachtcompanies already have a presence in the Indianmarket through their dealers / distributors. Italiancompanies have a 45% market share, followed by UAE based companies (25%) and other Europeancompanies. The Italian yacht industry enjoys ahigh brand equity in India and therefore new Italian companies entering the market are likely tohave good acceptance.

The growth of the market is constrained to anextent, due to lack of regulatory framework, bothat the central as well as state level. There is lack of clarity regarding registration of boats, and privateinvestment in building marine infrastructure is

hampered by political and administrative red tape.However, it is reasonable to assume that as theindustry grows in size, these issues will getaddressed.

Based on the present market scenario, withestimated sales of about 120 boats a year in therecent years, the demand for additional boats overthe next 10 years, i.e. 2009 to 2018 is projected tobe about 4500 numbers. However, in a likely scenario of regulatory and infrastructure issues

being adequately addressed, the total potentialdemand could be 13,000 boats over the next 10years.

Recommendations

The following recommendations could serve aspointers for strategic decisions by Italian yacht


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manufacturers planning to enter the Indianmarket:

- Selection and appointment of dealers is thekey to success. In addition to generation of sales (identification of prospects, guidance inselection etc.), the dealers play a very important role in terms of helping potentialbuyers in arranging finance from banks,handling the import formalities, warranty service and various options in maintenancebackup and boat management. Dealers alsoplay a key role in facilitating the fractionalownership arrangements, making it yachtownership a more viable proposition forindividual buyers.

- High visibility in the market, through activeparticipation in boat shows, exhibitions andtrade promotion events is extremely important to create brand awareness.Collaboration with yacht clubs and otherindustry bodies, e.g. sponsorship of promotional events, can also be a usefulavenue.

- While having a presence in key locations likeMumbai, Goa and Kochi is essential, it is also

important target non coastal cities as well, which have high concentration of potentialcustomers.

- High capital investment being one of the mainissues for the potential buyers, offering apackage of fractional ownership options orfinancing tie-up with a bank can be a strong USP.

- Provision of maintenance and boatmanagement services: Almost one-third of theyacht owners surveyed during the study ratemaintenance provision as their top selectionpriority.

- Developing the pre-owned yacht marketcould be a unique niche in the Indian market.In world boating industry, about 42% of allnew boats are sold by the first owner withinseven years. Considering that the industry inIndia has taken off only during the last twoyears, there could be a substantial pre-ownedboats market within the next 5 years.Companies could also explore the possibility of offering pre-owned boats from other

countries (duty refurbished and certified).


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ANNEXURES


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ANNEX 1:


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Annex 2:


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ANNEX 3 : LIST OF PEOPLE PERSONALLY MET

Company Name Designation City

Electronik Lab Bahadur B Sanjana Partner MumbaiLOTS John Mathews Executive Director KochiNAUTILUS Yachts Captain Mathew Cherian President KochiCentury Shipyard P Ltd Joy Jacob Executive Director AlappuzhaMarine Biz tv, AriesMarine

Jacob Joseph Naval Architect Kochi

NAUTILUS Yachts Joseph Jacob Director UAEMFS India Captain Thellyil J. Mathew NA KochiIndmerc George A. Pottamkulam NA KochiKSINC K.V.R. varier Managing Director KochiMarine Solutions Gautama Dutta Director MumbaiMarine Solutions Anju Dutta Partner MumbaiNavnit Marine Pvt Ltd Sateesh S Nair Manager( South) MumbaiMARINETEK Simon J Arrol Director ( Technical) Mumbai

AVA Marine Feroz Contractor Partner MumbaiNAUTILUS Yachts Captain Mathew Partner MumbaiY Cyrus Partner Mumbai

Giira Yachts Paurus Partner MumbaiRBYC Rajan Manager(Sailing) Mumbai

Patel Sr Manager Mumbaiurban aqua Dr Peter Jansen Partner NAPRAGA Marine Pvt Ltd Joe Nejedly Managing Director CoimbatoreIndmerc Joseph A. Pottamkulam NA KochiWest Coast Marine YachtServices Pvt Ltd

Aashim Mongia Managing Director Mumbai

West Coast Marine YachtServices Pvt Ltd

Jitender Rami Partner Mumbai

Infinity Yachts Nelson D Mello CEO MumbaiAqua Marine MumbaiNew Wave Rajiv Bhatia CEO MumbaiM&M Yachts Meherji Partner MumbaiM&M Yachts B Bhardwaj Partner Mumbai


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New Delhi 110065

Documents

Boating - Pleasure Boating - Yachting Industry - Final Report - Ace Global[1]