Country Snapshot: India / Golf Advisory Practice in EMA

Country Snapshot: IndiaGreat challenges…even greater potential

The Indian economy

Key indicators 2009 2010 2011* 2012*

Population (m) 1,166 1,184 1,202 1,238

GDP at current market prices (USD b) 1,365 1,729 1,988 2,326

Real GDP growth (%) 9.1 8.8 7.8 8.6

Consumer price infl ation (%) 10.9 11.9 6.8 5.0

*ForecastsSource: Economist Intelligence Unit, 2011

Overview of supplyThe British Empire left a golfi ng legacy to India, and a number of high quality courses, steeped in tradition. The introduction of the Indian Golf Union (IGU) in1955 took over responsibilities for golf organisation and development from the Royal Calcutta Golf Club, who had been handling India’s golf interests since the club’s inception in 1829.

According to the IGU, India currently has 196 registered golf courses, and up to35 additional courses not affi liated with the IGU. Around 50% of the registered courses are situated on military bases, which are only accessible to military personnel and select individuals. This leaves approximately 100 courses to caterfor a civilian golf demand.

The makeup of the golf course supply is split between 18-hole (39% share)and 9-hole (60% share) facilities with three 27-hole clubs. There are fi ve existing signature courses in the country, including ones designed by Jack Nicklaus,Arnold Palmer and Greg Norman.

The Indian golf market 2011

Number of golf courses* 196*

Number of club members (approx) 100,000

*affi liated to the Indian Golf Union (IGU)Source: IGU

Number of Golf CoursesAffiliated to IGU

Golf

Cour

ses 200

195

190

185

180

175

170

165

160

155

1502000 2001 2003 2004 2005 2006 2007 2008 2009 2010

Source: IGU

158 159161

164

175

179

186 186

194196

Golf Advisory Practice in EMA

The majority of courses in India are located in proximity to main urban centres, with many in or close to New Delhi, Bangalore, Hyderabad and India’s largest city, Mumbai. Surprisingly there are still no resort courses in the country even though inbound tourism in India has grown 8.1% in the last year.

Overview of demandIt is estimated that India has approximately 150,000 active golfers, of which 100,000 are golf club members. Of these, 55,000 subscribe to the IGU for a one-off fee of around USD 200 benefi ting them to concessional rates at affi liated clubs.The demographic of these players is heavily skewed towards male participants(85-90%) while female and junior golfers comprise the remaining share.

In recent years private clubs have become more accessible to green fee players, however many courses still advertise, or like to be seen as members only. According to our sources, there are only two clubs, both in the capital New Delhi which are defi ned as public courses. Many clubs restrict green fee players withthe majority of courses closing to visitors over the weekend to cater for the members’ demand.

Rounds and revenuesResearch collected for KPMG’s Golf Benchmark Survey indicates that the average number of rounds played per annum at 18-hole facilities ranges from 25,000 to 30,000 (excluding military courses). At some of the busier clubs where fl oodlights are used, hours can be extended to accommodate a higher demand.

Average annual revenues for both nine and 18-hole courses range USD 180,000-200,000 (excluding military courses) with some larger, more popular clubs reaching anywhere up to USD 800,000 per year.

Membership initiation fees typically range USD 1,800-2,000 however, at some of the more high profi le clubs with very restricted and exclusive membership policies, fees of up to USD 20,000 may be charged.

Annual subscriptions for individual membership can range USD 100-300 depending on the club. With the average number of members per club estimated at 1,000, although some courses exceed 2,000 members, it becomes clear that a large portion of annual revenues emanates from subscriptions.

Average green fees range USD 10-50 and do not contribute to annual revenuein the same way as subscriptions, due to most rounds being allocated to members. Some high-end courses charge up to USD 100 but these are low in numbers.

ChallengesOur discussions with local industry stakeholders highlighted an underlying theme of lack of professional expertise and knowledge within the Indian golf industry. The requirement for more dedicated and experienced resources to advise and understand the challenges that are faced not only with new projects but also when looking to overcome inherent problems of long established operations.

Another major challenge India faces today in developing golf courses is the ability to acquire land in both a cost and time effi cient manner. Land parcels are generally small; and developers need to purchase multiple plots at a cost that can quickly infl ate. The initial steps taken when planning a project with a golf component can be time consuming, expensive and misunderstood, delaying developments and have, in some instances, resulted in the omission of golf from project master plans.

In an attempt to drive participation rates, the sport needs to be supported by an increase in accessible courses that focus on affordability to a wider audience. However the viability of such projects can be questioned especially when the only cost effective land available for this would be away from urban areas with limited transport infrastructure.

Cluster map of main golf course supply in India

� 15-20 courses

� 8-12 courses

� 5-10 courses

� 4-6 courses

New Delhi

Mumbai Hyderabad

Bangalore

Chennai

Distribution of golf courses by size

Source: IGU

� 27-hole + courses 1%� 18-hole courses 39%� 9-hole courses 60%

Did you know…?• India was the fi rst country outside

Great Britain to have a golf course.• The Delhi Golf Club was chosen to

host the fi rst golf tournament of the Asian Games in 1982.

• The average number of members per golf club is 1,000; however, this can exceed 2,000 at some clubs.

• The New Delhi area has the most courses in India with as many as 18.

• Environmental considerations could restrict progress in course construction as the use of land and water for non-essential living is opposed.

© 2011 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Local contact:

Indian Golf Unionwww.indiangolfunion.org

Acknowledgements:Indian Golf Union, Ranganath Thota – Golfgaga.com, Howard Swan – Swan Golf Designs, Anit Mehrotra – Silverglades, Anil Dev – Asian Golf Course Owners Association

For further information pleasecontact the Golf Benchmark Team:

KPMG’s Golf Advisory PracticeH-1139 Budapest,Váci út 99Hungary

T: +36 1 887 7100E: info@golfbenchmark.com

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International Cooperative (“KPMG International”).

© 2011 KPMG Tanácsadó Kft., a Hungarian limited liability company and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Development and future outlookIn the last 10 years, 38 golf courses have been affi liated to the IGU, of which30 were new developments and the remaining eight as re-developments of existing military courses. This has been a very slow growth rate for the last decade, however based on our research; there are currently as many as 30 courses under construction.

Due to the lack of transparency it is diffi cult to estimate future growth rates of demand. One approach, as shown on the left is based on expected participation rates applied to a small section of the population who can feasibly afford to choose to play golf. This suggests that India may need to build up to 100 new courses to satisfy the demand over the next decade. An increase in participation can be achieved by: • Building more affordable and accessible facilities• Increasing activity in junior and academy golf• Effectively promoting professional golf to a wider audience.

The IGU has taken positive steps to ensure the development of golf in years to come. A joint venture with the R&A and IGU saw the creation of the National Golf Academy, intent on improving the standards of teachers, players, trainers and course managers.

The reach of the professional game will be just as important in driving the sport forward in the future. Players like Jeev Milkha Singh and SSP Chowrasia (both European Tour champions) inspire all ages to take up the sport. Professional competitions such as the Indian Masters (which was inaugurated in 2008 andis now India’s fl agship golf tournament with a purse of just over USD 2.5 millionin 2011) bring exposure to both global and national Indian markets. Additionally,the Indian Open on the Asian Tour has been won by an Indian national three outof the last fi ve times.

Future course development seems inevitable and may need to come hand-in-hand with real estate opportunity. Provided that the challenges that exist in India can be overcome, there is great potential in this growing golf market.

Outlining future potentialgolf demandThe population of India stands at1.2 billion. The estimated population of India with a disposable annual income of more than USD 10,000 is approximately 1.5%* of the total population, resulting in a potential golf target market of 18 million.The proportion of active golfers from this population is 0.8%.

Assuming that in the next10 years, the proportion of active golfers doubles to 300,000, then India would have to build between 90-100 new courses to accommodate the increased demand.*McKinsey Global Institute with KPMG elaboration