You are on page 1of 56

The Boating | Pleasure | Yachting Industry in India Market Research 2009

Boating/PleasureBoating/YachtingIndustry &itsEvolutioninIndia

SubmittedTo: ItalianTradeCommission,Mumbai(INDIA) PreparedBy: AceGlobalPrivateLimited

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


TableofContents

ExecutiveSummary Chapter1IndiaOverview Economy Demography Climate CoastLine Tourism IncomeGroupings HighNetworthIndividuals 1 6 6 6 7 7 7 8 9 11 11 12 12 13 13 16 18 20 20 23 23

Chapter2PleasureBoating&YachtingIndustry YachtsNomenclature Origin&EvolutioninIndia MarketSize Imports Majordestinations Marinas Factorsdrivinggrowth

Chapter3MarketSegments Individualowners CorporateBuyers ConcentrationCityWise

FormsofOwnership o o TimeSharing FractionalOwnership

24 26 27 28 33 35 36 36 36 36 37 37 37 39 41 43 46

CharterServices TheSupplySide MajorManufacturers MajorDealers TheIndianYachtClub(WHOsWHO)

Chapter4RegulatoryFramework GovernmentPolicy Registration MaharashtraMaritimeBoard Imports OtherTaxes Industrybodies

SWOTAnalysis Chapter5DemandPotential Potentialdemand

Chapter6Conclusions&Recommendations

ANNEXURES

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 and a Gross Domestic Product (GDP) growth exceeding 9% annually for three years continuously, and with a 7% growth expected for 2009, it is still holding its ground in the midst of the current global financial crisis Income groupings: According to Indias premier economics research agency NCAER, there in all 206.5 million households across the country of which around 1.2 million homes have an annual income of Rs 1 million and above, about 21% of the households are concentrated in Mumbai. HNIs: India recorded the fastest growth in the HNI population worldwide in 2007-08, growing by more than 23%. To 120,000 High Net worth Individuals. The average net worth of the Indian HNIs has gone up to $3.6 million, compared to the global average of $4 million.

Pleasure Boating & Yachting Industry


Market Size: Presently there are less than 300 boats registered in India, including around 120 luxury yachts and over 150 speed boats, with foreign brands enjoying a dominant share. According to industry sources, approximately 120 boats are sold every year, of which more than 80% are speed boats. The popular sizes of boats purchased in India ranges from 15-35 ft in overall length. The current revenue of Indias pleasure boating industry is estimated to range from Rs 1.5 billion to Rs 5. However, the industry is growing at more than 100% p.a. in volume and value terms, and one can expect the share of luxury yachts to increase over the years. Major Destinations: The nature of yachting limits the locations to only the few cities with good waterfronts and marinas. At present, Mumbai, Goa and Kochi are the only yachting destinations in India. Mumbai is by far the biggest location for yachting and leisure boats in India. Marinas: In India, the absence of marinas is the biggest challenge and constraint before the yacht industry. Some of the major issues are: 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. Absence of national or state level policy for marinas, which presents major risks for entrepreneurs who wish to develop

1|Page

marinas in India. This leads to a vicious circle: people didnt buy yachts because they never had a proper docking place for their yacht; while no developer wanted to develop marina as they never saw enough demand from boat owners. However some serious recent attempts have been made by the state maritime boards to set up marinas in India. The lead has been taken by the Maharashtra Maritime Board1, which has come up with draft legislation on regulatory framework required to set up a marina in the state of Maharashtra. The Kerala Tourism Development Corp has announced it will set up a 'marina' at the Bolghatty Isle in Kochi. With a few 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 in fiscal 2008. Also, the number of people in the income bracket of Rs 5 million-10 million has more than doubled. With rising income levels and more people entering into the highest income bracket, yacht industry is sure to benefit. Cruise arrival: There has been a marked increase in Cruise Arrivals in India which
1

is playing a major role in promoting the Indian yacht industry. Mumbai Port, the home port for cruise tourism handled 66,681 domestic tourists and 24,400 international tourists for cruise shipping in 2007. In order to promote the Cruise Industry, the government has introduced tax exemptions for the cruise operators. The government is hopeful that such a move will help increase cruise passenger landings from the current 0.2 million to 1 million by 2010. Popular events: The fact that buyers have spent close to Rs 4 billion on pleasure boats since Mumbai hosted Indias first international boat exhibition in 2007, signifies the degree of influence these events have had and the awareness that they have created. Amongst the other popular events, the important ones were The Boat India 2008 which was held at Kochi and the Volvo Ocean Race stopped by at Kochi for a fortnight, Dec 1-14, 2008.

Market Segments
Demand Side Pleasure boat owners can be classified into two categories, Individual and Corporate Owners. Individual Owners are buyers who own boats for their personal use, either as transport or leisure. Majority of boats in India are owned by individuals. Speed boats less than 31ft and Sailing

Maharashtra Maritime Board is a regulatory body

2|Page

Boats are two most popular segments among the individual buyers. A corporate owner is a company or firm that owns a luxury boat to be used as a commuting vessel for its top executives to distant office locations or for leisure and parties. Some of the prominent examples are United Breweries UB group, Indiabulls Financial Services, Ispat Inc (L N Mittal), Essar Steel, and Reliance-ADAG. Owners/ partners of firms often register their personal yachts under their companys name, so as to save tax by showing it as business expenditure. Speed boats are most popular amongst the corporates too and constitute 81% of the total boats, majority of which are the large sized speed boats. Supply side In India, most yacht manufacturing companies operate through a dealer model with presence in various countries of the world. Since India is not a big market, the renowned brands have only one or two dealers in the whole country. Word of mouth references from other customers and dealer contacts and links are the most effective sources of sales generation. Several leading international yacht manufacturers are present in the Indian market. West Coast Marines and Marine Solutions are the leading dealers of yachts, representing prestigious brands.

Finance and Insurance Indian financial institutions have not yet adopted marine financing options. Usually, there is term loan provided to the owner, but there is no loan against yachts or boat loans in the market. The only bank active in this field is Yes Bank, where in a dedicated team is handling this. Yacht insurance starts from construction phase itself. Amount depends on owners discretion. Usually all insurance companies provide marine insurance Many Indian dealers, like Marine solutions, help their clients to get financing and insurance done from abroad as they believe that financial institutions expertise is not up to the mark in marine industry.

Regulatory Framework
As there are no specific rules and regulations designated for pleasure boats in India, the industry is covered by Inland Vessels Act, and the owners face regulations applicable to carriers or cargo vessels. Registration: After 26/11 terror attacks, the intelligence agencies directed both the central and state governments to ensure that all private yachts are registered either with Director General of Shipping or the respective state maritime boards. However, as per industry feedback, both the authorities are refusing to register the boats citing technical reasons.

3|Page

According to Daily News Analysis the total number of boats registered till 2007 was 269 (196 in 2006). However primary sources estimate that approximately 120 boats were sold every year in the last few years, which indicates that not all boats are registered. Imports: Custom duty on imported yachts is 34.13%. In addition to this, 5.5% Octroi is payable in 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)

Recommendations
Pointers for strategic decisions by Italian yacht manufacturers planning to enter the Indian market: Selection and appointment of dealers is the key to success, in addition to generation of sales, the dealers play a very important role in terms of helping potential buyers in arranging finance from banks, handling the import formalities, warranty service and various options in maintenance backup and boat management. High visibility in the market, can be achieved through active participation in boat shows, exhibitions, trade promotion and collaboration with yacht clubs and other industry bodies. While having a presence in key locations like Mumbai, Goa and Kochi is essential, it is also important target non coastal cities as well, which have high concentration of potential customers. High capital investment being one of the main issues for the potential buyers, 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: Almost one-third of the yacht owners surveyed during the study rate maintenance provision as their top selection priority.

Market Potential
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. -

4|Page

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

within the next 5 years. Companies could also explore the possibility of offering pre-owned boats from other countries (duty refurbished and certified).

5|Page

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). Its the second-most populous country, and the largest democracy in the world.

Economy
India has transformed in the past fifteen years from a closed market to a liberal market driven economy, with a significant involvement of the private sector, including foreign enterprises. With its recent trillion dollar economy status, it has seen remarkable economic growth over the last couple of years. With a Gross Domestic Product (GDP) growth exceeding 9% annually for three years continuously, and with a 7% growth expected for 2009, it is still holding its ground in the midst of the current global financial crisis. The economy is broad-based, with well developed agriculture, industrial and service sectors, including high technology and knowledge-based sectors. 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. EconomyProfile(200708)
GDPatFactorCost (currentprices) ForexReserves Exports Imports FDIinflows
$1.06 trillion

US$309.7 billion US$155.5 billion US$235.9 billion US$29.9 billion

Demography
India is the worlds second most populous country (after China), with a population of nearly 1.15 billion people and a gender ratio of 933 females to 1000 males. 6|Page

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 in urban areas. Given its cultural diversity, scores of languages and dialects are spoken in the country. Hindi is the national language, while English is the business language. India is a federal union of states comprising twenty-eight states and seven union territories.

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, and 2,094 kilometers (1,301 mi) to the Andaman, Nicobar, and Lakshadweep Islands. According to the Indian naval hydrographic charts, the mainland 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

Climate
Because of India's size, its climate depends not only on the time of year, but also the location. In general, temperatures tend to be cooler in the north, especially between September and March. The south is coolest between November to January. In June, winds and warm surface currents begin to move northwards and westwards, heading out of the Indian Ocean and into the Arabian Gulf. This creates a phenomenon known as the south-west monsoon, and it brings heavy rains to the west coast. Between October and December, a similar climatic pattern called the north-east monsoon appears in the Bay of Bengal, bringing rains to the east coast. In addition to the two monsoons, there are two other seasons, spring and autumn.

TourismFacts,2007
ForeignTouristArrivalsinIndia DomesticTouristVisitstoall States/UTs ForeignExchangeEarningsfrom Tourism(inUS$) ShareofIndiainInternational TourismArrivals ShareofIndiainTouristArrivals 5.08mn 526.57mn US$10.73bn 0.56% 2.76%

Coast Line
Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal on 7|Page

Income Groupings
According to Indias premier economics research agency National Council for Applied Economic Research (NCAER), of the total 206.5 million households across the country, the income groupings are as follows:

Globals: The top of the income pyramid has around 1.2 million homes with an annual household income of Rs 1 million and above (> US$ 22,000 in nominal terms, 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$ 11,000 to 22,000 in nominal terms, and $ 58,000115,000 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 nominal terms, and $ 23,000-58,000 in PPP terms) The bottom of the pyramid is made up by the remaining 192 million homes including 101 million families living in poverty conditions, with very low disposable income (91 million households - Aspirers; and 101 million households Deprived)

8|Page

Source: Ace Global estimates

The data for the number of households in the income bracket of above Rs. 1 million for the major Indian cities is presented in the table below: Indian Cities No. of Households (having income of more than Rs. 1 million) 71,717 152,515 115,439 84,887 250,909 109,061
Source: Sky line India

High Net worth Individuals


According to the World Wealth Report, prepared by Merrill Lynch and Cap Gemini, India has over 120,000 High Net worth Individuals (HNIs), i.e. individuals having a wealth of more than one million US dollars, besides their primary residence. The average net worth of the Indian HNIs has gone up to $3.6 million, compared to the global average of $4 million. Spearheaded by the annual growth of 9 % followed by a splurge in the stock markets, India recorded the fastest growth in the HNI population worldwide in 2007-08, growing by more than 23%.

Hyderabad Delhi Bangalore Urban in Thane Mumbai Pune

9|Page

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

10 | P a g e

Chapter 2 Pleasure Boating & Yachting Industry


Yachts Nomenclature
A yacht is a recreational boat that covers two different classes of watercraft: Sailing Yachts: Sailing Yachts can range in overall length (Length over allLOA, in yachting parlance) from about 20 ft (6 m) to well over 100 ft (30 m). The motive force being the wind, sailing is more economical and environmentally friendly than any other means of propulsion. 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. Usually in the western markets, yachts are classified according to 5 major categories:

Particulars Sports&UtilityBoats SmallYachts SuperYachts MegaYachts Gigayachts

Length Upto40ft 4080ft 100200ft 200300ft >300ft

Topspeed 40knots 2530knots 1540knots 20knots

11 | P a g e

However, 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

Origin & Evolution in India


Yachting was introduced in India in the 1830s by the erstwhile Maharajas, Nawabs and Governors. The first recorded race sailed on 06 Feb 1830 in Bombay (now Mumbai). Till 1950s, the five active sailing clubs were based at Bombay, Madras, Bangalore, Barrack pore and Nainital. The Yachting Association of India (YAI) was constituted in 1960 for promoting the sport in the country. 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 Prior to Indias liberalization, 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.

over 150 speed boats, with foreign brands enjoying a dominant share. According to industry sources, it was only after the 2007 boat exhibition of Mumbai that the interest and awareness among the people shot up. Now approximately 120 boats are sold every year, of which more than 80% are speed boats. The popular sizes of boats purchased in India ranges from 15-35 ft in overall length. Given the enormous price range in leisure boats, ranging from Rs 3 million for speed boats to over Rs 1 billion for super luxury yachts, the revenue turnovers can be misleading. The current revenue of Indias pleasure boating industry is 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. However, the industry is growing at more than 100% p.a. in

Market Size
Indias pleasure boat industry is rather nascent. Presently there are less than 300 boats registered in India, including around 120 luxury yachts and 12 | P a g e

volume and value terms, and one can expect the share of luxury yachts to increase over the years. Imports As per the official import data compiled by Ministry of Commerce and Industry, the total imports of yachts and other vessels for pleasure/sports in 2007-08 were valued at US$ 20.81 million, representing a almost 8 times increase over the previous year. Italy was by far the leading source of imports (with 24.4% share), followed by USA, UAE and other European countries.
ImportsofYachtsandOtherVesselsfor Pleasure/Sports(ValueinUS$million) 20062007 20072008 Italy 0.06 5.07 UAE 0.23 1.16 USA 1.01 2.54 France 0.22 0.85 UK 0.14 0.78 Germany 0.01 0.57 Others 0.97 9.84 Total 2.64 20.81

Major destinations
Location is a key element and constraint in the development of yachting as a national phenomenon in India. The nature of yachting limits the locations to only the few cities with good 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 biggest location for yachting and leisure boats in India. It has a strong boating heritage with three sailing clubs in the city- The Royal Bombay Yacht Club, Colaba Sailing Club and the Bombay Sailing Association. It has a

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

13 | P a g e

natural harbor with miles of sheltered coastline with great places to sail to. The water sports center of Mumbai facilitates all kind of water sports, like Boat sailing, Parasailing, Water Skiing, Canoeing, Kayaking, Jet boats, Wind Surfing and Rowing. The sailing season is between October and June. The geographical proximity to another yachting hub, Dubai, with miles of natural harbor and a sheltered coastline dotted with picturesque seaside towns, helps making Mumbai a great yachting hub with luxury yachts (size ranging from 30 ft to 100 ft and more) dotting the harbor. The quayside off Mumbais Gateway of India is already clogged with boats of all sizes, uses and types, and people frequently jump from one vessel to another to reach their own. 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. Kochi: Formerly known as Cochin is a city in the Indian state of Kerala, one of the principal seaports of the country. It has an estimated population of 600,000, with an extended metropolitan population of about 1.5 million, making it the largest urban agglomeration and the second largest city in Kerala after the capital. The port is strategically located on the busy international sea route just 11 nautical 14 | P a g e

miles from the Gulf-Singapore-Far East route and 70 nautical miles off SuezSingapore-Far East while Mumbai is 430 nautical miles off. Kochi is the maritime gateway for peninsular India and one of the best ports in Asia. In 2007, a record 43 cruisers had arrived, which included maiden voyages of some of the worlds most famous and largest vessels like Queen Victoria and Queen Mary II, thanks to its old world village charm combined with the modern facilities. It also has a good transport, communication network and magnificent beauty and greenery of Kochi. Currently yachts and boats sailing-in from the Gulf region have no intermediate berthing place for them once they leave Dubai. Goa: Variously known as "Pearl of the Orient" and a "Tourist Paradise", the state of Goa is not too far from Mumbai. It is India's smallest state in terms of area and the fourth smallest in terms of population. The innumerable beaches, magnificent scenic beauty and the architectural splendors of its temples, churches and old houses have made Goa a firm favorite with travelers around the world. Located on the west coast of India in the region known as the Konkan. Tourism is Goa's primary industry: it handles 12% of all foreign tourist arrivals in India. The number of yachts docked at

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

15 | P a g e

Marinas
In India, the absence of marinas is the biggest challenge and constraint before the 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. Due to such reasons break water and water flushing systems become very important. Given the high political sensitivity, greater priority has always been 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 be taken over for marinas. On the other hand, there is no national or state level policy for marinas, anywhere in India, which presents major risks for entrepreneurs who wish to develop marinas in India. This leads to a vicious circle: people didnt buy yachts because they never had a proper docking place for their yacht; while no developer wanted to develop marina as they never saw enough demand from boat owners. Under these circumstances, boats and yachts are moored 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

16 | P a g e

facilities for repairs, spares and other amenities usually 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 and concrete, and can accommodate 40-50 boats at a time. A pontoon made out of plastic costs around Rs 0.4 million. However, there have been some serious recent attempts to set up marinas in India, and some support is also forthcoming from the state maritime boards. The lead has been taken by the Maharashtra 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 public domain for review and comment, but its contents would specify the policy of the state, define the roles and responsibilities of various actors, and also provide guidelines for developers in terms of land acquisition, investments, licensing arrangements and other rights. Similarly, Goa and Kerala have announced some marina initiatives. Some marina projects that have been announced are featured below: The Kerala Tourism Development Corp has announced it will set up a 'marina' at the Bolghatty Isle in `Kochi to solve the problem of parking of yachts and boats. This will be the first ever marina in the country. Its said to
2

contain a cruise terminal which will house a five-star hotel, shopping malls, food courts, a Kerala village etc. It will also be the worlds only marina with a golf course. Oyster Rock, 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 A business tycoon from Goa and a keen water sports lover, Umaji V Chowgule, MD, Goa Yacht Haven Pvt Ltd. 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. A leisure boating and coastal cruising center in Vasco, Goa which would cater to 400 boats is expected to be operational by October 2009. This project has already incurred an investment of Rs 1 billion

The development of marinas is critical for the growth of the boating industry in India. It will not only boost the waterfront real estate and tourism industries, but also provide employment opportunities. It is estimated that a 400- berth marina usually generates 400 direct plus 600 indirect jobs, and can include a range of amenities: ranging from yacht docking, boat sales and repairs, recreation zones, water sports, hotels, restaurants, etc. Aquasail has completed a feasibility study for about six marina projects. The company, which

Maharashtra Maritime Board is a regulatory body

17 | P a g e

has targeted Kochi, Chennai and Goa, is now waiting for official permission to build its first marina 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 projects in Goa, Kochi, and Chennai and along the coasts of Maharashtra and Gujarat.

income bracket of Rs 5 million- 10 million has more than doubled from 4,400 persons in fiscal 2006 to 10,500 in fiscal 2008. High rate of growth of High Net Worth individuals is going to play a major role. Cruise Tourism: There has been a marked increase in Cruise Arrivals in India which is playing a major role in promoting the Indian yacht industry. Mumbai Port, the home port for cruise tourism had handled 66,681 domestic tourists and 24,400 international tourists for cruise shipping. There has been an increase of over 48 per cent in international cruise vessels which call at Indian ports. And a hike of 28 per cent in cruise liners which operate only within Indian ports, catering mostly to domestic tourists. In order to promote the Cruise Industry, the government has introduced tax exemptions for the cruise operators. The government is hopeful that such a move will help increase cruise passenger landings from the current 0.2 million to 1 million by 2010. At present, there is no Indian firm operating cruises along Indian shores. From India 0.16 million people went on long cruises in 2007.

Factors driving growth


Income: With rising income levels and more people entering into the highest income bracket, yacht industry is sure to ride the highest growth wave. 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 5,000 in fiscal 2008. Also, the number of people in the 18 | P a g e

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

Popular Events: The fact that people have spent close to Rs 4 billion on pleasure boats since Mumbai hosted Indias first international boat exhibition signifies the degree of influence that these shows have had and the awareness that they have created. 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 premiere round-the-globe yachting event, coming to India for the very first time have done a great deal in enhancing Indias position as a major shipping destination. Another major event, the Boat India 2008 held at Kochi, received a huge response with all the major regional, national and 19 | P a g e

Chapter 3 Market Segments


A boat industry customer is usually well aware and has adequate knowledge of the market. Since its a luxury product, the customer values the proposition and knows that its a long term commitment which is why he weighs various attributes before making a purchase.

Pleasure boat owners can be classified into two categories, Individual and Corporate Owners Individual owners Individual Owners are buyers who own boats for their personal use, either as transport or leisure. Majority of boats in India are owned by individuals

Source: Primary Research

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. 21% of the owners rate price as the most important factor while only 14% go by the brand names.

Source: Royal Bombay Yacht Club

Speed boats and Sailing Boats are two most popular segments among the individual buyers. Since the price of the boat increases with the increase in length, speed boats with an overall length less than 31 ft seems to be the most preferred category.

20 | P a g e

Individual buyers can be further segmented into the following categories: Utility Buyer and Luxury Buyer A luxury buyer purchases a yacht for leisure. It is either used for commuting to distant weekend getaways or social parties and leisure. These are generally large in size and range between 45-100 feet. Yachts in cities like Kochi & Goa mostly belong to this category.

Age 50% of the boat buyers lie between the age group of 40-60 years while another 33% in 60 years plus group. This shows that pleasure boat owners are generally people who have accumulated wealth over period of years, and buy it more towards their retirement age. With fractional ownership concept gaining grounds in the country, which allows multiple owners to a yacht, a significant chunk of this age group is formed by the CEOs/Partners/Owners of companies in the service sector.

A utility buyer purchases a yacht for business travel, 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 has led to a recent increase in their number. Utility yachts generally range between 20-40 feet in size and are mostly limited to Mumbai and neighboring suburbs, according to the RMYC.

Gender Boating remains a mans pursuit, and the majority of boat owners are males. However, it is estimated that 20 % of boat owners are female. Irrespective of ownership, ladies are important decision influencers in boat purchases in India.

21 | P a g e

Professional Background Luxury boats are more commonly bought for business and personal leisure. With Indias booming service sector and its top executives drawing hefty salary packages, the number of luxury boats owners has increased to 20 % from service sector. However, considering the amount goes 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 or hosting their friends even on standing yacht at docking place. Considering the fact that yacht requires huge maintenance cost, boat owners who dont use these vessels often, opt to provide their boats on charter in order to cover maintenance costs.

22 | P a g e

Corporate Buyers A corporate owner is a company or firm that owns a luxury boat to be used as a commuting vessel of its top executives to distant office locations or for leisure and parties. Owners/ partners of firms often register their personal yachts under companys name, so as to save tax by showing it as a business expenditure. Few cases observed are United Breweries UB group, Indiabulls Financial Services, Ispat Inc (L N Mittal), Essar Steel, and Reliance -ADAG.

An interesting contrast from individual owners can been seen that while only 15 % of individuals owned large sized speed boats , a significant 38 % corporate own large sized speed boats. Concentration City-Wise Mumbai constitutes 80% of the pleasure boats in India. The Gateway of India in Mumbai, catering to almost 200 boats of various sizes and shapes, is the largest in India. Additionally, boat owners from neighboring cities also dock their boats at Mumbai or Goa. With a heritage for sailing through Royal Bombay Yacht Club, Colaba Sailing Club, etc. in the city, the drive for sailing has increased in the recent past. With maximum number of yacht dealers and boat shows being conducted, Mumbai along with Kochi are the most talked about cities in Indian pleasure boating industry.

Speed boats are most popular amongst the corporates too and constitute 81% of the total boats, majority of which are the large sized speed boats.

23 | P a g e

In addition to buyers from neighboring cities, a significant emerging trend is the number of yachts owners emerging from Indias non-coastal major cities like New Delhi and Hyderabad. With dealers taking responsibility for maintenance and security, high net worth individuals and corporate alike, from distant cities are increasingly buying yachts for leisure. Aquamarine Leisure is one of the dealers with an office in New Delhi to cater to the growing interest in the city.

any burdensome costs of maintenance, berthing and insurance associated with its ownership. The club proposes to diversify its fleet and introduce more 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 days over three years and the Larson Cabrio 350 costs Rs. 1.6 million for 13 days every year for three years. The club recently initiated a Points System to attract more members, 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.

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. These memberships are not transferrable and non extendable and have no right on the yacht. Club Privada, with a strength of 48 members, is Indias first luxury boat club that launched the time sharing concept in India3. Club Privada offers time share options with a choice of yachts, including super luxury $2 million Azimut 50 and Larson Cabrio 350. The clubs innovative business model facilitate the customers with a fully crewed, maintained luxury yacht and the lifestyle without
Source- Yachting Association of India Joint Secretary General, Commodore Ajay Narang)
3

24 | P a g e

b) Fractional Ownership
In this ownership the yacht is shared by two or more individuals, typically 5-6 people, one owner member and other sharer members. The sharer member uses the yacht for dedicated no. of days or he may even rent it out to other shareholders or outsiders (hotels/resorts/individuals/tour operators/etc). The fractional owners own a share of one boatpossessing equity in that purchase. Aquasail is a company that promotes fractional ownership as one of their flagship offerings. When a customer orders a boat with Aquasail, he gets a preferential price. 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. India being a new entrant into the industry, this model promotes the concept of luxury yachting. Benefits of fractional ownership: The member gets to use high quality boat without paying the full purchase and other maintenance costs. No hassles of maintenance, servicing, staffing the boat; since all are taken care of by the maintenance company. Easy and convenient scheduling of sharing services maintained by provider. 25 | P a g e

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. In most cases, a maintenance firm is appointed to take care of the yacht on a fixed 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

Charter Services
While investing in a yacht, one important factor to bear in mind is its potential for charters. With a low usage rate and maintenance cost being as high as 5% p.a. of the price of the yacht, owning a yacht would be all about paying hefty prices and taxes every year. By chartering a yacht for about 10 weeks a year, the owners can pay operating expenses for a full year. The charter market has allowed people to buy boats a little larger than they would have wanted to invest in, had they not seen it as a source of revenue to help defray their operating costs. Club Privada has also entered into charter market, by renting yacht facilities for Rs.15000Rs.30000 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.

Yacht insurance starts from construction phase itself. Yachts are usually shipped in open deck. Insurance is required for shipping, lifting, journey, docking, etc. Amount depends on owners discretion. 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 Many Indian dealers, like Marine solutions, help their clients to get financing and insurance done from abroad as they believe that financial institutions expertise is not up to the mark in marine industry.

Financing and Insurance: Indian financial institutions have not yet adopted marine financing options. Usually, there is term loan provided to the owner if he asks for, but there is no loan against yachts or boat loans in the market. The only bank active in this field is Yes Bank, where in a dedicated team is handling this.

26 | P a g e

THE SUPPLY SIDE


Most yacht manufacturing companies operate through a dealer model with presence in various countries of the world. The reason behind is to showcase quality and to use a push strategy to penetrate into the market. Dealers of yachts 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. As India is not a big market, the renowned brands have only one or two dealers in the whole country. The absence of multiple dealers of a particular brand and the fact that the market is value driven enables the customer to enjoy a good scope of bargaining. Recently, dealers have started giving discounts and reducing their margins to increase sales. Starting from a target margin of about 30%, the dealers usually settle for a margin as low as 8%, depending upon the clients bargaining power and the dealers urgency to make a sale. Word of mouth seems to be the most effective method of sales generation, accounting for 49% of the sales. Dealer contacts and links prove to be only the second best source. Exhibitions and boat shows are a recent development in India and are likely to emerge as an important avenue for sales generation.

According to the primary research feedback, 50% of the customers identify dealers according to the brands that they deal in, while only 20% choose on the basis of the maintenance and services offered.

Source: Primary Research

27 | P a g e

Major Manufacturers
In the absence of organised production of yachts and pleasure boats in India, the market is catered by international companies present in India through sales representatives. 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.

position in the global leisure marine market offering a wide array of products. It manufactures high 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 major harbour of the world. Brands: Gulf craft has product range under 3 distinct brands - the Majesty, SilverCraft and Oryx range of boats and mega-yachts. Majesty Yachts offers a range of luxury fly-bridge yachts, with an extensive range from 42 140 ft luxury yachts, super yachts and custom built yachts. Silver Craft range combines advanced hull designs, superior performance and evolving styles. Dolphin Super Deluxe (DSD 31) i.e. SilverCraft 31SF - has been one of the most favored boats among Indian owners. The Oryx Sports Cruisers are known for combining Power and Performance with exceptional styling, rigid and robust Hulls. These are built for superior luxury and comfort and are in 36 ft and 40 ft options (and now a 46 ft too).

Some of the leading manufacturers present in India are profiled below: a) GULF CRAFT INC. Background: Gulf Craft Inc, an Ajman-based company began its operations in 1982 in UAE. Today, in the world of category-based specialist manufacturers, Gulf Craft Inc holds a pre-eminent 28 | P a g e

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

Since the boats are directly imported from U.A.E., they provide a huge benefit to their owners through reduced freightage, and have the unbeatable More Boat per Boat advantage over its European and US counterparts. Six sales were recorded through them during 2007-08. b) MAXUM Background: 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. Speed boats: Maxum speed boats are sleek, nimble and responsive that feature ergonomically designed cockpits, roomy transom storage and supersized swim platforms. Sport Cruisers: Maxum Sport Cruiser has the added conveniences of private heads, full galleys, spacious sleeping quarters and Sunbrella fabrics throughout. A Maxum owner can enjoy innovations like Smart Craft digital gauges and JBL certified stereo installation. Sport Yachts: Maxum Sport Yachts add an exciting twist to the world of luxury offering the ergonomically designed dual helm seating, oversized lounge areas, air-

conditioned cabins and an impressive galley. c) SEALINE Background: 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). With international sales and 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 dimension of luxury from the Sealine range F series: Reinventing its class, the awardwinning F-series has an enviable reputation for space, comfort, quality, and Sealine signature innovations S series: From the entry level S25 to the commanding SC47, the S-series captures the true meaning of intelligent design balanced with a sports pedigree

d) FERRETTI The Italian company is one of the leaders in yacht manufacturing and technology with pioneered revolutionary designs and technologies. With a current production run of around 60 units, the group is focusing on top-end yacht including Fly bridge. The 460 (46) and 550 were the first two motor yachts delivered by Ferretti and were the

29 | P a g e

first luxury motor yachts to arrive in the country. The company has recently set up shop in India through Marine Solutions, Indias premier yacht retail company.

Itama Cantieri Navali S.p.A (open motoryachts, 13 to 23 meters) the American Bertram Yacht, Inc. (sport fisherman motoryachts, 12 to 22 meters) Riva S.p.A. (open and flybridge motoryachts, 10 to 35 meters) Apreamare S.p.A. in Sorrento (gozzo sorrentino, 7 to 20 meters) Mochi Craft division (lobster boats, 13 to 23 meters) Custom Line division (maxi yachts in composite 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 to 120 meters. Marine Solutions, India's premier Yacht retail company promoting the yachting lifestyle in the country represents Ferretti Yachts in India.

e) AZIMUT 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 a range of around 300 nautical miles and can comfortably cater to two families with kids on a weekend trip or even a private party of around 15 people on an evening cruise.

The group consists of the following design and production companies: Pershing S.p.A. (high performance open cruisers, 11 to 35 meters) Ferretti Yachts division (flybridge motoryachts, 14 to 27 meters)

30 | P a g e

Amerglass, a modern Dutch shipyard producing boats in fiberglass, conferred the first dealership contract in Italy on the newly-founded power boat manufacturer Azimut. The business developed quickly, adding the distribution of sailing boats, motor cruisers and finally motor yachts from different makers: British Powles, Westerly, and others. 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 Targa model: 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 are two among few dealers of the yacht manufacturer. f) Nautilus Yachts This is a Kochi based yacht manufacturing company manufacturing high-powered airconditioned 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. 31 | P a g e

g) Princess Yachts Princess Yachts International is a 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. h) AICON The Aicon Group is one of the most dynamic operators in the design, construction and commercialization of Fly bridge and Open yachts, both in Italy and abroad. Although the group was 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. Aicon is present in the United States and has a dealer network that covers the USA, the EMEA countries (Europe, the Middle East and Africa), Russia and recently moved into Asia with the

creation of Aicon (Shanghai) Co. Ltd.

International

Trading

k) SEA RAY It is 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. l) LARSON BOATS

Aicon pays particular attention to the design and the style of its luxury yachts, which are built not only to be aesthetically beautiful, but also to be extremely comfortable, functional and seaworthy. The industrialization of all phases of the production process and the use of the latest technology help make every Aicon yacht unique in terms of luxury, technology and quality. It is available in India in open boats and flybridge version. i) BAYLINER

It is a leading manufacturer of recreational boats established in 1957. The 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. j) SUNSEEKER INTERNATIONAL

Background: Larson Boats founded in 1913 on the banks of the Mississippi River in Little Falls, Minnesota deals in the manufacture of the most affordable and dependable boats. Larson offers 24 models ranging from 18' to 37'. Dealer: Sorenstam (Dadar, Mumbai) is the dealer taking care of its sales in India. m) GRADY WHITE BOATS Background: 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.

It is a 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.

32 | P a g e

Major Dealers
Marine Solutions: Established in 2001, Marine Solutions claims to be India's first professionally managed company dedicated to the leisure boating industry. The company exclusively represents premier international brands in every category of the boating business in India. Concerns include the elegant Italian models from Ferretti Yachts, Custom Line, Mochi Craft and Pershing of the Ferretti Group, Jeanneau sail and motor yachts from France, the iconic American Sea RayTM sports boats and sports cruisers, Kawasaki's JetskiTM personal water crafts, the complete range of leisure and Milpro inflatable boats of the world famous Zodiac name, Sunstream boatlifts and marine propulsion options and commercial boats from Mercury Marine. Services provided include help in choosing the right product, handling the import, commissioning the boat, warranty service and various options in maintenance backup and boat management. 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. They also offer clients exclusive service at 33 | P a g e

the Panjim Yacht Station in Goa and at moorings off the Gateway of India in Mumbai. West Coast Marine: 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: The company is exclusive distributors of U.K based Princess Yachts in India. They also provide a seamless ownership experience for customers including boat selection with tailor made specifications, registrations, crew, management and maintenance. They also offer luxury charter services on Princess Flybridge yachts and fractional ownership programs on a range of Princess Yachts. Infinity Yachts: Infinity Yachts is a division of Infinity Group. The Group, through its division Infinity cars has a

proven expertise in dealership and services for high end, lifestyle vehicle brands. Infinity Yachts represents Maxum (entry level sports cruiser) and Sealine (sports cruiser & flybridge) which belong to Brunswick and Aicon (luxury motor yacht) from Italy. These brands are among the global leaders in their size segment. New Wave: New Wave Distributors (India) Pvt. Ltd deals with yachting, power boats or water sports from various brands like Azimut, Cobalt boats, Larson, Grady white. After selection of the vessel, they also assist customers with certification by authorities, insurance, transportation to India, customs, commissioning and other regulatory issues. For servicing and maintenance they have tied up with Ocean Blue Boating Services Pvt. Ltd. (OBBSPL). OBBSPL has an up to-date service centre with European service specialists and trained local staff that have been involved in the Luxury yacht industry in other parts of the World. 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.

M&M Yachts: Exclusive dealers to Riva yachts, often known as pride of Ferretti group. Ocean Crest Marine: Ocean Crest Marine currently has outlets in Dharamtar creek and Revas port in Mandwa. A showroom in South Mumbai is also in the offering. Aquasail: was founded in 2004 by Shakeel Kudrolli, Indias premier yachtsman. Aquasail has established itself in the market by forging several tie ups with some of the worlds best brands, bringing a range of dinghies, power and sail boats to India. The brands that Aquasail represent are the Worlds leaders in their categories like Laser Performance, Hobie Catamarans and Kayaks, NeilPryde Windsurfing and Cabrinha Kiteboarding. The highly desirable Beneteau with its sleek French design and luxurious interiors is the ultimate style statement in sailing yachts & powerboats.

34 | P a g e

The Indian Yacht Club (WHOs WHO) Vijay Mallya Chairman, UB Group owns the 95 m long (311 ft) Indian Empress costing approximately Rs 4.43 billion. Indian Empress is largely used for his private parties. Gautam Singhania CMD, Raymond Group 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 guest cabins and a master cabin. Riyhad Kundanmal Director, Ocean Crest Marine sold a 50 footer Sunseeker, which he picked up in London in 2008. He also bought another 84 footer (The Sunseeker 80) Rajen Mariwala, Managing Director of Hindustan Polyamides & Fibres Limitedacquired a 36-footer Jeanneau (Rs 10 million) Anil Ambani, Chairman of RelianceADAG, has recently 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. Shah Rukh Khan, popular Bollywood star.
YachtsonecanorderinIndia UTILITYBOATS INDICATIVEPRICES* Lancer21 Rs.1.7million Monterey18 Rs.2.0million Silver Craft 31 SF Rs.4.5million (Dolphin31) SeaRay350Sundancer Rs.10.5million RegalSportsBoat3050 Rs.8.2million LarsonCabrio310 Rs.8.4million Touring36 Rs.6.1million YACHTS Majesty44 Rs.30million Azimut43 Rs.45million Princess42 Rs.38million Sunseeker45 Rs.45million Ferretti460 Rs.48million Majesty66 Rs.100million Azimut68E Rs.190million Princess67 Rs.180million Sunseeker Manhattan Rs.185million 66 Ferretti681 Rs.210million MEGAYACHTS Majesty101 Rs.240million Azimut103S Rs.480million Ferretti110CL Rs.600million SUPERYACHTS CustomLine112 Rs940million Pershing115 Rs.1.28billion Alibi Rs.4billion *Pricesareinclusiveofimportduties Source:Industry

35 | P a g e

Chapter 4 Regulatory Framework


Government Policy Indian Pleasure boat industry is covered by Inland Vessels Act. (Attached in Annex 2) As there are no specific rules and regulations designated for pleasure boats in India, the owners face regulations applicable to carriers or cargo vessels. Registration Registration is one of the most important aspects of 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 placed on back and front of the yacht. For motor boats, registration is mandatory. 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.

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. Over the years, the board has taken a number of initiatives to harness the potential of its coastline. These include 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 presently handle 10 percent of the total cargo handled by minor ports in the country. MMB activities across the state are supported by 400 employees in five regional offices.

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

36 | P a g e

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

After 26/11 terror attacks, the intelligence agencies directed both the central and state governments to ensure that all private yachts are registered either with DGS or state maritime boards. However, as per industry feedback, both the authorities are refusing to register the boats citing technical reasons. Imports

Year
2006 2007

No.OfBoats
196 269 Source: Daily News Analysis

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. Other Taxes

From the data obtained from Royal Bombay Yacht Club, the total no. of boats registered with them was 185 of which speed boats were the dominant category.

Mumbai, which has the highest concentration of yachts in India, levies 5.5% Octroi on yachts and pleasure boats. However, there is no Octroi in Goa. 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) was formally constituted on 15 May 1960 and was registered under the Societies Registration Act XXVI of 1961 on the 22 December 1964 at Calcutta, West Bengal. The YAI is also officially recognised by the Indian Olympic Association and 37 | P a g e

the Ministry of Youth Affairs and Sports, Government of India as the governing authority for sailing, windsurfing, motor boating, powerboat racing and personal watercraft, at sea and on inland waters in India. As such the YAI is responsible for promoting the sport in the country, developing and training of judges, umpires and other administrators of the sport and representing the sailors in all matters concerning the sport. The YAI is affiliated to the International Sailing Federation (ISAF), which is recognised by the International Olympic Committee (IOC) as the governing authority for sailing worldwide. There are currently 14 class associations affiliated to the YAI, ranging from the smallest, the Optimist Dingy to the largest, and the J 24 class. There are 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 is responsible for the Indian contingents participation in the Olympic Games, Commonwealth Games, Asian Games (OutdoorIndoor-Beach) and South Asian Games. Each Olympic and Non-Olympic Sport has a Federation at the National level and is affiliated/recognized to/ by IOA. A special feature of the Indian Olympic Association is that, in addition to the national federation for each sport, there are State Olympic Associations in various States in the country. The State bodies controlling the different sports are affiliated to the 38 | P a g e

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 the registrations and services offered. 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. The RBYC also has Optimist class of boats for children in the ages of 8 and 15. The charges are levied for the boat 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.

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. 39 | P a g e

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.

40 | P a g e

Chapter 5 Demand Potential


Demand according to the present scenario The potential demand for yachts and pleasure boats in India over the next 10 years can be estimated by two methods : Growing universe of the individual buyers Yachts as a part of the expanding luxury market universe of the individual

CEOs/MDs : Since yacht is a luxury product and not every CEO or MD of a company falls in the same income bracket, our 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. Bollywood celebrities and sportspersons: The booming Bollywood industry and other similar fields have constantly been producing potential buyers particularly in the younger age group. 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.

Growing buyers4

There are 3 crucial components comprising the universe:

HNIs5: The HNI population as of December 2007 stands at 0.12 million, growing at a CAGR of 19% p.a.

For calculation purposes, corporate ownerships are ignored, as theres no observable trend in their demand pattern. Moreover individual buyers have a major share. 5 To avoid double counting, the HNI population excluding the CEOs/MDs of top 100 BSE listed companies, bollywood celebrities and sportspersons has been taken into consideration.
4

41 | P a g e

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)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

79,318 52 200 97,561 63 240 120,000 77 288 142,800 94 346 175,644 115 415 216,042 141 498 265,732 171 597 326,850 209 717 402,026 255 860 494,492 311 1,032 608,225 380 1,238 748,116 463 1,486 920,183 565 1,783 Total market potential over 10 years

79,570 97,864 120,365 143,240 176,174 216,680 266,500 327,776 403,141 495,835 609,843 750,066 922,532

143 176 217 267 328 403 496 610 750 923 4,312

The total size of the universe as of December 2007 end was 0.123 million. According to industry sources, approximately 120 boats are sold every year, indicating that only 0.1% of the universe buys boat every year. By following the similar trend, taking into consideration the growing size of the universe, the yacht industry would be able to sell out approximately 4300 boats over a decade (2008-2018).

Yachts as a part of the expanding luxury market If luxury is about indulging, sans the boundaries, then owning a yacht is the ultimate in luxury travel for the Indian millionaires. People are not just investing in Yachts but are indulging in it. The luxury travel is not just limited to the usual suspects in metros, tier II cities and nonmetros too are throwing up business. Statistics

42 | P a g e

show that, 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 the data obtained through primary research 95% of the 2006 No. of boats in the market until 2006 Yacht industry Luxury goods market (Source: The 186

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%.

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$) 931 23.275 4,350

Economic Times ATKearney India Luxury Review 2007)

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

0.54

Since the luxury goods market is pegged to reach US$ 14.35 billion in 2010, 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 (again taking Rs. 5 million as the average price). Now considering that the total number of boats is expected to increase to 574 by 2010, the CAGR over a period of four years (2006-2010) is approximately 30.6 %. Assuming a similar trend to 43 | P a g e

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

Year

Totalnoofboatsinthe market 196 256 334 437 574 750 979 1,279 1,670 2,181 2,848 3,720 4,858

issues, the market potential can be estimated as follows: The universe of the potential buyers consists of the HNIs, CEOs/MDs of top 100 BSE listed companies, Bollywood celebrities and sportspersons. Considering that only 120 boats are sold every year indicates that only 0.1% of the universe buys a boat every year. Taking into account the assumptions and increasing awareness, a realistic estimate of at least 0.3% of the universe buying a boat every year seems possible. Accordingly, the Indian market offers a potential for sales of around 13,000 boats over the next ten years.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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

Potential demand
Given the current status of the industry with infrastructure and regulatory framework being the major impediment to the growth, the assessment of the true market potential becomes a critical issue. Taking into account the increase in income levels and awareness among people, along with the assumption that the industry is no longer constrained by infrastructure and regulatory 44 | P a g e

HNI

CEOs

Bollywood celebrities& sportspersons

Total

No.ofBoatslikelytobe soldeachyear

2006 79,318 52 200 2007 97,561 63 240 2008 120,000 77 288 2009 142,800 94 346 2010 175,644 115 415 2011 216,042 141 498 2012 265,732 171 597 2013 326,850 209 717 2014 402,026 255 860 2015 494,492 311 1,032 2016 608,225 380 1,238 2017 748,116 463 1,486 2018 920,183 565 1,783 Totalnumberofboats(20092018)

79,570 97,864 120,365 143,240 176,174 216,680 266,500 327,776 403,141 495,835 609,843 750,066 922,532

430 529 650 800 983 1,209 1,488 1,830 2,250 2,768 12,935

45 | P a g e

6. CONCLUSIONS & RECOMMENDATIONS


Conclusions

Pleasure boating and Yachting industry in India is still in a nascent stage of development, with only about 300 boats registered. Even though the Yachting Association of India was formed in 1960, it is only in the recent years that the market has picked up, and is 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 organisation of boat shows, exhibitions and other promotional events in various parts of the country, which have contributed significantly to this 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 in planning/implementation state, which will a large extent address the problem of inadequate infrastructure, clearing the way for further expansion of the market for yachts and pleasure boats.

A large number of the worlds leading yacht companies already have a presence in the Indian market through their dealers / distributors. Italian companies have a 45% market share, followed by UAE based companies (25%) and other European companies. The Italian yacht industry enjoys a high brand equity in India and therefore new Italian companies entering the market are likely to have good acceptance. 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. There is lack of clarity regarding registration of boats, and private investment in building marine infrastructure is hampered by political and administrative red tape. However, it is reasonable to assume that as the industry grows in size, these issues will get addressed. 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

The following recommendations could serve as pointers for strategic decisions by Italian yacht

46 | P a g e

manufacturers planning to enter the Indian market: Selection and appointment of dealers is the key to success. In addition to generation of sales (identification of prospects, guidance in selection etc.), the dealers play a very important role in terms of helping potential buyers in arranging finance from banks, handling the import formalities, warranty service and various options in maintenance backup and boat management. Dealers also play a key role in facilitating the fractional ownership arrangements, making it yacht ownership a more viable proposition for individual buyers. High visibility in the market, through active participation in boat shows, exhibitions and trade promotion events is extremely important to create brand awareness. Collaboration with yacht clubs and other industry bodies, e.g. sponsorship of promotional events, can also be a useful avenue. While having a presence in key locations like Mumbai, Goa and Kochi is essential, it is also important target non coastal cities as well, which have high concentration of potential customers. High capital investment being one of the main issues for the potential buyers, 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: Almost one-third of the yacht owners surveyed during the study rate maintenance provision as their top selection priority. 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. Considering that the industry in India has taken off only during the last two years, there could be a substantial pre-owned boats market within the next 5 years. Companies could also explore the possibility of offering pre-owned boats from other countries (duty refurbished and certified).

47 | P a g e

ANNEXURES

48 | P a g e

ANNEX 1:

49 | P a g e

Annex 2:

50 | P a g e

ANNEX 3 : LIST OF PEOPLE PERSONALLY MET

Company
Electronik Lab LOTS NAUTILUS Yachts Century Shipyard P Ltd Marine Biz tv, Aries Marine NAUTILUS Yachts MFS India Indmerc KSINC Marine Solutions Marine Solutions Navnit Marine Pvt Ltd MARINETEK AVA Marine NAUTILUS Yachts Giira Yachts RBYC urban aqua PRAGA Marine Pvt Ltd Indmerc West Coast Marine Yacht Services Pvt Ltd West Coast Marine Yacht Services Pvt Ltd Infinity Yachts Aqua Marine New Wave M&M Yachts M&M Yachts

Name
Bahadur B Sanjana John Mathews Captain Mathew Cherian Joy Jacob Jacob Joseph Joseph Jacob Captain Thellyil J. Mathew George A. Pottamkulam K.V.R. varier Gautama Dutta Anju Dutta Sateesh S Nair Simon J Arrol Feroz Contractor Captain Mathew Y Cyrus Paurus Rajan Patel Dr Peter Jansen Joe Nejedly Joseph A. Pottamkulam Aashim Mongia Jitender Rami Nelson D Mello Rajiv Bhatia Meherji B Bhardwaj

Designation
Partner Executive Director President Executive Director Naval Architect Director NA NA Managing Director Director Partner Manager( South) Director ( Technical) Partner Partner Partner Partner Manager(Sailing) Sr Manager Partner Managing Director NA Managing Director Partner CEO CEO Partner Partner

City
Mumbai Kochi Kochi Alappuzha Kochi UAE Kochi Kochi Kochi Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai NA Coimbatore Kochi Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai

51 | P a g e

Ace Global Private Limited


335, 338, Centrum Plaza Sector 53, Gurgaon Regd. Office: D-139, East of Kailash, New Delhi 110065

www.aceglobalonline.com

You might also like