Team: Blue Ocean PlanIT(IIFT Delhi)

Sector: Luxury Yacht Mahindra Odyssea

BY:

Dhruv Bhatia

Manvi Bajpai

Sirish Gupta

Yash Saxena

Boating Industry Segments: Market Presence in segments comprising 70 % Revenues >

Sectors US UK Avg.

Marina/Storage 5.96% 8.64% 7.30%Boats sold 38.40% 42.06% 40.23%

Servicing/Maintenance 5.16% 23.85% 14.50%Equipment 19.40% 12.15% 15.77%

Engine 4.67% 8.10% 6.39%Others 26.41% 5.21% 15.81%

7%

40%

15%

16%

6%

16%

Revenue Sectors

Marina/Storage Boats sold Servicing/Maintenance

Equipment Engine Others

3. Enter:Odyssea

7 % + 6% + 40%53% Market presence

4. Enter:Odyssea Services7%+ 6 % + 40% + 15%

~70% Market presence

1. Enter:Ocean Blue JV

7%

2. Enter:Mahindra Marine

Engines7 % + 6%

13% Market presence

The Market segments in recreational industries was analysed in US & UK to arrive at indicative figures

3 -4 YearsCapacity: Projection India under scenarios

Good Capacity (No. Projects)

Medium Low

1200 (20-30) 600 (8-10) 300 (4-5)

Blue Ocean15 Projects

Aquasil3 Projects

H2O3 Projects

Goa Yacht Heaven1 Project

1. Marina Capacity: Estimation >

Kochi, Bolgatty MarinaAwarded to Gulf Marinas. The Indian arm is Ocean Blue Marinas (49% partners of M&M).

MIBS, Marina

CompanyNo. of

Projects Status Locations Capacity

Blue Ocean 1Under Const. Cochin 50

15 Planned Maharashtra 700 ?

Goa

Kerela

Tamil Nadu

Orissa

Chhattisgarh

Gujarat

H2O, Rajiv Somani 1 Built Goa 11

1 Planned Goa 50?

1 Planned Mumbai 50?

Aquasil 1 Planned Goa 50?

1 Planned Chennai 50?

1 Planned Kochi 50?

Goa Yacht Haven Pvt Ltd, 1 Planned Goa 300

Umaji V Chowgule

Total Planned 1300

Sujoy Chahal-Another Opinion 8 Estimates India 800?

Source:http://www.marinebusiness-world.com/index.cfm?nid=45585, IBI News

Source:http://IBI News.com

Others ?

Marina Segment: Revenues >

Typical returns in Marina business: 10-15%Depend upon

Rent Rate in Market

Depend upon

Growth in coastal population growth

Abundance of boat sizes in > 12 m segments

Depend upon

Integration with Hospitality/ Tourism and Travel industry

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1990 1995 2000

India US China

Small boats can also be stored at ‘Rackonium’

Rack storage is cheaper; Hence more suited for Indian markets

However larger than 12 Mts boat can’t be stored in racks

Rackoniums could be one of the opportunities for mahindra

Condominiums or Residential marinas give higher returns on investment.

Mahindra is already into hospitality hence option of developing marinas at places where it can create synergy with Hospitality business of Mahindra can boost returns.

50- 75% Market share450 CroreInvestment estimated in IndianMarina segment@ 1300 berth capacity

Return @ 10%45 Crores Calculation:A Marina returns its Investment over a period of 10-20 years.Assuming median value of 15 Years to break even gives 8 % return.PPP Partnership will sweeten up the deals.

Calculation:As shown before ‘ Ocean Blue Wave’

16 Crores

Earning@ 75% market share& 51% equity.

Marina Segment: Revenues >

A 300 Berth MarinaUsually costs, 100 Crore and break evens in 10-20 years.1

US$ 25000-30000 cost per slip. 2

•Most Outboard Motors have a running life of 1500 Hours

•Average usage of Boats stand at 600 Hrs/year for Commercial usage and 200Hrs/Year for recreational personal usage. Hence commercial engine needs overhaul in two years

•Motors in the 200 HP range are priced at 3.5 Lac and are almost 40 % of the Boats cost .

2. Engines: OutBoard Engine Motors Market> Potential & Revenues

Export MarketDomestic Market

30 Cr

42 Cr

2012

2008

A US$ 2 Billion market

Indian Export: Only

US$18000

Both Export opportunity &

Domestic opportunity

@ 50% Market share & 66% & 33% Revenues from Domestic & Export markets

30 Crores

Potential ofNo. of Boats in

a country

Wealth, HNWIs

Per Capita Water Area available per urban coastal resident.

Sea ExperienceMarina/ Coastal Infrastructure

Boat Market: Factors affecting>

Inland and Coastal water area availability

12

43

86% Explained

by a statistical analysis onno. of boats and the factors listed on countries around the world

3. Total Recreational Boating Retail Market >

0

20000

40000

60000

80000

100000

120000

2002 2003 2004 2005 2006 2007 2008 2012 E

Imports in US$

2002 2003 2004 2005 2006 2007 2008 2012 F

888 682 620 5767 2,640 9573 28,475 109389.56

-35.14% -23.20% -9.09% 830.16% -54.22% 262.61% 197.45%

Imported recreational boats market to reach 400 Croresby 2012.Using a simple forecast based on Import figures for Recreational & leisure boats in India.We calculated a CAGR : 40% (3 Years) Based on the 2008 figure of 140 crore we get 400 crores by 2012.

Motor Boating Retail Market > India Potential

150 100 1000

Recreational Boats

Mumbai Goa

Total Floating Stock in India

Motor Boats Imported in 2007-08

100

250 530

20%growth based on

HNWIs growth rate

growth based on recreational industry CAGR

40%

No. of Boats Sold by foreign players by 2012

• Market is primarily in the small boatssegment

• Mumbai International Boat Show (MIBS)official told us last year MIBS sold only twolarge boats rest all were small boats

• MIBS estimates the total boat deals of $100 Million facilitated through the show

• The real market in India can be far largeras a large no. of boats (80% ) are notimported in India but registered at foreignlocations due to 35% import duty. BothMallya’s and Ambani’s boat are registeredwith foreign flags.

0

500

1000

1500

2009 2012 F

Marina Capacity Increasing

• Based on MIBS figures the overall market could grow to 1000-2000 Crores by 2012 calculated at 20%- 40% growth rates.

• Based on the growth in number of units imported- 250 and 530 at ASV of INR 50,00,000 total import market could be 125-265 crores. At 50% share of this market replacement can get revenues 60-120 crores.

Motor Boating Retail Market > India Potential Revenues

75- 100 Crores – Domestic Markets

Domestic market targets of 300 boats by 2012 is feasible at ASV of INR 25 Lakhs. Total revenues from Home markets could then be around INR 75 crores.

Defence markets- Coast Guards (1073 Cr), Marine Police (500 Cr) can bring in occasional additional large orders of that can amount to additional revenues.

Recreational Boating Retail Market > Target Segments

Marine police/Coast Guards

Boat Exports

HNWIsIndividuals

Hotels, Boat Clubs,

Sporting MotorBoats

Marine Police:With a budget of 72 Marine Stations.Need 500 boats

Indian Navy need 80 small boats.

India has 84000 HNWIs.

70% of these HNWIs live in Mumbai.

From 2005 to 2008 HNWIs in India grew @ 20%

HNWIs Investment & Buying patterns

Yacht, Car like Investments

Luxury Hotels in India maintain a fleet of even 20 Mercedes, Hence a possible buyer of Yachts.

Sporting events for Motor Boats, sports fishing events.

Indian Market Competition>

MO 22 and MO 33 are among the cheapest in it

Other players have already made huge dealer network and advertisement campaigns

Stiffer competition in 22 feet category

117

54

42 40 37 35 31 2919 15 14

0

20

40

60

80

100

120

140

Larson Cabrio 350

Beneteau Regal 2565 Window Express

Regal 2520 Bayliner 265 Cruiser

Cobalt 232 Cobalt 220 Cobalt 222 Sea-Doo Islandia

Mahindra Odyssea 22

Sea-Doo Challenger

Pri

ce (

Rs

Lakh

s)

182

67.555 50

0

20

40

60

80

100

120

140

160

180

200

Meridian Bayliner 300 Cruiser Mahindra Odyssea 33

Silvercraft SC34

Pri

ce (

Rs

Lakh

s)

20-27 feet segment

27-36 feet segment

France: Excellent market for <25 feet segment motorboats

USA and Canada: Big market for motorboats for younger crowd. High level of competition. So lowcost advantage will sell huge.

Italy: Very low tax on pleasure boating. Best sale is from 20-40 feet boats

Netherlands: Numerous but small waterways. Huge market ideal sale is for 32-36 feet

> Export Market Targets

• Outboard Motor Boat Sales in US: 150,000 Units; US$ is a 33 Billion • China is one of the leading exporters today of Yachts including the larger ones• Taiwan which also started with smaller boats did well initially to supply in export markets.• The lower boat segment is relatively more price conscious hence a definite market for Low

cost exports.

Motor Boating Retail Market > Export Market Potential

75- 100 Crores – Export Potential

Boat Business Inputs

Price- Low Cost labor

Technology & Design expertise

Brand Domestic Markets

India Yes (India canleverage on Indian working in Boating Industry in Gulf countries

Yes (As shown in small cars export- India has done better due to its relatively better availability of engineering talent

No Introductory

China Yes No No Maturity

Analysing the Floating stock available around the world. We found the favorites sub-segments in numbers.

Below 12 Mts 12-30 mtsAbove 30

mts

World Motorboats 14549 18446 1103 100.00%

Catamaran 433 222 18 2.98%

Small Cruisers 6208 353 12 42.67%

Pontoon 197 22 1 1.35%

Narrowboats 24 32 4 0.16%

Bowrider 1289 2 0 8.86%

Cuddy Cabin 2949 37 0 20.27%

Houseboats 360 970 42 2.47%

Categories to move in < 12 Mts Boat segment

> Cruisers (42.7 %) – Very high volumes in the> Caddy Cabins (20.27%)> Bowriders (8.87 %)

To be analysed further>Catamarns- Only 2.98 % present, Hence not a very favorable segment.

Historical Trends in Motor Yacht sub segment

World Floating Stock analysis : Product Development

Historical Trends in Motor Yacht sub segment

World Floating Stock analysis :

• Of the total available boats in 6-12 mts segment availability has decreased from 57% to 42% While availability has increased other segments

• The availability of New boats has decreased even more rapidly in the world market for below 6m segment.

• The new boats sold in US in Small and Large segments has also decreased over the years.

6-12 Mts12-30 Mts >30 Mts

Till 2000 9338 57.15% 10083 47.00% 531 37.00%

After 2000 7001 42.85% 11368 53.00% 904 63.00%

Used 14538 93.13% 18435 90.11% 289 20.76%

New 1073 6.87% 2024 9.89% 1103 79.24%

150000

200000

250000

300000

1980 2007

Smaller Boat

7000

12000

17000

22000

1980 2007

Larger Boat

After 2000 Market

6-12 Mts 12-30 Mts >30 Mts

Total 5021 7630 511

Sea Ray 584 Azimut 810 Azimut 40

Carver 361 Sunseeker 773 Falcon 32

Sealine 329 Fairline 566 Benetti 26

Jeanneau 259 Princess 557 Sunseeker 25

Silverton 208 Sea Ray 532 Burger 24

Bayliner 199 Ferretti 398 Maiora 23

Cranchi 178 Carver 378 Westport 22

Beneteau 172 Pershing 203 Mangusta 16

Fairline 171 Sealine 194 Overmarine 13

Meridian 144 Cranchi 158 Custom 12

Regal 127 Meridian 126 San Lorenzo 12

Cruisers 117 Cruisers 107 Cantieri Di Pisa 11

Azimut 115 Silverton 106 Isa 11

Bavaria 109 Astondoa 100 Baglietto 10

Positioning Matrix for all Boat brands >Scouting for partners- Analysis of other brands: Strategic Positioning

Sirena Marine of the group will produce yachts in Bursa in the name of Italian Azimut in turkey- A potential candidate for being a a low cost supplier

Searay is facing close downs and cost upscales

Hence the matrix can be used to find potential partners or Co- Branding strategic alliance partners, Potential manufacturers to whom Odyssea can supply as Low Cost Partners

Some other companies facing close downs and financial crunch could also be tracked down in the matrix Like ‘Couach’

Brand Building Through Strategic Alliances: Strategic Alliances for Co-Branding

• Disadvantage of the ‘Made In India’ and the unknown Mahindra name in this segment can be overcome withdesign collaborations with leaders like Pininfarina from Italy.

• Enter into co-branding activity which are suffering from the financial meltdown and provide them with cost effective manufacturing base in India and use their network to sell our boats in established market

• India also has an advantage of having High Skilled Indian workers working in the Gulf Boat building Industry which can be leveraged.

Yacht Brand building: The 8 Point agenda >

Luxury Brand

Experience

Tradition and heritage

Selective Distribution

High Price

Exclusive communication

Superior Quality

Superior Service

Imagery & story telling

Innovation & Creativity

Personal Selling outranks glossy advertisement in Boating MagazinesIndependent owned dealerships

Inviting customers to see their Yachts in construction

Stay in touch with the customer in a segment where repeat business will drive growth

Focus on Individual customisation

Independent owned dealerships & Consultants

Key demographics of first time boat buyers

Segmentation Characteristics % of Total Boat Owners % of Total Households Index

Fast Track Families 4.20% 1.00% 430

Country Casuals 5.7 1.6 367

Big Fish ,Small Pond 5.90% 2.1 285

Country Squires 4.00% 1.40% 278

Big Sky Families 2.30% 0.90% 243

Winners Circle 1.70% 0.80% 204

Shotguns &Pickups 1.30% 0.60% 202

God's Country 4.40% 2.20% 202

Blue Blood Estates 1.60% 0.80% 199

Mayberry Ville 5.00% 2.60% 190

66% male; 34% femaleMedian age of 37Married with children (1+)HomeownerHousehold income at least Rs 20,00,000Typically resides in rural/town and suburban areas