MUMBAI: Once a week, Vikas Saraf travels to the Gateway of India in Mumbai, where he boards a speedboat and disappears into the Arabian Sea. The 42-year-old’s destination is the nearby coastal town of Alibag, where he owns a house. On his Beneteau 750 of Rs 52-lakh, 25 feet, the journey takes about 20 minutes to the strategic director of the Essar group.
Enthusiastic about sailing, Mr. Saraf recently bought a Leopard 39ft catamaran, which costs around Rs 2.7 crore. âAn open boat experience is enjoyable and sailing is a great way to spend time with my family,â he says.
Such excursions were a luxury that disappeared from Mumbai at the end of 2008. While the economic crisis trapped the global yacht industry in a whirlwind of bankruptcies, the 11/26 terrorists from the sea sank the sea. emerging Indian market with crippling strike on its anchor – Mumbai. In 2009, the Indian market recorded virtually no sales. âThe Maharashtra government has banned evening sailing,â said Malav Shroff, CEO and Managing Director of Ocean Blue, a Mumbai-based yacht dealer. “By the time the ban was lifted, the year was almost over.”
Today, in 2010, as the global economy is rafting and the coastline is uneventful, the Indian yachting industry is getting its second wind. âWe’re seeing more conversion rates,â says Anju Dutta, managing director of Marine Solutions, another Mumbai-based yacht dealer. “Sales have crossed Rs 125 crore this year, compared to almost nothing in 2009 and Rs 200 crore in 2008.”
Repossession of fractional ownership
But the second surge in the Indian yacht industry is different from the first. Buyers in 2008, when the Indian yacht market took off, were mainly manufacturers, including Adi Godrej, Sunny Dewan Wadhawan of HDIL, Vinod Mittal of Ispat Industries and the Ruia brothers of the Essar group. On the other hand, the list of buyers in 2010 is dominated by professionals – fund managers, bankers, architects, BPO executives, HR managers …
Actors in the Indian yachting industry are driving this change by making the yacht experience more affordable and enjoyable, and by commercializing the romance of sailing. So besides outright buying, some yacht dealers allow fractional ownership – the equivalent of the timeshare program at tourist resorts.
For example, a 30ft speedboat costs around Rs 50 lakh. But with five owners, the effective cost is reduced to Rs 10 lakh per person. “In the motorboat segment, fractional ownership is picking up,” said Shakeel Kudrolli, director of Aquasail, which offers such purchasing plans. Malabar Yachts, a dealer in Kochi, even maintains the boat and rents it out when not in use, allowing owners to make money with their own boat; some dealers even hire crews.
Vivek Mathur, a financial analyst at a Mumbai bank that sails once a month, owns a sixth of his yacht. âI used to want to buy a boat, but I was put off by the high price and the maintenance costs,â he says. âThe timeshare program made it practical. Another yacht dealer, Ocean Crest Marine, however, limits the number of boat owners to three or even two. âIt’s important to give people a sense of belonging,â says Riyhad Kundanmal, Marketing Director at Ocean Crest.
The other push came from the initiation of people into sailing. The companies now offer several courses in sailing, windsurfing and power boating. Aquasail’s beginner level sailing course costs Rs 15,000 and includes a minimum of eight sessions of two hours each. Its most advanced course is a long distance cruising and navigation course, which costs Rs 2 lakh for eight sessions.
Newcomers to boating include Ramesh Subramaniam, CFO of Tata Power, Uday Sinha, regional director of Pepsi, and Tarun Anand, CEO of Thomson Reuters. âOnce the passion for sailing sets in, there is no looking back,â says Zia Hajeebhoy, director of Aquasail. âOur 6,000 customers are buyers and potential buyers, and those who want to learn to sail. ”
Om Hemrajani, Director of Genesys International, an IT company, has been an avid browser for years. âIt helps me stay away from the hustle and bustle of city life, and it’s an adventurous activity,â he says. He plans to buy a double hull catamaran, which would cost around Rs 2.5 crore. Shirish Barwale, director of seed technology company Mahyco, is also considering buying a yacht this year. âI have been actively sailing (through learning and timeshare programs) and am considering buying one now,â he says. âIt’s a great activity, just like golf.
Ms. Dutta of Marine Solutions says the desire for yachts is not due to their punch factor or their investment potential. âPeople buy it for their family, relatives and friends,â she says. âThis allows us to develop closer ties. ”
More and more yacht dealers are looking to apply this thinking at the company level. Aquasail, for example, leases yachts to companies looking to provide benefits to their employees, or even host customer meetings and leadership programs. âI have conducted over 20 management programs with companies like IL&FS, Reliance Trends, Novartis, CEAT, Siemens and Colgate,â says Ms. Hajeebhoy.
Aquasail also organizes team building exercises around sailing, as it did twice with Novartis employees in January. âPeople are starting to get bored of the usual escalation and other forms,â says Priya Vasudevan, head of human resources at Novartis. “But sailing elicits a positive response.”
Some companies even buy yachts, mostly in fractional ownership. âThey don’t want an asset in their books,â Zia says. Or, they rent. âThe cost of renting a boat for a corporate event ranges from Rs 15,000 to Rs 1,25,000 per hour,â says Mr. Kundanmal of Ocean Crest, which has around 25 corporate clients.
The momentum that the Indian yacht market had gained and lost at the end of 2008 is now back. By all accounts 2008 was his best and his worst time. The second edition of the Mumbai International Boat Show, held in February 2008, featured the products of around 100 exhibitors and was visited by around 5,000 Wealthy People (HNI).
The growing number of HNI has attracted a number of dealers and yacht builders to India. Leading players such as Ferretti from Italy, Bayliner and Azimut from the United States, and Princess and Sunseeker from the United Kingdom, have appointed dealers in India. That year Indian dealers sold yachts worth Rs 200 crore. âThis show helped,â says Ms. Hajeebhoy. âVisitors realized that even the less wealthy could own a yacht. ”
The same year, Anil Ambani gave his wife Tina a yacht worth Rs 100 crore for her birthday. Named Tian, ââit was seized by customs officials soon after following a dispute over tariffs. Still, things were looking good for the Indian yacht market.
But in the space of about two months, it went from bright to dark. The global economy has gone into a funk. And 11/26 has arrived. Demand has dropped. But more than demand, supply contracted. Leading brands like Brunswick, Riviera and Genmar have been pushed to the brink of bankruptcy. âIt’s not that people weren’t ready to buy. There was no supply, âsays Sujay Chohan of Ocean Blue. “Most of the major manufacturers have been shut down, which has affected the supply.”
Many of them are now back, after asset disposals and restructuring. India, meanwhile, also has its first yacht builder: the Mahindra Group. Mahindra Odyssea, a joint venture between Mahindra and Ocean Blue of India, was launched in 2009. âWe plan to sell around 50 boats this season (October to May),â said Malav Shroff, CEO and Managing Director of Ocean Blue.
So far the cumulative sales of the Indian yacht market have been around Rs 900 crore. Considering the Indian coastline of 2,700 km and the renewed dynamism, market players expect it to increase by a multiple. According to Gautama Dutta, Executive Director of Marine Solutions: “If the necessary infrastructure is in place, this could increase to Rs 10,000 crore by 2015.”
The crucial missing piece in the infrastructure is the marinas – the mooring bay for the yachts. Mumbai, India’s largest yacht market, does not have a marina. In fact, India didn’t have its first marina, in Kochi, until April. Goa is expected to get one in 2011. âMarinas need a lot of permits,â says Ajay Narang, secretary of the Yachting Society of India. “And the government is still unwilling to accept that there is a demand for yachts in the country.” The rich and the ardent, however, are sailing.