Feasibility_Study_Financial_Feasibility_O by Sutherland Global Services

Case Study and Sample Slides India: Leisure Boating Market

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Leisure Boating Market Client • The client is an emerging leisure boating company aiming to reach out to one million customers by 2014

Project Scope • The client was looking to seek venture capital funding and engaged SGS to prepare a detailed business plan • The key objective of the study was to present the client’s product portfolio, business strategy and forecasted financials in an attractive manner so as to make it saleable to potential investors

Sutherland’s Solution • SGS conducted an extensive secondary research to understand the sailing and water sports market size, factors expected to drive the market in the future, competition, and target market opportunities • SGS conducted in-depth interviews with the client’s management to understand the product portfolio, marketing strategy, target customers to lay out the client value proposition in the best possible manner • SGS prepared detailed financial models to forecast client revenues over the coming 5-year period based on the market demand

• Benefits to the Client • Sutherland provided an exhaustive business plan to the client, which included: • Company Profile • Market Potential for Sailing in India – Business Overview – Key Demographics – Management Profile – Indian Tourism Industry – Marketing Strategy – Potential of Sailing and Watersports in India

• Competitive Analysis – Existing Competition and the company’s edge over Competition • SWOT Analysis • Internal / External Factor Analysis

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XXXX has diversified its business portfolio objectively and strategically

Infrastructure and Marina Development

To support growth of leisure boating Distribution and Allied Services of Yacht and Boats

Cost Leverage

Customer Acquisition Access and Engagement

Retail

XXXX Yachting Academy

Splash and XXXX Club

Future Business Initiatives

Corporate

Theme-based Events

Salience Program

Corporate Events

Beach Holiday Yacht Charter

XXXX has developed synergistic streams of business operations that meet different needs, serve different purposes and feed into each other by assisting in customer acquisition and laddering whilst lowering costs

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India’s nascent leisure sailing and water sports industry is all set to ride high in coming years Favorable Demographics with More Money in Hand •

Increasing popularity of water sports activities among youth in India

•

Changing lifestyle and attitude of young Indians is resulting in more number of short excursions

•

Increasing disposable income and matching customer profile of Indians to lead to an upsurge in leisure sailing

Topography and Infrastructure of 7,600km boasts of successful sailing spots like Goa

Government & Industry Commitment • Government has set up National

• Coastline

• Availability

of many popular and developed water sports and sailing destinations like Mumbai, Andaman Nicobar Islands, Chandigarh, Kochi, Chennai, etc.

Rising Popularity of Leisure Sailing

• Tourists are spending

a hefty amount on excursion activities like sailing

Institute of Watersports (NIWS) to develop infrastructure and promote watersports in India • Several sailing

clubs and associations are aggressively promoting sailing as leisure and sport activity

• Many promotional events

for sailing are

being carried out in India

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XXXX scores high on capability to combat internal and external market barriers Strengths •

Unparalleled domain knowledge of the top management

•

Strong vision and execution skills backed by a highly experienced and relevant advisory board

Weaknesses •

Non-entry into the high-end segment for cruising and charter holidaying

•

Low availability of attractive talent in sailing operations

•

Innovative range of product offerings, from 1-hour training programs to beach holidays

•

Low budgets to penetrate into varied markets in India and the Indian subcontinent region

•

XXXX has its own fleet of wide-range and relevant boats with warehousing facilities

•

Lack of proper channel for selling high-end segment yachts and boats

•

Tie-ups with leading brands like Beneteau

•

Strong salience with media resulting in strong brand awareness at little or no cost

•

First-mover’s advantage in India, detailed customer acquisition strategy & costeffective sailing experience

•

Professional sailing operations team with RYA compliance, national and international sailors

Opportunities • • • •

Threats •

Minimal marina and infrastructural facilities at the coastal regions

•

Non-ideal market for the big boats and cruising industry in India

•

No specific taxing rules and government regulations on the leisure boating and sailing industry

Nascent but high potential industry in India Indian tourism ministry’s rising interest and investments in developing watersports infrastructure Low to medium competition in almost all operational segments Increased spending in leisure and lifestyle by Indians

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Access and Engagement to remain a significant contributor to XXXX’s revenues

EBITDA margin

400

250

50,000

50%

200

40,000

150

30,000

100

20,000

10,000

45% 40%

200

35% 0

30% 2010F

2011F

2012F

2013F

2014F

80%

28%

60%

8% 0%

4% 19% 6%

40% 20%

56%

2010F Access & Engagement Club

Beach Holiday Distribution

2014F Yacht Charter Holiday Time Share

2011F

2012F

2013F

2014F

Key Observations •

XXXX's revenue is expected to grow at a CAGR of 69% over 2010-14, from INR73.5 million to INR598.7 million

•

EBITDA is expected to grow at a CAGR of 68%, from INR38.6 million in 2010 to INR304.6 million in 2014

•

Revenues are projected on the basis of 30% - 50 % capacity utilization in the first year of operation, increasing to 60% - 75% over the five years of operations

•

The “Sales and Services” revenue includes commission earned on sale of boats and fees earned by providing AMC and other services

•

Times Share, a part of “Sales and Services” would generate revenues by utilization of idle resources of owner members

35%

0 2010F

XXXX Business Segment Revenue Contribution Projections 100%

Number of Customers

55% Number of Boats

Revenues (in INR mn)

600

Boats purchased

EBITDA margin (%)

Revenues

XXXX Number of Boats and Customer Projections

Number of Customers

XXXX Revenue Projections

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With a valuation of INR1,030.3 million, XXXX offers attractive investment proposition XXXX’s Valuation is INR1,030.3 million, Based on the Discounted Cash Flow Analysis Value available to common shareholders

INR1,030.3 million

Present Value of Terminal Value

INR866.0 million

Rate of perpetual growth

2.0%

Weighted average Cost of Capital

14.2%

Sensitivity Analysis (in INR million) Weighted average cost of capital

Perpetual growth

Step

1.00%

1,055.49

11.2%

12.2%

13.2%

14.2%

15.2%

16.2%

17.2%

0.5%

1,330.7

1,179.8

1,053.8

947.5

856.7

778.3

710.2

1.0%

1,380.6

1,219.1

1,085.3

973.0

877.6

795.7

724.7

1.5%

1,435.7

1,262.0

1,119.4

1,000.5

900.0

814.1

740.1

2.0%

1,496.6

1,309.2

1,156.6

1,030.3

924.1

833.9

756.5

2.5%

1,564.6

1,361.2

1,197.3

1,062.6

950.2

855.2

774.0

3.0%

1,640.8

1,418.9

1,241.9

1,097.7

978.3

878.0

792.7

3.5%

1,726.9

1,483.1

1,291.1

1,136.2

1,008.9

902.7

812.8

0.50%

The financial valuation reflects all revenue streams and capital expenditure over the projection period, from FY 2010 to FY 2014. XXXX’s EBITDA is expected to grow at a CAGR of 68% over the projection period

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Reckoning all these factors, XXXX affirms itself as an attractive value proposition for investors •

Forayed into the relatively untouched and highly potential Indian leisure boating market

•

Internationally-benchmarked products and services

•

Sailing programs designed to cater to a wide ambit of customers with varied price points

•

Strong management team with complementary skills of Shakeel Kudrolli & Zia Hajeebhoy

•

Core team has over 100 years of combined experience in operations and marketing

•

Proficient on-shore execution team comprising national and international talents

Differentiated Marketing & Business Strategy

•

Successful in ‘seeding’ the nascent Indian market with sailing experience

•

Promoting sailing as a leisure and adventure activity to different communities

•

Separate promotion, product and pricing strategy for retail and corporate customers

Relevant Tie-ups and Partnerships

•

Secured exclusive territory rights for sales of best boat brands in the world

•

Exclusive tie-up with the recognized training body: Royal Yachting Association (RYA)

•

Forged innovative tie-ups with leading hotels and travel agencies

•

Devised a detailed strategic plan for horizontal and vertical expansion

•

To leverage on the domain knowledge gained, consumer insights, client base and network to pioneer new industry

Focused Business Model

Strong Management Team

Future Expansion Plan

segments like beach holidays and yacht charters

Market Opportunity

Modest Competition

•

Rising disposable income coupled with favorable attitude to leisure holidaying activity

•

Indian coastal tourism & transport has witnessed a growth of over 50% in last three years

•

No significant player with the range of products and services as offered by XXXX

•

Differentiated from competition through quality of equipment deployed, professionals and the number of locations operated by the company

Strong Performance

•

More than 1,000 people sailed through ITS; 26 people opted for the LTS course

•

Added more than 3,000 people to its database of loyal customers

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