mahindra holidays & resorts india ltd. documents...mahindra holidays & resorts india ltd....

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Mahindra Holidays & Resorts India Ltd.

Changing the Way India Holidays

(updated as at Dec 31, 2010)

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The MHRIL story

Company Overview1

Differentiated Approach: Customer Centric Design2

Integrated and Mixed Use Business Model3

Unique Revenue Model4

Proven Financial Performance5

Way Forward6

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Company Overview

Highlights & Milestones

Product Portfolio

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Highlights & Milestones

• Among the Top 10 Vacation Ownership Companies in the World#

• India‟s No.1 Vacation Ownership Company

– 121,751 Vacation Ownership (VO) members as at Dec 31, 2010

– 72% of the total active VO members in India with RCI*

– 34 resorts, 1,555 apartments & cottages as at Dec 31,2010

• Impressive Growth Rates

– 5 year CAGR for Income at 43%

– 5 year CAGR for PAT at 54%

• “Club Mahindra Holidays”: Superbrand 2009**

• 10 RCI Gold Crown Resorts: Munnar and Goa for 10 consecutive years

• Ranked 150 in Business Today BT Top 500 (2009)

• One of Best performing Global IPO by Wall street Journal (lone Indian IPO)

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# Company Sources * Source: Group RCI as on May 31, 2009 **Source: Brand Council in India

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Product Portfolio

Flagship Brand : India’s No. 1 holiday brand

Offers “Family Holidays” 7 days every year for 25 years

27 resorts in India & Thailand. 5,087 resorts through RCI

Age Segment 30 – 55 years

1997

Offers “Short Breaks” 6 days every year for 10 years

Across 5 resorts

Target Segment young urban families

2006

Corporate Membership

Offers Reward & Recognition solutions

Points based platform to aid flexibility for Corporates

2006

1 stop shop for family holiday & travel related services

Powered thru e-commerce website, dedicated call center

2008

Provides accommodation in private homes

Has aggregated 205 homes across 14 states

Launched in the UK, extended into India

2008

2010 Tented campsite specially designed for families

Outdoor & Adventure activities to bring people closer to

nature

5

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Differentiated Approach

Customer Centric Design

Product Features

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Conventional Proposition: Essentially

discounted accommodation room nights.

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Understanding Vacation Ownership

• Key features of the conventional model

– Ownership at a fixed resort location for a fixed week

in the year every year in a fixed season and room type

‘Concept of Vacation Ownership’

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Customer Centric Design

• Fixed Week Fixed Resort

• Variable Price Model

• Limited Service Resort

• Distinct Developer, Marketer and Service

Operator

• Pure Timeshare Resorts

• Floating Week Floating Resort

– Gives customer flexibility: Time of holiday,

duration, destination of choice

• Fixed Retail Price

– Greater transparency

• Full Service Resort

– Amenities, Facilities and Services

– Complete Family Holiday Experience

• Vertically Integrated Operations

– Deliver on promised value

• Mixed Use Resorts

– Maintain Quality

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ONE WEEK EVERY YEAR FOR 25 YEARS, RIGHT-TO-USE MEMBERSHIP

IN THE SEASON AND APARTMENT TYPE THE MEMBER CHOOSES•For conditions of usage please refer to the Membership Application Form

•available at any of our offices, branches and outlets

Conventional Model Club Mahindra Model

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Integrated & Mixed Use Business Model

Integrated Value Chain

Multiple Sales Channels

Resort Network

Family Holiday Experience

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Delivery Through Integrated Value Chain

Resort Design &

DevelopmentLifestyle product

marketing approach

Pan India multi-

channel sales

initiatives

Holiday planning

& reservation

services

Active customer

feedback system

Full service

resorts

Additional value

opportunities

Identification &

acquisition of land

Club Mahindra

©

Pan India multi-channel sales team

11

Onsite

Branch

Offices19

36#

126**

3*

Retail

Outlets

Franchisee

Service

Office

11

*Dubai ; **including Dubai & Kuwait; # 29 Direct and 7 Franchise

• Follow Permission Marketing Approach

• Retails Outlets: Club Mahindra Holidayworlds

at Malls and shopping complexes

• Direct to home: Meet target members at home

• Onsite: Club Mahindra Holidayworlds at resorts

Reaching Customers through

Innovative Sales & Marketing Channels

Multiple Sales Channels

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Pan India presence

Coorg

Kodaikanal

Poovar

Ashtamudi

Dharamsala

Mussoorie

Manali

Binsar (2)

Corbett

Goa (2) Pondicherry

Ramnagar

Tungi

Kadapakkam

Theog

Thekkady

Ooty (2)

MasinagudiYercaudMunnar

Varwade

KasPanchgani

Shimla

Operational

Under Development

Green FieldsNaukuchiatal

Kumbalgarh

Hyderabad

Gangtok

Existing Resorts

Own 12 (1047 Apartments)

Long Lease 16 (426 Apartments)

Short Lease 6(82 Apartments)

Total 34 (1555 Apartments)

96% Own & Long Lease

Expansions Planned

Ashtamudi, Coorg

Greenfield Development

Tungi (near Lonavala), Theog (near Shimla)

Landbanks for future

Maharashtra Kas, Varwade

Tamil Nadu Kadapakkam

Andhra Pradesh Near Hyderabad

Karnataka Coorg

**Besides resorts shown in map Club Mahindra members have access to a total of 5,087 RCI affiliated resorts across the world

*Also present in Thailand

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Gir

Ranthambore

Sariska

Nawalgarh

Osian

Swamimalai

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Holistic Family Holiday Experience

# Activities and amenities at certain locations are resort specific and may not be available at all locations throughout the year

• 10 RCI Gold Crown resorts

• 2 Resorts 5 Star accredited by Dept. of Tourism GOI

• MRD processes certified ISO:9001-2000 compliant

• PCMM level 3 assessed at Goa Resort

• BHC certified Hygiene systems

Accreditation for

quality resort services

• Fun dining Restaurants &

Gourmet takeaways

• Svaastha Spas/Ayurvedic

Spas

• Kids Club

• Champs

• Bars

• Swimming pool

• Conferences & Outbound

Trainings

Activities & amenities giving complete holiday

experience#

• Designed to suit

topography of the

location

• Non-conventional

accommodation such as

log huts, tents and

floating cottages Resort

Design

• Adding innovative

activities

Strategy to enhance holiday experience

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Unique Revenue Model

Multiple Revenue stream

Continuous Value creation from single unit

The Club Mahindra Advantage

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Revenue Streams From Members

• Membership Fee:

– Admission Fee

– Entitlement Fee

• Annual Subscription Fee: (ASF)

• Interest: On Instalments (EMI’s)

• Resort Revenue: Revenue generated at the resort during the

holiday

Upfront Cash:

Admission Fee

Recurring Income:

Entitlement Fee

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Unique Revenue Model Value created continuously from a single resort unit..

Timeline (years)*Inflation not considered

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Valu

e R

eali

zed

Recurring Revenue Streams*: ASF, Usage Fee, Resort

Revenues

Upfront

Cash:Admission

Fee

Residual Value *:Opportunity for

2nd cycle - ZERO

Marginal Cost of

Inventory

Income from

Financing

Admission FeeEntitlement Fee

Resort - MembersResort – FITInterest on EMI

Annual Subscription Fee

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Value Creation Profile

Large Upfront Cash-flow

Built in Annuity Stream

Residual Value

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The Club Mahindra Advantage

Club Mahindra Hotels

OccupancyHigher and Stable All Year round

occupancy

Lower occupancy subject to

uncertainty and fluctuations

Revenue

Streams

Multiple revenue streams. Yearly

and Annuity based.

Limited revenue streams. No

Annuity streams.

Debt Structure Almost debt free High levels of debt

Cash Flows Strong upfront cash flow model Low on cash flow

Receivables Receivables can be Securitized. No Securitization opportunity

Holiday

Experience

High Quality – Focus on every

member of the Family.

Generally less focus on Holiday

Experience and no focus on

individuals within the Family.

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Details of income

For FY 05 to FY 09 numbers are from the MHRIL Prospectus

All Figs in Rs crores

2010 2009 2008 2007 2006 2005

Income from sale of Vacation Ownership 348.6 297.21 283.54 181.11 113.49 73.95

Annual subscription fee 51.7 45.56 32.28 22.77 19.94 12.73

Income from travel services & homestays 2.7 1.21 0.08 0 0 0

Income from resorts

- Room rentals 22.3 17.53 14.12 10.52 6.37 5.06

- Food and beverages 30.8 23.12 16.22 13.52 9.32 7.31

- Others 12.7 7.57 5.34 3.98 3.21 2.31

Total Income from Resorts 65.8 49.08 36.83 28.43 19.29 15.03

Total 468.7 393.06 352.73 232.31 152.72 101.71

2010 2009 2008 2007 2006 2005

Other Income 47.6 51.25 22.31 8.34 4.01 4.44

Net Profit before tax, restated 176.7 132.04 126.19 66.77 32.83 15.25

Percentage 27% 39% 18% 12% 12% 29%

Interest

On instalment sales 18.7 37.15 19.68 7.32 3.39 2.84

Income from securitization (refer note 5) 22.3 9.96 1.21 0.72 0.45 1.57

Gain on exchange fluctuation 0.0 2.50 - - - -

Miscellaneous income 6.6 0.16 0.55 0.26 0.16 0.03

Total 47.62 51.25 22.31 8.34 4.01 4.44

Details of Other Income

Details of Income from sale of Vacation Ownership

and other services

Year ended March 31st

Year ended March 31st

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Balance

Sheet

Summary Statement of Assets & Liabilities As at 31st March In Rs. crore

2010 2009 2008 2007 2006 2005

Shareholders' funds:

Share capital 83.3 77.0 76.4 28.4 28.4 28.4 Employee stock options outstanding - - 0.0

Reserves and surplus 356.0 118.8 66.6 47.3 14.9 0.0

Minority Interest - 0.0 0.0 0.0 - -

439.3 195.8 143.0 75.7 43.3 28.4

Deferred income

Advance towards members' facilities 805.0 641.0 482.5 324.2 226.3 164.0 Loan funds:

Secured loans 10.0 24.7 20.1 6.0 26.8 22.0 Unsecured loans - - - - - 1.3

Deferred tax liability (net) 33.3 29.5 23.6 20.2 9.2 -

TOTAL 1,287.7 891.0 669.2 426.0 305.6 215.7

APPLICATION OF FUNDS

Fixed assets

Gross block 489.2 429.3 273.4 225.7 191.7 149.3 Less : Depreciation 82.5 64.1 47.9 38.3 30.7 23.5

Net block 406.7 365.2 225.5 187.4 161.0 125.7

Capital work in progress/advances 86.6 42.8 39.0 9.8 1.4 1.4

Expenditure during construction pending allocation11.3 8.5 6.0 2.9 0.8 0.3

504.6 416.5 270.5 200.1 163.2 127.5

Investments 227.2 0.0 0.0 5.9 0.0 4.5

Deferred tax asset (net) - - - - - 2.2

Current assets, Loans and advances

Inventories 3.0 5.3 3.5 1.8 0.9 0.6

Sundry debtors 631.5 482.6 403.4 218.7 145.7 78.2

Cash and bank balances 24.4 32.8 7.6 9.4 7.8 3.9 Loans and advances 81.2 66.5 62.0 41.9 26.2 18.8

740.1 587.1 476.5 271.8 180.6 101.6

Less: Current liabilities and provisions

Current liabilities 143.2 82.1 60.9 40.6 38.0 25.1

Provisions 41.0 30.6 17.0 11.2 0.3 0.2

184.2 112.6 77.9 51.8 38.2 25.3

Net current assets 555.9 474.5 398.6 220.0 142.3 76.3

Profit and loss account - - - - - 5.2

TOTAL 1,287.7 891.0 669.1 426.0 305.6 215.7

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Strong Financial Performance

Sustained Growth

Financials

Highlights: 9M FY11 and Q3

Consolidation Measures for the future

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Growth Rate

Please note, all figures are based on consolidated financial statement , Div for FY 10 is proposed .

FY 05 FY 06 FY 07 FY 08 FY 09 FY 105 Year

CAGR

Cumulative Member base (No) 28,491 38,691 53,113 73,533 92,825 109,884 31%

Income from sale of Vacation

Ownership & Other Services101.7 152.7 232.3 352.7 393.2 473.5 36%

PBDITA 27.3 44.6 79.3 144.0 152.1 199.5 49%

PAT 8.3 20.0 42.5 84.0 79.8 117.1 70%

Share Capital 28.4 28.4 28.4 76.4 77.0 83.3 24%

Reserves 0.0 14.9 47.3 66.6 118.8 355.3 713%

EPS (Diluted) (in Rs) 1.69 4.05 5.50 10.77 10.19 14.18 53%

Dividends 0% 0% 30% 30% 30% 40%

(Rs. In Cr.)

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77.4

145.7

218.7

403.4

484.1

631.5

733.7

FY05 FY06 FY07 FY08 FY09 FY10 9M FY11

106.1

156.7

240.6

375.0

444.3

516.4

364.4


500 606

675 779

1,177

1,476 1,555


28,491 38,691

53,113

73,533

92,825

109,884

121,751


Sustained Growth

Cumulative VO Membership Inventory (Number of Units)

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CAGR FY08 – FY10: 31% CAGR FY08 – FY10: 24%

Total Income (INR Cr) Receivables Available for securitization (INR Cr)


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9.2 20.8

41.7

80.5 83.4

117.8

62.6


27.2 44.5

78.9

140.5 155.6

200.4

108.1


Consistent Financial Growth

PBIDT and PAT Margins

Please note, all figures are based on standalone financial statement

EBITDA (INR Cr) PAT (INR Cr)

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FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 9M FY 11

EBITDA Margin 26% 28% 33% 37% 35% 39% 30%

PAT Margin 9% 13% 17% 21% 19% 23% 17%

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Nine Month Ending Sept 30, 2010

• 9M F11 Highlights

– 9M Total income at INR 364.44 Cr

– 9M PAT at INR 62.59 Cr

– 11,867 members added

– Cumulative member base as on 31st Dec 2010: 121,751

• CMH 114,879 and Zest 6,872

– Launched Terra a Tented campsite with adventure activities giving customers an

outdoorsy experience

– MOU signed with the Government of Gujarat for setting up 7 resorts

– MHRIL became the first vacation ownership company in the world to have

received the prestigious COPC certification.

– Won prestigious Bird Express TravelWorld Awards for Excellence in Operations

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©

Quarter Ending Dec 31, 2010

• Q3 F11 Highlights

– Q3 Total income at INR 144.5 Cr (Growth of 14.1% )

– Q3 PAT at INR 31.1 Cr (Growth of 30.6% )

– Q3 EBITDA at INR 51.9 Cr (Growth of 25.0% )

– 3,758 members added

– Occupancy was 81.4% against 74.1% in Q3 LY

– 3 New destinations added : Osian , Navalgarh and Swamimalai

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©

Consolidation Measures for the future

• Measures taken at start of fiscal year

– Move from “Aggressive-Push” to “Assisted-Pull” approach in Acquisition

– Sales processes streamlined

• Price increase 5%

• DP increased to 15%

• Limit Tenure to 48 EMI plans

– Strengthening memberbase health through re-alignments and cancellations

• Upsides

– More committed and actively holidaying member base

– Improved Yield : from New Sales funnel and receivables

– Released old inventory for resale at current prices

• Downsides

– Short term „pains‟: “dampener” impact on Revenues and PAT

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©

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Strategy Formulation

Competitive

Advantage

Growth

Strategy

Environment

& Industry

+

Growth Strategy driven by

An enabling environment & our competitive advantage

CHANGE

Identified Business

Processes to suit the

changed times.

CONSOLIDATE

Intensify existing VO

operations.

Enter new segments.

BE FUTURE READY

Leverage Competences &

enter related businesses.

Test new initiatives.

+ +India Story:

Strong

Fundamentals

Travel &

Tourism:

Growth

Sector

VO Industry:

Nascent

market

New Segments

Management

Competences

Leading Brand, Mahindra Group,

Unique & Differentiated Biz Model,

Human Capital

28

© 29

29

Growth Strategy

• Intensification: Build on the VO

business

– Geographic Expansion

– Age Segments

• Project GYPSY, Senior Citizens

– Income Segments

• Fractionals, Mass-market VO

• Integration: Strengthen the

Value Chain

– Travel Services

• Diversification: Expand into

Holiday Related Services

– Homestays, Svaastha

Intensify Integrate Diversify

Existing

Club Mahindra

+

Geographical/

Channel Expansions,

Extensions for Sr. Citizens

& Teens

India

International Expansions

New

Glo

bal

Geogra

phic

al M

ark

et

Product

Zest, Fundays, Fractionals,

Mass Market VO, Club M

Travel Services

Homestays, Svaastha,

Campsites

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