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Rich toys for big boys
Arati Menon Carroll in Mumbai | March 17, 2007
The Majesty 66 yacht is a nifty plaything to have. She is 20 metres long from stem to stern, has four bedrooms (one with walk-in closet), five bathrooms, a full-fledged kitchen and will ply you down the coast to Goa if you have Rs 12,000 to spend on fuel bills by the hour.
The owner, a young player in the Indian financial services sector, remains conspicuously absent. "How ironic that something so boastful cannot be shown off," comments Erwin Bamps, a senior executive with Gulf Craft, the yacht's manufacturer.
Next to the Majesty 66 bobs the 120-foot Kalizma, one of the few yachts docked at the Gateway of India to be unreservedly owned...by Vijay Mallya.
As far as profligacy can be measured, it's no match for Mallya's other "boat", The Indian Empress -- all 311 feet of it stays docked in Monaco for much of the year.
In fact, industry sources suggest that up to 85 per cent of all leisure boats purchased by Indians never leave Dubai or the Mediterranean -- cagey owners are probably better off without them in public view locally. How does one hide a 100-foot yacht anyway?
It's probably just as hard to disguise a Ferrari 575 M as a taxi. Yes, a red Ferrari with yellow licence plates cruised stealthily down Thiruvananthapuram's roads for a bit, two years ago, until it reportedly made its way into the garage of its (un?)lawful owner in Bangalore. But not before causing considerable intrigue and speculation.
As daunting as the prospect of public scrutiny and taxman inquisition is, India's wealthy seem to have a steadily expanding list of top-dollar extravagances. With 36 of its billion-plus citizens worth over a billion dollars, India has replaced Japan as Asia's top breeding ground for the super-rich, says the Forbes 2007 listing of billionaires. Only the US (415), Germany (55) and Russia (53) have more billionaires than India.
Utterly believable. The barely-a-year-old Rolls-Royce dealership in Mumbai has sold 16 Phantoms at an average Rs 4 crore, and amid rumours that they're even bereft of their test car (the company representative denies this), they are hopeful of selling another 12 bespoke beauties this year.
Comparable price tags and associated levels of snoot puts Bentley (Lalit Khaitan, CMD Radico Khaitan, drives one) in the same family.
Both, by virtue of being custom-built, sit undisturbed at the top of the pile. The Maybach threatened to crash their party, but mirroring its global slump in sales (and the bad PR associated with Mukesh Ambani disposing of his), it is finding fewer suitors. The other Ambani, true to his extroverted personality, prefers flashier transport. He owns a Lamborghini Gallardo and a Maserati Quattroporte.
In fact, sporty thoroughbreds like Lamborghini (Sameer Thapar of JCT Mills has a Gallardo Spyder), Ferrari (Sanjay Dutt drives an F430), and Maserati (Ajay Devgan has a Quattroporte) are finding favour among young turks who'd otherwise predictably buy a Mercedes S-Class, BMW 7 Series (Pia Singh of DLF Universal drives a BMW 760Li) or Audi S8. There are an estimated 50 Porsche 911s on Indian roads, occasionally seen pushing 150 kph on Marine Drive post midnight.
Ashish Chordia, CEO of Shreyans Motors, exclusive Indian dealer for Porsche, reckons they will double that number in 2007. Yohan Poonawalla, whose family's auto cache has always been partial to Rolls-Royce, drives a Lamborghini Gallardo. So does Bhushan Kumar of T-Series, who owns a Murcielago as well as a Mercedes-Benz SL55 AMG.
The AMG ticket -- which means it is custom kitted and performance-enhanced � adds invaluable cool and also incidentally 20-30 per cent up on the price.
Poonawalla's Porsche Cayenne is similarly souped up with a Gemballa kit. Those in the know claim they could spot the difference from among the six regular Cayennes parked at the Mahalakshmi race course on race day. Gautam Singhania, it must be said, is noticeable for eschewing show-off favourites for cult sports cars like the Lotus Elise and Honda S2000.
Luxury cars, for a while, represented the biggest boast, but riding the wave of market liberalisation are newer and more extravagant emblems of luxury. At Mumbai's first international boat show, an estimated Rs 40 crore exchanged hands. (Saurashtra Cement's Jai Mehta was seen giving a 72 ft Sunseeker the once over.)
And while the bulk of the Rs 200 crore (Rs 2 billion) leisure boating market in India is still made up by the dinghies and power boats under Rs 50 lakh or Rs 5 million (there are well over 100 moored in Mumbai), Sujay Chohan, one of the show's organisers, says it's not the money that's stopping buyers. "When you're buying a Rs 5 crore (Rs 50 million)yacht, you do worry about where you'll berth it in the monsoon," he says.
Still, with the first 20-berth marina (to be scaled up to 100 berths in a year) in Mumbai scheduled for 2008, some of the hurdles for purchase will be eliminated. "At next year's boat show 20 yachts above 40 feet will be on display, and none of them will go back," predicts Chohan.
That may sound pollyannaish, but manufacturers back it up. Princess, a �200 million premium yacht maker that previously sold two yachts to Indians six years ago, expect to sell six from relationships cultivated at the show.
"We had a lot of young entrepreneurs visit the stall and express interest in the 70-feet plus category. And they got down to the stage of money transfers pretty quick," laughs David Pyle, director, Princess yachts. "It may be the Mallyas and Singhanias that get profiled but there's a new breed of big spenders, and they're not landed gentry," says Chohan.
Yes, there are more ways than one to make your riches. And while the top rung of India Inc are predictable shoppers, the soaring value of land has resulted in a rash of new billionaires -- the real estate owners and construction barons.
Sunny Dewan of Dewan Housing is known for his penchant for cars and has a Ferrari F430 Modena and a Hummer H2. Avinash Bhosale, a construction magnate based in Pune, has a bespoke Phantom and a Murcielago tucked in his garage along with other luxury machines.
But how can 32 knots (59 kph) and 320 kph compare with 782 kph? That's the range of the super mid-sized business jet Hawker 4000. It can take 8-12 passengers, has a range of 3,400 miles and will set you back $21 million. The grapevine has it that more than one Indian company has booked it this year.
Again, while the Tatas, Birlas and Reliance have had the larger fleets for longer, the drivers today are small- and medium-sized companies. New biz jet owners include the GMR Group, Hindustan Construction, Punj Lloyd, and Jaiprakash Associates, and unlike the market of old, they're purchasing larger, faster jets with intercontinental range. The headcount? Four hundred aircraft to be delivered over the next three years at an average of $22-24 million each.
Business at Bangalore Aero India 2007 was brisk. Bombadier introduced the Global Express XRS at $52 million to India and two or three got snapped up immediately.
Reliance Industries bought one, who bought the others? "Typically, we do not disclose new orders, until the customer decides to declare acquisition after delivery," says Srinivas Duvvuri, chief country representative, Bombardier India.
Low-key logistics operator Vijayanand Roadlines became one of the largest purchasers of aircraft at the air show when it treated itself to three King Air B200s ($5 million) and a Beechcraft Premier 1A ($6.2 million).
Raytheon, which owns the brands, has sold 21 new business jets in India in the last three years. Compare that to their corresponding-period sales in China -- six.
In fact, India sales is number 3 in dollar value terms in 2006, after UK and Russia. They sold five at the air show, for approximately $30 million. The going is equally good for Dassault, long a favourite with the Indian Air Force. They clock annual sales of $150 million from the Indian market alone, according to Thierry de Poncins, international sales director, Dassault.
But there are business jets and there are business jets. Vijay Mallya flies to multiple destinations a day in his Airbus corporate jet (ACJ), yes, the commercial A319 configured for business use. Reliance Industries has ordered an ACJ, and the government has taken delivery of two.
Just as imperial is the Boeing business jet, four of which were sold in India in the past year. "The smallest business jet we offer is the BBJ and it offers three times the cabin space of the traditional long-range business jet," says Dr Dinesh Keskar, senior VP, Boeing Commercial Airplanes.
With a queen-sized bed in a private stateroom, private bathrooms with a full-sized shower, a full-service galley, a private office and a dining room that can double as a conference room, Satcom, high-speed and broadband connections, there's room for work and play.
But pockets sometimes just ain't that deep, so some make do with shared ownership. The most high-profile is a consortium called Forum 1 comprising Ajay Singh, Analjit Singh, Pawan Munjal, Sunil Mittal and Hari Bharti. Forum 1 owns a King Air B 200 (for smaller runways) and Hawker 850 XP (for longer runways).
Fractional ownership -- where a company or an individual can buy equity in an aircraft and use it based on the equity structure -- is now organised business.
Manav Singh's Club One Air has a fleet of about 40 aircraft having been operational for more than a year. Rajeev Chandrashekhar's (of the Rs 1,400 crore or Rs 14 billion BPL sweet sale deal) Jupiter Aviation is launching Private Air and is negotiating the purchase of a fleet of business jets and corporate helicopters.
Also out to extend the charmed life to the upper middle classes is Aashim Mongia's West Coast Marine. Their yacht share programme that allows a group of 5-6 individuals to own a Gulf Craft yacht, stipulates a down payment of Rs 8 lakh, followed by an annual fee of Rs 300,000 over a period of five years. On eventual sale, everyone shares the spoils.
All this trade seems largely impervious to a stubborn duty structure -- 112 per cent duties on imported cars , 35-odd per cent on boats... Biz jet manufacturers did flinch when the Budget announced the resumption of duty on imported aircraft with a total administerable duty of 24.77 per cent. De Poncins indicates a few Dassault orders are wobbly with customers contemplating cancellations, or registering their purchases outside the country.
"It's not as if transactions aren't clean," insists Anju Dutta of Marine Solutions, that sold seven boats at the show, "but until public attitudes are less judgmental, nobody's comfortable flaunting these new emblems of luxury." Like Gulfcraft's Bamps says, "There are only two sets of people who'd be informed of your purchase of a yacht, your best friend and your biggest competition."
As we speak, a little birdie has reported the arrival of another Lamborghini Murci�lago LP640 at customs...no names have come up yet but the sleuths at BS Motoring are at the task. Watch this space...
With inputs from Ravi Teja Sharma and BS Motoring