India Overview. By Zubin Karkaria, CEO & MD India & South Asia. Kuoni Analyst Days, Mumbai, Sep28, 2007

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1 India Overview By Zubin Karkaria, CEO & MD India & South Asia Kuoni Analyst Days, Mumbai, Sep28, 2007

2 Geographic dispersal Ludhiana New Delhi Area: 3.3 million sq.kms (1/3 the size of Europe) Population: 1.1 billion (1.5 times the size of Europe) Ahmedabad Jaipur Kolkata 35 cities have a population of 1 million or more Mumbai Pune Hyderabad Bangalore Chennai 2

3 Geographic dispersal Ludhiana Mumbai-Delhi Air: 2 hours Train: hours New Delhi Jaipur Ahmedabad Mumbai Pune Bangalore 3 Hyderabad Chennai Kolkata Mumbai-Kolkata Air: 3 hours Train: 2 nights 1 day Mumbai-Chennai Air: 2 hours Train: 24 hours Delhi-Chennai Air: 2h 45m Train: 2 nights 1 day

4 India Fact File Official Languages 15 Recognized Dialects 186 GDP $ 3.6 trillion 51 % from Services GDP Growth Rate 8-9% Major Religions 6 Ethnic Groups 87 5,600 dailies 206 TV channels 160 mn cell phones 75 mn TV sets Population under 29 years of age 51% 4

5 India is young 33 % is below 15 years 6 % is above 56 years AND CROWDED!! 17% of the world lives in just 2.5 % of the area 5

6 India is changing Passenger Car Models 60 6 USD 500 (every 3 years) Rupee Highly Regulated N/A Foreign Travel allowance Credit Cards in India International Airlines FDI in Hotels & Airlines USD 10,000 (annually) Rupee / US$ Open skies Hotels : upto 100% Airlines : upto 49%

7 GDP composition winds of change % % 44% 40% Agriculture 43% 36% 49% Industry 56% Services 22% 17% 20% 22% 7

8 India is getting economically stronger 8

9 Household income growth will accelerate across India 9

10 By 2025, India will become one of world s largest consumer markets 10 Source : Me Kinsey Global Institute

11 Fast Forward India India's economy grew an average of 8.1 percent annually in the past three years. The number of millionaires in the world's second-most populous country rose by 19 percent last year, more than double the pace worldwide, according to a report by Merrill Lynch & Co. and Cap Gemini. The growing wealth in India makes travel a priority in their lifestyles Affluent Indians have shown an increase in their leisure travel, with the number of those taking one or more leisure trips in a year increasing by 16%, and those taking three or more leisure trips increasing by a whopping 200%. Ownership of mobile phones with Internet access grew from 12.3% to 23.7% Ownership of luxury goods saw an increase from 15% to 19% 11 Source : Various Reports

12 India in 2007 Managing the New Growth Paradigm In 2006 India s economic growth bar was impressively raised. Drivers are in place for India to not only deliver on those expectations (+8%), but raise the bar even further in 2007 Though people and politics are real risks, the odds are expected to favour India Looking ahead, India has the potential to further lift its trend growth level from 8% to 10%. However to move to a higher growth trajectory 4 main challenges need to be addressed. 12 Source : Citigroup Economic & Market Analysis report, Jan 07

13 India in 2007 Managing the New Growth Paradigm The Challenges Infrastructure Increase in infra spend across sectors is needed. In 2007 we see the government facilitating investments via the Public Private Partnership model this would accelerate infra build through accountability, transparence and inclusiveness Inclusive Growth Addressing the growing disparity will be vital since 60% of the incremental rise in population will occur in 3 of the poorest states. Human Resource Paradox Favourable demographics are a key growth factor, but job creation is a priority. Economic boom has not been preceded by a scaling-up of talent supply. Major paradox : need to create more jobs on one hand, and a talent shortage on the other Politics Politics remains a concern, given the nature of India s coalition government. 13 Source : Citigroup Economic & Market Analysis report, Jan 07

14 The Changing face of India Every one is using Mobile Phones EVERY ONE!! EVEN TO TALK TO THE GODS! 14

15 Modern Mass Transport facilities 15 SUPPLEMENT THE TRIED AND TESTED!

16 Technology has made giant strides 16 ADDING TO OUR NATIONAL COMPETITIVENESS

17 But Competition is Fierce EVEN IN THE SKIES!! 17

18 The Flavours of India Over 150 cuisines available in India with regional and even district wise changes. Yet all Indians agree that the best food they ever eat is in their MOTHERS KITCHEN 18

19 Doing Business in India Deregulation at a national level The 1991 liberalization is still fuelling our growth, and despite all comments to the contrary, is the agenda followed by both sides of the political divide. Numbers are huge World Bank estimates the Indian middle income consuming class at 331 mio, that s more than the population of Europe. A Cola study indicates that if Indians consumed half the global per capita consumption of colas, Coca Cola would have to shift its headquarters from Atlanta to India! 19

Understanding the Indian Consumer Meet Indian Tastes Coca Cola India had to bring back Limca (a lemon based drink) & Thums Up (a cola) due to a lukewarm response from consumers to Coke s brands

20 Understanding the Indian Consumer Meet Indian Tastes Coca Cola India had to bring back Limca (a lemon based drink) & Thums Up (a cola) due to a lukewarm response from consumers to Coke s brands (Coca-Cola, Sprite, 7-Up) despite huge advertising budgets. All tours to Europe have chefs that provide Indian meals everyday MacDonalds launched a vegetarian burger from day 1 of its operations in India With a population of 1.2 bio, and a consuming class of 331 mio, yet not all products launched in India succeed. 20

21 India Travel & Tourism Sector 21

22 India Travel & Tourism Economy (2007 Estimates) Economic activity (total demand) generated USD 61 bio Contribution in GDP 5.4% World ranking in terms of year-on-year growth Growth potential world ranking 8.7% Rank 3 Employment generated Share of total employment 26 mio jobs 5.5% 22 Source: WTTC, 2007 Travel & Tourism Economic Report

23 Government of India initiatives Increased budgetary allocations for Ports and Airports Privatization of Airports and Ports already underway Infrastructure: Focused approach Positioning and Branding of India Incredible India Campaign [winner of PATA Gold Award] launched in % p.a. increase in arrivals in 2003, 2004, USD 45 million spending budgeted over next 3 years Removal/reduction in taxes on Travel & Tourism : Tourism sector to attract capital investment of USD 29 billion by 2010 Introduction of Open Skies for peak tourism season (Nov-Mar) Target 2010 for additional hotel rooms : 80, ,000 new rooms 23 Source: Express Travel World

24 India is Rich in Tourism Opportunity Diverse natural beauty : over 4000 km of beach front, perennial glaciers, deserts, tropical havens, temperate grasslands, mangroves, etc. Over sites and structures that are over 500 years old, with the oldest structures being well over 2500 years old. A gastronomical delight with over 15 different cuisines that are well entrenched within their respective geographies Historical sites that cover all the major world religions. A melting pot of cultural diversity within a generic commonality 24

25 India Tourism International Recognition Condenast Traveller s Readers Travel Awards 2007 ranked India as the No.1 Destination in the world (up from No.4 in 2006). ABTA (Association of British Travel Agency) has ranked India as No.1 amongst top 50 places for The Incredible India campaign has been ranked as the Highest Recall Advertisement worldwide by Travel and Leisure. World Travel Awards were received for (a) Asia s leading destination, (b) World s Leading Travel Destination Television Commercial, (c) World s Leading Responsible Tourism Project for Endogenous Tourism Project and (d) Asia s Leading Tourism & Convention Bureau. Euro Effies Award received for the Incredible India campaign

26 Inbound, Outbound and Domestic Travel The Potential is Immense 380 mio domestic trips are undertaken every year Outbound to cross 6 mio in 2007 Outbound likely to reach mio by 2015 Inbound grew from 2.6 mio in 2000 to an estimated 5.1 mio in 2006 Inbound likely to reach 12.4 mio by 2015 (infrastructure permitting) 26 Source : WTO and Ministry of Tourism, Govt of India 28

27 Inbound Tourism Inbound travel is estimated to double in this decade, and by all accounts, seems to be in a position to do in less time. With Inbound likely to double in this decade, room capacities do not seem to be growing in tandem. The need for the hour is a rational hospitality development blue print The challenge is to manage this huge opportunity and to sustain it over the next decade as well. 27 Source : WTO

28 Outbound Tourism WTO estimates Outbound to grow at 15 to 20 % per annum be one of the largest outbound markets within the next 2 decades. Welcome mats are being laid out for Indians 28

29 Domestic Tourism Over 380 mio domestic tourists each year. With increasing affluence, domestic tourism is growing at over 15% per annum. Unofficial estimates seem to suggest that Urban India is powering a major share of this growth. On January 26 th 2007, (a long weekend) the Dukes Resort (a 3-star leisure resort 100km from Mumbai) was selling at USD 350 per night and was full up weeks in advance! Cheaper airfares (LCCs and discounting), higher population of passenger cars and increased Stage Carriage busses, has fuelled this growth. 29

30 Potential for growth in air travel India contributes only 0.02% of world s air traffic. Indian Railways carry the same number of passengers daily that all Indian airlines together transport in a year 30 Source: Airbus Global Market Forecast 2004

31 Airport Projects in India India: 36 Non-Metro airports selected for extension & modernisation Amritsar Jaipur DEL: New Hub Airport by rd Runway by 2008 Delhi Lucknow Ahmedabad CCU: New Metro Patna Airport planned. Soon open for bidding Nagpur Cargo Hub Kolkata Guwahati 31 Mumbai BOM: New Hub Airport by 2010 Source: Lufthansa research Pune Goa Hyderabad HYD: New Hub Airport by 2008 ready for A 380 Bangalore Chennai BLR: New Hub Airport Cochin MAA: New Hub Airport by 2008 ready Tiruchipalli planned. Soon open for for A 380 bidding

32 Aircraft fleet development Air-India Indian Airlines Jet Airways Air Sahara Boeing expects India to buy 900 new aircraft worth USD 86 bio in the next 20 years Kingfisher Air-India Express Alliance Air IndiGo 100 Air deccan Current fleet spice jet 6 10 New aircraft orders 32 Go 10 Source: Orient Aviation Magazine, Internet Research

33 Kuoni India Overview 33

34 Key milestones Acquired Tour Club India s principal Commenced destination manager Indian operations in Middle East through acquisition of Launched Visa SOTC services Launched Kuoni Academy to offer education in T&T Enters domestic tourism market VFS launches biometrics services Acquired SITA World Travel to become India s largest travel company Set up FIT holidays for individual leisure travel Launched Kuoni Holidays with focus on premium segment Acquired Distant Frontiers specializing in FIT & MICE

Martyris T/O share : 30% Employees : 398 Locations : 62 T/O share : 48% Employees : 623 Locations : 236 T/O share : 4% Employees : 648 Locations : 150 T/O

35 Organisation SBD Destinations Div. Head, Rolf Schafroth Kuoni India CEO, CFO, R. Wagle Chief HR, B. Martyris CIO, D. Savla DM Division Tour Op. Division Business Travel Division Visa Services Education COO, H. Anand COO, Sunil Gupta Sr.VP, M. Rikhy COO, S. Bhaduri Head, B. Martyris T/O share : 30% Employees : 398 Locations : 62 T/O share : 48% Employees : 623 Locations : 236 T/O share : 4% Employees : 648 Locations : 150 T/O share : 17% Employees : 1135 Locations : 215 T/O share : 0.4% Employees : 30 Locations : 8 35 T/O share = Turnover share of total Kuoni India Turnover as per 2007E Employees = Average FTE as per 2007E

36 Turnover growth (excl. DM) CHF mio (CHF1=INR35) E 36

37 FTE growth (annual average FTE excl. DM) % % 7% 16% 23% 31% 35% VFS Others VFS as % of total E 37

38 Core businesses Tour Operating India s No.1 Outbound travel company Group Series FIT Incentives Trade-Fairs Sports Markets to Indians in India also catering to special language markets Markets to NRIs (Non-Resident Indians in USA, UK, Middle-East & Africa) Destination Management India s No.1 DM company Handles all segments of the Incoming market Groups, FITs, Incentives, Charters, Conferences & Cruises, etc.. Turnover share from Kuoni Group companies 26% in 2006 (balance from non Kuoni Tour Operators). 38

39 Core businesses Business Travel (BT) India s No.2 BT company Handles travel and travel-related arrangements for Corporate customers Partnered by HRG, the global leader in BT Visa Services World s No.1 visa services company Handles visa applications and other related administrative functions for and on behalf of diplomatic missions in India and around the world Also handles specialised services such as biometrics Highly technology-driven business Highly sensitive nature of business 39

40 Travel Education India s No.1 Travel Education company Launched as a Corporate Social Responsibility initiative to give something back to the society. Offers a variety of courses from basic frontline courses to managerial courses Has cultivated an industry presence e.g. runs courses for main industry bodies Launched overseas in Feb 2007 in Guangzhou, China Tied-up with International School of Tourism Management, Switzerland in May 2007 to offer 2 courses in collaboration. 40

41 Key Awards (recent) Rated as one of India s Top 10 unlisted companies by Outlook Business magazine (national mainstream business magazine) in 2007 Express Travel & Tourism (ETT)-Galileo Award for Best Outbound Tour Operator for last 3 consecutive years ETT-Galileo Award for Best Inbound Tour Operator for last 4 consecutive years Ministry of Tourism s National Tourism Award for last 5 consecutive years (& for 17 years overall) Consumer Superbrand SOTC for CNBC Awaaz Award for Best Outbound Tour Operator in 2007 SATTE Award for Best Outbound Tour Operator in 2007 SAP ACE Award in 2007 for Best Implementation in Services category HR Excellence Award in

42 Corp. Responsibility : Tourism Police Launched in 2000 in partnership with Mumbai Police (as a separate arm of Mumbai Police) Objective : to provide a safer environment for tourists and thereby boost tourism to India 6 jeeps & 5 kiosks (located at Mumbai s main tourist sites) provided and maintained by Kuoni Kuoni also provides training for the force in the art of handling tourists. 42

Corp. Responsibility : Environment protection initiatives

Corporation (BMC) & India Tourism Objective : to promote

of public interest Kuoni has produced a high-impact short film

Tourism for India Kuoni has sponsored public interest message

43 Corp. Responsibility : Environment protection initiatives Launched in 2006 in partnership with Mumbai s Municipal Corporation (BMC) & India Tourism Objective : to promote cleanliness drive in Mumbai and across India, and other messages of public interest Kuoni has produced a high-impact short film on garbage awareness separately for BMC for Mumbai and for India Tourism for India Kuoni has sponsored public interest message sign-boards across Mumbai Kuoni co-sponsored BMC s Award ceremony to felicitate key staff 43

44 Synergy Project the rationale The Synergy Project was launched in Mumbai in 2005 to build synergies across the Kuoni Group by enabling Group companies to increase their productivity & profitability and thereby get a competitive edge over their respective competitors The Project carries out back-office work (operations support, accounting support, etc.) for other Group Companies Operations commenced in July 2005 with 5 staff & 1 customer AlliedTPro Today the Project employs 41 staff and carries out work for 4 Kuoni Group companies AlliedTPro, Kuoni France, Kuoni Italy, Private Safaris and for an external customer. 44

45 Key success factors for Kuoni India Perfectly timed entry into India anticipation of growth potential Dominate the market by establishing a leading presence in every major market segment. Innovation : prime example being VFS (using a core competence to start a new business and become a global leader) Strong distribution network and aggressive mass marketing campaigns to capture the No.1 position in the Outbound market Understanding & anticipating customer needs, perceptions & beliefs SBU Structure focus on each individual market segment Focus on IT Focus on HR / people development Set the benchmark 45

46 Thank-you 46

India Market Update 2018

India Market Update 2018 Growth Potential 1. 3 B i l l i o n P o p u l a t i o n O v e r 6 0 c i t i e s w i t h m i l l i o n + p o p u l a t i o n GDP Above 7% FASTEST Growing Large Economy in the World