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June 23, 2009

Mahindra Holidays

Hospitality

Company Background

MHRIL is a leading leisure hospitality provider in India. The company was launched in 1996 and promoted by the Mahindra & Mahindra (M&M) Group. Currently, the company operates 1,261 apartments spread across 27 resorts in India and Thailand. The company owns around 11 resorts while the remaining is taken on lease. The company has 19 branches and 61 retail outlets across India. In addition, the company has 149 direct-to- home operations (DTH), which are franchised by it. The company accounted for 72% of the total active members across the vacation ownership industry with RCI in India up to May 31, 2009.

Business Model

MHRIL’s flagship offering is Club Mahindra Holidays, which allows members the choice to holiday at any of the 23 earmarked resorts for seven days a year in a season and apartment type of their choice, for 25 years. The company in all has close to 92,000 Club members. The company’s members are required to pay a membership fee at the time of enrolment and an annual subscription fee each year thereafter. The membership fee and the annual subscription fee depend on the type of season and apartment chosen by the member. The membership fee payable comprises a non-refundable admission fee, which forms 60% of the total and an entitlement fee towards the provision of entitlement through the membership period. The company provides its members the benefit of payment in EMIs staggered over a maximum period of 60 months. MHRIL’s other offerings include Zest, Club Mahindra Fundays and Club Mahindra Travels.

Revenue Model

The company’s Revenue model involves upfront payment of the non-refundable ownership fee (admission fee), which is recognised as income. Entitlement fee, which entitles the member for the holiday facilities over the membership usage period, is recognised as income equally over the usage period. The company also charges annual maintenance fees, which is revised every year in line with inflation, thereby providing for higher visibility and a more stable stream of revenues than for pure hospitality players. MHRIL’s overall growth, to a great extent, hinges on its ability to expand its membership base.

IPO Details

MHRIL has set a price band of Rs275-325 a share for its initial public offer (IPO) of 9.27 million shares. The issue comprises fresh issue of 5.89 million shares and an offer for sale of 3.36 million shares by M&M (Promoter), and would represent about 11% of the post-issue paid-up capital. The issue proceeds would be utilised in setting up new projects and expansion of existing resorts over the next three years. The company, which has 27 resorts situated across India and Thailand, is looking to tap new markets in South Africa and China and also to acquire properties within the country.

ESOS Trust1

1,319,409

1.7

1,319,409

1.6

State Bank of India

1,649,130

2.1

1,649,130

2.0

Nylim Jacob Ballas India Fund III, LLC

8,24,565

1.1

824,565

1.0

Employees and Directors

1,065,705

1.4

1,065,705

1.3

Others

120,046

0.2

120,046

0.1

Public

0

0.0

9,265,275

11.0

Total

78,333,688

100.0

84,229,772

100.0

Post-Issue No. of shares

%

69,985,642

83.0

Source: Company RHP, Angel Research

2

Pre-Issue No. of shares

%

73,354,833

93.5

Exhibit 2: Share Holding Pattern

Promoter Mahindra & Mahindra Limited Others

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