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June 23, 2009

Mahindra Holidays

Hospitality

Industry Overview

Tourism in India has registered significant growth in recent decades. This sector is one of India’s largest net earners of foreign exchange and also employs the largest manpower. The World Travel and Tourism Council has identified India as one of its growth centers in the world in the coming decade. According to Conde Nast, India has been ranked as the fourth ‘must see’ destination in the world. India’s domestic tourism too has picked up over the years. The country’s domestic trips are expected to post a CAGR of 11.7% over FY2007-12 to reach approximately 871 million trips in 2012. The domestic tourism expenditure is expected to rise to Rs2,621.1bn registering a CAGR of 13.6% over FY2007-12.

Exhibit 3: Growth of Domestic Tourists in India (Mn)

600 CAGR of 12.8% over CY19962007

500 400 300 200 100

0

Source: Ministry of Tourism, Angel Research

The Indian economy has grown at a healthy pace over the past few years, which has resulted in rising per capita income and increased consumerism. The country’s domestic Tourism Industry too has thrived due to these factors. Going ahead, India is expected to maintain its strong growth on the back of favourable demographics and is therefore expected to become world’s fifth largest consumer market by CY2025. Further, wallet share of discretionary items is expected to grow from 52% in CY2005 to 70% by CY2025. India’s aggregate consumption by the middle and upper income households is expected to grow nearly 13 times by 2025.

Exhibit 4: Change in Demographic Profile over FY2006 and FY2010E

8%

1% 2%

13%

26%

Deprived

Aspirers

Middle class

Rich

65%

Source: Company RHP, Angel Research

Deprived

Aspirers

Middle class

Rich

34%

51%

Vacation Ownership Industry at a glance: Vacation ownership is essentially where the ownership and/or usage of a hospitality asset is sold for a pre-determined duration or perpetuity. The product range, generally offered, includes:

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