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Balwant
Chawla (L), CEO, and Santokh Chawla, Director Polo Amusement
Park: Moving on the Down Under |
Given
a choice, Mansi and Basant would never go to school. They'd rather
spend all their time hanging out at Delhi's Fun 'n' Food Village,
hopping from one stomach-churning ride to another-there's 20 to
choose from-calling it a day only when the 10-acre amusement park
does. In fact, whenver the two brothers are in town, they manage
to pack in at least five hours a day-seven days a week-on Fun 'n'
Food's famed "mono rail" and "flying carpet".
The two teenagers have to be the biggest amusement park addicts,
right? Hardly.
Meet daddy, Balwant Chawla. The 44-year-old
loves amusement parks so much that, along with brother Santokh,
he's already built two (yep, he owns Fun 'n' Food), and is building
a bigger and better third. The interesting bit: it is coming up
not in India, but Australia. Bang on the Gold Coast. The 72-acre
park will cost Chawla, who comes from a family of Sikh businessmen
in Thailand, a cool Rs 300 crore, most of which will be coughed
up by businesses that take up slots in the amusement park. Businesses
like ride-operating companies and fast food marketers.
Chawla may be the first Indian to make a splash
on the world theme parks map (a worried Gold Coast neighbour, Warner
Brothers, is trying to throw a spanner in Chawla's works), but he's
hardly the only one who thinks amusement is big business. There
are already 100-odd big and small a-parks scattered across the country,
raking in estimated revenues of Rs 1,000 crore a year. Now, according
to Ashok Goel, President, Indian Association of Amusement Parks
and Industries (IAAPI), 400 more are in the pipeline, including
those of Unitech, Haldiram's, and Sahara India.
IN
FOR THE RIDE
Some of the big projects coming to town. |
UNITECH & INTERNATIONAL
AMUSEMENT
A joint venture to set up a 62 acre park in Rohini (Delhi),
and another 146-acre park in Noida (near Delhi).
Cost: Rs 100 crore and Rs 400 crore, respectively
HALDIRAM FOODS INTERNATIONAL
A 6.25-acre, heart-of-the-city theme park in Nagpur,
which already has two more amusement parks.
Cost: Rs 10 crore
AGRI GOLD
Amusement parks in Vijayawada (70 acres), Vizag (113), Hyderabad
(100), Bangalore (70). Cost: Rs 200 crore
SAHARA INDIA
A 100-acre amusement park in its Amby Valley township near
Lonavla (Maharashtra).
Cost: n.a.
ROY WONDERLAND AMUSEMENT PARK
An amusement and resort centre on the outskirts of Hyderabad.
Cost: Rs 32 crore
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In fact, at the CII Partnership Summit held
in Hyderabad in January this year, a clutch of companies signed
agreements with the Andhra Pradesh government to set up not power
plants or port facilities, but theme parks in different parts of
the state. For example, Agri Gold Group-a company promoted by V.R.
Rao Avvas-plans to build parks at Vizag, Vijaywada, and Shameerpet
(near Hyderabad). Investment: Rs 200 crore. Roy Wonder Land Amusement
Park, a Hyderabad-based company, is pumping in Rs 32 crore on another
outside Hyderabad.
Then, there are the existing players such as
Pan India Paryatan (the holding company for Zee Group's Essel World
and Water Kingdom) and Rajive Kaul's Nicco Parks and Resorts that
are investing in expansion. The latter has taken a minority 10 per
cent stake in a park that will open in Dhaka on April 14 (Bengali
New Year Day). Even Appu Ghar, which claims to be the most successful
amusement park in the country with annual footfalls of 25 lakh,
is joining hands with real estate group Unitech to build a 62-acre
park in Rohini (Delhi).
Start The Roller Coaster
But why this rush? There are several reasons,
none of which would hold but for the emergence of a new kind of
Indian consumer, who is getting serious about having fun. According
to retail consultant KSA-Technopak, as recently as the early 90s,
the average urban household in India spent a mere 15-17 per cent
of its monthly disposable income on entertainment. Today, not only
has that percentage gone up to 22 per cent, but the absolute amount
has soared too. Says Arvind Singhal, Chairman, ksa-Technopak: "Both
urban and rural households want to liberalise and end up spending
a considerable portion of their disposable income on entertainment,
which is a fundamental shift from yesteryears."
Ergo, the industry is expecting wild rates
of growth. One estimate puts it at an incredible 300 per cent for
the next three to four years. What's also helping is that some states
such as Uttar Pradesh, Gujarat and Maharashtra have recently exempted
the amusement park business from entertainment tax. In terms of
its business model, the business has a long way to go. Elsewhere
in the world, it is equally capital intensive, but works on an interesting
model. The promoter only invests in infrastructure and marketing
the park, and the rest of the investment in rides, food court, and
merchandising is made by franchisee marketers-much like how a shopping
mall works. A revenue sharing agreement allows the promoter to make
money on the entertainment and goodies inside the park.
DESIGNER
DREAMS
The husband-and-wife team of a-park architects. |
Until the mid-90s,
Rajiv and Sabina Khanna made a living designing housing projects.
Then, in 1999, they discovered a whole new industry: amusement
parks. And since, they've designed three of them and are currently
working on their biggest project yet: Balwant Chawla's Rs 300-crore
project in Gold Coast, Australia. Sure, the duo are competent
and they are also members of the Atlanta-based International
Association of Amusement Parks and Attractions-the big daddy
of A-parks the world over-but their edge is in cut-rate fee.
A Rs 10-crore project designed by a foreign architectural firm
could cost upto $60,000. The Khannas can do it for $15,000,
and almost as well. |
However, in India, the promoter also invests
in the rides and other facilities. The result: huge investments
and long break-even periods. Pan India, for instance, has invested
Rs 80 crore so far in Essel World, but has profits of only Rs 1
crore. MGM Dizzee World (Chennai), which was set up in 1993, has
invested Rs 100 crore till date, but made only Rs 2 crore in net
profits last year. Appu Ghar, the oldest of them and with Rs 15
crore in annual turnover, claims to make only marginal proftis.
The problem: new rides and entertainment facilities have to be added
every year and that means having to plough back cash flows into
the park. Says Gian Vijeshwar, 58, Chairman, Appu Ghar: "The
entrepreneur has to wait patiently for profits, as this is a long-term
proposition."
Left with few options, amusement parks in India
have to depend on entry ticket sales for revenues. While Disney
earns just 17 per cent of its revenues at the gate, its Indian counterpart
makes as much as 80 per cent. And those who don't either keep a
tight control on costs or are unable to plough in money into newer
rides every year, go belly up. Crazy Water and Blue Lagoon-two theme
parks that operated in and around Bangalore-shut shop over the last
two years.
Small wonder, then, some of the park barons
are in it because they had an easy entry point. Chawla was a dry-ride
manufacturer before he turned a customer himself; Neeladri Amusement
Park is owned by Bangalore's real estate magnate M. Nagaraju; and
Hyderabad's Ramoji Rao is venturing into "movie magic theme
parks" because he's in the movie business.
But, like it happens with any new industry,
just too many players are trying to get in (there's a virtual stampede
to set up snow parks). And not all will make money. Agrees iaai's
Goel, who's also Director of Pan India Paryatan: "Only the
fittest will survive."
So some kind of a consolidation is almost certain,
although just what the synergy could be is not very clear. Promoters
like Chawla of Fun 'n' Food aren't too worried about what's in store.
"Our philosophy is to make a park, bring it up and sell it
off," he says. Until then, of course, Mansi and Basant can
continue to wrangle free rides at their dad's parks.
additional reporting by E.
Kumar Sharma, Nitya Varadarajan, Venkatesha Babu, and Dipayan Baishya
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