MARCH 2, 2003
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Q&A: Kunio Sebata
The President and CEO of the $3.8-billion Hitachi Home and Life Solutions Inc tells BT Online about what it's like to operate independently in India, the company's past relationship with the Lalbhai Group in the air-conditioner market, its faith in joint ventures and its current plans for India.


Q&A: Eran Gartner
As Vice President (Operations), Bombardier Transportation, Eran Gartner, outlines what would make his company such a hot pick to build Bangalore's mass transit system. It isn't just about creating a network and vanishing, he claims, it's also about transferring modern technology to the local operations.

More Net Specials
Business Today,  February 16, 2003
 
 
The Big A
Forget thrill-seeking kids. Lining up for amusement parks this time around are big businesses with serious money. Number of projects planned: 400 by 2005.
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).

HALDIRAM FOODS INTERNATIONAL
A 6.25-acre, heart-of-the-city theme park in Nagpur, which already has two more amusement parks.

AGRI GOLD
Amusement parks in Vijayawada (70 acres), Vizag (113), Hyderabad (100), Bangalore (70).

SAHARA INDIA
A 100-acre amusement park in its Amby Valley township near Lonavla (Maharashtra).

ROY WONDERLAND AMUSEMENT PARK
An amusement and resort centre on the outskirts of Hyderabad.

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.

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