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The fun has just begun

Rashmi Pratap | Updated on September 12, 2014 Published on June 20, 2014

Appu's sire: Back in the 1980s, Gian Vijeshwar, a Sweden-based NRI, was handpicked by then Prime Minister Indira Gandhi to set up the country's first amusement park, Appu Ghar, in the heart of Delhi; it will reopen in Gurgaon later this year.

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Share of enjoyment: Arun K Chittlapilly is the MD of Wonderla Holidays, which launched a Rs 180-crore IPO in April.

For amusement parks in India, there is a lot of money riding on a young population that is determined to seek out entertainment & willing to spend on it

It was the early ’80s. The then Prime Minister Indira Gandhi was scouting for entrepreneurs. No, not for setting up a steel plant or any other ‘heavy industry’. Rather, she wanted to create India’s first amusement park, one where poor children would have free entry and rides wouldn’t cost more than ₹10. She handpicked Sweden-based NRI, Gian Vijeshwar, for the task. The India Trade Promotion Organisation (ITPO), which owns Pragati Maidan in the heart of the Capital, leased the land for the park. But Vijeshwar had to import all the rides and equipment, incurring astronomical duties. By November 1984, Appu Ghar was ready to take children and adults alike on its zooming roller coaster and other rides for a ticket priced at ₹1. For the next decade, Appu Ghar remained synonymous with amusement parks in India.

Cut to 2014: Amusement is not so pocket-friendly anymore. Tickets to theme parks in the metros usually start at ₹1,200, while even smaller parks in tier II and III cities charge upwards of ₹350 per person. The concept of free rides for the poor is almost alien to most parks, and at many of them, made-in-India rides stand proud next to imported equipment. And in April, the first-ever IPO of an amusement park in India was oversubscribed 37 times.

The country’s amusement parks industry, with 150 players, generated revenues of over ₹1,800 crore in FY13. The Indian Association of Amusement Parks and Industries (IAAPI) estimates this will more than double to ₹4,000 crore by 2020. While many parks have shut down in the past, new ones are coming up too, keeping the industry in growth mode.

“There is growth because there aren’t many amusement parks in India. We have only four to five big players. It is a very small size for a country of 1.2 billion, where people like to have fun and entertainment,” says Arun K Chittilappilly, MD of Wonderla Holidays, the company that launched the ₹180-crore IPO in April.

Fun in demand

Rising incomes, a growing population of young Indians and a greater willingness to spend on leisure have together given a boost to the amusement industry.

Most cities lack lung spaces and malls are emerging as the only entertainment-cum-shopping destinations. Amusement parks are seen as a welcome alternative. That explains why Mumbai alone has so many of them — EsselWorld, Water Kingdom, KidZania, Adlabs Imagica and Nishiland, among others.

Amusement park refers not only to a collection of dry and wet rides, snow parks and shopping malls, but also other entertainment options such as theatre and folk dances in a defined space. Most large parks in India have opted for a one-price formula, with a single entry fee offering unlimited rides.

“Every year, we are seeing a 15-20 per cent growth in the sector — be it the expansion of existing parks or the setting up of new ones,” says IAAPI President Yogesh Dange, who is a promoter of the GRS Fantasy Park in Mysore.

The absence of large open spaces and entertainment options in the metros had prompted Viraf Sarkari, the director of Wizcraft International Entertainment, to set up Kingdom of Dreams in Gurgaon in 2010. “The idea was inspired by Las Vegas, where we saw many such entertainment destinations. Nothing like this existed in India. Since we are in the business of entertainment, creating an entertainment destination was a logical next step,” he says. Kingdom of Dreams boasts an elaborate arts, crafts, and culinary boulevard with street performers and a Bollywood-themed café. Its auditorium and amphitheatre host live productions, including musicals. And it is raking in money, which, Sarkari says, is being re-invested to expand the park.

Around 2,500 people visit every day, clocking a revenue per person of ₹1,500 to ₹2,000, including food and beverages. At the top end, it makes a cool ₹50 lakh per day.

Space for thrills

On the flip side, amusement parks call for high investments and involve long gestation periods. Chittilappilly points out that larger parks of 50-100 acres require capex exceeding ₹250 crore, while the smaller parks of 20-40 acres require ₹50-80 crore.

Dange adds that this capital-intensive industry requires continuous investment. “Entrepreneurs need to regularly introduce new rides to retain visitor interest.” That also explains why many parks have shut down over the last few years. A bigger challenge, he says, is in getting approvals for large land parcels as they are usually delayed, often until after work begins. As loans for amusement parks are a difficult proposition, entrepreneurs end up borrowing at market rate, which is not feasible in the long run, he adds.

“Typical land parcels for parks are valued at a minimum of ₹25-30 crore. If land price goes up, some entrepreneurs feel it is best to cash out. Besides, some amusement parks closed down due to financing problems,” Dange says.

Appu Ghar, however, faced a different challenge altogether. The iconic park had to be shut down in 2008 to make way for Delhi Metro’s Pragati Maidan Station. International Amusement Ltd (IAL), the company that built and operated Appu Ghar, is now readying to launch an amusement park with the same name in Gurgaon later this year.

Imported amusement

Shishir Deshpande, CEO of EsselWorld, India’s biggest amusement park, says most rides at his park are imported. “The cost of bringing them into the country is very high. The duties and installation and maintenance charges add to it, making both capital and operating expenses high.”

Some of the big imported rides can cost up to ₹40 crore. But the ticket prices barely cover these costs. At ₹1,500, a Wonderla ticket is way below Disneyland tickets starting from $100 (₹6,000), excluding food, beverages and souvenirs. “We are way behind (international peers such as Walt Disney parks) in terms of revenue. We have to price the entry tickets according to the paying capacity of the average Indian customer. I wish we could increase the price,” says Deshpande.

Appu Ghar, which kept ticket prices low to pull in crowds and help the government fulfil the quasi-socialist objectives of that era, attracted over 1.4 million visitors annually and took several years to turn profitable. “We had to delay our break-even timelines to ensure we do not compromise on ride quality, safety standards and the overall experience of our guests,” says Vijeshwar.

EsselWorld in Mumbai and Wonderla’s two parks in Kochi and Bangalore are operationally profitable. While 80 per cent of the revenue for Indian parks comes from tickets, the rest is from food, locker rentals and photography. “In the West, this ratio is 50:50. So we need to come up with methods to ensure more sales within parks, such as through merchandise, to increase revenues as raising ticket prices is not much of an option,” says Dange. Moreover, the key to achieving profitability quickly, says Chittilappilly, is to keep investments low. “We design the parks ourselves, besides developing rides and technology in-house as against buying them from outside.”

Local pleasures

Wonderla has developed 40 of the 120 rides it offers in-house, including the roller coaster, water slides and 5D theatre. This nearly halves the cost, proving to be a huge saving as most rides cost upwards of ₹10 crore.

Indian companies such as Hindustan Amusement Machines (HAM) and Saya Amusement Manufacturing offer locally manufactured rides at lower prices. Enjoying the advantage of low labour and material costs, they use standardised components to help scale up quickly and keep prices low.

Wonderla has gone a step ahead. Rather than outsource maintenance to the ride manufacturers, it has trained professionals to do it in-house. “It is a substantial saving as maintenance by technicians abroad is a very costly proposition,” Chittilappilly says.

More importantly, workers should be trained well both for maintenance and for adhering to safety measures. “High-level skills are required in maintaining safety as well as hygiene in parks,” he says.

There have been instances of serious injury and even death at amusement parks in the past. The companies, however, insist they have enough checks and balances now to avert any untoward incident.

Although there is demand for more amusement parks, their future will depend on the speed at which they innovate. Wonderla has a resort alongside its amusement park in Bangalore, and Adlabs Imagica on the outskirts of Mumbai is coming up with a hotel too. “These new concepts will increase footfalls and create new interest in the market,” says Dange.

But Vijeshwar foresees a different kind of future for the industry in the next few years. “By 2020, I expect amusement parks to be more interactive, and to defy all laws of physics through digital mediums,” he says. He believes that park attractions will be condensed into mobile apps, integrating entertainment with daily life. But till such time, park owners and entertainment seekers alike will continue to head out to the wide open spaces for a thrilling ride of their life.

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Published on June 20, 2014
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