While many sectors are under stress, the amusement industry is booming. In an interview to Bloomberg TV India, Wonderla Managing Director Arun Chittilappilly gives an insight of the growth potential of the industry.

What has boosted your Q2 earnings?

Basically, it has been led by footfall growth. We have seen an uptick in footfalls by roughly 8 per cent and, on top of that, we increased ticket prices in the beginning of the year by almost 11-12 per cent. So these two factors have contributed to the growth in our revenues. The other main factor is our costs have not gone up as much. While our revenues grew about 25 per cent, our costs only grew 15 per cent. So that also expanded our margins.

Can you elaborate on how you lowered the finance cost?

We have prepaid some of our loans and that has reduced our finance cost. We don't have too much of debt on our books but we do have some debt — may be less than ₹20 crore.

Give me an update on your Hyderabad park. How much will it contribute to your margins?

We are confident of opening the Hyderabad project by the first quarter of FY17, which is next April. So, as of now, we are working full steam towards that deadline and we are reasonably confident that there will not be any significant delays. If that happens, we will see the impact of that park in the next financial year. We are hoping to see a big revenue jump and in the first year that park will have EBITDA margin close to 30 per cent and a top line of roughly ₹65 crore. So that will come on top of all the growth that we can see from our existing projects. So next year is going to be pretty interesting.

You also have plans for expansion in Tamil Nadu. What kind of investments are you looking at and when is that likely to be operational?

As regards our plans for Chennai, we want to open a park there by 2018. That’s the deadline we have kept for ourselves. So we roughly have about 2.5-3 years to complete that project. Right now we are in the land acquisition stage. We hope to complete it by the beginning of the next financial year and then the major construction will start only once Hyderabad is fully operational and starts generating revenue. So we will see some capex going to the Chennai project from next financial year onwards. We hope to open this park by the first half of 2018. So that's the broad plan for the company for the next three-four years.

What has been the trend in ticket prices, especially in the festival season?

We decide on annual price hikes usually starting April. This year, we hiked prices by roughly 12 per cent. So that has been effective April onwards. That will continue for Q3 and Q4 as well. But on top of that we have also had the impact of a service tax hike from June. So that is an added cost to the customer of roughly about 12-14 per cent. But that is being challenged in courts by the Association of Amusement Parks. So it’s too early to say how that’s going to pan out. We are hoping that we will get some respite.

How large is the amusement park industry and how do you intend to cash in on the potential?

The amusement park industry is very under-represented in India. There are very few parks for such a large country and even though you have so many large cities. There is a huge opportunity in the country. But world over, amusement parks are capital intensive. In India, that makes it a much bigger problem because people have less spending power. So I think the trick in India is to make sure that your capex is managed very well and you are operationally profitable. So that operational efficiency is what we focus on a lot. We hope to gradually be present in other large cities going forward.

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