Cover Story

An ‘amusing’ business

The amusement and theme parks industry in India is deemed to be worth over Rs 6,000 crore. This figure, coupled with the country's population speaks volumes, literally, in terms of potential and success. By Chetan Kapoor

The amusement and theme parks industry in India found its roots during mid and late 1980s when a few innovative entrepreneurs took up the challenge of establishing amusement parks in Delhi, Kolkata, Mumbai and Chennai. This makes the market in India relatively new when compared with that in the USA and Europe.

The good news is that, according to industry sources, this sector is growing at a rapid pace and over 150 amusement parks, water parks and snow parks are currently in operation in India, with an overall investment of over Rs 30 billion. The number of footfalls these parks (put together) manage to get is around 50 million annually with an annual turnover of approximately Rs 5 billion.

We've heard of the world's Disneylands, Genting Highland, Sentosa Island, Las Vegas, and now the Dubailand. So far, the travel agents and national tourism boards have been successful in marketing these manmade attractions and have showed no signs of stepping back while promoting the same. And why would they? After all, these attractions translate into big money. However, in India, this concept as means to attract tourism has been relegated to the backburner.

House of horrors

Nilesh Mistry Vice President (corporate affairs) Essel Group

In spite of the mind-boggling investments made in constructing and developing amusement and theme parks, the industry has not got its due. In India, the tourism policy does not address the needs and the potential of the amusement industry and fails to provide uniform subsidies or tax exemptions for it to grow like other industries. The fact that most of the industry was unorganised for a long time has also impacted its growth.

A high level of entertainment tax (ET) has been the primary source of concern for the industry. The fact that it is a state-specific subject makes matters worse. Although ET is charged at cinemas, circus, clubs, and earlier even at cabarets, the concept of this tax was to restrict people from consuming/acquiring 'harmful' products such as cigarettes, alcohol, etc. According to Nilesh Mistry, vice president (Corporate Affairs), Essel Group which owns EsselWorld and Water Kingdom properties in Mumbai, "Initially, concepts such as amusement and theme parks weren't mentioned in any state's ET policy. Thus, it was 65 per cent along with an added 10 per cent surcharge and in some parts it was to the extent of 110 per cent. After much deliberation, citing foreign case studies, and even local examples, the policies were amended."

Abhijit Dutta President (project & engineering) Nicco Parks & Resorts

Abhijit Dutta, president (Project & Engineering) of Kolkata-based Nicco Parks & Resorts, adds, "This is a capital-intensive industry and the cost of rides and attractions, which are often imported are very high. Therefore, we are required to obtain debt fund from banks and other financial institutions. Servicing this borrowed fund with high interest cost and return of principle amount becomes a huge burden for the amusement parks." Land acquisition and rehabilitation issues, maintenance cost, coupled with high labour, electricity and water costs also add up to a considerate amount.

Joining the pieces

Rajen Shah MD Arihant Industrial Corporation and President, IAAPI

In 1999, the Indian Association of Amusement Parks & Industries (IAAPI) was formed to bring the entire amusement industry under one umbrella. According to Rajen Shah, managing director, Arihant Industrial Corporation and president of IAAPI, "The association aims to promote and encourage the growth of amusement industry in India. Through its multi-faceted activities it has brought all those related to the business together and has set international quality standards for safety, rides and the use of resources."

He adds, "IAAPI has presented to the government authorities the issues of exemption of entertainment tax, excise and provision of benefits to the amusement industry." Shah believes that the Indian amusement industry is in the midst of a boom and millions in the metros and even small towns are looking out for world-class entertainment avenues.

The sector has tremendous potential for investment by business houses and foreign investors. Rajeev Jalnapurkar, vice president of Ramoji Film City, wants the state of Andhra Pradesh to take a step in this regard. He says, "Every state has its USP. Gujarat has its kite festival, Kerala has its ayurveda packages but there is nothing for Andhra Pradesh. We need to take Tirupati as a peg and build other destinations around it. Amusement parks and theme parks should be developed and promoted as destinations in themselves."

To attain this, even the psychology of people needs to be addressed. Harry Clement, chief marketing manager of Mount Opera in Andhra Pradesh, says, "The general view about amusement parks in the country is that it is a place for kids and adults have nothing to do there. This perception has to change and people have to see amusement parks not merely as places to kill time but as places which offer a judicious blend of leisure, fun and health." Such 360-degree developments in terms of having a body to address grievances of the industry, unifying them to achieve the industry's potential and most importantly lure high number of population to visit such sites will only make this industry stand on its feet.

Product development

Arunkumar Muchhala MD Muchalla Magic Land and Founder, Suraj Waterpark

Comparing international amusement and theme parks with the Indian ones, one needs to ask why isn't the Indian amusement industry doing as well? In addition to the setbacks mentioned earlier, lack of product development is the most viable reason. Arunkumar Muchhala, managing director of Muchalla Magic Land, founder of Suraj Waterpark, says, "There is a constant flow of investment in upgrading and adding new rides in this industry and the gestation period is very long and borrowing funds isn't an easy option. Earlier, the Tourism Finance Corporation of India (TFCI) would demand very high rate of interest and since recovering money in this industry is a difficult task, one faces loss in the initial years. So failure in clearing instalments, coupled with loss mentioned in one's balance sheet has put many out of business." Thus, lack of availability of monetary benefits has been an integral aspect working against the industry.

Building a quality product also means rides maintaining the highest standards in terms of quality and safety. Even though some parks may independently follow safety norms, there are no nationwide safety standards to be followed. Arun Chittilapilly, executive director, Wonder La in Bangalore, claims, "We have received over seven lakh visitors in our very first year of operations and safety obviously is of utmost importance. Every ride in the park undergoes daily safety checks before being opened to the public. Every ride is shut down at least once a year, taken apart and all parts serviced."

VGP Ravidas Vice President IAAPI

Answering to the state of safety norms in this industry is VGP Ravidas, vice president of IAAPI. He says, "IAAPI has submitted a proposal to the Bureau of Indian Standards (BIS) for chalking out uniform safety guidelines for amusement parks, which is seriously working out standard specifications. We hope to outline the safety guidelines at the earliest." Looking at these developments, one can say that the amusement-entertainment industry has entered a mature phase and has started thinking about certification and accreditation. The industry and the central government is working closely with international private certifying companies like TUC, MICON and SGS to bringing safety accreditation. This kind of certification will improve credibility and bring in a global appeal, says an industry insider.

If one were to observe the location of these units, they are mostly in the outskirts of cities. Thus, setting up even basic infrastructure becomes a Herculean task not only in terms of labour involved but also monetary expenses. Taking a case study of EsselWorld, Mistry says, "Since the area had a small population, we had no support from the local municipal corporation for solid waste management, garbage disposal, sewage lines and electricity. Thus, we had to find alternatives - operating on generators, rain water harvesting for an easy and regular supply of water, set up our own sewage treatment plant having vermiculture pits to convert garbage into manure and maintain greenery in our property - to become self-sufficient and also to cut costs." Furthermore, on a larger scale, there are minimal or hardly any tie-ups with state tourism boards or travel agents to market and increase the visibility of such sites in the country, let alone globally. Malaysia Tourism is a great example. It has been promoting Genting Highland with enormous benefits.

The time machine: Changing times

Certain states have realised the potential of such entertainment units and have reduced or simply eradicated ET. Also, the amusement industry may not necessarily always cater to international tourists (thus probably losing out on higher revenues as charged at historical sites) and the beneficiaries have no problems with that since the number of domestic visitors is moving upwards slowly but steadily.

"Annually, we get three to four lakh people and this may not necessarily give us a huge turnaround. For us, profit really is the appreciated value of land over a period of time," says Muchhala whose water park has entered the Limca Book of Records five times for the vast man-made structures his team has built. "Our park was made for the purpose of entertainment since everyone including children, nowadays is caught up with some or the other mental activity," he adds. Continuing with achieving records, Muchhala wants to add another two 'manmade wonders' to complete his set of seven wonders, in addition to three more properties coming up in Gujarat.

Raman Khurana, manager of International Recreational Parks, the creator of Appu Ghar in Delhi says, "It is not about spinning money, but an overall vision to build an entertainment city dedicated to entertainment and attached to it is a mission to reach international standards." His company is creating niche products by the year 2010, just in time for Commonwealth Games in the hope of attracting more footfalls.

Taking a step further and exploring the option of building an entertainment and tourism centre in the country is the Essel Group. It has announced its intention of entering a joint venture with Maharashtra Tourism Development Corporation to develop a project on the lines of Genting Highland, Sentosa Island and Dubailand, to be positioned as a global tourist destination in the outskirts of Mumbai.

The group believes that this region will be a one-of-its-kind location between Europe and the Far East to fulfil the need of international tourists. Mistry says, "None of the entertainment-based projects can sustain if they are too localised. Repeat visitation is one of the integral aspects for success and to do that, one needs to re-invent. Shelf life is getting shorter as more forms of entertainment are coming up - malls, retail space, multiplexes, sporting space, etc which are our competitors."

With the above developments taking place and investments worth thousands of crore being pumped in, it's time the Centre takes some initiatives too like:

• A tourism policy for the promotion of amusement and theme parks industry,
• Market the product aggressively - take Disneyland, Genting Highland as case studies,
• Arrive upon uniform entertainment tax rates and provide other economic benefits

It is with this that the amusement and theme parks industry in the country will truly get the power to push the ride upwards. So, are we amused?

(Inputs from all bureaus) Images courtesy: EsselWorld/Water Kingdom/IAAPI