ET NowIn a chat with ET Now, Kapil Bagla, Director & CEO of Adlabs Entertainment Ltd, talks about the growth of Imagica, a theme park, in the last one year. Excerpts:
ET Now: When is the cash breakeven happening?
Kapil Bagla: For a business like this which is set up in the country for the first time and for the size of investment that you put, you would be creating a market for outdoor entertainment business. But the response we have got from customers in the last two years has been very encouraging. Last year FY15, we did a topline of close to 189 crore, which was up 82% from the previous year. Similarly, footfall grew about 31% and with that, the bottomlines and toplines are growing. We we were EBITDA positive in the first year and we have been substantially EBITDA positive in FY15. Hopefully, the cash breakeven will happen in FY16 itself.
ET Now: How do you measure the success of a park? Should one look at footfalls, profitability or cash flows, because it is a different industry, so the traditional matrix does not work here.
Kapil Bagla: The most important KPI is the footfall. It is a consumption story and more the people consume it, more the growth will happen.
ET Now: What is the cost of running this park?
Kapil Bagla: Typically in a year, we spend close to Rs 140 crore as an operating cost. The size of the park and the way we are running it is in line with international standards. So, we need a million people to breakeven on the EBITDA and about 1.6 to 1.7 million people to breakeven on cash. The first two months of this year - which is April and May - have been phenomenal. We clocked footfalls of 3.75 lakhs. In the same period last year, it was 1.06.
ET Now: How much is an average person spending in the park?
Kapil Bagla: We do not charge separately for the rides, so there is one entry ticket for all the attractions.
ET Now: But isn't food expensive there?
Kapil Bagla: It is a matter of quality. I do not think it is expensive. Our average realisation per person is roughly in the region of about Rs 1800, so we get about 1300-1400 average on the ticket, about 300 on an average on food and about 150 to 200 on the merchandise.
ET Now: Can this 1800 go to 3000 soon?
Kapil Bagla: Going by the way consumption has been growing in this country, I think it can. Currently, we are just 25% of what you would pay in any other international park, so there is scope to grow. We want to expand on the non-ticketing revenues first because we want more people to expand. So our strategy this year has been not to grow in terms of price increase, but to grow in terms of spends inside the park.
ET Now: How do you generate that?
Kapil Bagla: We have six theme restaurants inside the park with different themes altogether, so we lure people to eat and consume. We have an American diner, a banquet restaurant, a food court, an African- themed restaurant as well as an evening lounge.
ET Now: Have the numbers changed because of these initiatives?
Kapil Bagla: We are seeing growth on consumption. Food is a strategy as an F&B business. Similarly, merchandising forms a very large portion of our business.
ET Now: Mickey Mouse made Disney Park famous. What is your mascot? What is your USP apart from rides?
Kapil Bagla: Unfortunately, we do not have a Mickey Mouse as yet in this country. But we are in the process of creating something. We have a large number of characters and we are slowly popularising them via evening parades. It is a 45-minute extravaganza that happens every evening. So, we have a Tubby, we have Mr India, Mogambo, etc.
Because of India's tropical climate, the heat during the monsoon is typically better for water parks and the second half of the year is typically better for theme parks. So, the two complement each other.
ET Now: Does the park typically do well during monsoon?
Kapil Bagla: Because of India's tropical climate, the heat during the monsoon is typically better for water parks and the second half of the year is typically better for theme parks. So, the two complement each other.
ET Now: You have an existing competitor - EsselWorld - in Mumbai region and that competitor’s entry points are much lower than yours. Is it a completely different segment geographically and target market wise, or are you two competing for the same pie?
Kapil Bagla: We are a very underserved market in the outdoor entertainment space. There is enough space for people to co-exist in this space. The Indian market for amusement park is barely $0.5 billion or 2500 crores. The worldwide market is $32 billion. We are trying to create a park where you can enjoy the same thing that you would experience in any another global park in India.
ET Now: How are your expansion plans working out?
Kapil Bagla: There is an expansion which is going in terms of Mumbai itself. We are creating a snow park, which should be operational by Q3, and we are also planning to create an adventure park.
ET Now: Do you have all the necessary land?
Kapil Bagla: Yes.
ET Now: How much land do you own?
Kapil Bagla: We own about 302 acres.
ET Now: It is part of the company’s balance sheet?
Kapil Bagla: Yes. The entertainment business is being created on about 132 acres of land.
ET Now: And you can do that without raising money?
Kapil Bagla: Yes, we would not like to raise more money for that.
ET Now: When is the cash breakeven happening?
Kapil Bagla: For a business like this which is set up in the country for the first time and for the size of investment that you put, you would be creating a market for outdoor entertainment business. But the response we have got from customers in the last two years has been very encouraging. Last year FY15, we did a topline of close to 189 crore, which was up 82% from the previous year. Similarly, footfall grew about 31% and with that, the bottomlines and toplines are growing. We we were EBITDA positive in the first year and we have been substantially EBITDA positive in FY15. Hopefully, the cash breakeven will happen in FY16 itself.
ET Now: How do you measure the success of a park? Should one look at footfalls, profitability or cash flows, because it is a different industry, so the traditional matrix does not work here.
Kapil Bagla: The most important KPI is the footfall. It is a consumption story and more the people consume it, more the growth will happen.
ET Now: What is the cost of running this park?
Kapil Bagla: Typically in a year, we spend close to Rs 140 crore as an operating cost. The size of the park and the way we are running it is in line with international standards. So, we need a million people to breakeven on the EBITDA and about 1.6 to 1.7 million people to breakeven on cash. The first two months of this year - which is April and May - have been phenomenal. We clocked footfalls of 3.75 lakhs. In the same period last year, it was 1.06.
ET Now: How much is an average person spending in the park?
Kapil Bagla: We do not charge separately for the rides, so there is one entry ticket for all the attractions.
ET Now: But isn't food expensive there?
Kapil Bagla: It is a matter of quality. I do not think it is expensive. Our average realisation per person is roughly in the region of about Rs 1800, so we get about 1300-1400 average on the ticket, about 300 on an average on food and about 150 to 200 on the merchandise.
ET Now: Can this 1800 go to 3000 soon?
Kapil Bagla: Going by the way consumption has been growing in this country, I think it can. Currently, we are just 25% of what you would pay in any other international park, so there is scope to grow. We want to expand on the non-ticketing revenues first because we want more people to expand. So our strategy this year has been not to grow in terms of price increase, but to grow in terms of spends inside the park.
ET Now: How do you generate that?
Kapil Bagla: We have six theme restaurants inside the park with different themes altogether, so we lure people to eat and consume. We have an American diner, a banquet restaurant, a food court, an African- themed restaurant as well as an evening lounge.
ET Now: Have the numbers changed because of these initiatives?
Kapil Bagla: We are seeing growth on consumption. Food is a strategy as an F&B business. Similarly, merchandising forms a very large portion of our business.
ET Now: Mickey Mouse made Disney Park famous. What is your mascot? What is your USP apart from rides?
Kapil Bagla: Unfortunately, we do not have a Mickey Mouse as yet in this country. But we are in the process of creating something. We have a large number of characters and we are slowly popularising them via evening parades. It is a 45-minute extravaganza that happens every evening. So, we have a Tubby, we have Mr India, Mogambo, etc.
Because of India's tropical climate, the heat during the monsoon is typically better for water parks and the second half of the year is typically better for theme parks. So, the two complement each other.
ET Now: Does the park typically do well during monsoon?
Kapil Bagla: Because of India's tropical climate, the heat during the monsoon is typically better for water parks and the second half of the year is typically better for theme parks. So, the two complement each other.
ET Now: You have an existing competitor - EsselWorld - in Mumbai region and that competitor’s entry points are much lower than yours. Is it a completely different segment geographically and target market wise, or are you two competing for the same pie?
Kapil Bagla: We are a very underserved market in the outdoor entertainment space. There is enough space for people to co-exist in this space. The Indian market for amusement park is barely $0.5 billion or 2500 crores. The worldwide market is $32 billion. We are trying to create a park where you can enjoy the same thing that you would experience in any another global park in India.
ET Now: How are your expansion plans working out?
Kapil Bagla: There is an expansion which is going in terms of Mumbai itself. We are creating a snow park, which should be operational by Q3, and we are also planning to create an adventure park.
ET Now: Do you have all the necessary land?
Kapil Bagla: Yes.
ET Now: How much land do you own?
Kapil Bagla: We own about 302 acres.
ET Now: It is part of the company’s balance sheet?
Kapil Bagla: Yes. The entertainment business is being created on about 132 acres of land.
ET Now: And you can do that without raising money?
Kapil Bagla: Yes, we would not like to raise more money for that.
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