We had been planning a theme park since 2008. Imagica is a global standard theme park modelled on some of the best around the world. Spread over 130 acres, it is India’s largest theme park — about two to three times the size of Universal Studio in Singapore or Hong Kong Disneyland. (Imagica is located in Khopoli, midway between Mumbai and Pune) Since we opened in 2013, we have had 5.5 million visitors, added a water park, a 287-room hotel and a snow park. We have largely achieved what we wanted. But we should have done 2.2 million visitors a year; currently we are at 1.5-1.6 million. Therefore, the gap is stressing our interest payment and debt repayment. The debt-reduction and footfall-generating exercise that we have undertaken will help address this. (Imagica was set up at a capital cost of Rs 16 billion. Current debt stands at Rs 10.5 billion and interest payment is Rs 1.2 billion per annum. In FY 2017, its revenues stood at Rs 2.39billion and losses were Rs 1.1 billion).
What is the reason behind low footfalls?
Everybody who comes to Imagica loves the experience. Eighty five per cent of the people who visit us rate the park as exceptional. But people are not coming in larger numbers. Singapore, Hong Kong are business centres that have theme parks (Ocean Park and Disneyland in Hong Kong, Universal in Singapore). Yet, they get tourist footfalls. For example, China is a mature market for theme parks. But the Shanghai Disneyland that opened in 2016 has been successful within a year. For Imagica, the whole country is my catchment area. From a Mumbai-Pune standpoint, it is a very affordable park of international quality. At the low-end, you could spend about Rs 10,000 for a day’s outing for the whole family. The same experience would cost Rs 20,000-30,000 outside India. Globally, theme parks average between 0.8-1 million visitors a year. Therefore, a large park such as this should do at least double of that. This is the estimate on which our business plan was made.
The key difference is tourism, and we are not getting enough support from the government. What we have created can be used to propel domestic tourism for Maharashtra. But apart from declaring Imagica a mega tourism project — for creating such a large tourist destination and generating employment for the region — there is no other infrastructure or subsidy support. Even the entertainment tax waiver was subsequently nullified by the introduction of the goods and services tax (GST). Internationally, theme parks of this scale enjoy support, with governments putting up dedicated infrastructure for connectivity, equity and tax subsidies. Most enjoy single-digit taxation.
Is the target off then?
The target is not a problem. That is why we went public (in 2015). It is a great plan. Now we are working harder at marketing it and improving efficiencies. For example, we acquired 300 acres of land but have used only 130 acres. However, we are paying interest on the money paid for total land acquired (the non-core assets). So, we have hived off the hotel and excess land to make the balance sheet lighter. The specific impact of this will be seen in FY18 or early FY19. We are now trying to build the product.
How are you planning to do that?
In India, nobody differentiates between a theme park and an amusement park. When we market to schools, the argument is ‘if you do not give us a lower price, we will go to EsselWorld’. (Imagica’s ARPU at Rs 1,700 per head is higher than any other park) We do have a special price for schools, which is competitive but the entertainment value we are providing, as well as the service standards have to be considered. Also, when school kids visit, they face time constraints, therefore, are not allowed to enjoy all the rides. So, we have built an element of education, where we show them the water plant and the solid waste treatment plant.
We have four major clusters of consumers — schools, corporates who use it for team-building exercises, dealer meets, or awards functions, visiting friends and family, and walk-ins. Unlike films, our product requires a time commitment, so people say, ‘I would love to go but will decide when later’. Building urgency is key. We do that by creating time-bound reasons for a visit like events and festivals. For example, there is Imagica by Night, music events, New Year events and a month-long magic festival.
It is a marketing challenge more than operations....
From a brand standpoint, we have to focus more on educating people on what a theme park is all about. We want to talk to everyone coming to Mumbai and Pune. But TV is a high-burn medium, so we do not want to use it that much. Digital works well. We find print is working for us, especially to reach regional markets. After every print ad, the inflow to the call centre increases and online booking goes up by as much as 10-15 per cent. Our consumer acquisition costs are stable and we have reduced cash impact with partnerships like the one with Times of India Brand Capital. It is a high fixed-cost business, so we cannot be a one-park story. We are looking at Delhi next. But before that, it is time for a strategic partner to come in and we are looking for one.