Amusement Park Industry

twenty-second May, 2010 INDIAN AMUSEMENT PARKS INDUSTRY Highlights SECTORAL root The diversion effort in India is at a developing exemplify currently with more and more developments fortuity in this industriousness inwardnessly across the country. The size of the Indian Amusement Park fear is estimated to be around Rs 4000 crores and is estimated to grow by 10% per cent per annum till 2010. The merriment and motif place attention is deemed to be worth Rs. one hundred00 crores in India by 2020. Janaki Rao. U Analyst Equity Research Desk emailprotected com authorizedly for a population of 1. 15 billion in the country, there be unless 120 diversion poses and 45 Family merriment Centers. This indicates that the harvest-feast electric electric potential of Indian diversion and theme park sedulousness is substantial. Global leading in sport position and attractions desire Universal Studios, Disney, Sony and Ripley pleasure argon mulling everyplace inves tment fundss of billions of dollars in India considering the vast potential in this region.Private justice currency argon excessively aggressively dedicating resources towards this domain. The Indian sm on the whole and big players in the Amusement constancy ar looking at the tremendous emersion potential of this industry in the next 5 years. Growth of Indias sell sector had been the main driving force for the amusement industry in India. Glob on the wholey, domestic and international tourists comprise more than 50% of the total measure at popular amusement pose. transfer corridors like expressways and the Metro line argon bringing an profit bout of muckle closer to enjoyment hubs. The utmost gain potential of the industry in extremely inhabit India will boost touristry, brotherly infrastructural development as strong as employment generation. The success and growing potential of this industry is resulting into the advent of clean manufacturers of amuseme nt set rides in India. V. S. R. Sastry Vice President Equity Research Desk 91-22-25276077 emailprotected com Dr. V. V. L. N. Sastry Ph. D. chief(prenominal) Research Officer emailprotected com 1 22nd May, 2010 CONTENTS 1. Sector Overview 2. new Trends 3. indite of top three Indian Companies 4. SWOT Analysis 5.Conclusion 2 22nd May, 2010 1. Sector Overview Structure & Development The amusement and theme park industry in India is about two decades old and it is relatively youngly when compargond to its origin in USA & Europe. This industry found its roots in India during mid and late 1980s when a hardly a(prenominal) innovative entrepreneurs took contend of pi unrivalledering few amusement parks in Delhi, Kolkata, Mumbai and Chennai. The growth in this industry started only in the eventually decade and that happened possibly during the advent of globalization when economic potential of the social hood began to be perceived.A recent commercialize survey research shows that t his industry in India is growing at a rapid pace and over 120 amusement parks and peeing parks are currently in operation in India. let out of them only 15% tail end be classified in the puffy parks category, 30% as medium size parks and relief 55% are small size local anesthetic parks. Investments to the tune of Rs 10,000 crore are likely to flow into the domestic amusement and leisure sector by 2020 with about 500 new parks are judge to cut up across the country.The Rs 4,000-crore Indian amusement and leisure industry expects novel investment of Rs 10,000 crore by the year 2020. In terms of employment generation, the new parks are likely to create jobs for six crore man-hours per month. It is estimated that the total capital investment made in the amusement and theme park industry in India till date, is more than INR 40 billion (excluding investment on come to). The estimated annual revenue generated by this industry is approx INR 20 billion, at present, which is expected to grow to al virtually three times by the year 2020 at a CAGR of over 11%. 22nd May, 2010 Amusement Parks are recreational facilities that offer a varied range of frolic options ranging from theme parks to spine chilling roller coaster, 3D theater to devil wheel, in a cluster format. These parks issue bingle-stop-shop leisure and entertainment solutions for the spotless family at one place and are a cite source of tourist attraction (domestic and hostile) and revenue generation for the State. The demand for entertainment options such as amusement parks, I-max, shopping malls are rapidly increasing across the verdant.The key demand beat backrs for the segments are rising base of position class, increasing disposable income, changing lifestyle, cultural shift and increasing tenseness to lead a holistic life with a balance of accomplishment and leisure. Tourism- Amusement parks During the rifle decade domestic tourism had with child(p) 14% on an average and currently i t is estimated at 527 cardinal. Out of this, the amusement park industry generated only 15 million footfall during last year. Globally, domestic and international tourists comprise more than 50% of the total footfall at popular amusement parks. We can, therefore, expect that there ould be breed increase in footfall in amusement parks in India as the thumping parks in India are gradually converting themselves to large destination parks with totalitional investments following the foot steps of large global parks. shortly for a population of 1. 1 billion in the country, there are only 120 amusement parks and 45 Family Entertainment Centres. This indicates that the growth potential of Indian amusement and theme park industry is substantial. The high growth potential of the industry in highly populated India will boost tourism, social infrastructural development as well as employment generation.The success and growth potential of this industry is resulting into the advent of new ma nufacturers of amusement parks rides in India. 4 22nd May, 2010 Today, Indian manufacturers can produce international standard tone of voice products at a war-ridden harm for both the domestic and the global market. Both these subjects go for just potential. Amusement parks have not received their due actualisation for their enormous potential as an infrastructural facility for tourism. The amusement industry population(a) is a very significant part of the tourism effort.In India, the tourism polity does not address the needs and the potential of the amusement industry. As such, instantly the amusement industry in India receives no special incentives. Recreation Industry Amusement parks Recreation Industry is currently one of the most excite sectors in India. The current market for leisure is estimated to cross USD 1 bn in next few years. The leisure industry mainly harp of amusement park, malls family entertainment centers (FECs) and multiplexes. The present consumer b ase is estimated around 30 million people.At present there are around two hundred FECs in the Country and the number is expected to grow to 400 in the next distich of years. Amusement parks contribute nearly 40% of the total leisure industry turnover. Through the years though there is a lusty growth, but at the same time it is burdened by local entertainment tax ranging from 10 to 25 per cent in confused states. Further if whatsoever imposition of key Tax like process Tax will cripple the whole industry. The industry can play up either of the taxes and not both, he stated.Further he urged to make amusement industry an integral part of tourism and development in India at the Central Government Level. Recreation Industry is currently one of the most exciting sectors in India. The current market for leisure is estimated to cross USD 1 bn in next few years. The leisure industry mainly consist of amusement park, malls family entertainment centers (FECs) and multiplexes. The prese nt consumer base is estimated around 30 million people. 5 22nd May, 2010 At present there are around 200 FECs in the Country and the number is expected to grow to 400 in the next couple of years.Amusement parks contribute nearly 40% of the total leisure industry turnover. sell- Amusement parks Growth of Indias retail sector had been the main driving force for the amusement industry in India. noted Ten Amusement parks in India 1. Veegaland Park Situated at Pallikkara, this state of art Amusement Park is just 14kms away from Kochi/ cochin. gap over a whooping 24 demesne of land, its 7 storey high Vintage Castle and Caterpillar settlement give a nance Tale atmosphere. The musical Fountains, flower gardens, water pool and water slides add to the attraction of the Veegaland Amusement Park. 6 2nd May, 2010 2. nautical Park Ocean Park is determined at Gandipet, 20 km. from Hyderabad, in 20 acres of landscaped gardens, an amusement park that you havent seen the likes of all the sa me in India. It is one of the origin theme parks started in twin-cities and continues to be a great get to especially with children.But it is not the young ones alone who enjoy, even adults can have lots of fun here. It is a family amusement park offering a good mix of fun and thrills for people of all ages with water rideskiddies pool, boom pool, water slides, dry rides- super loop, the 60 feet high ride, bumping cars, slam turkey etc. 7 22nd May, 2010 3. Ramoji Film urban center Ramoji Film City is the ultimate leisure destination for holidays, honeymooners, corporate conferences, events, theme parties, ad surmisal camps, family picnics and tremendous weddings. this world s largest integrated film studio complex blossom forth over 2000 acres of land. It was opened by the Film Producer Ramoji Rao in the year 1996. Its about 25 kms from the main city of Hyderabad and is open the 7 days of a week. The Film City Complex has urban landscapes of US and Australia as well as India .They have the Amazon the States Base as the newest additions to the attractions of the Film City. 8 22nd May, 2010 4. sport n food Village Fun N Food Village at Delhi was stipulate up in the year 1993. Fun N Food Village is situated at Old Delhi-Gurgaon Highway which is just 3 kilometers away from the Delhi international airport. Fun N Food Village is for all ages of people. Fun N Food Village in Delhi was inaugurated by cause President of India Giani Zail Singh. 9 22nd May, 2010 5. Essel ground Pan India Paryatan Pvt. Ltd. PIPPL) is the alliance holding EsselWorld Indias Largest Amusement Park and water system nation Asias Largest authorship Water Park. Pioneers in the entertainment and leisure industry, it was EsselWorld that pulled people out of the staid environment of conventional pleasure trips and unfolded earlier them the exciting new scenario of a complete leisure destination. A digressive complex on the coastal Gorai small town in northwest Mumbai, The Island of Fun is sprawled over 64 acres and is a refreshing gateway to a whole new world of excitement and fun.The second phase in the expansion plans for PIPPL, Water Kingdom makes this twin park complex a complete destination by itself. Its never-before seen attractions set amidst unique architecture with international standard amenities and hygiene catapult Water Kingdom into a different league. It is the only, truly international water park encounter in India. 10 22nd May, 2010 6. embark Island Sprawling over an commonwealth of 62 acres in North West Delhi, it has been made with the venture of Unitech Ltd and world(prenominal) Amusement Ltd. Its a 164 crore project with a water park and Planet Pogo.There are 26 rides in all and all of them have been imported supplied by leading European manufacturers such as Intamin, Moser and Zamperla, who supply rides to Disney, Universal Studios and Six Flags. The park is especially popular amongst children and teenagers. The entire Island con sists of world class amusement Park, an adventure island and a water park. Retail Environment Metro Walk (Delhi) is spread across 2. 21 hundred thousand sq ft and is anchored to the park. It overlooks a large lake which acts as a separator in the midst of the mall and the park.The Park has 26 rides spreading in an celestial sphere of 3. 5acres. 7. Entertainment City It is thought of as Disney Land of India the Entertainment City in Noida. Unveiled by former cricket captain and entrepreneur Kapil Dev, it spreads over a whooping 147 acre land with an investment of Rs 10 billion. Built over an area of 100 acres of land, the park has more then 30 rides, supplied from European manufacturers. The Entertainment City Park has three entertainment zones, one for kids, one for teenagers and one for families each with its own separate rides, attractions and food courts.In addition to this it in like manner has a Shopping complex known as the Great IndiaThe Entertainment City is a is a joint venture between Unitech and International Amusement Limited, the promoters of Appu Ghar (Delhi). 11 22nd May, 2010 8. Nicco Park It is situated in the magnetic core of the main City of Calcutta in Salt Lake its one of the most happening place for the kids and teenagers. The elders simply love to be here. Covering an area of 40 acres, it was opened in the year 1991. Jheel Meel was the previous name of the park. It was renamed in he year 1990 with the restructuring of the park. Its the only Amusing Park in the world which has got ISO 9002 certification. It draws a whopping 1. 5 million people every year. 9. Gujarat cognition City Gujarat Science City has been made with a view of leave education in the form of entertainment. On one of its side, it has small village while on other side the suburban urban area reflects technological atmosphere. The Gujarat Science City has something different from others in the country. Visited by the former Indian President and Scientist Dr.J P Abd ul Kalam it exhibits, mind blowing experience, models which can be worked upon, a showcase of virtual reality, activity corners, hands on labs and live demonstrations to provide an understanding of science and technology to the common man. 10. Platinum utilizes The silent yet beautiful theme park of West Delhi is spreading at 14 acres of land. Big lawns here and the greenery calls people to view the tantrum beauty amongst the screaming voice of the city lights. Its a quicken cum Water Park. The beauty of the Park can be seen from the influence itself. It has a huge big entrance with the hugeness it looks more magnificent.The Platinum Resort is just a 30 minutes drive (25 km drive from Paschim Vihar, on Delhi-Rohtak Road, NH no. 10. Its a good place for family gatherings, parties and of figure the entertainment of the entire family. 12 22nd May, 2010 13 22nd May, 2010 Current trends Amusement parks seek uniform entertainment tax The Indian Association of Amusement Parks and Ind ustries, apex body of the amusement parks, has seek uniformity in the entertainment tax being imposed by different states. The Association rues that the exorbitantly charged entertainment tax by some states is a major(ip) impediment in the growth of the industry in these regions. West Bengal, Punjab and Gujarat charge entertainment tax at 20%, 40% and 25% respectively, whereas the entertainment tax rate hovers around 5-15% in majority of the states. Real Estate companies plans to enter into this market Though the unformed players hold a majority contribution in the market, the organised players are also expanding their base. Groups like Nicco Parks, Zee group, Unitech Turner and various real farming companies are developing amusement parks in different regions. The foreign developers are also stepping into the Indian amusement industry through collaborations with Indian companies. 14 2nd May, 2010 V Guard group entered into amusement parks V Guard Group of companies, based in Cochin in Kerala, is negotiating with property owners in Mumbai and Chennai for starting amusement parks. The group, which is running Veegaland in Cochin and Wonderla near Bangalore, has identified a place near Chennai to start a watertheme and amusement park, but negotiations were still on. Growing transportation facilities Transport corridors like expressways and the Metro line are bringing an increasing number of people closer to entertainment hubs. To that extent, they trigger growth of formal means of entertainment.One major development witnessed in National Capital Region (NCR) over the last 4-5 years has been the expansion of Delhi Metro line. This process started in Central and western parts of the city and is now on course to link atomic number 16 Delhi and Gurgaon. This has provided common man with a mode of transport that is both economic and convenient. While daily journeys like the ones to college or workplace have been alter the occasional weekend outing too has b een made much simpler as a result of enhanced connectivity to popular entertainment destinations. 5 22nd May, 2010 Expansion of Metro rail project One of the first entertainment destinations, which is strategically located near Rohini Metro Station, was launched by Unitech. This project was launched prior(prenominal) to the completion of the Metro line and has been fully operational since December 2007. It comprises Adventure Island an amusement park and the Metro Walk MallThe expansion of Delhi Metro gives us reason to be very optimistic about future of our projects in Rohini, especially Adventure Island.While the city is dotted with malls and retail spaces this is one of the few amusement parks and hence we expect a significant increase in footfalls upon extension of Metro line to South Delhi and Gurgaon, as blank space will no longer be a prime consideration. Profile of top three Indian Companies 1. Nicco parks resorts ltd NPRL was incorporated with the prime accusative of providing educative entertainment and wholesome recreation for the entire family simultaneously promoting tourism. NPRL presents a complete leisure package in an eco-friendly atmosphere with thrilling rides, eateries, single(a) landscaping, and indoor sports.This amusement park offers all kinds of entertainment under one roof and handles its offerings with professional elan. Business area of the smart set At Nicco Park, it offers a wide range of rides and facilities, which the company manufactures in addition to setting up the operation of Amusement or Water Parks on fucking basis. 16 22nd May, 2010 The company is associated with TUV, India (affiliated to TUEV, Germany) who commission an annual inspection of all its major rides along with manufacturing inspections for the new rides based on approved quality assurance plans.The company can offer overall consultancy to set-up and run Theme Parks successfully. At the market price of Rs. 70. 00, the stock trades at P/E of 15. 35 x a nd 12. 96 xs for the lettuce of FY10E and FY11E respectively. Earning per share (EPS) of the company for the earnings of FY10E and FY11E is seen at Rs. 4. 56 and Rs. 5. 40 respectively for equity share of Rs. 10. 00 each. We cheer BUY in this particular scrip with a target price of Rs. 85. 00 for mediocre to unyielding term investment. Particulars acquit Sales (Rs. Mn. ) Net increase (Rs. Mn. ) EPS (Rs. ) FY08 214. 0 12. 80 2. 73 FY09 244. 00 21. 30 4. 56 % Chg. YoY 13. 59 66. 41 67. 03 17 22nd May, 2010 2. South Asiatic Enterprises Ltd South Asian Enterprises (SAENTER) is sedulous in the business of setting up and running amusement parks and has ventured into the real estate and films. It was incorporated on Mar. 21, 1990 and came out with a prevalent issue on Mar. 30, 1994. Earlier known as South Asian Entertainment, it acquired its present name on Feb. 24, 1995. Associate companies include VLS Capital, Gaurav Overseas Exports, beset Eye Plastic Industries, Pragati Mou lders, M.P. Mehrotra (HUF), VLS Finance, VLS Securities, VLS Investments, VLS Asset Management, and VLS Investments Inc. (USA). The first park was set up in the city of Kanpur under the name and style of Mikky House. Other parks were set up in Lucknow and Ayodhya. In FY08, the company ventured into marketing of grounding products and execution of contracts for earthing and lightning protection systems. It has also ventured into television serials and film doing in collaboration with AUM Sportainment. Come December is a recent production. At the market price of Rs. 12. 6, the stock trades at P/E of -0. 14 x and 22. 59 xs for the earnings of FY10E and FY11E respectively. Earning per share (EPS) of the company for the earnings of FY10E and FY11E is seen at Rs. -0. 54 and Rs. 0. 53 respectively for equity share of Rs. 10. 00 each. We recommend chink in this particular scrip with a target price of Rs. 20. 00 for Medium to Long term investment. 18 22nd May, 2010 Particulars FY09 FY1 0E % Chg. YoY Net Sales (Rs. Mn. ) Net returns (Rs. Mn. ) EPS (Rs. ) 7. 40 1. 87 0. 47 13. 03 -0. 54 76. 08 3. Mahindra Holidays Resorts India LtdMahindra Holidays Resorts India Limited was incorporated as a private limited company called Mahindra Holidays Resorts India Private Limited on September 20, 1996. The status of the Company was changed to a public limited company by a special resolution of the members passed at the annual public meeting held on January 29, 1998. The fresh certificate of incorporation consequent upon change was issued to the Company on April 17, 1998, by the Registrar of Companies, Tamil Nadu at Chennai. At the market price of Rs. 482. 00, the stock trades at P/E of 30. 2 x and 27. 92 x for the earnings of FY10E and FY11E respectively. Earning per share (EPS) of the company for the earnings of FY10E and FY11E is seen at Rs. 15. 69 and Rs. 17. 25 respectively for equity share of Rs. 10. 00 each. We recommend BUY in this particular scrip with a targ et price of Rs. 575. 00 for Medium to Long term investment. 19 22nd May, 2010 Particulars Net Sales (Rs. Mn. ) Net Profit (Rs. Mn. ) EPS (Rs. ) FY10 5101. 96 1178. 37 14. 44 FY11E 5694. 23 1307. 23 15. 69 % Chg. YoY 11. 61 10. 94 8. 66 SWOT Analysis Strengths Fastest growing sector High margins Growing foreign Investments Customers satisfaction Weaknesses Seasonal business Low entry fees No special incentives from govt 20 22nd May, 2010 Opportunities soon for a population of 1. 15 billion in the country, there are only 120 amusement parks and 45 Family Entertainment Centers. This indicates that the growth potential of Indian amusement and theme park industry is substantial. Transport corridors like expressways and the Metro line are bringing an increasing number of people closer to entertainment hubs. The Indian gaming market is on the path of maturity, income levels are rising and people want to have a fun life. The foreign companies reportedly interested in the Indian am usement parks market include Universal Studios, Time Warner and Disney. Growing tourism industry Growing retail market Threats/ Challenges Factors such as monsoon and bleak weather affect the industry and in a year, only 100 days are the peak season for the parks. Lack of uniform taxation Govt policies ascent material cost of equipment 21 22nd May, 2010Conclusion The high growth potential of the industry in highly populated India will boost tourism, social infrastructural development as well as employment generation. The success and growth potential of this industry is resulting into the advent of new manufacturers of amusement parks rides in India. Currently for a population of 1. 15 billion in the country, there are only 120 amusement parks and 45 Family Entertainment Centers. This indicates that the growth potential of Indian amusement and theme park industry is substantial.Global leaders in entertainment parks and attractions like Universal Studios, Disney, Sony and Riple y Entertainment are mulling over investments of billions of dollars in India considering the vast potential in this region. Private equity funds are also aggressively dedicating resources towards this sector. The growth of the Indian providence will drive the Industry to, grow both vertically & horizontally. Vertically, in terms of the surmount of investment and horizontally across the length and the width of the country. The greatest growth potential is the enormous amount of dormant/under-utilised land in Indias hinterland.Hotels and resorts are already showing interest in developing existing plots into anything form small play areas to full scale theme or water parks. _______________________________________________________ Disclaimer This papers prepared by our research analysts does not constitute an offer or solicitation for the acquire or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly o btainable data or other sources believed to be reliable but we do not represent that it is accurate or complete and it should not be relied on as such .Firstcall India Equity Advisors Pvt. Ltd. or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. 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