Management Discussion and AnalysisA. Industry Structure And Development
The Amusement and theme park industry in India is just over two decades old and it isstill relatively new compared to its origin in USA and Europe. The industry found itsroute in India during mid and late 80's and at the same time Nicco Park was set up as oneof the pioneering theme amusement park project in India. Since then Nicco Park has beengrowing with addition of novelties every year and it has been running successfully for thelast 20 years.
An industry wide market survey research carried out by M/s. Ernst & Young 2-3 yearsback shows that Nicco Park continues to be one of the largest parks in India.
Amusement park industry is growing at a rapid pace and there are over 150 amusementparks and water parks all over India and out of these amusement parks there are about15-20 major players in 7-8 metros in India and balance being medium and small size localparks spread around various cities and towns.
It is estimated that total capital investment made in the amusement and theme parkindustry in India till date, is more than INR 150 billion.
The estimated annual revenue generated by this industry is approx INR 25 billion atpresent which is expected to grow to almost 3 times by the year 2020 at a double digitCAGR.
Many new Amusement parks and Water parks are being set up by various entrepreneursevery year both in private and organized sector. Large amusement park industries andinvestors from abroad are also looking at India with interest.
During the last decade domestic tourism had grown @ 14% on an average and currently itis estimated at 550 million. Relative to this, the amusement park industry generated onlyi9 million footfall during last year. Globally, domestic and international touristscomprise more than 50% of the total footfall at popular amusement parks. We can,therefore, expect that there would be manifold increase in footfall in amusement parks inIndia as the large parks in India are gradually converting themselves to largerdestination parks with resort facilities with additional investments following the footsteps of large global parks. Currently for a population of i.i billion in the country,there are only 150 amusement parks and 45 Family Entertainment Centres. This indicatesthat the growth potential of Indian amusement and theme park industry is substantial.
B. Business Strategy
Your company is in the business of leisure and entertainment and is providinginteractive, participative and educative form of entertainment with its amusement park inKolkata for wholesome recreation for the families. Set up in 1991, over 24 million guestsvisited this theme amusement park during the last 20 years.
Having gathered immense experience in maintaining and running amusement parks, theCompany has diversified into extending overall consultancy for setting up theme parks andwater parks in addition to engineering, manufacturing and supply of amusement park'srides. Company also undertakes turn key contracts for setting up composite amusement parkand water park from concept to commissioning. With the rapid growth of amusement parkindustry many small manufacturer of rides and attractions are mushrooming all over thecountry. But, Nicco Park being "One Stop Shop" for setting up parks and sincethere are hardly any companies in India and abroad who can offer such facilities, NiccoPark has earned good reputation and is in demand to offer such services. Nicco Park hasalready set up 7 amusement parks and 4 water parks in India including I large compositepark in Bangladesh. Many enquiries for such proposal for setting up the complete park onturn key basis are being received by the Company and business potential for same is good.
Nicco Park with high professional and experienced executives guided by the Board ofDirectors pursues achievement of long term sustainability of the company involving itsstakeholders. Your company practices the contemporary management style to calculate theimpact that the business had in terms of social, infrastructural and financial return forits long run sustainability. Your company has many achievements in respect of economic,environmental and social return which are shown on the following pages. These haveresulted in Company's achieving rare distinction of obtaining certificate from CII for"Significant Achievement on the Journey towards Business Excellence" which is avery prestigious award in our country. This is only Amusement Park in India which hasreceived this certificate.
Financial Result:
• A growing business portfolio in the newly emerging Theme Amusement Parkbusiness.
• Turnover, PBT and EPS doubled in last five years.
• Debt Equity Ratio of the Company is 0.23 : I.
• Only company in Amusement Park industry sector, listed in the Stock Exchanges.
• Paying dividends for last consecutive 17 years.
• Holding excellent track record and very high credibility with Banks andFinancial Institutions.
• Annual footfall over 1.6 million.
• High Brand Equity of the company continuously helps in its economic performance.
Environmental Result:
• Nicco Park always concentrated to create a wonderful ambience with greeneries tooffer wholesome recreation in a healthy environment to visitors.
• Several thousand trees were planted during inception and every year severalhundred trees are planted in the Park. It has also created artificial water bodies,hillocks and greeneries inside the park.
• Conservation of energy by use of efficient lighting, energy efficient drives byWater conservation and Water recirculation. Company takes various measures to minimizeCarbon Emission and Greenhouse Effect.
• Park's wastes are utilized for making vermi-compost and Organic manure and thesame are used for Park's horticulture and beautification. For this work our QualityImprovement Team achieved "Par Excellence" Award at CII - Bangalore NationalQuality Convention and "Gold" Award at International Quality Convention atHyderabad.
• All Management Systems in Nicco Park for Quality Environment, Health and Safetyconform to International Standards. First Amusement Park to obtain rare distinction ofachieving all the three ISO Certificates i.e. ISO : 9000, Quality ManagementCertification; ISO : 14000, Environment Management Certification and OHSAS : 18000, SafetyManagement System Certification form renowned European Certified Authority, M/s. DetNorske Veritas.
• The State Government appreciated Company's effort and declared the Park as"Plastic Free Zone".
• A recipient of the West Bengal Government "Environment ExcellenceAward".
• Employee's are trained on nature care and mountaineering
• Medicinal garden created inside the Park.
• Pisciculture in the water bodies at Water Park.
• Maintains high quality hygienic water of international standard in Water Park.
Social Result
• Business generates livelihoods for over 500 families.
• Takes many initiatives and measures for society's infrastructure improvement inand around the park.
• With the help of NGOs, takes initiatives towards eradication of illiteracy innearby societies. 6 employees engaged in "Teach India" programme.
• Sponsored and subsidized visits of over 5000 orphanage and destitute visitorsthrough philanthropic organization.
• Does not employ any child labour and ensures that the same is observed by allits franchisees and vendors.
• Bargainable employees' salaries are reviewed at regular intervals and finalizedthrough negotiation.
• First Aid Centre inside the park is attended by the registered MedicalPractitioners and Nurses, with stand-by Ambulance.
• Park observes "Children Day", "Independence Day","Republic Day" every year and organize social camps for its employees andneighbours for "Pulse Polio Immunisation", "Eye Care Camp","General Health Check-up Camp", "Road Safety Week".
• The First and the only Park in India to obtain SA : 8000 - Social AccountabilityCertification from M/s. Det Norske Veritas.
• Physical health check up for all employees started through our First Aid Centrefor all employees including contractual labours and franchisee staff and recordsmaintained.
• Observed World's AIDS Day in association with Health Dept., Govt. of WestBengal.
• ISO 9001 Certification in 1998: First amusement park in India certified.
• ISO 14001 Certification in 2001: First amusement park in Asia certified.
• OHSAS 18001 Certification in 2006: First amusement park in Asia certified.
• SA 8000 Certification in 2008: First amusement park reportedly in the worldcertified.
Recent Recertification Audit of ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007 &SA 8000:2008 confirms our best international standard.
• River cave ride of Nicco Park has been awarded as "The Innovative &Most Popular Ride" in India during 2009-10 by Indian Association of Amusement Parks& Industries.
• QIT achieved "Par Excellence Award" at National Convention on QualityCircle organized by QCFI.
• QIT achieved "Gold Award" at International Convention on QualityCircle organized by QCFI.
• IAAPA, USA nominating committee has nominatged and elected Mr. Arijit Sengupta,MD & CEO of Nicco Parks & Resorts Limited to join the IAAPA Board of Directors forthe period 2011-2013.
• Nicco Parks & Resorts Limited this year achieved a rare distinction ofobtaining Certificate from CII& Exim Bank for "Significant Achievement on thejourney towards Business Excellence" which is one of the prestigious awards in ourcountry.
• QC & QIT achieved "Par Excellence Award" at Kolkata ChapterConvention on Quality Circle organized byQCFI.
• Horticulture Team of Nicco Park bagged several prizes at Sarabangla PuspaPradarshani "o" Protijogita at Bidhannagar (Salt Lake) Mela, 2010.
C. Segmentwise Performance a Park Operation
To maintain novelty of the Park and to increase repeat visits the Company iscontinuously adding new rides, attractions, facilities and events. Market Research Dataindicates that your Company have about 60% repeat visitors. With such high level ofcustomer loyalty, there is a business compulsion to constantly re-invent ourselves to addnew attractions, to conduct low cost high profile events and to carry out various salespromotions to benefit and attract the visitors.
During the year we conducted a high profile event "Winter Carnival" which hadgreat novelty value. The ever-popular "Ice Land" was brought back again totallyrevamped. Both these attractions were enjoyed by large number of visitors.
Novelty rides added last couple of years and the winter attraction helped in increasingthe footfall in your Park, compared to that of previous year. Increase in per capitaincome along with improved footfall helped your Park to earn 175 L more Gate & Riderevenue as compared to last year.
b. Consultancy, Contract and Sale of Ride Components
The amusement park business is growing rapidly in the developing countries. With 20years of experience in running and maintaining amusement park successfully, your Companyhas expanded its activities to provide overall technical consultancy, design, engineeringand supply of rides on turn key basis. With the help of Company's technical collaboratorsin UK and Europe the Company has started getting project orders to supply rides in Indiaand worldover.
Your Company's products and services are expected to receive wide acceptance abroad asit has obtained 4 major certifications such as ISO : 9001 : 2008 - Quality ManagementSystem, ISO : 14001 : 2004 - Environment Management System, OHSAS : 18001 : 2007Occupational Health & Safety Management System and SA : 8000 : 2008 SocialAccountability from the renowned European Certifying Authority - M/s. Det Norske Veritas.
Your Company has successfully completed Rose Valley Group's Water Park Project onturnkey basis and same has been well received by local and tourist visitors of Mondermani& Digha. Your Company has been engaged in executing & extending overall technicalcollaboration for a water park project in Cox's Bazar, Chittagong, Bangladesh.
Your Company is also exploring the possibility of working together in some of the largetheme park and Ropeway projects coming up in India and also signed Non-DisclosureAgreement with a few international renowned companies in the field of Amusement park ridesand attractions manufacture.
c. Others
Bowler's Den, the air-conditioned sports bar and multi-cuisine restaurant continues todo well. Due to its ever increasing demand, the interiors of Nicco Super Bowl wererestructured, Bowler's Den was refurbished, expanded and upgraded and was given a new lookaltogether, during this year. Acknowledged as a family dining center, its locationaladvantage, atmosphere, ambience and multi cuisines have made it very popular to the localsof Salt Lake area and to the workforce from Information Technology, BPO, Call Centre andElectronics Industry located in the close proximity.
D. Risks And Concerns
"Visitors' safety" being of utmost concern, your Company continuously ensureshigh quality maintenance of all its rides and attractions.
The entertainment provided by your Company is interactive and participative in natureand faces competition from various other forms of entertainment in the leisure industry.The business has seasonality and being outdoor, climatic conditions have a bearing on itssuccess. Sponsorship earnings also depend upon overall business conditions of variousindustries within the country.
With respect to project operations, although there are several renowned and reputedcompanies in the field worldwide who have a domineering presence, India has a costadvantage, which your Company is attempting to leverage. However, the Consultancy,Contracts and Sale of components for rides are also subject to variations depending uponthe number of contracts.
Recognizing the needs associated with the various facets of the business of yourCompany, your Company had already formulated a Risk Management Framework in consultationwith various functional heads to identify, assess and mitigate the major areas of riskassociated with the business of the Company. The Risk Management Framework is reviewed bythe Audit Committee and Board of Directors on a regular basis.
E. Internal Control Systems and their Adequacy
Your Company has adequate internal procedures commensurate with the Company's size andnature of business. The objective of these procedures are to ensure efficient use andprotection of the Company's resources, accuracy in financial reporting and due complianceof statutes and Company procedures.
The existing system provides for structured work instructions, clearly laid downprocedures of authorisations and approvals for purchase and sale of goods and services,reserved responsibility of custodial control with identified personnel, and use ofcomputerized systems to ensure controls at source. Internal Audit is done by an externalagency. Post audit checks and reviews are carried out to ensure follow up on theobservations made by the audit teams. The Internal Audit reports, the progress inimplementation of recommendations contained in such reports and the adequacy of internalcontrol systems are reviewed by the Audit Committee of the Board in its periodicalmeetings.
F. Human Resource Management
Ours is a continuous quest to offer the finest guest experience and we are constantlyreinventing ourselves in a sector that is on the move. People power is one of the pillarsof our success.
Your Company firmly believes that its greatest strength lies in the quality of itsmanpower. The Company's "people philosophy" has given it a competitive edge asits guests are served by bright, enthusiastic and committed employees who anticipateguests needs and deliver exceptional service with genuine warmth.
There is a conscious effort on the part of the management to develop the Knowledge,Skills and Attitudes of its people through a variety of Training interventionsspecifically aimed at an individual's need with a specific thrust on enhancingfunctional/domain knowledge across disciplines.
Your Company has signed a four year wage agreement with the bargainable employees yearbefore last, after long negotiations. The IR situation continues to be peaceful.
Employee - Management relations remained cordial through 2010-2011. As on 31st March,2011, the number of people employed by the Company was 235.
G. Opportunities and Threats Opportunity
• Eastern India experiencing growth in leisure and entertainment business inrecent years.
• Gradual shift of center of gravity of the city to Salt Lake due to developmentof large townships, Govt. offices and Information Technology industry in and around thisplace.
• Opportunity for expansion through Joint Venture in other parts of India andabroad.
• Large export potential for Company's international standard quality products atcompetitive prices.
• Space available within the Company's premises for further expansion.
• The Company's products and high quality services receive wide acceptance inIndia and abroad due to International Standards Organisation (ISO) certifications obtainedby the Company.
• "Brand equity" of the Company is perceivably high.
Threats
• Development of similar large parks in the city.
• Increase in operational cost due to change in Statutory Govt. policies includingrates, taxes, etc.
• Park business is seasonal.
• Dependency of Project Division's performance on order availability, which may behighly cyclic.
• Alternative indoor entertainment options like Multiplexes, Malls etc.
H. Financial And Operational Performance
The Guest level increased as compared to that of the previous year. Per capita incomeshows considerable improvement. Various sales promotional schemes helped ramp up footfalland additional income from park operations.
Your Company is a trendsetter in the amusement parks industry in India with many firstsattached to its name and is a profit-making organisation in this sector. Incorporated in1989, it is the only listed company in the Stock Exchange in the country's amusement parkindustry. Your Company also has the distinction of showing profits since inception andpaying dividends continuously for seventeen years.
I. Outlook
With aggressive marketing schemes, good number of booking for events and with anemphasis on increasing F&B sales, barring any unforeseen circumstances, your Companylooks to the future with confidence.
J. Cautionary Statement
Statements in the Management Discussion and Analysis Report in regard to projections,estimates and expectations have been made in good faith. Many unforeseen factors may comeinto play and affect the actual results, which could be different from what the Directorsenvisage in terms of future performance and outlook. Industry information contained inthis Report, have been based on information gathered from various published andunpublished reports and their accuracy, reliability and completeness cannot be assured.