Moneycontrol
Last Updated : Jan 29, 2016 12:43 PM IST | Source: CNBC-TV18

Will break even in FY17; to add snow, adventure park: Adlabs

Kapil Bagla, CEO of Adlabs Entertainment says there was 75 percent occupancy in Novotel Imagica with an Average Revenue per Room (ARR) at Rs 5,800.

India's international standard theme park Adlabs Entertainment's standalone net loss widened to Rs 25.19 crore for the third quarter ended December.

Speaking to CNBC-TV18, Kapil Bagla, CEO of the company says Adlabs' revenue mix has shifted to lower average revenue per user (ARPU) products and that the company would break even on a cash basis in FY17.

In addition, high service tax has affected revenues, he says, adding, the company is planning to pass on this hike to its customers.

On the hotel business, Bagla says there was 75 percent occupancy in Novotel Imagica with an Average Revenue per Room (ARR) at Rs 5,800.

Further, the company is planning to add a snow and adventure park within FY17 and is approaching banks for refinancing and negotiating interest rates, he says.

Meanwhile, the year-end debt is expected to be at Rs 950-960 crore, Bagla adds. Adlabs' current debt is at Rs 920 crore.

Below is the verbatim transcript of Kapil Bagla’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: Explain to us why the income growth has been in single digits this time?

A: We should look at little bit in detail. What has happened this time? While our foot fall growth has been very good, it has been 23 percent on year-on-year (Y-o-Y) basis in terms of quarterly. Somewhere around the line there is a change in the product mix that means the revenue mix that we are talking about. So, this time we got a little more share of customers that came to our Water Park which is Adlabs Aquamagica, than the another quarter in the previous year.

Also the share of foot fall that came through school groups was higher. So, these are low ARPU (average revenue per user) products as we call it. So, in effect what happened was then the revenues get contracted to that extent.

There was one more element that hit us this time which was in effect of service tax which was not there in the previous quarter last year.

Latha: That will continue to be there?

A: Yes, but the question is that how do you want to do it? This year because it was in the middle of the year we didn’t pass on to the customers. We said that we are going to absorb part of it. Now with the foot fall growth being established we are now wanting to do a plus service tax model that we will now roll out. So, it will effectively increase my realisation by at least 10 percent going forward.

Latha: What about your net loss itself? It has actually expanded. You were telling us that your finance cost will fall by about 20 percent. It has fallen by 4 percent. When do you see yourself in the black at all?

A: I have maintained that the position of cash breakeven is going to happen in FY17. Every element by the quarter is adding towards that direction; like for example this time the hotel, it was the first quarter of operations of the hotel. It was a first three months of Novotel Imagica operations. We did 75 percent occupancy on the hotel. We did almost a 5,800 plus average revenue per room (ARR) on the hotel.

Now we should appreciate that, I mean I have always maintained that FY17 will be the first full year where all the elements of our project as it was conceived which is the full blown hotel, the theme park, the water park and we are adding the snow park attraction and adventure park. All will start operations.

So, these will all contribute to the growth of revenues so we are that way very optimistic on the FY17 numbers which is how it was planned.

Latha: FY17 is cash breakeven? When is the net profit?

A: Net profit is a year next unless we do something in FY17 which we are aggressively working on reduction of our interest cost. We are now approaching the banks for a refinancing and reworking on the interest cost which considering the growth of business now banks should oblige, I am quite sure.

Sonia: What is your debt now and where will it stand at about 12 months from now?

A: Right now the current debt is about Rs 920 crore on the balance sheet. The year-end debt will probably be around Rs 950-960 crore not more than that. We are not doing anything we are not borrowing any further basically except for the completion of the hotel that we have to complete.
First Published on Jan 29, 2016 11:07 am
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