Wonderla Holidays Limited (WONDERLA) Earnings Call Transcript & Summary

Sir -- Arun sir, should I go ahead?

Yes, yes, please. Go ahead.

See, normally, in our business, as you know the weekday and weekend patterns are quite different. Okay. So what is happening now is we are getting a good traction during the weekends. Okay. We get some days even 4,000, 5,000 numbers, and we had to even shut down -- I mean, send back some visitors. Because you also must be aware that in the Ministry of Home Affairs guidelines, they have given only 50% of operating capacity. Okay. So we can't put all the resources and open up all the rides. And we have got a few limited rides not running. And accordingly, the resources is optimized, and we try to do about 4,000 people to 5,000 in the maximum. So during the weekends, we have received about 4,000, 5,000 and weekdays about 1,000 people we have received.

The next question is from the line of Kaustubh Pawaskar from Sharekhan.

Yes. Sir, in covering ones, if we get an approval to operate at 100% capacity, in what time frame our park operations will stabilize? Like we will be completely available for 100% occupancy.

We can't put a date on that because we don't know when that guidelines will come. As of now, we have been told to operate at 50% capacity. So that's what we are working at. I think as the vaccination drive improves, I think at some point, they will allow us to open more and more. I'm guessing that before summer, they will allow us, but we don't know the exact date.

But if they allow you for 100%, then you have optimum resources to occupy 100% occupancy.

Yes.

Okay. Yes. Sir, my second question is on your -- you've been doing a lot of digital activities. And you are trying to understand what is the visitor's mindset. So considering that, what kind of response you are getting? Because I believe that in the post-pandemic, I think the large footfall would happen in the open-ended entertainment options, for example, amusement park or weekends on the weekdays or something rather than going to a movie hall or a shopping mall. So some kind of sense you have been getting from the visitors?

Yes. I think we are feeling that there is a lot of pent up demand. People want to come to the parks, we get at least 500 to 1,000 calls every day and requests in each of our parks. So I think there is a lot of demand. There's a lot of questions that people are asking how safe it is, can we come, can we bring children. So I think there's a lot of demand. As the pandemic eases, and I think we will see -- I mean, we'll see bigger demand coming back.

And sir, 1 question on the CapEx front. What are the plans ahead like in terms of Chennai Park or earlier, we used to have 2 rides per park every year. It was kind of a known product, but now how are we planning to add some more rides in our existing parks?

Yes. I think we will -- I see Chennai has been put on hold for now because we have not got the extension of the tax benefits and also we're working on that. It's going slow, I think, because it's election here. We don't know how long it will take. Regarding the new expansion in the parks, I think as of now, everything is on hold, we are just waiting for footfalls to come back. And then accordingly, we will take a call on what kind of expansion we can do. But I think we will, as the pandemic eases and the footfalls come back, I think we are confident that we can slowly maybe next year onwards, we'll slowly start investing again in new technologies, new rides and things like that.

Okay. And sir, 1 last one. Do you have a lot of open space in most of our parks. So are we -- do we have any plans to utilize this for events like marriages or conferences because there is high demand for marriages in the open-ended space rather than the closed ones. So considering that any thoughts on that?

We are not planning to do weddings because that's not our -- that doesn't fit well with our target audience. We are in the entertainment space. So family entertainment avenues, and maybe F&B, outdoor F&Bs avenue, like maybe outdoor shopping, all those kind of things are possible. So we are exploring that to see how we can use that. But no concrete plans have been made yet.

[Operator Instructions] The next question is from the line Sri Shankar from InCred.

I hope I'm audible right now. I had a couple of questions on the other set. Some of the questions have been already answered. Thanks for that. But among the park operators, I see that you, what are the persons -- because you don't have debt in your books comfortable. And the pandemic probably has brought down a lot of other competitors, if at all, if I may say, also down. Are you looking out to expand to other places where any of these kind of operators are there? That's my first question. Second, what are you doing to your employees, salaries, et cetera, as at the beginning of the presentation, I think I heard a statement saying that because we are seeing more and more footfalls happening and people -- patternization is happening, you're probably increasing the salary levels. And that's the second part. And third, what is the kind of new rides or is our entire rides operational only of 50% of the rides are operational. How is it working? Because the guidelines would say that operating capacity should be to the extent of 50%. So are you restricting the number of people, while all the rides are full or how are we taking it forward?

Satheesh, you can answer that question.

Okay. So the first point -- the first question was we are operating all the rides, okay. We have only limited few rides, which we are not operating. And based on the guidelines given by the state governments. Otherwise, we are operating most of the rides. And that is number one. So we are operating with limited resource because you know we are working only on the weekends. So the resource has also been the off-road resources are called based on the park opening dates. Okay. So -- and we try to optimize the number of resources through the working days and our park cleaning and other available requirements, number 2. And coming on to the salary part, which was your second question. We are -- we have been paying I mean about 50% salary before the park opening. But as gradually once the parks have started opening and we start working like 3, 4 days in a week. We are increasing to about 75%. And slowly, it will go to 100% salary payments.

Okay. And expansion thought process because you...

With regards to expansion. See, the -- we have -- the first priority for us was to open the park. And the second, now the most important crucial thing is we are working on, getting the people back to the park. While some of the park operators and new developments are talking to us on park operation and management opportunities, it is too early to commit anything about it. But there are some talks on new parks and new O&M opportunities, which has to crystallize. Because as you know, the investment into the parks by others also is getting delayed. They are also postponing a bit. Any new investment into the park, people are postponing a bit. So the clarity will emerge only after the first quarter of the next year, I think. Who's going to invest, how they are going to do and what is going to open up. I think the first quarter of every year, which is from April to June, which is the most important quarter dictates for the entire year. So we will -- I think any new business or any new investments will be critically looked after the first quarter.

The next question is from the line of Manoj Dua, an Investor.

My question is the extension of the question asked for the last panel. As many of the competitors are getting, as we said, facing the problem, you're cash. So do you think some competition dying in the areas which you are operating like Bangalore, Kochi and Hyderabad. And as we return to normalcy, we may have that advantage of that?

Yes. I think -- I mean, it's too early to say, but I mean, from what we are seeing that, yes, obviously, established players will find it easier. I think if the balance sheets are good and operations are well oiled. So I mean we are confident that we will come back the way things are going, we are pretty confident. But to what extent it will affect other people, other competitors and how that will affect us, it remains to be seen. I don't think we can speculate on that yet.

The next question is from the line of [ Meeth Jagani ] from PS Associates.

Where are we on Wonder Kitchen? Was it a profitable quarter for Wonder Kitchen? And what about Wonder Garden? Is there any concrete plan for expanding the same? Are we looking for expansion, first of all?

Satheesh, you can just answer that.

Yes. See, it's still not profitable. We are only experimenting, as we told during the last call. We are experimenting with various experiences and menus there. Because -- and this still has not reached into a profitable situation. Wonder Garden is relatively very, very small development, which is in the Kochi Park. And we are recording about INR 6 lakh to INR 7 lakh sale per month on -- per quarter on that. So Wonder Garden is very limited to Kochi -- Kochi Park, and we do about INR 7 lakh to INR 8 lakh sales for the quarter.

Any plan for the expansion of the sale, Wonder Kitchen?

Not really, not immediately now. Only we will evaluate all the performance of Wonder Kitchen by March, and then we will have a strategic initiative on that. It is too early on wonder Kitchen because the -- even the population in the cities have just moved out of the city now. So -- and there is -- the pickup of sales have not gone up since the unlock also happened. We have to look into it. But we are experimenting with new menus, new idea and other things, we will see how it takes us out.

It's not a big business vertical for us. So I mean, we are seeing how it evolves and then at some point, we'll take a call on how we want to degraded into our existing big business.

Okay. And are we breaking even in the current quarter? If you can throw some light on how we are performing in the current quarter?

We are not breaking even in the current quarter.

[Operator Instructions] The next question is from the line of Manish Shah from Vajani Securities.

Sir, this is regarding this Chennai Park. I think there was some proposal go head and to set up a flat park in Chennai. And I think some regulatory hurdles were there any update on that?

It's been put on hold until the hurdles are -- we have to see how the government responds for COVID. And so we are going to have a series of talks with them, and we'll see. But as of now, it's on hold.

Okay. So it's more for regulatory reasons or for COVID reasons, or for both?

Both. Both. Both.

[Operator Instructions] The next question is from the line of Adhidev Chattopadhyay from ICICI Securities.

So just wanted to get some idea now in terms of our expenses. Now we have scaled up to, I think, INR 5 crores a month. So assuming that normalcy resumes maybe another 2, 3 months. So where do we see the expenses now heading forward in 3 to 4 months? Is there any permanent cost saving? Or is it back to...

A normal period in a normal year, we spend at about INR 14 crores to -- INR 14.5 crores per month. Now our expenses is subdued because only part of the quarter we worked and also only few parks worked in a staggered manner. You see Hyderabad Park did not work, Kochi Park came only in December. So this first INR 5 crore average is not appropriate. So once the park opens and we operate all the 3 parks at 5 days a week, we can see anywhere the expense going up about INR 9 crores to INR 9.5 crores per month.

Okay. Okay. And sir, other question is, sir, is there any update from the government on any release measures or tax breaks for the parks for this financial year?

No, not really. We thought, we were expecting it being the highly affected industry, the entertainment industry being highly affected during the -- due to the COVID reasons. We expected some incentive from the government, at least a tax reduction in GST, which we also represented from 18% to 12%. But unfortunately, there is nothing come out of it.

Okay. Okay. Sir, lastly, just 1 bookkeeping question. So what is the current cash and investments we have on books? And what are plans? Are you planning to take on any data just as a risk mitigation strategy?

No. We have about INR 90 crores with us as of 31st of December, and we are not thinking of any debt or cash restructuring.

[Operator Instructions] As there are no further questions. I now hand the conference over to the management for their closing comments.

Arun, sir...

Thank you. Yes, yes. Thank you all for attending the Q3 FY 2021 Conference Call. We wish to -- wish all of you a safe and happy new year, and we'll be back soon with the next quarter results and hope that things improve. Thank you.

Thank you. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you.