Imagicaaworld Entertainment Ltd - Annual Report 2023-24 Analysis

Overview #

Detailed Analysis #

This analysis looks into the Imagicaaworld Entertainment Limited annual report for FY2023-24, examining its financial performance, business segments, identified risks, and ESG initiatives.

I. Financial Performance:

The report highlights a 4% revenue growth in FY24 compared to FY23, reaching ₹260.02 crore (standalone). However, this growth needs to be viewed in the context of the previous year’s figures which included significant one-off items. A more detailed analysis is necessary:

• Revenue from Operations: ₹260.02 crore (FY24) vs ₹250.55 crore (FY23) - a modest increase.
• Other Income: ₹18.49 crore (FY24) vs ₹83.19 crore (FY23) – a substantial decrease, primarily due to the absence of a significant one-off interest reversal in FY24. This makes direct year-on-year comparison unreliable.
• Profit Before Tax (PBT): ₹543.09 crore (FY24) vs ₹161.39 crore (FY23) - a dramatic increase, again significantly influenced by exceptional items.
• Profit After Tax (PAT): ₹540.93 crore (FY24) vs ₹357.46 crore (FY23) – similarly impacted by exceptional items (primarily debt write-off in FY24).
• Exceptional Items: A significant write-off of assigned debt under the Resolution Plan greatly boosted FY24’s profitability. Without this, the year-on-year comparison would show a much different picture.
• Earnings Per Share (EPS): ₹11.48 (basic) and ₹10.75 (diluted) for FY24, indicating an improvement compared to FY23. However, the impact of exceptional items needs to be considered.

Financial Ratios (Standalone): The report provides some key ratios but lacks detailed context and comparison to industry benchmarks. A deeper analysis is needed using the full financial statements:

• Operating Profit Margin: Showed a significant drop from 54% in FY23 to 6.6% in FY24, excluding exceptional items. This indicates operational challenges.
• Net Profit Margin: Improved dramatically from 107% to 194% due to exceptional items. Without this, the margin would likely be significantly lower.
• Debt-to-Equity Ratio: Improved, suggesting a healthier financial structure. Precise figures are needed from the statements.
• Interest Coverage Ratio: Showed substantial improvement from 1.62 times in FY23 to 22.75 times in FY24, mainly due to exceptional items and improved EBITDA.

II. Business Segments:

Imagicaaworld operates many interconnected segments:

• Theme Park: The flagship attraction, spanning 110 acres with various rides and shows.
• Water Park: Features numerous international-standard slides and attractions.
• Snow Park: An indoor snow-themed park.
• Hotel (Novotel Imagicaa Khopoli): A 5-star hotel offering accommodation and conferencing facilities.
• Acquired Parks (Wet’nJoy & Sai Teerth): Four parks (two water parks, one amusement park, and a religious theme park) acquired from the Malpani Group. These acquisitions significantly expand Imagicaaworld’s geographical reach.
• Indore Park Project: An under-construction water park in Indore, Madhya Pradesh, acquired through the purchase of the project entity (MPIPL). The report highlights challenges related to land lease tenure and obtaining necessary approvals.

Segment Performance: The report provides a summary table but lacks detailed breakdown of revenue and profit contributions from each segment. Further analysis is needed using the provided financial statements.

III. Risks:

The report identifies many key risks:

• Seasonality: Revenue is heavily influenced by school holidays, weekends, and weather conditions. Water parks are especially susceptible to monsoon season.
• Changing Consumer Preferences: The industry is highly volatile, requiring constant adaptation to evolving customer tastes and preferences.
• Economic Conditions: Discretionary spending on entertainment is sensitive to economic downturns and inflation.
• Incidents and Adverse Publicity: Accidents, illness outbreaks, or negative publicity can severely damage reputation and attendance.
• Epidemics and Pandemics: The risk of future pandemics impacting operations remains a concern.

IV. ESG Initiatives:

Imagicaaworld highlights many ESG initiatives:

• Energy Management: Focus on renewable energy sources, aiming to reduce its carbon footprint. A significant investment in a captive solar power plant is underway. The report mentions achieving 64.84% of total power consumption from renewable sources in FY24 through Open Access.
• Water and Waste Management: Implementation of waste segregation, recycling programs, and water conservation measures. The report mentions rain harvesting and sewage treatment plants.
• Employee Well-being: Provision of health insurance, safety training, and other employee-centric initiatives.
• Community Engagement: The report mentions various community development initiatives (water distribution, supporting local schools).

Further Analysis & Conclusion:

While the report presents a positive narrative of growth and expansion, a thorough analysis using the complete standalone and consolidated financial statements is essential to assess the true financial health and profitability of the company. The substantial impact of exceptional items requires careful consideration when interpreting year-on-year changes in key financial metrics.

The acquisitions of Wet’nJoy and Sai Teerth, along with the Indore project, represent a significant expansion strategy, but also expose the company to greater operational complexity and risks, especially concerning the Indore project’s land lease issues.

The ESG initiatives are positive but lack specific quantitative targets and measurable results. More detailed reporting of ESG performance would improve transparency and provide investors with a clearer understanding of the company’s sustainability goals and progress. Overall, the report provides a high-level overview, requiring a deeper dive into the detailed financial statements and disclosures to gain a complete and nuanced understanding of Imagicaaworld’s performance and future prospects.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

The provided annual report gives the values in Indian Rupees (INR) in Lakhs (1 Lakh = 100,000). To get the values in standard numerical format, we need to multiply the figures by 100,000.

Based on the Standalone Financial Statements:

• Total Assets: ₹1,09,768.95 Lakhs = ₹10,976,895,000
• Current Assets: ₹14,573.12 Lakhs = ₹1,457,312,000
• Cash and Cash Equivalents: ₹9,997.87 Lakhs = ₹999,787,000
• Accounts Receivable (Trade Receivables): ₹413.20 Lakhs = ₹41,320,000
• Inventory: ₹1,597.78 Lakhs = ₹159,778,000

These figures are from the Standalone Financial Statements. The Consolidated Financial Statements would include the values of the subsidiary companies as well, resulting in higher total asset and other values. The report doesn’t provide a consolidated breakdown of these specific line items.

Liability Analysis #

Again, these figures are from the Standalone Financial Statements in Indian Rupees (INR) and in Lakhs (1 Lakh = 100,000). Multiply the values by 100,000 to get the standard numerical format.

Based on the Standalone Financial Statements:

• Total Liabilities: ₹1,09,768.95 Lakhs = ₹10,976,895,000 (Note: This is identical to Total Assets, reflecting the basic accounting equation: Assets = Liabilities + Equity)
• Current Liabilities: ₹30,280.38 Lakhs = ₹3,028,038,000
• Long-Term Debt: ₹8.97 Lakhs = ₹897,000 (This appears to represent only a small provision, not the full long-term debt. The major portion of long-term debt was associated with the OCRPS, which were converted to equity during the year).
• Accounts Payable (Trade Payables): ₹2,341.13 Lakhs = ₹234,113,000

It’s essential to note that the “Long-Term Debt” figure shown is misleadingly low. The significant long-term debt related to the OCRPS (Optionally Convertible Redeemable Preference Shares) was effectively eliminated during the year through conversion into equity. The small figure of ₹8.97 Lakhs represents a residual provision. A complete picture of long-term debt obligations before the conversion would require additional information from the notes to the financial statements or previous year’s reports.

Equity Analysis #

The values are again from the Standalone Financial Statements, in Indian Rupees (INR) and Lakhs. Remember to multiply by 100,000 for the standard numerical format.

Based on the Standalone Financial Statements:

• Shareholders’ Equity: ₹79,479.60 Lakhs = ₹7,947,960,000 (This is calculated as Total Assets - Total Liabilities). Note that this is the post-conversion of OCRPS to equity.
• Retained Earnings: (₹89,652.10) Lakhs = -₹8,965,210,000 (This represents accumulated losses).
• Share Capital: ₹48,190.01 Lakhs = ₹4,819,001,000 (This reflects the equity share capital after the conversion of OCRPS and issuance of shares under the ESOP).

It’s important to note that the retained earnings figure reflects accumulated losses. The shareholders’ equity is significantly affected by the conversion of OCRPS into equity shares during the year; the previous year’s shareholders’ equity would have had a very different structure and value before the Resolution Plan’s implementation. The provided figures reflect the situation after significant restructuring.

Income Statement #

Operating Performance #

The figures are from the Standalone Statement of Profit and Loss, in Indian Rupees (INR) and Lakhs. Remember to multiply by 100,000 to obtain values in standard numerical format.

Based on the Standalone Statement of Profit and Loss:

• Revenue (Revenue from Operations): ₹26,001.50 Lakhs = ₹2,600,150,000
• Cost of Revenue (Cost of Material Consumed + Changes in Inventories of Stock-in-Trade + Merchandise): ₹(1,951.93 + 17.55 + 888.41) Lakhs = ₹2,857.89 Lakhs = ₹285,789,000
• Gross Profit (Revenue - Cost of Revenue): ₹(26,001.50 - 2,857.89) Lakhs = ₹23,143.61 Lakhs = ₹2,314,361,000
• Operating Expenses (Employee benefit expense + Finance cost + Depreciation, Impairment loss & amortisation expense + Other expenses): ₹(5,031.91 + 156.32 + 7,928.56 + 8,477.54) Lakhs = ₹21,594.33 Lakhs = ₹2,159,433,000
• Operating Income (Gross Profit - Operating Expenses): ₹(23,143.61 - 21,594.33) Lakhs = ₹1,549.28 Lakhs = ₹154,928,000

These figures represent the standalone performance. Consolidated figures would incorporate the results of the subsidiary company as well, but those details are not provided in this level of detail within the report’s summary. Remember that the figures are still affected by the accounting for exceptional items which are reported separately and need to be factored in for a complete understanding of the company’s performance.

Bottom Line Metrics #

The values are from the Standalone Statement of Profit and Loss, in Indian Rupees (INR) and Lakhs. Remember to multiply by 100,000 to obtain the values in standard numerical format.

Based on the Standalone Statement of Profit and Loss:

• Net Income (Profit/Loss for the year): ₹5,409.29 Lakhs = ₹540,929,000 (Note: This is significantly impacted by the exceptional items, mainly the debt write-off).
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): This is not explicitly stated in the summary but can be calculated. It’s (Operating Income + Depreciation, Impairment loss & amortisation expense + Finance Cost) = ₹(154,928,000 + 792,856,000 + 15,632,000) = ₹963,416,000
• Basic EPS (Earnings Per Share): ₹11.48 per share
• Diluted EPS (Earnings Per Share): ₹10.75 per share

It is very important to note that the Net Income figure is heavily skewed by the exceptional items. A more accurate picture of the underlying profitability would require analyzing the statement of profit and loss, excluding those items. The EBITDA figure is also a calculation derived from various elements of the income statement. Therefore a significant portion of the profitability reported in this annual report is attributable to debt restructuring and write off, rather than core operations.

Cash Flow #

Cash Flow Components #

The figures are from the Standalone Statement of Cash Flows, in Indian Rupees (INR) and Lakhs. Remember to multiply by 100,000 for the standard numerical format. Parentheses indicate cash outflows.

Based on the Standalone Statement of Cash Flows:

• Cash Flow from Operating Activities: ₹10,617.79 Lakhs = ₹1,061,779,000
• Cash Flow from Investing Activities: (₹6,438.58) Lakhs = -₹643,858,000
• Cash Flow from Financing Activities: (₹234.86) Lakhs = -₹23,486,000

These figures represent the net cash flows for each category. The details behind these net figures – such as proceeds from share issuances and repayments of borrowings – would require a more in-depth examination of the statement of cash flows. The significant changes in the balance sheet structure resulting from the debt restructuring and conversion of OCRPS have a major impact on these cash flow figures, making a straight comparison to the previous year potentially unreliable unless the underlying movements are closely analyzed.

Cash Flow Metrics #

The annual report does not directly provide free cash flow. Free cash flow (FCF) is a calculated metric, not a line item in the financial statements. It’s typically calculated as:

FCF = Operating Cash Flow - Capital Expenditures + Proceeds from asset sales - Acquisitions

To calculate the FCF for Imagicaaworld, we need to gather information from multiple parts of the report:

• Operating Cash Flow: ₹1,061,779,000 (from Standalone Statement of Cash Flows).
• Capital Expenditures (CAPEX): ₹269,768,000 (this is derived from the segment information within the annual report as Capital expenditure during the year).
• Proceeds from Asset Sales: This is not explicitly stated as a single figure but can be partially gleaned from the notes on the sale of land and the sale of investment in WPPL (Walkwater Properties Pvt Ltd). The total proceeds of land sales would be ₹5,500 Lakhs (₹550,000,000) as per Note 35 and total proceeds from investment sales would be ₹2,400 Lakhs (₹240,000,000).
• Acquisitions: This includes the acquisitions of the four parks from Giriraj Enterprises (₹630 Crores = ₹6,300,000,000) and the acquisition of MPIPL (₹55 Crores = ₹550,000,000). Note that some of the payments for these acquisitions might be reflected in the investing cash flows instead of being completely categorized as “acquisitions”.

Therefore, an approximate FCF calculation (which may not be entirely accurate without scrutinizing the detailed cash flow statement) is:

FCF ≈ 1,061,779,000 - 269,768,000 + 550,000,000 + 240,000,000 - 6,300,000,000 - 550,000,000 ≈ -₹5,277,989,000

This negative FCF indicates that the company’s cash flow from operations was insufficient to cover its capital expenditures and acquisitions during the year.

• Capital Expenditure (CAPEX): ₹269,768,000 (as derived from Note 46)
• Dividends Paid: Nil (explicitly stated in the report).

It is important to note that this FCF calculation is an approximation. A precise calculation would need a line-by-line analysis of the cash flow statement and a detailed breakdown of all acquisition and disposal transactions during the financial year. The exceptional items also greatly affect the resulting FCF.

Profitability Ratios #

Calculating precise profitability ratios requires a line-by-line analysis of the financial statements, and some important figures aren’t explicitly provided in the report summary. We can provide estimates based on the summarized data, but these should be considered approximations. The impact of exceptional items is significant and must be factored in for a complete analysis. The figures below exclude exceptional items for a more accurate assessment of underlying profitability. The figures are rounded to the nearest percentage point.

Standalone Results (Excluding Exceptional Items):

• Gross Profit Margin: (Gross Profit / Revenue) = (₹2,314,361,000 / ₹2,600,150,000) = 89%
• Operating Margin: (Operating Income / Revenue) = (₹154,928,000 / ₹2,600,150,000) = 6%
• Net Profit Margin: (Net Income / Revenue) = (₹540,929,000 / ₹2,600,150,000) = 21% (This is heavily inflated by exceptional items. Without them, the net profit margin would be much lower.)

Return on Equity (ROE) and Return on Assets (ROA):

Calculating ROE and ROA accurately requires the average equity and average assets for the year. These are not provided in the report summary. The report does provide some ratio results, but it is not clear what methodology has been used.

Approximate calculations (Standalone, using year-end figures - this is not fully accurate):

• Return on Equity (ROE): (Net Income / Shareholders’ Equity) ≈ (₹540,929,000 / ₹7,947,960,000) ≈ 7% (This is a rough estimate and is heavily influenced by the accounting for exceptional items and the conversion of OCRPS into equity during the year. A more accurate calculation needs the average shareholders’ equity for the year.)
• Return on Assets (ROA): (Net Income / Total Assets) ≈ (₹540,929,000 / ₹10,976,895,000) ≈ 5% (Again, a rough estimate subject to the caveats regarding exceptional items. Average total assets for the year would be needed for a more precise calculation.)

In summary: While the reported Net Profit Margin is high due to exceptional items, the operating margin is low, indicating relatively low profitability from core operations. The estimated ROE and ROA are modest, requiring further analysis with average figures for a more robust conclusion. A detailed analysis is required to fully understand the financial performance, including a sensitivity analysis and comparison to industry benchmarks. The significant debt restructuring and conversion of OCRPS make year-over-year comparisons less straightforward and require a better assessment.

Liquidity Ratios #

The liquidity ratios are calculated using data from the Standalone Balance Sheet, in Indian Rupees (INR) and Lakhs. Remember to multiply the figures by 100,000 for the standard numerical format.

Based on the Standalone Balance Sheet (year-end figures):

• Current Ratio: (Current Assets / Current Liabilities) = (₹1,457,312,000 / ₹3,028,038,000) = 0.48 This is a low current ratio, suggesting potential short-term liquidity concerns.

• Quick Ratio: (Current Assets - Inventories) / Current Liabilities) = (₹1,457,312,000 - ₹159,778,000) / ₹3,028,038,000 = 0.43 This is even lower than the current ratio, indicating that the company might struggle to meet its short-term obligations without liquidating its inventory.

• Cash Ratio: (Cash and Cash Equivalents / Current Liabilities) = (₹999,787,000 / ₹3,028,038,000) = 0.33 This ratio is relatively low, suggesting that the company’s readily available cash is insufficient to cover its current liabilities.

Important Considerations:

• Year-End Figures: These calculations use year-end figures, which may not reflect the average liquidity position throughout the entire financial year. Using average balances would provide a more accurate picture.
• Industry Benchmarks: These ratios should be compared to industry averages for a more meaningful interpretation. A low current ratio and quick ratio could indicate solvency issues, especially given the company’s high level of debt before restructuring. The cash ratio indicates severely limited short-term cash buffer.
• Quality of Current Assets: The composition of current assets is also crucial. Highly liquid assets are more helpful for covering short-term liabilities than illiquid assets.
• Debt Restructuring: The significant debt restructuring undertaken during the year significantly altered the balance sheet. Analyzing liquidity ratios for previous periods, prior to the restructuring would be insightful.

In conclusion, the calculated liquidity ratios suggest potential short-term liquidity challenges for Imagicaaworld. Further analysis, including comparison to industry benchmarks and an examination of the cash flow statement for detailed liquidity trends, is recommended for a detailed assessment.

Efficiency Ratios #

Calculating efficiency ratios accurately requires data not fully presented in the report’s summary. We’ll provide estimates using available information, but these should be considered approximations. The report gives some ratio results in Note 49, but the calculation methodology is not provided.

Based on available data from the Standalone Financial Statements (using year-end figures, which may not accurately represent average values throughout the year):

• Asset Turnover: (Revenue / Average Total Assets) - To calculate this accurately, we need the average total assets for the year (beginning and ending balances). The report only provides year-end values. Using the year-end total assets figure as an approximation, we would have: (₹2,600,150,000 / ₹10,976,895,000) ≈ 0.24 times. This is very low, indicating that the company is not generating a high level of revenue relative to its total assets.

• Inventory Turnover: (Cost of Goods Sold / Average Inventory) - Again, we need the average inventory for the year (beginning and ending balances) for a proper calculation. Using year-end inventory as a proxy: (₹285,789,000 / ₹159,778,000) ≈ 1.8 times. This suggests that the company’s inventory is turning over relatively slowly.

• Receivables Turnover: (Revenue / Average Accounts Receivable) - We need the average accounts receivable for accurate calculation. Using the year-end figure: (₹2,600,150,000 / ₹41,320,000) ≈ 63 times. This suggests that the company is collecting its receivables relatively quickly. This appears to be consistent with the data reported in Note 49.

Important Considerations:

• Average Balances: The above calculations use year-end balances instead of average balances, which would result in more accurate ratio calculations.
• Cost of Goods Sold: The exact cost of goods sold is not explicitly stated, but it has been calculated from the provided data.
• Industry Benchmarks: These ratios should be compared against industry benchmarks to provide a more meaningful interpretation of efficiency.
• Data Limitations: The summary provided in the report limits the precision of these calculations. A complete and precise calculation requires access to the full financial statements, including opening balances for all relevant accounts.

In summary, based on the approximations, the asset turnover is low, while the receivables turnover is relatively high. Inventory turnover is moderate. A more detailed analysis using average balances and comparisons to industry benchmarks is necessary for a thorough assessment of Imagicaaworld’s operational efficiency.

Leverage Ratios #

Calculating use ratios accurately requires data not fully presented in the report’s summary. We will provide estimates using available information, but these should be considered approximations. The report gives some ratio results in Note 49, but the calculation methodology is not provided. Furthermore, the significant debt restructuring during the year makes year-over-year comparisons less meaningful.

Based on available data from the Standalone Financial Statements (using year-end figures, which may not accurately represent average values throughout the year):

• Debt-to-Equity Ratio: (Total Debt / Shareholders’ Equity) - “Total Debt” needs clarification. The report shows a low long-term debt figure because the OCRPS were converted to equity. Using the current liabilities (excluding trade payables and other current liabilities) as a proxy for short-term debt and the year-end shareholders’ equity: (₹1,954,780,000 / ₹7,947,960,000) ≈ 0.25. This is likely an underestimate of the true debt-to-equity ratio before the restructuring which would include the portion of long-term debt represented by the OCRPS.

• Debt-to-Assets Ratio: (Total Debt / Total Assets) - Using the same approximation of total debt as above: (₹1,954,780,000 / ₹10,976,895,000) ≈ 0.18. This too would be underestimated due to the OCRPS conversion.

• Interest Coverage Ratio: (Earnings Before Interest and Taxes (EBIT) / Interest Expense) - EBIT is not directly stated. We can approximate it using the Profit Before Tax and Interest Expense figures. Assuming that the exceptional items are excluded from the calculation of EBIT, the EBIT can be derived as (Profit before tax +Interest Expense) = ₹(3,398.21 +156.32) Lakhs = ₹3,554.53 Lakhs = ₹355,453,000. Therefore, the Interest Coverage Ratio would be approximately (₹355,453,000/ ₹15,632,000) ≈ 23 times. This is consistent with the reported value but is influenced by the large impact of exceptional items.

Important Considerations:

• Average Balances: The above calculations utilize year-end balances instead of average balances, leading to less accurate calculations.
• Total Debt: The “Total Debt” figure is approximated due to the OCRPS conversion. A precise calculation needs the total debt before conversion and a clear definition of what constitutes total debt.
• EBIT Calculation: The EBIT is also estimated, requiring more detailed financial statement information for precise calculations.
• Industry Benchmarks: Comparing these ratios to industry benchmarks is essential for a more detailed analysis.

In summary, the estimated use ratios suggest a relatively low level of debt after the significant debt restructuring. However, the reported figures do not provide a true representation of the use ratios prior to the restructuring. A detailed analysis of the balance sheet and the income statement is necessary for a proper understanding of the company’s use before and after the restructuring.

Market Analysis #

Market Metrics #

The annual report does not provide a market capitalization (market cap), price-to-earnings ratio (PE ratio), price-to-book ratio (PB ratio), dividend yield, or dividend payout ratio. These are market-based metrics that depend on the company’s share price and other market data, which are not included in the financial statements themselves. To calculate these ratios, you would need:

• Market Cap: (Current Share Price * Number of Outstanding Shares)
• PE Ratio: (Market Price per Share / Earnings Per Share)
• PB Ratio: (Market Price per Share / Book Value per Share)
• Dividend Yield: (Annual Dividend per Share / Market Price per Share)
• Dividend Payout Ratio: (Dividends Paid / Net Income)

The annual report does state that no dividends were paid in FY2023-24, making the dividend yield and dividend payout ratio zero. However, to calculate the market cap, PE, and PB ratios, you need the current market price of Imagicaaworld’s shares which is not provided in this report. You would need to obtain the current share price from a financial news source or stock exchange website. Then, using the number of outstanding shares (provided in the report) and the EPS and book value per share (derived from the financial statements), you can calculate the market cap, PE ratio, and PB ratio.

Business Analysis #

Segment Analysis #

The annual report provides limited detail on segment performance, making a precise breakdown challenging. The report focuses on the overall company performance rather than detailed segment-by-segment analysis. We can offer a partial analysis based on available information. Note that growth rates are calculated based on the limited information provided, and may not reflect a complete picture. Market share data is entirely absent from this annual report.

Business Segments (Standalone):

The report identifies these segments, but the exact revenue and profit breakdown for each isn’t provided:

• Tickets: This encompasses sales of tickets for the Theme Park, Water Park, and Snow Park. Revenue for FY24: ₹131.81 Crores, representing a decrease of around 1.6% from FY23. The segment’s operating margin is not disclosed.
• Food and Beverage: Includes sales from restaurants and food kiosks within the parks and at the Novotel hotel. Revenue for FY24: ₹62.06 Crores; showing an increase of 3% compared to FY23. The operating margin for this segment is not disclosed in the report.
• Merchandise: Sales of souvenirs and other retail products. Revenue for FY24: ₹14.13 Crores, indicating a 13% increase compared to FY23. The operating margin for this segment is not disclosed.
• Rooms (Hotel): Revenue generated from hotel accommodation at the Novotel Imagicaa Khopoli. The revenue figures for the segment are not explicitly given, but it constitutes around 20% of the total revenue, so it can be estimated to be around ₹52 Crores (20% of total revenue of ₹260 Crores). The segment’s operating margin is not disclosed.
• Other Operations: This includes income from parking, lockers, sponsorships, revenue-sharing agreements, and lease rentals. Revenue for FY24: ₹18.18 Crores; showing a significant increase of 51.2% from FY23. The operating margin for this segment is not disclosed.

Key Products/Services by Segment:

• Tickets: Day passes, multi-day passes, seasonal passes, and other ticket types.
• Food and Beverage: A variety of food and beverage options across different price points and cuisines.
• Merchandise: Souvenirs, clothing, and other retail items themed around Imagicaa properties.
• Rooms: Hotel rooms and suites.
• Other Operations: Parking spaces, lockers, sponsorship deals, and lease revenue.

Geographic Presence:

• Maharashtra: The Khopoli location is the main focus, drawing visitors primarily from Mumbai, Pune, and surrounding areas.
• Gujarat: The newly opened Aquamagicaa water park in Surat expands the geographic reach.
• Madhya Pradesh (Indore): An under-construction water park represents a future expansion into this market.

Market Share:

The annual report doesn’t provide any data on the market share for each segment or for Imagicaaworld as a whole within the Indian amusement park industry.

Limitations:

This analysis is hampered by the lack of detailed segment-specific financial data in the report’s summary. The operating margins for each segment are not explicitly disclosed, and a precise assessment requires a thorough examination of the complete financial statements. Furthermore, the substantial restructuring during the year impacts the reliability of direct year-on-year growth rate comparisons for each business segment. To gain a complete picture of each segment’s performance, more detailed financial information is necessary.

Risk Management #

Risk Assessment #

The annual report identifies many key risk factors but doesn’t provide a structured assessment of their impact severity, likelihood, or specific mitigation strategies in a consistent and detailed manner. We can categorize and describe the risks based on the information provided, but a detailed risk assessment requires more detailed information from the company.

I. Key Risk Factors:

The report mentions many risk factors, which can be categorized as follows:

A. Operational Risks:

• Seasonality: Revenue is highly dependent on seasonal factors (monsoon, school holidays, weekends) and weather conditions. This significantly impacts attendance and revenue predictability.
• Safety and Security: Accidents, injuries, or security breaches can damage reputation, lead to legal liabilities, and significantly reduce attendance.
• Maintenance and Upkeep: The need to continuously maintain and upgrade rides and attractions to avoid downtime and ensure safety presents an ongoing operational challenge. A major failure could lead to significant revenue loss.
• Product Quality: Maintaining high standards of product and service quality to attract and retain customers is crucial. Poor quality can lead to negative word-of-mouth, decreased attendance, and reputational damage.

B. Financial Risks:

• Economic Downturn: Discretionary spending on leisure and entertainment is susceptible to economic cycles and inflation.
• Debt: While significant debt reduction was achieved through the Resolution Plan, future borrowing might expose the company to interest rate risk and increased financial vulnerability.
• Liquidity: The report suggests short-term liquidity issues (low current and quick ratios). Maintaining sufficient working capital is vital, especially during the seasonal fluctuations.

C. External Risks:

• Competition: The increasing popularity of the amusement park industry may lead to increased competition. Attracting and retaining customers in this competitive landscape is a major challenge.
• Regulatory Changes: Changes in environmental regulations, safety standards, or taxation policies could increase operational costs or create compliance challenges.
• Epidemics and Pandemics: The experience of the COVID-19 pandemic underscores the vulnerability of the industry to large-scale health crises, which can lead to extended closures and financial losses.

II. Qualitative Assessment (Approximation):

The annual report does not provide a quantitative risk assessment (likelihood and impact severity). We can offer a qualitative assessment, recognizing that this is only an approximation:

III. Mitigation Strategies & Trends:

The report mentions some mitigation strategies:

• Seasonality: Dynamic pricing strategies to adjust to seasonal fluctuations in demand.
• Safety and Security: Implementation of an Integrated Management System (IMS) certified by the Bureau of Indian Standards (BIS) and maintenance of high safety standards.
• Debt: Significant debt reduction through the Resolution Plan and a focus on profitability improvement.
• Liquidity: The report does not provide concrete strategies for liquidity enhancement beyond general statements about monitoring.

The identified trends generally point towards increasing competition, a shift towards experience-based consumption, and growing government support for the amusement park industry in India.

Limitations:

The report’s lack of structured risk assessment limits the accuracy of this analysis. Specific mitigation strategies are only vaguely outlined. A detailed risk management approach would involve a formal risk assessment process that includes quantitative measures of impact severity and likelihood, as well as detailed mitigation plans for each identified risk.

Strategic Overview #

Management Assessment #

Imagicaaworld’s management outlines many key strategies, competitive advantages, market conditions, challenges, and opportunities in its discussion and analysis.

I. Key Strategies:

• Geographic Expansion: Expand into new markets across India, leveraging the established Imagicaa brand. This is evident in their recent ventures into Gujarat (Surat) and planned expansion into Madhya Pradesh (Indore).
• Integrated Holiday Destination: Develop Imagicaa Khopoli into a multi-day destination by offering various attractions (Theme Park, Water Park, Snow Park) coupled with hotel accommodations and event hosting capabilities to boost occupancy and increase revenue streams.
• Increase Guest Attendance: Implement focused marketing campaigns targeting various demographics (families, students, young professionals, schools, and corporates) and improve the overall guest experience through continuous improvement in operations and service delivery.
• Revenue Diversification: Reduce reliance on ticket sales by expanding non-ticketing revenue streams such as food and beverage, merchandise, sponsorships, and event hosting.
• Profitability Improvement and Cost Optimization: Increase efficiency through economies of scale (centralized procurement), streamlining operations, and implementing dynamic pricing to adjust to seasonal fluctuations.

II. Competitive Advantages:

• First-Mover Advantage: Being an early entrant into the large-scale, international-standard themed entertainment destination market in India provides a significant head start. Creating similar projects requires substantial capital investment, time, and expertise.
• Attractive Location: The Khopoli location, easily accessible from major cities like Mumbai and Pune, is a significant advantage.
• International-Standard Rides and Attractions: The use of internationally recognized designers and manufacturers ensures high-quality offerings that appeal to a wide audience.
• Strong Brand Recognition: Years of operations have established the Imagicaa brand, increasing brand awareness and recall.
• Experienced Management Team: The management team boasts extensive experience in the entertainment, marketing, and hospitality sectors.
• Consolidated Park Operations: The integration of all the various parks owned by the Malpani group under a single umbrella (Imagicaaworld) leads to streamlined operations, cost reduction, increased bargaining power, and better resource allocation.

III. Market Conditions:

• Growth in Experiential Entertainment: Post-pandemic, there’s a rising demand for experiential entertainment, especially outdoor activities.
• Increasing Disposable Incomes: The growth of the middle class and rising disposable incomes are driving greater spending on leisure and entertainment.
• Urbanization: Rapid urbanization is increasing the potential customer base in urban centers.
• Government Support: Growing recognition by state governments of the amusement park industry’s potential, leading to more supportive policies and public-private partnerships (PPPs).
• Rise of Religious Tourism: A growing segment presents opportunities for themed attractions related to religious pilgrimages.

IV. Challenges:

• Seasonality: Weather and holiday-related fluctuations create revenue instability.
• Competition: Attracting and retaining customers in a growing and increasingly competitive market is a key challenge.
• Economic Volatility: The sensitivity of discretionary spending on entertainment to economic conditions poses a threat to revenue predictability.
• Infrastructure Development: The development of large-scale amusement parks is capital-intensive, and securing land and obtaining necessary approvals can be complex.
• Manpower: A lack of skilled manpower with specific experience in the theme park sector is a limiting factor.

V. Opportunities:

• Untapped Market Potential: Significant growth potential exists in Tier 2 and Tier 3 cities where large-scale themed entertainment destinations are scarce.
• Government Partnerships (PPPs): PPP projects like the one secured in Ahmedabad offer opportunities for growth and expansion.
• Technological Advancements: Incorporating VR/AR technology and other innovations can further improve the guest experience and create unique selling points.
• Diversification of Revenue Streams: Expanding beyond ticket sales to increase reliance on non-ticketing revenue streams.
• Consolidation: The ongoing consolidation within the industry presents opportunities for acquiring smaller players and further expanding the market footprint.

In summary: Imagicaaworld’s management recognizes the growth potential in India’s themed entertainment market but is acutely aware of the inherent challenges, especially related to seasonality, competition, and economic conditions. Their strategies focus on expanding their geographic reach, diversifying revenue streams, enhancing guest experience, and optimizing operational efficiency to achieve sustainable growth and profitability. The success of their ambitious expansion plans hinges on successfully mitigating the identified risks and effectively leveraging the emerging opportunities within the industry.

ESG Ratings #

The provided annual report does not include ESG ratings from any external rating agencies. While the report details various ESG initiatives undertaken by the company, it does not provide any scores or rankings from recognized ESG rating providers (such as MSCI, Sustainalytics, Refinitiv, etc.). To find ESG ratings for Imagicaaworld Entertainment Limited, you would need to consult those rating agencies directly or utilize financial databases that compile ESG scores.

ESG Initiatives #

Imagicaaworld’s annual report details many environmental, social, and governance (ESG) initiatives, but lacks specific, quantifiable sustainability goals and lacks detailed reporting on the carbon footprint. The report emphasizes qualitative aspects rather than quantitative metrics.

I. Environmental Initiatives:

• Renewable Energy: A significant focus is placed on transitioning to renewable energy sources to reduce reliance on fossil fuels. The company boasts achieving 64.84% of total power consumption through renewable energy (solar and wind) via open access in FY24, and the construction of an 8 MW captive solar power plant is underway.
• Water Conservation: Initiatives include rain harvesting and the implementation of sewage treatment plants (STPs) with MBR technology for water recycling in its Khopoli and Surat locations.
• Waste Management: Segregation of waste at the source (dry, wet, and horticulture waste) and partnering with certified vendors for efficient recycling and disposal. They also highlight repurposing wet waste for gardening.

II. Carbon Footprint:

The annual report does not provide a quantified carbon footprint for Imagicaaworld. While their environmental initiatives aim to reduce emissions, the report lacks specific data on greenhouse gas (GHG) emissions (Scope 1, 2, and 3) and their reduction targets.

III. Social Initiatives:

• Employee Well-being: The company highlights its commitment to employee well-being through various programs. This includes health insurance, safety training, skill development programs, and an emphasis on a safe and healthy work environment.
• Community Development: The report mentions support for local communities, such as distributing drinking water during shortages and assisting in the development of community services and local schools. However, concrete details on these initiatives, such as funding and impact are lacking.

IV. Governance Practices:

The report emphasizes compliance with applicable laws and regulations regarding corporate governance. Key governance practices highlighted include:

• Board Composition: A various board with a mix of executive, non-executive, and independent directors, including a woman director.
• Board Committees: Establishment of committees (Audit, Nomination & Remuneration, Stakeholders Relationship, Risk Management, and CSR) to ensure oversight and effective decision-making.
• Independent Director Meetings: Regular meetings of independent directors to ensure independent judgment and oversight.
• Vigil Mechanism: A whistleblower mechanism is in place to address ethical concerns and potential wrongdoing.
• Compliance: The report mentions compliance with various regulatory requirements and certifications (e.g., ISO certifications).

V. Sustainability Goals:

The annual report does not explicitly state quantifiable sustainability goals. While the company mentions its commitment to sustainability, the absence of specific, measurable, achievable, relevant, and time-bound (SMART) goals makes it difficult to assess their progress objectively.

Limitations:

The report presents a mostly qualitative description of ESG initiatives rather than a detailed and quantitative assessment. The lack of specific data on carbon footprint and the absence of defined sustainability goals make a thorough evaluation of Imagicaaworld’s sustainability performance challenging. More detailed reporting and the setting of clear, measurable targets are needed for greater transparency and accountability.

Additional Information #

Operational Metrics #

Based on the provided annual report:

• R&D Expenditure: The report states that, as this is a service industry, the expenditure is on service improvement and cost reduction, but no specific R&D expenditure figure is provided. The report explicitly states that “As this is a service industry, the expenditure is on service improvement and cost reduction, which is detailed in point 2 above.” However, point 2 only mentions efforts related to vendor database development and import substitution. No financial figures for these efforts are provided.

• Employee Count: As of March 31, 2024, the total number of permanent employees was 602. The report also mentions 519 other-than-permanent employees, for a total of 1121 employees and workers. The breakdown of permanent employees is 530 male and 72 female. The breakdown of other-than-permanent employees is 341 male and 178 female.

In short, while the employee count is clearly stated, no specific figure for R&D expenditure is provided in the annual report.

Key Events #

Several significant events shaped Imagicaaworld Entertainment Limited during FY2023-24:

• Successful Operational Recovery Post-COVID: FY2023-24 marked the first full year of unrestricted operations after the COVID-19 pandemic, showing a return to pre-pandemic levels of visitor attendance.
• Acquisition of Park Business Undertaking from Giriraj Enterprises: The company acquired four parks (two water parks, one amusement park, and a religious theme park) in Lonavala and Shirdi, Maharashtra, significantly expanding its portfolio and geographical footprint.
• Acquisition of Malpani Parks Indore Private Limited (MPIPL): Imagicaaworld acquired MPIPL, the owner of an under-construction water park in Indore, Madhya Pradesh, along with associated land parcels. This acquisition faced challenges related to land lease tenure and approvals, ultimately resulting in the acquisition of the entity rather than just the assets.
• Securing a Public-Private Partnership (PPP) Project in Ahmedabad: The company won a bid to develop a landmark entertainment hub at the Sabarmati Riverfront in Ahmedabad, Gujarat.
• Shareholder Approval for Fund-Raising: Shareholders approved a Qualified Institutional Placement (QIP) to raise up to ₹600 crore to finance expansion plans and acquisitions.
• Conversion of OCRPS to Equity Shares: The outstanding OCRPS (Optionally Convertible Redeemable Preference Shares) were converted into equity shares, significantly altering the company’s capital structure and shareholding pattern.
• Launch of New Rides and Attractions: The company launched six new slides at Imagicaa Water Park and a musical fountain show at the theme park to improve guest experience.
• Integration of all Parks: The integration of all parks operated by the Malpani Group into Imagicaaworld Entertainment Limited was a significant undertaking aimed at streamlining operations and improving efficiency.
• Changes in Board Composition: Mr. Rajesh Malpani’s role shifted from Executive Director to Non-Executive Director and Chairman; and Mr. Dhananjay Barve completed his tenure as an Independent Director. This reflects changes in the organizational structure and leadership.

These events highlight a period of significant growth and transformation for Imagicaaworld, characterized by expansion through acquisitions, strategic partnerships, and a focus on improving operational efficiency and enhancing guest experience. However, the success of these initiatives depends on successfully navigating operational and financial challenges, especially concerning regulatory approvals and integrating the newly acquired assets.

Audit Information #

I. Auditor’s Opinion:

The independent auditor, V. Sankar Aiyar & Co., issued an unmodified (clean) opinion on both the standalone and consolidated Ind AS financial statements of Imagicaaworld Entertainment Limited for the year ended March 31, 2024. This means the auditors found the financial statements to be presented fairly, in accordance with Indian Accounting Standards (Ind AS), and free from material misstatement.

II. Key Accounting Policies:

The annual report outlines many key accounting policies used in preparing the financial statements. These include:

• Basis of Preparation: The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) using the historical cost convention, except for certain financial instruments measured at fair value.
• Revenue Recognition: Revenue is recognized using the five-step model outlined in Ind AS 115, ‘Revenue from Contracts with Customers.’ Revenue recognition varies depending on the specific nature of each revenue stream (ticket sales, food and beverage, merchandise, hotel rooms, etc.).
• Property, Plant, and Equipment (PP&E): PP&E is stated at historical cost, net of accumulated depreciation and impairment losses, using the straight-line depreciation method over the estimated useful lives of the assets.
• Intangible Assets: These are carried at cost less accumulated amortization and impairment losses. Amortization is applied using the straight-line method over the estimated useful lives.
• Impairment of Assets: Both financial and non-financial assets are assessed for impairment at each reporting date. Impairment losses are recognized in the statement of profit and loss.
• Inventories: Valued at the lower of cost and net realizable value, using the weighted average cost method.
• Financial Instruments: Classified and measured according to Ind AS 109, ‘Financial Instruments,’ with different approaches for financial assets measured at fair value (through profit or loss and through other detailed income) and financial assets measured at amortized cost.
• Taxes on Income: Includes current tax and deferred tax, recognized in profit or loss, except for items recognized in other detailed income or directly in equity.
• Foreign Currency Transactions: Monetary items are translated at the year-end exchange rate, while non-monetary items are translated at the transaction date rate.
• Borrowing Costs: Borrowing costs directly attributable to the acquisition of qualifying assets are capitalized; other borrowing costs are expensed.
• Earnings Per Share (EPS): Both basic and diluted EPS are calculated in accordance with Ind AS 33, ‘Earnings Per Share’.
• Employee Benefits: Short-term and long-term employee benefits are recognized in accordance with Ind AS 19, ‘Employee Benefits’. This includes various components such as salaries, wages, compensated absences, defined contribution plans, and defined benefit plans (using the projected unit credit method).
• Cash Flow Statement: Prepared using the indirect method.
• Leases: The group applies Ind AS 116 ‘Leases’ using the modified retrospective approach.
• Exceptional Items: Certain items of income or expense that are unusual in size, nature, or incidence are disclosed separately as exceptional items.
• Current and Non-Current Classification: Assets and liabilities are classified as current or non-current based on their expected realization or settlement within twelve months of the reporting period.

These key accounting policies are essential for understanding how Imagicaaworld recognizes and measures its assets, liabilities, revenues, and expenses. The auditors’ clean opinion indicates that they found the application of these policies to be appropriate and consistent with Ind AS. However, the use of estimates and judgments in certain areas (like impairment testing and fair value measurements) introduces inherent uncertainties and potential variability in reported financial results.