MUMBAI: In acquisition mode yet again, the Anil Dhirubhai Ambani Group
is now eyeing the Subhash Chandra-promoted Essel Group's amusement
park in Mumbai—popularly known as 'Essel World'.
ADAG insiders told ET that Reliance Entertainment was keen on the
property, considering its popularity and location. Essel World is one
of the first initiatives to set up an amusement part in Mumbai.
Essel World is touted as the first and largest amusement theme parks
in India with an area of 64 acres. The move is in sync with the
younger Ambani's entertainment blue-print of creating entertainment
zones across the country. According to sources, the deal is valued
anywhere between Rs 300 crore and Rs 400 crore.
When contacted, a Reliance ADAG spokesperson said, "We do not comment
on market speculation."
For the Essel Group, the decision to let go of the franchise stems
from the fact that the amusement park faces tough competition from
other recreational centres such as malls and multiplexes. While
margins in the business are high, the capital expenditure to run an
amusement park is also relatively high, as one has to re-invest at
least half of that money into the business year on year.
Also, with Mr Chandra's grand plan of setting up a 1000 acre
entertainment and tourism-related SEZ gone kaput, with objection from
the local inhabitants and political parties, the stand alone property
is not part of the company's larger entertainment vision.
Essel Propack vice-chairman Ashok Goel declined to comments.
In fact, in February this year, Mr Chandra stated that they were open
to withdraw from the project if the surrounding local community was
not convinced of the project. There has been no real movement on that
front. Leading the talks from the ADAG stable is Reliance
Entertainment president Rajesh Sawhney. The acquisition of Essel World
for Reliance Entertainment would translate into direct access to an
entertainment zone, which could be refurbished and created into a
larger brand, as opposed to hunting for land and developing an
amusement park from scratch.
Also, in the recent past, the Essel Group has not really focused on
the venture, and the returns from the amusement park has not been very
significant. An ADAG insider close to deal said, "Negotiations are on,
and now it is just a matter of valuation. If the economic value is
good, the Essel Group would think twice about selling the property."
In the recent past, the ADAG group have made significant moves in the
entertainment space. It recently struck a joint venture with the
London based Great Wheel Co-operation (GWC), the IPR holders of iconic
viewing and observation structures such as the London Eye and the
Singapore Flyer for India, to develop and operate great wheels and
observation platforms for 5 cities in the country. The total
investment cost of the project, excluding land was estimated to be $
500 million.
In fact, the first two cities where the project will take off will be
Mumbai and Delhi, The three other locations are yet to be finalised,
as the company is studying which locations would be most condusive to
tourists as well as land availability.
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