Interesting aspect of the PRASADS IMAX Project

The roles of Government and business enterprise are normally quite different and well defined. The contemporary concept of Public Private Partnerships is bringing them together for directing their expertise in maximizing the wealth of the Nation. The partnership between Government of Andhra Pradesh and PRASADS has exactly achieved this desired goal.

Presentation of the first revenue share cheque of Rs. 94, 03,376/- by PRASADS, the private partner in the partnership, to the Government corroborates the spirit of this concept.

On this happy occasion it is apt to once again bring into the public domain the facts and figures concerning this successful partnership.

1. In the year 2000, the Government of Andhra Pradesh called for global expression of interest from interested bidders for setting up of an IMAX theatre and family entertainment centre in the Buddha Purnima Project Authority Area of Hyderabad under the private public partnership.

2. Out of the 15 Business houses across the globe, who have filed their expression of interest for the project, PRASADS Group was chosen after going through a rigorous selection process.

3. After the land was handed over for almost one and half years the project was not allowed to take off with public interest litigations. The PILs were finally disposed off in February 2002 and the project was made commercially operational in July 2003. This shows the commitment with which PRASADS Group took up this project.

4. The commitment and enthusiasm of PRASADS towards this project was so strong that they have bid for the project offering the Government a revenue share of 15% from the project compared to the nearest bid which has offered only 6.71% revenue share to the Government.

5. Government of A.P. has given 10,832 sq yds of vacant unutilized land valued in the year 2001 at Rs. 11.92 crores on a lease for a period of 33 years to PRASADS for the project.

6. PRASADS have built this project on the said land, investing Rs.65 crores.

7. The project was awarded on a Build - Own - Operate and Transfer basis for 33 years.

8. PRASADS is paying a lease rent of Rs. 6,03,450/- per month to the Government in the current year. This increases by 5% every year, at that rate it will be amazing to note that in the 33rd year of lease PRASADS will be paying a lease rent of Rs. 23,65,600/- per month to the Government.

9. Apart from the lease rent, PRASADS pay 15% revenue share to the Government, the revenue sharing partner of this project. Revenue share means a share on the turnover of the company notwithstanding whether the company earns any profits.

10. The Government gave a holiday for the revenue share from this project for first two years i.e. from 25th July 2003 to 24th July 2005.

11. For the 3rd and 4th years (25th July 2005 to 24th July 2007) Government allowed deferment of the revenue share and the differed amount is payable in 24 monthly installments from the 49th month onwards i.e. from 25th July 2007 onwards.

12. The revenue share accrued and payable to Government for the differed period of 3rd and 4th years is Rs. 9,36,62,320/-. It may be of great interest to the Government and the public at large to note that the floor revenue share fixed by Government at the time of calling bids for the project was Rs. 2.50 lakhs per month compared to the present monthly share of Rs.45 lakhs generated by the project for the month of August 2007, which is almost 1800% over the minimum expectation of the Government. This is the beauty of Public Private Partnership project. If the Private partner is committed and capable, the public exchequer gets the best advantage and Returns from the project.

13. The revenue share of 15% from this project, very certainly, is the highest that is being earned by the Public exchequer from any comparable tourism project. 14.

14. The first revenue share cheque of Rs.94,03,376/- being presented today consists of: * First monthly installment of the 3rd and 4th years differed revenue share 39,02,596. * Revenue share for the period 25th July 2007 to 31st August 2007 55,00,780

15. As against the notional value of the land given for the project by the Government on lease i.e. without parting with the title to the land, which was Rs. 11.92 crores, the Government has till date (i.e. in the 4 years) earned Rs. 12.97 crores comprising Rs. 3.05 crores in the form of land lease rentals and Rs.9.92 crores as revenue share. What a successful Project!!!

16. The project has generated direct employment for 400 people notwithstanding the indirect employment it has generated.

17. Approximately 40 million patrons have visited this facility in the last 4 years of operation resulting in considerable trade and commerce.

18. The project is generating handsome indirect revenues to the Government through taxes and license fees.

19. Another important feature of this partnership is that after the lease period of 33 years the structures of the project along with the land will revert to the State Government without any compensation payable to PRASADS.

20. Last but not the least, the present day concern of patrons - the safety and security is very extensively taken care of in the project. The building has implemented all the fire safety measures under the guidance of the Fire Department and placed closed circuit cameras across the building to cover every nook and corner of the building. I am sure all of you will recall based on the information recorded in these CC cameras Police were able to trace the person who left behind a bomb in the complex some time ago.

On this occasion we would like to touch upon certain problems faced by this project.

1. As a notified tourism project this project is eligible for Sales tax exemption for the first 5 years of its operation. But sadly it was not allowed and PRASADS has taken up this issue to the legal forum.

2. This project was exempted from entertainment tax for the first 5 years of its operation, again the same was denied on certain non-existent grounds for part of the period, which is contested by PRASADS.

3. One screen built in the project with the approval of the Government, was not allowed to operate on certain technical grounds for the last 3 and half years.