The update
Mr. Arun K Chittilappilly has decided to take a sabbatical and hence has resigned as the Managing Director of the Company. The Board has accepted his resignation. He will however remain as a non-executive director and a technical advisor. Mr. Kochouseph Chittilappilly, currently Non-Executive Director has been appointed as the Executive Vice Chairman. Mr. George Joseph, currently the Executive Vice Chairman will become the Joint Managing Director with the powers of the Managing Director.

Rationale given by Arun
During the investor conference call conducted on 10th July, Arun said he has had a hectic last 2-3 years at work. He is taking a 6-9 months break for going to Toronto where his son is enrolled in a 2-year school program. He doesn’t see the possibility of any operational issues in his absence given each park has an able team of professionals running day to day operations. The strategic direction is already set and execution would continue to be smooth. There are no major events like new ride addition or park opening lined up for the remainder of the year. His father Mr. Chittilappilly along with Mr. Joseph would take the leadership role. He would continue to be available as a non-executive director and technical advisor while monitoring operations remotely, if need be.

Our take
We feel there could be more to it than meets the eye. Given the remarkable background and professionalism of this business family, and considering the way announcement has come it doesn’t seem like a separation between the father and son. This could possibly be on account of something personal like a temporary health issue or a family issue.

While the business is inherently strong given fantastic economics and first mover advantage, Arun’s vision and able leadership has indeed played a crucial role in taking the company to this level. During the call Arun reassured investors multiple times that this is temporary and he will be back as MD by the end of this financial year. For now, we accept that on face value and hope to see him back soon.

Business Update
Q1FY19 footfalls have grown and management has maintained its initial guidance of double digit footfall growth in FY19.

Chennai park work is yet to start amidst levy of additional 10% tax by Tamil Nadu government over the 18% GST. Company has been meeting top ministry officials to get an exemption from this additional tax before starting the civil work. They expect a resolution within 3-6 months.

The current stock price seems reasonable considering the business quality, balance sheet strength and growth potential. We retain buy rating on Wonderla Holidays.

Source: https://www.bseindia.com/xml-data/corpfiling/AttachLive/f1aad3d0-623a-4009-8409-20e79578f90f.pdf