Devyani International Limited — Q2 FY26

Devyani International Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=0mmQy85bwv8 Published: 6 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Dyani Internationals earnings conference call. As a reminder, all participant lines will be in the 0:09 9 seconds listenon mode and there will be an opportunity to ask questions after the presentation concludes. 0:17 17 seconds Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. 0:25 25 seconds Please note that this conference is being recorded. I now hand the conference over to Mr. 0:30 30 seconds Anuk Pujari from CDR India. Thank you and over to you sir. 0:36 36 seconds Thank you. Good afternoon everyone and thank you for joining us on Dyani International's Q2 FI26 earnings conference call. We have with us Mr. 0:47 47 seconds Ravi Jaipurya non-executive chairman of the company, Mr. Raj Gandhi, non-executive director, Mr. Vira Jooshi, CEO and oldtime director and Mr. Mr. 0:57 57 seconds Manish Dawer, CFO and wholetime director of the company. 1:02 1 minute, 2 seconds We'll initiate the call with opening remarks from the chairman followed by key financial highlights from the CFO. 1:09 1 minute, 9 seconds Thereafter, we will have the forum open for a question and answer session. 1:14 1 minute, 14 seconds Before we begin, I would like to point out that some statements made in today's call may be forwardlooking in nature and a disclaimer to this effect has been 1:22 1 minute, 22 seconds included in the results presentation shared with you earlier. 1:26 1 minute, 26 seconds I would now request Mr. Aijay Purya to make his opening remarks. 1:35 1 minute, 35 seconds Good afternoon everyone and thank you for joining us today. I'm pleased to welcome you all to Dyani International's 1:43 1 minute, 43 seconds post result earnings conference call to discuss our performance for the second quarter of the fiscal year 2526. 1:53 1 minute, 53 seconds The second quarter of the current fiscal year saw perhaps the most important policy development for consumer and 2:01 2 minutes, 1 second retail industry. The GST council meeting formalized the trans transition towards GST2, 2:09 2 minutes, 9 seconds a historic move to simplify and harmonize the GST framework to a two-tier structure. 2:17 2 minutes, 17 seconds While it's still early to assess the results of this transition, the initial signs are encouraging and all of us have 2:26 2 minutes, 26 seconds been a significant upside in certain consumption categories like automobiles 2:32 2 minutes, 32 seconds and durables. The impact of the change has been very minimal on the QSR category and our business. We have 2:42 2 minutes, 42 seconds already passed on the benefits of reduced input costs to consumers. 2:47 2 minutes, 47 seconds Overall, GST2 is a welcome move to broaden the consumption story in India. 2:55 2 minutes, 55 seconds We continue to expand our store network with 30 new additionals KFC's and another three additionals Pizza Hut. 3:06 3 minutes, 6 seconds We also test launched T life by way of opening six news outlets during the quarter. The initial customer feedback 3:15 3 minutes, 15 seconds is positive and we plan to expand the brand after the test launch phase. 3:21 3 minutes, 21 seconds Our recent acquisition Byani by Kilo and Guila butter chicken continue to do well 3:29 3 minutes, 29 seconds and we have seen a strong momentum in the business post the sherup. The integration of Skyate with DI remains on 3:38 3 minutes, 38 seconds track as shared earlier. Our goal is to achieve brand contribution break even by March 2026 3:47 3 minutes, 47 seconds and we are pleased to report steady progress towards this milestone. 3:52 3 minutes, 52 seconds We remain confident of meeting this target. Being a festive quarter, our promotions targeted both the top topical 4:02 4 minutes, 2 seconds event Pujo and Onam specials as well as the core offerings. KFC saw pan India 4:09 4 minutes, 9 seconds launch of the Chennana Chhattpa burger attractively priced at rupees 69 and 4:17 4 minutes, 17 seconds compromising of protein rich vegetable 4:24 4 minutes, 24 seconds vegetarian patty. We've also started rolling out a new grilled chicken offering and new limited time offering 4:32 4 minutes, 32 seconds LTO's in the beverage and desserts category. 4:37 4 minutes, 37 seconds We launched ultimate cheese crust and flip the cheese in Pizza Hut across all 4:44 4 minutes, 44 seconds channels. Customer response has been enthusiastic and has encouraged us to 4:50 4 minutes, 50 seconds expand the offering of to combos and meal offers as well. 4:56 4 minutes, 56 seconds We saw both Shraa and Navatri fall in the same quarter impacting out of home 5:02 5 minutes, 2 seconds consumption. Further unseasonal rains especially in eastern part of the country during the crucial second half of September impacted our sales. 5:14 5 minutes, 14 seconds Despite external factors, our consolidated revenues grew to 1377 crores, a 13% yearon-year growth. 5:25 5 minutes, 25 seconds While the industry has navigated a challenging environment over the past few years, we have continued to 5:32 5 minutes, 32 seconds strengthen our fundamentals and adapt on to evolving consumer preference. The 5:40 5 minutes, 40 seconds resilience of our brands, disciplined, execution and ongoing operational improvements have enabled us to grow. 5:48 5 minutes, 48 seconds Despite these headwinds, India's consumption story continues to present significant opportunities for organized 5:57 5 minutes, 57 seconds players like us. With a strong fundament foundation and a diversified portfolio, 6:04 6 minutes, 4 seconds we are well positioned to capture these opportunities and deliver sustainable profitable growth in the years ahead. 6:13 6 minutes, 13 seconds With this I would like to conclude my address and now hand over to Manish for the financial highlights. Thank you very much. 6:24 6 minutes, 24 seconds Thank you Mr. Japurya. 6:26 6 minutes, 26 seconds Good evening everyone. A very warm welcome and thank you for your valuable time for attending DI's Q2 FI26 earnings conference call. Our 17th such call since our listing in August 21. 6:38 6 minutes, 38 seconds We ended September 2025 with a total store count of 2,184 stores comprising of 1100 KFC stores and 6:48 6 minutes, 48 seconds 630 Pizza Hut stores. As mentioned by the chairman earlier, we also opened six outlets of TIE during the quarter by way of test launch. 6:59 6 minutes, 59 seconds The consolidated operating revenue for Q2 FI26 including Skyate was rupes 1377 7:06 7 minutes, 6 seconds floors up 12.6% 6% Y on Y. Consolidated Q2 FI26 gross profit came in at rupes 7:12 7 minutes, 12 seconds 933 crores up 10.1% Y with margins at 67.8%. 7:20 7 minutes, 20 seconds Brand contribution margin was at 11.7% versus 13.6% last year. Excluding Skyate brand contribution would have been higher at 12.4%. 7:30 7 minutes, 30 seconds The organic dip is on account of decline in margins in the Indian operations slightly offset by steady performance in international business. Consolidated 7:38 7 minutes, 38 seconds operating IIDA on a pre-indust basis was rupees 93 crores with margins at 6.8% versus 8.1% in the previous quarter. 7:47 7 minutes, 47 seconds This quarter saw the full impact of consolidation of Skygate which adversely impacted the margins. As guided earlier, we are on track to achieve the break 7:55 7 minutes, 55 seconds even at brand contribution level for Skygate by the end of the current financial year. Excluding the Skygate impact, operating aida would have been higher at 7.6%. 8:07 8 minutes, 7 seconds Startup costs related to new franchise brands like Tife and uh New York fries and Sanu Kitchen have also impacted the margins to some extent. 8:17 8 minutes, 17 seconds Reported IIDA was rupes 194 crores with margins standing at 14.1%. 8:24 8 minutes, 24 seconds The Indian operations including Skygate grew 12.1% Yony to reach rupes 937 crores in revenues. Gross margin came in 8:32 8 minutes, 32 seconds at 69.7% a decline of 1.9% versus the previous year primarily on account of consolidation of Skyate and due to 8:41 8 minutes, 41 seconds investments to support transactions growth in the online business. X Skyate uh impact gross margins of Indian operations slightly improved on a sequential basis. 8:52 8 minutes, 52 seconds Lower gross margin increased aggregator and delivery expenses due to higher salency of off-promise sale in KFC led to overall lower brand contribution in 9:00 9 minutes India. Moving the discussion to our brands, KFC in India added 30 net new stores in quarter 2 FI26. 9:07 9 minutes, 7 seconds With this, the total store count for KFC in India stands at 734 stores as of 30th September and we are on track to open 9:14 9 minutes, 14 seconds approximately 100 to 110 new stores of KFC this year. Average daily sales for quarter 2 FI26 at 89,000 reflects 9:22 9 minutes, 22 seconds seasonal variance. Revenues came in at 572 crores up 5.3% Y on Y. Gross margin was at 68.1%. 9:32 9 minutes, 32 seconds The brand contribution margin came in at 14.1%. For quarter2 FI26 due to lower gross profit margin, higher delivery and 9:39 9 minutes, 39 seconds aggregator cost and de leverage on account of lower ads. 9:44 9 minutes, 44 seconds We opened three net new stores in Pizza Hut in quarter 2 FI26 ending with 621 stores in India. Pizza Hut India revenue for the quarter was rupes 186 crores. 9:55 9 minutes, 55 seconds ADS at 33,000 remained flat on sequential basis with triple SG at minus 4%. Gross margin was also stable quarteron quarter at 74.8%. 10:06 10 minutes, 6 seconds Prudent cost control helped us in achieving near break even at the brand contribution level. 10:12 10 minutes, 12 seconds Franchise brands which includes Costa Coffee and the newer brands in India posted revenues of rupes 51 crores with 10:18 10 minutes, 18 seconds gross margins at 73 73.6% and brand contribution of rupes 5.4 crores. Brand contribution for the 10:26 10 minutes, 26 seconds division includes the startup cost associated with the new brands. 10:31 10 minutes, 31 seconds Own brands which includes Wango, Biryani Kilo and Goa chicken recorded rupes 86 crores in revenues including Skygate portfolio with gross margins at 62.6%. 10:43 10 minutes, 43 seconds Brand contribution margin came in at 6% again primarily on account of consolidation of Skyate. The dilution in 10:50 10 minutes, 50 seconds gross margin and brand brand contribution as I said uh is primarily owing to Skygate portfolio and as mentioned earlier we are on track to 10:59 10 minutes, 59 seconds achieve uh break even numbers by end of current financial year. Our international business continues to demonstrate resilience and strong 11:08 11 minutes, 8 seconds performance. Revenues reached at rupees 450 crores in quarter 2 FI26 up 14% yearonear with gross margins at 64% 11:17 11 minutes, 17 seconds brand contribution of rupees 75 crores representing 16.7% margins it's higher on a yi basis led by strong 11:26 11 minutes, 26 seconds performance in Thailand Mr. So Japurya spoke about the introduction of GST2. 11:31 11 minutes, 31 seconds While it is still early days, we are hopeful that the savings generated through GST deduction should boost consumption. Our initial estimates suggest that we may get some modest 11:39 11 minutes, 39 seconds benefits due to lower GST on slightly lower input costs. We have already passed on this benefit to the consumers through reduction in the prices of key 11:47 11 minutes, 47 seconds SKUs of our brands. I would also like to reiterate that output GST for us continues to remain at the same level and we are not allowed to take input uh 11:56 11 minutes, 56 seconds tax credit on our products. We remain focused and disciplined in our pursuit of sustainable and profitable growth leveraging our strong brands expanding 12:05 12 minutes, 5 seconds the portfolio and operational excellence to deliver consistent performance going forward. On that note, I would like to request the moderator to open the forum 12:13 12 minutes, 13 seconds for any questions or suggestions that you may have. Thank you very much. 12:19 12 minutes, 19 seconds Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchstone phone. 12:30 12 minutes, 30 seconds If you wish to remove yourself from the question queue, you may press star and then two. 12:36 12 minutes, 36 seconds Participants are requested to use handsets while asking a question. 12:41 12 minutes, 41 seconds Ladies and gentlemen, we will wait for a moment while the question queue assembles. 12:46 12 minutes, 46 seconds Our first question comes from the line of Dwanchu Bansil from MK Global. Please go ahead. 12:56 12 minutes, 56 seconds Yes sir. Hi uh thanks for the opportunity. Uh so you seemed uh to have optimized the promotions for TFC uh as 13:04 13 minutes, 4 seconds the gross margin drop has been relatively much lower in Q2 versus what we saw in Q1. uh so wanted to check uh 13:13 13 minutes, 13 seconds existed for uh this shift of Navaratri in Q2. Uh were the underlying SSD trends 13:19 13 minutes, 19 seconds for KFC uh comparable uh uh to what we saw in Q1? So that was the first question. 13:30 13 minutes, 30 seconds You want to complete your question or should I answer? 13:33 13 minutes, 33 seconds Yeah, please answer sir. So basic question is that promotion seem to have reduced because gross margin dip is 13:40 13 minutes, 40 seconds relatively lower. So I wanted to check whether the underlying SSD trends in Q2 adjusted for the Navlati share. Were 13:48 13 minutes, 48 seconds they broadly similar to what we saw in Q1 because uh uh despite a reduction in 13:56 13 minutes, 56 seconds promotion so that was the first show. So on a on a quarteronquarter basis we've seen slight improvement in the gross 14:04 14 minutes, 4 seconds margin of uh KFC versus versus let's say when you compare it to year-on-year basis and the reason uh we supported the 14:13 14 minutes, 13 seconds brand from a brand contribution point of view because uh as you know in the current uh quarter we had this peculiar situation whereby the Shraat and the 14:22 14 minutes, 22 seconds Navatras came in one quarter which was unlike the previous uh year and and therefore we saw a kind of prolonged drip in the triple 14:30 14 minutes, 30 seconds But um to your other question in terms of net off the impact on uh on the brand because of these two events it was 14:38 14 minutes, 38 seconds pretty much positive. However the other thing that you would like to note uh that Kolkata or east is uh is a big 14:46 14 minutes, 46 seconds region for us and during Pujo uh there were very strong rains in east which impacted the overall offtake. So that 14:54 14 minutes, 54 seconds was the other reason which kind of impacted the uh the overall KFC uh numbers. 15:00 15 minutes Fair enough. Fair enough. Uh secondly uh just a bookkeeping thing. Uh so basic calculation suggests that biryani by 15:09 15 minutes, 9 seconds kilo is at about 52 cr quarterly runway and about 3 three and a half cr of grand level loss. Uh so adjusting was that the 15:18 15 minutes, 18 seconds other uh businesses has seen a very strong uh growth right. So if the if my calculation is right so that 52 cr has 15:26 15 minutes, 26 seconds moved to 67. So wanted to understand as in uh which all portfolios are seeing a very strong traction here. 15:33 15 minutes, 33 seconds See overall uh the brands are doing fine as you said uh because we've given the numbers uh in some places without the 15:41 15 minutes, 41 seconds Skyate portfolio also uh we've consolidated Skyate fully uh during the quarter and Skyate uh as I mentioned 15:49 15 minutes, 49 seconds earlier was sitting at a double-digit uh brand contribution losses. uh we've started uh working on the same uh we are 15:57 15 minutes, 57 seconds hopeful that by end of this financial year at a brand contribution level Skyate uh we will achieve the uh break 16:04 16 minutes, 4 seconds even numbers and after that uh we are we are going to be working on improving the margins uh to to kind of come back to 16:12 16 minutes, 12 seconds our uh average portfolio margins which which might take a little time but we are very confident that we'll be able to achieve the break even uh uh brand 16:21 16 minutes, 21 seconds contribution numbers by March of uh 2026 At the same time, we've also tested uh 16:27 16 minutes, 27 seconds uh Biryani by Kilo brand uh at our Bombay airport and Pune airport locations. Uh the brand has seen good 16:34 16 minutes, 34 seconds traction and therefore we are actually planning to expand the brand into our food court locations to test the model in the food court so that we are able to 16:43 16 minutes, 43 seconds kind of work out a long-term uh strategy post our tests in various channels. 16:52 16 minutes, 52 seconds Yeah. So uh adjusted for BBK if if my calc firstly wanted to check if 16:59 16 minutes, 59 seconds the calculation was right 52 cr run rate and 3 to 4 cr of grand level loss 17:06 17 minutes, 6 seconds yeah your calculation is right broadly so if we address this then what is leading that 30 35% kind of a growth so 17:14 17 minutes, 14 seconds I wanted to understand that no what is leading means what 17:22 17 minutes, 22 seconds If we exclude biryani by kilo no are you talking about only the India portfolio? Yes. Yes. Only the uh own brand portfolio. 17:35 17 minutes, 35 seconds No, only the own brand portfolio inf your inference is not correct because own brand has Wango and and and biryani 17:42 17 minutes, 42 seconds by kilo and uh Wango is pretty steady uh some bit of I mean there's no exceptional movement in Wango but the 17:51 17 minutes, 51 seconds dip is on account of biryani by kilo. So maybe we can connect on an offline basis to go through the numbers that you're working on and then we can address your query. 17:59 17 minutes, 59 seconds Sure man. No sir. Yeah. And thanks for taking the question. 18:05 18 minutes, 5 seconds Thank you. Our next question comes from the line of Gorov Jani from JM Financial. Please go ahead. 18:12 18 minutes, 12 seconds Uh hi sir. Uh thank you for taking my question. Uh so my question is in regards to uh the young brand's global commentary on Pizza Hut franchise. Uh so 18:21 18 minutes, 21 seconds would you have any comments on that they are you know planning to rationalize and if they do what what kind of an impact can it have on us? 18:30 18 minutes, 30 seconds Uh Gorov there are two ways to look at this. Uh one is uh let let me first talk about where we stand uh versus the yum announcement. So as far as we are 18:38 18 minutes, 38 seconds concerned uh all of our agreements are well protected and in case of any such event uh there's no uh difference that 18:45 18 minutes, 45 seconds is going to u impact us as far as the India business or any of the other businesses where we have Pizza Hut. So 18:53 18 minutes, 53 seconds we are fully protected on the on the development agreements at the store level agreements that we've talked about in the past. So therefore that is not an 19:00 19 minutes issue. uh we feel um again let's say for example if you were to look at the media reports and all this actually might uh 19:08 19 minutes, 8 seconds bring focus uh on the Pizza Hut brand and therefore it could well be uh positive for us. So so that's how we are 19:16 19 minutes, 16 seconds reading and we are optimist optimistic about this whole uh uh change that Yum has announced. Uh but let's see it's too early to say because they right now they 19:25 19 minutes, 25 seconds have announced only their intention. So we've also read and we also know to whatever extent you guys know but uh at the least it will not impact us at all. 19:36 19 minutes, 36 seconds Okay. Uh sure. Thanks. I said just one clarification regarding KFC. Uh you know uh is the inference right that the promotional intensity has been lower on 19:44 19 minutes, 44 seconds a QQ basis and hence the the gross margin expansion what we have seen. 19:51 19 minutes, 51 seconds See the promotional intensity actually was higher compared to what we've seen because seasonally one it was a low quarter second we had uh Shrad and 20:00 20 minutes Navatra falling in the in the same quarter and hence we actually supported the brand um uh to that extra extent so 20:07 20 minutes, 7 seconds so therefore we've not reduced the promotional intensity that is not the case uh uh if at all I mean we are trying to kind of maintain the 20:14 20 minutes, 14 seconds transactions because typically in a in a quarter like this it has a a double whammy impact And therefore we never reduce the promotion intensity. 20:25 20 minutes, 25 seconds Sure. So so what you really led this QQ expansion in gross margin then uh see um because there have been some 20:33 20 minutes, 33 seconds changes in the u um in the input cost and all but that is small. At the same time we also looked at some efficient 20:41 20 minutes, 41 seconds efficiency in operation some tweak in the consumptions and so on and so forth. 20:46 20 minutes, 46 seconds So sure. So, so the the margins gross margins that we have done uh can believe that this is sustainable because even in the uh quarter where when you continue 20:54 20 minutes, 54 seconds to maintain promotions etc and still you are able to clock this gross margins. So should one assume that this should be sustainable and maybe improve going ahead. 21:03 21 minutes, 3 seconds So corab on a material cost basis and the efficiency basis obviously it is sustainable but again depending on the 21:12 21 minutes, 12 seconds promotional intensity depending on how much we are pushing on online versus offline to that extent the gross margins can vary 21:19 21 minutes, 19 seconds but otherwise purely on the other perspect no issues. 21:24 21 minutes, 24 seconds Sure. And so just lastly on KFC only I mean this quarter we have seen a very strong uh uh expansion on the storefront. So, so any guidance that you 21:33 21 minutes, 33 seconds can give on store expansion both on the KFC and the Pizza Hut? And that would be the last question from Gordon. We've talked about in the past 21:41 21 minutes, 41 seconds that KFC we are planning to open about uh 110 whatever 100 to 110 112 outlets 21:47 21 minutes, 47 seconds uh and we remain uh strong on our guidance. We will open those number of outlets and and you will see I mean 21:55 21 minutes, 55 seconds we've demonstrated in the current quarter we've opened about 30 KFC outlets. So we will be able to meet meet those numbers. 22:02 22 minutes, 2 seconds As far as Pad is concerned as I've mentioned on the call earlier, we u we optimized our commentary on the net new 22:10 22 minutes, 10 seconds units. Uh as I said we are kind of in negotiations with Yam on various other things. So that is still on uh and 22:17 22 minutes, 17 seconds therefore on pedhat also uh we are talking about muted uh net new units. 22:24 22 minutes, 24 seconds Okay. Okay sir. Thank you for coming. Okay. 22:29 22 minutes, 29 seconds Thank you. Our next question comes from the line of Jign Shu Gore from Bernstein. Please go ahead. 22:38 22 minutes, 38 seconds Uh hi Manish. Uh good afternoon. Uh thank you for the opportunity. Uh I just had one question on KFC. First a lot of 22:47 22 minutes, 47 seconds the new promos that we are seeing or the menu items that we are seeing uh they seem to be special initiatives for driving walk-ins. 22:56 22 minutes, 56 seconds uh because I I'm for example chana burger only a only a combination of two is available online not individual uh 23:05 23 minutes, 5 seconds right the masala rice I can't find even in Hyderabad etc uh versus a our dining 23:12 23 minutes, 12 seconds has uh reduced considerably right yi so how are you seeing uh your efforts in 23:19 23 minutes, 19 seconds driving demand like what is your primary focus is it either demand is it din demand um or or how how are you optimizing for that? 23:30 23 minutes, 30 seconds Jagantu see if you look at let's say the overall uh consumer trends uh they are kind of uh moving in favor 23:38 23 minutes, 38 seconds of uh home delivery right and there's a very strong traction behind delivery uh and hence we are putting in some extra 23:46 23 minutes, 46 seconds efforts to make sure that our dining also continues to be salent uh and as you know I mean dininin portfolio is is 23:52 23 minutes, 52 seconds a more profitable portfolio for us and and we are taking efforts so that we are able to attract consumers into the stores and and and and continue to uh make Dian a robust business. 24:06 24 minutes, 6 seconds But have you seen a trend there that your existing customers are more preferring delivery and only new 24:12 24 minutes, 12 seconds customers are are predominantly D in uh and how does that so are you swimming against the tide in a way by trying to 24:20 24 minutes, 20 seconds do that? uh uh so just just want to get a sense of whether you see this shift 24:27 24 minutes, 27 seconds towards delivery stabilizing at some point. 24:31 24 minutes, 31 seconds See you are able to see the shift um across all the companies right whether you look at e-commerce, quickcommerce, QSR I mean that shift is there everywhere. 24:39 24 minutes, 39 seconds Mhm. 24:40 24 minutes, 40 seconds At the same time for example in our portfolio we need to have the stores to be able to service the consumers. It's 24:47 24 minutes, 47 seconds not a situation like uh a Amazon or a Flipkart or quickcommerce that you can get into some um whatever dark 24:55 24 minutes, 55 seconds warehouses and start to service the consumer from there and hence we need to make the efforts to be able to kind of um have the salience on the dining 25:03 25 minutes, 3 seconds portfolio also because for example if you look at the large malls if you look at the prime retail locations uh the 25:11 25 minutes, 11 seconds retail uh and consumers walking in are are still a very very very good phenomenon. So therefore I mean just 25:19 25 minutes, 19 seconds because the consumption trend is moving that side does not mean that we should simply just give it away. 25:26 25 minutes, 26 seconds Fair. Okay. Uh I think that that was the only only question from me. Uh thank you and all the best. Sure. 25:35 25 minutes, 35 seconds Thank you. 25:37 25 minutes, 37 seconds Our next question comes from the line of Avi Ma from Mcquary Capital. Please go ahead. 25:43 25 minutes, 43 seconds Yeah. Hi team. Thanks a lot for this opportunity. Um I just wanted to check on you know the thoughts on stabilizing of discounting in the second half which 25:51 25 minutes, 51 seconds we were earlier thinking about any update on that and in that sense are we sorry for intervening I lost your 25:59 25 minutes, 59 seconds voice for a couple of seconds please repeat the question sure sure uh I wanted to just get your updated thoughts on you know the expectations that we would look to 26:07 26 minutes, 7 seconds stabilize discounting in second half any change in that thought and if yes uh and if no how do you see margin performance 26:15 26 minutes, 15 seconds across as we move into the second half across the formats. That's my first question. 26:20 26 minutes, 20 seconds See um as I said I mean um during the previous quarter u we had uh Shraan and 26:27 26 minutes, 27 seconds Navatraas falling in together which kind of impacts the non-vegetarian sales and we made extra efforts to kind of uh support the promotions and all. uh 26:36 26 minutes, 36 seconds obviously going forward we will try and optimize that a little bit uh because obvious obviously uh one quarter 3 is a 26:43 26 minutes, 43 seconds big quarter and then December is is an exceptional period uh so therefore uh let's see how it kind of shapes up uh 26:51 26 minutes, 51 seconds moving towards December and then we'll take that call but the idea is to kind of balance out the online promotions versus what we are offering in the in 27:00 27 minutes the uh in the offline channel to have a good balance uh in terms of the dining contribution ution as well as the margins. 27:08 27 minutes, 8 seconds Got it sir. And sir I joined I may have missed this. Just wanted to check if there's any quantum of the impact from the change in festive season timing and 27:17 27 minutes, 17 seconds uh your sense on how the demand environment is behaving so as to get a perspective of how do we look at future quarters. 27:26 27 minutes, 26 seconds A we demand environment in our view continues to be weak. Uh and therefore we've seen uh that whenever let's say we do some promotions or or promotion 27:35 27 minutes, 35 seconds intensity it kind of picks up very well and the moment you kind of withdraw that uh it falls back and therefore which 27:42 27 minutes, 42 seconds kind of signifies that the that the overall uh uh consumption side continues to be weak. Uh the the consumers are 27:51 27 minutes, 51 seconds becoming more and more value conscious um because we've seen the lower value items pick up very fast. uh so therefore 27:58 27 minutes, 58 seconds we are working on that innovation also you would have seen a promotion on the the whole epic promotion where we are kind of promoting uh uh the value layer 28:07 28 minutes, 7 seconds similarly the China burger launch also uh was catering to the same sentiment so so we are making those efforts trying to 28:15 28 minutes, 15 seconds balance out the margins and everything and uh and and that's how it is kind of panning out maybe if I can clarify just the question was that you know we saw 28:23 28 minutes, 23 seconds minus 4 in KFC but obviously some of impact is there from you reigns from the timing of the festive period. So your 28:31 28 minutes, 31 seconds best guess if we had to adjust for that would be what kind of same store sales growth for KFC in the last quarter. 28:39 28 minutes, 39 seconds See if I were to adjust for let's say because there was shavan there was Natra then there was Puja which got washed out 28:46 28 minutes, 46 seconds because of the rains. Now all of these things are very very difficult to pinpoint in terms of what is the exact impact. But let's say if I were to take 28:53 28 minutes, 53 seconds out that period then it's kind of uh a much better number versus what we reported. 29:00 29 minutes Uh so the so where I'm going with this is the underlying trends are more flattish or still mo or you know moderating. That's what I was trying to kind of appreciate more. That's still moderately negative. 29:10 29 minutes, 10 seconds Okay sir. Uh thank you. That's all from my side. Thanks sir. Okay. Okay. 29:17 29 minutes, 17 seconds Thank you. 29:19 29 minutes, 19 seconds Our next question comes from the line of Danjay Bagodia from Alchemy. Please go ahead. 29:26 29 minutes, 26 seconds Hi. Hi sir. Thank you for giving me the opportunity. Uh just wanted to ask you sir, how would we have looked at our market share data uh across the segment? 29:34 29 minutes, 34 seconds I know it's a little hard to uh quantify but how would you read it? 29:40 29 minutes, 40 seconds See there's no formal mechanism dan in this sector to report to kind of measure the market data. So we don't have uh 29:47 29 minutes, 47 seconds Neielsons of the world covering QSR category. 29:50 29 minutes, 50 seconds So so we can kind of uh and then there are these multiple categories within the QSR in terms of chicken in terms of um the the pizza and 30:00 30 minutes the and the coffee and the burger and so on and so forth. So, so therefore I mean while we estimate our numbers on the basis of some inputs from the online 30:09 30 minutes, 9 seconds channel, some uh inputs on the on the basis of our own market intelligence from our field teams and all but I would 30:16 30 minutes, 16 seconds not like to quote these numbers because they are not based on any authentic source. 30:22 30 minutes, 22 seconds Okay. Okay. So, so I'll tell you why I'm asking this. I just we just want to understand is is the see we understand there's a consumer slowdown but in that 30:31 30 minutes, 31 seconds there are obviously in some spaces we see like even alco beverages some companies are doing better than the other one uh in this unfortunately we 30:38 30 minutes, 38 seconds only have QSR who have the same u uh segments so we're just trying to understand could it be that uh these 30:46 30 minutes, 46 seconds pizza and chicken are facing issues but let's say healthy options are doing better is anything like that which we could quantify see there's no measure available that's 30:55 30 minutes, 55 seconds what I said the nobody's measuring this market on a formal basis and there are a lot of these local brands which are also there 31:04 31 minutes, 4 seconds so so it's it's kind of hard to estimate uh as we as we discuss okay and uh maybe this is miss but how 31:12 31 minutes, 12 seconds do we see now how are we seeing signs of demand picking up and uh how do we see in terms of us uh gaining market share 31:20 31 minutes, 20 seconds from whatever you are doing what are we doing to gain market share going ahead See in this category um it's all about 31:27 31 minutes, 27 seconds because for example let's say this is this is a category where you need to have a physical location to be able to 31:34 31 minutes, 34 seconds get the consumers either online or an offline basis. So this is not a distribution model that you can push into distribution and you can generate 31:42 31 minutes, 42 seconds the demand and hence your physical presence of the store or the kitchen to be able to service the consumer also is very important 31:50 31 minutes, 50 seconds and and hence the number of stores the penetration of those stores the location of those stores also matter a lot. So therefore you'll not be able to apply 31:58 31 minutes, 58 seconds the traditional FMCG principles to this one. Okay fine sure sir thank you. Yeah. Okay. 32:07 32 minutes, 7 seconds Thank you. Before we take the next question, a reminder to all the participants. You may press star and then one to ask a question. 32:16 32 minutes, 16 seconds Our next question comes from the line of Sorup Kundan from Goldman Sachs. Please go ahead. 32:23 32 minutes, 23 seconds Yes sir. Thank you very much for the opportunity. Just one question on the Thailand business seems to be growing at a decent pace. uh any guidance you could 32:33 32 minutes, 33 seconds give us on store editions there for the rest of the year and generally next year etc and uh overall for the international 32:41 32 minutes, 41 seconds business the margins that we see in the first half should those sustain going forward that's all 32:49 32 minutes, 49 seconds sort of uh on Thailand uh we had talked about opening about uh uh 2021 stores um 32:57 32 minutes, 57 seconds during this year uh as far as KFC FC is concerned. So we stay with the same numbers. There's no change. Uh and uh as 33:06 33 minutes, 6 seconds far as the future is concerned, uh we will be kind of optimizing these numbers a little bit because uh there is a ne 33:13 33 minutes, 13 seconds negative triple SC that we've seen in Thailand also while we continue to maintain the profitability. But uh there 33:21 33 minutes, 21 seconds are these early signs uh because Thailand as you know is is sitting at close to almost 1150 stores uh 1150 KFC 33:29 33 minutes, 29 seconds stores for a small country like Thailand and hence we are doing the entire market study to understand and we are working with Yum uh to see what is the potential 33:37 33 minutes, 37 seconds of the market and to ensure that we continue to maintain the growth uh through the store openings as well as triple STG. 33:46 33 minutes, 46 seconds Okay, thank you. Just one very quick question on the Skyate brands. Uh you will break even by the end of this 33:54 33 minutes, 54 seconds financial year. Uh um I wanted to ask on the product side or the process because 34:01 34 minutes, 1 second I recall biryani by kilo used to take a lot of time to prepare etc. Have you made changes to that or that you haven't touched that part of this? 34:12 34 minutes, 12 seconds So sort of as far as the regular uh channel is concerned, we've not touched that part part at all. Uh because it's a 34:19 34 minutes, 19 seconds it's a very strong brand uh and and therefore we've not tinkered with anything. However, when we launched uh the brand in the in the airports which 34:28 34 minutes, 28 seconds is Bombay and uh uh Punea airport, obviously the consumer is not going to be waiting at the airport with those kind of kitchen preparation times and 34:37 34 minutes, 37 seconds therefore we've optimized the entire uh uh preparation uh process to to to be able to give the faster delivery to 34:46 34 minutes, 46 seconds consumer and we will be applying the same process as far as our food quotes is also concerned but in the regular channels we are not touching uh the product at all as of now. 34:58 34 minutes, 58 seconds And even for example, all the tests that we've done, all the blind studies that we've done for the airport and uh and and food court perspective, uh obviously 35:08 35 minutes, 8 seconds the mode of packaging and mode of delivery to the consumer is different, but otherwise in terms of ingredients, it's the same. uh process is different 35:16 35 minutes, 16 seconds and therefore we kind of uh are able to achieve faster uh delivery times without compromising on the product quality or the taste or the flavors. 35:27 35 minutes, 27 seconds Great. Thank you very much. Okay. Thank you. 35:36 35 minutes, 36 seconds Our next question comes from the line of Ashish Canodia from City. Please go ahead. 35:41 35 minutes, 41 seconds Uh yeah, thank you Manise. So the first question is on on just on the demand side like uh I understand you know 2Q had multiple moving pieces but if you 35:50 35 minutes, 50 seconds look at October and just first few days of November at least on ground are you seeing any improvement uh in the demand trend or is it still muted in the last say 3540 days? 36:02 36 minutes, 2 seconds Uh Ashish obviously because I mean as you know I mean quarter 3 is a big quarter typically and that comes and that plays out in the month of December. 36:12 36 minutes, 12 seconds uh so so October is no different but we've seen some difference post the sherara uh let's see whether it it sustains the momentum or not but overall 36:19 36 minutes, 19 seconds let's say if you were to ask me what is the one word conclusion it remains muted uh sure the second part was on the 36:27 36 minutes, 27 seconds Thailand business uh I think you know while the SSG is negative we are seeing margin improvement there so from a free cash flow point of view how should we 36:35 36 minutes, 35 seconds think about uh uh the Thailand business because I think uh from next year maybe you will start optimizing the store expansion as So the capex intensity also 36:42 36 minutes, 42 seconds goes down. So when do you see uh you know Thailand uh generating free cash flow? 36:49 36 minutes, 49 seconds See on an operational basis obviously it'll be there but uh we do have some debt sitting in the uh in the balance sheet and therefore we need to repay 36:58 36 minutes, 58 seconds that debt uh which is sitting in the Thailand balance sheet. At the same time we've also tested T live in Thailand and we've opened about three stores. As I 37:06 37 minutes, 6 seconds said uh it's it's predominantly uh we are doing the test launch. let's see how the results are and and therefore that 37:13 37 minutes, 13 seconds uh if the results are good and we expand the IT live uh uh network there then that will kind of consume some bit of cash. 37:21 37 minutes, 21 seconds Uh sure man. And last one is uh you know like uh when you look at uh in India across the franchisee brands and your 37:29 37 minutes, 29 seconds own brands like broadly what kind of a store expansion you are looking uh in current financial year and maybe next financial year and broadly if you can 37:38 37 minutes, 38 seconds also help us with uh you know what kind of a capex we should assume just just for the franchisee and your own brands 37:44 37 minutes, 44 seconds uh because uh I mean uh the the challenge is you know some of them will be uh airport stores some someone of them could be delivery stores. So if you 37:52 37 minutes, 52 seconds can give us some sense on that overall between uh Ashish let's say franchise brands and own brands put 38:00 38 minutes together we are looking at about adding 100 odd stores uh which includes let's say as I said there could be some on a test phase basis biryani by kilo we'll 38:08 38 minutes, 8 seconds be expanding uh into the retail channel Wango we continue to expand and and the capex on those 100 stores will be small 38:17 38 minutes, 17 seconds it'll be at best whatever 5 to 7 8 crores not more than Uh when you say 100 stores, uh this is for current financing here. FI26. 38:26 38 minutes, 26 seconds Sorry. Sorry. 50 odd crores. My bad. Yeah. Uh but money is on the 100 stores. 38:35 38 minutes, 35 seconds Is it current financial year when you plan to add uh uh net new? Yeah. 100 net. Correct. 38:44 38 minutes, 44 seconds Sure. Sure. Got it. Uh thank you. All the best. Okay. Thank you. 38:51 38 minutes, 51 seconds Ladies and gentlemen, we will take that as the last question for today. I now hand the conference over to the management for closing comments. 39:00 39 minutes Uh thank you very much. We hope we have been able to answer all your questions. 39:05 39 minutes, 5 seconds Should you need any further clarifications or would like to know more about the company, please feel free to contact our investor relations team. 39:13 39 minutes, 13 seconds Thank you once again for your interest and support and for taking the time out to join us on this call. 39:20 39 minutes, 20 seconds Thank you. 39:23 39 minutes, 23 seconds Thank you ladies and gentlemen. That concludes this conference. Thank you for joining us and you may now disconnect your lines.