Devyani International Limited — Q3 FY26

Devyani International Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=C6aeFTA1iQY Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Divyani International Learnings Conference call. As a reminder, all participant lines will be 0:10 10 seconds in the listenonly mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:17 17 seconds Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this 0:25 25 seconds conference is being recorded. I now hand the conference over to Mr. Anuk Pujari from CDR India. Thank you and over to you sir. 0:35 35 seconds Thank you. Good afternoon everyone and thank you for joining us on Dani International's Q3 and 9M FI26 earnings conference call. We have with us Mr. 0:46 46 seconds Ravi Jaipurya non-executive chairman of the company. Mr. Raj Gandhi non-executive director, Mr. Virat Johi, CEO and wholetime director and Mr. 0:57 57 seconds Manish Dawer, CFO and wholetime director of the company. We'll initiate the call with opening remarks from the chairman 1:04 1 minute, 4 seconds followed by key financial highlights from the CFO. Thereafter, we will have the forum open for a question and answer 1:11 1 minute, 11 seconds session session. Before we begin, I would like to point out that some statements made in today's call may be forwardlooking in nature and a 1:20 1 minute, 20 seconds disclaimer to this effect has been included in the results presentation shared with you earlier. I would now request Mr. Ravi Jaya to make his opening remarks. 1:31 1 minute, 31 seconds Good afternoon everyone and thank you for joining us today. It's my pleasure to welcome you all to Dyani 1:39 1 minute, 39 seconds International's post results earnings conference call to discuss our performance for the third quarter 2526. 1:49 1 minute, 49 seconds We continue to invest in and steadily expand our core business in India. New 1:56 1 minute, 56 seconds store openings accelerated during the quarter with 54 net new KFC outlets and 2:03 2 minutes, 3 seconds 18 new net additional additions to Pizza Hut. With this, we 2:09 2 minutes, 9 seconds have not added any net new Pizza Hut stores on a cumulative basis during the calendar year 2025. 2:19 2 minutes, 19 seconds Within our brands portfolio, we have also added 17 new stores to Biryani by 2:25 2 minutes, 25 seconds Kilo and Wango. The international business added 20 new stores during the 2:32 2 minutes, 32 seconds quarter between Thailand and Nepal. All at the end of quarter 3, 2026. 2:39 2 minutes, 39 seconds The total store count for DIL stood at 2279 stores. We are happy to state that 2:47 2 minutes, 47 seconds we have achieved break even brand ibida results by biryani by kilo much ahead of 2:53 2 minutes, 53 seconds our target as guided earlier. In parallel, we are also bringing innovative new products to our 3:01 3 minutes, 1 second customers. We recently introduced the dunked range in KFC fried chicken coated in a bold and fairy barbecue sauce. 3:12 3 minutes, 12 seconds The product launch has been accomp accompanied by a promotional campaign focusing on the indulgence and craving 3:20 3 minutes, 20 seconds features a well-known comedian and actor which has been wellreceived. 3:26 3 minutes, 26 seconds We also have launched the crafted flats range of pizzas featuring a handstretch 3:33 3 minutes, 33 seconds crust open option with seven new flavorful toppings to choose from. It is 3:41 3 minutes, 41 seconds a great example of a global product launched that is being customized for regional preferences. 3:48 3 minutes, 48 seconds We have seen encouraging initial response from our patrons. 3:54 3 minutes, 54 seconds Our business continues to grow in a sustained manner. India operations grew 12.1% yearonear while consolidated 4:04 4 minutes, 4 seconds revenues reached 1,441 crores growing 11.3% year on year. 4:15 4 minutes, 15 seconds Our international business continues to gather strength from operations and profitability 4:23 4 minutes, 23 seconds perspective and same is reflected in the steady improvement in the results. 4:29 4 minutes, 29 seconds Earlier this year, we announced the proposed merger with Sapphire Foods, a transformative step that will create one 4:36 4 minutes, 36 seconds of the largest diversified FnB platforms in India. The combined entity will have 4:43 4 minutes, 43 seconds more than 3,000 stores globally and a turnover approaching USD $1 billion. 4:50 4 minutes, 50 seconds We are very excited regarding this new chapter in your company's growth phase. 4:58 4 minutes, 58 seconds We've also started the process of turnaround of the Pizza Hut business by shutting down shutting down loss making 5:05 5 minutes, 5 seconds stores. Our idea is to bring a sharper focus to this exercise and with this as 5:13 5 minutes, 13 seconds an objective we are not planning to add any net new units to our Pizza Hut portfolio. 5:20 5 minutes, 20 seconds We will open the new stores only to compensate for the closure of lossmaking stores. This will also help us to 5:30 5 minutes, 30 seconds utilize the existing [clears throat] assets and equipments in our new stores and bring down the capex for the new 5:37 5 minutes, 37 seconds openings as well. We have seen positive SSSG across all our brands in the month of 5:45 5 minutes, 45 seconds January except Pizza Hut where the losses are being contained. We are expecting that if this momentum 5:53 5 minutes, 53 seconds continues through the quarter, this will lay a strong foundation for future growth. On the macro front, we are 6:02 6 minutes, 2 seconds beginning to see some early signs of consumption coming back in a few sectors in the broader economy. Thanks to the 6:10 6 minutes, 10 seconds government support and fiscal measures, we have used the last few quarters to build a leaner and more resilient organization. 6:20 6 minutes, 20 seconds With the proposed merger underway, we are confident that we will emerge as a stronger and more agile business well 6:29 6 minutes, 29 seconds placed to accelerate growth by capitalizing on opportunities that are available. 6:36 6 minutes, 36 seconds DIL is at a critical infection point in this growth journey as we prepare to scale into a larger, more 6:45 6 minutes, 45 seconds diversified and more complex organization. 6:49 6 minutes, 49 seconds The board believes that this next phase requires a bold strategic vision backed by a strong execution [clears throat] capability. 7:01 7 minutes, 1 second Given the background, I would like to briefly touch upon the important leadership decisions the board at the 7:08 7 minutes, 8 seconds board meeting today. Vira has expressed his desire to superenuate from the company. The board has accepted his 7:17 7 minutes, 17 seconds restrict request effective March 31st, 2026 and has requested him to continue as a 7:26 7 minutes, 26 seconds non-executive director and provide his valuable insights on strategic matters as and when required. I would also like 7:35 7 minutes, 35 seconds to acknowledge Virg's invaluable contribution to DI's journey over the last more than two decades. We thank him 7:44 7 minutes, 44 seconds for his leadership and wish him all the best with all his future endeavors. 7:50 7 minutes, 50 seconds Manish Tower shall get elevated as president and CEO for DIL with effect from April 1st, 2026. 7:59 7 minutes, 59 seconds Manish joined us almost 5 years back as CFO for the company and has played a 8:05 8 minutes, 5 seconds very significant and pivotal role in shaping the company's growth trajectory. 8:12 8 minutes, 12 seconds including the success successful public listing. He has also led key strategic 8:20 8 minutes, 20 seconds initiatives including the acquisition of Thailand business, the acquisition and turnaround of Skygate hospitality brands 8:29 8 minutes, 29 seconds biryani by kilo and guila butter chicken and more recently the proposed merger 8:36 8 minutes, 36 seconds with sapphire foods. He has over three decades of leadership experience across very reputed and well-known global and 8:45 8 minutes, 45 seconds Indian entrepreneurs with leadership roles at Vodafone India 8:51 8 minutes, 51 seconds Vidanta Wreckit Benghazer Reebok having started this his career at 8:59 8 minutes, 59 seconds Hindustan Uni Liver he has wide experience across multiple industry domains and various geographies in the 9:07 9 minutes, 7 seconds world the board and I feel that he is well placed to take over the role of the 9:14 9 minutes, 14 seconds expanded DIL as president and CEO. I would also like to wish and his team the 9:21 9 minutes, 21 seconds very best to take DIL even to greater heights as we make progress with the merger. 9:29 9 minutes, 29 seconds I'm also pleased to inform you that Mr. 9:32 9 minutes, 32 seconds Anupam Kumar currently EVP finance will take over the role of CFO. Anupam has 9:40 9 minutes, 40 seconds over two decades of experience before joining AJ Corp with Vanta Walker 9:46 9 minutes, 46 seconds Chandoke and Co. LLP. This will add depth and continuity 9:53 9 minutes, 53 seconds to the company's financial leadership and will make DIL ready for the post merger scenario. With this I would like 10:01 10 minutes, 1 second to conclude my address and now I hand over to Manish for the financial highlight. Thank you very much. 10:13 10 minutes, 13 seconds Thank you Mr. Japurya. Good evening everyone. A very warm welcome and thank you for your valuable time for attending DI's quarter 3 FI26 earnings conference 10:22 10 minutes, 22 seconds call. Our 18th such call since our listing in August 21. At the outset, I would like to thank the chairman and the 10:29 10 minutes, 29 seconds board for reposing the trust and confidence in me to lead DIL at such an exciting and transformative juncture. 10:36 10 minutes, 36 seconds With DI's deep operational capabilities, strong brands, expanding scale, and growing digital and technology backbone, we are uniquely positioned to build a 10:45 10 minutes, 45 seconds future ready QSF platform that delivers sustained and long-term value for our stakeholders. We will be announcing the 10:53 10 minutes, 53 seconds broader leadership team for DI in due course as we progress with the merger. 10:58 10 minutes, 58 seconds Coming back to the results, as of December 21st, 2025, our total network stood at 2279 stores comprising of 1174 11:08 11 minutes, 8 seconds KFC stores and 648 Pizza Hut stores. We also launched our first Sanu Kitchen outlet in Guro. Sanu Kitchen brand is 11:16 11 minutes, 16 seconds for Thai and Asian food lovers. The consolidated operating IIDA for Q3 FI26 was rupes 1 1441 crores up 11.3% Y on Y. 11:27 11 minutes, 27 seconds Consolidated Q3 FI26 gross profit came in at rupes 993 crores up 11.7% Y on Y with margins at 68.9%. 11:38 11 minutes, 38 seconds Reflecting an improvement of 20 basis points Y on Y. Excluding Skyate, the improvement is 70 basis points Y on Y 11:46 11 minutes, 46 seconds and 110 basis points versus quarter 2 FI26. 11:50 11 minutes, 50 seconds Consolidated brand contribution was higher at rupees 200 crores versus rupees 185 crores last year led by our 11:57 11 minutes, 57 seconds India and international operations. The brand contribution margin improved to 13.9% versus 11.7% in the previous 12:04 12 minutes, 4 seconds quarter. I'm happy to report that Skygate brands posted a break even brand a bit. This is ahead of our initial expectation and guidance given earlier. 12:15 12 minutes, 15 seconds Consolidated operating a bit on a pre-indust basis was rupees 124 crores with margins at 8.6% versus 6.8% in the 12:23 12 minutes, 23 seconds previous quarter. Reported aida was rupees 227 crores with margins at 15.7%. 12:30 12 minutes, 30 seconds Indian operations grew 12.1% yon to reach rupes 978 crores in revenues. 12:36 12 minutes, 36 seconds Gross margin came in at 71% virtually flattish on Y-on Y basis. Excluding Skyade, the GM improvement stands at 60 basis points versus the previous year. 12:47 12 minutes, 47 seconds KFC in India added 54 net new stores in quarter 3 FI26, taking the total store count for KFC in India to 788 stores as 12:55 12 minutes, 55 seconds of 31st December. Average daily sales for quarter 3 FI26 was stable sequentially at 90,000 rupees. Revenues 13:03 13 minutes, 3 seconds at rupees says 603 crores were up 5.9% Y on Y. Gross margin at 69.8% showed 1.2% 13:10 13 minutes, 10 seconds improvement compared to the same quarter last year. The improvement in gross margin was offset on account of de leverage delever impact because of lower ads and higher deliveries revenues. 13:21 13 minutes, 21 seconds Brand contribution margin was rupees 101 crores with margins at 16.8% 40 basis points lower versus the previous year. 13:30 13 minutes, 30 seconds We opened 18 net new Pizza Hut stores in quarter in quarter 3 FI26 ending with 639 stores in India. Pizza Hut India 13:38 13 minutes, 38 seconds revenue for the quarter was 178 crores with ads at 31,000 rupees. Gross margin was at 76% and improvement of 1.2% from 13:47 13 minutes, 47 seconds the preceding quarter. Despite deliver on lower sales, we managed to effectively control costs and delivered positive brand contribution of rupees 13:55 13 minutes, 55 seconds 1.4 crores and margins at8% for the quarter. improvement of 1% from the previous quarter. We also started to 14:03 14 minutes, 3 seconds shut the lossmaking stores. We have taken steps to turn around the Pizza Hut business. We will start to shut down the lossmaking stores in the Pizza Hut 14:10 14 minutes, 10 seconds portfolio and our plan is not to add any net new units in the brand for 2026. 14:16 14 minutes, 16 seconds However, we will ensure that the overall store count remains broadly in line with December 25 numbers. 14:22 14 minutes, 22 seconds Franchise brands which include Costa Coffee and the newer brands in India posted revenues of rupees 56 crores with Yon stable gross margins at 75.7%. 14:31 14 minutes, 31 seconds And brand contribution of rupes 8.8 crores with margins at 15.7%. 14:36 14 minutes, 36 seconds Improvement of 5.2% versus the preceding quarter. Our own brands portfolio which includes Wango, Biryani Kilo and Goya 14:45 14 minutes, 45 seconds Butter Chicken recorded a healthy growth with rupes 94 crores in revenues and gross margins at 64.2%. 14:51 14 minutes, 51 seconds Brand contribution margin came in at 9% reflecting the turnaround in profit in the profitability of Skygate portfolio. 14:58 14 minutes, 58 seconds We achieved break even brand beta for Skyate in the month of December. 15:03 15 minutes, 3 seconds The Skyate portfolio continues to perform in line with our expectations with the growth momentum carrying through quarter 3. With margins 15:11 15 minutes, 11 seconds improving and the integration nearly completed, we have started to scale up the brand in a measured manner. This quarter we added 13 net new stores under 15:19 15 minutes, 19 seconds the Skygate portfolio in DI's existing food court locations. 15:24 15 minutes, 24 seconds Happy to report that Wango has crossed a count of 100 stores in this quarter. The revenues for the quarter came in at rupees 20 crores and the brand continues 15:31 15 minutes, 31 seconds to maintain its healthy gross margins and the brand contribution. 15:35 15 minutes, 35 seconds Our international business continues to demonstrate resilience and strong performance. Revenues reached rupees 473 15:42 15 minutes, 42 seconds crores in quarter 3 FI26 up 10.1% YNY with improved gross margins at 64.9%. 15:50 15 minutes, 50 seconds Brand contribution of rupees 81 cr representing 17.1 margins is higher on Yon basis. Let me also take this 15:58 15 minutes, 58 seconds opportunity to briefly update you on the merger process. We have already submitted our applications for exchange approvals and we'll also be shortly filing the application for CCI approval. 16:08 16 minutes, 8 seconds At this point, we do not anticipate any material deviation in the merger timeline that we've outlined earlier. 16:14 16 minutes, 14 seconds While we continue to execute towards building a geographically diverse multi-dimensional FNB platform, Yum Brands i.e. KFC and Pizza Hut and India 16:23 16 minutes, 23 seconds business will continue to anchor our business. The proposed merger will further help us build a strong growth foundation in India. And the estimated 16:31 16 minutes, 31 seconds annual merger synergies of approximately rupees 210 to rupees 225 crores will allow us a greater headroom to invest in 16:39 16 minutes, 39 seconds India and grow the business. In our view, QSR remains one of the most promising segments in the consumption category and we believe we have the 16:47 16 minutes, 47 seconds brands and the management capability to build a marketleading business. On that note, I would like to request the moderator to open the forum for any 16:56 16 minutes, 56 seconds questions or suggestions that you may have. Thank you very much. 17:00 17 minutes Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone 17:09 17 minutes, 9 seconds telephone. If you wish to remove yourself from the question, you may press star and participants are requested to please use handsets while 17:17 17 minutes, 17 seconds asking a question. Ladies and gentlemen, we will now wait for a moment while the question assembles. 17:28 17 minutes, 28 seconds Our first question comes from the line of Dwanchal from MBA Global. Please go ahead. 17:35 17 minutes, 35 seconds Hi uh thanks for the opportunity and uh congratulations on a good operation performance. uh at the onset V kudos to 17:44 17 minutes, 44 seconds your long career at Vani and uh execution discipline with healthy operational company your voice is not very clear. 17:55 17 minutes, 55 seconds Hi Dwanchu. Yeah. Is it better now? Hello. No. Yes. Better now. Better. Yeah. Exactly. 18:04 18 minutes, 4 seconds Yeah. Is it better now? Yep. 18:08 18 minutes, 8 seconds Yeah. Yeah, I was saying Virat kudos to your career and uh execution on uh healthy operational savings uh despite a 18:15 18 minutes, 15 seconds prolonged macro weakness and Manish congratulations and uh all the best for your new role uh as CEO of the merged 18:23 18 minutes, 23 seconds entity. Uh just Manish starting off still there is some time for the CEO hat 18:30 18 minutes, 30 seconds but uh you have been in the system for quite some time. uh checking if you would like to share some initial thoughts on your key focus areas for 18:38 18 minutes, 38 seconds ramping up uh the next phase of uh the growth journey for DAN. 18:44 18 minutes, 44 seconds So I think Dwanchu obviously it is too early to kind of uh comment on this piece uh and uh as you said I have been in the in the system long enough and 18:53 18 minutes, 53 seconds therefore we all know uh and this is not hidden our biggest priority will be to turn around uh the triple SC and ADS 19:00 19 minutes numbers and uh this can only happen with multiple measures and obviously we have to bring a a completely enabling 19:07 19 minutes, 7 seconds environment so that we are able to take these actions forward. So, so we will come back to you in due course of time in terms of uh what the new leadership 19:16 19 minutes, 16 seconds team will be, what will be our strategy and so on and so forth. Uh but uh otherwise uh the operational priority uh 19:24 19 minutes, 24 seconds remains very very important. Uh we have to be ready uh with the leadership team uh before we get into a merger 19:33 19 minutes, 33 seconds consummation scenario. uh we need to have a strong technology focus uh because we all recognize that Dyani is 19:40 19 minutes, 40 seconds lagging behind on technology versus some of the other peer group. Uh so these are the top priorities that I would say uh 19:47 19 minutes, 47 seconds but uh but we will come back to you uh as and when things evolve. 19:52 19 minutes, 52 seconds No fair enough Manish looking forward to uh uh the updated uh strategy. Uh the second question uh obviously the 20:00 20 minutes commentary mentions that uh most formats have seen positive SSD in Jan 26. Uh I wanted to understand the key initiatives 20:09 20 minutes, 9 seconds uh which have led to this improvement uh just to better gauge uh the sustainability of this uh SSG turnaround. 20:18 20 minutes, 18 seconds We experimented uh Dewanchu with some ideas uh on the promotions on the deals. 20:24 20 minutes, 24 seconds uh we've changed little bit of our strategy in terms of how we deal with the online business and offline business. uh so that has really kind of 20:32 20 minutes, 32 seconds helped us uh with the January triple SG numbers. Uh as Mr. Japurya said that Pizza Hut is uh still to be kind of uh 20:40 20 minutes, 40 seconds done but again uh this is just one month in a quarter. Uh we've just uh we have started doing experiments. We are seeing 20:48 20 minutes, 48 seconds the results. uh as I said in terms of what the sustainable strategy will be we will come back to you in due course of time. 20:56 20 minutes, 56 seconds Sure. Just a small followup here. Uh so how do we see your uh improved gross margin profile whether we have invested 21:03 21 minutes, 3 seconds back some of uh the savings at the gross level to revive this SSG or uh the JAN 21:10 21 minutes, 10 seconds trends are mostly with the 70% SSG that we have reported in KFC? 21:16 21 minutes, 16 seconds They want you broadly we will be able to maintain the gross margins profile. I mean it could be uh here and there by by by whatever some some basis points but 21:24 21 minutes, 24 seconds largely the gross margin profile will be maintained. 21:28 21 minutes, 28 seconds Sure. Uh thanks for taking my questions manage. Sure. Thanks a lot Danchu. 21:35 21 minutes, 35 seconds Thank you. Our next question is from the line of Jay Dhi from Kota. 21:42 21 minutes, 42 seconds Before you go ahead sir, let me remind participants that they may press star and one to ask a question and to please limit your questions to one per 21:48 21 minutes, 48 seconds participant. You may rejoin the queue if you have follow-up questions. Jay Doshi, you may proceed with your question. 22:03 22 minutes, 3 seconds J we are not able to hear you. Uh okay. Is this better? Yeah, now we can hear you. 22:12 22 minutes, 12 seconds Okay. Uh yes. Uh I've got two questions. 22:15 22 minutes, 15 seconds First one is uh you know this IDA growth of or absolute iida pre-index of 124 cr 22:22 22 minutes, 22 seconds uh you know do you think that you know this is uh uh even in a weak environment uh similar uh iida margin or absolute 22:32 22 minutes, 32 seconds iida adjusted for seasonality you should be comfortable maintaining and should we expect improvement uh over the course of 22:39 22 minutes, 39 seconds coming quarters from this level yeah J we feel so because uh as I've said in the past it was the negative 22:47 22 minutes, 47 seconds continuous negative triple which was kind of pulling us down and as you know in the previous quarter we started consolidating biryani by kilo and 22:55 22 minutes, 55 seconds biryani by kilo was a lossmaking portfolio and that's where the previous quarter numbers got impacted so we've managed to turn around biryani by kilo 23:03 23 minutes, 3 seconds to a break even level and therefore that has helped us our Nepal Nigeria operations have done exceedingly well uh 23:10 23 minutes, 10 seconds Thailand uh is very very stable if you look at the losses in triple G in the in the KFC business in India. They are 23:17 23 minutes, 17 seconds better than what we've seen in the past and therefore we are hopeful that we should be able to maintain the uh IIDA numbers. 23:25 23 minutes, 25 seconds Sure. Second question is on KSC you know for brand you know with such strong brand equity you know 10 odd quarters of 23:32 23 minutes, 32 seconds SSSG decline uh you know uh can you can you give us some indication of what could be the impact of cannibalization 23:41 23 minutes, 41 seconds on uh SSSG of KFC and is there any thought internally to perhaps slow down 23:48 23 minutes, 48 seconds store addition for KFC for a year or so and try and improve SSSG and uh you know profitability. 23:56 23 minutes, 56 seconds of that business. 23:58 23 minutes, 58 seconds J if you look at a store opening pace and I'm talking about here uh KFC as a 24:06 24 minutes, 6 seconds brand and not DI so much. Um if you look at let's say in the last 5 years we've gone to almost close to three to 24:14 24 minutes, 14 seconds four times uh of what the base store count used to be and obviously uh if you are opening stores at that pace uh there 24:22 24 minutes, 22 seconds will be some amount of cannibalization which will uh which will seep in. 24:27 24 minutes, 27 seconds I think what is required to be done on KFC is a very differentiated uh strategy uh from an online and offline 24:34 24 minutes, 34 seconds perspective. A very differentiated strategy from a uh from how we treat uh the brand innovation again from an 24:42 24 minutes, 42 seconds online and offline perspective and we've started uh discussing that internally. 24:47 24 minutes, 47 seconds We've started taking some steps and that's what uh Mr. Japuri alluded that we've seen positive triple seg uh in uh 24:55 24 minutes, 55 seconds in January month. So, so the idea is that uh we need to have uh the right steps and a strategic direction in terms 25:03 25 minutes, 3 seconds of how the food sector has evolved after the entry of uh online players like Zumato and Swiggy and that is what the 25:11 25 minutes, 11 seconds focus area is going to be because if you look at for example I mean I don't want to name the competition but the nearest 25:18 25 minutes, 18 seconds competitor in QSR is sitting at more than twice the store count that we have in KFC 25:25 25 minutes, 25 seconds and and Therefore, those results are fine and that is the inspiration for us uh to ensure that we continue to grow 25:33 25 minutes, 33 seconds KFC. Uh however, we have to sort things out in terms of uh um the strategy piece and uh and we will come back to you on those. 25:44 25 minutes, 44 seconds Understood. Final question is you know uh you had a certain uh incentives b uh you know linked to store openings per 25:53 25 minutes, 53 seconds year. Now in the new agreement that you know you may have signed with uh Yum uh do you still have you know a similar 26:01 26 minutes, 1 second level of commitment in terms of store additions for KFC or has it been relaxed in context of you know the weakness that 26:08 26 minutes, 8 seconds Indian market is seeing see J right now for example let's say uh during the merger discussions it was 26:16 26 minutes, 16 seconds more of what are the merger conditions and how will the merger take place and yum's approval and so on so forth. uh both the companies had independently 26:24 26 minutes, 24 seconds signed the development agreements. They will continue and obviously we will uh inherit uh whatever was signed by Sapphire. Having said that uh obviously 26:34 26 minutes, 34 seconds we will present the complete KFC strategy to the parent organization uh which is Yum Brands and we will have that discussion in terms of uh what is 26:42 26 minutes, 42 seconds right for the brand because for for Yum also India remains a top priority uh as far as growth is concerned and uh and 26:50 26 minutes, 50 seconds Pizza Hut as you know we've already mentioned that we've scaled back and even for 25 there was zero NN use 26 26:58 26 minutes, 58 seconds again there are going to be zero NN use uh So, so therefore Pizza Hut we've recognized that and and the focus is turnaround whereas KFC is seen as a 27:07 27 minutes, 7 seconds growth brand but nonetheless we take your uh point and and that is something which is kind of [clears throat] a pending discussion from our side with Yam. 27:17 27 minutes, 17 seconds Uh thank you so much and Manish wish you the very best for your new role. Thank you so much. 27:23 27 minutes, 23 seconds Thank you. Our next question comes from the line of pages Sha from Aventus Spark Institutional Equities. Please go ahead. 27:33 27 minutes, 33 seconds Hi, thanks for the opportunity and Manish, congrats on the promotion and best wishes for the new role. Uh uh 27:39 27 minutes, 39 seconds Manish uh you uh so you tried asking this but I'm also pushing my luck here. 27:44 27 minutes, 44 seconds So you have had a front seat grow to the prolonged struggle that we have seen uh in last uh many quarters and then you 27:52 27 minutes, 52 seconds have multiple uh unfinished projects on the table today. So uh what would you prioritize in the sense fixing or or 28:00 28 minutes ramping up uh KFC first or or fixing Pizza Hut as a model first and then you have a lot of longtail of other pri other other projects as well. So just 28:09 28 minutes, 9 seconds wanted to understand without um too much detail there. 28:14 28 minutes, 14 seconds So pages I think uh I've discussed uh this whole scenario multiple times with uh with with you guys. See, 28:23 28 minutes, 23 seconds traditionally we were operating like uh a multi-environment business. So there was yum, there was safier and there was 28:31 28 minutes, 31 seconds us. So any decision-m used to happen as a three-way approach by way of consensus. Uh whereas competition had 28:38 28 minutes, 38 seconds that advantage of uh of being very nimblefooted, faster decision-m investing in technology. In our case, it was a fractured environment from a 28:46 28 minutes, 46 seconds multiple perspective. And I think uh the biggest u strategic move that we have taken is to consolidate the two 28:53 28 minutes, 53 seconds companies and as we've discussed in the previous call that we will take over technology operations from Yum. We will take over supply chain management from 29:00 29 minutes Yum. Now all of these things will come back and help us. uh and therefore once we overlay that with the operations piece uh I think it's a great win-win 29:10 29 minutes, 10 seconds combination for us and that's the reason it was very important that we kind of sort out the larger structural issue uh which is where we were hugely hampered 29:18 29 minutes, 18 seconds and impacted by and that is what uh something that we've managed to do not uh yet in practice because we are undergoing the regulatory approvals 29:27 29 minutes, 27 seconds which will take some time and this is the time we'll utilize for for strategy building and in terms of uh what is that 29:34 29 minutes, 34 seconds we need to do on blast tax while let's say the merger process is is currently on in terms of approvals. 29:41 29 minutes, 41 seconds Perfect. Uh and second on this Jan uh January commentary that that we have put out uh apart from the SSG what are the 29:49 29 minutes, 49 seconds other optal indicators uh which are actually helping us to or guiding us to say that this this could be sustainable and not a false start that we have seen multiple times in last two three years. 30:01 30 minutes, 1 second See as I mentioned earlier I'm not saying that u and I'm just saying factually that January has been positive 30:09 30 minutes, 9 seconds and let's see uh it is just one month uh I don't want you guys to draw any conclusions basis that uh we need to 30:16 30 minutes, 16 seconds look at how the whole quarter goes we need to experiment with the initiatives we've taken in other geographies so it's uh it's early I agree with you but uh we 30:25 30 minutes, 25 seconds just wanted to indicate uh the factual situation yeah Thanks and all the best uh for the coming. 30:32 30 minutes, 32 seconds Sure. Thank you so much. 30:34 30 minutes, 34 seconds Thank you. Our next question comes from the line of Sakshia from Oldbridge Capital. Please go ahead. 30:42 30 minutes, 42 seconds Hi team, thank you for taking my question. Just one on pizza. So you indicated that uh we started to sort of 30:50 30 minutes, 50 seconds shut down the lost milk stores and that is being comp getting compensated at the new addition. Just wanted to get a sense 30:56 30 minutes, 56 seconds on um you know basically your initial lead through um how far do we have to go in terms of shutting these stores down 31:05 31 minutes, 5 seconds like how many stores if you can just give us an indication on how many stores such stores are there and what would be 31:12 31 minutes, 12 seconds your initial read through on what is not working for us in these stores because it's categorization or competition or something else that's the only question 31:21 31 minutes, 21 seconds I have see we'll have to handle um again Pizza Hut from multiple fronts. So uh one 31:30 31 minutes, 30 seconds important element is shutting the lossmaking stores. Uh the other important element is having technology for the brand which is where we have 31:37 31 minutes, 37 seconds been missing. We need to make sure that the marketing is much more effective. We need to make sure that the innovation pipeline is stronger and as I said that 31:46 31 minutes, 46 seconds I mean all of these u uh initiatives will uh transition from uh from Yum to us. Now that is that is going to take 31:54 31 minutes, 54 seconds about a year. In the meantime, we've started taking this initiative on on cleaning up the lossmaking stores. It'll take a couple of years to uh to to 32:03 32 minutes, 3 seconds finally sort it out, but uh we've we've absolutely started this exercise. And now once we have the CCI approval, 32:10 32 minutes, 10 seconds obviously between us and Safire, we are not in a position to talk to each other at this stage. But once we have the CCI approval, we we will sit jointly and 32:19 32 minutes, 19 seconds draw out a merged company strategy plan for Pizza Hut. Uh because that is where we need to kind of work together very 32:26 32 minutes, 26 seconds very intensively by the time uh the entire process uh gets finished. So we will come back to you on that piece uh once we have more details. Sure. 32:39 32 minutes, 39 seconds Thank you. 32:42 32 minutes, 42 seconds Thank you. The next question comes from the line of Percy from IFL. Please go ahead. 32:48 32 minutes, 48 seconds Uh hi Manish. Uh just one very basic question I wanted to ask you. Uh and this is ignoring any uh merger synergies that you might get a year or two later. 32:59 32 minutes, 59 seconds But uh like for FI27 uh what is the minimum SSSG that you 33:06 33 minutes, 6 seconds need to deliver so that you can have a pre-Indius AIDA margin expansion on a YI basis 33:15 33 minutes, 15 seconds see we will not be able to give you the guidance on FI27 um per C but if you look at let's say the way we performed 33:23 33 minutes, 23 seconds um and let me just give you the recent quarter example by just kind of stating the factual number. So if you look at 33:30 33 minutes, 30 seconds KFC business, the ADS uh in the current quarter was 90,000. 33:36 33 minutes, 36 seconds Previous quarter was 89,000 virtually flat. If you look at the triple SG, uh it was negative. And despite all of 33:43 33 minutes, 43 seconds that, if you look at the brand contribution, we've managed to improve the brand contribution by more than 200 basis points. 33:51 33 minutes, 51 seconds So that is what I have mentioned. 33:55 33 minutes, 55 seconds Sorry, what has really gone into that? How has that 200 basis points be driven? 34:01 34 minutes, 1 second See, this is what I said. I mean, we've experimented with multiple things in terms of online, offline, how to kind of segregate the deals, how to do the mix 34:09 34 minutes, 9 seconds and so, so therefore, I mean, so those experiments are in progress, but we are seeing the results. So the point is that 34:16 34 minutes, 16 seconds and this is what I mentioned in the past that we do have levers to optimize the IIDA. I'm not saying that triple SG is 34:23 34 minutes, 23 seconds not important. it it is a very very important uh KPI and we are absolutely not running away from that but we do have other levers uh which is what I 34:32 34 minutes, 32 seconds have mentioned in the past so for example if you remember um in our meeting I had said that uh the gross the the brand contribution margins that KFC 34:40 34 minutes, 40 seconds used to deliver at 125,000 ads in the current scenario we are very confident that we'll be able to deliver those kind 34:47 34 minutes, 47 seconds of brand contribution margins at about 105 110,000 kind of ads numbers So, so therefore I mean we've made 34:55 34 minutes, 55 seconds progress on various initiatives uh and and it is getting reflected in the numbers. 35:01 35 minutes, 1 second Understood. But is there any more juice in the lemon here? What I'm trying to figure out is whatever costsaving 35:08 35 minutes, 8 seconds initiative you have done till now that's already there in your margins for this quarter. Now if I have to look ahead and I'm not asking for a guidance on FI27. 35:19 35 minutes, 19 seconds I'm just looking for a algorithm as to how to uh uh model your business that uh 35:26 35 minutes, 26 seconds uh let's say if there is a zero SSG is there any way you can still improve margins uh beyond what you have already 35:33 35 minutes, 33 seconds done or now the margin improvement is going to be more a function of the operating leverage which would typically 35:41 35 minutes, 41 seconds cases come only when the SSG goes beyond a 3 to 4% kind of a level per CC I mean using your phrase I mean 35:49 35 minutes, 49 seconds of course there is juice there is still juice there in the lemon so because see as I've said the businesses are ever evolving we learn from uh what is 35:59 35 minutes, 59 seconds happening in the environment we learn from what is happening in the competition we learn from what we have done in the past so therefore it's a ever evolving situation so I would not 36:07 36 minutes, 7 seconds kind of call ever that I mean there's nothing more that we can do that's how we look at the business and that is how the group has always been so so 36:16 36 minutes, 16 seconds therefore I mean we always look at the initiatives and uh and now with merger happening uh obviously we will have the 36:24 36 minutes, 24 seconds synergies also coming in. We will have the technology piece kind of coming coming in our hands which will give us 36:31 36 minutes, 31 seconds the leverage in terms of pricing how to structure the pricing um in terms of speed of moving with the innovation and 36:38 36 minutes, 38 seconds uh and various other initiatives. So I would say there are initiatives available but at the same time remember that it's a very complex business. It's 36:46 36 minutes, 46 seconds a very decentralized retail environment and uh and and that is where we continuously seek uh as to what the opportunities are sitting in which part 36:54 36 minutes, 54 seconds of the business and we continue to optimize. 36:58 36 minutes, 58 seconds Understood. Understood. Uh secondly, if I might ask to interrupt I request you to please rejoin the queue if you have 37:04 37 minutes, 4 seconds any further questions. Thank you. Our next question comes from the line of Avi Meta from McQuary. Please go ahead. 37:13 37 minutes, 13 seconds Hi Manish. uh congratulations on the elevation. Uh I wanted to just check with you on two things. one uh wanted to 37:21 37 minutes, 21 seconds understand if this positive same store sales growth that we saw in JAN is this uh something that was uh specifically 37:29 37 minutes, 29 seconds seen only in our formats or you could comment whether you've seen it across other peers and whether you have seen any change in the discounting intensity 37:37 37 minutes, 37 seconds space uh in the last few months and the second question that I had was a bookkeeping one my understanding is 37:44 37 minutes, 44 seconds there has been an increase in India overheads if you could confirm if that understanding is correct and what led to it. Those are the two things. Thank you. 37:56 37 minutes, 56 seconds So um a uh to answer your first question first obviously I will not be able to comment on the peer group uh because we 38:04 38 minutes, 4 seconds do not have the visibility on the on the peer group but January January numbers that we've seen I'm we are only talking about our scenario. Uh so that is one. 38:13 38 minutes, 13 seconds Uh second coming to the India overheads uh as I've said in the past uh please take 5% as normally the corporate GNA uh 38:21 38 minutes, 21 seconds in terms of uh the broad guidance uh as far as our company's concerned but this particular quarter as you know u there 38:29 38 minutes, 29 seconds has been an implementation of the labor code uh and that kind of uh impacts the overall numbers and uh there are some 38:36 38 minutes, 36 seconds numbers which have got impacted above IDA there are some below in terms of what the accounting standards are uh but otherwise the the GNA remains more or 38:45 38 minutes, 45 seconds less as guided earlier and there's no significant deviation or variation on that. 38:51 38 minutes, 51 seconds So so just to confirm this number the what's the amount that I should kind of remove to get a more stable state run rate in the India overhead. 39:00 39 minutes So that's what I that's what I said for let's say for 26 27 you can take a 5% uh GNA. 39:09 39 minutes, 9 seconds Okay. Thank you. Thank you. Thank you. Yeah. Thanks. Thanks so much. 39:15 39 minutes, 15 seconds Thank you. Our next question is from the line of Gorov Jagani from JM Financial. Please go ahead. 39:22 39 minutes, 22 seconds Uh thank you uh and congratulations to you Manish for the ediation. Uh my first question is with regards to you know the 39:30 39 minutes, 30 seconds international piece of the business. I mean while you know the India piece has grown at a decent pace there is some uh sorry to interrupt Gorov but your line is not very clear. 39:39 39 minutes, 39 seconds Uh am I audible now? This is this is a little better. Please go ahead. 39:44 39 minutes, 44 seconds Yeah. Uh so first of all I would like to congratulate Manish on his uh for the post of CEO. Uh my question 39:52 39 minutes, 52 seconds to Manish is regarding the international piece of the business. Uh where you know the growth has been I would say a bit muted despite you know Nigeria and Nepal 40:01 40 minutes, 1 second doing better. So uh is there some impact of the growth in the Thailand piece of the business because typically is a good season business for them. 40:12 40 minutes, 12 seconds So um Thailand if you remember uh uh Gorov I mean uh the April May June quarter is the is is one of the best 40:20 40 minutes, 20 seconds quarters u Nepal Nigeria while we've seen great uh growth but as a constituent of the overall business is small 40:29 40 minutes, 29 seconds and uh and and that is where uh but and we've seen some negative triple SG in our Thailand business as well uh and 40:36 40 minutes, 36 seconds Thailand again in January has done better versus uh what we saw in the previous quarter. 40:43 40 minutes, 43 seconds But if you look at let's say from a gross margin perspective on the international side uh the margins have improved by 90 basis points. If you look 40:50 40 minutes, 50 seconds at the brand contribution uh the brand the overall business has improved by 40 basis points versus previous quarter and 40:59 40 minutes, 59 seconds almost uh 50 basis points versus the year ago. So I think we are on the right uh track as far as the international business is also concerned. 41:08 41 minutes, 8 seconds Sure. And just on the corporate overhead bit only uh we know the corporate overheads for the international business also seems to have increased. So is 41:15 41 minutes, 15 seconds there some currency related impact in that because it see 41:25 41 minutes, 25 seconds related piece gor but otherwise underlying uh we know that uh the corporate overheads for international have remained in line. 41:33 41 minutes, 33 seconds Yeah, QQ it is in I would say that. Uh just the Y. 41:39 41 minutes, 39 seconds Sure. Let me let me just check that out and come back to you. Sure. Uh thank you. 41:48 41 minutes, 48 seconds Thank you. 41:50 41 minutes, 50 seconds Our next question comes from the line of Amit Sacha from UBS. Please go ahead. 41:56 41 minutes, 56 seconds Uh hi, thank you so much for taking my question and congratulations Manish on on on your role. So my just one question 42:04 42 minutes, 4 seconds on uh you know January improvement that you've seen uh and obviously you alluded to the several initiatives or at least 42:12 42 minutes, 12 seconds uh the experiments you've run maybe I assume that pricing and how you kind of uh you know create the marketing mix for 42:19 42 minutes, 19 seconds that. Uh could you give us a little bit of detail that what three four things are you really excited about that are working very well? it is a pivot to 42:26 42 minutes, 26 seconds value or the larger back or what sort of online and offline strategies are active towards activities if you could give us 42:34 42 minutes, 34 seconds some more detail about that I'll really appreciate and what you think that are going to sustain and help you in the rest of the quarter as well 42:43 42 minutes, 43 seconds Amit as you know all of these are business confidential details and we will not be able to share that in the public forum uh so but 42:52 42 minutes, 52 seconds obviously as I said there is enough and more opportunity available both in the online and offline piece that we can continue to optimize our 43:00 43 minutes offerings. We can continue to how we focus and play with the with the deals with the discount mixes and so on and so 43:07 43 minutes, 7 seconds forth. So I mean obviously we will not be able to lay out uh the marketing promotion and and how we kind of approached it. 43:15 43 minutes, 15 seconds Sure. But you know just to understand that it is largely driven by how you promote and or is it like some SKUs are 43:22 43 minutes, 22 seconds working better which I'm not really asking for any competitive sense of just uh as a as a structural theme that which 43:30 43 minutes, 30 seconds is working very well and which which you feel is you know we sure I've got your point. So we've 43:37 43 minutes, 37 seconds experimented with some deals and the offerings in certain markets which have given us good results 43:44 43 minutes, 44 seconds and uh we are wanting to kind of experiment that on a little bit um better scale uh in other geographies as 43:52 43 minutes, 52 seconds well uh and we've experimented in other geography that has given the results again. So therefore I mean that's the broad piece. It's how you approach uh 44:01 44 minutes, 1 second the mix between the online offline uh where you focus where you put your more money. So that's the kind of approach that we've taken. 44:10 44 minutes, 10 seconds Got it. Got it. No, thanks so much for that. I really appreciate your input. Thanks Manisha and all the best. 44:18 44 minutes, 18 seconds Thank you ladies and gentlemen to ask a question. You may please press star and one. 44:25 44 minutes, 25 seconds Our next question comes from the line of Ashish Kaodia from city. Please go ahead. 44:31 44 minutes, 31 seconds Uh yeah thank you man. just uh on the demand part while I understand you know you have taken some of the strategic initiative but uh if I also look at 3Q 44:39 44 minutes, 39 seconds numbers there's a improvement in uh KFC there's a improvement in pasta coffee as well sequentially and if I just look at you know how the food aggregators have 44:47 44 minutes, 47 seconds reported there was some uptick in growth in 3Q as well so apart from the strategic uh initiative where you are seeing positive SLC coming through if 44:55 44 minutes, 55 seconds you look at three uh 3Q October November December have you also seen some bit of a tailwind coming through the quarter like sequence Had December been slightly 45:04 45 minutes, 4 seconds better than November adjusting for of course the seasonality. 45:09 45 minutes, 9 seconds So Ashish as Mr. Japurya mentioned in his uh uh address he did mention that we 45:16 45 minutes, 16 seconds are seeing some green shoots in the overall consumption environment and obviously when let's say that is happening and plus we are kind of double 45:24 45 minutes, 24 seconds dipping bases whatever we are doing uh things start to happen. So uh so so we've already talked about that uh so therefore that kind of matches with the 45:32 45 minutes, 32 seconds commentary that you're also hearing because we are seeing it's too early. We would not like uh you guys to kind of make some definitive uh conclusions 45:41 45 minutes, 41 seconds basis that but there are some green shoots which are kind of uh appearing. 45:46 45 minutes, 46 seconds Sure sh is that helpful? And just on the store expansion side if I hear you correctly uh in Pizahut you will not add uh uh any stores on a net basis in FI26 45:56 45 minutes, 56 seconds but on FI27 you know just looking at Dyani part of the business how should we think about store expansion for both KFC and Pizard 46:05 46 minutes, 5 seconds U so Ashish when I talked about 26 I actually meant the calendar year 26 which is large part of the financial 46:12 46 minutes, 12 seconds year 2627 so therefore uh until about December 26 we will we will have a neutralized N and 46:20 46 minutes, 20 seconds a new structure from Jan to March of 27 is something that we are discussing and we will come back to you guys but again uh the store additions will be 46:29 46 minutes, 29 seconds minimal it will not be as in the past it'll be a very very small amount if required for KFC 46:38 46 minutes, 38 seconds KFC as I said uh our DA continues we've inherited the uh Sapphire DA also so if 46:45 46 minutes, 45 seconds you if you remember we've said in the past that uh as far as DI is concerned, we plan to add about 110 to 120 stores every year for KFC that stays. 46:55 46 minutes, 55 seconds Uh sh Thank you and congratulations on the new. Thanks Ashish. 47:02 47 minutes, 2 seconds Thank you ladies and gentlemen. We will take that as our last question. I would now like to hand the conference over to the management for closing comments. 47:11 47 minutes, 11 seconds Over to you sir. 47:14 47 minutes, 14 seconds Thank you very much. We hope we have been able to answer all your questions satisfactoryy. Should you need any further clarifications or would like to 47:22 47 minutes, 22 seconds know more about the company, please feel free to contact our investor relations team. Thank you once again for your 47:28 47 minutes, 28 seconds interest and support and for taking the time out to join us on this call. Thank you very much. 47:36 47 minutes, 36 seconds Thank you ladies and gentlemen. That concludes this conference. Thank you all for joining us. You may now disconnect your lines. Thank you very much.