Devyani International Limited — Q4 FY26

Devyani International Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=UdruMceb9RA Published: 1d ago

0:00 Ladies and gentlemen, Kurt and welcome to the Dvyani Internationals earnings conference call. As a reminder, all participant lines will be in the listen 0:08 8 seconds only mode and anyone who wishes to ask a question may enter star and one on the touchstone phone. To remove yourself 0:16 16 seconds from the queue, please enter star and two. Should you need assistance during the conference call, please signal an operator by pressing star then zero on 0:23 23 seconds the touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anupjari 0:30 30 seconds 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 for Dyani International's Q4 and FI26 earnings conference call. We have with us Mr. 0:46 46 seconds Ravi Japurya non-executive chairman of the company. Mr. Raj Gandhi non-executive director, Mr. Anawar, 0:54 54 seconds president and CEO and Mr. Tanukong Kumar, CFO of the company. We'll initiate the call with opening remarks 1:01 1 minute, 1 second from the chairman followed by key business and financial highlights from the CEO. Thereafter, we will have a forum open for a question and answer session. 1:11 1 minute, 11 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 1:19 1 minute, 19 seconds included in the results presentation shared with you earlier. I would now request Mr. Ravishurya to make his opening remarks. 1:33 1 minute, 33 seconds Good afternoon everyone and thank you for joining us today. It's my pleasure to welcome you all to Dyani 1:41 1 minute, 41 seconds International's post results earning conference call to discuss our performance for the fourth quarter and 1:48 1 minute, 48 seconds full year 2526. 1:53 1 minute, 53 seconds This year has been a defining one for Dyani International. A year in which we navigated a challenging operational 2:02 2 minutes, 2 seconds environment while taking transformational steps that position the company strongly for the future. Our 2:11 2 minutes, 11 seconds proposed merger with Sapphire Foods is a strategic combination of two scaled up 2:17 2 minutes, 17 seconds and complimentary platforms united by a shared vision for long-term growth upon 2:24 2 minutes, 24 seconds completion. The merged entity will emerge as one of the largest QSR platforms globally and as one of the 2:32 2 minutes, 32 seconds largest partners for Yum with a diversified portfolio of leading brands, expanded geography reach and enhanced operational capabilities. 2:44 2 minutes, 44 seconds The merger is expected to unlock meaningful synergies, strengthen ed execution, and create a more agile and 2:52 2 minutes, 52 seconds efficient organization capable of accelerating growth across markets. I'm pleased to share that the process is 3:01 3 minutes, 1 second progressing as per plan and we remain on track to complete the merger by the end of the current fiscal year. 3:09 3 minutes, 9 seconds We have also taken steps to transform our management team under the leadership of Manish, our new CEO. I'm happy with 3:19 3 minutes, 19 seconds the progress made and feel very confident that we'll be able to largely have the new team in place by next 3:26 3 minutes, 26 seconds quarter. Our focus is to bring in experienced and forward-looking professionals with deep operational and 3:34 3 minutes, 34 seconds strategic expertise as we prepare for the next phase of growth and integration. These 3:41 3 minutes, 41 seconds capabilities will be critical in driving transformation across the organization. 3:48 3 minutes, 48 seconds technology automation and data decision making ma will remain central and critical to our to this journey. 3:58 3 minutes, 58 seconds This will also play a key role in enhancing efficiency, scalability and customer experience. The new management 4:07 4 minutes, 7 seconds team is being formed keeping in pink with our aspiration for DIL to 4:15 4 minutes, 15 seconds become one of the largest and most admired Global QSR companies. Demand 4:22 4 minutes, 22 seconds sentiment during the quarter remained broadly stable helped by favorable policy stimulus and GST rate rationalization. 4:31 4 minutes, 31 seconds Volume leading growth in educ compos consumption categories like FMCG further 4:38 4 minutes, 38 seconds points to stable to improving demand trends thanks to a stable demand environment and tailored and sustained 4:46 4 minutes, 46 seconds customer engagement. KFC delivered its strongest performance in the last 14 4:52 4 minutes, 52 seconds quarters, posting 4.9% positive SSSG and nearly 15% yearon-year growth during the quarter. 5:04 5 minutes, 4 seconds It continues to anchor our growth momentum and network expansion. Our own and franchise brands also maintain 5:14 5 minutes, 14 seconds positive SSSG trends. Overall, our footprint growth was calibrated and we 5:21 5 minutes, 21 seconds ended the year with a global network of 2,256 stores. 5:28 5 minutes, 28 seconds Throughout the year, we remained disciplined in our execution with a clear focus on protecting unit economics, 5:36 5 minutes, 36 seconds driving operational excellence, and maintaining financial prudence. At the same time, our marketing efforts remain 5:43 5 minutes, 43 seconds sharply focused on enhancing value perception and improving accessibility for consumers across key brands. 5:55 5 minutes, 55 seconds Encouragingly, we continue to witness improvement in the consumption trends. 6:00 6 minutes As far as our brands are concerned, our valueled initiatives and accessibility focused campaigns at KFC are resonating 6:10 6 minutes, 10 seconds well with our customers, resulting in improved average daily sales trends and consequential 6:18 6 minutes, 18 seconds recovery in SSSG performance while external and seasonal factors remain fluid. 6:31 6 minutes, 31 seconds We are optimistic about demand conditions and believe the business is well positioned for stronger performance during the year. 6:42 6 minutes, 42 seconds Our strategic priorities remain unchanged, disciplined expansion, stronger profitability and deeper 6:50 6 minutes, 50 seconds consumer relevance through innovation and digital engagement. Our view on India opportunity remains unchanged and 6:59 6 minutes, 59 seconds the pro proposed merger further enhances our ability to 7:06 7 minutes, 6 seconds execute these priorities on scale and reinforces our confidence in the long-term opportunity ahead. This has 7:15 7 minutes, 15 seconds been a year of resilience, execution and strategic progress. With the merger progressing well, leadership 7:22 7 minutes, 22 seconds capabilities, strengthening and demand trends showing signs of recovery, we believe we are entering into our next phase of growth 7:31 7 minutes, 31 seconds from a position of strength. With this, I would like to conclude my address and now hand over to Manish for the business update. Thank you. 7:44 7 minutes, 44 seconds Thank you Mr. Japurya. Good evening everyone. A very warm welcome and thank you for your valuable time for attending our Q4 FI26 earnings conference call. 7:54 7 minutes, 54 seconds Our performance in Q4 provides a good foundation as we plan and build DL2 a journey of transformation led by the new 8:02 8 minutes, 2 seconds leadership team and enabled by digital technology automation and AI. 8:08 8 minutes, 8 seconds DL has always been a brand and employeecentric organization and our vision is to leverage these assets to form a common and scaled up one DL view 8:16 8 minutes, 16 seconds and to create a frictionless organization in the interactions of employees, brands and technology. The combination of deep institutional 8:24 8 minutes, 24 seconds knowledge within the organization and the fresh perspective being brought by the new leadership team is helping shape a clear and ambitious road map for the 8:32 8 minutes, 32 seconds future. one aimed at strengthening DI's position amongst leading food services players globally. 8:39 8 minutes, 39 seconds While we'll share more details on DI2 strategy and transformation roadmap over the course of the year, let me briefly outline its core pillars. It's all about 8:48 8 minutes, 48 seconds reimag reimagining how we work, expanding the reach of our brands, making the organization more efficient and focus on digital transformation. 8:57 8 minutes, 57 seconds We also see significant opportunities in driving greater collaboration across brands, enabling the sharing of capabilities, common infrastructure, 9:06 9 minutes, 6 seconds strategic thinking at middle management level, consumer insights and best practices across the portfolio. 9:12 9 minutes, 12 seconds Together, these initiatives will help us build a leaner, more agile, and significantly more productive growth oriented organization with technology and digital 9:21 9 minutes, 21 seconds capabilities. Customer recruitment and increasing instore traffic will remain one of the core strategic priorities serving as important growth enabler. We 9:30 9 minutes, 30 seconds have now achieved more than 80% digital kiosk penetration across our KFC store network enhancing customer experience, convenience and and engagement across physical formats. 9:41 9 minutes, 41 seconds In parallel, we are making strong progress on DL Commerce, our unified technology platform designed to strengthen operational execution, deepen 9:50 9 minutes, 50 seconds customer engagement, and create a scalable digital backbone for future growth. Onto the business updates, 9:57 9 minutes, 57 seconds we ended FI26 on a good note. KFC delivered a positive triple SG of 4.9% for the quarter, the strongest 10:04 10 minutes, 4 seconds performance in the last 14 quarters, reaffirming both the resilience of the brand and the long-term opportunity in the market. 10:11 10 minutes, 11 seconds This momentum translated into nearly 15% year-on-year growth for KFC with Q4 revenues of INR 586 crores. 10:21 10 minutes, 21 seconds Brand contribution grew nearly 20% YNY to reach INR 99 crores with brand contribution margins improving to 17% for the quarter. 10:30 10 minutes, 30 seconds We ended the year with 7K 83 KFC stores across India. KFC continues to execute effectively on the dual priorities of 10:38 10 minutes, 38 seconds innovation and delivering disruptive value along with higher footfalls in the stores. At Pizza Hut, our focus remains 10:46 10 minutes, 46 seconds on portfolio consolidation and operational discipline while Triple SG was at minus 3.7% the performance 10:53 10 minutes, 53 seconds improved on a sequential basis with ADS remaining stable at approximately INR 30,000 uh rupees per store per day. 11:01 11 minutes, 1 second Brand contribution for the quarter was slightly negative primarily due to operating leverage arising from lower same store sales. We ended the year with 11:10 11 minutes, 10 seconds 639 stores with no net additions during the quarter. Our own brand's portfolio comprising of Wangu and Biryani by Kilo 11:18 11 minutes, 18 seconds continue to deliver healthy performance with both brands reporting mids singledigit positive triple SC's with Biryani by Kilo now achieving positive 11:27 11 minutes, 27 seconds brand contribution. We have initiated measured expansion in the offline channels by way of test launch and 11:34 11 minutes, 34 seconds smaller express formats within our franchise brands portfolio which includes Costa Coffee. Revenue growth remained steady at nearly 3% 11:42 11 minutes, 42 seconds year-on-year. Elevated coffee and cocoa prices however impacted input costs and led to a 1.2% year-on-year decline in 11:51 11 minutes, 51 seconds gross margins. The portfolio delivered a healthy brand contribution margin of 16.1%. 11:57 11 minutes, 57 seconds As you all know, there was a very significant gas crisis in the country because of the Middle East war. I feel very happy to report that our teams 12:05 12 minutes, 5 seconds managed the same very closely and effectively and we could come out of it with minimal impact on the business. The gas crisis continues to be on continues 12:13 12 minutes, 13 seconds to be an issue in some parts of the country and we are still not fully out of it but we are able to manage the same very very closely. 12:23 12 minutes, 23 seconds Our international business continues to deliver strong and consistent growth. 12:27 12 minutes, 27 seconds Nepal while still is a relative relatively small contributor recorded an impressive 46% yearonear increase in 12:34 12 minutes, 34 seconds sales while Thailand grew revenues by 19%. 12:38 12 minutes, 38 seconds As a result, the international business grew 20% yearonear and crossed INR 500 crores in quarterly revenues for the first time. Improved gross margins and 12:47 12 minutes, 47 seconds operating leverage drove brand contribution margins to 17.7% with brand contribution reaching INR89 crores. 12:56 12 minutes, 56 seconds On a consolidated basis, we delivered 18.5% year-on-year growth in revenues for the quarter, reaching INR437 13:05 13 minutes, 5 seconds crores. For the full year, we crossed INR 5,500 crores revenue milestone, reaching INR 5,611 crores. Both gross 13:15 13 minutes, 15 seconds margin at 68.8% and brand contribution at 14.1% but better on a Yony basis. Operating 13:22 13 minutes, 22 seconds AITA came in at INR 123 crores representing 8.6% of sales and grew 13.8% Yony. 13:31 13 minutes, 31 seconds Over the past year, our priority has been to consolidate the portfolio and strengthen the foundation for the next phase of growth. We ended FI26 with a 13:39 13 minutes, 39 seconds system store count of 2256 stores representing a net addition of 217 stores over the last 12 months. We 13:48 13 minutes, 48 seconds expect to add approximately 200 to 225 net new stores in FI27. 13:53 13 minutes, 53 seconds As DI KFC is expected to contribute 100 to 110 110 stores of these additions with the balance being driven by Costa 14:00 14 minutes Coffee, Biryani by Kilo and international businesses. Having tested key live in India and Thailand, we've decided to discontinue the brand and the same will happen in the next quarter. 14:11 14 minutes, 11 seconds Before I conclude, I would also like to briefly update you on the proposed merger with Sapphire Foods. The process remains on track. We have completed 14:18 14 minutes, 18 seconds filings with the stock exchanges and we are expecting to receive the necessary approval shortly following which we will proceed with the CCI application. We 14:27 14 minutes, 27 seconds continue to expect completion of the merger by end of the current financial year. With this, I would request the moderator to open the forum for any 14:35 14 minutes, 35 seconds questions or suggestions that you may have. Thank you very much. 14:40 14 minutes, 40 seconds 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 the touchstone 14:48 14 minutes, 48 seconds telephone. If you wish to remove yourself from the question, you may press star and two. Participants are requested to use answers while asking a 14:57 14 minutes, 57 seconds question. Ladies and gentlemen, we will wait for a moment while the question cube assembles. 15:13 15 minutes, 13 seconds The first question is from the line of Dwanchel from MK Global. Please go ahead. 15:19 15 minutes, 19 seconds Yes. Hi uh good afternoon uh to everyone and congratulations on a strong P strong pick up in KST. Uh Manish uh we have 15:28 15 minutes, 28 seconds made multiple leadership announcements uh in the recent time. Uh maybe if you could highlight uh how these leadership 15:36 15 minutes, 36 seconds changes uh across some of the key roles uh can help us in growth growth augmentation uh in the subsequent quarters uh would be helpful. 15:48 15 minutes, 48 seconds Uh thanks Ivanchu. Uh so uh when we do the blueprint in terms of where we want to go as a company uh we kind of 15:57 15 minutes, 57 seconds analyzed and saw what what were the skill sets that were missing. So that was one piece and the other piece was this whole impending merger with Safire 16:05 16 minutes, 5 seconds Foods. Uh because uh if you put the two companies together we are going to be almost a $1 billion topline by the time we complete the merger. And hence the 16:14 16 minutes, 14 seconds exercise was to kind of evaluate what are the skill gaps uh where is that we need to go and how do we how is that we 16:21 16 minutes, 21 seconds need to go there. As part of uh the entire exercise uh what we thought that 16:28 16 minutes, 28 seconds we lack was one uh strong technology leader and uh we've hired a gentleman by the name of Nirj Thari uh who's going to 16:37 16 minutes, 37 seconds be the CTO for the company going forward. uh we've already made this announcement as you know uh uh we also 16:44 16 minutes, 44 seconds identified uh that with our own brands uh coming in and with some of the other franchise brands where we take the lead 16:51 16 minutes, 51 seconds on marketing and at the same time as we've announced in the past that Pizza Hut marketing will come to us as part of 16:58 16 minutes, 58 seconds the merger. We wanted to enhance uh our marketing overall uh portfolio and hence we've hired a gentleman by the name of 17:06 17 minutes, 6 seconds SEP Anand. So Sep uh has joined us as chief marketing officer and uh he will be also looking after the Pizza Hut 17:14 17 minutes, 14 seconds operations. Uh SEP's background is a combination of QSR and technology and therefore all of the relevant 17:22 17 minutes, 22 seconds experience will help us as we move forward in our journey. We've also made uh a couple of other announcements like 17:29 17 minutes, 29 seconds Robinder uh who's going to be leading our portfolio on the Costa side and and some of the smaller brands that we have 17:36 17 minutes, 36 seconds like New York fries and and and Sanu Kitchen. Uh we've also made an announcement for the COO today. I don't 17:44 17 minutes, 44 seconds know whether you've seen that or not. Uh so therefore this gentleman also will be joining us uh in the next couple of 17:51 17 minutes, 51 seconds weeks. comes with a very strong background from FMCG and technology with the companies like Univer and uh and 17:58 17 minutes, 58 seconds Amazon. So with that we are becoming a future forward organization and we want to transform ourself uh not only from uh 18:07 18 minutes, 7 seconds from people practices point of view. Uh we want to bring in much more automation and technologyled operations 18:14 18 minutes, 14 seconds transformation and technologydriven uh operations so that we are able to ride the next wave. So that has been the 18:22 18 minutes, 22 seconds broad hypothesis in terms of the people changes uh that we are looking at. 18:28 18 minutes, 28 seconds Great sir. So majorly if we have to summarize this so from one is from marketing perspective right and the 18:37 18 minutes, 37 seconds other one is is from maybe uh the own delivery capabilities as well as from a customer 18:44 18 minutes, 44 seconds acquisition perspective and thirdly from a CEO perspective obviously that will be an onground sort of growth focus so is 18:53 18 minutes, 53 seconds is is that a right way to look at it Manish? Yep, absolutely. Because if you remember, we announced in the last call 19:01 19 minutes, 1 second uh that we've kind of tied up with one of the leading uh IT companies as as a 19:07 19 minutes, 7 seconds technology partner and therefore uh we will be developing our own apps. We'll be developing our entire technology stack and therefore we wanted to build 19:15 19 minutes, 15 seconds that capability also in house because we'll have to manage uh the technology as we go along inside the company. 19:24 19 minutes, 24 seconds Great. Uh now secondly Manish the broader commentary that we have come 19:30 19 minutes, 30 seconds across CSR players post Q4 uh the dining footballs are definitely improved uh after a fairly long period of time. So 19:38 19 minutes, 38 seconds wanted to check if you could share your thought process on the sustainability of this trend right. So uh what all initiatives company specific we have 19:47 19 minutes, 47 seconds taken and what is the confidence on sustainability of these standards? 19:53 19 minutes, 53 seconds See they want you as I as I've mentioned the cost we need to give a reason to the consumer to come into the store right and uh because for example if you're 20:01 20 minutes, 1 second able to give uh the same offering uh to a consumer uh inside the home uh with zero incentives to come to the store 20:09 20 minutes, 9 seconds nobody will walk into the store and therefore that meant that you have to kind of reimagine the business from the point of view of what is your pricing in 20:17 20 minutes, 17 seconds the two channel in the two channels what is the innovation and so on and so forth. So we've done some experiments 20:24 20 minutes, 24 seconds to treat the two channels as two different businesses which is what again I have alluded in the past and therefore that is showing some results. It is just 20:33 20 minutes, 33 seconds the start of the journey. We have to cover a lot of gaps from there but we are encouraged uh with what we've done and the response that we've seen the 20:41 20 minutes, 41 seconds seen from the consumers. So, so therefore it kind of again reiterates our belief that if you give a reason to the consumer to come into the store they 20:49 20 minutes, 49 seconds will come into the store and and that's how we are kind of now approaching the entire business 20:56 20 minutes, 56 seconds right u so this trend at least we can assume right so obviously geopolitical tensions etc sort of some uncertainties 21:06 21 minutes, 6 seconds remain but so far uh so good right see macro levels Tanchu uh none of us 21:14 21 minutes, 14 seconds can control right and we've seen number of macro issues over the last 3 4 years so so it started from co and since the 21:22 21 minutes, 22 seconds time uh of covid there has been some event or the other uh which is regularly kind of coming along so I think uh the way we look at it I mean we have to 21:30 21 minutes, 30 seconds accept this as a reality uh and and and therefore we continue to chug along in terms of whatever we need to do whatever is under our control do that to the best 21:39 21 minutes, 39 seconds of your capability and uh and and carry the business along because remember that any of such geopolitical situations they 21:47 21 minutes, 47 seconds put more pressure on the on the small scale players uh which kind of helps us consolidate further uh on whatever we are doing. 21:57 21 minutes, 57 seconds Yeah, great. Uh thank you Manish. I just couple of bookkeeping questions but I'll come back in the thanks for taking sure thanks very much. 22:07 22 minutes, 7 seconds Thank you ladies and gentlemen. In order to ensure that the management is able to address questions from all participants, we would request you to please restrict 22:16 22 minutes, 16 seconds to a question to one per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Gorav Joani from JM Financial. Please go ahead. 22:27 22 minutes, 27 seconds Uh thank you. Uh since I can ask only one question. Uh my question is regards to the uh store opening. Basically the 22:35 22 minutes, 35 seconds store opening this quarter around we have noticed that across the we have closed uh so just want to understand uh 22:42 22 minutes, 42 seconds I'm sorry to interrupt you Mr. Roani but you are not clearly audible sir. Uh is this better? 22:49 22 minutes, 49 seconds Yes but it is sounding a little muffled. Uh is it better now? 22:57 22 minutes, 57 seconds Yes please go ahead. 22:59 22 minutes, 59 seconds Yeah. Uh so my question is with regards to the store openings. Uh basically we have seen that you know there has been store closures across formats. Uh so is 23:07 23 minutes, 7 seconds this a deliberate strategy wherein as a part of the this exercise of reorganization we are kind of uh you know chugging out the loss making or the 23:15 23 minutes, 15 seconds nonprofitable stores and then start on a cleaner state for the next year and if so is there any change in the guidance for the store expansion? 23:27 23 minutes, 27 seconds So corab on the guidance uh first as I said in my uh address that we are planning to open about 200 to 225 new 23:34 23 minutes, 34 seconds stores during the year of which KFC will account for about 100 to 110 120 kind of store levels. Uh at the same time we've 23:44 23 minutes, 44 seconds communicated in the past that for uh for 26 I'm talking about calendar year 26 here. Uh we are not planning to add uh 23:53 23 minutes, 53 seconds any net new stores for Pizza Hut. The idea is to consolidate and realign the portfolio for Pizza Hut. So therefore 23:59 23 minutes, 59 seconds the remainder uh addition uh up to 200 225 will come from Costa Wango Biryani by Kilo and so on and so forth. Having 24:08 24 minutes, 8 seconds said that uh I know that you've seen negative numbers in quarter 4 which is primarily because we are resetting our 24:16 24 minutes, 16 seconds strategy from a BD perspective in terms of better quality stores and uh and and therefore a better pipeline. That's the reason first quarter was a negative 24:24 24 minutes, 24 seconds store and uh the focus uh as you said is to kind of shut the lossmaking stores which are there in the portfolio and and 24:33 24 minutes, 33 seconds open better quality stores. Uh while let's say our new strategy uh is kind of uh build the pipeline as per our new 24:41 24 minutes, 41 seconds guidelines and what we've discussed internally. Uh that's the reason the store count is looking negative. But again as I said for the entire year you 24:49 24 minutes, 49 seconds will be able to see 110 to 120 new KFC stores and uh and with the overall store count of about 200 to 225 stores. 24:59 24 minutes, 59 seconds So uh M thanks for this followup you know uh also you know you've been highlighting that you'll be doing a lot more techdriven initiatives. So would 25:08 25 minutes, 8 seconds that in any case uh you know you would be tinkering with at least the store size uh or the any changes in the KEX 25:15 25 minutes, 15 seconds per store uh any changes that you see uh uh here on this one? 25:21 25 minutes, 21 seconds Not so much uh Gorov as I said uh around the call that we where we announced the merger that we will we will be able to 25:30 25 minutes, 30 seconds manage all the tech changes within the existing uh budgets that we have uh and whatever charges we pay to the yum and 25:37 25 minutes, 37 seconds so on and so forth. So therefore that is how we've tailored oursel in terms of the new investments also and plus given 25:44 25 minutes, 44 seconds the uh uh current optionalities on AI and all of that we are we we will be able to use our current infrastructure 25:51 25 minutes, 51 seconds better with the help of some overlaying uh AI technology and and that is what we are focusing on. 25:59 25 minutes, 59 seconds Uh so just one last question from a Manish uh is regarding the KFC revival that you have seen. uh so you know we have also seen the macroeconomic 26:07 26 minutes, 7 seconds situation also kind of improving plus you have also taken initiatives in terms of the interventions you have done so for the the SSD that you have reported 26:16 26 minutes, 16 seconds how much you would accord to the the overall macro changes and how much would be your own initiative uh and how sustainable this is going ahead 26:25 26 minutes, 25 seconds is difficult to quantify factor by factor as as I've said in the past but again uh we feel confident that we'll be able to sustain uh the initiatives that 26:34 26 minutes, 34 seconds you've seen uh if at all I mean uh if you look at let's say in the in the quarter almost 26:40 26 minutes, 40 seconds 45 days have gone by we have seen that we are able to maintain the current uh triple SG trends in line with the 26:48 26 minutes, 48 seconds previous quarter so therefore that is encouraging we are monitoring it uh obviously it'll take another couple of quarters by the time we are firmly able 26:55 26 minutes, 55 seconds to say that the worst is behind us and we are not too sure about the macroeconomic situation as well but uh 27:02 27 minutes, 2 seconds as per as per the current actual numbers uh we think we we will be able to maintain the triple SC trends that you've seen. 27:12 27 minutes, 12 seconds Sure. Thank you. Thank you. That's also Thank you. The next question is from the 27:21 27 minutes, 21 seconds line of Percy Pantaki from ISL Securities. Please go ahead. 27:26 27 minutes, 26 seconds Uh hi Manish. Uh I just wanted to understand the gross margin expansion on KFC. It's a pretty big number. uh what has really driven that? 27:38 27 minutes, 38 seconds See per see uh there are many things uh that would go into the gross margin line. Uh so one is uh the the whatever 27:46 27 minutes, 46 seconds raw materials and packing materials that we buy. Uh at the same time uh how we handle the promotions and discounting structures and the multiple deals that 27:54 27 minutes, 54 seconds we offer. What are the timings of the deals? So it's a combination of all of that. The raw material and packing material environment has been pretty 28:01 28 minutes, 1 second stable. Uh so that therefore that has not been an issue and at the same time uh we tweaked the deals in favor of uh 28:10 28 minutes, 10 seconds uh the dining customers more uh where we were lacking initially and that has helped us to kind of uh improve the 28:18 28 minutes, 18 seconds gross margins a little bit and drive the customers in the stores uh to deliver the triple SG. 28:26 28 minutes, 26 seconds So sorry uh for the instore uh uh uh uh part of the business you have reduced your promotions is that what you are saying? 28:35 28 minutes, 35 seconds No I've reduced the promotions on online is the other okay understood understood. uh also just 28:43 28 minutes, 43 seconds wanted to understand I mean in light of the fact that uh promotions have been actually reduced uh what is really 28:51 28 minutes, 51 seconds driving this uh SSSG uh I mean we have seen it across both sapphire and yourself so is it just that I mean 29:00 29 minutes beyond a point after 2 3 years of uh uh sort of negative SSG uh the the sort of 29:08 29 minutes, 8 seconds uh only the loyal customers are left and they now sort of seeing a normal growth and whoever had to leave has left or is 29:16 29 minutes, 16 seconds there any can you can you just tell me of if there are any two three very specific actions which you have taken which in your opinion have driven the SSG for KFC. 29:27 29 minutes, 27 seconds So um Percy as I mentioned to Dwanchu that end of the day you need to give a reason to the consumers to come into the 29:35 29 minutes, 35 seconds stores and that is what we've increased the intensity uh which is where we were not kind of as active our our entire 29:43 29 minutes, 43 seconds focus used to be on online and we've shifted the focus now more to din and more to the dining customers and 29:50 29 minutes, 50 seconds therefore we are tailoring the offers and the price points and the promotions to make sure that the dining customers are attracted and that is that is what 29:59 29 minutes, 59 seconds has predominantly helped us but at the same time the reduction in the offline promotions hasn't that had a negative effect on that part of the business. 30:09 30 minutes, 9 seconds No, I'm not saying that we've reduced the offline. I said we've reduced the online promotions. 30:14 30 minutes, 14 seconds Yeah. Yeah. Online I'm saying the online promotion reduction uh which is so the offline gains are much more than the online losses. 30:23 30 minutes, 23 seconds I see. I see. Understood. Also, have you taken any uh menu price increases in KFC uh uh either in uh uh the past quarter or very recently? 30:35 30 minutes, 35 seconds There was a very small correction. So on a portfolio basis, I would say it was maybe less than half a percentage point. 30:42 30 minutes, 42 seconds It was only to kind of tweak some bits of mismatches which were here and there. That's a continuous process. 30:48 30 minutes, 48 seconds And given the inflationary sort of macro scenario that we are seeing, uh do you foresee any uh uh price increases in the near future? 30:58 30 minutes, 58 seconds If you can help me foresee the inflation in the near future, I'll be able to tell you that. 31:05 31 minutes, 5 seconds Got it. Got it. Okay, that's all from me. Thank you. Yeah, thank you so much. 31:11 31 minutes, 11 seconds Thank you. The next question is from the line of Jagan Shagur from Bernston. Please go ahead. 31:19 31 minutes, 19 seconds Uh hi uh hi Manish congratulations on uh on sort of revival in KFC. I wanted to double click on KFC and had a very quick 31:28 31 minutes, 28 seconds question on Pizza Hut. I'll post both questions together so you can you can answer them. U on KFC uh would you help 31:36 31 minutes, 36 seconds us understand uh this SSG that you've seen? uh what part of it is higher AOV 31:42 31 minutes, 42 seconds uh or higher average value orders and higher uh incremental transactions. I think which is a bigger share u uh and 31:52 31 minutes, 52 seconds what gives you the confidence of sort of uh sustaining that uh irrespective of what happens in macro uh and I think on 32:00 32 minutes pizza uh the last time you mentioned that we will have a more detailed uh answer to what's your approach going to 32:08 32 minutes, 8 seconds be right to revise the brand uh so when should we expect to to see that thanks Sure thanks 32:16 32 minutes, 16 seconds so uh so let me answer your question on the KFC first. Uh so in terms of again I think it's basically going down to the 32:24 32 minutes, 24 seconds online and offline. So if you see our uh uh past trend when we were losing triple SGS we were losing more on uh dinin uh 32:34 32 minutes, 34 seconds versus uh the online channels if at all uh while let's say the triple SG was negative in the same quarter we had seen 32:41 32 minutes, 41 seconds that the online channel was positive and the offline channel was negative and uh that negativity was kind of overlapping 32:48 32 minutes, 48 seconds the positivity on the online channel and that is what we've tried to reverse in the last quarter by focusing more on the 32:55 32 minutes, 55 seconds offline channel and uh so let's say online triple SG has come down but the offline has taken over more and uh again 33:03 33 minutes, 3 seconds it's basically as I said I mean you need to give right reasons for the consumers um to come into the stores because it cannot happen that let's say for example 33:12 33 minutes, 12 seconds if a consumer is ordering at home and at times they are able to get cheaper pricing sitting at home rather than coming into the store where the expense 33:19 33 minutes, 19 seconds is higher and at the same time uh where where the customer gets the convenience So that is what we've started to monitor 33:26 33 minutes, 26 seconds much more closely and we've taken steps that for any customer the best deals uh will always be at the store level uh and 33:35 33 minutes, 35 seconds and that is basically where you experience the brand at its best not only from a freshness point of view but also from a customer experience point of 33:43 33 minutes, 43 seconds view and we've seen that the customers have responded very positively to that and that is kind of helping us. uh to 33:50 33 minutes, 50 seconds your other sub question in terms of the tickets versus the uh AOV it's a combination of both we've seen the tickets also grow because what we had 33:59 33 minutes, 59 seconds seen over a period of time that uh there were lot of new consumers who were coming in uh but there were lot of uh 34:07 34 minutes, 7 seconds lapses also which were happening. So the new consumers were coming in the olds were lapsing out. So we've tried to address uh through multiple uh ways in 34:16 34 minutes, 16 seconds terms of how do we get back the consumers who've lapsed out and while we continue to recruit the new consumers. 34:23 34 minutes, 23 seconds So therefore that strategy we've seen u has played out well in in in the current quarter uh we need to ensure that we are 34:30 34 minutes, 30 seconds able to run with it for the next few quarters to be able to call out that our strategy is working. So the start has been good uh let's see how it shapes up 34:38 34 minutes, 38 seconds uh on the Pizza Hut. Uh to your other question, as I said, we've hired uh a new gentleman by the name of Sep. Uh 34:46 34 minutes, 46 seconds he's going to be focusing on pizza. He's basically a marketeer uh all through his career with a strong FMCG background uh 34:54 34 minutes, 54 seconds QSR background and technology background and uh so basically we are going back to basics as far as Pizza Hut is concerned 35:01 35 minutes, 1 second in terms of uh identifying the gaps on the portfolio from a product point of view identifying the pricing layers which are kind of missing in our portfolio. 35:11 35 minutes, 11 seconds looking at the quality uh on a denovo basis as far as pizza pizzas are concerned u and not only from just uh 35:19 35 minutes, 19 seconds because as you know in a pizza typically you have to look at the dough cheese and toppings so we are trying to revisit all 35:25 35 minutes, 25 seconds of those things u internally we've seen u some good work which is happening uh and I think it'll take uh maybe a couple 35:35 35 minutes, 35 seconds of months by the time we uh actually launch that in the market we are seeing how the technology is working we We are actually starting to retrain all of our 35:43 35 minutes, 43 seconds store staff uh both from a product quality perspective as well as uh uh the CX training. So so it's Pizza Hut is 35:52 35 minutes, 52 seconds back to basics. Uh so maybe during the course of the year as I said in my uh in my comments uh that we will come back to 35:59 35 minutes, 59 seconds you with the complete strategy in terms of how we are trying to approach various brands. uh maybe we can fix uh an analyst day in the next couple of 36:07 36 minutes, 7 seconds quarters and we can take you guys through in detail on what what our plans are and what is that we are uh trying to 36:14 36 minutes, 14 seconds do brand by brand once the entire new management team or the leadership team is in place. 36:21 36 minutes, 21 seconds Okay, perfect. Uh thank you for the for the answer. Uh all the best. Thank you. 36:29 36 minutes, 29 seconds Thank you. The next question is from the line of naman from Sani family office. Please go ahead. 36:37 36 minutes, 37 seconds Hi. Uh just one quick clarification. So we mentioned about uh 225 new store editions. That is taking into account 36:45 36 minutes, 45 seconds the merger scenario or is it on standalone basis at DI level? 36:51 36 minutes, 51 seconds It's on a standalone basis. Standalone basis but considering all of our brands. 36:56 36 minutes, 56 seconds So therefore that would include uh KFC, Costa, Wango, Biryani by Kilo all the brands put together. 37:03 37 minutes, 3 seconds Okay. And just second clarification you know uh in Mumbai I think you've started with this uh new KFC around the metros. 37:13 37 minutes, 13 seconds So do you think that that channel as a whole is uh giving us a very good uh visibility and showing encouraging trends? 37:21 37 minutes, 21 seconds See Mumbai territory is with Sapphire not with us and uh and therefore uh your specific question on Mumbai Mumbai will 37:30 37 minutes, 30 seconds have to be addressed by Safire. But in general um I've mentioned uh I think probably a few quarters back um that we 37:39 37 minutes, 39 seconds see a big momentum on the on the travel side and that's the reason we were focusing on multiple brands. That was the reason we were focusing on opening 37:46 37 minutes, 46 seconds food courts at the highways and the malls and the food courts and so on and so forth. So that is part of that overall strategy. So we are bullish on the travel segment but Mumbai question you need to check with Safire. 37:57 37 minutes, 57 seconds Sure sure. I'm so sorry. Thanks. No issues. Thanks. 38:03 38 minutes, 3 seconds Thank you. Participants who wishes to ask a question please press star and one. 38:17 38 minutes, 17 seconds Anyone who wishes to ask a question, you may press star and one now. 38:23 38 minutes, 23 seconds The next question is from the line of Danch Bansil from MK Global. Please go ahead. Yes, Manisha. Thanks for the followup. 38:31 38 minutes, 31 seconds Just a couple of bookkeeping questions. 38:34 38 minutes, 34 seconds Uh this GAT cost uh is is is this a small 1.52% of sales or is it a sizable part of your portfolio? If you could 38:42 38 minutes, 42 seconds just uh specify this. So I'll not be able to give you the exact number they want you but it's a small cost. 38:50 38 minutes, 50 seconds Okay. Okay. Yeah. And uh lastly Manish on the uh and at the same time for example they want you just to give you uh because in 38:58 38 minutes, 58 seconds our portfolio as a result of gas gas crisis we started evaluating electrical equipments uh for example in in Biryani 39:06 39 minutes, 6 seconds by Kilo we've managed to switch our equipments to electrical. At the same time we are also exploring whereby the equipments can work on both gas as well 39:15 39 minutes, 15 seconds as as electricity. So there are multiple initiatives which we which we've taken so that in future we are able to mitigate the impact better. 39:24 39 minutes, 24 seconds Sure. Sure. And uh secondly sir biryani by kilo from we don't get the individual 39:31 39 minutes, 31 seconds brand wise profitability but uh this India portion excluding the KFC and Pizza Hut uh has 39:38 39 minutes, 38 seconds done well right from a profitability perspective. So anything if you could highlight from next year perspective how we should begin for this particular guy. 39:48 39 minutes, 48 seconds So biryani biryani by kilu as I said we've managed to turn the brand around as you know it was a lossmaking brand. 39:54 39 minutes, 54 seconds uh there is a further potential because right now we've basically brought the negative to positive and we have to grow from a profitability perspective. 40:03 40 minutes, 3 seconds At the same time we've started experimenting with the brand on an offline basis. Uh so we've opened a few express outlets in our food courts to 40:12 40 minutes, 12 seconds see how the brand performs. Uh uh it's a profitable uh stores where we wherever we've opened. So therefore uh we are 40:20 40 minutes, 20 seconds very bullish on biryani by kilo and uh and it can do wonders uh once we are able to stabilize the entire situation. 40:29 40 minutes, 29 seconds Understood. Um one last from balance sheet perspective Manish there is some increase in debt uh as well as u some increase in intangible assets as well. 40:40 40 minutes, 40 seconds So anything u uh u to sort of look into it or how how should we read these two numbers in FI? 40:48 40 minutes, 48 seconds So it's predominantly biryani by kilo consolidation uh dwanchu because the consideration that we paid obviously we'll go and sit predominantly on the 40:57 40 minutes, 57 seconds intangible side. So if you want details we can connect on an offline off offline. Yeah. And we'll be able to but 41:04 41 minutes, 4 seconds it's predominantly biryani by kilo uh going and sitting in the goodwill as well as uh the brands. 41:12 41 minutes, 12 seconds Okay. And anything why the debt has increased Manish for FI26? 41:18 41 minutes, 18 seconds So that was only a temporary because we were trying to u we raised some debt uh because there was some injection required in Thailand and because of the 41:27 41 minutes, 27 seconds local Thailand regulatory issues. So that has got squared off in the first week or the second week of April already. 41:34 41 minutes, 34 seconds Okay. Understood sir. Thanks. Yeah. Okay. Thank you. 41:41 41 minutes, 41 seconds Thank you ladies and gentlemen. That was the last question for today. I now hand the conference over to management for closing comments. 41:49 41 minutes, 49 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 41:58 41 minutes, 58 seconds know more about the company, please feel free to contact our investor relations team. Thank you once again for your 42:04 42 minutes, 4 seconds interest in sports and for the taking the time out to join us on this call. 42:11 42 minutes, 11 seconds Thank you very much once again. Thank you. 42:17 42 minutes, 17 seconds Thank you ladies and gentlemen. That concludes this conference. Thank you for joining us.