Dear Shareholders,
It gives me immense pleasure to reconnect with you and reflect on yet another
successful year for our Company. While the operating landscape presented several
challenges, we navigated them with great dexterity. Our steadfast commitment to putting
"Customers First" drove our strategic execution, leading to strong growth
momentum and the achievement of significant milestones. This unwavering customer focus,
evident across our brand portfolio, underscores our dedication to sustainable, long-term
value creation.
WITH A PRESENCE IN OVER 240 CITIES THROUGH OUR CORE BRANDS, WE HAVE ESTABLISHED A
STRONG, NATIONAL FOOTPRINT. STORE EXPANSION CONTINUES TO BE A PIVOTAL ASPECT OF OUR
BUSINESS STRATEGY, ENABLING US TO CATER TO A LARGER CUSTOMER BASE.
During FY2023, emerging from the pandemic, the economy witnessed a sustained
inflationary trend, particularly notable in the first half of the year. The rising prices
started impacting consumer sentiments and the overall demand environment, which became
evident in the second half of the year especially post Diwali. This constraining of
discretionary spending, significantly affected the FMCG and Retail sectors. Furthermore,
the layoffs in the tech sector in the US had a direct bearing on consumer sentiments in
India, as several US companies have their back office operations in this part of the
world. Additionally, many Indian companies also implemented workforce rationalization
measures, further contributing to a cautious consumer spending behavior.
Even in the face of these external uncontrollable factors, we remained steadfast to our
commitment towards long-term store expansion, aiming to bring our brands closer to
customers and provide enhanced experiences. In line with this long-term potential for our
Brands, we added 305 net new units during the year, setting a new record for our Company
compared to the previous year's 246 net new units. As a result, we operate a total of
1,243 stores across multiple countries and brands as of March 31, 2023, effectively more
than doubling our store count over the last three years.
Our store expansion success supported our financial performance, which was marked by
record revenues, highest-ever margins and record profits. These achievements are
especially commendable considering the unprecedented inflation in the past year,
potentially the highest in a decade. Our income grew 44% year-on-year, amounting to
30,303 million, showcasing the robustness of our brand portfolio. Through our strong
emphasis on financial discipline and effective management of input costs, we achieved the
highest-ever consolidated reported EBITDA of 6,551 million, reflecting a 38% year-on-year
growth. Furthermore, our net profit reached2,625 million, 69% increase from the previous
year's 1,551 million.
The year also marked significant achievements for our core brands. Both KFC and Pizza
Hut surpassed the noteworthy milestone of 500 stores each across the global portfolio.
This remarkable growth performance was acknowledged and honored at the International
Franchise Conference in Singapore, where DIL was awarded the prestigious 'Explosive
Restaurant Growth Award' by Yum! Global. We also proudly celebrated the recent opening of
our 100th Costa Coffee store, which stands as a testament to our firm commitment to the
growth of all our core brands.
With a presence in over 240 cities, our core brands have established a strong and
expansive footprint across India. Store expansion continues to be a pivotal aspect of our
business strategy, enabling us to cater to a larger customer base. Our focus remains on
strengthening our presence in existing cities and venturing into upcoming non-metro
markets. We recognize the immense potential for growth in these non-metro markets, as
customers in smaller towns aspire for experiences on par with their counterparts in larger
cities. Currently, 53% of our stores are located in non-metros, versus only 48% in FY2021
a mere 2 years ago.
Our store opening strategy continues to be aligned to the changing customer
preferences. Realizing the growing trend for online ordering, we increased our focus on
smaller-sized, delivery-focused stores vis-a-vis larger dining-oriented stores in India.
Compact stores with their favorable cost metrics also provide us with greater opportunity
to take our core brands deeper into the country. We are also actively investing in
cutting-edge technology to enhance our digital capabilities, improve delivery efficiency
and optimize overall operations, all with the goal of providing an enhanced experience to
our valued customers. Moreover, the thrust on product innovation remains as strong as ever
across all our brands, ensuring that we meet customer expectations and offer them more
reasons to frequent our stores or order online.
With the aim to be future-ready, we have introduced 'KFC Smart Restaurants' in select
cities. These flagship KFC stores provide an enhanced experience with digital
capabilities, spacious layouts and diverse menus. Our current goal is to target 10% of our
new KFC store openings as flagship stores. We strongly believe that these stores will help
us in growing consumer salience for the KFC brand and solidify its presence in a fast
growing fried-chicken segment.
As we begin the new fiscal year, there are encouraging initial indications of inflation
stabilizing in India. This bodes well for a potential recovery in consumer spending in the
latter half of the year. Despite these short-term challenges, the underlying factors
driving industry growth in the medium and long term remain intact. India's favorable
demographics, increasing income levels and evolving consumption patterns will continue to
create growth opportunities for the QSR industry, which remains considerably
underpenetrated in the country. Additionally, the expanding adoption of smartphones and
growing prevalence of digital payments are reshaping the daily lives of Indians, providing
further momentum for the sustained growth of the QSR industry.
In addition to our strong confidence in the Indian market, we hold a unwavering belief
in the potential of our time-tested brands. We are fully dedicated to expanding our market
presence and making strategic investments in our brands to harness emerging opportunities.
We will continue to focus on improving our processes, ensuring exceptional product quality
and enhancing our execution capabilities, all the while maintaining financial discipline,
to better serve our customers and realize our growth objectives. Moreover, we are
committed to nurturing and investing in our employees as they are the driving force behind
our success. Our ongoing emphasis on recruiting and engaging with a diverse workforce also
plays a significant role in advancing our Company's diversity and inclusion
strategy.
In conclusion, I would like to express my heartfelt appreciation to the entire DIL team
for their outstanding contributions throughout the year. I would also like to extend my
sincere gratitude to our esteemed Board Members for their invaluable guidance and
insights, as well as our shareholders and all other stakeholders for their steadfast
support. I look forward to our continued success in achieving our goal of delivering
sustainable growth.
Warm regards,
RAVI JAIPURIA
Chairman
IN ADDITION TO OUR STRONG CONFIDENCE I N THE I N D IAN MARKET, WE MAINTAIN A STRONG
BELIEF IN THE POTENT IAL O F OUR TIME-TESTED BRANDS AND OUR EXECUTION CAPABILITIES. WE ARE
FULLY DEDICATED TO EXPANDING OUR MARKET PRESENCE AND MAKING STRATEGIC INVESTMENTS IN OUR
BRANDS TO HARNESS EMERGING OPPORTUNITIES.