Annual Report
Total Page:16
File Type:pdf, Size:1020Kb
ANNUAL REPORT Coffee Day Enterprises Limited the lifestyle brew!Coffee Day Enterprises, on the back of the iconic Café Coffee Day lifestyle brand, is expected to emerge as a significant beneficiary of revival in India’s urban discretionary consumption space. Today, with 1,682 stores spread across 241 Indian cities and towns (as on 31 March 2017), Café Coffee Day is not only India’s largest chain of coffee stores but also an integrated ‘bean-to-cup’ group model that ensures that only the finest and most delectable coffee reaches our consumers. With a solid track record of having reported a 15% CAGR gross retail revenue growth of coffee business over the last five years, the Company is well-positioned to capitalise on prevailing opportunities and grow stronger value-creation platforms. message from the chairman I am delighted to share the progress made in the last year on the FY17: THE YEAR IN A NUTSHELL occasion of our second year as a public listed company. With strong business fundamentals and a slew of innovative Since the inception of our brand Café Coffee Day in 1996, we Food & Beverage launches, our coffee retail business reported a have continued in our pursuit of turning coffee into a social idea. robust gross operational revenue growth of 14% and retail EBIDTA In a fast-changing world, our drive to promote a coffee drinking growth of 8% over the last year. While the Food & Beverage retail culture and offer a space for people to connect over a cup has market landscape continues to look challenging, I am pleased remained constant. Today, with over 2500 cafés, express outlets, to share that Café Coffee Day recorded another year of positive coffee points and over 41,500 vending machines in a vast majority same-store-sales growth of 5.02% in FY17. The performance is a of corporates, we are touching the hearts of millions of Indians testimony of our strongly focused consumer engagement model each day across more than 1000 cities and towns. built over the years. Today, India is going through an important phase of transition, FY17 was another interesting year with a healthy mix of new with GST and Digitisation revolutionising the way business is initiatives and expansion based on strong fundamentals. conducted, and we are gearing up to deliver in this New Age. 002 | COFFEE DAY | ANNUAL REPORT 2016-17 Our home delivery business expansion continued and we got SICAL closer to our consumer than ever before by delivering across With the implementation of ‘Make in India’ and other government 7 major cities. Based on strong consumer insights, we kept initiatives, the logistics industry is set to become more centralised, delighting the market with refreshing launches like Inverted efficient and tax compliant. Third party logistics and supply chain Cappuccino, Filter Coffee, wellness range of coconut drinks, management are gaining traction and are set to consolidate in sugarcane juice, international burgers and sundaes at the café, the coming years, especially in industries such as automobiles, alongside our new energy drink ‘Storm’, ‘Soul’ mineral water, and pharmaceuticals, consumer durables and FMCG. our cold coffee ‘Frappe Chill’ in the packaged products category. The Company’s growth (Gross revenues growth of 21% and The response to our mobile app has been heartening, with EBIDTA growth of 43%) has been propelled by new business over 3 million downloads in a year. This drive towards a data- initiatives and additional contract gains. SICAL Iron Ore Terminals rich organisation is helping us build superlative loyalty, and the Limited, a subsidiary of SICAL Logistics Limited, has executed the app has further shrunk the distance between our brand and License Agreement with Kamarajar Port for the modification of consumers. the existing iron ore terminal to handle common user coal. The Beyond cafés, we are strengthening the reach to our customers financial closure and approval of the Detailed Project Report have by expanding proactively into the corporate segment. With been cleared, and the Company is in the process of implementing unique smart solutions, our vending machines have made steady the project. inroads into the corporate sector in FY17. With an eye on growing TANGLIN DEVELOPMENTS this business, we are deepening our focus on hotels, restaurants The growth of commercial real estate technology parks depends and non-traditional channels as business verticals. on the service and industrial sectors, where India continues to be THE COFFEE INDUSTRY: A LOT CAN HAPPEN OVER COFFEE an attractive destination for major international players. Tanglin As a group which goes beyond coffee, our core remains intact. offers customised facilities in infrastructure for various technology While the category is still nascent, the café chain market has been enterprises in Bengaluru and Mangaluru. Here, our gross revenue growing at a CAGR of 20% since 2014, and our belief in its huge continues to increase steadily and has touched Rs.139.2 Cr in potential is supported by the robust Indian consumption story: FY17. Our 3.3 million square feet on offer continue to yield rental returns, while another 7,50,000 square feet will be occupied by Consumer market of the future: This is fuelled by favourable our clients within the forthcoming year. demographics of a young India with the median age at 27 years. WAY2WEALTH Increasing per capita consumption over the years: Our GDP Our investment advisory and financial intermediation enterprise has been growing at over 7%, and this augurs well for the focuses on qualitative financial products and long-term wealth economy. Consistent growth will ensure increase in disposable creation. Following regulatory initiatives by the government, our incomes and aspirations beyond metros, and a new Indian financial markets have seen greater participation and economic consumption story will emerge. activity. We expect a continuation of these trends going forward. AN EXPANDED PORTFOLIO: OUR RESILIENT SELF- WE ARE A PART OF SOCIETY PROPELLED BUSINESSES With a commitment to strengthen the communities with whom Our diverse businesses are charting their own course successfully. we work, our coffee is selected and purchased ethically, ensuring They continue to be self-sustaining, with robust internal revenue that it protects the ecological balance of our UTZ certified generators in place. At the group level, our consolidated gross plantations and surrounding forest areas, while safeguarding the revenue increased by 15% and achieved a profit after tax of Rs.46.2 interests of coffee growers. Cr in FY17. I am pleased to share key performance highlights: We also contribute to society with the following long-term initiatives: CHAIRMAN MESSAGE | 003 Yuva - Harnessing youth potential: Yuva, our vocational training of consumer lives. New age products and contemporary cafés will college, is managed by the SVGH Trust, offering a fully funded further strengthen this relationship. programme for rural youth from underprivileged backgrounds to THE POWER OF HUMAN CAPITAL learn hospitality and life skills. Over a period of 12 years, our team at Yuva has trained and helped 6000 youth become self-sufficient. Our ability to scale up has been possible due to significant additions to our middle management, including women in Encouraging ‘Silent Brewmasters’: We are engaged in a leadership roles. I am proud of our seasoned leadership and the partnership with NGOs ‘Enable India’ and ‘Gram Tarang’ to employ foundation they are creating for a promising future. The aim has youth with disabilities. We have employed more than 150 been to deepen our expertise in two main areas: professionals with speech and hearing impairment – our Silent Brewmasters – and are committed to increasing this count over Growth Mindset: Through sales capability across businesses the years. Innovation Mindset: Through design capability (across new product development, store design and the corporate design THE ROAD AHEAD team) As we look towards the future, I would like to reiterate our commitment to enhancing shareholder value for Coffee Day We are also building strength at the base of the pyramid through Enterprises Limited. We aspire to deliver sustainable growth, which our Management Trainee Programme, expanding capacity and is ahead of the country’s GDP and sets up good performance capability to create a pipeline of future leaders. benchmarks in the industry. As always, I would like to thank you, our shareholders, for reposing While considerable groundwork is yet to be done, the group is your trust in us. As a performance-driven company at the cusp of making good headway, with certain key factors that will ensure exponential growth, with lots of coffee and conversations, we will our success on the road ahead: create greater value for stakeholders and society. Exciting Innovations: In response to an increase in consumer Lets keep brewing new possibilities! preferences for a healthier lifestyle, we are continuously evolving our menu. Best regards, Going Digital: Technology has disrupted our way of life like never before, and we will keep investing in it to engage with young consumers through apps, thus getting nuanced insights into Mr. V.G. Siddhartha customer behaviour. Chairman and Managing Director Great Consumer Connect: Incomparable reach across the country with good value has ensured that we become an inseparable part 004 | COFFEE DAY | ANNUAL REPORT 2016-17 CHAIRMAN MESSAGE | 005 contents 006 | COFFEE DAY | ANNUAL REPORT 2016-17 01 02 03 BUSINESS MANAGEMENT FINANCIAL