Analyst Call - May 2011

8/6/2019 Analyst Call - May 2011

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Jubilant FoodWorks Limited

Q4&FY2011Investors/AnalystsConferenceCallMay13,2011

UrvashiButani:Thankyou.Goodevening ladiesandgentlemanwelcome to JubilantFoodWorks conference call for investors and analyst. The call has been hosted to

discussthefinancialperformanceandshareoperatinghighlightsforthequarterended

in31March2011.IhavewithmeonthiscalltodayMr.HariBhartiaCoChairmanof

JubilantFoodWorks,Mr.AjayKaulCEOandMr.RaviGuptaCFO.Wewillcommence

thiscallwithcommentsfromMr.HariBhartiaandMr.AjayKaulfollowedbyMr.Ravi

GuptaandaftertheopeningremarksweshallopenthefloorforaQ&Asessionwhere

themanagementwillbeverygladtorespondtoanyqueriesyoumayhave.

At this point I would like to mention the certain statements made or discussed in

todays conference callmaybe forward looking innatureand theactual resultsmay

varysignificantlyfromthesestatementsmade.Thecompanydoesnotoffertoupdate

thempublicallytoreflectchangesinperformanceandadetailstatementtothiseffect

isavailableinthereleasesentouttoyouearlierandonthecompanyswebsite.Iwould

now like to invite Mr. Hari Bhartia to commence by sharing his views on JubilantFoodWorksperformanceforQ4&FY11.Overtoyousir.

HariBhartia:Goodafternoontoallofyou.Andthankyouforbeingonthiscall.Weareverypleasedtoreporthealthyprofitsforthequarterofthisfiscalbasedonour,very

solid financial and operating performance. We continue to witness a very healthy

trajectoryinourgrowthonthebackof,Iwouldsay,averyrobustbusinessstrategyand

averystrongbusinessmodelthatwehavecontinuouslynurturedanddevelopedover

the lastmany years. And as all of youmay be aware this quarter has been rather

special for Jubilant FoodWorks as we expanded our business with the addition of

Dunkin'Donutswhich is reallyaworldrenowned coffeeandbakedgoodschainand

alsooneofthefastestgrowingchainsacrosstheglobe.Asweenternewfiscalweare

quite optimistic about our plans for Dunkin' Donuts and the growth potential for

Domino'sPizza.Wewilldoourbest to further capitalizeonour strengthsand Iam

confident that Jubilant FoodWorkswill enjoy continued growth in the financial year

2012.MycolleaguesAjay, theCEOof JubilantFoodWorksandRavitheCFOwillnow

provideyouwithmoredetailedviewonourresultsandaperspectiveonourstoryand

otherkeydevelopmentssofar.Thankyouagain.

AjayKaul:ThankyouHari.Averygoodeveningandwarmwelcometoallpresentherewith us. Jubilant FoodWorks witnessed another strong quarter and a solid and

successful fiscal, not only from a profitability standpoint but also in terms strategic

developmentand that isDunkin'Donuts.As reported inyesterdays financial results

pressrelease,ourTotalIncomeforthequarterwitnessedarobustgrowthof56%over

lastyear to standatRs.1,937million.OurNetProfit for thequarterwasatRs.193

B - 214, Phase II, District Gautam Budh Nagar, Noida - 201 305, Uttar Pradesh, India


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millionup86%ascomparedtothesameperiodlastyear.InFY2011JFLsTotalIncome

stoodatRs.6,783millionupby60%overFY2010.ThecorrespondingNetProfitstood

atRs.720millionupby118%overlastyear.

JubilantFoodWorksseesitselfasaninnovatorandatthesametimehastheabilityto

focusonitsconsumerstodevelopleadershippositioninthefoodserviceindustry.We

havesuccessfullybeenabletoexpandournetworkofDomino'sPizzastoresacrossthe

nation.AtthestartofFY2011wehadsetatargetofopening70storesspreadacross

existing and new cities and I am pleased to announce that our coverage has

successfully evolvedaswe launched 72new storesduring the year.Todaywehave

storestotalat378spreadacross90citiesinIndia.Moreoverweareontrackwithour

plans to enter Sri Lanka through our subsidiary Jubilant FoodWorks, Lanka Private

LimitedandaresettolaunchDominosPizzatherenextmonth.

Webelievewehavebuiltourcompetitivestrengthsandcontinuetodosobackedby

ourfocusonkeybusinessphilosophiesthathavebeenpartofJFLsinceinception.Webelievewe are able to create valuewith our commitment towards costumer needs

innovation andquality andhopewe are able to generateeven greater value in the

future.

Weare trulyexcitedabout theprospectsand thepotentialofourgrowthespecially

withournewventurewhichisourassociationwiththeworldleadingbakedgoodsand

coffeechain Dunkin'Donuts.Asmanyofyoumaybeawareandpresentwithuswhen

wediscussour ideologiesandstrategyaroundDunkin'Donuts in theQ4.Webelieve

Dunkin'DonutsrelationshipisaperfectmatchwithJFLswayofbusiness.WithDunkin'

Donuts

added

to

our

portfolio

we

wish

to

cater

to

the

all

day

part

food

segment

which

webelieveislargelyuntappedandhastremendouspotentialtogrow.AlsotheDunkin'

DonutsbrandisextremelyrelevantforIndianotonlyduetoitsstrengthsindonutsand

coffeebutalsoduetoitsdifferentiatedfoodandbeveragemenu.

Atpresentwehaveinitiatedourworkonseveralareaswhichwouldformthebackbone

ofthisnewventure,beforewebegintherolloutofactualstores.An importantpoint

thatwouldliketoemphasizehereisthatthenatureofDunkin'Donutsmodelenables

us to localize our offerings and recipes and present to our customers a range of

offeringswhichwouldcaterandsatisfy to theirneeds,whichweat JFLbelieve isan

extremelypositiveandcrucialfactorforcreatingasuccessfulfoodandbeveragebrand.

Moreover,givenDunkinDonutsexpertise inseveral internationalmarketscombined

withJubilantFoodWorksstatureinindustryinIndia,weareconfidentofcreatingnew

successeswithDunkin'DonutsinIndia.

Moreover, we have a highly committed and strong team to drive Dunkin' Donuts

operations.Mr.DevAmritesh,whoasSeniorVicePresidentMarketing forDomino's

PizzahasbeenveryinstrumentalandfundamentaltobuildthebrandDominosPizzaat


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JubilantFoodWorks.Hewillnow lendhisstrategic leadershipvisionandexpertise to

drivetheoperationsforDunkinDonutsasthePresidentandCOOofDunkinDonuts.

Going forward, the food industry in India continues to present great opportunities

especiallyintheQSRspace.AllinallwefeelJFLhasthecapabilities,theknowhowandhealthyfinancialstrengthtotapthisgrowingpotential.

For the year ahead of us our goals as an organization are clear, we would like to

continue to grow our network of Dominos Pizza continue to aggregate revenue

growth and expand our scale, productivity and enhance our brand equity. Our

expansionplansfortheyearaheadarebasedonthefeedbackwehavereceivedsofar

andthusplantoopen80newstoresinFY2012.Alsoweareconfidentofourplansofa

phased rollout of Dunkin Donuts stores. Thus our initial focuswill be primarily on

metrocitiesandweplantorolloutabout80to100storesofDunkinsDonutsinaspan

ofnextfiveyears.

Thatbringsmetotheendofmyremarks;IwouldnowliketohandovertoRaviGupta

ourCFOwhowilltakeyouthroughourfinancialperformance.

RaviGupta:ThankyouAjay.Goodeveningandwarmwelcometoallofyouagain.Iampleased to report that thecontinuous focusofour teamonprofitable revenue, cost

controlinitiativesandcustomersatisfactionhasresultedinanothersolidperformance

forJubilantFoodWorks.IshallbrieflyprovideyouwithanoverviewofourCompanys

performanceforthequarterandthefullyearended31March,2011.

OurTotalIncomeforQ4FY11wasatRs.1,937millionwitharobustgrowthof56%over

thefourthquarterlastyear.Thisquartergrowthwaslargelyduetotheincreaseinour

network&and same share sales growth. Wealsowitnessed increase innumberof

ordersreceivedonaccountoftheCricketWorldCup.Oursamestoresalesgrowthfor

Q4FY11wasat33.2%ascomparedto38.1%forQ4FY10.

MovingaheadwithrespecttoprofitabilityduringthequarterourEBIDTAwasreported

atRs.331millioncomparedtoRs.185million inthesameperiodlastyear.Whileour

EBIDTAmarginswereat17.1%ascomparedto14.9% inQ4FY10.Finallyweachieved

robustbottomlineprofitabilityduringthequarterwithanincreaseof86%inPATtoRs.

193millionascomparedtoRs.104millioninQ4FY10.

This fiscal by virtue of systematic planningwe have opened 72 stores and enteredseveralnewcitieswhichincludeTierIIandTierIIIcitiestoo.Andwearepleasedwith

thepositiveresponsewehavereceivedonsuchopenings.Thusbackedbythefeedback

we will also continue to relentlessly drive our capabilities to further expand our

networkandstrengthenourbusinessmodel.


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Whiletheindustryiswitnessinghealthygrowth,thesharpincreaseininflationinIndia

hasbeenaparticularconcerntousasaplayerinthefoodindustry.However,givenour

scale and infrastructure suchasour strong supply chain, focusedmanagementand

practicesrelatedtocostcontrolatallorganizationslevelwehavebeenabletoleverage

these

not

only

to

our

benefit

but

also

to

the

benefit

of

our

customers.

Thus

as

we

continue to grow, we are also continuing to focus on cost containment and again

achievefavorableyearonyearresultsinoperatingexpenses.

MovingaheadwehadnointerestchargeonourbookthisquarterascomparedtoRs.

11.81milliononQ4FY10duetorepaymentofalltermloans.

Nowtogiveyousomecolouronour fullyearresults. JFLsTotal IncomestoodatRs.

6,783millionregisteringagrowthof60%ascomparedtoFY10.OurEBIDTAforFY11

was at Rs. 1,202 million compared with Rs. 656 million in the previous fiscal. The

EBIDTAmarginsstoodat17.7%ascomparedto15.5%inFY10.

Lastly JFLsPAT for the fiscalwasRs. 720millionwitnessing a growth of 118.4% as

compared toPATofRs.330million inFY10.ThecorrespondingPATmarginswereat

10.6%and7.8%respectively.

During the year, besides new store openings we maintained our commitment to

innovationandasaresultsawthe introductionofnewadditiontoourmenusuchas

Pasta ItalianoandMexicanWrapalongwiththenewPizzavariant,DoubleBurstPizza

whichwe launched intheQ3.Also thesehaveandcontinuedto receivetremendous

positiveresponsefromourcustomers.

Andasmanyofyoumaybeawarefromourrecentannouncement,wehaveexpanded

our brand portfoliowith our alliancewith DunkinDonuts, there by driving greater

valuefortheCompanyandourstakeholders.DunkinsDonuts,inmorethanoneway,isanidealmatchforJFLanditsgrowthstory.Wetrulybelievethatwiththisassociation

we have begun another exciting story in the Indian QSR space. Exciting for many

reasons, firstly we believe that with the uptrend in the food business, it was an

opportune time for us to formalize our association to introduceDunkinsDonuts in

Indiaandprovide the Indian customerswithanew rangeofproducts.Wehave the

flexibilityinthismodeltofinetune,asAjayhasmentioned,tolocalizeourofferingsto

alignthemtotasteandpreferencesoftheIndianpalate. Furthermorewebelievethat

wewillbeabletobenefitfromseveralsynergies.Wehavefromourjourneythusfar,

gatheredtheexpertiseandtheabilitytomonitorandfeelthepulseoftheconsumer

thusgivingasauniqueedge.BesideswehaveanimmenselytalentedhumanresourcebaseofwhichadedicatedteamundertheleadershipofDevhasbegunworktowardsmakingDunkinDonutsasuccess.


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Movingon,wewould like to sincerely thankour investorsand stakeholders for the

continuous faith placed in JFL. We are confident of sustaining a good growth

momentum in the years ahead givenour increasingly differentiated profilewhich is

enhancedbyourassociationwithleadingfoodbrands.WiththisIconcludemyremarks

and

I

would

request

operators

to

open

it

for

question

and

answers.

Ajay

and

I

will

be

morethanhappytoanswerallthequestions.Thankyou.

Moderator: Thank you verymuch sir.Our first question is from the line of PriteshCheddafromEmkayGlobal.Pleasegoahead.

PriteshChedda:CouldyoutellusifthereisanyfurtherscopeforoperatingleverageintheDominosbusinessmodelandifyesthencouldyouidentifytheareasfromwhere

theleveragecancomeinthebusinessafterreachingthisscale?

AjayKaul:Okay.Ifyoulookatlastthreeyears,wehaveimprovedourmarginsfrom12.1%to15.5%yearbeforelastto17.7%lastyear.Idoagreethattowardstheendoflast

yearbyvirtueofabitofpressurefromrawmaterials,especiallymilkandcheeseanda

bitbecauseofourinvestmentonourpeople,lastquartermarginprobablywasnotas

goodas itshouldhavebeenbutstill17.7% isagood improvementovertheprevious

yearwhichis15.5%.Nowgoingforward ifyouhavetomakesomesortofaguidance

for next year, we believe we should be able to at least retain the same margin

percentage even next year.Now answering your question that is there a room for

improvement,yesofcourserelatedtoscaleandwhileweplantoadd80newstores

nextyear,wewillalsohavegrowthcomingfromsamestores.Asthequarterswillpass

wewillbeinabetterpositiontomakeacomment,butwebelieveretainingthismargin

is

definitely

what

we

will

do.

Is

there

scope

indeed

as

far

fixed

cost

or

I

would

call

them

partlyvariablecost likemarketingwhichwillprobablynotgrowat the samepaceas

ourbusiness.OurG&Ashouldnotgrowatthesamepaceasourbusinesswill.There

willbescopeforimprovingmarginthere.

PriteshChedda: In the totalstorenetworkof378thatyouhave today,howmuch isDelhiandhowmuch isMumbaiandwhatisthemaximumpotentialofstoressayina

city likeDelhiandMumbaiandtenyearsdownthe linehowmanysuchcitiesdoyou

see?

AjayKaul:WedonothaveexactnumbersPritesh,inallfairness,atthefingertipsrightnow, but let me give you these numbers in a slightly different way, in a different

format. The top three cities between Delhi, Mumbai and Bangalore contribute to

around should I say40% 45%ofourbusiness.And it isquite surprising the rateat

whichthefrequencyofconsumptionisincreasingincitieswherewehavebeenpresent

for amuch longer duration,how the consumerhabits are changingwith regards to

frequencyandpenetration.Soasaresultwebelievethere isasmuchopportunity in

DelhiandaMumbaiandBangaloreandthefewotherbiggercities,toopenmoreand


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more stores because the frequency of consumption is increasing at such apace, as

muchasthereisin letssaytheLucknowsandAhmedabadsandtheKanpursasthere

is innewcitieswherewearenotpresentatall.And Iam lookingatthenexttwoto

threeyearswindowhere,actuallyPriteshinallfairnesswewillnotbeabletolookthat

far

and

tell

you

that

how

many

stores

will

be

in

Delhi

ten

years

from

now.

PriteshChedda:Andwhen you said 45%, is it 45% of the store network or 45% ofrevenues?

RaviGupta:Itisbasedonofrevenue;anditkeepsonhoveringbetween40to45%PriteshChedda:Percentofrevenue.RaviGupta:Yes.JustaddontowhatAjayhasindicated.Aboutfiveyearsbackwewereabout50 stores in the top threecities.Andasofnow thereareabout130 stores in

thosetop3cities.

PriteshChedda:Soabout50storesroughlyacity.RaviGupta:50stores,aroundthreecities5yearsback.AjayKaul:Around50storesinDelhi.PriteshChedda:Okay.AjayKaul:Around50 inMumbaiandaround40 inBangalore isanumberasofnow,numberofstores.

PriteshChedda:Okay.Can youhazarda guesshowmany sub citiesdo you see tenyearsdownthelineorisitnotpossible?

AjayKaul:Icant,wecanttalk intermsofnumberofcitiesbutintermsofstoresifIhave thepredict, lets say tenyears fromnow, theywillbewell inexcessofmaybe

1200,1300,1400stores.

PriteshChedda:OnDominosnetwork.AjayKaul:WeareonlytalkingaboutDominosPizzahere.PriteshChedda:Okay.Andwhenyougavethese80newstoreadditionsforFY12thatisDominosaloneright?

RaviGupta:Yes,thatisDominosPizzaalone.


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PriteshChedda:Okay.MynextquestionisinyourrevenuesayforFY11,isitpossibletoknowwhat is the new product SKUs contribution that is Pasta,wraps, dessert put

togetherasapercentageofrevenue?

AjayKaul:Wewouldnotwant to share that information,allwe can say is that thecontributionofPizzasnodoubthasgoneafewpercentagepointslower.

RaviGupta:Butitcontinuestobearound80%level.PriteshChedda:Okay.Now that includes,80% ispurePizzaand20%would includebeveragesandeverything.

Ajay Kaul: Yes, everything else. But let mejust add to this step as a part of ourconcertedstrategyclearlyexpansionintermsofshareofstomachissomethingwhich

weareconsciously lookingatandthesearealso learningscoming from international

markets,whereproductswhichcanexpandtheshareofstomachareonlyhelpingusto

growtheticketsizealso,while it isalsosome impactontheorder.Products likethe

ChocoLavaCakewhichcameinasadessert,thePastawhichclearlywasanadditionto

thePizzathecategoryandWrapsandsoon,haveallhelpedinthisarea.Sothe37%

38%samestoregrowthwhichwehaveachievedthisyearand22%lastyear,wewould

attachsomeweightageclearlytotheadditionofthesenewproducts.

PriteshChedda:Okay.AjayKaul:Andprogressivelygoingforwardwewouldbe lookingatsuchproducts.AsmuchaswewillfocusonPizza.

PriteshChedda:Okay.Nowwhatisthehighestrevenuethatyouhavegeneratedoutofastoreandwhatisthatnumber,doesitmeanthateventuallyoneofyournewstores

wouldgotowardsthathigherstorerevenue?

RaviGupta:Pritesh,toansweryourfirstquestion.Ouraveragestoresales,whenyoulookatsalesofRs678crorethatwehavedoneanddividethisby342i.e.anaverageof

thenumberofstores whichissmallaveragestoreatbeginningofyearandtheendof

theyear,youwillcomeoutofafigureof1crore98lakhsalesonanaveragebasiswhat

wehavedoneduringthelastyear.

PriteshChedda:Yes.RaviGupta:Butsomeofthestoreshavehadsaleswhichisabout2to2.5timesmorethanthis.So,doesitansweryourquestion?

PriteshChedda:Yes,sowhenIusethesamestoresalesgrowth,oneofthenewstoreswouldeventuallyonthegrowthbasisshouldgoatthatnumber,asitwhenitmatures?


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RaviGupta:Yes,atsomepointintimeitmaygoandwearenotsayingthatthestorewhich isatthe2to2.5timesthe levelofthenationalaveragehasstoppedgrowing,

thatstoremayalsogrow.

PriteshChedda:Okay.LastlyDunkinDonuts,whenisthefirststoregoingtoopenandhowmanystoresareyounowplanninginthefirstyearofoperation?

AjayKaul:Thisisseenasthefirstyearofoperation.WeplantoopenourfirststoreinCalendar2012.

PriteshChedda:Thatisnextcalendaryear.AjayKaul:NextcalendaryearbutQ4ofthisfinancialyear.PriteshChedda:Okay.SoQ4FY12iswhenyouwillopenyourfirststore?AjayKaul:Yes,whilewearetryingtoacceleratethewholethingbutsincewearestillatastagewhereoursupplychainstrategy,ingredientsstrategy,menumixapartfrom

the holistic marketing and overall strategy is being finalized, we are trying to

accelerate,butrealisticallyspeakingQ1 Calendar2012isagoodtimeframetolookat.

PriteshChedda: Andinthefirstyearofoperationsnumberofstoresinoperationanyidea?

AjayKaul: Iprobablywouldnotputanumber to thatbut itwillbea smallnumberbecauseweclearlybelieveinopeningahandfulofstorestheregettinglotoflearnings

fromthatstoresasmuchaswehavedoneinDominosandwefirmlybelieveingetting

thebasicsright,gettingthe initialentrystrategyrightandthenacceleratethereafter,

wedobelievebythefifthyearweshouldbesittingat100storesandasyouhavesaid

in the past also that in 15 years timewe believewe shouldbehaving at least 500

DunkinDonutsstoresinIndia.

PriteshChedda:Okay.SoasastrategywillyoufirststabilizeDunkinDonutsmodelandthen look for a new franchise or you are open to a new franchise before Dunkin

Donutsstabilizes.

AjayKaul: Iwould saywewouldwant tostabilizeDunkinDonutsbecause thathasbeenthegroupsphilosophyallthrough,thatdontbeinahurry,attheendofthedaywehavetobringvaluetoourshareholdersandourinvestorsasmuchaswedidthatin

DominosPizza.Peoplewereknockingatourdoorforalongtimebutwetookourtime

to finalizeDunkinsDonuts.Sowewoulddo thatalthoughweare indiscussionwith

otherpeoplealsobutIthinkatleast12to18monthsfromnowiswhenwewouldthe

evaluating or probably contemplate something, till that point we will be totally


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preoccupiedbyestablishingDunkinsDonutsandofcoursetakingDominostothenext

level.

Pritesh Chedda: What are the rent inflation and the employee inflation that theDominosmodelisseeninFY11?

RaviGupta:Ithinkitisverydifficulttocomputerentinflationbecauseitisamixtureofhow much space you are hiring, which area and the city you are hiring in. So to

computetheexactrentinflationbecomesaverydifficulttask.Buthavingsaidthat,in

ouragreementweprovideforinflationwhichisabout15%every3years.Sothatisthe

inflationwhichisinbuiltintheagreementitself.

PriteshChedda:Andemployeeinflation?RaviGupta:Asfarastheemployee isconcernedweareofferingthemslightlybetterthaninflationsothattheycanbeatinflation.Itis ultimatelyouremployeeswhohelp

usdeliverthewholeofourgrowth.Andweneedtomaintainthissenseamongstour

employeeswholeadthisacceleratedgrowth.Asaresult,itisimportantthatwekeep

themtogetherandwekeepthemmotivated.

AjayKaul:Youmustbealreadyaware,that inSeptember lastyearwehad increasedthesalariesofourteammemberswhoworkinthestore,bysignificantnumber.There

are of course, minimum wages pressures which are coming from all the state

government and so on but we want to stay ahead of that curve and we had also

introducedthe incentiveplansforourmanagerswhowork insidethestore.Allthese

are efforts being done to stay ahead of the curve, to ensure that regular inflow of

employeesisthere,benchstrengtharebeencreated,inthequesttoopen 72lastyear

and 80 stores next year. Because, as you are aware we are the fastest growing

multinationalfoodserviceschaininIndia,wearealsothelargestbyyardsasMNCQSR

chain,sothesearethestepswehavetotake.

PriteshChedda:WhatisthecountinFY10andFY11,theemployeecount?RaviGupta:FY10itwasabout8,500employeesandFY11itisabout11,500employees.PriteshChedda:ThisdoesntincludethetemporaryemployeeswhichyouhaveinthemonthofDecember?

RaviGupta:Thisisactuallyatthepointoftime asofMarch31.Pritesh Chedda: Okay. And how much does the temporary addition happens inDecember?


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AjayKaul:Imean,weaddprobablyaround1000extrapeopleIamhazardinga guessbutdontholdmeon that.Wedohirearounda thousandoddpeoplewho thenby

January,Februaryagainkindofmoveout, so itcomesdownback to the reasonable

level.

PriteshChedda:Okay.AndmylastandfinalquestionforMr.Bhartia,haveyouframethedividendpolicynowsinceitsfirstfullyearofoperationsbeingalistedentity?

HariBhartia:On the dividend side this year theBoardhasdecidednot to give anydividendmainlyforthereasonthatwecontinuetoseehugegrowth intheDominos

Pizzabusinesswhichweare investinga lotofresourcesboth in Indiaandthen inthe

newmarkets likeSriLankaandthenofcoursetheamountof investmentrequired in

DunkinDonutsthisyearisverysmall.SoIthinknowBoardwillreviewthisyearasto

howdoweseegrowthinthenextthreetofouryearsandthenwewillcomebackwith

a dividend policy. So I think this year we decided not to give a dividend because

resourcesstillneedtobeutilizedforgrowth, Ithinktheopportunitiesforgrowthare

immense.SoIthinkweneedtoseewatchthemarket whichweseeisgrowingquite

fast, seewhen India isgrowing, themarket isgrowingandhasAjaypointedoutwe

continuously see the frequency being increased in the cities and that creates a

completelynewmarket,even intheexistingcitieswherewearepresent.So,a lotof

capitalisstillrequiredforinvestinginnewstores.

PriteshChedda:Okay.HariBhartia:Wewillcomebackwiththedividendpolicydefinitelynextyearintermsofhowweexpecttodistribute.

PriteshChedda:Thankyouverymuch.Moderator: The next question is from the line of Jaibir Sethi from CLSA. Please goahead.

JaibirSethi:Thesamestoresalesthisquarterhasbeenexceptionallystrongdespitethetoughdaysfromfourthquarteroflastyear,Ijustwantedtogetasenseofone,whatdrovethisandsecondwhatwouldbeareasonablesortofgrowthratetolookforgoing

forward?

AjayKaul:Okay,areasonablenumbertolookforwardtointhisyearsomethingwhichwebelievewewillbeabletodeliverisaround19 20%asasamestoregrowthnumber.

Yourobservationwas very right that comingoutofquarter fourof yearbefore last

wherewehadforthefirsttimeachievedthis35 40%samestoregrowthnumber.Our

33%samestoresalesgrowthnumberforQ4FY2011wasagoodachievement, Ithink

WorldCuppresencedidhelp there,so thatwasoneadditional incrementalbusiness


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thatwegot.Overandabove,IthinkourproductwhichwehadlaunchedinDecember

andthatcontinuedforthewholeofthatquarterwhichwastheDoubleBurstPizzaalso

helpedandevenotherproductswhichwehadlaunchedfromtimetotimebeforethat

haveledtotheincreaseinshareofstomach,theyhavealsocontributedalittlebit.One

more

thing

which

probably

I

want

to

highlight

in

the

end

is

that

our

online

ordering

whichwehavebeentryingtobuildabackboneforoverthe lastyear,yearandahalf

clearly in the months of January, February and March has started showing better

resultsand inthisparticularquarter,asapercentageofdeliverysales, itwasagood

numberandweareobviouslybettingalotonthatasfarasfutureisconcerned.Iwould

attributetothesenumbers.

JaibirSethi:CouldyougiveusasenseofhowmuchofthismighthavebeentheWorldCupbecause,nonWorldCupversusWorldCupperiodsduringthequarter?

AjayKaul: Itsa toughone todo.Wehave tried todo thisanalysisout there, itsasingle digit, small single digit number but the nonetheless it is there and one cant

disregardit.

JaibirSethi:Andthe19%20%numberwhichyoumentionedforFY12,whatfactorsdoyouseedrivingthat?

AjayKaul: Ithink itsamixofallthesefactorswhich Ihadjustsaidthatwehaveanengine, a model which is kind of working well, supporting that will be our media

strategy weareincreasingourmarketingspends.Weareincreasingthespendwhich

we are going to do on onlinemedia;we have a single numberwhichwewill start

popularizingvery,verystrongly.Wehavebeenalreadydoingthatbutthisyearwillbe

very,verystrongonthatandoverandabovetheproduct launcheswillcontinuethe

shareofstomachstorywhichIwastalkingabout,willcontinue.Soasamixofallthis,

we believe that a 20% same store growth number is clearly that we can commit

ourselvestoo.

RaviGupta:Ithinkoverallgrowthandsaliencywhichwehaveseenandthegrowthinthe Indian industrywhichwe are foreseeing, that gives us confidence thatwe can

achievethisgrowthof20%.

JaibirSethi:Okay.Andthesecondthingwasaroundthemarginside,Iunderstandthatyou have taken a bit of a price hike effective April, however, there are still fairly

palpablepressuresboth intermsof inputcostaswellaswages.Sodoyouthink the

growthat itsstore level intermsofsamestorerevenueandsamestorecostswillbe

broadlyinlineordoyouthinkyouwillperhapssomepressurecominginonstorelevel

margins.


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Ajay Kaul: Seewe believe, the pressure as far asmanpower is concerned, ismoreinternal,itisourownbecausewearegrowingatacertainpaceandweneedinflowof

peopleatapaceatwhichwewant.Butwehavealsoseenthatwhenwetakestepslike

these immediately after in a succeeding quarters, we are able to bring in lot of

manpower

efficiencies

because

training

costs

go

down,

bench

strength

are

created

so

asaresult,eventherecruitmentcostgodownandsoon.Asfarasrawmaterialcostis

concerneditsobviouslyexternaldrivenbuthavingsaidthatIwanttojustmentionone

thing in the same breath thatwhen you are growing, for example at around 60%,

whichisourtotalgrowthforlastyearandanyearbeforelastitwas50%,plus,weare

able to work very closely with our business partners who maybe otherwise have

inflationarypressuresbutwhentheyarealsogrowingontheirDominospieceby50

60%,theyareable todriveeconomiesofscale, theyareable tobring inor invest in

plantandmachinerywell in timebecause theyknowourplansand theycanalmost

bankonDominosasapartner.Soasa result these inflationarypressuresonusare

neverassevereastheymaybeforsocalledoutsideworld,buthavingsaidthattowards

theend,lastthreefourmonthsoflastyeartheydidgothroughanunprecedentedkind

ofaphase,milkpricesdidgothroughtheroof.Butwebelieveitissomethingwhichwe

willhavetoworkcloselywithourbusinesspartners,andnominalprice increasesare

somethingwhichwehavetotakegoingforwardinanycase,whichwehavebeendoing

inthelastthree,fouryearsalso.

JaibirSethi:Okay,soyouarenotparticularlyconcernedaboutyourabilitytoabsorbthesecostpressures.

AjayKaul:Iwouldsaytheinflationarypressureshavebeenthereeveninthelasttwoyears,

a

bit

more

in

the

last

few

months.

But

we

try

to

work

closely,

absorb

as

much

as

possibleandthenpassonanominalincreasetoourconsumers.

JaibirSethi:Right.Thanksalotforthatsir.Moderator: Thank you. The next question is from the line of Manav Vijay fromEdelweiss.Pleasegoahead.

ManavVijay:Couldtellmewhenthelastpricehikewastaken?RaviGupta: Inthe lastfinancialyear itwas inNovemberand inthisfinancialyearwehavejusttakeninApril,normallyeveryyearthesearethetwoperiodswherewetake

thepricinghike.

ManavVijay:Okay.SoAprilandNovember.RaviGupta:Yes.


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13

ManavVijay:Okay.Now, inspiteoftaking Iwouldsayapriceriseourgrossmarginshavebasically theyhavecomeoff Iwould sayquarteronquarteraswell.Nowdoes

thatmean that the entire benefit that company is trying to get either lets say by

increasingthepricesfirstly,secondlytheoperatingleewaythatyouhaveinyourmodel

in

terms

of

rent

and

other

expenses

is

getting

negated

by

obviously

the

extended

inflationandtheinternalstaffcost?

RaviGupta:Manav,Ithinkwehavediscussedinthelastconcallalso.Whenwedecideaboutprice increase inNovember typically thisdecision is taken twomonthsbefore

thatperiod. Andthat isbasedonwhat istheinflation levelatthatpointoftimeand

whatistheexpectedlevelofinflation.Nowittakesforusacoupleofmonthsormaybe

one or two quarters for us to exactly pass on thewhole impact of inflation to the

consumers. Sowhenwe took the lastprice increaseat thatpointof timewhatever

inflationwasexpectedwehavetakenadecisiontoincreasetheprices.Butlastcouple

ofmonthsasAjayhasindicatedtheinflationhasbeenunexpected,themilkpriceshave

gonethroughtheroof. Soittakessometimeforustopassonandwealsodecidethat

wewillnotpassonallthe increasetotheconsumerdemandbecauseconsumermay

feeljitterytryingtounderstandwhypizzashavebecomeexpensive.Sowewanttopass

onalltheprice increaseslowlytotheconsumersand inthemeantimeabsorbthese

increasessothatconsumerunderstandstheseincreasesandacceptsalltheseincreases

andthatisthereasonlasttwoquartersyoufindthatrawmaterialcosthasgoneupa

littlebitandyouwillseethatgoingforwarditwillcomeundercontrol.

ManavVijay:Okay.Now,Imean,duringtheyearwehavegeneratedclosetoRs.40 50crorefreecashflowandconsideringtheplansthatwehavejustforDominoskeepingI

would

say

DD

apart

as

of

now,

this

is

more

than

sufficient

to

cover

the

entire

CapEx

that we will have in FY12 to a very great extent. So any specific reason of not

distributinganydividend?

RaviGupta:SeeoverallCapExforthe lastfinancialyearwasaboutRs.70croresnowthat is for opening about 70 stores and also on three other areas which is a

replacementoftheequipment intheexistingstores,someadditionalnewequipment

becauseofthegrowthof37% inthesamestoregrowthwhichhashappenedandall

theadditionalequipmentyouneedatthecommissarylevelandallother levelsinthe

Company. Sogoingourplansarethatwewillopenabout80stores.Secondaspectis

costofopeningstoresisalsoisgoingupbecauseofinflationandalsobecauseweare

upgradingqualityofthestores interms,forexamplewillhavedigitalmenuinallthestoresandwehavequitealotofotherimprovementplansinthestoresandwehave

seen that ifwespend thatkindofmoney, thepayback ispretty faston those. And

thenweperiodically reimage the stores, relocate the stores. So all theseplans are

thereandareprettyaggressive. On topof itweplan to relocate twocommissaries

whichisEastandWestcommissaries. Andwealsoplantoopenonenewcommissary

inNorthIndiawhichwillbesomewherearoundChandigarh. Soallthisplansarethere


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14

withus. Apartfromthat,wewillinvestinabout45storeswhichwillcomeinSriLanka

andlastlyplanforDunkinDonuts.SoallthisplansarethereandweareontrackAnd

are fairly confident of achieving them and thats the reason the Board has decided

sayingthatmoneyisneededforexecutioninternally.

ManavVijay:AnyspecificreasonofrelocatingEastandWestcommissary?RaviGupta:Theseareabout1011yearsoldcommissaries. Theyhave livedtheir lifeandwehaveoutgrownintermsofnumbers likethiscommissarywasestablishedfor

about30to40storesandithasStretchedcapacitytogoupto100stores. Rightnowit

ismanagingabout120 stores there. Sobeyonda stageyouneed toupgrade them,

needtoincreasethecapacity. Sonowwhenweestablish,wewillestablishforabout

200250storesthere. Soboththereasonsarevalidthatitsliveditslifeandthenwe

havetoexpanditatsomepointoftime.

ManavVijay:SowhatkindofCapExatthererelocationofEastandWestwillrequireinFY12?

RaviGupta:Commissariestypicallycostdependingonsize,anywherebetweenaboutRs.5croretoRs.10crore.Rs.5croreforabout50to75storescommissaryandabout

Rs.10crorefor250storescommissaries. Sothosearekindofexpensewewillincur.

Manav Vijay: And the upcoming commissary in Chandigarh is because the currentcommissaryinNorthhasnotbeenabletoormaybeisalreadystretchingitslimit?

RaviGupta:Notexactlythatisthereason. Webelievethereisaquitealotofpotentialin the northern part of the country specifically because right now all the

transportation happens from Noida and we believe that we can reduce the

transportation cost forup country storesand improves theproductqualityalsoand

unfoldthepotentialwhichisthere innorth. Sothatwhenthecommissary isnearby

thelogisticcostsforsupplytonewstoresandlookingatthenewstoreprofitabilityalso

comesupprettywell.

ManavVijay: OkaysoweshouldhaveanotherRs.5croretoR.10croreofexpenditureinthiscommissaryaswell.

RaviGupta:Yes.ManavVijay:Great,thankyouModerator:Thankyou. Ournextquestion is fromthe lineofAmnishAggarwal fromMotilalOswalSecuritiesLtd. Pleasegoahead.


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15

AmnishAggarwal:My firstquestion is regarding the loansandadvanceswhichhaverisen at a very sharppaceduring the yearbecause ifwe look at thebalance sheet

whichwehavebeengiven,theloansandadvanceshaveincreasedfromRs.36croreto

nearlyRs.70crore.Sowouldyou like toguideusonwhathas led tothiskindofan

increase

in

the

loans.

RaviGupta:Amnish,wehadaboutRs.51croreofcashlyinginourhandaboutRs.21croreyouwillfindunder investment,which isa liquid fundkindof investmentwhich

arethereandRs30croreisanICDgiventoacorporateofreputewhichisunderloans

andadvances.Thatwillexplainthecompletedifference.

AmnishAggarwal:OkaysoisthatinterestrateonICDslinktothemarketrates?RaviGupta:Itisatmarketratebutnotlinked.AmnishAggarwal:Okay. AndthesecondquestionisthatwhatsortofCapExweplantohavefortheDunkinDonutsprojectinthecurrentyearthatisFY12.

RaviGupta: Ithinkweare inthemidstformakingplansforDunkinDonuts. Wewillnotbeabletoexactlysharethenumberfor it,butwhenwe lookat incomparisonto

theDominos,thiswillnotbeverysubstantial,maybeabout5%ofwhatwespenton

Dominosthisyear.

AmnishAggarwal:Okay. Andifyoulookatthepriceincreaseswhichyouhavetakenrecently,myguess is that in thepast, say sixmonthsor sowehave increasedpizza

prices by an average of say 7% to 15% depending upon the various sizes. And

practicallyintheentiremenu,PizzaManiaistheonlyproductforwhichthepriceshave

notgoneup. Soareyouwitnessinganychangeinthesalesmixhappeningduetothis

anddoyouenvisageanyimpactonthesalesbecauseusuallyourpriceincreaseearlier

usedtobesayaroundcoupleofpercentagepointstwiceayear. ButthisyearifIlook

atthepast12to13monthsthepriceincreasewouldberangingbetweensayminimum

of10%totheupwardofsay20%. Socanyouthrowsomelightonthis?

Ajay Kaul: Yes sure, we normally take two price increases during the year, one,somewhereinApril,onesomewhereinOctober November.Thesearenominal2%to

3%priceincreases.ThelastpriceincreasewhichwehavetakeninAprilisalittlemore

than2% 3%but it isnot intherange inwhichyouaretalking. It isdefinitelynot in

thatrange. Itisamidsingledigitnumber,buthavingsaidthat,thisisthefirsttimewe

tookit.Therewereabitofinflationarypressuresbutwewerealsoobviouslywatching

theconsumersbehaviourveryveryclosely.Wehaveourownwaysofdoingthat.We

haveseennochangewhatsoeversofarduringthefirstmonthandhalfofthisyearon

consumerbehaviourwithrespecttoprice.


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16

RaviGupta:Amnish,toaddtowhatAjayhasindicatedseewedonotincreasethepriceofall theproductsacross.Whenwe increased thepricesnow inApril,wehavenot

increasedpriceofthePizzaManiawhichremainsatRs.39. Soitmeanswhenwedoa

weightedaverageincreasesomeofthepizzavarietymayhaveahigherpriceincrease

and

some

of

them

can

have

a

lower

or

no

increase

at

all.

So

that

is

the

reason

you

may

say10%to20%butthatisnotintherangewehaveoperatedeverinthehistoryonthe

company. Ourincreasewas5%p.a.

AmnishAggarwal:Okaynowactually,thedifferenceisyouarelookingattheweightedaveragepriceincrease,butI'mlookingatsaytheonlythepizzasegment,becauseyou

arerightthatPizzaManiahasnotseenanyprice increasebut if I lookatsay,pizza in

particular,onlypizzapart, Imean, if I lookatOctoberandnow theprice increase in

someofthemIthinkaspermydataitssayindoubledigitsifI'mnotwrong.

AjayKaul: Ifyouseen lasttime inOctoberandwedidgothroughaprice increase inNovemberalso. Somaybe it isamultipliereffectoftwoprice increases. Youknow,

whatwedo is,wedoactuallyaweightedaveragewhichmeanswelookattheactual

salesgeneratedbyeachSKUandmultiplyitwiththepriceincreasesandsoon. Andas

Iwastellingyou,theweightedaverageimpactisnot2%to3%butitisstillamidsingle

digitkindofanumber, ifyouunderstand. Andmost importantly istheelasticity,we

arenot seeing so farany visible signswhatsoeverof consumeroff takeshaving got

impactedbecauseofit.

AmnishAggarwal:OkaybutbecausePizzaManiapricesarestable,hastherebeenanyincreaseinofftakeofthesame?

AjayKaul:Ithasbeenatthesteady,samelevelasithasbeeninthepreviousyearsorthepreviousmonths.

RaviGupta:AndthenAmnishtoupdateyoulastyearwehavetakenPizzaManiapriceupfrom35to39atonegoitself. SoitisnotthatwedonttakethePizzaManiaprice.

Thistimewehavedecidenottotakeit,butatappropriatemomentswewilldothat.

HariBhartia:OntheinflationIjustwantedtoaddwhatAjayandRavihavesaid. Whileinflationobviously increasesthepriceofrawmaterialbut Ithink JubilantFoodWorks

and its team have done a fantasticjob of leveraging our increasing amount of raw

materialsthatwebuyfromthesupplier. SoA)wecontinuouslydevelopnewvendor

whoaremorecosteffectiveandeven theexistingonesbecauseofoursheersizeof

purchasesgoingupeveryyearsubstantially. Sowhilethereisinflationonrawmaterial

butIdontthinkweallowtheimpactontherawmaterialatthesamelevelbecausewe

certainlyleverageourbuyingpowercontinuouslyaswemoveforwardbecausewebuy

thesamestuffinamuchlargerquantity. Ithinktheteamhasdoneaverygoodjobin

that.


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17

AmnishAggarwal:OkayMr.Bhartiathanksalot.Moderator: Thank you, the next question is from the line of Harish Zaveri fromDeutscheBank. Pleasegoahead.

HarrishZaveri:Thisquestion isaddressed toMr.Bhartiaand therewas this investorapprehensiononachangeinarticlesofassociationthreemonthsearlier,therewasone

particularlineonthechangeinarticleswhichwasthatyoucouldgointobeachresorts

andhotels. NoIremembercheckingwiththemanagementandtheanswerthatIgot

wasnootherinvestmentsexceptinfood,butIwantedtoknowyourviewsonthisone.

HariBhartia:We were very clear and have exactly the same view. We have nointentionsatall. Ithink itmusthavecreeped inbecausesometimesyoutrytocover

everythingwhenyougo fora change,probablyRavi canexplain thisbetterbut this

Companyasyouknowhasremainedfocusedsincethetimeitstartedandcontinuesto

remainfocusedinthelineofbusinessthatwearein. Soyoucanberestassuredthat

wearenotbuildinganybeachresorts.

RaviGupta:HarrishtoaddtowhatHariBhartiahasindicated,Ithinktheexplainaboutstatement inthatnoticewasveryclear,thatalltheseamendmentsandwhateverour

futureendeavourswillbe,theywillbeallrelatedtothefoodbusiness. Youcanreadit

clearlyinthatline,weareveryclearthatwearefocusedonthefoodbusinessandwe

dontintendtodivertinanyotherdirection.

HarrishZaveri:Yesthankyou.Moderator:Thankyou.Thenextquestion is from the lineofKalpeshMakwana fromQuantcapital. Pleasegoahead.

KalpeshMakwana:Wehavetalkedabout increasedscaleofbusinessa lot. TheonlythingwhichIwantedtoknowis,isthereanypossibilityofgrossmarginexpansionfrom

goingforwardyear,ifthefoodinflationweretocomedown?

Ajay Kaul: As I said, a little while back, as we see the business right now we areconfidentthatwewillbeabletomaintainthemarginswhichwehavedeliveredinthe

previousyearwhich is17.7%, in the comingyearalso. Ifyou lookatour last three

yearsperformancewehavebeensteadilyimprovingourmarginperformancefrom12.

1%to15.5%tolastyear17.7%. Ifwehaveunprecedentedgrowth,farmorethanwhat

weanticipate,sometimestherecanbereasonsunknowntous forexamplewe think

we cando20% same store growth, ifwedobetter than that, therewillbemargin

improvementforsure,butasofnowweareconfidentof17.7%delivery.

RaviGupta:Kalpesh,ourgrossmargincontinuestobearound75%and inthe futurealsowewilldefinitelytrytomaintainaroundthatlevel.


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18

KalpeshMakwana:Okayperfect thatanswers. Andanotherquestionwhich Ihad inmindwasthe80storesguidancethatwehaveincreasednow,areweseeingthisonly

forFY12orweareconfidentofachievingthesamenumberfromyearscomingahead.

AjayKaul:Thesearethenumberonly201112whichmeansnextfinancialyear.KalpeshMakwana:Butisthegroundsituationgivingyouenoughconfidencethatyouwillbeabletomaintainthis?

AjayKaul:Wewillmakethestatementattheappropriatetimebut fornextyearweareprettymuch confident that 80 storesor somethingwhichwe shouldbeable to

deliver.

KalpeshMakwana:Perfect sounds good. Andmy lasthousekeepingquestion,whatshouldbethetaxrateforFY12?

RaviGupta:FY12,itwillbefulltax.KalpeshMakwana:Fulltax,33%?RaviGupta:Yes.KalpeshMakwana:Okayperfectthanks.Moderator: Our next question is from the line of Hiren Dasani of Goldman Sachs.Pleasegoahead.

HirenDasani:OfRs70croreCapExinFY11canyoubrieflyorapproximatelytellwhatwould be commissary related,whatwould new stores related, andwhatwould be

replacementrelated?

RaviGupta:Icangiveyouaballparkfigures,about90%ofthisisrelatedtothestores,Andthatincludesbothnewstoresaswellastheexistingstores. Nowtheinvestmentin

thestoresisapproximately,inthelastyearwasinthetuneofaboutRs.7millionper

storeandtherestisfortheexistingstores. Ihopethatwillsuffice.

HirenDasaniSureandthisRs.7millionseemstobegoneuplittlebit?RaviGupta:Yesthisyear itwillgoupforthereasonwhich Itoldyou,sayingthatwewillbe improvingourqualityofthestoresandthere isabitof impactoftheinflation

alsoandboth these factorswill result inan increaseof thisnumber. So likewewill

havedigitalmenuwhich Isharedwithyouandotherqualityof theconstructionand

otherareasalsoweareimprovingandwehaveseenwhereverwehavespentthatkind


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19

ofmoneyitpaysbackprettyfast. Andthatisthereasonwewouldliketospendlittle

moreonthat.

HirenDasani:Inanyoftheoperatingexpenditurelinethatisemployee,therentortheotherOPEX,willtherebeanyDunkinrelatedexpenditureaswellinthequarter?

Ravi Gupta: In the quarter yes there are small expenses like agreement relatedexpensesandotherthingswhicharethere,notverysignificant.

HirenDasani:CoulditbelikelessthanRs.5croreormore?RaviGupta:Yesmuchmuchlesser.HirenDasani:Okay.Thankyou.Moderator: Thank you. Our next question is from are line of Neeraj Sadani fromBarclaysWealth. Pleasegoahead.NeerajSadani:IactuallywantedtoknowthatisthereapossibilitythatwewillusethesamestoresasDominostosellourDunkin'Donutsproductsgoingforward?

Ajay Kaul: No, the answer of that question is a direct no. These are two separatedivisions, theseare twoseparatebrandsandthekindofmarketsor targetsegments

theyarekindofgoing foraredifferent.Soasaresulttheremaybecoincidence that

theremaybeaDominosandaDunkin'storenexttoeachotherbutnotunderoneroof

ifyouunderstand,butinalllikelihoodtheywillbeindifferentlocationsalso.

NeerajSadani:Okaysir,thanks.Moderator:Thenextquestion isfromthe lineofVishalDesai fromCentrumBroking.Pleasegoahead.

VishalDesai:Ijustwantedtosenseastothe80storetargetthatwehavebeengivenforFY12,howmanyofthesewouldbeSriLankabasedstores ifyoucouldgivemea

figureonthat?

Ajay Kaul:None of these stores are from Sri Lanka. These numbers are purely theIndianoperation.VishalDesai:Thiswillbeonly Indiaoperation including theone starting in thenextmonthaswell.

AjayKaul:YesitdoesntincludetheoneinSriLankawhichweareproposingtostartinJunenextmonth.


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20

VishalDesai:Thanksalot.Moderator:Thankyou thenextquestion is from the lineofMadhuchandaDey fromKotakInfina. Pleasegoahead.

MadhuchandaDey:Whilementioningaboutthegrowthnumbersonthesamestore,ifyoucouldgiveussomesenseofhowhasbeenthemovementintheaverageticketsize

ofyourbillsoverthequarters? Imeanhowhasthat improvedfromthebeginningof

theyeartotheendwhathasbeenthetrend?

AjayKaul:Wewillnotbeabletogiveexactinformationonthatbecausewebelieve,abitof it is,reasonablyproprietaryandtheremaybeabitofcompetitiveedgesitting

therebut Icantellyouonething, Ididspeakearlieronabouthowsomeofthenew

products likeChocoLavacake,Pastaforsure,theWrapthesehaveall ledtoshareof

stomachincrease.SowhenItalkofshareofstomach,itmeansthatthesamecustomer

whowasearlierorderingpizzasalsostartedhavingabitofPastaandabitChocoLava

cake and so on. So clearly that has led to ticket size increase, And while on a

standalone basis also there are pure Pasta eaters and pureWrap eaters and so on

whichhasledtotheorderincrease. Sinceyourquestionisonticketsizewehadbeen

growingticketsizequitehandsomelyoverthelastoneortwoyears.

MadhuchandaDey: And is there anynewproduct additionplanned in theDominosframeworkthisyear?

AjayKaul: Indeed, theproduct innovation centric topizzasandnoweven centric tononpizzasisclearlywhatwealwayssaidisadifferentiatorforDominosandweplanto

launchnewsides,wealsoplantolaunchnewpizzasduringthecourseoftheyearand

youwillgettohearaboutthemandseethemonTVaswhentheygetlaunched.

Madhuchanda Dey: Okay.Slightly different question on the Dunkins platform, youwerementioninga lotabout Indianizedofferings inDunkins. Myquestion is,when

youaregivingitaconceptofDunkinswhatisthatyouhaveinmindintermsofyour

competition, ImeanwhoarebasicallygoingtobethecompetitortoDunkins inyour

framework?

AjayKaul:Seesincethecategoryifyouaskmeisatastagewhichisstillsointheinitialstages. Honestly,Iwouldntputanybodyinthecompetitorslistname. Letmespenda

momentontellingyouwhatDunkinDonutswouldtrytoachieveordoinIndia.Ifyou

lookattheIndianmarket,clearlywhilethereisasmallcoffeemarketbutgrowingata

bigpace,thereareafewotherthingsbutalldaypartfoodoptionsincludinglunchand

dinnerconsumedoutsideofhome, isthesingle largestsegment.Nowtherearesome

Indiancompanies,IndianbrandslikeaHaldiramandsoonwhicharetryingtocaterto

this. We believe based on what we would inherit from Dunkin Donuts from other


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countries, IamtalkingofcountriesoutsideofAmerica,where foodhasplayedavery

importantrole,andwewouldprimarilybeoperating inthealldaypartfoodsolutions

markets.Andan integralpartof thatoffering isgoing tobeDunkinDonuts.Country

after country wherever Dunkin has gone they have had a roaring successwith the

donuts

and

they

are

undisputed

market

leaders

and

we

believe

that

it

is

going

to

be

a

similarstoryinIndiaalso.Andthethirdpegofthestoryiscoffeeandotherbeveragesin

theIndiancontextbecauseitistropical,sotherearealotofothernoncoffeeorcallit

coldbeverageswhichDunkinhastooffer.Sothisisgoingtobetheoverallmixofwhat

thestoryisgoingtorevolveround.Alldaypartfood,donutasanintegralhookwhichis

sittingthereandhasgottremendouspotentialasacategoryandcoffeeandbeverages.

Inthebeginning ifyouseeforallthesecategoriesespeciallycoffee it isstillaconcept

which issonew in India.Goingbyexperienceofcoffeeconsumption inotherpartsof

theworld,percapitaconsumptionofcoffee in India isoneofthe lowest.Even ifyou

weretohaveanurbancutinitisstillveryverylowcomparedtosomeofthemarkets

like letussayAsianmarketsandsoon.Sothereisa lotofheadroomforthattogrow

andDunkinDonutscoffeeintheUSifyouareaware,isalwaysseenascustomerbeing

themostbrandloyaltoforthelastfiveyears.Whenevertheyhavedoneloyaltytests,

Dunkin'Donutscoffeeisregardedastheonewhereconsumershavemaximumloyalty

towards. That is why they have a campaign which has a tagline America runs on

Dunkin.Sowebelievethatwhileasmallsegmentbuthasalotofheadroomtogrow

all day part snacking option is something which we are going to focus on. In the

beginningtherewillbetheWesternbiasinitbutclearlytherewillbetheIndianoptions

andover theperiodof time since theyhave the leewayand flexibility to Indianizeas

much asmuch as possible,we would all get into that also and clearly donuts as a

differentiator will always be there. Because nobody else in the world actually has

donutslikeDunkin'Donuts.

MadhuchandaDey:DonutsinIndiahavenotreallycaughtoninabigwayunlikePizzaandwehaveat least intheurbanpartof India it isnotthatwedonothaveexclusive

coffee chain. I mean definitely you must be having in mind where would you

differentiateyourselfandyoudefinitelyalludedtothisIndianisedoffering.Isthereany

modelthatyouhaveinmindwhichyouwouldliketogiveusasenseofatthisstage?

AjayKaul:Somestrategydevelopmentandsomeresearchworkison;sothatisgoingtocrystallizeourthinkingthatmuchmore.Butweclearlydonotbelieveweareanother

coffeeplayer, like thereare somepeople in themarket,whoalso andwe know are

trying to aggressively trying to focuson foodbecause they realize that there is that

muchmoretothewholestory.Webelieve,goingbysuccessofDunkinDonutsitisone

ofthelargestbakedgoods&coffeecompanyinthewholeworld.Marketaftermarket

wheretheyhavegone,donut,asacategoryhadaroaringsuccess.Weseenoreason

whyifwedogetouractright,wecannotdevelopdonutasacategoryinIndia.Youmay

arguethatsomepeoplehavenotbeenabletopromotedonuts,butwedonotbelieve

thatthosearetherightdonutcompanies.DunkinDonutsisthelargestdonutcompany


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22

intheworld.Theirdonutsareconsumedbythedozensineverycountry.Sowewillget

ouract right, sameas the storywithpizza letme tell you1415 yearsback, initially

nobodyknewwhatpizzaswerethere,sowehavebeliefandconfidenceinourstrategy,

inourexecution,thatwillbeabletomakedonutsahouseholdname.Butdonutisonly

a

subset

of

all

day

food

part

option

is

what

we

will

be

focusing

on

and

clearly

supporting

thatbyastrongcoffee&beverageprogram.

MadhuchandaDey:Okay,thanks.Moderator:Thankyou.ThenextquestionisfromthelineofPratikBiyanifromStandardChartered.Pleasegoahead.

Pratik Biyani: I wanted to know your strategy on opening of new stores. One, inexistinglocationsbasicallywhattypicalradiusofcoveragedoyoulookat,specificallyin

topfivecitieslikeyouaretalkingaboutMumbai,BangaloreandDelhi.From50towhat

numberofstoresdoyouthink itcango,50to100or70?Andsecondwouldbewhen

you enter in anew city build a certain per capita statistics on population figures to

decideonwhichcityyouwanttoenter?

AjayKaul:Letmeanswerthesecondquestionfirst,yes,youarerighteverytimetheyenteranewcitywe lookata lotofpiecesofdata,primary,secondarydata,wegoto

reports,andwelookatpercapitaconsumptionofdurablesandsoon.Butourmodelif

you realize is suchwheredensityofpopulationofacertain typeofSEC isvery,verycritical.Sowhilewedoall thatwealsogoon footand that iswhywehaveourown

businessdevelopmentteamwhoaretrainedunderacertainwayofDomino'sworking.

And they identifywhich isjust the rightplace for opening stores.Andwehavehad

roaring success city after city where we have gone. For your information we have

entered21newcitieslastyear.Sowedoallthat,callitduediligence,callitscienceand

technologyallthesearebroughtintothiswholeprocessandwhynotbecausewehave

tomakeeverystoresuccessful.Asfarasthefirstquestionisconcerned,morethanthe

radius governed by a certain range by kilometers especially in big cities, as the

frequencyofconsumptionisgoingupandup,werealizedthatone isofcoursethe30

minutesorfreeuniversalpropositionwhichwehaveforourcustomersthatweneedto

keep inmind.Andwealsoneed tokeep inmind theservice levelstoourcustomers,

sometimeswereachin30minutesbutitisattheupperendofletussay2829minutes

whichisnotagainwhatwewant,becauseouraveragedeliverytimesaremuchlesser.

Soasfrequency is increasingwecarveoutstoresoutoftheexistingstoresandearlier

whentherewasjustonestore,nowwehavewithsomevirginmarketsaround it,we

havemaybe2or3or4stores.So ifyourquestion isultimatelythathowmanystores

canyouhave in these large cities,we cannotputanumberbut there is tremendous

potentialstillforustogrow.


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23

PratikBiyani:Mysecondquestion isonsamestoresalesforstoreswhicharemature,whichareoperating formorethanthreeyears,what isthepercentageofsamestore

salesgrowththatyou'rewitnessinginthesestoresascomparedtothenewstoresthat

youarebringingin?

AjayKaul:Betweenastorewhichislet'ssayhonestlyeven10yearsold,13yearsold,8yearsold,ifIhavetodosomesortofcorrelationanalysisonit,theyareallgrowingat

rateswhicharenotverydifferentfromeachother.Soitisnotthatwhenastorewhich

is 1214 years old does it start givingjust a singledigit samestore growth and the

answertothatquestion isno.Buttheyaredifferinganditdependsonalotoffactors

butthereisnosaturation,assuch,ifthatistheunderlyingpointinwhatyouaresaying.

Sometimeswhenastorebecomesverybigandserviceleveltocustomersstartsgetting

affectedthenwesplitastoreandcreatetwooutofone.

PratikBiyani:Ofthe80storesyouareplanningtoopen,doyouplantoenteranother20morecitiesthisyear?

AjayKaul:Wedonothaveanumberofnewcitiestargetinfrontofus.Buttherewillbea sizable number of new cities that we will enter. In the last three years we have

enteredasmanyas50+newcities.Lastyearinparticularweentered21.Soeventhis

yearweintendtoenteralotofnewcities.

PratikBiyani:OnelastquestionontheICDsthatyoumentionedabout,itisRs.30croreandhowmuchdoyouexpecttoearnoutof it,atwhatratehas itbeengiven, ifyou

couldshareitscontributiontootherincomewouldbeinthiscurrentyear?

RaviGupta:Wewillnotbeable to share theexactpercentage theamountwehavesharedwithyouandwehavegivenittoanorganizationofrepute.Thatisallwhatwe

cansharewithyou.

PratikBiyani:Okay,thankyou.Moderator:Thankyou.Thenextquestion is from the lineofVijayChugh fromAmbitCapital.Pleasegoahead.

VijayChugh:Myquestionwasaretheregoodreliableestimatesavailableforgrowthfortheindustryforthepast1to3yearsandconsideringthewayfoodhabitsarechanging,

whattempocanbesustained?

AjayKaul:Therearevariousreportsfromvariousagenciesfromtimetotimeconsultantsandsoon.Butnoneactuallyclearlyspelloutwhatyoujustsaid,concretely,buttheyall

allude in a certain direction. Some reports from people like Technopac and others

probably do talk about consumption a little bit. But all we can say is that the food

servicesmarket,organized,unorganizedandeverythingputtogether isahugemarket.


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24

Andorganizedpartof it isstillwebelievebasedonvariousestimates,justabout10to

12% of thewhole thing. If youwere to take a subsegment fast food and as a sub

segmentofthatpizzaandpasta,whilemostof it isorganizedtoday it isstilljustabout

2%of thiswhole thing.So theheadroomorgrowth forpercapitaconsumption ifyou

may

in

other

words

that

is

the

yardstick

to

look

at.

There

is

a

lot

of

headroom

for

pizza

andpastatogrowasacategory.

VijayChugh: And intermsofmarketshares,consumersatisfactionorconsumerloyaltyanymatrixtoknowfromthecompanysidehowtheyhaveassessedormeasureditover

thelastoneyear?

AjayKaul:Weareprettymuch frenziedabout customer satisfactionmeasurement. Infactforyourinformation,whileouremotionalladderingtoourconsumersisKhushiyon

Ki HomeDelivery, internally our every storemanager in our every store, there is a

KhushiyonKaMeterwhichisthereineverystore.Thatisthewaytheylookatit.And

basedonafairlyrigorous1015pointprogram,doweassesshowhappycustomersare

inthatstore,andthatisbasedondeliverycustomerindexwhichisseparatefromdine

in.Wealso lookatthenumberofconcernswhichcomefromeverystoreandhowfast

they get resolved. And we look at lot of other indexes and all that go into defining

Khushiyon KaMeter for every store. So every storewhenwe enterwe know how

happy theconsumersare in that store.Overandabove thiswealsouse theMillward

Brownmodel,whichtellsusthatagainstsomeothercompetingbrandhowhappyour

customersare.Wedomysteryshopperexercise,sowedoalotofthings;infactweare

fairlyobsessed youmay say in somewayswith customer feedbacking and customer

service.AndforyourinformationtheFranchisingAssociationofIndialastyear,amongst

all

retail

companies

in

the

country,

for

customer

service

and

responsiveness

give

us

the

number one award, across the industry. Which means that it includes large format

retails,itincludeshospitality,itincludeseverybodyandwewerenumberonethere.

VijayChugh:Thankyouverymuch.Moderator: Thank you. The next question is from the line of Saurabh Pant from SBIMutualFund.Pleasegoahead.

SaurabhPant:Ajayyoujustspokeaboutataparticular levelstore intermsofrevenuesizeorthescaleofthestore,youconsidersplittingthestores.Soisthereanybenchmark

averagerevenuewhichwouldactuallybringwherethequalitystartsgettingaffectedand

youconsideranewstore?

AjayKaul:No,thereisnobenchmarkpersay,becausealotofstoreswehavedifferentlybasedon spreadof thehouseholdcount. If Igiveyouoneexampleprobably thatwill

helpyoutounderstandwhatIamsaying.DelhiasacityisveryflatwhereasMumbaiasa

cityisveryvertical,sothesameyardstickscannotbeappliedtothesetwocities,because


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25

theyaredifferent.Sotoansweryourquestiontherearenoyardsticksintermsofletus

sayrevenue.Buttherearesome,Iwouldnotstillcallconcretebenchmarksbutthereare

somenorms intermsofhouseholdcountbutmore importantlywe lookverycloselyat

howsatisfiedcustomersare,howmanylatesareweofferinginthatstoreespeciallyover

the

weekends,

,

what

is

the

average

delivery

time,

so

those

are

the

indicators

which

tell

usthatarewestretchingourselvesinthatparticularstorewhereourcustomerserviceis

sufferingandthatbecomesan indicatorforusthatmaybethetimehascome for itto

split.

SaurabhPant: But generallywhen you see that these factors that you spoke about,these start getting affected and you think about opening another store but on an

average such storeswhichare splitwhatkindof revenue they clock, it canbea very

broadnumbersomethinglikethat?

AjayKaul:Theyarelargestores,Icantellyouthatthesearenotsmallstores;theseareprobablythestoreswhichareinourtop40%.

SaurabhPant: So exactly like Ravimentioned thepoint thaton an average youhaveclockedaboutRs.1.9croreperstore,biggeronesareclockingsomewherearound2.5

timesofthat,sowecanconsiderthatnumbertobesomething

AjayKaul:No,Iwouldsayyoudonothavetogothatfar,evenstoreswhichareletssay3040%morethanthissometimescancomeupforsplittingandletmetellyouonething

that same store growth number which we have been talking about, 38% last year,

includes the impactwhichmaybecomingbecauseof thissplitting,netof that impact

that thispointnumberone.Pointnumber two is thatevenwhenwearesplittingand

obviouslyonestoreislosingsomerevenueandtheothernewstoreisbeingcreated,the

return on investment norms which we have internally are taking the net sales into

account because we clearly are also cognizant that overall the new store should be

returningtheinvestment.

SaurabhPant:Howmanystoreswouldhavebeensplit,sayinthelastoneyear?AjayKaul:Ifyoulookataswespeak,itisagooddoubledigitnumberwhichhassplit.RaviGupta:Apartfromwhateverstoreswehaveopenedinthenewcity,wheneverweopenastoreinexistingcitytherewillbesomelevelofsplit,canbe10%split,canbe50%

split, canbeanything inbetween. Sopracticallywhenever youopen inexisting cities

therecanbeasplit there,except formaybe secondstore in thecity thatcouldbean

exception.

SaurabhPant:Justarelatedpoint,canwelookattheDominosmodeltodayintermsofrevenueonapersquarestorebasis,thatissomethingwhenitstartsreachingalevelof


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26

somethinglikeletussayyousaidanindicatingno. Rs3crore,justforexample,sothose

storesuntiltheyreachaboutthatrevenuebenchmark,theycangrowatsomethinglikea

samestoresalesgrowthnumberbeyondthattheywouldgrowsomethingmaybesub

10%ofthatnumber.Wouldthatbetherightwayofunderstanding?RaviGupta:Whenyoulookatlastyearspecificallylike37%growthwhichwehad,wetrytoanalyze whetherthebiggerstoresaregrowingat lowernumberorolderstoresare

growingatthatnumber,andwearesurprised,althoughthereisadifferenceofacouple

ofpercentagepointsbutallcategoriesstoreshavegrown.

SaurabhPant:Soyouaresayingthatthedeviationofgrowthisverylowacross?RaviGupta: Yes.Only in caseswherewe decide to split, therewill be an impact forsometimebutwehaveseenthatwithin3to6monthstimeletussayninemonthstime,

thestorerecoversthelostsalesandstartsgrowingagain.

SaurabhPant:Thanksalot.Moderator:Thankyou.Ournextquestion is from the lineofMitulMehta fromLuckySecurities,pleasegoahead.

MitulMehta:Yousaidthatourmetroconcentrationisabout45%.Justwanttogetsomesensemetroversusanonmetro in termsof thecustomer responseandhowyouare

expandingthestomachofaconsumerby launchingnewproducts.Whathasbeen the

growthpatterninFY10/FY11forametroversusanonmetro?AjayKaul:Seefromanonmetroletusexcludestoreswhichhaveopenedinthelast1to1.5 to 2 yearsbecause these arepurelynew small kindof stores. So letus compare

metroversusothernonmetro less theother segment Ijust talkedabout.Wearenot

seeing a big difference between these two categories. If you understand what I am

saying,thisisnotanumberwhichIam,asaproprietaryIwanttohidefromyou,butwe

arenotseeingabigdifferencethere.Thereisnobigcorrelationwhichwecanrunthere

that there are saturations being achieved. In the smaller cities by virtue of higher

penetrationmoreandmorepeoplestartconsuming, inbiggercitiespenetration isnot

thatmuchofanissuebutfrequencystartsbecominghigherandhigherbecausepeople

therearethatmuchmoreinternationalized,globalized;theyhavebeeneatingpizzasfor

alongerduration.Toansweryourquestioninstraightforwardtermswearenotseeinga

bigdifferenceintermsofmanifestationonsamestoregrowth.

MitulMehta:Or letussayanonmetrocentrewhenyourecentlyormaybeopenedastoreayearorayearandahalfbackthattheexperiencehasbeenprettymutedversus

someothercentre?


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27

AjayKaul:Thereare.Oneoddoftenareplaceswheretheresponseisnotasgoodaswehadexpectedbuttodaywehavealsothroughallourprecisionmarketingandallother

marketingweapons thatwehave,ground level, local storesmarketing,corporateswe

areabletoturnaroundthesestoresalsoaftergivingallsortsofinjectionstothemina

short

period

but

other

than

that

and

I

would

not

like

to

name

any

because

they

are

prettymuch random.Afterall theduediligence thatwedo they sometimesgiveusa

surprise.Butprobabilityofsuchstores,asIsaid,isjustabout5%.

Mitul Mehta: We did talk about runaway inflation in milk and cheese. Andcorrespondinglywe did take some price action. Sowhen you take price actions, the

intensityofpriceactionversuspreviousyearandayearbeforethat,howmuchofaprice

hikedidwetakethisyearversuslasttwoyears?AjayKaul:Wehavebeentakingtwonominalprice increaseseverysixmonthsandthishasbeenthepatternforthelast34yearsofaround2%to3%.ThisyearinAprilwetook

slightlyhigherthanthatandsofarthereisnoindicationthatconsumerofftakehadany

impact.

Mitul Mehta: To reverse the prices once the inflation starts cooling off, so do thebenefitsgetimmediatelypassedonortheimpactofpricerisecontinuestoaccruetoour

company?AjayKaul: Firstly, your question is a littlehypothetical.We donot foresee that foodinflationleddecreaseswillhappeninforeseeablefuture.Iftheyareatthesamelevelwe

should feel lucky. So, the chances that it is going to go down are low. But even

hypotheticallyitweretogolow,Idonotforeseethatwewillgoaheadandreduceprices

that is my immediate answer although it is a hypothetical question. So in that

circumstancemaybeitwillstartgivingussomemarginbenefits.

MitulMehta:Mylastquestion isa littlebroadbasedandprematurebut Iamsureyoucananswer.NowourJubilantpizzamodelseemstohaveverywellestablishedasfaras

returnparametersareconcerned.NowifIweretolookatDunkinDonutsasaseparate

entityorasegment,haveyousetanyinternaltargetsintermsofwhatkindofreturnon

capitalemployedwewouldbetargeting,oristheeconomicsinDunkinDonutswouldbe

identicaltoaDominospizzashop?Ravi Gupta: See our evaluation criteria for opening a new store atDominos is thatpaybackforthatstores,whateverwehaveinvestedinthatstore,shouldbelessthan3

years.AndthenweevaluatedDunkinDonutsandallotherbrands,wehavepassedall

thosebrandsthroughthisfilterandafterDunkinDonutshaspassedthroughthatfilter,

wehaveshort listedthatbrandtogoaheadandwebelievethatDunkinDonutshasa

potentialtomeetthiscriteriawhichisourinternalcriteriaofpaybackofthreeyearsor

less.


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28

MitulMehta:Thankyouverymuch.Moderator: Thank you.Ournext question is from the lineofAakashManghani fromGirikCapital,pleasegoahead.

AakashManghani:Earlieryoumentionedthatsomeofthestoreswhichyouopened,letussay,threeyearsback,tenyearsback,oreightyearsback,theyaregrowingatasimilar

rate.OnethingIwanttoknowhaveanyofyourstoresinthepastdecadeorsohadde

grown?

AjayKaul:None.AakashManghani:Andyoudidnothavetoshutdownanyofyourstores?AjayKaul:None.Youmayhavesometimesseenastoreclosingbutletmeassureyounostorehasbeenshutdownbecauseofperformancereasons.Wemayrelocateandweare

consciouslyrelocatingsomeofouroldstoreswhichareDominosstoresdoingwellbut

weusedtofollowtheoldDominosmodelwheretheywereabitintheinside,notvery

visibleandsoon,andwerealizedaswearemovingstoresmoreandmorehighstreet,

moreandmoreoutside, that itselfgives thebig fillip to the salesandsoon.So those

relocationsmayhavehappenedandyoumayhaveseenanoldstoreshuttingdownbut

nonebecauseofperformance.

AakashManghani:Youmentionedearlierthattherehavebeenchangesinconsumptionpatternalsowhichhasledtoincreaseinsamestoresalesgrowthoverthelastcoupleof

years.Soifyoucangivemeanideathatcomparedtofiveyearsbackvisvisnowwhat

wouldbetheaverageorderstakenawayfromyourtopperformingstorefiveyearsback

ascomparedtonow?

AjayKaul:IcannotshareconsumerleveldatabutIcantellyouthatifyoulookatthreeoffourbucketsoneisifthestorehasgotxnumberofhouseholdsaroundit,howmany

householdsareorderingatleastonceinaoneyearperiod.Nowclearlythishasgoneup

significantly. People who are consuming you at least once or more, clearly their

frequency, if you compare five years back has probably gone significantly upmaybe

more than doubled in this time period. Now households per se, as the store starts

becoming bigger and bigger we reduce the number of households there because

servicing becomes better and so on and we create a new store out of the other

households.Soevennumberofhouseholdsperstorehasbeenreducingoveraperiodof

time.So if Ihavebeenabletoansweryourquestionalltheseconsumer leveldataare

suggesting that at the consumption level clearly the consumer is imbibing pizza as a

categorymoreandmore.


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29

AakashManghani:Recentlytherewasareportinoneoftheleadingnewspaperstalkingaboutthegrowthpatternsofmostofyourcompetitors,thelikesofPizzaHut,Subwayor

McDonalds,notexactlyheadoncompetitors,soIwouldliketoknowyourtakeonitasin

howdoyouseecompetitionpanningout.Youarethemarketleaderasofnowbut5,7,8

years

out

do

you

see

more

of

international

players

coming

into

the

scene

or

do

you

still

expecttoincreasemarketsharegoingforward?

AjayKaul:See,marketshareresultoftheactivitieswhichwedo,wedonotstartthedayby saying that we want so much of market share. Yes, but market leadership is

somethingwhichwehadaspiredsomeyearsbackandclearlyweare thenumberone

playertodayinthepizzamarketandwealsotakeprideinsayingthatwearethelargest

multinationalfastfoodcompanyinthecountryintermsofnumberofstores.Nowifyou

lookatthepenetrationofpizzaandpastaasapercentageofthetotalmarketitisstillso

small,whiletheindustryis15yearsold,fastfoodindustryandpizzaandpastaalsoasa

subsegmentofthat,wedobelievethatthereisstilllotofheadroomtogrowandlotof

workwhichallofustogetherwhichisusandsomeofourotherhonourableopposition

do,willonlychangehabitsofpeople.IfIweretojustthrowonepieceofstatisticshere,

there are number of meals consumed outside of home in a Delhi or a Mumbai,

compared to any other, let us say a metropolis in Asia, is still so miniscule despite

changingfoodhabitsandsoon,sooutof60mealsinamonthlunchanddinner,avery

small percentage of that is consumed outside of home in aDelhi or aMumbai. The

momentyou lookata JakartaoraBangkokoranyothersuchcountry,theyhavealso

gonethroughthiswholeprocess,theyaresittingat5times,6times,7timesoursize.So

thereisalotofheadroomtogrowthere.Soweareveryupbeataboutthemarket.We

donotbelievecompetitioniswiththenextplayer.Infactwearemorecompetingwith

the

generic

Indian

food

which

is

the

dal

roti,

the

idli

sambhar,

dosa

and

the

chana

bhaturasandsoon.

AakashManghani:Lastly,youmentionedaboutthe80storeswhichyouwillopeninthisfiscal.Howmanywouldbedineinamongstthis?

AjayKaul:Allourstoresaregoingtobedeliverycentricbecausethatiswhatweare,weare a delivery expert and we are number one in the country and also the world.

However,asyourightlysaidthelastthreeorfouryearswehaveconsciouslycreakedour

strategy to create storeswhich also has ample good dinein environment, so all our

storeswhich are comingup this year are going tobehaving adinein centricity also

where they will be people who can sit down and in a good congenial fast food

environmentandconsumetheirfood.

AakashManghani:SotheCAPEXperstorewouldincreasesignificantlyIassume.AjayKaul:Seeitwouldnormallybesimilartolastyearbecauselastyearalsoweopenedsimilar storesbut this yearwehave consciously tried to create thatmuchmorehigh


30/30

volumementality in our stores.When I say high volumementality itmeans creating

stores for the futurebecause37% to38%samestoregrowthalsoareunprecedented.

Wehavebeenwitnessing20%to22%samestoregrowthforalongtimebut37%to38%

wasalsoforthefirsttimeforus.Sowearecreatingstoresforfuturewherebyinvestinga

bit

more

into

infrastructure,

a

bit

more

into

modern

day

technology

to

make

sure

that

they facilitateordertaking,they facilitateorderprocessing,andweareabletohandle

highervolumes.

AakashManghani: Inyour inventory,your inventorieshave increasedsignificantly thisyear.Whatwouldbethereasonforthat?

RaviGupta:Wehaveprocuredoneof thematerial inadvancebecause therewasananticipationofshortageofthatmaterialandthatisthereasontemporarilyinthemonth

ofMarchthusinventorywashigh.

AakashManghani:Thanksalotforansweringmyquestions.Wishyouallthebest.Moderator:Thankyou.Ladiesandgentlemen thatwas the lastquestion. Iwouldnowliketohandthefloorbacktothemanagementforclosingcomments.

AjayKaul:Iwouldliketothankeverybodyforpatientlylisteningtoourpartofthestory.Thank you verymuch forjoining us today.Wehad a strong finish to a year and are

optimisticaboutourgrowthgoingahead.Shouldyouhaveanymorequeriespleasedo

getintouchwithusandwewouldbeveryhappytoaddressthem.ThankyoufromRavi

andmysideandHariBhartia.

Moderator: Thank you.On behalf of Jubilant FoodWorks Limited that concludes thisconferencecall.Thankyouforjoiningusandyoumaynowdisconnectyourlines.

.

_____________________________________________________________________Thisisatranscriptionandmaycontaintranscriptionerrors.TheCompanyorsendertakesnoresponsibilityforsucherrors,althoughanefforthasbeenmadetoensurehighlevelofaccuracy.

Analyst Call - May 2011

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Transcript of Analyst Call - May 2011