On the occasion of our very first Annual Report as a public listed company Imdelighted to share with you our journey over the past 20 years.
Way back in the year 1996 there were no social hubs that offered friends colleaguesor coffee lovers a place to unwind converse or just be themselves. We acted on thisgaping opportunity and pioneered the interactive coffee culture in India one thathas permeated the social and intellectual fabric of our country.
Our dream was to turn coffee into a social idea thus giving the Indian consumera new lifestyle experience that is within the reach of a common man. Today we can boastof having served 1.6 billion cups of beverages to a population base of 1.3 billion. Welaunched our first outlet on Brigade Road as the Coffee Day Cyber Cafe onethat offered a 64 kbps connection at a time when the internet was accessible only to about10000-15000 IT professionals.
At Coffee Day weve always had one vision to be a forward-thinking companythat stays relevant to the people of our country. Today over 1600 cafes and 35000vending machines later our vision remains unchanged. The year FY16 saw a lot of excitingdevelopments take place the highlight of course being that we transitioned to apublic listed company and welcomed you all aboard!
FY16: Snapshot of the Year
Our coffee retail business saw a gross operational revenue growth of 13.7% while theretail EBIDTA was up 19% as compared to the previous year. CCD has recorded a positivesame-store-sales growth of 5.4% in FY16 even while the footfalls across the Food andBeverages industry have been experiencing a momentary slowdown.
The past year was a year of many firsts.
Based on our extensive research and consumer insights we felt the time was right toenter the Home-Delivery segment and will soon expand to major cities in India. Tostrengthen loyalty offer personalization and gain access to deeper consumer data welaunched a new mobile app during FY16. We also launched an array of refreshing new summerbeverages freshly assembled food and ice cream sundaes thus generating a higherthroughput during the year.
Our foray into the corporate segment was strengthened with the number of vendingmachines moving to over 35000. The highlight of the year however is our joint venturewith the 160-year-old WMF group the worlds leading vending machine manufacturer.
The Coffee Industry: As Strong as Our Brew
While we are involved in a multitude of businesses from logistics to IT parksand financial services our core business will always be coffee owing to ourheritage and the mind-boggling potential of the industry. The two promising growthindicators which are keeping us laser-focused and spurring the growth of the foodservices market are:
Strength of our population: With a population of 1.3 billion people India is among thelargest consumers and producers of F&B in the world. While a big chunk of ourconsumers are from Generation Y (born between 1982 and 1994) standing at a staggering 440million people; there is now an explosive potential from Generation Z (those born afterthe year 2000) currently estimated at 400 million people who are soon to enter ourtarget market.
Shift in consumption patterns: Our per capita income stood at Rs. 93293 in 2015-16with a strong potential to grow in tandem with our current GDP growth rate of 7.5%. Owingto the growing disposable income the consumption patterns and aspiration levels of themiddle class have evolved as witnessed in Tier 2 and Tier 3 markets as well. Whatis even more encouraging is the migration that is taking place from rural to urban Indiaplacing us on the brink of a promising future.
A Diversified Portfolio: Other Self-Sustaining Businesses
Our forays into diverse businesses are marked by the same passion with which Coffee DayGlobal Limited was started. These businesses are self-sustaining and have robust internalrevenue generators in place. At the group level the EBIDTA increased by 23.5% this yearas compared to FY15 and our net operating revenue saw a 14% growth from FY15 to FY16. Wealso substantially reduced our losses to Rs. 8 crores in FY16 from Rs. 84 crores in FY15.
Here are a couple of noteworthy businesses in our diversified portfolio:
SICAL our leading integrated logistics solutions provider in India recorded arevenue of Rs. 810 crores in FY16. We will continue to drive this business with a strongfocus on efficiency and better asset utilization in the coming years. In the near futurewe plan to enter the coastal shipping market which will free up Indian roads lowerpollution levels and significantly impact growth. We are also introducing a Retail SupplyChain Solution by integrating our cold chain services with cold storage and warehousingfacilities. We plan to offer this to third party clients - thus opening up new businessavenues.
Tanglin Developments our subsidiary offering bespoke infrastructural facilitiesfor technology enterprises in Bengaluru and Mangaluru recorded a revenue of Rs. 125crores in FY16 compared to Rs. 101 crores in FY15. In this business our occupancy of 3.2million square feet is currently yielding rental returns while another 700000 squarefeet will soon be occupied.
A Responsible Way to Grow
As a socially aware company we have integrated our Social Responsibilities into ourdaily operations. These initiatives include embracing eco-friendly technology adoptingsustainable farming techniques educating and training economically underprivileged youthand differently-abled people and then subsequently employing them. We are the first Indiancoffee company to receive the UTZ certification a world standard for responsiblefarming and are the biggest exporters of UTZ-certified coffee in the country today.
As we come to the end of an eventful year we reiterate our commitment to creatingshareholder value for Coffee Day Enterprises Limited. We plan to do so by focusing on fourpillars of growth:
Innovation pipeline: A cycle of innovation has always been our biggest strength. Wehave invested in cutting-edge roasting and brewing solutions and a modern cold coffeemanufacturing unit that will increase the quality standards of our coffee. A health-foodphenomenon has swept through the nation and we soon hope to venture into the healthsegment with a host of innovative food and beverages.
Deeper consumer engagement: In order to stay relevant we will keep engaging with ourconsumers beyond food and beverages. We hope to strengthen our relationship via socialmedia channels digital tools and awe-worthy experiences.
Brand leverage: 20 years ago we laid the foundation stone for Coffee Day as the baseof the pyramid. Today we wish to leverage our brand strength by venturing into variouscategories like packaged cold coffee energy drinks Tetra Pak milk and other beverages.
People currency: We are optimistic about the growth opportunities of our companybecause of our people currency as I like calling them. We recruit talentedpeople from across the best management schools in the country and empower them toinnovate.
I am deeply grateful to my experienced management team for their expertise andforesight. I also want to express my gratitude to my earnest cafe team members who help usfulfill our journey from bean to cup by working round the clock to brew new cups ofhappiness day after day.
Finally I want to thank you our shareholders for your trust in the company. As Ialways say were still in the initial stages of our growth and have a long journeyahead of us - one thats dotted with lots of coffee conversations and newpossibilities.