I am delighted to share the progress made in the last year on the occasion of oursecond year as a public listed company.
Since the inception of our brand Caf Coffee Day in 1996 we have continued in ourpursuit of turning coffee into a social idea. In a fast-changing world our drive topromote a coffee drinking culture and offer a space for people to connect over a cup hasremained constant. Today with over 2500 cafs express outlets coffee points and over41500 vending machines in a vast majority of corporates we are touching the hearts ofmillions of Indians each day across more than 1000 cities and towns.
Today India is going through an important phase of transition with GST andDigitisation revolutionising the way business is conducted and we are gearing up todeliver in this New Age.
FY17: THE YEAR IN A NUTSHELL
With strong business fundamentals and a slew of innovative Food & Beveragelaunches our coffee retail business reported a robust gross operational revenue growth of14% and retail EBIDTA growth of 8% over the last year. While the Food & Beverageretail market landscape continues to look challenging I am pleased to share that CafCoffee Day recorded another year of positive same-store-sales growth of 5.02% in FY17. Theperformance is a testimony of our strongly focused consumer engagement model built overthe years.
FY17 was another interesting year with a healthy mix of new initiatives and expansionbased on strong fundamentals.
Our home delivery business expansion continued and we got closer to our consumer thanever before by delivering across 7 major cities. Based on strong consumer insights wekept delighting the market with refreshing launches like Inverted Cappuccino FilterCoffee wellness range of coconut drinks sugarcane juice international burgers andsundaes at the caf alongside our new energy drink Storm' Soul' mineralwater and our cold coffee Frappe Chill' in the packaged products category.
The response to our mobile app has been heartening with over 3 million downloads in ayear. This drive towards a data-rich organisation is helping us build superlative loyaltyand the app has further shrunk the distance between our brand and consumers.
Beyond cafs we are strengthening the reach to our customers by expanding proactivelyinto the corporate segment. With unique smart solutions our vending machines have madesteady inroads into the corporate sector in FY17. With an eye on growing this business weare deepening our focus on hotels restaurants and non-traditional channels as businessverticals.
THE COFFEE INDUSTRY: A LOT CAN HAPPEN OVER COFFEE
As a group which goes beyond coffee our core remains intact. While the category isstill nascent the caf chain market has been growing at a CAGR of 20% since 2014 andour belief in its huge potential is supported by the robust Indian consumption story:
Consumer market of the future: This is fuelled by favourable demographics ofa young India with the median age at 27 years.
Increasing per capita consumption over the years: Our GDP has been growingat over 7% and this augurs well for the economy. Consistent growth will ensure increasein disposable incomes and aspirations beyond metros and a new Indian consumption storywill emerge.
AN EXPANDED PORTFOLIO: OUR RESILIENT SELF_ PROPELLED BUSINESSES
Our diverse businesses are charting their own course successfully. They continue to beself-sustaining with robust internal revenue generators in place. At the group level ourconsolidated gross revenue increased by 15% and achieved a profit after tax of Rs.46.2 Crin FY17. I am pleased to share key performance highlights:
With the implementation of Make in India' and other government initiatives thelogistics industry is set to become more centralised efficient and tax compliant. Thirdparty logistics and supply chain management are gaining traction and are set toconsolidate in the coming years especially in industries such as automobilespharmaceuticals consumer durables and FMCG.
The Company's growth (Gross revenues growth of 21% and EBIDTA growth of 43%) has beenpropelled by new business initiatives and additional contract gains. SICAL Iron OreTerminals Limited a subsidiary of SICAL Logistics Limited has executed the LicenseAgreement with Kamarajar Port for the modification of the existing iron ore terminal tohandle common user coal. The financial closure and approval of the Detailed Project Reporthave been cleared and the Company is in the process of implementing the project.
The growth of commercial real estate technology parks depends on the service andindustrial sectors where India continues to be an attractive destination for majorinternational players. Tanglin offers customised facilities in infrastructure for varioustechnology enterprises in Bengaluru and Mangaluru. Here our gross revenue continues toincrease steadily and has touched Rs.139.2 Cr in FY17. Our 3.3 million square feet onoffer continue to yield rental returns while another 750000 square feet will beoccupied by our clients within the forthcoming year.
Our investment advisory and financial intermediation enterprise focuses on qualitativefinancial products and long-term wealth creation. Following regulatory initiatives by thegovernment our financial markets have seen greater participation and economic activity.We expect a continuation of these trends going forward.
WE ARE A PART OF SOCIETY
With a commitment to strengthen the communities with whom we work our coffee isselected and purchased ethically ensuring that it protects the ecological balance of ourUTZ certified plantations and surrounding forest areas while safeguarding the interestsof coffee growers.
We also contribute to society with the following long-term initiatives:
Yuva - Harnessing youth potential: Yuva our vocational training college is managed bythe SVGH Trust offering a fully funded programme for rural youth from underprivilegedbackgrounds to learn hospitality and life skills. Over a period of 12 years our team atYuva has trained and helped 6000 youth become self-sufficient.
Encouraging Silent Brewmasters': We are engaged in a partnership with NGOsEnable India' and Gram Tarang' to employ youth with disabilities. We haveemployed more than 150 professionals with speech and hearing impairment our SilentBrewmasters and are committed to increasing this count over the years.
THE ROAD AHEAD
As we look towards the future I would like to reiterate our commitment to enhancingshareholder value for Coffee Day Enterprises Limited. We aspire to deliver sustainablegrowth which is ahead of the country's GDP and sets up good performance benchmarks in theindustry.
While considerable groundwork is yet to be done the group is making good headway withcertain key factors that will ensure our success on the road ahead:
Exciting Innovations: In response to an increase in consumer preferences for ahealthier lifestyle we are continuously evolving our menu.
Going Digital: Technology has disrupted our way of life like never before and we willkeep investing in it to engage with young consumers through apps thus getting nuancedinsights into customer behaviour.
Great Consumer Connect: Incomparable reach across the country with good value hasensured that we become an inseparable part of consumer lives. New age products andcontemporary cafs will further strengthen this relationship.
THE POWER OF HUMAN CAPITAL
Our ability to scale up has been possible due to significant additions to our middlemanagement including women in leadership roles. I am proud of our seasoned leadership andthe foundation they are creating for a promising future. The aim has been to deepen ourexpertise in two main areas:
Growth Mindset: Through sales capability across businesses
Innovation Mindset: Through design capability (across new productdevelopment store design and the corporate design team)
We are also building strength at the base of the pyramid through our Management TraineeProgramme expanding capacity and capability to create a pipeline of future leaders.
As always I would like to thank you our shareholders for reposing your trust in us.As a performance-driven company at the cusp of exponential growth with lots of coffee andconversations we will create greater value for stakeholders and society.
Lets keep brewing new possibilities!
Mr. V.G. Siddhartha
Chairman and Managing Director