On the occasion of our very first Annual Report as a public listed
company, I''''m delighted to share with you our journey over the past 20
Way back in the year 1996, there were no social hubs that offered
friends, colleagues or coffee lovers a place to unwind, converse or
just be themselves. We acted on this gaping opportunity and pioneered
the interactive coffee culture in India - one that has permeated the
social and intellectual fabric of our country.
Our dream was to turn coffee into a social idea - thus giving the
Indian consumer a new lifestyle experience that is within the reach of
a common man. Today, we can boast of having served 1.6 billion cups of
beverages to a population base of 1.3 billion. We launched our first
outlet on Brigade Road as the ''''Coffee Day Cyber Cafe'''', one that offered
a 64 kbps connection at a time when the internet was accessible only to
about 10,000- 15,000 IT professionals.
At Coffee Day, we''''ve always had one vision - to be a forward-thinking
company that stays relevant to the people of our country. Today, over
1600 cafes and 35,000 vending machines later, our vision remains
unchanged. The year FY16 saw a lot of exciting developments take place
- the highlight of course being that we transitioned to a public 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 the retail EBIDTA was up 19% as compared to the previous
year. CCD has recorded a positive same-store-sales growth of 5.4% in
FY16, even while the footfalls across the Food and Beverages 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 to enter the Home-Delivery segment, and will soon expand to
major cities in India. To strengthen loyalty, offer personalization and
gain access to deeper consumer data, we launched a new mobile app
during FY16. We also launched an array of refreshing new summer
beverages, freshly assembled food and ice cream sundaes, thus
generating a higher throughput during the year.
Our foray into the corporate segment was strengthened with the number
of vending machines moving to over 35,000. The highlight of the year
however, is our joint venture with the 160-year-old WMF group, the
world''''s 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 parks and financial services, our core business will always be
coffee - owing to our heritage and the mind-boggling potential of the
industry. The two promising growth indicators, which are keeping us
laser-focused and spurring the growth of the food services market are:
Strength of our population: With a population of 1.3 billion people,
India is among the largest consumers and producers of F&B in the world.
While a big chunk of our consumers are from Generation Y (born between
1982 and 1994), standing at a staggering 440 million people; there is
now an explosive potential from Generation Z (those born after the year
2000), currently estimated at 400 million people, who are soon to enter
our target market.
Shift in consumption patterns: Our per capita income stood at Rs.
93,293 in 2015-16, with a strong potential to grow in tandem with our
current GDP growth rate of 7.5%. Owing to the growing disposable
income, the consumption patterns and aspiration levels of the middle
class have evolved - as witnessed in Tier 2 and Tier 3 markets as well.
What is even more encouraging is the migration that is taking place
from rural to urban India, placing us on the brink of a promising
A Diversified Portfolio: Other Self-Sustaining Businesses
Our forays into diverse businesses are marked by the same passion with
which Coffee Day Global Limited was started. These businesses are self-
sustaining and have robust internal revenue generators in place. At the
group level, the EBIDTA increased by 23.5% this year as compared to
FY15, and our net operating revenue saw a 14% growth from FY15 to FY16.
We also 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
SICAL, our leading integrated logistics solutions provider in India,
recorded a revenue of Rs. 810 crores in FY16. We will continue to drive
this business with a strong focus on efficiency and better asset
utilization in the coming years. In the near future, we plan to enter
the coastal shipping market, which will free up Indian roads, lower
pollution levels and significantly impact growth. We are also
introducing a Retail Supply Chain Solution by integrating our cold
chain services with cold storage and warehousing facilities. We plan
to offer this to third party clients - thus opening up new business
Tanglin Developments, our subsidiary offering bespoke infrastructural
facilities for technology enterprises in Bengaluru and Mangaluru,
recorded a revenue of Rs. 125 crores in FY16, compared to Rs. 101
crores in FY15. In this business, our occupancy of 3.2 million square
feet is currently yielding rental returns, while another 700,000 square
feet will soon be occupied.
A Responsible Way to Grow
As a socially aware company, we have integrated our Social
Responsibilities into our daily operations. These initiatives include
embracing eco-friendly technology, adopting sustainable farming
techniques, educating and training economically underprivileged youth
and differently-abled people and then subsequently employing them. We
are the first Indian coffee company to receive the UTZ certification -
a world standard for responsible farming 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 creating shareholder value for Coffee Day Enterprises Limited. We
plan to do so by focusing on four pillars of growth:
Innovation pipeline: A cycle of innovation has always been our biggest
strength. We have invested in cutting-edge roasting and brewing
solutions and a modern cold coffee manufacturing unit that will
increase the quality standards of our coffee. A health-food phenomenon
has swept through the nation and we soon hope to venture into the
health segment with a host of innovative food and beverages.
Deeper consumer engagement: In order to stay relevant, we will keep
engaging with our consumers beyond food and beverages. We hope to
strengthen our relationship via social media channels, digital tools
and awe-worthy experiences.
Brand leverage: 20 years ago, we laid the foundation stone for Coffee
Day as the base of the pyramid. Today, we wish to leverage our brand
strength by venturing into various categories like packaged cold
coffee, energy drinks, Tetra Pak milk and other beverages.
People currency: We are optimistic about the growth opportunities of
our company because of our ''''people currency'''', as I like calling them.
We recruit talented people from across the best management schools in
the country and empower them to innovate.
I am deeply grateful to my experienced management team for their
expertise and foresight. I also want to express my gratitude to my
earnest cafe team members who help us fulfill our journey from bean to
cup, by working round the clock, to brew new cups of happiness, day
Finally, I want to thank you, our shareholders, for your trust in the
company. As I always say, we''''re still in the initial stages of our
growth and have a long journey ahead of us - one that''''s dotted with
lots of coffee, conversations and new possibilities.