Devyani International Ltd Management Discussions

ECONOMIC OVERVIEW

The global economy is projected to grow by 2.8% in 2025, reflecting a moderation from earlier expectations due to escalating trade tensions, and slowing momentum in several economies across various regions. While private consumption remains resilient in certain markets, overall growth prospects have softened, weighed down by rising tariffs, tighter financial conditions, and persistent services inflation in advanced economies. Inflation continues to moderate globally, aided by softer commodity prices and earlier monetary tightening. The external environment remains fragile, with downside risks arising from geopolitical tensions, financial market volatility, and policy uncertainty. Elevated trade policy frictions, particularly between major economies, are exerting additional pressure on global trade flows and investment sentiment.

India continues to stand out as one of the fastest-growing major economies, with GDP growth forecast at 6.5% in 2025, supported by strong domestic demand, infrastructure-led public investment, and the demographic advantages of a young, digitally connected population. Investor confidence remains strong, underpinned by macroeconomic stability and sustained structural reforms. However, structural challenges such as rural employment generation, income disparity, and enhancing global trade competitiveness will require continued policy attention to ensure inclusive and broad-based growth.

Source: IMF World Economic Outlook - April 2025

INDUSTRY OVERVIEW & OUTLOOK

The Indian Foodservice Market is projected to reach USD 85.2 billion by 2025, expanding to USD 139.8 billion by 2030, with a CAGR of 10.4%. This growth is driven by evolving consumer habits, increased frequency of dining out, and a shift towards convenience-led dining formats. Full Service Restaurants (FSRs) continue to dominate in terms of revenue share, while Cloud Kitchens are gaining traction as one of the fastest-growing segments, supported by the rising penetration of food delivery platforms. Independent outlets currently command a significant ~65% market share, though organized chains are scaling up operations rapidly, particularly in Tier II and III cities, where consumer spending and brand awareness are on the rise.

The Indian Quick Service Restaurant (QSR) industry is valued at USD 25.5 billion in 2024 and is expected to grow to USD 27.8 billion in 2025, reaching USD 38.7 billion by 2029, reflecting a CAGR of 8.7%. This expansion is underpinned by rapid urbanization, a youthful population—more than two-thirds under the age of 35 - and increasing disposable incomes. Chained QSR outlets held a 52.33% value share in 2023, benefiting from strong brand recall, consistent formats, and operational efficiencies, while independent players continue to grow by offering affordability and localized choices. Meat-based cuisines have emerged as a significant segment within the Indian QSR landscape. Recent data indicates that 83.4% of males and 70.6% of females aged 15-49 years regularly consume non-vegetarian meals, with per capita meat consumption reaching 6.82 kg in 2022. This trend has prompted QSR chains to expand their meat-based menu offerings, catering to the growing demand for diverse and protein-rich options.

While FY 2024-25 presented challenges for the QSR industry due to subdued consumer sentiment and inflationary pressures, the long-term outlook remains positive. The sector is witnessing a strong pivot toward digital-first, deliverycentric models, with technology-driven ordering systems and loyalty platforms enhancing customer engagement and operational agility. The integration of AI-based ordering systems and online food delivery platforms is further improving customer accessibility, personalizing the dining experience, and streamlining backend operations for QSR chains. Franchize-based expansions are opening up newer geographies, especially in underpenetrated markets across smaller towns and cities.

Growth across both foodservice and QSR segments will continue to be driven by favorable demographics, deepening urbanization, and digital enablement. The industrys adaptability, combined with its focus on scalability, innovation, and deeper regional penetration, positions it well to tap into emerging opportunities and navigate macroeconomic headwinds.

Source: Mordor Intelligence, Statists, Redseer Strategy Consultants Jan 2025 Report

KEY DRIVERS FOR GROWTH & OPPORTUNITY

The Indian food services industry is evolving rapidly and holds immense potential for long-term expansion and innovation. The interplay of various drivers is influencing its growth trajectory and opening up significant opportunities for deeper market penetration, product diversification, and digital-led consumer engagement.

Urbanization and Changing Lifestyles: Rapid urbanization is reshaping food consumption patterns in India. Busy lifestyles, longer commutes, and increased participation of women in the workforce are also contributing to the growing preference for quick-service and ready-to-eat meal options.

Rising Disposable Income and Aspirational Consumption:

Indias growing middle class and expanding income base are boosting consumer spending on discretionary categories, including dining out. As incomes rise, especially in Tier II and III cities, consumers are seeking higher-quality, branded food experiences. This structural tailwind is enabling QSR brands to upgrade offerings and tap into broader consumption segments.

Digital Transformation and Influence of Aggregator Platforms: Digitalization continues to transform the foodservice value chain, from discovery and ordering to delivery and feedback. AI-powered ordering systems, mobile apps, and loyalty integrations are driving personalization and efficiency. The growing influence of food aggregators has also widened reach and improved accessibility, enabling QSR brands to tap into newer consumer groups and occasions without proportionate investments in physical infrastructure.

Store Expansion and Format Innovation: Organized QSR players are actively expanding their footprint through a combination of company-owned and franchise-led models. Store count across the top chains has seen significant growth in recent years, supported by the adoption of flexible formats including express outlets, food court counters, and high-street kiosks. This strategy is enabling faster entry into untapped markets, particularly in Tier II and III cities, where organized penetration remains low and competition is less intense.

Strong Preference for Chicken-Centric Offerings: The Indian QSR segment is seeing a marked rise in demand for nonvegetarian formats, particularly chicken-based menus. With a significant portion of the population regularly consuming non-vegetarian meals, chicken has emerged as the protein of

choice across diverse customer segments. Its appeal lies in its versatility, affordability, and compatibility with Indian and international flavors, making it a key growth lever for menu innovation.

Together, these structural trends support the industrys growth while presenting compelling opportunities to scale operations, innovate menus, and strengthen customer engagement across urban and emerging markets.

BUSINESS OVERVIEW

Company Snapshot

Devyani International Limited ("DIL or "the Company"), a growth engine for RJ Corp Group, is one of Indias largest players in the Quick Service Restaurant (QSR) segment and a key contributor to the countrys organized foodservice sector. Headquartered in Gurugram, Haryana, DIL began its journey in 1997 with the launch of its first Pizza Hut outlet in Jaipur. Since then, it has expanded rapidly through a disciplined growth strategy, operational excellence, and a diversified brand portfolio.

DIL is the largest franchisee of Yum! Brands in India, operating globally recognized brands including KFC, and Pizza Hut. DIL also operates Costa Coffee stores in India. In addition to these international formats, the Company has successfully developed and scaled homegrown brands such as Vaango, and Food Street, catering to diverse consumer preferences and enhancing its multi-format offering.

As of March 31,2025, DIL operated over 2,000 stores across India, Nepal, Nigeria, and Thailand, up from 1,782 stores in the previous year. This includes 696 KFC restaurants, 630 Pizza Hut outlets, 220 Costa Coffee cafes in India, and 306 KFC restaurants in Thailand, reflecting the Companys robust store expansion and growing international footprint. While India remains the core market, overseas operations contribute meaningfully to business growth, geographic diversification, and operational scale.

With a balanced portfolio of global brands and innovative Indian concepts, a strong operational foundation, and a scalable business model, DIL is well-positioned to capitalize on opportunities within Indias fast-evolving foodservice landscape and strengthen its presence in high-potential international markets.

nilS CORF RRANOS GROWTH IN INDIA

DIL is Yums franchisee for KFC in India and holds franchise rights in Thailand, Nepal and Nigeria through its subsidiaries. In India, DIL operates 696 KFC outlets, making it the largest franchisee in the country. The global brand, with a network of more than 25,000 restaurants across 155+ countries, has expanded DILs reach to 1,060 KFC outlets across India, Thailand, Nepal, and Nigeria.

DIL operates Pizza Hut in India and Nepal, with 637 outlets across these regions. Known for its wide variety of pizzas and family- friendly dining, Pizza Hut is part of a global network exceeding 18,000 restaurants. ^F

DIL operates as a franchisee for Costa Coffee in India, managing over 200 stores. The brand, with a global presence of 3,900+ stores in 41 countries, has gained significant traction in Indias coffee culture. DIL continues to drive Costa Coffees growth by expanding in metropolitan cities and emerging markets, enhancing the brands position in Indias competitive coffee shop sector.

STRATEGIC BRAND EXPANSION

The Companys portfolio of exciting QSR brands witnessed a major expansion during FY 2024-25 with the addition of several key new global brands. Led by our focus on consolidating our "FOOD ON THE GO" and "HOUSE OF BRANDS" strategy, we augmented our offerings to include three new lifestyle QSR brands. We have acquired exclusive rights for (i) Tealive- a renowned Malaysian tea and beverage brand; (ii) New York Fries (NYF) - a Canadian quick-service snacking brand celebrated for its french-fries, hot dogs, and poutine; and (iii) SANOOK KITCHEN - a popular Singapore-based brand specializing in Thai and Asian cuisine.

With Tealive, we are introducing the #1 bubble tea brand in Malaysia and Southeast Asia to Indian consumers. Quirky, bold, trend-savvy, and driven by purpose, Tealive brings a refreshing, modern beverage experience to Indias tea-loving audience.

NYF, one of Canadas most iconic QSR brands, offers a focused menu of loaded fries and hot dogs, crafted from fresh, hand-cut potatoes and prepared using a unique three- stage cooking process, made to order every time. With a successful debut at Chhatrapati Shivaji Maharaj International Airport, Mumbai, subsequent to the end of the financial year, NYF has begun delivering its signature Canadian flavors to Indian fast-food enthusiasts, adding a bold new dimension to our QSR portfolio.

With SANOOK KITCHEN, we are tapping into Indias growing appetite for authentic Asian cuisine. Originating from Singapore, SANOOK KITCHEN is a well-loved brand celebrated for its vibrant Thai and Asian flavors, delivered in a contemporary and approachable format.

In a strategic move, DIL has executed definitive agreements to acquire a controlling stake in Sky Gate Hospitality Private Limited (Sky Gate) for three brands - Biryani by Kilo, Goila Butter Chicken, and The Bhojan. Sky Gate operates over 109 outlets across 29 Indian cities and recently launched its first international outlet in the UAE. These strategic additions significantly enhance our "House of Brands" approach and will strengthen our presence in the Indian cuisine segment.

These new brands significantly broaden the Companys reach into both Indian and international cuisine segments, targeting diverse consumer tastes and expanding its presence in high- growth food and beverage categories.

During the year, the Company has entered into a Shareholders Agreement with PVR INOX Limited ("PVR INOX") to incorporate a new company for development and operation of food courts situated within shopping malls

in India. Subsequently Devyani PVR INOX Private Limited ("Devyani PVR INOX") was incorporated as a subsidiary of the Company. Devyani PVR INOX has opened its first food court in Kota.

KEY DEVELOPMENTS IN FY 2024-25 Financial Performance

DIL reported a 39% year-on-year revenue increase, reaching 4,951 crore, driven by strong store expansions and improved core brands performance. However, despite the revenue growth, the Company posted a net loss of 6.9 crore due to rising costs related to its rapid store expansion and increased expenses in materials and employee benefits.

Store Expansion

DIL continued its aggressive growth strategy, successfully opening 257 new stores across India and international markets, bringing the total number of outlets to 2,039 stores by March 2025. The Company focused on expanding in Tier II and Tier III cities in India, as well as growing its international footprint in regions like Thailand, Nepal, and Nigeria.

Digital Investments

The Company made ongoing investments in digital platforms to enhance customer engagement and improve operational efficiency. This included refining menu offerings, implementing technology for better customer experiences, and strengthening its digital ordering platforms.

BUSINESS STRENGTHS

Visionary Leadership Driving Sustained Growth

• Mr. Ravi Jaipuria brings over four decades of entrepreneurial experience, successfully expanding businesses across South Asia and Africa

• The Board of Directors consists of highly experienced professionals in finance, operations, and strategy, ensuring sustainable growth and informed decision-making

Robust and Diverse Brand Portfolio

• DIL operates a dynamic portfolio of global brands like KFC, Pizza Hut, and Costa Coffee, alongside successful homegrown brands such as Vaango and Food Street

• This mix of international and local brands ensures DIL adapts to diverse consumer preferences and evolving market trends

Pioneering Excellence in the QSR Sector

• DIL leverages its partnership with Yum! Brands, combined with expertize in technology, marketing, and operations, positioning itself as a leader in the QSR market

• The Companys agility allows it to stay ahead of industry trends and remain competitive in a dynamic market

Operational Efficiency Through Innovation

• DIL drives cost optimization and improved store economics by leveraging synergies and economies of scale

• Continuous innovation in operational strategies ensures high service standards and efficient store performance

Strategic Nationwide Expansion

• DIL operates across 27 states and 5 union territories, with a total of 1,664 stores over 280 cities as of March 31,2025

• FY 2024-25 saw the opening of 235 new stores, including 63 for Pizza Hut, 100 for KFC, and 41 for Costa Coffee, expanding its presence into 30 new cities

• DIL plans to open ~200 new stores in FY 2025-26, focusing on Tier II and Tier III cities with growing disposable incomes

Market Leadership in Indias QSR Industry

• DIL is a dominant force in Indias QSR sector, operating over 2,000 stores across India, Nepal, Nigeria, and Thailand

• The Company has solidified its position as one of the largest and most trusted players in the organized foodservice industry in India

Sustained Financial Growth and Profitability

• DIL reported a 39% year-on-year growth in revenue in FY 2024-25, driven by effective brand management and strategic expansion

• The Companys growth reflects its ability to navigate market challenges and maintain profitability

Expanding Revenue Streams through Diversification

• DIL is expanding into institutional channels like food courts, airports, and transit zones, creating new revenue streams

• This diversification allows DIL to reach broader audiences and strengthen its market presence

Commitment to Customer-Centric Innovation

• DIL consistently introduces menu innovations that align with local tastes and global food trends, keeping the brand relevant in a dynamic market

• This focus on consumer-driven offerings helps DIL maintain a competitive edge

FINANCIAL OVERVIEW

• Revenue: Total revenue grew 39% year-on-year to 4,951 crore, driven by robust performance across India and international operations, enhanced digital engagement, and menu localization

• Gross Profit: Gross profit reached 3,412 crore, with margins at 68.9%, supported by cost optimization, improved product mix, and disciplined supply chain management.

• Brand Contribution:

? KFC remained the leading revenue contributor, driven by its wide reach and value offerings.

? Pizza Hut delivered steady performance through localized menus and flexible store formats.

? Costa Coffee saw continued growth in urban markets, reinforcing its premium cafe positioning.

? Homegrown brands - Vaango, and Food Street

contributed to customer diversification and margin accretion.

• Store Growth: As of March 31, 2025, DIL operated over 2,000 outlets, up from 1,782 the previous year — a 14% increase. The Company added 250+ stores across India, Nepal, Nigeria, and Thailand, with international markets playing an increasingly important role in growth.

Rs.in million)

Particulars	FY 2024-25	FY 2023-24	YoY Growth
Revenue	49,511	35,563	39.2%
Gross Profit	34,122	24,997	36.5%
EBITDA	8,422	6,524	29.1%
Depreciation	5,699	3,848	48.1%
Finance Cost	2,648	1,869	41.7%
PAT	(69)	(97)	-28.9%

There is no significant change (i.e. 25% or more) in key Ratios i.e. Debtors Turnover, Inventory Turnover, Current Ratio, Debt Equity Ratio, Operating Profit Margin, as compared to previous year other than the following ratio:

S. Particulars No.	FY 2024-25	FY2023-24	% Change	Explanation
1. Interest Coverage Ratio (in times)	1.12	1.72	(35)	Interest cost increased due to availment of term loan in FY2023-24, with full year impact of interest in FY 2024-25.
2. Net Profit Margin (%)	0.71	(0.20)	455	Lower expenses/provisions lead to increase in net profit margin.
3. Return on net worth (%)	2.15	(0.58)	470	Lower expenses/provisions lead to increase in return on net worth.

CORPORATE SOCIAL RESPONSIBILITY AND SPECIAL INITIATIVES

In FY 2024-25, DIL reinforced its commitment to creating a positive social impact through focused CSR initiatives aligned with its core values. DIL participated in the National Apprenticeship Promotion Scheme (NAPS) introduced by the Government, and spent 23.32 million towards the scheme. The aim of implementing the NAPS within the Company was to foster skill development among youth/ freshers PAN India and enhance their employability. By participating in the NAPS, the Company aimed to provide structured training opportunities that bridge the gap between theoretical knowledge and practical skills required in the workforce. Through NAPS, the Company contributed to the national agenda of creating a skilled workforce that meets the demand of Industries.

HUMAN RESOURCES

As of March 31, 2025, DIL employed 20,417 individuals, including 14,802 in India and 5,615 across international markets. The workforce expanded in line with the Companys growing store footprint, supported by robust recruitment, onboarding, and training frameworks. The Company also engages third-party service providers for contract staffing, including security personnel, and hires part-time staff during peak operational hours. The Company does not have

labor union representation or engage in collective wage negotiations.

To ensure consistent service quality and operational excellence, all employees undergo structured training aligned with Yum! Brands certification standards. Training is delivered through blended formats, including on-the-job learning, digital modules, and mandatory programs such as fire safety and brand-specific operational training. Specialized learning tracks are designed for area managers and supervisory staff. Regular audits are conducted to monitor training compliance and adherence to operational protocols.

DIL places strong emphasis on diversity and inclusion, reflected in initiatives such as women-only stores across its core brands — KFC, Pizza Hut, and Costa Coffee. As of March 31, 2025, the Company operated 110 women-led outlets and 43 stores staffed by differently abled employees, creating a more inclusive workforce and empowering individuals to take on meaningful roles.

Throughout FY 2024-25, the Company prioritized leadership development, employee engagement, and digital transformation in HR processes. By leveraging technology for learning and performance management, DIL enhanced agility, improved employee experience, and built a resilient, future-ready talent pool to support its continued growth.

RISK MANAGEMENT, AUDIT AND INTERNAL CONTROL

DIL has instituted a robust internal control framework tailored to the multifaceted nature of its business and the dynamic market environment in which it operates. These controls are designed to ensure efficient use of resources, protect the Companys assets, and uphold the integrity of financial reporting.

All financial transactions are subject to rigorous authorization protocols and are systematically recorded, ensuring accuracy, transparency, and accountability. A structured system of checks and balances supports the reliability of financial data and enables consistent compliance with applicable regulatory and accounting standards.

To further reinforce its governance structure, the Company has constituted an Audit, Risk Management, and Ethics Committee at the Board level. This Committee plays a pivotal role in overseeing internal audit functions, reviewing risk management frameworks, and ensuring adherence

to the highest standards of ethical conduct and corporate governance.

To maintain the independence and quality of external evaluations, DIL has appointed Walker Chandiok & Co LLP and O P Bagla & Co LLP, Chartered Accountants, as joint statutory auditors. Their role includes reviewing the effectiveness of internal financial controls and assessing the overall financial reporting environment.

The Company operates under a comprehensive Risk Management Policy, designed to proactively identify, assess, and mitigate potential business and operational risks. This Policy facilitates strategic decision-making by aligning risk management with business objectives and enabling timely corrective action.

Key risk factors and mitigation strategies are summarized below:

Risk Category	Description	Mitigation Measures
Business Environment Risk	Exposure to macroeconomic shifts and external market volatility that could dampen consumer demand.	• Tiered pricing across diverse menu offerings to serve multiple customer segments
		• Ongoing product and menu innovation to deliver compelling value propositions and offset input cost pressures
Seasonality & Demand Cycles V	Variability in sales linked to festive seasons and cyclical consumer behavior.	• Data-driven demand forecasting using historical patterns and real-time market trends
		• Agile operational planning to capture seasonal upsides and cushion demand slowdowns
Organizational Risk V	Operational inefficiencies or disruptions due to gaps in internal processes or leadership availability.	• Robust organizational structure enabling rapid communication and decision-making
		• Strengthened leadership bench across functions to ensure continuity during transitions or absences
Supply Chain Risk V	Interruptions in supply or cost instability due to vendor concentration or external shocks.	• Diversification of supplier base through regional sourcing aligned with franchisor standards
		• Strategic long-term contracts to lock in pricing and reduce exposure to market swings
		• Real-time inventory monitoring to enhance procurement planning and minimize shortages
Talent & Workforce Risk V	Inability to attract, retain, and develop skilled personnel critical to operations and growth.	• Structured hiring practices supported by objective performance management
		• Investment in continuous learning, leadership development, and inclusion initiatives
		• Employee wellness programs and performance-linked rewards to drive engagement and retention
Technology & Cyber Risk V	Risks related to system scalability, data integrity, and cybersecurity threats.	• Ongoing system performance audits and proactive infrastructure upgrades
		• Robust IT governance including strict access controls, cybersecurity protocols, licensed software, and endpoint protection to safeguard data and ensure operational reliability