Jubilant Foodworks Ltd Management Discussions

Economy Overview

The global economic expansion, estimated at 3.2%1 in 2023, has demonstrated remarkable resilience in the face of a volatile business environment marked by escalating geopolitical tensions and disruptions in supply chains. Many markets experienced higher inflation rates and the subsequent tightening of monetary policy by many central banks resulted in a dampened consumer sentiment. However, as global inflation receded from its peak in mid-2022, economic activity exhibited consistent growth, defying earlier concerns regarding stagflation and a potential global recession.

1Source: World Economic Outlook, April 2024

Growing Influence of Emerging Markets

Over the past twenty years, the emerging markets of the Group of Twenty (G20) have experienced significant growth, averaging almost 6% a year. They now represent about 30% of global economic activity and approximately one quarter of global trade. These economies have also become more interconnected through their involvement in global value chains (GVCs), which gives them the potential to influence global markets. India and T?rkiye – large markets for the group - are amongst the 10 emerging markets within the G20.

India has emerged as prime driver for global economic growth. In FY24, the Indian economy is estimated to grow by 8.2%2. As per IMF, propelled by key reforms in digitization and infrastructure, India is estimated to contribute 16% of global growth, the second largest share in the world. India is the worlds fifth largest economy and the prospect of steady progress in the coming years is bright as the country charts its progress to become worlds third largest economy.

Indias domestic economic activity is supported by an upturn in the investment cycle on the back of the governments continued thrust on capital expenditure, higher capacity utilization, underlying resilience of the services sector, double digit credit growth, and healthier corporate and bank balance sheets. Despite the multiple and overlapping shocks to the global economy, a series of timely measures by the Reserve Bank of India and the Government aided in reigning the inflation.

2Source: CSO

Organized chains account for ~9% of the food services market. Within organized chains, Quick Service Restaurants(QSRs) are the largest format with more than 50% share. The chained QSR industry in India has grown at a 24% revenue CAGR over FY10-20, which is c.2.7x the rate of the overall food services market in the country.

Growth Drivers

The food services industry in India is expected to grow at a CAGR of over 9% for the next few years owing to a number of secular trends. The chained QSR industry is expected to continue its faster growth trajectory. Indias chained QSR per capita consumption is also low compared to other emerging markets giving it large headroom for growth in coming decades.

Key Drivers of Growth

• Consistent rise in per capita income in consumption-led economic growth

• Demographic tailwinds

• Digital Democratization

• Growth in Online Ordering

Consistent rise in per capita income in consumption-led economic growth

Indias share of domestic consumption, measured as private final consumption expenditure, in its GDP is ~60%. The continued strength in consumption can be attributed to a mix of socioeconomic factors. The high share of private consumption to GDP has the advantage of insulating India from volatility in the global economy. It also implies that sustainable economic growth directly translates into sustained consumer demand for goods and services. The per-capita income (at current prices) has grown at a CAGR of c.9%. This rate of growth of per-capita income is expected to give a major boost to discretionary spending as the country crosses the $2,400 per-capita income.

Per-capita GDP($)

Demographic tailwinds

India has the second-largest urban population in the world. The pace of Indias urbanization that is a key trend to note for its implication on Indias economic growth. As per UN estimates, around 416 million people will be added to Indias urban population between 2018 and 2050, translating to approximately 40% urbanization by 2030. This trend is expected to reflect greater purchasing power in the urban centers with stronger growth opportunity for industry.

India also has one of the youngest populations globally compared to other leading economies. The median age in India is estimated to be 28.7 years, and is expected to remain under 30 years until 2030. The younger population are likely to have a greater inclination towards branded food service players.

Digital Democratization

The improving broadband network penetration, device and services affordability has caused an increase in data usage across the country and enabled Indians to embrace digital applications.

The number of internet users at 840 million has doubled since 2016. The digital transaction volumes have grown by seven times since 2019.

Illustration: A closer look at Indias digital transformation

1.36 billion	1.25 billion	692 million
Aadhar (biometric digital identification system)	Telecom subscribers	Internet
644 million	493 million	300 million
E-commerce	Smartphones	UPI (digital payments)
268 million
Food delivery

Source: Indian Council for Research on International Economic Relations, Feb 2023

Growth in Online Ordering

The share of online sales in food service industry has reached double digit in 2021. The analysis of the funnel of Indian online consumers shows a tapering from a high number of internet users at 840 million to active consumers of social media and content at 450 million to 165 million digital commerce transactors.

Sales in Consumer Foodservice by Online/Offline Ordering: % Foodservice Value 2016-2021

% value	2016	2017	2018	2019	2020	2021
Offline	98.1	97.2	95.7	93.7	90.3	89.3
Online	1.9	2.8	4.3	6.3	9.7	10.7
Source: Euromonitor

Aided by digital democratization and huge headroom for growth for digital commerce transactors, the share of online sales is expected to increase at a faster clip further enabled by the following secular trends:

• Consumers are now accustomed to delivery across town classification helped with the ever-expanding reach of the delivery ecosystem in Tier II/III/IV

• With the option of food now being delivered at the touch of a button from the comfort of their home and at any time of the day, convenience is helping drive delivery growth and move users from occasion-based ordering to habitual ordering

The Companys strategic priorities defines key focus areas, establishes the framework for decision-making and lays the foundation for the Company to maintain a consistent focus on driving sustained and profitable growth while creating long-term value for all stakeholders. It comprises of four key priorities: Customer and Market First, Data and Technology Forward, Operational Excellence, and Foundation of People and Culture. This strategic framework provides a fixed point of reference for all decisions of Company-wide significance and is being reviewed by the Management and Board of Directors yearly while factoring in the changes in the operating environment.

A. Customer and Market First

The first set of priorities relates to Customer and Market First. Unequivocally, this is the single biggest long term value creating pillar. The underlying objective here is to build a multi-brand and multi-country food service organization. The endeavor is to serve multiple occasions, innovate on formats that drive engagement and customize menu as per the needs of local market.

A major thrust towards this strategic priority came when DP Eurasia N.V., during the year, became a step-down subsidiary of the Company and Jubilant Foodworks Netherlands B.V.s stake increased to 94.33% as on March 31, 2024.

Consequent to the stake-build, JFL Groups store network is now 2,991 stores across six markets and five brands.

Illustration: JFL Groups Store Network

	India		Turkey		Sri Lanka	Bangladesh	Azerbaijan	Georgia	Overall Network	Net Addition in last 12 months
Stores	Total	Corporate	Franchised	Total	Total	Total	Franchised	Franchised	Total	Total
	1,995	78	625	703	50	28	10	7	2,793	240
	42	-	-	-	-	-	-	-	42	29
	31	-	-	-	-	-	-	-	31	10
	28	-	-	-	-	-	-	-	28	15
	-	25	72	97	-	-	-	-	97	62
All Brands	2,096	103	697	800	50	28	10	7	2,991	356

Through the market presence in these six countries – India, Turkey, Bangladesh, Sri Lanka, Azerbaijan and Georgia – the Group has a potential to serve ~22% of worlds population. This enhances the potential long-term growth for the Group.

The Group has further strengthened its Portfolio of Brands comprising of three franchised global brands – Dominos, Popeyes and Dunkin along with two own-brand Hongs Kitchen and COFFY. The Portfolio of Brands is further accentuated with participation of multiple cuisines which significantly enhances the ability of the Group to participate in its consumers total share of meal occasions.

Dominos

The Global QSR Pizza industry is valued at $94 bn wherein the International QSR Pizza segment outside USA is estimated at $41 bn. A large part of the future international growth will be contributed by the emerging markets.

Dominos and JFL Group partnership is a long-standing relationship between the Worlds #1 Pizza Company and one of the largest emerging market foodservice player.

The JFL Group through its own corporate store as well as sub-franchise stores has a total network of 2,793 stores across the six markets namely – India, Turkey, Bangladesh, Sri Lanka, Azerbaijan and Georgia. All these markets with JFL group have a number of strategic similarities. These markets have exclusive full-territorial rights for under-penetrated, high potential markets. These markets are supported by one of the strongest value equations and operate a unique commissary-based sourcing model. These markets have developed self-delivery and own-app infrastructure grounds-up. They have a unique culture of hustle with a maniacal focus on operational execution to succeed in a store environment which has one of the highest through-put per store. There exists deep local expertise developed over decades across all markets and most importantly the long-term vision to make growth investments ahead of the curve for durable long-term growth.

Popeyes

The iconic US Fried Chicken brand - Popeyes - made its debut in India with the opening of its first restaurant in Bengaluru in January 2022, followed by rapid expansion to 42 restaurants across 15 cities.

Popeyes is known for its bold and unique Louisiana style Cajun fried chicken and world famous chicken sandwiches. The use of bold Cajun spices - a proprietary blend of cayenne pepper, garlic, onion, black pepper, celery, and white pepper - and techniques developed by an in-house culinary team of chefs that makes its fried chicken a point of reference for Michelin Chefs and celebrities. The brands passion for its Louisiana heritage and flavorful authentic food has allowed Popeyes to become one of the worlds largest chicken quick service restaurants.

Dunkin

The Company successfully pivoted to Coffee-first approach as per the new brand identity. The new Dunkin restaurants feature a modern caf?-like experience with comfortable in-store seating for enjoying a cup of coffee any time of day, as well as convenient takeaway, and delivery options, allowing guests to enjoy their favorite Dunkin on-the-go. The fresh modern design is also complemented with a new menu, which brings international coffee and bakery range for Indian consumers. During the year, the net store addition of 10 restaurants along with new city entry took Dunkins network to 31 restaurants across 10 cities.

Hongs Kitchen

Hongs Kitchen is Indias only Chinese QSR brand. During the year, the Company made significant intervention across workstreams to strengthen the brand for future growth. These included efforts in product innovation, improvement in existing offerings, higher reliance on central kitchen set up in Greater Noida commissary, ramping up training efforts and upgrading the consumer experience through technological intervention. All these have led to marked improvement in repeat rates, orders and record high NPS. During the year, the net store addition of 15 restaurants took Hongs Kitchen network to 28 restaurants across six cities.

COFFY

Coffee consumptions frequency is very high in Turkey. At least 53% of Turkish coffee consumers are consuming more than two coffee per day. The Coffee market in Turkey is estimated to be ~$1.1 bn and as per industry estimates, the market will double in 5 years to ~$2 bn by end of CY2028. COFFY was founded with an idea of building an own-brand that will provide COFFY without the excessive price tag. The team came up with a unique model of having single price points for each size rather than having different price points for each beverage at every size. With a trial store opened in October 2019 in Istanbul to being the 8th largest CAF? brand in Turkey with 97 stores, COFFY has demonstrated strong performance and presents an additional growth vector to the JFL Group.

B. Data and Technology Forward

The second set of priorities relates to Data and Technology Forward. Technology and data sciences takes customer offerings to beyond immediate physical boundaries of the store. Under this we are working on four workstreams which are Elevate Consumer Experience, Next-level Platform Capabilities, Advanced Analytics and Data Science and Digitalizing Value Chain. When seen in unison, all four work-streams help us lead the industry and thrive in the era of digitalization.

It also helps the Company understand its customers and deepen the relationship through loyalty programs like Dominos Cheesy Rewards and make it easier to order a pizza on a moving train. Equally, the Company is moving forward by embedding automation in our kitchens, commissaries, and allied logistics with enterprise-grade processes. Finally, it is about building a future ready digital and technology ecosystem by combining captive capabilities, winning partnerships and thoughtful investments.

The Company continually improve not only customer experience across all digital assets but is also working closely to help permeate technology and digital strength across the entire organization. During the year, a number of transformation projects across all functions were rolled out.

Illustration: Data and Technology Forward Pillars

During the year, the Company launched a dedicated app for store managers to efficiently and conveniently manage their stores along with the launch of an in-house Table-POS. This is a big thrust towards digitizing the operations which in turn is also one of the four pillars of being a data and technology forward organization. It empowers the operations team and help everyone benefit from deeper penetration of data and technology across all layers.

Illustration: Launched OSSOM (One Stop Shop for Store Operations and Management) App

The Company realizes that consumer expectations in the digital world are evolving rapidly. Accordingly, the focus remains on continuously strengthening the backend technology stack so as to have an agile, modular and scalable architecture that is well structured to help drive future growth. During the last two years, the Company has integrated multiple building blocks which will help build an intelligent, personalized, engaging food-experience platform at scale with the following measures:

• API services to enable for greater collaboration on a digital platform

• Seamless data integration with numerous platforms and services

• Data extraction in real time for order auditing and speedier order fulfillment

• Data distribution services centralized

• Multi-country, multi-currency, multi-tenant platforms that are centralized

During the year, the Company joined Open Network for Digital Commerce (ONDC) Network. With this integration, Dominos catalogue will be seen on all apps that a consumer is shopping from across a network that is rapidly developing, while seamlessly facilitating transactions.

This will enable Dominos to expand its customer base by making its products available to buyers from all ONDC seller apps based on geographical proximity, paid promotions or through product or brand search. The move will help the brand grow its presence across the country and help achieve its mission expanding touchpoints and occasions for consumers to enjoy pizza.

Advanced Analytics and Data Science

The Analytics and Insights function helps the Company analyze data streams almost on a real-time basis and get very sharp and actionable insights. There are four teams under A&I which develop state of the art data assets, data science capabilities, dashboards and analytics tools and help decision-makers anticipate and respond faster to emerging trends.

• The data engineering team has built a real-time data platform that consolidates, standardizes and enriches data from internal operations and applications, consumer-facing assets and relevant external data that provides fresh insights and differentiation. The data platform enables leaders with real-time decision making and allied recommendations.

• The Data Science team is building scalable AI/ ML solutions that help the Company understand every customer uniquely, predict customers future actions and prescribe Next Best Action that helps in personalizing customer experience across every touchpoint. The team will also build forecasting and scenario planning capabilities that help in loss prevention, resource planning and optimization that helps provide best in class service levels to customers and optimize cost for business.

• The Business intelligence teams develop dashboards to understand the health of the business and internal functions. The team builds diagnostic and analytics tools that help scale analytics across the organization.

• The strategy and Insights team distil data to find opportunities and emerging trends. This helps the business prioritize efforts, influence strategy and translate insights into actionable recommendations. The customer science engine tracks all customer interactions (orders, browsing behavior, CRM engagement, NPS scores and feedback etc.) and is then able to derive rich customer intelligence that helps understand what matters to the customers, how the customer engages, what are customers latent behaviors and purchase driver and what are likely future actions. The customer intelligence is then used to provide a meaningful experience to the customer on application and send personalized communications and offers. Today in Dominos app, the customer is shown a personalized menu based on the predicted preferences which greatly helps reduce order time.

C. Operational Excellence

The third priority is to continue driving operational excellence. The Company places inordinate focus on continuous improvement when it comes to executing with excellence. From procurement to food tech park operations to managing the logistics to kitchen operations to last mile operations, across brands and countries, the Company is developing a unique way of execution – ‘The JFL Way. Notably, with the Companys vast expanse of operations, the continuous endeavor is to manage complexity at lower cost, generate leverage while bringing in improvements in the backward integrated sourcing supply chain with state-of-the-art commissaries. One critical outcome of this priority will be marked improvement across cost lines and productivity.

Store Operations

With growing store network of Dominos India, the existing four regions were managing a very large portfolio of Dominos stores with ever growing complexity which comes with network densification.

During the year, the Company with an objective to efficiently meet its medium-term ambition of 3,000 Dominos India stores and the runway beyond, made adjustments to Dominos regional management structure for even sharper on-ground execution and to become even more agile as an organization. The Company invested behind three new regions to transition to a seven-region structure in Dominos India. This incremental investment in the new structure will go a long way in further bolstering the key competitive advantage of best-in-class operational prowess.

The Company also launched a new flagship store format for Dominos - ACE 2.0 which significantly enhanced the store ambience while carrying different elements of the new brand identity – It Happens Only With Pizza.

Integrated Supply Chain

The Company has built a robust integrated supply chain which oversees four broad functions:

1. Sourcing and Supplier Management

The Company places considerable emphasis on ensuring that it procures high-quality raw materials, fresh ingredients, packaging material, engineering products, capital goods and equipment, enabling it to provide quality products and experience to its customers. Also, the centralized procurement through commissaries allows the Company to maximize leverage and negotiate better prices with suppliers.

Food Safety and Quality Control

High hygiene standards, food that is uncompromised on quality and taste, and consumer safety are the Companys top priorities. The Company has developed sustainable systems and processes for ensuring the highest standards of food safety and hygiene. It also adheres to all the applicable rules and regulations regarding the manufacture, storage, distribution of products and labelling information – under Food Safety and Standards – for all its food products, including legal metrology.

The Company works with its partners and employees to ensure that there is no compromise on the taste, quality and safety of the products its consumers have come to love over the years.

2. Commissaries and Distribution Centers

The Company has eight commissaries and two distribution centers across India. These commissaries primarily manufacture food intermediaries, house central kitchen and act as fulfilment centers/warehouses for majority of the ingredients. This also helps in ensuring consistent quality, adherence to strict food safety protocols and timely delivery of raw materials to stores.

The primary raw materials used in the preparation of our pizzas, such as cheese, flour, vegetables and chicken, are sourced, processed in the commissaries.

Dominos uses fresh centrally produced dough using the standard global Dominos recipe manufactured in the dough facility. The pizza dough is also differentiated with added nutrients like Iron, Folic Acid and Vitamin B12. In the Greater Noida commissary, the Company has a dedicated dough lab to test and continuously monitor inputs from different varieties. Basis the test results, suitable modifications are made in quantity of other inputs to ensure consistency of taste and adherence to quality.

Similarly, the Company has dedicated facilities for desserts meant for Dominos, donuts for Dunkin and recently introduced central kitchen. Central kitchen is an example of forward integration where the Company is able to quickly standardize the menu, deliver consistent quality through enhanced supervision and usage of equipment with high level of automation and precision while being cost efficient. Hongs Kitchen operations registered remarkable progress with further enhancement in taste, improvement in repeat rates, increase in orders and record high NPS with the introduction of central kitchen. It is also leading to simplification of in-store kitchen processes while reducing food wastage.

To support the Companys store expansion plans, commensurate investments are being planned for new commissaries and capacity expansion in existing ones.

The Jubilant Food Park Bangalore commissioned on 9th November, 2023 is the largest and the most prestigious food processing unit, adding unprecedented new capabilities for business growth across the entire portfolio of brands. This facility is designed to serve 750+ Dominos stores, and 300 stores of Popeyes, Hongs Kitchen, and Dunkin.

In addition to the usual Dough manufacturing and the Cold Warehouses at Supply Chain Centers, the Bangalore Food Park has large factories for chicken toppings and chicken marination, bakery products manufacturing, seasoning manufacturing and a state-of-the-art Central Kitchen. This gives the Company a unique cost advantage along with end-to-end value chain control.

During the year, the ground-breaking ceremony for the upcoming commissary in Mumbai was performed and the construction is in progress.

Illustration: Upcoming commissary in Mumbai

3. Research and Development

The Company has an internal product development team (comprising a team of chefs, food technology expert and a kitchen in-charge) which interacts constantly with consumers, the marketing team and the market research teams to get their feedback on food products and new product ideas. The Company also have a dedicated internal product development kitchen located at commissary in Greater Noida and in Head Office in Noida. It also relies on franchisors expertise along with close collaboration among other franchisees for new product development ideas as well as food technology. The internal product development team works independently and also in close collaboration with the vendors to develop the ingredients for our food products to meet ongoing requirements for menu innovation.

During the year, the Company pivoted from ingredient innovation to establishing a full-fledged R&D function for new product development and new categories. The famous Brioche bun in Popeyes India is developed in-house with recipes validated by RBI team. In Dominos, the R&D team ensured that the menu is 100% free from usage of artificial preservatives, colors and flavor under the Baking Goodness initiative of the brand. The team also continuously strive to reduce fat and salt content in all its products while maintaining the same loved taste.

4. Logistics

The Companys store operations are dependent on frequent and consistent deliveries of raw material, intermediaries and finished food items as per the specifications and hence maintaining consistent high fill-rate is very important. Dominos has an industry leading fill-rate of over 99.5%. This is achieved through rigorous materials and resource planning in advance, load levelling, infallible engagement with suppliers and building optimized inventory levels while managing cost efficiency.

The Company has a dedicated cold-chain fleet that helps in ensuring timely delivery of raw materials to stores. These trucks are refrigerated to ensure that the ingredients are supplied in a temperature-controlled environment, which is monitored during transit to ensure quality and minimize wastage.

Foundation of People and Culture

The fourth priority, essentially a pre-requisite for delivering on the first three priorities, is the foundation of people and culture. Companies built to last, have a culture and people processes that are home grown. To succeed the Company has identified three interlinked objectives:

(i) Engaged and inclusive front-line teams

(ii) Be the employer of choice

(iii) Be guided by a unique JFL culture embedded with values that last beyond us

Culture and allied HR strategy

Smart hustle, guest-centric, collaborative, flexible and tech-driven are the five basic tenets which define the Companys culture. Accordingly, the objectives of the Companys Human Resources strategy have been defined with a view to attracting talent, optimizing their deployment and providing them with opportunities to develop their potential, thereby ensuring that all their skills and expertise are available to meet the current and future needs of the Company. The success of this approach is borne out by the results of employee engagement and satisfaction surveys, conducted every year.

During the year, the Company was regarded as Great Place to Work for second time in a row as a reflection of high trust, high performance culture, another marker of being an employer of choice.

Illustration: Number of people employed as on March 31, 2024

Diversity and Inclusion

The Company firmly believes that focusing on diversity, equity and inclusion isnt just the right thing to do, it is critical for long-term sustainable success. All the stakeholders benefit when we amplify diversity, create a platform to celebrate uniqueness and create an environment where everyone can contribute, thrive and prosper. It brings diversity of thought, greater innovation, better understanding of customer mind-sets, better employee engagement and sets the Company on a path to excellence. During the year, the Company took concerted efforts to build a more diverse workforce and nurture an equitable and inclusive culture. The Company is committed to create an ecosystem - that attracts and grows talent from all genders, backgrounds and generations

Consolidated Financial Highlights (for Continuing Operations)

Particulars (Rs. mn)	FY24	FY23	% Change
Revenue from operations	56,541	51,582	9.6%
Other Income	419	504	-16.9%
Total Income	56,960	52,087	9.4%
Raw Material and Beverage Cost	13,411	12,478	7.5%
Gross Profit	43,130	39,104	10.3%
Margin	76.3%	75.8%
Personnel Expenses	10,588	9,064	16.8%
Manufacturing and Other Expenses	21,107	18,525	13.9%
Op. EBITDA	11,435	11,516	-0.7%
Margin	20.2%	22.3%
Interest Cost	2,878	2,012	43.0%
Depreciation and Amortization	5,980	4,859	23.1%
Share of Profit in Associate	159	-261	n.m
PBT before exceptional item	3,156	4,887	-35.4%
Margin	5.6%	9.5%
Exceptional item: Gain on fair value of DPEU stake	1,702	0	n.m
PBT	4,857	4,887	-0.6%
Margin	8.6%	9.5%
Tax	850	1,357	-37.4%
PAT	4,008	3,530	13.5%
Margin	7.1%	6.8%

• Consolidated revenue increase came in at 9.6%. Excluding the 2 months of DPEU consolidation, revenue growth came in at 5.4%

• Gross profit increase was driven by improved gross margins led by deflation and productivity initiatives

• Personnel costs have seen a step-up due to increments and resourcing in new stores, commissaries and technology teams

• Manufacturing and other expenses while have seen an increase in line with new stores opening and orders increase, the operating deleverage on the same due to subdued revenue growth has impacted the margins

• Overall interest and depreciation costs are up on the back of increased investments

• Profit before Exceptional items before Tax for FY24 stands at 3,156 million against 4,887 million in FY23

• Post the exceptional entry on the one-time gain of 1,702 million on fair valuation of previously held stake in DPEU, consolidated PAT stands at 7.1%

Ratio Analysis
Key Ratios	FY24	FY23
Debtors Turnover*	37.9	203.2
Inventory Turnover (on Cost of Goods sold)*	4.6	7.4
Interest Coverage Ratio*	10.3	185.8
Current Ratio	0.6	0.7
Debt Equity Ratio*^	0.6	-0.1
Operating EBITDA Margin	20.2%	22.3%
Operating EBIT Margin*	9.6%	12.9%
Net profit Margin	7.1%	6.8%
Return on Equity	18.7%	17.7%
Return on Capital Employed#	13.0%	16.5%

*The significant change in ratios (i.e. change of 25% or more as compared to the FY 2022-23) is primarily on account of consolidation of DP Eurasia accounts w.e.f. February 1, 2024 ^Borrowings less cash and cash equivalents_ #Capital employed = Total Assets - Intangible Assets (i.e. Brand, MFA and Goodwill) - Current Liabilities - Net Deferred Tax Liabilities Note: Please refer to Note 51 of the standalone financial statements for an explanation of the standalone financial ratios and the reason for the change.

Risk Management

Risk Management Framework

Effective risk management is integral to JFL operations and is embedded in its day-to-day business transactions and activities. The framework in place seeks to identify, prioritize, mitigate, monitor and appropriately report any significant threat to the organisations strategic objectives, its reputation, operational continuity, environment, compliance, and the health & safety of its employees.

A Disciplined Approach to Managing Risks

The approach is based on assessment of several factors and associated risks through proper analysis and understanding before undertaking any business activities and implementing changes to processes and systems.

S. No. Principle Risk	Risk Description	Allied Opportunities	Key Mitigation Actions
1 Food safety			To address this risk:
	• The Company operations involve various stages, from sourcing ingredients to food preparation and service, where potential food safety hazards may arise.	• The Company has developed sustainable systems and processes for ensuring the highest standards of food safety and hygiene that results in increased consumer satisfaction and helps in attracting & retaining our customers	• The Company has instituted stringent quality processes, standards and parameters that adhere to FSSAI norms across all sectors, including Restaurants, SCCs, Warehouses, Vendors, etc.
	• These food safety incidents may:
	- Impact the well-being of consumers		• Periodic testing of food products & regular food safety reviews are conducted to ensure sustained compliance and effectiveness
	- Erode the brand reputation leading to loss of consumer trust and loyalty		• The Company is highly committed in procuring raw materials from suppliers certified under GFSI program
	- Result in regulatory repercussions, including fines or sanctions		• Regular training and awareness sessions are carried out for restaurant and SCC staff on adherence to quality norms
	- Disrupt normal business operations, causing temporary closures, product recalls or supply chain disruptions		• The Company is actively monitoring and reducing food related customer complaints
	• Therefore, inability to adhere to prescribed food safety standards or any contamination of food product poses a significant risk to the Company.
2 Health, Safety & Wellbeing	• Given the nature and scale of our business which involves a large workforce engaging daily in food preparation, delivery logistics and interaction with diverse urban environments, ensuring workforce safety is paramount.	• Safety and well-being of its employees & delivery associates is of high importance to the Company and a cornerstone of its operational priorities.	To mitigate health and safety risks, several measures have been undertaken:
			• The Company has systematically identified potential safety hazards at SCCs & restaurants and has ensured that adequate safety measures are implemented in compliance with applicable occupational health & safety regulations
	• Health, safety & wellbeing is considered as critical because of following reasons:	• Ensuring a secure and supportive workplace environment fosters productivity & loyalty and enhances workforce morale	• Additionally, the management has established a safety review process to ensure that employees comply with safety measures
	- Unsafe working conditions and lack of support for employee well-being can lead to low morale & productivity, violation of employee rights and high attrition		• All reported cases undergo a comprehensive review and corrective and preventive actions are implemented as necessary
	- Employee casualty can be subject to negative publicity and a loss of customer trust and confidence, which can impact the Companys reputation		• To enhance employee awareness and preparedness, regular safety training and communications are carried out
			• Each Company location maintains a first response plan and details of nearby medical facilities for emergency cases
	- Poor employee safety and well-being can lead to increased health care costs and compensation claims, which can have a significant financial impact on the organization		• The Company ensures that all employees and workers are covered by insurance policies, including medical, accident cover etc. to provide financial support in case of unforeseen incidents
3 Business Ethics	• In todays increasingly interconnected and scrutinized business environment,	Upholding the highest ethical standards also present an opportunity for:	The Company has been practicing high standards of good governance & ethics by having:
		• Differentiation & competitive advantage	• Clear ethical guidelines and code of conduct that outline expected behaviour for employees and vendors
		• Enhancement of brand reputation,	• Robust and effective framework for reporting of statutory compliances and review on a periodic basis
		• Fostering trust among stakeholders
	• These ethical challenges can impact:	• Reinforce commitment to long-term value creation & sustainable growth	• Confidential Whistle blower channels for employees to report unethical behaviour or concerns without fear of retaliation
	- Culture of ethical behaviour across all levels of the organization		• Regular training sessions and educational programs to raise awareness about ethical issues
	- Compliance with evolving regulatory frameworks		• Effective oversight mechanisms, such as independent audits, compliance committees and Board Committees to monitor adherence to ethical guidelines
	- Company reputation on being associated with any perceived ethical lapses
4 ESG Framework & Sustainable Business Conduct	• In todays dynamic business environment, there is a growing emphasis on Environmental, Social, and Governance (ESG) considerations in business operations.	Ensuring a robust ESG framework also helps in:	The Company has established clear pathway to address this risk through following:
		• Cost reduction opportunities through waste minimization & efficient use of resources	a) ESG framework:
			• Review of business processes to identify material focus areas and to establish objectives & targets
	• As a result, it is essential to recognize the risk associated with evolving landscape of ESG frameworks & regulations and also acknowledge the changing expectations of stakeholders, including investors, regulators, and communities.	• Creation of a responsible brand image attracting environmental conscious customers	• Periodic tracking and review of actual achievement against targets
		• Increased investor confidence	• Define reporting format, content & matter in line with statutory requirements & industry best practices
			b) Human Rights:
			• Create & implement a Policy specifying the human right standards & principles supported by the organization.
	• The risk can impact the Company in following ways:		• Communicate Human Rights principles to suppliers / partners through Supplier Code of Conduct outlining clear expectations
	- Non-compliance with statutory requirements resulting in adverse action by regulators		• Establish formal channels for reporting of concerns by employees (POSH, Whistle Blower etc.)
	- Negative publicity related to sustainable business practices resulting in reputational damage		• Carry out frequent employee communication around Human Rights policy & channels available for reporting concerns
			c) Waste Management:
			• Tie-up with certified vendor for waste pick-up & disposal
			• Streamline the process for waste disposal / recycle / reuse in phased manner ensuring compliance with statutory requirements & sustainable practice
			• Periodic review to identify waste recycle / reuse / reduction opportunities, defining action plan & ensuring implementation
			d) Environment:
			• Create & implement Environment Policy specifying companys commitment & initiatives undertaken towards reducing: carbon footprint water wastage impact of companys operations on environment
			• Ensure Energy Management System (‘EMS) is installed at all SCCs & restaurants for real time remote monitoring of Electricity consumption and providing actionable information for optimizing energy usage
5 Cyber Security	• Cyber security threats have emerged as an important risk to consider across industries as organisations are moving to newer touchpoints such as social, mobile computing and cloud computing	The Company has a robust Cyber security framework which helps in:	The Company has undertaken following measures to address the Cyber Security risk:
		• Increased availability of ordering platforms	• Robust information systems and processes to protect business information, including personal information of customers, employees and business partners, while it is collected, processed, consumed and stored in various internal and external systems
		• Increased consumer confidence
	• Hacking, ransomware, social engineering and other cyber-attacks are some of the ever-present threats to data security and system availability
			• As mandated by RBI Guidelines on Regulation of Payment Aggregators and Payment Gateways, the company does not store any Customer Card details like Card Number, CVV Number, Card Expiry Date etc. on systems
	• Cyber security threats may lead to:
	- Leakage of company or consumer or employee information
			• Alignment with well-known Cyber Security best practices and frameworks including NIST CSF and ISO 27001. Migration to the latest ISMS Standard ISO 27001:2022 to keep up to date with global standards for information security. Company is now certified for latest version of PCI- DSS i.e., V4.0. This is as per annual process with Certifications attested by the Payment Card Industry accredited Auditors, in-line with Industry Standards.
	- Business disruption
	- Financial losses
	- Reputational damage
			• Regular assessment of Companys Cyber Security Maturity w.r.t. NIST CSF is done to constantly improve Companys cyber security posture and strengthen the digital assets of the Organisation
			• Constant improvement of cyber security processes & technologies, raising employee awareness and embedding security in day to day functions
			• Agile, prompt and scalable cyber security team which monitors digital infrastructure and business information 24x7 to respond to cyber threats. Working with the Industry Cyber Security Consulting Partners, OEMs and Leading Cyber-security technologies available.
			• Recovery drills to ensure preparedness and speedy recovery in case of any disaster
6 Multi-geography business operations	• Managing operations across multiple geographies introduces a unique set of challenges. Variations in regulatory environments, cultural nuances and economic conditions necessitate a sophisticated approach to business operations.	Multi-geography business operations present several positive aspects and opportunities:	To mitigate the risk, following steps have been taken by the Company:
		• Diversification of revenue streams and reduce dependence on any single market	• Establishing a central team with the oversight & governance responsibilities for all geographies along with clearly defined objectives & responsibilities
			• Implementation of clear reporting structures across all geographies (direct reporting lines & escalation procedures)
	• Diversification also requires vigilant oversight and adaptive strategies as it may lead to: - Heightened operational complexities	• Access to larger customer base and potential to capture new customer segments	• Defining and tracking key performance indicators (KPIs) and metrics to monitor the health and performance of operations in each geography
		• Economies of scale by leveraging operational efficiencies	• Maintaining regular communication with local managers / teams to stay informed about developments on the ground
	- Financial & market volatility due to fluctuations in economic conditions	• Strengthen brand recognition, reputation, and market leadership by positioning as a global player	• Identifying local organizations, government agencies & industry associations and establishing partnerships / collaboration to share recent development / best practices
	- Reputational repercussions that extend globally
			• Fostering cross-functional collaboration between departments and teams across geographies to share knowledge, best practices and resources
7 Post-Merger Integration /	• As the Company continue to explore growth opportunities and strategic partnerships, it is imperative to acknowledge the inherent complexities associated with post- merger integration and consolidation.	-	Following measures have been taken by the company:
Consolidation			• Establish an integration team comprised of Subject Matter Experts with clear roles and responsibilities
	• While mergers and acquisitions present avenues for synergies and expansion, they also introduce transitional challenges that require careful navigation.		• Develop a comprehensive Integration Plan outlining specific objectives, timelines, and responsibilities for each stage of the integration process (including areas of synergies, organizational structure, standardization of processes, operations, technology, culture and talent management)
	• These challenges can range from cultural differences to operational harmonization and may:		• Continuously monitor progress of the integration process and evaluate its success
	- Result in loss of synergies		• Ensure compliance with relevant legal and regulatory requirements throughout the integration process
	- Impact seamless operations		• Develop financial consolidation process and ensure adherence including compliance with relevant Accounting Standards & other applicable regulations
	- Impact performance metrics
			• Develop a communication strategy to keep employees, suppliers and other stakeholders informed about the integration process.

A Disciplined Approach to Managing Risks

The approach is based on assessment of several factors and associated risks through proper analysis and understanding before undertaking any business activities and implementing changes to processes and systems.

Internal Controls and their Adequacy

The Companys current systems of Internal Financial Controls (IFC) are aligned with the requirement of Section 134(5)(e) of the Companies Act, 2013 (Act). As stipulated under the said provisions, the IFC framework established by the Company encompasses the following elements:

• Orderly and efficient conduct of business

• Safeguarding of its assets

• Adherence to Companys policies

• Prevention and detection of frauds and errors

• Accuracy and completeness of the accounting records and timely preparation of reliable financial information

The Companys internal controls are commensurate with its size and the nature of its operations. They have been designed to provide reasonable assurance with regard to all the above stated IFC elements. To make the IFC framework robust, the Company worked on three lines of defence strategy:

First Line of Defence: Build internal controls into operating processes, which primarily include controls operated by the process owners under the overarching guidance of the Code of Conduct, Whistle-blower mechanism, budgetary controls, financial delegation of authority, accounting policies and manuals, period-end closing checklist, basis of accounting estimates and various other Company policies and procedures. For better governance, these operational controls have been implemented through robust digital, Enterprise Resource Planning (ERP) and other IT systems.

Second Line of Defence: Create an efficient review mechanism, comprising monthly business performance reviews under which each business unit and function is reviewed on its performance. Additionally, a robust Control Self-assessment (CSA) process enables process owners to perform self-assessment against the Risk and Control Matrices (RCMs). The CSA process enables the Company to monitor the adequacy and effectiveness of the internal control environment.

Third Line of Defence: Independent assurance through internal audits performed by audit firms of international and national repute. The internal audit scope covers the entire gamut of the Companys operations based on a rolling audit plan approved by the Audit Committee. The Audit Committee reviews reports submitted by the internal auditors and suggestions for improvement are considered. Additionally, the statutory auditors audited Companys financial statements included in this Annual Report and have also confirmed the adequacy and operational effectiveness of the Companys internal control over financial reporting (as defined in Section 143 of the Act).

Outlook

The JFL Group believes in the immense long-term potential of the food service category in the under-penetrated emerging markets. Secular trends of young population, rising urbanization, growing affluence, accelerated shifts towards digitalization and shift in favor of the organized sector, and within that for big, established, credible brands will help aid growth of Foodservice industry in these markets. The Group through its Portfolio of Brands, key-competitive advantages of having its own-commissary and delivery network, in-house technology stack is well placed to capitalize the growth opportunity, and strengthened enablers is well placed to leverage the opportunity and deliver sustained profitable growth.

Cautionary Statement

Certain statements in the ‘Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward-looking statements within the meaning of applicable securities laws and Regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the Companys operations include economic developments within the Country, demand and supply conditions in the industry, input prices, changes in Government regulations, tax laws and other factors, such as litigation and industrial relations.