Speciality Restaurants Ltd Management Discussions

Economic Overview

As per International Monetary Fund (World Economic Outlook April 2023), global-economic growth to fall from 3.4% in 2022 to 2.8% in 2023, before settling at 3.0% in 2024. The year saw geopolitical uncertainty with the prolonged Russia-Ukraine conflict and economic challenges leading to disruptions in the global supply food chain and elevated inflation with increase in commodity and energy prices. This prompted central banks to aggressively tighten their monetary policy, which further impacted economic activity.

The Indian economy was much more resilient and moved on after the pandemic, staging recovery in FY 2022-23 ahead of other countries. The GDP growth rate of 7% in FY 2022-23, despite strong global headwinds and tighter domestic monetary policy to manage inflationary pressures, reflects strong fundamentals of the Indian economy and emerging as the fastest growing major economy. The RBI also projected the economic growth to slow down to 6.5% in FY 2023-24, citing risks from geo-political tension and tightening of global financial system.

These optimistic growth forecasts stem in part from the resilience of the Indian economy which is palpably visible in the rebound of private consumption and capital formation thereby helping to generate employment as seen in the declining urban unemployment rate. The uptick in private consumption has also given a boost to production activity, resulting in an increase in capacity utilisation across sectors.

Your Companys performance for the financial year 2022-23 needs to be analysed in the context of the aforesaid economic and operating environment.

Food and Beverages Service Industry Overview

One of the key segments of the Indian economy is Food and Beverages industry which contributes to employment generation, skill development, growth in the allied industries and entrepreneurship to create experiences.

The financial year 2022-23 has been a year of sustained recovery in the food and beverage industry and in particular the hotel and restaurant industry. This was the first full year of uninterrupted operation after the pandemic and the revenge eating trend continued in the beginning which helped to push discretionary spends and bring some cheer to the hospitality industry after a long period of gloom. The trends in the food and beverages industry are still encouraging even though the food and labour costs are on the rise.

Speedy adaptability of technology, direct online and third-party ordering, wide use of various apps has paved the way for recovery and growth in the year 2022. By the end of year 2023, the food industry expects to reach $899 billion in sales. Food delivery / logistic services became immensely important with its unique challenges. Trust in the food handling process, delivery methods and demand for contactless transactions have become critical factors for consumers as home delivery of food from restaurants gained significance.

The food and beverages services sector continues to consolidate its position and is also attracting new investment from domestic as well as international players, as the sector continues to have high growth potential led by domestic consumption.

Food and beverages market in India has evolved from unorganized home grown, standalone, family run business ventures into organized structure with priorities on transparency, corporatisation with formation of chain of restaurants, international partnerships with multipolar and integrated business models and cloud kitchens.

Industry Trends

Food and Beverage Trends

• Food presentation plays a bigger role due to the growth of social media influence.

• Increase in the share of deliveries and takeaways and convenience continue to reign.

• Healthy food to boost immunity.

• Wholesome small eats are most preferable.

• Sugar-free food or food with less sugar.

• High-protein, grab-and-go options that are both nutritious and convenient, such as nutritious puffed snacks, dry fruits, prunes and protein bars.

• Alternative diets such as gluten-free, dairy-free, vegan and keto options.

• Plant-based food options

Eating Out

Profile of Indian Consumers, their behaviour and spending patterns have evolved with the changing economic, social and demographic landscape. The exposure to new cuisines and the increased propensity of eating out, along with the home delivery of food and takeaways have led to the growth in the food and beverages market. Eating out is now regarded as a necessity arising out of a compulsive desire for a change in palate as regularly to avoid boredom of a staple diet at home. Trying out and discovering out for new cuisines have become a natural occurrence rather than being reserved for specific occasions such as business meetings, celebrations of any kind or periodical family outing. Consumers have now embraced the mid-week break as against weekend holidays. Eating out on weekdays is a new trend as against only being restricted to weekend to avoid crowds. India has the youngest population in the world and the food and beverages industry is benefitting from it with a young, dynamic and diverse food-loving consumer with a high disposable income. The growing participation of women in the workforce and double-income nuclear families, preference for eating out or ready- to-eat meals have created new opportunities in the industry.

Eating out as an experience

Hospitality industry provides an enriching dining experience where guest expectations are anticipated and met with consistency in food quality, wide varieties, innovative presentation, unique food concepts coupled with exceptional service. Consumers always look forward to the hospitality industry for unique experiences for the feel good factor. Eating out has emerged as a prominent avenue for relaxing and spending quality time with the family or with friends.

Social Media / Digital Marketing

Social media has become an integral part of the Indias young population lifestyle. Indian food and beverages operators are using social media for digital marketing, to communicate offers, incentives, product information and promotions. The key trends that continue to influence and shape the Indian food and beverages service industry are rise of online food aggregators, enhanced penetration of internet, use of technology to improve consumer experience and social media for consumer engagement.

Focus on consumer engagement using technology

The restaurant industry continues to focus on consumer engagement by use of technology. Technology has helped the consumer to express their views and opinions, compare and evaluate choices and share feedback. The consumers are now using technology to make table reservations, ordering food either online or through a phone call and use mobile / wallets for payment. Application based online food aggregators and development of third party logistics service providers has brought in a whole new dimension to food service business.

Food Discovery/Restaurant Search: Online food aggregators as well as third party applications provide food guides and eating out directories of restaurants with third party reviews, opinions and vital information to its users with food discovery or restaurant search and ordering of food at just a few clicks away.

Table Reservation: Table reservation facility is beneficial to a customer as it guarantee ones table at the designated time and place with the personalised service at the restaurant. Fine dine restaurants offer table reservation service to their guests to manage demand more efficiently.

Online ordering: In todays time busy customers prefer to order food of their choice from favorite restaurant to save time on travelling and enjoy their choicest food while at work or at leisure.

Open Network for Digital Commerce (ONDC) platform

The ONDC platform has started by offering prices 30-80% lower to consumers and charging significantly lower commissions from restaurants, compared to established food delivery platforms. In addition, it provides restaurants access to consumer data which can help them to customise offers and promotions. ONDC decentralises the entire ecosystem with buyer-side, logistics-side and seller-side network partners. The Company is considering to onboard with ONDC which will make the value chain more innovation driven, cost-competitive and efficient.

Digital kitchen boards

As online orders continue to increase, restaurants are adopting new ways to streamline their operations. Kitchen Display Systems (KDS) are digital menu boards for kitchen staff that help restaurants streamline back-of-house operations. With KDS, restaurant staff dont need a grab pen or notebook or continuously move back and forth between the front-of-house and the kitchen to take customer orders and confirm whether those orders are ready.

A kitchen display system is directly linked to the restaurants point-of-sale (POS) system and starts to work immediately when an order is placed. The screen displays orders automatically based on priority and flags any special dietary requests. It also tracks meal delivery times and monitors inventory to signal when an item is out of stock. Digital kitchen displays promises a sustainable kitchen operation by ensuring better communication, clearer workflows, and accuracy.

Cloud-based POS systems

Cloud-based POS systems are one of the major restaurant technology trends and these are point-of-sale systems, which utilise cloud technology for deployment and data storage.

QR codes

Restaurant menus are being replaced by QR codes. This technology is gradually going global, with more and more restaurants are adopting it.

In the current contactless era, auto-scanning barcodes allow customers to access online menus, order, and pay for their orders by performing a simple scan. This technology, which does not require that an app be downloaded plays a key role in helping restaurants with contact tracing.

Digital Inventory Management

Electronic or digital inventory management systems is allowing businesses to continually track stock levels and order new supplies at the best possible moment, while also identifying relevant trends, such as times when demand increases, and times when demand falls.

Inventory management systems can be synchronised with POS systems, so that inventory information is always up-to-date and accurate, while alerts can be set up to notify users when supplies of a particular item start to run low.

Market Segments

The Indian market segment of the organized food service industry is led by Quick Service Restaurants followed by Casual Dine-in formats followed by Cafe chains, Frozen Desserts, Ice-creams and then followed by Fine dining. The rest of the market is shared by Pubs, Bars, Clubs and Lounges. QSR and Casual Dine-in are popular with working professionals while Fine dining is family get together and more occasion driven.

Evolving Customer Preferences

Food and beverages industry is driven by consumer preferences. Key players in the industry are continuously monitoring such patterns and accordingly offering innovative and new products. Customization of products and services have become the key success driver in todays industry. Eating out has evolved the lifestyle of todays young Indians, who are willing to experiment different cuisines and beverages.

Experimenting with Cuisines

Consumers are experimenting with regional as well as international cuisines. The urbanisation and cosmopolitan culture of major metros of India has helped the food and beverages industry to cater the taste buds by serving a variety of cuisines from across the world over and above the Indian and regional cuisines.

Emerging retail formats

Food courts in malls and new retail avenues such as airports, amusement parks are driving consumers towards food. In shopping Malls fine dining / semi-casual dining restaurants in a controlled atmosphere lends variety to the food retail space with paid parking facility, which is a very essential factor to any retailing establishments success. Mall developers consider fine-dining restaurants very important to their overall tenant/product mix as they help the establishment to attain a degree of exclusiveness and give customers a more holistic experience. Malls are one of the most popular retail formats, as it gives a holistic experience to the buyer and satisfies his various shopping and entertainment needs under one roof - a choice ranging from costumes, accessories, salons and spas to cinemas, gaming zones, super markets and of course dedicated food courts. Its a destination for a full day engagement.

Dine-in v/s Take-away/Deliveries

Restaurants are providing option to consumers for ordering food at home/office. The share of deliveries and takeaways for the Company increased from 8% pre Covid period to 26% during the year under review. The Company has tie-ups with online food aggregators to capitalize on the rising online delivery segment.

Cloud Kitchen

A Cloud kitchen is also referred to as a "dark kitchen" or "virtual kitchen", utilizing a commercial kitchen for the purpose of preparing food for delivery or takeaways only, with no dine-in facility for customers. Cloud kitchens enable restauranteurs to expand an existing restaurant or start a virtual brand at minimal cost. Cloud kitchen format has emerged as an alternative as it can be setup with a very low capital expenditure as compared to a Restaurant or Cafe and helps in increasing the delivery revenues of the restaurant chain with cost benefits.

It can also act as a Commissary base kitchen delivering raw materials, sauces, all basic ingredients and food in portions to multiple restaurants of a chain. This format is helping the industry to reduce the high rental cost and also cost of labour and also helping in faster turnaround over and above standardization of quality.

Kitchen within Kitchen

It is a multi-brand virtual kitchen within existing restaurant kitchen of a restaurant. It is dedicated to meet the requirements of online delivery services, facilitated by the third party delivery apps. It is easy to setup multiple brands using the existing infrastructure with a very low capital expenditure as compared to a Cloud Kitchen and helps in the operation of a chain of restaurants with sweating of assets at the existing restaurant. Multi-brand virtual kitchen is a boon for the industry and a trend that has revolutionized the whole segment.

International Opportunities

Theres global demand for Indian cuisine as its popularity caters to the diaspora and popular Indian restaurant chains are leveraging that with financial and management bandwidth and harnessing this opportunity. Indian cuisines are also being accepted and gaining popularity in international markets which is a very healthy sign for the growth of the industry.

With a vision to tap this opportunity, many established Indian food and beverage operators including your Company have entered key markets such as Middle East and United Kingdom for profitable growth due to attractive growth potential, ease of doing business, fewer regulatory issues and higher returns on investment than in India.

Opportunities and Challenges

The success of your Company depends on its ability to identify strengths & opportunities and leverage them while mitigating the risks that arise while conducting its business. The strength of your restaurants lie in the brands that we have created over the years and mastered what we do best viz. serving delicious food, offering quality service and providing an unforgettable dining experience which is the key to our success

Opportunities for the Company are -

• Upgradation and be the king of Asian cuisine in the country

• Optimizing share of delivery and take-away formats, with focus on convenience and assurance of hygiene standards.

• Strengthening our delivery business with new product innovations, like Meal-in-a-box

• Experimentation with new themes and menus;

• Setting-up of Cloud Kitchens / Commissary, and also Kitchen within Kitchen through sweating of assets (converting our existing kitchens into multi brand kitchens wherever feasible)

• International expansion.

• Strategic / differential pricing for the buffet format for weekday and weekend.

• Riding on the technology wave with tech savvy consumers, online food aggregators and Open Network for Digital Commerce (ONDC) platform.

Your Companys success depends on the value and relevance of its brands and products to consumers and on our ability to bring in changes, innovate and remaining competitive and ahead of time. Consumer tastes, preferences and behaviours are subject to change from time to time. Your Companys ability to identify and respond to these changes is vital to its business success. We continue to work on creating innovative products with the objective that those continue to meet the needs of consumers.

Challenges

The Companys prospects depends on economic factors such as changes in regulatory environment i.e. food inflation triggered by increasing fuel prices, licensing regulations, competition, operational challenges including high real estate cost, availability of skilled manpower, supply chain management, people management and all that it entails.

Competitive Advantage

Your Company continues to be at the top of the mind of consumers in the Fine Dining and Casual Dining formats as well as in Cloud Kitchen segment enjoying leadership position in the Fine-dining segment. The key to this has been the continuous and well-paced focus on innovation, endeavour on improvement and building on existing strengths and pragmatic expansions.

During the year under review, your Company opened four (4) Cloud Kitchens. At the end of financial year ended March 31, 2023, your Company has 71 restaurants (including 17 franchisees), 16 Cloud Kitchens and 40 confectionaries.

Mainland China, flagship brand, focuses on serving Chinese cuisine with contrasting flavours and spices. The Company has succeeded in retaining a high brand recall over the years and has won many awards for the same. With a new initiative of doing a brand refresh with upgradation of interiors, service, the Menu offerings and presentation in new formats and backed by fresh training and standardization of certain mother sauces and ingredients have helped improve consumer satisfaction.

Asia Kitchen by Mainland China was created as a semi-casual option of the mother brand with an Asian spread to appeal to a much younger and larger audience and ideally suited in Mall formats. With almost 50% of Chinese cuisine (selection from popular items of Mainland Chinas offerings) coupled with 50% new offerings in the form of Pan Asian cuisine which includes gourmet dishes ranging from Japanese, Korean, Thai, Burmese, Malaysian, in addition to Chinese, it has already carved its own identity successfully borrowing equity from Mainland China.

Oh! Calcutta continues to be the coveted destination for Bengali food lovers and now a big draw for global travellers and food connoiseurs and remains one of our core brands. With a rare cuisine that celebrates Calcuttas melting pot of cultures, Oh! Calcuttas appeal reaches out to food connoisseurs far beyond Bengalis and reaching out to a truly global cuisine.

Gong, serving modern asian cuisine is a contemporarised Asian fine dining restaurant. It is different from the others as offering diverse Asian flavours that are prepared using western cooking techniques and presentations to take you through a journey of the mysterious culinary traditions of the Far-East.

Sigree Global Grill is another one of the core brands serving grilled flavours from the North-West frontiers of India and extending to the Arabian, Mediterranean, Spanish, Mexican mix. It has an innovative vibrant format with live grills on each table bit the best part is that it has a single price point for a meal which is unlimited helping.

Hoppipola is an All-day Bar serving finger food, bar nibbles and innovative mocktails. Its target market is those young-at-heart and was launched primarily to attract the younger audience with high disposable income.

Riyasat

Riyasat is a royalty inspired Indian dining - a story woven through royal celebrations and victories and is inspired from the stately homes of the royal families of the 19th century. The cuisine is inspired from the North-western frontiers cuisine that is vibrant, robust and encompasses the healthier culinary techniques and dining experiences to blend in with the changing time and trends.

Cafe Mezzuna offers modern European food in a semi-casual format lends diversity to the brand portfolio. It serves dishes with Mediterranean, Moroccan, Spanish, French and Italian flavours alongwith a complimenting bar menu.

Episode One

Episode One is one of a kind resto-bar serving delectable food from all over the world along with some beautifully crafted taptails. Episode One is todays take on a Gymkhana or the British Club. Episode One desires to build a creative community bringing together like-minded individuals from all walks of life including art, music, fashion, films, media, technology and more.

BARishh

A place that is vibrant and chic, with stunning decor, a splash of pop colours that spell youthful and breathes of fresh air is for all day and any mood. With striking blue walls with large and small butterfly murals, also makes use of elements like soothing green and quirky writings on the wall, giving BARishh a balanced look and feel.

The entire food menu is derived out of Indian ingredients with a western touch to it making global in presentation.

Sweet Bengal has proved to be the favourite Bengali sweet meat destination. Innovative and traditional spread of Bengali Sweets are created from pure cows milk by ‘karigarS from West Bengal who literally crafts each and every sweet. With over 30 outlets, it is the only chain serving authentic Bengali sweets and snacks in Mumbai and Pune.

Dariole is your cosy, affectionate neighbourhood confectionary and cafe, where the Kolkata citys best croissants, buns, puffs, wraps, cakes, cookies, pastries and breads are born every day.

Haka, devised for the guest on the go. Haka is ideal for those seeking to shop or watch a movie and have a quick bite. Featuring modern Chinese cuisine in small plates including dim sums and quick meal at comfortable prices, typically found on Hong Kong and Shanghai streets. The contemporary ambience of each Haka restaurant is created with red walls and modern impressionist artwork emphasizing efficiency and functionality in layout.

CHOURANGI, introduced to the Londons discerning food lovers to the unexplored cuisine of Calcutta - three centuries old and still evolving, bursting with taste and flavours that have never before been encountered in this city. The decor has also been carefully thought out and designed to capture the diversity of the city over centuries with the iconic ‘Indian Coffee House feel of the Howrah Bridge Wall as the gate way to the city, the iconic Tolly Club and Bengal Club or the Royal Turf Club settings, louvre walls with a mix of jazz and Bengali light instrumentals in the background to set the mood for discerning diners to soak up the experience.

Its cuisine features adventurous new ingredients, flavours and cooking methods interwoven with 300 years of colourful history and stories giving the people of London an experiential taste of Calcutta.

Risk, concerns and Mitigation

Business risks such as industry risk, general economic conditions, socio-political risks and company specific risks exist for any enterprise having national and international exposure. Your Company also faces some such risks, the key ones being - a longer than anticipated delay in economic revival, continuing inflationary conditions, dependence on fine-dine segment, competition from global chains and other segments of the restaurant industry, hostile neighbouring countries and any sudden unanticipated change in regulatory framework for the industry.

As per the provisions of Regulation 21 of SEBI (LODR) Regulations, your Company has voluntarily constituted Risk Management Committee. Your Company has Risk Management Policy to identify and evaluate risks and to effectively mitigating the various business and operational risks, through strategic actions.

Summarized below are the key risk factors that are identified as well as the proposed mitigation strategies:

Risk Factor	Description	Mitigation Strategies
Business Development	Risk of selection of non- profitable/ non-feasible new location	To conduct a thorough, detailed and standardized feasibility study prior to selection of new restaurant location in-order to arrive at a decision of Go - No-go
	Ineffective Pricing strategy	To evaluate the effectiveness of Pricing decisions to check and validate if pricing decisions have been effective - by comparing the estimated Topline and Contribution with the actual Topline and Contribution for each of the Restaurants and areas.
	Changing Consumer tastes and preferences	Review of brand positioning and refreshment of the existing brands as well as introduction of new brands targeted at niche cuisines or customer.
	Intellectual Property Rights	To develop brands, identify and plan for registration/protection.
Operational	Customer feedback and complaint management ineffectiveness & Social Media Risk	Feedback analysis by use of technology and timely action upon each individual feedback till closure.
	Excessive wastages	To scientifically estimate the need for food items based on seasons and trends by using systematic forecasting based on historic trends
	Non Compliance with statutory requirement	To manage the compliance requirements through a compliance management software application with a workflow, accountability and ownership for compliance and Dashboards.
	Safety	Implementation of annual maintenance plan and Safety awareness and training at the restaurant level.
	Business continuity	To transform business and business models to create new work order to overcome uncertanity.
Purchase and Controls	Procurement Planning - unavailability/delayed availability of supplies	Material requirement planning based on the past trends and the covers expected in the restaurant. Annual supply contract, vendor selection and development.
	Commodity and Material Price Fluctuation	To plan for commodity supplies, systematically well in advance, after a continuous review and evaluate the possibility of hedging for commodity prices for select commodities
Human Resources	High Attrition Rate	Review of career growth path defined. Implementation of performance management system - Appraisal and Reward process.
	Ineffective Succession Planning	Systematic review of positions that require succession plans.
Information Systems and Process Improvements / Integration	Information Security Threats	Defined Information Security Policy and Organisation Structure. Deployment of systems and periodic audit to protect the confidential information.

Internal Controls System and their Adequacy

Your Company has in place adequate internal controls system to ensure that all assets are protected, with documented procedures covering all corporate functions and restaurants. System of internal controls are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls and compliance with applicable laws and regulations.

The internal control systems are in the form of various policies & procedures issued by the Management covering all critical and important activities viz. Revenue Management, Restaurant Operations, Purchase, Finance, Human Resources, Safety, etc. These policies & procedures are updated from time to time and compliance is monitored and reported by the Internal Auditor of the Company. The Company continues its efforts to align all its processes and controls with best practices. The effectiveness of internal controls is reviewed through the internal audit process, which is undertaken for operational units and all major corporate functions of the Company.

The Company has implemented an Enterprise Resource Planning (ERP) application to record data for accounting, consolidation and management information purposes and connects to different locations for efficient exchange of information. The Companys internal control systems are commensurate with the nature of its business, the size and complexity of operations.

The Audit Committee of the Board oversees the adequacy of the internal control environment through regular reviews of the audit findings and monitoring implementations of internal audit recommendations through the compliance reports submitted to them by the internal auditor of the Company.

The Chairman & Managing Director and Executive Director-Finance & CFO of the Company have issued a certificate on the adequacy and effectiveness of internal controls system and procedures, which forms part of this annual report.

Financial Performance Accounting policy

The financial statements have been prepared in accordance with the Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2015.

Standalone Financial performance for the year ended March 31, 2023

a) Total Revenue

(Rs in millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Revenue From Operations	3,749.7	2,529.3	1,220.4	48.3
Other Income	237.4	136.2	101.2	74.3
Total	3,987.1	2,665.5	1,321.6	49.6

Total Revenue for the year increased by 49.6% from the previous year due to increase in same store sales growth and delivery from cloud kitchen and kitchen within kitchen. Other income includes interest received from Banks/Others, Dividend on Mutual Fund Investments, Profit on Sale of Current Investments and Fixed Assets (Net), Foreign Exchange Gains (Net) and Miscellaneous Income.

b) Cost of Material Consumed

(Rs in millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Cost of Material Consumed	1139.9	755.2	384.7	50.9

Cost of material consumed increased by 50.9% from the previous year due to corresponding increase in Revenues in FY 2022-23.

c) Employee Benefit Expenses

(Rs In Millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Employee Benefit Expenses	731.9	464.0	267.9	57.7

Employee Benefit Expense comprises of salary, bonus, allowances, staff welfare expense and Companys contribution to Provident Fund, ESIC and Gratuity. It increased to 19.5% from 18.4% of Revenue from operations due to fresh recruitments for new outlets, staff increments and promotions and variable PLI (Performance linked Incentive for staff).

d) Finance Costs

(Rs In Millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Interest	139.1	145.5	(6.4)	(4.4)

There was no debt in the Company during the financial year. The interest under finance cost is due to computation of interest on lease liability on Right of Use Asset as per IND-AS 116 during the financial year under review.

e) Depreciation and Amortisation expense

(Rs In Millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Depreciation and Amortisation expense	317.2	273.5	43.7	16.0

The charge for depreciation on Property, Plant & Equipment and Intangible assets was Rs. 101.7 million (previous year Rs. 109.6 million) and Right Of Use Assets as per IND-AS 116 was Rs. 215.5 million (previous year Rs. 163.8 million).

f) Other Expenses

(Rs In Millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Other Expenses	1,112.6	885.7	226.9	25.6

Other expenses includes rent, power & fuel, rates, taxes & license fee, insurance, operating supplies, advertising and marketing expenses, repairs and maintenance and other miscellaneous expenses. With control on expenses Other Expenses reduced to 29.7% of Revenue from Operations from 35.0% of the Previous year.

g) Profitability

(Rs In Millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Profit Before Tax (PBT)	622.3	135.2	487.1	360.3
Profit After Tax (Net Profit)	955.8	135.2	820.6	607.0

Profit After Tax at Rs. 955.8 millions was primarily due to increase in revenue and control on costs.

a) Equity

(Rs in millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Paid Up Share Capital	469.6	469.6	-	-
Other Equity	2,354.2	1,047.8	1,306.4	124.7
Total Equity	2,823.8	1,517.4	1,306.4	86.1

Total Equity of the Company increased by 86.1% during the year under review due to total comprehensive income earned during the year amounting to Rs. 956.5 million.

b) Non-Current Financial Liabilities

(Rs in millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Other Financial Liabilities	1,127.2	1,166.0	(38.8)	(3.3)

The Company did not have any debts on its books and thus continues to be a debt free company. The decrease is because of accounting for lease liability on Right of Use Asset as per IND-AS 116.

c) Current Liabilities and Provisions

(Rs in millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Current Liabilities and Provisions	829.6	696.1	133.5	19.2

Current Liabilities comprise of trade payables, payables for purchase of property, plant and equipments, provisions and other current liabilities.

d) Net Tangible and Intangible Assets

(Rs in millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Tangible and Intangible Assets after Depreciation (Net)	544.6	451.7	92.9	20.6
Capital Work-in Progress	275.1	282.5	(7.4)	(2.6)
Total	819.7	734.2	85.5	11.6

There was an overall increase of 11.6% in the Net Tangible and Intangible Assets of the Company primarily due to capitalization of fixed assets on account of opening of new units.

e) Non-Current Financial Assets

(Rs in millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Investments	116.8	116.5	0.3	0.3
Loans and other financial assets	253.1	241.0	12.1	5.0
Total	369.9	357.5	12.4	3.5

Investments include investment in Speciality Hospitality UK Limited and Speciality Hospitality US Inc. respectively, Wholly Owned Subsidiaries of the Company. Loans and Other financial assets comprises of Security and other deposits given by the Company.

f) Other Non - Current Assets

(Rs in millions)

	2022-23	2021-22	Change (Rs)	Change (%)
Other non-current assets	501.3	161.9	339.4	209.6

Other Non-Current assets comprises of capital and normal advances to vendors, prepaid expenses and deferred rent, advance tax (net), deferred tax asset was created during the year and for details refer Note No. 35(b)(i) of financial statements and balances with government authorities paid under protest.

g) Current Assets

	2022-23	2021-22	Change (Rs)	Change (%)
Inventories	68.4	52.4	16.0	30.5
Financial assets
- Investments	1,645.6	975.9	669.7	68.6
- Trade Receivables	65.1	48.0	17.1	35.6
- Cash and Cash equivalents	49.7	11.3	38.4	339.8
- Bank balances other than cash above	0.8	0.8	-	-
- loans	6.0	6.7	(0.7)	(10.4)
- other financial assets	82.6	52.7	29.9	56.7
other current assets	156.2	92.2	64.0	69.4
Total	2,074.2	1,240	834.2	67.3

Significant changes in Key Financial Ratios

The details of changes in key financial ratios as compared to the immediately previous financial year along with detailed explanations are as under:

Key Ratios	March 31, 2023	March 31, 2022	Change %	Due to
Debtors Turnover (times)	57.60	52.65	9.4	Enhanced revenues during the year.
Inventory Turnover (times)	54.85	48.24	13.7
Interest Coverage Ratio	0.14	3.85	(96.4)	IND-AS interest accounting impact. The Company is debt free.
Current Ratio	2.62	1.87	40.1	Improvement in overall current assets with reduced current liabilities.
Operating Profit Margin (%)	26.74	22.15	20.7	Operative leverage worked favorably.
Net Profit Margin (%)	23.97	5.7	320.5
Return on Net Worth (%)	33.85	8.91	279.9	Profit increased in current year as compared with previous year.

Consolidated Financial performance for the year ended March 31, 2023

The Consolidated Financial Statements comprise of the Company and its Joint Venture and WOS company, prepared in accordance with IND- AS as applicable to your Company. The Consolidated Statements include the financial position of joint venture by applying equity method of accounting and WOS by proportionate consolidation method of accounting. The following table sets forth the Consolidated financial results for the year ended March 31, 2023.

(Rs in millions]

Particulars	March 31, 2023	March 31, 2022	Change (Rs)	Change (%)
Revenue from operations	3749.7	2,529.3	1,220.4	48.3
Other Income	241.2	136.2	105.0	77.1
Total Income	3,990.9	2665.5	1,325.4	49.7
Cost of materials consumed	1,139.9	755.2	384.7	50.9
Employee benefit expense	731.9	464.0	267.9	57.7
Other expenses	1,113.0	886.2	226.8	25.6
Earnings before Interest, Depreciation, Amortization and Tax	1,006.1	560.1	446.0	79.6
Less: Finance Costs	139.1	145.5	(6.3)	(4.4)
Depreciation /Amortization	317.2	273.5	43.7	16.0
Profit before share of Profit in Joint venture, exceptional item and Tax	633.7	141.1	492.6	349.1
Share of Profit / (Loss) in Joint Venture Company	0.7	(59.6)	60.4	101.2
Exceptional Item	(83.9)	-	(83.9)	(100)
Profit before tax for the year	634.4	81.5	552.9	678.4
Less: Taxes Expenses / (credit)
Current Tax	0.6	-	0.6	100
Deferred Tax	(334.1)	-	(334.1)	(100)
Profit for the year	967.9	81.5	886.4	1,087.6
Total Other Comprehensive Income	1.9	11.5	(9.6)	(83.5)
Total Comprehensive Income for the period	969.8	93.0	876.8	942.8

Disclosure of accounting treatment in preparation of financial statements

The Company has followed prescribed Accounting Standards as laid down by the Institute of Chartered Accountants of India in preparation of its financial statements.

Outlook

As per the estimate of the Reserve Bank of India, the GDP growth projection of Indian economy is 6.5% in the FY 2023-24, on the back of inflationary pressures, supply-chain pressures and geopolitical escalations.

The financial year 2022-23 had several challenges such geopolitical escalations, elevated inflation and aggressive monetary policy by central banks.

In the challenging macro-environment, the Company has delivered an encouraging performance across all parameters. The food and beverages industry in India has a strong potential and there are significant growth opportunities in the domestic markets. Your Company has positioned to capitalize on these growth opportunities and its brands are well-equipped to cater to the taste buds of consumers.

Material developments in Human Resources

Your Company firmly believes in the strength of its most vital asset of over 2,200 strong workforce. To maintain its competitive edge in a highly dynamic industry, your Company recognizes the importance of having a work force which is trained, consumer-focused and performance driven. In keeping with this, a number of policies and initiatives have been drawn up to ensure a healthy balance between business needs and individual aspirations. The company ensured for the well-being of the entire workforce by counseling and videos to follow safety protocols.

Cautionary Statement

This Annual Report and the Management Discussion and Analysis report contains certain "forward-looking statements". These forward looking statements can generally be identified by words or phrases such as "aim", "anticipate", "believe", "expect", "estimate", "intend", "objective", "plan", "project", "will", "will continue", "will pursue", "seek to" or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans, prospects or goals are also forward-looking statements. Forward-looking statements reflect the current views of our Company as of the date of this Management Discussion and Analysis report and are not a guarantee of future performance. These statements are based on the managements beliefs and assumptions, which is in turn and based on currently available information. Although we believe the assumptions upon which these forward-looking statements are based to be reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements based on these assumptions could be incorrect.