Looking for inorganic opportunities for growth, says Sapphire Foods India

These primary funds will help us going forward in our expansion plans, said Purohit.Pizza Hut and KFC have a long runway of growth and the QSR industry is poised for growth in the next five years.We believe that in the next five years, the food industry will double and within that, QSR should garner 54 per cent, he added.The company, like other QSR channels, is focusing on its omnichannels strategy as online sales delivery and takeaway.

Yum Brands franchise partner Sapphire Foods India, the company that has come out with an IPO aiming to raise up to Rs 2,073 crore, is scouting for inorganic growth opportunities besides the organic one in the existing markets.

Sapphire Foods India, which operates KFC and Pizza Hut outlets in India, Sri Lanka and the Maldives, has already raised Rs 474 crore of primary funds through the private placement, which will fund its expansion plans.

''As part of the expansion strategy, besides organic, we would actively look for the opportunity for acquisition for high-quality scalable QSR brand, which is relevant to the market and has customers appeal.

''This could be either in a complementary category in either existing geographies or new geography,'' Sapphire Foods India Group CEO Sanjay Purohit told PTI.

Its agreement with Yum Brands allows it to acquire any brands as long as it is not competing with pizza, burger or chicken brand of the US-based quick service restaurant (QSR) chain, he said ''The inorganic strategy could be either in the existing geographies or can also be in a new geography. We are open for that,'' Purohit added.

Sapphire Foods India on Tuesday fixed a price band of Rs 1,120-Rs 1,180 a share for its initial public offering (IPO) and plans to raise Rs 2,073 crore at the upper price band.

The IPO will be entirely an offer for sale (OFS) of 1,75,69,941 equity shares by promoters and existing shareholders will open for subscription on November 9 and conclude on November 11.

The offer consists of an offer for sale by its promoters and the company is not going to receive any proceeds from the offer.

''Our plans for the IPO is the secondary sales. A few months ago, we had private placement and raised Rs 474 crore of primary funds. These primary funds will help us going forward in our expansion plans,'' said Purohit.

Pizza Hut and KFC have a ''long runway'' of growth and the QSR industry is poised for growth in the next five years.

''We believe that in the next five years, the food industry will double and within that, QSR should garner 54 per cent,'' he added.

The company, like other QSR channels, is focusing on its omnichannels strategy as online sales — delivery and takeaway. In FY21, Sapphire Foods' delivery contributed 41 per cent of its revenue, while takeaway contributed 27 per cent and the balance was from the dine-in segment. ''As the restriction starts coming on dine-in, malls and cinemas are opening, we believe it will make a strong recovery,'' said Purohit adding that delivery will continue to be an important part.

When asked about the possible split between dine-in and delivery this fiscal, he said it will be difficult to give exact guidance at this stage.

The company, which has entered the sector in 2015 by getting the Yum brands franchise, is a young company that has now grown up to 482 stores as of September 2021.

''Our initial phase of expansion was quite slow. When we took over the business in 2015-16, the idea was to get the right economic model and omnichannels strategy.

''Once we became comfortable, our pace of expansion has increased in last 12-18 months,'' Purohit added Last year, Sapphire Foods India added 32 restaurants, out of which 27 came in the second half.

''This year, we have already opened 46 restaurants in FY 22 of which 32 are in the second quarter,'' he said adding that it indicates its expansion plans for KFC and Pizza Hut. Its gross revenue for the financial year ended on March 31, 2021, stood at Rs 1,016.7 crore, down 23.5 per cent on account of the pandemic. It was at Rs 1,329.6 crore in FY 2019-20.

When asked about the growth this fiscal, in comparison to the H1 of FY21 and FY22, the business has made a ''strong recovery'' and stores operations were reaching almost to ''pre-COVID-19 level'', Purohit said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)