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Edited Transcript of COFFEEDAY.NSE earnings conference call or presentation 24-May-19 10:45am GMT

Q4 2019 Coffee Day Enterprises Ltd Earnings Call

BANGALORE May 28, 2019 (Thomson StreetEvents) -- Edited Transcript of Coffee Day Enterprises Ltd earnings conference call or presentation Friday, May 24, 2019 at 10:45:00am GMT

TEXT version of Transcript

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Corporate Participants

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* A. Venu Madhav

Coffee Day Enterprises Limited - CEO & Director of Coffee Day Global

* Jayraj C. Hubli

Coffee Day Enterprises Limited - CFO, Chief Information Officer & Director of Coffee Day Global

* R. Ram Mohan

Coffee Day Enterprises Limited - CFO

* V. G. Siddhartha

Coffee Day Enterprises Limited - Founder, Chairman & MD

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Conference Call Participants

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* Arun Malhotra

* Chirag Lodaya

Valuequest Investment Advisors Private Limited - Equity Analyst

* Dhaval Shah

* Indira Badrinarayan

Morgan Stanley, Research Division - Research Associate

* Subhankar Ojha

SKS Capital & Research Private Limited - Senior Analyst of Equity Research

* Yogeshkumar Doshi

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Coffee Day Enterprises Limited Q4 and Full Year FY '19 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded.

On today's call, we have the senior management of Coffee Day Enterprises led by Mr. V. G. Siddhartha, Chairman and Managing Director, Coffee Day Enterprises Limited. We also have with us Mr. Ram Mohan, CFO, Coffee Day Enterprises Limited and Chairman of Sical Logistics Limited; Mr. Jayraj Hubli, Director, Coffee Day Global Limited; Mr. Venu Madhav, CEO of Coffee Day Global Limited; and Mr. Sadananda Poojary, Company Secretary, Coffee Day Enterprises Limited.

I would now like to request Mr. V. G. Siddhartha to take you all through the key highlights of the results. And over to you, sir.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [2]

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Thank you, ma'am. Good evening, everyone, and warm welcome to our quarter 4 earnings call.

Before I speak about the quarter and full year performance, I would like to share a few updates. Coffee Day Enterprises and Coffee Day Trading Limited sold their entire stake in Mindtree Limited, a global IT consulting and service company, to Larsen and Toubro Ltd. Transaction was concluded on May 3. Proceeds, net of expenses and taxes, to the tune of INR 2,100 crore were received, and that amount has been utilized to dilute the debt.

During the quarter, we incorporated a subsidiary with 51% stake with us -- with Impact HD of Japan to set up a chain of retail stores in India to expand our Fresh 'n Ground business. Around 425 Fresh 'n Ground outlets have been transferred to this subsidiary to remodel into chain of retail stores. These retail stores will cater to both F&B and convenience product.

Moving to our quarterly and full year performance. Consolidated number of Coffee Day Enterprises for quarter 4 are as follows. Net operational revenue is INR 1,322 crore, growth of 17% year-on-year; EBITDA of INR 253 crore, growth of 17% year-on-year; PAT of INR 26 crore, growth of 4% year-on-year. Consolidated number for FY '19 are as follows. Net operational revenue is INR 4,264 crore, growth of 13% year-on-year; EBITDA is INR 961 crore, growth of 15% year-on-year; PAT of INR 128 crore, growth of 21% year-on-year.

Moving to our coffee business. In quarter 4, Coffee Day Global Limited posted a retail net revenue growth of -- revenue of INR 353 crore, up year-on-year 1% ; EBITDA of INR 85 crore, up 4% year-on-year; profit after tax of INR 10 crore, up 17% year-on-year. For the year ended March -- for the full year, Coffee Day Global posted a net revenue of INR 1,468 crore, up 13% year-on-year; EBITDA, INR 375 crore, growth of 9% year-on-year; PAT of INR 41 crore, growth of 10% year-on-year.

As of March 2019, our café network stands at 1,752 spread across 243 cities in India. For the full year, we added 96 cafés. We are happy to report that our quarter 4 ASPD grew to INR 15,920. Our SSSG came at 5.48%, [5.5%]. This quarter is the 29th consecutive quarter of a positive same-store growth.

Our leadership in vending machine segment continues. Total vending machine installed as of March '19 stands at 56,799 machines, having added 7,707 machines during the quarter 4. Full year gross addition to vending machines stood at 13,011.

Our other subsidiaries have also delivered steady performance during the quarter, backed by strong fundamentals. For quarter 4, Sical reported net revenue of INR 426 crore, growth of 15% year-on-year; and EBITDA at INR 78 crore

(sic) [INR 54 crore].

Sical Iron Ore Terminal, a subsidiary of Sical Logistics, has received all clearances and financial approval for the modification of the existing iron ore [terminal] to handle common user coal at Kamarajar port. The company is in process of executing this project and will start generating revenue on quarter 2 of this year.

With this, I'll now open the floor for questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Nillai Shah from Morgan Stanley.

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Indira Badrinarayan, Morgan Stanley, Research Division - Research Associate [2]

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This is Indira here from Morgan Stanley. Congratulations on your results. I actually just wanted to understand the difference between how -- the ASPD and same-store sales growth, the underlying difference between the 2 because the gap seems to be high between the 2 numbers. So the ASPD growth is about 2% and the SSSG is at 5.5%. Can you help me understand the difference, please?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [3]

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Our colleague -- CFO for Coffee Day Global, Jayraj, will answer this question, please.

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Jayraj C. Hubli, Coffee Day Enterprises Limited - CFO, Chief Information Officer & Director of Coffee Day Global [4]

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Yes. Actually, the way both are calculated is totally different. Same-store sales growth takes a month as a unit, whereas ASPD takes a day as a unit. If a café has worked for only 10 days, still there could be a better ASPD, but when you compare that with the full month sales, the same-store sales growth will show a lesser growth. That is the fundamental difference. Now coming back to the growth percentage of 2%. Actually, that 2% growth that you mentioned is based on gross sales. But when you take net sales impact, the growth is actually 7.4%, and -- which is, I mean, quite comparable with the SSS growth of 5.48%.

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Indira Badrinarayan, Morgan Stanley, Research Division - Research Associate [5]

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Okay. So that is the reason why this is -- and this has been true actually for the last 3 quarters, so from 1Q F '19. Is that all being reported on a gross basis?

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Jayraj C. Hubli, Coffee Day Enterprises Limited - CFO, Chief Information Officer & Director of Coffee Day Global [6]

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Yes, yes. ASPD is always being reported on a gross basis, and same-store sales growth are reported on net sale basis.

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Indira Badrinarayan, Morgan Stanley, Research Division - Research Associate [7]

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Okay. So that's also one of the reason why that difference comes, apart from the month and day estimates?

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Jayraj C. Hubli, Coffee Day Enterprises Limited - CFO, Chief Information Officer & Director of Coffee Day Global [8]

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You are right, you are right.

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Operator [9]

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The next question is from the line of Dhaval Shah from Girik Capital.

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Dhaval Shah, [10]

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Sir, first, congratulations on completing the Mindtree transaction. Sir, now on our balance sheet, what is the status of debt and cash as of today as for the parent companies?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [11]

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Yes. So we have net debt of INR 2,400 crore.

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Dhaval Shah, [12]

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Net debt, INR 2,400 crore, okay. So this INR 2,100 crore has been entirely used to pay off debt?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [13]

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Yes, yes.

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Dhaval Shah, [14]

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Okay. So then -- so was it -- so we were -- at the end of second quarter, we were at INR 3,600 crore net debt as per what we've spoken in the call. So this increase in debt, what is the bridge? After paying off, why is it still INR 2,400 crore?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [15]

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Yes. Ram will respond, please.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [16]

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Today, if you see my gross debt, it is INR 4,700 crores (sic) [INR 4,500 crores] , but the net is only INR 2,400 crore. So if you see March, it will be a little more because even the INR 600 crores of promoter debt came and stood in March. Only for the Mindtree, that L&T wanted us to consolidate all the debt and the shares to one account. Promoter had around INR 600 crores debt. Even that came as debt in the group. Today, everything is repaid.

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Dhaval Shah, [17]

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Okay, okay, okay. So we are INR 2,400 crore net and gross is INR 4,500 crore?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [18]

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Yes, yes.

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Dhaval Shah, [19]

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Okay. And what is the breakup between entities for this...

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [20]

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I can give you the net. Holdco has INR 300 crores; Sical has INR 1,300 crores; TDL has INR 800 crores; coffee business, INR 300 crores.

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Dhaval Shah, [21]

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Okay. That's café -- Coffee Day Global Limited, right?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [22]

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CDGL. And we have a little -- INR 300 crore cash in all the other entities like Way2Wealth and other things for their margin money. Net is INR 2,400 crore.

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Operator [23]

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(Operator Instructions) The next question is from the line of Chirag Lodaya from Valuequest .

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [24]

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Sir, can you help me with the cash position in Holdco, Sical, Tanglin and coffee as on date?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [25]

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Yes. Ram?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [26]

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Holdco, we don't have any cash.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [27]

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Okay.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [28]

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We have some cash in Coffee business. We have some cash in Way2Wealth, around INR 200 crores in Way2Wealth. That is actually for their margin. And we have TDL around INR 500 crore cash for their expansion.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [29]

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TDL, Tanglin, right?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [30]

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Tanglin, yes.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [31]

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INR 500 crore, their cash?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [32]

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Yes. Sical has around INR 100 crores.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [33]

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Okay. Coffee?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [34]

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Coffee has INR 400 crores.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [35]

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INR 400 crore. So sir, gross debt is INR 4,500 crore, and net debt is INR 2,400 crore. The difference between the 2 is INR 2,100 crore. So that is the cash, right?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [36]

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Yes.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [37]

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So that number, that's entirely -- INR 2,100 crores number doesn't get tallied. INR 500 crore...

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [38]

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Can I repeat again?

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [39]

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Yes, please.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [40]

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Holdco is 0. Sical is INR 100 crores. Resorts, we have INR 100 crores. Tanglin, around INR 550 crore. Then we have 1 company called Coffee Day Trading. It has around INR 200 crore. Then we have coffee, INR 460 crore. Way2Wealth is around INR 300 crores -- say INR 250 crores. And we have another around INR 400 crores in Tanglin Retail Reality.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [41]

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Tanglin Retail Reality?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [42]

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Yes. This is part of TDL only but -- subsidiary of TDL.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [43]

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Sir, both put together will be INR 1,000 crore. That right -- number is right? Tanglin...

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [44]

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Yes. INR 500 crores and INR 400 crores, yes.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [45]

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1,000, 1,500 -- okay. Got it. And what is the status of promoter pledge, sir, right now?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [46]

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You're talking about our [EDL], sir?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [47]

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70%.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [48]

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CDEL.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [49]

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Yes, 70%.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [50]

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And is it expected to go down in next 2, 3 months with the deal closing happening now?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [51]

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Yes, yes. I think -- see, we have given a lot [visibility] before [3 years]. We didn't know all the working capital we'd get. So I mean, it's close, and we'll get it below 50%.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [52]

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Right. And within 3 months?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [53]

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3, 4 months, yes. Because some people are not willing to close the loans or whatever because they're asking penalties. That's why we are negotiating here.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [54]

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Right. Sir, what is the reason of holding cash -- so much cash in Tanglin Retail, coffee? Because your CapEx plans are in Tanglin like INR 150 crore to INR 200 crore annually.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [55]

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Oh, no, no, no. This year, we'll have million -- we've got our own INR 500 crore CapEx there.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [56]

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In Tanglin?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [57]

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Yes, yes.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [58]

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And in Coffee?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [59]

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(inaudible). Coffee will be...

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [60]

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INR 300 crores.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [61]

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INR 300 crores.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [62]

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Okay. So any rationale because our overall interest outflow is higher than interest we are earning on cash.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [63]

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We'll -- see, the cash is still -- now we are -- this one, we'll review that. Because we are going to review, in the next 6 months, you can see a big change in that.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [64]

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Okay. And what is the strategy in this Fresh 'n Ground stores? At what valuation we have sold the stake in the company? And what are the plans there?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [65]

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Plan is -- see, we have 425 stores owned by us, okay? It was a slow business for us. So we are holding 51% in that company and the Japanese company is holding 49%.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [66]

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Right. Name of the company is HD Impact (sic) [Impact HD] or what name...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [67]

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HD Impact. So we are going to refurbish all this 300 -- 425 stores. Along with coffee, we are -- today, we are selling only coffee powder there. Along with that, we'll sell coffee powder, food, coffee beverages and some small essentials. The new product coming in will be called [Coffee Day Essential]. The name has changed. And all the CapEx will be introduced by that in the partner. So for 49%, they'll put in INR 100 crore. And other than that, for expansion, another INR 100 crore. We'll get the money at a very low rate of interest.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [68]

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And that INR 100 crore will settle the loan in the company, right?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [69]

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No, no. INR 100 crore is the loan in the company. INR 100 crore on that -- for that equity. INR 200 crore will be put in to expand the business for the next 2, 3 -- 2 years.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [70]

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2 years. And what is the current size of this business?

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Jayraj C. Hubli, Coffee Day Enterprises Limited - CFO, Chief Information Officer & Director of Coffee Day Global [71]

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INR 75 crores to INR 80 crores.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [72]

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INR 75 crore to INR 80 crore.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [73]

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Okay. And sir, you mentioned promoter money -- loan came into the company during the deal. If you can just explain a bit more on that front.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [74]

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See, when we were closing deal with L&T, L&T wanted all the shares to be held through 1 escrow, 1 company, yes. So given our INR 600 crores worth of shares, also given there -- and we have some other loans, we took it and we closed it when the money came back. L&T wanted to have 1 transaction because they didn't want to move 1 share also in the group. It's -- until the deal happened. Because we didn't know how long the deal will happen because we applied for [CTL]. We got it and we closed everything [on start of Monday].

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [75]

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So your INR 600 crore shares came into the company, company paid you INR 600 crore for a particular period.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [76]

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Yes, 1 month.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [77]

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They took over the loan of the promoter.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [78]

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They took over the loan of the promoter because L&T has insisted all the shares should be in one entity.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [79]

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Okay, okay, okay. Now everything is repaid?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [80]

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Yes, everything.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [81]

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And sir, what is the outlook on Coffee business now going at FY '20 store edition SSSG margin? How one should look at it?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [82]

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I tell you honestly, we are going to add whatever the store in the next 3. But I can assure you next 3 years, Coffee business on an average will grow double digit -- high double digit, we can grow. That was the internal target.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [83]

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High double digit. And sir, you started restructuring journey last year. What is the progress on that, sir? And any other step you are planning to take?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [84]

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Within the Mindtree, you give us time, we'll go directly. Within the Mindtree, it took almost 6 months to sell Mindtree. It is not easy to sell in a sense or there were some other plan. I'm sure that you'll hear some positive news from us in 3 to 6 months.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [85]

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Right. And just lastly, Sical, how one should look at post -- all the approvals of this iron ore terminal? So how one should look at it in FY '20?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [86]

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To tell you honestly, we don't give a forward earning. But I can tell you, the growth will be -- profit growth will be very good. You can see we are working on 3 projects that should deliver the result to us. But we don't -- because it is nothing -- implementation, we are right. But some regulatory approvals are -- we are waiting for that. But our terminal of iron ore port, it should earn around run rate of INR 100 crore by this year or next year. We will open in September, by September end.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [87]

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Okay. And what will be the average cost of borrowing as on date?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [88]

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Which business?

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [89]

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No, overall, overall average cost of borrowing for the company and ForEx portion out of the total borrowing?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [90]

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So Coffee business [indiscernible] is around 10% to 11%.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [91]

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I think it's 11%, 11.5%.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [92]

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And the Coffee business interest, we have around INR 10 crores of MTM loss this year.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [93]

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Right. So total ForEx loan would be how much out of this INR 4,500 ForEx denominator?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [94]

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Of this 54 million.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [95]

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54 million? Okay.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [96]

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Yes.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [97]

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No, no. Total, I am asking, CDEL.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [98]

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50 million.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [99]

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50 million. So you take around 50 million.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [100]

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30 million, 80 million.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [101]

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50 million plus 30 million, 80 million.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [102]

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Yes, 80 million.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [103]

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80 million is ForEx debt. And average cost of borrowing for the company as a whole?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [104]

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11.5%, 12%.

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Operator [105]

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The next question is from the line of Subhankar Ojha from SKS Capital and Research.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [106]

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Sir, can you just guide me as to the promoter level debt in different equities and how that has changed and likely to change in the next 6 months? I understand that all of...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [107]

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Promoter level, promoter level...

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [108]

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That a lot of (inaudible) coming up...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [109]

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Promoter -- we have got lot of direct business also. Promoter level, you don't need to worry about anything. And we have given our personal shares to company's working capital and the requirement, which we said the next 6 months, we'll withdraw a lot of that and the pledge will come to 50%.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [110]

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And could you also highlight your facilities with KKR and other -- and there is -- a lot of promoter shares have been...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [111]

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The company doesn't have any -- we are giving it to KKR.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [112]

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Oh, but I believe a lot of the -- this was related to the previous question, where you mentioned that you have 70% promoter pledge. But I understand that as per your arrangement with KKR, the pledge is expected to go up in July because you have some covenants with them where you have to...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [113]

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Nothing is -- nothing will go up.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [114]

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Okay. So you're categorically saying the pledges will come down rather than go up because there are some obligations...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [115]

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In a group like us, INR 100 crore, INR 50 crore, they use to go on [watching it with signs]. But nothing will go up. I can tell you that.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [116]

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Okay. And there is -- due to this NBFC crisis and refinancing problems that lot of promoter groups are facing, are you confident that...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [117]

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Yes, we don't have -- yes, we don't have any big NBFC exposures.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [118]

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What level?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [119]

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We don't have any big NBFC exposures.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [120]

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I know no NBFC, but still there are a lot of promoter level debt repayments expected for the next 3 to 6 months. So would that...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [121]

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We have to see. We have managed a lot of things. We are the largest (inaudible) grower in this country. Anything we will -- we have honored our commitment for the last 25 years. Nothing will (inaudible), okay? We don't have any serious commitment like that.

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Operator [122]

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(Operator Instructions) The next question is from the line of [Ramu Krishnan] from [ZenWealth].

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Unidentified Analyst, [123]

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I just wanted to understand a bit in terms of your café net growth. As per your presentation, it says that there is around 1,752 stores as of date, and you added around 96 in fiscal year '19. So just wanted to understand -- I'm sorry I joined a bit late if I have missed it out, but how many of these stores are actually breakeven? And how do you actually do the [rate] arrangement on the stores that doesn't do well or do well? And how do you handle all these things? That is one kind of understanding which I wanted to have. And the second...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [124]

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There are 2 questions you have asked. Regarding business, my colleague, CEO of Café Coffee Day, will answer you. As the financial year (inaudible) profitability, Jayraj, CFO, will answer you.

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Unidentified Analyst, [125]

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Yes. I have one more, if you don't mind, actually.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [126]

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Yes.

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Unidentified Analyst, [127]

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So the third question was related to the fourth quarter SSSG growth, which came in at around 5%. Just wanted to understand, sequentially, there is a decline. Is it a seasonally weak quarter? Or if you can throw some light on this particular aspect also.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [128]

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Okay. Venu will give you all details, [Coffee Limited].

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A. Venu Madhav, Coffee Day Enterprises Limited - CEO & Director of Coffee Day Global [129]

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[Ramu], in terms of the store selection, we look at the gaps in the market where we are not present. And therefore, on the basis of the catchment analysis that we do, we select and take the cafés in those areas. So that is how we select our cafés.

We also have a running target in terms of yearly how many cafés we need to open, and we pay thousands into opening those number of cafés in the year.

As far as SSSG is concerned, yes, in the fourth quarter, there was a little decline in consumers, and therefore, that is reflected in that value.

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Jayraj C. Hubli, Coffee Day Enterprises Limited - CFO, Chief Information Officer & Director of Coffee Day Global [130]

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Just for information, 29 quarters, we have targeted same-store growth. And you see in any food business, even 2 years back they were negative. We were not having any negative. But I tell you, after 20th of December, we see a softness in the market. That is not the end of it. But there is -- I think you are late to the call -- we told (inaudible). We expect the growth of around -- double-digit growth -- mid-level or double-digit growth for the next 2, 3 years.

We are maybe slightly wrong on quarter-on-quarter. But looking at the full year, I can tell you, it will be around 15% or maybe around a 1% or 2% growth possible next 2, 3 years in our business.

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Unidentified Analyst, [131]

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Yes. That is very helpful. But just a follow-up on that. So I just wanted to understand the breakeven part. How many stores are breakeven as of now? And all these stores are owned stores? Or are they combination of owned and franchises?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [132]

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No, we don't have franchise stores.

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Jayraj C. Hubli, Coffee Day Enterprises Limited - CFO, Chief Information Officer & Director of Coffee Day Global [133]

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We don't have any franchisee stores except for some about 8 to 9 [near] the airports. By composition, we have to go with the franchisee rule. Otherwise, we always go for the owned format.

Coming back to your question on the breakeven, almost 91% of our cafés are on breakeven. And the remaining, regularly, we take a call and discuss and find out if there is a scope for improvement, we'll do it or we take a call on closing also. So we make sure that it remains at this level always.

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Operator [134]

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The next question is from the line of [Roshan De Silva] from [De Silva Holdings].

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Unidentified Analyst, [135]

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Firstly, congrats on closure of the transaction with Mindtree. My questions were around the deal of the Uber Eats. And you've announced a new initiative of Home Cravings, et cetera. I wanted to kind of understand from you how that's been performing. And have you rolled out across their entire network? And whether you can see further growth on that.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [136]

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Venu will answer you.

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A. Venu Madhav, Coffee Day Enterprises Limited - CEO & Director of Coffee Day Global [137]

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[Roshan], this arrangement with Uber Eats was done with the intention of launching private branch, which will be available only on Uber Eats. So the part of the first initiative, we have launched Home Cravings, and we rolled out across 39 cafés in Bangalore and Hyderabad. The first few cafés were launched in November end, and mostly the other ones were launched in February end. Idea is to take these to about 100 to 150 stores in the next 12 to 18 months.

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Unidentified Analyst, [138]

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Okay. Why only 100 to 150? Because the store network is much larger, right?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [139]

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Just to tell you, we are acting the minimum guaranteed sales from Uber and the minimum profitability sales, okay? And (inaudible) we are OK to even roll out thousand. But because we are investing money, and we are acting minimum guarantee because we -- who knows if their business is a risk, you should not be putting your capital, no?

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Unidentified Analyst, [140]

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Got it. Got it. Sorry, I was not aware of those nitty-gritty. My other question...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [141]

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There is a minimum guarantee and a minimum profit, that is an understanding [I can tell you].

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Unidentified Analyst, [142]

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Got it. My second question is around -- obviously, you guys have -- you have prime real estate and in some of the most beautiful parts of Karnataka. What is the plan? Because I knew you already done some resorts. What's the plan to further unlock that portion of the real estate hospitality? What -- can we expect more of that?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [143]

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Nice to tell you, that will be part of our Tanglin. I think next 6 to 8 months, our Tanglin rental revenue will -- gross revenue will go to INR 250 crore and make up the tax profit, and that will be at INR 225 crore in the next 8, 9 months. That will be a part of it. So because all these resorts, they all will give you 10%, 12% EBITDA -- return on your investment. So with (inaudible), we got 3 -- today, we got 4 of them, 3, directly won; another one, we won 24%, which will go to 49% or something (inaudible) Andaman one. So wherever we think it earns more than 12% return for us in a very long term and the capital of provision of property is there, we'll invest.

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Unidentified Analyst, [144]

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Right. But you could have other models, right, where essentially, you just provide the land, and there could be other operators who come in and build the property?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [145]

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Let's see. We have done 3. One more remodeling of Andaman is happening in this year. We will do only 1 every year. We were not in a hurry to do all of them.

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Unidentified Analyst, [146]

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Right. Got it. I want to ask you also about the café model itself and in terms of product mix. So at the moment, if we look at the product mix, it is very weighted, in my opinion, towards the South Indian palette and more coffee and does not serve the tea drinkers than maybe other parts of the world. Is there -- I mean, is that by design? Or are you moving towards a more broader Indian palette? Or...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [147]

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Actually, you can see, [Roshan], our coffee is handcrafted Italian espresso. So therefore, it is omitting the channels of entire of India, not only South India. But yes, we would like to increase the beverage gaps in terms of having brewed tea, et cetera. That will be coming shortly into the cafés.

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Unidentified Analyst, [148]

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Got it.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [149]

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We are in the process of even revamping our menu. You can see a big change in 3, 4 months.

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Operator [150]

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The next question is from the line of [Anke Vishna] from Indian (inaudible) Portfolio Management Services.

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Unidentified Analyst, [151]

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My question is regarding the liability side. You said net debt is INR 2,400 crores. Is it before the Mindtree transaction or after the transaction?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [152]

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After Mindtree.

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Unidentified Analyst, [153]

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Sir, if you have repaid INR 2,100 crores, can I know in which company how much debt has been repaid?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [154]

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So it's in -- all the debt that you see the last quarter repaid in TRR.

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Unidentified Analyst, [155]

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Sir, what?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [156]

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Repaid completely in TRR. Because before last -- before market [sell], we consolidated all the debt to Tanglin Retail Reality. We repaid INR 2,400 crores in the Tanglin Retail Reality.

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Unidentified Analyst, [157]

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In Tanglin Retail Reality. Okay, okay. And one more thing, in the current results , consolidated results, our short-term debt has increased by INR 3,000 crores out of which you said [603]...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [158]

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That is the same thing. Tanglin Retail Reality, we consolidated all the loan and [marked gain] to [LND] transaction. LND insisted there should be only one holding. Including promoter, they put in one company, and we repaid everything in May 3.

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Unidentified Analyst, [159]

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Okay. Out of INR 2,400 crores has been repaid?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [160]

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Yes.

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Unidentified Analyst, [161]

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And sir, last question, I think you also mentioned the merger of Coffee Day Global.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [162]

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We didn't mention that. We clearly said we are restructuring the company with the Mindtree. And 3 to 6 months, we are looking for other things to create value. You will hear from us.

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Operator [163]

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The next question is from the line of [Radut Isayid] from [Beet Finance].

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Unidentified Analyst, [164]

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Sir, just one question. Once all this restructuring is over, so maybe a couple of years down the line, where do you expect the net debt to settle?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [165]

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(inaudible) but see, tell you honestly, I don't have a business plan for the next year, no. We just -- this particular year, we have written the business plan. Because see, just to tell you, with businesses like Tanglin, Coffee Day, Global and Sical, they're not a huge profit/loss. So whatever the investment [to play], there is one Sical investment where it can generate more than INR 100 crore profit for us. Now because of the debt level none of you like, we are sacrificing and leasing the (inaudible) from this one because we didn't want to show INR 200 crore additional debt in the books.

So this year, we are planning our financial. But next year, I don't know how the opportunity comes. It will be under INR 10 crore. I don't think that we are going to borrow thousands of crore or anything.

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Unidentified Analyst, [166]

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Okay. And where do we expect this Tanglin rental income to -- exit rental income and...

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [167]

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See, it's a [high-level] question. See, today, we -- Tanglin, we have about 4.5 million square feet buildup today. And (inaudible) see, before 6 months down the line, our rental revenue will -- gross rental revenue will grow to INR 250 crore. Potential is 11 million or 12 million square feet there. Railway station is -- metro is starting there, and that means from the center of Bangalore City, you can go direct 22 minutes, okay?

Should I put INR 350 crore for every -- INR 300 crore for every million square feet and do another 6 million square feet or 7 million square feet, I don't know. We'll grow year-by-year. We have got the line, which is delaying that with us. [Let me] call later. But in the next 6 months, we will grow to INR 250 crore rental income.

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Operator [168]

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(Operator Instructions) The next question is from the line of Yogesh Doshi from Aquarian Shares Broking.

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Yogeshkumar Doshi, [169]

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Congratulations to the Board for great results, sir. In fact, my question about the food business and food delivery business was asked by previous speaker so I got the answer.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [170]

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Sir, where -- Yogesh, hello?

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Yogeshkumar Doshi, [171]

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Yes.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [172]

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You asked me food delivery business, sir?

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Yogeshkumar Doshi, [173]

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Yes.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [174]

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I'm not talking -- I'm not going to talk about our -- for this one. But I'd tell you, food delivery business will be mind-boggling business, which has got a great potential in this country in next 3 to 4 years, sir.

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Yogeshkumar Doshi, [175]

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Correct. Correct. Correct, sir. In fact, even vending business is growing exceedingly well. I believe it should touch 1 lakh within the next 2 years.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [176]

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Sir, you don't believe before we went public, there was no competition because we tell everything in the call. We got -- getting a competition. Yes, I think we know how to fight the competition. But we should not talk about these businesses that attracts more people under peril.

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Operator [177]

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The next question is from the line of [Ram Krishnal] from [Zen Wealth].

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Unidentified Analyst, [178]

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So I just wanted to understand, you talked -- when you talked about this restructuring plan next 2 years or 3 years, what are the exit -- return on equity that you're actually aiming internally from the current level?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [179]

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Yes. I'm not in a position to answer that today. The Mindtree deal took 6 months for me so it [takes time]. We'll do all of this because we have a -- from what I now was saying to the associate, we got more than 60% equity with that. So we have to perform better to earn our money. That's how we grow our -- do a very good job every investor report.

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Operator [180]

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(Operator Instructions) The next question is from the line of [Ashok Shah] from LSC Securities.

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Unidentified Analyst, [181]

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Can you speak broadly of future 2 to 3 years restructuring plan or how the company will be looking after 2 to 3 years and some divestment or some addition or some new developments?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [182]

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See, sir, now there are 3 good business in our portfolio. One is coffee retail and the food business and -- which we can expand easily in food delivery, and vending machines. And that's -- they [indiscernible] growth. As I told [all of you], in the next 2 to 3 years, component will grow at a double digit -- mid double digits plus. So regarding -- this is on our foods business, sir. I'd like all -- associated businesses, rental income also. This, we are -- next realization is coming next to our properties. That also -- our potential is to be 11 million. If that will be available 2 years from now, no, I don't know. We will build always 1 more building like that. So now we sold our stake to L&T. This L&T growth will get a substantial occupation in the -- our part. And so that also can grow. It can grow to 10 million to 11 million square feet the next 4, 5 years. But I don't know. It completely depends on the area demand. But we are going to build every [10 million] once it is occupied, then we'll go to the next building. And third, there's no secret (inaudible) also. Our -- a new terminal will start in September. And we have another 2 contracts which are starting next 8, 9 months, which we won 2 years back. According to the history, the results will create enough growth for the whole [economy, sir].

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Unidentified Analyst, [183]

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Sir, on your vending business, I think there is a condition that all the consumables will be supplied by the company. So how do we [sketch] -- watch on it whether it's 100% consumable is bought from us or it's outsourced from somewhere else?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [184]

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No, sir...

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [185]

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(inaudible).

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [186]

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No. No, sorry. Every consumable has the associates. What are the consumable? Coffee bean, napkin, cups, lid, stirrer, sugar, all these things.

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Unidentified Analyst, [187]

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Even the branded milk and coffee also, sir?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [188]

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Yes. So they can rather buy from that. We've got a service team, which works for servicing that. If any client is not using our product, they're using other product, we'll take a right action. Sometimes, [with other mission] also. Last quarter, to tell you honestly, we did lot of cleanups where there are no pay. We would rather (inaudible) on refurbishing and putting in the -- new this time.

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Unidentified Analyst, [189]

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Sir, and the vending also?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [190]

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Vending will do very good also.

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Unidentified Analyst, [191]

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Sir, how many more things were -- last quarter are refurbished or taken back?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [192]

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Taken back? Totally, we put forth all the machine total time [division]. But late last year, we have taken back [3500] of our machines to vendor.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [193]

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Actually, in the last quarter, on a full year basis, 4,000 machines.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [194]

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Full year, we have taken 4,000 machines back, sir.

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Operator [195]

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The next question is from the line of Arun Malhotra from CapGrow Capital.

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Arun Malhotra, [196]

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Just wanted to find out, you have spoken about restructuring, but there was no clarity on what direction it will take. Can you elaborate on what kind of restructuring are we planning?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [197]

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Yes. That is -- As a process of restructuring, we sold Mindtree. Honestly, one thing I realized in this country, to tell you anything, there are [3000, 4000 crore]. One bill, people ask for discount. So and with -- it took 6 months to find a buyer -- right buyer to the transaction. We did that. So all these 3 businesses, we are looking how to enhance their shareholders' value. We are doing all that through talking to the right people to enhance their shareholder's value, sir. We are -- we do have 3 to 6 months' time, early in the year is probably the announcement, sir.

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Arun Malhotra, [198]

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Sir, I really appreciate that. But I would request that if you could probably in whatever time frame what you are conceiving could elaborate what direction it will take, whether you will be multi businesses, whether you will do is separate the Coffee business or whether you will sell the real estate assets, that would be helpful.

Second point, what are the key performance metrics which internally you monitor to estimate or to understand or to comprehend whether your company has grown well or not? Because in terms of capital efficiency, if you -- if I see the ratios are quite bad even if I take a consolidated value. So are we destroying value? And that is also reflective that our stock price is still below the IPO price. Any comments on that?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [199]

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I agree with you, sir. (inaudible) for our Coffee business. In India, all of us are looking at the growth. Along with that, the profitability. But to tell you honestly, even I don't understand. There is 1 Chinese company which went public 1 week back in NASDAQ, 18 months old company, $125 million revenue, $250 million losses last year and valuation is now at $5 billion. So sir, I don't know. I don't know I'm right or wrong. But people are going mad in the Coffee business. I'm sure that we'll build our Coffee business which will be very valuable to all of us, sir.

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Arun Malhotra, [200]

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So sir, what I am extrapolating is we want only the Coffee business to stay. There are so many other businesses that 40%, 50% of their time is consumed just finding out what the date is, how the [late] transactions are taking place between the promoter companies. Can we just have a clearcut direction and a clearcut path maybe 6 months down the line so that we can have an exposure on these separate businesses?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [201]

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As I said, we'll look into that, and we'll take your suggestion. We'll look into that, sir. With -- it took 6 months for us to do the Mindtree deal. We are doing 1 or 2 things that is good for the company. Give us 6 months' time, you'll hear something positive, sir.

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Arun Malhotra, [202]

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Sure. And lastly, sir, we can only (inaudible) because sometimes like MacKenzie and [Bannon] to help us.

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Operator [203]

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The next question is from the line of [Ankiv Gupta] from Indian (inaudible) Portfolio Management Services.

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Unidentified Analyst, [204]

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I just wanted to have a little more clarity on the increase in the borrowings. So you were saying that for consolidating the shareholding of Mindtree, you had to take some promoter loan in the books of Coffee Day. So what was that amount? Was that around -- and what was the exact transaction? Can you just throw a light on that?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [205]

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Mindtree, if you see, promoter had their own 600 crores of Mindtree shares. So 650 all in all. They had it debt taken as that. The [LNP] wanted us to consolidate all the debt in 1 entity, including promoter debt. During March, we consolidated the debt in the listed entity, one of the subsidiaries as listed entity.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [206]

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In 24th of March, we did that -- and we cleared it on the 23 of May -- 3rd May.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [207]

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3rd May, we had cleared all the debt -- again, it's Mindtree, including promoter in the subsidiary.

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Unidentified Analyst, [208]

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Okay. So INR 600 crores debt addition was because of getting the Mindtree stake in our books.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [209]

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Yes.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [210]

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Yes.

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Unidentified Analyst, [211]

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Okay. And then we sold the entire Mindtree stake from our books and we cleared the debt of INR 600 crore?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [212]

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Yes.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [213]

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Yes.

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Unidentified Analyst, [214]

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The second question is that as per our consolidated balance sheet, so even if we remove the INR 600 crores, our borrowing has increased by almost INR 2,000 crores in -- during the financial year.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [215]

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Okay.

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Unidentified Analyst, [216]

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So what is the -- where have been this borrowing deployed primarily?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [217]

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No. No. In the financial, we inputted increase. INR 600 crores is only promoter debt.

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Unidentified Analyst, [218]

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So the gross debt as on 31st March 2008 was INR 4,000 crores -- '18, sorry.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [219]

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Okay.

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Unidentified Analyst, [220]

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And in -- and gross debt as of March 31, 2019, it was INR 6,500 crores, INR 6,600 crores. But even if I remove INR 600 crores of promoter debt, which came as of -- in the last week of March because of the LNP requirement then also, it has -- it is INR 6,000 crores. So there is an increase of INR 2,000 crores.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [221]

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No. FY '18, the gross debt is INR 5,100 crores.

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Unidentified Analyst, [222]

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INR 5,100 crores.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [223]

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Yes.

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Unidentified Analyst, [224]

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Okay.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [225]

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Now that becomes INR 6,500 crores.

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Unidentified Analyst, [226]

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INR 5,100 crores has become INR 6,500 crores.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [227]

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Yes. Out of the INR 600 crores, you take it from promoter.

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Unidentified Analyst, [228]

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Okay.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [229]

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And remaining will be CapEx at the -- yes, largely Tanglin has been taken for the Tanglin development. And because (inaudible) [pickup].

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Unidentified Analyst, [230]

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So do you say that the INR 1,100 crores is sitting in other current financial liabilities? Or where is it sitting in our balance sheet in 2018?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [231]

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No. No, that possibility of the current portion of the debt will come in the current liability, no?

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Unidentified Analyst, [232]

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Right. So in this year also, we would be having the current portion somewhere, everything?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [233]

--------------------------------------------------------------------------------

That's correct.

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Unidentified Analyst, [234]

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How much is that?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [235]

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Sir, net debt as of today is INR 2,400 crore.

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Unidentified Analyst, [236]

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Okay.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [237]

--------------------------------------------------------------------------------

Yes. You can amend. Further clarification, we'll just send on mail. I'll be able to give you anything.

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Operator [238]

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'

The next question is from the line of Subhankar Ojha from SKS Capital.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [239]

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Actually, (inaudible) again. So just a clarification, this may be a repeat question. Regarding Tanglin, what is the total area that we have? And what is the utilization of this?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [240]

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4.5 million square feet to build that area is there, and we can go up to 11 million to 12 million square feet.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [241]

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When is that happening, 11 million to 12 million? I mean, is your plan in place?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [242]

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We build only 1 million square feet every year. And it's a secret. We don't know. We are talking to somebody. If they come, we may build more also. But I think in next 4, 5 years, we'll complete everything. We'll -- we should be having at least 10 million square feet in Tanglin.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [243]

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And what is the utilization of this?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [244]

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Here, it's 95% are occupied -- occupancy.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [245]

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Okay. And you do say INR 250 crores of rental income in FY '20 from this?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [246]

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INR 250 crore, we'll start getting a run rate in next 6 to 8 months.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [247]

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Next 6 to 8 months.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [248]

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There, all the buildings are ready. Occupancy is getting -- happening. The average is 3 months, 4 months [are rent free period] (inaudible) people take for [20 year] for the furnishing and all.

We occupy it floor by floor.

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Subhankar Ojha, SKS Capital & Research Private Limited - Senior Analyst of Equity Research [249]

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Okay. Okay. And can you give the number again, sir? What is the debt in this and the cash in this entity?

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [250]

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Tanglin is what, sir?

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [251]

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[$15 million] is net debt.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [252]

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(inaudible).

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Operator [253]

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Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. V.G. Siddhartha for his closing comments.

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V. G. Siddhartha, Coffee Day Enterprises Limited - Founder, Chairman & MD [254]

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Thanks a lot for joining us for the call.

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R. Ram Mohan, Coffee Day Enterprises Limited - CFO [255]

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Thank you.

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Operator [256]

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Thank you. Ladies and gentlemen, on behalf of Coffee Day Enterprises Limited, that concludes today's conference. Thank you for joining us and you may now disconnect your lines. Thank you.