Capitaline

Analyst Meet / AGM 29-May-14

Conference Call

Speciality Restaurants

Higher raw material costs and new additions lead to lower operating margins in Q4 FY'14

The company held its conference call on 29^th May'14 and was addressed by Mr. Anjan Chatterjee MD
Key Highlights

The company has opened a total of 18 new restaurants in FY'14 and plans to add about 14 more in FY'15 as well. About 7 of them will be of Mainland China restaurant and rest will be of the other brands.

During the quarter ended Mar'14, lots of upfront costs of new stores together with higher man power costs were added during the quarter. Some of the restaurants have just started and all these have resulted in lower operating margins. Further the new stores are taking time to break even due to economic conditions and lower sentiments that were prevailing during the whole of FY'14.

On the other side the real estate costs in the form of lower rentals is helping the company.

Food costs continue to remain high. Also about 30-35% of total raw material costs i.e. food is imported from China and other countries. Management is working on localization on it and is trying to reduce the import content of the same.

Average churn for Mainland China is about 1.4 and average bill per table is about Rs 675. The gestation period of Mainland China restaurant have increased from average of about 6 months to about 12 months due to current state of the economy.

Average churn for Oh Calcutta is about 1.0 with average bill of about Rs 450 per table.

Overall, Management expects the revenue growth to continue to be strong and margins to improve from here on.

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