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On August 4, Devyani International, India's largest franchisee of Pizza Hut, KFC, and Costa Coffee, will go public. The franchisee will use the proceeds from the IPO to pay off its long-term indebtedness by selling new equity shares.

The IPO includes a fresh issuance of equity shares worth Rs 440 crore by the company, as well as an offer for sale of up to 155,333,330 equity shares by the selling shareholders, Dunearn Investments (Mauritius) and RJ Corp Limited, the promoter selling shareholder. The IPO's price band is set at Rs 86-90 per share. The company hopes to raise roughly Rs 1,800 crore with this IPO.

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Ravi Kant Jaipuria, non-executive director and chairman of Devyani International, commented on the company's debt, saying, “The funds that we are collecting is to repay our debt. More than that, we have enough cash flows to support our operations. The cash flow will take care of our needs. Moreover, we will not have to dilute our equity to borrow money.”

Manish Dawar, the company's chief financial officer, added to this by saying, “The total consolidated debt is around Rs 500 crore which includes debt of standalone and other subsidiary companies. Our endeavour will be to maximise our loan repayment and make the company debt-free.”

Dawar did add, though, that the corporation is keeping an eye on the pandemic. “Depending on the current pandemic condition, we may keep more funds -- looking at the way the third wave of COVID is panning out --and repay a lesser debt. This is because of the uncertain times.”

According to the red herring prospectus, the firm had total borrowings (consisting of long-term and short-term borrowings) of Rs 463.32 crore and Rs 396.47 crore as of March 31, 2021, and June 30, 2021, respectively.

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The franchisee has been developing inorganically and organically, with 297 Pizza Hut locations, 264 KFC stores, and 44 Costa Coffee stores in India as of March 2021. Despite the ongoing pandemic, the company expanded roughly 40 locations in the first quarter, according to Jaipuria, who also claimed that the company is pretty aggressive in terms of expanding stores.

Devyani International, on the other hand, has reported losses of Rs 94.14 crore, Rs 121.41 crore, and Rs 62.98 crore in fiscal years 2019, 2020, and 2021, respectively. The corporation will be in a positive position after repaying the debt, according to Dawar.

Devyani International is a subsidiary of RJ Corp, Pepsico's largest bottling partner in the food and beverage industry. Yum Brands is the company's largest franchisee, with Pizza Hut, KFC, and Costa Coffee among its major brands. Vaango, Food Street, Masala Twist, Ile Bar, Amreli, and Ckrussh Juice Bar are among the company's other brands.

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(Source: Free Press Journal)