Devyani International Limited's board of directors convened on February 4, 2026, approving significant strategic decisions including a major acquisition and capital restructuring. The meeting, held from 11:00 AM to 11:55 AM, resulted in key approvals that will strengthen the company's market position in the food and beverages sector, with formal regulatory disclosures filed under SEBI Listing Regulations.

Strategic Acquisition of Sky Gate Hospitality

The board approved the acquisition of approximately 11.4% additional equity stake in Sky Gate Hospitality Private Limited from its promoters and founders. This strategic move will transform Sky Gate into a wholly-owned subsidiary of Devyani International.

Sky Gate Hospitality Profile

Sky Gate Hospitality Private Limited, incorporated on July 28, 2015, operates in the food and beverages industry with a strong financial track record. The company has demonstrated consistent growth over the past three years.

*Note: FY2025 figures exclude turnover from Krazy Kebab Co. and Peanutbutter and Jelly Private Limited.

Share Capital Restructuring

The board approved comprehensive re-classification of the company's authorized share capital, subject to shareholder and regulatory approvals. The restructuring involves modification of the capital clause in the Memorandum of Association.

Preference Share Issuance

As part of the acquisition consideration, the board approved issuance of up to 3,00,000 fully paid-up non-convertible redeemable preference shares to Sky Gate's promoters and founders.

Regulatory Compliance and Approvals

The company has filed comprehensive disclosures under Regulation 30 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015, with both NSE and BSE. The transaction constitutes a related party transaction as Sky Gate is already a subsidiary of Devyani International. However, the company's promoter group has no interest in Sky Gate, and the proposed investment is conducted at arm's length.

The board has initiated the postal ballot process to seek equity shareholders' approval for the proposed transactions. The acquisition requires no governmental or regulatory approvals beyond standard shareholder consent procedures, aligning with Devyani International's expansion strategy in the food and beverages sector.

Devyani International and Sapphire Foods India Limited have announced a transformative merger that will create one of India's largest food and beverage platforms. The boards of both companies approved the merger on January 1, 2026, marking a significant milestone in India's quick service restaurant sector.

Merger Structure and Financial Impact

The transaction involves a comprehensive share swap arrangement with specific terms for different stakeholder groups:

The merger includes a promoter-level transaction where RJ Corp will acquire 18.5% stake from Sapphire Foods Mauritius Limited at a floor price of ₹280 per share. This bilateral arrangement, to be completed within 3-15 months, ensures RJ Corp maintains significant shareholding in the combined entity as required by Yum! Brands.

Expected Synergies and Timeline

The companies have identified substantial cost synergies expected from the merger:

These synergies will emerge from general and administrative cost optimization, enhanced Yum! incentives, improved procurement negotiations, and operational efficiencies. The figures represent net benefits after accounting for integration costs and new functional responsibilities.

Operational Transformation and Brand Management

The merger will significantly alter operational responsibilities between the franchisee and Yum! Brands. Devyani International will assume expanded roles across both major brands:

Pizza Hut Operations:

• Marketing and innovation functions transfer to merged entity
• Technology and supply chain management responsibilities
• 10-year incentive structure for brand turnaround
• Flexibility to restructure store portfolio without net unit reduction requirements

KFC Operations:

• Technology and supply chain management transfer
• Marketing and innovation remain with Yum! Brands
• Continued expansion under existing development agreements

The company has already initiated capability building, hiring functional leaders and shortlisting a global technology partner to support the transformation. Management expects to have all new capabilities operational by June 2026, well before merger completion.

Strategic Market Positioning

The combined entity will operate in India's rapidly expanding food services market, estimated at over $100 billion, with the QSR segment alone exceeding $25 billion. The merger creates a unified franchise partner with national reach, enhanced bargaining power with landlords and suppliers, and improved capital allocation capabilities.

The merged platform will house multiple brand portfolios including KFC, Pizza Hut, Costa Coffee, Vaango, Biryani By Kilo, and other regional brands, providing comprehensive coverage across different consumer segments and dining formats.

Pizza Hut Revival Strategy

Management outlined specific plans for Pizza Hut's turnaround, targeting positive brand contribution margins in the first year and low double-digit margins thereafter. The strategy focuses on:

• Store portfolio optimization with closure and relocation flexibility
• Same-store sales growth recovery through unified marketing approach
• Technology infrastructure enhancement for improved delivery capabilities
• Innovation initiatives under direct franchisee control

The 10-year incentive structure from Yum! Brands provides long-term support for the brand revival efforts, reflecting mutual commitment to Pizza Hut's success in the Indian market.

Technology and Infrastructure Development

The merged entity will implement a unified technology platform across all brands, featuring common backend infrastructure with brand-specific consumer interfaces. This approach will enable faster delivery times, improved customer experience, and operational efficiencies while maintaining distinct brand identities.

The companies expect the merger to position them competitively against market leaders through enhanced speed of service, innovation capabilities, and national-scale execution. The transaction represents a strategic consolidation in India's fragmented QSR market, creating a platform capable of capturing the sector's significant growth potential.