Devyani International management has announced the initiation of a comprehensive turnaround strategy for its Pizza Hut business operations during a recent conference call. The company is implementing strategic measures aimed at improving the overall performance and profitability of its Pizza Hut segment.

Strategic Turnaround Approach

The management outlined a focused approach to restructuring the Pizza Hut business through targeted store closures and operational refinement. The company has begun shutting down loss-making stores as part of its effort to streamline operations and improve financial performance.

Store Expansion Policy Changes

The company has implemented a significant shift in its expansion strategy for the Pizza Hut brand. Management confirmed that Devyani International will not open new Pizza Hut stores going forward, with the sole exception being replacement outlets for the closed loss-making stores. This policy change represents a departure from growth-focused strategies toward profitability-centered operations.

Operational Restructuring Focus

The turnaround strategy emphasizes sharpening the company's focus on its Pizza Hut operations. This approach involves concentrating resources and efforts on improving the performance of existing profitable locations while eliminating underperforming outlets from the portfolio.

The management's announcement during the conference call indicates a strategic pivot toward sustainable profitability rather than aggressive expansion in the Pizza Hut segment. This restructuring initiative aims to create a more efficient and financially viable Pizza Hut business model for Devyani International.

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.

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.

Current Structure:

• Total Authorized Capital: ₹5,67,50,00,000
• Equity Shares: 5,64,50,00,000 shares of ₹1 each
• Preference Shares: 30,00,000 shares of ₹10 each (0.10% Redeemable, Non-Cumulative, Non-Convertible)

Proposed Structure:

• Total Authorized Capital: ₹5,67,50,00,000 (unchanged)
• Equity Shares: 4,67,50,00,000 shares of ₹1 each
• Preference Shares: 10,00,000 shares of ₹1,000 each

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 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 aligns with Devyani International's expansion strategy in the food and beverages sector, leveraging Sky Gate's established market presence and growth trajectory. The transaction requires no governmental or regulatory approvals beyond standard shareholder consent procedures.