Sapphire Foods India Limited , a prominent player in the food service industry, has issued a clarification regarding the appointment of Vijay Jain as Executive Director and Chief Financial Officer (ED & CFO). The company provided additional details on Jain's remuneration and stock option allocation in response to the proposed resolution in their 16th Annual General Meeting (AGM) notice.

Appointment and Remuneration

Vijay Jain, who has been serving as the company's Chief Financial Officer since September 5, 2018, is set to take on the expanded role of ED & CFO. Sapphire Foods emphasized that Jain's proposed remuneration package remains largely unchanged from his previous position as CFO, with only standard annual increments applied.

Stock Option Allocation

The company addressed concerns about stock option grants, stating that no additional stock options have been or will be granted specifically due to Jain's elevation to the ED & CFO position. Sapphire Foods disclosed that approximately 11 lakh stock options, representing 5% of the total Employee Stock Ownership Plan (ESOP) pool (equivalent to 0.3% of the issued share capital), remain unallocated.

Key points regarding the stock option allocation include:

• No exclusive allocation of stock options will be made to any board member, including the ED & CFO.
• Future stock option grants from the residual pool will be considered holistically for the overall management team and other key employees.
• Any potential future grant of stock options to the ED & CFO will not exceed 20% of the remaining unallocated pool.
• The minimum grant price for any future allocation of ESOPs will be Rs. 272.00 per share.

Performance-Linked Incentive

The company clarified that the performance-linked incentive (PLI) for Jain is part of his overall Cost to Company (CTC) package. The PLI is tied to the company's operating profits and will be evaluated by the Nomination and Remuneration Committee at the end of each financial year, taking into account both individual and company performance.

Board's Perspective

The Board of Directors expressed their view that Vijay Jain has played a significant role in driving the company's strategic initiatives. They believe that the proposed remuneration is commensurate with the remuneration paid to similar positions in other companies, considering the size of Sapphire Foods, Jain's profile, knowledge, skills, and the responsibilities he shoulders.

Shareholder Approval and Transparency

Sapphire Foods emphasized that any additional grant of stock options beyond the residual ESOP pool would require fresh shareholder approval. The company also noted that their existing ESOP plans include provisions for malus and clawback, which can be triggered under certain specified circumstances.

This clarification by Sapphire Foods India Limited demonstrates the company's commitment to transparency and proper corporate governance practices, providing shareholders with detailed information about executive compensation and stock option policies.

Sapphire Foods India Limited , the operator of KFC and Pizza Hut restaurants in India and Sri Lanka, reported mixed results for the first quarter. The company saw revenue growth but faced margin pressures due to investments in value campaigns and promotional activities.

Revenue Growth and Store Expansion

Sapphire Foods achieved a revenue of Rs 775.00 crores in Q1, representing an 8% year-on-year growth. The company continued its expansion strategy, adding 11 new restaurants during the quarter, bringing its total store count to 974 across all brands and regions.

KFC Performance

KFC, the company's flagship brand, delivered flat same-store sales growth (SSSG) but achieved positive transaction growth. The introduction of the 'Epic Savers' campaign, offering 9 items for Rs 299.00, contributed to this increase in customer transactions. However, the brand's restaurant EBITDA margin declined to 15.7%, primarily due to investments in value offers and promotions.

Pizza Hut Challenges

Pizza Hut faced headwinds with a 5% decline in revenue and negative 8% SSSG. However, the brand showed promising results in Tamil Nadu, where it implemented a targeted mass media advertising strategy. This approach led to positive single-digit SSSG in the state, outperforming other markets significantly.

Sri Lanka Operations

The company's Sri Lanka business continued to show robust performance with a 12% SSSG and 15% system growth. However, margins were impacted by recent minimum wage increases in the country. To mitigate this, Sapphire Foods has implemented a 3-5% price increase in Sri Lanka starting Q2.

Margin Pressure and Future Outlook

Consolidated restaurant EBITDA declined by 13% year-on-year, with margins contracting by 290 basis points to 12.2%. This decline was primarily attributed to investments in value campaigns, increased delivery mix, and operational deleverage due to flat SSSG in key markets.

Sanjay Purohit, Whole-time Director & Group CEO of Sapphire Foods, commented on the results: "We are encouraged by the positive transaction growth in KFC and the success of our targeted advertising strategy for Pizza Hut in Tamil Nadu. While margins have been impacted by our investments in value campaigns, we believe these initiatives will drive long-term growth and improve SSSG performance."

Financial Highlights

The company remains focused on its strategy of driving transaction growth through value offerings and expects this approach to translate into improved SSSG performance in the coming quarters. Sapphire Foods continues to invest in brand building and operational excellence across its portfolio to navigate the challenging market conditions and position itself for long-term growth.