Sapphire Foods India Limited , a major player in the quick-service restaurant industry, has received a show cause notice from the Delhi Sales Tax authorities regarding alleged discrepancies in its GST returns for the fiscal year 2021-22.

Details of the Notice

The notice, issued under Section 73 of the Central Goods and Services Tax Act, 2017, amounts to INR 51.00 million. This sum includes:

• Interest of INR 19.53 million
• Penalty of INR 2.88 million

The authorities have highlighted differences observed in the company's filed returns, prompting this action.

Company's Response

Sapphire Foods has stated that the claim is not maintainable and expects no material impact on its financial, operational, or other activities. The company is currently evaluating the notice and plans to respond appropriately.

Official Disclosure

In compliance with regulatory requirements, Sapphire Foods has made an official disclosure to the stock exchanges. The company secretary, Sachin Dudam, signed the disclosure document, providing details as mandated under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Investor Relations

Sapphire Foods continues to maintain transparency with its investors. The company recently held an earnings call to discuss its financial results. The audio recording of this call has been made available on the company's website for investors' reference.

Market Impact

While the company asserts that the notice will not have a material impact, investors and market analysts will likely monitor the situation closely. The outcome of Sapphire Foods' response to the tax authorities and any potential financial implications will be of interest to stakeholders.

Sapphire Foods India Limited, known for operating KFC and Pizza Hut outlets in India, continues to navigate regulatory challenges while maintaining its focus on business operations and investor relations.

Sapphire Foods India Limited , a leading YUM franchisee operator in the Indian subcontinent, has received a show cause notice from the Sales Tax Officer in Delhi regarding alleged discrepancies in its GST returns for the financial year 2021-22. The notice, amounting to INR 51.00 million, includes interest of INR 19.53 million and a penalty of INR 2.88 million.

Details of the Notice

The authorities issued the notice under Section 73 of the Central Goods and Services Tax Act, 2017, highlighting differences observed in the company's filed returns. The show cause notice (SCN) was received by Sapphire Foods on July 23, 2023, as per the company's disclosure to the stock exchanges.

Company's Response

Sapphire Foods has stated that the claim made by the authority is not maintainable. The company expects no material impact on its financial, operational, or other activities due to the issuance of this notice. In its filing, Sapphire Foods mentioned that it is in the process of evaluating the notice and will respond appropriately.

About Sapphire Foods

Sapphire Foods India Limited is a significant player in the Quick Service Restaurant (QSR) sector, operating 510 KFC and 336 Pizza Hut restaurants in India, along with 118 Pizza Hut and 10 Taco Bell restaurants in Sri Lanka as of June 30, 2023. The company has been expanding its presence, with recent additions including 8 KFC restaurants, 2 Pizza Hut outlets in India, and 1 Pizza Hut restaurant in Sri Lanka during the first quarter of FY2024.

Recent Financial Performance

In its Q1 FY2024 results, Sapphire Foods reported:

The company's KFC business in India saw flat same-store sales growth, while Pizza Hut experienced a decline of 8% in same-store sales. However, the Sri Lanka business continued to show strong double-digit same-store sales growth of 12% in local currency terms.

As Sapphire Foods navigates this regulatory challenge, investors and industry observers will be watching closely to see how it may impact the company's operations and financial performance in the coming quarters.