Ravi Jaipuria notes that the proposed merger is far more than combining two businesses and is about creating one of the largest F&B platforms in India
Emphasising that India’s food and beverage (F&Bb) market is large and getting formalised, Ravi Jaipuria, the Non-executive Chairman of Devyani International or DIL has stated that the merged entity of DIL and Sappire Foods India is likely to cross USD 1 billion in annual revenues.
Addressing analysts in a conference call, Jaipuria noted that the proposed merger is far more than combining two businesses and is about creating one of the largest F&B platforms in India. The merged entity will have over 3,000 stores and a turnover of around Rs 8,000 crore, on an annualised basis, he noted.
“India’s food and beverage market is large, getting formalised and expanding rapidly, with independent estimates placing the broader food services market at more than USD 100 billion and quick service restaurant (QSR) alone at more than USD 25 billion,” he pointed out.
The process of obtaining the approvals is expected to take approximately 12 to 15 months, following which the merger will become effective. The full integration of the two entities, along with the realisation of the identified synergy benefits, is expected to be completed within 15 to 18 months from the effective date of the merger.
“Pursuant to the scheme, with effect from the appointed Date (defined in the scheme as opening hours of 1 April 2026), the transferor company (Sapphire Foods India) shall stand amalgamated with and absorbed into the transferee company (Devyani International),” the companies noted in the exchange filing.
Upon the scheme becoming effective and in consideration of the amalgamation, Devyani International (DIL) will issue and allot 177 fully paid up equity shares of Rs 1 each for every 100 fully paid up equity shares of Rs 2 each held by shareholders of Sapphire Foods India. The Board of Directors of the company has also approved the execution, delivery and performance of a Merger Framework Agreement (MFA).
“The merger enhances long-term growth visibility and is expected to unlock significant synergies through improved operating leverage, more efficient capital allocation, greater scale benefits, and stronger execution across brands and geographies,” Motilal Oswal said in a report.
Although the one-time fee payable to Yum! Brands amounts to Rs 4.1 billion, the merger is expected to generate recurring annual synergies of around Rs 2.2 billion, the report noted. As per the company, around 60 per cent of these synergies are likely to be realised in the first year after the merger and the full run-rate is expected from the second year. Although the upfront payment may appear near-term negative, Motilal Oswal sees the transaction as structurally positive given the quantum of recurring synergies and the creation of a single pan-India QSR platform.
