Coffee Roasters Private Limited (A)

“We believe in building long term relationships with farms that grow the coffee beans that we love to
roast. After tasting a range of coffees from each farm, we carefully select our favorites.” This is the
basic principle on which our company “Coffee Roasters Pvt Ltd” works, says Ms. Radha, one
of the co-founders of the company.

The company sets up cafés and also sells premium coffee online. In turn, it enables coffee
growers to get premium rates for the coffee they grow.

The company which started with 2 cafés, has grown to 16 cafés across 4 cities within 4 years.
“We are now the largest roastery in India, exclusively focused on Arabica coffee beans. No roastery in
India procures Arabica Coffee beans at the scale we do” commented Ms. Radha.

The company is now looking for debt funding to meet their working capital requirements.
The company is planning to expand its business by launching more cafés in different
geographies which puts added pressure on its working capital requirement.

Coffee Industry in India

Coffee is one of the most popular hot beverages in India alongside tea. India grows at least 13
unique varieties of coffee. Coffee beans are primarily grown in the hills of the southern region
of the country, of which Karnataka accounts for the highest production. Nearly 60 percent of
the total production comes from Karnataka, while Tamil Nadu contributes approximately 10
percent, and Kerala makes up around 20 percent. The industry is driven by ~3 lakh coffee
growers, out of which 99% are small growers, while 1% are medium to large growers1. These
plantations employ an average of around ~6lakh people on a daily basis. The labour cost
constitutes one of the major input costs for coffee growers.

The total spends by consumers on coffee in India in the form of ground coffee, whole beans
and Instant coffee amounted to US$ 377 Mn in 2018. The market is expected to grow annually
by 5.9% (CAGR 2018-2021). Out of these forms of coffee, the largest contribution is that of
roasted coffee, i.e. ground coffee and whole beans. India’s per capita coffee consumption
stands at 110 gm. In the United States, per capita consumption is at 4kg and in Finland, it is
over 9 kg.

Coffee Varieties Grown In India

India produces two varieties of coffee beans, Arabica and Robusta.

Arabica coffee is harvested between November to January and is typically grown on higher
altitudes ranging from 600 to 2000 meters in cool, moisture-rich and subtropical weather
conditions. They require nutrient-rich soil to be able to conform to the highest international
coffee standards. Robusta coffees (or Robusta) have twice the level of caffeine compared to
Arabica. This variety can be grown at lower altitudes and is harvested from December to
February. Although the Arabica variety is preferred in international markets, high-quality
Robusta is also highly sought after in espressos due to their strong taste and the creamy flavor

1
https://www.indiacoffee.org/coffee-statistics.html

Strictly Private and Confidential – Redistribution strictly prohibited

that they help generate. The green coffee beans of Robusta are about half the price of Arabica
green beans in the commodity market.

International Market Scenario

India produces ~3.9% of the world's coffee. It is ranked the third largest producer of coffee in
Asia (7th largest in the world) after Vietnam and Indonesia, while Brazil dominates
production and exports globally.

Rigid control of quality and grade designations in India is controlled by India Coffee Board,
an agency of the Government of India that ensures export of only the finest and the most
aromatic of India’s hand-picked coffee beans. ~70% of Indian coffee is exported to over 45
countries. The top 5 export markets for Indian coffee are Italy, Germany, Belgium, Russian
Federation and Turkey.

The industry’s demand for premium coffee is mainly driven by a number of factors which
include disposable income, per capita coffee consumption, attitudes towards health, world
pricing of coffee and demographics. The industry is highly sensitive to the macroeconomic
factors such as recession and inflation that affect growth in household disposable. Another
crucial factor for analyzing the demand in the industry is the per capita coffee consumption
where the increase in coffee consumption increases the revenue of coffee cafés.

Café Industry in India2

India is primarily a tea-drinking nation and consumers generally have low consumption of
coffee (with an exception of the Southern part of the country), both in terms of frequency and
quantity with per capita consumption of about 110 g per year vis-à-vis developed countries
with consumption of about 8 kg per year. In spite of the popularity of tea, tea cafés in India
are not as popular as their coffee counterparts.3 However the tide seems to be turning with
many tea café chains established in the past 5 years. Some players in the organized tea cafés
in the market are Chaayos, Chai Point and Wagh Bakri Tea Lounges.

The size of the organized café market is estimated to be ~₹115 billion in 2018 and is projected
to grow to ₹151 billion by 2020 at a CAGR of 20%.

2
https://www.statista.com/outlook/30010000/119/coffee/india
3
https://www.sebi.gov.in/sebi_data/attachdocs/1435720745997.pdf

Strictly Private and Confidential – Redistribution strictly prohibited

Coffee Roasters Pvt Ltd – History
Coffee Roasters Pvt Ltd was launched in 2014 with the purpose of creating an exceptional
experience for coffee lovers using “perfect” coffee blends. The business started with a
single brewing machine in the promoters’ bedroom and today it has grown as a
premium branded coffee café chain. “People often say – Do what you love and you will never
have to work” and this is what has been the driving passion of Ms. Radha. Unlike the fancy
degrees and qualifications, this business was built on passion and a drive to provide the high-
quality coffee for all the coffee lovers in the country.
The co-founder, Ms. Radha used to roast her own coffee for a long time, using small-scale
equipment at her house. Later, she and her sister (another promoter director) started doing
this part-time from a 500 gm coffee roaster and sold this to friends & family. Slowly, the word
of mouth spread and they saw an opportunity for high-quality Arabica coffee demand. In
2013, the promoters left their jobs and started roasting coffee professionally (Refer to Exhibit
3 for the coffee roasting process). They bought high-quality roasters and hired Q Graders
(certified coffee quality professionals) who focused on finding the right mix to blend and roast
coffee beans of different origins, varieties, densities, and more.

As on Sep ’18, the company has been successful in getting equity funding totaling to ₹207 Mn.
Exhibit 1 provides the detailed financials of the company. The funds helped them build the
coffee chain and also expand operations to other cities (Refer to Exhibit 2 for the company’s
business performance and individual performance of top 10 cafés)

“Over the last few years we had to deal with multiple factors like sourcing sustainable coffee, financing,
marketing and negotiating real estate and the equity funding is a testament of doing each of the above
successfully” commented Ms. Radha.

Strictly Private and Confidential – Redistribution strictly prohibited

Coffee Roasters – Business Model
The company sources, roasts, brews and sells Indian Arabica Coffee. The company also
operates a chain of cafés under the brand name of “Love Thy Coffee”. The company procures
coffee beans from 10+ coffee estates/farms typically with large farm sizes of 200-1000 acres
land. Large coffee estates have been able to maintain quality consistently with proper care
taken at the time of harvesting as well as at the time of plucking of the coffee beans. They also
provide sorting and grading options of the beans according to the requirement of the
company.

“We don’t engage into long term contracts with any of the estates but given that we are consistently
buying from the estates and usually pay a premium price, we are able to establish a relationship directly
with the farmers” said Ms. Radha when asked about an arrangement with farmers. This
arrangement is in contrary to the generally accepted industry norms, i.e. contract farming.

“We also run the risk of losing out some of the supply from some estates if our competitor has already
approached them, and we are very much cognizant of it”, says the procurement head. In an Agri based
business, the relationship with farmers is one of the critical factors and thus the procurement
team is always on its toes with regards to supply of coffee beans to its roasteries which are in
Mumbai and Delhi.

“While the price of green coffee beans for Arabica coffee hovered around ₹200-225 per kg in the local
market in the year 2018, our company has paid an additional premium of ₹ 120-200 per kg with an
average price of ~₹350 per kg for the quality beans we procured from the estates” said the
procurement head. Every year, the company gets sample beans from all of its coffee estates.
After considerable evaluation, the highest quality beans are chosen and purchased from the
respective farmers at 40-60% premium (based on quality)

Though the company has been doing very well on the sales front, financing the purchase of
coffee beans remains the most important aspect of the business. Every year, the company
spends half the previous year’s revenue in buying beans. And this has to be done in lump
sum, which eats up a massive portion of the company’s working capital.

Strictly Private and Confidential – Redistribution strictly prohibited

Revenue Streams
The company has two revenue streams, Revenues from Cafés and Revenues from Roasteries

Revenue from Cafés:

The company currently operates about 16 cafés across 4 cities- Delhi, Mumbai, Gurugram and
Hyderabad. The sales from cafés contribute ~58% of the total revenues for the company (up-
to Sep ’18) and yields gross margins of ~60%. Following is the city-wise revenue from cafés:

“Choosing a location is a strategic decision for us and it is done very scientifically. We analyze multiple
factors like presence of malls in the city, proximity to commercial buildings, the presence of food streets,
etc.” responded, Mr. Gupta, the business development head on a query when asked about
where the company plans to expand going forward.

Type & Size of Cafés:

The company has 3 types of cafés:

 Without Kitchen: These are typically less than 300 Sqft kiosks where only coffee and
some bakery items like pastries, croissants are available. The food items are sourced
from other vendors.
 Cafés with small kitchen backed by a centralized kitchen: 3-4 cafés of 300-1000 Sqft
area which are located in radius of 10-15 km from a centralized kitchen. Here the food
menu has more varieties including salads, sandwiches, wraps, fruit juice etc.
 Large café with in-house kitchen: These are typically 1000+ Sqft cafés with in-house
kitchen and large seating area typically with both indoor and outdoor seating capacity.
The food menu remains the same as the cafés with centralized kitchen.

“Once we identify a location to set up a café outlet, we usually take an average between 45 days to two
months to set up and commence operations at such café outlet, depending on the size of the outlet and
accessibility of the location. We have developed a standardized approach with respect to design,

Strictly Private and Confidential – Redistribution strictly prohibited

ambience, and outlay of our cafés which also ensures consistency in their look and feel”, said Ms.
Radha.

“Achieving break-even, which is typically 6 months and payback is about 18 months. Achieving it at
the earliest possible time at a unit level remains one of the top priorities. So our focus is mostly on the
300-1000 Sqft café size and majority of our current cafés are also in this segment. The real estate price
is also one of the deciding factors in opening cafés of particular size”

Revenue from Roasteries

“The company sells roasted coffee beans (contributing ~40% of revenue) and machinery to B2B clients
and B2C clients. Additionally, we also provide an option to lease equipment (roasting equipment,
vending machines, graders, etc) to the B2B clients. The revenues from sale and lease of equipment is
~3% of the total revenues of the company. Excluding the corporate costs, the gross margins and
EBITDA margins from roasteries are at 53% and 26% up to H1 FY 18” commented Mr. Gupta,
responding to one of the queries on diversification of revenue streams.

B2B Clients: As on date, the company has 70+ B2B clients (including the company’s own
cafés) contributing 25% of the total sales as on Sep ’18 and typically yield 45% gross margins
on the sale amount. B2B clients can be further bifurcated into:
 Corporate Clients: Typically the major software and e-commerce companies
 Restaurants & Cafés: Delhi and Mumbai based cafés / restaurants.
 Hotels: Typical clientele is Luxury Boutique hotels.

B2C Clients: B2C clients contribute 17% of the total sales as on Sep ‘18 and yield gross margins
of ~60-65%. The company sells roasted coffee beans with various grinding options through 3
channels:

 Own Online Portal: Customers can buy their own customized coffee from the options
available on their own website platform.
 Through e-commerce platforms like Amazon and Flipkart
 Shop-in at their own café: Coffee beans sold in their own cafés along with accessories.

“The coffee beans are roasted and packed with a strong three layer pouch. This packaging helps
to retain freshness and aroma for up to six months. Our premium packaging also appeals to
the customers” said Vishal, the brand manager of the company, further explained, on how
every aspect of their product is carefully thought about.

Strictly Private and Confidential – Redistribution strictly prohibited

Marketing the Product and Creating a Brand
“Considering the capital and resource constraint we are in right now, we currently stick to Digital
marketing channels like Google and Facebook. These digital marketing channels also have a wide appeal
to a large audience” speaking about the marketing activities taken in the company. Commenting
further on the promotional activities, Vishal said “We need to look at creating strong brand loyalty
and bring in repeat customers and we consider some promotion methods like organizing events,
distributing free samples on certain occasions. Direct marketing is one aspect the company would
definitely look at going forward and a plan for the same has to be carefully thought about. We will have
to work on advertisements and further positioning the product as a premium product”.

Also considering that the business is seasonal in nature where the months of November to
February have 10-20% higher monthly sales due to winter, festive and holiday season the
marketing effort is more focused in that time. Sales tend to reduce by 5-15% in the months of
March-July due to summer.

Competition
“Over the past 20 years, the café culture in India has grown, with many new cafés being added along
with the entry of some international players. The concentration of these new entrants has been primarily
in the metropolitan cities due to the cosmopolitan culture of these cities and the ease of back-end
integration. It is a highly competitive market and some of the well-known names are Starbucks, Café
Coffee Day, Barista, Gloria Jeans and many more” said the co-founder of the company. Currently,
there are approximately 100+ café and bakery chain brands with an estimated 4,000+ outlets
spread across various cities in India.

A) Price comparison
Following chart shows the prices of different coffee types and food products in the different
café chains of the competitors of “Coffee Roasters”:

Price Comparison across different brands

(Delhi)
300
250 230
210
200 160 150
150
100
50
0
Cappuccino Espresso Hot Chocolate Veg Sandwich

Starbucks Coffee Café Coffee Day Barista Costa Cofffee Coffee Roasters

B) Comparison of Operational Performance

Strictly Private and Confidential – Redistribution strictly prohibited

 Café
Starbucks Costa Coffee
Coffee Barista
Coffee Coffee Roasters
Day
Average store size (sq
1850 900 900 1350 674
ft)4
Average Sales Per
Day(ASPD) for 76,958 15,379 21,548 27,705 24,510
H1FY19* in ₹

Average Sales per Day per square foot (ASPD

SQFT)
45
40
35
30
25
20
15
10
5
0
Starbucks Café Coffee Day Barista Costa Cofffee Coffee Roasters
Coffee

Comparison of Financial Performance

Coffee Roasters Pvt Ltd Tata Starbucks

4
Draft Red Herring Prospectus of Coffee Day Enterprise, December 2014.
The Average Sales Per Day is calculated in present day value account for retail inflation which is 3.6% in FY 18,
4.5% in FY 17, 4.9% in FY 16 and 5.8% in FY 15.

Strictly Private and Confidential – Redistribution strictly prohibited

 Particulars Unit Sep‘18 2018 2017 2018 2017 2016 2015
Revenue ₹ Mn 97.5 114.5 49.5 3,456 2,722 2,388 1,712
Sales growth % 68.30% 131.30% 143.80% 28% 14% 40% -
GP margin % 62% 57% 57% 68% 70% 70% 68%
EBITDA ₹ Mn -5.34 -4.7 -0.84 13 -59 -152 -288
EBITDA margin % -5.50% -4% -1.7 0.40% -2% -6% -17%
Net-worth ₹ Mn 176.5 162 29.2 1,823 1,929 2,023 1,865
Current Ratio Times 4.45 6.18 1.94 4.2 1.4 1.57 1.2
Tata Starbucks is an equal joint
Sources, roasts, sells and brews 100%
venture between US-based
Business Arabica Indian coffee beans directly to
Starbucks Coffee Company of US
Description clients/consumers as well as have
and Tata Global Beverages Ltd. It
own cafés
started its operation in India 2012.
Beverages- Coffee, Juice Beverages - Coffee, Juice, Tea
Menu Food - Sandwiches, wraps, pastries Food - Sandwiches, wraps, fruits,
(Outsourced) cookies, deserts
Institutional Venture Capital Ltd, Dragon Tata Global beverages, Emerald City
Investors Investments Pte CV
No of cafés
16 128
(October ‘18)

In 2016 -17, Starbucks had to shut a couple of loss-making stores and had 84 stores operational
in the country. Tata Starbucks turned EBITDA positive for the first time in FY18 after 6 years
of operations due to the focus on profitability and halt on aggressive expansion.

Both Starbucks and Coffee Roasters use high-quality Arabica Coffee beans and appeal to
coffee connoisseurs. However, Starbucks has slightly premium prices, wider menu options,
premium interiors and stronger brand loyalty as compared to Coffee Roasters which lead to
high revenues per square feet.

In FY 2016-17, Café Coffee Day shut around 35 to 40 stores in FY 16-17, while adding 100 stores
in the financial year. In FY 2017-18, CCD had shut between 25-30 stores, while added 100 more
stores. Shutting down loss-making stores has helped CCD improve revenue per square feet
and same store growth in revenue metrics. “The business environment under which we operate,
sometimes we need to take hard decisions of shutting down stores otherwise we risk losing the entire
business” said Mr. Gupta

Future Plans
The company is planning to expand rapidly in the existing and new geographies. Its
aggressive expansion plan is dependent on significant equity funding by the company. The
company is targeting to open its new branches in Bengaluru in the current year. As per the
survey conducted by the company, Bengaluru is the fourth biggest market for coffee chains
with Mumbai and Delhi being the biggest. Going forward, revenues from cafés are expected
to be >70% of the total revenue. Following is the café plan of the company for the future:

Strictly Private and Confidential – Redistribution strictly prohibited

 Year FY19 FY20 FY21
No. of Cafés 25 62 100

“We need to raise additional capital from time to time, to meet the aggressive growth targets we’ve set
for ourselves. The need to raise additional capital could also be due to business growth beyond what our
current balance sheet can sustain, additional capital requirements imposed due to changes in the
regulatory regime or new guidelines, or significant depletion in our existing capital base due to high
cash burn “commented Ms. Radha on how the expansion is going to be funded.

Lending Decision by CII

The company currently has 3 lenders on-boarded and the terms are mentioned in Exhibit 4.
However, the company needs further borrowing and has approached CII for a loan of ₹ 50
Mn.
Akshay, the investment Manager at CII is looking at the proposal and is thinking about the
following:

 Highly competitive space yet the potential to achieve a lot.

 The social impact the company is creating by engaging directly with farmers and also
the premium price the company pays the farmers.
 The premium price demanded by the company for its coffee when compared with
competitors
 High cash burn forecasted to support their aggressive business targets
 Impact of unforeseen climatic conditions
 Will the company be able to raise equity for its expansion plan? If no equity is raised,
is the company self-sufficient to run its business and service CII debt obligations at the
same time?

Questions:
 Carry out business and financial analysis for addressing the concerns of Akshay.
 What are the marketing activities the company can carry out to scale their business.
 Indicate the key strengths of the company and the strategy they can adopt to expand
with/without equity funding.

Strictly Private and Confidential – Redistribution strictly prohibited

Exhibit 1: Detailed financials of the company

Coffee Roasters 31-Mar-16 31-Mar-17 31-Mar-18 30-Sep-18

Income Statement (₹) Audited Provisional
Sales from products/ services
Café 1.33 15.37 57.90 54.78
Roastery 18.98 34.14 56.61 41.60
Income from Operations 20.31 49.51 114.50 96.37
Other Income 0.01 1.07 1.61 1.17
Total Income 20.32 50.59 116.11 97.55
COGS - Café 0.61 6.78 21.66 17.27
COGS - Roasteries 9.68 14.32 27.27 19.60
COGS 10.29 21.10 48.93 36.87
Gross Profit 10.02 28.41 65.58 59.50
Employee Expense 4.58 15.60 36.90 34.17
Selling, General & Admin Expenses 5.17 14.47 34.59 31.16
Marketing expense 0.43 0.25 0.38 0.69
Depreciation & Amortization 1.51 4.37 12.84 12.77
Total Expenses 21.98 55.80 133.63 115.66
EBIT (1.66) (5.22) (17.52) (18.11)
Financial Expense 0.19 0.77 0.96 0.37
PBT (1.85) (5.99) (18.48) (18.48)
Current Tax - - - -
Deferred Tax Liability/ (Asset) (0.03) 0.04 (1.30) -
PAT (1.82) (6.03) (17.18) (18.48)

Balance Sheet (₹) 31-Mar-16 31-Mar-17 31-Mar-18 30-Sep-18

Paid Up capital 0.12 0.14 0.14 0.14
Securities Premium Reserve 36.74 36.72 186.71 206.94
Retained Earnings (1.66) (7.68) (24.87) (43.35)
Net-worth 35.20 29.18 161.99 163.74
Loan From Directors/Related 3.07 2.77 - -
Parties
Adjusted Net-worth 38.27 31.95 161.99 163.74
Long-term Debt 0.67 1.41 0.80 0.06
Short Term Borrowings 1.50 3.12 8.01 3.68
Current Maturities of Long Term 0.29 4.09 0.59 -
Debt
Total Debt 5.52 11.39 9.41 3.74
Deferred Tax Liability - - - -
Other Non-current liabilities - - - 0.89
Total Long term Liabilities 3.73 4.18 0.80 0.95
Trade Payables 2.00 3.64 5.95 4.42
Statutory Dues 0.56 0.63 2.73 -
Advance from Customer 0.03 0.05 0.26 -

Strictly Private and Confidential – Redistribution strictly prohibited

 Other Current Liabilities 1.06 0.86 0.81 11.18
Total Current Liabilities 5.44 12.39 18.36 19.28
Total Liabilities 44.37 45.75 181.15 183.97
Gross Fixed Assets 10.93 23.49 75.00 110.60
Accumulated Depreciation 2.39 5.35 17.73 30.50
Net Fixed Assets 8.54 18.14 57.27 80.10
Intangibles 2.01 2.05 2.15 2.80
Capital Work in Progress 0.11 0.41 0.45 0.92
Long Term Loans and advances 2.96 1.08 6.54 12.93
Other non-current assets 0.06 0.02 1.32 1.32
Non-current Assets 13.68 21.70 67.75 98.08
Current Investments - - 50.00 10.14
Inventories 6.98 13.86 28.70 44.41
Trade Receivables 3.77 6.27 12.20 15.49
Cash & Equivalents 19.04 1.92 12.24 2.09
Other - CA 0.21 0.35 1.86 13.36
Short Term Loans and Advances 0.69 1.65 8.42 0.40
Current Assets 30.69 24.04 113.40 85.89
Gross Assets 44.37 45.75 181.15 183.97

Cash Flow (YTD) 31-Mar-16 31-Mar-17 31-Mar-18 30-Sep-18

PAT (1.82) (6.03) (17.18) (18.48)
Depreciation & Amortization 1.51 4.37 12.84 12.77
Interest expense 0.19 0.77 0.96 0.37
Other income (0.01) (1.07) (1.61) (1.17)
Changes in Working Capital
Changes in debtors (1.88) (2.50) (5.93) (3.30)
Changes in inventory (3.44) (6.88) (14.84) (15.71)
Changes in payables 1.77 1.64 2.31 (1.53)
Changes in other current assets (0.75) (1.10) (8.28) (3.49)
Changes in non-current assets (2.99) 1.91 (6.76) (6.39)
Changes in other liabilities 0.24 0.10 2.31 (2.11)
Change in short term provisions 0.06 (0.20) (0.05) 10.38
Cash Flow From Operations (7.12) (8.97) (36.23) (28.66)
Capex (9.03) (14.31) (52.11) (36.72)
Changes in current investments - - (50.00) 39.86
Other income 0.01 1.07 1.61 1.17
Cash Flow from Investment activities (9.02) (13.24) (100.50) 4.32
Proceeds from issue of equity 36.76 - 150.00 20.23
Proceeds from issue of debt (2.09) 5.86 (1.98) (5.66)
Interest expense (0.19) (0.77) (0.96) (0.37)
Cash flow from Financing Activities 34.48 5.09 147.05 14.19
Net Surplus (deficit) 18.34 (17.12) 10.32 (10.15)

Strictly Private and Confidential – Redistribution strictly prohibited

 Opening cash balance 0.70 19.04 1.92 12.24
Closing cash balance 19.04 1.92 12.24 2.09

Exhibit 2: Company’s business performance and individual performance of cafés

The share of revenue from cafés has consistently increased over the last few years as the
number of cafés increased. This also contributed to higher gross margins, but lower EBITDA
margins on account of higher fixed overheads for the cafés.

2015 2016 2017 2018 Sept’ 18

Café 0% 7% 31% 51% 58%
Roastery 100% 93% 69% 49% 42%
No of cafés 0 1 4 8 16
No of Roasteries 1 1 2 2 2

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 Financial Performance of top 10 Cafés

Vintage Average Monthly Revenue (₹ '000) EBITDA Margin

Café Location (Months
) H1 FY18 H2 FY18 H1 FY19 H1 FY18 H2 FY18 H1 FY19
Delhi - A 32 1,405 2,307 1,822 21.8% 25.1% 19.42%
Mumbai- A 30 649 707 714 8.2% 7.1% 4.0%
Gurgaon-A 26 379 438 447 44.6% 49.7% 47.6%
Delhi - B 20 177 180 211 57.7% 54.1% 52.6%
Hyderabad - A 15 340 1,004 1,184 14.9% 24.2% 24.8%
Mumbai – B 14 63 798 767 -96.8% -7.7% -15.3%
Delhi – C 12 - 719 931 - -25.6% -13.6%
Delhi – D 10 - 448 764 - 14.3% 17.8%
Mumbai- C 6 - - 651 - - -15.7%
Gurgaon-B 6 - - 159 - - -19.0%

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Exhibit 3: Detailed process flow of the roastery business
•Farms are selected by in-house sourcing team who procure from farms with good cultural
practices, plant material, and post harvesting process, all of which reflect in the cup
Farm
quality of the end product.
Seelction

•All samples are scored using a proprietary scoring model and coffee beans samples with
Sample score above a benchmark are shortlisted. Based on sensorial characters, the quantity,
Selection price and premium are decided.
Process

•All coffee beans are packed in jute bags for outer covering with a food grade Grain
pro/Ecotact bag liner to keep the coffee protected by any external issue. This also helps to
Packing keep the moisture intact during transportation and storage.

•Temperature is maintained in 3 chambered air-cooled warehouses, keeping the coffee at

19 - 21 Degree celsius to maintain the moisture level. Green bean coffee bags are placed
Storage on top of pallets and away from the wall to maintain the warehouse green beans quality.

•Prior to roasting, a team of trained staff manually garble the coffee beans to remove any
Sorting
small defects that passes through from the farm leve
(Pre-
Roasting)

•The company uses a specialized software for all roasting, This helps to ensure consistency
from batch to batch and also serves as a production log for sensorial QC checks. This
software helps to create roast profile for each single origin coffee. After roasting, an id is
Roasting generated and is automatically saved on a server and can be used for quality check and
also for future references.

•After roasting, QC is conducted for each batch of coffee. The company has developed
customised quality cupping sheets to score the coffee beans based on certain attributes
Quality
like Aroma/Fragrance, Flavour, Sweetness, Acidity, Body, Development and Aftertaste.
Control

•Random samples of coffee beans are selected and are measured for extraction and
sensorial analysis. Extraction is measured using a refractometer to get the TDS% of the
Brewed
coffee using that particular recipe.
Coffee QC

•Marketing is a simultaneous process. The company uses variety of methods to attract new
customers including pin code level digital marketing through Facebook and Google.
Marketing

•The coffee is customized for the clients according to their requirement based on the roast
level & grinding type and then it is shipped to clients (including their own cafés) location.
Sales The company also sells & leases equipments to both B2B and B2C clients

Exhibit 4: Borrowing details of the company

Strictly Private and Confidential – Redistribution strictly prohibited

 S. No. Name of Type of Sanction Remaining Security O/S as on
the facility Amount (₹ Tenor Cover August’
lender/ Mn) 18 (₹ Mn)
party
1 ANZ Bank Unsecured 1.5 18 months NA 0.9
business
loan
2 Venture Business 3 5 months Receivables 1.8
Capital loan and
Pvt Ltd Inventory
3 HFD Bank CC 9.45 NA FD of 105% 4.5
Total 13.90 7.2

Exhibit 5: Financial Projections

Coffee Roasters Pvt Ltd 31-Mar-19 31-Mar-20 31-Mar-21

Income Statement (₹ Mn) Projections
Sales from products/ services
Café 164.01 709.37 1,375.48
Roastery 102.35 195.22 311.55
Income from Operations 266.35 906.05 1,688.64
Other Income 0.76 26.49 2.24
Total Income 267.11 932.54 1,690.88
COGS - Café 52.86 236.26 504.61
COGS - Roasteries 48.56 84.92 135.52
COGS 101.42 321.69 640.70
Gross Profit 164.93 584.36 1,047.94
Employee Expense 85.39 247.89 409.00
SG&A Expenses 71.67 269.00 416.55
Marketing expense - - -
Depreciation & Amortization 20.35 54.92 80.61
Total Expenses 278.84 893.50 1,546.85
EBIT (11.73) 39.04 144.03
Financial Expense 1.34 2.78 -
Exceptional Expenses(Gains) - - -
PBT (13.07) 36.26 144.03
Current Tax - - 35.72
Deferred Tax Liability/ (Asset) - - -
PAT (13.07) 36.26 108.31

Balance Sheet (₹) 31-Mar-19 31-Mar-20 31-Mar-21

Paid Up capital 0.14 0.14 0.14
Securities Premium Reserve 806.94 806.94 806.94
Retained Earnings (37.93) (1.67) 106.64
Net worth 769.15 805.41 913.72

Strictly Private and Confidential – Redistribution strictly prohibited

 Loan from Directors/Related - - -
Parties
Adjusted Net worth 769.15 805.41 913.72
Long-term Debt 0.03 0.03 0.03
Short Term Borrowings 45.31 - -
Total Debt 45.34 0.03 0.03
Other Non-current liabilities 0.79 2.00 3.10
Total Long term Liabilities 0.82 2.03 3.13
Trade Payables 5.97 10.48 16.79
Other Current Liabilities 6.09 17.08 56.32
Total Current Liabilities 57.37 27.57 73.11
Total Liabilities 827.34 835.01 989.96
Gross Fixed Assets 197.31 395.10 535.77
Accumulated Depreciation 38.08 93.00 173.61
Net Fixed Assets 159.23 302.09 362.16
Intangibles 1.81 1.45 1.16
Capital Work in Progress 0.55 0.44 0.35
Long Term Loans and advances 18.76 48.25 69.93
Other non-current assets 0.02 0.02 0.02
Non-current Assets 180.38 352.25 433.62
Inventories 47.12 52.11 49.97
Trade Receivables 24.07 34.91 34.74
Cash & Equivalents 557.38 374.59 447.30
Other - CA 18.22 20.95 24.09
Short Term Loans and Advances 0.18 0.21 0.24
Current Assets 646.97 482.76 556.34
Gross Assets 827.34 835.01 989.96

Strictly Private and Confidential – Redistribution strictly prohibited