| Ticker | BARBEQUE |
| Company Name | Barbeque-Nation Hospitality Limited |
| Shariah Compliance | Compliant |
| DP Ratio | 2.18% |
Report Published as on 31st May 2024
We have conducted an extensive examination of Barbeque-Nation Hospitality Limited from a Shariah compliance standpoint, scrutinizing its revenue sources to ascertain adherence to Shariah principles.
Barbeque-Nation Hospitality Limited specializes in operating a casual dining restaurant chain in India, pioneering the innovative concept of “over the table barbeque,” where guests can grill their own barbeque dishes right at their dining tables. With approximately 200 outlets across India, along with establishments in the UAE, Malaysia, and Oman, the company has established a significant presence in the dining industry.
The dining experience at Barbeque Nation restaurants revolves around offering customers a unique culinary experience. Guests are provided with a selection of both vegetarian and non-vegetarian largely pre-cooked appetizers, which they can season and grill on an embedded table grill. Additionally, patrons can indulge in an all-you-can-eat main course buffet and enjoy a variety of desserts, adding to the overall dining experience.
Barbeque-Nation Hospitality Limited derives its revenue mainly from its operating segments, including restaurant operations, food and beverage sales, and related services. The company’s revenue streams are closely examined to ensure compliance with Shariah principles, considering factors such as the nature of the products and services offered, the source of ingredients, and the overall business operations.
By analyzing the revenue generated from its operating segments, we aim to determine the Shariah compliance of Barbeque-Nation Hospitality Limited, ensuring that its business practices align with ethical and permissible standards outlined by Shariah principles.
Operating Revenue:
All figures in Millions of INR for the Year ended 31st March 2023
| Segments | Revenue | Non-Permissible Revenue | % of Non-Permissible Revenue | Non-Permissible Segment Classification | Comments |
| Sale of food & beverages | 12,312.94 | 213.87 | 1.74% | Alcohol | Revenue from alcoholic beverages |
| Other operating revenues | 24.61 | – | – | – | – |
| Total | 12,337.55 | 213.87 | 1.74% | – | – |
Tricky Areas From s Shariah Perspective
Upon scrutinizing the revenue streams of Barbeque-Nation Hospitality Limited from a Shariah perspective, several potential areas of concern have been identified:
- Sales of Alcohol: Revenue derived from the sale of alcoholic beverages constitutes a potential Shariah non-compliant source of income. Although the company does offer alcoholic beverages in some of its outlets, a detailed breakdown of revenue from alcohol sales is not provided in its financial reports. However, given that Barbeque Nation primarily focuses on offering barbeque food buffets and the sale of alcohol may not be a significant revenue driver, it is assumed that revenue from alcohol sales is relatively minor. To err on the side of caution, a conservative estimate of 10% of revenue from outlets serving alcohol has been considered as non-permissible income. Further clarification on this matter has been sought from the company’s Investor Relations department.
- Sales of Pork: The sale of pork-based items represents another area of potential concern from a Shariah perspective. However, upon examination of the restaurant menu, it has been confirmed that Barbeque Nation does not offer any pork-based products, thereby eliminating the possibility of revenue from such sales.
- Entertainment: Revenue generated from entertainment activities, such as live music, DJ performances, or karaoke events, could potentially pose Shariah compliance issues. While specific revenue figures related to entertainment activities are not provided, it is observed that such activities may have minimal financial impact on the company’s overall revenue.
In summary, while Barbeque-Nation Hospitality Limited operates in an industry where certain activities may raise Shariah compliance concerns, a thorough assessment suggests that the company’s primary revenue sources are Shariah compliant. However, further clarification may be required regarding revenue from alcohol sales and entertainment activities to ensure complete adherence to Shariah principles.
Non-operating revenue:
All figures in Millions of INR for the Year ended 31st March 2023
| Segments | Revenue | Non-Permissible Revenue | % of non-permissible Revenue | Non-Permissible Segment Classification | Comments |
| Interest income | 56.56 | 56.56 | 100% | Interest income | – |
| Foreign exchange gain | 13.68 | – | – | – | – |
| Profit on Sale of Asset | 0.05 | – | – | – | – |
| Total | 70.29 | 56.56 | 80.47% | – | – |
It is clear from the table above that the non-operating income of the company includes interest income, which is Shariah not compliant. This amount is included for the calculation of the Sector Compliance and Dividend Purification.
Sector Compliance Calculation:
| Total revenue | 12,407.84 |
| Non-permissible operating revenue | 213.87 |
| Interest income | 56.56 |
| % of non-permissible revenue | 2.18% |
| Sector compliance | PASS |
Dividend Purification Calculation:
| Revenue Description | Non-Permissible Revenue |
| Non-permissible operating revenue | 213.5 |
| Non-permissible non-operating revenue | 56.56 |
| Total non-permissible revenue | 270.43 |
| Total revenue of the company | 12407.84 |
| Dividend Purification Ratio | 2.18% |
Financial Ratio Screen:
| Particulars | Amount | Remarks |
| 3 Years average Market | 35870.66 | – |
| Total Debt | 7112.78 | – |
| Debt Ratio | 19.83% | – |
Source: All the above information is based on the website of the company and the latest Annual Report for the period ended 30th September 2023.
https://www.barbequenation.com/sites/default/files/2023-09/BNHL%20Annual%20Report-FY23.pdf
Conclusion
Given the above information, we at Ratings Intelligence believe that Barbeque-Nation Hospitality Limited is Shariah Compliant company as per the Shariah screening criteria.
