Hyderabad: From spending his first days in Hyderabad without a proper place to stay to building one of the city’s most recognisable tea brands, A. Babu Rao, the founder of Café Niloufer, has built an extraordinary entrepreneurial journey around a simple cup of Irani chai.
According to the account published by Moneycontrol, Rao arrived in Hyderabad from Adilabad in 1975 in search of work. He initially found employment at a textile shop but spent his first few weeks sleeping on footpaths and using the waiting room at Nampally railway station to bathe.
Nearly five decades later, the brand he built has grown from a modest café into a large food and beverage business with multiple outlets across Hyderabad, a bakery and packaged products.
From Textile Shop to Café
Rao’s first job in Hyderabad was at a textile store. After working there for a few months, he moved into the restaurant business, where he began learning the fundamentals of running a food establishment.
His entry into Café Niloufer came through a customer who believed Rao would be suited to work at the newly opened establishment. He initially joined as a waiter, taking on a variety of responsibilities that went beyond serving customers.
According to the company’s own account, Rao progressed from cleaner to waiter, tea master and supervisor through years of hard work. Café Niloufer’s official history identifies 1978 as the year Rao established the business. The company’s profile also states that he formally acquired the café in 1993.
Irani Chai Became the Foundation
The business was built around a relatively simple combination — Irani chai and Osmania biscuits. Over the years, the consistency of its tea and the traditional Hyderabadi café experience helped Café Niloufer develop a strong following.
The company says its original Lakdikapul outlet eventually recorded daily footfalls exceeding 20,000 customers, helping establish the foundation for its expansion across Hyderabad.
The menu has since expanded considerably. Café Niloufer now offers bakery products, cakes, breads, snacks and other food items, while also selling packaged tea products.
From a Small Café to a Growing Brand
The growth of Café Niloufer has accelerated significantly in recent years. The company has expanded beyond its traditional café format and opened outlets in several prominent parts of Hyderabad.
Its expansion has also been accompanied by a push towards larger, experience-driven outlets designed to serve the city’s growing young and corporate population.
One of the biggest examples is its HITEC City outlet at Raidurgam, which opened in March 2025. The company describes the outlet as its ninth and largest location, spanning approximately 40,000 square feet across three floors and accommodating more than 700 customers.
The outlet features a large two-tonne installation called the “Kettle of Love”, along with dedicated gathering spaces and outdoor dining. Its menu combines Café Niloufer staples such as tea, bun maska and Osmania biscuits with newer offerings including millet-based dishes, rice combinations and desserts.
Building a Modern Café Business
The HITEC City expansion represents a shift in the way the traditional Niloufer brand is being positioned. Rather than functioning only as a quick tea stop, the newer outlets are designed as larger destinations for families, young professionals and corporate gatherings.
Architectural Digest India reported that the 40,000-square-foot HITEC City café was designed by Chromed Design Studio and The Mélange Studio, combining the brand’s traditional identity with a contemporary interior.
The company’s official website currently highlights outlets across Hyderabad and describes the HITEC City location as its flagship expansion.
Financial Growth and Expansion
Moneycontrol’s report, citing third-party financial data, said ABR Café and Bakers Pvt Ltd, the company behind Café Niloufer, recorded significant revenue growth in recent years.
The report cited data from Tracxn showing revenue rising to around ₹206 crore in FY2025, compared with ₹24.76 crore in FY2021. That represents more than an eight-fold increase over the four-year period.
The same report also pointed to rising capital expenditure and operating costs as the company expanded its outlet network. It said profitability had not increased at the same pace as revenue, with the reported net margin declining from around 7% in FY2021 to approximately 3.8% in FY2025.
These financial figures are based on third-party data cited by Moneycontrol and should not be treated as independently verified audited figures unless confirmed through the company’s financial filings.
Fundraising Could Mark the Next Phase
The business is reportedly exploring external fundraising as it looks to support its next stage of expansion. Moneycontrol reported that ABR Café and Bakers is working with advisers including PwC and Rainmaker Group in connection with a potential fundraising exercise.
Media reports have placed a possible valuation of the company in the range of approximately ₹1,500 crore to ₹1,899 crore. However, this should be viewed as a reported potential valuation rather than a confirmed transaction value, as no completed investment transaction at those figures has been publicly established in the sources reviewed for this article.
Keeping the Original Identity Alive
Despite the rapid expansion, the company continues to position Irani chai as the heart of the Café Niloufer brand. The official company history traces the business back to Rao’s 1978 venture and describes its growth as an effort to preserve the traditional taste while adopting modern production and service systems.
The brand has also expanded into packaged tea, allowing customers to purchase products associated with its signature chai outside its physical outlets.
A Hyderabad Success Story
A. Babu Rao’s story stands out because of the distance between his beginnings and the scale of the business today. He arrived in Hyderabad looking for employment, spent his early days without a permanent place to stay and entered the café business as a worker.
Years of experience eventually gave him the opportunity to take control of Café Niloufer and build it into a recognisable Hyderabad institution. Today, the business combines its traditional Irani café identity with large modern outlets, packaged products and an expanding food and beverage operation.
With the HITEC City flagship demonstrating the scale of its current ambitions and reported fundraising plans potentially opening another chapter, Café Niloufer’s journey reflects how a neighbourhood tea business can evolve into a major modern food and beverage brand while retaining its connection with Hyderabad’s distinctive café culture.
