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ANNUAL REPORT 2012-13

from a

Great things

grow firm

foundation.

from a

Great things

grow firm

Financial Highlights & Key Ratios

Shoppers Stop Ltd.
(` in lacs) 2008-09 72 141,298 6,438 134,860 2,555 137,415 90,034 8,588 33,868 132,490 4,924 2,560 6,313 (3,949) 2,486 (6,436) (6,372) 3,487 — 19,822 20,776 — 44,085 25,873 8,467 15.9% 1.2% 31.7% 30.0% 3.5% -2.8% -4.6% 0.98 3 94 4.0 1.5 3.1 0.9 -5.2% -3.0% 66.85 (18.3) (18.3) (0.17) —

Profitability Statement No. of Stores Income Gross Retail Sales Less: Value Added Tax Gross Retail Sales (Net of taxes) Other Operating & Miscellaneous Income Expenditures Cost of goods sold Employee costs Operating and administrative expenses EBIDTA Interest and finance charges Depreciation Profit before exceptional items and Tax Exceptional Items Profit Before Tax Profit After Tax Balance Sheet items Share Capital Optionally Convertible Warrants Reserve & Surplus Loan Funds Deferred Tax (Liability)/Assets Capital Employed Fixed Assets Net Working Capital Profit & Loss Ratios Sales (Chain level growth) Sales (Like to Like growth) Gross Profit Margin Operating Expenses Ratio Operating Margin (EBIDTA) (Before exceptional item) PBT Margin before exceptional item PAT Margin Interest Coverage Balance Sheet Ratios Debtors No. of Days Creditors No. of Days Stock Turnover Ratio Current Ratio Assets Turnover Ratio Debt Equity Ratio Return to Investors Return on Networth Return on Capital Employed Book Value Per Share (in `) EPS (taking equity share up to FY 2009-10 at ` 10/- each and thereafter at ` 5/- each) (In `) Basic Diluted Cash EPS Dividend Per Share

2012-13 104 256,050 12,074 243,976 3,249 247,225 159,065 16,106 58,973 234,144 13,081 1,907 5,075 6,100 74 6,026 3,917 4,149 — 65,233 32,934 (625) 102,941 48,336 21,510 17.0% 7.4% 33.2% 29.3% 5.1% 2.4% 1.5% 3.90 3 90 2.6 1.5 2.7 0.5 11.8% 8.2% 83.81 4.7 4.7 10.86 0.75

2011-12 91 218,919 10,505 208,414 2,799 211,213 136,775 12,764 47,369 196,908 14,305 752 3,772 9,781 — 9,781 6,426 4,128 — 61,722 25,907 (23) 91,780 44,659 18,700 19.0% 6.5% 32.7% 27.5% 6.5% 4.5% 2.9% 5.23 3 86 2.7 1.5 2.7 0.4 16.8% 12.7% 79.89 7.8 7.8 12.37 0.75

2010-11 97 187,344 8,960 178,384 2,412 180,796 116,554 9,898 39,132 165,584 15,211 734 3,100 11,377 (5) 11,383 7,518 4,108 — 55,702 14,549 325 74,359 34,561 15,754 23.0% 16.7% 33.0% 26.2% 8.1% 6.1% 4.0% 8.85 3 86 3.7 1.4 3.0 0.2 26.7% 19.3% 75.71 9.5 9.4 13.44 0.75

2009-10 93 159,845 6,857 152,988 2,435 155,423 102,376 8,759 32,938 144,073 11,351 1,869 3,103 6,379 (188) 6,567 5,023 3,491 3,072 24,326 19,935 455 50,824 29,867 8,534 10.0% 3.7% 31.7% 26.1% 7.1% 4.0% 3.1% 4.72 3 93 3.5 1.3 3.4 0.6 30.4% 17.4% 88.58 14.4 14.3 23.30 1.50

Note: Number of stores includes the Shoppers Stop Department stores and Speciality Stores (viz Home Stop, Mothercare, Crossword Bookstores, Arcelia, Mac, Clinique, Estee Lauder & Airport Business). Note: Figures have been regrouped for Presentation purpose.
Annual Report 2012-13 | 29

Directors' Report
Dear Members,

Shoppers Stop Ltd.

Your Directors present herewith 16th Annual Report on the business and operations of the Company together with the Audited Statements of Accounts for the year ended March 31, 2013. Financial Performance ( in lacs) Year ended Particulars Retail Turnover Own merchandise (including concession sales) Consignment merchandise Other Retail operating income Less: Value Added Tax Less: Cost of consignment merchandise Other Income Profit before Depreciation & Tax Less: Depreciation Profit before Tax Less: Provision for Tax Profit after Tax Add: Balance brought forward from previous year Amount available for Appropriation Appropriation Proposed Dividend (incl. Dividend Distribution Tax) Transfer to General Reserve Balance carried forward Performance Review During the year under review, your Company has opened 5 departmental stores i.e. one store each at Pune, Jalandhar, Coimbatore and two stores at Bengaluru taking its chain of stores to 55 stores (including two airport stores) spread across India. Further, the Company has also opened two “Home Stop” at Coimbatore and Chennai taking its tally to 13 stores. The revenue of the Company is ` 227,310.39 lacs (previous year ` 194,839.27 lacs), registering a growth of 16.67% y-o-y basis. The net Profit achieved was ` 3,916.85 lacs (previous year `. 6,425.92 lacs). Dividend Your Directors are pleased to recommend a dividend of ` 0.75 per equity share of ` 5 each. (Previous year ` 0.75 per equity share of ` 5 each). The payment of dividend is subject to approval of the members in the ensuing Annual General Meeting. Awards and Recognition As in the past years, awards and recognitions were conferred on your Company by leading organisations during the year under review: Some of them are: 728.12 195.84 17,508.89 719.67 321.30 14,516.00 227,048.25 26,111.84 2,809.26 255,969.35 12,073.84 18,306.59 225,588.92 1,721.47 227,310.39 11,100.34 5,074.71 6,025.63 2,108.78 3,916.85 14,516.00 18,432.85 194,276.55 22,289.34 2,681.47 219,247.36 10,505.10 15,771.75 192,970.51 1,868.76 194,839.27 13,552.94 3,772.24 9,780.70 3,354.78 6,425.92 9,131.05 15,556.97 March 31, 2013 Year ended March 31, 2012

Annual Report 2012-13 | 30

Directors' Report

Shoppers Stop Ltd.

to Rank 276.

2.

Best use of Social Media to Enhance Loyalty

1. 2. 3. 4.

Most Innovative initiative Award for Goodie box Best Talent Management Award for Baby Kangaroo Programmes Organisation with innovative HR practices “I Pledge” Learning and Talent Initiative Exercise for Lead & Leap Programmes.

Credit Rating During the year, India Ratings & Research Private Limited (A Fitch Group Company) has assigned the following credit ratings:
` 500 million. ` 500 million.

During the year, Credit Analysis & Research Limited has awarded the following credit ratings: 1. 2. 3. 4. CARE A1 (Non Fund Based) and CARE A (Fund Based) for Bank Facilities of ` 461.50 crores (enhanced from ` 401.50 crores). CARE A1 for Commercial Paper issue/Short Term Debt (Series I) issue of the Company, aggregating to ` 100 crores. CARE A1 for Commercial Paper issue/Short Term Debt (Series II) issue of the Company, aggregating to ` 40 crores. CARE A for Non Convertible Debentures issue of ` 100 crores.

Finance Your Company continues with various initiatives for bringing down the cost of borrowings which includes application of short-term instruments like commercial paper, working capital demand loans within working capital borrowing, long term loans for expansion at competitive terms, so as to have funds at competitive cost. Employees Stock Option Plan The grant of stock options to employees is a mechanism to align the interest of employees with those of the Company, to provide them with an opportunity to share the growth of the Company and also to foster the long-term commitment. Your Company has formulated

Annual Report 2012-13 | 31

Directors' Report

Shoppers Stop Ltd.

Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, as amended. The Compensation/Remuneration Committee of the Company administer and monitor the same. During the year under review, the Company has granted 200,000 Employee Stock Options at a grant price of ` 297/- per option to the specified employees of the Company and its subsidiary Companies. During the year under review, the Company has allotted 417,383 equity shares of ` 5 each on exercise of vested options by certain employees under the said ESOP Schemes. The particulars of Employees Stock Option Plan (ESOP) Schemes, as required by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, are appended herewith and forms part of this Report. Subsidiary Companies and Consolidated Financial Statements In accordance with the Accounting Standard AS-21, the consolidated financial statements form part of this Annual Report. These consolidated financial statements provide financial information about your Company and its subsidiaries as a single entity. Ministry of Corporate Affairs, Government of India vide General Circular No : 2/2011 dated February 8, 2011, has granted general exemption under Section 212 of the Companies Act, 1956, to the holding companies, from attaching the specified documents of its subsidiary companies, as referred in Section 212(1) of the said Act, with its Balance Sheet, on fulfillment of certain conditions. The Company has fulfilled these specified conditions and accordingly, the said documents of subsidiary companies are not attached to the financial statements of the Company. A summary of the financial performance of the subsidiary companies is given in this Annual Report. The annual accounts of the subsidiary companies and the related detailed information are made available to shareholders of the Company and subsidiary companies seeking such information. The Annual Accounts of subsidiary companies are also open for inspection by any member at the registered office of the Company and of the subsidiary companies. Human Resources The Company continued to create a productive, learning and caring environment by implementing robust and comprehensive HR processes and taking new initiatives to further align its Human Resource policies to meet the growing needs of its business. People development continues to be a key focus area in the Company. Special designed training modules for the frontline employees are being delivered from time to time to meet the training needs of the employees. Human relations remained cordial throughout the year. During the year, your Company organised various training programmes. As on date of the Balance Sheet, the Company had a total of 6,052 Customer Care Associates. Deposits During the year under review, the Company has not accepted any deposit under Section 58A of the Companies Act, 1956, read with Companies (Acceptance of Deposits) Rules, 1975. No amount of principal or interest was outstanding as on the Balance Sheet date. Auditors Annual General Meeting. Deloitte Haskins & Sells have sought the re-appointment and have confirmed that their re-appointment, if made, shall be within the limits laid down under Section 224(1B) of the Companies Act, 1956. The Audit Committee and the Board of Directors recommend the re-appointment of Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company. Directors In accordance with the provision of the Companies Act, 1956 and Articles of Association of the Company, Mr. Gulu Mirchandani and Mr. Deepak Ghaisas, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. A brief particular of Mr. Gulu Mirchandani and Mr. Deepak Ghaisas is annexed to the Notice convening the Sixteenth Annual General Meeting in accordance with the listing agreement entered into with the Stock Exchanges.

Annual Report 2012-13 | 32

Directors' Report
Corporate Governance

Shoppers Stop Ltd.

The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with the Stock Exchanges are complied with. A separate section on Corporate Governance and Auditors Certificate is annexed hereto and forms part of this Report. Compliance with the Code of Conduct The Company had evolved and adopted a Code of Conduct for its Board of Directors and its management personnel based on the principles of good corporate governance and best management practices. The declaration of compliance with the Code of Conduct has been received from them. The Code is available on the website of the Company. A certificate to this effect from Mr. Govind Shrikhande, Managing Director forms part of this Report. Demat Suspense Account Unclaimed Shares As on date there are 13 shareholders, holding 700 Equity Shares of ` 5/- each (post sub-division) allotted in Initial Public Offering of 2005, lying in the escrow account due to non-availability of their correct particulars. Despite various reminders to them, by Karvy Computershare Private Limited, our Registrar and Share Transfer Agent, no response has been received. As a result, the said unclaimed shares have agreement. Such shareholders may approach the Company with their correct particulars and proof of their identity for crediting requisite shares from Demat Suspense Account to their individual Demat Account. During the year under review, no shares were transferred from the suspense account to any of the aforesaid shareholders. The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares. Conservation of Energy, Technology absorption and Foreign Exchange earnings & outgo The Company is engaged in the continuous process of energy conservation through improved operational and maintenance practices. The brief of the particulars in respect of various steps and initiatives taken regarding conservation of energy and technology absorption and its disclosure as stipulated by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is as under: connected load. Based on the connected load and operating hours, budgeted energy consumption is given to each stores and practice of taking daily logs and cross-checking the daily consumption with the budgeted units is adopted. This helps in curbing the unwanted consumption, motivating users to take all the possible measures to save the energy and helps in pointing out the discrepancies in the energy consumption pattern and corrective action to eliminate the discrepancies. 2. 3. Controlled the energy consumption of HVAC system by optimising the temperature inside the stores (24°C). This drive is the major contributor for the energy conservation for the stores. Optimised lighting consumption by strictly controlling the operating hours as per the usage pattern. Colour coding is followed for usage can be optimised. 4. 5. Eliminated the unwanted night consumption and restricted usage of the night lighting during night work. Installed capacitor banks to maintain the power factor to reduce the losses and avail PF incentive thereby receiving 5% to 7% incentive on the energy bills. ` 224 lacs) cumulatively by consistent monitoring and controlling the consumption at optimum level as compared to the consumption of the last year. 7. 8. Company has also installed solar panels in Andheri Store to reduce energy cost and help reduce pollution. Company has also finalised the supplier of Wind Power for two of its stores in Maharashtra. This should help reduce the power cost of these stores substantially.

The Company earns Foreign Exchange on sale of its merchandise to its customers. Foreign Exchange outgo during the year included purchase of capital goods, merchandise, professional fees, etc. The foreign exchange earnings during the year was ` 5,393.36 lacs (previous year ` 4,704.40 lacs), whereas Foreign Exchange outgo was ` 4,821.10 lacs (previous year ` 3,723.44 lacs).

Annual Report 2012-13 | 33

Directors' Report
Particulars of Employees

Shoppers Stop Ltd.

The particulars of employees as required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules 1975, as amended, forms part of this Report. However, in pursuance of Section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent to all shareholders of the Company, excluding the aforesaid information. The aforesaid information is also available for inspection at the Registered Office of the Company during its working hours. Any shareholder interested in such particulars may inspect the same. Directors’ Responsibility Statement Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of Directors confirm that: 1. 2. In the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profit of the They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other

3.

Auditors Report The Board has duly examined the Statutory Auditors report to accounts and the clarifications, wherever necessary, have been included in the Notes to Account, section of this Annual Report. Acknowledgement Your Directors wish to convey their appreciation to all customers, business partners, suppliers, banks and financial institutions for their invaluable support and look forward to continued support in the future. Your Directors place on record their sincere appreciation for the of the Company. The Directors also acknowledge the confidence and faith reposed by Shareholders in the Company and look forward to having the same in future as well. For and on behalf of the Board of Directors

April 30, 2013

Chandru L. Raheja Chairman

Certificate of Compliance with the code of conduct for the financial year 2012-13
I, Govind Shrikhande, Managing Director of the Company, hereby declare that the Company has adopted a Code of Conduct for its Board Members and its management personnel and they have affirmed compliance with the said Code of Conduct. For Shoppers Stop Limited Govind Shrikhande Customer Care Associate & Managing Director

April 30, 2013
Annual Report 2012-13 | 34

Annexure to the Directors' Report

Shoppers Stop Ltd.

Information required to be disclosed under SEBI (ESOS and ESPS) Guidelines, 1999 as on March 31, 2013 Description Options Granted Date of Grant The pricing formula ESOP 2008 - 1* 1,032,800 29.04.2009 The options are granted to eligible employees at the closing price of the Equity Shares of the Company at BSE on the working day immediately preceding the date of grant. The options were granted at an exercise price of ` 55/958,740 898,220 74,060 49,402,100 60,520 ESOP 2008 - 2* 400,000 24.03.2010 The options are granted to eligible employees at the closing price of the Equity Shares of the Company at BSE on the working day immediately preceding the date of grant. The options were granted at an exercise price of ` 191/360,300 157,300 39,700 30,044,300 203,000 ESOP 2008 - 3 189,382 29.04.2011 The options are granted to eligible employees at the closing price of the Equity Shares of the Company at BSE on the working day immediately preceding the date of grant. The options were granted at an exercise price of ` 336/47,553 1,223 36,833 410,928 151,326 ESOP 2008 - 4 200,000 09.06.2012 The options are granted to eligible employees at the closing price of the Equity Shares of the Company at BSE on the working day immediately preceding the date of grant. The options were granted at an exercise price of ` 297/22,090 177,910

Options vested Options exercised and total number of Equity Shares arising as a result of exercise of options Options lapsed/Cancelled Variation of terms of options Money realised by exercise of options (in `) Total number of options in force Options granted to Senior Management personnels Govind Shrikhande

The Company has not granted options during the current financial year under these ESOP schemes

13,750

Options granted to any employee during the year amounting to 5% or more of options granted during the year. Govind Shrikhande The Company has not granted options during the current financial year under these ESOP schemes 13,750

Options granted to any employee equal to or exceeding 1% of the issued capital of the Company at the time of grant. No such options have been granted Diluted Earnings Per Share (EPS) pursuant to The diluted EPS of the Company calculated after considering the effect of potential issue of shares on exercise of option calculated equity shares arising on account of exercise of options is ` 4.71 per share. in accordance with (AS) 20 Earnings Per Share.

Annual Report 2012-13 | 35

Annexure to the Directors' Report
Where the Company has calculated the employee compensation cost using the intrinsic value of the stock option, the difference between employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the option, shall be disclosed. The impact of this difference on profits and on EPS of the Company shall also be disclosed.

Shoppers Stop Ltd.
Had the Company followed fair value method for accounting the stock option compensation, the compensation expenses would have been higher by ` 202.35 lacs. Consequently profit after tax would have been lower by ` 202.35 lacs and the basic EPS of the Company would have been ` 4.49 per share (lower by ` 0.24 per share) and the diluted EPS would have been ` 4.47 per share (lower by ` 0.24 per share).

Weighted average exercise prices and weighted The Company has not granted options during the current Exercise price is average fair value of the options shall be financial year ` 297 per option disclosed separately for options whose exercise which equals the price either equals or is less than the market price of the stock. fair value is ` 118.03 per option A description of the method and significant The Company has not granted options during the current Black Scholes assumption used during the year to estimate financial year Option Pricing the fair values of options. model using Volatility of 46.89%, risk free rate of 8.06%, expected life of 3.85 years, dividend yield of 0.25% and stock price of ` 296.85. * The Equity Share of the Company was sub-divided from face value ` 10/- each into two Equity Shares of ` 5/- each w.e.f. January 13, 2011, consequently the options and its related information has been adjusted.

Annual Report 2012-13 | 36

Certification by MD & CFO
To, The Board of Directors Shoppers Stop Limited Eureka Towers, B-Wing, 9th Floor, Mindspace, Link Road, Malad (West),

Shoppers Stop Ltd.

Dear Sirs, We hereby certify that: (a) We have reviewed the financial statements and the cash flow statement for the year and that to the best of our knowledge and belief: i. these statements do not contain any materially untrue statement or omit any material fact or contain statement that might

accounting standards, applicable laws and regulations. (b) There are, to the best of our knowledge and belief, no transaction entered into by the Company during the year which are fraudulent, (c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies. (d) We have indicated to the auditors and the Audit Committee: ii. significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial

iii. instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an

For Shoppers Stop Limited Govind Shrikhande Customer Care Associate & Managing Director April 30, 2013 Sanjay Chakravarti Customer Care Associate & Chief Financial Officer

Annual Report 2012-13 | 37

Management Discussion and Analysis Report
Indian Retail

Shoppers Stop Ltd.

to the total employment. The Indian retail market is amongst the largest and fastest growing in the world. With a population of over 1.2 billion and household size of 4 to 5 on an average, it is not difficult to see the potential attractiveness that this market offers. Indian retail business has grown by 16% Compounded Annual Growth Rate (CAGR) over the past two years and expected to accelerate to 18.8 % over the next few years, according to The India Retail Report 2013. India has emerged as the fifth most favourable destination for many years of a large, young, well-educated and attractive labour market, according to the report. consumption driven by “Choice” instead of “need” will grow significantly. Modern Retail – Today Modern retail has been in existence for some time now. In India, modern retail constitutes 7.8 % of the total retail market. According to The India Retail Report findings, modern retail in India is growing at a rapid rate of 26.8% CAGR and is expected to grow even faster by 2015. By 2015 the share of modern retail in India is expected to rise to more than 10 % of total retail in India. With the young demographics that India is blessed with, it can be assumed that modern retail will be trendy, fashionable, in demand and buzzing with hives of promotion and opportunities. With an increasing number of men and women working and being independent, disposable income is increasing. The easy availability of financial instruments is also playing its part in growing the modern retail space and consumption. Modern retail is expected to mushroom in smaller towns in the next 3 years and also make a foray in to the rural heartland of India to index, westernisation index, youth population, etc., will play an important role in ascertaining the demand for categories and brands, which in turn will determine the direction and extent to which penetration in rural towns would happen. With modern trade gaining ground in India, the opportunity for strong and continuous growth is immense. A simple comparison with other developed and emerging economies in Asia indicates room for a manifold increase in modern trade density. With a modest six modern trade stores per million customers, even matching the pace of countries like Thailand and Indonesia points to an inflection point that is yet to occur. Contrasted with the density of traditional trade outlets, the lower density of modern trade is certainly poised to change. Modern Retail – Challenges Ahead The Indian economic sector, including retail, has weathered an uneven ride. Changes in policies and markets have caused investors in this market to draw caution and adopt wait-and-watch policies. Rising inflation, even when disposable income has risen, has left a dampening mark on retail sales and consumption. Brands have decided to ensure an effective presence strategy while speculation markets have dropped. Big malls that were assured of complete occupancy just a few years back are having to resort to price-leading strategies to woo in tenants and consumers. Retailers in India are struggling to strike a balance between choosing available retail space in desired location and rentals. The next challenge is that of human capital. With attrition still very high in the industry, human capital management continues to remain one of the top three agenda points for the retailer. The cost of training and retraining staff to replace people who leave, is high specifically for larger retailers who want to maintain a particular standard in their operations. Skill development, hence, is a critical factor to achieve scale and is an area which needs investment. S.W.O.T. ANALYSIS Strengths: programme has exceeded the 2.8 million mark in memberships, making it one of the largest loyalty membership programme in the country across sectors. The Company continues to believe that its loyalty programme is not only a source of substantial competitive advantage, but is also a very strong strategic tool. Your Company believes that its First Citizens will continue to drive its growth by increased average expenditure in our stores which will be aided by targeted promotional activities. At the same time, our fan base on social media has been increasing, with 4.4 million fans on our Facebook Page today. We see significant opportunities on both these platforms for engaging our customers.

Annual Report 2012-13 | 38

Management Discussion and Analysis Report

Shoppers Stop Ltd.

believes that continuous investment in people, process and technology will drive sustainable and profitable growth for the Company. We have in the past year, undertaken a number of new investments in the back end and continue to upgrade our current information technology capabilities and processes.

believes that the “hub-and-spoke” model followed by it for its distribution network, will stand it in good stead for the expansion envisaged in the forthcoming years. centres for promotion decisions, career planning and succession planning. Individual and organisational development is the primary objective of the assessment centre. We also conduct associate satisfaction survey every year and derive ASI scores, which helps us in identifying the trust index scores of respect, credibility, fairness and pride with the organisation. We continue to benchmark our compensation and benefits through consultants, with the best in the industry to pay our associates accordingly. the real estate business and their relationships with developers, which have helped us acquire preferred properties at competitive rates. We have a robust pipeline of new stores which will be operational over a period of next 36 months.

external auditors are amongst the Big 4 audit firms of the globe. The Board has 5 independent Directors. that it is well placed in negotiations/re-negotiations of property rentals, better commercials terms with merchandise suppliers, etc. The Company has successfully grown gross margins year on year. Risks and Concerns: continue over the next 36 months and the timely execution of this expansion will be critical. The Company has a strong execution team and we believe it has the capability to execute varied retail formats. experienced personnel in modern retail will only increase in the near term and long term. Your Company believes that this problem will persist until the industry reaches a steady growth phase. for the Company. Power cost and service tax is also a matter of concern as they put substantial pressure on profits. the business which are proving to be a very large burden as there are no modes for the industry to recover or pass on these levies. Delay in the roll out of the GST regime is also a matter of concern. impact on the cash flows and consolidated results of the Company.

Annual Report 2012-13 | 39

Management Discussion and Analysis Report
Opportunities:

Shoppers Stop Ltd.

of departmental stores, and therefore improve city wise penetration in new cities, increase market share in existing cities through space has increased from 2.3 million square feet for the year ended 31st March, 2011 to 3.4 million square feet for the year ended 31st March, 2013, which is an impressive increase of 48%. of 12% for the year, like to like sales growth of 5% for the year and registered 7th consecutive quarter of store level profitability. formats viz, HomeStop which retails hard and soft furnishing, M.A.C. and Estee Lauder which retails high end cosmetic products, Clinique which retails skin care products, Mothercare which retails infant and kids merchandise and airport retailing, by tying up with The Nuance Group AG of Switzerland. The Company has also made a successful foray into internet retailing through its e-retailing portal. The Company has continued to expand these formats successfully and will maintain a focus on them. Threats: consumption in the supply/value chain, is bound to face difficulties in an environment of economic slowdown. sector, thus increasing competition. However, the nationwide footprint, excellent customer service levels, look & feel of the stores, competitive products offerings & capability of its management team to execute the business operations & expansion are the few factors amongst many which would certainly help the Company to retain its market share. The Company believes that it has a robust pipeline of stores for future expansion. the growth of the Company. Customer Entry: Retailers measure entry as footfalls, which is the number of people entering the stores. This is computed through manual count in all stores during trading hours.
45 40 35 Customer Entry (in mn.) 30 25 20 15 10 5 0 2008-09 2009-10 2010-11 Year 2011-12 2012-13 22.8 23.3 30.9 Customer Entry (Departmental Store)

40.2 36.7

(Source: Company MIS)

Annual Report 2012-13 | 40

Management Discussion and Analysis Report
Conversion Ratio:

Shoppers Stop Ltd.

Conversion is the ratio of the number of transactions (Cash Memo) versus the total customer entry into the stores. Tracking conversion helps the retailer understand the productivity of his front-end store employees and the attractiveness of the merchandise and services.
Conversion Ratio (%) (Departmental Store) 35% 30% 25% Conversion Ratio (%) 20% 15% 10% 5% 0% 2008-09 2009-10 2010-11 Year 2011-12 2012-13 28%

27%

24%

23%

23%

(Source: Company MIS)

Sales: Gross Sales both at chain level and for Like-To-Like stores has grown against last year. The growth was 17% in gross retail turnover of Shoppers Stop departmental store business. The sales per sq. ft. has been computed on built-up area.
Sales (like-to-like growth %) (Departmental Stores) 17 Sales Per Square Feet (in `) (Departmental Store) 10500 Sales Per Square Feet (in `) 9000 7500 6000 4500 3000 1500 0 2008-09 2009-10 2010-11 Year 2011-12 2012-13 8218 7955 8518 7808 7837

18 Sales (like-to-like growth %) 16 14 12 10 8 6 4 2 0 1 2008-09

7 4

7

2009-10

2010-11 Year

2011-12

2012-13

(Source: Company MIS)

(Source: Company MIS)

Annual Report 2012-13 | 41

Management Discussion and Analysis Report
Apparel:

Shoppers Stop Ltd.

The Apparel contribution to total sales of the Shoppers Stop Departmental store business was 59.9% in 2012-13 as compared to 58.7% in 2011-12. Non-Apparel: This category includes Cosmetics, Personal Accessories, Jewellery, Leather goods, Home Wares, Electronics, Books and Music. These lifestyle products have high aspiration value, and as the consuming class increases, there will be a big surge in the demand for this category. The Non-Apparel contribution to total sales of the Company was 40.1% in 2012-13.
Sales Mix (%) (Departmental Stores) Non-Apparels 100% 39.6% 80% 40.5% 41.2% 41.3% 40.1% Apparels

Sales Mix (%)

60% 60.4% 40% 59.5% 58.8% 58.7% 59.9%

20%

0% 2008-09 2009-10 2010-11 Year 2011-12 2012-13

(Source: Company MIS) Private Label & Private Brands: Your Company aims to provide a differentiated and unique offering to the customer through its own private labels as well as through exclusive private brands. The contribution of private label is at 15.9% of sales, and private label sales grown by 16%. Your Company has

provide a wide range of merchandise to customers, your Company aims to fill in the gaps in the national brand offering through its private labels & exclusive arrangements with private & international brands.

Annual Report 2012-13 | 42

Management Discussion and Analysis Report
Average Selling Price (ASP):

Shoppers Stop Ltd.

Average Selling Price is the Gross Retail Sales divided by the number of units sold. Tracking ASP helps the retailer to align the offering as per the customer segment as well as improve the productivity of the floor space.
Average Selling Price (Like to Like) (Departmental Stores) 1100 1000 Average Selling Price (`) 900 800 700 600 500 400 2008-09 2009-10 2010-11 Year 2011-12 2012-13 821 856 913 977 1062

(Source: Company MIS)

Transaction Size ( ): Transaction size represents the amount spent by each customer on his buying. This is computed by the total sales divided by the number of cash memos.
Transaction Size (`) (Departmental Store) 2700 2400 2100 Transaction Size (`) 1800 1500 1200 900 600 300 0 2008-09 2009-10 2010-11 Year 2011-12 2012-13 1843 2029 2207 2311 2481

(Source: Company MIS)

Annual Report 2012-13 | 43

Management Discussion and Analysis Report
Merchandise Purchase:

Shoppers Stop Ltd.

most critical success factors. A team of Buyers & Merchandisers continuously ensure that the pricing strategy and value proposition are Our well-established systems and processes in Buying & Merchandising & Logistics enables us to efficiently manage the flow of inventory to stores, provide prompt replenishments and manage pricing. Your Company believes in a broad distribution of risk with no high dependency on any single supplier and has a diversified supplier base. Suppliers are selected after evaluation based on fairly stringent parameters which ensure the quality & reliability of supply. Alternate distribution channels for inventory have also been put in place as a contingency, should the need arise. Supplier Risks: Our broadly varied offering necessitates alliances with a large number of suppliers from various business sectors. In order to mitigate the risk involved, we enter into arrangements with vendors in various business formats such as Outrights Buy/Sale or return, Consignment & Concessionaire/Conducting arrangement. Shrinkage: Shrinkage in the retail business is defined as the loss in inventory through a combination of shop lifting, pilferage and errors in documentation and transaction processing that go unnoticed. We have focus on inventory control and have set up a separate department called profit enhancement, which not only monitors Shrinkage on a regular basis but also looks at various factors that could lead to Shrinkage at stores and distribution centres. The profit enhancement department, Store Operations along with the Supply Chain team have worked together and monitored the Shrinkage level on a month on month basis which has resulted in the Shrinkage percentage being controlled at 0.35% of the Turnover and our endeavour will always be to lower this ratio through proper monitoring and continuously reviewing Inventory management processes and systems.
Shrinkage (as a % of Sales) 0.65% 0.60% Shrinkage (as a % of Sales) 0.55% 0.50% 0.45% 0.40% 0.40% 0.35% 0.30% 0.25% 2008-09 2009-10 2010-11 Year 2011-12 2012-13 0.36% 0.30% 0.35% 0.52%

(Source: Company MIS)

Gross Margins: The gross margin increased during the year to 33.2% from 32.7% as compared to the last Improved sales mix with higher contribution from lifestyle products (i.e. watches, leather, jewellery, perfumes and cosmetics), helped improve gross margins. Vendor management as also sourcing ability has improved with scale and would accrue more economies and higher gross margins.

Annual Report 2012-13 | 44

Management Discussion and Analysis Report
Operating Profit:

Shoppers Stop Ltd.

Operating Profit (without exceptional items) has decreased by 9% to ` 13,081 lacs from ` 14,305 lacs in the previous year. The Operating Profit Margin has degrown to 5.1% from 6.5% due to economic slowdown and opening of large number of new stores.
EBIDTA 16000 14000 12000 (EBIDTA ` in millions) 10000 8000 6000 4000 2000 0 2008-09 2009-10 2010-11 Year Operating Profit (without exceptional items) % to Gross Retail Sales 2011-12 2012-13 4,924 3.6% 7.3% 8.0%

6.6% 6.5 % 5.1%

15,211 14,391 14,305

11,351

13,081

Net Interest: Interest cost has increased to ` 1,906.8 lacs as against ` 752.4 lacs. Profit after Tax: The Company has achieved post tax profit of ` 3,916.9 lacs, as against a post tax profit of ` 6,425.9 lacs last year. Dividend: The Company has proposed a dividend of 15% amounting to ` 728 lacs (Including Corporate Dividend Tax). Inventory: The inventory as at the end of current year is ` 24,382 lacs as against ` 21,204 lacs as at the end of the last year. Inventory holding period is 140 days during the current fiscal against 133 days last year. The inventory has been valued at lower of cost or net realisable value. Liquidity: The cash generated from operations was ` 11,236 lacs.

Annual Report 2012-13 | 45

Management Discussion and Analysis Report
Productivity/Operating efficiency parameters:

Shoppers Stop Ltd.

We look at our Gross Margin with reference to our Space, Inventory and Labour to monitor our efficiency with the help of 3 indicators i.e., Gross Margin on Inventory (GMROI), Gross Margin Return on Floor Space (GMROF) and Gross Margin Return on Labour (GMROL). GMROI helps to optimise inventory levels, GMROF helps to maximise the cash margins and GMROL helps to increase labour productivity. GMROI
5.0

4.5 4.17
GMROI (` Inventory)

4.0

4.22

4.25

4.01 3.86

3.5

3.0

2.5 2008-09 2009-10 2010-11 Year 2011-12 2012-13

(Source: Company MIS)

GMROF

2900 2700
GMROF (` per unit of retail space)

2771

2550 2500 2300 2100 1900 1700 2008-09 2009-10 2010-11 Year 2011-12 2471 2608

2568

2012-13

(Source: Company MIS)

Annual Report 2012-13 | 46

Management Discussion and Analysis Report
GMROL

Shoppers Stop Ltd.

1,900,000 1,700,000 GMROL (` per employee) 1,500,000 1,300,000 1,100,000 900,000 700,000 500,000 2008-09 2009-10 2010-11 Year 2011-12 2012-13 1,270,014 1,637,299 1,719,600 1,690,871

1,649,991

(Source: Company MIS) Partner Satisfaction Index (PSI): The performance of any Company depends on the association and relationship it builds with various vendors/partners over a period of time. To evaluate this satisfaction and expectation, your Company has appointed CSMM (Customer Satisfaction Measurement and Management), a part of IMRB (Indian Marketing and Research Bureau) to do an impartial evaluation of our relationship with various stakeholders. This helps your organisation understand the expectations of various business partners, current strengths and concern areas thereby help set a clear roadmap for improvement and better performance. Our PSI scores for the five years are as below: Year Scores 2008 4.06 2009 3.89 2010 4.14 2011 3.85 2012 4.07

Partnership for Progress: Partnership for Progress (PFP) is a vendor, meet which your Company conducts annually. During this event, your Company gets and gives opportunity to the top retail vendors/brands to discuss and strengthen the association, apart from exploring various business possibilities with each other. The summit also becomes a platform for your Company as well as its partners to share their experiences with each other. Your Company also invites well-known international and national speakers to share learning and experience which is closely related to Retail, Brand, Customer, Logistics, etc. Your Company also recognises the performance of top partners who are rewarded with “SHOPPERS STOP PINNACLE AWARDS” during this summit. This is an activity with more than 100 vendors/partners attending the summit. Human Resources: For your Company, the Human Resource function has evolved from pure HR to Talent Management over the last one year. With our focus

front end associates to a managerial roll. This year we worked with and helped 40 associates cross the bridge from a front end associate towards a managerial roll. We identified, developed, trained and groomed them for their next big assignment.
Annual Report 2012-13 | 47

Management Discussion and Analysis Report

Shoppers Stop Ltd.

The Managerial and Supervisory Training programmes (M.A.S.T.) was conducted for 37 days with the help of internal as well as external trainers. The content was exhaustive and effective. the fire within each employee to stay committed to our most treasured set of principles and beliefs. An initiative that set to reach out, connect and engage with every single employee across 54 stores and 24 cities. The focus from Learning & Development was on incorporating the Coach & Mentor model, which was applied to the Trainee Trading Manager and Trainee Category manager for a period of 7 months each, helping the individuals on the development plan through technical and behavioural coach & coachee model. The L.E.A.P. (Learn, Excel, Achieve & Perform) & L.E.A.D. (Leadership Excellence Accreditation Development) programme introduced in the year 2012 in continuation to the Baby Kangaroo M.A.S.T. programme keeping in mind the 5th value which clearly states that we will and business associates With the changing consumer behaviour and to bestow good customer service we hired a pool of Management Trainees through campus placements and also hired students from fashion institutes and designated them as “CCA & Fashion Assistants”. The focus on Learning & Development has been an on-going and integral part of the organisation where there has been a growth in training hours extended to associates across all levels. Training Hours 11-12 22,455 Training Hours 12-13 25,594 Growth Over Last Year % 14%

Your Company has conducted 144 assessment centres in the F.Y. 2012-2013 covering 1020 associates in order to provide growth opportunities thus ensuring a fair and transparent growth process. The Associate Satisfaction Index (ASI) is conducted through an online survey yearly to understand the level of satisfaction associates have towards their work, job satisfaction, loyalty index, help us understand the strength and weakness of the organisation to take immediate corrective measures. This year the ASI score is at 4.12 and the overall satisfaction levels were more or less the same across different levels. Year Overall Loyalty Index Marketing: Concerns of environment, health, road & public transport, amongst others. At the same time the campaign portrayed the high fashion key markets like Mumbai, New Delhi and Bengaluru. This campaign is a series of small ads that are published every Thursday on page 3 of key city supplements of a leading publication in these cities. These ads provide interesting fashion/ shopping tips to customers every week, which are also highlighted at the physical stores through Visual Merchandising. This year, we had category based promotions like the Denim Power, Makeover Marathon, Suits & Jackets Fest, to name a few. These festivals focused on offers that were available across all brands available in our store for the particular category. Customer engagement through innovative initiatives in Digital and Social Media continued to be a big highlight this year. Various contests and continual engagement on this space have ensured that Shoppers Stop enjoys a large number of fans, more than 44 lacs on Facebook. Shoppers Stop is also active on other platforms such as Twitter and You Tube. all marketing communications. Augmented Reality in India is still nascent and Shoppers Stop is the First Indian Large-Format Retailer to have created an Augmented Reality set-up for a campaign. 2008 4.01 2009 3.95 2010 3.95 2011 4.11 2012 4.12

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Management Discussion and Analysis Report
Customer Satisfaction:

Shoppers Stop Ltd.

At Shoppers Stop we strive to provide our customers with the best overall experience of shopping with us. To measure the customer experience we conduct customer satisfaction surveys to evaluate a range of parameters including merchandise range and quality, store environment, staff, transaction efficiency, loyalty programme, schemes and promotions to name a few and undertake improvements in various areas. We also include select competition stores in our surveys in order to measure experience in our stores as compared to competition. Overall Customer Satisfaction Index: November 2007 63 Loyalty Programme: Your Company runs the famed ‘First Citizen Loyalty Programme’. The First Citizens programme now has a base of over 28.8 lacs customers. During the current year, the First Citizens contributed 71% of the Company’s annual sales. The First Citizen programme has 3 tiers – Classic Moments (entry level), Silver Edge and Golden Glow. Members fall into the various tiers on the basis of their spends with us. First Citizens also earn differential rewards basis on their current tier of membership. First Citizens receive: Company’s stores. February 2009 81 April 2010 80 June 2011 79 August 2012 80

Shoppers Stop has also taken the First Citizen experience mobile, by updating the exclusive First Citizen Mobile application on Blackberry, Android and iPhone platforms. This year, the Company continued with the exclusive promotion for First Citizen members – First Citizens’ Fiesta. Under this promotion the member earned 3 times the reward points besides lots of other special offers and deals. The promotion was very well received and it helped us further reinforce our strong relationship with this member community. Your Company also continued with the ‘Choose Your Own Gift’ offer which gave customers the chance to select their own gifts from on their purchases, which could be redeemed on any product of their choice. Co-branded Credit/Debit card programmes with Citibank: Your Company in association with Citibank continues to offer its First Citizens an option to add on a credit card to their existing loyalty cards. This enables First Citizens to add on a credit line to their purchases. They also have the added advantage of being able to choose customers who are averse to credit, there is an option of activating a debit card. As on 31 March, 2013, the number of members in the Risk Management and Internal Control: Effective governance consists of competent management; implementation of standard policies and processes; maintenance of an The Company has an integrated approach for management of risk and has formulated the framework for regulatory and risk management, standardizing the definition of internal controls.

Management Discussion and Analysis Report

Shoppers Stop Ltd.

It also provides a framework for risk management and regulatory compliance, which requires risk assessments and related policies, a control-based environment and activities, information and communication procedures, and a monitoring mechanism for the control environment. The Company has a sound system of Internal Controls for financial reporting of various transactions, efficiency of operations and compliance with relevant laws and regulations commensurate with its size and nature of business. The Company has a well-defined system of management reporting and periodic review of businesses to ensure timely decision-making. These internal control procedures ensure the following:

material deviations from the annual planning and budgeting and business outlook including capital expenditure reported to the Board on quarterly basis. Reports of internal auditors are reviewed by the Audit Committee, and corrective measures are carried out towards further improvement in systems and procedures and compliance with Internal Control System. The board also recognises the work of the auditors as an independent check on the information received from the management on the operations and performance of the Company. Technology Initiatives: In the year 2012-13, your Company continued its thrust towards scaling up for growth, increasing operational efficiency and exploring technology lead innovation to sustain the leadership position in IT adoption in the Indian and Global retail markets. Some of the key initiatives in this direction are: Allocation: Shoppers Stop rolled out the Allocation application from JDA. The application predicts the merchandise most likely to sell in each store and quantities thereof based on past sales data. This allows more relevant inventory to be sent to each store thus leading to increased sales throughput and a better customer experience. iCatalog: In its endeavour to constantly bring benefits of the latest technologies to customers, your Company deployed an iPad based application in the HomeStop format. This application will serve as a potent tool to the Home Consultants & showcase the latest home products & solutions, for better customer engagement & enhanced experience. Customer engagement through Mobility: Having delighted the customer by engaging her through the First Citizen app, your Company has added more functions and features to the app which will provide customers with important information like store locations, partner benefits, in store promotions, etc. This success story has also encouraged our sister concern, Crossword Bookstores to rollout a similar app to engage their customers and book lovers. Business Intelligence: As part of the Business Intelligence initiative, Shoppers Stop implemented cutting edge, in-memory, Data Analysis technology called

technical help. Having successfully completed the roll-out of the first phase in the stipulated time, the project has delivered above expectations. Corporate Governance: Your Company has taken steps to ensure that the Corporate Governance guidelines are adopted and fully complied with. The detailed Corporate Governance Report is attached with this report.

Annual Report 2012-13 | 50

Management Discussion and Analysis Report
Cautionary Statement:

Shoppers Stop Ltd.

from those expressed or implied, depending on the economic and climatic conditions, Government policies and other incidental factors which are beyond the control of the Company.

Annual Report 2012-13 | 51

Certificate of Compliance from Auditors as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India
To the Members of Shoppers Stop Limited

Shoppers Stop Ltd.

We have examined the compliance of conditions of Corporate Governance by Shoppers Stop Limited (“the Company”) for the year ended on March 31, 2013 as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges in India. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to a review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion, and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company. For Deloitte Haskins & Sells, Chartered Accountants (Registration No. 117366W) Shyamak R. Tata Partner Membership No. 38320 Place: Mumbai April 30, 2013

Annual Report 2012-13 | 52

Corporate Governance Report
Company’s philosophy on Code of Governance

Shoppers Stop Ltd.

The Company remains committed to the concept of good corporate governance practices in all its activities to ensure that the ultimate goal of making the Company a value driven organisation. Its philosophy on the code of Corporate Governance is: shareholders.

We have made conscious efforts to institutionalise Corporate Governance practice and we believe that it shall go beyond adherence to the regulatory framework. Our corporate structure, business and disclosure practices have been aligned to our Corporate Governance Board of Directors The Board of Directors comprises of ten members including one executive director and nine non-executive directors. The Company has a non-executive promoter Chairman and the number of independent directors is one half of the total number of Directors. The independent directors on the Board are professionals, technocrats and retail experts, who are senior, competent and highly respected persons from their respective fields and provide strategic direction and thrust to the operation of the Company. The key decisions are taken after detailed deliberations and discussions by the Board. The Company always ensures that Board members are presented with all the relevant information on vital matters affecting the working of the Company including the information as interalia None of the Directors on the Board is a Member on more than ten Committees and Chairman of more than five Committees (as specified in Clause 49), across all the companies in which they are Directors. The composition of the Board of Directors, their attendance at Board Meetings during the year and at the last Annual General Meeting and the number of other Directorships and Committee Memberships held by them in other Companies are given below:
Name of Directors Category Designation Attendance particulars Board Meetings Last AGM No. of other Directorships & Committee Memberships/Chairmanships Committee Committee Directorships1 Membership1 & 2 Chairmanship1 & 2

Mr. Chandru L. Raheja Mr. Ravi C. Raheja Mr. Neel C. Raheja Mr. Gulu L. Mirchandani Mr. Shahzaad S. Dalal Prof. Nitin Sanghavi Mr. Deepak Ghaisas Mr. Nirvik Singh Mr. B. S. Nagesh Mr. Govind Shrikhande

Promoter & NonChairman Executive Director Promoter & NonDirector Executive Director Promoter & NonDirector Executive Director Independent & NonDirector Executive Director Independent & NonDirector Executive Director Independent & NonDirector Executive Director Independent & NonDirector Executive Director Independent & NonDirector Executive Director Non-Executive Vice Chairman Director Executive Director Managing Director

4 4 3 4 3 3 4 2 3 4

Yes Yes Yes No Yes Yes Yes Yes Yes Yes

2 5 5 5 9 1 2 1 3 5

1 1 0 2 3 1 0 0 1 1

0 1 0 0 1 0 2 0 0 0

Annual Report 2012-13 | 53

Corporate Governance Report
Notes: 1.

Shoppers Stop Ltd.

The other Directorships and Chairmanships/ Memberships of committees held in foreign companies, private limited companies and companies incorporated u/s 25 of the Companies Act, 1956 are excluded. Mr. Ravi C. Raheja and Mr. Neel C. Raheja are sons of Mr. Chandru L. Raheja. No other director is related to any other director of the Company.

3.

During the year under review, the Board of Directors met four times i.e. on 30th April, 2012, 31st July, 2012, 30th October, 2012 and 29th January, 2013. The maximum interval between any two meetings during this period does not exceed four months. Dates for the Board Meetings for the ensuing year are decided well in advance and communicated to the Directors. The Agenda along with the explanatory notes are sent in advance to the Directors. Additional meetings of the Board are held when deemed necessary by the Board. The Company has adopted the Code of Conduct for all Board members and management personnels of the Company. This Code is posted on the website of the Company. All Board members and management personnels have confirmed compliance to the Code of Conduct. A declaration signed by the Managing Director of the Company to this effect is appended with the Report. Audit Committee The Company has constituted an Audit Committee in the year 2001. The role, powers and functions of the Audit committee is in accordance with Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956. The Audit Committee comprises of four Non-Executive Directors. The members of the Committee possess the sound knowledge of finance & accounts. The Audit Committee invites such of the executives, as it considers appropriate to be present at the meetings of the Committee. The Managing Director, Vice Chairman, Chief Financial Officer, Company Secretary, representatives of the internal auditors and statutory auditors are also present at the Audit Committee Meetings as invitees. During the year under review, the Committee met four times i.e. on 30th April, 2012, 31st July, 2012, 30th October, 2012 and 29th January, 2013. The Composition of the Audit Committee and the attendance of the members at the meetings held are as follows: Name of Member Mr. Deepak Ghaisas Mr. Ravi C. Raheja Mr. Shahzaad S. Dalal Prof. Nitin Sanghavi Status Chairman Member Member Member Category Independent Director Non-Independent Director Independent Director Independent Director No. of meetings attended 4 4 3 3

The broad terms of reference of the Audit Committee inter-alia are as under: statement is correct, sufficient and credible. 2. 3. To recommend to the Board, the appointment and re-appointment, replacement or removal of the Statutory Auditors, fixation of audit fees and also approval for payment of any other services. To review with the management, the annual financial statements before submission to the Board for approval, with particular reference to: (2AA) of Section 217 of the Companies Act, 1956. b) Changes, if any, in accounting policies and practices and reasons for the same.

Annual Report 2012-13 | 54

Corporate Governance Report
c) Major accounting entries involving estimates based on the exercise of judgement by management.

Shoppers Stop Ltd.

d) Significant adjustments made in the financial statements arising out of audit findings. e) Compliance with listing and other legal requirements relating to financial statements. f) 4. 5. 6. Disclosure of related party transactions.

To review with the management, the quarterly financial statements before submission to the Board for approval. To review with the management, performance of statutory and internal auditors and adequacy of the internal control systems. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.) the statement of funds utilised for purposes other than those stated in the offer document or prospectus/ notice and making appropriate recommendations to the Board to take up steps in this matter. To review the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. Discussion with internal auditors any significant findings and follow up there on. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

7. 8. 9.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. 11. To look into the reasons for substantial defaults in the payment to the shareholders (in case of non payment of declared dividends) and creditors. 12. To review the functioning of the Whistle Blower mechanism. 13. To approve the appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate. 14. Carrying out any other function as may be added to the terms of reference of the Audit Committee. Compensation / Remuneration Committee The Company has constituted Compensation / Remuneration Committee in the year 2001. The scope of the activities of the Compensation / Remuneration Committee is to recommend the remuneration payable to the Managing Director of the Company, payment of commission and sitting fees to Non-Executive Directors and formulation and implementation of various Employee Stock Option Plans (ESOP) Schemes in the Company. During the year, the Committee met twelve times i.e., on 30th April, 2012, 30th May, 2012, 9th June, 2012, 1st August, 2012, 28th August, 2012, 28th September, 2012, 30th October, 2012, 28th November, 2012, 20th December, 2012, 29th January, 2013, 26th February, 2013 and 26th March, 2013. The Composition of the Committee and the attendance of the members at the meetings held are as follows: Name of Member Mr. G. L. Mirchandani Mr. Ravi C. Raheja Mr. Shahzaad S. Dalal Prof. Nitin Sanghavi Status Chairman Member Member Member No. of meetings attended 12 12 4 3

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Corporate Governance Report
Remuneration Policy 1.

Shoppers Stop Ltd.

The remuneration of the Executive Director is recommended by the Compensation / Remuneration Committee based on criteria such macroeconomic review on remuneration packages of heads of other organisations and is decided by the Board of Directors. The Company pays remuneration by way of salary, perquisites, allowances and profit linked reward scheme to its Managing Director. Annual increments are decided by the Compensation / Remuneration Committee within the salary approved by members and are normally effective from April 1, annually.

2. 3.

The Company pays sitting fees of ` 20,000/- to its Non-Executive Directors for attending each Board of Directors meeting. The members of the Company at the fourteenth Annual General Meeting had approved the payment and distribution of sum not exceeding 1% of the net profits of the Company calculated in accordance with the provisions of Sections 198, 349 and 350 of the Companies Act, 1956 by way of commission to Non-Executive Directors for a period of 5 (five) years commencing from April 1, 2011.

Details of compensation paid/payable to Non-Executive Directors during the year are as under: Name of Directors Mr. Chandru L. Raheja Mr. Ravi C. Raheja Mr. Neel C. Raheja Mr. Gulu L. Mirchandani Mr. Shahzaad S. Dalal Prof. Nitin Sanghavi Mr. Deepak Ghaisas Mr. Nirvik Singh Mr. B. S. Nagesh Total Commission ( ) 0 0 0 300,000 300,000 300,000 600,000 300,000 300,000 2,100,000 Sitting Fees ( ) 80,000 80,000 60,000 80,000 60,000 60,000 80,000 40,000 60,000 600,000 Total ( ) 80,000 80,000 60,000 380,000 360,000 360,000 680,000 340,000 360,000 2,700,000

Details of remuneration paid to Mr. Govind Shrikhande, Managing Director for the financial year 2012-2013 is as under: Salary and Bonus ( ) Perquisites ( ) Contribution to Provident Fund ( ) 1,508,400 Total ( )

31,442,624

939,900

33,890,924

ESOPs Details of grant of stock options to and exercise of stock options by Mr. B. S. Nagesh, Vice Chairman under the following ESOP Schemes is as under: Scheme ESOP 2008-1 Date of Grant 29.04.09 Options Granted 100,000 Options vested and exercised 100,000 Grant price ( ) 55 Fair value on the date of grant ( ) 55 Vesting period 38 months

Annual Report 2012-13 | 56

Corporate Governance Report

Shoppers Stop Ltd.

Details of grant of stock options to and exercise of stock options by Mr. Govind Shrikhande, Managing Director under the following ESOP Schemes is as under: Scheme Date of Grant 29.04.09 24.03.10 29.04.11 09.06.12 Options Granted 260,000 24,000 29,700 13,750 Options vested and exercised 260,000 24,000 0 0 Grant price ( ) Fair value on the date of grant ( ) 55 191 336 297 Vesting period

ESOP 2008-1 ESOP 2008-2 ESOP 2008-3 ESOP 2008-4

55 191 336 297

38 months 3 Years 3 years 3 years

Service Contract, severance fees and notice period of Mr. Govind Shrikhande, Managing Director Mr. Govind Shrikhande was appointed as Managing Director for a period of 3 years w.e.f. 29th July, 2010. There is no separate provision for payment of any severance fees. There is a notice period of three months from either side. Shareholders’ Investor Grievance and Share Transfer Committee Committee also oversees the performance of the Registrar and Share Transfer Agents and recommends measures for overall improvement in the quality of investor services. No meeting was held during the year 2012-13. The Composition of the Committee is as follows: Name of Member Mr. Ravi C. Raheja Mr. Neel C. Raheja Mr. B. S. Nagesh Status Chairman Member Member

During the year, the Company has received 7 (seven) Communications/grievances, which were attended and resolved to the satisfaction of the Shareholders. No grievances were pending at the year end. Subsidiary Companies incorporated in India, whose turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. In this regard, Hypercity Retail (India) Ltd. a 51% subsidiary, is a material non-listed subsidiary of the Company. Mr. Deepak Ghaisas and Mr. Nitin Sanghavi, the Independent Directors of the Company are on the Board of Hypercity Retail (India) Ltd. The Audit Committee and Board of Directors of the Company inter-alia, review the annual financial statements of Hypercity Retail (India) The Board of Directors of the Company also reviews Minutes of the Board Meetings of unlisted subsidiary companies.

Annual Report 2012-13 | 57

Corporate Governance Report
General Body Meetings Details of Annual General Meetings held during last three years: AGM for Financial Year ended 2011-2012 Date Time Location

Shoppers Stop Ltd.

Special Resolutions passed thereat No special resolution has been passed.

31st July, 2012

3.30 p.m. National Stock Exchange of India Ltd., Exchange Plaza, NSE Auditorium, Ground Floor, Bandra Kurla Complex, Bandra (E), 3.00 p.m. National Stock Exchange of India Ltd., Exchange Plaza, NSE Auditorium, Ground Floor, Bandra Kurla Complex, Bandra (E), 3.00 p.m. National Stock Exchange of India Ltd., Exchange Plaza, NSE Auditorium, Ground Floor, Bandra Kurla Complex, Bandra (E),

2010-2011

26th July, 2011

Payment and distribution of upto 1% of the net profits by way of commission to Non-Executive Directors of the Company for a period of 5 (five) years commencing from April 1, 2011. No special resolution has been passed.

2009-2010

29th July, 2010

Postal Ballot There was no special resolution passed through Postal Ballot during the year 2012-13 and no special resolution is proposed to be passed through Postal Ballot. Disclosure on materially significant related party transactions There were no materially related party transactions that may have potential conflict with the interest of the Company at large. The transactions between the Company and the related parties are disclosed in Notes to the Accounts in the Annual Report. Disclosure of Accounting Treatment The financial statements of the Company comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956. Board Disclosures – Risk Management The Company has laid down the requisite procedures to inform the Board Members about the risk assessment and minimisation procedures which are accordingly followed. Details of non-compliance on matters relating to Capital Market There have been no instances of non-compliances by us and no penalties and/or strictures have been imposed on the Company by Stock Exchanges or SEBI or any statutory authority on any matter related to the capital markets during the last three years. Code of conduct for Prevention of Insider Trading Practices In compliance with the SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended, the Company has formulated, adopted and implemented “Shoppers Stop Code of conduct for prevention of Insider Trading” in the shares of the Company. Whistle Blower Policy The Whistle Blower Policy aims to encourage all employees to inform the Company regarding any kind of misuse of Company property, mismanagement or wrongful conduct prevailing in the Company and no personnel has been denied access thereto. The disclosure would

Annual Report 2012-13 | 58

Corporate Governance Report

Shoppers Stop Ltd.

be sent to the Chairman of the Audit Committee/the Ethics Counselor who would investigate and recommend to the management of the Company to take such disciplinary or corrective action as may be deemed fit. Compliance with non-mandatory requirements of Clause 49 of the listing agreement The Company has voluntarily complied with the non-mandatory requirements relating to Remuneration Committee and whistle blower policy. Management Discussion and Analysis Management Discussion and Analysis is given as a separate section in the Annual Report. Proceeds from public issues The Company has not raised any proceeds from public issue, right issue, preferential issues, etc. and there are no unutilised issue proceeds during the year under review. Means of Communication

does a Conference call with the analysts in order to clarify their doubts and queries. the other information about the Company and its business are available on the website. the information with public at large. General Shareholders Information (1) Annual General Meeting: Date, Time & Venue : 30th July 2013 at 3.30 p.m. : National Stock Exchange of India Ltd., Exchange Plaza, Dr. R. H. Patil Auditorium, Ground Floor, Bandra Kurla Complex, (2) Financial Calendar (3) Date of Book Closure (4) Dividend payment date (5) Listing on the Stock Exchanges : 1st April, 2012 to 31st March, 2013 : 23rd July, 2013 to 30th July, 2013 (Both days inclusive). : 31st July, 2013 : 1. BSE Limited 2. National Stock Exchange of India Ltd. Exchange Plaza, Bandra Kurla Complex, The requisite Listing Fees for the financial year 2013-2014 has been paid to both the above Stock Exchanges where the equity shares of the Company are listed (6) Stock Code: BSE Limited. National Stock Exchange of India Ltd. : 532638 : SHOPERSTOP (Symbol)

Annual Report 2012-13 | 59

Corporate Governance Report
(7) Stock Market Data for the period – 1st April, 2012 to 31st March, 2013 Share price performance in comparison on BSE: Month (2012-13) April May June July August September October November December January February March BSE High ( ) 396.00 355.00 343.00 392.00 393.85 417.45 451.90 442.00 494.00 473.90 454.00 418.50 Low ( ) 333.80 312.00 288.20 335.55 336.60 335.00 321.10 385.25 391.15 412.85 384.50 362.55 High 17,664.10 17,432.33 17,448.48 17,631.19 17,972.54 18,869.94 19,137.29 19,372.70 19,612.18 20,203.66 19,966.69 19,754.66 Sensex Low 17,010.16 15,809.71 15,748.98 16,598.48 17,026.97 17,250.80 18,393.42 18,255.69 19,149.03 19,508.93 18,793.97 18,568.43

Shoppers Stop Ltd.

No. of Shares transacted 103,256 35,289 424,199 859,398 181,986 916,440 198,523 245,373 1,718,298 436,177 105,937 164,894

Shoppers Stop Price Movement Chart – BSE
500 450
Amount (`)

20000 19000 18000 17000 16000 15000

350 300 250

Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Financial Year 2012-13 Shoppers Stop
Sensex

Share price performance in comparison on NSE: Month (2012-13) April May June July August September October November December January February March NSE High ( ) 395.00 367.30 341.95 391.65 393.40 417.50 452.00 441.70 496.90 473.50 454.00 419.55 Low ( ) 333.95 313.00 288.20 335.10 342.35 344.00 376.25 389.00 400.10 413.35 384.50 362.40 High 5,378.75 5,279.60 5,286.25 5,348.55 5,448.60 5,735.15 5,815.35 5,885.25 5,965.15 6,111.80 6,052.95 5,971.20 Nifty Low 5,154.30 4,788.95 4,770.35 5,032.40 5,164.65 5,215.70 4,888.20 5,548.35 5,823.15 5,935.20 5,671.90 5,604.85 No. of Shares transacted 1,648,003 875,215 3,276,285 2,103,537 739,442 3,638,483 1,141,817 1,074,893 6,761,815 1,630,794 493,153 483,253

Annual Report 2012-13 | 60

Sensex

400

Corporate Governance Report
Shoppers Stop Price Movement Chart – NSE
500 450
Amount (`)

Shoppers Stop Ltd.

6500 6000 5500 5000
Nifty

400 350 300 250
Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar
Financial Year 2012-13
Shoppers Stop Nifty

4500 4000 3500

(8) Distribution of Shareholding as on 31st March, 2013 and 31st March, 2012: Shareholding of Nominal Value As on 31st March, 2013 Shareholders Number 9856 129 81 30 15 14 24 70 10,219 % to total 96.45 1.26 0.79 0.29 0.15 0.14 0.23 0.69 100.00 4,270,980 949,160 1,167,630 740,450 543,640 665,240 1,760,550 404,799,935 414,897,585 % to total % to total 1.03 0.23 0.28 0.18 0.13 0.16 0.42 97.57 100.00 Number 8,793 60 40 24 11 7 20 70 9,025 As on 31st March, 2012 Shareholders % to total 97.43 0.66 0.44 0.27 0.12 0.08 0.22 0.78 100.00 3,015,655 476,885 575,920 605,885 397,885 331,040 1,466,240 405,941,160 412,810,670 % to total % to total 0.73 0.11 0.14 0.15 0.10 0.08 0.35 98.34 100.00

5001-10000 10001-20000 20001-30000 30001-40000 40001-50000 50001-100000 100001 and above Total

Shareholding Pattern The categories of shareholdings as on 31st March, 2013 and 31st March, 2012: Category Promoters Mutual Funds Financial Institution Foreign Institutional Investors Corporate Bodies Banks Clearing Members (Transit) Trust Total As on 31st March, 2013 No. of % to total Shares Held 56,029,674 67.52 8,782,564 10,607 7,933,430 4,825,594 5,283,302 8,640 83,265 22,437 4 82,979,517 10.58 0.01 9.56 5.82 6.37 0.01 0.10 0.03 0.00 100.00 As on 31st March, 2012 No. of % to total Shares Held 56,029,674 67.86 5,334,046 0 11,294,642 5,004,472 4,860,916 0 21,830 16,550 4 82,562,134 6.46 0.00 13.68 6.06 5.89 0.00 0.03 0.02 0.00 100.00

Annual Report 2012-13 | 61

Corporate Governance Report
Shareholding of Board of Directors as on 31 March, 2013: Name of Director Mr. Chandru L. Raheja Mr. Ravi C. Raheja Mr. Neel C. Raheja Mr. Gulu L. Mirchandani* Mr. Shahzaad S. Dalal Prof. Nitin Sanghavi Mr. Deepak Ghaisas** Mr. Nirvik Singh Mr. B. S. Nagesh Mr. Govind Shrikhande Status Promoter Director Promoter Director Promoter Director Director Director Director Director Director Vice Chairman Managing Director

Shoppers Stop Ltd.

No. of Shares 697,500 1,100,000 1,150,000 4,000 2,000 0 7,750 0 572,874 263,921

* Mr. Gulu L. Mirchandani holds 4,000 Equity Shares jointly with his son as second holder. ** Mr. Deepak Ghaisas holds 7,750 Equity Shares jointly with his wife as second holder. (9) Registrar and Transfer Agent : Karvy Computershare Private Limited. Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081, (India). Tel: +91-40 2342 0818, Fax: +91-40 2342 0814 The shares of the Company are traded on the Stock Exchanges through the Depository System. The ISIN allotted to the equity shares of ` 5/- each of the Company is INE498B01024. The requests received by the Company/RTA for dematerialisation/rematerialisation are disposed off expeditiously. Share certificates duly endorsed are issued to the shareholders, who opt for the shares in the physical form. and liquidity As on date, entire share capital of the Company except 330 equity shares are being held in the dematerialised mode. The shares of the Company are regularly traded at both the Stock Exchanges where they are listed, which ensure the necessary liquidity to shareholders. : The Company has not issued any ADR or GDR or warrants or any convertible instruments, which has likely impact on equity share capital. Mr. Prashant Mehta Eureka Towers, B-Wing, 9th Floor, Mindspace, Link Road, Malad (West), Mumbai - 400 064. Tel: (022) 4249 7000, Fax: (022) 2880 8877 E-mail ID: investor@shoppersstop.com Web Address: www.shoppersstop.com

(10) Share Transfer System

:

(12) Outstanding GDRs/ADRs/ Warrants or any Convertible instruments

(13) Address for correspondence :

Annual Report 2012-13 | 62

Corporate Governance Report
(14) Store Locations : Western Region

Shoppers Stop Ltd.

6. Dynamix Mall, Sant Dhyaneshwar Marg, JVPD Scheme, Next to Chandan Cinema Hall,

21. Koregaon Park Shopping Centre, S. No. 37, Hissa No. 4, Village Mouje, Gorpadi Taluka, Pune Southern Region

Annual Report 2012-13 | 63

Corporate Governance Report

Shoppers Stop Ltd.

15. 1st and 2nd Floor, Celebros Shyamala Towers, 136 Acrot Road, Saligramam,

17. OMR, Ground Floor, Gopalan Signature Towers, Opp. RMZ Infinity, Old Madras Road,

21. E-City Mall, S-7, No. 474, Near Rangavilas Mill, Avinash Road, Near PSG Krishnammal 22. HomeStop, E-City Mall, Near Rangavilas Mill, Avinash Road, Near PSG Krishnammal 23. “Soul Space Arena” Outer Ring Road, Doddanekkundi Village, K R Puram Hobli,

Northern Region 1. Ansal Plaza, Hudco Palace, Andrew Ganj, Khelgaon Marg, Near South Extension,

5. E - City Mall, Opp. Paryatan Bhavan, Beside Eldeco Green Compound, Gomti Nagar,

9. Suncity Triton Mall, Near Bhawani Niketan College, Off Sikar Road, Sitarampura, Tehsil

Annual Report 2012-13 | 64

Corporate Governance Report

Shoppers Stop Ltd.

17. MBD Neopolis Mall, Civil Lines, Beside Hotel Raddison, BMC Chowk,

Eastern Region

Annual Report 2012-13 | 65

Independent Auditors' Report
To, The Members of Shoppers Stop Limited Report on the Financial Statements 1.

Shoppers Stop Ltd.

We have audited the accompanying financial statements of SHOPPERS STOP LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (“the Act”) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error. Auditors’ Responsibility 3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls

4.

internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. 5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion 6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. Emphasis of Matter 7. We draw attention to: (a) Note 30 to the financial statements regarding non-provision of service tax for the period 1st June, 2007 to 31st March, 2010 on renting of immoveable properties given for commercial use, aggregating ` 1,659.56 lacs (2012: ` 1,659.56 lacs), service tax. The matter is contingent upon the final outcome of the litigation.

Annual Report 2012-13 | 66

Independent Auditors' Report

Shoppers Stop Ltd.

(b) Note 31 to the financial statements regarding the Company's financial involvement aggregating ` 33,058.39 lacs (2012: ` 28,801.49 lacs) in Hypercity Retail (India) Limited, a subsidiary Company. The Company considers no provision for any loss is currently necessary for the reasons stated in the note. Our opinion is not qualified in respect of these matters. Report on Other Legal and Regulatory Requirements Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 9. As required by Section 227(3) of the Act, we report that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. (c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. (d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act. (e) On the basis of the written representations received from the directors as on 31st March, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act. For Deloitte Haskins & Sells Chartered Accountants (Firm Registration No. 117366W) Shyamak R. Tata Partner Membership No. 38320 Place: Mumbai Date: 30 April, 2013

Annual Report 2012-13 | 67

Annexure to the Independent Auditors' Report
To, The Members of Shoppers Stop Limited

Shoppers Stop Ltd.

(Referred to in paragraph 8 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date) the year are such that clauses (vi), (viii), (x), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of paragraph 4 of the order, are not applicable to the Company. In respect of the other clauses, we report as under: 1. In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) Some of the fixed assets were physically verified during the year by the Management in accordance with a regular programmes of verification, which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company. 2. In respect of its inventories: (a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. (c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. 3. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to (a) The Company has granted unsecured loans to one party during the year aggregating ` 15,350 lacs. At the year-end, the outstanding balance of such loans aggregated ` 8,350 lacs and the maximum amount involved during the year was ` 11,350 lacs. (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company. (c) The receipt of principal and interest in respect of such loans are as per stipulations. (d) There are no overdue amounts of principal or interest as at 31st March, 2013. 4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in the aforesaid internal control system. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us: (a) The particulars of the contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered. (b) Where each of such transactions is in excess of ` 5 lacs in respect of any party, we are informed that the nature of transactions is such that there are no comparative prevailing market prices. 6. 7. In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. According to the information and explanations given to us, and the records of the Company examined by us, in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues including Provident Fund, Investor Education and and other material statutory dues applicable to it with the appropriate authorities.
Annual Report 2012-13 | 68

5.

Annexure to the Independent Auditors' Report

Shoppers Stop Ltd.

dues in arrears as at 31st March, 2013 for a period of more than six months from the date they became payable. (c) There are no disputed dues relating to Wealth Tax, Excise Duty and Cess which have not been deposited with the relevant been deposited as on 31st March, 2013 on account of any disputes are given below: Name of the Statute Nature of dues Period to which the amount relates Forum where dispute is pending Appellate Authority – Tribunal level Appellate Authority – Tribunal level Appellate Authority – Tribunal level Appellate Authority – Tribunal level Appellate Authority – Commissioner level Appellate Authority – Deputy Commissioner level Appellate Authority – Commissioner level Appellate Authority – Tribunal level Appellate Authority – Commissioner level ( in lacs) 228.20

May 06 to May 07

370.20

The West Bengal Value

Tamil Nadu Value Added Tax Act, 2006 Central Sales Tax The Customs Act, 1962 Custom Duty 2008 2008

7.06

dues to banks. the Company for loans taken by its joint venture companies and a subsidiary Company from banks are not prima facie, prejudicial to the interests of the Company. purposes for which they were obtained. prima facie, not been used during the 12. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no significant fraud on the Company has been noticed or reported during the year. For Deloitte Haskins & Sells Chartered Accountants

Shyamak R. Tata Partner Membership No. 38320 Place: Mumbai Date: 30 April, 2013

Balance Sheet as at 31 March 2013

Shoppers Stop Ltd.
(All amounts in Notes Mar-13 4,148.98 65,233.22 69,382.20 lacs) Mar-12 4,128.11 61,721.66 65,849.77 3,500.00 23.48 3,523.48 18,406.87 23,607.54 14,234.41 928.08 57,176.90 126,550.15

EQUITY AND LIABILITIES SHAREHOLDERS’ FUNDS Share capital Reserves and surplus NON CURRENT LIABILITIES Long-term borrowings Deferred tax liabilities (net) CURRENT LIABILITIES Short-term borrowings Trade payables Other current liabilities Short-term provisions

3 4

5 6

11,250.00 625.43 11,875.43 19,433.71 28,467.66 13,609.86 1,028.07 62,539.30 143,796.93

7 8 9 10

ASSETS NON CURRENT ASSETS Fixed assets Tangible assets Intangible assets Capital work in progress Non-current investments Long-term loans and advances Other non-current assets CURRENT ASSETS Inventories Trade Receivables Cash and cash equivalents Short-term Loans and advances Other current assets

11 11

44,298.28 1,293.32 2,744.86 48,336.46 33,094.74 27,540.34 790.45 109,761.99

40,618.34 1,063.34 2,977.07 44,658.75 28,421.29 25,028.65 — 98,108.69 21,204.01 1,916.92 714.62 3,892.48 713.43 28,441.46 126,550.15

12 13 14

15 16 17 18 19

24,382.49 2,036.36 1,172.13 5,857.36 586.60 34,034.94 143,796.93

The accompanying notes 1 to 41 are an integral part of the financial statements. In terms of our report of even date. For Deloitte Haskins & Sells Chartered Accountants Shyamak R. Tata Partner Mumbai, Dated: 30 April, 2013 For and on behalf of the Board of Directors C. L. Raheja Chairman Ravi Raheja Director Govind S. Shrikhande Customer Care Associate & Managing Director Prashant Mehta Customer Care Associate & Vice President - Legal & Company Secretary

Sanjay Chakravarti Customer Care Associate & Chief Financial Officer Mumbai, Dated: 30 April, 2013

Annual Report 2012-13 | 70

Statement of Profit and Loss for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Notes Mar-13 225,588.92 1,721.47 227,310.39 22 24 25 11 26 143,936.81 (3,178.48) 16,106.41 3,188.14 5,074.71 56,083.11 221,210.70 6,099.69 74.06 27 6,025.63 2,108.78 3,916.85 28 4.73 4.71 7.80 7.75 lacs) Mar-12 192,970.51 1,868.76 194,839.27 127,093.82 (6,090.35) 12,764.04 2,503.60 3,772.24 45,015.22 185,058.56 9,780.70 — 9,780.70 3,354.78 6,425.92

INCOME Revenue from operations Other income Total revenue EXPENSES Purchase of stock-in-trade Employee benefits expense Finance costs Depreciation and amortisation expense Other expenses Total expenses PROFIT BEFORE EXCEPTIONAL ITEMS AND TAX Exceptional Item (Note 40) PROFIT BEFORE TAX Tax expense PROFIT FOR THE YEAR EARNINGS PER EQUITY SHARE Equity shares of face value ` 5 each Basic (`) Diluted (`) The accompanying Notes 1 to 41 are an integral part of the financial statements.

20 21

In terms of our report of even date. For Deloitte Haskins & Sells Chartered Accountants Shyamak R. Tata Partner Mumbai, Dated: 30 April, 2013

For and on behalf of the Board of Directors C. L. Raheja Chairman Ravi Raheja Director Govind S. Shrikhande Customer Care Associate & Managing Director Prashant Mehta Customer Care Associate & Vice President - Legal & Company Secretary
Annual Report 2012-13 | 71

Sanjay Chakravarti Customer Care Associate & Chief Financial Officer Mumbai, Dated: 30 April, 2013

Cash Flow Statement for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in lacs) Mar-12 9,780.70 3,772.24 2,503.60 31.22 (1,665.77) 14,421.99 (6,090.35) (316.29) (1,189.23) (1,954.04) (1,824.88) 61.85 3,695.37 6,804.42 (3,106.59) 3,697.83 — 3,697.83 (13,323.27) 18.96 3,666.91 (4,701.45) (0.50) 125.72 — 1,668.05 639.00 (11,906.58) 19.77 318.63 (695.84) 7,500.00 (2,000.00) 5,857.92 (2,437.75) 8,562.73 353.98 236.42 590.40 353.98 714.62 124.22 590.40 639.53 (639.00) (0.53)

Cash flows from operating activities Net profit before exceptional item and tax Adjustments for: Depreciation and Amortisation Finance costs Loss on sale of fixed assets Interest income Operating profit before working capital changes Adjustments for: Inventories Trade receivables Short-term loans and advances, other current assets Lease deposits (net) Deposit towards Service Tax Long-term/short-term provisions Trade payables and other current liabilities Cash generated from operations Income taxes paid (net of refunds) Cash flow before exceptional item Exceptional item: Insurance claim received (Note 40) Net cash from operating activities (A) Cash flow from investing activities Purchase of fixed assets Sale of fixed assets Loans & advances to subsidiaries/group Companies (net) Investment in subsidiaries Investment in others Dividend Received Investment in joint ventures Interest Received Consideration received on transfer of crossword business (refer note 2 below) Net cash used in investing activities (B) Cash flows from financing activities Issue of share capital Securities premium on issue of share capital Dividend and dividend tax paid Proceeds from long term borrowings Repayment of long term borrowings Short terms loans (net) Finance costs paid Net cash from financing activities (C) Net Increase in cash and cash equivalents (A) + (B) + (C) Cash and cash equivalents as at beginning of the year Cash and cash equivalents as at the end of the year (Note 17) Notes : (1) Cash and Cash Equivalents as per Balance Sheet (Note 17) Less: Deposit under lien & dividend accounts Cash and Cash Equivalents as reported above (2) Consideration receivable from transfer of Crossword business Less: consideration received during the year Balance consideration receivable as at the year end The accompanying Notes 1 to 41 are an integral part of the financial statements. In terms of our report of even date. For Deloitte Haskins & Sells Chartered Accountants Shyamak R. Tata Partner Mumbai, Dated: 30 April, 2013
Annual Report 2012-13 | 72

Mar-13 6,099.69 5,074.71 3,188.14 83.88 (1,259.62) 13,186.80 (3,693.58) 7.39 (1,991.27) (1,036.08) — 99.99 6,254.28 12,827.53 (2,091.89) 10,735.64 500.00 11,235.64 (10,444.21) 92.48 (456.14) (4,539.00) — — (134.46) 1,257.95 0.53 (14,222.86) 20.87 322.83 (719.67) 10,000.00 (4,000.00) 1,026.84 (3,233.67) 3,417.20 429.98 590.40 1,020.38 429.98 1,172.13 151.75 1,020.38 0.53 (0.53) —

For and on behalf of the Board of Directors C. L. Raheja Ravi Raheja Chairman Director Sanjay Chakravarti Customer Care Associate & Chief Financial Officer Mumbai, Dated: 30 April, 2013

Govind S. Shrikhande Customer Care Associate & Managing Director Prashant Mehta Customer Care Associate & Vice President - Legal & Company Secretary

Notes to the Financial Statements for the year ended 31 March, 2013
1. COMPANY BACKGROUND

Shoppers Stop Ltd.

retailing a variety of household and consumer products through departmental stores. As at 31 March 2013, the Company operated through 55 such departmental stores located in different cities of India. 2. SIGNIFICANT ACCOUNTING POLICIES a) Basis of accounting and preparation of financial statements The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. b) Use of estimates The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise. c) Fixed Assets and Depreciation Tangible Assets Fixed assets are stated at their original cost of acquisition less accumulated depreciation and impairment losses. Cost comprises of all costs incurred to bring the assets to their location and working condition and includes all expenses incurred up to the date of launching new stores to the extent they are attributable to the new stores. Depreciation is provided, pro rata for the period of use, by the straight line method (SLM), based on management's estimate of useful lives of the fixed assets, or at the SLM rates prescribed in Schedule XIV to the Act whichever is higher, at the following annual rates: (%) Air conditioning and other equipment Furniture, fixtures and other fittings Computers Vehicles Leasehold Improvements Intangible Assets Intangible assets are stated at their cost of acquisition, less accumulated amortisation and impairment losses. An intangible asset is recognised, where it is probable that the future economic benefits attributable to the asset will flow to the enterprise and where its cost can be reliably measured. The intangible assets are amortised over the best estimate of its useful life on a straight-line basis. Trademarks & Patents and Computer Software are amortised uniformly over a period of 10 and 6 years respectively. 9.50 5.82 20.00

Annual Report 2012-13 | 73

Notes to the Financial Statements for the year ended 31 March, 2013
Impairment of assets

Shoppers Stop Ltd.

An asset is considered as impaired in accordance with Accounting Standard 28 on Impairment of Assets when at the balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable, of the cash generating use). The carrying amount is reduced to the recoverable amount and the reduction is recognised as an impairment loss in the Statement of Profit and Loss. d) Investments Non-current investments are stated at cost. Where applicable, provision is made to recognise a decline, other than temporary, in the value of non-current Investments. e) Revenue recognition Sale of products: Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection. Retail sales are recognised on delivery of the merchandise to the customer, when the property in goods and significant risks and rewards are transferred for a price and no effective ownership control is retained. The property in the merchandise of third-party concession stores located within the main departmental store of the Company passes to the Company once a customer decides to purchase an item from the concession store. The Company in turn sells the item to the customer and is accordingly included under Retail Sales. The property in the merchandise of third party consignment stock does not pass to the Company. Since, however, the sale of such stock forms a part of the activities of the Company's departmental stores, the gross sales values and cost of the merchandise are disclosed separately and form part of total Retail Revenue in the Statement of Profit and Loss. Sales are net of discounts. Value Added Tax and Sales Tax are reduced from Retail Revenue. In respect of gift vouchers and point award schemes operated by the Company, sales are recognised when the gift vouchers or points are redeemed and the merchandise is sold to the customer. Other retail operating revenue: advertisements are promoted/displayed. Facility management fees are recognised pro-rata over the period of the contract. f) Income from investments and loans Interest income is recognised on time proportion basis. Dividend income is recognised when right to receive it is established. g) Inventories Inventories are valued at the lower of cost and net realisable value. Cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present condition and location. Cost is determined by the weighted average cost method. Merchandise received under consignment and concessionaire arrangements belong to the consignors/concessionaires and h) Employee benefits Compensation to employees for services rendered is measured and accounted for in accordance with Accounting Standard 15 on Employee Benefits.

Annual Report 2012-13 | 74

Notes to the Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.

Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to the Statement of Profit and Loss in the period in which the service is rendered. Employee Benefits under defined benefit plans and other long term employee benefits such as gratuity and compensated absences which fall due for payment after completion/cessation of employment or after a period of twelve months from rendering service, are measured by the projected unit credit method, based on actuarial valuations, at each balance sheet date, of obligations as reduced by the fair value of plan assets, where applicable. Actuarial Gains and losses are recognised immediately in the Statement of Profit and Loss. i) Operating Lease Operating Lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis or other j) Borrowing costs Borrowing costs attributable to the acquisition or construction of qualifying assets, as defined in Accounting Standard 16 on Borrowing Costs, are capitalised as part of the cost of acquisition. Other borrowing costs are expensed as incurred. k) Foreign currency transactions Transactions in foreign currencies are accounted at the prevailing rates of exchange on the date of transaction. Monetary items denominated in foreign currencies, are restated at the prevailing rates of exchange at the Balance Sheet date. All gains and losses arising out of fluctuations in exchange rates are accounted for in the Statement of Profit and Loss. Exchange differences on forward exchange contracts, entered into for hedging foreign exchange fluctuation risk in respect of an underlying asset/liability, are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rate changes. Premium/Discount on forward exchange contracts are recognised as an expense/income over the life of the contract. l) Income-tax Income taxes are accounted for in accordance with Accounting Standard 22 on Accounting for Taxes on Income. Taxes comprise both current and deferred tax. Provision for current tax is made taking into account admissible allowances, disallowances under the provisions of Income Tax Act, 1961, using the applicable tax rates. Deferred tax resulting from the timing differences between taxable income and accounting income is accounted using applicable tax rates and laws, enacted or substantively enacted as at the Balance Sheet. The deferred tax asset is recognised and carried forward only to the extent that there is reasonable/virtual certainty that the asset will be realised in future. m) Stock based compensation The compensation cost of stock options granted to employees is calculated using the intrinsic value of the stock options. The compensation expense is amortised uniformly over the vesting period of the option.

Annual Report 2012-13 | 75

Notes to the Financial Statements for the year ended 31 March, 2013
n) Earnings Per Share

Shoppers Stop Ltd.

The Company reports basic and diluted Earnings Per Share (EPS) in accordance with Accounting Standard 20 on Earnings Per Share. Basic EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive. o) Cash Flow Statement The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard 3 on Cash Flow Statements and presents the cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered bank balances. p) Cash and Cash Equivalents (for purposes of Cash Flow Statement) Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. q) Provision, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes to the financial statements. Disclosure is not made if the possibility of an outflow of future economic benefits is remote. Contingent assets are neither recognised nor disclosed in the financial statements.

Annual Report 2012-13 | 76

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

3. SHARE CAPITAL 3.1 Authorised 200,000,000 equity shares of ` 5/- each 3.2 Issued, subscribed and fully paid up shares 82,979,517 (2012 : 82,562,134) equity shares of ` 5/- each fully paid-up 3.3 Reconciliation of shares outstanding at the beginning and end of the year: Particulars: Equity shares At the beginning of the year Issued during the year - ESOP (Note 3.4) At the end of the year 3.4 Shares reserved for issue under options: Employee Stock Option Plan (ESOP) Options exercised during the year Option Outstanding as at For further details of ESOP schemes, refer Note 35 3.5 Details of shareholders holding more than 5% shares as at 31 March: Name of the Shareholder Palm Shelter Estate Development Pvt. Ltd. Raghukool Estate Development Pvt. Ltd. Capstan Trading Pvt. Ltd. Casa Maria Properties Pvt. Ltd. Anbee Construction Pvt. Ltd. Cape Trading Pvt. Ltd. 31 March 2013 Shares held Shares held (Nos) (%) 1,18,13,300 82,63,300 81,29,768 79,13,300 65,11,762 62,61,040 14.24% 9.96% 9.80% 9.54% 7.85% 7.55% 31 March 2013 Numbers ` Lacs 8,25,62,134 4,17,383 8,29,79,517 4,128.11 20.87 4,148.98

10,000.00 4,148.98 4,148.98

10,000.00 4,128.11 4,128.11

31 March 2012 Numbers 8,21,66,836 3,95,298 8,25,62,134 Mar-13 4,17,383 5,92,756

` Lacs

4,108.34 19.77 4,128.11 Mar-12 3,95,298 8,53,367

31 March 2012 Shares held Shares held (Nos) (%) 1,18,13,300 82,63,300 8,129,768 7,913,300 6,511,762 6,261,040 14.31% 10.01% 9.85% 9.58% 7.89% 7.58%

3.6 Other disclosures: The Company has one class of equity shares having a par value of ` 5 per share. Each equity shareholder is eligible for one vote per share held. Each equity shareholder is entitled to dividends as and when the Company declares and pays dividend after obtaining During the year ended 31st March 2013, the amount of per share final dividend recognised as distribution to equity shareholders was ` 0.75 per share (2012: ` 0.75 per share).

Annual Report 2012-13 | 77

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in lacs) Mar-13 Mar-12

4.

RESERVES AND SURPLUS Securities Premium Account: Balance at beginning of the year Add: Received on allotment of shares General Reserve Balance at beginning of the year Transferred from Surplus in the Statement of Profit and Loss Surplus in the Statement of Profit and Loss Opening Balance Add: Profit for the year Appropriations: Dividend proposed to be distributed to equity shareholders` 0.75 per share (2012: ` 0.75 per share) Tax on proposed dividend Transferred to General Reserve

45,956.03 322.83 46,278.86 1,249.63 195.84 1,445.47 14,516.00 3,916.85 18,432.85 622.35 105.77 195.84 923.96 17,508.89 65,233.22

45,637.40 318.63 45,956.03 928.33 321.30 1,249.63 9,131.05 6,425.92 15,556.97 619.22 100.45 321.30 1,040.97 14,516.00 61,721.66 5.10 5.10 61,721.66

Closing Balance Employees' Stock Options outstanding Balance at beginning of the year Less: Transferred to securities premium on options exercised Closing balance 5. LONG TERM BORROWINGS From banks Term Loans (Secured) Less: Current maturities (Note 9)

65,233.22

13,500.00 2,250.00 11,250.00

7,500.00 4,000.00 3,500.00

5.1

2013: Term Loans are secured by a first pari passu charge on stock, book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present & future except ICICI Bank Term loans which is secured by 1st Pari Passu charge on the current assets and all the movable fixed assets of the Company both Present & Future excluding leasehold rights, lease deposits & Shoppers Stop Brands. 2012: Term Loans are secured by a first pari passu charge on stock, book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present and future. Terms of the Facilities: Loan Balance Mar-13 Mar-12 1,000.00 5,000.00 2,500.00 5,000.00 5,000.00 2,500.00 -

5.2

Name of the Bank Rate of Interest Repayment Schedule HDFC Bank Ltd. 11.60%(Previous Repayable on 10th April 2013. For 2012, Loan is repayable in 5 monthly Equal Year: 11.80%) Installments from 10th Dec. 2012 Bank of India 11.25%(Previous Repayable on 8th June 2014 Year: 11.75%) ICICI Bank Ltd. 11.75% Installments from 1st Sep. 2014 IDBI Bank Ltd. 12.00% from 1st Feb. 2014 Annual Report 2012-13 | 78

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

6.

DEFERRED TAX LIABILITIES (NET) Major components of Deferred tax asset and liability are as follows: Deferred tax liability On fiscal allowances on fixed assets Deferred tax assets On provision for doubtful debts/advances On fiscal allowances on expenditure 138.04 270.96 409.00 Deferred tax liabilities (Net) 625.43 108.67 592.74 701.41 23.48 1,034.43 1,034.43 724.89 724.89

7.

SHORT-TERM BORROWINGS Loans from banks (secured) Loans from bank (unsecured) Commercial papers (unsecured) (maximum amount outstanding during the year ` ` 8,500 lacs) 19,433.71 18,406.87 16,501.38 932.33 2,000.00 14,406.87 4,000.00

7.1 2013: Term Loans are secured by a first pari passu charge on stock, book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present & future except ICICI Bank Term loans which is secured by 1st Pari Passu charge on the current assets and all the movable fixed assets of the Company both Present & Future excluding leasehold rights, lease deposits & Shoppers Stop Brands. 2012: Term Loans are secured by a first pari passu charge on stock,book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present and future. 8. TRADE PAYABLES 28,467.66 28,467.66 8.1 There are no Micro, Small and Medium Enterprises, to whom the Company owes dues which are outstanding for more than 45 days during the year. This information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. 23,607.54 23,607.54

Annual Report 2012-13 | 79

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12 4,000.00 94.07 0.46 739.32 6,642.21 1,172.81 1,275.70 169.74 98.25 41.85 14,234.41

9.

OTHER CURRENT LIABILITIES Current maturities of long term borrowings: secured (Note 5) Interest accrued and not due on borrowings Other liabilities: a) Creditors for capital expenditure b) Liability for gift vouchers/point award redemptions c) Statutory dues payable d) Accrued Payroll e) Security deposits f) Related parties payables (Note 38) g) Gratuity 413.54 7,176.65 1,740.52 1,559.22 192.57 98.21 130.14 13,609.86 2,250.00 48.54 0.46

10. SHORT-TERM PROVISIONS For Employee benefits: Leave Encashment For Proposed Dividend For Corporate Dividend Tax 299.96 622.34 105.77 728.11 1,028.07 208.42 619.21 100.45 719.66 928.08

Annual Report 2012-13 | 80

11. FIXED ASSETS (All amounts in GROSS BLOCK 1 April 2012 21,334.22 17,449.33 14,777.20 1,161.04 6,597.05 41.58 61,360.42 320.50 2,718.54 3,039.04 GROSS BLOCK 1 April 2011 Additions 31 March Deductions 2012 20.94 726.77 747.71 — — — 341.44 3,445.31 3,786.75 195.95 1,779.75 1,975.70 24.86 492.87 517.73 — — — 220.81 2,272.62 2,493.43 3,108.66 2,665.51 2,636.69 166.84 591.19 — 9,168.89 544.11 414.84 653.70 27.05 544.54 12.40 2,196.64 23,898.77 5,883.18 19,700.00 4,639.62 16,760.19 5,862.88 1,300.83 590.90 6,643.70 3,746.58 29.18 18.93 68,332.67 20,742.09 1,487.87 1,234.00 1,018.22 127.73 686.82 2.34 4,556.98 193.43 152.03 394.08 12.26 512.82 0.06 1,264.67 7,177.62 5,721.59 6,487.02 706.37 3,920.58 21.21 24,034.39 Additions Deductions 31 March 2013 1 April 2012 For the year Deductions 31 March 2013 31 March 2013 16,721.15 13,978.41 10,273.17 594.46 2,723.12 7.97 44,298.28 120.63 1,172.69 1,293.32 DEPRECIATION/AMORTISATION NET BLOCK lacs)

Notes to Financial Statements for the year ended 31 March, 2013

Description

TANGIBLE ASSETS Leasehold improvements Air conditioning and other equipment Furniture, fixtures and other fittings Office Equipment Computers Vehicles Total INTANGIBLE ASSETS Trademarks Software Total Previous Year

Description

DEPRECIATION/AMORTISATION NET BLOCK 1 April For the 31 March 31 March Deductions 2012 2012 2011 year

TANGIBLE ASSETS Leasehold improvements 15,139.06 6,208.02 12.86 21,334.22 4,721.08 1,174.35 12.25 5,883.18 15,451.04 Air conditioning and other equipment 13,931.10 3,538.06 19.83 17,449.33 3,756.25 913.39 30.02 4,639.62 12,809.71 171.11 14,777.20 5,304.04 669.54 110.70 5,862.88 8,914.32 Furniture, fixtures and other fittings 12,573.77 2,374.54 Office Equipment 888.63 279.34 6.93 1,161.04 489.42 127.58 26.10 590.90 570.14 Computers 5,285.89 1,535.97 224.81 6,597.05 3,353.51 618.46 225.39 3,746.58 2,850.47 Vehicles 41.58 — — 41.58 17.11 1.82 — 18.93 22.65 Total 47,860.03 13,935.92 435.54 61,360.42 17,641.41 3,505.14 404.46 20,742.09 40,618.34 INTANGIBLE ASSETS Trademarks 320.02 0.48 — 320.50 171.56 24.39 — 195.95 124.55 Software 2,384.19 334.35 — 2,718.54 1,537.04 242.71 — 1,779.75 938.79 Total 2,704.21 334.83 — 3,039.04 1,708.60 267.10 — 1,975.70 1,063.34 Note: Some of the Trademarks and Patents are pending for registration with relevant authorities and formalities (including for removal of objections) are under progress.

Shoppers Stop Ltd.

Annual Report 2012-13 | 81

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

12. NON-CURRENT INVESTMENTS (Trade, Unquoted at cost unless otherwise stated) Investments in equity instruments In subsidiary companies: Shoppers' Stop Services (India) Limited 50,000 Equity Shares of ` 10/- each Fully Paid Less: Provision for diminution in value of investment

5.00 (5.00) — 5.00 (5.00) — 5.00 (5.00) — 5.00 (2.55) 2.45 2,505.93 67.61

5.00 (5.00) — 5.00 (5.00) — 5.00 (5.00) — 5.00 (2.55) 2.45 2,505.93 67.61

5,000 Equity Shares of ` 100/- each Fully Paid Less: Provision for diminution in value of investment

50,000 Equity Shares of ` 10/- each Fully Paid Less: Provision for diminution in value of investment Gateway Multichannel Retail (India) Limited 50,000 Equity Shares of ` 10/- each Fully Paid Less: Provision for diminution in value of investment Crossword Bookstores Limited 95,62,500 Equity Shares of ` 10/- each Fully Paid Hypercity Retail (India) Limited 4,84,500 Equity Shares of ` 10/- each Fully Paid In Joint Venture Companies: Timezone Entertainment Private Limited 133,39,488 (2012: 119,94,900) Equity Shares of ` 10/- each Fully Paid Nuance Group (India) Private Limited 364,10,000 Equity Shares of ` 10/- each Fully Paid Others: Stargaze Properties Private Limited 1,000 Equity Shares of ` 10/- each Fully Paid Retailers Association of India 10,000 Equity Shares of ` 10/- each Fully Paid 500 Equity Shares of ` 100/- each Fully Paid Aesthetic Realtors Private Limited 66 Equity Shares of ` 10/- each Fully Paid

1,333.94 3,641.00

1,199.49 3,641.00

0.10 1.00 0.50

0.10 1.00 0.50

0.01

0.01

Annual Report 2012-13 | 82

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

13. NON-CURRENT INVESTMENTS (Contd.) Investments in preference shares In subsidiary companies: Crossword Bookstores Limited 100,00,000 5.5% Cumulative Reedemable Preference Shares of ` 10/- each Fully Paid Hypercity Retail (India) Limited 1310,70,000 7% Compulsorily Convertible Preference Shares of ` 10/- each Fully Paid Hypercity Retail (India) Limited 10,36,00,000 (2012:5,82,10,000), 7% Cumulative Redeemable Preference Shares of ` 10/- each Fully paid

1,000.00

1,000.00

14,182.20

14,182.20

10,360.00

5,821.00

33,094.74 Aggregate provision for diminution in value of non-current investments 13. LONG-TERM LOANS AND ADVANCES (unsecured, considered good unless otherwise stated) Capital Advances Premises and other deposits Deposit towards service tax (Note 30) Advance income-tax (net of provision) Loans and advances to subsidiary companies (Note 38) 17.55

28,421.29 17.55

1,390.26 13,665.57 1,824.88 744.06 9,389.32 2,291.00

956.28 12,629.49 1,824.88 158.57 9,140.14 2,291.00 11,431.14 2,291.00 9,140.14 319.29 25,028.65

Less: Provision for doubtful loans and advances Loans and advances to other related parties (Note 38)

11,680.32 2,291.00 9,389.32 526.25 27,540.34

14. OTHER NON-CURRENT ASSETS Insurance Claim Receivable (Note 40) 15. INVENTORIES (At lower of cost and net realisable value) Stock-in-trade: Retail merchandise

790.45 790.45

-

24,382.49

21,204.01

Annual Report 2012-13 | 83

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

16. TRADE RECEIVABLES (unsecured) Debts outstanding for a period exceeding 6 months from the date they are due for payment Considered good Considered doubtful Other Debts, considered good * Less: Provision for doubtful debts * includes receivable from a subsidiary company on account of transfer of business
` Nil (2012 ` 0.53 lacs)

2.73 12.40 2,033.63 2,048.76 12.40 2,036.36

33.64 12.40 1,883.28 1,929.32 12.40 1,916.92

17. CASH AND CASH EQUIVALENTS Balance with bank in current accounts Other bank balances: Margin money accounts (under lien against bank guarantee) Dividend accounts Cash on hand Of the above, cash and cash equivalents comprise: Balance with banks in current accounts Cash on hand

417.60 151.29 0.46 602.78 1,172.13 417.60 602.78 1,020.38

344.97 123.76 0.46 245.43 714.62 344.97 245.43 590.40

18. SHORT TERM LOANS AND ADVANCES Advances for goods and rendering of services 4,356.43 393.73 Less: Provision for doubtful advances Advances to employees Prepaid expenses 4,750.16 393.73 4,356.43 196.49 1,304.44 5,857.36 19. OTHER CURRENT ASSETS Statutory recoverables 2,916.27 393.73 3,310.00 393.73 2,916.27 99.71 876.50 3,892.48

586.60 586.60

713.43 713.43

Annual Report 2012-13 | 84

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12 194,276.55 22,289.34 216,565.89 10,505.10 15,771.75 190,289.04 836.39 890.02 955.06 2,681.47 192,970.51 194,276.55 22,289.34 2,681.47 219,247.36

20. REVENUE FROM OPERATIONS Retail Sale of Products Own merchandise (including concession sales) - Gross of tax Consignment merchandise Less: Value added tax Less: Cost of consignment merchandise Other Retail operating revenue Facility management fees Income from store displays and sponsorship Income Direct marketing income

227,048.25 26,111.84 253,160.09 12,073.84 18,306.59 222,779.66 1,284.18 683.07 842.01 2,809.26 225,588.92

20.1The gross retail volume of business and operations comprise: Own merchandise Consignment merchandise Other Retail operating income

227,048.25 26,111.84 2,809.26 255,969.35

21. OTHER INCOME Interest Income: Interest Income from subsidiary companies Interest Income from others Compensation received for loss of business Miscellaneous income

1,223.17 36.45 432.00 29.85 1,721.47

1,641.97 23.80 117.61 85.38 1,868.76

22. PURCHASE OF TRADED GOODS 143,936.81 143,936.81 22.1Details of purchase of traded goods Apparels Non-apparels 23. CHANGES IN INVENTORIES OF STOCK-IN-TRADE Opening inventory Closing inventory (Increase)/Decrease 81,519.01 62,417.80 127,093.82 127,093.82 69,460.54 57,633.28

21,204.01 24,382.49 (3,178.48)

15,113.66 21,204.01 (6,090.35)

Annual Report 2012-13 | 85

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12 11,760.82 672.89 330.33 12,764.04

24. EMPLOYEE COSTS Salaries, allowances and bonus Contribution to provident and other funds Staff welfare expenses

14,647.89 1,035.18 423.34 16,106.41

25. FINANCE COSTS Interest on bank borrowings Interest - others Other borrowing costs Bank charges

2,386.29 680.98 32.29 88.58 3,188.14

1,738.76 656.99 17.11 90.74 2,503.60

26. OTHER EXPENSES Insurance Lease rent and hire Charges (Note 26.1) Business conducting fees Rates and taxes Repairs and maintenance

115.31 21,644.47 1,268.49 40.32 5,082.78 744.79 775.10 1,149.29 1,527.78 1,158.13 1,290.59 6,399.40 3,850.39 2,662.07 1,633.33 476.35 83.88 157.31 4,252.24 1,771.09 56,083.11

94.22 17,887.09 1,027.70 31.82 4,008.19 626.64 696.48 870.96 1,401.37 793.54 1,027.75 4,804.53 3,178.01 1,831.27 1,403.60 554.85 31.22 27.09 2,579.51 2,139.38 45,015.22

Legal and professional fees (Note 26.2) Housekeeping charges Security charges Computer expenses Conveyance and travelling expenses Electricity charges Advertisement and publicity Sales promotion Charges on credit card transactions Packing materials Loss on Sale of Fixed Assets (net) Foreign exchange loss (net) Service tax input credit expensed Miscellaneous expenses

Annual Report 2012-13 | 86

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12 10,559.11 7,245.82

26.1 Leasing Transactions a) Operating lease rentals charged to revenue: b) Variable rentals charged to revenue: Variable rent for certain stores is payable in accordance with the lease agreement as the higher of (a) fixed minimum guarantee amount and (b) revenue share percentage. c) The future minimum rental payments in respect of non-cancellable lease for premises are as follows: Not later than one year Later than one year and not later than five years Later than five years The agreements are executed for periods ranging from 33 to 288 months with a non-cancellable period at the beginning of the agreement ranging from 33 to 108 months and having a renewable clause. 26.2 Payments to Auditors (excluding service tax): i) Audit fees ii) Other matters iii) Out of pocket expenses

11,044.67 10,512.59

8,637.21 14,345.85 620.12

8,992.04 17,520.48 942.67

37.95 4.25 2.54 44.74

34.50 3.50 0.80 38.80

27. Tax expenses comprise of: Current tax - For the year - For the earlier year Deferred tax - For the year - For the earlier year

2,006.54 (499.71) 242.94 359.01 2,108.78

3,005.70 349.08 3,354.78

28. EARNING PER EQUITY SHARE Calculated as follows: a) Profit attributable to equity share holders (` In lacs) b) Weighted Number of equity shares outstanding during the year (Nos) c) Weighted Number of equity shares outstanding during the year after adjustment for dilution (Nos) d) Nominal value per share (`) e) EPS: Basic (`) Diluted (`)

3,916.85 8,27,87,593 8,31,59,250 5 4.73 4.71

6,425.92 8,24,25,678 8,28,82,344 5 7.80 7.75

Annual Report 2012-13 | 87

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

29. CONTINGENT LIABILITIES AND COMMITMENTS: a) Claims against the Company not acknowledged as debts, comprising of: (i) Income-tax claims disputed by the Company relating to disallowances aggregating (ii) Service tax, Sales tax and other Indirect tax claims disputed by the Company relating to issues of applicability and classification aggregating (iii) Third party claims arising from disputes relating to contracts aggregating b) Other matters c) Estimated amount of contracts remaining to be executed on capital account and not provided for 702.10 1,496.75 236.19 52.25 3,927.78 1,338.57 9,500.00 379.62 1,068.85 1,419.05 236.19 52.25 2,427.87 1,338.57 5,000.00 324.74

d) Corporate guarantee given jointly and severally with joint venture partners to banks for loans taken by Joint venture entities e) Corporate guarantee given jointly and severally with the promoter group company for loans taken by Hypercity Retail (India) Ltd. f) Bank Guarantees

Note: Future cash outflows in respect of (a) above are determinable only on receipt of judgements/decisions pending with various forums/authorities. 30. SERVICE TAX Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Company has, based on a legal advice, challenged the said levy and, inter-alia, its retrospective application. The Hon'ble Supreme Court passed an interim order dated 14th October, 2011, with regard to the levy of service tax on immovable property rented out for commercial use including its retrospective applicability from 1st June, 2007 in compliance of which, the Company made an aggregate deposit of ` 1824.88 lacs in respect of the liability for such service tax upto 30th September, 2011. From October, 2011 the Company has been accounting and paying for such service tax regularly as per directives of the Supreme Court. Pending the final disposal of the matter, the Company continues not to provide for the retrospective levy aggregating ` 1,659.56 Lacs for the period 1st June, 2007 to 31st March, 2010. 31. The Company has financial involvement in a subsidiary company, namely Hypercity Retail (India) Limited ('Hypercity') as follows: (All amounts in Name of the Company Investment in Equity and Preference Capital 24,609.81 Loans and Advances lacs)

Total Involvement

Hypercity Retail (India) Limited

8,448.58

33,058.39

Hypercity continues to make losses and the accumulated losses of ` 45,175.83 lacs as at 31st March, 2013 have substantially eroded its Net worth as at the year end. Hypercity has business plans with strategic growth projections, which it is confident of achieving given the business opportunities in domestic retail and a continued financial support from the Company. Based on these plans, opportunities and business valuation by an independent valuer, the Company considers that there is no loss for which a provision is currently necessary in these financial statements.

Annual Report 2012-13 | 88

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.

32. The Company has financial involvement in two joint venture companies, namely Nuance Group (India) Private Limited and Timezone Entertainment Private Limited, as follows: (All amounts in Name of the Company Investment in Equity and Preference Capital 3,641.00 1,333.94 Loans and Advances lacs)

Total Involvement

Nuance Group (India) Private Limited Timezone Entertainment Private Limited

— 407.27

3,641.00 1,741.21

The Net worth of these companies have substantially been eroded as at 31st March, 2013. Based on the business plans of these companies and the business valuation by an independent valuer, no provision for any loss is currently considered necessary in these financial statements. 33. SEGMENT REPORTING The Company is primarily engaged in the business of retail trade through retail and departmental store facilities, which in the terms of Accounting Standard 17 on 'Segment Reporting', constitutes a single reporting segment. 34. DERIVATIVES a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading and speculative purposes. The following are the outstanding Forward Exchange Contracts entered into by the Company as at 31 March 2013. (All amounts in Particulars Number of Contracts Type Foreign currency (in lacs) INR Equivalent (in lacs) 8 Buy 7.70 GBP 644.12 75.50 31 March 2013 3 Buy — — — — 104.36 31 March 2012 2 Buy lacs)

b) Unhedged Foreign Currency exposure The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below: Particulars 31 March 2013 In lacs Payable for purchase of Merchandise — — Payable towards Royalty 64.95 5.48 GBP 6,632 In Foreign currency — — 31 March 2012 In lacs 242.15 — 45.59 12.46 GBP 15,034 In Foreign currency GBP 2,92,128 —

Annual Report 2012-13 | 89

Notes to Financial Statements for the year ended 31 March, 2013
35. ESOP schemes a) Number of Employee Stock Option Outstanding:

Shoppers Stop Ltd.

Number of Options

Weighted average exercise price 154.91 297.00 — 82.35 — 245.95

Number of Options

Weighted average exercise price 101.78 336.00 — 84.44 — 154.91

31 March 2013 Outstanding at the beginning of the year Granted during the year Lapsed/Cancelled during the year Exercised during the year Surrendered during the year Outstanding at the end of the year Details of year wise grant and exercise: Year / (date of Grant) 2005-06 (28-12-2005) 2009-10 (29-04-2009) 2009-10 (24-03-2010) 2011-12 (29-04-2011) 2012-13 (09.06.2012) Options granted (net of lapsed) 1,12,328 9,58,740 3,60,300 1,52,549 1,77,910 Exercised till 31.03.2012 1,12,328 5,63,460 75,900 — — Exercised in 2012-13 — 3,34,760 81,400 1,223 — 4,17,383 8,53,367 2,00,000 43,228 4,17,383 — 5,92,756

31 March 2012 11,59,832 1,89,382 1,00,549 3,95,298 — 8,53,367

Exercised till 31.03.2013 1,12,328 8,98,220 1,57,300 1,223 —

Outstanding 31.03.2013 — 60,520 2,03,000 1,51,326 1,77,910 5,92,756

b) New Schemes Launched The compensation cost of stock options granted to employees is calculated using the intrinsic value of the stock options. 2012-13 Date of grant Number of option granted Contractual life Vesting Schedule (from the date of grant) First Year Second Year Third Year Method of settlement Estimated Fair Values (Arrived at by applying Black Scholes Option Pricing Model) Model inputs (share price at the grant date) ` Exercise Price ` Expected Volatility Risk free rate of return
Annual Report 2012-13 | 90

2011-12 — — — 29.04.2011 1,89,382 4 years — — —

09.06.2012 2,00,000 4 years

30% 30% 40% Equity

— — — —

30% 30% 40% Equity

— — — —

118.03 296.85 297.00 46.89% 8.06%

— — — — —

152.39 333.85 336.00 52.34% 8.26%

— — — — —

Notes to Financial Statements for the year ended 31 March, 2013
c) The weighted average contractual life of the options outstanding is 3.85 years d) Other information regarding employee share-based payment plans is as below:(i) Expense arising from employee share based payment plans (ii) Impact on PAT if fair value method had been used instead of Intrinsic Value Method (iii) EPS if fair value method have been used instead of Intrinsic Value Method (`)

Shoppers Stop Ltd.

31 March 2013 — (202.35)

31 March 2012 — (233.07)

4.49 4.47 — — — — —

7.51 7.47 — 5.10 (5.10) — —

(iv) ESOP Outstanding Opening Balance Less: Transfer to securities premium on exercise of options Less: Options lapsed during the year

Annual Report 2012-13 | 91

Notes to Financial Statements for the year ended 31 March, 2013
(All amounts in 36. EMPLOYEE BENEFITS Post-employment benefits Defined contribution plans Defined benefit scheme-Gratuity (Funded) I. Component of Employer Expense Current Service Cost Interest Cost Expected Return on Plan assets Actuarial Losses/(Gain) II. Change in Defined Benefit Obligations (DBO) Present Value of DBO at the Beginning of Period Current Service Cost Interest Cost Actuarial Losses/(Gains) Benefits paid/transferred Present Value of DBO at the End of Period III. Change in Fair Value of Assets Plan Assets at the Beginning of Period Expected Return on Plan Assets Actuarial Gains/(Losses) Actual Company Contribution Benefits paid/transferred Plan Assets at the End of Period IV. Net Asset/(Liability) Recognised in Balance Sheet Present Value of Defined Benefit Obligation Fair Value of Plan Assets Status [Surplus/(Deficit)] Net Asset/(Liability) Recognised in Balance Sheet V. Actuarial assumptions Discount Rate Expected Return on Plan Assets Rate of increase in salaries Rate of Attrition

Shoppers Stop Ltd. lacs, unless otherwise stated) 31 March 2012

31 March 2013

590.27

416.08

87.96 42.30 (38.86) 101.93 193.33 497.66 87.96 42.30 124.99 (61.92) 690.99 455.81 38.86 23.06 105.04 (61.92) 560.85 690.99 560.85 (130.14) — (130.14) 8.00% p.a. 8.70% p.a. 4.00% p.a. 9.50% p.a.

80.46 33.75 (26.70) (16.76) 70.75 421.82 80.46 33.75 (8.42) (29.95) 497.66 332.98 26.70 8.34 117.74 (29.95) 455.81 497.66 455.81 (41.85) — (41.85) 8.50% p.a. 8.60% p.a. 4.00% p.a. 8.50% p.a.

VI. Net Asset/(Liability) recognised in Balance Sheet (including experience adjustment impact) 31 Mar 2013 31 Mar 2012 31 Mar 2011 Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Surplus/(Deficit) in the Plan Experience Adjustments arising on Plan Experience Adjustments arising on Plan 9.88
Annual Report 2012-13 | 92

31 Mar 2010 262.51 262.51 — (49.45) (16.45)

31 Mar 2009 280.43 280.43 — (0.44) (15.81)

690.99 560.85 (130.14) (35.86)

497.66 455.81 (41.85) (63.86) 8.35

421.82 332.98 (88.84) 108.69 3.29

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.

The Company expects to contribute ` 311.66 lacs to its Gratuity plan for the next year. In assessing the Company's Post Retirement Liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables. Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The gratuity benefit scheme of the Company is managed by Life Insurance Corporation of India (LIC). The Company is currently awaiting the details of the composition of the plan assets, by category, from the LIC for the current and the previous years and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given. 37. INTEREST IN JOINT VENTURES: The Company's interests, as a venturer, in a jointly controlled entities are as follows: Name Nuance Group (India) Private Limited Timezone Entertainment Private Limited Principal Activities Airport retailing Entertainment Proportion of ownership Interest 31 March 2013 and 31 March 2012 50%

The Company's share in the assets, liabilities, income and expenses (each without elimination of inter company transactions) related to its interest in the joint ventures are: 31 March 2013 31 March 2012 I. ASSETS Non-Current Assets a) Fixed Assets including capital work in progress (Net) 940.01 1,234.74 b) Long-term loans and advances 807.41 972.10 c) Other non-current assets 0.52 12.57 Current Assets a) Inventories 714.67 657.18 b) Trade receivables 81.70 94.42 c) Cash and cash equivalents 691.91 348.84 d) Short-term loans and advances 280.02 92.83 e) Other current assets 54.67 25.87 II. LIABILITIES Non-Current Liabilities Long-term borrowings — 66.58 Other long term liabilities 1.55 40.54 Long-term provisions 4.96 8.82 Current Liabilities Short-term borrowings 399.80 342.32 Trade payables 1,144.46 1,080.71 Other current liabilities 385.98 326.25 Short-term provisions 10.04 3.48 III. INCOME Revenue from Operations 5,431.00 4,605.43 IV. EXPENSES Operational Expenses 4,856.99 4,180.05 Finance costs 71.85 73.50 Depreciation/Amortisation 496.86 350.18 Provision for taxation — — V. CONTINGENT LIABILITIES 182.18 657.32 Note: The Company's share in the assets, liabilities, income and expenses in Nuance Group (India) Private Limited is based on the audited financials for the year ended 31 December 2012.
Annual Report 2012-13 | 93

Notes to Financial Statements for the year ended 31 March, 2013
(All amounts in 38. RELATED PARTY DISCLOSURES Following are the material transactions with related parties
Nature Subsidiaries Companies under common control/ significant influence (refer (c) below) 12.17 Joint Ventures

Shoppers Stop Ltd. lacs, unless otherwise stated)

Key Management Personnel

Total

Purchase of Assets

Magna Warehousing & Distribution Pvt. Ltd.
Sale of Assets

Trion Properties Private Limited
Purchase of Merchandise

Crossword Bookstores Limited Hypercity Retail (India) Limited
Sale of Merchandise

Crossword Bookstores Limited

Payment of conducting fees/Lease Rent/ Common Area Maintenance Charges

— — (—) — — 193.72 190.07 3.65 (252.21) 190.26 190.26 (252.46) (—) 113.82 — — 113.82 — — (116.99)
1,194.13

12.17 (—) 47.93 47.93 — — — (—) — — — (—) 4,629.22 1,492.76 1,926.87 — 191.27 1,018.32 (4,272.22) — — — 29.04 (23.79) 80.18 — 44.70 35.48 (35.48) — — —

— — (—) — — — — — (—) — — — (—) — — — — — — (—)
29.04

— — (—) — — — — — (—) — — — (—) — — — — — — (—) — — — — (—) — — — — (—) — — —

12.17

— (—) 47.93 — 193.72 — — (252.21) 190.26 — (252.46) (—) 4,743.04 — — — — — (4,389.21)
1,223.17

Ivory Properties and Hotels Private Limited Inorbit Malls (India) Private Limited Hypercity Retail (India) Limited Magna Warehousing & Distribution Pvt. Ltd. Trion Properties Private Limited

Interest Received

Crossword Bookstores Limited Hypercity Retail (India) Limited Timezone Entertainment Pvt. Ltd.
Deposits Paid

Hypercity Retail (India) Limited Inorbit Malls (India) Private Limited Trion Properties Private Limited
Advance Given

Gateway Multichannel Retail (India) Limited

43.31 1,150.82 — (1,618.18) 0.90 0.90 — — (—) 12.65 12.65 —

— — — (—) — — — — (—) — — —

— — — (1,641.97) 81.08 — — — (35.48) 12.65 — —

Annual Report 2012-13 | 94

Notes to Financial Statements for the year ended 31 March, 2013
(All amounts in
Reimbursement of Expenses 409.25 168.18

Shoppers Stop Ltd. lacs, unless otherwise stated) — — — — — (—) — — — (—) — — — — — — — — (—) — — (—) — — — — (—) — — — (—) 338.91 338.91 (310.70) 27.00 0.80 0.80 0.60 3.60 3.80 3.60 3.60 6.80 3.40 (27.00)
577.43

Inorbit Malls (India) Private Limited Crossword Bookstores Limited Hypercity Retail (India) Limited Trion Properties Private Limited
Expenses paid Retailers Association of India Sanghavi Associates Ltd. Expenses recovered

Hypercity Retail (India) Limited Nuance Group (India) Private Limited Crossword Bookstores Limited
Investments made

Hypercity Retail (India) Limited — Preference Shares Timezone Entertainment Pvt. Ltd.
Deposit received back

— 388.78 20.47 — (—) — — — (—) 119.54 0.50 — 119.04 (2.61) 4,539.00 4,539.00 — (4,701.45) — — (—) 15,753.00 403.00 15,350.00 — (11,340.00) 16,028.00 428.00 15,600.00 (14,793.00) — — (—) — — — — — — — — — — (—)

131.42 — — 32.88 (—) 22.09 11.83 10.26 (—) — — — — — — —

— — — — — (—) — — — (—) 0.31 — 0.31 (10.27) 134.46 — 134.46 (—) — — (—) 200.00 — — 200.00 (—) — — — (—) — — (—) — — — — — — — — — — (—)

— — — — (—) 22.09 — — (—) 119.85 — — — (12.88) 4,673.46 — — (4,701.45) 6.42 — (—) 15,953.00 — — — (11,340.00) 16,028.00 — — (14,793.00) 338.91 — (310.70) 27.00 — — — — — — — — — (27.00)

6.42

Inorbit Malls (India) Private Limited
Loan Given

Crossword Bookstores Limited Hypercity Retail (India) Limited Timezone Entertainment Private Limited
Recovery of Loan Crossword Bookstores Limited Hypercity Retail (India) Limited Remuneration to Directors

Govind Shrikhande
Commission and Sitting fees to Non Executive Directors

6.42 (—) — — — — (—) — — — (—) — — (—) — — — — — — — — — — (—)

Chandru L. Raheja Ravi Raheja Neel Raheja B. S. Nagesh Gulu L. Mirchandani Shahzaad Dalal Nitin Sanghavi Deepak Ghaisas Nirvik Singh

Annual Report 2012-13 | 95

Notes to Financial Statements for the year ended 31 March, 2013
Balance outstanding at the year end Payable 98.21 (98.25) Receivables Shoppers Stop Services (India) Limited Cr.

Shoppers Stop Ltd.

1.04 (0.68) Dr. Shoppers Stop.Com (India) Limited 0.63 (0.29) Dr. Hypercity Retail (India) Limited 8,579.76 (8,852.95) Dr. Ivory Properties and Hotels Private Limited 1,016.09 (958.51) Dr. Inorbit Malls (India) Private Limited 620.08 (581.80) Dr. Gateway Multi Channel Retail (India) Limited 2,306.12 (2,291.00) Dr. Timezone Entertainment Private Limited 407.27 (200.00) Dr. Nuance Group (India) Private Limited 118.98 (119.29) Dr. Trion Properties Private Limited 488.89 (444.12) Dr. Crossword Bookstores Limited 923.95 (406.54) Dr. The figure in bracket pertain to previous year. Names of related parties and description of relationship: a) Subsidiaries Shoppers Stop Services (India) Limited, Crossword Bookstores Limited. Gateway Multichannel Retail (India) Limited. Hypercity Retail (India) Limited b) Promoter directors having control/significant C.L. Raheja, Ravi C. Raheja, Neel C. Raheja influence over companies stated in (c) below c) Companies in which the persons stated in (b) Ivory Properties and Hotels Private Limited, K. Raheja Corp. Private Limited. above have control/significant influence K. Raheja Private Limited, Inorbit Malls (India) Private Limited Avacado Properties and Trading India Private Limited, K. Raheja IT Park (Hyderabad) Private Limited, Trion Properties Private Limited, Magna Warehousing and Distribution Private Limited d) Joint Ventures Nuance Group (India) Private Limited Timezone Entertainment Private Limited. e) Key Management Personnel Executive Director: Govind Shrikhande Non Executive Directors: Chandru L. Raheja Ravi Raheja Neel Raheja B. S. Nagesh Gulu L. Mirchandani Shahzaad Dalal Nitin Sanghavi Deepak Ghaisas Nirvik Singh
Annual Report 2012-13 | 96

Notes to Financial Statements for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

39. Additional notes a) Value of Imports on CIF Basis: Capital Goods Purchase of Merchandise b) Expenditure in foreign currency: Consultancy/Professional fees Royalty Commission paid to Directors Sitting fees paid to a director Others c) Earnings in foreign exchange: Foreign currency and foreign credit card collection on sale of merchandise

381.46 3,883.05 4,264.51 169.75 76.39 6.00 1.20 303.25 556.59 5,393.36 5,393.36

185.17 3,160.55 3,345.72 154.31 65.59 6.00 1.20 150.62 377.72 4,704.40 4,704.40

40.

Pune. The Company has filed claim with the insurance company and, the survey by the insurance company is under process. The Company is adequately insured (including for materials damage and for loss of profits) and has set up a receivable of ` 790.45 lacs (net of on account receipt of ` 500 lacs) from the insurance company in respect of the value of the asset destroyed/ authorities and the Company's past experience. The net loss of ` 74.06 lacs on this account, primary on policy exclusions, has been disclosed as an exceptional item. The operations of the store remain suspended.

41. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

Annual Report 2012-13 | 97

STATEMENT REGARDING SUBSIDIARY COMPANIES
(All amounts in Share Capital Assets * Reserves Total Total Investments Liabilities ** Turnover/ Total Income Profit/(Loss) Before Taxation Provision for Taxation Profit/ (Loss) After Taxation Proposed Country Dividend including Dividend distribution tax — India lacs)

Annual Report 2012-13 | 98

Sr. No.

Name of Subsidiary Company

Reporting Currency

1

Crossword Bookstores Limited 5.00 17.31 170.01 170.01 — 0.01 (0.45) — (0.45)

INR

1,956.25

407.89

6,278.78

6,278.78



9,079.20

(588.57)

166.50

(755.06)

2

INR



India

Limited 5.00 (4,495.44) 17.45 17.45 — 0.01 (8.05) — (8.05) — India

Financial Information of Subsidiary Companies

3

Gateway Multichannel Retail (India) Limited 5.00 3.66 9.89 9.89 — 0.37 0.03

INR

4

Shoppers Stop Services (India) Limited 5.00 (3.37) 2.42 2.42 — 0.21

INR

0.01

0.02



India

5

Shoppers Stop.com (India) Limited 46,108.73 (45,175.83) 33,534.42 33,534.42 —

INR

(0.13)



(0.13)



India

6

Hypercity Retail (India) Limited

INR

78,216.63

(8,773.17)



(8,773.17)



India

* Total Assets = Non Current Assets + Current Assets

** Total Liabilities = Shareholder's Fund + Share Application money pending allotment + Non Current Liabilities + Current Liabilities

Shoppers Stop Ltd.

Shoppers Stop Limited Consolidated Financial Statements 2012-13

Annual Report 2012-13 | 99

Independent Auditors' Report
To, The Board of Directors of Shoppers Stop Limited 1.

Shoppers Stop Ltd.

Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of SHOPPERS STOP LIMITED (the “Company”), and its subsidiaries (“the Group”), which comprise the Consolidated Balance Sheet as at 31st March, 2013, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements The Company’s Management is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the reports of other auditors on the financial statements of the subsidiaries and jointly control entity referred to below in the other matter paragraph, the aforesaid consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2013; (b) in the case of the Consolidated Statement of Profit and Loss, of the loss of the Group for the year ended on that date; and (c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date. Emphasis of Matter We draw attention to Note 30 to the Consolidated Financial Statements regarding non-provision of service tax for the period 1st June, 2007 to 31st March, 2010 on renting of immoveable properties given for commercial use, aggregating ` 2,010.90 lacs (2012: ` 2,010.90 lacs), pending final disposal of the appeal filed before the Hon’ble Supreme Court, inter-alia, challenging the retrospective levy of the service tax. The matter is contingent upon the final outcome of the litigation. Our report is not qualified in respect of this matter. Other Matter We did not audit the financial statements of certain subsidiaries and one jointly controlled entitiy, whose financial statements reflect total assets (net) of ` 6,936.33 lacs as at 31st March, 2013, total revenues of ` 10,324.47 lacs and net cash flows amounting to ` 17.74 lacs for the year ended on that date, as considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and jointly controlled entity, is based solely on the reports of the other auditors. Our report is not qualified in respect of this matter.

2.

3.

4.

5. 6.

7.

8.

For Deloitte Haskins & Sells Chartered Accountants (Firm Registration No. 117366W) Shyamak R. Tata Partner (Membership No. 38320) Place: Mumbai Date: 30 April, 2013
Annual Report 2012-13 | 101

Consolidated Balance Sheet as at 31 March 2013

Shoppers Stop Ltd.
(All amounts in lacs) Mar-12 4,128.11 47,476.54 51,604.65 394.98 9,441.57 23.48 80.82 9,545.87 28,828.69 31,980.63 17,285.55 998.42 79,093.29 140,638.79

EQUITY AND LIABILITIES SHAREHOLDERS’ FUNDS Share capital Reserves and surplus MINORITY INTEREST NON-CURRENT LIABILITIES Long-term borrowings Deferred tax liabilities (net) Other long-term liabilities CURRENT LIABILITIES Short-term borrowings Trade payables Other current liabilities Short-term provisions

Notes 3 4

Mar-13 4,148.98 45,942.02 50,091.00 457.13

5 6 7 8 9 10 11

16,624.98 626.36 1.55 17,252.89 30,442.99 38,143.02 16,194.18 1,125.92 85,906.11 153,707.13

ASSETS NON-CURRENT ASSETS Fixed assets Tangible assets Intangible assets Capital work-in-progress Intangible assets under development Goodwill on consolidation Non-current investments Deferred Tax Assets (net) Long-term loans and advances Other non-current assets CURRENT ASSETS Inventories Trade Receivables Cash and cash equivalents Short-term loans and advances Other current assets

12 12

62,052.64 2,154.10 3,185.35 3.03 67,395.12 9,874.51 1.61 — 23,956.92 922.08 102,150.24 36,981.95 3,217.12 2,678.13 7,572.75 1,106.94 51,556.89 153,707.13

59,815.75 1,792.21 3,190.55 14.91 64,813.42 9,873.82 1.61 2.53 21,554.24 537.88 96,783.50 33,113.41 2,630.72 1,501.70 5,866.31 743.15 43,855.29 140,638.79

13 14 15 16 17 18 19 20 21

The accompanying Notes 1 to 40 are an integral part of the financial statements. In terms of our report of even date. For Deloitte Haskins & Sells Chartered Accountants Shyamak R. Tata Partner Mumbai, Dated: 30 April, 2013 For and on behalf of the Board of Directors C. L. Raheja Chairman Ravi Raheja Director

Govind S. Shrikhande Customer Care Associate & Managing Director Prashant Mehta Customer Care Associate & Vice President - Legal & Company Secretary

Sanjay Chakravarti Customer Care Associate & Chief Financial Officer Mumbai, Dated: 30 April, 2013

Annual Report 2012-13 | 102

Consolidated Statement of Profit & Loss for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in in lacs) Mar-12

Notes A. CONTINUING OPERATIONS INCOME Revenue from operations Other income Total revenue EXPENDITURE Purchase of stock-in-trade Changes in Inventories of stock-in-trade – (increase)/decrease Employee benefits expenses Finance costs Depreciation and amortisation expenses Other expenses Total expenses (LOSS)/PROFIT FROM CONTINUING OPERATIONS BEFORE TAX Exceptional Item (Note 38) (Loss)/Profit before tax Tax expense (LOSS)/PROFIT FOR THE YEAR B. DISCONTINUING OPERATIONS (LOSS)/PROFIT FROM DISCONTINUING OPERATIONS BEFORE TAX Tax expenses (LOSS)/PROFIT FOR THE YEAR C. TOTAL OPERATIONS LOSS FOR THE YEAR BEFORE MINORITY INTEREST Minority Interest – Share of loss (LOSS)/PROFIT FOR THE YEAR EARNINGS PER EQUITY SHARE Equity shares of face value ` 5 each Basic (`) Diluted (`) 32

Mar-13

22 23

317,719.08 689.20 318,408.28 211,747.94 (3,862.42) 23,593.27 5,465.77 7,907.39 76,627.01 321,478.96 (3,070.68) 74.06 (3,144.74) 2,275.28 (5,420.02)

278,706.99 756.96 279,463.95 192,629.16 (8,065.04) 19,908.74 4,216.47 6,093.42 63,909.48 278,692.23 771.72 — 771.72 3,216.96 (2,445.24)

24 25 26 27 12 28

31

37

(8.05) — (8.05) (5,428.07) 4,298.85 (1,129.22)

3.37 — 3.37 (2,441.87) 4,343.30 1,901.43

(1.36) (1.36)

2.31 2.29

The accompanying Notes 1 to 40 are an integral part of the financial statements. In terms of our report of even date. For Deloitte Haskins & Sells Chartered Accountants Shyamak R. Tata Partner Mumbai, Dated: 30 April, 2013 For and on behalf of the Board of Directors C. L. Raheja Chairman Ravi Raheja Director Govind S. Shrikhande Customer Care Associate & Managing Director Prashant Mehta Customer Care Associate & Vice President - Legal & Company Secretary
Annual Report 2012-13 | 103

Sanjay Chakravarti Customer Care Associate & Chief Financial Officer Mumbai, Dated: 30 April, 2013

Consolidated Cash Flow Statement for the year ended 31 March, 2013

Shoppers Stop Ltd.
(All amounts in lacs) Mar-12 775.09 6,093.42 4,216.75 (216.49) 62.89 (9.74) (77.20) 10,844.72 (8,058.74) (441.85) (544.60) (191.13) (537.88) (2,017.45) (2,179.70) (9.62) (85.89) 5,947.89 2,725.75 (3,252.37) (526.62) — (526.62) (17,484.81) 167.29 (2.45) (0.50) 80.17 (17,240.30) 19.77 318.63 4,514.73 (716.23) 14,000.00 (7,121.14) 10,390.15 (4,209.71) 17,196.20 (570.72) 1,590.15 1,019.43 (570.72) 1,501.70 482.27 1,019.43

Cash flows from operating activities Net (Loss)/profit before exceptional item and tax Adjustments for: Depreciation, Amortisation Finance costs Loss/(Gain) on account of stake increase/dilution in a joint venture Loss on sale of fixed assets Provision for advances/doubtful debts Interest income Operating Profit before working capital changes Inventories Trade receivables Short term loans and advances, other current assets Long term loans and advances Other non-current assets Lease deposits (net) Deposit towards service tax Long term liabilities Short term provisions Trade payables and other current liabilities Cash generated from operations Income taxes paid (net of refunds) Cash flow before exceptional items Exceptional item: Insurance claim (Note 39) Net cash from/(used in) operating activities (A) Cash flow from investing activities Purchase of fixed assets Sale of fixed assets Purchase of interest in a joint venture/subsidiary Purchase of other investment Interest received Net cash used in investing activities (B) Cash flows from financing activities Issue of share capital Securities premium on Issue of shares capital Issue of share capital to minority shareholders Dividend and dividend tax paid Proceeds from long-term borrowings Repayment of long-term borrowings Short-term loans (net) Finance costs paid Net cash from financing activities (C) Net Increase/(Decrease) in cash and cash equivalents (A)+(B)+(C) Cash and cash equivalents as at beginning of the year Cash and cash equivalents as at the end of the year Note: Cash and Cash Equivalents as per Balance sheet (see note 19) Less: Balance under lien/earmarked with banks Cash and Cash Equivalent as reported above The accompanying Notes 1 to 40 are an integral part of the financial statements. In terms of our report of even date. For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors C. L. Raheja Chairman Ravi Raheja Director

Mar-13 (3,078.73) 7,907.39 5,465.77 — 107.51 47.88 (77.67) 10,372.15 (4,383.64) (586.40) (2,047.67) 75.96 406.25 (1,252.34) — (79.28) 127.50 7,770.76 10,403.30 (2,213.31) 8,189.99 500.00 8,689.99 (12,257.40) 153.20 (134.46) — 77.67 (12,160.99) 20.87 322.83 4,361.00 (719.67) 10,000.00 (5,366.59) 1,614.31 (5,514.87) 4,717.88 1,246.88 1,019.43 2,266.31 1,246.88 2,678.13 411.82 2,266.31

Govind S. Shrikhande Customer Care Associate & President & Chief Executive Officer & Executive Director Prashant Mehta Customer Care Associate & Vice President - Legal & Company Secretary

Shyamak R. Tata Partner Mumbai, Dated: 30 April, 2013
Annual Report 2012-13 | 104

Sanjay Chakravarti Customer Care Associate & Chief Financial Officer Mumbai, Dated: 30 April, 2013

Notes to the Consolidated Financial Statements for the year ended 31 March, 2013
1. COMPANY BACKGROUND

Shoppers Stop Ltd.

Shoppers Stop Limited (‘SSL’ or ‘the Company’) was incorporated on 16 June, 1997. The Company is engaged in the business of retailing a variety of household and consumer products and books through departmental stores. As at 31 March, 2013, the Company operated through 55 such departmental stores located in different cities of India. The Company has six subsidiaries which along with the Company constitute the Group (Refer Note 38). 2. SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation of financial statements The consolidated financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. b) Use of estimates The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise. c) Fixed assets and depreciation Tangible assets Fixed assets are stated at their original cost of acquisition less accumulated depreciation and impairment losses. Cost comprises of all cost incurred to bring the assets to their location and working condition and includes all expenses incurred up to the date of launching new stores to the extent they are attributable to the new store. Depreciation is provided, pro rata for the period of use, by the straight line method (SLM), based on management's estimate of useful lives of the fixed assets, or at the SLM rates prescribed in Schedule XIV to the Act whichever is higher, at the following annual rates:

Air conditioning and other equipment
Furniture, fixtures and other fittings

Computers Vehicles Leasehold Improvements
Intangible assets

(%) 5.00–33.00 6.33–20.00 16.21–33.33 9.50–20.00 5.82–20.00

Intangible assets are stated at their cost of acquisition, less accumulated amortisation and impairment losses. An intangible asset is recognised, where it is probable that the future economic benefits attributable to the asset will flow to the enterprise and where its cost can be reliably measured. The depreciable amount of intangible assets is allocated over the best estimate of its useful life on a straight-line basis. Trademarks, patents and computer software are amortised uniformly over a period of 10 and 6 years respectively. Copyrights and acquired Goodwill are amortised uniformly over a period of 10 years. Impairment of assets An asset is considered as impaired in accordance with Accounting Standard 28 on Impairment of Assets when at the balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset’s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognised as an impairment loss in the Statement of Profit and Loss.

Annual Report 2012-13 | 105

Significant Accounting Policies and Notes forming part of Consolidated Financial Statements for the year ended 31 March 2013
d) Investments

Shoppers Stop Ltd.

Long-term investments are stated at cost. Where applicable, provision is made to recognise a decline, other than temporary, in the value of non-current Investments. e) Revenue recognition Sale of products: Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection. Retail sales are recognised on delivery of the merchandise to the customer, when the property in goods and significant risks and rewards are transferred for a price and no effective ownership control is retained. The property in the merchandise of third-party concession stores located within the main departmental store of the Company passes to the Company once a customer decides to purchase an item from the concession store. The Company in turn sells the item to the customer and is accordingly included under Retail Sales. The property in the merchandise of third-party consignment stock does not pass to the Company. Since, however, the sale of such stock forms a part of the activities of the Company's departmental stores, the gross sales values and cost of the merchandise are disclosed separately and form part of total Retail Turnover in the Statement of Profit and Loss. Sales are net of discounts. Value Added Tax and Sales Tax are reduced from Retail Revenue. In respect of gift vouchers and point award schemes operated by the Company, sales are recognised when the gift vouchers or points are redeemed and the merchandise is sold to the customer. Other retail operating revenue: Revenue from store displays and sponsorships are recognised based on the period for which the products or the sponsors’ advertisements are promoted/displayed. Facility management fees are recognised pro-rata over the period of the contract. Franchise income is recognised in accordance with the rates specified in the franchise agreements and is based on the sales recorded by the franchisees for the year. f) Income from investments and loans Interest income is recognised on time proportion basis. Dividend income is recognised when right to receive payment is established. g) Inventories Inventories are valued at the lower of cost and net realisable value. Cost of inventories comprises of all costs of purchase and other costs incurred in bringing the inventories to their present condition and location. Cost is determined by the weighted average cost method. Merchandise received under consignment and concessionaire arrangements belong to the consignors/concessionaires and are therefore excluded from the Company’s inventories. Option inventories comprises of right to acquire flats in a structure to be constructed by the other party, which right is freely marketable/transferable after a stipulated period. The same is valued at lower of cost and net realisable value. h) Employee benefits Compensation to employees for services rendered is measured and accounted for in accordance with Accounting Standard 15 on Employee Benefits. Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to the Statement of Profit and Loss in the period in which the service is rendered. Employee Benefits under defined benefit plans and other long-term employee benefits such as gratuity and compensated absences which fall due for payment after completion of employment or after a period of twelve months from rendering service, are measured by the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The company’s obligations recognised in the balance sheet represent the present value of obligations as reduced by the fair value of plan assets, where applicable. Actuarial Gains and losses are recognised immediately in the Statement of Profit and Loss.

Annual Report 2012-13 | 106

Significant Accounting Policies and Notes forming part of Consolidated Financial Statements for the year ended 31 March 2013
i) Operating leases

Shoppers Stop Ltd.

Operating Lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis or other bases more representative of the time pattern of the user’s benefit. j) Borrowing costs Borrowing costs attributable to the acquisition or construction of qualifying assets, as defined in Accounting Standard 16 on Borrowing Costs, are capitalised as part of the cost of acquisition. Other borrowing costs are expensed as incurred. k) Foreign currency transactions Transactions in foreign currencies are accounted at the prevailing rates of exchange on the date of transaction. Monetary items denominated in foreign currencies, are restated at the prevailing rates of exchange at the Balance Sheet date. All gains and losses arising out of fluctuations in exchange rates are accounted for in the Statement of Profit and Loss. Exchange differences on forward exchange contracts, entered into for hedging foreign exchange fluctuation risk in respect of an existing asset/liability, are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rate changes. Premium/Discount on forward exchange contracts are treated as an expense/income over the life of the contract. l) Income-Tax Income taxes are accounted for in accordance with Accounting Standard 22 on Accounting for Taxes on Income. Taxes comprise both current and deferred tax. Provision for current tax is made taking into account admissible allowances, disallowances under the provisions of Income-Tax Act, 1961, using the applicable tax rates. Deferred tax resulting from the timing differences between taxable income and accounting income is accounted using applicable tax rates and laws, enacted or substantively enacted as at the Balance Sheet. The deferred tax asset is recognised and carried forward only to the extent that there is reasonable/virtual certainty that the asset will be realised in future. m) Stock based compensation The compensation cost of stock options granted to employees is calculated using the intrinsic value of the stock options. The compensation expense is amortised uniformly over the vesting period of the option. n) Earnings per share Basic and diluted Earnings Per Share (EPS) is reported in accordance with Accounting Standard 20 on Earnings Per Share. Basic EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive. o) Cash Flow statement The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard 3 on Cash Flow Statements and presents the cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered bank balances. p) Cash and cash equivalents (for purposes of Cash Flow Statement) Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. q) Provision, Contingent liabilities and Contingent assets Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes to the financial statements. Disclosure is not made if the possibility of an outflow of future economic benefits is remote. Contingent assets are neither recognised nor disclosed in the financial statements.

Annual Report 2012-13 | 107

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

3. SHARE CAPITAL 3.1 Authorised 200,000,000 equity shares of ` 5/- each 3.2 Issued, subscribed and fully paid up shares 82,979,517 (2012: 82,562,134) equity shares of ` 5/- each fully paid up

10,000.00 4,148.98 4,148.98

10,000.00 4,128.11 4,128.11

3.3 Reconciliation of shares outstanding at the beginning and end of the year: Particulars: Equity shares At the beginning of the year Issued during the year - ESOP (Note 3.4) At the end of the year 3.4 Shares reserved for issue under options: Employee Stock Option Plan (ESOP) Options exercised during the year Option Outstanding as at 3.5 Details of shareholders holding more than 5% shares as at: 31 March 2013 Name of the Shareholder Shares held Shares held (Nos) (%) Palm Shelter Estate Development Pvt. Ltd. Raghukool Estate Development Pvt. Ltd. Capstan Trading Pvt. Ltd. Casa Maria Properties Pvt. Ltd. Anbee Construction Pvt. Ltd. Cape Trading Pvt. Ltd. 11,813,300 8,263,300 8,129,768 7,913,300 6,511,762 6,261,040 14.24% 9.96% 9.80% 9.54% 7.85% 7.55% 31 March 2013 Numbers ` lacs 82,562,134 417,383 82,979,517 4,128.11 20.87 4,148.98 31 March 2012 Numbers 82,166,836 395,298 82,562,134 Mar-13 417,383 592,756
` lacs

4,108.34 19.77 4,128.11 Mar-12 395,298 853,367

31 March 2012 Shares held Shares held (Nos) (%) 11,813,300 8,263,300 8,129,768 7,913,300 6,511,762 6,261,040 14.31% 10.01% 9.85% 9.58% 7.89% 7.58%

3.6 Other disclosures: The Company has one class of equity shares having a par value of ` 5 per share. Each equity shareholder is eligible for one vote per share held. Each equity shareholder is entitled to dividends as and when the Company declares and pays dividend after obtaining shareholders’ approval. Dividends are paid in Indian Rupees. During the year ended 31st March 2013, the amount of per share final dividend recognised as distribution to equity shareholders was ` 0.75 per share (2012: ` 0.75 per share).

Annual Report 2012-13 | 108

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

4. RESERVES AND SURPLUS Securities Premium Account Balance at beginning of the year Add: Received on allotment of shares General Reserve Balance at beginning of the year Transferred from Surplus in the Statement of Profit and Loss Surplus in the Statement of Profit and Loss Opening Balance Add/(Less): (Loss)/Profit for the year Appropriations: Dividend proposed to be distributed to equity shareholders` 0.75 per share (2012: ` 0.75 per share) Tax on proposed dividend Transferred to General Reserve Closing Balance Employees’ Stock Options outstanding Balance at beginning of the year Less: transferred to securities premium on options exercised Closing balance * Includes Share in Joint Ventures – Loss ` 3,259.80 lacs (2012 : ` 3,285.18 lacs) 5. LONG-TERM BORROWINGS From banks Term Loans (Secured) Less: Current maturities (Note 10) Share in Joint Ventures – Term Loan (Note 38) Less: Current maturities (Note 10)

45,956.03 322.82 46,278.85 1,249.63 195.84 1,445.47 270.88 (1,129.22) (858.34) 622.35 105.77 195.84 (1,782.30)

45,637.40 318.63 45,956.03 928.33 321.30 1,249.63 (589.58) 1,901.43 1,311.85 619.22 100.45 321.30 270.88

— — — 45,942.02*

5.10 5.10 — 47,476.54*

19,374.98 2,750.00 16,624.98 67.00 67.00 — 16,624.98

14,674.99 5,300.00 9,374.99 199.74 133.16 66.58 9,441.57

5.1 2013: Term loans are secured by a first Pari Passu charge on stocks, book debts including credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both Present & Future. Some of the term loans are further secured by second Pari Passu charge on the current assets of the Company and corporate guarantees, joint and several, given by the company and promoter group/joint venture partners except ICICI Bank Term loans which is secured by first Pari Passu charge on the current assets and all the movable fixed assets of the company both Present & Future excluding leasehold rights, lease deposits & Shoppers Stop Brands.

Annual Report 2012-13 | 109

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.

2012: Term loans are secured by a first Pari Passu charge on stocks, book debts including credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both Present & Future. Some of the term loans are further secured by second Pari Passu charge on the current assets of the Company and corporate guarantees, joint and several, given by the Company and promoter group/joint venture partners. 5.2 Terms of the Facilities: Name of the Bank HDFC Bank Ltd. Rate of Interest Repayment Schedule Loan Balance 31 March 2013 31 March 2012 1,000.00 5,000.00

Bank of India ICICI Bank Ltd. IDBI Bank Ltd. IDBI Bank Ltd.

Kotak Mahindra Bank Ltd.

Yes Bank Ltd.

11.60% Repayable on 10th April 2013. (Previous Year: 11.80%) For 2012, Loan is repayable in 5 monthly Equal Installments from 10th Dec. 2012 11.25% Repayable on 8th June 2014 (Previous Year: 11.75%) 11.75% Repayable in 15 Equal Quarterly Installments from 1st Sept. 2014 12.00% Repayable in 4 Equal Quarterly Installments from 1st Feb. 2014 For 2012, Loan is repayable in Nil (Previous Year: 14.75%) 4 Quarterly Installments from 13th May 2012 Loan is repayable in 21 equal 12.25% (Previous Year: 12.30%) installments from 30th April 2013. For 2012, Loan is repayable in 33 Equal Monthly Installments from 30th April 2012 Repayable in 12 Equal Quarterly 12.05% (Previous Year: 12.05%) Installments from 25th June 2014

2,500.00 5,000.00 5,000.00 —

2,500.00 — — 800.00

875.00

1,375.00

5,000.00

5,000.00 lacs)

(All amounts in Mar-13 6. DEFERRED TAX LIABILITIES (NET) Major components are as follows: Deferred tax liabilities On fiscal allowances on fixed assets Deferred tax assets On provision for doubtful debts/advances On fiscal allowances on expenditure Unabsorbed depreciation Deferred tax liability (Net) 7. OTHER LONG-TERM LIABILITIES Share in Joint Venture (Note 38) 1.55 1.55 138.04 297.36 109.23 544.63 626.36 1,170.99 1,170.99

Mar-12

724.89 724.89

108.67 592.74 — 701.41 23.48

80.82 80.82

Annual Report 2012-13 | 110

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs)

Mar-12 24,152.53 401.16 4,000.00 275.00 28,828.69

8. SHORT-TERM BORROWINGS Loans from banks (secured) Loans from bank (unsecured) Bill discounting Buyer Credit Commercial papers (unsecured) (maximum amount outstanding during the year ` 11,500 lacs; 2012: ` 8,500 lacs) Share in Joint Ventures (Note 38)

26,567.66 932.33 651.52 27.18 2,000.00 264.30 30,442.99

8.1 2013: Loan repayable on demand viz. Cash credit, Working capital loans and Other loans viz. short-term loans and Buyers credit are secured by a first Pari Passu charge hypothecation charge on credit card/debit card receivables (Escrow account), current assets and all movable fixed assets of the Company both present and future and an exclusive lien on lease deposits except ICICI Bank Term loans which is secured by first Pari Passu charge on the current assets and all the movable fixed assets of the Company both present and future excluding leasehold rights, lease deposits and Shoppers Stop brands. Some of the loans are further secured by corporate guarantees, joint and several, given by the Company and promoter group/joint venture partners. 8.2 2012: Loan repayable on demand viz. Cash credit, Working capital loans and Other loans viz. short-term loans and Buyers credit are secured by a first Pari Passu charge hypothecation charge on credit card/debit card receivables (Escrow account), current assets and all movable fixed assets of the Company both present and future and an exclusive lien on lease deposits. Some of the loans are further secured by corporate guarantees, joint and several, given by the Company and promoter group/joint venture partners. (All amounts in 9. TRADE PAYABLES – Micro, Small and Medium enterprises – Other than Micro, Small and Medium enterprises Share in Joint Ventures (Note 38) 11.16 37,068.98 1,062.88 38,143.02 lacs)

23.44 30,827.26 1,129.93 31,980.63

9.1 There are no Micro, Small and Medium Enterprises, to whom the Company owes dues which are outstanding for more than 45 days during the year. This information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

Annual Report 2012-13 | 111

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
Mar-13 Mar-12 5,300.00 108.59 32.79 0.46 809.01 1,261.02 1,717.35 352.90 7,285.94 96.39 321.10 17,285.55

10. OTHER CURRENT LIABILITIES Current maturities of long-term borrowings: Secured (Note 5) Interest accrued and not due on borrowings Income received in advance Unpaid dividend Other liabilities: a) Creditors for capital expenditure b) Statutory dues payable c) Accrued payroll d) Security deposits e) Others (mainly for gift vouchers/points award redemptions, etc.) f) Gratuity Payable Share in Joint Ventures (Note 38) (includes current maturities of term loans 2013: ` 67 lacs, 2012: ` 133.16 lacs) 11. SHORT-TERM PROVISIONS For employee benefits: For Leave encashment For Proposed equity dividend For Tax on Proposed equity dividend Share in Joint Ventures (Note 38)

2,750.00 59.50 18.25 0.46 603.76 2,008.38 2,085.45 420.19 7,736.00 154.31 357.88 16,194.18

392.11 622.34 105.77 728.11 5.70 1,125.92

269.98 619.21 100.45 719.66 8.78 998.42

Annual Report 2012-13 | 112

12. FIXED ASSETS (All amounts in GROSS BLOCK Additions Deductions Adjustments 31 March 2013 3,436.29 2,955.15 5,971.82 7,099.65 829.89 4,584.03 56.01 1,093.70 7,263.87 476.86 5.82 8.67 146.73 2,369.11 945.95 523.28 187.89 23.68 1,520.60 539.93 310.56 18.65 190.30 0.04 (3.98) 2,083.64 641.37 92.32 2,874.55 172.58 813.75 — 282.80 3,405.96 756.84 92,664.56 26,476.49 164.89 (8.67) 2,336.51 21.00 0.01 85.70 555.51 204.76 8,388.66 39.78 21.84 1,890.41 859.74 268.88 22,139.78 927.62 128.46 27,953.58 7,321.77 7,769.76 975.46 4,816.39 53.11 1,427.82 759.35 30,611.89 837.42 141.56 29,869.92 6,841.39 2,043.11 485.45 151.46 8,247.58 1 April For the year 2012 Deductions Adjustments 31 March 2013 31 March 2013 21,622.34 20,631.81 14,370.02 914.95 3,572.24 32.59 908.69 62,052.64 DEPRECIATION, AMORTISATION NET BLOCK lacs)

DESCRIPTION

1 April 2012

TANGIBLE ASSETS

Leasehold improvements

27,412.61

Air conditioning and other equipment

26,054.51

Furniture, fixtures and other fittings

20,393.85

Office Equipment

1,779.45

Computers

8,335.18

Vehicles

106.71

Share in Joint Ventures (Note 39)

2,209.93

Total

86,292.24 10,535.12

INTANGIBLE ASSETS 20.94 972.14 9.87 1,002.95 0.90 133.44 7,241.65 — — 76.77 0.90 138.99 5,390.81 2,790.57 42.68 4,580.83 — (5.55) 1,774.07 1,747.58 24.86 717.66 20.00 762.52 — 0.90 — 0.90 119.00* 135.90 — 254.90 1,653.44 3,371.43 62.67 5,087.55 120.63 2,019.38 14.10 2,154.10

Trademarks and patents (Note)

1,747.58

Computer Software

4,558.56

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Share in Joint Ventures (Note 39)

66.90

Total

6,373.04

* Represents adjustment pertaining to earlier years. Accordingly the depreciation (net) for the year is ` 7,907.39 lacs.

Shoppers Stop Ltd.

Annual Report 2012-13 | 113

(All amounts in GROSS BLOCK Additions Deductions Adjustments 31 March 2012 7,258.40 4,806.56 3,480.43 372.57 1,856.71 9.86 524.63 1,262.59 — — — — — 6,373.04 4,036.79 — 66.90 31.17 — 4,558.56 2,354.07 — 1,747.58 1,651.55 96.03 436.50 11.51 544.04 — 86,292.24 21,959.52 5,549.38 471.51 — 2,209.93 1,076.55 338.69 321.54 1,032.41 — — — — 4.41 — 106.71 55.03 4.88 3.90 291.12 — 8,335.18 4,019.02 852.36 287.35 16.13 — 1,779.45 670.48 192.91 33.50 — — — — 317.92 — 20,393.85 6,206.68 1,129.77 236.80 — 7,099.65 829.89 4,584.03 56.01 1,093.70 — 26,476.49 — — — — 1,747.58 2,790.57 42.68 4,580.83 144.39 — 26,054.51 4,635.62 1,469.25 133.05 — 5,971.82 17.11 — 27,412.61 5,296.14 1,561.52 16.27 — 6,841.39 20,571.22 20,082.69 13,294.20 949.56 3,751.15 50.70 1,116.23 59,815.75 — 1,767.99 24.22 1,792.21 1 April For the year 2011 Deductions Adjustments 31 March 2012 31 March 2012 DEPRECIATION, AMORTISATION NET BLOCK

lacs)

DESCRIPTION

1 April 2011

Annual Report 2012-13 | 114

TANGIBLE ASSETS

Leasehold improvements

20,171.32

Air conditioning and other equipment

21,392.34

Furniture, fixtures and other fittings

17,231.34

Office Equipment

1,423.01

Computers

6,769.59

Vehicles

101.26

Share in Joint Ventures

2,156.81

Total 0.48 881.45 — 881.93

69,245.67 18,309.16

INTANGIBLE ASSETS

Trademarks and patents (Note)

1,747.10

Computer Software

3,677.11

Share in Joint Ventures

66.90

Total

5,491.11

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Note:

Some of the Trademarks and Patents are pending for registration with relevant authorities and certain formalities (including for removal of objections) are under progress.

Shoppers Stop Ltd.

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs)

Mar-12

13. NON-CURRENT INVESTMENTS (Trade, unqouted, at cost, unless otherwise stated) Investments in equity instruments Stargaze Properties Private Limited 1,000 equity shares of ` 10/- each fully paid Retailers Association of India 10,000 equity shares of ` 10/- each fully paid Aesthetic Realtors Private Limited 66 equity shares of ` 10/- each fully Paid Retailers Association’s Skill Council of India 500 equity shares of ` 100/- each fully paid

0.10

0.10

1.00

1.00

0.01 0.50 1.61

0.01 0.50 1.61

14. DEFERRED TAX ASSETS (NET) Major components are as follows: Deferred tax liability On fiscal allowances on fixed assets Deferred Tax Assets Unabsorbed depreciation Expenditure allowable on payment basis — — — Deferred tax asset (Net) — 126.02 34.90 160.92 2.53 — — 158.39 158.39

Annual Report 2012-13 | 115

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

15. LONG-TERM LOANS AND ADVANCES (Unsecured, considered good unless otherwise stated) Capital advances Premises and other deposits Deposit towards service tax (Note 30) Advance income tax (net of provision) Loans and advances to related parties (Note 35) – Considered good Share in Joint Ventures (Note 38) 274.21 807.41 23,956.92 16. OTHER NON-CURRENT ASSETS (Unsecured, considered good unless otherwise stated) Statutory recoverables – Considered good – Considered doubtful Less : Provision for doubtful advances Insurance Claim receivables Other receivables Minimum alternate tax credit entitlement Share in Joint Ventures (Note 38) 129.99 100.27 230.26 100.27 129.98 790.45 1.12 — 0.52 922.08 17. INVENTORIES (At lower of cost and net realisable value) Stock-in-trade: Retail merchandise (including Stock in transit ` 228.99 lacs, 2012: ` 141.72 lacs) Property option inventories Share in Joint Ventures (Note 38) 1,076.00 714.67 36,981.95 1,076.00 657.19 33,113.41 35,191.28 31,380.22 336.97 100.27 437.24 100.27 336.97 37.87 — 163.04 — 537.88 203.25 984.66 21,554.24 1,512.38 18,098.53 2,179.70 1,084.69 993.49 16,815.87 2,179.70 377.27

Annual Report 2012-13 | 116

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

18. TRADE RECEIVABLES (unsecured) Debts outstanding for a period exceeding 6 months from the date they are due for payment – Considered good – Considered doubtful Other Debts, considered good Less: Provision for doubtful debts Share in Joint Ventures (Note 38) 29.71 82.03 3,105.72 3,217.46 82.03 3,135.43 81.69 3,217.12 19. CASH AND CASH EQUIVALENTS Balance with banks in Current accounts Deposit accounts Other bank balances: Margin Money account (under lien against bank guarantee) Dividend accounts Cash on hand Share in Joint Ventures (Note 38) Of the above, cash and cash equivalents comprise: Balance with banks in Current accounts Deposit accounts Cash on hand Share in Joint Ventures (Note 38) 706.44 12.72 886.75 660.40 2,266.31 405.11 5.73 401.16 207.43 1,019.43 379.83 0.46 886.75 1,986.20 691.93 2,678.13 340.40 0.46 401.16 1,152.86 348.84 1,501.70 706.44 12.72 405.11 5.73 44.91 58.03 2,491.40 2,594.34 58.03 2,536.31 94.41 2,630.72

Annual Report 2012-13 | 117

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

20. SHORT-TERM LOANS AND ADVANCES (unsecured, considered good unless otherwise stated) Advances for goods and rendering of services to be received: – Considered good – Considered doubtful Less: Provision for doubtful advances Advances to employees Premises and other deposits Advance to suppliers Less: Provision for doubtful advances Prepaid expenses & other receivables Share in Joint Ventures (Note 38) 21. OTHER CURRENT ASSETS Statutory recoverable Share in Joint Ventures (Note 38) 22. REVENUE FROM OPERATIONS Retail Sale of Products Own merchandise (including concession sales) – Gross of tax Consignment merchandise Less: Value added tax Less: Cost of consignment merchandise Revenue from Gaming Business (Share in Joint Venture) Other Retail operating revenue Facility management fees Income from store displays and sponsorship Income Direct marketing Income Income from franchisees Share in Joint Ventures (Note 38)

5,048.96 459.40 5,508.36 459.40 5,048.96 212.58 — 346.27 26.12 320.15 1,749.84 241.22 7,572.75 1,013.47 93.47 1,106.94

3,902.10 461.64 4,363.74 461.64 3,902.10 104.44 30.33 208.26 — 208.26 1,525.27 95.91 5,866.31 720.37 22.78 743.15

321,243.25 26,111.84 347,355.09 18,346.62 18,306.59 310,701.88 1,369.45 312,071.33 1,284.18 3,074.69 911.71 192.37 5,462.95 184.80 5,647.75 317,719.08 321,243.25 26,111.84 5,647.75 353,002.84

282,337.91 22,289.34 304,627.25 16,483.66 15,771.75 272,371.84 1,307.27 273,679.11 856.83 2,653.60 1,028.39 310.72 4,849.54 178.34 5,027.88 278,706.99 282,337.91 22,289.34 5,027.88 309,655.13

22.1The gross retail volume of business and operations comprise:Own merchandise Consignment merchandise Other Retail operating revenue

Annual Report 2012-13 | 118

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12 77.20 216.49 77.99 25.29 4.21 306.54 707.72 49.24 756.96

23. OTHER INCOME Interest Income from others Gain on account of stake dilution in joint venture Miscellaneous income and credits Provision for doubtful debts/advances written back Profit on sale of fixed assets (net) Compensation for loss of business Share in Joint Ventures (Note 38) 77.67 — 89.67 15.07 — 432.00 614.40 74.80 689.20 24. PURCHASE OF TRADED GOODS Purchase of trading goods – retail merchandise Share in Joint Ventures (Note 38) 209,931.38 1,816.56 211,747.94 24.1Details of purchase of traded goods Apparels Non-apparels Food, Household items etc. Others (mainly books, CDs etc.) 81,519.01 62,417.80 61,224.07 6,587.06 211,747.94 25. CHANGES IN INVENTORIES OF STOCK-IN-TRADE Opening inventory Closing inventory Share in Joint Ventures (Note 38) (Increase)/Decrease 26. EMPLOYEE BENEFITS EXPENSE Salaries, allowance and bonus Contribution to Provident and other funds Staff welfare expenses Share in Joint Ventures (Note 38) 20,946.92 1,408.27 769.51 23,124.70 468.57 23,593.27 17,717.48 1,032.83 745.87 19,496.18 412.56 19,908.74 32,456.22 36,267.28 (51.37) (3,862.42) 24,389.47 32,456.22 1.71 (8,065.04) 69,460.54 57,633.28 59,337.84 6,197.50 192,629.16 191,145.43 1,483.73 192,629.16

Annual Report 2012-13 | 119

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12 3,186.00 695.43 9.10 252.45 4,142.98 73.49 4,216.47

27. FINANCE COSTS Interest on bank borrowings Interest on others Other borrowing costs Bank charges Share in Joint Ventures (Note 38) 4,379.77 697.38 32.29 294.33 5,403.77 62.00 5,465.77 28. OTHER EXPENSES Insurance Lease rent and hire Charges (Note 29) Business conducting fees Rates and taxes Repairs and maintenance – Buildings – Others Legal and professional fees Housekeeping charges Security charges Computer expenses Conveyance and travelling expenses Electricity charges Advertisement and publicity Sales promotion Charges on credit card transactions Packing materials Loss on Sale of Fixed Assets (net) Provision for Doubtful debts/advances Foreign exchange loss (net) Balances written off Service tax input credit expensed Miscellaneous expenses Share in Joint Ventures (Note 38) 6,774.36 1,754.07 1,042.47 1,633.56 1,925.13 1,236.20 1,748.10 8,836.46 5,420.51 2,684.35 2,288.31 946.10 107.51 62.95 154.90 70.26 5,610.93 2,706.82 73,999.79 2,627.22 76,627.01 5,470.02 1,464.38 924.70 1,345.97 1,787.94 901.84 1,632.47 6,977.40 4,400.11 1,872.56 2,073.39 1,098.18 67.10 15.55 32.56 — 3,519.78 3,319.93 61,627.33 2,282.15 63,909.48 150.53 27,535.09 1,268.49 42.69 125.27 23,536.51 1,027.70 33.97

Annual Report 2012-13 | 120

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12 14,897.62 9,693.85

29. Leasing Transactions a) Operating lease rentals charged to revenue: b) Variable rentals charged to revenue: Variable rent for certain stores is payable in accordance with the lease agreement as the higher of (a) fixed minimum guarantee amount and (b) revenue share percentage. c) The future minimum rental payments in respect of non-cancellable lease for premises are as follows: Not later than one year Later than one year and not later than five years Later than five years The agreements are executed for periods ranging from 33 to 288 months with a non-cancellable period at the beginning of the agreement ranging from 33 to 108 months and having a renewable clause.

15,811.31 13,398.77

12,734.42 19,835.13 2,598.26

13,512.88 26,441.24 2,934.31

30. Service Tax The Company has based on a legal advice, challenged the said levy and inter-alia, its retrospective application. The Hon’ble Supreme Court has passed an interim order dated 14th October, 2011, with regard to the levy of service tax on immovable properties rented out for commercial use including its retrospective applicability from 1st June, 2007 in compliance of which, the Company has made an aggregate deposit of ` 2,145.94 lacs in respect of the liability for such service tax upto 30th September, 2011. From October 2011, the Company has been accounting and paying for such service tax regularly as per directives of the Supreme Court. Pending the final disposal of the matter, the Company continues not to provide for the retrospective levy aggregating ` 2,010.90 lacs for the period 1st June, 2007 to 31st March, 2010. 31. Tax expense comprises of: Current tax – For the year – For the earlier year Deferred tax – For the year – For the earlier year MAT Credit Reversal/(Entitlement)

2,006.54 (499.71) 246.40 359.01 163.04 2,275.28

3,201.27 (35.22) 213.95 — (163.04) 3,216.96

32. EARNING PER EQUITY SHARE Calculated as follows: Particulars a) (Loss)/Profit attributable to equity share holders (` In lacs) b) Weighted Number of equity shares outstanding during the year c) Weighted Number of equity shares outstanding during the year after adjustment for dilution d) Nominal value per share (`) e) EPS: Basic (`) Diluted (`)

(1,129.22) 82,787,593 83,159,250 5.00 (1.36) (1.36)

1,901.43 82,425,678 82,882,344 5.00 2.31 2.29

Annual Report 2012-13 | 121

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.
(All amounts in Mar-13 lacs) Mar-12

33. Contingent liabilities and commitments: a) Claims against the Company not acknowledged as debts comprise of: Income tax claims disputed by the Company relating to disallowances aggregating Service tax, Sales tax and other Indirect tax claims disputed by the Company relating to issues of applicability and classification aggregating Third party claims arising from disputes relating to contracts aggregating b) Others c) Estimated amount of contracts remaining to be executed on capital account and not provided for

702.10 1,496.75

1,068.85 1,687.03

699.06 52.25 4,920.20

644.96 52.25 2,671.39

d) Corporate guarantee given jointly and severally with joint venture partners to banks for loans taken by Joint venture entities e) Corporate guarantee given jointly and severally with the promoter group company for loans taken by Hypercity Retail (India) Ltd. f) Unpaid preference dividend

1,338.57

1,338.57

9,500.00

5,000.00

4,442.90 382.62 182.18

3,058.12 327.74 657.32

g) Bank Guarantees h) Share of Joint Ventures (see Note 38) Note: Future cash outflows in respect of (a) above are determinable only on receipt of judgements/decisions pending with various forums/authorities.

Annual Report 2012-13 | 122

Notes to Consolidated Financial Statements for the year ended 31 March 2013
(All amounts in 34. EMPLOYEE BENEFITS Post-employment benefits Defined contribution plans Company’s contribution to Provident Fund Defined benefit scheme-Gratuity (Funded) I. Component of Employer Expense Current Service Cost Interest Cost Expected Return on Plan assets Actuarial (Gains)/Losses II. Change in Defined Benefit Obligations (DBO) Present Value of DBO at the Beginning of Period Current Service Cost Interest Cost Actuarial Losses Benefits paid/transferred Present Value of DBO at the End of Period III. Change in Fair Value of Assets Plan Assets at the Beginning of Period Expected Return on Plan Assets Actuarial Losses Actual Company Contribution Benefits paid/transferred Plan Assets at the End of Period IV. Net Asset/(Liability) Recognised in Balance Sheet Present Value of Defined Benefit Obligation Fair Value of Plan Assets Status [Surplus/(Deficit)] Unrecognised Past Service Cost Net Asset/(Liability) Recognised in Balance Sheet V. Actuarial assumptions Discount Rate Expected Return on Plan Assets Rate of increase in salaries Rate of Attrition

Shoppers Stop Ltd. lacs, unless otherwise stated) 31 March 2012

31 March 2013

915.81

717.90

108.24 50.62 (44.52) 101.32 215.66 598.91 108.24 50.62 125.98 (81.59) 802.16 502.52 44.52 24.04 158.36 (81.59) 647.85 802.16 647.85 (154.31) — (154.31) 7.75% - 8.00% p.a. 8.00% - 8.70% p.a. 4.00-5.00% p.a. 8.50-25.00%

106.48 42.38 (32.53) (6.56) 109.77 535.21 106.48 42.38 1.43 (86.59) 598.91 426.89 32.53 7.99 121.70 (86.59) 502.52 598.91 502.52 (96.39) — (96.39) 8.00% - 8.50% p.a. 8.00% - 8.60% p.a. 4.00-5.00% p.a. 8.50-25.00%

VI. Net Asset/(Liability) recognised in Balance Sheet (including experience adjustment impact) Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Surplus/(Deficit) in the Plan Experience Adjustments arising on Plan Liabilities – Losses/(Gains) Experience Adjustments arising on Plan Assets – Gains/(Losses) 31 March 2013 31 March 2012 31 March 2011 31 March 2010 31 March 2009 535.21 802.16 598.91 268.81 285.21 647.85 502.52 426.89 263.81 281.45 (154.31) (96.39) (108.32) (5.00) (3.76) (44.01) 6.23 (63.86) 8.35 120.21 3.09 (49.45) (16.45) (0.44) (15.83)

Annual Report 2012-13 | 123

Notes to Consolidated Financial Statements for the year ended 31 March 2013
The group expects to contribute ` 324.42 lacs to its Gratuity plan for the next year.

Shoppers Stop Ltd.

In assessing the group Post Retirement Liabilities, the group monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables. Expected return on plan assets is based on expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations. The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The gratuity benefit scheme of the group is managed by Life Insurance Corporation of India (LIC). The group is currently awaiting the details of the composition of the plan assets, by category, from the LIC for the current and the previous years and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given.

Annual Report 2012-13 | 124

Notes to Consolidated Financial Statements for the year ended 31 March 2013

Shoppers Stop Ltd.

35. RELATED PARTY DISCLOSURES Following are the material transactions with related parties:
Nature

(All amounts in
Companies under common control/ significant influence (refer (b) below) 12.17 Joint Ventures

lacs, unless otherwise stated)
Key Management Personnel Total

Purchase of Assets LAI Games Sales Inc. LAI Games International Pte. Ltd. Timezone Funtasia Embed International Pty. Magna Warehousing & Distribution Pvt. Ltd. Sale of Assets

34.44

Trion Properties Private Limited
Purchase of Goods

Leisure & allied Industries Philiipines Inc. LAI Games International Pte. Ltd. P T Matahari Graha Fantasi Embed International Pty. The Nuance Group AG
Sale of Merchandise

The Nuance Group AG
Payment of conducting fees/Lease Rent/Common Area Maintenance Charges

Ivory Properties and Hotels Private Limited Inorbit Malls (India) Private Limited Avacado Properties and Trading India Private Limited Magna Warehousing & Distribution Pvt. Ltd. Trion Properties Private Limited
Expenses Paid

Inorbit Malls (India) Private Limited Avacado Properties and Trading India Private Limited The Resort Trion Properties Private Limited
Deposits Paid

Trion Properties Private Limited Inorbit Malls (India) Private Limited Avacado Properties and Trading India Private Limited
Deposit received Back

Inorbit Malls (India) Private Limited

— — — — 12.17 — 47.93 47.93 — — — — — — — — — — — 7,358.47 — 2,117.43 2,622.19 217.31 191.27 2,210.27 (7,251.85) 410.93 213.47 3.59 6.73 187.14 (418.26) 240.82 35.48 44.70 160.64 (35.48) 6.42 6.42 —

4.44 21.49 4.07 4.44 (90.87) — — — 13.38 5.57 1.65 0.04 0.05 6.07 (5.68) — — (61.09) — — — — — — — — — — — — — — — — — — — — — —

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

46.61

(90.87) 47.93

13.38

(5.68) —

7,358.47

(7,251.85) 410.93

(418.26) 240.82

(35.48) 6.42

Annual Report 2012-13 | 125

Notes to Consolidated Financial Statements for the year ended 31 March 2013
Nature Companies under common control/ significant influence (refer (b) below) 164.30 Joint Ventures

Shoppers Stop Ltd.
Key Management Personnel Total

Reimbursement of Expenses

Inorbit Malls (India) Private Limited Trion Properties Private Limited
Receiving of services

The Nuance Group AG
Expenses Paid

Retailers Association of India Sanghavi Associates Ltd.
Expenses Recovered

131.42 32.88 — — — — 22.09 11.83 10.26
102.34

Inorbit Malls (India) Private Limited Magna Warehousing and Distribution Private Limited Nuance Group (India) Private Limited
Other Expenses

Avel Pty. Ltd. (Royalty)

Issue of Equity/Preference Shares

Aberdee Pty. Ltd. K. Raheja Corp. Pvt. Ltd.
Share application money

Aberdee Pty. Ltd.
Remuneration to Managing Director:

68.94 33.40 — (68.94) — — — — 4,361.00 — 4,361.00 (4,514.73) — — —

— — — — 7.98 7.98 — — — — — — — — — — 26.63 26.63 (26.78) — 81.32 81.32 — (338.29) — — (80.82) —

— — — — — — — — — — — — — — — — — — — — — — — — — —
338.91

164.30

7.98

— 22.09

102.34

(68.94) 26.63


4,442.32

(4,853.02) — — (80.82) 338.91 (310.70) 27.00

Govind Shrikhande
Commission and Sitting fees to Non Executive Directors

Chandru L. Raheja Ravi C. Raheja Neel C. Raheja B. S. Nagesh Gulu L. Mirchandani Shahzaad S. Dalal Nitin Sanghavi Deepak Ghaisas Nirvik Singh — —

338.91 (310.70) 27.00 0.80 0.80 0.60 3.60 3.80 3.60 3.60 6.80 3.40 (27.00)

(27.00)

Annual Report 2012-13 | 126

Notes to Consolidated Financial Statements for the year ended 31 March 2013
Balance outstanding at the year end Receivables Avacado Properties and Trading India Private Limited Ivory Properties and Hotels Private Limited Inorbit Malls (India) Private Limited Trion Properties Private Limited LAI Games International Pte. Ltd. Magna Warehousing and Distribution Private Limited The Nuance Group AG Payables Avel Pty. Ltd. LAI India Pvt. Ltd . P T Matahari Graha Fantasi P T Matahari Leisure LAI Singapore Pte. Ltd. Leisure & allied Industries Philiipines Inc. The Nuance Group AG Corporate Guarantee The Nuance Group AG The figure in bracket pertain to previous year Names of related parties and description of relationship: (a) Promoter directors having control/significant C.L. Raheja, Ravi C. Raheja, Neel C. Raheja influence over companies stated in (b) below (b) Companies in which the persons stated in (a) above have control/significant influence

Shoppers Stop Ltd.

473.25 (311.66) 1,202.67 (1,092.59) 843.51 (922.65) 836.22 (735.97) — (2.97) 33.40 — 63.88 (61.09) 85.93 (72.69) 21.93 (22.33) 0.30 (0.26) (0.46) (20.66) — (9.88) — (2.75) 626.04 (484.13) 412.50

Ivory Properties and Hotels Private Limited, K. Raheja Corp. Private Limited, K. Raheja Private Limited, Inorbit Malls (India) Private Limited, Hypercity Retail (India) Limited, Avacado Properties and Trading India Private Limited, K. Raheja IT Park (Hyderabad) Private Limited, Trion Properties Private Limited, Magna Warehousing and Distribution Private Limited, Sanghavi Associates Ltd., Retailers Association of India Nuance Group (India) Private Limited Timezone Entertainment Private Limited Executive Director: Govind Shrikhande Non-Executive Directors: Chandru L. Raheja Ravi Raheja Neel Raheja B. S. Nagesh Gulu L. Mirchandani Shahzaad Dalal Nitin Sanghavi Deepak Ghaisas Nirvik Singh

(c) Joint Ventures (d) Key Management Personnel

Annual Report 2012-13 | 127

Notes to Consolidated Financial Statements for the year ended 31 March 2013
36. SEGMENT REPORTING I) Information about primary segments (Business segments):

Shoppers Stop Ltd.

(All amounts in Particulars Retail Operations SEGMENT REVENUE External Sales Total Revenue Segment Results Interest Income Interest Expenses Provision for Taxation Profit before minority interest OTHER INFORMATION Segment Assets Total Assets Segment Liabilities Total Liabilities Segment Depreciation Total Depreciation Segment Capital Expenditure Total Capital Expenditure 12,058.12 199.28 7,715.82 191.58 102,752.23 406.77 152,576.60 1,130.54 153,707.13 153,707.13 103,159.00 103,159.00 7,907.39 7,907.39 12,257.40 12,257.40 16,889.97 594.84 5,868.75 224.67 88,070.68 568.48 139,541.91 1,096.88 316,349.63 316,349.63 2,271.46 1,369.45 1,369.45 (43.68) 317,719.08 317,719.08 2,227.79 85.20 (5,465.77) (2,275.28) (5,428.07) 277,399.72 277,399.72 4,999.60 1,307.27 1,307.27 (94.85) 31 March 2013 Others Total Retail Operations 31 March 2012 Others

lacs)

Total

278,706.99 278,706.99 4,904.70 86.81 (4,216.47) (3,216.96) (2,441.87)

140,638.79 140,638.79 88,639.16 88,639.16 6,093.42 6,093.42 17,484.81 17,484.81

II)

The Company has business segment as the primary segment for disclosure on the basis of nature of products, different risks and returns etc. and mainly operates in retail operations i.e. trading of Apparels, Non-apparels such as Cosmetics, Household items, Food products, Books & CDs etc. 'Others' comprise of Gaming business and Property options. Segment revenue includes other retail operating revenue. The company operates in a single geographical environment i.e. in India.

III)

Annual Report 2012-13 | 128

Notes to Consolidated Financial Statements for the year ended 31 March 2013
37. DISCONTINUING OPERATIONS:

Shoppers Stop Ltd.

The Board of Directors of Gateway Multichannel Retail (India) Limited (Gateway), a subsidiary of SSL had decided to discontinue operation in January 2009. SSL has committed to provide the necessary level of support, to enable Gateway to remain in existence and continue as a going concern. The total assets and liabilities of Gateway as at March 31, 2013 aggregated ` 17.45 lacs (Previous year ` 12.95 lacs) and ` 4,507.89 lacs (Previous year ` 4,495.34 lacs) respectively. The net cash flows attributable to operating, investing and financing activities of Gateway during the year, aggregated ` 4.49 lacs (Previous year (5.89) lacs), ` Nil (Previous Nil) and ` 0.86 lacs (Previous year ` 0.28 lacs) respectively. Statement showing the revenue and expenses of continuing and discontinuing operations: 31 March 2013 Discontinuing Continuing operations operations (Gateway) 317,719.08 689.20 318,408.29 316,087.25 5,465.77 (3,144.76) 2,275.28 (5,420.03) — 0.01 8.06 0.00 (8.05) — (8.05) Total Continuing operations (All amounts in lacs) Total

Particulars REVENUE Sales/Income Other Income Total Revenue Operating Expenses Interest Expense Profit/(Loss) before tax Income tax Profit/(Loss) after tax before minority interest

31 March 2012 Discontinuing operations (Gateway) — 4.34 0.69 0.28 3.37 — 3.37

317,719.08 689.21 316,095.31 5,465.77 (3,125.80) 2,275.28 (5,428.07)

278,706.99 756.96 279,463.95 274,475.76 4,216.47 771.72 3,216.96 (2,445.24)

278,706.99 761.30 274,476.45 4,216.75 775.09 3,216.96 (2,441.87)

0.01 318,408.29

4.34 279,468.29

(All amounts in

lacs, unless otherwise stated)

38. The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) – ‘‘Consolidated Financial Statements’’ and Accounting Standard 27 (AS 27) – ‘‘Financial Reporting of Interests in Joint Ventures’’ as notified by Companies (Accounting Standards) Rules, 2006. (a) The subsidiaries (which alongwith Shoppers Stop Limited, the parent, constitute the Group) considered in the preparation of these Consolidated Financial Statements are: Name Country of Incorporation Percentage of ownership interest either directly or through subsidiary 31 March 2013 Hypercity Retail (India) Limited Crossword Book Stores Limited Upasna Trading Limited Shoppers Stop Services (India) Limited Shoppers Stop.Com (India) Limited Gateway Multichannel Retail (India) Limited India India India India India India 51 100 100 100 100 100 31 March 2012 51 100 100 100 100 100

Annual Report 2012-13 | 129

Notes to Consolidated Financial Statements for the year ended 31 March 2013
(b) Interests in Joint Ventures: The Group’s interests in jointly controlled entities (incorporated Joint Ventures) are: Name Country of Incorporation

Shoppers Stop Ltd.

Percentage of ownership interest either directly or through subsidiary 31 March 2013 31 March 2012 50 33.66

Nuance Group (India) Private Limited Timezone Entertainment Private Limited

India India

50 33.87

The financial statements of the joint ventures, considered in the consolidated accounts, are drawn upto 31st March other than for Nuance Group (India) Private Limited where it is upto 31st December. The Group’s interest in these joint ventures is accounted for using proportionate consolidation. (c) These Consolidated Financial Statements are based, in so far as they relate to amounts included in respect of subsidiaries and joint ventures, on the audited financial statements prepared for consolidation in accordance with the requirements of AS 21 and AS 27 by each of the included entities. (d) The details of the subsidiary companies are given in the Annexure. 39. The Company’s assets (including inventory) were destroyed/damaged in a fire, on 21 June 2012, at its store in Koregaon Park, Pune. The Company has filed claim with the insurance company and, the survey by the insurance company is under process. The Company is adequately insured (including for materials damage and for loss of profits) and has set up a receivable of ` 790.45 lacs (net of on account receipt of ` 500 lacs) from the insurance company in respect of the value of the asset destroyed/damaged based on the company’s current best estimates and reasonable certainty considering the reports of the relevant authorities and the Company's past experience. The net loss of ` 74.06 lacs on this account, primary on policy exclusions, has been disclosed as an exceptional item. The operations of the store remain suspended. 40. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/ disclosure.

Annual Report 2012-13 | 130

STATEMENT REGARDING SUBSIDIARY COMPANIES
Annexure (All amounts in lacs) Total Assets* Total Investments Liabilities** Turnover/ Total Income Profit/(Loss) Before Taxation Provision for Taxation Profit/ (Loss) After Taxation Proposed Country Dividend including Dividend distribution tax — India

Sr. No.

Name of Subsidiary Company

Reporting Currency

Share Capital

Reserves

1

Crossword Bookstores Limited 5.00 17.31 170.01 170.01 — 0.01 (0.45) — (0.45)

INR

1,956.25

407.89

6,278.78

6,278.78



9,079.20

(588.57)

166.50

(755.06)

2

Upasna Trading Limited 5.00 (4,495.44) 17.45 17.45 — 0.01 (8.05) —

INR



India

3

Gateway Multichannel Retail (India) Limited 5.00 3.66 9.89 9.89 — 0.37 0.03

INR

(8.05)



India

4

Shoppers Stop Services (India) Limited 5.00 (3.37) 2.42 2.42 — 0.21

INR

0.01

0.02



India

5

Shoppers Stop.Com (India) Limited 46,108.73 (45,175.83) 33,534.42 33,534.42 —

INR

(0.13)



(0.13)



India

6

Hypercity Retail (India) Limited

INR

78,216.63

(8,773.17)



(8,773.17)



India

Notes to Consolidated Financial Statements for the year ended 31 March 2013

* Total Assets = Non-Current Assets + Current Assets

** Total Liabilities = Shareholder's Fund + Share Application money pending allotment + Non-Current Liabilities + Current Liabilities

Shoppers Stop Ltd.

Annual Report 2012-13 | 131

Notes

Shoppers Stop Ltd.

Annual Report 2012-13 | 132

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