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Directors Report of Shoppers Stop Ltd.

Mar 31, 2016

Dear Members,

The Directors present herewith 19th Annual Report on the business and operations of the Company together with the Audited Statements of Accounts for the year ended March 31, 2016.

1. Financial Performance

(Rs. in lacs)

Year ended Year ended Particulars 31-Mar 2016 31-Mar 2015

Retail Turnover

Own merchandise (including concession sales) - gross of tax 343,376.02 306,930.78

Consignment merchandise 28,323.88 30,088.43

Other Retail operating income 6,356.69 4,236.64

378,056.59 341,255.85

Less: Value Added Tax 17,968.53 16,095.48

Less: Cost of consignment merchandise 18,767.60 20,162.71

341,320.46 304,997.66

Other Income 2,130.37 1,765.49

343,450.83 306,763.15

Profit before Depreciation & Tax 18,122.91 15,536.96

Less: Depreciation 9,766.40 8,580.71

Profit before Tax 8,356.51 6,956.25

Exceptional Items 2,381.00 -

Profit before Tax 5,975.51 6,956.25

Less: Provision for Tax 3,457.89 2,882.72

Profit after Tax 2,517.62 4,073.53

Add: Balance brought forward from previous year 23,342.16 20,294.15

Amount available for appropriation 25,859.78 24,367.68

Less: Adjustment of depreciation charge Sch. II - 69.30

25,859.78 24,298.38

Appropriation

Interim Dividend paid including Dividend Distribution Tax 753.43 -

Proposed Dividend (incl. Dividend Distribution Tax) - 752.54

Transfer to General Reserve 75.02 203.68

Balance carried forward 25,031.33 23,342.16

2. Performance Review

During the year under review, your Company has opened 8 departmental stores i.e. one store each at Mangalore International Airport, Meerut, Kolhapur, Kolkata, Jaipur, New Delhi and two stores at Bengaluru taking its chain of stores to 77 stores (including five airport stores) spread across India. Further, the Company also has 18 HomeStop stores.

The revenue of the Company is Rs. 343,450.83 lacs (previous year Rs. 306,763.15 lacs), registering a growth of 11.96% y-o-y basis. The net profit achieved was Rs. 2,517.62 lacs (previous year Rs. 4,073.53 lacs).

3. Dividend

The Company has paid an Interim Dividend of 15% (i.e. Rs. 0.75 per equity share) of Rs. 5/- each (previous year Rs. 0.75 per equity share of Rs. 5/- each as the final dividend.)

The Company has declared 15% dividend, since the financial year 2005-06 (except in the financial year 2008-09, where no dividend was declared) and it is proposed to continue with the same percentage of dividend for the current year as well. Further, in order to conserve resources for expansion plans of the Company, the Directors do not recommend any further dividend and considered the said interim dividend as the final dividend.

During the year, the unclaimed dividend pertaining to the financial year 2007-08, was transferred to Investor Education & Protection Fund established by the Central Government in compliance with Section 205C of the Companies Act, 1956. Prior to transferring the aforesaid dividend, the Company has sent reminders to the concerned shareholders for submitting their claims for unclaimed dividend.

4. Finance

The Company continues to focus on judicial management of its working capital with various initiatives for bringing down the cost of borrowings. The costs of facilities such as commercial paper, working capital demand loans, vendor bill discounting facility, etc. were kept under check through its continuous monitoring. The Company has also taken long-term loans at very competitive interest rates.

5. Credit Rating

During the year, the following credit ratings were assigned to the Company:

1. India Ratings & Research Private Limited (A Fitch Group Company):

- IND A1 for Commercial Paper Programme of Rs. 500 million.

- IND A1 for Short-Term Debt Programme/Commercial Paper of Rs. 1000 million.

2. Credit Analysis & Research Limited has assigned the following credit ratings:

- CARE A (Single A) for the long-term bank facilities amounting to Rs. 682 crore and CARE A1 (A One) for the short-term bank facilities amounting to Rs. 21.50 crore.

- CAREA1 (A One) for Commercial Paper Issue/Short-Term Debt Issue amounting toRs. 100 crore.

- CARE A (Single A) for Non-Convertible Debenture issue amounting to Rs. 100 crore.

3. CRISIL Limited has assigned CRISIL A1 rating for Commercial Paper of Rs. 100 crore.

6. Subsidiary & Joint Venture Companies

Hypercity: Hypercity Retail (India) Ltd; the subsidiary Company achieved the total revenue (net of taxes) of Rs. 93,462.81 lacs (previous year Rs. 90,768.49 lacs), registering a growth of 3.0%, year on year basis. Hypercity has operated 14 stores for full year. Hypercity has posted net loss of Rs. (9,290.13 lacs) (previous year net profit of Rs. 1,347.7 lacs). The outstanding inter corporate deposits as on March 31, 2016 was Rs. 14,500 lacs (maximum outstanding during the year was Rs. 17,500 lacs).

During the year under review, the rights of 163,040,500 7% Cumulative Redeemable Preference Shares (CRPS), held in Hypercity by the Company were varied to make them Compulsorily Convertible Preference Shares (CCPS), with the conversion ratio of 5:1 i.e. 5CCPS of Rs. 10/-each were converted into 1 equity share of Rs. 10/-each. Accordingly, on March 15, 2016, the Company was allotted 32,608,100 equity shares of Rs. 10/- each.

Further the terms of 131,070,000 7% Compulsorily Convertible Preference Shares of Rs. 10/- each (CCPS) held in Hypercity by the Company, were varied and converted into equity shares on March 15, 2016 instead of August 31, 2017. The Company was allotted 26,214,000 equity shares of Rs. 10/- each.

Crossword: Crossword Bookstores Ltd.; the wholly owned subsidiary has launched & closed certain stores during the year under review, taking its chain strength to 90 stores across the Country. The revenue of the Company during the year under review was Rs. 9,848.24 lacs vis avis (previous year Rs. 9,038.66 lacs). Crossword has posted net loss of Rs. (295.19 lacs) for the year under review, against a net loss of Rs. (716.13 lacs) in the previous year. The outstanding inter corporate deposits as on March 31, 2016 was Rs. 766.26 lacs (maximum outstanding during the year was Rs. 766.26 lacs).

During the year under review, the rights of 1,00,00,000 6% Cumulative Redeemable Preference Shares (CRPS), held in Crossword, were varied to make them Compulsorily Convertible Preference Shares (CCPS), with the conversion ratio of 2.5:1 i.e. 2.5 CCPS of Rs. 10/- each were converted into 1 equity share of Rs. 10/- each. Accordingly, on March 15,2016, the Company was allotted 40,00,000 equity shares of Rs. 10/- each.

Timezone: Timezone Entertainment Private Ltd.; is engaged in the business of operating Family Entertainment Centers (FEC) under the "Timezone" brand. There are 26 FECs which are set up and operated at leading shopping malls by Timezone. The revenue during the year under review was Rs. 59.07 crores (Previous year Rs. 55.54 crores), registering a growth of 6% y-o-y basis. Timezone has incurred the loss of Rs. (1.85) crores against previous year''s profit of Rs. 1.23 crores.

Nuance Group: The Nuance Group AG and the Company have formed a Joint Venture called Nuance Group (India) Pvt. Ltd., to operate the Duty Free stores at International Airports in India. During the year under review, sales growth on Like to Like basis is 16%, mainly resulting from growth in passengers vs last year. It has delivered profit after tax of Rs. 7.2 crore. It is a part of the Company''s policy and practice to constantly monitor its investments. Pursuant to this policy, during the year under review, the Company made a provision for impairment to an extent of Rs. 23.81 crores, towards diminution in value of investment, in Nuance Group (India) Pvt. Ltd; a Joint Venture Company.

The other subsidiaries of the Company viz; Upasna Trading Ltd; Shopper''s Stop Services (India) Ltd.; Shopper''s Stop.Com (India) Ltd.; and Gateway Multichannel Retail (India) Ltd.; either have insignificant or no operations during the year under review.

During the year under review, no company has become or ceased to be a subsidiary, joint venture entity or associate company.

The financial statements along with the report of Directors and Auditors thereon of the above mentioned subsidiary companies are kept open for inspection by the members at the Registered Office of the Company. These statements are also available on the website of the Company www.shoppersstop.com.

7. Consolidated Financial Statements

The Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India. These Statements, together with Auditors'' Report thereon forms part of the Annual Report.

The statement containing the salient features of a company''s subsidiaries and joint venture companies under Section 129 of the Companies Act, 2013, in the prescribed form is attached to the Financial Statements.

8. Employees Stock Option Plan

The Company has granted 3,275 Employee Stock Options at a grant price of Rs. 404/- per option under ES0P Scheme 2008 to an employee of the Subsidiary Company. The Nomination and Remuneration & Corporate Governance Committee of the Company, inter-alia, administers and monitors the Employees Stop Option Scheme in accordance with the SEBI Guidelines.

During the year under review, the Company has allotted 94,141 equity shares of Rs. 5/-each on exercise of vested options by certain employees of the Company and its subsidiary Companies under the ES0P Scheme 2008.

The particulars as required to be disclosed pursuant to the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and its disclosure requirements is annexed herewith as Annexure I. The same is also uploaded on the website of the Company at www.shoppersstop.com.

The Company has received a certificate from its Auditors, that the scheme has been implemented in accordance with SEBI Guidelines and resolution passed by the Shareholders of the Company. The said Certificate would be placed at the ensuing Annual General Meeting of the Company.

9. Human Resources

The Company continues to introspect and strengthen its core competencies by redefining its Values and Vision. People development continues to be a key focus area and to have a sustained learning environment, the employees are being coached and empowered to coach others. Reaffirming a strong belief in inclusion and equality and a zero tolerance on harassment, customised workshops and focused discussions are being conducted. To create a leadership pipeline across the system, assessments are being conducted to have fair and transparent performance evaluation. Taking new initiatives to further align its Human Resource policies to meet the growing needs of its business continues to be a constant endeavour. Special designed training modules for the frontline employees are being delivered from time to time to meet the training needs of the employees. Infusion of technology in the learning space is helping the Company to maximise knowledge percolation, enable speedy coverage of information and monitor & address learning requirements of the employees. As on date of the Balance Sheet, the Company had a total of 7,440 employees.

10. Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, a Corporate Social Responsibility Committee has been constituted by the Board of Directors of the Company. The Committee comprises Ms. Abanti Sankaranarayanan, as a Chairperson and Mr. Ravi Raheja, Mr. Gareth Thomas and Mr. Govind Shrikhande as members.

The CSR Policy may be accessed on the Company''s website at the link: http://corporate.shoppersstop.com/uploaded_files/6a821 c5- ec98.pdf. The report on CSR is annexed herewith as Annexure II.

11. Directors & Key Managerial Personnel

In accordance with the provisions of the Section 152 of the Companies Act, 2013, Mr. B. S. Nagesh (DIN 00027595) Non-Executive & Non-independent Director of the Company, will retire by rotation at the ensuing Annual General Meeting and being eligible, seeks re-appointment. The Board recommends his re-appointment. His brief profile is provided in the Notice convening the ensuing 19th Annual General Meeting of the Company.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (listing Regulations'').

Mr. Avnish Bajaj (DIN 00281547), resigned as a Director of the Company w.e.f. July 31, 2015 due to his personal commitments. The Board of Directors records its sincere appreciation and recognition of the valuable contribution and services rendered by him during his association with the Company.

There is no change in the Key Managerial Personnel of the Company during the year under review.

12. Performance Evaluation

In compliance with the Companies Act, 2013 & Listing Regulations, the performance evaluation of the Board, its specified Committees and individual directors was carried out during the year under review. More details on the same are provided in Corporate Governance Report.

13. Familiarisation Programme for Independent Directors

The familiarisation programme for Independent Directors which also extends to other Non-Executive Directors, aims to familiarise them with the Company, nature of the retail industry, business model, processes & policies, etc., and also seeks to update them on the roles, responsibilities, rights and duties under the Companies Act, 2013 and other statutes.

Presentations are regularly made to the Board of Directors, Audit Committee/Nomination and Remuneration & Corporate Governance Committee members on various related matters, where Directors interact with executive committee members of the Company. These Presentations inter-alia cover the Company''s strategy, business model, operations, markets, products, finance, risk management framework, financial performance, budget & control process and such other area as may arise from time to time.

The details of the said programme has been posted on the Company''s website at web link: http://corporate.shoppersstop.com/ Investors/Training.aspx.

14. Remuneration Policy

The Board of Directors has on the recommendation of the Nomination and Remuneration & Corporate Governance Committee has framed a policy for selection and appointment of Directors, senior management and their remuneration. The said policy is annexed herewith as Annexure III.

15. Disclosures Under the Companies Act, 2013

Extract of Annual Return: The details forming part of extract of the annual return in Form MGT-9 is annexed herewith as Annexure IV

Meetings of the Board of Directors: The Board of Directors met 4 (four) times in the year under review. The details about the board meetings and the attendance of the directors are provided in Corporate Governance Report.

Change in Share Capital: During the year under review, the Company has allotted 94,141 equity shares of Rs. 5/- each on exercise of vested options by certain employees under the ESOP Scheme.

Audit Committee: The Audit Committee comprises four Non-Executive Directors i.e. Mr. Deepak Ghaisas, as the Chairman, Mr. Ravi C. Raheja, Prof. Nitin Sanghavi and Mr. Manish Chokhani as the members. The Board of Directors has accepted the recommendations made by Audit Committee from time to time.

Related Party Transactions: All related party transactions that were entered into during the financial year were on arm''s length basis and were in ordinary course of business of the Company. During the year, the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Related Party Transactions Policy, including policy for determining material subsidiaries and on materiality of related party transactions, as approved by the Board of Directors is uploaded on the Company''s website and is accessible at the web link: http:// corporate.shoppersstop.com/uploaded_files/70ad1 d -7375.pdf.

Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm''s length basis, the disclosure under form AOC-2 is not applicable. However, the Directors draw attention of the members to Notes to the stand alone financial statement which sets out related party disclosures.

All the related party transactions are presented to the Audit Committee and the Board of Directors. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all such related party transactions is presented before the Audit Committee and Board on a quarterly basis, specifying the nature and value of these transactions. Particulars of Loans, Guarantees or investments: The details of Loans, Guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 forms part of the Notes to the Financial Statements.

Other Disclosures: The Board of Directors state that no disclosure and / or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

- Details relating to deposits covered under Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

- Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this report.

- Issue of equity shares with differential rights as to dividend, voting or otherwise.

- Managing Director of the Company has not received any remuneration or commission from any of the Company''s subsidiaries.

- No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

The Company has adopted a policy for prevention of sexual harassment at work place and is fully committed to comply with its various provisions. The policy inter-alia provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. During the year under review, there were fourteen complaints received pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The same has been disposed of completely.

16. Material Related Party Transactions

Pursuant to the provisions of the Securities and Exchange Board of India ("SEBI") Circular No. CIR/CFD/POLICY CELL/2/2014 dated April 17, 2014 read with Circular No. CIR/CFD/POLICY CELL/7/2014, dated September 15, 2014, under clause 49 of the Listing Agreement, the Company had obtained an approval, in respect of the material related party transactions with Hypercity Retail (India) Ltd; the subsidiary Company, from the members at its 18th Annual General Meeting.

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as 10DR'') was notified on September 2, 2015 wherein, pursuant to Regulation 23 (8), all existing material related party contracts and arrangements as on the date of the notification of LODR and which may continue beyond such date shall be placed for approval of members in the first General Meeting subsequent to the said notification.

The Company had entered into the various transactions with Hypercity Retail (India) Ltd; a subsidiary, and are continuing beyond September 2, 2015, the date of notification of LODR. The details in respect of these transactions are provided in the explanatory statement to the Notice convening the ensuing 19th Annual General Meeting of the Company. Accordingly, these material related party contracts or arrangements is placed before the members for their approval at the ensuing Annual General Meeting of the Company.

17. Risk Management

In line with the regulatory requirements, the Company has formally framed a Risk Management Policy to identify and assess the key risk areas, monitor and report the compliance and effectiveness of the same. A Risk Management Committee has been constituted to oversee the risk management process in the Company. The committee has reviewed the major risks which affect the Company from both the external and the internal environment perspective. Appropriate actions have been initiated to mitigate, partially mitigate, transfer or accept the risk (if need be) and monitor the risks on a regular basis. Based on the detailed review the following key risks inter-alia has been identified:

Internet Usage: India''s Internet user base is currently third largest in the world. This, coupled with the rising consumer confidence in online retail, is driving the growth of e-commerce in the country. With a significant number of Indian consumers turning Internet users, and eventually, online shoppers, selling through the online channel is set to redefine retail. The Company in order to counter the impact of loss in business due to online e-commerce sales, has designed a two pronged strategy which includes, Omni-channel approach to driving sales with the emphasis on seamless and engaging customer experience and plans to sell products and brands online via tie up with leading online e-commerce portals.

Development of new technologies: E-commerce Platforms being adopted by Brands themselves or by B2C & B2B Applications; as well as the obsolescence of older technologies could have a significant impact on the performance of the Company. The Company will be making focused and substantial investments to embrace new technologies and infrastructure for the Omni channel, which is a combination of physical store and online site.

Vendor production capacity/supply reaching full capacity bottlenecks: The Company''s expansion plans combined with renewed vigour on the e-commerce retail segment & possible new entrants in the brick & mortar segment of retail, these factors may trigger a constraint in terms of vendors reaching their production/supply capacity. The Company is looking at establishing new sources within and outside India, to mitigate the problem.

Economic Slowdown: Economic slowdowns have a direct impact on consumption. Retail being the end service provider of consumption in the supply/Value chain, is bound to face difficulties in an environment of economic slowdown. The Company continuously looks at stepping up the marketing activities and strong cost control to protect its profitability.

18. Internal Financial Control

The Company has laid down internal financial control''s, through a combination of Entity level controls, Process level controls and IT General controls inter-alia to ensure orderly and efficient conduct of business, including adherence to the Company''s policies and procedures, accuracy and completeness of accounting records and timely preparation and reporting of reliable financial statements/ information, safeguarding of assets, prevention and detection of frauds and errors.

The evaluation of these internal financial controls was done through the internal audit process, established within the Company and also through appointing professional firm to carry out such tests byway of systematic internal audit programme. Based on the review of the reported evaluations, the directors confirm that, for the preparation of financial accounts for the year ended March 31, 2016, the applicable Accounting Standards have been followed and the internal financial controls are generally found to be adequate and were operating effectively and that no material weaknesses were noticed.

19. Whistle Blower/Vigil Mechanism

The Company has established a Vigil Mechanism and adopted a whistle blower policy for its directors and employees, to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. The mechanism provides adequate safeguards against victimisation of persons who use this mechanism. The brief detail about this mechanism has also been posted on the website of the Company.

20. Corporate Governance

The Company has complied with the corporate governance requirements as prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate section on corporate governance and the certificate from the Statutory Auditors of the Company, confirming the compliance is annexed and forms part of the Annual Report.

The specified information about the elements of remuneration such as salary, benefits, bonuses, stock options, pension, etc., of all the directors, details of fixed component and performance linked incentives along with the performance criteria; service contracts, notice period, severance fees; stock option details are provided in said Corporate Governance Report.

21. Management''s Discussion and Analysis

Management''s Discussion and Analysis for the year under review, as stipulated in terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented in a separate section forming part of this Annual Report.

22. Code of conduct for the prevention of Insider Trading

The Board of Directors has adopted the Code of Internal Procedures and Conduct for regulating, monitoring and reporting trading by designated persons in accordance with the SEBI (Prohibition of Insider Trading) Regulations, 2015. The said code lays down guidelines and procedures to be followed, and disclosures to be made while dealing with the securities of the Company. The Code of fair disclosure of unpublished price sensitive information is available on our website http://corporate.shoppersstop.com/uploaded_ files/3cd8391-7d65.pdf

23. Listing Agreement

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 was notified on September 2, 2015, with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. The said regulations were effective from December 1, 2015. Accordingly, all listed entities were required to enter into the Listing Agreement within six months from the effective date. The Company has entered into Listing Agreement with BSE Ltd. and the National Stock Exchange of India Ltd.

24. Auditors

Statutory Auditors

Deloitte Haskins & Sells LLP (Registration no. 117366W/W-100018), Chartered Accountants, Mumbai, who are the Statutory Auditors of the Company, hold office till the conclusion of Twentieth Annual General Meeting of the Company, subject to ratification of their appointment at this Annual General Meeting, pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder.

They have confirmed their eligibility and are not disqualified for appointment under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. They have confirmed that they have been subjected to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer Review Board of ICAI.

The Audit Committee and the Board of Directors recommend the ratification of appointment of Deloitte Haskins & Sells LLP as the Statutory Auditors of the Company. The members are requested to ratify appointment of Deloitte Haskins & Sells LLR Chartered Accountants, as Statutory Auditors of the Company and to authorise the Board to fix their remuneration.

The Auditors'' Report to the members for the year under review does not contain any qualification, reservation, adverse remark or disclaimer. The Auditor has not reported any fraud to the Company required to be disclosed under Section 143(12) of the Act.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014, the Company has appointed V. Sundaram & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report issued by them, is annexed herewith as Annexure V The said report does not contain any qualification, reservation, adverse remark or disclaimer.

25. Energy Conservation, Technology Absorption and Foreign Exchange

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure VI. The foreign exchange earnings was Rs. 8,078.52 lacs and outgo was Rs. 3,950.74 lacs.

26. Demat Suspense Account Unclaimed Shares

As on date there are 13 members, holding 700 equity shares of Rs. 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 been credited to ''Shoppers Stop Ltd - Unclaimed Shares Demat Suspense Account''. Such members 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 members. The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

27. Particulars of Employees

In terms of the provisions of Section 197(12) of the Companies Act, 2013, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this report.

Further, the disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during business hours on working days upto the date of ensuing Annual General Meeting. Any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The Annual Report including the aforesaid information is also available on the Company''s website.

28. Directors'' Responsibility Statement

Pursuant to the requirements of Section 134 of the Companies Act, 2013, the Board of Directors confirms that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) appropriate accounting policies have been selected and applied them consistently and judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2016 and of the profit of the Company for the year ended on March 31, 2016;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) the proper internal financial controls has been laid down and that the internal financial controls were adequate and were operating effectively;

f) the systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

29. Awards and Recognition

During the year under review, your Company received many awards and felicitations conferred by reputable organisations.

Some of them are:

1. "Economic Times - Excellence In Supply Chain & Logistics Award" established by Economic Times.

2. "QUALITY EXCELLENCE AWARD - Supply Chain Sustainability" for the Company''s Supply Chain team at the World Quality Congress.

3. Most Admired Enterprise Solution Implementation and; Most Admired Retailer of the year - Department Store 2015 at Images Retail Forum, 2015.

4. "Best Supply chain company in Retail vertical" at ''Express Logistics and Supply Chain'' Forum conducted by Kamikaze B2B Media.

5. "The Most Respected Company in Retail" by Business World Magazine for the fifth year in a row.

30. Material Changes

There are no material changes and commitments affecting the financial position of the Company occurred between March 31, 2016 and the date of this report of Board of Directors to you.

31. Acknowledgement

Your Directors wish to express their appreciation to all customers, business partners, suppliers, banks and financial institutions for their continued support and co-operation extended by them.

Your Directors also place on record their sincere appreciation to all associates of the Company for their unstinted commitment towards the growth of the Company.

The Directors acknowledges the confidence and faith reposed by Shareholders in the Company and look forward to their continued support in future as well.

For and on behalf of the Board of Directors

Chandru L. Raheja

May 3, 2016 Chairman


Mar 31, 2014

Dear Members,

The Directors present herewith 17th Annual Report on the business and operations of the Company together with the Audited Statements of Accounts for the year ended March 31, 2014.

Financial Performance

(Rs. in lacs)

Year ended Year ended Particulars March 31, 2014 March 31, 2013

Retail Turnover

Own merchandise (including concession sales) 274,109.89 227,048.25

Consignment merchandise 27,590.06 26,111.84

Other Retail operating income 3,290.47 2,809.26

304,990.42 255,969.35

Less: Value Added Tax 14,581.77 12,240.40

Less: Cost of consignment merchandise 19,051.33 18,306.59

271,357.32 225,422.36

Other Income 1,338.88 1,721.47

272,696.20 227,143.83

Profit before Depreciation & Tax 12,448.43 11,100.34

Less: Depreciation 6,177.89 5,074.71

Profit before Tax 6,270.54 6,025.63

Less: Provision for Tax 2,570.07 2,108.78

Profit after Tax 3,700.47 3,916.85

Add: Balance brought forward from previous year 17,508.89 14,516.00

Amount available for appropriation 21,209.36 18,432.85

Appropriation

Proposed Dividend (incl. Dividend Distribution Tax) 730.19 728.12

Transfer to General Reserve 185.02 195.84

Balance carried forward 20,294.15 17,508.89

Performance Review

Your Company has opened 14 departmental stores i.e., one store each at Chandigarh, Kalyan, Surat, Thane, Agra, Vadodara, Raipur, Hyderabad, Chennai, Ghaziabad, Kolkata and Airports at Delhi, Jaipur and Raipur taking its chain of stores to 68 stores (including five airport stores) spread across India. Further, the Company has also opened 5 HomeStop stores at Chandigarh, Jaipur, Hyderabad and two at Bengaluru taking its tally to 18 stores.

The revenue of the Company is Rs. 272,696.20 lacs (previous year Rs. 227,143.83 lacs), registering a growth of 20.05% y-o-y basis. The net Profit achieved was Rs. 3,700.47 lacs (previous year Rs. 3,916.85 lacs).

Dividend

Your Directors are pleased to recommend a dividend of Rs. 0.75 per equity share of Rs. 5 each. (Previous year Rs. 0.75 per equity share of Rs. 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:

* World HRD Congress has conferred the Company with following awards:

1. Excellence in Training & Development Award for Best Custom Built Content.

2. Excellence in Training & Development Award for Best Training Partnership with External Vendors.

* India''s Most Respected Retail Company and Top 50 Most Respected Companies of India by BWI Business world Magazine.

* Best Supply Chain Company in Retail vertical, Award at 7th Express, Logistics & Supply Chain Leadership Awards 2013.

* Best Anchor Store award, for Inorbit Mall, Vashi store.

* GIA Award by International Home Ware Association (IHA), Chicago for Homestop.

* A certificate for best practice of "Innovative Eco Friendly Practices in Retail - Qualifier Top 20 Best Practices" at 5th Business Excellence Global Conference and 8th International Benchmarking Conference, Singapore.

* Runner Up BestPrax Prize for the project Innovative Eco Friendly Practices at 25th Qimpro Convention.

* The Sliver Award for Viva City Store design at the Designomics Awards.

* VM&RD Awards has conferred the Company with following awards:

1. Best Department Store - Thane Viviana Mall

2. Merit award - Best Visual Merchandising across India

3. Merit award - Best Window Display across India

* Best Loyalty Program Award at the Loyalty Summit 2014.

* Third position in great places to work in Retail Industry by Great Place to Work Institute and Retailers Association of India.

* Coaching Organisation of the Year and Best Organisational Leadership Development Programme at Learning & Development WHRD Awards 2014.

* Best Green Energy Efficiency Initiative Award at Global Green Leadership Awards, 2014, by World CSR Congress.

* 3rd Asia Manufacturing Supply Chain Summit has conferred the Company with following awards:

1. Manufacturing/Supply Chain Leadership and Strategy Award for ASN initiative with Madura Garments.

2. Best Supply Chain Initiative of the Year Award for GS1 Initiative.

* Best Green Energy Efficiency Initiative Award at Global Green Leadership Awards - 2014 conducted by World CSR Congress.

* Most Trusted Retailer - Popular choice award and Best Customer Loyalty Initiative of the Year award at the ET Retail Awards ceremony.

Credit Rating

During the year, the following credit ratings were assigned to the Company:

1. India Ratings & Research Private Limited (A Fitch Group Company):

* IND A1 for Commercial Paper Programme of Rs. 500 million.

* IND A1 for Short Term Debt Programme of Rs. 500 million.

2. Credit Analysis & Research Limited has assigned the following credit ratings:

* CARE A to the long term facilities of Rs. 547 crore and CARE A1 to the short term facilities of Rs. 31.50 crore.

* CARE A1 for Commercial Paper issue/ Short Term Debt (Series I) issue aggregating to Rs. 100 crore.

* CARE A1 for Commercial Paper issue/ Short Term Debt (Series II) issue aggregating to Rs. 40 crore.

* CARE A for Non Convertible Debentures issue amounting to Rs. 100 crore.

3. CRISIL Limited has assigned CRISIL A1 rating for Commercial Paper programme of Rs. 50 crore.

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, vendor bill discounting facility, 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 and designed Employees Stock Option Plan Scheme for its and its subsidiary''s employees and options were granted in accordance with Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, as amended. The Nomination and 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 Rs. 344/- per option to the specified employees of the Company and its subsidiary Companies.

During the year under review, the Company has allotted 236,243 equity shares of Rs. 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.

The Company has received a certificate from its Statutory Auditors, that the scheme has been implemented in accordance with SEBI Guidelines and resolution passed by the Shareholders of the Company. The said Certificate would be placed at the Annual General Meeting of the Company.

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 6,821 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

Your Company''s Statutory Auditors, Deloitte Haskins & Sells LLP Chartered Accountants, Mumbai, will retire at the conclusion of the ensuing Annual General Meeting. Deloitte Haskins & Sells LLP have sought re-appointment and have confirmed that they are eligible for re-appointment, if made, as a Statutory Auditors of the Company.

The Audit Committee and the Board of Directors recommend the re-appointment of Deloitte Haskins & Sells LLP as the Statutory Auditors of the Company.

Directors

Mr. Ravi Raheja and Mr. Neel Raheja the promoters of the Company, have thus far been the permanent & non-executive promoter directors of the Company. Your directors have, however, now re-designated them as retiring directors whose office shall be liable to determination by retirement by rotation in accordance with the provisions of Section 152 of the Companies Act, 2013.

Accordingly, in accordance with the provision of the Companies Act, 2013 and Articles of Association of the Company, Mr. Ravi C Raheja, Non-Executive & Non Independent Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. Avnish Bajaj and Ms. Abanti Sankaranarayanan were appointed as Additional Directors of the Company on October 25, 2013 and June 19, 2014 respectively. These directors hold their office as Directors upto the date of ensuing Annual General Meeting of the Company and are eligible for re-appointment.

Pursuant to Section 149, 152 and other applicable provisions of the Companies Act, 2013 and amendment to the Listing Agreement, your directors are seeking appointment of Prof. Nitin Sanghavi, Mr. Deepak Ghaisas and Mr. Nirvik Singh as non-retiring Independent Directors of the Company, for five consecutive years for a term upto March 31, 2019 and Mr. Avnish Bajaj and Ms. Abanti Sankaranarayanan as non-retiring Independent Directors of the Company, for five consecutive years for a term upto July 30, 2019. The Company has received requisite notice from a member proposing their appointment as Independent Directors of the Company.

The Company has received declarations from all the Independent Directors of the Company confirming that they satisfy the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and clause 49 of the listing agreement with the Stock Exchanges.

Mr. Govind Shrikhande, Managing Director of the Company is liable to retire by rotation. Your directors seek to re-designate him as a permanent director of the Company whose office shall not be liable to determination by rotation, till such time as he remains a Managing Director of the Company, in accordance with the terms of his appointment and in accordance with the provisions of Section 152 of the Companies Act, 2013.

Brief particulars of these Directors are annexed to the notice convening the 17th Annual General Meeting in accordance with the provisions of the Companies Act, 2013 and the Listing Agreement entered into with the Stock Exchanges.

Mr. Shahzaad Dalal and Mr. Gulu L Mirchandani have informed the Board that due to time constraints and other personal commitments, they would not like that their appointment as Independent Directors under the Companies Act, 2013 be approved at the forthcoming Annual General Meeting of the Company and would continue as Independent Directors only till such date. The Board of Directors records its sincere appreciation and recognition of the valuable contribution and services rendered by them during their long association with the Company.

Corporate Governance

The Report on corporate governance as stipulated under clause 49 of the Listing Agreement forms part of this Report. The certificate from the Statutory Auditors of the Company, confirming the compliance with the conditions of corporate governance as stipulated under the aforesaid clause 49, is annexed to the Report on corporate governance.

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 Rs. 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 been credited to ''Shoppers Stop Ltd - Unclaimed Shares Demat Suspense Account'' in view of compliance of clause 5A of the Listing 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:

1. All the Store Unit maintenance head and store managers were made aware about energy consumption of their store as per the 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, motivated 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. Controlled the energy consumption of HVAC system by optimizing the temperature inside the stores (24°C). This drive is the major contributor for the energy conservation for the stores.

3. Optimized lighting consumption by strictly controlling the operating hours as per the usage pattern. Colour coding is followed for distinguishing the different lighting (emergency, show window, signage''s, floor lighting, indirect lighting) switches; so that energy usage can be optimised.

4. Eliminated the unwanted night consumption and restricted usage of the night lighting during night work.

5. Installed capacitor banks to maintain the power factor to reduce the losses and avail PF incentive there by receiving 5% to 7% incentive on the energy bills.

6. These cumulative efforts resulted in the saving of 2,915,343 Units (Cost Rs. 303 Lacs) cumulatively by consistent monitoring and controlling the consumption at optimum level as compared to the consumption of the last year.

7. Company has also finalized the supplier of Wind Power for two of its stores in the state of Maharashtra. This should help reduce the power cost of these stores substantially, viability of this option purely depends on the MSEDCL & MERC norms.

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 Rs. 6,194.01 lacs (previous year Rs. 5,393.36 lacs), whereas Foreign Exchange outgo was Rs. 5,058.93 lacs (previous year Rs. 4,821.10 lacs).

Particulars of Employees

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 the requirements of Section 217 (2AA) of the Companies Act, 1956, the Board of Directors confirms that:

1. In the preparation of the annual accounts for the year ended March 31, 2014, the applicable accounting standards have been followed along and no material departures have been made from the same;

2. 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, 2014 and of the profit of the Company for the year ended on that date;

3. 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 fraud and other irregularities; and

4. They have prepared the annual accounts on a ''going concern'' basis.

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 Accounts, section of Annual Report.

Acknowledgement

Your Directors wish to express their appreciation to all customers, business partners, suppliers, banks and financial institutions for their invaluable support and look forward to their continued support in the future. Your Directors place on record their sincere appreciation for the significant contributions made by all the associates at all levels; through their dedication, hard work and commitment towards the growth of the Company.

The Directors also acknowledges the confidence and faith reposed by Shareholders in the Company and look forward to have the same in future as well.

For and on behalf of the Board of Directors

Chandru L. Raheja June 19, 2014 Chairman


Mar 31, 2013

Dear Members,

The 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 (Rs. in lacs)

Year ended Year ended Particulars March 31, 2013 March 31, 2012

Retail Turnover

Own merchandise (including concession sales) 227,048.25 194,276.55

Consignment merchandise 26,111.84 22,289.34

Other Retail operating income 2,809.26 2,681.47

255,969.35 219,247.36

Less: Value Added Tax 12,073.84 10,505.10

Less: Cost of consignment merchandise 18,306.59 15,771.75

225,588.92 192,970.51

Other Income 1,721.47 1,868.76

227,310.39 194,839.27

Profit before Depreciation & Tax 11,100.34 13,552.94

Less: Depreciation 5,074.71 3,772.24

Profit before Tax 6,025.63 9,780.70

Less: Provision for Tax 2,108.78 3,354.78

Profit after Tax 3,916.85 6,425.92

Add: Balance brought forward from previous year 14,516.00 9,131.05

Amount available for Appropriation 18,432.85 15,556.97

Appropriation

Proposed Dividend (incl. Dividend Distribution Tax) 728.12 719.67

Transfer to General Reserve 195.84 321.30

Balance carried forward 17,508.89 14,516.00

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 Rs. 227,310.39 lacs (previous year Rs. 194,839.27 lacs), registering a growth of 16.67% y-o-y basis. The net Profit achieved was Rs. 3,916.85 lacs (previous year Rs.. 6,425.92 lacs).

Dividend

Your Directors are pleased to recommend a dividend of Rs. 0.75 per equity share of Rs. 5 each. (Previous year Rs. 0.75 per equity share of Rs. 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:

- Dun & Bradstreet at Rolta Corporate Awards 2011.

- "Leadership Governance Award" in service category at Qimpro Best Prax Conclave 2012.

- Silver Award for ''Choose your Own Gift'' campaign by DMAI.

- Most Admired Retail Group of theYear and Most Admired Home Format of theYear for HomeStop at IRF 2012.

- Top Class Brand Award 2012-2013 by National Education & Human Resource Development Organisation.

- No. 1 Social Net Worth Company on Facebook by Fortune Magazine (India). Ranking for the Company has improved from Rank 297 to Rank 276.

- Most Trusted Retailer of the Year - Popular choice at ET Retail Awards.

- The 6th Loyalty Summit conferred the Company with following awards:

1. Loyalty Programmes of the Year - Retail Large Format

2. Best use of Social Media to Enhance Loyalty

3. Champion of Champions - Loyalty Programmes of the Year

- Best Mobile Marketing Campaign at Indian Digital Summit (hosted by IAMAI).

- World HRD Congress conferred the Company with following awards:

1. Most Innovative initiative Award for Goodie box

2. Best Talent Management Award for Baby Kangaroo Programmes

3. Organisation with innovative HR practices "I Pledge"

4. Learning and Talent Initiative Exercise for Lead & Leap Programmes.

- Best Online Retailer of the Year (Department Store) by ET NOW.

- POP-Instore Asia and Visual Merchandising & Retail Design Awards 2013 conferred the Companywith following awards:

1. Merit Award - Best Store Award > 20,000 sq. ft. - R-city Store

2. Merit Award - Green Initiative Award - Andheri store

3. Gold Award - Best Window Display

4. Gold Award - Best Visual Merchandising

Credit Rating

During the year, India Ratings & Research Private Limited (A Fitch Group Company) has assigned the following credit ratings:

1. ''INDAI'' for Commercial Paper Programmes of Rs. 500 million.

2. ''INDAI'' for Short Term Debt Programmes of Rs. 500 million.

During the year, Credit Analysis & Research Limited has awarded the following credit ratings:

1. CARE A1 (Non Fund Based) and CARE A (Fund Based) for Bank Facilities of Rs. 461.50 crores (enhanced from Rs. 401.50 crores).

2. CARE A1 for Commercial Paper issue/Short Term Debt (Series I) issue of the Company, aggregating to Rs. 100 crores.

3. CARE A1 for Commercial Paper issue/Short Term Debt (Series II) issue of the Company, aggregating to Rs. 40 crores.

4. CARE A for Non Convertible Debentures issue of Rs. 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 and designed Employees Stock Option Plan Scheme for its and its subsidiary''s employees and options were granted in accordance with 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 Rs. 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 Rs. 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

Your Company''s Statutory Auditors, Deloitte Haskins & Sells, Chartered Accountants, Mumbai, will retire at the conclusion of the ensuing 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.

Corporate Governance

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 Rs. 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 been credited to ''Shoppers Stop Ltd. - Unclaimed Shares Demat Suspense Account'' in view of compliance of Clause 5A of the listing 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:

1. All the Store Unit maintenance head and store managers were made aware about energy consumption of their store as per the 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. 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.

3. Optimised lighting consumption by strictly controlling the operating hours as per the usage pattern. Colour coding is followed for distinguishing the different lighting (emergency, show window, signage''s, floor lighting, indirect lighting) switches; so that energy usage can be optimised.

4. Eliminated the unwanted night consumption and restricted usage of the night lighting during night work.

5. 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.

6. These cumulative efforts resulted in the saving of 2,124,330 Units (CostRs. 224 lacs) cumulatively by consistent monitoring and controlling the consumption at optimum level as compared to the consumption of the last year.

7. Company has also installed solar panels in Andheri Store to reduce energy cost and help reduce pollution.

8. 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 Rs. 5,393.36 lacs (previous year Rs. 4,704.40 lacs), whereas Foreign Exchange outgo was Rs. 4,821.10 lacs (previous year Rs. 3,723.44 lacs).

Particulars of Employees

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. In the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. 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 Company for the year ended on that date;

3. 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 irregularities; and

4. They have prepared the annual accounts on a ''going concern'' basis.

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 significant contributions made by all the associates at all levels; through their dedication, hard work and commitment towards the growth 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

Chandru L. Raheja

April 30, 2013 Chairman


Mar 31, 2012

The Directors are pleased to present the 15th Annual Report on the business and operations of the Company together with the Audited Statements of Accounts for the year ended March 31, 2012.

Financial Performance

(Rs.in lacs

Year ended Year ended

Particulars March 31, 2012 March 31, 2011

Retail Turnover Own merchandise (including concession sales) 194,276.55 167,270.86

Consignment merchandise 22,289.34 d 18,130.30

Other Retail operating income 2,681.47 2,186.88

219,247.36 187,588.04

Less: Value Added Tax 10,557.47 8,960.24

Less: Cost of consignment merchandise 15,771.75 12,965.82

192,918.14 165,661.98

Other Income 1,868.76 945.47

194,786.90 166,607.45

Profit before Depreciation & Tax 13,552.94 14,482.46

Less: Depreciation 3,772.24 3,099.88

Profit before Tax 9,780.70 11,382.58

Less: Provision for Tax 3,354.78 3,865.00

Profit after Tax 6,425.92 7,517.58

Add. Balance brought forward from previous year 9,131.05 2,685.19

Proposed Dividend (incl. Dividend Distribution tax) 719.67 695.84

Transfer to General Reserve 321.30 375.88

Balance carried forward 14,516.00 9,131.05

Performance Review

During the year under review, your Company has opened 13 departmental stores i.e. two stores in Chennai and Pune and one each at Indore, Vijayawada, New Delhi, Mysore, Latur, Ahmadabad, Mumbai, Bengaluru, Gurgaon, taking its chain of stores to 51 stores (including two airport stores) spread across India. Further, the Company has also opened seven "HomeStop" one each at Lucknow, Vijayawada, Pune, Bengaluru, Ahmedabad, Mumbai, Cyberabad taking its tally to 11 stores.

The revenue is Rs 194,786.90 lacs (previous year Rs 166,607.45 lacs), registering a growth of 16.91% y-o-y basis. The net profit achieved was Rs 6,425.92 lacs (previous year Rs 7,517.58 lacs).

Dividend

Your Directors are pleased to recommend a dividend of Rs 0.75 per equity share of Rs 5 each. [previous year Rs 0.75 per equity share of Rs 5 each.]

The dividend, once approved by members in the ensuing Annual General Meeting, will be paid out of the profits of the Company for the year.

Awards and Recognition

Your Company has been conferred inter-alia with the following awards and recognitions during the year under review:

- Best Supply Chain Excellence Award' in the Retail Vertical during the 5th Express, Logistics and Supply Chain Conclave, conducted by ELSC at Mumbai.

- "Department Store of the Year" Award at the Star Retail Award, 2011.

- Fortune Magazine (India) has ranked Shoppers Stop as No. 1 among Fortune 500 Companies for the highest Social Net worth on Facebook. Overall, Fortune 500 ranking for the Company has also improved from Rank 351 to 297 this year.

- Most Admired Beauty Products Retailer of the year at Images Beauty & Wellness Awards.

- Winner for three consecutive years in Customer & Brand Loyalty in the "Retail Sector - Large Formats" at Loyalty Summit Award.

- Direct Marketing Campaign of the year in Loyalty Summit Award.

- Merit certificate in the Department Store > 20,000 sq. ft. at VMRD Retail Design Award, 2012 for Rohini store.

Credit Rating

During the year, Credit Analysis & Research Limited (CARE) has awarded the following credit ratings:

1. CARE A1 to Commercial paper (CP) issue/ Short Term Debt (STD) issue of the Company, aggregating to Rs 40 crores (enhanced from Rs 30 crores).

2. CARE A1 to Commercial Paper (CP) issue/ Short Term Debt (STD) issue of the Company, aggregating to Rs 100 crores (enhanced from Rs 70 crores) (carved out of sanctioned fund based working capital limits).

3. CARE A for long term bank facility of Rs 230 crores

4. CARE A1 for short term bank facility of Rs 96.50 crores and

5. CARE A for Non-Convertible Debentures issue of Rs 100 crores

During the year, Fitch Ratings India Private Limited has assigned the following credit ratings:

1. Fitch A1 (and) rating for the short term debt / Commercial paper programme of Rs 50 Crores.

2. Fitch A1 (ind) rating for the Commercial programme of Rs 50 crores (carved out of sanctioned fund based working capital limits) 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 and designed various Employees Stock Option Plan Schemes for its employees and options were granted in accordance with 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 administers and monitors the same.

During the year under review, the Company has granted 189,382 Employee Stock Options at a grant price of Rs 336/- per option to the specified employees of the Company and its subsidiary Companies.

During the year under review, the Company has allotted 395,298 equity shares of Rs 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 Act, with its balance sheet, on fulfillment of certain conditions. The Company has fulfilled those 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 company.

During the year under review, on November 14, 2011, the Company has acquired 49% of equity share capital of Gateway Multichannel Retail (India) Ltd., (Gateway) from Hyper city Retail (India) Ltd., at its face value making Gateway, as its 100% subsidiary.

Human Resources

The Company takes great pride in the commitment, competence and vigour shown by its employees in all realms of business. 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 HR 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. As in the earlier years, the Company continues to conduct several training programmes.

As on date of the Balance Sheet, the Company had a total of 5,371 Customer Care Associates.

Fixed 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

Your Company's Statutory Auditors, Deloitte Haskins & Sells, Chartered Accountants, Mumbai, retire at the conclusion of the ensuing 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, Prof. Nitin Sanghavi and Mr. Nirvik Singh, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. A brief resume of these Directors, nature of their expertise in specific functional areas, names of companies in which they hold the directorships/chairmanships of Committees as stipulated under Clause 49 of the listing agreement with the Stock Exchanges are provided in a statement annexed to the Notice convening the Fifteenth Annual General Meeting.

Corporate Governance

The Company has been pro-active in following the principles and practices of good Corporate Governance. 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 Rs 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, they said unclaimed shares have been credited to 'Shoppers Stop Ltd. - Unclaimed Shares Demat Suspense Account' in view of compliance of Clause 5A of the listing 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.

1. All the Store Unit maintenance head and store managers were made aware about energy consumption of their store as per the 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, motivated users to take all the possible measures to save the energy. Helps in pointing out the discrepancies in the energy consumption pattern and corrective action to eliminate the discrepancies.

2. Controlled the energy consumption of HVAC system by optimizing the temperature inside the stores (24°C). This drive is the major contributor for the energy conservation for the stores.

3. Optimized lighting consumption by strictly controlling the operating hours as per the usage pattern. Colour coding is followed for distinguishing the different lighting (emergency, show window, signage's, floor lighting, indirect lighting) switches; so that energy usage can be optimized.

4. Eliminated the unwanted night consumption and restricted usage of the night lighting during night work.

5. Installed capacitor banks to maintain the power factor to reduce the losses and avail PF incentive there by receiving 5 to 7% incentive on the energy bills.

6. These cumulative efforts resulted in the saving of 895,636 Units (Cost Rs 77.05 lacs) cumulatively by consistent monitoring and controlling the consumption at optimum level as compared to the consumption of the last year.

The Company earns Foreign Exchange on sale of its merchandise to its customers. Foreign Exchange outgo during the year included purchase of computer software and purchase of merchandise, professional fees etc. The foreign exchange earnings during the year was Rs 4,707.40 lacs (previous year Rs 4,487.10 lacs), where as Foreign Exchange outgo was Rs 3723.44 lacs (previous year Rs 4,815.20 lacs).

Particulars of Employees

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 Statement of Particulars of Employees, which is 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 confirms that:

1. In the preparation of Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. 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, 2012 and of the profit of the Company for the year ended on that date;

3. 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 irregularities;

4. They have prepared the annual accounts on a 'going concern' basis.

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 Accounts 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 appreciation for the enormous contribution made by all the associates at all levels; their competence, perseverance, and hard work that has enabled the Company to cross new milestones on a continual basis.

And to you our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board of Directors

Chandru L. Raheja

April 30, 2012 Chairman


Mar 31, 2011

The Directors are pleased to present the 14th Annual Report on the business and operations of the Company together with the Audited Statements of Accounts for the year ended March 31, 2011.

Financial Performance

(Rs. in lacs)

Year ended Year ended Particulars March 31,2011 March 31,2010

Retail Turnover

Own merchandise (including concession sales) 172,583.12 141,583.75

Consignment merchandise 18,130.30 13,074.07

Other Retail operating income 2,186.88 2,178.93

192,900.30 156,836.75

Less: Value Added Tax 8,960.24 6,856.84

Less: Cost of consignment merchandise 12,965.82 9,429.83

170,974.24 140,550.08

Other Income 945.47 631.17

171,919.71 141,181.25

Profit before Depreciation & Tax 14,482.46 9,669.57

Less: Depreciation 3,099.88 3,102.54

Profit before Tax 11,382.58 6,567.03

Less: Provision for Tax 3,865.00 1,543.98

Profit after Tax 7,517.58 5,023.05

Add/(Less): Balance brought forward from previous year 2,685.19 (1,476.00)

Proposed Dividend (incl. Dividend Distribution Tax) 695.84 610.71

Transfer to General Reserve 375.88 251.15

Balance carried forward 9,131.05 2,685.19

Performance Review

Your Company has opened eight departmental stores i.e. one each at Aurangabad, Bengaluru, Bhopal, Durgapur, Indore, New Delhi, Pune and Siliguri, taking its chain of stores to 40 stores (including two airport stores) spread across India. Further, the Company has also opened one "HomeStop" at Lucknow, taking its tally to 5 stores.

The revenue is Rs. 171,919.71 lacs (previous year: Rs. 141,181.25 lacs), registering a growth of 21.77% y-o-y basis. The net Profit achieved was Rs. 7,517.58 lacs (previous year net profit of Rs. 5,023.05 lacs).

Dividend

Your Directors are pleased to recommend a dividend of Rs. 0.75 per equity share of Rs. 5 each, [(previous year: Rs. 1.50) per equity share of Rs. 10 each.]

The dividend, once approved by members in the ensuing Annual General Meeting will be paid out of the profits of the Company for the year and will sum up to a total of Rs. 695.84 lacs, including dividend distribution tax.

Awards and Recognition

Your Company has been conferred inter-alia with the following awards and recognitions during the year under review:

- Department Store of the Year by Star Retailer Awards.

- Merit Certificate in the category Department Store > 20000 sq.ft. at the VMRD Retail Design Awards 2011.

- Prestigious Loyalty award for Customer & Brand loyalty in the Retail Sector at the Loyalty Summit.

- Best Retail Marketing Campaign of the Year Award and Customer Loyalty programme award at the 7th Reid & Taylor Awards for Retail Excellence at Asia Retail Forum (Asia Retail Congress).

- Marketing Idea of The Year award for the Zoozoo merchandise tie-up with Vodafone-Essar at ET Retail Awards, backed by the Economic Times and Retailers Association of India (RAI).

- Most Respected Company in the Retail Sector by Business World.

- shoppersstop.com has been recognised as the "Most Admired Non-Store Fashion and Lifestyle Retailer" of the Year at the Images Fashion Awards 2011.

Further Issue of Capital

To meet the fund requirements entailed by the strong growth potentials, the Company issued 2,000,000 equity shares of Rs. 10/- each to Qualified Institutional Buyers at a price of Rs. 649/- in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 & pursuant to the approval of members accorded by Postal Ballot on December 16,2009. Further the Company has also simultaneously allotted 4,000,000 equity shares of Rs. 10/- each at a price of Rs. 307.18/-, to the promoters of the Company on preferential basis, consequent upon exercise of their option for conversion of 4,000,000 warrants, in accordance with SEBI Guidelines.

Credit Rating

During the year. Fitch Ratings India Private Limited has upgraded rating for commercial paper and short-term debt programme of Company from "F1 (ind)" to "F1 + (ind)". The limit of the rating has been increased from Rs. 80 crores to Rs. 100 crores out of which Rs. 50 crores would be carved out of the sanctioned working capital limit of the Company.

During the year. Credit Analysis & Research Limited (CARE) has awarded "PR1 +" rating for commercial paper and short-term debt programme of Company for Rs. 100 crores, out of which Rs. 70 crores would be carved out of the sanctioned working capital limit of the Company. Your Company has also obtained credit rating from CARE for long-term bank facilities of Rs. 291 crores and short term bank facilities of Rs. 40 crores. The rating assigned for long-term bank facilities and short-term bank facilities are "CARE A+" and "PR1 +" respectively. Your Company has also obtained credit rating "CARE A +" from CARE for Non-Convertible Debenture Issue of Rs. 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, so as to have funds at competitive cost.

Sub-division of shares

As approved by members, by Postal Ballot on December 23, 2010, the Company has sub-divided the equity share of the face value of Rs. 10 each into two equity shares of Rs. 5 each. The Company had fixed January 13,2011 as the Record Date for the purpose of sub-division of the equity shares.

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 and designed various Employees Stock Option Plan Schemes for its employees and options were granted in accordance with 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 allotted 154,420 equity shares of Rs. 10 each (before sub-division as stated above) and 29,308 equity shares of Rs. 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 on consolidated financial statements, your Directors have pleasure in attaching the consolidated financial statements, which 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 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 company.

During the year under review, on June 30, 2010, the Company has increased its equity stake in Hypercity Retail (India) Ltd.; from 19% to 51% and made it, as its subsidiary. The Company also holds 51% of Hypercitys preference share capital.

The Company and Crossword Bookstores Limited, its wholly-owned subsidiary has mutually terminated the franchise agreement with effect from end of business hours of September 30, 2010 and accordingly, "Crossword" business was handed over back to Crossword Bookstores Limited.

Human Resources

The Company takes great pride in the commitment, competence and vigour shown by its employees in all realms of business. The Company continues to take new initiatives to further align its HR 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. As in the earlier years, the Company conducted several training programmes.

As on date of the Balance Sheet, the Company had a total of 4,317 Customer Care Associates.

Fixed 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

Your Companys Statutory Auditors, Deloitte Haskins & Sells, Chartered Accountants, Mumbai, retire at the conclusion of the ensuing 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 appreciation of Mr. Govind Shrikhandes farsighted vision, wisdom and guidance, which have been invaluable to the Companys growth, he was elevated as a Customer Care Associate & Managing Director of the Company for a period of 3 years commencing from July 29, 2010. Before this appointment, Mr. Shrikhande was President & CEO & Executive Director of the Company.

Your Directors would like to place on record their sincere gratitude towards the guidance and contribution made by Mr. Shrikhande and welcomes him, as the Managing Director of the Company.

In accordance with the provision of the Companies Act, 1956 and Articles of Association of the Company, Mr. B. S. Nagesh and Mr. Shahzaad Dalai, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer them for re-appointment. A brief resume of these Directors, nature of their expertise in specific functional areas, names of companies in which they hold the directorships/chairmanships of Committees of the Board as stipulated under Clause 49 of the Listing Agreement with the stock exchanges are given in the explanatory statement annexed to the Notice convening the fourteenth Annual General Meeting.

Corporate Governance

The Company has been pro-active in following the principles and practices of good Corporate Governance. 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

During the year under review, 50 equity shares of Rs. 5/- each were transfered from the suspense account to a shareholder demat account. As on date, there are 700 Equity Shares of Rs. 5/- each (post sub-division), which were allotted in Initial Public Offering of 2005, were lying in the escrow account due to non-availability of 13 shareholders 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 are credited to Shoppers Stop Ltd - Unclaimed Shares Demat Suspense Account in view of compliance of Clause 5A of the Listing Agreement. Such shareholders may approach the Company with their correct particulars and proof of their identity for crediting requisite shares from the Demat Suspense Account to their individual demat Account. 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:

- Daily capturing and monitoring the energy consumption in every store.

- Adoption of Variable Frequency Drives (VFDs) for Air handling units with temperature sensors.

- Adoption of new LED lighting to reduce the energy consumption in lighting.

- Controlled the energy consumption of HVAC system by optimising the temperature inside the stores.

- Installed capacitor Banks to Maintain the Power factor and reduce the losses.

- Ensure preventive maintenance schedules genuinely to have better efficiency and output from the equipments.

- All above efforts resulted in the conservation of 1,118,171 nos of Units of electricity across the chain during the year which amounts to appx. Rs. 85.14 lacs.

The Company also proposes to commence energy auditing, improvements in the pumping system installed at standalone stores, reduction in energy cost in due course of time.

The Company earns Foreign Exchange on sale of its merchandise to its customers. Foreign Exchange outgo during the year included purchase of computer software and purchase of merchandise, professional fees etc. The foreign exchange earnings during the year was Rs. 4,487.10 lacs (previous year: Rs. 4,224.41 lacs), where as Foreign Exchange outgo was Rs. 4,815.20 lacs (previous year: Rs. 3,387.03 lacs).

Particulars of Employees

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 Statement of Particulars of Employees, which is 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 confirms that:

1. In the preparation of Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. 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, 2011 and of the profit of the Company for the year ended on that date;

3. 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 irregularities;

4. they have prepared the annual accounts on a going concern basis.

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 Accounts, section of 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 appreciation for the significant contribution made by all the associates at all levels; their competence, perseverance, and hard work that has enabled the Company to cross new milestones on a continual basis.

And to you our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board of Directors

Chandru L. Raheja Chairman

April 29, 2011

 
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