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Notes to Accounts of Shoppers Stop Ltd.

Mar 31, 2017

1. SERVICE TAX

Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007, the Company has, based on a legal advice, and challenged the said levy and, inter-alia, its retrospective application. Pending the final disposal of the matter, which is presently before the Supreme Court, the Company continues not to provide for the retrospective levy aggregating Rs, 1,659.56 lacs for the period 1 June, 2007 to 31 March, 2010.

2. EQUITY INVESTMENT IN HYPERCITY RETAIL (INDIA) LIMITED (''HYPERCITY'')

The accumulated losses of Hypercity Retail (India) Limited, a subsidiary company, amounting to Rs, 71,177.58 lacs at 31 March 2017 (2016: Rs, 62,703.95 lacs, 2015: Rs, 53,961.56 Lacs) have substantially eroded its net worth. While Hypercity continues to take steps to revamp its business operations, (including store right sizing, and brand positioning), the gestation period to achieve the desired level of turnaround is taking longer than previously envisaged. Based on a business valuation, after considering the aforesaid, the Company has recognized an impairment of Rs, 3,600 lacs for diminution in value of the investment. Based on its future business plans and strategic growth projections, the Company has determined that no further impairment is required at this stage.

3. SEGMENT REPORTING

The Company is primarily engaged in the business of retail trade through its retail and departmental store facilities, which in the terms of Ind AS 108 on ''Operating Segments'', constitute a single reporting segment. The Company operates in a single geographical environment i.e in India

4. DIVIDENDS

The Board of Directors have recommended dividend of '' 0.75 per share of '' 5 each for the financial year 2016-17 from its retained earnings. The payment is subject to the approval of shareholder in its ensuing annual general meeting.

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5. DERIVATIVES / FORWARD FOREIGN EXCHANGE CONTRACTS

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency exposures relating to the underlying transactions and firm commitments. The company does not enter into any derivative instruments for trading and speculative purposes.

Adjustments are made to the initial carrying amounts of non-financial hedged items when the anticipated sale or purchase transaction takes place.

b) Unhedged Foreign Currency exposure

There are no foreign currency exposures that have not been hedged by a derivative instrument or otherwise at the end of the year.

6. SHARE-BASED PAYMENTS

7 Employee share option plan of the Company

The Company has a share option scheme for certain employees of the Company and its subsidiaries. In accordance with the terms of the share option scheme, as approved by shareholders at a previous general meeting, employees with a pre-defined grade and having more than five years of service (for Hypercity employees, the same is three years) may be granted options to purchase equity shares. Each share option converts into one equity share of the company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The share options vests based on a pre-determined vesting schedule from the date of grant.

The fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions upon which the share options are granted. However, the above performance condition is only considered in determining the number of instruments that will ultimately vest.

8. EMPLOYEE BENEFITS

9 Defined contribution plans

The Company operates defined contribution plan (Provident fund) for all qualifying employees of the Company. The employees of the company are members of a retirement contribution plan operated by the government. The Company is required to contribute a specified percentage of payroll cost to the retirement contribution scheme to fund the benefits. The only obligation of the Company with respect to the plan is to make the specified contributions.

The Company''s contribution to Provident Fund aggregating Rs, 1,111.81 Lacs (2016: Rs, 999.91 Lacs; 2015: Rs, 818.92 Lacs) has been recognized in the Statement of Profit and Loss under the head Employee Benefits Expense.

Information about the contribution to defined contribution plans for key managerial personnel is disclosed in note 38.

10 Defined benefit plan

The Company sponsors funded defined benefit (Gratuity) plan for qualifying employees, covered under the Payment of Gratuity Act, 1972. The defined benefit plan is administered by a third-party insurer (Life Insurance Corporation of India). This third-party insurer is responsible for the investment policy with regard to the assets of the plan.

Under the plan, the employees are entitled to a lump-sum amounting to 15 days'' final basic salary for each year of completed service payable at the time of retirement / resignation provided the employee has completed 5 years of continuous service.

h) Asset liability matching strategies:

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

i) Effect of plan on entity''s future cash flows

a) Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

b) The Company expects to contribute Rs, 730.52 lacs to its gratuity plan for the next year.

c) Weighted average duration of the defined benefit obligation is 6 years (based on discounted cash flows).

11. RELATED PARTY DISCLOSURES

Names of related parties and description of relationship:

(a) Subsidiaries Upasana Trading Limited, Shoppers Stop.

com (India) Limited,

Shoppers Stop Services (India) Limited,

Crossword Bookstores Limited.

Gateway Multi Channel Retail (India)

Limited.

Hypercity Retail (India) Limited.

(b) Key Management Personnel Executive Director: Govind Shrikhande

Non Executive Directors: Chandru L.Raheja

Ravi Raheja Neel Raheja B.S.Nagesh Nitin Sanghavi Deepak Ghaisas Nirvik Singh

Abanti Sankaranarayanan Gareth Thomas Manish Chokhani

(c) Promoter directors having control C.L. Raheja, Ravi C. Raheja, Neel C. Raheja / significant influence over the

company.

(d) Entities in which the promoter Ivory Properties and Hotels Private Limited, directors have control/significant K.Raheja Corp. Private Limited. influence

K.Raheja Private Limited, Inorbit Malls (India) Private Limited Chalet Hotels Private Limited Trion Properties Private Limited; Magna Warehousing & Distribution Private Limited

12. FINANCIAL INSTRUMENTS

Capital risk management

The Company''s objectives when managing capital are to safeguard continuity as a going concern, provide appropriate return to shareholders and maintain a cost efficient capital structure. The Company determines the amount of capital required on the basis of an annual budget and a five year plan, including, for working capital, capital investment in stores, technology, and strategic investment in subsidiary companies. The Company''s funding requirements are met through internal accruals and a combination of both long-term and short-term borrowings.

The Company monitors capital on the basis of total debt to total equity on a periodic basis. The following table summarizes the capital of the Company:

The Company''s objective is to keep the debt equity ratio below 1 which it has achieved in both these years.

B. Financial risk management

A wide range of risks may affect the Company''s business and operational / financial performance. The risks that could have significant influence on the Company are market risk, credit risk and liquidity risk. The Company''s Board of Directors reviews and sets out policies for managing these risks and monitors suitable actions taken by management to minimize potential adverse effects of such risks on the Company''s operational and financial performance.

(a) Market risk:

Market Risk is the risk that changes in market place could affect the future cash flows to the company. The market risk for the company arises primarily from product price risk, interest rate risk and, to some extent, foreign currency risk.

Product price risk: In a potentially inflationary economy, the Company expects periodical price increases across its retail product lines. Product price increases which are not in line with the levels of customers'' discretionary spends, may affect the business/retail sales volumes. In such a scenario, the risk is managed by offering judicious product discounts to retail customers to sustain volumes. The Company negotiates with its vendors for purchase price rebates such that the rebates substantially absorb the product discounts offered to the retail customers. This helps the Company protect itself from significant product margin losses. This mechanism also works in case of a downturn in the retail sector, although overall volumes would get affected.

Interest risk: The Company is exposed to interest rate risk primarily due to borrowings having floating interest rates. The Company uses available working capital limits for availing short term working capital demand loans with interest rates negotiated from time to time so that the Company has an effective mix of fixed and variable rate borrowings. Interest rate sensitivity analysis shows that an increase / decrease of fifty basis points in floating interest rates would result in decrease / increase in the Company''s profit before tax by approximately Rs, 283 lacs (2016: Rs, 260 lacs).

Currency risk: The Company''s significant transactions are in Indian Rupees and therefore there is minimal foreign currency risk. Generally, the Company fully covers the foreign currency risk for transactions in foreign currency which are primarily for import of merchandise, by entering into forward foreign exchange contracts. Also Refer Note 34 for the forward foreign currency contracts outstanding at the end of the reporting period.

(b) Credit risk:

Credit risk is a risk that the counterparty will default on its contractual obligation resulting in financial loss to the Company. The credit risk for the Company primarily arises from credit exposures to trade receivables (mainly institutional customers), deposits with landlords for store properties taken on leases and other receivables including balances with banks.

Trade and other receivables: The Company''s retail business is predominantly on ''cash and carry'' basis which is largely through credit card collections. The credit risk on such collections is minimal, since they are primarily owned by customers'' card issuing banks. The Company has adopted a policy of dealing with only credit worthy counterparties in case of institutional customers and the credit risk exposure for institutional customers is managed by the Company by credit worthiness checks. The Company also carries credit risk on lease deposits with landlords for store properties taken on leases, for which agreements are signed and property possessions timely taken for store operations. The risk relating to refunds after store shut down is managed through successful negotiations or appropriate legal actions, where necessary.

The Company''s experience of delinquencies and customer disputes have been minimal. Further, Trade and other receivables consist of a large number of customers, across geographies, hence, the Company is not exposed to concentration risks.

(c) Liquidity Risk:

Liquidity risk is a risk that the Company may not be able to meet its financial obligations on a timely basis through its cash and cash equivalents, and funds available by way of committed credit facilities from banks.

Management manages the liquidity risk by monitoring rolling cash flow forecasts and maturity profiles of financial assets and liabilities. This monitoring includes financial ratios and takes into account the accessibility of cash and cash equivalents and additional undrawn financing facilities.

In respect of financial guarantee contracts, no amounts are recognized based on the results of the liability adequacy test for likely deficiency / defaults by the entities on whose behalf the Company has given guarantees, grounded on the Company''s actual experience.

The Company has access to following financing facilities which were undrawn as at the end of reporting periods mentioned.

Notes

1. Under the previous GAAP, there was no separate record in the financial statements for ''Other Comprehensive Income''. Under Ind AS, specified items of income, expense, gains and losses are presented under Other Comprehensive Income.

2. Under the previous GAAP, point award schemes were measured from the standpoint of the grantor, (the Company). On transition to Ind AS, point award schemes are measured at fair value from standpoint

of the holder. Consequently, the Company has recognized deferred revenue with corresponding adjustment to total equity and / or profit or loss, as applicable.

3. Under the previous GAAP, interest free lease deposits were recorded at their transaction value. On transition to Ind AS, these lease deposits are premeasured at amortized cost using the effective interest rate method. The difference between the transaction value of the deposit and amortized cost is regarded as prepaid rent and recognized as expenses uniformly over the lease period. Interest income, measured by the effective interest rate method is accrued. The effect of these is reflected in total equity and / or profit or loss, as applicable.

4. Under the previous GAAP, equity settled employee share-based payments were recognized using the intrinsic value method. Under Ind AS, the cost of equity settled employee share-based payments is recognized based on the fair value of the options as on the grant date. The effect of these is reflected in total equity and/ or profit or loss as applicable.

5. Under the previous GAAP, actuarial gains and losses on employee defined benefit obligations were recognized in profit or loss. Under Ind AS, the actuarial gains and losses on re-measurement of net defined benefit obligations are recognized in other comprehensive income. This resulted in a reclassification between profit or loss and other comprehensive income.

6. Under the previous GAAP, proposed dividends were recognized as a provision in the financial statements, even if declared after the balance sheet date. Under Ind AS, dividends are recognized when declared. This results in a timing difference and has been reflected in total equity of the relevant financial years.


Mar 31, 2016

1. SERVICE TAX

Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June, 2007, the Company has based on a legal advice, challenged the said levy and, inter-alia, its retrospective application. Pending the final disposal of the matter, which is presently before the Supreme Court, the Company continues not to provide for the retrospective levy aggregating to Rs.1,659.56 lacs for the period 1 June, 2007 to 31 March, 2010, (fully paid under protest).

2. Segment reporting

The Company is primarily engaged in the business of retail trade through retail and departmental store facilities, which in the terms of Accounting Standard 17 on ''Segment Reporting'', constitutes a single reporting segment.

3. DERIVATIVES

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading and speculative purposes.

The Company expects to contribute Rs.390.13 lacs to its gratuity plan for the next year.

In assessing the Company''s post retirement liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables.

Expected return on plan assets is based on expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The gratuity benefit scheme of the Company is managed by Life Insurance Corporation of India (LIC). The Company is currently awaiting the details of the composition of the plan assets, by category, from the LIC for the current and the previous years and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given.

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


Mar 31, 2014

1. COMPANY BACKGROUND

Shoppers Stop Limited (''SSL'' or ''the Company'') was incorporated on 16 June 1997. The Company is engaged in the business of retailing a variety of household and consumer products through departmental stores. As at 31 March 2014, the Company operated through 67 such departmental stores located in different cities of India.

2. Other disclosures:

The Company has one class of equity shares having a par value of Rs. 5 per share. Each equity shareholder is eligible for one vote per share held. Each equity shareholder is entitled to dividends as and when the Company declares and pays dividend after obtaining shareholders'' approval. Dividends are paid in Indian Rupees.

During the year ended 31st March 2014, the amount of per share final dividend recognised as distribution to equity shareholders was Rs. 0.75 per share (2013: Rs. 0.75 per share).

3. 2014: Term Loans are secured by a first pari passu charge on stock, book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present & future except ICICI Bank Term loans which is secured by first Pari Passu charge on the current assets and all the movable fixed assets of the Company both Present & Future excluding leasehold rights, lease deposits & Shoppers Stop Brands.

2013: Term Loans are secured by a first pari passu charge on stock, book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present & future except ICICI Bank Term loans which is secured by first Pari Passu charge on the current assets and all the movable fixed assets of the Company both Present & Future excluding leasehold rights, lease deposits & Shoppers Stop Brands.

4. 2014: Term Loans are secured by a first pari passu charge on stock, book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present & future except ICICI Bank Term loans which is secured by first Pari Passu charge on the current assets and all the movable fixed assets of the Company both Present & Future excluding leasehold rights, lease deposits & Shoppers Stop Brands.

2013: Term Loans are secured by a first pari passu charge on stock, book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present & future except ICICI Bank Term loans which is secured by first Pari Passu charge on the current assets and all the movable fixed assets of the Company both Present & Future excluding leasehold rights, lease deposits & Shoppers Stop Brands.

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

6. CONTINGENT LIABILITIES AND COMMITMENTS:

(All amounts in lacs)

Mar-14 Mar-13

a) Claims against the Company not acknowledged as debts, comprising of:

(i) Income-tax claims disputed by the Company relating to disallowances aggregating 968.71 702.10

(ii) Service tax, Sales tax and other Indirect tax claims disputed by the Company relating to issues of applicability and classification aggregating 1,512.98 1,496.75

(iii) Third party claims arising from disputes relating to contracts aggregating 493.52 236.19

b) Other matters 227.25 52.25

c) Estimated amount of contracts remaining to be executed on capital account and not provided for 3,935.24 3,927.78

d) Corporate guarantee given jointly and severally with joint venture partners to banks for loans taken by Joint venture entities 825 00 1 338 57

e) Corporate guarantee given jointly and severally with the promoter group company for loans taken by Hypercity Retail (India) Ltd. 19,500.00 9,500.00

f) Bank Guarantees 371.36 379.62

Note: Future cash outflows in respect of (a) above are determinable only on receipt of judgements/decisions pending with various forums/authorities.

7. SERVICE TAX

Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Company has, based on a legal advice, challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has passed an interim order dated 14th October, 2011, with regard to the levy of service tax on immovable properties rented out for commercial use including its retrospective applicability from 1st June, 2007 in compliance of which, the Company made an aggregate deposit of Rs. 1824.88 lakhs in respect of the liability for such service tax upto 30th September, 2011. From October, 2011, the Company is accounting and paying for such service tax regularly as per directives of Supreme Court.

Pending the final disposal of the matter, the Company continues not to provide for the retrospective levy aggregating Rs. 1,659.56 Lacs for the period 1st June, 2007 to 31st March, 2010.

Hypercity continues to make losses and the accumulated losses of Rs. 53,757.28 Lacs as at 31st March, 2014 have substantially eroded its Net worth as at the year end. Hypercity has business plans with strategic growth projections, which it is confident of achieving given the business opportunities in domestic retail and a continued financial support from the Company. Based on these plans, opportunities and business valuation by an independent valuer, the Company considers that there is no loss for which a provision is currently necessary in these financial statements.

8. Exceptional items comprise of (i) net loss of Rs. 29.56 Lacs relating to the Company''s inventory destroyed / damaged in a fire, in May 2013, at its store in Inorbit Mall, Pune. (ii) net loss of Rs. 37.84 Lacs (2013: Rs. 74.06 Lacs) relating to the Company''s assets destroyed / damaged in a fire, in June 2012, at its store at Koregaon Park, Pune. In respect of the above, the Company received insurance claims agrregating Rs. 1,100.20 Lacs (2013 : Rs. 500 Lacs) during the year.

9. SEGMENT REPORTING

The Company is primarily engaged in the business of retail trade through retail and departmental store facilities, which in the terms of Accounting Standard 17 on ''Segment Reporting'', constitutes a single reporting segment.

10. DERIVATIVES

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading and speculative purposes.

The Company expects to contribute Rs. 203.04 lacs to its Gratuity plan for the next year.

In assessing the Company''s Post Retirement Liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables.

Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The gratuity benefit scheme of the Company is managed by Life Insurance Corporation of India (LIC). The Company is currently awaiting the details of the composition of the plan assets, by category, from the LIC for the current and the previous years and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given.

Note: The Company''s share in the assets, liabilities, income and expenses in Nuance Group (India) Private Limited is based on the audited financials for the year ended 31 December 2013.

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


Mar 31, 2013

1. COMPANY BACKGROUND

Shoppers Stop Limited (''SSL'' or ''the Company'') was incorporated on 16 June 1997. The Company is engaged in the business of retailing a variety of household and consumer products through departmental stores. As at 31 March 2013, the Company operated through 55 such departmental stores located in different cities of India.

2. SERVICE TAX

Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Company has, based on a legal advice, challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court passed an interim order dated 14th October, 2011, with regard to the levy of service tax on immovable property rented out for commercial use including its retrospective applicability from 1st June, 2007 in compliance of which, the Company made an aggregate deposit of Rs. 1824.88 lacs in respect of the liability for such service tax upto 30th September, 2011. From October, 2011 the Company has been accounting and paying for such service tax regularly as per directives of the Supreme Court.

Pending the final disposal of the matter, the Company continues not to provide for the retrospective levy aggregating Rs. 1,659.56 Lacs for the period 1st June, 2007 to 31st March, 2010.

3. SEGMENT REPORTING

The Company is primarily engaged in the business of retail trade through retail and departmental store facilities, which in the terms of Accounting Standard 17 on ''Segment Reporting'', constitutes a single reporting segment.

4. DERIVATIVES

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading and speculative purposes.

5. The Company''s assets (including inventory) were destroyed/damaged in a fire, on 21 June, 2012, at its store in Koregaon Park, Pune. The Company has filed claim with the insurance company and, the survey by the insurance company is under process. The Company is adequately insured (including for materials damage and for loss of profits) and has set up a receivable of Rs. 790.45 lacs (net of on account receipt of Rs. 500 lacs) from the insurance company in respect of the value of the asset destroyed/ damaged based on the company''s current best estimates and reasonable certainty considering the reports of the relevant authorities and the Company''s past experience. The net loss of Rs. 74.06 lacs on this account, primary on policy exclusions, has been disclosed as an exceptional item. The operations of the store remain suspended.

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


Mar 31, 2012

1. COMPANY BACKGROUND

Shoppers Stop Limited ('SSL' or 'the Company') was incorporated on 16 June 1997. The Company is engaged in the business of retailing a variety of household and consumer products and books through departmental stores. As at 31 March 2012, the Company operated through 51 such departmental stores located in different cities of India.

1.1 The Company simultaneously allotted 20,00,000 equity shares to Qualified Institutional Buyers (QIBs) and 40,00,000 equity shares to Promoters pursuant to the conversion of optionally convertible warrants for an aggregate issue price of Rs 12,980 lacs and Rs 12,287.20 lacs (Rs 3,071.80 lacs received in 2010 being 25% of total price) respectively. The premium received aggregated Rs 24,667.20 lacs.

1.2 The Board of Directors and shareholders of the Company at their meetings held on October 29, 2010 and December 23, 2010 respectively approved sub division of equity share of Rs10/- each into two equity shares of Rs 5/- each. The Company fixed January 13, 2011 as the Record Date, for the said sub division and as on date, the equity shares of the company were sub divided.

1.3 Other disclosures:

The Company has one class of equity shares having a par value of Rs 5 per share. Each equity shareholder is eligible for one vote per share held. Each equity shareholder is entitled to dividends as and when the Company declares and pays dividend after obtaining shareholders' approval. Dividends are paid in Indian Rupees.

During the year ended 31st March 2012, the amount of per share final dividend recognized as distribution to equity shareholders was Rs 0.75 per share (2011: Rs 0.75 per share)

2.1 Term Loans are secured by a first pari passu charge on stock, book debts, hypothecation charge on credit card/debit card receivables (Escrow account) and all the movable fixed assets of the Company, both present & future.

2.2 Term Loan of Rs 5,000 Lacs availed from HDFC Bank Ltd. @ 11.80% is repayable in 5 equal monthly installment from 9th December 2012 and term loan of Rs 2,500 lacs availed from Bank of India @11.75% is repayable on 7th June 2014.

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

(All amounts in Rs lacs) Mar-12 Mar-11

4. CONTINGENT LIABILITIES AND COMMITMENTS:

a) Claims against the Company not acknowledged as debts, comprising of:

(i) Income-tax claims disputed by the Company relating to disallowances 1,068.85 535.91

aggregating

(ii) Service tax, Sales tax and other Indirect tax claims disputed by the Company relating to issues of applicability and classification aggregating 1,419.05 33.55

(iii) Third party claims arising from disputes relating to contracts aggregating 236.19 236.19

b) Other matters 52.25 52.25

c) Estimated amount of contracts remaining to be executed on capital account and 2,427.87 3,194.26

not provided for

d) Corporate guarantee given jointly and severally with joint venture partners to banks 1,338.57 1,338.57 for loans taken by Joint venture entities

e) Corporate guarantee given jointly and severally with the promoter group company 5 000 00 - for loans taken by Hyper city Retail (India) Ltd.

f) Bank Guarantees 324.74 -

Note: Future cash outflows in respect of (a) above are determinable only on receipt of judgments/decisions pending with various forums/authorities.

5. SERVICE TAX

Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Company has, based on a legal advice, challenged the said levy and, inter-alia, its retrospective application. The Hon'ble Supreme Court has passed an interim order dated 14th October, 2011, with regard to the levy of service tax on immovable properties rented out for commercial use including its retrospective applicability from 1st June, 2007 in compliance of which, the Company has made an aggregate deposit of Rs 1,824.88 lacs in respect of the liability for such service tax upto 30th September, 2011. From October 2011, the Company is accounting and paying for such service tax regularly as per directives of the Supreme Court.

Pending the final disposal of the matter, the Company continues not to provide for the retrospective levy aggregating Rs 1,659.56 lacs for the period 1st June, 2007 to 31st March, 2010.

Hyper city continues to make losses and the accumulated losses of Rs 36,402.66 lacs as at 31st March, 2012 have substantially eroded its Net worth as at the year end. Hyper city has business plans with strategic growth projections, which it is confident of achieving given the business opportunities in domestic retail and a continued financial support from the Company. Based on these plans, opportunities and business valuation by an independent valuer, the Company considers that there is no loss for which a provision is currently necessary in these financial statements.

The Net worth of these companies have substantially been eroded as at 31st March, 2012. Based on the business plans of these companies and the business valuation by an independent valuer, no provision for any loss is currently considered necessary in these financial statements.

6. SEGMENT REPORTING

The Company is primarily engaged in the business of retail trade through retail and departmental store facilities, which in the terms of Accounting Standard 17 on 'Segment Reporting', constitutes a single reporting segment.

7. DERIVATIVES

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency exposures relating to the underlying transactions and firm commitments. The company does not enter into any derivative instruments for trading and speculative purposes.

The following are the outstanding Forward Exchange Contracts entered into by the Company as at 31 March 2012.

The company expects to contribute Rs 133.75 lacs to its Gratuity plan for the next year.

In assessing the Company's Post Retirement Liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables.

Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The gratuity benefit scheme of the Company is managed by Life Insurance Corporation of India (LIC). The Company is currently awaiting the details of the composition of the plan assets, by category, from the LIC for the current and the previous years and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given.

8. On account of termination of the franchisee agreement with Crossword Bookstores Ltd. (CBL), a wholly owned subsidiary of the Company, the operations of "Crossword" were handed over to Crossword Bookstores Limited with effect from October 1, 2010. Accordingly, figures for the previous year are not comparable with those of the current year.

9. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification/disclosure.


Mar 31, 2011

1. COMPANY BACKGROUND

Shoppers Stop Limited (SSL or the Company) was incorporated on 16 June 1997. The Company is engaged in the business of retailing a variety of household and consumer products and books through departmental stores. As at 31 March 2011, the Company operated through 42 such departmental stores located in different cities of India.

2. Retail Turnover in the Profit and Loss account indicates the gross volumes of business and operations.

(All amounts in Rs. lacs)

Mar-11 Mar-10

3. CONTINGENT LIABILITIES IN RESPECT OF:

a) Guarantee given for loan taken by Joint venture companies from banks 1,338.57 4,490.00

b) Claims against the Company not acknowledged as debts comprise of:

(i) Disputed Income tax matters in appeal 535.91 245.42

(ii) Disputed sales tax matters in appeal 16.46 428.63

(iii) Disputed Customs Duty 17.09 24.00

c) Contingent contractual claims 236.19 236.19

d) Others 52.25 -

Note: Future cash outflows in respect of (b) above are determinable only on receipt of judgements/decisions pending with various forums/authorities.

4. SERVICE TAX

Pursuant to levy of service tax on renting of immoveable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Company has, based on a legal advice.challenged the said levy and, inter-alia, its retrospective application in various High Courts. An interim stay has been granted by various High Courts from recovery of the said service tax and the matter is pending. Accordingly, the Company has not provided for service tax aggregating to Rs. 1,619 lacs for the retrospective period upto 31 March 2010, which will be appropriately recognised on final determination.

5. SEGMENT REPORTING

The Company is primarily engaged in the business of retail trade through retail and departmental store facilities in India, which in the terms of Accounting Standard 17 on Segment Reporting1, constitutes a single reporting segment.

6. RELATED PARTY DISCLOSURES

Names of related parties and description of relationship:

(a) Subsidiaries Upasna Trading Limited, Shoppers Stop.com (India) Limited,

Shoppers Stop Services (India) Limited, Crossword Bookstores Limited.

Gateway Multichannel Retail (India) Limited.

Hypercity Retail (India) Limited, (w.e.f. 30 June 2010)

(b) Promoter directors having control/significant C. L. Raheja, Ravi C. Raheja, Neel C. Raheja influence over companies stated in (c) below

(c) Companies in which the persons stated in (b) above Ivory Properties and Hotels Private Limited, K. Raheja Corp. Private Limited have control/ significant influence K. Raheja Private Limited, Inorbit Malls (India) Private Limited

Avacado Properties and Trading India Private Limited, K. Raheja IT Park (Hyderabad) Private Limited

Trion Properties Private Limited

(d) Joint Ventures Nuance Group (India) Private Limited

Timezone Entertainment Private Limited

(e) Key Management Personnel Executive Director : Govind Shrikhande

Non Executive Directors: Chandru L. Raheja

Ravi Raheja Neel Raheja

B. S. Nagesh

Gulu L. Mirchandani

Shahzaad Dalal

Nitin Sanghavi

Deepak Ghaisas

Nirvik Singh

7. DERIVATIVES

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency exposures relating to the underlying transactions and firm commitments. The company does not enter into any derivative instruments for trading and speculative purposes.

8. ESOP SCHEMES

b) New Schemes Launched

No new employees share based payment plans were formulated during the year. The compensation cost of stock options granted to employees is calculated using the intrinsic value of the stock options.

c) The weighted average contractual life of the options outstanding is 4.42 years

9. INTEREST IN JOINT VENTURES: March-11 March-10

V. CONTINGENT LIABILITIES 439.90 161.82

Note: The companys share in the assets, liabilities, income and expenses in Nuance Group (India) Private Limited is based on the audited financials for the year ended 31 December 2010.

10. EMPLOYEE BENEFITS

The company expects to contribute Rs. 101.05 lacs to its Gratuity plan for the next year.

In assessing the Companys Post Retirement Liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables.

Expected return on plan assets is based on expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

11. EXCEPTIONAL ITEM

The Board of Directors of Gateway Multichannel Retail (India) Limited (Gateway) had in January 2009 decided to discontinue operations and the company had therefore made a provision for its investments and loans and advances aggregating to Rs. 2,486.40 lacs in the previous year. The impairment charge was disclosed as an "Exceptional item" in the Profit and Loss Account. During the year the Company has recovered Rs. 5.10 lacs from Gateway and has accordingly disclosed the credit as an "Exceptional item".

12. The Board of Directors and shareholders of the Company at their meetings held on October 29, 2010 and December 23, 2010 respectively approved sub-division of equity share of Rs. 10/- each into two equity shares of Rs. 5/- each. The Company fixed January 13, 2011 as the Record Date, for the said sub-division and as on date, the equity shares of the company were sub-divided. Accordingly, the basic and diluted EPS for the current and prior year have been computed on the basis of the said sub-division.

13 (i) During the year, the Company has simultaneously allotted 20,00,000 equity shares to Qualified Institutional Buyers (QIBs) and 40,00,000 equity shares to Promoters pursuant to the conversion of optionally convertible warrants for an aggregate issue price of Rs. 12,980 lacs and Rs. 12,287.20 lacs (Rs. 3,071.80 lacs received in 2010 being 25% of total price) respectively. The premium received aggregated Rs. 24,667.20 lacs.

14. On account of termination of the franchisee agreement with Crossword Bookstores Ltd. (CBL), a wholly-owned subsidiary of the Company, the operations of "Crossword" have been handed over to Crossword Bookstores Limited with effect from October 1, 2010 at book values. Accordingly, figures for the previous year are not comparable with those of the current year.

15. The Networth of these companies have been substantially eroded and these companies continue to make losses. Based on the business plans of these companies and the valuation of businesses by an independent valuer, no provision for any loss is currently considered necessary in these financial statements.

16a. During the year, the name of the Company was changed from Shoppers Stop Limited to Shoppers Stop Limited.

16b. Figures of the previous year are regrouped, where necessary, to conform to those of the current year.


Mar 31, 2010

1. COMPANY BACKGROUND

Shopper’s Stop Limited (‘SSL’ or ‘the Company’) was incorporated on 16 June 1997. The Company is engaged in the business of retailing a variety of household and consumer products and books through departmental stores. As at 31 March 2010, the Company operated through 34 such departmental stores (including HomeStop) located in different cities of India.

(All amounts in Rs. lacs) Mar-10 Mar-09 2. CONTINGENT LIABILITIES IN RESPECT OF: a) Guarantee given for loan taken by Joint venture companies from banks 4,490.00 5,090.00 b) Contingent contractual claims 236.19 239.20 c) Disputed Income tax matters in appeal 245.42 51.60 d) Disputed sales tax matters in appeal 428.63 43.63 e) Disputed Customs Duty 24.00 24.00

3. SERVICE TAX

The Finance Bill 2010 proposes to impose a levy of Service Tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007. Since, (a) the Finance Bill has not yet been enacted and (b) based on legal advice the company is planning to challenge the levy in a court of law, no provision for the same has been made in the accounts - Rs. 1,728 lacs.

4. SEGMENT REPORTING

The company is primarily engaged in the business of retail trade through retail and departmental store facilities, which in the context of AS 17 on ‘Segment Reporting’ constitutes a single reporting segment.

The company expects to contribute Rs. 83.29 lacs to its Gratuity plan for the next year.

In assessing the Company’s Post Retirement Liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables.

Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The gratuity benefit scheme of the Company is managed by Life Insurance Corporation of India (LIC). The Company is currently awaiting the details of the composition of the plan assets, by category, from the LIC for the current and the previous years and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given.

5. The Company allotted 4,000,000 warrants to Promoters on 29 December 2009. Each warrant is convertible at the option of the Promoters, into one Equity share at a price of Rs. 307.18/- at any time before the expiry of 18 months from the date of allotment.

6. EXCEPTIONAL ITEM

The Board of Directors of Gateway Multichannel Retail (India) Limited (Gateway) had in January 2009 decided to discontinue operations and the company had therefore made a provision for its investments and loans and advances aggregating to Rs. 2,486.40 lacs in the previous year. The impairment charge was disclosed as an “Exceptional item” in the Profit and Loss Account. During the year the company has recovered Rs. 187.72 lacs from Gateway and has accordingly disclosed the credit under the “Exceptional item” line.

7. Figures of the previous year are regrouped and reclassified wherever necessary to correspond to the figures of the current year.

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