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Notes to Accounts of V Mart Retail Ltd.

Mar 31, 2016

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of RS,10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2016, the amount of per equity share dividend recognized as distributions to Equity shareholders is RS,1.25 per share (Previous year: RS,1.50 per share) i.e. interim dividend of RS,1.15 per share (previous year RS, Nil per share) and final dividend of RS,0.10 per share (previous year RS,1.5 per share).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The above information is furnished as per shareholder register as at the year end.

e) Shares reserved for issue under options

For details of shares reserved for issue under the Employee Stock Option Plan (ESOP) of the Company, refer note 44.

* The Board of Directors of the Company, in their meeting dated 27 May 2016, recommended a final dividend of RS,0.10 per equity are amounting to RS,1,806,670 subject to approval of the shareholders at the ensuing Annual General Meeting.

# The Board of Directors of the Company, in their meeting held on 17 March 2016 have declared interim dividend of H1.15 per fully paid up equity are of RS,10 each, aggregating to RS,25,006,348, including dividend distribution tax for the year ended 31 March 2016. Further, the Board of Directors of the Company, in their meeting held on 27 May 2016, recommended a final dividend of RS,0.10 per fully paid up equity share of RS,10 each, aggregating to RS,2,174,465, including dividend distribution tax for the year ended 31 March 2016, subject to the approval of shareholders at the ensuing Annual General Meeting of the Company.

For details on Employee Stock Option Plan 2012 (ESOP) of the Company, refer note 44.

(1) Fund based credit facility of RS,420,000,000 (previous year - RS,350,000,000) from State Bank of India comprising of vendor financing scheme (VFS) amounting to RS,370,000,000 (previous year: nil) and cash credit (CC) facility of RS,50,000,000 (previous year: RS,350,000,000), carries an interest for Vendor Financing Scheme (VFS) at base rate (9.30% p.a.) up to 90 days, base rate (9.30% p.a.) plus 0.25% for period above 90 days to 180 days and interest rate as applicable to Cash Credit (CC) account for outstanding more than 180 days and carries an interest rate (9.30% p.a.) plus 125 basis point (1.25%) for Cash Credit as on 31 March 2016 and is repayable on demand. The fund based credit facility has increased from RS,350,000,000 to RS,420,000,000 with effect from 2 July 2015 from which RS,370,000,000 is towards VFS and RS,50,000,000 is towards Cash Credit account. The outstanding book balance as on 31 March 2016 for CC account is RS,24,616,852 (previous year - RS,199,690,926) and for VFS is RS,198,991,453 (previous year - Nil).

These facilities are secured by way of :-

a. Primary - Exclusive Hypothecation charge over Company''s all current assets (present and future) including/inter alia stock of raw materials, finished goods etc. lying in their warehouse, shop, go down, and elsewhere including goods in transit (present and future).

b. Collateral -

(a) Exclusive charge on all the present and future fixed assets of the company excluding those financed by other term lenders.

(b) Equitable mortgage of residential property in the name of Mr. Lalit Agarwal (Managing director) , Mrs.Sangeeta Agarwal (Wife of Mr. Lalit Agarwal) & Mr. Madan Gopal Agarwal (Director) in Gurgaon.

(c) Lien on Mutual funds (in name of the company) of RS,5,300,000. (Market value: RS,6,151,975).

(d) Lien on Fixed deposits receipts (with SBI) of RS,19,800,000.

Further, personal guarantees have been given by Mr. Lalit Agarwal (Managing director), Mr. Hemant Agarwal (Director) (till 17 March 2016), Mr. Madan Gopal Agarwal (Director), Mrs. Sangeeta Agarwal (Wife of Lalit Agarwal) and Mrs. Smiti Agarwal (Wife of Hemant Agarwal)."

(2) Overdraft facility/Short term loan of RS,58,975,000 (previous year - RS, NIL) from HDFC Bank Limited carries an interest at rate of 10% (Subject to minimum base rate of HDFC Bank Limited) as on 31 March 2016 and is repayable on demand. The outstanding book balance as on 31 March 2016 is of RS,10,406,048 (previous year - RS, NIL).

This facility is secured by the way :

Debt FMPs (Fixed Maturity Product) wholly owned by the Company and acceptable by bank. The Company has pleged FMP''s amounted to RS,50,000,000 to bank.

(3) Fund based cash credit facility of RS,128,492,375 (previous year - RS,117,512,500) from Deutsche Bank AG carries an interest at the rate MIBOR plus 1.5% or Deutsche Bank base rate (9.20%) whichever is higher as on 31 March 2016 and is repayable on demand. The outstanding book balance as on 31 March 2016 is of RS,35,098,925 (previous year - RS,86,592,534).

This facility is secured by the way :

Approved Mutual funds(Debts/ Income/ Liquid/ FMP) and bonds in the name of the Company. The Company has pleged mutual fund amounted to RS,125,000,000 to bank.

# Adjustments here represents re-classification of assets from one head to another head basis re-assessment performed by the management.

* includes reversal of accumulated depreciation of H Nil (previous year: H1,290,854) and prior period depreciation of H740,844 (previous year: H1,649,492) (refer note 34).

Note 12A.1: Subsequent to 31 March 2016, the finance lease arrangement relating to the respective fixed assets has been cancelled mutually by the Company and the counter party, pursuant to which the Company had a gain of RS,3,813,101, the same has been recognized as a credit to gross block against settlement of liability outstanding in the books.

Note 12A.2: Change in method of charging depreciation on fixed assets:

"During the previous year, the Company has changed its method of charging depreciation on fixed assets from Written Down Value (''WDV'') method to Straight Line Method (''SLM'') method as management believes that such change in accounting policy results in a fair recognition of depreciation charge vis-a-vis its operations particularly when the Company is on the growth path and opening new stores on regular basis, which presents the financial statements more appropriately.

12A. Tangible assets (contd.)

Accordingly, the Company has accounted for the reversal of depreciation charge of H249,197,148 in previous year financial statements. Had the Company continued with the previous method of charging depreciation, the charge for depreciation for the year ended 31 March 2015 would have been higher by RS,249,197,148.

Note 12A.3: Impact due to revision of useful life in accordance with the requirement of Schedule II of the Companies Act, 2013

Effective from 1 April 2014, the Company has started providing depreciation based on the revised useful life of the assets as per the requirement of Schedule II of the Companies Act, 2013. Due to this, depreciation charge for the year ended 31 March 2015, is higher by RS,160,998,081. And, in case of assets whose life has been completed as on 31 March 2014, the carrying value (net of residual value) of those assets has been charged along with depreciation charge for the year ended 31 March 2015.

12B. Capital work-in-progress

Capital work-in-progress amounting to RS,23,456,176 (previous year: RS,7,207,558) comprises of expenses incurred in relation to stores under pipeline.

* Owing to the nature of Company''s business and the voluminous nature of goods included in inventory, the Company carries out physical verification to cover all its retail stores and storage units over a period of one year. Shortfall identified during such physical verification is adjusted for each store/unit at the relevant time during the year after conclusion of such exercise such write-off pertain to good in transit loss, damage goods, short/excess inventory etc.

* The Payment of Bonus (Amendment) Act, 2015 dated 31 December 2015 (which was made effective from 1 April 2014) revised the thresholds for coverage of employees eligible for Bonus and also enhanced the ceiling limits for computation of bonus. However, taking cognizance of the stay granted by Hon''ble High Courts of Kerala (Ernakulam), Karnataka (Bengaluru), Uttar Pradesh (Allahabad) and Madhya Pradesh (Indore) and pending disposal of such matter, the Company, in accordance with the Payment of Bonus (Amendment) Act, 2015, has only recognized an additional expense of RS,21,380,719 for the period 1 April 2015 to 31 March 2016 and has not recognized the differential amount of bonus (RS,10,760,923) for the period 1 April 2014 to 31 March 2015.

Further, the Company has certain litigations involving suppliers, motor vehicle accident, sale tax litigations and certain inspections under Prevention of Food Adulteration Act, 1954. Based on legal advice of in-house legal team, the management believes that no material liability will devolve on the Company in respect of these litigations.

5. 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 Retailer Association of India (Company being a member of such association) has challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has passed an interim order dated 14 October 2011, directing the members to deposit 50% of the arrears of service tax due up to 30 September 2011 and the balance if any at the time of final disposal of appeal. The amount of service tax on rent in respect of rented stores from 1 June 2007 till 30 September 2011 was H10,825,938 of which H7,793,204 has been provided for in the Statement of Profit and Loss till 31 March 2012 and the balance H3,032,733 has been classified as contingent liability.

As per directions of Hon''ble Supreme Court, the Company after adjusting the amount already paid has made an aggregate deposit of H3,768,918 under protest (i.e. against the amount under dispute amounting to H6,885,520) with the concerned authorities and the same is being presented as "Service tax deposit" under Long term loans and advances.

6. Related party disclosures

Information required to be disclosed under Accounting Standard 18 "Related Party Disclosures” a) Relationship

I. Key Managerial Personnel

Lalit Agarwal Managing Director

Hemant Agarwal Whole-time Director (till 22 January 2015)

MadanGopal Agarwal Whole-time Director

II. Relatives of Key Managerial Personnel

Sangeeta Agarwal Wife of Lalit Agarwal

Hemant Agarwal Brother of Lalit Agarwal and Non - Executive Director

(w.e.f 23 January 2015 till 17 March 2016)

Uma Devi Agarwal Wife of Madan Gopal Agarwal and Mother of Lalit and Hemant Agarwal

Snehal Shah Son-in-law of Madan Gopal Agarwal

Smiti Agarwal Wife of Hemant Agarwal

Sunita Shah Sister of Lalit and Hemant Agarwal

III. Entities owned by the Key Managerial Personnel and Relatives of Key Managerial Personnel

Lalit Agarwal (HUF) HUF in which Lalit Agarwal is Karta

MadanGopal Agarwal (HUF) HUF in which Madan Gopal Agarwal is Karta

Hemant Agarwal (HUF) HUF in which Hemant Agarwal is Karta

Wesbok Lifestyle Private Limited Company owned by Hemant Agarwal and Smiti Agarwal

* Personal guarantees have been given by Mr. Lalit Agarwal, Mr. Hemant Agarwal, Mr. Madan Gopal Agarwal, Mrs. Sangeeta Agarwal and Mrs. Smiti Agarwal towards fund based credit facility of RS,420,000,000 (previous year - RS,350,000,000) which include vendor financing scheme (VFS) amounting to RS,370,000,000 (previous year: nil) and cash credit (CC) facility of RS,50,000,000 (previous year: RS,350,000,000). The outstanding book balance as on 31 March 2016 for CC RS,24,616,852 (previous year - RS,199,690,926) for cash credit and for VFS is RS,198,991,453 (previous year - Nil).

7. Segment reporting

In the opinion of the management, there is only one reportable segment "Retail Sales" as envisaged by Accounting Standard 17 on "Segment Reporting". The Company is operating only in India and there is no other significant geographical segment.

8. Leases

Information required to be disclosed under Accounting Standard 19 on "Leases”

Operating lease

The retail stores are taken on lease for a lease term ranging from nine years to twelve years including the lock-in period ranging from one to three years. These leases are further renewable on the expiry of total lease term subject to mutual consent of both the parties. There are no restrictions imposed on the Company under the lease arrangement. There are no subleases.

9. Employee stock option plan

The Company has implemented an Employee Stock Option Scheme, which was approved by the Board of Directors and the shareholders vide resolution dated 2 July 2012 and 10 July 2012 respectively (''the V-Mart ESOP Scheme 2012'' or the "Scheme"), consequent to which 300,000 equity shares with a nominal value of RS,10 each will be granted upon exercise of as stock options (ESOPs) to eligible employees. The exercise price of these options will be determined by the Remuneration Committee and the options will vest over a period of 12 months to 36 months of continued employment from the grant date.

The vesting of options is subject to the continued employment of the grantee over the vesting period. The options granted can be exercised after vesting at any time before the expiry of eight years from the grant date.

RS,1,051,552 (previous year RS,274,162) has been provided as employee benefit expenses, as the proportionate cost of 35,995 (previous year: 22,350) numbers of options granted, using the intrinsic value of the stock options measured by a difference between the fair value of the underline equity shares at the grant date and the exercise price.

On 04 May 2015, 03 August 2015 and 09 February 2016, the Company has allotted 14,237 equity shares at a weighted average share price of RS,150.00 per share, 24,687 equity shares at a weighted average share price of RS,150.00 per share and 12,083 equity shares at a weighted average share price of RS,150.00 per share respectively, of face value of RS,10.00 each to the eligible employees of the Company on account of exercise of vested stock options.

The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

10. Initial Public Offer (IPO) of the Equity Shares of the Company

During the year ended 31 March 2013, the Company allotted 1,250,000 equity shares to the Pre- IPO investors at an issue price of RS,210 per equity share (including a premium of RS,200 per equity share) aggregating to RS,262,500,000 and also completed its IPO of 4,496,000 equity shares of RS,10 each for cash at a price of RS,210 per equity share (including a premium of RS,200 per equity share) aggregating to RS,944,160,000. The issue comprised of a fresh issue of 2,761,000 equity shares by the Company and an offer for sale of 1,735,000 equity shares by Naman Finance and Investment Private Limited. The Company''s equity shares have been listed on both BSE Limited and the National Stock Exchange of India Limited on 20 February 2013.

11. In the opinion of the board of directors, assets, loans and advances have a value on realization in the ordinary course of the business at least equal to the amounts at which they are stated and provision for all known liabilities have been made.

12. During the year, certain cases of misappropriation of inventory involving employees at certain stores was identified by the management, the impact of which is included in "Stock written off" disclosed under "Purchase of traded goods and other direct expenses" under Note 27 to the financial statements. Such stock write off of RS,157,063,042 (refer note 27) includes write offs aggregating RS,88,030,850 (approx.) on account of damaged inventory and the balance write off includes, inter-alia, the impact of shrinkages in transit and misappropriation of inventory by employees, among others. Whilst it is not possible to quantify the impact owing to such misappropriation, management believes that the impact thereof is not material to the financial statements

Further, the management has identified an instance of misappropriation of funds, wherein certain payments aggregating to RS,75,000 (approx.) had been processed by an employee, by utilizing the pre-specified approval limit through which he was approving inappropriate invoices. The Company has recovered these amounts from such employee, whose services have since been terminated and therefore, it does not have any impact on the Statement of Profit and Loss.

13. Previous year comparatives have been reclassified, wherever considered necessary, to conform to this year''s classification.


Mar 31, 2015

1. Capital and Other Commitments (Amounts in Rs.)

31 March 2015 31 March 2014

(i) Estimated amount of contracts remaining to be executed on capital account 7,490,597 10,214,424 and not provided for.

(ii) Bank guarantees 2,043,061 5,823,061

(iii) For commitments relating to lease arrangements, please refer note 40.

2. Contingent Liabilities not provided for in respect of: (Amounts in Rs)

31 March 2015 31 March 2014

Demand raised by the sales tax authorities (refer note below) 7,820,505 3,045,897

Service tax on rent payable based on Hon'ble Supreme Court order (refer note 37 3,032,733 3,032,733 below)

Demand raised by electricity board 373,029 2,463,417

Demand raised by income tax authorities 2,294,070 1,456,510

Other litigations 497,000 497,000

14,017,337 10,495,557

Note:- The Company has received an adjustment order under section 54(1)(14) (dated 10 April 2015) of the UP Value Added Tax, 2014 from the Joint Commissioner (Commercial Tax), Muzaffar Nagar wherein the demand of Rs.268,500 raised earlier has been reversed subsequent to the year-end.

Further, the Company has certain litigations involving suppliers, motor vehicle accident and certain inspections under Prevention of Food Adulteration Act, 1954. Based on legal advice of in-house legal team, the management believes that no material liability will devolve on the Company in respect of these litigations.

2. 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 Retailer Association of India (Company being a member of such association) has challenged the said levy and, inter-alia, its retrospective application. The Hon'ble Supreme Court has passed an interim order dated 14 October 2011, directing the members to deposit 50% of the arrears of service tax due up to 30 September 2011 and the balance if any at the time of final disposal of appeal. The amount of service tax on rent in respect of rented stores from 1 June 2007 till 30 September 2011 was Rs.10,825,938 of which Rs.7,793,204 has been provided for in the Statement of Profit and Loss till 31 March 2012 and the balance Rs.3,032,733 has been classified as contingent liability.

As per directions of Hon'ble Supreme Court, the Company after adjusting the amount already paid has made an aggregate deposit of Rs.3,768,918 under protest towards the balance amount with the concerned authorities and the same is being presented as "Service tax deposit" under Long term loans and advances.

3. Segment Reporting

In the opinion of the management, there is only one reportable segment "Retail Sales" as envisaged by Accounting Standard 17 on "Segment Reporting". The Company is operating only in India and there is no other significant geographical segment.

4. Leases

Information required to be disclosed under Accounting Standard 19 on "Leases"

Operating lease

The retail stores are taken on lease for a lease term ranging from nine years to twelve years including the lock-in period ranging from one to three years. These leases are further renewable on the expiry of total lease term subject to mutual consent of both the parties. There are no restrictions imposed on the Company under the lease arrangement. There are no subleases.

The minimum lease payments for the initial lease term are as under:

5. Employee Stock Option Plan

The Company has implemented an Employee Stock Option Scheme, which was approved by the Board of Directors and the shareholders vide resolution dated 2 July 2012 and 10 July 2012 respectively ('the V-Mart ESOP Scheme 2012'or the Scheme), consequent to which 300,000 equity shares with a nominal value of Rs.10 each will be granted upon exercise of as stock options (ESOPs) to eligible employees. The exercise price of these options will be determined by the Remuneration Committee and the options will vest over a period of 12 months to 36 months of continued employment from the grant date.

On 20 July 2012, the Company has granted 153,252 ESOPs ('Grant I') as per Scheme at an exercise price of Rs.150.00 per option with graded vesting (i.e. 45,975 options vesting after 12 months from the date of grant, 45,975 options vesting after 24 months from the date of grant and 61,302 options vesting after 36 months from the date of grant). The vesting of options is subject to the continued employment of the grantee over the vesting period. The options granted can be exercised after vesting at any time before the expiry of eight years from the grant date.

On 5 January 2015, the Company has further granted 22,350 ESOPs ('Grant II') as per Scheme at an exercise price of Rs.450.00 per option with graded vesting (i.e. 6,705 options vesting after 12 months from the date of grant, 6,705 options vesting after 24 months from the date of grant and 8,940 options vesting after 36 months from the date of grant). The options granted can be exercised after vesting at any time before the expiry of eight years from the grant date. The fair value of equity shares on the date of grant was Rs.539.30 (i.e. closing price at stock exchange, prior to the date of the meeting of the Board of Directors in which options are granted).

Rs.274,162 has been provided as employee benefit expenses, as the proportionate cost of 22,350 numbers of options granted, using the intrinsic value of the stock options measured by a difference between the fair value of the underline equity shares at the grant date and the exercise price.

On 29 September 2014 and 5 January 2015, the Company has allotted 41,308 at a weighted average share price of Rs.150 per share and 15,603 equity shares at a weighted average share price of Rs.450 per share respectively, of face value of Rs.10 each to the eligible employees of the Company on account of exercise of vested stock options.

6. Initial Public Offer (IPO) of the Equity Shares of the Company

During the year ended 31 March 2013, the Company allotted 1,250,000 equity shares to the Pre- IPO investors at an issue price of Rs.210 per equity share (including a premium of Rs.200 per equity share) aggregating to Rs.262,500,000 and also completed its IPO of 4,496,000 equity shares of Rs.10 each for cash at a price of Rs.210 per equity share (including a premium of Rs.200 per equity share) aggregating to Rs.944,160,000. The issue comprised of a fresh issue of 2,761,000 equity shares by the Company and an offer for sale of 1,735,000 equity shares by Naman Finance and Investment Private Limited. The Company's equity shares have been listed on both BSE Limited and the National Stock Exchange of India Limited on 20 February 2013.

7. In the opinion of the board of directors, assets, loans and advances have a value on realization in the ordinary course of the business at least equal to the amounts at which they are stated and provision for all known liabilities have been made.

8. In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms with the provisions of the said Act, the Company was to spend a sum of Rs.5,372,487 towards CSR activities during the year ended 31 March 2015. The CSR Committee has been examining and evaluating suitable proposals for deployment of funds towards CSR initiative. During the year ended 31 March 2015, the Committee has approved and paid a contribution of Rs.2,100,000 towards Maharaja Agrasen Hospital Charitable Trust, New Delhi, being expenditure towards CSR activities.

9. Previous year comparatives have been reclassified, wherever considered necessary, to conform to this year's classification.


Mar 31, 2014

1. CORPORATE INFORMATION

V-Mart Retail Limited (the "Company") was incorporated on 24 July 2002. The Company retails readymade garments, accessories etc. and is engaged in the business of "Value Retailing" through the chain of stores situated at various places in India.

2. BASIS OF PREPARATION

The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting in accordance with the accounting principles generally accepted in India ("Indian GAAP") and in compliance with the mandatory accounting standards ("AS") as prescribed under the Companies (Accounting Standards) Rules, 2006 (as amended) ("the Rules"), the provisions of the Companies Act, 1956 and the Companies Act, 2013 (to the extent applicable). The accounting policies have been consistently applied by the Company and are consistent with those used in previous year.

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI to the Act.

3. USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities on the date of the financial statements and the results of operations during the reporting periods. Although these estimates are based upon management''s knowledge of current events and actions, actual results could differ from those estimates and revisions, if any, are recognized in the current and future periods.

4. (i) Fund based cash credit facility of Rs.280,000,000 from State Bank of India carries an interest at base rate (10%) plus 90 basis point (0.90%) as on 31 March 2014 and is repayable on demand. The outstanding as on 31 March 2014 is credit balance of Rs.250,918,971 shown in Note 9 (previous year - debit balance of Rs.76,641,918).

(ii) Fund based cash credit facility of Rs.100,000,000 from Andra Bank carries an interest at base rate (10.25%) plus 200 basis point (2.00%) as on 31 March 14 and is repayable on demand. The outstanding as on 31 March 2014 is debit balance of Rs.335,287 (previous year - credit balance of Rs.170,712,504).

These facilities are secured by way of

a. Primary - Hypothecation charge of stock of goods including goods in transit and all the present and future book debts, shared with Bank(s) under Consortium Arrangement.

b. Collateral -

1. First pari passu charge to working capital lenders (except bank 2 below) on all the present and future fixed assets of the Company.

2. First pari passu charge to working capital lenders (except bank 2 below) on the following properties

(a) Equitable mortgage of residential property in the name of Mr. Lalit Agarwal (Managing director), Mrs. Sangeeta Agarwal (Wife of Mr. Lalit Agarwal) & Mr. Madan Gopal Agarwal (Director) in Gurgaon.

(b) Equitable mortgage of residential property in the name of Mr. Hemant Agarwal (Director) and Mrs. Smiti Agarwal (Wife of Mr. Hemant Agarwal) in Ahmedabad.

(c) Equitable mortgage of residential property in the name of Mrs. Prem Lata Jatia in New Delhi.

(d) Cash Collateral of Rs.3,800,000 in the form of pledge of fixed deposits in the name of the promoters.

Further, personal guarantees have been given by Mr. Lalit Agarwal (Managing director), Mr. Hemant Agarwal (Director), Mr. Madan Gopal Agarwal (Director), Mrs. Sangeeta Agarwal (Wife of Lalit Agarwal), Mrs. Smiti Agarwal (Wife of Hemant Agarwal) and Mrs. Prem Lata Jatia.

(2) Fund based cash credit facility of Rs.45,000,000 from ICICI Bank carries an interest at base rate (10.00%) plus 475 basis point (4.75%) as on 31.03.14 and is repayable on demand. The outstanding as on 31 March 2014 is Nil (previous year - credit balance of Rs.9,328,009).

This facility is secured by way of

Hypothecation of all credit card receivables and book debts of the Company, present and future.

(3) Fund based cash credit facility of Rs.279,804,198 from Deutsche Bank AG carries an interest at the rate MIBOR plus 1.5% or Deutsche Bank base rate (9.95%) whichever is higher as on 31 March 14 and is repayable on demand. The outstanding as on 31 March 2014 is credit balance of Rs.182,506,250.

This facility is secured by way of

Approved Mutual funds (Debts/ Income/ Liquid/ FMP) and bonds in the name of the Company.

5. CONTIGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

2014 2013

Demand raised by the sales tax authorities 6,105,573 515,546

Claims against the Company not acknowledged as debts 497,000 497,000

Service tax on rent payable based on

Supreme Court order (refer note 46) 3,032,733 3,032,733

Demand raised by electricity board 3,142,326 3,142,326

Demand raised by income tax authority 306,787 306,787

Total 13,084,419 7,494,392

6. In the opinion of the board of directors, assets, loans and advances have a value on realization in the ordinary course of the business at least equal to the amounts at which they are stated and provision for all known liabilities have been made.

7. 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 Retailer Association of India (Company being a member of such association) has challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has passed an interim order dated 14 October 2011, directing the members to deposit 50% of the arrears of service tax due up to 30 September 2011 and the balance if any at the time of final disposal of appeal. The amount of service tax on rent in respect of stores from 1 June 2007 till 30 September 2011 was Rs.10,825,629 of which Rs.7,792,896 has been provided for in the Statement of Profit and Loss till 31 March 2012 and the balance Rs.3,032,733 has been classified as contingent liability.

As per directions of Hon''ble Supreme Court, the Company after adjusting the amount already paid has made an aggregate deposit of Rs.3,768,918 under protest towards the balance amount with the concerned authorities and the same is being presented as "Service tax deposit" under Long term loans and advances.

8. The Company has requested its vendors to confirm their status under Micro, Small and Medium Enterprises Development Act, 2006. None of the suppliers has confirmed that they are covered under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year-end together with interest paid/payable as required under the said Act have not been given.

9. The previous year figures have been re-classified/ re-grouped wherever considered necessary, to conform to current year classification.


Mar 31, 2013

1. Corporate information

V-Mart Retail Limited (the "Company") was incorporated on 24 July 2002. The Company retails readymade garments, accessories etc. and is engaged in the business of "Value Retailing" through the chain of stores situated at various places in India.

2. Basis of preparation

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rules, 2006, (as amended) issued by the Central Government in exercise of the power conferred under sub-section (I) (a) of section 642 and the relevant provisions of the Companies Act, 1956 (the ‘Act''). The financial statements have been prepared under the historical cost convention on accrual basis. The accounting policies have been consistently applied by the Company unless otherwise stated.

3. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities on the date of the financial statements and the results of operations during the reporting periods. Although these estimates are based upon management''s knowledge of current events and actions, actual results could differ from those estimates and revisions, if any, are recognised in the current and future periods.

4. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

(Amount in Rs.)

As at As at 31 March 2013 31 March 2012

Demand raised by the sales tax authorities 2,169,897 12,004,163

Claims against the Company not acknowledged as debts 497,000

Service tax on rent payable based on Supreme Court order (refer note

5) 3,032,733 3,032,733

Demand raised by electricity board 3,142,326 2,763,417

Demand raised by income tax authority 306,787 306,787

Total 9,148,743 18,107,100

6. RELATED PARTY DISCLOSURES

Information required to be disclosed under Accounting Standard 18 "Related Party Disclosures" a) Relationship

I. Company having significant influence over the company

Naman Finance and Investment Private Limited(with effect from 15 September 2008 till 14 February 2013)

II. key Managerial Personnel

Lalit Agarwal Managing Director

Madan Gopal Agarwal Director

Hemant Agarwal Director

III. Relatives of key Managerial Personnel

Sangeeta Agarwal Wife of Lalit Agarwal

Smiti Agarwal Wife of Hemant Agarwal

Uma Devi Agarwal Wife of Madan Gopal Agarwal and Mother of Lalit and Hemant Agarwal

Sunita Shah Sister of Lalit and Hemant Agarwal

IV. Entities owned by the key managerial personnel

Lalit Agarwal (HUF) HUF in which Lalit Agarwal is Karta

Madan Gopal Agarwal (HUF) HUF in which Madan Gopal Agarwal is Karta

Hemant Agarwal (HUF) HUF in which Hemant Agarwal is Karta

7. SEGMENT REPORTING

In the opinion of the management, there is only one reportable segment "Retail Sales" as envisaged by Accounting Standard 17 on "Segment Reporting". The Company is operating only in India and there is no other significant geographical segment.

8. Leases

Information required to be disclosed under Accounting Standard 19 on "Leases"

Operating lease

The retail stores are taken on lease with the initial lease term ranging from one to three years. These leases are further renewable on the expiry of initial lease term subject to mutual consent of both the parties. There are no restrictions imposed on the Company under the lease arrangement. There are no subleases.

9. V-MART ESOP SCHEME 2012

The Company has implemented an Employee Stock Option Scheme, which was approved by the Board of Directors and the shareholders vide resolution dated 2 July 2012 and 10 July 2012 respectively (‘the V-Mart ESOP Scheme 2012''), consequent to which 300,000 equity shares of Rs.10 each will be granted upon exercise of as stock options (ESOPs) to eligible employees. The exercise price of these options will be determined by the Remuneration Committee and the options will vest over a period of 12 months to 36 months of continued employment from the grant date.

On 20 July 2012, the Company has granted 153,252 ESOPs at an exercise price of Rs.150.00 per option with graded vesting (i.e. 45,975 options vesting after 12 months from the date of grant, 45,975 options vesting after 24 months from the date of grant and 61,302 options vesting after 36 months from the date of grant).The vesting of options is subject to the continued employment of the grantee over the vesting period. The options granted can be exercised after vesting at any time before the expiry of eight years from the grant date.

The relevant details in respect of V-Mart ESOP Scheme 2012 are as follows:

b) Pro forma Accounting for Stock Option Grants

The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plan. Had the compensation cost been determined using the fair value approach, the Company''s net income and basic and diluted earnings per share as reported would have reduced to the pro forma amounts as indicated below:

10. INITIAL PUBLIC OFFER (IPO) OF THE EQUITY SHARES OF THE COMPANY

During the year, the Company allotted 1,250,000 equity shares to the Pre- IPO investors at an issue price of Rs.210 per equity share (including a premium of Rs.200 per equity share) aggregating to Rs.262,500,000 and also completed its IPO of 4,496,000 equity shares of Rs.10 each for cash at a price of Rs.210 per equity share (including a premium of Rs.200 per equity share) aggregating to Rs.944,160,000. The issue comprised of a fresh issue of 2,761,000 equity shares by the Company and an offer for sale of 1,735,000 equity shares by Naman Finance and Investment Private Limited. The Company''s equity shares have been listed on both BSE Limited and the National Stock Exchange of India Limited on 20 February 2013.

11. In the opinion of the board of directors, assets, loans and advances have a value on realisation in the ordinary course of the business at least equal to the amounts at which they are stated and provision for all known liabilities have been made.

12. 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 Retailer Association of India (Company being a member of such association) has challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has passed an interim order dated 14 October 2011, directing the members to deposit 50% of the arrears of service tax due upto 30 September 2011 and the balance if any at the time of final disposal of appeal. The amount of service tax on rent in respect of stores from 1 June 2007 till 30 September 2011 was Rs.10,825,629 of which Rs.7,792,896 has been provided for in the Statement of Profit and Loss till 31 March 2012 and the balance Rs.3,032,733 has been classified as contingent liability.

As per directions of Hon''ble Supreme Court, the Company after adjusting the amount already paid has made an aggregate deposit of Rs.3,768,918 under protest towards the balance amount with the concerned authorities and the same is being presented as "Service tax deposit" under Long term loans and advances.

13. The Company has requested its vendors to confirm their status under Micro, Small and Medium Enterprises Development Act, 2006.None of the suppliers has confirmed that they are covered under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year-end together with interest paid/payable as required under the said Act have not been given.

14. The previous year figures have been re-classified/ re-grouped wherever considered necessary, to conform to current year classification.