Notes to Accounts of FSN E-Commerce Ventures Ltd.

Mar 31, 2025

Provisions

A provision is recognised when the Company has a
present legal or constructive obligation as a result
of past event and it is probable that an outflow of
resources embodying economic benefits will be
required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. The
expense relating to a provision is presented in the
Statement of Profit and Loss.

If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to
the liability. When discounting is used, the increase in
the provision due to the passage of time is recognised
as a finance cost.

Provisions are reviewed at each Balance Sheet date
and adjusted to reflect the current best estimates.

i) Foreign currency transactions

Functional and presentation currency

Items included in the financial statements of the company
are measured using the currency of the primary economic
environment in which the company operates (''the functional
currency''). The financial statements are presented in Indian
rupee (?) in crores (''Cr''), which is E-Commerce Ventures
Limited''s functional and presentation currency.

Foreign currency transactions and balances

(i) Initial recognition

Foreign currency transactions are recorded in the
reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting
currency and the foreign currency at the date of
the transaction.

(ii) Conversion

Foreign currency monetary items are retranslated using
the exchange rate prevailing at the reporting date.
Non-monetary items, which are measured in terms of
historical cost denominated in a foreign currency, are
reported using the exchange rate at the date of the
transaction. Non-monetary items, which are measured
at fair value or other similar valuation denominated in
a foreign currency, are translated using the exchange
rate at the date when such value was determined.

(iii) Exchange differences

Exchange differences arising on settlement or
translation of other monetary items or on reporting
monetary items at rates different from those at
which they were initially recorded during the period/
year, or reported in previous financial statements, are
recognised as income or as expenses in the Statement
of Profit and Loss in the period/year in which they arise.

) Share based payments

Employees (including senior executives) of the Company
receive remuneration in the form of share-based payment
transactions, whereby employees render services as
consideration for equity instruments (equity-settled
transactions).

The cost of equity-settled transactions is determined by
the fair value at the date when the grant is made using an
appropriate valuation model.

The cost of equity-settled transactions is determined by
the fair value at the date when the grant is made using
an appropriate valuation model. That cost is recognised,
together with a corresponding increase in share options
outstanding reserves in equity, over the period in which
the performance and/or service conditions are fulfilled
in employee benefits expense. The cumulative expense
recognised for equity-settled transactions at each reporting
date until the vesting date reflects the extent to which the
vesting period has expired and the Company''s best estimate
of the number of equity instruments that will ultimately
vest. The Statement of Profit and Loss expense or credit for
a period represents the movement in cumulative expense

recognised as at the beginning and end of that period and
is recognised in employee benefits expense.

When the terms of an equity-settled award are modified,
the minimum expense recognised is the expense had the
terms had not been modified, if the original terms of the
award are met. An additional expense is recognised for any
modification that increases the total fair value of the share-
based payment transaction or is otherwise beneficial to the
employee as measured at the date of modification. Where
an award is cancelled by the entity or by the counterparty,
any remaining element of the fair value of the award is
expensed immediately through profit or loss.

The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted
earnings per share.

k) Employee benefits

Short-term employee benefits

All short-term employee benefits such as salaries, incentives,
medical benefits which are expected to be settled wholly
within 12 months after the end of the period in which the
employee renders the related services which entitles him
to avail such benefits are recognised on an undiscounted
basis and charged to the Statement of Profit and Loss.

Post-employment benefits

i. Defined Contribution Plans

Retirement benefit in the form of Provident Fund is
a defined contribution scheme and the contributions
are charged to the Statement of Profit and Loss of
the period/year when the contribution to the funds
is due. There are no other obligations other than
the contribution payable to the fund. The Company
recognises contribution payable to the provident fund
scheme as expenditure, when an employee renders
the related service.

ii. Defined Benefit Plans
Gratuity

The Company has an obligation towards gratuity, a
defined benefit plan covering eligible employees. The
plan provides for a lump-sum payment to vested
employees at retirement, death while in employment or
on termination of employment of an amount equivalent
to 15 days salary payable for each completed year of
service. Vesting occurs upon completion of five years
of service. The gratuity benefits are unfunded.

Gratuity liability is provided for on the basis of an
actuarial valuation on projected unit credit method
made at the end of each financial period/year. The

present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows by reference to market yields at the end of the
reporting period on government bonds that have terms
approximating to the terms of the related obligation.

Net interest is calculated by applying the discount
rate to the net defined benefit liability. The Company
recognises the following changes in the net defined
benefit obligation as an expense in the Statement of
Profit and Loss:

â¢ Service costs comprising current service costs,
past-service costs, gains and losses on curtailments
and non-routine settlements; and

â¢ Net interest expense or income

Re-measurements, comprising of actuarial gains and
losses, excluding amounts included in net interest
on the net defined benefit liability, are recognised
immediately in the Balance Sheet with a corresponding
debit or credit to retained earnings through ''Other
comprehensive income'' in the period in which they
occur. Re-measurements are not reclassified to profit
or loss in subsequent periods.

Compensated absences

The Company provides for the encashment of leave or
leave with pay subject to certain rules. The employees
are entitled to accumulate leave subject to certain
limits, for future encashment. The liability is provided
based on the number of days of unutilised leave at each
Balance Sheet date on the basis of an independent
actuarial valuation using the projected unit credit
method at the reporting date. Actuarial gains/losses are
immediately taken to the Statement of Profit and Loss
and are not deferred. The obligations are presented
as current liabilities in the Balance Sheet if the entity
does not have an unconditional right to defer the
settlement for at least 12 months after the reporting
date, regardless of when the actual settlement.

l) Fair value measurement

Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The
fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability
takes place either:

â¢ In the principal market for the asset or liability or

â¢ In the absence of a principal market, in the most
advantageous market for the asset or liability

The principal or the most advantageous market must be
accessible by the Company.

The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.

The Company uses valuation techniques that are appropriate
in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:

â¢ Level 1 â Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.

â¢ Level 2 â Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is directly or indirectly observable.

â¢ Level 3 â Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable.

For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
The management assessed that cash and cash equivalents,
trade receivables, advances, trade payables, bank overdraft
and other financial liabilities approximate their carrying
amounts largely due to the short-term maturities of
these instruments. The management selects appropriate
valuation techniques using discounted cash flow model
when the fair value of the financial assets and liabilities
recorded in the Balance Sheet cannot be measured based
on quoted prices in active markets. The inputs to these
models are taken from observable markets where possible,
but where this is not feasible, a degree of judgement is
required in establishing fair values. External valuers are
involved for valuation of significant assets and liabilities.
The management selects external valuer on various criteria
such as market knowledge, reputation, independence and
whether professional standards are maintained by valuer.
The management decides, after discussions with the
Company''s external valuers, which valuation techniques
and inputs to use for each case.

For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability
and the level of the fair value hierarchy as explained above.

m) Income taxes

Tax expense comprises current and deferred tax.

Current income tax

Current income-tax is measured at the amount expected
to be paid to the tax authorities in accordance with the
Income-tax Act, 1961 enacted in India.

Deferred tax

Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable
temporary differences, except:

â¢ When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting
profit nor taxable profit or loss and does not give rise
to equal taxable and deductible temporary differences.

â¢ In respect of taxable temporary differences associated
with investments in subsidiaries, associates and interests
in joint ventures, when the timing of the reversal of the
temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
foreseeable future.

Deferred tax assets are recognised for all deductible
temporary differences and the carry forward of any unused
tax losses. Deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry
forward of unused tax losses can be utilised except:

â¢ When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or
loss and does not give rise to equal taxable and deductible
temporary differences.

â¢ In respect of deductible temporary differences
associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are
recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable

future and taxable profit will be available against which
the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the
deferred tax asset to be recovered.

Deferred tax assets and deferred tax liabilities are offset,
if a legally enforceable right exists to set-off current tax
assets against current tax liabilities and the deferred tax
assets and deferred taxes relate to the same taxable entity
and the same taxation authority.

Current tax and deferred tax are measured using the tax
rates and tax laws enacted or substantively enacted, at the
reporting date. Current income tax and deferred tax relating
to items recognised outside profit and loss is recognised
outside profit and loss (either in OCI or in equity). The
Company periodically evaluates positions taken in the tax
returns with respect to situations in which applicable tax
regulations are subject to interpretation and considers
whether it is probable that a taxation authority will accept
an uncertain tax treatment. The Company shall reflect the
effect of uncertainty for each uncertain tax treatment by
using either most likely method or expected value method,
depending on which method predicts better resolution of
the treatment.

n) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise
cash at banks and on hand and short-term deposits with
an original maturity of three months or less, and other
short term highly liquid investments which are subject to
an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and
cash equivalents consist of cash and short-term deposits,
as defined above, net of outstanding bank overdrafts as
they are considered an integral part of the Company''s
cash management.

o) Contingent Liabilities

settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot
be recognised because it cannot be measured reliably.
The Company does not recognise a contingent liability but
discloses its existence and other disclosures in the notes
to the financial statements unless the possibility of any
outflow in settlement is remote.

p) Earnings per share

Basic earnings per share is computed by dividing the net profit
or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding
during the period. The weighted average number of equity
shares outstanding during the period is adjusted for events
such as bonus issue, bonus element in a rights issue, share
split, and reverse share split (consolidation of shares) that
have changed the number of equity shares outstanding,
without a corresponding change in resources.

For the purpose of calculating diluted earnings per share,
the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares
outstanding during the period are adjusted for the effects
of all dilutive potential equity shares, except where the
result would be anti-dilutive.

q) Segment reporting

In accordance with Ind AS 108 ''Operating Segments'',
segment information has been given in the consolidated
financial statements of the Group and therefore, no separate
disclosure on segment information is given in standalone
financial statements.

r) Business combination:

Business combinations involving entities or businesses
under common control are accounted for using the pooling
of interest method. Under pooling of interest method,
the assets and liabilities of the combining entities or
businesses are reflected at their carrying amounts after
making adjustments necessary to harmonise the accounting
policies. The financial information in the financial statements
in respect of prior periods is restated as if the business
combination had occurred from the beginning of the
preceding period in the financial statements, irrespective
of the actual date of the combination. The identity of
the reserves is preserved in the same form in which they
appeared in the financial statements of the transferor and
the difference, if any, between the amount recorded as share
capital issued plus any additional consideration in the form
of cash or other assets and the amount of share capital of
the transferor is transferred to capital reserve.

3. Significant accounting judgments, estimates
and assumptions

The preparation of financial statements in conformity
with Ind AS requires the management to make judgments,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities
and the accompanying disclosures, and the disclosure of
contingent liabilities, at the end of the reporting period.
Such judgments, estimates and associated assumptions are
evaluated based on historical experience and various other
factors, including estimation of the effects of uncertain
future events, which are believed to be reasonable under
the circumstances. Actual results may differ from these
estimates. The estimates and underlying assumptions are
reviewed on an on-going basis. Revisions to accounting
estimates are recognised in the period in which the estimate
is revised if the revision affects only that period or in the
period of the revision and future periods if the revision
affects both current and future periods.

Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to
the carrying amount of assets or liabilities affected in
future periods.

The following are the critical judgements and estimates
that have been made by the management in the process of
applying the Company''s accounting policies and that have
the most significant effect on the amount recognised in
the financial statements and/or key sources of estimation
uncertainty that may have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year.

I. Judgemnts:

Determining the lease term of contracts
with renewal and termination options â the
Company as lessee

The Company determines the lease term as the nonÂ¬
cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably
certain to be exercised, or any periods covered by an option
to terminate the lease, if it is reasonably certain not to be
exercised. It considers all relevant factors that create an
economic incentive for it to exercise either the renewal
or termination.

The Company has several lease contracts that include
extension and termination options. The Company applies
judgement in evaluating whether it is reasonably certain
whether or not to exercise the option to renew or terminate
the lease. That is, it considers all relevant factors that create
an economic incentive for it to exercise either the renewal
or termination.

The Company included the renewal period as part of the lease
term for leases of property with shorter non-cancellable
period (i.e., 3 to 5 years). The Company typically exercises
its option to renew for these leases because there will be
a significant negative effect on business if a replacement
alternate property is not readily available. The renewal
periods for leases of property with longer non-cancellable
periods (i.e., 6 to 10 years) are not included as part of
the lease term as these are not reasonably certain to be
exercised. Furthermore, the periods covered by termination
options are included as part of the lease term only when
they are reasonably certain not to be exercised.

II. Estimates and assumptions:

a) Estimation of useful life of property,
plant and equipment and intangible asset

Property, plant and equipment and intangible assets
represent a significant proportion of the asset base
of the Company. The charge in respect of periodic
depreciation is derived after determining an estimate
of an asset''s expected useful life and the expected
residual value at the end of its life. The useful lives
and residual values of assets are determined by
management at the time the asset is acquired and
reviewed periodically, including at each financial period/
year end. The lives are based on historical experience
with similar assets.

b) Fair Value measurement of financial
instruments

When the fair values of financial assets and financial
liabilities recorded in the Balance Sheet cannot be
measured based on quoted prices in active markets,
their fair value is measured using valuation techniques
including the discounted cash flow model. The inputs
to these models are taken from observable markets
where possible, but where this is not feasible, a degree
of judgement is required in establishing fair values.
Judgements include considerations of inputs such
as liquidity risk, credit risk and volatility. Changes in
assumptions about these factors could affect the
reported fair value of financial instruments.

c) Estimation of defined benefit obligation
and compensated absences

The cost of the defined benefit gratuity plan,
compensated absences and the present value of the
gratuity obligation are determined using actuarial
valuations. An actuarial valuation involves making
various assumptions that may differ from actual
developments in the future. These include the
determination of the discount rate, future salary
increases and mortality rates. All assumptions are
reviewed at each reporting date.

The parameter most subject to change is the discount
rate. In determining the appropriate discount rate for
plans operated in India, the management considers
the interest rates of government bonds in currencies
consistent with the currencies of the post-employment
benefit obligation.

Future salary increases are based on expected future
inflation rates. The mortality rate is based on publicly
available mortality tables for the country. Those
mortality tables tend to change only at interval in
response to demographic changes.

d) Income taxes

Significant judgments are involved in determining
the provision for income taxes including judgment on
whether tax positions are probable of being sustained
in tax assessments. A tax assessment can involve
complex issues, which can only be resolved over
extended time periods.

e) Deferred Taxes

Deferred tax assets are recognised for unused tax
losses to the extent that it is probable that future
taxable profit will be available against which the
losses can be utilised. In assessing the probability, the
Company considers whether the entity has sufficient
taxable temporary differences relating to the same
taxation authority and the same taxable entity,
which will result in taxable amounts against which
the unused tax losses or unused tax credits can be
utilised before they expire. Significant management
judgement is required to determine the amount of
deferred tax assets that can be recognised, based
upon the likely timing and the level of future taxable
profits together with future tax planning strategies.
The Company has recognised deferred tax assets on

the unused tax losses and other deductible temporary
differences since the management is of the view that it
is probable the deferred tax assets will be recoverable
using the estimated future taxable income based on
the approved business plans and budgets.

f) Provision

Provisions and liabilities are recognised in the period
when it becomes probable that there will be a future
outflow of funds resulting from past operations or
events and the amount of cash outflow can be reliably
estimated. The timing of recognition and quantification
of the liability require the application of judgement to
existing facts and circumstances, which can be subject
to change. The carrying amounts of provisions and
liabilities are reviewed regularly and adjusted to take
account of changing facts and circumstances.

g) Impairment of financial assets:

The impairment provisions for financial assets
depending on their classification are based on
assumptions about risk of default, expected cash loss
rates, discounting rates applied to these forecasted
future cash flows, recent transactions and independent
valuer''s report. The Company uses judgement in
making these assumptions and selecting the inputs
to the impairment calculation, based on Company''s
history, existing market conditions as well as forward
looking estimates at the end of each reporting period.

h) Provision for expected credit losses of
trade receivables and contract assets:

The Company uses a simplified approach to determine
impairment loss allowance on the portfolio of trade
receivables. This is based on its historically observed
default rates over the expected life of the trade
receivable and is adjusted for forward looking estimates.
At every reporting date, the historical observed
default rates are updated and changes in the forwardÂ¬
looking estimates are analysed. The assessment of
the correlation between historical observed default
rates, forecast economic conditions and ECLs is a
significant estimate. The amount of ECLs is sensitive
to changes in circumstances and of forecast economic
conditions. The Company''s historical credit loss
experience and forecast of economic conditions may
not be representative of customer''s actual default in
the future.

i) Leases â Estimating the incremental
borrowing rates:

The Company cannot readily determine the interest rate
implicit in the lease, therefore, it uses its incremental
borrowing rate (IBR) to measure lease liabilities.

The IBR is the rate of interest that the Company would
have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset
of a similar value to the right-of-use asset in a similar
economic environment. The IBR therefore reflects
what the Company ''would have to pay'', which requires

estimation when no observable rates are available or
when they need to be adjusted to reflect the terms
and conditions of the lease.

The Company estimates the IBR using observable inputs
(such as market interest rates) when available and is
required to make certain entity-specific estimates
(such as the Company''s credit rating).

j. Other estimates:

The share-based compensation expense is determined
based on the Company''s estimate of equity instruments
that will eventually vest.

Mar 31, 2024

Provisions

A provision is recognised when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the Statement of Profit and Loss.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

(i) Foreign currency transactions

Functional and presentation currency

Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the company operates (''the functional currency''). The financial statements are presented in Indian rupee (INR) in million |''Mn''), which is E-Commerce Ventures Limited''s functional and presentation currency.

Foreign currency transactions and balances

(i) Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Conversion

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

(iii) Exchange differences

Exchange differences arising on settlement or translation of other monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the period/year, or reported in previous financial statements, are recognised as income or as expenses in the Statement of Profit and Loss in the period/year in which they arise.

) Share based payments

Employees (including senior executives) of the Company receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised, together with a corresponding increase in share options outstanding reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The Statement of Profit and Loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.

employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

(k) Employee benefits

Short term employee benefits

All short term employee benefits such as salaries, incentives, medical benefits which are expected to be settled wholly within 12 months after the end of the period in which the employee renders the related services which entitles him to avail such benefits are recognised on an undiscounted basis and charged to the Statement of Profit and Loss.

Post-employment benefits

i. Defined Contribution Plans

Retirement benefit in the form of Provident Fund is a defined contribution scheme and the contributions are charged to the Statement of Profit and Loss of the period/year when the contribution to the funds is due. There are no other obligations other than the contribution payable to the fund. The Company recognises contribution payable to the provident fund scheme as expenditure, when an employee renders the related service.

ii. Defined Benefit Plans Gratuity

The Company has an obligation towards gratuity, a defined benefit plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The gratuity benefits are unfunded.

Gratuity liability is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial period/year. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

Net interest is calculated by applying the discount rate to the net defined benefit liability. The Company recognises the following changes in the net defined

benefit obligation as an expense in the Statement of Profit and Loss:

â¢ Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and

â¢ Net interest expense or income

Re-measurements, comprising of actuarial gains and losses, excluding amounts included in net interest on the net defined benefit liability, are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through ''Other comprehensive income'' in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Compensated absences

The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilised leave at each Balance Sheet date on the basis of an independent actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the Statement of Profit and Loss and are not deferred. The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer the settlement for at least 12 months after the reporting date, regardless of when the actual settlement.

(l) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

â¢ In the principal market for the asset or liability or

â¢ In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of

relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

â¢ Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

â¢ Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

â¢ Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. The management assessed that cash and cash equivalents, trade receivables, advances, trade payables, bank overdraft and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The management selects appropriate valuation techniques using discounted cash flow model when the fair value of the financial assets and liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. External valuers are involved for valuation of significant assets and liabilities. The management selects external valuer on various criteria such as market knowledge, reputation, independence and whether professional standards are maintained by valuer. The management decides, after discussions with the Company''s external valuers, which valuation techniques and inputs to use for each case.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

(m) Income taxes

Tax expense comprises current and deferred tax.

Current income tax

Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

â¢ When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences.

â¢ In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences and the carry forward of any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax losses can be utilised except:

â¢ When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences.

â¢ In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and

deferred taxes relate to the same taxable entity and the same taxation authority.

Current tax and deferred tax are measured using the tax rates and tax laws enacted or substantively enacted, at the reporting date. Current income tax and deferred tax relating to items recognized outside profit and loss is recognized outside profit and loss (either in OCI or in equity). The Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company shall reflect the effect of uncertainty for each uncertain tax treatment by using either most likely method or expected value method, depending on which method predicts better resolution of the treatment.

(n) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, and other short term highly liquid investments which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.

(o) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.

(p) Earnings per share

Basic earnings per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, except where the result would be anti-dilutive.

(q) Segment reporting

The Company drives synergy across fulfilment models, sales channels and product categories and accordingly the Chief Operating Decision Maker (''CODM'') reviews and allocates resources based on Omni business and Omni channel strategy, which in the terms of Ind AS 108 on ''Operating Segments'' constitutes a single reporting segment.

(r) Share capital

Equity shares are classified as equity. Incremental costs directly attributable to the issue of equity shares are recognised as a deduction from equity.

(s) Business combination:

Business combinations involving entities or businesses under common control are accounted for using the pooling of interest method. Under pooling of interest method, the assets and liabilities of the combining entities or businesses are reflected at their carrying amounts after making adjustments necessary to harmonise the accounting policies. The financial information in the financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. The identity of the reserves is preserved in the same form in which they appeared in the financial statements of the transferor and the difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The following are the critical judgements and estimates that have been made by the management in the process of applying the Company''s accounting policies and that have the most significant effect on the amount recognised in the financial statements and/or key sources of estimation uncertainty that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

I. Judgements:

Determining the lease term of contracts with renewal and termination options â the Company as lessee

The Company determines the lease term as the noncancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. It considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.

The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.

to 10 years) are not included as part of the lease term as these are not reasonably certain to be exercised. Furthermore, the periods covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised.

II. Estimates and assumptions:

a. Estimation of useful life of property, plant and equipment and intangible asset

Property, plant and equipment and intangible assets represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial period/year end. The lives are based on historical experience with similar assets.

b. Fair Value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

c. Estimation of defined benefit obligation and compensated absences

The cost of the defined benefit gratuity plan, compensated absences and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

Future salary increases are based on expected future inflation rates. The mortality rate is based on publicly available mortality tables for the country. Those mortality tables tend to change only at interval in response to demographic changes.

d. Income taxes

Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods.

e. Deferred Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that future taxable profit will be available against which the losses can be utilised. In assessing the probability the Company considers whether the entity has sufficient taxable temporary differences relating to the same taxation authority and the same taxable entity, which will result in taxable amounts against which the unused tax losses or unused tax credits can be utilised before they expire. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. The Company has recognised deferred tax assets on the unused tax losses and other deductible temporary differences since the management is of the view that it is probable the deferred tax assets will be recoverable using the estimated future taxable income based on the approved business plans and budgets.

f. Provision

Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.

g. Impairment of financial assets:

The impairment provisions for financial assets depending on their classification are based on assumptions about risk of default, expected cash loss rates, discounting

rates applied to these forecasted future cash flows, recent transactions and independent valuer''s report. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

h. Provision for expected credit losses of trade receivables and contract assets:

The Company uses a simplified approach to determine impairment loss allowance on the portfolio of trade receivables. This is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company''s historical credit loss experience and forecast of economic conditions may not be representative of customer''s actual default in the future.

i. Leases â Estimating the incremental borrowing rates:

The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities.

The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Company ''would have to pay'', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease.

The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the Company''s credit rating).

j. Other estimates:

The share-based compensation expense is determined based on the Company''s estimate of equity instruments that will eventually vest.

43 DEFINED BENEFIT PLAN AND OTHER LONG TERM EMPLOYEE BENEFIT PLAN

(I) Defined Contribution Plan

During the year, the Company has made contribution / provision to provident fund stated under defined contribution plan amounting to C16.41 Mn (March 31, 2023: C12.45 Mn) and the same has been recognised as an expense in the Statement of Profit and Loss.

(II) Defined Benefit Plans

The Company operates a defined benefit gratuity plan for its employees. The gratuity benefits payable to employees are based on the employee''s service and last drawn salary at the time of leaving. The Company has provided for gratuity based on actuarial valuation done as per projected unit credit method.

The Company has provided for gratuity based on actuarial valuation done as per projected unit credit method.

(A) Interest risk â A decrease in the discount rate will increase the plan liability.

(B) Longevity risk â The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

(C) Salary risk â The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

The Company do not have any other transaction with key managerial person than that is disclosed above.

# Remuneration includes amount of perquisite value towards ESOP based on exercise of options.

Amount paid to KMP do not include the provisions made for gratuity as it is determined on an actuarial basis for the Company as a whole. Similarly, expenses for compensated absences are not included in the above table as the same is also determined on an actuarial basis for the Company as a whole.

* The aggregate managerial remuneration, as approved, amounting to C86.69 Mn, C42.60 Mn and C42.56 Mn for Mrs. Falguni Nayar, Mr. Anchit Nayar and Ms. Adwaita Nayar respectively is paid in the ratio, as determined by the Nomination and Remuneration Committee, between the Holding Company and its subsidiaries. The amount disclosed above is the share of the Company, as determined, in accordance with such ratio.

The total offer expenses were estimated to be ?2,423.44 Mn (inclusive of taxes) which were proportionately allocated between the selling shareholders (including a related party) and the Company in the proportion of equity shares sold by the selling shareholders and the Company. As at March 31, 2022 amount of C226.42 Mn payable to selling shareholders out of the IPO proceeds was withheld pending final settlement of IPO proceeds and included amount payable to a related party. In the previous financial year, the same has been settled.

45 COMMITMENTS AND CONTINGENT LIABILITIES

A Commitments

The contract remaining to be executed on capital account and not provided for amounts to C262.72 Mn (net of advances) as at March 31, 2024 (March 31, 2023 - Nil).

(ii) Audit trail

The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled at the database level and master fields as it relates to accounting software. The said feature was enabled at master data level from January 31, 2024.

The Company also uses third-party operated software for processing payroll. Management has obtained the report of Service Organisation Controls (SOC) auditors engaged by such third party which does not mention whether the audit trail feature of the said software was enabled and operated throughout the year for all relevant transactions recorded in the software or whether there were any instances of the audit trail feature being tampered with.

(b) Security Deposit

The Company also carries credit risk on lease deposits with landlords for properties taken on leases, for which agreements are signed and property possessions are taken for operations. The risk relating to refunds after vacating the premises is managed through successful negotiations or appropriate legal actions, where necessary.

(c) Financial instruments and cash deposit

Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis and may be updated throughout the year subject to approval of the Company''s Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through a counterparty''s potential failure to make payments.

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.

49 SEGMENT INFORMATION

The Company has identified Board of directors and CEO as Chief Operating Decision Maker (''CODM'') who reviews and allocates resources based on Omni business and Omni channel strategy, which in terms of Ind AS 108 on "Operating Segmentsâ constitutes a single reporting segment.

(i) The Company operates in a single geographical environment i.e. in India.

(ii) No single external customer (other than related party) contributed 10% or more to Company''s revenue.

50 CAPITAL MANAGEMENT

51 SHARE BASED PAYMENTS

The Company has granted stock options under the employee stock option scheme- ESOS 2012, ESOS 2017, ESOP 2022 and RSU respectively, as approved by the Board of Directors of the company, to the eligible employees of the Company or its subsidiaries. These options would vest in 3 or 4 equal annual installments from the date of grant based on the vesting conditions as per letter of grant executed between the Company and the employee of the Company or its subsidiaries. The maximum period for exercise of options is 4 years from the date of vesting. Each option when exercised would be converted into one fully paid-up equity share of C1 each of the Company. The options granted under ESOS 2012, ESOS 2017, ESOP 2022 and RSU scheme carry no rights to dividends and no voting rights till the date of exercise.The options granted under ESOS 2012, ESOS 2017, ESOP 2022 and RSU scheme carry no rights to dividends and no voting rights till the date of exercise.

The Company has recognised an expense of C69.00 Mn (March 31, 2023: C21.35 Mn) arising from equity settled share based payment transactions for employee services received during the year. The carrying amount of Employee stock options outstanding reserve as at March 31, 2024 is C281.11 Mn (March 31, 2023: C169.26 Mn)

53 UTILISATION OF IPO FUNDS

During the year ended March 31, 2022, the Company had completed its Initial Public Offer (IPO) of 47,575,326 equity shares of face value of C1 each at an issue price of C 1,125 per share (including a share premium of C 1,124 per share). A discount of C100 per share was offered to eligible employees bidding in the employee''s reservation portion of 250,000 equity shares. The issue comprised of a fresh issue of 5,602,666 equity shares aggregating to C6,300 Mn and offer for sale of 41,972,660 equity shares by selling shareholders aggregating to C47,197 million. Pursuant to the IPO, the equity shares of the Company were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on November 10, 2021.

The total offer expenses of C2,161.24 million (inclusive of taxes) were proportionately allocated between the selling shareholders and the Company in the proportion of equity shares sold by the selling shareholders and offered by the Company. The utilization of IPO proceeds of C6,045.72 million (net of IPO expenses of C254.28 million) is summarized below:

54 OTHER STATUTORY INFORMATION

i. The Company does not have any transactions with companies struck off.

ii. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iii. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

iv. The Company did not have any such transaction which is not recorded in the books of accounts that has been surrendered or

disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

v. Other than the details mentioned below, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(is), including foreign entities ("Intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

The provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act has been complied with for such transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003).

vi. No funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

vii. The Company does not have any benami property held in its name. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

viii. The Company is not declared wilful defaulter by any Bank, Financial Institution or other lender.

55 DISCLOSURE PURSUANT TO IND AS 103 "BUSINESS COMBINATIONS"

The Board of Directors in their meeting held on February 06, 2024, has approved acquisition of Athleisure and Lingerie business of

Nykaa Fashion Limited (''Transferor Company''), a wholly owned subsidiary of the Company, as a going concern on slump sale basis. The

transaction has been consummated on March 29, 2024 post compliance of conditions precedent, being the closing date of transfer of

business for a consideration of ?2,260.30 Mn.

The aforementioned business transfer has been accounted in accordance with Ind AS 103 ''Business Combination'' read with Appendix

C to Ind AS 103 specifed under Section 133 of the Act, read with the Companies (Accounting Standards) Amendment Rules, 2016.

Accordingly, the accounting treatment has been given as follows:

(i) The assets and liabilities of the abovementioned business have been incorporated in the financial statements at their respective carrying values.

(ii) Difference between the carrying value of net assets acquired and consideration paid has been transferred to capital reserve, refer table 4 below.

(iii) The financial information in the financial statements in respect of prior periods i.e. for the year ended March 31, 2023 and for the period April 01, 2023 to March 29, 2024 (herein after referred as "pre-acquisition periodâ) have been restated as if the business combination had occurred from the beginning of the preceding period in the financial statements irrespective of the actual date of acquisition in accordance with Ind AS 103, as detailed in table 1, 2 and 3 below.

(iv) Profit/(loss) for the pre-acquisition period related to the acquired business on account of restatement of financial statements as explained above did not result into increase/decrease in net assets of equivalent amount as of March 31, 2023 and as of March 29,2024 as not all the items of assets and liabilities were transferred. Accordingly, the difference between profit/(loss) and change in net assets position has been adjusted in retained earnings as Contribution.

(v) Profit/(loss) on the acquired business during the pre-aquisition period is not required to be adjusted from retained earnings. Accordingly, profit/(loss) for the said period net of adjustment as explained in point (iv) above has been reclassified from retained earnings to capital reserve.

(vi) The consequent tax effects amounting to C366.96 Mn on the above transaction have been considered in Statement of Profit and Loss for the year ended March 31, 2024. There is no impact on account of the above in the Consolidated Financial Statements.

''Contribution of C2.20 Mn (March 31, 2023: C3.00 Mn) has been given to Nykaa foundation which is a section 25 company engaged in doing CSR activities. The amount has been contributed to Salam Bombay Foundation (March 31, 2023: Sambhav Foundation) through Nykaa Foundation for CSR activity.

57

Previous year figures have been regrouped and reclassed wherever required to conform to those of the current year.

As per our report of even date

For S. R. Batliboi & Associates LLP For and on behalf of Board of Directors of

Chartered Accountants FSN E-Commerce Ventures Limited

ICAI Firm Registration No.: 101049W/E300004

per Nilangshu Katriar Falguni Nayar Anchit Nayar

Partner Executive Chairperson, CEO & Managing Director Executive Director

Membership No: 058814 DIN: 00003633 DIN: 08351358

P Ganesh Neelabja Chakrabarty

Chief Financial Officer Company Secretary &

Compliance Officer Membership No.: A16075

Place: Mumbai Place: Mumbai

Date: May 22, 2024 Date: May 22, 2024

Mar 31, 2023

i) Terms / rights attached to equity shares:

The Company has only one class of equity shares having a par value of H 1 per share. Each holder of equity shares is entitled to one vote 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.

Each equity shareholder is entitled to dividends as and when the Company declares and pays dividend after obtaining shareholdersâ approval.

During the previous year, the Company had completed its Initial Public Offer (I PO) of 47,575,326 equity shares of face value of H 1 each at an issue price of H 1,125 per share (including a share premium of H 1,124 per share). A discount of H 100 per share was offered to eligible employees bidding in the employeeâs reservation portion of 250,000 equity shares. The issue comprised of a fresh issue and allotment of 5,602,666 equity shares aggregating to H 6,300 Mn and offer for sale of 41,972,660 equity shares by selling shareholders aggregating to H 47,197 Mn.

vi) Shares issued for consideration other than cash:

a) The Company has issued 2,373,563,075 bonus shares of face value of H 1 each during the year vide shareholdersâ approval dated November 02, 2022 in the ratio of 5 bonus shares for every 1 share held.

b) The Company had issued 311,357,900 bonus shares of face value of H 1 each during the year 2022 vide shareholdersâ approval dated July 16, 2021 in the ratio of 2 bonus shares for every 1 share held.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

iv) Shares reserved for issue under employee stock option

The Company has reserved issuance of 210,000,000 (Previous year 198,000,000) Equity Shares of H 1 each for offering to Eligible Employees of the Company and its subsidiaries under Employees Stock Option Scheme (ESOS). During the year ended March 31, 2023 the Company has granted 3,109,600 options (March 31, 2022: 3,651,000). Cumulative number of equity shares granted under Employee Stock Option Scheme (ESOS) is 59,448,400 equity shares as at March 31, 2023. (March 31, 2022: 56,338,800).

Nature and purpose of reserves

(i) Securities premium: Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares is transferred to Securities Premium.

(ii) Retained earnings: Retained Earnings are the profits / (losses) that the Company has earned till date, less any dividends or other distributions paid to shareholders.

(iii) Other Comprehensive Income: This represents the cumulative gains and losses arising on remeasurement of defined employee benefit plan.

(iv) Share application money pending allotment: This represents the share application money received in previous year for Employee Stock Option Scheme for which shares are allotted during the current financial year.

(v) Employee Share Options Scheme Reserve: The fair value of the equity-settled share based payment transactions with employees is recognised in Employee Share Options Scheme Reserve.

(vi) Capital Reserve: Capital reserve is on account of forfeiture of partly paid up OCRPS and security premium thereon.

Notes:

(i) Working Capital/Cash Credit Facilities from Bank is secured by hypothecation of book debts, current assets and movable Property, plant and equipment both present and future.

(ii) Loan is payable on demand. Interest payable on working capital loan is MCLR/ Repo/ T-Bill adjusted with the risk spread mutually agreed between the parties.

(iii) Maximum amount of loan outstanding during the year was H 835.79 Mn (March 31, 2022: H 669.47 Mn).

(iv) Bank loan contain certain financial covenants and the Company has satisfied all covenants as per the terms of bank loan.

(v) As at March 31, 2023, the Company had undrawn committed funded and non-funded borrowing facilities of H 470.32 Mn (March 31, 2022: H 381.60 Mn).

(vi) Quarterly statements of current assets filed by the Company with banks are in agreement with the audited/unaudited books of accounts.

The number of shares at the beginning of the previous year have been restated to give effect of share split of equity shares of face value of H 10 each sub-divided into equity shares of face value of H 1 each.

The number of shares at the beginning of the year have been restated to give effect of and bonus shares allotted in the ratio of 5 bonus shares for every 1 share held vide shareholdersâ approval dated November 02, 2022.

42 Leases

The Company as lessee

The Company has lease contracts for premises obtained for offices, warehouse etc. Leases of premises generally have lease terms between 3 to 5 years.

The Companyâs obligations under its leases are secured by the lessorâs title to the leased assets.

The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Companyâs business needs. Management exercises significantjudgement in determining whether these extension and termination options are reasonably certain to be exercised.

43 Defined Benefit Plan and Other Long Term Employee Benefit Plan:

I) Defined Contribution Plan

During the year, the Company has made contribution/provision to provident fund stated under defined contribution plan amounting to H 12.45 Mn (March 31, 2022: H 9.64 Mn) and the same has been recognised as an expense in the Statement of Profit and Loss.

II) Defined Benefit Plans

The Company operates a defined benefit gratuity plan for its employees. The gratuity benefits payable to employees are based on the employeeâs service and last drawn salary at the time of leaving. The Company has provided for gratuity based on actuarial valuation done as per projected unit credit method.

The discount rate is based on the prevailing market yields of Government of India Bonds as at the Balance Sheet date for the estimated terms 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 cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period and assuming there are no other changes in the market conditions. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analysis.

These plans typically expose the Company to actuarial risks such as: interest risk, longevity risk and salary risk.

a) Interest risk - A decrease in the discount rate will increase the plan liability.

b) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

c) Salary risk - The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

The Company do not have any other transaction with key managerial person than that is disclosed above.

*Remuneration includes amount of perquisite value towards ESOP based on exercise of options.

The total offer expenses were estimated to be H 2,423.44 Mn (inclusive of taxes) which were proportionately allocated between the selling shareholders (including a related party) and the Company in the proportion of equity shares sold by the selling shareholders and the Company. As at March 31, 2022 amount of H 226.42 Mn payable to selling shareholders (Refer note 28) out of the IPO proceeds was withheld pending final settlement of IPO proceeds and included amount payable to a related party. In the current year the same has been settled.

A Commitments

The Company does not have any contract remaining to be executed on capital account and not provided for (net off advances) H Nil as at March 31, 2023 (March 31, 2022 - Nil).

B Contingent liabilities (not provided for)
Particulars	As at March 31, 2023	As at March 31, 2022
i) Claims against the Company, not acknowledged as debts
Disputed Indirect tax matters (including interest up to the date of demand, if any) [Refer note (i) below]	26.64	26.64
ii) Corporate guarantees given to banks [Refer note (ii) below]	6,390.00	3,540.00
Total	6,416.64	3,566.64

Notes:

i. The Company has received VAT assessments order for financial years 2016-17 with demands amounting to H 32.02 Mn on account of certain input disallowances/adjustment made by VAT department. Out of the total demand amount, the Company has paid H 5.38 Mn to tax authorities during the financial year 2021-2022 and for the balance H 26.64 Mn the management believes that the position taken by it on the matter is tenable and hence, no adjustment has been made to the financial statements.

ii. Corporate guarantees given to banks with respect to borrowings taken by the subsidiary companies to a maximum amount of H 6,390 Mn (March 31, 2022: H 3,540 Mn), carrying amounts of the related financial guarantee contracts at March 31, 2023 were H Nil (March 31, 2022: H 24.18 Mn) (Refer note 28).

The carrying values of the financial assets and liabilities measured at amortised cost are reasonable approximation of their fair values. Accordingly, the fair values of such financial assets and liabilities have not been disclosed separately.

Valuation methodology:

The fair values of assets and liabilities are included at the amount at which the instrument can be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

The valuation techniques used to determine the fair values of financial assets and financial liabilities classified as level 2 include use of quoted market prices or dealer quotes for similar instruments and generally accepted pricing models based on a discounted cash flow analysis using rates currently available for debt on similar terms, credit risk and remaining maturities.

The Company enters into derivative financial instruments such as forward contracts with various counterparties. The fair value of such derivatives instruments are determined using forward exchange rates, currency basis spreads between respective currencies, etc.

48 Financial Risk Management Objectives and Policies:

The Companyâs principal financial liabilities comprise borrowings from banks, trade and other payables. The main purpose of these financial liabilities is to finance and support the Companyâs operations. The Companyâs principal financial assets comprise cash and bank balance, trade and other receivables that derive directly from its operations.

The Company is exposed to various financial risks such as market risk, credit risk and liquidity risk. The Companyâs senior management team oversees the management of these risks. The Board ofDirectors review and agree policies for managing each of these risks, which are summarised below:

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk mainly comprises currency risk, product price risk and interest risk.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2023 and March 31, 2022.

b) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities denominated in foreign currency and thus the risk of changes in foreign exchange rates relates primarily to trade payables.

Since the business of the Company doesnât involves material foreign currency transactions, its exposure to foreign currency changes is not material.

c) Product price risk

In a potentially inflationary economy, the Company expects periodical price increases across its product lines. Product price increases which are not in line with the levels of customersâ discretionary spends, may affect the business/ sales volumes. In such a scenario, the risk is managed by offering judicious product discounts to 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 customers. This helps the Company to 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.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).

a) Trade receivables

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 Companyâs experience of delinquencies and customer disputes have been minimal. Also, the Company has a simplified approach to determine impairment loss allowance on the portfolio of trade receivables. This is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. Accordingly, the credit risk is covered by the Company (Refer accounting policy 2(g) for expected credit loss on trade receivable).

b) Security deposit

Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Companyâs Board of Directors on an annual basis and may be updated throughout the year subject to approval of the Companyâs Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through a counterpartyâs potential failure to make payments.

Liquidity risk

51 Employee Share Based Payment:

The Company has granted stock options under the employee stock option scheme- ESOS 2012, ESOS 2017 and ESOP 2022 respectively, as approved by the Board of Directors of the company, to the eligible employees of the Company or its subsidiaries. These options would vest in 3 or 4 equal annual installments from the date of grant based on the vesting conditions as per letter of grant executed between the Company and the employee of the Company or its subsidiaries. The maximum period for exercise of options is 4 years from the date of vesting. Each option when exercised would be converted into one fully paid-up equity share of H 1 each of the Company. The options granted under ESOS 2012, ESOS 2017 and ESOP 2022 scheme carry no rights to dividends and no voting rights till the date of exercise.

The Company has recognised an expense of H 21.35 Mn (March 31, 2022: H 35.82 Mn) arising from equity settled share based payment transactions for employee services received during the year. The carrying amount of Employee stock options outstanding reserve as at March 31, 2023 is H 169.26 Mn (March 31, 2022: H 155.91 Mn)

49 Segment information:

The Company has identified Board of directors and CEO as Chief Operating Decision Maker (âCODMâ) who reviews and allocates resources based on Omni business and Omni channel strategy, which in terms of Ind AS 108 on âOperating Segmentsâ constitutes a single reporting segment.

i) The Company operates in a single geographical environment i.e. in India.

ii) No single external customer (other than related party) contributed 10% or more to Companyâs revenue.

50 Capital management:

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to its shareholders. For the purpose of the Companyâs capital management, capital includes issued equity capital, convertible preference shares, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to maximise the shareholder value. The capital structure of the Company is based on managementâs judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. The Company consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Companyâs policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain

The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The volatility is based on annualised standard deviation of the continuously compounded rates of return based on the peer companies and competitive stocks over a period of time. The Company has determined the market price on grant date based on latest equity valuation report available with the company preceding the grant date.

The weighted average share price at the date of exercise of options exercised during the year was H 187 (March, 2022 H 153**)

**The movement of options & the fair value assumptions have been restated to give effect of the bonus shares allotted by the company wide shareholdersâ approval dated November 02, 2022 in proportion of 5:1, i.e., 5 (five) bonus equity shares of H 1 each for every 1 (one) fully paid-up equity share held as on the record date.

53 Utilisation of IPO funds

During the previous year, the Company had completed its Initial Public Offer (I PO) of 47,575,326 equity shares of face value of H 1 each at an issue price of H 1,125 per share (including a share premium of H 1,124 per share). A discount of H 100 per share was offered to eligible employees bidding in the employeeâs reservation portion of 250,000 equity shares. The issue comprised of a fresh issue of 5,602,666 equity shares aggregating to H 6,300 Mn and offer for sale of 41,972,660 equity shares by selling shareholders aggregating to H 47,197 Mn. Pursuant to the IPO, the equity shares of the Company were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on November 10, 2021.

The Company is executing certain multiyear ongoing projects namely, âProject Rangeetâ and âNykaa Chair in Consumer Technology implemented by IIM-Aâ. Due to such ongoing projects and plan of spending funds in multi years, the Company was not able to spend two per cent of the average net profit as per section 135(5) in the current financial year. Unspent CSR amount pertaining to the commitments made by the Company towards multi-year ongoing projects has been transferred to a separate Unspent CSR account of the Company. The amount transferred to the aforesaid Unspent CSR account will be spent for the said projects within the permissible time limit.

Accordingly, the Company has duly complied with section 135 of the Act read with rules thereunder and the CSR policy of the Company.

The amount during the year has been spent towards promoting research & education, upskilling and health care.

âContribution of H 3 Mn has been given to Nykaa foundation which is a section 8 company engaged in doing CSR activities. The amount has been contributed to Sambhav Foundation through Nykaa Foundation for CSR activity.

55 Other Statutory Information

i. The Company does not have any transactions with companies struck off.

ii. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iii. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

iv. The Company did not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)

v. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

vi. No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (âFunding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

56 Previous year figures have been regrouped and

reclassed wherever required to conform to those of the current year.

Mar 31, 2022

During the year the Company has recognised the impact of decline in fair value of investment of '' 13.19 Mn (March 31, 2021: 24.84 Mn) through other comprehensive income.

⁽¹⁾ On September 28, 2021, the Company has acquired 51% stake in Dot & Key Wellness Private Limited (Dot & Key) for a consideration of '' 969 Mn. Accordingly, effective such date Dot & Key has become a subsidiary of the Company. Further, the Promoter shareholders of Dot & Key (NCI holder of the subsidiary) have Put Option for selling balance stake of 49% by the Company at a value to be determined as per the terms of Shareholders Agreement for consideration not exceeding ''1,530 Mn. The fair value of the Put Option on the date of acquisition of '' 502.76 Mn has been included in the cost of investments. Put Option liability as on March 31, 2022 was '' 242.40 Mn (Refer note 22) and resultant change in liability is recognised under âOther incomeâ (Refer note 32) during the year.

Terms / rights attached to equity shares:

The Company has only one class of equity shares having a par value of '' 1 per share. Each holder of equity shares is entitled to one vote per share.

Each equity shareholder is entitled to dividends as and when the Company declares and pays dividend after obtaining shareholdersâ approval.

During the year, the Company has completed its Initial Public Offer (IPO) of 47,575,326 equity shares of face value of '' 1 each at an issue price of '' 1,125 per share (including a share premium of '' 1,124 per share). A discount of ''100 per share was offered to eligible employees bidding in the employeeâs reservation portion of 250,000 equity shares. The issue comprised of a fresh issue and allotment of 5,602,666 equity shares aggregating to '' 6,300 Mn and offer for sale of 41,972,660 equity shares by selling shareholders aggregating to '' 47,197 Mn.

iv) Shares reserved for issue under employee stock option

The Company has reserved issuance of 33,000,000 (Previous year 33,000,000) Equity Shares of '' 10 each for offering to Eligible Employees of the Company and its subsidiaries under Employees Stock Option Scheme (ESOS). During the year ended March 31, 2022 the Company has granted 2,200,200 options (March 31, 2021: 2,541,000). Cumulative number of equity shares granted under Employee Stock Option Scheme (ESOS) is 28,227,450 equity shares as at March 31, 2022. (March 31, 2021: 26,027,250).

(ii) Retained earnings: Retained Earnings are the profits / (losses) that the Company has earned till date, less any dividends or other distributions paid to shareholders.

(iii) Other Comprehensive Income: This represents the cumulative gains and losses arising on remeasurement of defined employee benefit plan.

(v) Employee Share Options Scheme Reserve: The fair value of the equity-settled share based payment transactions with employees is recognised in Employee Share Options Scheme Reserve.

(vi) Capital Reserve: Capital reserve is on account of forfeiture of partly paid up OCRPS and security premium thereon.

(i) Working Capital/Cash Credit Facilities from Bank is secured by hypothecation of book debts, current assets and movable Property, plant and equipment both present and future.

(ii) Loan is payable on demand. Interest payable on working capital loan is MCLR adjusted with the risk spread mutually agreed between the parties.

(iii) Maximum amount of loan outstanding during the year was '' 669.47 Mn (March 31, 2021: '' 679.37 Mn).

(iv) Bank loan contain certain financial covenants and the Company has satisfied all covenants as per the terms of bank loan.

(v) As at March 31, 2022, the Company had undrawn committed funded and non-funded borrowing facilities of '' 381.60 Mn (March 31, 2021: '' 256.46 Mn).

41 Leases

The Company as lessee

The Company has lease contracts for premises obtained for offices, warehouse etc. Leases of premises generally have lease terms between 3 to 5 years.

The Companyâs obligations under its leases are secured by the lessorâs title to the leased assets.

The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Companyâs business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.

The Company had total cash outflow for leases of '' 72.99 Mn (March 31, 2021: '' 59.82Mn).

The Company earned rental income from sublease of '' 39.45 Mn (March 31, 2021: '' 32.50 Mn)

42 Defined Benefit Plan and Other Long Term Employee Benefit Plan:I) Defined Contribution Plan

During the year, the Company has made contribution/provision to provident fund stated under defined contribution plan amounting to '' 9.64 Mn (March 31, 2021: '' 4.87 Mn) and the same has been recognised as an expense in the statement of profit and loss.

II) Defined Benefit Plans

The Company operates a defined benefit gratuity plan for its employees. Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure @ 15 days of last drawn salary for each completed year of service.

The Company has provided for gratuity based on actuarial valuation done as per projected unit credit method.

The discount rate is based on the prevailing market yields of Government of India Bonds as at the Balance Sheet date for the estimated terms 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.

These plans typically expose the Company to actuarial risks such as: interest risk, longevity risk and salary risk.

(A) Interest risk - A decrease in the discount rate will increase the plan liability.

(B) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

(C) Salary risk - The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.

Compensated absences:

The Company has a policy on compensated absences for its employees. In the current year, the Company has changed the policy allowing employees to accumulate leaves subject to certain limits and carry forward into subsequent years for availment/encashment. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at the Balance sheet date using the project unit credit method.

Terms and conditions of transactions with related parties

The Company do not have any other transaction with key managerial person than that is disclosed above.

*Remuneration includes amount towards ESOP based on exercise of options.

The total offer expenses are estimated to be H 2,423.44 Mn (inclusive of taxes) which are proportionately allocated between the selling shareholders (including a related party) and the Company in the proportion of equity shares sold by the selling shareholders and the Company. As at March 31, 2022 amount of H 226.42 Mn payable to selling shareholders (Refer note 27) out of the IPO proceeds has been currently withheld pending final settlement of IPO proceeds includes amount payable to a related party.

44 Commitments and contingent liabilitiesA Commitments

The Company does not have any contract remaining to be executed on capital account and not provided for (net of advances) '' Nil as at March 31, 2022 (March 31, 2021 - '' Nil)

The Company does not have lease contracts that have not yet commenced as at March 31, 2022.

B Contingent liabilities (not provided for)

Particulars	As at March 31, 2022	As at March 31, 2021
i) Claims against the Company, not acknowledged as debts
Disputed Indirect tax matters (including interest up to the date of demand, if any) [Refer note (i) below]	26.64	11.77
ii) Corporate guarantees given to banks [Refer note (ii) below]	3,540.00	3,290.00
iii) Bank guarantees [Refer note (iii) below]	505.19	-
Total	4,071.83	3,301.77

Notes:

i. The Company has received VAT assessments order for financial years 2016-17 with demands amounting to '' 32.02 Mn on account of certain input disallowances/adjustment made by VAT department. Out of the total demand amount, the Company has paid '' 5.38 Mn to tax authorities during the year and for the balance '' 26.64 Mn the management believes that the position taken by it on the matter is tenable and hence, no adjustment has been made to the financial statements.

ii. Corporate guarantees given to banks with respect to borrowings taken by the subsidiary companies to a maximum amount of '' 3,540 Mn (March 31, 2021: '' 3,290 Mn), carrying amounts of the related financial guarantee contracts at March 31, 2022 were '' 24.18 Mn (March 31, 2021: '' 26.53 Mn). (Refer note 27).

iii. Bank guarantees have been given to National Stock Exchange for completion of process of IPO.

46 Fair value of financial assets and financial liabilities

The following methods and assumptions were used to estimate the fair values:

â¢ The carrying values of financial assets i.e. cash and cash equivalents, trade receivables, other financial assets and of financial liabilities i.e. trade and other payables, working capital loan borrowing and other financial liabilities are reasonable approximation of their fair values due to the short maturities of these instruments.

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. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows:

Particulars	Increase / decrease in basis points	Effect (decrease) / increase on profit before tax
March 31, 2022	50	(1.57)
	-50	1.57
March 31, 2021	50	(1.22)
	-50	1.22

b) Foreign currency risk

Valuation methodology:

i) The Company has measured fair value for Level 2 investment using the third-party pricing information without adjustment.

47 Financial Instruments:

The Company is exposed to various financial risks such as market risk, credit risk and liquidity risk. The Companyâs senior management team oversees the management of these risks. The Board of Directors review and agree policies for managing each of these risks, which are summarised below:

c) Product price risk

Market risk

a) Trade receivables

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 Companyâs experience of delinquencies and customer disputes have been minimal. Also, the Company has a simplified approach to determine impairment loss allowance on the portfolio of trade receivables. This is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. Accordingly, the credit risk is covered by the Company. (Refer accounting policy 2(g)(IV) for expected credit loss on trade receivable).

b) Security deposit

c) Financial instruments and cash deposits

Liquidity risk

The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments.

48 Segment information:

The Company has identified Board of directors and Group CEO as Chief Operating Decision Maker (âCODMâ) who reviews and allocates resources based on Omni business and Omni channel strategy, which in terms of Ind AS 108 on âOperating Segmentsâ constitutes a single reporting segment.

i) The Company operates in a single geographical environment i.e. in India.

ii) No single external customer (other than related party) contributed 10% or more to Companyâs revenue.

49 Capital management

50 Employee Share Based Payment

The Company has granted stock options under the employee stock option scheme- ESOS 2012 and ESOS 2017 respectively, as approved by the Board of Directors of the Company, to the eligible employees of the Company or its subsidiaries. These options would vest in 3 or 4 equal annual installments from the date of grant based on the vesting conditions as per letter of grant executed between the Company and the employee of the Company or its subsidiaries. The maximum period for exercise of options is 4 years from the date of vesting. Each option when exercised would be converted into one fully paid-up equity share of '' 10 each of the Company. The options granted under ESOS 2012 and ESOS 2017 scheme carry no rights to dividends and no voting rights till the date of exercise.

The fair value of the share options is estimated at the grant date using Black and Scholes Model, taking into account the terms and conditions upon which the share options were granted.

The Company has recognised an expense of '' 35.82 Mn (March 31, 2021: '' 11.15 Mn) arising from equity settled share based payment transactions for employee services received during the year. The carrying amount of Employee stock options outstanding reserve as at March 31, 2022 is '' 155.91 Mn (March 31, 2021: '' 89.37 Mn).

The weighted average share price at the date of exercise of options exercised during the year was '' 920 (March 31, 2021: '' 486.21).

**The movement of options & the fair value assumptions for FY 2020-21 have been restated to give effect of share split of equity shares of face value of '' 10 each sub-divided into equity shares of face value of '' 1 each and bonus shares allotted in the ratio of 2 bonus shares for every 1 share held vide shareholderâs approval dated July 16, 2021.

52 Subsequent events

Subsequent to the year ended March 31, 2022 on April 22, 2022, the Board of Directors of the Company has approved strategic investments in Earth Rhythm Private Limited (Earth Rhythm) and Nudge Wellness Private Limited (Nudge). The Company has accordingly executed a share subscription and share purchase agreement with:

â¢ Earth Rhythm to acquire upto 18.51% of the fully diluted share capital by way of subscription and/or purchase of Compulsorily Convertible Cumulative Preference Shares and/or Equity Shares for a consideration of '' 416.5 Mn. The transaction has been consummated on May 04, 2022.

â¢ Nudge to acquire initially upto 60% (with a right to go upto 100%) of the fully diluted share capital by way of subscription and/or purchase of Equity Shares for a consideration of '' 36 Mn.

53 Utilisation of IPO funds

During the year, the Company has completed its Initial Public Offer (IPO) of 47,575,326 equity shares of face value of '' 1 each at an issue price of '' 1,125 per share (including a share premium of '' 1,124 per share). A discount of '' 100 per share was offered to eligible employees bidding in the employeeâs reservation portion of 250,000 equity shares. The issue comprised of a fresh issue of 5,602,666 equity shares aggregating to '' 6,300 Mn and offer for sale of 41,972,660 equity shares by selling shareholders aggregating to '' 47,197 Mn. Pursuant to the IPO, the equity shares of the Company were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on November 10, 2021.

55 Social Security Code

The Code on Social Security, 2020 (âCodeâ) relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

56 Impact of Covid 19

The Company has taken into account all the possible impacts of COVID-19 in preparation of these standalone financial statements, including but not limited to its assessment of, liquidity and going concern assumption, recoverable values of its financial and non-financial assets, impact on revenue recognition and impact on leases. The Company has carried out this assessment based on available internal and external sources of information upto the date of approval of these standalone financial statements and believes that the impact of COVID-19 is not material to these financial statements and expects to recover the carrying amount of its assets. The impact of COVID-19 on the standalone financial statements may differ from that estimated as at the date of approval of these standalone financial statements owing to the nature and duration of COVID-19. The Company will continue to closely monitor any material changes to future economic conditions.

57 Other Statutory Information

i. The Company does not have any transactions with companies struck off.

ii. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

iii. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

58 During the year, outsourced warehouse manpower expenses has been reclassified from employee benefit expenses and disclosed separately under other expenses for the year ended March 31, 2022 and March 31, 2021. The reclassification does not have any impact on the profit of the group for the respective years.

59 Previous year figures have been regrouped and reclassed wherever required to conform to those of the current year.

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Notes to Accounts of FSN E-Commerce Ventures Ltd.

Provisions

i) Foreign currency transactions

Functional and presentation currency

Foreign currency transactions and balances

(i) Initial recognition

(ii) Conversion

(iii) Exchange differences

) Share based payments

k) Employee benefits

Short-term employee benefits

Post-employment benefits

i. Defined Contribution Plans

ii. Defined Benefit PlansGratuity

Compensated absences

l) Fair value measurement

m) Income taxes

Current income tax

Deferred tax

n) Cash and cash equivalents

o) Contingent Liabilities

p) Earnings per share

q) Segment reporting

r) Business combination:

3. Significant accounting judgments, estimatesand assumptions

I. Judgemnts:

Determining the lease term of contractswith renewal and termination options â theCompany as lessee

II. Estimates and assumptions:

a) Estimation of useful life of property,plant and equipment and intangible asset

b) Fair Value measurement of financialinstruments

c) Estimation of defined benefit obligationand compensated absences

d) Income taxes

e) Deferred Taxes

f) Provision

g) Impairment of financial assets:

h) Provision for expected credit losses oftrade receivables and contract assets:

i) Leases â Estimating the incrementalborrowing rates:

j. Other estimates:

Provisions

(i) Foreign currency transactions

Functional and presentation currency

Foreign currency transactions and balances

(i) Initial recognition

(ii) Conversion

(iii) Exchange differences

) Share based payments

(k) Employee benefits

Short term employee benefits

Post-employment benefits

i. Defined Contribution Plans

ii. Defined Benefit Plans Gratuity

Compensated absences

(l) Fair value measurement

(m) Income taxes

Current income tax

Deferred tax

(n) Cash and cash equivalents

(o) Contingent Liabilities

(p) Earnings per share

(q) Segment reporting

(r) Share capital

(s) Business combination:

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

d. Income taxes

e. Deferred Taxes

f. Provision

g. Impairment of financial assets:

h. Provision for expected credit losses of trade receivables and contract assets:

i. Leases â Estimating the incremental borrowing rates:

j. Other estimates:

43 DEFINED BENEFIT PLAN AND OTHER LONG TERM EMPLOYEE BENEFIT PLAN

(I) Defined Contribution Plan

(II) Defined Benefit Plans

45 COMMITMENTS AND CONTINGENT LIABILITIES

A Commitments

(ii) Audit trail

(b) Security Deposit

(c) Financial instruments and cash deposit

Liquidity risk

49 SEGMENT INFORMATION

ii. Defined Benefit Plans
Gratuity

3. Significant accounting judgments, estimates
and assumptions

Determining the lease term of contracts
with renewal and termination options â the
Company as lessee

a) Estimation of useful life of property,
plant and equipment and intangible asset

b) Fair Value measurement of financial
instruments

c) Estimation of defined benefit obligation
and compensated absences

h) Provision for expected credit losses of
trade receivables and contract assets:

i) Leases â Estimating the incremental
borrowing rates:

i. Leases â Estimating the incremental borrowing rates: