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Notes to Accounts of V-Mart Retail Ltd.

Mar 31, 2022

a. Terms / rights attached to equity shares

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

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.

f. Shares reserved for issue under options

For details of shares reserved for issue under the Employee Stock Option Plan (ESOP) of the Company, refer note 35.

g. Qualified Institutions Placement

During the previous year, the Company had issued 1,530,612 equity shares of '' 10 each at an issue price of '' 2,450 per share, aggregating to '' 37,499.99 lakhs (including securities premium of ''37,346.93) as a Qualified Institutional Placement (QIP). The proceeds of the issue (net of QIP related expense of '' 463.17 lakh) are to augment to meet the future expansion plans of the Company, which include funding expenditure towards expansion of store network, including warehousing facilities and related land acquisition, funding digital initiatives, general corporate purposes, other corporate exigencies, including but not limited to the refurbishment and renovation of existing stores. Further, the Company has spend ''26,915.10 lakhs on purchase of land, acquisition of retail stores and other incidental expenses. The proceeds of '' 10,121.72 lakh pending utilisation for the objects of QIP, have temporarily been invested in interest bearing liquid instrument and Mutual funds.

Retained earnings

Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.

Share option outstanding account

The reserve is used to recognize the grant date fair value of options issued to employees under employee stock option schemes and is adjusted on exercise/ forfeiture of options.

A contract liability is recognised when the Company is under an obligation to redeem discount coupon, credit vouchers etc given to customer on existing sales. Contract liabilities are recognised as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer). Refund liabilities - A refund liability is recognised for the obligation to refund some or all of the consideration received (or receivable) from the customer. The Company''s refund liabilities arise from customers'' right of return and volume rebates. The Company updates its estimates of refund liabilities at the end of each reporting period.

There are no Contract Assets and trade receivables as Company operates retail stores and there is no credit sales or other receivables from customers. Rental income from sublease customers are settled with in the same month.

30 EARNINGS / (LOSS) PER SHARE

Basic EPS amounts are calculated by dividing the profit for the period attributable to equity holders by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the period plus the weighted average number of Equity shares that would be issued under ESOP Scheme to employees.

31 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. 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.

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.

In particular, the Company has identified the following areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.

Judgements

In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

a) Leases

Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised.

In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease, and the importance of the underlying asset to Company''s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that it reflects the current economic circumstances.

For leases which are expired and under discussion for renewal, the Company Considers such leases as short term leases since, the Company is not certain that option to extend the lease will be exercised as lessor has right to terminate the lease.

Further, the Company has exercised its judgement in using a single discount rate to a portfolio of leases with reasonably similar characteristics.

b) contingencies

Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events.

c) Recognition of deferred tax

The extent to which deferred tax asset to be recognized is based on the assessment of the probability of the future taxable income against which the deferred tax asset can be utilized.

estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(i) useful lives of depreciable assets

The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets.

(ii) Defined benefit obligation

The cost of the defined benefit plan and other post-employment benefits and the present value of such 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 trends salary increases, mortality rates and future pension increases. In view of 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

(iii) Impairment of assets

In assessing impairment, the Company estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

(iii) Share based payments

The Company initially measures the cost of equity-settled transactions with employees using a black Scholes model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. For equity-settled share-based payment transactions, the liability is recognised at the vesting date. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 35.

(iv) 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 DCF 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.

(v) Assessment of potential markdown inventory

The Company at each reporting date makes an assessment of potential markdown due to aged inventory. In doing so, it estimates the net realisable value of aged inventory based on historic trend of sale of such/ similar aged inventory. Further, it also estimate the provision for shrink based on past trends which it believes is more than or near to actual shrink to be booked as and when stores are counted annually.

(vi) incremental borrowing rate for leases

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.

32 coMMiTMENTS And coNTiNGENciES i) commitments

As at

March 31, 2022

As at

March 31, 2021

Estimated amount of contracts remaining to be executed on capital account not provided in books (including acquisition of land remaining land)

11,980.32

3,460.21

11,980.32

3,460.21

ii) contingent liabilities

As at

March 31, 2022

As at

March 31, 2021

Income tax1

192.25

754.90

Value added tax 2

157.01

565.01

Service tax 3

30.33

30.33

Payment of Bonus (Amendment) Act, 20154

107.61

107.61

Minimum Wages Act, 19485

107.48

107.48

594.68

1,565.33

Note: The Company does not believe any liability devolving against it.

income Tax 1

'' 21.75 lakhs [net of deposited of '' 76.13 lakhs (March 31, 2021 : '' 21.75)] represents demand raised by the income tax department for AY 14-15 in respect of addition made under rule 8D of section 14A of Income Tax Act, 1961 and other disallowances. The Company has filed an appeal before CIT (A).

'' Nil lakhs (March 31, 2021: '' 600.63) represent reassessment order received by the Company under section 263 of Income Tax Act, 1961 for AY 16-17 wherein the Commissioner of Income has made certain additions with respect to non-deduction of TDS on director''s commission, Inventory write-off and claims and contingencies. In the current year, the matter has been decided in favour of assessee and the matter is closed.

'' 74.97 lakhs (March 31, 2021 : ''74.97 lakhs) was raised by the income tax department for AY 12-13 in respect of addition made on disallowance of certain purchases based on inadvertent assumption. The Company has filed an appeal an appeal before CIT (A).

'' 57.55 lakhs (March 31, 2021 : ''57.55 lakhs) represents demand raised by the income tax department for AY 18-19 in respect of addition made under rule 8D of section 14A of Income Tax Act, 1961 and disallowance of expenditure on ESOP. However, the Company has filed an appeal before CIT (A).

'' 37.98 lakhs (March 31, 2021 : ''Nil lakhs) represents demand raised by the income tax department for AY 20-21-19 in respect of various adjustments such as addition with respect to 43B, items, adjustments under ICDS, etc. THe Copany has filed an appeal before CIT (A).

Demand netted off with refund

'' Nil (March 31, 2021: '' Nil) represents demand amounting to '' 4.81 lakhs (March 31, 2021: ''4.81 lakhs) raised by the income tax department for AY 13-14 in respect of addition made under rule 8D of section 14A of Income Tax Act, 1961 and other non deductible expenses. The Company has reduced the refund due to it against such demand. However, the Company has filed an appeal before CIT (A).

'' Nil (March 31, 2021: '' Nil) represents demand amounting to '' 12.57 lakhs (March 31, 2021: ''12.57 lakhs) raised by the income tax department for AY 16-17 in respect of addition made under rule 8D of section 14A of Income Tax Act, 1961 and other non deductible expenses. The Company has reduced the refund due to it against such demand. However, However, the Company has filed an appeal before CIT (A).

'' Nil (March 31, 2021: '' Nil) represents demand amounting to '' 80.20 lakhs (March 31, 2021 : ''80.20 lakhs) raised by the income tax department for AY 17-18 in respect of addition made under rule 8D of section 14A of Income Tax Act, 1961, allowance of education cess, delay in payment of PF and disallowance of interest on delayed payment of Income Tax. The Company has reduced the refund due to it against such demand. However, the Company has filed an appeal an appeal before CIT (A).

Value added tax 2

'' 157.01 lakhs (March 31, 2021: '' 565.01 lakhs) represents demand relating to the appropriateness of forms/ declaration made by the Company under relevant sales tax legislations which were primarily procedural and on interstate movement of goods. Pending final decisions, the Company has deposited amounts under protest with statutory authorities for certain cases amounting to '' 115.45 (March 31, 2021: ''115.45).

Service tax 3

Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from June 1, 2007 by the Finance Act, 2010, the Retailer Association of India (the Company being a member of such Association) has challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has issued an interim order dated October 14, 2011, directing to deposit 50% of the arrears of service tax due up to September 30, 2011 and the balance, if any, at the time of final disposal of the appeal. The amount of service tax on rent in respect of rented stores from June 1, 2007 till September 30, 2011 amounted to ''108.26 lacs of which ''77.93 lacs has been provided for in the Statement of Profit and Loss till March 31, 2017 and the balance ''30.33 lacs has been disclosed as contingent liability in current and previous year. As per directions of the Hon''ble Supreme Court, the Company, has deposited ''37.69 lacs under protest with the concerned authorities and has disclosed this balance as “Service tax deposit” under other non-current assets.

payment of Bonus (Amendment) Act, 20154

The Payment of Bonus (Amendment) Act, 2015 dated December 31, 2015 (which was made effective from April 1, 2014) revised the thresholds for coverage of employees eligible for bonus and also enhanced the ceiling limits for computation of bonus. However, taking cognizance of the stay granted by Hon''ble High Courts of Kerala (Ernakulam), Karnataka (Bengaluru), Uttar Pradesh (Allahabad) and Madhya Pradesh (Indore) and pending disposal of such matter, the Company, in accordance with the Payment of Bonus (Amendment) Act, 2015, has only recognized an additional expense of ''213.81 lakhs for the period April 1, 2015 to March 31, 2016 during previous year ended March 31, 2016 and has not recognised the differential amount of bonus of ''107.61 lakhs for the period April 1, 2014 to March 31, 2015.

Minimum Wages Act, 19485

''107.48 lakhs (March 31, 2021 :''107.48 lakhs) represents demand under imposed by the labour enforcement officer under The Minimum Wages Act, 1948 mainly on classification of employees into skilled, semi-skilled and un-skilled. The Company has received an order during the year stating that the differential amount has been paid by it, however, it has not paid any such amount since, the Management believes that the classification done by the labour officer was not appropriate and it is in process of filing its reply to labour department to correct the said orders. Further, it does not anticipate any material liability devolving on the Company.

Further there are various labour, legal metrology, food adulteration and cases under other acts pending against the Company, the liability of which cannot be ascertained. However, management does not expect significant or material liability devolving on the Company.

The sensitivity analyses above have 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.

Sensitivities due to demographics are insignificant. Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.

In presenting the above sensitivity analysis, the present value of defined benefit obligation has been calculated using the projected credit unit method at the end of reporting period, which is the same as that applied in calculating the defined obligation liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(Three Lakhs) to 600,000 (Six Lakhs) options The exercise price of these options will be determined by the Remuneration Committee and the options will vest over a period of twelve months to thirty six months of continued employment from the grant date.

The Company has introduced new Employee Stock Option Scheme which was approved by Board of Directors and the shareholders vide resolution dated August 10, 2020 and September 30, 2020 respectively (‘the V-Mart ESOP Scheme 2020'' or the “Scheme”), consequent to which 185,950 equity shares with the nominal value of '' 10 each was granted to all the employees above certain level and based on certain portion of their remuneration subject to achievement of Company''s performance and individual performance at the cut-off date. The option will vest over a period of 1 to 4 years in the ratio of 10:20:30:40 at a exercise price decided by the Nomination and Remuneration Committee.

(i) Risk analysis

The Company is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined benefits plans and management estimation of the impact of these risks are as follows:

interest rate risk

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields falls, the defined benefit obligation will tend to increase.

Salary Inflation risk

Higher than expected increases in salary will increase the defined benefit obligation Demographic risk

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary Increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

Detailed information to the extent provided by the actuary in the actuarial certificate has been included in the disclosure given above.

35 SHARE BASED PAYMENTSEmployee Stock options (ESop)

The Company has implemented an Employee Stock Option Scheme, which was approved by the Board of Directors and the shareholders vide resolution dated July 2, 2012 and July 10, 2012 respectively (‘the V-Mart ESOP Scheme 2012'' or the “Scheme”), consequent to which 300,000 equity shares with a nominal value of ''10 each will be granted upon exercise of as stock options (ESOPs) to eligible employees. Further, the Members of the Company in its meeting held on September 18, 2017 had further approved the amendment in V-Mart ESOP scheme, 2012 by increasing the total number of options from 300,000

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

36 SEGMENT INFORMATION

Ind AS 108 establishes standards for the way that the Company report information about operating segments and related disclosures about products and services, geographic areas, and major customers. The Company''s operations comprises of only one segment i.e. Retail sale business of various merchandise products. The Company operates primarily in India and does not have operations in economic environments with different risks and returns. Hence, it is considered operating in single geographical segment. Based on the "management approach" as defined in Ind AS 108, the management also reviews and measure the operating results taking the whole business as one segment. In view of the same, separate segment information is not required to be given as per the requirements of Ind AS 108 on “Operating Segments”. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the significant accounting policies.

39 FINANCIAL RISK MANAGEMENT A. Capital risk management

The Company''s objectives when managing capital are to safeguard continuity as a going concern, provide appropriate return to shareholders and maintain a cost efficient capital structure. The Company determines the amount of capital required on the basis of an annual budget and a five year plan, including, for working capital, capital investment in stores and technology. The Company''s funding requirements are met through internal accruals and a combination of both longterm and short-term borrowings. The Company does not have any long term borrowings or working capital loan from bank. However, it has obtained cash credit facility from bank. The Company has sanctioned borrowing limit of ''14,900 lakhs.

Liquidity risk:

Liquidity risk is a risk that the Company may not be able to meet its financial obligations on a timely basis through its cash and cash equivalents, and funds available by way of committed credit facilities from banks Management manages the liquidity risk by monitoring rolling cash flow forecasts and maturity profiles of financial assets and liabilities. This monitoring includes financial ratios and takes into account the accessibility of cash and cash equivalents and additional undrawn financing facilities.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Further, as at March 31, 2022, the Company has cash and cash equivalent of '' 3,017.95 lakhs (March 31, 2021: ''2,222.83 lakhs).

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2022 and March 31, 2021.

B. Financial risk management

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

Market risk :

Market Risk is the risk that changes in market place could affect the future cash flows to the Company. The market risk for the Company arises primarily from interest rate risk and product price risk.

i) interest risk: The Company is exposed to interest rate risk primarily due to borrowings having floating interest rates. The Company uses available working capital limits for availing short term cash credits. The Company mitigates the same through efficient use of working capital limits and regular monitoring of Interest Coverage ratio. The Company is not exposed to significant interest rate risk as at the respective reporting dates.

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

credit risk:

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of account receivables. Individual risk limits are also set accordingly.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Company compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The Company considers reasonable and supportive forward-looking information.

The Company provides for twelve month expected credit losses for the following financial assets

The fair value of the financial assets and liabilities is included at the amount at which the instrument could 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 following methods and assumptions were used to estimate the fair values:

The fair value of quoted investments are based on price quotations as on the reporting date.

The security deposits paid are evaluated by the company based on parameters such as interest rate, risk factors , risk characteristics, and individual credit worthiness of the counterparty. Based on this evaluation allowances are taken into account for the expected losses of the security deposits.

The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

There have been no transfers between Level 1 and Level 2 during the year.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed traded mutual funds that have quoted price. The mutual funds are reported using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximises the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

Note :

The carrying amount of trade receivables, trade payables, capital creditors, borrowing, employee payables and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.

The fair values for security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

42 The Company on a periodic basis assesses the markdown of its aged and obsolete inventories (including shrinkage due to various reasons). The exercise has been carried out throughout the year and also at the year end. The estimated markdown including shrinkage in consumption of stock-in -trade amounts to '' 4,642.90 lakhs including provision at year end of ''3,247.00 lakhs (March 31, 2021 :'' 4,196.86 lakhs including provision at year end of '' 2,463.00 lakhs). The management believes that above estimation is adequate both in line with the industry standards and as well as considering the current COVID-19 situation. Also refer note 46 below.

44 The lease terms for office premises, warehouse and store sites are for an period of nine years to fifteen years and having a lock-in period ranging from one to three years. The lease are further renewable on expiry of total lease term subject to mutual consent of both the parties. The Company also sub lease portion of retail stores. However, the sub-lease income is not material to the total lease outflows.

Further, the Company has also obtained some of the assets under operating lease from asset leasing company. Such lease agreement are cancellable by giving a three months notice and does not contain lock-in period.

Undrawn committed borrowing facilities

The Company has sanctioned working capital limits amounting to '' 14,900 lakhs (March 31, 2021: ''22,000 lakhs) including non

fund based limit of ''1,000 lakhs from SBI, ICICI, Yes Bank, Axis Bank and HDFC Bank. An amount of ''13,524.32 lakhs remains

undrawn as at March 31, 2022 (March 31, 2021: '' 21,536.99 lakhs). Further, the limits available is secured by way of:

i) Pari passu hypothecation charge with all the working capital lenders on entire current assets including stock and all the present and future book debts.

ii) Pari passu first hypothecation charge with all the working capital lenders on all the present and future fixed assets of the Company excluding vehicle and assets financed by other banks under the finance lease and term loan.

iii) Exclusive charge over personal property of Mr. Lalit Agarwal, Mr. Madan Gopal Agarwal and Mrs. Sangeeta Agarwal to SBI only.

iv) Personal guarantee of Mr. Lalit Agarwal and Mr. Madan Gopal Agarwal is given to SBI, ICICI and Axis bank

v) Personal guarantee of Mr. Lalit Agarwal is given to HDFC and personal guarantee of Mrs, Sangeeta Agarwal is given to SBI.

vi) Exclusive charge over Mutual Funds of SBI DFS - C - 48 - 1177 Days - Direct - Growth and SBI Magnum Ultra Short Duration Fund - Direct - Growth to SBI.

vi) Exclusive charge over FDRs of '' 67 lakhs to SBI.

The Company does not face a significant liquidity risk with regard to its lease liabilities as the company believes that it will able to generate sufficient cash to meet the obligations related to lease liabilities as and when they fall due.

Rental expense recorded for short-term leases and the leases which are under the process of renewal was ''2,511.86 lakhs ((March 31, 2021: 1,202.56 lakhs) for the year ended March 31, 2022.The same has been netted of from rent concession received from landlord (refer note 47).

Rental income on assets given on operating lease to '' 198.52 lakhs( March 31, 2021- ''57.02 lakhs) for the year ended March 31, 2022 which has been adjusted against lease liability during the year ended March 31, 2022.

The Company is in the process of getting the lease deeds registered for 43 leased premises in the name of the Company. The Company has not recognised right to use assets as per Ind AS 116 on these stores. Accordingly, rent paid for these stores have been debited to statement of profit and loss. Out of these 43 stores, for 21 stores stores, the Company has right to operate such store as per Master Franchise Agreement with Arvind Lifestyle Brands Limited (ALBL). The Company believes the delay in execution of MOU or lease agreement is largely due to procedural issues in executing such lease deeds which are beyond control of the Company. It further believes that there is no material liability devolving against the Company in this regard.

45 Pursuant to Asset Transfer Agreement (ATA) dated July 22, 2021 with Arvind Lifestyle Brands Limited ("ALBL"), a wholly owned subsidiary of Arvind Fashion Limited ("AFL") and subsequent agreements dated September 1, 2021, The Company has purchased certain identified Property, plant and equipment and Inventories of ALBL. In addition to this, the Company has paid against security deposit of 73 retail stores and one warehouse to ALBL. The total value of consideration amounts to '' 16,895.10 lakhs (net off recoveries as per the terms of ATA and other agreements as mentioned above, excluding GST). The details of assets so acquired are as follows:

particulars

Amount

Property plant and equipments

5,407.27

Inventories

8,312.37

Security Deposits

3,218.13

Others (Net of adjustments)

(42.67)

Total

16,895.10

The transaction was effective from September 1, 2021 and the assets so acquired have been accounted as asset acquisition. In addition to above, the seller has provided certain assurance to facilitate transfer of lease deeds in favour of the Company, usuability of property, palnt and equipments for agreed period, etc. The Company has accounted all the adjustments identified so far in its books of accounts. The management is confident that there will be no material adjustment to the carrying value of assets so acquired and if any, the same are adequately backed up the terms of agreement as mentioned above.

46 Consequent to uncertainties caused by COVID-19 pandemic, the Company has prepared a cash flow projections and also assessed recoverability and carrying value of its assets comprising property, plant and equipment, intangible assets, right of use assets, investments, inventories and other financial and non-financial assets. It also factored assumptions used in impairment testing of property, plant and equipment using various internal and external information up to the date of approval of these audited financial statements.

Further, the Company has re-assessed valuation and recoverability of inventory. In its assessment the management has considered projected sales, purchase, discounts, promotion schemes, other logistic costs, etc. It has carried out sensitivity analysis and based on the same it is of the view that provision for markdown and shrink is sufficient and appropriate to cover any loss that may arise due to various uncertainties involved.

On the basis of this evaluation and current indicators of future economic conditions, the Company expects to recover the carrying amount of these assets and does not anticipate any impairment to these financial and non-financial assets. The situation may though change giving rise to inherent uncertainty. The Company will continue to closely monitor any material changes required, if any, due to future economic conditions.

47 The Company has elected to apply the practical expedient of not assessing the rent concessions as a lease modification, as per MCA notification dated July 24, 2020 and June 18, 2021 on Ind AS 116 for rent concessions which are granted due to COVID-19 pandemic. Accordingly, it has accounted '' 1,583.79 lakhs which is netted from rent expenses for the year ended March 31, 2022 ('' 1,202.56 lakhs which is netted from rent expenses for the year ended March 31, 2021 and '' 1,573.84 lakhs has been shown as income under head "Other income") on account of unconditional rent concessions confirmed in writing by the landlord.

48 The Code on Social Security, 2020 (‘Code'') 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 and the final rules/interpretation have not yet been issued. 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.

49 The Company had made investment in commercial papers of Infrastructure Leasing &Financial Services (IL&FS) amounting to '' 979.94 lakhs, which were due for redemption on September 18, 2018. The aforesaid amount and interest thereon have, however, not been received as on date. In view of the fact that there was significant uncertainty on recovery of the entire amount, the management had made a provision of full amount '' 979.94 lakhs during the year ended March 31, 2019. The Company, however, continues to monitor developments on this matter and is committed to take steps including further legal actions that may be necessary to ensure full recoverability.

50 OTHER STATUTORY INFORMATION FOR FINANCIAL YEAR ENDED MARCH 31, 2022 AND MARCH 31, 2021:

(i) The Company do not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

(ii) The Company do not have any transactions with companies struck off under Section 248 of the Companies Act, 2013.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,

(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during each financial year.

(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries); or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) 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 Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) The Company do not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income 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.

(viii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.

(ix) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017 from the date of their implementation.

53 The Board of Directors of the Company, in their meeting held on May 25, 2022, recommended a final dividend of ''0.75 per fully paid up equity shares of '' 10 each, aggregating to ''148.12 lakhs for the year ended March 31, 2022, subject to the approval of shareholders at the Annual General Meeting of the Company.

54 The Company was awarded projects under the ‘Deen Dayal Upadhyaya - Grameen Kaushalya Yojana'' (“the Grant”) from various state Government for encouraging youth employment. The Company, has received '' 2,018.09 lakhs (March 31, 2021: ''1,852.84 lakhs) so far under such scheme. The Company has spent '' lakhs 3,404.82 (March 31, 2021: ''2,043.68 lakhs) on the activities as agreed in the terms of such grant and certificate has been obtained by the Company from an independent auditor.

55 The figures for the corresponding previous year have been regrouped/ reclassified, wherever considered necessary including requirements of the amended Schedule III to the Companies Act 2013, to make them comparable with current year classification.


Mar 31, 2018

1. Corporate information

V-Mart Retail Limited (the ‘Company’), incorporated on 24 July 2002, is a public limited company with its equity shares listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India (NSE). The Company retails readymade garments, accessories, etc. and is engaged in the business of ‘Value Retailing’ through the chain of stores situated at various cities in India. The Company is domiciled in India with registered office situated at 610-611, Guru Ram Dass Nagar, Main Market, Opposite SBI Bank, Laxmi Nagar, New Delhi and corporate office situated at Plot No-862, Udyog Vihar Industrial Area, Phase V, Gurugram. The financial statements of the Company for the year ended 31 March 2018 are authorised for issue on 24 May 2018 in accordance with a resolution of the Board of Directors. The revision to financial statements is permitted by the Board of Directors after obtaining necessary approvals or at the instance of regulatory authorities as per provisions of the Companies Act, 2013 (‘the Act’).

2(a) Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standard (‘Ind AS’) and comply with requirements of Ind AS, stipulations contained in Schedule III (revised) as applicable under Section 133 of the Act, the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other pronouncements/ provisions of applicable laws. For all periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with the Accounting Standards notified under the Section 133 of the Act read together with Rule 7 of the Companies (Accounts) Rules 2014 (‘Indian GAAP’). The financial statements for the year ended 31 March 2018 are the first to have been prepared in accordance with Ind AS.

The transition to Ind AS was carried out retrospectively as on the transition date of 01 April 2016. The financial statements contain an opening balance sheet as on 01 April 2016, comparative information for 31 March 2017 presented under Ind AS and reconciliation for key changes for amounts reported under Indian GAAP and Ind AS.

The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:

i. Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments);

ii. Share based payments;

The financial statements of the Company are presented in Indian Rupees (H), which is also its functional currency and all amounts disclosed in the financial statements and notes have been rounded off to the nearest lacs as per the requirement of Schedule III to the Act, unless otherwise stated.

The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:

i. Expected to be realised or intended to sold or consumed in normal operating cycle;

ii. Held primarily for the purpose of trading;

iii. Expected to be realised within twelve months after the reporting period; or

iv Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

i. It is expected to be settled in normal operating cycle

ii. It is held primarily for the purpose of trading

iii. It is due to be settled within twelve months after the reporting period, or

iv There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and its realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.

The financial statements of the Company are presented in Indian Rupees (H), which is also its functional currency and all amounts disclosed in the financial statements and notes have been rounded off to the nearest million as per the requirement of Schedule III to the Act, unless otherwise stated.

2(b) Recent accounting pronouncements

In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018 via notification dated 28 March 2018 to further amend Companies (Indian Accounting Standards) Rules, 2015, notifying a new revenue recognition standard Ind AS 115, ‘Revenue from Contracts with Customer’. This amendment replaces Ind AS 18, ‘Revenue’ and Ind AS 11, ‘Construction Contracts’. Also notifying an insertion of Appendix B, ‘Foreign currency transaction and advance consideration’ to Ind AS 21, ‘The effect of change in foreign exchange rate’, amendment to Ind AS 40, ‘Investment property’ and amendment to Ind AS 12, ‘Income taxes’. The amendments are applicable to the Company from 01 April 2018.

- Notification of Ind AS 115:

The new standard provides a control-based revenue recognition model and provides a five step application principle to be followed for revenue recognition:

a. Identify the contract(s) with a customer;

b. Identify the performance obligations;

c. Determine the transaction price;

d. Allocate the transaction price to the performance obligations;

e. Recognise revenue when or as an entity satisfies performance obligation.

The Company is evaluating the requirements of the amendment and its impact on the financial statements.

- Insertion of Appendix B to Ind AS 21:

This Appendix applies to a foreign currency transaction (or part of it) when an entity recognises a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration before the entity recognises the related asset, expense or income (or part of it). The amendment to Ind AS 21 requires the entities to consider exchange rate on the date of initial recognition of advance consideration (asset/liability), for recognising related expense/income on the settlement of said asset/liability

This Appendix does not apply when an entity measures the related asset, expense or income on initial recognition:

a. At fair value; or

b. At the fair value of the consideration paid or received at a date other than the date of initial recognition of the nonmonetary asset or non-monetary liability arising from advance consideration.

An entity is not required to apply this Appendix to:

a. income taxes; or

b. insurance contracts (including reinsurance contracts) that it issues or reinsurance contracts that it holds.

The Company is evaluating the requirements of the amendment and its impact on the financial statements.

- Amendment to Ind AS 12

The amendment to Ind AS 12 requires the entities to consider restriction in tax laws in sources of taxable profit against which entity may make deductions on reversal of deductible temporary difference (may or may not have arisen from same source) and also consider probable future taxable profit.

The Company is evaluating the requirements of the amendment and its impact on the financial statements.

The deposits are pledged against :

Bank guarantees issued to sales tax and service tax authorities, to Skill development authority (for Deen Dayal Upadhyaya Grameen Kaushalya Yojana) and for cash credit facilities with banks.

*During the year ended 31 March 2018, the Company was awarded a project under the ‘Deen Dayal Upadhyaya - Grameen Kaushalya Yojana’ (‘the Grant’) of the Government for encouraging youth employment. In March 2018, the Company has received the first tranche amounting to RS.463.53 lacs (previous year 31 March 2017: Nil; 1 April 2016: Nil) under the Grant from the Government, subject to terms and conditions stated therein. The Company expects to initiate the activities pre-agreed in the Grant in the subsequent financial year.

(b) Terms/rights attached to equity shares

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

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.

(c) No shares was issued as bonus shares, shares issued for consideration other than cash and shares buy back during the five years immediately preceding the reporting date except 6,606,842 bonus shares issued by capitalisation of free reserves in the year ended 31 March 2013.

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

‘Conquest Business Services Private Limited (‘Conquest’), a Promoter Company, has acquired 74,89,798 (41.38%) equity shares of the Company from the Promoter/Promoter group of the Company on 27 March 2018. The aforementioned equity shares acquired by Conquest were held with IIFL Wealth Management Limited in the brokers settlement account on 31 March 2018 on behalf of Conquest and consequently settled and credited into its demat account on 3 April 2018.

(e) Shares reserved for issue under options

For details of shares reserved for issue under the Employee Stock Option Plan (ESOP) of the Company, refer note 40.

For movements of respective heads, refer to the Statement of Changes in Equity.

Description of nature and purpose of each reserve Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve will be utilised in accordance with provisions of the Act.

Amalgamation reserve

Amalgamation reserve pertain to business combinations which materialised prior to transition date.

Retained earnings

Retained earnings are created from the profit / loss of the Company, as adjusted for distributions to owners, transfers to other reserves, etc.

Share option outstanding account

The reserve is used to recognise the grant date fair value of options issued to employees under employee stock option schemes and is adjusted on exercise/forfeiture of options.

A (i) Fund based credit facility of RS.6,200 Lacs (31 March 2017: RS.6,200 Lacs; 1 April 2016: RS.4,200 Lacs) from State Bank of India comprising vendor financing scheme (VFS) amounting to RS.3,000 Lacs (31 March 2017: RS.3,000 Lacs; 1 April 2016: RS.3,700 Lacs), cash credit (CC) facility of RS.2400 Lacs (31 March 2017: RS.2,400 Lacs; 1 April 2016: RS.500 Lacs) and Standby Letter of Credit (SLC) facility of RS.800 Lacs (31 March 2017: RS.800 Lacs; 1 April 2016: Nil).

These facilities carry an interest for Vendor Financing Scheme (VFS) at 3 months MCLR plus 10 basis points (0.10%) up to 90 days, 6 months MCLR plus 20 basis points (0.20%) for period above 90 days to 180 days and interest rate as applicable to CC account for outstanding more than 180 days and carries an interest rate at 1 year MCLR plus 125 basis point (1.25%) for Cash Credit as on 31 March 2018 which is repayable on demand and for SLC 1% above the applicable CC rate of interest.

The outstanding book balance as on 31 March 2018 for CC account is NIL (31 March 2017: RS.97.38 Lacs; 1 April 2016: RS.246.17 Lacs), for VFS is NIL (31 March 2017: RS.2,948.73 Lacs; 1 April 2016: RS.1,989.91 Lacs) and for SLC is Rs. Nil (31 March 2017: Rs. Nil; 1 April 2016: Rs. Nil).

(ii) During the year, the Company has obtained cash credit facility from Axis Bank Limited comprising RS.200 Lacs (31 March 2017: Nil; 1 April 2016: Nil), this facility carries interest rate at 3 months MCLR plus 110 basis points, 1 month MCLR plus 40 basis points (0.40%) for period up to 90 days, 1 month MCLR plus 60 basis points (0.60%) for period above 90 days to 180 days. The outstanding book balance as on 31 March 2018 for CC account is NIL (31 March 2017: Nil; 1 April 2016: Nil).

(iii) Further during the year, the Company has obtain fund based facility of RS.900 Lacs (31 March 2017: Nil; 1 April 2016: Nil) from ICICI Limited comprising Working Capital Demand Loan (WCDL) amounting to RS.800 Lacs (31 March 2017:Nil and 1 April 2016: Nil) and CC cum WCDL cum FCNR facility of RS.100 Lacs (31 March 2017:Nil and 1 April 2016: Nil), this facility carries an interest for CC account at 6 month MCLR plus 95 basis point (0.95%), 3 months MCLR plus 20 basis points (0.20%) up to 3 months, 6 months MCLR plus 20 basis points (0.20%) for period above 3 months to 6 months and 1 year MCLR plus 20 basis points (0.20%) for period greater than 6 months.

The outstanding book balance as on 31 March 2018 for CC account is a debit balance disclosed in note 10 (31 March 2017: Nil; 1 April 2016: Nil), for CC cum WCDL cum FCNR account is Nil (31 March 2017: Nil; 1 April 2016: Nil).

These facilities are secured by way of :

a. Primary - Exclusive first charge on stocks of raw material, stocks in process, finished goods, including goods in transit, all present and future book debts / receivables and other current assets of the Company

b. Collateral -

(a) Exclusive charge on all the present and future fixed assets of the Company excluding vehicle and assets financed by other banks under financial lease and term loan.

(b) Equitable mortgage of residential property situated at Apartment No. BPB081, 8th floor, Wing No. PBO- 33 & 34, Belvedere Park, Phase II & III, DLF City, Gurgaon measuring super area 1,714 sq. feet in the name of Mr. Lalit Agarwal, Mr. Madan Gopal Agarwal and Ms. Sangeeta Agarwal.

(c) Lien on Mutual funds (in the name of the Company) of RS.424.15 lacs and market value: RS.556.56 lacs as of the date on which the facility was obtained.

Further, personal guarantees have been given by Mr. Lalit Agarwal (Managing director), Mr. Madan Gopal Agarwal (Director) and Mr. Sangeeta Agarwal (Wife of Mr. Lalit Agarwal).

B The Company has surrendered Overdraft facility/Short term loan sanctioned by HDFC Bank Limited of RS.589.75 lacs on 08 July 2016. The Company has received ‘No Dues Certificate’ from HDFC Bank Limited on 11 July 2016. The outstanding balance as on 31 March 2018 is of Rs. Nil (31 March 2017: Rs. Nil; 1 April 2016: RS.104.06 lacs).

C Fund based cash credit facility of RS.875.88 lacs (31 March 2017: RS.875.88 lacs; 1 April 2016: RS.1,284.92 lacs) from Deutsche Bank AG carries an interest at the rate MIBOR plus 1.5% or Deutsche Bank base rate (9.20%) whichever is higher as on 31 March 2018 and is repayable on demand. The outstanding book balance as on 31 March 2018 is of Nil (31 March 2017: RS.440.93 lacs; 1 April 2016: RS.350.99 lacs)

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

3 (a) Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Retailer Association of India (the Company being a member of such Association) has challenged the said levy and, inter-alia, its retrospective application. The Hon’ble Supreme Court has issued an interim order dated 14 October 2011, directing the members of the Association to deposit 50% of the arrears of service tax due upto 30 September 2011 and the balance, if any, at the time of final disposal of the appeal. The amount of service tax on rent in respect of rented stores from 1 June 2007 till 30 September 2011 amounted to RS.108.26 lacs of which RS.77.93 lacs has been provided for in the Statement of Profit and Loss till 31 March 2017 and the balance RS.30.33 lacs has been disclosed as contingent liability.

As per directions of the Hon’ble Supreme Court, the Company, has deposited RS.3769 lacs under protest with the concerned authorities and has disclosed this balance as ‘Service tax deposited under protest” under other non-current assets.

3 (b) The Payment of Bonus (Amendment) Act, 2015 dated 31 December 2015 (which was made effective from 1 April 2014) revised the thresholds for coverage of employees eligible for bonus and also enhanced the ceiling limits for computation of bonus. However, taking cognisance of the stay granted by Hon’ble High Courts of Kerala (Ernakulam), Karnataka (Bengaluru), Uttar Pradesh (Allahabad) and Madhya Pradesh (Indore) and pending disposal of such matter, the Company, in accordance with the Payment of Bonus (Amendment) Act, 2015, has only recognised an additional expense of RS.213.81 lacs for the period 1 April 2015 to 31 March 2016 during previous year ended 31 March 2016 and has not recognised the differential amount of bonus of RS.107.61 lacs for the period 1 April 2014 to 31 March 2015.

Level 1: Level 1 heirarchy includes financial instruments measured using quoted prices. This includes listed traded mutual funds that have quoted price. The mutual funds are reported using the closing NAV

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximises the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

(ii) Specific valuation techniques used to value financial instruments include the use of qouted market prices and NAV of the instrument.

(iii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amount of trade receivables, trade payables, capital creditors, borrowing, employee payables and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.

The fair values for security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value heirarchy due to the inclusion of unobservable inputs including counterpaty credit risk.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

4. Financial Instruments

A. Capital Risk Management

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

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

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018 and 31 March 2017.

B. Financial Risk Management

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

B.1 Market risk :

Market Risk is the risk that changes in market place could affect the future cash flows to the Company. The market risk for the Company arises primarily from interest rate risk and product price risk.

i) Interest risk: The Company is exposed to interest rate risk primarily due to borrowings having floating interest rates. The Company uses available working capital limits for availing short term cash credits. The Company mitigates the same through efficient use of working capital limits and regular monitoring of Interest Coverage ratio. The Company is not exposed to significant interest rate risk as at the respective reporting dates.

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

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.

The table below summarises the maturity profile (remaining period of contractual maturity at the balance sheet date) of the Company’s financial liabilities based on contractual undiscounted cash flows :-

B.2 Credit risk

i) Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivables. Individual risk limits are also set accordingly

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Company compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The Company considers reasonable and supportive forward-looking information.

ii) Concentration of financial assets

The Company’s principal business activities are of retailing in consumer care and food products. All financial assets pertain to the retail business.

(e) Risk exposure

Through its defined benefit plans, the company is exposed to a number of risks, the most significant of which are detailed below:

Interest rate risk: The plan exposes the Company to the risk off all in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Liquidity risk: This is the risk that the Company is not able to meet the short-term gratuity pay-outs. This may arise due to non availability of enough cash/ cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Salary escalation risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability

Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Detailed information to the extent provided by the actuary in the actuarial certificate has been included in the disclosure given above.

5. Share Based Payments Employee Stock Options (ESOP)

The Company has implemented an Employee Stock Option Scheme, which was approved by the Board of Directors and the shareholders vide resolution dated 02 July 2012 and 10 July 2012 respectively (‘the V-Mart ESOP Scheme 2012’ or the ‘Scheme’), consequent to which 300,000 equity shares with a nominal value of RS.10 each will be granted upon exercise of as stock options (ESOPs) to eligible employees. The exercise price of these options will be determined by the Remuneration Committee and the options will vest over a period of 12 months to 36 months of continued employment from the grant date.

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

6. Lease Commitments

A. Non-cancellable operating leases

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

The minimum lease payments over the lease term are as under:

Collateral against borrowings

The company has pledged financial instruments as collateral against a number of its borrowings. Refer to Note 44 for further information on financial and non-financial collateral pledged as security against borrowings.

7. Operating Segments

In the opinion of the management, there is only one reporting segment ‘Retail Sales’ as envisaged by Ind As 108 ‘Operating Segments’. The Company is operating only in India and there is no other significant geographical segment.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company

8. During the year, few cases of misappropriation of inventory involving employees at certain stores was identified by the management, the impact of which is included under the consumption of stock-in -trade. Such stock write off of RS.1,597.38 lacs (previous year RS.1,449.46 lacs) includes write offs on account of damaged inventory shrinkages in transit and misappropriation of inventory by employees, among others. Whilst it is not possible to quantify the impact owing to such misappropriation, management believes that the impact thereof is not material to the financial statements. Further, the management has taken steps to reduce such instance which have yield positive results.

Further, during the current year, a robbery incident occured at Sarsaram, i.e., one of stores of the Company. During the robbery gunman looted cash and clothes from the said store worth RS.13.80 lacs. The Company has filed an FIR with the police for such robbery and basis the initial police investigation, the suspicion of planning the entire robbery primarily is on two of the employees of the Company Based on such preliminary investigation, the management has suspended both the employees.

9. Corporate social responsibility

In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms with the provisions of the said Act, the Company was to spend a sum of RS.10783 lacs towards CSR activities during the year ended 31 March 2018. The detail of amount spent is as follows:

10. First time adoption of Ind AS Explanations of transition to Ind AS

As stated in note 2, these are the Company’s first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act (‘Previous GAAP’).

The accounting policies set out in note 2 have been applied in preparing these financial statements for the year ended 31 March 2018, including for the comparative information presented in these financial statements for the year ended 31 March 2017 and the opening Ind AS balance sheet as on the date of transition, i.e., 1 April 2016.

In preparing its Ind AS balance sheet as at 1 April 2016 and presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with the previous GAAP This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows.

A. Ind AS Optional exemptions and mandatory exceptions

In preparing these financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions:-

a) Optional exemptions availed

1. Fair valuation of property plant and equipment, and intangible assets

As per Ind AS 101 an entity may elect to:

(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date.

(ii) use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation was, at the date of the revaluation, broadly comparable to:

- fair value;

- or cost or depreciated cost under Ind AS adjusted to reflect, for example, changes in a general or specific price index.

The elections under (i) and (ii) above are also available for intangible assets that meets the recognition criteria in Ind AS 38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).

(iii) use carrying values of property, plant and equipment, intangible assets and investment properties as on the date of transition to Ind AS (which are measured in accordance with previous GAAP) if there has been no change in its functional currency on the date of transition.

As permitted by Ind AS 101, the Company has elected to measure the items of property, plant and equipment and intangible assets, at the date of transition at its fair value and use that fair value as its deemed cost at that date.

2. Lease arrangements

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. Accordingly, the Company has elected to assess all the contracts existing at the date of transition to Ind AS.

3. Share based payments

Ind AS 102 Share based payments requires an entity to record the options on their fair value instead of intrinsic value. Ind AS 101 permits a first time adopter to ignore such requirement for the options already vested as on transition date. The Company has elected to apply this exemption for such vested options.

4. Business combination

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

b) Mandatory exceptions

1. Estimates

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP The Company made estimates for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

2. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that existed on the date of transition.

C. Notes to first-time adoption

1. Fair valuation of investments

Under the previous GAAP, long-term investments were carried at cost less provision for permanent decline in the value of such investments. Current investments were carried at lower of cost and market value. The Company has made investments in certain mutual funds such as FMPs, Debt funds, Short term funds etc. Under Ind AS, these investments are measured at fair value through profit and loss (FVTPL). The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently, in the profit or loss.

2. Proposed dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend included under provisions has been reversed with corresponding adjustment to retained earnings.

3. Remeasurements of post-employment benefit obligations

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

4. Security deposits

Under the previous GAAP, rent expenses including rent escalations and rent free period were recorded on a straight-line basis over the lease term. However,Ind-AS 17 permits the Company to ignore straight-lining of rent expense in case escalation reflects expected inflationary cost increases. Accordingly, the Company has reversed the lease equalisation reserve to the extent it pertains to rent escalations since it considers increases in rent largely to be consistent with the inflation rate.

5. Lease equalization reserve

Under the previous GAAP, rent expenses including rent escalations and rent free period were recorded on a straight-line basis over the lease term. However, Ind-AS 17 permits the Company to ignore straight-lining of rent expense in case escalation reflects expected inflationary cost increases. Accordingly, the Company has reversed the lease equalisation reserve to the extent it pertains to rent escalations since it considers increases in rent largely to be consistent with the inflation rate.

6. Fair valuation of ESOP

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

7. Fair valuation of Property, Plant and Equipment

Under the previous GAAP, fixed assets were carried at historical cost less accumulated depreciation. Under Ind AS, the Company has elected to measure the items of property, plant and equipment and intangible assets, at the date of transition at its fair value and use that fair value as its deemed cost at that date.


Mar 31, 2017

1. Corporate information

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

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with previous year except for the change in accounting policy for dividend as explained in Note 2.1 (r), which does not impact the net profit for the year. Had the Company followed the earlier policy, the reserves and surplus of the Company would have been lower by RS.271.83 lacs (comprising dividend of RS.225.85 lacs and dividend distribution tax of RS.45.98 lacs) and short term provision would have been higher by RS.271.83 lacs.

a) Reconciliation of equity shares outstanding at the beginning and at the end of the reporting period

b) Terms/rights attached to equity shares

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

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.

c) Aggregate number of bonus shares issued, shares issued for consideration other than cash during the five years immediately preceding the reporting date:

d) Details of equity shareholders holding more than 5% shares in the Company as at 31 March 2017

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

e) Shares reserved for issue under options

For details of shares reserved for issue under the Employee Stock Option Plan (ESOP) of the Company, refer note 43.

3. Reserves and surplus

* The Board of Directors of the Company, in their meeting held on 27 May 2016, had recommended a final dividend of RS.0.10 per fully paid up equity share of RS.10 each, aggregating to RS.21.74 lacs, including dividend distribution tax for the year ended 31 March 2016, subject to the approval of shareholders at the ensuing Annual General Meeting of the Company.

# The Board of Directors of the Company, in their meeting held on 17 March 2016, had declared interim dividend of RS.1.15 per fully paid up equity share of RS.10 each, aggregating to RS.250.06 lacs, including dividend distribution tax for the year ended 31 March 2016.

** Represents final adjustments in proposed dividend in respect of year ended 31 March 2015 pursuant to changes in number of equity shares till the date of payment.

Note 3A : The Board of Directors of the Company in their meeting held on 03 May 2017 has recommended a final dividend of RS.1.25 per fully paid up equity share of RS.10 each, aggregating to RS.225.85 lacs for the year ended 31 March 2017, subject to the approval of shareholders at the ensuing Annual General Meeting of the Company.

^ For details on Employee Stock Option Plan 2012 (“ESOP”) of the Company, refer note 43.

(1) Fund based credit facility of RS.6,200 lacs (previous year RS.4,200 lacs) from State Bank of India comprising vendor financing scheme (VFS) amounting to RS.3000 lacs (previous year: RS.3700 lacs), cash credit (CC) facility of RS.2400 lacs (previous year: RS.500 lacs) and Standby Letter of Credit (SLC) facility of RS.800 lacs (previous year: Nil).

These faciities carry an interest for Vendor Financing Scheme (VFS) at 3 months MCLR plus 10 basis points (0.10%) upto 90 days, 6 months MCLR plus 20 basis points (0.20%) for period above 90 days to 180 days and interest rate as applicable to CC account for outstanding more than 180 days and carries an interest rate at 1 year MCLR plus 125 basis point (1.25%) for Cash Credit as on 31 March 2017 which is repayable on demand and for SLC 1% above the applicable CC rate of interest.

Out of the total limit of RS.6,200 lacs, RS.3,000 lacs is towards VFS, RS.2,400 lacs is towards CC account and RS.8,00 lacs is towards SLC. The outstanding book balance as on 31 March 2017 for CC account is RS.97.38 lacs (previous year RS.246.17 lacs), for VFS is RS.2,948.73 lacs (previous year RS.1,989.91 lacs) and for SLC is Rs.Nil (previous year Rs.Nil).

These facilities are secured by way of :-

a. Primary - Exclusive first charge on stocks of raw material, stocks in process, finished goods, including goods in transit, all present and future book debts / receivables and other current assets of the Company.

b. Collateral -

(a) Exclusive charge on all the present and future property, plant and equipment of the Company excluding vehicle and assets financed by other banks under financial lease and term loan.

(b) Equitable mortgage of residential property situated at Apartment No. BPB081, 8th floor, Wing No. PBO-33 & 34, Belvedere Park, Phase II & III, DLF City, Gurgaon measuring super area 1,714 sq. feet in the name of Mr. Lalit Agarwal, Mr. Madan Gopal Agarwal and Mrs. Sangeeta Agarwal.

(c) Lien on Mutual funds (in the name of the Company) of RS.424.15 lacs. (Market value: RS.556.56 lacs).

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

(2) The Company has surrendered Overdraft facility/Short term loan sanctioned by HDFC Bank Limited of RS.589.75 lacs on 08 July 2016. The Company has received “No Dues Certificate” from HDFC Bank Limited on 11 July 2016. The outstanding balance as on 31 March 2017 is of RS.NIL (previous year - balance of RS.1 04.06 lacs).

(3) Fund based cash credit facility of RS.875.88 lacs (previous year - RS.1,284.92 lacs) from Deutsche Bank AG carries an interest at the rate MIBOR plus 1.5% or Deutsche Bank base rate (9.20%) whichever is higher as on 31 March 2017 and is repayable on demand. The outstanding book balance as on 31 March 2017 is of RS.440.93 lacs (previous year - RS.350.99 lacs)

These facilities are secured by way of :-

Approved Mutual fund in the name of the Company. The Company has pledged mutual fund amounting to RS.875.88 lacs (previous year RS.1,250.00 lacs).

4. Trade payables

A. Total outstanding dues of Micro Enterprises and Small Enterprises

Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act):

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

B. Total outstanding dues of creditors other than Micro Enterprises and Small Enterprises

5. a) Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Retailer Association of India (the Company being a member of such Association) has challenged the said levy and, inter-alia, its retrospective application. The Hon’ble Supreme Court has issued an interim order dated 14 October 2011, directing the members of the Association to deposit 50% of the arrears of service tax due upto 30 September 2011 and the balance, if any, at the time of final disposal of the appeal. The amount of service tax on rent in respect of rented stores from 1 June 2007 till 30 September 2011 amounted to RS.108.26 lacs of which RS.77.93 lacs has been provided for in the Statement of Profit and Loss till 31 March 2017 and the balance RS.30.33 lacs has been disclosed as contingent liability.

As per directions of the Hon’ble Supreme Court, the Company, has deposited RS.37.69 lacs under protest with the concerned authorities and has disclosed this balance as “Service tax paid under protest” under Long term loans and advances.

(b) The Payment of Bonus (Amendment) Act, 2015 dated 31 December 2015 (which was made effective from 1 April 2014) revised the thresholds for coverage of employees eligible for bonus and also enhanced the ceiling limits for computation of bonus. However, taking cognizance of the stay granted by Hon’ble High Courts of Kerala (Ernakulam), Karnataka (Bengaluru), Uttar Pradesh (Allahabad) and Madhya Pradesh (Indore) and pending disposal of such matter, the Company, in accordance with the Payment of Bonus (Amendment) Act, 2015, has only recognized an additional expense of RS.213.81 lacs for the period 1 April 2015 to 31 March 2016 during previous year ended 31 March 2016 and has not recognised the differential amount of bonus RS.107.61 lacs for the period 1 April 2014 to 31 March 2015.

6. Related party disclosures

a) Relationship

I. Key Managerial Personnel

Mr. Lalit Agarwal Managing Director

Mr. Madan Gopal Agarwal Whole-time Director

II. Relatives of Key Managerial Personnel

Mrs. Sangeeta Agarwal Wife of Mr. Lalit Agarwal

Mr. Hemant Agarwal Brother of Mr. Lalit Agarwal and Non - Executive Director

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

Mrs. Uma Devi Agarwal Wife of Mr. Madan Gopal Agarwal and Mother of Mr. Lalit Agarwal

and Mr. Hemant Agarwal Mr. Snehal Shah Son-in-law of Mr. Madan Gopal Agarwal

Ms. Sunita Shah Sister of Mr. Lalit Agarwal

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

Lalit M Agarwal (HUF) HUF in which Mr. Lalit Agarwal is Karta

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

Wesbok Lifestyle Private Limited Company owned by Mr. Hemant Agarwal

Personal guarantees have been given by Mr. Lalit Agarwal, Mr. Madan Gopal Agarwal and Mrs. Sangeeta Agarwal towards fund based credit facility of RS.6,200 lacs (previous year: RS.4,200 lacs) which include vendor financing scheme (VFS) of RS.3,000 lacs, cash credit (CC) facility of RS.2,400 lacs and SLC (Standby Letter of Credit) of RS.800 lacs. The outstanding book balance as on 31 March 2017 for CC account is RS.97.38 lacs (previous year: RS.246.17 lacs) and for VFS is RS.2,948.73 lacs (previous year: RS.1,989.91 lacs) and for SLC is Rs.Nil (previous year: Rs.Nil).

7. Segment reporting

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

8. Leases

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

Operating lease

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

9. Employee stock option plan

The Company has implemented an Employee Stock Option Scheme, which was approved by the Board of Directors and the shareholders vide resolution dated 02 July 2012 and 10 July 2012 respectively (‘the V-Mart ESOP Scheme 2012’ or the “Scheme”), consequent to which 300,000 equity shares with a nominal value of RS.10 each will be granted upon exercise of as stock options (ESOPs) to eligible employees. The exercise price of these options will be determined by the Remuneration Committee and the options will vest over a period of 12 months to 36 months of continued employment from the grant date.

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

An amount of RS.7.02 lacs (previous year RS.10.52 lacs) has been provided as employee benefits expense, as the proportionate cost of 108,570 (previous year: 35,995) number of options granted, using the intrinsic value of the stock options measured by a difference between the fair value of the underlying equity shares at the grant date and the exercise price.

On 04 May 2015, 03 August 2015, 09 February 2016 and 05 August 2016, the Company has allotted 14,237 equity shares, 24,687 equity shares, 12,083 equity shares and 1,464 equity shares of face value of RS.10 each respectively, at a weighted average price of RS.150 per share, to the eligible employees of the Company on account of exercise of vested stock options.

(b) Pro forma Accounting for Stock Option Grants:

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

(c) The fair value of the options was estimated on the date of grant using the Black-Scholes model with the following significant assumptions:

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

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

During the year ended 31 March 2013, the Company allotted 1,250,000 equity shares to the Pre- IPO investors at an issue price of RS.210 per equity share (including a premium of RS.200 per equity share) aggregating to RS.2,625 lacs and also completed its IPO of 4,496,000 equity shares of RS.10 each for cash at a price of RS.210 per equity share (including a premium of RS.200 per equity share) aggregating to RS.9,441.60 lacs. The issue comprised a fresh issue of 2,761,000 equity shares by the Company and an offer for sale of 1,735,000 equity shares by Naman Finance and Investment Private Limited. The Company’s equity shares have been listed on both BSE Limited and the National Stock Exchange of India Limited on 20 February 2013.

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

12. In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms with the provisions of the said Act, the Company was to spend a sum of RS.88.92 lacs towards CSR activities during the year ended 31 March 2017. The detail of amount spent is as follows:-

13. During the year, a few cases of misappropriation of inventory involving employees at certain stores was identified by the management, the impact of which is included in “Stocks written off” disclosed under “Purchase of stock-in-trade” under Note 26 to the financial statements. Such stock write-offs of RS.1,449.46 lacs (previous year RS.1,570.63 lacs) includes write offs aggregating RS.706.24 lacs (previous year RS.880.31 lacs) (approx.) on account of damaged inventory and the balance write off includes, inter-alia, the impact of shrinkages in transit and misappropriation of inventory by employees, among others. Whilst it is not possible to quantify the impact owing to such misappropriation, management believes that the impact thereof is not material to the financial statements. Further, the management has taken steps to reduce such instances which have yield positive results.

Further, the management has identified an instance of misappropriation of Company’s inventory, wherein certain inappropriate credit notes aggregating to RS.17.33 lacs (approx.) had been recorded by certain employees at a store. The Company had initiated the necessary legal action against these employees who have since left the Company and is yet to recover such amounts from them. The impact of this has been expensed off in the Statement of Profit and Loss in “Stocks written off” under Note 26 to the financial statements.

14. Disclosure in respect of Specified Bank Notes* (“SBN”) as notified by the Ministry of Corporate Affairs vide notification no. G.S.R. 308 (E) dated 30 March 2017

15. Previous year comparative information has been reclassified, wherever considered necessary, to conform to this year’s classification.

This is the summary of significant accounting policies and other explanatory information referred to in our report of even date


Mar 31, 2016

b) Terms/rights attached to equity shares

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

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

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

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

e) Shares reserved for issue under options

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

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

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

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

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

These facilities are secured by way of :-

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

b. Collateral -

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

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

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

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

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

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

This facility is secured by the way :

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

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

This facility is secured by the way :

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

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

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

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

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

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

12A. Tangible assets (contd.)

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

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

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

12B. Capital work-in-progress

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

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

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

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

5. Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Retailer Association of India (Company being a member of such association) has challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has passed an interim order dated 14 October 2011, directing the members to deposit 50% of the arrears of service tax due up to 30 September 2011 and the balance if any at the time of final disposal of appeal. The amount of service tax on rent in respect of rented stores from 1 June 2007 till 30 September 2011 was H10,825,938 of which H7,793,204 has been provided for in the Statement of Profit and Loss till 31 March 2012 and the balance H3,032,733 has been classified as contingent liability.

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

6. Related party disclosures

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

I. Key Managerial Personnel

Lalit Agarwal Managing Director

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

MadanGopal Agarwal Whole-time Director

II. Relatives of Key Managerial Personnel

Sangeeta Agarwal Wife of Lalit Agarwal

Hemant Agarwal Brother of Lalit Agarwal and Non - Executive Director

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

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

Snehal Shah Son-in-law of Madan Gopal Agarwal

Smiti Agarwal Wife of Hemant Agarwal

Sunita Shah Sister of Lalit and Hemant Agarwal

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

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

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

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

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

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

7. Segment reporting

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

8. Leases

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

Operating lease

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

9. Employee stock option plan

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

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

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

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

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

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

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

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

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

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

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


Mar 31, 2015

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

31 March 2015 31 March 2014

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

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

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

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

31 March 2015 31 March 2014

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

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

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

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

Other litigations 497,000 497,000

14,017,337 10,495,557

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

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

2. Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Retailer Association of India (Company being a member of such association) has challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has passed an interim order dated 14 October 2011, directing the members to deposit 50% of the arrears of service tax due up to 30 September 2011 and the balance if any at the time of final disposal of appeal. The amount of service tax on rent in respect of rented stores from 1 June 2007 till 30 September 2011 was Rs.10,825,938 of which Rs.7,793,204 has been provided for in the Statement of Profit and Loss till 31 March 2012 and the balance Rs.3,032,733 has been classified as contingent liability.

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

3. Segment Reporting

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

4. Leases

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

Operating lease

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

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

5. Employee Stock Option Plan

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

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

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

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

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

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

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

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

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

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


Mar 31, 2014

1. CORPORATE INFORMATION

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

2. BASIS OF PREPARATION

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

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

3. USE OF ESTIMATES

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

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

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

These facilities are secured by way of

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

b. Collateral -

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

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

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

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

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

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

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

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

This facility is secured by way of

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

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

This facility is secured by way of

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

5. CONTIGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

2014 2013

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

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

Service tax on rent payable based on

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

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

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

Total 13,084,419 7,494,392

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

7. Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Retailer Association of India (Company being a member of such association) has challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has passed an interim order dated 14 October 2011, directing the members to deposit 50% of the arrears of service tax due up to 30 September 2011 and the balance if any at the time of final disposal of appeal. The amount of service tax on rent in respect of stores from 1 June 2007 till 30 September 2011 was Rs.10,825,629 of which Rs.7,792,896 has been provided for in the Statement of Profit and Loss till 31 March 2012 and the balance Rs.3,032,733 has been classified as contingent liability.

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

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

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


Mar 31, 2013

1. Corporate information

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

2. Basis of preparation

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

3. Use of estimates

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

4. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

(Amount in Rs.)

As at As at 31 March 2013 31 March 2012

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

Claims against the Company not acknowledged as debts 497,000

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

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

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

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

Total 9,148,743 18,107,100

6. RELATED PARTY DISCLOSURES

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

I. Company having significant influence over the company

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

II. key Managerial Personnel

Lalit Agarwal Managing Director

Madan Gopal Agarwal Director

Hemant Agarwal Director

III. Relatives of key Managerial Personnel

Sangeeta Agarwal Wife of Lalit Agarwal

Smiti Agarwal Wife of Hemant Agarwal

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

Sunita Shah Sister of Lalit and Hemant Agarwal

IV. Entities owned by the key managerial personnel

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

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

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

7. SEGMENT REPORTING

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

8. Leases

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

Operating lease

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

9. V-MART ESOP SCHEME 2012

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

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

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

b) Pro forma Accounting for Stock Option Grants

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

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

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

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

12. Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Retailer Association of India (Company being a member of such association) has challenged the said levy and, inter-alia, its retrospective application. The Hon''ble Supreme Court has passed an interim order dated 14 October 2011, directing the members to deposit 50% of the arrears of service tax due upto 30 September 2011 and the balance if any at the time of final disposal of appeal. The amount of service tax on rent in respect of stores from 1 June 2007 till 30 September 2011 was Rs.10,825,629 of which Rs.7,792,896 has been provided for in the Statement of Profit and Loss till 31 March 2012 and the balance Rs.3,032,733 has been classified as contingent liability.

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

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

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

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