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Notes to Accounts of V2 Retail Ltd.

Mar 31, 2018

1. Corporate Information

i) V2 Retail Limited formerly known as Vishal Retail Limited (the Company) is a public Company domiciled in India and incorporated under the provisions of Companies Act, 1956. The Company’s ethos stands for “value and variety” and remains focused on selling quality fashion garments for significant lower prices targeting the very core of the nation. With currently 49 stores under its umbrella out of which 4 in Delhi-NCR, 13 in Bihar, 13 in Uttar Pradesh, 3 in Odisha, Assam and Jamshedpur, 2 each in Uttarakhand and West Bengal, 1 each in Karnataka, Himachal Pradesh, Arunachal Pradesh, Madhya Pradesh, Jammu and Kashmir and Tripura. It has been successfully serving the Indian retail market for more than 25 years

ii) 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 or revalued amount:

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

- Defined benefit plans - plan assets measured at fair value.

- Assets held for sale - measured at fair value less cost to sell.

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

iii) Use of estimates

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

*Represents deemed cost on the date of transition to Ind AS. Gross block and accumulated depreciation from the previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets.

i. Contractual obligations

Refer note 38 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

ii. Capitalised borrowing cost

The Company has not capiatlised any borrowing costs during the year ended 31 March 2018, 31 March 2017 and 1 April 2016.

* Represents deemed cost on the date of transition to Ind AS. Gross block and accumulated depreciation from the previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets.

(i) No trade or other receivables are due from director or other officers of the Company either severally or jointly with any other person. Further, no loans are due from firms or private companies respectively in which any director is partner, director or a member.

(ii) The carrying values of trade receivables are considered to be a reasonable approximation of fair value.

Refer note 45 on Financial instruments for disclosure of fair values in respect of financial assets measured at amortised cost and assessment of expected credit losses.

The carrying values are considered to be a reasonable approximation of fair value.

Refer note 45 on Financial instruments for disclosure of fair values in respect of financial assets measured at amortised cost and assessment of expected credit losses.

(b) Terms/rights attached to equity shares/warrants

The Company has only one class of equity shares having par value of RS.10 per share. Each holder of equity shares is entited to one vote per share. The company declares and pays dividend in Indian rupees. The Board of Directors of the Company has not declared any dividend during the reporting period.

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.

During the year ended 31 March 2017, the Company has made preferential allotment of 4,000,000 equity shares @ RS.75 (including share premium @ RS.65 per equity share) each to Promoters and Non-promoter group on 22 November 2016 and the Company has allotted 1,000,000 Convertible warrants @ RS.75 each at Ricon Commodities Private Limited (promoter group) on 22 November 2016. Further, the Company has made allotment of 2,035,065 equity shares @ RS.79.85 (including share premium @ RS.69.85 per equity share) each to Bennett Coleman and Company Limited (BCCL) non-promoter on 7 January 2017 pursuant to conversion of warrants by Bennett Coleman and Company Limited.

During the year ended 31 March 2018, the Company has made allotment of 2,000,000 equity shares @ RS.380 (including share premium @ RS.10 per equity share) each to India 2020 Fund II, Limited non-promoter on 16 October 2017 and the Company has made allotment of 1,000,000 equity shares @ RS.75 (including share premium @ RS.10 per equity share) each to Ricon Commodities Private Limited (promoter group) on 16 October 2017 pursuant to conversion of warrants by Ricon Commodities Private Limited.

Nature and purpose of other reserves Securities premium account:

Securities premium account represents premium received on issue of shares. The balance in securities premium account is utilized in accordance with the provisions of the Companies Act, 2013.

Capital reserve:

This reserve represents the excess of net assets taken, over the cost of consideration paid at the time of amalgamation done previously. This reserve is not available for the distribution to the shareholders.

Share options outstanding amount:

The account is used to recognize the grant date value of options issued to employees under Employee stock option plan. Other comprehensive income (OCI) reserve:

The Company has recognized remeasurements benefits on defined benefits plans through other comprehensive income.

Note (a): The Company restructured its business in the financial year 2010-11 resulting in creation of Capital Reserve amounting to RS.60,523.24 lakhs. The aforementioned reserve has been reconciled except for RS.365.36 lakhs which the Company is in the process of reconciling. However, the management belives that there is no impact of same on statement of profit and loss.

*Inter-corporate deposits (ICD’s)

The Company has taken unsecured borrowings from various Companies. These ICD’s carry interest rate of 12%- 15% p.a. These deposits are repayable on demand.

Refer note 45 on financial instruments for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

The carrying values of above are considered to be a reasonable approximation of their fair value.

Refer note 45 on financial instruments for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

*State Bank of India & Pegasus Assets Reconstruction Private Limited

There is no outstanding loan from State Bank of India, the charges mentioned herein below are to be removed from Ministry of Company Affairs (MCA).

The loan originally taken from HSBC Bank Limited was assigned to Pegasus Assets Reconstruction Private Limited and the term loan was repaid during the financial year ended 31 March 2017.

The Company, vide proposal for settlement of term loan dated 30 June 2016 from Pegasus Assets Reconstruction Private Limited (One of the lenders) had agreed for one time settlement of its loan including interest of RS.4250 lakhs along with interest at 12% per annum on monthly rests to be paid till 30 November 2016.

During the year ended 31 March 2017, the Company has settled the outstanding amount of loan including interest with Pegasus Assets Reconstruction Private Limited and has reversed the excess interest amounting to RS.1,512.69 lakhs (as an exceptional item) in its financial statements.

These loans were secured by first charge in paripassu basis on all the movable and immovable assets of the Company as on the transfer date.

These loans were also secured by way of first paripassu equitable mortgage of property in the name of Vishal Water World Private Limited situated at Kouchapukur, PO Hatgachia, Parganas (West Bengal).

These loans were further secured by way of first paripassu equitable mortgage of property in the name of VRL situated at Krishna Nagar Village, Taluqhubli, District Dharwad.

These loans were further secured by way of first paripassu equitable mortgage of property in the name of VRL situated at PJE Plaza, deg No.77-78, 81, 82, Khasra B No. 655-11-5-12, Mauza-Kyenjara, VIP Road, Kolkata and same including Ground Floor has been sold in lieu of term loan payment of Pegasus Assets Reconstruction Private Limited during the financial year ended 31 March 2017.

There loans were also secured by Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. Uma Agarwal, Corporate Guarantee of Vishal Water World Private Limited and pledge of 100% of existing promoters shareholding in the Company or 51% of the Company’s paid up capital whichever is lower.

Refer note 45 on financial instruments for disclosure of fair values in respect of financial liabilities measured at amortised cost and analysis of their maturity profiles.

a. The Company has sold its investment properties and recorded profit of RS.818.75 lakhs as gain on sale of non-current investments.

b. During the year ended 31 March 2017, the Company settled the outstanding amount of loan including the interest with Pegasus Assets Reconstruction Private Limited and has reversed the interest liability

*An amount of RS.818.75 lakhs towards profit on sale of property.

**RS.1,512.69 lakhs interest written back towards one time settlement of interest bearing loan @ 12% p.a. instead of earlier agreed rate of 16% per annum.

Note 1. CSR Expenditure

For recogization, measurement, presentation and disclosure of expenditure on activities related to CSR activities, the company has adopted the prescribed under Guidance note on “Accounting for expenditure on CSR activities”. Issue by ICAI on 15th May 2015. The said guidance note clearly states that no provision for the amount which is not spent for the purpose of CSR (i) in case there is shortfall in spending on CSR activates below the prescribed threshold) is required to be made in the books of accounts (except where the company has incurred a contractual liability in such regard).

*Diluted earnings per share

The calculation of diluted earnings per share has been based on the following profit attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

(C) The Company has certain cases/disputes aggregating to RS.2,025.37 lakhs involving customers, vendors and exemployees. Whilst the impact of these litigations on these financial statements can only be ascertained on the settlement of such cases/disputes, management has broadly assessed that based on the merits of such cases, the Company has reasonably good chances on succeeding and accordingly, no provision has been recognised in these financial statements.

(D) The Company has certain litigations related to Sales tax and Values added tax (VAT) pending under Rajasthan Value Added Tax Act, 2003 aggregating to RS.492.83 lakhs and The Uttar Pradesh Value Added Tax Act, 2008 aggregating to RS.24.45 lakhs. Whilst the impact of these litigations on these financial statements can only be ascertained on the settlement of such cases/disputes, management has broadly assessed that based on the merits of such cases, the Company has reasonably good chances on succeeding and accordingly, no provision has been recognised in these financial statements.

(E) The Company has one litigation related to Service tax pending under Finance Act, 1994 aggregating to RS.302.08 lakhs. Whilst the impact of these litigations on these financial statements can only be ascertained on the settlement of such cases/disputes, management has broadly assessed that based on the merits of such cases, the Company has reasonably good chances on succeeding and accordingly, no provision has been recognised in these financial statements.

Note 2. Segment information

In accordance with Ind AS 108, the Board of directors being the Chief operating decision maker of the Company has determined that the Company is engaged in the business of retail trade of garments, textiles and accessories in India and there are no separate reportable segments as per Ind AS 108.

Note 3. Leases Company as lessee:

Operating Lease:

The Company has taken premises for showroom for 12 to 15 years lease/license period with lock in period of one to three year. The escalation clause is variable per between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the lessor. There are no restrictions imposed on the Company under the lease arrangement.

A Gratuity

The Company operates gratuity plan where in every employee is entitled to benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vests after five years of continuous service. Gratuity benefits valued were in accordance with the payment of Gratuity Act, 1972.

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defind benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied which was applied while calculating the defined benefit obligation liability recognised in the balance sheet.

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

Notes:

1 The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of obligations.

2 The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors on long term basis.

Note 4. Share based payment

On 7 January 2017 the Company granted 256,578 Employee Stock Options (ESOP) as per the scheme approved by “Nomination and Remuneration Committee’ of the Board of Directors, at an exercise price of RS.10 per option with graded vesting. Out of which 9,815 ESOP have been forfeited subsequently during the year ended 31 March 2017. The graded options can be exercised after vesting at any time before the expiry of 3 months before vesting period.

During the year ended 31 March 2018, the Company has granted 25,596 (net of ESOP lapsed during the year) employee stock options (“ESOP”) as per scheme approved by “Nomination and Remuneration Committee”, at an exercise price of RS.10 per option. Further, out of 246,763 ESOP outstanding as at the beginning of the year, the Company has forfeited 44,650 ESOP. Total outstanding ESOP at the year ended 31 March 2018 are 227,709. The vesting period of the ESOP is ranging from 15 months to 36 months. The granted options can be exercised after vesting at any time before the expiry of 3 months from vesting date. An amount of RS.329.92 lakhs has been recorded for the year ended 31 March 2018 as employee benefits expense, as the proportionate cost of ESOP granted.

The Company provides share-based payment scheme to its employees. During the year ended 31 March 2017, an Employee Stock Option Plan was introduced. The relevant details of the scheme and the grant as below, In the Annual General Meeting held on 30 September 2016, the Board of Directors (“Board’) has approved the V2 R-Employee Stock Option Scheme 2016 (‘ESOP 2016’) and grant of options to the eligible employee of the company under the Scheme. The Details of the scheme are as below:

c) Fair Valuation:

The fair valuation of the options used to compute profoma net profit and earnings per share have been done by an independent valuer on the date of grant using Black-Scholes Merton Formula. The key assumption and fair value are as under:

Expected volatility of the Company’s stock price is based on the Company’s comparable peer Company’s stock price on NSE based on the price data of the last three years upto the data of grant as the Company has been listed only for a few months prior to the date of grants.

Note 5. Related party disclosures

(a) Directors

Mr. Ram Chandra Agarwal (Chairman and Managing Director)

Mrs. Uma Agarwal (Director)

Mr. Akash Agarwal (Director)

Mr. Jitender Yadav (Non-executive director)

Mr. Lalan Yadav (Non-executive director)

Mr. Ravinder Kumar Sharma (Non-executive director)

Mr. Rohit Singh Rautela (Non-executive director)

Mr. Sourabh Kumar (Non-executive director)

Mr. Siya Ram (Non-executive director)

(b) Key managerial personnel

Mr. Manshu Tandon (Chief Executive Officer w.e.f 16 Oct 2017))

Mr. Umesh Kumar (Company Secretary and Compliance Officer)

Mr. Vipin Kaushik (Chief Financial Officer) w.e.f. 30 May 2017 Mr. Varun Kumar Singh (Chief Financial Officer) till 23 May 2017

(c) Companies in which Key Management Personnel or their relatives have control or significant influence

Unicon Marketing Private Limited Ricon Commodities Private Limited V2 Conglomerate Private Limited Vishal Water World Private Limited

ii) Fair values hierarchy

Financial assets and financial liabilities measured at fair value in the balance sheet are categorised into three levels of fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for financial instruments.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Valuation process and technique used to determine fair value

The fair value of investments in mutual fund units is based on the net asset value (NAV) as stated by the issuers of these mutual fund units in the published statements as at the Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

(iii) Fair value of instruments measured at amortised cost

The management assessed that fair values of cash and cash equivalents, trade receivables, trade payables, bank overdrafts, Interest accrued on bank deposits with banks, other current financial assets and other current financial liabilities approximates their carrying amounts largely due to the short-term maturities of these instruments.

The fair values of loans, borrowings and other financial assets and liabilities are considered to be the same as their fair values, as there is an immaterial change in the lending rates.

Note 6. Financial risk management

i) Risk management framework

The Company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

A) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investments in debt securities.The carrying amount of financial assets represents the maximum credit exposure.

- cash and cash equivalents,

- trade receivables,

- loans & receivables carried at amortised cost, and

- deposits with banks

a) Credit risk management

The Company assesses and manages credit risk based on internal credit rating system, continuously monitoring defaults of customers and other counterparties, identified either individually or by the company, and incorporates this information into its credit risk controls. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.

A: Low

B: Medium

C: High

Cash & cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks.

Trade receivables

The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become past due one year.

Other financial assets measured at amortised cost

Other financial assets measured at amortized cost includes loans and advances to employees, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.

b) Expected credit losses

Trade receivables

The Company’s trade receivables does not have any expected credit loss as the Company sells products once the entire payment is received. During the periods presented, the Company made no write-offs of trade receivables and no recoveries from receivables previously written off.

Other financial assets measured at amortised cost

Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the company can draw to apply consistently to entire population For such financial assets, the Company’s policy is to provides for 12 month expected credit losses upon initial recognition and provides for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognised on such assets considering their low credit risk nature, though incurred loss provisions are disclosed under each sub-category of such financial assets.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.

Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

Maturities of financial liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity of Company based on their contractual maturities for all non-derivative financial liabilities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

C) Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

b) Interest rate risk

i) Liabilities

The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. At March 31, 2018, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Company’s investments in fixed deposits all pay fixed interest rates.

Sensitivity

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates. Other components of equity change as a result of an increase/decrease in the fair value of the cash flow hedges related to borrowings. In case of fixed rate borrowings a change in interest rates at the reporting date would not affect profit or loss.

ii) Assets

The Company’s fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

c) Price risk

Exposure

The Company’s exposure price risk arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit or loss. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.

Sensitivity

The table below summarises the impact of increases/decreases of the index on the Company’s equity and profit for the period :

Note 7: Capital management

The Company’s capital management objectives are

- to safeguard their ability to continue as a going concern

- to maintain an optimal capital structure to reduce the cost of capital

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

Management assesses the Company’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company’s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

Note 8. First time adoption of Ind AS Transition to Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Ind AS optional exemptions

1 Deemed cost for property, plant and equipment, investment property and intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38, Intangible Assets and investment property covered by Ind AS 40 Investment Properties. Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their Previous GAAP carrying value.

2 Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at Fair value through Statment of Profit and Loss on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in equity investments.

3 Share based payments

Ind AS 102 Share based payments requires an entity to recognise the equity settled share based payment plans based on fair value of the stock options granted to employees 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 that is 1 April 2016. The Company has elected to apply this exemptions for such vested options.

4 Assets held for sale

The company has elected to measure non-current assets held for sale at the lower of carrying value and fair value less cost to sell at the date of transition and recognize directly in retained earnings any difference between that amount and the carrying amount of those assets at the date of transition.

B. Ind AS 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 following items in accordance with Ind AS at the date of transition as these were not required under Previous GAAP:

a) Investment in equity instruments carried at Fair value through Statment of Profit and Loss or Fair valur through Other Comprehensive Income

b) Impairment of financial assets based on expected credit loss model”

2 Classification and measurement of financial assets and liabilities

The classification and measurement of financial assets will be made considering whether the conditions as per Ind AS 109 are met based on facts and circumstances existing at the date of transition. Financial assets can be measured using effective interest method by assessing its contractual cash flow characteristics only on the basis of facts and circumstances existing at the date of transition and if it is impracticable to assess the use of effective interest method, fair value of financial asset at the date of transition shall be the new carrying amount of that asset. The measurement exemption applies for financial liabilities as well.

3 Impairment of financial assets

At the date of transition to Ind AS, determine whether there has been a significant increase in credit risk since the initial recognition of a financial instrument would require undue cost or effort, the Company has recognised a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised.

Note 1:

Security deposit

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent.

Note 2:

Asset held for sale

Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations requires disposal assets to be identified as held for sale if the carrying amount will recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. Ind AS 105 lays down detailed guidelines and criteria in this regard. Based on the assessment performed by the management, it has been determined that the freehold land and buildings-HUBLI should be presented as held for sale under Ind AS. Consequently, the asset held for sale have been presented separately from the other assets in the balance sheet. There is no impact on the total equity or profit as a result of this adjustment.

Note 3:

Employee stock option expense

Under the previous GAAP, the cost of equity-settled employee share-based plan were recognised using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognised based on the fair value of the options as at the grant date. There is no impact on total equity.

Note 4:

Reversal of lease equalization reserve

Under Previous GAAP, operating lease rentals were straight lined over the lease period. Under Ind AS, if the payments by the lessee are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost, lease reserve should not be booked. Consequent to this change, the amount of retained earnings has been decreased. Also under Ind AS , Rent free period is straight-lined over the lease term as the same is considered as incentive.

Note 5: Vat recoverable

Vat recoverable is written off of RS.136.62 lakhs to retained earnings on transition date as it is considered non-recoverable.

Note 6: Investment in debentures

Under Previous GAAP, investments in compulsory convertible debentures of TPG Wholesale Private Limited was the part of investments which is classified to retained earnings in Ind AS on the transition date.

Note 7:

Deferred tax

Under Previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under Ind AS, deferred tax is recognized following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base. In addition, various transitional adjustments has also led to recognition of deferred taxes on new temporary differences.

Note 8:

Other comprehensive income

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year.

Also as the company never recognised provision in respect of employee benefits under the previous GAAP, the company accordingly has recognised the amount of provisions in respect of gratuity and leave encashment.

Note 9: Retained earnings

Retained earnings as at 1 April 2016 and 31 March 2017 has been adjusted consequent to the above Ind AS transition adjustments.

Statement of cash flows

The transition from previous GAAP to Ind AS has not had a material impact on the Statement of cash flows.


Mar 31, 2017

1 State Bank of India & Pegasus Assets Reconstruction Pvt. Ltd.

There Is no outstanding loan from State Bank of India, the charges mentioned herein below are to be removed from MCA

The loan originally taken from HSBC Bank Limited has been assigned to Pegasus Assets Reconstruction Pvt. Ltd and the term loan has been paid during financial year FY16-17.

The Company, vide proposal for settlement of term loan dated 30th June, 2016 from Pegasus Assets Reconstruction Private Limited (one of the Company’s lenders) had agreed for one time settlement of its loan including interest at Rs. 4,250.00 lacs along with interest at 12% p.a. on monthly rests to be paid till 30th November, 2016.

During the year, the Company has settled the outstanding amount of loan including interest with Pegasus Assets Reconstruction Pvt. Ltd and has reversed the excess interest amounting to Rs. 151,269,271 (Refer Note- 30 “Exceptional Items”).

First charge on paripassu basis on all the movable and immovable assets of the Company as on the transfer date.

First paripassu charge by way of equitable mortgage of property in the name of Vishal Water World Pvt. Ltd. situated at Kouchapukur, PO Hatgachia ,dist 24 Parganas (West Bengal)

First paripassu charge by way of equitable mortgage of property in the name of VRL situated at Krishna nagar Village, TaluqHubli, District Dharwad and NOC for Sale of the same has been availed.

First paripassu charge by way of equitable mortgage of property in the name of VRL situated at PJE Plaza, deg No.77-78,81,82Khasra B no.655-11-5-12, Mauza -Kyenjara, VIP road .Kolkata (except ground floor) and same including Ground Floor has been sold in lieu of term loan payment of Pegasus Assets Reconstruction Pvt. Ltd during financial year 2016-17.

Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. Uma Agarwal

Corporate Guarantee of Vishal Water World Pvt. Limited

Pledge of 100% of existing promoters’ shareholding in the Company or 51 % of the Company’s paid up capital whichever is lower.

2 Inter- Corporate deposits

The Company has taken unsecured borrowing from various Companies which carries an interest rate of 12% -15% p.a .These deposits are repayable on demand.

3 Bank of India, ING Vysya Bank and UCOBank

There is no outstanding loan from Bank of India, ING Vysya Bank & UCO Bank the charges mentioned herein below are to be removed from MCA

Exclusive charge with Bank of India of property at industrial land Khata no.329, Khasra No. 122/43 Mouza Central Hope town, (Saelakui), ParagnaPachwodopon, Tehsil Vikas Nagar, District Dehradun (Note: this is a small piece of land measuring 0.57 acres)

Subservient charge on Current Assets

Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. Uma Agarwal.

Pledge of 953,770 shares of VRL.

Corporate Guarantee of Unicorn Marketing Private Limited.(Liability limited to the extent of shares pledged( 7,70,000 shares of VRL)

Post dated Cheques for Principal Amount FITL

Pledge of 100% of existing promoters’ shareholding in the Company or 51 % of the Company’s paid up capital whichever is lower.

Note:-

The Company has initiated the process of identification of supplies registered under Micro, Small and Medium Enterprises Development Act, 2006, by obtaining confirmations from all suppliers. Information has been collated only to the extent of information received as at Balance Sheet date.

Investment property given as security

Investment property are subject to first charge to secure the companies term loan taken from bankers and financial institutions as detailed in securities furnished in respect of loans taken by the company.

4. Employee Benefits

a. Defined contribution plans

The Company''s employee provident fund scheme are defined contribution plan amounting to Rs.16,050,651/- (previous year Rs. 11,622,160/-) towards employee provident fund has been recognized as an expense in relation other scheme and is included in employee benefits in the Statement of Profit and Loss.

b. Defined benefit plans (i) General description of defined benefit plan:

Gratuity plan

The Company operates gratuity plan where in every employee is entitled to benefit equivalent to15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vests after five years of continuous service. Gratuity benefits valued were in accordance with the payment of Gratuity Act,1972.

(vi) Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the prevailing market yield of government bonds as at the Balance Sheet date for the estimated term of the obligation and the estimates of future salary increases considered taking into account the inflation, seniority, promotion and other relevant factors.

(b) Other long term benefit (Compensated absences)

The Company operates compensated absences plan, where in every employee Is entitled to the benefit equivalent to 15 days leave salary for every completed year of service. The salary for calculation of earned leave is last drawn basic salary. The same is payable during the service, early retirement, withdrawal of scheme, resignation by employee and upon death of employee.

An actuarial valuation of compensated absences has been carried out by an independent actuary on the basis of the following assumptions:

(v) Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the prevailing market yield of government bonds as at the Balance Sheet date for the estimated term of the obligation and the estimates of future salary increases considered taking into account the inflation, seniority, promotion and other relevant factors.

33. Leases

The company has taken premises for showroom for 12 to 15 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancellable operating leases

The lease rentals charged during the year and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective agreements.

The contingent liabilities, if materialized, shall entirely be borne by the Company, as there Is no likely reimbursement from any other party. The Company''s pending litigation comprises of claim against the company primarily for service tax, income tax and claims not acknowledgment as debts. The company has reviewed all its pending litigation and proceedings and adequately provided for where provisions are required and disclosed contingent liabilities where applicable, in the financial statements. The Company does not expect the outcome of these proceedings to have material adverse effects its financial results.

5. Employee Stock Option Plan

On January 7”1 2017 the Company has granted 256,578 Employee Stock Options as per the scheme approved by “Nomination and Remuneration Committee’ of the Board of Directors, at an exercise price of Rs. 10/- per option with graded vesting. Out of which 30,317 Employee Stock Options have been forfeited subsequently (161,794 options vesting after 15 months from the date of grant and 64,467 option vesting after 36 months from the date of grant net of forfeiture). The graded options can be exercised after vesting at any time before the expiry of 3 months before vesting period.

The Company provides share -based payment scheme to its employees. During the year ended 31st March, 2017, an employee Stock option plan was introduced . The relevant details of the scheme and the grant as below, In the Annual General Meeting held on 30th September, 2016, the Board of Directors (“Board’’) has approved the V2R-Employee Stock Option Scheme 2016 (‘ESOP 2016'') and grant of options to the eligible employee of the company under the Scheme. The Details of the scheme are as below

''Expected volatility of the Company’s stock price Is based on the Company’s comparable peer group’s stock price on NSE based on the price data of the last three years upto the data of grant as the Company has been listed only for a few months prior to the date of grants.

6. Since the Company operates in single segment, no disclosure Is required to be given as per AS-17" Segmental Reporting” issued by ICAI.

7. CIF value of imports

There are no Import of traded goods and capital goods during the year.

8. Unhedged foreign currency expense and derivates contracts

There are no outstanding derivates contracts and unhedged foreign currency exposure as at balance sheet date.

9. CORPORATE SOCIAL RESPONSIBILITY (CSR)

For recogization . measurement, presentation and disclosure of expenditure on activities related to CSR activities, the company has adopted the prescribed under Guidance note on "Accounting for expenditure on CSR activities". Issue by ICAI on 15th May 2015. The said guidance note clearly states that no provision for the amount which is not spent for the purpose of CSR (i) in case there is shortfall in spending on CSR activates below the prescribed threshold) is required to be made in the books of accounts (except where the company has incurred a contractual liability in such regard)

Details of expenditure (in INR ) incurred in relation to CSR activates during the year

Average net profit of the Company for last three financial years -100,010,245

Prescribed CSR expenditure (2% of the amount as in item 3 above) - 2,000,205

Details of CSR spent during the financial year

Total amount to be spent for the financial yean- 2,000,205 Amount unspent, if any2,000,205

- For the Purposes of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated November 8, 2016

10. Previous year figures have been regrouped/ rearranged wherever considered necessary to make them comparable with current year figures.


Mar 31, 2016

b. Terms / rights attached to equity shares / warrants

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 dividends in Indian rupees. The Board of Directors of the Company has not declared any dividend during the reporting period. 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.

Securities furnished in respect of long term borrowings taken by the Company

A. State Bank of India & Pegasus Assets Reconstruction Pvt. Ltd.

There is no outstanding loan from State Bank of India the charges mentioned herein below are to be removed from MCA The loan originally taken from HSBC Bank Limited has been assigned to Pegasus Assets Reconstruction Pvt. Ltd.

First charge on paripassu basis on all the movable and immovable assets of the Company as on the transfer date.

First paripassu charge by way of equitable mortgage of property in the name of Vishal Water World Pvt. Ltd. situated at Kouchapukur, PO Hatgachia ,dist 24 Parganas (West Bengal)

First paripassu charge by way of equitable mortgage of property in the name of VRL situated at Krishna nagar Village, Taluq Hubli, District Dharwad.

First paripassu charge by way of equitable mortgage of property in the name of VRL situated at PJE Plaza, deg No.77-78,81,82 Khasra B no.655-11-5-12, Mauza -Kyenjara, VIP road ,Kolkata (except ground floor)

Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. Uma Agarwal

Corporate Guarantee of Vishal Water World Pvt. Limited

Pledge of 100% of existing promoters’ shareholding in the Company or 51% of the Company’s paid up capital whichever is lower.

B. Bank of India, ING Vysya Bank and UCO Bank

There is no outstanding loan from Bank of India, ING Vysya Bank & UCO Bank the charges mentioned herein below are to be removed from MCA

Exclusive charge with Bank of India of property at industrial land Khata no.329, Khasra No. 122/43 Mouza Central Hope town, (Saelakui), Paragna Pachwodopon, Tehsil Vikas Nagar, District Dehradun (Note: this is a small piece of land measuring 0.57 acres)

Subservient charge on Current Assets

Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. Uma Agarwal.

Pledge of 953,770 shares of VRL.

Corporate Guarantee of Unicorn Marketing Private Limited.(Liability limited to the extent of shares pledged( 7,70,000 shares of VRL)

Post dated Cheques for Principal Amount FITL

Pledge of 100% of existing promoters’ shareholding in the Company or 51% of the Company’s paid up capital whichever is lower.

Investment property given as security

Investment property with a carrying amount of Rs. 214,166,411 (P.Y. Rs. 264,268,421) are subject to first charge to secure the companies term loan taken from bankers and financial institutions as detailed in securities furnished in respect of loans taken by the company

1. Employee benefits

a) Defined contribution plans

The Company’s employee provident fund scheme are defined contribution plan amounting to Rs.15,829,538/- (previous year Rs. 11,576,193/-) towards employee provident fund has been recognized as an expense in relation to the scheme and is included in employee benefits in the Statement of Profit and Loss.

b) Defined benefit plans

(i) General description of defined benefit plan:

Gratuity plan

The Company operates a gratuity plan wherein every employee is entitled to a benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vests after five years of continuous service. Gratuity benefits valued were in accordance with the payment of Gratuity Act, 1972.

(vi) Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the prevailing market yield of government bonds as at the Balance Sheet date for the estimated term of the obligation and the estimates of future salary increases considered taking into account the inflation, seniority, promotion and other relevant factors.

(c) Other long term benefit (Compensated absences)

The Company operates compensated absences plan, where in every employee is entitled to the benefit equivalent to 15 days leave salary for every completed year of service. The salary for calculation of earned leave is last drawn basic salary. The same is payable during the service, early retirement, withdrawal of scheme, resignation by employee and upon death of employee.

An actuarial valuation of compensated absences has been carried out by an independent actuary on the basis of the following assumptions:

2. Leases

The company has taken premises for showroom for 12 to 15 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancellable operating leases.

The lease rentals charged during the year and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective agreements.

3. Previous year figures have been regrouped or rearranged wherever considered necessary to make them comparable with current year figures.


Mar 31, 2015

1. Corporate information

V2 Retail Limited formerly known as Vishal Retail Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange. The Company is primary engaged in the business of retail sales of garments, textiles, accessories and consumer durables products in India.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with 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 by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below:

3. Deferred Tax Asset

In accordance with Accounting Standard 22 on ' Accounting for Taxes on Income' the net decrease in deferred tax asset of 8,69,18,390 for the current year has been recognized in the profit & loss account. The tax effect of significant timing differences as at 31st March, 2011 that reverse in one or more subsequent years gave rise to the following net deferred tax assets as at March 31, 2015.

4. Employee benefits

a) Defined contribution plans

The Company's employee provident fund scheme are defined contribution plan amounting to Rs.11,576,193/- (previous year Rs. 9,046,788/-) towards employee provident fund has been recognized as an expense in relation to the scheme and is included in employee benefits in the Statement of Profit and Loss.

b) Defined benefit plans

(i) General description of defined benefit plan:

Gratuity plan

The Company operates a gratuity plan wherein every employee is entitled to a benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vests after five years of continuous service. Gratuity benefits valued were in accordance with the payment of Gratuity Act, 1972.

(vi) Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the prevailing market yield of government bonds as at the Balance Sheet date for the estimated term of the obligation and the estimates of future salary increases considered taking into account the inflation, seniority, promotion and other relevant factors.

(v) Economic assumptions

The principal assumptions are the discount rate and salary growth rate. The discount rate is based upon the prevailing market yield of government bonds as at the Balance Sheet date for the estimated term of the obligation and the estimates of future salary increases considered taking into account the inflation, seniority, promotion and other relevant factors.

5. Leases

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancellable operating leases.

The lease rentals charged during the year and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective agreements.

There are no contingent liabilities in respect of the Joint Venture. The above figures are based on latest available unaudited accounts, drawn on the respective dates as certified by the management.

6. Previous year figures have been regrouped or rearranged wherever considered necessary to make them comparable with current year figures.


Mar 31, 2014

1. Corporate information

V2 Retail Limited formerly known as Vishal Retail Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the business of retail sales of garments, textiles, accessories and consumer durables products in India.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with 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 notifed by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below:

3. Leases

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancellable operating leases.

4. Related Party Disclosures:

The Disclosures are required by the Accounting Standard - 18( Related Party Disclosure) are given below:

1. Names of related parties and related party relationship with whom transaction have Subsidiary companies VRL Infrastructure Limited

VRL Movers Limited VRL Retail Ventures Ltd.

Enterprises in directors of the company are directors Unicon Marketing P. Ltd.

Ricon Commodities P. Ltd. Vishal Water World P. Ltd. V2 Conglomerate Ltd.

Key managerial personnel Mr. Ram Chandra Agarwal (Director)

Mrs. Uma Agarwal (Director)

Relative of key managerial personnel Mr. Akash Agarwal (Son of Director)

Note:- The Company has already initiated the process of identifcation of Micro, Small & Medium Enterprises suppliers and service providers, In view of large number of suppliers and non receipt of critical inputs, responses from several such potential parties, the liability of interest, if any cannot be reliably estimated. Hence the required disclosure has not been made.

Previous year''s fgures have been regrouped / reclassified wherever necessary to correspond with the current year''s classifcation disclosure.

5. Contingent Liabilities

Particulars 31.03.2014 31.03.2014

a. Outstanding Bank Guarantees 4,652,797 4,652,797

b. Disputed Sales Tax Demands - matter under appeal 291,007,117 291,007,117

c. Claims against the Company not acknowledged as debts 181,771,441 201,556,700

d. Claims by Income Tax Department 1,188,071,650 -

e. Claims by Provident Fund Department - 113,929,006

f. Claims by Service Tax Department 30,208,391 30,208,391

Total 1,695,711,396 641,354,011

The Company has made provision in the books of account in the current year with respect to amount payable to Labour Welfare Fund. The Liability on account of the same was not provided for in the earlier years and the same cannot be ascertained, which in the view of the management is not likely to be material.

6. The fgures of previous year were audited by AKGVG and Associates Previous Year''s fgures have been regrouped and/or rearranged where necessary to conform to this year''s classification.


Mar 31, 2013

1. Corporate information

V2 Retail Limited formerly known as Vishal Retail Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the business of retail sales of garments, textiles, accessories, consumer durables and FMCG products in India.

2. Basis of preparation

The fnancial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these fnancial statements to comply in all material respects with the Accounting Standards notifed by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The fnancial statements have been prepared under the historical cost convention on an accrual basis.

The accounting policies adopted in the preparation of fnancial statements are consistent with those of previous year, except for the change in accounting policy explained below:

3. Leases

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancellable operating leases.

The lease rentals charged during the year and maximum obligations on long term non-cancellable operating leases payable as per the rentals stated in the respective agreements.

4. Contingent Liabilities

Particulars As at As at 31st March, 2013 31st March, 2012 (Rs.) (Rs.)

a. Outstanding Bank Guarantees 4,652,797 5,997,535

b. Disputed Sales Tax Demands - matter under appeal 291,007,117 298,551,617

e. Claims against the Company not acknowledged as debts 201,556,700 198,177,295

f. Claims by Provident Fund Department 113,929,006 113,929,006

g. Claims by Service Tax Department 30,208,391 30,208,391

Total 641,354,011 646,863,844

The Company has made provision in the books of account in the current year with respect to amount payable to Labour Welfare Fund. The liability on account of the same was not provided for in the earlier years and the same cannot be ascertained, which in the view of the management is not likely to be material.

There are no contingent liabilities in respect of the Joint Venture. The above fgures are based on latest available unaudited accounts, drawn on the respective dates as certifed by the management. 40. The fgures of previous year were audited by AKGVG and Associates Previous year''s fgures have been regrouped and/or rearranged where necessary to conform to this year''s classifcation


Mar 31, 2012

1. Corporate Information

V2 Retail Limited (the Company) formerly known as Vishal Retail Limited is a public company domiciled in India and incorporated under the provisions ofthe CompaniesAct, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the business of retail sales of garments, textiles, accessories, consumer durables and FMCG products in India.

2. Basis of Preparation

The financial statements ofthe Company have been prepared in accordance with 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 by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions ofthe CompaniesAct, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis.

The accounting policies have been consistently applied by the Company except as mentioned herein below:

a. Terms / rights attached to equity shares / warrants

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 dividends in Indian rupees. The Board of Directors of the Company has not declared any dividend during the reporting period. In the event of liquidation ofthe 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 Company came out with preferential allotment of 39,10,000 Convertible Share Warrants to its promoters during the Financial year 2009- 10 at an issue price of Rs. 60/- calculated under SEBI (DIP) Guidelines, 2000 on preferential basis duly approved by Shareholders and Board of Directors of the Company. These Warrants were issued on 30lh October, 2009 and were convertible into equity shares on or before 18 months from the date of issue. The promoters failed to pay balance amount of share warrants consequently the paid amount which was duly bifurcated into Share Warrants Money and Share Premium stands forfeited on April 29m 2011.

1. State Bank of India & Pegasus Assets Reconstruction Pvt. Ltd.

There is no outstanding loan from State Bank of India, the formalities for removal of charge from MCA are yet to be furnished. The Detail of Charges is mentioned herein below:

First charge on pari passu basis on all the movable and immovable assets of the Company as on the transfer date.

First pari passu charge by way of equitable mortgage of property in the name of Vishal Water World Pvt. Ltd. situated at Kouchapukur, PO Hatgachia ,dist 24 Parganas (West Bengal)

First pari passu charge by way of equitable mortgage of property in the name of V2 Retail Limited situated at Khasra No. 122/44, Mouza Central Hope town (Selakui), Paragana Pachwodopon, Tehsil Vikas Nagar, district Dehradun.

First pari passu charge by way of equitable mortgage of property in the name of V2 Retail Limited situated at Krishnanagar Village, Taluq Hubli, District Dharwad. First pari passu charge by way of equitable mortgage of First Floor & Second Floor of property in the name of V2 Retail Limited situated at PJE Plaza, deg No.77- 78,81,82 Khasra B no.655-11-5-12, Mauza-Kyenjara, VIP Road, Kolkata Personal Guarantee of Mr. Ram ChandraAgarwal and Mrs. UmaAgarwal Corporate Guarantee of Vishal Water World Pvt. Ltd.

Pledge of 100% of existing promoters,shareholding in the Company or 51 % of the Company's paid up capital whichever is lower.

The loan payable to Pegasus Assets Reconstruction Pvt. Ltd. was originally taken from HSBC Bank Limited.

2. Bank of India, ING Vysya Bank and UCO Bank

There is no outstanding loan from Bank of India, ING Vysya Bank & UCO Bank, the formalities for removal of charge from MCA are yet to be furnished. The Detail of Charges is mentioned herein below :

Exclusive charge with Bank of India of property at industrial land Khata no.329, Khasra No. 122/43 Mouza Central Hope town, (Saelakui), Paragna Pachwodopon, Tehsil Vikas Nagar, District Dehradun Subservient charge on Current Assets

Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. Uma Agarwal.

Pledge of 953,770 shares of V2 Retail Limited.

Corporate Guarantee of Unicorn Marketing Private Limited.(Liability limited to the extent of shares pledged( 7,70,000 shares of V2 Retail Limited)

Pledge of 100% of existing promoters,shareholding in the Company or 51% of the Company's paid up capital whichever is lower.

3. Deferred Tax Assets

In accordance with Accounting Standard 22 on 'Accounting for Taxes on Income'the net decrease in deferred tax asset of Rs. 155,312,063 for the current year has been recognised in the profit & loss account. The tax effect of significant timing differences as at 31 si March, 2011 that reverse in one or more subsequent years gave rise to the following net deferred tax assets as at March 31,2012.

4. Leases

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

Obligations on long term, non-cancelable operating leases.

The lease rentals charged during the year and maximum obligations on long term non-cancelable operating leases payable as per the rentals stated in the respective agreements.

5. Segment Information

The Company is engaged in the business of retail sales of garments, textiles, accessories and FMCG in India and there are no separate reportable segments as per AS-17 “Segment reporting" notified by Companies (Accounting Standards) Rules, 2006.

6. Contingent liabilities:

(Amount in Rs.) Particulars 31th March 2012 31th March 2011

a. Outstanding Bank Guarantees 5,997,535 1,225,000

b. Disputed Sales Tax Demands - matter under appeal 298,551,617 5,51,96,492

c. Disputed excise duty demands- matter under appeal - -

d. Disputed Liability in respect of Income Tax demands - matter under appeal - -

e. Claims against the Company not acknowledged as debts 198,177,295 269,598,913

f. Claims by Provident Fund Department 113,929,006 113,929,006

g. Claims by Service Tax Department 30,208,391 -

Total 646,863,844) 439,949,411

Note:-The Company has initiated the process of identification of Micro, Small & Medium Enterprises Suppliers and service providers, at this point of time. In View of large numbers of suppliers and non receipt of critical inputs and response from several such potential parties, the liability of interest, if any, cannot be reliably estimated nor required disclosure can be made.

There are no contingent liabilities in respect of the Joint Venture. The above figures are based on latest available unaudited accounts, drawn on the respective dates as certified by the management.

7. The figures of previous year were audited by firm of Chartered Accountants other than AKGVG and Associates Previous year's figures have been regrouped and/or rearranged where necessary to conform to this year’s classification.


Mar 31, 2011

1. Contingent liabilities

(Amount in Rs.) Particulars 31st March 2011 31st March 2010

a. Outstanding Bank Guarantees 1,225,000 1,225,000

b. Disputed Sales Tax Demands - matter under appeal 5,51,96,492 4,687,235

c. Disputed excise duty demands- matter under appeal - 500,000

d. Disputed Liability in respect of Income Tax demands - matter under appeal - 127,166,302

e. Claims against the Company not acknowledged as debts 269,598,913 296,461,235

f. Claims by Provident Fund Department 113,929,006 113,929,006

Total 439,949,411 543,968,778

The Company has made provision in the books of account in the current year with respect to amount payable to Labour Welfare Fund. The liability on account of the same was not provided for in the earlier years and the same cannot be ascertained, which in the view of the management is not likely to be material.

2. There is a lien on Fixed Deposits of Rs. 5,851,327 (Rs. 8,556,525) towards Bank Guarantee provided by Banks and pledge of Fixed Deposits with various Revenue Authorities as surety bond.

3. Securities for Loans.

Bank : State Bank of India, HSBC & HDFC Bank Security

- First charge on pari passu basis on all the movable and immovable assets of the Company as on the transfer date.

- First pari passu charge by way of equitable mortgage of property in the name of Vishal Water World Pvt. Ltd. situated at Kouchapukur, PO Hatgachia ,dist 24 Parganas (West Bangal)

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at Khasra No. 122/43,122/44, Mouza Central Hope town (Selakui), Paragana Pachwodopon, Tehsil Vikas Nagar, district Dehradun.

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at Krishnanagar Village, Taluq Hubli, District Dharwad.

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at PJE Plaza, deg No.77-78,81,82 Khasra B no.655-11-5-12, Mauza -Kyenjara, VIP road ,Kolkata (except ground floor which is exclusively mortgaged to HDFC Bank)

- Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. Uma Agarwal

- Corporate Guarantee of Vishal Water World Pvt. Limited

- Pledge of 100% of existing promoters' shareholding in the Company or 51% of the Company's paid up capital whichever is lower.

4. Secured Loan repayable within a year is Rs. 588,464,092 (P. Y. Rs. 592,081,863).

5. Business Restructuring:

The company has restructured its business during the year by way of sale of its Wholesale and Retail Businesses to TPG Wholesale Private Limited and Airplaza

Retail Holdings Private Limited (referred to as Acquiring Companies) respectively. The Master Restructuring Agreement and other settlement agreements were entered into by the Company with the Acquiring Companies and its Lenders to effect the said restructuring and CDR proposal of the Company. As a result of the said agreement the liabilities to the extent of Rs. 823.20 Crores and assets of Rs. 393.78 crores were taken over by the acquiring companies against a consideration of Rs. 70 crores. The Slump Sale transaction resulted in a Capital Reserve of Rs. 499.42 Crores.

As a part of the said restructuring some unsecured lenders of the company also waived off their claims to the extent of Rs. 105.81 Crores which has also been transferred to Capital reserve Account.

The company got waiver of Rs. 96.93 crores as reversal of interest under the CDR scheme which has been disclosed as extra ordinary item in the Profit & Loss Account.

6. Management Plan

The Company has already started its new retail venture under the brand & style "V2". The Company has entered into MOU for eight new stores, out of the same, four stores has already operational with a total area of 60,775 sq, ft during the current period.

7. In the opinion of the management, sundry debtors, loans and advances and other current assets are approximately of the value stated if realized in the ordinary course of business. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

As per the Business Transfer Agreement entered into by the Company with TPG Wholesale Private Ltd and Airplaza Retail Holding Private Ltd (referred to as acquiring companies), the balances due to Sundry Creditors have been transferred to acquiring companies. The interest payable to Micro, Small and Medium Enterprises amounting to Rs. 68,34,368 has been written back in the Profit and Loss Account. However if any liability arises for the same in future the interest will be accounted for on payment basis.

8. The Company is engaged in the business of retail sales of garments, textiles, accessories and FMCG in India and there are no separate reportable segments as per AS-17 "Segment reporting" notified by Companies (Accounting Standards) Rules, 2006.

Notes:

i. The Company is dealing in a large number of products at several locations across the country. The quantitative information required in terms of Schedule VI of the Companies Act, 1956 have been broadly grouped as Apparels, FMCG and Non-Apparels (household goods and other accessories).

c) Other information in pursuance of the provisions of the paragraph 3, 4C, 4D, Part II of Schedule VI of the Companies Act, 1956 is not applicable to the Company.

9. The figures of previous year were audited by firm of Chartered Accountants other than Surana Singh Rathi and Co.. Previous year's figures have been regrouped and/or rearranged where necessary to conform to this year's classification.


Mar 31, 2010

1. The financial statements as on 31st March, 2010 have been prepared by the Management on a "going concern basis" taking into account the present operations of the company.

2. Contingent liabilities

(Amount in Rs.)

Particulars 31st March 2010 31st March 2009

a. Outstanding Bank Guarantees 1,225,000 6,263,297

b. Disputed Sales Tax Demands-matter underappeal 4,687,235 4,687,235

c. Disputed Excise Duty demands-matter under appeal 500,000 3,201,968

d. Disputed Liability in respect of Income Tax demands-matter under appeal 127,166,302 3,323,879

e. Claims againstthe Company not acknowledged as debts 296,461,235 134,613,270

f. Claims by Provident Fund Department 113,929,006 Nil

Total 5437968778 152,089,649

The Company has made provision in the books of account in the current year with respect to amount payable to Labour Welfare Fund. The liability on account of the same was not provided for in the earlier years and the same cannot be ascertained, which in the view of the management is not likely to be material.

3. There is a lien on Fixed Deposits of Rs. 8,556,525 (Rs. 9,708,297) towards Bank Guarantee provided by Banks for the company.

4. Securities for Loans.

Bank

State Bank of India, HSBC & HDFC Bank

Security

- First charge on pari passu basis on all the fixed assets of the company.

- First pari passu charge over all the receivables and stocks and current assets of the company.

- First Pari passu charge by way of equitable mortgage of property in the name of Vishal Water World Pvt. Ltd. situated at Kouchapukur, PO Hatgachia ,dist 24 Parganas (West Bangal) *

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at Khasra No. 122/43,122/44, Mouza Central Hope town (Selakui), Paragana Pachwodopon, Tehsil Vikas Nagar, district Dehradun.

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at Krishnanagar Village, TaluqHubli, District Dharwad.

- First pari passu charge by way of equitable mortgage of property in the name of VRL situated at PJE Plaza, deg No.77-78,81,82 Khasra B no.655-11-5-12, Mauza -Kyenjara, VIP road .Kolkata (except ground floor which is exclusively mortgaged to HDFC Bank)

- Personal Guarantee of Mr. Ram Chandra Agarwal, Mr. Surendra Kumar Agarwal , Mrs. UmaAgarwal

- Corporate Guarantee of Vishal World Pvt. Limited.

Bank

HDFC Bank

Security

- Loan against property )also available for HDFC Term Loans

- First charge on the basement and ground floor of property at 52/6 VIP Road, Kolkata, West Bengal in the name of VRL.

- First charge on property at 896,Golbazar, Wright Town, Jabalpur

Bank

Bank of India

Security

- Exclusive charge of property at industrial land Khata no.329, Khasra No. 122/43,122/44 Mouza Central Hope town, (Saelakui), Paragna Pachwodopon, Tehsil Vikas Nagar, District Dehradun (Note: this is a small piece of land measuring 0.57 acres distinct from the other property at Dehradun over which SBI.HDFC and HSBC have a charge)

- Subservient charge on Current Assets

- Personal Guarantee of Mr. Ram Chandra Agarwal and Mrs. UmaAgarwal.

- Pledge of 953,770 shares of VRL.

- Corporate Guarantee of Unicorn Marketing Private Limited.(Liability limited to the extent of shares pledged( 7,70,000 shares of VRL)

- Post dated Cheaues for Principal Amount + FITL

Bank

ICICIBank

Security

- Vehicle Loan

- First Charge on Vehicle under finance and Personal guarantee of Promoters

Bank

Kotak Mahindra Bank

Security

- venicie Loan

- Charge on Vehicle under finance and Personal guarantee of Promoters

Bank

ICICIBank

Security

- Equipment Loan

- Charge on Fixed Assets under finance, and Personal Guarantee of Promoters

5. Secured Loan repayable within a year is Rs. 592,081,863 (P. Y. Rs.352,357,918).

6. Unsecured Non-convertible Debentures issued to LIC Mutual Fund Asset Management Company Limited are redeemable on monthly basis from 30th June, 2009 to 31st May, 2011 as per the agreed schedule. Unsecured Non-convertible Debentures issued to Deutsche Trustee Services (I) Private Limited were repayable on 25th August, 2009. These debentures have not been redeemed/ repaid as per terms of the related debentures.

7. During the year, the Company has submitted its proposal under Corporate Debt Restructuring (CDR) mechanism to CDR cell for restructuring its secured as well as unsecured debts. SBI, HDFC, HSBC, ING Vyasa, UCO Bank and BOI are participating banks under the CDR mechanism.

The CDR Empowered Group has considered the proposal of the Company.

8. The Company had initiated the process of identifying non- moving, slow moving, obsolete, damaged inventory, shortages due to pilferage in all the categories i.e. Raw material and finished goods for all the stores and warehouses across India during the previous year, which is now completed. The company has recognized an aggregate amount of Rs. 3,417,159,919 as write off on account of the above, which is charged to Profit & loss account for the year ended 31st March 2010 and is included in Cost of Goods Sold in Schedule 15.

9. The company has recognized Rs. 507,897,976 as Extra-ordinary item during the year on account of Loss of Inventory due to fire in distribution centre at Gurgaon, on 4th June, 2009.

10. In the opinion of the management, sundry debtors, loans and advances and other current assets are approximately of the value stated if realized in the ordinary course of business. The provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

11. Inventory valued at Rs.2,199,612,291 lying at various stores and warehouses of the Company spread across the country are as physically verified by other Chartered Accountants and relied upon by the auditors of the Company.

12. During the year the company shut down 15 stores and added 11 new stores across various locations.

13. Preferential Issue of Warrants

In order to meet the fund requirement of the company, the company has come out with preferential allotment of 3,910,000 Warrants to the promoters during the year at an issue price of Rs. 60/- calculated under SEBI (DIP) Guidelines, 2000 on preferential basis duly approved by Shareholders and Board of Directors of the company. These warrants issued on 30th October, 2009 are convertible into equity shares on or before 18 months from the date of issue.

The above managerial remuneration does not include expense towards gratuity since the same is based on actuarial valuations carried out for the company as a whole.

Remuneration amounting Rs.2,623,572 paid during the year has been subsequently reversed. The unrecovered amount of Rs. 1,600,333 has been shown as recoverable from directors underthe head Loans SAdvances.

14. The company has provided for interest amounting Rs. 3,652,688 (Previous Year Rs. 3,181,680) on delayed payments and outstanding balance of MSME Creditors as on 31st March, 2010. This information is required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company. In terms of notification no. G.S.R. 719(E) dated November 16, 2007 issued by the Central Government of India, the disclosure of payments due to any supplier as at March 31,2010 are as follows:

15. The Company is engaged in the business of retail sales of garments, textiles, accessories and FMCG in India and there are no separate reportable segments as perAS-17 "Segment reporting" notified by Companies (Accounting Standards) Rules, 2006.

16. Disclosures Pursuant to Accounting Standard 15 "Employee Benefits": a) Defined Contribution Plans

i. Provident Fund

ii. State Defined Contribution Plans

17. The Disclosure as required by the Accounting Standard -18 (Related Party Disclosure) are given below:- Names of related parties with whom transactions have taken place and relationship

Name Designation Relationship

Mr. Ram Chandra Agarwal Director Key Managerial Personnel

Mr. Surendra Kumar Agarwal Director Key Managerial Personnel (upto 30,h September, 2009)

Mrs. Uma Agarwal Director Key Managerial Personnel

Mr. Jai Prakash Shukla Director Key Managerial Personnel (from 30* September, 2009)

VRL Infrastructure Limited Subsidiary Company

VRL Consumer Goods Limited Subsidiary Company

VRL Movers Limited Subsidiary Company

VRL Fashions Limited Subsidiary Company

VRL Retailer Business Solutions Pvt. Limited Joint Venture Company

VRL Retailer Ventures Limited Subsidiary Company

VRL Knowledge Process Limited Subsidiary Company

VRL Foods Limited Subsidiary Company

Unicon Marketing Pvt. Ltd. Two directors of Vishal Retail Limited are directors in the Company.

Ricon Commodities Pvt. Ltd. Two directors of Vishal Retail Limited are directors in the Company.

Vishal Water World Private Ltd. Two directors of Vishal Retail Limited are directors in the Company.

18. Lease

The company has taken premises for showroom for 12 years lease/license period with lock in period of one to three year. The escalation clause is variable between 12% to 15% after every three years and the company generally takes three month rent free time from the date of possession given by the landlord.

* Lease rental for the year includes contingent rent amounting Rs. 4,869,084 calculated on the basis of sales.

In respect of residential premises taken on lease on short term basis, relevant agreement had not been executed as per the practice prevalent in that area. The relevant disclosure for future lease commitments, if any in respect of such leases is not ascertainable.

19. Previous years figures have been regrouped where necessary to conform to this years classification.

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