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Shopper's Stop Ltd.

Annual Report 2009-10 | 28

Chandru L. Raheja – ChairmanRavi C. Raheja – DirectorNeel C. Raheja – DirectorGulu L. Mirchandani – DirectorShahzaad S. Dalal – DirectorProf. Nitin Sanghavi – DirectorDeepak Ghaisas – DirectorNirvik Singh – DirectorB. S. Nagesh – Vice ChairmanGovind Shrikhande – President & CEO & Executive Director

Audit CommitteeDeepak Ghaisas – ChairmanRavi C. Raheja – MemberProf. Nitin Sanghavi – MemberShahzaad S. Dalal – Member

Compensation/Remuneration CommitteeGulu L. Mirchandani – ChairmanRavi C. Raheja – MemberProf. Nitin Sanghavi – MemberShahzaad S. Dalal – Member

Finance CommitteeRavi C. Raheja – ChairmanNeel C. Raheja – MemberB. S. Nagesh – MemberGovind Shrikhande – Member

Shareholders Investor Grievance and Share Transfer CommitteeRavi C. Raheja – ChairmanNeel C. Raheja – MemberB. S. Nagesh – Member

Vice President – Legal & Company SecretaryPrashant Mehta

Registered Office & Service OfficeEureka Towers, B Wing,9th Floor, Mindspace,Link Road, Malad (West),Mumbai - 400 064Website: www.shoppersstop.com

Statutory AuditorsDeloitte Haskins & Sells

Chartered Accountants

12, Dr. Annie Besant Road,

Opp. Shiv Sagar Estate,

Worli, Mumbai - 400 018

Internal AuditorsErnst & Young Pvt. Ltd.

Jalan Mill Compound,

95, Ganpatrao Kadam Marg,

Lower Parel, Mumbai - 400 013

BankersIDBI Bank Limited

Axis Bank Limited

Kotak Mahindra Bank Limited

Citibank N.A.

HDFC Bank Limited

ICICI Bank Limited

SolicitorsWadia Ghandy & Co.

Board of Directors

Shopper's Stop Ltd.


Financial Highlights & Key Ratios

(Rs. in lacs)Profitability Statement 2009-10 2008-09 2007-08 2006-07 2005-06 No. of Stores 93 72 73 60 21 Income Gross Retail Sales 154,658 138,311 119,008 88,505 66,603 Less: Value Added Tax 6,857 6,438 5,551 3,874 3,111 Gross Retail Sales (Net of taxes) 147,801 131,873 113,457 84,631 63,492 Other Operating & Miscellaneous Income 2,810 2,555 2,567 2,776 1,907

150,611 134,428 116,024 87,406 65,399 Expenditure Cost of goods sold 98,426 88,000 75,354 56,879 43,220 Employee costs 8,759 8,588 7,826 5,850 4,029 Operating and administrative expenses 31,700 32,916 26,342 16,804 12,492

138,885 129,504 109,522 79,532 59,741 EBIDTA 11,726 4,924 6,503 7,874 5,658 Interest and finance charges 2,244 2,560 1,124 440 240 Depreciation 3,103 6,313 3,927 2,563 1,394 Profit Before Tax before exceptional items 6,379 (3,949) 1,452 4,871 4,025 Exceptional Items (188) 2,486 — — — Profit Before Tax after exceptional items 6,567 (6,436) 1,452 4,871 4,025 Profit After Tax 5,023 (6,372) 697 2,620 2,710 Balance Sheet items Share Capital 3,491 3,487 3,486 3,483 3,438 Optionally Convertible Warrants 3,072 — — — — Reserve & Surplus 24,326 19,822 26,183 26,034 23,556 Loan Funds 19,141 20,776 17,293 11,314 5,855 Deferred Tax Liability — — 169 412 36 Capital Employed 50,030 44,085 47,131 41,243 32,885 Fixed Assets 29,867 25,873 24,038 15,216 12,252 Net Working Capital 7,741 8,467 15,021 21,136 17,126 Profit & Loss Ratio's Gross Retail Sales (Chain level growth) 10.0% 15.9% 34.2% 32.7% 33.2% Gross Retail Sales (Like to Like growth) 3.7% 1.2% 14.0% 21.0% 17.0% Gross Profit Margin 31.9% 31.7% 32.0% 31.4% 30.4% Operating Expenses Ratio 26.2% 30.0% 28.7% 25.4% 24.8% Operating Margin (EBIDTA) (Before exceptional item) 7.6% 3.6% 5.5% 8.9% 8.5% PBT Margin before exceptional item 4.1% -2.9% 1.2% 5.5% 6.0% PAT Margin 3.2% -4.6% 0.6% 3.0% 4.1% Interest Coverage 4.8 1.0 5.3 13.7 18.1 Balance Sheet Ratio's Debtors No. of Days 3 3 2 3 2 Creditors No. of Days 95 94 69 55 54 Stock Turnover Ratio 3.5 4.0 3.3 3.7 3.9 Current Ratio 1.3 1.5 2.0 2.7 3.0 Assets Turnover Ratio 3.3 3.1 2.7 2.4 2.6 Debt Equity Ratio 0.6 0.9 0.6 0.4 0.2 Return to Investors Return on Networth 31.8% -5.2% 8.7% 18.8% 23.5% Return on Capital Employed 18.3% -3.0% 5.8% 14.3% 16.8% Book Value Per Share (in Rs.) 88.58 66.85 85.14 85.46 80.86 EPS (taking equity share at Rs. 10/- each) (In Rs.) Basic 14.4 (18.3) 2.0 7.58 8.12 Diluted 14.3 (18.3) 2.0 7.57 8.10 Cash EPS 23.30 (0.17) 13.27 15.00 12.41 Dividend Per Share 1.50 — 1.50 1.50 1.50

Note: Number of stores includes the Shoppers Stop Department stores and Speciality Stores (viz Home Stop, Mother Care, Crossword Bookstores, Arcelia, Mac, Clinique, Estee Lauder & Airport Business).

Shopper's Stop Ltd.Directors' Report


Dear Members,

Your Directors are pleased to present the Thirteenth Annual Report on the business and operations of the Company together with the Audited Statements of Accounts for the year ended March 31, 2010.

Financial Performance(Rs. in lacs)

Year ended Year ended

Particulars March 31, 2010 March 31, 2009

Retail Turnover Own merchandise (including concession sales) 141,583.75 128,152.70 Consignment merchandise 13,074.07 10,158.10 Other Retail operating income 2,178.93 1,759.40 156,836.75 140,070.20 Less: Value Added Tax 6,856.84 6,437.70 Less: Cost of consignment merchandise 9,429.83 7,319.40

140,550.08 126,313.10 Other income 631.17 795.10

141,181.25 127,108.20

Profit/(Loss) before Depreciation & Tax 9,669.57 (122.60)

Less: Depreciation 3,102.54 6,313.10

Profit/(Loss) before Tax 6,567.03 (6,435.70)

Less: Provision for Tax 1,543.98 (63.90)

Profit/(Loss) after Tax 5,023.05 (6,371.80)

Add/(Less): Balance brought forward from previous year (1,476.00) 4,895.80

Proposed Dividend (incl. Dividend Distribution Tax) 610.71 –

Transfer to General Reserve 251.15 –

Balance carried forward 2,685.19 (1,476.00)

Performance ReviewYour Company has opened four departmental stores i.e. one at Bengaluru, two at Hyderabad and one at Amritsar, taking its chain of stores to 34 stores (including HomeStop) spread across India.The revenue is Rs. 141,181.25 lacs (previous year Rs. 127,108.20 lacs), registering a growth of 11.07% y-o-y basis. The net Profit achieved was Rs. 5,023.05 lacs (previous year net loss of Rs. 6,371.80 lacs).

DividendYour Directors are pleased to recommend a dividend of Rs. 1.50 (previous year Nil) per equity share of Rs. 10 each.The dividend, once approved by members in the ensuing Annual General Meeting will be paid out of the profits of the Company for the year and will sum up to a total of Rs. 610.71 lacs, including dividend distribution tax.

Awards and RecognitionYour Company has been conferred inter-alia with the following awards and recognitions during the year under review:• Best Distribution Centre Management System at Network Computing EDGE and PC Quest Enterprise Award - 2009.• Best Visual Merchandising (Store Launch Category) at VMRD Retail Design Award - 2009.• Most Admired Retailer of the Year- Consumer Relations at IRF 2009.• Customer & Brand Loyalty in the Retail Sector at Loyalty Summit Award 2010.• Most Admired Large Format National Fashion Retailer – Outstanding Achievement in Consumer Recognition and Loyalty at the

Images Fashion Forum.



• Most Admired Fashion Retail Professional of the year to Mr. Govind Shrikhande at the Images Fashion Forum.

• Gitanjali IFA Most Admired Large Format Retailer of the year – Partner Awards

• Gini Jony IFA Most Admired Large Format Retailer of the year – Partner Awards

• Triumph Maximum Consumer Reach – Partner Awards

Share Capital

During the year under review, the paid up equity share capital of the Company has increased by Rs. 4.85 lacs on account of allotment of equity shares pursuant to exercise of stock options under ESOP Schemes.

Credit Rating

Fitch Ratings India Private Limited has maintained “F1(ind)” rating for commercial paper and short term debt programme of Company for Rs. 50 crores and Rs. 30 crores respectively.

Finance

Your Company continues with various initiatives for bringing down the cost of borrowings which includes application of short term instruments so as to have increase in cash flows.

The Company had obtained observations from Securities & Exchange Board of India in respect of its Right Issue of Rs. 500 crores (subsequently reduced to Rs. 300 crores). The validity of the said observations had expired and accordingly the Right Issue has been dropped.

Warrants to Promoters and Qualified Institutional Placement

As approved by members, through Postal Ballot on December 16, 2009, and in accordance with the provisions of Chapter VII of the Securities & Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009, the Company has allotted 4,000,000 warrants at a price of Rs.307.18 each to certain Promoters. Each warrant will be convertible into one equity share of Rs. 10 each.

Further, members through Postal Ballot have also approved to offer, issue and allot upto 4,000,000 Equity Shares and/ or Securities convertible into upto 4,000,000 equity shares of the Company, in one or more tranches, by way of Qualified Institutional Placement ("QIP").

Employees Stock Option Plan

Your Company has formulated and designed various Employees Stock Option Plan Schemes (ESOP Schemes) for employees. During the year under review, the Company has allotted 48,521 Equity Shares of Rs. 10 each on exercise of vested options by certain employees under the said ESOP Schemes.

During the year under review, under Employees Stock Option Plan Scheme 2008, the Company has granted 516,400 stock options at an exercise price of Rs. 110/- on April 29, 2009 and 200,000 stock options at an exercise price of Rs. 382/- on March 24, 2010 respectively to the specified employees.

Further, 632,931 Stock Options granted under Employees Stock Option Plan Scheme 2005 have been surrendered to the Company.

The particulars of Employees Stock Option Plan (ESOP) Schemes, as required by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, are appended herewith and forms part of this Report.

Subsidiaries

Ministry of Corporate Affairs, Government of India, vide order No. 47/127/2010-CL-III dated March 22, 2010, has granted approval that the requirement to attach various documents in respect of subsidiary companies, as set out in sub-section (1) of Section 212 of the Companies Act, 1956, shall not apply to the Company. Accordingly, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. Financial information of the subsidiary companies, as required by the said order, is disclosed in the Annual Report. The Annual Accounts of the subsidiary companies and the related detailed information will be made available to any member of the Company and its subsidiaries, who may be interested in seeking such information. The annual accounts of the subsidiary companies will also be kept open for inspection by any investor at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies, which has been duly audited by the Statutory Auditors.



Crossword Bookstores Limited, a wholly owned subsidiary of the Company had appointed the Company, w.e.f. July 1, 2006, as its master franchisee, pursuant to the Master Franchise Agreement, to carry on ‘Crossword’ business at its existing and new store premises which may be identified by the Company from time to time. Now, the Company and Crossword, propose to terminate the said Agreement and handover ‘Crossword’ business back to Crossword Bookstores Limited, together with its fixed assets, current assets, rights, liabilities/ obligations of all nature and kind along with its employees. The Company proposes to seek, members approval to handover ‘Crossword’ business back to Crossword Bookstores Ltd; by postal ballot under section 293(1)(a) of the Companies Act, 1956.

Human Resources

The Company takes great pride in the commitment, competence and vigour shown by its employess in all realms of business. The Company continues to take new initiatives to further align its HR policies to meet the growing needs of its business.

People development continues to be a key focus area in the Company. Special designed training modules for the frontline employees are being delivered from time to time to meet the training needs of the employees.

As on date of the Balance Sheet, the Company had a total of 3,851 Customer Care Associates.

Fixed Deposits

During the year under review, the Company has not accepted any deposit under Section 58A of the Companies Act, 1956, read with Companies (Acceptance of Deposits) Rules, 1975. No amount of principal or interest was outstanding as on the Balance Sheet date.

Auditors

Your Company’s Statutory Auditors, Deloitte Haskins & Sells, Chartered Accountants, Mumbai, retire at the conclusion of the ensuing Annual General Meeting. Deloitte Haskins & Sells have sought the re-appointment and have confirmed that their re-appointment, if made, shall be within the limits laid down under Section 224(1B) of the Companies Act, 1956.

The Audit Committee and the Board of Directors recommends the re-appointment of Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company for the financial year 2010-2011.

Directors

In appreciation of Mr. B. S. Nagesh's farsighted vision, wisdom and guidance, which have been invaluable to the Company’s growth, he was elevated as Non-Executive Vice Chairman with effect from August 18, 2009, after his successful association for more than eighteen years with the Company. He played a key role in the phenomenal growth and success of the Company.

Apart from his extraordinary entrepreneurial acumen, Mr. Nagesh is a great visionary. His affectionate care for the well-being of the employees, his belief in human values and business principles & ethics are some of the principles upon which the Company stands today. They have enabled the Company to build a successful and sustainable business model.

Your directors would like to place on record their sincere gratitude towards the guidance and contribution made by Mr. B. S. Nagesh and welcomes him as the Vice Chairman of the Company.

Mr. Govind Shrikhande has been entrusted with the responsibility of the day to day management of the affairs of the Company, as the President & CEO & Executive Director of the Company with effect from August 18, 2009.

In accordance with the provision of the Companies Act, 1956 and Articles of Association of the Company, Mr. G. L. Mirchandani and Mr. Deepak Ghaisas, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. A brief resume, expertise and details of other directorship and committee membership thereof of these directors are given in the explanatory statement annexed to the Notice convening the Thirteenth Annual General Meeting.

Corporate Governance

The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in clause 49 of the listing agreement with the Stock Exchanges are complied with.

A separate section on Corporate Governance and Auditors Certificate is annexed hereto and forms part of this Report.

Compliance with the Code of Conduct

The Company had evolved and adopted a Code of Conduct for its Board of Directors and its management personnel based on the principles of good corporate governance and best management practices. The declaration of compliance with the Code of Conduct has been received from them. The Code is available on the website of the Company.



A certificate to this effect from Mr. Govind Shrikhande, President & Chief Executive Officer & Executive Director forms part of this Report.

Demat Suspense Account Unclaimed Shares

There are 315 Equity Shares of the Company which were allotted in Initial Public Offering of 2005, were lying in the escrow account due to non- availability of shareholders correct particulars. Despite various reminders to them, by Karvy Computershare Private Limited our Registrar and Share Transfer Agent, no response has been received. As a result, the said unclaimed shares are credited to ‘Shopper’s Stop Ltd - Unclaimed Shares Demat Suspense Account; in view of compliance of Clause 5A of the Listing Agreement. Such shareholders may approach the Company with their correct particulars and proof of their identity for crediting requisite shares from the Demat Suspense Account to their individual demat Account. The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

Postal Ballot

The Company proposes to seek approval of members on June 21, 2010, through postal ballot in respect of the following:

1. Making investment in securities by subscription/ purchase or otherwise / loans or advances/ guarantee/ security(ies) etc. in Hypercity Retail (India) Ltd; upto an extent of Rs. 200 Crores under Section 372A of the Companies Act, 1956.

2. To handover ‘Crossword’ business to Crossword Bookstores Limited, a wholly owned subsidiary of the Company under Section 293(1)(a) of the Companies Act, 1956.

3. To delete the existing Article 150 – ‘Common Seal’ of the Articles of Association of the Company and substituting it with a new Article under Section 31 of the Companies Act, 1956.

Conservation of Energy, Technology absorption and Foreign Exchange earnings & outgo.

The Company is engaged in the continuous process of energy conservation through improved operational and maintenance practices. The brief of the particulars in respect of various steps and initiatives taken regarding conservation of energy and technology absorption and its disclosure as stipulated by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is as under.

• Daily maintenance of power consumption in every store.

• Adoption of Variable Frequency Drives (VFD’s) for Air handling units with temperature sensors.

• Adoption of new LED lighting to reduce the energy consumption.

• Installation of lighting energy saving devices (Step down transformer) for Energy conservation.

• Controlled the energy consumption of HVAC system by optimizing the temperature inside the stores.

• Optimized lighting by making necessary changes in the circuits and installing the sensors.

• Installed capacitor Banks to Maintain the Power factor and reduce the losses.

• DSM initiatives to reduce the excess unutilized demand there by reducing the fixed energy cost.

• All above efforts resulted in the conservation of 4,043,638 units of electricity across the chain during the year which amounts to appx. Rs. 309.74 lacs.

The Company also proposes to commence energy auditing, improvement in pumping system, reduction in energy cost in due course of time.

The Company earns Foreign Exchange on sale of its merchandise to its customers. Foreign Exchange outgo during the year included purchase of computer software and purchase of merchandise, professional fees etc. The foreign exchange earnings during the year was Rs. 4,224.40 lacs (previous year Rs. 4,392.57 lacs), where as Foreign Exchange outgo was Rs. 3,387.03 lacs (previous year Rs. 3,745.49 lacs).

Particulars of Employees

The particulars of employees’ as required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules 1975, as amended, forms part of this Report. However, in pursuance of Section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent to all shareholders of the Company, excluding the Statement of Particulars of Employees, which is available for inspection at the Registered Office of the Company during its working hours. Any shareholder interested in such particulars may inspect the same.



Directors’ Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of Directors confirm that:

1. In the preparation of Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profit of the Company for the year ended on that date;

3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

4. they have prepared the annual accounts on a ‘going concern’ basis.

Auditors Report

The Board has duly examined the Statutory Auditors report to accounts and the clarifications, wherever necessary, have been included in the Notes to Accounts, section of Annual Report.

Acknowledgement

Your Directors wish to convey their appreciation to all customers, business partners, suppliers, banks and financial institutions for their invaluable support and look forward to continued support in the future.

Your Directors would also like to place on record their sincere appreciation to the employees of the company for the total commitment, dedication and hard work at all levels. To them goes the credit for the Company’s achievements.

And to you our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board of Directors

Mumbai, Chandru L. RahejaApril 28, 2010 Chairman

Certificate of Compliance with the code of conduct for the financial year 2009-10

I, Govind Shrikhande, President & Chief Executive Officer & Executive Director of the Company, hereby declare that the Company has adopted a Code of Conduct for its Board Members and its management personnel and they have affirmed compliance with the said Code of Conduct.

For Shopper's Stop Ltd.

Govind ShrikhandeMumbai, President & Chief Executive Officer & April 28, 2010 Executive Director

Shopper's Stop Ltd.


Information required to be disclosed under SEBI(ESOS and ESPS) Guidelines, 1999 as on March 31, 2010

Description ESOP III ESOP IV ESOP V - 1 ESOP 2008 - 1 ESOP 2008 - 2

Options Granted 155,640 122,340 100,151 516,400 200,000

Date of Grant 01.05.2004 01.02.2005 28.12.2005 29.04.2009 24.03.2010

The pricing formula Rs.150/- Rs.240/- The options granted to eligible employees are granted at the average of the daily closing price of Equity Shares of the Company at BSE during the period of 6 months immediately preceding the date on which the options were granted. The Options were granted at an exercise price of Rs. 384/-

The options granted to eligible employees are granted at the closing price of the Equity Shares of the Company at BSE on the working day immediately preceding the date of grant. The options were granted at an exercise price of Rs. 110/-

The options granted to eligible employees are granted at the closing price of the Equity Shares of the Company at BSE on the working day immediately preceding the date of grant. The options were granted at an exercise price of Rs. 382/-

Options vested 113,517 81,249 65,573 — —

Options exercised and total number of equity Shares arising as a result of exercise of Options

109,638 66,517 16,781 — —

Options lapsed/Cancelled 42,810 45,889 42,166 3,700 —

Variation of terms of options

— — — — —

Money realised by exercise of options

16,445,700 15,964,080 6,443,904 — —

Total number of Options in force

3,192 9,934 41,204 512,700 200,000

Options granted to Senior Management personnels

B S Nagesh 22,560 13,980 11,353 50,000 —

Govind Shrikhande 9,230 7,270 5,306 130,000 12,000

C B Navalkar 7,140 4,470 3,469 50,000 8,000

Salil Nair 5,610 3,810 2,952 50,000 8,000

Arun Gupta — — — 20,000 6,000

Vivek Mathur — 2,310 1,302 10,000 4,000

Annexure to the Directors' Report

Shopper's Stop Ltd.


Options granted to any employee during the year amounting to 5% or more of options granted during the year

B. S. Nagesh 22,560 13,980 11,353 50,000 —

Govind Shrikhande 9,230 7,270 5,306 130,000 12,000

C. B. Navalkar — — — 50,000 —

Salil Nair — — — 50,000 —

Options granted to any employee equal to or exceeding 1% of the issued capital of the company at the time of grant

— — — — —

Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with (AS) 20 Earnings Per Share.

The diluted EPS of the Company calculated after considering the effect of potential equity shares arising on account of exercise of options is Rs. 14.40 per share.

Where the Company has calculated the employee compensation cost using the intrinsic value of the stock option, the difference between employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the option, shall be disclosed. The impact of this difference on profits and on EPS of the Company shall also be disclosed.

Had the Company followed fair value method for accounting the stock option compensation, the compensation expenses would have been lower by Rs. 1,088.39 lacs. Consequently profit after tax would have been higher by Rs.1,088.39 lacs and the basic EPS of the Company would have been Rs. 17.53 per share (higher by Rs. 3.13 per share) and the diluted EPS would have been Rs. 17.43 per share (higher by Rs. 3.11 per share).

Weighted average exercise prices and weighted average fair value of the options shall be disclosed seperately for options whose exercise price either equals or is less than the market price of the stock.

Weighted average exercise price is Rs. 185.94 and weighted average fair value is Rs.78.12.

A description of the method and significant assumption used during the year to estimate the fair values of options.

Black Scholes Option Pricing model using Volatility of 49.43%, risk free rate of 6.06%, expected life of 3.28 years, dividend yield of 0.30% and stock price of Rs.186.29.

The Employee Stock Options granted to employees under these ESOP 2005 Schemes have been surrended to the Company.

ESOP 2005 Scheme

No. of Options Date of Grant Grant Price Vesting Schedule

ESOP V - 2 * 157,931 29.07.2006 Rs. 540/- 30% - 29.07.2007

30% - 29.07.2008

40% - 29.07.2009

ESOP V - 3 145,000 29.07.2006 Rs. 540/- 100% - 29.07.2009

ESOP V - 5 330,000 23.08.2007 Rs. 485/- 35% - 29.07.2010 35% - 29.07.2011 30% - 29.07.2012

Total 632,931

* 2,568 options granted under ESOP V-2 are not being surrendered by resigned employees.

Annexure to the Directors' Report

Shopper's Stop Ltd.


To,

The Board of Directors

Shopper’s Stop Limited

Eureka Towers,

B Wing, 9th Floor,

Mindspace, Link Road,

Malad (West),

Mumbai – 400 064

Dear Sirs,

We hereby certify that:

(a) We have reviewed the financial statements and the cash flow statement for the year and that to the best of our knowledge and belief:

i. these statements do not contain any materially untrue statement or omit any material fact or contain statement that might be misleading;

ii. these statements together present a true and a fair view of the Company’s affair and are in compliance with existing accounting standards, applicable laws and regulation.

(b) There are, to the best of our knowledge and belief, no transaction entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.

(d) We have indicated to the auditors and the Audit Committee:

i. significant changes in internal control over the financial reporting during the year;

ii. significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

iii. instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company’s internal control system over financial reporting.

For Shopper's Stop Limited

Govind Shrikhande C. B. Navalkar

President & Chief Executive Officer & Executive Director Group Chief Financial Officer

April 28, 2010

Certification by CEO & CFO

Management Discussion and Analysis Report Shopper's Stop Ltd.


Indian Retail – The Story So Far

The Indian retail market – the fifth-largest retail destination in the world – was ranked the most attractive emerging market for investment

in the retail sector in management consultancy firm A.T. Kearney’s eighth annual Global Retail Development Index (GRDI) in 2009.

The modern retail industry today stands at a size of US$ 25 bn. The attractiveness quotient of India as a retail destination is clearly borne

out by the fact that as of July 2009, FDI inflows in single-brand retail trading stood at approximately US$46.60 mn, according to the

Department of Industrial Policy and Promotion (DIPP).

The availability of quality real estate for modern retail has undergone a sea change. In 1999, India had three shopping malls, collectively

measuring less than 1mn square feet. By the end of 2006, the country had 137 shopping malls, occupying 28 mn square feet. By the end

of 2008, it is estimated that there were more than 450 malls in India, accounting for at least 120 mn square feet.

Modern Retail Today

The modern retail sector, which currently accounts for around 5 per cent of the Indian retail market, is all set to witness maximum number

of large format malls and branded retail stores in South India, followed by North, West and the East in the next two years. Tier II cities like

Noida, Amritsar, Kochi and Gurgaon, are emerging as the favoured destinations for the retail sector with their huge growth potential.

Further, this sector is expected to invest around US$ 503.2 million in retail technology service solutions in the current financial year. This

could go further up to US$ 1.26 billion in the next four to five years, at a CAGR of 40 per cent. Moreover, many new international apparel

brands are preparing to open outlets in India.

From mandis to malls, Indian retailing has come a long way. The transformation of Indian retailing is to be noticed, especially with the

Indian economy playing a crucial role globally. Differentiation, branding, compelling customer experience, exploring commoditization,

share of purchasing power, and continuous innovation has now become the key retail strategies which the modern retail players are

focusing on. Out of the Indian GDP of about US$1036 bn in 2007, retail was about US$295 bn. Some key trends have now emerged in the

Indian retail industry in real estate (rental partnerships, revenue share model, rental holidays for property delays), in innovation of retail

formats and consolidation and collaboration between competing players to synergise costs and scale.

The slowdown in the past year and a half has taken a certain toll on the modern retail in India.

A study has pointed out that organised retail penetration, which was expected to touch 16% by 2012 from the current 5 %, is likely

to reach only around 10.4%. However, along with the slowdown came lessons for the modern retail players. Cost control, focus on

profitability and sustainable growth rather than exponential growth, have become the new mantras in the industry which augur very

well for its future. Modern retailers have taken strategic measures like store rationalisation, changes in supply chain, consolidation of

operations and improvement in IT infrastructure. These will be beneficial in the long-run. In the current scenario, Indian retailers are also

looking for opportunities to partner with foreign players as it could bring in the much needed capital and expertise.

The next big wave is expected to be internet retailing, already an accepted mode of shopping in the more mature western markets.

The benefits of internet retailing are unanimously accepted and acknowledged by most manufacturers, retailers and consumers alike.

From manufacturers and retailers’ perspective, internet retailing offers benefits in the form of cost-effectiveness, profitability and easy

accessibility and can be utilized across diverse products and services in grocery as well as non-grocery items.

Internet retailing allows greater access to products, enabling second tier cities and suburbs to acquire a wider variety of goods. At the

same time, the internet allows consumers to compare and contrast price points and product benefits and thus make informed decisions

on purchases. While internet surfing, emailing and other web-enabled services gained vast popularity, internet retailing and actual

purchases are currently confined to a very niche consumer base. Unlike other developed countries, Indians are not overly enthusiastic

about non-store retailing. Indian consumers’ prefer to touch and feel items before making their purchasing decisions and prefer to go to a



physical store instead. Also the products are not standardized and there could be tremendous amount of variability in products, sizes etc.

This has proved to be the key challenge for internet retailing and it therefore enjoyed only a restricted appeal for Indian consumers.

Besides pure play internet retailers, modern retailers in India have decided to adopt a mix of online and offline retailing. Whilst sales over

the internet for Indian modern retailers are very miniscule today, it is expected to become larger in the coming years.

Modern Retail Growth Outlook

After the turbulence of 08-09, the modern retail industry has bounced back in 09-10 on the back of improved customer sentiment and

astute cost management.

Strong underlying economic growth, population expansion, the increasing wealth of individuals and the rapid construction of organised

retail infrastructure are key factors behind the forecast explosive growth in India’s retail sales. Economic growth should create an

expanding middle and upper class consumer base. There will also be increasing penetration of India’s second and third tier cities, such

as Pune, Chandigarh etc. The greater availability of personal credit and a growing vehicle population that provides improved mobility also

contribute to a trend that is likely to see the value of the retail segment grow from an estimated US$427.25 bn in 2009 to US$755.47

bn by 2014.

The growth in the overall retail market is expected to be driven, largely by the explosion in the modern retail market. According to

Investment Commission of India (ICI) data, this segment accounted for US$12.10 bn of sales in 2006, 4.6% of the total retail segment.

As per study by Business Monitor International Ltd., Modern retail sales will reach US$99.09 bn by 2014, 13.1% of the total retail sales

in the country. Retail sales of Asian countries in 2009 were an estimated US$2.29 trn. China and India alone accounted for almost 93%

of regional retail sales in 2009, and by 2014 their share of the regional market is expected to be close to 94%.

The key Growth drivers of modern retail in India remain unchanged and actually substantiate the business model. The main drivers

of Indian modern retail growth can broadly be defined as economic growth, favourable population demographics and increased

industry investment.

• Economic growth: Though Asia, and consequently India was initially badly hit by late 2008’s sharp global economic slowdown, but

its recovery has been remarkable. The Indian domestic demand is showing clear and robust signs of growth. A positive five-year

economic forecast, ignoring the threat of a renewed slowdown on the back of unwinding fiscal stimulus should contribute to healthy

wage growth and sustained middle class expansion, which are major contributors to retail sales growth.

• Population growth: India has favourable age demographics, with a large young population that has the ability and keenness to spend.

This trend has in fact been a telling reason for return to health of the economy and the modern retail industry.

• Urbanisation: Economic growth has fuelled urbanisation region-wide as rural dwellers have moved to the city in search of higher

paid employment. This has been a major fillip for the urban-centric modern retail sector, dramatically lifting its potential audience

size. Such favourable geographic demographics have led urban real estate prices to soar but the benefits of a captive, high-spending

urban audience have outweighed the downsides for now.

• Westernisation: Increased exposure to Western consumption habits has fuelled consumerism not only in India but also in developed

and emerging Asia. Westernisation has helped in stimulating interest in a wider range of modern retail concepts.

• Industry investment: With modern retail model intact and the potential for serious players clearly being beyond doubt, modern

retailers in India have lined up impressive plans for growth and expansion. The investments, therefore made by these players will

go along way in increasing penetration and growth of modern retail. Furthermore, increased multinational interest & involvement in

the Indian modern retail will further fuel investments and growth. This will also result in the introduction of retail best practices that

support sales.



Strengths:

• First Citizens: Our First Citizens Club has continued to be the main stay of our business. With a total membership exceeding 1.6

million, the company strongly believes that its loyalty program is not only a source of substantial competitive advantage, but is

also a very strong strategic tool. Your company believes that its First Citizens will continue to drive its growth by increased average

expenditure in our stores which will be aided by targeted promotional activities.

• Strong focus on Systems & Processes: We continue to invest in our front and back end processes and systems. The company believes

that continuous investment in people, process and technology will drive sustainable and profitable growth for the company.

• Strong distribution and logistics network and supply chain: We have created a strong distribution and logistics network, with our four

Distribution Centers covering more than 400,000 square feet handling over 400,000 SKUs per year, and working 24x7.

• Enhancing our Human capital: We periodically assess our Customer Care Associates (CCAs) across all levels through assessment

centers to identify competency gaps and use development inputs (i.e. training, job rotation etc.) to bridge them. We benchmark our

compensation and benefits through consultants, with the best in the industry to pay our associates accordingly.

• Strong understanding of the real estate business: We benefit from our Promoters’ association with the real estate business and their

relationships with developers, which have helped us acquire preferred properties at competitive rates.

• Shopping Experience: The Company pioneered the departmental store format in the Indian market when the Indian consumer was

deprived of choice. Customers were drawn by the shopping experience. This is the differentiation that the Company continues to

bank on. Price is not essentially a differentiator for the Company, shopping experience is. The Company imparts special training to its

employees to ensure that service is not compromised on.

• Management Strength & Corporate Governance: The Company has a professional and well-established management team, headed

by Mr. Govind Shrikhande. Furthermore, the Company’s unwavering focus on good corporate governance has been a beacon for the

industry. Our internal and external auditors are amongst the Big 4 audit firms of the globe. The Board has 5 independent Directors.

• Strong bargaining strength: Having been in existence for so many years and due to its strong brand image, the Company believes

that it is well placed in negotiations / re-negotiations of property rentals, better commercials terms with merchandise suppliers etc.

The Company has successfully grown gross margins year on year.

Risks and Concerns:

• Execution: We believe the key risk to our growth is execution risk. The next wave of expansion is expected to happen over the next

30 months and the timely execution of this expansion will be critical. The Company has a strong execution team and we believe it

has the capability to execute varied retail formats.

• Employee retention: With the Indian economy back on a growth path the Company believes that employee satisfaction and retention

will become very important. The demand for reasonably experienced personnel in modern retail will only increase in the near term

and long term. Your Company believes that this problem will persist until the industry reaches a steady growth phase.

• Delay in store delivery: Majority of the new stores planned are in malls and any delays in the construction of the malls will delay the

company’s retail expansion plan. However, the Company has built up a robust pipeline of future stores and believes that delays will

not materially affect expansion.

• Pressure on retail lease rentals: Rent is one of the largest components in a retail business’ fixed costs, and the case is no different

for the Company. Rentals are expected to harden once again in the near term.



• Government levies: Retail is currently not viewed as an industry in India. Hence there are certain levies / cascading effect of taxes on

the business which are proving to be a very large burden as there are no modes for the industry to recover or pass on these levies.

Delay in the roll out of the GST regime is also a matter of concern.

• Investee Companies: The company has invested in other entities and in the current economic scenario, it is expected that the returns

from these will have a delayed gestation period than what was originally envisaged.

Opportunities:

• Geographical reach: Your Company continues to increase its Pan-India footprint and is expecting to launch into its next expansion

phase in the next 30 months. The Company strategy to increase the number of departmental stores, improve city wise penetration

and increase market share in cities where it’s stores already exists remains unchanged.

• Hypercity – Leveraging the potential in mixed retail: The Company has entered the hypermarket segment, which is a high growth

segment by acquiring a 19% stake in Hypercity. We believe that the scope for hypermarkets in India is immense. The stores run by

Hypercity have shown very impressive performance in the year gone by.

• Format diversification: Your Company, in it’s constant endeavour to capture wallet share, has diversified into multiple formats viz,

HomeStop which retails hard and soft furnishings, Crossword for books, music and stationery, M.A.C. which retails high end cosmetic

products, Clinique which retails skin care products, Mothercare which retails infant and kids merchandise and airport retailing, by

tying up with the Nuance Group of Switzerland. The Company has also made a successful foray into internet retailing through its

e-retailing portal.

• Preferred partner for foreign players: Your Company believes that by virtue of it’s presence across all lifestyle categories in the

departmental format, it’s strong brand value and it’s presence in the books and music segment, it is best placed to bring in

international brands into the country, there by enriching the product bouquet for it’s customers and in turn increasing opportunities

for product diversification and profit enhancement.

Threats:

• Economic recovery: A slower than expected economic recovery remains the biggest risk to the Indian retail outlook. However

economic data of the last 3 quarters suggest that the recovery is well underway.

• Threat of new entrants: With India becoming an attractive retail market and the gradual increase in foreign participation in the sector,

the Company expects many new entrants thus increasing competition.

• Competitive rivalry in the industry: There is intense rivalry among leading national retailers for new locations and quality real estate.

This will further sharpen in the coming 2 years as the established players will focus on growth.

• Price wars: Although it stimulates the sector in general, the rise of discounting and its extension beyond grocery retail could pose

a threat to retail sales values, if not to retail volumes. Price wars became a mainstay of the mainstream grocery retail sector

throughout the economic downturn and the extension of this trend into homeware or apparel could undermine retail profit margins.

• Terrorism: Due to the sheer volume of people visiting retails outlets coupled with easy access, retail is considered as a soft target

and hence more prone to terror attacks as compared to others.



Customer Entry:

Retailers measure entry as footfalls, which is the number of people entering the stores. This is computed through manual count in all

stores during trading hours.

0

5

10

15

20

25

30

2009-102008-092007-082006-072005-062004-05

Cust

omer

ent

ry (i

n m

n.)

Year

Customer EntryDepartmental Store

14.6

18.319.9

24.9

22.922.8

(Source: Company MIS)

Conversion Ratio:

Conversion is the ratio of the number of transactions (Cash Memo) versus the total customer entry into the stores. Tracking conversion

helps the retailer understand the productivity of his front-end store employees and the attractiveness of the merchandise and services.

23%

24%

25%

26%

27%

28%

29%

2009-102008-092007-082006-072005-062004-05

Conv

ersi

on R

atio

(%)

Year

27% 27% 27%

25%

28%

27%

Conversion Ratio %Departmental Store




Sales:

Gross Sales both at chain level and for Like-To-Like stores showed an improvement as compared to last year. The growth was 10% in

gross retail turnover. The sales per sq.ft have been computed on built-up area.

0

5

10

15

20

25

2009-102008-092007-082006-072005-062004-05

Sale

s (li

ke-to

-like

gro

wth

%)

Year

9

21

17

1

14

4

Sales (like-to-like growth %)(Departmental Stores)

Sale

s Pe

r Squ

are

Feet

(in

Rs.)

Year

0

1500

3000

4500

6000

7500

9000

10500

2009-102008-092007-082006-072005-062004-05

Sales Per Square Feet

69037576 7973

8671 8218 7883

(Source: Company MIS) (Source: Company MIS)

Apparel:

The Apparel contribution to total sales of the company was 59% in 2009-10 as compared to 60% in 2008-09. There has been growth in

Non-Apparel segment which has resulted in Non-Apparel sales percentage growing. This is primarily due to customer buying life style

products.

Non-Apparel:

This category includes Cosmetics, Personal Accessories, Jewellery, Leather Goods, Home Wares, Electronics, Books and Music. These

lifestyle products have high aspiration value, and as the consuming class increases, there will be a big surge in the demand for this

category. The Non-Apparel contribution to total sales of the Company was 41% in 2009-10.

Sale

s M

ix (%

)

Year

0%

20%

40%

60%

80%

100%

2009-102008-092007-082006-072005-062004-05

64.7% 61.0% 58.9% 61.2% 60.4%

35.3% 39.0% 41.1% 38.8% 39.6%

59.1%

40.9%

Non-Apparels Apparels

Sales Mix (Departmental Stores)




Private Label & Private Brands:

Your Company aims to provide a differentiated and unique offering to the customer through its own private labels as well as through

exclusive private brands. The contribution of private label is at 18.1% of sales as compared to 19.9% last year and private label sales

remained constant. Your company has got an exclusive arrangement for departmental store business with MUSTANG JEANS, a German

Brand, for their Men’s and Women’s Wear. Our Austin Reed U.K exclusive agreement to retail men’s & women’s wear has posted a

healthy growth. As a part of it’s strategy to provide a wide range of merchandise to customers, your Company aims to fill in the gaps in

the national brand offering through its private labels & exclusive arrangements with private & international brands.

Average Selling Price (ASP):

Average Selling Price is the Gross Retail Sales divided by the number of units sold. Tracking ASP helps the retailer to align the offering as

per the customer segment as well as improve the productivity of the floor space.

605

647

704

759

821855

400

500

600

700

800

900

2009-102008-092007-082006-072005-062004-05

Aver

age

Sellin

g Pr

ice

(Rs.

)

Year

Average Selling Price(Departmental Stores)


Transaction Size (Rs.):

Transaction size represents the amount spent by each customer on his buying. This is computed by the total sales divided by the number

of cash memos.

0

300

600

900

1200

1500

1800

2100

2400

2009-102008-092007-082006-072005-062004-05

Tran

sact

ion

Size

(Rs.

)

Year

12781366

15621713

1843

2030

Transaction Size (Rs.)Departmental Store




Merchandise Purchase:

Your company’s ability to present on the shelves correct merchandise assortments in the right mix, style, colour & fashion is one of its

most critical success factors. A team of Buyers & Merchandisers continuously ensure that the pricing strategy and value proposition are

completely in tune with the customers’ expectations. We regularly monitor sales trends to optimize inventory levels.

Our well established systems and processes in Buying & Merchandising & Logistics enables us to efficiently manage the flow of inventory

to stores, provide prompt replenishments and manage pricing.

Your company believes in a broad distribution of risk with no high dependency on any single supplier and has a diversified supplier base.

Suppliers are selected after evaluation based on fairly stringent parameters which ensure the quality & reliability of supply. Alternate

distribution channels for inventory have also been put in place as a contingency, should the need arise.

Supplier Risks:

Our broadly varied offering necessitates alliances with a large number of suppliers from various business sectors. In order to mitigate the

risk involved, we enter into arrangements with vendors in various business formats such as Outrights Buy/Sale or return, Consignment &

Concessionaire/Conducting arrangement.

Shrinkage:

Shrinkage in the retail business is defined as the loss in inventory through a combination of shop lifting, pilferage, and errors in

documentation and transaction processing that go unnoticed. We have focus on inventory control and have set up a separate

department called profit enhancement, which not only monitors Shrinkage on a regular basis but also looks at various factors that

could lead to Shrinkage at stores and distribution centers. The profit enhancement department, Store Operations along with the Supply

Chain team have worked together and monitored the Shrinkage level on a month on month basis which has resulted in the Shrinkage

percentage being controlled at 0.40% of the Turnover and our endeavour will always be to lower this ratio through proper monitoring

and continuously reviewing Inventory management processes and systems.

Year

0.41%

0.41% 0.40%

0.35%

0.40%

0.45%

0.50%

0.55%

0.60%

0.65%

0.70%

2009-102008-091007-082006-072005-062004-05

Shrinkage(as a % of Sales)

0.52%

0.46%0.47%


Sustaining high Gross Margin:

The gross margin has shown improvement and has increased during the year to 31.9% from 31.7% as compared to the last year. The

Company believes that an increasing share of revenue from private labels, improved sales mix with higher contribution from lifestyle



products (i.e. watches, leather, jewellery, perfumes and cosmetics), and shrinkage control have helped improve gross margins. Vendor

management as also sourcing ability has improved with scale and would accrue more economies and higher gross margins going

forward.

Operating Profit:

Operating Profit (without exceptional items) has increased by 138% to Rs. 11,726 lacs from Rs. 4,924 lacs in the previous year.

The Operating Profit Margin has grown to 7.6% from 3.6% due to improved gross margins, improvement in like to like sales growth,

rationalization of costs, right sizing of some departmental stores / new business formats.

0

2000

4000

6000

8000

10000

12000

14000

2009-102008-092007-082006-072005-062004-05

Year

Operating Profit (without exceptional items) % to Gross Retail Sales

6.7%

8.5%

8.9%

5.5%

3.6%

EBIDTA

EBID

TA (R

s. in

milli

ons)

3,360

5,660 7,874 6,503 4,924

11,726

7.6%

Interest:

Interest cost has reduced to Rs. 2,244 lacs as against Rs. 2,560 lacs mainly due to reduction in cost of funds and reduced borrowings.

Depreciation:

As a result of the review of the useful lives of fixed assets, the depreciation rates were revised from 1st April, 2009. Consequently the

depreciation charge for the year is lower by Rs. 3,190 lacs.

Profit after Tax:

The Company has achieved post tax profit of Rs. 5,023 lacs, as against a loss of Rs. 6,372 lacs, which is an increase by 179% over the

last year.

Dividend:

The Company has proposed a dividend of 15% amounting to Rs. 611 lacs (Including Corporate Dividend Tax).

Inventory:

The inventory as at the end of current year is Rs. 14,989 lacs as against Rs.14,498 lacs as at the end of the last year. Inventory holding

period is higher at 105 days during the current fiscal against 92 days last year due to opening of four new stores during the year. The

inventory has been valued at lower of cost and net realizable value.



Liquidity:

The cash generated from operations was Rs. 8,224 lacs.

Productivity / Operating efficiency parameters:

We look at our Gross Margin with reference to our Space, Inventory and Labour to monitor our efficiency with the help of 3 indicators i.e.

Gross Margin on Inventory (GMROI), Gross Margin Return on Floor Space (GMROF) and Gross Margin Return on Labour (GMROL).

GMROI helps to optimize inventory levels, GMROF helps to maximize the cash margins and GMROL helps to increase labour

productivity.

GMROI

2.0

2.5

3.0

3.5

4.0

4.5

2009-102008-092007-082006-072005-062004-05

GMRO

I (Rs

. Inv

ento

ry)

Year

2.232.35

2.75

3.62

3.29

4.17

GMROI


GMROF

GMRO

F (R

s. p

er u

nit o

f ret

ail s

pace

)

Year

1700

1900

2100

2300

2500

2700

2900

2009-102008-092007-082006-072005-062004-05

GMROF

23532520

2735

2471

2576

2330




GMROL

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

2009-102008-092007-082006-072005-062004-05

899,045

1,046,768

1,032,609

1,198,593

1,270,014

1,417,992

GMRO

L (R

s. p

er e

mpl

oyee

)

Year

GMROL


Partner Satisfaction Index (PSI):

The performance of any company depends on the association and relationship it builds with various vendors/partners over a period of

time. To evaluate this satisfaction and expectation, your company has appointed CSMM (Customer Satisfaction Measurement and

Management), a part of IMRB (Indian Marketing and Research Bureau) to do an impartial evaluation of our relationship with various

stakeholders. This helps your organization understand the expectations of various business partners, current strengths and concern areas

thereby help set a clear roadmap for improvement and better performance.

Our PSI scores for the five years are as below:

Year 2005 2006 2007 2008 2009

Scores 3.98 3.80 4.00 4.06 3.89

Partnership for Progress:

Partnership for Progress (PFP) is a vendor meet which your company conducts annually. During this event, your company gets and gives

opportunity to the top retail vendors/brands to discuss and strengthen the association, apart from exploring various business possibilities

with each other. The summit also becomes a platform for your company as well as its partners to share their experiences with each

other. Your company also invites well known international and national speakers to share learning and experience which is closely related

to Retail, Brand, Customer, Logistics, etc.

Your company also recognizes the performance of top partners who are rewarded with “SHOPPER’S STOP PINNACLE AWARDS” during

this summit.

This is an activity with more than 100 vendors/partners attending the summit.



Human Resources:

The global meltdown and recession, consumer spending and demands decreasing was a phase that was to pass by. We stood strong,

planning and calculating our future move, retaining our staff without going in for layoff. The phase took its turn to bring us to a grand

turnaround making each and every effort, correction and consolidation worthwhile.

In an ongoing process to increase the growth and development for our associates we have been looking at various levels of developmental

interactions. For the year under review we have provided the Baby Kangaroo program (BK), to identify potential associates, develop, train

and groom them for the next level and provide an opportunity for career progression.

The Managerial & Supervisory Training program (M.A.S.T) was conducted for 37 days with an exhaustive content through various internal

and external trainers. The objective was to ensure that the associates would be well versed with Technical Skills and Soft skills. The

assessments were conducted online through Reliance Web World. The objective of going online was to ensure efficiency and fairness to

the entire selection process.

The focus on Learning & Development has been an ongoing an integral part of the organization where there has been a 46.05% growth in

trainings hours extended to associates across all levels.

Training Hours 08-09 Training Hours 09-10 Growth Over Last Year %

6867.45 12728.94 46.05

The Gross Margin Return on Labour at 12%, has improved during the year.

Our company has conducted 76 assessment centers in the F.Y. 2009- 2010 covering 486 associates in order to provide growth opportunities,

ensuring a fair and transparent growth process.

The Associate Satisfaction Index (ASI) is conducted through an online survey yearly to understand the level of satisfaction associates

have towards their work, job satisfaction, loyalty index, helps us understand the strength and weakness of the organization to take

immediate corrective measures.

This year the ASI score is at 3.95 and the overall satisfaction levels were more or less the same across different levels.

Year 2006 2007 2008 2009 2010

Overall Loyalty Index 4.11 4.05 4.01 3.95 3.95

Marketing:

Carrying forward our new brand philosophy of ‘Start Something New’, was the central theme of all our advertising, promotions and events this year. At Shoppers Stop, we have been always looking at providing our esteemed customers with exclusive merchandise. This has propelled us to bring alive the effervescence of mega starrer films such as Love Aaj Kal, Chance Pe Dance and Karthik Calling Karthik. Their immense popularity and success is a clear indication of the deep permeation of Bollywood in Indian fashion and the growing desire of Indians to emulate their icons.

We have also set a Retail precedent through an exclusive retail arrangement with Vodafone-Essar for merchandising (in specific categories) of their brand mascot - Zoozoo. This is a first-of-its-kind arrangement in the history of India’s advertising that a Brand mascot is being licensed for merchandising. Character merchandising is a new emerging trend in India targeted at the Youth, and we have added a whole new dimension to this. Given the increasing size of the Youth Audience at Shoppers Stop, this merchandising line fits well in our merchandise offering.



This year also saw our focus shift from experienced based promotions to category based promotions. There were many category based

promotions that were well received by our customers – Watch Out festival, Foot fair, Stares & Glares, Glitter & Glamour to name a few.

These festivals focused on offers that were available across all brand available in our store for the particular category.

Customer Satisfaction:

At Shoppers Stop we strive to provide our customers with the best overall experience of shopping with us. To measure the customer

experience we conduct customer satisfaction surveys to evaluate a range of parameters including merchandise range and quality, store

environment, staff, transaction efficiency, loyalty programme, schemes and promotions to name a few and undertake improvements in

various areas.

We also include select competition stores in our surveys in order to measure experience in our stores as compared to competition.

Overall Customer Satisfaction Index:

January 2006 August 2006 November 2007 February 2009

60 63 63 81

Loyalty Programme:

Your Company has pioneered India’s first retail loyalty program - “First Citizens”. The First Citizens base grew by 26% from 12,77,109 to

over 16,11,578 customers in this year. During the current year, the First Citizens contributed 75% of the Company’s annual sales. The

First Citizen programme has 3 tiers - Classic Moments (entry level), Silver Edge and Golden Glow. Members fall into the various tiers on

the basis of their spends with us.

First Citizens also earn differential reward basis on their current tier of membership. First Citizens receive:-

• Reward points on their spends. These reward points can be redeemed for a wide variety of merchandise at your

Company ’s stores.

• Exclusive schemes, benefits and promotions.

• Extended and exclusive shopping hours - especially during the festive season. Special previews before the sale periods.

• Invitations to exclusive events - both in-store as well as those organised outside the stores.

• Home delivery of altered merchandise.

• Exclusive First Citizens lounge at select stores to relax after hectic shopping.

First Citizens always stay updated with all details pertaining to their membership as well as the best of offers and privileges available,

through a unique service - First Citizens First. Through this service First Citizens get all the information that they want on their mobile

phones simply by sending an SMS.

This year, the company initiated an exclusive promotion only for First Citizens – First Citizens’ Fiesta. Under this promotion the member

earned 3 times the reward points besides lots of other special offers and deals. The promotion was very well received and it helped us

further reinforce our strong relationship with this member community.

Co-branded Credit/Debit card programme with Citibank:

Your Company in association with Citibank has offered its First Citizens an option to add on a credit card to their existing loyalty cards.



This enables First Citizens to add on a credit line to their purchases. They also have the added advantage of being able to choose from

amongst various attractive financing options, cash back schemes, EMI schemes etc. for buying at your Company’s stores. For customers

who are averse to credit, there is an option of activating a debit card. As on 31 March, 2010, the number of members in the co-branded

card programme was over 2,00,000.

Risk Management and Internal Control:

Effective governance consists of competent management; implementation of standard policies and processes; maintenance of an

appropriate audit program with internal control environment effective risk monitoring and management information systems (MIS).

The Company has an integrated approach for management of risk and has formulated the framework for regulatory and risk management,

standardizing the definition of internal controls.

It also provides a framework for risk management and regulatory compliance, which requires risk assessments and related policies,

a control-based environment and activities, information and communication procedures, and a monitoring mechanism for the control

environment.

The Company has a sound system of Internal Controls for financial reporting of various transactions, efficiency of operations and

compliance with relevant laws and regulations commensurate with its size and nature of business. The Company has a well-defined

system of management reporting and periodic review of businesses to ensure timely decision-making.

These internal control procedures ensure the following:

• Efficient use and protection of resources.

• Compliance with policies, procedures and statutes.

• Accuracy and promptness of financial reports.

The MIS forms an integral part of the Company’s control mechanism. All operating parameters are monitored and controlled, with

material deviations from the annual planning and budgeting and business outlook including capital expenditure reported to the Board on

quarterly basis.

Reports of internal auditors are reviewed by the Audit Committee, and corrective measures are carried out towards further improvement

in systems and procedures and compliance with Internal Control System. The board also recognizes the work of the auditors as an

independent check on the information received from the management on the operations and performance of the company.

Technology Initiatives:

Your company continues to invest in technology solutions with a prudent mix of customized and packaged solutions. In the year

2009-10, with renegotiations and vendor management, the operational IT cost was contained with a 15% reduction over the

previous year. Amongst the key initiatives taken up some of them were:

In April 2009 your company out sourced its ERP operations to an Indian partner, UST Global based in Trivandrum, which supports several

legendary retail brands in the U.S. Middle East and Europe. The outsourcing provides the organization capacity to focus on business

innovation while moving away from day to day support activities.

With the planned growth in business operations over the next 2 years, we invested in IT infrastructure upgrade at the data center to

sustain the transactional systems as well as the Customer Relationship Management & Loyalty applications. With this, the immediate

benefit to Operations and Supply Chain has been visibly improved response times for queries, updates as well as day beginning and end



processes. Another initiative to address the growing data storage requirements was the induction of world leading storage solutions from

EMC Corporation. These investments will help us manage the growth in customers and transactions.

Equipped with rich transactional information, continued investments in data warehouse and business intelligence now help us track

customer trends, preferences and analyze behavior. Being ahead on the adoption curve, we work with the Loyalty, Marketing and B&M

teams to create actionable insights with help from tools such as SAS Analytics, a leader in advanced analytics.

The Internet offers a promise to engage with many tools, websites as social media gains momentum across the globe. Keeping in line

with trends on the Internet to engage with customers and stakeholders, your company now has a new look brand site with several new

features like promotions, a new look store locator, etc.

Corporate Governance:

Your Company has taken steps to ensure that the Corporate Governance guidelines are adopted and fully complied with. The detailed

Corporate Governance Report is attached with this report.

Cautionary Statement:

The statement made in this section describes the Company’s objectives, projections, expectations and estimations which may be

’forward looking statements’ within the meaning of applicable securities laws and regulations. The annual results can differ materially

from those expressed or implied, depending on the economic and climatic conditions, Government policies and other incidental factors

which are beyond the control of the Company.

Shopper's Stop Ltd.


To the Members of Shopper's Stop Limited

(1) We have examined the compliance of conditions of Corporate Governance by Shopper's Stop Limited (the Company) for the year ended on 31 March 2010 as stipulated in Clause 49 of the listing agreement of the Company with the stock exchanges.

(2) The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the company for ensuring compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

(3) In our opinion, and to the best of our information and according to the explanations given to us, we certify that the company has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement.

(4) We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For Deloitte Haskins & Sells,Chartered Accountants(Registration No. 117366W)

P. B. PardiwallaPartnerMembership No. 40005Place: Mumbai Date: 28 April, 2010

Auditors' Certificate on Corporate Governance

Corporate Governance Report Shopper's Stop Ltd.


Company’s philosophy on Code of Governance

The Company remains committed to the concept of good corporate governance practices in all its activities to ensure that the ultimate goal of making the Company a value driven organisation. Its philosophy on the code of Corporate Governance is:

• To ensure adequate control systems to enable the Board to efficiently conduct the business and discharge its responsibilities to shareholders.

• To ensure that the decision making process is fair and transparent.• To ensure fullest involvement and commitment of the management for maximisation of shareholders value.• To imbibe the corporate values in the employees and encourage them in their conduct.• To ensure that the Company follows the globally recognized corporate governance practices.

We have made conscious efforts to institutionalize Corporate Governance practice and we believe that it shall go beyond adherence to the regulatory framework. Our corporate structure, business and disclosure practices have been aligned to our Corporate Governance Philosophy. We will continuously endeavour to take forward the best practices to enhance stakeholder’s value.

Board of Directors

The Board of Directors comprises of ten members including one executive director and nine non executive directors. The Company has a non executive promoter Chairman and the number of independent directors is one half of the total number of Directors. The independent directors on the Board are professionals, technocrats and retail experts, who are senior, competent and highly respected persons from their respective fields and provide strategic direction and thrust to the operation of the Company.

The key decisions are taken after detailed deliberations and discussions by the Board. The Company always ensures that Board members are presented with all the relevant information on vital matters affecting the working of the Company including the information as inter-alia specified under Annexure - IA of clause 49 of the Listing Agreement.

None of the Directors on the Board is a Member on more than ten Committees and Chairman of more than five Committees (as specified in Clause 49), across all the companies in which they are Directors.

The composition of the Board of Directors, their attendance at Board Meetings during the year and at the last Annual General Meeting and the number of other Directorships and Committee Memberships held by them in other Companies are given below:

Name of Directors Category Designation Attendance particulars

No. of other Directorships & Committee Memberships/Chairmanships

Board Meetings

Last AGM

Directorships1 Committee Membership1 & 2

Committee Chairmanship1 & 2

Mr. Chandru L. Raheja

Promoter & Non-Executive Director Chairman 4 Yes 4 1 0

Mr. Ravi C. Raheja

Promoter & Non-Executive Director Director 4 Yes 5 1 1

Mr. Neel C. Raheja

Promoter & Non-Executive Director Director 5 Yes 4 2 0

Mr. B. S. Nagesh Non Executive Director Vice Chairman 3 Yes 6 0 1

Mr. Gulu L. Mirchandani

Independent & Non-Executive Director Director 5 No 8 2 0

Mr. Shahzaad S. Dalal

Independent & Non-Executive Director Director 2 Yes 14 3 3

Prof. Nitin Sanghavi


Mr. Deepak Ghaisas


Mr. Govind Shrikhande

Executive Director President & CEO 5 Yes 3 0 0

Mr. Nirvik Singh Independent & Non Executive Director Director 5 Yes 0 0 0



Notes:

1. The other Directorships and Chairmanships/Memberships of committees held in foreign companies, private limited companies and companies incorporated u/s 25 of the Companies Act, 1956 are excluded.

2. The Chairmanship and the Membership of Audit Committee and Shareholders’ Grievance Committee alone are considered.

3. Mr. Ravi C. Raheja and Mr. Neel C. Raheja are sons of Mr. Chandru. L. Raheja. No other director is related to any other director of the Company.

4. Mr. B. S. Nagesh was elevated as a Vice Chairman and Mr. Govind Shrikhande was elevated as President & CEO & Executive Director of the Company w.e.f. 18th August, 2009.

During the year under review, the Board of Directors met five times i.e on 29th April, 2009, 29th July, 2009, 29th October 2009, 14th November, 2009 and 29th January, 2010. The maximum interval between any two Meetings during this period does not exceed four months.

Dates for the Board Meetings for the ensuing year are decided well in advance and communicated to the Directors. The Agenda along with the explanatory notes are sent in advance to the Directors. Additional meetings of the Board are held when deemed necessary by the Board.

The Company has adopted the Code of Conduct for all Board members and management personnels of the Company. This Code is posted on the website of the Company. All Board members and management personnels have confirmed compliance to the Code of Conduct. A declaration signed by the Chief Executive Officer of the Company to this effect is appended with the Report.

Audit Committee

The Company has constituted an Audit Committee in the year 2001. The role, powers and functions of the Audit committee is in accordance with Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956.

The Audit Committee comprises of four Non-Executive Directors. The members of the Committee possess the sound knowledge of finance & accounts. The Audit Committee invites such of the executives, as it considers appropriate to be present at the meetings of the Committee. The President & CEO & Executive Director, Vice Chairman, Group Chief Financial Officer, Company Secretary, representatives of the internal auditors and statutory auditors are also present at the Audit Committee Meetings as invitees.

During the year under review, the Committee met four times on 29th April, 2009, 29th July, 2009, 29th October 2009 and 29th January 2010.

The Composition of the Audit Committee and the attendance of the members at the meetings held are as follows:

Name of Member Status Category No. of meetings attended

Mr. Deepak Ghaisas Chairman Independent Director 4

Mr. Ravi C. Raheja Member Non-Independent Director 3

Mr. Shahzaad S. Dalal Member Independent Director 2

Prof. Nitin Sanghavi Member Independent Director 4

Mr. Prashant Mehta, Vice President – Legal and Company Secretary of the Company acts as the Secretary to the Committee.

The broad terms of reference of the Audit Committee inter-alia is as under:

1. To oversee the Company’s financial reporting process and the disclosure of its financial information, to ensure that the financial statement is correct, sufficient and credible.

2. To recommend to the Board, the appointment and reappointment of Statutory Auditors, fixation of audit fees and also approval for payment of any other services.



3. To review with the management, the annual financial statements before submission to the board for approval, with particular reference to:

a) Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of Section 217 of the Companies Act, 1956.

b) Changes, if any, in accounting policies and practices and reasons for the same.

c) Major accounting entries involving estimates based on the exercise of judgement by management.

d) Significant adjustments made in the financial statements arising out of audit findings.

e) Compliance with listing and other legal requirements relating to financial statements.

f) Disclosure of related party transactions.

g) Qualifications in the draft audit report.

4. To review with the management, the quarterly financial statements before submission to the Board for approval.

5. To review with the management, performance of statutory and internal auditors and adequacy of the internal control systems.

6. Reviewing, with the management, the statement of uses/application of funds raised through an issue (public issue, rights issue, preferential issue, etc.) the statement of funds utilized for purposes other than those stated in the offer document or prospectus and making appropriate recommendations to the Board to take up steps in this matter.

7. To review the adequacy of internal audit function, including the structure of the internal audit department, staffing of the department, reporting structure coverage and frequency of internal audit.

8. Discussion with internal auditors any significant findings and follow up there on.

9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

11. To review the functioning of the Whistle Blower mechanism.

12. Carrying out any other function as may be added to the terms of reference of the Audit Committee.

Compensation/Remuneration Committee

The Company has constituted Compensation/Remuneration Committee in the year 2001. The scope of the activities of the Compensation/Remuneration Committee is to recommend the remuneration payable to the Executive Directors of the Company, payment of commission and sitting fees to Non Executive Directors and formulation and implementation of various Employee Stock Option Plans (ESOP) Schemes in the Company.

During the year, the Committee met five times i.e. on 29th April, 2009, 29th July, 2009, 29th October 2009, 29th January, 2010 and 24th March, 2010.

The Composition of the Committee and the attendance of the members at the meetings held are as follows:

Name of Member Status No. of meetings attended

Mr. Gulu L. Mirchandani Chairman 5

Mr. Ravi C. Raheja Member 4

Mr. Shahzaad S. Dalal Member 3

Prof. Nitin Sanghavi Member 4



Remuneration Policy

1. The remuneration of the Executive Directors is recommended by the Compensation/ Remuneration Committee based on criteria such as industry benchmarks, the Company’s performance vis-a-vis the industry, responsibilities shouldered, performance/ track record, macro economic review on remuneration packages of heads of other organisations and is decided by the Board of Directors. The Company pays remuneration by way of salary, perquisites, allowances and profit linked reward scheme to its Executive Directors. Annual increments are decided by the Compensation / Remuneration Committee within the salary approved by members and are normally effective from April 1, annually.

2. The Company pays sitting fees of Rs. 20,000/- to its Non-Executive Directors for attending each Board of Directors meeting.

3. The members of the Company at the Ninth Annual General Meeting approved the payment and distribution of sum not exceeding 1% of the net profits of the Company calculated in accordance with the provisions of sections 198, 349 and 350 of the Companies Act, 1956 by way of commission to Non-Executive Directors.

Details of compensation paid/payable to Non-Executive Directors during the year are as under:

Name of Directors Commission (Rs.) Sitting Fees (Rs.) Total (Rs.)

Mr. Chandru L. Raheja 0 80,000 80,000

Mr. Ravi C. Raheja 0 80,000 80,000

Mr. Neel C. Raheja 0 100,000 100,000

Mr. B. S Nagesh * 0 20,000 20,000

Mr. Gulu L. Mirchandani 200,000 100,000 300,000

Mr. Shahzaad S. Dalal 200,000 40,000 2,40,000

Prof. Nitin Sanghavi 200,000 80,000 2,80,000

Mr. Deepak Ghaisas 200,000 100,000 3,00,000

Mr. Nirvik Singh 200,000 100,000 3,00,000

Total 10,00,000 700,000 17,00,000

* Mr. B.S. Nagesh was elevated as a Vice Chairman of Company w.e.f. 18th August, 2009.

Details of remuneration paid/payable to Mr. B. S. Nagesh, then Managing Director for the period from April 1, 2009 to August 17, 2009 and Mr. Govind Shrikhande, President & CEO & Executive Director, for the financial year 2009-10 is as under:

(Rs. in lacs)

Name of Directors Salary and Bonus (Rs.)

Perquisites(Rs.)

Contribution to Provident Fund (Rs.)

Total (Rs.)

Mr. B. S. Nagesh 147.01 0.88 2.31 150.20

Mr. Govind Shrikhande 279.44 39.83 5.45 324.72

The Company had made applications to the Central Government for payment of remuneration to its executive directors in excess of the limits laid down in sections 198 and 309 of the Companies Act, 1956, read with schedule XIII of the Act for the financial years 2007-2008 and 2008-2009. The Central Government has approved payments aggregating to Rs. 311.96 lacs on 15th April, 2010 for the excess remuneration paid to the directors. The excess payment aggregating to Rs. 244.06 lacs will be shortly recovered from the directors.



Details of grant of stock options to and exercise of stock options by Mr. B. S. Nagesh, Vice Chairman under the following ESOP Schemes is as under:

Scheme Date of Grant

Options Granted

Options vested and exercised

Grant price per equity share (Rs.)

Fair value on the date of grant (Rs.)

Vesting period

ESOP-III 01.05.04 22,560 22,560 150 181 3 years

ESOP-IV 01.02.05 13,980 13,980 240 248 39 months

ESOP-V-1 28.12.05 11,353 3,405 384 429 3 years

ESOP 2008-1 29.04.09 50,000 0 110 110 38 months

Details of grant of stock options to and exercise of stock options by Mr. Govind Shrikhande, President & CEO & Executive Director under the following ESOP Schemes is as under:

Scheme Date of Grant

Options Granted

Options vested and exercised

Grant price per equity share (Rs.)

Fair value on the date of grant (Rs.)

Vesting period

ESOP-III 01.05.04 9,230 9,230 150 181 3 years

ESOP-IV 01.02.05 7,270 7,270 240 248 39 months

ESOP-V-1 28.12.05 5,306 1,591 384 429 3 years

ESOP 2008-1 29.04.09 1,30,000 0 110 110 38 months

ESOP 2008-2 24.03.10 12,000 0 382 382 3 years

Service Contract, severance fees and notice period

Mr. Govind Shrikhande, President & CEO & Executive Director:

Period of contract is 3 Years w.e.f. 29th July, 2009. There is no separate provision for payment of any severance fees. The members through Postal Ballot on June 29, 2009 had approved re-appointment of Mr. Shrikhande for a further period of 3 years effective from July 29, 2009.

Shareholders’ Investor Grievance and Share Transfer Committee

The Company has constituted the Committee in the year 2004. The Committee looks into redressal of shareholders’ grievances. The Committee also oversees the performance of the Registrar and Share Transfer Agents and recommends measures for overall improvement in the quality of investor services.

During the year 2009-10, the Committee met on 29th July, 2009.

The Composition of the Committee and the attendance of the members at the meeting held is as follows:

Name of Member Status No. of meeting attended

Mr. Ravi C. Raheja Chairman 1

Mr. Neel C. Raheja Member 1

Mr. B. S. Nagesh Member 1

Mr. Prashant Mehta, Vice President - Legal & Company Secretary of the Company has been designated as the Compliance Officer.

During the year, the Company has received one Communication/grievance, which was attended and resolved to the satisfaction of the Shareholder. No grievances were pending at the year end.



Subsidiary Companies

Clause 49 of Corporate Governance defines a ‘material non-listed Indian subsidiary’ as an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. In this regard, the Company does not have any material non-listed Indian subsidiary.

The Board of Directors of the Company reviews every quarter the financial statements and minutes of Board Meetings of unlisted subsidiary companies.

General Body Meetings

Details of Annual General Meetings held during last three years:

AGM for Financial Year

ended

Date Time Location Special Resolutionspassed thereat

2008-2009 29th July, 2009 2.30 p.m. R. D. National College & W. A. Science College, (College Auditorium), Linking Road, Bandra (West), Mumbai 400 050.

No special resolution has been passed.


• Appointment of Mr. Govind Shrikhande as Whole-time Director for a period of 3 years w.e.f. July 29, 2009.

• Employee Stock Option Scheme – ESOPs to employees of Company and Subsidiaries.

• Modification to earlier ESOP Schemes.

• Ratification of Right Issue of shares.


Revision in the “objects of the issue” and consequent utilization of monies raised by the Company in its Initial Public Offering.

Postal Ballot

As per section 192A of the Companies Act, 1956 during the year 2009-10, the following special resolutions were passed by members

through postal ballot on June 29, 2009 and December 16, 2009. Details of the postal ballot process followed in these regard are as

under:

1. Results of Postal Ballot announced on June 29, 2009

Approval of members was sought for following Special Resolutions:

1. Making investment, placing inter corporate deposit, or give guarantees and/or provide security(s) in specified bodies corporate

from time to time under section 372A of the Companies Act, 1956;



2. Waiver of the requirement of repayment of excess remuneration paid by the Company in case of Mr. B. S. Nagesh, Managing

Director of the Company for the financial year 2007-08 and 2008-09;

3. Waiver of the requirement of repayment of excess remuneration paid by the Company in case of Mr. Govind Shrikhande,

Executive Director and CEO of the Company for the financial year 2007-08 and 2008-09;

4. Payment of remuneration to Mr. Govind Shrikhande, Executive Director & Chief Executive Officer of the Company for the period

from April 1, 2009 up to July 28, 2009;

5. Re-appointment of Mr. Govind Shrikhande as “Executive Director & CEO” of the Company and

6. Continue to remain appointed and payment of remuneration to Mr. B. S. Nagesh, Managing Director of the Company for the

financial year 2009-10.

Voting Pattern and Procedure for Postal Ballot

1. The Board of Directors of the Company at its meeting held on April 29, 2009 appointed Mr. V. Sundaram, Practising Company

Secretary as a Scrutinizer for conducting the voting though Postal Ballot.

2. All postal ballot forms received upto June 27, 2009, the last date for receiving the postal ballot forms from shareholders were

considered for scrutiny. Envelopes received after this date were not considered for scrutiny.

3. The results of the Postal Ballot was announced on June 29, 2009 at the Registered Office of the Company. The details of voting

are as follows:

Particulars

In favour Against

Total No. of Shares

No. of Postal Ballot

Forms

No. of Votes in

Favour of%

No. of Postal Ballot

Forms

No. of Votes

Against%

Resolution No.1 246 28,875,544 99.997 30 944 0.003 28,876,488

Resolution No.2 214 28,870,223 99.978 63 6,290 0.022 28,876,513

Resolution No.3 214 28,870,223 99.978 63 6,290 0.022 28,876,513

Resolution No.4 237 28,874,371 99.993 39 2,117 0.007 28,876,488

Resolution No.5 242 28,874,233 99.992 34 2,255 0.008 28,876,488

Resolution No.6 241 28,874,394 99.993 35 2,094 0.007 28,876,488

2. Results of Postal Ballot announced on December 16, 2009

Approval of members was sought for following Special Resolutions:

1. To offer, issue and allotment of upto 4,000,000 Equity Shares and/or Securities convertible into upto 4,000,000 equity shares

of the Company, in one or more tranches, by way of Qualified Institutional Placement (“QIP”) to Qualified Institutional Buyers

(“QIBs”) as defined in the Securities & Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009

(“SEBI ICDR Regulations”), whether or not such investors are existing members of the Company.

2. To offer, issue and allot to the promoters and promoter group, in one or more tranches, by way of preferential issue, of upto

4,000,000 warrants, each warrant being convertible into one equity share of Rs. 10/- each at the price determined in accordance

with Chapter VII of the SEBI ICDR Regulations, on such terms and conditions as may be deemed appropriate by the Board at its

absolute discretion.



Voting Pattern and Procedure for Postal Ballot :

1. The Board of Directors of the Company at its meeting held on November 14, 2009 appointed Ms. Rashmi Bhide of

M/s. V Sundaram & Co., Practising Company Secretaries as a Scrutinizer for conducting the voting though Postal Ballot.

2. All postal ballot forms received upto December 15, 2009, the last date for receiving the postal ballot forms from shareholders

were considered for scrutiny. Envelopes received after this date were not considered for scrutiny.

3. The results of the Postal Ballot was announced on December 16, 2009 at the Registered Office of the Company. The details of

voting are as follows:

Particulars

In favour Against

Total No. of SharesNo. of

Postal Ballot Forms

No. of Votes

%No. of

Postal Ballot Forms

No. of Votes

%

Resolution No.1 141 26,751,671 99.999 16 340 0.001 26,752,011

Resolution No.2 138 26,751,596 99.998 19 415 0.002 26,752,011

The Company proposes to seek approval of members on June 21, 2010, through postal ballot in respect of the following:

1. Making investment in securities by subscription/ purchase or otherwise / loans or advances/ guarantee/ security(ies) etc. in Hypercity Retail (India) Ltd; upto an extent of Rs. 200 Crores under Section 372A of the Companies Act, 1956.

2. To handover ‘Crossword’ business to Crossword Bookstores Limited, a wholly owned subsidiary of the Company under Section 293(1)(a) of the Companies Act, 1956.

3. To delete the existing Article 150 – ‘Common Seal’ of the Articles of Association of the Company and substituting it with a new Article under Section 31 of the Companies Act, 1956.

Disclosure on materially significant related party transactions

There were no materially related party transactions that may have potential conflict with the interest of the Company at large. The transactions between the Company and the related parties are disclosed in Notes to the Accounts in the Annual Report.

Disclosure of Accounting Treatment

The financial statements of the Company comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

Board Disclosures – Risk Management

The Company has laid down the requisite procedures to inform the Board Members about the risk assessment and minimization procedures.

Details of non compliance with regard to Capital Market

There have been no instances of non-compliances by us and no penalties and/or strictures have been imposed on the Company by Stock Exchanges or SEBI or any statutory authority on any matter related to the capital markets during the last three years.

Code of conduct for Prevention of Insider Trading Practices

In compliance with the SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended, the Company has formulated, adopted and implemented “Shopper’s Stop Code of conduct for prevention of Insider Trading” in the shares of the Company.



Whistle Blower Policy

The Whistle Blower Policy aims to encourage all employees to inform the Company regarding any kind of misuse of Company property, mismanagement or wrongful conduct prevailing in the Company and no personnel has been denied access thereto. The disclosure would be sent to the Chairman of the Audit Committee/the Ethics Counselor who would investigate and recommend to the management of the Company to take such disciplinary or corrective action as may be deemed fit.

Compliance with non mandatory requirements of Clause 49 of the listing agreement

The Company has voluntarily complied with the non mandatory requirements relating to Remuneration Committee and whistle blower policy.

Management Discussion and Analysis

Management Discussion and Analysis is given as a separate section in the Annual Report.

Proceeds from public issues

The Company has disclosed the uses and application of funds raised through a public issue to the Audit Committee on a quarterly basis as a part of their quarterly declaration of financial results.

Means of Communication

• The quarterly results are published within 48 hours of the Board Meeting, in prominent daily newspapers viz. Economic Times and Maharashtra Times and the same are also posted on the Company’s website immediately. At the end of each quarter, the Company does a Conference call with the analysts in order to clarify their doubts and queries.

• The domain name of the Company’s website is www.shoppersstop.com and upto date financial results, official press releases and the other information about the Company and its businesses are available on the website.

• Presentations made to the institutional investors or to the analysts are immediately posted on Company’s website in order to share the information with public at large.

General Shareholders Information

(1) Annual General Meeting:

Date, Time & Venue : 29th July, 2010 at 3.00 p.m.

: Exchange Plaza, NSE Auditorium, Ground Floor, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. (2) Financial Calendar : 1 April to 31 March

(3) Date of Book Closure : 21st July, 2010 to 29th July, 2010 (Both days inclusive).(4) Dividend Payment Date : Within 5 days of declaration.

(5) Listing on the Stock Exchanges : 1. Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001. 2. National Stock Exchange of India Ltd. Exchange Plaza, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051.

The requisite Listing Fees for the financial year 2010-2011 has been paid to both the above Stock Exchanges where the equity shares of the Company are listed.

(6) Stock Code Bombay Stock Exchange Limited : 532638 National Stock Exchange of India Ltd. : SHOPERSTOP (Symbol)



(7) Stock Market Data for the period – 1 April, 2009 to 31 March, 2010Share price performance in comparison on BSE:

Month (2009-10)BSE Sensex No. of Shares

transactedHigh (Rs.) Low (Rs.) High Low

April 143.50 99.00 11,492.10 9,546.29 339,915May 194.00 110.15 14,930.54 11,621.30 196,502June 212.75 148.00 15,600.30 14,016.95 80,597July 198.50 126.00 15,732.81 13,219.99 1,497,587August 277.00 173.00 16,002.46 14,684.45 876,177September 309.00 244.15 17,142.52 15,356.72 798,621October 325.45 248.90 17,493.17 15,805.20 224,342November 389.30 261.15 17,290.48 15,330.56 506,677December 416.00 341.30 17,530.94 16,577.78 1,357,938January 401.00 320.05 17,790.33 15,982.08 429,123February 355.95 320.30 16,669.25 15,651.99 203,484March 423.80 342.05 17,793.01 16,438.45 516,773

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Share price performance in comparison on NSE:

Month (2009-10)NSE Nifty No. of Shares

transactedHigh (Rs.) Low (Rs.) High Low

April 149.95 99.00 3,517.25 2,965.70 497,512May 188.00 111.05 4,509.40 3,478.70 355,354June 210.00 146.35 4,693.20 4,143.25 202,682July 199.00 123.00 4,669.75 3,918.75 2,398,640August 275.00 166.95 4,743.75 4,353.45 1,295,034September 310.00 243.25 5,087.60 4,576.60 1,183,925October 307.00 249.00 5,181.95 4,687.50 430,573November 388.05 261.00 5,138.00 4,538.50 892,575December 415.00 340.25 5,221.85 4,943.95 1,676,511January 401.00 310.50 5,310.85 4,766.00 866,972February 354.85 318.05 4,992.00 4,675.40 419,877March 423.50 344.15 5,329.55 4,935.35 919,046



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(8) Distribution of Shareholding as on 31 March 2010 and 31 March 2009:

Shareholding of Nominal Value

As on March 31, 2010 As on March 31, 2009

Shareholders % to total Shareholders % to totalRupees Number % to

totalRupees % to

totalNumber % to

totalRupees % to

total

Upto 5000 7,995 96.86 3,477,760 1.00 8,285 97.46 3,418,570 0.985001-10000 82 0.99 645,110 0.18 68 0.80 526,250 0.1510001-20000 42 0.51 580,300 0.17 45 0.53 622,840 0.1820001-30000 33 0.40 853,890 0.24 23 0.27 589,160 0.1730001-40000 13 0.16 461,080 0.13 6 0.07 221,410 0.0640001-50000 9 0.11 417,720 0.12 11 0.13 513,790 0.1550001-100000 18 0.22 1,454,840 0.42 19 0.22 1,484,060 0.43

100001 and above 62 0.75 341,252,740 97.74 44 0.52 341,282,150 97.88

Total 8,254 100.00 349,143,440 100.00 8,501 100.00 348,658,230 100.00

Shareholding PatternThe categories of shareholdings as on 31 March, 2010 and 31 March, 2009:

CategoryAs on March 31, 2010 As on March 31, 2009

No. of Shares Held

% to total No. of Shares Held

% to total

Promoters 23,921,184 68.51 23,873,527 68.47Mutual Funds and UTI 3,696,438 10.59 2,782,251 7.98Financial Institution 1,38,050 0.40 138,050 0.40Foreign Institutional Investors 17,06,964 4.89 3,535,125 10.14Corporate Bodies 27,29,065 7.81 2,329,094 6.68Indian Public & HUF 2,684,901 7.69 2,192,307 6.29Banks 2,000 0.01 0 0NRI’s & OCB’s 8,254 0.02 10,845 0.03Clearing Members (Transit) 27,486 0.08 4,622 0.01Trust 2 0.00 2 0.00

Total 34,914,344 100.00 34,865,823 100.00



Shareholding of Board of Directors as on 31 March, 2010:

Name of Director Status No. of Shares

Mr. Chandru L. Raheja Promoter Director 348,750

Mr. Ravi C. Raheja Promoter Director 550,000

Mr. Neel C. Raheja Promoter Director 575,000

Mr. Gulu L. Mirchandani Director 0

Mr. Shahzaad S. Dalal Director 1,000

Prof. Nitin Sanghavi Director 0

Mr. Deepak Ghaisas* Director 0

Mr. B. S. Nagesh Vice Chairman 342,449

Mr. Govind Shrikhande President & CEO & Executive Director 31,295

Mr. Nirvik Singh Director 0

* Mr. Deepak Ghaisas holds 3,875 Equity Shares jointly with his wife as second holder.

(9) Registrar and Transfer Agent : Karvy Computershare Private Limited Plot No. 17-24, Vitthal Rao Nagar, Madhapur, Hyderabad - 500 081, (India). Tel : +91-40 2342 0818, Fax : +91-40 2342 0814(10) Share Transfer System : The shares of the Company are traded on the Stock Exchanges through the Depository System.

The ISIN allotted to the equity shares of the Company is INE498B01016. The request received by the Company/RTA for dematerialisation/rematerialisation are disposed

off expeditiously. Share certificates duly endorsed are issued to the shareholders, who opt for the shares in the physical form.

(11) Dematerialization of shares : The trading in Company’s equity shares is compulsorily in dematerialised mode for all investors. and liquidity As on date, entire share capital of the Company except 1,133 equity shares are being held in the

physical mode. The shares of the Company are regularly traded at both the Stock Exchanges where they are

listed, which ensure the necessary liquidity to shareholders.(12) Outstanding GDRs/ADRs / : The Company has allotted 4,000,000 warrants to its promoters at a price of Rs. 307.18/- each on Warrants or any Convertible 29 December, 2009. Each warrant is convertible into one Equity Share of Rs. 10/- each of the instruments Company. Warrant holders can convert these warrants within the statutory time frame.(13) Address for correspondence : Mr. Prashant Mehta Vice President – Legal & Company Secretary Eureka Towers, B-Wing, 9th Floor, Mindspace, Link Road, Malad (W), Mumbai - 400 064. Tel : (022) 4249 7000 E-mail ID : [email protected] Web Address : www.shoppersstop.com

(14) Store Locations : Western Region 1. 211-D, S. V. Road, Andheri (W), Mumbai - 400 058 2. Krushal Commercial Centre, G. M. Road, Chembur (W), Mumbai - 400 089 3. Suburbia, Old Bandra Talkies, Linking Road, Bandra (West), Mumbai - 400 050 4. Naman Plaza, 41, S. V. Road, Kandivali (W), Mumbai - 400 067 5. Nirmal Lifestyles, L. B. S. Marg, Mulund (W), Mumbai - 400 080 6. Inorbit Mall, Plot no. 1406-A, 28/A, Link Road, Malad (W), Mumbai - 400 064 7. Dynamix Mall, JVPD Scheme, Juhu, Mumbai - 400 049 8. Godrej Eternia, B Wing, Shivaji Nagar, Mumbai-Pune Road, Pune - 411 005 9. Nucleus Mall, 1 Church Road, Pune - 411 001 10. HomeStop, Inorbit Mall, Link Road, Malad (W), Mumbai - 400 064 11. Inorbit Mall, Plot no. 39/1, Vashi, Navi Mumbai - 400 705 12. HomeStop, 2nd Floor, Sector No. 30 A, Vashi, Navi Mumbai - 400 705



Southern Region 1. Garuda Star Mall, Magrath Road, Ashok Nagar, Bengaluru - 560 025 2. Commerce@Mantri, Bannerghatta Road, Bengaluru - 566 076 3. Plot No. 1-11-251/1, Alladin Mansion, Begumpet, Hyderabad - 500 016 4. No. 2, Harrington Road, Chetpet, Chennai - 600 031 5. 1, Sampige Road, Next to Mantri Greens, Before Sampige Theatre, Malleshwaram, Bengaluru - 560 003 6. GVK One Mall, Road No. - 01, Banjara Hills, Hyderabad - 500 034 7. Inorbit Mall, Hi Tech City, Madhapur, Opp. I-Lab, Hyderabad - 500 081 8. HomeStop, Raheja Point No. 17/2, Magrath Road, Bengaluru - 560 025

Northern Region 1. Gaurav Towers 2, Plot No. 2, Indira Palace, Malviya Nagar, Jaipur - 302 017 2. Ansal Plaza, Hudco Palace, Andrews Ganj, Khelgaon Marg, New Delhi - 110 049 3. The Metropolitan Mall, Mehrauli-Gurgaon Road, Gurgaon, Haryana - 122 002 4. Shipra Mall, Shipra Suncity, 9 Vaibhav Khand, Indirapuram, Ghaziabad - 201 012 5. HomeStop, Plot No. A/3, Select City Walk, District Centre, Saket, New Delhi - 110 017 6. E - City Mall, Opp. Paryatan Bhavan, Beside Eldeco Green Compound, Gomti Nagar, Lucknow - 226 010 7. Eros Mall, Plot no. 10, Shivaji Palace, District Centre, Raja Garden, New Delhi - 110 027 8. The Great India Palace, Plot No : 2, Sector 38 - A, New Okhla Industrial Development Area, District - Gautam Budh Nagar, Noida, Uttar Pradesh - 201301 9. Plot No. 2, MGF Metropolitan Saket, District Centre Saket, Sector II, New Delhi - 110 017 10. Khasra No. 1/1/2, Jhotwara Road, Suncity Triton, Chomu Circle, Village Bassi, Sitarampura, Tehsil Sawai, Jaipur - 302 012 11. Alpha One Mall, MBM Farm, Sultan Wing, Near Istaa Hotel, G. T. Road, Amritsar - 143 010

Eastern Region 1. 10/3, Lala Lajpat Rai Sarani (Elgin Road), Kolkata - 700 020 2. City Centre, DC - 1, Block - 1, Salt Lake, Kolkata - 700 064 3. South City Mall, 375, Prince Anwar Shah Road, Kolkata - 700 068

Shopper's Stop Ltd.


To,

The Members of Shopper’s Stop Limited

1. We have audited the attached Balance Sheet of Shopper’s Stop Limited (“the Company”) as at 31 March 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the

purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our

examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with

the books of account; (d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in

compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) Attention is invited to note no. 23 of the Financial Statements regarding non-provision of service tax proposed to be levied by

the Finance Bill 2010, retrospectively from 1 June 2007 – Rs. 1,728 lakhs. Our audit report has not been qualified in this regard since the Finance Bill has not yet been passed by Parliament and we are informed that the company is planning to challenge the proposed levy in courts of law.

(f) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2010; ii. in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and iii. in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.5. On the basis of written representations received from the Directors as on 31 March 2010 and taken on record by the Board of

Directors, none of the Directors is disqualified as on 31 March 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.



Auditors' Report

Shopper's Stop Ltd.


(Referred to in paragraph 3 of our report of even date)

1. Having regard to the nature of the Company’s business/activities/result, clauses (i-c), (vi), (viii), (x), (xii), (xiii), (xiv), (xix) and (xx) of CARO are not applicable.

2. In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the

fixed assets. (b) Some of the fixed assets were physically verified during the year by the Management in accordance with a programme of

verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

3. In respect of its inventory: (a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of

inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

4. The company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

i. The company has granted unsecured loans aggregating to Rs. 8,954.50 lakhs to one party during the year. At the year-end, the outstanding balance of such loans aggregated to Rs. 4,159.12 lakhs and the maximum amount involved during the year was Rs. 5,036.65 lakhs.

ii. The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

iii. The receipts of principal amounts and interest have been as per stipulations. iv. There are no overdue amounts of principal or interest, as per renegotiated terms, as at 31 March 2010.5. In our opinion and according to the information and explanations given to us, there is an adequate internal control system

commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

6. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of the contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transactions (excluding loans reported under paragraph 4 above) is in excess of Rs. 5 lakhs in respect of any party, we are informed that the nature of transaction is such that there are no comparative prevailing market prices.

7. In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

8. According to the information and explanations given to us in respect of statutory dues: i. The Company has generally been regular in depositing undisputed dues including Provident Fund, Investor Education and

Protection Fund, Employees’ State Insurance, Income-Tax, Wealth Tax, Sales Tax, Service Tax, Excise Duty, Customs Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

ii. There were no undisputed amounts payable in respect of Income-Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March 2010 for a period of more than six months from the date they became payable.

Annexure to the Auditors' Report

Shopper's Stop Ltd.


iii. Details of dues of Income Tax and Sales Tax which have not been deposited as on 31 March 2010 on account of any disputes are given below:

Name of the Statute Nature of the dues Period to which the amount relates

Forum where dispute is pending

Amounts (Rs. in lacs)

The West Bengal Value Added Tax, 2003

Sales Tax Demand F.Y. 2005-06 Additional Commissioner, Commercial Taxes, West Bengal

27.32

Rajasthan Value Added Tax, 2003

Sales Tax Demand F.Y. 2005-06 Assistant Commissioner, Commercial Taxes, Jaipur

26.40

The Uttar Pradesh Trade Tax Act, 1948

Sales Tax Demand F.Y. 2006-07 Additional Commissioner (Appeals), Commercial Tax, Ghaziabad

19.30

The Uttar Pradesh Trade Tax Act, 1948

Sales Tax Demand F.Y. 2006-07 Additional Commissioner (Appeals), Commercial Tax, Ghaziabad

339.79

The Income Tax Act, 1961 Income Tax Demand F.Y. 2006-07 Commissioner of Income Tax Appeals, Mumbai

24.01

9. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks.

10. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by its joint venture companies from banks are not prima facie prejudicial to the interests of the Company.

11. In our opinion and according to the information and explanations given to us, the term loans have been applied, during the year, for the purposes for which they were obtained.

12. According to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long-term investment.

13. During the year, the Company has issued optionally convertible warrants to companies covered in the Register maintained under Section 301 of the Companies Act, 1956. The price at which these optionally convertible warrants have been issued has been determined as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, which in our opinion, is not prejudicial to the interest of the Company.

14. To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the company has been noticed or reported during the year.



Annexure to the Auditors' Report

Shopper's Stop Ltd.


As per our attached report of even date. For and on behalf of the Board of Directors

For Deloitte Haskins & Sells C. L. Raheja Ravi Raheja Govind S. ShrikhandeChartered Accountants Chairman Director Customer Care Associate & President & Chief Executive Officer & Executive Director

P. B. Pardiwalla C. B. Navalkar Prashant MehtaPartner Customer Care Associate & Customer Care Associate &Mumbai, Dated: 28 April, 2010 Group Chief Financial Officer Company Secretary & Vice President - Legal

(All amounts in Rs. lacs)

Notes Mar-10 Mar-09SOURCES OF FUNDS SHAREHOLDERS’ FUNDS Share capital 3 3,491.43 3,486.60 Optionally Convertible Warrants 34 3,071.80 — Reserves and surplus 4 24,325.99 20,996.43

30,889.22 24,483.03 LOAN FUNDS Secured loans 5 17,641.08 17,822.21 Unsecured loans 6 1,500.00 2,954.10

19,141.08 20,776.31

50,030.30 45,259.34 APPLICATION OF FUNDS FIXED ASSETS 7 Gross Block 45,765.95 40,345.02 Less: Accumulated depreciation 18,666.39 16,794.42 Net Block 27,099.56 23,550.60 Capital work in progress (including Capital advances) 2,767.74 2,322.50

29,867.30 25,873.10

INVESTMENTS 8 11,967.45 9,744.56 DEFERRED TAX ASSET 26(b) 455.00 — CURRENT ASSETS, LOANS AND ADVANCES Inventories 9 14,989.32 14,498.10 Sundry debtors 10 1,090.90 1,129.87 Cash and bank balances 11 303.71 1,572.75 Loans and advances 12 19,112.85 17,886.96

35,496.78 35,087.68 Less: CURRENT LIABILITIES AND PROVISIONS 13 Current Liabilities 26,966.03 26,472.34 Provisions 790.20 148.36

27,756.23 26,620.70

Net current assets 7,740.55 8,466.98

PROFIT AND LOSS ACCOUNT Balance in Profit and Loss Account — 1,476.00 Less: General Reserve deducted as per contra — 301.30 — 1,174.70 50,030.30 45,259.34

The accompanying notes 1 to 36 are an integral part of the financial statements.

Balance Sheet as at 31 March, 2010

Shopper's Stop Ltd.






Notes Mar-10 Mar-09INCOME Retail Turnover Own merchandise (including concession sales) 2(e) 141,583.75 128,152.70 Consignment merchandise 13,074.07 10,158.10 Other Retail operating income 14 2,178.93 1,759.40 20 156,836.75 140,070.20 Less: Value Added Tax 6,856.84 6,437.70 Less: Cost of consignment merchandise 9,429.83 7,319.40

140,550.08 126,313.10 Other income 15 631.17 795.10

141,181.25 127,108.20EXPENDITURE Cost of goods sold 16 88,996.23 80,680.30 Employee costs 17 8,758.55 8,588.00 Operating and administrative expenses 18 31,700.27 32,915.80 Interest and finance charges 19 2,244.35 2,560.30 Depreciation and Amortisation 7 3,102.54 6,313.10

134,801.94 131,057.50

PROFIT/(LOSS) BEFORE EXCEPTIONAL ITEMS 6,379.31 (3,949.30)

Exceptional Item 35 (187.72) 2,486.40

PROFIT/(LOSS) BEFORE TAX 6,567.03 (6,435.70)

Tax Charge/(Credit) 26(a) 1,543.98 (63.90)

NET PROFIT/(LOSS) AFTER TAX 5,023.05 (6,371.80)

BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR (1,476.00) 4,895.80

3,547.05 (1,476.00)APPROPRIATIONS Transfer to General Reserve 251.15 — Proposed Dividend 523.72 — Corporate Dividend Tax 86.99 —

BALANCE CARRIED TO BALANCE SHEET 2,685.19 (1,476.00)

Earnings per share (Equity shares, par value of Rs. 10/- per share) 30 Basic (Rs.) 14.40 (18.27) Diluted (Rs.) 14.32 (18.27)

The accompanying notes 1 to 36 are an integral part of the financial statements.

Profit and Loss Account for the year ended 31 March, 2010

Shopper's Stop Ltd.






Mar-10 Mar-09Cash flows from operating activitiesNet profit/(loss) before tax 6,567.03 (6,435.70)Adjustments for: Depreciation and Amortisation 3,102.54 6,313.10 Interest and finance charges 2,244.35 2,560.30 Provision for diminution in the value of investments — 2.55 Provision for Advances/Doubtful Debts 427.73 2,483.85 (Profit)/Loss on sale of fixed assets (147.29) 178.60 Amortisation of Stock Compensation — 5.30 Interest income (375.40) (582.10) Operating profit before working capital changes 11,818.96 4,525.90 (Increase)/Decrease in Inventories (491.22) 2,489.50 Decrease/(Increase) in Sundry Debtors 4.97 (310.47) Increase in Loans and Advances (other than lease deposits) (2,208.63) (870.35) Decrease/(Increase) in Lease Deposits 213.63 (830.90) Increase in Current Liabilities and Provisions 513.11 5,802.45 Cash generated from operations 9,850.82 10,806.13 Income taxes paid (1,626.78) (706.10) Net cash generated from operating activities 8,224.04 10,100.03Cash flow from investing activities Purchase of fixed assets (including capital work in progress) (7,604.44) (8,569.60) Sale proceeds of fixed assets 655.03 242.60 Investments made (2,222.89) (1,672.37) Receipt of interest income 375.40 582.10 Net cash used for investing activities (8,796.90) (9,417.27)Cash flows from financing activities Proceeds from issue of share capital 4.83 0.40 Securities premium on Issue of Shares 103.60 4.80 Proceeds from issue of Optionally Convertible Warrants 3,071.80 — Payment of Dividend and Dividend Tax — (611.70) (Payments)/Proceeds of/from term loans to/from Banks (2,349.33) 12,017.40 Proceeds/(Payments) from/of Cash Credit Facilities from/to banks 662.51 (6,378.29) Proceeds from working capital demand loans from Banks 1,505.69 1,500.00 Payments of Unsecured loans to Banks (2,954.10) (3,545.89) Proceeds/(Payments) from/of Unsecured loan from/to Subsidiary company 1,500.00 (110.00) Payment of interest and finance charges (2,244.35) (2,560.30) Net cash (used in)/generated from financing activities (699.35) 316.42

Net (Decrease)/Increase in cash and cash equivalents (1,272.21) 999.18 Cash and cash equivalents as at beginning of the year 1,553.05 553.87 Cash and cash equivalents as at the end of the year 280.84 1,553.05 (1,272.21) 999.18Note: Cash and Cash Equivalents as per Balance Sheet (see Note 11) 303.71 1,572.75 Less: Deposit under lien 22.87 19.70 Cash and Cash Equivalents as reported above 280.84 1,553.05The accompanying notes 1 to 36 are an integral part of the financial statements.

Statement of Cash Flows for the year ended 31 March, 2010

Significant Accounting Policies and Notes forming part of Financial Statements for the year ended 31 March, 2010 Shopper's Stop Ltd.


1. COMPANY BACKGROUND

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

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention and in accordance with Generally Accepted Accounting Principles and the provisions of the Companies Act, 1956.

b) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and differences between actual results and estimates are recognised in the periods in which the results are known/materialize.

c) Fixed Assets and Depreciation

Tangible Assets

Fixed assets are stated at their original cost of acquisition less accumulated depreciation and impairment losses. Cost comprises of all costs incurred to bring the assets to their location and working condition and includes all expenses incurred up to the date of launching new stores to the extent they are attributable to the new store.

Depreciation is provided, pro rata for the period of use, by the straight line method (SLM), based on management’s estimate of useful lives of the fixed assets, or at the SLM rates prescribed in Schedule XIV to the Act whichever is higher, at the following annual rates:

(%) Up to 31 March 2009

(%) From 1 April 2009

Air conditioning and other equipment 5.00 – 20.00 5.00 – 20.00

Furniture, fixtures and other fittings 14.29 – 20.00 6.33 – 20.00

Computers 33.33 16.21 – 33.33

Vehicles 20.00 9.50

Leasehold Improvements 10.00 – 20.00 5.82 – 20.00

Intangible Assets

Intangible assets are stated at their cost of acquisition, less accumulated amortization and impairment losses. An intangible asset is recognized, where it is probable that the future economic benefits attributable to the asset will flow to the enterprise and where its cost can be reliably measured. The depreciable amount of intangible assets is allocated over the best estimate of its useful life on a straight-line basis.

The company capitalizes software and related implementation costs where it is reasonably estimated that the software has an enduring useful life. Software is depreciated over management estimate of its useful life: up to 31 March 2009 – 3 to 5 years, from 1 April 2009 – 6 years.

Trademarks and Patents are amortized uniformly over a period of 10 years.



Impairment of Assets

An asset is considered as impaired in accordance with Accounting Standard 28 on Impairment of Assets when at the balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset’s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the profit and loss account.

d) Investments

The company has presently classified all its investments as “Long Term” in accordance with Accounting Standard 13 on “Accounting for Investments”. Long-term investments are stated at cost. Provision is made to recognize a decline, other than temporary, in the value of investments.

e) Revenue Recognition

Revenue is recognised when it is earned and no significant uncertainty exists as to its realization or collection.

Retail sales are recognized on delivery of the merchandise to the customer, when the property in the goods is transferred for a price, when significant risks and rewards have been transferred and no effective ownership control is retained. Sales are net of discounts. Value Added Tax and Sales Tax are reduced from Retail Turnover.

The property in the merchandise of third party concession stores located within the main departmental store of the Company passes to the Company once a customer decides to purchase an item from the concession store. The Company in turn sells the item to the customer and is accordingly included under Retail Sales.

The property in the merchandise of third party consignment stock does not pass to the Company. Since, however, the sale of such stock forms a part of the activities of the Company’s departmental stores, the gross sales values and cost of the merchandise are displayed separately in the profit and loss account.

In respect of gift vouchers and point award schemes operated by the Company, sales are recognised when the gift vouchers or points are redeemed and the merchandise is sold to the customer.

Revenue from store displays and sponsorships are recognised based on the period for which the products or the sponsors advertisements are promoted/displayed. Facility management fees are recognised pro-rata over the period of the contract.

f) Inventories

Inventories are valued at the lower of cost and net realizable value. Cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present condition and location. Cost is determined by the weighted average cost method.

Merchandise received under consignment and concessionaire arrangements belong to the consignors/concessionaires and are therefore excluded from the Company’s inventories.

g) Employee Benefits

Compensation to employees for services rendered is measured and accounted for in accordance with Accounting Standard 15 on Employee Benefits.

Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to the profit and loss account in the period in which the service is rendered.

Employee Benefits under defined benefit plans and other long term employee benefits such as gratuity and compensated absences which fall due for payment after completion of employment or after a period of twelve months from rendering service,



are measured by the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The company’s obligations recognized in the balance sheet represent the present value of obligations as reduced by the fair value of plan assets, where applicable.

Actuarial Gains and losses are recognized immediately in the Profit and Loss Account.

h) Operating Lease

Operating Lease payments are recognized as an expense in the Profit & Loss Account on a straight-line basis or other bases, representative of the time pattern of the user’s benefit.

i) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying assets, as defined in Accounting Standard 16 on Borrowing Costs, are capitalized as part of the cost of acquisition. Other borrowing costs are expensed as incurred.

j) Foreign Currency Transactions

Transactions in foreign currencies are accounted at the prevailing rates of exchange on the date of transaction.

Monetary items denominated in foreign currencies, are restated at the prevailing rates of exchange at the Balance Sheet date. All gains and losses arising out of fluctuations in exchange rates are accounted for in the Profit and Loss Account.

Exchange differences on forward exchange contracts, entered into for hedging foreign exchange fluctuation risk in respect of an existing asset/liability, are recognized in the Profit and Loss Account in the reporting period in which the exchange rate changes. Premium/Discount on forward exchange contracts are treated as an expense/income over the life of the contract.

k) Income Tax

Income taxes are accounted for in accordance with Accounting Standard 22 on Accounting for Taxes on Income. Taxes comprise both current and deferred tax.

Current tax is measured at the amount expected to be paid/recovered from the taxation authorities, using the applicable tax rates and tax laws.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of deferred tax assets at each balance sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized.

At each balance sheet date the company re-assesses the unrecognized deferred tax asset and to the extent that it has become reasonably or virtually certain (in accordance with Accounting Standard 22) that sufficient future taxable income will be available against which such deferred tax asset can be realized, recognizes the previously unrecognized deferred tax asset.

Tax on distributed profits payable in accordance with the provisions of section 115 O of the Income Tax Act, 1961 is in accordance with the Guidance Note on Accounting for Corporate Dividend Tax, regarded as a tax on distribution of profits and is not considered in determination of the profits for the year.

l) Stock Based Compensation

The compensation cost of stock options granted to employees is calculated using the intrinsic value of the stock options. The compensation expense is amortized uniformly over the vesting period of the option.

m) Earnings Per Share

The company reports basic and diluted Earnings Per Share (EPS) in accordance with Accounting Standard 20 on Earnings Per Share. Basic EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares



outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

n) Cash Flow Statement

The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard 3 on Cash Flow Statements and presents the cash flows by operating, investing and financing activities of the Company.

Cash and cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered bank balances.

o) Contingent Liabilities

Contingent Liabilities as defined in Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Assets are disclosed by way of notes to the accounts. Disclosure is not made if the possibility of an outflow of future economic benefits is remote. Provision is made if it becomes probable that an outflow of future economic benefits will be required to settle the obligation.

Notes to Financial Statements for the year ended 31 March, 2010 Shopper's Stop Ltd.



Mar-10 Mar-09

3. SHARE CAPITAL

Authorised: 100,000,000 Equity shares of Rs. 10/- each 10,000.00 10,000.00

Issued and Subscribed: 34,914,344 (Previous year 34,865,823) Equity shares of Rs. 10/- each fully paid up 3,491.43 3,486.60

3,491.43 3,486.60

4. RESERVES AND SURPLUS

Securities Premium Account: Balance, at beginning of the year 20,964.61 20,959.88 Add: Received during the year 103.60 4.73

21,068.21 20,964.61

General Reserves Balance, at beginning of the year 301.30 301.30 Add: Transferred from Profit and Loss Account 251.15 — Less : Debit balance in Profit and Loss Account deducted as per contra — 301.30

552.45 —

Balance in Profit and Loss Account 2,685.19 —

Employees' Stock Options Outstanding (Refer note 29(d)) 20.14 31.82

24,325.99 20,996.43

5. SECURED LOANS

From Banks Term Loans (Refer note below) 9,668.12 12,017.45 Cash Credit Facilities (Refer note below) 967.27 304.76 Working Capital Demand Loans (Refer note below) 7,005.69 5,500.00

17,641.08 17,822.21

Note:

Term Loans, Cash Credit Facilities and Working Capital Demand Loans are secured by a first charge on all movable tangible properties and an exclusive lien on lease deposits and on all current assets of the Company, both present and future.

6. UNSECURED LOANS

Short term Loan from Banks — 2,954.10

From Subsidiary Company 1,500.00 —

1,500.00 2,954.10



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Mar-10 Mar-098. INVESTMENTS (Trade, long term at cost, unquoted) In Subsidiary Companies: Shoppers’ Stop Services (India) Limited 50,000 Equity shares of Rs. 10/- each Fully Paid 5.00 5.00 Less: Provision for diminution in value of investment (5.00) (5.00) — — Upasna Trading Limited 5,000 Equity shares of Rs.100/- each Fully Paid 5.00 5.00 Less: Provision for diminution in value of investment (5.00) (5.00) — — Shoppers’ Stop.Com (India) Limited 50,000 Equity shares of Rs. 10/- each Fully Paid 5.00 5.00 Less: Provision for diminution in value of investment (5.00) (5.00) — — Gateway Multichannel Retail (India) Limited 25,500 Equity shares of Rs.10/- each Fully Paid 2.55 2.55 Less: Provision for diminution in value of investment (2.55) (2.55) — — Crossword Bookstores Limited 95,62,500 Equity shares of Rs.10/- each Fully Paid 2,505.93 2,505.93 100,00,000 5.5% Cumulative Reedemable Preference Shares of Rs.10/- each Fully Paid 1,000.00 1,000.00 In Joint Venture Companies: Timezone Entertainment Private Limited 80,89,214 (Previous year 71,70,290) Equity shares of Rs. 10/- each Fully Paid 808.92 717.03 Nuance Group (India) Private Limited 364,10,000 (Previous year 246,00,000) Equity shares of Rs. 10/- each Fully Paid 3,641.00 2,460.00 In Associate Company: Hypercity Retail (India) Limited 1,80,500 Equity shares of Rs. 10/- each Fully Paid 20.49 20.49 399,00,000 (Previous year 304,00,000), 7% Cumulative Redeemable 3,990.00 3,040.00 Preference Shares of Rs. 10/- each Fully paid

Others: Stargaze Properties Private Limited 1,000 Equity shares of Rs. 10/- each Fully paid 0.10 0.10 Retailers Association of India 10,000 Equity shares of Rs. 10/- each Fully paid 1.00 1.00 Aesthetic Realtors Private Limited 66 Equity shares of Rs. 10/- each Fully Paid 0.01 0.01

11,967.45 9,744.56

9. INVENTORIES (At lower of cost and Net realisable value) Retail merchandise 14,989.32 14,498.10




Mar-10 Mar-09

10. SUNDRY DEBTORS

(unsecured)

Debts outstanding for more than 6 months

Considered good 81.91 118.02

Considered doubtful 46.40 12.40

Other Debts, considered good 1,008.99 1,011.85

1,137.30 1,142.27

Less: Provision for doubtful debts 46.40 12.40

1,090.90 1,129.87

11. CASH AND BANK BALANCES

Cash on hand (including cheques on hand) 155.09 120.10

Balances with scheduled banks:

In Current Accounts 125.75 1,432.95

In Margin Money accounts (under lien against bank guarantee) 22.87 19.70

303.71 1,572.75

12. LOANS AND ADVANCES

(unsecured, considered good unless otherwise stated)

Loans (including accrued interest)

To subsidiaries 2,335.70 2,534.38

To other group companies 4,470.62 1,158.50

Due from suppliers 1,233.47 1,343.38

Advances recoverable in cash or in kind or for value to be received:

Premises and other deposits 10,333.87 10,547.50

Service Tax Input Credits available 1,025.34 1,585.60

Prepayments 510.40 566.90

Income taxes paid (net of provision for tax) 699.60 1,071.80

Others 1,193.68 1,562.70

21,802.68 20,370.76

Less: Provision 2,689.83 2,483.80

19,112.85 17,886.96

Notes: i) Considered Good 19,112.85 17,886.96

Considered Doubtful 2,689.83 2,483.80

21,802.68 20,370.76

ii) Loans and advances include amount due from directors (Refer note 33(e)(i)) 244.06 556.00

Maximum amount outstanding during the year 556.00 583.90




Mar-10 Mar-0913. CURRENT LIABILITIES AND PROVISIONS Current liabilities Sundry creditors (see notes below) Total outstanding dues of Micro enterprises and Small enterprises — — Total Outstanding Dues of creditors other than Micro enterprises and Small enterprises 26,082.10 25,538.41 Security deposits 261.84 115.30 Other Liabilities 622.09 818.63 26,966.03 26,472.34 Provisions For Proposed Dividend 523.72 — For Corporate Dividend Tax 86.99 — For Leave Encashment 179.49 148.36 790.20 148.36 27,756.23 26,620.70 Notes: i) Sundry Creditors include amounts due to wholly owned subsidiaries: Shoppers’ Stop Services (India) Limited Rs. 2.67 lacs (Previous Year Rs. 2.73 lacs) Shoppers’ Stop.Com (India) Limited Rs. 2.04 lacs (Previous Year Rs. 2.28 lacs) Upasna Trading Limited Rs. 65.07 lacs (Previous Year Rs. 74.99 lacs) ii) The Company has not received any intimation from “suppliers” under the

Micro Small and Medium Enterprises Development Act, 2006 and therefore 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. OTHER RETAIL OPERATING INCOME Facility management fees 634.17 607.76 Income from store displays and Sponsorship Income 456.42 730.84 Direct Marketing Income 428.16 420.80 Relinquishment of development rights (Refer note below) 660.18 — 2,178.93 1,759.40 Note: The Company received Rs. 660.18 lacs as consideration towards relinquishment of

future development rights to open Mothercare Standalone stores.

15. OTHER INCOME Interest Income 375.40 582.10 [Tax deducted at source Rs. 4.21 lacs (Previous year Rs. 74.90 lacs)] Miscellaneous income and credits 57.05 213.00 Profit on sale of fixed assets (net) 147.29 — Foreign Exchange Gain (net) 51.43 — 631.17 795.10 16. COST OF GOODS SOLD (Including concession purchases) Opening stock 14,498.10 16,987.60 Add: Purchases 89,487.45 78,190.80 Less: Closing stock 14,989.32 14,498.10 88,996.23 80,680.30




Mar-10 Mar-0917. EMPLOYEE COSTS Salaries, allowances and bonus 8,190.08 7,957.10 Contribution to Provident and other funds 368.87 396.90 Stock compensation expense — 5.30 Staff welfare expenses 199.60 228.70 8,758.55 8,588.00

18. OPERATING AND ADMINISTRATIVE EXPENSES Insurance 57.46 74.30 Lease rent and hire charges 13,766.36 13,003.50 Business conducting fees 986.46 1,270.70 Rates and taxes 43.78 73.10 Repairs and maintenance – Buildings 2,474.61 2,219.40 – Others 552.84 495.60 Legal and professional fees 305.77 375.00 Housekeeping charges 479.88 605.80 Security charges 704.44 755.60 Computer expenses 791.79 715.20 Conveyance and travelling expenses 723.85 525.80 Electricity charges 3,493.92 3,543.40 Advertisement and publicity 1,602.64 2,753.60 Sales promotion 1,872.31 1,990.30 Charges on credit card transactions 889.90 822.80 Packing materials 485.72 518.20 Loss on Sale of Fixed Assets (net) — 178.60 Provision for Advances/Doubtful Debts 427.73 — Foreign Exchange Loss (net) — 20.30 Service Tax Input credit written off 753.37 652.90 Miscellaneous expenses 1,287.44 2,321.70 31,700.27 32,915.80

19. INTEREST AND FINANCE CHARGES Interest On fixed loans from banks 1,493.65 1,404.40 On Other Loans 690.51 1,069.60 Finance Charges 60.19 86.30 2,244.35 2,560.30

20. Retail Turnover in the Profit and Loss Account indicates the gross volumes of business and operations.

21. CAPITAL COMMITMENTS (Net of Advances)

Fixed assets 2,344.63 2,719.10




Mar-10 Mar-0922. CONTINGENT LIABILITIES IN RESPECT OF: a) Guarantee given for loan taken by Joint venture companies from banks 4,490.00 5,090.00 b) Contingent contractual claims 236.19 239.20 c) Disputed Income tax matters in appeal 245.42 51.60 d) Disputed sales tax matters in appeal 428.63 43.63 e) Disputed Customs Duty 24.00 24.00

23. SERVICE TAX The Finance Bill 2010 proposes to impose a levy of Service Tax on renting of immovable properties given for commercial use,

retrospectively with effect from 1 June 2007. Since, (a) the Finance Bill has not yet been enacted and (b) based on legal advice the company is planning to challenge the levy in a court of law, no provision for the same has been made in the accounts - Rs. 1,728 lacs.

24. SEGMENT REPORTING The company is primarily engaged in the business of retail trade through retail and departmental store facilities, which in the context

of AS 17 on ‘Segment Reporting’ constitutes a single reporting segment. 25. LEASING TRANSACTIONS Mar-10 Mar-09 a) Operating lease rentals charged to revenue: 10,488.49 10,544.73 b) Variable Rent charged to revenue: 3,194.38 2,319.07 Variable rent for certain stores is payable in accordance with the lease agreement

as the higher of (a) fixed minimum guarantee amount and (b) revenue share percentage.

c) The future minimum rental payments in respect of non cancellable lease for premises are as follows: Not later than one year 7,227.99 7,241.95 Later than one year and not later than five years 14,208.51 15,883.72 Later than five years 1,611.51 3,316.67

The agreements are executed for periods ranging from 33 to 288 months with a non cancellable period at the beginning of the agreement ranging from 33 to 108 months and having a renewable clause.

26. (a) TAX CHARGE/(CREDIT) The tax expense/(credit) for the year comprises of: Mar-10 Mar-09 Income Tax – Current tax 1,814.97 — – Deferred tax credit (455.00) (168.50) – Short Provision of tax of earlier year 184.01 — – Fringe Benefit Tax — 104.60 1,543.98 (63.90) (b) DEFERRED TAX ASSET Major components of Deferred Tax Asset are as follows: Depreciation 284.27 — Expenditure allowable on payment basis 59.46 — Provision for doubtful advances 111.27 — Deferred Tax Asset 455.00 —



(All amounts in Rs. lacs unless otherwise stated)27. RELATED PARTY DISCLOSURES Following are the material transactions with related parties:

Nature Subsidiaries Associates Joint Ventures

Key Management

Personnel

Total

Purchase of Assets 20.68 4.48 — — 25.16 Gateway Multi Channel Retail (India) Limited 20.68 — — —Hypercity Retail (India) Limited — 4.48 — —

(953.00) (2.00) — — (955.00)Sale of Assets — 10.58 — — 10.58 Hypercity Retail (India) Limited — 10.58 — —

— — — — —Sale of Merchandise — 1.29 69.04 — 70.33 Nuance Group (India) Private Limited — — 69.04 —Hypercity Retail (India) Limited — 1.29 — —

(2.00) (76.90) — (78.90)Payment of conducting fees/Lease Rent/Common Area Maintenance Charges

— 3,807.68 — — 3,807.68

Ivory Properties and Hotels Private Limited — 1,379.60 — — K. Raheja Private Limited — 0.20 — —Inorbit Malls (India) Private Limited — 2,090.78 — —Avacado Properties and Trading India Private Limited

— 0.88 — —

K. Raheja IT Park (Hyderabad) Private Limited — 2.63 — —Trion Properties Private Limited — 333.59 — —

— (3,020.10) — — (3,020.10)Expenses Paid 680.37 109.69 — — 790.06 Upasna Trading Limited 586.11 — — —Crossword Bookstores Limited 94.26 — — —Hypercity Retail (India) Limited — 104.40 — — Others — 5.29

(1,285.70) (656.80) — — (1,942.50)Interest Received — 328.13 18.36 — 346.49 Hypercity Retail (India) Limited — 328.13 — —Timezone Entertainment Private Ltd. — — 18.36 —

(215.90) (344.50) (19.60) — (580.00)Interest Expenses 35.53 1.85 — — 37.38 Crossword Bookstores Limited 35.53 — — —Ivory Properties and Hotels Private Limited — 1.85 — —

(147.10) — — — (147.10)

Service Charges Paid 42.55 — — — 42.55 Upasna Trading Limited 36.00 — — —Shoppers Stop Services (India) Limited 6.55 — — —

(54.20) — — — (54.20)



Nature Subsidiaries Associates Joint Ventures

Key Management

Personnel

Total

Deposits Paid — 330.22 — — 330.22 Hypercity Retail (India) Limited — 113.82 — —Trion Properties Private Limited — 216.40 — —

— (399.20) — — (399.20)Reimbursement of Expenses — 516.05 19.11 — 535.16 Nuance Group (India) Private Limited — — 19.11 —Hypercity Retail (India) Limited — 30.62 — —Inorbit Malls (India) Private Limited — 448.24 — —Trion Properties Private Limited — 37.19 — —

— (17.40) (364.50) — (381.90)

Expenses Recovered 1.30 350.08 — — 351.38 Hypercity Retail (India) Limited — 350.08 — — Gateway Multi Channel Retail (India) Limited 1.30 — — —

(25.50) (664.30) (22.10) — (711.90)

Investments Made — 950.00 1,272.89 — 2,222.89 Nuance Group (India) Private Limited — — 1,181.00 —Hypercity Retail (India) Limited - Preference Shares

— 950.00 — —

Timezone Entertainment Private Limited — — 91.89 — — (1,140.00) (535.00) — (1,675.00)

Deposit Repaid Back 2.31 17.81 — — 20.12 Gateway Multi Channel Retail (India) Limited 2.31 — — —K. Raheja Private Limited — 0.30 — — K. Raheja IT Park (Hyderabad) Private Limited — 17.51 — —

(64.60) (70.60) — — (135.20) Loan Given — 8,954.50 200.00 — 9,154.50 Hypercity Retail (India) Limited — 8,954.50 — —Timezone Entertainment Private Limited — 200.00 —

(979.70) (6,350.00) (350.00) — (7,679.70)Loan Received 2,095.00 — — — 2,095.00 Crossword Bookstores Limited 2,095.00 — — —

(1,645.00) — — — (1,645.00) Loan Repaid 595.00 — — — 595.00 Crossword Bookstores Limited 595.00 — — —

(1,755.00) — — — (1,755.00)Recovery of Loan 187.72 5,955.00 — — 6,142.72 Hypercity Retail (India) Limited — 5,955.00 — — — Gateway Multi Channel Retail (India) Limited 187.72 — — — —

(61.20) (6,013.20) (1,250.00) — (7,324.40)Advance to Directors — — — 244.06 244.06

— — — (556.00) (556.00) Remuneration to Directors — — — 474.92 474.92

— — — (113.42) (113.42)

(All amounts in Rs. lacs unless otherwise stated)



Balance outstanding at the year end Payable Shoppers Stop Services (India) Limited 2.67 (2.73) Cr. Shoppers Stop.Com (India) Limited 2.04 (2.28) Cr. Upasna Trading Limited 65.07 (74.99) Cr. Crossword Bookstores Limited 1,460.38 (52.20) Dr.

Receivables Hypercity Retail (India) Limited 4,372.75 (1,250.90) Dr. K. Raheja Private Limited — (0.40) Dr. Ivory Properties and Hotels Private Limited 1,082.62 (1,082.60) Dr. Inorbit Malls (India) Private Limited 645.86 (583.60) Dr. Gateway Multi Channel Retail (India) Limited 2,296.07 (2,482.20) Dr. K. Raheja IT Park (Hyderabad) Private Limited — (17.50) Dr. Timezone Entertainment Private Limited 201.94 — Nuance Group (India) Private Limited 109.56 (6.50) Cr. Trion Properties Private Limited 216.40 — Key Management Personnel 244.06 (556.00) Dr.

The figure in bracket pertain to previous year.

Names of related parties and description of relationship:

Subsidiaries Upasna Trading Limited, Shoppers Stop.Com (India) Limited, Shoppers Stop Services (India) Limited, Crossword Bookstores Limited, Gateway Multi Channel Retail (India) Limited

Associates Ivory Properties and Hotels Private Limited, K. Raheja Corp. Private Limited, K. Raheja Private Limited, Inorbit Malls (India) Private Limited, Hypercity Retail (India) Limited, Avacado Properties and Trading India Private Limited, K. Raheja IT Park (Hyderabad) Private Limited, Trion Properties Private Limited, The Resort

Joint Ventures Nuance Group (India) Private Limited Timezone Entertainment Private Limited

Key Management Personnel Govind Shrikhande B. S. Nagesh




28. DERIVATIVES

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations.

The following are the outstanding Forward Exchange Contracts entered into by the Company:

Particulars Mar-10 Mar-09

Number of Contracts 5 4

Type Buy Buy

GBP Equivalent (in lacs) 6.26 4.92

INR Equivalent (in lacs) 451.00 358.44

b) Unhedged Foreign Currency exposure

The year end foreign currency exposures that have not been hedged by a derivative instruments or otherwise are

given below:


Rs. in In Foreign Rs. in In Foreign lacs currency lacs currency

Payable for purchase of Merchandise 244.33 GBP 3,60,303 310.52 GBP 4,26,178

82.24 USD 1,82,728 5.89 USD 11,561

Payable towards Royalty 59.70 USD 1,32,646 67.25 USD 1,32,000

31.92 GBP 47,065 127.30 GBP 174,772

Receivable on account of Royalty 21.67 GBP 31,960 54.60 GBP 75,000

29. ESOP SCHEMES

Mar-10 Mar-09

a) Number of Employee Number of Weighted average Number of Weighted average

Stock Option Outstanding: Options exercise price Options exercise price

Outstanding at the beginning of the year 778,934 481.42 890,555 481.42

Granted during the year 716,400 185.94 — —

Lapsed/Cancelled during the year 44,284 — 108,128 —

Exercised during the year 48,521 206.52 3,493 150.00

Surrendered during the year 632,931 — — —

Outstanding at the end of the year 769,598 198.63 778,934 481.42



b) During the year, the following employee share based payment plans were formulated by the Company. The compensation cost of stock options granted to employees is calculated using the intrinsic value of the stock options.

2009-10 2008-09

Date of grant 29.04.2009 24.03.2010 — —

Number of option granted 516,400 200,000 — —

Contractual life 6 years 6 years — — 2 months

Vesting Schedule (from the date of grant)

First Year 30% 30% — —

Second Year 30% 30% — —

Third Year 40% 40% — —

Method of settlement Equity Equity — —

Estimated Fair Values (Arrived at by applying

Black Scholes Option Pricing Model) Rs. 42.13 171.05 — —

Model inputs (share price at the grant date) Rs. 111.50 379.40 — —

Exercise Price Rs. 110.00 382.00 — —

Expected Volatility 47.92% 53.32% — —

Risk free rate of return 5.38% - 7.38% —

c) The weighted average contractual life of the options outstanding is 5.17 years

d) Other information regarding employee share-based payment plans is as below:

Mar-10 Mar-09

i) Expense arising from employee share based payment plans — 5.30

ii) Impact on PAT if fair value method had been used instead of Intrinsic Value Method 1,088.39 (528.40)

iii) EPS if fair value method have been used instead of Intrinsic Value Method (Rs.)

– Basic 17.53 (19.78)

– Diluted 17.43 (19.78)

iv) Closing balance of ESOP 20.14 31.82

30. Earning pEr sharE (Eps) is calculatEd as follows:


(a) Profit/(Loss) attributable to equity share holders (Rs. in lacs) 5,023.05 (6,371.80)

(b) Weighted Number of equity shares outstanding during the year 34,870,875 34,865,593

(c) Weighted Number of equity shares outstanding

during the year after adjustment for dilution 35,069,496 34,865,593

(d) Nominal value per share (Rs.) rs. 10 Rs. 10

(e) EPS:

– Basic (Rs.) 14.40 (18.27)

– Diluted (Rs.) 14.32 (18.27)



31. intErEst in Joint VEnturEs:

The Company's interests, as a venturer, in jointly controlled entities incorporated in India are as follows:

(all amounts in rs. lacs unless otherwise stated)

name principal activities proportion of ownership interest as at

31 March 2010 and 31 March 2009

Nuance Group (India) Private Limited Airport retailing 50%

Timezone Entertainment Private Limited Entertainment 45%

The Company's share in the assets, liabilities, income and expenses (without elimination of inter company transactions) related to its interest in the joint ventures are:

Mar-10 Mar-09

i. assEts

1. Fixed Assets including Capital Work in Progress (Net) 1,939.77 2,475.53

2. Investments (Rs. 5,000) 0.02 0.02

3. Current Assets, Loan and Advances

a) Inventories 915.80 1,351.26

b) Sundry Debtors 112.52 507.81

c) Cash and Bank Balances 449.19 421.91

d) Loans and Advances 1,807.30 2,516.65

ii. liaBilitiEs

1. Loan Funds

a) Secured Loan 2,276.04 3,428.55

b) Unsecured Loans 90.83 —

2. Current Liabilities and Provisions

a) Liabilities 1,411.30 1,997.57

b) Provisions 23.12 30.11

iii. incoME

Revenue 4,142.50 2,749.42

iV. EXpEnsEs

Operational Expenses 4,816.27 2,954.82

Interest 338.31 301.59

Depreciation/Amortisation 561.24 394.36

V. contingEnt liaBilitiEs 161.82 416.40

note 1: The company’s share in the assets, liabilities, income and expenses in Nuance Group (India) Private Limited is based on the audited financials for the year ended 31 December 2009.

note 2: The company’s share in the assets, liabilities, income and expenses in Timezone Entertainment Private Limited is based on the management certified accounts for the year ended 31 March 2010.



(All amounts in Rs. lacs, unless otherwise stated)

32. EMPLOYEE BENEFITS: 31 March 2010 31 March 2009

Post-employment benefits Defined contribution plans Company’s contribution to Provident and other funds 368.87 396.90 Defined benefit scheme-Gratuity a) Liability recognised in Balance Sheet Change in Benefit Obligation Present Value of Obligations As at the beginning of the year 280.43 192.60 Service cost 69.27 113.58 Interest cost 20.61 18.57 Actuarial Loss/(Gain) on obligations 1.81 (43.68) Benefits paid/transferred (109.61) (0.64) As at the end of the year 262.51 280.43 Less: Fair Value of Plan Assets As at the beginning of the year 280.43 192.60 Expected Return on Plan assets less loss on investments 20.47 20.68 Employers’ Contribution 87.67 83.60 Benefits paid/transferred (109.61) (0.64) Actuarial Loss on Plan Assets (16.45) (15.81) As at the end of the year 262.51 280.43

Net Liability — —

b) Expense during the year Service Cost 69.27 113.58 Interest Cost 20.61 18.57 Expected Return on Plan assets (20.47) (20.68) Actuarial Loss/(Gain) on obligations 18.26 (27.85) 87.67 83.62 c) Principal actuarial assumptions Rate of Discounting 7.50% p.a. 7.75% p.a. Rate of Return on Plan Assets 8.00% p.a. 8.00% p.a. Rate of increase in salaries 4.00% p.a. 4.00% p.a. Rate of Attrition 13.76% p.a. 3.00-5.00% p.a.

The company expects to contribute Rs. 83.29 lacs to its Gratuity plan for the next year.In assessing the Company’s Post Retirement Liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables.Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.The gratuity benefit scheme of the Company is managed by Life Insurance Corporation of India (LIC). The Company is currently awaiting the details of the composition of the plan assets, by category, from the LIC for the current and the previous years and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given.




Mar-10 Mar-0933. SUPPLEMENTARY STATUTORY DATA a) Value of Imports on CIF Basis: Computer software 2.89 62.20 Computer Hardware 51.40 — Furniture, Fixtures and Electrical Items 400.04 420.40 Purchase of Merchandise 2,208.15 2,633.62 2,662.48 3,116.22 b) Expenditure in Foreign Currency (on payment basis): Travelling expenses 25.15 45.77 Subscription and membership 34.42 14.30 Computer consultancy 106.70 98.60 Professional fees 28.21 165.40 Royalty 454.65 252.30 Reimbursement of other expenses 7.18 18.60 Others 68.24 34.30 724.55 629.27 c) Earnings in Foreign Exchange (On receipt basis): Foreign currency and foreign credit card collection on sale of merchandise 4,164.29 4,332.70 Royalty 60.11 59.87 4,224.40 4,392.57 d) Payments to Auditors (Excluding service tax): i) Audit fees 25.00 25.00 ii) Other matters 2.00 10.15 iii) Out of pocket expenses 0.28 0.60 27.28 35.75 e) Payments to Directors: i) Executive Directors: Salary, allowance and bonus 426.45 76.06 Contribution to Provident and other Funds 7.76 17.42 Perquisites 40.71 19.94 474.92 113.42 The Company made applications to the Central Government for payment

of remuneration to its executive directors in excess of the limits laid down in sections 198 and 309 of the Companies Act, 1956, read with schedule XIII of the Act for the financial years 2007-2008 and 2008-2009. The Central Government has approved payments aggregating to Rs. 311.96 lacs on 15 April 2010 for the excess remuneration paid to the directors. The excess payment aggregating to Rs. 244.06 lacs will be shortly recovered from the directors. (Note no. 12)

ii) Non-executive directors: – Commission 10.00 — – Sitting Fees 7.00 6.60

Other disclosures:

Particulars 31 March 2010 31 March 2009 31 March 2008

Present Value of the Defined Benefit Obligation 262.51 280.43 192.60 Fair Value of the Plan Assets 262.51 280.43 192.60 Surplus/(Deficit) in the Plan — — — Experience Adjustments arising on Plan Liabilities – Gain (49.45) (0.44) — Experience Adjustments arising on Plan Assets – Loss (16.45) (15.81) —

The Company adopted revised Accounting Standard 15 on Employee Benefits from the financial year commencing 1 April 2007.



g) Quantitative details of opening stock, purchases, sales and closing stock (excluding consignment merchandise)

For the year ended 31 March 2010. (Quantity in '000s)

Category Units Opening stock Purchases Sales Closing stock*

Quantity Amount Quantity Amount Quantity Amount Quantity Amount

Apparels Nos. 1,995 8,278.50 10,870 48,099.17 10,513 80,560.58 2,198 8,436.27

Non Apparels

Nos. 2,068 6,219.60 9,507 41,388.28 9,257 61,023.17 2,204 6,553.05

4,063 14,498.10 20,377 89,487.45 19,770 141,583.75 4,402 14,989.32

For the year ended 31 March 2009 (Quantity in '000s)

Category Units Opening stock Purchases Sales Closing stock*

Quantity Amount Quantity Amount Quantity Amount Quantity Amount

Apparels Nos. 2,327 10,255.60 9,899 43,018.70 10,013 73,570.36 1,995 8,278.50

Non Apparels Nos. 2,331 6,732.00 8,859 35,172.10 9,063 54,582.34 2,068 6,219.60

4,658 16,987.60 18,758 78,190.80 19,076 128,152.70 4,063 14,498.10

*Closing stock is after adjusting samples, free gifts, damaged goods and shortages at stores.


Mar-10 Mar-09 f) Computation of Net Profit in accordance with Section 309(5) of the Companies Act,1956:

Profit/(Loss) Before Tax 6,567.03 (6,435.70)

Add: Depreciation as per books of account 3,102.54 6,313.10 (Profit)/Loss on sale of Fixed Assets - per books (147.29) 178.60 Managerial Remuneration (including commission) 484.92 113.42 Provision for Doubtful Debts/Advances/Investments 427.73 2,486.40

10,434.93 2,655.82 Less: Depreciation as per section 350* 3,287.24 2,998.37 Recovery of Doubtful advances 187.72 — Profit on sale of fixed assets per section 349 100.91 — Excess of expenditure over income of previous year 342.55 —

Net Profit/(Loss) as per Section 349 read with Section 309(5) 6,516.51 (342.55)

*The Company depreciates fixed assets based on estimated useful lives that are lower than those implicit in Schedule XIV of the Companies Act, 1956 (Refer note 2(c)). Based on a legal opinion, the rates of depreciation used by the Company for the purposes of determination of profits under section 349 for the year are the minimum prescribed by Schedule XIV.

Commission to Non Executive Directors - 1% of net profits: Rs. 65.16 lacs restricted to Rs. 10 lacs.



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

35. EXCEPTIONAL ITEM The Board of Directors of Gateway Multichannel Retail (India) Limited (Gateway) had in January 2009 decided to discontinue

operations and the company had therefore made a provision for its investments and loans and advances aggregating to Rs. 2,486.40 lacs in the previous year. The impairment charge was disclosed as an “Exceptional item” in the Profit and Loss Account. During the year the company has recovered Rs. 187.72 lacs from Gateway and has accordingly disclosed the credit under the “Exceptional item” line.

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

Shopper's Stop Ltd.


I. Registration Details:

Registration No. State Code

Balance Sheet Date

II. Capital raised during the year (Amount in Rs. Thousands): Public Issue Right Issue

Bonus Issue Optionally Convertible Warrants

III. Position of Mobilisation and Deployment of Funds (Amounts in Rs. Thousands): Total Liabilities Total Assets

Sources of Funds Paid-up Capital Reverse & Surplus

Secured Loans Unsecured Loanss

Application of Funds Net Fixed Assets Investments

Net Current Assets Deferred Tax Asset

Accumulated Losses

IV. Performance of Company (Amount in Rs. Thousands): Turnover (Gross Revenue) Total Expenditure

+ – Profit/Loss Before Tax + – Profit/Loss After Tax

(Please tick Appropriate box + for Profit – for Loss)

Earnings per Share in Rs. Dividend

V. Generic Names of Three Principal Products/Services of Company (as per Monetary Terms): Item Code No. (ITC Code) Product Description

Item Code No. (ITC Code) Product Description

Item Code No. (ITC Code) Product Description

C. L. Raheja Ravi Raheja Govind S. ShrikhandeChairman Director Customer Care Associate & President & Chief Executive Officer & Executive Director

C. B. Navalkar Prashant MehtaCustomer Care Associate & Customer Care Associate &Group Chief Financial Officer Company Secretary &Mumbai, Dated : 28 April, 2010 Vice President - Legal

– – –

1 1

1 0 0 3 3 1Y e a rMonthD a t e

1 1 - 1 0 8 7 9 8

– – –

– – – 3 0 7 1 8 0

5 0 0 3 0 3 0 5 0 0 3 0 3 0

3 4 9 1 4 3 2 4 3 2 5 9 9

1 7 6 4 1 0 8 1 5 0 0 0 0

2 9 8 6 7 3 0 1 1 9 6 7 4 5

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N A

N A

N A

Balance Sheet Abstract and Company's General Business Profile

Shopper's Stop Ltd.


Statement pursuant to Section 212(1)(e) of the Companies Act, 1956 relating to Subsidiary Companies

(Rs. in Lacs)

Name of the Subsidiary Companies

Crossword Bookstores

Limited

Upasna Trading Limited

Shopper's Stop.Com (India) Limited

Shopper's Stop Services (India)

Limited

Gateway Multichannel Retail

(India) Limited

Holding Company’s interest:No. of Equity Shares Held

95,62,500 Equity Shares of Rs. 10/- each fully paid up.

5,000 Equity Shares of Rs. 100/- each fully paid up.




Extent of Holding 100% 100% 100% 100% 51%

The “Financial Year” of the Subsidiary Company ended on

31st March, 2010

31st March, 2010

31st March, 2010

31st March, 2010

31st March, 2010

Net aggregate amount of the Subsidiary Company’s profits/(losses) dealt with in the Holding Company’s accounts

For the Subsidiary’s aforesaid financial year

382.50 21.52 (0.32) 0.31 (8.06)

For the previous financial years

(377.35) (3.77) (1.14) 3.09 (2,254.56)

Net aggregate amount of the Subsidiary Company’s profits/(losses) not dealt with in the Holding Company’s accounts

For the Subsidiary’s aforesaid financial year

— — — — (7.74)

For the previous financial years

— — — — (2,166.15)

Statement pursuant to Section 212 (1)(e) of the Companies Act, 1956

Shopper's Stop Ltd.


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Financial Information of Subsidiary Companies


Shopper's Stop LimitedConsolidated Financial Statements

2009-10

Shopper's Stop Ltd.


To,

The Board of Directors of Shopper's Stop Limited

1. We have audited the attached group Consolidated Balance Sheet of Shopper’s Stop Limited (the Company) as at 31 March 2010

and also the group Consolidated Profit and Loss Account and the group Consolidated Cash Flow Statement for the year ended on

that date annexed thereto. These consolidated financial statements are the responsibility of the Company’s management and have

been prepared by the management on the basis of separate financial statements and other financial information relating to the

components. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan

and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements.

An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An

audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating

the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of certain components which have been audited by other auditors whose reports have

been furnished to us by the Company’s management and our opinion in so far as it relates to the amounts included in respect of

these components is based solely on the reports of the other auditors:

a) Subsidiary companies whose financial statements reflect total assets of Rs. 690.64 lakhs as at 31 March 2010, total revenues of

Rs. 593.40 lakhs and total cash flows of Rs. 109.52 lakhs for the year ended 31 March 2010, as considered in the Consolidated

Financial Statements.

b) An associate company in respect of which the group’s share of loss is restricted to the value of its investment.

4. We did not audit the financial statement in respect of a joint venture company whose financial statements are based on unaudited

financial information/estimates and as certified by the management on which we have relied for the purposes of our examination of

the consolidated financial statements, (reference is invited to note 1(c)). The joint venture company’s financial statements reflect

the group’s share of total assets of Rs. 358.32 lakhs as at 31 March 2010, total revenues of Rs. 731.71 lakhs and total cash flows

of Rs. 3.48 lakhs for the year ended 31 March 2010.

5. Attention is invited to note no. 23 of the Financial Statements regarding non-provision of service tax proposed to be levied

by the Finance Bill 2010 retrospectively from 1 June 2007 – Rs. 1,805.54 lakhs. Our audit report has not been qualified in

this regard since the Finance Bill has not yet been enacted. We are informed that the company is planning to challenge the

proposed levy in a court of law.

6. Subject to the matter referred to in paragraph 4 above:

a) We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements

of Accounting Standard 21 (Consolidated Financial Statements), Accounting Standard 23 (Accounting for Investment

in Associates in Consolidated Financial Statements) and Accounting Standard 27 (Financial Reporting of Interests in Joint

Ventures) as notified under the Companies (Accounting Standards) Rules, 2006.

Auditors' Report

Shopper's Stop Ltd.


Auditors' Report

b) Based on our audit and on consideration of the separate audit reports on individual financial statements of the Company, its

aforesaid subsidiaries, joint venture and associate entities and unaudited financial information/estimates as certified by the

management of a joint venture company and to the best of our information and according to the explanations given to us, in our

opinion, the Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally

accepted in India:

i) in the case of the Consolidated Balance Sheet, of the state of affairs of the group as at 31 March, 2010;

ii) in the case of the Consolidated Profit and Loss Account, of the profit of the group for the year ended on that date and

iii) in the case of the Consolidated Cash Flow Statement, of the cash flows of the group for the year ended on that date.

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No. 117366W)

P. B. Pardiwalla

Partner

Membership No. 40005

Place : Mumbai

Date : 28 April, 2010

Shopper's Stop Ltd.



Notes Mar-10 Mar-09SOURCES OF FUNDSSHAREHOLDERS’ FUNDS Share capital 3 3,491.43 3,486.60 Optionally Convertible Warrants 33 3,071.80 — Reserves and surplus 4 21,556.14 20,996.43

28,119.37 24,483.03 LOAN FUNDS Secured loans 5 19,917.12 21,250.74 Unsecured loans 6 2,206.19 5,340.62 22,123.31 26,591.36

50,242.68 51,074.39 APPLICATION OF FUNDSFIXED ASSETS 7 Gross Block 50,178.36 45,900.70 Less: Accumulated depreciation, amortisation and Impairment 21,151.01 19,523.41

Net Block 29,027.35 26,377.29 Capital work in progress (including Capital advances) 2,781.28 2,365.86

31,808.63 28,743.15 INVESTMENTS 8 3,991.13 3,041.13 GOODWILL ON CONSOLIDATION 1,091.70 1,091.70 MINORITY INTEREST 2,171.44 2,163.70 DEFERRED TAX ASSET 25 (b) 455.00 7.40 CURRENT ASSETS, LOANS AND ADVANCES Inventories 9 15,905.12 15,849.36 Sundry debtors 10 1,223.22 1,661.90 Cash and bank balances 11 922.12 2,185.29 Loans and advances 12 22,117.26 22,861.18

40,167.72 42,557.73 Less: CURRENT LIABILITIES AND PROVISIONS 13 Current Liabilities 28,643.45 28,878.60 Provisions 799.49 161.33

29,442.94 29,039.93

Net current assets 10,724.78 13,517.80

PROFIT AND LOSS ACCOUNT Balance in Profit and Loss Account 84.66 2,810.81 Less: General Reserve deducted as per contra 84.66 301.30 — 2,509.51

50,242.68 51,074.39

The accompanying notes 1 to 34 are an integral part of the financial statements.As per our attached report of even date. For and on behalf of the Board of Directors


P. B. Pardiwalla C. B. Navalkar Prashant MehtaPartner Customer Care Associate & Customer Care Associate &Mumbai, Dated : 28 April, 2010 Group Chief Financial Officer Company Secretary & Vice President - Legal

Consolidated Balance Sheet as at 31 March, 2010

Shopper's Stop Ltd.


(All amounts in Rs. in lacs)

Notes Mar-10 Mar-09INCOME Retail Turnover Own merchandise (including concession sales) 2(e) 144,732.55 130,711.06 Consignment merchandise 13,074.07 10,158.10 Other Retail operating income 14 2,654.67 2,317.62

20 160,461.29 143,186.78 Less: Value Added Tax 6,856.84 6,451.80 Less: Cost of consignment merchandise 9,429.83 7,319.40

144,174.62 129,415.58 Revenue from Gaming Business 721.80 642.85

144,896.42 130,058.43

Other income 15 946.58 664.48

145,843.00 130,722.91 EXPENDITURE Cost of goods sold 16 90,220.10 81,473.73 Employee costs 17 9,198.14 9,502.07 Operating and administrative expenses 18 34,858.67 37,351.68 Interest and finance charges 19 2,543.28 2,923.83 Depreciation, Amortisation and Impairment 7 3,807.09 7,680.69 140,627.28 138,932.00

PROFIT/(LOSS) BEFORE TAX 5,215.72 (8,209.09)PROFIT/(LOSS) FROM CONTINUING OPERATIONS BEFORE TAX 30 5,231.52 (4,470.69) Tax Charge / (Credit) 1,635.45 3,596.07 (14.52) (4,456.17)

LOSS FROM DISCONTINUING OPERATIONS BEFORE TAX 30 (15.80) (3,738.40) Tax Charge — (15.80) 4.46 (3,742.86)

PROFIT/(LOSS) FROM OPERATING ACTIVITIES AFTER TAX 3,580.27 (8,199.03) Minority Interest 7.74 1,834.02 NET PROFIT/(LOSS) FOR THE YEAR 3,588.01 (6,365.01)BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR (2,810.81) 3,554.20

777.20 (2,810.81)APPROPRIATIONS Transfer to General Reserve 251.15 — Proposed Dividend 523.72 — Corporate Dividend Tax 86.99 —

BALANCE CARRIED TO BALANCE SHEET (84.66) (2,810.81)Earnings per share (Equity shares, par value of Rs. 10/- per share) 32 Basic (Rs.) 10.29 (18.25) Diluted (Rs.) 10.23 (18.25)



P. B. Pardiwalla C. B. Navalkar Prashant MehtaPartner Customer Care Associate & Customer Care Associate &Mumbai, Dated : 28 April, 2010 Group Chief Financial Officer Company Secretary & Vice President - Legal

Consolidated Profit & Loss Account for the year ended 31 March, 2010

Shopper's Stop Ltd.



Mar-10 Mar-09Cash flows from operating activitiesNet profit/(loss) before tax 5,215.72 (8,209.09) Adjustments for: Depreciation, Amortisation and Impairment 3,807.09 7,680.69 Interest and finance charges 2,543.28 2,923.83 Loss on sale of fixed assets 65.05 183.76 Amortisation of Stock Compensation — 5.30 Provision for Advances/Doubtful Debts 427.73 — Interest income (631.93) (370.87) Operating Profit before working capital changes 11,426.94 2,213.62 (Increase)/Decrease in Inventories (55.76) 2,371.50 Decrease/(Increase) in Sundry Debtors 406.18 (781.40) Increase in Loans and Advances (other than lease deposits) (480.48) (1,621.20) Decrease/(Increase) in Lease Deposits 256.00 (488.30) (Decrease)/Increase in Current Liabilities and Provisions (220.81) 7,284.68 Cash generated from operations 11,332.07 8,978.90 Income taxes paid (1,554.24) (791.80) Net cash generated from operating activities 9,777.83 8,187.10 Cash flow from investing activities Purchase of fixed assets (including capital work in progress) (7,806.96) (10,102.10) Sale proceeds of fixed assets 869.33 1,164.60 Investments made (950.00) (1,140.00) Receipt of interest income 631.93 370.90 Net cash used for investing activities (7,255.70) (9,706.60)Cash flows from financing activities Proceeds from issue of share capital 4.83 0.40 Securities premium on Issue of Shares 103.60 4.80 Proceeds from issue of Optionally Convertible Warrants 3,071.80 — Payment of Dividend and Dividend Tax — (611.70) (Payments)/Proceeds of/from term loans to/from Banks (3,503.34) 13,697.50 Proceeds/(Payments) from/of Cash Credit Facilities from/to banks 663.97 (6,354.90) Proceeds from working capital demand loans from Banks 1,505.69 1,500.00 Payments of Unsecured loans to Banks (2,954.10) (3,545.90) (Payments)/Proceeds of/from Unsecured loan to/from Others (180.32) 580.30 Payment of interest and finance charges (2,543.28) (2,923.80) Net cash (used in)/generated from financing activities (3,831.15) 2,346.70 Net (Decrease)/Increase in cash and cash equivalents (1,309.02) 827.20 Cash and cash equivalents as at beginning of the year 2,034.10 1,206.90 Cash and cash equivalents as at the end of the year 725.08 2,034.10 (1,309.02) 827.20 Note:Cash and Cash Equivalents as per Balance sheet (see note 11) 922.12 2,185.29 Less: Deposit under lien 197.04 151.19

Cash and Cash Equivalent as reported above 725.08 2,034.10


For Deloitte Haskins & Sells C. L. Raheja Ravi Raheja Govind S. ShrikhandeChartered Accountants Chairman Director Customer Care Associate & President & Chief Executive Officer & Executive DirectorP. B. Pardiwalla C. B. Navalkar Prashant MehtaPartner Customer Care Associate & Customer Care Associate &Mumbai, Dated : 28 April, 2010 Group Chief Financial Officer Company Secretary & Vice President - Legal

Consolidated Statement of Cash Flows for the year ended 31 March, 2010

Shopper's Stop Ltd.


1. BACKGROUND

The Consolidated Financial Statements of the group – the parent company, Shopper’s Stop Limited (‘SSL’ or ‘the Company’) and all its subsidiaries – include financial information, as applicable of its other components viz. joint venture and associate companies.

The Company was incorporated on 16 June 1997. The Company is engaged in the business of retailing a variety of household and consumer products and books through departmental stores.

The following components are included in the consolidation:

(a) The Company has the following subsidiaries incorporated in India:

Name of the Company % of shareholding as at 31 March 2010 and 31 March 2009

Nature of business

Crossword Book Stores Limited 100% Engaged in the business of retailing books and other items such as music, toys, stationery through departmental and concessionaire stores, operated by franchisees.

Upasna Trading Limited 100% Supervises the distribution and Logistics operations of SSL.

Shopper’s Stop Services (India) Limited 100% Provides accounting services to group companies.

Shopper’s Stop.Com (India) Limited 100% Operations suspended.

Gateway Multichannel Retail (India) Limited 51% Engaged in the business of retailing of products through catalogue shopping at retail outlets, internet and telephone orders (catalogue retailing operations). Operations discontinued in March 2009.

(b) The Company has the following Interest in Joint Venture Companies incorporated in India:

Name of the Company Proportion of ownership Interest as at 31 March 2010 and 31 March 2009

Nature of Business

Nuance Group (India) Private Limited 50% Airport retailing

Timezone Entertainment Private Limited* 45% Entertainment

* Consolidated based on unaudited financial information/estimates as certified by the management.

(c) The Company has the following Investment in an Associate Company Incorporated in India:

Name of the Company Proportion of ownership Interest as at 31 March 2010 and 31 March 2009

Nature of Business

Hypercity Retail (India) Limited 19% Retail Business

2. SIGNIFICANT ACCOUNTING POLICIES

a) Principles of Consolidation

The subsidiaries are consolidated on a line-by-line basis in accordance with Accounting Standard 21 on “Consolidated Financial Statements”. Interest of the minority shareholders in the subsidiaries’ profits or losses and net worth is displayed separately in the consolidated financial statements. Inter-company transactions and balances are eliminated on consolidation.

Investments in Joint ventures are accounted for using the proportionate consolidation method in accordance with Accounting Standard 27 on “Financial Reporting of Interests in Joint Ventures”. Unrealised profits and losses resulting from transactions between the Company and the Joint Venture Companies are eliminated to the extent of the Company’s Share in the Joint Ventures.

Significant Accounting Policies and Notes forming part of Consolidated Financial Statements for the year ended 31 March, 2010

Shopper's Stop Ltd.Significant Accounting Policies and Notes forming part of Consolidated Financial Statements for the year ended 31 March, 2010


Investments in Associates are accounted for using the Equity Method in accordance with Accounting Standard 23 on “Accounting for Investments in Associates in Consolidated Financial Statements”. Unrealised profits and losses resulting from transactions between the Company and the Associates are eliminated to the extent of the Company’s interest in the Associate.

For the purpose of consolidation, the financial statements of the Subsidiaries, Joint Venture Companies and Associates are drawn up to 31 March 2010 which is the same reporting period of the Company except for the financial statements of Nuance Group (India) Private Limited, a Joint Venture company whose accounts for the year ended 31 December 2009 have been considered for the purpose of consolidation. Adjustments are made for the effect of significant transactions or other events that occurred between 1 January 2010 till 31 March 2010.

The excess of the cost of investment in Subsidiary, Joint venture and Associate Companies over the parents’ portion of equity is recognized in the financial statements as goodwill. When the cost to the parent of its investment in Subsidiary, Joint Venture and Associate Companies is less than the parents’ portion of equity, the difference is recognized in the financial statements as capital reserve.

b) Uniform Accounting Policies

SSL and its Subsidiaries, Associate Companies and Joint Venture Companies, in preparing their standalone annual financial statements, have adopted uniform accounting policies, except in the amortization of Trademarks, Copyrights and Goodwill by Crossword Bookstores Limited. However, the Consolidated Balance Sheet and Profits and Loss Account have been prepared using the same accounting policies as adopted by SSL.

c) Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and differences between actual results and estimates are recognised in the periods in which the results are known / materialize.

d) Fixed Assets and Depreciation

Tangible Assets

Fixed assets are stated at their original cost of acquisition less accumulated depreciation and impairment losses. Cost comprises of all cost incurred to bring the assets to their location and working condition and includes all expenses incurred up to the date of launching new stores to the extent they are attributable to the new store.

Depreciation is provided, pro rata for the period of use, by the straight line method (SLM), based on management’s estimate of useful lives of the fixed assets, or at the SLM rates prescribed in Schedule XIV to the Act whichever is higher, at the following annual rates:

(%) Up to 31 March 2009

(%) From 1 April 2009

Air conditioning and other equipment 5.00 – 33.00 5.00 – 33.00

Furniture, fixtures and other fittings 10.00 – 20.00 6.33 – 20.00

Computers 20.00 – 33.00 16.21 – 33.33

Vehicles 20.00 9.50 – 20.00

Leasehold Improvements 10.00 – 20.00 5.82 – 20.00

Intangible Assets

Intangible assets are stated at their cost of acquisition, less accumulated amortization and impairment losses. An intangible asset is recognized, where it is probable that the future economic benefits attributable to the asset will flow to the enterprise and where its cost can be reliably measured. The depreciable amount of intangible assets is allocated over the best estimate of its useful life on a straight-line basis.

The company capitalizes software and related implementation costs where it is reasonably estimated that the software has an enduring useful life. Software is depreciated over management’s estimate of its useful life: up to 31 March 2009 – 3 to 5 years, from 1 April 2009 – 6 years.

Trademarks and Patents, Copyrights and Goodwill are amortized uniformly over a period of 10 years.

Shopper's Stop Ltd.


Significant Accounting Policies and Notes forming part of Consolidated Financial Statements for the year ended 31 March, 2010

Impairment of Assets

An asset is considered as impaired in accordance with Accounting Standard 28 on Impairment of Assets when at the balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset’s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the profit and loss account.

e) Investments

Long term investments other than in associates considered for consolidation are carried at cost. Provision is made to recognize a decline, other than temporary, in the value of investments. Investments in associates considered for consolidation are accounted for using the equity method.

f) Revenue Recognition

Revenue is recognized where it is earned and no significant uncertainty exists as to its realization or collection.

Retail sales are recognized on delivery of the merchandise to the customer, when the property in the goods is transferred for a price, when significant risks and rewards have been transferred and no effective ownership control is retained. Sales are net of discounts. Value Added Tax and Sales Tax are reduced from Retail Turnover.

The property in the merchandise of third party concession stores located within the main departmental store of the Company passes to the Company once a customer decides to purchase an item from the concession store. The Company in turn sells the item to the customer and is accordingly included under Retail Sales.

The property in the merchandise of third party consignment stock does not pass to the Company. Since, however, the sale of such stock forms a part of the activities of the Company’s departmental stores, the gross sales values and cost of the merchandise are displayed separately in the profit and loss account.

In respect of gift vouchers and point award schemes operated by the Company, sales are recognised when the gift vouchers or points are redeemed and the merchandise is sold to the customer.

Revenue from store displays and sponsorships are recognised based on the period for which the products or the sponsors’ advertisements are promoted / displayed. Facility management fees are recognised pro-rata over the period of the contract.

Franchise income is recognized in accordance with the rates specified in the franchise agreements and is based on the sales recorded by the franchisees for the year.

g) Inventories

Inventories are valued at the lower of cost and net realisable value. Cost of inventories comprises of all costs of purchase and other costs incurred in bringing the inventories to their present condition and location. Cost is determined by the weighted average cost method.

Merchandise received under consignment and concessionaire arrangements belong to the consignors / concessionaires and are therefore excluded from the Company’s inventories.

h) Employee Benefits

Compensation to employees for services rendered is measured and accounted for in accordance with Accounting Standard 15 on Employee Benefits.

Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to the profit and loss account in the period in which the service is rendered.

Employee Benefits under defined benefit plans and other long term employee benefits such as gratuity and compensated absences which fall due for payment after completion of employment or after a period of twelve months from rendering service, are measured by the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The company’s obligations recognized in the balance sheet represent the present value of obligations as reduced by the fair value of plan assets, where applicable.

Actuarial Gains and losses are recognised immediately in the Profit and Loss Account.

Shopper's Stop Ltd.Significant Accounting Policies and Notes forming part of Consolidated Financial Statements for the year ended 31 March, 2010


i) Operating Lease

Operating Lease payments are recognized as an expense in the Profit & Loss Account on a straight-line basis or other bases, representative of the time pattern of the user’s benefit.

j) Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying assets, as defined in Accounting Standard 16 on Borrowing Costs, are capitalized as part of the cost of acquisition. Other borrowing costs are expensed as incurred.

k) Foreign Currency Transactions

Transactions in foreign currencies are accounted at the prevailing rates of exchange on the date of transaction.

Monetary items denominated in foreign currencies, are restated at the prevailing rates of exchange at the Balance Sheet date. All gains and losses arising out of fluctuations in exchange rates are accounted for in the Profit and Loss Account.

Exchange differences on forward exchange contracts, entered into for hedging foreign exchange fluctuation risk in respect of an existing asset / liability, are recognized in the Profit and Loss Account in the reporting period in which the exchange rate changes. Premium / Discount on forward exchange contracts are treated as an expense / income over the life of the contract.

l) Income Tax

Income taxes are accounted for in accordance with Accounting Standard 22 on Accounting for Taxes on Income. Taxes comprise both current and deferred tax.

Current tax is measured at the amount expected to be paid/recovered from the taxation authorities, using the applicable tax rates and tax laws.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of deferred tax assets at each balance sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized.

At each balance sheet date the company re-assesses the unrecognized deferred tax asset and to the extent that it has become reasonably or virtually certain (in accordance with Accounting Standard 22) that sufficient future taxable income will be available against which such deferred tax asset can be realized, recognizes the previously unrecognized deferred tax asset.

Tax on distributed profits payable in accordance with the provisions of section 115O of the Income Tax Act, 1961 is in accordance with the Guidance Note on Accounting for Corporate Dividend Tax, regarded as a tax on distribution of profits and is not considered in determination of the profits for the year.

m) Stock Based Compensation

The compensation cost of stock options granted to employees is calculated using the intrinsic value of the stock options. The compensation expense is amortised uniformly over the vesting period of the option.

n) Earnings Per Share

The company reports basic and diluted Earnings Per Share (EPS) in accordance with Accounting Standard 20 on Earnings Per Share. Basic EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

o) Cash Flow Statement

The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard 3 on Cash Flow Statements and presents the cash flows by operating, investing and financing activities of the Company.

Cash and cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered bank balances.

p) Contingent Liabilities

Contingent Liabilities as defined in Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Assets are disclosed by way of notes to the accounts. Disclosure is not made if the possibility of an outflow of future economic benefits is remote. Provision is made if it becomes probable that an outflow of future economic benefits will be required to settle the obligation.

Shopper's Stop Ltd.Notes to Consolidated Financial Statements



Mar-10 Mar-093. SHARE CAPITAL Authorised: 100,000,000 equity shares of Rs. 10/- each 10,000.00 10,000.00

Issued and Subscribed: 3,49,14,344 (Previous year 3,48,65,823) equity shares of Rs. 10/- each 3,491.43 3,486.60

3,491.43 3,486.60

4. RESERVES AND SURPLUS Securities Premium Account: Balance at beginning of the year 20,964.61 20,959.88 Add: Received during the year 103.60 4.73

21,068.21 20,964.61 General Reserves: Balance at beginning of the year 301.30 301.30 Transferred from Profit and Loss Account 251.15 — Less: Debit balance in Profit and Loss Account deducted as per contra 84.66 301.30

467.79 —

Employee's Stock Options Outstanding (Refer note 31) 20.14 31.82

21,556.14 20,996.435. SECURED LOANS From Banks: Term Loans (Refer note (a) below) 9,668.12 12,017.43 Cash Credit Facilities (Refer note (a) below) 967.27 304.76 Working Capital Demand Loans (Refer note (a) below) 7,005.69 5,500.00 17,641.08 17,822.19 Share in Joint Venture (Refer note (b) below) 2,276.04 3,428.55 19,917.12 21,250.74 Notes: a. Term Loans, Cash Credit Facilities and Working Capital Demand Loans are secured

by a first charge on all movable tangible properties and an exclusive lien on lease deposits and on all current assets of the Company, both present and future.

b. Term Loans in Joint Venture entities are secured by a first charge on all company’s receivables and stock, both present and future and corporate guarantee given by the joint venturers.

6. UNSECURED LOANS Short term Loan from banks — 2,954.10 Others 2,206.19 2,386.52

2,206.19 5,340.62



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8. INVESTMENTS (Trade, Long term at cost, unquoted) Stargaze Properties Private Limited 0.10 0.10 1,000 equity shares of Rs. 10/- each Fully paid Retailers Association of India 1.00 1.00 10,000 equity shares of Rs. 10/- each Fully paid Aesthetic Realtors Private Limited 66 Equity Shares of Rs. 10/- each Fully Paid 0.01 0.01

In Associate Company: Hypercity Retail (India) Limited (including goodwill of Rs. 20.49 Lacs) 20.49 20.49 180,500 Equity Shares of Rs. 10/- each Fully Paid Less: Share of Loss of associate Company (restricted to the value of investment) (20.49) — (20.49) — — 3,99,00,000 (Previous year 3,04,00,000), 7% Cumulative Redeemable 3,990.00 3,040.00 Preference Shares of Rs. 10/- each Fully Paid

Others: Investments in Government Securities (N.S.C) 0.02 0.02

3,991.13 3,041.13 9. INVENTORIES (At lower of cost and Net realisable value) Retail merchandise 14,989.32 14,498.10 Share in Joint Venture 915.80 1,351.26

15,905.12 15,849.36

10. SUNDRY DEBTORS (unsecured) Debts outstanding for more than 6 months – Considered good 86.21 117.99 – Considered doubtful 46.40 13.90 – Other Debts, considered good 1,024.49 1,036.10

1,157.10 1,167.99 Less: Provision for doubtful debts 46.40 13.90

1,110.70 1,154.09 Share in Joint Venture 112.52 507.81

1,223.22 1,661.90

11. CASH AND BANK BALANCES Cash on hand (including cheques on hand) 155.37 120.38 Balances with scheduled banks: – In Current accounts 281.69 1,621.30 – In Deposit accounts 13.00 2.00 – In Margin Money account (under lien against bank guarantee) 22.87 19.70

472.93 1,763.38 Share in Joint Venture 449.19 421.91

922.12 2,185.29




Mar-10 Mar-0912. LOANS AND ADVANCES (unsecured, considered good unless otherwise stated) Loans (including accrued interest) to Group companies 5,386.80 2,913.48 Due from suppliers 1,233.47 1,465.18 Advances recoverable in cash or in kind or for value to be received: Premises and other deposits 10,510.30 10,766.30 Service Tax Input Credits available 1,026.08 1,669.53 Prepayments 511.10 620.39 Income taxes paid (net of provision for tax) 792.38 1,321.20 Others 1,336.72 1,590.83 20,796.85 20,346.91 Less: Provision 393.73 — 20,403.12 20,346.91 Share in Joint Venture 1,714.14 2,514.27 22,117.26 22,861.18 Note: Considered Good 22,117.26 22,861.18 Considered Doubtful 393.73 — 22,510.99 22,861.18 13. CURRENT LIABILITIES AND PROVISIONS Current Liabilities Sundry creditors 26,262.70 25,457.54 Security deposits 332.48 133.74 Other Liabilities 625.00 1,274.34 27,220.18 26,865.62 Share in Joint Venture 1,423.27 2,012.98 28,643.45 28,878.60 Provisions For Proposed Dividend 523.72 — For Corporate Dividend Tax 86.99 — For Leave Encashment 179.91 148.88 790.62 148.88 Share in Joint Venture 8.87 12.45 799.49 161.33 29,442.94 29,039.9314. OTHER RETAIL OPERATING INCOME Facility management fees 634.17 607.80 Income from store displays and Sponsorship Income 485.42 782.10 Direct Marketing Income 428.16 420.80 Relinquishment of development rights (Refer note below) 660.18 — Income from franchisees 234.14 218.14 2,442.07 2,028.84 Share in Joint Venture 212.60 288.78 2,654.67 2,317.62 Note: The Company received Rs. 660.18 lacs as consideration towards relinquishment of future development rights to open Mothercare Standalone Stores.

15. OTHER INCOME Interest income 631.93 370.90 Miscellaneous income and credits 152.66 259.36 Profit on sale of fixed assets (net) 85.77 — Foreign Exchange Gain (net) 51.43 — 921.79 630.26 Share in Joint Venture 24.79 34.22 946.58 664.48




Mar-10 Mar-0916. COST OF GOODS SOLD (Including concession purchases) Opening stock 14,498.10 18,193.70 Add: Purchases 88,865.34 76,985.50 Less: Closing stock 14,989.32 14,498.10 88,374.12 80,681.10 Share in Joint Venture 1,845.98 792.63 90,220.10 81,473.73

17. EMPLOYEE COSTS Salaries, allowance and bonus 8,200.48 8,388.20 Contribution to Provident and other funds 370.25 393.75 Stock compensation expense — 5.30 Staff welfare expenses 199.60 289.40 8,770.33 9,076.65 Share in Joint Venture 427.81 425.42 9,198.14 9,502.07

18. OPERATING AND ADMINISTRATIVE EXPENSES Insurance 57.52 81.81 Lease rent and hire Charges 13,769.72 13,706.40 Business conducting fees 986.46 1,270.70 Rates and taxes 47.43 91.27 Repairs and maintenance – Buildings 2,474.61 2,219.40 – Others 557.14 515.05 Legal and professional fees 323.10 401.06 Housekeeping charges 479.92 616.13 Security charges 705.89 785.19 Computer expenses 791.79 715.20 Conveyance and travelling expenses 723.92 464.07 Clearing & Forwarding charges 591.61 1,475.71 Electricity charges 3,494.19 3,543.40 Advertisement and publicity 1,614.12 3,019.68 Sales promotion 1,872.31 1,990.30 Charges on credit card transactions 889.90 833.07 Packing materials 485.72 518.20 Loss on Sale of Fixed Assets (net) — 183.71 Provision for Advances/Doubtful Debts 427.73 — Service Tax Input credit written off 753.37 777.67 Miscellaneous expenses 1,302.83 2,438.31 32,349.28 35,646.33 Share in Joint Venture 2,509.39 1,705.35 34,858.67 37,351.68 19. INTEREST AND FINANCE CHARGES Interest – On fixed loans from banks 1,493.65 1,404.40 – On Other Loans 646.72 1,132.39 Finance charges 66.04 95.25 2,206.41 2,632.04 Share in Joint Venture 336.87 291.79

2,543.28 2,923.83



20. Retail Turnover in the Profit and Loss Account indicates the gross volumes of business and operations.

21. CAPITAL COMMITMENT (NET OF ADVANCES) Mar-10 Mar-09 Fixed assets 2,344.63 2,719.10

22. CONTINGENT LIABILITIES IN RESPECT OF

a) Guarantee for loans taken from bank 4,490.00 5,090.00 b) Contingent contractual claims 236.19 239.20 c) Disputed Income tax matters in appeal 245.42 51.60 d) Disputed sales tax matters in appeal 590.45 460.05 e) Disputed Custom Duty 24.00 24.00

23. SERVICE TAX The Finance Bill 2010 proposes to impose a levy of Service Tax on renting of immovable properties given for commercial

use, retrospectively with effect from 1 June 2007. Since, (a) the Finance Bill has not yet been enacted and (b) based on legal advice the company is planning to challenge the levy in a court of law no provision for the same has been made in the accounts - Rs. 1,805.54 lacs.

24. LEASING TRANSACTIONS Mar-10 Mar-09

a) Operating lease rentals charged to revenue: 10,925.76 12,710.60

b) Variable Rent charged to revenue: 4,417.61 2,319.07 Variable rent for certain stores is payable in accordance with the lease

agreement as the higher of (a) fixed minimum guarantee amount and (b) revenue share percentage.

c) The future minimum rental payments in respect of non cancellable lease for premises are as follows: Not later than one year 7,705.82 7,615.37 Later than one year and not later than five years 14,310.27 16,247.27 Later than five years 1,611.51 3,316.70

The agreements are executed for periods ranging from 33 to 288 months with a non cancellable period at the beginning of the agreement ranging from 33 to 108 months and having a renewable clause.

25. (a) TAX CHARGE/(CREDIT) The tax expense/(credit) for the year comprises of: Mar-10 Mar-09

Income Tax – Current tax 1,915.17 44.86 – Deferred tax credit (447.60) (175.93) – Short Provision of tax of earlier year 164.88 — – Fringe benefits Tax 3.00 121.01

1,635.45 (10.06)

(b) DEFERRED TAX ASSET Major components of Deferred Tax Asset are as follows:

Depreciation 284.27 7.40 Expenditure allowable on payment basis 59.46 — Provision for doubtful advances 111.27 —

Deferred Tax Asset 455.00 7.40




26. EMPLOYEE BENEFITS Mar-10 Mar-09 Post-employment benefits Defined contribution plans Company’s contribution to Provident Fund 385.48 404.80 Defined benefit scheme-Gratuity a) Liability recognised in Balance Sheet Change in Benefit Obligation Present Value of Obligations As at the beginning of the year 285.21 193.60 Service cost 73.84 116.74 Interest cost 21.22 18.75 Actuarial Gain on obligations (1.85) (43.18) Benefits paid/transferred (109.61) (0.70)

As at the end of the year 268.81 285.21 Less: Fair value of Plan Assets As at the beginning of the year 281.45 193.59 Expected Return on Plan assets less loss on investments 20.55 20.76 Employers’ Contribution 87.67 83.60 Benefits paid/transferred (109.61) (0.70) Actuarial Loss on Plan Assets (16.25) (15.80) As at the end of the year 263.81 281.45

Net Liability 5.00 3.76

b) Expense during the year Service Cost 73.84 116.74 Interest Cost 21.22 18.75 Expected Return on Plan assets (20.55) (20.76) Actuarial Loss/(Gain) on obligations 14.60 (27.28)

89.11 87.45 c) Principal actuarial assumptions Rate of Discounting 7.50% - 8.25% p.a. 7.00 - 7.75% p.a. Rate of Return on Plan Assets 8.00% p.a. 8.00% p.a. Rate of increase in salaries 4.00 - 5.00% p.a. 4.00 - 5.00% p.a. Rate of Attrition 2.00 - 13.76% 3.00 - 5.00%

The company expects to contribute Rs. 83.29 Lacs to its Gratuity plan for the next year.In assessing the Company’s Post Retirement Liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables. The base being the LIC 1994-96 ultimate tables.Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.The gratuity benefit scheme of the Company is managed by Life Insurance Corporation of India (LIC). The Company is currently awaiting the details of the composition of the plan assets, by category, from the LIC for the current and the previous years and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given. Other disclosures: Particulars 31 March 2010 31 March 2009 31 March 2008 Present Value of the Defined Benefit Obligation 268.81 285.21 192.60 Fair Value of the Plan Assets 263.81 281.45 192.60 Surplus/(Deficit) in the Plan (5.00) (3.76) — Experience Adjustments arising on Plan Liabilities – Gain (49.45) (0.44) — Experience Adjustments arising on Plan Assets – Loss (16.45) (15.83) — The Company adopted revised Accounting Standard 15 on Employee Benefits from the financial year commencing 1 April 2007.



27. RELATED PARTY DISCLOSURES Following are the material transaction with related parties: (All amounts in Rs. lacs, unless otherwise stated)

Nature Associates Joint Ventures Key Management

Personnel

Total

Purchase of Assets 4.48 — — 4.48 Hypercity Retail (India) Limited 4.48 — — —

(242.10) — — (242.10) Sale of Assets 209.67 — — 209.67 Hypercity Retail (India) Limited 209.67 — — —

— — — —Purchase of Merchandise — — — — Hypercity Retail (India) Limited — — — —

(950.30) — — (950.30) Return of Merchandise — — — — Hypercity Retail (India) Limited — — — —

(1,056.10) — — (1,056.10)Sale of Merchandise 1.29 34.52 — 35.81 Nuance Group (India) Private Limited — 34.52 — —Hypercity Retail (India) Limited 1.29 — — —

(2.00) (76.90) — (78.90)Payment of conducting fees / Lease Rent / Common Area Maintenance Charges

3,810.28 — — 3,810.28

Ivory Properties and Hotels Private Limited 1,379.60 — — —Inorbit Malls (India) Private Limited 2,090.78 — — —Hypercity Retail (India) Limited 2.60 — — —K. Raheja Private Limited 0.20 — — —Avacado Properties and Trading India Private Limited

0.88 — — —

K. Raheja IT Park (Hyderabad) Private Limited 2.63 — — —Trion Properties Private Limited 333.59 — — —

(3,020.10) — — (3,020.10)Sale of Scrap — — — — Hypercity Retail (India) Limited — — — —

(13.70) — — (13.70)Expenses Paid 109.69 — — 109.69 Hypercity Retail (India) Limited 104.40 — — —Others 5.29 — — —

(656.80) — — (656.80)Interest Received 578.75 10.10 — 588.85 Hypercity Retail (India) Limited 578.75 — — —Timezone Entertainment Private Limited — 10.10 — —

(359.00) (19.60) — (378.60)Interest Expenses 1.85 — — 1.85 Ivory Properties and Hotels Private Limited 1.85 — — —

(207.00) — — (207.00)Deposits Paid 330.22 — — 330.22 Hypercity Retail (India) Limited 113.82 — — —Trion Properties Private Limited 216.40 — — —

(399.20) — — (399.20)



Nature Associates Joint Ventures Key Management

Personnel

Total

Deposit Received Back — — — — Avacado Properties and Trading India Private Limited

— — — —

Hypercity Retail (India) Limited — — — —(86.50) — — (86.50)

Reimbursement of Expenses 603.69 19.11 — 622.80 Nuance Group (India) Private Limited — 19.11 — —Inorbit Malls (India) Private Limited 448.24 — — —Hypercity Retail (India) Limited 30.62 — — —Trion Properties Private Limited 37.19 — — —The Nuance Group AG 87.64 — — —

(709.40) (364.50) — (1,073.90)Expenses Recovered 350.08 — — 350.08 Nuance Group (India) Private Limited — — — —Hypercity Retail (India) Limited 350.08 — — —

(669.40) (22.10) — (691.50)Investments Made 950.00 — — 950.00 Hypercity Retail (India) Limited 950.00 — — —

(1,140.00) — — (1,140.00)Deposit Repaid Back 17.51 — — 17.51 K. Raheja IT Park (Hyderabad) Private Limited 17.51 — — —

— — — — Loan Given 9,589.50 110.00 — 9,699.50 Hypercity Retail (India) Limited 9,589.50 — — —Timezone Entertainment Private Limited — 110.00 — —

(7,222.50) (350.00) — (7,572.50)Loan Taken 130.48 — — 130.48Hypercity Retail (India) Limited 130.48 — — —

(882.49) — — (882.49)Loan Repaid 310.65 — — 310.65Hypercity Retail (India) Limited 310.65 — — —

— — — —Issue of Shares 110.00 — — 110.00 The Nuance Group AG 110.00 — —

(760.00) — — (760.00)Recovery of Loan 5,955.00 — — 5,955.00 Hypercity Retail (India) Limited 5,955.00 — — —Nuance Group (India) Private Limited — — — —

(6,013.20) (1,250.00) — (7,263.20)Advance to Directors — — 244.06 244.06

— — (556.00) (556.00)Remuneration — — 474.92 474.92

— — (113.42) (113.42)



Balance outstanding at the year end Receivables Hypercity Retail (India) Limited 3,082.13 (742.00) Dr.

Ivory Properties and Hotels Private Limited 1,082.62 (1,082.60) Dr.

Inorbit Malls (India) Private Limited 645.86 (583.60) Dr.

Timezone Entertainment Private Limited 111.07 — Dr.

Nuance Group (India) Private Limited 54.78 — Dr.

Trion Properties Private Limited 216.40 — Dr.

Others — (17.90) Dr.

Key Management Personnel 244.06 (556.00)

Payable The Nuance Group AG 812.24 (720.20) Cr.

The figure in bracket pertain to previous year

Names of related parties and description of relationship:

Associates : Ivory Properties and Hotels Private Limited, K. Raheja Corp. Private Limited, K. Raheja Private Limited, Inorbit Malls (India) Private Limited, Hypercity Retail (India) Limited, Avacado Properties and Trading India Private Limited, K. Raheja IT Park (Hyderabad) Private Limited, Trion Properties Private Limited, The Resort, The Nuance Group AG

Joint Ventures : Nuance Group (India) Private Limited Timezone Entertainment Private Limited

Key Management Personnel : Govind Shrikhande B. S. Nagesh



28. SEGMENT REPORTING I) Information about primary business segments:


Mar-10 Mar-09 Particulars Retail Others Total Retail Others Total Operations Operations

REVENUE External Sales 144,174.62 721.80 144,896.42 129,415.58 642.85 130,058.43

Total Revenue 144,174.62 721.80 144,896.42 129,415.58 642.85 130,058.43

RESULTS Segment Operating Results 7,861.31 (94.57) 7,766.74 (3,373.94) (77.30) (3,451.24) Interest Expenses (2,478.08) (65.20) (2,543.28) (2,883.23) (40.60) (2,923.83) Provision for Taxation (1,635.45) — (1,635.45) 12.26 (2.20) 10.06

Net Profit/(Loss) 3,588.01 (6,365.01)

OTHER INFORMATION Segment Assets 78,622.12 1,063.50 79,685.62 76,540.20 1,057.30 77,597.50

Total Assets 79,685.62 77,597.50

Segment Liabilities 50,770.19 796.06 51,566.25 54,918.50 712.90 55,631.40

Total Liabilities 51,566.25 55,631.40

Segment Depreciation 3,618.58 188.51 3,807.09 7,511.29 169.40 7,680.69

Total Depreciation 3,807.09 7,680.69

Total Cost incurred during the year to acquire Segment assets (Tangible and Intangible fixed assets) 7,177.31 214.23 7,391.54 10,811.80 477.29 11,289.09

II) The company operates in a single geographical environment.

29. DERIVATIVES

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations.

The following are the outstanding Forward Exchange Contracts entered into by the Company:

Particulars 31 March 2010 31 March 2009

Number of Contracts 5 4

Type Buy Buy

GBP Equivalent (lacs) 6.26 4.92

INR Equivalent (lacs) 451 358.44



b) Unhedged Foreign Currency exposure

The year end foreign currency exposures that have not been hedged by a derivative instruments or otherwise are given below:

Particulars 31 March 2010 31 March 2009

Rs. in In Foreign Rs. in In Foreign lacs currency lacs currency

Payable for purchase of Merchandise 244.33 GBP 3,60,303 310.52 GBP 4,26,178

82.24 USD 1,82,728 5.89 USD 11,561

Payable towards Royalty 59.70 USD 1,32,646 67.25 USD 132,000

31.92 GBP 47,065 127.30 GBP 174,772

Receivable on account of Royalty 21.67 GBP 31,960 54.60 GBP 75,000

30. DISCONTINUING OPERATIONS:

The Board of Directors of Gateway Multichannel Retail (India) Limited (Gateway), a subsidiary of SSL had decided to discontinue operation in January 2009. SSL has committed to provide the necessary level of support, to enable Gateway to remain in existence and continue as a going concern till such time as it realizes its assets and settles its liabilities.

The carrying amounts as of 31 March 2010, of the total assets relating to the discontinuing operations aggregate to Rs. 77.45 lacs (Previous year Rs. 579.02 lacs) and the total liabilities to be settled relating to the discontinuing operations aggregate to Rs. 4,508.96 lacs (Previous year Rs. 4,994.72 lacs). In the opinion of the company the assets and liabilities will have a value on realization in the ordinary course of business that are atleast equal to the amounts at which they are stated in the Balance Sheet.

The net cash flows attributable to operating, investing and financing activities of the discontinuing operations during the current year aggregated to Rs. 168.21 lacs (Previous year (114.93) lacs), Rs. 214.30 lacs (Previous year Rs. (275.76) lacs) and Rs. (367.99) lacs (Previous year Rs. 1371.92 lacs) respectively.

Statement showing the revenue and expenses of continuing and discontinuing operations: (All amounts in Rs. lacs)

Particulars

31 March 2010 31 March 2009

Continuing operations

Discontinuing operations (Gateway)

Total Continuing operations

Discontinuing operations (Gateway)

Total

REVENUE

Sales/Income 144,896.42 — 144,896.42 129,199.83 858.60 130,058.43

Other Income 944.18 2.40 946.58 649.98 14.50 664.48

Total Revenue 145,840.60 2.40 145,843.00 129,849.81 873.10 130,722.91

Operating Expenses 138,065.91 18.09 138,084.00 131,825.78 4,182.40 136,008.18

Pre-tax Profit/(Loss) from operating activities 7,774.69 (15.69) 7,759.00 (1,975.97) (3,309.30) (5,285.27)

Interest Expense 2,543.17 0.11 2,543.28 2,494.73 429.10 2,923.83

Profit/(Loss) before tax 5,231.52 (15.80) 5,215.72 (4,470.69) (3,738.41) (8,209.09)

Income tax expense 1,635.45 — 1,635.45 (14.52) 4.46 (10.06)

Profit/(Loss) from operating activities after tax 3,596.07 (15.80) 3,580.27 (4,456.17) (3,742.87) (8,199.03)

Minority Interest 7.74 — 7.74 1,834.02 — 1,834.02

Net Profit/(Loss) from operating activities after tax 3,603.81 (15.80) 3,588.01 (2,622.15) (3,742.87) (6,365.01)



31. ESOP SCHEMES

Mar-10 Mar-09

Number of Employee Number of Weighted average Number of Weighted average Stock Option Outstanding: Options exercise price Options exercise price

Outstanding at the beginning of the year 778,934 478.62 890,555 481.42 Granted during the year 716,400 185.94 — — Lapsed/Cancelled during the year 44,284 — 108,128 — Exercised during the year 48,521 206.52 3,493 150.00 Surrendered during the year 632,931 — — —

Outstanding at the end of the year 769,598 198.63 778,934 478.62

32. EARNING PER SHARE (EPS) IS CALCULATED AS FOLLOWS:


(a) Profit/(Loss) attributable to equity share holders (Rs. in lacs) 3,588.01 (6,365.01) (b) Weighted Number of equity shares outstanding during the year 34,870,875 34,865,593 (c) Weighted Number of equity shares outstanding during the year after adjustment for dilution 35,069,496 34,865,593

(d) Nominal value per share (Rs.) 10 10

(e) EPS:

– Basic (Rs.) 10.29 (18.25)

– Diluted (Rs.) 10.23 (18.25)

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

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

Shopper's Stop Ltd.


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