MANAGEMENT DISCUSSION AND ANALYSIS -31ST MARCH 2015

This Management Discussion and Analysis Report is brpared in adherence to the spirit enunciated in the Code of Corporate Governance, approved by the Securities and Exchange Board of India and in compliance with the provisions of the Listing Agreement.

Overview

The Indian retail industry has brsently emerged as one of the most dynamic and fast paced industries as several players have started to enter the market. It accounts for over 10 per cent of the country's gross domestic product (GDP) and around eight per cent of the employment in India. The country is today the fifth largest global destination in the world for retail.

India's retail market is expected to double to US$ 1 trillion by 2020 from US$ 600 billion in 2015 driven by income growth, urbanization and attitudinal shifts. While the overall retail market will grow at 12 per cent per annum, modern trade is expected to grow twice as fast at 20 per cent per annum and traditional trade is estimated to grow at 10 per cent. Three prime factors which would drive this growth will be greater brand recognition, new entrants / market players and assurance of increasing ease of doing business in the country.

Added to the above the share of e-Commerce is also expected to grow steadily. The value propositions of assortment, discounts and convenience have attracted a larger customer base to this vertical. Besides strong logistics infrastructure and the payment modalities have also aided the growth in e-commerce. E-tailers are betting on more Indians switching to shopping online, with a projection of 200 million new consumers by 2017.

As the market grows wider and wider and as the industry evolves there comes the need of a basic transformation in the retailers' approach. In this rapidly changing retail environment, brick and mortar retailers will be competing with an increasingly wider set of peers for the same wallet. The retailers will now be forced to modify their offerings across the pathway.

The year 2014-15 was a remarkable one for the brand marking major milestones. In a highly competitive scenario, where new brands and offerings are entering the market almost every quarter, your Company delivered competitive growth, driven by innovation and sharper in-market execution. Our focused efforts as a Company on delivering contemporary and quality products, judicious pricing, waste minimization and cutting superfluous expenses without compromising on the competitiveness of brand investments bore the fruit. The business mantra for the year has been retail expansion and directing the energies in getting the right model, size and throughputs and thereby improving the economics.

Your Company built its dominance by opening 29 exclusive outlets during the year in select markets. While the supply side continues to pose challenges in terms of increase in real estate costs and high input costs to an extent, the brand has well conceived fact of addressing the throughput problems which will make the margins to follow the right path.

Further the raising of funds through QIP has well capitalized the Company to fuel its growth engines. The focus now lies on sharply identifying emerging opportunities across geographies and customer segments and allow for experimentation. Added to it, with e-commerce in India expected to quadruple in the next 5 years, the brand is also focusing on designing a seamless and connected customer journey for shoppers.

Internal Control Systems and their Adequacy

The Company has developed adequate internal control system commensurate to its size and business to ensure that all assets are safeguarded and protected against any loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly. The internal audit reports are periodically reviewed by the Management together with the Audit Committee of the Board. The Company has a strong Management Information System as a part of Control Mechanism.

Risk Management

The Company is exposed to Interest Rate Risk. The Interest rates have softened during the course of the year and with the repayment of Term loans, the Company's debt is only confined to working capital facilities.

Financial Performance

The financial statements have been brpared in compliance with the requirements of the Companies Act, 2013, and Generally Accepted Accounting Principles (GAAP) in India.

The management accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgment relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably brsent our state of affairs and profits for the year.

Human Resources

The top priorities of the Company include measures for employees' safety, their welfare and development. The Company had around 400 employees as on 31st March 2015. The Company is in the process of adopting a targeted approach to training, appraisal and retention of leaders and employees.

Cautionary Statement

Statement in this Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or brdictions may be "forward looking statements" within the meaning of applicable securities, laws and regulations. Actual results could materially differ from those exbrssed or implied. Important factors that could make a difference to the Company's operations include raw material availability and prices, global demand-supply conditions, changes in governmental regulations and tax structure, economic structure within India and the countries with which the Company has business contacts and other incidental factors.