1. COMPANY BACKGROUND

Shoppers 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 through departmental stores. At 31 March, 2016, the Company operated through 77 such departmental stores located in different cities of India.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Accounting and Preparation of Financial Statements

The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 (the Act), and the relevant provisions of the Act. The financial statements have been brpared on accrual basis under the historical cost convention.

b) Use of Estimates

The brparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses, assets and liabilities (including contingent liabilities). Actual results could differ from these estimates and the differences are recognised in the periods in which the results are known/materialise.

c) Fixed Assets and Debrciation

Tangible assets

Fixed assets are stated at their cost of acquisition or construction less accumulated debrciation 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 stores.

Debrciation on tangible fixed assets has been provided for by the straight line method over the useful lives brscribed in Schedule II to the Companies Act, 2013, except in respect of the following categories of assets, whose lives have been assessed as under, taking into account various factors such as the expected pattern of usage, operating conditions, past history of replacement, anticipated technological changes, manufactures warranties and maintenance support

Intangible assets

Intangible assets are stated at their cost of acquisition, less accumulated amortisation and impairment losses. An intangible asset is recognised, 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 intangible assets are amortised over the best estimate of useful life on a straight-line basis, as under:

Trademarks and Patents - 10 years

Computer Software - 6 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, of 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 recognised as an impairment loss in the Statement of Profit and Loss.

d) Investments

Non-current investments are stated at cost. Where applicable, provision is made to recognise a decline, other than temporary, in the value of non-current investments.

e) Revenue Recognition

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

Sale of products:

Retail sales are recognised on delivery of the merchandise to the customer, when the property in goods and significant risks and rewards are transferred for a price and no effective ownership control is retained.

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 disclosed separately under retail sale of products (Note 19).

Sales are net of discounts. Value added tax and sales tax are reduced from retail revenue.

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.

Other retail operating revenue:

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) Income from Investments and Loans

Interest income is recognised on time proportion basis. Dividend income is recognised when right to receive it is established.

g) Inventories

Inventories are valued at the lower of cost and net realisable value. Cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their brsent 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 are charged as expense to the Statement of Profit and Loss 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/cessation of employment or after a period of twelve months from rendering service, are measured by the projected unit credit method, based on actuarial valuations, at each Balance Sheet date, carried out by independent actuaries. The Company’s obligations recognised in the Balance Sheet rebrsent the brsent value of obligations as reduced by the fair value of plan assets, where applicable.

Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss.

i) Operating Leases

Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis or other systematic bases more rebrsentative 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 capitalised 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 brvailing rates of exchange on the date of transaction. Monetary items denominated in foreign currencies, are restated at the brvailing rates of exchange at the balance sheet date. All gains and losses arising out of fluctuations in exchange rates are accounted for in the Statement of Profit and Loss.

Exchange differences on forward exchange contracts, entered into for hedging foreign exchange fluctuation risk in respect of an underlying asset/liability, are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rate changes. Premium/discount on forward exchange contracts are recognised 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 to revenue authorities using the applicable tax rates and tax laws.

Deferred tax resulting from the timing differences between taxable income and accounting income is accounted using applicable tax rates and laws, enacted or substantively enacted as on the reporting date.

The deferred tax asset is recognised and carried forward only to the extent that there is reasonable/virtual certainty (as relevant) that the asset will be realised.

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 brpared by the indirect method set out in Accounting Standard 3 on Cash Flow Statements and brsents the cash flows by operating, investing and financing activities of the Company.

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

p) Provision, Contingent Liabilities and Contingent Assets

A provision is recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes to the financial statements.

Disclosure is not made if the possibility of an outflow of future economic benefits is remote. Contingent assets are neither recognised nor disclosed in the financial statements

2. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure