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India : Retail Industry Overview 2011 India : Retail Industry Overview 2011 Shoppers Stop: An Overview Shoppers Stop: An Overview Store Formats Store.

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Presentation on theme: "India : Retail Industry Overview 2011 India : Retail Industry Overview 2011 Shoppers Stop: An Overview Shoppers Stop: An Overview Store Formats Store."— Presentation transcript:

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2 India : Retail Industry Overview 2011 India : Retail Industry Overview 2011 Shoppers Stop: An Overview Shoppers Stop: An Overview Store Formats Store Formats Strategic Alliance Strategic Alliance Type Of Retail Outlets Type Of Retail Outlets Approach Approach Vision Vision International Brands International Brands Loyalty Program Loyalty Program Customer Satisfaction Index Customer Satisfaction Index Adverse Financial Analysis Adverse Financial Analysis SWOT Analysis SWOT Analysis Risk Points raised by the Auditors Risk Points raised by the Auditors Risk Factors Analysed Risk Factors Analysed Findings and Recommendations Findings and Recommendations Competitor Common Stock Comparison Competitor Common Stock Comparison

3 Indian Retail Market Share: 22% of GDP Contribution towards Total Employment: 8% Total Retail Market : US $450 billion Expected Growth in Retail Market: US $ billion by 2016, market is expected to grow at 12% over the next 5 years and 7% during the next 10 years. Compounded Annual Growth Rate (CAGR) of Indian Retail: 13.3% Organized Retail Market: US $450 billion (5.5% of total market) Expected Growth in Organized Retail Market: Expected to grow at 12.4% by 2016 and to US $200 billion by Source: India Retail Report 2012

4 HEADQUATERS Eureka Towers,9th Floor, B Wing, Mindspace, Link Road, Mumbai, Maharashtra INDUSTRYRetail TYPEPublic Company STATUSOperating COMPANY SIZE8000 employees NUMBERS OF STORES REVENUESRs crore NET PROFITRs crore TOTAL RETAIL AREA 4.78 million sq. ft. as of 30 th September 2012 FOUNDED 1991 Sources:

5 SHOPPERS STOP: AN OVERVIEW Management- SHOPPERS STOP Ltd. Chandru L RahejaChairman / Chair PersonB S NageshVice Chairman Govind ShrikhandeManaging DirectorRavi C RahejaDirector Deepak GhaisasDirectorGulu L MirchandaniDirector Neel C RahejaDirectorNitin SanghaviDirector Shahzaad S DalalDirectorNirvik SinghDirector About SHOPPERS STOP Ltd. Shoppers Stop Ltd., a pioneer in modern retailing in India, has been promoted by K Raheja Corp. Group (Chandru L. Raheja Group), one of the leading groups in the business of real estate development and hotels in the country. Shoppers Stop Ltd along with its Subsidiary Company Hypercity Retail (India) Ltd and Joint Venture Companies Timezone Entertainment Pvt. Ltd and Nuance Group (India) Pvt. Ltd. operates more than 4.78 million sq. Ft. as of 30 th September 2012 in the country. Shoppers Stop and its associate companies are involved in retailing through department stores, specialty stores, entertainment zones and large hypermarkets. Sources:

6 Shoppers Stop Ltd. Consolidated with SSL SS Department Stores Business 71% Sales Contribution SS Department Stores Business 71% Sales Contribution No of stores: 54 GFA: lacs sq ft. No of stores: 54 GFA: lacs sq ft. No of stores: 12 GFA: 1.99 lacs sq ft. No of stores: 12 GFA: 1.99 lacs sq ft. No of stores: 39 GFA: 0.18 lacs sq ft. No of stores: 39 GFA: 0.18 lacs sq ft. No of stores: 5 GFA: 0.18 lacs sq ft. No of stores: 5 GFA: 0.18 lacs sq ft. 10 – 11 : 35 lacs visitors 11 – 12 : 72 lacs visitors Subsidiary Companies 30% Sales Contribution JV Companies 2 2% Sales Contribution SSL Stake 51% No of stores: 12 GFA: lacs sq ft. Sales as of Sep 2012 : Rs. 406 Cr Sales for full year as of March 2012 : Rs 761 Cr No of stores: 12 GFA: lacs sq ft. Sales as of Sep 2012 : Rs. 406 Cr Sales for full year as of March 2012 : Rs 761 Cr SSL Stake 100% No of stores: 82 Own Stores : 41 GFA: 2.33 lacs sq ft. No of stores: 82 Own Stores : 41 GFA: 2.33 lacs sq ft. No of stores: 1 GFA: 0.19 lacs sq ft No of stores: 1 GFA: 0.19 lacs sq ft No of stores:18 GFA: 1.20 lacs sq ft. No of stores:18 GFA: 1.20 lacs sq ft. SSL Stake 50% SSL Stake 36.82% Well diversified portfolio to capture the consumer’s wallet share Well diversified portfolio to capture the consumer’s wallet share Note : Above figures as of 30TH September GFA: Gross Floor Area Source: Shoppers Stop Annual Report

7 Shopper's Stop Ltd. has entered into a non exclusive retail agreement with world-renowned cosmetics major Estee Lauder to open M.A.0 Cosmetics stores in India. Shopper's Stop Ltd. has a 51% stake in Hypercity Retail (India) Ltd. Mothercare PLC of UK, the largest specialist retailer for infant and toddler care, is now in India. Shopper's Stop Ltd.'s entry into airport retailing is marked by a joint venture with The Nuance Group AG of Switzerland, the world's leading airport retailer. Shopper's Slop Ltd has forayed into the Entertainment sector by acquiring a 36.82% stake in Timezone Entertainment Private Limited which is in the business of setting up & operating Family Entertainment Centres (FECs). Source: Shoppers Stop Annual Report

8 TYPE OF RETAIL OUTLETS Shoppers Stop Ltd. Departmental Store- Shopper’s Stop- 54 Specialty Retailing-138 Home Products Retailing- HomeStop- 12 Beauty, Cosmetics Retailing- MAC, Estee Lauder Clinique- 39 Crossword Book store- 82 Parenting Products- Mothercare- 5 Hypermart- HyperCity -12 Source: Shoppers Stop Annual Report

9 TYPE OF APPROACH SSL will open nearly 80 per cent of the new stores in the top 24 cities. 75 per cent of the total sales of SSL comes from metros and Tier-1 cities. SSL aims to stick to the top 10 cities including Pune, Bangalore, Hyderabad and metro cities.

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11 TRANSITIONED THE SHOPPERS STOP BRAND FROM PREMIUM TO BRIDGE-TO-LUXURY Luxury Bridge to Luxury Premium Contemporary Popular Mass Source:

12 Jack & Jones, French Connection, CK Jeans, GAS, ESPRIT, Tommy Hilfiger, Mustang & Mango in apparel segment Loccitane, Lancome, MAC, Clinique & Estee Lauder in cosmetics CK, Armani & Gucci in sun glasses Burberry, Nina Ricci, Diesel & Boss in watches Improved Product Mix and Brands Profile to Attract “Aspirational” Customers INTERNATIONAL BRANDS PRIVATE LABELS SHOPPERS STOP PRIVATE LABELS Stop- Mens formal/casual/ethnic/womens western/ethnic, kids casual/ethnic Kashish – Mens & womens ethnic Life- Mens & womens Fashion Vettorio Fratini- Premium formal& semi formal mens wear Haute curry- fusion wear for women Elliza Donatein- corporate womenswear Ijeans wear- Mens denim

13 The First Citizen Shoppers’ Stop’s customer loyalty program is called The First Citizen. The program offers its members an opportunity to collect points and avail of innumerable special benefits. Currently, Shoppers’ Stop has a database of over lakh members who contribute to nearly 72% of the total sales of Shoppers’ Stop. Source: Shoppers Stop Annual Report

14 Customer satisfaction index is calculated based on the following parameters: Merchandising Range and Quality Store Environment Staff Transaction Efficiency Loyalty Programme Schemes Promotions Customer experience in Shoppers Stop wrt the competitor stores There was a significant increase in customer satisfaction from year 2007 to year 2009, although there is a small decrease in customer satisfaction in year 2010 from year This may be due to increased choices offered to the customers by other stores and hence increasing expectations of the customer Source: Shoppers Stop Annual Report

15 PARAMETERSUSEADVERSITIES 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. There has been a consistent fall in the consolidated conversion ratio starting from financial year to The financial year saw a fall by 1% to 23% from previous year when it was 24%. A further fall by 4% is expected in Quarter-II of Financial year Like To Like Sales Volume (%) A comparison of this year's sales to last year's sales in a particular company, taking into consideration only those activities that were in effect during both time periods. Like-for-like sales is a method of valuation that attempts to exclude any effects of expansion, acquisition or any other event that artificially enlarge a company's sales. A consolidated consistent fall has been noted in the LTL volume in October to December 2011 by 5% and yet again in financial year by 4%. A further fall by 4% is expected in Quarter-II of Financial year Private Level Sales (%) Company aims to provide a differentiated and unique offering to the customer through its own private labels as well as through exclusive private brands. Although there has been a growth in Consolidated Private Label Mix up to 6.4% during financial year but Consolidated Private Label Sales Growth has fallen by 2.4% during the same period. A further fall by 13% is expected in Quarter-II of Financial year Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

16 PARAMETERSDEFINATION AND ITS USEADVERSITIES Gross Marginal Return on Floor % (GMROF) GMROF helps to maximise the cash margins. A consistent fall has been noted in the Consolidated GMROF :  April to December 2011 by 6%  Quarter III of by 15%  Quarter IV of by 10%  Financial Year by 7% Gross Marginal Return on Inventory % (GMROI) GMROI helps to optimise inventory levels. A continuous fall in Consolidated GMROI (%) has been noticed from financial at 4.25% to 4.17% in and 4.01% in Gross Marginal Return on Labour % (GMROL) GMROL helps to increase labour productivity. A consistent fall has been noted in the Consolidated GMROL :  April to December 2011 by 2%  Quarter III of by 15%  Quarter IV of by 6%  Financial Year by 6% Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

17 PARAMETERUSEADVERSITIES Operating Expenses There has been consistent steep rise noted in Operating Expenses of both SSL Alone and Consolidated:  April to December 2011 to SSL- 21% and Consolidated- 36%  Quarter III of to SSL- 23% and Consolidated- 24%  Quarter IV of to SSL- 28% and Consolidated- 26%  Overall Financial Year to SSL- 23% and Consolidated- 33% A further rise by 26% in SSL and 20% in Consolidated version is expected in Quarter-II of Financial year Operating Profit and Operating Profit Margin(%) The Ratio is used to analyze the efficiency with which the company controls its selling and general and administrative expenses. Operating Profit of SSL (without exceptional items) has decreased by 5% to Rs.14,391lacs from Rs.15,211lacs in the previous year whereas Consolidated have fallen by 18% in from its previous years. A further fall by 27% in SSL and 37% in Consolidated version is expected in Quarter-II of Financial year Similarly there has been a decrease in Operating Profit Margin of SSL Alone from 8.53% in to 6.91% in and in Consolidated version there has been a fall from 5.73% in to 3.70% in Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

18 PARAMETERUSEADVERSITIES Profit Before Tax (PBT)There has been consistent and substantial fall noted in SSL Alone and whereas huge effects were reflected on Consolidated financial figures:  April to December 2011 to SSL- 10% and Consolidated- 77%  Quarter III of to SSL- 32% and Consolidated- 65%  Quarter IV of to SSL- 25% and Consolidated- 144%  Overall Financial Year to SSL- 14% and Consolidated- 86% A further fall by 65% in SSL and 212% in Consolidated version is expected in Quarter-II of Financial year Profit After Tax (PAT)There has been consistent and substantial fall noted in SSL Alone and whereas major effects were reflected on Consolidated financial figures:  April to December 2011 to SSL- 9% and Consolidated- 49%  Quarter III of to SSL- 31% and Consolidated- 44%  Quarter IV of to SSL- 31% and Consolidated- 88%  Overall Financial Year to SSL- 15% and Consolidated- 56% A further fall by 67% in SSL and 155% in Consolidated version is expected in Quarter-II of Financial year Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

19 PARAMETERUSEADVERSITIES Finance Charges Finance Charges have at times risen to enormous level in both SSL Alone and Consolidated financial figures:  April to December 2011 to SSL- 30% (fall in charges) and Consolidated- 58%  Quarter III of to SSL- 850% and Consolidated- 72%  Quarter IV of to SSL- 1137% and Consolidated- 35%  Overall Financial Year to SSL- 14% (fall in charges) and Consolidated- 45% A further fall by 172% in SSL and 35% in Consolidated version is expected in Quarter-II of Financial year Net cash used for investing activities There has been consistent shortage of Consolidated cash available for investing activities:  April to December 2011 – Rs.16,0 66  Overall Financial Year – Rs.16, 584 A further fall by Rs.5, 858 is expected during April to September Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

20 PARAMETERUSEADVERSITIES Gross Profit Margin Ratio The gross profit margin is used to analyze how efficiently a company is using its raw materials, labour and manufacturing-related fixed assets to generate profits. Higher Gross Profit Margin means more efficient. The gross margin of SSL Alone has decreased during the year to 32.7% from 33.0% as compared to the last year, principally on account of increases in levies and the transition in trading models. PAT Margin Ratio Net profit margin measures the overall efficiency of the business The PAT margin of SSL Alone has decreased during the year to 2.9% from 4% as compared to the previous year Whereas PAT margin of Consolidated version has decreased during the year to 3.38% from 4.6% as compared to the previous year Interest Coverage Ratio The interest coverage ratio is a measure of the number of times a company could make the interest payments on its debt with its EBIT. The lower the interest coverage ratio, the higher the company's debt burden and the greater the possibility of bankruptcy or default. The Interest Coverage Ratio of SSL Alone has decreased during the year to 5.23% from 8.9% as compared to the previous year Whereas Interest Coverage Ratio of Consolidated version has decreased during the year to 4.91% from 8.83% as compared to the previous year Although it still remains within the ideal ratio limits. Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

21 PARAMETERUSEADVERSITIES Stock Turnover Ratio Number of time the stock has been turned over during the period and evaluates the efficiency with which a firm is able to manage its inventory. This ratio indicates whether investment in stock is within proper limit or not. The Stock Turnover Ratio of SSL Alone has decreased during the year to 2.7% from 3.7% as compared to the last year Whereas Asset Turnover Ratio of Consolidated version has decreased during the year to 9.1% from 10.96% as compared to the previous year Asset Turnover Ratio How well a company is utilizing its assets to produce revenue. The Asset Turnover Ratio of SSL Alone has seen a continuous decrease during to 3% from 3.4% of and 2.7% during as compared to its previous year Whereas Asset Turnover Ratio of Consolidated version has decreased during the year to 1.54% from 1.59% as compared to the previous year Current Ratio Firm's commitment to meet financial obligation. Heavy ratio is undesirable as it indicates less efficient use of funds. Although the Current Ratio of SSL Alone is stable throughout the years and has rather increased to 1.5 during as compared to 1.4 of previous year , similarly Current Ratio of Consolidated version resides 0.5 in and 0.47 in but does not lie in the ideal range and hence evident to the fact that company is not using its funds efficiently and needs improvement in it. Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

22 PARAMETERUSEADVERSITIES Debt Equity Ratio This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. Long term solvency of the Company. Although the Current Ratio of SSL Alone has increased to 0.4 during as compared to 0.2 of previous year similarly Debt Equity Ratio of Consolidated version resides 0.84 in and 0.in , but does not lie in the ideal range and hence evident to the fact that there lies a greater risk for creditors because the long term solvency of the company is not correct and needs a little attention. over the point. Quick Ratio Short term solvency of the Company. There is a shortage in the Quick Ratio of SSL Alone of the company which during the period lies at 0.12 as compared to last year’s ratio to 0.14, similarly Quick Ratio of Consolidated version resides 0.12 in and 0.14 in therefore as far as the ideal ratio is concerned i.e. 0.5 it lacks way behind and hence is suffice to states that the company’s short term solvency needs immediate attention and improvement. Days Inventory Outstanding (DIO) DIO gives a measure of the number of days it takes for the company's inventory to turn over, i.e., to be converted to sales, either as cash or accounts receivable. SSL Alone has experienced an increasing trend in DIO to in from in the previous year whereas in Consolidated version DIO is increasing from in to in , therefore evidencing to the fact that the company is struggling to convert inventories into cash or receivables. Source: Shoppers Stop Annual Report, , and and Shoppers Stop Quarterly Report s of

23 PARAMETERUSEADVERSITIES Return on Assets (ROA) This ratio indicates how profitable a company is relative to its total assets. SSL Alone has seen a decrease in ROA from 10.86% in to 10.73% in , similarly in Consolidated version ROA has decreased from10.65% in to 9.61% in Free Cash Flow Cash left behind after incurring of Capital Expenditure There is a shortage in the Free Cash Flow of SSL Alone of the company which during the period lies at Rs.14, lakhs as compared to last year at Rs.15, lakhs, similarly Consolidated version figures resides at Rs.10, lakhs in as compared to Rs.13, lakhs in Cash Flow to Debt Ratio This ratio provides an indication of a company's ability to cover total debt with its yearly cash flow from operations. Company has seen a immense decrease in the ratio of SSL Alone from 1.09 in to 0.17 in Similarly Company also experiences a decrease in Consolidated version from 0.61 in to 0.28 in Source: Shoppers Stop Annual Report, , and and Shoppers Stop Quarterly Report s of

24 PARAMETERUSEADVERSITIES Return on Net Worth (RONW) Company has experienced a substantial decrease in RONW of SSL Alone from 26.7% during to 16.9% during Return on Capital Employed (ROCE) The company has experienced a decrease in ROCE of SSL Alone from 19.3% during to 12.8% during Short Term Loans and Advances There has been a rise in the Short Term Loans and Advances provided by the company to Rs.4,012.47lacs during from Rs.3,894.82lacs during previous year Further it is expected to rise to Rs.5,861.1lacs from April to September Long Term Loans and Advances There has been a rise in the Long Term Loans and Advances provided by the company to Rs.25,028.65lacs during from Rs. 24,978.29lacs during previous year Further it is expected to rise to Rs.27,881.7lacs from April to September Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

25 PARAMETERUSEADVERSITIES Debt Ratio It is used to gain a general idea as to the amount of leverage being used by a company. There has been a rise in Debt Ratio of SSL Alone from 0.43 in to 0.48 in , similarly Consolidated version showed a fall from 0.57 in to 0.60 in Capitalization Ratio It is used to measure the Long Term Debt proportion in the Total Capital structure of the Company. There has been a rise in Capitalization Ratio in Consolidated Version of the Company from 0.45 in to 0.70 in Operating Cash Flow to Sales Ratio It gives investors an idea of the company's ability to turn sales into cash. Company has seen a fall in Operating Cash Flow to Sales Ratio of SSL Alone to 0.02 in from 0.08 in , similarly fall has also been seen in Consolidated version to in from in Free cash Flow to operating Cash Flow Ratio Company has seen a fall in Free Cash Flow to Sales Ratio of Consolidated version to in from 0.96 in Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

26 PARAMETERUSEADVERSITIES Fixed Asset Turnover Ratio It is used to reflect a company’s efficiency in managing the Fixed Assets. Although there has been a rise in Fixed Asset Turnover Ratio in Consolidated version of the Company from the previous year but there has been a fall in SSL Alone from 5.51 in to 4.80 in Capitalization Ratio It is used to measure the Long Term Debt proportion in the Total Capital structure of the Company. There has been a rise in Capitalization Ratio in Consolidated Version of the Company from 0.45 in to 0.70 in Short Term Debt Coverage Ratio Company has seen a fall in Short Term Debt Coverage Ratio of SSL Alone to 0.20 in from 1.09 in , similarly fall has also been seen in Consolidated version to in from 0.75 in Capital Expenditure Coverage Ratio Company has seen a fall in Capital Expenditure Coverage Ratio of SSL Alone to in from 7.78 in , similarly fall has also been seen in Consolidated version to 0.06 in from 3.73 in Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

27 PARAMETERUSEADVERSITIES Price Earnings to Growth Ratio (PEG Ratio) It gives the investors an insight into the degree of overpricing or underpricing of a stock's current valuation Company’s Expected PEG Ratio is 8 for the year which shows that the stock is overvalued. Dividend Yield It shows how much a company pays out in dividends each year relative to its share price. There has been a fall in Dividend Yield of the Company from 0.22%in to 0.19% in Capital Expenditure Company has seen a hike in Capital Expenditure of SSL Alone to Rs.(7, lakhs) in from Rs.1,764.13lakhs in , similarly fall has also been seen in Consolidated version to Rs.(8, lakhs) in from Rs.3,697.52lakhs in Stock in Trade There has been a rise in the Stock in Trade of the company to Rs.21,204.01lacs during from Rs.15,113.66lacs during previous year Further it is expected to rise to Rs.21,239lacs from April to September Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

28 PARAMETERUSEADVERSITIES Trade Payables There has been a rise in the Trade Payables from other than MSME’s to Rs.21,656.71lacs during from Rs.24,622.74lacs during previous year Further it is expected to rise to Rs.29,586.1lacs from April to September Other Current Liabilities Some of the Other Current Liabilities during have substantially risen from the previous year :  Current maturities of long term borrowings (secured): Rs.4,000lacs whereas in P.Y it was Rs.2,000lacs.  Interest accrued and not due on borrowings: Rs.94.7lacs whereas in P.Y it was Rs.28.21lacs.  Creditors for capital expenditure: Rs.739.2lacs whereas in P.Y it was Rs lacs.  Liability for gift vouchers/point award redemptions: Rs.6,642.21lacs whereas in P.Y it was Rs.5,758.23lacs. Further Other Current Liabilities are expected to rise to Rs.14,652.8lacs from April to September Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

29 PARAMETERUSEADVERSITIES Short Term Borrowings Short Term Borrowings during have increased from the previous year :  Loans from banks (secured): Rs.14,406.87lacs whereas in P.Y it was Rs.10,548.95lacs.  Commercial papers (unsecured): Rs.4,000lacs whereas in P.Y it was Rs.2,000lacs. Further it is expected to rise to Rs.21,710.5lacs from April to September Partnership 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, 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 organisation understand the expectations of various business partners, current strengths and concern areas thereby help set a clear roadmap for improvement and better performance. PSI score haven fallen to 3.85 during the year as compared to 4.14 during the previous year Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

30 PARAMETERUSEADVERSITIES Net Worth 1)The Company has financial involvement in a subsidiary company, namely Hypercity Retail (India) Limited (‘Hypercity’) as follows: Investment in Equity and Preference Capital of Rs.20, lacs and Loans and Advances of Rs.8, lakhs, making an aggregate involvement to Rs.28, lacs. But Hypercity continues to make losses and the accumulated losses of Rs.36,402.66lacs as at 31st March, 2012 have substantially eroded its Net worth as at the year end. 2)The Company has financial involvement in a Joint Venture companies, namely Nuance Group (India) Private Limited and Timezone Entertainment Private Limited, as follows: Investment in Equity and Preference Capital of Rs.3, 641lacs in Nuance Group and Rs.1, lacs in Timzone and Loans and Advances of Rs.200lakhs in Timezone, making an aggregate involvement to Rs.3, 641lacs in Nuance Group and Rs.1, lacs in Timezone.But Net Worth of both the subsidiiaries have been substantially eroded ias at 31 st March Source: Shoppers Stop Annual Report, , Shoppers Stop Quarterly Report s of

31 Opportunities  First Citizens Club has continued to be one of the main strengths of our business. In the year gone by the programme has exceeded the 2.5 million mark in memberships, making it one of the largest loyalty membership programs in the country across sectors.  The company continues to invest in our front and back end processes and systems.  The company created a strong distribution and logistics network, with our four Distribution Centres covering more than 400,000 square feet handling over 400,000 SKUs per year, and working 24x7. The Company believes that the “hub – and-spoke” model followed by it for its distribution network, will stand it in good stead for the expansion.  Company endeavors to make Shopping experience the differentiator.  The company assesses Customer Care Associates (CCAs) across all levels through assessment centres for promotion decisions, career planning and succession planning. Company also conducts associate satisfaction survey every year and derive ASI scores, which helps it in identifying the trust index scores of respect, credibility, fairness, pride with the organisation.  Company benefits from its Promoters’ association with the real estate business and their relationships with developers, which have helped the company, acquire preferred properties at competitive rates.  The Company imparts special training to its employees to ensure that service is not compromised on. The company’s store positioning in the “bridge to luxury” segment clearly sets apart its stores from those of the rest of the industry players.  Among the big players in the organized retail space in India, Shopper's Stop has always understood the criticality of scale, availability and experience, and has been an eager adopter of advanced, cutting edge technology. To help drive its growth strategy, Shopper's Stop is employing its reporting and analytics capabilities in the areas of merchandising, loyalty management, distribution and logistics, sales performance, loss prevention, and financial analysis. SAS provided the retailer with a business analytics framework for reporting and analytics using SAS Enterprise BI Server and SAS Enterprise Miner.  Access to standardized, timely and accurate data from its DRISHTI (Insight) data warehouse project, along with flexible reporting functionality. Source: Shoppers Stop Annual Report, ,

32  The company will be in expansion phase over next 36 months which will be a critical time as far as execution risk is concerned.  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.  Slowing expansion due to dependence on real estate developer for completing projects during slowdown.  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.  The Company has invested in other entities and lower than expected returns from these entities will have an impact on the cash flows and consolidated results of the Company  It has lesser promotional strategies on both Above the Line and Below the Line level compared to global leaders.  Operating expenses of the company have substantially risen throughout the years which had its adverse effects on the profits of the financials of the company.  Severe consistent heavy hikes in Finance Charges have been proved to be a big matter of concern for the company. The needs an immediate attention over the issue before it could consolidate its adverse effects on profits of the company.  The funds available by the company are not being utilized by it in an efficient manner which reflects in its Current Ratio.  Company has both provided and obtained heavy financing and borrowings for itself as well as for its Associate companies which until the current stage has failed to show its purpose and worth which takes a heavy toll out of the profit as a part of interest charges.  The Net worth of Joint Venture Companies of SSL, i.e. Nuance Group (India) Private Limited and Timezone Entertainment Private Limited has substantially been eroded as at 31st March, Based on the business plans of these companies and the business valuation by an independent valuer, no provision for any loss is currently considered necessary in these financial statements.  Subsidiary of SSL, Hypercity Retail (India) Limited continues to make losses and the accumulated losses of Rs. 36,402.66lacs as at 31st March, 2012 have substantially eroded its Net worth as at the year end. Based on the Business plans, opportunities and business valuation by an independent valuer, the Company considers that there is no loss for which a provision is currently necessary in these financial statements. Source: Shoppers Stop Annual Report, ,

33  The company is expecting to launch into its next expansion phase in the next 36 months. The Company’s strategy to increase the number of departmental stores, and therefore improve city wise penetration in new cities, increase market share in existing cities through additional new stores in those cities, and new stores in Tier-II cities, remains unchanged.  Hypercity which is a 51% subsidiary of the Company has shown encouraging performance, with an overall sales growth of 27.5% and like to like sales growth of 9% for the year.  Company has diversified into multiple formats viz, HomeStop which retails hard and soft furnishing, M.A.C. and Estee Lauder 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 AG of Switzerland. The Company has also made a successful foray into internet retailing through its e-retailing portal. The Company looks to focus and expand these formats.  Company believes that by 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, thereby enriching the product bouquet for it’s customers and in turn increasing opportunities for product diversification and profit enhancement.  After the clearance of FDI from the Rajya Sabha, Shopper Stop because of having an early presence in some International brands may be have an upper hand in competing with the Global multibrand retail companies than its local rivals.  Preferred partner for international brands in various categories due to diversified presence. Source: Shoppers Stop Annual Report, ,

34  Economic slowdowns have a direct impact on consumption. Retail, being the end service provider of consumption in the supply/value chain, is bound to face difficulties in an environment of economic slowdown.  With India continuing to be an attractive retail market, the Company expects many new entrants into the sector, thus increasing competition, also among existing rivals there is intense rivalry for new locations and quality real estate, therefore it sets up the foundations for increased intensity of competition among existing rivals.  With the clearance of FDI from the Government of India, Shopper Stop together with the local multibrand retailers like Wills Big Bazaar, Spencers, etc. Will also have to face severe competition from the global behemoths like Wallmarts.  Faced with increasing competitive pressure for customer wallet share, Shopper's Stop will have to improve customer satisfaction and loyalty, increase its breadth of merchandise and expand store operations into new markets, while maintaining profitability. Source: Shoppers Stop Annual Report, ,

35 RISK POINTS RAISED BY THE AUDITORS Following risk points were raised by the Auditors for the financial year : According to the Auditor’s opinion, a substantial part of fixed assets has not been disposed off by the Company during the year. The Company has granted unsecured loans to one party during the year. At the year-end, the outstanding balance of such loans aggregated Rs.8,730.68lacs (including interest) and the maximum amount involved during the year was Rs.16,500.00lacs. The rate of interest and other terms and conditions of such loans are, in the Auditor’s opinion, prima facie not prejudicial to the interests of the Company. According to the Auditor’s opinion 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. Auditor’s attention is invited to Note 31 to the Consolidated Financial Statements regarding non-provision of service tax for the period 1 June 2007 to 31 March 2010, on renting of immoveable properties given for commercial use, aggregating Rs. 2,010.90lacs, pending final disposal of the appeal filed before the Honourable Supreme Court, inter-alia, challenging the retrospective levy of the service tax. The matter is contingent upon the final outcome of the litigation. Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effect from 1 June 2007 by the Finance Act, 2010, the Company has, based on a legal advice, and challenged the said levy and, inter-alia, its retrospective application. The Honourable Supreme Court has passed an interim order dated 14th October, 2011, with regard to the levy of service tax on immovable properties rented out for commercial use including its retrospective applicability from 1st June, 2007 in compliance of which, the Company has made an aggregate deposit of Rs.1,824.88lacs in respect of the liability for such service tax up to 30th September, From October 2011, the Company is accounting and paying for such service tax regularly as per directives of the Supreme Court. Pending the final disposal of the matter, the Company continues not to provide for the retrospective levy aggregating Rs.1,659.56lacs for the period 1st June, 2007 to 31st March, Source: Shoppers Stop Annual Report

36 RISK FACTORS ANALYSED 1)Liquidity Ratios : Current Ratio, Quick Ratio and Days Inventory Outstanding (DIO). 2)Profitability Ratios : Gross Profit Ratio, Net Profit Ratio, Operating Profit and Operating Profit Margin Ratio and Return On Asset. 3)Debt Ratios : Debt Equity Ratio, Capitalization Ratio, Interest Coverage Ratio and Cash Flow To Debt Ratio. 4)Operating Performance Ratios : Stock Turnover Ratio and Asset Turnover Ratio. 5)Cash Flow Indicator Ratios : Operating Cash Flow to Sales Ratio, Free Cash Flow, Free Cash Flow to Sales Ratio, Short Term Debt Coverage Ratio and Capital Expenditure, Capital Expenditure Coverage Ratio. 6)Investment Valuation Ratio : Price Earnings to Growth Ratio and Dividend Yield. 7) Sales and Volume : Conversion Ratio, Like to Like Sales Volume and Private Label Sales. 8)Inventory and Labour Efficiency : Gross Marginal Return on Floor(GMROF), Gross Marginal Return on Inventory(GMROI) and Gross Marginal Return on Labour (GMROL). 9) Profit and Loss Account : Operating Expenses, Finance Charges, Profit Before Tax(PBT) and Profit After Tax(PAT) 10)Non Current and Current Assets : Short and Long Term Loans and Advances, Stock in Trade and Fixed Assets. 11)Current Liabilities : Trade Payables, Short Term Borrowings and Other Current Liabilities 12)Market : Market Analysis, Employees Stock Option Plan(ESOP) and Shareholding Pattern. 13)Company’s Internal Structure : Compensations and Remunerations. 14)Others : Contingent Liabilities, Net worth of Joint Ventures and Subsidiaries, Partnership Satisfaction Index(PSI), Expansion Phase, Dependence on Real Estate and Promotional Strategies.

37 IMPACT AND RECOMMENDATIONS  Although there has been a rise in the Current Ratio from the previous year but still since , the ratio has consistently being out of ideal range which is causing a liquidity crunch situation thus creating more pressure on the cash utilisation of the company.  Quick Ratio is even in more critical condition, it is not only decreasing from previous year but also far short of what ideal ratio is considered. This raises a formidable questions on the short term solvency of the company again putting a tremendous pressure on the cash utilization of the company in the short run.  On the other hand an increasing Days Inventory Outstanding(DIO) from the previous year shows that the company is feeling pressure of converting inventories into cash or even receivables leading to rise in stock in trade and further putting pressure on liquidity of the company keeping investor’s money largely on risk. Therefore Company looks inefficient in managing its important working capital assets  As evident from the Current and Quick Ratio above, the Company’s liquidity issue is making cash trapped for a longer time. Efforts from the company needs to be done on this front therefore the company can either increase its Current Assets or rather should put its efforts to reduce its Current Investments in order to increase the ratios. In short Current Assets should be enough to cover its Current Liabilities as currently Current Assets are inappropriate to pay out all its Current Liabilities.  The Company should put efforts to convert inventories into cash or account receivables so that cash from inventory sale is paid further to its suppliers for goods and services. Increasing DIO shows that the Company’s products are either failing to attract customers or the demand of the Company’s product is decreasing thereby reducing or squeezing cash availability.

38 IMPACT AND RECOMMENDATIONS  The fall in Gross Profit Margin Ratio has signaled on the fact that the company has not efficiently utilized its labour, raw materials and manufacturing related fixed assets to generate profits thus leading to fall in the value of the Gross Profit.  On the other hand fall in Operating Profit Margin Ratio and Operating Profit together evidences the fact that company has failed to control its selling and general and administrative expenses and thus leading to loss in operating profit.  Further fall in Net Profit Margin Ratio supports the above mentioned Operating Profit Margin Ratio and Gross Margin Ratio that Company’s profit has depleted due to lack efficient control of direct and indirect expenses.  A fall in Return on Assets(ROA) from the previous year shows that the management has remained inefficient in employing the Company’s Total Assets to make a profit on it or rather earn a higher return on it.  As evident from the Gross, Operating and Net Profit Ratio above, the Company has struggled with efficiently utilizing its direct and indirect expenses therefore company should find certain ways to curb its expenses to boost its profit and to have a control over its day to day operations as the above fall in the ratios is also evidencing the fact to the deficiencies in the Management decision making process too.  Company in order to improve its ROA should evolve certain ways to boost its returns on the assets available with it.

39 IMPACT AND RECOMMENDATIONS  Rise in Debt Ratio and Debt Equity from previous year in both Alone and Consolidated format shows that the company’s dependence on the leverage has increased because the Company has seen a tremendous increase in the liabilities as compared to assets and mostly the debt part of the liabilities.  On the other hand rise in the Capitalization Ratio from the previous year indicate the investment quality of the company. Further it shows the increasing dependence of the Company on the long term debt.  Further fall in Cash Flow to Debt Ratio which shows that Company’s cash flow is not efficiently utilized to serve its total debt and also the weak cash flow situation which affects the cash generation and operation of the company.  As evident from the Debt Ratio, Debt Equity Ratio and Capitalization Ratio, Company should reduce its dependence on leverage i.e. Debt so as to reduce the risks involved in it as compared to its Equity therefore Company should reduce or dispose some of its Debts on both the long and short term one’s with as quickly as possible as it is also having a negative impact on the profit of the Company (from interest expenses).  Company should either generate enough cash to improve its weak cash flow situation or should again most probably as mentioned above should severely take certain actions to reduce the abundance of Debt taken by the Company to realise some pressures on the cash.

40 IMPACT AND RECOMMENDATIONS  The fall in SSL alone in the Fixed Asset Turnover Ratio form the previous year shows that especially SSL alone as a company has been inefficient in managing its Fixed Assets, therefore failing to convert the Company’s Fixed Asset are failing to generate sales and hence causing reduced sales when compared to the amount invested on the purchase of the Fixed Asset.  Accompanying the above ratio, the fall in the Company’s Asset Turnover Ratio form the previous year also shows that company has been inefficient in managing its Total Assets too, and hence Assets of the Company is not generating enough cash in proportion to its investment value. As evident from the falling Fixed Assets and Total Assets Ratios, Company should find ways to generate enough cash in proportion to its investment value.

41 IMPACT AND RECOMMENDATIONS  The fall in Operating Cash Flow to Sales Ratio from the previous year is signaling to the fact that the Company has conducted majority of its sales in credit, hence impacting a cash shortage situation.  Accompanying the above ratio, the fall in Free Cash Flow and Free Cash Flow to Sales Ratio from the previous year have also shown that there is insufficient cash available by the company for further acquisitions or expansions required. Therefore boosting yet more cash crunch situation.  Further, fall in Short Term Debt and Capital Expenditure and Capital Expenditure Coverage Ratios leading to insufficient cash to cover or service either the Short Term obligations as well as Capital Expenditure requirements by the Company also consolidates the fact of substantial cash crisis problem. As evident from the falling above mentioned ratios, it is very important for the company find ways to resolve its cash crisis situations whether in increasing cash sales or reducing its operating expenditures so as to leave with the company enough cash to cover its both short and long term obligations regarding debts or acquisitions or expansions or any other further Capital expenditures as and when required.

42 IMPACT AND RECOMMENDATIONS  PEG Ratio of 8 shows that the Company’s stocks are overvalued and hence it is expected by the investors that the prices are going to fall the market’s current valuation.  Further, the fall in Company’s Dividend Yield shows that the dividend in relation to its per share value trading has decreased from the previous year.  Company’s PEG Ratio shows Company’s stock to be overvalued as compared to the market valuation therefore efforts should be made from the company to reach as close to the market valuation as possible.  Further Company’s Dividend Yield is not in its fine shape hence Dividend declared and paid out as compared to the share price traded should be reevaluated so as to be in consonant with the trading share price.

43 FINDINGS AND RECOMMENDATIONS  A rising trend in Operating is indicating to the fact that the company is continuously failing to grasp and attract the potential customers entering the store and converting their product seeking into purchasing it from the store.  A similar falling trend in Like to Like Sales Volume shows that comparing this year's sales to last year's sales in the company there has been a fall which also continues in further upcoming quarters.  Although an increase in the Private Label Mix has been noticed but more importantly the fall in the Private Label Sales shows that the products being sold by the company under the brand name of other companies are registering a fall and puts a question on the same.  Company should pay attention to increase the people visiting on store into potential customers, which will need improved efforts from both the front end employees and also the attractiveness of the merchandise and services either by introducing certain schemes or discounts or concessions together with the efficient customer service to lure the visitors.  The products being sold by the company under the brand name of other companies are registering a fall and the company should seriously think about the feasibility of continuing the same practice.

44 FINDINGS AND RECOMMENDATIONS A falling trend in Gross Marginal Return on Floor, Inventory and Labour, clearly suggest that the Company’s efficiency regarding labour and inventory productivity is declining consistently thus effecting sales altogether of the company as well as the investments made on the inventory too. Company should pay attention to increase its labour and inventory productivity by increasing various initiatives to encourage the employees to produce greater results as well as thinking ways to place investments on inventory in an efficient manner.

45 FINDINGS AND RECOMMENDATIONS  A rising trend in Operating Expenses is a major concern for the Company. A bigger factor contributing to it are the tremendous hikes in Finance Charges during the year which are so severe that it has a taken a heavy toll out of the profits of the company too and hence blocking lot of cash within itself so as to be left for other obligations or expenditures.  Consolidating the above fact, the Profit before and after tax of the Company and its other Associate Companies have bore the brunt of the above mentioned expenses. Company should with immediate effect find ways to decrease the expenses especially the finance charges which are consuming way too much cash available by the company therefore leading to a cash crisis situation and blocking other major Capital expenditure or even short term obligations.

46 FINDINGS AND RECOMMENDATIONS  Short and Long Term Secured and Unsecured Loans & Advances by the Company have seen a growth to both its Associate Companies and others under severe cash crisis situations which again have not been beneficial for the Company and therefore it raises the basic questions on its existence, prudence, timing and appropriateness itself. Also evidencing to the above fact Auditors in the Audit Report of financial year have also raised the questions regarding on the prejudicial interest of the Company by granting of an Unsecured Loans to a party on terms and conditions of such loan.  Auditors of the Company in its Audit Report of financial year , has mentioned in their opinion itself that inspite of the opportunity substantial part of Fixed Assets have not been disposed of during the year which might have served an extra source of cash generation or rather would have relived the Balance Sheet to certain extent.  Company should revisit and rethink about the prudence and feasibility of the extent and terms and conditions of granting loans and advances to the other Companies especially at the crucial time when the Company is struggling to maintain cash and profits for its own obligations and expenditures.  Company should dispose of the Fixed Asset whether scrapped or obsolete or otherwise wherever it is correct and possible so as to generate certain cash if possible or to create enough space in the Balance Sheet to add on other assets to its pool.

47 FINDINGS AND RECOMMENDATIONS Short Term Borrowings, Trade Payables and Other Current Liabilities have all risen from the previous year which shows the on the one hand Company’s rising obligations whereas on the other hand increasing influence of Creditors and Borrowers on the functioning of the Company, which are both further mounting pressures on profits and cash. Company should invent and innovate more ways to settle their obligations and relieve the Company from severe Debt ridden phase thereby making provisions and generating enough cash to fulfill all future and current obligations.

48 FINDINGS AND RECOMMENDATIONS  Market analysis of trading history of SSL at NSE in showed that on particular months like July, August, October, December and February during the period the prices of the company fell and at times fell to a substantial amount impacting volumes and turnovers of the Company.  There was no such evidence found during the study of its Annual report and part thereof that clearly mentions that the Special Resolutions for ESOPs during and was passed in Annual General Meeting(AGM) of the Company. However the company has granted ESOPs as on 24 th March 2010 and 29 th April As per part 3 to 14 of the SEBI Guidelines 1999, approval of shareholders of the Company through Special Resolution in the AGM is mandatory for the granting ESOP.  Company has used Black Scholes Option Pricing model in assessing fair value of the Options on its ESOPs, which it yet an outdated and criticized valuation mechanism excluding many key factors from its valuations some of them are like: Transportation Cost, Taxation Cost, Assuming Homogenous investor demand and time duration etc.  Company should see that it gets its special resolutions required to be passed within the AGM and also the Company should take NSE at the front when assessing market prices and exercise price of its ESOPs.  Company should also look and opt for better Option Valuation Models for far much better results and valuations.

49 FINDINGS AND RECOMMENDATIONS  As mentioned earlier among the points noted by the Auditors, Company regarding its disputed service tax levy has not made any sort of Contingent Liability provisions as such so as to accumulate fund and source the Contingency payments as and when required by it therefore leaving the Company no other choice than to apply funds available with the Company itself.  Fall in Net Worth of both Subsidiary Companies and Joint Ventures of the Company together with fall in Partnership Satisfaction Index from previous year shows us that Company is struggling with its Associate Companies both in financials and in satisfaction level too.  Expansion Phase of 36 months of the Company is yet another worrying and crucial time factor where it will be mostly vulnerable to market risks. Further dependence on Real Estate Promoters have really hit hard to the company’s expansion duration and financials as affecting it in shape of high construction cost, land rentals and delay in construction too due to slowing economy.  Company’s promotional strategies have been on a much lower sides both above and below the line what is on usual expected from the size and scale of the company like this.  It will be a prudent practice for the Company to create provisions on Contingent Liabilities as will help the Company is much better way managing its contingent payments in advance.  Company should also seek to strengthen its Joint Ventures and Subsidiaries by either revamping their operational strategies or rethinking about prudence and feasibility of continuing the Partnership looking at the Company’s future in the long run.  Company should create some innovative promotional and marketing advertisements and campaigns to increase the product’s demand as well as to create more awareness about the Company’s product’s among the consumers.

50 FINDINGS AND RECOMMENDATIONS The details of dues of Income-Tax, Sales Tax and Customs Duty which have not been deposited as on 31st March, 2012 on account of any disputes are given below: 1) Company has not deposited Income Tax according to the Income Tax Act, 1961 which is pending in CIT (Appeals) amounting to Rs.1, 042lacs for the period of , 2008 and ) Company has not deposited Sales Tax according to the West Bengal Value Added Tax Act, 2005 which is pending in Jt. Commissioner of sales Tax (Appeals) amounting to Rs.22.03lacs for the period of ) Company has not deposited Custom Duty according to the Customs Act, 1962 which is pending in Commissioner (Appeals) amounting to Rs.12.23lacs for the period of And as done earlier Company has not maintained at all any provision for such Duties and Taxes.  As mentioned earlier it will be better for the Company to stand a provision in the Balance Sheet for such amounts or else their Balance Sheet is going to have an adverse effect of any such Contingent Liabilities.

51 COMMON STOCK COMPARISON (RS. In Crs.) S no.Company NameFinancials as on…Share Price Shares Outstanding as on March 2012 Market Cap(Rs.) Net Debt 2012(Rs.) Expected Value(Rs.) 1Tata Industries (Consolidated) 31 st March ,299.68(961.2)19, Pantalone Retail (Standalone)* 30 th June , , Bata (Consolidated)*31 st December ,408.87(190.00)3, Shopper's Stop (Consolidated) 31 st March , , Gitanjali Gems (Consolidated) 31 st March , , , Trent (Standalone)31 st March ,586.52(29.61)2, Jubiliant Foodworks (consolidated) 31 st March 20121, ,602.08(12.94)7, Provogue India(Standalone) 31 st March Source: Danodia Capital Advisors Report July 2012 Source: As per research reports available by leading brokers like Goldman Sachs, Citi Group etc.

52 COMMON STOCK COMPARISON (RS. In Crs.) S no.Company NameSales 2012 (Rs.) Sales 2013 (Expected) (Rs.) EBITDA 2012 (Rs.) EBITDA 2013 (Expected) (Rs.) Net Income 2012 (Rs.) Net Income 2013 (Expected) (Rs.) 1Tata Industries (Consolidated) 8, , Pantalone Retail (Standalone)* 4,778.95, Bata (Consolidated)* 1, , Shopper's Stop (Consolidated) 2, , Gitanjali Gems (Consolidated) 12, , Trent (Standalone) NA Jubiliant Foodworks (consolidated) 1, , Provogue India(Standalone) Source: As per research reports available by leading brokers like Goldman Sachs, Citi Group etc.

53 COMMON STOCK COMPARISON S no.Company NameEBITDA Margin (%) PAT Margin (%) (EV/Sales) 2012 (Rs.) (EV/Sales) 2013E (Rs.) (EV/EBITDA) 2012 (Rs.) (EV/EBITDA) 2013E (Rs.) (P/E) 2012 (Rs.) (P/E) 2013E (Rs.) 1Tata Industries (Consolidated) x Pantalone Retail (Standalone) Bata (Consolidated) Shopper's Stop (Consolidated) Gitanjali Gems (Consolidated) Trent (Standalone) Jubiliant Foodworks (consolidated) Provogue India(Standalone) Source: As per research reports available by leading brokers like Goldman Sachs, Citi Group etc.

54  After studying and analyzing the ratios above the Company looks to be in a serious cash crunch situation, and hence this is causing the Company in clearing its both Short and Long term Obligations. A much bigger role in this have been played by the Finance Charges that have cropped up to insurmountable levels. Company will have to find its way out to reduce not only Finance Charges but other Expenditures too, increase its cash sales and find ways in which it can increase its cash reserves in proportion to its investments and obligations so as also to meet its day to day operational activities and relieve investors from this front.  Company has continuously in hope of returns have granted loans and advances to its Associate Companies which on the contrary have experienced falling Net Worths causing loss of Company’s return on investments thereby forcing Company to opt for heavy borrowings to finance its Capital Expenditures and clear its obligations therefore the Company is moving gradually into being a debt stricken entity and should find ways before it accumulates to unbearable amounts. Already the heavy borrowings and questionable granting of loans have caused a tremendous hike in its Finance charges and further if not sorted out earlier its going to bulge into a much bigger chronic problem for the Company.  Low Dividend Yield but good Dividend Pay Out Ratio rises a question on feasibility of continuous declaring of Dividends at constant rate especially when the Company should rather tighten its belts and look for ways to cut costs and expenses are increase its cash reserves and also looking to cut down its borrowings. At times it looks mere a tactic to keep its share prices surviving and look attractive to the investors whereas from inside the stocks are not much stronger as they seem.  Another big problem with the Company is its too much involvement with Global brands and players and almost no association as such with domestic players which causes a demerit for the Company as compared to its local competitors. Company’s if willing to succeed in Tier II and III segment should observe the market and then introduce their products according to the requirements of the market, mostly Indian customers are still more inclined towards the price sensitivity than to brand sensitivity but the Company seem to have missed that spot somehow. Where on one hand the local rivals have an advantage of placing attractive discounts and cheaper products from the local markets, the Company on the other hand although have opened its stores in Tier II and Tier III towns but has to bear with costly and expensive global products with lesser restrictive promotional discounts and offer seasons, thereby loosing its presence and charm for the Tier II and Tier III customers.

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