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Aditya Birla Fashion & Retail Directors Report, Aditya Birla F Reports by Directors
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Aditya Birla Fashion & Retail

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Download Annual Report PDF Format 2015 | 2014 | 2013
Directors Report Year End : Mar '16    « Mar 15
Dear Members,
 
 The Company''s Directors, hereby present the Ninth Annual Report of the
 Company together with the Audited Financial Statements of the Company
 for the Financial Year ended March 31, 2016 (year under review/ FY
 16).
 
 COMPOSITE SCHEME OF ARRANGEMENT
 
 Creation of India''s Largest Pure Play Fashion and Lifestyle Company
 with a strong bouquet of leading fashion brands and retail formats
 
 During the year under review, the apparel retail businesses of the
 Aditya Birla Group, housed under separate entities viz. the Company,
 Aditya Birla Nuvo Limited (ABNL) and Madura Garments Lifestyle Retail
 Company Limited (MGLRCL), were consolidated under the Company, vide
 the Composite Scheme of Arrangement amongst the Company, ABNL, MGLRCL
 and their respective shareholders and creditors, under Sections 391 to
 394 of the Companies Act, 1956 (Composite Scheme).
 
 Composite Scheme was undertaken with a view to enable the business
 activities to be carried out with greater focus and specialisation for
 sustained growth and also to benefit from the potential synergies of
 combining with the similar and related businesses, thereby resulting in
 enhancement of shareholder value. This consolidation is also expected
 to unlock value and accrue potential synergy benefits for the business
 arising inter alia on account of operational efficiency in matters such
 as sourcing, infrastructure and information technology.
 
 Composite Scheme was approved by the Board of Directors (Board) of
 the Company, ABNL and MGLRCL, at their respective meetings held on May
 3, 2015 and later was made and declared effective on January 9, 2016
 (Effective Date), after considering the status of all conditions to
 the effectiveness of the Composite Scheme as set out therein and
 receipt of necessary statutory and regulatory approvals, including
 approvals from the:
 
 a) Equity Shareholders and Unsecured Creditors of the Company, vide a
 Special Resolution passed at the Court Convened Meeting held on
 September 7, 2015 and
 
 b) Hon''ble High Court of Judicature at Gujarat and Bombay, by virtue of
 their respective orders dated October 23, 2015 and December 5, 2015.
 
 Pursuant to the Composite Scheme becoming effective, Madura Fashion -
 the branded apparel retailing division of ABNL and Madura Lifestyle -
 the luxury branded apparel retailing division of MGLRCL, were demerged
 from ABNL and MGLRCL respectively to the Company, to collectively form
 a division of the Company viz. Madura Fashion & Lifestyle (Madura
 Fashion & Lifestyle Division) w.e.f. April 1, 2015 (i.e. the Appointed
 Date as per the Composite Scheme). Pantaloons Format business forms
 another separate division of the Company (Pantaloons Division).
 
 Change of Name
 
 To reflect the enhanced scope of the operations post consolidation vide
 the Composite Scheme, name of the Company was changed from Pantaloons
 Fashion & Retail Limited to Aditya Birla Fashion and Retail Limited
 (ABFRL). A fresh Certificate of Incorporation pursuant to the change
 of name of the Company was issued by the Registrar of Companies, Mumbai
 on January 12, 2016.
 
 Changes in Share Capital
 
 During the year under review, pursuant to the Composite Scheme, the
 Authorised Share Capital of the Company was increased from Rs.
 1,60,15,00,000/- (Rupees One Hundred Sixty Crore Fifteen Lakh only) to
 Rs.10,10,15,00,000/- (Rupees One Thousand Ten Crore Fifteen Lakh only).
 
 Also, upon the Composite Scheme becoming effective and after
 determining the respective entitlements of the shareholders of ABNL and
 MGLRCL as on January 21, 2016 (i.e. the Record Date fixed by ABNL and
 MGLRCL in terms of the Composite Scheme), High Power Committee of the
 Board, vide its Circular Resolution passed on January 27, 2016,
 allotted 67,60,37,600 (Sixty Seven Crore Sixty Lakh Thirty Seven
 Thousand Six Hundred) Equity Shares of Rs.10/- (Rupees Ten only) each
 (ranking pari passu with the then existing Equity Shares of the
 Company) to the eligible shareholders of ABNL and MGLRCL, whose names
 were recorded in their respective Register of Members as on the Record
 Date (merger allotment), in the following swap ratio recommended by
 the independent valuers:- a) in consideration of the demerger of Madura
 Fashion from ABNL into the Company - 26 (Twenty Six) Equity Shares of `
 10/- (Rupees Ten only) each credited as fully paid-up for every 5
 (Five) Equity Shares of Rs.10/- (Rupees Ten only) each fully paid up
 held by each member in ABNL.
 
 b) in consideration of the demerger of Madura Lifestyle from MGLRCL
 into the Company -
 
 - 7 (Seven) Equity Shares of Rs.10/- (Rupees Ten only) each credited as
 fully paid-up for every 500 (Five) Equity Shares of Rs.10/- (Rupees Ten
 only) each fully paid up held by each member in MGLRCL;
 
 - 1 (One) Equity Share of Rs.10/- (Rupees Ten only) each credited as
 fully paid-up for all 1,00,00,000 (One Crore) Preference Shares of face
 value Rs.10/- (Rupees Ten only) each fully paid up held by a Preference
 Shareholder of MGLRCL.
 
 Consequent to the allotment, the paid-up Equity Share Capital of the
 Company increased from Rs.92,80,51,260/- (Rupees Ninty Two Crore Eighty
 Lakh Fifty One Thousand Two Hundred Sixty only) (9,28,05,126 Fully
 Paid-up Equity Shares of Rs.10/- each) to Rs.7,68,84,27,260/- (Rupees
 Seven Hundred Sixty Eight Crore Eighty Four Lakh Twenty Seven Thousand
 Two Hundred Sixty only) (76,88,42,726 Fully Paid-up Equity Shares of
 Rs.10/- each).
 
 Allotment of 37,82,178 Equity Shares, representing 0.49% of the total
 paid-up capital, to NRI Shareholders of ABNL holding shares on
 Repatriation basis (NRE Shareholders) is kept pending. Details w.r.t.
 the same are provided here in below separately.
 
 Equity Shares allotted pursuant to the Composite Scheme, were listed
 and permitted for trading on BSE Limited (BSE) and the National Stock
 Exchange of India Limited (NSE) w.e.f. February 4, 2016.
 
 Settlement of Fractional Entitlements
 
 The fractional entitlements arising out of allotment of Equity Shares
 issued pursuant to the Composite Scheme were consolidated and sold in
 the Open Market in terms of the Clause 19 of the Composite Scheme. The
 fractional entitlements were duly paid to the respective shareholders
 in the month of April, 2016 through demand drafts and other prescribed
 electronic modes of payments along with necessary intimations of such
 payments to each of such Equity Shareholders.
 
 Allotment to NRI Shareholders of ABNL holding shares on Repatriation
 basis
 
 In terms of applicable FEMA Regulations and extant FDI Policy of the
 Government of India (FDI Policy), Company was required to obtain an
 approval from the Foreign Investor Promotion Board (FIPB) for
 allotment of Equity Shares to NRE Shareholders pursuant to the
 Composite Scheme.
 
 Accordingly, the Company had made an application to the FIPB for
 seeking its approval w.r.t. the allotment of its Equity Shares to such
 NRE Shareholders. However, the Department of Industrial Policy and
 Promotion - Government of India conveyed that in view of the provisions
 of the extant FDI Policy, application of the Company cannot be acceded
 to. Hence, the allotment of 37,82,178 Equity Shares, representing 0.49%
 of the total paid-up capital, to such NRE Shareholders has been kept
 pending.
 
 In order to settle such lawful entitlements of such NRE Shareholders,
 the Company evaluated various options. It has been advised that as per
 the prevailing law(s), a non-resident shareholder is permitted to hold
 both NRE and NRO accounts in India and the Company can credit their
 entitlements to such NRO account. Accordingly, the Company has sent out
 a detailed communication to the registered addresses of all such NRE
 Shareholders inter alia stating that such NRE shareholders may provide
 details of their respective NRO accounts vide a duly filled in Consent
 Form and opt for allotment of Equity Shares of the Company in their NRO
 accounts. In absence of such consent, share allotment to such NRE
 Shareholders of ABNL shall continue to be pending till the time there
 is a favorable change in the applicable laws.
 
 The aforesaid communication alongwith the necessary Consent Form is
 available on the website of the Company i.e. www.abfrl.com.
 
 Cessation from being a subsidiary of Indigold Trade and Services
 Limited and Aditya Birla Nuvo Limited
 
 As mentioned above, on January 27, 2016, the Company allotted Equity
 Shares of the Company to all the eligible shareholders of ABNL and
 MGLRCL pursuant to the Composite Scheme. Consequently, shareholding
 percentage of Indigold Trade and Services Limited was reduced from
 72.62% to 8.77% and the Company ceased to be a subsidiary of Indigold
 Trade and Services Limited – a wholly owned subsidiary of ABNL (ITSL)
 and also ceased to be a step-down subsidiary of ABNL w.e.f. January 27,
 2016.
 
 Change in promoters of the Company
 
 As mentioned above, upon effectiveness of the Composite Scheme, Equity
 Shares of the Company were allotted to the eligible shareholders of
 ABNL and MGLRCL including the promoters of ABNL and MGLRCL.
 Accordingly, the promoters of ABNL and MGLRCL became promoters of the
 Company w.e.f. the date of allotment i.e. January 27, 2016.
 
 Further, ABNL IT & ITES Limited and ITSL ceased to be the promoters of
 the Company w.e.f. March 31, 2016, consequent to their amalgamation
 with ABNL (ABNL amalgamation).
 
 ACQUISITION OF FOREVER 21, INDIA BUSINESS*
 
 With a view to create a strong foothold in the women''s wear business in
 the western wear segment, the Board approved the proposal to acquire
 the exclusive online and offline rights of the global brand - Forever
 21, for the Indian market and its existing store network in India from
 the current franchise of Forever 21 i.e. Diana Retail Private Limited
 (Diana Retail) (said Acquisition). Further, a Committee of the
 Board, constituted specifically for the matters relating to the said
 Acquisition, vide its circular resolution passed on July 1, 2016
 approved the finalized terms of the transaction and authorized officers
 of the Company for signing of binding transaction documents.
 
 On July 5, 2016, the Company executed a Business Transfer Agreement
 with Diana Retail and DLF Brands Limited (the promoter of Diana
 Retail), for the acquisition of the business undertaking of Diana
 Retail relating to the business of operating retail stores in India for
 the sale of clothing, artificial jewellery, accessories and related
 merchandise under the Forever 21 brand and also through E-Commerce
 channels (Forever 21 Undertaking) on a going concern basis, by means
 of a slump sale (as defined in Section 2 (42C) of the Income Tax Act,
 1961), for a lump sum consideration. Company also executed a Franchise
 Agreement with Forever 21, Inc., in terms of which the Company has
 acquired the exclusive franchise rights for the brand Forever 21 for
 the Indian market.
 
 Note:
 
 * Material change and commitment affecting the financial position of
 your Company between end of the financial year and the date of this
 report.
 
 Pursuant to the said acquisition and upon completion of the
 transactions/ conditions precedents mentioned in the Business Transfer
 Agreement, the Forever 21 Undertaking will form part of Madura Fashion
 & Lifestyle division of the Company w.e.f. July 1, 2016.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 To avoid repetition of information, the Management Discussion and
 Analysis, on performance of the Company, is presented below.
 
 Overview
 
 The Financial Year 2015-16 was another year of mixed trends across the
 globe as economic, political, trade and financial factors interacted in
 a dynamically changing environment. Global growth has been projected at
 3.2% in 2016 and 3.5% in 2017.
 
 Indian economy remained a bright spot, buoyed by the reform oriented
 policy initiatives and increasing FDI investment in the country. India
 became the fastest growing economy (as per World Bank estimates, growth
 for FY 16 is estimated at 7.5%), surpassing China in terms of GDP
 growth.
 
 However, the year also saw challenges with subdued exports on account
 of lower global demand, fluctuating Rupee against the US Dollar, weak
 rural economy due to poor monsoons and drought and the resultant tepid
 demand conditions in the economy. Index of Industrial Production
 (IIP) also witnessed lukewarm growth over the period, owing to lower
 capacity utilization in the manufacturing sector along with decline in
 domestic demand and consumption.
 
 On the consumption side, while consumer confidence has not resulted in
 higher spends, indicating that consumers have been cautious about
 spending. Several consumer facing industries witnessed single digit
 growth rate in FY16 unlike much higher growth recorded in previous
 years. The announcement of the Seventh Pay Commission is a positive
 development as it enhances the discretionary spending power.
 
 GST is expected to come into force during the course of coming year.
 This legislation is likely to simplify the distribution structure and
 reduce the operational complexities of overall supply chain. The
 financial impact of the legislation will depend on the rate applicable
 for apparel and textiles.
 
 Industry Structure and Developments
 
 The apparel industry has evolved rapidly over the past few years. Some
 of the major shifts are as follows:
 
 - Women and Youth have emerged as two important new demographic
 segments driving demand for younger, casual and more fashionable
 products. Women''s wear business has been gaining prominence and demand
 for casual wear was seen to be growing faster than the industry.
 
 - Rapid growth of digital ecosystem with improvement in telecom
 infrastructure, penetration of smart phones and rapid growth of social
 media is changing the way consumers interact with fashion category and
 shop for their clothes. E-Commerce is evolving as a significant channel
 with consumer shift being aided by deep investments in marketing and
 discounting by E-Commerce players.
 
 - Entry of international brands has created greater choice for
 consumers at the higher end of the market.
 
 - At lower price points, value fashion retailers have been rapidly
 expanding their retail footprint, offering good quality, fashionable
 products at affordable prices to the fast growing middle class which is
 upgrading from unbranded products.
 
 While the underlying drivers of growth are strong, the overall
 consumption remained muted during most of the year. At such times,
 demand for discretionary products comes under pressure as consumers
 shift their spending to more basic products. In this challenging
 environment, the industry registered one of its slowest growths in
 FY16. Your Company''s performance needs to be viewed in the context of
 the aforesaid economic and market environment.
 
 Consolidation
 
 As mentioned above, the Composite Scheme became effective on January 9,
 2016 thereby creating India''s largest pure play branded apparels
 Company.
 
 - The combined entity has the largest retail network in fashion space
 in the Country.
 
 - The portfolio of the Company is well positioned for growth with the
 combined strengths of Madura Fashion & Lifestyle in mens wear and
 Pantaloons strength in women''s wear.
 
 Business Overview
 
 In this challenging environment, the Company focused on improving the
 customer experience and providing greater choice to the consumers
 across all its formats and channels. The base of loyal customers for
 the Company continued to grow with more repeat business being generated
 by these loyal customers. Today, the Company has over 13 million loyal
 customers who are the ambassadors of Company''s products.
 
 Company''s major brands - Louis Philippe, Van Heusen, Allen Solly and
 Peter England, continue to be leading brands in their respective
 segments. These brands continued to successfully expand their franchise
 by building new brand extensions to cover more wearing occasions and
 product categories spanning formals, casual, denim and accessories.
 
 In the Value Fashion segment, Pantaloons has expanded its network at an
 aggressive pace and has added several new in-house brands across
 various categories. During the year, it launched a stand- alone format
 targeted towards kids - ''Pantaloons Kids'' and is ready to launch
 ''Pantaloons Woman'' to accelerate its distribution expansion.
 
 Business Strategy
 
 Company''s vision is to offer Indian consumers'' needs in fashion, style
 and value across wearing occasions in Apparel and Accessories, through
 strong brands and high-quality consumer experience with the ultimate
 purpose of delivering superior value to all stakeholders.
 
 In pursuance of its vision and in line with the rapid development in
 the industry and consumer landscape, your Company has identified the
 following areas for strategic response and growth:
 
 Expand the portfolio through strategic entry in faster growing segments
 
 Your Company continuously identifies the emerging segments in the
 market and seeks to enhance its play in these segments through
 sub-brand extensions, new product launches and organic and inorganic
 actions. In the last few years, the Company has expanded its play in
 casual wear segment through brand extensions, while acquisition of
 Pantaloons has given the Company a strong play in the fast growing
 value fashion segment. The Company will continue to explore further
 growth opportunities in womens wear, casual and super-premium segments
 of the market. In line with this strategy, the Company in July, 2016
 has acquired the offline and online rights of Forever 21 – a leading
 fast fashion brand targeted towards young women.
 
 Drive digital transformation across key consumer touch points
 
 Your Company has embarked on an aggressive digital transformation to
 meet the evolving need of digital consumer of tomorrow. To enable this,
 the company has created a multi-pronged strategy of enhancing
 investment in own E-Commerce business, launch of omni-channel
 initiative and building deeper partnership with E-Commerce players. In
 the next 18-24 months, all the retail stores of the Company will offer
 a rich, seamless and integrated online – offline experience to all its
 consumers.
 
 Continue to expand retail distribution
 
 Your Company has been growing rapidly through its multi-channel
 distribution strategy.  To further deepen the penetration, the Company
 has identified markets in Tier II/ III cities for further retail
 expansion.  This expansion will provide the Company an early mover
 advantage and position it strongly to meet the growing demand for
 high-quality ready-made branded apparel in emerging markets across
 India.
 
 Deepen consumer centricity
 
 Over the past few years, your Company has created a strong culture of
 consumer-centricity in all aspects of its operations. The
 consumer-centricity framework is based on continuous consumer research,
 real-time consumer feedback from retail outlets and strong loyalty
 program. Towards this, the Company has embraced the Net Promoter Score
 (NPS) framework to assess customer satisfaction through a Company-wide
 program - ''Mission Happiness''. This program will progressively cover
 the entire retail network and is well integrated across all functions
 of the business.
 
 Your Company has set-up an in-house ''Epic Centre'' through which it
 continuously listens to consumer views and feedback in the digital
 space. These inputs are helping the company to develop a single view of
 the consumer and enhance its ability to dynamically cater to the
 growing as well as changing consumer demand.
 
 Invest in cutting-edge design and merchandising capability
 
 Your Company has constantly built its brands through incorporation of
 latest designs and trends in its products as well as launching
 innovative products. To ensure the sustained pipeline of new products,
 the Company has invested in a Knowledge Management Centre to centrally
 collate latest developments in fashion, fabrics, fits and styling so
 that its design and product teams have continuous access to world class
 products and technologies. The Company also ensures that its designers
 are updated with latest fashion through structured exposure to global
 trends.
 
 Financial Performance
 
 During the year under review, by virtue of the Composite Scheme, Madura
 Fashion & Lifestyle division was demerged into the Company w.e.f. April
 1, 2015, in addition to the Pantaloons division of the Company, as
 explained in detail hereinabove. Accordingly, the financial figures as
 on March 31, 2016 i.e. for the year under review, include figures of
 the Madura Fashion & Lifestyle division, whereas the figures as on
 March 31, 2015 represent figures only w.r.t. Pantaloons division.
 Therefore, the figures for the year under review same are not
 comparable with the figures as on March 31, 2015 for the financial year
 2014-15 (the previous year).
 
 Profit and Loss Account
 
                                                   (Amount in Rs.Crore) 
 
 Particulars                                    As on             As on
                                      March 31, 2016#   March 31, 2015#
 
 Revenue                                        6,060             1,851
 
 EBITDA*                                          409                75
 
 Finance Cost                                     175               120
 
 EBDT                                             234               (45)
 
 Depreciation                                     338               183
 
 Earnings Before Tax                             (104)             (228)
 
 Provision for Taxation                             -                 -
 
 Net Profit/(Loss)*                              (104)             (228)
 
 Notes:
 
 * Includes other income of Rs.12 Crore (Previous year: Rs.3 Crore)
 
 # The figures as on March 31, 2016, include figures of the Madura
 Fashion & Lifestyle division alongwith the figures of the Pantaloons
 division, whereas the figures as on March 31, 2015 represent figures
 only w.r.t. Pantaloons division and therefore both are not comparable.
 
 Revenue
 
 Your Company reported revenue of Rs.6,060 Crore during the year under
 review, recording a growth of 227.4% over previous year, mainly
 attributable to inclusion of figures of Madura Fashion & Lifestyle
 division, as mentioned above.
 
 Segment: Madura Fashion & Lifestyle
 
 It reported revenue of Rs.3,996 Crore. During the year, it added 142
 stores (net of closures). Its retail channel, which comprises of 1,877
 Exclusive Brand Outlets (EBOs) and 148 value stores spanning 2.6
 million square feet, accounts for 44% of Madura''s revenue and reaches
 out to 8.5 million loyalty customers base. Besides these EBOs, Madura
 is reaching customers through 7,000  additional points of sales
 including Multi Brand Outlets (MBOs) and Department Stores.
 
 Segment: Pantaloons
 
 It reported revenue of Rs.2,164 Crore recording growth of 17% over
 previous year. During the year, it added 29 stores (net of closures)
 taking the total number of stores to 163 including 1 Pantaloons Kids
 store and 27 Factory Outlets spanning 2.9 million sq ft. It reaches out
 to 5 million loyalty customer base.  Pantaloons has a diversified
 customer base with Men, Women, Kids and Non-Apparels and has increased
 its share of exclusive brands from 52% to 62%.
 
 Operating Profit
 
 Combined EBITDA of both the Divisions excluding other income is Rs.397
 Crore as compared to previous year EBITDA of Rs.73 Crore representing
 only the Pantaloons division.
 
 Depreciation
 
 The depreciation cost was higher during the year as the Company had
 reassessed the useful life of leasehold improvements and immovable
 fixtures w.r.t. its Pantaloons business, from the period of lease to
 six years, as the same better reflects the expected usage of such
 assets.
 
 Balance Sheet
 
                                              (Amount in Rs.Crore)
 
 Particulars                              As on             As on
                                March 31, 2016#   March 31, 2015#
 
 Net Fixed Assets (Including 
 Capital Advances and CWIP)                 566               422
 
 Goodwill*                                1,795             1,168
 
 Net Working Capital                        463                99
 
 Capital Employed                         2,824             1,689
 
 Net Worth                                  944               346
 
 Debt^                                    1,880             1,343
 
 Notes:
 
 # The figures as on March 31, 2016, include figures of the Madura
 Fashion & Lifestyle division alongwith the figures of the Pantaloons
 division whereas the figures as on March 31, 2015 represent figures
 only w.r.t. Pantaloons division and therefore, both are not comparable.
 
 * Arising on account of transfer of Pantaloons format business (during
 Financial Year 2012-13) and Madura Fashion & Lifestyle businesses
 (during Financial Year 2015-16) to the Company.
 
 - Includes interest accrued but not due on borrowings. Previous year
 numbers have been regrouped accordingly.
 
 As on March 31, 2016, Goodwill (after testing for impairment in
 accordance with the Accounting Standard - 28 issued by the Institute of
 Chartered Accountants of India) stands at Rs. 1,795 Crore.
 
 Net Working Capital as on March 31, 2016, includes Inventory of Rs.
 1,388 Crore, Trade Receivables of Rs. 391 Crore, Cash and Bank Balance
 of Rs. 20 Crore and Trade Payables of Rs. 1,437 Crore.
 
 Dividend
 
 In view of the loss for the year under review, no amount is proposed to
 be transferred to the reserve(s) and your Directors have not
 recommended payment of any dividend for the year under review.
 
 Borrowings
 
 During the year under review, there is a reduction in the average
 borrowing cost from ~10.17% in previous year to ~9.3%. Your Company
 explored various options for bringing down the cost of borrowings and
 also for procuring funds which included availing of short-term
 instruments like commercial paper, working capital borrowing and long
 term loans which was aided by the reduction in the overall interest
 rates in the economy.
 
 Further, during the year, at the Eighth Annual General Meeting of the
 Company, approval of the Members was obtained by way of a Special
 Resolution, to raise funds by issuance of Non-Convertible Debentures
 for an amount of upto Rs. 1,000 Crore, on private placement basis,
 within the overall borrowing limits of the Company as approved by the
 Members from time to time (issuance of NCDs), in order to continue to
 avail greater financial flexibility and optimal financing structure.
 
 SWOT Analysis
 
 Strengths
 
 With its portfolio of established brands and large format fashion
 retail presence, your Company has a leading position in the Indian
 apparel market and caters to consumers across all segments, from Luxury
 to Value, straddling men, women and kids in the formal and casual
 space.
 
 Your Company has developed strong product portfolio amongst its brands
 based on high quality, constant innovation, strong internal design
 setup, large and deep distribution network and an agile and robust
 supply chain system. The company produces large share of its high value
 garments at its state-of-art manufacturing facilities to ensure highest
 standards of product quality.
 
 Your Company attracts the best talent in the apparel industry and has
 strong systems of nurturing the talent backed by robust people
 development processes, mentoring and employee engagement programs.
 
 Weaknesses
 
 While the Company has a strong presence and brands in mens wear
 segment, it has a relatively lower presence in western womens wear,
 casual wear, denims and kids-wear segments. As part of its strategy,
 your Company is keenly focusing to quickly build capabilities in these
 segments.
 
 Opportunities
 
 Rising incomes, favourable demographics, increasing disposition towards
 fashion, greater access and awareness about brands is creating a large
 shift towards branded fashion across the Country. While consumers in
 larger cities have had access to brands and organized retailers, the
 overall market continues to remain under-penetrated. This offers growth
 opportunities in Tier II/ III cities. Your Company has taken strategic
 calls to expand in these areas in response to these growing
 opportunities.
 
 The emerging E-Commerce channel opens up opportunities for the Branded
 Apparel business to reach out to a large base of consumers.
 
 Company is also looking to tap the opportunity in the super-premium
 segment as more affluent consumers seek international brands and global
 experiences.
 
 Threats and Risks
 
 Retail space in India is limited to key markets and a few successful
 malls, leading to a scarcity of good retail spaces.
 
 The share of online business is growing rapidly and traditional
 channels of distribution will be under pressure.
 
 Company faces constant threat on its talent pool from competition and
 increasingly from the new international players and E-Commerce
 companies in the industry.
 
 Outlook
 
 Propelled by steady rise in income levels, favourable demographics and
 greater penetration of organised retail, the branded apparel business
 is poised for strong growth in the coming years.
 
 The Company is well positioned to exploit this growth with its strong
 brands, distribution reach and product offerings across various
 categories and price points for varying consumer needs.
 
 Risk Management and Internal Controls
 
 Effective governance and risk management form the bedrock of a
 company''s sustained performance and revolve around rigorous
 implementation of standardized policies and processes and development
 of strong internal control systems.
 
 Board has constituted a Risk Management Committee (RMC), to assist
 the Board with regard to the identification, evaluation and mitigation
 of operational, strategic and external risks. RMC has a defined role
 and overall responsibility for monitoring and reviewing the Risk
 Management Plan and associated practices of the Company. Details of the
 composition of the RMC have been disclosed separately as part of the
 Corporate Governance Report.
 
 Company also has an Internal Risk Management Committee (internal
 committee) to support and assist the RMC in identifying, evaluating
 and mitigating operational, strategic and external risks. This internal
 committee is headed by the Chief Financial Officer of the Company who
 is also the Chief Risk Officer of the Company and it is supported by
 individual Risk Officers covering legal, supply chain, manufacturing,
 human resources, finance, business development, IT, sales and marketing
 functions. This internal committee assists the RMC in defining the
 framework for risk management and compliance and undertakes assessment
 of risks, adopts the risk mitigation plans and regularly monitors them
 in a structured, controlled environment. It also reviews developments
 in the socio-economic environment and identifies internal threats and
 opportunities, updates the framework and refines processes and systems
 for mitigation.
 
 Further, Company has set up internal controls and policies related to
 financial reporting of transactions and efficient business operations
 in compliance with relevant laws and regulations. Internal reporting
 systems are in place for effective measurement of various business
 parameters related to revenue, expenses and reporting, in line with the
 provisions of the Companies Act. Internal Audit Reports are tabled and
 reviewed by the Audit Committee and corrective measures are taken up
 promptly to improve the systems and processes.
 
 Details w.r.t. the Risk Management Policy adopted by the Board have
 been disclosed separately here in below.
 
 Human Resources
 
 Company''s Employee Value Proposition (EVP) aims to deliver unique
 opportunities to its employees in terms of rich and diverse learning,
 career development, recognition and quality of life.
 
 Through structured capability building programs, key talent is
 identified, developed and assessed on functional as well as behavioural
 competencies before being deployed for specific roles. Aditya Birla
 Centre for Retail Excellence (ABCRE), one of its kind capability
 building function in the Retail industry, develops state of art content
 and training capability amongst its employees through leveraging
 multiple learning spaces. Company has built a strong in-store training
 capability by developing internal trainers across its stores/
 functions, wherein learning is facilitated by focusing on Learning by
 doing. Company uses the Aditya Birla Group state-of-the-art Learning
 and Knowledge centre - Gyanodaya for capability building and training
 of its managerial staff.
 
 Company has aggressive but performance anchored reward program both at
 stores as well as corporate offices. There are multiple recognition
 platforms well entrenched in the Company across Stores, Zonal Offices
 and Head Office. Participative Management is encouraged through
 promoting and recognizing Continuous Improvements across the Company.
 
 The total number of employees on rolls of the Company as on March 31,
 2016 was ~18,876.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Sections 134(3)(c) and 134(5) of the
 Companies Act, 2013, the Directors, to the best of their knowledge and
 ability, confirm that:-
 
 a) in the preparation of the annual accounts, the applicable accounting
 standards had been followed along with proper explanation relating to
 material departures;
 
 b) 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 at the end of the financial year and of the profit and loss
 of the company for that period;
 
 c) they have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 2013 for safeguarding the assets of the company and for
 preventing and detecting fraud and other irregularities;
 
 d) they have prepared the annual accounts on a going concern basis;
 
 e) they have laid down internal financial controls to be followed by
 the company and that such internal financial controls are adequate and
 were operating effectively and
 
 f) they have devised proper systems to ensure compliance with the
 provisions of all applicable laws and that such systems were adequate
 and operating effectively.
 
 OTHER DISCLOSURES UNDER THE COMPANIES ACT, 2013 READ WITH THE RULES
 MADE THEREUNDER (ACT) AND OTHER APPLICABLE LAWS, REGULATIONS ETC.
 
 Details of Directors and Key Managerial Personnel who were appointed or
 have resigned during the year
 
 A.  Directors
 
 Members of the Company, at the Eighth Annual General Meeting of the
 Company held on August 28, 2015, approved the appointment of Ms.
 Sukanya Kripalu (holding Directors Identification Number 06994202) and
 Mr. Arun Thiagarajan (holding Directors Identification Number 00292757)
 as Independent Directors, for a period of period of 5 (five)
 consecutive years w.e.f. October 13, 2014 and May 11, 2015,
 respectively.
 
 During the year under review, none of the Directors of the Company
 resigned from their respective Directorships in the Company.
 
 B.  Key Managerial Personnel (KMP)
 
 Pursuant to the effectiveness of the Composite Scheme and resultant
 demerger of Madura Fashion & Lifestyle division into the Company, Mr.
 Ashish Dikshit- Business Head, Madura Fashion & Lifestyle, was
 appointed as one of the KMP of the Company w.e.f. January 9, 2016.
 Also, Mr. Shital Mehta, was re-designated as Chief Executive Officer-
 Pantaloons and continues to be one of the KMP of the Company.
 
 During the year under review, none of the KMP of the Company resigned
 from their respective positions in the Company.
 
 The aforesaid appointments were based on the recommendation of the
 Nomination and Remuneration Committee of the Board (NRC).
 
 Further, in accordance with the provisions of the Act and the Articles
 of Association of the Company, Mr. Sushil Agarwal, Non-executive
 Director of the Company, retires by rotation at the ensuing Ninth
 Annual General Meeting and being eligible, offers himself for
 re-appointment. Business of his re-appointment is one of the agendas of
 the ensuing Ninth Annual General Meeting of the Company.
 
 Further, the list of the present Directors and KMP forms part of this
 Annual Report under the section Corporate Information.
 
 Company''s policy on appointment of Directors and KMP and remuneration
 including criteria for determining qualifications, positive attributes,
 independence of a director and other matters provided under sub-section
 (3) of section 178 of the Act Board has, on the recommendation of the
 NRC, adopted a Policy, which inter alia enumerates the Company''s policy
 on appointment of Directors and KMP.
 
 Further the Board has also on the recommendation of the NRC, adopted a
 policy entailing Executive Remuneration Philosophy, which covers the
 Directors, KMP and employees included in Senior Management of the
 Company.
 
 Both the aforesaid policies are annexed as Annexure I and Annexure II
 to this report.
 
 Familiarization Programme
 
 Company has framed a Familiarisation Programme for Independent
 Directors of the Company, which aims to provide an insight into the
 Company to enable the Independent Directors to understand their roles,
 rights, responsibilities in the Company, nature of the industry in
 which the Company operates, business model of the Company, its business
 in depth and contribute significantly to the Company.
 
 On appointment, a formal letter of appointment is given to the
 Independent Director being appointed, which inter alia explains the
 role, function, duties and responsibilities expected of him/ her as an
 Independent Director of the Company. By way of an introduction to the
 Company, the new Director is presented with an Induction Kit,
 essentially a set of documents of the Company which may enable him/ her
 to have an adequate idea of the Aditya Birla Group and the Company,
 such as Snapshot of the Company along with its major activities in last
 three years, Corporate presentations along with other documents that
 can give him/ her broad idea of the Management of the Company, various
 Codes of Conduct and Policies applicable to the Company, etc. The
 Director is also explained, in detail, the compliances required from
 him/ her under the applicable laws. Also, once appointed, the Directors
 are periodically updated on the new projects, activities or processes
 of the Company, industry scenario, changes in regulatory framework and
 the impact thereof on the working of the Company. Details of said
 Familiarization Programme(s) are also available on the website of the
 Company i.e. www.abfrl.com.
 
 During the year under review, the Company conducted Familiarization
 Programmes for Independent Directors of the Company on June 19, 2015
 and April 27, 2016, to familiarize them with the Pantaloons division
 and Madura Fashion & Lifestyle division of the Company, respectively. A
 detailed presentation thereby providing overview of the Pantaloons and
 Madura Fashion & Lifestyle divisions was made to the Independent
 Directors at the said meetings and the same was followed by the visits
 to the stores of respective divisions.
 
 Number of Meetings of the Board
 
 During the year under review, the Board met six times, on following
 occasions:
 
 Sr. 
 No. Date of Meeting             Place
 
 1.  May 3, 2015                 Mumbai
 
 2.  May 13, 2015                Mumbai
 
 3.  August 10, 2015             Mumbai
 
 4.  November 2, 2015            Mumbai
 
 5.  January 9, 2016             Mumbai
 
 6.  February 12, 2016           Bengaluru
 
 Details of meetings of the Board and its Committees alongwith the
 attendance of the Directors therein have been disclosed as part of the
 Corporate Governance Report.
 
 The intervening gap between the meetings was as prescribed under the
 Companies Act, 2013 and Securities Exchange Board of India (Listing
 Obligations and Disclosure Requirements) Regulations, 2015 (SEBI
 Listing Regulations).
 
 Manner of formal annual evaluation by the Board of its own performance
 and that of its committees and individual directors
 
 Pursuant to the provisions of the Act and the SEBI Listing Regulations,
 the Board has to evaluate its own performance and that of its
 committees and individual directors (Evaluation).
 
 To enable such evaluation, an evaluation framework has been adopted by
 all the companies of the Aditya Birla Group, which is devised with a
 view to provide a more structured approach for the evaluation and which
 lays down overall guidelines and processes to be adopted for the
 evaluation of performance.  NRC and the Board have, vide their
 respective Resolutions dated May 8, 2015 and May 13, 2015, approved the
 Evaluation Framework.
 
 The evaluation framework for assessing the performance of Directors of
 your Company comprises of their contribution at the meeting(s),
 strategic perspective or inputs regarding the growth and performance of
 your Company, among others. Pursuant to the provisions of the Act and
 the SEBI Listing Regulations, the Directors have carried out the annual
 performance evaluation of the Board, Independent Directors,
 Non-executive Directors, Executive Directors and the Committees of the
 Board. Performance evaluation criteria for Independent Directors is
 provided in the Corporate Governance Report. The Directors were
 satisfied with the evaluation results, which reflected the overall
 engagement of the Individual Directors, the Board as a whole and its
 Committees with the Company.
 
 Statement on declaration of Independence
 
 All the Independent Directors of the Company have given their
 respective declarations that they meet the criteria of Independence as
 provided in Section 149(6) of the Act and Regulation 16(1)(b) of the
 SEBI Listing Regulations.
 
 Composition of the Committees of the Board of Directors 
 
 Name of the Committee         Composition of Committee
 
 Audit Committee               - Mr. Arun Thiagarajan, Independent 
                                 Director (Chairperson)
 
                               - Mr. Bharat Patel, Independent Director
 
                               - Ms. Sukanya Kripalu, Independent 
                                 Director
 
                               - Mr. Sushil Agarwal, Non-executive
                                 Director
 
                               - Permanent Invitee - Mr. Pranab 
                                 Barua, Managing Director 
 
 Stakeholders Relationship     - Mr. Bharat Patel, Independent 
                                 Director (Chairperson)
 
 Committee                     - Ms. Sukanya Kripalu, Independent
                                 Director
 
                               - Mr. Sushil Agarwal, Non-executive 
                                 Director 
 
 Nomination Remuneration       - Mr. Bharat Patel, Independent Director
                                (Chairperson) 
 
 Committee                     - Ms. Sukanya Kripalu, Independent
                                 Director
 
                               - Mr. Arun Thiagarajan, Independent 
                                 Director
 
                               - Mr. Sushil Agarwal, Non-executive
                                 Director CSR Committee 
 
                               - Mr. Bharat Patel, Independent Director
 
                               - Mr. Sushil Agarwal, Non-executive 
                                 Director
  
                               - Mr. Pranab Barua, Managing Director
 
                               - Permanent Invitee - Dr. Pragnya Ram,
                                 Group Executive President, Corporate 
                                 Communication & CSR, Aditya Birla Group
 
 Risk Management               - Mr. Bharat Patel, Independent Director
                                (Chairperson)
 
 Committee                     - Mr. Arun Thiagarajan, Independent
                                 Director
 
                               - Mr. Sushil Agarwal, Non-executive
                                 Director
 
 Corporate Governance
 
 Company is committed to follow the best practices of Corporate
 Governance, including the requirements under the SEBI Listing
 Regulations and the Board is responsible to ensure the same, from time
 to time.
 
 Company has duly complied with the Corporate Governance requirements as
 set out under Chapter IV of the SEBI Listing Regulations, from time to
 time and the Statutory Auditors of the Company viz.  M/s. S R B C & CO
 LLP, Chartered Accountants (ICAI Registration No. 324982E/E30003), have
 vide their certificate dated May 25, 2016, confirmed that the Company
 is and has been compliant with the conditions stipulated in the Chapter
 IV of the SEBI Listing Regulations. The said certificate is annexed as
 Annexure III to this report.
 
 Further, a separate report on Corporate Governance forms part of this
 Annual Report.
 
 Extract of Annual Return
 
 As required under the provisions of Sections 92(3) and 134(3)(a) of the
 Act and Companies (Management and Administration) Rules, 2014, an
 Extract of the Annual Return in Form MGT-9 is annexed as Annexure IV to
 this report.
 
 Explanations or comments by the Board on every qualification,
 reservation or adverse remark or disclaimer made - (i) by the auditor
 in his report and (ii) by the company secretary in practice in his
 secretarial audit report;
 
 Statutory Auditor
 
 M/s. S R B C & CO LLP, Chartered Accountants (ICAI Registration No.
 324982E/E30003), were appointed as Statutory Auditors of the Company at
 the Eighth Annual General Meeting of the Company held on August 28,
 2015 and they hold office till the conclusion of the ensuing Ninth
 Annual General Meeting and are eligible for re-appointment.
 
 Report given by the Statutory Auditors, on the financial statements of
 the Company, is disclosed as part of the Financial Statements of the
 Company for the year under review.
 
 There has been no qualification, reservation, adverse remark or
 disclaimer given by the Statutory Auditors in their Report for the year
 under review and therefore, does not call for any further comments. The
 Notes to the Financial Statements are self-explanatory and do not call
 for any further comments.
 
 Secretarial Auditor
 
 M/s. Dilip Bharadiya & Associates, Practicing Company Secretaries, were
 appointed as Secretarial Auditor of the Company, to conduct Secretarial
 Audit for the year under review, pursuant to the provisions of Section
 204 of the Act.
 
 There has been no qualification, reservation, adverse remark or
 disclaimer given by the Secretarial Auditor in his Report for the year
 under review and therefore, does not call for any further comments. The
 Secretarial Audit Report is annexed as Annexure V to this report.
 
 Branch Auditors
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, Bengaluru (ICAI
 Firm Registration No. 008072S), were appointed as Branch Auditors of
 the Madura Fashion & Lifestyle division of the Company, by the Board at
 its meeting held on January 9, 2016, to hold office till the conclusion
 of the ensuing Ninth Annual General Meeting of the Company.
 
 The Branch Audit Report w.r.t. the Madura Fashion & Lifestyle division,
 for the year under review, does not contain any qualification,
 reservation or adverse remark.
 
 Particulars of loans, guarantees or investments under Section 186 of
 the Act
 
 Particulars of the loans, guarantees and investments as required under
 Section 186 of the Act have been disclosed in Note 4 of the Financial
 Statements of the Company for the year under review.
 
 Particulars of contracts or arrangements with related parties referred
 to in sub-section (1) of Section 188 of the Act in the prescribed form
 
 All contract(s)/ arrangement(s)/ transaction(s) entered into by the
 Company with its related parties, during the year under review, were
 
 - in ordinary course of business of the Company,
 
 - on an arm''s length basis and
 
 - not material,
 
 as per the provisions of Section 188(1) of the Act read with Companies
 (Meetings of Board and its Powers) Rules, 2014 and Regulation 23 of the
 SEBI Listing Regulations.
 
 Accordingly, Form AOC-2 prescribed under the provisions of Section
 134(3)(h) of the Act and Rule 8 of the Companies (Accounts) Rules,
 2014, for disclosure of details of Related Party Transactions, which
 are not at arm''s length basis and also which are material and at
 arm''s length basis, is not provided as an annexure of the Directors''
 Report.
 
 However, all Related Party Transactions entered into during the year
 under review and as on March 31, 2016 were approved by the Audit
 Committee of the Board and Board, from time to time and the same are
 disclosed in Note 31 of the Financial Statements of the Company for the
 year under review, as per the applicable provisions of the Act and the
 SEBI Listing Regulations.
 
 Further, pursuant to the provisions of the Act and the SEBI Listing
 Regulations, Board has, on recommendation of its Audit Committee,
 adopted a Policy on Related Party Transactions and the said policy is
 available on the website of the Company i.e. www.abfrl.com.
 
 Details relating to deposits
 
 During the year under review, the Company has not accepted any fixed
 deposits from the public falling under Section 73 of the Act read with
 the Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March
 31, 2016, there were no deposits which were unpaid or unclaimed and due
 for repayment.
 
 Names of companies which have become or ceased to be its Subsidiaries,
 joint ventures or associate companies during the year
 
 During the year, no Company became/ ceased to be a Subsidiary/
 Associate/ Joint Venture of your Company.
 
 As at the end of the year under review i.e. on March 31, 2016 and also
 as on the date of this report, the Company does not have any subsidiary
 and/ or Associate Company and the Company is also not a part of any
 Joint Venture(s).
 
 As already mentioned above, during the year under review, the Company
 ceased to be a subsidiary of ITSL and also a step-down subsidiary of
 ABNL.
 
 Details w.r.t. development and implementation of a Risk Management
 Policy
 
 Considering the susceptibility of the Company to inherent business
 risks, Board of the Company, on recommendation of RMC, has adopted a
 Risk Management Policy, to
 
 - develop and implement Risk Management procedure/ plan including
 identification therein of elements of risk, if any, which may threaten
 the existence of the Company;
 
 - enable the Company to proactively manage the uncertainty, changes in
 the internal and external environment to limit negative impacts; and
 
 - capitalize on opportunities along with minimization of identifiable
 risks,
 
 - in compliance with the provisions of the Act and Regulation
 4(2)(f)(ii)(7) and Regulation 17(9)(b) of the SEBI Listing Regulations
 which requires the Company to lay down procedure for risk assessment
 and procedure for risk minimization.
 
 More details on risks and threats have been disclosed above, as part of
 the Management Discussion and Analysis.
 
 Further, in view of the ever increasing size and complexity of the
 business operations, the Company is exposed to the various risks
 emanating from fraud(s). Accordingly, the Board has, on recommendation
 of the Audit Committee, adopted an Anti-Fraud Policy and a Whistle
 Blower Policy, to put in place, a system for detecting and/ or
 preventing and/ or deterring and/ or controlling the occurrence of
 fraud(s).
 
 Details of establishment of Vigil Mechanism
 
 Board has, on recommendation of its Audit Committee, adopted a Policy
 thereby enumerating the Vigil/ Whistle Blower Mechanism, for Directors
 and employees of the Company, to report concerns about unethical
 behaviour, actual or suspected fraud or violation of your Company''s
 Code of Conduct and to voice genuine concerns or grievances about
 unprofessional conduct without fear of reprisal. Adequate safeguards
 are provided against victimization to those who avail of the mechanism
 and direct access to the Chairperson of the Audit Committee is provided
 to them. The Vigil Mechanism is also available on the website of the
 Company i.e.  www.abfrl.com.
 
 Details about the policy developed and implemented by the Company on
 Corporate Social Responsibility (CSR) and the CSR initiatives taken
 during the year
 
 Board has constituted a CSR Committee, in terms of the provisions of
 Section 135 of the Act read with the Companies (Corporate Social
 Responsibility Policy) Rules, 2014. Details of the composition of the
 CSR Committee are disclosed above and have also been disclosed
 separately as part of the Corporate Governance Report.
 
 Further, the Board has, with a vision to actively contribute to the
 social and economic development of the communities and build a better,
 sustainable way of life for weaker sections of society, adopted a CSR
 Policy and the same is available on the website of the Company i.e.
 www.abfrl.com.
 
 CSR Policy of the Company, enumerates the Vision of the Aditya Birla
 Group and the Company, as a responsible corporate citizen and mentions
 the process to be implemented w.r.t. identification of projects and
 philosophy of the Company, alongwith key endeavors and goals viz.
 
 - In Education - to spark the desire for learning and knowledge;
 
 - In Health care - to render quality health care facilities to people
 living in the villages and elsewhere through our Hospitals;
 
 - In Sustainable Livelihood - to provide livelihood in a locally
 appropriate and environmentally sustainable manner;
 
 - In Infrastructure Development - to set up essential services that
 form the foundation of sustainable development and
 
 - to bring about Social Change, we advocate and support.
 
 In line with the same, the CSR activities of the Company are mainly
 focused towards,
 
 - Girl Child Education and Skilling;
 
 - Health and Sanitation.
 
 In view of the losses for the year under review and also considering
 absence of profits during the three immediately preceding financial
 years, the Company was not required to spend any amount towards the CSR
 activities, as per the applicable provisions of Section 135 of the Act.
 However, during the year under review, by virtue of the Composite
 Scheme, Madura Fashion & Lifestyle division, became part of the Company
 and accordingly, a report on CSR Activities of the Company, more
 particularly covering the CSR activities of the Madura Fashion &
 Lifestyle division of the Company, during the year under review, is
 annexed as Annexure VI to this Report.
 
 Conservation of energy, technology absorption, foreign exchange
 earnings and outgo
 
 Company consciously makes all efforts to conserve energy across all its
 operations. Information on conservation of energy, technology
 absorption and foreign exchange earnings and outgo, required to be
 disclosed pursuant to Section 134(3)(m) of the Act read with the
 Companies (Accounts) Rules, 2014 is given in Annexure VII to this
 Report.
 
 Sustainability and Business Responsibility Report
 
 Company''s sustainability initiatives are aligned with the Aditya Birla
 Group''s sustainability vision, which mainly comprises of Responsible
 Stewardship, Stakeholder Engagement and Future-proofing.
 
 Accordingly, under the aegis of the Aditya Birla Group''s sustainability
 vision, the Company is strengthening its ''ReEarth'' program, to design a
 roadmap which will align with the group level sustainability policies
 and international frameworks.
 
 Through this mission, we hope to create a future ready organization,
 which can pre-empt imminent challenges, address the needs of all
 stakeholders and continue to be a preferred partner for its consumers,
 thereby securing a common future for tomorrow.
 
 In accordance with our sustainability vision and in terms of Regulation
 34(2)(f) of the SEBI Listing Regulations, a Sustainability and Business
 Responsibility Report forms a part of this Annual Report.
 
 Details of significant and material orders passed by the regulators or
 courts or tribunals impacting the going concern status and company''s
 operations in future
 
 No significant or material orders were passed by the Regulators or
 Courts or Tribunals which impact the going concern status and Company''s
 operations in future, other than the order(s) by the Hon''ble High
 Courts of Judicature at Bombay and Gujarat w.r.t. Composite Scheme, as
 enumerated hereinabove.
 
 Employee Stock Option Scheme and Share Based Employee Benefits
 
 Grant of share based benefits to employees is a mechanism to align the
 interest of employees with those of the Company, to provide them with
 an opportunity to share the growth of the Company and also to foster
 the long-term commitment.
 
 The SEBI (Share Based Employee Benefits) Regulations, 2014
 (Regulations), govern the grant of share based benefits to the
 employees of the Company, such as Employee Stock Options (Stock
 Options), Restricted Stock Units (RSUs), Stock Appreciation Rights
 (SARs) etc.
 
 NRC inter alia administers, implements and monitors the Schemes and
 plans thereby governing the grant of Share Based Employee Benefits to
 the employees of the Company and accordingly, administration and
 implementation of the Employee Stock Option Scheme - 2013 (Scheme)
 and Stock Appreciation Rights Plan - 2013 (Plan), now comes under
 the scope of NRC.
 
 During the year under review, no Stock Options and/or RSUs and/ or SARs
 were granted pursuant to the provisions of the Scheme and/ or plan.
 Pursuant to the provisions of the Scheme and Plan, 1,95,116 Stock
 Options and 66,152 SARs, respectively, vested in the eligible grantees.
 No RSUs were vested in the grantees pursuant to the provisions of the
 Scheme. Further, the Stakeholders Relationship Committee of the Board,
 allotted 11,597 (Eleven Thousand Five Hundred Ninety Seven) Equity
 Shares of Rs. 10/- (Rupees Ten only) each credited as fully paid-up,
 upon exercise of Stock Options by the eligible grantees.
 
 Before effectiveness of the Composite Scheme, ABNL had, under its
 Employee Stock Option Scheme (ABNL ESOS), granted RSUs to some of the
 employees of Madura Fashion & Lifestyle division, by virtue of them
 then being employees of ABNL. However, pursuant to the effectiveness of
 the Composite Scheme, such employees became employees of the Company
 w.e.f. January 9, 2016, by when the RSUs granted by ABNL had not vested
 in them as per the vesting terms of the ABNL ESOS. Accordingly, for the
 benefit of all such employees, NRC, vide its Circular Resolution passed
 on May 11, 2016, granted 2,79,544 RSUs to such eligible employees.
 
 In terms of the provisions of the regulations, the details of the Stock
 Options and/ or RSUs and/ or SARs already granted under the
 abovementioned Scheme and/ or plan are available on the website of the
 Company i.e. www.abfrl.com. Further, the same have been disclosed as
 part of the Financial Statements of the Company for the year under
 review.
 
 A certificate from the Statutory Auditor confirming that the Scheme has
 been implemented in accordance with the Guidelines and the Regulations
 will be placed at the ensuing Ninth Annual General Meeting for
 inspection by the Members.
 
 Particulars of Employees as per Section 197(12) of the Act and Rule 5
 of the Companies (Appointment and Remuneration of Managerial Personnel)
 Rules, 2014
 
 Disclosures with respect to the remuneration of Directors and employees
 as required under Section 197 (12) of the Act and Rule 5(1) of the
 Companies (Appointment and Remuneration of Managerial Personnel) Rules,
 2014 is annexed as Annexure VIII to this Report.
 
 In terms of the provisions of Section 197(12) of the Act read with
 Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
 Managerial Personnel) Rules, 2014, a statement showing the names and
 other particulars of the employees drawing remuneration in excess of
 the limits set out in the said rules forms part of the Annual Report.
 However, in line with the provisions of the first proviso to Section
 136(1) of the Act, the reports and accounts as set out therein, are
 being sent to all Members of the Company, excluding the aforesaid
 information about the employees and the same will be made available at
 the Registered Office of the Company during working hours before 21
 days of the Annual General Meeting. Any member interested in obtaining
 such information may write to the Company Secretary and the same will
 be made available to any such member on request. Such details are also
 available on the website of the Company i.e. www.abfrl.com.
 
 Disclosures as per the Sexual Harassment of Women at the Workplace
 (Prevention, Prohibition and Redressal) Act, 2013
 
 Company is committed towards providing a work environment that is
 professional and mature, free from animosity and one that reinforces
 our value of integrity that includes respect for the individual and in
 pursuance to the same. Accordingly, Company has a Policy on Prevention
 of Sexual Harassment at Workplace, which is applicable to all employees
 of the Company, as per the provisions of the Sexual Harassment of Women
 at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
 
 During the year under review, no cases were filed pursuant to the
 Sexual Harassment of Women at Workplace (Prevention, Prohibition and
 Redressal) Act, 2013 and 26 complaints were received, out of which all
 26 complaints have been investigated and resolved after taking an
 appropriate action and none of the complaints remain pending as of
 March 31, 2016.
 
 AWARDS AND RECOGNITIONS
 
 Your Company has been proud recipient of the following Awards and
 Recognitions during the year under review:
 
 Madura Fashion & Lifestyle division
 
 - Recognised as
 
 - ''The Top Apparel Innovator 2016'' for its Product Management Lifecycle
 Solution by US-based Apparel Magazine.
 
 - One of the ''Best Corporate Brands 2016'' at the Economic Times Best
 Corporate Brands Summit.
 
 ''Most Trusted Premium Formal Wear'' brand at the 13th Franchisee Awards
 2015.
 
 - Awarded with
 
 - Golden Star - Six Sigma Award'' for Service Quality Excellence by The
 World Quality Congress.
 
 - ''Gold'' for 4 projects in the Six Sigma and Kaizen category by The
 Curriculum Concept of Quality Circle, Bengaluru.
 
 - Other Awards and accolades
 
 Name of the Brand   Award/ Recognition    By/ At
 
 Louis Philippe      Comfort Vote Quality 
                     Label                 German Testing and Research
                                           Centre, Hohenstein Institute
 
 Van Heusen          The Most Admired 
                     Retailer of the Year  Images Retail Awards 2015
                     for ''Store Design''
                     award
 
                     ''Best Loyalty 
                     Program'' award        Single/ Speciality format at
                                           the 9th Loyalty Summit by
                                           AIMIA
 
                     ''Best Use of 
                     Customer Experience   Customer Experience Summit
                     Technology'' award
 
                     - Best Customer
                       Loyalty Program     Asia Retail Congress
 
                     - Best Retail
                       Marketing Campaign
                       Offline
 
                     - Best Innovative
                       Retail Concept
 
                     ''Best Loyalty Program'' 
                     award in the          8th Loyalty Summit by AIMIA
                     single brand retail
                     sector category
 
                     ''Most Trusted Premium 
                     Formal Wear''          Brand Equity survey of The
                     brand award           Economic Times
 
                     ''Social Media 
                     Campaign of the Year'' Social Media Awards
                     award
 
 Allen Solly         Social Media award 
                     for ''The Best use     Global Youth Marketing Forum
                     of Twitter''
 
 Peter England       Retail Excellence
                     Award for ''Best       Asia Retail Congress 2015
                     Technology 
                     Initiative/ 
                     Implementation'' 
                     and ''Customer 
                     Loyalty Program''
 
                     ''CII 5S Excellence
                     Award'' in the 3rd 
                     place                 CII 5S Excellence Award
                     under Large Scale 
                     Service Industry
                     category
 
 Trendin.com         Gold'' for the ''Best
                     E-Commerce Website''   Internet and Mobile
                                           Association of India (IAMAI)
 
 Pantaloons division
 
 - Recognised as ''India''s Most Trusted Apparel Retail Brand'' for the 3rd
 consecutive year in the Brand Equity survey of The Economic Times.
 
 - ''Greencard'' Loyalty program of Pantaloons was awarded with 3 trophies
 at the 9th Loyalty Awards 2016 by AIMIA in the following categories:
 
 - ''Best Direct Marketing Campaign of the Year''.
 
 - ''Best use of Customer Experience Technology Award of the Year''.
 
 - ''Best use of Customer and Data Analytics in Loyalty Program''.
 
 - ''Greencard'' Loyalty program of Pantaloons was awarded the ''Best
 Direct Marketing Campaign of the Year'' at the 8th Loyalty Awards 2015
 by AIMIA.
 
 SAFETY
 
 Company''s goal is ''no fatal accidents at work at any of our locations''.
 In order to ensure this, Company has several mechanisms in place to
 assess, manage and provide safety. An Operational Health and Safety
 (OHS) policy has been rolled out in line with the Aditya Birla Group
 policy. OHS design development and implementation has been carried out
 in all operations under direct control. Company has instilled an
 Environment, Health & Safety (EHS) committee which conducts monthly
 meetings to track performance. Regular safety audits are conducted,
 including third party assessments. The system of ''5S'' has been well
 implemented in warehouses and the same is being worked on in the
 factories and offices.
 
 During the year, there were zero lost time injuries or fatalities in
 operations under control of the Company.
 
 OTHER DISCLOSURES
 
 - Your Company has not issued any shares with differential voting
 rights.
 
 - There was no revision in the financial statements for the financial
 year/ during the year.
 
 - Your Company did not issue any sweat equity shares.
 
 ACKNOWLEDGEMENT
 
 We place on record our sincere appreciation for the continued support
 which the Company has received from its customers, vendors, suppliers,
 business associates, bankers, financial institutions, investors,
 Central and State Governments, promoters, group companies and above
 all, employees of the Company.
 
                         For and on behalf of the Board of Directors
 
 
 
                         Pranab Barua             Bharat Patel
 
                         Managing Director        Independent Director
 
 Place : Bengaluru 
 
 Date : May 25, 2016
Source : Dion Global Solutions Limited
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