1. COMPANY BACKGROUND
Shoppers Stop Limited (SSL or the Company) was incorporated on 16
June 1997. The Company is engaged in the business of retailing a
variety of household and consumer products and books through
departmental stores. As at 31 March 2011, the Company operated through
42 such departmental stores located in different cities of India.
2. Retail Turnover in the Profit and Loss account indicates the gross
volumes of business and operations.
(All amounts in Rs. lacs)
Mar-11 Mar-10
3. CONTINGENT LIABILITIES IN RESPECT OF:
a) Guarantee given for loan taken by Joint
venture companies from banks 1,338.57 4,490.00
b) Claims against the Company not
acknowledged as debts comprise of:
(i) Disputed Income tax matters in appeal 535.91 245.42
(ii) Disputed sales tax matters in appeal 16.46 428.63
(iii) Disputed Customs Duty 17.09 24.00
c) Contingent contractual claims 236.19 236.19
d) Others 52.25 -
Note: Future cash outflows in respect of (b) above are determinable
only on receipt of judgements/decisions pending with various
forums/authorities.
4. SERVICE TAX
Pursuant to levy of service tax on renting of immoveable 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.challenged the said levy and, inter-alia, its retrospective
application in various High Courts. An interim stay has been granted by
various High Courts from recovery of the said service tax and the
matter is pending. Accordingly, the Company has not provided for
service tax aggregating to Rs. 1,619 lacs for the retrospective period
upto 31 March 2010, which will be appropriately recognised on final
determination.
5. SEGMENT REPORTING
The Company is primarily engaged in the business of retail trade
through retail and departmental store facilities in India, which in the
terms of Accounting Standard 17 on Segment Reporting1, constitutes a
single reporting segment.
6. RELATED PARTY DISCLOSURES
Names of related parties and description of relationship:
(a) Subsidiaries Upasna Trading Limited, Shoppers Stop.com
(India) Limited,
Shoppers Stop Services (India) Limited,
Crossword Bookstores Limited.
Gateway Multichannel Retail (India) Limited.
Hypercity Retail (India) Limited,
(w.e.f. 30 June 2010)
(b) Promoter
directors having
control/significant C. L. Raheja, Ravi C. Raheja, Neel C. Raheja
influence over
companies stated
in (c) below
(c) Companies in
which the persons
stated in (b) above Ivory Properties and Hotels Private Limited,
K. Raheja Corp. Private Limited
have control/
significant
influence K. Raheja Private Limited, Inorbit Malls
(India) Private Limited
Avacado Properties and Trading
India Private Limited, K. Raheja IT Park
(Hyderabad) Private Limited
Trion Properties Private Limited
(d) Joint Ventures Nuance Group (India) Private Limited
Timezone Entertainment Private Limited
(e) Key Management
Personnel Executive Director : Govind Shrikhande
Non Executive Directors: Chandru L. Raheja
Ravi Raheja Neel Raheja
B. S. Nagesh
Gulu L. Mirchandani
Shahzaad Dalal
Nitin Sanghavi
Deepak Ghaisas
Nirvik Singh
7. DERIVATIVES
a) The Company uses foreign currency forward contracts to hedge its
risks associated with foreign currency exposures relating to the
underlying transactions and firm commitments. The company does not
enter into any derivative instruments for trading and speculative
purposes.
8. ESOP SCHEMES
b) New Schemes Launched
No new employees share based payment plans were formulated during the
year. The compensation cost of stock options granted to employees is
calculated using the intrinsic value of the stock options.
c) The weighted average contractual life of the options outstanding is
4.42 years
9. INTEREST IN JOINT VENTURES: March-11 March-10
V. CONTINGENT LIABILITIES 439.90 161.82
Note: The companys share in the assets, liabilities, income and
expenses in Nuance Group (India) Private Limited is based on the
audited financials for the year ended 31 December 2010.
10. EMPLOYEE BENEFITS
The company expects to contribute Rs. 101.05 lacs to its Gratuity plan
for the next year.
In assessing the Companys Post Retirement Liabilities, the Company
monitors mortality assumptions and uses up-to-date mortality tables.
The base being the LIC 1994-96 ultimate tables.
Expected return on plan assets is based on expectation of the average
long-term rate of return expected on investments of the fund during the
estimated term of the obligations.
The estimates of future salary increases considered in actuarial
valuation take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
11. EXCEPTIONAL ITEM
The Board of Directors of Gateway Multichannel Retail (India) Limited
(Gateway) had in January 2009 decided to discontinue operations and the
company had therefore made a provision for its investments and loans
and advances aggregating to Rs. 2,486.40 lacs in the previous year. The
impairment charge was disclosed as an Exceptional item in the Profit
and Loss Account. During the year the Company has recovered Rs. 5.10
lacs from Gateway and has accordingly disclosed the credit as an
Exceptional item.
12. The Board of Directors and shareholders of the Company at their
meetings held on October 29, 2010 and December 23, 2010 respectively
approved sub-division of equity share of Rs. 10/- each into two equity
shares of Rs. 5/- each. The Company fixed January 13, 2011 as the
Record Date, for the said sub-division and as on date, the equity
shares of the company were sub-divided. Accordingly, the basic and
diluted EPS for the current and prior year have been computed on the
basis of the said sub-division.
13 (i) During the year, the Company has simultaneously allotted
20,00,000 equity shares to Qualified Institutional Buyers (QIBs) and
40,00,000 equity shares to Promoters pursuant to the conversion of
optionally convertible warrants for an aggregate issue price of Rs.
12,980 lacs and Rs. 12,287.20 lacs (Rs. 3,071.80 lacs received in 2010
being 25% of total price) respectively. The premium received aggregated
Rs. 24,667.20 lacs.
14. On account of termination of the franchisee agreement with
Crossword Bookstores Ltd. (CBL), a wholly-owned subsidiary of the
Company, the operations of Crossword have been handed over to
Crossword Bookstores Limited with effect from October 1, 2010 at book
values. Accordingly, figures for the previous year are not comparable
with those of the current year.
15. The Networth of these companies have been substantially eroded and
these companies continue to make losses. Based on the business plans of
these companies and the valuation of businesses by an independent
valuer, no provision for any loss is currently considered necessary in
these financial statements.
16a. During the year, the name of the Company was changed from
Shoppers Stop Limited to Shoppers Stop Limited.
16b. Figures of the previous year are regrouped, where necessary, to
conform to those of the current year.
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