Vmart Prospectus

8/10/2019 Vmart Prospectus

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V-MART RETAIL LIMITEDOur Company was originally incorporated as Varin Commercial Private Limited under the Companies Act, 1956 vide certificate of incorporation dated

West Bengal. The name of our Company was subsequently changed to V-Mart Retail Private Limited vide a fresh Certificate of Incorporation Consequentthe Registrar of Companies, West Bengal. The registered office of our Company was changed from the state of West Bengal to Delhi vide an order datRegion Bench at Kolkata, and subsequently, a Certificate of Registration of the Company Law Board order for Change of State dated May 22, 2007 was issuCapital Territory of Delhi and Haryana. Our Company s name was changed to V-Mart Retail Limited upon conversion into a public limited companyupon Change of Name on Conversion to a Public Limited Company dated July 11, 2008 issued by the Registrar of Companies, National Capital Territory of Delhi

Number ( CIN ) of our Company is U51909DL2002PLC163727 . For further details please refer to the chapter titled General Information and Hirespectively of the Prospectus .

Registered Office: F-11, Udyog Nagar Industrial Area, Peeragarhi, Rohtak Road, New Delhi 110 041Tel: +91 11 4525 4444; Fax: +91 11 4525 4429; Email : [email protected]; Website: www.vma

Company Secretary and Compliance Officer: Yogesh Bhardwaj PROMOTERS OF OUR COMPANY: LALIT AGARWAL, HEMANT AGARWAL, MADAN AGARWAL, MADAN GOPAL AGARWAL (HUF), LALIT M. AGA

AGARWAL (HUF)PUBLIC ISSUE OF 4,496,000 EQUITY SHARES OF FACE VALUE OF 10 EACH OF V- MART RETAIL LIMITED (OUR COMPANY OR TH

210 PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF 200 PER EQUITY SHARE) AGGREGATING TO 944.16 MIL

ISSUE OF 2,761,000 EQUITY SHARES BY OUR COMPANY AGGREGATING TO 579.81 MILLION (THE FRESH ISSUE) AND AN O(THE OFFER FOR SALE) BY NAMAN FINANCE AND INVESTMENT PRIVATE LIMITED (THE SELLING SHAREHOLDER) AGGREGATING TOWILL CONSTITUTE 25.04% OF THE POST ISSUE PAID-UP CAPITAL OF OUR COMPANY.

THE FACE VALUE OF EQUITY SHARES IS 10 EACH. THE ISSUE PRICE IS 210 AND IS 21 TIMES THE FACE VALUE OF THE EQ

In case of revision in the Price Band, the Bid/Issue Period will be extended for atleast three additional Working Days after such revision of the Price Band, suWorking Days. Any revision in the Price Band and the revised Bid/Issue Peri od, if applicable, will be widely disseminated by notification to the BSELimited ( NSE ), by issuing a press release, and also by indicating the change on the website of the Book Running Lead Manager ( BRLM ), oSyndicate Banks ( SCSBs). The Issue is being made through a Book Building Process in accordance with Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules, 1957, as amended India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, (SEBI (ICDR) Regulations ) wherein 50% of the Issue sInstitutional Buyers ( QIBs ). Our Company and Selling Shareholder may, in consultation with the BRLM, allocated upto 30% of the QIB Portion to Andiscretionary basis, out of which at least one-third will be available for allocation to domestic Mutual Funds only. Such number of Equity Shares representing 5%allocation on a proportionate basis to Mutual Funds only, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis t

received at or above the Issue Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity SharPortion will be added to the Net QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Issue shall be available for allocation on a pand not less than 35% of the Issue shall be available for allocation to Retail Individual Bidders as per the mechanism provided under the heading

Bidders on page 353 of the Prospectus, subject to valid Bids being received from them at or above the Issue Price. All QIB bidders and Non-Institutcompulsorily partic ipate in this Issue through the Application Supported by Blocked Amount ( ASBA ) process. Retail investors participating in this IBids. For further details please see the chapter titled Issue Procedure on page 326 of the Prospectus.

RISKS IN RELATION TO THE FIRST ISSUEThis being the first public issue of Equity Shares of our Company, there has been no for mal market for the Equity Shares of our Company. The Face Value of Eqtimes of the Face Value and the Cap Price is 21.50 times of the Face Value. The Issue Price (as determined and justified by our Company and Selling Shareholdunder the chapter titled Basis for Issue Price on page 83 of the Prospectus) should not be taken to be indicative of the market price of Equity Shares aftegiven regarding an active and/or sustained trading in Equity Shares of our Company or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKSInvestment in equity and equity related securities involves a degree of risk and investors should not invest any funds in this Issue unless they can afford to take tadvised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their oincluding the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board ofadequacy of the Prospectus. Specific attention of the investors is invited to the chapter titled Risk Factors on page 15 of the Prospectus.

ISSUERS AND SELLING SHAREHOLDERS ABSOLUTE RESPONSIBILITY Our Company having made all reasonable inquiries, accepts responsibility for, and confirms that the Prospectus contains all information with regard to our Cocontext of the Issue, that the information contained in the Prospectus is true and correct in all material respects and is not misleading in any material respect, thare honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of anymaterial respect. Further, the Selling Shareholder accepts responsibility for and confirms that the information relating to the Selling Shareholder contained in thaspects and is not misleading in any material respect.

IPO GRADING The Issue has been graded by C ARE and has been assigned the CARE IPO Grade 3 , indicating average fundamentals through its letter dated January 4, the chapter titled General Information on page 42 of the Prospectus.

LISTING ARRANGEMENTThe Equity Shares offered through the Red Herring Prospectus are proposed to be listed on BSE and NSE. Our Company has received in-principle approvals of

pursuant to letters dated September 05, 2012 and August 22, 2012, respectively. For the purpose of this Issue, the Designated Stock Exchange is BSE.

BOOK RUNNING LEAD MANAGER REGISTRAR

Anand Rathi Advisors Limited11 th Floor, Times Tower,Kamala City, Senapati Bapat Marg,Lower Parel Mumbai 400 013

Karvy Computershare Private LimitedPlot No. 17-24, Vithal Rao Nagar,Madhapur, Hyderabad 500 081,I di
mailto:[email protected]:[email protected]://www.vmart.co.in/http://www.vmart.co.in/mailto:[email protected]


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TABLE OF CONTENTS

PARTICULARS

Section I Definitions and Abbreviations Company Related Terms Issue Related Terms Technical/Industry Related Terms / Abbreviations Conventional and General Terms/ Abbreviations

Section II General Presentation of Financial Information and Use of Market Data Forward Looking Statements Section III Risk Factors Section IV Introduction Summary of the Industry Summary of our Business Summary of Financial Information The Issue

General Information Capital Structure Section V Objects of the Issue Objects of the Issue Basis for Issue Price Statement of Tax Benefits Section VI About Us Industry Overview Our Business Key Industry Regulations and Policies History and Other Corporate Matters Our Management Our Promoters and Promoter Group Group Entity Dividend Policy Section VII Financial Information Financial Information Financial Indebtedness Managements Discussion and Anal ysis of Financial Condition and Results of Operations Section VIII Legal and other Regulatory Information Outstanding Litigations, Material Developments and Other Disclosures Government and Other Statutory Approvals Section IX Other Regulatory and Statutory Disclosures Section X Issue Related Information


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SECTION I

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise requires, the terms and abbreviations stated hereunder shall havassigned therewith.

Notwithstanding the definitions and abbreviations included in this section,

(i) In the chapter titled Our Business on page 127 of the Prospectus, defined terms s

given to such terms in that section;(ii) In the chapter titled Industry Overview on page 95 of the Prospectus, defined

meaning given to such terms in that section;

(iii) In the chapter titled Financial Information on page 193 of the Prospectus, definmeaning given to such terms in that section;

(iv) In the chapter titled Managements Discussion and Analysis of Fina ncial COperations on page 245 of the Prospectus, defined terms shall have the meaning githat section;

(v) In the chapter titled Key Industry Regulations and Policies on page 148 of terms shall have the meaning given to such terms in that section.

Company Related Terms

Term Description

Articles /AoA / Articles ofAssociation The articles of association of our Company, as amended fAuditor/ Statutory Auditor The statutory auditor of our Company Walker, Chandiok

Accountants.Board of Directors/Board The board of directors of our Company or a committee

unless the context otherwise specifies.Director(s) Director(s) of our Company, unless otherwise specified.Equity Shareholders Person(s) holding Equity Shares of our Company unless th

specifies.

Executive Director(s) Lalit Agarwal, Hemant Agarwal and Madan AgarwalGroup Entity Companies, firms, ventures promoted by the Promo

whether such entities are covered under section 370(1)(Act or not and disclosed in the chapter titled Groupthe Prospectus.

Hemant Agarwal The Individual Promoter and Director of our Company Hemanta Kumar Agarwal and Hemant M Agarwal


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Term DescriptionMemorandum / MoA /

Memorandum ofAssociation

The memorandum of association of our Company, as am

time.

Operations Committee The committee of the Board of Directors constituted reviewing the overall operations of our Company from ti

Promoters The promoters of our Company namely, Lalit AgarwaMadan Agarwal, Lalit M. Agarwal (HUF), Hemant Madan Gopal Agarwal (HUF)

Promoter Group Includes such persons and entities constituting our promotRegulation 2(1)(zb) of the SEBI (ICDR) Regulations

chapter titled Our Promoters and Promoter Group Registered Office The registered office of our Company being F-11, Udy

Area, Peeragarhi, Rohtak Road, New Delhi 110041Selling Shareholder Naman Finance and Investment Private Limited, a compa

the Companies Act and having its registered office at Industrial Estate, 52, S.K. Ahire Marg, Worli, Mumbai

V-Mart Retail Limited,V-Mart, We, us,our, Issuer,

Company or ourCompany

Unless the context otherwise indicates or implies, refLimited, a company registered under the Companies Actregistered office at F-11, Udyog Nagar Industrial Area

Road, New Delhi 110 041, India.

Issue Related Terms

Term DescriptionAllotment/ Allot/Allotted Unless the context otherwise requires, the allotment of Equ

to the Fresh Issue and transfer of the Equity Shares ofShareholder pursuant to the Offer for Sale to successful Bid

Allotment Advice The note or advice or intimation of Allotment sent to the BInvestors, who have been or are to be Allotted the Equity Sof Allotment has been approved by the Designated Stock E

Allottee A successful Bidder to whom the Equity Shares are AllottedAnand Rathi AdvisorsLimited / Anand Rathi /ARAL

Anand Rathi Advisors Limited, a company incorporated Act, 1956 and having its corporate office at 11 th FlooMills, Senapati Bapat Marg, Lower Parel, Mumbai - 40India.

Anchor Investor(s) A Qualified Institutional Buyer, applying under the Anchwith a minimum Bid of ` 100 million.

Anchor Investor Bid/IssuePeriod

The day, one Working Day prior to the Bid/ Issue Opening by Anchor Investors were submitted and allocation to Acompleted.

Anchor Investor IssuePrice

` 210 per Equity Share

Anchor Investor Portion Upto 30% of the QIB Portion which was allocated by our C


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Term DescriptionIndusInd Bank Limited and Axis Bank Limited.

Basis of Allotment The basis on which Equity Shares will be Allotted to Biddand which is described in chapter titled Issue Proceduron page 353 of the Prospectus.

Bid / Bids An indication to make an offer during the Bid / Issue Pericase of Anchor Investors, the Anchor Investor Bid/Issue

pursuant to submission of a Bid cum Application FormEquity Shares of our Company at a price within the Pricrevisions and modifications thereto.

Bid Amount The highest value of the optional Bids indicated in the B

Form and which is payable by the Bidder on submission ofBid / Issue Closing Date Except in relation to Anchor Investor, February 5, 2013.Bid / Issue Opening Date Except in relation to the Anchor Investor(s), February 1, 201Bid cum Application Form The form used by a Bidder to make the Bid and which i

application for Allotment for the purposes of the Red Hethe Prospectus including the Bid cum Application FoBidders.

Bidder Any prospective investor who makes a Bid pursuant to tHerring Prospectus and the Bid cum Application Form.

Bid / Issue Period/Bidding / Issue Period The period between the Bid/ Issue Opening Date and thDate, inclusive of both days, during which prospective BidInvestors) and the ASBA Bidders submitted their Bids, inthereof.

Book Building Process/Book Building Method

Book building process as provided in Schedule XI oRegulations, in terms of which this Issue is being made.

BRLM / Book RunningLead Manager

Anand Rathi Advisors Limited.

CAN / Confirmation of

Allocation Note

Notice or intimation of allocation of Equity Shares sent

who have been allocated Equity Shares, after Basis ofapproved by the Designated Stock Exchange.

CARE Credit Analysis and Research LimitedCARE Research Report Report prepared by CARE Limited titled Indian Retail

Research on page 95 of the Prospectus.Cap Price The higher end of the Price Band, above which the Issu

finalized and above which no Bids will be accepted.Compliance Officer The Company Secretary of our Company, being Yogesh BhaControlling Branches Such branches of the SCSB which coordinate with, the Re

and the Stock Exchanges, a list of which is available on httCut-off Price The Issue Price, finalised by our Company and the Se

consultation with the Book Running Lead Manager. OnBidders are entitled to Bid at the Cut-off Price, for a Bid A

` 200,000. No other categories of Bidders are entitled Price.

D it N ti l S iti D it Li it d d C t l D i


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Term Descriptionwww.nseindia.com, where the Bids can be submitted to a

Broker. Non Syndicate StockBroker

shall mean a stock broker registered as a member of a Stoforming not entered into a Sub-Syndicate AgreementMember and is not a part of the Syndicate.

Non Syndicate StockBroker Mechanism

Investors applying through Non Syndicate Stock BrokerBroker Centre pursuant to SEBI circular no. CIR/CFD/1404, 2012.

Offer for Sale The offer for sale of 1,735,000 Equity Shares aggregating by the Selling Shareholder.

Pay-in Date Bid Closing Date or the last date specified in the CANAnchor Investors, as applicable.Pay-in-Period With respect to Anchor Investors, it shall be the Anchor

Period and if the price fixed as a result of Book Building isat which the allocation is made to Anchor Investor, the A

bring in the additional amount. For Bidder(s), other than period commencing on the Bid / Issue Opening Date and c/ Issue Closing Date.

Pre-IPO Investors The investors who have been allotted Equity Shares

Placement namely Antique Finsec Private Limited, AnLimited, Four Dimensions Securities (India) Limited, LaMerit Credit Corporation Limited and Tejal Rohit Kothari.

Pre-IPO Placement The allotment made by our Company on January 6, 2013Draft Red Herring Prospectus with the Securities and Exchof 1,250,000 Equity Shares at a price of ` 210 per EquInvestors aggregating to ` 262.50 million.

Price Band Price band, of a minimum price (floor of the price banmaximum price (cap of the price band) of ` 215.

Pricing Date The date on which our Company and Selling Shareholder the BRLM finalizes the Issue Price.Prospectus This prospectus dated February 8, 2013 of our Company fi

this Issue after the Pricing Date, in accordance with Sectiothe Companies Act and the SEBI (ICDR) Regulations.

Public Issue Account Account opened with the Bankers to the Issue to receivEscrow Account and the SCSBs from the bank accounts oon the Designated Date.

Qualified Foreign Investors

or QFIs

(i) Resident in a country that is a member of Financ

(FATF) or a member of a group which is a member

(ii) Resident in a country that is a signatory to IO SA Signatories) or a signatory of a bilateral MOU w

Provided that the person is not resident in a country statements issued by FATF from time to time on (i) ju


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Term Description(2) The phrase resident in India shall carry the same

Act.(3) Resident in a country, other than India, shall medirect tax laws of the country.

(4) Bilateral MoU with SEBI shall mean the bilateraand the overseas regulator that inter alia provides foarrangements.

(5) Member of the FATF shall not mean an Associate mQualified InstitutionalBuyers or QIBs

Regulation 2 (1) (zd) of the SEBI (ICDR) Regulatioinstitutional buyer to mean public financial institutions as

4A of the Companies Act, scheduled commercial banks, mwith SEBI, FII and sub-account registered with SEBI, othwhich is a foreign corporate or foreign individual, muldevelopment financial institution, venture capital fund ralternative investment funds registered with SEBI, foinvestor registered with SEBI, state industrial develinsurance company registered with IRDA, provident fund wof ` 250 million, pension fund with minimum corpus ofInvestment Fund set up by Government of India, insuranmanaged by the army, navy or air force of the Union offunds set up and managed by the Department of Posts, Indi

Provided that for the purpose of this Issue, alternatiregistered with SEBI and containing funds from foreign invFIIs and sub-account registered with SEBI and multdevelopment financial institutions will not be permitted to

QIB Portion The portion of the Issue being 2,248,000 Equity Shares ofa price of ` 210 per Equity Share (including a share pEquity Share) to be Allotted to QIBs including the Anchor

Reserve Bank of India Act/RBI Act

The Reserve Bank of India Act, 1934, as amended.

Refund Account The account(s) opened with Escrow Collection Bank(s), froany, of the whole or part of the Bid Amount (excluding toshall be made.

Refund Bank(s) IndusInd Bank LimitedRefunds through electronictransfer of funds

Refunds through electronic transfer of funds means reCredit, ECS/ NECS, RTGS, NEFT as applicable.

Registrar to the Issue /Registrar Registrar to the Issue, in this case being Karvy Computersh

Retail Individual Bidder(s) Individual Bidders (including HUFs applying through theBid for Equity Shares for an amount not more than

bidding options in the Issue.Retail Portion The portion of the Issue not less than 1,573,600 Equity Sh

cash at a price of ` 210 per Equity Share (including a sh


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Term DescriptionGuidelines, 1999 as amended.

SEBI Insider TradingRegulations SEBI (Prohibition of Insider Trading) Regulations, 1992 ato timeSEBI (ICDR) Regulations SEBI (Issue of Capital and Disclosure Requirements) Re

amended from time to time.SEBI Takeover Regulations Securities and Exchange Board of India (Substantial Acquis

Takeovers) Regulations, 2011, as amended from time to timSelf Certified SyndicateBank or SCSBs

The Banks which are registered with SEBI under SEBI Regulations, 1994 and offers services of ASBA, includiaccount and a list of which is available on http://www.seb

Stock Exchanges BSE Limited and National Stock Exchange of India LimitedSub Syndicate Member A SEBI Registered member of BSE and/ or NSE appointedor Syndicate Member to act as a Sub Syndicate Member in

Syndicate The BRLM, the Syndicate Members and the Sub Syndicate Syndicate Agreement The agreement dated January 15, 2013 entered into betwee

with the Syndicate Members our Company and the Serelation to the collection of Bids (excluding Bids by ASBdirectly to SCSBs) in this Issue.

Syndicate ASBA Branches Branches of SCSBs in the Syndicate ASBA Bidding Ce

accept the Bid cum Application Forms from the Syndicate Syndicate ASBA Members Those members of the Syndicate who can procure Bid Forms (in relation to ASBA).

Syndicate Members An intermediary registered with the SEBI to act as a syndicais permitted to carry on the activity as an underwriter, in thRathi Advisors Limited.

TRS / TransactionRegistration Slip

The slip or document issued by a member of the Syndicaon demand), as the case may be, to the Bidder as proof Bid.

Underwriters The BRLM and the Syndicate MembersUnderwriting Agreement The agreement dated February 8, 2013 among the Underwr

and the Selling Shareholder.Working Day All days on which banks in Mumbai are open for business

any bank holiday, provided however during the Bidding PInvestor Bidding Date, a Working Day means all daysMumbai are open for business and shall not include a S

bank holiday.

Technical/Industry Related Terms / Abbreviations

Term DescriptionClassification of Cities byour Company

Except as dis closed in the Industry chapter, our Comcities for internal use, based on the population of the cities/dof India 2011 into the following categories: Metros, Tier-I, T

Metros and Tier I Cities Internal classification of our Company for cities in this
http://www.sebi.gov.in/http://www.sebi.gov.in/http://www.sebi.gov.in/


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Term DescriptionEPS Earnings Per Share i.e., profit after tax for a Fiscal divi

average outstanding number of Equity Shares at the end of tERP Enterprise Resource PlanningESI Act Employees' State Insurance Act, 1948ESIC Employees' State Insurance CorporationEPS Unless otherwise specified, Earnings Per Share, i.e., profit

year divided by the weighted average outstanding numduring that fiscal year

ESOP Employee stock optionsFATF Financial Action Task Force

FCNR Account Foreign Currency Non Resident AccountFDI Foreign Direct InvestmentFEMA Foreign Exchange Management Act, 1999 read with rules

circulars there under and amendments theretoFEMA Regulations FEMA (Transfer or Issue of Security by a Person Resid

Regulations, 2000 and amendments theretoFII(s) Foreign Institutional Investors as defined under SEBI (

Investor) Regulations, 1995 registered with SEBI under appFinancial Year/ Fiscal/fiscal/

FY

Period of twelve months ended March 31 of that particular y

statedFIPB Foreign Investment Promotion BoardFVCI Foreign Venture Capital Investor registered under the Secu

Board of India (Foreign Venture Capital Investor) RegulatioGDP Gross Domestic ProductGIR Number General Index Registry NumberGovernment / GOI Government of India, GoI, or Central GovernmentHNI High Net worth IndividualHUF Hindu Undivided Familyi.e. that isIEC Import Export CodeIFRS International Financial Reporting StandardsIncome Tax Act / IT Act The Income Tax Act, 1961, as amended from time to timeICAI The Institute of Chartered Accountants of IndiaICSI The Institute of Company Secretaries of IndiaICWAI The Institute of Cost Accountants of IndiaIOSCOs International Organisation of Securities Commissions IT Information TechnologyIT Department Income Tax DepartmentIndian GAAP Generally Accepted Accounting Principles in IndiaIPO Initial Public OfferingJV Joint VentureMn. / mn / mn. MillionMICR Magnetic Ink Character Recognition


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Term Description NSDL National Securities Depository Limited

NSE National Stock Exchange of India LimitedOCB A company, partnership, society or other corporate bodyindirectly to the extent of up to 60% by NRIs including ovenot less than 60% of beneficial interest is irrevocably heldindirectly and which was in existence on October 3, 20

before such date was eligible to undertake transactions pu permission granted to OCBs under the FEMA. OCBs are nothis Issue, except special permission from the Reserve Bank

p.a. per annum

P/E Ratio Price/Earnings RatioPAN Permanent Account Number allotted under the Income Tax APAT Profit After TaxPBT Profit Before TaxPIO Persons of Indian OriginRBI Reserve Bank of IndiaRoC Registrar of Companies, National Capital Territory of Delhi RONW Return on Net WorthRs./ `/ Rupees /INR Indian Rupees

RTGS Real Time Gross SettlementSCRA Securities Contracts (Regulation) Act, 1956, as amended fromSCRR Securities Contracts (Regulation) Rules, 1957, as amended frSEBI The Securities and Exchange Board of India constituted undSIA Secretariat for Industrial AssistanceSME Small and Medium EnterpriseSq.Ft. Square FeetSq.Mtr. Square Meter(s)Sq.Yd. Square Yard(s)State Government The government of a state of IndiaTAN Tax Deduction Account NumberTCS Tax Collection SourceTDS Tax Deduction at SourceTIN Tax Payer Identification NumberUIN Unique Identification NumberU.S. / USA / US United States of AmericaUS GAAP Generally Accepted Accounting Principles in the United StatUSD/ US$ / US Dollars United States DollarVAT Value Added TaxVC Venture CapitalistVCFs Venture Capital Funds as defined and registered with SE

(Venture Capital Fund) Regulations, 1996, as amended fromWOS Wholly Owned SubsidiaryYoY Year on Year


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publications generally state that the information contained therein has been obtained from believed to be reliable, but their accuracy, completeness and underlying assumptions are ntheir reliability cannot be assured and accordingly, investment decisions should not information.Although we believe that industry data used in the Prospectus are reliable, tindependently verified. The extent to which the market and industry data used in the Prospecdepends on the readers familiarity with and understanding of the methodologies used in coThere are no standard data gathering methodologies in the industry in which we conductmethodologies and assumptions may vary widely among different industry sources.


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FORWARD LOOKING STATEMENTS

All statements contained in the Prospectus that are not statements of historical fact c ostatements. All statements regarding our expected financial condition and results of operatioand prospects are forward looking statements. These forward looking statements include st

business strategy, our revenue and profitability, planned projects and other matters discussedregarding matters that are not historical facts. These forward looking statements and anycontained in the Prospectus (whether made by us or any third party) are predictions and iunknown risks, uncertainties and other factors that may cause our actual results, performance

be materially different from any future results, performance or achievements expressed oforward looking statements or other projections.

These forward looking statements generally can be identified by words or phrases such as believe, expect, estimate, intend, objective, is likely to result, seek to, fumay, might, will, will continue, will pursue or other words or phrases of similarstatements that describe our strategies, objectives, plans or goals are also forward lookiforward looking statements are subject to risks, uncertainties and assumptions about us that results and property valuations to differ materially from those contemplated by the relevant sta

Actual results may differ materially from those suggested by the forward looking statemeuncertainties associated with our expectations with respect to, but not limited to, regulatory to the industries in India in which we have our businesses and our ability to respond to tsuccessfully implement our strategy, our growth and expansion, technological changes, our erisks, general economic and political conditions in India and which have an impact on our buinvestments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turrates, foreign exchange rates, equity prices or other rates or prices, the performance of the fiIndia and globally, changes in domestic laws, regulations and taxes and changes in competitio

Important factors that could cause actual results to differ materially from our expectatioothers:

Our ability to identify and respond to consumer demands and preferences; Disruption in supply of products/ raw materials; Customer spending on various occassions like; festivals, wedding, birthdays and socia Factors affecting discretionary consumer spending in India; Growth of unorganized retail sector; Increased competition from other retail players; Our supply chain management system including our logistics and transportation capab Our relationship with and other conditions affecting our customers; Changes in government policies, laws and regulations that apply to or affect our busin Changes in political and social conditions in India, the monetary and interest rate polic

other countries, inflation, deflation, anticipated turbulence in interest rates, equity pri prices;

General economic and business conditions in the markets in which we operate and in


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otherwise revise any statements reflecting circumstances arising after the date hereof or to refof underlying events, even if the underlying assumptions do not come to fruition. In accorequirements, our Company, the Selling Shareholder and Book Running Lead Manageinvestors in India are informed of material developments until the time of the grant of approvals by the Stock Exchanges.


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SECTION III

RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider alin the Prospectus, including the risks and uncertainties described below, before making an in

Equity Shares. These risks and uncertainties are not the only risks that we currently face. Adduncertainties not presently known to us or that we currently believe to be immaterial may also adverse effect on our business, results of operations and financial condition. If any of the foother risks that are not currently known or are deemed immaterial, actually occur, our busioperations and financial condition could suffer, the price of Equity Shares could decline, and yor part of your investment.

Unless otherwise stated in the relevant risk factors set forth below, we are not in a positioquantify the financial or other implications of any of the risks mentioned herein. In makindecision, prospective investors must rely on their own examination of our Company and the teincluding merits and risks involved.

The Prospectus also contains forward looking statements that involve risks and uncertainties. Oucould differ materially from those anticipated in these forward looking statements as a result ofinc luding considerations described below and in the chapter titled Forward Looking Statemenof the Prospectus.

To obtain a better understanding of our business, you should read this chapter in conjuncchapters of the Prospectus , including the chapters titled Our Business, Management

Analysis of Financial Condition and Results of Operations and Financial Information on pand 193, respectively of the Prospectus, together with all other financial information c

Prospectus. Unless otherwise stated, the financial data in this chapter is derived from our a financial statements prepared in accordance with Indian GAAP and restated in accordance(ICDR) Regulations.

The risk factors have been determined on the basis of their materiality. The following considered for determining the materiality:

1. Some risks may not be material individually but may be material when considered col2. Some risks may have an impact which is qualitative though not quantitative.3. Some risks may not be material at present but may have a material impact in the future

Internal Risk Factors

1. Our Company, I ndividual Promoters and Group E nti ty are involved in certai n l egal proceedingspotential litigations. Any adverse decision in such proceedings may render us/them liabli abil iti es/penalti es and may adversely af fect our business and r esul ts of operati ons.

Our Company, Individual Promoters and Group Entity are involved in certain legal prolitigations and claims in relation to certain civil criminal and tax matters incidental to


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EntityInvolved inthelitigation

Civil Cases CriminalCases

Tax Cases FinancialImplications (

in mn)

PL

Against ourCompanyTotal

Number ofCases

4 9 12 38.64

Promoter and/or DirectorsLitigation byPromotersand/orDirectors

Nil Nil 1 0.03

LitigationagainstPromotersand/orDirectors

Nil 6* Nil Amountincluded in

criminallitigation against

the CompanyTotal

Number ofCases

Nil 6* 1 0.03

Our Group EntityLitigations

by ourGroupEntity

Nil Nil Nil Nil

Litigationsagainst ourGroupEntity

Nil Nil Nil Nil

Totalnumber ofcases

Nil Nil Nil Nil

* Our Individual Promoters are parties to the criminal litigation against our Company.

For further details of outstanding litigation against our Company, our Promoters and our Dthe chapter titled Outstanding Litigations and Other Material Developments on page

2. Our inabili ty to promptly identify and respond to changing customer preferences or evolving trmay decrease the demand f or our merchandi se among our customers, which may adversely af fect ourbusiness.

We offer a wide variety of products such as apparels, non apparels, home decor, accessorieand FMCG to our customers. Our success depends upon our ability to forecast, anticipate


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not have access to additional discounts and special schemes offered by such distributors anmay make our products/pricing relatively unattractive. If the existing vendors, temporarily ounable to supply the required products as per our requirements or at all, we may face a tempoon our business.

4. Our Company being in the retail sector requir es signi fi cant amount of work ing capital f or a continugrowth. Our inabili ty to meet our worki ng capital requir ements may have an adverse eff ect on oresul ts of operations.

Our business requires significant amount of working capital. Major portion of our workingtowards inventory. Our net working capital (excluding working capital loans) as on March were ` 499.59 million and ` 540.52 million respectively. Our total current assets as on Marcwere ` 774.32 million and ` 917.34 million respectively, which comprised of inventory aand 2012 of ` 711.06 million and ` 869.42 million respectively which was 91.83% ancurrent assets as on March 31, 2011 and 2012 respectively. We have been sanctioned fucapital limits of ` 425.00 million from the existing bankers. The retail industry is working has lot of fixed expenditures for operation of stores and maintainence of inventory levels. Wegrowing by setting up additional stores. All these factors may result in increase in the quantumOur inability to maintain sufficient cash flow, credit facility and other sources of fund, in a tiall, to meet the requirement of working capital or pay out debts, could adversely affect our and result of our operations. For further details regarding working capital requirement, chap ter titled Objects of the Issue on page 73 of the Prospectus.

5. Losses on account of Shr in kage may have a negative impact on our prof itabil ity.

The retail industry is vulnerable to the problem of Shrinkage. Shrinkage at our stores andcentres may occur through a combination of shoplifting by customer, pilferage by eobsolescence, expiry and error in documents and transaction that go un-noticed and later

physical verification of stock with book stock. An increase in Shrinkage levels at our existinor our distribution centres may force us to hire additional supply chain management persosecurity staff or install additional security and surveillance equipments, which will increase ouand may have an adverse impact on our profitability.

6. There are certain modifications in the auditors report and report under Compani eOrder, 2003 (as amended) of our Company f or F iscals 2008, 2009, 2010, 2011 and 2012 require any corr ective adju stment in our fi nancial statements.

There are certain modifications in the auditors report and report under Companies Auditors (as amended) of our Company for Fiscals 2008, 2009, 2010, 2011 and 2012 which do not req

adjustment in our financial statements. For further details please refer to the point number 10 Annexure V - Statement of Notes to Restated Summary Statements of the Company Financial Information on page 209 of the Prospectus.

7. The objects of the I ssue are based on the internal estimates of our management, and have not beenapprai sed by any bank or f inanci al i nstitution. The deployment of funds in the project is entir ely at oudiscretionandasperthedetail smentionedinthechapter titled Objects of the Is


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8. We have not yet executed the requir ed def in iti ve agreements or arr angements as regards our proposednew stores to be opened by uti li sin g the Net Pr oceeds of the Fresh I ssue.

We intend to open 60 new stores and additional space of distribution centres over the next thutilising the Net Proceeds of the Issue. We have entered into ten memorandums of understanof intent in relation to the stores to be opened in Fiscal 2013 and Fiscal 2014. Further, the advance level of negotiations with respect to other locations for opening the stores. Howeve

placed orders for all the equipment and furniture that we may require. Though we believmonths for planning a store and making it operational, in case our expansion plans arenvisaged, it may have a material adverse affect on our Companys operations and financial we might face difficulties in finding suitable locations for establishing our new stores and if wlocations, there can be no assurance that such locations will be available on commercially acc

9. The Company wil l not receive any proceeds fr om the Off er f or Sale.

This Issue includes an Offer for Sale of Equity Shares by the Selling Shareholder. The entire Offer for Sale will be transferred to the Selling Shareholder and the Company will no

proceeds. For further details, see the chapter titled Objects of the Issue on page 73 of t

10. Our growth str ategy to expand in to new geographi c areas exposes us to certain ri sks

As a part of our strategy, our Company has it current presence in 10 states and intends to expsuch as West Bengal, Assam, Jharkhand and Uttarakhand in Tier-II and Tier-III cities and Pursuant to such a growth strategy, we may be exposed to risks, which may arise due to lackunderstanding of the economic conditions, demography, trends and culture of such areas. If manage the risk of such expansion it could have a material adverse affect on our operations.

11. Our agreements with various banks for fi nancial arr angements contain r estri ctive covenantcertai n activi ties and if we are unabl e to get their approval, i t mi ght r estri ct our scope of activiti es and

impede our gr owth plans.

The financing arrangements with our lenders, we have obtained the prior consent from olenders, namely State Bank of India, Andhra Bank and ICICI Bank Limited, for the Issue.include restrictive covenants, such as obtaining prior consents of the lenders for raising publithe Issue, which impose certain restrictions on our Company. We cannot assure you that wcomply with these financial or other covenants. Any failure to comply with these reqconditions or covenants under our financing agreements that is not waived by our lenders rectified by us, may require us to repay the borrowing in whole or part and may include othe

Company may be forced to sell some or all of its assets or limit our operations. Further, the the extant banking policies or increase the interest rates/levy penal interest for non-complimay adversely affect our ability to conduct our business and impair our future growth information, see the chapter titled Financial Indebtedness on page 239 of the Prospectu

12. Our Company has availed unsecur ed loans, which can be recalled anytime by their respective lenders.


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trademarks we may have a lesser recourse to initiate legal proceedings to protect our private applications for the registration of certain trademarks may be opposed by third parties, and wesignificant cost in relation to these oppositions. In the event we are not able to obtain ropposition by third parties or if any injunctive or other adverse order is issued against us in retrademarks for which we have applied for registration, we may not be able to avail the

prevent unauthorised use of such trademarks by third parties, which may adversely affec business.

For further details on the trademarks, registered or pending registration, please refer toGovernment and Other Statutory Approvals on page 283 of the Prospectus.

14. Our Company had negative cash f lows from operati ng, fi nancing and investing activities in ceryears

As per our restated financial statements, our cash flows from operating, financing and invesnegative in certain fiscals as mentioned below:

Particulars Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011 Fiscal 2012

Net cashfrom / (usedin) operatingactivities

(37.59) (130.47) 99.35 45.16 168

Net cashfrom / (usedin) investingactivities

(32.55) (151.94) (61.82) (100.08) (137

Net cashfrom / (usedin) financingactivities

88.71 276.64 (41.08) 56.12 (34.

Net increasein cash andcashequivalents

18.57 (5.77) (3.55) 1.20 (3.

Any negative cash flow in future could affect adversely affect our operations and financial trading price of our Equity Shares. For further details, please refer to the chapter titledon page 193 of the Prospectus.

15. We have contingent l iabi li ti es in our balance sheet, as restated, at M arch 31, 2012 and November 30,2012. Fur ther, our Company may be subj ect to certain penal ty proceedings in respect of ongoing taxli tigati ons and our Company has not presentl y provided for such penal ties whi ch may be imposed. any of these actuall y occur , they may adversely impact our profi tabil ity and may have a materi


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Particulars March 31, 2012 Total 18.10

The contingent liabilities of our Company arise as our Company is party to certain tax litigativarious tribunals and our Company may also be subject to imposition of penalty by the Incomin relation to such litigations. Our Company has not made provision for such penalties as macontingent liabilities as the amount of penalty which may be imposed is not quantifiable.

16. Our in abil ity to manage our gr owth could disrupt our business and have an adverse ef fect on ouprofitability.

We have experienced reasonable growth in recent periods. Our sales have increased at a CAGFiscal 2010 to Fiscal 2012. Our growth strategies are subject to and involve risks and diwhich are beyond our control and, accordingly, there can be no assurance that we will be ablstrategy or growth plans, or complete them within the budgeted cost and timelines. Fsignificant demands on our management and other resources. Further, on account of conditions, industry dynamics, changes in regulatory policies or any other relevant factors, oand plans may undergo substantial changes and may even include limiting or foregoing growthe situation so demands.

An increase in the number of stores will also increase our fixed operating costs, and there cathat we will able to offset the increased cost with the incremental revenue. Any inability on our growth or implement our strategies effectively could have a material adverse effect on ouof operations and financial condition.

17. Our expansion plans are subj ect to the ri sk of cost and ti me overru ns, which could have an adverseimpact on our Companys results of operations and financial condition.

Our plan for setting up additional stores as referred to in the chapter titled Objects of the Prospectus, contains project costs and implementation schedules. We intend to utilise ththe Issue to set up 60 new stores, additional space of distribution centres and working capitalexpansion plans are subject to a number of contingencies, including changes in lawgovernment action, delays in obtaining approvals, delays in getting requisite locations for ourobtain the necessary equipment and other supplies at quoted or at acceptable terms, accidentsand other factors, many of which may be beyond our control. We, therefore, cannot assureincurred or time taken for implementation of these plans will not vary from our estimated para

18. Our inabili ty or f ail ur e to main tain a balance between optimum inventory l evels and our pr ooff erin g at our stores may adversely affect our busin ess, resul ts of operati ons and fi nanci al condi tion

We strive to keep optimum inventory at our stores and our distribution centres to control our capital requirements through our dynamic supply chain management. To maintain an optmonitor our inventory levels based on our projections of demand as well as on a real-time baof products, which are in high demand, may depress sales volumes and adversely arelationships. Conversely, an inaccurate forecast can also result in unavailability and/or

d hi h i i l i h fl d h li f i


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20. Any di sruptions in our distributi on and tr ansport network may adversely af fect our operabusiness and f inanci al conditi on.

Our distribution and logistics network is focussed around our four distribution centers, of New Delhi and one in Ahmedabad, Gujarat. Our distribution centres act as storage facilities fof our merchandise to all our stores. Any material disruption at these distribution centres due reason may damage our products stored at such distribution centres and adversely affect ologistics operations temporarily.

Further, we use our own trucks for the delivery of our products to our stores. Further, we alsotransport service providers to deliver our products to our stores. However, we have nodefinitive agreements with any third party transport service providers and engage themThough, in the past, our business has not experienced any disruptions, any such disruptionand transport operations may have an adverse affect on the supplies from our suppliers and ddistribution centres to our stores.

21. Our Com panys business relies on the reliable performance of its information technoloany in terrupti on or abnor mali ty in the same may have an adverse impact on our busin ess operationsand profitability.

Our Company has Enterprise Resource Planning (ERP ) software which integrate purchase, sales, reporting, accounting, stocks, etc. from all the 62 stores in more than distribution centres. Our Company utilises its information technology systems to monito

businesses and relies to a significant extent on such systems for the efficient operation of its bthe monitoring of inventory levels, the allocation of products to our stores and budget plannininformation technology systems may not always operate without interruption and may enabnormality or become obsolete, which may affect its ability to maintain connectivity wdistribution centres. We cannot assure that we will be successful in developing, instamigrating to new software systems or systems as required for its overall operations. Even

successful in this regard, significant capital expenditures may be required, and it may not be athe investment immediately. All of these may have a material adverse impact on our Compan

profitability.

Also, our Company cannot guarantee that the level of security it presently maintains is asystems can withstand intrusions from or prevent improper usage by third parties. Our Cocontinue its operations without interruption due to any of these reasons may adversely afferesults of operations.

22. Quali ty concern s and negative publi city if any, either in relation to us or th ir d parties, would adverselaff ect the value of our br and, and our sales.

Our business is dependent on the trust that our customers have in our brand and products. Wegoods from third parties. In the event that goods procured by us from external vendmanufacturers and sold to our customers suffer in quality or after sales service provideddirectly to the customers is unsatisfactory our brand image and sales could be negatively imp


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24. Our Company depends on the knowledge and exper ience of ou r I ndividual Pr omoters and other KM anagement Personnel f or ou r gr owth. The loss of th eir servi ces may have a mater ial adverse effecton our business, f inanci al conditi on and r esul ts of operati ons.

Our Company depends on the management skills and guidance of our Individual Promoters business strategies, monitoring its successful implementation and meeting future chaManagement Personnel complement the vision of our Individual Promoters and performconducting our day-to-day operations and execution of our strategies. In the event we are unretain managerial personnel or our Key Management Personnel join our competitors ocompanies, our ability to conduct efficient business operations may be impaired. The loss of t

personnel or our Individual Promoters and our inability to hire and retain additional qualifhave an adverse effect on our business, financial condition and results of operations.

25. Revenue generated from the apparel vert ical consti tutes majori ty of our revenue fr om operations. Asudden fal l i n the revenues f rom the apparel segment may adversely af fect our f in ancial condi tion andprofitability.

Revenue generated from the sale of our apparel vertical constitutes 63.58% and 68.48% during eight months period ended November 30, 2012 respectively, of the total revenue fromCompany. Any changes in customer preferences, increased competition, fashion trends orcould decrease our revenue and profitability from this vertical and may result in an adv

financial condition of our Company.

26. The success of our business depends on our abil ity to attract and r etain customers and maintai nconsistency in customer service.

Our Companys ability to offer contemporary products to our customers and maintain our staservice in our stores is critical to attract and retain customers. We undertake regular advertisactivities to create visibility, stimulate demand and promote our stores, through various communication. Our ability to attract customers and provide high standards of customer servi

on our ability to attract and hire the right personnel and also train the personnel in the imp business processes. We cannot assure you that we will be able to recruit and retain the righadvertising and marketing campaign will be successful in meeting its objectives ancommensurate to the investments made. Any failure to attract new customers or expand our cmaterially affect our growth and financial performance.

27. Any inabili ty or f ail ur e on our part to control our attri tion r ate or recrui t fr esh talent may have aadverse eff ect on our operations and business.

Typically, the retail industry suffers from high attrition rate especially at the store level. Orepresentatives and other employees play a key role in managing our customer expectations. will be added pressure on us as new entrants in the retail industry look for trained manpoweAny inability or failure on our part to retain our employees at same cost or recruit fresh talaffect the conduct of operations and business.

28 O rb sinessi soperati ng nder ar io sla s hichreq i re stoobtainappro alsfr omtheconcerned


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29. Conf li cts of i nterest may ari se out of common business objects shar ed by our Company and our GroupEntity.

Madan Agarwal, our Individual Promoter is a partner in the partnership firm Shreemaour Group Entity. Although currently we do not face any direct competition from Shreeman Ssmall scale of business activities in the unorganised retail sector, any major expansion in theof Shreeman Shreemati may create a conflict with our Company. Currently the Compcompete agreement with Shreeman Shreemati . Such a conflict of interest may have an

business and growth.

For further details on the business and financial performance of Shreeman Shreemati, please titled " Group Entity " on page 190 of the Prospectus.

30. Our P romoters and members of the Promoter Gr oup wil l conti nue jointl y to retain maj ori ty conover our Company af ter the I ssue, which wi ll all ow them to determine the outcome of mattsubmi tted to shar eholders for approval.

Post this Issue, our Promoters and Promoter Group will collectively own 58.83% of the equita result, our Promoters, together with the members of the Promoter Group, will be able to exdegree of influence over us and will be able to control the outcome of any proposal that can

majority shareholder vote, including, the election of members to our Board, in accordance wAct and our Articles of Association. Such a concentration of ownership may also have the

preventing or deterring a change in control of our Company.

In addition, our Promoters will continue to have the ability to cause us to take actions thatconflict with, our interests or the interests of some or all of our creditors or other shareholdassure you that such actions will not have an adverse effect on our future financial performaour Equity Shares.

31. The market price of our Companys Equity Shares may be adversely affected by addiequity or equity l inked securi ties by our Company or by sale of a l arge number of our Equi ty Sharesby signi fi cant shareholders of our Company.

Our Company may finance its growth plans through additional equity offerings. Any future isequity-linked securities by our Company may dilute the shareholding of investors in its Equitadversely affect the market price of its Equity Shares.

The Board and shareholders have approved an employee stock option scheme titled

2012 , in compliance with the SEBI ESOP Guidelines under which our Company mayemployee stock options. If the options are exercised and converted into Equity Shares, it wdilution of the existing shareholders. For further details, please refer chapter titled CapCapital Structure- Employee Stock Option Scheme beginning on page 55. Although theIssue shareholders is subject to lock-in as per applicable SEBI (ICDR) Regulations, sale oEquity Shares by any significant shareholder of our Company after the expiry of the loadversely affect the market price of the Equity Shares In addition any perception by


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33. I n the past, we have not been i n compl iance with th e requi rements of section 383(A) of the CompaniesAct with regard to the delay in appointment of a whole-time company secretary. Such ncompli ances may resul t in to penal ties or other action on our Company by the statutor y author it ies.

The paid up capital of our Company exceeded ` 20.00 million on February 15, 2008 pCompany was required to appoint a whole-time company secretary, as required under secCompanies Act. Although we had issued advertisements in a newspaper inviting candidates the company secretary of our Company, we appointed a whole-time company secretaryDecember 18, 2008. As a result, our Company was in violation of section 383(A) of thregarding the appointment of a whole-time company secretary for the said period. Our Comto imposition of penalty by the RoC for failure to comply with section 383(A) of the Compan

period.

34. We may in the fu tur e face potenti al l iabil iti es from l awsui ts or clai ms from thi rd parti es, shoul d thperceive any def ici ency in our products.

Our Company believes in providing quality products and due care is taken to mitigate the assomay happen due to factors beyond our control. We may face the risk of legal proceedings

brought against us by our customers amongst others on account of sale of any defective prodadulterated food items. Further, we could also face liabilities should our customers face any l

to any unforeseen incident such as fire, accident, etc. in our stores, which could cause damage to our customers. This may result in lawsuits and / or claims against our Commaterially and adversely affect the results of our operations and may also result in loreputation. For further details, please refer to the heading Potential LitigationOutstanding Litigations, Material Developments and Other Disclosures on page 280 o

35. We operate our registered off ice, stores and distr ibu ti on centres fr om premi ses that ar e taken by us ona leasehold basis. Our in abil ity to renew the lease agreements or any adverse impact on th e titl e orownership r igh ts of our landlor ds in relati on to such pr emises, may impede our eff ective operati ons.

Our Company operates the registered office, stores and distribution centres on a leaseholagreements generally being long term in nature are renewable on mutually acceptable terms of such rent escalations as stated in lease agreements. If the lease agreements are not renewedterms and conditions that are unfavorable to us or we are unable to find alternate premiseacceptable terms, we may suffer a disruption in our operations which could have a material ad

business and operations. Further, any adverse impact on the title or ownership rights of the laus to vacate such premises and we would be required to make alternative arrangements, wadverse affect on the costs of operation and profitability of our Company.

36. The BRL M has conducted the due dil igence as per the prevaili ng SEBI (I CDR) Regulations andin ternal gu ideli nes, though i t has not conducted an extensive veri fi cation of our maj or assets ain ternal controls.

The BRLM has conducted the due diligence as per the prevailing SEBI (ICDR) Regulatioguidelines and have issued a Due Diligence certificate dated July 23 2012 During the cour


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The management has conducted physical verification of inventory at reasonable intervals dur

The procedure for physical verification of inventory followed by the management are reasonin relation to the size of the company and nature of its business.

The Company is mainta ining proper records of inventory and material discrepancies verification have been properly dealt with in the books of accounts

In our opinion, there is an adequate internal control system commensurate with the size of thnature of its business for the purchase of inventory and fixed assets and for the sale of goods a

The Book Running Lead Manager has relied on the aforesaid processes and third parties inmajor assets of our Company and they have themselves not conducted an audit / extensive

physical assets with the fixed asset register. Further the BRLM has not carried out an indepeassets of our Company.

37. The BRL M has conducted the due dil igence as per the prevaili ng SEBI (I CDR) Regulations andin ternal guidelines, though the BRL M has not in dependentl y veri fi ed the debtors and creditor s.

The BRLM has conducted the due diligence as per the prevailing SEBI (ICDR) Regulatio

guidelines and have issued a due diligence certificate dated July 23, 2012.

Our Company operates is in the retail industry, wherein majority sales are to retail customers The debtors as on March 31, 2012 are ` 0.56 million and represent approximately 0.02% odebtors pertain to sales to corporate customers. The BRLM have discussed with the Statutconfirm that they have carried out an audit in accordance with the auditing standards generalland they dont have any specific reservations in this regard. Further they have also verifiedrealisations after March 31, 2012 from these debtors.

Our Company procures products on credit from its suppliers. Our Companys m ajority ogoods) offer a credit period ranging from 0 to 90 days. As on March 31, 2012 approxicreditors are 0-30 days old and more than 25% of creditors pertain to 30 60 days and tare more than 60 days.

The Book Running Lead Manager has not independently verified our debtors and creditors with the Statutory Auditor. The Statutory Auditors state that they have carried out an audit the auditing standa rds generally accepted in India and they dont have any specific reservFurther they have also verified the ledgers subsequent to March 31, 2012 for payments to th

invoices on sampling basis. Further the creditors are not related to the Promoters.

As a part of its due diligence, BRLM has met certain suppliers of products / apparels to under process and supply terms with the Company

38. Our inabili ty to procure and/or main tain adequate in surance cover in connection wi th our busind l f f t ti d fi t bili t


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For more details on the insurance policies availed by us, please refer to the chapter tit Insurance on page 147 of the Prospectus.

39. Whi le our Company declar ed dividends in the last two f iscal years we cannot assur e you that ouCompany wi ll make dividend payments in the futu re.

While our Company declared dividends for the financial year ended Fiscal 2011 and Fiscal 2may not be able to declare dividends in the future. Such payments will depend upon a including our Companys results of operations, future earnings, capital requiremefinancial conditions, contractual restrictions, applicable Indian legal restrictions and other relevant by our Board.

40. We have issued Equi ty Shares dur in g the last one year at a pri ce that may be below th e I ssue Pr ice.

In the last one year, we have made an issue of 1,250,000 Equity Shares at an issue price ofShare (including a premium of ` 200 per Equity Share) aggregating to ` 262.50 miEquity Shares may be at a price lower than the Issue Price. The price at which the Equityissued in the last 12 months is not indicative of the price which may be offered in this Issue.

please refer to the chapter titled Capital Structure on page 52 of the Prospectus.

External Risk Factors

41. Signif icant di ff erences exi st between I ndian GAA P and other accounti ng pri nciples, such aGAAP and IFRS, which may be material to investors assessment of our Compacondition.

As stated in the reports of our Company's independent auditors included in the Prospstatements are prepared and presented in conformity with Indian GAAP, consistently applied stated, except as provided in such reports, and no attempt has been made to reconcile any given in the Prospectus to any other principles or to base it on any other standards such as US

42. We have not prepared, and curr ently do not in tend to prepare, our fi nanci al statements in accordancewith the International Financial Reporting Standards (IFRS) of the International Standards Board. Our transiti on to I F RS reporting could have a materi al adverse eff ect on oreported resul ts of operati ons or fi nancial condition.

Public companies in India, including us, may be required to prepare annual and interim funder IFRS in accordance with the roadmap for convergence with IFRS announced by the MiAffairs, Governme nt of India through a press note dated January 22, 2010 (the IFRS Conve

Ministry of Corporate Affairs by a press release dated February 25, 2011 has notified that 35 Standards are to be converged with IFRS. The date of implementation of such convergedstandards has not yet been determined. Our financial condition, results of operations, cash fshareholders equity may appear materially different under IFRS than under Indian GAAPconverged Indian Accounting Standards may adversely affect our reported results of opercondition. This may have a material adverse effect on the amount of income recognised duri th di ( t t d) i d i th ti Fi l/ i d


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44. Our business and activities will be regulated by the Competition Act, 2002 (the Competiany appli cation of the Competi tion Act to us coul d have a materi al adverse eff ect on our business

fi nancial condition and r esult s of operati ons.

The object of the Competition Act is to prevent business activities that have an appreciablecompetition in India. Under the Competition Act, any arrangement, understanding or action enterprises, whether formal or informal, which causes or is likely to cause an appreciablecompetition in India is void and attracts substantial monetary penalties. Any agreementindirectly determines purchase or sale prices, limits or controls production, shares the geographical area, market or number of customers in the market is presumed to have an aeffect on competition. If we are affected, directly or indirectly, by any provision of the Com

application or interpretation, including any enforcement proceedings initiated by the Compeof India and any adverse publicity that may be generated due to scrutiny or prosecution bCommission of India, it may have a material adverse effect on our business, financial condioperations.

45. Terror ist attacks, civil unr ests and other acts of viol ence or war involving I ndia or other countrcould adversely af fect the financial markets, our business, fi nancial condition and the pri ce of oEquity Shares.

Any major hostilities involving India or other acts of violence, including civil unrest or sim beyond our control, could have a material adverse effect on Indias economy and our businesthe Mumbai terrorist attacks, other incidents such as those in Indonesia, Madrid and Londonviolence may adversely affect the Indian stock markets where our Equity Shares will tradeequity markets generally. Such acts could negatively impact business sentiment as wellcountrie s, which could adversely affect our Companys business and profitability.

Also, India, or other countries may enter into armed conflict or war with other countries or hostilities. South Asia has, from time to time, experienced instances of civil unrest and

neighbouring countries. Military activity or terrorist attacks could adversely affect the Indiaexample, disrupting communications and making travel more difficult. Such events co perception that investments in Indian companies involve a higher degree of risk. This, in tuaffect client confidence in India, which could have an adverse impact on the economies countries, on the markets for our products and services and on our business. Additionally, have a material adverse effect on the market for securities of Indian companies, including the

46. The retail sector is subj ect to extensive foreign exchange regul ations. .

The retail sector in India is regulated by the GoI, state governments and local authorities. Fmade by non-residents into India are governed by the Foreign Exchange Management Act, and regulations thereunder and the consolidated foreign direct investment policy issued by Industrial Policy and Promotion ("FDI Policy") and various notifications, circulars and presto recent notifications issued by the Department of Industrial Policy and Promotion, MinistryIndustry, GoI, foreign direct investment (FDI) has now been permitted in the Indian multiindustry up to a maximum of 51% with prior Governmental approval and subject to the sat


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Our business, and the market price and liquidity of our Equity Shares, may be affected by intein Government policy, taxation, social and civil unrest and other political, economic or other affecting India. Elimination or substantial change of policies or the introduction of policies ththe Companys business could cause its results of operations to suffer. Any significanteconomic liberalisation and deregulation policies could disrupt business and economic cgenerally and the Companys business in particular.

49. Global economic, poli tical and social conditi ons may harm our abili ty to do business, in crease ocosts and negatively aff ect our stock pr ice.

Global economic and political factors that are beyond our control, influence forecasts performance. These factors include interest rates, rates of economic growth, fiscal and m

governments, inflation, deflation, foreign exchange fluctuations, consumer credit availabilcommodities markets, consumer debt levels, unemployment trends and other matters that iconfidence, spending and tourism. Increasing volatility in financial markets may cause thesewith a greater degree of frequency and magnitude, which may negatively affect our stock pric

50. The price of our E quity Shares may be highly volatil e, or an active tradin g market for our EquiShares may not develop.

After this Issue, the price of our Equity Shares may be highly volatile, or an active trading ma

Shares may not develop. The prices of our Equity Shares on the Stock Exchanges may flucseveral factors, including:

Volatility in the Indian and global securities market; Our results of operations and performance; Performance of the Indian economy; Changes in government policies; Changes in the estimates of our performance or recommendations by financial analyst Performance of our Companys competitors in the retail in dustry and market perc

the retail industry; Adverse media reports on our Company or the Indian retail industry; Significant developments in Indias economic liberalization and deregulation policies Significant developments in I ndias fiscal and environmental regulations.

51. The I ssue price of our E qui ty Shares may not be in dicati ve of the mark et pri ce of our Equity Sharesafter the I ssue and the market pri ce of ou r E qui ty Shares may decli ne below the issue pri ce and youmay not be able to sell your Equity Shar es at or above the I ssue Pri ce.

The Issue Price of our Equity Shares will be determined on the basis of the Book Building Pwill be based on numerous factors (For further information, please refer chapter t itled

beginning on page 83 of the Prospectus) and may not be indicative of the market price of our the Issue. The market price of our Equity Shares could be subject to significant fluctuations may decline below the Issue Price. We cannot assure you that you will be able to sell your Eabove the Issue Price. Among the factors that could affect our share price are:


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Basis of Allotment is approved by the Designated Stock Exchange. Thereafter, trading in thecommence only upon receipt of trading approval from the Stock Exchanges. We cannot aEquity Shares will be credited to investors demat accounts, or that trading in the Equity Sha

within the time periods specified by SEBI. Any delay in obtaining the approvals would resdispose of your Equity Shares.

53. Financial instability in Indian financial markets could adversely affect our Companyoperati ons and fi nancial conditi on.

The Indian economy and financial markets are significantly influenced by worldwide economarket conditions. Any financial turmoil, especially in the United States of America, Eurhave a negative impact on the Indian economy. Although economic conditions differ in each

reactions to any significant developments in one country can have adverse effects on the ficonditions in other countries. A loss in investor confidence in the financial systems, pemerging markets, may cause increased volatility in Indian financial markets. The curreturmoil, an outcome of the sub-prime mortgage crisis which originated in the United States oto a loss of investor confidence in worldwide financial markets. Indian financial markets havthe contagion effect of the global financial turmoil, evident from the sharp decline i

benchmark index. Any prolonged financial crisis may have an adverse impact on the Indianresulting in a material and adverse effect on our Company's business, operations, f

profitability and price of its Shares. Stock exchanges in India have in the past expe

fluctuations in the prices of listed securities.

54. The extent and reliabil ity of I ndian in fr astru cture could adversely af fect our Company's resuloperati ons and fi nancial conditi on.

India's physical infrastructure is less developed than that of many developed nations. disruption in its port, rail and road networks, electricity grid, communication systems or any ocould disrupt our Company's normal business activity. Any deterioration of India's physical inharm the national economy, disrupt the transportation of goods and supplies, and add costs to

India. These problems could interrupt our Company's business operations, which could havon its results of operations and financial condition.

55. Any downgrading of I ndia' s sovereign r ating by a domestic or in ternational r ating agency cadversely aff ect ou r Company's busin ess.

Any adverse revisions to India's sovereign ratings for domestic and international debinternational rating agencies may adversely affect our Company's ability to raise additional interest rates and other commercial terms at which such additional financing is available. Th

Company's business and financial performance, ability to obtain financing for capital expendiof our Company's Equity Shares.

Prominent Notes:

1. We have issued Equity Shares within the last twelve months from the date of the Prwhich may be lower than the Issue Price Please see the c hapter titled Capital S


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per the audited financial statements of the Company for the period ended Novembefor the Pre-IPO Placement of 1,250,000 equity shares of ` 10 each aggregatiamounts to ` 939.72 million and ` 61.83 respectively. For more information, please

Financial Information on page 193 of the Prospectus.

4. The average cost of acquisition of per Equity Shares by our Promoters, which has taking the average amount paid by them to acquire our Equity Shares, is as follows:

Name of the Promoter Average cost of acquisition per Equi

Lalit Agarwal 1.66Hemant Agarwal 1.23Madan Agarwal 0.62Lalit M. Agarwal (HUF) 1.85Hemant Agarwal (HUF) 0.56Madan Gopal Agarwal (HUF) 0.57

5. For details of related party transactions entered into by our Company, please seStatement of Related Party Transactions and Balances, as Restated appearing chapter titled Financial Information on page 229 of the Prospectus.

6. Except as disclosed in chapters titled Capital Structure , Our Promoters & Prom Management beginning on pages 52, 185 and 165 respectively, of the ProPromoters, Directors or Key Management Personnel have any interest in our Company

7. Except as disclosed in the chapter titled Capital Structure on page 52 of the issued any Equity Shares for consideration other than cash.

8. The Issue is being made under Regulation 26(1) of the SEBI ICDR Regulations throuProcess wherein 50% of the Issue to the Public shall be available for allocation on a to QIBs, out of which 5% (excluding the Anchor Investor Portion) shall be available

proportionate basis to Mutual Funds only, and the remaining QIB portion shall be avaon a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids babove Issue Price. Upto 30% of the QIB Portion has been allocated to Anchor InveInvestor Issue Price on a discretionary basis and one-third of the Anchor Investor Poto domestic Mutual Funds. Under-subscription, if any, in the Mutual Funds portion wover from the QIB portion and be allotted proportionately to the QIB Bidders. Furtheof the Issue to the Public shall be available for allocation on a proportionate basis tBidders and not less than 35% of the Issue to the Public shall be available for

Individual Bidders as per the mechanism provided under the heading Basis of A For Retail Individual Bidders on page 353 of the Prospectus subject to valid Bidabove the Issue Price.

9. Investors may note that in case of over-subscription in the Issue, allotment to QuInvestors, Non- Institutional Bidders and Retail Bidders shall be on a proportiona


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14. There are no financing arrangements whereby the Promoter Group, the Directors ofare the Promoters of our Company, the Independent Directors of our Company and

financed the purchase by any other person of securities of our Company during the pimmediately preceding the date of filing of the Draft Red Herring Prospectus.

15. Except as sta ted in the chapter titled Group Entity on page 190 of the Prospectuno business interest or other interest in our Company.

16. Our Company has not changed its name in the last three years immediately precedinDraft Red Herring Prospectus with the Board. For further details of changes inCompany, please see the chapter titled History and Other Corporate Matters

Prospectus.


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SECTION IV

INTRODUCTION

SUMMARY OF THE INDUSTRY

The I ndian Economy

Bri ef on growth of the I ndian Economy

The Indian economy has been one of the fastest growing economies in the world, backed b

fundamentals that have helped maintain a high growth trajectory with GDP growth averaginlast five years i.e. FY07-FY11. In recent times however, the economy has been adversely affeover effects of global economic slowdown coupled with domestic pressures. During FY12, thregistered growth of 6.5% as against 8.4% during FY11. The Government of India has projecthe range of 5.7% - 5.9% in FY13, given that growth in the first half of this fiscal has touched

CARE Economics Division expects GDP growth for FY13 to settle at 5.6%, on accounimprovement in industrial production, particularly from the manufacturing sector. A completeeconomy is expected to be rather gradual. India being a growing economy has in genera

industrial activity, however, the years of recession and more recently FY12 and FY13 so considerable moderation herein. The high-interest rate regime has also been responsiblinvestments thereby affecting supply-side dynamics. Specifically, growth in manufacturin(April-October 2012) has dipped to 1.0%, far below the long-term average of 7.5% in the lexpected that as growth promoting monetary strategies come into effect an uptick in this sectowith the investment cycle being reversed. Production would very crucially, be backed bydemand as well. In India, this relationship between demand for consumer goods against a bspending power is a crucial driving force for broad-based economic growth.

Overall growth in the Indian economy would not just be strongly supported by higher prodalso rising incomes, which has and continues to widen the base of consumption demand capita Net National Income (Per capita NNI) (at current prices) has been growing at a CoGrowth Rate (CAGR) of 14% for the period FY08-FY12 with the Economic Survey reestimating the Per capita NNI during FY12 at Rs 60,972 thus indicating high growth potentmarket, a positive on the demand-side. Furthermore, with a targeted growth rate of 16% for cin the country, combined with an optimistic view of reversal in interest rates, one may disbursement to pick up.

A potential threat however, in this regard, particularly expected to impact the retail segment, High inflation evidently, reduces consumption demand as buying capacity of existing diminishes. The last year, FY12, witnessed an elevated and accelerating price situation in thwith volatility in consumer durables production that capped the retail market. The trend has as well, although the stance of monetary tightening has successfully brought down core (mainflation. There has been a double-edged impact of crowding out of private savings

i i i i d h h h d M i i l


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Though some amount of the shift is happening to Tier I cities, there is significant increase in II and Tier III cities as some of the businesses are shifting to these cities due to rising real escities. With rising prosperity in Tier II and III cities, spending power too has gone up and itarget market for the next retail revolution. This transition from rural to urban areas has led todemand for goods (owing to higher income and ever-expanding needs). The retailers, especiasegment are therefore targeting the middle class populace by ensuring the availability ofvarious price ranges to match the nee ds of a common man. With limited availability of sreal estate prices, Tier I cities are fast getting saturated with organised retail. With rising per c

huge footfall from neighbouring smaller towns and villages, Tier II and Tier III cities is proposition for organised retail to expand its footprint in India.

The primary reason for the higher share of unorganised retail in India emanates from the comprises a major share of the total retail sales. Of this value, the share of organised retail iconsidering the low penetration of modern retail formats in the rural areas. Of the 45comprising the total retail sales as in 2011, a significant proportion of the retail revenue iunorganised retailers such as Kirana stores, fruit & vegetable vendors, hawker and ocomposition of unorganised retail in the total is comparatively higher in Tier II and III cities.of transportation, semi-urban areas are attracting a large number of footfalls from villagers wincome and improved consumption basket diversified into apparel, footwear, jewellery, enteII and Tier III cities are a big opportunity in themselves with more than 80 cities occupiedmillion population in total.

To catch on the growth bandwagon in tier- II & III cities various retailers such as PantalooTrent etc have ventured into the said locations adopting store formats and store size as

Rural - urban population divide (%)

Source: Census Data


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SUMMARY OF OUR BUSINESS

The following information should be read together with the more detailed financial and o

included in the Prospectus, including the information contained in the chapter titlchapter titled Managements Discussion and Analysis of Financial Condition and Results ofFinancial Statements on pages 15, 245 and 193 of the Prospectus, respectively.

Overview

We are one of the pioneers in setting up stores across various small Indian towns and cities inUjjain, Motihari (Source: Indian Retail Industry 2012 CARE Research) . We primarilTier- III cities, with a chain of value retail departmental stores offering apparels, genera

kirana, catering to the entire family. Based in New Delhi, our operations are spread across eastern parts of India. In October, 2003 we opened our first store by the name of Gujarat, and currently own and operate 62 stores spread across 53 cities and 10 states and unia total area of 5.06 lac Sq. Ft. Our stores are located in New Delhi, Gujarat, Uttar PrChandigarh, Haryana, Jammu and Kashmir, Rajasthan and Madhya Pradesh.

We have established stores in Metro, Tier-I, Tier-II and Tier-III cities which are primarily locstores in high-street areas and shopping hubs of such cities. The average size of our store is apSq. Ft.

Our Company follows the concept of value retailing to target the strata of the popuexpanding aspiring class and middle class based o n our customers socio -economi

power, demographic details and customer trends. We believe our offerings in untapped macustomers with a different shopping experience, comprising of a vast range of value retaimodern ambience and feel of a large retail mall.

Our Business Verticals

Our business can be classified in three business verticals: (i) Apparels, (ii) General MerKirana Bazaar. Our 39 stores are Mini Hyper Stores retai ling apparels, general merchaand 23 stores are Family Fashion Stores which are focused on apparels and gene

business verticals are further divided as follows:


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clutches, fashion jewellery, bags and luggage. The Home Mart division consists of the follhome furnishing, kitchenware, crockery and gifts and novelties.

Our Kirana Bazaar business vertical, includes the following segments: FMCG products, pac beauty and personal care, home care and staples.

Our business is based on the primary concept of value retailing and guided by our Sabse Accha and Price Less Fashion , following which we aim to provide the laapparels and non apparels to the entire family with an added focus on demands of theFamilies. As a complete family departmental store, we also retail a wide range of products athrough our Kirana Bazaar vertical.

We source our products, including private labels, directly from the regions where such pavailable or manufactured, to minimize our procurement costs and offer quality products strong sourcing capability is backed by an efficient logistics network, which is suppoinfrastructure, systems and processes, thus enabling us in achieving our concept of valu

Our total income has grown at a CAGR of 30.21% from ` 980.71 million in Fiscal 2008 tFiscal 2012. Our profit after tax has grown at a CAGR of 33.04% from ` 35.24 mil110.40 million in Fiscal 2012. Our total income stood at ` 2,500.59 million for the eight

November 30, 2012 and profit after tax was ` 130.80 million for the same period. Aroun

of our total income is from apparels and general merchandise and 24.02% and 19.45% of oKirana Bazaar in Fiscal 2012 and for the eight months period ended November 30, 2012 respehave grown from 22 in Fiscal 2008 to 62 as on the date of the Prospectus and square feet uincreased from 2.11 lac Sq.Ft. in Fiscal 2008 to 5.06 lac Sq.Ft. as on the date of the Prospectu


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SUMMARY OF FINANCIAL INFORMATION

STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED

Particulars

As at31 March

200831 March

200931 March

201031 March

2011

A. Non current assetsFixed assets

Tangible assets 84.36 202.44 215.03 250.66 Intangible assets - 2.10 2.30 1.97 Capital work in progress - - 6.19 13.53

Deferred tax asset (net) 0.09 - 1.41 3.

Vmart Prospectus

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