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

2. Indian Retail Market Share: 22% of GDP Contribution towards Total Employment: 8% Total Retail Market : US $450 billion Expected Growth in Retail Market: US $804.06 billion by 2016, market is expected to grow at 12% over the next 5 years and 7% during the next 10 years. Compounded Annual Growth Rate (CAGR) of Indian Retail: 13.3% Organized Retail Market: US $450 billion (5.5% of total market) Expected Growth in Organized Retail Market: Expected to grow at 12.4% by 2016 and to US $200 billion by 2020.Source: India Retail Report 2012 3. HEADQUATERS Eureka Towers,9th Floor, B Wing, Mindspace, LinkRoad,Mumbai, Maharashtra-400064INDUSTRYRetailTYPEPublic CompanySTATUSOperatingCOMPANY SIZE8000 employeesNUMBERS OF STORES 512012 REVENUES Rs. 1947.869 croreNET PROFITRs. 64.26 croreTOTAL RETAIL4.78 million sq. ft. as of 30th September 2012AREAFOUNDED 1991Sources: http://corporate.shoppersstop.com/ 4. SHOPPERS STOP: AN OVERVIEW About SHOPPERS STOP Ltd. Shoppers Stop Ltd., a pioneer in modern retailing in India, has been promoted by K Raheja Corp. Group (Chandru L. Raheja Group), one of the leading groups in the business of real estate development and hotels in the country. Shoppers Stop Ltd along with its Subsidiary Company Hypercity Retail (India) Ltd and Joint Venture Companies Timezone Entertainment Pvt. Ltd and Nuance Group (India) Pvt. Ltd. operates more than 4.78 million sq. Ft. as of 30th September 2012 in the country. Shoppers Stop and its associate companies are involved in retailing through department stores, specialty stores, entertainment zones and large hypermarkets.Management- SHOPPERS STOP Ltd.Chandru L RahejaChairman / Chair Person B S Nagesh Vice ChairmanGovind Shrikhande Managing Director Ravi C RahejaDirectorDeepak GhaisasDirectorGulu L Mirchandani DirectorNeel C Raheja DirectorNitin Sanghavi DirectorShahzaad S DalalDirectorNirvik Singh Director Sources: http://corporate.shoppersstop.com/ 5. Shoppers Stop Ltd.Consolidated with SSLSS Department Stores Business Subsidiary Companies 30%JV Companies 271% Sales Contribution Sales Contribution 2% Sales Contribution SSL Stake SSL Stake 51% 50% No of stores: 1 GFA: 0.19 lacs sq ftNo of stores: 54 No of stores: 12GFA: 30.62 lacs sq ft.SSL Stake GFA: 12.35 lacs sq ft.36.82% Sales as of Sep 2012 : Rs. 406 Cr Sales for full year as of March No of stores:18 2012 : Rs 761 CrGFA: 1.20 lacs sq ft. No of stores: 12 GFA: 1.99 lacs sq ft.No of stores: 39SSL StakeGFA: 0.18 lacs sq ft. 100% No of stores: 82 Own Stores : 41 No of stores: 510 11 : 35 lacs visitors GFA: 2.33 lacs sq ft.Well diversified portfolio GFA: 0.18 lacs sq ft.11 12 : 72 lacs visitors to capture the consumers wallet shareNote : Above figures as of 30TH September 2012.Source: Shoppers Stop Annual Report 2011-12 GFA: Gross Floor Area 6. Shoppers Stop Ltd. has entered into a non exclusive retail agreement with world-renowned cosmetics major Estee Lauder to open M.A.0 Cosmetics stores in India. Shoppers Stop Ltd. has a 51% stake in Hypercity Retail (India) Ltd. Mothercare PLC of UK, the largest specialist retailer for infant and toddler care, is now in India. Shoppers Stop Ltd.s entry into airport retailing is marked by a joint venture with The Nuance Group AG of Switzerland, the worlds leading airport retailer. Shoppers Slop Ltd has forayed into the Entertainment sector by acquiring a 36.82% stake in Timezone Entertainment Private Limited which is in the business of setting up & operating Family Entertainment Centres (FECs).Source: Shoppers Stop Annual Report 2011-12 7. TYPE OF RETAIL OUTLETS Shoppers Stop Ltd. Departmental Store-Hypermart- HyperCity -12 Specialty Retailing-138 Shoppers Stop- 54 Beauty, Cosmetics Parenting Products- Crossword Home Products Retailing- Retailing- MAC, Estee Mothercare- 5Book store- 82 HomeStop- 12Lauder Clinique- 39Source: Shoppers Stop Annual Report 2011-12 8. TYPE OF APPROACH 75 per cent of the total sales of SSLcomes from metros and Tier-1 cities.SSL will open nearly 80 per cent of the new stores in the top 24 cities. 9. TRANSITIONED THE SHOPPERS STOP BRAND FROM PREMIUM TO BRIDGE-TO-LUXURYLuxury Bridge to Luxury 2009Premium2005Contemporary Popular MassSource: http://corporate.shoppersstop.com/investors/presentation-analyst.aspx 10. INTERNATIONAL BRANDSImproved Product Mix and Brands Profile to Attract Aspirational Customers Jack & Jones, French Connection, CKJeans, GAS, ESPRIT, Tommy Hilfiger, Mustang& Mango in apparel segment Loccitane, Lancome, MAC, Clinique & EsteeLauder in cosmetics CK, Armani & Gucci in sun glasses Burberry, Nina Ricci, Diesel & Boss in watches PRIVATE LABELSSHOPPERS STOP PRIVATE LABELSStop- Mens formal/casual/ethnic/womens western/ethnic, kids casual/ethnicKashish Mens & womens ethnicLife- Mens & womens FashionVettorio Fratini- Premium formal& semi formal mens wearHaute curry- fusion wear for womenElliza Donatein- corporate womenswearIjeans wear- Mens denim 11. The First Citizen Shoppers Stops customer loyalty program is called The First Citizen. The program offers its members an opportunity to collect points and avail of innumerable special benefits. Currently, Shoppers Stop has a database of over 25.03 lakh members who contribute to nearly 72% of the total sales of Shoppers Stop.Source: Shoppers Stop Annual Report 2011-12 12. CSI 10080604020 CSI 0May/06 Jan/06Jan/07 May/07 Jan/08May/08Jan/09 May/09 Jan/10 May/10 Jan/11 Sep/06Sep/07 Sep/08Sep/09Sep/10May/11Customer satisfaction index is calculatedbased on the following parameters:There was a significant increase inMerchandising Range and Quality customer satisfaction from yearStore Environment 2007 to year 2009, although thereStaff is a small decrease in customerTransaction Efficiencysatisfaction in year 2010 from yearLoyalty Programme 2009.Schemes This may be due to increasedPromotionschoices offered to the customers byCustomer experience in Shoppers Stop wrt theother stores and hence increasingcompetitor stores expectations of the customerSource: Shoppers Stop Annual Report 2011.12 13. PARAMETERS USEADVERSITIES Conversion Ratio Conversion is the ratio of the There has been a consistent fall in thenumber of transactions (Cash consolidated conversion ratio startingMemo) versus the total customerfrom financial year 2009-10 to 2011-entry into the stores. Tracking12. The financial year 2011-12 saw aconversion helps the retailerfall by 1% to 23% from previous yearunderstand the productivity of his 2010-11 when it was 24%. A further fallfront-end store employees and theby 4% is expected in Quarter-II ofattractiveness of the merchandiseFinancial year 2012-13.and services. Like To Like Sales Volume (%)A comparison of this years sales to lastA consolidated consistent fall has beenyears sales in a particular company,noted in the LTL volume in October totaking into consideration only those December 2011 by 5% and yet again inactivities that were in effect during both financial year 2011-12 by 4%. A furthertime periods. Like-for-like sales is a fall by 4% is expected in Quarter-II ofmethod of valuation that attempts to Financial year 2012-13.exclude any effects of expansion,acquisition or any other event thatartificially enlarge a companys sales. Private Level Sales (%)Company aims to provide aAlthough there has been a growth indifferentiated and unique offering toConsolidated Private Label Mix up tothe customer through its own private 6.4% during financial year 2011-12 butlabels as well as throughConsolidated Private Label Salesexclusive private brands.Growth has fallen by 2.4% during the same period. A further fall by 13% is expected in Quarter-II of Financial year 2012-13.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 14. PARAMETERS DEFINATION AND ITS USEADVERSITIES Gross Marginal Return on GMROF helps to maximise the cashA consistent fall has been noted Floor % (GMROF)margins.in the Consolidated GMROF : April to December 2011 by 6%Quarter III of 2011-12 by 15%Quarter IV of 2011-12 by 10%Financial Year 2011-12 by 7% Gross Marginal Return on GMROI helps to optimise inventory A continuous fall in Consolidated Inventory % (GMROI)levels. GMROI (%) has been noticedfrom financial 2009-10 at 4.25%to 4.17% in 2010-11 and 4.01%in 2011-12. Gross Marginal Return on GMROL helps to increase labourA consistent fall has been noted Labour % (GMROL) productivity. in the Consolidated GMROL : April to December 2011 by 2%Quarter III of 2011-12 by 15%Quarter IV of 2011-12 by 6%Financial Year 2011-12 by 6%Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 15. PARAMETERUSEADVERSITIESOperating ExpensesThere has been consistent steep rise noted inOperating Expenses of both SSL Alone andConsolidated: April to December 2011 to SSL- 21% andConsolidated- 36%Quarter III of 2011-12 to SSL- 23% andConsolidated- 24%Quarter IV of 2011-12 to SSL- 28% andConsolidated- 26%Overall Financial Year 2011-12 to SSL- 23% andConsolidated- 33%A further rise by 26% in SSL and 20% inConsolidated version is expected in Quarter-II ofFinancial year 2012-13.Operating Profit and The Ratio is used to analyze the Operating Profit of SSL (without exceptionalOperating Profit Margin(%) efficiency with which the companyitems) has decreased by 5% to Rs.14,391lacs controls its selling and general and from Rs.15,211lacs in the previous year whereas administrative expenses. Consolidated have fallen by 18% in 2011-12 fromits previous years. A further fall by 27% in SSL and37% in Consolidated version is expected inQuarter-II of Financial year 2012-13. Similarlythere has been a decrease in Operating ProfitMargin of SSL Alone from 8.53% in 2010-11 to6.91% in 2011-12 and in Consolidated versionthere has been a fall from 5.73% in 2010-11 to3.70% in 2011-12.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 16. PARAMETERUSE ADVERSITIES Profit Before Tax (PBT)There has been consistent and substantial fall notedin SSL Alone and whereas huge effects werereflected on Consolidated financial figures: April to December 2011 to SSL- 10% andConsolidated- 77%Quarter III of 2011-12 to SSL- 32% andConsolidated- 65%Quarter IV of 2011-12 to SSL- 25% andConsolidated- 144%Overall Financial Year 2011-12 to SSL- 14% andConsolidated- 86%A further fall by 65% in SSL and 212% inConsolidated version is expected in Quarter-II ofFinancial year 2012-13. Profit After Tax (PAT) There has been consistent and substantial fall notedin SSL Alone and whereas major effects werereflected on Consolidated financial figures: April to December 2011 to SSL- 9% andConsolidated- 49%Quarter III of 2011-12 to SSL- 31% andConsolidated- 44%Quarter IV of 2011-12 to SSL- 31% andConsolidated- 88%Overall Financial Year 2011-12 to SSL- 15% andConsolidated- 56%A further fall by 67% in SSL and 155% inConsolidated version is expected in Quarter-II ofFinancial year 2012-13.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 17. PARAMETERUSE ADVERSITIES Finance ChargesFinance Charges have at times risen toenormous level in both SSL Alone andConsolidated financial figures: April to December 2011 to SSL- 30% (fall incharges) and Consolidated- 58%Quarter III of 2011-12 to SSL- 850% andConsolidated- 72%Quarter IV of 2011-12 to SSL- 1137% andConsolidated- 35%Overall Financial Year 2011-12 to SSL- 14%(fall in charges) and Consolidated- 45%A further fall by 172% in SSL and 35% inConsolidated version is expected in Quarter-II ofFinancial year 2012-13. Net cash used for investingThere has been consistent shortage of activities Consolidated cash available for investingactivities: April to December 2011 Rs.16,0 66Overall Financial Year 2011-12 Rs.16, 584A further fall by Rs.5, 858 is expected during Aprilto September 2012.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 18. PARAMETER USEADVERSITIES Gross Profit Margin Ratio The gross profit margin is used to The gross margin of SSL Alone has decreased analyze how efficiently a company is during the year 2011-12 to 32.7% from 33.0% as using its raw materials, labour andcompared to the last year, principally on account manufacturing-related fixed assets toof increases in levies and the transition in trading generate profits. Higher Gross Profitmodels. Margin means more efficient. PAT Margin RatioNet profit margin measures the The PAT margin of SSL Alone has decreased overall efficiency of the business during the year 2011-12 to 2.9% from 4% ascompared to the previous year 2010-11.WhereasPAT margin of Consolidated version hasdecreased during the year 2011-12 to 3.38%from 4.6% as compared to the previous year2010-11. Interest Coverage Ratio The interest coverage ratio is a The Interest Coverage Ratio of SSL Alone has measure of the number of times a decreased during the year 2011-12 to 5.23% company could make the interestfrom 8.9% as compared to the previous year payments on its debt with its EBIT.2010-11. Whereas Interest Coverage Ratio of The lower the interest coverageConsolidated version has decreased during the ratio, the higher the companys debt year 2011-12 to 4.91% from 8.83% as compared burden and the greater the to the previous year 2010-11. Although it still possibility of bankruptcy or default.remains within the ideal ratio limits.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 19. PARAMETERUSEADVERSITIES Stock Turnover Ratio Number of time the stock has beenThe Stock Turnover Ratio of SSL Alone has decreasedturned over during the period andduring the year 2011-12 to 2.7% from 3.7% asevaluates the efficiency with which acompared to the last year 2010-11. Whereas Assetfirm is able to manage its inventory. This Turnover Ratio of Consolidated version has decreasedratio indicates whether investment induring the year 2011-12 to 9.1% from 10.96% asstock is within proper limit or not. compared to the previous year 2010-11. Asset Turnover RatioThe Asset Turnover Ratio of SSL Alone has seen a continuous decrease during 2010-11 to 3% from 3.4% of 2009-10 and 2.7% during 2011-12 as compared to its previous year 2010-11. Whereas Asset Turnover Ratio of Consolidated version has decreased during How well a company is utilizing its assets to the year 2011-12 to 1.54% from 1.59% as compared to produce revenue.the previous year 2010-11. Current RatioFirms commitment to meet financialAlthough the Current Ratio of SSL Alone is stableobligation. Heavy ratio is undesirable asthroughout the years and has rather increased to 1.5it indicates less efficient use of funds.during 2011-12 as compared to 1.4 of previous year 2010-11, similarly Current Ratio of Consolidated version resides 0.5 in 2011-12 and 0.47 in 2010-11 but does not lie in the ideal range and hence evident to the fact that company is not using its funds efficiently and needs improvement in it.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 20. PARAMETER USE ADVERSITIES Debt Equity Ratio Although the Current Ratio of SSL Alone has increased to 0.4 during 2011-12 as compared to This is a measurement of how much 0.2 of previous year 2010-11 similarly Debt Equity suppliers, lenders, creditors and obligorsRatio of Consolidated version resides 0.84 in 2011- have committed to the company versus12 and 0.in 2010-11, but does not lie in the ideal what the shareholders have committed. range and hence evident to the fact that there lies Long term solvency of the Company.a greater risk for creditors because the long term solvency of the company is not correct and needs a little attention. over the point. Quick Ratio There is a shortage in the Quick Ratio of SSL Alone of the company which during the period 2011-12 lies at 0.12 as compared to last years ratio to 0.14, similarly Quick Ratio of Consolidated version resides 0.12 in 2011-12 and 0.14 in 2010-11 therefore as far as the ideal ratio is concerned i.e. 0.5 it lacks way behind and hence is suffice to Short term solvency of the Company. states that the companys short term solvency needs immediate attention and improvement. Days Inventory OutstandingDIO gives a measure of the number ofSSL Alone has experienced an increasing trend in DIO to days it takes for the companys inventory 34.84 in 2011-12 from 35.53 in the previous year 2010- (DIO) to turn over, i.e., to be converted to sales, 11 whereas in Consolidated version DIO is increasing either as cash or accounts receivable.from 34.23 in 2010-11 to 38.97 in 2011-12, therefore evidencing to the fact that the company is struggling to convert inventories into cash or receivables.Source: Shoppers Stop Annual Report, 2011-12, 2010-11 and 2009-2010 and Shoppers Stop Quarterly Report s of 2011-12 21. PARAMETERUSEADVERSITIES Return on Assets (ROA)SSL Alone has seen a decrease in ROA from 10.86% in 2010-11 to 10.73% in 2011-12, similarly in This ratio indicates how profitable a Consolidated version ROA has decreased from10.65% company is relative to its total assets.in 2010-11 to 9.61% in 2011-12. Free Cash FlowThere is a shortage in the Free Cash Flow of SSL Alone of the company which during the period 2011-12 lies at Rs.14, 421.99lakhs as compared to last year at Rs.15, 053.08lakhs, similarly Consolidated version Cash left behind after incurring of Capital figures resides at Rs.10, 849.07lakhs in 2011-12 as Expenditure compared to Rs.13, 178.42lakhs in 2010-11. Cash Flow to Debt RatioThis ratio provides an indication of a Company has seen a immense decrease in the ratio of SSLcompanys ability to cover total debtAlone from 1.09 in 2010-11 to 0.17 in 2011-12.Similarlywith its yearly cash flow from Company also experiences a decrease in Consolidatedoperations.version from 0.61 in 2010-11 to 0.28 in 2011-12.Source: Shoppers Stop Annual Report, 2011-12, 2010-11 and 2009-2010 and Shoppers Stop Quarterly Report s of 2011-12 22. PARAMETERUSE ADVERSITIES Return on Net WorthCompany has experienced a substantial decrease (RONW) in RONW of SSL Alone from 26.7% during 2010-11 to 16.9% during 2011-12. Return on CapitalThe company has experienced a decrease in Employed (ROCE)ROCE of SSL Alone from 19.3% during 2010-11 to12.8% during 2011-12. Short Term Loans and There has been a rise in the Short Term Loans Advances and Advances provided by the company toRs.4,012.47lacs during 2011-12 fromRs.3,894.82lacs during previous year 2010-11.Further it is expected to rise to Rs.5,861.1lacsfrom April to September 2012. Long Term Loans andThere has been a rise in the Long Term Loans and Advances Advances provided by the company toRs.25,028.65lacs during 2011-12 from Rs. 24,978.29lacs during previous year 2010-11. Further it isexpected to rise to Rs.27,881.7lacs from April toSeptember 2012.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 23. PARAMETERUSEADVERSITIES Debt RatioThere has been a rise in Debt Ratio of SSL Alone It is used to gain a general idea as to from 0.43 in 2010-11 to 0.48 in 2011-12, similarly the amount of leverage being used by a Consolidated version showed a fall from 0.57 in company.2010-11 to 0.60 in 2011-12. Capitalization Ratio It is used to measure the Long TermThere has been a rise in Capitalization Ratio inDebt proportion in the Total Capital Consolidated Version of the Company from 0.45structure of the Company.in 2010-11 to 0.70 in 2011-12. Operating Cash Flow toCompany has seen a fall in Operating Cash Flow Sales Ratio to Sales Ratio of SSL Alone to 0.02 in 2011-12 It gives investors an idea of the companys from 0.08 in 2010-11, similarly fall has also been ability to turn sales into cash.seen in Consolidated version to -0.001 in 2011-12 from 0.063 in 2010-11. Free cash Flow to Company has seen a fall in Free Cash Flow to operating Cash Flow Ratio Sales Ratio of Consolidated version to -20.60 in 2011-12 from 0.96 in 2010-11..Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 24. PARAMETERUSE ADVERSITIES Fixed Asset Turnover Ratio Although there has been a rise in Fixed AssetTurnover Ratio in Consolidated version of the It is used to reflect a companysCompany from the previous year but there has efficiency in managing the Fixed Assets. been a fall in SSL Alone from 5.51 in 2010-11 to4.80 in 2011-12. Capitalization Ratio It is used to measure the Long Term There has been a rise in Capitalization Ratio inDebt proportion in the Total CapitalConsolidated Version of the Company from 0.45structure of the Company. in 2010-11 to 0.70 in 2011-12. Short Term Debt Coverage Company has seen a fall in Short Term Debt RatioCoverage Ratio of SSL Alone to 0.20 in 2011-12from 1.09 in 2010-11, similarly fall has also beenseen in Consolidated version to -0.02 in 2011-12from 0.75 in 2010-11. Capital ExpenditureCompany has seen a fall in Capital Expenditure Coverage Ratio Coverage Ratio of SSL Alone to -0.49 in 2011-12from 7.78 in 2010-11, similarly fall has also beenseen in Consolidated version to 0.06 in 2011-12from 3.73 in 2010-11.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 25. PARAMETERUSE ADVERSITIES Price Earnings to Growth Companys Expected PEG Ratio is 8 for the year Ratio (PEG Ratio)It gives the investors an insight into the2013-14 which shows that the stock is overvalued.degree of overpricing or underpricing of astocks current valuation Dividend Yield It shows how much a company pays out in There has been a fall in Dividend Yield of thedividends each year relative to its share Company from 0.22%in 2010-11 to 0.19% in 2011-price.12. Capital ExpenditureCompany has seen a hike in Capital Expenditure of SSLAlone to Rs.(7, 617.57lakhs) in 2011-12 fromRs.1,764.13lakhs in 2010-11, similarly fall has also beenseen in Consolidated version to Rs.(8, 123.32lakhs) in2011-12 from Rs.3,697.52lakhs in 2010-11. Stock in Trade There has been a rise in the Stock in Trade of thecompany to Rs.21,204.01lacs during 2011-12 fromRs.15,113.66lacs during previous year 2010-11.Further it is expected to rise to Rs.21,239lacs fromApril to September 2012.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 26. PARAMETERUSE ADVERSITIES Trade Payables There has been a rise in the Trade Payables fromother than MSMEs to Rs.21,656.71lacs during2011-12 from Rs.24,622.74lacs during previousyear 2010-11. Further it is expected to rise toRs.29,586.1lacs from April to September 2012. Other Current LiabilitiesSome of the Other Current Liabilities during2011-12 have substantially risen from theprevious year 2010-11:Current maturities of long term borrowings(secured): Rs.4,000lacs whereas in P.Y it wasRs.2,000lacs.Interest accrued and not due on borrowings:Rs.94.7lacs whereas in P.Y it was Rs.28.21lacs.Creditors for capital expenditure: Rs.739.2lacswhereas in P.Y it was Rs.536.10lacs.Liability for gift vouchers/point awardredemptions: Rs.6,642.21lacs whereas in P.Y itwas Rs.5,758.23lacs.Further Other Current Liabilities are expected torise to Rs.14,652.8lacs from April to September2012.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 27. PARAMETER USEADVERSITIES Short Term BorrowingsShort Term Borrowings during 2011-12 haveincreased from the previous year 2010-11:Loans from banks (secured): Rs.14,406.87lacswhereas in P.Y it was Rs.10,548.95lacs.Commercial papers (unsecured): Rs.4,000lacswhereas in P.Y it was Rs.2,000lacs.Further it is expected to rise to Rs.21,710.5lacsfrom April to September 2012.The performance of any company depends on PSI score haven fallen to 3.85 during the year Partnershipthe association and relationship it builds with 2011-12 as compared to 4.14 during the Satisfaction Index (PSI) various vendors/ partners over a periodprevious year 2010-11.of time. To evaluate this satisfaction andexpectation, company has appointed CSMM(Customer Satisfaction Measurement andManagement), a part of IMRB (Indian Marketingand Research Bureau) to do an impartialevaluation of our relationship with variousstakeholders. This helps your organisationunderstand the expectations of various businesspartners, current strengths and concernareas thereby help set a clear roadmap forimprovement and better performance.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 28. PARAMETER USEADVERSITIES Net Worth1) The Company has financial involvement in a subsidiary company, namely Hypercity Retail (India) Limited (Hypercity) as follows: Investment in Equity and Preference Capital of Rs.20, 070.81lacs and Loans and Advances of Rs.8, 730.68lakhs, making an aggregate involvement to Rs.28, 801.49lacs. But Hypercity continues to make losses and the accumulated losses of Rs.36,402.66lacs as at 31st March, 2012 have substantially eroded its Net worth as at the year end.2) The Company has financial involvement in a Joint Venture companies, namely Nuance Group (India) Private Limited and Timezone Entertainment Private Limited, as follows: Investment in Equity and Preference Capital of Rs.3, 641lacs in Nuance Group and Rs.1, 199.49lacs in Timzone and Loans and Advances of Rs.200lakhs in Timezone, making an aggregate involvement to Rs.3, 641lacs in Nuance Group and Rs.1, 399.49lacs in Timezone.But Net Worth of both the subsidiiaries have been substantially eroded ias at 31st March 2012.Source: Shoppers Stop Annual Report, 2011-12, Shoppers Stop Quarterly Report s of 2011-12 29. First Citizens Club has continued to be one of the main strengths of our business. In the year gone by the programme has exceeded the 2.5 million mark in memberships, making it one of the largest loyalty membership programs in the country across sectors. The company continues to invest in our front and back end processes and systems. The company created a strong distribution and logistics network, with our four Distribution Centres covering more than 400,000 square feet handling over 400,000 SKUs per year, and working 24x7. The Company believes that the hub and-spoke model followed by it for its distribution network, will stand it in good stead for the expansion. Company endeavors to make Shopping experience the differentiator. The company assesses Customer Care Associates (CCAs) across all levels through assessment centres for promotion decisions, career planning and succession planning. Company also conducts associate satisfaction survey every year and derive Opportunities ASI scores, which helps it in identifying the trust index scores of respect, credibility, fairness, pride with the organisation. Company benefits from its Promoters association with the real estate business and their relationships with developers, which have helped the company, acquire preferred properties at competitive rates. The Company imparts special training to its employees to ensure that service is not compromised on. The companys store positioning in the bridge to luxury segment clearly sets apart its stores from those of the rest of the industry players. Among the big players in the organized retail space in India, Shoppers Stop has always understood the criticality of scale, availability and experience, and has been an eager adopter of advanced, cutting edge technology. To help drive its growth strategy, Shoppers Stop is employing its reporting and analytics capabilities in the areas of merchandising, loyalty management, distribution and logistics, sales performance, loss prevention, and financial analysis. SAS provided the retailer with a business analytics framework for reporting and analytics using SAS Enterprise BI Server and SAS Enterprise Miner. Access to standardized, timely and accurate data from its DRISHTI (Insight) data warehouse project, along with flexible reporting functionality.Source: Shoppers Stop Annual Report, 2011-12, www.mbaskool.com, www.cio.in, www.sas.com, 30. The company will be in expansion phase over next 36 months which will be a critical time as far as execution risk is concerned.Rent is one of the largest components in a retail business fixed costs and the case is no different for the Company. Rentals areexpected to harden once again in the near term.Slowing expansion due to dependence on real estate developer for completing projects during slowdown.Certain levies / cascading effect of taxes on the business which are proving to be a very large burden as there are no modes forthe industry to recover or pass on these levies. Delay in the roll out of the GST regime is also a matter of concern.The Company has invested in other entities and lower than expected returns from these entities will have an impact on thecash flows and consolidated results of the CompanyIt has lesser promotional strategies on both Above the Line and Below the Line level compared to global leaders.Operating expenses of the company have substantially risen throughout the years which had its adverse effects on the profitsof the financials of the company.Severe consistent heavy hikes in Finance Charges have been proved to be a big matter of concern for the company. The needsan immediate attention over the issue before it could consolidate its adverse effects on profits of the company. The funds available by the company are not being utilized by it in an efficient manner which reflects in its Current Ratio.Company has both provided and obtained heavy financing and borrowings for itself as well as for its Associate companieswhich until the current stage has failed to show its purpose and worth which takes a heavy toll out of the profit as a part ofinterest charges.The Net worth of Joint Venture Companies of SSL, i.e. Nuance Group (India) Private Limited and Timezone EntertainmentPrivate Limited has substantially been eroded as at 31st March, 2012. Based on the business plans of these companies and thebusiness valuation by an independent valuer, no provision for any loss is currently considered necessary in these financialstatements.Subsidiary of SSL, Hypercity Retail (India) Limited continues to make losses and the accumulated losses of Rs. 36,402.66lacs asat 31st March, 2012 have substantially eroded its Net worth as at the year end. Based on the Business plans, opportunities andbusiness valuation by an independent valuer, the Company considers that there is no loss for which a provision is currentlynecessary in these financial statements.Source: Shoppers Stop Annual Report, 2011-12, www.mbaskool.com, www.cio.in, www.sas.com, 31. The company is expecting to launch into its next expansion phase in the next 36 months. The Companys strategy to increasethe number of departmental stores, and therefore improve city wise penetration in new cities, increase market share in existingcities through additional new stores in those cities, and new stores in Tier-II cities, remains unchanged.Hypercity which is a 51% subsidiary of the Company has shown encouraging performance, with an overall sales growth of27.5% and like to like sales growth of 9% for the year.Company has diversified into multiple formats viz, HomeStop which retails hard and soft furnishing, M.A.C. and Estee Lauderwhich retails high end cosmetic products, Clinique which retails skin care products, Mothercare which retails infant and kidsmerchandise and airport retailing, by tying up with The Nuance Group AG of Switzerland. The Company has also made asuccessful foray into internet retailing through its e-retailing portal. The Company looks to focus and expand these formats.Company believes that by its presence across all lifestyle categories in the departmental format, its strong brand value and itspresence in the books and music segment, it is best placed to bring in international brands into the country, thereby enrichingthe product bouquet for its customers and in turn increasing opportunities for product diversification and profit enhancement.After the clearance of FDI from the Rajya Sabha , Shopper Stop because of having an early presence in some Internationalbrands may be have an upper hand in competing with the Global multibrand retail companies than its local rivals.Preferred partner for international brands in various categories due to diversified presence.Source: Shoppers Stop Annual Report, 2011-12, www.mbaskool.com, www.cio.in, www.sas.com, 32. Economic slowdowns have a direct impact on consumption. Retail, being the end service provider of consumption in thesupply/value chain, is bound to face difficulties in an environment of economic slowdown.With India continuing to be an attractive retail market, the Company expects many new entrants into the sector, thusincreasing competition, also among existing rivals there is intense rivalry for new locations and quality real estate, therefore itsets up the foundations for increased intensity of competition among existing rivals.With the clearance of FDI from the Government of India, Shopper Stop together with the local multibrand retailers like WillsBig Bazaar, Spencers, etc. Will also have to face severe competition from the global behemoths like Wallmarts.Faced with increasing competitive pressure for customer wallet share, Shoppers Stop will have to improve customersatisfaction and loyalty, increase its breadth of merchandise and expand store operations into new markets, while maintainingprofitability.Source: Shoppers Stop Annual Report, 2011-12, www.mbaskool.com, www.cio.in, www.sas.com, 33. RISK POINTS RAISED BY THE AUDITORSFollowing risk points were raised by the Auditors for the financial year 2011-2012: According to the Auditors opinion, a substantial part of fixed assets has not been disposed off by the Company duringthe year. The Company has granted unsecured loans to one party during the year. At the year-end, the outstanding balance of suchloans aggregated Rs.8,730.68lacs (including interest) and the maximum amount involved during the year wasRs.16,500.00lacs. The rate of interest and other terms and conditions of such loans are, in the Auditors opinion, primafacie not prejudicial to the interests of the Company. According to the Auditors opinion the terms and conditions of the guarantees given by the company for loans taken byits joint venture companies from banks are not prima facie prejudicial to the interests of the Company. Auditors attention is invited to Note 31 to the Consolidated Financial Statements regarding non-provision of service taxfor the period 1 June 2007 to 31 March 2010, on renting of immoveable properties given for commercial use, aggregatingRs. 2,010.90lacs, pending final disposal of the appeal filed before the Honourable Supreme Court, inter-alia, challengingthe retrospective levy of the service tax. The matter is contingent upon the final outcome of the litigation. Pursuant to levy of service tax on renting of immovable properties given for commercial use, retrospectively with effectfrom 1 June 2007 by the Finance Act, 2010, the Company has, based on a legal advice, and challenged the said levy and,inter-alia, its retrospective application. The Honourable Supreme Court has passed an interim order dated 14th October,2011, with regard to the levy of service tax on immovable properties rented out for commercial use including itsretrospective applicability from 1st June, 2007 in compliance of which, the Company has made an aggregate deposit ofRs.1,824.88lacs in respect of the liability for such service tax up to 30th September, 2011. From October 2011, theCompany is accounting and paying for such service tax regularly as per directives of the Supreme Court. Pending the finaldisposal of the matter, the Company continues not to provide for the retrospective levy aggregating Rs.1,659.56lacs forthe period 1st June, 2007 to 31st March, 2010.Source: Shoppers Stop Annual Report 2011-12 34. RISK FACTORS ANALYSED1) Liquidity Ratios : Current Ratio , Quick Ratio and Days Inventory Outstanding (DIO).2) Profitability Ratios : Gross Profit Ratio, Net Profit Ratio, Operating Profit and Operating Profit MarginRatio and Return On Asset.3) Debt Ratios : Debt Equity Ratio, Capitalization Ratio, Interest Coverage Ratio and Cash Flow To DebtRatio.4) Operating Performance Ratios : Stock Turnover Ratio and Asset Turnover Ratio .5) Cash Flow Indicator Ratios : Operating Cash Flow to Sales Ratio, Free Cash Flow, Free Cash Flow toSales Ratio, Short Term Debt Coverage Ratio and Capital Expenditure, Capital Expenditure CoverageRatio.6) Investment Valuation Ratio : Price Earnings to Growth Ratio and Dividend Yield.7) Sales and Volume : Conversion Ratio, Like to Like Sales Volume and Private Label Sales.8) Inventory and Labour Efficiency : Gross Marginal Return on Floor(GMROF), Gross Marginal Return onInventory(GMROI) and Gross Marginal Return on Labour (GMROL).9) Profit and Loss Account : Operating Expenses, Finance Charges, Profit Before Tax(PBT) and ProfitAfter Tax(PAT)10) Non Current and Current Assets : Short and Long Term Loans and Advances, Stock in Trade and FixedAssets.11) Current Liabilities : Trade Payables, Short Term Borrowings and Other Current Liabilities12) Market : Market Analysis, Employees Stock Option Plan(ESOP) and Shareholding Pattern.13) Companys Internal Structure : Compensations and Remunerations.14) Others : Contingent Liabilities, Net worth of Joint Ventures and Subsidiaries, Partnership SatisfactionIndex(PSI), Expansion Phase, Dependence on Real Estate and Promotional Strategies. 35. IMPACT AND RECOMMENDATIONSAlthough there has been a rise in the Current Ratio from the previous year but still since 2008-09, the ratio hasconsistently being out of ideal range which is causing a liquidity crunch situation thus creating more pressure onthe cash utilisation of the company.Quick Ratio is even in more critical condition, it is not only decreasing from previous year but also far short ofwhat ideal ratio is considered. This raises a formidable questions on the short term solvency of the companyagain putting a tremendous pressure on the cash utilization of the company in the short run.On the other hand an increasing Days Inventory Outstanding(DIO) from the previous year shows that thecompany is feeling pressure of converting inventories into cash or even receivables leading to rise in stock intrade and further putting pressure on liquidity of the company keeping investors money largely on risk.Therefore Company looks inefficient in managing its important working capital assets As evident from the Current and Quick Ratio above, the Companys liquidity issue is making cash trapped for a longer time. Efforts from the company needs to be done on this front therefore the company can either increase its Current Assets or rather should put its efforts to reduce its Current Investments in order to increase the ratios. In short Current Assets should be enough to cover its Current Liabilities as currently Current Assets are inappropriate to pay out all its Current Liabilities. The Company should put efforts to convert inventories into cash or account receivables so that cash from inventory sale is paid further to its suppliers for goods and services. Increasing DIO shows that the Companys products are either failing to attract customers or the demand of the Companys product is decreasing thereby reducing or squeezing cash availability. 36. IMPACT AND RECOMMENDATIONSThe fall in Gross Profit Margin Ratio has signaled on the fact that the company has not efficiently utilized itslabour, raw materials and manufacturing related fixed assets to generate profits thus leading to fall in the valueof the Gross Profit.On the other hand fall in Operating Profit Margin Ratio and Operating Profit together evidences the fact thatcompany has failed to control its selling and general and administrative expenses and thus leading to loss inoperating profit.Further fall in Net Profit Margin Ratio supports the above mentioned Operating Profit Margin Ratio and GrossMargin Ratio that Companys profit has depleted due to lack efficient control of direct and indirect expenses.A fall in Return on Assets(ROA) from the previous year shows that the management has remained inefficient inemploying the Companys Total Assets to make a profit on it or rather earn a higher return on it. As evident from the Gross, Operating and Net Profit Ratio above, the Company has struggled with efficiently utilizing its direct and indirect expenses therefore company should find certain ways to curb its expenses to boost its profit and to have a control over its day to day operations as the above fall in the ratios is also evidencing the fact to the deficiencies in the Management decision making process too. Company in order to improve its ROA should evolve certain ways to boost its returns on the assets available with it. 37. IMPACT AND RECOMMENDATIONSRise in Debt Ratio and Debt Equity from previous year in both Alone and Consolidated format shows that thecompanys dependence on the leverage has increased because the Company has seen a tremendous increase inthe liabilities as compared to assets and mostly the debt part of the liabilities.On the other hand rise in the Capitalization Ratio from the previous year indicate the investment quality of thecompany. Further it shows the increasing dependence of the Company on the long term debt.Further fall in Cash Flow to Debt Ratio which shows that Companys cash flow is not efficiently utilized to serveits total debt and also the weak cash flow situation which affects the cash generation and operation of thecompany. As evident from the Debt Ratio, Debt Equity Ratio and Capitalization Ratio, Company should reduce its dependence on leverage i.e. Debt so as to reduce the risks involved in it as compared to its Equity therefore Company should reduce or dispose some of its Debts on both the long and short term ones with as quickly as possible as it is also having a negative impact on the profit of the Company (from interest expenses) . Company should either generate enough cash to improve its weak cash flow situation or should again most probably as mentioned above should severely take certain actions to reduce the abundance of Debt taken by the Company to realise some pressures on the cash. 38. IMPACT AND RECOMMENDATIONSThe fall in SSL alone in the Fixed Asset Turnover Ratio form the previous year shows that especially SSL alone asa company has been inefficient in managing its Fixed Assets, therefore failing to convert the Companys FixedAsset are failing to generate sales and hence causing reduced sales when compared to the amount invested onthe purchase of the Fixed Asset.Accompanying the above ratio, the fall in the Companys Asset Turnover Ratio form the previous year alsoshows that company has been inefficient in managing its Total Assets too, and hence Assets of the Company isnot generating enough cash in proportion to its investment value. As evident from the falling Fixed Assets and Total Assets Ratios, Company should find ways to generate enough cash in proportion to its investment value. 39. IMPACT AND RECOMMENDATIONSThe fall in Operating Cash Flow to Sales Ratio from the previous year is signaling to the fact that the Companyhas conducted majority of its sales in credit, hence impacting a cash shortage situation.Accompanying the above ratio, the fall in Free Cash Flow and Free Cash Flow to Sales Ratio from the previousyear have also shown that there is insufficient cash available by the company for further acquisitions orexpansions required. Therefore boosting yet more cash crunch situation.Further, fall in Short Term Debt and Capital Expenditure and Capital Expenditure Coverage Ratios leading toinsufficient cash to cover or service either the Short Term obligations as well as Capital Expenditure requirementsby the Company also consolidates the fact of substantial cash crisis problem. As evident from the falling above mentioned ratios, it is very important for the company find ways to resolve its cash crisis situations whether in increasing cash sales or reducing its operating expenditures so as to leave with the company enough cash to cover its both short and long term obligations regarding debts or acquisitions or expansions or any other further Capital expenditures as and when required. 40. IMPACT AND RECOMMENDATIONS PEG Ratio of 8 shows that the Companys stocks are overvalued and hence it is expected by the investors that the prices are going to fall the markets current valuation. Further, the fall in Companys Dividend Yield shows that the dividend in relation to its per share value trading has decreased from the previous year. Companys PEG Ratio shows Companys stock to be overvalued as compared to the market valuation therefore efforts should be made from the company to reach as close to the market valuation as possible. Further Companys Dividend Yield is not in its fine shape hence Dividend declared and paid out as compared to the share price traded should be reevaluated so as to be in consonant with the trading share price. 41. FINDINGS AND RECOMMENDATIONS A rising trend in Operating is indicating to the fact that the company is continuously failing to grasp and attract the potential customers entering the store and converting their product seeking into purchasing it from the store. A similar falling trend in Like to Like Sales Volume shows that comparing this years sales to last years sales in the company there has been a fall which also continues in further upcoming quarters. Although an increase in the Private Label Mix has been noticed but more importantly the fall in the Private Label Sales shows that the products being sold by the company under the brand name of other companies are registering a fall and puts a question on the same.Company should pay attention to increase the people visiting on store into potential customers, which will needimproved efforts from both the front end employees and also the attractiveness of the merchandise and serviceseither by introducing certain schemes or discounts or concessions together with the efficient customer service to lurethe visitors.The products being sold by the company under the brand name of other companies are registering a fall and thecompany should seriously think about the feasibility of continuing the same practice. 42. FINDINGS AND RECOMMENDATIONSA falling trend in Gross Marginal Return on Floor, Inventory and Labour, clearly suggest that theCompanys efficiency regarding labour and inventory productivity is declining consistently thus effectingsales altogether of the company as well as the investments made on the inventory too.Company should pay attention to increase its labour and inventory productivity by increasing variousinitiatives to encourage the employees to produce greater results as well as thinking ways to placeinvestments on inventory in an efficient manner. 43. FINDINGS AND RECOMMENDATIONS A rising trend in Operating Expenses is a major concern for the Company. A bigger factor contributing to it are the tremendous hikes in Finance Charges during the year which are so severe that it has a taken a heavy toll out of the profits of the company too and hence blocking lot of cash within itself so as to be left for other obligations or expenditures. Consolidating the above fact, the Profit before and after tax of the Company and its other Associate Companies have bore the brunt of the above mentioned expenses.Company should with immediate effect find ways to decrease the expenses especially the finance charges which areconsuming way too much cash available by the company therefore leading to a cash crisis situation and blockingother major Capital expenditure or even short term obligations. 44. FINDINGS AND RECOMMENDATIONS Short and Long Term Secured and Unsecured Loans & Advances by the Company have seen a growth to both its Associate Companies and others under severe cash crisis situations which again have not been beneficial for the Company and therefore it raises the basic questions on its existence, prudence, timing and appropriateness itself. Also evidencing to the above fact Auditors in the Audit Report of financial year 2011-12 have also raised the questions regarding on the prejudicial interest of the Company by granting of an Unsecured Loans to a party on terms and conditions of such loan. Auditors of the Company in its Audit Report of financial year 2011-12, has mentioned in their opinion itself that inspite of the opportunity substantial part of Fixed Assets have not been disposed of during the year which might have served an extra source of cash generation or rather would have relived the Balance Sheet to certain extent .Company should revisit and rethink about the prudence and feasibility of the extent and terms and conditions ofgranting loans and advances to the other Companies especially at the crucial time when the Company is struggling tomaintain cash and profits for its own obligations and expenditures.Company should dispose of the Fixed Asset whether scrapped or obsolete or otherwise wherever it is correct andpossible so as to generate certain cash if possible or to create enough space in the Balance Sheet to add on otherassets to its pool. 45. FINDINGS AND RECOMMENDATIONS Short Term Borrowings, Trade Payables and Other Current Liabilities have all risen from the previous year which shows the on the one hand Companys rising obligations whereas on the other hand increasing influence of Creditors and Borrowers on the functioning of the Company, which are both further mounting pressures on profits and cash.Company should invent and innovate more ways to settle their obligations and relieve the Company from severe Debtridden phase thereby making provisions and generating enough cash to fulfill all future and current obligations. 46. FINDINGS AND RECOMMENDATIONSMarket analysis of trading history of SSL at NSE in 2011-12 showed that on particular months like July,August, October, December and February during the period the prices of the company fell and at timesfell to a substantial amount impacting volumes and turnovers of the Company.There was no such evidence found during the study of its Annual report and part thereof that clearlymentions that the Special Resolutions for ESOPs during 2010-11 and 2011-12 was passed in AnnualGeneral Meeting(AGM) of the Company. However the company has granted ESOPs as on 24th March2010 and 29th April 2011.As per part 3 to 14 of the SEBI Guidelines 1999, approval of shareholders of the Company through SpecialResolution in the AGM is mandatory for the granting ESOP.Company has used Black Scholes Option Pricing model in assessing fair value of the Options on itsESOPs, which it yet an outdated and criticized valuation mechanism excluding many key factors from itsvaluations some of them are like: Transportation Cost, Taxation Cost, Assuming Homogenous investordemand and time duration etc.Company should see that it gets its special resolutions required to be passed within the AGM and also the Companyshould take NSE at the front when assessing market prices and exercise price of its ESOPs.Company should also look and opt for better Option Valuation Models for far much better results and valuations. 47. FINDINGS AND RECOMMENDATIONSAs mentioned earlier among the points noted by the Auditors, Company regarding its disputed servicetax levy has not made any sort of Contingent Liability provisions as such so as to accumulate fund andsource the Contingency payments as and when required by it therefore leaving the Company no otherchoice than to apply funds available with the Company itself.Fall in Net Worth of both Subsidiary Companies and Joint Ventures of the Company together with fall inPartnership Satisfaction Index from previous year shows us that Company is struggling with its AssociateCompanies both in financials and in satisfaction level too.Expansion Phase of 36 months of the Company is yet another worrying and crucial time factor where itwill be mostly vulnerable to market risks. Further dependence on Real Estate Promoters have really hithard to the companys expansion duration and financials as affecting it in shape of high construction cost,land rentals and delay in construction too due to slowing economy.Companys promotional strategies have been on a much lower sides both above and below the linewhat is on usual expected from the size and scale of the company like this.It will be a prudent practice for the Company to create provisions on Contingent Liabilities as will help the Companyis much better way managing its contingent payments in advance.Company should also seek to strengthen its Joint Ventures and Subsidiaries by either revamping their operationalstrategies or rethinking about prudence and feasibility of continuing the Partnership looking at the Companys futurein the long run.Company should create some innovative promotional and marketing advertisements and campaigns to increase theproducts demand as well as to create more awareness about the Companys products among the consumers. 48. FINDINGS AND RECOMMENDATIONSThe details of dues of Income-Tax, Sales Tax and Customs Duty which have not been deposited as on 31stMarch, 2012 on account of any disputes are given below:1) Company has not deposited Income Tax according to the Income Tax Act, 1961 which is pending inCIT (Appeals) amounting to Rs.1, 042lacs for the period of 2004-06, 2008 and 2009.2) Company has not deposited Sales Tax according to the West Bengal Value Added Tax Act, 2005which is pending in Jt. Commissioner of sales Tax (Appeals) amounting to Rs.22.03lacs for the periodof 2009.3) Company has not deposited Custom Duty according to the Customs Act, 1962 which is pending inCommissioner (Appeals) amounting to Rs.12.23lacs for the period of 2008.And as done earlier Company has not maintained at all any provision for such Duties and Taxes.As mentioned earlier it will be better for the Company to stand a provision in the Balance Sheet for such amounts orelse their Balance Sheet is going to have an adverse effect of any such Contingent Liabilities. 49. COMMON STOCK COMPARISON (RS. In Crs.) S no.Company Name Financials as on Share Shares MarketNet DebtExpected Price Outstanding as Cap(Rs.)2012(Rs.) Value(Rs.) on March 2012 1Tata Industries31st March 2012 228.6 88.8 20,299.68 (961.2) 19,338.48(Consolidated) 2Pantalone Retail 30th June 2011306.6520.756,362.692,334.7 8.697.39(Standalone)* 3Bata (Consolidated)* 31st December 530.456.43 3,408.87(190.00)3,218.87 2011 4Shoppers Stop 31st March 2012 389.158.26 3,212.91367.693,580.59(Consolidated) 5Gitanjali Gems 31st March 2012 325.009.11 2,960.753,291.086,251.83(Consolidated) 6Trent (Standalone) 31st March 2012 949.202.72 2,586.52(29.61) 2,556.91 7Jubiliant Foodworks31st March 2012 1,168.156.51 7,602.08(12.94) 7,589.14(consolidated) 8Provogue 31st March 2012 14.55 11.44166.39273.27439.65India(Standalone)Source: Danodia Capital Advisors Report July 2012Source:As per research reports available by leading brokers like Goldman Sachs, Citi Group etc. 50. COMMON STOCK COMPARISON (RS. In Crs.) S no.Company Name Sales 2012Sales 2013EBITDA 2012 EBITDA 2013 Net Income Net Income 2013 (Rs.) (Expected)(Rs.) (Expected)2012 (Rs.) (Expected) (Rs.) (Rs.) (Rs.) 1Tata Industries8,848.4310,295.5834.02906 600.15 675.8(Consolidated) 2Pantalone Retail 4,778.9 5,504.4 505.3 572.9055.8075.40(Standalone)* 3Bata 1,812.002,132.70300.20390.60185.40 246.60(Consolidated)* 4Shoppers Stop 2,737.413,444.00104.80178.4019.0165.00(Consolidated) 5Gitanjali Gems 12,498.27 14,050.50 807.59970.80487.25 531.00(Consolidated) 6Trent (Standalone) 821.79923.27NA99.34 47.2655.06 7Jubiliant1,018.641,430.20187.69270.40103.29 155.50Foodworks(consolidated) 8Provogue 609.59696.5559.69 103.0325.0347.85India(Standalone)Source: As per research reports available by leading brokers like Goldman Sachs, Citi Group etc. 51. COMMON STOCK COMPARISON S no. Company Name EBITDA PAT(EV/Sales) (EV/Sales)(EV/EBITDA) (EV/EBITDA) (P/E) 2012 (P/E) 2013E (Rs.)Margin Margin 2012 (Rs.) 2013E 2012 (Rs.)2013E (Rs.) (Rs.)(%)(%) (Rs.) 1 Tata Industries9.43 6.78 2.19 1.8823.19x21.34 33.8230.04 (Consolidated) 2 Pantalone Retail 10.571.17 1.821.58 17.21 15.18 114.03 84.39 (Standalone) 3 Bata 16.5710.231.78 1.5110.72 8.2418.3913.82 (Consolidated) 4 Shoppers Stop 3.83 0.69 1.31 1.0434.17 20.07 169.01 49.43 (Consolidated) 5 Gitanjali Gems 6.46 3.90 0.50 0.447.746.446.08 5.58 (Consolidated) 6 Trent05.75 3.11 2.770 25.74 54.7346.98 (Standalone) 7 Jubiliant18.4310.147.45 5.3140.43 28.07 73.6 48.89 Foodworks (consolidated) 8 Provogue 9.79 4.11 0.72 0.637.374.276.65 3.48 India(Standalone)Source: As per research reports available by leading brokers like Goldman Sachs, Citi Group etc. 52. After studying and analyzing the ratios above the Company looks to be in a serious cash crunch situation, and hencethis is causing the Company in clearing its both Short and Long term Obligations. A much bigger role in this have beenplayed by the Finance Charges that have cropped up to insurmountable levels. Company will have to find its way out toreduce not only Finance Charges but other Expenditures too, increase its cash sales and find ways in which it canincrease its cash reserves in proportion to its investments and obligations so as also to meet its day to day operationalactivities and relieve investors from this front.Company has continuously in hope of returns have granted loans and advances to its Associate Companies which onthe contrary have experienced falling Net Worths causing loss of Companys return on investments thereby forcingCompany to opt for heavy borrowings to finance its Capital Expenditures and clear its obligations therefore theCompany is moving gradually into being a debt stricken entity and should find ways before it accumulates tounbearable amounts. Already the heavy borrowings and questionable granting of loans have caused a tremendous hikein its Finance charges and further if not sorted out earlier its going to bulge into a much bigger chronic problem for theCompany.Low Dividend Yield but good Dividend Pay Out Ratio rises a question on feasibility of continuous declaring ofDividends at constant rate especially when the Company should rather tighten its belts and look for ways to cut costsand expenses are increase its cash reserves and also looking to cut down its borrowings. At times it looks mere a tacticto keep its share prices surviving and look attractive to the investors whereas from inside the stocks are not muchstronger as they seem.Another big problem with the Company is its too much involvement with Global brands and players and almost noassociation as such with domestic players which causes a demerit for the Company as compared to its localcompetitors. Companys if willing to succeed in Tier II and III segment should observe the market and then introducetheir products according to the requirements of the market, mostly Indian customers are still more inclined towards theprice sensitivity than to brand sensitivity but the Company seem to have missed that spot somehow. Where on onehand the local rivals have an advantage of placing attractive discounts and cheaper products from the local markets,the Company on the other hand although have opened its stores in Tier II and Tier III towns but has to bear with costlyand expensive global products with lesser restrictive promotional discounts and offer seasons, thereby loosing itspresence and charm for the Tier II and Tier III customers.