brainbees solutions pvt ltd Management discussions

* Twelve months ended June 30, 2023 for Annual Unique Transacting Customers, and three months ended June 30, 2023 for Orders, Average Order Value, GMV and GMV Growth. #GMV growth for the three months ended June 30, 2023 has been calculated by comparing the GMV for the three months ended June 30, 2022. Note: The GMV in the table above (and elsewhere in this Draft Red Herring Prospectus) includes the monetary value of orders inclusive of taxes and gross of discounts, if any, across the FirstCry website, mobile application and FirstCry and BabyHug modern stores, including those operated by Digital Age and franchisees, net of order cancellations and prior to product returns. Accordingly, the GMV numbers do not reconcile directly with our revenue from operations and should not be considered representative of our revenue from operations.

Our integrated FirstCry platform helps fulfil three essential parenting needs i.e., shopping, parenting community and education. We address the needs of our customers across various channels: online platform, modern stores, and general trade retail distribution channels in India; and online platforms in UAE and KSA. Our content-led strategy enables engagement with parents early in their parenting lifecycle through our YouTube channel, i.e., FirstCry.com parenting platform. We own and operate several pre-schools in India through Edubees Educational Trust. In addition, we also operate a network of pre-schools in India through our franchisees. Our platform is built on key foundational capabilities of robust data and technology, deep understanding of our customers, a portfolio of home brands and healthy third-party brand relationships.

In May 2022, we acquired Digital Age Retail Private Limited ("Digital Age"). The principal business of Digital Age is to deal in the retail trade of Mothers, Babies and Kids products. Prior to the acquisition, our online platform was operated by Digital Age, pursuant to a platform sharing agreement. Further, some of our modern stores were franchised to Digital Age. As a result of the acquisition, we are able to consolidate all of these operations into our business. Our revenue from operations as per the Unaudited Pro Forma Consolidated Financial Information (which takes into account the impact of our acquisition of Digital Age) amounted to 35,975.04 million and 52,621.90 million for Financial Years 2022 and 2023, respectively. As per the Restated Consolidated Financial Statements, for the three months ended June 30, 2023 (for which Digital Age was consolidated into our operations for the entire three month period), our revenue from operations amounted to 14,069.33 million. Further, the ratio of materials cost to revenue from operations as per the Unaudited Pro Forma Consolidated

Financial Information amounted to 66.91% and 67.08%, respectively, for Financial Years 2022 and 2023. As per the Restated Consolidated Financial Statements, the ratio of materials cost to revenue from operations for the three months ended June 30, 2023 was 64.28%. For details of the acquisition, please see "History and Certain Corporate Matters" on page 221. See also, "Unaudited Pro Forma Consolidated Financial Information" on page 404.

Further, we have, in the past, evaluated and executed strategic acquisitions of other complementary businesses as well, which have contributed to the growth of our business. For example, we acquired Swara Baby in October 2020, which provided us with the capabilities of manufacturing diapers. In addition, to further leverage our management teams experience in creating and scaling up our home brands, we, together with our Managing

Director and Chief Executive Officer, have also established GlobalBees Brands, to create a digital-first platform for helping D2C Indian and global brands to grow their business in India across direct-to-customer channels and modern stores. We hold 50.23% stake on a fully diluted basis in Globalbees Brands. Through GlobalBees Brands, we work with D2C brands through multiple approaches, i.e., strategic investments and acquisitions, direct-to-customer platform distribution relationships, brand licensing arrangements and OEM relationships. GlobalBees Brands has acquired controlling stakes in 21 entities and has entered into business transfer agreements with five entities. For details, please see "Our Business GlobalBees Brands" on page 208. Revenues from GlobalBees Brands (before inter-segment elimination) amounted to 8,971.79 million and 2,564.98 million for the Financial Year 2023 and the three months ended June 30, 2023, respectively, in accordance with our Restated Consolidated Financial Statements. We expect that the growth of the businesses acquired by GlobalBees Brands and further acquisitions by GlobalBees Brands will continue to contribute to our results of operations.

We are Indias largest multi-channel retailing platform for Mothers, Babies and Kids products, based on GMV, for the year ending December 2022, according to the RedSeer Report. In addition to our online platform, which is available in India, UAE and KSA, we have a network of 936 FirstCry and BabyHug Modern Stores in 465 cities in 27 states and four union territories across India with over 1.76 million square feet of retail space as at June 30, 2023. In the past three Financial Years, our revenue growth has been driven by our ability to attract new customers to our online platform and modern stores and retain existing customers. Our focus on providing personalized, enjoyable shopping experiences and a wide variety of Mothers, Babies and Kids products on our multi-channel retailing platform has contributed to the growth in our customer base in prior periods, leading to a growth in Orders and GMV. Further, the growth of our international operations in the UAE and KSA has also led to an increase in our customer base. In addition to our multi-channel retail operations, we also provide an engaging parenting ecosystem on our website and mobile application, which covers articles, videos and live sessions targeted at our customers. Our customers value the content on our platform and further enhance it by adding their own experiences to the platform. Our unique content strategy feeds into our transaction funnel and creates a strong flywheel effect, as we believe that more content leads to more customers and more customers leads to richer content. More customers on our platform also increases the number of transactions on our platform. For further details, please see "Our Business Competitive Strengths Our platform has powerful network effects driven by content, brands and data" on page 187.

Our Annual Unique Transacting Customers (which covers unique customers on our online platform and modern stores) increased from 5.38 million in the Financial Year 2021 to 6.86 million in Financial Year 2022 and 7.98 million in Financial Year 2023. Further, we had 8.25 million Annual Unique Transacting Customers in the twelve months ended June 30, 2023. This has driven an increase in our revenue from operations and brand awareness during the periods under review.

Further, according to the Redseer Report, India has the largest population of children globally, with approximately 309 million children under 12 years of age as at July 1, 2022, with a birth rate of 16.4 births per thousand people in calendar rear 2021. Child care products spending per capita in India is currently nascent, at only 7,975 in the calendar year 2022, and is projected to grow faster than those in mature markets, at a CAGR of approximately 15% from 2022 to 2027 (compared to 3% for USA and 7% for China) (Redseer Report). For further details, please see "Industry Overview" on page 160. We believe we are well suited to benefit from the expected growth in the industry.

Growth in sales volumes on our online platform, modern stores and through our general trade distribution has been a key factor that has contributed to the growth in our revenue from operations. We track number of Orders placed on our online platform and modern stores and believe that the growth in Orders is largely driven by our customer base, mix of products sold on our platform, our brand awareness among customers in the market and expansion of our network of modern stores. Our sales volumes are also subject to seasonal fluctuations and tend to generally be higher during the second and third quarters of our Financial Year, due to change of seasons and the festive period in India. Our number of Orders has increased from 19.38 million in the Financial Year 2021 to 26.73 million in Financial Year 2022 and 30.99 million in Financial Year 2023. Further, we had 8.00 million Orders in the three months ended June 30, 2023.

Furthermore, our GMV has been growing consistently over the last three Financial Years. Our GMV increased from 39,858.44 million in the Financial Year 2021 to 57,994.63 million in Financial Year 2022 and 72,576.34 million in Financial Year 2023. Further, our GMV for the three months ended June 30, 2023 was 19,871.48 million. The growth in our GMV has been due to an increase in the assortment of products we offer across third-party and home brands, an increase in the prices of certain products, an increase in our customer base in India and our international markets, and an expansion in the network of our modern stores. An increase in Orders and GMV generally corresponds with an increase in our revenues from operations, as the main component of our revenue from operations is sale of products.

Through our multi-channel retailing platform, we offer customers a variety of products, ranging from products of leading multi-national Mothers, Babies and Kids products brands (such as Medela India Private Limited, Chicco and Funskool (India) Limited), "momprenuers" (i.e., mothers who operate home-based businesses) and our own home brands, such as BabyHug, Babyoye, Cutewalk and Pine Kids. As at June 30, 2023, our multi-channel retailing platform offered more than one million SKUs from more than 6,500 brands. We believe that our diverse product offering across third-party and home brands has contributed to the growth of our revenues in prior periods, as customers view us as a comprehensive destination platform for Mothers, Babies and Kids products.

We aim to maintain and expand our brand relationships in order to sustain and further diversify the variety of products available on our platform. The combination of wide selection of products offered on our platform, a wide range of products across multiple price points, and enjoyable personalized shopping experience, coupled with our strong brand salience enables us to attract more customers to our platform. This in turn draws more brand relationships to our multi-channel retailing platform, resulting in an expansion of our product portfolio and driving new and existing customers to make multiple purchases.

Furthermore, we have created multiple baby and kids product brands in India such as BabyHug, Babyoye,

Cutewalk and Pine Kids, in the mid to premium category, after conducting extensive research based on customer data analytics and identifying product and pricing gaps. Our home brands play a key role in creating a greater assortment of curated products for our customers. BabyHug is the largest Mothers, Babies and Kids products brand in the Asia Pacific region (excluding China) in terms of product assortment as at June 30, 2023, according to the RedSeer Report. The BabyHug brand has products across apparel, footwear, diapers, wipes, baby gear, nursery, toys and personal care categories. As at June 30, 2023, we also operated 241 exclusive BabyHug brand stores in India, which help to re-enforce its strong brand recognition across India. The growth of our home brand and the expansion of our home brands portfolio have contributed to the growth of our revenue from operations.

Our profitability and gross margins are impacted by our ability to control our materials cost and other key expenses, in particular, advertisement and sales promotion expenses.

Our materials cost comprises (i) cost of materials consumed (i.e., the raw materials consumed in the manufacture of goods that we produce (primarily, diapers and kids food)); (ii) purchase of stock-in-trade that we purchase from third-party brands and contract manufacturers); and (iii) changes in inventories of stock-in-trade, finished goods and work in progress. As at June 30, 2023, we leveraged a network of over 800 contract manufacturers across India and international markets, excluding contract manufacturers engaged by GlobalBees Brands and its subsidiaries.

Our cost of materials consumed and cost of contract manufactured and traded goods are impacted by the volume of raw materials/contract manufactured goods procured and correspondingly the price at which we procure such materials, which have historically fluctuated and are expected to continue to do so in the future. Furthermore, our ability to manage our inventory while maintaining and enhancing operational efficiency, impacts our ability to maintain or increase our margins. Our materials cost as per our Restated Consolidated Financial Statements amounted to 10,461.61 million, 15,721.39 million, 39,353.18 million and 9,044.01 million for the Financial

Years 2021, 2022 and 2023 and the three months ended June 30, 2023, respectively. Based on the Unaudited Pro Forma Consolidated Financial Information, pro forma materials cost, amounted to 24,070.72 million for the Financial Year 2022 and 35,297.26 million for the Financial Year 2023. Pro forma materials cost as a percentage of pro forma revenue from operations amounted to 66.91% for the Financial Year 2022 and 67.08% for the Financial Year 2023.

We invest in marketing and advertisement initiatives to acquire new customers, encourage existing customers to purchase more and to enhance our brand recognition in new markets. While we have gained prominence as the leading parenting platform in India by leveraging our core capabilities in content, social media engagement and hospital gift box program (whereby we provide free gift boxes to mothers who have just given birth, through our partnerships with hospitals and maternity clinics), our cost effectiveness depends on our ability to attract and retain customers at reasonable marketing expenses. As a percentage of revenue from operations, our advertisement and sales promotion expenses decreased from 10.23% in Financial Year 2021 to 7.39% in Financial Year 2023 (primarily as a result of cost optimization and the acquisition of Digital Age) as per our Restated Consolidated Financial Statements. However, marketing cost is expected to increase in the next few years owing to higher spend towards marketing for new customer acquisition and new initiatives, such as the expansion of our modern store network and of our business in international markets. For additional details, please see "Our Business Our Growth Strategies" on page 189. As a result, we expect our margins and profitability to remain under pressure in the short term, as we increase our marketing spend.

We organize our business into four reportable segments: India multi-channel, international, GlobalBees Brands and Others (for details, please see " Principal Components of Statement of Profit and Loss Our Business Segments" on page 444). While we have experienced growth in revenue and gross margins in our India multi-channel segment, our other business segments are in relatively early stages of growth. Going forward, growth in our other business segments will impact our results of operations.

As we grow our customer base in India, we also aim to selectively expand in international markets. In furtherance of this strategy, we launched e-commerce operations in UAE in October 2019 and in KSA in August 2022. Our international revenue from operations (before inter-segment elimination) amounted to 4,874.83 million and

1,723.66 million in Financial Year 2023 and the three months ended June 30, 2023, respectively, as per our Restated Consolidated Financial Statements. According to the RedSeer Report, largest specialist online Mothers, Babies and Kids Product retail platforms in UAE, in terms of GMV, for the year ending December 2022. Further, we commenced our operations in KSA in August 2022 and are the largest online-first Mothers, Babies and Kids product-focused retail platform, according to the Redseer Report. We offer products in various categories, including apparel, footwear, baby gear, nursery, diapers, toys and personal care, amongst others with more than 167,500 SKUs from more than 3,100 brands, including global brands, our home brands and leading third-party Indian brands. As at June 30, 2023, the FirstCry Arabia (UAE and KSA) mobile application had been downloaded 2.71 million times. For the three months ended June 30, 2023, we had 0.32 million Average Unique Transacting Customers in UAE and KSA. We expect that our international expansion will continue to contribute to the growth of our revenue from operations. In addition to the growth of our international operations, the growth of our GlobalBees Brands and Others segments (which also includes our pre-school education business) will also contribute to the growth in our revenue from operations.

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Trade receivables and debt instruments (such as security deposits) issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when we become a party to the contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus or minus, for an item not at fair value through profit and loss ("FVTPL") and transaction costs that are directly attributable to its acquisition or issue.

On initial recognition, a financial asset is classified as measured at

amortized cost;

fair value through other comprehensive income ("FVOCI") - debt investment;

FVOCI - equity investment; or FVTPL

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period we change our business model for managing financial assets.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

the asset is held within a business model whose objective is achieved by, both, collecting contractual cash flows and selling financial assets; and

the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, we may irrevocably elect to present subsequent changes in the investments fair value in other comprehensive income ("OCI") (designated as FVOCI

- equity investment). This election is made on an investment-by-investment basis. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with our continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. On initial recognition, we may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets: Subsequent measurement, gains and losses

Classification, subsequent measurement and gains and losses: Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value, and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

We derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire, or we transfer the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which we neither transfer nor retain substantially all of the risks and rewards of ownership and do not retain control of the financial asset.

If we enter into transactions whereby we transfer assets recognized on our statement of assets and liabilities, but retain either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.

We derecognise a financial liability when its contractual obligations are discharged or cancelled, or expire. We also derecognise a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognized in profit or loss.

Financial assets and financial liabilities are offset and the net amount presented in the restated consolidated statement of assets and liabilities when, and only when, we currently have a legally enforceable right to set off the amounts and we intend either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and accumulated impairment losses, if any. Capital work-in-progress is stated at cost, net of accumulated impairment losses, if any.

Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to us.

Depreciation is calculated on costs of items of property, plant and equipment less their estimated residual values over their estimated useful lives using the written down value method, and is generally recognized in the statement of profit and loss.

The estimated useful lives of items of property, plant and equipment for the current and comparative periods estimated by us are also in line with those specified in Schedule II to the Companies Act, 2013 and are as follows:

Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Depreciation on additions (disposals) is provided on a pro-rata basis, i.e., from (up to) the date on which asset is ready for use (disposed of).

Brands acquired on business combination are initially recognised at fair value. Subsequent to initial recognition the brands are assessed between those having indefinite useful lives and those having definite useful lives. Brands with indefinite useful lives are recognised at their carrying value less impairment losses. Brands with definite useful lives, are amortized over their estimated useful lives. Amortization method and amortization period is reviewed by our management and changes in the estimated useful life are made if the same are expected to be used for shorter period than the initial estimated period.

Customer contracts / relationships acquired on business combination are initially recognised at fair value. Subsequent to initial recognition the intangible assets amortization method and amortization period is reviewed by our management and changes in the estimated useful life are made if the same are expected to be used for shorter period than the initial estimated period.

Intangible assets for content writing are initially recognised at cost of acquisition. Subsequent measurement is at cost less accumulated amortisation and impairment loss, if any.

Other intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.

Research costs are charged to the Statement of Profit and Loss in the year in which they are incurred.

Platform development costs incurred are recognized as intangible assets, when feasibility has been established, we have committed technical, financial and other resources to complete the development and it is probable that asset will generate future economic benefits. The costs capitalized includes the salary cost of employees exclusively working on platform development up to the date the asset is available for use. Platform costs is amortized on a straight line basis over a period of four years. Platform development is measured at cost less accumulated amortisation and accumulated impairment, if any.

Product development costs incurred are recognized as intangible assets, when feasibility has been established, we have committed technical, financial and other resources to complete the development and it is probable that asset will generate future economic benefits. The costs capitalized includes the material cost, service cost and salary cost of employees exclusively working on product development up to the date the asset is available for use. Product development costs is amortized on a straight line basis over a period of seven years. Product development is measured at cost less accumulated amortisation and accumulated impairment, if any.

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.

Goodwill and brand value are not amortized and are tested for impairment annually.

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method for contract value and written down value method for other intangible assets is included in depreciation and amortisation in the Statement of Profit and Loss.

The estimated useful lives are as follows:

Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on weighted average method, and includes expenditure incurred in acquiring the inventories, and other costs incurred in bringing them to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses and discounts. The comparison of cost and net realizable value is made on an item-by-item basis.

Cost of work in progress and manufactured finished goods is determined on the weighted average basis and comprises direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and condition.

Raw materials, packaging materials and stores and spare parts are valued at lower of cost and net realizable value. Cost of raw materials, stock-in-trade, packaging materials and stores and spare parts includes purchase price, (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. In determining the cost, weighted average cost method is used.

In accordance with Ind AS 109, we apply expected credit loss ("ECL") model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

(i) Financial assets that are debt instruments, and are measured at amortized cost, for example, loans, debt securities, deposits and bank balance; and

(ii) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115.

We follow ‘simplified approach for recognition of impairment loss allowance on trade receivables.

The application of simplified approach does not require us to track changes in credit risk. Rather, we recognize impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. We recognize the provision for ECL based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which we are exposed to credit risk.

Our non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated. Goodwill and brand value are tested annually for impairment.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units ("CGUs"). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).

The goodwill impairment test is performed at the level of the CGU or groups of CGUs which are benefitting from the synergies of the acquisition and which represent the lowest level at which goodwill is monitored for internal management purposes. Market related information and estimates are used to determine the recoverable amount. Key assumptions on which we have based our determination of recoverable amount include estimated long term growth rates, discount rates and terminal growth rates. Cash flow projections take into account past experience and represent our best estimate about future developments.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in the Statement of Profit and Loss. Impairment loss recognized in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not subsequently reversed. In respect of other assets for which impairment loss has been recognized in prior periods, we review at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognized.

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid, e.g., under short-term cash bonus, if we have a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.

The grant date fair value of equity settled share-based payment awards granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as expense is based on the estimate of the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market vesting conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. We make specified monthly contributions towards Government administered provident fund scheme. Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.

Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Our net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for us, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (‘the asset ceiling). In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized in OCI. We determine the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (‘past service cost or ‘past service gain) or the gain or loss on curtailment is recognized immediately in profit or loss. We recognize gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Our liability in respect of other long-term employee benefits: Compensated absences is the amount of future benefit that employees have earned in return for their service in the current and prior periods. This benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The obligation is measured on the basis of an annual independent actuarial valuation using the Projected Unit Credit method. Remeasurement gains or losses are recognized in profit or loss in the period in which they arise.

A provision is recognized if, as a result of a past event, we have a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. Expected future operating losses are not provided for.

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent assets are not recognized in the consolidated financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefit will arise, the asset and related income are recognized in the period in which the change occurs. A contingent asset is disclosed, where an inflow of economic benefits is probable.

Revenue from contracts with customers is recognized upon transfer of control of promised goods/ services to customers at an amount that reflects the consideration to which we expect to be entitled for those goods/ services.

To recognize revenues, we apply the following five-step approach: identify the contract with a customer; identify the performance obligations in the contract; determine the transaction price;

allocate the transaction price to the performance obligations in the contract; and

recognize revenues when a performance obligation is satisfied.

Revenue from sale of products towards satisfaction of performance obligation is measured at the fair value of the amount of consideration received or receivable net of returns and allowances, trade discounts and rebates, taking into account contractually defined terms of payment excluding taxes or duties collected on behalf of the Government.

Goods and services tax is not received by us in our own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the Government. Accordingly, it is excluded from revenue. Our Company generally work on cash and carry model. However, other companies in our group have payment terms generally in the range of 30 to 90 days from the date of delivery.

For customer loyalty programmes, the fair value of the consideration received or receivable in respect of the initial sale is allocated between the loyalty points and the other components of the sale. The amount allocated to loyalty points is deferred and is recognized as revenue when the loyalty points are redeemed and we have fulfilled our obligations to supply the discounted products under the terms of the programme or when it is no longer probable that the award credits will be redeemed.

Income from internet display charges is recognized on an accrual basis to the extent that it is probable that the economic benefits will flow to us and the revenue from such services can be reliably measured. The performance obligation is satisfied over a time and payment is generally due within 30 to 60 days from satisfaction of performance obligation.

Service income arising from brand and platform (website) license usage is recognized on an accrual basis and in accordance with the agreement. The performance obligation is satisfied over time and payment is generally due within 45 days from satisfaction of performance obligation. This is considered as part of other operating revenue.

Revenue from royalty and sales of student kit to franchisee schools is recognized on accrual basis during the academic year.

The policy for contract balances, i.e., contract assets, trade receivables and contract liabilities is as follows:

We classify our right to consideration in exchange for deliverables as either a receivable or as unbilled revenue. A receivable is a right to consideration that is unconditional upon passage of time. Revenue in excess of billings is recorded as unbilled revenue and is classified as a financial asset where the right to consideration is unconditional upon passage of time. Unbilled revenue which is conditional is classified as other current asset. Trade receivables and unbilled revenue is presented net of impairment.

A contract liability is the obligation to deliver services to a customer for which we have received consideration or part thereof (or an amount of consideration is due) from the customer. If a customer pays consideration before we deliver services to the customer, a contract liability is recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognized as revenue when we perform under the contract.

Interest income or expense is recognized using the effective interest method.

The ‘effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

the gross carrying amount of the financial asset; or

the amortized cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Rental income from sub-leasing activities is recognized on an accrual basis based on the underlying sub-lease arrangements.

Income from support services are recognized when the services are performed and recovery of the consideration is certain.

Income tax comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination or to an item recognized directly in equity or in other comprehensive income.

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognized in respect of carried forward tax losses and tax credits. Deferred tax is not recognized for:

temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;

temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that we are able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which they can be used. We recognize a deferred tax asset to the extent that there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realized.

Deferred tax assets unrecognized or recognized, are reviewed at each reporting date and are recognized / reduced to the extent that it is probable / no longer probable, respectively, that the related tax benefit will be realized. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which we expect, at the reporting date, to recover or settle the carrying amount of our assets and liabilities.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

Government grants are recognized when there is a reasonable assurance that we will comply with the relevant conditions and the grant will be received.

Government grants are recognized in the Statement of Profit and Loss, either on a systematic basis when we recognize, as expenses, the related costs that the grants are intended to compensate or, immediately if the costs have already been incurred. Government grants related to assets are deferred and amortized over the useful life of the asset. Government grants related to income are presented as an offset against the related expenditure, and government grants that are awarded as incentives with no ongoing performance obligations to us are recognized as income in the period in which the grant is received.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, we elect whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquirees identifiable net assets. Acquisition-related costs are expensed as incurred.

We determine we have acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organized workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.

At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognised at their acquisition date fair values. For this purpose, the liabilities assumed include contingent liabilities representing present obligation and they are measured at their acquisition fair values irrespective of the fact that outflow of resources embodying economic benefits is not probable. However, the following assets and liabilities acquired in a business combination are measured at the basis indicated below:

Deferred tax assets or liabilities, and the liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with Ind AS 12 Income Tax and Ind AS 19 Employee Benefits respectively.

Potential tax effects of temporary differences and carry forwards of an acquiree that exist at the acquisition date or arise as a result of the acquisition are accounted in accordance with Ind AS 12.

When we acquire a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If a business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognized in profit or loss or OCI as appropriate.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of Ind AS 109 Financial Instruments, is measured at fair value with changes in fair value recognised in profit or loss in accordance with Ind AS 109. If the contingent consideration is not within the scope of Ind AS 109, it is measured in accordance with the appropriate Ind AS and shall be recognised in profit or loss. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and subsequent its settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, we re-assess whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in OCI and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in equity as capital reserve, without routing the same through OCI.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of our cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. A cash generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange difference are recognized in profit and loss.

For the purpose of consolidation, the assets and liabilities of our foreign operations are translated to Indian rupees at the exchange rate prevailing on the balance sheet date, and the income and expenses at the average rate of exchange for the respective months. Exchange differences arising on such translation are recognized as currency translation reserve under equity. Exchange differences arising from the translation of a foreign operation previously recognized in currency translation reserve in equity are not reclassified from equity to profit or loss until the disposal of the operation.

Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

We evaluate if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. We use significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.

We determine the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if we are reasonably certain to exercise that option, and periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option in assessing whether we are reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for us to exercise the option to extend the lease, or not to exercise the option to terminate the lease. We revise the lease term if there is a change in the non-cancellable period of a lease.

We recognize right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. As per Ind AS 116, lease commencement date is the date on which a lessor makes an underlying asset available for use by a lessee. Our Company generally has two types of leases, one being leases for holding company owned physical stores and other being the leases for warehouses of the holding company. In case of leases for holding company owned physical stores, the holding company recognizes right of use asset on the lease commencement date. However, in case of leases for warehouses, lessor provides a rent-free period to facilitate fitting out and essential modifications to the assets to make it available for use by the holding company. The assets cannot be used until the modifications are completed, hence the holding company recognizes right-of-use asset for warehouse leases on completion of the initial rent free period i.e, the date on which asset is available for use. The cost of the right of use asset measured at inception shall comprise of the amount of the initial measurement of lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of use assets subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re-measurement of the lease liability. The right of use asset is depreciated in the straight line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. Right-of use assets are tested for impairment where there any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognized in the consolidated statement of profit and loss.

We measure the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, we use incremental borrowing rate. For leases with reasonably similar characteristics, we, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where we are reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, we recognize any remaining amount of the re-measurement in statement of profit and loss.

We apply the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.

Leases in which we do not transfer substantially all the risks and rewards of ownership of an asset is classified as an operating lease. Assets subject to operating leases are included in the property, plant and equipment. Rental income on an operating lease is recognized in the Consolidated Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the Consolidated Statement of Profit and Loss.

The amendments to Ind AS 116 provide a practical expedient to lessees in accounting for rent concessions that are a direct consequence of the COVID-19 pandemic.

Many lessors have provided rent concessions to lessees as a result of the COVID-19 pandemic. Rent concessions can include rent holidays or rent reductions for a period of time. Applying the requirements in Ind AS 116 for changes to lease payments, particularly assessing whether the rent concessions are lease modifications and applying the required accounting, could be practically difficult in the current environment. The objective of the amendment is to provide lessees that have been granted COVID-19 related rent concessions with practical relief, while still providing useful information about leases to users of the financial statements.

The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change.

Any reduction in lease payments affects only payments originally due on or before June 30, 2021.

There is no substantive change to other terms and conditions of the lease.

Pursuant to the above amendment, we have applied the practical expedient with effect from April 1, 2020. We have accounted for the unconditional rent concessions in "miscellaneous income" in the Consolidated Statement of Profit and Loss.

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Our board of directors is identified as chief operating decision maker. Subsequent to the acquisition of Digital Age and expansion of Globalbees and international operations, for management purposes, we have reorganized our segments, which provide relevant information for better understanding of our financial performance and resource allocation decisions. Accordingly, we primarily operate in the following four segments:

(i) India multi-channel,

(ii) International,

(iii) Globalbees and

(iv) Others.

Earning per share

Basic earnings per share are calculated by dividing the net profit and loss for the period attributable to equity shareholders of our Company (after deducting preference dividends and attributable taxes) by the weighted average number of equity and compulsorily convertible preference shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit and loss for the period attributable to equity shareholders of our Company and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

Total income consists of revenue from operations and other income.

Revenue from operations consists of sale of products and other operating revenue.

Sale of products: Sale of products relates to transactions where we act directly as the seller of goods we purchase from our suppliers or owned brands we manufacture. Revenue from operations from sale of products is measured based on the transaction price, which is the consideration, adjusted for volume discounts, rebates, scheme allowances, price concessions, incentives, and returns, if any, as specified in the contracts with our customers.

Other operating revenue: Other operating revenue consists of (i) internet display charges, which we charge from brands for advertising on our platform and (ii) other operating revenue (including preschool revenue).

Other income consists primarily of interest income on fixed deposits with banks and others, income from support services, lease rentals, and miscellaneous income.

Our expenses consist of

(i) cost of materials consumed,

(ii) purchase of stock-in-trade

(iii) changes in inventories of stock-in-trade, finished goods and work in progress,

(iv) employees benefits expense

(v) employee share based payment expense,

(vi) finance costs,

(vii) depreciation and amortisation expenses, and

(viii) other expenses.

Cost of materials consumed consist of costs of raw material that we purchase for our manufacturing operations.

Purchase of stock-in-trade primarily consists of the purchase price of Mothers, Babies and Kids products that we purchase from third party brands or our contract manufacturers (including purchases by subsidiaries of GlobalBees Brands).

Changes in inventories of stock-in-trade, finished goods and work in progress consists of movements between opening and closing value of our inventories (i.e., finished goods, work-in-progress, and stock-in-trade).

Employee benefit expense consists of salaries, wages, bonus, and other allowances, contributions to provident and other funds, and staff welfare expenses.

Employee share based payment expense consists of the number of awards that meet the related service and vesting conditions at the vesting date. For further details, please see "Restated Consolidated Financial Statements Note

32 Share Based Payments".

Finance costs consist of interest on borrowings measured at amortized cost, interest expense on lease liabilities, interest on contingent consideration arising through business combinations and other borrowing costs.

Depreciation and amortisation expenses consist of depreciation on property, plant and equipment, amortization of right-of-use assets and amortization of intangible assets.

Other expenses primarily consist of advertising and sales promotion expenses, courier expenses, subcontractor expenses, telephone and internet charges, legal and professional expenses, and miscellaneous expenses.

We organize our business into the following reportable segments:

India multi-channel segment: this segment covers our online platform, modern stores as well as general trade retail distribution in India, covering both home brand and third-party products. In addition, this segment also covers our manufacturing operations in India;

International segment: this segment covers our operations in UAE and KSA;

Globalbees Brands segment: this segment covers GlobalBees Brands and its subsidiaries; and

Others: This segment covers other businesses which are currently not material (for example, our education business).

The Restated Consolidated Financial Statements include information on revenues from operations and results from our reportable segments, as set forth in the tables below, for Financial Year 2023 and the three months ended June 30, 2023:

In addition, the Restated Consolidated Financial Statements also provide segmental revenue from operations and results assuming that the acquisition of Digital Age was completed on April 1, 2022, as set forth below:

We acquired 100% equity interest in Digital Age on May 2, 2022. As a result, Digital Ages results of operations have been consolidated in our Restated Consolidated Financial Statements for Financial Year 2023 (from May 2, 2022 onwards) and for the three months ended June 30, 2023 (for the entire three months period). The principal business of Digital Age is to, amongst other things, deal in the retail trade of Mothers, Babies and Kids Products.

Prior to the acquisition, our online platform was operated by Digital Age, pursuant to a platform sharing agreement. Further, several of our modern stores were franchised to Digital Age. As a result of the acquisition, we are able to consolidate all of these operations into our business.

As Digital Age is a material Subsidiary and its acquisition has had a material impact on our financial condition and results of operations, our Restated Consolidated Statement of Profit and Loss for the Financial Year 2022 and 2023 are not directly comparable.

We have prepared the Unaudited Pro Forma Consolidated Financial Information included in this Draft Red Herring Prospectus to reflect the acquisition of Digital Age for Financial Years 2022 and 2023. The Unaudited Pro Forma Consolidated Financial Information for the Financial Years 2022 and 2023 has been prepared as if the acquisition had taken place on April 1, 2021.

In this section, we provide a discussion of our results of operations for Financial Year 2022 and 2023 based on the Unaudited Pro Forma Consolidated Financial Information. We believe that, due to the materiality of the acquisition of Digital Age, this discussion provides important information to the reader on our results of operations that would have resulted if Digital Age was consolidated into our financial statements for these years.

Please see "Unaudited Pro Forma Consolidated Financial Information" and "Risk Factors The Unaudited Pro Forma Consolidated Financial Information is presented for illustrative purposes only and may not be indicative of our future performance." on pages 404 and 46 for additional details.

The following table sets forth select financial data from our restated consolidated statement of profit and loss for the Financial Years 2021, 2022 and 2023 and for the three months ended June 30, 2023, the components of which are also expressed as a percentage of total income for such periods:

Our total income was 14,268.27 million for the three months ended June 30, 2023.

Revenue from operations. Our revenue from operations was 14,069.33 million for the three months ended June 30, 2023, comprising sale of products and other operating revenue.

Further, other operating revenue amounted to 349.76 million for the three months ended June 30, 2023 primarily comprising internet display charges.

Other income. Our other income amounted to 198.94 million for the three months ended June 30, 2023, primarily comprising interest income from fixed deposits.

Expenses

Materials cost. Materials cost amounted to 9,044.01 million for the three months ended June 30, 2023.

The table below sets forth the components of our materials cost:

Materials cost as a percentage of revenue from operations amounted to 64.28%.

Employee benefits expense. Employee benefits expense amounted to 1,140.33 million for the three months ended June 30, 2023, primarily comprising salaries, wages, bonus and other allowances amounting to 1,083.30 million.

Employee share based payment expense. Employee share based payment expense amounted to 452.87 million for the three months ended June 30, 2023.

Finance costs. Our finance costs amounted to 356.54 million for the three months ended June 30, 2023, primarily comprising

(i) interest expense on lease liabilities accounted for as per Ind AS 116 amounting to 195.73 million for the three months ended June 30, 2023,

(ii) interest on borrowings measured at amortized cost amounting to 37.82 million and

(iii) interest on contractual obligations amounting to 111.67 million.

Depreciation and amortisation expense. Our depreciation and amortisation expense amounted to 835.58 million for the three months ended June 30, 2023, primarily comprising

(i) depreciation of property, plant and equipment amounting to 240.38 million,

(ii) amortization of right-to-use assets to 321.97 million as per Ind As 116, and

(iii) amortization of intangible assets amounting to 273.23 million.

Other expenses. Our other expenses amounted to 3,588.97 million for the three months ended June 30, 2023, primarily comprising

(i) courier expenses amounting to 1,266.24 million for the three months ended June 30, 2023,

(ii) advertising and sales promotion expenses amounting to 1,100.39 million,

(iii) miscellaneous expenses amounting to 367.54 million, and

(iv) rent amounting to 182.05 million.

Loss before tax for the period. As a result of the foregoing, our loss before tax was (1,150.03) million for the three months ended June 30, 2023.

Tax expenses. Our total tax income for the three months ended June 30, 2023 amounted to 45.77 million and comprised a current tax expense of (39.57) million and deferred tax credit of 85.34 million.

Loss after tax for the period. As a result of the foregoing, our loss for the period amounted to (1,104.26) million for the three months ended June 30, 2023.

Our total income increased by 127.71% to 57,312.76 million for the Financial Year 2023 from 25,169.16 million for the Financial Year 2022, due to an increase in revenue from operations, partially offset by a decrease in other income.

Revenue from operations. Our revenue from operations increased by 134.56% to 56,325.39 million for the Financial Year 2023 from 24,012.88 million for the Financial Year 2022, primarily due to an increase in the sale of products and other operating revenue due to following reasons:

Sale of products increased to 55,194.40 million for Financial Year 2023 from 23,235.02 million for Financial Year 2022. This increase was primarily due to our acquisition of Digital Age in May 2022. Further, the increase was also due to: growth in the sale of products in India: the growth was driven by an increase in the demand of our products on our multi-channel retailing platform, which led to higher sales volumes. The increase in demand was a result of an increase in our customer base across our platform (Annual Unique Transacting Customers (which covers unique customers on our online platform and modern stores) increased from 6.68 million in Financial Year 2022 to 7.72 million in Financial Year 2023) and an increase in the number of our modern stores, from 630 as at March 31, 2022 to 888 as at March 31, 2023. Across our multi-channel retailing platform, Orders in India increased to 29.61 million in Financial Year 2023, from 25.65 million in Financial Year 2022. In addition, we also expanded our general trade distribution in Financial Year 2023, as compared with Financial Year 2022;

we commenced operations in KSA in August 2022 and have grown our sales in KSA since then. Further, we also grew our sale of products in UAE in Financial Year 2023, compared to Financial Year 2022;

increase in revenues from our GlobalBees Brands business in Financial Year 2023, compared to Financial Year 2022, primarily as a result of acquisitions undertaken by GlobalBees Brands during the year;

increase in revenues from our Subsidiary, Swara Baby in Financial Year 2023, compared to Financial Year 2022; and

increase in other operating income, due to higher internet display charges for Financial Year 2023, compared to Financial Year 2022.

Other income. Our other income decreased by 14.61% to 987.37 million for the Financial Year 2023 from 1,156.28 million for the Financial Year 2022, primarily due to a decrease in interest income from fixed deposits.

Expenses

Materials cost. Materials cost increased significantly to 39,353.18 million for the Financial Year 2023 from 15,721.39 million for the Financial Year 2022, primarily due to the impact of consolidation of Digital Age in

Financial Year 2023, increases in the purchases of products that we purchased from various brands and from contract manufacturers that manufacture our home brands. The increase in expenses was in line with the increase in our revenues from sale of products both within India and outside India. In addition to volume growth, Materials cost also increased due to increases in the price of various products procured by us, due to general inflationary trends and the increase in prices of raw materials used in the manufacture of such products.

The table below sets forth the components of our materials cost sold:

Employee benefits expense. Employee benefits expense increased by 65.53% to 4,083.93 million for the Financial Year 2023 from 2,467.17 million for the Financial Year 2022, primarily due to increases in salaries, wages, bonus and other allowances to 3,880.45 million for the Financial Year 2023 from 2,346.28 million for the Financial Year 2022 on account of an increase in our employee headcount (due to the consolidation of employees of Digital Age, increase in the number of our modern stores, expansion of our international operations, employee cost on account of business combination and the full year impact of the acquisition of our GlobalBees Brands business).

Employee share based payment expense. Employee share based payment expense increased significantly to

3,614.37 million for the Financial Year 2023 from 921.31 million for the Financial Year 2022, primarily due to the vesting of employee stock options granted towards the end of Financial Year 2022 in accordance with our ESOP Plan.

Finance costs. Our finance costs increased by 89.93% to 715.73 million for the Financial Year 2023 from 376.83 million for the Financial Year 2022, primarily due to increases in

(i) interest expense on lease liabilities accounted for as per Ind AS 116 to 560.06 million for the Financial Year 2023 from 245.62 million for the

Financial Year 2022, on account of the increase in our modern stores (including modern stores owned and operated by Digital Age) and warehouses and

(ii) interest on borrowings measured at amortized cost to 102.22 million for the Financial Year 2023 from 33.89 million for the Financial Year 2022, primarily due to an increase in borrowings by our subsidiaries.

Depreciation and amortisation expense. Our depreciation and amortisation expense increased significantly to 2,942.83 million for the Financial Year 2023 from 1,108.88 million for the Financial Year 2022, primarily due to increases in

(i) depreciation of property, plant and equipment to 854.34 million for the Financial Year 2023 from 420.16 million for the Financial Year 2022, primarily due to increases in the number of our modern stores (including modern stores owned and operated by Digital Age) and warehouses,

(ii) amortization of right-to-use assets as per Ind AS 116 to 1,015.27 million for the Financial Year 2023 from 579.00 million for the Financial

Year 2022, as a result of an increase in the number of our modern stores (including modern stores owned and operated by Digital Age) and warehouses, and

(iii) amortization of intangible assets to 1,073.22 million for the Financial Year 2023 from 109.72 million for the Financial Year 2022, primarily due to intangible assets acquired in business combinations.

Other expenses. Our other expenses increased significantly to 12,446.63 million for the Financial Year 2023 from 5,085.02 million for the Financial Year 2022, primarily due to increases in

(i) courier expenses to 4,292.70 million for the Financial Year 2023 from 610.42 million for the Financial Year 2022 primarily due to the impact of the acquisition of Digital Age, increases in order fulfilments in line with increases in sales volume,

(ii) advertising and sales promotion expenses to 4,164.77 million for the Financial Year 2023 from 2,686.11 million for the Financial Year 2022, increased advertising, in line with the growth in our sales, relating to scale-up of businesses under our GlobalBees Brands and due to the commencement of our operations in KSA,

(iii) miscellaneous expenses to 1,018.78 million for the Financial Year 2023 from 172.69 million for the Financial

Year 2022 primarily due to the impact of the acquisition of Digital Age, the full year consolidation of our

GlobalBees Brands business and the commencement of our operations in KSA, and (iv) rent to 562.24 million for the Financial Year 2023 from 88.95 million for the Financial Year 2022 primarily due to our increase in rental expenses of material handling equipment, full year consolidation of our GlobalBees Brands business and the impact of the acquisition of Digital Age.

Loss before tax for the year. As a result of the foregoing, our loss before tax was (5,300.23) million for the Financial Year 2023 as compared to loss before tax of (511.44) million for Financial Year 2022.

Tax expenses. Our total tax income for the Financial Year 2023 amounted to 439.67 million and comprised a current tax expense of 172.05 million, deferred tax credit of 611.72 million. Our total tax expense for the Financial Year 2022 was 275.41 million and comprised current and deferred tax expense of 121.42 million and 153.99 million, respectively.

Loss after tax for the year. As a result of the foregoing, our loss for the year increased to (4,860.56) million for the Financial Year 2023 from a loss of (786.85) million for the Financial Year 2022.

Our total income increased by 44.65% to 25,169.16 million for the Financial Year 2022 from 17,400.59 million for the Financial Year 2021, due to an increase in revenue from operations, partially offset by a decrease in other income.

Revenue from operations. Our revenue from operations increased by 49.81% to 24,012.88 million for the Financial Year 2022 from 16,028.54 million for the Financial Year 2021, primarily due to an increase in the sale of products and other operating revenue.

Sale of products increased to 23,235.02 million for Financial Year 2022 from 15,588.26 million for Financial Year 2021, due to a growth in our sale of products both within India and outside India.

Across our multi-channel retailing platform in India, Orders increased to 25.65 million in Financial Year 2022, from 18.67 million in Financial Year 2021. The growth in our revenue was driven by an increase in the demand of our products on our multi-channel retailing platform. The increase in demand was a result of an increase in our customer base across our platform and an increase in the number of modern stores, from 437 as at March 31, 2021 to 630 as at March 31, 2022. Further, in Financial Year 2021, our revenue from operations was also adversely impacted by the adverse impact of the COVID-19 pandemic and related lockdowns and movement restrictions, which adversely impacted our sales during the year (in particular, the first quarter of Financial Year 2021).

We also grew our operations in UAE in Financial Year 2022, which also contributed to the growth in our revenue from operations.

Additionally, we also invested in Global Bees Brands in Financial Year 2022, which also further contributed to the growth of our revenue.

Further, other operating revenue increased to 777.86 million for Financial Year 2022 from 440.28 million for Financial Year 2021 primarily due to an increase in internet display charges.

Other income. Our other income decreased by 15.73% to 1,156.28 million for the Financial Year 2022 from 1,372.05 million for the Financial Year 2021, primarily due to a decrease in interest income from fixed deposits.

Expenses

Materials cost. Materials cost increased by 50.28% to 15,721.39 million for the Financial Year 2022 from 10,461.61 million for the Financial Year 2021, primarily due to increases in purchases of products that we purchased from various brands and from contract manufacturers that manufacture our home brands, and also due to increases in the pricing of certain products. The increase in expenses was in line with the increase in our revenues from sale of products both within India and outside India. The table below sets forth the components of our materials cost:

Employee benefits expense. Employee benefits expense increased by 46.91% to 2,467.17 million for the Financial Year 2022 from 1,679.40 million for the Financial Year 2021, primarily due to increases in salaries, wages, bonus and other allowances to 2,346.28 million for the Financial Year 2022 from 1,601.18 million for the Financial Year 2021 on account of an increase in our employee headcount (due to an increase in the number of our modern stores, employee cost on account of business combination and expansion of our UAE operations and acquisition of Global Bees Brands and Swara Baby).

Employee share based payment expense. Employee share based payment expense increased significantly to 921.31 million for the Financial Year 2022 from 458.21 million for the Financial Year 2021, primarily due to the vesting of employee stock options granted towards the end of Financial Year 2022 in accordance with our ESOP Plan.

Finance costs. Our finance costs increased significantly to 376.83 million for the Financial Year 2022 from 140.76 million for the Financial Year 2021, primarily due to increases in

(i) interest expense on lease liabilities accounted for as per Ind AS 116 to 245.62 million for the Financial Year 2022 from 134.24 million for the Financial Year 2021, due to the increase in our modern stores and warehouses and

(ii) interest on borrowings measured at amortized cost to 33.89 million for the Financial Year 2022 from 6.52 million for the Financial Year 2021, primarily due to an increase in borrowings by our subsidiaries and

(iii) interest on contractual obligations amounting to 91.42 million for the Financial Year 2022.

Depreciation and amortisation expense. Our depreciation and amortisation expense increased by 57.88% to 1,108.88 million for the Financial Year 2022 from 702.37 million for the Financial Year 2021, primarily due to increases in

(i) depreciation of property, plant and equipment to 420.16 million for the Financial Year 2022 from 239.94 million for the Financial Year 2021, primarily due to increases in the number of our modern stores and warehouses,

(ii) amortization of right-to-use assets as per Ind As 116 amounting to 579.00 million for the Financial Year 2022 from 399.04 million for the Financial Year 2021, as a result of an increase in the number of our modern stores and warehouses, and

(iii) amortization of intangible assets to 109.72 million for the Financial Year 2022 from 63.39 million for the Financial Year 2021, primarily intangible assets acquired in business combination.

Other expenses. Our other expenses increased by 68.90% to 5,085.02 million for the Financial Year 2022 from 3,010.65 million for the Financial Year 2021, primarily due to increases in

(i) advertising and sales promotion expenses to 2,686.11 million for the Financial Year 2022 from 1,640.18 million for the Financial Year 2021, primarily due to increased advertising, in line with the growth in our sales, and relating to scale-up of businesses under our GlobalBees Brands,

(ii) courier expenses to 610.42 million for the Financial Year 2022 from 382.41 million for the Financial Year 2021 primarily due to increases in order fulfilments in line with increases in sales volume,

(iii) subcontractor expenses to 507.69 million for the Financial Year 2022 from 365.52 million for the Financial Year 2021 primarily due to fulfilment of higher number of Orders in Financial Year 2023,

(iv) legal and professional expenses to 274.37 million for the Financial Year 2022 from 86.05 million for the Financial Year

2021 primarily due to certain deal related expenses incurred towards the acquisition of subsidiaries, and

(v) miscellaneous expenses to 172.70 million for the Financial Year 2022 from 43.90 million for the Financial Year 2021 primarily due to the acquisition of subsidiaries by GlobalBees Brands.

Profit/(Loss) before tax for the year. As a result of the foregoing, our loss before tax was (511.44) million for the Financial Year 2022 as compared to the profit before tax of 983.21 million for Financial Year 2021.

Tax expenses. Our total tax expense for the Financial Year 2022 was 275.41 million and comprised current and deferred tax expense of 121.42 million and 153.99 million, respectively. Our total tax income for the Financial Year 2021 amounted to 1,176.23 million and comprised a current tax expense of 47.55 million and deferred tax income of 1,223.78 million.

Profit/(Loss) after tax for the year. As a result of the foregoing, our loss for the year amounted to (786.85) million for the Financial Year 2022 and our profit for the year amounted to 2,159.44 million for the Financial Year 2021.

The following table sets forth select financial data from our unaudited pro forma consolidated statement of profit and loss for the Financial Years 2022 and 2023, reflecting the acquisition of Digital Age, the components of which are also expressed as a percentage of total income for such periods: For details regarding our acquisitions, please see "History and Certain Corporate Matters" on page 221.

Total income increased by 44.16% to 53,610.04 million for the Financial Year 2023 from 37,188.74 million for the Financial Year 2022, due to an increase in revenue from operations, partially offset by a decrease in other income.

Revenue from operations. Revenue from operations increased by 46.27% to 52,621.90 million for the Financial Year 2023 from 35,975.04 million for the Financial Year 2022, primarily due to the following reasons:

growth in the sale of products in India: the growth was driven by an increase in the demand of our products on our multi-channel retailing platform, which led to higher sales volumes. The increase in demand was a result of an increase in our customer base across our platform (Annual Unique Transacting Customers (which covers unique customers on our online platform and modern stores) increased from 6.68 million in Financial Year 2022 to 7.72 million in Financial Year 2023) and an increase in the number of our modern stores, from 630 as at March 31, 2022 to 888 as at March 31, 2023. Across our multi-channel retailing platform, Orders in India increased to 29.61 million in Financial Year 2023, from 25.65 million in Financial Year 2022. In addition, we also expanded our general trade distribution in Financial Year 2023, as compared with Financial Year 2022, leading to higher sales;

we commenced operations in KSA in August 2022 and have grown our sales in KSA since then. Further, we also grew our sale of products in UAE in Financial Year 2023, compared to Financial Year 2022;

increase in revenues from our GlobalBees Brands business in Financial Year 2023, compared to Financial Year 2022;

increase in revenues from our Subsidiary, Swara Baby in Financial Year 2023, compared to Financial Year 2022; and

increase in other operating income, due to higher internet display charges for Financial Year 2023, compared to Financial Year 2022.

Other income. Other income decreased by 18.58% to 988.14 million for the Financial Year 2023 from 1,213.70 million for the Financial Year 2022, primarily due to a decrease in interest income from fixed deposits.

Expenses

Materials cost. Materials cost sold increased by 46.64% to 35,297.26 million for the Financial Year 2023 from 24,070.72 million for the Financial Year 2022, consistent with the increase in sales of products on our multi-channel retailing platform both within India and outside India.

In addition to increase in materials cost due to higher purchase volumes, Materials Cost also increased due to increases in the price of various products procured by us, due to general inflationary trends and the increase in prices of raw materials used in the manufacture of such products.

The table below sets forth the components of the pro forma materials cost for Financial Years 2022 and Financial Year 2023:

Materials cost as a percentage of revenue from operations amounted to 66.91% for the Financial Year 2022 and 67.08% for the Financial Year 2023.

Employee benefits expense. Employee benefits expense increased by 49.03% to 4,107.61 million for the Financial Year 2023 from 2,756.17 million for the Financial Year 2022, primarily due to increases in salaries, wages, bonus and other allowances on account of the following factors:

an increase in employee headcount, driven by an increase in the number of modern stores opened and the expansion of our general trade retail distribution operations in Financial Year 2023, full year consolidation of our GlobalBees Brands business and the growth of our operations in KSA and UAE; and employee cost on account of business combination in Financial Year 2023, compared with Financial Year 2022. This cost relates to amounts payable by us towards the acquisition of additional stakes in four subsidiaries of Globalbees Brands, which is partly dependent on the continuity of the founder in the acquired companies. Hence, as per Ind AS, such amount has been treated as a component of employee benefit expenses.

Employee share based payment expense. Employee share based payment expense increased significantly to 3,614.37 million for the Financial Year 2023 from 921.31 million for the Financial Year 2022, primarily due to the vesting of employee stock options granted towards the end of Financial Year 2022 in accordance with our ESOP Plan.

Finance costs. Finance costs increased by 69.90% to 720.98 million for the Financial Year 2023 from 424.36 million for the Financial Year 2022, primarily due to increases in

(i) interest expense on lease liabilities accounted for as per Ind AS 116, on account of an increase in the number of our modern stores and warehouses in Financial Year 2023, compared to Financial Year 2022, and

(ii) interest on borrowings measured at amortized cost, primarily due to an increase in borrowings by some of our subsidiaries.

Depreciation and amortisation expense. Depreciation and amortisation expense increased significantly to

2,963.49 million for the Financial Year 2023 from 1,341.02 million for the Financial Year 2022, primarily due to increases in

(i) depreciation of property, plant and equipment, primarily due to increases in the number of our modern stores and warehouses,

(ii) amortization of right-to-use assets as per Ind AS 116, as a result of an increase in the number of our modern stores and warehouses, and

(iii) amortization of intangible assets, primarily intangible assets acquired upon business combinations.

Other expenses. Other expenses increased significantly to 12,753.48 million for the Financial Year 2023 from 8,419.90 million for the Financial Year 2022, primarily due to increases in

(i) courier expenses primarily due to increases in order fulfilments in line with increases in sales volume,

(ii) advertising and sales promotion expenses, consistent with the growth in our sales, relating to scale-up of businesses under our GlobalBees Brands and due to the commencement of our operations in KSA,

(iii) miscellaneous expenses primarily due to the full year consolidation of our GlobalBees Brands business and commencement of our operations in KSA and (iv) rent primarily due to the increase in rent expenses of material handling equipment and full year consolidation of our GlobalBees Brands business.

Loss before tax for the year. As a result of the foregoing, loss before tax was (5,847.15) million for the Financial Year 2023 as compared to loss before tax of (744.74) million for Financial Year 2022.

Tax expenses. Total tax income for the Financial Year 2023 amounted to 439.67 million and comprised a current tax expense of (172.05) million and deferred tax credit of 611.72 million. Total tax expense for the Financial Year 2022 was 272.54 million and comprised current and deferred tax expense of (121.42) million and (151.12) million, respectively.

Loss after tax for the year. As a result of the foregoing, loss for the year increased to (4,863.81) million for the Financial Year 2023 from a loss of (1,017.28) million for the Financial Year 2022.

Historically, our primary liquidity requirements have been to finance our capital expenditure and working capital needs for our operations. We have met these requirements through cash flows from operations, equity infusions from Shareholders and borrowings. As at June 30, 2023, we had 3,864.50 million in cash and cash equivalents, and 5,091.72 million in other bank balances other than cash and cash equivalents in accordance with our Restated Consolidated Financial Statements. We believe that, after taking into account the expected cash to be generated from operations, our borrowings and the proceeds from the Offer, we will have sufficient liquidity for our present requirements and anticipated requirements for capital expenditure and working capital for the next 12 months.

The following table sets forth our cash flows for the period and years indicated below:

Net cash generated in operating activities for the three months ended June 30, 2023 was 96.78 million. While our restated loss before tax for the three months ended June 30, 2023 was (1,150.03) million, our operating profit before working capital changes was 307.09 million, primarily attributable to adjustments for employee share based payment expense of 452.87 million, finance costs of 356.54 million, amortisation of intangible assets of 273.23 million, depreciation on property, plant and equipment of 240.38 million and amortisation of right of use assets of 321.97 million, partially offset by interest income on fixed deposits with banks of 100.88 million. Our working capital adjustments primarily consisted of an increase in trade payables of 595.24 million, partially offset by a, increase in other current assets of 481.24 million, and increase in inventories of 199.13 million. Our income taxes paid (net of tax refund received) was 22.09 million for the three months ended June 30, 2023.

Net cash used in operating activities for the Financial Year 2023 was 3,989.89 million. While our restated loss before tax for the Financial Year 2023 was (5,300.23) million, our operating profit before working capital changes was 1,269.70 million, primarily attributable to adjustments for employee share based payment expense of 3,614.37 million, amortisation of intangible assets of 1,073.22 million, amortisation of right of use assets of 1,015.27 million and depreciation on property, plant and equipment of 854.34 million, partially offset by interest income on fixed deposits with banks of 560.58 million. Our working capital adjustments primarily consisted of a decrease in trade payables of 5,579.04 million, decrease in current and non-current financial liabilities of 1,621.29 million, partially offset by increase in other non-current assets of 1,284.49 million increase in inventories of 3,080.61 million. The major adjustments in working capital related to acquisitions made by us during the year. Our income taxes paid (net of tax refund received) was 267.39 million for the Financial Year 2023.

Net cash used in operating activities for the Financial Year 2022 was 1,317.26 million. While our restated loss before tax for the Financial Year 2022 was (511.44) million, our operating profit before working capital changes was 908.99 million, primarily attributable to adjustments for employee share based payment expense of 921.31 million, amortisation of right of use assets of 579.00 million and depreciation on property, plant and equipment of 420.16 million, partially offset by interest income on fixed deposits with banks of 963.12 million. Our working capital adjustments primarily consisted of an increase in inventories of 4,020.65 million, increase in other current assets of 1,092.42 million partially offset by increase in trade payables of 1,737.05 million, increase in current and non-current financial liabilities of 1,610.02 million. Our income taxes paid (net of tax refund received) was (255.07) million for the Financial Year 2022.

Net cash used in operating activities for the Financial Year 2021 was 667.40 million. While our restated profit before tax for the Financial Year 2021 was 983.21 million, our operating profit before working capital changes was 1,160.81 million, primarily attributable to adjustments for employee stock option scheme expense of

458.21 million, and amortisation of right of use assets of 399.04 million, partially offset by interest income on fixed deposits with banks of 1,016.90 million. Our working capital adjustments primarily consisted of an increase in inventories of 2,027.47 million, an increase in other current assets of 357.53 million, and an increase in trade receivables of 315.85 million, which was partially offset by an increase in trade payables of 1,038.27 million. Our income taxes paid (net of tax refund received) was 32.36 million for the Financial Year 2021.

Net cash generated from investing activities was 1,244.47 million for the three months ended June 30, 2023, primarily comprising proceeds from bank deposits of 4,308.81 million, partially offset by acquisition of Subsidiaries of 2,642.06 million and acquisition of property, plant and equipment of 548.62 million.

Net cash generated from investing activities was 3,040.89 million for the Financial Year 2023, primarily comprising proceeds from bank deposits of 9,047.43 million, partially offset by acquisition of subsidiaries of 3,949.46 million and acquisition of property, plant and equipment of 2,330.67 million.

Net cash used in investing activities was 4,905.81 million for the Financial Year 2022, primarily comprising acquisition of subsidiaries of 5,211.24 million and acquisition of property, plant and equipment of 2,178.84 million, partially offset by proceeds from bank deposits of 1,484.07 million and interest received of 1,138.52 million.

Net cash used in investing activities was 4,451.80 million for the Financial Year 2021, primarily comprising investments in bank deposits of 27,341.56 million, partially offset by proceeds from bank deposits of 22,927.50 million.

Net cash used in financing activities was 70.26 million for the three months ended June 30, 2023, primarily on repayment of lease liabilities (including interest) of 362.15 million and interest paid of 49.14 million, partially offset by proceeds from borrowings of 341.03 million.

Net cash used in financing activities was 506.18 million for the Financial Year 2023, primarily on repayment of lease liabilities (including interest) of 1,200.92 million and interest paid of 155.67 million, partially offset by proceeds from borrowings of 1,472.88 million.

Net cash generated from financing activities was 6,443.76 million for the Financial Year 2022, primarily from proceeds from issue of shares by subsidiaries of 7,676.31 million, partially offset by amount paid on repurchase of equity interest of 958.47 million.

Net cash generated from financing activities was 7,179.40 million for the Financial Year 2021, primarily from proceeds from securities premium of 7,893.12 million, partially offset by repayment of lease liabilities (including interest) of 396.90 million and amount paid on account of shares bought back of 376.42 million.

As at June 30, 2023, we had Total Borrowings of 2,105.77 million, comprising non-current borrowings of 565.87 million and current borrowings (including current portion of our non-current borrowings) of 1,539.90 million in accordance with our Restated Consolidated Financial Statements.

As at June 30, 2023, the estimated amount of contracts remaining to be executed on capital account and other long-term commitments and not provided for was 1,446.12 million.

The following table summarizes the maturity profile of our financial liabilities based on contractual undiscounted payments as at June 30, 2023:

Our capital expenditures primarily relate to the purchase of furniture and fixtures, computers, office equipment and leasehold improvements. We incurred expenses on acquisition of property, plant and equipment as per our

Restated Consolidated Financial Statements amounting to 548.62 million for the three months ended June 30, 2023, and 2,330.67 million, 2,178.84 million and 412.83 million in Financial Years 2023, 2022 and 2021, respectively. Our budgeted capital expenditure for Financial Year 2024 is 1,034.00 million.

As at June 30, 2023, we have contingent liabilities (as per Ind AS 37) of 18.83 million relating to claims against our Group not acknowledged as debts for disputed direct tax matters, indirect tax matters and legal matters.

We do not have any off-balance sheet arrangements, derivative instruments or other relationships with other entities that would have been established for the purpose of facilitating off-balance sheet arrangements.

We have engaged in the past, and may engage in the future, in transactions with related parties. For details of our related party transactions, see "Summary of the Offer Document Related Party Transactions" on page 27.

Non-GAAP Measures EBITDA (excluding other income) and Adjusted EBITDA

Adjusted EBITDA is a supplemental measure of performance that is not required by, nor presented in accordance with, Ind AS. Adjusted EBITDA is not a measurement of financial performance or liquidity under Ind AS, IFRS or any other internationally accepted accounting principles, and should not be considered as an alternative to profit or any other performance measures derived in accordance with Ind AS, nor as an alternative to cash flow from operating activities as a measure of liquidity. In addition, Adjusted EBITDA is not a standardized term, hence, a direct comparison between companies using this term may not be possible. Adjusted EBITDA is presented because we believe that it is frequently used by securities analysts, investors and other interested parties in evaluating companies.

The following table sets forth reconciliation of Adjusted EBITDA to profit/loss for the periods indicated in accordance with our Restated Consolidated Financial Statements:

(1) Deal related costs are certain non-recurring fees paid by us in relation to corporate transactions carried out during the period.

The following table sets forth reconciliation of pro forma adjusted EBITDA (excluding other income) to pro forma profit/loss for the years indicated:

(1) Deal related costs are certain non-recurring fees paid by us in relation to corporate transactions carried out during the period.

Our Board of Directors has overall responsibility for the establishment and oversight of our risk management framework. The Senior Management has developed and monitors our risk management policies. The management reports regularly to our Board of Directors on its activities. Our risk management policies are established to identify and analyse the risks faced by us, to set appropriate risk limits and controls and to monitor risks and adherence to limits. We regularly review our risk management policies and systems to reflect changes in market conditions and our activities.

Credit risk is the risk of financial loss to us if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from our receivables from customers. Our exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, we also consider the factors that may influence the credit risk of our customer base, including the default risk associated with the industry and country in which the customers operate. We consider a financial asset in default when contractual payments are 90 days past due adjusted for forward-looking factors specific to the debtors and the economic environment. However, in certain cases, we may also consider a financial asset to be in default when internal or external information indicates that we are unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by us. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. We consider that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with our financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure, as far as possible, that we will have sufficient liquidity to meet our liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. Our management monitors rolling forecasts of our liquidity position on the basis of expected cash flows.

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices will affect our income or the value of its investments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Our exposure to foreign currency risk is limited as a majority of our transactions are in our functional currency.

Interest rate risk is the risk that the fair value or future cash flow of a financial instrument will fluctuate because of changes in market interest rates. We are exposed to interest rate risk on short-term and long-term floating rate interest bearing liabilities. Our policy is to maintain a balance of fixed and floating interest rate borrowings and the proportion of fixed and floating rate debt is determined by prevailing interest rates. These exposures are reviewed by us on a periodic basis.

Our business has been subject, and we expect it to continue to be subject, to significant economic changes arising from the trends identified above in " Significant Factors Affecting our Results of Operations" and the uncertainties described in "Risk Factors" on page 38. To our knowledge, except as disclosed in this Draft Red Herring Prospectus, there are no known factors which we expect to have a material adverse effect on our income.

Other than as described elsewhere in this Draft Red Herring Prospectus, to the knowledge of our management, there are no known factors that might affect the future relationship between costs and income.

Except as disclosed in this Draft Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.

Except as disclosed in this Draft Red Herring Prospectus, including as described in "Our Business" on page 180, there are no new products or business segments that have or are expected to have a material impact on our business prospects, results of operations or financial condition.

Our business is subject to seasonality with higher sales volumes in the second and third quarters of our financial year. For details, see "Risk Factors The seasonality of our business affects our quarterly results of operations and places an increased strain on our operations" on page 58.

Our industry is competitive and we expect that competition will continue to increase. For further details, see "Risk Factors We operate in a competitive industry and our failure to compete effectively could have a negative effect on the success of our business." on page 58.

Other than as described in "Risk Factors", "Our Business" and above in " Significant Factors Affecting our Results of Operations" on pages 38, 108 and 426, respectively, to our knowledge, there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

Except as disclosed in this Draft Red Herring Prospectus, there are no circumstances that have arisen since June 30, 2023, the date of the last financial statements included in this Draft Red Herring Prospectus, which materially and adversely affect or is likely to affect our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next 12 months.