Aditya Birla Fashion & Retail Ltd Management Discussions

Revolutionising E-commerce with Hyperlocal Capability

We continue to reshape the digital retail experience through our integrated Super App. It unifies multiple customer touchpoints into a single seamless platform. At the heart of this digital transformation is the hyperlocal capability, known as the Express Delivery, a solution designed to enhance convenience and responsiveness in todays on-demand environment.

The Express Delivery model empowers customers to browse and shop from nearby stores, with orders fulfilled locally to ensure swift deliveries. This location-based Reducing Product Returns

A key benefit of the hyperlocal model is its ability to reduce return rates through improved purchase accuracy. Customers can connect directly with store staff via the app or website, receiving real-time guidance on size, fit, and product attributes. This personalised assistance enables better purchase decisions, significantly lowering return rates and resulting in cost savings related to manpower, logistics, and fuel consumption.

We also have a structured process in place to prevent and address defective products before they reach customers, thereby minimising the risk of product recalls. The process begins with rigorous quality checks on incoming raw materials and trims to ensure they meet the required standards. Pre-Production Meetings (PPMs) are conducted to align all stakeholders on quality expectations and potential risks. During manufacturing, inline inspections are carried out at various stages to detect and correct defects early. A final quality check is performed before dispatch to ensure only top-quality products are delivered. Additionally, post-delivery audits at stores and customer feedback are captured through the Post Purchase Mission Happiness (PPMH) initiative. Any complaints received are thoroughly analysed, and improvement projects are initiated to prevent recurrence and enhance overall product quality.

Internal Audit Mechanism

Internal audits are conducted at regular intervals as per a defined schedule. These audits are led by trained internal auditors and focus on evaluating compliance with QMS procedures at both factory and functional levels. They cover

all critical processes to ensure consistent adherence to quality standards and help identify areas for improvement.

Quality Management

Our Quality Management System is independently audited and certified by reputed third-party agencies such as Bureau Veritas.

The manufacturing facilities are compliant with international standards and hold valid certifications for ISO 9001:2015 (Quality Management Systems),

ISO 14001:2015 (Environmental

Management Systems), and ISO 45001:2018 (Occupational Health & Safety Management). These certifications ensure that global benchmarks for process excellence, environmental responsibility, and workplace safety are consistently met. Inspections are conducted based on Acceptance Quality Limit (AQL) which is accepted internationally by all fashion brands with repute.

Customer Satisfaction

At ABFRL, understanding customer sentiment is essential to refining experiences and enhancing brand loyalty. We conduct annual customer satisfaction surveys and gather real-time feedback to identify improvement areas across channels. During FY 2024-25, our customer engagement efforts yielded impressive Net Promoter

Scores (NPS): 86% for lifestyle brands, 89% for Pantaloons, and 73% for VH Innerwear, indicating strong consumer advocacy and trust. We deliver exceptional customer experiences by leveraging advanced technologies and data-driven insights to personalise offerings, enhance service quality, and stay ahead of fashion trends. We ensure every interaction

reflects trust, innovation, and style. Simultaneously, the company fosters a responsible and ethical value chain by embedding sustainability, transparency, and fairness into supplier engagements, sourcing practices, and operational processes. Through robust compliance systems, stakeholder dialogue, and partnerships with responsible vendors, we ensure long-term value creation while reinforcing our commitment to social responsibility and ethical business conduct.

Omnichannel Expansion

In alignment with our digital-forward strategy, we have continued to scale our omnichannel infrastructure. Our "Buy Online, Ship from Store (BOSS)" model strengthens inventory utilisation across the retail network, improving fulfilment speed and reducing logistical redundancies. The Pantaloons business has expanded its reach with the launch of a dedicated mobile application, enhancing access and engagement. As a result, 14% of our total revenue during FY 2024-25 was generated from direct online sales, signalling a robust digital presence.

Customer Health and Safety

We uphold the highest standards of consumer health and safety, adhering strictly to OSHA guidelines and product-specific compliance standards. Our products are rigorously tested for quality and safety during the design and development stages.

At Pantaloons, about 27% by option and 35% by volume of our kids wear portfolio is tested for parameters such as pH and Formaldehyde. As a safety measure, in addition

capability is accessible across several brands,

offering personalised, efficient service that aligns with modern shopping behaviours. Unlike traditional e-commerce models that rely on extensive logistics networks, this approach streamlines order fulfilment and reduces the ecological footprint by cutting down transportation costs and emissions.

The hyperlocal model is currently active on platforms like The Collective and ABFRLs Super App, featuring leading fashion labels such as Louis Philippe, Van Heusen, Peter England, and Allen Solly. Plans are underway to expand this feature across more cities and additional brands, reinforcing our position as a digital-first, customer-centric retail leader.

to option level testing of pH & Formaldehyde for kids • category (this is done for all options), all garments • are passed through needle detector to ensure there • is no metal contamination when goods are being made/ packed (this is validated for 100% garments made in kids category). At lifestyle brands, denim, which accounts for 5-6% of our product, is tested for pH parameter through random checks while select jewellery items are tested for lead, nickel, and corrosion resistance. Our ceramic products undergo checks to ensure microwave safety and the absence of leachable toxic substances.

Additionally, every product is tagged with clear care and cautionary instructions to ensure safe handling. We continue to monitor market feedback and regulatory updates to address potential issues proactively. In FY

2024-25, there were no incidents of product recalls, fines, penalties, and non-compliance with voluntary code of health and safety regulations.

Marketing and Labelling

We are dedicated to ethical, transparent, and consumer-centric marketing practices. Further, we are also committed to providing accurate and balanced information about our products to our customers. Our

Responsible Marketing and Advertising Commitment ensures that our content is fair, honest, and aligned with consumer rights (protect vulnerable market segments, and never compromise customers privacy). For 100% of our products, we refrain from comparative advertising including exaggerated claims about the social and environmental impact of our products and guarantee that all product claims are accurate, verifiable, and non-deceptive. We abstain from disinforming customers on any competitors products. Customers are educated on the safe and responsible usage of products, including guidelines for product handling (wash care, drying, and ironing instructions for all our apparel products). Additionally, key product such as raw materials, finishes, or other significant attributes are disclosed beyond mandatory requirements through hangtags, exemplified by labels like LIVA and Giza Cotton.

Our apparel labels adhere to the 16 CFR 423 standard, clearly mentioning:

• Country of Origin

• Style and Product Details

• Date of Manufacture

• Manufacturer Code

• Fibre Content (in order of predominance)

• Care Instructions • Cautionary Details

• Disposal Guidelines for Packaging

Over the past few years, there has been a significant increase in amendments under the Indian Legal

Metrology Act and Rules, along with enhanced scrutiny by the authorities through inspections and issuance of notices. In light of this, and to ensure strict compliance while avoiding substantial penalties, the Legal team has taken proactive steps.

Multiple training sessions have been conducted for the relevant Sourcing and Brand teams to build awareness and reinforce understanding of the legal requirements relating to price tags and declarations on products. Additionally, the Legal team has developed a comprehensive, category-wise ready reference document that includes sample tags for various product categories. This document has been shared with all concerned teams for easy reference and implementation.

During FY 2024-25, 20 incidents of non-compliance related to labelling standards were reported, resulting in a penalty of 8 lakhs. There were zero incidents of non-compliance, fines, and penalties concerning marketing communications, reaffirming our integrity in customer engagement.

We provide comprehensive information about all our brands on our company website (https://www.abfrl. com). In addition, each of our brands maintains its own website, where updates on offerings are regularly shared. We also actively leverage various social media and digital platforms to engage with consumers and disseminate relevant updates.