Go Fashion (India) Ltd Management Discussions.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Financial Information on page 206.

This Draft Red Herring Prospectus may include forward-looking statements that involve risks and uncertainties, and our actual financial performance may materially vary from the conditions contemplated in such forward-looking statements as a result of various factors, including those described below and elsewhere in this Draft Red

Herring Prospectus. For further information, see "Forward-Looking Statements" on page 14. Also read "Risk Factors" and "- Significant Factors Affecting our Results of Operations and financial condition" on pages 21 and 290, respectively, for a discussion of certain factors that may affect our business, financial condition or results of operations.

Unless otherwise indicated or the context otherwise requires, the financial information for Fiscals 2019, 2020 and 2021 included herein is derived from our Restated Financial Information, included in this Draft Red Herring Prospectus. Further, unless otherwise indicated or the context otherwise requires, all operational information included herein for Fiscals 2019 is as on standalone basis. For further information, see "Financial Information" on page 206. Our Companys Fiscal commences on April 1 and ends on March 31 of the immediately subsequent year, and references to a particular Fiscal are to the 12 months ended March 31 of that particular year. Unless the context otherwise requires, in this section, references to "we", "us", "our", "the Company" or "our Company" refers to Go Fashion (India) Limited.

Unless otherwise indicated, industry and market data used in this section has been derived from industry publications, in particular, the report titled "Report on Womens Bottom Wear Apparel in India" dated August 10, 2021 (the "Technopak Report"), prepared and issued by Technopak Advisors Private Limited appointed on May 25, 2021, and exclusively commissioned by and paid for by us in connection with the Offer. Also see, "Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation Industry and Market

Data" on page 12.

OVERVIEW

We are among the largest womens bottom-wear brands in India, with a market share of approximately 8% in the branded womens bottom-wear market in Fiscal 2020 (Source: Technopak Report). We are engaged in the development, design, sourcing, marketing and retailing a range of womens bottom-wear products under the brand, ‘Go Colors. We are among the few apparel companies in India to have identified the market opportunity in womens bottom-wear and have acted as a ‘category creator for bottom-wear. We have leveraged our first-mover advantage to create a direct-to-consumer brand with a diversified and differentiated product portfolio of premium quality products at competitive prices. (Source: Technopak Report)

The share of organized retailing within womens apparel has increased from 19% in Fiscal 2015 to 27% in Fiscal 2020 and is expected to reach 42% by Fiscal 2025. This rapid growth is attributable to a growing female population, increasing number of working women, evolving fashion trends, and rising spending power of consumers. In particular, womens bottom-wear is the fastest growing category in the womens apparel segment market and contributes 8.3% of womens apparel market amounting to 135,470 million in Fiscal 2020 and is expected to grow at a CAGR of 12.35% to reach 243,150 million by Fiscal 2025. The organised share of womens bottom-wear market is expected to reach 92,400 million with a share of 38% in Fiscal 2025 growing at a CAGR of 24.3% until 2025. The womens clothing market in India has evolved in the past decade from the traditional one-piece apparel, like the saree, to a two-piece and mix-and-match apparel, with bottom-wear becoming an essential category that caters to basic and functional needs of consumers. Today, bottom-wear has become a must-have that provides comfort as well as style and is a round-the-year universal category that is not subject to seasonal trends. Historically, the bottom-wear market, being highly unorganized, has had limited options for consumers to access branded products of consistent quality. (Source: Technopak Report)

We offered one of the widest portfolios of bottom-wear products among womens apparel retailers in India in terms of colours and styles, as of July 2021 (Source: Technopak Report). Our bottom-wear products, which include churidars, leggings, dhotis, harem pants, patiala, palazzos, culottes, pants, trousers and jeggings, are sold across multiple categories such as ethnic wear, western wear, fusion wear, athleisure, denims, plus sizes and girls wear making our portfolio ‘universal and for every occasion. As of May 31, 2021, we sold bottom-wear in over 50 styles in more than 120 colours. We design our products to cater to women across all age groups and girls and fits that are suitable to various body types and physiques. These factors, coupled with the lack of seasonality, ensure that our portfolio is resistant to redundancy from fashion trends.

We endeavour to provide our customers with premium quality products, and at a price range that caters across all income segments and the price range of our products ranges from 225 to 1,599 while the average selling price of our products in Fiscal 2021 was 584.02. In addition, the strength of our ‘Go Colors brand and round-the-year relevance of our product portfolio allows us to typically retail our products at full price and with discounts offered only in limited circumstances.

We serve our customers primarily through our extensive network of 450 exclusive brand outlets ("EBOs") (including 15 kiosks operated on a "company owned and company operated" ("COCO") model and 11 franchise stores) that are spread across 23 states and union territories in India, as of May 31, 2021. Our cluster-based approach to opening and operating EBOs allows us to pursue the COCO model which results in better operational control and greater store profitability. In our experience, retailing through EBOs creates better brand recall. Our EBOs are located in high streets, malls, residential market areas in major metros, large cities and other tier II and tier III cities and at airports. In addition, our distribution channels include large format stores ("LFSs") including

Reliance Retail Limited, Central, Unlimited, Globus Stores Private Limited and Spencers Retail among others. Our LFSs have grown from 925 LFSs, as of March 31, 2019 to 1,419 LFSs, as of March 31, 2020 and further increased to 1,267 LFSs, as of March 31, 2021 while as of May 31, 2021 we operated in 1,332 such stores. In addition, we sell our products through our own website and online marketplaces and through multi-brand outlets (" MBOs").

The table below sets forth our revenue from operations from our distribution channels, for the periods indicated:

Fiscal 2019

Fiscal 2020

Fiscal 2021

Amount (Rs.million) % of Total Revenue from Operations Amount (Rs.million) % of Total Revenue from operations Amount (Rs.million) % of Total Revenue from operations
EBOs(1) 1,859.23 65.18% 2,667.13 68.04% 1,727.62 68.92%
LFSs 763.86 26.78% 1,030.17 26.28% 551.58 22.00%
Online 35.97 1.26% 38.18 0.97% 119.40 4.76%
MBOs and
193.42 6.78% 184.66 4.71% 108.08 4.31%
Others(2)
Total 2,852.47 100.00% 3,920.14 100.00% 2,506.68 100.00%

Notes:

(1) EBO includes kiosks and franchise stores

(2) MBOs and others includes sales through multi-brand outlets and garment fairs, exhibitions, events, etc. and scrap sales.

The tables below sets forth certain performance indicators of our EBOs for the periods indicated:

EBOs
Particulars

As of/for the year ended March 31,

2019 2020 2021
New stores opened during the Fiscal 130 133 42
Stores(1) 333 448 449
Cities 88 110 114
Same Store Sales Growth(2) 19.97% 11.37% (36.75)%
Average Store Area (square feet) 306.29 348.89 379.64
Sales per Square Feet ( ) 18,174.10 17,063.83 10,135.26
- Mature Stores(3) Sales per Square Feet 24,737.11 21,871.34 10,525.10
Revenue per Store (Rs.million) 5.57 5.95 3.85
- Mature Stores(3) (Rs.million) 7.43 7.19 3.84
Average Capital Expenditure per Store(4) (Rs.million) 1.23 1.44 1.72

Notes:

(1) Stores refers to the number of stores at the end of the relevant period.

(2) Same-Store Sales Growth represents the period-over-period percentage change in net revenue from operations of all stores which are operational for more than 12 months for the reported Fiscal.

(3) Mature Stores refers to stores in existence for a period of more than 12 months.

(4) Average Capital Expenditure per Store refers to cost of interiors, furniture and equipment.

Our in-house design and merchandising team designs and develops bottom-wear products across categories with their deep understanding of consumers requirements, in-depth market research and data analysis, helping in creating the fit and comfort of our products. The efforts of our design and merchandising team are supplemented by our extensive sourcing network and the manufacturing network undertaken through 73 suppliers and 42 job-workers spread across 11 states and union territories, as of May 31, 2021.

We manage our inventory and logistics as well as our entire supply chain for all our channels from our 99,100 square foot warehouse in Tirupur, Tamil Nadu and are capable of handling complex SKU mixes. We have implemented ERP protocols across our operations that have helped us scale our operation and assist us in tracking inventory at our warehouse. We also have modern equipment at our warehouse that results in process efficiencies enabling us to optimize our costs. Our inventory management ensures that we are able to maintain inventory levels across our wide range of SKUs and our distribution network. As part of our inventory management, we also track business intelligence reports generated by our system to address changing trends and customer preferences which would result in minimal write-offs.

We are led by a management team that has extensive industry experience. Our Promoters, Prakash Kumar Saraogi, Managing Director and Gautam Saraogi, Executive Director and Chief Executive Officer, have been instrumental in the growth of our business. Prakash Kumar Saraogi has over three decades of experience in the apparel industry while Gautam Saraogi has over 10 years of experience in garment manufacturing, sourcing, marketing and brand building. The experience of our management team in garment sourcing, manufacturing, retailing and exports has helped us grow our operations. Their experience in exporting garments has helped our Company consistently procure quality fabrics at competitive prices. We have a committed and large senior management team that has extensive experience in the retail and fashion industry, which positions us well to capitalize on future growth opportunities. Our heads of functional groups, such as marketing and e-commerce, sourcing and supply chain, finance and accounts, product development and design, operations and sales, enhance the quality of our management with their specific and extensive industry experience. Our Board of Directors includes a combination of management executives and independent members who bring in significant business expertise including in the areas sales and marketing, finance and corporate governance. We have grown our operations with capital infusion from reputed investors such as funds managed or advised by ICICI Venture and Sequoia Capital in Fiscal 2018 and Fiscal 2014, respectively.

The table below sets forth certain key financial information for the periods indicated:

As of/for the year ended March 31,

Particulars 2019 2020 2021

(Rs.million, except percentages)

Revenue from operations 2,852.47 3,920.14 2,506.68
EBITDA 799.88 1,265.05 463.49
EBITDA Margin 28.04% 32.27% 18.49%
Restated (Loss)/Profit After Tax 309.41 526.34 (35.39)
Return on Capital Employed 14.36%, 18.14% 3.47%
Return on Equity 13.55% 18.38% (1.25)%

For reconciliation of EBITDA, EBITDA Margin, Return on Capital Employed and Return on Equity, see

"Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Non GAAP Measures - Reconciliation of EBITDA and EBITDA Margin to Restated (Loss)/Profit after Tax", "Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Non GAAP Measures - Reconciliation of Capital Employed and Return on Capital Employed (pre-tax) to Total Assets" and "Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Non GAAP Measures - Reconciliation of Return on Equity to Total Equity" on page 292, 293 and 293, respectively. Also see, "Certain Conventions, Use of Financial Information and Market

Data and Currency of Presentation Non-GAAP Financial Measures" on page 12.

PRESENTATION OF FINANCIAL INFORMATION

Our restated consolidated balance sheet as at March 31, 2019, and the restated consolidated statement of profit and loss (including other comprehensive income), the restated consolidated cash flow statement, restated statement of changes in equity and notes forming part of the restated consolidated financial information for the year ended March 31, 2019, together with the summary of significant accounting policies and explanatory information thereon (collectively, the "Restated Consolidated Financial Information"), have been compiled from our audited consolidated financial statements as at and for the year ended March 31, 2019, prepared in accordance with Ind AS, read with the Companies (Indian Accounting Standards) Rules, 2015, and restated in accordance with the SEBI ICDR Regulations and the Guidance Note on "Reports in Company Prospectuses (Revised 2019)" issued by ICAI and the circular no. SEBI/HO/CFD/DIL/CIR/P/2016/47 dated March 31, 2016 issued by SEBI. Our restated standalone balance sheet as at March 31, 2021, 2020, and 2019, and the restated standalone statement of profit and loss (including other comprehensive income), the restated standalone cash flow statement, restated statement of changes in equity and notes forming part of the restated standalone financial information for the years ended March 31, 2021, 2020, and 2019, together with the summary of significant accounting policies and explanatory information thereon (collectively, the "Restated Financial Information"), have been compiled from our audited financial statements as at and for the years ended March 31, 2021, 2020 and 2019, prepared in accordance with Ind AS, read with the Companies (Indian Accounting Standards) Rules,

2015, and restated in accordance with the SEBI ICDR Regulations and the Guidance Note on "Reports in Company Prospectuses (Revised 2019)" issued by ICAI and the circular no. SEBI/HO/CFD/DIL/CIR/P/2016/47 dated March 31, 2016 issued by SEBI.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Impact of COVID-19

Beginning in March 2020 we experienced a substantial reduction in customer footfalls and store operations due to the nationwide lockdown implemented on March 25, 2020, quarantines, stay-at-home and shelter-in-place orders, the promotion of social distancing, and other restrictions. The impact of the COVID-19 pandemic on our business, operations and financial performance have included and may continue to include significant decline in revenue from operations. We experienced and may continue to be subject to temporary as well as permanent closures and reduced store-level operations such as reduced operating hours, as mandated by regulatory authorities. Our

Companys total revenue from operations decreased by 36.06% from 3,920.14 million in Fiscal 2020 to 2,506.68 million in Fiscal 2021. The impact of the ongoing pandemic, particularly the second wave and more communicable strain of the virus that has affected India in April 2021, may also result in an adverse impact on our profitability as our operating expenses, primarily comprising lease rental expenses and employee benefit expenses, are less variable in nature. We also incurred and may continue to incur additional expenses in complying with evolving government regulations, including with respect to social distancing measures and sanitization practices. Also see "Risk Factors

The current and continuing impact of the ongoing COVID-19 pandemic on our business and operations has been significant. The impact of the pandemic on our operations in the future, including its effect on the ability or desire of customers to visit our stores, is uncertain and may be significant and continue to have an adverse effect on our business prospects, strategies, business, operations, our future financial performance, and the price of our Equity Shares." on page 21.

In order to manage the adverse impact of COVID-19 on our operations, we have implemented and are in the process of implementing various measures to manage our expenses and liquidity. These measures include rationalization of under-performing stores exacerbated by COVID-19, and reduction in format size of several stores. In addition, we capitalized on this opportunity to renegotiate our rental arrangements under various agreements with mall developers, landlords and lessors during the onset of the COVID-19 pandemic in India. Based on these rent relief negotiations, we arrived at negotiated agreements with respect to reductions in rent and our rental obligations during the COVID-19 crisis with a majority of our landlords. However, there can also be no assurance that we will be able to obtain such waivers or successfully further renegotiate these arrangements in the future. Further, in accordance with MCA Notification dated July 24, 2020 on Ind AS 116 (the "MCA Notification"), the Company has elected to apply the practical expedient of not assessing rent concessions as a lease modification for all lease concessions which are granted due to COVID-19 pandemic. As a result, rent concession, shown as an increase in other income, increased to 243.31 million in Fiscal 2021 from no such income in Fiscal 2020.

To increase revenue generation opportunities during the initial months of COVID-19, we increased our focus on sales through our own online channels and leading e-commerce marketplaces. Through e-commerce marketplaces and our own websites, we have been able to leverage the fixed costs we have invested in integrating our physical stores and warehouses with our online channels, to serve customers seeking delivery of our products.

In the short- to medium-term, we expect that revenues generated at our stores as a proportion of our overall revenue from operations may decline while our revenues through online channels as a proportion of our overall revenue from operations may gradually increase. However, the impact of subsequent waves of the virus on our business cannot be ascertained at this time and we cannot currently estimate the duration or future negative impact of the COVID-19 pandemic on our ability to continue expanding our network of stores, or improve same-store sales growth. As a retail company, we are significantly exposed to the public health and economic effects of the COVID-19 pandemic and there can be no assurance that our business will not be adversely affected if the COVID-

19 pandemic were to worsen or last for an extended period, or if subsequent waves and more restrictive measures were to be implemented.

Expansion of our store network

Our ability to continue our growth across geographies depends upon the strength of our brand, product offering and store economics. Our ability to effectively execute our expansion strategy further depends on our ability to open new stores successfully. As of March 31, 2021, we operated 450 EBOs across 115 cities in 23 states and union territories across India.

As a retailing company, our stores generally need to be in high visibility and high traffic locations. Our ability to effectively obtain quality commercial property to relocate existing stores or open new stores depends on the availability of commercial property that meets our criteria for customer traffic, square footage, lease economics, demographics and other factors, including our ability to negotiate terms that meet our financial targets. In addition, rising real estate prices may restrict our ability to lease new desirable locations.

Any new store that we establish requires significant resources in terms of lease costs, fit-outs and refurbishments, to align the store with our preferred format, and may not be profitable immediately upon its opening or may take time to break even, and failure to do so within a reasonable period may adversely affect our profitability. Our ability to reduce our payback periods depends on our ability to negotiate commercially reasonable terms with lessors/ landlords/ mall developers, based on the store format and the location for such format, that is subject to various assumptions on demand for our products from the particular demographic at the location. In addition, new stores could impact the sales of our existing stores nearby, and there can be no assurance that sales cannibalization will not occur or become more significant in the future as we increase our presence in existing markets. An inability to appropriately identify suitable locations, or set-up the most appropriate store-format at a particular location, or to negotiate commercially reasonable lease terms, may increase our payback periods, result in store-closures, and adversely affect our results of operations and financial condition. However, with the experience of setting up stores in various parts of India and, we believe that we are well positioned to leverage on opportunities for expansion.

Cost of procuring raw materials and manufacturing our products

We have established long-standing relationships with our suppliers, job workers, in order to ensure the delivery of quality products to our customers. In Fiscal 2021, we sourced raw materials, such as printed fabric, processed fabric and trim materials from approximately 73 suppliers (third-party traders, mills or weavers), and sourced finished products from five suppliers. We have not entered into formal arrangements or contracts with such suppliers and issue purchase orders to source our materials on an as-needed basis. Our cost of goods sold is impacted by the amount of raw materials procured and the price at which we procure such raw materials, and may fluctuate from time to time. The availability and price of our raw materials may be subject to a number of factors beyond our control, including economic factors, seasonal factors, environmental factors and changes in Government policies and regulations.

Further, we manufacture our products through job workers and incur sub-contracting charges as expenses. Subcontracting charges incurred by us were 204.52 million, 275.83 million and 118.19 million, or 7.17%, 7.04% and 4.72%, respectively, of our revenue from operations for the Fiscals 2019, 2020, and 2021, respectively. Changes in quantity of products manufactured through our job workers and increase in costs of production of job workers (which may increase in the future, including due to increase in the cost of labour and other utilities) may affect expenses incurred towards fabrication charges and consequently our profitability and results of operations.

Consumer spending and general economic and market conditions

While we are engaged in the business of retailing essential wear, our success partially depends to a significant extent on customer confidence and spending, which is influenced by general economic condition and discretionary income levels. Many factors affect the level of customer confidence and spending in the retail sector, including recession, inflation, political uncertainty, availability of consumer credit, taxation and unemployment. Our performance may decline during recessionary periods or in other periods where one or more macro-economic factors, or potential macro-economic factors, negatively affect the level of customer confidence and spending.

Womens bottom-wear market contributes 8% of womens apparel market amounting to 13,547 crores in Fiscal 2020. This bottom-wear market is expected to grow at a CAGR of 12.35% to reach 24,315 crores by Fiscal 2025. The share of organised retail in ethnic and fusion bottom-wear is expected to increase from 47% in Fiscal 2020 to 52% in Fiscal 2025. The overall share of bottom-wear category in womens apparel is expected to increase from 8.3% in Fiscal 2020 to 9.6% in Fiscal 2025 (Source: Technopak Report). We intend to capitalize on the growing industry opportunity and leverage our position as the market leader in the bottom-wear segment in India, to continue to grow our business.

Employee benefit expenses

We incur employee benefits expenses towards employee remuneration and benefits includes salaries and wages, contributions to the provident fund, gratuity expenses and staff welfare expenses. The growth of our retail operations, particularly through EBOs and LFS (where we position our employees) results in the increase of our retail staff and corresponding increase in our employee benefits expenses. As of March 31, 2019, 2020, and 2021 we had 2,150, 2,914 and 2,794 employees, respectively, of which 85.49%, 88.33% and 88.62%, respectively, were employed at our EBOs and LFS. In Fiscals 2019, 2020, and 2021, our employee benefit expenses were 419.63 million, 619.54 million and 614.87 million that represented 14.71%, 15.80% and 24.53% of our revenue from operations in such periods, respectively. We expect employee benefit expenses to increase in line with the growth of our operations and effective manpower planning and by maintaining optimal employee strength in corporate, logistics and front-end retail, thereby endeavouring to maximise revenue per employee.

CHANGES IN ACCOUNTING POLICIES IN THE LAST THREE FINANCIAL YEARS

There have been no changes in the accounting policies of the Company during the last three financial years, except for with respect to Ind AS 116, which was effective for accounting periods beginning on or after April 1, 2019.

Ind AS 116

On March 30, 2019, the Ministry of Company Affairs ("MCA") notified that Ind AS 116 would be effective for accounting periods beginning on or after April 1, 2019.

We adopted Ind AS 116 Leases with the date of initial application being April 1, 2019. Ind AS 116 replaces Ind AS 17 Leases and related interpretation and guidance. We have used simplified transition approach under Ind AS 116, under which the difference between right-to-use asset and lease liabilities is adjusted against retained earnings as on the date of transition. For the purpose of Restated Financial Information, the proforma transition date has been considered as April 1, 2018, resulting in net impact of 55.52 million (net of deferred tax asset) in the restated Other equity and Total comprehensive income.

The net effect of the above mentioned restatement adjustment in the other equity, right-of-use asset and lease liabilities balance as at March 31, 2019, have not been considered in the respective opening balances as at April 1, 2019. Hence, the opening balance of other equity, right-of-use and lease liabilities as at April 1, 2019 in these Restated Financial Information are as per the audited standalone financials statements as at and for year ended March 31, 2019. For further information, see "Restated Financial Information Note 41: Restatement adjustments" on page 245.

NON-GAAP MEASURES

EBITDA and others below, (together, "Non-GAAP Measures"), presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or US GAAP. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the years/ period or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS or US GAAP. In addition, these Non-GAAP Measures are not standardised terms, hence a direct comparison of these Non-GAAP Measures between companies may not be possible. Other companies may calculate these Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although such Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us as they are widely used measures to evaluate a companys operating performance.

Reconciliation of EBITDA and EBITDA Margin to Restated (Loss)/Profit after Tax

The table below reconciles restated (loss)/profit for the year to EBITDA. EBITDA is calculated as profit/loss for the year/ period, plus total tax expenses, exceptional items, finance costs and depreciation and amortization expenses, less other income, while EBITDA Margin is the percentage of EBITDA divided by revenue from operations.

Particulars Fiscal
2019 2020 2021
(Rs.million)
Restated (loss)/profit after tax (I) 309.41 526.34 (35.39)
Add: Total Tax Expense (II) 112.73 156.52 4.04
Add: Exceptional Items (III) 0 0 0
Add: Finance Costs (IV) 113.78 164.72 205.69
Add: Depreciation and Amortisation expense
321.28 465.72 604.99
(V)
Less: Other Income (VI) 57.32 48.25 315.84
Earnings before interest, taxes, depreciation
and amortization expenses (EBITDA) VII = 799.88 1,265.05 463.49
I + II +III+IV+V-VI
Revenue from operations (VIII)

2,852.47

3,920.14

2,506.68

EBITDA Margin (VII/VIII)

28.04%

32.27% 18.49%

Reconciliation of Capital Employed and Return on Capital Employed (pre-tax) to Total Assets

The table below reconciles capital employed to total assets. Capital employed is calculated as total assets less current liabilities, plus borrowings under current liabilities, current maturities of long-term debts and lease liabilities under current liabilities, while ROCE is calculated as EBIT divided by capital employed.

Particulars Fiscal
2019 2020 2021
(Rs.million)
Total Assets (I) 4,041.31 5,191.86 5,483.67
Current Liabilities (II) 212.22 218.8 309.83
Current Liabilities - Borrowings (III) 82.81 27.9 104.39
Current Maturities of Long-Term Debts (IV) 0 0 0
Current Liabilities - Lease liabilities (V) 15.43 273.66 45.86
Capital Employed (VI) = I-(II+III+IV+V) 3,730.85 4,671.50 5,023.59
Restated (Loss)/Profit after Tax (VII) 309.41 526.34 (35.39)
Total Tax Expense (VIII) 112.73 156.52 4.04
Finance Costs (IX) 113.78 164.72 205.69
Earnings Before Interest, Tax (EBIT) (X) = VII+ VIII
535.92 847.58 174.34
+ IX
Return on Capital Employed (X/VI) 14.36% 18.14% 3.47%

Reconciliation of Return on Equity to Total Equity

The table below reconciles return on equity to total equity. Return on equity is calculated as restated (loss)/profit for the year/ period divided by total equity.

Particulars Fiscal
2019 2020 2021
(Rs.million)
Total Equity (I) 2,283.34 2,863.02 2,829.36
Restated (Loss)/Profit after Tax (II) 309.41 526.34 (35.39)
Return on Equity (III) = (II/I) 13.55% 18.38% (1.25)%

Reconciliation of Total Borrowings and Debt to Equity Ratio

The table below reconciles total borrowings and debt to equity. Total Borrowings is calculated as borrowings under non-current liabilities plus current maturities of long-term debts plus borrowings under current liabilities, while Debt to Equity is calculated as Total Borrowings divided by total equity.

Particulars Fiscal
2019 2020 2021
(Rs.million)
Non-Current Liabilities - Borrowings (I) - - -
Current maturities of long-term debts (II) - - -
Current liabilities Borrowings (III) 82.81

27.9

104.39
Total Borrowings IV = (I + II + III) 82.81

27.9

104.39
Total Equity (V)

2,283.34

2,863.02

2,829.36

Debt to Equity ratio VI = (IV/V) 0.04

0.01

0.04

Company Adjusted EBITDA

The table below reconciles restated (loss)/profit for the year to Company Adjusted EBITDA, which is our EBITDA that has been adjusted to remove the effects of our adoption of Ind AS 116, for the periods indicated.

Particulars Fiscal
2019 2020 2021
(Rs.million)
Restated (loss)/profit after tax (I) 309.41 526.34 (35.39)
Add: Total Tax Expense (II) 112.73 156.52 4.04
Add: Finance Costs (IV) 113.78 164.72 205.69
Add: Depreciation and Amortisation expense (V) 321.28 465.72 604.99
Less: Other Income (VI) 57.32 48.25 315.84
EBITDA: VII = I + II +III+IV+V-VI 799.88 1265.05 463.49
Less: Ind AS adjustments on Lease Contract 297.81 423.36 335.16
Company Adjusted EBITDA 502.07 841.69 128.33

Ind AS Adjustments includes adjustments for Ind AS 116, in accordance with MCA Notification, our Company has elected to apply the practical expedient of not assessing lease concessions as a lease modification for all lease concessions which are granted due to COVID-19 pandemic. For further information, see "Restated Financial Information Note 42" on page 246.

Company Adjusted PAT

The table below reconciles restated (loss)/profit after tax to Company Adjusted PAT, which is our PAT that has been adjusted for lease contracts and the deferred tax impact on account of our adoption of Ind AS 116, for the periods indicated.

Particulars Fiscal
2019 2020 2021
(Rs.million)
Restated (loss)/profit after tax 309.41 526.34 (35.39)
Add: Adjustments for lease contract and security deposit discounting 79.48 122.24 87.41
Less: Deferred tax impact on lease contract accounting 22.81 43.78 9.8
Company Adjusted PAT 366.08 604.80 42.22

Company Adjusted Return on Capital Employed

The table below reconciles capital employed to total assets. Capital Employed is calculated as total assets less current liabilities, plus borrowings under current liabilities, current maturities of long-term debts and lease liabilities under current liabilities, while ROCE is calculated as EBIT divided by capital employed. The ROCE has been further adjusted for right of use assets, deferred tax impact and lease liabilities on account of our adoption of Ind AS 116, for the periods indicated.

Particulars Fiscal
2019 2020 2021
(Rs.million)
Total Assets 4,041.31 5,191.86 5,483.67
Current Liabilities 310.46 520.36 460.08
Capital Employed (I) 3,730.85 4,671.50 5,023.59
(Loss)/ Profit Before Tax 422.14 682.86 (31.35)
Interest 113.78 164.72 205.69
Company EBIT (II) 535.92 847.58 174.34
ROCE% (II)/(I) 14.36% 18.14% 3.47%
Total Assets (I) 3,730.85 4,671.50 5,023.59
Less: Right of use of assets (III) 1,377.37 1,947.14 2,006.14
Less: Deferred tax effect on lease asset accounting (IV) 22.81 43.78 53.59
Add: Lease liabilities 15.43 273.66 45.86
Less: Security deposit discount effect in current assets 1.15 2.59 (2.09)
Company Adjusted Total Assets (V) = (I)-(III)-(IV) 2,347.25 2,956.83 3,007.63
Company Adjusted PAT 366.08 604.80 42.22
Add: Interest 0.18 0.84 2.80
Add: Tax 135.54 200.30 13.84
Company Adjusted EBIT (VI) 501.80 805.94 58.86
Company Adjusted ROCE% (VIII) = (VII)/(V) 21.38% 27.26% 1.96%

Company Adjusted Return on Equity

The table below reconciles Adjusted Return on Equity to total equity. Company Adjusted Return on Equity is calculated as Company Adjusted PAT divided by total equity.

Particulars Fiscal
2019 2020 2021
(Rs.million)
Company Adjusted PAT (I) 366.08 604.80 42.22
Total Equity (II) 2,283.34 2,863.02 2,829.36
Company Adjusted Return on Equity (III) = (I/II) 16.03% 21.12% 1.49%

PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE

Set forth below are the principal components of income and expenditure from our continuing operations:

Total Income

Our total income comprises (i) revenue from operations; and (ii) other income.

Revenue from Operations

Revenue from operations comprises (i) sale of products (retail sales net of discounts and gift vouchers provided during the year); and (ii) other operating revenue including scrap sales and export incentives.

Other Income

Other income includes (i) income on financial assets (interest on bank deposits, interest on security deposits measured at amortised cost, investment in mutual funds and interest on income tax refund); (ii) net gain on foreign exchange transactions and translation; (iii) gain on sale of property, plant and equipment; (iv) gain arising from rent concession/early termination of lease agreements; and (v) miscellaneous income.

Expenses

Our expenses comprise (i) cost of materials consumed; (ii) purchases of stock-in-trade; (iii) changes in inventories of finished goods and work-in-progress; (iv) subcontracting charges; (v) employee benefit expense; (vi) finance costs; (vii) depreciation and amortisation expenses; and (viii) other expenses.

Cost of Materials Consumed

Cost of materials consumed comprise opening stock of raw materials, purchases and an adjustment for closing stock of raw materials. Cost of materials consumed is primarily towards fabric, accessories, packing materials and yarn.

Purchases of Stock-in-Trade

Purchases of stock-in-trade comprises garments.

Changes in Inventories of Finished Goods and Work-in-Progress

Changes in inventories of finished goods and work-in-progress comprise changes in our (i) inventories of work-in-progress; and (ii) finished goods and stock in trade; calculated based on the opening stock of work-in-progress and finished goods and stock-in-trade, adjusted for closing stock of work in progress and finished goods & stockin-trade.

Subcontracting Charges

Subcontracting charges comprise sub-contracting and sample making charges.

Employee Benefit Expense

Employee benefit expense comprises (i) salaries, wages and bonus; (ii) contribution to provident and other funds; (iii) gratuity expenses; and (iv) staff welfare expenses.

Finance Costs

Finance costs include interest expense on (i) cash credit facility; (ii) delayed payment of income tax; and (iii) lease rental discounting.

Depreciation and Amortisation Expenses

Depreciation and amortisation expenses comprise (i) depreciation of property, plant and equipment (plant and machinery, furniture and fixtures, vehicles, office equipment and computers); (ii) amortisation of intangible assets (software); and (iii) amortisation on right-of-use assets.

Other Expenses

Other expenses comprise (i) power and fuel; (ii) sales promotion expenses; (iii) freight and handling charges; (iv) rent; (v) repairs and maintenance (buildings, machinery and others); (vi) communication expenses; (vii) printing and stationery; (viii) travelling and conveyance; (ix) rates and taxes; (x) legal and professional charges; (xi) payment to auditor; (xii) expenditure on corporate social responsibility; (xiii) cash collection charges; (xiv) net loss on foreign exchange transactions and translation; (xv) loss on sale of property, plant and equipment; (xvi) bank charges; (xvii) property, plant and equipment written off; (xviii) obsolete stock written off; (xix) provision for expected credit impairments; (xx) bad debts; and (xxi) miscellaneous expenses.

Key components of other expenses are explained below:

? Power and fuel expenses are mainly incurred towards generator charges in the office, warehouse and EBOs.

? Sales promotion expenses primarily comprises expenses towards advertisement, social media promotions, event promotions and commission on lease property.

? Freight and handling charges comprises amounts paid to logistics companies for transport of products from our job workers to our warehouses and from our warehouses to our EBOs and LFSs, and freight on online sales to customer and material returns.

? Rent expenses incurred towards our EBOs, payable to landlords/ lessors/ mall developers.

? Repairs and Maintainence expenses incurred towards our buildings, machinery and others primarily comprise of the maintenance of warehouses and our storage system, the maintenance and upkeeps, refurbishments and periodic upgrades to our EBOs to maintain the ambience and experiential customer service, and the common area maintenance paid to malls

? Property, plant and equipment written off include: (i) in the case of store renovation, capitalised expenditure and the written off depreciated cost of interior; and (ii) in the case of closure, the written off interior cost after salvage.

RESULTS OF OPERATIONS

The following table sets forth certain information with respect to our results of operations on a standalone basis for Fiscal 2019, 2020 and 2021:

Fiscal

2019

2020

2021

Particulars (Rs.million) Percentage of total income (Rs.million) Percentage of total income (Rs.million) Percentage of total income
Income
Revenue from operations 2,852.47 98.03% 3,920.14 98.78% 2,506.68 88.81%
Other income 57.32 1.97% 48.25 1.22% 315.84 11.19%
Total income 2,909.79 100.00% 3,968.39 100.00% 2,822.52 100.00%
Expense
Cost of materials consumed 835.37 28.71% 1062.06 26.76% 488.97 17.32%
Purchases of stock-in-trade 284.08 9.76% 604.59 15.24% 218.17 7.73%
Changes in inventories of finished goods and work in progress (174.75) (6.01)% (367.14) (9.25)% 214.45 7.60%
Subcontracting charges 204.52 7.03% 275.83 6.95% 118.19 4.19%
Employee benefit expense 419.63 14.42% 619.54 15.61% 614.87 21.78%
Finance costs 113.78 3.91% 164.72 4.15% 205.69 7.29%
Depreciation and amortisation expenses 321.28 11.04% 465.72 11.74% 604.99 21.43%
Other expenses 483.74 16.62% 460.21 11.60% 388.54 13.77%
Total expenses 2,487.65 85.49% 3,285.53 82.79% 2,853.87 101.11%
(Loss)/profit before tax 422.14 14.51% 682.86 17.21% (31.35) (1.11)%
Tax expenses
Current tax 136.78 4.70% 204.65 5.16% 26.00 0.92%
Tax related to earlier years (2.79) (0.10)% (1.58) (0.04)% (1.01) (0.04)%
Deferred tax (21.26) (0.73)% (46.55) (1.17)% (20.95) (0.74)%
Total tax expense 112.73 3.87% 156.52 3.94% 4.04 0.14%
(Loss)/profit after tax 309.41 10.63% 526.34 13.26% (35.39) (1.25)%
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of the defined benefit plans (gain)/loss (5.07) (0.17)% 2.83 0.07% (2.38) (0.08)%
Income tax relating to above 1.48 0.05% (0.71) (0.02)% 0.60 (0.02)%
Total other comprehensive income (3.59) (0.12)% 2.12 0.05% (1.78) (0.06)%

 

Fiscal

2019

2020

2021

Particulars (Rs.million) Percentage of total income (Rs.million) Percentage of total income (Rs.million) Percentage of total income
Total comprehensive (loss)/income for the year 313.00 10.76% 524.22 13.21% (33.61) (1.19)%

FISCAL 2021 COMPARED TO FISCAL 2020

Key Developments

? Our operations in Fiscal 2021 were severely impacted by COVID-19 and consequent lockdowns and restrictions imposed in India. Operations at our stores were suspended or restricted, which resulted in a decrease in sale of our products, on account of government restrictions imposed during Fiscal 2021. For further information, see "Significant Factors Affecting Results of Operations and Financial Condition

Impact of COVID-19" on page 290.

? Our operations in Fiscal 2021 were also impacted by related rationalization efforts undertaken by us in order to improve operational efficiency. These included, renegotiating existing lease arrangements and closing certain stores. As a result, we closed 41 EBOs in Fiscal 2021, compared to 18 EBOs closed in Fiscal 2020. For further information, see " Significant Factors Affecting Results of Operations and Financial Condition Impact of COVID-19" on page 290.

Income

Total income decreased by 28.87% from 3,968.39 million in Fiscal 2020 to 2,822.52 million in Fiscal 2021 primarily due to the impact of the COVID-19 crisis and the temporary closure of a number of our stores across India due to lockdown related restrictions on our business operations commencing from end of Fiscal 2020, as well as reduced store-level operations, including reduced operating hours in line with GoI guidelines, which resulted in a significant decrease in customer footfalls at our stores given the lockdown, and significant decrease in same-store sales up to the third quarter of Fiscal 2021.

Revenue from operations

Revenues from operations decreased by 36.06% from 3,920.14 million in Fiscal 2020 to 2,506.68 million in

Fiscal 2021, primarily due to a decrease in retail sales and other operation revenue including scrap sale, on account of the COVID-19 pandemic.

Sale of products

Sale of products decreased by 35.99% from 3,906.13 million in Fiscal 2020 to 2,500.29 million in Fiscal 2021, primarily driven by the impact of COVID-19 and the temporary closure of a number of our stores due to lockdown related restrictions on our business operations.

? Revenue from EBOs decreased by 35.23% from 2,667.13 million in Fiscal 2020 to 1,727.62 million in Fiscal 2021.

? Revenue from LFSs decreased by 46.46% from 1,030.17 million in Fiscal 2020 to 551.58 million in Fiscal

2021.

? Revenue from other channels, i.e. online increased from 38.18 million in Fiscal 2020 to 119.40 million in Fiscal 2021.and MBOs decreased by 38.82% from 116.98 million in Fiscal 2020 to 71.57 million in

Fiscal 2021, primarily driven by increased online purchases by customers due to COVID-19.

Other operating revenue

Other operating revenue also decreased by 54.39% from 14.01 million in Fiscal 2020 to 6.39 million in Fiscal 2021 primarily due to a decrease in scrap and exhibition sales.

Other income

Other income increased from 48.25 million in Fiscal 2020 to 315.84 million in Fiscal 2021, primarily due to an increase in income from rent concession/early termination of lease agreements to 243.31 million in Fiscal 2021 from no such income in Fiscal 2020 on account of the company electing to apply the practical expedient of not assessing the rent concessions as a lease modification, as per Ministry of Corporate Affairs (MCA) notification dated July 24, 2020 on Ind AS 116 for rent concessions, which are granted due to COVID-19 pandemic; the company has also recognised 11.93 million, as other income arising out of difference between the closing lease asset & liability value, on account of short closure of lease agreements and an increase in income from security deposits measured at amortised cost by 211.94% from 12.73 million in Fiscal 2020 to 39.71 million in Fiscal 2021.

This was partially offset by a decrease in income from bank deposits by 48.00% from 22.79 million in Fiscal 2020 to 11.85 million in Fiscal 2021 and on investments in mutual funds by 53.79% from 9.63 million in Fiscal 2020 to 4.45 million in Fiscal 2021.

Expenses

Total expenses decreased by 13.14% from 3,285.53 million in Fiscal 2020 to 2,853.87 million in Fiscal 2021, primarily due to the decreased scale of our operations during the COVID-19 pandemic.

Cost of materials consumed

Cost of materials consumed significantly decreased by 53.96% from 1062.06 million in Fiscal 2020 to 488.97 million in Fiscal 2021 due to a decline in purchases of raw materials primarily due to reduced sales on account of reduced demand for products as a result of store closures, economic uncertainty and other factors arising out of the COVID-19 pandemic.

Purchases of stock-in-trade

Purchases of stock-in-trade (garments) decreased from 604.59 million in Fiscal 2020 to 218.17 million in

Fiscal 2021 primarily due to delays in garment sourcing and restructuring for optimisation of the inventory due to the COVID-19 lockdown.

Changes in inventories of finished goods and work-in-progress

Inventories of finished goods and work-in-progress reflect a net decrease by 23.70% from 904.80 million in Fiscal 2020 to 690.35 million in Fiscal 2021 attributable to delays in garment sourcing and restructuring for optimisation of inventory due to COVID-19 lockdowns.

Subcontracting charges

Subcontracting charges include sub-contracting and sample making charges that decreased by 57.15% from 275.83 million in Fiscal 2020 to 118.19 million in Fiscal 2021 due to reduced operations.

Employee benefits expense

Employee benefits expenses decreased by 0.75% from 619.54 million in Fiscal 2020 to 614.87 million in Fiscal 2021, primarily due to a decrease in salaries, wages and bonus by 1.28% from 580.41 million in Fiscal 2020 to 572.98 million in Fiscal 2021 on account of the optimisation of labour force as a result of the lockdown.This also led to a decrease in staff welfare expenses by 12.38% from 18.58 million in Fiscal 2020 to 16.28 million in Fiscal 2021. This was marginally offset by an increase in the contribution to provident and other funds by 13.03% from 13.43 million in Fiscal 2020 to 15.18 million in Fiscal 2021; and an increase in gratuity expenses by 46.49% from 7.12 million in Fiscal 2020 to 10.43 million in Fiscal 2021 attributable to the increase in service costs.

Finance costs

Finance costs increased by 24.87% from 164.72 million in Fiscal 2020 to 205.69 million in Fiscal 2021 primarily due to an increase in lease rental discounting by 23.80% from 163.88 million in Fiscal 2020 to 202.89 million in Fiscal 2021 a result of the adoption of Ind AS 116. Interest expense on cash credit facility increased from 0.12 million in Fiscal 2020 to 1.15 million in Fiscal 2021 and expenses on delayed payment of income tax also increased from 0.72 million in Fiscal 2020 to 1.65 million in Fiscal 2021.

Depreciation and amortisation expenses

Depreciation and amortisation expenses increased by 29.90% from 465.72 million in Fiscal 2020 to 604.99 million in Fiscal 2021, primarily on account of increase in amortisation of right-of-use assets by 30.47% from 394.35 million in Fiscal 2020 to 514.63 million in Fiscal 2021, due to capitalisation of new EBOs. Depreciation of property, plant and equipment increased by 26.00% from 69.22 million in Fiscal 2020 to 87.22 million in Fiscal 2021 and depreciation of intangible assets also increased by 53.17% from 2.05 million in Fiscal 2020 to

3.14 million in Fiscal 2021 due to capitalisation of new EBOs and the adoption of Ind AS 116.

Other expenses

Other expenses decreased by 15.57% from 460.21 million in Fiscal 2020 to 388.54 million in Fiscal 2021, primarily due to a decrease in:

? Sales promotion expenses that decreased by 10.66% from 71.20 million in Fiscal 2020 to 63.61 million in Fiscal 2021 primarily on account of the COVID-19 pandemic affecting revenue from sales and reduced commission on stores.

? Rent expenses that decreased by 40.92% from 110.99 million in Fiscal 2020 to 65.57 million in Fiscal 2021 primarily due to lease extension options held and exercisable by the Company, rent relief negotiations pursuant to which we arrived at negotiated agreements with respect to reductions in rent and our rental obligations during the COVID-19 pandemic with a majority of our landlords.

In accordance with MCA Notification, the Company has elected to apply the practical expedient of not assessing lease concessions as a lease modification for all lease concessions which are granted due to COVID-19 pandemic. As a result, rent concession, shown as an increase in other income, increased to 243.31 million in Fiscal 2021 from no such income in Fiscal 2020.

? Repairs and maintenance expenses of buildings that decreased by 11.69% from 55.34 million in Fiscal 2020 to 48.87 million in Fiscal 2021 on account of waivers of common area maintenance charges from mall owners for the duration of the nationwide lockdown imposed by the government in Fiscal 2021 on account of the COVID-19 pandemic; expense on machinery that decreased from 0.42 million in Fiscal 2020 to 0.13 million in Fiscal 2021 and expenses on others that decreased by 25.63% from 23.57 million in Fiscal 2020 to 17.53 million in Fiscal 2021 on account of COVID-19 lockdowns and reduced operations.

? Travelling and conveyancing expenses that decreased by 46.12% from 16.24 million in Fiscal 2020 to 8.75 million in Fiscal 2021, due to nationwide lockdown and temporary closures of certain of our stores on account of the COVID-19 pandemic, reduced operating hours and reduced travel by the corporate team.

? Bank charges that decreased by 29.57% from 16.10 million in Fiscal 2020 to 11.34 million in Fiscal 2021 due to lesser transactions as a result of reduced operations.

? Miscellaneous expenses that decreased by 34.82% from 12.12 million in Fiscal 2020 to 7.90 million in Fiscal 2021 on account of reduced operations.

The decrease was marginally offset by an increase in expenditure on corporate social responsibility from 0.61 million in Fiscal 2020 to 16.81 million in Fiscal 2021 due to CSR expenditure of prior years and write offs on property, plant and equipment from 19.34 million in Fiscal 2020 to 25.95 million in Fiscal 2021 due to closure of stores on account of COVID-19 and relocation.

Restated (Loss)/ Profit Before Tax

For the reasons discussed above, restated loss before tax was 31.35 million in Fiscal 2021 compared to a profit of 682.86 million in Fiscal 2020.

Tax Expense

Current tax expenses decreased from 204.65 million in Fiscal 2020 to 26.00 million in Fiscal 2021; tax related to earlier years decreased from 1.58 million in Fiscal 2020 to 1.01 million in Fiscal 2021; and deferred tax allowance decreased from 46.55 million in Fiscal 2020 to 20.95 million in Fiscal 2021, primarily on account of reduced taxable profit. As a result, total tax expense amounted to 4.04 million in Fiscal 2021 compared to 156.52 million in Fiscal 2020.

Restated (Loss)/Profit After Tax

We recorded a loss after tax of 35.39 million in Fiscal 2021 compared to a profit of 526.34 million in Fiscal 2020.

Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA)

EBITDA was 463.49 million in Fiscal 2021 compared to EBITDA of 1265.05 million in Fiscal 2020, while EBITDA Margin was 18.49% in Fiscal 2021 compared to 32.37% in Fiscal 2020.

For reconciliation of EBITDA and EBITDA Margin, see "Managements Discussion and Analysis of Financial

Condition and Results of Operations Results of Operations Non GAAP Measures - Reconciliation of EBITDA and EBITDA Margin to Restated (Loss)/Profit after Tax" on page 292.

FISCAL 2020 COMPARED TO FISCAL 2019

Income

Total income increased by 36.38% from 2,909.79 million in Fiscal 2019 to 3,968.39 million in Fiscal 2020 primarily due to an increase in in the number of EBOs and Same Stores Sales Growth during Fiscal 2020. We had 448 EBOs as of March 31, 2020 compared to 333 EBOs as of March 31, 2019.

Revenue from Operations

Revenues from operations increased by 37.43% from 2,852.47 million in Fiscal 2019 to 3,920.14 million in Fiscal 2020, primarily due to an increase in retail sales, reduced sale of imperfect goods and receipt of earlier year export incentives.

Sale of Products

Sale of products increased by 37.68% from 2,837.14 million in Fiscal 2019 to 3,906.13 million in Fiscal 2020.

? Revenue from EBOs increased by 43.45% from 1,859.23 million in Fiscal 2019 to 2,667.13 million in Fiscal 2020, primarily due to increased number of stores.

? Revenue from LFSs increased by 34.86% from 763.86 million in Fiscal 2019 to 1,030.17 million in Fiscal 2020, primarily due to increased number of stores and Same Store Sales Growth.

? Revenue from other channels, i.e. online increased by 6.17% from 35.97 million in Fiscal 2019 to 38.18 million in Fiscal 2020 and MBOs, decreased by 16.19% from 139.58 million in Fiscal 2019 to 116.98 million in Fiscal 2020, primarily driven by increased sales through cash and carry.

Other Operating Revenue

Other operating revenue decreased by 8.61% from 15.33 million in Fiscal 2019 to 14.01 million in Fiscal 2020 primarily due to a decrease in revenue from scrap sales, attributable to reduced sale of imperfect goods.

Other Income

Other income decreased by 15.82% from 57.32 million in Fiscal 2019 to 48.25 million in Fiscal 2020, primarily due to a decrease in income from investments in mutual funds by 66.43% from 28.69 million in Fiscal 2019 to

9.63 million in Fiscal 2020; and a decrease in net gain on foreign exchange transaction and translation to a nil in Fiscal 2020 from 3.27 million in Fiscal 2019. This was partially offset by an increase in income from bank deposits by 71.61% from 13.28 million in Fiscal 2019 to 22.79 million in Fiscal 2020; and an increase in income from security deposits measured at amortised cost by 29.90% from 9.80 million in Fiscal 2019 to

12.73 million in Fiscal 2020.

Expenses

Total expenses increased by 32.07% from 2487.65 million in Fiscal 2019 to 3,285.53 million in Fiscal 2020, primarily due to an increase in cost of materials consumed, purchase of stock in trade and employee benefit expenses driven by an increase in scale of our operations in Fiscal 2020.

Cost of materials consumed

Cost of materials consumed increased by 27.14% from 835.37 million in Fiscal 2019 to 1,062.06 million in Fiscal 2020 due to an increase in opening stock by 124.83% from 73.41 million in Fiscal 2019 to 165.05 million in Fiscal 2020; and an increase in purchases including purchase of fabric, accessories, packing material and yarn in Fiscal 2020 owing to increased sales.

Purchases of stock-in-trade

Purchases of stock-in-trade (garments) increased by 112.82% from 284.08 million in Fiscal 2019 to 604.59 million in Fiscal 2020 due to new products/categories being outsourced as finished garments.

Changes in inventories, finished goods and work-in-progress

Inventories of finished goods and work-in-progress reflect a net increase by 68.28% from 537.67 million in Fiscal 2019 to 904.80 million in Fiscal 2020 attributable to an increase in operations.

Subcontracting charges

Subcontracting charges include subcontracting and sample making charges that increased by 34.87% from 204.52 million in Fiscal 2019 to 275.83 million in Fiscal 2020 due to increased outsourcing to vendors.

Employee benefits expense

Employee benefits expenses increased by 47.64% from 419.63 million in Fiscal 2019 to 619.54 million in Fiscal 2020, primarily due to an increase in salaries, wages and bonus by 48.88% from 389.85 million in Fiscal 2019 to 580.41 million in Fiscal 2020, on account of increase in the number of our employees from 2,150 as of March 31, 2019 to 2,914 as of March 31, 2020, due to an increase in stores. This also led to an increase in contribution to provident and other funds by 64.58% from 8.16 million in Fiscal 2019 to 13.43 million in Fiscal 2020; gratuity expenses from 6.79 million in Fiscal 2019 to 7.12 million in Fiscal 2020; and staff welfare expenses from 14.83 million in Fiscal 2019 to 18.58 million in Fiscal 2020.

Finance costs

Finance costs increased by 44.77% from 113.78 million in Fiscal 2019 to 164.72 million in Fiscal 2020 primarily due to an increase in lease rental discounting by 44.26% from 113.60 million in Fiscal 2019 to 163.88 million in Fiscal 2020 as a result of the adoption of Ind AS 116. Expenses on delayed payment of income tax also increased from nil in Fiscal 2019 to 0.72 million in Fiscal 2020.

Depreciation and amortisation expenses

Depreciation and amortisation expenses increased by 44.96% from 321.28 million in Fiscal 2019 to 465.72 million in Fiscal 2020, primarily on account of increase in amortisation of right-of-use assets by 44.23% from 273.49 million in Fiscal 2019 to 394.45 million in Fiscal 2020, due to the adoption of Ind AS 116 and the opening of additional stores. Depreciation of property, plant and equipment also increased by 52.07% from 45.52 million in Fiscal 2019 to 69.22 million in Fiscal 2020.

Other expenses

Other expenses decreased by 4.86% from 483.74 million in Fiscal 2019 to 460.21 million in Fiscal 2020, primarily due to an decrease in expenditure on obsolete stock written off from 50.20 million in Fiscal 2019 to a nil in Fiscal 2020 and a decrease in expenditure on bad debts from 105.28 million in Fiscal 2019 to a nil in Fiscal 2020 attributable to closure of our subsidiary:

The decrease was partially offset by an increase in:

? Power and fuel expenses that increased by 79.04% from 22.09 million in Fiscal 2019 to 39.55 million in Fiscal 2020 primarily on account of increase in number of stores.

? Sales promotion expenses that increased by 33.99% from 53.14 million in Fiscal 2019 to 71.20 million in Fiscal 2020 primarily due to new advertisement campaigns such as billboards and focussed cluster campaigns.

? Freight and handling charges that increased by 27.63% from 37.14 million in Fiscal 2019 to 47.40 million in Fiscal 2020 primarily due to increase in product volumes, stores, and LFS supplies.

? Rent that increased by 64.43% from 67.50 million in Fiscal 2019 to 110.99 million in Fiscal 2020 due to the adoption of Ind AS 116.

? Repairs and maintenance expenses of buildings that increased by 38.56% from 39.94 million in Fiscal 2019 to 55.34 million in Fiscal 2020 primarily due to an increase in the number of stores.

? Bank charges that increased by 63.62% from 9.84 million in Fiscal 2019 to 16.10 million in Fiscal 2020 due to higher LC charges as a result of increased imports.

? Property, plant and equipment written off that increased from a nil in Fiscal 2019 to 19.34 million in Fiscal 2020 on account of impairment of assets under Ind AS 36.

Restated Profit before tax

For the reasons discussed above, restated profit before tax was 682.86 million in Fiscal 2020 compared to 422.14 million in Fiscal 2019.

Tax Expense

Current tax expenses increased from 136.78 million in Fiscal 2019 to 204.65 million in Fiscal 2020 and deferred tax allowance increased from 21.26 million in Fiscal 2019 to 46.55 million in Fiscal 2020, primarily on account of increase in taxable profit. As a result, total tax expense amounted to 156.52 million in Fiscal 2020 compared to 112.73 million in Fiscal 2019.

Restated Profit after Tax for the Year

We recorded a restated profit after tax for the year of 526.34 million in Fiscal 2020 compared to 309.41 million in Fiscal 2019.

Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA)

EBITDA was 1,265.05 million in Fiscal 2020 compared to EBITDA of 799.88 million in Fiscal 2019, while EBITDA Margin was 32.27% in Fiscal 2020 compared to 28.04% in Fiscal 2019.

For reconciliation of EBITDA and EBITDA Margin, see "Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Non GAAP Measures - Reconciliation of EBITDA and EBITDA Margin to Restated (Loss)/Profit after Tax" on page 292.

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed the expansion of our business and operations primarily through capital infusion by investors and internal accruals. From time to time, we may obtain loan facilities to finance our short-term working capital requirements.

CASH FLOWS

The following table sets forth certain information relating to our cash flows in the periods indicated:

Fiscal
Particulars 2019 2020 2021
(Rs.million)
Net cash from/ (used in) operating activities 332.86 572.11 898.53
Net cash from/ (used in) investing activities (53.00) (184.65) (472.58)
Net cash from/ (used in) financing activities (308.98) (437.70) (371.39)
Net increase/ (decrease) in cash and cash equivalents (29.12) (50.24) 54.56
Cash and cash equivalents at the end of the period/ year 23.32 (26.92) 27.64

Operating Activities

Fiscal 2021

In Fiscal 2021, net cash from operating activities was 898.53 million. Restated loss before tax for the year was

31.35 million in Fiscal 2021 and adjustments to reconcile loss before tax to operating profit before working capital changes primarily consisted of depreciation of plant, property and equipment and amortisation of intangible assets of 90.36 million; interest recognized on lease liability of 202.89 million; and depreciation recognised on lease assets of 514.63 million. This was partially offset by adjustments for interest recognized on interest free lease deposits of 294.95 million and other income from lease accounting of 255.24 million. The main working capital adjustments in Fiscal 2021 included decrease in inventories of 217.98 million and decrease in loans and advance and other assets 252.35 million. Cash generated from operations in Fiscal 2021 amounted to 898.85 million. Income tax paid amounted to 0.32 million.

Fiscal 2020

In Fiscal 2020, net cash from operating activities was 572.11 million. Restated profit before tax for the year was

682.86 million in Fiscal 2020 and adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation of plant, property and equipment and amortisation of intangible assets of 71.27 million; interest recognized on lease liability of 163.88 million; and depreciation recognised on lease assets of 394.45 million. This was partially offset by adjustments for interest on fixed deposits of 22.79 million and interest recognized on interest free lease deposits of 12.73 million.

The main working capital adjustments in Fiscal 2020 included decrease in loans and advance and other assets of 198.62 million and increase in provisions of 31.86 million. This was partially offset by adjustments for increase in inventories of 381.46 million; increase in trade and other receivables 165.06 million; and decrease in trade payables and other current liabilities of 215.77 million. Cash generated from operations in Fiscal 2020 amounted to 774.60 million. Income tax paid amounted to 202.49 million.

Fiscal 2019

In Fiscal 2019, net cash from operating activities was 332.86 million. Restated profit before tax for the year was

422.14 million in Fiscal 2019 and adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation of plant, property and equipment and amortisation of intangible assets of 47.79 million; interest recognized on lease liability of 113.60 million; and depreciation recognised on lease assets of 273.49 million. This was partially offset by adjustments for interest on fixed deposits of 13.28 million and income from investment on mutual funds of 28.69 million.

The main working capital adjustments in Fiscal 2019 included increase in trade payables and other current liabilities of 80.68 million and increase in provisions of 3.75 million. This was partially offset by adjustments for increase in inventories of 266.39 million; increase in trade and other receivables of 102.24 million; and increase in loans and advance and other assets of 133.99 million. Cash generated from operations in Fiscal 2019 amounted to 500.30 million. Income tax paid amounted to 167.44 million.

Investing Activities

Fiscal 2021

Net cash used in investing activities was 472.58 million in Fiscal 2021, primarily on account of purchase of mutual funds of 934.45 million; purchase of property, plant and equipment, intangible assets and capital work in progress 100.28 million; and placement of security deposits of 69.61 million. This was partially offset by bank deposits matured during the year of 116.33 million and interest received on fixed deposits of 11.46 million.

Fiscal 2020

Net cash used in investing activities was 184.65 million in Fiscal 2020, primarily on account of purchase of property, plant and equipment, intangible assets and capital work in progress of 284.95 million; and placement of security deposits of 84.29 million. This was partially offset by Sale of mutual funds of 1680.17 million and interest received on fixed deposits of 21.90 million.

Fiscal 2019

Net cash used in investing activities was 53.00 million in Fiscal 2019, primarily on account of purchase of property, plant and equipment, intangible assets and capital work in progress of 264.98 million; and bank deposits opened during the year of 329.26 million. This was partially offset by redemption of mutual funds of 933.69 million and interest on fixed deposits received 10.98 million.

Financing Activities

Fiscal 2021

Net cash used in financing activities was 371.39 million in Fiscal 2021, primarily on account of principal repayment of lease liability of 167.29 million and interest expense on lease rental discounting of 202.90 million.

Fiscal 2020

Net cash used in financing activities was 437.70 million in Fiscal 2020, primarily on account of principal repayment of lease liability of 273.66 million and interest expense on lease rental discounting of 163.87 million.

Fiscal 2019

Net cash used in financing activities was 308.98 million in Fiscal 2019, primarily on account of principal repayment of lease liability of 195.16 million and interest expense on lease rental discounting of 113.60 million.

INDEBTEDNESS

As of March 31, 2021, we had total borrowings (consisting of current and non-current borrowings) of 104.39 million. Our gross debt to equity ratio was 0.04 as of March 31, 2021. For further information on our indebtedness, see "Financial Indebtedness" on page 318.

The following table sets forth certain information relating to our outstanding indebtedness as of March 31, 2021, and our repayment obligations in the periods indicated:

Particulars

As of March 31, 2021

Payment due by period

(Rs.million)
Total Less than 1 year 1-3 years 3-5 years More than 5 years
Long Term Borrowings
Term loans (secured) - - - - -
Term loans (unsecured) - - - - -
Total long term borrowings (including current maturities) - - - - -
Short Term Borrowings
Secured 104.39 104.39 - - -
Unsecured - - - - -
Total Short Term Borrowings 104.39 104.39 - - -

 

Particulars

As of March 31, 2021

Payment due by period

(Rs.million)
Total Less than 1 year 1-3 years 3-5 years More than 5 years
Total Borrowings 104.39 104.39 - - -

CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2021, our contingent liabilities as per Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets, that have not been provided for were as follows:

Amount
Particulars
(Rs.million)
Contingent Liabilities and Commitments
(a) Claims against the Company not acknowledged as debts 11.69
(b) Commitments 5.97
Estimated amount of contracts remaining to be executed on capital account and not provided 17.66

For further information on our contingent liabilities, see "Financial Information" on page 206.

Except as disclosed in the Restated Financial Information, Restated Consolidated Financial Information or elsewhere in this Draft Red Herring Prospectus, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table sets forth certain information relating to future payments due under known contractual commitments as of March 31, 2021, aggregated by type of contractual obligation:

Particulars

As of March 31, 2021

Payment due by period

(Rs.million)
Total Less than 1 year 1-3 years 3-5 years More than 5 years
Long Term Borrowings
Contractual obligations - - - - -
Long term borrowings including current portion - - - - -
Lease liabilities 2,219.04 45.86 1139.14 631.56 402.48
Trade Payables 107.33 107.33 - - -
Security deposits payable 10.28 10.28 - - -
Short term borrowings 104.39 104.39 - - -
Capital creditors 17.83 17.83 - - -
Others 5.96 5.96 - - -
Total 2,464.83 291.65 1139.14 631.56 402.47

For further information on our capital and other commitments, see "Financial Information" on page 206.

CAPITAL EXPENDITURES

In Fiscal 2019, Fiscal 2020, and Fiscal 2021, our capital expenditure towards additions to fixed assets (property, plant and equipments and intangible assets) and capital work-in-progress (net additions/transfers) were 264.96 million, 285.04 million and 100.29 million, respectively. The following table sets forth our fixed assets for the periods indicated:

Fiscal 2019 Fiscal 2020 Fiscal 2021
Particulars
(Rs.million)
Property, plant and equipment 258.07 219.78 94.33
Intangible Assets 4.44 4.06 0.95

 

Fiscal 2019 Fiscal 2020 Fiscal 2021
Particulars
(Rs.million)
Capital Work in Progress (net additions/transfers) 2.45 61.20 5.01
Total 264.96 285.04 100.29

For further information, see "Financial Information" on page 206.

RELATED PARTY TRANSACTIONS

We enter into various transactions with related parties in the ordinary course of business. These transactions principally include remuneration to executive Directors and Key Managerial Personnel, loan written off, advances given, sale of finished goods and subcontracting charges. For further information relating to our related party transactions, see "Financial Information Note 39: Related party disclosures" on page 238.

In Fiscals 2019, 2020 and 2021, the aggregate amount of such related party transactions was 141.71 million, 47.58 million, and 43.85 million, respectively. The percentage of the aggregate value of such related party transactions to our revenue from operations in Fiscals 2019, 2020 and 2021 was 4.97%, 1.21% and 1.75%, respectively.

AUDITORS OBSERVATIONS

There have been no reservations/ qualifications or adverse remarks/ emphasis of matter highlighted by our statutory auditors in their auditors reports on the audited financial statements as of and for the years ended March 31, 2019, 2020 and 2021.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to various types of market risks during the normal course of business. Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: Currency risk, interest risk and other price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Product Price Risk

Product price increases which are not in line with the levels of customers discretionary spends, may affect the sales volumes. In such a scenario, the risk is managed by offering judicious discounts to customers to sustain volumes. We negotiate with vendors for purchase price rebates such that the rebates substantially absorb the product discounts offered to the retail customers. This helps protect us from significant product margin losses.

Interest Rate Risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

We are exposed to interest rate risk primarily due to borrowings having floating interest rates. We use available working capital limits for availing short term working capital demand loans with interest rates negotiated from time to time so that we have an effective mix of fixed and variable rate borrowings. We do not enter into financial instrument transactions for trading or speculative purposes or to manage interest rate exposure.

Credit Risk

Credit risk is the risk of the financial loss that the counterparty will default on its contractual obligation. The credit risk for us primarily arises from the credit exposures to trade receivables (mainly institutional customers), deposits with landlords for store properties taken on leases, cash and cash equivalents, deposits with banks and other receivables.

Trade and other receivables

Our retail business is predominantly on cash and carry basis. We sell goods on credit basis to institutional parties. The credit risk on such collections is minimal considering that such sales are only 3% of the total sales. The average credit period for institutional parties is 30 days. No interest is charged on trade receivables on payment received even after the credit period. We have adopted a policy of dealing with only credit worthy counterparties in case of institutional customers and the credit risk exposure for institutional customers is managed by us by credit worthiness checks. We also carry credit risk on lease deposits with landlords for store properties taken on lease, for which agreements are signed and property possessions timely taken for store operations. The risk relating to refunds after store shut down is managed through successful negotiations or appropriate legal actions, where necessary.

Liquidity Risk

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of our short, medium and long-term funding and liquidity management requirements. We manage liquidity risk by maintaining adequate reserves, banking facilities by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.

Inflation

In recent years, India has experienced relatively high rates of inflation. While we believe inflation has not had any material impact on our business and results of operations, inflation generally impacts the overall economy and business environment and hence could affect us.

UNUSUAL OR INFREQUENT EVENTS OR TRANSACTIONS

Except as described 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.

SIGNIFICANT ECONOMIC CHANGES THAT MATERIALLY AFFECT OR ARE LIKELY TO AFFECT INCOME FROM CONTINUING OPERATIONS

Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations identified above in "Managements

Discussion and Analysis of Financial Condition and Results of Operations Significant Factors Affecting our Results of Operations" and the uncertainties described in "Risk Factors" on pages 287 and 21, respectively.

KNOWN TRENDS OR UNCERTAINTIES

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 "Managements Discussion and Analysis of Financial Condition and Results of Operations Significant Factors Affecting our Results of Operations" and the uncertainties described in "Risk Factors" on pages 290 and 21, respectively. To our knowledge, except as discussed in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

FUTURE RELATIONSHIP BETWEEN COST AND INCOME

Other than as described in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of

Financial Condition and Results of Operations" on pages 21, 149 and 287 respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

NEW PRODUCTS OR BUSINESS SEGMENTS

Except as set out in this Draft Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments.

COMPETITIVE CONDITIONS

We operate in a competitive environment. See "Risk Factors", "Industry Overview", "Our Business" and on pages 21, 104 and 149, respectively, for further details on competitive conditions that we face across our various business segments.

EXTENT TO WHICH MATERIAL INCREASES IN NET SALES OR REVENUE ARE DUE TO INCREASED SALES VOLUME, INTRODUCTION OF NEW PRODUCTS OR SERVICES OR INCREASED SALES PRICES

Changes in revenue in the last three Fiscals are as described in "Managements Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2021 compared to Fiscal 2020" and "Managements Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2020 compared to Fiscal 2019" above on pages 298 and 301, respectively.

SEGMENT REPORTING

Our business activity primarily falls within a single business and geographical segment, i.e. retailing of bottom-wear apparel in India, accordingly, other than as disclosed in "Restated Financial Information Note 38" on page

237, we do not follow any other segment reporting.

SIGNIFICANT DEPENDENCE ON SINGLE OR FEW CUSTOMERS

Given the nature of our business operations, we do not believe our business is dependent on any single or a few customers.

SEASONALITY/ CYCLICALITY OF BUSINESS

Our business exhibits seasonality with relatively higher revenues recorded during the festive periods compared to other periods. For further information, see "Risk Factors - Our sales are subject to seasonal variations that could result in fluctuations in our results of operations." on page 36.

SIGNIFICANT DEVELOPMENTS AFTER MARCH 31, 2021 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS

Except as disclosed in this Draft Red Herring Prospectus, there have been no significant developments after March 31, 2021 that may affect our future results of operations.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue recognition

Revenue from contract with customer is recognised, when control of the goods or services are transferred to the customer, at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for those goods or services. The specific recognition criteria described below must also be met before revenue is recognised. Revenue is recognised as follows:

Sale of goods

Revenue from contracts with customers

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

To recognize revenues, the Company applies 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

Recognise revenues when a performance obligation is satisfied.

Revenue from sale of products

Revenue is measured at the fair value of the consideration received or receivable net of returns and allowances, trade discounts and volume rebates, taking into account contractually defined terms of payment excluding taxes or duties collected on behalf of the government.

Goods and Service Tax (GST) is not received by the Company in its 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.

Refund liabilities

A refund liability is the obligation to refund part or all of the consideration received (or receivable) from the customer. The Company has therefore recognised refund liabilities in respect of customers right to return. The liability is measured at the amount the Company ultimately expects it will have to return to the customer. The Company updates its estimate of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period.

The Company has presented its right to return assets and refund liabilities as required under Ind AS 115 in the financial statements.

Income from gift voucher

Gift voucher sales are recognised when the vouchers are redeemed, and the goods are sold to the customer.

Dividend and Interest Income

Dividend income from investments is recognised when the Companys right to receive payment has been established. Realised Gain from Redemption of Growth oriented mutual fund schemes are recognised in Profit and Loss Account upon receipt of redemption proceeds, and unrealised gain on Mark to Market re-statement of Mutual Funds are measured at Fair Value through Profit and Loss Account as on the Balance Sheet closing date. Interest income is accrued on time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Foreign currencies

Determination of functional currency:

Currency of the primary economic environment in which the Company operates ("the functional currency") is

Indian Rupee (INR) in which the company primarily generates and expends cash. Accordingly, the Management has assessed its functional currency to be Indian Rupee (INR).

Transactions in foreign currency are recorded on the basis of the exchange rate prevailing as on the date of transaction. Monetary assets and liabilities denominated in foreign currency are restated at rates prevailing at the year-end. The net loss or gain arising out of such restatement is dealt with in the Statement of Profit and Loss.

Leases

The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether:

(i) the contract involves the use of an identified asset (ii) the company has substantially all of the economic benefits from use of the asset through the period of the lease (iii) the company has the right to direct the use of the asset.

The company as a lessee

At the commencement of the lease, the company recognises a right of use asset (ROU) and a corresponding lease liability for all lease arrangements in which it is a leasee, except for leases with a term of 12 months or less (Short term lease) and low value leases. For those Short term and low value leases, the company recognizes the lease payments as an operating expense on a straight line basis over the term of the lease. Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are re-measured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.

Ministry of Corporate Affairs (MCA) vide its notification dated July 24, 2020, has directed the companies to recognise the short term waivers received on account of COVID-19 pandemic, up to June 2021, as other income in the profit and loss account.

Employee benefits

Defined contribution plan

The Company makes defined contribution to Government Employee Provident Fund, Government Employee Pension Fund, Employee Deposit Linked Insurance and Employee State Insurance, which are recognized in the statement of Profit and loss on accrual basis. The Company recognises contribution payable to the provident fund scheme as an expenditure, when an employee renders the service entitling them to the contributions.

The Company has no obligation, other than the contribution payable to the provident fund.

Retirement benefit costs and termination benefits

Liabilities for gratuity funded in terms of a scheme administered by the LIC are determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to the statement of profit and loss. Past service cost is recognized in the statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:

- Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); - Net interest expense or income; and - Remeasurement

The Company presents the first two components of defined benefit costs in the statement of profit and loss in the line item ‘Employee benefits expense. Curtailment gains and losses are accounted for as past service costs.

The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the

Companys defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are recognized in the statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

Current tax

The tax currently payable is based on estimated taxable profit for the year. Estimated taxable profit differs from

‘profit before tax as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companys current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets include Minimum Alternate Tax ("MAT") paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set-off against future tax liability. Accordingly, MAT is recognised as deferred tax asset in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.

Property, Plant and Equipment and Depreciation on Property, Plant and Equipment

Property, plant and equipment are stated at costs less accumulated depreciation (other than freehold land) and impairment loss, if any.

The cost includes purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Subsequent expenditure on fixed assets after its purchase/completion is capitalized only if such expenditure results in an increase in the future economic benefits from such asset beyond its previously assessed standard of performance.

Depreciation is provided for property, plant and equipment on the straight-line method over the estimated useful life from the date the assets are ready for intended use. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Depreciation on Property, Plant and Equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.

Estimated Useful Life of the various categories of Property, Plant & Equipment in Go Fashions are as below:

1. Plant & Machinery (SLM % 6.33/15 years) 2. Vehicles (SLM% 11.88/8 years) 3. Furniture (SLM% 9.50/10 years) 4. Office Equipments (SLM% 19/5 years) 5. Computers (SLM% 31.67/3 years)

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.

Capital work in progress

Amount paid towards the acquisition of property, plant and equipment outstanding as of each reporting date and the cost of property, plant and equipment not ready for intended use before such date are disclosed under capital work-in-progress. The capital work- in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

Intangible assets

Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less accumulated amortization and accumulated impairment, if any.

Intangible assets comprise of computers and are amortized on a straight line basis over their estimated useful lives of 3 years. The estimated useful lives of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.

Impairment

Financial assets (other than fair value)

The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and/or all trade receivables that do not constitute a financing transaction.

The Company applies simplified approach of expected credit loss model for recognising Impairment loss on lease receivables, trade receivables, other contractual rights to receive cash or other financial asset. Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Expected credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

Non-financial assets

Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognized in the statement of profit and loss.

Inventories

Items of inventory are valued at lower of cost and net realizable value. Cost includes cost of purchase, cost of conversion, and other costs incurred in bringing the inventories to their present location and condition and is net of taxes where applicable. Cost of raw materials, stores and spares, packing material and traded goods is determined on weighted average basis. In case of work-in-process and finished goods, cost includes the actual cost of conversion.

Provisions and Contingent Liabilities

A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The Company does not recognize a contingent liability but discloses its existence in the Restated Financial Information. Contingent assets are only disclosed when it is probable that the economic benefits will flow to the entity.

Investment

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments.

Current investments are carried individually, at fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

During the year ended March 31, 2019, the Wholly Owned Subsidiary filed an application with Jebal Ali Free Zone (JAFZA) for removal/striking off its name from the records of the JAFZA. Accordingly, the JAFZA skirted off the name of the Wholly Owned Subsidiary as on 04.02.2019 and liquidated its assets and liabilities.

Financial Instruments

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through statement of profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.

Financial assets

Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. the foreign exchange component forms part of the fair value gains or losses and is recognized in the profit and loss.

Cash and cash equivalent

Cash comprises cash on hand, cheques and demand drafts on hand, balances with banks in current accounts/demand deposits. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

Earnings per share

Basic earnings per share is computed by dividing the profit/(loss) after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit/(loss) after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits/reverse share splits and bonus shares, as appropriate.

Operating Cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

Borrowing Cost

Borrowing costs consist of interest, ancillary and other costs that the Company incurs in connection with the borrowing of funds and interest relating to other financial liabilities. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which these occur.