Purple Style Labs Ltd Management Discussions

^ The PPUS GMV attributable to the USA is only from our online platform for Fiscals 2023, 2024 and 2025. That said, as of the date of this Draft Red Herring Prospectus, we are in the process of opening an Experience Center in New York.

* Rest of the World includes Australia, Canada, the Middle East (including United Arab Emirates, Saudi Arabia, Qatar, Kuwait) and South East Asia (including Singapore), among others.

Our value proposition for customers

As a discovery platform with a curated assortment of luxury Designer Brands, we provide customers with collections of Indian luxury Designer Brands across a range of product categories, which can be accessed at our Experience Centers as well as online. Our online channels also function as a discovery platform for customers, driving increased foot traffic to our Experience Centers. Our Experience Centers offer customers the ability to physically interact with products, try on apparel and experience the quality and craftsmanship of the products. A key feature of our Experience Centers is the availability of in-store stylists who provide personalized styling advice and assistance.

Our value proposition for Designer Brands

We offer Indian luxury Designer Brands visibility and access to a large, global customer base, while providing control over b rand image and pricing integrity. Furthermore, our platform addresses key challenges faced by Designer Brands in the luxury fashion industry, particularly around visibility, distribution, and access to premium retail environments, according to the 1Lattice Report. As a result, we have been able to maintain relationships with our top Designer Brands, while consistently increasing the sales of these Designer Brands through PPUS Omni-channel. For further details of the PPUS GMV of our top Designer Brands, see "Multi-brand omni-channel luxury platform in India with a wide portfolio of products and strong designer relationships" on page 171.

Management Team

Our management team is led by our Promoter, Whole-Time Director and Chief Executive Officer, Abhishek Agarwal. Abhishek is supported by the management team comprising professionals with experience in retail, sales, marketing and product management. Our senior management team is characterized by its dynamism and adaptability, bringing a fresh and innovative approach to the luxury fashion industry. Further, our senior management comprises professionals with strong academic backgrounds, including graduates from premier institutions such as the Indian Institute of Technology. Our Board also includes Abhinav Agarwal, our Whole-Time Director and Chief Business Officer with experience in the operation of multi-brand, luxury omni-channel fashion platform, Harminder Sahni, our Non-Executive Director with experience in the consultancy sector, and Rahul Garg, our NonExecutive director, with experience in private equity investment in banking and finance, consumer and retail sectors. For further details of our Board and senior management, see "Our Management beginning on page 212.

Market opportunity

According to the lLattice Report, Indias luxury market is valued at Rs.1,350 billion in FY 2025, growing at a CAGR of 14% from Rs.699 billion in FY 2020. It is further expected to expand to Rs.2,314 billion by FY 2030, at a CAGR of 11%. The sector is undergoing a significant transformation, driven by rising income levels and the evolving aspirations of the countrys middle and upper c lasses.

The Indian wedding and occasion wear market is Rs.1,800 billion in FY 2025, having grown at a CAGR of 12% from FY 2020 to FY 2025, according to the 1Lattice Report. This upward trajectory is expected to continue, with the market projected to grow at 13% CAGR, reaching Rs.3,400 billion by FY 2030. This growth will likely be driven by rising household affluence, increasing discretionary spending, a surge in demand for premium ethnic wear, and the enduring cultural significance of wedding and occasion wear in India, according to the 1Lattice Report.

According to the 1Lattice Report, the luxury fashion market in India is characterized by its fragmented nature, with numerous designer brands, franchisee of international brands and distributors operating independently. We have addressed these challenges by successfully aggregating a wide array of Designer Brands and product categories onto a single, cohesive platform. By serving as a one-stop shop, we streamline the shopping experience and offer a centralized destination for luxury fashion, enabling us to provide personalized recommendations and a curated selection tailored to each customers preferences.

According to the 1Lattice Report, despite the growing international recognition and strong brand equity that Indian designer labels have built, the overall distribution network outside India remains limited. There is a notable scarcity of retail stores outside India that offer a comprehensive selection of Indian luxury and occasion wear. According to the 1Lattice Report, this scarcity makes it difficult for international customers to access high-quality, authentic Indian fashion, limiting the global reach and commercial potential of these brands despite their growing appeal. We provide a centralized platform for customers, enabling Designer Brands to reach a broader audience through our services instead of opening their own stores or establishing their own distribution channels and aim to increase the reach of Indian Designer Brand products globally.

Further, according to the 1Lattice Report, the growing purchasing power of the overseas Indian community is complemented by the growing global acceptance of Indian culture across fashion, entertainment, and luxury markets. Indian aesthetics, craftsmanship, and traditions are gaining prominence in high fashion, Hollywood, luxury hospitality, and fine jewelry, shaping consumer preferences beyond the Indian community. For instance, according to the 1Lattice Report, Indian wedding wear is highly sought after by both Indian Americans and non-Indians for weddings. Further, according to the 1Lattice Report, Indian luxury fashion has gained significant global recognition, driven by the growing international presence of Indian weddings. As Indian weddings become grand, multicultural celebrations hosted across the world, there is rising demand for high-quality, authentic Indian designer-wear. This globalization of Indian wedding traditions has positioned luxury Indian wedding and occasion wear as highly desirable in key international markets such as the US, UK, Middle East, and Australia, driven by both the Indian diaspora and a broader global audience drawn to the richness and vibrancy of Indian celebrations.

Economic environment and changes in trade policies

Our business is influenced by the overall economic environment and shifts in consumer behavior. When the broader economy is strong, customers are more likely to spend through our omnichannel platform. Conversely, economic downturns could lead to reduced customer spending, which can negatively affect our financial performance. Various global macroeconomic factors, such as employment levels, trade policies, credit availability, interest rates, and fuel and energy prices can impact customer spending habits and, in turn, impact our operating results. Additionally, periods of low unemployment often lead to increased labor costs for our business. Furthermore, prolonged inflationary pressures can erode consumers discretionary income and compress our margins if we are unable to pass increased costs on to customers. Additionally, geopolitical instability or public health crises that disrupt supply chains or dampen consumer confidence may also materially and adversely affect our sales volumes and profitability.

In addition, we export our products to the United States, United Kingdom, Australia, Canada, the United Arab Emirates and Southeast Asia. In particular, the United States contributed 16.55%, 22.27%, and 25.19% of our Total PPUS GMV in Fiscals 2025, 2024, and 2023, respectively. In 2025, the United States announced a range of new tariff measures on several major trading partners, including India, Canada, and the European Union. Ongoing changes to these tariffs and international responses have resulted in significant volatility in financial markets and increased economic uncertainty. For example, on August 27, 2025, the United States imposed an additional 25.00% tariff on Indian-origin goods, bringing the total tariff rate to 50.00%. These tariffs may impact Indian businesses, especially those with a substantial export presence in the US market and may result in uncertainties, potentially constraining their market competitiveness and profitability. Such tariff increases may result in our products becoming substantially more expensive for customers and our shipping costs may also increase and it is possible that fewer shipping options may be available to us. The scope, duration, and potential escalation of such trade actions remain uncertain, and we will continue to monitor developments and, where appropriate, adjust our supply-chain and pricing strategies to mitigate any future impact.

Designer Brands

Our ability to attract and retain customers, drive repeat purchases and grow PPUS AOV is intrinsically linked to the depth and breadth of Designer Brands whose products we sell on our omnichannel platform. As of March 31, 2025, we had relationships with approximately 1,312 active Indian Designer Brands including marquee labels such as Seema Gujral, Anushree Reddy, Amit Aggarwal and Rohit Gandhi & Rahul Khanna. While no single Designer Brand accounted for more than 10% of our Total PPUS GMV in Fiscal 2025, however, our top 100 Designer Brands for Fiscal 2025 together accounted for 71.93% of Total PPUS GMV in the said year.

Our business depends on our ability to preserve relationships with established, high-value designers that drive traffic and conversion, and to identify and onboard emerging designer brands to keep our product catalogue fresh and relevant. If a Designer Brand elects to

(a) terminate its arrangement with us;

(b) move to a competing platform,

(c) open its own direct-to-consumer channels,

(d) reduce the breadth of SKUs it offers through us, or

(e) renegotiate commercial terms (margins, working-capital and return windows) on less favourable bases, we could experience reduced product availability, lower take-rates, inventory write-downs or higher operating costs. In addition, any operational disruption, financial distress, supply-chain constraint or negative publicity affecting our Designer

Brands could impair their ability or willingness to supply us in a timely manner and damage the perceived quality of our platform.

Further, the quality and design of the products, prompt fulfilment of orders, adherence to committed delivery timelines and the willingness of designers to undertake alterations or accept returns for defects are critical to customer satisfaction. Delays, quality failures or refusals by Designer Brands to honour such obligations may lead to customer cancellations, refund claims, reputational harm and the loss of customers. Our failure to do so, or to retain and nurture existing designer relationships, could materially and adversely affect our gross merchandise value, customer acquisition and retention, brand equity and, ultimately, our business, financial condition and results of operations.

Customer Retention

Customer retention is a critical driver of our business performance, directly influencing both our results of operations and cash flows. Our ability to retain customers is reflected in the increasing proportion of repeat customers and their growing contribution to our overall sales. For Fiscal 2025, repeat customers accounted for 28.05% of our total customers, up from 22.29% in Fiscal 2024 and 18.86% in Fiscal 2023. Similarly, repeat customer orders as a percentage of PPUS No. of Orders increased to 33.57% in Fiscal 2025 from 28.40% in Fiscal 2024 and 25.36% in Fiscal 2023. The share of repeat customer orders in Total PPUS GMV also rose to 30.80% in Fiscal 2025, compared to 26.05% in Fiscal 2024 and 22.63% in Fiscal 2023. These metrics demonstrate our success in customer loyalty and encouraging repeat purchases, which are essential for sustaining revenue growth and reducing customer acquisition costs. Our focus on customer retention has also resulted in a consistent increase in the Average PPUS GMV per customer. In Fiscal 2025, the Average PPUS GMV per customer reached Rs.83,269.82, up from Rs.67,096.98 in Fiscal 2024 and Rs.59,023.17 in Fiscal 2023. This growth in Average PPUS GMV per customer enhances our revenue predictability and supports healthier cash flows, as loyal customers tend to make more frequent and higher-value purchases. Additionally, the contribution of our top 10,000 customers to our Total PPUS GMV has also shown improvement. In Fiscal 2025, the top 10,000 customers accounted for 58.20% of Total PPUS GMV, compared to 52.87% in Fiscal 2024 and 55.93% in Fiscal 2023. The Total PPUS GMV contributed by these customers increased to Rs.3,423.81 million in Fiscal 2025 from Rs.3,287.36 million in Fiscal 2024 and Rs.2,607.03 million in Fiscal 2023. This concentration of sales among our most engaged customers highlights the effectiveness of our retention strategies and the positive impact on our operating results and cash generation.

An inability to retain customers would have an adverse effect on our results of operations and cash flows. If we fail to maintain high retention rates, we would need to invest more heavily in customer acquisition, such as increased marketing and promotional expenses. This could in turn erode our margins and reduce profitability. Furthermore, the loss of loyal customers could weaken our brand reputation and diminish the network effects that currently drive both customer and Designer Brand engagement on our platform. As a result, our ability to achieve sustained growth and maintain our competitive position in the luxury fashion market would be compromised.

Introduction of new product categories

By diversifying our product portfolio beyond womenswear, we are able to address a broader spectrum of customer needs and capture additional market segments, thereby driving incremental revenue growth and enhancing our competitive positioning.

We believe there is a dearth of curated, multi-brand offerings in menswear within the Indian luxury fashion market. Our differentiated value proposition, centered on curation, quality, and access to leading Designer Brands, positions us to effectively capture this untapped demand. By leveraging our established expertise in curating and assorting collections for women, we are well- placed to replicate this success in menswear and other categories, further expanding our value proposition and appeal to a wider customer base. Our strategic focus on menswear has already yielded tangible results. The PPUS GMV for the menswear category has been steadily increasing, reaching Rs.1,090.78 million in Fiscal 2025, up from Rs.960.48 million in Fiscal 2024 and Rs.492.90 m illion in Fiscal 2023. As a proportion of Total PPUS GMV, menswear contributed 18.54% in Fiscal 2025, compared to 15.45% in Fiscal 2024 and 10.58% in Fiscal 2023.

The successful introduction and scaling of new product categories such as menswear have contributed to the diversification of our revenue streams, reduced reliance on any single category, and improved our ability to capture new growth opportunities. This has resulted in increased Total PPUS GMV, higher customer engagement, and enhanced brand equity. As we continue to expand and optimize our product portfolio, we expect these initiatives to have a positive impact on our results of operations and support sustained long-term growth.

The following descriptions set forth information with respect to the key components of our profit and loss statement.

Income

Total income consists of revenue from operations and other income.

Revenue from operations includes sale of goods, in relation to the sale of products through PPUS Omni-channel, and sale of services including logistics and ancillary services related to the sale of goods to customers, and other support services.

Other income primarily includes interest income on financial assets measured at amortised costs, including on fixed deposits, loans to employees and lease deposits, interest on income tax refund and other income such as fair value gain on financial assets carried at FVTPL, foreign exchange gain (net) and miscellaneous income.

Cost of materials consumed primarily includes the cost of raw materials for materials such as fabrics, threads, embellishments, dying colors, and also in the production of in-house brands such as Wendell Rodricks.

Purchases of stock-in-trade consists of the cost of acquiring products which we sell through our omnichannel distribution network. Changes in inventories of finished goods, work-in-progress and stock-in-trade

Changes in inventories of finished goods, work-in-progress and stock-in-trade reflects the difference between our inventories at the start of the year and the end of the year.

Employee benefits expense primarily consists of salaries, wages and bonus, contribution to provident and other funds, gratuity expense and staff welfare expenses.

Finance costs primarily consist of interest on financial liabilities measured at amortized costs in relation to non-convertible debentures, others, lease liabilities and interest on late payment of statutory dues and other borrowing costs (primarily related to expenses of fees and charges towards availing borrowings).

Depreciation and amortization expense primarily relates to depreciation of our property, plant and equipment, amortization of intangible assets, depreciation of right of use assets and impairment of goodwill.

Other expenses primarily consist of sales and marketing expenses, courier and shipping charges, utilities expenses, payment gateway charges, legal and professional charges, housekeeping and security charges, repair and maintenance charges, technology expenses, among others.

Exceptional Items comprise one-time expenses/income such as employee share-based payment expense and reversal of share-based payment expense.

The following table sets forth certain information with respect to our results of operations for the years ended March 31, 2025, 2024 and 2023:

Total Income. Our total income decreased by 3.14% to Rs.4,940.01 million in Fiscal 2025 from Rs.5,100.33 million in Fiscal 2024, primarily due to decrease in our Revenue from operations and Other income.

Revenue from operations. Our Revenue from operations decreased by 2.87% to Rs.4,899.09 million in Fiscal 2025 from Rs.5,043.73 million in Fiscal 2024 primarily due to the reasons indicated below.

Sale of goods decreased by 1.12% to Rs.4,833.91 million in Fiscal 2025 from Rs.4,888.50 million in Fiscal 2024 primarily on accou nt of the gradual and strategic decision to reduce lower valued products in an effort to increase PPUS AOV, which led to a corresponding decrease in the sale of products. This decrease was offset by the growth in revenue from higher value products and our menswear product category.

Sale of services decreased by 58.01% to Rs.65.18 million in Fiscal 2025 from Rs.155.23 million in Fiscal 2024 primarily on account of our reduced focus on ancillary services such as consulting, styling, marketing and management services, information technology related consulting and support services.

Other income. Other income decreased by 27.70% to Rs.40.92 million in Fiscal 2025 from Rs.56.60 million in Fiscal 2024 primarily due to a decrease in fair value gain on financial asset carried at FVTPL by 74.92% to Rs.3.93 million in Fiscal 2025 from Rs.15.67 million in Fiscal 2024 on account of lower revaluation gains, and a decrease in foreign exchange gain (net) by 49.67% to Rs.6.09 million in Fiscal 2025 from Rs.12.10 million in Fiscal 2024 due to lower currency fluctuations. This was marginally offset by a n increase in interest income on financial assets measured at amortised costs - lease deposits to Rs.26.21 million in Fiscal 2025 from Rs.19.03 million in Fiscal 2024 on account of an increase in lease deposits during Fiscal 2025, on account of expansion to Large Format Experience Centers.

Expenses. Total expenses increased by 0.37% to Rs.5,597.83 million in Fiscal 2025 from Rs.5,577.43 million in Fiscal 2024 primarily due to increases in employee benefits expenses, finance costs and depreciation and amortisation expenses for the reasons set out below.

Cost of materials consumed. Cost of material consumed decreased by 60.07% to Rs.12.90 million in Fiscal 2025 from Rs.32.31 million in Fiscal 2024 primarily due to our reduced focus on our in-house brands leading to lower production volumes.

Purchase of stock-in-trade. Purchase of stock-in-trade decreased 12.92% to Rs.3,025.87 million in Fiscal 2025 from Rs.3,474.80 million in Fiscal 2024 due to lower purchase of inventory, in line with our decision to optimize operations.

Changes in inventories of finished goods, work-in progress and stock-in-trade. Changes in inventories of finished goods, work-in progress and stock-in-trade were Rs.(200.04) million in Fiscal 2025 compared with Rs.(532.12) million in Fiscal 2024.

Employee benefits expenses. Our employee benefits expenses increased by 12.82% to Rs.662.08 million in Fiscal 2025 from Rs.586.86 million in Fiscal 2024 primarily on account of increase in salaries, wages and bonus, which increased by 12.51% to Rs.618.55 million in Fiscal 2025 from Rs.549.76 million in Fiscal 2024. This increase was primarily due to annual increments as well as an increase in on-roll permanent employees to 1,058 as of March 31, 2025 from 994 as of March 31, 2024.

Finance costs. Our finance costs increased by 29.97% to Rs.529.73 million in Fiscal 2025 from Rs.407.57 million in Fiscal 2024. This was primarily due to an increase in interest on financial liabilities measured at amortized cost - non-convertible debentures by 42.03% to Rs.165.38 million in Fiscal 2025 from Rs.116.44 million in Fiscal 2024 on account of higher borrowings, an increase in interest on financial liabilities measured at amortized cost - others by 139.32% to Rs.56.60 million in Fiscal 2025 from Rs.23.65 million in Fiscal 2024 due to increased working capital requirements, and an increase in interest on financial liabilities measured at amortized cost - lease liabilities by 15.56% to Rs.273.15 million in Fiscal 2025 from Rs.236.38 million in Fiscal 2024 due to expansion of leased Experience Center space.

Depreciation and amortization expense. Depreciation and amortization increased by 42.03% to Rs.547.97 million in Fiscal 2025 from Rs.385.81 million in Fiscal 2024 primarily due to an increase in depreciation on property, plant and equipment by 212.58% to Rs.128.22 million in Fiscal 2025 from Rs.41.02 million in Fiscal 2024 due to accelerated depreciation on account of change in useful life of certain classes of assets based on managements estimate in Fiscal 2025 and an increase in depreciation of right of use assets by 17.71% to Rs.402.22 million in Fiscal 2025 from Rs.341.71 million in Fiscal 2024 on account of expansion and addition of Experience Centers.

Other expenses.

Our other expenses decreased by 16.60% to Rs.1,019.32 million in Fiscal 2025 from Rs.1,222.20 million in Fiscal 2024 primarily du e to decreases in the following expenses:

Sales and marketing expenses, which decreased by 38.71% to Rs.331.68 million in Fiscal 2025 from Rs.541.13 million in Fiscal 2024, primarily on account of optimization of advertising and marketing campaigns.

Courier and shipping charges, which decreased by 22.74% to Rs.213.50 million in Fiscal 2025 from Rs.276.35 million in Fiscal 2024, due to lower number of orders delivered in Fiscal 2025 consistent with the strategic decision to reduce products with lower price point.

Exceptional item - expense/(income). Our exceptional items - expense/(income), increased to Rs.1,227.68 million in Fiscal 2025 from Nil in Fiscal 2024 on account of employee compensation expenses accounted towards grant of employee stock options in Fiscal 2025 to certain eligible employees.

Profit/(loss) before tax. For the reasons discussed above, our loss before tax was Rs.1,885.50 million in Fiscal 2025 compared to Rs.477.10 million in Fiscal 2024.

Total tax expenses. Our total tax expense was Nil in Fiscals 2025 and 2024.

Profit/(loss) after tax. For the various reasons discussed above, our loss for the year was Rs.1,885.50 million in Fiscal 2025 compared to Rs.477.10 million in Fiscal 2024.

Our total income increased by 37.34% to Rs.5,100.33 million in Fiscal 2024 from Rs.3,713.75 million in Fiscal 2023, primarily due to an increase in our Revenue from operations.

Revenue from operations. Our revenue from operations increased by 36.61% to Rs.5,043.73 million in Fiscal 2024 from Rs.3,691.93 million in Fiscal 2023 primarily due to an increase in sale of goods as set out below.

Sale of goods increased by 51.68% to Rs.4,888.50 million in Fiscal 2024 from Rs.3,222.83 million in Fiscal 2023 primarily on acco unt of expansion of Experience Center space, the expansion of menswear category, an increase in PPUS No. of Orders as well as higher PPUS AOV.

Sale of services decreased by 66.91% to Rs.155.23 million in Fiscal 2024 from Rs.469.10 million in Fiscal 2023 primarily on accou nt of our reduced focus on ancillary services such as consulting, styling, marketing and management services, and information technology related consulting and support services.

Other income. Other income increased by 159.40% to Rs.56.60 million in Fiscal 2024 from Rs.21.82 million in Fiscal 2023 primarily due to an increase in other non-operating income - fair value gain on financial assets carried at FVTPL by 179.32% to Rs.15.67 million in Fiscal 2024 from Rs.5.61 million in Fiscal 2023 on account of higher revaluation gains, and an increase in other non - operating income - foreign exchange gain (net) by 387.90% to Rs.12.10 million in Fiscal 2024 from Rs.2.48 million in Fiscal 2023 on account of favorable currency movements.

Expenses. Total expenses (before exceptional items) increased by 31.73% to Rs.5,577.43 million in Fiscal 2024 from Rs.4,234.11 million in Fiscal 2023 primarily due to an increase in purchases of stock-in-trade, employee benefits expense, finance costs and other expenses.

Cost of materials consumed. Cost of material consumed decreased by 49.91% to Rs.32.31 million in Fiscal 2024 from Rs.64.50 million in Fiscal 2023 primarily due to our reduced focus on our in-house brands leading to lower production volumes.

Purchase of stock-in-trade. Purchase of stock-in-trade increased 29.53% to Rs.3,474.80 million in Fiscal 2024 from Rs.2,682.54 million in Fiscal 2023 primarily due to the space expansion of our Experience Centers and due to increase in Sale of goods.

Changes in inventories of finished goods, stock-in-trade and work-in-progress. Changes in inventories of finished goods, stock-intrade and work-in-progress were Rs.(532.12) million in Fiscal 2024 compared with Rs.(600.35) million in Fiscal 2023.

Employee benefits expenses. Our employee benefits expenses increased by 32.96% to Rs.586.86 million in Fiscal 2024 from Rs.441.37 million in Fiscal 2023 primarily on account of increase in salaries, wages and bonus, which increased by 33.44% to Rs.549.76 mi llion in Fiscal 2024 from Rs.412.00 million in Fiscal 2023. This increase was primarily due to annual increments as well as an increase in on-roll permanent employees to 994 as of March 31, 2024 from 861 as of March 31, 2023.

Finance costs. Our finance costs increased by 62.64% to Rs.407.57 million in Fiscal 2024 from Rs.250.60 million in Fiscal 2023. This was primarily due to higher borrowings and increased lease liabilities.

Depreciation and amortization expense. Depreciation and amortization increased by 32.25% to Rs.385.81 million in Fiscal 2024 from Rs.291.72 million in Fiscal 2023 primarily due to an increase in depreciation on property, plant and equipment by 32.62% to Rs.41.02 million in Fiscal 2024 from Rs.30.93 million in Fiscal 2023 on account of capital expenditure towards expansion of Experience Centers and an increase in depreciation of right of use assets by 33.28% to Rs.341.71 million in Fiscal 2024 from Rs.256.38 milli on in Fiscal 2023 on account of additional leased Experience Centers.

Other expenses. Our other expenses increased by 10.73% to Rs.1,222.20 million in Fiscal 2024 from Rs.1,103.73 million in Fiscal 2023 primarily due to increases in the following expenses:

Sales and marketing expenses, which increased by 13.83% to Rs.541.13 million in Fiscal 2024 from Rs.475.37 million in Fiscal 2023, primarily on account of increased advertising and promotional activities with a view to increase sales.

Courier and shipping expenses, which increased by 8.21% to Rs.276.35 million in Fiscal 2024 from Rs.255.39 million in Fiscal 2023, primarily on account of higher sales volumes on our omnichannel platform.

Exceptional item - expense/(income). Our exceptional items - expenses/(income) was Nil in Fiscal 2024 while it was Rs.(106.47) million in Fiscal 2023 on account of reversal of residual cost lying in share based payment reserve in Fiscal 2023 after exercise of all the employee stock options by eligible employees.

Profit/(loss) before tax. For the reasons discussed above, our loss before tax was Rs.477.10 million in Fiscal 2024 compared to Rs.413.89 million in Fiscal 2023.

Total tax expenses. Our total tax expense was Nil in Fiscals 2024 and 2023.

Profit/(loss) after tax. For the various reasons discussed above, our loss after tax was Rs.477.10 million in Fiscal 2024 compared to Rs.413.89 million in Fiscal 2023.

Historically, our primary liquidity requirements have been to finance our capital expenditure and working capital needs for our operations. We have met these requirements through cash flows from operations, equity infusions from shareholders and borrowings. As of March 31, 2025, we had Rs.103.78 million in cash and cash equivalents and Rs.1.01 million in bank balances other than cash and cash equivalents. We believe that, after taking into account the expected cash to be generated from operations, our borrowings and the expected proceeds from the Issue, we will have sufficient liquidity for our present requirements and anticipated requirements for capital expenditure and working capital.

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

Operating Activities

Net cash used in operations was Rs.451.85 million in Fiscal 2025. Our loss before tax was Rs.1,885.50 million in Fiscal 2025, which was primarily adjusted for depreciation and amortisation expense of Rs.547.97 million, finance costs of Rs.529.50 million, and sh are- based payment expense of Rs.1,227.68 million, resulting in an operating profit before working capital changes of Rs.486.55 million. Further, in Fiscal 2025, adjustments from movements in working capital were made to arrive at the net cash used in operating activities, which primarily included an increase in inventories of Rs.304.67 million, increase in other financial assets of Rs.259.24 million, and a decrease in trade payables of 264.95. Cash used in operating activities amounted to ^451.21 million and net cash used in operating activities also included income taxes paid (net) of Rs.0.64 million in Fiscal 2025.

Net cash used in operations was Rs.313.44 million in Fiscal 2024. Our loss before tax was Rs.477.10 million in Fiscal 2024, which was primarily adjusted for depreciation and amortisation expense of Rs.385.81 million and finance costs of Rs.407.52 million, resulti ng in an operating profit before working capital changes of Rs.362.59 million. Further, in Fiscal 2024, adjustments from movements in working capital were made to arrive at the net cash used from operating activities, which primarily included an increase in inventories of Rs.625.72 million, an increase in other financial assets of Rs.127.11 million, and a decrease in other liabilities of Rs.138.49 million. Cash used in operating activities amounted to ^311.52 million and net cash used in operating activities also included income taxes paid (net) of Rs.1.92 million in Fiscal 2024.

Net cash used in operations was Rs.441.89 million in Fiscal 2023. Our loss before tax was Rs.413.89 million in Fiscal 2023, which was primarily adjusted for depreciation and amortisation expense of Rs.291.72 million and finance costs of Rs.241.10 million, resulti ng in an operating profit before working capital changes of Rs.23.54 million. Further, in Fiscal 2023, adjustments from movements in working capital were made to arrive at the net cash used from operating activities, which primarily included an increase in inventories of Rs.624.95 million, an increase in other assets of Rs.240.00 million and an increase in other financial assets of Rs.133.42 million. Cash used in operating activities amounted to Rs.440.45 million and net cash used in operating activities also included income taxes paid (net) of Rs.1.44 million in Fiscal 2023.

Investing Activities

Net cash used in investing activities was Rs.121.13 million in Fiscal 2025, primarily on account of purchase of property, plant and equipment of Rs.149.37 million, which was marginally offset by proceeds from sale of investments of Rs.30.13 million.

Net cash used in investing activities was Rs.167.86 million in Fiscal 2024, primarily on account of purchase of property, plant and equipment of Rs.154.67 million and purchase of investments of Rs.10.53 million.

Net cash used in investing activities was Rs.125.58 million in Fiscal 2023, primarily on account of purchase of property, plant and equipment of Rs.134.81 million, which was marginally offset by proceeds from sale of investments of Rs.10.64 million.

Financing Activities

Net cash generated from financing activities was Rs.644.85 million in Fiscal 2025 on account of proceeds from issue of shares including premium collected of Rs.1,482.50 million and proceeds from non-current borrowings of Rs.1,121.50 million. This was primarily offset by repayment of non-current borrowings of Rs.1,050.11 million and payment of interest on lease liabilities of Rs.273.15 million.

Net cash generated from financing activities was Rs.437.52 million in Fiscal 2024 on account of proceeds from non-current borrowings of Rs.1,141.00 million and proceeds from short term borrowings of Rs.394.61 million. This was primarily offset by repayment of non-current borrowings (including current maturities) of Rs.555.43 million and repayment of short term borrowings of Rs.288.33 million.

Net cash generated from financing activities was Rs.471.66 million in Fiscal 2023 on account of proceeds from issue of shares including premium collected of Rs.625.90 million and proceeds from short term borrowings of Rs.540.72 million. This was primarily offset by repayment of non-current borrowings (including current maturities) of Rs.340.10 million and repayment of short term borrowings of Rs.477.87 million.

Our capital expenditures primarily comprised expenditures relating to property, plant and equipment for our Experience Centers and offices. In Fiscals 2025, 2024 and 2023, our capital expenditure towards additions to property, plant and equipment were Rs.100.46 million, Rs.154.66 million and Rs.137.25 million, respectively.

For more information, see "Financial Information - Restated Consolidated Financial Information" on page 232.

As of March 31, 2025, we had total borrowings (consisting of borrowings under total non-current liabilities and borrowings under current liabilities) of Rs.1,127.91 million. Our gross debt to equity ratio was 0.95 times as of March 31, 2025. For further information on our indebtedness, see "Financial Indebtedness" beginning on page 340.

The following table sets forth certain information relating to our outstanding indebtedness as of March 31, 2025, and our repayment obligations in the period indicated:

Contingent Liabilities

As of March 31, 2025, our contingent liabilities that have not been accounted for in the Restated Consolidated Financial Information, were as follows:

Note: During the year ended March 31, 2024, our Company received an income tax demand notice amounting to Rs. 8.80 million for assessment year 2022-23 in respect of certain disallowance. Our Company filed an appeal in relation to the same and had deposited 20% of the demand amount with protest. Such case is pending at CIT (Appeals) and hence the timing of outflow, cannot be estimated. Our Company does not expect any reimbursements in respect of this contingent liability.

For more information, see "Financial Information - Restated Consolidated Financial Information - Note 59 - Contingent liabilities and capital commitments on page 305.

Capital Commitments

As of March 31, 2025, March 31, 2024 and March 31, 2023, we did not have any capital commitments.

EBITDA, EBITDA Margin, and other non-GAAP measures, (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 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, such 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.

For details of reconciliation of the non-GAAP financial measures, see "Other Financial Information" on page 310.

We do not have any off-balance sheet arrangements that we believe have or are reasonably likely to have a current or future material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

We enter into various transactions with related parties in the ordinary course of business. These transactions principally include payment towards remuneration and professional charges, availment and repayment of borrowings, issuance of shares of our Company and reimbursement of expenses incurred on behalf of the Company. For further information relating to our related party transactions, see "Financial Information - Restated Consolidated Financial Information - Note 47 - Related party disclosures on page 286.

Material Accounting Policy Information Summary of material accounting policy information Foreign currency transactions

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Foreign currency denominated monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date and exchange gain or loss arising on their settlement and restatement are recognised in the Restated Consolidated Statement of Profit and Loss.

Non-monetary assets and liabilities that are recorded in terms of historical cost are not retranslated. Exchange differences are deferred in equity if they are attributable to part of net investment in a foreign operation.

Revenue is recognised on satisfaction of performance obligation upon transfer of promised goods or services to customers. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts, margin, rate change etc. offered by the Group as part of the contract. Revenue excludes taxes collected from customers on behalf of the government.

• The Group satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

• The customer simultaneously receives and consumes the benefits provided by the Group s performance as the Group performs; or

• The Groups performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

• The Groups performance does not create an asset with an alternative use to the Group and an entity has an enforceable right to payment for performance completed to date.

For performance obligations where none of the above conditions are met, revenue is recognised at the point in time at which the performance obligation is satisfied.

Revenue from the services provided is recognised as and when the service is completed and in accordance with the contractual obligation between the Group and its customers.

Revenue from sale of products is recognised by the Group at a point in time on which the performance obligation is satisfied which usually coincides with the dispatch of goods or upon delivery to customer, in accordance with the terms of sale.

Interest income is accrued on a time basis, by reference to the principle outstanding and at the effective interest rate applicable, which is the rate that discounts estimated future cash receipts through the expected life of the financial asset to that as sets net carrying amount on initial recognition.

Other non-operating income is recognised as and when due or received, whichever is earlier.

The Group has a customer award credits/ points programme which allows customers to accumulate loyalty points that can be redeemed against future purchases of products as discount. The loyalty points give rise to a separate performance obligation as they provide a material right to the customer. A portion of the transaction price is allocated to the loyalty points awarded to customers based on relative stand-alone selling price and recognised as a contract liability until the points are redeemed.

When estimating the stand-alone selling price of the loyalty points, the Group considers the likelihood that the customer will redeem the points. The Group updates its estimates of the points that will be redeemed at each reporting date.

A contract asset is the right to consideration in exchange for products or services that the Group transfers to its customers. If the Group transfers products or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditioned to customers acceptance.

A receivable is recognised if an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section of ‘Financial instruments - initial recognition and subsequent measurement.

A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group fulfils its performance obligation under the contract (i.e., transfers control of the related goods or services to the customer).

Income tax expense comprises current tax expenses and net change in the deferred tax assets or liabilities during the period. Current and deferred taxes are recognised in the Restated Consolidated Statement of Profit and Loss, except when they relate to item 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.

The income tax expense or credit for the period is the tax payable on the current periods taxable income based on the applic able income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted in relation to the reporting period for each of the entities of the Group.

Deferred tax is recognised using the balance sheet approach. Deferred tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of recognition.

Deferred tax asset is recognised to the extent that sufficient taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. The carrying amount of deferred tax assets are reviewed at each reporting date and reduced when it is no longer probable that sufficient taxable profit will be available to allow the full or part of deferred tax assets to be utilised. At each reporting date, the Group re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax asset to the extent that it has become reasonably certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

The Group recognises deferred tax liability for all taxable temporary differences, except to the extent that both of the following conditions are satisfied:

When the Group can control the timing of the reversal of the temporary difference; and it is probable that the temporary difference will not reverse in the foreseeable future.

The Group assesses at contract inception and on reassessment of a contract, whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group recognises lease liabilities to make lease payments and right of use assets representing the right to use the underlying assets. The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. Lease payments associated with the short-term leases and leases of low-value assets are recognised as an expense in the Restated Consolidated Statement of Profit and Loss.

The Group recognises right of use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses (if any), and adjusted for any re-measurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right of use assets are depreciated on a straight-line basis over the lease term or the estimated useful lives of the assets, whichever is shorter. If the ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

The right of use assets are also subject to impairment.

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce property, plant and equipment) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date in case the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

For a lease modification that fully or partially decreases the scope of the lease, the Group decreases the carrying amount of the right of use asset to reflect partial or full termination of the lease. Any difference between those adjustments is recognised in profit or loss at the effective date of the modification.

The carrying amount of the non-financial assets are reviewed at each balance sheet date to confirm if there is any indication of impairment based on internal /external factors. An impairment loss is recognised whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. Impairment loss is recognised in the Restated Consolidated Statement of Profit and Loss.

After impairment, depreciation / amortisation is provided on the revised carrying amount of the asset over its remaining useful life. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation / amortisation if there was no impairment.

Inventories are measured at lower of cost and net realisable value ("NRV") after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, and other costs including transportation and labour overheads incurred in bringing them to their respective present location and condition. Cost of raw materials is measured on a weighted average basis. Work-in-progress and finished goods are measured on a weighted average basis and its cost is computed on the basis of raw material consumed and proportion of direct overheads incurred. Stock in trade is measured on a weighted average basis. NRV is the estimated selling price in ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

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

Financial assets (excluding trade receivables that do not consist of significant financial component), are recognised initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. A trade receivable without a significant financing component is initially measured at the transaction price.

Transaction costs directly attributable to the acquisition of financial assets measured at fair value through profit or loss ("FVTPL") are recognised immediately in the Restated Consolidated Statement of Profit and Loss.

For purposes of subsequent measurement, financial assets are classified in the following categories

Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. After Initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate ("EIR") method. EIR is the rate that exactly discounts estimated future cash receipts (including all fees, transaction costs and other premiums or discounts) through the expected life of the debt instrument or where appropriate, a shorter period, to the net carrying amount on initial recognition. Interest income from these financial assets is included in finance income using the EIR method. Impairment gains or losses arising on these assets are recognised in the Restated Consolidated Statement of Profit and Loss.

Financial assets are measured at fair value through other comprehensive income ("OCI") if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset, on specified dates, give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised through profit and loss in the Restated Consolidated Statement of Profit and Loss.

Financial asset not measured at amortised cost or at fair value through OCI, is carried at FVTPL. Financial assets included within FVTPL category are measured at fair value with all changes recognised in the Restated Consolidated Statement of Profit and Loss.

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Restated Consolidated Statement of Profit and Loss. In respect of equity investments which are not held for trading, the Group has made an irrevocable election to present subsequent changes in the fair value of such instruments in the Restated Consolidated Statement of Profit and Loss. Such an election is made by the Group on an instrument-by-instrument basis at the time of transition for existing equity instruments/ initial recognition for new equity instruments.

In accordance with Ind AS 109, the Group applies the expected credit loss ("ECL") model for measurement and recognition of impairment loss on the financial assets and credit risk exposures.

For recognition of impairment loss on financial assets and risk exposure, the Group determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.

ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

The Group follows ‘simplified approach for recognition of impairment loss allowance on trade receivables (including lease receivables) and on any contractual right to receive financial asset that result from transactions within the scope of Ind AS 115. The application of simplified approach does not require the Group to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.

ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the Restated Consolidated Statement of Profit and Loss.

The Group de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the assets and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralized borrowing for the proceeds received.

For the purpose of presentation in the Restated Consolidated Statement of Cash Flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term and highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the Restated Consolidated Statement of Assets and Liabilities. Margin money deposits, earmarked balances with banks and other bank balances which have restrictions are presented as other bank balances.

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments which are issued for cash are recorded at the proceeds received, net of direct issue costs. Equity instruments which are issued for consideration other than cash are recorded at fair value of the equity instrument.

Financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument. All financial liabilities are initially measured at fair value plus or minus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue.

Transaction costs directly attributable to the acquisition of financial liabilities at FVTPL are recognised immediately in Restated Consolidated Statement of Profit and Loss.

The subsequent measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses including interest expenses on financial liabilities at FVTPL are recognised in the Restated Consolidated Statement of Profit and Loss.

After initial recognition, interest-bearing liabilities and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in Restated Consolidated Statement of Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Restated Consolidated Statement of Profit and Loss.

Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired. When an existing financial liability is replaced by another liability on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the Restated Consolidated Statement of Profit and Loss.

Financial assets and financial liabilities are offset and the net amount is reported in the Restated Consolidated Statement of Assets and Liabilities if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis to realize the assets and settle the liabilities simultaneously.

All items of property, plant and equipment are stated at historical cost less accumulated depreciation / amortisation and impairment loss, if any. Historical cost includes expenditure that is attributable to the acquisition/ construction and all other costs (including borrowing related to qualifying assets), and taxes that are not refundable and are necessary to bring the asset to its working condition of use as intended.

Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. Repairs and maintenance expenses are charged to Restated Consolidated Statement of Profit and Loss during the reporting period in which they are incurred.

The cost of property, plant and equipment and directly related expenses net of accumulated impairment losses, if any, which are incurred before the date they are ready for their intended use, are disclosed as capital work-in-progress before such date.

Gains or losses arising from de-recognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Restated Consolidated Statement of Profit and Loss when the asset is de-recognised.

Depreciation is charged on straight line method on the basis of the useful life of assets (mentioned below). Depreciation is calculated on the depreciable amount, which is the cost of an asset less its residual value. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Depreciation is calculated pro-rata from the date on which asset is ready for use or to the date of disposal, as the case may be. The Group depreciates its property, plant and equipment over useful life in the manner prescribed in Schedule II to the Act.

Useful life considered for calculation of depreciation for various asset classes are as follows:

Capital costs in respect of upgradation of leased premises are amortised over the balance lease period or its useful lives whichever is lower.

On transition to Ind AS, the Group has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2022 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.

Intangible assets with a finite useful life are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Cost includes expenditure that is attributable to the acquisition/ development of the intangible assets including cost necessary to bring the asset to its intended use or sale. Expenditure on research activities is recognised in the Restated Consolidated Statement of Profit and Loss as incurred.

Identifiable intangible assets are recognised when it is probable that future economic benefits attributed to the asset will flow to the Group and the cost of the asset can be reliably measured.

Software and related implementation costs are capitalized where it is expected to provide enduring economic benefits and are amortized over a period of 5 to 10 years starting from the date on which asset is ready for use.

Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirers interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any. Goodwill is tested for impairment annually or when events or circumstances indicate that the implied fair value of goodwill is less than its carrying amount. Impairment losses relating to acquired goodwill are not reversed in future periods.

Expenditure on internally generated goodwill and brands is recognised in profit or loss as incurred.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Restated Consolidated Statement of Profit and Loss when the asset is derecognised.

On transition to Ind AS, the Group has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2022 measured as per the previous GAAP and use that carrying value as the deemed cost of the intangible assets.

Borrowing costs consist of interest, ancillary costs and other costs in connection with the borrowing of funds.

Borrowing costs attributable to acquisition and/or construction of qualifying assets are capitalized as a part of the cost of such assets, up to the date of such assets are ready for their intended use. All other borrowing costs are charged to the Restated Consolidated Statement of Profit and Loss.

A provision is recognised when the Group has a present obligation 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.

Provisions are measured at the present value of managements best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects the current market assessments of time value of money and the risks specific to the liability. The increase in the provision due to passage of time is recognised as interest expense. The provisions are reviewed at each balance sheet date and adjusted to reflect the managements estimates.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group, or a present obligation where outflow of resources is not probable or where outflow is probable but reliable estimate of the amount cannot be made.

Contingent assets are not recognised in the Restated Consolidated Financial Information. However, contingent assets are assessed continuously and if it is virtually certain that an inflow of economic benefits will arise, the assets and the related income are recognised in the period in which the change occurs.

All employee benefits which are due within twelve months of rendering the services are classified as short-term employee benefits. Benefits such as salaries, wages, compensated absences, etc. and the expected cost of bonus, ex-gratia are recognised on an undiscounted and accrual basis for the period in which the employee renders the related service.

Groups contribution under provident fund scheme, employees state insurance corporation ("ESIC"), local government pension plan, etc. are recognised during the period in which the related service is rendered. The Group has no further payment obligations once the contributions have been paid.

Gratuity: The Group has computed its liability towards future payments of gratuity to employees, on actuarial valuation basis which is determined based on project unit credit method and the charge for current period is debited to the Restated Consolidated Statement of Profit and Loss. The present value of the defined benefit obligation, which is unfunded at present, is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating the terms of the related obligation. Actuarial gains and losses arising on the re-measurement of defined benefit obligation is charged/ credited to other comprehensive income. They are included in the Restated Consolidated Statement of Changes in Equity and in the Restated Consolidated Statement of Assets and Liabilities.

Certain employees of the Group receive part of their remuneration through share-based payments in consideration for the services rendered. The fair value of the options at the grant date is calculated by an independent valuer based on Black Scholes model.

Related costs are recognised as employee benefits expense that are correspondingly credited to employee stock option reserve as part of total equity, over the period in which the performance and/or service conditions are fulfilled by relevant employees. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Groups best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the Restated Consolidated Statement of Profits and Loss for the year represents the movement in cumulative expense recognised as at the beginning and end of that year and is recognised in employee benefits expense.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Groups best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the fair value as at the grant date. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

No expense is recognised for awards that do not ultimately vest because of non-market performance and/or service conditions have not been met.

Basic earnings per share are calculated by dividing the net profit or loss (excluding other comprehensive income) for the period attributable to equity shareholders by the weighted average number of equity shares and instruments which are compulsorily convertible into equity shares, outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a right issue, share split (sub-division) and reverse share splits (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources. For an event wherein the number of ordinary shares increases without an increase in resource, the number of ordinary shares outstanding before the event is adjusted for the proportionate change in the number of ordinary shares outstanding as if the event had occurred at the beginning of the earliest period presented.

For the purpose of calculating diluted earnings per share, the net profit or loss (excluding other comprehensive income) for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

When an item of income or expense within the Restated Consolidated Statement of Profit and Loss from ordinary activity is of such size, nature or incidence that its disclosure is relevant to explain more meaningfully the performance of the Group for the period, the nature and amount of such items is disclosed as an exceptional item.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The CODM comprise of chief executive officer ("CEO") and executive directors of the Company.

Incremental costs directly attributable to the issue of equity shares or instruments in the nature of equity are recognised as a deduction from equity.

There have been no changes in the accounting policies of our Company during the last three financial years.

"Emphasis of Matters not requiring adjustments to Restated Consolidated Financial Information are reproduced below:

Purple Style Labs Limited - Audited Special Purpose Consolidated financial statements Basis of Preparation and Restriction on Distribution and Use

We draw attention to Note 2(A) to the accompanying Audited Special Purpose Ind AS Consolidated Financial Statements, which describes the basis of its preparation. The Special Purpose Ind AS Consolidated Financial Statements have been prepared by the Holding Companys management solely for the purpose of preparation of the Restated Consolidated Financial Information of the Group for the years ended 31 March 2025, 31 March 2024 and 31 March 2023 to be included in the Draft Red Herring Prospectus (‘DRHP)/ Red Herring Prospectus (‘RHP)/ Prospectus, as per the requirements of Section 26 of Part I of Chapter III of the A ct, read with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time (the "ICDR Regulations") and the general directions issued by Securities and Exchange Board of India ("SEBI") dated 28 October 2021 through the Association of Investment Banking of India to the Lead Managers of the Holding Company, to be filed with SEBI, National Stock Exchange of India Limited and BSE Limited and Registrar of Companies (Mumbai), in relation to the proposed Initial Public Offer (‘IPO) of the equity shares of the Holding Company. Therefore, these Audited Special Purpose Ind AS Consolidated Financial Statements may not be suitable for any other purpose. Our report is issued solely for the aforementioned purpose, and accordingly, should not be used, referred to or distributed for any other purpose or to any other party without our prior consent in writing. Further, we do not accept or assume any liability or any duty of care for any other purpose for which or to any other person to whom this report is shown or into whose hands it may come without our prior consent in writing. Our opinion is not modified in respect of this matter.

Purple Style Labs UK Limited - Special Purpose Financial Statements for the financial year 2022-23

We draw attention to Note 1 to the accompanying Special Purpose Financial Statements, which describes the basis of accounting used by the Companys management for the preparation of the accompanying Special Purpose Financial Statements, which is a special purpose financial reporting framework. These Special Purpose Financial Statements have been prepared by the Companys management solely to enable the management of the Purple Style Labs Limited, the Holding Company, in the preparation of its consolidated financial statements for the quarter and year ended 31 March 2023 and accordingly, these Special Purpose Financial Statements may not be suitable for any other purpose. This report is issued solely for the aforementioned purpose, and accordingly, should not be used, referred to or distributed for any other purpose or to any other party without our prior written consent. Further, we do not accept or assume any liability or any duty of care for any other purpose for which or to any other person to whom this report is shown or into whose hands it may come without our prior consent in writing. Our opinion is not modified in respect of this matter."

"Matters reported under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended) in the Independent Auditors report on the Audited Consolidated Financial Statements for the years ended 31 March 2025, 31 March 2024 and 31 March 2023, not requiring adjustments to Restated Consolidated Financial Information are reproduced below:

Purple Style Labs Limited - Consolidated financial statements - Financial Year 2024-25

As stated in Note 59 to the consolidated financial statements and based on our examination which included test checks, except for matters mentioned below, the Holding Company and its subsidiary incorporated in India, in respect of financial year commencing on 01 April 2024, have used two accounting softwares for maintaining their books of account which have a feature of recording audit trail (edit log) facility and the same have been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with other than the consequential impact of the exceptions given below. Furthermore, except for the previous year and the period mentioned in the below matters, the audit trail has been preserved by the Holding Company and its subsidiary as per the statutory requirements for record retention.

Financial Year 2023-24

As stated in Note 41 to the consolidated financial statements and based on our examination which included test checks, except for instances mentioned below, the Holding Company and its subsidiary which are companies incorporated in India and audited under the Act, in respect of financial year commencing on 1 April 2023, have used certain accounting software for maintaining their books of account which have a feature of recording audit trail (edit log) facility and the same have been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with, other than the consequential impact of the exception given below:

"Auditors comments in Annexure to the Independent Auditors report on the financial statements for the years ended 31 March 2025, 31 March 2024 and 31 March 2023 not requiring adjustments to Restated Consolidated Financial Information, are reproduced below:

Purple Style Labs Limited - Standalone financial statements - Financial Year 2024-25 Annexure I referred to in paragraph 13 of the Independent Auditors Report - Clause vii (b)

According to the information and explanations given to us, we report that there are no statutory dues referred in sub-clause (a) which have not been deposited with the appropriate authorities on account of any dispute except for the following:

Clause xvii

The Company has incurred cash losses amounting to Rs. 903.08 million (including impact of share based payment) in the current financial year but had not incurred cash losses in the immediately preceding financial year.

Financial year 2023-24

Annexure I referred to in paragraph 12 of the Independent Auditors Report - Clause vii (a)

In our opinion, and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities by the Company, though there have been slight delays in few cases. Further, no undisputed amounts payables in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

Clause vii (b)

According to the information and explanations given to us, we report that there are no statutory dues referred in sub-clause (a) which have not been deposited with the appropriate authorities on account of any dispute except for the following:

Clause xvii

The Company has not incurred cash losses in the current financial year but had incurred cash losses amounting to Rs. 28.82 mill ion in the immediately preceding financial year.

Financial year 2022-23

Annexure I referred to in paragraph 13 of the Independent Auditors Report - Clause i (b)

The Company has a regular programme of physical verification of its property, plant and equipment under which the assets are physically verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. However, no physical verification was carried out by the management of the Company during the year, and we are therefore unable to comment on the discrepancies, if any, which could have arisen on such verification.

Clause vii(a)

In our opinion, and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, income-tax, duty of customs, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, though there have been slight delays in few cases. Further, no undisputed amounts payables in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

Clause xvii

The Company has incurred cash losses in the current financial year and in the immediate preceding financial year amounting to Rs. 28.82 million and Rs. 168.91 million respectively.

PSL Retail Private Limited - Financial year 2024-25

Annexure I referred to in paragraph 13 of the Independent Auditors Report - Clause vii (a)

In our opinion, and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, duty of customs, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities by the Company, though there have been slight delays in few cases. Further, no undisputed amounts payables in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

Clause xvii

The Company has incurred cash losses (including impact of shared based payment) in the current financial year and in the immediate preceding financial year amounting to Rs. 404.31 million and Rs. 264.40 million respectively.

Financial year 2023-24

Annexure I referred to in paragraph 13 of the Independent Auditors Report - Clause vii (a)

In our opinion, and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities by the Company, though there have been slight delays in few cases. Further, no undisputed amounts payables in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

Clause xvii

The Company has incurred cash losses in the current financial year and in the immediate preceding financial year amounting to Rs. 431.47 million and Rs. 333.21 million respectively.

Financial year 2022-23

Annexure I referred to in paragraph 13 of the Independent Auditors Report - Clause i (b)

The Company has a regular programme of physical verification of its property, plant and equipment under which the assets are physically verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. However, no physical verification was carried out by the management of the Company during the year, and we are therefore unable to comment on the discrepancies, if any, which could have arisen on such verification.

Clause vii (a)

In our opinion, and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, income-tax, duty of customs, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, though income-tax have not generally been regularly deposited with the appropriate authorities and there have been significant delays. Undisputed amounts payables in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Statement of arrears of statutory dues outstanding for more than six months as at balance sheet date:

Clause xvii

The Company has incurred cash losses in the current financial year and in the immediate preceding financial year amounting to Rs. 333.21 million and Rs. 40.39 million respectively."

See "Risk Factors - Our Statutory Auditors have included certain emphasis of matters, and observations prescribed under the Companies (Auditors Report) Order, 2020 in the audit reports of our Company, in the Restated Consolidated Financial Information of our Company" page 47.

Our financial risk management is an integral part of how we plan and execute our business strategy. Our Board of Directors sets our financial risk management policy. Our business activities expose us to a variety of financial risks, namely, credit risk, liquidity risk and market risks. Our risk management policies are established to identify and analyze the risks faced by us, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and our activities.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: Foreign currency risk, interest rate risk and price risk. Our exposure to market risk is primarily on account of foreign currency exchange rate risk and price risk.

Currency Risk

Currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The risk primarily relates to fluctuations in receivables and payables denominated in currencies against the functional currency of the respective entities forming part of our Group.

Changes in foreign currency exchange rates influence our results of operations. Our reporting currency is the INR and we are exposed to foreign exchange risk arising from various currency exposures on account of Other receivables from payment gateway partners and Trade payables towards other expenses, primarily with respect to USD, GBP and CAD, among others. In Fiscals 2025, 2024 and 2023, 0.59%, 0.38%, and 0.51%, respectively, of our Revenue from operations was denominated in currencies other than INR as on the balance sheet date. If our operations in countries outside of the India continues to grow, our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future. In addition, because we conduct business in currencies other than INR, but report our results of operations in INR, we also face remeasurement exposure to fluctuations in currency exchange rates, which could hinder our ability to predict our future results and earnings and could impact our results of operations.

Our management regularly reviews the currency risk. However, we have not entered into any forward exchange contracts or other arrangements to hedge our exposure to currency fluctuations.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. All our borrowings are fixed rate borrowings as of March 31, 2025 and we are not susceptible to interest rate risk due to non-variability of interest rates.

Commodity price risk

Commodity price risk is the possibility of impact from changes in the prices of raw materials and inventory of stock-in-trade. Our procurement department continuously monitors the fluctuation in price and takes necessary action to minimize our commodity price risk exposure.

For more information regarding the exposure to credit risk, see "Restated Consolidated Financial Information - Note - 50 - Financial risk management - (C) Market risk" on page 296.

Liquidity Risk

Liquidity risk is the risk that we may not be able to meet our present and future cash and collateral obligations without incurring unacceptable losses. Our objective is to maintain optimum levels of liquidity and to ensure that funds are available for use based on our requirements. We monitor rolling forecasts of our liquidity position and cash and cash equivalents on the basis of expected cashflows. The liquidity risk principally arises from obligations on account of financial liabilities such as borrowings, lease liabilities, trade payables and other financial liabilities. For more information regarding the exposure to liquidity risk, see "Restated Consolidated Financial Information - Note - 50 - Financial risk management - (B) Liquidity risk" on page 295.

Credit Risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. We are exposed to credit risk from our operating activities (primarily trade receivables) and from our financial assets.

Trade receivables (net of loss allowance)

Trade receivables are unsecured and are derived from revenue earned from sales to customers. Our historical experience of collecting receivables is that credit risk is low. We measure the expected credit loss of trade receivables from individual customers based on historical trend, industry practices and the business environment in which we operate. Loss rates are based on actual loss experience and past trends. Based on historical data, the loss on collection of receivables is very insignificant and hence the credit risk on overall portfolio of trade receivables is low. Generally, we sell goods after receipt of certain advance payments from customers. Further, sales to customers are required to be settled in cash or using major credit cards or renowned payment portals. Thus, the credit risk is mitigated to a large extent.

Other financial assets

We maintain cash balances with banks with high credit rating. Loans given to employees are fully recoverable to the extent of carrying value. The majority of security deposits are placed for lease agreements or with government agencies.

For more information regarding the exposure to credit risk, see "Restated Consolidated Financial Information - Note 50 - Financial risk management - (A) Credit risk on page 294

Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent".

Our business has been subject, and we expect it to continue to be subject, to significant economic changes. 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 income from our continuing operations. For further information regarding trends and uncertainties, please see "- Significant Factors Affecting Our Financial Condition and Results of Operations" on page 316 and "Risk Factors" on page 24.

Except as disclosed in this Draft Red Herring Prospectus, we have not publicly announced any new product categories or business segments. For more information regarding new products, please see "Our Business" on page 167.

We have only one reportable business segment, i.e. "Sale of multi designer apparel, accessories, jewellery, other lifestyle products and allied services thereto". For further information, see "Restated Consolidated Financial Information - Note 58 - Segment Information" on page 305.

Except as disclosed in this Draft Red Herring Prospectus, there are no known factors that will have a material adverse impact on our operations and finances. For more information, see "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 24, 167 and 313, respectively.

We cater to luxury shoppers for occasions such as weddings, pre-wedding events, festivities, social gatherings, and anniversary celebrations. Given the Indian wedding season is spread across eight to nine months in a year and given the longer delivery timelines especially for wedding wear, shopping is concluded some two to three months in advance. Therefore, this demand is distributed throughout the year. Hence, our business and operations have minimal impact due to seasonal variations.

We do not have any significant dependence on a single or few customers or suppliers.

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. See "Risk Factors" and " - Significant Factors Affecting Our Financial Condition and Results of Operations" on page 24 and 316.

We expect competition in our industry from existing and potential competitors to intensify. See "Risk Factors - Our industry is competitive in both the offline and the online channels, with the potential to adversely affect our sales and our ability to work at high margins. Our inability to compete effectively may adversely affect our business, financial condition, cash flows, results of operations and prospects" on page 30.

Except as disclosed elsewhere in this Draft Red Herring Prospectus, there have not arisen, since the date of the last financial statement disclosed in this Draft Red Herring Prospectus, any circumstances which materially and adversely affect, or are likely to affect, our trading, or profitability or the value of our assets or our ability to pay our liabilities within the next 12 months from the date of filing of the Draft Red Herring Prospectus.