Spencers Retail Ltd Directors Report.

Dear Members,

The Board of Directors ("Board") have the pleasure in presenting the Fourth Annual Report on the business and operations of the Company together with the audited financial statements of the Company for the financial year ended March 31, 2021.

FINANCIAL HIGHLIGHTS

The Companys financial performance (Standalone and Consolidated) for the year ended March 31, 2021, are summarised below:

(Rs Lakhs)

Particulars Standalone Consolidated
FY2020-21 FY2019-20 FY2020-21 FY2019-20
Revenue from operations and other income 2,11,613.21 2,40,283.86 2,48,146.90 2,67,662.64
Earnings before interest expenses, tax, depreciation and amortisation (EBITDA) 4,710.08 10,881.36 6,134.79 8,913.17
Finance costs 6,886.27 6,087.09 9,134.19 8,195.36
Depreciation and amortisation 10,616.93 10,496.18 13,421.03 13,814.87
Loss before tax (12,793.12) (5,701.91) (16,420.43) (13,097.06)
Tax expenses - - (35.25) (18.69)
Loss after tax (12,793.12) (5,701.91) (16,385.18) (13,078.37)
Other comprehensive income /(loss) (66.56) (141.80) (65.42) (58.55)
Total comprehensive loss for the year (12,859.68) (5,843.71) (16,450.60) (13,136.92)

The financial statements have been prepared in accordance with Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 ("Act"), as amended, read with Companies (Accounts) Rules, 2015.

PERFORMANCE OVERVIEW

Spencers Retail Limited ("SRL" or "Spencers"), the retail arm of RP-Sanjiv Goenka Group, opened 14 stores {12 in SRL and 2 in Natures Basket Limited (NBL)} spanning around 1.09 lakh square feet (1.01 lakh in SRL and 0.08 lakh in NBL) of retail space during the year. The stores cater to essentials such as groceries, fresh products, general merchandise, personal care products, apparel and accessories, consumer durables and other lifestyle products.

Spencers has shown immense resilience in tackling the pandemic-related ongoing crisis. The financial year under review was a challenging year. We witnessed multiple intermittent lockdowns, disrupting business across all our stores. The Company created a Business Continuity Plan and formed a dedicated committee to monitor the situation. More than 90% of our stores were operational during the lockdown which helped us to serve the nation during such a global healthcare crisis, while taking all necessary precautions. Our financial results for the year reflects the impact of the intermittent lockdowns. First quarter sales were significantly subdued. Thereafter, we witnessed significant quarter-on-quarter recovery in our business but owing to limited operating hours and restrictions on selling of higher-margin non-essential items (apparels, general merchandise and other non-food items) our revenues and margins were impacted. As at the end of March 31, 2021, our consolidated revenue stood at Rs 2,42,807 Lakhs.

As part of our cost-e_ciency enhancing measures during the pandemic, we re-designed and re-engineered most of the contracts with our partners, thereby enabling us to save costs.

While working on minimising the impact through actions above, we continue with our strategy to focus on higher margin non-food categories. Though they were impacted sharply during the year, they are crucial for pivoting the business model to significant profitability.

Apart from our focus on higher margin non-food items, the second piece of our strategy is to build a significant "Out of Store" business. We also made investments to strengthen our mobile application and technology. We increased our local consumer connect using "Stores as hubs" and via hyper local approach for our "Out of Store" business.

DIVIDEND

In view of the accumulated losses, the Board of Directors of the Company has not declared any dividend for the financial year ended March 31, 2021. As required under the SEBI (Listing Obligation & Disclosure Requirement) Regulations, 2015 ("SEBI Listing Regulations") Dividend Policy of the Company has been uploaded on the website of the Company and can be accessed at http://www.spencersretail.com/investor.

COVID 19 PANDEMIC

Due to outbreak of COVID-19 globally and in India, the Company has made an assessment of likely adverse impact on economic environment in general, and financial risks on account of COVID-19. The Company is in the business of organised retail which majorly deals with essential commodities. Accordingly, it has been assessed that there is no major impact on the business of the Company since in nation-wide partial lockdown in different periods during the year, the business in essential commodities was not restricted and the requirement of delivery of essential commodities at doorstep had also increased significantly. The Company has tied up with various service providers to make available the essential products to reach its customers places, aligned with its suppliers and transporters to have a continuous supply of products and keep them available at the Companys stores and warehouses.

MANAGEMENT DISCUSSION AND ANALYSIS

In compliance with Regulation 34(2)(e) of the SEBI Listing Regulations, a separate section on the Management Discussion and Analysis (Annexure-A), as approved by the Board of Directors, which includes detailed review of operations, performance and future outlook of the Company, is annexed hereto and forms a part of this report.

CORPORATE GOVERNANCE

It has been the endeavor of the Company to follow and implement best practices in corporate governance, in letter and spirit. A separate Report on Corporate Governance (Annexure-B) along with Additional Shareholders Information (Annexure-C), as prescribed under SEBI Listing Regulations, together with a certificate from Companys Secretarial Auditor confirming compliance, are annexed to this report.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the extract of Annual Return as on March 31, 2021 is available on the website of the Company at http://www.spencersretail.com/investor.

BUSINESS RESPONSIBILITY REPORT

A detailed Business Responsibility Report (Annexure-D) as required under Regulation 34(2)(f) of the SEBI Listing Regulations, is annexed hereto and forms a part of this report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In terms of the provisions of Section 152 of the Act and Article 100 of the Articles of Association of the Company, Mr. Shashwat Goenka (Director Identification Number 03486121), retires by rotation and, being eligible, offers himself for re-appointment. Suitable resolution for re-appointment of Mr. Shashwat Goenka has been included in the Notice of the Fourth Annual General Meeting (AGM).

The details on Directors re-appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Directors, and also remuneration for Key Managerial Personnel and other employees forms a part of the Corporate Governance Report of this Report.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees received by them.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Act and the SEBI Listing Regulations.

In terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, names of Independent Directors of the Company have been included in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

During the year, there was no change in the Key Managerial Personnel of the Company.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

During the year under review, five Board meetings were held, the details of which are given in the Corporate Governance Report forming a part of this report.

SHARE CAPITAL

As on March 31, 2021, the paid up share capital of the Company post Rights Issue was Rs 50,06,60,045 comprising 9,01,32,009 equity shares of Rs 5/- each and 5,00,000 preference shares of Rs 100/- each. The equity shares of the Company are presently listed with the National Stock Exchange of India Limited ("NSE") and BSE Limited ("BSE").

LISTING

The Company had, voluntarily delisted its equity shares from The Calcutta Stock Exchange Limited (‘CSE) with effect from November 23, 2020 as there has been no trading in the equity shares of the Company listed on CSE. The equity shares of the Company are continued to be listed on BSE and NSE. The Company has paid the requisite listing fees to the Stock Exchanges up to the Financial Year 2021-22.

PUBLIC DEPOSITS

During the year under review, the Company has not accepted any deposits from public / Members under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. The Company does not have any unpaid / unclaimed deposits as on March 31, 2021

STATUTORY AUDITOR AND AUDITORS REPORT

As per the requirement of section 139(2) of the Act, M/s. S.R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E/E300005), was appointed as the Statutory Auditor of the Company for a term of five consecutive years at the Third Annual General Meeting of the Company held on August 03, 2020. The Statutory Auditor has confirmed that they are in compliance under the provisions of the Act to continue as Auditor of the Company.

The notes on the financial statement referred to in the Auditors report are self explanatory and do not call for any further comments. Further, the Auditors Report does not contain any qualification, adverse or disclaimer remark. No fraud has been reported by the auditor.

SECRETARIAL AUDIT AND AUDITORS REPORT

The Board had appointed M/s. S. M. Gupta & Co., Company Secretaries (Membership No. FCS 896), to conduct Secretarial audit of the Company for the financial year 2020-21.Secretarial audit of secretarial and related records of the Company was conducted by the aforesaid auditor and a copy of the secretarial audit report is annexed and forms a part of this report (Annexure-E). Secretarial Audit Report of Natures Basket Limited, material unlisted subsidiary of the Company, is also attached (Annexure-E1). Neither of the above Secretarial audit reports contains any qualifications, reservations or adverse remarks or disclaimer.

SECRETARIAL STANDARDS

During the year under review, the Company has complied with the applicable Secretarial Standards i.e. SS-1 and SS-2 relating to Meetings of the Board of Directors and General Meetings respectively, issued by the Institute of Company Secretaries of India and approved by the Central Government pursuant to Section 118 of the Act.

RELATED-PARTY TRANSACTIONS

All the Related-Party Transactions (RPT) entered into during the financial year were at arms length basis and were in the ordinary course of business and as per the RPT policy of the Company. Hence, the provisions of Section 188 of the Act, as amended, are not attracted. Further, all the RPTs are placed before the Audit Committee for review and approval and prior omnibus approval was obtained for RPT which were repetitive in nature. Thus, disclosure in Form AOC-2 is not required. Further, there were no material significant Related-Party Transaction(s) during the year under review made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interest of the Company at large.

The policy on RPT as approved by the Board is posted on the Companys website and may be accessed at http://www. spencersretaii.com/investor.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the financial year under review, the Company has complied with the provisions of Section 186 of the Act in respect of loans given and investments made. Details of Loans and Investments are given in the notes to financial statements. Further the Company has not given any guarantee or provided any security during the financial year.

COMMITTEES OF THE BOARD

At present, the Board has five committees:

1) Audit Committee,

2) Nomination and Remuneration Committee,

3) Stakeholders Relationship Committee,

4) Corporate Social Responsibility Committee and

5) Risk Management Committee (Constituted on June 15, 2021)

A detailed note on the composition of the Board and its committees is provided in the Corporate Governance Report section of this Report.

The Company has adopted a Code of Conduct for its Directors and senior management personnel including the Managing Director and the Executive Directors. The same can be accessed using the following https://spencersretaii.com/investor.

All Directors and senior management personnel have affirmed compliance with the Code of Conduct and Ethics for Directors and Senior Management.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) and 134(5) of the Act, your Directors, to the best of their knowledge and belief, confirm that:

a) in the preparation of the accounts for the financial year ended March 31, 2021, the applicable Indian accounting standards have been followed along with proper explanation relating to material departures, if any;

b) appropriate accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the period;

c) proper and sufficient care has been taken for the maintenance of accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and during the year under review, neither the statutory auditors nor the secretarial auditors reported to the Audit Committee of the Board, any instances of fraud committed against the Company by its officers or employees.

d) The annual accounts have been prepared on a going concern basis;

e) Internal financial controls laid down by the directors have been followed by the Company and that such internal financial controls were adequate and operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

BOARD EVALUATION

Pursuant to the provisions of the Act, SEBI Listing Regulations and Circulars and Guidance Notes issued by SEBI, the Board had carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. At a separate meeting of Independent Directors, the performances of Non-Independent Directors, the Board as a whole and the Chairman were evaluated, taking into account the views of Executive Directors and Non-Executive Directors.

CRITERIA ON BOARD DIVERSITY AND DIRECTOR ATTRIBUTES AND REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the SEBI Listing Regulations, Nomination and Remuneration Committee (NRC) is responsible for determining qualifications, positive attributes and independence of a Director. NRC is also responsible for recommending to the Board, a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Remuneration for Directors, Key Managerial Personnel and other employees.

RISK MANAGEMENT

The Company has laid out a proper mechanism to identify the elements of business and other risks and a risk management system to ensure compliance with the applicable laws and relevant standards. Detailed discussion on risk management is covered in Management Discussion and Analysis and Report on Corporate Governance, which form part of the Annual Report.

The senior management assists the Board in its oversight of the Companys Management on key risks, including strategic and operational risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks under the aegis of the overall business risks management framework.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with Section 135 of the Act and the rules made thereunder, the Company has revised the Corporate Social Responsibility ("CSR") Policy as amended on January 22, 2021 by Ministry of Corporate Affairs (MCA), a brief outline of which along with the required disclosures is annexed (Annexure-F) as a part of this Report.

The aforesaid CSR Policy has also been uploaded on the Companys website at http://www.spencersretail.com/investor.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to the guidelines laid down under Section 177 of the Act, Rules made thereunder and SEBI Listing Regulations, the Company has a Whistle-blower policy (vigil mechanism) in place for reporting genuine concerns pertaining to any instances of irregularity, unethical practice and/or misconduct. The details of the said policy have been disclosed in the Companys website at http://www.spencersretail.com/investor. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chairman of the Audit Committee of the Company through Company Secretary for redressal of their grievances. No person has been denied access to the Chairman of the Audit Committee, and no such reporting took place during the year.

ANTI SEXUAL HARASSMENT POLICY

The Company has in place an anti-sexual harassment policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013, covering all employees of the Company. An internal committee has been set up for this purpose. During the year, there was no complaint received by the committee.

SUBSIDIARIES

As on March 31, 2021, the Company had two wholly-owned subsidiaries, Natures Basket Limited and Omnipresent Retail India Private Limited. Out of these two subsidiaries, Natures Basket Limited is the material subsidiary of the Company. In terms of the provisions of Regulation 24(1) of the SEBI Listing Regulations, appointment of the Independent Director of the Company on the Board of material subsidiaries was not applicable to Natures Basket Limited. The Company has prepared a consolidated financial statements for the Company and its subsidiaries in the form and manner in compliance with the applicable Indian accounting standards and the SEBI Listing Regulations and the same has been audited by S. R. Batliboi & Co. LLP, Chartered Accountants, the Statutory Auditors of the Company.

The audited consolidated financial statements for the financial year 2020-21 forms a part of the Annual Report and shall be laid before the Members of the Company at the Annual General Meeting. Further, the Auditors Reports of subsidiaries do not contain any qualifications, adverse or disclaimer remarks. Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial statements of the Companys subsidiaries in Form AOC-1 is attached to the financial statements of the Company. Furthermore, pursuant to the provisions of Section 136 of the Act said, the said financial statements of the Company and the consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company at http://www.spencersretail.com/investor. Shareholders desirous of obtaining the Accounts of the Companys subsidiaries may obtain the same upon request.

COST RECORDS

Neither maintenance of cost records nor audit of cost records as required under Section 148 of the Act read with relevant rules made thereunder is applicable to the Company.

EMPLOYEE STOCK OPTION

The Company has formulated Spencers Employee Stock Option Plan 2019 ("ESOP Scheme") for benefit of its employees as per applicable regulations of Securities and Exchange Board of India as amended from time to time and the said schemes are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014, [SEBI (SBEB) Regulations] as applicable. The purpose of above ESOP Scheme is to provide the employees with an additional incentive in the form of options to receive the equity shares of the Company at a future date and reward them for their continuous hard work, dedication and support. Under the aforesaid ESOP Scheme, the NRC of the Board of Directors at their meeting held on June 26, 2020, approved the grant of 1,20,000 options to the eligible employees under the Employee Stock Option Scheme. These options granted are being implemented through a trust viz. Spencers Employee Benefit Trust ("Trust") in accordance with the provisions of SEBI (SBEB) Regulations and involves the secondary market acquisition of the Companys equity shares by the Trust from the Stock Exchanges. Details with respect to employee stock options under the ESOP 2019 as at March 31, 2021, are provided in the table below:

Sl. No. Particulars Number of Equity Shares / Options
1 Total number of options outstanding at the beginning of the year Nil
2. Total number of options granted under ESOP Scheme during the year 1,20,000
3. Options vested during the year NIL
4. Options exercised during the year NIL
5. Options lapsed or forfeited during the year NIL
6. Total number of options outstanding at the end of the year 1,20,000

A certificate from S.R.Batliboi & Co. LLP, Statutory Auditors, with respect to the implementation of the Companys Employee ESOP scheme can be accessed upon logging to the NSDL e-voting system as mentioned in the Notice of AGM.

AWARDS AND RECOGNITIONS

The Company has been a proud recipient of numerous awards and recognitions during the year 2020-21. The significant ones amongst them are listed hereunder:

Certified as a Great Workplace by Great Place to Work Institute, India

India Retail champions for Food & General Retail (Large format over 5,000 sq.ft.) powered by RAI at Bhartiya City Centre Winner for Apprenticeship Leader by Nexus Malls Retail Awards 2020 Contracted Highest Apprentices In Retail (CHAIR) Award at News Mall Retail Awards 2021

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, affecting the financial position of the Company that have occurred between the close of the financial year ended March 31, 2021, and the date of this Boards Report. The year was a year of restructuring for retailers. However, the annual online shopping has increased significantly, because of higher number of people working from home due to pandemic. There was a significant drop in physical footfall in retail outlets owing to pandemic. Our "Out of Store" initiatives, including E-Commerce, Phone Delivery, WhatsApp ordering brought many shoppers online and thus overall order position witnessed a spike. There was a change in the consumer buying behaviour from offine to online owing to safety offerings and better convenience. Going forward in 2021-22, the industry is expected to stabilise and witness many businesses adopting an Omni-channel approach. Also, higher number of COVID-19 cases, have led to consumers hesitation to return to in-store shopping. This could be one of the important factors to empower online industry growth. However, future performance will depend on when the pandemic fades and normalcy returns, which remains uncertain. At the same time, the risks and impact on the Companys different businesses will vary based on the industry, their target markets and the nature of operations. These risks and the approach of each of these businesses to mitigate them have been covered in their respective sections in the Management Discussion and Analysis which forms part of this report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS AND TRIBUNALS

No significant and material order has been passed by the Regulators, Courts and Tribunals impacting the going concern status and the Companys operations in future.

CHANGE IN THE NATURE OF BUSINESS

During the year under review, there was no change in the nature of the business of the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains adequate internal control systems in all areas of its operations. The services of internal and external auditors are sought from time to time as well as in-house expertise and resources. The Company believes that it has sound internal control systems commensurate with the nature and size of its business. The Company continuously upgrades these systems in line with best-in-class practices.

These reports and deviations are regularly discussed with the Management Committee members and actions are taken, whenever necessary. The Audit Committee of the Board periodically reviews the adequacy of the internal control systems.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed hereto and forms part of this Report (Annexure-G).

PARTICULARS OF EMPLOYEES

As required under the provisions of Section 197 of the Act and Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, requisite particulars of the employees forms a part of this Report. However, as per the provisions of Section 136 of the Act, the Annual Report and Accounts are being sent to all the members of the Company excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary of the Company through email on spencers.secretarial@rpsg.in.

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed hereto and forms part of this Report (Annexure-H).

INDUSTRIAL RELATIONS

Industrial relations in the Company, during the year, continued to be cordial. A detailed section on the Companys Human Resource initiatives is forming part of the Management Discussion & Analysis.

GREEN INITIATIVES

The Company supports the ‘Green Initiative undertaken by the Ministry of Corporate Affairs, Government of India, enabling electronic delivery of documents including Annual Report etc. to shareholders at their e-mail address already registered with the Depositories ("DP") and Registrar and Transfer Agents ("RTA").

To support the ‘Green Initiative, Members who have not registered their email addresses are requested to register the same with the Companys RTA / DP for receiving all communications, including Annual Report, Notices, Circulars, etc., from the Company electronically. Pursuant to the MCA Circulars and SEBI Circulars and in view of the prevailing situation of the Pandemic, owing to the difficulties involved in dispatching of the physical copies of the Notice of the fourth AGM and the Annual Report of the Company for the financial year ended March 31, 2021, including therein the Audited Financial Statements for the financial year 2020-21, the afore-mentioned documents are being sent only by email to the Members.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation for the valuable services rendered by the employees of the Company, across all levels. The Directors would also like to express their appreciation to bankers, regulatory authorities, trade suppliers, customers, financial institutions and shareholders for their continued support and cooperation.

On behalf of the Board of Directors
Dr. Sanjiv Goenka
Chairman
Kolkata, June 15, 2021 (DIN 00074796)