Shopper's Stop Limited - Securities and Exchange Board of India

Earnings before Interest, Depreciation, Tax and Amortisation and exceptional items (EBIDTA)
EBIDTA increased substantially by about 204% to Rs. 109 mn in FY 2002 over a loss made in FY 2001.
This was a result of a stronger brand (due to effective spending on direct marketing and advertising in the
prior year), better grip over the supply chain that led to more controlled inventory levels and increase
margins.
Finance Charges
Finance charges increased marginally to Rs.54 mn in FY 2002 from Rs.51 mn in FY 2001 representing a
5.9 % increase. This was mainly due to a higher bank borrowing utilization for increase in working capital
needs due to addition of new stores. Credit Card utlization by our customers requiring us to discount a
higher amount of receivables
Depreciation
The depreciation expense on fixed assets reduced in value from Rs. 62 mn in FY 2001 to Rs. 49 mn in
FY 2002. This was the result of increasing the residual life of the fixed assets, though the accounting
method followed did not change.
Income tax
No provisions were made for any taxes due to losses incurred in earlier years
Profit after tax as per Audited statement of Accounts
Profit after tax for FY 2002 was about Rs. 2 mn as we turned around and reported profits after 2 years of
losses.
Adjusted Profit
Our profit after tax has been adjusted on account of, adoption of accounting policy prescribed by AS-26,
with respect to intangible items namely preliminary expenses, brand development expenses and store
launch expenses and due to reclassification and capitalization of software consultancy cost as fixed
assets and provision of depreciation on the same at the rate of 20% each year.
Adjustment for fiscal 2002
We have adjusted our profits for fiscal 2002 to present the net effect of change in accounting policy
pursuant to adoption of AS-26 from fiscal 2004 to reallocate the cost relating to amortisation of
preliminary expenses, brand development expenses and store launch expenses to period in which they
are incurred. Also due to reclassification of software consultancy cost as fixed assets and provision of
depreciation on the same. On account of the following adjustments, we have restated our profits for
fiscal 2002 upwards by Rs.5million.
Comparison of FY 2003 with FY 2002
Some of the key developments that occurred during FY 2003 include the following:
Our two stores that we had opened in Pune and Bandra (Mumbai) had now become fully operational. On
the other side we also opened 3 more stores in Kandivli (Mumbai), Gurgaon, and Kolkata. This took our
total store count to 12 stores. We also started to emphasis the sale of private label merchandise.
We also went in for a debt swap replacing the loan facility of Rs.280 Million from ICICI Bank with HDFC
Ltd in January 2003, thereby reducing interest rate by 4% per annum.
Gross Retail Turnover
Our Gross Retail Turnover increased by 21.4% in FY 2003 to Rs. 3030 mn as compared to Rs. 2495 mn
in FY 2002.
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