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

in management, reduction in Promoters’ existing shareholding to below 75% of the paid
up equity share capital of our Company. (After giving effect to the Issue, our Promoters'
collective shareholding in the Company will reduce from 79.75% to 67.09%, for which
permission has been obtained from the concerned banks).
If the consent of the concerned banks and financial institutions is not forthcoming our
ability to undertake the above mentioned activities will be impacted.
15. Our inability to deliver as per our business plan could have an adverse impact on
our business
Our business plan includes opening of new stores, and expanding and renovating some
of our existing stores over the next few years. Our success in achieving future growth
through these methods is dependent upon our ability to obtain suitable store sites and in
setting up our new stores, and where applicable, hiring appropriate store personnel.
There can be no assurance that we would be able to renovate existing stores or acquire,
open or operate new stores on a timely or profitable basis or that comparable store sales
will increase in the future.
We also rely on various real estate developers for our store sites. Any delay by the
developers in handing over the possession of store sites to us may lead to delays in our
opening of stores and impact our roll out schedules and cause cost and time over runs.
Any failure by our management to effectively implement an expansion strategy could
have a material adverse effect on our business and operations. In the past, there have
been instances of delays in obtaining possession of the store sites.
16. Any inability to manage our rapid growth could disrupt our business
We have experienced reasonable growth in recent periods. However, our future growth
plans can place significant demands on our management and other resources. Hence,
there can be no assurance that we will be able to execute our strategy on time and within
budget or that we will meet the expectations of the customers and achieve our planned
growth.
Our inability to manage our growth could have a material adverse effect on our business,
financial condition and results of operations. A larger number of stores will increase our
fixed operating costs, and there can be no assurance that we will experience a
commensurate increase in revenue or derive operational synergies to offset these higher
costs.
17. The following outstanding litigations are pending against our Company, our
Promoters and Directors of our Company. For further details, please refer to the
section titled “Outstanding Litigations” on page no. 230 of this draft Red Herring
Prospectus.
Litigation in respect of the Company
There is one sales tax related case; one civil suit against some of our Directors
case and one labour related case pending against the Company, brief details of
each of which are set out below
Sales Tax
Shoppers' Stop New Delhi Store was reassessed for Sales Tax Assessment for the year 2000-01
to 2001-02 under section 23(3) of Delhi Sales Tax Act 1957. The Assessing Authority disallowed
the sales of tax-free Sarees (currently classified as fabric) & raised a demand of Rs. 9,17,734/-on
the classification issue stating that these sarees are not 'fabric' but are 'Readymade Garments'.
The Company further filed an appeal on September 26, 2003 against the demand and paid
Rs.57,500/- against the stay. Currently the matter is in appeal with Deputy Commissioner of Sales
Tax (Appeals), Range IV, Delhi.
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