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

same in future. Currently none of these companies are engaged in the business of
establishing/operating/managaing retail departmental stores.
External Risk Factors
1. We are subject to risks arising from exchange rate fluctuations.
The exchange rate between the Rupee and other currencies is variable and may continue to
fluctuate in the future. Fluctuations in the exchange rates may affect us to the extent of such
orders being placed overseas. As on July 31, 2004 we have placed orders on various
overseas vendors for equipments and other store related capital expenditure amounting to
Great Britain Pound 2303.4. We may place orders with overseas contractors or consultants
or for buying equipments for our new as well as existing stores, as well as source some of
our products from overseas markets for sale in our stores.
2. Regional conflicts in South Asia could adversely affect the Indian economy, disrupt
the Company’s operations and cause its business to suffer.
South Asia has, from time to time, experienced instances of civil unrest and hostilities
among neighbouring countries, such as between India and Pakistan. In recent years there
have been military confrontations along the India-Pakistan border. Military activity or terrorist
attacks in the future could influence the Indian economy. This could have a material adverse
effect on the market for securities of Indian companies, including the Equity Shares and on
the market for the Company’s offering.
3. Public places such as malls in which our stores are located could be likely targets for
unforeseen acts of violence (including terrorist acts and rioting), which may impact
the retail business
Any violence in public places such as retail stores and malls could cause damage to life and
property, and also impact consumer sentiment and their willingness to visit public places.
4. The retail Industry is restricted in its ability to raise financial resources for its growth
The retail sector has not been granted industry status by the Government of India. The
capital requirements for a retailer are in the real estate (which banks have historically
restricted lending to) and for meeting working capital requirements. Banks and financial
institutions are further reluctant to lend to the sector because of lack of collaterals since
most of the assets are on lease.
While some of the leading retailers are still able to get bank funding, the smaller ones are
constrained for growth funding. Similarly, equity options are also restricted with Foreign
Direct Investment not being permitted in the retail trading sector.
5. Retail sector generally relies on various external partners on whom absolute control
is not possible
Generally, the retail sector depends upon various vendors to provide them the merchandise.
Operations could be adversely affected if supplies of merchandise are not obtained in a
timely manner from the vendors or if the supply of such merchandise is discontinued or if
vendors are not able to meet up with growth requirements.
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