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

As at the date of this draft Red Herring Prospectus, we have not entered into any letter of intent or any
definitive commitment for any such acquisition or investments or joint ventures except as stated on page
51 of this draft Red Herring Prospectus under the section titled “Our Option to acquire a controlling
shareholding in Rainbow Retail Private Limited, set up to venture into food and value retailing.” Our
management, in accordance with the policies set up by our Board of Directors of the Company, will have
flexibility in applying the balance proceeds, if any allocated for general corporate purposes received by us
from this Issue.
No part of the Issue Proceeds will be paid by us as consideration to our Promoters, Directors, key
management personnel, or companies promoted by our Promoters except in the course of normal
business, such as deposits/lease rentals/ conducting fees for taking premises owned by any of the
companies promoted by our Promoters as per the terms of the commercial contractual arrangements
from which we may operate any of our proposed stores or for expanding our existing stores.
Interim Use of Proceeds
Pending any use as described above, we intend to invest the proceeds of this Issue in high quality,
interest / dividend bearing short term / long term liquid instruments including deposits with banks for the
necessary duration. We may also deploy the proceeds of the Issue in temporarily reducing our exposure
to working capital borrowings from banks and financial institutions. These investments would be
authorised by our Board or a duly authorised committee thereof.
Issue expenses
The expenses for this Issue include underwriting commission, management fees, selling commissions
and brokerage, printing and distribution expenses, legal fees, advertisement expenses, depository
charges and listing fees to the Stock Exchanges, among others. The total expenses for this Issue are
estimated to be approximately Rs. 80 mn. Monitoring of Utilization of Funds
The Audit Committee appointed by the Board will monitor the utilization of the proceeds of the Issue.
Working Capital
The proceeds of the Issue will not be used to meet our working capital requirements as we expect our
existing working capital facilities and internal cash accruals to meet our incremental working capital
requirements.
Presently we enjoy working capital limits from the following banks:
Limits Sanctioned Amount outstanding as on July
Bank
Amount ( Rs mn)
31, 2004 ( Rs mn)
UTI Bank Limited 300.00 175.68
Citi Bank 160.00 127.80
IDBI Bank Limited 160.00 100.06
Kotak Mahindra Bank 150.00 0
ICICI Bank Limited 30.00 0
Total 800.00 403.54
Moreover, Fitch Ratings Ltd had rated us for issuance of Commercial Paper for Rs 100 mn In March
2003 and has enhanced the same to cover Commercial Paper issuance of upto Rs 200 mn in April 30,
2004. Our rating is F1 (Ind), denoting the highest safety. Allahabad Bank, Corporation Bank, Bank of
Baroda and UCO Bank have subscribed to our Commercial paper. The outstanding Commercial Paper
as on July 31, 2004 is Rs 180 mn. We believe these facilities along with our internal accruals are
adequate to take care of our working capital requirements.
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