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Aditya Birla Fashion & Retail Ltd.

BSE: 535755 Sector: Industrials
NSE: ABFRL ISIN Code: INE647O01011
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VOLUME 142468
52-Week high 359.40
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P/E 53.48
Mkt Cap.(Rs cr) 23,746
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OPEN 255.85
CLOSE 256.10
VOLUME 142468
52-Week high 359.40
52-Week low 221.15
P/E 53.48
Mkt Cap.(Rs cr) 23,746
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Aditya Birla Fashion & Retail Ltd. (ABFRL) - Director Report

Company director report

(INCLUDING MANAGEMENT DISCUSSION AND ANALYSIS)

Dear Members

Your Company's directors hereby present the Fifteenth Annual Reporttogether with the audited financial statements of the Company for the financial year endedMarch 31 2022 ("year under review / FY 2021-22").

MANAGEMENT DISCUSSION AND ANALYSIS

Overview

This year began with the second wave of the pandemic where most of thebusinesses faced challenges brought upon by lockdowns human distress and deeply impactedconsumer confidence. However with large-scale vaccination drive in many countries and dropin severity of cases the world strongly emerged from the fears of the pandemic andgradually moved towards recovery and growth. Global growth is estimated to have surged to5.9 percent in 2021 as a relaxation of pandemic-related lockdowns in many countrieshelped boost demand. The geopolitical situation and inflationary pressures has created anuncertainity in growth path but in medium term economies are expected to recover at fasterpace. There is demand and positivity across markets depite the various challenges.

Global Economy Overview

According to the International Monetary Fund ("IMF")estimates the global economy entered 2022 on a positive note. In the beginning when thenew Omicron COVID-19 variant spread some countries had re-imposed mobility restrictionsbut were withdrawn sooner than in the past. Rising energy prices commodity prices andsupply disruptions in the backdrop of the geopolitical situation resulted in higher andmore broad-based inflation than anticipated. Despite that private consumption is expectedto boost the demand in an amplified manner and this is expected to bring the recovery andgrowth back.

The IMF estimates suggest that global growth is expected to moderatefrom 5.9 percent in 2021 to 3.6 percent in 2022 and 2023 on the backdrop of global macrocondition.

Indian Economy Overview

The IMF has pegged India's economic growth forecast for CY 2021 to 8.9percent in its latest world economic outlook report while it has projected the growthforecast for India in FY23 at 7.4 percent.

Despite withering the pandemic waves 2 & 3 last year India remainson a strong recovery path. According to the IMF India's prospects for 2023 are marked byexpected improvements to credit growth and subsequently investment and consumptionbuilding on the better-than-anticipated performance of the financial sector.

India is expected to become the world's third largest consumer economyin terms of consumption by 2025. Factors that influence this growth include favourabledemographics increasing disposable income and doubling of the consumer class.

Outlook: Cautious Optimism as we step into FY23

Notwithstanding a highly transmissible third wave driven by the Omicronvariant of COVID-19 India is charting a different course of recovery from the rest of theworld and is positioned to grow at the fastest pace year-on-year ("YoY") amongmajor economies according to projections made by the various international agencies. Thisrecovery is pushed by large-scale vaccination and is sustained by supportive fiscal andmonetary support.

According to the Reserve Bank of India. In India real GDP growth at9.2 percent for 2021-22 takes it modestly above the level of GDP in 2019-20 Privateconsumption the mainstay of domestic demand continues to trail its pre-pandemic level.The persistent increase in international commodity prices the surge in the volatility ofglobal financial markets and global supply-chain bottlenecks can aggravate the risksposed to the outlook.

Going forward the Government's thrust on capital expenditure andexports is expected to enhance production capacity and strengthen aggregate demand. Theconducive financial conditions engendered by the RBI's policy actions are expected toprovide stimulus to investment activities. Capacity utilization is rising and the outlookon business and consumer confidence remains in optimistic territory which should supportinvestment as well as consumer demand.

Overall there is some loss of the momentum of near-term growth withglobal factors turning adverse. However the domestic growth drivers are graduallyimproving.

Industry Review

Global Apparel Industry

The outbreak of COVID-19 has acted as a massive restraint on theApparel Industry in 2021 as consumption declined due to lockdowns imposed by governmentsglobally and consequent cut down in discretionary expenditure. However the industry isgradually recovering with normalcy reinstating in daily lives alongwith increase inconsumption.

Increasing demand for online shopping is expected to help the ApparelMarket grow further by driving easy access through larger platforms than before whichwill drive market growth by increasing their customer base geographically. In countriessuch as India for instance e-commerce portals have also given boost to the sales ofgarments by giving larger exposure to artisans and brands in a very large market.

Social commerce is increasingly being used as a sales and engagementchannel thanks to growing functionality and user comfort for social channels which make aseamless shopping experience more feasible.

The Global Apparel Market size is expected to grow from USD 551.36billion in CY 2021 to USD 605.4 billion in CY 2022 at a compound annual growth rate("cagr") of 9.8 percent. This Market is expected to grow to USD 843.13 billionin 2026 at a CAGR of 8.6 percent.

The Indian Apparel Industry

GlobalData said India's apparel market grew to USD 65 billion in 2021on the back of easing restriction reopening of retail stores and return of socialgatherings but still remain below 2019 levels. The market is expected to grow at CAGRgreater than 10% during the period 2022-2026.

The country has seen the entry of several foreign brands in last fewyears but Indian lifestyle brands however continue to grow rapidly as they leverage deepunderstanding of consumer trends and uniqueness of India fashion market.

With reduced attention span increased connectivity and acceptance ofnew technology 2021 saw brands launching several digital intiatives to provide enhancedcustomer experince personalised marketing and higher brand loyalty.

The Indian e-commerce industry has transformed the way business is donein the country especially in the last 24 months. Unicommerce's e-commerce fashion reportstates that the fashion e-commerce industry in India clocked a 51 percent jump in ordervolumes during 2020-2021 over the previous fiscal year with fashion/apparel being one ofthe key growth driver. According to a Technopak report by 2025 close to 20 percent ofall apparel sold in India will be online; making it an estimated USD 16 billion market.

Outlook: Indian Apparel Segment

India has a major role to play for the fashion industry due to itsfast-growing middle-class consumer segment and uptapped manufacturing potential. Thesefactors when combined with an improving post-pandemic economy and growing digitalconsumption make India an important market for fashion brands - locally as well as atinternational levels.

The fashion segment has been an early adopter of new technology as itcontinues to focus on a personalized experience for the customers. There has been aremarkable shift of mindset among brands with traditional offline retail companies arealso building an online D2C presence.

Key Trends in the Indian Apparel Industry

1. Brick & Mortar bouncing back

Brick & Mortar had been impacted by the pandemic with the resultantlockdowns and restrictions on movements. Its struggle had been compounded by anunprecedented transition of customers to e-commerce sales. But as the markets came back tonormal with the pandemic waning off need for a real-life experience brought consumersback to offline retail.

The pace of recovery has encouraged several retailers to roll out storeexpansion plans which had been put on hold due to pandemic. The retail sector haswitnessed an increase in leasing activity well reflected in the fact that the absorptionacross malls and high streets had doubled in 2021 compared to 2020 and is expected toincrease further.

2. The Role of Digitalization spurred by the Pandemic

Digitalization in the fashion industry as a trend has been on the riseit has become a permanent shift going forward given the impact of the change in habitspushed by the pandemic.

As the marketplaces evolved both legacy and emerging fashion brandslooked at increasing their online presence and use Data analytics to offer moredata-driven personalized solutions and capture a bigger share of the market. Thewidespread use of live streaming and customer service video chats are few of the newerways in which companies are trying to make themselves more relevant in the digital world.

People have experienced the benefits of online shopping making theirappetites for digital consumption grow consistently over time. Pandemic has been a strongcatalyst in changing the behavior of consumers globally and India has been no exception.

As personal hygiene and comfort have become a hot topic for both menand women Lingerie Intimate wear & Athleisure saw a gradual surge in digitalconsumption. Moreover the lockdown is also one of the reasons for the increasing demandin these comfort-driven categories. Trending ready-made fashion brands have furtheroccupied a major part of the online retail space. Right from the women's ready-made ethnicKurtas to men's casual and formal wear the trend is here to stay in 2022 and thereafter.

The Kidswear segment also gained major traction during the pandemicwith consumers getting more comfortable with online apparel shopping in terms of safetyand variety.

3. The D2C Disruption transforms the Industry

Direct selling to customers without any intermediaries is an emergingbusiness model. For several brands the majority of revenue as well as new customers arecoming through direct- to-consumer ("D2C") online channels. Many of thesuccessful brands have started with an online- first distribution model before goingomnichannel.

While many new brands are adopting this strategy some establishedbrands are switching from traditional business models to D2C models. D2C model helpscompanies understand their consumers and demand much better by accessing data to informtheir marketing strategies strengthen and fine-tune their innovation and ascertainhyper-local demands.

India is home to over 600 D2C brands and growth momentum at this ratesuggests that the market will be a more than USD 100 Billion opportunity by 2025.

4. The evolution of the Ethnic wear market

The Indian Ethnic Wear market has evolved into a fashion trend for thepast 10-15 years driven by two major factors - first a shift from tailored wear toready-to-wear and second rising need of young Indians to rediscover their culture andheritage.

Estimates suggest that of India's USD 20 Billion Ethnic Wear Market 93percent is women's wear. A change in men's behavior would expectedly give a great push tothis segment in the coming years.

The mammoth Ethnic Wear market has pushed big firms to tap the brandvalue of designer labels their skills and knowledge base. It is expected that companieswould make use of their design sensibilities and craft strategies to scale operationsrather than operate in niches.

5. Sustainability and Social Justice getting wider acceptance

Along with digitalization another key apparel industry trend issustainability. Consumers are now concerned about the future of the planet and are puttingpressure on fashion companies that do not have eco-friendly practices. As a resultcompanies are working to modify their business models and develop products moresustainably.

6. Continued Growth in Athleisure

Athleisure represents a hybrid clothing category that combines athleticwith casual and everyday styles. Another clear trend from the pandemic has been a boom inathleisure as consumers swapped business casual and professional garb for yoga pants andT-shirts.

The athleisure trend is by no means new. The growing popularity ofwellness gave yoga-inspired clothing unique staying power and the trend has onlycontinues since then.

The Indian Athleisure Market which is currently around USD 6.8 billionis expected to grow at a CAGR of more than 10% over next 5 years.

7. A Shift Towards Size-inclusive Fashion

Rising levels of obesity around the world have spurred the demand foron-trend plus-size fashion.

In the past plus-size clothing options have been scarce at manyretailers and often relegated to their separate sections next to maternity wear.

However as per Allied Market Research the global plus-size clothingmarket was valued at $481 billion in 2019 and is projected to reach $697 billion by 2027registering a CAGR of 5.9% from 2021 to 2027. Closer home in India the market segment forsuch clothes happens to be a fast-growing one with almost 30 percent of customersdemanding plus-size clothing. Plus-size happens to be a latent market with a hugepotential opportunity.

This is beginning to change as size-inclusive initiatives have becomemore widespread. Major players have now expanded their range of apparel sizes available instores but most luxury brands have not made similar moves to normalize double-digitsizing.

Business overview

Your Company is India's largest pure-play fashion and lifestyle entitywith an elegant bouquet of leading fashion brands and retail formats.

A) Madura Segments

Madura Fashion and Lifestyle ("mfl") segment includesLifestyle Brands Youth Western Fashion Active Athleisure Innerwear and Super PremiumBrands. MFL reported a revenue of INR 5381 Crore up by 58 percent over the previous year.The EBITDA margin was positive 14.9 percent at INR 804 Crore compared to INR 366 Crore inFY21. MFL continued to expand its presence in the retail channel by opening new stores.

Lifestyle brands

Your Company's Lifestyle brands house four of India's iconic apparelbrands addressing diverse customer needs uniquely:

• Louis Philippe: To inspire the quest for excellence

• Van Heusen: To make professionals fashionable and trendy

• Allen Solly: To encourage unconventional thinking in yourworkplace

• Peter England: To bring alive authenticity and trust in ourrelationships

The Lifestyle business at the back of its strong brand portfolio andaggressive e-commerce and omnichannel expansion recovered to pre-pandemic levels gainedmarket share and achieved record revenues this year despite braving multiple COVID waves.

Each of the brands continued to lead in their respective segments. Thebrands also expanded their loyal customer base to include over 23.80 million satisfiedcustomers gaining their trust by

providing innovative and premium products and top-notch retailexperience across channels. The business added new categories such as sportswear occasionwear and ceremonial wear along with accessories and footwear propelling its growthmanifolds.

With strong investments in digital marketing brands have not onlyaccelerated digital channel sales but have also created service excellence for digitalconsumers across their own websites as well as marketplaces. The Buy Online Ship fromStore ("boss") network has expanded to make Omnichannel scale up rapidly acrossIndia.

Overview of Key performance indicators ("KPis"):

Lifestyle brands FY17 FY18 FY19 FY20 FY21 FY22
Walk-ins (Crore) 0.79 0.82 0.79 0.72 0.39 0.43
Conversion 44% 46% 50% 55% 83% 89%
Average selling price ("asp") 1639 1747 1714 1626 1680 1701
Average bill value ("abv") 3701 4211 4256 4072 3693 3844
Items per bill 2.3 2.4 2.5 2.5 2.2 2.3
like-to-like ("ltl") volume growth -7% 8% 4% 3% -9% 25%
LTL ASP growth 2% 0% 1% 1% -11% 16%
LTL value growth -5.7% 8.6% 5.3% 4.5% -19.6% 46%

The identified new growth levers including casual wear activeweardenim and women's fusion wear have garnered significant traction from consumers in storesand online. After successfully crossing the 400+ stores milestone for Peter England'ssmall-town format and more than 50 stores in Allen Solly Prime the Lifestyle brands'Business has now piloted similarly modeled small-town formats for Van Heusen and LouisPhilippe. This aggressive expansion into newer Indian towns and cities has furtheraugmented Your Company's strong distribution network.

Lifestyle brands aspire to become a significant portfolio of iconicbrands across all important occasions and price points.

Van Heusen Activewear Athleisure and Innerwear

Your Company forayed into the innerwear and athleisure space in 2016through its iconic lifestyle brand Van Heusen. The brand is now expanding its EBO as wellas multi-brand outlet ("mbo") footprint rapidly across the country with apresence across more than 27000 outlets key departmental stores and large e-commerceplatforms by end of FY22. It is accelerating its e-commerce growth through relevantmerchandise assortment curated for specific partner platforms and driving new e-commercecategories such as Women's Sleepwear. Vanheusenintimates.com is becoming the one-stopsolution for Women's Lingerie Lounge Athleisure and Activewear needs. Through aseamless online and offline interface and an increasing large network of EBOs theInnerwear business is building the best omnichannel interface for consumers. Categoryexpansion continues by enhancing the product portfolio across categories and price pointscatering to wide consumer needs. The e-commerce channel in this segment grew by 44 percentover last year.

The brand is continuously building driving trade channel digitization.Your Company has made significant investments in digitization across the consumertouch-points and backend operations and supply chain to enhance value adds todistributors and drive benefecial relationships.

By building on brand awareness and acceptance across segments layingdown a large and deep trade network and driving continuous product innovation to buildcustomer-winning products Your Company has charted a strong growth trajectory for thissegment and the business is going to be one of the largest contributors to growth of thecompany in future.

Youth Western Fashion

American Eagle is currently among the top denim brands in India owingto its superior products brand positioning and a great shopping experience for itsconsumers across stores and online channels. The brand is currently expanding its storefootprint aggressively to tap into newer markets within India. It is also gaining greaterbrand awareness and better positioning through its campaigns. It has established itself asa Premium Denim Brand growing both offline and online on the strength of its strong brandand excellent products.

Forever 21 is building a viable retail network and is rapidly evolvingas a preferred brand for young fashionable consumers through its high fashion sharplypriced merchandise.

During the year Your Company worked towards diversifying itsmerchandise and is enhancing its men's wear offerings alongside women's wear. It is alsobuilding a wide range of non apparel categories such as accessories footwear and bags.The brand has redesigned its business model by moving towards local sourcing making iteasily scalable and increasingly profitable in India.

Super Premium Brands

The Global brands portfolio includes 'The Collective' one of India'slargest multi-brand retailers of luxury brands and select mono brands such as thesuper-premium brand Ralph Lauren and the iconic British brands Fred Perry Ted Baker andHackett London.

The business in the premium and the super-premium segment has grownimpressively during the year resilient to the demand fluctuations owing to COVID. TheCollective has significantly transformed its e-commerce operations through a focusedimprovement in this channel resulting in its e-commerce revenue increasing manifolds atthe back of a revamped supply chain strategy and distribution. The category is showingincreased traction among consumers online as well as offline along with the potential togrow beyond metros and would continue to enhance its appeal across markets.

Reebok

Your Company announced the signing of a long-term licensing agreementwhich grants it exclusive rights to distribute and sell Reebok products through wholesalee-commerce and Reebok branded retail stores in India. This deal marks Your Company's forayinto India's fastgrowing sports and activewear segment.

B) Pantaloons

Pantaloons has been one of the strongest brands in masstige segment ofthe Indian Fashion Retail Industry over the past two decades. The brand offers fashionableclothing and accessories with superior quality and freshness to the Indian middle-classconsumers across the length and breadth of the country. It has built one of India's widestretail network with 377 large format stores. This year Pantaloons strengthened itsprivate label portfolio through launches across categories such as Men's wear (StreetArmor and Ajile Loungewear) designer collaborations in women's ethnic kids wear (Zerofor Pantaloons) as well as increased focus on growing Pantaloons.com its online store.With a revamped logo new retail identity across its iconic stores innovative adcampaigns product development agile supply chain and customercentric processesPantaloons delivers a superior shopping experience to customers across channels andgeographies.

Pantaloons reported annual revenue of INR 2626 Crore up by 41 percentfrom last year while the EBITDA stands at INR 368 Crore compared to INR 276 Crore lastyear. The EBITDA margin was 14.0 percent for FY22.

Pantaloons has a high presence in mall formats and the pro-longedrestrictions in malls had an impact on the sales in FY22 but Pantaloons continued a sharpfocus on sourcing agility and cost controls to deliver an encouraging performance thisyear.

Overview of KPIs*:

Pantaloons FY17 FY18 FY19 FY20 FY21 FY22
Walk-ins (Crore) 4.7 4.6 5.4 5.7 2.3 3.6
Conversion 22.6% 22.4% 24.3% 26.1% 31.5% 26.2%
ASP 668 665 643 665 649 727
ABV 1725 1842 1880 2001 2075 2325
Items per bill 2.6 2.8 2.9 3.0 3.2 3.2
LTL volume growth 6.4% -3.3% 3.1% -2.1% -50.5% 18.0%
LTL ASP growth -2.9% 0.8% -1.7% 4.9% -1.7% 12.7%
LTL value growth 3.3% -2.6% 1.4% 2.7% -51.3% 33.0%

*Basis of previous years' numbers have been adjusted to make itcomparable with FY21

Strong demand resurgence during the festive period combined withfocused efforts towards driving alternative channels such as e-commerce and WhatsAppcommerce brought the business back on track quite significantly until December when itwas again disrupted by the third wave of COVID and the lockdowns that followed.

Pantaloons e-commerce has grown significantly recording 63 percentgrowth over last year. Inventory for e-commerce was managed innovatively to make a widerassortment of merchandise available online. Building truly 'Phygital stores' through arevamped loyalty program and increased digitalization of shopping experience at storesleveraged Omni-channel play.

Despite continued challenges from the subsequent waves of the pandemicPantaloons opened 49 new stores in FY22. It is planning to expand its network with 70-80new stores in the next fiscal with its new retail identity that will match thefast-changing consumer interests in fashion. The brand continually redesigns its productstrategy to meet the changing fashion needs of consumers and is well placed to continue togrow aggressively in FY23.

Ethnic wear

This category accounts for around 28 percent of the overall apparelmarket in the country and is growing at a CAGR of over 10 percent with no internationalcompetition. A large part of this market remains unorganized and unbranded. Consumers arenow increasingly shifting to the branded and organized segment thus increasing the piefor organized players. FY20 was the turning point in the branded ethnic segment when YourCompany took definitive steps in this space by acquiring the Jaypore brand and forging apartnership with Shantanu & Nikhil for occasion wear. In FY21 with two freshpartnerships with Tarun Tahiliani and Sabyasachi were announced. Further during FY22Your Company announced two new organic forays namely

1. Marigold Lane - Premium women's ethnic wear brand 2. Tasva - PremiumMen's ethnic wear brand. Your Company has also signed an agreement to acquire 52.4% stakein House of Masaba Lifestyle and aims to create a young aspirational and digital-ledbrand across the affordable luxury segment in the fashion beauty and accessorycategories. Your Company now boasts a comprehensive portfolio of iconic ethnic wear brandsacross price points.

Jaypore is India's leading destination for craft-based and artisanalproducts available in domestic and international markets through its e-commerce channel.Shantanu & Nikhil caters to contemporary luxury shoppers by curating design for themillennials' sartorial choices.

Sabyasachi aspires to establish itself as a global Indian luxury brandoffering bridal wear ethnic wear handcrafted jewelry and accessories. It has graduallybuilt a strong play at the back of inspiration that is deeply rooted in the rich Indianheritage. It aspires to become India's first global luxury fashion brand.

Tarun Tahiliani is a renowned couturier in the Indian ethnic wearcategory. In partnership with him Your Company forayed into affordable premium men'sethnic wear by launching a new brand TASVA in FY22. Tasva addresses the ceremonial wearneeds of Indian men through high quality products at sharp prices. The brand thatcommenced its journey this year started with 7 stores and plans to growth the footprintmultifolds by the end of next fiscal.

Marigold Lane is a premium women's ethnic wear brand that is meant forIndian women with distinctly evolved fashion sense. It currently reaches its customersthrough 50+ Pantaloons stores and 3 EBOs.

Direct to Consumer (D2C)

The D2C market opportunity in India is expected to be USD 100 Billionby 2025.Your Company has announced plans to set up a platform for foraying into theDirect-to-Consumer ("D2C") business with an omnibus approval to set up a newsubsidiary towards building a portfolio of distinct new-age digital brands acrosscategories in fashion beauty and other allied lifestyle segments. With organic andinorganic build up this venture will be initially incubated and funded by your Companyand will subsequently bring in external capital to accelerate the growth journey at anappropriate time in the future.

The newly incorporated entity TMRW will organically incubate andacquire promising & distinct digital brands and will scale it up rapidly throughstrategic and operational interventions and support closely working with their foundingteams. With this your Company is looking at building the next set of its iconic brands inthe portfolio in the digital space evolving in line with changing consumers.

Business strategy:

1. Launching new Brands and Re-energising the Existing Ones

Your Company has leading brands such as Louis Philippe Van HeusenAllen Solly and Peter England established for over 25 years. Pantaloons is one of India'slargest fast fashion store brands.

Your Company also holds exclusive online and offline rights to theIndia network of California- based fast fashion brand Forever 21. The International Brandsportfolio includes - The Collective India's largest multi-brand retailer of internationalbrands Simon Carter and select monobrands such as American Eagle Ralph Lauren HackettLondon Ted Baker and Fred Perry.

Your Company has successfully forayed into the innerwear business withVan Heusen Innerwear Athleisure and Activewear and established itself as India's mostinnovative and fashionable brand. Your Company's foray into branded ethnic wear businessincludes brands such as Jaypore Tasva & Marigold Lane and strategic partnerships withDesigners 'Shantanu & Nikhil' 'Tarun Tahiliani' 'Sabyasachi' and 'House of Masaba'.Your Company also acquired Reebok's India operations to build strong play in sportswear.

2. Building a Robust and Agile Supply Chain with Innovative Marketing

To cater to the fast-moving market and customer demand Your Companyenabled a change in market trend by moving to a monthly collection schedule resulting in'12-seasons in a year' model. Earlier it was a two-trade show model wherein orders weretaken twice a year from wholesale partners own retail channels and the merchandise wasproduced accordingly. However Your Company realized the importance of being nimble in themarket being able to respond faster to changes keeping the inventory tighter.

This move benefits our channel partners as they no longer have tocommit to purchases eight to 10 months in advance and can place orders monthly.

3. Omni-Channel: Coming Closer to Consumers

Your Company has revamped its e-commerce websites and also invested inbuilding a distinctive omnichannel presence across the country to provide consumers withan integrated shopping experience. This has further strengthened relationships with majore-commerce players through marketplace integration and converted it into a bigopportunity. The Branded Apparel Business Model has transformed from a wholesale-drivenbusiness to a multi-channel business. The concept of focusing primarily on exclusivebranded stores has paid rich dividends and the business expanded aggressively across thecountry.

4. Harnessing the Small town Opportunity

Branded apparel has largely been restricted to bigger cities - Metrosand Tier 1 and 2 towns - in India. Increasingly your Company's brands are now tapping the"Bharat" opportunity across small towns through exclusive formats catering tothe needs of these geographies. With merchandise customized for local needs and providingquality products at a value brands are set to scale in small-town India through anasset-light growth model. The brands' focus on fostering local entrepreneurship woulddrive quick on-boarding of partners leading to rapid scale-up. Your Company plans to tapthis opportunity through such specialized small-town formats under Peter England AllenSolly Pantaloons and Style Up brands.

Digital Transformation Roadmap

The impact of the pandemic and the resultant lockdowns have rapidlychanged consumer shopping behavior in the last two years. Your Company is continuing tofocus on driving an aggressive digital transformation program across all its businessesincluding the new businesses acquired in the last two years. E-commerce business on bothbrand.com and marketplaces has accelerated this year and is expected to grow rapidly.

Your Company has continued on its journey to build a brand-lede-commerce play that aligns with its offline business model building on the strength ofthe brands and enhancing them digitally. The e-commerce platform enables having separatewebsites mobile sites and mobile apps for each brand along with seamless integration withover 10 different marketplaces that are built on a common order management and supplychain system. This enables a single view of inventory in both warehouses and storesacross all digital channels enabling seamless omnichannel capabilities.

This year your Company launched mobile Apps for Pantaloons and PeterEngland and websites / mobile sites for Tasva. The Pantaloons website/ app has advancedfeatures such as personalization which analyses consumer preferences based on pasttransactions and browsing behavior to showcase more relevant merchandize resulting inimproved conversion.

Your Company has focused on enhancing customer service capabilities byinvesting in advanced Customer Relationship Management ("CRM") system whichacts as a single repository for customer feedback and complaints. These can be received onmultiple channels including call center email website / app social media and even onWhatsApp. All customer feedback received in stores and online as part of Your Company'sflagship Net Promoter Score ("nps") program called Mission Happiness is alsocaptured in the CRM system. This has resulted in significant customer delight.

The 'Customer-360 program' enabling personalized communication with 35million customers has been rolled out across all major brands. The program leveragesMachine Learning capability integrated with a marketing automation platform to enablecommunication on email SMS web / app notifications social and WhatsApp.

In the last year Your Company has completed the modernization of itsPoint-of-sale ("pos") system which has been rolled out across all brands. ThePOS system is cloud-hosted enabling seamless connectivity from stores on multiple devicesincluding billing terminals tablets and mobile phones. This has also been integratedwith the online stores of various brands enabling the fulfilment of online orders fromstores. Going forward Your Company will leverage this platform for seamless omnichannelcustomer experiences such as Buy-Online-Pickup-in Store ("bopis")Buy-Online-Return- in-store (Boris) Hyperlocal shopping Endless Aisle etc.

In the last year Your Company has also focused on extensively buildingdata management and analytics capabilities. A Company-wide data warehouse has been set upto consolidate data across all major systems. This has been used to build commonenterprise-wide business intelligence platforms. Furthering the philosophy of datademocratization your Company has developed a Single View of Customer mobile app for StoreManagers and Customer Service Associates enabling Clienteling. A significant innovationin the backend is the development of a Markdown Management System which uses AI / ML toderive the optimum pricing for products during the season and discounting duringEnd-of-Season Sale. For the Innerwear business a demand forecasting model has beenimplemented combining statistical algorithms and market feedback.

Supply Chain

Your Company has been focusing on digitizing the pre-production supplychain processes with unique initiatives such as digital 3D modeling and digital designcollaboration processes. This has improved agility and reduced the market lead time byaround 15 to 30 days.

The demand pattern has been shifting quite rapidly with multiplelockdowns in the last year. Your Company with robust demand planning processes has beenable to prepare for the shifts on the back of your agile Supply Chain and capitalize onthe changing demand pattern.

Your Company is planning to diversify the manufacturing footprint bysetting up a state-of-the-art manufacturing plant for suits and trousers at PulivendulaAndhra Pradesh. This plant will be a benchmark facility in terms of sustainable and safemanufacturing practices.

Human Resources

FY22 Human Resources Achievements

1) Continuous driver on internal talent growth and developmentresulting in 15.47 percent of employees getting new roles; of which 45.5 percent ofcrucible roles were occupied by talent.

2) Diversity agenda driven through CEO sponsorship hiring guidelinesand a healthy mix in hiring resulting in an overall woman hiring in FY22 at 38 percent.

3) Consumer grade experience of key HR processes provided to 16952retail employees by implementing Alt Life HRMS program through simplified and tech-enabledapp-based HR process. Received a score of 55 percent NPS from retail employees on AltLife.

4) Agile ramp-up of leadership and managerial capabilities in newbusinesses of ethnic e-commerce and D2C resulting in targeted quality hiring.

5) Successful pilot across 50 stores with 500+ gig assignmentsresulting in over (8 percent) savings of manpower budget.

6) Specialist framework for designer community focusing on developmenthas been implemented.

7) Strengthened our campus brand through the launch of properties likeNext Top Designer ("ntd") which resulted in 400 + applications on NTD andfeatures in leading news websites and campus blogs; masterclass series led by functionalleaders on social media - Tales from Heads.

8) Built the foundation of social media by positioning LinkedIn as anemployer brand platform; resulting in a 51 percent increase in followership with a totalof 4000K impressions.

9) Emotional Wellbeing program @ ABFRL covered 200+ employees in theSelf-care and Grief support program across businesses.

10) Multiple pilots activated: Digital Health assessment multiplierapp eye check-up camp for Karigars Well O Mania I Invest psychological safety programMadura championship which resulted in an increase in VIBES score under Health &Well-being offerings from 85 percent to 88 percent.

11) Secured health and safety of our employees and family membersacross 310+ cities through CAER and a 100 percent vaccination status.

Your Company's People Vision is to "To drive a High Performing andCustomer Centric Culture with Happy and Value Oriented Employees". Your Company'sperformance is anchored on capabilities and productivity; customer-centric culture througha strong service orientation; happiness through purposeful behavior by high-qualitytalent; value-oriented through a deep commitment to the values of the Aditya Birla Group.

Delivering 'Employee Value Proposition' ("EVP") throughPeople Strategy:

The unique Employee Value Proposition - "A World ofOpportunities" makes your Company a preferred employer for professionals in theindustry. You are committed to strengthening your employee value proposition in everyaspect - career growth learning and development rewards and recognition and enrichmentof life through a healthy work environment and wellbeing programs.

1) Careers:

Your Company believes in harnessing leadership and people capabilitiesthrough sharp focus and initiatives on talent development. There is a well-defined talentand career management process through potential assessments and talent discussions thattake place every year. The company has institutionalized Talent Councils that activelyreview the Organization's talent pipeline succession planning for key roles andrequisite development interventions.

Your Company strengthened its partnership with premier institutionsacross the country by the successful placement of management trainees into meaningfulroles aligned with career aspirations. The Young Talent Program (STRIDERS) includes hiresacross multiple streams such as Business and Core Fashion functions CharteredAccountants Human Resources and Retail Operations that has enabled the organization toinfuse young bright talent from various institutes and help create a strong futureleadership pipeline.

Your Company launched the second batch of India's Finest Store Managerc'ifsm") Program an industry-best learning and development practice for groomingStore Managers to take up senior roles in the organization. IFSM's current batch includes12 store managers including 2 women.

2) Learning & Development:

Your Company's initiatives equip employees to develop leadership andmanagement capabilities in both domain-specific and behavioral disciplines. Your Companyboasts of an advanced learning ecosystem 'Gyanodaya' which offers a wide array of learningprograms to empower employees to grow through a series of expert-led sessions on"Managing Internal Customers" "Being Your Best" "DigitalTransformation Journey" among many. The in-house structured learning program 'ABFRLUniversity' supports organization-wide capability building through market experiences andlive projects.

Digital Transformation in your Company was actively driven by deepeningthe digital capability and quotient of senior management through curated learning serieswith digital leaders and academicians. Your Company organized an Advanced E-CommerceCapability Building Program to deepen functional capability.

3) Rewards and Recognition

Your Company's reward philosophy is aligned with driving the culture ofmeritocracy and ensuring market competitiveness. This philosophy recognizes and celebratessuccess therefore raising the bar on performance and achievement. Your Company adopts atotal rewards approach which covers both monetary (Fixed Compensation Variable Pay andLongTerm Incentive Plan) and non-monetary rewards (Benefits Program Recognition Programsand Work-life effectiveness program) for its employees.

Celebrating success through recognition platforms are at the core ofbuilding a vibrant work culture. Well-entrenched annual engagement events are forums whereyour Company celebrates and recognizes team and individual achievements value championsand feats achieved by employees beyond the call of duty. The ultimate celebration ofsuccess happens at the Group's annual event - Aditya Birla Awards which recognizesoutstanding players and teams who have displayed commitment and passion towards theircraft.

4) 'Enrich your life' program

Your Company recognizes the importance of different roles thatemployees play in their personal lives. Your Company actively engages in the art of givingand driving sustainability through CSR programs which focus on building model villagesspecifically in the areas of education digitization and health among others. YourCompany embarks on multiple initiatives to create a wholesome approach for employeesthrough competitive events in sports that enhances bonding and camaraderie. There is alsoa bouquet of wellness programs being offered through maternity support and flexibleworking for fostering a robust diverse work environment.

Employee Wellness initiatives

Your Company has strengthened its employee wellness initiatives by: -

- Creation of a holistic health and employee wellness environment

- Adoption of hybrid work models in businesses

Employee productivity was increased through a series of initiativessuch as lifestyle habits grief circles and emotional and financial wellness programs.The team established a helpline for health counseling;10000+ lives were covered undervoluntary insurance cover (Employee & Family members) and 4800 + beneficiaries werecovered under CAER* for the employees' program. The HR Stakeholder survey and Vibes Surveyreflected a positive experience with high scores given to Employee Wellness.

Timely and proactive support was delivered to employees across alllevels through the Covid Assistance and Emergency Response ("caer") program. Theprogram covered:

- 4800+ beneficiaries through testing ambulance services onlinedoctor consultation hospital beds home isolation and oxygen support.

- 10000+ lives of the employee and their family members were coveredunder the voluntary insurance cover.

- Financial support was provided for affected employees and theirfamilies.

- Caregiver leaves and assistance to families of deceased employeeswere provided as part of the Covid care policy.

- Helpline for healthcare established.

- Sanitization drive in villages implemented.

- All employees across stores factories and corporate offices werefully vaccinated ensuring 100 percent vaccination coverage by partnering with healthcareservice providers.

Values

The organization's core values of Seamlessness Passion SpeedCommitment and Integrity have guided the actions of your Company and are the key to whyyour Company attracts the best talent. These values come alive in the daily processes andpractices that leaders and employees follow.

Communication

Your Company encourages open and honest communication among teams andthrough leadership. There are various formal and informal platforms including open housestown halls and anonymous survey touch points through which employees are encouraged toask questions and share feedback. The open work atmosphere across the Company has ensuredtwo-way healthy communication between leadership and employees. The VIBES and HRstakeholder survey have helped management understand the pulse of employees across variousexperiences and stages.

Your Company has engaged top talent across businesses through a seriesof interventions planned and implemented for various groups. There were regular leadershipconnections and development journeys designed for high-performing employees across yourCompany.

New Businesses

The key focus for FY22 for D2C Businesses has been understanding theBusiness model and Organisation Creation. Your Company has conducted intensive research onthe organizational

structure policies and practices followed by the competitors and isin the process of creating an HR framework which would be true to the industry sectorand organization thereby increasing the ability of your Company to attract the right setof talent in new age capabilities such as Tech Digital Marketing M&A etc.

With the investments made towards the ethnic portfolio with playerssuch as Sabyasachi Tarun Tahiliani and Shantanu & Nikhil the main focus for FY22 hadbeen to build a foundation for the various Human Resource related aspects ranging fromcreating policies and processes to rolling out of non-negotiable such as POSH Code ofConduct among others and building cadence around them. The HR teams have worked towardsnot only the creation of a highly inclusive HR Framework but have also ensured properimplementation of the same resulting in building a sense of equity fairness and trustin Aditya Birla Group.

Sustainability

Aditya Birla Group ("abg") defined a Sustainable Business asone that can continue to operate within the tightening constraints of a future world andthereby adopted a progressive target to become a leading Indian conglomerate forsustainable business practices across global operations. To understand and leverage thenuances that shall exist in the business ecosystem and to get an in-depth understanding ofthe Environmental Social and Governance ("esg") aspects that are relevant forthe business and stakeholders ABG has adopted the Sustainable Business Framework through4 dimensions ("4D") lens approach.

Anchored by the ABG Vision and three pillars of Sustainable BusinessFramework - Responsible Stewardship Stakeholder Engagement and Future-proofing yourCompany has embarked on the sustainability journey with the launch of the sustainabilityprogram 'ReEarth - For our Tomorrow' in FY13. Your Company considers sustainability as anability to survive and thrive in the face of growing uncertainty and megatrends to build asustainable business. Over the years your Company has achieved significant milestonesacross ESG aspects to unlock true potential and deliver long-term sustainable value to thestakeholders.

Building on a commitment to foster a sustainable tomorrow and deliversustainable fashion your Company successfully transitioned to sustainability 2.0 that isfrom 'Process-led to Product-led' in 2021 with a focus on product design and developmentcustomer centricity and supply chain.

This transition shall embed sustainability across the whole spectrum ofproduct life cycle and endorses circularity recycling and upcycling across the valuechain. This journey aims to achieve ambitious sustainability targets and business goalswhile balancing risks and opportunities for all relevant ESG initiatives.

Your Company has a robust governance mechanism effectively overseeinga sustainability agenda and building a conducive environment far beyond compliancerequirements. In addition to the Management Committee ("ManCom") whichperiodically reviews sustainability strategy and initiatives your Company has evolved itsRMC to Risk Management and Sustainability Committee ("rmsc"). The RMSC isentrusted with the responsibility of monitoring and reviewing the risk management plansustainability and other such functions as may be delegated by the Board from time totime.

Your Company believes in the transition towards sustainable fashionwhich requires local actions with a focus on creating adaptable and flexible sustainablebusiness models that build and operate at high performance promote life cycle thinkingsource regional embrace circular economy principles and ultimately contribute toshifting away from fossil fuels mitigating or eliminating negative impacts of business.

Your Company is working towards doubling down efforts indecarbonization through enhancing its share of renewable energy and also further reducingcarbon and water footprint at both facility and product levels. With a vision toaccelerate the transition from linear to circular models your Company continues toemphasize integrating circular principles across the value chain and establishing lastmile traceability for pre-and post-consumer waste.

In the sustainability journey the focus on sustainable raw materialshas always been incremental every year. Your Company continues its efforts towardssustainable packaging and enhanced alternate packaging measures through deployingbio-degradable polybags and strengthened plastic waste management in adherence to ExtendedProducer Responsibility guidelines.

Your Company's sustainability maturity and leadership have contributedto the achievement of global recognition and various accolades in this decade of thesustainability journey. This year your Company continued to receive accolades fromprominent forums and organizations.

• Retained as Asia's 'Most Sustainable Company' in the TextileApparel & Luxury Goods Industry' by S&P Global CSA 2021

• Included in the S&P Global Sustainability Yearbook 2022 theworld's most comprehensive publication on corporate sustainability

• Awarded 'Gold Shield' for Reporting on Sustainable DevelopmentGoals by ICAI Sustainability Reporting Awards 2021

• Recognized with Excellence Award in IGBC Performance Challenge2021 for the LBRD Warehouse Bengaluru

• Sollepura Village Tamil Nadu awarded 'PLATINUM' certificationfrom Indian Green Building Council ("igbc") - a testament to our socialresponsibility programs

Taking cognizance of the sustainability philosophy and commitment YourCompany's sustainability strategy has been effectively embedded across core businessstrategies operations and investments.

Your Company is working towards accelerating advocacy and exploringinnovative solutions with a prime focus on circularity sustainability sourcing and lowcarbon pathway. This journey requires deep collaboration across the entire value chainenvisaging radical transformation benefiting the entire ecosystem.

Along with existing collaboration and partnerships with the EllenMcArthur foundation and Circular Apparel Innovation Factory ("caif") YourCompany has made a large stride in the circularity journey through its collaboration withthe 'GIZ' a German Government agency in a 'private-public development partnership project'with an aim to strengthen circular business practices for the Indian market. Thiscollaboration shall focus on material innovation reduce inputs of harmful substancesincrease textile-to-textile recycling develop alternatives to plastic packaging andfoster traceability. This will support the industry to match supply and demand which waswitnessing pressure due to resource constraints.

Over the years Your Company participated and collaborated with variousglobal platforms and ESG Indices such as UNEP SAC ZDHC SU.RE CII FICCI IACC S&PGlobal. These strategic collaborations and participation assisted you in staying relevantand also provided an opportunity to benchmark Your Company's sustainability performancewith domestic and global peers.

Finally Your Company believes in adopting a pragmatic approach thatwill contribute to holistic growth taking the business to 2030 and beyond. In this 'Decadeof Action' Your Company shall continue to transform ambition into effective actionsensuring alignment not just to Company's sustainability goals but also to regionalnational and global goals.

Risk management

Effective governance and risk management form the bedrock of aCompany's sustained performance. Your Company has a robust Enterprise Risk Managementframework which helps in identifying evaluating mitigating and reporting risks. YourCompany has adopted a Risk Management Policy in line with provisions of the Companies Actand Listing Regulations. Your Company has constituted a Risk Management and SustainabilityCommittee ("rmsc") to monitor risks on a continuous basis which is supported byan internal risk management committee comprising experts from various business processesand segments including subsidiaries. The internal risk management committee also reviewsdevelopments in the socio-economic environment and identifies internal threats andopportunities updates the framework and refines processes and systems for mitigation.The Company has also laid down procedures wherein the committee on a periodic basisinforms the Audit Committee as well as the Board of Directors about risk assessment andeffectiveness of mitigation plans defined. Details of the composition of the RMSC and theRisk Management Policy adopted by the board have been disclosed separately.

Key Risks

1. Rapidly changing fashion trends and consumer preferences

Rapidly changing fashion trends deeply influenced by social andelectronic media is a challenge to apparel business models. Going forward offeringsshould be highly nuanced to meet the ever-changing fashion needs of consumers globally.Furthermore with changing consumer needs new categories keep gaining relevance from abusiness perspective.

To mitigate this your Company has undertaken various supply chain anddigital initiatives to run an agile model ensuring merchandise freshness by introducingthe 12-season model and utilizing analytics-based planning tools for smarter merchandisemanagement. In line with its broader strategy extending the brand into relevantcategories Your Company has evolved its product portfolio mirroring the changingconsumer needs.

2. Changing consumers buying behavior

The consumer digital engagement is rising sharply over last couple ofyears as a result of more hours spent online newer shopping habits and rising interestin virtual worlds. The end consumer today is in want of quicker access to fashion with apersonalized and hyper-quick shopping experience. The retail industry is tapping intotechnology resources to maximize their competitive edge through artificial intelligenceconnected stores and end to end digitalization

To mitigate this risk your Company ramped up its online and digitalpresence with changing consumer buying behavior. Your Company has increased its presencein online and digital platforms through launching of various brands apps and continuouslyrefreshing of ecommerce websites for better customer experience. Your Company has enteredinto strategic partnership with e commerce players to propagate and distribute its brandsalong with upscaling of omni channel capabilities and hyper local solutions. Your Companyhas also entered into its first digital pure play through launch of D2C business.

3. Global Supply Side Constraints

The fashion industry is reliant on an intricate web of global supplychain which are seeing unprecedented levels of pressure and disruption due to local socialand geo-political factors adverse climatic conditions lockdowns port congestions andlogistical lock jams shortage of global availability of raw material accelerated byvarious factors and increased costs.

To mitigate this risk your Company has enabled a change in markettrend by moving to a monthly collection schedule resulting in '12-seasons in a year'model. Your Company has been focusing on digitizing the supply chain processes to improveagility and reduce the market lead time. To deal with constantly changing demand patternyour Company with robust demand planning processes has been able to prepare for theseshifts due to agile supply chain. Your Company continues to monitor changing geopoliticalsituation and has responded by moving the bulk of your supply chain to India.

4. Cyber security threats and loss of sensitive data

Leakage or loss of confidential business information and consumer datais a risk aggravated by higher exposure on digital platforms. Threat of unauthorizedelements / persons breaking into IT systems to steal change or destroy information orhalt the business services showing increasing trends across retail industry

To mitigate this risk your Company ensures employees handlingsensitive and critical data are covered with all information security and data leakageprevention controls alongside implementation of Information Rights Management("irm") tool. Your Company's data centre is run by world class professionalservice providers and is supported by well managed backup systems and protocols to avoidany unforeseen disruption. Continuous risk assessment exercise is undertaken to reviewstrengths of IT systems with evolving threats and timely implementation of recommendationsare made to strengthen the IT systems.

5. High Attrition in retail industry and Inability to retain talent

The apparel industry has been facing difficulty in attracting qualitytalent due to a highly competitive market ecosystem. The demand for talent exceeds thesupply in critical areas such as analytical thinking technical competency and leadershipskills. The above two factors have made talent development and management an extremelycrucial part of the business strategy.

To mitigate this your Company has a well-crafted and structuredapproach towards talent retention and development along with leadership grooming ofinternal talent with periodic focused interventions. Continuous efforts are put indevelopment of existing internal talent through various internal employee developmentprogrammes and at the same time also focus on identifying newer talents which will helpthe organisation achieve its overall objectives.

6. Inadequate availability of quality retail space

Commercial real estate in India has seen a slowdown in the past fewyears. Lack of prime retail land high-property rates in prime areas and COVID-relateduncertainties in recent times have further discouraged developers from investing incommercial spaces. Further the demand for prime retail spaces by existing retail playersdue to aggressive expansion plans and newer market entrants have accelerated the demandand further added to the supply side concerns.

To mitigate this your Company has strengthened its relationshipsthrough regular connect with prominent mall owners and real estate developers across thecountry to remain a preferred

partner of choice in any new ventures. Your Company has kept a closewatch on prime retail locations and ensured tapping of opportunities which have opened upover the past year in wake of exits of other brands that have faced financial pressuresdue to the pandemic.

7. Ecommerce and Digital Disruption to established business model

Online and digital sales formats are attracting newer entrants. This iscoupled with deep discounts on E-Commerce channels that are built around only buildingscale may hurt the overall fashion retail market in India. With increasing consumertraffic on E-Commerce looking for fashion at value the demand is growing for cheapermerchandise which is in turn growing a market for low-quality apparel cannibalizingthe market for quality fashion.

To mitigate this our strategy has been built around enhancing theprice-value equation of products offering superior quality consumer services that wouldhelp us in building stronger and more desirable brands. This is coupled with aggressiveexpansion plans and building omni channel capabilities ensuring last mile customerdelivery through strong supply chain management which will enable us to deliver our brandpromise.

8. Intensifying competitive landscape

The penetration of technology and growing e-retail space in the entirevalue chain has enabled start-ups to enter the fashion industry with much largeraggression. Major international apparel brands also have forayed into the Indian apparelmarket realizing the potential of Indian market. The fashion and apparel industry ishighly competitive as large numbers of retailers sell similarlooking products at similarprice points. It is becoming increasingly important to develop brand equity at the back ofbetter-quality products and services that could create differentiation.

To mitigate this your Company will continue to build its capability inproduct quality designs merchandising and distribution required to strengthen itsportfolio of brands enabling it to maintain a leadership position in the apparel space.Your Company will also keep on diversifying its portfolio to tap into newer areas ofgrowth leveraging its expertise in its core businesses to gain profitability.

9. Pandemic induced disruption with possible fresh waves

Subsequent waves of pandemic may further disrupt the Indian apparelindustry's operations by way of restrictions on people's movement to contain the spread ofthe infection which may impact sales overall consumer sentiments and may also havesignificant economic impact. To mitigate this efforts around building digital channels ofsales to enable consumers to shop from wherever they are being made continuously. Furthercontinuous efforts are being made through various cost and cash flow improvement measuresto keep the price points competitive and within reach of individual customers for eachcategory of products.

Road Ahead

The recovery trend observed in fourth quarter of this fiscal is atestimony to the temporary nature of the impact of the pandemic and the resilient consumersentiment which is pointing towards getting back to the stores and shopping as soon asit is safe to move outside. The future for the Indian apparel industry looks promisingbuoyed by strong domestic consumption and export demand. The per capita consumption ofapparel will grow swiftly in the times ahead fuelled by aspirational buying and anorganised market play.

Your Company firmly believes that its formidable branded play acrosscategories will drive rapid growth. The post pandemic phase is expected to boost demandas Indians from all age groups begin moving out for work and travel leading to sharprecovery of consumption led sectors. As recovery happens at the back of its bouquet ofstrong brands your Company will reinforce its leadership position in the Indian fashionand apparel sector.

Your Company has moved towards a portfolio play led strategy focused onproviding a Bouquet of offerings as it plans to take advantage of large growthopportunities across multiple segments in line with rapidly evolving consumer shifts. YourCompany will continue investing in building its digital capabilities to make it intrinsicto its business model going forward.

Financial Performance and Analysis

(‘ in Crore)

Particulars Standalone Consolidated
Year Ended March 31 2022 Year Ended March 31 2021 Year Ended March 31 2022 Year Ended March 31 2021
Revenue from Operations 7824 5181 8136 5249
EBITDA (1) 1174 667 1203 628
Finance Costs 340 498 351 503
Depreciation 947 945 997 963
Profit / (Loss) Before Tax (1) (113) (776) (145) (838)
Current Tax - - 21 40
Deferred Tax Assets / (Liabilities) 33 196 47 211
Deferred Tax Assets / (Liabilities) - One time (2) - (69) - (69)
Net Profit / (Loss) After Tax (1) (81) (650) (118) (736)
Particulars Standalone (Comparable)* Consolidated (Comparable)*
Year Ended March 31 2022 Year Ended March 31 2021 Year Ended March 31 2022 Year Ended March 31 2021
Revenue from Operations 7824 5181 8136 5249
EBITDA (1) 273 (222) 275 (271)
Finance Costs 132 274 134 275
Depreciation 215 221 235 231
Profit/ (Loss) Before Tax (1) (74) (717) (94) (778)
Current Tax - - 21 40
Deferred Tax Assets / (Liabilities) 33 196 47 211
Deferred Tax Assets / (Liabilities) - One time (2) - (69) - (69)
Net Profit/ (Loss) After Tax (1) (41) (590) (67) (676)

Standalone performance

Particulars As at March 31 2022 As at March 31 2021
Net Working Capital (3) 705 636
Net Fixed Assets (including capital work-in-progress) 674 614
Deferred Tax Asset (2) 353 321
Capital Employed 1732 1572
Investments (4) 835 690
Right-of-use assets 2279 2067
Goodwill (5) 1860 1860
Total Capital Employed 6705 6188
Net Worth 2882 2685
Debt 1207 1118
Lease Liabilities 2616 2386

Notes:

(1) Includes other income of Rs 94 Crore (Previous year:Rs 73 Crore).

(2) One-time impact of creation of deferred tax liability ofRs 69 Croreas at March 312021 is on account of amendment to Section 32 of the Income Tax Act 1961whereby Goodwill of a business will not be considered as a depreciable asset anddepreciation on goodwill will not be allowed as deductible expenditure effective April 12020.

(3) Net working Capital

Particulars As at March 31 2022 As at March 31 2021
Inventory 2729 1743
Trade Receivables 754 600
Cash and Bank Balances 108 164
Other Assets 2009 1581
Less: Trade Payables 3336 2114
Less: Other Liabilities 1560 1338
Net Working Capital 705 636

(4) Investments includes Rs 828 Crore towards investments inSubsidiaries and Joint Venture (Previous year:Rs 683 Crore).

(5) As on March 31 2022 goodwill (after testing for impairment inaccordance with the Ind AS - 36 issued by the Institute of Chartered Accountants of India)stands atRs 1860 Crore.

Revenue

Your Company reported revenue of Rs 7824 Crore during the financialyear recording a growth of 51% over the previous year.

Earnings before interest tax depreciation and amortization("ebitda")

EBITDA of the Company including other income is Rs 273 Crore oncomparable basis (previous year negative EBITDA of Rs 222 Crore). The reported EBITDA ofthe Company is Rs 1174 Crore (previous year Rs 667 Crore) factoring impact of Ind AS 116.The EBITDA margin for the Company improved from 12.9% to 15.0% during the year.

Finance cost

Finance cost for the year was Rs 132 Crore on a comparable basisdecreased from Rs 274 Crore in previous year as a result of lower average borrowingsprimarily on account of amounts raised through Rights and Preferential Issue during theprevious year and final call of Rights Issue during the year. The average borrowing costfor the Company marginally increased to 7.67% as compared to 7.36% in the previous yeardue to higher proportion of long-term borrowings. The reported finance cost of the Companyis Rs 340 Crore (previous year Rs 498 Crore) due to the impact of Ind AS 116.

Depreciation

Depreciation reduced from Rs 221 Crore in the previous year to Rs 215Crore during the year on comparable basis. The reported depreciation of Rs 947 Crore(previous year Rs 945 Crore) includes the impact of Ind AS 116.

Dividend

In view of accumulated losses of previous years your directors havenot recommended payment of any dividend for the year under review.

Borrowings

Borrowings have increased marginally from Rs 1118 Crore in theprevious year to Rs 1207 Crore though the Net Debt has reduced from Rs 654 Crore in theprevious year to Rs 562 Crore. The Company has raised Rs 803 Crore through freshborrowings and have repaid borrowings of Rs 714 Crore during the year with averageborrowing cost at 7.67%.

There is no change in the credit ratings of the Company during the yearand it continues to be AA (Stable) by CRISIL Limited ICRA Limited and India Ratings &Research.

Non-Convertible Debentures

During the year under review the Company has issued and allotted 4000Listed Unsecured Rated Redeemable Non-Convertible Debentures ("NCDs") of theface value of Rs 1000000 (Rupees Ten Lakh only) aggregating to Rs 400 Crore (Rupees FourHundred Crore only) on Private Placement Basis under Series 8. The details of outstandingNCDs as on March 31 2022 are disclosed in the Section 'Shareholders' Information' formingpart of this Annual Report.

Standalone Key financial ratios

Particulars As at March 31 2022 As at March 31 2021
Debtors Turnover Ratio (times) (1) 11.55 8.02
Inventory Turnover Ratio (times) (1) 3.50 2.53
Interest Coverage Ratio (times) (1) 0.14 (1.83)
Current Ratio (times) 1.03 1.08
Debt Equity Ratio (times) 0.17 0.22
EBITDA Margin (%) 15.00 12.87
Operating Profit Margin (%) (1) 2.90 -5.37
Net Profit Margin (%) (1) -1.03 -12.54
Return on Net Worth (%) (1) -2.89 -34.46
Return on Average Capital Employed (%) (1) 3.52 -4.44

The formulae used in the computation of the above ratios are asfollows:

Ratio Formula
Debtors Turnover Ratio Revenue from Operations / Average of opening and closing Trade Receivables
Inventory Turnover Ratio Revenue from Operations / Average of opening and closing Inventories
Interest Coverage Ratio Earnings Before Interest* and Tax / Finance Costs*
Current Ratio Current Assets / Current Liabilities (excluding Lease Liabilities accounted as per Ind AS 116)
Debt Equity Ratio Debt# / (Net Worth+ Lease Liabilities - Right of use)
EBITDA Margin EBITDA / Revenue from Operations
Operating Profit Margin Earnings Before Interest and Tax / Revenue from Operations
Net Profit Margin Profit After Tax / Revenue from Operations
Return on Net Worth Profit After Tax / Average net worth
Return on Average Capital Employed Earnings Before Interest and Tax / Average Capital Employed

*Finance cost / interest comprise of interest expense on borrowing andexcludes interest on lease liabilities and interest charge on fair value of financialinstitution.

#Debt = Borrowings (excluding Lease Liabilities accounted as per IndAS116) - Cash and Bank Balance (includes FD) - Liquid Investments

Details of significant changes (i.e. change of 25% or more as comparedto the immediately previous financial year) in the key financial ratios:

1. Debtors Turnover Ratio Inventory Turnover Ratio Interest CoverageRatio Operating Profit Margin Net Profit Margin Return on Net Worth and Return onAverage Capital Employed - Ratios have improved due to increase in revenue andprofitability as FY 21 was impacted on account of COVID-19 and due to reduction inborrowings as the Company had raised the funds during the previous year by way of Rightsand Preferential Issue and Final call of Rights issue during the year.

Consolidated performance

At consolidated level your Company reported a revenue of Rs 8136Crore (previous year Rs 5249 Crore) and EBITDA of Rs 1203 Crore with EBITDA margin at14.8% (previous year Rs 628 Crore with EBITDA margin at 12.0%).

DIRECTORS' RESPONSIBILITY STATEMENT

The audited financial statements of your Company for the year underreview ("financial statements") are in conformity with the requirements of theCompanies Act 2013 read with the rules made thereunder ("Act") and the IndianAccounting Standards. The financial statements reflect the form and substance oftransactions carried out during the year under review and present your Company's financialcondition and results of operations fairly and reasonably.

Your directors confirm that:

a) in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any;

b) accounting policies selected have been applied consistently andreasonable and prudent judgments and estimates were made so as to give a true and fairview of the state of affairs of your Company as at the end of the year under review andthe profit and loss of your Company for the year under review;

c) proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of your Company and for preventing and detecting fraud and otherirregularities;

d) the annual accounts of your Company have been prepared on a 'goingconcern' basis;

e) adequate internal financial controls were laid down and followed byyour Company and such internal financial controls were operating effectively;

f) proper systems have been devised by your Company to ensurecompliance with the provisions of all applicable laws and such systems were adequate andoperating effectively and

g) the Company has been in compliance with the applicable SecretarialStandards issued by the Institute of Company Secretaries of India.

SHARE CAPITAL

a) Equity share capital

Details of changes in paid-up share capital during the year underreview are as under:

Paid-up Equity Share Capital Rs ‘in Crore
At the beginning of the year i.e. as on April 1 2021 915.05
Changes made during the year: Allotments made pursuant to:
1.1. Employee Stock Option Scheme 2013 & 2017 0.49
1.2. Rights Issue
(i) Receipt of final call money 22.47
(ii) Receipt of call money pursuant to annulment of forfeiture 0.28
At the end of the year i.e. as on March 31 2022 938.29

b) Preference share capital

The paid-up preference share capital of your Company as at the end ofthe year under review stood at Rs 50.50 Lakh (same as at the end of previous year). Thedetails of Preference shares is as below:

Class of preference shares Redemption date
500000 8% Redeemable Cumulative Preference Shares of Rs 10/- each March 29 2024
500 6% Redeemable Cumulative Preference Shares of Rs 100/- each October 12 2024

.