Dear Friends

Carrying on from where we left off last year the year that went by seemed almostidentical to the previous year except that it threw some more challenges.

Though we succeeded in stemming the decline in terms of gross turnover the situationremained unchanged.

We continued to shut loss making stores wherever required and while their numbers weremade up by way of new openings all this came at a cost.

Mature stores cost money to close while new ones cost even more to open. And while thisis an ongoing struggle in any retail operation a breakout from the struggle can only beachieved when new store openings outstrip old store closings. However in these fastchanging market dynamics the decision to open new stores entail more risks than everbefore.

In the midst of our daily struggles disaster struck on what is normally the mostjoyous day of the year for your company Feb 14th Valentine's Day.

As the day dawned we received information that there was a fire at our CorporateOffice. As the minutes of the day progressed we stood outside in the rain and watchedhelplessly as the fire brigade fought the battle. The day ended with all floors of ourCorporate Office gutted and unusable.

A new immediate problem faced us of getting the Corporate Office functioning as fastas possible. While it did take us between 2 to 4 weeks to get all functions up andrunning work never stopped.

The domino effect of the global economy slowing down is hitting the Indian economy aswell with slowdowns being seen across sectors. Falling as we do into the category ofdiscretionary spending we cannot remain immune from the same. In the first quarter of2019-20 gone by we have felt the heat from the slowdown and will need to remain alert soas not to get too badly affected.

Our mantra for the current year remains consolidation of operations closing anyfringe stores that are not performing while continuing to look for fresh areas ofpotential to open new stores but very selectively.

Our endeavor to delight our customer with newer and newer offerings continues with acontinuous flow covering a wide demographic. The first quarter alone saw the introductionof over a thousand new varieties of gifts and accessories never seen before in our stores.This helps us in better engaging customers and helps us help them express themselves totheir loved ones.

Yours Truly

Anil Moolchandani

Chairman & Executive Director

Archies Limited