() Terms/Rights Attached to Equity Shares

The Company has Equity Shares having a par value of Rs.2/- each at the Balance Sheet Date. Equity Shares have been further classified in to Equity Shares carrying normal voting and dividend rights (Ordinary Shares) and Equity Shares carrying differential voting and dividend rights Class B (Series-1) Shares.

Each holder of Ordinary Shares, is entitled to one vote per member in case of voting by show of hands and one vote per Ordinary Shares held in case of voting by poll/ballot. Each holder of Equity Share is also entitled to normal dividend (including interim dividend, if any) as may declared by the company.

Each holder of Class B (Series -1) Shares, is entitled to one vote per member in case of voting by show of hands and three vote per four Class B (Series-1) shares held in case of voting by poll/ballot. Each holder of Class B (Series-1) Share is also entitled to 2% additional dividend in addition to normal dividend (including interim dividend, if any) as may declared by the company. Further, the Company may declare dividend only for Class B (Series-1) Share up to 2% without declaring any dividend for Equity Shares.

All other rights would be same for both classes of Equity Shares.

The Company declares and pays dividends in Indian Rupees.

In the event of liquidation of company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distributions will be in proportion to the number of equity shares held by shareholder.

(ii) Pursuant to the provisions of the Companies Act, 1956 and Companies Act 2013, the issue of equity shares are kept in abeyance.

a) 11,400 Equity Shares of Rights Issue of 2006.

b) 84,478 Equity Shares of Rights Issue of 2015.

c) 8,493 Equity Shares of Class B (Series-1) of Rights Issue of 2015.

1. Financial Risk Management

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The company’s financial risk management policy is set by the managing board.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including loans and borrowings, foreign currency receivables and payables.

The Company manages market risk through treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures and borrowing strategies.

(i) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company is not exposed to significant interest rate risk as at the respective reporting dates.

(ii) Foreign Currency Risk

The Company is exposed to exchange fluctuation risk for its purchase from overseas suppliers in various foreign currencies.

The Company follows established risk management policies including the use of derivatives like foreign exchange forward contracts to hedge exposures to foreign currency risk.

(iii) Credit Risk

Credit risk refers to the risk of default on its obligation by the counter party resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs.488.40 Crore and Rs.366.71 Crore as of March 31, 2018 and March 31, 2017 respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has always been managed by the company through credit approvals establishing credit limits and continuously monitoring the credit worthiness of customers to which the company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess the impairment loss or gain. The company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the company’s historical experience for customers.

(iv) Liquidity Risk

The company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. Liquidity risk is defined as the risk that the company will not be able to settle or meet its obligations on time or at a reasonable price. Typically the company ensures that it has sufficient cash on demand to meet expected operational expenses and servicing of financial obligations.

(v) Financial Instruments Valuation

All financial instruments are initially recognized and subsequently re-measured at fair value as described below:

a) The fair value of quoted investment is measured at quoted price or NAV.

b) The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

c) All foreign currency denominated assets and liabilities are translated using exchange rate at reporting date.

The financial instruments are categorized into two levels based on the inputs used to arrive at fair value measurements as described below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; and

Level 2: Inputs other than the quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly.

(vi) Capital Management

For the purpose of the Company’s capital management capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. In Net debt, the Company includes interest bearing loans and borrowings, trade and other payables less cash and cash equivalents.

In order to achieve this overall objective, the Company’s capital management amongst other things aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2018 and March 31, 2017.

2. Employee Benefits - Gratuity

As per Ind AS 19 the disclosures as defined in the Accounting Standard are given below:

(i) Change in Present Value of Defined Benefit Obligation

3. Segment Reporting

Ind AS 108 establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas, and major customers. The Company’s operations predominantly relate to manufacturing, trading and leasing of assets. Based on the “management approach” as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments. Accordingly, information has been presented both along business segments and geographic segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the significant accounting policies.

4. Related Party Disclosures

Disclosure as required by Ind AS 24 “Related Party Disclosures” are given below:

1. List of Related Parties

A Subsidiary Companies

(i) Bluerock eServices Private Limited (w.e.f. April 15, 2016)

(ii) Futurebazaar India Limited

(iii) Future E-Commerce Infrastructure Limited

(iv) Future Merchandising and Sourcing Pte. Ltd.

(v) Future Media (India) Limited

(vi) Future Supply Chain Solutions Limited (FSCSL)

(vii) Work Store Limited (formerly known as Staples Future Office Products Limited)

B Fellow Subsidiary Companies

(i) Office Shop Private Limited (100% Subsidiary of Work Store Limited)

(ii) Vulcan Express Private Limited (100% Subsidiary of FSCSL) (w.e.f. February 2, 2018)

C Associate Company

(i) Galaxy Entertainment Corporation Limited ( upto January 2, 2018)

(ii) Leanbox Logistics Solutions Private Limited(w.e.f. July 27, 2017)

D Joint Venture Companies

(i) Apollo Design Apparel Parks Limited

(ii) Future Generali India Insurance Company Limited

(iii) Future Generali India Life Insurance Company Limited

(iv) Goldmohur Design and Apparel Park Limited

(v) Shendra Advisory Services Private Limited

(vi) Sprint Advisory Services Private Limited

E Enterprises over which Key Managerial Personnel are able to Exercises Significant Influence

(i) Future Ideas Company Limited

(ii) Future Retail Limited

F Entity able to Exercise Significant Influence

(i) Future Corporate Resources Limited (upto March 30, 2017) (merged with Suhani Trading and Investment Consultants Private Limited w.e.f. November 14, 2017)

G Key Managerial Personnel

(i) Mr. Kishore Biyani (upto May 1, 2016)

(ii) Mr. Rakesh Biyani (upto May 2, 2016)

(iii) Mr. Vijay Biyani

(iv) Mr. Dinesh Maheshwari

(v) Mr. Deepak Tanna

H Relatives of Key Managerial Personnel

(i) Ms. Ashni Biyani

(ii) Mrs. Godavaridevi Biyani

(iii) Mrs. Sangita Biyani

(iv) Mrs. Santosh Biyani

Note: Previous year figures are given in parenthesis.

5. Significant Related Party Transactions

A Sale of Goods and Services and Fixed Assets includes Future Generali India Life Insurance Company Limited Rs. Nil (2017: Rs.0.05 Crore), Apollo Design Apparel Parks Limited Rs.0.01 Crore (2017: Rs.0.03 Crore), Future Retail Limited Rs.3,076.99 Crore (2017: Rs.878.67 Crore).

B Purchases of Goods and Services and Fixed Assets includes Future Supply Chain Solutions Limited Rs.17.52 Crore (2017: Rs.1.52 Crore), Apollo Design Apparel Parks Limited Rs.97.89 Crore (2017: Rs.27.63 Crore), Goldmohur Design and Apparel Park Limited Rs.136.60 Crore (2017: Rs.18.15 Crore), Future Generali India Life Insurance Company Limited Rs.0.35 Crore (2017: Rs.0.15 Crore), Future Ideas Company Limited Rs.0.11 Crore (2017: Rs.0.07 Crore), Future Media (India) Limited Rs.0.18 (2017: Rs.1.27 Crore), Future Retail Limited Rs.4.32 Crore (2017- Nil), Galaxy Entertainment Corporation Limited Rs.0.18 Crore (2017- Nil).

C Managerial Remuneration includes Mr. Kishore Biyani Rs. Nil (2017: Rs.0.21 Crore), Mr. Rakesh Biyani Rs. Nil (2017: ‘0.21 Crore), Mr. Vijay Biyani Rs.2.68 Crore (2017: Rs.1.91 Crore), Mr. Dinesh Maheshwari Rs.2.24 Crore (2017: Rs.1.37 Crore). Key Managerial Remuneration Mr. Deepak Tanna Rs.0.52 Crore (2017: Rs.0.50 Crore).

D Dividend Received includes Apollo Design Apparel Parks Limited Rs.1.21 Crore (2017: Rs.1.10 Crore), Goldmohur Design and Apparel Park Limited Rs.1.25 Crore (2017: Rs.1.14 Crore).

E Security Deposit Received Future Retail Limited Rs. Nil (2017: Rs.75.00 Crore).

F Investment includes Work Store Limited (formerly known as Staples Future Office Products Limited) Rs. Nil (2017: Rs.8.70 Crore), Sprint Advisory Services Private Limited Rs.56.36 Crore (2017: Rs.13.55 Crore), Shendra Advisory Services Private Limited Rs. Nil Crore (2017: Rs.24.35 Crore), Future Generali India Life Insurance Company Limited Rs.58.75 Crore (2017: Rs.14.16 Crore), Future Generali India Insurance Company Limited Rs. Nil (2017: Rs.25.50 Crore), Future E-Commerce Infrastructure Limited Rs.1.00 Crore (2017 - Nil), Future Merchandising And Sourcing Pte. Limited Rs.0.20 Crore (2017- Nil).

6. Employee Stock Option Scheme

The company had received approval of the Board and Shareholders for issuance of 1,02,74,989 Equity Shares of Rs.2 each for offering to eligible employees of the Company under Employee Stock Option Scheme (FEL ESOP 2012 & FEL ESOP 2015). During the year the Company has granted Nil (2017-4,925,298) options at a price of Rs.10 per option plus all applicable taxes, as may be levied in this regard on the Company. Out of the options granted Nil (2017 -746,748) cancelled. The options to be granted, would vest over a maximum period of 3 years or such other period as may be decided by the Human Resources, Nomination and Remuneration Committee from the date of grant based on specified criteria.

7. Leases

The Company has entered into operating lease arrangements for fixed assets and premises. The future minimum lease rental obligation under non-cancellable operating leases payable not later than one year is Rs.13.60 Crore (2017: Rs.13.06 Crore), payable later than one year but not later than five year is Rs.8.40 Crore (2017: Rs.6.84 Crore) and payable later than five years is Rs. Nil (2017: Rs. Nil).

8. Details of dues to Micro, Small and Medium Enterprises Development as defined under the MSMED Act, 2006

There are no Micro, Small and Medium Enterprises, to whom the company owes dues which are outstanding for more than 45 days during the year. This information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

9. Contingent Liabilities

Claims Against the Company Not Acknowledged as Debts, In respect of Income Tax Rs.0.54 Crore (2017: Rs.104.29 Crore), Value Added Tax Rs.1.75 Crore (2017 : Rs. Nil), Letter of Credit Rs.123.17 Crore (2017: Rs.135.62 Crore) and Other money for which the Company is Contingently Liable, Corporate Guarantees Given Rs.5753.26 Crore (2017: Rs.4159.78 Crore).

There are various labour, legal metrology, food adulteration and cases under other miscellaneous acts pending against the Company, the liability of which cannot be ascertained. However, management does not expect significant or material liabilities devolving on the Company.

10. Capital and Other Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.95.89 Crore (2017: Rs.78.40 Crore).

11. The borrowing cost capitalized during the year ended March 31, 2018 was Rs.46.53 Crore (2017: Rs.43.29 Crore).

12. Expenditure on Corporate Social Responsibilities

As per section 135 of the Companies Act, 2013 read with relevant rules thereon, the Company was required to spend Rs.1.82 Crore till FY 2017-18 on Corporate Social Responsibility (CSR) activities. Against it, the Company has during the year under review spent an amount of Rs.1.82 Crore towards CSR activities. In respect of CSR spending for the year under review, there are no amounts outstanding to be paid.

13. Security clause in respect to Secured Borrowings

(i) Non-Convertible Debentures

a) Rs. Nil (2017: Rs.112.50 Crore) are secured by Pledge of certain Investments held by company, carries coupon rate of 12.10% per annum and are redeemable as per terms of issuance in FY 2017-18.

b) Rs.200.00 Crore (2017: Rs.600.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 10.25% per annum and are redeemable as per terms of issuance in FY 2020-21.

c) Rs.500.00 Crore (2017: Rs.500.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 10.10% per annum and are redeemable fully as per terms of issuance in FY 2020-21.

d) Rs.365.00 Crore (2017: Rs.365.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 10.10% per annum and are redeemable as per terms of issuance in two installments as Rs.146.00 Crore in FY 2020-21 and Rs.219.00 Crore in FY 2021-22.

e) Rs.35.00 Crore (2017: Rs.35.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 10.25% per annum and are redeemable as per terms of issuance in two installments as Rs.14.00 Crore in FY 2020-21 and Rs.21.00 Crore in FY 2021-22.

f) Rs.400.00 Crore (2017: Rs.400.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 10.25% per annum and are redeemable as per terms of issuance in two installments as Rs.220.00 Crore in FY 2020-21 and Rs.180.00 Crore in FY 2021-22.

g) Rs.750.00 Crore (2017: Rs.750.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 10.10% per annum and are redeemable as per terms of issuance in two installments as Rs.300.00 Crore in FY 2020-21 and Rs.450.00 Crore in FY 2021-22.

h) Rs.197.50 Crore (2017: Rs.197.50 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 10.25% per annum and are redeemable as per terms of issuance in two installments as Rs.104.00 Crore in FY 2021-22 and Rs.93.50 Crore in FY 2022-23.

i) Rs.51.00 Crore (2017: Rs.51.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.75% per annum and are redeemable fully as per terms of issuance in FY 2021-22.

j) Rs.84.00 Crore (2017: Rs.84.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.80% per annum and are redeemable as per terms of issuance fully in FY 2023-24.

k) Rs.27.00 Crore (2017: Rs.27.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.50% per annum and are redeemable fully as per terms of issuance in FY 2021-22.

l) Rs.18.00 Crore (2017: Rs.18.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.55% per annum and are redeemable as per terms of issuance fully in FY 2023-24.

m) Rs.949.00 Crore (2017: Rs.949.00 Crore) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.60% per annum and are redeemable as per terms of issuance in two installments as Rs.379.60 Crore in FY 2021-22 and Rs.569.40 Crore in FY 2022-23.

n) Rs.94 Crore (2017: Rs. Nil) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.28% per annum and are redeemable as per terms of issuance fully in FY 2024-25.

o) Rs.26 Crore (2017: Rs. Nil) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.17% per annum and are redeemable as per terms of issuance fully in FY 2022-23.

p) Rs.88 Crore (2017: Rs. Nil) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 8.80% per annum and are redeemable as per terms of issuance fully in FY 2022-23.

q) Rs.162 Crore (2017: Rs. Nil) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 8.91% per annum and are redeemable as per terms of issuance fully in FY 2024-25.

r) Rs.150 Crore (2017: Rs. Nil) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.25% per annum and are redeemable as per terms of issuance in two installments as Rs.60 Crore in FY 2022-23 and Rs.90 Crore in FY 2023-24.

s) Rs.20 Crore (2017: Rs. Nil) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.40% per annum and are redeemable as per terms of issuance fully in FY 2022-23.

t) Rs.84 Crore (2017: Rs. Nil) are secured by First Pari-Passu charge on Company’s specific immovable properties and movable fixed assets, carries coupon rate of 9.50% per annum and are redeemable as per terms of issuance fully in FY 2024-25.

u) Rs.150 Crore (2017: Rs. Nil) are secured by Personal Guarantee of Promoters and Corporate Guarantee of Promoter Entity, carries coupon rate of 9.25% per annum and are redeemable as per terms of issuance in three installments as Rs.45 Crore in FY 2021-22, Rs.45 Crore in FY 2022-23 and Rs.60 Crore in FY 2023-24.

v) NCD from Banks and Financial Institution of Rs.2,575.00 Crore are secured by Corporate Guarantee of Future Retail Limited.

(ii) Term Loan from Banks

a) Rs. Nil (2017: Rs.30.00 Crore) are secured by First Pari-Passu charge on Tangible Fixed Assets (movable and immovable) present and future, of the company (excluding specific immovable properties).

b) Rs.266.67 Crore (2017: Rs.286.26 Crore) are secured by First Pari-Passu charge on entire Fixed Assets of the company (present & future) except assets exclusively charged to other lenders.

c) Rs. Nil (2017: Rs.108.67 Crore) are secured by First Pari-Passu charge on Tangible Fixed Assets (movable and immovable) present and future, of the company (excluding specific immovable properties).

d) Rs.347.47 Crore (2017: Rs.350.96 Crore) are secured by First Pari-Passu charge on Tangible Fixed Assets (movable and immovable) present and future, of the company (excluding specific immovable properties).

e) Rs.451.34 Crore (2017: Rs.61.24 Crore) are secured by First Pari-Passu charge on entire Fixed Assets of the company (present & future) excluding specific immovable properties.

(iii) Term Loan from Other

Rs. Nil (2017: Rs.80.00 Crore) are secured by Pledge of certain Investments held by Company and further undertaking to create charge on other investments within a period of two years and undertaking for nondisposal of specific investments.

(iv) Working Capital Loans from Banks

Rs.96.36 Crore (2017: Rs.119.47 Crore) are secured by (a) First Pari-Passu Charge on Current Assets (present and future) of the company (b) Second Pari-Passu Charge on the Tangible Fixed Assets (present and future) of the company (excluding specific immovable properties) and (c) Corporate Guarantee of Future Retail Limited.

(v) Term Loans from Banks and other of Rs.718.01 Crore are secured by personal guarantee of promoter directors.

(vi) Term Loans from Banks and Other of Rs.1065.48 Crore are secured by Corporate Guarantee of Future Retail Limited.

(vii) Term Loans from Banks are repayable as follows: Rs.68.75 Crore in FY 2018-19, Rs.153.75 Crore in FY 2019-20, Rs.233.75 Crore in FY 2020-21, Rs.269.80 Crore in FY 2021-22, Rs.253.72 Crore in FY 2022-23 and Rs.85.71 Crore in FY 2023-24.

(viii) Installments falling due in respect of all the above Loans (Term Loan & NCDs) upto 31.03.2019 aggregating Rs.68.75 Crore have been grouped under Current Maturities of Long-Term Borrowings.

(ix) Rs.250 Crore (2017: Rs. Nil) Commercial Paper carries Interest Rate 8.85%.

(x) Weighted average rate of interest on the Term Loans is 10.61%.

14. Composite Scheme of Arrangement

The Composite Scheme of Arrangement between the Future Retail limited and Bluerock eServices Private Limited (“BSPL” or “Second Demerged Company”) and Praxis Home Retail Limited (“PHRL”or “Resulting Company”) and their respective Shareholders under sections 230 to 232 and section 66 of the Companies Act, 2013 (“the Scheme”), for demerger of e-Commerce Home Retail Business Undertaking of BSPL into PHRL, with effect from Appointed Date April 15, 2016 (as defined in the Scheme) has been given effect during current financial year.

Pursuant the Scheme, all the assets and liabilities pertaining to e-Commerce Home Retail Business Undertaking of the BSPL has been transferred to and vested in PHRL. As a considration for the said Demerger PHRL issued 6,30,000 9 % Redeemable Preference Shares of the face Value of ‘100 /- each full paid -up to the shareholders of BSPL.