V-MART THESIS: Salient points: a) Focus on Tier II and Tier III cities only.

Positioned as value retailer (price for less is their tagline sab se sasta, sab se acha is their jazzy hindi tagline) b) 30% sales growth, 33% profit growth on average (cagr) over the past 5 years c) Major stores in UP, followed by Bihar. Planning to enter Jharkhand. d) Presently consist of a mix of apparel and non-apparel. All new stores going forward will have apparel only (gross margins around 35% on apparel so, reason is obvious). Non-apparel was a strategy only to attract footfalls initially. Apparel contributes about 75% of total revenues and Kirana at 14% and non-apparel the rest.(according to latest concall) e) Store-to-store distance at around 150km to ensure better distribution network, better scale in media/print spend and better branding presence. (Subhiksha also had followed a similar carpet bombing initially with decent results, before they went haywire in rapid expansion) f) Currently at 78 stores (latest at Haldwani, UP), planning to go to 120-125 by FY15. 38 stores with kirana. No more kirana. g) Same store sales growth on average around 10% every year for the past 4 years. h) Sales per sq. ft is highest in Tier 3 (around 7k per sq ft), followed by Tier 2 (around 6.5K per sq. ft) and then Tier I (around 6K per sq ft) (according to DRHP). Improved 9% y-o-y according to the latest concall. Currently, they have about 6.2L sq ft under business i) Presence will predominantly be in north and east. Warehouses were in Ahmedabad and Delhi. Ahmedabad has been discontinued. Centralized only in Delhi now. j) All stores dont exceed 8000-10000 sq ft. Presence in Tier II and Tier III ensures low rental costs (and manpower costs since they source employees locally). k) Gross margins between 30-32% (key monitorable, in my opinion, along with same stores sales growth, sales per sq ft and working capital/sales (at around 82 days currently, from 86 days a year ago) from P&L standpoint. Debt (short and long term of course remains the key monitorable on the BS front). 10-11% EBITDA margins, Rs. 400-500 average billing (Vishal Retail had similar average billing before their working capital and rapid expansion went haywire). Shrinkage ratio at about 1% l) Still having a negative operating cashflow. Management says thats due to increase in working capital for rapid store expansion. Remains a monitorable. m) Have 2000 suppliers, and each supplier not exceeding 1% of sales. No plans to get into manufacturing (backward integration as Vishal Retail called it, before that bombed). So, thats a positive. n) Aditya Birlas PE group (Naman Finance and Investment Pvt. Ltd) invested in this in 2010. Exited 15% in IPO. Still hold 10% (maybe, some marketing expertise from Madura Garments is also coming in) o) Raised 120 cr in IPO at Rs.210/- per share. Currently at Rs.170/- share. Listed on BSE and NSE p) Recently opened V Galz stores focusing on ladies garments and accessories

q) History of promoters includes Mr. Lalit Agarwal being the CEO of Vishal Retail till 2003. Ram Chandra Agarwal (Vishal Retail, now V2 retail) is his cousin. But no business dealings between the two entities as of now. r) Anand Rathi was the lead book runner for the IPO. Hence, their optimistic projections in the brokerage report need to be taken judiciously. (their track record in bringing out new issues is not that great to be honest) My Observations: i) 78 stores currently. 125 by FY15. That is about 25 stores per fiscal. However, over the past 5 years, they have, on average opened about 12 stores per fiscal. Do they have that kind of management bandwidth? Well, they had 69 stores at the end of March 2013. Within 5 months, they have opened about 9 stores and planning to hit 88 stores (that is 9 more stores) in the next 3 months (by end of October). Same store sales growth (and hence mgmt.s bandwidth capability) will only be known next year) Requires about Rs.2500-2600 per sq. ft capex to set up a store for the first time (Rs.1300 for the store, and Rs.1300 for inventory). So, 50 new stores for the next 2 years, on average of 8000 sq ft should come to Rs.100 cr. They have that much cash from IPO proceeds. So, there should be very little excuse (except for some working capital) to take on much debt. Any kind of debt talk should set off alarm bells. Else, for the next 2 years and their target of stores, they should be relatively debt free. They are targeting at 15% same stores sales growth year-on-year. On average, they have been able to achieve that over the past 4-5 years with about 12 stores per year. Since the plan of new stores is about 25 per year, we need to see if they can achieve it. But on the whole, their past track record seems to indicate they can achieve it, and if they can, the current price is a bargain. It secures long term leases (9-10 yrs) with all the rental locations, and the termination would be at the discretion of v-mart (not sure why the owner would agree to this but thats how it is structured). A few old stores are coming up for renewals, but majority of the stores (new stores) are locked in for long term. Given the relatively lower rentals in tier 2 and tier 3 and given the visibility of rental expense, it is favorable to v-mart (till a major slowdown comes which might impact their cashflows). They dont sell goods on a consignment basis 100% of apparels is bought and sold. Hence, this forces the company to have only fast-selling apparel. Hopefully, theyll slowly move towards the Inditex (Zara) model and replicate it for low value retail. I repeat myself, but same stores sales growth is an extremely important parameter, maybe no.1 parameter to keep track of (no.2 being working capital/sales) as it would help us differentiate the revenue growth that came from new stores vis--vis the revenue growth that came from existing stores (as a result of improved operations, longer presence at a location etc.). If the same store sales stalls for some reason (exception being 2008 like scenario), we need to get out of the stock irrespective of management justifications. For some strange reason, none of the brokerage reports talk about this important parameter.

ii)

iii)

iv)

v)

vi)

vii)

viii)

ix)

Need to watch out for a repeat of Vishal Retail here Vishal Retail went all guns blazing during its IPO listing at Rs.270/- with similar rosy picture and similar mgmt. talk and similar great results for a year. The stock went all the way upto Rs.1000/- and then crashed and burned. Of course, the mgmt. here is not talking of openings 100s of stores in the next 2 years so thats good in one way. Need to keep a watch out though. Itd be very difficult to come up with any definite valuation of the firm except to believe the mgmt. talk (as they would have a better grip on the fundamentals of the location stores). Taking a 10% same store sales growth, EBITDA of 10% and NPM of about 3%, we arrive at a EPS of about Rs.14-16 per share for FY14. (Anand Rathi, for obvious reasons, has put up Rs.18/- share). Id slowly buy into this than put a large buy order for the simple reason that I am more worried about cashflows coming in, rather than just EPS growth. I have not focused on competition analysis for a few obvious reasons DRHP has that analysis, I dont believe Trent/Shoppers Stop is the true competition, the true competition are the local stores. Market size is too big in tier 2 and tier 3 that even if V2 retail and Vishal Retail (Shriram owned now) come up in these markets, there are too many districts to restrict the market (yet).

Lessons from Vishal Retail and Subhiksha: 1) Vishals inventory days increased from 150 odd days to over 200 days. V-marts inventory days is currently at 82. Any increase in this inventory days metric on a substantial basis say beyond 100 days, irrespective of the mgmts justification (increased stores, tough mkt etc.) should be a pointer to deteriorating business model 2) Vishal increased stores at a very rapid pace, and funded them through debt (as IPO proceeds were not enough for expansion). If V-mart is also headed in that direction (taking on debt to increase stores at a rapid pace although the next 2 yrs should not see that possibility), itd be time to re-look at the stock in our portfolio 3) Vishal got into manufacturing (backward integration, they called it) which stretched bandwidth and resources. The first sign of a downturn and they shut down the factories which should never have been opened in the first place. Thankfully, management of V-mart emphaises again and again (in their concalls) that they want to remain a pure retailing player and dont want to get into manufacturing or extensive private labeling. 4) Vishal did not build adequate supply chain and IT infra. Although V-mart claims it has built superior distribution network and fantastic supply chain system, all such problems are usually known in hindsight. There is no good way to know if the chain is adequate except for measuring same store sales growth and cash conversion ratio. 5) Subhiksha was worse than Vishal Retail. A beautiful model gone wrong with mindless expansion. An expansion of 1400 stores in 2 yrs (although their store space was about 1500 sq ft), Rs.8bn in debt and trying to be a one-stop-shop with groceries, mobiles, medicines etc (which when combined with 1400 stores makes the inventory mgmt. impossible to manage). V-mart is consciously moving into apparel-only, avoiding Kirana for the new stores and not intent on

taking debt (for now). And 50 stores in 2 yrs although sounds a little too aggressive given their background for the past 8 yrs, is no where as mindless as 1400 stores in 2 yrs like subhiksha.

DRHP: July 23rd 2012 - http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343041803906.pdf Jan 17th 2013 - http://203.199.247.102/cms/sebi_data/attachdocs/1359366836594.pdf

Brokerage Reports: Anand Rathi http://insurance.rathi.com/nl/upload/links/V-Mart%20Retail%20Ltd%20-%20IPO%20Note.pdf Will V-mart retail be different than Vishal Retail? - http://www.moneycontrol.com/news/ipo-issuesopen/will-v-mart-retail-be-differentv2-(vishal)-retail_816663.html Aditya Trading - http://research.adityatrading.com/Reports/RR0202201351.pdf K M Global Finserv (gives a good overview from the DRHP doc on the store expansion in different states and the proposed sq. ft increase through 2015) - http://www.ipostatus.com/documents/V-Mart-RetailIPO.pdf Nirmal Bang - http://www.indianotes.com/buy/V-Mart-Retail-IPO-Investment-opportunity-for-listinggain-and-long-term-investment/180591/127/IO ICICI Direct - http://content.icicidirect.com/ULFiles/UploadFile_20132112143.pdf?TB_iframe=true Ajcon Global - http://www.ajcononline.com/V_Mart%20Retail%20Ltd_%20IPONote.pdf Edelweiss Partners - http://www.edelweisspartners.com/Mutual%20Fund%20Info/V%20Mart%20IPO%20note.pdf SMC Trade Online http://www.smctradeonline.com/Admin/ResearchReports/634951516776875000_VMART%20RETAIL%20LIMITED.pdf

Concall after Q3 FY13, On same store sales growth - If you look at it for the age of one to three years, the Y-to-D same store sales growth is 19%; for the three to five year category it is 15% and greater than five years it is 8%. And this gives an overall aggregate of about 14%. For the period ending December 2012; we have 12 stores in the one to three year category; 22 stores in the three to five year category; and 10 stores in the greater than five years category. 18 stores are there, balance which do not have like to like period in the last financial year which we have not considered for the comparison purpose. Concall after Q4 FY13 36 stores right now in tier III and 20 in tier II and 13 in tier I Concall after Q1 FY14 86% from fashion (apparel 75%, non-apparel 11%), 14% from Kirana Sales per sq ft - Rs. 734 Store count end of year: 69, Q1 FY14 addition - 7, Plan for Q2 FY14 - 7 (as of date, sep 8th, opened only 4). 3 stores in last 3 weeks of the qtr pending - their plan "7 stores in Q1; we opened 7 in the Q2, we will open another 8 in Q3, so that it will take our tally to almost 22 and then we will open around 3 to 4 in the last quarter." On average, 33 employees per store (on addition of 17 new stores, 550 employees got added) 6.12L sq ft under business

Other Notes sent to Krishna and Om

The AR looks very impressive and extremely detailed. I was floored reading the AR. I don't know if they are going to continue with so much detail next year, but the first year of listing AR has been an extremely satisfactory read. Needless to say, and I am not saying it :), but given this statement "At V-Mart, we expect that our business model will generate a 35-40% revenue growth and project to add about 25 stores in 2013-14, with a higher percentage growth in our post-tax bottomline, enhancing value in the hands of the shareholders" we are looking at atleast 17 bucks as EPS this year - which, in my opinion would be phenomenal. The reason I say phenomenal is, even with a modest 15 P/E, we are looking at a 20-22% growth in share price this year (of course, unless the entire mkt crashes in which case I buy Page). So, buying at this price would entail us with atleast a 15% IRR - which is good enough for me. (on a net profit basis, 25 cr is what they need to achieve and they have already achieved 7 cr in Q1. Traditionally, Q2 has been a quarter of very poor net margins (1.5%), so this would be a key monitorable (as well as Q4, but by then, we would know roughly how they would be doing). But I am looking at a 7+3+10+5 cr in each of the 4 qtrs this year. Thoughts? I also like the tone of the mgmt talk (and the proof is in the pudding, which we'll know over the next 2 years), especially, "At V-Mart, we would rather grow 30% compounded across ten years supported by revenue growth in every single year as opposed to 50% compounded with three down years in ten." But to start with, I think that's a great thought to have, and we have repeatedly heard in concalls about low-tozero debt, growing through internal accruals etc. Emphasizing that again in the AR, feels good :) Couple of niggling questions though -

a) In the AR, "The Companys business model comprises the purchase of merchandise (apparel and non apparel) from indigenous suppliers, coupled with onward distribution through distribution centres (Delhi and Ahmedabad)" - now they had closed down Ahmedabad centre as far as I can remember. Why did they mention it in the AR then? b) What does this line mean? - "All stores have lease agreements with two other stores with whom they share revenues as mandated by a clause" - This is a great strategy to prevent poaching, but in general, do we know any further details on this? My only question right now (and I don't want to go overtly bullish) is to decide on the position size before Q2 and then after Q2.

My bad - I think it's 14 EPS per year, not 17 EPS, assuming 40% growth in profits this year (I had some per share calculations messed up). 25 cr remains the same. At 15 P/E, it would be Rs.210, and a 11% IRR at current prices. Of course, we can always assume a 20 P/E and a Rs.280 share price and hence a 48% growth from current prices :)

a) I think there are some communal tensions in UP currently. Not sure which districts exactly, because the mainstream media is pretty tight lipped about it. But deploying army is no joke. So, not sure how many districts are affected, and thereby how many stores are affected (Q2 is a weak qtr, so it may be swept under the rug, but if this spills over into October, we will have an issue). b) Mgmt in the most recent concall had promised 88 stores by end of october as they wanted to take advantage of the holiday season to the maximum extent. Currently, Sep 8th, they are at 80 stores. So, roughly, 8 stores in 2 months, close to 1 store every 1-1.5 weeks - looks very tough to me. (unless of course they surprise us by opening 2-3 stores on the same day tomorrow or next weekend) c) Communal tensions in UP (according to news items that I could scrape from Google) are Shamli, Muzzafarnagar and Sahranpur. Of course, in many other districts, the situation is currently unknown. V-mart has stores in Muzzafarnagar and Sahranpur (none in Shamli). Not sure when these stores were open or how much their contribution is to the UP revenue topline.

So, going by EV/Sales parameter (most analysts in the US evaluate retail cos. on the EV/Sales parameter and compare competitors). In India, most retail guys (even though unprofitable) have EV/Sales = 1.1 Now, given a min. 35% growth (as guided by the mgmt), sales come to about Rs. 517 cr. As per Mar 13 B/S, Debt - Cash = 66 cr. EV = 342 + 66 = Rs.408 cr Sales end of FY14 = 517 cr. At EV/Sales = 1.1, we are looking at an EV = Rs.569 cr and removing debt - cash of 66 cr, we end up with a mkt cap of 500 cr. That is, a mkt price of Rs.280. In our prev. conservative calculations, we get a EPS of 14. Meshing it with this, we are expecting the mkt to value this at roughly 20 P/E (or slightly lesser at around 18-19 PE).

Sounds reasonable to me. 280 looks like a decent target for FY14.

Deepak Sharma's statement in the 20th March 2013 concall - "On an average actually just to give you the seasonality in terms of numbersI am talking basically about the bottom line. The bottom line in the first quarter is about 25%; in the fourth quarter at about 17% and the balance is accommodated between the second quarter and third quarter; the third quarter taking about 45% to 60% anywhere between that depending upon how the second quarter goes." 7 cr profit in Q1, and going by his logic, 28 cr profit for the full year (a 55% growth over the FY13). 15.5 EPS.

17 EPS looks tough. You seem to be expecting a 50% growth in revenue with 6% net margin. Or one of the combinations in the matrix -

Revenue vs 35% growth 40% growth 50% growth NM 4% net margin 11.5 11.9 12.8 5% net margin 14.4 14.9 16.0 5.5% net 15.8 16.4 17.6 margin 6% net margin 17.3 17.9 19.2
I would be more conservative and stick with 40% growth and 5% net margin which brings us to a 14-15 kind of EPS. Of course, the story is not just about this year. I am looking at this as a 3 year high growth story, to be monitored quarter on quarter. The recent communal tensions in UP, if they continue in October - then all bets are off for this year. Not just because of price correction, but because of the larger fixed cost base, they may run into losses and may have to take on debt if Q3 is a washout.

I have been continously been thinking about this stock and I think it would pay us to wait on this one till Q2 results are released. The reasons are two-fold: a) We would have better clarity on the UP business. Close to 50% business comes from this state. At IPO time, they had 27 stores out of 62 in UP. Now, out of 80, they have 36 stores from UP. That is, out of the 18 stores that they have added between January and now, 9 stores are from UP. Considering the communal violence and near-shutdown of most districts in UP, we need to be aware of a correction. b) As per Q1 results, they have about 106 cr expenses.With 4-6 more stores opening, I would peg the expenses to be around 110-120 cr. Last year in Q2, they had 80 cr sales. In Q1, they had about 118 cr sales. Hence, by some kind of extrapoloation, I don't see them doing more than 100-110 cr business in Q2 (esp considering the UP situation). That is, they might be close to break-even in Q2 (and I am not even counting any damage that was done during the riots - there's a media blackout, so not even sure of the damage). Ok, so what was the point in all this? The point is, we know and understand that this is a very good business. This is a scalable business. And the promoters till date have been conservative and transparent. So, given the UP turmoil (a temporary

issue) and given that Q2 is going to be near break-even (or maybe some loss), we would get this stock at much cheaper prices (not many funds/HNIs/valuepickrs follow it yet - everyone's in the hangover of too much inventory/too much debt/too much working capital halo of vishal retail and subhiksha). I expect this to touch around 150-160 or maybe lower by Q2 results release. I would buy it then. Till then, it's better cash sits in some other stock or savings bank a/c. Of course, I would be very wary if the communal violence continues/escalates into October/November. Then, all bets are off. Thanks for listening to my thought-stream over the past couple of days. Let me know your thoughts :) I started putting something on valuepickr, but looks like the administrator might shut down that thread :) For reasons best known, I am not yet ready to put such kind of analysis (detailed or otherwise) on valuepickr yet.

Jan-13 Total Stores 4 27 8 9 4 3 4 1 1 1 0 0 62 MiniHyper Stores 1 16 4 5 4 3 3 1 1 1 0 0 39 Family Fashion Stores 3 11 4 4 0 0 1 0 0 0 0 0 23 Total Stores 4 37 9 12 4 4 4 1 1 1 3 2 80

Sep-13 Mini-Hyper Stores 1 16 4 5 4 4 3 1 1 1 0 0 41 Family Fashion Stores 3 21 5 7 0 0 1 0 0 0 3 2 41

States Delhi Uttar Pradesh Gujarat Bihar Punjab Madhya Pradesh Rajasthan Haryana Chandigarh J&K Uttarakhand Jharkhand Total

Difference 0 10 1 3 0 1 0 0 0 0 3 2 20

Sales per square feet:

Yep, 673 in Q1FY13, end the year with Rs.685. Now, we have Rs.734 in Q1FY14. I expect it to end with somewhere around the 700 levels for the entire year (optimistically, Rs.750/-). Could you share the list of questions you sent to the company Krishna? I have been trying to think up questions for the Q2 conference call and maybe we can combine our questions, and each of us can ask a couple this time? The two questions for now are:

a) The average sales per sq ft increased from Rs.507 in 2011 to Rs.685 last year and this year we should be Rs.700-710 levels. Apart from the product mix changes (lesser kirana, more fashion which seemed to have contributed to most of the increase in avg. sales per sq ft over the past 2-3 years) what are the major 2-3 levers that you have that can drive up the avg. sales per sq ft. in the next 2-3 years? Ans. We are increasing the average sales per square feet by meeting the aspirations of people by proving quality fashion at affordable prices. This will come by having a enhanced understanding of customer taste and preferences. Further, we have rationalized our Store Display Policy, giving good promotional schemes to our customers and better incentive plans for our employees to increase sales per square feet per month.

b) Did we close any stores this year? We had closed 6 stores in 2010, 3 in 2011 and 1 each in the last 2 years. Any plans of closing down any stores this year. If you could give us an indication of what are the criteria to close down stores and how many stores might be meeting this criteria in the near future? Ans. We evaluate financial performance of every store on Store EBIDTA parameter. We have not closed any of our store in FY14 c) 1-3 yrs, 3-5 yrs > 5 yrs store breakup? As same store sales growth differs

Stores break up in terms of vintage as on 30 Sep 2013 is as follows: Stores age No of Stores Less than one 24 1-3 years 18 3-5 years 24 More than 5 years 16

d) 94 stores by FY14 and 120 by FY15?

e) I am looking at the Cash flow statement. The operating profit before WC changes is 23cr and cash generated from operations is -15 crwhich implies, we have close to 38 cr of working capital. Is this working capital for new stores/additional stores/both? Since next year well have close to 110 stores by this time (approx), should we expect this kind of working capital overload every Q2 (seasonal)? f) We have about 44-45 cr left from the IPO proceeds. Given that we require about 2-2.5 cr per store (capex + working capital), we are looking at about 20 more stores. Beyond 20 stores, how are we planning to open more stores? Will further growth post 20 stores come only from internal accruals? Or are we looking at other forms of funding? From internal accruals only g) There was close to 75% jump in short term borrowings. Was this only for working capital (inventory build up) or for some other reasons? Should we be expecting such kind of jumps in short term borrowing before festival season year on year? h) Can we get an idea of what % of sales grew because Ramzan fell during Q2 this year?

It is very difficult to identify and quantify. It will effect several stores and percentage effect on sales is different for different stores.

Is it because the product mix is changing (i.e., heavily moving into apparel and moving away from kirana as a % of overall revenues) or are there any other major factors? Since the revenue mix will be changing to more than 90% in apparel, are we looking at topping out on average sales per sq ft around Rs.750/- -800 levels in the next 2 years? What are the other levers that we have to move this up?

Is there a bare min. sales/profitability criteria that a store needs to acheive? How long should a store run before you decide to continue with it/close it down? What are the typical factors that you have seen why the stores which were closed down failed? (regional market conditions/competition/unexpected events/closing down tier-1 stores only etc.)?

Thanks

Oct 26th 2013

Did some rough calculations on the split of stores. Approximately, At the end of FY14, we'll have > 5 years - 37 stores (SS - 8%) 3 - 5 years - 8 stores (SS - 15%) 1 - 3 years - 26 stores (SS - 19%) < 1 year - 25 stores The ratio is skewed compared to the numbers by management in Dec 2012 because, 17 stores were opened in 2008 - which at the end of FY14 straight away get into the > 5 year bucket. We should be good for another 2 yrs with the same stores growth I think. Post that, it would depend on how many new stores these guys open in the next 2 yrs. They can get away with not opening new stores for 1 year I think (somewhere in the economic cycle), but beyond 1 year, no chance - it's like riding a tiger - they gotta keep opening new stores.

The answer lies in depreciation. Let me explain. Depreciation is of two types - straight line depreciation method (SLM) and accelerated depreciation (written down value - WDV). All competitors of V-mart - like Shoppers Stop, Pantaloons and Trent use the SLM method for depreciation. V-mart though uses the WDV method.

So, how does that change earnings 3 years later? Well, the way WDV works, although cash flows don't get impacted, the EPS (it's an accounting trick) will get impacted by quite a bit. In the WDV method, stuff is depreciated by a lot in the first 3 years (usually, as a thumb rule, the depreciation value in the first 2 years in WDV is twice that of SLM). Now, when stuff is depreciated a lot more than SLM, earnings (am talking of P&L here) will be understated by that delta more than if they had done by SLM. Consequently, after year 3, when most of the stuff has already depreciated, but you continue to use that stuff for sales, your PAT (and hence EPS) automatically goes up. And that's how we get to the conclusion that there is hidden value in this stock wherein right now, the earnings are understated due to increased deperciation and 3 years later (as per previous mail, we have 52 stores in the 0-3 yrs timeframe), the earnings will be that much more. Accounting gimmickry, yes. But Indian markets care about EPS than anything else. Now, the question arises - maybe they are right in using WDV because stuff gets worn out. Well, what is the stuff these guys use? It's not computers. It's not electronics. It's not cars. If you look at their DRHP and AR, most of the stuff is in interior works (false ceiling), furnitures and fixtures, gensets etc. How many times have you seen false ceilings/racks/cupboards being changed in your regular shopping mall in 3-5 years? I haven't. Sure there is maintenance capex. But do they throw away this stuff? Absolutely not. Therefore, the logical conclusion is, the value on the books might be zero for these assets, but they will still be generating sales 3 years down the line. Now the question arises - alright, that's good. But by how much would this impact the EPS? Well, for that I have no good answer and I am still trying to quantify. But just as ball park, in 2012 balance sheet, gross assets were 35 cr and in 2013, the gross assets were 85 cr. Imagine the impact of WDV depreciation for these assets 3 yrs down the line? This also indicates that Shoppers Stop, Pantaloons, Trent who follow SLM are basically stating their earnings normally, but V-mart is understating its earnings in its initial years because it's using WDV than SLM. Anyway, as a final takeaway, there is only one other retail firm (listed) which uses the WDV method of depreciating its assets. Can you guess the name? :) V2 Retail Store openings:

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

1 0 0 4 3 20 10 10 8 14 25