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Myntra was established by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena in February 2007. All three are IIT alumni, and have worked for several start-ups. Myntra is headquartered in Bangalore and has been funded by Venture Capital funds like IndoUS, IDG & Accel [5] Partners. The company started off in the business of personalization of products, and soon expanded to set up regional offices in New Delhi, Mumbai and Chennai. It began its operations in the B2B (business to business) segment with the personalization of gifts, which included T-shirts, mugs and caps to name a few. However, in 2010, the company shifted its strategy to becoming a B2C (business to customer) oriented firm, expanding its catalogue to fashion and lifestyle products. From 2007 to December 2010, was in the business of online demand personalization. The products ranged from T-shirts, mugs, greeting cards, calendars, key chains, diaries, wine glasses, coasters and many such products with photographs, one-liners and slogans. In three years, Myntra became one of the India’s largest on-demand personalization platform for products and gifts [7] with over a 50% market share Myntra offered personalized jerseys of several cricket and football teams such as Team India, IPL teams, national football teams, andPremier League football teams. [edit]New
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business focus and products

Myntra has tied up with top fashion and lifestyle brands in India, such as Nike, Inc., Reebok, Puma, Adidas, Asics, Lee, Lotto, Decathlon, FIFA, John Miller, Indigo Nation etc. to offer a wide range of current season merchandise from [9] these brands Myntra currently offers products from more than 350 Indian and international brands. These include shoes for running, tennis, football, basketball and fitness, along with casual footwear from world-renowned industry leaders like Nike, Puma, Converse, Adidas, Decathlon, Reebok, Lee Cooper, Numero Uno, Skechers, Crocks, Asics, Fila, Lotto, ID and many more. There are also casual and dressy footwear for women from Catwalk, Carlton London and Red Tape to name a few. Myntra also stocks T-shirts for men and women from popular brands like Jealous 21, Forever New, Classic Polo, Inkfruit, Lee, Nike, Inc., Probase, Puma, Adidas, Reebok, Ed Hardy, Decathlon, Lotto, Ediots, Mr. Men, Tantra and [11] [12] [13] Guerilla. The website has also launched Being Human and Fastrack watches. In July 31, 2012 Bollywood [14] actor Kalki Koechlin launches Myntra’s ‘Star N Style’ feature. [edit]Business

model is an aggregator of many brands. Its business model is based on procuring current season merchandise from various brands and making them available on the portal at the same time as in respective retail brand outlets. All [15] these products are offered to customers on MRP. In October 2007, Myntra received a seed funding from Accel Partners (formerly Erasmic Venture Fund), Sasha Mirchandani from Mumbai Angels and another angel investor. In November 2008, Myntra raised with it’s A funding of [16] $5 million from NEA-IndoUS Ventures, IDG Ventures and Accel Partners. In the second round of funding led by Tiger Global and participated by existing investors IDG Ventures and Indo-US Venture Partners, Myntra raised $14 million. Towards the end of 2011, raised $20 million in its third round of funding led by Tiger Global.

Myntra launched a brand campaign with its first TVC in July 2011. The commercial 'juxtaposes new-age fashion with [18] [19] [20] [21] old-world grit' and positions Myntra as a 'fashionable new age' brand. Myntra's second campaign, with the tagline "Ramp It Up", was launched in October 2011 with a TVC. The new ad scored high on fashion quotient and the core message was to communicate the launch of the Autumn Winter 2011 [22] collection on In February 2012, Myntra also rolled out an OOH (out of home) campaign across Tier 2 cities, to to build brand [23] awareness and promote online shopping. In June 2012, Myntra launched its third campaign. Created by Taproot, the communication emphasises the benefits of buying online, and is titled 'Real life mein aisa hota hai kya'.in which they offer free shipping,cash on delivery,30 [24] day return & 24 hours dispatch Myntra continued the 'Real life mein aisa hota hai kya' theme in its next campaign in October 2012 and extended it to [25] showcase its wide catalog and hassle-free Returns Policy. [edit]Awards was announced as a winner of the Red Herring Global 100 award. Red Herring announced its Global 100 awards in recognition of leading private companies from North America, Europe, and Asia, celebrating these [26] startups' innovations and technologies across their respective industries. CNBC - TV18 awarded as one of the Hottest Internet Companies of the Year at the Mercedes - Benz [27] CNBC - TV18 Young Turks Awards.
ABOUT MYNTRA is India’s largest online fashion and lifestyle store for men, women, and kids. Shop online from the latest collections of apparel, footwear and accessories, featuring the best brands. We are committed to delivering the best online shopping experience imaginable.
PAY SECURELY POWERED BY © MYNTRA.COM / ALL RIGHTS RESERVED is ranked among the leading e-commerce companies in India and is the largest online retailer of lifestyle and fashion products. The company was started by a group of IIT/IIM graduates in 2007 and is headquartered in Bangalore. Funded by top tier Venture Capital Funds, Myntra is among the best funded e-commerce companies in the country today.

Myntra, which started as an online destination for personalized products back in 2007, has expanded into broader lifestyle and fashion retailing. Today, Myntra is the largest online lifestyle retailer with over 200 national and international brands under its banner.

Myntra has brought in a new level of professionalism and technology enablement to the e-commerce space in India. For consumers, this translates to superior experience, broader product selection and unmatched efficiency, thus adding to a better purchasing decision.

The company's unique offerings include the largest in-season product catalogue, 100% authentic products, cash on delivery, and 30 day return policy, making Myntra the preferred online shopping destination in the country. Our Awards

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CNBC - TV18 Young Turks Award as one of the "Hottest Internet Companies of the Year 2011-12" "Pride of India 2011-2012" for Most Successful Fundraising by IDG Ventures "Pride of India 2009-2010" award for Exceptional Business Growth by IDG Ventures Red Herring Global 100 winner 2010 Our Team At the helm of Myntra's success is a management team of experienced and high caliber senior management professionals from globally recognized organizations such as Microsoft, Google, Intel, Trilogy and SAP, to name a few. The company has an employee base of over 400+ employees from a mix of corporate, business and premier academic institutions like IIMs and IITs who love to have fun and balance work at the same timWHY

MYNTRA is ranked among the top 10 e-commerce companies in India and is scaling rapidly. Myntra was started by a group of IIT/IIM graduates in early 2007 and is headquartered in Bangalore with regional offices in New Delhi, Mumbai and Chennai. The company is funded by top tier Venture Capital Funds and is now among the best funded e-commerce companies in the country.

In addition to accelerated growth opportunities, we foster openness, trust and respect in the workplace. We're a warm and fun-filled place to work; we're passionate about sport and music, debate and design and about getting things right. And while we are small, we are growing rapidly and our growth philosophy is to hire and retain the best. To this end, we offer all employees a culture of fun and learning, and a very competitive package of pay and benefits. Some highlights of our offer are as follows:

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One of the best paying start-ups in the country All Myntra employees are eligible to stock options to ensure they receive a meaningful stake in the company 11 paid holidays in a year for employees to celebrate national events and festivals with their families, along with 24 days of paid annual leave to help maintain work-life balance. Additional leave types that include paid paternity leave of up to 10 business days per annum and an option to work-from-home for women for a defined period at the birth of a child, in addition to standard maternity leave and benefits Every employee is assigned two days of professional development opportunities per year in the form of trainings, certifications, seminar and conference participation opportunities etc. Myntra provides medical insurance to all its employees. 100% of the premium for this is paid by Myntra. This provides reimbursement per annum of up to Rs. 2 Lakhs per family including parents/in-laws. All employees are eligible for Group Personal Accident insurance. Due to bodily injury or death as a result of an accident, GPA insurance provides benefit of upto Rs. 10 Lakhs per defined payment schedule. Myntra pays 100% of the premium. We foster a culture of fun and transparency with events such as our Monthly All Hands Meets, Sports @ Myntra initiative, Founding Day Annual Celebration for employees and their families and lots more. We encourage the generation of smart ideas by our employees from across teams and levels - the best idea of the month receives an I pad!

We are looking for dynamic professionals who want to ride the steep learning curve to accelerated responsibility and success, while enjoying the journey and making it a fun experience for those they work with. If you are excited by what you've read above about us, and if you are an achiever with passion, energy, integrity and a mission to excel, this is the place for you. JOIN US!

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Roles & Responsibilities: Sourcing, negotiating and buying branded apparel for sale at the portal Managing relationships with multiple t-shirt brands Managing roll-out of new products on the website Tracking sales targets, inventory, margins etc on a regular basis Analysing performance of t-shirt styles/designs Market research and store visits to identify popular brands/ design themes Creating product catalogue for distribution across retail and POS partners Planning and executing category promotions Requirements: Graduate/PG with prior experience in managing some apparel category Experience: 3-6 Years Excellent relationship management skills Aggressive and willing to work in a startup Should be able handle target based goals Strong analytical skills Strong communication skills

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Roles & Responsibilities: Develop/proof read/edit Myntra website content keeping SEO as key focus and clear understanding of target audience with right tone of voice. Develop highly effective, original and targeted marketing copy for the promotion and sale of Myntra products online. Work with various departments of Myntra to generate collaterals for promotions, direct marketing (email, newsletter), advertisements as well as website content updates. Experience & Skills Required over the English language. Expert writing skills, editing and proof reading abilities. Ability to write terse, attention grabbing and professional copy that puts the message across. Creative bend of mind with strong visualization and idea generation skills.

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Exposure to writing print promotional materials, online web content, press releases, copy to assist advertising and marketing efforts, etc. Ability deliver within tight deadlines Requirements: 2-4 years of copywriting experience within Internet Marketing and SEO realm for a major brand. Experience: 3-6 Years Excellent relationship management skills Aggressive and willing to work in a startup



CALL US AT +91-80-43541999

RETURNS PROCESSING FACILITY ATTN: The Logistics Manager The Returns Desk Vector E-Commerce Pvt Ltd. 7th Mile, Krishna Reddy Industrial Area, Kudlu Gate Opp Macaulay High School, behind Andhra Bank ATM Bangalore - 560068 Phone: 080-49023100

BANGALORE OFFICE 3rd Floor, AKR Tech Park 7th Mile, Krishna Reddy Industrial Area Kudlu Gate Bangalore - 560068 Phone: 080-43540100 Download Route Map


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We have the largest collection of the latest fashion and lifestyle products in India!

All our products are brand new and 100% original.


" I am addicted to Myntra. I enjoy looking at the products and you give amazing Mynt credits which makes me buy more and more. Thank you for all the offers! "- Chaitra, Bangalore



JEWELLERY, NIKE SHOES, MYNTRA COUPONS, T-SHIRTS, SHOES SPORTS SHOES, FREECULTR, ADIDAS SHOES, BACKPACKS, FASTRACK WATCHES, KURTAS, BAGS, FLIP FLOPS, RAKHI GIFTS FOR SISTER, WILDCRAFT, FORMAL WEAR, SANDALS, DRESSES, RAKHI GIFTS FOR BROTHER, WOMEN LINGERIE, WATCHES, CAPS, PERFUMES, FILA SHOES, JEANS, WOMEN CLOTHING, FRENCH CONNECTION, CONVERSE SHOES, PUMA SHOES, HANDBAGS, LEVIS, INNER WEAR, UCB, JACKETS, SHIRTS ABOUT MYNTRA is India’s largest online fashion and lifestyle store for men, women, and kids. Shop online from the latest collections of apparel, footwear and accessories, featuring the best brands. We are committed to delivering the best online shopping experience imaginable.

t‟s the weekend and you‟re strolling past shiny display windows showcasing the latest Fall collection. Shopaholics with busy workdays will probably be wondering why the newest styles and fanciest brands aren‟t just a click away… Actually, they are. This month, we added new brands to our impressive repertoire – clothes from Chemistry and Mustard and lingerie from Cake and Garfield. After clothes, can jewellery be far behind? Bluestone Jewellery, with its modernistic take on religious jewellery, is now available on Myntra! Also, right in time for winter, we have a selection of stylish jackets, sweaters and sweatshirts from Duke and printed tee essentials from Republic of Spiel for men. We at Myntra, continue to raise the fashion quotient this Fall…

A Fabulous Workplace

Oct 17, 2012By Manu Prasadin CULTURE, MEDIA COVERAGE1 COMMENTTags: MYNTRA,OFFICE,WORKPLACE,YOURSTORY Our vibrant and casual work culture has always caught the eye of those who visit our office. The informal

environment, fashion forward interiors and no-cubicle policy often takes people by surprise. – a news service which concentrates on startups and entrepreneurs, visited Myntra a month ago and took a tour of our office. The result – we‟re the first to be featured in their Fabulous Workplace series! Take a look at the video below and read their post here. So, how does it feel to be eye candy?

We make fashion accessible „anytime, anywhere‟!!
Life Mein Aisa Hota Hai Kya” series.


Finally after hours of brainstorming sessions, the fruit of our labor is here.. Myntra‟s latest TVCs in the “Real

While in the previous campaign we focused on demystifying myths about online shopping by communicating the key benefits of shopping with Myntra, the 2 new TVCs have a clear objective of showcasing the wide range of products and convenience of shopping on Myntra. The TVCs also highlight the fact that shoppers have access to over 500 brands „anytime, anywhere‟ and easy product return with the tag line „goods once sold can always be returned‟. The TVCs were conceptualized by Mumbai based advertising agency, Taproot. The film was directed by Prashant Issar and produced by Radhika Sawhney from Tubelight films. Agnello Dias, Chief Creative Officer of Taproot India quotes “This is a further extension of the original campaign thought – „Real Life mein aisa hot hai kya?‟ which had worked very well for the brand the first time round. Myntra does indeed have a wide range of fashion brands parading on the site at any given point in time and we thought it would be interesting to dramatize that fact by exaggerating the grand parade of fashion apparel through a catwalk in a place and at a time when one least expects it. Similarly, the second TVC emphasizes on a core offering of Myntra – hassle free return and exchange”

12 New Reasons to Shop – Myntra‟s August Brand Launches

Oct 3, 2012By Nitya Andrewin NEW BRANDS0 COMMENTSTags: AVIRATE. HAVAIANAS, GAS,NEW BRANDS LAUNCHES Just when you thought you could curb your shopping addiction, we have you rethinking the timing of your

resolution. A slew of new brands have been launched in Myntra this August, including famous brands like GAS, Aviraté and Freecultr. There‟s also Ambica Fashions for those who love all things ethnic. The beauty category has an impressive line up with Lotus, Ponds, L‟oreal, Lakmé, Olay and Nivea. In the footwear section, we have Havaianas to update your flip flop collection.

It‟s true when they say resolutions are meant to be broken!

If you‟re happy and you know it, come and shop! – Myntra Happy Hour
busiest shopping day, some reports suggest it‟s been the busiest over a much longer period of time.

Sep 26, 2012By Naresh Krishnaswamyin CULTURE,MARKETING0 COMMENTS

Black Friday – the day following Thanksgiving in the US. Retailers around the country offer big promotions and sales on this day and give their employees a day off to enjoy their shopping. Since 2005, this day has been the Cyber Monday – The e-commerce equivalent of Black Friday, on the immediately following Monday. In 2010, Cyber Monday say online spending of over $1 billion in 1 day! Picking up on these interesting innovations from the US, we here at Myntra decided to open up a „Happy Hour‟ for all our employees giving them a 25% discount on anything they shopped in those 60 minutes. What transpired from this was something truly spectacular! In all 291 Myntrans participated in the Happy Hour and we booked a total purchase value of, wait for it……… Rs 11 Lakhs! In total over 1800 productswere bought and the highest buyer spent over Rs 40,000. All this in one single hour. Everyone who had been neglecting their spouse/girlfriends/parents/friends decided this was the day to set things right and buy them gifts. We knew it would be crazy, but not this crazy! The inspiration for this idea came from our HR head Pooja. Wonder if even she expected such a response. A lot of effort went behind this initiative. Our back-end engineering team came up with a beautiful dashboard to show live updates of what people were buying and how much they were spending. The front-end guys came up with the coupon for the employees to use and the marketing guys did what they do best, make noise!

Besides the benevolence and the energy, there were more objectives to this exercise. Our warehouse and logistics department managed to deliver over 90% of the products the very next day! Two delivery boys spent the entire day at the office delivering the products to each of the buyers. All the packages outside the front door was a sight to behold. More importantly, the feedback we received from the employees on the service quality and where we can improve was invaluable. Needless to say, a recurring theme of the feedback was that we should have the Happy Hour more often. An integral part of the experience was the competition. A natural consequence of competition is scamming and collusion. Many people placed joint orders to get on top of the leader-board. The Top shopper however was a Man on a mission. No one was stopping him on that day! Prizes were given away for the Top Male and Female

shoppers, the first employee to shop for over Rs 5,000 and for the „Most Stylish Purchase‟. Without a doubt the most fun hour in recent times at Myntra!

What do they know of cricket who only cricket know?


This past month saw more than a 100 Myntrans enthusiastically participating in the inaugural Myntra Premier League that unraveled itself over 15 exciting matches. The League produced gripping theater- there were tight matches, close finishes and brilliant performances with the different departments here at Myntra religiously following and whole heartedly backing their respective teams to win MPL 2012. It also saw the making of some long term cricketing rivalries. Although the standard of cricket in the MPL might not have been in the same ballpark as its slightly better known namesake, it was no less real for those who played in it. Cricket is a fickle mistress – it might reward the slick fly-by-night operator whilst contemptuously turning down the earnest offerings of a life long lover. But are these emotional vicissitudes restricted to just the die hard followers of the game? Do they have any significance beyond the cricket boundary? This brings us back to the heading of the article – the iconic phrase coined by C.L.R James: What do they know of cricket who only cricket know? In one succinct sentence, James brought out the quintessential nature of cricket that makes it transcend the boundaries of a simple sport. To begin to understand cricket, a mastery of the intricacies of the game might well be a good starting point; but it is definitely not a sport that can be followed in isolation. Cricket is so intimately woven into the fabric of the context it is played in that to truly appreciate it, one must also comprehend the life and times that forms its background. When he penned these words, James was referring to the West Indies cricket team who forged an identity for the whole Caribbean by playing the game invented by their erstwhile rulers, but in their own inimitable style, to become world champions. I believe it‟s equally applicable to us here at Myntra. The tournament has come and gone, but to the avid follower, it gave a glimpse of Myntra itself. I believe the spirit in which it was played, the bonds that coalesced, the support from the entire organization, the pride and belonging that everyone felt to his/her team, and to Myntra, will be its lasting legacy. There‟s a spark in the air now, other clubs are gaining impetus, people are conversing and forming ideas over what they can do with fellow Myntrans outside of work. They say that sport is stark and simple, that it is black and white while life has shades of grey, that in sport there‟s always a winner and a loser. Strangely in cricket, that is not always so; and quite aptly for after MPL 2012, it is obvious to those who truly followed the game – there‟s really no one who lost, only a winner and that‟s Myntra…

Bollywood Style!


I‟m still unsure whether that red and yellow Govinda-style ensemble I wore to a high school party back in the 90s was actually the embarrassment it was made out to be. In fact, I now think that it was color blocking done way ahead of its time. But the point is that celebrities, especially film stars, have always wielded a tremendous amount of influence on our style. Some of us are more judicious about the celebrities we emulate, but let‟s not bring that up. This more-than-a-passing-interest in celebrity style is probably what made theStar „N‟ Style property we launched last month an instant hit within the office and among our consumers.

The idea was to get a peek into a star‟s own sense of style, his/her inspirations, and most importantly, get style tips that we could use in our day-to-day life. Our inaugural star was none other than Kalki Koechlin, who we „unveiled‟ at a launch event in Delhi attended by several members of the press and quite a few Delhi bloggers as well. (details and photos) Later, she not only picked her favouritesfrom our catalog, but also posed for a few „looks„, and gave us a few Autumn-Winter style tips as well. But the biggest treat of all was her visit to our office! Take a look at the photoshere and you would realise that everyone present had an absolutely awesome time! She spoke of her fashion favourites, had a good laugh over the video we had made for her, answered questions with refreshing chutzpah and generally made it an evening to remember.

And this is only the beginning. Star „N‟ Style is all set for another celebrity very soon, and is a property that I hope will feature the brightest stars around. But Govinda, I am told, is unlikely. Oh well.

Myntra Big Idea Contest – Got an Idea, Sirjee?

Sep 14, 2012By Naresh Krishnaswamyin CULTURE, IDEAS0 COMMENTSTags: BIG IDEA

How do we come up with new cutting-edge ideas? Simple, we send out a mail asking for Ideas, offer an iPad for the best Idea and VOILA, we have a steady pipeline of great ideas to choose from. Here at Myntra, we pride ourselves in the effective use of „Crowd-Sourcing‟. E-commerce is a nascent industry and we truly believe that there are tons of great ideas out there worth exploring. And who better to come up with these ideas, than our employees themselves! Another great outcome of this initiative has been employee engagement. This has encouraged employees to think outside their own department and put themselves in our customer‟s shoes. Even if we don‟t always receive path-breaking ideas every month, the very fact that employees are pushing themselves to think outside the box (albeit for an iPad) is a big win for us. So, next time you see something on our website or in our marketing campaigns that you find really cool, one happy iPad toting Myntra employee was probably behind it!

The Hack Night Rises!


A few of us wanted to put our core value of “Work Hard. Play Harder” into practice and a bunch of ideas came forth on how to do that. Most of us agreed on a gaming night, but then a few responsible souls suggested an alternative way of having fun. What started out as a plan to game all night, manifested into a night of intense coding, problem solving and still, lots of fun! The event gave engineers the opportunity to create products they believed in. And create they did. As many as 19 prototypes were built out of which 3 of them are live products across the supply chain and the website! The Myntra Hackathon had arrived!! It was a crazy, fun filled night, interspersed with AOE games, light hearted humour, cheering when products went live and a lot of learning from each other! What went in : 1. A bunch of excited coders with a list of awesome ideas to work on

and, 2. A few cheerleaders, chips, pizza, music and lots of Red Bull ! Quite a few prototypes went live – live information feeds, advanced delivery tracking mechanisms, social features, and so on. What did we get out of it apart from all the cool products we built, you ask?! Well just to mention a few : 1. It gave that push which was required to get a few shy ones to experiment

2. Even those who did not code came up with something!

We also got to know that : 1. 4 cans of Red Bull, ingested at equal intervals of time, keep you awake for 12 hours! 2. Age of Empires allows you to take the frustration off anything. Nothing like killing a few of the enemies‟ villagers! 3. Work can definitely be fun! The Demos that followed the next week, allowed the hackers to present their hacks to the audience and gather the support of the respective Product Manager and business stake holder to take their creation live! It was filled with energy and some of the hacks threw up information that made a lot of heads turn! It was all about having fun and we can hardly wait for the next instalment!

Colour Crush @ Myntra


When the red alert sounded on the fashion runways, Myntra was there to give you the lowdown on how to wear the red trend. Since we practice what we preach, we immediately had a Colour Crush themed Friday as a part of our “Wear the Trend” initiative. We know everyone loves a fun Friday but boy, were we surprised when we saw the number of employees riding the crimson tide with their themed outfits! Ranging from rich maroons to flirty cerise, we absolutely loved the different ways in which the colour was worn – with ballet flats, dotted scarves and tried-and-tested denims. To sweeten the pot, one person from every department was shortlisted for the top spot, with a chance to win a bag from Myntra. And the winner was… Ashish Arora, a Stylist from the Catalog Department! Sporting boat shoes and red pants, balanced with a neutral shirt – we approve of his unapologetically bold style.

A sneak-peek of other enthusiastic participants in red:

Well-red, aren‟t we?



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Culture (6) Sports (1) Engineering (1) Fashion (4) New Brands (2) Ideas (2) Marketing (3) Media Coverage (1) RECENTLY @ MYNTRA Fall Fanfare – Myntra‟s September Brand Launches A Fabulous Workplace We make fashion accessible „anytime, anywhere‟!! 12 New Reasons to Shop – Myntra‟s August Brand Launches

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If you‟re happy and you know it, come and shop! – Myntra Happy Hour HISTORY @ MYNTRA October 2012 (4) September 2012 (7) 140 @ MYNTRA
myntra Take a lesson in style from the birthday girl, Julia Roberts! :)3 hours
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myntra The Myntra Fashion Daily is out! ▸ Top stories today via@colorificindia @GraziaIndia @tweetSpoo4 hours ago · reply · retweet · favorite myntra @sandilyachelsea Great to know that :)6 hours ago · reply · retweet · favorite myntra @akshovshrestha1 Hey, so happy to know that you like it. Thank you :)6 hours ago · reply · retweet · favorite Join the conversation

© @Myntra 2012 Powered by WordPress • Themify WordPress ThemesFinancial statement analysis (or financial analysis) the process of

understanding the risk and profitability of a firm (business, sub-business or project) through analysis of reported financial information, particularly annual and quarterly reports. Financial statement analysis consists of 1) reformulating reported financial statements, 2) analysis and adjustments of measurement errors, and 3) financial ratio analysis on the basis of reformulated and adjusted financial statements. The two first steps are often dropped in practice, meaning that financial ratios are just calculated on the basis of the reported numbers, perhaps with some adjustments. Financial statement analysis is the foundation for evaluating and pricing credit risk and for doing fundamental company valuation. 1) Financial statement analysis typically starts with reformulating the reported financial information. In relation to the income statement, one common reformulation is to divide reported items into recurring or normal items and nonrecurring or special items. In this way, earnings could be separated in to normal or core earnings and transitory earnings. The idea is that normal earnings are more permanent and hence more relevant for prediction and valuation. Normal earnings are also separated into net operational profit after taxes (NOPAT) and net financial costs. The balance sheet is grouped, for example, in net operating assets (NOA), net financial debt and equity. 2) Analysis and adjustment of measurement errors question the quality of the reported accounting numbers. The reported numbers can for example be a bad or noisy representation of invested capital, for example in terms of NOA,

which means that the return on net operating assets (RNOA) will be a noisy measure of the underlying profitability (the internal rate of return, IRR). Expensing of R&D is an example when such investment expenditures are expected to yield future economic benefits, suggesting that R&D creates assets which should have been capitalized in the balance sheet. An example of an adjustment for measurement errors is when the analyst removes the R&D expenses from the income statement and put them in the balance sheet. The R&D expenditures are then replaced by amortization of the R&D capital in the balance sheet. Another example is to adjust the reported numbers when the analyst suspects earnings management. 3) Financial ratio analysis should be based on regrouped and adjusted financial statements. Two types of ratio analysis are performed: 3.1) Analysis of risk and 3.2) analysis of profitability: 3.1) Analysis of risk typically aims at detecting the underlying credit risk of the firm. Risk analysis consists of liquidity and solvency analysis. Liquidity analysis aims at analyzing whether the firm has enough liquidity to meet its obligations when they should be paid. A usual technique to analyze illiquidity risk is to focus on ratios such as the current ratio and interest coverage. Cash flow analysis is also useful. Solvency analysis aims at analyzing whether the firm is financed so that it is able to recover from a losses or a period of losses. A usual technique to analyze insolvency risk is to focus on ratios such as the equity in percentage of total capital and other ratios of capital structure. Based on the risk analysis the analyzed firm could be rated, i.e. given a grade on the riskiness, a process called synthetic rating. Ratios of risk such as the current ratio, the interest coverage and the equity percentage have no theoretical benchmarks. It is therefore common to compare them with the industry average over time. If a firm has a higher equity ratio than the industry, this is considered less risky than if it is above the average. Similarly, if the equity ratio increases over time, it is a good sign in relation to insolvency risk. 3.2) Analysis of profitability refers to the analysis of return on capital, for example return on equity, ROE, defined as earnings divided by average equity. Return on equity, ROE, could be decomposed: ROE = RNOA + (RNOA - NFIR) * NFD/E, where RNOA is return on net operating assets, NFIR is the net financial interest rate, NFD is net financial debt and E is equity. In this way, the sources of ROE could be clarified. Unlike other ratios, return on capital has a theoretical benchmark, the cost of capital - also called the required return on capital. For example, the return on equity, ROE, could be compared with the required return on equity, kE, as estimated, for example, by thecapital asset pricing model. If ROE < kE (or RNOA > WACC, where WACC is the weighted average cost of capital), then the firm is economically profitable at any given time over the period of ratio analysis. The firm creates values for its owners. Insights from financial statement analysis could be used to make forecasts and to evaluate credit risk and value the firm's equity. For example, if financial statement analysis detects increasing superior performance ROE - kE > 0 over the period of financial statement analysis, then this trend could be extrapolated into the future. But as economic theory suggests, sooner or later the competitive forces will work - and ROE will be driven toward kE. Only if the firm has a sustainable competitive advantage, ROE - kE > 0 in "steady state".