REGULATIONS AND POLICIES

Shops and commercial establishment laws

Under various Central and State laws dealing with shops and establishments, any shop
or commercial establishment has to obtain a certificate of registration from the
supervising inspector and also has to comply with certain rules laid down in the act
governing that particular State. These rules and regulations regulate the opening and
closing hours of shops and commercial establishments, daily and weekly work hours,
closing dates and holidays, health and safety of persons working in shops and
commercial establishments, payment of wages and maintenance of records and
registers by the employers, among others. Our Company currently has 34 Department
Stores (including HomeStop) situated in various cities in India and therefore are
regulated by legislation enacted by various State Governments. Pursuant to the
applicable laws in force in various states in India in which our Department Stores are
situated each of our Department Stores require material registrations / licenses/
consents / permissions under the statutes listed out below. The statutes/ legislation list
set out below is by way of illustration and is not exhaustive.
 The Bombay Shops and Establishment Act, 1948
 The Karnataka Shops and Commercial Establishments Act, 1961
 The A.P. Shops and Establishment Act, 1988
 The Andhra Pradesh Factories and Establishments (National, Festival and
other Holidays) Act, 1974
 The Rajasthan Shops and Commercial Establishments Act, 1958
 The Delhi Shops and Establishment Act, 1954
 The Tamil Nadu Shops and Establishment Act, 1947
 The Punjab Shops and Commercial Establishments Act, 1958
 The West Bengal Shops and Establishment Act, 1963
 The Mumbai Municipal Corporation Act, 1888
 The Karnataka Municipal Corporation Act, 1976
 The H.M.C Act, 1955
 The New Delhi Municipal Council Act, 1994
 The Chennai City Corporation Licensing of Hoardings and Levy and Collection
of Advertisement Tax
 Rules, 2003
 The Tamil Nadu Fire Services Act, 1985
 The Tamil Nadu Industrial Establishments (National and Festival Holidays) Act,
1958; and
 The KMC Act 1980

*Copyright Act, 1957

Our stores also require a license for live musical performances and for playing music in
the stores under the provisions of the Copyright Act, 1957 (“Copyright Act”). The
Copyright Act covers registration of copyrights of original literary, dramatic, musical
and artistic works, cinematographic films and sound recordings. A copyright
board has been constituted under the Copyright Act, which ordinarily hears all
proceedings instituted before it under the Copyright Act. Licensing and assignment of
copyright is permitted in accordance with the provisions of the Copyright Act.
Infringement of copyright may amount to either a civil or criminal offence, depending
on the circumstances in which the offence was committed.

*Trademarks
Our brand names are also required to be registered under the Trademarks Act 1999
(“Trademark Act”). The Trademark Act governs the statutory protection of trademarks
in India. In India, trademarks enjoy protection under both statutory and common law.
Indian trademark law permits the registration of trademarks for goods and services.
Certification marks and collective marks can also be registered under the Trademark
Act. An application for trademark registration may be made by individual or joint
applicants and can be made on the basis of either use or intention to use a trademark in
the future. Applications for a trademark registration may be made for in one or more
119 international classes. Once granted, trademark registration is valid for ten years
unless cancelled. If not renewed after ten years, the mark lapses and the registration
would then have to be restored.

*Policy on Foreign Trade: (Export Promotion of Capital Goods):

The basic objective of the scheme is to promote and develop Indian exports. The Zero
duty EPCG scheme allows import of capital goods for pre-production, production and
post-production at zero Customs duty, subject to an export obligation equivalent to 6
times the duty saved on capital goods imported under EPCG scheme, to be fulfilled
in 6 years reckoned from Authorization issue date. Concessional 3% duty EPCG scheme
allows import of capital goods for pre-production, production and postproduction
at 3% Customs duty, subject to an export obligation equivalent to 8 times of duty saved
on capital goods imported under the EPCG scheme to be fulfilled in 8 years reckoned
from Authorization issue-date. The EPCG scheme covers manufacturer exporters with
or without supporting manufacturer(s)/vendor(s), merchant exporters tied to
supporting manufacturer(s) and service providers. EPCG scheme also covers a service
provider who is designated/ certified as a Common Service Provider (“CSP”) by
the Directorate General of Foreign Trade subject to provisions of Foreign Trade
Policy/Handbook of Procedures

*The Contract Labour (Regulation and Abolition) Act, 1970

The Contract Labour (Regulation and Abolition) Act, 1970 applies to those
establishments where 20 or more workmen are employed or were employed on any day
of the preceding 12 months as contract labourers; and to every contractor or sub-
contractor who employs or who employed 20 or more workmen on any day of the
preceding 12 months, provided they were not employed in certain “core” activities.
This legislation seeks to regulate the working conditions of contract labourers and to
abolish it in certain cases. This law provides that any employer seeking to employ
contract labourers must register his establishment with the appropriate authority of the
particular State.

*The Employee’s State Insurance Act, 1948

The Employee’s State Insurance Act, 1948 is applicable to all factories and other
businesses as the Central Government may determine, unless a specific exemption has
been granted. The employers in such factories and businesses are required to pay
contributions to the Employees State Insurance Corporation, in respect of each
120 employees at the rate prescribed by the Central Government. Companies which are
controlled by the Government are exempt from this requirement if the employees are
receiving benefits which are similar or superior to the benefits prescribed under the
Employee’s State Insurance Act, 1948.

*Employee’s Provident Funds and Miscellaneous Provisions Act, 1952

Under the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952,
compulsory provident fund, family pension fund and deposit linked insurance is
payable to employees in factories and other establishments for their benefit. The
legislation provides that an establishment employing more than 20 persons, either
directly or indirectly, in any capacity whatsoever, is either required to constitute its own
provident fund or subscribe to the statutory employee’s provident fund. The employer
of such establishment is required to make a monthly contribution to the provident fund
equivalent to the amount of the employee’s contribution to the provident fund, as
provided in such statute.

*The Minimum Wages Act, 1948 (the “Minimum Wages Act”)

The Minimum Wages Act was enacted to provide for minimum wages in certain
employments. Under this Act, the Central and the State Governments are the
authorities to stipulate the scheduled employment and to fix minimum wages. The Act
contains list of Agricultural and Non Agricultural employment where the prescribed
minimum rate of wages is to be paid to the workers. The minimum wages are
calculated and fixed based on the basic requirement of food, clothing, housing required
by an average Indian adult.

Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 and

Employment Exchanges (Compulsory Notification of Vacancies) Rules, 1960
The Employment Exchanges (Compulsory Notification of Vacancies) Act was enacted
to provide for compulsory notification of vacancies to the Employment Exchanges and
for the rendition of returns relating to Employment situation by the employers. All
Establishments in Public Sector and such establishments in private sector excluding
Agriculture, where ordinarily 25 or more persons are employed fall within the purview
of the Act. These establishments are required to notify all vacancies (other than those
exempted) to the appropriate Employment Exchange as notified in the official Gazette
by the State Government in the prescribed format.

The Equal Remuneration Act, 1976 (the “Equal Remuneration Act”) and Equal
Remuneration Rules, 1976
The Constitution of India provides for equal pay for equal work for both men and
women. To give effect to this provision, the Equal Remuneration Act was implemented.
The Equal Remuneration Act provides that no discrimination shall be shown on the
basis of sex for performing similar works and that equal remuneration shall be paid to
both men and women when the same work is being done.

The Maternity Benefit Act, 1961 (the “Maternity Act”)

The purpose of the Maternity Act is to regulate the employment of pregnant women
and to ensure that they get paid leave for a specified period during and after their
pregnancy. It provides for payment of maternity benefits and medical bonus, and
prohibits the dismissal of and the reduction of wages paid to pregnant women.

Service tax
The Central Sales Tax Act, 1956 Chapter V of the Finance Act, 1994 as amended,
provides for the levy of a service tax in respect of certain categories of services. Every
person who is liable to pay this service tax must register himself with the appropriate
authorities for the same.

Central excise
Excise duty imposes a liability on a manufacturer to pay excise duty on production or
manufacture of goods in India. The Central Excise Act, 1944 is the principal legislation
in this respect, and it provides for the levy and collection of excise and prescribes
procedures for clearances from factory once the goods have been manufactured.

Value added tax (“VAT”)

VAT is a system of multi-point levies on each of the purchases in the supply chain with
the facility of set-off input tax on sales whereby tax is paid at the stage of purchase of
goods by a trader and on purchase of raw materials by a manufacturer. VAT is based on
the value addition of goods, and the related VAT liability of the dealer is calculated by
deducting input tax credit for tax collected on the sales during a particular period.
VAT is a consumption tax applicable to all commercial activities involving the
production and distribution of goods and the provisions of services, and each State that
has introduced VAT has its own VAT Act under which persons liable to pay VAT must
register and obtain a registration number from the Excise Tax Officer of the respective
State.

Sales tax
The tax on sale of moveable goods within India is governed by the provisions of the
Central Sales Tax Act, 1956 or relevant State law depending upon the movement of
goods pursuant to the relevant sale. If the goods move interstate pursuant to a sale
arrangement, then the taxability of such sale is determined by the Central Sales Tax Act,
1956. On the other hand, the taxability of a sale of movable goods which does not
contemplate movement of goods outside the State where the sale is taking place is
determined as per the local sales tax/VAT legislation in place within such State.

Income tax
The Income Tax Act, 1961 (the “IT Act”) is the law relating to taxes on income in India.
The IT Act provides for the taxation of persons resident in India on global income and
persons not resident in India on income received, accruing or arising in India or
deemed to have been received, accrued or arising in India. In accordance with the IT
Act, any income earned by way of profits by a company incorporated in India is subject
to tax levied on it in accordance with the rates as declared as part of the annual Finance
Bill. Companies can also avail certain benefits under the IT Act, if eligible.

State laws governing entry tax

Entry Tax provides for the levy and collection of tax on the entry of goods into the local
areas of the State for consumption, use or sale therein and matters incidental thereto
and connected therewith. It is levied at such rate as may be specified by the State
Government and different rates may be specified for different goods. The tax leviable
under this Act shall be paid by every dealer in scheduled goods or any other person
who brings or causes to be brought into a local area such scheduled goods whether on
his own account or on account of his principal or customer or takes delivery or is
entitled to take delivery of such goods on such entry.