our operational expenses as a percentage of sales to be higher for new stores than for mature stores. However, in absolute terms,
our older stores tend to have higher operational costs as these costs also include repairs which are not capitalized. In addition,
we carry out periodic renovations of our stores, which we believe are important in maintaining and enhancing the image of our
stores and in attracting customers. During renovations, we will incur expenses and experience temporary disruptions to our
normal operations which may affect our revenues.

Our operational expenses and costs also include expenses and costs incurred by our supply chain and distribution infrastructure,
which includes, among other things, (i) cost of human resource, utilities and maintenance for our warehouses, (ii) costs and
expenses relating to our fleet of vehicles and delivery personnel to facilitate the transportation of inventory between our
warehouses and stores, and costs and expenses relating to our technology infrastructure.

Our gross margins and, in turn, profitability, are directly correlated with our ability to manage our operational expenses and
costs. We expect that our planned expansion of our store network and increasing scale of our business would allow us to
continue to leverage our supply chain and distribution infrastructure, and increase our cost efficiency by benefitting from
economies of scale, see “Our Business - Our Competitive Strengths — Lean Cost Structure and Technology Driven Operations”
on page 152. Further, we also plan to achieve further consolidation of direct sourcing, which we expect would yield additional
turnover/trade discounts and campaign benefits, and a stronger negotiating position with suppliers. We expect such efforts to
continue to improve our gross margins for our sales of branded pharmaceutical products. Additionally, we expect sales of our
higher gross margin yielding private label product portfolio to continue to grow through our leveraging of (i) in-store promotions
and merchandising, (ii) stringent quality control and checks, (iii) incentives to our store employees, and (iv) training of our
employees at stores with lower private label product mix, which we expect would drive growth in our gross margins.

Competition

The Indian pharmacy retail industry is competitive and may become more competitive in the future, see “Risk Factors — Internal
Risks — Risks Relating to Our Business — We are in an industry that is highly competitive, and any inability to compete
successfully against current and future competitors may adversely affect our business, financial condition and results of
operation.” on page 44. Pharmacy retail businesses typically compete with other drugstore chains, online retailers, independent
pharmacies, pharmacies attached to hospitals and medical groups. Our primary key competitors are Apollo Pharmacy, Wellness
Forever, PharmEasy, Tata Img and NetMeds.

We operate in a rapidly consolidating industry, and our potential new or existing competitors may be able to provide a wider
product offering at more competitive prices, or respond more quickly and effectively to new or changing opportunities,
technologies, regulations or customer requirements. Increased competition may lead to a fall in prices and a consequent fall in
our margins. A number of our competitors have an established presence in the markets in which we operate and they may
continue to open additional stores in the same cities where we have opened or intend to open our stores in the future. This may
require us to change our strategy, delay expansion plans or be more selective in opening of new stores. For example, we
introduced slab-based discounting to counter the 20-25% discount given by e-pharmacy retailers. This enabled us to increase
the number of “large ticket” purchases (average order value of more than 1,000) from 47% (share in total MRP for the year)
in the financial year 2019 to 60.00% in the financial year 2020, which, in turn, resulted in an increase in revenue growth for the
financial year 2020.

Significant Accounting Policies for Our Restated Financial Information

The notes to our Restated Financial Information included in this Prospectus contain a summary of our significant accounting
policies. Set forth below is a summary of our most significant critical accounting policies under Ind AS.

Basis of Preparation

Our Restated Financial Information has been prepared specifically in connection with the Offer. The Restated Financial
Information has been prepared in accordance with Ind AS and other relevant provisions of the Companies Act. In preparing our
Restated Financial Information, our management has made judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized prospectively.

Basis of Consolidation

Our Company consolidates all entities which it controls. Control is established when our Company is exposed to, or has rights
to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity.
In assessing control, potential voting rights are considered only if the rights are substantive. The financial statements of our
subsidiaries are included in our Restated Financial Information from the date that control commences until the date that control
ceases. For the purpose of preparing the Restated Financial Information, the accounting policies of our subsidiaries have been
changed where necessary to align them with the policies adopted by our Company.

Revenue

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