Future Enterprises DVR Directors Report.

DIRECTORS

To

The Members,

Your Directors are pleased to present the Twenty Sixth Annual Report together with the Audited Statements of Accounts for the period ended March 31, 2014.

FINANCIAL HIGHLIGHTS

The operating results of the Company for the period under review are as follows:

(Rs. in Crores)

January 01,2013 to March 31, 2014 July 01, 2011 to December 31, 2012
Sales (Net of Taxes) 11,336.16 6,771.78
Other Operating income 241.28 215.95
Other income 27.74 27.70
Total income 11,605.18 7,015.43
Profit before Depreciation, Exceptional items & Tax 374.95 343.59
Less: Depreciation 404.34 311.87
Profit before Tax (29.39) 31.72
Exceptional items 30.66 256.60
Less: Earlier Years income Tax - -
Less: Provision for Taxation (1.54) 15.06
Profit after Tax 2.81 273.26
Add: Profit brought forward from previous year 654.07 506.35
Surplus available for appropriation 656.89 779.61
appropriation
Excess Provision Reversal of Tax on Dividend - (0.85)
Pursuant to the composite schemes of arrangements 451.62 -
Debenture Redemption Reserve 120.00 69.38
Proposed Dividend 13.97 25.54
Proposed Dividend on Preference Share - -
Provision for Dividend Tax 2.37 4.14
Transfer to General Reserve 0.28 27.33

REVIEW OF PERFORMANCE

The performance review is for the financial period of fifteen months pursuant to extension of the present accounting period by three months. in the current financial period we mark beginning of a new innings and laying the foundation for the Companys future, as major realignment initiatives of the Company have been achieved. The Company has also changed its name to Future Retail Limited from its earlier name, viz. Pantaloon Retail (India) Limited. The Company is now operating in hypermarket and home business including Big Bazaar, Food Bazaar, fbb, Home Town and eZone.

We are pleased to inform you that the Retail business of the Company has been showing growth trend during the financial period under review. The Company is now present in hypermarket segment and home business and for the period under review recorded growth through increase in presence in various cities. income from operations for the financial period under review were at Rs. 11,577.44 crores which was at Rs. 6,987.73 crores during the financial period of 2011-12. PBDiT excluding exceptional items, stood at Rs. 1,067.49 crores in during the financial period of 2013-14, which was at Rs. 804.00 crores in the previous financial period. PAT for the financial period under review was Rs. 2.81 crores, which was at Rs. 273.26 crores for the preceding financial period. Due to various realignment exercises undertaken by the Company and different duration of the current and previous financial period, the current financial period result is not comparable with the previous financial period, which was of eighteen months.

During the financial period 2013-14, the Company is operating through 10.36 million square feet of retail space, spread over pan india basis.

SCHEME OF ARRANGEMENT:

As part of realignment exercise, the Company has given effect to three Schemes of Arrangement during the financial period under review, detail of which are given hereunder:

1. Scheme of Arrangement between the Company and Pantaloons Fashion and Retail Limited.

Pursuant to the approval of the members at the Court Convened Meeting held on December 06, 2012, the Company filed petition with the Honble High Court at Bombay for demerger of Pantaloons Format Business to Peter England Fashions and Retail Limited now known as Pantaloons Fashion and Retail Limited (PFRL). The demerged undertaking comprises of Companys business under the name "Pantaloons" together with all assets, liabilities, brands etc. attached to the said Brand.

Your directors are pleased to inform that the demerger of Pantaloon Format Business Scheme has been approved by the Honble High Court of Judicature at Bombay on March 1, 2013, and thereafter on filing of the certified copy of the court order with Registrar of Companies, Maharashtra, Mumbai, on April 8, 2013, the entire assets and liabilities pertaining to Pantaloons Format Business were transferred and stand vested, as a going concern, in the PFRL effective from July 1, 2012 ("Appointed Date").

Pursuant to the approved scheme, PFRL, without any further application or deed, issued and alloted shares, credited as fully paid up, to the extent indicated below, to the members (including Class B (Series 1) shareholder) whose name appeared in the Register of Members of Company as on the Record Date (April 18, 2013) or to their respective heirs, executors, administrators or other legal representatives or the successors-in-title, as the case may be, in the following manner:

"1 (One) fully paid Equity Share of Rs. 10/- (Rupees Ten Only) each of PFRL for every 5 (Five) Equity Shares of Rs. 2/- (Rupees Two) each held in the Company.

1 (One) fully paid Equity Share of Rs. 10 (Rupees Ten Only) each of PFRL for every 5 (Five) Class B (Series 1) shares of Rs. 2 (Rupees Two) each held in the Company."

Fractional entitlement arising out of the aforesaid allotment were consolidated and allotted to one of the persons nominated by PFRL Board. Sale Proceeds of these shares was distributed to shareholders who were entitled to such fractional shares. The shares of the PFRL were listed on the Stock Exchanges after compliance with the requirements of the stock exchanges and regulatory authorities.

2. Composite Scheme of Arrangement and Amalgamation between PRiL (FRL), FViL(FCEL), LEE, iLCL and FLFL

The Composite Scheme of Arrangement and Amalgamation between Pantaloon Retail (india) Limited (now known as -Future Retail Limited) and Future Lifestyle Fashions Limited (FLFL) and indus-League Clothing Limited and Lee Cooper (India) Limited and Future Ventures India Limited (now known as - Future Consumer Enterprise Limited) (FCEL) and their respective shareholders and creditors ("the Fashion Scheme") under the provisions of sections 391-394 of the Companies Act, 1956 for demerger of respective fashion format business of the Company (Fashion Format Business) and FCEL with effect from Appointed Date of January 1, 2013, as defined in the Fashion Scheme, has been given effect on May 29, 2013, after receipt of High Court approval. Pursuant to the same, all the assets and liabilities pertaining to the Fashion Format Business has been demerged and vested in FLFL. Accordingly, the shares of FLFL have been issued to the shareholders of the Company as on the June 25, 2013 as stated in the Fashion Scheme, as per entitlement ratio of 1 (One) fully paid Equity Share of Rs. 2/- (Rupees Two Only) each of FLFL for every 3 (Three) Equity Shares &/or Class B (Series 1) Share of Rs. 2/- (Rupees Two) each held in the Company.

Fractional entitlement arising out of the aforesaid allotment were consolidated and allotted to one of the persons nominated by FLFL Board. Sale Proceeds of these shares was distributed to shareholders who were entitled to such fractional shares. The shares of the FLFL were listed on the Stock Exchanges after compliance with the requirements of the stock exchanges and regulatory authorities.

3. Scheme of Amalgamation between the Company and Future Value Retail Limited

During the period under review, the Board of Directors of the Company approved the amalgamation of Future Value Retail Limited (FVRL) with the Company pursuant to the Scheme under Sections 391-394 of the Companies Act, 1956 with effect from Appointed Date of July 1, 2012 ("the Retail Scheme"). FVRL is wholly owned subsidiary of your Company having core retail business formats like Big Bazaar, Food Bazaar etc. The Retail Scheme for merger of FVRL with effect from July 1, 2012, has been approved by Honable High Court of Judicature at Bombay on January 31, 2013 and scheme has been made effective upon filing of the certified copy of court order with Registrar of Companies, Maharashtra on February 11, 2014. Pursuant to the Retail Scheme all the assets and liabilities of FVRL was merged and vested in the Company.

The Company issued debentures as stated in paragraphs given hereunder for the debentures held by investors in FVRL. No shares were issued as 100% of capital in FVRL is held by the Company.

4. Divestment of stake in Future Generali India Life Insurance Company Limited

On December 17, 2013, the Company divested part of its stake in one of its Insurance joint venture company, Future Generali India Life Insurance Company Limited as a part of Companys strategy to focus on retail segment. At the end of the financial period ended March 31, 2014, your Company directly holds 3% stake in Future Generali India Life Insurance Company Limited.

DIVIDEND

The Board of Directors of the Company has recommended a dividend of Rs. 0.60 (30%) per equity share (previous financial period Rs. 1.10 (55%) per equity share) and dividend of Rs. 0.64 (32%) per Class B share (Series 1) (previous financial period Rs. 1.14 (57%) per Class B Share (Series 1) for the financial period ended March 31, 2014. The said dividend shall be subject to the approval of the members at the ensuing annual general meeting.

The dividend, if approved by the shareholders in the Annual General meeting shall based on the paid up share capital as at the date of this report, entail a payout of Rs. 16.34 crores including dividend distribution tax of Rs. 2.37 crores. The dividend is free of tax in the hands of the shareholders.

EQUITY SHARE CAPITAL

Paid-up Share Capital

Equity Capital

After the completion of the financial period under review, pursuant to the approval of members through Postal Ballot and Employees exercise their options the Company issued and allotted 2,17,594 equity shares of Rs. 2/- each to Employees under ESOS 2012 Scheme on April 29, 2014.

After above allotments, the paid up equity share capital as on date Rs. 46,36,00,370 divided into 21,58,71,033 equity shares of Rs. 2/- each and 1,59,29,152 Class B (Series-1) Shares of Rs. 2/-each.

DEBENTURES

Pursuant to the scheme of Amalgamation and Arrangement of Future Value Retail Limited (FVRL), a wholly owned subsidiary company with the company under the provisions of section 391394 of the Companies Act, 1956 for merger of FVRL with effect from Appointed Date of July 1, 2012 after receipt of approval of Honable High Court of Judicature at Bombay on January 31, 2013 and scheme has been made effective upon filing of the certified copy of court order with Registrar of Companies,

Maharashtra on February 11, 2014. Pursuant to the same Compulsorily Convertible Debentures (CCDs) of Rs. 150 crores and Optionally Convertible Debentures (OCDs) of Rs. 250 crores issued by FVRL transferred to the Company.

During the period under review, the Company has raised long term funds through Non-Convertible Debentures aggregating Rs. 275 crores. The funds raised were utilised for the objects as stated at the time of raising of funds.

FIXED DEPOSITS

The Company has not accepted any Deposits during the period under review.

REPORT ON CORPORATE GOVERNANCE

A detailed report on Corporate Governance together with Auditors certificate as required under clause 49 of the listing agreement has been included as an enclosure to this Report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

The management discussion and analysis as required under clause 49 of the listing agreement has been dealt with extensively as part of this Annual Report.

THE FUTURE

The focus on strengthening core competency in core retail operations, by optimising store network, improving store productivity by increasing store efficiency through upgraded high margin product offering and rationalising the operating area.

Introduction of reinvented fbb product mix, ensured availability of the fashion products for the youth and other customer categories at highly competitive pricing. In food segment as well the new categories offered customers multiple choices resulting in better turnover. Similarly other categories such as furniture, home furnishing and electronics also offered revised product mix, giving choice of hot and current products to customers. The Company also introduced the certain customer centric initiative resulting in addition of the new customer categories.

Further various realignment and divestment initiative, ensured reduced debt burden on the Company resulting in overall reduction in finance cost. In addition to the above, certain strategic management changes made during the financial period under review would result in further cost reduction and thereby contributing to the profitability in the years to come.

SUBSIDIARY COMPANIES & JOINT VENTURES

SUBSIDIARY COMPANIES (In Alphabetical Order)

The Company has following subsidiaries (including step down subsidiaries) as at the end of financial period ended March 31, 2014.

FSC Brand Distribution Services Limited

FSC Brand Distribution Services Limited (FSCBDSL) was incorporated to deal in the business of distribution services. FSCBDSL is subsidiary of Future Supply Chain Solutions Limited, another subsidiary of the Company and accordingly is step down subsidiary of the Company. The Company has earned revenue of Rs. 5.69 Crores & incurred net loss for Rs. 4.29 Crores during the period ended March 31, 2014.

Future E-Commerce Infrastructure Limited

Future E-Commerce Infrastructure Limited (FECIL) is to capture the consumption space through the internet, as well as other technology based and digital modes and provide infrastructure services for the same. The Company has 70.43% stake in FECIL. The Company also has Convertible Preference Shares, which has not yet been converted into equity shares. During the period ended March 31, 2014, FECIL registered income from operations amounting to Rs. 61.88 Crores and the net loss stood at Rs. 21.20 Crores.

Future Freshfoods Limited

Future Freshfoods Limited (FFL) is a company which caters to the sourcing and supply of fresh food products to retail formats of the group. FVRL was holding company of FFL holding 79.17% of equity capital in FFL. The Company acquired the balance shares held by other shareholders in the Company and with merger of FVRL with the Company, FFL became 100% subsidiary of the Company. During the period ended March 31, 2014, FFL registered income from operations amounting to Rs. 0.05 Crores and net loss stood at Rs. 0.44 Crores.

Future Home Retail Limited

Future Home Retail Limited (FHRL) has been created as subsidiary with the objective to transfer the retail electronic and consumer durable business from PRIL. During the period ended March 31, 2014, FHRL registered total income of Rs. 0.01 Crore and net loss of Rs. 0.0007 Crore.

Futurebazaar India Limited

Futurebazaar India Limited (FBIL) is set up as the e-Retailing arm of the Future Group for providing on-line shopping experience through e-portal www.futurebazaar.com. Your Company holds 100% in FBIL. FBIL is successfully operating its e-retailing business and during the period ended March 31, 2014, it has registered income from operations amounting to Rs. 22.33 Crores and its net loss stood at Rs. 0.82 Crores.

Future Knowledge Services Limited

Your Company holds 100% in Future Knowledge Services Limited (FKSL) which has a net loss of Rs. 3.66 Crore as on March 31, 2014.

Future Learning and Development Limited

Your Company holds 100% in Future Learning and Development Limited (FLDL) which has during the period ended March 31, 2014 registered total revenue of ^ 0.10 Crore with net loss of Rs. 1.75 Crore.

Future Media (India) Limited

Future Media (India) Limited (FMIL) is the Groups media venture, aimed at creation of media properties in the ambience of consumption and thus offers active engagement to brands and consumers. FMIL offers relevant engagement through its media properties like Visual Spaces, Print, Radio, Television and Activation. Your Company has 93.10% stake in FMIL. The Company also has Convertible Preference Shares, which has not yet been converted into equity shares. During the period ended March 31, 2014, FMIL registered income from operations amounting to Rs. 57.40 Crores and the net loss of Rs. 14.19 Crores.

Future Supply Chain Solutions Limited

Future Supply Chain Solutions Limited (FSCSL) is designed to operate in the logistics, transportation, distribution and warehousing space. FSCSL provides solutions in the areas of integrated Supply Chain Management, warehousing, distribution and Multi Modal transportation. Your Company has 70.17% stake in FSCSL. FSCSL has warehousing space of 2.7 Million square feet spread over all across India. The company is currently building large scale warehousing facilities and also increasing its presence in 3PL logistics solutions. During the period ended March 31, 2014, FSCSL registered income from operations amounted to Rs. 521.34 Crores and the earned net profit of Rs. 9.33 Crores.

Home Solutions Retail (India) Limited

Home Solutions Retail (India) Limited (HSRIL) was incorporated to operate in the home and hard goods consumption space. Your Company has 66.86% stake in HSRIL. During the period ended on March 31, 2014, HSRIL registered an income from operations of Rs. 0.05 Crores and net loss of Rs. 1.05 Crores.

nuZone Ecommerce Infrastructure Limited

nuZone Ecommerce Infrastructure Limited (NEIL) has been created as subsidiary with the objective to transfer the wholesale and sourcing business related to electronic and consumer durable business from PRIL. During the period ended March 31, 2014, NEIL has a net loss of Rs. 0.0009 Crore.

Office Shop Private Limited

Office Shop Private Limited (OSPL) was incorporated to deal in the business of distribution services. OSPL is 100% subsidiary of SFOPPL and accordingly, is step down subsidiary of the Company. The company has earned revenue of Rs. 59.42 Crores & incurred net loss for Rs. 5.20 Crores during the period ended March 31, 2014.

Staples Future Office Products Private Limited

Staples Future Office Products Private Limited (SFOPPL) is designed to capture the consumption space of office supplies, office equipments and products. SFOPPL was formed as a Joint Venture between the Company and Staples Asia investment Limited (a subsidiary of Staples inc USA) Your Company has 60% Stake in SFOPPL. During the period ended March 31, 2014, SFOPPL registered income from operations amounting to Rs. 160.34 Crores and the net loss stood at Rs. 15.75 Crores. Your Company has acquired a part of the stake from Staples Asia investment Limited by which SFOPPL became subsidiary of your Company.

Winner Sports Limited

Winner Sports Limited (WSL) is a wholly owned subsidiary of the Company. At present the WSL does not have any operating business and management is evaluating various business opportunities. During the period ended March 31, 2014, WSL registered net loss of Rs. 0.02 Crore.

Companies which moved out of subsidiary status

Future Agrovet Limited (subsidiary upto 11-11-2013)

Future Agrovet Limited (FAL) is to strengthen sourcing and distribution of staples and other food products for the Company. FAL has sourcing and distribution bases at all key cities across the country. The Company was holding 96.16% stake in FAL. The Company divested the stake in FAL, which has been taken over by another group company, Future Consumer Enterprise Limited with effect from November 11, 2013. Due to divestment within the group, it is ensured that various food formats of the Company continue to get supply of staples and other food products from FAL.

Future Lifestyle Fashions Limited

Future Lifestyle Fashions Limited (FLFL) was incorporated on May 30, 2012 and was wholly owned subsidiary of your Company. With a view to dedicated focus on fashion business, comprising of Central, Brand Factory, Planet Sports etc. of your Company and identified fashion business of Future Consumer Enterprise Limited (earlier known as - Future Ventures india Limited) (FCEL), was demerged and vested with FLFL under the provisions of section 391-394 of the Companies Act, 1956 and was effected on May 29, 2014. Pursuant to the terms of the Scheme, FLFL has issued equity shares to the shareholders of the Company and FCEL and thereby moved out of the subsidiary status of the Company.

Future Value Retail Limited

Future Value Retail Limited (FVRL) was a wholly owned subsidiary of your Company and engaged in Value Retail Business under various formats like Big Bazaar, Food Bazaar etc. and other small format in Value Retail Business. However, as part of the merger scheme various business formats of FVRL has been transferred to the Company.

As required under the Listing agreement with the Stock Exchanges, the Company is mandatorily required to prepare the Consolidated Financial Statements, according to the applicable indian Accounting Standards and reflects the financial position of all the subsidiary Companies of the Company.

A statement pursuant to section 212 of the Companies Act, 1956 relating to subsidiary companies is given as an annexure to the Annual Report. Further the Board has passed resolution pursuant to the General Circular No. 2/2011 dtd February 8, 2011, issued by Ministry of Corporate Affairs, giving consent for not attaching the balance sheet of the subsidiary companies. The Company is publishing the consolidated financial statements of the holding company and all subsidiaries duly audited by its auditors, in compliance with the applicable accounting standards and listing agreement and a statement disclosing the necessary information regarding each of subsidiaries.

It is hereby confirmed that Annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the holding and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall be available for inspection by any shareholders in the head office of the holding company and of the subsidiary companies concerned. Details of accounts of subsidiaries shall be furnished to any shareholder on demand.

JOINT VENTURES (In Alphabetical Order)

Apollo Design Apparel Parks Limited and Goldmohur Design & Apparel Park Limited

The Company has entered into joint venture with NTC for the restructuring and development of the Apollo Mills and Goldmohur Mills situated in Mumbai. For the same two separate SPV companies have been created viz. Apollo Design Apparel Parks Limited (ADAPL) & Goldmohur Design & Apparel Park Limited (GDAPL). The ADAPL & GDAPL would be working for the restructuring and development of the Apollo Mills and Goldmohur Mills respectively. During the period ended March 31, 2014 ADAPL made a turnover of Rs. 248.51 Crores and earned net profit of Rs. 9.12 Crores. Further during the period GDAPL made a turnover of Rs. 228.78 Crores and earned net profit of Rs. 9.46 Crores.

Future Generali India Life Insurance Company Limited

Future Generali India Life insurance Company Limited (FGI-Life) is Companys joint venture in the Life insurance sector. FGI-Life has introduced many insurance products to suit requirements of various categories of customers. The Company has divested its part investment in FGi-Life with effect from 17th December, 2013. During the period ended March 31, 2014, FGi-Life has registered a total income of Rs. 1,315.31 Crores and net loss of Rs. 63.56 Crores.

Future Generali India Insurance Company Limited

Future Generali India insurance Company Limited (FGI-Nonlife) is Companys joint venture in the general insurance sector. FGI-Nonlife has introduced insurance products for various general insurance needs of the different categories of customers. During the period ended March 31, 2014, FGI-Nonlife has registered a total income of Rs. 1,499.77 Crores and net profit of Rs. 47.71 Crores.

Integrated Food Park Private Limited

Integrated Food Park Private Limited (IFPPL) is designed to capture the consumption space of food and aims to facilitate the establishment of strong food processing industries backed by an efficient supply chain, which would include collection centres, processing centres, cold chain infrastructures. The Company has received the approval from the Government for setting up Mega Food Park at Tumkur District in the State of Karnataka. IFPPL was formed as a joint venture between the Company, Capital Foods Private Limited and Sattva Developers Private Limited with 28.86% stake held by your company. IFPPL has not earned any income during the period ended March 31, 2014 since its project has yet not commenced. Net loss of IFPPL for the said period stood at Rs. 0.09 Crore.

Shendra Advisory Services Private Limited

Shendra Advisory Services Private Limited (Shendra) is a SPV with respect to the Companys insurance arm Future Generali India insurance Company Limited. During the period ended March 31, 2014, Shendra has registered a total income of Rs. 0.03 Crore and net loss of Rs. 0.12 Crore.

Sprint Advisory Services Private Limited

Sprint Advisory Services Private Limited (Sprint) is a SPV with respect to the Companys insurance arm Future Generali India Life insurance Company Limited. During the period ended March 31, 2014, Sprint has registered a total income of Rs. 0.09 Crore and net profit of Rs. 0.004 Crore.

DIRECTORS

Mr. Kishore Biyani & Mr. Rakesh Biyani retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

The term of Mr. Vijay Biyani, as Whole-Time Director, which was for a period of 5 years from September 26, 2009 is to expire on September 26, 2014. The Directors are seeking appointment of Mr. Vijay Biyani as a Whole-Time Director for a period of 3 years. Detail of the proposal for appointment of Mr. Vijay Biyani is mentioned in the Statement under Section 102 of the Companies Act, 2013 of the Notice of the 26th Annual General Meeting. His appointment is appropriate and in the interest of the Company.

The Company is also proposing resolutions for the remunerations payable to all the executive directors of the Company to be approved by the Shareholders, in view of the requirement to make application to the Central Government for approval of remuneration, due to inadequacy of profits.

Impending notification of Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking appointment of Mr. S. Doreswamy, Mr. Anil Harish, Ms. Bala Deshpande and Mr. V.K. Chopra as independent Directors for a term of five years. Details of the proposal for appointment of Mr. S. Doreswamy, Mr. Anil Harish, Ms. Bala Deshpande and Mr. V.K. Chopra are mentioned in the Statement under Section 102 of the Companies Act, 2013 of the Notice of the 26th Annual General Meeting.

The details as required by clause 49 of the listing agreement, is given as part of the notice.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that: -

(i) in preparation of the annual accounts, the applicable accounting standards have been followed with proper explanation and there are no material departures;

(ii) the accounting policies selected have been applied consistently and judgments made and estimates given are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2014 and the profit of the company for the period ended on that date;

(iii) The proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) the accounts have been prepared on a going concern basis.

AUDITORS

M/s NGS & Co. LLP, Chartered Accountants, Mumbai, hold office as Statutory Auditors upto the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Shareholders are requested to re-appoint them as Statutory Auditors to hold office upto the three years and to fix their remuneration. The observations made by the auditors are self-explanatory.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited consolidated financial statements are provided as part of the Annual Report in accordance with Accounting Standard AS-21, AS-23 & AS 27 dealing with the consolidated financial reporting. These statements have been prepared on the basis of the financial statements received from subsidiaries and joint ventures, as approved by their respective Board of Directors. Some of the financial statements provided by the subsidiaries, associates and joint ventures are unaudited and considered on certification of management. Due to extension of financial period of the Company, relevant financial period of subsidiaries, associates and joint ventures for a period of eighteen months is being considered for consolidation.

THE EMPLOYEE STOCK OPTION SCHEME

The Nomination and Remuneration Committee of the Board of the Company inter alia administers and monitors the Employee Stock Option Scheme of the Company in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the SEBI Guideline).

The applicable disclosure as stipulated under the SEBI Guidelines as on March 31, 2014 with regard to Employee Stock Option Scheme is provided hereunder:

Future Retail Limited (FRL) (earlier known as Pantaloon Retail (India) Limited) has granted Options to eligible employees in 2013 under PRIL-Employee Stock Option Scheme 2012 ("ESOS 2012").

In a Scheme of demerger, "FRL (Demerged Company) has transferred its Fashion business under the brand name "Pantaloons" and variations thereof to "Peter England Fashions and Retail Limited" (Resulting Company); demerger scheme has been duly sanctioned by the Bombay High Court in its order dated March 1, 2013.

In a subsequent Scheme of demerger, "FRL (Demerged Company) has transferred its fashion business carried on under the format brands of Central, Brand Factory, and Planet Sports to "Future Lifestyle Fashions Limited"; demerger scheme has been duly sanctioned by the Bombay High Court in its order dated May 10, 2013.

The Employee Stock options of the Company has adjusted for the corporate actions on Value for Value exchange and hence there is no incremental benefit to the option grantee and also it does not result in change in aggregate Fair Value of the Options.

A. Summary of Status of ESOPs Granted

The position of the existing scheme is summarized as under -

Sr. No. Particulars Details
1 Details of the Meeting Approved in Shareholders Meeting dated Feb 04, 2013
2 Options Approved* 25,00,000
3 The Pricing Formula Rs. 20 revised to Rs. 10 in the Scheme of Demerger*
4 Options Granted* 2,76,279
5 Options Cancelled before Demerger 14,790
6 Unvested Options cancelled (Employees Transfer to Future Lifestyle Fashions Limited in scheme of Demerger) 98,464
7 Option Adjusted in Scheme of Demerger of entity in to Future Lifestyle Fashion Limited* 1,42,167
8 Revised Options after Demerger* 3,05,192
9 Options Exercised -
10 Options Cancelled 11,798
11 Options Lapsed -
12 Total Number of Options in force* 2,93,394
13 Variation in terms of ESOP Not Applicable
14 Total number of equity shares arising as a result of exercise of options -
15 Money realised by exercise of options (Rs. In Crores) -

*Value for Value exchange of Options under the Scheme of Demerger of Future Lifestyle Fashions Limited from Future Retail Limited

B. Employee-wise details of options granted during the financial year 2013-14 to:

(i) Senior managerial personnel
Mr. Dinesh Maheshwari 20,986
(ii) Employees who were granted, during any one year, options amounting to 5% or more of the options granted during the year
Mr. Sadasiv Nayak 40,114
Mr. Manoj Agarwal 19,728
Mr. Devendra Chawla 33,431
Mr. Venkateshwar Kumar M 26,744
Mr. Rajesh Ramjilal Kalyani 14,793
Mr. Dinesh Maheshwari 20,986
(iii) Identified employees who were granted option, during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant. NIL

C.

Weighted average Fair Value of Options granted during the year whose

(a) Exercise price equals market price -
(b) Exercise price is greater than market price -
(c) Exercise price is less than market price* 196.17
Weighted average Exercise price of options granted during the year whose
(a) Exercise price equals market price -
(b) Exercise price is greater than market price -
(c) Exercise price is less than market price* 10.00

D The stock-based compensation cost calculated as per the intrinsic value method for the financial year 2011-12 is Rs.1.09Crores. If the stock-based compensation cost was calculated as per the fair value method, the total cost to be recognised in the financial statements for the year 2011-12 would be Rs.3.70 Crores. The effect of adopting the fair value method on the net income and earnings per share is presented below:

Pro Forma Adjusted Net Income and Earning Per Share

Net Income as reported Rs. in Crores 2.81
Add: Intrinsic Value Compensation Cost Rs. in Crores 3.07
Less: Fair Value Compensation Cost Rs. in Crores 3.07
Adjusted Pro Forma Net Income Rs. in Crores 2.81
Earning Per Equity Share: Basic
As Reported Rs. 0.12
Adjusted Pro Forma Rs. 0.12
Earning Per Equity Share: Diluted
As Reported Rs. 0.12
Adjusted Pro Forma 0.12

E Method and Assumptions used to estimate the fair value of options granted during the year:

1. Risk Free Interest Rate 7.89%
2. Expected Life 1.59
3. Expected Volatility 65.02%
4. Dividend Yield 0.53%
5. Price of the underlying share in market at the time of the option grant (Rs.) 215.60

PARTICULARS OF EMPLOYEES

The statement containing particulars of employees as required under section 217(2A) of the Companies Act, 1956 and the rules made thereunder, is given as an annexure appended hereto and forms part of this report. In terms of section 219(1)(b)(iv) of the Act, the report and accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining the copy of annexure may write to the company secretary at the registered office of the Company.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

A Statement giving details of conservation of energy (in Form A) and foreign exchange earnings and outgo, as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988, in Annexure I is enclosed and forms part of this report. However there is no expenditure on R&D, Technology absorption, adoption & innovation during the current financial period. The Company being concentrating on the domestic consumption space do not have any specific exports initiatives to report to members.

AWARDS AND RECOGNITIONS

• Future Retail Limited Won the Best Run Award in IT (Technology Solutions) at SAP ACE 2013

• Best Run Award 2013

Home Town became the first Indian retailer to bag Global innovation Award for the year 2012- 2013.

• EMC Transformers Award 2013

Technology Services Team at Future Group won the EMC Transformers Awards for their smart and judicious use of IT services.

• CIO100 Awards 2013

Business Technology Services of Future Group won this award for the 2nd consecutive year for the project "Pratibimb", a project carried for virtualization of desktops to enhance user productivity.

• CISO Award 2013

IT support services received this prestigious for innovative ways to secure the business in the most effective manner and deliver business value, by creating competitive advantage, optimizing business processes, enabling growth and improving relationships with customers.

• Consumer Survey of Product Innovation 2013

Sach Handwash voted product of the year by Consumer Survey of Product innovation 2013

• Images Fashion Awards 2013

The Most Admired Fashion Retail Personality of the Year - Mr. Kailash Bhatia

• The Global Innovation Award

International Home + House wares Retail Excellence /Global

Innovation for the year 2012-2013 - Home Town

• Retailer Technology Awards 2013

Future Groups IT team was felicitated with the following awards:

Retail Application of the year

IT Team of the year

Supply Chain Software Solution

• 4th Most Trusted Service Brands In India

Big Bazaar is the 4th most trusted service brand in India in the Brand Equity Survey 2013 conducted by Nielsen.

• Images Most Admired Food & Grocery Retailer

Foodhall bagged the images Most Admired Food & Grocery Retailer at the 7th Coca Cola Golden Spoon Awards 2014.

ACKNOWLEDGMENT

The Board wishes to place on record their sincere appreciation to all the consumers, working capital consortium bankers lead by Bank of India, vendors, and other stakeholders for the continued support and patronage during the previous period. The board further wishes to record their sincere appreciation to the employees of the Company whose efforts, hard work and dedication has enabled the Company to achieve the targets and recognitions

For and on behalf of the Board,
Kishore Biyani Rakesh Biyani
Managing Director Jt. Managing Director
Mumbai
May 30, 2014

ANNEXUREI

A) Conservation of energy

FORM A

Form for Disclosure of Particulars with respect to Conservation of Energy.

A) Power and fuel consumption (Manufacturing Facility) January 01, 2013 to March 31, 2014 July 01, 2011 to December 31, 2012
(1) ELECTRICITY
a) Purchased
Purchased
Unit 9,87,138 10,71,900
Total amount (In Rs.) 85,66,748 84,81,740
Rate/unit 8.68 7.91
b) Own Generation
Internal Generation through DG set
No. Of Units 20,126 16,252
Unit per litre of Diesel 3.61 3.52
Rate per /unit (In 15.89 12.97
(2) FURNACE OIL
Quantity (K.Ltrs.) 1,37,802 1,59,186
Total amount (In Rs.) 66,87,707 69,41,573
Average rate (Rs. / Ltr.) 48.53 43.61

 

B) Foreign Exchange Earnings and Outgo January 01, 2013 to March 31, 2014 July 01, 2011 to December 31, 2012
FOREIGN EXCHANGE OUTGO
Traveling Expenditure 2.84 2.21
Interest 1.84 1.25
Consulting Fees 2.92 0.74
Royalty 1.51 7.38
Commission 0.07 Nil
Imports
Raw Materials including (Stitching Materials) 0.09 0.27
Finished Goods 133.80 115.98
Capital Goods 29.76 10.18
Accessories & Others 1.34 1.39
FOREIGN EXCHANGE EARNING
Earnings in Foreign Currency 88.43 85.13