DIRECTORS REPORT

Dear Members,

Your Company's Directors, hereby present the Eighth Annual Report of the Company together with the Audited Financial statements of the Company for the Financial Year ended March 31, 2015

Revenue

Your Company reported a revenue of Rs. 1851 Crore in the year 2014-15 ("year under review"), recording a growth of 11.4% over 2013-14 ("previous year"). During the year under review, Company opened 25 new Pantaloons Stores and closed two stores. As at March 31, 2015, the Company had 104 Pantaloons Stores and 30 Factory Outlet Stores.

Operating Profit

EBITDA excluding other income at ~ Rs. 73 Crore grew by 118% over previous year. Focus on cost efficiencies, improved product mix and pricing has improved the EBITDA during the year under review.

Net Interest

Finance costs stood at Rs. 120 Crore with average borrowing cost of 10.17% versus 10.40 % in the previous year.

Depreciation

The depreciation cost was higher mainly due to accelerated depreciation provided on account of refurbishment and closure of stores.

The Goodwill recognised on transfer of Pantaloons business to the Company was subsequently tested for impairment in accordance with the Accounting Standard - 28 issued by the Institute of Chartered Accountants of India and continues to stand at Rs. 1,168 Crore as on March 31, 2015.

Net Working Capital as on March 31, 2015, includes Inventory of Rs. 427 Crore, Trade Receivables of Rs. 3 Crore, Cash and Bank Balance of Rs. 7 Crore and Trade Payables of Rs 311 Crore.

The detailed analysis of the performance is included in the section Management Discussion and Analysis.  

DIVIDEND

In view of the loss for the year under review, no amount is proposed to be transferred to the reserve(s) and your Directors have not recommended payment of any dividend for the year under review.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Sections 134(3) (c) and 134(5) of the Companies Act, 2013, the Directors, to the best of their knowledge and ability, confirm that:-

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS

Indian Economy

Having seen muted growth over past two years, the Indian GDP saw marginal improvement in the year under review, as growth picked up from 6.9% to an estimated 7.3% this year. This was primarily led by expectations of a stable government and policy framework, as well as a moderate revival in consumption spending due to slowing inflationary pressures and a drop in global fuel prices. Fiscal and monetary initiatives taken by the Government and the Reserve Bank of India ("RBI") have narrowed down both the fiscal deficit and current account deficit. However, outlook going forward remains uncertain, as the global revival is yet to take off and expectations of a sub-normal monsoon may temper any recovery.

Indian Apparel Market Overview

Clothing and fashion retailing is the second largest contributor to the Indian retail market with a share of just under 10%. In the organized retailing market, clothing and fashion retailing is the largest and the most penetrated segment. It accounts for roughly one-third of the organized retailing market.

Organised apparel market is growing at a faster pace than the overall apparel retail market, driven by multiple factors including significant growth in discretionary income, changing lifestyles and rapid growth of E-Commerce.

Within organised apparel market, men's category is the largest segment with more than 50% share. Menswear will continue to dominate the market in years to come, however, the womenswear and kidswear are expected to grow faster and enhance their share in the overall expanding pie.

The competitive landscape of Indian organized retail has been further intensified with entry of large number of E-Commerce players with deep pockets and several global retailers. Moreover, Domestic Value Retailers are on aggressive expansion to take advantage of the increasing demand from consumers for sharply priced products.

The other significant change being awaited by the retail sector is notification of Goods and Service Tax in the next financial year. It is expected to reduce the complexities of doing business in India.

Business Overview

Post the transition from Future Group, your Company has focussed on stores expansion, brand building and organisation processes to lay the foundation for growth in the future.

Expanding the network reach:

Your Company expanded the network by launching 25 new Pantaloons stores and 6 factory outlets during the year under review, taking the total count to 104 Pantaloons stores and 30 factory outlets as on March 31, 2015. Your Company has adopted two-pronged expansion strategy with focus on deeper penetration in larger towns and metros as well as increasing reach in tier-2 and tier-3 cities.

Enhancing productivity of the existing stores:

With an objective of improving customer footfalls, enhancing sell-through and sustaining profitable sales growth in the existing stores, 22 stores were refurbished during the year through infrastructure and assortment upgrade, completing the refurbishment of all necessary stores after the acquisition.

Strengthening brand portfolio:

During the year under review, your Company launched four new exclusive brands viz.

• SF Jeans, a brand that offers fashionable Denim products for both men and women;

• Candies, a Young fast-fashion women's westernwear brand;

• Poppers, a colorful, trendy casual brand for boys and girls in the age group of 7-14 years; and

• Jamini, an elegant women's ethnicwear brand targeted towards women in the 35+ age group, which stands for its handcrafted fashion.

These new brands help your Company to address the white spaces in the portfolio thereby increasing the range of exclusive brands being offered to the customer.

Building a robust vendor base:

Your Company has taken significant efforts to broad-base the vendor base i.e. introducing significant number of new vendors in the year under review and ensuring a geographically diverse set of product specialists.

Scheme of Arrangement to create India's Largest Pure Play Fashion & Lifestyle Company with a strong bouquet of leading fashion brands and retail formats

In a bid to capitalise on its large market presence in the branded fashion space in India, on May 3, 2015, the Boards of Directors of your Company, Aditya Birla Nuvo Limited ("ABNL"), and Madura Garments Lifestyle Retail Company Limited ("MGLRCL"), a subsidiary of ABNL, at their respective meetings, approved the consolidation of branded apparels businesses of the Aditya Birla Group, through a Composite Scheme of Arrangement between the Company, ABNL, MGLRCL and their respective shareholders and creditors, under Sections 391 to 394 of the Companies Act, 1956 ("Composite Scheme"). The consolidation will also enable tapping of operational synergies on various fronts such as sourcing, real estate and technology platforms.

This move to bring all the branded apparel businesses of Aditya Birla Group, under one roof is expected to accelerate the growth of these businesses and help exploit emerging opportunities presented by the rapidly growing Indian apparel market.

The businesses that will be demerged from the respective companies into your Company are:

1) Madura Fashion, a branded apparel retailing division of ABNL, ("Madura Undertaking") and

2) Madura Lifestyle, a luxury branded apparel retailing division of MGLRCL ("MGLRCL Retail Undertaking").

The Boards of your Company, ABNL and MGLRCL have approved the following swap ratio recommended by the independent valuers:-

1) Shareholders of ABNL will get 26 new Equity Shares of your Company for every 5 equity shares held in ABNL pursuant to the demerger of Madura Fashion;

2) Shareholders of MGLRCL will get 7 new Equity Shares of your Company for every 500 equity shares held in MGLRCL pursuant to the demerger of Madura Lifestyle;

3) Preference shareholder of MGLRCL will get 1 new equity share of PFRL.

The Composite Scheme is subject to the necessary statutory and regulatory approvals, including approvals of the appropriate authorities including High Court(s), Stock Exchange(s), SEBI and respective shareholders & lenders and/or creditors of each of the companies involved in the Composite Scheme. The appointed date of the Composite Scheme will be April 1, 2015.

Finance

During the year under review, your Company continued to explore various options for bringing down the cost of borrowings and also for procuring funds at competitive cost which included availing of short-term instruments like commercial paper, working capital borrowing, long term loans for expansion at competitive terms, resulting in the reduction of average borrowing cost to ~10.17% (previous year -10.40%).

Further, during the year, at the Seventh Annual General Meeting of the Company, approval of the Members was obtained by way of a Special Resolution, to raise funds, by issue of Equity Shares on a rights basis to the then existing Shareholders of the Company including by way of a qualified institutional placement, for an aggregate amount not exceeding Rs. 500 Crore or its equivalent in any foreign currency, commensurate to the future growth plans and in order to

• pursue the existing endeavours of the Company;

• repay the existing debts; and

• meet general corporate purposes.

However, for achieving greater financial flexibility and to enable optimal financing structure, it was deemed fit to raise funds, by issue of NCDs, on a private placement basis and accordingly, approval of the Members was obtained by way of a Special Resolution passed through Postal Ballot (including through voting by electronic means), to issue and/or offer and/or invite subscriptions for and/ or allot NCDs of up to Rs. 1,000 Crore, on a private placement basis, in one or more tranches, during the period of one year from the date of passing of the Special Resolution by the Members, within the overall borrowing limits of the Company, as approved by the Members from time to time.

Strengths and Opportunities

Strong parentage

Pantaloons is a part of the Aditya Birla Group, a USD 41 billion Indian multinational. The Group has demonstrated capabilities of creating large scale profitable businesses from scratch as well as building leadership position in the businesses acquired inorganically. The Group has a vast experience in promoting and growing consumer facing businesses and brands in the apparel as well as non-apparel sectors and in the process, has gained significant consumer insights. Brands like Louis Philippe, Van Heusen, Allen Solly, Peter England, Idea Cellular, Birla Sun Life Insurance and Birla Sun Life Asset Management are among the leaders in their respective categories. Among the most trusted business houses in India, Aditya Birla Group is well known for its corporate governance and financial management.

Brand leadership

Pantaloons is among the leading large format fashion retailers in India. With continued focus on catering to varied apparel and non-apparel needs of Indian consumers in a modern retail environment, 'Pantaloons' has emerged as a strong brand in the fashion industry over the past two decades. Pantaloons is constantly innovating designs, concepts and products by infusing the latest trends in fashion and clothing styles. Pantaloons operates across varied categories viz., casual wear, ethnic wear, formal wear, party wear and active wear for Men, Women and Kids. Non-apparel products primarily comprise of footwear, handbags, cosmetics, perfumes, fashion jewellery and watches

Unparalleled reach

Pantaloons span a retail space (carpet area) of about 2.3 million square feet, which is among the largest in India in the organized fashion retail segment. The average size of a Pantaloons store is around 21,000 square feet. However, depending on the city, location and target market size, the typical store size varies between 10,000 square feet to 25,000 square feet.

Pantaloons enjoys a pan India reach with presence across more than 50 cities. In the year under review, your Company expanded its reach by entering in 9 new cities.

Your Company continues to evaluate real estate locations to ensure a strong pipeline of stores for continued expansion.

Strong Loyalty Program

Your Company has around 4.5 million loyalty customer base at present, one of the largest in the country. It contributes to significant portion of the Company's sales and augments its competitive advantage. The loyalty program offers reward points, special offers and discounts, in order to encourage repeat purchases from loyal customers.

Wide Product Range

Pantaloons offers a one-stop shopping experience to aspiring middle class families. Through a wide range of brand offerings, across apparel and non-apparel categories and across varied price points, Pantaloons caters to varying and evolving fashion needs of its customers.

Owned and licensed brands contributed to 52% of the Company's sales during the year under review. These comprise brands owned by Pantaloons viz., Rangmanch, Ajile, Honey, Akkriti, Chalk, Annabelle, Trishaa, Alto Moda, Poppers, Chirpie Pie; as well as brands licensed on a long term basis, Bare, Rig, SF Jeans, Byford, JM Sports, Lombard and Candies.

Risks and Threats

Slowdown in Indian economy

Our business performance is highly correlated with the economy. Any slowdown in Indian economy may, in turn, affect the consumer spending and therefore, business growth and profitability.

Dependence on real estate

The fashion retail industry is heavily dependent on availability of quality retail space at marquee locations at affordable rentals. Non-availability of retail space in timely or cost effective manner and at right location may hamper the business growth and profitability.

Intensifying competition

Given the growth potential of Indian apparel retail market, many global brands have entered in Indian market. Relaxation in FDI norms is likely to further intensify the competition. Further, we expect trends of increasing e-commerce penetration to continue, as market players continue to drive sales through aggressive promotions and advertising.

Attracting and retaining talent

Human capital is the key to the growth of the business. We value our staff and continue to assess both front-end and back-end staff for career development, planning and succession. The loss of key personnel or any inability to manage the attrition levels in different employee categories may impact the business and ability to grow.

DISCLOSURES UNDER THE COMPANIES ACT, 2013 ("ACT") AND RULES MADE THEREUNDER

Extract of Annual Return

As required under the provisions of Sections 92(3) & 134(3)(a) of the Act and the Companies (Management and Administration) Rules, 2014, an Extract of the Annual Return in Form MGT-9, is annexed as Annexure I to this report

Details of the meetings of the Board and its Committees alongwith the attendance of the Directors therein have been disclosed as part of the Corporate Governance Report.

The intervening gap between the meetings was as prescribed under the Companies Act, 2013 and Equity Listing Agreement ("Listing Agreement").

Statement on declaration given by Independent Directors under sub-section (6) of section 149

Company's Board presently comprises of 3 Independent Directors viz. Mr. Bharat Patel, Ms. Sukanya Kripalu and Mr. Arun Thiagarajan.

All the Independent Directors of the Company have given their respective declarations that they meet the criteria of Independence as provided in Section 149(6) of the Act and Clause 49 of the Listing Agreement.

Company's policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178

Board has, on the recommendation of the Nomination and Remuneration Committee ("NRC"), adopted a Policy, which interalia enumerates the Company's policy on appointment of Directors and Key Managerial Personnel ("KMP").

Further the Board has, also on the recommendation of the NRC, adopted a policy entailing Executive Remuneration Philosophy, which covers remuneration philosophy covering the Directors, KMPs and employees included in Senior Management of the Company.

Both the aforesaid policies are annexed as Annexure II and Annexure III to this report.

Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made (i) by the auditor in his report; and (ii) by the company secretary in practice in his secretarial audit report

Statutory Audit

M/s. S R B C & Co LLP, Chartered Accountants [ICAI Registration Number 324982E], were appointed as Statutory Auditors of the Company at the last i.e. Seventh Annual General Meeting of the Company held on August 27, 2014 and they hold office till the conclusion of the ensuing Eighth Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment.

Report given by the Statutory Auditors, on the financial statements of the Company, is disclosed as part of the Financial Statements of the Company for the year under review.

There has been no qualification, reservation, adverse remark or disclaimer given by the Statutory Auditors in their Report and does not call for any further comments. The Notes to the Financial Statements are self-explanatory and do not call for any further comments.

Secretarial Audit

M/s. Dilip Bharadiya & Associates, Practising Company Secretaries, were appointed as Secretarial Auditor of the Company, to conduct Secretarial Audit for the year under review, pursuant to the provisions of Section 204 of the Act.

The Secretarial Audit Report for the year under review, does not contain any qualification, reservation or adverse remark and the same is annexed as Annexure IV to this Report.

There has been no qualification, reservation, adverse remark or disclaimer given by the Secretarial Auditor in his Report and does not call for any further comments. The Notes to the Financial Statements are self-explanatory and do not call for any further comments.

Particulars of loans and investments under Section 186

Particulars of the loans and investments under Section 186 of the Act have been disclosed as part of the Financial Statements of your Company for the year under review, as Note 4 and 9, respectively.

Particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 in the prescribed form

All contract(s) / arrangement(s) / transaction(s) entered into by your Company with its related parties, during the year under review, were

• in "ordinary course of business" of the Company,

• on "an arm's length basis"; and

• not "material",

as per the provisions of Section 188(1) of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 (VII) of the Listing Agreement.

Accordingly, Form AOC-2, prescribed under the provisions of Section 134(3)(h) of the Act and Rule 8 of the Companies (Accounts) Rules, 2014, for disclosure of details of Related Party Transactions, which are "not at arm's length basis" and also, which are "material & at arm's length basis", is not provided as an annexure of the Directors' Report. However, details of the Related Party Transactions entered into during the year under review and as on March 31, 2015, are disclosed as part of the Financial Statements of your Company for the year under review, as Note 30.

Further, pursuant to the provisions of the Act and the Listing Agreement, Board has, on recommendation of its Audit Committee, adopted a Policy on Related Party Transactions to:-

a) regulate transactions of the Company with its related parties, as defined and identified under the Act and the Listing Agreement;

b) ensure high standards of Corporate Governance while dealing with related parties; and

c) ensure optimum compliance with various applicable laws prescribed for Related Party Transactions, The said policy is available on your Company's website viz. www.pantaloons.com

Conservation of energy, technology absorption, foreign exchange earnings and outgo

Company consciously makes all efforts to conserve energy across all its operations.

a) Technology Absorption: Nil

b) Foreign Exchange Earnings and Outgo has been disclosed as part of the Financial Statements of the Company for the year under review.

c) The Company earned NIL (Previous Year: NIL) in foreign currency from Export of Goods and Foreign Exchange outgo was Rs.16 Lakhs (Previous year: Rs. 6 Lakhs).

Details w.r.t. development and implementation of a Risk Management Policy

Board has constituted a Risk Management Committee of the Board ("RMC"), to assist the Board with regard to the identification, evaluation and mitigation of operational, strategic and external risks. RMC has overall responsibility for monitoring and reviewing the Risk Management Plan and associated practices of your Company.

Further, considering the susceptibility of the Company to inherent business risks, Board of your Company, on recommendation of RMC, has adopted a Risk Management Policy, to

• develop and implement Risk Management procedure/ plan including identification therein of elements of risk, if any, which may threaten the existence of the company;

• enable the Company to proactively manage the uncertainty, changes in the internal &external environment to limit negative impacts; and

• capitalize on opportunities along with minimization of identifiable risks,

• in compliance with the provisions of the Act and Clause 49 of the Listing Agreement which requires the Company to lay down procedure for risk assessment and procedure for risk minimization.

More details on risks and threats have been disclosed above, in the section "Management Discussion and Analysis".

Further, in view of the technologically advanced operations, growing complexities of internal structures of the organizations, increasingly transient employees and such other reasons, all organisations, including the Company, are exposed to the risks emanating from fraud(s). Accordingly, the Board of your Company has, on recommendation of the Audit Committee, adopted an Anti-Fraud Policy, to put in place, a system for detecting and/or preventing and/or deterring and/or controlling the occurrence fraud(s).

Details about the policy developed and implemented by the Company on Corporate Social Responsibility ("CSR") initiatives taken during the year

Board has, with a vision "to actively contribute to the social and economic development of the communities and built a better sustainable way of life for weaker sections of society", adopted a CSR Policy and the same is available on your Company's website viz. www.pantaloons.com

CSR Policy of your Company, enumerates the Vision of the Aditya Birla Group & the Company, as a responsible corporate citizen, and mentions the process to be implements w.r.t. Identification of projects and philosophy of the Company, alongwith key endeavors & goals viz.

• In Education - to spark the desire for learning and knowledge;

• In Health care - to render quality health care facilities to people living in the villages and elsewhere through our Hospitals;

• In Sustainable Livelihood - to provide livelihood in a locally appropriate and environmentally sustainable manner;

• In Infrastructure Development - to set up essential services that form the foundation of sustainable development; and

• to bring about Social Change we advocate and support.

In view of the losses for the year under review, your Company was not required to spend any amount towards the CSR activities, as per the applicable provisions of Section 135 of the Companies Act, 2013. Accordingly, the details of the CSR activities during the year under review are not provided in this Report.

Manner of formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors

Pursuant to the provisions of the Act and Listing Agreement, the Board has to evaluate its own performance and that of its committees and individual directors ("Evaluation").

To enable such evaluation, an evaluation framework has been adopted by all the companies of the Aditya Birla Group, which is devised with a view to provide a more structured approach for the evaluation and which lays down overall guidelines & processes to be adopted for the evaluation of performance. NRC and the Board have, vide their respective Resolutions dated May 8, 2015 and May 13, 2015, approved the Evaluation Framework.

Accordingly, the Board carried out the evaluation of its own performance and that of its committees and individual Directors w.r.t. the year under review. The exercise was carried out through a structured evaluation process covering various aspects of the functioning of the Board and its Committees. Individual Directors were evaluated separately on basis of their respective designations and roles. The manner in which the evaluation has been carried out has been enumerated in the Corporate Governance Report. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Individual Directors, the Board as a whole and its Committees with the Company.

Details of Directors and Key Managerial Personnel who were appointed or have resigned during the year

During the year under review, Dr. Rakesh Jain, Non-executive Director (DIN: 00020425) and Mr. P. Murari, Independent Director (DIN: 00020437), resigned from their respective Directorships of the Company w.e.f. December 15, 2014 and March 25, 2015 respectively.

Also, pursuant to the Talent Development Policy of the Aditya Birla Group, Mr. Manoj Kedia, Chief Financial Officer of the Company was transferred as the Chief Financial Officer of the "Textiles, Acrylic Fibre and Overseas Spinning" Business of the Aditya Birla Group and accordingly, he ceased to be the Chief Financial Officer of the Company w.e.f. November 4, 2014.

With a view to broaden the Board and pursuant to the provisions of the Act, following appointments were made, subject to the approval of the members of the Company at the ensuing Annual General Meeting-

Resolutions for appointment of Ms. Kripalu and Mr. Thiagarajan, form part of the Notice for the ensuing Eighth Annual General Meeting of the Company, circulated to the members of the Company, separately.

Mr. Pranab Barua, was appointed as the Managing Director of the Company vide a Special Resolution passed by the members of the Company at the Seventh Annual General Meeting of the Company held on August 27, 2014, w.e.f. October 25, 2013.

Further, in accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Sushil Agarwal, Non- executive Director of the Company, will retire by rotation at the ensuing Annual General Meeting and being eligible for re-appointment, he seeks re-appointment as such. Resolution for his appointment also forms part of the Notice for the ensuing Eighth Annual General Meeting of the Company, circulated to the members of the Company, separately.

Also, on the recommendation of the Nomination and Remuneration Committee of the Board and pursuant to the Talent Development Policy of the Aditya Birla Group, Mr. S. Visvanathan was appointed as the Chief Financial Officer of the Company w.e.f. November 4, 2014.

Names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year

During the year, no Company became/ ceased to be a Subsidiary/ Associate/ Joint Venture of your Company.

As at the end of the year under review i.e. on March 31, 2015 and also as on the date of this report, your Company does not have any subsidiary and/or Associate Company and the Company is also not a part of any Joint Venture(s).

Details relating to deposits

During the year under review, your Company has not accepted any fixed deposits from the public falling under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March 31, 2015, there were no deposits which were unpaid or unclaimed and due for repayment. Further, as the Company had not accepted any deposit under Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules, 1975, in the previous year(s) and as there were no deposits which were unclaimed and due for repayment, as on March 31, 2014, there has been no default in repayment of deposits or payment of interest thereon during the year under review.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

Details in respect of adequacy of internal financial controls with reference to the Financial Statements

Company has established a system of internal controls and business processes, comprising of policies and procedures, with regards to efficiency of operations, financial reporting and compliance with applicable laws and regulations etc. commensurate with its size and nature of the business. Regular internal audit and checks are undertaken to ensure that systems and processes are followed effectively and systems & procedures are periodically reviewed to keep pace with the growing size and complexity of your Company's operations. Your Company also has a well-defined process for an on-going management reporting and periodic review of operations to ensure effective decision-making. During the year under review, proper internal financial controls were in place and the financial controls were adequate and were operating effectively.

Employee Stock Option Scheme and Share Based Employee Benefits

The grant of share based benefits to employees is a mechanism to align the interest of employees with those of the Company, to provide them with an opportunity to share the growth of the Company and also to foster the long-term commitment.

The Securities Exchange Board of India ("SEBI") enacted SEBI (Share Based Employee Benefits) Regulations, 2014 ("Regulations"), thereby repealing the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 ("Guidelines"). The regulations govern the grant of share based benefits to the employees of the Company, such as Employee Stock Options ("ESOPs"), Restricted Stock Units ("RSUs"), Stock Appreciation Rights ("SARs") etc.

During the year under review, the Board of Directors of the Company, merged its ESOP Compensation Committee with the Nomination and Remuneration Committee ("NRC") and accordingly, the functions and the scope of the erstwhile ESOP Compensation Committee i.e. mainly to administer, implement and monitor the Schemes and plans thereby governing the grant of Share Based Employee Benefits to the employees of the Company, are now included in the overall scope of the NRC. Accordingly, administration and implementation of the "Pantaloons Employee Stock Option Scheme 2013" ("Scheme") and "Pantaloons Stock Appreciation Rights 2013" ("Plan"), now comes under the scope of NRC.

During the year under review, no ESOPs and/or RSUs and/or SARs were granted pursuant to the provisions of the Scheme and/or plan. Further, no ESOPs and/or RSUs and/or SARs have vested in the grantees pursuant to the provisions of the Scheme and/or plan.

In terms of the provisions of the regulations, details of the ESOPs and/or RSUs and/or SARs already granted under the abovementioned Scheme and/or plan are available on your Company's website viz. www.pantaloons.com Further, the same have been disclosed as part of the Financial Statements of the Company for the year under.

A certificate from the Statutory Auditor thereby confirming that the Scheme has been implemented in accordance with the Guidelines and the regulations will be placed at the ensuing Eighth Annual General Meeting for inspection by the Members.

Details of establishment of Vigil Mechanism Policy

Board has, on recommendation of its Audit Committee, adopted a Policy thereby enumerating the Vigil/ Whistle Blower mechanism, for Directors and employees of the Company, to report concerns about unethical behaviour, actual or suspected fraud or violation of your Company's Code of Conduct and to voice genuine concerns or grievances about unprofessional conduct without fear of reprisal. Adequate safeguards are provided against victimization to those who avail of the mechanism and direct access to the Chairman of the Audit Committee in exceptional cases is provided to them.

Particulars of Employees as per Section 197(12) & Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 (12) of the Act and Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided separately as Annexure V to this Report.

Details of employee remuneration as required under provisions of Section 197 (12) of the Act and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be made available at the Registered Office of the Company during working hours before 21 days of the Annual General Meeting, pursuant to the provisions of the first proviso to Section 136(1) of the Act and any member interested in obtaining such information may write to the Company Secretary and the same will be made available to any such member on request.

DISCLOSURES AS PER THE LISTING AGREEMENT "LISTING AGREEMENT" Corporate Governance

Your Company is committed to follow the best practices of Corporate Governance, including the requirements under Clause 49 of the Listing Agreement and the Board is responsible to ensure the same, from time to time.

Company has duly complied with the Corporate Governance requirements as set out under Clause 49 of the Listing Agreement, from time to time and the Statutory Auditors of the Company viz. M/s. S R B C & Co LLP, Chartered Accountants, have, vide their certificate dated May 13, 2015 confirmed that the Company is and has been compliant with the conditions stipulated in the Clause 49 of the Listing Agreement. The said certificate is annexed to this report as Annexure VI. Further, a separate report on Corporate Governance forms part of this Annual Report.

Familiarization programmes

Independent Directors, on their appointment, are issued a Letter of Appointment setting out in detail, the terms of appointment, duties, responsibilities and expected time commitments. Interactive sessions with the members of Senior Management including Business and Functional Heads and KMPs of the Company are organised for the induction of the Independent Directors. Details of programmes for familiarisation of Independent Directors with the Company and related matters are put up on the website of your Company's viz. www.pantaloons.com and have been briefly disclosed as part of the Corporate Governance Report.

Material developments in Human Resources / Industrial Relations front, including number of people employed

Company believes that its people are one of its most valuable assets and therefore the Human Resource philosophy and strategy of your Company is structured to attract and retain the best talent that encourages innovation and creates a work environment of inspiration, creativity and passion. To ensure employee development and growth, training and development of the front end store staff, identifying leadership and key talent across the organization and executing individual development plans continue to be the key focus area of your Company. The total number of employees on rolls of the Company as on March 31, 2015 was ~ 5,932.

DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

Your Company is committed to providing a work environment that is professional and mature, free from animosity and one that reinforces our value of integrity that includes respect for the individual and in pursuance to the same, the Company has a Policy on Prevention of Sexual Harassment at Workplace, which is applicable to all employees of the Company, as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, no cases were filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and 16 complaints were received, out of which 16 complaints have been disposed of after taking an appropriate action and none of the complaints remain pending as of March 31, 2015.

AWARDS AND RECOGNITIONS

Your Company has been proud recipient of the following Awards/Recognitions during the year

One of the "Most Trusted Retailer of India"- across categories and formats.

Nielsen, an independent agency which specialises in conducting nationwide surveys/ research projects, conducts an Independent survey for "Economic Times' Brand Equity" on annual basis, which is among the largest research project of its kind in India. The intention of the survey is to identify the "Most Trusted Brands and Retailers" and the Company is proud to have been recognised as one of the "Most Trusted Retailer ", as per the results of the survey conducted during the year under review.

Award for the "Best Direct Marketing Campaign of the Year"

Pantaloons' Greencard i.e. the loyalty program for the Customers of the Company, was awarded as the Best "Direct Marketing Campaign of the Year" at the 8th Loyalty awards presented by AIMIA, World's leading loyalty management organization with over 70+ years of consulting expertise.

Award for the "Best Store Design"

Pantaloons' store located at the M. G. Road, Bangalore was awarded for the Best Store Design at the "VMRD-Retail Design Awards", which are among the most coveted awards given in the Indian Retail Industry and which turn a spotlight on exceptionally innovative retail designs initiative and projects taken by Architects, Designers, Visual Merchandisers, Suppliers and other retail solution providers.

OUTLOOK

In the short term, we expect the consumer sentiment and spending to remain muted. However, with the inflation projected to stabilise at lower levels and an anticipated improvement in GDP growth, the consumer spending is likely to improve in the medium term.

ACKNOWLEDGEMENT

We place on record our sincere appreciation for the continued support which your Company has received from its customers, suppliers, investors, promoters, bankers, group companies and above all, its employees.

For and on behalf of the Board of Directors,

Pranab Barua

Managing Director

Sushil Agarwal

Non-executive Director

Place : Mumbai

Date : May 13, 2015