1.  We have audited the attached Balance Sheet of Pantaloon Retail
 (India) Limited as at June 30, 2010 and also the Profit and Loss
 account and the cash flow statement for the year ended on that date
 annexed thereto.These financial statements are the responsibility of
 the Companys management. Our responsibility is to express an opinion
 on these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (as
 amended), issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i. We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 ii. In our opinion, proper books of account as required by law have
 been kept by the company so far as appears from our examination of
 those books;
 
 iii. The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. In our opinion, the balance sheet, profit and loss account and cash
 flow statement dealt with by this report comply with the accounting
 standards referred to in subsection (3C) of section 211 of the
 Companies Act, 1956, read with note B(3) of schedule 19 related to the
 accounting of the effect of the composite scheme of Amalgamation and
 Arrangements, which has been done in accordance with the terms of the
 scheme as approved by the High Court;
 
 v. On the basis of the written representations received from the
 directors, as on June 30, 2010, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 June 30, 2010 from being appointed as a director in terms of clause (g)
 of sub-section (1) of section 274 of the Companies Act, 1956.
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us the said accounts read together with
 significant accounting policies and other notes to accounts of Schedule
 19 give the information required by the Companies Act, 1956, in the
 manner so required and give a true and fair view in conformity with the
 accounting principles generally accepted in India;
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at June 30, 2010;
 
 b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 c) in the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure to the Auditors Report Re: Pantaloon Retail (India) Limited
 (the Company) With reference to the Annexure referred to in Paragraph
 3 of the report of the Auditors to the members of the company for the
 year ended June 30,2010, we report that:
 
 i. (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has physically verified certain assets during the
 period in accordance with a program of verification, which in our
 opinion provides for physical verification of the fixed assets at
 reasonable intervals. According to the information and explanations
 given to us, no material discrepancies were noticed on such
 verification.
 
 (c) Pursuant to the composite scheme of Amalgamation and Arrangement
 the scheme involving the company, Future Mall Management Limited (FMML)
 and Future Merchandising Limited (FML), the company has transferred the
 fixed assets pertaining to the value retail business and mall
 management business to FMML and FML respectively. In our opinion and
 according to the information and explanations given to us, the
 aforesaid transfer does not affect going concern assumption.
 
 ii. (a) The Company has conducted physical verification of inventory at
 regular intervals during the year.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 followed by the Management are reasonable and adequate in relation to
 the size of the Company and its nature of business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company is maintaining proper records of inventory.
 The discrepancies noticed on verification between physical stocks and
 the book records were not material having regard to the size of the
 operations of the company.
 
 iii. The Company has not granted or taken any loan secured/unsecured
 to/from Companies, firms or parties covered in the register maintained
 under section 301 oftheCompaniesAct, 1956. Accordingly, clause (iii) of
 Paragraph 4 of the Companies (Auditors Report) Order, 2003 (as
 amended) is not applicable to the Company.
 
 iv. In our opinion, and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and nature of its business
 for purchase of inventory and fixed assets and for the sale of goods
 and services. During the course of our audit, no major weakness has
 been noticed in the internal control system in respect of these areas.
 Further, we have not observed any continuing failure to correct major
 weakness in internal control system of the Company.
 
 v. In respectof particularsof contractsorarrangements and transactions
 entered in the register maintained in pursuance of section 301 of the
 Companies Act, 1956.
 
 a.  To the best of our knowledge and belief and according to the
 information and explanations given to us, particulars of contracts or
 arrangements that needed to be entered into the register have been so
 entered.
 
 b.  According to the information and explanations given to us, the
 transactions made in pursuance of these contracts or arrangements
 referred to in 5(a) above and exceeding the value of Rs.five lakhs with
 any party during the year have been made at prices which are reasonable
 having regards to prevailing market prices at the relevant time.
 
 vi. In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Section
 58A, 58AA and other relevant provisions of the Companies Act, 1956 and
 the rules framed there under with regard to the deposits accepted from
 public. To the best of our knowledge and according to the information
 and explanations given to us, no order has been passed by the Company
 Law Board or National Company Law Tribunal or Reserve Bank of India or
 any Court orTribunal.
 
 vii. In our opinion, the internal audit functions carried out during
 the year by firms of Chartered Accountants appointed by the management
 have been commensurate with the size of the Company and the nature of
 its business.
 
 viii. To the best of our knowledge and as explained, the Central
 Government has not prescribed maintenance of cost records under clause
 (d) of sub-section (1) of Section 209 of the Act, in respect of
 Companys products. Accordingly the provision of clause 4(viii) of
 paragraph 4 of the Companies (Auditors Report) Order 2003 (as amended)
 is not applicable to the Company.
 
 ix. (a) According to the information and explanations given to us, the
 Company is generally regular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, investor education
 and protection fund, employees state insurance, income-tax, sales-tax,
 wealth-tax, service tax, custom duty, excise duty, cess and other
 material statutory dues applicable to it. According to the information
 and explanations given to us, no undisputed statutory dues as above
 were outstanding as at June 30, 2010 for a period of more than 6 months
 from the date, they became payable. Further since the Central
 Government of India has till date not prescribed the amount of cess
 payable under Section 441A of the Companies Act, 1956, there is no
 statutory due payable under Section 441A of the Act.
 
 (b) According to the information and explanation given to us, the dues
 of Sales Tax, IncomeTax, Customs Duty, Wealth Tax, Excise Duty, Cess,
 Service Tax and other statutory dues which have not been deposited on
 account of any dispute and the forum where the dispute is pending are
 as under:
 
 Name of the         Nature of            Amount         Period
 Statute              the dues            (in Crores>
 
 The Indian           Stamp Duty              1.81         --
  Stamp
 Act,1899
 
 The Indian           Stamp Duty              1.55         --
 Stamp
 Act,1899
 
 The Indian           Stamp Duty              0.51         --
 Stamp
 Act,1899
 
 The Indian           Stamp Duty              0.92         --
 Stamp
 Act,1899
 
 URTrade              SalesTax                0.02         --
 Tax Act              Demand
 
 Karnataka            SalesTax                0.27        A.Y.
 VAT                  Demand                             2006-07
 
 
 
 
 Name of the Statue              Forum
 
 The Indian
 Stamp
 Act,1899                  District Collector
                           of Stamps, Gau-
                           tam-budhnagar,
                           UP.
 
 The Indian
 Stamp
 Act,1899                  Upper Collector,
                           Ghaziabad, U.R
 
 The Indian
 Stamp
 Act,1899                  Collector of
                           Stamp, Kanpur,
                           U.P.
 
 The Indian
 Stamp
 Act,1899                  Assistant District
                           Magistrate
                           (Finance &
                           Revenue),
                           Allahabad
 
 URTrade
 Tax Act                   Additional
                           Commissioner
                           of Commercial
                           Tax.
 
 Karnataka
 VAT                       Joint
                           commission
                           of commercial
                           taxes, Karnataka
 
 x. The Company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 xi. Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to financial
 institutions, banks and debenture holders.
 
 xii. According to the information and explanations given to us, the
 Company has not given any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities and hence
 the question of maintenance of adequate records for this purpose does
 not arise.
 
 xiii. In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi / mutual benefit
 fund / society.  Therefore, the provisions of clause (xiii) of
 Paragraph 4 of the Companies (Auditors Report) Order 2003(as amended)
 are not applicable to the Company.
 
 xiv. In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly
 provisions of clause 4(xiv) of the Companies (Auditors Report) Order
 2003(as amended) are not applicable to the Company.
 
 xv. In our opinion and according to the information and explanations
 given to us, the Company has given guarantees on behalf of subsidiaries
 and joint ventures for loans taken from banks, the terms and conditions
 whereof in our opinion are not prima- facie prejudicial to the interest
 of the Company.
 
 xvi. In our opinion and according to the information and explanations
 given to us, the term loans obtained during the year have prima facie
 been applied for the purpose for which they were taken.
 
 xvii. According to information and explanations given to us and on
 overall examination of the balance sheet of the Company, we report that
 no funds raised on short-term basis have been used for long-term
 investment.
 
 xviii. According to the information and explanations given to us, the
 Company has made preferential allotments of shares to parties or
 companies covered in the register maintained under section 301 of the
 Companies Act, 1956 and the price at which shares have been issued is
 not prejudicial to the interests of the Company.
 
 xix. During the year covered by our audit report, the Company has
 created security or charge in respect of debentures issued.
 
 xx. The Company has not raised any money by public issues during the
 year. Accordingly, the provisions of clause 4(xx) of the Companies
 (Auditors Report) Order 2003(as amended) are not applicable to the
 Company.
 
 xxi. To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud by the Company was
 noticed or reported during the year, although there were some instances
 of fraud on the Company noticed by the Management, the amounts whereof
 were not material in the context of the size of the Company and the
 nature of its business and the amounts were adequately provided for.
 
                                                     For NGS & Co.
 
                                             Chartered Accountants
                                      Firm Registration No.119850W
 
                                                    Navin T. Gupta
 
 Place : Mumbai                                            Partner
 
 Date : August 28, 2010                      Membership No.: 40334