Dear Stakeholders
 
 We are pleased to share the Annual Report of your company for the
 financial year 2010-2011. It was an eventful year and seen in the
 context of the last three years, the period has been marked by
 unprecedented challenges and exciting opportunities. The core retail
 business of your company grew at the compounded growth rate of 31.84%
 during these last three years.  The year on year same-stores-sales
 growth in lifestyle segment was 15.56%, value segment was 10.31%, and
 in home segment was 8.32%. These growth rates are comparable with the
 industry, but we believe that your company is now poised to deliver
 much more.
 
 Building an enterprise is much like rearing a child from fancy to
 adulthood. As a new born grows up, she requires a huge amount of
 nurturing and nourishment.  From infancy to childhood and from
 childhood till she reaches youth, the kid demands attention and most
 importantly patience. And then one day, the kid matures into a youth,
 ready to stand on their own, make their own mark and make their parents
 and family members who took in all the hardships proud. So it is with
 organizations.
 
 From a start-up to its growth phase and till it reaches a steady-state,
 an organization demands disproportionate amount of nurturing and
 resources. It needs to explore possibilities and opportunities, gain
 knowledge and expertise, and build an ecosystem around it to strengthen
 
 its foundation for the future. Organizations are like living organisms
 and it is equally important to inculcate the right culture and values,
 develop symbiotic relationships with its stakeholders and know the
 world around it. And then one day, it transforms from childhood to
 youth – ready with veins and muscles that can create significant value
 for all stakeholders.
 
 I believe that your company is now poised to enter its youth. Most of
 our retail formats have now matured.  More importantly, the systems and
 processes that we have built, the infrastructure that we have developed
 and the management bandwidth and talent we have created are capable of
 delivering disproportionate and profitable growth. From here on, our
 mantra is of getting ''more from the same.''
 
 From Infancy to Youth
 
 Ten years back when we opened the first three Big Bazaar stores, we
 were starting a new journey - going beyond our traditional area of
 strength in the fashion category. Most retailers like us then were
 primarily focused on the fashion category. However, we decided to go
 beyond and over the period of time have developed substantial scale and
 strength in food and fmcg, general merchandise and homewares, home
 improvement and consumer electronics. The size and scale of these
 operations is somewhat unparalleled in the industry. Our operations are
 spread across the country and our retail brands are most trusted and
 well recognized across India.
 
 However, developing this comes with a demand for patience, management
 bandwidth and resources. In most countries, retailers dealing in these
 categories can focus on retailing alone. But when we started to grow,
 we realized the need to create the industry around retail that could
 enable retail to take off. We started developing many of these
 businesses. And as we developed we also matured. Many of the businesses
 we had built, gained significant traction and had acquired a life of
 their own. Some of course didn''t. In this journey, since we were often
 the first, we made the maximum number of mistakes and learnt the most.
 And today, we are proud to say that we know each business threadbare,
 where the opportunities lie, which is the mirage and which is the
 oasis.
 
 Our retail business had supported the building of these businesses. A
 relatively small investment in setting up a financial services business
 few years back has today created more than ten times value for the
 company.  But that is clearly far, far below our expectation. A similar
 investment in setting up logistics network has created a far more
 significant value and attracted the world''s most prominent retail
 logistics business to invest, partner and grow it. Likewise other
 businesses too have matured and can now grow on their own without the
 financial support of the mothership.
 
 Pantaloon Retail was meant to be a retail business and that''s what it
 should be. Hence, we started to divest each of these non-core,
 non-retail businesses.  It allowed Pantaloon Retail to focus its
 resources on retail and each of the other businesses to take their own
 wings.
 
 Over the last eighteen months, we have divested Pantaloon Retail''s
 stake in most non-retail businesses and created a focused, wholly-owned
 subsidiary to operate its value retail business that includes Big
 Bazaar.  The only large non-retail business still partially owned by
 Pantaloon Retail is our consumer finance and insurance business and we
 intend to separate them from Pantaloon Retail and create a retail
 pure-play.  However, these are substantial businesses it takes time and
 patience to track external factors and find the most opportune time.
 
 Challenges & Opportunities
 
 As we move ahead, we foresee new challenges and new opportunities. The
 most significant of this relates to our most crucial raw material –
 good spaces in good locations in key Indian cities. Domestic
 consumption is expected to double within this decade and a large part
 of it will happen through modern retail. However in all our crowded
 metropolises, there is little new space available to build the next
 generation of shopping mall and consumption centers. As modern retail
 grows, quality real estate will get more and more scarce. Through our
 scenario planning exercises we have made an indepth analysis of such a
 situation. And keeping this in mind, we have taken two key strategic
 directions.
 
 For the near term, we have booked more than 9 million square feet of
 prime spaces in India''s largest cities. We believe that this will give
 us a key competitive advantage as completion gains traction and with
 the imminent entry of foreign players.  This real estate pipeline will
 help us secure our growth at a lower cost than competitors.
 
 For the longer term, we are building a strong presence in the digital
 space. Through a connected commerce platform, our strategy is to
 capture a substantial part of new consumption across categories through
 the digital space. We are leveraging our sourcing strengths in all
 product categories, our logistics and delivery network and lower cost
 of customer acquisition and integrating it with a strong technology
 backbone.  This has the potential to be a game changer and a
 significant value creator for the organization in the longer run. We
 believe that our connected commerce platform on the digital space has
 the potential to contribute around 15% of our turnover at significantly
 lower cost.
 
 With all the investments in technology, infrastructure and manpower, we
 believe we have today built an organization that is capable of
 delivering far more growth and productivity. And therefore we believe
 that the best of times is ahead of us. The Indian consumption story is
 yet to begin in its full glory. In all developed economies, retailers
 are among the largest businesses, wealth creators, employers and we
 will expand prudently and wait patiently for our turn. We thank you for
 your attention, nurturing and patience in helping transform this very
 unique organization from its infancy to its youth.
 
 Rewrite Rules, Retain Values
 
 Kishore Biyani