Pantaloon Retail

DEAR SHAREHOLDERS
 
 It gives me immense pleasure to present your companys Annual Report
 for the year 2007-2008. During the previous financial years, we had
 shared with you our ideas and plans for new businesses that will help
 us capture a sizeable portion of the 0 billion consumption economy
 in India. In line with these plans, we had taken a number of strategic
 steps and started new businesses focused on various opportunities in
 the consumption ecosystem.  For many of these businesses, the financial
 year 2007-08 marked the completion of the first full year of
 operations. And this also marked two significant transformational
 changes that your company went through.
 
 The first and more obvious development has been the stabilising of each
 of our businesses.  We have now acquired the knowledge, skills and
 understanding of the challenges and opportunities that are there in
 each of the businesses. We have also been able to attract world-class
 talent and people resources to these businesses. Each of these
 businesses has passed through their initial start-up phase and the
 benefits of entering the phase of growth and consolidation is just
 about to reflect in the value-creation that your company will generate.
 
 A significant outcome during this financial year has been the listing
 of a subsidiary company, Future Capital Holdings (FCH). FCH is in the
 investment advisor to funds worth around  billion and also operates
 a fast growing arm focused on financial products retailing.  Your
 company holds a majority stake in FCH.  During the forthcoming year, we
 will continue to explore opportunities and different channels that will
 help unlock more value from the different subsidiaries of your company.
 
 Another encouraging development was Future Generali launching its
 portfolio of insurance products in the Indian market.  The life
 insurance and the general insurance ventures of your company hold
 immense potential to create long term value in your company. The
 companys specialised businesses in the areas of logistics, brand and
 Intellectual Property Rights (IPR) development, retail media services
 and retail technology services too have made significant progress in
 creating a favorable niche for themselves. As you will notice in this
 Annual Report, your company has put a lot of emphasis on exploiting the
 synergies that exist across these businesses. This is now helping your
 company pursue a more concerted strategy towards catering to the entire
 consumption space.
 
 The second significant transformation has been the internal strategic
 alignment that your company went through during the financial year
 2007-08. During the past couple of months, the external economic
 environment has been going through a period of strain. Your companys
 management team had noticed the rising cost of business and had almost
 eighteen months back proactively initiated a number of measures towards
 strategic realignment and cost controls.  We had, on an ongoing basis,
 conducted scenario planning exercises and rigorously reviewed our
 business plans to derive maximum efficiency, productivity and
 resilience against external factors. The results of the emphasis on
 efficiency, productivity and cost control have already started to
 become evident in your companys financial performance.
 
 These strategic steps are providing us with a significant competitive
 advantage over other players in the business. We are happy to share
 that our expansion plans have been right on track and we do not
 anticipate any changes in the financial and operational goals that we
 had set for ourselves. By 2011, the groups retail operations are
 expected to span across 30 million square feet.
 
 A critical factor that has helped us in this regard has been our
 engagement with globally reputed consultancy major, McKinsey & Co. We
 have been able to successfully adopt a number of strategic measures,
 including building a process- driven approach towards markdowns and
 discount planning, better inventory management and assessment and
 evaluation of individual business units based on Return on Capital
 Employed (RoCE).
 
 Along with McKinsey & Co., we have also been able to map in detail, the
 size of the opportunity and the addressable market that exists in every
 category spend of the Indian consumer. Based on this we have developed
 a roadmap for necessary organizational initiatives that need to be
 taken to capture a sizeable portion of the opportunity.
 
 The size of the entire consumption economy in India is estimated to be
 around 0 billion and it can be divided across some key categories
 wherein the Indian customer spends his or her money. Even by
 conservative estimates, atleast  billion of additional consumption
 will be generated every year. It is incumbent on us to develop right
 organizational capabilities and business models to capture this in the
 most profitable manner.
 
 In this Annual Report, we have presented you the review of your
 companys business initiatives in each of these categories along with
 the group synergies that are helping the company address these
 opportunities in a more holistic manner.
 
 For us, the journey of transformation into Indias leading player in
 the consumption space has begun and we would like to thank you for your
 continued trust, support and encouragement in making this such an
 eventful one.
 
 Best regards
 Kishore Biyani