Shoppers Stop

1.  We have audited the attached Balance Sheet of Shoppers Stop
 Limited, as at 31 March 2009 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, 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:
 
 (a) 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.
 
 (b) 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.
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account.
 
 (d) 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 sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 (e) On the basis of written representations received from the Directors
 as on 31 March 2009 and taken on record by the Board of Directors none
 of the directors are disqualified as on 31 March 2009 from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Companies Act, 1956.
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the accounts read together with the
 accounting policies and notes thereon 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:
 
 i.  in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 March 2009;
 
 ii.  in the case of the Profit and Loss Account, of the loss for the
 year ended on that date; and
 
 iii.  in the case of the Cash Flow Statement, of the Cash Flows for the
 year ended on that date.
 
 Annexure to the Auditors Report
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  The nature of the Companys business/activities for the year are
 such that the requirements of items (i-c), (vi), (viii), (x), (xii),
 (xiii), (xiv), (xviii), (xix) and (xx) of paragraph 4 of the Order are
 not applicable to the Company.
 
 2.  In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 (b) Some of the fixed assets were physically verified during the year
 by the management in accordance with a programme of verification, which
 in our opinion provides for physical verification of all the fixed
 assets at reasonable intervals. According to the information and
 explanations given to us no material discrepancies were noticed on such
 verification.
 
 3.  In respect of its inventories:
 
 (a) As explained to us, inventories were physically verified by the
 management at reasonable intervals during the year.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 4.  The Company has not taken any loans from parties covered under
 Section 301 of the Companies Act, 1956. In respect of loans granted
 during the year to parties covered in the register maintained under
 section 301 of the Companies Act 1956, according to the information and
 explanations given to us:
 
 i. The company has granted an unsecured loan to one party. At the
 year-end, the aggregate outstanding balance of the loan was Rs. 116.49
 million. The maximum amount outstanding during the year was Rs. 612.38
 million.
 
 ii. In our opinion, the rate of interest and other terms and conditions
 of the loan are prima facie not prejudicial to the interests of the
 Company.
 
 iii.  The repayment of principal amounts and receipt of interest during
 the year have been regular.
 
 iv.  There are no overdue amounts of principal or interest at 31 March
 2009.
 
 5.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory and fixed assets and for the sale of goods and
 services. We have not observed any continuing failure to correct major
 weaknesses in such internal controls.
 
 6.  In respect of contracts or arrangements entered in the register
 maintained in pursuance of Section 301 of the Companies Act, 1956 to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of the contracts or arrangements referred to in
 Section 301 that needed to be entered in the register, maintained under
 the said section, have been so entered.
 
 (b) Where each of such transactions (excluding loans reported under
 paragraph 4 above) is in excess of Rs. 5 lakhs in respect of any party,
 we are informed that the nature of transaction is such that there are
 no comparative prevailing market prices.
 
 7.  In our opinion, the internal audit function 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.
 
 8.  In respect of Statutory dues, according to the information and
 explanations given to us:,
 
 i. The Company has generally been regular in depositing undisputed
 statutory dues including Provident Fund, Employees State Insurance,
 Income-tax, Value Added tax, Service tax, Custom duty, Cess and other
 material statutory dues with the appropriate authorities during the
 year.
 
 Annexure to the Auditors Report
 
 ii.  There are no disputed dues relating to Customs Duty, Service Tax
 and Cess which have not been deposited with the relevant authorities.
 Details of disputed statutory dues which have not been deposited as at
 31 March 2009 are set outgiven below:
 
 Name of the Statute      Nature of the dues          Amounts
                                               (Rs. in millions)
 
 The West Bengal Value      Sales Tax Demand          2.73
                            Added Tax, 2003
 
 The Income Tax Act, 1961   Income Tax Demand       5.16
 
 Period to which the         Forum where
 amount relates              dispute is pending
 
 F. Y 2005-06                Additional
                             Commissioner,
                             Commercial Taxes,
                             West Bengal
 F. Y 2005-06                Deputy Commissioner
                             of Income Tax
                             Appeals
 
 9.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 banks.
 
 10.  In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by its joint venture companies from banks are
 prima facie not prejudicial to the interests of the Company.
 
 11.  To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 obtained were, prima facie, applied by the Company during the year for
 the purposes for which the loans were obtained.
 
 12.  According to the information and explanations given to us, and on
 an overall examination of the Balance Sheet of the Company, funds
 raised on short-term basis have, prima facie, not been used during the
 year for long-term investment.
 
 13.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on or by
 the Company was noticed or reported during the year.
 
 
 
                                    For Deloitte Haskins & Sells,
                                           Chartered Accountants
                                                P. B. Pardiwalla
                                                         Partner
                                            Membership No. 40005
 Place: Mumbai
 Date: 29 April, 2009