1.  We have audited the attached Balance Sheet of Shoppers Stop Limited
 (the Company) as at 31 March 2011, the Profit and Loss Account and
 the Cash Flow Statement of the Company for the year ended on that date,
 both 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 misstatements.  An audit
 includes examining, on a test basis, evidence supporting the amounts
 and the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the significant estimates
 made by the 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 Section 227(4A) 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 in paragraph 3
 above, we report as follows:
 
 (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 it appears from our examination of
 those books;
 
 (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211 (3C) of the
 Companies Act, 1956;
 
 (e) Without qualifying our opinion, attention is invited to Note 24 of
 the Financial Statements regarding non-provision of service tax for the
 period 1 June 2007 to 31 March 2010 on renting of immoveable properties
 given for commercial use, aggregating Rs. 1,619 lacs. The retrospective
 levy of service tax has, inter-alia, been challenged by the Company in
 various High Courts and an interim stay has been granted by the various
 High Courts from the recovery of the said service tax. The matter is
 contingent upon the final outcome of the litigation.
 
 (f) in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5.  On the basis of written representations received from the Directors
 as on 31 March 2011 and taken on record by the Board of Directors, none
 of the Directors is disqualified as on 31 March 2011 from being
 appointed as a director in terms of Section 274(1)(g) of the Companies
 Act, 1956.
 
 Annexure to the Auditors Report (Referred to in paragraph (3) thereof)
 In our opinion and according to the information and explanation given
 to us, the nature of the Companys business/activities during the year
 are such that clauses (vi), (viii), (x), (xii), (xiii), (xiv) and (xix)
 of Companies (Auditors Report) Order 2003, are not applicable to the
 Company. In respect of the other clauses, we report as under:
 
 1.  In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the 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.
 
 (c) During the year, in our opinion, a substantial part of fixed assets
 has not been disposed off by the Company.
 
 2.  In respect of its inventory:
 
 (a) As explained to us, the inventories were physically verified during
 the year by the Management at reasonable intervals.
 
 (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.
 
 3.  The company has not taken any loans, secured or unsecured, from
 companies, firms or other parties listed in the Register maintained
 under Section 301 of the Companies Act, 1956. In respect of loans,
 secured or unsecured, granted by the Company to companies, firms or
 other parties covered in the Register maintained under Section 301 of
 the Companies Act, 1956, according to the information and explanations
 given to us:
 
 (a) The company has granted unsecured loans to one party during the
 year. At the year-end, the outstanding balance of such loans aggregated
 Rs. 12,565.54 lacs and the maximum amount involved during the year was
 Rs. 13,685.45 lacs.
 
 (b) The rate of interest and other terms and conditions of such loans
 are, in our opinion, prima facie not prejudicial to the interests of
 the Company.
 
 (c) The payment of principal and interest in respect of such loans are
 as per stipulations.
 
 (d) There are no overdue amounts of principal or interest as at 31
 March 2011.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchases of inventory and fixed assets and the sale of goods and
 services. During the course of our audit, we have not observed any
 major weakness in the aforesaid internal control systems.
 
 5.  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 is in excess of Rs. 5 lacs in
 respect of any party, we are informed that the nature of transaction is
 such that there are no comparative prevailing market prices.
 
 6.  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.
 
 7.  According to the information and explanations given to us, and the
 records of the Company examined by us in respect of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 dues including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service
 Tax, Customs Duty, Excise Duty, Cess and other material statutory dues
 applicable to it with the appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of Income-Tax,
 Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and
 other material statutory dues in arrears as at 31 March 2011 for a
 period of more than six months from the date they became payable.
 
 (c) There are no disputed dues relating to Sales Tax, Wealth Tax,
 Service Tax, Excise Duty and Cess which have not been deposited with
 the relevant authorities as at 31st March, 2011.
 
 The details of dues of Income-Tax and Customs Duty which have not been
 deposited as on 31 March 2011 on account of any disputes are given
 below:
 
 Name of the 
 Statute       Nature of dues   Period to which the  Forum where
                                amount relates       dispute is  
                                                     pending 
 
 The Income-
 tax Act,      Income-tax       FY 2007-08           Dy. Commissioner
 1961                                                (Appeals)
 
                                FY 2008-09           Dy. Commissioner 
                                                     (Appeals)
 
 The Customs 
 Act, 1962     Custom duty      FY 2007-08           Commissioner
                                                     (Appeals)
 
 Name of the Statue    Amount under dispute not yet deposited
                                (Rs. in Lacs)
 
 The Income- tax Act,            74.96
 1961
 
                                 74.40
 
 The Custom Act, 1962            17.09
 
 8.  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.
 
 9.  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
 not prima facie prejudicial to the interests of the Company.
 
 10.  In our opinion and according to the information and explanations
 given to us, the term loans obtained have been applied for the purposes
 for which they were obtained.
 
 11.  In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used during
 the year for long-term investment.
 
 12.  During the year, the Company has made preferential allotment of
 shares against optionally convertible warrants issued in the previous
 year to Companies covered in the Register maintained under Section 301
 of the Companies Act, 1956. The price at which these shares have been
 allotted, has been determined as per the Securities and Exchange Board
 of India (Issue of Capital and Disclosure Requirements) Regulations,
 2009, which in our opinion, is not prejudicial to the interest of the
 Company.
 
 13.  We have verified the end use of moneys raised by public issue viz.
 qualified institutional placement and the same has been disclosed in
 Note 37(ii) of the financial statements.
 
 14.  To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no significant
 fraud on the Company has been noticed or reported during the year.
 
 
 
 For Deloitte Haskins & Sells,
 Chartered Accountants 
 (Registration No. 117366W)
 
 Shyamak R. Tata
 Partner
 Membership No. 38320 
 
 Place: Mumbai 
 Date : 29 April, 2011