The Directors have great pleasure in presenting the Ninth Directors
 Report of the company with the audited statements of accounts for the
 year ended March 31,2010.
 
 Financial Highlights                               (Rs. in million)
 
 PARTICULARS                          Year ended        Year ended
                                      31.03.2010        31.03.2009
 
 Income from Operations                 11054.59          13232.34
 
 Other Income                             130.28             94.84
 
 Total Income                           11184.87          13327.18
 
 Total Expenditure except 
 interest cost                          16139.32          13778.09
 
 Interest                                 894.43            925.03
 
 Profit(+) & Loss(-) before tax 
 (3)-(4+5+6)                            (5848.88)         (1375.94)
 
 Provision for Taxation                     Nil              Nil
 
 Tax Adjustments                         2238.89            458.81
 
 Net Profit (+) & Loss 
 (-) after tax(7-8)                     (3609.99)          (917.13)
 
 Brought forward from Previous year      (121.83)           823.02
 
 Extra Ordinary Item &
 Prior Period Adjustment                 (537.18)          (27.73)
 
 Amount available for appropriation         Nil              Nil
 
 Less: Provision for Preference 
 Dividend                                   Nil              Nil
 
 Less: Provision for Dividend 
 Distribution Tax                           Nil              Nil
 
 Balance carried to Balance Sheet        (4269.00)         (121.84)
 EPS(ln Rs for Equity Shares 
 of par value of Rs.10/- each)
 
 Basic (before extraordinary items)       (162.47)          (42.18)
 
 Basic (after extraordinary items)        (185.15)          (42.18)
 
 Diluted (before extraordinary items)     (162.47)          (42.18)
 
 Diluted (after extraordinary items)      (185.15)          (42.18)
 
 PERFORMANCE REVIEW
 
 Retail industry has faced various challenges due to economic melt down.
 Most of the companies in the organized retail sector have seen a
 decline. Similarly it has not been a year of growth for the company.
 The Company has seen decline in turnover by 16.46%. Due to reduction in
 sales and consequential rise in expense burden your company has seen
 increased losses during the year 2009-10 which reached to Rs. 4269
 Million.
 
 The Company has attempted to recover from the situation during the
 current year and several corrective measures have been taken in
 operational restructuring, cost reduction to sustain in the current
 situation of the Company.
 
 Continuing the cost control exercise, 15 unviable stores of the Company
 have been closed and the Company has adopted centralized warehousing
 system, 22 regional warehouses have been closed down. The operations
 have been rationalized based on the current size of operations of the
 company.
 
 The Company has also closed down all manufacturing set-ups.
 
 The company is under process of restructuring its debts through
 corporate debt restructuring mechanism. During the financial year
 2009-2010 company has submitted its proposal under corporate debt
 restructuring mechanism to CDR cell for restructuring its secured as
 well as unsecured debts. SBI, HDFC, HSBC, ING Vyasa, UCO bank and BOI
 are participating banks under the CDR mechanism. CDR empowered group
 has approved the proposal of the Company
 
 As per market analysis the retail industry in India is expected to grow
 during the time to come with many retailers maturing in the trade and
 with new entrants joining the business. The customer base of organized
 retail is growing rapidly.
 
 The company has made several efforts during the year and will be
 continuing its efforts to minimize losses and improve profitability
 during the ensuing year.
 
 OPERATIONS REVIEW
 
 - During the year, the Company closes down 15 unviable stores and 11
 new stores have added across various locations. The company has 171
 stores and has reduced 0.78 Lakh Sq. Ft. of Retail Space during the
 financial year ended March 31,2010.
 
 - The Company has now adopted the centralized warehousing system. The
 number of warehouses have been reduced to 4 only from the previous 26
 warehouses, 22 of the regional warehouses have been closed down during
 the year.
 
 - Considering all the restructuring measures taken during the year by
 the company and based on those actions which will follow as per the
 planned action mechanism instituted, the company is expected to witness
 the changes/ benefits of all those actions during the following year.
 
 INDUSTRIAL RELATIONS
 
 The relations between the Company and its employees continued to be
 cordial and harmonious throughout the year under review.
 
 However, due to economic meltdown several employees left the Company
 during the financial year.
 
 MATERIAL CHANGES AFTER BALANCE SHEET DATE
 
 Memorandum of Understanding with strategic Investor
 
 The Company has entered into Memorandum of Understanding (MOU) with
 Texas Pacific Group (TPG) in accordance with Corporate Debt
 Restructuring scheme approved by the lenders of the Company.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management Discussion and Analysis has been dealt extensively in
 the Annexure I to this Report.
 
 DIVIDEND
 
 In view of the loss for the current financial year, your directors do
 not propose to declare any dividend for this year.
 
 PUBLIC DEPOSIT
 
 During the year, the Company has not accepted any deposit under Section
 58Aof the Companies Act, 1956.
 
 DIRECTORS
 
 Ms. Uma Agarwal Whole time Director of the Company retires by rotation
 and being eligible offers herself for reappointment at the ensuing
 Annual General Meeting.
 
 Mr. Jai Prakash Shukla, Director of the company liable to retire by
 rotation, whose term as additional director lapse at the ensuing Annual
 General Meeting, is proposed to be reappointed in the ensuing Annual
 General Meeting, pursuant to the receipt of Notice u/s 257 in his
 favor. Mr. Jai Prakash Shukla was appointed as Additional Director on
 September 30, 2009 and on the same date appointed as the Whole time
 Director of the Company for a term of 5 years.
 
 Mr. Surendra Kumar Agarwal, Director, resigned from the company on 30th
 September 2009.
 
 Mr. Rakesh Agarwal, Director, resigned from the company on 30th
 October,2009.
 
 Mr. Bharat Jain, Director, resigned from the company on 2nd August
 2010.
 
 Mr. Sandeep Kumar, Director, resigned from the company on 1st
 September, 2010.
 
 SUSIDIARY COMPANIES
 
 The Company has 7 subsidiary Companies namely, VRL Foods Limited, VRL
 Movers Limited, VRL Consumer Goods Limited, VRL Fashions Limited, VRL
 Infrastructure Limited, VRL Retail Ventures Limited and VRL Knowledge
 Process Limited. Out of the same 4 Companies viz. VRL Movers Limited;
 VRL Infrastructure Limited, VRL Retail Ventures Limited and VRL
 Knowledge Process Limited are subsidiaries by virtue of control over
 composition of the Board of Directors. None of the
 subsidiariescompanies have commenced business operations during the
 year.
 
 AUDITORS
 
 The existing auditors M/s Haribhakti & Co., Chartered Accountants,
 retires at the conclusion of the ensuing Annual General Meeting and
 being eligible, offer themselves for reappointment.
 
 The Auditors have put certain qualifications to which the management
 has put forward the following below mentioned replies;
 
 Qualification and response to Auditors Report
 
 Para 4 (a) (i) The accumulated losses ofRs.4269 Mn as at March 31, 2010
 exceed the net worth of the Company. Para 4 (a) (ii) Certain lenders
 have filed winding up petition against the Company in High Court.
 However the accounts have been drawn on going concern assumption as the
 company has made a proposal under corporate debt restructuring scheme
 to CDR cell for restructuring of its secured as well as unsecured debts
 and expects turnaround.
 
 Companys business is supported by lenders/ creditors and working
 capital is positive. Further company has become EBITDA positive in the
 first quarter. Considering the above, excess of accumulated losses over
 net worth of the company will have no negative impact on the operations
 and running of the company.
 
 Winding up petitions have been filed by certain lenders, but Honorable
 Courts have not given decision which has any negative impact on running
 of business. Further we are seeking legal opinions to vacate those
 orders. We are also approaching our lenders for amicable solution.
 
 From the above, management do not see any event which may lead to a
 reason wherein company should not be considered as going concern. Based
 on the same assessment, accounts have been drawn on going concern
 assumption.
 
 Para 5 (i) (a) Basis and supporting for write off of inventory
 amounting to Rs.3,41,71,59,919 on account of pilferage, shrinkage, slow
 moving, non moving, obsolete and damaged goods.
 
 The company started the process of identification of inventory which
 were slow-moving, non-moving, dead, obsolete and damaged during the
 year. The company has substantially completed this exercise during the
 financial year. Now the perpetual controls have been put in place to
 continuously monitor the inventory.
 
 Para 5 (i) (b) Adequate documentary evidence for display charges
 included in other Income amounting to Rs. 2,86,02,715 recognized in
 the Profit & loss Account.
 
 The arrangements of display where company allows vendors/ companies to
 display their products are seasonal and not regular in nature, though
 we have adequate control on the collections from all the vendors. The
 above amounts are not material and significant in size in each
 arrangement. Though company obtains/ keeps contracts in cases where
 each arrangement is regular and material in nature.
 
 Para 5 (i) (d) Basis for write off of sundry balances amounting to Rs.
 1,40,33,201 included in other expenses in schedule 16.
 
 The company made an assessment and has written off deposits/ advances
 which were not expected to realize in future.
 
 Para 5 (iv) (a) Accounting Standard 2-Valuation of Inventories The
 cost of valuation of inventories does not include Octroi, mandi tax,
 entry tax, input VAT, freight inwards and discount received on the
 purchase. The impact of such valuation from AS2 is currently
 unascertainable.
 
 Considering the complexity of transaction, movement of stock and number
 of SKUs, current system is not supportive to charge expenses like
 octroi, mandi tax, entry tax, input VAT etc on specifically identified
 inventory, hence we have not taken them in account Jor valuation of
 inventory but same have been charged to profit and loss account.
 Further the quantum of amount involved in not too high.
 
 Para 5 (iv) (b) Accounting Standard 28-lmpairment of Assets: whereby
 no assessment for impairment of assets if any was carried out during
 the year by the management.
 
 The company has valued assets at cost less accumulated depreciation and
 is following the same policy consistently and due to scattered stores,
 huge asset base and the nature of assets the company has not accounted
 for loss on account of impairment.
 
 Para 5 (iv)(c) Accounting Standard-22 Accounting for taxes on income
 The company has recognized Deferred Tax Asset amounting to Rs.
 2,62,64,99,840 as at 31st March 2010 even though the company has
 incurred operating loses in the current year and in earlier years and
 there is no convincing evidence as to virtual certainty of future
 income.
 
 We have seen economic slowdown in past years due to which company
 operating profit margins went under pressure and there was some
 financial imbalance. Now, the company has been witnessing growth in
 sales and EBITDA margins gradually. All required mark down in the value
 of slow moving, non moving and obsolete stock has already been provide
 for. From all these indicator we found that there is virtual certainty
 that company will be able to make sufficient profits and accordingly
 Deferred Tax Asset has been recognized.
 
 Para 5 (vi) (a) The balances of unsecured loans amounting to Rs.
 1,60,45,87,755 from various banks and financial institutions are
 subject to confirmation and reconciliation.
 
 We have made full efforts for getting confirmation from unsecured
 lenders but due to CDR process going on, some of the lenders were
 unable to given confirmations.
 
 Para 5 (vi) (b) The balance of sundry debtors Rs. 2,91,57,235 and
 Sundry creditors Rs. 1,23,51,04,887 are subject to confirmation and
 reconciliation.
 
 The company has taken note of the same and will act upon the same for
 getting reconciliation/ confirmation. The creditors as at 31 st March
 2010 have been paid in the months of April, May and June in majority
 and hence major portion is reconciled. As the numbers of suppliers are
 more and reconciliation is expected to take time, the company will
 complete the exercise of reconciliation in due course of time- Para 5
 (i) (c) Adequate documentary evidence to support write off of capital
 work in progress amounting to Rs. 78,69,388 included in prior period
 expenses.
 
 The company has identified certain capital assets under progress which
 were not to be installed due to closing down of respective projects.
 The identified assets were written off accordingly from the books of
 accounts.
 
 DIRECTORSRESPONSIBILITY STATEMENT
 
 Pursuant to the requirements of Section 217(2AA) of the Companies Act,
 1956, the Directors of the Company hereby confirm:
 
 That in the preparation of the annual accounts, the applicable
 accounting standards had been followed along with proper explanation
 relating to material departures;
 
 That the Directors had selected such accounting policies and applied
 them consistently and made judgments and estimated that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the company at the end of the financial year and of the profit or
 loss of the company forthe period under review;
 
 That the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the company and
 for preventing and detecting fraud and other irregularities;
 
 That the Directors had prepared the annual accounts for the year ended
 31 st March 2010 on a going concern basis.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 A Statement giving details of Conservation of energy, technology
 absorption and foreign exchange earnings and outgo as required u/s
 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure
 of particulars in the Report of Directors) Rules 1988, has been
 enclosed asAnnexure- II to this report
 
 REPORT ON CORPORATE GOVERNANCE
 
 The Report on Corporate Governance along with Auditors Certificate on
 the same has been enclosed as an Annexure III to this Report.
 
 OTHER INFORMATION
 
 Information as per section 217 (2A) of Companies Act, 1956, read with
 companies (particular of employees) Rules, 1975 forms part of this
 report. However, as per the provisions of section 219 (b) (iv) of
 Companies Act, 1956, the reports and the accounts are being sent to all
 members of the Company, excluding the information required under sec
 217 (2A) of the Companies Act, 1956, read with the Companies
 (Particulars of Employees) Rules, 1975, as amended.  Any member
 interested in obtaining such information may write to the Company
 Secretary at the registered office. The said information is also
 available for inspection at the corporate office during working hours
 up to the date of Annual General Meeting.
 
 ACKNOWLEDGEMENT
 
 The Directors wish to thank and deeply acknowledge the co- operation,
 assistance and support extended by the Central Government, the State
 Governments, the Companys Bankers, the Shareholders, the dealers,
 vendors of the company in the success and growth of the Company. The
 Directors also wish to place on record appreciation forthe co-operation 
 and contribution made by the employees atall levels.
 
                             On behalf of the Board of Directors
 
                                                          sd/-
  Date: 30.09.10                           Ram Chandra Agarwal
 
 Place :NewDelhi                                      Chairman
 
                                                 Din:-00491885