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Future Enterprises-DVR.

BSE: 570002 Sector: Others
NSE: FELDVR ISIN Code: IN9623B01058
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VOLUME 1433
52-Week high 57.80
52-Week low 14.65
P/E 2.50
Mkt Cap.(Rs cr) 183
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Future Enterprises-DVR. (FELDVR) - Director Report

Company director report

DIRECTORS

To

The Members

Your Directors are pleased to present the Twenty Sixth Annual Report together with theAudited Statements of Accounts for the period ended March 31 2014.

FINANCIAL HIGHLIGHTS

The operating results of the Company for the period under review are as follows:

(Rs. in Crores)

January 012013 to March 31 2014 July 01 2011 to December 31 2012
Sales (Net of Taxes) 11336.16 6771.78
Other Operating income 241.28 215.95
Other income 27.74 27.70
Total income 11605.18 7015.43
Profit before Depreciation Exceptional items & Tax 374.95 343.59
Less: Depreciation 404.34 311.87
Profit before Tax (29.39) 31.72
Exceptional items 30.66 256.60
Less: Earlier Year's income Tax - -
Less: Provision for Taxation (1.54) 15.06
Profit after Tax 2.81 273.26
Add: Profit brought forward from previous year 654.07 506.35
Surplus available for appropriation 656.89 779.61
appropriation
Excess Provision Reversal of Tax on Dividend - (0.85)
Pursuant to the composite schemes of arrangements 451.62 -
Debenture Redemption Reserve 120.00 69.38
Proposed Dividend 13.97 25.54
Proposed Dividend on Preference Share - -
Provision for Dividend Tax 2.37 4.14
Transfer to General Reserve 0.28 27.33

REVIEW OF PERFORMANCE

The performance review is for the financial period of fifteen months pursuant toextension of the present accounting period by three months. in the current financialperiod we mark beginning of a new innings and laying the foundation for the Company'sfuture as major realignment initiatives of the Company have been achieved. The Companyhas also changed its name to Future Retail Limited from its earlier name viz. PantaloonRetail (India) Limited. The Company is now operating in hypermarket and home businessincluding Big Bazaar Food Bazaar fbb Home Town and eZone.

We are pleased to inform you that the Retail business of the Company has been showinggrowth trend during the financial period under review. The Company is now present inhypermarket segment and home business and for the period under review recorded growththrough increase in presence in various cities. income from operations for the financialperiod under review were at Rs. 11577.44 crores which was at Rs. 6987.73 crores duringthe financial period of 2011-12. PBDiT excluding exceptional items stood at Rs. 1067.49crores in during the financial period of 2013-14 which was at Rs. 804.00 crores in theprevious financial period. PAT for the financial period under review was Rs. 2.81 croreswhich was at Rs. 273.26 crores for the preceding financial period. Due to variousrealignment exercises undertaken by the Company and different duration of the current andprevious financial period the current financial period result is not comparable with theprevious financial period which was of eighteen months.

During the financial period 2013-14 the Company is operating through 10.36 millionsquare feet of retail space spread over pan india basis.

SCHEME OF ARRANGEMENT:

As part of realignment exercise the Company has given effect to three Schemes ofArrangement during the financial period under review detail of which are given hereunder:

1. Scheme of Arrangement between the Company and Pantaloons Fashion and Retail Limited.

Pursuant to the approval of the members at the Court Convened Meeting held on December06 2012 the Company filed petition with the Hon'ble High Court at Bombay for demerger ofPantaloons Format Business to Peter England Fashions and Retail Limited now known asPantaloons Fashion and Retail Limited (PFRL). The demerged undertaking comprises ofCompany's business under the name "Pantaloons" together with all assetsliabilities brands etc. attached to the said Brand.

Your directors are pleased to inform that the demerger of Pantaloon Format BusinessScheme has been approved by the Hon'ble High Court of Judicature at Bombay on March 12013 and thereafter on filing of the certified copy of the court order with Registrar ofCompanies Maharashtra Mumbai on April 8 2013 the entire assets and liabilitiespertaining to Pantaloons Format Business were transferred and stand vested as a goingconcern in the PFRL effective from July 1 2012 ("Appointed Date").

Pursuant to the approved scheme PFRL without any further application or deed issuedand alloted shares credited as fully paid up to the extent indicated below to themembers (including Class B (Series 1) shareholder) whose name appeared in the Register ofMembers of Company as on the Record Date (April 18 2013) or to their respective heirsexecutors administrators or other legal representatives or the successors-in-title asthe case may be in the following manner:

"1 (One) fully paid Equity Share of Rs. 10/- (Rupees Ten Only) each of PFRL forevery 5 (Five) Equity Shares of Rs. 2/- (Rupees Two) each held in the Company.

1 (One) fully paid Equity Share of Rs. 10 (Rupees Ten Only) each of PFRL for every 5(Five) Class B (Series 1) shares of Rs. 2 (Rupees Two) each held in the Company."

Fractional entitlement arising out of the aforesaid allotment were consolidated andallotted to one of the persons nominated by PFRL Board. Sale Proceeds of these shares wasdistributed to shareholders who were entitled to such fractional shares. The shares of thePFRL were listed on the Stock Exchanges after compliance with the requirements of thestock exchanges and regulatory authorities.

2. Composite Scheme of Arrangement and Amalgamation between PRiL (FRL) FViL(FCEL)LEE iLCL and FLFL

The Composite Scheme of Arrangement and Amalgamation between Pantaloon Retail (india)Limited (now known as -'Future Retail Limited') and Future Lifestyle Fashions Limited(FLFL) and indus-League Clothing Limited and Lee Cooper (India) Limited and FutureVentures India Limited (now known as - 'Future Consumer Enterprise Limited') (FCEL) andtheir respective shareholders and creditors ("the Fashion Scheme") under theprovisions of sections 391-394 of the Companies Act 1956 for demerger of respectivefashion format business of the Company (Fashion Format Business) and FCEL with effect fromAppointed Date of January 1 2013 as defined in the Fashion Scheme has been given effecton May 29 2013 after receipt of High Court approval. Pursuant to the same all theassets and liabilities pertaining to the Fashion Format Business has been demerged andvested in FLFL. Accordingly the shares of FLFL have been issued to the shareholders ofthe Company as on the June 25 2013 as stated in the Fashion Scheme as per entitlementratio of 1 (One) fully paid Equity Share of Rs. 2/- (Rupees Two Only) each of FLFL forevery 3 (Three) Equity Shares &/or Class B (Series 1) Share of Rs. 2/- (Rupees Two)each held in the Company.

Fractional entitlement arising out of the aforesaid allotment were consolidated andallotted to one of the persons nominated by FLFL Board. Sale Proceeds of these shares wasdistributed to shareholders who were entitled to such fractional shares. The shares of theFLFL were listed on the Stock Exchanges after compliance with the requirements of thestock exchanges and regulatory authorities.

3. Scheme of Amalgamation between the Company and Future Value Retail Limited

During the period under review the Board of Directors of the Company approved theamalgamation of Future Value Retail Limited (FVRL) with the Company pursuant to the Schemeunder Sections 391-394 of the Companies Act 1956 with effect from Appointed Date of July1 2012 ("the Retail Scheme"). FVRL is wholly owned subsidiary of your Companyhaving core retail business formats like Big Bazaar Food Bazaar etc. The Retail Schemefor merger of FVRL with effect from July 1 2012 has been approved by Hon'able High Courtof Judicature at Bombay on January 31 2013 and scheme has been made effective upon filingof the certified copy of court order with Registrar of Companies Maharashtra on February11 2014. Pursuant to the Retail Scheme all the assets and liabilities of FVRL was mergedand vested in the Company.

The Company issued debentures as stated in paragraphs given hereunder for thedebentures held by investors in FVRL. No shares were issued as 100% of capital in FVRL isheld by the Company.

4. Divestment of stake in Future Generali India Life Insurance Company Limited

On December 17 2013 the Company divested part of its stake in one of its Insurancejoint venture company Future Generali India Life Insurance Company Limited as a part ofCompany's strategy to focus on retail segment. At the end of the financial period endedMarch 31 2014 your Company directly holds 3% stake in Future Generali India LifeInsurance Company Limited.

DIVIDEND

The Board of Directors of the Company has recommended a dividend of Rs. 0.60 (30%) perequity share (previous financial period Rs. 1.10 (55%) per equity share) and dividend ofRs. 0.64 (32%) per Class B share (Series 1) (previous financial period Rs. 1.14 (57%) perClass B Share (Series 1) for the financial period ended March 31 2014. The said dividendshall be subject to the approval of the members at the ensuing annual general meeting.

The dividend if approved by the shareholders in the Annual General meeting shall basedon the paid up share capital as at the date of this report entail a payout of Rs. 16.34crores including dividend distribution tax of Rs. 2.37 crores. The dividend is free of taxin the hands of the shareholders.

EQUITY SHARE CAPITAL

Paid-up Share Capital

Equity Capital

After the completion of the financial period under review pursuant to the approval ofmembers through Postal Ballot and Employees exercise their options the Company issued andallotted 217594 equity shares of Rs. 2/- each to Employees under ESOS 2012 Scheme onApril 29 2014.

After above allotments the paid up equity share capital as on date Rs. 463600370divided into 215871033 equity shares of Rs. 2/- each and 15929152 Class B (Series-1)Shares of Rs. 2/-each.

DEBENTURES

Pursuant to the scheme of Amalgamation and Arrangement of Future Value Retail Limited(FVRL) a wholly owned subsidiary company with the company under the provisions of section391394 of the Companies Act 1956 for merger of FVRL with effect from Appointed Date ofJuly 1 2012 after receipt of approval of Hon'able High Court of Judicature at Bombay onJanuary 31 2013 and scheme has been made effective upon filing of the certified copy ofcourt order with Registrar of Companies

Maharashtra on February 11 2014. Pursuant to the same Compulsorily ConvertibleDebentures (CCDs) of Rs. 150 crores and Optionally Convertible Debentures (OCDs) of Rs.250 crores issued by FVRL transferred to the Company.

During the period under review the Company has raised long term funds throughNon-Convertible Debentures aggregating Rs. 275 crores. The funds raised were utilised forthe objects as stated at the time of raising of funds.

FIXED DEPOSITS

The Company has not accepted any Deposits during the period under review.

REPORT ON CORPORATE GOVERNANCE

A detailed report on Corporate Governance together with Auditors certificate asrequired under clause 49 of the listing agreement has been included as an enclosure tothis Report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

The management discussion and analysis as required under clause 49 of the listingagreement has been dealt with extensively as part of this Annual Report.

THE FUTURE

The focus on strengthening core competency in core retail operations by optimisingstore network improving store productivity by increasing store efficiency throughupgraded high margin product offering and rationalising the operating area.

Introduction of reinvented fbb product mix ensured availability of the fashionproducts for the youth and other customer categories at highly competitive pricing. Infood segment as well the new categories offered customers multiple choices resulting inbetter turnover. Similarly other categories such as furniture home furnishing andelectronics also offered revised product mix giving choice of hot and current products tocustomers. The Company also introduced the certain customer centric initiative resultingin addition of the new customer categories.

Further various realignment and divestment initiative ensured reduced debt burden onthe Company resulting in overall reduction in finance cost. In addition to the abovecertain strategic management changes made during the financial period under review wouldresult in further cost reduction and thereby contributing to the profitability in theyears to come.

SUBSIDIARY COMPANIES & JOINT VENTURES

SUBSIDIARY COMPANIES (In Alphabetical Order)

The Company has following subsidiaries (including step down subsidiaries) as at the endof financial period ended March 31 2014.

FSC Brand Distribution Services Limited

FSC Brand Distribution Services Limited (FSCBDSL) was incorporated to deal in thebusiness of distribution services. FSCBDSL is subsidiary of Future Supply Chain SolutionsLimited another subsidiary of the Company and accordingly is step down subsidiary of theCompany. The Company has earned revenue of Rs. 5.69 Crores & incurred net loss for Rs.4.29 Crores during the period ended March 31 2014.

Future E-Commerce Infrastructure Limited

Future E-Commerce Infrastructure Limited (FECIL) is to capture the consumption spacethrough the internet as well as other technology based and digital modes and provideinfrastructure services for the same. The Company has 70.43% stake in FECIL. The Companyalso has Convertible Preference Shares which has not yet been converted into equityshares. During the period ended March 31 2014 FECIL registered income from operationsamounting to Rs. 61.88 Crores and the net loss stood at Rs. 21.20 Crores.

Future Freshfoods Limited

Future Freshfoods Limited (FFL) is a company which caters to the sourcing and supply offresh food products to retail formats of the group. FVRL was holding company of FFLholding 79.17% of equity capital in FFL. The Company acquired the balance shares held byother shareholders in the Company and with merger of FVRL with the Company FFL became100% subsidiary of the Company. During the period ended March 31 2014 FFL registeredincome from operations amounting to Rs. 0.05 Crores and net loss stood at Rs. 0.44 Crores.

Future Home Retail Limited

Future Home Retail Limited (FHRL) has been created as subsidiary with the objective totransfer the retail electronic and consumer durable business from PRIL. During the periodended March 31 2014 FHRL registered total income of Rs. 0.01 Crore and net loss of Rs.0.0007 Crore.

Futurebazaar India Limited

Futurebazaar India Limited (FBIL) is set up as the e-Retailing arm of the Future Groupfor providing on-line shopping experience through e-portal www.futurebazaar.com. YourCompany holds 100% in FBIL. FBIL is successfully operating its e-retailing business andduring the period ended March 31 2014 it has registered income from operations amountingto Rs. 22.33 Crores and its net loss stood at Rs. 0.82 Crores.

Future Knowledge Services Limited

Your Company holds 100% in Future Knowledge Services Limited (FKSL) which has a netloss of Rs. 3.66 Crore as on March 31 2014.

Future Learning and Development Limited

Your Company holds 100% in Future Learning and Development Limited (FLDL) which hasduring the period ended March 31 2014 registered total revenue of ^ 0.10 Crore with netloss of Rs. 1.75 Crore.

Future Media (India) Limited

Future Media (India) Limited (FMIL) is the Group's media venture aimed at creation ofmedia properties in the ambience of consumption and thus offers active engagement tobrands and consumers. FMIL offers relevant engagement through its media properties likeVisual Spaces Print Radio Television and Activation. Your Company has 93.10% stake inFMIL. The Company also has Convertible Preference Shares which has not yet been convertedinto equity shares. During the period ended March 31 2014 FMIL registered income fromoperations amounting to Rs. 57.40 Crores and the net loss of Rs. 14.19 Crores.

Future Supply Chain Solutions Limited

Future Supply Chain Solutions Limited (FSCSL) is designed to operate in the logisticstransportation distribution and warehousing space. FSCSL provides solutions in the areasof integrated Supply Chain Management warehousing distribution and Multi Modaltransportation. Your Company has 70.17% stake in FSCSL. FSCSL has warehousing space of 2.7Million square feet spread over all across India. The company is currently building largescale warehousing facilities and also increasing its presence in 3PL logistics solutions.During the period ended March 31 2014 FSCSL registered income from operations amountedto Rs. 521.34 Crores and the earned net profit of Rs. 9.33 Crores.

Home Solutions Retail (India) Limited

Home Solutions Retail (India) Limited (HSRIL) was incorporated to operate in the homeand hard goods consumption space. Your Company has 66.86% stake in HSRIL. During theperiod ended on March 31 2014 HSRIL registered an income from operations of Rs. 0.05Crores and net loss of Rs. 1.05 Crores.

nuZone Ecommerce Infrastructure Limited

nuZone Ecommerce Infrastructure Limited (NEIL) has been created as subsidiary with theobjective to transfer the wholesale and sourcing business related to electronic andconsumer durable business from PRIL. During the period ended March 31 2014 NEIL has anet loss of Rs. 0.0009 Crore.

Office Shop Private Limited

Office Shop Private Limited (OSPL) was incorporated to deal in the business ofdistribution services. OSPL is 100% subsidiary of SFOPPL and accordingly is step downsubsidiary of the Company. The company has earned revenue of Rs. 59.42 Crores &incurred net loss for Rs. 5.20 Crores during the period ended March 31 2014.

Staples Future Office Products Private Limited

Staples Future Office Products Private Limited (SFOPPL) is designed to capture theconsumption space of office supplies office equipments and products. SFOPPL was formed asa Joint Venture between the Company and Staples Asia investment Limited (a subsidiary ofStaples inc USA) Your Company has 60% Stake in SFOPPL. During the period ended March 312014 SFOPPL registered income from operations amounting to Rs. 160.34 Crores and the netloss stood at Rs. 15.75 Crores. Your Company has acquired a part of the stake from StaplesAsia investment Limited by which SFOPPL became subsidiary of your Company.

Winner Sports Limited

Winner Sports Limited (WSL) is a wholly owned subsidiary of the Company. At present theWSL does not have any operating business and management is evaluating various businessopportunities. During the period ended March 31 2014 WSL registered net loss of Rs. 0.02Crore.

Companies which moved out of subsidiary status

Future Agrovet Limited (subsidiary upto 11-11-2013)

Future Agrovet Limited (FAL) is to strengthen sourcing and distribution of staples andother food products for the Company. FAL has sourcing and distribution bases at all keycities across the country. The Company was holding 96.16% stake in FAL. The Companydivested the stake in FAL which has been taken over by another group company FutureConsumer Enterprise Limited with effect from November 11 2013. Due to divestment withinthe group it is ensured that various food formats of the Company continue to get supplyof staples and other food products from FAL.

Future Lifestyle Fashions Limited

Future Lifestyle Fashions Limited (FLFL) was incorporated on May 30 2012 and waswholly owned subsidiary of your Company. With a view to dedicated focus on fashionbusiness comprising of Central Brand Factory Planet Sports etc. of your Company andidentified fashion business of Future Consumer Enterprise Limited (earlier known as -Future Ventures india Limited) (FCEL) was demerged and vested with FLFL under theprovisions of section 391-394 of the Companies Act 1956 and was effected on May 29 2014.Pursuant to the terms of the Scheme FLFL has issued equity shares to the shareholders ofthe Company and FCEL and thereby moved out of the subsidiary status of the Company.

Future Value Retail Limited

Future Value Retail Limited (FVRL) was a wholly owned subsidiary of your Company andengaged in Value Retail Business under various formats like Big Bazaar Food Bazaar etc.and other small format in Value Retail Business. However as part of the merger schemevarious business formats of FVRL has been transferred to the Company.

As required under the Listing agreement with the Stock Exchanges the Company ismandatorily required to prepare the Consolidated Financial Statements according to theapplicable indian Accounting Standards and reflects the financial position of all thesubsidiary Companies of the Company.

A statement pursuant to section 212 of the Companies Act 1956 relating to subsidiarycompanies is given as an annexure to the Annual Report. Further the Board has passedresolution pursuant to the General Circular No. 2/2011 dtd February 8 2011 issued byMinistry of Corporate Affairs giving consent for not attaching the balance sheet of thesubsidiary companies. The Company is publishing the consolidated financial statements ofthe holding company and all subsidiaries duly audited by its auditors in compliance withthe applicable accounting standards and listing agreement and a statement disclosing thenecessary information regarding each of subsidiaries.

It is hereby confirmed that Annual accounts of the subsidiary companies and the relateddetailed information shall be made available to the shareholders of the holding andsubsidiary companies seeking such information at any point of time. The annual accounts ofthe subsidiary companies shall be available for inspection by any shareholders in the headoffice of the holding company and of the subsidiary companies concerned. Details ofaccounts of subsidiaries shall be furnished to any shareholder on demand.

JOINT VENTURES (In Alphabetical Order)

Apollo Design Apparel Parks Limited and Goldmohur Design & Apparel Park Limited

The Company has entered into joint venture with NTC for the restructuring anddevelopment of the Apollo Mills and Goldmohur Mills situated in Mumbai. For the same twoseparate SPV companies have been created viz. Apollo Design Apparel Parks Limited (ADAPL)& Goldmohur Design & Apparel Park Limited (GDAPL). The ADAPL & GDAPL would beworking for the restructuring and development of the Apollo Mills and Goldmohur Millsrespectively. During the period ended March 31 2014 ADAPL made a turnover of Rs. 248.51Crores and earned net profit of Rs. 9.12 Crores. Further during the period GDAPL made aturnover of Rs. 228.78 Crores and earned net profit of Rs. 9.46 Crores.

Future Generali India Life Insurance Company Limited

Future Generali India Life insurance Company Limited (FGI-Life) is Company's jointventure in the Life insurance sector. FGI-Life has introduced many insurance products tosuit requirements of various categories of customers. The Company has divested its partinvestment in FGi-Life with effect from 17th December 2013. During the period ended March31 2014 FGi-Life has registered a total income of Rs. 1315.31 Crores and net loss ofRs. 63.56 Crores.

Future Generali India Insurance Company Limited

Future Generali India insurance Company Limited (FGI-Nonlife) is Company's jointventure in the general insurance sector. FGI-Nonlife has introduced insurance products forvarious general insurance needs of the different categories of customers. During theperiod ended March 31 2014 FGI-Nonlife has registered a total income of Rs. 1499.77Crores and net profit of Rs. 47.71 Crores.

Integrated Food Park Private Limited

Integrated Food Park Private Limited (IFPPL) is designed to capture the consumptionspace of food and aims to facilitate the establishment of strong food processingindustries backed by an efficient supply chain which would include collection centresprocessing centres cold chain infrastructures. The Company has received the approval fromthe Government for setting up 'Mega Food Park' at Tumkur District in the State ofKarnataka. IFPPL was formed as a joint venture between the Company Capital Foods PrivateLimited and Sattva Developers Private Limited with 28.86% stake held by your company.IFPPL has not earned any income during the period ended March 31 2014 since its projecthas yet not commenced. Net loss of IFPPL for the said period stood at Rs. 0.09 Crore.

Shendra Advisory Services Private Limited

Shendra Advisory Services Private Limited (Shendra) is a SPV with respect to theCompany's insurance arm Future Generali India insurance Company Limited. During the periodended March 31 2014 Shendra has registered a total income of Rs. 0.03 Crore and net lossof Rs. 0.12 Crore.

Sprint Advisory Services Private Limited

Sprint Advisory Services Private Limited (Sprint) is a SPV with respect to theCompany's insurance arm Future Generali India Life insurance Company Limited. During theperiod ended March 31 2014 Sprint has registered a total income of Rs. 0.09 Crore andnet profit of Rs. 0.004 Crore.

DIRECTORS

Mr. Kishore Biyani & Mr. Rakesh Biyani retire by rotation at the forthcoming AnnualGeneral Meeting and being eligible offer themselves for re-appointment.

The term of Mr. Vijay Biyani as Whole-Time Director which was for a period of 5 yearsfrom September 26 2009 is to expire on September 26 2014. The Directors are seekingappointment of Mr. Vijay Biyani as a Whole-Time Director for a period of 3 years. Detailof the proposal for appointment of Mr. Vijay Biyani is mentioned in the Statement underSection 102 of the Companies Act 2013 of the Notice of the 26th Annual General Meeting.His appointment is appropriate and in the interest of the Company.

The Company is also proposing resolutions for the remunerations payable to all theexecutive directors of the Company to be approved by the Shareholders in view of therequirement to make application to the Central Government for approval of remunerationdue to inadequacy of profits.

Impending notification of Section 149 and other applicable provisions of the CompaniesAct 2013 your Directors are seeking appointment of Mr. S. Doreswamy Mr. Anil HarishMs. Bala Deshpande and Mr. V.K. Chopra as independent Directors for a term of five years.Details of the proposal for appointment of Mr. S. Doreswamy Mr. Anil Harish Ms. BalaDeshpande and Mr. V.K. Chopra are mentioned in the Statement under Section 102 of theCompanies Act 2013 of the Notice of the 26th Annual General Meeting.

The details as required by clause 49 of the listing agreement is given as part of thenotice.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act 1956 the Board of Directors of theCompany hereby state and confirm that: -

(i) in preparation of the annual accounts the applicable accounting standards havebeen followed with proper explanation and there are no material departures;

(ii) the accounting policies selected have been applied consistently and judgments madeand estimates given are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company as on March 31 2014 and the profit of the company for theperiod ended on that date;

(iii) The proper and sufficient care have been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 1956 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

(iv) the accounts have been prepared on a going concern basis.

AUDITORS

M/s NGS & Co. LLP Chartered Accountants Mumbai hold office as Statutory Auditorsupto the conclusion of the ensuing Annual General Meeting and being eligible offerthemselves for re-appointment. Shareholders are requested to re-appoint them as StatutoryAuditors to hold office upto the three years and to fix their remuneration. Theobservations made by the auditors are self-explanatory.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited consolidated financial statements are provided as part of the Annual Reportin accordance with Accounting Standard AS-21 AS-23 & AS 27 dealing with theconsolidated financial reporting. These statements have been prepared on the basis of thefinancial statements received from subsidiaries and joint ventures as approved by theirrespective Board of Directors. Some of the financial statements provided by thesubsidiaries associates and joint ventures are unaudited and considered on certificationof management. Due to extension of financial period of the Company relevant financialperiod of subsidiaries associates and joint ventures for a period of eighteen months isbeing considered for consolidation.

THE EMPLOYEE STOCK OPTION SCHEME

The Nomination and Remuneration Committee of the Board of the Company inter alia administersand monitors the Employee Stock Option Scheme of the Company in accordance with theSecurities Exchange Board of India (Employee Stock Option Scheme and Employee StockPurchase Scheme) Guidelines 1999 (the SEBI Guideline).

The applicable disclosure as stipulated under the SEBI Guidelines as on March 31 2014with regard to Employee Stock Option Scheme is provided hereunder:

Future Retail Limited (FRL) (earlier known as Pantaloon Retail (India) Limited) hasgranted Options to eligible employees in 2013 under PRIL-Employee Stock Option Scheme 2012("ESOS 2012").

In a Scheme of demerger "FRL' (Demerged Company) has transferred its Fashionbusiness under the brand name "Pantaloons" and variations thereof to "PeterEngland Fashions and Retail Limited" (Resulting Company); demerger scheme has beenduly sanctioned by the Bombay High Court in its order dated March 1 2013.

In a subsequent Scheme of demerger "FRL' (Demerged Company) has transferred itsfashion business carried on under the format brands of Central Brand Factory and PlanetSports to "Future Lifestyle Fashions Limited"; demerger scheme has been dulysanctioned by the Bombay High Court in its order dated May 10 2013.

The Employee Stock options of the Company has adjusted for the corporate actions onValue for Value exchange and hence there is no incremental benefit to the option granteeand also it does not result in change in aggregate Fair Value of the Options.

A. Summary of Status of ESOPs Granted

The position of the existing scheme is summarized as under -

Sr. No. Particulars Details
1 Details of the Meeting Approved in Shareholders' Meeting dated Feb 04 2013
2 Options Approved* 2500000
3 The Pricing Formula Rs. 20 revised to Rs. 10 in the Scheme of Demerger*
4 Options Granted* 276279
5 Options Cancelled before Demerger 14790
6 Unvested Options cancelled (Employees Transfer to Future Lifestyle Fashions Limited in scheme of Demerger) 98464
7 Option Adjusted in Scheme of Demerger of entity in to Future Lifestyle Fashion Limited* 142167
8 Revised Options after Demerger* 305192
9 Options Exercised -
10 Options Cancelled 11798
11 Options Lapsed -
12 Total Number of Options in force* 293394
13 Variation in terms of ESOP Not Applicable
14 Total number of equity shares arising as a result of exercise of options -
15 Money realised by exercise of options (Rs. In Crores) -

*Value for Value exchange of Options under the Scheme of Demerger of Future LifestyleFashions Limited from Future Retail Limited

B. Employee-wise details of options granted during the financial year 2013-14 to:

(i) Senior managerial personnel
Mr. Dinesh Maheshwari 20986
(ii) Employees who were granted during any one year options amounting to 5% or more of the options granted during the year
Mr. Sadasiv Nayak 40114
Mr. Manoj Agarwal 19728
Mr. Devendra Chawla 33431
Mr. Venkateshwar Kumar M 26744
Mr. Rajesh Ramjilal Kalyani 14793
Mr. Dinesh Maheshwari 20986
(iii) Identified employees who were granted option during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant. NIL

C.

Weighted average Fair Value of Options granted during the year whose

(a) Exercise price equals market price -
(b) Exercise price is greater than market price -
(c) Exercise price is less than market price* 196.17
Weighted average Exercise price of options granted during the year whose
(a) Exercise price equals market price -
(b) Exercise price is greater than market price -
(c) Exercise price is less than market price* 10.00

D The stock-based compensation cost calculated as per the intrinsic value methodfor the financial year 2011-12 is Rs.1.09Crores. If the stock-based compensation cost wascalculated as per the fair value method the total cost to be recognised in the financialstatements for the year 2011-12 would be Rs.3.70 Crores. The effect of adopting the fairvalue method on the net income and earnings per share is presented below:

Pro Forma Adjusted Net Income and Earning Per Share

Net Income as reported Rs. in Crores 2.81
Add: Intrinsic Value Compensation Cost Rs. in Crores 3.07
Less: Fair Value Compensation Cost Rs. in Crores 3.07
Adjusted Pro Forma Net Income Rs. in Crores 2.81
Earning Per Equity Share: Basic
As Reported Rs. 0.12
Adjusted Pro Forma Rs. 0.12
Earning Per Equity Share: Diluted
As Reported Rs. 0.12
Adjusted Pro Forma 0.12

E Method and Assumptions used to estimate the fair value of options granted during theyear:

1. Risk Free Interest Rate 7.89%
2. Expected Life 1.59
3. Expected Volatility 65.02%
4. Dividend Yield 0.53%
5. Price of the underlying share in market at the time of the option grant (Rs.) 215.60

PARTICULARS OF EMPLOYEES

The statement containing particulars of employees as required under section 217(2A) ofthe Companies Act 1956 and the rules made thereunder is given as an annexure appendedhereto and forms part of this report. In terms of section 219(1)(b)(iv) of the Act thereport and accounts are being sent to the shareholders excluding the aforesaid annexure.Any shareholder interested in obtaining the copy of annexure may write to the companysecretary at the registered office of the Company.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS &OUTGO

A Statement giving details of conservation of energy (in Form A) and foreign exchangeearnings and outgo as required under Section 217(1)(e) of the Companies Act 1956 readwith the Companies (Disclosure of Particulars in the Report of Directors) Rules 1988 inAnnexure I is enclosed and forms part of this report. However there is no expenditure onR&D Technology absorption adoption & innovation during the current financialperiod. The Company being concentrating on the domestic consumption space do not have anyspecific exports initiatives to report to members.

AWARDS AND RECOGNITIONS

• Future Retail Limited Won the Best Run Award in IT (Technology Solutions) at SAPACE 2013

• Best Run Award 2013

Home Town became the first Indian retailer to bag Global innovation Award for the year2012- 2013.

• EMC Transformers Award 2013

Technology Services Team at Future Group won the EMC Transformers Awards for theirsmart and judicious use of IT services.

• CIO100 Awards 2013

Business Technology Services of Future Group won this award for the 2nd consecutiveyear for the project "Pratibimb" a project carried for virtualization ofdesktops to enhance user productivity.

• CISO Award 2013

IT support services received this prestigious for innovative ways to secure thebusiness in the most effective manner and deliver business value by creating competitiveadvantage optimizing business processes enabling growth and improving relationships withcustomers.

• Consumer Survey of Product Innovation 2013

Sach Handwash voted product of the year by Consumer Survey of Product innovation 2013

• Images Fashion Awards 2013

The Most Admired Fashion Retail Personality of the Year - Mr. Kailash Bhatia

• The Global Innovation Award

International Home + House wares Retail Excellence /Global

Innovation' for the year 2012-2013 - Home Town

• Retailer Technology Awards 2013

Future Group's IT team was felicitated with the following awards:

Retail Application of the year

IT Team of the year

Supply Chain Software Solution

• 4th Most Trusted Service Brands In India

Big Bazaar is the 4th most trusted service brand in India in the Brand Equity Survey2013 conducted by Nielsen.

• Images Most Admired Food & Grocery Retailer

Foodhall bagged the images Most Admired Food & Grocery Retailer at the 7th CocaCola Golden Spoon Awards 2014.

ACKNOWLEDGMENT

The Board wishes to place on record their sincere appreciation to all the consumersworking capital consortium bankers lead by Bank of India vendors and other stakeholdersfor the continued support and patronage during the previous period. The board furtherwishes to record their sincere appreciation to the employees of the Company whose effortshard work and dedication has enabled the Company to achieve the targets and recognitions

For and on behalf of the Board
Kishore Biyani Rakesh Biyani
Managing Director Jt. Managing Director
Mumbai
May 30 2014

ANNEXUREI

A) Conservation of energy

FORM A

Form for Disclosure of Particulars with respect to Conservation of Energy.

A) Power and fuel consumption (Manufacturing Facility) January 01 2013 to March 31 2014 July 01 2011 to December 31 2012
(1) ELECTRICITY
a) Purchased
Purchased
Unit 987138 1071900
Total amount (In Rs.) 8566748 8481740
Rate/unit 8.68 7.91
b) Own Generation
Internal Generation through DG set
No. Of Units 20126 16252
Unit per litre of Diesel 3.61 3.52
Rate per /unit (In 15.89 12.97
(2) FURNACE OIL
Quantity (K.Ltrs.) 137802 159186
Total amount (In Rs.) 6687707 6941573
Average rate (Rs. / Ltr.) 48.53 43.61

 

B) Foreign Exchange Earnings and Outgo January 01 2013 to March 31 2014 July 01 2011 to December 31 2012
FOREIGN EXCHANGE OUTGO
Traveling Expenditure 2.84 2.21
Interest 1.84 1.25
Consulting Fees 2.92 0.74
Royalty 1.51 7.38
Commission 0.07 Nil
Imports
Raw Materials including (Stitching Materials) 0.09 0.27
Finished Goods 133.80 115.98
Capital Goods 29.76 10.18
Accessories & Others 1.34 1.39
FOREIGN EXCHANGE EARNING
Earnings in Foreign Currency 88.43 85.13