Auditor Report of Aditya Birla Fashion and Retail Ltd.

Mar 31, 2022

Report on the Audit of the Standalone financial statements

Opinion

1. We have audited the accompanying standalone financial statements of Aditya Birla Fashion and Retail Limited ("the Company") which includes the financial statements of ABFRL Employee Welfare Trust, which comprise the Standalone Balance Sheet as at March 31, 2022, and the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the Standalone financial statements, including a summary of significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2022, and total comprehensive loss (comprising of loss and other comprehensive income), changes in equity and its cash flows for the year then ended.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the "Auditor''s Responsibilities for the Audit of the Financial Statements" section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matters

How our audit addressed the key audit matters

Impairment assessment of goodwill (Refer Note 5A to the Standalone financial statements) The Company has goodwill of '' 1,859.60 crores as at March 31,2022. The goodwill was acquired in business combinations recorded in the prior years and was allocated to cash generating units (CGU) of the Company. In accordance with Ind AS 36, Impairment of Assets, goodwill acquired in a business combination is required to be tested for impairment annually.

Our audit procedures included the following: • Understood and evaluated the design and tested operating effectiveness of Company''s controls to assess impairment of goodwill on an annual basis. • Evaluated whether the CGUs were determined and the goodwill allocation was performed in accordance with requirements of Ind AS 36 and our knowledge of the Company''s operations. • Evaluated the appropriateness of the approach selected by the management to determine the recoverable amount of the CGU. • Evaluated the objectivity, competency and independence of the management expert engaged by the Company.

Key Audit Matters	How our audit addressed the key audit matters
Management has performed impairment assessment for each of the CGUs to which goodwill has been allocated by comparing the carrying amount of the CGU, including the goodwill, with the recoverable amount of the CGU which is higher of value in use and fair value less costs of disposal. Impairment assessment of goodwill requires significant management judgement and estimates such as projected cash flows, discount rates, growth rates over the projection period and terminal growth rates. Given the judgement, subjectivity and sensitivity of key parameters to the changes in economic conditions, the impairment assessment of goodwill is considered to be a key audit matter.	• Assessed the reasonableness of the cashflow projections by testing the key management assumptions and estimates used in the impairment analysis and evaluated the consistency of the cashflow projections with the budgets approved by the Board of Directors. • Evaluated the sensitivity analysis performed by management on the growth rates and discount rate to determine whether reasonable changes in these key assumptions would result in the carrying amounts of individual CGUs to exceed their recoverable amounts. • Involved auditor''s expert to assist in evaluating the impairment assessment including certain assumptions used. • Evaluated the adequacy of the disclosures made in the Standalone Financial Statements. Based on procedures above, management''s impairment assessment of goodwill appears to be reasonable.
Impairment evaluation of Investments	Our audit procedures included the following:
in subsidiaries	• Understood and evaluated the design and tested
(Refer Note 6(a) to the standalone financial	operating effectiveness of Company''s controls to
statements)	assess impairment of its investments in subsidiaries.
The Company has made equity investments in the following subsidiaries namely, Jaypore E-Commerce Private Limited, TG Apparel & Decor Private Limited, Finesse International Design Private Limited,	• Evaluated the appropriateness of the approach selected by the management to determine the recoverable amount. • Evaluated the objectivity, competency and
Sabyasachi Calcutta LLP and Indivinity	independence of the Management expert engaged
Clothing Retail Private Limited with	by the Company.
carrying values of '' 229.75 crores, '' 0.25	• Evaluated the reasonableness of the cashflow
crores, '' 77.78 crores, '' 389.84 crores and	projections by testing the key management
'' 63.00 crores respectively, as at March	assumptions and estimates used in the impairment
31, 2022.	analysis and assessed the consistency of the
The Company reviews the carrying values	cashflow projections with the budgets approved by
of these investments in accordance	Board of Directors.
with Ind AS 36 ''Impairment of Assets''.	• Evaluated the Company''s sensitivity analysis of the
Impairment assessment is performed and	recoverable amounts and evaluated whether any
recoverable amounts of the investments are determined if indicators of impairment	reasonably foreseeable changes in key assumptions could lead to impairment loss or material change in
are identified.	valuation.
Management has considered losses suffered by these subsidiaries as an	• Evaluated the Company''s process regarding impairment assessment with the involvement of
indicator for impairment assessment. Management has therefore performed impairment assessment by determining	auditor''s valuation experts to assist in assessing the appropriateness of the impairment model including
the recoverable amount of the investments	independent assessment of certain assumptions
in these subsidiaries using the value in use	underlying the cash flow projections, discount rate,
method and comparing the same with	terminal value etc.
the carrying value. Where the carrying	• Obtained the audited standalone financial statements
value exceeds the recoverable amount,	of the subsidiaries for the year ended March 31,2022
an impairment loss is recognized.	and evaluated their financial performance.

Key Audit Matters	How our audit addressed the key audit matters
Determination of value in use involves use of projected cash flows based on financial budgets approved by the Board of Directors. Management has involved external experts to determine the recoverable amounts. Impairment evaluation of investment in subsidiaries is considered as a key audit matter as it requires significant management judgement and estimates in addition to consideration of economic and entity specific factors in determination of the recoverable value used in impairment assessment such as projected cash flows, discount rates, growth rates over the projection period and terminal growth rates which are subject to management judgement and subjectivity and might be affected by changes in economic conditions.	• Evaluated the adequacy of the disclosures made in the Standalone Financial Statements. Based on the above work performed, Management''s assessment of impairment of subsidiaries appears to be reasonable.
Provision for Inventory obsolescence (Refer Notes 12 and 40(f) to the standalone financial statements) The Company held inventories of '' 2,729.23 crores as at March 31, 2022. In accordance with Ind AS 2, Inventories, inventories are carried at lower of cost or net realizable value. The Company operates in a fast changing fashion market where there is a risk of inventory falling out of fashion and proving difficult to be sold above cost. Management has a policy to recognize provisions for inventory considering assessment of future trends and the Company''s past experience related to its ability to liquidate the aged inventory. The provision for inventory obsolescence has been considered as a key audit matter, as determination of provision for inventory involves significant management judgment and estimates.	Our audit procedures included the following: • Understood and evaluated the design and tested the operating effectiveness of Company''s controls to assess the adequacy of provision for inventory obsolescence. • Evaluated the methodology used by the management to determine the provision for inventory obsolescence and determined whether the method is consistent with that applied in the prior year. • Assessed whether the changes in the methodology (if any) are reasonable and consistent with our understanding of the changes in the business. • Evaluated the ageing report including assessing its completeness and the underlying management judgements and estimates made. Further, assessed on a sample basis whether the calculation of provision for obsolescence is in accordance with Company''s policy. • Verified appropriate approvals for specific obsolescence provisions and assessed their reasonableness on a sample basis. • Evaluated the adequacy of the disclosures made in the Standalone Financial Statements. Based on the above procedures performed, we did not identify any material exceptions in recognition and measurement of provision for inventory obsolescence.

Key Audit Matters	How our audit addressed the key audit matters
Provision for discount and sales returns	Our audit procedures included the following:
(Refer Note 40(g) to the standalone	• Understood and evaluated the design and tested
financial statements)	the operating effectiveness of Company''s controls
The Company has recognized provision for unsettled discounts and sales returns	to assess the adequacy of provision for discounts and sales returns.
amounting to ''231.88 crores and '' 393.39	• Evaluated the periodic account reconciliations
crores respectively, as at March 31,2022.	prepared by the management during the year.
Revenue from contracts with customers	• Evaluated the management estimates and
is recognised when the entity satisfies a	judgements in determining the provision for
performance obligation by transferring	discounts and sales returns and assessed whether
control of promised goods to a customer.	the same is consistent with the prior year.
Recognition of revenue requires	• Evaluated the contract terms for a sample of
determination of the net selling price	customer contracts to assess the reasonableness
after considering variable consideration	of the provision for discounts and returns and
including forecast of sales returns and	determine whether the same is in line with terms of
discounts.	the contract.
The estimate of sales returns and discounts	• Verified credits notes issued to customers on a
depends on contract terms, forecasts of sales volumes and past history of quantum of returns. The expected returns and discounts that have not yet been	sample basis and assessed the validity of claims with the underlying documents and appropriate approvals.
settled with the customers are estimated	• Evaluated the adequacy of the disclosures made in
and accrued.	the Standalone Financial Statements.
Determination of provision for discounts	Based on the above procedures performed, we did
and sales returns is determined as a key	not identify any material exceptions in recognition
audit matter as it involves significant	and measurement of provisions for discount and sales
management judgement and estimation.	returns.

Other Information

5. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Chairman''s Statement, Report of the Board of Directors, Sustainability and Business Responsibility Report, Corporate Governance Report and Management Discussion and Analysis Report, but does not include the standalone financial statements and our auditor''s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the standalone financial statements

6. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the

Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s responsibilities for the audit of the standalone financial statements

7. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

8. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

9. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

10. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

11. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter

12. The standalone financial statements of the Company for the year ended March 31, 2021 were audited by another firm of chartered accountants under the Act who, vide their report dated May 28, 2021, expressed unmodified opinion on those standalone financial statements.

Our opinion is not modified in respect of above matter.

Report on other legal and regulatory requirements

13. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the ''Annexure B'', a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

14. As required by Section 143(3) of the Act, we report that:

(a) We have sought and 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 Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on March 31, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022 from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference to Standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A".

(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Notes 24 and 45 to the standalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year.

iv. (a) The management has represented that, to the best of its knowledge and belief, as

disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 55(vii) to the standalone financial statements);

(b) The management has represented that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 55(vii) to the standalone financial statements); and

(c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.

v. The Company has not declared or paid any dividend during the year.

15. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

For Price Waterhouse & Co Chartered Accountants LLP

Chartered Accountants

Firm Registration Number: 304026E/E-300009

A. J. Shaikh

Partner

Membership Number: 203637

UDIN: 22203637AJFDAP9079

Place: Mumbai

Date: May 18, 2022

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Mar 31, 2021

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS Financial Statements of Aditya Birla Fashion and Retail Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2021, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and notes to the Standalone Ind AS Financial Statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the 'Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements' section of our report. We are independent of the Company in accordance with the 'Code of Ethics' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS Financial Statements.

Emphasis of Matter

We draw attention to Note 40(j) of the Standalone Ind AS Financial Statements which describes management's assessment of the impact of COVID 19 pandemic on the Company's operations and carrying value of assets as at March 31, 2021. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind AS Financial Statements for the financial year ended March 31, 2021. These matters were addressed in the context of our audit of the Standalone Ind AS Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the Standalone Ind AS Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Ind AS Financial Statements.

Key audit matters	How our audit addressed the key audit matter
Goodwill: Impairment Evaluation (as described in Note 5 of the Standalone Ind AS Financial Statements)
As disclosed in Note 5, goodwill amounts	Our audit procedures included the following:
to ' 1,859.60 Crore as at March 31, 2021	• Obtained an understanding of the process
and represents goodwill acquired through	followed by the management to determine the
business combinations and allocated to	recoverable amounts of cash generating units to
cash generating units of the Company.	which the goodwill has been allocated.
A cash generating unit to which goodwill	• Evaluated the objectivity, competency and
has been allocated is tested for impairment	independence of the specialist engaged by the
annually, or more frequently when there is	Company and reviewed the valuation reports
an indication that the unit may be impaired. As disclosed in Note 5, impairment of	issued by such specialist.
goodwill is determined by assessing	• Evaluated the model used in determining the
the recoverable amount of each cash	value in use of the cash generating units.
generating unit to which the goodwill	• Assessed the consistency of data used in the
relates.	recoverable amount calculation with the financial
The recoverable amount of the cash	budgets approved by senior management of the
generating unit as at March 31, 2021 has	Company.
been determined by the management	• Analysed the performance of the cash generating
based on a value in use calculation using	units and assessed the assumptions used in
cash flow projections from financial	computation of value in use as at March 31,
budgets approved by senior management.	2021, including understanding of management's
Goodwill impairment assessment is a key	estimate of business impact based on current
audit matter considering future estimates	market and economic conditions arising from the
and judgment involved in such assessment	COVID 19 pandemic.
and considering the significant carrying	• Involved valuation expert to assist in evaluating
value of goodwill.	management's determination of value in use. •    Tested the arithmetical accuracy of the computation of recoverable amounts of cash generating units. •    Assessed the disclosures provided by the Company in relation to its annual impairment test in Note 5 to the Standalone Ind AS Financial Statements.

Impairment Evaluation of Investments in Subsidiaries (as described in Note 6(a) of the Standalone Ind AS Financial Statements)
As disclosed in Note 6(a), Investment in subsidiaries and joint venture amounts to ' 682.87 Crore as at March 31, 2021, which includes investment in Finesse International Design Private Limited ('Finesse'), Jaypore E-commerce Private Limited ('Jaypore') and T G Apparel & Decor	Our audit procedures included the following: •    Obtained an understanding of the process followed by the management to determine the recoverable amounts of investment in Finesse, Jaypore and TG Apparel. •    Evaluated the objectivity, competency and independence of the specialist engaged by the

Key audit matters

How our audit addressed the key audit matter

Private Limited ('T G Apparel') amounting to ' 162.85 Crore (acquired during the year ended March 31, 2020). Investment in subsidiaries is tested for impairment annually, or more frequently when there is an indication that the investment may be impaired. As disclosed in Note 40(a), impairment of investment in subsidiaries is determined by comparing the carrying value of the investments with their recoverable amount. As at March 31, 2021, the recoverable amount of the investments in these subsidiaries has been determined by the management based on a value in use calculation using cash flow projections from financial budgets approved by senior management. Impairment assessment of investment in aforesaid subsidiaries is a key audit matter considering future estimates and judgment involved in such assessment.

Company and reviewed the valuation reports issued by such specialist. •    Evaluated the model used in determining the value in use of investment in aforesaid subsidiaries. •    Assessed the consistency of data used in the recoverable amount calculation with the financial budgets approved by senior management. •    Analysed the performance of the subsidiaries and assessed the assumptions used in computation of value in use as at March 31, 2021, including understanding of management's estimate of business impact based on current market and economic conditions arising from the COVID 19 pandemic. •    Involved valuation expert to assist in evaluating management's determination of value in use. •    Obtained and read the audited financial statements of the subsidiaries to determine the net worth, historical cash flows and other financial indicators. •    Tested the arithmetical accuracy of the computation of recoverable amounts of investment in aforesaid subsidiaries.

Provision for discount and sales returns (as described in Note 40(g) of the Standalone Ind
AS Financial Statements)	Â
Revenue from contracts with customers	Our audit procedures included the following:
is recognised upon transfer of control of	• Assessed the Company's accounting policy for
promised goods and is measured at the	recognition and measurement of net sales
fair value of the consideration received or	revenue, including the policy for recording
receivable, net of returns and allowances,	returns, and discounts in accordance with Ind AS
trade discounts, sales promotion schemes	115 'Revenue from Contracts with Customers'.
and rebates, based on contractually defined terms.	• Tested design and operating effectiveness of key controls for calculating, reviewing and approving
In some cases, discounts estimated and	returns and discounts.
accrued are offered on further sale of	• Tested the estimate of returns and discounts
goods by the customers. Also, in certain	related accruals with underlying documentation
cases the Company has contracts with	such as management approved norms,
customers which entitles them to right of	customer agreements, sales data and customer
return.	reconciliations, as applicable.
At year end, amount of expected returns,	• Obtained an understanding of management's
and discounts that have not yet been	estimate of business impact of COVID 19
settled with the customers are estimated	pandemic on estimates of sales returns and
and accrued.	sales discounts.

Key audit matters

How our audit addressed the key audit matter

Estimating the amount of accrual at year end is considered a key audit matter due to assumptions and judgments required to be made by management.

•    Tested, on sample basis, credit notes issued to customers for returns and discounts as per approved norms. •    Performed analytical procedures on returns and discounts and held discussions with management to understand changes in provisioning norms/additional provisions made based on management's assessment of market conditions. •    Assessed the Company's disclosures in Note 40(g) on significant accounting judgments, estimates and assumptions.

Ind-AS 116 -Leases and Accounting for rent concession arrangements (as described in Note 4 and 40(k) of the Standalone Ind AS Financial Statements)
As at March 31, 2021, the Company has	Our audit procedures included the following:
' 2,066.89 Crore of Right of use (RoU) assets and ' 2,385.57 Crore of Lease	• Assessed the Company's accounting policy with
liabilities recognised under Ind AS 116	respect to recognition of leases and for assessing
pertaining to the premises leased by the	compliance with Ind AS 116, including accounting
Company.	for rent concession arrangements.
During the year, considering the impact	• Obtained an understanding, evaluated the
of COVID 19 pandemic on its business,	design and tested the operating effectiveness
the Company negotiated rent concessions	of controls that the Company has in relation
with its lessors.	to accounting of leases and rent concession
The Ministry of Corporate Affairs vide	arrangements under Ind AS 116.
notification dated July 24, 2020, issued	• Tested the accuracy and completeness of
an amendment to Ind AS 116 - Leases, by	the underlying lease master by agreeing the
inserting a practical expedient w.r.t. "Covid-	underlying data pertaining to lease rentals,
19-Related Rent Concessions" effective	term, escalation and other relevant terms and
from the period beginning on or after April	conditions to lease agreements and performed
01, 2020.	recomputation on a sample basis.
Pursuant to the above amendment, the	• Tested on a sample basis, the rent concessions
Company applied the practical expedient	accounted by the Company, to agreed rent
with effect from April 01,2020. Accordingly,	concession arrangements / underlying
the Company accounted unconditional rent	documents, calculations and assessed the
concessions of ' 340.43 Crore during the	terms of the same against the requirements of
year as a reduction of rent expense in the Standalone Statement of Profit and Loss.	the practical expedient under Ind AS 116.
Accounting under Ind AS 116, requires significant judgement and estimate in identification of lease arrangement, determining the RoU assets and lease liabilities and related rent concessions	•    Assessed the underlying assumptions and estimates including the applicable discount rates. •    Assessed the Company's disclosures made in accordance with the requirements of Ind AS 116.
based on terms of the underlying agreements. Hence, we considered this as a key audit matter.
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Key audit matters	How our audit addressed the key audit matter
Recognition of Deferred tax assets (as described in Note 10 and 38 of the Standalone Ind AS Financial Statements)
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The Company's ability to recognise previously un-recognised deferred tax assets is assessed by the management at the end of each reporting period, taking into account forecasts of future taxable profits and the applicable tax laws. As at March 31, 2021 the Company has recognised net deferred tax assets of ' 321.23 Crore. The recognition and measurement of deferred tax assets is a key audit matter as its recoverability within the allowed time frame involves estimate of financial projections, availability of sufficient taxable income in the future and judgments in the interpretation of tax regulations and tax positions adopted by the Company.	Our audit procedures included the following: •    Assessed the Company's accounting policy with respect to recognition of deferred taxes in accordance with Ind AS 12 "Income Taxes". •    Involved tax specialists who evaluated the Company's tax positions by assessing the prevalent tax laws. •    Assessed the consistency of financial projections used by management in assessing recoverability of deferred tax assets with the financial budgets approved by senior management of the Company. •    Analysed the performance of the Company and assessed the assumptions used in forecast of future profits and expected utilisation of the unabsorbed business losses and unabsorbed depreciation, including understanding of management's estimate of business impact based on current market and economic conditions arising from the COVID 19 pandemic. •    Assessed the disclosures in Note 10 and 38 of the Standalone Ind AS financial statements in accordance with the requirements of Ind AS 12 "Income Taxes".

Provision on inventories (as described in Note 12 and 40(f) of the Standalone Ind AS Financial Statements)

As at March 31, 2021, the Company held inventories of ' 1,742.93 Crore. Inventories are carried at lower of cost and net realisable value in accordance with the accounting policy of the Company. The Company makes provision for inventory based on policy, past experience, current trend and future expectations of these materials depending upon the category of goods. Significant judgment is required in assessing the appropriate level of the provision for slow moving and/or obsolete inventory. Accordingly, we have considered provision on inventories to be a key audit matter.

Our audit procedures included the following: •    Obtained an understanding, evaluated the design and tested the operating effectiveness of controls that the Company has in relation to inventory provision. •    Compared the methodology used to calculate the inventory provision and its consistency with prior periods and obtained an understanding of management basis for changes. •    Obtained an understanding of management's estimate of business impact of COVID 19 pandemic on provision on inventories. •    Tested on a sample basis, the calculation of the provision as per Company policy.

Key audit matters	How our audit addressed the key audit matter
Â	•    For specific provisions made, on a sample basis, assessed the basis and tested with management approvals. •    Tested on a sample basis, whether inventories are carried at the lower of cost and net realisable value. •    Assessed the Company's disclosures in Note 40(f) on significant accounting judgments, estimates and assumptions and Note 12 on Inventories.

Other Information

The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report with respect to following sections, but does not include the Standalone Ind AS Financial Statements and our auditor's report thereon.

• Report of the Board of Directors (includes Management Discussion and Analysis) only with respect to the following sections

•    Business Overview

•    Business Strategy

•    Financial Performance and Analysis

•    Risk Management

•    Internal Control Systems and their Adequacy

•    Share Capital

•    Disclosure in terms of the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

•    Corporate Governance Report

Our opinion on the Standalone Ind AS Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Ind AS Financial Statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Ind AS Financial Statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Ind AS Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•    Identify and assess the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•    Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

•    Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

•    Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone Ind AS Financial Statements, including the disclosures, and whether the Standalone Ind AS Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Ind AS Financial Statements for the financial year ended March 31, 2021 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1.    As required by the Companies (Auditor's Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2.    As required by Section 143(3) of the Act, we report that:

(a)    We have sought and 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 Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d)    In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e)    On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164 (2) of the Act;

(f)    With respect to the adequacy of the internal financial controls with reference to Standalone Ind AS Financial Statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(g)    The remuneration paid to Managing Director and Whole time Directors for the year ended March 31, 2021, being in excess of the limits prescribed under the provisions of section 197 read with Schedule V to the Act, by ' 0.56 Crore, is subject to the approval of the shareholders;

(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i.    The Company has disclosed the impact of pending litigations on its financial position in its Standalone Ind AS Financial Statements - Refer Note 45 to the Standalone Ind AS Financial Statements;

ii.    The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii.    There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Aditya Vikram Bhauwala

Partner

Membership Number: 208382

UDIN: 21208382AAAABT7915

Bengaluru

May 28, 2021

---

Mar 31, 2019

INDEPENDENT AUDITOR''S REPORT

To the Members of Aditya Birla Fashion and Retail Limited Report on the Audit of the Ind AS Financial Statements Opinion

We have audited the accompanying Ind AS financial statements of Aditya Birla Fashion and Retail Limited ("the Company"), which comprise the Balance sheet as at March 31, 2019, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Ind AS Financial Statements'' section of our report. We are independent of the Company in accordance with the ''Code of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Ind AS financial statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Ind AS financial statements.

Key audit matters	How our audit addressed the key audit matter
Goodwill: Impairment Evaluation (as described in Note 4 of the Ind AS financial statements)
As disclosed in Note 4, goodwill amounts to Rs,1,859.60 Crore as at March 31, 2019 and represents goodwill acquired through various business combinations and allocated to cash generating units of the Company. A cash generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when	Our audit procedures in respect of impairment evaluation of goodwill included the following: - Obtained an understanding of the process followed by the management to determine the recoverable amounts of cash generating units to which the goodwill has been allocated.

Key audit matters	How our audit addressed the key audit matter
there is an indication that the unit may be impaired. As disclosed in Note 4, impairment of goodwill is determined by assessing the recoverable amount of each cash generating unit to which the goodwill relates. The recoverable amount of the cash generating unit as at March 31, 2019 has been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a three-year period. Management of the Company has used an external specialist in assessing the recoverable amount of the cash generating unit based on value in use computation. We focused this area because of the judgmental factors involved in impairment assessment and the significant carrying value of the goodwill.	- Evaluated the objectivity and independence of the specialist engaged by the Company and reviewed the valuation reports issued by such specialist. - Evaluated the model used in determining the value in use of the cash generating units. - Evaluated the consistency of data used in the recoverable amount calculation with the financial budgets approved by senior management of the Company. - Tested the arithmetical accuracy of the computation of recoverable amounts of cash generating units. - Analysed the level of performance regards the business plan approved in the previous year, discussed with the management reasons for deviation as compared to such plan to and have assessed the assumptions used in the financial budgets for computation of value in use as at March 31, 2019. - Involved valuation expert to assist in evaluating the assumptions around the key drivers of the cash flow projections including discount rates, expected growth rates and terminal growth rates used. - Assessed the sensitivity analysis performed by the Company and the resultant change in the recoverable amount upon changes in assumptions. - We also assessed the disclosures provided by the Company in relation to its annual impairment test in Note 4 to the financial statements.
Provision on inventories (as described in Note 11 and 38 of the Ind AS financial statements)
As at March 31, 2019, the Company held inventories of Rs,1,921.28 Crore (net of provision of Rs,270.91 Crore). Inventories are carried at lower of cost and net realizable value in accordance with the accounting policy of the Company. The Company makes provision for inventory based on policy, past experience, current trend and future expectations of these materials depending upon the category of goods. Significant judgment is required in assessing the appropriate level of the provision for slow moving and/ or obsolete inventory. Accordingly, we have considered provision on inventories to be a key audit matter.	Our audit procedures to test the provision on inventories, included the following: - We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that the Company has in relation to inventory provision. - We compared the methodology used to calculate the inventory provision and its consistency with prior periods and obtained an understanding of management justification for changes. - We obtained inventory provision calculation from the Company and re-performed the calculation of the inventory provision as per the policy of the Company. - For specific provisions made, on a sample basis we assessed the basis of such provision and also tested it with management approvals. - For inventory on hand at the end of the period, we assessed on a sample basis, whether such inventory was recorded at the lower of cost and net realizable value by testing the cost for such sample inventory items to the most recent retail price.

Key audit matters	How our audit addressed the key audit matter
	- We assessed the Company''s disclosures concerning this in Note 38 on significant accounting judgments, estimates and assumptions and Note 11 Inventories to financial statements.
Provision for discount and sales returns (as described in Note 38 of the Ind AS financial statements)
Revenue from contracts with customer is recognized upon transfer of control of promised goods and is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates, based on contractually defined terms. In some cases, discounts estimated will be determined on sale of goods by the customers. Also, in certain cases the Company has contracts with customers which entitles them to right of return. At year end, amount of returns, and discounts that have been incurred and not yet settled with the customer are estimated and accrued. Estimating the amount of accrual at year-end is considered a key audit matter due to the judgments required to be made by management.	Our audit procedures to test the provision for discount and sales returns included the following: - Read and understood the Company''s accounting policy for recognition and measurement of net sales revenue, including the policy for recording returns, and discounts by assessing compliance with Ind AS 115 ''Revenue from Contracts with Customers''. - Tested the estimate of returns and discounts related accruals with underlying documentation such as management approved norms, customer agreements, sales data and customer reconciliations, as applicable. - Tested design and operating effectiveness of key controls for calculating, reviewing and approving returns and discounts. - Analysed returns and discounts and held discussions with management to understand changes in provisioning norms/additional provisions made based on management''s assessment of market conditions. - We assessed the Company''s disclosures concerning this in Note 38 on significant accounting judgments, estimates and assumptions.
Recognition of Deferred tax assets, including Minimum Alternate Tax (MAT) credit entitlement (as described in Note 9 and 36 of the Ind AS financial statements)
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized. The Company''s ability to recognize previously un-recognized deferred tax assets is assessed by the management at the end of each reporting period, taking into account forecasts of future taxable profits and the applicable tax laws. As at March 31, 2019 the Company has recognized total deferred tax assets of Rs,194.56 Crore (including Rs,21.84 Crore of Minimum Alternate Tax credit entitlement). The recognition of deferred tax asset is a key audit matter as its recoverability within the allowed time frame involves significant estimate of the financial projections, availability of sufficient taxable income in the future and significant judgments’ in the interpretation of tax regulations and tax positions adopted by the Company.	Our audit procedures to test the recognition of deferred tax assets (including MAT credit entitlement) included the following: - Read and understood the Company''s accounting policies with respect to recognition of deferred taxes and for assessing compliance with Ind AS 12 "Income Taxes". - Involved tax specialists who evaluated the Company''s tax positions by assessing the prevalent tax laws and compared the current position with prior years, past precedents. - Assessed the consistency of data used in the deferred tax assets amount calculation with the financial budgets approved by senior management of the Company. - We compared the projections with past trends and enquired for the significant variations. - We assessed the disclosures in Note 9 and 36 of the Ind AS financial statements in accordance with the requirements of Ind AS 12 "Income Taxes".

Other Information

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report with respect to following sections but does not include the Ind AS financial statements and our auditor''s report thereon.

- Letter to Shareholders from Chairman

- Report of the Board of Directors (includes Management Discussion and Analysis) only with respect to the following sections

- Business Overview

- Business Strategy

- Financial Performance and Analysis

- Risk Management

- Internal Control Systems and their Adequacy

- Share Capital

- Disclosure in terms of the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

- Corporate Governance Report

Our opinion on the Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the Ind AS Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error

In preparing the Ind AS financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Ind AS financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the Ind AS financial statements, including the disclosures, and whether the Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Ind AS financial statements for the financial year ended March 31, 2019 and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought and 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 Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(g) In our opinion, the managerial remuneration for the year ended March 31, 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

(h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements - Refer Note 45 to the Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure 1 to the Independent Auditor''s Report of even date on the Ind AS Financial Statements of Aditya Birla Fashion and Retail Limited

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, plant and equipment.

(i) (b) All Property, plant and equipment have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(i) (c) According to information and explanations given by the management, the title deeds of immovable properties, included in Property, plant and equipment are held in the name of the Company except for the following immovable properties other than self-constructed buildings aggregating to Rs,6.05 crore which are held in the name of the demerged companies and is in the process of being transferred to the Company:

Total Asset Amount as at	Remarks
number of category March 31, 2019
cases (''in Crores)
12 Freehold 5.92	Title deeds are in names of the companies whose divisions
Land	got merged with the Company and are pending to be
1 Building 0.13	transferred in the name of the Company.
(Flat)

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification. There was no inventory lying with third parties.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013 ("the Act"). Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of section 185 and 186 of the Act are applicable and hence not commented upon.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under section 148(1) of the Act, for the products/ services of the Company.

(vii) (a) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, service tax, sales-tax, customs duty, excise duty, value added tax, goods and service tax, cess and other statutory dues as applicable, have generally been regularly deposited with the appropriate authorities.

(vii) (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, service tax, sales-tax, customs duty, excise duty, value added tax, goods and service tax, cess and other statutory dues were outstanding as applicable, at the year end, for a period of more than six months from the date they became payable.

(vii) (c) According to the records of the Company, the dues of income-tax, service tax, sales-tax, custom duty, excise duty, value added tax and cess on account of any dispute, are as follows:

Statute	Nature of	Unpaid Amount	Period to which	Forum Where dispute is pending
	dues	involved (Rs, in Crores)*	the amount relates
Central Excise Act	Excise duty	1.86	May, 2001 to April, 2003	Customs, Excise and Service Tax Appellate Tribunal, Bengaluru
Central Sales Tax	Central sales	0.01	2006-07	The Appellate Deputy Commissioner (CT),
Act	tax			Secunderabad
Customs Act	Custom duty	2.04	1998-99	Supreme Court
Customs Act	Custom duty	0.50	2010	Commissioner - Appeal, Chennai
Gujarat	Sales tax	2.26	2011-12	Joint Commissioner - JCCT(A), Ahmadabad
Commercial Tax
Act
Central Excise Act	Excise duty	24.10	June - July, 2013	Commissioner of Central Tax, Bengaluru
Karnataka Sales	Sales tax	0.01	2005-07	Joint Commissioner of Commercial Taxes -
Tax Act				Appeal, Bengaluru
Karnataka Sales	Sales tax	6.78	2012-13 to	Joint Commissioner of Commercial Taxes -
Tax Act			2014-15	Appeal, Bengaluru
Karnataka Tax on	Entry tax	0.02	2002-03 to	Joint Commissioner of Commercial Taxes -
Entry of Goods Act			2004-05	Appeal- 1, Bengaluru
Kerala Commercial	Surcharge	2.44	April, 2008 to	Kerala High Court, Ernakulum
Tax Act			June, 2017
Kerala General	Kerala sales	0.01	2004-05	Kerala Sales Tax Appellate Tribunal, Ernakulum
Sales Tax Act	Tax
Kerala Commercial	Goods and	0.59	2017-18	Assistant Commissioner (Appeals) of State
Tax Act	service tax			Goods and Service Tax Department, Kozhikode
Odisha Sales tax	Sales tax	0.74	2014-15	Joint Commissioner of Commercial Tax,
Act				Bhubaneshwar
Odisha Sales tax	Sales tax	0.005	2002-03	Assistant Commissioner of Commercial Taxes,
Act				Bhubaneshwar
Odisha Entry tax	Entry tax	0.001	2002-03	Assistant Commissioner of Commercial Taxes, Bhubaneshwar
Textile Committee	Textile cess	0.59	1999-2005	Hon''ble High Court - Karnataka
Act
Uttar Pradesh	Value added	2.15	2009-10 to	Deputy Commissioner of Commercial Taxes,
Commercial Tax	tax		2010-11	Lucknow
Uttar Pradesh	Value added	5.07	2011-12 to	Additional Commissioner - Appeal, Lucknow
Commercial Tax	tax		2012-13
Uttarakhand	Value added	0.92	2012-13 to	Deputy Commissioner of Commercial Taxes,
Commercial Tax	tax		2014-15	Dehradun
West Bengal	Sales tax	0.05	2005-06 &	Joint Commissioner Appeal - JCCT (A), Kolkata
Commercial Tax			2013-14
West Bengal	Sales tax	0.20	2011-12	Appellate and Revisional Board, Kolkata
Commercial Tax
West Bengal	Sales tax	0.28	2015-16	Sr. Joint Commissioner, Kolkata
Commercial Tax
Madhya Pradesh	Sales tax	0.24	2013-14 &	Deputy Commissioner of Commercial Taxes,
Commercial Tax			2015-16	Indore
Income tax Act,	Withholding	0.24	2011-12	Commissioner of Income Tax (Appeals),
1961	tax			Mumbai

* The unpaid amount mentioned above is net of '' 45.74 Crore paid under protest.

(viii) In our opinion and according to information and explanations given by the management, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. The Company does not have any borrowing from the government during the year

(ix) In our opinion and according to the information and explanations given by the management, monies raised by way of term loans and debt instruments were applied for the purposes for which those were raised. The Company has not raised any money way of initial public offer/ further public offer.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management, the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) of the Order are not applicable to the Company and, not commented upon.

(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

Annexure 2 to the Independent Auditor''s Report of even date on the Ind AS Financial Statements of Aditya Birla Fashion and Retail Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Aditya Birla Fashion and Retail Limited ("the Company") as of March 31, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting with reference to these Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to these Ind AS financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting with reference to these Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these Ind AS financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these Ind AS financial statements.

Meaning of Internal Financial Controls Over Financial Reporting with reference to these Ind AS financial statements

A company''s internal financial control over financial reporting with reference to these Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting with reference to these Ind AS financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting with reference to these Ind AS financial statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to these Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting with reference to these Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting with reference to these Ind AS financial statements and such internal financial controls over financial reporting with reference to these Ind AS financial statements were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Vijay Maniar

Partner

Membership Number: 36738

Place: Mumbai

Date: May 15, 2019

Aditya Birla Fashion and Retail Limited

---

Mar 31, 2018

Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements of Aditya Birla Fashion and Retail Limited (formerly known as Pantaloons Fashion & Retail Limited) (“the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of written representations received from the directors as on March 31, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018, from being appointed as a director in terms of section 164(2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements - Refer Note 45 to the Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure 1 to the Independent Auditor’s Report of even date on the Ind AS Financial Statements of Aditya Birla Fashion and Retail Limited

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, plant and equipment.

(i) (b) All Property, plant and equipment have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(i) (c) According to information and explanations given by the management, the title deeds of immovable properties, included in Property, plant and equipment are held in the name of the Company except for the following immovable properties other than self-constructed buildings aggregating to Rs.6.05 Crore which are held in the name of the demerged companies and is in the process of being transferred to the Company:

Total number of cases	Asset category	Amount as at March 31, 2018 (Rs.in Crores)	Remarks
12	Freehold land	5.92	Title deeds are in names of the companies whose divisions got merged with the Company and are
1	Building (Flat)	0.13	pending to be transferred in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013 (“the Act”). Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted in respect of which provisions of section 185 and 186 of the Act are applicable and hence not commented upon.

(v) The Company has not accepted any deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under section 148(1) of the Act, for the products/services of the Company.

(vii) (a) Undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales tax, service tax, customs duty, excise duty, value added tax, goods and services tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities.

(vii) (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, sales tax, service tax, customs duty, excise duty, value added tax, goods and services tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(vii) (c) According to the records of the Company, the dues outstanding of income tax, sales tax, service tax, customs duty, excise duty , value added tax and cess on account of any dispute, are as follows:

Statute	Nature of dues	Unpaid amount involved (Rs. in Crores)*	Period to which the amount relates	Forum where dispute is pending
Central Excise Act	Excise duty	1.86	May, 2001 to April, 2003	Customs, Excise and Service Tax Appellate Tribunal, Bangalore
Central Sales Tax Act	Central sales tax	0.01	2006-07	The Appellate Deputy Commissioner (CT) Secunderabad Division
Customs Act	Customs duty	2.04	1998-99	Hon’ble High Court -Karnataka
Customs Act	Customs duty	0.50	2010	Customs, Excise and Service Tax Appellate Tribunal, Chennai
Gujarat Commercial Tax Act	Sales tax	2.26	2011-12	Joint Commissioner -JCCT(A)
Karnataka Sales Tax Act	Sales tax	5.28	2011-12	Karnataka Appellate Tribunal
Karnataka Sales Tax Act	Sales tax	1.01	2005-07	Joint Commissioner of Commercial Taxes -Appeal
Karnataka Sales Tax Act	Sales tax	6.46	2012-13 to 2014-15	Joint Commissioner of Commercial Taxes -Appeal
Karnataka Tax on Entry of Goods Act	Entry tax	0.02	2002-03 to 2004-05	Joint Commissioner of Commercial Taxes -Appeal-1
Kerala Commercial Tax Act	Surcharge	2.44	April, 2008 to June, 2017	Kerala High Court, Ernakulum
Kerala General Sales Tax Act	Kerala sales tax	0.01	2004-05	Kerala Sales Tax Appellate Tribunal, Ernakulum
Orissa Sales Tax Act	Sales tax	0.74	2014-15	Joint Commissioner of Commercial Tax
Orissa Sales Tax Act	Sales tax	0.005	2002-03	Assistant Commissioner of Commercial Taxes, Bhubaneswar
Orissa Entry Tax Act	Entry tax	0.001	2002-03	Assistant Commissioner of Commercial Taxes, Bhubaneswar
Textile Committee Act Textile cess		0.59	1999-2005	Hon’ble High Court -Karnataka
Uttar Pradesh Commercial Tax Act	Value added tax	2.15	2008-09 to 2009-10	Deputy Commissioner of Commercial Taxes
Uttar Pradesh Commercial Tax Act	Value added tax	5.22	2008-09, 2011-12 and 2012-13	Additional Commissioner - Appeal
Uttarakhand Commercial Tax Act	Value added tax	3.75	2008-09 to 2010-11, 2012-13 and 2013-14	Additional Commissioner - Appeal
West Bengal Commercial Tax Act	Sales tax	0.05	2013-14	Joint Commissioner Appeal - JCCT (A)
West Bengal Commercial Tax Act	Sales tax	0.20	2011-12	Appellate and Revisional Board

Employee State Insurance Act	Employee state insurance	0.11	2003-06	Hon’ble Court of Labour Tribunal, Bangalore
KVAT Act	Value added tax	0.08	2008-09	Joint Commissioner of Commercial Tax
Madhya Pradesh VAT Act	Value added tax	0.08	2013-14	Commercial Tax Department
Haryana Commercial Tax Act	Central sales tax	0.08	2013-14	Joint Commissioner of Commercial Taxes -Appeal

* The unpaid amount mentioned above is net of Rs.39.14 Crore paid under protest.

(viii) According to information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. The Company does not have any borrowing from the government during the year.

(ix) In our opinion and according to the information and explanations given by the management, monies raised by way of term loans and debt instruments were applied for the purposes for which those were raised. The Company has not raised any money by way of initial public offer/ further public offer.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management, the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Vijay Maniar

Partner

Membership No.: 36738

Place: Mumbai

Date: May 11, 2018

---

Mar 31, 2017

INDEPENDENT AUDITOR’S REPORT

To the Members of Aditya Birla Fashion and Retail Limited Report on the Ind AS financial statements

We have audited the accompanying Ind AS financial statements of Aditya Birla Fashion and Retail Limited ("the Company") (formerly Pantaloons Fashion & Retail Limited), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss and Statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS financial statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended.

This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note - 44 in the financial statements regarding the acquisition of the demerged undertakings i.e Madura Undertaking and MGL Retail Undertaking in the previous year. For reasons more fully described therein regarding the accounting, no adjustments are considered necessary as regards the manner of recording of the said transaction.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s report) Order, 2016 ("the Order") issued by the Central

Government of India in terms of sub-section 11 of section 143 of the Act, we give in the Annexure

1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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, Statement of Profit and Loss including the Statement of Other comprehensive income, the Statement of cash flows and Statement of changes in equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of written representations received from the Directors as on March 31, 2017, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2017, from being appointed as a Director in terms of section 164(2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report dated May 12, 2017 in "Annexure 2" to this report;

(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements - Refer Note - 38 to the Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;

iv. The Company has provided requisite disclosures in Note - 32 to these Ind AS financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on our enquiries, test check of the books of account and other details maintained by the Company and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of account maintained by the Company.

Other Matter

The comparative financial information for the year ended March 31, 2016 and the transition date opening Balance Sheet as at April 1, 2015 pertaining to the Madura division of the Company included in these Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by predecessor branch auditor whose report for the year ended March 31, 2016 and March 31, 2015 dated May 25, 2016 and May 11, 2015 respectively expressed an unmodified opinion on those financial information of the branch, as adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have been audited by us.

Annexure 1 referred to in paragraph 1 under the heading “Report on Other Legal and Regulatory

Requirements” of our report of even date.

(i)(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(i)(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(i)(c) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to information and explanations given by the management, the title deeds of immovable properties are held in the name of the Company except for the following immovable properties other than self-constructed buildings aggregating to Rs. 605 Lakh which are held in the name of the demerged companies and is in the process of being transferred to the Company (Refer Note - 44 to the financial statements):-

Total number of cases	Asset category	Amount as at March 31, 2017 in Lakhs	Remarks
12	Freehold Land	592	Title deeds are in names of the companies whose divisions got merged with the Company and are pending to be transferred in the name of the Company.
1	Building (Flat)	13	Title deeds are in names of the companies whose divisions got merged with the Company and are pending to be transferred in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of section 185 and 186 of the Companies Act, 2013 are applicable and hence not commented upon.

(v) The Company has not accepted any deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under clause 148(1) of the Companies Act, 2013, for the products / services of the Company.

(vii)(a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, excise duty, income tax, sales tax, wealth tax, service tax, customs duty, value added tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities

(vii)(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income tax, wealth tax, service tax, sales tax, value added tax, excise duty, customs duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. (vii)(c) According to the records of the Company, the dues outstanding of income tax, sales tax, wealth tax, service tax, duty of customs, excise duty, value added tax and cess on account of any dispute, are as follows:

Name of the statute	Nature of the dues	Unpaid amount (Rs. in Lakhs)1	Period to which the amount relates	Forum where dispute is pending
Karnataka - Value Added Tax	Value Added Tax	8	2008-09	Deputy Commissioner of Commercial Taxes, Bangalore
Madhya Pradesh -Value Added Tax	Value Added Tax	8	2013-14	Commercial Tax Department
Rajasthan - Value Added Tax	Value Added Tax	4	2014-15	Commercial Tax Department
Central Excise Act	Excise duty	186	May''01 to Apr03	Customs, Excise and Service Tax Appellate Tribunal, Bangalore
Central Sales Tax Act	Sales tax	1	2006-07	The Appellate Deputy Commissioner (CT) Secunderabad Division
Customs duty	Customs duty	408	1998-99	Hon''ble High Court - Karnataka
Customs duty	Customs duty	50	2010	Customs, Excise and Service Tax Appellate Tribunal, Chennai
Gujarat -Commercial tax	Sales tax	226	2011-12	DEO - Joint Commissioner - JCCT(A)
Karnataka Sales Tax Act	Sales tax	528	2011-12	Karnataka Appellate Tribunal
Karnataka Sales Tax Act	Sales tax	985	2005-07 to 2014-15	JCCT - Appeals
Karnataka Tax on Entry of Goods Act	Entry tax	2	2002-03 to 2004-05	Joint Commissioner of Commercial Taxes - Appeal - 1
Kerala Commercial Tax	Surcharge	180	April 2008 to June 2017	Kerala High Court, Ernakulum
Kerala General Sales Tax Act	Kerala sales tax	1	2004-05	Kerala Sales Tax Appellate Tribunal, Ernakulum
Orrisa Entry tax	Entry dues	0	2002-03	Assistant Commissioner of Commercial Taxes, Bhubaneshwar
Orrisa Sales Tax Act	Sales tax	0	2002-03	Assistant Commissioner of Commercial Taxes, Bhubaneshwar
Textile Committee Act	Textile cess	122	1981-2005	Honourable High Court
Uttar Pradesh Commercial tax	Value Added Tax	737	2008-2013	DCCT - Uttar Pradesh
Uttarkhand Commercial tax	Value Added Tax	375	2008-2014	Additional Commissioner - Appeal
West Bengal Commercial tax	Sales tax	1	2005-06	Joint Commissioner Appeal -JCCT(A)

we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. The Company has not taken any loans or borrowings from the government.

(ix) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer. The monies raised by way of term loans and debt instruments were applied for the purposes for which those were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud on or by the officers and employees of the Company has been noticed or reported during the year.

(xi) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.

(xiii) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013, where applicable, and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with Directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

Annexure 2 referred to in paragraph 2 under the heading “Report on Other Legal and Regulatory Requirements” of our report of even date on the financial statements of Aditya Birla Fashion and Retail Limited. Report on the Internal Financial Controls under clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 (“the Act”)

To the Members of Aditya Birla Fashion and Retail Limited

We have audited the internal financial controls over financial reporting of Aditya Birla Fashion and Retail Limited ("the Company") (formerly Pantaloons Fashion & Retail Limited) as at March 31, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Vijay Maniar

Partner

Membership No.: 36738

Place: Mumbai

Date: May 12, 2017

---

Mar 31, 2016

We have audited the accompanying financial statements of Aditya Birla Fashion and Retail Limited ("the Company") (formerly Pantaloons Fashion & Retail Limited), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, in which are incorporated the branch''s financial statements for the year ended on that date audited by the branch auditors of the Company''s branches at Bengaluru.

Management''s Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2016, its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of Sub-section (11) of Section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purpose 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 report on the accounts of the branch offices of the Company, audited under Section 143(8) of the Act by the branch auditor, has been sent to us and have been properly dealt by us in preparing this report;

(d) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the audited financial statements received from branches;

(e) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and Companies (Accounting Standards) Amendment Rules, 2016;

(f) On the basis of written representations received from the Directors, as on March 31, 2016, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2016, from being appointed as a Director in terms of Section 164(2) of the Act;

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(h) With respect to the Other Matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 36 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

Other Matters

The accompanying financial statements include total assets of Rs.184,996 lakh as at March 31, 2016, and total revenues and profit before tax of Rs.391,118 lakh and Rs.21,935 lakh, respectively for the year ended on that date, in respect of two branches, which have been audited by the branch auditors, which financial statements, other financial information and auditor''s reports have been furnished to us. Our opinion, in so far as it relates amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors. Our opinion is not modified in respect of this matter.

Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date

(i)(a) The Company has maintained proper records showing full particulars, including quantitative details and situation, of fixed assets.

(i)(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(i)(c) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, the title deeds of immovable properties are held in the name of the Company except for the following immovable properties other than self-constructed buildings aggregating to Rs.605 lakhs which are held in the name of the demerged companies and is in the process of being transferred to the Company (refer Note 32 to the financial statements).

Total Number Asset Amount Remarks of Cases Category as at 31 March 2016 (Rs.in lakhs)

12 Freehold Land 592 Title deeds are in the names of the companies whose divisions got merged with the Company and are pending to be transferred in the name of the Company.

1 Building (Flat) 13 Title deeds are in the names of the companies whose divisions got merged with the Company and are pending to be transferred in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

(iii)(a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of Clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted, in respect of which provisions of Sections 185 and 186 of the Companies Act, 2013, are applicable and hence not commented upon.

(v) The Company has not accepted any deposits from the public.

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under Clause 148(1) of the Companies Act, 2013, for the products/services of the Company.

(vii)(a) Undisputed statutory dues, including provident fund, investor education and protection fund, employees'' state insurance, excise duty, income tax, sales tax, wealth tax, service tax, customs duty, value added tax, cess and other material statutory dues, have generally been regularly deposited with the appropriate authorities.

(vii)(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income tax, wealth tax, service tax, sales tax, value added tax, excise duty, customs duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(vii)(c) According to the records of the Company, the dues outstanding of income tax, sales tax, wealth tax, service tax, duty of custom, excise duty, value added tax and cess on account of any dispute, are as follows:

Name of Nature of the Amount Period to which Forum where the Statute Dues Involved the Amount Dispute is Pending (in Rs.) Relates

Central Excise Excise Duty 21,121,944 1.05.2001 to Customs, Excise and Service Tax Act 30.04.2003 Appellate Tribunal, Bengaluru

Orissa Sales Sales Tax 81,000 2002-03 Assistant Commissioner of Tax Act Commercial Taxes, Bhubaneswar

Orissa Entry tax Entry Tax 32,000 2002-03 Assistant Commissioner of Commercial Taxes, Bhubaneswar

Kerala General Kerala Sales 68,000 2004-05 Kerala Sales Tax Appellate Sales Tax Act Tax Tribunal, Ernakulam

Karnataka Tax on Entry Tax 221,000 2002-03 to Joint Commissioner of Entry of Goods Act 2004-05 Commercial Taxes - Appeal-1

West Bengal Sales Sales Tax 121,000 2005-06 Asst. Commissioner of Tax Commercial Taxes

Textile Commit tee Textile Cess 13,266,000 1981-99 Textile Committee Cess Act Appellate Tribunal, Mumbai

8,130,669 1999-05 Assessing Officer - Textiles Committee, Coimbatore

Karna taka Sales Sales Tax 341,445 2005-07 JCCT - Appeals Tax

48,287,594 2011-12 Hon''ble High Court, Karnataka

Central Sales Tax Central Sales 161,000 2006-07 The Appellate Deputy Act Tax Commissioner (CT), Secunderabad Division

Uttar Pradesh Value Added 72,556,564 2009-10, 2010-11 DCCT, Uttar Pradesh Commer cial Tax Tax and 2011-12

Uttar Pradesh- Value Added 41,101,963 2008-09 DCCT, Uttar Pradesh Value Added Tax Tax

Custom Duty Custom Duty 40,800,000 1998-99 Hon''ble High Court, Karnataka

Karna taka - Value Added 817,012 2008-09 Deputy Commissioner of Value Added Tax Tax Commercial Taxes, Bengaluru

Madhya Pradesh - Value Added 236,400 2013-14 Commercial Tax Department Value Added Tax Tax

(viii) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. The Company has not taken any loans or borrowings from the government.

(ix) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, the Company has not raised any money by way of initial public offer/ further public offer/ debt instruments. The monies raised by way of term loans were applied for the purposes for which those were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud on or by the officers and employees of the Company has been noticed or reported during the year.

(xi) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of Clause 3(xi) of the order are not applicable to the Company and hence not commented upon.

(xiii) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, transactions with the related parties are in compliance with Sections 177 and 188 of Companies Act, 2013, where applicable, and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence not commented upon.

(xv) Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanations given to us, the provisions of Section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration No.: 324982E/E300003



per Vijay Maniar

Partner

Membership No.: 36738

Place: Bengaluru

Date: 25th May, 2016

---

Mar 31, 2015

We have audited the accompanying Financial Statements of Pantaloons Fashion & Retail Limited ("the Company") (formerly Peter England Fashions and Retail Limited), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Financial Statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the Financial Statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Financial Statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2015, its loss and its cash flows for the year ended on that date.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of written representations received from the Directors as on March 31,2015, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2015, from being appointed as a Director in terms of section 164 (2) of the Act;

(f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 35 to the Financial Statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company. Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

(i)(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(i) (b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(ii)(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(ii) (c) The Company is maintaining proper records of inventory. Discrepancies noted on physical verification of inventories were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3 (iii)(a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) 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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas.

(v) The Company has not accepted any deposits from the public.

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under clause 148(1) of the Companies Act, 2013, for the products/ services of the Company.

(vii) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, value added tax,cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there have been slight delays in few cases.The provisions relating to excise duty are not applicable to the Company.

(vii)(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income-tax, wealth-tax, service tax, sales- tax, value added tax, customs duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(vii)( c) According to the information and explanations given to us there are no dues of income tax, sales tax, wealth tax, service tax, custom duty, excise duty, value added tax and cess which have not been deposited on account of any dispute.

(vii) (d) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.

(viii) The Company's accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash loss during the year and in the immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(x) According to the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institution.

(xi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the Financial Statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S R B C & CO LLP Chartered Accountants ICAI Firm registration number: 324982E

Per Vijay Maniar Partner Membership no.: 36738

Place: Mumbai Date : 13 May 2015

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Mar 31, 2014

We have audited the accompanying financial statements of Pantaloons Fashion & Retail Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, and the Statement of Profit and Loss, and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014 dated 4th April, 2014, issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 1956 ("the Act"), in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 38 to the financial statements, wherein the appointment of the managing director is subject to the approval of the shareholders and the managerial remuneration paid in excess of the limits prescribed under Schedule XIII of the Act. The management has taken necessary steps for obtaining Central Government''s approval. Pending the approval from the Shareholders of the Company and the Central Government, as aforesaid, no adjustments have been made to the Financial Statements. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, 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 purpose 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Act read with General Circular 8/2014 dated 4th April, 2014, issued by the Ministry of Corporate Affairs.

(e) On the basis of written representations received from the directors as on 31st March, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014, from being appointed as a director in terms of Clause (g) of Sub-Section (1) of Section 274 of the Act.

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

Re: Pantaloons Fashion & Retail Limited (Formerly Peter England Fashions and Retail Limited) ("the Company")

(i)(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(i)(b) The management has a planned program of verifying the fixed assets once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets, however, during the year, physical verification has been carried out by the management only in respect of few stores as against the planned program. No material discrepancies were noticed on such verification.

(i)(c) There was no disposal of a substantial part of fixed assets during the year.

(ii)(a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(ii)(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(ii)(c) The Company is maintaining proper records of inventory. Discrepancies noted on physical verification of inventories were not material and have been properly dealt with in the books of account.

(iii)(a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of Clauses 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon.

(iii)(e) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of Clauses 4(iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(iv) 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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v)(a) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Act. Accordingly, the provisions of Clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed the maintenance of cost records under Clause (d) of Sub-section (1) of Section 209 of the Act, for the products of the Company.

(ix)(a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities.The provisions relating to excise duty are not applicable to the Company.

(ix)(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth tax, service tax, sales tax, customs duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than Six months from the date they became payable.

(ix)(c) According to the information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, customs duty and cess which have not been deposited on account of any dispute.

(x) The Company''s accumulated losses at the end of the financial year are less than fifty per cent of its net worth.The Company has incurred cash losses in the current year and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced before us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of Clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that short-term sources of funds in the form of trade payables amounting to Rs. 5,703 Lakh have been used for long-term purpose for fixed assets, loans and advances and funding of losses.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act.

(xix) According to the information and explanations given to us, the Company had issued unsecured non-convertible redeemable 3000 debentures of Rs.1,000,000 each, during the period, covered by our audit report, on which no security or charge is required to be created.

(xx) The Company has not raised money from public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For S.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration No. 301003E

per Vijay Maniar

Partner

Membership No. 36738

Mumbai, 5th May, 2014

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Pantaloons Fashion & Retail Limited (Formerly Peter England Fashions and Retail Limited) ("the Company"), which comprise the Balance Sheet as at 31 March 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles- generally accepted in India, including accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013,

(b) In the case of the Statement of Profit and Loss, of the loss for the year ended on that date, and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 32 (9) to the Financial Statements, wherein, the Company has accounted for the demerger expenses which, though, not in compliance with the accounting standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended), is in accordance with the scheme of arrangement approved by the Honorable Bombay High Court,). Our opinion is not qualified in respect of this matter.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, 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 purpose 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act.

(e) On the basis of written representations received from the directors as on 31 March 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

Re: Pantaloons Fashion & Retail Limited (Formerly Peter England Fashions and Retail Limited) ("the Company")

(i)(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(i)(b) The management has a planned program of verifying the fixed assets once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets, however the fixed assets have not been physically verified by the management during the year as the assets have been taken over under the scheme of arrangement described under Note 32 to the financial statements which is effective from a date subsequent to the Balance Sheet date, hence, we are unable to comment on the discrepancies, if any, in respect of such assets that have been taken over.

(i)(c) There was no disposal of a substantial part of fixed assets during the year.

(ii)(a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(ii)(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(ii)(c) The Company is maintaining proper records of inventory. Discrepancies noted on physical verification of inventories were not material and have been properly dealt with in the books of account.

(iii)(a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon.

(iii)(e) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(iv) 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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v)(a) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956, for the products of the Company.

(ix)(a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, service tax, customs duty, cess and other material statutory dues applicable to its business other than the demerged undertaking (refer Note 32 to the financial statements). In case of the demerged undertaking, we have relied on certificate received from the statutory auditor''s of the demerged Company that the Company is regular in depositing the respective undisputed statutory dues with appropriate authorities.

(ix)(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(ix)(c) According to the information and explanations given to us, there are no dues of income tax, sales- tax, wealth tax, service tax, customs duty and cess which have not been deposited on account of any dispute.

(x) The Company''s accumulated losses at the end of the financial year are less than fifty per cent of its net worth. The Company has incurred cash losses in the current year and not in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced before us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) The Company has not taken any term loans during the year. Accordingly we are not required to comment on the same. In case of term loans taken over in pursuant to the scheme of demerger explained in note 32 to the financial statements and outstanding during the year, as explained to us, the demerged Company had utilized the said loans in the earlier years.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that short term sources of funds amounting to Rs. 17,320 lacs in the form of short term borrowings and trade payables taken over under the scheme of arrangement described under Note 32 to the financial statements have been used for long-term investment representing fixed assets, long term loans and advances taken over under the Scheme and towards funding of losses.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has unsecured debentures outstanding during the year, on which no security or charge is required to be created.

(xx) The Company has not raised money from public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E

per Vijay Maniar

Partner

Membership No.: 36738

Mumbai, 23rd May, 2013