MIRA INFORM REPORT

Report Date :

23.07.2011

IDENTIFICATION DETAILS

Name :	PHOENIX MILLS LIMITED
Registered Office :	462, Senapati Bapat Marg, Lower Parel, Mumbai – 400013, Maharashtra
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	27.01.1905
Com. Reg. No.:	11-000200
Capital Investment / Paid-up Capital :	Rs.289.691 Millions
CIN No.: [Company Identification No.]	L17100MH1905PLC000200
TAN No.: [Tax Deduction & Collection Account No.]	MUMT09705D
PAN No.: [Permanent Account No.]	AAACP3325J
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchange.
Line of Business :	Manufacturer of Cotton Textile Goods.
No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

A (69)

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 62000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is an old and well established company having fine track. Financial position of the company appears to be sound. Directors are reported as experienced and respectable businessman. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered good for normal for business dealings at usual trade terms and conditions.

NOTES:

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

INFORMATION DECLINED BY

Name :	Mr. Ashok Parakh
Designation :	Accounts Manager
Date :	21.07.2011

LOCATIONS

Registered Office :	462, Senapati Bapat Marg, Lower Parel, Mumbai – 400013, Maharashtra, India
Tel. No.:	91-22-24964307/ 8/ 9
Fax No.:	91-22-24938388
E-Mail :	corpaffairs@highstreetphoenix.com info@thephoenixmills.com
Website :	http://www.thephoenixmills.com
Corporate/ Admin Office :	Shree Laxmi Woollen Mills Estate 2^nd Floor, R R Hosiery Building, Off Dr. E. Moses Road, Mahalaxmi, Mumbai – 400011, Maharashtra, India
Tel. No.:	91-22-30016730/ 30016600
Fax No.:	91-22-30016818/ 30016601
Email :	info@marketcity.in

DIRECTORS

Name :	Mr. Ashokkumar Ruia
Designation :	Chairman and Managing Director
Name :	Mr. Atul Ruia
Designation :	Joint Managing Director
Name :	Mr. Kiran Gandhi
Designation :	Whole Time Director
Name :	Mr. Shishir Shrivastava
Designation :	Group CEO and Executive Director
Name :	Mr. Pradumna Kanodia
Designation :	Director – Finance
Name :	Mr. Amitkumar Dabriwala
Designation :	Independent and Non-Executive Director
Name :	Mr. Amit Dalal
Designation :	Independent and Non-Executive Director
Name :	Mr. Sivaramakrishnan Iyer
Designation :	Independent and Non-Executive Director
Name :	Mr. Shribhanu Patki
Designation :	Independent and Non-Executive Director
Name :	Mr. Suhail Nathani
Designation :	Independent and Non-Executive Director

KEY EXECUTIVES

Name :	Mr. Pradumna Kanodia
Designation :	Group CFO
Name :	Ms. Minal Bhate – Dandekar
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(AS ON 30.06.2011)

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	9,931,781	6.86
Bodies Corporate	85,544,882	59.06
Sub Total	95,476,663	65.92
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	95,476,663	65.92
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	7,737,518	5.34
Financial Institutions / Banks	70,500	0.05
Foreign Institutional Investors	30,925,358	21.35
Foreign Venture Capital Investors	1,500,000	1.04
Any Others (Specify)	975	-
Trusts	975	-
Sub Total	40,234,351	27.78
(2) Non-Institutions
Bodies Corporate	1,405,315	0.97
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	6,300,840	4.35
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	1,117,373	0.77
Any Others (Specify)	310,903	0.21
Directors & their Relatives & Friends	3,500	-
Clearing Members	177,372	0.12
Non Resident Indians	130,031	0.09
Sub Total	9,134,431	6.31
Total Public shareholding (B)	49,368,782	34.08
Total (A)+(B)	144,845,445	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	-
(1) Promoter and Promoter Group	-	-
(2) Public	-	-
Sub Total	-	-
Total (A)+(B)+(C)	144,845,445	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Cotton Textile Goods.

Products :

Products Description	Item Code No.
Cloth/ Garments	520722

GENERAL INFORMATION

No. of Employees :

Not Available

Bankers :

· Corporation Bank

Facilities :

Secured Loans	31.03.2010	31.03.2009
	(Rs. In Millions)
Loans from Banks
Term Loans	1144.376	1290.274
Working Capital Loans	277.247	359.165
(Secured by Equipments Mortgaged of deposits of Title deed in respect of certain immovable properties and by hypothecation of rentals receivable from licensees)
Vehicles Loans	--	2.145
(Secured by hypothecation of the repetitive vehicles)
Total	1421.623	1651.584

Banking Relations :	--
Auditors :
Name :	· A. M. Ghelani and Company Chartered Accountant · Chaturvedi and Shah Chartered Accountant
Associates :	· Bartraya Mall Development Company Private Limited · Starboard Hotels Private Limited · Classic Mall Development Company Private Limited · Entertainment World Developers Limited · Escort Developers Private Limited · Island Star Mall Developers Private Limited · Juniper Developers Private Limited · Offbeat Developers Private Limited · Picasso Developers Private Limited · Ramayana Realtors Private Limited
Subsidiaries :	· Blackwood Developers Private Limited · Bellona Finvest Limited · Big Apple Real Estate Private Limited · Gangetic Developers Private Limited · Kalani Holdings Private Limited · Market City Management Private Limited · Marketcity Resources Private Limited · Palladium Constructions Private Limited · Pallazzio Hotels and Leisure Limited · Pinnacle Real Estate Development Private Limited · Plutocrat Assets and Capital Management Private Limited · Ruia Realtors Private Limited up to 25.02.2010 · Upal Developers Private Limited · Vamona Developers Private Limited

CAPITAL STRUCTURE

(AS ON 31.03.2010)

Authorised Capital :

No. of Shares	Type	Value	Amount
150000000	Equity Share	Rs.2/- each	Rs.300.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
144845445	Equity Share	Rs.2/- each	Rs.289.691 Millions

NOTE:

Of the above:

54,600,000 Equity shares of 2 each have been alloted as fully paid up Bonus Shares by capitalisation of Reserves.

40,000,000 Equity Shares of 2 each were allotted to the share holders of Ashok Ruia Enterprise Private Limited as per the scheme of amalgamation without payments being received in cash.

9,166,665 Equity Shares of 2 each were allotted to the share holders of Ruia Real Estate Development Company Pvt. Ltd. as per the scheme of amalgamation without payments being received in cash.

3,390,000 Equity Shares have been reserved for allotment under The Phoenix Mills Employees’ Stock Option Plan 2007.

650,000 Options have been granted under ‘The Phoenix Mills Employees’ Stock Option Plan 2007’ of which 250,000 Options have been lapsed and are available for regrant.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		289.691	289.691	271.358
2] Share Application Money		0.000	0.000	18.333
3] Reserves & Surplus		15102.913	14708.301	14096.540
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		15392.604	14997.992	14386.231
LOAN FUNDS
1] Secured Loans		1421.623	1651.584	1551.471
2] Unsecured Loans		0.000	0.000	497.846
TOTAL BORROWING		1421.623	1651.584	2049.317
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		16814.227	16649.576	16435.548
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		4454.149	1550.704	1265.058
Capital work-in-progress		882.042	3160.986	1781.692
INVESTMENT		5874.533	5329.995	5731.956
DEFERREX TAX ASSETS		22.519	12.561	9.699
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	3.053	3.298	2.704
	Sundry Debtors	410.781	332.351	198.898
	Cash & Bank Balances	203.949	1543.988	20.057
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	6295.911	5849.335	8351.082
Total Current Assets		6913.694	7728.972	8572.741
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditor	260.742	256.412	160.174
	Other Current Liabilities	836.702	653.456	551.895
	Provisions	235.266	223.774	213.529
Total Current Liabilities		1332.710	1133.642	925.598
Net Current Assets		5580.984	6595.330	7647.143
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		16814.227	16649.576	16435.548

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Sales and Services	1157.717	901.495	2035.844
		Other Income	240.240	498.840	240.080
		TOTAL (A)	1397.957	1400.335	2275.924
Less	EXPENSES
		Purchases for resale and variation in Inventory	5.906	6.103	7.042
		Employees Costs	39.460	43.037	34.185
		Operating and Other Expenses	366.128	250.297	243.482
		TOTAL (B)	411.494	299.437	284.709
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		986.463	1100.898	1991.215
Less	FINANCIAL EXPENSES (D)		85.529	49.479	41.808
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		900.934	1051.419	1949.407
Less/ Add	DEPRECIATION/ AMORTISATION (F)		160.473	83.715	72.627
	PROFIT BEFORE TAX (E-F) (G)		740.461	967.704	1876.780
Less	TAX (H)		141.542	185.539	190.257
	PROFIT AFTER TAX (G-H) (I)		598.919	782.165	1686.523
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		2830.081	2517.377	1302.563
Less	APPROPRIATIONS
		Transfer to General Reserve	200.000	300.000	250.000
		Proposed Dividend	173.815	144.845	144.845
		Tax on Proposed Dividend	29.540	24.616	24.616
		Dividend for Earlier year	--	--	44.658
		Tax on Dividend for earlier year	--	--	7.590
	BALANCE CARRIED TO THE B/S		3025.645	2830.081	2517.377
	Earnings Per Share (Rs.)		4.13	5.52	16.10

QUARTERLY RESULTS

PARTICULARS	30.06.2010	30.09.2010	31.12.2010	31.03.2011
Type	1^st Quarter	2^nd Quarter	3^rd Quarter	4^th Quarter
Sales Turnover	404.310	443.380	450.720	467.910
Total Expenditure	110.700	126.060	123.450	146.900
PBIDT (Excl OI)	293.610	317.320	327.270	321.010
Other Income	43.620	66.010	71.020	140.960
Operating Profit	337.230	383.330	398.290	461.970
Interest	34.540	29.090	19.040	2.840
Exceptional Items	0.000	0.000	0.000	0.000
PBDT	302.690	354.240	379.250	459.130
Depreciation	68.510	69.500	69.610	69.670
Profit Before Tax	234.180	284.740	309.640	389.470
Tax	51.560	63.520	71.950	117.840
Reported PAT	182.620	221.220	237.690	271.630
Extraordinary Items	0.000	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000	0.000
Net Profit	182.60	221.220	237.690	271.630

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	42.84	55.86	74.10
Net Profit Margin (PBT/Sales)	(%)	63.96	107.34	92.19
Return on Total Assets (PBT/Total Assets}	(%)	6.51	10.43	19.08
Return on Investment (ROI) (PBT/Networth)		0.05	0.06	0.13
Debt Equity Ratio (Total Liability/Networth)		0.18	0.19	0.21
Current Ratio (Current Asset/Current Liability)		5.19	6.82	9.26

LOCAL AGENCY FURTHER INFORMATION

SUNDRY CREDITORS DETAILS

Particulars	31.03.2010	31.03.2009	31.03.2008
	(Rs. In Millions)
Sundry Creditors
- Micro and Small Enterprises	--	--	--
- Others	260.742	256.412	160.174
Total	260.742	256.412	160.174

OPERATIONS:

The most significant development during the year in review has been the launch of “Palladium”, the new premium mall at High Street Phoenix (HSP). During the year in review, occupancy levels, footfall and retailer demand at HSP have been very encouraging. The report on management Discussion and Analysis (MDA), which forms part of this report, Inter-Alia, deals comprehensively with the operations as also current and future outlook of the company.

MANAGEMENT DISCUSSION AND ANALYSIS

Growth in the Indian Economy

Based on the Economic Outlook for fiscal 2010 by the Economic Advisory Council to the Prime Minister, the Indian Economy may grow by about 7.2% in the fiscal year 2010 and return to a 9% growth rate in the next two years.

The strength of India’s age demographics in which the high proportion of English comprehending young working professionals are growing in numbers, and a massive increase in the number of households with discretionary spending power has led to retail and domestic demand becoming the real impetus of the economy. With approximately 55% of India’s workforce earning their livelihood and producing around 19% of India’s GOP, it continues to be a key part in the Indian economy. The percentage of the Indian population that is made up of the earning population in the 20-59 age bracket is expected to increase. An increase in the earning population usually leads to increased spending and consumption in the economy which may in turn lead to stronger demand for the real estate industry.

Going forward, the virtuous demographic income dynamics will be dependent on the rapid employment growth in manufacturing and services industries. India is uniquely positioned amongst the emerging markets in which the domestic market and resource base offers a reliable buffer against global economic turbulence.

In 2010, the government hopes to not only focus on the fiscal stimulus but also to address the deficit reduction over the next two years. Further, in part to offset the deficit, it has proposed limited privatization of government-owned industries. In the long term, India is set to face a myriad of compound challenges that include inadequate infrastructure, limited employment opportunities as well as inadequate basic and higher education structure. In this respect, great emphasis is being placed in the development of both social and physical infrastructure.

The real estate sector in India comprises the development of residential housing, commercial buildings, hotels, restaurants, cinemas, retail outlets and the purchase and sale of land and development rights. The real estate and construction sector plays an important role in the overall development of India’s core infrastructure. The real estate sector has evolved in the past 10 years, accompanied by various regulatory reforms. Growth in the real estate sector is also directly affected by the growth of mortgage finance and lending to the real estate sector in the country, both in terms of reach and affordability. As a large proportion of the investment in real estate sector is funded by bank and financial institutions, increased credit off-take acts as a stimulus to the sector.

With the rise in spending in upgrading India’s overall infrastructure and in the face of an ever increasing affluent populace with rising consumption and dwelling development, PML is aptly positioned to capture the growth opportunity from the robust consumption story of the Indian economy.

THE RETAIL SECTOR

Historically, the Indian retail sector has been dominated by small independent local retailers, such as traditional neighborhood grocery stores. However, during the 1990s, organized retail outlets gained increased acceptance due to an increase in the number of working women, changes in perception of branded products, entry of international retailers and a growing number of retail malls. India’s retail boom primarily originated in the mature cities and has subsequently expanded to High Growth and Emerging cities, with leading retailers and developers continuing to plan shopping malls and hypermarkets in these locations.

The growth of organized retail segment is expected to be driven by demographic factors, increasing disposable incomes, the increased purchasing power of the growing middle class and consumerist aspirations, in addition to the macroeconomic policy decisions, such as allowing FDI in multi brand retailing format. Although real estate development in the retail sector is relatively new in India, both domestic and foreign investors have invested substantial capital in this sector in recent years.

The size of the Indian retail market was approximately US$ 410 billion in calendar year 2008, out of which modern retail was approximately US$ 18 billion. Projected retail demand figures show that Indian retail market is expected to be approximately US$ 535 billion by 2013. Out of this, modern retail would constitute US$ 73 billion, which would result in a Compounded Annual Growth Rate (“CAGR”) of over 30%. Investment up to US$ 30 billion is anticipated over next five years in the modern retail sector. (Source: Technopak)

Organized retail is being driven throughout India by resilient consumers who are typically young, urbanized and brand-conscious shoppers with changing preferences towards consumerism and the means to pursue it. This growth in organized retail has been aided by the increased number of shopping malls built over the last three years, an increasing number of which are located in the nation’s smaller, underserved markets. (Source: Technopak Report: India Growth Story: Pyramid To Diamond Rise of Consuming Class, March 2009)

THE HOSPITALITY SECTOR

The Indian hospitality industry has emerged as one of the key industries driving the growth of the services sector and, thereby, the Indian economy. One of the key reasons for the increase in demand for hotel rooms in the country has been the significant growth in the overall economy and substantial growth in sectors including information technology, telecom, banking and finance, insurance, construction, tourism, retail and real estate. The Growth Drivers impacting the Hospitality segment include the following:

Regulatory Drivers:

The Department of Tourism, Government of India has initiated a number of steps to ensure full utilization of the potential which tourism holds for India’s economy. Current regulations by the Government of India allow 100% FDI in the Hospitality Sector through the automatic route. This has increased the amount of capital available for investment into the sector. Other incentives include the reduction of customs duty for import of various raw materials, equipment and liquor among others; Capital subsidy program for budget hotels fringe benefit tax exempted on crèche, employee sports and guest house facilities; Five year income tax holiday granted to two to four star hotels established in specified districts which have been declared UNESCO-declared ‘World Heritage Sites; state level exemptions on luxury tax and sales tax for five to seven years for new projects; small capital subsidy for the development of budget hotels; below market rate allotment of land controlled by States for development projects; five year income tax holiday for two to four star hotels and convention centers (minimum 3,000 people) in National Capital Region (NCR”); and in order to increase the built-up area of Delhi, zonal auction rate has been reduced by the Government of India.

Rising GDP:

Overall India’s economy has experienced a positive rate of growth with a growth rate of 9.6% and 9% in the fiscal year 2007 and the fiscal year 2008 respectively. Despite slowdown, the GDP growth for the fiscal year 2009 was 6.7%. An increase in GDP may act as a stimulant to growth in the hospitality Sector.

FDI lnflow:

Of the total FDI inflow between the fiscal years 2000 and 2008, the hospitality sector contributed US$ 1.07 billion. The hospitality sector requires more than US$ 10 billion investment in the next two to three years for which the government is relying on FDI. (Source: Technopak)

Changing Consumer Dynamics and Ease of Access to Finance:

Nominal per capita income growth averaged at approximately 7.3%, which was higher than the average inflation rate of 5.1% during fiscal years 2004 to 2008. India has also experienced significant growth in the credit card market. The credit card base in 2008 was estimated to be 25 million and this is expected to grow at 20 to 25% per annum. Driving this growth is the increased use of credit cards for the purpose of purchasing due to attractive and consumer friendly schemes being offered by various banks. 35% of those who use credit cards use it for travel, hotel and dining.

Increasing Domestic and International Tourist Arrivals:

There has been an increase in the number of tourists, both domestic as well as international. From 310 million domestic visits in 2003, the number rose to 529 million in 2007, a CAGR of 14%.

The Ministry of Tourism’s vision is to achieve 760 million domestic visits by the year 2011, with an annual average growth rate of 12%.

Demand Supply Imbalance:

Statistics on the demand and supply for hotel rooms indicate that India currently has around 114,200 hotel rooms spread across various hotel categories and is facing a shortfall of approximately 156,000 rooms. The effect of this demand and supply gap is felt through increased room tariffs.

New Entrants in the Sector:

The Government of India until December 2007 has approved the construction of 85,000 hotel rooms resulting in the emergence of different entrants in the industry ranging from real estate companies, private equity firms, and IT companies. (Source: Technopak).

OPERATIONS REVIEW

Company’s strategy is to establish and maintain a market leading position as an active owner, developer and manager of prime retail-led assets in the city centres of India. Company undertakes asset and centre management initiatives with the aim of delivering strong long-term returns for shareholders through income and capital growth. Company is committed to active mall management and ongoing investment in its mall centres, commercial centres and hospitality assets.

High Street Phoenix (HSP), including Palladium

The strategy to generate higher income and value is taking solid shape at the High Street Phoenix complex. The most significant development for FY10 at this facility was the launch of the new premium mall “Palladium” within the complex.

HSP’s portfolio offers over 250 licenses covering 3.0 million sq. ft. of mixed-use development consisting of retail, entertainment, commercial, parking and residential complexes and provides company a solid platform from which to operate. Increased footfall, high occupancy, strong retailer demand and stable income show the resilience and attractiveness of HSP as a retail and commercial destination.

During the year in review, occupancy levels, footfall and retailer demand at High Street Phoenix have been very encouraging. The highlight of FY 2010 was the completion of “Palladium”. The newest 300,000 sq. ft. premium mall of Mumbai, “Palladium” at High Street Phoenix, opened to rave reviews with encouraging interest from retailers. As on 31st March 2010, 82% of total numbers of stores were opened with approximately 70% of the facility area operational. During the first quarter of FY 2011, the occupancy levels have further improved to around 90% and Palladium is expected to be fully filled out by the end of the current year. During FY 2010, the Company also exhibited excellent occupancy levels of over 90% for the rest of the HSP facility.

The concentration of a number of famous and highly revered brands at the Lower Parel facility has given the HSP location stronger USPs in gaining the attention of the Mumbai consumption market. A recorded footfall of around 12 million for FY 2010 and solid income from operations of 1,158 mn, confirmed the direction of the strategy towards infrastructure enhancements, space expansion, higher quality and new contemporary global brands.

2010 marked the entry of several new brands that chose to make HSP and the Palladium their first home in Mumbai. In particular, Zara, the internationally acclaimed fashion brand, signed up to commence operations of their store in June 2010. The Palladium also acted as a launch platform for leading international premium and luxury brands with Burberry, Diesel, Canali and Guess opening their stores in early 2010. The Landmark Bookstore signed up to establish its India flagship store within The Palladium in May 2010. HSP also signed up to host marquee ‘first time’ brands into India, including The Comedy Store, Manchester United Cafe, Hamleys and Bo-Concept. Hamleys, the marquee London based toy store, which signed up its 25,000 sq. ft store to open in early April, 2010 has long had the reputation of being one of the most famous toy stores globally, and is Europe’s oldest and largest toy store. The facility also signed up to host several ‘first time’ brands into Mumbai, including The Collective, The Punjab Grill and Asia Seven.

Another key development for the HSP during FY 2010 was the completion and commencement of the Pay and Park facility. The new car parking facility has immensely increased the convenience factor of visiting HSP, negating the adverse parking supply position for both 4 and 2 wheelers in the Lower Parel area generally. In turn, with the car park operating in full swing and experiencing solid usage, the HSP facility has further enhanced its footfall and established a new income generation source.

During FY 2010, PML introduced a system for collections through a Joint Bank Account for many of its retailers. This is a mechanism wherein the retailer agrees that the monthly charges (License Fees, CAM charges, Marketing and Promotional Charges, etc.) will be paid to the Company on a daily basis. To facilitate this, the retailer agrees that all monies collected (whether by way of cash or through credit card/debit card or through any other monetary instrument) are deposited into a joint bank account. This Joint Bank Account operates under the joint instructions of both the parties. Through an IT solution in which reconciliation of trade revenues is done on a daily basis, Company can keep a close track of the performance of each of the retailing units and notice any visible trends that might trigger an action. It also gets an idea of the traffic flow and spending habits of its visitors. Since the collections take place on a daily basis, the Company is able to optimize its cash flows.

PERFORMANCE

The company Group operates on some simple yet powerful fundamental approaches. The most powerful one is the need to ensure that the design of a property is in itself a key driver for success. The idea behind this approach is to capture the consumption story of India by giving it world class properties and not mediocre ones. It has engaged some of the world’s most successful and respected property designers Benoy (UK/Hong Kong) and PG Patki (India) amongst other leading architects. The outstanding designs of the Group’s evolving portfolio are the result of Company’s Joint Managing Director, Mr. Atul Ruia’s energy and passion for winning at the design stage itself.

The company Group also understands the importance of having a very good mix of retail brands, Shops, food and beverages outlets to meet the expectations of both the licensees and visitors. It believes that it must exhibit flexibility in adjusting the sizing and product mix of its mixed-use projects to reflect the most current and emerging trends that impact viability and a successful outcome. It believes in being highly selective on the types of retailers permitted to participate in order to make a better experience for the mall’s visitors. It also places enormous importance to the overall concept of the properties and the zoning of retail areas to optimize consumer experience. It takes a very long term view when planning the infrastructure of the project. Specifically, knowing how ample parking space for 4 and 2 wheelers are critical to making a comfortable visiting experience, it plans for large parking facilities that will endure the test of growing demand overtime. It is also highly conscious about using materials that give long term savings on energy costs. Through its Retail Excellence team, MCRPL offers substantial support during the fit outs by working closely with the designers of the licensees. Most importantly, the team believes in having the project SPVs fully funded and financially closed before commencing on any project.

The Company also establishes customized and innovative commercial arrangements with its licensees. Depending on various business factors, they include a judicious combination of fixed and variable fees that offer retailers attractive terms and PML the opportunity to act as a stakeholder in the retailers’ businesses. As each retail property matures into a high traffic mall with strong sales, Company expects to keep improving the ratio of its shared revenue income, giving the Company an upside on its revenue earning potential.

The Company Group boasts of “The Largest Retail-Led Mixed- Use Developments around 10+ million sq ft in the country comprising of Malls, Hospitality, Commercial and Residential developments, with most of its projects expected to be completed by 2013. The company Group has one of the largest leasing teams in the country with around 40 professionals. The leasing team has been able to close main anchor commitments for all the company projects in Pune, Bengaluru, Mumbai and Chennai. It has created long term symbiotic relationships with the Tata group, Future group, Reliance group, DLF group, Planet Retail group, Bombay Rayon group, Madura Lifestyle, Arvind Brands, PVR and marquee brands such as Zara, Nike, Reebok, Adidias, UCB, Lacoste, Levis and Zodiac. Today, PML has many firsts to its credit: the first Hamleys, the first Comedy Store, the first Manchester United Café and also the second Zara entry in India. For several brands, PML has become a single window platform to launch them on a pan-India basis through the organized retail market.

FY 2010 marked the successful and timely delivery of The Palladium at High Street Phoenix, the Company’s flagship premium mall in Mumbai. Currently, the projects team within MCRPL has several key projects concurrently under implementation, which include:

1. Phoenix Market City Pune

2. Phoenxi Market City Mumbai

3. Phoenix Market City Bangalore (E)

4. Phoenix Market City Chennai

5. Shangri-La Hotel at High Street Phoenix

6. Bangalore (W) Residential Project

Towards the end of FY 2010 and into FY 2011, the Market City projects in Pune, Mumbai and Bangalore (E) have reached an advanced stage of completion. With civil structures in place and electromechanical works mostly completed, the finishes were making good progress. During the year, the Company launched the marketing of the properties’ spaces and received excellent response from the retailing community. Despite stiff competition and a price sensitive atmosphere, the Company has been able to capture premium rates. This fact is testimony to the exceptional appreciation and acceptance of licensees of the overall concept and design of Market City as a winning format. To further enhance the appeal of the malls, the Company’s Retail Excellence Team has introduced special incentives to retailers for producing best façade and flagship store, encouraging them to push the bar in retail design. With a significant percentage of space already committed by retailers and F and B operators, all four Market Cities are slated to become significant cash generators from day one of their launch itself.

OUTLOOK

Given the Favourable long term market trends in retail, hospitality, residential and commercial real estate sectors, the growth of HSP into one of the largest malls in Mumbai through the addition of The Palladium, the upcoming launch and addition of more than 4 million sq. ft. chargeable space of the Market Cities through FY11 and FY12, of which more than 50% is already committed, a highly focused and driven leadership team, the Company’s business vision, sound strategies and its ability to execute some of the largest projects in India, the outlook for the Company’s foreseeable future remains bright.

CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

Disputed excise duty liability amounting Rs.11.377 Millions

Other claims against the Company amounting not acknowledged as debts - Nil

Corporate guarantee issued by the Company amounting to Rs.500.000 to secure financial assistance being availed by a subsidiary company.

Out standing guarantees given by Banks Rs.2.770 Millions

Estimated amount of contracts remaining to be executed on capital account and not provided for in the accounts is Rs.129.605 net of advance paid.

Demand notices received for damages / interest on account of arrears / late payments of Provident Fund and E.S.l.C dues amounting to Rs.3.148 Millions are disputed by the Company. The Company has paid Rs.1.000 against RF. demands to the P.F. authorities and has also furnished a Bank Guarantee for Rs.1.471 Millions.

BOARD OF DIRECTORS

MR. ASHOKKUMAR RUIA,

Chairman and Managing Director

Mr. Ashokkumar Ruia, aged 64, is a graduate from Cambridge and has pursued an active career in both business and sports. He has the unique distinction of representing the country in two sports; Bridge and Golf, demonstrating an inimitable desire to excel in whatever he undertakes.

He joined the Board of company in 1963. He has vast experience in managing the Company’s affairs over the years and has contributed significantly to its growth. He has also played an ardent and active role in the textile industry serving as a member in the Committee of the Mill Owners Association, Bombay for several years. He is now actively involved in mentoring the leadership team and in various aspects of the Company’s expansion plans through its various projects.

MR. ATUL RULA,

Joint Managing Director

Mr. Atul Ruia is a graduate in Chemical Engineering from the University of Pennsylvania and holds a degree in Business Management from The Wharton School of Finance. He joined the Board of company in 1996 and is the key visionary, pioneer and force behind the development of High Street Phoenix, Mumbai’s first retail-led mixed use destination. He is responsible for strategizing and overseeing the expansion plans of the Company which has embarked upon a pan India asset creation strategy under the flagship brand ‘Phoenix Market Cities’.

MR. KIRAN GANDHI,

Whole Time Director

Mr. Kiran Gandhi, joined PML in 1970. He holds a B. Corn degree and is a chartered accountant. He has over 30 years of work experience at Phoenix Mills and is responsible for financing, investing and accounting activities. He plays a role in fund raising, maintaining banking relationships, cash management, credit management, capital budgeting, financial accounting, internal audit and control, taxation and secretarial work.

MR. SHISHIR SHRIVASTAVA,

Executive Director

Mr. Shishir Shrivastava graduated from IHM Bangalore and has served the Phoenix Group entities for the past 11 years in various capacities. His portfolio of responsibilities include being the project manager for the early phases of High Street Phoenix; becoming a founding member of the Companies service and advisory vertical and serving as the CEO of the Groups hospitality business since 2008. He has previously worked with the Taj Group of Hotels and Galaxy Entertainment Corporation Limited. He currently oversees several critical functions of the Company including corporate strategy, land acquisition, debt and private equity fund raising, investor relations, legal. Business development and the Groups Hospitality Portfolio.

MR. AMITKUMAR DABRIWALA,

Non-Executive Director

Mr. Amitkumar Dabriwala graduated from the Calcutta University. As a Promoter Director of United Credit Securities Limited (UCSL), a member of the National Stock Exchange, Mr. Dabriwala has been associated with the capital markets since 1996. He was also responsible for setting up the Mumbai branch of United Credit Securities Limited. In 2004 he promoted JNR Securities Broking Private Limited which is a member of The Bombay Stock Exchange. Through United Credit group companies he is also involved in real estate development, leasing and hire purchase.

MR. AMIT DALAL,

Non-Executive Director

Amit N. Dalal has been Managing Director of Amit Nalin Securities Private Limited since October 1997 and also serves as its Director of Research. Mr. Dalal has been Executive Director of Investments at Tata Investment Corporation Limited since January 1, 2010. Mr. Dalal has experience as Investment Analyst in USA for 2 years. He serves as Non Executive Director of company. He has been Executive Director of Tata Investment Corp. Limited (India) since January 1, 2010 and served in the same role from June 19, 2008 until July 8 2009. He completed Post-Graduate Diploma in Business Management from the University of Massachusetts. He obtained a Bachelor Degree in Commerce from the University of Mumbai and a Masters Degree in Business Administration from the University of Massachusetts, USA.

MR. SIVARAMAKRISHNAN LYER

Non-Executive Director

Mr. Sivaramakrishnan lyer is a qualified Chartered Accountant based in Mumbai. He is a partner of Patel Rajeev Siva and Associates which specializes in corporate finance and advises companies on debt and equity fund raising, mergers and amalgamations and capital structuring for new expansion projects, The firm also carries out due diligence work for various companies.

MR. SUHAIL NATHANI

Non-Executive Director

Mr. Nathani graduated from Mumbai University with a degree in Commerce and holds a masters degree in law from Cambridge University and an L.L.M. from Duke University in the United States. Mr. Nathani is also admitted to the New York State Bar and the U.S. Court of International Trade. He is a founding partner of Economic Laws Practice, a law firm in Mumbai. He practices in the areas of Private Equity, Competition, International Trade and general corporate matters.

MR. SHRIBHANU PATKI

Non-Executive Director

Mr. Patki has vast experience in the architectural segment. He is one of Mumbai’s renowned architects with a number of prestigious projects to his design credit. He is currently the Managing Director of M/s P G Patki Architects Private Limited, a reputed architectural firm for over four decades. He has graduated from J. J. School of Arts with honours. He is an associate of the Royal Institute of British Architects and a fellow of Indian Institute of Architects and has lectured at design colleges in Europe and US.

MANAGEMENT TEAM

Mr. Tushar Mehta

Tushar has over 21 years of varied experience in the field of Sales, Client servicing and property management. He is the Centre Director for Phoenix Market City Pune. His key role is to ensure the successful implementation of pre-launch activities such as Marketing, PR and Retailer transition and thereafter manage the operations of the property and achieve the bottom line profitability of the centre.

Mr. Stephen Beale

Stephen has over 20 years of experience in the Hospitality industry with expertise in project development, establishing corporate business and growth strategy and managing the operations. He is the Centre Director for Phoenix Market City Mumbai in Kurla, Mumbai. His key role is to ensure the successful implementation of pre-launch activities such as Marketing, PR, Retailer transition and thereafter manage the operations of the property and achieve the bottom line profitability of the centre.

Mr. Harjeet Singh Deep

Harjeet has over 15 years of experience working in diverse fields and focusing on construction management. He is the VP Projects and oversees the Hotel projects of the group and his current responsibilities include budgeting, design coordination, planning, contracts, procurement for the hotel projects.

Mr. G. S. Balaji

Balaji has over 24 years of experience in Project Management including execution, planning, budgeting and heads the construction division of the group. He has vast experience in handling international multi-million dollar projects independently. At PML, he has been playing a key role in the timely execution of projects while maintaining cost and quality parameters.

Ms. Sangeeta Vernekar

Sangeeta has over 22 years of experience and has been a key member of some of India’s award winning and successful shopping centers. At PML, she heads the Retail Excellence” initiative, supported by a team of retail specialist professionals. Her role is to service clients on mall design, architecture, signage, lighting and retail.

Mr. Rajesh Kulkarnl

Rajesh has over 20 years of experience in driving the development, planning and implementation of the project from an architectural perspective. Supported by a team of experienced architects, he heads the Architecture and planning function, and plays a key role in the design, project co-ordination and finalizing architectural plans for all the prestigious projects of the Phoenix Group.

Mr. Sundar Rajan

Sundar has over 22 years of experience in executing various infra, retail, hospitality and commercial projects in India and abroad. He is the Dy. Head Projects (West) of the group and his current responsibilities include project management, cost planning, design co-ordination and execution of projects within time, cost and quality parameters.

Mr. P. Vidya Sagar

Vidya has over 21 years of experience across various industries in the areas of corporate laws, M and A, Compliance and Corporate Governance. He heads the Corporate and Legal functions of the Group. and his responsibilities include managing the Group’s secretarial, corporate and legal affairs.

Mr. Rajendra Kalkar

Rajendra has over 22 years of experience across various fields with expertise in property management. He is the Centre Director for High Street Phoenix and is responsible for Operations, Leasing, Retailer Mix, Legal and Customer relationship, Marketing functions and the bottom line profitability and commercial success of the centre.

Mr. Haresh Morajkar

Haresh has over 20 years of experience with strong Business Management skills and profound experience in the field of Human Resource Management and General Management. He currently heads the HR, Admin and IT functions of the Group, playing a key role in strategic HR planning, organizational development, training and performance management.

Mr. Surender Pal

Surender comes with over 20 years of experience in operations and leasing. He started his career at the Phoenix Group heading the Operations of High Street Phoenix and has been subsequently elevated to head the Leasing function for the entire group. He plays a key role in developing and implementing the right retailer mix and retail leasing plans for all Phoenix Market City projects.

Mr. Pradumna Kanodia

Pradumna has over 20 years of experience in corporate management, finance & commercial matters, fiscal and strategic planning, P&L management, budget development and cash flow management. He is the Group CFO and heads the Finance and Accounts function of the group, playing a key role in fund raising, liaisoning with financial institutions, finalization of accounts and company law matters.

FIXED ASSETS

· Freehold Land

· Land

· Building

· Plant and Machinery

· Office Furniture and Equipments

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject : None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.43
UK Pound	1	Rs.71.89
Euro	1	Rs.63.40

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	7
--RESERVES	1~10	8
--CREDIT LINES	1~10	7
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		69

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.