CORPORATE GOVERNANCE:

Committed to good corporate governance practices, your Company fully conform to standards set out by SEBI and other regulatory authorities and has implemented and complied with all of its major stipulations. Koutons Retail India Limited is committed to conduct the business of the company with the highest level of integrity and transparency. The commitment of your company is clearly reflected in the business activities of the company. As per clause 49 of the Listing Agreement, a report on Corporate Governance along with Compliance Certificate from the Practising Company Secretary form part of this Annual Report.

Code of Conduct
As per Clause 49(I)(D), the Board of the Company has laid down Code of Conduct for all the Board members of the Company and senior management as well and the same has been posted on website of the Company. Annual Compliance Report for the year ended 31st March 2010 has been received from all the Board members and senior management of the Company regarding the compliance of all the provisions of Code of Conduct. Declaration regarding compliance by Board members and senior management personnel with the Company's Code of Conduct is hereby attached as annexure to this report.

AWARDS & RECOGNITION

The following are some of the recognitions that your Company won during the year 2009-2010: Nominated in the Retail category for the 4th NDTV Profit Business Leadership Award. Award of "Emerging Corporate" at the Corp Excel Award 2008 for National mSME Excellence organized by Corporation Bank. Received The Star Retailer Award for being the Value Retailer of the Year organized by Franchise India. The "Best Clothing Company of the Year" of CMAI. Nominated for the Best Advertising Campaign of the year by CMAI. Nominated for the Brand of the Year by CMAI

DIRECTOR'S RESPONSIBILITY STATEMENT

As required under section 217(2AA) of the Companies Act, 1956 the Directors hereby confirm that : 1. in the preparation of the Annual Accounts for the period ended as on 31st March 2010, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

2. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for that period; 3. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. the Directors had prepared the annual accounts on a going concern basis

FOREIGN EXCHANGE EARNINGS AND OUT GO:

Foreign Exchange Earning and Outgo: (Rs. in Lacs) a) Imports on CIF basis 36.83 b) Expenditure in Foreign Currency (Foreign traveling Directors) 36.08 c) Earning in Foreign Currency NIL Initiatives taken to increase Exports: The Company mainly deals in domestic market and has NIL sales on account of exports during the Financial Year 200910. Hence details regarding followings are not applicable: 1) Activities relating to exports 2) Development of new export markets for products and services 3) Export plan

Risks and Threats:

Any slow down in consumption pattern of the consumers

Number of Board Meetings held and attended by Directors:

The meetings of the Board of Directors are scheduled well in advance. The Board Members are presented in advance with the detailed agenda in respect of all Board meetings. During the year under review five meetings of the Board of Directors were held and the gap between two meetings did not exceed four months. The date on which the Board Meetings were held are as follows dates:May 22, 2009, June 30, 2009, July 31, 2009, Oct. 31, 2009, Jan. 28, 2010.

The attendance record of each of the Directors at the Board Meetings during the year ended on March 31, 2010 and of the last Annual General Meeting are as under:-

Name of Directors Mr. DPS Kohli Mr. BS Sawhney Mr. GS Sawhney Mr. KC Sharma Mr. Ajay Mittal Mr. Anil K. Khatod Mr. Vinod Chander Sinha Mr. Grish Chandra Raghubir M. Krishnamurthy Santhanam Dr. Rajiv Grover Mr. GS Bhalla Mr. VK Gupta

No. of Board Meetings 5 5 5 5 5 4 5 4 2 0 3 4

Attendance at the last AGM held on 30.09.2009. yes yes yes yes no no yes No No No No Yes

AUDIT COMMITTEE:

Constitution of Audit Committee: The composition of Audit Committee meets the requirements of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement. The Audit Committee was constituted on July 25, 2006, thereafter it was reconstituted on December 15, 2006 and October 31, 2008 respectively in accordance with Clause 49 of the Listing Agreement, consisting of three non-executive and independent director, one being nonexecutive/Investor and Mr. DPS Kohli, Chairman-cum-Whole Time Director as a permanent invitee. The committee consists of the following: Name of Members Mr. V.C. Sinha Mr. Ajay Mittal Mr. Grish Chandra Raghubir Mr. Virendra Kumar Gupta Position Held Chairman Member Member Member

INTERNAL AUDITORS
The Company has appointed Sanjay Abhay & Associates as Internal Auditors to review the internal controls system of the Company and to report thereon. The reports of the internal auditors are reviewed by the Audit committee. The audit is based on an Internal Audit plan, which is reviewed each year in consultation with the statutory auditors and the Audit Committee. The planning and conduct of internal audit is oriented towards the review of controls in the management of risks and opportunities in the Company's activities. The Internal Audit process is designed to review the adequacy of internal control checks in the system and covers all significant areas of the Company's operations.

SHAREHOLDER AND INVESTORS GRIEVANCE COMMITTEE

Composition of Committee: The Shareholders and Investors Grievance Committee has been constituted on July 25, 2006 to look into investors complaints/queries. Position Held Name of Member Mr. Krishnamurthy Santhanam hy Santhanam Chairman Mr. Grish Chandra Raghubir Chairman Member Member

GENERAL SHAREHOLDERS INFORMATION :

a) Annual General Meeting : Date, time and Venue 16 th Annual General Meeting Date : September 30, 2010 Time : 9.30 A.M. Venue : Hotel Vista Delhi, 162, M.G. Road, New Delhi-110030 b) Financial Year : April 1, 2009 to March 31, 2010 c) Date of Book Closure : September 24, 2010 to 30 September, 2010 (both days inclusive), for the purpose of 16 th Annual General Meeting

d) Listing on Stock Exchanges: The Equity Shares of the company got listed on 12 th October, 2007 and continued to be listed at the following Stock Exchanges: Bombay Stock Exchange Ltd., Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400001. National Stock Exchange of India Ltd., Exchange Plaza, Bandra-Kurla Complex Bandra (E), Mumbai 400051.

CERTIFICATE ON CORPORATE GOVERNANCE

To the Members of Koutons Retail India Limited, New Delhi We have examined the compliance of the conditions of Corporate Governance by Koutons Retail India Limited, for the financial year ended on March 31, 2010, as stipulated in Clause 49 of the Listing Agreements of the said Company with the Stock Exchanges. The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination was limited to a review of the procedures and implementations thereof adopted by the company for ensuring compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company. In our opinion and to the best of our information and according to the explanations furnished to us, we certify that the company has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreements. We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or effectiveness with which the management has conducted the affairs of the company. For Sanjay Grover & Associates

Company Secretaries Sanjay Grover