MANAGEMENT DISCUSSION AND ANALYSIS

ECONOMIC OVERVIEW

Growth picked up in 2014, inflation markedly declined, and the external position was comfortable, helped by positive policies and lower global oil prices. The outlook for India is for economic strengthening through higher infrastructure spending, increased fiscal devolution to states, and continued reform to financial and monetary policy. The government underscored its intention to move steadily to tackle politically difficult structural issues that have stalled investment and limited economic performance in recent years.

A more robust economic performance than was earlier indicated emerges from revised data based on an updated base year, wider coverage of goods and services, and the inclusion of tax data to estimate economic activity. Real growth in India was brviously estimated as a change in volume, but the new series estimates value added at each stage.

The government's initial estimates for year ending 31 March 2015 show that economic growth accelerated to 7.4%. Growth is forecast to further grow to 8.1 percent in 2015 and 8.2 percent in 2016, benefiting from the acceleration of infrastructure projects, strong consumer spending due to lower inflation and monetary easing and gradual improvements in market sentiments.

INDUSTRY OVERVIEW

The Indian real estate sector is one of the most globally recognised sectors in the Indian economy. In the country, it is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations.

India's real estate market is expected to increase seven times by 2028 to reach US$ 853 billion by 2028 from US$ 121 billion in 2013. It is currently the fourth-largest sector in the country in terms of foreign direct investment (FDI) inflows. FDI in the sector is estimated to grow to US$ 25 billion in 10 years. India needs to invest approximately US$ 1.2 trillion over next 20 years to modernize urban infrastructure and keep pace with the burgeoning urbanization.

The Road Ahead

Real estate contribution to India's gross domestic product (GDP) is estimated to increase to about 13 per cent by 2028, on the back of increasing industrial activity, improving income level and urbanization. Private equity (PE) investments in real estate in 2014 stood at US$ 1.1 billion, a 13 per cent increase in INR terms from US$ 1.2 billion in 2013.

The Government of India has allocated US$ 1.3 billion for Rural Housing Fund in the Union Budget and has

also allocated US$ 0.7 billion for National Housing Bank (NHB) to increase the flow of cheaper credit for affordable housing.

BUSINESS OVERVIEW Business Policy

Prozone Intu maintains generally accepted standards of corporate conduct towards its employees, consumers and society at large. We believe that the policies must balance individual interest with corporate goals and operate within the accepted norms of propriety, equity and sense of justice. The Company believes that it is rewarding to be better managed and governed and to align and intensify its activities with the national interest. The Company makes all round efforts in its pursuit to enhance market share and enhance shareholders value in the industry.

Prozone Intu Operations

To capitalize the opportunities in the retail business, the Company is in the process of developing properties for commercial purposes including development of regional shopping malls. The Board Directors of the Company comprise of two directors appointed by Intu Properties plc (formerly known as Capital Shopping Centres Group Plc), largest financial investor in the Company. Intu Properties plc is a UK FTSE 100 listed Company owning and managing assets worth more than 8.9 bn pounds. They own 17 properties, 12 of which are among the top 25 shopping centers in the UK, rebrsenting ~ 38% UK market share. Being associated with one of the leaders of retail real estate development, the Company is aiming to open international scale shopping centres across India designed and built to international standards. Aurangabad was the first to open in October 2010 housing approximately 0.8 million square feet of India's best retailers, entertainment centres and restaurants.

In addition to the retail shopping centres, Prozone Intu is developing mixed-use properties in the residential colonies and commercial office blocks segment on land adjacent to the retail developments.

Internal Control System and Adequacies

The Company has adequate internal control procedures commensurate with the size and nature of its businesses. The internal control system is supplemented by extensive internal audits, regular reviews by the management and well-documented policies and guidelines to ensure reliability of all records to brpare financial statements and other data. Moreover, the Company continuously upgrades these systems in line with the best accounting practices. The Company has independent audit systems to monitor the entire operations and the Audit Committee of the Board regularly review the findings and recommendations of internal audits.

OPPORTUNITIES AND THREATS

Opportunities

The retail sector in India is today one of the fastest growing business segments in the country, comprising over 13 million outlets and employing over 18 million people. Rise in disposable income, changing lifestyles and favourable demographics are the key factors driving this growth.

With organised retail expected to grow at a steady rate of over 20% per annum, India's consumption story continues to provide the Company immense opportunities. Our strong partnership with Intu Properties plc further helps the company to leverage this position.

Large investments in new retail concepts are changing the rapidly evolving organized retail landscape in India. This is not just restricted to the metros but has also sbrad to Tier-2 and Tier-3 cities. Prozone Intu is expected to benefit significantly from a combination of the growth in retail and as the rise of the consuming class in Tier-2 and Tier-3 cities continues.

Threats

Apart from the ever shifting real estate scenario and the emergence of new retail estate players, demand for talent in India and abroad may result in increasing attrition of employees. The Company has adopted policies that will attract and retain the best talent.

RISK MANAGEMENT

Economic Risk

A slowdown in economic growth in India could cause the business to suffer as the Company's performance is highly dependent on the growth of the economy, which in turn leads to a rise in disposable incomes and resultant consumption.

Favourable population growth, a large pool of highly skilled workers, greater integration with the world economy and increasing domestic and foreign investment suggest that the Indian economy will continue its growth momentum for several years to come. This will also provide impetus to the retail industry, which is expected to nearly double to US$ 1 trillion by 2020 from US$ 600 billion in 2015, driven by income growth, urbanisation and attitudinal shifts.

Business Risk

The Company operates in high growth urban centres, where retail consumption is being fuelled by a strong migration of the working population from smaller towns and rural areas. If this rate of urbanisation were to slow it would in turn slow absorption rates of the real estate infrastructure in the development pipeline. However through a carefully planned phased development strategy, the management of the Company has reduced the risk to a minimal level.

Shopping Mall Risk

Large scale retail infrastructure's success is subject to well designed architecture and services that will meet the needs of retailers and consumers over the long term and a strong and growing catchment area that will provide an increasing supply of consumers. The company believes that in the case of Aurangabad, which is open, and in other cities, which are brparing for development, both these risks have been mitigated. The population numbers in the catchment areas of each site in these Tier II cities are growing and therefore should brsent no major long term risk to the business. In addition Company guided by the advice and expertise of Intu Properties Plc.'s rebrsentative directors on the Board has ensured that architecture and services have been designed with a long term perspective to meet the needs of retailers and consumers alike and therefore do not rebrsent significant risk to the business.

Brand Risk

Any event that tarnishes the image of the Prozone Intu brand can lower the value of the brand and adversely affect the Company's business.

The Company ensures that none of the characteristics and attributes of the brand are compromised within the Company's communication to its customers or its trade partners. The Company also gives wide focus on customer brferences and conducts extensive in-house research to maintain top-of-the-mind recall with the customer base with respect to the brand. The Company believes that it has an appropriate mitigation plan in place to handle brand risk.

HUMAN RESOURCES

The Company regards its human resources as amongst its most valuable assets and proactively reviews policies and processes by creating a work environment that encourages initiative, provides challenges and opportunities and recognizes the performance and potentials of its employees.

Focused and organized investment in training and development, continuance of productivity improvement efforts and an employee satisfaction survey are some of the highlights of our ongoing HR activities.

Industrial relations across different locations of the Company were cordial during the year and the Company continues to maintain its focus on human resources development. The total number of employees of the Company as on 31st March 2015 stood at 12.

OUTLOOK

A strong latent demand for retail, residential and commercial real estate with the markets Prozone intu has selected, positions the Company as an integrated real estate player in the growing domestic consumption story. With the Indian economy on a firm foundation and the organized retail industry surging, the Company is confident that it is well placed to take advantage of the growth opportunities in the coming years.

FINANCIAL PERFORMANCE

Revenue, EBITDA and Profit after Tax

The company achieved total consolidated revenue of Rs. 68.02 Crore against the last year's total consolidated revenue of Rs. 58.84 Crore. During the year, the company earned consolidated EBITDA margin of Rs. 21.22 Crore against Rs. 21.39 Crore during the brvious year, variant of 0.80%.

The idle funds of the company were temporarily invested into liquid funds and interest bearing securities, which has resulted in higher income earning to the company.

Cautionary Statement

This report contains forward-looking statements based on certain assumptions and expectations of future events. Actual performance, results or achievements may differ from those exbrssed or implied in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.