Future Market Networks Ltd

Dear Stakeholders

I am pleased to share with you the Annual Report of Future Market Networks Limited for the Financial Year 20112012. Future Market Networks is inspired by the thought of creating a network of new markets for the Indian consumption sector by integrating and organizing modern retail, wholesale and logistics retail infrastructure. Retail Infrastructure, Wholesale Trade Infrastructure and Logistics Infrastructure form the three key business verticals of your company. We are happy to state your company has made visible progress in each of its business verticals and has aligned with "best in class" partners in each of them.

It goes without saying that the potential and growth of India's domestic consumption sector has few parallels anywhere in the world. We are in the midst of a social and economic change, the pace of which has never been seen at any point in our history. Increase in life expectancy, a younger demographic profile and economic growth are fueling domestic consumption. A Boston Consulting Group report states that the lifetime consumption of an average Indian born in 2009 will be $ 184,556, which is 13 times that of someone born in 1960. The report suggests that the average household income is set to rise nearly three times between now and the end of the decade. India's private domestic consumption economy is now at around $400 billion and during this decade will cross $1 trillion.

For a developing economy, India has a uniquely higher share of domestic consumption driving the economy. While domestic consumption is only 39% of China's GDP, in India its share is over 60%, comparable to the 70% share in the United States and other developed economies. This characteristic feature of the Indian economy therefore acts as a strong foundation for sustainable growth of the economy. However, the infrastructure that supports this consumption economy in India is woefully inadequate, disorganized and fragmented. Modern retail has more than 40% share in China and over 90% share in the United States. In India, the share of modern retail is variously estimated to be between 6% and 8%. Even in the large metros, the share of modern retail rarely crosses 20%. The Indian logistics space is extremely fragmented - only 6% of the industry is organized, as opposed to 57% in USA and 80% in Japan.

Economic liberalization in the Nineties led to growth. Growth generated demand. However, supply in India is perennially playing catch up with demand. Most of the infrastructure that supports consumption in India continues to be outdated and unable to benefit from or catalyze the further growth of consumption. It is only obvious that we have to build capacity to reach more consumers across more consumption centers, with more products and services, more effectively and cost effectively.

Your company is designed to build capacity in the three most important components of the value chain the connect the manufacturers to consumers in India. These are the warehouse and logistics infrastructure, wholesale trade infrastructure and modern retail infrastructure.

In order to develop these businesses, your company has forged partnerships with leading organizations in India and abroad. Hong Kong based, Fung Properties is part of a USD 15 billion organization that specializes in supply chain management in sourcing and distribution of consumer goods. It partners with some of the largest retailers across the world and invests in fast growing companies that can benefit from both capital and strategic assistance from the group. Your company has formed a 70:30 joint venture with Fung Properties to develop the Wholesale Markets in India.

Infrastructure Leasing & Financial Services Limited (IL&FS) is one of India's leading infrastructure development and finance companies. Your company has partnered with IL&FS for the development of the logistics infrastructure parks in the country and has committed to invest Rs 100 crore in the business.

Delhi-based Star Centers specializes in the planning, and management of high-quality shopping malls and has domain expertise, credibility, occupier relationships and an established track record of success with experience spread across 50 shopping centers across Asia, including the much acclaimed Select City Walk in Saket, Delhi. Your company has a 60% stake in this entity.

Drawing on the requisite expertise from these partnerships, your company has already made progress on each of these businesses. A modern wholesale market - similar to those seen in China and the Middle East - is being set up in Bangalore. The first phase of this project will be operational from December 2012. Branded as 'World Market' this 11 acre facility located on the Old Madras Road in the outskirts of Bangalore will have over 400 wholesale traders operating from this complex. In Mumbai, an existing mall close to Mumbai Central railway terminus has also been converted into a World Market and will have 400 traders operating from the complex by the first quarter of the FY 2012-13.

In April 2012, the company also opened its retail infrastructure project, 1MG Road. 1MG ROAD is an iconic, downtown high street shopping centre, located in the heart of Bangalore, on Trinity Circle, MG Road. Located inside walking distance from some of the city's best 5-star hotels such as Taj Residency, The Oberoi, Park Hotel & Hotel Ista, the mall is positioned as a premium, high energy, urban retail centre for the affluent Bangalorean and visitors to the city. It sports foreign and domestic labels like Marks & Spencer, Apple iStore, Hagen Daaz, The Body Shop, Hidesign and Food Hall. Another marquee mall, DCN, will be operational in the second quarter of the FY 2012-13 in Kolkata

In the logistic infrastructure space, the company has already begun the process of acquiring land in Jhajjar in Haryana to set up a logistics infrastructure facility to address consumption in Gurgaon and the balance of the south and south east region of the Delhi NCR. It has also identified land at Dankuni to the north west of Kolkata and applied to the Government of West Bengal for the necessary permission to acquire it. The company has chalked out a plan to develop 10 million square feet of space for logistics infrastructure parks in eight top cities and is in various stages of identifying and acquiring the land.

We believe that we are fortunate enough to have a board of directors with rich and cross-functional expertise in infrastructure development, project management, real estate and finance and are backed by a committed team of professionals with experience in working with leading organizations in the country. Future Group's inherent knowledge and experience in the consumption economy and its presence in retail and supply chain and its relationships with partners across various consumption categories in India provides a strong foundation for our growth.

The slowdown in real estate development has come at a most opportune time for us as we go out into the market to acquire site for our business verticals. We are finally finding sanity in the pricing and transaction terms that are being offered to us. Within a short period of time, we have been able to achieve more than what we planned for. Yet, this achievement is quite small compared to the aspiration and ambition that is harbored within this organization. I would like to thank everyone for your continued support, faith and encouragement in our vision, ambition and execution.

Warm regards