SRS ENTERTAINMENT LIMITED an ISO 9001:2000 Company [Originally Incorporated As SRS Commercial Co

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DRAFT RED HERRING PROSPECTUS Dated [] Please read Section 60B of the Companies Act, 1956 The Draft Red Herring Prospectus will be updated upon RoC filing 100% Book Building Offer

SRS ENTERTAINMENT LIMITED An ISO 9001:2000 Company [Originally incorporated as SRS Commercial Co. Limited on August 29, 2000 with Registrar of Companies, NCT of Delhi and Haryana at New Delhi and name of the Company was changed to SRS Entertainment Limited on January 25, 2005 under a fresh Certificate of Incorporation] Registered Office: C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094 Telephone: (011) 55418111, 55292497, 55418110; Fax: (011) 22577796 E-mail: [email protected]; Website: www.srs-world.com Contact Person: Mr. Arun Kumar Gupta, CFO and Compliance Officer; Telephone: (0129) 5008350, 5003266; E-mail: [email protected] [The Company has changed its registered office from 804, Manjusha, 57, Nehru Place, New Delhi - 110019 to E-985, Near Mala Devi School, 100 ft. Road, Babarpur, Shahdara, Delhi - 110094 vide resolution dated December 01, 2000 and subsequently to the present location C-4/1, 100 Ft. Road, Shahdara, Delhi - 110094 vide resolution dated April 23, 2003] Public Issue of 2,28,57,200 Equity Shares of Rs.10/- each of SRS Entertainment Limited (“SRSEL”) (the “Company”) at a price of Rs. [] per equity share for cash aggregating Rs.[] Lacs (hereinafter referred to as the “Issue”). The Issue comprises 42,87,200 Equity Shares of Rs.10/- each aggregating to Rs. [] Lacs reserved for Promoter Group of the Company, 22,85,720 Equity Shares of Rs.10/- each aggregating to Rs. [] Lacs reserved for the Shareholders of Group Companies of the Company, 22,85,720 Equity Shares of Rs.10/- each aggregating to Rs. [] Lacs reserved for Employees of the Company and Net Issue to public of 1,39,98,560 Equity Shares of Rs.10/- each aggregating to Rs. [] Lacs. The Issue would constitute 45.81% of the post Issue paid-up capital of the Company. Price Band: Rs. [] To Rs. [] Per Equity Share Of Face Value Of Rs. 10 Each The Issue Price Is [] Times Of The Face Value At The Lower End Of The Price Band And [] Times Of The Face Value At The Higher End Of The Price Band. This Issue is being made through the 100% Book Building Process wherein up to 50% of the Net Issue to public shall be allocated on a discretionary basis to Qualified Institutional Buyers. Further, not less than 15% of the Net Issue to public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to public shall be available on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. RISKS IN RELATION TO FIRST ISSUE This being the first Issue by SRS Entertainment Limited, there has been no formal market for the securities of the Company. The face value of the shares is Rs.10/- each and the Issue Price is [] times of the face value. The Issue Price (as determined and justified by the Book Running Lead Manager and the Issuer Company as stated under “Introduction - Basis of Issue Price” paragraph on page no. 31 of the Draft Red Herring Prospectus) should not be taken to be indicative of the market price of the equity shares after the shares are listed. No assurance can be given regarding an active or sustained trading in the shares of the Company nor regarding the price at which the Equity Shares will be traded after listing. GENERAL RISK Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of investors is invited to the statement of ‘Risk factors’ on page no. viii of the Draft Red Herring Prospectus. COMPANY’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that the Draft Red Herring Prospectus contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in the Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. BOOK RUNNING LEAD MANAGER JOINT BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE UTI BANK Solutions for a lifetime UTI Bank Limited Allianz Securities Limited Karvy Computershare Private Limited Central Office: Maker Towers ‘F’, 33, Vaswani Mansion, Karvy House, 46, Avenue 4, 11th Floor, Cuffe Parade, Colaba, 6th Floor, Dinsha Vachha Road, Street No.1, Banjara Hills, Mumbai – 400 005 Churchgate, Mumbai – 400 020 Hyderabad 500 034 Tel.: (022) 2218 9106 - 09 Tel.: (022) 2287 0580 Tel.: (040) 2331 2454 Fax.: (022) 2216 2467 Fax.: (022) 2287 0581 Fax.: (040) 2331 1968 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.utibank.com Website: www.aslfinancial.com Website: www.karvy.com

ISSUE PROGRAMME Bid / Issue Opens On [], 2005 Bid / Issue Closes On [], 2005

LISTING The Equity Shares issued through the Draft Red Herring Prospectus are proposed to be listed on The Bombay Stock Exchange Limited (Designated Stock Exchange) and The National Stock Exchange of India Limited. The Company has received in-principle approvals for listing its Equity Shares from the aforesaid stock exchanges through their letters dated ______and ______respectively.

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TABLE OF CONTENTS

SECTION TITLE PAGE NO. I. DEFINITIONS, TECHNICAL GLOSSARY AND ABBREVATIONS ii II. RISK FACTORS 1. Forward Looking Statements vii 2. Risk Factors viii III. INTRODUCTION 1. Summary 1 2. General Information 5 3. Capital Structure 10 4. Objects of the Issue 24 5. Basis of Issue Price 31 IV. ABOUT SRS ENTERTAINMENT LIMITED 1. Industry Overview 37 2. Business Overview 44 3. History and Corporate Structure 69 4. Management 73 5. Promoters and Promoter Group 81 6. Group Companies 89 7. Currency of Presentation 90 8. Dividend Policy 90 V. FINANCIAL STATEMENTS 1. Financial Information of SRS Entertainment Limited 91 2. Changes in Accounting Policies in the last three years 95 3. Managements' Discussion and Analysis of Financial Condition and 104 Results of Operations as reflected in the Financial Statements VI. LEGAL and OTHER INFORMATION 1. Outstanding Litigations and Material Developments 111 2. Government Approvals / Licensing Arrangements 114 VII. OTHER REGULATORY AND STATUTORY INFORMATION 118 VIII. ISSUE INFORMATION 1. Terms of the Issue 125 2. Issue Structure 127 3. Issue Procedure 131 IX. DESCRIPTION OF EQUITY SHARES AND TERMS OF THE 147 ARTICLES OF ASSOCIATION X. OTHER INFORMATION 1. List of Material Contracts and Documents for Inspection 160 2. Declaration 162

DEFINITIONS, TECHNICAL GLOSSARY AND ABBREVIATIONS

Terms Description “SRS Entertainment Limited” Refers to SRS Entertainment Limited, a public limited company incorporated or “SRSEL” or “the under the Companies Act, 1956 Company” or "our Company" “we” or “us” and “our” Unless the context otherwise require, refers to SRS Entertainment Limited

Issue Related Terms Terms Description Allotment Unless the context otherwise requires, transfer of Equity Shares from the Company to the successful applicants Bankers to the Issue [•], each of whom is registered with SEBI and with whom the Public Issue Account will be opened Bid An offer made during the Bidding Period by a prospective investor to subscribe to Equity Shares of the Company at a price within the Price Band, including all revisions and modifications thereto. Bid Amount The amount equal to highest value of the optional Bids indicated in the Bid-cum- Application Form payable by the Bidder on submission of the Bid in the Issue Bid Closing Date/ Issue Closing The date after which the Members of the Syndicate will not accept any Bids for Date the Issue, which shall be the date notified in a widely circulated English national newspaper, Hindi national newspaper and regional newspaper Bid Opening Date/ Issue The date on which the Members of the Syndicate shall start accepting Bids for the Opening Date Issue, which shall be the date notified in a widely circulated English national newspaper, Hindi national newspaper and regional newspaper Bid-cum-Application Form The form in terms of which the Bidder shall make an offer to subscribe to the Equity Shares of the Company and which will be considered as the application for issue of the Equity Shares pursuant to the terms of the Draft Red Herring Prospectus. Bidder Any prospective investor who makes a Bid pursuant to the terms of the Draft Red Herring Prospectus Bidding Period / Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date inclusive of both days and during which prospective Bidders can submit their Bids Book Building Process Book building route as provided under Chapter XI of the SEBI Guidelines, in terms of which, this Issue is being made CAN/ Confirmation of The note or advice or intimation of allocation of Equity Shares sent to the Bidders Allocation Note who have been allocated Equity Shares in the Book Building Process Cap Price The higher end of the Price Band, above which the Issue Price will not be finalised and above which no bids will be accepted Cut-off Price Cut-off price refers to any price within the Price Band. A Bid submitted at Cut-off is a valid Bid at all price levels within the Price Band Depositories Act Depositories Act, 1996, as amended from time to time Depository A depository registered with SEBI under the SEBI (Depositories and Participants) Regulations, 1996, as amended from time to time Depository Participant A depository participant as defined under the Depositories Act Designated Date The date on or after which funds are transferred from the Escrow Account to the Public Issue Account after the Prospectus is filed with the RoC, following which the Board of Directors shall allot Equity Shares to the successful Bidders Designated Stock Exchange The Bombay Stock Exchange Limited Draft Red Herring Prospectus Draft Red Herring Prospectus dated September 12, 2005 as filed with SEBI for its /Offer Document comments Equity Shares Equity Shares of the Company of face value of Rs.10/- each unless otherwise specified in the context thereof Escrow Account Account opened with an Escrow Collection Bank(s) and in whose favour the Bidder will issue cheques or Drafts in respect of the Bid Amount when submitting a Bid. Escrow Agreement Agreement entered into amongst the Company, the Registrar, the Escrow Collection Bank(s), the BRLM and the JOINT BRLM for collection of the Bid

Amounts and for remitting refunds, if any, of the amounts collected, to the Bidders. Escrow Collection Bank(s) The banks, which are clearing members and registered with SEBI as Banker to the Issue at which the Escrow Account will be opened. Face Value Par value of equity capital per Equity Share (presently Rs.10 per Equity Share) Floor Price The lower end of the Price Band, below which the Issue Price will not be finalised and below which no Bids will be accepted IPO Committee A Committee constituted by the Board of Directors comprising of Mr. R. K. Aggrawal, and Mr. Sunil Jindal for the purpose of carrying out various activities in relation to the Issue Issue Price The price at which Allotment of Equity Shares will be made in this Issue as determined by the Company and in consultation with the BRLM and Joint BRLM, on the Pricing Date. Issue/ Initial Public Offer / "IPO" Public Issue of 2,28,57,200 Equity Shares of face value of Rs.10/- each at the Issue Price by the Company under the Draft Red Herring Prospectus Net Issue Issue size less 42,87,200 equity shares reserved for Promoters of the Company, less 22,85,720 Equity Shares reserved for the Shareholders of the Group Companies of the Company and less 22,85,720 equity shares reserved for Employees of the Company NRIs/ Non-Residents Non-Resident is a person resident outside India, as defined under FEMA and who is a citizen of India or a Person of Indian Origin under FEMA (Transfer or Offer of Security by a Person Resident Outside India) Regulations, 2000 Pay-in-date The last date specified in the CAN sent to the Bidders Pay-in-Period This term means i. with respect to Bidders whose Margin Amount is 100% of the Bid Amount, the period commencing on the Bid Opening Date and extending until the Bid Closing Date, and ii. with respect to Bidders whose Margin Amount is less than 100% of the Bid Amount, the period commencing on the Bid Opening Date and extending until the closure of the Pay-in-Date Price Band The Price band of a minimum price (Floor Price) of Rs. [•] and the maximum price (Cap Price) of Rs. [•] and includes revision thereof Pricing Date The date on which the Company in consultation with the BRLM and Joint BRLM finalises the Issue Price Public Issue Account In accordance with Section 73 of the Companies Act, 1956, an account opened with the Banker(s) to the Issue to receive monies from the Escrow Account for the Issue on the Designated Date QIB Portion The portion of the Issue being mandatory, 69,99,280 Equity Shares of Rs.10 each at the Issue Price, available for allocation to QIBs Qualified Institutional Buyers/ Public Financial Institutions as specified in Section 4A of the Companies Act, QIBs Scheduled Commercial Banks, Mutual Funds registered with SEBI, Venture Capital Funds registered with SEBI, State Industrial Development Corporations, Insurance Companies registered with the Insurance Regulatory And Development Authority (IRDA), Provident Funds with a minimum corpus of Rs.2500 lacs and Pension Funds with a minimum corpus of Rs.2500 lacs Red Herring Prospectus Means the Red Herring Prospectus issued in accordance with Section 60B of the Companies Act, which does not have complete particulars on the price at which the Equity Shares are issued and size of the Issue. The Red Herring Prospectus would be filed with the RoC at least three days before the opening of the Bid/ Issue and will become a Prospectus after filing with the RoC after the pricing and allocation. Registrar/ Registrars to the Issue Karvy Computershare Private Limited Reserved Categories Means reservation for allocation to: i. Promoter Group of the Company ii. Permanent Employees and Directors of the Company * iii. Shareholders of Group Companies i.e., Akriti Financial Services (P) Limited and Ferro Plast Limited * * as on cut-off date [•] Retail Individual Bidders Individual Bidders (including HUFs) who have not Bid for an amount in excess

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of Rs.1,00,000 in any of the bidding options in the Issue. Retail Portion The portion of the Issue being a minimum of 48,99,496 Equity Shares of Rs.10 each available for allocation to Retail Individual Bidder(s) Revised Form The form used by the Bidders to modify the quantity of Equity Shares or the Bid Price in any of their Bid cum Application Forms or any previous Revision Form(s). SEBI (DIP) Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January 27, 2000, as amended, including instructions and clarifications issued by SEBI from time to time SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time Stock Exchanges The Bombay Stock Exchange Limited and The National Stock Exchange of India Limited Syndicate The Syndicate Members collectively Syndicate Agreement The agreement to be entered into among the Company and the members of the Syndicate in relation to the collection of Bids in this Issue Syndicate Members Intermediaries registered with SEBI and eligible to act as underwriters. Syndicate Members are appointed by the BRLM and Joint BRLM TRS or Transaction TRS or The slip or document issued by the Syndicate Members to the Bidder as proof of Transaction Registration Slip registration of the Bid Underwriters The BRLM, Joint BRLM and the Syndicate Members Underwriting Agreement The Agreement dated [•] among the Syndicate and the Company to be entered into on or after the Pricing Date.

Company/Industry related Terms Terms Description Article(s) of Association Articles of Association of SRS Entertainment Limited Auditors The statutory auditors of the company viz. M/s T.K. Gupta & Associates, Chartered Accountants BOD/ Board/ Board of Directors The Board of Directors of SRS Entertainment Limited or a Committee thereof, except where mentioned otherwise Cineplex A complex of movie theaters and coffee lounge Director(s) Director(s) of SRS Entertainment Limited unless otherwise specified DJ Disk Jockey Employees The following persons as on the cut-off date [•] (a) a permanent employee of the Company working in India or out of India; and (b) a Director of the Company, whether a whole time director, part time director or otherwise F&B Food and Beverages Food Court 7 Dayz Multiethnic Food Court/Fine Dine Restaurant Group Companies 1. Akriti Financial Services (P) Limited 2. Ferro Plast Limited I.T. Information Technology I.T.E.S. Information Technology Enabled Services ITES/BPO Information Technology Enabled Services and Business Process Outsourcing Memorandum / Memorandum of The Memorandum of Association of SRS Entertainment Limited Association Multiplex Includes Cineplex, Food Court /restaurants, shopping mall and SRS Value Bazaar Project The Proposed expansion plans of the Company to set up by way of: • Ownership model including Multiplex • Leasehold model including Cineplex, restaurants/Food Court and SRS Value Bazaar • Franchisee model including Cineplex and Food Court Promoters 1. Mr. Sunil Jindal 2. Mr. Raju Bansal

Promoter Group Family members of Promoters 1. Mr. Lalit Bansal 2. Mr. N. C. Bansal 3. Mr. Bishan Bansal 4. Mr. Suresh Bansal 5. Ms. Sanjna Bansal Corporate bodies: 1. Bansla Finlease Limited 2. BTL Commercial Limited 3. BTL Impex (India) Limited 4. BTL Industries Limited 5. BTL Investments Limited 6. BTL Sales Limited 7. Madhavtech India (P) Limited 8. Neelabh Engineers (P) Limited 9. North Delhi Credit & Investments Limited 10. Parvati Finlease Limited Registered Office of the C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094 Company Retail Stores/ Bazaar(s) SRS Value Bazaar, i.e., retail stores proposed to be set up by the Company Reverse Osmosis A water purification process SRS Cinemas Brand name of theatre screens poposed to be set up SRS Multiplex / SRSM Existing Multiplex located at City Centre, Sector 12, Faridabad, (NCR), Haryana 121007 SRS Value Bazaar Retail stores proposed to be set up by the Company Tier II Cities Urban areas having a population of more than 10 lakh but less than 30 lakh, other than the “Big Six” Metros [Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad]

Abbreviations Abbreviations Full Form A/c Account Act/Companies Act The Companies Act, 1956, as amended from time to time AGM Annual General Meeting AS Accounting Standards as issued by the Institute of Chartered Accountants of India BRLM Book Running Lead Manager, in this case being UTI Bank Limited BSE The Bombay Stock Exchange Limited CAGR Compounded Annual Growth Rate Capital or Share Capital Capital of the Company CDSL Central Depository Services (India) Limited Joint BRLM Joint Book Running Lead Manager, in this case being Allianz Securities Limited DP Depository Participant DPC Damp Proof Coarse EGM/ EOGM Extraordinary General Meeting EPS Earnings Per Share FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the regulations framed thereunder FIPB Foreign Investment Promotion Board FY / Fiscal / Financial Year Financial year ending March 31 GOI Government of India HSEB Haryana State Electricity Board HUDA Haryana Urban Development Authority HUF Hindu Undivided Family Indian GAAP Generally Accepted Accounting Principles in India IT Act The Income Tax Act, 1961 as amended KVA kilovolt Ampere MoU Memorandum of Understanding

Mts. Meters N.A. Not Applicable NAV Net Asset Value NCR National Capital Region N.I Act Negotiable Instruments Act, 1881 as amended NPV Net Present Value NRE Account Non Resident External Account NRIs Non Resident Indians NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OCB(s) Overseas Corporate Bodies p.a. per annum P/E Ratio Price/Earnings Ratio PAN Permanent Account Number PAT Profit after Tax RBI Reserve Bank of India RoC Registrar of Companies RoE Return on Equity RoNW Return on Net Worth Rs. Indian Rupees SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992 sq. ft. Square feet TAN Tax Deduction and Collection Account Number USD / US$ United States Dollar VCDs Video Compact Disks

CURRENCY OF PRESENTATION

In the Draft Red Herring Prospectus, all references to “Rs.” refer to Rupees, the lawful currency of India and “USD” or “US$” refer to the United States Dollar, the lawful currency of the United States of America. References to the singular also refer to the plural and one gender also refers to any other gender, wherever applicable. The words “ Lakh” or “ Lac” mean “ one hundred thousand” and the word “ million” means “ ten lacs” and the word “ crore” means “ ten million” or “ one hundred Lacs”. In the Draft Red Herring Prospectus unless the context otherwise requires, the terms ‘we’, ‘us’ and ‘our’ refer to SRS Entertainment Limited. In the Draft Red Herring Prospectus, any discrepancies in any table between total and the sums of the amount listed are due to rounding off.

FORWARD-LOOKING STATEMENTS

We have included statements in the Draft Red Herring Prospectus which contain words or phrases such as “will”, “aim”, “will likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions, that are “forward-looking statements”.

Actual results may differ materially from those suggested by the forward-looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and political conditions in India which have an impact on our business activities or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the industry.

For further discussion of factors that could cause our actual results to differ, please refer to the section titled “Risk Factors” beginning on page no. viii of the Draft Red Herring Prospectus. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither the Company nor the Book Running Lead Manager, nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the Company and the Book Running Lead Manager will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges.

Use of Market Data Market data used throughout the Draft Red Herring Prospectus was obtained from internal Company reports and industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable, but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Some of the industry data reproduced in the Draft Red Herring Prospectus has been obtained from http://www.ibef.org website. Although we believe market data used in the Draft Red Herring Prospectus is reliable, it has not been independently verified. Similarly, internal company reports, while believed by us to be reliable, have not been verified by any independent sources.

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RISK FACTORS

Any investment in Equity Shares involves a high degree of risk and so you should carefully consider the risks described below before you make an investment decision. Risks have been quantified, wherever possible. If any of the following risks actually occur, our business, financial condition and results of operations could suffer, the trading price of our Equity Shares could decline and you may lose all or part of your investment.

INTERNAL RISK FACTORS

1. The Company has not declared dividend since inception.

Management Perception: Our Company was incorporated on August 29, 2000, but began commercial operations on November 12, 2004. Due to this, our Company has not declared dividend in the past. However, this is not an indicative of future Company policy for dividend declaration. Any future declaration of dividends is subject to availability of profits and other financial and economic considerations.

2. The Company has not registered some of the brand names it proposes to establish through the Project. As a result, the Company may have lesser recourse to initiate legal proceedings to protect the in-house brands. This may lead to a dilution in the brand value of the in-house brands. The Company presently has two trademarks registered in the name of the SRS Commercial Co. Limited viz. SRS World and SRS Cinemas. The Company applied for registration of trademarks for SRS Value Bazaar and SRS Club. Pending the registration of these trademarks the Company may have a lesser recourse to initiate legal proceedings to protect the in-house brands. This may lead to a dilution in the brand value of the in house product brands.

Management Perception Our success with our in-house brands depends, partly on our ability to protect and defend our current and future intellectual property rights relating to such brands. We are in the business of building retail and entertainment brands, failure to obtain the registration may have an adverse impact on our business. If, we fail to adequately protect our intellectual property and market products/services under brands similar to our brands.

3. The business plans of the Company may need substantial capital and additional financing in the form of debt and/or equity to meet the requirements.

Management Perception Our proposed business plan is substantially funded through this IPO and partly by Promoters equity and debt. However, the actual amount and timing of future capital requirements may differ from estimates including but not limited to unforeseen delays or cost over runs, unanticipated expenses, market developments or new opportunities in the industry. We may also not be able to generate internal cash in our Company as estimated and may have to resort to alternate sources of funds. Sources of additional financing may include commercial borrowings, vendor financing, or further issue of equity or debt instruments. If we decide to raise additional funds through the debt route, the interest obligations would increase and we may be subject to additional covenants, which could limit our ability to access cash flows from the operations. If we decide to raise additional funds through equity route, your shareholding in the Company could get diluted.

4. Any adverse impact on the title/ownership rights/development rights of the landlords (including the Promoters/ Promoter Group) from whose real estate premises the Company would carry out its operations may impede the Company’s effective operations of its Multiplexes/Cineplexes/Bazaars/restaurants in the future.

Management Perception With a view to deepen our penetration into several cities across the country, our Company plans to obtain a few properties on which a part of the Project will be operated, by entering into transactions in the nature of long-term lease or sub-lease or leave and licence or conducting basis and /or other contractual arrangements basis with third parties and/or our Promoters or the Promoter Group Companies. Any adverse impact on the title /ownership rights/development rights of our landlords (including our Promoters or the Promoter Group Companies) from whose real estate premises we propose operate our Multiplexes/ Cineplexes/Bazaars/restaurants may impede our Company’s effective operations.

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5. The Company has not yet executed the required definitive agreements or arrangements for fully utilizing the Issue proceeds. Also, it has not yet finalised consultants and contractors for several of the proposed new Multiplex/Cineplex/retail stores/restaurants.

Management Perception We have executed preliminary contractual agreements for the three properties that we propose to acquire each at Agra, Ludhiana and Muzaffarnagar, the lease sites at Jodhpur and Amritsar for the Cineplex and Food Court, at Gurgaon for the Food Court. However, final contractual agreements have not been entered into. We have not entered into any agreements for the three locations where SRS Value Bazaar and Food Court/ restaurants are proposed to be set up on lease basis for which we are raising funds through this Issue. We have not yet finalised consultants and contractors for our proposed Project, nor have we placed orders for the equipment and furniture that we may require. Should we not execute our expansion plan as envisaged because of this there could be time and cost overruns affecting the performance of our Company. Further, our expansion plan includes the lease model to be implemented in seven cities. In such cases, any delay on the part of the lessor to give possession of the property in a timely manner would delay the implementation of the Project and besides delays it may also cause may cause substantial cost overruns.

6. The Company has not entered into definitive agreement or placed orders for construction, machinery and equipment required to operate the proposed Project.

Management Perception The deployment of funds as stated in the “Introduction - Objects of the Issue” is entirely at our discretion and is not subject to monitoring by any independent agency. All the figures included under the “Introduction - Objects of the Issue” are based on our own estimates. The estimated capital expenditure including contingency provisions towards the Project is estimated to be Rs. 10623.70 Lacs and out of the total working capital reqirement of Rs.906.30 Lacs, Rs. 681.30 Lacs that will be financed out of the proceeds of this Issue. For more information regarding the status of the Project see “Introduction - Objects of the Issue” and “Business Overview - Location of the Project” on page no. 24 and 50 respectively of the Draft Red Herring Prospectus.

7. Non-receipt of Government and other regulatory approvals may affect the proposed expansion plan

Management Perception: We have not yet applied for and/or received all the government and other regulatory approvals required with regard to the new Multiplexes/Cineplexes/retail stores/restaurants proposed to be set by us. In case of non receipt or delayed receipt of the same, we may not be able to implement our proposed expansion plan as scheduled, which may lead to cost overrun and have impact on our growth and financial condition. However, we are of the view that the abovesaid approvals/ permissions can only be applied/ obtained at the stage once the project commences. For details on the applicable government and/or regulatory approvals refer to “Legal Information - Government Approvals / Licensing Arrangements” on page no.114 of the Draft Red Herring Prospectus.

8. Success of the business is substantially dependent on the management team, inability to retain them could adversely affect the businesses of the Company

Management Perception We have a strong team of professionals to oversee the operations and growth of our businesses, including our Managing Director, CEO and several Key Management personnel. Our success is substantially dependent on the expertise and continuity of quality services of our management team. The loss of the services of such personnel may have an adverse effect on our business, financial condition and results of operations.

9. As per the Project Appraisal Report by UTI Bank Limited dated September 05, 2005, the Company/Project is subject to the following weaknesses: i. New promoters: The promoters of the company are new in the above business and therefore they have very little hands on experience of running a entertainment & retail industry business. Though they have proved their project execution skills by successfully setting up SRS Multiplex, their management skills in running the business through various business cycles is to be established.

ii. Operating Efficiency: Currently the company is operating a single project SRS Multiplex at Faridabad. With regard to the current small scale of operations, the scale of operations is going to increase manifolds in future with the completion of various activities in the project. The company’s capability in efficiently operating such a new business on large scale is to be established.

10. The Company has issued Equity Shares in the past 12 months to some of its promoter/promoter group/investors at a price of Rs.10/- and Rs.20/- per share.

Management Perception We have allotted 10,00,000 Equity Shares at Rs.10/- each and 1,35,38,500 Equity Shares at Rs.20/- each of our Company to some of our Promoters/promoter group/ investors in the last 12 months from the date of the Draft Red Herring Prospectus. (For further details please refer to ‘Notes to Capital Structure’ under the section titled “Intorduction - Capital Structure” on page no.10 of the Draft Red Herring Prospectus).

11. In the future, the Company may not be entitled to Entertainment Tax benefits in the states of Uttar Pradesh, Haryana, Rajasthan and Punjab, where setting up of Multiplexes/ Cineplexes is planned under the Project

Management Perception: Multiplexes/Cineplexes/retail stores/restaurants proposed to be set up by the Company, as stated in the section "Introduction - Objects of the Issue", will become operative after two or three years. Government Policies may change by that time. It might be possible that the above exemptions may not be available to the Company when the Cineplexes become operative. However, presently there is no indication of any such change happening in the Government policy.

Currently, the respective State Government policies provide the following for multiplex business: State Entertainment tax rate Government Policy Haryana 50% No tax exemption available Punjab - Tax exemption for 5 years for multiplexes having capacity of minimum 1000 seats, set up in an area of 4000 square yards and minimum investment of Rs.2000 lacs. Rajasthan - Tax exempt for 3 years as follows: • 75% for the 1st year • 50% for the 2nd year • 25% in the 3rd year Uttar Pradesh 60% Tax Exemption for 5 year for multiplexes (project) worth Rs.150 lacs or more.

We are aware of the existing policies and the proposed Multiplexes/Cineplexes will be built keeping in mind the relevant rules and regulations to avail the aforesaid benefits in respective states.

12. Sustainability of income from leased property will depend on the performance of its clients operating out of the shopping mall at the Multiplexes

Management Perception: The location of SRS Multiplex has the advantage of being accessible to the population of Faridabad as well as being within reach of the population of New Delhi. The complex, being situated near the main Delhi- Agra highway in the city center of Faridabad has the potential to attract tourists who visit the Taj Mahal and Mathura. Also, the brands having their presence at SRS Multiplex are renowned names. Therefore, we do not envisage a problem of performance by such brands. In the future also, we intend to set up the Project at the best available sites in the cities our Company plans to penetrate and tie up with well established and renouned brands for the shopping malls.

13. Misuse of the Company’s brand name SRS Cinemas and the brand 7 Dayz provided by M/s Seven Dayz Restaurants (P) Limited.

The Company proposes to lend its brands SRS Cinemas and the brand 7 Dayz, which is provided by M/s Seven Dayz Restaurants (P) Limited, to the various parties with whom it proposes to enter into agreements for implementation of the franchise model, Such parties may misuse the brands or commit any act of commission or omission that may erode the value of these brands.

Management Perception: As per the MoU entered into by our Company and M/s Richi Look Marketing (P) Limited, a company appointed for implementing the franchise model, our Company will have recourse in terms of legal proceedings etc. to safeguard our interests and the value of our intellectual property rights. Besides, we will take necessary steps to avoid occurance of such embarassing situations. Our Company proposes to recruit a quality control executive at each of the sites. Such personnel will be responsible to ensure that the processes defined by the Company are strictly followed and there in no negligence committed in the quality control systems or misuse of the said brands.

14. The multiplex business is cyclical in nature during the different periods of the year.

Management Perception: Our business is cyclical during the different periods of the year. Our revenues are higher during the April- June and October-December quarters. Any substantial decrease in our sales in these quarters can have a material adverse impact on our financial performance. Our revenues increase in the third quarter of the financial year (October-December quarter) due to the occurrence of festivals like Durga Puja, Diwali, Christmas, etc, as well as during the summer vacation season (April-June quarter). Also, major big banner Hindi movies are released during the above mentioned quarters. As a result of this, the quarter to quarter comparison of financial results may not be accurate or meaningful indicator of our future performance.

15. Success of the Cineplex business depends upon the commercial success of various films.

Management Perception: Success of the Cineplex business depends upon the commercial success of various films. In cases where a film is not a box office success, it may not attract crowds subsequently we will not enjoy high capacity utilization. Further, lack of quality content in a film will be reflected in the box office performance and will in turn impact our profitability. The profitability of the Cineplex business will also depend on the purchase price of the film. There is no guarantee that the box office performance will be commensurate with the price paid.

16. Fluctuations in exchange rates may adversely affect the cost of our Project.

Management Perception: We intend to use part of proceeds from the Issue to meet capital expenditure required for the expansion plan described in section “Introduction - Objects of the Issue” beginning on page no.24 of the Draft Red Herring Prospectus. Some of the equipment we intend to deploy is expected to be imported and be paid for in foreign currency. Changes in foreign exchange rates affecting the value of the Rupee adversely may affect the cost of the Project.

17. The Company has not received final sanction for debt of Rs.2000.00 Lacs required for the Project

Management Perception: We have received in-principle approval for the debt portion of the means of finance from UTI Bank Limited amounting to Rs. 2000 lacs. Any delay in getting the final sanction from the bank may cause delay in implementation of our Project.

18. Outstanding litigation

Home Stores (India) Limited (HSL) moved an arbitration application in the Hon’ble Hight Court of Delhi, under Section 11(6)(b) of the Arbitration and Conciliation Act, 1956, against the Company alleging that the Company had failed to adhered to the time schedule as per the lease deed entered with the Company for providing on leasehold propoerty at SRS Multiplex. As per the said lease deed, HSL paid a sum of Rs.5,44,480 at the time of signing the lease deed on account of security deposit. HSL has demanded a sum of Rs. 20 lac for the losses suffered by it on account of the non completion of the project and its consequential handing over by the Company. HSL has also prayed to the Hon’ble High Court for the appointment of Arbitrator and the disputes and difference arisen between the parties to be referred to the said Arbitrator. A show cause notice dated August 04, 2005 was received by the Company on August 22, 2005 and the matter has been listed for further directions on October 04, 2005

Management Perception: We received the 'full occupation certificate' from HUDA upon completion of construction of the Multiplex building on August 11, 2004. However, HSL never came forward for taking the possession of the premises despite our several requests. Vide our letter dated January 21, 2005, we terminated the lease deed and demanded a sum of Rs.5,35,283 from HSL on account of rent and 'common area maintainence' charges (including service tax) with effect from October 22, 2004 till January 15, 2005. Immediately on receiving the notice from HSL,we, through our advocates gave reply on June 14, 2005 whereby the our claim was reiterated. Claim of HSL was denied. Appointment of Mr. Anand Srivastava as arbitrator was disputed and called upon HSL to concur in the appointment of Mr. Sanjeev Singh Advocate as the arbitrator. For more information regarding litigations involving our Directors or our Promoters/ Promoter Group please refer to the section titled "Outstanding Litigation and Material Development" on page no.111 of the Draft Red Herring Prospectus.

19. Related party transactions The Company’s paid up capital constitutes of 2,70,38,500 equity shares of Rs.10/- each out of which 1,80,58,700 equity shares (constituting 66.79% of the total pre-Issue shareholding) are held by 10 (ten) corporate shareholders which form part of the Promoter Group. Out of these 10 companies, being the majority shareholders (pre-Issue) of the Company, 5 companies have also entered into Lease Agreements in respect of commercial space situated at SRS Multiplex at Faridabad.

Management Perception: The above transactions are in the ordinary course of business. Refer to "Financial Information" on page no. 91 of the Draft Red Herring Prospectus for details on Related Party Transactions.

External Risk Factors

1. The retail/entertainment industry is prone to unforeseen shifts in tastes and preferences of audiences, which could have an impact on the operations of the Company.

Management Perception Our success will depend on our ability to understand the business environment and change our business strategy accordingly.

2. Competition from existing shopping malls, single cinema theaters and multiplexes and future entrants in the retail/shopping malls and Cineplex business in which the Company operates and proposes to operate. The concentration of shopping malls and multiplexes in a particular area will impact the footfalls and in turn adversely impact the profitability.

Management Perception Our success will depend in developing the business strategy to cope with the competition by adopting new strategies in accordance with the changing circumstances.

3. Changes in cinema/theatre technology may render our current technologies obsolete or require us to make substantial capital investments.

Management Perception The Company would adopt strategy to shift the equipments to other areas where existing technology may be useful and adopt new technology in the areas wherever required to meet and respond to the competition.

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4. Public places such as Multiplex/Cineplex/retail stores/restaurants could be likely targets for unforeseen acts of violence (including terrorist acts and rioting), which may impact the retail and entertainment business

Management Perception Any violence in public places such as retail stores and malls could cause damage to life and property, and also impact consumer sentiment and their willingness to visit public places.

5. One of the major segments in which the Company operates, the retail industry, is restricted in its ability to raise financial resources for its growth

Management Perception The retail sector has not been granted industry status by the Government of India. The capital requirements for a retailer are in the real estate (which banks have historically restricted lending to) and for meeting working capital requirements. Banks and financial institutions are further reluctant to lend to the sector because of lack of collaterals since most of the assets are on lease.

While some of the leading retailers are still able to get bank funding, the smaller ones are constrained for growth funding. Similarly, equity options are also restricted with Foreign Direct Investment not being permitted in the retail trading sector.

6. Retail sector generally depends upon various external merchandisers/vendors on whom absolute control is not possible

Management Perception Generally, the retail sector depends upon various vendors to provide them the merchandise. Operations could be adversely affected if supplies of merchandise are not obtained in a timely manner from the vendors or if the supply of such merchandise is discontinued or if vendors are not able to meet with the growth requirements.

7. Regional conflicts in South Asia could adversely affect the Indian economy, disrupt the Company’s operations and cause its business to suffer.

Management Perception South Asia has, from time to time, experienced instances of civil unrest and hostilities among neighbouring countries, such as between India and Pakistan. In recent years there have been military confrontations along the India-Pakistan border. Military activity or terrorist attacks in the future could influence the Indian economy. This could have a material adverse effect on the market for securities of Indian companies, including the Equity Shares and also on the market for the Company’s offering.

8. Multiplicity of local taxes and levies including VAT, service tax and entertainment tax may impact the growth of organised retail and entertainment industries.

Management Perception Each state in India has different local taxes and levies including sales tax, VAT, Entertainment Tax, octroi, etc, which has enhanced the complexity for organised retailers as well as added to their costs. Incidence of various levies as well as the requirement to mention the Maximum Retail Price (MRP) on various products has led to organised retailers functioning in a sub optimal level, impacting their competitiveness vs. unorganised players who also gain by way of tax evasion. Unfavourable changes in these local taxes and levies might marginally impact the performance adversely since these are indirect levies and are recovered from the ultimate consumer(s).

9. The fortunes of the retail and enertainment sector, especially of companies retailing lifestyle products, are linked to the overall performance of the economy

Management Perception The retail sector is dependent on consumer spend for its performance. Overall economic conditions can impact the consumer spend, and more so in areas such as lifestyle products. Any impact on the Indian economy due to internal or external reasons could impact consumer spend. Since retailers have fixed costs

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in the short term, any downtrend in the economy can impact the retail sector adversely and impact fashion and lifestyle retailers even more.

10. Availability of large quantities of retail space can be affected by change in interest rates or banking policies

Management Perception Prevailing interest rates in the economy as well as the yields available on the lease of property have been instrumental in making real estate available for retail by permitting investors to borrow and invest in real estate and lease it to retail companies. Any change in interest rates, or yields on property or change in banking policies pertaining to lending against real estate or securitisation of lease rentals could impact availability of real estate for retail.

11. Attrition rates at the entry level are very high for the industry

Management Perception Our industry competes with other emerging service sectors such as ITES in its ability to hire and retain quality people in addition to competition amongst the players in the sector. Hence, availability of trained manpower poses a key risk for the retail sector. As organised retail grows rapidly, there will be further pressure on existing players as new entrants would look for trained manpower at various levels. Opening up of Foreign Direct Investment (FDI) in retail could see the entry of international retail majors and put further pressure on the manpower.

12. Stability of policies and political situation in India can determine the fortunes of the industry

Management Perception The Indian Central and State Governments play an important role for the sector by regulating policies and regulations governing businesses, including malls/mutilpex/retail. We cannot assure that the current policies will continue in future. The rate of economic liberalisation could change and specific laws and policies affecting our industries and other policies affecting investment in our securities could change as well. A significant change in India’s economic liberalisation and deregulation policies could disrupt business and economic conditions in India and thereby affect our business.

13. Any change in the current policies pertaining to foreign direct investment in the retail sector could impact our business. Unstable internal and international political environment could impact the economic performance in both short term and long term.

14. There has been no public market for the Equity Shares of our Company and the prices of the Equity Shares may fluctuate.

Management Perception There can be no assurance that an active trading market for the Equity Shares will develop or be sustained after this Issue or that the prices at which the Equity Shares are sold in this Issue will correspond to the prices at which the Equity Shares will trade in the market subsequent to this Issue.

15. After this Issue, price of the Company's Equity Shares may be highly volatile, or an active trading market for the Equity Shares may not develop. The prices of the Equity Shares on the Stock Exchanges may fluctuate as a result of several factors, including: • Volatility in the Indian and global securities market; • Results of operations and performance of the Company, in terms of market share; • Performance of the competitors, the Indian film exhibition industry, organised and unorganised retail sector and the perception in the market about investments in these sectors; • Performance of the Indian economy; • Changes in Government policies; • Changes in the estimates of our performance or recommendations by financial analysts; • Significant developments in India’s economic liberalisation and deregulation policies; and • Significant developments in India’s fiscal and environmental regulations.

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16. Force Majeure: In future there might be a natural calamity like earthquake, Tsunami, volcano, etc. or some unforseen event that is beyond the control of the Company that might prevent it from performing its business obligations and could disrupt its properties.

NOTES TO RISK FACTORS

1. Public Issue of 2,28,57,200 Equity Shares of Rs.10 each of SRS Entertainment Limited (the “Company”) at a price of Rs. [•] per Equity Share for cash aggregating Rs. [•] Lacs. 2. Investors are advised to refer to the section titled "Introduction - Basis of Issue Price" on page no.31 before investing in this Issue. 3. Networth as on June 30, 2005 is Rs.2636.49 Lacs. 4. The Book value per share as on June 30, 2005 is Rs. 15.47 5. The investors may contact the Book Running Lead Manager for any clarifications or information pertaining to the Issue. 6. Average cost of acquisition per share by Mr. Sunil Jindal and Mr. Raju Bansal is Rs.10 per equity share 7. The Promoters do not have any interest in the business of the Company, except to the extent of investments made by them and their Promoter Group / investment companies in SRSEL. For details on the same, please refer to page no.88 of the Draft Red Herring Prospectus. 8. The Investors are advised to refer to the section titled ‘Introduction - Basis of Issue Price’ on page no. 31 of the Draft Red Herring Prospectus before making an investment in the Issue. 9. Trading in Equity Shares of the Company for all the investors shall be in dematerialized form only. 10. Investors may note that in case of over-subscription in the Issue, allotment to Non-Institutional Bidders and Retail Bidders shall be on a proportionate basis. For more information, see the section titled ‘Basis of Allotment’ on page no. 143 of the Draft Red Herring Prospectus.

INTRODUCTION

You should read the following Summary with the Risk Factors from page no.viii and more detailed information about us and our Financial Statements included elsewhere in the Draft Red Herring Prospectus.

Summary

Industry SRSEL lays great emphasis on growth of the retail sector to determine its future growth pattern. Multiplexes today reflect the emergence of organised Indian retail industry. They have also emerged as the fastest growing niche in the Indian media sector. Their rise reflects: Metamorphosis of Indian retail (rise of organised retail, malls etc) Increasing disposable incomes Rising aspirations of the urban consumer and a change in consumer behaviour which has altered the spending pattern of the urban consumer.

Going by this trend, the business model of SRSEL is a blend of the retail and entertainment sectors. It includes construction and management of Multiplex, which includes Cineplex, shopping malls, coffee lounge, Food Court, health club etc.

Entertainment: Though distribution and exhibition are the last links in the chain bringing filmed entertainment to the masses, they are of paramount importance, as the success of the film depends on successful distribution and exhibition. In India the current infrastructure for Film exhibition is inadequate to meet existing and potential demand. For a nation with 50,000 lac admissions every year (roughly a weekly entry of about 1000 lac), there are only around 12,900 theatres spread over the country. Further to this, the theatrical sales constitute dominant source of revenues for the film industry and represent box office ticket sales to the viewers at the cinema halls. Ticket sales constitute to be around 90% of the total revenues in the film industry. (Source FICCI Report)

The trends suggest that with the advent of multiplexes and modern theatres the exhibition business has indeed become lucrative. To take guidance from international trends, theatre occupancy in England, Germany, US and Australia tripled with the multiplex boom and similar growth could be expected in India with adequate exhibition infrastructure - multiplexes, megaplexes and miniplexes. In fact, only 32% of the screens in the US are single theatre screens, the rest falling under either multiplexes, megaplexes or miniplexes category whereas the in India 95% of the screens are in single screen theaters.

Improving Movie Going Habits The attendance level in the contemporary theatre has reduced over the years but with the advent of multiplexes and megaplexes the trend has reversed. By moving up the value chain companies can generate higher revenues. Higher prices can be charged for additional value delivered.

International trends So far various international markets are highly under screened. Looking at the present structure, The US has about 9000 persons per screen, Europe around 27000 people per screen, Latin America around 69000 and Asia around 105000 people per screen. This shows that Indian Multiplex market is extremely under screened. This survey also states that factors like location, type of theatre, dining and shopping are most important features in selecting a theatre and entertainment joint.

Retail: The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls begun their journey from metros and are now turning towards second-rung cities introducing the Indian consumer to a shopping experience like never before. Rated the fifth most attractive emerging retail market, India is being seen as a potential goldmine. It has been ranked 2nd in a Global Retail Development Index of 30 developing countries drawn up by A. T. Kearney.

Real Estate: India is ranked 5th in the list of 30 emerging retail markets and organized retail segment is expected to grow from a mere 2% to 20% by the end of the decade.

The Company’s Business The business model of SRS Entertainment Limited is a “hybrid” model, which involves a mix of entertainment cum retailing and real estate. The Company’s maiden project, SRS Multiplex, is a unique complex, combining a 3 screen Cineplex with most facilities of a modern shopping mall. SRS Multiplex commenced operations from November 12, 2004 and has been proved profitable within the first 6 months of its operation. The average ticket prices at SRS PVR Cinemas range from Rs.75/- to Rs.150/-. All the showrooms and shop blocks in the mall have been completely sold / leased out.

Some of the leading brands in sunglasses, apparels both formal and casual wear, gold/silver jewellery, women wears both ethnic and western, music, are available at SRS Multiplex

SRSM offers a wide variety of restaurants that offer visitors a range of delicacies to chose from. Some of the available cuisines are Mexican, Indian, continental and also fast food including burgers, pizzas, pastries, hot and cold drinks, ice cream parlours etc.

The Company's first retail store, SRS Value Bazaar is proposed to be set up at the Multiplex and will begin commercial operations in October 2005. SRS Value Bazaar would be a hyper-market in the retail business of various products at the sites in the format and type of retail chain with different content of products depending on needs and aspirations of customers. The discount store concept in the form of SRS Value Bazaar would provide value for money to the population at large apart from the target segment and ensure additional footfalls for the entire Multiplex.

The Issue Equity Shares offered for Issue by the 2,28,57,200 Equity Shares Company

of which:

Promoter Group reservation portion 42,87,200 Equity Shares Constituting 18.76% of the Issue size (allocation on firm allotment basis) Shareholders of Group Companies of the 22,85,720 Equity Shares Company reservation portion Constituting 10% of the Issue size (allocation on proportionate basis) Employee reservation portion 22,85,720 Equity Shares Constituting 10% of the Issue size (allocation on proportionate basis) Net Issue to the Public: QIB Portion 69,99,280 Equity Shares Constituting 50% of the Net Issue to the public (allocation on discretionary basis) Non-Institutional Portion 20,99,784 Equity Shares Constituting15% of the Net Issue to the public (allocation on proportionate basis) Retail Portion 48,99,496 Equity Shares Constituting 35% of the Net Issue to the public (allocation on proportionate basis) Equity Shares outstanding prior to the Issue 2,70,38,500 Equity Shares Equity Shares outstanding after the Issue 4,98,95,700 Equity Shares Use of proceeds by the Company See the section titled “Introduction - Objects of the Issue” on page no.24 of the Draft Red Herring Prospectus

Summary of Consolidated Financial Statements The following summary has been prepared in accordance with Indian GAAP, in conjunction with our audited financial statements (as restated) for the financial years 2003, 2004 and 2005 and quarter ending June 30, 2005, which appear in section titled ‘Management's' Discussion and Analysis of Financial Condition and Results of Operations’ on page no. 104 of the Draft Red Herring Prospectus. Our financial year ends on March 31 of each year.

Statement of Profit and Loss Account - As Restated (Rupees in Lacs) Particulars Quarter ended For the year ended March 31, June 30, 2005 2005* 2004 2003 Income A) Sales : a) Operational Revenue Company 369.20 453.17 0.00 0.00 b) Products traded by the Company 34.88 35.62 0.00 0.00 Sub-Total (a) + (b) 404.08 488.79 0.00 0.00 (c ) Other Operational Income 185.70 275.10 0.00 0.00 (d) Other Income 11.80 1.47 0.00 1.13 (e) Interest 0.00 0.00 0.00 0.00 Total (A) 601.58 765.36 0.00 1.13

Expenditure Work Cost/Operational Exp. 93.68 245.63 0.00 0.00 Staff Costs 27.17 33.95 0.00 0.15 PVR Share 6.57 6.20 0.00 0.00 Administration Expenses 116.20 87.26 0.00 0.00 Selling & Other Expenses/ Sales 14.56 15.14 0.00 0.00 Promotion Interest 51.27 72.59 0.00 0.89 Fringe Benefit Tax 0.50 0.00 0.00 0.00 Depreciation 29.70 45.00 0.00 0.00 Preliniminery Expenses W/off 0.46 1.83 0.00 0.03 Total (B) 340.11 507.60 0.00 1.07

Net Profit before tax 261.47 257.76 0.00 0.06 Taxation 22.00 20.21 0.00 0.02 Deferred Tax 8.20 18.46 0.00 0.00 Profit After Tax 231.27 219.09 0.00 0.04 Profit B/f for Last Years 219.14 0.05 0.05 0.01 Profit Transferred to Reserve & Surplus 450.41 219.14 0.05 0.05 * Figures for F.Y2005 represent months November 2004 to March 2005 only as the Company commenced commercial operations of SRS Multiplex on November 12, 2004.

Statement of Assets and Liabilities - As Restated (Rupees in Lacs) Particulars Quarter As at March 31, Ended on 2005 2004 2003 30.06.2005 A. Fixed Assets : Gross Block 4099.89 4088.99 0.00 0.00 Less Depreciation 74.70 45.00 0.00 0.00 Net Block 4025.19 4043.99 0.00 0.00 Add :- Capital Work in Progress 603.11 568.64 2337.30 982.36 Less : Revaluation Reserve 0.00 0.00 0.00 0.00 Net Block after adjustment 4628.30 4612.63 2337.30 982.36 for Revaluation Reserve Sub-Total 4628.30 4612.63 2337.30 982.36

B. Investment 0.00 0.00 0.00 0.00 Sub-Total 0.00 0.00 0.00 0.00

C. Current Assets, Loans and Advances : Inventories 1.47 1.71 0.00 214.62 Sundry Debtors 399.42 198.67 0.00 0.00

Cash and Bank Balances 149.32 131.78 77.96 11.48 Loans and Advances 288.34 71.06 0.23 0.12 Other Current Assets 0.00 0.00 0.00 0.00 Sub-Total 838.55 403.22 78.19 226.22 D. Liabilities and Provisions : Secured Loans 1530.00 1368.85 999.62 610.96 Unsecured Loans 1111.21 1153.93 94.34 32.76 Current Liabilities and Provisions 189.15 196.75 71.68 23.35 Sub-Total 2830.36 2719.53 1165.84 667.30 E. Networth 2636.49 2296.32 1249.84 541.51 F. Represented by 1. Share Capital 1848.04 1739.60 1250.00 541.70 2. Reserves 804.26 572.98 0.04 0.04 Less Revaluation Reserve 0.00 0.00 0.00 0.00 Reserves (Net of 804.26 572.98 0.04 0.04 Revaluation Reserves) Less Preliminary Expenses yet not 15.81 16.27 0.20 0.23 w/off Networth 2636.49 2296.32 1249.84 541.51

Cash Flow Statement (Rupees in Lacs)

Particulars Quarter For the year ended March 31, ended June 2005 2004 2003 30, 2005 Net cash flow from operating activities (171.09) 119.77 263.06 (225.54) Net cash flow from investing activities (38.23) (2338.21) (1355.14) (818.04) Net cash flow from financing activities 226.86 2272.27 1158.54 1040.11 Net increase/(decrease) in cash or cash 17.54 53.83 66.46 (3.47) equivalent Figures in brackets represent cash outflow

GENERAL INFORMATION SRS ENTERTAINMENT LIMITED

The Company was incorporated as ‘SRS Commercial Co. Limited’ on August 29, 2000 under the Companies Act 1956. It changed its name to 'SRS Entertainment Limited' on January 25, 2005 under a fresh Certificate of Incorporation. Registered Office of the Company is located at C-4/1, 100 Ft. Road, Shahdara, Delhi - 110094. Registration number of the Company is 55-107484. The Registrar of Companies, NCT Delhi and Haryana having its office at New Delhi is the concerned Registrar of Companies in case of our Company. The Company has changed its registered office from 804, Manjusha, 57, Nehru Place, New Delhi to E-985, Near Mala Devi School, 100 ft. Road, Babarpur, Shahdara, Delhi vide resolution dated 1.12.2000 and to the present location C- 4/1, 100 Ft. Road, Shahdara, Delhi 110094 vide resolution dated 23.4.2003. The head office of the Company is located at E-18, Nehru Ground, NIT Faridabad - 121001

Board of Directors of SRS Entertainment Limited

Sr. No. Name Designation 1 Dr. Raj Kumar Aggarwal Chairman – Independent and Non Executive Director 2 Mr. Sunil Jindal Managing Director 3 Mr. Raju Bansal Executive Director 4 Mr. Vinod Gupta Executive Director 5 Mr. R. S. Gupta Non-Executive Director 6 Mr. Pavan Kumar Vijay Independent and Non-Executive Director 7 Mr. K. M. Mehta Independent and Non Executive Director 8 Mr. Devendra Singh Independent and Non Executive Director

Brief Description of the Chairman, Managing Director and Executive Directors is given below:

Dr. Raj Kumar Aggarwal, Chairman Dr. Aggarwal is a practicing chartered accountant by profession and has extensive experience spanning over twenty years. He is 43 years of age. He is well known and respected in the fields of project finance, corporate restructuring and taxation. He has served as the Chairman of the North Indian Regional Council of the Institute of Company Secretaries of India during the year 2003. Dr. Aggarwal holds a Masters Degrees in Commerce and is a Bachelor of Law. Additionally, he is a fellow member of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India as also an associate member of the Institute of Cost and Works Accountants of India.

Mr. Sunil Jindal, Managing Director SRS Entertainment Limited is promoted by Mr. Sunil Jindal. He is a first generation promoter, 28 years of age, a law graduate and designated as the Managing Director of SRSEL. He has been in the business of finance for over five years and has been instrumental in the growth of business as well as diversified business activities. He has also promoted Akriti Financial Services (P) Limited. He supervises the day-to-day operations apart from the strategic planing for growth and expansion of the Company. Mr. Jindal's ability to visualize, plan, execute and manage the trends in the retail industry has resulted in the growth of SRS Multiplex in a short period.

Mr. Raju Bansal, Executive Director Mr. Bansal is 28 years of age. He is a promoter of SRS Entertainment Limited as well as Ferro Plast Limited. His active involvement and role in conceptualisation of the SRS Multiplex has been decisive in its success. He has been in the business of finance for more than four years and has played a vital role in the conceptualisation and implementation of SRSM.

Mr. Vinod Gupta, Director Mr. Gupta, aged 51 years, is an Arts Graduate and also has been managing business of Vinod Gas Agency and has earned good reputation in the field of Petroleum Products. He has an experience of more than 25 years. He was involved in the SRS Multiplex project since its foundation and has been a decision maker for procurement of materials, equipment, recruitment of personnel etc.

Bankers to the Company Union Bank of India F-14/15, Connaught Place New Delhi-110 001

Tel No.: (011) 23354234, 23314777 Fax: (011) 23323809 E-mail: [email protected]

Issue Management Team

Book Running Lead Manager to the Issue Joint Book Running Lead Manager to the Issue UTI Bank Limited Allianz Securities Limited Central Office, Maker Towers ‘F’ 11th Floor, 33, Vaswani Mansion, Cuffe Parade, Colaba, 6th Floor, Dinsha Vachha Road, Churchgate, Mumbai – 400 005 Mumbai – 400 020 Tel.: (022) 2218 9106 - 9 Tel. : (022) 2287 0580 Fax: (022) 2216 2467 Fax. : (022) 2287 0581 Web site: www.utibank.com Website: www.aslfinancial.com E-mail: [email protected] E-mail: [email protected] Contact person: Ms. Shilpa Jaisingh Contact Person: Mr. Sanjay Dewan Registrars to the Issue Legal Advisor to the Issue Karvy Computershare Private Limited Vaish Associates Karvy House, 46, Avenue 4, Street No.1, Banjara 10 Hailey Road, Hills, Apts. 5, 6 and 7, Hyderabad 500 034 New Delhi – 110001 Tel.: (040) 2331 2454 Tel: (011) 52492510 Fax.: (040) 2331 1968 Fax: (011) 23320484/ 52492600 E-mail: [email protected] E-mail: [email protected] Contact Person: Mr. Ganapathy Subramaniam Auditors to the Company Bankers to the Issue T.K. Gupta & Associates [•] 4228/1, Ansari Road, Darya Ganj, New Delhi - 110002 Tel: (011) 23269898, 23264006 Fax: (011) 23255308 E-mail: [email protected] Company Secretary Compliance Officer Ms. Navneet Chhabra Mr. Arun Kumar Gupta SRS Multiplex, SRS Multiplex, City Centre, Sector-12, City Centre, Sector-12, Faridabad, (NCR), Haryana 121007. Faridabad, (NCR), Haryana 121007. Telephone: (0129) 5008350, 5003266 Mobile: +91 9810672518 Fax: (0129) 2433255 Telephone: (0129) 5008350, 5003266 E-mail:[email protected] Fax: (0129) 2433255 E-mail: [email protected]

Note: Investors are advised to contact the Registrar to the Issue/ Compliance Officer in case of any pre- issue/post-issue related problems such as non-receipt of Red Herring Prospectus/ Letter of Allotment/ Share Certificate(s)/ Warrant Certificate(s)/ Refund Orders/ Demat Credit.

Statement of Inter-Se Allocation of Responsibility The responsibilities and coordination for various activities in this Issue have been distributed between the BRLM and Joint BRLM as under:

Sr. Activities Responsibility Co- No. ordinator 1 Capital structuring with the relative components and UTI Bank UTI Bank formalities such as type of Instruments etc. 2 Due diligence of the Company’s operations UTI Bank UTI Bank /management/business plans/legal etc. 3 Drafting and Design of Red Herring Prospectus and UTI Bank UTI Bank of statutory advertisement including memorandum containing salient features of the Prospectus. The

BRLM shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, Registrar of Companies and SEBI. 5 Appointment of various agencies connected with the UTI Bank UTI Bank Issue including Printers, Advertising Agency, Bankers to the Issue etc. 4 Appointment of Registrar to the Issue UTI Bank, Allianz Allianz 6 Company positioning and pre-marketing exercise, UTI Bank, Allianz UTI Bank finalise media and public relation strategy, drafting and approval of all publicity material other than statutory advertisement as mentioned in (3) above including corporate advertisement, brochure, etc. 7 Qualified Institutional Bidder (QIBs) Category: UTI Bank, Allianz UTI Bank Finalising the list and division of investors for one- to-one meetings, Co-ordinating institutional investor meetings, finalising pricing decision and institutional allocation in consultation with the Company 8 Non Institutional and Retail Marketing of the Issue, UTI Bank, Allianz Allianz which will cover inter alia: _ Formulating marketing strategy _ Preparation of publicity budget _ Finalise Media and Public Relation strategy _ Finalising centers for holding conferences for brokers, press, etc. _ Follow-up on distribution of publicity and issue material including bid cum application form, prospectus and deciding on the quantum of the issue material 9 Appointment of Syndicate Members UTI Bank, Allianz Allianz 10 Running the Book, interaction and co-ordination UTI Bank, Allianz Allianz with Stock Exchanges for book-building software, bidding terminals and mock trading 11 Finalisation of Prospectus and RoC Filing etc. UTI Bank, Allianz UTI Bank 12 The post bidding activities including, management of UTI Bank, Allianz Allianz escrow accounts, co-ordinate non-institutional allocation, intimation of allocation, dispatch of refund orders to Bidders etc. 13 The post issue activities for the Issue will involve UTI Bank, Allianz Allianz essential follow up steps, which include the finalisation of listing of Equity Shares and dispatch of allotment advice and refund orders, with the various agencies connected with the work such as the Registrars to the Issue, Bankers to the Issue and the bank handling refund business.

Even if many of these activities will be handled by other intermediaries/agencies, the designated BRLM/Joint BRLM shall be responsible for ensuring that these intermediaries/agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with the Company.

Credit Rating This being an Issue of Equity Shares credit rating for this Issue is not required.

Trustees As this is an Issue of Equity Shares, the appointment of Trustees is not required.

Monitoring Agency This Issue being for less than aggregate Rs.50,000 Lacs, appointment of a Monitoring Agency is not applicable.

Project Appraisal The Project, for which funds are being raised through the Issue, has been appraised by UTI Bank Limited for financing the debt requirement. UTI Bank Limited has given its consent for its name being included as appraising agency and for their appraisal report being used in this document.

Book Building Process Book building refers to the collection of Bids from investors, which is based on the Price Band, with the Issue Price being finalised after the Bid/ Issue Closing Date. The principal parties involved in the Book Building Process are: 1. The Company 2. Book Running Lead Manager 3. Joint Book Running Lead Manager 4. Syndicate Members 5. Escrow Collection Bankers 6. Registrar to the Issue

SEBI, through its guidelines, has permitted an Issue of securities to the public through the 100% Book Building Process, wherein at least 50% of the Issue shall be allocated on a discretionary basis to Qualified Institutional Buyers (QIBs). Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders and not less than 35% of the Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. The Company will comply with these guidelines for this Issue. In this regard, the Company has appointed the BRLM/Joint BRLM to procure subscriptions to the Issue. The process of book building, under SEBI Guidelines, is relatively new and the investors are advised to make their own judgment about investment through this process prior to making a Bid in the Issue. Pursuant to recent amendments to SEBI Guidelines, QIBs are not allowed to withdraw their Bid after the Bid/ Issue Closing Date. See page no.125 for the section titled “Issue Information - Terms of the Issue” in the Draft Red Herring Prospectus.

Steps to be taken by the Bidders for bidding: Check whether he/ she is eligible for bidding; Bidder necessarily needs to have a demat account; and Ensure that the Bid cum Application Form is duly completed as per instructions given in the Draft Red Herring Prospectus and in the Bid cum Application Form.

Illustration of Book Building and Price Discovery Process (Investors should note that the following is solely for the purpose of illustration and is not specific to the Issue) Bidders can bid at any price within the price band. For instance, assuming a price band of Rs.20 to Rs.24 per share, issue size of 3,000 equity shares and receipt of five bids from bidders details of which are shown in the table below. A graphical representation of the consolidated demand and price would be made available at the bidding centres during the bidding period. The illustrative book as shown below shows the demand for the shares of our Company at various prices and is collated from bids from various investors.

Number of equity shares Bid Price (Rs.) Cumulative equity Subscription Bid for shares Bid for 500 24 500 16.67% 1000 23 1500 50.00% 2000 21 5000 166.67% 2500 20 7500 250.00%

The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue the desired quantum of shares is the price at which the book cuts off i.e., Rs.22 in the above example. The issuer, in consultation with the BRLM will finalise the issue price at or below such cut off price i.e. at or below Rs.22. All bids at or above this issue price and cut-off bids are valid bids and are considered for allocation in respective category.

Underwriting Agreement After the determination of the Issue Price and prior to filing of the Prospectus with RoC, the Company, on its behalf, will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be issued through the Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the

BRLM/Joint BRLM shall be responsible for bringing in the amount devolved in the event that the members of the Syndicate do not fulfill their underwriting obligations. The Underwriters have indicated their intention to underwrite the following number of Equity Shares: (This portion has been intentionally left blank and will be filled in before filing of the Prospectus with (RoC)

Name and Address of the Indicated Number of Equity Amount Underwritten Underwriters Shares to be Underwritten (Rupees in Lacs) [•] [•] [•] [•] The above Underwriting Agreements are dated [•].

In the opinion of our Board of Directors (based on a certificate given by the Underwriters), the resources of the above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. The above-mentioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as brokers with the Stock Exchange(s).

Our Board of Directors, at their meeting held on [•], have accepted and entered into the underwriting Agreement mentioned above on behalf of the Company. Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments. Notwithstanding the above table, the BRLM, Joint BRLM and the Syndicate Members shall be responsible for ensuring payment with respect to Equity Shares allocated to investors procured by them. In the event of any default in payment, the respective Underwriter, in addition to other obligations defined in the underwriting agreement, will also be required to procure/subscribe to the extent of the defaulted amount.

Allocation to QIBs is discretionary as per the terms of the Draft Red Herring Prospectus and may not be proportionate in any way and the patterns of allocation to the QIBs could be different for the two Underwriters.

CAPITAL STRUCTURE

The capital structure of the Company is as under: As on September 11, 2005 (Amount in Rupees Lacs) Particulars Face Aggregate Value Value (A) Authorised Share Capital 6,00,00,000 Equity shares of Rs.10/- each 6000.00 6000.00

(B) Issued, Subscribed and paid-up capital 2,70,38,500 Equity shares of Rs.10/- each 2703.85 2703.85

(C) Present Issue 2,28,57,200 Equity Shares of Rs.10/- each 2285.72 [•] Out of which 42,87,200 Equity Shares of Rs.10/- each are reserved for allotment to the 428.72 [•] Promoters of the Company on a firm allotment basis * 22,85,720 Equity Shares of Rs.10/- each are reserved for allotment to the 228.57 [•] Shareholders of Group Companies of the Company on a proportionate basis 22,85,720 Equity Shares of Rs.10/- each are reserved for allotment to the 228.57 [•] Employees of the Company on a proportionate basis

(D) Net Issue to the public in terms of the Draft Red Herring Prospectus 1,42,84,274 Equity Shares of Rs.10/- each 1428.42 [•]

(E) Paid up capital after the Issue of Equity shares 4,98,95,700 Equity Shares of Rs.10/- each 4989.57 [•]

(F) Share Premium Account Existing Share Premium Account - 1353.85 On the Issue of Equity Shares - [•]

* 42,87,200 Equity Shares of Rs.10 each at the 'Cut-Off' price will be allotted to the Promoter Group of the Company on firm allotment basis, towards 'Promoters Contribution in the Project'. The Promoters have vide their letter dated August 25, 2005 undertaken to bring Rs. [•], being the amount due at the higher end of the price band of Rs. [•] to Rs. [•], amounting to Rs. [•] Lacs, one day prior to the Issue Opening date and the same will be deposited in an escrow account to be opened with the Banker to the Issue, which will be a Scheduled Commercial bank as required by SEBI (DIP) Guidelines, 2000.

These equity shares will be subscribed to by the corporate bodies forming part of the Promoter Group as under: Sr. Name of Investor Registered Office Address No. of shares of No. Rs. 10/- each 1. Bansla Finlease Limited C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094 12,85,714 2. BTL Commercial Limited C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094 2,85,714 3. BTL Impex (India) Limited E-985, 100 Ft. Road, Near Babarpur Bus 1,42,857 Terminal. Shahdra, Delhi – 110032 4. BTL Industries Limited E-985, 100 Ft. Road, Near Babarpur Bus 2,85,714 Terminal. Shahdra, Delhi – 110032 5. BTL Investments Limited C-4/1, 100 Ft. Road, Shahdara, Delhi – 110094 11,44,345 6. BTL Sales Limited E-985, 100 Ft. Road, Near Babarpur Bus 2,85,714 Terminal. Shahdra, Delhi 110032 7. Madhavtec India (P) D-15/2, New Govindpura, Street No.9, Delhi 1,42,857 Limited – 55 8. Neelabh Engineering (P) D-15/2, New Govindpura, Street No.9, Delhi 1,42,857 Limited – 55 9. North Delhi Credit E-985, 100 Ft. Road, Near Babarpur Bus 2,85,714 Investments Limited Terminal. Shahdra, Delhi – 110032

10. Parvati Finlease Limited C-8, LGF – II, East of Kailash, New Delhi 2,87,202 TOTAL 42,87,200 The abovementioned equity shares will be locked-in for 1 year from the date of allotment in the Issue.

Notes

1. Share Capital History of the Company

Date of No. of shares Face Cumulative Offer Nature of Nature of Issue and Allotment and allotted Value no. of shares Price payment reason for Date when (Rs.) (Rs.) allotment Made fully Paid-up 29.08.2000 700 10.00 700 10.00 Cash Subscription to Memorandum of Association 31.12.2001 99, 300 10.00 1,00,000 10.00 Cheque Preferential Allotment 31.03.2002 8,30,000 10.00 9,30,000 10.00 Cheque Preferential Allotment 10.08.2002 17,47,000 10.00 26,77,000 10.00 Cheque Preferential Allotment 30.09.2002 5,00,000 10.00 31,77,000 10.00 Cheque Preferential Allotment 16.12.2002 8,62,000 10.00 40,39,000 10.00 Cheque Preferential Allotment 29.03.2003 13,78,000 10.00 54,17,000 10.00 Cheque Preferential Allotment 12.06.2003 8,70,000 10.00 62,87,000 10.00 Cheque Preferential Allotment 31.08.2003 24,74,000 10.00 87,61,000 10.00 Cheque Preferential Allotment 05.11.2003 15,75,800 10.00 1,03,36,800 10.00 Cheque Preferential Allotment 20.02.2004 21,63,200 10.00 1,25,00,000 10.00 Cheque Preferential Allotment 07.01.2005 10,00,000 10.00 1,35,00,000 10.00 Cheque Preferential Allotment 28.02.2005 15,00,000 10.00 1,50,00,000 20.00 Cheque Preferential Allotment 28.03.2005 20,38,500 10.00 1,70,38,500 20.00 Cheque Preferential Allotment 12.08.2005 * 1,00,00,000 10.00 2,70,38,500 20.00 Cheque Preferential Allotment 2,70,38,500

* 1,00,00,000 equity shares of Rs.10/- each at Rs.20/- each have been allotted to the following: (Rupees in Lacs) Entities No. of equity shares Amount Promoter Group: Bansla Finlease Limited 15,36,750 3,07,35,000 BTL Commercial Limited 4,00,700 80,14,000 BTL Investments Limited 25,50,050 5,10,01,000 BTL Sales Limited 2,55,000 51,00,000 Madhavtech India (P) Limited 75,000 15,00,000 Parvati Finlease Limited 9,25,000 1,85,00,000 Sub total (a) 57,42,500 11,48,50,000 Others: Private Corporate bodies:

Akriti Financial Services (P) Limited 20,000 4,00,000 Avisha Credit Capital Limited 24,05,000 4,81,00,000 Ferro Plast Limited 8,65,000 1,73,00,000 Master Finlease Limiteds 7,00,000 1,40,00,000 Vijay Finlease Limited 2,55,000 51,00,000 Individuals: Mr. Raj Kumar Singla 5,000 1,00,000 Ms. Mona Arora 500 10,000 Mr. Sourabh Gupta 5,000 1,00,000 Mr. S. S. Gupta 2,000 40,000 Sub total (b) 42,57,500 8,51,50,000 Total (a + b) 1,00,00,000 20,00,00,000

Funds raised from this preferential allotment have been used to partially meet the fund requirement towards the Project. For the schedule of "Objects of the Issue - Funds Deployed" please refer to page no. 29 of the Draft Red Herring Prospectus.

2. Details of increase in Authorised Capital Sr. No. Particulars of the Increase Date of Meeting Nature of Meeting (Rupees in Lacs) From To 1 10 100.00 01.03.2002 EOGM 2 100 300.00 15.05.2002 EOGM 3 300 1250.00 01.08.2002 EOGM 4 1250 1500.00 06.01.2005 EOGM 5 1500 2000.00 10.03.2005 EOGM 6 2000 6000.00 30.06.2005 EOGM

3. There has been no issue of shares for consideration other than cash / cheque.

4. The Company has not issued any Equity Shares out of the revaluation reserves.

5. As on date of filing of draft Red Herring Prospectus with SEBI, the issued capital of the Company is fully paid up.

6. Promoters' Contribution and Lock-in

a) 3 years lock-in (Promoters' contribution and lock-in in respect of promoters whose name figure in the Draft Red Herring Prospectus as Promoters) Name of the Promoter Date on which Nature of Number of Face Value Issue/trans % of post Lock-in equity shares payment Equity (Rs.) fer Price issue paid period $ were of Shares (Rs.) up capital allotted/transfe consider rred and made ation fully paid-up Sunil Jindal 29.08.2000 Cheque 100 10 10 0.0002 31.12.2001 Cheque 500 10 10 0.0010 15.04.2004 Cheque 1,20,000 10 10 0.2405 1,20,600 0.2417 3 years

Raju Bansal 12.06.2003 Cheque 25,000 10 10 0.0501 20.02.2004 Cheque 20,000 10 10 0.0401 45,000 0.0902 3 years

Bishan Bansal 12.06.2003 Cheque 25,000 10 10 0.0501 25,000 0.0501 3 years

Lalit Kumar Bansal 10.08.2002 Cheque 60,000 10 10 0.1203

05.11.2003 Cheque 1,32,500 10 10 0.2656 20.02.2004 Cheque 5,000 10 10 0.0100 1,97,500 0.3958 3 years

N. C. Bansal 16.12.2002 Cheque 30,000 10 10 0.0601 05.11.2003 Cheque 1,32,500 10 10 0.2656 20.02.2004 Cheque 10,000 10 10 0.0200 1,72,500 0.3457 3 years

Sanjana Bansal 20.02.2004 Cheque 5,000 10 10 0.0100 5,000 0.0100 3 years

Suresh Kumar Bansal 12.06.2003 Cheque 25,000 10 10 0.0501 20.02.2004 Cheque 10,000 10 10 0.0200 35,000 0.0701 3 years

Bansla Finlease Limited 10.08.2002 Cheque 2,00,000 10 10 0.4008 30.09.2002 Cheque 20,000 10 10 0.0401 16.12.2002 Cheque 4,19,500 10 10 0.8408 29.03.2003 Cheque 6,50,000 10 10 1.3027 12.06.2003 Cheque 53,000 10 10 0.1062 31.08.2003 Cheque 6,75,000 10 10 1.3528 05.11.2003 Cheque 50,000 10 10 0.1002 20,67,500 4.1436 3 years

BTL Commercial Limited 24.01.2005 Cheque 7,16,000 10 45 1.4350 10.08.2002 Cheque 27,000 10 10 0.0541 12.06.2003 Cheque 2,40,000 10 10 0.4810 20.02.2004 Cheque 1,70,000 10 10 0.3407 11,53,000 2.3108 3 years

BTL Impex (India) Limited 31.08.2003 Cheque 3,50,000 10 10 0.7015 3,50,000 0.7015 3 years

BTL Industries Limited 31.03.2002 Cheque 1,50,000 10 10 0.3006 29.03.2003 Cheque 1,88,000 10 10 0.3768 31.08.2003 Cheque 8,30,000 10 10 1.6635 05.11.2003 Cheque 3,70,800 10 10 0.7432 20.02.2004 Cheque 98,200 10 10 0.1968 16,37,000 3.2808 3 years

BTL Investments Limited 10.08.2002 Cheque 10,000 10 10 0.0200 16.12.2002 Cheque 72,500 10 10 0.1453 29.03.2003 Cheque 4,30,000 10 10 0.8618 12.06.2003 Cheque 3,10,000 10 10 0.6213 12.06.2003 Cheque 7,000 10 10 0.0140 12.06.2003 Cheque 1,000 10 10 0.0020 31.08.2003 Cheque 160,000 10 10 0.3207 20.02.2004 Cheque 175,000 10 10 0.3507 11,65,500 2.3359 3 years

BTL Sales Limited 16.12.2002 Cheque 35,000 10 10 0.0701 29.03.2003 Cheque 60,000 10 10 0.1203 31.08.2003 Cheque 95,000 10 10 0.1904

05.11.2003 Cheque 1,90,000 10 10 0.3808 15.04.2004 Cheque 1,50,000 10 10 0.3006 20.02.2004 Cheque 7,65,000 10 10 1.5332 15.04.2004 Cheque 2,50,000 10 10 0.5010 15.04.2004 Cheque 2,00,000 10 10 0.4008 17,45,000 3.4973 3 years

Madhavtech India (P) 31.03.2002 Cheque 95,000 10 10 0.1904 Limited 10.08.2002 Cheque 2,00,000 10 10 0.4008 30.09.2002 Cheque 1,30,000 10 10 0.2605 16.12.2002 Cheque 45,000 10 10 0.0902 12.06.2003 Cheque 48,000 10 10 0.0962 31.08.2003 Cheque 80,000 10 10 0.1603 05.11.2003 Cheque 50,000 10 10 0.1002 20.02.2004 Cheque 30,000 10 10 0.0601 6,78,000 1.3588 3 years

Neelabh Engineers (P) 31.03.2002 Cheque 1,25,000 10 10 0.2505 Limited 10.08.2002 Cheque 2,20,000 10 10 0.4409 30.09.2002 Cheque 30,000 10 10 0.0601 16.12.2002 Cheque 80,000 10 10 0.1603 12.06.2003 Cheque 4,000 10 10 0.0080 4,59,000 0.9199 3 years

North Delhi Credit & 10.08.2002 Cheque 1,50,000 10 10 0.3006 Investments Limited 1,50,000 10 10 0.3006 3 years

Total 1,00,05,600 20.0530 3 years $ Lock-in period shall start from the date of allotment of Equity Shares in terms of the Draft Red Herring Prospectus.

b) 1 year lock-in

Name of the Promoter Date on which Nature of Number of Face Issue/tran % of post Lock-in equity shares payment Equity Value sfer Price issue paid period $ were of Shares (Rs.) (Rs.) up capital (years) allotted/transf considera erred and tion made fully paid-up Sunil Jindal 24.01. 2005 cheque 100 10 20 0.00 24.01. 2005 cheque 100 10 20 0.00 24.01. 2005 cheque 500 10 20 0.00 24.01. 2005 cheque 6,300 10 20 0.01 15.04. 2004 cheque 9,000 10 10 0.02 16,000 0.03 1 year Bansla Finlease Limited 28.03. 2005 cheque 550,000 10 20 1.10 12.08. 2005 cheque 1536,750 10 20 3.08 2086,750 4.181 year BTL Commercial Limited 07.01. 2005 cheque 20,000 10 10 0.04 28.03. 2005 cheque 309,000 10 20 0.62 12.08. 2005 cheque 400,700 10 20 0.80

729,700 1.461 year BTL Impex (India) Limited 28.03. 2005 cheque 222,500 10 20 0.45 222,500 0.451 year BTL Investments Limited 28.03. 2005 cheque 555,000 10 20 1.11 12.08. 2005 cheque 2550,050 10 20 5.11 3105,050 6.221 year BTL Sales Limited 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 6,500 10 20 0.01 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 1,500 10 20 0.00 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 50,000 10 20 0.10 24.01. 2005 cheque 50,000 10 20 0.10 24.01. 2005 cheque 1,000 10 20 0.00 24.01. 2005 cheque 200 10 20 0.00 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 5,000 10 20 0.01 24.01. 2005 cheque 3,000 10 20 0.01 24.01. 2005 cheque ,500 10 20 0.00 24.01. 2005 cheque 250,000 10 20 0.50 28.03. 2005 cheque 185,000 10 20 0.37 12.08. 2005 cheque 255,000 10 20 0.51 847,700 1.701 year Madhavtech India (P) 07.01. 2005 cheque 130,000 10 10 0.26 Limited 12.08. 2005 cheque 75,000 10 20 0.15 205,000 0.411 year North Delhi Credit & 28.03. 2005 cheque 97,000 10 20 0.19 Investments Limited 97,000 0.191 year Parvati Finlease Limited 12.08.2005 cheque 925,000 10 20 1.85 925,000 1.851 year Akriti Financial Services (P) 12.08. 2005 cheque 20,000 10 20 0.04 Limited 20,000 0.041 year Ferro Plast Limited 12.08. 2005 cheque 865,000 10 20 1.73 865,000 1.731 year Avisha Credit Capital 12.01. 2005 cheque 50,000 10 20 0.10 Limited 12.01. 2005 cheque 200,000 10 20 0.40 28.02. 2005 cheque 1250,000 10 20 2.51 12.08. 2005 cheque 2405,000 10 20 4.82 3905,000 7.831 year Amit Goel 15.01. 2005 cheque 50,000 10 20 0.10 50,000 0.101 year Anshul Maheshwari 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10000 10 20 0.02 30,000 0.061 year Anjana Maheshwari 24.01. 2005 cheque 5,000 10 20 0.01 24.01. 2005 cheque 1,000 10 20 0.00 6,000 0.011 year Bindu Sethi 24.01. 2005 cheque 20,000 10 20 0.04

05.04. 2005 cheque 5,000 10 48 0.01 25,000 0.051 year Boats India (P) Limited 24.01. 2005 cheque 30,000 10 20 0.06 30,000 0.061 year Chander Bhan Sharma 24.01. 2005 cheque 5,000 10 20 0.01 24.01. 2005 cheque 1,000 10 20 0.00 6,000 0.01 Dayawati 24.01. 2005 cheque 5,000 10 20 0.01 5,000 0.011 year Deepak Mangla 24.01. 2005 cheque 200 10 20 0.00 24.01. 2005 cheque 200 10 20 0.00 24.01. 2005 cheque 1,000 10 20 0.00 24.01. 2005 cheque 1,000 10 20 0.00 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 8,000 10 20 0.02 20,400 0.041 year Hema Aggarwal 24.01. 2005 cheque 4,000 10 20 0.01 24.01. 2005 cheque 500 10 20 0.00 4,500 0.011 year Himanshu Jain 24.01. 2005 cheque 60,000 10 20 0.12 60,000 0.121 year Harish Kumar Maheshwari 24.01. 2005 cheque 10,000 10 20 0.02 10,000 0.021 year Kamlesh Jindal 15.01. 2005 cheque 10,000 10 44 0.02 10,000 0.021 year Kamlesh Maheshwary 24.01. 2005 cheque 20,000 10 20 0.04 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 4,000 10 20 0.01 24.01. 2005 cheque 1,000 10 20 0.00 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 5,000 10 20 0.01 70,000 0.141 year Kailash M. Mehta 24.01. 2005 cheque 5,000 10 20 0.01 24.01. 2005 cheque 1,000 10 20 0.00 6,000 0.011 year Kanika Anand 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 30,000 0.061 year Lakshmi Gupta 15.01. 2005 cheque 30,000 10 42 0.06 30,000 0.061 year Manu Consultants Limited 28.03. 2005 cheque 16,000 10 20 0.03 16,000 0.031 year Moksh Pal Singh 15.01. 2005 cheque 84000 10 41 0.17 84,000 0.171 year Manohar Lal 15.01. 2005 cheque 84,000 10 40 0.17 15.01. 2005 cheque 70,000 10 40 0.14 15.01. 2005 cheque 10,000 10 40 0.02 15.01. 2005 cheque 10,000 10 40 0.02 24.01. 2005 cheque 10,000 10 40 0.02 24.01. 2005 cheque 10,000 10 40 0.02

24.01. 2005 cheque 2,000 10 40 0.00 05.04. 2005 cheque 4,000 10 40 0.01 200,000 0.401 year Manju Rani Jain 24.01. 2005 cheque 10,000 10 20 0.02 10,000 0.021 year Mukesh Kumar Aggarwal 24.01. 2005 cheque 2,000 10 20 0.00 24.01. 2005 cheque 2,000 10 20 0.00 24.01. 2005 cheque 500 10 20 0.00 4,500 0.011 year Master Finlease Limited 24.01. 2005 cheque 30,000 10 20 0.06 24.01. 2005 cheque 270,000 10 20 0.54 24.01. 2005 cheque 500,000 10 20 1.00 24.01. 2005 cheque 200,000 10 20 0.40 24.01. 2005 cheque 150,000 10 20 0.30 24.01. 2005 cheque 100,000 10 20 0.20 28.02. 2005 cheque 250,000 10 20 0.50 28.03. 2005 cheque 700,000 10 20 1.40 2200,000 4.411 year Mona Arora 12.08. 2005 cheque 500 10 20 0.00 500 0.001 year Manish Jain 24.01. 2005 cheque 1,000 10 20 0.00 1,000 0.001 year Naresh Kumar 15.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 20,000 10 20 0.04 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 2,000 10 20 0.00 24.01. 2005 cheque 500 10 20 0.00 24.01. 2005 cheque 1,000 10 20 0.00 24.01. 2005 cheque 1,500 10 20 0.00 45,000 0.091 year Narender Kumar Singhal 15.01. 2005 cheque 10,000 10 43 0.02 24.01. 2005 cheque 10,000 10 43 0.02 24.01. 2005 cheque 10,000 10 43 0.02 30,000 0.061 year Nitesh Maheshwary 24.01. 2005 cheque 10,000 10 20 0.02 10,000 0.021 year Narender Kumar Jain 24.01. 2005 cheque 15,000 10 20 0.03 24.01. 2005 cheque 4,000 10 20 0.01 24.01. 2005 cheque 1,000 10 20 0.00 20,000 0.041 year Prem Sagar Singla 31.12. 2001 cheque 50,000 10 10 0.10 50,000 0.101 year Poonam Munjal 24.01. 2005 cheque 2,000 10 20 0.00 24.01. 2005 cheque 500 10 20 0.00 2,500 0.011 year Parveen Kumar Gupta 24.01. 2005 cheque 5,000 10 20 0.01 24.01. 2005 cheque 500 10 20 0.00 24.01. 2005 cheque 200 10 20 0.00 5,700 0.011 year Parvesh Mahajan 24.01. 2005 cheque 5,000 10 20 0.01 24.01. 2005 cheque 500 10 20 0.00 24. 01. 2005 cheque 200 10 20 0.00 5,700 0.011 year

Paramjeet Singh Bakshi 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 5,000 10 20 0.01 25,000 0.051 year Rajat Fincap (P) Limited 30.09. 2002 cheque 50,000 10 10 0.10 29.03. 2003 cheque 50,000 10 10 0.10 20.02. 2004 cheque 145,000 10 10 0.29 245,000 0.491 year Raju Gupta 15.01. 2005 cheque 20,000 10 42 0.04 20,000 0.041 year Rakesh Maheshwary 24.01. 2005 cheque 10,000 10 20 0.02 10,000 0.021 year Rajinder Maheshwary 24.01. 2005 cheque 10,000 10 20 0.02 10,000 0.021 year Rai Chand Jain 24.01. 2005 cheque 2,000 10 20 0.00 2,000 0.001 year Rajiv Arora 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 2,000 10 20 0.00 24.01. 2005 cheque 500 10 20 0.00 12,500 0.031 year Ramesh Maheshwari 24.01. 2005 cheque 2,000 10 20 0.00 24.01. 2005 cheque 1,000 10 20 0.00 3,000 0.011 year Rakesh kumar Mahajan 24.01. 2005 cheque 5,000 10 20 0.01 24.01. 2005 cheque 500 10 20 0.00 24.01. 2005 cheque 200 10 20 0.00 5,700 0.011 year Raj Kumar Singla 12.08. 2005 cheque 5,000 10 20 0.01 5,000 0.011 year Rita Goyal 28.03. 2005 cheque 5,000 10 20 0.01 5,000 0.011 year Surbhi Gupta 15.01. 2005 cheque 10,000 10 42 0.02 15.01. 2005 cheque 10,000 10 42 0.02 15.01. 2005 cheque 10,000 10 42 0.02 30,000 0.061 year Sahil Gupta 15.01. 2005 cheque 10,000 10 42 0.02 15.01. 2005 cheque 10,000 10 42 0.02 20,000 0.041 year Sukesh Gupta 15.01. 2005 cheque 20,000 10 43 0.04 15.01. 2005 cheque 10,000 10 43 0.02 30,000 0.061 year Sheenam Maheshwary 24.01. 2005 cheque 5,000 10 20 0.01 5,000 0.011 year Smita Arora 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 2,000 10 20 0.00 24.01. 2005 cheque 3,000 10 20 0.01 24.01. 2005 cheque 1,000 10 20 0.00 16,000 0.031 year Shipra Sharma & Satish 24.01. 2005 cheque 10,000 10 20 0.02 Sharma 24.01. 2005 cheque 1,000 10 20 0.00 11,000 0.021 year Satish Sharma (HUF) 24.01. 2005 cheque 10,000 10 20 0.02

24.01. 2005 cheque 4,000 10 20 0.01 14,000 0.031 year Sandeep Kumar Maheshwary 24.01. 2005 cheque 5,000 10 20 0.01 5,000 0.011 year Sneh Lata 24.01. 2005 cheque 2,000 10 20 0.00 cheque 2000 0.001 year Sucon (India) (P) Limited 28.03. 2005 cheque 76,500 10 20 0.15 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 2,000 10 20 0.00 24.01. 2005 cheque 1,000 10 20 0.00 24.01. 2005 cheque 500 10 20 0.00 100,000 0.201 year Sunita Maheshwari 24.01. 2005 cheque 2,000 10 20 0.00 2,000 0.001 year Suresh Maheshwari 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 24.01. 2005 cheque 10,000 10 20 0.02 30,000 0.061 year Shashi Mehta & Kailash M. 24.01. 2005 cheque 5,000 10 20 0.01 Mehta 24.01. 2005 cheque 1,000 10 20 0.00 6,000 0.011 year Sanjeev Kumar Khanna 24.01. 2005 cheque 10,000 10 20 0.02 10,000 0.021 year Suman Gupta 24.01. 2005 cheque 5,000 10 20 0.01 24.01. 2005 cheque 500 10 20 0.00 24.01. 2005 cheque 200 10 20 0.00 5,700 0.011 year Sanjay Mittal 28.03.2005 cheque 2,500 10 20 0.01 2,500 0.011 year S. C. Aggarwal 28.03.2005 cheque 3,000 10 20 0.01 3,000 0.011 year Subhash Goel 28.03.2005 cheque 5,000 10 20 0.01 5,000 0.011 year Shyam Sunder Garg 28.03.2005 cheque 3,000 10 20 0.01 3,000 0.011 year Sourabh Gupta 12.08. 2005 cheque 5,000 10 20 0.01 5,000 0.011 year S. S. Gupta 12.08. 2005 cheque 2,000 10 20 0.00 2,000 0.001 year Vijay Finlease Limited 12.08. 2005 cheque 2,55,000 10 20 0.51 2,55000 0.511 year Vikas K. Modi 24.01. 2005 cheque 5,000 10 20 0.01 5,000 0.011 year Varsha Gupta 15.01. 2005 cheque 20,000 10 43 0.04 20,000 1 year $ Lock-in period shall start from the date of allotment of Equity Shares in terms of the Draft Red Herring Prospectus

7. The Promoter’s contribution is not being brought-in less than the specified minimum lot of Rs. 25,000/- per application from each individual and Rs.1,00,000/- from companies.

8. The Company, its Promoters, Directors and Book Running Lead Manager have not entered into any buy-back, stand-by and similar arrangements for purchase of securities being offered through the Draft Red Herring Prospectus.

9. Currently there are no shares under lock-in.

10. The Equity Shares to be held by the Promoter Group under lock-in period shall not be sold / hypothecated / transferred during the lock-in period. However, the Equity Shares held by Promoter Group, which are locked in, may be transferred to and among Promoter Group or to a new promoter or persons in control of the Company, subject to the continuation of lock-in with the transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 as applicable. The Promoter Group may pledge their Equity Shares with banks or financial institutions as additional security for loans whenever availed by them from banks or financial institutions.

11. In case of over-subscription, allotment will be on proportionate basis as detailed in para "Statutory and other Information - Basis of Allotment" on page no.143 of the Draft Red Herring Prospectus. An over- subscription to the extent of 10% of the Net Issue to public can be retained for the purpose of rounding off to the nearer multiple of [•] (which is minimum allotment lot), while finalising the allotment. Consequently, the actual allotment may go up by a maximum of 10% of the Net Issue to public, as a result of which, the post Issue paid up capital would also increase by the excess amount of allotment so made. In such an event, the shares held by the Promoter and subject to lock-in shall be suitably increased; so as to ensure that 20% of the post Issue paid-up capital is locked in.

12. The securities through this Public Issue shall be made fully paid up or will be forfeited within 12 months from the date of allotment of the securities offered through the Draft Red Herring Prospectus.

13. Unsubscribed portion in any Reserved Category would be added to any other Reserved Category. The unsubscribed portion, if any, after such interse adjustments among the Reserved Categories shall be added back to the Net Issue to the public and first be distributed equally between the Retail Portion and the Non-Institutional Portion in accordance with the description in section titled "Statutory and other Information - Basis of Allotment” as described in page no. 143.

14. Undersubscription:

Unsubscribed portion in any Reserved Category may be added to any other Reserved Category

The unsubscribed portion, if any, after such interse adjustments among the Reserved Categories shall be added back to the Net Issue to the public

In case of undersubscription in the Net Issue to the public portion, spillover to the extent of undersubscription shall be permitted from the Reserved category to the Net Issue portion.

15. Details of major shareholders:

a) Top ten shareholders as on date of filing of the Red Herring Prospectus with the RoC

Name of shareholder No. of Shares BTL Investments Limited 42,70, 550 Bansla Finlease Limited 41,54,250 Avisha Credit Capital Limited 39,05,000 BTL Sales Limited 25,92,700 Master Finlease Limited 22,00,000 BTL Commercial Limited 18,82,700 BTL Industries Limited 16,37,000 Parvati Finlease Limited 9,25,000 Madhavtech India (P) Limited 8,83,000 Ferro Plast Limited 8,65,000

b) Top ten shareholders ten days prior to the date of filing of the Red Herring Prospectus with the RoC Name of shareholder No. of shares BTL Investments Limited 42,70, 550 Bansla Finlease Limited 41,54,250 Avisha Credit Capital Limited 39,05,000 BTL Sales Limited 25,92,700 Master Finlease Limited 22,00,000 BTL Commercial Limited 18,82,700 BTL Industries Limited 16,37,000 Parvati Finlease Limited 9,25,000 Madhavtech India (P) Limited 8,83,000 Ferro Plast Limited 8,65,000

c) Top ten shareholders two years prior to the date of filing of the Red Herring Prospectus with the RoC Name of shareholder No. of shares Bansla Finlease Limited 20,17,500 BTL Industries Limited 14,68,000 BTL Impex (India) Limited 10,66,000 BTL Investments Limited 10,02,500 Madhavtech India (P) Limited 5,98,000 BTL Commercial Limited 4,67,000 Neelabh Engineers (P) Limited 4,59,000 BTL Sales Limited 1,90,000 Rajat Fincap (P) Limited 1,84,000 North Delhi Credit & Investments Limited 1,50,000

16. Aggregate shareholding of the Promoter Group and of the Directors of the Promoters, where the promoter is a company is as follows:

Particulars Pre-Issue as on September 06, Post-Issue 2005 No. of Shares @ % Holding No. of Shares @ % Holding Rs. 10/- each Rs. 10/- each a. Promoter 1,81,600 0.68 1,81,600 0.36 b. Immediate Relatives of the 4,35,000 1.61 4,35,000 0.87 Promoter c. Companies in which 10% or Nil Nil Nil Nil more of the share capital is held by the Promoter / an immediate relative of the Promoter / a firm or HUF in which the Promoter or any one or more of his immediate relatives is a member d. Companies in which Nil Nil Nil Nil Company mentioned in c. above holds 10% or more of the share capital e. HUF or firm in which the Nil Nil Nil Nil aggregate share of the promoter and his immediate relatives is equal to or more than 10% of the total f. All persons whose 1,76,23,700 65.18 2,23,45,900 44.79 shareholding is aggregated for the purpose of disclosing in the prospectus as "Shareholding of the

Promoter's Group". Total 1,82,40,300 67.46 2,25,27,500 45.15

17. Shareholding pattern of the Company as on September 11, 2005is as follows: Name of shareholders No. of equity shares of Rs.10 % of shareholding each Promoters Mr. Sunil Jindal 1,36,600 0.51 Mr. Raju Bansal 45,000 0.17 I 1,81,600 0.67

Promoter Group: Corporate bodies: BTL Investments Limited 42,70,550 15.79 Bansla Finlease Limited 41,54,250 15.36 BTL Commercial Limited 18,82,700 6.96 BTL Impex (I) Limited 5,72,500 2.12 BTL Industries Limited 16,37,000 6.05 BTL Sales Limited 25,92,700 9.59 North Delhi Credit & Investments Limited 2,47,000 0.91 Madhavtech India (P) Limited 8,83,000 3.27 Neelabh Engineers (P) Limited 4,59,000 1.70 Parvati Finlease Limited 9,25,000 3.42 II 1,76,23,700 65.18 Individuals: Mr. Lalit Bansal 1,97,500 0.73 Mr. N. C. Bansal 1,72,500 0.64 Mr. Bhishan Bansal 25,000 0.09 Mr. Suresh Bansal 35,000 0.13 Ms. Sanajna Bansal 5,000 0.02 III 4,35,000 1.61 Sub-total (a) (I+II+III) 1,82,40,300 67.46

Others Corporate Bodies 76,06,000 28.13 Individuals 11,78,200 4.36 HUF 14,000 0.05 Sub-total (b) 87,98,200 32.54 Total 2,70,38,500 100.00

18. Pre and post Issue shareholding pattern of the Company is as follows: Pre Issue Post-Issue Category No. of shares % No. of shares % Promoters 1,81,600 0.67 1,81,600 0.36 Promoter Group 1,80,58,700 66.79 2,23,45,900 44.79 Others 87,98,200 32.54 1,33,69,640 26.80 Public 0 0.00 1,39,98,560 28.06 TOTAL 2,70,38,500 100.00 4,98,95,700 100.00

19. There have been no transactions by the Promoters, their relatives and associates, and the Directors of the Company, directly or indirectly, in the Equity Shares of the Company during the last 6 months.

20. The Company has not granted any options or shares of the Company under any scheme of Employee Stock Options or Employee Stock Purchase to its employees.

21. The Company does not have any proposal, intention, negotiation or consideration to alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of Equity Shares or any other securities within a period of six months from the date of opening of the present Issue or from the date the application moneys are refunded on account of failure of the Issue.

22. However, if business needs of the Company so require, the Company may alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities during the period of six months from the date of listing of the Equity Shares issued under the Red Herring Prospectus or from the date the application moneys are refunded on account of failure of the Issue, after seeking and obtaining all the approvals which may be required for such alteration.

23. At any given time, there shall be only one denomination of the Equity Shares. The Company shall comply with such disclosure and accounting norms as may be specified by the SEBI from time to time.

24. The number of shareholders as on September 11, 2005 is 87 (Eighty Seven).

25. The promoters, directors and Book Running Lead Managers to the Issue have not paid any amount, whether direct or indirect and in cash or kind, in the nature of discount, commission, allowance or otherwise to any person.

OBJECTS OF THE ISSUE

The object of the issue is to raise funds for the proposed expansion plans of the Company. The object is also to create a public trading market for its shares by listing them on the Stock Exchanges, which will enhance our visibility and brand name and enable us to use our equity shares for strategic growth opportunites. The net proceeds from the Issue after deducting underwriting Commission and management fees, brokerage; fees to various advisors and all other Issue related expenses from the Issue of shares are intended to be deployed in setting up the Project in the following manner:

A. Owned Model: (i) Funding the capital expenditure required for the expansion; (ii) To meet working capital requirement;

B. Lease Model: Leased Premises including SRS Value Bazaars/ Food Courts/ Restaurants/Multiplexes/cinemas or any combination thereof: (i) To meet capital expenditure (ii) To meet working capital requirement;

C. Franchise Model (i) To meet expenditure towards human resource training, software development etc.

The other object of the Issue is to get the shares listed on the Stock Exchanges and to provide liquidity to our existing investors.

The main object clause and objects incidental or ancillary to the main objects clause of the Memorandum of Association of the Company enables the Company to undertake the existing activities and the activities for which funds are being raised by the Company, through the Issue.

The Cost of Project and Funds Requirement as appraised by UTI Bank Limited is as follows:

Disclaimer Clause: This Project Appraisal Report (Report) contains proprietary and confidential information regarding SRS Entertainment Limited (SRS). The Report has been prepared by UTI Bank Limited (UTIB) based on the information provided by SRS and the published information available.

The financial projections in the Report have been prepared for the limited purpose of circulation among the Banks/FIs/Institutions who have shown their interest in financing the project. The financial projections represent, to the best of knowledge and judgment, SRS’s expected financial position, results of operations and cash flow situation for the projection period. These projections are subject to changes in economic conditions, legislation and other force-majeure circumstances.

UTIB has not independently verified all of the information contained in this Report and the work performed by UTIB is not in the nature of audit or due-diligence. Neither UTIB, nor any of the directors, employees or advisors make any expressed or implied representation or warranty and no responsibility or liability is accepted by any of them with respect to the estimates or forecasts set forth in this Report or the underlying assumptions on which they are based or any credit or investment decision taken on the basis of this Report.

This Report is furnished on strictly confidential basis and is for the sole use of the person / company to whom it is addressed. Neither this Report, nor the information contained herein, may be reproduced or passed to any person or used for any other purpose other than stated above. (Rupees in Lacs) A Project Cost I Capital Expenditure Sr. No. Model Cost per location No. of locations Amount 1. Ownership 2558.00 3 7674.00 2. Lease 638.00 4 2552.00 3. Franchise - 5 100.00

10326.00 II Working capital requirement 906.30 III Contingencies 297.70 Sub total (a) 11530.00

B Issue Expenses 470.00 Sub total (b) 470.00 Grand Total (a + b) 12000.00

Detailed break-up of funds requirement

A. Project Cost

I. Capital Expenditure

1. Ownership Model The Company proposes to buy land and construct a structure on it for Multiplexes, which would also include Cineplexes, shopping mall, lobby etc. The land is being located at a prime location which is convenient to the customers and has a sufficient parking place. The structure would be built along with the interior designing, furniture and fixtures and equipment which would be having aesthetic looks and design.

SRSEL proposes to own 3 (three) of such Multiplexes. Accordingly, total cost of construction of the three owned Multiplexes is estimated to be: (Rupees in Lacs) Sr. No. Cost Head Cost per facility Cost of 3 facilities 1. Property 1920.00 5760.00 2. Theatres - SRS Cinemas 306.00 918.00 3. SRS Value Bazaar 208.00 624.00 4. 7 Dayz restaurants 124.00 372.00 Total 2,558.00 7674.00

2. Lease Model The total cost estimated by SRSEL to implement the leased model at the proposed locations is as under: (Rupees in Lacs) Sr. No. Cost Head Cost per facility Cost of 4 facilities 1. Theatres - SRS Cinemas 306 1224 2. SRS Value Bazaar 208 832 3. 7 Dayz Restaurants 124 496 Total 638 2552

3. Franchise Model The total cost for implementing the franchise model is estimated as Rs.100 Lacs. This would be utilised towards software development costs and providing manpower training. (Rupees in Lacs) Table Page Amount No. of Total Sr. Referenc No. per locations no. Cost Head e location Installation of software, radio O 60 19.60 5 98.00 connectivity and training & 1 development 2 Miscellaneous Expenses .40 5 2.00 Total Cost 20.00 5 100.00

Break up of cost (facility wise)

The owned Multiplexes would contribute a major head for the Project cost and the same for each proposed site, would be as follows:

Owned Multiplexes (Rupees in Lacs) Table Page Amount No. of Total Reference Nos. per locations Cost Head location 1 Land 320.00 3 960.00 Building including common A 52 972.90 3 2918.70 2 Interiors 3 Plant & Machinery B 52 336.00 3 1008.00 4 Air Conditioning C 53 125.00 3 375.00 5 Lifts & Escalators G 55 93.10 3 279.30 6 Architect Fees K/1 57 25.00 3 75.00 Misc. Expenses 3% of Item No. 48.00 3 144.00 7 (2, 3,4 & 5) Total Cost 1,920.00 3 5760.00

Cineplex - SRS Cinemas (Rupees in Lacs) Table Page No. of locations Total Cost Head Reference No. Amount Owned Lease Location Amount Interior, Furniture and Including H / 1 & 2 55 52.80 3 4 7 369.60 electrical Fixture & 1 Fire Fighting 2 Equipment cost P 60 147.60 3 4 7 1033.20 Computers, Plazamas, Display L 57 40.00 3 4 7 280.00 Monitors, & Soft 3 wares Etc. 4. Theaters Seats H / 3 55 30.00 3 4 7 210.00 5. Air Conditioning D 53 30.60 3 4 7 214.20 6. Architect Fees K/2 57 5.00 3 4 7 35.00 Total Cost 306.00 3 4 7 2142.00 Owned 306.00 3 - 3 918.00 Lease 306.00 - 4 4 1224.00

SRS Value Bazaar (Rupees in Lacs) Table Page No. of locations Total Cost Head Reference No. Amount Owned Lease Location Amount Interior, Furniture I/1 & 2 56 47.00 and Including 3 4 7 329.00 1 electrical Fixture Air Conditioning E 54 27.20 3 4 7 190.40 2 ducting etc. Computers, M 58 40.00 Plazams, Soft 3 4 7 280.00 wares, Monitors 3 etc. 4. Equipments I/3 56 25.00 3 4 7 175.00 Civil Work & Fire I/4 56 64.80 Fighting, Wooden Partitions, 3 4 7 453.60 Individual Counter 5. & Racks 6. Architect Fees K/3 57 3.00 3 4 7 21.00 7. Miscellaneous 1.00 3 4 7 7.00

Expenses Total Cost 208.00 3 4 7 1456.00 Owned 208.00 3 - 3 624.00 Lease 208.00 - 4 4 832.00

7 Dayz Food Court/Restaurants

(Rupees in Lacs) Table Page No. of locations Total Cost Head Reference No. Amount Owned Lease Location Amount Interior, Furniture J/1 56 41.25 3 4 7 288.75 and Including 1 electrical Fixture 2 Air conditioning F 54 6.80 3 4 7 47.60 Computer, N 59 20.00 3 4 7 140.00 monitors & 3 Palazama 4 Kitchen Equipment J/2 56 41.20 3 4 7 288.40 Seating Chairs & J/3 56 3.00 3 4 7 21.00 5 Tables Civil Work J/4 56 9.75 3 4 7 68.25 including Fire Fighting & 6 counters 7 Architect Fees K/4 57 2.00 3 4 7 14.00 Total Cost 124.00 3 4 7 868.00 Owned 124.00 3 - 3 372.00 Lease 124.00 - 4 4 496.00

II. Working Capital Requirement (Rupees in Lacs) Particulars Cost Per Location Total Cost SRS Value Bazaar Stock 106.08 742.56 Trade Debtors 62.40 436.80 Less: Trade Creditors 42.37 296.58 Sub-total (a) 126.11 882.78 7 Dayz Stock 3.36 23.52 Sub-total (b) 3.36 23.52 Total 129.47 906.30 Margin Funding from Term Loan 32.37 225.00 Out of the total requirement of Rs. 906.30 Lacs towards the working capital, Rs.225 Lacs will be utilised from the term loan.

III. Contingencies The company estimates contingency of Rs. 297.70 Lacs which approx. is 3% of the total capital cost of the Project taking in view of escalation of the cost of project.

B. Issue Expenses Issue expenses to be met out of the funds raised from the Issue is estimated at Rs.470 Lacs. For details on Issue expenses please refer to “ General Information – Issue Expenses” on page no. 122 of the Draft Red Herring Prospectus.

Appraisal The Project has been appraised by UTI Bank Limited for meeting the debt requirement for the Project.

Means of Finance (Rupees in Lacs) Sr. No. Means Project Cost a. Equity: i. Preferential Allotment (1) 2499.99 ii. IPO Proceeds [•] b. Debt (2) 2000.00 c. Internal Accruals (3) Balance Total [(a) + (b) + (c)] 12000.00

(1) Preferential allotment refers to the preferential allotment of 1,00,00,000 Equity Shares of Rs. 10/- each at Rs.20/- each made by the Company on August 12, 2005. For details on the allotment please refer to the section "Capital Structure - Share Capital History of the Company " on page no. 11 and "Legal Information - Material Developments" on page no. 111 of the Draft Red Herring Prospectus. The amount of Rs.2000 Lacs so raised have been deployed in the Project. For details on deployment of the same please refer to the section titled “Introduction - Objects of the Issue - Funds Deployed” on page no. 29 of the Draft Red Herring Prospectus. (2) SRSEL has received the in-principal approval for the debt component of Rs.2000 Lacs from UTI Bank Limited.

(3) If funds raised from this IPO are in short of our requirement to meet the proposed expansion programme, such amount will be met through the internal accruals of the Company.

In the event that funds raised from the IPO are in excess of our stated requirement, the same will be used as follows: a) Further expansion plans of the Company over and above the Project, b) Branding of our SRS Multiplex, SRS Value Bazaars and SRS Cinemas to gain mind-share of customers and create customer loyalty, and c) Advertising and promotional campaigns to earn local market-share and improve profitability

Schedule of Implementation as estimated by the Company

City Owned Leased Franchise Mall SRS Food SRS SRS SRS Food SRS Restaurant/ Bazaar Court Cinema Cinema Bazaar Court Cinem Food Court a Agra Sep’ 07 Sep’ 07 Sep’ 07 Sep’ 07 - - - - -

Ludhiana Sep’ 07 Sep’ 07Sep’ 07 Sep’ 07 - - - - Muzaffarnagar Mar' 08 Mar' 08 Mar’ 08 Mar' 08 - - - -

Gurgaon(1) - - - - Mar’ 06 - Mar’ 06 - -

Gurgaon(2) - - - - Mar' 07 - Mar' 07 - -

Jodhpur - - - - Mar’ 07 Mar’ 07 Mar’ 07 - -

Amritsar - - - - Sep’ 07 - Sep’ 07- -

Ambala - - - - Sep’ 06 - Sep’ 06 Sep’ 06

Jalandhar - - - - - Sep’ 07 - Sep’ 07 Sep’ 07

Jaipur ------Mar’ 07Mar’ 07

Meerut - - - - - Sep’ 07 - Sep’ 07 Sep’ 07

Panipat ------Sep’ 07 Sep’ 07

Funds Deployed The Company has deployed Rs.1997.03 Lacs towards Project cost, the break-up of which, as certified by T. K. Gupta and Associates, Chartered Accounts dated August 20, 2005 is provided below: (Rupees in Lacs) Sr. No. Particulars Amount 1 Advance to Era Infrastructure Limited 840.00 2 Advance to Ayushi Steel Co. (P) Limited 400.00 3 Advance to J V Steel Traders 75.00 4 Advance to Kanika Strips (P) Limited 253.00 5 Advance to Mani Mahesh Metals (P) Limited 40.00 6 Advance to SRS Buildcon (P) Limited 250.00 7 Advance to Tarang Buildcon P Limited 100.00 8 Omaxe Construction Limited 1.51 9 Tulip Info Sevices (P) Limited 2.51 10 P R infrastructure Limited 1.51 11 Issue related expenses 33.50 (Advance to Issue management team, RoC etc.) Total 1997.03

Sources of financing of funds already deployed The Company has made a preferential allotment of 1,00,00,000 Equity Shares of Rs. 10/- each at Rs.20/- each on August 12, 2005 to its Promoters, Promoter Group and others. The same has been detailed in the section titled "Capital Structure - Share Capital History" on page no. 11 of the Draft Red Herring Prospectus.

Details of Balance Fund Deployment (Rupees in Lacs) Activities Total Already Balance Amount Project Spent/Give Cost n as Advance upto August 22, 2005 Setting Up of 31.3.2006 31.3.2007 31.3.2008 31.3.2009 Multiplexes – 5760.00 1958.00 1210.00 752.00 1840.00 0.00 owned SRS Cinemas 1890.00 5.53 484.47 1200.00 458.00 0.00 SRS Value 1456.00 0.00 140.00 810.00 500.00 0.00 Bazaar 7 Dayz 868.00 0.00 200.00 600.00 68.00 0.00 Restaurants Screen on 2142.00 0.00 50.00 50.00 0.00 0.00 Franchises Basis Issue Expenses 470.00 33.50 436.50 0.00 0.00 0.00 Contingency 297.70 0.00 0.00 0.00 0.00 297.70 Working 906.30 0.00 106.30 400.00 400.00 0.00 Capital Requirement Total 12000.00 1997.03 2627.27 3812.00 3266.00 297.70

Interim use of Funds Pending utilization of the proceeds out of the Issue for the purposes described above, the Company intends to temporarily invest the funds in high quality, interest /dividend bearing short term / long term liquid instruments

including deposits with banks for the necessary duration. Such investments would be in accordance with the investment policies approved by the Board of Directors from time to time.

BASIS OF ISSUE PRICE

Qualitative Factors The Company is strategically positioned to leverage its strength in the domestic market, due to its competitive strengths that include the following:

1. SRS Entertainment Limited is an ISO: 9001:2000 certified Company.

2. Ability to identify locations: One of the key factors for the success of any Multiplex is its location. The Company believes that its skill in identifying locations is one of its key strengths. The Company's management comprises of persons experienced in project conceptualisation and implementation.

3. Strong project management skills: The Company’s management team comprises of young and dynamic individuals. They preempted the changing trends of the economy and the growing aspirations of the Indian population. Therefore, the Company’s first Multiplex, SRS Multiplex is a one of its kind mall in Faridabad, India. The credit for its planning, execution and successful implementation lies on the shoulders of the Company's management and their ability to conceptualise and bring to reality the dream Project of SRS Multiplex.

4. Capital-efficient project design and execution: The Company's projects are planned and conceived in a manner that each location would be profitable on a stand alone basis. Apart from standalone profitability of each site, it also strives efficient use of capital. This is because the Company has examined the demographic and economic bounty at each location before deciding upon the nature of arrangement and facilities to be made available at respective locations.

5. Focus: The Company has focused, developed and maintained a 'family outing' approach while setting up SRS Multiplex. There is something of entertainment for everyone. E.g., 3 screen Cineplex for the entire family to watch movies together, Dazzel Resto Bar for the young-at-heart, mehndi corner for ladies, Little Freedom for kids etc. This approach not only gels with the Company’s concept of entertainment but also is a mechanism to add multiple revenue streams and de-risk the business model.

6. Selection of brands: Carrying the Company's focus forward, the selection of brands operating out of SRSM has been done in a way so as to appeal the middle and upper middle class population. There is a kids zone for children, for men there is a one big mega store named Planet Fashion that houses brands like Louis Philippe, Van Heusen, Allen Solly and Oswals, women focused brands like Sangini Jewelers, Shringar Place, Nari Collection and Silver and Chant and many brands that enjoy popularity among all genders and age groups like Rayban, Archies, Titan and Music World. For the ones with a sensitive taste bud, there is choice of McDonalds, Yellow Chilly, Pizza Hut, Dazzle Bar, 7 Dayz, Cowboyz and Khana Karkhana.

7. Marketing strength: The Company believes that SRS Multiplex has been accepted in Faridabad. It enjoys strong brand recall due to marketing through newspaper ads, radio spots, direct mailers and the use of promotions like paid previews, contests, and blood donation campaigns. Premieres of films are also used as an important marketing tool.

Quantitative Factors SRSEL was incorporated August 29, 2000, but the commercial operations of its first Multiplex, SRS Multiplex commenced on November 12, 2004. Therefore, computing ratios related to profitability, e.g. EPS and RoNW, are not relevant from F.Y 2000 to F.Y 2004.

1. Financial Performance (Rupees in Lacs) Particulars Quarter ending For the year ended March 31, June 30, 2005 2005 * 2004 2003 Sales 601.58 765.36 0.00 1.13

Profit after Tax 231.27 219.09 0.00 0.04 Equity Capital 1848.04 1739.60 1250.00 541.70 Reserves and Surplus 804.26 572.98 0.04 0.04 * The period for which the revenue earned is for 140 days from 12th November 2004 to 31st March 2005

2. Adjusted Earnings Per Share (EPS) EPS Weight Quarter ended June 30, 2005 (1) 5.43 2 F.Y 2005 (2) 4.43 1 Weighted Average EPS 5.10 (1) Annualised Basic and Diluted EPS (2) The period for which the revenue earned is for 140 days and EPS has been annualised

3. Price/ Earning Ratio (P/E) in relation to Issue Price Based on Weighted Average EPS [•] x EPS as on June 30, 2005 [•] x

There are no comparable companies that operate in entertainment cum retail sector and the real estate sector similar to that of SRSEL and currently listed in India. Therefore, comparison of industry P/E is not possible.

4. Return on Networth (RoNW) RoNW Weight June 30, 2005 (1) 35.08% 2 F.Y 2005 (2) 25.44% 1 Weighted Average RoNW (%) 31.87% (1) Annualised Basic and Diluted EPS (2) The period for which the revenue earned is for 140 days and EPS has been annualised

5. Minimum Return on Total Net Worth post-Issue to maintain pre-Issue EPS is [•]

6. Book Value per share (BVPS)

BVPS As at Quarter ended June 30, 2005 15.47 As at March 31, 2005 13.50 After the Issue [•]

Issue Price = [•]

7. Comparison of Accounting Ratios with Peers

There are no companies which are strictly comparable with SRSEL. However, following companies have been considered for the purpose of comparison of ratios: Parameter Adlabs Films Shoppers' Stop (Figures as of March 31, 2004) EPS (Rs./unit) 7.88 2.19 Book Value (Rs./unit) 48.76 14.31 Return on Networth (%) 12.39 14.30 P/E Multiple** 57.70 352.80 **Based on September 06, 2005 closing prices as available on Capitaline Plus

8. The face value of the Equity Shares is Rs.10 each

9. Issue Price is [•] times the Issue Price at the lower end of the price band and [•] times at the higher end of the price band.

The final price would be determined on the basis of the demand from the investors.

TAX BENEFITS

To The Board of Director SRS Entertainment Limited E-18, Nehru Ground NIT Faridabad

Dear Sir,

As required, we are giving here under a statement of possible Tax benefits available to M/s SRS Entertainment Limited (formerly known as SRS Commercial Limited) and its shareholders.

We hereby report that the enclosed annexure states the possible tax benefits available to M/s SRS Entertainment Limited (formerly Known as SRS Commercial Limited) (the "Company”) and its shareholders under the current direct tax laws. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed herein are not exhaustive.

This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue.

We do not express any opinion or provide any assurance as to whether: The Company or its shareholders will continue to obtain these benefits in future; or The conditions prescribed for availing the benefit have been / would be met with.

The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and the interpretation of current tax laws.

For T. K. GUPTA & ASSOCIATES

T. K. GUPTA (PARTNER)

Date: August 29, 2005 Place: New Delhi

Benefits available to the Company Under the Income Tax Act, 1961.

1. Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in section 115-O of the Act is exempt from income tax in the hands of share holders.

2. As per the provisions of section 10(38), long term capital gain arising to the share holders from the sale/transfer of long term capital assets being an Equity Shares in any company or unit of an equity oriented mutual fund ( i.e. a capital assets held for the period of 12 months or more) entered into a recognized stock exchange in India and being such transaction, which chargeable to security transaction tax is exempt from tax

3. In terms of Securities Transaction Tax as enacted by Chapter VII of the Finance (No.2) Act, 2004, transactions for purchase and sale of the securities in the recognized stock exchange by the shareholder, shall be chargeable to securities transaction tax. As per the said provisions, any delivery based purchase and sale of equity share in a company through the recognized stock exchange is liable to securities transaction tax @ 0.075% of the value payable by both buyer and seller (0.1% with effect from 1 June, 2005 as per the Finance Act, 2005). The non-delivery based sale transactions are liable to tax @ 0.015% of the value payable by the seller (0.02% with effect from 1 June, 2005 as per the Finance Act, 2005).

4. In terms of section 88E of the Act, the securities transaction tax paid by the share holder in respect of taxable securities transaction entered into in the course of business would be eligible for rebate from the amount of income-tax on the income chargeable under the head ’Profit and gains under Business or profession’ arising from taxable securities transactions as such no deduction in respect amount paid on account of securities transaction tax will be allowed in computing the income chargeable to tax as capital gain.

5. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the Act, the Company would be entitled to exemption from tax on gains arising from transfer of the long term capital asset (not covered by section 10 (38) if such capital gain is invested in any of the long-term specified assets within a period of 6 months after the date of such transfer for a period of at least 3 years, in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long- term specified asset is transferred or converted into money.

6. Under section 54ED of the Act and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under section 10(38) of the Act) on the transfer of investment in shares will be exempt from capital gains tax if the capital gains are invested in shares of an Indian Company forming part of an eligible public issue, within a period of 6 months after the date of such transfer and held for a period of at least one year. Eligible public issue means issue of equity shares which satisfies the following conditions, namely - a) the issue is made by a public company formed and registered in India; b) the shares forming part of the issue are offered for subscription to the public; There is a legal uncertainty over whether the benefit under this Section can be extended to shares forming part of the offer for sale by the selling shareholders.

7. As per the provisions of section 111 A, Short Term capital gains arising from the transfer of Equity Shares in any company through a recognized stock exchange or from the sale of units of equity-oriented mutual fund shall be subject to tax @ 10% (plus applicable service tax & education cess) provided such transaction is subject to Securities Transaction Tax.

8. Under Section 112(1)(b) of the Act and other relevant provision of the Act, long-term capital gains [not covered under section 10(38) arising on transfer of share in the company, if share are held for a period exceeding 12 months, shall be taxed at a rate 20% (plus applicable surcharge and education cess) after indexation as provided in the proviso to the section 48 or at 10% (plus applicable surcharge and education cess) (without indexation), at the option of share holder.

Benefits available to the Members of the company Under the Income Tax Act, 1961.

1. Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in section 115-O of the Act is exempt from income tax in the hands of share holders.

7. Under Section 54F of the Act, where in case of individual or HUF capital gain arising from transfer of long term capital assets [other than a residential house and those exempt u/s10(38) ] then such capital gain, subject to the conditions to the extent specified there in, will be exempt if the net sales consideration from such transfer is utilized for purchase of residential house property with in a period of one year before or two year after the date on which transfer took place or for construction of residential house property with in period of three years after the date of transfer.

8. As per the provisions of section 111 A, Short Term capital gains arising from the transfer of Equity Shares in any company through a recognized stock exchange or from the sale of units of equity-oriented mutual fund shall be subject to tax @ 10% (plus applicable service tax & education cess) provided such transaction is subject to Securities Transaction Tax.

9. Under Section 112(1)(b) of the Act and other relevant provision of the Act, long-term capital gains [not covered under section 10(38) arising on transfer of share in the company, if share are held for a period exceeding 12 months, shall be taxed at a rate 20% (plus applicable surcharge and education cess) after

indexation as provided in the proviso to the section 48 or at 10% (plus applicable surcharge and education cess) (without indexation), at the option of share holder.

10. In accordance with the provisions of Section 10(32) of the Act, any income of minor children clubbed with the total income of the parent under Section 64(1A) of the Act will be exempt from tax to the extent of Rs. 1,500 per minor child per year.

Benefits available to Mutual Funds

1. In case of a shareholder being a Mutual fund, as per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds registered with SEBI / regulation thereunder or authorised by the Reserve Bank of India, subject to the conditions as the Central Government may by notification in the Official Gazette specify in this behalf, would be exempt from Income Tax on all their income, including income from investment in the shares of the company.

Benefits available to Venture Capital Companies /Funds

1. In case of a shareholder being a Venture Capital Company / Fund, as per the provisions of Section 10(23FB) of the Act, any income of Venture Capital Companies / Funds registered with the Securities and Exchange Board of India, would exempt from Income Tax, on all their income, including dividend from and income from sale of shares of the company, subject to the conditions specified.

Benefits available under the Wealth Tax Act, 1957

1. As per the prevailing provisions of the above Act, no Wealth Tax shall be levied on value of shares of the Company.

Benefits available under the Gift Tax Act

1. Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares will not attract gift tax.

Note:

1. All the above benefits are as per the current tax laws as amended by the Finance Act, 2005.

2. All the above benefits are as per the current tax law and will be available only to the sole / first named holder in case the shares are held by joint holders.

3. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the double taxation avoidance agreements, if any, between India and the country in which the non-resident has fiscal domicile.

4. In view of the individual nature of tax consequences, each investor is advised to consult his / her own tax advisor with respect to specific tax consequences of his / her participation in the scheme. However, a shareholder is advised to consider in his / her / its own case. The tax implications of an investment in the Equity Shares, particularly in view of the fact that certain recently enacted legislations may not have direct legal precedent or may have a different interpretation on the benefits which an investor can avail.

ABOUT SRS ENTERTAINMENT LIMITED

INDUSTRY OVERVIEW

Introduction

The Company lays great emphasis on growth of the retail sector to determine its future growth pattern. Multiplexes today reflect the emergence of organised Indian retail industry. They have also emerged as the fastest growing niche in the Indian media sector. Their rise reflects: Metamorphosis of Indian retail (rise of organised retail, malls etc) Increasing disposable incomes Rising aspirations of the urban consumer and a change in consumer behaviour which has altered the spending pattern of the urban consumer.

Going by this trend, the business model of SRSEL is a perfect blend of the retail and entertainment sectors. It includes development and management of Multiplex, which includes Cineplex, shopping malls, coffee lounge, food court, health club etc.

The estimated consumption spend in India has doubled from US$250bn to US$500bn in the last 5 years, based on the changing demographics. In particular, the sharp rise in the number of ‘upper end’ and ‘rich’ households (as per the recent NCAER survey) is indicative of the potential consumption spend. People are richer, younger and more aspirational than ever before, supporting the growth in the retail and entertainment sectors.

Retail

Overview Retailing in India has traditionally been the domain of the unorganised sector. The retail landscape is dominated by the local setups like kirana shops, family run general stores and small local merchandise retailers. In fact India has 120 lac retail outlets, the world’s largest retail network. The retail sector generates 15% of the total employment in the country and is the largest contributor to India’s GDP.

Current trends The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls begun their journey from metros and are now turning towards second-rung cities introducing the Indian consumer to a shopping experience like never before. Rated the fifth most attractive emerging retail market, India is being seen as a potential goldmine.

Key drivers for growth 1. Changing demographics / Attitudinal shift supported by the rising income levels, increasing proportion of the ‘young’ middle class (with almost 70 lac individuals entering the 20-34 age group every year) backed by easy finance options and low nominal interest rates. Further, the attitudinal shift towards both a preference for value-added products and convenience also supports the ‘mall’ culture.

2. Burgeoning middle class. As per a study conducted by the NCAER the Indian middle class (household income between Rs 0.20-10 lac) at 570 lac in 2001- 02 is expected to cross 920 lac by 2005-06 and 1530 lac by 2009-10.

3. Surge in mall construction. The number of malls is expected to rise from the current 40 to around 300 by 2007. Close to 500 lac sq. ft. of retail space is being planned for the next 2 years. Over the medium term, retailing could substantially enhance the overall productivity. Moreover, it is the sector that could potentially provide the forward linkages for mass marketing of processed and packaged goods including farm goods. The growth of the organised retailing sector, would, however, be in part dependent on the government facilitating 100% foreign direct investment (FDI) in retailing, providing the necessary supply chain infrastructure and the relatively high cost of real estate – all of which continue to be constraints in the rapid growth of organised retailing in India.

4. Scalable and profitable retail models are well established for most of the categories

Last few years have seen development of the scalable and profitable retail models across categories. Large Indian corporate groups like Tata, , Raheja, , , Piramal Group, Pantaloon have taken big leap in setting up the retail chain business. Various other renowned groups have expressed serious interest in investing in retailing. In addition, foreign investors and private equity players are also firming up plans to identify investment opportunities in the Indian retail sector. Investments into the sector are estimated at Rs. 2,000- 2,500 crore in the next 2-3 years, and over Rs. 20,000 crore by the end of 2010, as reported by KSA Technopak. Successful development of value based concepts such as Big Bazaar, Giant and Vishal Mega Mart as well as development of retail space in smaller cities and towns will drive organised retail into the next level of cities. Small towns with a population of 5-10 lacs are witnessing a defined increase in disposable income coupled with high aspirational levels leading to enhanced spending on consumer goods along with lesser aversion to credit. Thus, the ‘retail boom’, 85% of which has so far been concentrated in the metros is beginning to percolate down to smaller cities and towns. The contribution of these tier-II cities to total organised retailing sales is expected to grow to 20-25%.

5. Retail space no longer a constraint Mall developers across the country are creating superior real estate options at a frenzied pace. From 35-40 operational malls currently occupying approximately 6 million sq ft of retail space, India is expected to have over 300 new malls by 2007, thereby adding retail space to the tune of 50 million sq ft. Further, by 2010, 500-600 malls occupying approx 120 million sq ft are at various stage of planning. Of the 300 malls expected to be launched by 2007, about 50% are estimated to come up in 6 metros - NCR, Mumbai, Bangalore, Kolkata, Hyderabad and Chennai with NCR and Mumbai alone accounting for almost 60 of these new malls. However, by 2010, mall developments are anticipated to spread across 60 cities in the country.

6. India on the radar of global retailers Over the last few years, many international retailers have entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands and international shopping experiences and the increased availability of retail real estate space. Luxury brands such as LVMH, Ermenegildo Zegna, Bvlgari, Escada, Hugo Boss, Tommy Hilfiger, Cartier, etc have entered the Indian market with presence mostly in five-star hotels in New Delhi and Mumbai. Many others are firming up plans to set up shop in the country to offer new-age global Indians an aspirational lifestyle they have demanded for long. A significant trend is that most of these brands are introducing their latest collections in India in line with developed markets even at the cost of taking a hit on their profitability due to the high import duties. This bears testimony to the seriousness with which luxury retailers are exploring the Indian market with a view to long-term sustainability. Development of India as a sourcing hub will further make India an attractive retail opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle, etc are stepping up their sourcing requirements from India and moving from third-party buying offices to establishing their own wholly owned/wholly managed sourcing and buying offices which will further make India an attractive retail opportunity for the global players. Buying volumes for many of these players are already in the range of Rs. 1,000 - 2,000 crore per year, with reported plans to step up to Rs. 10,000 - 15,000 crore within the next 3-4 years.

7. Suppliers/brands willing to partner with retailers Manufacturers in industries such as FMCG, consumer durables, paints, etc are waking up to the growing clout of the retailers as a shift in bargaining power from the former to the latter becomes imminent. Already, a number of manufacturers in India, in line with trends in developed markets, have set up dedicated units to service the retail channel. Also, instead of viewing retailers with suspicion, or as a ‘necessary evil’ as was the case earlier, manufacturers are beginning to acknowledge them as channel members to be partnered with for providing solutions to the end-consumer more effectively.

The way ahead The focal point of organised retail has been the explosive development of shopping malls and entertainment centres in India over the past three years. According to the Indian branch of the International Council for Shopping Centres, 40 malls have been built in India in the last three years, with 300 more scheduled to be completed by 2007. The pace of development of amusement and entertainment centres in India is extremely high. India is scheduled to complete the same number of entertainment project in 4 years that took other countries, even developed ones, almost 30 years to develop.

A.T. Kearney has estimated India's total retail market at US $202.6 billion which is expected to grow at a compounded 30% over the next five years. • In 2003-04, organised retailing, which has an annual growth rate of 8.5%, swept past the Rs.200 billion mark (US $4.5 billion), a figure that appears quite small if one were to compare the extent of the total market. • Organised retail, at present comprises merely 2% of the total market in India. This means that the untapped segment amounts to a whopping Rs.9,800 billion (approx. US $225 billion). • The share of modern retail is likely to grow from its current 2% to 15-20% over the next decade, analysts feel.

According to a study conducted by KSA Technopak, a retail consultancy firm, major part of the investment over the next two years is likely to go into development of 93 malls in 14 major cities. Of the 93 malls, about 39 will be launched in 2005 and the remaining 54 in 2006. By 2010, about 300 malls are estimated to come up. Also, development of malls is likely to spread across 60 cities by the end of the decade.

The National Capital region (NCR) comprising of New Delhi, Gurgaon, Noida and Faridabad will see the maximum development with 14 retail malls with a cumulative space of 3.35 million square feet expected to be operational in 2005. This is on account of the high spending power traditionally demonstrated in this region.

The Tier-II Cities Urban areas having a population of more than ten to thirty lakh but other than the “Big Six” metros (Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad) are considered as Tier-II cities.

They are generally characterised by the following traits compared to the metros: lower population less developed physical and civil infrastructure less cosmopolitan in nature i.e. higher levels of heterogeneity in the demography lower penetration of organised business lower costs of living Popular examples of Tier-II cities are Ahmedabad, Baroda, Indore, Nagpur, Agra, Lucknow, Chandigarh, etc. More recently, Tier-II cities have attracted the attention of the booming I.T. and I.T.E.S. industry that are rapidly opening offices and facilities in these cities on account of their unique advantages like availability of skilled manpower at lower costs, large land area available at attractive rates and lower costs of operation.

Thus, the economic benefits of the technology boom in India is spreading beyond the traditional hubs and is moving into newer cities. This has resulted in the youth population in these areas having higher income and consequently higher discretionary spending power. Coupled with the increasing exposure to globalisation and the aspirational needs to mimic the trends of their metropolitan brethren, it has led to the development of potentially lucrative pockets which have been so far under-developed.

The Tier-II cities are also characterised by the existence of industries unique to each location. For example, the sugar mills of Agra, the diamond merchants of Surat, the cloth traders of Ahmedabad, and so on. These industries have yielded several success stories over the decades and have led to the development of several high income families in each city. So far, these consumers have had very little opportunity to experience the modern amenities offered by the upscale retail and entertainment avenues in the metros.

Entertainment

Overview Multiplexes, a new concept in movie exhibition in India has substantial revenue and entertainment potential. A multiplex embodies the luxuries, amenities of the modern day theatre; multiple screen choices, state-of-art technology, ergonomic seating, eye-catching architecture and top of the line cafes and food courts. Currently there are about 50 - 55 multiplexes operational in India with prominent ones being in Mumbai, Pune, Delhi, and Bangalore.

Indian Film Industry The Indian film industry, with an output of 800-850 movies a year, ranks as the world’s largest and most prolific film industry in the world. Though there has been a discernible trend towards corporatisation and organised financing, film production continues to be a fragmented and unorganised business. Despite the pervasive influence of films on the Indian public, the quality of movie theatres is very poor. With an estimated 13,000 movie theatres in India, most of them single-screeners and family-owned, film-exhibition business continues to be a highly fragmented segment.

Film exhibition: Multiplexes are catalyzing investments and consolidation The impact in the Metros and larger cities is unmistakable where multiplexes have mushroomed over the last few years. State governments have also done their bit by announcing tax holidays for multiplexes, thereby stimulating investments and helping projects to achieve a faster breakeven. Most of the players are rolling out ‘multiplex chains’ by either leasing out space in upcoming malls or leasing old single-screen theatres and converting them into multiplexes. The new players are bringing in modern retailing practices to maximize profitability of their properties. Their rising ‘clout’ in the film-exhibition segment is helping them to strike better deals with film distributors. Based on media reports, it is estimated that the segment is in the process of adding around 200 additional screens to the existing 150 in the next 2-3 years Most of the players are rolling out ‘multiplex chains’ by either leasing out space in upcoming malls or leasing old single-screen theatres and converting them into multiplexes. The new players are bringing in modern retailing practices to maximize profitability of their properties. Their rising ‘clout’ in the film-exhibition segment is helping them to strike better deals with film distributors. Based on media reports, it is estimated that the segment is in the process of adding around 200 additional screens to the existing 150 in the next 2-3 years

Key metrics: Ticket price, F&B spend and number of patrons The above three variables have the maximum impact on EBIDTA margins of a multiplex and the key operating challenge is to maximize these variables. Costs such as distributor share (as % age of ticket receipts), property rentals etc vary minimally in the medium term.

Current trends One of the advantages of a multiplex is that a patron, has multiple movie options at any given point in time. This allows a movie patron to watch another movie, if the tickets for the movie of his choice are not immediately available. It also allows the movie patron to revisit the theater complex at a greater frequency as compared to a single screen theater, Multiplexes generally offer international quality audio and video equipment apart from quality seating and ambience, thus providing a patron with a high quality viewer ship experience.

Key factors for growth a) Organised Retail boom There has been a boom in the organised retail market in India. There are malls coming in many cities and towns. One of the key elements driving the success of a mall is its ability to drive footfalls consistently. Hence each mall design looks at a mix of tenants – large and small. Multiplexes are one of the anchor tenants to large format malls. This gives a mall assured footfalls as movies have a higher frequency of consumption. b) Highly fragmented industry The Exhibition business is currently highly fragmented, with no single entity having control over a large number of theaters. This offers an opportunity for a multiplex player to set up a chain of multiplexes and thus build control over a large number of screens. With increasing control on screens the bargaining power increases with distributors, vendors and other suppliers c) Quality Theater Complexes

Films are a key destination for entertainment. Exhibition is the last mile in the film value chain where the patron interacts with the film. The poor condition of most single screens has turned away family audiences. Multiplexes offer the quality ambience and service levels. Although multiplex tickets are usually priced at a premium to the ticket prices of single screens, they continue to attract patrons (both individuals and families) on account of the better quality of service and ambience that they provide. d) Entertainment Tax Benefits The existing rate of Entertainment tax in various states is high. This has resulted in a pressure on profitability for a number of players in the exhibition business. As a result, exhibitors (especially the single screen owners) have not been able to channelise investments for maintaining and/or upgrading their theaters. A worsening quality of theaters has resulted in a lower audience turnout, which put a further strain on profitability. e) Growing corporatisation: Over the last 5 years, the Film Industry is gradually getting corporatised. Several production houses have also raised capital from the equity markets. This is resulting in a growth in the number of films produced by top quality producers / directors. A lot of niche / innovative films are also being produced by such production houses. All this is directly beneficial to Multiplexes.

Advantages of multiplexes over single screen theatres • The Entertainment Tax exemption being offered by various state governments is proving to be a major incentive for new multiplexes. For instance in Maharashtra, theatres pay 31% of the ticket price as entertainment tax, which directly affects the revenues and profits of the theatre owners. • The ultimate aim of a multiplex is to provide wholesome entertainment to a family ranging from movies, games and food courts. • Multiplexes offer flexibility in terms of the wider variety of content that can be screened. Most multiplexes built are of the 3 screen format thus offering a greater variety of movies to the discerning viewer. • Due to a larger number of screens, timings of movies can be staggered allowing greater flexibility to viewers. • Multiplexes offer a quality conscious consumer the Value For Money concept – better ambience, better viewing, parking facilities etc.

Though distribution and exhibition are the last links in the chain bringing filmed entertainment to the masses, they are of paramount importance, as the success of the film depends on successful distribution and exhibition. In India the current infrastructure for Film exhibition is inadequate to meet existing and potential demand. For a nation with 5,000 million admissions every year (roughly a weekly entry of about 100 million), there are only around 12,900 theatres spread over the country. Further to this, the theatrical sales constitute dominant source of revenues for the film industry and represent box office ticket sales to the viewers at the cinema halls. (Source FICCI Report)

Favourable Demographics Some key finding of the study conducted to study the demographics of the Indian entertainment consumer. • Maximum film-watchers fall in age of 15 years to 55 years. • 49% of the teenagers are frequent movies goers • Due to the population boom of 1980’s and 1990’s more and more people are expected to come in the category of 13+ and 18+. Thus market for frequent movie goers is expected to increase. • Indian entertainment market is heavily under screened as compared to the US and European markets. Actually, one of the main reasons for the depressed industry scenario in developed countries is large number of screens per million of population. • India is primarily at the single screen theatre stage with few multiple screen cinema halls existing in metro cities. Increase in number of screens in India due to advent of multiple screen cinemas and multiplexes will be beneficial for the industry as pointed out earlier with overseas examples illustrating that cinema attendance goes up with multiplexes. • An average Indian spends about 30% of his annual income on family entertainment (activities housed in family entertainment centers for e.g. multiplexes and megaplexes) (source: study by KSA Technopak)

Government Policies Entertainment tax is a state subject in India and hence is levied on cinemas, theatres and other forms of entertainment. Quite a few state governments such as Maharashtra, Gujarat, West Bengal, Madhya Pradesh and Uttar Pradesh have announced an entertainment tax holiday to new mulitplexes being set up in their respective states. The Governments of Maharashtra and Gujarat have been amongst the first to come out with such policies, which envisage exemption from entertainment tax – 100% for first 3 years and 75 per cent for the balance two years for multiplex operators. At the Central level, the Union government has given section 80 I B benefits of 50 per cent income tax deduction to multiplexes being set up in non-metro cities.

Entertainment Tax Holiday (ETH) is definitely the single most significant factor in the commercial feasibility of multiplexes. However the success of multiplexes in Delhi (where this holiday is not available) point out to the fact that a good operational exhibition facility with premium pricing can still attract audience. The ETH would improve the project payback period and also enable multiplex owners to invest in other entertainment facilities, which would generate revenues to compensate when the rebate expires after 5 years

Entertainment Tax Rates and Govt. Polices for Multiplexes

States Entertainment Tax Rates Government Policies Bihar 110% Further compounding of taxes from 10 to 30% based on gross collection capacity per show Madhya Pradesh 50% Further compounding of taxes at 10% to 45% based on gross collection capacity Maharashtra 45% Tax Exemption for 3 Years and 75% rebate for following two years to multiplexes with more than 4 screens and capacity > 1200 seats. Uttar Pradesh 60% Tax Exemption for 5 year for multiplexes (project) worth Rs.150 lacs or more. Haryana 50% No tax exemption available Punjab - Tax exemption for 5 years for multiplexes having capacity of minimum 1000 seats, set up in an area of 4000 sq. yards and minimum investment of Rs.2000 lacs. Rajasthan - Tax exempt for 3 years as follows: • 75% for the 1st year

• 50% for the 2nd year • 25% in the 3rd year Gujarat 50% Tax Exemption for 3 Years and 75% rebate for following two years to multiplexes with more than 4 screens and capacity > 1200 seats.

Real Estate

Driven by the positive growth in industry, real estate in India is booming. The development of real estate focusses on two primary areas: retail and residential.

The global real-estate consulting group Knight Frank has ranked India 5th in the list of 30 emerging retail markets and predicted an impressive 20% growth rate for the organised retail segment by 2010. The organised segment is expected to grow from a mere 2% to 20% by the end of the decade, it said.

Investment in the retail real estate segment yields 13-16% return which is quite high when compared with the returns from the residential and office segments. There are, of course, exceptions such as the National Capital Region, where the prices of residential property have appreciated by 20 to 30% over the last one year.

According to a survey by real estate consulting firm CB Richard Ellis (CBRE), office space in Mumbai is more expensive than Manhattan. The CBRE survey, called Global Market Rents, has ranked Mumbai as the world's 15th most expensive place, Manhattan, the 20th, while Delhi stands at the 32nd position. The cost of occupation in Mumbai is $56.83 per square feet per annum, while in Manhattan, it is $52.04 per sq ft and in Delhi, it is $40.62. Technically, occupation cost represents rent plus local taxes and service charges.

Key trends of the real estate boom:

Over 300 malls with a combined retail space of 2.5 crore square feet are sprouting across the country at an investment of Rs 12,500 crore, eight times of Rs 1,500 crore invested till last year. According to an ICICI study, malls are estimated to become a Rs.38,447 crore ($8.3 billion) sector by 2010. As the competition in the market is intense, builders are going out of their way to be different. Specialised malls have become the order of the day. Gurgaon, on the suburbs of New Delhi will soon have an auto mall and jewellery mart, while Bangalore is about to get an exclusive furniture mall. Similarly in the home segment, which is driven by the availability of easy home finance, most builders are trying to woo investors with interesting features, each more tempting than the other. Closed-circuit television and earthquake proofing are expected as standard features in most upmarket blocks. Evershine Builders, for instance, is providing a range of facilities from modular kitchens to piped gas and Internet connections.

BUSINESS OVERVIEW

The Company's business model is a “hybrid” model, which involves a mix of entertainment cum retailing and real estate. The Company’s maiden project, SRS Multiplex, is a unique complex, combining a 3 screen Cineplex with most facilities of a modern shopping mall.

SRS Multiplex commenced operations on November 12, 2004 and has been profitable since commencement. It is located on NH-2, Delhi-Agra Road at Faridabad, just 25 kms away from Connaught Place in New Delhi. The complex is spread over 23,000 sq. ft. with a total built up area of 1,22,000 approx sq. ft., of which total commercial leasable area expands to 33,358.35 sq. ft. and 3.5 acres of parking space to accommodate over 2,500 vehicles at a time. The location is significant as it has the advantage of being accessible to the population of Faridabad as well as being within reach of the affluent population of New Delhi. The complex being situated on the main Delhi-Agra highway has the potential to attract tourists who visit the Taj Mahal and Mathura.

SRS Multiplex was conceived to provide entertainment experience combining high-tech architecture, technology and world class amenities to provide a truly global experience to visitors. The Company has incorporated several new design concepts and ideas to ensure that SRS Multiplex offers an experience that is not provided anywhere else in India. The Company contracted the services of Gautam & Gautam Associates for conceptualising the architecture of the complex while the task of construction was undertaken by Era Construction India Limited

Some of the major architectural and design features that highlight SRSM and renders it the remarkableness are:

A star shaped atrium Ecological form building Modern technology with structure of steel and glass in vibrant colours A video wall in the central lobby with a mini water fall Guang A separate tower for the high speed Zen 2 lift from China: this lift tower is the sole entry point for members of the exclusive SRS Club and Cineplex patrons Glass Tunnel housing the Autowalk Travelator: this tunnel is 40 feet above the ground and connects the Cineplex with the Zen 2 lift tower A swimming pool that is housed indoors on the roof top and is dust free Fire-retardant fabric is used throughout the Cineplex

The average capacity utilization of the Cineplex is approximately 40% and ticket prices range from Rs.75/- to Rs.150/- per ticket. The total shopping area leased out stands at 32,936.41 sq. ft.. Of which 13,665.47 sq. ft. area has been sold and leased back by the Company.

Floor Wise Features The complex is divided into 5 floor levels and Roof Top with each housing different facilities.

Lower Ground Level Facilities

Little Freedom: Children’s Play Area The children play area includes the facility of modern games like, Bowling Alley, Air Hockey, Video games, Catchers, Pool Table and kids rides etc. This Little Freedom spans over 4000 sq. ft. area of SRSM.

Mini Theatre Mini Theater has capacity of 72 luxury seats. This provides the facility for corporate members to arrange conferences, presentations, annual general meetings, product launches, training program, tele conferences etc.

SRS Value Bazaar The Company is in the process of establishing a branded chain of value based mass retailing stores christened “SRS Value Bazaar”. SRSEL will inaugurate its first SRS Value Bazaar at SRS Multiplex. The Bazaar will be spread over an elaborate area of 16000 sq. ft. It is expected to be opened to public by around October 2005. The concept of the bazaar is reflected in its title “Sab Kuch Sab Khush”.

Ground Level Facilities

Yellow Chilly A premier restaurant conceptualised by one of the leading chef of India Mr. Sanjeev Kapoor, who is also the host of a popular teleserial Khanna Khazana aired on Zee TV, has set up a chain of Yellow Chilly restaurants. The restaurant has made a mark as super specialty curtsy for food lovers.

Music World A grand collection of all types of audio and video cassettes, CDs and DVDs of all various classical, film, non film, folks etc. are available. The chain of music world was setup by famous R.P.G. Group owner of HMV Brand has drizzling environment and unique collection.

World of Titan India’s Brand Icon in the field of watches, with its brands has presence in SRSM.

Airtel A full service outlet providing the sale of all types of Nokia mobile phones and service to the prepaid and postpaid customers of Airtel.

Rayban A leading brand in the spectacles market has its presence at the ground level.

Dukes A varied collection of t-shirts, trousers, shirts, shorts, jeans (denim and non denim), sweaters, pull overs, track suits, jackets etc. for all age groups and weather.

S F Jeans A brand owned by the Madura Garments having the collections of shirts, t-shirts, jeans, shorts and other denim collections.

Sangini An exclusive outlet of diamond jewellery that caters to the sophisticated audience.

Nokia This leading mobile manufacturer has its presence in SRSM with its wide range of mobile phones and accessories.

Mc-Donald The leading international chain of fast food restaurants. It has seating capacity for more than 60 people.

Cream Bell This is an exclusive ice cream outlet.

There are various other brands/ outlets having their presence at SRSM and attract varied audiences. Some of them are: Sanjh Savera U.S. Garments Orchid Blues AMPm Kitchen Corner Walk and Style Silver and Chants

First Level Facilities

Food Court – “7 Dayz” family restaurant A multi cuisine ethnic food court with specialisation of North Indian, Chinese, Fast Food, South Indian and Italian food under one roof. This restaurant has attracted the attention of many mall developers around the country due to the delicious cuisine offered at the food court.

Pizza Hut

Pizza Hut is a brand well known among the gourmet. They have a chain of Pizza Hut restaurants around the country. One of such restaurants is presence at SRSM too. It uses the common seating capacity which is approximately 130 seats.

Nescafe The coffee shop with decent seating arrangements

Juice Zone A juice junction for refreshing moods and providing of all type of seasonal and Non seasonal variey

Planet Fashion A mega store having the unique brand of Madura Garments viz. Van Heusen, Allen Solly, Luise Philppe, Peter England etc.

Archies A gift and card store for all ages, occasion and remberences.

Cowboyz A fresh bakery shop with wide variety of pastries, patties, cakes, biscuit and burger etc.

Candico and many more A corridor stall of Indian and imported candies.

There are a few other outlets at this floor like the Damini Creation and Spicy Western Wear that provide exclusive wear.

This floor also provides entertainment for the ladies shopping at SRSM. A corner has been reserved for a mehndi-wala. This is a unique ladies corner for decorating the hands with beautiful design, fragrance and colour heena.

Second Level Facilities

• SRS PVR Cinemas This floor houses the Cineplex with three theme based screens with the concept of the SUN, MOON and GALAXY. It has been christened SRS PVR Cinemas. At present, the combined Cineplex capacity at SRSM is 900 seats. This is bifurcated as 450 seats at Sun, 225 each at Moon and Galaxy. The total operational capacity of the Cineplex is 776 seats. The screen size of Sun Auditorium is around 14.78 metres in width and 6.275 metres in lenght which is among the large screen size available in multiplexes in India. Moon and Galaxy each have screen size of 12.30 metres in width and 5.23 metres in lenght.

• Visitors Lounge A spacious furnished and luxurious lounge has been provided for the waiting customers, near the screens. It has a seating capacity for upto 40 people.

• Coffee Lounge Two coffee lounges having the capacity of 40 people each for birthday parties, Kitty parties and similar occasion near the theatre.

• Travelator India’s first and only auto walk system at the SRS Multiplex by OTIS. A luxury, which is often facilitated at International Airports, has its presence in India. This is the first Travelator which has been installed in India.

Third Level Facilities

• Dazzel Restro Bar The classical dine and wine restaurant with a small discotheque forms part of of SRS Multiplex. The DJ keeps the environment warm and cozy with the harmonious music and tunes. It has a seating capacity of approximately 90 seats

Roof Top Facilities

• Crystal Restaurant An open air roof top restaurant near the periphery of swimming pool provide the hill top experience. It also includes pool facing bar with Indian and imported drinks has its magnificent presence. The management of this restaurant is with Dazzle Restro Bar. Its seating capacity is upto 70 seats • Swimming Pool An imported Australian pool at the roof above the screen is first of its kind in Asia. It was the dream facility of SRSEL for being the very first and only in India for the club members of SRS Multiplex.

The following facilities are also proposed to be included in the SRS Club: Health Club Slimming Center Steam Bath Sauna Bath Jacuzzi Yoga

Agreement with Pepsi Foods (P) Limited The Company has entered into an ‘exclusive pouring and promotions’ agreement with Pepsi Foods (P) Limited. As per the agreement Pepsi will provide advertisement and promotional support for SRS Multiplex for consideration that its products will be sold at the SRS PVR Cinemas and food court at the SRS Multiplex.

Business Model The current business model comprises of revenue and costs from entertainment and real estate sectors. Details of the same is as under:

Business Model

Income Costs

Cineplex Operations Movie tickets and Snack Entertainment bar sales Tax Distribution Shopping Mall Costs Sale and Lease of Commercial Space Direct Costs F & B SRS Club Personnel Monthly and Annual Membership Fee

Advertising Displays Rentals Renting out of Advertising space and Displays on the premises Utilities Promotional activities Arranged by sponsors within/ outside the premises Housekeeping & Security Party Lawn Catering and Space charges Promotion & Marketing Kids Park Income from Rides and Swings Other Costs

Parking Charges

Business Model

Income Costs

SRS Cinemas Movie tickets and Snack Entertainment bar sales Tax Distribution SRS Value Bazaars Costs Sale of products Direct Costs F&B Shopping Mall Sale and Lease of Personnel Commercial Space

SRS Club Monthly and Annual Rentals Membership Fee

Advertising Utilities Displays Renting out of Advertising space and Housekeeping & Security Promotional activities Arranged by sponsors within/ outside Promotion & the premises Marketing

Party Lawn Catering and Space Other Costs charges

Kids Park Income from Rides and Swings

Parking Charges

Going ahead, with the proposed commencement of commercial operations of SRS Value Bazaar, the Company will set foot into the retail segment as well. The proposed business model will be as under:

Location of the Project The Company’s business model is based on the latent demand for upscale entertainment and retail options in non-metro urban cities, also known as Tier-II cities. These areas are increasing grabbing the attention of Fast Moving Consumer Goods (FMCG) companies and F&B retailers. It is estimated that the growth of organised retail in Tier-II cities will outstrip the relative growth in the metros by three times.

The Company has devised a three pronged approach:

1. Ownership model SRSEL proposes to expand the mall operations under the SRS Multiplex business model by buying land and building smaller replicas of the existing SRS Multiplex in three different cities. The cities have been identified as: City State Agra Uttar Pradesh Ludhiana Punjab Muzaffarnagar Uttar Pradesh

These Multiplexes will provide SRS Cinemas, SRS Value Bazaars, 7 Dayz Restaurant – Food Court, other restaurants and a shopping area that will house various leading brands.

2. Lease Model SRSEL plans to expand its operations through leasing of properties. Four of such sites, i.e., two at Gurgaon and one each at Amritsar and Jodhpur would provide SRS Cineplex and 7 Dayz Restaurant – Food Court. At Jodhpur, the Company also plans to also introduce the SRS Value Bazaar. SRS Value Bazaar would also be set up, on lease arrangement basis, at three other locations, i.e., Ambala, Jalandhar and Meerut. At these locations the Company proposes to implement the SRS Cineplex and 7 Dayz Restaurant – Food Court on a franchise arrangement basis described below.

The following table provides city wise overview of facilities proposed to be provided under the lease model: City State SRS Cineplex Food SRS Value Court/restauran Bazaar t Gurgaon, Omaxe Haryana ☺ ☺ - Plaza, Gurgaon, Omaxe Haryana ☺ ☺ - Wedding Mall Amritsar Punjab ☺ ☺ - Jodhpur Rajasthan ☺ ☺ ☺ Ambala Haryana - - ☺ Jalandhar Punjab - - ☺ Meerut Uttar Pradesh - - ☺

City State Lessor Date of Agreement Gurgaon, Omaxe Plaza Haryana Omaxe Construction Limited 22.08.2005 Gurgaon, Wedding Mall Haryana Omaxe Construction Limited 22.08.2005

M/s Omaxe Construction Limited is in process of development and construction of two shopping malls cum multiplex named Omaxe Plaza and Wedding Mall at Gurgaon. The Company has entered into agreements with Omaxe Construction Limited to take on lease, premises for running theatres at the said malls cum multiplex. For details on the agreements please refer to the section titled "History and Corporate Structure - Other Agreements" on page no. 72 of the Draft Red Herring Prospectus.

The Company has already entered into MoUs for two properties details of which are as follows: City State Lessor Date of MoU Amritsar Punjab P R Infrastructure Limited 17.07.2005 Jodhpur Rajasthan Tulip Info Services (P) Limited 08.07.2005

Details of the aforesaid MoUs is as follows: • MoU with P R Infrastructure Limited MoU has been signed between SRSEL and M/s P R Infrastructure Limited for their upcoming shopping mall at Batala, Verka Chowk, Amritsar for 4 theatre screens in a super area of 23000 sq. ft. for period of 9 years divided into 3 slots of 3 years each. A ticket window would be provided at the ground floor at an approximate area of 150 sq.ft.

• MoU with Tulip Info Services (P) Limited MoU has been signed with M/s Tulip Info Services (P) Limited. The company plans to set up a shopping mall at Jodhpur, Rajasthan in collaboration with His Highness Gaj Singh, referred as Majestic Stadia. SRSEL would be running 4 screen theatres and a food court on an approximate super area of 50,000 sq. ft. for a total period of 9 years.

3. Franchise Model SRSEL has entered into a MoU with M/s Richi Look Marketing (P) Limited to provide marketing assistance to implement the franchisee model. The Company would authorise Richi Look to use/franchise the brand for SRS Cinemas and 7 Dayz. SRSEL would provide recruitment advice and training to the personnel and put the I.T. and allied infrastructure in place. For this, SRSEL proposes to develop a software that would facilitate the centrally controlled system for logistics, purchases, revenue generated etc. at each of the sites.

SRSEL, with the assistance of Richi Look, would implement the franchisee model in the following sites: City State Ambala Haryana Jallandhar Punjab Jaipur Rajasthan Meerut Uttar Pradesh Panipat Haryana

Plant, machinery, technology, process:

Land and Building The Company is in the process of acquiring land at Agra, Ludhiana and Muzzafarnagar, where it plans to construct and manage Multiplexes on ownership basis. The Company through SRS Buildcon (P) Limited has identified properties at Agra and Ludhiana and necessary due deligence is being conducted for acquisition. The Company is also in the process of identifying property at Muzzafarnagar through Tarang Buildcon (P) Limited

(Rupees in Lacs) Sr. Particulars Name of Area Rate Per Unit Amount No. Vendor/Supplier (Sq. Ft.) (Rs.) 1 Civil Work ERA Infrastructure India 80000 550.00 440.00 Limited 2. Finishing & ERA Infrastructure India 80000 425.00 340.00 Furnishing Limited (Civil work) 3. Fire Fighting ERA Infrastructure India 80000 65.00 52.00 Limited 4. Furniture & ERA Infrastructure India 80000 84.00 67.20 Fixtures (Wood Limited work) 5. Architect Fees Gautam & Gautam 80000 31.25 25.00 Associates 6. Furniture & ERA Infrastructure India 80000 92.00 73.70 Fixture Limited (Including Lighting Fixture) 1247.25 997.90

Equipment The Company is currently negotiating with various suppliers for supply of various fixtures, furniture, equipments, hardware and software required to operate the Project. The details of the equipment with the respective suppliers and consultants the Company is in dialogue is as given hereunder:

Table - A

Owned Multiplexes - Detail of Building Including Common Interiors (Rupees in Lacs) Sr. Particulars Name of Area Unit Rate Per Amount No. of Amount No. Vendor/Suppl Unit (RS.) locations ier 1 Civil Work ERA 80000 Sq. 550.00 440.00 3 1320.00 Infrastructure Ft. India Ltd. 2. Finishing & ERA 80000 Sq. 425.00 340.00 3 1020.00 Furnishing Infrastructure Ft. India Ltd. 3. Fire ERA 80000 Sq. 65.00 52.00 3 156.00 Fighting Infrastructure Ft. India Ltd. 4. Furniture & ERA 80000 Sq. 84.00 67.20 3 201.60 Fixtures Infrastructure Ft. India Ltd. 5. Furniture & ERA 80000 Sq. 92.00 73.70 3 221.10 Fixture Infrastructure Ft. (Including India Ltd. Lighting Fixture) Total 1216.00 972.90 3 2918.70

Table - B Owned Multiplexes - Detail of Plant & Machinery (Rupees in Lacs) No. of Sr. Unit Price Per Description Vendor Location No. Location/Property / Property Total Cost 1 Sub Head 1 - Wiring for Light Points, MEC Electrical 24.50 3 73.50 Power Points, UPS Lighting Etc. Engineers & Contractors 2 Sub Head 2 - Telephone Conducting MEC Electrical 3.50 3 10.50 & wiring Engineers & Contractors 3 Sub Head 3 - CCTV System/TV MEC Electrical 4.85 3 14.55 System Engineers & Contractors 4 Sub Head 4 - Data Networking MEC Electrical 2.10 3 6.30 Engineers & Contractors 5 Sub Head 5 - Music System:/ MEC Electrical 7.85 3 23.55 Speakers for Audies Engineers & Contractors 6 Sub Head 6 - Intelligent fire alarm MEC Electrical 24.25 3 72.75 system Engineers & Contractors 7 Sub Head 7 - Lighting Distribution MEC Electrical 4.75 3 14.25 Board Engineers & Contractors

8 Sub Head 8 - MV Panel Boards, MEC Electrical 84.50 3 253.50 Starters, Control Console Etc. Engineers & Contractors 9 Sub Head 9 - Earthling & Lightening MEC Electrical 12.75 3 38.25 Protection Engineers & Contractors 10 Sub Head 10 - Cables, Cable Trays & MEC Electrical 49.50 3 148.50 Steel Structure for walk ways Engineers & Contractors 11 Sub Head 11 - Sub-Station System MEC Electrical 30.15 3 90.45 Engineers & Contractors 12 Sub Head 12 – D. G. Set & Allied MEC Electrical 61.50 3 184.50 works (1 X 500 KVA + 2 X 250 Engineers & KVA) Contractors 13 Sub Head 13 - External / Facade MEC Electrical 6.10 3 18.30 Lighting Engineers & Contractors 14 Sub Head 14 - Lighting Fixtures MEC Electrical 19.70 3 59.10 Engineers & Contractors 336.00 3 1,008.00

Table C Owned Multiplexes - Air conditioning (Rupees in Lacs) Description Vendor Unit Qty. Rate No. of Total locations Sub Head 1 - Machinery Suvidha Engineers Lot 1 72.00 3 216.00 Project Sub Head 2- Piping Suvidha Engineers Lot 1 24.00 3 72.00 Project Sub- Head 3 Air Distribution Suvidha Engineers Lot 1 10.00 3 30.00 Project Sub -Head 4- Insulation Suvidha Engineers Lot 1 10.00 3 30.00 Project Sub -Head 5-Electrical Suvidha Engineers Lot 1 9.00 3 27.00 Works Project TOTAL 125.00 375.00

Table D SRS Cinemas - Air conditioning (Rupees in Lacs) Description Vendor Unit Qty. Rate No. of Amount locations Sub head 1 – machinery, Suvidha Engineers Lot 1 19.50 7 136.50 ahu,fcu’s Project Sub head 2- piping Suvidha Engineers Lot 1 3.50 7 24.50 Project Sub- head 3 air distribution Suvidha Engineers Lot 1 4.80 7 33.60 Project Sub –head 4- insulation Suvidha Engineers Lot 1 1.25 7 8.75 Project Sub –head 5-electrical works Suvidha Engineers Lot 1 1.55 7 10.85 Project TOTAL 30.60 7 214.20

Table E SRS Value Bazar - Air conditioning (Rupees in Lacs) Description Vendor Unit Qty. Rate No .of Amount locations Sub head 1 – machinery, ahu,fcu’s Suvidha Lot 1 16.90 7 118.30 Engineers Projects Sub head 2- piping Suvidha Lot 1 3.00 7 21.00 Engineers Projects Sub- head 3 air distribution Suvidha Lot 1 4.60 7 32.20 Engineers Projects Sub -head 4- insulation Suvidha Lot 1 1.15 7 8.05 Engineers Projects Sub -head 5-electrical works Suvidha Lot 1 1.55 7 10.85 Engineers Projects TOTAL 27.20 7 190.40

Table F 7 Dayz Food Court - Air conditioning (Rupees in Lacs) Description Vendor UnitQty. Rate No. of Total locations Sub head 1 – machinery, ahu,fcu’s Suvidha Lot 1 4.50 7 31.50 Engineers Project Sub head 2- piping Suvidha Lot 1 0.40 7 2.80 Engineers Project Sub- head 3 air distribution Suvidha Lot 1 1.50 7 10.50 Engineers Project Sub -head 4- insulation Suvidha Lot 1 0.15 7 1.05 Engineers Project Sub -head 5-electrical works Suvidha Lot 1 0.25 7 1.75 Engineers Project TOTAL 6.80 7 47.60

Table G Owned Multiplexes – Lifts & Escalators (Rupees in lacs) No. of Sr. Unit Total Description Vendor Qty Location No. Price Price / Property Total Cost OTIS Elevator 1 Passanger Glass Elevaors Company (India) Ltd. 2 23.00 46.00 3 138.00 2 4.2 M Esclators OTIS Elevator Company (India) Ltd. 2 14.85 29.70 3 89.10 3 Charges towards Erection & OTIS Elevator Service Tax Company (India) Ltd. 2 3.50 7.00 3 21.00 4 OTIS Elevator Customs Duty (35% of 14.85 Lacs) Company (India) Ltd. 2 5.20 10.40 3 31.20 Total 93.10 3 279.30

Table H

Details of interiors ,Furniture and seats of theatres (Rupees in lacs)

S. Vendor / Rate No.of No. Particulars Contractor Area Unit (Rs.) Amount locations Total Amount 1 Interior, Furnishing & Fire Fighting (Including Acoustics, ERA Civil work & Infrastructure Electrical fixtures) (India) Ltd. 18000Sq. Ft. 293 52.74 7 369.18 Miscellaneous 2 expenses - 0.06 7 0.42 TOTAL 1+2 52.80 7 369.60 ERA Infrastructure 3 Seats (India) Ltd. 1000Nos. 3000 30.00 7 210.00 Total 82.74 7 579.60

Table I SRS Value Bazar - Interior, Furniture,Equipment and Civil Work (Rupees in lacs) No.of Sr. Vendor / Rate locations Total No. Particulars Contractor Area Unit (Rs.) Amount Amount 1 Interior & Furnishing ERA (Including Infrastructure 16000 Sq. Ft. 293.00 46.88 7 328.16 Electrical (India) Ltd. fixtures) 2 Miscellaneous Turnkey 0.12 7 0.84 Expenses 47.00 329.00 TOTAL 3 Equipments ERA

Infrastructure Turnkey 25.00 17.50 7 (India) Ltd. Civil Work & 4 Fire Fighting, ERA Wooden Infrastructure Partitions, (India) Ltd. 16000 Sq. Ft. 405.00 64.80 7 45.36 Individual Counter & Racks

Table - J

7 Dayz Restaurants - Interior, Furniture, Kitchen Equipments, Chairs and Civil Work (Rupees in lacs) Sr. Vendor \ No.of Particulars Area Unit Rate (Rs.) Amount Total Amount No. Contractor Locations Interior & Furnishing ERA Infrastructure (Including (India) Ltd. Electrical 1 fixtures) 4000Sq. Ft. 1031.25 41.25 7 288.75 Equipments ERA Infrastructure 2 (India) Ltd. Trunkey 41.20 7 288.40 Seating Chairs ERA Infrastructure Sets 3 & Tables (India) Ltd. 50(4+1) 6000 3.00 7 21.00 Civil Work including Fire Fighting & ERA Infrastructure 4 counters (India) Ltd. 4000Sq. Ft. 243.75 9.75 7 68.25

Table K Architect Fees (Rupees in lacs) Sr.No. Description Name Rate No. of Total per location locations 1 Owned Multiplexes 25.00 3 75.00 2 SRS Cinemas 5.00 7 35.00 3 SRS Value Bazar Gautam & Gautam 3.00 7 21.00 Associates 4 7 Dayz Restaurants 2.00 7 14.00 Total 145.00

Table L

SRS Cinemas - Detail Computers, Plazamas, Display Monitors, & Soft wares Etc. (Rupees in lacs) No. of Sr. Unit Total Description Vendor Qty Location Total Cost No. Price Price /Property 1 Server Micro-Chip Computers 3 1.40 4.20 7 29.40 2 Display Server Micro-Chip 1 0.55 0.55 7 3.85 Computers 3 Nodes - a) For Ticket Counter (4 Nos) Micro-Chip b) For Back Office 12 0.38 4.56 7 31.92 Computers (8 Nos)

4 Micro-Chip Touch Screen for Cash Counter 6 00.90 5.40 7 37.80 Computers 5 Bar Code Reader Micro-Chip Computers 4 00.10 00.40 7 2.80 6 Swap Card Reader Micro-Chip Computers 10 0.11 1.1 7 7.7 8 Thermal Printer Micro-Chip Computers 10 00.18 1.80 7 12.60 9 Lazor Printer Micro-Chip Computers 3 00.20 00.60 7 4.20 10 Ticket Printer Micro-Chip Computers 4 .550 2.20 7 15.40 11 All in One Printer Micro-Chip Computers 1 00.95 00.95 7 0.665 12 Photo State Machine Micro-Chip Computers 1 1.25 1.25 7 8.75 13 Net Working (A- 24 Port Switch, B- 24 Port Switch, C- Network Cable, D-UTP Micro-Chip 4.112 7 28.784 Connector Computers E-Wall Mountal Jack-RJ-45, F- Router 14 UPS 8 KVA Online UPS Micro-Chip Computers 2 1.65 3.30 7 23.10 15 UPS 1 KVA Offline UPS Micro-Chip Computers 3 0.8 0.24 7 1.68 16 Soft ware Micro-Chip Computers 0.00

A- Window 2003 Premier Micro-Chip Server Computers 3 00.60 1.80 7 12.60 17 B-Operating system Micro-Chip Computers 2 00.065 1.43 7 10.01 18 C-Office 2003 Professional Micro-Chip Computers 16 00.16 2.56 7 17.92 19 D-Nortran antivirus Micro-Chip Computers 00.40 7 02.80 20 PC Any Where Micro-Chip Computers 3 0.11 0.33 7 2.31 21 Cinema Operational Software Micro-Chip Vista Computers 01 4.00 4.00 7 28.00 22 Less: Discount (0.27) 7 (1.86) Total 40 7 280.00

Table M

SRS Value Bazaar - Detail Computers, Plazamas, Display Monitors, & Soft wares Etc.

(Rupees in lacs) No. of Unit Total S.No. Description Vendor Qty Location Price Price /Property Total Cost 1 IBM Server Micro-Chip Computers 3 4.5 13.50 7 94.50 2 Nodes - a) For Office System (4 Nos) Micro-Chip Computers 9 0.38 3.42 7 23.94 b) For A/c (2 Nos) c) For Data Entry 3 Touch Screen for Cash Micro-Chip Computers 5 00.90 4.50 7 31.50 Counter 4 Bar Code Reader Micro-Chip Computers 5 00.10 00.50 7 3.50 5 Thermal Printer Micro-Chip Computers 5 00.18 00.90 7 6.30 6 Lazor Printer Micro-Chip Computers 4 00.20 00.80 7 5.60 7 Dot Matrix Printer Micro-Chip Computers 1 00.285 0.285 7 1.995 8 All in One Printer Micro-Chip Computers 1 00.95 00.95 7 0.665 9 Photo State Machine Micro-Chip Computers 1 1.25 1.25 7 8.75 10 Print Server Micro-Chip Computers 2 00.08 00.16 7 1.12 11 Net Working (A- 24 Port Switch, B- 24 Port Switch, C- Network Cable, D-UTP Micro-Chip Computers 00.526 7 3.68 Connector E-Wall Mountal Jack-RJ-45 12 UPS 8 KVA Online UPS Micro-Chip Computers 2 1.65 3.30 7 23.10 13 Soft ware Micro-Chip Computers 0.00 A- Window 2003 Premier Micro-Chip Computers Server 3 00.60 1.80 7 12.60 B-Operating system Micro-Chip Computers 14 00.065 00.91 7 6.37 C-Office 2003 Professional Micro-Chip Computers 9 00.16 1.44 7 10.08 D-Nortran antivirus Micro-Chip Computers 17 00.30 7 02.10 14 Bazaar Software Micro-Chip Computers 01 4.50 4.50 7 31.50 15 Designing Machine 2 .60 1.20 7 8.40 16 HP Scanner 1 0.32 0.32 7 2.24 17 HP Inkjet Printer 1 0.38 0.38 7 2.66

18 Less: Discount (0.09) 7 (.60) Total 40 7 280.00

Table N 7 Dayz Food Courts - Detail Computers, Plazamas, Display Monitors, & Soft wares Etc. (Rupees in lacs) Total No. of Sr. Total Cost Description Vendor Qty Unit Price Location No. Price /Property

1 Server – a) For Primary Domain Micro-Chip b) For Backup Domain Computers 2 1.40 2.80 7 19.60 2 Nodes - a) For Cash Counter(6Nos) Micro-Chip b) For Back Office (7 Nos) Computers 13 0.38 4.54 7 31.78 (Discount Rs. 40,000/-) 3 Thermal Printer Micro-Chip Computers 6 00.18 1.08 7 7.56

4 Bar Code Reader Micro-Chip Computers 6 00.10 00.60 7 4.20 6 Photo State Machine Micro-Chip Computers 1 1.25 1.25 7 8.75 6 All-in-One Printer Micro-Chip Computers 1 00.095 00.095 7 0.66 7 Dot Matrix Printer Micro-Chip Computers 3 00.18 00.54 7 3.78 8 Print Server Micro-Chip Computers 2 00.08 00.16 7 1.12 9 Net Working (A- 24 Port Switch, B- 24 Port Switch, C- Network Cable, Micro-Chip 00.632 7 4.42 D-UTP Connector Computers E-Wall Mountal Jack-RJ-45 10 UPS 8 KVA Online UPS Micro-Chip Computers 2 1.65 3.30 7 23.10 11 Soft ware Micro-Chip Computers A- Window 2003 Premier Server Micro-Chip Computers 2 00.60 1.20 7 8.40 B-Operating system Micro-Chip Computers 13 00.065 00.845 7 5.91 C-Office 2003 Professional Micro-Chip Computers 13 00.16 2.08 7 14.56 D-Nortran antivirus Micro-Chip Computers 15 00.30 7 02.10 12 Food Court software Micro-Chip Computers 01 00.75 00.75 7 5.25 13 Less: Discount (0.17) 7 (1.20) Total 20 7 140.00

Table O

SRS Cinemas - Detail of Radio Connectivity for Franchises Model (Rupees in Lacs) No. of Sr. Unit Total Description Vendor Qty Location No. Price Price /Property Total Cost 1 VIP 110-24 Ethernet Radio with Micro-Chip standard accessories Computers 5 0.90 4.50 5 22.50 2 24 DBI Antenna Micro-Chip 5 0.065 0.325 5 1.63 Computers 3 Micro-Chip 8 Pin connector for CAT 5 Cable 5 00.015 0.075 5 .37 Computers 4 15 Meter light weight self supported Micro-Chip tower Computers 5 0.75 3.75 5 18.75 5 Earthling Pit Micro-Chip Computers 5 0.07 0.35 5 1.75 6 Installation & Commissioning & Maint Micro-Chip Charges Computers 5 00.50 2.50 5 12.50 7 Software Consultancy & installation Micro-Chip charges Computers - - 8.10 5 40.50 Total 98.00

Table P (Rupees in lacs)

Sr. Unit Price per No. of No. Particulars Vendor Qty. Price Location Cineplex Total Cost A Projection System Rs. Rs. 1 Strong Millennium II Projector with automatic 2 lens turret and Cine Cita (P) Dolby Digital Reader Ltd. 3 751800 2255400 7 157.87 2 Water cooled film trap Cine Cita (P) Ltd. 1 8400 8400 7 0.58 3 Strong Highlight II Console 4500 W with High Reactance Power Cine Cita (P) Supply Ltd. 1 458800 458800 7 32.12 4 Strong Highlight II Console 2500-3000 W with High Cine Cita (P) Reactance Power Supply Ltd. 2 475600 951200 7 66.58 5 Strong 35 mm AP 3 deck platter Cine Cita (P) Ltd. 3 304700 914100 7 63.98 6 AP Make Up Table for AP platter Cine Cita (P) Ltd. 2 51000 102000 7 7.15 7 Heat Filter Cine Cita (P) Ltd. 1 22400 22400 7 1.58 8 Strong projector prewire Cine Cita (P) Ltd. 3 22000 66000 7 4.62 9 Automation CNA-100-C1 Cine Cita (P) Ltd. 3 130000 390000 7 27.30 10 Splicing tape (imported) Cine Cita (P) Ltd. 3 500 1500 7 0.10 11 Cue foil tape (imported) Cine Cita (P) Ltd. 3 1000 3000 7 0.21 Sub Total A 51,72,800 7 362.09

B Package price (Imported projection) 7 - 12 Reel Arm Set (local) 3 18000 54000 7 3.78 13 Film guide rollers set of 4 (local) Cine Cita (P) Ltd. 3 4000 12000 7 0.84 14 Loop accumulator and additional rollers (approx) for interlock Cine Cita (P) (local) Ltd. 1 25000 25000 7 1.75 15 Rewinder (local) Cine Cita (P) Ltd. 2 800 1600 7 0.11 16 Splicer (local) Cine Cita (P) Ltd. 2 4000 8000 7 0.56 Sub Total B 1,00,600 7 7.04 C 17 Schneider Integrated Anamorphic lens size 60 mm to 80 mm Cine Cita (P) Ltd. 3 116500 349500 7 24.47 18 Schneider Widescreen lens size Cine Cita (P) 60 mm to 80 mm Ltd. 3 45700 137100 7 9.59 19 Osram 4000 W/HS OFR Xenon Cine Cita (P) bulb Ltd. 1 53460 53460 7 3.75 20 Osram 3000 W/HS OFR Xenon Cine Cita (P) bulb Ltd. 2 42140 84280 7 5.89 Sub Total C 6,24,340 7 43.70 D 21 Slide projector (imported) Cine Cita (P) Ltd. 3 33200 99600 7 6.97 22 Projection port (local) Cine Cita (P) Ltd. 3 10000 30000 7 2.10 23 Slide projector port (local) Cine Cita (P) Ltd. 3 10000 30000 7 2.10 24 Viewer port (local) Cine Cita (P) Ltd. 3 10000 30000 7 2.10 Sub Total D 1,89,600 7 13.27 E

Harkness Matt Plus Screen (per Cine Cita (P) 25 sq.mtrs) (approx screen size) Ltd. 222 1800 398700 7 27.91 Cine Cita (P) 26 Packing charges (Rs.) Ltd. 60000 7 4.20 Cine Cita (P) 27 Screen Frames Ltd. 3 100000 300000 7 21.00 Sub Total E 7,58,700 7 53.11

F Audio System 7 - 28 Cine Cita (P) CP650D Ltd. 3 593000 1779000 7 124.53 29 JBL 4632T Cine Cita (P) Ltd. 3 116100 348300 7 24.38 30 Cine Cita (P) JBL 3632 Ltd. 6 80400 482400 7 33.76 31 Cine Cita (P) JBL 4642A Ltd. 6 66000 396000 7 27.73 32 JBL 8330A Cine Cita (P) Ltd. 40 14300 572000 7 40.04 33 Brackets for surround speakers Cine Cita (P) Ltd. 40 600 24000 7 1.68

34 CL1 Cine Cita (P) Ltd. 3 37700 113100 7 7.91 35 CL2 Cine Cita (P) Ltd. 9 53500 481500 7 33.71 36 XLS 402 Cine Cita (P) Ltd. 4 20200 80800 7 5.65 37 XLS 602 Cine Cita (P) Ltd. 8 26900 215200 7 15.06 38 Crown SST 4632T Cine Cita (P) Ltd. 3 18000 54000 7 3.78 39 Crown SST 3632 Cine Cita (P) Ltd. 6 10000 60000 7 4.20 40 Booth Monitor Cine Cita (P) Ltd. 3 21000 63000 7 4.41 41 Rack 40 ru Cine Cita (P) Ltd. 2 27500 55000 7 3.85 42 Rack 32 ru Cine Cita (P) Ltd. 2 24000 48000 7 3.36 43 Cables & connectors (from projector to processor & processor to amplifiers) Cine Cita (P) Ltd. 3 7500 22500 7 1.58 Sub Total F 47,94,800 7 335.64 Kitchen Equipments - Candy G 44 Pop Corm Warmers ( Gold Medal) Kitchen Rama 2 180535 361070 7 25.27 45 Hot Dispenser Cabinet Unit Kitchen Rama 2 95000 190000 7 13.30 46 Pop Crn Machine Kitchen Rama 2 438000 876000 7 61.33 47 Butter Dispenser Kitchen Rama 2 20580 41160 7 2.88 48 Nacho Warmers Kitchen Rama 2 24750 49500 7 3.47 49 Hot Dog Grills Kitchen Rama 2 74875 149750 7 10.48 50 Bun Warmers Kitchen Rama 2 51840 103680 7 7.27 51 Straw Dispenser Kitchen Rama 4 4800 19200 7 1.34 52 Napkin Dispenser Kitchen Rama 4 10170 40680 7 2.85 53 Cup Dispenser Kitchen Rama 8 28000 224000 7 15.68 54 Smoke less Fryer Kitchen Rama 1 200000 200000 7 14.00 55 Dump Stataion Kitchen Rama 1 25000 25000 7 1.75 56 Ice Shaver Kitchen Rama 1 35000 35000 7 2.45 57 Two Door Refregerator Kitchen Rama 1 202000 202000 7 14.14 58 Ice Cube Machine Kitchen Rama 1 163000 163000 7 11.41 59 Cold Display Cabinet Kitchen Rama 2 125000 250000 7 17.50

60 Miscellaneous Equipments 189120 7 13.24 Sub Total G 3119160 218.35 Total - (A+B+C+D+E+F+G) 14760000 1033.20

Orders for the above equipment have not been placed as all equipment is readily available in the market, delivery is quick and installation time is not substantial. The said amount is to the tune of 60.31% of the total Project cost required for the expansion.

Technology - Video Security System The basic components of video security systems are security cameras with multiplexers, time lapse VCRs and monitors. The Company has installed the complete state-of-the-art digital video security system at SRS Multiplex including quality CCD cameras connected to a digital video recorder system. It is installed at the basement of the Multiplex and a trained personnel is always monitoring the screen round the clock. Moreover, a screen is also installed in the cabins of the Managing Director and Chairman for surveillance purposes. The video security system is a means of significant improvement in loss prevention and safety control for the multiplex. Video Security tracks employees, locations, entryways corridors and open areas.

The video security has been installed for the following purposes: (i) To help 'Identify' perpetrators. (ii) To help 'Prevent' accidents or wrongdoing. (iii) To help 'Protect' people and property. (iv) To help 'Observe' processes.

Infrastructure facilities at SRS Multiplex

Raw Materials The Company does not have any manufacturing activities and therefore, there is no raw material requirement.

Manpower The Company sources its manpower requirements from consultancy firms like MSR Marketing (P) Limited, Satmaya Trading Co. (P) Limited etc. As on September 06, 2005, the Company has more than 80 regular employees on its rolls.

Power At SRS Multiplex the Company has made necessary arrangements to meet its power requirements. It has obtained approval for 1750 KVA of electricity line from HSEB. As a measure of precaution, SRSEL has installed two DG Sets of capacity of 500 KVA each and one DG set of 160 KVA at SRS Multiplex. The DG sets are sufficient to generate power in the event of power failure.

Water Water is not required as such for the operation of Multiplex/cinemas/ retail stores/restaurants. The requirement of water is restricted to human consumption, cooking and cleaning purposes. For this purpose, a water treatment plant, based on Reverse Osmosis process has been installed at SRS Multiplex.

Sewage The Company has obtained approval from HUDA for managing sewage at SRS Multiplex. An Effluent Treatment Plant of Migrani make has been installed.

Fire Fighting Facilities At SRS Multiplex the Company has installed Fire Hydrant and Sprinkler system which essentially consists of pipes connected to a source of water supply and provided with outlets for tapings water under pressure. Water outlets are applied at desired points manually through hoses during fire fighting operations. A man-made water storage tank of 60 cum capacity in two interconnected compartments with a common suction sump to facilitate cleaning and maintenance.

Marketing 1. Marketing Arrangements for SRS Multiplex SRS Multiplex has established itself as one of the premier Multiplex providing some of the best facilities. The Company has been advertising in the newspapers, Radio FM, direct marketing and promotion events like paid

previews, contests, DJ, social events like dance competition, fancy dress, singing competition etc. Different brands having their shopping set up in the Multiplex also manage their individual schemes/ campaign for promotional purpose which indirectly add to the promotion of SRS Multiplex. Hoardings have been installed at prominent places at Faridabad to promote the SRS brand.

Film premiers are shown at cinemas at SRS Multiplex.

The Company has appointed M/s Happenings as the marketing and advertising and promotion agency. M/s Happenings has been entrusted the responsibility of space selling and ad selling for SRS Multiplex. Although the agreement is in nature of being executed in the normal course of business, it aids the promotion of SRS Multiplex. The agreement was entered into on April 16, 2005.

The brand objective of the Company is to expand its customer base, ensure customer loyalty by creating a world class shopping and movie watching experience and thus increase depth of the Company's consumer relationship.

2. Marketing arrangement for the proposed Project The existing leading brands in apparels, fast food, jewellery etc. which have associated with the Multiplex has given the Company confidence to extend these brands to the other Multiplexes. With the SRS brand being extended to SRS Value Bazaar and SRS Cinemas, the Company expects to enjoy strong brand recollection. This would help the Company to sell space, services and facilities at the forthcoming Multiplex/ Cineplex/Bazaars/restaurants.

In the coming years, marketing communications will be carried out along the following lines:

Direct Mass Media Print and outdoor mass media using top end print media like local dailies, magazines and moving further to electronic media including radio and television

Events led communications Large events creating localised excitement; focus to be on events that can be televised/ advertised in mass media; also focus on sponsoring events targeting the young population. Premieres of films will also be used as an important marketing tool.

Business strategy The Company plans to target potential cities in North India as such cities are catching up with Metros in terms of culture, disposable income and lifestyle. The cities have been chosen based on the population, education centers providing penetration among the youth and being the advantage of among the first in such cities.

SRS Value Bazaar would be a hyper-market in the retail business of various products at the sites in the format and type of retail chain with different content of products depending on needs and aspirations of customers. The discount store concept in the form of SRS Value Bazaar would provide value for money to the population at large apart from the target segment and ensure additional footfalls for the entire Multiplex.

SRS Value Bazaar is a unique concept. It would be located in own multiplexes and in leased multiplexes of the Company. The Company would procure raw material and other ingredients centrally so as to make the system cost effective. The first store, to be opened at Faridabad, would be a trend setter in the opening of other stores. The store will operate as a discount store and provide various categories including apparels and accessories for all ages and gender, cosmetics, home textiles, household appliances, linen etc.

SRS Cinemas would be a chain of Cineplexes being owned/ leased/ managed by the Company. The present project envisages Cineplex set up in 7 cities across the country, having 21 screens with a capacity of about 20,000 seats.

With the increasing numbers in terms of locations, the Company is growing horizontally by opening of new Multiplexes/ Cineplex/ Bazaar and Food Courts which would provide economies of scale as the outsourcing / purchasing for all the locations would be done centrally.

The children games and club facilities would provide entertainment to all age groups providing a complete family entertainment centre.

A membership drive for the exclusive SRS Club would provide discounts, privileges at all the SRS locations.

To enhance the corporate value by its very name SRS – ‘Sab Raho Saath’, providing a feeling of togetherness, happiness and fun.

The existing total operative capacity at SRS PVR Cinemas is 776 seats. The following table shows the capacity utilization for the months April to July 2005: Sr. No. Month Capacity utilization 1 April 22.51% 2 May 38.54% 3 June 44.75% 4 July 46.47%

Competitive Strengths SRS Multiplex is well placed in the highly competitive retail and entertainment sector, in Faridabad. Few of its competitive strengths are: Professional and young management team possessing a good business acumen Strong communication skills Focus Innovative and focused marketing strategies Understanding of entertainment, retail and real estate businesses

Purchase of property The Company plans to purchase property at 3 places viz. Agra, Ludhiana and Muzaffarnagar. The Company has given advance worth Rs.250 lacs for the purchase of properties. These properties are planned to be located at premium places in these cities. For details of the advance payment, refer to section “Introduction - Objects of the Issue - Funds Deployed” on page no. 29 of the Draft Red Herring Prospectus.

KEY INDUSTRY REGULATIONS AND POLICIES

The Government of India and the respective State Governments have formulated various legislations over the years, which apply to companies engaged in the business of entertainment, real estate, retail and eateries in India.

The Company (SRS Entertainment Limited) currently has one Multiplex comprising of shopping center, theatre screens, eateries, etc. located at Faridabad (NCR–Delhi) and has plans to come up with other similar Mutilpexes in different States and is therefore subject to various State enactments also.

Under the provisions of various Central Government and State Government statutes / legislation, each of the multiplex is required to obtain and renew certain licenses/ registrations and / or permissions with respect to respective business/ operations/ matters.

Pursuant to the applicable laws in force in various States in India in which the Company's Multiplex/ Cineplex/ restaurant would be situated, each of the operation requires mandatory registrations/ licenses/ consents/ permissions under the statutes listed out below (the list of requisite statutes/ legislation set out below is by way of illustration and is not exhaustive for the present purpose): -

Sr. No. Industry Relevant Laws to be complied with

1. Real Estate i. Transfer of Property Act, 1882; ii. Foreign Direct Investment Policy; iii. Respective State’s Rent Control Act, 1958; iv. The Building and other Construction Workers’ (Regulation of Employment & Conditions of Service) Act, 1996; v. The Contract Labour (Regulation and Abolition) Act, 1970; vi. The Employers’ Liability Act, 1938; vii. The Environment Protection Act, 1986; viii. The Industrial Dispute Act, 1947; ix. The Minimum Wages Act, 1948; x. The Workmen’s Compensation Act, 1923 2. Retail i. Foreign Direct Investment Policy; ii. Central Sales Tax Act and/ or State Sales Tax Act(s) or, as the case may be, Value Added Tax Act; iii. Respective State’s Shops and Commercial Establishment Act; iv. Other miscellaneous indirect tax statutes

3. Entertainment i. Cinematography Act, 1952; ii. Cine-Workers and Cinema Theatre Workers Regulation of Employment Act; iii. Advertisement Act of 1954; iv. Respective State’s Cinema Regulation Act; v. Copyright Act, 1957 4. Eateries i. Prevention of Food Adulteration Act, 1954; ii. Prevention of Food Adulteration Rules, 1955; iii. Respective State’s Food Adulteration Rules; iv. Value Added Tax Act; v. Consumer Protection Act, 1986.

Broad overview of some of the relevant legislations/ enactments is as under:

The Cinematograph Act, 1952 The Cinematograph Act, 1952 (the “Act”) has been enacted to make provisions for the certification of cinematograph films for exhibition and for regulating exhibition of films by means of cinematographs.

The Act authorizes the Central Government to constitute Board of Film Certification (the “Board”) in accordance with the Cinematograph (Certification) Rules, 1983 for the purpose of sanctioning films for public exhibition in India. The Board may certify films for either restricted or unrestricted exhibition, or in the alternative, may prohibit the exhibition of the film. The certificate issued by the Board is valid for a period of 10 (ten) years. In terms of the Act, an establishment that exhibits films would have to obtain a license for such exhibition to confirm that the establishment has complied with the provisions of the Act and that the safety standards of the establishment are adequate. Non- compliance with the provisions of the Act would attract penalties in the form of imprisonment and/or fines.

The Cinematograph Film Rules, 1948 In terms of the Cinematograph Film Rules, 1948 (the “Rules”), a license must be obtained prior to storing of any film unless specifically exempted. Any person transporting, storing or handling films would have to ensure compliance with the provisions of the Rules pertaining to precautions against fire, restriction of access to films by unauthorized personnel, supervision of operations, minimum space between workers, storage of any loose films, minimum specifications for aisle space and exits in storage rooms, electrical installations in the storage rooms etc. The Rules also specify the form and the procedure for applying for licenses, renewal of licenses, transfer of licenses, procedure for transport of film, refusal of licenses and cancellation of licenses.

The Punjab Cinema Regulation Act, 1952/ The Punjab Cinema Regulation Rules, 1952 Punjab Cinema Regulation Act, 1952 (the “PCR Act”) extends to the whole of the State of Punjab and Haryana. This is State enactment to make provisions for regulating exhibitions by means of cinematographs in the State of Punjab and Haryana. Under the provisions of this Act, no person shall give an exhibition by means of cinematograph, elsewhere than in a place licensed under this Act or otherwise than in compliance with any condition and restriction imposed by such license.

The Punjab Entertainment Duty Act, 1955/ The Punjab Entertainment Duty Rules, 1956 The Punjab Entertainment Duty Act, 1955 (the “PED Act”) extends to the whole of the State of Punjab and Haryana. The applicability of the PED Act has been extended to Haryana in terms of Haryana Adaptation of Laws (State and Concurrent Subjects) Order, 1968. The PED Act, inter alia, provides for the levy of an entertainment duty in respect of admission to public entertainments. The PED Act provides that a person admitted to an entertainment shall be liable to pay an entertainment duty at a rate not exceeding one hundred and twenty five percent of the amount of payment for admission, which the Government may specify, by a notification in this behalf, and the said duty shall be collected by the proprietor and rendered to the Government in the manner prescribed. Proprietor in relation to any entertainment includes the owner, partner or a person responsible for the management thereof.

The Punjab Entertainments Tax (Cinematograph Shows) Act, 1954/ The Punjab Entertainments Tax (Cinematograph Shows) Rules, 1954 The Punjab Entertainments Tax (Cinematograph Shows) Act, 1954 (the “PET Act”) extends to the whole of the State of Punjab and Haryana. The applicability of the PET Act has been extended to Haryana in terms of Haryana Adaptation of Laws (State and Concurrent Subjects) Order, 1968. The PET Act, inter alia, provides for levy, charge and payment to the State government, on all public cinematograph exhibitions to which persons are admitted on payment, and entertainment at such rates as the State government may, from time to time, by notification fix, but not exceeding ten percent of the entertainment duty payable at the rate notified under Section 3 of the Punjab Entertainment Duty Act, 1955.

The Punjab Shops and Commercial Establishments Act, 1958 The Punjab Shops and Commercial Establishments Act, 1958, (the “PSCE Act”) inter alia, provides for the regulation of conditions of work and employment in shops and commercial establishments. The PSCE Act is applicable to the Sates of Punjab and Haryana. Further according to Section 4 of the PSCE Act, provisions of sections 9 and 10, in relation to opening & closing hours and close day are applicable to Cinema Houses. Other provisions regarding registration, maintaining of employees’ records, etc. have also to be complied with.

The Haryana Value Added Tax Act, 2003/ Central Sales Tax Act, 1956 The Haryana Value Added Tax Act, 2003 (the “HVAT Act”) was introduced in the State of Haryana with effect from April 1, 2003. Every dealer who is liable to pay tax has to apply for registration under the HVAT Act / Central Sales Tax Act within the prescribed time limit.

Section 3 of the HVAT Act provides that every dealer who would have continued to be liable to pay tax under the Haryana General Sales Tax Act of 1973 (the “HGST Act”) had HVAT Act not come into force, and every other dealer whose gross turnover during the year immediately preceding the appointed day exceeded the taxable quantum as defined or specified in the HGST Act, shall [subject to the provisions of sub-section (4)] be liable to pay tax on and from the appointed day on the sale of goods effected by him in the State.

Value Added Tax (VAT) In terms of the policies enumerated in the Central Government’s budget proposals for the fiscal year 2005-06, implementation of value added tax (“VAT”) is to be completed across all the States in India within this fiscal year. VAT levy will be administered by the Value Added Tax Act and the Rules made thereunder. Initially, it will replace the present levy of local sales tax. Under the current single-point system of tax levy, the manufacturer or importer of goods into a State is liable to sales tax. There is no sales tax on the further distribution channel. VAT, is a multi-point levy on each of the entities in the supply chain with the facility of set-off of input tax (i.e., the tax paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer). Only the value addition at each stage of distribution is subject to VAT. VAT has been introduced and implemented in the States of Punjab and the National Capital Territory of Delhi with effect from April 1, 2005.

The Haryana Local Area Development Tax Act, 2000 The provisions of Haryana Local Area Development Act (the “Act”) have become effective from 5.5.2000. Section 3 of the Act provides that there shall be levied and collected a tax (“LADT”) on entry into a local area, of all goods (except those specified in Schedule A to the Act), for consumption or use therein, at such rates not exceeding twenty percent of the value of petroleum based fuels and not exceeding ten percent of the value of other goods, as may, by notification, be specified by the State Government, and different dates and different rates may be specified in respect of different goods or different classes of goods or different local areas. The LADT shall be paid by the importer. However, an importer shall not be liable to pay tax so long as the aggregate value of taxable goods he brings into or receives on their entry into any local area does not, in a year, exceed ten lakh rupees or such other sum as the State Government may, by notification, specify. It has been further provided that an importer who has once become liable to pay tax under this Act shall continue to be so liable until the expiry of three consecutive years during each of which the aggregate value of any taxable goods he brings into or receives on their entry into any local area does not exceed the amount specified.

Foreign Investment Regulations As per the current policy on foreign direct investment, foreign direct investment in Indian companies carrying on business in the Indian retail-trading sector is prohibited.

Fiscal Regulations Income earned by way of profits by a company incorporated in India is subject to levy of income tax on it in accordance with the tax rate prescribed in the Income-tax Act read with Rules framed thereunder. The Company, like other companies, is eligible to avail certain benefits/ exemptions/ deductions available under the Income-tax Act. For details of the tax benefits see ‘Tax Benefits’ on page no. 33 of the Draft Red Herring Prospectus.

HISTORY AND CORPORATE STRUCTURE

History

Address of the Registered/ C-4/1, 100 Ft. Road, Shahdara, Delhi - 110094 Corporate Office Constitution Public Limited Company Activity Existing Construction and management of multiplexes, amusement parks, cinema halls, hotels, clubs and commercial and residential buildings. Proposed Same as above Date of incorporation January 25, 2005 Complexes located at: Existing Setor-12, NH-2, Delhi-Agra Road, Faridabad (NCR) Haryana 121007 Proposed Please refer to para "Business Overview - Location of the Project" on page no.50 of the Draft Red Herring Prospectus

SRSEL was incorporated as 'SRS Commercial Co. Limited' under the Companies Act, 1956 on August 29, 2000 which was engaged in the business of trading in commodities. Witnessing the rapid development in the National Capital Region in terms of civic infrastructure, quality of population, standards of living and general economic growth, the Company decided to venture into a different line of business to capitalize on the retail and entertainment business potential in the country. Thereafter, it changed its name to SRS Entertainment Limited on January 25, 2005 with the main object to engage in activities of construction and management of Multiplexes, Amusement Parks, Cinema Halls, Hotels, Clubs and Commercial and Residential Buildings etc. in and outside India.

The Company started with a small beginning by getting, in auction, land from HUDA in January 2002. This was a significant event which later on developed into a magnificient mall. After extensive surveys and closely studying similar projects in other parts of the country and the world, the Company gradually gathered the resources for building the SRS Multiplex at Faridabad. It was entrusted the support of banks, collaborators etc.

SRS Multiplex started commercial operations November 12, 2004. SRS Multiplex is an integrated project consisting of a 3 screen multiplex, a modern shopping mall, a family restaurant and food court and a health club with a rooftop swimming pool. The big names like Mcdonalds, Pizza Hut, Nescafe, Rayban, Airtel, Music World etc. to name a few add glory to the Multiplex. M/s ERA Construction was the main contractor for building up the project alongwith other different contractors for different contracts. SRS Multiplex received compliments from various celebrities and dignitaries for its attractiveness and colourfullness. The Multiplex’s enjoys recognition and is well accepted by the passers-by. Now, the Company receives many offers for similar replica for other cities. For its SRS Multiplex, the Company tied up with PVR Limited for content and management of the 3 screens built on the nature’s theme of Sun, Moon and Galaxy. The latest movies having strong mass appeal are displayed on the screens. The food joints have been selected on their various tastes from spicy to sweets.

Main Objects of the Company

The main objects of the Company as detailed in its Memorandum are: 1. To carry on the business of all kinds of entertainment, running and managing the multiplex, Cinema halls, open/digital theatres, stage programmes, restaurants, bar, café, discotheques, club, gymnasium, swimming pool, amusement parks, children games and sports centre, video games parlor, casino, hotels, holiday resorts, beauty parlor and saloon, recreational and other activities, banquet halls, marriage home, departmental store, auditorium and all other activities required for running the business of multiplex. 2. To carry on the business of production, direction, exhibition, distribution, purchase, sale, marketing of movies or films of Bollywood and/or Hollywood and to enter into partnership, joint venture, franchise or any type of association with any other person, firm or company engaged in doing any of these things. 3. To carry on the business of consultancy and marketing of activities related to entertainment and in particular to sell or otherwise provide on rent, the space for advertisements to the persons, firms, corporate

or any body interested for the same, to organise events, road shows, etc., for the purpose of marketing and business promotion, within and outside the multiplex, restaurant, banquet, cinema halls and any other building. 4. To buy, exchange or otherwise acquire an interest in any immovable property for the purpose of construction of multiplex, cinema halls, open/digital theatres, restaurants, bar, discotheques, club, gymnasium, swimming pool, amusement parks, beauty parlor and saloon, recreational and sports museum, banquet halls, departmental store, auditorium and any other type of building. 5. To get the rights for broadcasting, telecasting and marketing the musical programmes, serials, quiz programmes, thrillers, family dramas, news, sports etc., whether in all or in episodes and to broadcast and telecast the same.

Changes to the main object of the Memorandum of Association

Sr. Date of Particulars Passed as No. Resolution 1. 20. 09. 2002 Insertion of New Clause No.6 in the Main Object Clause Special 6. To carry on the business of multiplexes, cinema halls, Resolution open theatres, stage programmes, disco halls, disco theque, Bar, club, Gym, Banquet halls, swimming pool restaurants, amusement parks, Recreational and sports activities, Beauty Parlour, Departmental store and all other activities required for running the business of multiplexes. 2. 06. 12. 2004 Replacing Clauses 1-6 by inserting new Clauses no. 1-5 Special To carry on the business of all kinds of entertainment, running and Resolution managing the multiplex, Cinema halls, open/digital theatres, stage programmes, restaurants, bar, café, discotheques, club, gymnasium, swimming pool, amusement parks, children games and sports center, video game parlor, casino, hotels, holiday resorts, beauty parlor and saloon, recreational and sports activities, banquet halls, marriage home, departmental store, auditorium and all other activities required for running the business of multiplex.

To carry on the business of production, direction, exhibition, distribution, purchase, sale, marketing of movies or films of Bollywood and/or Hollywood and to enter into partnership, joint venture, franchise or any type of association with any other person, firm or company engaged in doing any of these things.

To carry on the business of consultancy and marketing of activities related to entertainment and in particular to sell or otherwise provide on rent, the space for advertisement to the persons, firms, corporate or anybody interested for the same, to organize events, road shows etc., for the purpose of marketing and business promotion, within and outside the multiplex, restaurant, banquet, cinema halls and any other building.

4. To buy, exchange or otherwise acquire an interest in any immovable property for the purpose of construction of multiplex, cinemas halls, open/digital theatres, restaurants, bar, discotheques, club, gymnasium, swimming pool, amusement parks, beauty parlor and saloon, recreational and sports museum, banquet halls, departmental store, auditorium and any other such type of building.

5. To get the rights for broadcasting, telecasting and marketing the musical programmes, serials, quiz programmes, thrillers, family dramas, news, sports etc., whether in all or in episodes and to broadcast and telecast the same.” 3. 04. 02. 2005 Amendment of existing clause no.2, 7, 13, 18, 34 Special Resolution

Insertion of new clauses in Objects Incidental or ancillary to the attainment of the Main Objects – 13A, 35, 36 and 37

13A. Subject to the provisions of Section 78, 79, 80 and 81 of the Companies Act, 1956, rules and regulations made there under and the directions issued by the RBI or under FEMA, to receive money as Share capital from any person, Corporations, Company or Organisations whether in India and/or abroad and to describe the same as investment made by NRI’s/ FII and to apply to any of the Stock Exchange as recognised by SEBI for listing of its securities

35. To undertake, carryout, promote and sponsor any programme for promoting the business of the company or for any social or charitable purpose and to increase any expenditure on the same programme and in order to implement any such programme do all the activities as it may deem fit.

36. Subject to the provisions of the Companies Act, 1956, to give to any director, officers, servants or employees of the company any share or interest in the profits of the company business by way of commission or otherwise carried on by own means or through the agency of any subsidiary company and for that purpose to enter into any arrangements which the company may think fit.

To do all event and every thing necessary, suitable or proper for the accomplishment of any of the purposes or the attainment of any of the objects of the company.

Major Events

Event Date Got Allotment Letter from HUDA 28.01.2002 Bhoomi poojan and start of construction 26.06.2002 Sanction of Term Loan of Rs.1000 Lac by PNB, Janpath, New Delhi 05.12.2002 Got DPC Certificate from HUDA 10.12.2002 Soft launch of SRS Multiplex 22.10.2004 Final launch of SRS Multiplex on the eve of Deepawali 12.11.2004 Sanction of Term Loan of Rs.1850lac from Union Bank of India (UBI), Connaught 20.05.2005 Place, New Delhi under Union Rental Scheme @ 9.75% p. a. Sanction Letter No.CP:ADV:2005:642 from UBI for reduction in rate of interest by 1% 13.06.2005 thereby making it 8.75% MoU with Tulip Info Services (P) Limited for leased space measuring 50,000 Sq. Ft. 08.07.2005 construction and management of Cineplex, Restaurant and SRS Value Bazaar at Jodhpur, Rajasthan. MoU with P. R. Infrastructure for leased space measuring 23,000 Sq. Ft. construction 17.07.2005 and management of Cineplex and Restaurant at Amritsar Grant of ISO 9001:2000 Certification 19.08.2005 Franchise agreement with Richi Look Marketing (P) Limited – Cineplex 22.08.2005 Agreement with Omaxe Construction Limited for leased space measuring 18,000 sq.ft. 22.08.2005 each for construction and management of Theatre at Omaxe Plaza and Wedding Mall at Gurgaon

Subsidiaries The Company has not promoted any other company and hence does not have subsidiaries.

Shareholders Agreements

The Company has not entered into agreement with any of it shareholders. The Company is also not a party to any agreement between any of its shareholders.

Other Agreements

1. M/s Seven Dayz Restaurants (P) Limited (Seven Dayz) On August 22, 2005, the Company entered into an MoU with Seven Dayz that gives the Company an exclusive right to use the brand ‘7 Dayz’ for the food courts/restaurants. Seven Dayz will not have any right/control over the properties on which by way of SRSEL the ‘7 Dayz’ is used and shall only be entitled to royalty/fee. The profit or loss arising out of operating the business of food courts/restaurants run/managed through the agreement shall be sole responsibility of SRSEL. The consideration, defined as royalty/fee is Rs.1,00,000/- per annum which shall be paid by SRSEL by cheque/ demand draft. The MoU requires the two parties to enter into definitive agreements within 60 days from the date of the MoU. The definitive agreement shall be in force for a minimum period of nine years commencing from the date of commencement of commercial operation of Cineplex/Food Court and can be renewed for a further period by the parties at mutually acceptable terms and conditions.

2. M/s Omaxe Construction Limited (Omaxe) i. Omaxe Plaza On August 22, 2005, the Company entered into an agreement with Omaxe Construction Limited for obtaining on lease the multiplex theatre to run 2 screens theatre on 2nd floor in Omaxe Plaza, measuring approximately 18,000 sq. ft. Under the terms of the agreement, Omaxe would provide on lease the multiplex at Omaxe Plaza to SRSEL to run a two screen theatre. Possession of the said premises will be given to SRSEL in October 2005 for the purpose of carrying out interior fit outs. SRSEL will pay consideration by way of monthly lease rent of Rs.3,78,000 (Rs.21/- per sq. ft.) to Omaxe. The agreement is valid for a period of nine years from the date of grant of Completion Certificate by the concerned authorities. ii. Wedding Mall On August 22, 2005, the Company entered into an agreement with Omaxe Construction Limited for obtaining on lease the multiplex theatre to run 3 screens theatre on 3rd and 4th floor in the Wedding Mall measuring approximately 18,000 sq. ft. of. Under the terms of the agreement, Omaxe would provide on lease the multiplex at Wedding Mall to SRSEL to run a three screen theatre. Possession of the said premises will be given to SRSEL in February 2007 for the purpose of carrying out interior fit outs. SRSEL will pay consideration by way of monthly lease rent of Rs.3,78,000 (Rs.21/- per sq. ft.) to Omaxe. The agreement is valid for a period of nine years from the date of grant of Completion Certificate by the concerned authorities.

3. Gautam & Gautam Associates On August 17, 2005 the Company appointed Gautam & Gautam Associates for carrying on the work of architects for the Project.

4. PVR Limited On July 28, 2004, the Company entered into an agreement with PVR for the operation and management of the SRS PVR Cinemas. Under the terms of the agreement, PVR provides management consultancy to SRSEL for Cineplex at SRSM for the consideration of 5% of the gross turnover of the Cineplex at SRSM. The gross turnover, as defined in the agreement, means the turnover of the Multiplex Cinema including without limitation all revenue eared by the Company from concession, cafeteria sales, advertising inside the auditorium and in the foyer area for show window, product display etc. marketing and promotions, campaigns less entertainment tax applicable and paid by the Company on Cineplex admissions at SRSM. The agreement is valid for a period of nine years from the commencement date which is November 12, 2004, the date when SRSEL inaugurated SRSM at Faridabad, Haryana.

MANAGEMENT

I. Board of Directors

Sr. Name, Designation, Present Qualification, Date of Directorship in No. Father's name and Address Occupation Appointment other companies Age and and Term Experience 1 Mr. Raj Kumar 367, Sector - M. Com, C.A., 04. 04. 2005 Corporate Aggarwal 9, Faridabad C.S., C.W.A., as Chairman Professional Infra Chairman (Haryana) L.L.B., Ph.D.; Structure (P) S/o Mr. Shri Niwas Professional Limited Aggarwal 20 years Vijay Finlease 43 years Limited 01. 02. 2005 Akriti Financial as Additional Services (P) Director Limited

RRA Mutual Benefit Co. Limited Corporate Professionals India (P) Limited 2 Mr. Sunil Jindal 538, Sector- B. Com, L.L.B.; 21.12.2004 as BTL Investments Managing Director 14, Faridabad Business Managing Limited S/o Mr. Girraj Singh (Haryana) 5 years Director Akriti Financial Jindal 01.12.2004 as Services (P) 26 years Additional Limited Director

3 Mr. Raju Bansal D-884, Chawla B. Com; 21.01.2002 Ferro Plast Executive Director Colony, Business Limited S/o Mr. Nanak Chand Ballabgrah, 4 years Bansal Faridabad 28 years (Haryana) 4 Mr. Pavan Kumar 7/9, Sarvpriya M. Com, 10.8.2005 Corporate Vijay Vihar, New L L B, Professionals India Director Delhi 110016 F.C. S. (P) Limited S/o Late Sh. R B Professional Corporate Vijay 16 years Professional Infra 41 years Structure (P) Limited Corporate Professionals.com (P) Limited BLB Limited P K Vijay Financial Services (P) Limited 5 Mr. Vinod Kumar B-9, Chawla B.A.; 25.02.2002 Madhavtech India Gupta Colony, Business (P) Limited Non Executive Ballabgarh, 25 years Neelabh Engineers Director Faridabad (P) Limited S/o Late Mr. Chunni (Haryana) Lal 50 years

6 Shri Kailash M. 1055, Sector – B. E. 28.03.2005 - Mehta 28, Faridabad (Mechanical) Independent Director and PGDIM

S/o Late Mr. M. M. Retired Mehta 30 Yrs. 63 years 7 Mr. Devendra Singh 646, Sector – B. Sc. and 28.03.2005 SRS Retreat Independent Director 16A, L.L.B Services (P) S/o Mr.. Balbir Singh Faridabad Professional Limited 46 years 25 years Fortune Portfolio (P) Limited

8 Mr. R. S. Gupta 309/12, B.E (Textiles) 14.06.2005 - Non-Executive Jawahar Business Director Colony, 20 years S/o Late Mr. B. R. Gurudwara Gupta Road, 34 years Faridabad

Brief profile of directors other than the Chairman, Managing Director and Executive Directors

Mr. Pavan Kumar Vijay, Director Mr. Pavan Kumar Vijay is the Managing Director of Corporate Professionals, a multidisciplinary corporate consultation company. He has served as the President of the Institute of Company Secretaries of India (ICSI) in the year 2003. He is M.Com, LL.B. and Fellow Member of the ICSI. He has richly contributed as a member of various committees of Ministry of Company Affairs (MCA), SEBI, Stock Exchanges, Industry Associations and professional bodies. He is member, Business Advisory Group of the Bombay Stock Exchange Limited; Member, Capital Market and Financial Services Committee of the PHDCCI, Special Invitee-“E-Corporate Business Working Group” of the DCA and Co-opted Member of the Executive Committee of the Association of NSE Members of India. He is also actively involved and contributing as a trustee for Consumer Education and Research Centre (CERC), Ahmedabad, a centre for promoting consumer education and awareness.

Mr. Kailash M. Mehta, Director Mr. Mehta has done B. E. (Mechanical) and PGDIM and has earned an experience of more than 30 years. He has worked with Sandvik Asia Limited, a Swedish Company as Regional Manager, Central Zone for 27 years and has served NSIC (PTC) as Deputy Director for 4 years.

Mr. Devendra Singh, Director Kanwar Singh is a Science and Law Graduate. He is a practicing advocate and has an experience of more than 25 years. He supervises the legal matters of the Company.

Mr. R. S. Gupta, Director Mr. Gupta is an Engineer and his experience spans beyond 35 years. He has worked with Muradabad Syntex Limited as Production Manager for around 20 years and has earned good reputation.

Terms of Appointment and Compensation of Directors

1. Terms of Appointment and Compensation of Mr. Sunil Jindal, Managing Director: i. Salary: Rs. 1,00,000/- Per Month ii. House Rent Allowance: Rs.30,000/- per month iii. Conveyance Allowance: Rs.10,000/- per month iv. Medical Allowance: Rs.10,000/- per month v. Perquisites: (a) Telephone: Actual telephone charges (b) Newspaper and mazagines: Actual expenses towards newspaper and magazines (c) Statutory Benefits: All statutory benefits applicable to the Company from time to time shall be payable as per applicable provisions (d) Gratuity: Gratuity payable shall not exceed half month's salary for each completed year of service. vi. Sitting Fees: Rs.5000 for Board Meeting and Rs.2000 for Committee Meeting vii. Others: Reimbursement of actual entertainment expenses, actual traveling and hotel expenses for the Company’s business and/or allowances as per the Company’s Rules. viii. Termination: Tenure ends on December 21, 2009 (a period of 5 years from date of appointment) as per the terms of the resolution dated December 21, 2004.

2. Terms of Appointment and Compensation of Mr. Raju Bansal, Executive Director: i. Salary: Rs. 80,000/- Per Month ii. House Rent Allowance: Rs.24,000/- per month iii. Conveyance Allowance: Rs.10,000/- per month iv. Medical Allowance: Rs.10,000/- per month v. Perquisites: (a) Telephone: Actual telephone charges (b) Newspaper and mazagines: Actual expenses towards newspaper and magazines (c) Statutory Benefits: All statutory benefits applicable to the Company from time to time shall be payable as per applicable provisions (d) Gratuity: Gratuity payable shall not exceed half month's salary for each completed year of service. vi. Sitting Fees: Rs.5000 for Board Meeting and Rs.2000 for Committee Meeting vii. Others: Reimbursement of actual entertainment expenses, actual traveling and hotel expenses for the Company’s business and/or allowances as per the Company’s Rules. viii. Termination: Tenure ends on December 21, 2009 (a period of 5 years from date of appointment) as per the terms of the resolution dated December 21, 2004.

Terms of Appointment and Compensation of other Directors

Name of Director Term/period Remuneration / Perquisites Sitting Compensation Fees* Mr. Vinod Gupta Retire by Rotation NIL NIL 5000 Mr. R. S. Gupta Retire by Rotation Rs. 25000 Per Month NIL 5000 Mr. Raj Kumar Aggarwal Retire by Rotation NIL NIL 5000 Mr. Pavan Kumar Vijay Retire by Rotation NIL NIL 5000 Mr. K. M. Mehta Retire by Rotation NIL NIL 5000 Mr. Devendra Singh Retire by Rotation NIL NIL 5000

* Rs.5000 each is for Board Meetings. Additionally, Rs.2000 will be paid as Sitting fees to the Directors for Committee Meetings.

Corporate Governance compliance

Corporate governance is administered through the Board of Directors and the committees of the Board. However, primary responsibility for upholding high standards of corporate governance and providing necessary disclosures within the framework of legal provisions and institutional conventions with commitment to enhance shareholders’ value vests with the Board of Directors.

Pursuant to listing of the Equity Shares, the Company would be required to enter into listing agreements with The National Stock Exchange of India Limited and The Bombay Stock Exchange Limited.

The Company is in compliance with the applicable provisions of listing agreement pertaining to corporate governance, including appointment of independent Directors and constitution of the following committees of the Board of Directors:

Audit Committee The Audit Committee consists of Dr. R. K. Aggarwal, Mr. Sunil Jindal and Mr. K. M. Mehta. Any two members would constitute a quorum for a meeting of the Audit Committee which will be chaired by Mr. R. K. Aggarwal. The Audit Committee acts as an interface between the management and the statutory and internal auditors overseeing the internal audit functions. The Audit Committee was first constituted by the Board of Directors in its meeting held on June 12, 2003 pusuant to compliance of the Companies Act, 1956. The Audit Committee was reconstituted on January 04, 2005 and March 28, 2005. The committee is entrusted with the functions, scope and powers as envisaged in Section 292 (a) of the Companys Amendment Act, 2000 and/or any modification / amendment thereof from time to time.

Remuneration Committee The Remuneration Committee consists of Dr. R. K. Aggarwal, Mr. K. M. Mehta and Mr. R. S. Gupta. All the members of the committee are non-executive independent directors. Any two members would constitute quorum

for a meeting of the Remuneration Committee. The Remuneration Committee is broadly responsible to review and approve the compensation package for senior management personnel including the Managing Director and Chief Executive Officer. The committee is scheduled to meet once a year and will be chaired by Mr. R. K. Aggarwal. The Company Secretary of the Company, Ms. Navneet Chhabra would act as the secretary of the committee.

Investor Grievance Committee The Investor Grievance Committee of our Company consists of Dr. R. K. Aggarwal, Mr. Sunil Jindal and Mr. Raju Bansal. This committee was constituted by the Board of Directors in its meeting held on June 14, 2005 pursuant to clause 49 of the Listing Agreement. It has been constituted for addressing the grievances of the shareholders/ investors, and to suggest and monitor measures to improve investors’ satisfaction. The committee will meet once a month and the meeting will be chaired by Mr. R. K. Aggarwal. The Committee shall have the authority to approve transfers, transmission, issue of certificates and other related work. The Committee also looks into redressal of shareholder and investor complaints, issue of duplicate share certificates. It shall have full access to information contained in the records of the Company and external professional advice, if necessary.

Shareholding of Directors including Qualification Shares The following table details the shareholding of our Directors, as at the date of the Draft Red Herring Prospectus:

Name of Director No. of Shares of Rs.10/- each Mr. Sunil Jindal 1,36,600 Mr. Raju Bansal 45,000

There is no requirement of holding qualification shares to become a Director of the Company in the Articles of Association of the Company.

Details of Borrowing Powers of Directors

The borrowing power of the Board of Directors of the Company has been increased upto Rs.10000 Lacs vide resolution dated 12.8.2005 passed in the EOGM of the company. The Company has presently utilised Rs. 1850 Lacs under union rent scheme of Union Bank of India, Connaught Palace, New Delhi. The Company has approached UTI Bank Limited for its debt requirement for the proposed project and UTI Bank Limited has vide its letter no. UTIBK/RMD-DEL/AM/172 dated September 8, 2005.

Interest of the Directors Except to the extent of the shareholding in the Company, the Directors do not have any other interest in the Company. In term of Section 301 of the Companies Act, 1956 no notice has been received from the Directors of the Company that need to be entered in the register maintained under section 301 of the Companies Act, 1956.

Change in directors during the last three years The following changes have taken place in the Board of Directors of the Company during the last three years:

Name Date of Date of cessation Nature of change appointment

Anil Jindal 21.01.2002 20.12.2004 Appointed as Additional Director and confirmed at AGM dated 27.06.2002 and elected as Managing Director w.e.f. 17.05.2003 Resigned as Director and Managing Director w.e.f. 20.12.2004 Sunil Jindal 29.08.2000 16.05.2002 Appointed as First Director and Resigned from Directorship w.e.f. 16.05.2002 Sunil Jindal 01.12.2004 N.A. Appointed as Additional Director and elected as Managing Director w.e.f. 21.12.2004. and reappointed as director at AGM dated 25.07.2005

Anil Goyal 21.01.2002 28.03.2005 Appointed as Additional Director and confirmed at AGM dated 27.06.2002 Resigned from Directorship by giving resignation letter dated 28.03.2005 Raj Kumar 01.02.2005 N.A. Appointed as Additional Director and Aggarwal confirmed at AGM dated 25.07.2005 and elected as Chairman w.e.f. 01.04.2005 Kailash M Mehta 28.03.2005 N.A. Appointed as Additional Director and confirmed at AGM dated 25.07.2005 Devendra Singh 28.03.2005 N.A. Appointed as Additional Director and confirmed at AGM dated 25.07.2005 Rajesh Mangla 21.01.2002 14.06.2005 Appointed as Additional Director and confirmed at AGM dated 27.06.2002 and Appointed as Whole-time Director w.e.f. 01.4.2005 and Resigned as Director and whole time Director w.e.f. 14.06.2005

Raju Bansal 21.01.2002 N.A. Appointed as Additional Director and confirmed at AGM dated 27.06.2002 R.S. Gupta 14.06.2005 N.A. Appointed as Additional Director and confirmed at AGM dated 25.07.2005 Pavan Vijay 10.08.2005 N.A. Appointed as Additional Director

II. Management Organisation structure

Chairman Raj Kumar Aggarwal

Managing Director Sunil Jindal

Director Director Director Director Director Director Pawan Kumar K.M. Mehta Vinod Gupta Raju Bansal R. S. Gupta Devendra Vijay Singh

C.E.O. Ashok Bansal

Management Incharge Representative Purchase & HOD Admin & H.R. Store Suresh Arora Ajay Jain

HOD C.O.O. & CS V. P. Retail C. F. O HOD I.T. Navneet Operations Arun Gupta Technical Department. Chhabra Rahul Das DP Singh Narender Vaid

Asst. Manager Mall Cinema Sr. Manager C.A.O. Manager Finance I. T. Manager & Manager Marketing Seema Narang Dheeraj Gupta Varun Gupta Cinema Ashish Negi Rahul Gupta Engineer

Incharg Hardware & Duty Managers Manager Sr. Accountant e Civil Software Staff Amit Marketing Mr. Ramesh Vipul Sanjiv Grover Chand Sachin

Supervisor Supervisor Asst Acco Incharge Incharg Incharge House Security & Duty Manager unt Electrical e Plumbing & Keeping Parking Officers Marketing Staff . Shiv A. C.r. ETP &ESPs Lakhan D. N. Sushil Jain Ratan Alok . Hari Rawat

III. Key Management Personnel

Sr. Name Age Designation Qualification Total Date of Previous No. (years) experienc appointmen employment e (years) t 1 Mr. Ashok 59 CEO B.E (Textiles) 35 01.06.2005 President – Bansal Euro cot Spin 1 2 Ms. 25 COO and M.Com, C.S. 2 /2 10.02.2003 Apollo Tyres Navneet Company Chhabra Secretary 3 Mr. Rahul 44 Vice B.A (Hons) 20 01.07.2005 Karam Chand Das President - Thapar Retail (Africa) Operations Limited Ashco, Inc. J.B.Nayak & Son’s Assam Company India Limited 4 Mr. Arun 24 CFO and B.Com, C.A. 3 01.09.2004 S P Chopra Kumar Compliance and Co., Gupta Officer Chartered Accountants 5 Mrs. 31 CAO B.A., B. Ed 12 01.10.2004 BTL Seema Investments Narang Limited 6 Mr. 32 Head (IT) B.E. 9 01.01.2005 Proprietary Narendra (Electronics), business Vaid MCSE, CCNA 7 Mr. D. P. 40 Mall Civil 18 01.10.2004 Era Singh Manager Engineer Constructions (Technical) India Limited 8 Mr. 30 Mall Civil 10 01.11.2004 Airforce Parvesh Manager Engineer Naval Kumar (Maintenanc Housing e) and Board Cinema Engineer

None of the Directors and Key Management Personnel, except Ms. Navneet Chhabra and Mrs. Seema Narang have family relation between them. As on September 06, 2005 all the employees named above are on the roll of the Company as permanent employees.

Brief profile of key Management personnel

Mr. Ashok Bansal, CEO He has been a veteran in the industry and has worked as President Euro cot Spin Limited; Vice President Parasrampuria International; Manager Indo Thai Synthetics Limited, Thailand etc. He is a B.E. and has experience of over 35 years. He has taken up the assignment at SRSEL recently. He has been instrumental in tying up for new projects at various places through his initiatives. He would be a key person in the Company's future endeavours.

Ms. Navneet Chhabra, COO and Co. Secretary She is Post Graduate in Commerce, the member of Institute of Company Secretaries of India and currently pursuing law from Delhi University. She has joined the Company as Company Secretary and Sr. Manager (Project) and within a short span of 1½ years got this position. She is the person responsible for complete cinema operations of the Multiplex.

Mr. Rahul Das Mr. Das is a B.A (Hons) Graduate in Economics. His experience spans over 20 years. He held independent charge as profit center head in Karam Chand Thapar (Africa) Limited Prior to that he was the Vice-President International Sourcing with Ashco, Inc. He has also been a partner in J.B. Nayak & Son’s and assistant manager with the Assam Company India Ltd, Assam.

Mr. Arun Kumar Gupta, CFO Mr. Gupta is a qualified Chartered Accountant from the Institute of Chartered Accountants of India. He has varied experience in the field of Finance, Accounts and Taxation. He has been assigned the complete responsibility of Accounts, Finance and Taxation Department.

Mrs. Seema Narang, CAO Mrs. Narang has varied experience in accounts. She takes care of Internal Control and Audit System and was completely involved in the feasibility study of the existing Project.

Mr. Narender Singh Vaid, Head (I. T.) Mr. Vaid has done his B. E. (Electronics) from Aurangabad University. He is MicroSoft Support Engineer (MCSE) and presently pursuing Cisco Certified Network Administrator (CCNA). Having an experience of more than 9 years, he heads the I.T. Department and looks after all requirements be it software, hardware, development of website etc.

Mr. D. P. Singh, Mall Manager (Technical) Mr. D. P. Singh is a Civil Engineer from State Board of Technical Education Haryana. He has been with the Project from the first day and has an experience of more than 18 years in the field of construction. After seeing his hard work and zeal, he has been entrusted to take care of all electrical, air-conditioning and all related activities.

Mr. Parvesh Kumar, Mall Manager (Maintenance) and Cinema Engineer Mr. Parvesh is a qualified Civil Engineer from C. R. Institute of Engineering, Rohtak. He is with the Project since its inception. Having an experience of more than 10 years, he is an expert in structures and finishing of the buildings. He looks after the engineering matters of SRSM in particular the cinema operations.

Shareholding of key Management personnel None of the Key Management Personnel hold any shares in the Company.

Changes of key Management personnel in the last one year There is no change in the key management personnel otherwise than by way of retirement in the normal course of service in the last one year prior to the date of filing the Draft Red Herring Prospectus with SEBI.

Compensation of key Management personnel Currently, the Company does not have performance linked bonus or a profit sharing scheme for the employees. The key Management personnel of the Company do not have any interest in the Company other than to the extent of the remuneration o benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them in the ordinary course of business.

Employees The total manpower on the rolls of the Company is more than 80 as on the date of the Draft Red Herring Prospectus. For entire manpower requirement, the Company banks mainly on manpower consultancy firms.

Disclosures Regarding Employees Stock Option Scheme / Employees Stock Purchase Scheme Till date, the Company has not introduced any Employees Stock Option Scheme / Employees Stock Purchase Scheme, as required by the Guidelines or Regulations of SEBI relating to Employee Stock Option Scheme and Employee Stock Purchase Scheme.

Payment or Benefit to Officers of the Company Except the payment of salaries and perquisites, the Company makes ex-gratia payments to its officers as and when it deems fit.

PROMOTERS

1. Mr. Sunil Jindal Mr. Sunil Jindal is the founder promoter of SRS Entertainment Limited. He is aged 28 years and is the Managing Director of the Company. He is a Law Graduate and has over 5 years of experience in the business and financial activities. He has also promoted Akriti Financial Services (P) Limited where he a director. He also serves as a director of BTL Investments Limited and has been instrumental in the growth of its business as well as diversified the business activities. He supervises the day-to-day operations of SRSEL apart from the strategic planing for growth and expansion of the Company.

Mr. Sunil Jindal’s personal details are as under: Voter ID No. N.A. Driving License No. 3196/F/2005

2. Mr. Raju Bansal Mr. Raju Bansal is the founder promoter of SRS Entertainment Limited. He is aged 28 years and is the Executive Director of the Company. He is a Commerce graduate and has over 4 years of experience in the business of financial activities. Other than SRSEL, he has also promoted Ferro Plast Limited. His active involvement and role in conceptualisation and implementation of the SRS Multiplex has been critical to its success.

Mr. Raju Bansal's personal details are as under: Voter ID No. HR/06/53/0140005 Driving License No. 3514/D/1995

Copy of the Permanent Account Number, Bank Account Number and passport of the above have been submitted to the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited.

Promoter Group

A. Relatives of Promoters The other individuals who form part of the Promoter Group of SRS Entertainment Limited are Mr. Lalit Bansal, Mr. N. C. Bansal, Mr. Bishan Bansal, Mr. Suresh Bansal and Mrs. Sanjna Bansal. These individuals are not holding any directorships in the Company and are not involved in the day-to-day management of the Company.

B. Corporate Bodies

1. Bansla Finlease Limited The company was incorporated on October 11, 1991 as Bansla Finlease (P) Limited and received a fresh Certificate of Incorporation on February 20, 1996 subsequent upon change of name to Bansla Finlease Limited on conversion to public limited company. The registration number of the company with ROC is 55-45921. The company is engaged in the activity of financing of vehicles, consumer goods etc.

It is promoted by Mr. Sushil Singla, Mr. Rajesh Singla and Mr. Vinod Jindal. The Board of Directors of the company comprises of Mr. Sushil Singla, Mr. Sanjay Singla, Mr. Praveen Singla, Mr. Rajesh Singla, Mr. Vinod Jindal and Mr. Bishan Bansal.

Shareholding Pattern: The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Mr. Sushil Singla 1,24,325 1.54 Mr. Rajesh Singla 1,05,300 1.30 Mr. Vinod. Jindal 1,07,600 1.34 Relatives, Friends & Associates 74,12,775 95.82

Total 80,81,800 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 242.71 167.54 77.60 Expenses 234.77 160.27 72.74 Profit/ (Loss) Before Tax (PBT) 7.95 7.26 4.86 Profit/ (Loss) after Tax (PAT) 4.38* 5.82 4.43 Equity Share Capital 808.18 700.00 662.35 Share Application Money 1.62 31.00 9.30 Reserve And Surplus 339.56 10.65 8.75 EPS 0.05 0.08 0.07 NAV 14.20 10.15 10.13 *The company earned higher PBT in F.Y2005 as compared to the previous year. However, the company enjoyed lower depreciation benefit as per Income Tax Act as compared to previous years. Therefore, higher provision for tax has been made in F.Y2005.

2. BTL Commercial Limited The company was originally incorporated on October 16, 2000 as Manu Commercial Limited and received certificate of commencement of business on the same day. Thereafter, on November 14, 2003 name of the company was changed to BTL Commercial Limited. Registration number of the company with ROC is 55- 107788. It trades in Tea under the brand name of “Rahee”. The primary business area of the company is Haryana and Delhi. It is promoted by Mr. Vinod Jindal and Mrs. Ritu Jindal. Its Board of Directors include Mr. Vinod Jindal, Mrs. Ritu Jindal and Mrs. Shashi Jindal

Shareholding Pattern: The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Sh. Vinod Jindal 69,050 4.60 Smt. Ritu Jindal 1,31,600 8.78 Relatives, Friends & Associates 12,99,350 86.62 Total 15,00,000 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 90.74 31.80 32.77 Expenses 89.38 30.91 31.92 Profit/ (Loss) Before Tax (PBT) 1.37 0.89 0.85 Profit/ (Loss) after Tax (PAT) 1.03 0.88 0.04 Equity Share Capital 150.00 117.24 60.00 Share Application Money 41.46 0.00 6.84 Reserve & Surplus 185.09 53.98 0.79 EPS 0.07 0.08 0.01 NAV 22.11 14.26 9.36

3. BTL Impex (India) Limited BTL Impex (India) Limited was originally incorporated on February 27, 1997 as G.S.J.P. Leasing & Credits Limited which received Certificate of Commencement of business on the same day. Name of the company was subsequently changed to BTL Home Finvest Limited and finally to BTL Impex (India) Limited. The registration

number of the company with ROC is 55-85457. The company has the authorised service station and sub dealership of TVS motors and direct selling agents of various finance companies to finance of vehicles.

The company is promoted by Mrs. Ritu Jindal and Mr. Rishi Prakash Chikkara. Its Board of Directors are Mrs. Ritu Jindal, Mr. Rishi Prakash and Mrs. Sangeeta Kapoor.

Shareholding Pattern: The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under: Name of Shareholder No. of Shares % of Shareholding Promoters Mrs. Ritu Jindal 68,300 4.91 Mr. Rishi Prakash Chikkara 32,400 2.33 Relatives, Friends & Associates 12,89,600 92.76 Total 13,90,300 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 136.00 23.24 5.02 Expenditure 130.60 22.50 4.91 PBT 1.46 0.75 0.10 PAT (0.35)* 0.69 0.06 Share Capital 139.03 116.12 50.00 Share Application Money 3.30 5.80 0.00 Reserves & Surplus 84.35 16.89 0.08 EPS 0.00 0.06 0.01 NAV 15.69 10.96 9.99 * The company has made provission for deffered tax liability to the tune of Rs.1,70,200 for the prior years in the current year.

4. BTL Industries Limited The company was originally incorporated on January 22, 1997 as Brightways Trade-Finlease Limited and received certificate of commencement of business on February 03, 1997. Name of the company was changed to BTL Industries Limited on January 13, 1998. The registration number of the company with ROC is 55-84630. The company is doing business in Haryana & Delhi with the brand name of “Rahee”. The products are refined oil, mustered oil and other kiryana items

The company is promoted by Mr. Girraj Prasad Jindal and Mr. Karamvir Singh and its Board of Directors comprises of Mr. Girraj Prasad Jindal, Mr. Karamvir Singh and Mr. Khem Chand.

Shareholding Pattern: The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters: Sh. Girraj Prasad Jindal 1,28,300 8.21 Sh. Karamvir Singh 1,14,600 7.34 Relatives, Friends & Associates 13,19,275 84.45 Total 15,62,175 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 418.82 53.17 53.42 Expenses 412.71 47.28 51.39

Profit/ (Loss) Before Tax (PBT) 6.11 5.89 2.03 Profit/ (Loss) after Tax (PAT) 3.86* 5.42 1.86 Equity Share Capital 156.22 111.79 95.57 Share Application Money 0.00 0.02 9.20 Reserve & Surplus 196.69 63.95 11.54 EPS 0.25 0.48 0.19 NAV 22.59 15.72 11.21 *The company earned higher PBT in F.Y2005 as compared to the previous year. However, the company enjoyed lower depreciation benefit as per Income Tax Act as compared to previous years. Therefore, higher provision for tax has been made in F.Y2005.

5. BTL Investments Limited The company was originally incorporated on May 19, 1995 as RRA Capital Services (P) Limited. Subsequently, changed its name to RRA Capital Services Limited upon conversion to public company limited. Finally its name was changed to BTL Investments Limited on September 05, 1997. The registration number of the company with ROC is 55-68803. The company has been awarded ISO 9001:2000 certificate for its qualitative services. The company is engaged in the activity of financing of vehicles, consumer goods etc..

It is promoterd by Mr. Naresh Goel, Mr. Nanak Chand Tayal and Mr. Dinesh Kumar Goel. Its Board of Directors comprises of: 1. Mr. Naresh Goel 2. Ms. Manju Rani Jain 3. Mr. Sunil Jindal 4. Mr. Nanak Chand Tayal 5. Mr. Dinesh Kumar Goel 6. Mr. Vipin Nalwa

Shareholding Pattern: The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Naresh Goel 1,14,300 1.51 Nanak Chand Tayal 1,03,400 1.36 Dinesh Kumar Goel 1,14,700 1.52 Relatives, Friends & Associates 72,47,475 95.61 Total 75,79,875 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 389.75 379.78 150.19 Expenses 383.95 374.73 143.19 Profit/ (Loss) Before Tax (PBT) 5.80 5.05 7.01 Profit/ (Loss) after Tax (PAT) 3.41* 4.49 6.45 Equity Share Capital 757.99 700.00 700.00 Share Apllication Money 31.22 0.00 29.95 Reserve And Surplus 188.93 11.56 11.98 EPS 0.04 0.06 0.09 NAV 12.49 10.17 10.17 *The company earned higher PBT in F.Y2005 as compared to the previous year. However, the company enjoyed lower depreciation benefit as per Income Tax Act as compared to previous years. Therefore, higher provision for tax has been made in F.Y2005.

6. BTL Sales Limited The company was incorporated on November 01, 1990 as Pappu Investment Company (India) Private Limited. On June 11, 1996 it was converted to a public limited company and nme changed to Pappu Investment

Company (India) Limited. Subsequently, on November 18, 2003 its name was changed from Gomti Manutrade Limited to BTL Sales Limited and the company received a fresh Cetificate of Incorporation. The registration number of the company with ROC is 55-41949. The company deals in manufacturing and trading of milk, edible oil, Vanspati Ghee, and other consumable items.

Promoters of the company are Mr. Dheeraj Gupta and Mrs. Sanjana Bansal. Its Board of Directors are Mr. Dheeraj Gupta, Mr. Nitin Kumar and Mrs. Sanjan Bansal.

Shareholding Pattern:

The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Mr. Dheeraj Gupta 80,500 6.84 Mrs. Sanjna Bansal 80,500 6.84 Relatives, Friends & Associates 10,16,720 86.32 Total 11,77,720 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-2003 Income 180.56 1.66 0.53 Expenses 179.55 1.64 0.46 Profit/ (Loss) Before Tax (PBT) 1.01 0.02 0.07 Profit/ (Loss) after Tax (PAT) 0.60 0.01 0.04 Equity Share Capital 117.77 74.25 10.00 Share Application Money 0.00 43.65 12.98 Reserve & Surplus 203.96 64.32 0.05 EPS 0.05 0.00 0.04 NAV 27.24 18.57 9.28

7. Madhavtech India (P) Limited The company was incorporated on February 22, 2000. The registration of the company with ROC is 55-103892. The company deals in manufacturing and trading of ferrous and nonferrous plastic mould components.

Promoters of the company are Mr. Vinod Gupta, Mr. Rakesh Gupta, Mr. Ashish Gupta and Mr. Rahul Gupta. It’s Board of Directors comprrise of Mr. Vinod Gupta and Mr. Ashish Gupta.

Shareholding Pattern: The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Share Holding Mr. Vinod Gupta 100 0.025 Mr. Rakesh Gupta 100 0.025 Mr. Ashish Gupta 2,26,250 49.95 Mr. Rahul Gupta 2,26,500 50.00 Total 4,52,950 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 2.65 0.71 0.35 Expenses 0.24 0.29 0.38

Profit/ (Loss) Before Tax (PBT) 2.41 0.42 (0.03) Profit/ (Loss) after Tax (PAT) 2.28 0.31 (0.03)* Equity Share Capital 45.29 37.55 31.17 Share Application Money 0.00 0.00 0.42 Reserve & Surplus 78.61 53.33 34.20 EPS 0.50 0.08 0.00 NAV 27.29 24.10 20.82 *In F.Y 2003, the company has suffered a loss of approximately Rs.0.15 lacs on sale of quoted investment.

8. Neelabh Engineers (P) Limited The company was incorporated on December 22, 1996. Its registration number with ROC is 55-33403. The company deals in manufacturing of automobile parts.

The company is promotered by Mr. Vinod Gupta, Mrs. Monica Gupta and Vinod Kumar HUF. The Board of Directors of the company comprises of Mr. Vinod Gupta and Mrs. Monica Gupta.

Shareholding Pattern: The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Mr. Vinod Kumar 1,41,100 78.30 Mrs. Monica Gupta 100 0.06 Vinod Kumar HUF 39,000 21.64 Total 1,80,200 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 0.00 0.00 0.00 Expenses 0.00 0.00 0.00 Profit/ (Loss) Before Tax (PBT) 0.00 0.00 0.00 Profit/ (Loss) after Tax (PAT) 0.00 0.00 0.00 Equity Share Capital 18.02 18.02 17.72 Share Application Money 1.85 1.70 1.70 Reserve & Surplus 26.85 26.85 26.40 EPS 0.00 0.00 0.00 NAV 24.41 24.46 24.66

9. North Delhi Credit & Investments Limited The company was incorporated on December 02, 1993. The registration number of the company with ROC is 55-56269. The company is engaged in the activity of money lending/financing and as an investment company by acquiring the shares in the other companies.

It is promoted by Mr. Raju Gupta and Mr. Dinesh Khatri. Borad of Directors of the company are Mr. Raju Gupta and Mr. Dinesh Khatri

Shareholding Pattern: The shareholding pattern of this company as on the date of filing this Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Sh. Raju Gupta 89,400 6.72 Sh. Dinesh Khatri 1,03,200 5.82 Relatives, Friends & Associates 13,43.645 87.46

Total 15,36,245 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-2005 2003-2004 2002-2003 Income 31.42 40.82 30.87 Expenses 30.11 39.59 29.73 Profit/ (Loss) Before Tax (PBT) 1.31 1.23 1.14 Profit/ (Loss) after Tax (PAT) 0.85* 1.04 0.97 Share Capital 153.62 128.04 108.41 Share Application Money 0.00 0.00 24.50 Reserves & Surplus 138.65 61.72 1.80 EPS 0.06 0.08 0.09 NAV 19.03 14.82 10.17 *The company earned higher PBT in F.Y2005 as compared to the previous year. However, the company enjoyed lower depreciation benefit as per Income Tax Act as compared to previous years. Therefore, higher provision for tax has been made in F.Y2005.

10. Parvati Finlease Limited The company was incorporated on May 23, 1996. The registration number of the company with ROC is 55- 79137. The company is engaged in the activity of money lending/financing and as an investment company by acquiring the shares in the other companies.

Promotes of the company are Mr. Ashwani Taneja and Mrs. Meena Aggarwal. Its Board of Directors Mr. Ashwani Taneja, Mrs. Meena Aggarwal and Mr. Ritesh Aggarwal.

Shareholding Pattern: The shareholding pattern of this company as on the date of filing this Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Mr. Ashwani Taneja 30,010 7.34 Mrs. Meena Aggarwal 2,50,010 61.10 Relatives, Friends & Associates 1,29,150 31.56 Total 4,09,170 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-2005 2003-2004 2002-2003 Income 3.68 2.43 1.93 Expenses 3.35 2.22 1.73 Profit/ (Loss) Before Tax (PBT) 0.33 0.21 0.21 Profit/ (Loss) after Tax (PAT) 0.21 0.14 0.13 Share Capital 40.92 40.92 40.92 Share Application Money 51.05 28.80 13.80 Reserves & Surplus 0.63 0.42 0.28 EPS 0.05 0.03 0.03 NAV 10.15 10.10 10.05

There is no change in the management in any of the above Promoter Group companies during the last three financial years.

The Permanent Account Numbers, Bank Account Numbers, the Company Registration Numbers and the addresses of the Registrars of Companies where the Promoter Group companies are registered have been submitted to the National Stock Exchange of India Limited and The Bombay Stock Exchange Limited.

Common Pursuits There are no common pursuits in the business of our Company and our Promoter Group companies.

Interest of Promoters The Promoters do not have any interest in the business of SRSEL, except to the extent of investments made by them and their Promoter Group / investment companies in SRSEL and earning returns thereon. For details of the salary and remuneration of the Managing Director, please refer to the section titled “Terms of Appointment and Remuneration of Directors” on page no. 74 of the Draft Red Herring Prospectus.

The Company has entered into various agreements/transactions with its Promoter Group companies. For further details, please refer to “Risk Factors” on page no. viii of the Draft Red Herring Prospectus and “Related Party Transactions” in the para below.

Payment of benefit to Promoters of the Issuer Company No other payment or benefit is given to our Promoters save in their capacity as shareholders or remuneration as Executive Directors.

GROUP COMPANIES

1. Akriti Financial Services (P) Limited

The company was incorporated on May 23, 1996 as Akriti Financial Services Private Limited The registration number of the company with ROC is 55-79126. The company is engaged in the activity of financing of articles or commodities of all and every kind of description by way of hire purchase, installment purchase or deferred payment or similar transaction.

It is promoted by Mr. Raj Kumar Aggarwal, and Mr. Sunil Jindal. The Board of Directors of the company comprises of Mr. Raj Kumar Aggarwal, Mrs. Shakuntla Devi, Mr. Sunil Jindal and Mr. Ritesh Kumar Aggarwal.

Shareholding Pattern: The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Mr. Raj Kumar Aggarwal 10 -- Mr. Sunil Jindal 40,000 3.26 Sub-total 40,010 3.26 Non Promoters 11,86,710 96.74 Total 12,26,720 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 9.36 2.35 1.13 Expenses 7.87 2.04 1.45 Profit/ (Loss) Before Tax (PBT) 1.49 0.31 (0.32)* Profit/ (Loss) after Tax (PAT) 1.37 0.28 (0.32) Equity Share Capital 122.67 99.42 84.42 Share Application Money 38.30 67.28 58.38 Reserve And Surplus 88.50 65.25 50.25 EPS 0.11 0.03 --- NAV 249.30 232.13 192.58 * The company sustained loss in the F.Y. 2003 because it did not receive dividend income on its investments in unquoted securities.

2. Ferro Plast Limited

The company was incorporated on December 04, 1973 as Ferro Plast Private Limited and received a fresh Certificate of Incorporation on April 8, 1996 subsequent upon change of name to Ferro Plast Limited on conversion to public limited company. The registration number of the company with ROC is 55-6980. The company is engaged in the business as factors, financers, guarantors, finance brokers and agent to do business of financing by way of Hire purchase, leasing, installment purchase or similar transaction.

It is promoted by Mr. Rajeev Vashisht, Mrs. Annapurna Gupta and Mr. Raju Bansal. The Board of Directors of the company comprises of Mr. Rajeev Vashisht, Mrs. Annapurna Gupta, Mr. Raju Bansla and Mr. Sunil Aggarwal.

The shareholding pattern of this company as on the date of filing the Red Herring Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding Promoters Mr Rajeev Vashisht 435 0.36

Mrs. Annapurna Gupta 25,000 20.79 Mr. Sunil Aggarwal 310 0.26 Mr. Raju Bansal 2,255 1.87 Sub-total 28,000 23.28 Non Promoters 92,275 73.72 Total 1,20,275 100.00

Financial Performance: Financial highlights for the last three years is as follows: (Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 Income 8.39 3.43 3.12 Expenses 7.78 3.33 2.95 Profit/ (Loss) Before Tax (PBT) 0.61 0.10 0.17 Profit/ (Loss) after Tax (PAT) 0.42 0.09 0.16 Equity Share Capital 120.28 116.53 93.03 Share Application Money 46.54 12.38 35.60 Reserve And Surplus 27.25 23.50 (0.57)* EPS 0.35 0.08 0.17 NAV 194.07 152.26 127.76 * The negative reserves and surplus is due to accumulated loss of prior years

Related Party Transactions For related party transactions kindly refer to the section titled ‘Financial Information - Related Party Disclosure" on page no. 103 of the Draft Red Herring Prospectus.

Currency of presentation For currency of presentation used in the Draft Red Herring Prospectus kindly refer to the section titled ‘Currency of Presentation’ on page no. vi of the Draft Red Herring Prospectus.

Dividend Policy The declaration and payment of dividends will be recommended by our Board of Directors and our shareholders, in their discretion, and will depend on a number of factors, including but not limited to our earnings, capital requirements and overall financial condition. The Company has not declared or paid dividend since its inception since the Company began commercial operations in November 2004.

FINANCIAL INFORMATION

REPORT OF THE AUDITORS ON FINANCIAL INFORMATION

To The Board of Directors SRS Entertainment Limited, (Formerly Known as SRS Commercial Co. Limited) Delhi

Dear Sir(s),

We have examined and found correct the Audited Accounts of SRS Entertainment Limited for the past five financial years/period ended 31/03/2001, 2002, 2003, 2004, 2005 and for the quarter ended on 30th June 2005 being the last date upto which the accounts of the Company have been made up and audited by us. Subject to paragraph 3(f) of Auditors Report and Notes on Accounts in Schedule IV of the said audited financial statements, at the date of signing this report, we are not aware of any material adjustment which would affect the result shown by these accounts in accordance with the requirement of Part II of Schedule II to the Companies Act, 1956.

In accordance with the requirements of Paragraph B (1) of Part II of Schedule II to the Companies Act 1956 (the Act), the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (SEBI Guidelines) and our terms of reference with the Company dated 22nd January, 2005 requesting us to make this report for the purpose of the Offering Memorandum as aforesaid, we report that:

The restated profits of the Company for the financial years/period ended 31stMarch 2001, 2002, 2003, 2004, 2005 and quarter ended on 30.06.2005 are as set out in Annexure I to this report. These profits have been arrived at after charging all expenses including depreciation and after making such adjustment and regroupings as in our opinion are appropriate and more fully described in the Significant Accounting Policies and Notes appearing in Annexure III & IV respectively to this report.

The restated assets and liabilities of the Company as at 31st March, 2001, 2002, 2003, 2004, 2005 and quarter ended on 30.06.2005 are as set out in Annexure II to this report after making such adjustments and regroupings as in our opinion are appropriate and more fully described in the Significant Accounting Policies and Notes appearing in AnnexureIII & IV respectively to this report.

The restated cash flow statement of the Company as at 31stMarch, 2001, 2002, 2003, 2004, 2005 quarter ended on 30.06.2005 and are as shown in Annexure V to this report.

The company has not paid any dividend during the years/period ended 31st March , 2001, 2002, 2003, 2004, 2005 and quarter ended on 30.06.2005.

We have examined the following financial information relating to the Company and as approved by the Board of Directors for the purpose of inclusion in the Offer document:

1. Accounting Ratios as appearing in Annexure VI to this report. 2. Capitalisation Statement as at 31st March, 2005 and as at 30.06.2005 as appearing in Annexure VII to this report 3. Statement of tax shelters as appearing in Annexure VIII to this report. 4. Details of other income as appearing in Annexure IX to this report 5. Details of sundry debtors as appearing in Annexure X to this report 6. Details of loans and advances as appearing in Annexure XI to this report 7. Details of unsecured loans as appearing in Annexure XII to this report 8. Details of secured loans as appearing in Annexure XIII to this report. 9. There are no related party disclosures.

In our opinion the above financial information of the Company read with Significant Accounting Policies and notes on account attached in Annexure III & IV to this report, after making adjustments and re-grouping as considered appropriate has been prepared in accordance with Part II of Schedule II of the Act and the SEBI Guidelines.

This report is intended solely for your information and for inclusion in the Offer document in connection with the specific Public Offer of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our written consent.

Thanking you,

For T.K. Gupta & Associates Chartered Accountants

Membership No. 82235

Place: New Delhi

Date: September 06, 2005

ANNEXURE – I

STATEMENT OF PROFITS AND LOSSES

(Rupees in Lacs) Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01 Ended on 30.06.20 05 Income A) Sales : a) Operational Revenue 369.20 453.17 0.00 0.00 0.00 0.00 Company b) Products traded by the 34.88 35.62 0.00 0.00 46.30 0.00 Company Sub-Total (a) + (b) 404.08 488.79 0.00 0.00 46.30 0.00 (c ) Other Operational Income 185.70 275.10 0.00 0.00 0.00 0.00 (d) Other Income 11.80 1.47 0.00 1.13 0.00 0.29 (e) Interest 0.00 0.00 0.00 0.00 1.97 0.39 Total (A) 601.58 765.36 0.00 1.13 48.27 0.68

Expenditure Work Cost/Operational Exp. 93.68 245.63 0.00 0.00 43.80 0.00 Staff Costs 27.17 33.95 0.00 0.15 0.00 0.00 PVR Share 6.57 6.20 0.00 0.00 0.00 0.00 Administration Expenses 116.20 87.26 0.00 0.00 0.63 0.33 Selling & Other Expenses/ 14.56 15.14 0.00 0.00 0.00 0.00 Sales Promotion Interest 51.27 72.59 0.00 0.89 3.81 0.30 Fringe Benefit Tax 0.50 0.00 0.00 0.00 0.00 0.00 Depreciation 29.70 45.00 0.00 0.00 0.00 0.00 Preliniminery Expenses W/off 0.46 1.83 0.00 0.03 0.03 0.03 Total (B) 340.11 507.60 0.00 1.07 48.27 0.66

Net Profit before tax 261.47 257.76 0.00 0.06 0.00 0.02 Taxation 22.00 20.21 0.00 0.02 0.00 0.01 Deferred Tax 8.20 18.46 0.00 0.00 0.00 0.00 Profit After Tax 231.27 219.09 0.00 0.04 0.00 0.01 Profit B/f for Last Years 219.14 0.05 0.05 0.01 0.01 0.00 Profit Transferred to Reserve 450.41 219.14 0.05 0.05 0.01 0.01 & Surplus

ANNEXURE – II

STATEMENT OF ASSETS AND LIABILITIES

(Rupees in Lacs) Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01 Ended on 30.06.200 5 A. Fixed Assets : Gross Block 4099.89 4088.99 0.00 0.00 0.00 0.00 Less Depreciation 74.70 45.00 0.00 0.00 0.00 0.00 Net Block 4025.19 4043.99 0.00 0.00 0.00 0.00 Add :- Capital Work in 603.11 568.64 2337.30 982.36 126.89 0.00 Progress Less : Revaluation 0.00 0.00 0.00 0.00 0.00 0.00 Reserve Net Block after 4628.30 4612.63 2337.30 982.36 126.89 0.00 adjustment for Revaluation Reserve Sub-Total 4628.30 4612.63 2337.30 982.36 126.89 0.00

B. Investment 0.00 0.00 0.00 0.00 37.43 6.00 Sub-Total 0.00 0.00 0.00 0.00 37.43 6.00

C. Current Assets, Loans and Advances : Inventories 1.47 1.71 0.00 214.62 0.00 0.00 Sundry Debtors 399.42 198.67 0.00 0.00 21.44 2.40 Cash and Bank Balances 149.32 131.78 77.96 11.48 14.96 8.90 Loans and Advances 288.34 71.06 0.23 0.12 0.00 0.00 Other Current Assets 0.00 0.00 0.00 0.00 0.08 0.08 Sub-Total 838.55 403.22 78.19 226.22 36.48 11.38 D. Liabilities and Provisions : Secured Loans 1530.00 1368.85 999.62 610.96 9.89 9.89 Unsecured Loans 1111.21 1153.93 94.34 32.76 35.35 2.70 Current Liabilities and 189.15 196.75 71.68 23.35 55.76 0.31 Provisions Sub-Total 2830.36 2719.53 1165.84 667.30 101.00 12.90 E. Networth 2636.49 2296.32 1249.84 541.51 99.80 4.48 F. Represented by 1. Share Capital 1848.04 1739.60 1250.00 541.70 100.07 5.07 2. Reserves 804.26 572.98 0.04 0.04 0.00 0.01 Less Revaluation 0.00 0.00 0.00 0.00 0.00 0.00 Reserve Reserves (Net of 804.26 572.98 0.04 0.04 100.07 5.08 Revaluation Reserves) Less Preliminary 15.81 16.27 0.20 0.23 0.27 0.30 Expenses yet not w/off Networth 2636.49 2296.32 1249.84 541.51 99.80 4.48

ANNEXURE - III

SIGNIFICANT ACCOUNTING POLICIES:

Statement of Significant Accounting Polices 1. Basis of accounting: The accounts of company are prepared under historical cost convention and in accordance with applicable accounting standards except where otherwise stated. Accounting policies not specifically referred to are consistent with generally accepted accounting practices. Revenue / Income and Costs and Expenditure are generally accounted on accrual basis, as they are earned or incurred.

2. Fixed Assets and Depreciation: All the fixed assets purchased are stated at cost of acquisition except in case of those assets which are revalued.

3. Depreciation: Depreciation of other assets is provided on "Straight line Method”, at the rates prescribed by Schedule XIV to the Companies Act, 1956.

4. Sundry Debtors/Loans and Advances: are stated net of provision for identified doubtful debts/advances.

5. Valuation of work in progress: The work in progress has been determined by the Management at the estimated realizable cost.

6. Revenue Recognition: In respect of Construction contracts, revenue is recognised on Percentage completion method based on the Bills submitted, certified and sanctioned by the appropriate authorities. The relevant cost is recognized in accounts in the year of recognition of the revenue. The total costs of contract are estimated, based on technical and other estimates Revenue from theater business is recognised on the basis of tickets sold for the period under accounting and revenue from candy bar is recognised at the time of factual sale at the counter. Revenue from other services is recognized on due basis which is in terms of accounting standard issued by the ICAI on Revenue Recognition. The Non Refundable Life membership fees of the club member is treated as revenue in nature and revenue recognized on mercantile basis.

7. Borrowing cost: Borrowing cost is accounted on accrual basis.

8. Contract Receipts - Joint venture: Proportionate Consolidation method of accounting and reporting is followed in respect of Joint venture entered into by the Company. The Income from such joint venture is recognised on the basis of Bills submitted, certified and sanctioned by the appropriate authorities. The actual expenses for such Project in Joint Venture are accounted on the basis of the Profit sharing ratio.

9. Earning Per Share: Earning per Share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

10. Taxation: Provision for Income tax comprises of current tax and deferred tax charge or release. Deferred tax is recognised, subject to consideration of prudence, on timing differences, being difference between taxable and accounting income/expenditure that originate in one period and are capable of reversal in one or more subsequent period(s). Deferred tax assets are not recognised unless there is "virtual certainty" that sufficient future taxable income will be available against which such deferred tax assets will be realised

11. Contingencies: Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of notes to the accounts.

12. Retirement Benefits: The retirement benefit in the form of Provident Fund and Pension Schemes, whether in pursuance of any law or otherwise, is accounted on accrual basis and charged to the profit and loss account of the year.

ANNEXURE IV Notes on Accounts:

1. Contingent Liabilities not provided for: The company has no outstanding contingent liabilities since its inception up to last audited period ending March 2005.

2. Other additional quantitative information pursuant to para 3, 4-C, and 4-D of part - II of Schedule VI of the Companies Act, 1956 is not ascertainable and amenable and hence not included in the Report.

3. CIF Value of imports The company has imported capital goods amounting to Rs. NIL during the qtr. ended on 30th June 2005 and Rs. 110.65 Lacs in the F.Y2004-05. There are no other income/expenses in foreign currency.

4. Directors remuneration: During the quarter ended on 30th June 2005 directors received the remuneration of Rs. 3.00 Lacs and NIL during the previous year 2004-05.

5. Auditors remuneration (Rupees in Lacs) Qtr. Ended Particulars on 2004-05 2003-04 2002-03 2001-02 2000-01 30.06.2005 Audit fees NIL 1.03 0.16 0.16 0.05 0.01 The auditors remuneration has been approved by the shareholders.

6. Income tax assessment has been completed upto the assessment year F.Y. 2003-04

7. The Deferred Tax liability comprises of tax effect of timing differences on account of: Deferred tax liability has arisen during the quarter ended on 30th June 2005 Rs.8.19 Lacs and in the previous F.Y. 2004-05 amounting to Rs.18.46 Lacs on account of timing difference in the depreciation (as per Balance Sheet). There are no other deferred tax liabilities of deferred tax assets.

8. As the company’s business activity comprises of different segments of revenue that arises from the activity of multiplex viz. theater revenue, lease rent, Advertisement Space Selling/Space Selling and Parking revenue and club member ship fees. During the quarter ended on 30th June 2005 the company has accepted the application of 478 persons.

9. The balance on all personal accounts is subject to confirmation by the parties and reconciliation, if any.

10. Previous year figures have been shown regrouped / rearranged, where considered necessary.

11. There are no amounts outstanding in respect of unpaid dividend / fixed deposits for more than seven years to be transferred to Investors Education and Protection Fund.

ANNEXURE – V

CASH FLOW STATEMENT (Rupees in Lacs) Particulars Qtr. 2005 2004 2003 2002 2001 Ended on 30.06.20 05 A Cash Flow arising from Operating Activities Net profit before taxation 262.43 257.77 0.00 0.09 0.04 0.04 Add back Depreciation 29.70 45.00 0.00 0.00 0.00 0.00 Interest & Financial 51.27 0.00 0.89 1.42 0.41 Charges 72.59 Deduct Interest income 7.14 0.00 0.00 0.00 1.97 0.38 Preliminary Expenses 0.00 1.83 0.00 0.03 0.03 0.03 Operating Profit before 336.26 377.19 0.00 0.95 (0.54) 0.04 Working Capital changes Add (Increase)/Decrease in (200.75) (198.67) 0.00 21.44 (19.04) (2.36) Trade Debtors (Increase)/Decrease in 0.24 (1.71) 214.61 (214.61) 0.00 0.00 Inventories (Increase)/Decrease in (214.77) (70.83) (0.12) (0.02) 0.22 (0.28) Loans & Advances and others Deduct (Increase)/Decrease in (38.30) 86.38 48.33 (32.40) 55.75 0.01 Trade Payable Cash generated from (117.32) 201.21 263.06 (224.64) 36.39 (2.59) operations Adjustment for Interest & Financial 51.27 0.00 0.89 1.42 0.41 Charges paid 72.59 Income Tax paid net of 2.50 8.85 0.00 0.02 0.01 0.01 refund Net cash in flow from (171.09) 119.77 263.06 (225.55) 34.96 (3.01) Operating activities ‘A’ B Cash flow from investing activities Outflow Investment in Fixed (45.37) (2320.32) (1354.94) (855.47) (126.89) 0.00 Assets(including CWIP) Purchase of Investment 0.00 0.00 0.00 0.00 (31.43) (6.00) Other Expenditure 0.00 (17.89) (0.20) 0.00 0.00 (0.33)

Inflow Interest Income 7.14 0.00 0.00 0.00 1.97 0.38 Sale of Investment 0.00 0.00 0.00 37.43 0.00 0.00 Net cash flow from (38.23) (2338.21) (1355.14) (818.04) (156.35) (5.95) Investing Activities (B) C Cash Flow from Financing Activities Inflow Increase in Share capital 108.44 489.60 708.30 441.64 95.00 5.07 Share Premium 0.00 353.85 0.00 0.00 0.00 0.00

Increase in Borrowing- Net 161.15 369.22 388.66 601.07 0.00 9.89 Misc. Income (Exchange 0.00 0.00 0.00 0.00 0.00 0.00 Rates) Increase (Decrease) (42.73) 1059.60 61.58 (2.59) 32.65 2.70 Unsecured Loans Net Cash in Financing 226.86 2272.27 1158.54 1040.12 127.65 17.66 Activities (c ) Net Increase/(Decrease) in 17.54 53.83 66.46 (3.47) 6.26 8.70 cash and cash equivalents Cash and cash equivalent 131.78 77.95 11.49 14.96 8.70 0.00 (opening balances) Cash and cash equivalents 149.32 131.78 77.95 11.49 14.96 8.70 (closing balances)

ANNEXURE – VI

STATEMENT OF ACCOUNTING RATIOS For the Financial Year ended March Qtr. 2005 2004 2003 2002 2001 31 Ended on 30.06.2005 Adjusted Net Profit/(Loss) A 231.27 219.09 0.00 0.04 0.00 0.01 Weighted Average Number of Equity 170.38 128.84 84.48 26.07 0.28 0.01 Shares outstanding during the period /year (B) No. of Outstanding at the end of 170.38 170.39 125.00 54.17 9.30 0.01 year/period © Net Worth (D) 2636.49 2296.32 1249.84 541.51 99.80 4.48 EPS (A/B)=E 1.35 1.70 0.00 0.00 0.00 0.00 EPS Basic (Rs Per Share) 5.43 4.43 0.00 0.00 0.00 0.00 (Annualised)=E*4 ( For P/Y E*365/140) Return on Net worth (RONW)(%) 8.77% 9.54% 0.00 0.00 0.00 0.00 Return on Net worth (RONW)(%) 35.08% 25.44% 0.00 0.00 0.00 0.00 (Annualised) = E*4 ( For P/Y E*365/140) Net Asset value per Share (NAV) –Rs 15.47 13.50 10.00 10.00 10.00 8.78

ANNEXURE – VII

CAPITALISATION STATEMENT

(Rupees in Lacs) Particulars Qtr. Ended on 31/3/2005 31/03/2004 30.06.2005 Short Term Debts Unsecured Loans 1111.21 1153.93 94.34 Total Short Term Debt (A) 1111.21 1153.93 94.34 Long Term Debt Secured Loans 1530.00 1368.85 999.62 Total Long Term Debt (B) 1530.00 1368.85 999.62

Shareholders funds Share Capital 1703.85 1703.85 1250.00 Share Application Money 144.19 35.75 0.00 Share Premium 353.85 353.85 0.00 Reserve & Surplus 450.41 219.14 0.05 Less:- Misc. Exp. Not yet w/off (15.81) (16.27) (0.20) Total shareholders fund (C) 2636.49 2296.32 1249.85 Long term Debt/Equity Ratio (A/C) 0.58:1 0.59:1 0.80:1 Post issue capitalization cannot be determined till the completion of book building process.

ANNEXURE – VIII

TAX SHELTER STATEMENT

(Rupees in Lacs) Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01 Ended on 30.06.200 5 Tax Rate (including 33.66% 36.59% 36.59% 35.70% 35.70% 39.55% Surcharge & Cess) Profit as per Profit & Loss 261.47 257.77 0.00 0.06 0.00 0.01 Account Tax at Notional Rate 88.01 94.32 0.00 0.02 0.00 0.00 Adjustments Difference between Tax 97.25 235.48 0.00 0.00 0.00 0.00 depreciation and Book Depreciation Net Adjustments 97.25 235.48 0.00 0.00 0.00 0.00 Tax Saving thereon (As per 32.73 86.17 0.00 0.00 0.00 0.00 Balance Sheet) Tax as per MAT (As per 22.00 20.21 0.00 0.01 0.00 0.01 Balance Sheet) Tax Provided in the books 22.00 20.21 0.00 0.02 0.01 0.01

ANNEXURE – IX

DETAILS OF OTHER INCOME (Rupees in Lacs) Particulars Qtr. Ended 2004-05 2003-04 2002-03 2001-02 2000-01 on 30.06.2005 Misc. Display Charges 0.78 1.47 0.00 0.00 0.00 0.00 Misc. Trade Receipts 0.08 0.00 0.00 1.13 0.00 0.29 Club Registration Fees 3.80 0.00 0.00 0.00 0.00 0.00 Interest Received 7.14 0.00 0.00 0.00 0.00 0.00 Total 11.80 1.47 0.00 1.13 0.00 0.29

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DETAILS OF INVESTMENT

A. Unquoted Shares (Rupees in Lacs) Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01 Ended on 30.06.20 05 (a) North Delhi Credit & 0.00 0.00 0.00 0.00 0.00 6.00 Investment Limited (b) BTL Home Finvest Limited 0.00 0.00 0.00 0.00 3.00 0.00 (c) BTL Investments Limited 0.00 0.00 0.00 0.00 9.60 0.00 (d) J.D. Sons Steel (P) Limited 0.00 0.00 0.00 0.00 18.50 0.00 (e) Rajat Fincap (P) Limited 0.00 0.00 0.00 0.00 6.33 0.00 Total 0.00 0.00 0.00 0.00 37.43 6.00

B. Quoted Shares

The Company did not make any investment in quoted shares during the period/years ending on March 31 2005, 2004, 2003, 2002 and 2001 and quarter ended on 30.06.2005.

ANNEXURE – X

AGE WISE ANALYSIS OF SUNDRY DEBTORS

Sundry Debtors (Unsecured) (Rupees in Lacs) Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01 Ended on 30.06.2005 More than Six Months 0.00 0.00 0.00 0.00 0.00 0.00 Less than Six Months 399.42 198.67 0.00 0.00 21.44 2.40

Considered Good 399.42 198.67 0.00 0.00 21.44 2.40 Considered Doubtful 0.00 0.00 0.00 0.00 0.00 0.00 Total 399.42 198.67 0.00 0.00 21.44 2.40

ANNEXURE – XI DETAILS OF LOANS & ADVANCES (Rupees in Lacs) Particulars Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01 Ended on 30.06.20 05 a) Loan to Parties 0.00 0.00 0.00 0.00 0.00 0.20 (Unsecured considered Good) b) Advances recoverable in cash or in kind or of for value to be received. Advance to Suppliers, 200.74 1.61 0.00 0.00 0.00 0.00 Contractors & Others Staff Imp rest & Advances 5.81 5.77 0.00 0.00 0.00 0.00 Pre- Paid Expenses 24.20 13.76 0.00 0.00 0.00 0.00 Security Deposits 45.23 40.77 0.00 0.00 0.00 0.00 Service Tax Recoverable 1.01 0.30 0.00 0.00 0.00 0.00 Advance Tax & TDS 11.34 8.85 0.23 0.12 0.08 0.08

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Sub-Total 288.33 71.06 0.23 0.12 0.08 0.08 Total 288.33 71.06 0.23 0.12 0.08 0.28

ANNEXURE – XII

STATEMENT OF UNSECURED LOANS (Rupees in Lacs) Qtr. 2004-05 2003-04 2002-03 2001-02 2000-01 Ended on 30.06.200 5 A. Other loans (i) ICD From Bodies Corporate 425.99 498.02 50.42 30.17 0.00 0.00 Sub Total (i) 425.99 498.02 50.42 30.17 0.00 0.00

(ii) Others From Individual 3.35 5.33 0.00 0.00 0.56 0.00 From H.U.F 0.00 0.00 2.65 2.59 4.78 2.70 From Bodies Corporate 656.17 626.91 41.27 0.00 30.00 0.00 Trade Deposits 25.70 23.67 0.00 0.00 0.00 0.00 Sub Total (ii) 685.22 655.91 43.92 2.59 35.34 0.00 Total 1111.21 1153.93 94.34 32.76 35.34 2.70

ANNEXURE – XIII

STATEMENT OF SECURED LOANS

Detail of secured loan outstanding as on 30.6.2005

Particulars Bank Nature Sanctioned Amount Rate of Repayment Securities of loans of Loan Amount Outstanding Interest Term offered P.A. Term Loan Union Term 1850. Lacs 1530.00 8.75% Monthly Mortgage of (Under Union Bank of Loan(U Installment of SRS Rent Scheme) India nder Net Rent Multiplex Union collection and Personal Rent after TDS Guarantee of Scheme (Appox. Rs. Three ) 25.00 Lacs. Director

Detail of secured loan outstanding as on 30.06.2005.

Particulars Bank Nature Sanctioned Amount Rate of Repayment Securities of loans of Loan Amount Outstanding Interest Term offered P.A. Term Loan Punjab Term 1350. Lacs *NIL 13.75% Qtr. Mortgage of National Loan Installments SRS Bank, of Rs. 67.50 Multiplex Janpath, Lacs New Delhi The term loan from of PNB has been takeover by the Union Bank of India.

Detail of secured loan outstanding as on 31.03.2005, 31.3.2004, 2003, 2002, and 2001

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(Rupees in Lacs) Particulars 2004-05 2003-04 2002-03 2001-02 2000-01 Secured Loan from Bank 1279.30 999.62 610.96 9.89 9.89

Total 1279.30 999.62 610.96 9.89 9.89

ANNEXURE – XIV

RELATED PARTY DISCLOSURES

List of related parties with whom transactions have taken place:

1. Key Management personnels (Directors)

2. Relatives of key Management personnel

3. Entities & Associates

The related party disclosures entered into by the Company are reported to be NIL in the audited financial statements for the year ended on 31st March 2005 and quarter ended on 30th June 2005.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussions of financial condition and results of operations together with audited financial statement for the year ending on March 31, 2001, 2002, 2003, 2004 and 2005 under Indian GAAP including scheduled, Annexure and notes thereto and the reports thereon, which appear in the Draft Red Herring Prospectus. These financial statements are prepared in accordance with Indian GAAP, the Companies Act and SEBI Guidelines and restated as described in the Auditor’s Report of T. K. Gupta & Associates dated August 29,2005 in the section with the title “Financial Information” at page no. 91 of the Draft Red Herring Prospectus. Unless otherwise stated, the financial information used in this section is derived from our audited unconsolidated financial statements under Indian GAAP, as restated.

Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the 12-month period ended March 31 of that year.

Overview of the Business The Company's business model is a “hybrid” model, which involves a mix of entertainment cum retailing and real estate.

The Company’s maiden project, SRS Multiplex began commercial operations from November 12, 2004. The Multiplex is a unique complex, combining a 3 screen Cineplex, all the facilities of a modern shopping mall, a club house, restaurants/Food Court and a coffee loungecoffee lounge.

The second is in the real estate sector. The Multiplex consists of 23,000 sq. ft. area of shopping complex. This is either let out on either lease rental basis or sold. Many brands such as Rayban, Airtel, Pizza Hut, Mc-Donalds etc. have their presence in the Multiplex.

Going ahead, the Company plans to foray into the retail segment by launching a chain of its retail stores under the name and style "SRS Value Bazaar". The Bazaar will offer lifestyle products in several price ranges to cater to the aspirational needs of the consumers in each of their locations. The products stocked in these Bazaars will reflect the unique tastes and purchasing power capacities of each city individually.

The first SRS Value Bazaar is being set up in the SRS Multiplex at Faridabad. This is expected to become operative from October 01, 2005. Products such as garments, accessories, household items, groceries, cosmetics etc will be made available at this bazaar at discounted rates upto 40%. The Company plans to make the SRS Value Bazaar a common feature of its proposed Project and expects it to become a major revenue driver for the Company.

Significant developments subsequent to the last financial year The Directors of the Company confirm that in their opinion, no circumstances have arisen since the date of the last financial statements as disclosed in the Red Herring Prospectus and which materially and adversely affect or is likely to affect the trading or profitability of the Company, or the value of its assets, or its ability to pay its liabilities within the next twelve months.

Factors that may affect Results of the Operations Several factors have affected our results of operations, financial condition and cash flow significantly in the F.Y 2004-05. These factors include: New films are being released across a larger number of theaters with a larger number of prints in order to maximize theatrical revenues in the shortest time period; Entertainment tax sops for developing and operating multiplexes are being offered by certain states. This has encouraged the growth of multiplexes and also encouraged single screen theaters to convert into multiplexes. Growth in multiplexing – catching the retail boom.

These factors and a number of future developments may affect our results of operations, financial condition and cash flow in future periods. We believe that the following future developments may affect our future results of operations, financial condition and cash flow: Retail Multiplexes are fast emerging as the one of the key anchor tenants for most organised retail outlets in India. Improving regulatory environment.

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Multiplexing – highly fragmented industry with scattered ownership – opportunities exists for nationwide film exhibition chain through chain of multiplexes.

For more information on these and other factors/developments which have or may affect us financially, please refer to the other parts of this “Managements' Discussion and Analysis of Financial Condition and Results of Operations” section and the section titled “Risk Factors” on page no. viii.

Discussion on Results of Operations

The following table gives the details of our operations for FY 2005 and for the three month period ended June 30, 2005 (Rupees in Lacs) Particulars For 3 months ended For the financial year June 30, 2005 ended March 31, 2005 Revenue Operational Income 404.08 488.79 Other Operational Income 185.70 275.10 Other Income 11.80 1.47 Total 601.58 765.36

Expenditure Work Cost/Operational Exp. 93.68 245.63 Staff Costs 27.17 33.95 PVR Share 6.57 6.20 Administration Expenses 116.20 87.26 Selling & Other Expenses/ Sales Promotion 14.56 15.14 Interest 51.27 72.59 Fringe Benefit Tax 0.50 0.00 Depreciation 29.70 45.00 Preliniminery Expenses W/off 0.46 1.83 Total 340.11 507.60

F.Y 2005 SRS Multiplex commenced commercial operations on November 12, 2004 at Faridabad (NCS - Delhi). Hence, the revenues and expenditure for the F.Y2005 may not be considered representative of the entire year.

The three months ended June 30, 2005 Good season, Good movies, Business season etc. therefore, revenues were encouraging. Expenditure on SRS Value Bazaar, club house etc. at SRS Multiplex.

Revenue

Particulars For 3 months Ratio to total For the financial Ratio to total ended June income (%) year ended income (%) 30, 2005 March 31, 2005 Revenue Operating Revenue 404.08 67.17 500.32 64.40 Other Operating 185.70 30.87 275.10 35.41 Revenue Other Income 11.80 1.96 1.47 0.19 Total 601.58 100.00 776.89 100.00

Operational Revenue Operation revenue means the revenue from theaters viz. sale of cinema tickets and sale of candy bar at snack counter inside the theater and space selling.

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Particulars For 3 months Ratio to For the financial Ratio to total ended June 30, total income year ended March income (%) 2005 (%) 31, 2005 Box Office Collection 125.57 20.87 130.52 16.80 Sale of Snacks at Candy 34.88 5.80 31.81 4.09 Bar Space Selling 4.63 0.77 337.99 43.51 SRS Club Revenue 239.00 39.73 0.00 0.00 Total 404.08 67.17 500.32 64.40

Other Operational Revenue The other operational revenue means the revenue from Lease rent from commercial area at multiplex, revenue from parking area, revenue from common area maintenance charges from the tenants and recovery of electricity charges from the tenants and advertisement display charges at various location of the mall. Particulars For 3 Ratio to total For the financial Ratio to total months income (%) year ended March income (%) ended June 31, 2005 30, 2005

Lease Rent 89.30 14.84 115.14 14.82 Parking Revenue 21.75 3.62 36.25 4.67 Common Area 10.70 1.78 18.80 2.42 Maintenance Charges Electricity and water 14.83 2.46 24.19 3.11 Charges Advertisement display 49.12 8.17 80.72 10.39 charges Total 185.70 30.87 275.10 35.41

Other Income The other income includes the miscellaneous income such as display charges on day-to-day basis and miscellaneous liability written off on account of short and excess and miscellaneous charges recovered from the tenants such as sound license fees

Operating Expenses Operating expenses means distributors share, Entertainment tax payable to the State Government, Show tax payable to the municipal corporation and purchase cost of the snacks sold at candy bar inside the theater and cost of space selling. Particulars For 3 months Ratio to total For the financial Ratio to total ended June 30, income (%) year ended March income (%) 2005 31, 2005 Cost of Purchase of 12.56 2.09 11.53 1.48 snack sold at Candy Bar Distributors Share 37.60 6.25 40.15 5.17 Entertainment Tax 41.86 6.96 43.50 5.60 PVR Share 6.57 1.09 6.20 0.80 Show Tax 0.27 0.04 0.42 0.05 Cost of Space Selling 1.39 0.23 161.56 20.80 Total 100.25 16.66 263.36 33.90

Operating Margin The operating margin means the gross total of operating and other operating revenue/income and deduction/subtraction of operating expenses.

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Particulars For 3 months Ratio to total For the financial Ratio to total ended June 30, income (%) year ended income (%) 2005 March 31, 2005 Operating Revenue 404.08 67.17 500.32 64.40 Less Operating 100.25 16.66 263.36 33.90 Expenses Operating Profit 303.83 50.51 236.96 30.50

Cost and Expenses We are continuously focus our efforts toward achieving the process improvement in our business. We have invested in technology over a period of time so that we can monitor business activity on day to day basis.

(a) Personal Expenses includes the expenses on salary to the staff including the P.F. and E.S.I expenses, and staff welfare expenses. (b) Office and administrative expenses includes the Electricity and water expenses, Security and house keeping, Auditors remuneration, Printing and stationery, Postage and courier, Repair and Maintenance, Insurance, Rates and taxes, ROC Expenses and Miscellaneous Expenses. (c) Marketing Expenses includes Sales Promotion Expenses and Tour and traveling Expenses.

Exceptional Item of Expenditure There is no exceptional item of expenditure incurred up to the date filing the Draft Red Herring Prospectus with SEBI.

Interest and Financial charges Interest and financial charges comprise of interest payments to banks and financial institutions, others and bank charges. In absolute terms interest and financial charges stood at 9.48% of the total revenues for F.Y 2005. While, we managed to maintian it at 8.52% of the total revenues as on June 30, 2005. The cost of borrowing on the basis of average borrowed funds has come down to 8.75% from 13.75% as the Company has borrowed capital from Union Bank of India and the same used to repay PNB.

Depreciation Fixed assets are stated at their original cost of acquisition less accumulated depreciation. Cost includes all cost to bring the assets to present condition. Expenditure incurred up to the date of launching of SRS Multiplex, to the extent attributable to the construction of fixed assets are also capitalised. Depreciation is provided, pro rata to the period of use, by straight line method at the rates prescribed in the Schedule XIV of the companies Act, 1956.

Taxes on Income and Deferred Tax provision Income Taxes are accounted for in accordance with Accounting Standard 22 on “Accounting for Taxes on Income”. Taxes comprise both current tax and deferred tax. Current Tax is measured at the amount expected to be paid /recovered from taxation authorities using the applicable tax rates and tax laws. The tax effect of the timing difference that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax assets or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulation.

Selling and other expenses/ Promotional Expenses Selling and other expenses/ promotional expenses in the three months ended June 30, 2005 was Rs. 14.56 Lacs. This is 2.42% of the total revenue.

Cash Flows The table below summarises our cash flows for the quarter ending June 30, 2005, F.Y 2005 and F.Y 2004

Particulars June 30, 2004-05 2003-04 2005 Net cash flow from operating activities (171.09) 119.77 263.06 Net cash flow from investing activities (38.23) (2338.21) (1355.14) Net cash flow from financing activities 226.86 2272.27 1158.54 Net increase/(decrease) in cash or cash equivalent 17.54 53.83 66.46

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Net Worth

Networth June 30, 2005 March 31, 2005 Represented by Share Capital 1848.04 1739.60 Reserves 804.26 572.98 Less Revaluation Reserve 0.00 0.00 Reserves (Net of 804.26 572.98 Revaluation Reserves) Less Preliminary Expenses yet not w/off 15.81 16.27 Networth 2636.49 2296.32

Borrowings

Historical and Planned Capital Expenditure In the Financial Year 2003, we made the addition to the fixed assets including capital work in progress amounting to Rs. 891.07 Lacs on the construction of SRS Multiplex.

In the Financial Year 2004, we made the addition to the fixed assets including capital work in progress amounting to Rs. 1354.94 Lacs on the construction of SRS Multiplex.

In the Financial Year 2005, we made the addition to the fixed assets including capital work in progress amounting to Rs. 2275.33 Lacs on the construction of SRS Multiplex.

In the quarter ending June 30, 2005, we made the addition to the fixed assets including capital work in progress amounting to Rs. 46.76 Lacs towards further investment on expansion of SRS Multiplex.

Our capital expenditure plan as per our objects for the current issue is below: The total cost of our proposed Project is Rs. 12000 Lacs. We have already given as advance of Rs. 1997.03 Lacs on capex. The balance amount of will be funded through IPO proceeds and debt of Rs. 2000 Lacs. Shortfall, if any, will be met through the internal accruals of the Company. For details on deployment of the funds to be raised from the Issue kindly refer to the section “Introduction - Objects of the Issue – Funds Deployed” on page no. 29 of the Draft Red Herring Prospectus. In case of any short fall/cost overrun, we intend meeting the fund requirements through our internal accruals. Our internal accruals for the F.Y2004-05 as per last audited accounts are Rs.219.09 Lacs.

Current Assets The current assets include the inventory, Sundry Debtors and cash and bank balance.

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

1. Unusual or infrequent events or transactions: The Company has sold property in SRS Multiplex and earned revenue of Rs. 337.99 lacs in F.Y.2005 which reduced to Rs. 4.63 lacs in the quarter ended June 30, 2005. We donot expect this income to be recurring in nature and therefore, may not be consistently sustainable source of revenue in the future.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations: Any major changes in policies of the Government would have significant impact on the profitability of the Company. Except the above, there are no significant economics changes that may materially affect or likely to affect income from continuing operations.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations: Apart from the risks as disclosed under heading “Risk Factors” beginning from page no. viii of the Draft Red Herring Prospectus, there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

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4. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known: Nil

5. The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices The growth in revenues is in line with rising trend in the business of our Company.

6. Total turnover of each major industry segment in which the company operated Our Company operated in two industry segments viz. Entertainment and Real Estate. Turnover for the quarter ended June 2005 from each of the segments is Rs.404.08 Lacs from entertainment and Rs. 185.70 lacs from real estate.

7. Status of any publicly announced new products or business segment Our Company has publicly announced the launch of SRS Value Bazaar at SRS Multiplex. We expect to commence its operations on October 01, 2005. This will also mark our Company’s foray into the retail sector. We expect this business segment to be one of the major revenue drivers for the Company in the future.

8. The extent to which business is seasonal: Other than as described in the section titled "Risk Factors" on page no. viii in the Draft Red Herring Prospectus, to the best of our knowledge, there are no known factors, which are seasonal in nature and which we feel will have a material impact on the operations and finances of the Company.

9. Any significant dependence on a single or few suppliers or customers: SRS Multiplex enjoys a diversified client base as it operates in the retail cum entertainment segment. It has location advantage, as it is accessible to the population of Faridabad as well as within reach of the affluent population of New Delhi. The Multiplex is situated near the main Delhi-Agra highway in the city center of Faridabad and has the potential to attract tourists who visit the Taj Mahal and Mathura. Hence, there is no dependence on any single customer. However, we are confined to the local vicinity for our customer base.

10. Competitive conditions:

I. Competitive Conditions The entertainment and retail businesses are subject to stiff competition. We believe that we are well positioned to promote SRS Multiplex as a preferred Multiplex destination to the customers in the region in which we are presently operating.

On account of our competitive strengths, we feel that we are in a position to serve our customers to their satisfaction. Few of our strengths are: Professional and young management team Strong communication skills Innovative and focused marketing strategies Understanding of entertainment, retail and real estate businesses

II. With the changing consumer aspirations and drive for better life style, the tier-II cities have witnessed a similar change towards such aspirations as seen in Metros. The educated and youth population with higher disposable incomes would drive customer aspirations for better entertainment alternatives, life style products and visiting of eatery places.

We are in the process of consistently evaluating opportunities and may form an alternative formats within our proposed offering as per our perspective of the new opportunities available in the market place.

Our growth and strategies are based on increasing in the cities of operation selectively in two or more formats of retail/ entertainment/ eatery joints.

Furthering SRS brand has a complete entertainment experience through unique and innovative promotions enhancing the merchandise categories growing through economies of scale, developing new private labels, offer better variety in each category, enhancing our operational experience through better systems and process.

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Promotions The promotions are targeted at enhancing the funds in shopping and providing the customers with unique experience. In the past, we have organised many promotional events which include:

Dance competition Singing competition Lori Festival

Competition Presently operating from a single multiplex at Faridabad, we have been able to overcome any competition as there is negligible presence of other Malls.

The twin city of Gurgaon happens to be the best overtaking in other cities in the country in terms of total Malls/ Multiplex area. Faridabad being the other city touching the capital of the country has been witnessing a series of new structures coming up. There are about 9 more multiplexes coming up over a length of about 12 kms. These would, in future, cause competition in terms of cineplexes. However, it will take atleast 2 years for our new projects to be set up as most of the present new projects are at the lower ground level and it will take more than 2 years to start operations.

Benefiting from the first strength, in the future we would be facing competition from other retailers of similar products and services. These include stand alone stores in the unorganised sector as well as other chain of stores/ cinemas in the vicinity.

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LEGAL INFORMATION

Outstanding Litigations

Apart from a Arbitration applicationed stated herein below, there are no present or threatened litigation by or against the Company and there is no show cause notice or legal notice, which has been served on the Company. The status of litigation as per representation by the management of the Company is given below:

A. Involving the Company

There is no other litigation outstanding against or by the Company except:

Arbitration Application by The Home Stores (India) Limited V/s SRS Entertainment Limited Home Stores (India) Limited (HSL) had pursuant to lease deed dated August 11, 2004 executed with the Company agreed to take on lease 6806 sq.feet Super Area or 5445 Sq. feet Carpet Area on the Lower Ground Floor in the SRS Multiplex at rent of Rs. 2,72,240 per month. As per the said lease deed, HSL was to take possession of the premises on August 16, 2004 and to deposit Rs.8,16,720 towards security deposit equivalent to three months rent. HSL paid Rs.5,44,480 on execution of the lease deed.

Subsequently HSL moved a Arbitration Application in the Hon’ble Hight Court of Delhi, under Section 11(6)(b) of the Arbitration and Conciliation Act, 1956, against the Company alleging that the Company had failed to adhered to the time schedule as per the lease deed and had breached the terms and conditions of thelease deed. HSL demanded a sum of Rs.20 lac for the losses suffered by it on account of the non completion of the project and its consequential handing over by the Company. HSL has also prayed to the Hon’ble High Court for the appointment of Arbitrator and the disputes and difference arisen between the parties to be referred to the said Arbitrator. A show cause notice dated August 04, 2005 was received by the Company on August 22, 2005 and the matter has been listed for further directions on October 04, 2005.

B. Involving the Directors of the Company

I. Filed by the Directors of the Company

1. Raj Kumar Aggarwal Vs. Ansal Housing & Construction Limited This is a Consumer Complaint filed by Mr. R.K Aggarwal against M/s Ansal Housing & Construction Limited. Mr. Aggarwal had booked a commercial flat in Vikasdeep at Plot No. 18 Laxmi Nagar District Center New Delhi. Certain disputes and differences had arisen between the parties towards the full and final settlement of the last installment as a consequence of which the Complainant has filed the Consumer Complaint. In this Complaint the Complainant has prayed to the Consumer Court to direct the Respondent to hand over the vacant and peaceful possession of Flat No 716, 7th Floor Vikasdeep building. Award compensation of Rs. 4,50,000/- and the cost of the proceedings. The matter is pending adjudication.

2. Raj Kumar Aggarwal Vs. M/s K. K Sharma & Company and Kiran Kumar Sharma This is a Criminal Complaint filed under Section 138 of the Negotiable Instruments Act, 1881. The Complainant had given a loan to the accused against the satisfaction of which the accused had given a cheque of Rs. 2,06,000. The cheque bounced on being presented by the Complainant for collection to the bank. Aggrieved by the bouncing of the cheque the Complainant has filed a Criminal Complaint before Additional Chief Judicial Magistrate, Faridabad. The matter is pending adjudication.

C. Involving the Promoters and Group Companies

(a) There is no litigations outstanding against or by the individual Promoters of Company

(b) The litigation outstanding by or against the promoter Group Companies is given in below:

I. Filed against the Promoter Group of the Company i. Individuals: 1. Satish Kumar Vs. Lalit Kumar This is a civil appeal filed by Mr. Satish Kumar against the judgment and decree dated 8.19.2003 by Shri R.K Jain Civil Judge Junior Division Faridabad in Civil Suit No 724 of 1998 vide which the suit of the

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plaintiff/respondent has been decreed with cost and with the prayer for the acceptance of the appeal and setting aside the judgment and decree of the learned lower court and dismissing the suit of the respondent with cost. The matter is pending adjudication.

2. State Vs. Raju, Nanak Chand, Lalit Kumar and Suresh This is a Criminal Complaint pending before the Court of M/s Madhu Khanna Judicial Magistrate 1st Class, Faridabad. In the charge sheet it has been alleged that the accused voluntarily caused grievous hurt to one Mr. Parmod and Suresh by means of blunt weapon and thereby committed an offence punishable u/s 325 IPC read with 34 Indian Penal Code. All the accused have pleaded not guilty and accordingly demanded a trial. The matter is pending adjudication.

3. Ved Wati and Master Sandip Kumar Vs. Nanak Chand This is s a suit for declaration and consequential relief filed by the Plaintiffs in the Court of Civil Judge Senior Division Faridabad. This is a dispute in relation to 2/3 of a piece of land situated at Village Dayalpur, Tehasil Balabgarh District Faridabad. In this suit it has been prayed by the Plaintiffs that a decree for declaration to the effect that the Plaintiffs are the owners and in possession/ co sharers of the subject land to the extent of 2/3rd share and the sale deed dated 24.02.1997 executed in favour of the defendant be declared null and void and not binding on the right, title and interest of the Plaintiff. An alternative prayer has been made to the effect that in the event the Plaintiffs are not found to be in the possession of the subject property they many be declared in possession of the said property. The Plaintiff has also prayed for a permanent injunction preventing the Defendant for alienating the said property. The matter is pending adjudication.

II. Filed by the Promoter Group of the Company i. Individuals: 1. Lalit Kumar Vs. Satish Kumar This is an execution petition filed by Mr. Lalit Kumar for the purpose of the recovery of a sum or Rs 1,93,056/- against the Judgment Debtor Mr. Satish Kumar. A Decree of ejectment and recovery has already been passed in favour of Mr. Lalit Kumar. The execution petition has been stayed as the Judgment Debtor has filed an appeal.

2. Lalit kumar Bansal Vs. Smt. Shyamoo This is a proceeding instituted by Mr. Lalit Kumar Bansal against Smt. Shyamoo in respect of a property situated at Palwal. The said property was purchased by Mr. Lalit Kumar from Shri Mohan Lal who had mortgaged the said property for Rs.3,000/- with the Smt Shyamoo. Mr. Lalit Kumar has filed the preset proceedings seeking possession of the said property.

3. Ved Prakash, Parbhu Dayal, Chetan Pal Singh, Vinod Kumar, Lalit Kumar, Manoj Kumar, Bishan Sarup and Amit Kumar Vs. State of Haryana This is an application under Section 144 of the Code of Civil Procedure for the restoration of possession before the Sub Divisional Officer (Civil) Ballabgarh. The petitioners had moved an application for the restoration of possession but the same was ordered to be stayed sine die vide order dated 5.12.2003on account of pendensy of ROR No 167-168 of 2001-2. Aggrieved form the order dated 5.12.2003 the petitioner preferred a revision before Shri Gulab Singh Sorad, IAS, Commissioner Gurgaon Division, Gurgaon bearing executive revision No 59 of 2002-3. The said revision petitions of the petitioners were accepted vide order dated 13.10.2004 and it was ordered that possession be delivered to the owners to the disputed land. The petitioners are the owners of this land having purchased the same from Col. Sir Harinder Singh Ex Ruler of Faridkot in 1989. There fore it has been prayed that the possession be kindly be restored back to The Petitioners in respect of khasra no. 158/2 measuring 1 Kanal 15 Marala situated within the Revenue Estate of Ballabgarh. The petition is pending. ii. Group Companies:

Since, the following Promoter Group Companies are engaged in the activity of automobile financing etc., these cases are filed by them for recovery of business dues.

1. Bansla Finlease Limited

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Nature of Sr. No. Defendant/Accused Amount Involved (Rs.) Stage of Case of Case 1. Rati Ram 249,471 138 of N. I. Act Pre Summoning Evidence 2. Harun 1,98,162 138 of N. I. Act Notice to Accused 3. Param Singh 1,50,000 138 of N. I. Act Notice to Accused 4. Fazru 1,41,607 138 of N. I. Act Notice to Accused 5. Ramanand 98,460 138 of N. I. Act Notice to Accused 6. Zakir Hussain 82,860 138 of N. I. Act Notice to Accused 7. Narpat Singh 55,741 138 of N. I. Act Notice to Accused 8. Mahinder 43,130 138 of N. I. Act Pre Summoning Evidence 9. Sabbir Ahmed 30,000 138 of N. I. Act Notice to Accused 10. Mubin 27,600 138 of N. I. Act Notice to Accused 11. Sirajudeen 21,972 138 of N. I. Act Notice to Accused 12. Akthar 20,151 138 of N. I. Act Notice to Accused 13. Imran 20,000 138 of N. I. Act Notice to Accused 14. Shamsher Singh 10,420 138 of N. I. Act Notice to Accused

2. BTL Commercial Limited Nature Sr. No. Defendant/Accused Amount Involved (Rs.) Stage of Case of Case 1. Shaheen Amin 7,73,990 138 of N. I. Act Notice to Accused 2. Ram Chand Dhingra 5,50,000 138 of N. I. Act Notice to Accused 3. Garg Trading Co. 4,06,920 138 of N. I. Act Notice to Accused 4. Leela Dhar Gupta 70,000 138 of N. I. Act Pre Summining Evidence 5. RK Bansal 51,225 138 of N. I. Act Bailable warrants of Accused 6. Suruchi Sharma 50,000 138 of N. I. Act Notice to Accused 7. Sanjay Gambhir 46,370 138 of N. I. Act Non Bailable warrants of Accused 8. Pardeep Kumar Jain 44,462 138 of N. I. Act Bailable warrants of Accused 9. Narender Vashisht 30,000 138 of N. I. Act Notice to Accused 10. Narender Vashisht 20,000 138 of N. I. Act Pre Summining Evidence 11. Rakesh Gupta 20,000 138 of N. I. Act Bailable warrants of Accused 12. Rakesh Kumar 18,000 138 of N. I. Act Pre Summining Evidence 13. Narender Vashisth 17,000 138 of N. I. Act Notice to Accused 14. Leela Dhar Gupta 10,000 138 of N. I. Act Pre Summining Evidence 15. Leela Dhar Gupta 10,000 138 of N. I. Act Notice to Accused 16. Parveen Kumar Sethi 8,096 138 of N. I. Act Notice to Accused

3. BTL Investments Limited Nature Sr. No. Defendant/Accused Amount Involved (Rs.) Stage of Case of Case 1. JS Manchanda 6,00,920 138 of N. I. Act Notice to Accused 2. Aamin Khan & Other 3,60,346 138 of N. I. Act Notice to Accused 3. Parkash Chand 2,33,605 138 of N. I. Act Fraiming of Charge 4. Lajpat Rai 2,31,460 138 of N. I. Act Notice to Accused 5. Hari Chand 2,25,600 138 of N. I. Act Notice to Accused 6. Harun 1,86,729 138 of N. I. Act Bailable Warrants of Accused 7. Lajpat Rai 1,83,425 138 of N. I. Act Notice to Accused 8. Saroj Garg 1,35,304 138 of N. I. Act Complainat's Evidence 9. Mukesh sharma 1,20,000 138 of N. I. Act Complainat's Evidence 10. Ravinder 81,257 138 of N. I. Act Non Bailable Warrants of Accused 11. Harun S/o Israil 70,000 138 of N. I. Act Notice to Accused

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12. Ghanshyam 65,535 138 of N. I. Act Notice to Accused 13. Dinesh Kuamr 65,000 138 of N. I. Act Complainat's Evidence 14. Jan Mohmed 64,000 138 of N. I. Act Notice to Accused 15. Sahabuddin 63,195 138 of N. I. Act Notice to Accused 16. Mahender Singh 60,000 138 of N. I. Act Notice to Accused 17. Harun 60,000 138 of N. I. Act Notice to Accused 18. Bal Mukand 52,121 138 of N. I. Act Notice to Accused 19. Jormal 44,103 138 of N. I. Act Notice to Accused 20. Jaibir Singh 41,806 138 of N. I. Act Notice to Accused 21. Bacchu Singh 40,266 Suit for Recovery Notice to Accused 22. Maqsood Ahmed 30,015 138 of N. I. Act Bailable Warrants of Accused 23. Rati Khan 27,819 Suit for Recovery Notice to Accused 24. Ajad Singh 25,500 138 of N. I. Act Notice to Accused 25. Satbir 21,000 138 of N. I. Act Non Bailable Warrants of Accused 26. Kartar Singh 10,160 138 of N. I. Act Bailable Warrants of Accused 27. Rati Ram 9,030 138 of N. I. Act Bailable Warrants of Accused

4. North Delhi Credit & Investment Limited Nature Sr. No. Defendant/Accused Amount Involved (Rs.) Stage of Case of Case 1. Inderveer 1,77,895 138 of N. I. Act Notice to Accused 2. Salim 1,64,258 138 of N. I. Act Notice to Accused 3. Shyam Lal 1,23,784 138 of N. I. Act Non Bailable warrants of Accused 4. Chatter Lal 1,10,000 138 of N. I. Act Bailable warrants of Accused 5. Partap Attosh 46,861 138 of N. I. Act Notice to Accused

Material Developments since last Balance Sheet date

We the Board of Directors of SRS Entertainment Limited certify that there are no material developments since the last balance sheet date save and except:

The Company has issued 1,00,00,000 equity shares of Rs.10 each for Rs.20 each on preferential basis to its Promoters, Promoter Group Companies and others for a total amount of Rs.2000 Lacs. Details of the transaction have been provided at page no. 11 of the Draft Red Herring Prospectus.

It should be noted that after the aforesaid allotment, Earning Per Share (EPS) of the Company stands dilitued to Rs.5.06 per share from Rs.5.43 (annualised) per share as on June 30, 2005

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GOVERNMENT APPROVALS/LICENSING ARRANGEMENTS

Technical Approvals The Company has taken obtained Structural Safety Certificate, confirming that "Plot No. 1132, Sector-19 Faridabad" is designed confirming to Indian Standard Certifications and National Building Code Provisions including that of earthquake design requirements, from Technical Projects Consultants, New Delhi.

All Government and other approvals:

The Company has received the following Government approvals/licenses/permissions: 1. Certificate of Incorporation

2. Certificate of Commencement of Business

3. Trade mark/ patent/ registered mark: i. SRS CINEMAS Trade Mark No.: 01298237 Date of Registration: July 26, 2004 ii. SRS WORLD Trade Mark No.: 01298238 Date of Registration: July 26, 2004

4. Certificate of Importer Exporter Code No. 050264625 dated February 22, 2001

5. Permanent Account Number : AAGCS8846R

6. TAN No. : RTKSO4931D

7. The following approvals have been received in respect to SRS Multiplex::

Sr. Particulars Authority under Act Date Validity Remarks No. Covered 1 NOC No.1483 HUDA N.A. 01.07.2004 -- Drainage

2 Inspection Repot DG Electrical Indian Electricity 05.11.2004 -- DG Set set Mem.No.4828 Inspectorate Rules, 1956 Haryana 3 NOC/Permission Electrical Indian Electricity 04.11.2004 -- Compliance of electric Mem.No.4799 Inspectorate Rules, 1956 Safety Audit I,II & III Haryana 4 Permission No.4108 Executive Cinematography 03.11.2004 -- Building of Cinema Engineer Rules, 1952 Provincial Division PWD Haryana 5 Sales Tax Sales Tax, Central Sales 17.09.2004 -- Sales Tax Regn.No. Registration Haryana Tax Act,1956 6131217476 6 Registration Labour Inspector Punjab Shop & 22.09.2004 31.03.2006 Certificate Commercial Establishment Act,1958 7 Load Sanction 750 to SDO ‘OP’ Haryana 15.04.2005 -- Load Sanction 1750 KVA Haryana Senior Division Electricity State Electricity (East), Reforms Act, Board SDO Faridabad. 1997 8 Installation of S.E. (OP) -- 27.03.2005 -- Installation of Transformers 2000 Circle Transformers 2000 KVA Chief Electrical DHBVNL KVA Inspector Faridabad 9 Licence to Run D.M. Faridabad - 05.08.2005 04.11.2005 Cinema Licence

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Cinema 10 HUDA Executive - 13.07.2004 - Water connection Water Connection Engineer HUDA, Faridabad 11 Certificate of Assessing Haryana Value 17.09.2004 - VAT Registration Registration, Haryana Authority Added Tax Act, VAT 2003 12 Allotment of Regional Employees’ 11.10.2004 - Provident Fund Provident Fund Code Provident Fund Provident Funds Number Commissioner, & Miscellaneous Haryana Provisions Act,1952 13 Allotment of Regional Employee State 06.07.2005 - Employee State Employee State Director, Insurance Act, Insurance Corporation Insurance Employees State 1948 Corporations Code Insurance Number Corporation 14 Approval for Administrator -- 22.06.2004 -- Approval for construction and HUDA, construction. maintenance of Faridabad parking and common area 15 Permission for Administrator, -- 18.03.2005 -- Permission to maintain development of green Huda green area without area permanent structures for beautification of area. 16 Permission for SE (OP) Circle, -- 12.01.2005 -- Permission granted for release of enhanced DHBVNL, stopgap arrangement contractual demand Faridabad. to the existing system. of 750 KVA. 17. Inspection Of 1000 Chief Electrical -- 04.06.2004 -- During inspection, KVA Transformer Inspector installations were found to be complying with the relevant provisions of the Act. 18 Extension of load to SE (OP) Circle, -- 03.12.2004 -- Extension of load 1600KW DHBVNL, sanctioned by the Faridabad authority. 19 Full Occupation Estate Officer, HUDA (Erection 11.08.2004 -- Construction of Certificate HUDA, Faridabad of buildings) Building completely in Regulations, compliance of 1979 approved building plans and rules/ regulations of HUDA 20 Certificate of Non- Estate Officer, -- 14.05.2004 -- Certifying that the Encumbrance HUDA, Faridabad property is free of any Property encumbrance. 21 Possession Certificate Junior Engineer, -- 15.03.2002 -- Possession of the plot HUDA, Faridabad permitted 22 DPC Certificate Sub-Divisional -- 10.12.2002 -- Construction of plot Engineer 23 Allotment Letter Estate Officer, -- 28.01.2002 -- Letter for allotment as HUDA, Faridabad per Form CC made on free hold acquired by way of bid 24 Fire NoC Assistant -- 10.08.2005 09.08.2006 In respect of Multiplex Divisional Fire at Faridabad

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Officer, Faridabad

The following licenses required for the Project are pending receipt:

i. Registration of the brand name SRS Value Bazaar has been applied for by the Company which is pending with the relevant governemt authority. ii. The Company is yet to apply for the abovementioned Government approvals/ Licences required for implementing the Project. The above list is indicative of the approvals required by the Company to inplement the Project and not exhaustive.

No consent of the Government of India is required by the Company for this Issue.

The Company has complied with all the applicable guidelines / directions issued by RBI from time to time.

As certified by the Legal Advisor to the Issue, except as stated above, the Company has received all the necessary consents, licenses, permissions and approvals form the Government/RBI and various government agencies, which are required for its present business.

It must, however, be distinctly understood that in granting the above consents/licenses/permissions/approvals, the Government/RBI does not take any responsibility for the financial soundness of the Company or for the correctness of any of the statements or any commitments made or opinions expressed.

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OTHER REGULATORY AND STATUTORY DISCLOSURES

The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of the Draft Red Herring Prospectus, the CAF, the Memorandum and Articles of Association of the Company, the approvals from the Government of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, Listing Agreements entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment advise or letter of allotment or Security Certificate and rules as may be applicable and introduced from time to time, the FEMA and the Letters of Allotment/Equity Shares to be issued. Over and above such terms and conditions, the Equity Shares shall also be subject to applicable laws, guidelines, notifications and regulations relating to issue of capital and listing of securities issued from time to time by SEBI, the Government of India, RBI and or other authorities.

Authority to the Offer The Issue of Equity Shares has been authorised by special resolutions adopted pursuant to Section 81(1A) of the Companies Act, at an Extra Ordinary General Meeting of the members of the Company held on June 30, 2005 and an Annual General Meeting of the members held on July 25, 2005. The Board of Directors has pursuant to resolutions passed at the meeting held on June 30, 2005 authorised a Committee, referred to as IPO Committee, to take decisions on behalf of the Board in relation to the Issue.

Prohibition by SEBI The Company, its Directors, Promoters, entities forming the Promoter Group, other companies/entities promoted by the Promoters, and companies/entities with which the Directors of the Company are associated as directors, have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. None of the Directors or the persons in control of the Promoter companies have been prohibited from accessing the capital markets or restrained from buying/selling/dealing in securities under any order or direction passed by SEBI.

Eligibility for the Issue As per clause 2.2.1 of SEBI Guidelines, an unlisted company may make an initial public offering of equity shares, only if it meets the following conditions; with eligibility criteria calculated in accordance with unconsolidated financial statements under Indian GAAP: a) The Company has net tangible assets of at least Rs.300 Lacs in each of the preceding three full years (of 12 months each) of which not more than 50% are held in monetary assets. b) The Company has a track record of distributable profits as per Section 205 of Companies Act, for at least three out of immediately preceding five years. For calculating distributable profits in terms of Section 205 of the Companies Act extra-ordinary items shall not be considered; c) The Company has a net worth of at least Rs.100 Lacs in each of the preceding three full years of 12 months each; d) In case the Company has changed its name within the last one year, atleast 50% of the revenues for the preceding one full year is earned by the Company from the activity suggested by the new name; and e) The aggregate of the proposed Issue and all previous issues made in the same financial year in terms of size (i.e. offer through offer Document + firm allotment + promoters contribution through offer document) does not exceed five (5) times its pre-issue networth as per the audited balance sheet of the last financial year.

In terms of a certificate issued by M/S T. K. Gupta and Associates, the statutory auditors dated August 25, 2005 the Company satisfies the above eligibility criteria as follows: (Rupees in Lacs) Particulars 2005 2004 2003 2002 2001 Net Tangible Assets (1) 4614.34 2337.30 1196.98 91.25 0.00 Monetary Assets (2) 401.52 78.19 11.60 72.12 11.38 Monetary Assets as % of Net 8.70 3.35 0.97 79.04 N.A. Tangible Assets

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Net Profits as restated 219.09 0.00 0.04 0.00 0.01 Net Worth as restated (3) 2296.32 1249.84 541.51 99.80 4.48 Distributable Profits (4) 219.09 0.00 0.04 0.00 0.01

(1) Net tangible assets means the sum of all net assets of the Company excluding intangible assets as defined in Accounting Standard 26 issued by ICAI. (2) Monetary Assets comprise cash and bank balances, public deposit account with the Government and interest accrued thereon. (3) Net worth have been computed as the aggregate of equity share capital and reserves, excluding miscellaneous expenditures, if any. (4) Distributable profits have been computed in terms of section 205 of the Companies Act.

Name of the Company was changed from 'SRS Commercial Company Limited' to 'SRS Entertainment Limited' on January 25, 2005. This was done to better reflect the nature of activities of the Company, which began commercial operations of SRS Multiplex, the first Multiplex of the Company, in November 2004.

The Company meets all the conditions mentioned above. However, the Equity Shares are being offered through the book building route in accordance with clauses 2.2.2 and 2.2.2A of the SEBI Guidelines, wherein:

Atleast 50% of the Net Issue to public (i.e., 83,85,000 equity shares) will be allotted to the Qualified Institutional Buyers (QIBs), failing which the full subscription monies shall be refunded The post-issue face value capital of the Company shall be Rs. 4989.57 Lacs.

Undertaking by the Company The Company undertakes that the number of allottees in the proposed Issue shall be atleast 1,000, otherwise, we shall forthwith refund the entire subscription amount received. In case of delay, if any, in refund, we shall pay interest on the application money at the rate of 15% per annum for the period of delay.

Disclaimer Clause AS REQUIRED, A COPY OF THIS DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF DRAFT RED HERRING PROSPECTUS TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED/ CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPOSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGERS UTI BANK LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI GUIDELINES FOR DISCLOSURE AND INVESTOR PROTECTION IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE OFFER DOCUMENT, THE BOOK RUNNING LEAD MANAGERS ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGERS UTI BANK LIMITED, HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED SEPTEMBER 12, 2005 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS: WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS MORE PARTICULARLY REFERRED TO IN THE ANNEXURE HERETO IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE; ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED

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PROFITIBALITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY; WE CONFIRM THAT: THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE GUIDELINES, INSTRUCTIONS ETC., ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO INVESTMENT IN THE PROPOSED ISSUE; BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID; AND IF UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCE AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE BOOK RUNNING LEAD MANAGER(S) (MERCHANT BANKERS) ANY IRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS.

Caution The Company accepts no responsibility for statements made otherwise than in the Draft Red Herring Prospectus or in any advertisement or other material issued by the Company or by any other persons at the instance of the Company and anyone placing reliance on any other source of information would be doing so at his own risk.

The Book Running Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports, etc. after filing of the Draft Red Herring Prospectus with SEBI. The Book Running Lead Manager and the Company shall update the Draft Red Herring Prospectus and keep the public informed of any material changes till the listing and trading commences.

Disclaimer With Respect To Jurisdiction The Draft Red Herring Prospectus has been prepared under the provisions of Indian Laws and the applicable rules and regulations hereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in New Delhi, India only.

The Draft Red Herring Prospectus has been filed with SEBI, Mittal Court, 'A' Wing, Nariman Point, Mumbai 400 021, for its observations. The final Red Herring Prospectus will be filed with the Designated Stock Exchange as per the provisions of the Act.

Disclaimer Clause of the Stock Exchange

Disclaimer Clause of BSE The Bombay Stock Exchange Limited (the "Exchange") has given vide its letter dated [•] permission to the Company to use the Exchange's name in the Draft Red Herring Prospectus as one of the stock exchanges on which this Company's securities are proposed to be listed. The Exchange has scrutinised the Draft Red Herring Prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner:

Warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red Herring Prospectus; or

Warrant that this Company's securities will be listed or will continue to be listed on the Exchange; or

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Take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company; and its should not for any reason be deemed or construed that the Draft Red Herring Prospectus has been cleared or approved by the Exchange.

Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.

Disclaimer Clause of NSE As required, a copy of the Draft Red Herring Prospectus has been submitted to National Stock Exchange of India Limited (hereinafter refereed to as NSE). NSE has given vide its letter dated [•] permission to the Issuer to use the Exchange's name in the Draft Red Herring Prospectus as one of the stock exchanges on which this Company's securities are proposed to be listed. The Exchange has scrutinised the Draft Red Herring Prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Issuer. It is to be distinctly understood that the aforesaid permission given by NSE that the Draft Red Herring Prospectus has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red Herring Prospectus nor does it warrant that the Issuer's securities will be listed or will continue to be listed on the Exchange nor does it take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Issuer.

Filing A copy of the Draft Red Herring Prospectus, along with the documents required to be filed under Section 60B of the Companies Act, would be delivered for registration to the RoC and a copy of the Prospectus to be filed under Section 60 of the Companies Act would be delivered for registration with RoC. A copy of the Draft Red Herring Prospectus has been filed with SEBI at Ground Floor, Mittal Court, “A” Wing, Nariman Point, Mumbai 400 021.

Listing Applications have been made to The Bombay Stock Exchange Limited and National Stock Exchange of India Limited for permission to deal in and for an official quotation of our Equity Shares. We have nominated The Bombay Stock Exchange Limited as the Designated Stock Exchange for the Issue. If the permissions to deal in and for an official quotation of our Equity Shares are not granted by any of the Stock Exchanges mentioned above, our Company shall forthwith repay, without interest, all moneys received from the applicants in pursuance of the Draft Red Herring Prospectus. If such money is not repaid within eight days after our Company becomes liable to repay it (i.e. from the date of refusal or within 70 days from the Bid/Issue Closing Date, whichever is earlier), then our Company and every director of our Company who is an officer in default shall, on and from expiry of eight days, will be jointly and severally liable to repay the money, with interest at the rate of 15% per annum on application money, as prescribed under Section 73 of the Companies Act. Our Company shall ensure that all steps for the completion of necessary formalities for listing and commencement of trading at both the Stock Exchanges mentioned above are taken within seven working days of finalisation and adoption of the basis of allotment for the Issue.

Impersonation As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection (1) of Section 68A of the Companies Act, 1956 which is reproduced below: “Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any Equity Shares therein, or otherwise induces a Company to allot, or register any transfer of Equity Shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years”

Consents The written consents of Directors, Company Secretary, Book Running Lead Manager to the Issue, Legal Advisor to the Issue, Registrar to the Issue, Statutory Auditors of the Company, Bankers to the Company and Bankers to the Issue to act in their respective capacities, have been obtained and filed along with a copy of the Draft Red Herring Prospectus with the Registrar of Companies, NCT Delhi & Haryana at New Delhi as required

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under Section 60 of the Companies Act and such consents have not been withdrawn up to the time of delivery of the Red Herring Prospectus for registration.

Expert Opinion The Company has not obtained any expert opinions related to the present Issue, except the opinion of the Statutory Auditors, M/s T. K. Gupta & Associates, Chartered Accountants on the tax benefits available to the investors.

Issue Expenses Public Issue expenses are estimated as follows: (Rupees in Lacs) Sr. No. Particulars Amount 1 Fees of Book Running Lead Manager, Registrar, Legal Advisor, [•] Auditors, Tax Auditors, etc. 2 Printing and Stationery, Distribution, Postage, etc. [•] 3 Brokerage and Selling Commission [•] 4 Advertisement and Marketing Expenses [•] 5 Other Expenses (incl. Filing Fees, Listing Fees, Depository Charges, [•] etc.) 6 Contingencies [•] Total [•]

Details of Fees Payable Particulars Amount (Rupees in % of total Issue % of total Issue Size Lacs) Expenses Book Running Lead [•] [•] [•] Manager Registrar to the Issue [•] [•] [•] Legal Advisor [•] [•] [•] Total [•] [•] [•]

Fees Payable to Book Running Lead Manager to the Issue The total fees payable to the Book Running Lead Manager will be as per the Memorandum of Understanding signed with the Book Running Lead Manager, copy of which is available for inspection at the Registered Office of the Company.

Fees Payable to Registrar to the Issue The total fees payable to the Registrar to the Issue will be as per the Memorandum of Understanding signed with the Registrar, copy of which is available for inspection at the Registered Office of the Company. The Registrar will also be reimbursed with all relevant out-of-pocket expenses such as cost of stationery, postage, stamp duty, communication expenses, etc. Adequate funds will be provided to the Registrar to the Issue to enable them to send refund order(s) / letter(s) of allotment / share certificate(s) by registered post.

Underwriting Commission, Brokerage and Selling Commission The Underwriting Commission will be paid not more than 2.5% of the Public Issue Size. Brokerage for the Issue will be paid not more than @ 1.5% of the Issue Price of the Equity Shares by the Company on the basis of the allotments made against the applications bearing the stamp of a member of any recognised Stock Exchange in India in the ‘Broker’ column. Brokerage at the same rate will also be payable to the Bankers to the Issue in respect of the allotments made against applications procured by them provided the respective forms of application bear their respective stamp in the Broker column. In case of tampering or over- stamping of Brokers’/ Agents’ codes on the application form, the Company’s decision to pay brokerage in this respect will be final and no further correspondence will be entertained in this matter. The Company, at its sole discretion, may consider payment of additional incentive in the form of kitty or otherwise to the performing brokers on such terms and mode as may be decided by the Company.

Previous Public or Rights Capital issues by the Company (during the last five years) This is the first Public /Rights issue by the Company.

Previous Issue of Shares Otherwise than for Cash

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Except as stated in 'Capital Structure' on page no. 10 of the Draft Red Herring Prospectus, we have not issued any equity shares for consideration otherwise than for cash.

Commission or Brokerage on Previous Issues Since this is an initial public offer, no sum has been paid or is payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of the equity shares of the Company since its inception.

Particulars in regard to other listed companies under the same management within the meaning of section 370 (1)(B) of the Companies Act, 1956 which made any capital Issue during the last three years There is no company under the same management within the meaning of erstwhile section 370 (1)(B) of the Companies Act, 1956:

Promise vis-à-vis Performance a) Issuer Company: Since this is an initial public offer by the Issuer Company, this is not applicable b) Listed ventures of Promoters: All the companies are closely held private companies and none of them have made any public offer during the last three years.

Stock Market Data This being the first public issue by the Company, no stock market data is available.

Investor Grievances and Redressal System The agreement between the Registrar to the Issue, Karvy Computershare Private Limitedand the Company will provide for retention of records with the Registrar to the Issue for a period of at least one year from the last date of dispatch of letters of allotment, demat credit and refund orders to enable investors to approach the Registrar to the Issue for redressal of their grievances. All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name, address of the applicant, number of Equity Shares applied for, amount paid on application and the bank branch or collection center where the application was submitted.

There are no complaints and/or grievances from the investors which are pending. All the complaints and/or grievances have been satisfactorily replied.

We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine investor grievances will be seven business days from the date of receipt of the complaint. In case of non routine complaints and complaints where external agencies are involved, we will seek to redress these complaints as expeditiously as possible.

We have appointed Mr. Arun Kumar Gupta (CFO) as the Compliance Officer and he may be contacted in case of any pre issue or post-issue related problems. His contact details are as under:

Mr. Arun Kumar Gupta CFO and Compliance Officer SRS Entertainment Limited SRS Multiplex, City Centre, Sector-12, Faridabad, (NCR), Haryana 121007. Mobile: +91 9810672518 Telephone: (0129) 5008350, 5003266 Fax: (0129) 2433255 E-mail: [email protected]

Changes in the auditors Following are the details of changes in Auditors of the Company in the last three years:

Sr. No. Name of Auditor Reason for Date of Nature of Change Meeting Meeting

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Appointed In place of 1 M/s. T. K. Gupta & M/s Rakesh Raj & Resignation 28.12.2004 EOGM Associates Associates 2 M/s Rakesh Raj & M/s A. C. Aggarwal & Resignation 07.07.2003 EOGM Associates Co. Other than the above, there was no change in Auditors during preceeding three years.

Capitalisation of Reserves or profits (during the last five years) There has been no capitalisation of reserves or profits of the Company in the last five years.

Revaluation of assets, if any (during the last five years) None of the assets of the Company have been revalued during last five years.

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OFFERING INFORMATION

ISSUE INFORMATION

1. TERMS OF THE ISSUE The Equity Shares being issued are subject to the provisions of the Companies Act, Memorandum and Articles, the terms of the Draft Red Herring Prospectus, Bid cum Application Form, the Revision Form, the CAN and other terms and conditions as may be incorporated in the allotment advice and other documents/ certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws, guidelines, notifications and regulations relating to the issue of capital and listing of securities issued from time to time by SEBI, Government of India, Stock Exchanges, RBI, Registrar of Companies and/or other authorities, as in force on the date of the Issue and to the extent applicable.

Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of the Memorandum and Articles and shall rank pari passu in all respects with the other existing equity shares of the Company including rights in respect of dividend. The allottees will be entitled to dividend or any other corporate benefits, if any, declared by the Company after the date of Allotment.

Mode of payment of dividend The declaration and payment of dividends will be recommended by the Board of Directors and shareholders, in their discretion, and will depend on a number of factors, including but not limited to earnings, capital requirements and overall financial condition.

Face Value and Issue Price The Equity Shares with a face value of Rs.10/- each are being offered in terms of the Draft Red Herring Prospectus at a price band of Rs.[.] to Rs.[.] per Equity share. At any given point of time, there shall be only one denomination for the Equity Shares of the Company, subject to applicable laws.

Rights of the Equity Shareholder • Subject to applicable laws, the equity shareholders shall have the following rights: • Right to receive dividend, if declared; • Right to attend general meetings and exercise voting powers, unless prohibited by law; • Right to vote on a poll either in person or by proxy; • Right to receive offers for rights shares and be allotted bonus shares, if announced; • Right to receive surplus on liquidation; • Right of free transferability; and • Such other rights, as may be available to a shareholder of a listed public Company under the Companies Act and Memorandum and Articles of Association of the Company.

For a detailed description of the main provisions of the Company’s Articles of Association relating to voting rights, dividend, forfeiture and lien, transfer and transmission and / or consolidation / splitting, see “Description of Equity Shares and Terms of Articles of Association of the Company” on Page no. 147 in the Draft Red Herring Prospectus.

Market Lot In terms of Section 68B of the Companies Act, the Equity Shares of the Company shall be allotted only in dematerialised form. In terms of existing SEBI Guidelines, the trading in the Equity Shares of the Company shall only be in dematerialised form for all investors.

Since trading of the Equity Shares will be dematerialised mode, the tradable lot is one equity share.

Nomination Facility to the Investor In accordance with Section 109A of the Companies Act, the sole or first bidder, along with other joint bidders, may nominate any one person in whom, in the event of the death of sole bidder or in case of joint bidders, death of all the bidders, as the case may be, the Equity Shares transmitted, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled

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to the same advantages to which he or she would be entitled if he or she were the registered holder of the equity share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to equity share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale/ transfer/ alienation of equity share(s) by the person nominating. In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect either: • to register himself or herself as the holder of the equity shares; or • to make such transfer of the equity shares, as the deceased holder could have made.

Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the equity shares, and if the notice is not complied with within a period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the equity shares, until the requirements of the notice have been complied with. Since the allotment of Equity Shares in the Issue will be made only in dematerialised mode, there is no need to make a separate nomination with us. Nominations registered with respective depository participant of the applicant would prevail. If the investors require changing the nomination, they are requested to inform their respective depository participant.

Minimum Subscription If the Company does not receive the minimum subscription of 90% of the Issue amount, including devolvement of the members of the Syndicate, if any, within 60 days from the Bid/Issue Closing Date, the Company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days, the Company and every director of the Company who is an officer in default, becomes liable to repay the amount with interest as per Section 73 of the Companies Act. If the number of allottees in the proposed Issue is less than 1,000 allottees, The Company shall forthwith refund the entire subscription amount received.

Withdrawal of the Issue The Company, in consultation with the BRLM and Joint BRLM, reserves the right not to proceed with the Issue anytime after the Bid/ Issue Opening Date without assigning any reason thereof.

Arrangements for disposal of odd lots The Company’s shares will be traded in dematerialised form only and therefore the marketable lot is 1 share. Therefore, there is no possibility of odd lots.

Restrictions on transfer of shares and alteration of capital structure The Company does not have any proposal, intention, negotiation or consideration to alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of Equity Shares or any other securities within a period of six months from the date of opening of the present Issue. However, if business needs of the Company so require, the Company may alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities. The Company may issue options to its employees pursuant to an employee stock option plan or, if the Company enters into acquisitions or joint ventures, it may consider raising additional capital to fund such activity or use Equity Shares as currency for acquisition or participation in such joint ventures.

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ISSUE STRUCTURE

Public Issue of 2,28,57,200 Equity Shares of Rs. 10/- each at the Issue Price of Rs. [•] for cash aggregating Rs. [•] Lacs is being made through a 100% book building process. Details of the issue structure are tabulated below:

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Reserved Reserved Reserved QIBs Non- Retail portion for portion for portion for Institution Individual Promoters Shareholders Employees al Bidders Bidders of the of Group of the Company Companies of Company the Company Number of Equity Up to Up to 22,85,720 Up to Up to Minimum Minimum Shares * 42,87,200 Equity Shares 22,85,720 69,99,280 of of Equity Equity Equity 20,99,784 48,99,496 Shares Shares Shares or Equity Equity Net Issue to Shares or Shares or public less Net Issue to Net Issue to allocation public less public less to Non- allocation allocation Institutional to QIBs and to QIBs and Bidders and Retail Non- Retail Individual Institutional Individual Bidders Bidders Bidders Percentage of Issue Up to ** Up to 10% ** Up to Up to 50% Minimum Minimum size available for 18.76% of of Issue size 10% of of Net Issue 15% of Net 35% of the Allocation Issue size Issue size to public or Issue to Net Issue to Net Issue public or public or size less Net Issue Net Issue allocation size less size less to Non- allocation allocation Institutional to QIBs and to QIBs and Bidders and Retail Non- Retail Individual Institutional Individual Bidders Bidders Bidders Basis of Allotment if N.A.$ Proportionate Proportionat Discretiona Proportiona Proportiona respective category is e ry te te oversubscribed Minimum Bid N.A.$ [•] Equity [•] Equity Such Such [•] Equity Shares and Shares and number of number of Shares and thereafter in thereafter in Equity Equity thereafter in multiples of [•] multiples of Shares that Shares that multiples of Equity Shares [•] Equity the Bid the Bid [•] Equity Shares Amount Amount Shares exceeds Rs. exceeds Rs. 1,00,000 1,00,000 and in and in multiples of multiples of [•] Equity [•] Equity Shares Shares Maximum Bid N.A.$ Such number of Such Such Such Such Equity Shares number of number of number of number of that the number Equity Equity Equity Equity of Equity Shares that Shares not Shares not Shares so as Shares Bid for the number exceeding exceeding to ensure should not of Equity the Net the Net that the Bid exceed Shares Bid Issue size Issue size Amount 22,85,720 for should subject to subject to does not Equity Shares not exceed applicable applicable exceed Rs. 22,85,720 limits limits 1,00,000 Equity Shares Mode of Allotment Compulsor Compulsory in Compulsory Compulsor Compulsor Compulsor y in Dematerialised in y in y in y in

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Reserved Reserved Reserved QIBs Non- Retail portion for portion for portion for Institution Individual Promoters Shareholders Employees al Bidders Bidders of the of Group of the Company Companies of Company the Company Demateriali form Dematerialis Demateriali Demateriali Demateriali sed form ed form sed form sed form sed form Trading Lot One One One One One One Who can Apply N.A.$ Shareholders of Employees Public Resident Individuals the Group of the financial Indian (including Companies of Company as institutions, individuals, HUFs) the Company, on [•] as specified HUF (in the applying for i.e, Akriti in section name of up to Rs. Financial 4A of the Karta), 1,00,000 Services (P) Companies companies, Limited and Act, corporate Ferro Plast scheduled bodies, Limited, as on commercial societies [•] banks, and trusts mutual funds, venture capital funds, and State Industrial Developmen t Corporations , Insurance companies registered with Insurance Regulatory and Developmen t Authority Provident Funds with minimum corpus of Rs. 2500 lacs and Pension Funds with minimum corpus of Rs. 2500 lacs who are authorised under their constitution to hold and invest in Equity Shares

Terms of Payment N.A$ Margin Amount Margin Margin Margin Margin

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Reserved Reserved Reserved QIBs Non- Retail portion for portion for portion for Institution Individual Promoters Shareholders Employees al Bidders Bidders of the of Group of the Company Companies of Company the Company applicable to Amount Amount Amount Amount reserved portion applicable to applicable applicable applicable for reserved to QIB to Non- to Retail Shareholders of portion for Bidders at Institutional Bidders at Group Employees the time of Bidders at the time of Companies of of the submission the time of submission the Company at Company at of Bid-cum- submission of Bid cum the time of the time of Application of Bid-cum- Application submission of submission Form to the application Form to the Bid-cum- of Bid-cum- members of Form to the members of Application Application the members of the Form to the Form to the Syndicate the Syndicate members of the members of Syndicate Syndicate the Syndicate Margin Amount N.A $ Full Bid Full Bid NIL Full Bid Full Bid Amount on Amount on Amount on Amount on Bidding Bidding Bidding Bidding

* Subject to valid bids being received at or above the Issue Price, under-subscription, if any, in any category, would be allowed to be met with spill-over from any other categories at the discretion of the Company, the BRLM and the Joint BRLM.

** Unsubscribed portion in any Reserved Category would be added to any other Reserved Category. The unsubscribed portion, if any, after such interse adjustments among the Reserved Categories shall be added back to the Net Issue to the public and first be distributed equally between the Retail Portion and the Non- Institutional Portion in accordance with the description in section titled "Statutory and other Information - Basis of Allotment” as described in page no. 143. In the event that the demand in either of the Retail Portion or the Non-Institutional Portion has been met, the Equity Shares shall be allocated to a category in which the demand has not been met. The remaining undersubscribed Equity Shares, if any, after allocation to the Retail Portion and the Non-Institutional Portion as aforesaid, shall be allocated to the QIB Portion in accordance with the description in section titled “Statutory and other Information - Basis of Allotment” as described in page no. 143.

$ Oversubscription in the Promoters reservation category is not possible as the investors and number of shares proposed to be applied for by each entity has been finalised. Amount payable by each of them, at the cap price, will brought-in one day before the Bid/Issue open date. For details please refer to “Capital Structure” on page no 10 of the Draft Red Herring Prospectus.

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ISSUE PROCEDURE

Book Building Procedure The Issue is being made through the 100% Book Building Process wherein upto 50% of the Issue shall be available for allocation on a discretionary basis to QIBs. Further, not less than 15% shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% shall be available for allocation on a proportionate basis to the Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price within price band.

Bidders are required to submit their Bids through the members of the Syndicate. We, in consultation with the BRLM and Joint BRLM reserve the right to reject any Bid procured by any or all members of the Syndicate without assigning any reason thereof from QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders, the Company would have a right to reject the Bids only on technical grounds.

Investors should note that Equity Shares would be allotted to all successful allottees only in the dematerialised form.

Illustration of Book Building and Price Discovery Process (Investors may note that this illustration is solely for the purpose of easy understanding and is not specific to the Issue) Bidders can bid at any price within the price band. For instance, assume a price band of Rs. 31 to Rs. 38 per share, issue size of 7000 equity shares and receipt of five bids from bidders out of which one bidder has bid for 500 shares at Rs.38 per share while another has bid for 1,500 shares at Rs.37 per share. A graphical representation of the consolidated demand and price would be made available at the bidding centers during the bidding period. The illustrative book as shown below shows the demand for the shares of the Company at various prices and is collated from bids from various investors.

Bid Quantity Bid Price (Rs.) Cumulative Quantity Subscription 500 38 500 30.33 1000 37 1500 40.44 2500 35 4000 180.56 3000 33 7000 300.34 4000 31 11000 450.65 The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue the desired quantum of shares is the price at which the book cuts off i.e. Rs. 33 in the above example. The issuer, in consultation with the BRLM, will finalise the Issue Price at or below such cut off price i.e. at or below Rs. 33. All bids at or above this Issue Price and cutoff bids are valid bids and are considered for allocation in respective category.

Bid-cum-Application Form Bidders shall only use the specified Bid-cum-Application Form bearing the stamp of a member of the Syndicate for the purpose of making a Bid in terms of the Draft Red Herring Prospectus. The Bidder shall have the option to make a maximum of three Bids in the Bid-cum-Application Form and such options shall not be considered as multiple bids. Upon the allocation of Equity Shares, dispatch of CAN, and filing of the Prospectus with the RoC, the Bid-cum-Application Form shall be considered as the Application Form. Upon completing and submitting the Bid-cum-Application Form to a member of the Syndicate, the Bidder is deemed to have authorised the Company to make the necessary changes in the Draft Red Herring Prospectus and the Bid-cum- Application Form as would be required for filing the Prospectus with he ROC and as would be required by ROC after such filing, without prior or subsequent notice of such changes to the Bidder.

The prescribed colour of the Bid-cum-Application Form for various categories, is as follows: Category Colour of Bid Cum Application Form Indian Public applying on a non-repatriation basis White Reserved Categories, i.e., Shareholders of Group Companies Pink of the Company and Employees of the Company

Who can Bid? 1. Indian nationals resident in India who are major, in single or joint names (not more than three); 2. Hindu Undivided Families or HUFs in the individual name of the Karta. The Bidder should specify that the Bid is being made in the name of the HUF in the Bid cum Application Form as follows: “Name of Sole or

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First bidder: ABC Hindu Undivided Family applying through ABC, where ABC is the name of the Karta”. Bids by HUFs would be considered at par with those from individuals; 3. Companies, corporate bodies and societies registered under the applicable laws in India and authorised to invest in the Equity Shares; 4. Indian Mutual Funds registered with SEBI; 5. Indian Financial Institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI regulations, as applicable); 6. Venture Capital Funds registered with SEBI; 7. State Industrial Development Corporations; 8. Trust/ society registered under the Societies Registration Act, 1860, as amended, or under any other law relating to Trusts/ society and who are authorised under their constitution to hold and invest in Equity Shares; 9. Scientific and/ or Industrial Research Organisations authorised to invest in Equity Shares. 10. Insurance companies registered with the Insurance Regulatory and Development Authority; 11. Provident funds with minimum corpus of Rs. 2500 lacs and who are authorised under their constitution to hold and invest in Equity Shares; 12. Pension funds with minimum corpus of Rs. 2500 lacs and who are authorised under their constitution to hold and invest in Equity Shares

Note: The BRLM, Joint BRLM, Syndicate Members and any associate of the members of the BRLM, Joint BRLM and Syndicate Members (except asset management companies on behalf of mutual funds, Indian financial institutions and public sector banks) cannot participate in that portion of the Issue where allocation is discretionary unless otherwise permitted by SEBI.

As per the current regulations, OCBs cannot Bid in this offer.

Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under the relevant regulations or statutory guidelines.

As per the current regulations, the following restrictions are applicable for investments by mutual funds: No mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments in index funds or sector or industry specific funds. No mutual fund under its scheme should own more than 10% of any company’s paid-up capital carrying voting rights.

As per the current regulations, the following restrictions are applicable for SEBI registered Venture Capital Funds: The SEBI (Venture Capital Funds) Regulations, 1996 prescribe investment restrictions on venture capital funds registered with SEBI. Accordingly, the holding by any individual venture capital fund registered with SEBI should not exceed 25% of our Company’s paid-up capital. The aggregate holdings of venture capital funds registered with SEBI could, however, go up to 100% of our Company’s paid-up equity capital. However, as of this date, no such resolution has been recommended for adoption.

The above information is given for the benefit of the Bidders. We, the BRLM and the Joint BRLM are not liable for any amendments or modification or changes in applicable laws or regulations, which may happen after the date of the Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares bid for do not exceed the applicable limits under laws or regulations.

The Equity Shares have not been and will not be registered under the U.S. Securities Act 1933, as amended (the “Securities Act ”) or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons ”(as defined in Regulation S of the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares will be offered and sold only (i) in the United States to “Qualified Institutional Buyers”, as defined in Rule 144A of the Securities Act, and (ii) outside the United States in compliance with Regulation S and the applicable laws of the jurisdiction where those offers and sales occur.

Maximum and Minimum Bid Size

For Retail Individual Bidders

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The Bid must be for a minimum of [•] Equity Shares and in multiples of [•] Equity Shares thereafter, subject to maximum Bid amount of Rs.1,00,000. In case of revision of Bids, the Retails bidders have to ensure that the Bid amount does not exceed Rs.1,00,000. In case the maximum Bid amount is more than Rs.1,00,000, then the same would be considered for allocation under the Non-Institutional Bidders category. The cut-off option is an option available only to the Retail Individual Bidders indicating their agreement to bid and purchase the equity shares at the final offer price as determined at the end of the Book Building process.

For Non-Institutional Bidders and QIBs Bidders The Bid must be for a minimum of such number of Equity shares, so as to ensure that the minimum Bid amount exceeds Rs.1,00,000/-. Above this minimum Bid Amount, the Bid should be in multiples of [•] equity shares. A Bid cannot be submitted for more than the size of the Issue.

However, the maximum Bid by a QIB should not exceed the investment limits prescribed for them by the regulatory or statutory authorities governing them. Under SEBI existing guidelines a QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing Date.

In case of revision in Bids, the Non-Institutional Bidders who are individuals have to ensure that the Bid Amount is greater than Rs.1,00,000/-. In case the Bid Amount reduces to Rs.1,00,000/- or less due to a revision in Bids, the same would be considered for allocation under Retail portion.

Information for the Bidders 1. The Company will file the Red Herring Prospectus with the RoC at least three days before the Bid/ Issue Opening Date. 2. The members of the Syndicate will circulate copies of the Red Herring Prospectus along with the Bid-cum- Application Form to potential investors. 3. Any investor (who is eligible to invest in the Equity Shares) who would like to obtain the Red Herring Prospectus and/ or the Bid-cum-Application Form can obtain the same from the Company’s registered office or from any of the BRLM, Joint BRLM or Syndicate Members. 4. The Bids should be submitted on the prescribed Bid-cum-Application Form only. Bid-cum-Application Forms should bear the stamp of the members of the Syndicate. Bid-cum-Application Forms, which do not bear the stamp of the members of the Syndicate, will be rejected. 5. Investors who are interested in subscribing for the Company’s Equity Shares should approach the BRLM, Joint BRLM or Syndicate Members or their authorised agent(s) to register their Bid.

Method and Process of Bidding 1. The Company, the BRLM and JOINT BRLM shall declare the Bid/Issue Opening Date, Bid/Issue Closing Date and Price Band at the time of filing the Red Herring Prospectus with RoC and also publish the same in three widely circulated newspapers (one each in English and Hindi) and one regional newspaper. This advertisement shall be made as per the applicable SEBI (DIP) Guidelines. Investors who are interested in subscribing for The Company’s Equity Shares should approach any of the BRLM, Joint BRLM or Syndicate Member or their authorised agent(s) to register their Bid. 2. The Bidding Period shall be open for atleast 3 working days and not more than 10 working days. In case the price band is revised, the revised price band will be published in two widely circulated national newspapers (one each in English and Hindi) and one regional newspaper and the Bidding period will be extended for a further period of three days, subject to the total Bidding period not exceeding 13 days. During the bidding period, The Bidders may approach the Syndicate to submit their Bid. Every Member of the Syndicate shall accept Bids from all clients/investors who place orders through them and shall have the right to vet the bids. 3. Each Bid-cum-Application Form will give the Bidder the choice to bid for up to three optional prices (for details refer to the paragraph entitled “Bids at Different Price Levels” on page no. 134 below) and specify the demand (i.e. the number of Equity Shares bid for) in each option. The price and demand options submitted by the Bidder in the Bid-cum-Application Form will be treated as optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares bid for by a Bidder at or above the Issue Price will be considered for allocation and the rest of the Bid(s), irrespective of the Bid Price, will become automatically invalid. 4. The Bidder cannot bid on another Bid-cum-Application Form after his or her Bids on one Bid-cum- Application Form have been submitted to any member of the Syndicate. Submission of a second Bid-cum- Application Form to either the same or to another member of the Syndicate will be treated as multiple bids and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point of time prior to the allocation or allotment of Equity Shares in this Issue. However, the Bidder can revise

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the Bid through the Revision Form, the procedure for which is detailed under the paragraph “Build up of the Book and Revision of Bids” on page no. 136 of the Draft Red Herring Prospectus. 5. The BRLM, JOINT BRLM and Syndicate Members will enter each bid option into the electronic bidding system as a separate Bid and generate a Transaction Registration Slip, (“TRS”), for each price and demand option and give the same to the Bidder. Bidders should make sure that they ask for a copy of the computerised TRS for every Bid Option from the Syndicate Member. Therefore, a Bidder can receive up to three TRSs for each Bid-cum-Application Form. 6. Along with the Bid-cum-Application Form, all Bidders will make payment in the manner described under the paragraph “Terms of Payment and Payment into Escrow Account” on page no. 135 of the Red Herring Prospectus.

Bids at Different Price Levels 1. The Price Band has been fixed at Rs. [•] to Rs. [•] per Equity Share of Rs.10 each, Rs. [•] being the Floor Price and Rs. [•] being the Cap Price. The Bidders can bid at any price with in the Price Band, in multiples of Re 1. 2. In accordance with SEBI Guidelines, the Company in consultation with the BRLM and Joint BRLM, can revise the Price Band during the Bidding period, in which case the Issue will be kept open for a period of three days after the revision of the Price Band, subject to the total Bidding Period not exceeding thirteen days. The Price Band can be revised during the Bidding Period in which case the maximum revisions on either side of the Price Band shall not exceed 20% fixed initially and as disclosed in the Red Herring Prospectus. 3. Any revision in the Price Band shall be widely disseminated including by informing the stock exchanges by issuing a public notice in two national languages (One each in English and Hindi) and one regional newspaper also indicating the change on the relevant websites and the terminals of the members of Syndicate. 4. The Company in consultation with the BRLM and Joint BRLm can finalise the Issue Price within the Price Band in accordance with this clause, without the prior approval of, or intimation to the Bidders. 5. The Bidder can bid at any price within the Price Band. The Bidder has to bid for the desired number of Equity Shares at a specific price. Retail Individual Bidders may bid at “Cut off”. However, bidding at “Cut- off” is prohibited for QIB or Non Institutional Bidders and such Bids from QIBs and Non Institutional Bidders shall be rejected. 6. Retail Individual Bidders who bid at the Cut-Off agree that they shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders bidding at Cut-Off shall deposit the Bid Amount based on the Cap Price in the Escrow Account. In the event the Bid Amount is higher than the subscription amount payable by the Retail Individual Bidders (i.e. the total number of equity shares allocated in the Issue multiplied by the Issue Price), Retail Individual Bidders shall receive the refund of the excess amounts from the Escrow Account. 7. In case of an upward revision in the Price Band announced as above, the Retail Bidders who had bid at Cut- off could either (i) revise their Bid or (ii) make additional payment based on the Cap of the Revised Price Band, with the members of the Syndicate to whom the Original Bid was submitted. In case the total amount (i.e. the original Bid amount plus additional payment) exceeds Rs.1,00,000 , the Bid will be considered for allocation of under the Non-Institutional portion in terms of the Red Herring Prospectus. If however the Bidder does not either revise the Bid or make additional payment and the offer price is higher than the cap of the Price Band prior to revision, the number of Equity Shares bid for shall be adjusted for the purpose of allocation, such that no additional payment would be required from the Bidder. 8. In case of downward revision in the Price Band announced as above, Retail Bidders who have bid at Cut- Off could either revise their Bid or the excess amount at the time of bidding would be refunded from the Escrow Account. 9. In the event of any revision in the Price Band, whether upwards or downwards, the Minimum Application shall remain [•] Equity Shares irrespective of whether the Bid Amount payable on such Minimum Application size is not in the range of Rs.5,000/- to Rs.7,000/-.

Option to Subscribe Equity Shares being issued through this Prospectus can be applied for in the dematerialised form only.

Escrow Mechanism Escrow Account for the Issue The Company shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the Bidders shall make out the cheque or demand in respect of his or her Bid and/or revision of the bid. Cheques or demand drafts received for the full Bid amount from Bidders in a certain category would be deposited in the

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Escrow Account for the Issue. The Escrow Collection Banks will act in terms of the Red Herring Prospectus and an Escrow Agreement. The monies in the Escrow Account for the Issue shall be maintained by the Escrow Collection Bank(s) for and on behalf of the Bidders. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks shall transfer the monies from the Escrow Account to the Public Issue Account with the Bankers to the Issue as per the terms of the Escrow Agreement with the Company. Payments of refunds to the Bidders shall also be made from the Escrow collection Banks are per the terms of the Escrow Agreement and the Red Herring Prospectus. The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as an arrangement between the Escrow Collection Bank(s), The Company, the Registrar to the Issue, BRLM and Joint BRLM, and Syndicate Members to facilitate collections from the Bidders.

Terms of Payment and Payment into the Escrow Collection Account In case of Non-institutional Bidders and Retails Individual Bidders, each Bidder shall, with the submission of the Bid cum Application Form draw a cheque or demand draft for the maximum amount of his Bid in favour of the Escrow Account of the Escrow Collection Bank (for details refer to the paragraph Payment Instructions on page no. 140 of the Draft Red Herring Prospectus) and submit the same to the members of the Syndicate with whom the Bid is being deposited.

Bid cum Application Forms accompanied by cash and Stockinvest shall not be accepted.

The maximum bid price has to be paid at the time of submission of the Bid cum Application Form based on the highest bidding option of the Bidder. The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection Bank(s), which will hold the monies for the benefit of the Bidders till such time as the Designated Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account or Refund Account with the Bankers to the Issue, as applicable.

In case of QIBs, the members of the Syndicate may, at their discretion, waive such payment at the time of the submission of the Bid cum Application Form. Where such payment at the time of submission of the Bid cum Application Form is waived at the discretion of the members of the Syndicate, the Issue Price shall be payable for the allocated Equity Shares no later than the date specified in the CAN, which shall be subject to a minimum period of two days from date of communication of the allocation list to the members of the Syndicate by the BRLM and Joint BRLM. If the payment is not made favoring the Escrow Account within the time stipulated above, the application of the Bidder is liable to be rejected. However, if the members of the Syndicate do not waive such payment, the full amount of payment has to be made at the time of submission of the Bid cum Application Form.

Where the Bidder has been allocated lesser number of Equity Shares than he or she had bid for, the excess amount paid on bidding, if any, after adjustment for allocation, will be refunded to such Bidder within 15 days from the Bid/Issue Closing Date.

Electronic Registration of Bids (a) The members of the Syndicate will register the Bids using the on-line facilities of NSE and BSE. There will be at least one on-line connectivity to each city where the Bids are accepted. (b) NSE and BSE will offer a screen-based facility for registering Bids for the Issue. This facility will be available on the terminals of the members of the Syndicate and their authorised agents during the Bidding Period. Members of the Syndicate can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently download the off-line data file into the on-line facilities for book building on a regular basis. On the Bid Closing Date, the Company shall upload the Bids till such time as may be permitted by the Stock Exchanges. (c) The aggregate demand and price for bids registered on the electronic facilities of NSE and BSE will be downloaded on a regular basis, consolidated and displayed on-line at all bidding centers. A graphical representation of consolidated demand and price would be made available at the bidding centers during the bidding period. (d) At the time of registering each Bid, the members of the Syndicate shall enter the following details of the investor in the online system: • Name of the investor (Investors should ensure that the name given in the Bid cum Application form is exactly the same as the Name in which the Depositary Account is held. In case, the Bid cum Application Form is submitted in joint names, investors should ensure that the Depository Account is

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also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form). • Investor Category – Individual, Corporate or Mutual Fund, etc. • Numbers of Equity Shares bid for • Bid price • Bid-cum-Application Form number • Whether payment is made upon submission of Bid-cum-Application Form • Depository Participant Identification No. and Client Identification No. of the Demat Account of the Bidder (e) A system generated TRS will be given to the Bidder as a proof of the registration of each of the bidding options. It is the Bidder’s responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bid by the member of the Syndicate does not guarantee that the Equity Shares shall be allocated either by the members of the Syndicate or us. (f) Such TRS will be non-negotiable and by itself will not create any obligation of any kind. (g) The members of the Syndicate have the right to review the Bid. Consequently, the members of the Syndicate also have the right to accept the Bid or reject it without assigning any reason. In case of Non- Institutional Bidders and Retail Individual Bidders, Bids shall not be rejected except on the technical grounds listed in the Draft Red Herring Prospectus. (h) It is to be distinctly understood that the permission given by NSE and BSE to use their network and software of the online IPO system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by us, and BRLM/JOINT BRLM are cleared or approved by NSE and BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of the Company, promoters, management or any scheme or project of the Company. (i) It is also to be distinctly understood that the approval given by NSE and BSE should not in any way be deemed or construed that the Red Herring Prospectus has been cleared or approved by the NSE and BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red Herring Prospectus; nor does it warrant that the equity shares will be listed or will continue to be listed on the NSE and BSE.

Build Up of the Book and Revision of Bids (a) Bids registered by various Bidders through the members of the Syndicate shall be electronically transmitted to the NSE or BSE mainframe on an on-line basis. Data would be uploaded on a regular basis. (b) The Price Band can be revised during the Bidding Period, in which case the Bidding Period shall be extended further for a period of three days, subject to the total Bidding Period not exceeding thirteen days. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of Price Band can move up or down to the extent of 20% of the floor of the Price Band disclosed in the Draft Red Herring Prospectus. (c) Any revision in the Price Band will be widely disseminated by informing the stock exchanges, by issuing a public notice in two national newspapers (one each in English and Hindi) and one regional newspaper and also indicating the change on the relevant websites and the terminals of the members of the Syndicate. (d) The book gets built up at various price levels. This information will be available with the BRLM and Joint BRLM on a regular basis. (e) During the Bidding Period, any Bidder who has registered his or her interest in the Equity Shares at a particular price level is free to revise his or her Bid within the price band using the printed Revision Form, which is a part of the Bidcum-Application Form. (f) Revisions can be made in both the desired number of Equity Shares and the bid price by using the Revision Form. (a) The Bidder must complete his or her Bid cum Application Form, the details of all the options in his or her Bid cum Application Form or earlier Revision Form and revisions for all the options as per his Bid cum Application Form or earlier Revision Form. (b) For example, if a Bidder has bid for three options in the Bid cum Application Form and he is changing only one of the options in the Revision Form, he must still fill the details of the other two options in the Revision Form unchanged. Incomplete or inaccurate Revision Forms will not be accepted by the members of the Syndicate. (g) The Bidder can make this revision any number of times during the Bidding Period. However, for any revision(s) in the Bid, the Bidders will have to use the services of the same member of the Syndicate through whom he or she had placed the original Bid. Bidders are advised to retain copies of the blank Revision Form and the revised Bid must only be made on that Revision Form.

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(h) Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of the Red Herring Prospectus. In case of QIBs, the members of the Syndicate may at their sole discretion waive the payment requirement at the time of one or more revisions by the QIB Bidders. (i) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS from the members of the Syndicate. It is the responsibility of the Bidder to request for and obtain the revised TRS, which will act as proof of his or her having revised the previous Bid. (j) In case of discrepancy of data between NSE or BSE and the members of the Syndicate, the decision of the BRLM and Joint BRLM based on the physical book shall be final and binding to all concerned.

Price Discovery and Allocation (a) After the Bid/Issue Closing Date, the BRLM and Joint BRLM will analyse the demand generated at various price levels and discuss pricing strategy with us. (b) The Company in consultation with the BRLM and Joint BRLM, shall finalise the “Issue Price”, the number of Equity Shares to be allotted and the allocation to successful QIB Bidders. The allocation will be decided based on the quality of the Bidder determined broadly by the size, price and time of the Bid. (c) The allocation for QIBs would be upto 50% of the Issue Size on a discretionary basis. The allocation for Non-Institutional Bidders would be upto 15% and Retail Individual Bidders of not less than 35% of the Issue Size respectively would be on proportionate basis, subject to valid Bids being received at or above the Issue Price. (d) Under-subscription, if any, in the Non-Institutional Portion and / or Retail Portion, would be allowed to be met with spill over of demand from any of the other categories, at the sole discretion of the Company, BRLM and Joint BRLM. (e) The BRLM and Joint BRLM, in consultation with the Company, shall notify the members of the Syndicate of the Issue Price and allocations to their respective Bidders. (f) The Company reserves the right to cancel the Issue any time after the Bid/Issue Opening Date, without assigning any reason therefore.

Signing of Underwriting Agreement and RoC Filing (a) We, the BRLM, Joint BRLM and the Syndicate Members shall enter into an underwriting agreement on finalisation of the Issue Price and allocation(s) to the Bidders. (b) After signing the Underwriting Agreement, we will file the Red Herring Prospectus with RoC, which then would be termed ‘Prospectus’. The Prospectus would have details of the Issue Price, Issue Size, underwriting arrangements and would be complete in all material respects.

Advertisement regarding Issue Price and Prospectus A statutory advertisement will be issued by the Company after the filing of the Prospectus with the RoC. This advertisement in addition to the information that has to be set out in the statutory advertisement shall indicate the Issue Price along with a table showing the number of Equity Shares. Any material updates between the date of Red Herring Prospectus and the date of Prospectus will be included in such statutory advertisement.

Issuance of Confirmation of Allocation Note (a) The BRLM, or Registrar to the Issue shall send to the members of the Syndicate a list of their Bidders who have been allocated Equity Shares in the Issue. (b) The BRLM, or Syndicate Members would then send the CAN to their Bidders who have been allocated Equity Shares in the Issue. The despatch of a CAN shall be deemed to be valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares allocated to such Bidder. Those Bidders who have not paid into the Escrow Account of the Company at the time of bidding shall pay in full the amount payable into the Escrow Account of the Company by the Pay-in Date specified in the CAN. (c) Bidders who have been allocated Equity Shares and who have already paid into the Escrow Account of the Company at the time of bidding shall directly receive the CAN from the Registrar to the Issue subject, however, to realisation of their cheque or demand draft paid into the Escrow Account of the Company. The despatch of a CAN shall be deemed to be a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares to be allotted to such Bidder.

Designated Date and Allotment of Equity shares (a) All allottees will receive credit for the Equity Shares directly in their depository account. Equity Shares will be offered only in the dematerialised form to the allottees. Allottees will have the option to re-materialise

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the Equity Shares so allotted, if they so desire, as per the provisions of the Companies Act and the Depositories Act. (b) Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated to them pursuant to this Issue. (c) After the funds are transferred from the Escrow Account to the Public Issue Account on the Designated Date, we would allot the equity shares to the allottees. We would ensure the allotment of Equity Shares within 15 days of Bid / Issue Closing Date and give instructions to credit to the allottees’ depository accounts within two working days from the date of allotment. In case we fail to make allotment within 15 days of the Bid/Issue Closing Date, interest would be paid to the investors at the rate of 15% per annum.

General Instructions Do’s: (a) Check if you are eligible to apply; (b) Ensure that the Bid is only within the Price Band. (c) Read all the instructions carefully and complete the Resident Bid-cum-Application Form (white in colour) or Non- Resident Bid-cum-Application Form (blue in colour), as the case may be; (d) Ensure that the details about Depository Participant and Beneficiary Account are correct as Equity Shares will be transferred in the dematerialised form only; (e) Investors must ensure that the name given in the bid cum application form is exactly the same as the Name in which the Depository Account is held. In case, the Bid cum Application Form is submitted in joint names, investors should ensure that the Depository Account is also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form; (f) Ensure that the Bids are submitted at the bidding centres only on forms bearing the stamp of a member of the Syndicate; (g) Ensure that you have been given a TRS for all your Bid options; and (h) Submit Revised Bids to the same member of the Syndicate through whom the Original Bid was placed and obtain a revised TRS.

Dont’s: (a) Do not Bid for lower than the minimum Bid size; (b) Do not Bid/ revise Bid to a price that is less than the Floor of the Price Band or higher than the Cap of the Price Band; (c) Do not Bid on another Bid-cum-Application Form after you have submitted a Bid to the members of the Syndicate; (d) Do not pay the Bid amount in cash or through Stockinvest; (e) Do not send Bid cum Application Forms by post; instead hand them over to a member of the Syndicate only; (f) Do not bid at Cut-off price for Non-institutional and QIB Bidders; (g) A Bid from any investor should not exceed the investment limit or maximum number of Equity Shares that can be held by a Bidder under the applicable laws or regulations.

Instructions for Completing the Bid-cum-Application Form Bidders can obtain Bid-cum-Application Forms and / or Revision Forms from the BRLM, or Syndicate Members.

Bids and Revisions of Bids Bids and revisions to Bids must be: (a) Made only in the prescribed Bid cum Application Form or Revision Form, as applicable. (b) Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions contained herein, the Bid cum Application Form and Revision Form. Incomplete Bid cum Application Forms or Revision Forms are liable to be rejected. (c) For Retail Individual Bidders, the Bids must be for a minimum of [•] Equity Shares and in multiples of [•] thereafter subject to a maximum Bid Amount of Rs.1,00,000. (d) For Non Institutional and QIB Bidders, Bids must be for a minimum of such number of Equity Shares that the Bid Amount exceeds Rs.1,00,000 and in multiples of [•] Equity Shares thereafter. Bids cannot be made for more than the Issue size. Bidders are advised to ensure that a single Bid from them should not exceed the investment limits or maximum number of shares that can be held by them under the applicable laws or regulations. (e) In single name or in joint names (not more than three).

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(f) Thumb impressions and signatures other than in the languages specified in the Eight Schedule in the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under his or her official seal.

Bidder’s Bank Details Bidders should note that on the basis of name of the Bidders, Depository Participant’s name, Depository Participant- Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository the Bidders bank account details. These Bank Account details would be printed on the refund order, if any, to be sent to Bidders. Hence, Bidders are advised to immediately update their Bank Account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in credit of refunds to Bidders at the Bidders sole risk.

Bidders Depository Account Details It is mandatory for all the bidders to get their equity shares in dematerialised form. All bidders should mention their depository participant’s name, depository participant-identification number and beneficiary account number in the bid cum application form. Investors must ensure that the name given in the bid cum application form is exactly the same as the name in which the depository account is held. In case the bid cum applicatison form is submitted in joint names, It should be ensured that the depository account is also held in the same joint names and are in the same sequence in which they appear in the bid cum application form.

Bidders should note that on the basis of name of the Bidders, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository demographic details of the Bidders such as address, bank account details for printing on refund orders and occupation (herein after referred to as Demographic Details). Hence, Bidders should carefully fill in their Depository Account details in the Bid-cum-Application Form. These Demographic Details would be used for all correspondence with the Bidders including mailing of the refund orders/ CANs/Allocation Advice and printing of Bank particulars on the refund order and the Demographic Details given by Bidders in the Bid -cum application Form would not be used for these purposes by the Registrar. Hence, Bidders are advised to update their Demographic Details as provided to their Depository Participants.

By signing the Bid-cum-Application Form, Bidder would have deemed to authorize the depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Refund orders/Allocation Advice/CANs would be mailed at the address of the Bidder as per the Demographic Details received from the Depositories. Bidders may note that delivery of refund orders/allocation advice/CANs may get delayed if the same once sent to the address obtained from the depositories are returned undelivered. In such an event, the address and other details given by the Bidder in the Bid cum Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity, then such Bids are liable to be rejected.

Bids under Power of Attorney In case of Bids made pursuant to a Power of Attorney or by limited companies, corporate bodies, registered societies, a certified copy of the Power of Attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the Memorandum and Articles of Association and/or Bye Laws must be lodged along with the Bidcum-Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason. In case of Bids made by Insurance Companies registered with the Insurance Regulatory and Development Authority, a certified copy of certificate of registration issued by Insurance Regulatory and Development Authority must be lodged along with the Bid-cum-Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason. In case of Bids made by provident funds with minimum corpus of Rs.2500 Lacs and pension funds with minimum corpus of Rs.2500 Lacs, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/pension fund must be lodged along with the Bid-cum-Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason.

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In case of Bids made by mutual fund registered with SEBI, Venture Capital Fund registered with SEBI and Foreign Venture Capital investor registered with SEBI, a certified copy of their SEBI registration certificate must be submitted with the Bid cum Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case without assigning any reason. The Company in its absolute discretion, reserve the right to relax the above condition of simultaneous lodging of the Power of Attorney along with the Bid cum Application form, subject to such terms that we may deem fit.

Procedure for Application by Mutual Funds In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple bids provided that the Bids clearly indicate the name of scheme concerned for which the Bid has been made.

Payment Instructions The Company shall open an Escrow Account(s) with the Escrow Collection Bank(s) for the collection of the Bid Amounts payable upon submission of the Bid-cum-Application Form and for amounts payable pursuant to allocation in the Issue. Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation as per the following terms:

Payment into Escrow Account to the Issue i. The Bidders for whom the applicable margin is equal to 100% shall, with the submission of the Bid cum Application Form draw a payment instrument for the Bid Amount in favour of the Escrow Account of the Company and submit the same to the members of the Syndicate. ii. In case no Margin Amount has been paid by the Bidders during the Bidding Period, on receipt of the CAN, an amount equal to the Issue Price multiplied by the Equity Shares allocated to the Bidder or the balance amount, in case the Margin Amount is less than the Issue Price multiplied by the Equity Shares allocated to the Bidder, shall be paid by the Bidders into the Escrow Account within the period specified in the CAN which shall be subject to a minimum period of two days from the date of communication of the allocation list to the members of the Syndicate by the BRLM/Joint BRLM. iii. The payment instruments for payment into the Escrow Account of the Company should be drawn in favour of “Escrow Account – ______” v. Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Escrow Account of the Company. vi. The monies deposited in the Escrow Account of the Company will be held for the benefit of the Bidders until Designated Date. vii. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Account of the Company as per the terms of the Escrow Agreement into the Issue Account with the Bankers to the Issue. viii. On the Designated Date and no later than 15 days from the Bid/Issue Closing Date, the Escrow Collection Bank shall also refund all amounts payable to unsuccessful bidders and also the excess amount paid on Bidding, if any, after adjusting for allocation to the Bidders

Payments should be made by cheque or demand draft drawn on any Bank (including a Co-Operative Bank), which is situated at, and is a member of or sub-member of the banker’s clearing house located at the centre where the Bid-cum-Application Form is submitted. Outstation cheques/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected.

Payment by Stockinvest In terms of Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn with immediate effect. Hence, payment through stockinvest would not be accepted in this Issue.

Cash/Stockinvest/Money Orders/Postal Orders will not be accepted.

Submission of Bid-cum-Application Form All Bid cum Application Forms or Revision Forms duly completed and accompanied by account payee cheques or drafts shall be submitted to the BRLM, Joint BRLM or Syndicate Member at the time of submitting the Bid. The BRLM/Joint BRLM/ members of the Syndicate may at its discretion waive the requirement of payment at the time of submission of the Bid cum Application Form and Revision Form.

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No separate receipts shall be issued for the money payable on the submission of Bid cum Application Form or Revision Form. However, the collection centre of the BRLM, Joint BRLM or Syndicate Member will acknowledge the receipt of the Bid cum Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid cum Application Form for the records of the Bidder.

Other Instructions Joint Bids in the case of Individuals Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments will be made out in favour of the Bidder whose name appears first in the Bid-cum-Application Form or Revision Form (“First Bidder”). All communications will be addressed to the First Bidder and will be dispatched to his or her addres.

Multiple Bids A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same. We reserve the right to reject, in our absolute discretion, all or any multiple Bids in any or all categories.

PAN or GIR Number Where Bid(s) is/are for Rs.50,000 or more, the Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/her Permanent Account Number (PAN) allotted under the I.T.Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the application form. Applications without this information and documents will be considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground. In case the Sole/First Bidder and Joint Bidder(s) is/are not required to obtain PAN, each of the Bidder(s) shall mention “Not Applicable” and in the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yet been allotted each of the Bidder(s) should mention “Applied for” in the Bid cum Application Form. Further, where the Bidder(s) has mentioned “Applied for” or “Not Applicable”, the Sole/First Bidder and each of the Joint Bidder(s), as the case may be, would be required to submit Form 60(Form of declaration to be filed by a person of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in rule 114B), or, Form 61 (form of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable to income tax in respect of transactions specified in rule 114B), as may be applicable, duly filled along with a copy of any one of the following documents in support of the address: (a) Ration Card (b) Passport (c) Driving License (d) Identity Card issued by any institution (e) Copy of the electricity bill or telephone bill showing residential address (f) Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address (g)Any other documentary evidence in support of address given in the declaration.

It may be noted that Form 60 and Form 61 have been amended vide a notification issued on December 1, 2004 by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. All Bidders are requested to furnish, where applicable, the revised Form 60 or 61 as the case may be.

The Company’s Right to Reject Bids We, the BRLM, and the members of the Syndicate reserve the right to reject any Bid without assigning any reason therefore in case of QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders, we, BRLM have a right to reject bids based on technical grounds. Consequent refunds shall be made by cheque or pay order or draft and will be sent to the bidder’s address at the Bidder’s risk.

Grounds for Technical Rejections Bidders are advised to note that Bids are liable to be rejected on among others on the following technical grounds: 1. Amount paid doesn’t tally with the highest number of Equity Shares bid for; 2. Bank account details (for refund) are not given; 3. Age of First Bidder not given; 4. Bid by minor;

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5. PAN or GIR Number not given if Bid is for Rs. 50,000 or more; 6. Bids for lower number of Equity Shares than specified for that category of investors; 7. Bids at a price less than lower end of the Price Band; 8. Bids at a price more than the higher end of the Price Band; 9. Bids at cut-off price by Non-Institutional and QIB Bidders; 10. Bids for number of Equity Shares which are not in multiples of 100; 11. Category not ticked; 12. Multiple bids; 13. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant documents are not submitted; 14. Bid-cum-Application Form does not have the stamp of the BRLM, Joint BRLM or Syndicate Members; 15. Bid-cum-Application Form does not have Bidder’s depository account details; 16. Bid-cum-Application Forms are not delivered by the Bidders within the time prescribed as per the Bid-cum- Application Form, Bid/Issue Opening Date advertisement and the Red Herring Prospectus and as per the instructions in the Red Herring Prospectus and the Bid cum-Application Form 17. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations. See the details regarding the same at page no. 127 of the Draft Red Herring Prospectus; 18. Bids accompanied by Stockinvest; 19. Signature of sole and / or joint bidders missing; 20. In case no corresponding record is available with the Depositories that matches three parameters namely, names of the Bidders (including the sequence of names of joint holders), the depositary participant’s identity (DP ID).

Equity Shares in Dematerialised Form with NSDL or CDSL As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be allotted only in a dematerialised form, (i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode). In this context, two tripartite agreements have been signed between the Company and the Depositories: a) an agreement dated [•] with NSDL, the Company and Karvy Computershare Private Limited b) an agreement dated [•] with CDSL, the Company and Karvy Computershare Private Limited

Bids from any investor without relevant details of his or her depository account are liable to be rejected. (d) A Bidder applying for Equity Shares must have at least one beneficiary account with either of the Depository Participants of either NSDL or CDSL prior to making the Bid. (e) The Bidder must necessarily fill in the details (including the Beneficiary Account Number and Depository Participant’s Identification number) appearing in the Bid-cum-Application Form or Revision Form. (f) Equity shares allotted to a successful Bidder will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the Bidder. (g) Names in the Bid-cum-Application Form or Revision Form should be identical to those appearing in the account details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the Depository. (h) Non-transferable allotment advice or refund orders will be directly sent to the Bidder by the Registrar to this Issue. (i) If incomplete or incorrect details are given under the heading ‘Request for Equity Shares in electronic form’ in the Bidcum-Application Form or Revision Form, it is liable to be rejected. (j) The Bidder is responsible for the correctness of his or her demographic details given in the Bid-cum- Application Form vis-à-vis those with his or her Depository Participant. (k) It may be noted that Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. All the Stock Exchanges where the Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL. (l) The trading of the Equity Shares of the Company would be in dematerialised form only for all investors. As this Issue comprises of Fresh Issue, investors are advised to instruct their Depository Participants to accept the Equity Shares that may be allocated to them pursuant to this Issue.

Communications All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or First Bidder, Bid-cum-Application Form number, number of Equity Shares applied for, date, bank and branch where the Bid was submitted and cheque, draft number and issuing bank thereof.

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Procedure and Time Schedule for Allotment of Equity Shares and Disposal of Applications and Application Money The Company reserves at its absolute and uncontrolled discretion and without assigning any reason therefore, the right to accept or reject any Bid in whole or in part. In case a Bid is rejected in full, the whole of the Bid Amount will be refunded to the Bidder within 15 days of the Bid/Issue Closing Date. In case a Bid is rejected in part, the excess Bid Amount will be refunded to the Bidder within 15 days of the Bid/Issue Closing Date. We will ensure the allotment of the Equity Shares within 15 days from the Bid/Issue Closing Date. We shall pay interest at the rate of 15% per annum (for any delay beyond the periods as mentioned above), if allotment is not made, refund orders are not dispatched and/ or dematerialised credits are not made to investors within two working days from the date of allotment.

Disposal of Applications and Application Money The Company shall ensure despatch of allotment advice or refund orders and giving of benefit to the Beneficiary Account with Depository Participants and submission of the allotment and listing documents to the Stock Exchanges within two working days of finalisation of the basis of allotment of Equity Shares. We shall ensure the dispatch of refund orders, if any, of value up to Rs.1,500/-, “Under Certificate of Posting”, and dispatch of refund orders above Rs.1,500/-, if any, by Registered Post or Speed Post at the sole or First Bidder’s sole risk. The Company shall make best efforts to ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed are taken within seven working days of finalisation of the basis of allotment.

In accordance with the Companies Act, the requirements of the Stock Exchanges and SEBI Guidelines, we, further undertake that: • Allotment of Equity Shares shall be made only in dematerialised form within 15 days of the Bid/Issue Closing Date; • We would ensure despatch of refund orders within 15 days of the Bid/Issue Closing Date; and • We shall pay interest at 15% per annum (for any delay beyond the 15 days time period as mentioned above), if allotment/ transfer is not made, refund orders are not dispatched and/or demat credits are not made to investors within the 15 days time prescribed above. • We will provide adequate funds required to the Registrar to the Issue for dispatch of refund orders or allotment advice. Refunds will be made by cheque, pay orders or demand drafts drawn on a bank appointed by the Company as a refund banker and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.

Impersonation Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act, 1956, which is reproduced below: “Any person who: (a) Makes in a fictitious name, an application to a Company for acquiring or subscribing for, any shares therein, or (b) Otherwise induces a Company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.”

Interest on Refund of excess Bid Amount The Company shall pay interest at the rate of 15% per annum on the excess Bid Amount received if refund orders are not dispatched within 15 days from the Bid/Issue Closing Date as per the Guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No.F/8/S/79 dated July 31, 1983, as amended by their letter No. F/14/SE/85 dated September 27, 1985, addressed to the stock exchanges, and as further modified by SEBI’s Clarification XXI dated October 27, 1997, with respect to the SEBI Guidelines.

Basis of Allotment A. For Employee Reservation Portion Only Eligible Employees are eligible to apply under the Employee Reservation Portion. Bids received from the Eligible Employees at or above the Issue Price shall be grouped together to determine the total demand under this category. The allocation to all the successful Eligible Employees will be made at the Issue Price. If the aggregate demand in this category is less than or equal to 22,85,720 Equity Shares at or above the Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand.

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If the aggregate demand in this category is greater than 22,85,720 Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of [•] Equity Shares. For the method of proportionate Basis of Allotment, refer below. The unsubscribed portion, if any, out of the Equity Shares in the Employee Reservation Portion will be added to the categories of Non Institutional Bidders and Retail Bidders, in a proportion to be determined by the Company in consultation with the BRLM and Joint BRLM.

B. For Retail Bidders Bids received from the Retail Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The allotment to all the successful Retail Bidders will be made at the Issue Price. The Issue size less allotment to Non-Institutional and QIB Bidders shall be available for allotment to Retail Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price. If the aggregate demand in this category is less than or equal to [•] Equity Shares at or above the Issue Price, full allotment shall be made to the Retail Bidders to the extent of their demand. If the aggregate demand in this category is greater than [•] Equity Shares at or above the Issue Price, the allotment shall be made on a proportionate basis up to a minimum of [•] Equity Shares. For the method of proportionate basis of allotment, refer below.

C. For Non-Institutional Bidders Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The allotment to all successful Non-Institutional Bidders will be made at the Issue Price. The Issue size less allotment to QIBs and Retail Portion shall be available for allotment to Non-Institutional Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price. If the aggregate demand in this category is less than or equal to [•] Equity Shares at or above the Issue Price, full allotment shall be made to Non-Institutional Bidders to the extent of their demand. In case the aggregate demand in this category is greater than [•] Equity Shares at or above the Issue Price, allotment shall be made on a proportionate basis up to a minimum of [•] Equity Shares. For the method of proportionate basis of allotment refer below. The aggregate allotment to Retail and Non-Institutional Bidders shall not exceed [•] Equity Shares.

D. For QIBs Bids received from the QIB Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The allotment to all the QIBs will be made at the Issue Price. The Issue size less allotment to Non-Institutional Portion and Retail Portion shall be available for allotment to QIBs who have bid in the Issue at a price that is equal to or greater than the Issue Price. The allotment would be decided by our Company in consultation with the BRLM and Joint BRLM and would be at their sole discretion, based on various factors, such as quality of the Bidder, size, price and date of the Bid. The aggregate allotment to QIB Bidders shall not be less than [•] Equity Shares. Undersubscription, if any in the Non Institutional and Retail Bidders categories would be allowed to be met with spill over from any other category at the sole discretion of our Company, the BRLM and Joint BRLM.

Method of Proportionate Basis of Allotment In the event of the Issue being over-subscribed, we shall finalize the basis of allotment to Retail and Non- Institutional Bidders in consultation with the Designated Stock Exchange. The Executive Director or Managing Director (or any other senior official nominated by them) of the Designated Stock Exchange along with the BRLM, Joint BRLM and the Registrar to the Issue shall be responsible for ensuring that the basis of allotment is finalised in a fair and proper manner. The allotment shall be made in marketable lots, on a proportionate basis as explained below: a) Bidders will be categorised according to the number of Equity Shares applied for. b) The total number of Equity Shares to be allotted to each category as a whole shall be arrived at on a proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the over-subscription ratio. c) Number of Equity Shares to be allotted to the successful Bidders will be arrived at on a proportionate basis, which is total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the over-subscription ratio.

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d) In all Bids where the proportionate allotment is less than [•] Equity Shares per Bidder, the allotment shall be made as follows: Each successful Bidder shall be allotted a minimum of [•] Equity Shares; and The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a manner such that the total number of Equity Shares allotted in that category is equal to the number of Equity Shares calculated in accordance with (b) above. e) If the proportionate allotment to a Bidder is a number that is more than [•] but is not a multiple of 1 (which is the marketable lot), the number in excess of the multiple of 1 would be rounded off to the higher multiple of 1 if that number is 0.5 or higher. If that number is lower than 0.5, it would be rounded off to the lower multiple of 1. All Bidders in such categories would be allotted Equity Shares arrived at after such rounding off. f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares allotted to the Bidders in that category, the remaining Equity Shares available for allotment shall be first adjusted against any other category, where the allotted shares are not sufficient for proportionate allotment to the successful Bidders in that category. The balance Equity Shares, if any, remaining after such adjustment will be added to the category comprising Bidders applying for minimum number of Equity Shares.

Letters of Allotment or Refund Orders The Company shall dispatch allotment advice and refund orders and give credit to the Beneficiary Account with Depository Participants and submit the allotment and listing documents to the Stock Exchanges within two working days of finalisation of the basis of allotment of Equity Shares. The Company shall dispatch refund orders, if any, of value up to Rs.1,500, by “Under Certificate of Posting”, and will dispatch refund orders above Rs.1,500, if any, by registered post or speed post at the sole or first bidder’s sole risk. In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI Guidelines, the Company further undertakes that: (a) Allocation and allotment of Equity Shares will be made only in dematerialised form within 15 days from the Bid/ Issue Closing Date; (b) Dispatch of refund orders will be done within 15 days from the Bid/Issue Closing Date; and (c) The Company shall pay interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), if transfer is not made, refund orders are not dispatched and/or demat credits are not made to investors within the 15 day time prescribed above. The Company will provide adequate funds required for dispatch of refund orders or allotment advice to the Registrar to the Issue. Refunds will be made by cheques, pay-orders or demand drafts drawn on a bank appointed by the Company, as an escrow collection bank(s) and payable at par at places where Bids are received. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centers will be payable by the bidders.

Interest in case of delay in Despatch of Allotment Letters/Refund Orders in case of Public Issues The Company agrees that allotment of securities offered to the public shall be made not later than 15 days of the closure of the public issue. The Company further agrees that it shall pay interest @ 15% per annum if the allotment letters/refund orders have not been dispatched to the applicants within 15 days from the date of closure of the Issue.

Undertaking by the Company The Company undertakes as follows: • that the complaints received in respect of this Issue shall be attended to expeditiously; • that all steps will be taken for the completion of the necessary formalities for listing and commencement of trading at all the stock exchanges where the Equity Shares are proposed to be listed within seven working days of finalisation of the basis of allotment; • that the funds required for despatch of refund orders or allotment advice by registered post or speed post shall be made available to the Registrar to the Issue;

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• that the promoters’ contribution in full, wherever required, shall be brought n advance before the Issue opens for public subscription and the balance, if any, shall be brought in pro rata basis before the calls aremade on public. • that no further issue of Equity Shares shall be made till the Equity Shares issued through the Red Herring Prospectus are listed or until the bid monies are refunded on account of non-listing, under-subscription etc.

Utilization of Issue proceeds The Board of Directors of the Company Certify that: • all monies received out of the Fresh Issue shall be transferred to a separate bank account other than the bank accountreferred to in sub-section (3) of Section 73 of the Companies Act; • details of all monies utilised out of Fresh Issue referred above shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the purpose for which such monies have been utilised; and • details of all unutilised monies out of the Fresh Issue, if any shall be disclosed under the appropriate separate head in the balance sheet of the Company indicating the form in which such unutilised monies have been invested. • the utilisation of monies received under promoters’ contribution and from irm allotments and reservations shall be disclosed under an appropriate head in the balance sheet of the issuer company, indicating the purpose for which such monies have been utilised. The Company shall not have recourse to the Issue proceeds until approval for trading of Equity Shares from all the stock exchanges where listing is sought is received.

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DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF ASSOCIATION

Main provisions of the Articles of Association of SRS Entertainment Limited

The Articles of Association of the Company, inter alia, includes following clauses:

Shares Share-Capital 3. The Authorised Share Capital of the Company shall be such Amount and be divided into such shares as may, from time to time, be provided in clause V of the Memorandum of Association, with power to increase or reduce the capital in accordance with company's regulations and the provisions of the Companies Act, 1956 for the time being inforce in that behalf with power to sub-divide consolidate and increase and with power, from time to time, to issue any shares of the original capital with and subject to any preferential, qualified or special rights, privileges or conditions as may be thought fit, and upon the sub-division of shares to apportion the right to participate in profits, in any manner as between the shares resulting from subdivision.

Redeemable Preference Shares 4. The Company shall have power to issue Preference Shares carrying right of redemption out of profits which would otherwise be available for dividend, or out of the proceeds of a fresh issue of shares made for the purpose of such redemption, or liable to be redeemed at the option of the Company, and the Board of Directors may, subject to the provisions of Section 80 of the Act, exercise such power in such manner as it thinks fit.

Allotment of Shares 5. Subject to the provisions of these Articles, the shares shall be under the control of the Directors who may allot or otherwise dispose off the same on such terms and conditions, and at such time as the Directors think fit and with power to issue any shares as fully paid up in consideration of services rendered to the Company in its formation or otherwise, provided that where the Directors decides to increase the issued capital of the Company by the issue of further shares, the provisions of Section 81 of the Act will be complied with, provided further that the option or right to call of shares shall not be given to any person except with the sanction of the Company in general meeting.

Issue of Shares at a discount 6. Subject to the provisions of the Act, it shall be lawful for the Company to issue at a discount shares of a class already issued.

Issue of Shares at premium 6A. Subject to the provisions of the Act, the Company may issue shares at premium as may be decided by the Board from time to time.

Commission for placing shares 7. The Company may, subject to compliance with the provisions of Section 76 of the Act, exercise the powers of paying commission on the issue of shares, debentures. The commission may be paid or satisfied in cash or shares, debentures or debenture stock of the Company.

Brokerage 8. The Company may pay a reasonable sum of brokerage, subject to the ceiling prescribed under the Act.

Buy back of Shares 9A. Notwithstanding anything contained in these Articles, in the event it is permitted by law for a company to purchase its own shares or securities, the Board of Director may, when and if thought fit, buy back such of the Company's own shares of securities as it may think necessary, subject to such limits, upon such terms and conditions, and subject to such approvals as may be permitted by law.

Further Issue of Shares 9C I. Where at the time after the expiry of two years from the formation of the company or at any time after the expiry of one year, from the allotment of shares in the company made for the first time after the formation, whichever is earlier, it is proposed to increase the subscribed capital of the company by allotment of further shares either out of the unissued capital or out of the increased share capital then:

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(a) Such further shares shall be offered to the persons who, at the date of the offer, are holders of the equity shares of the company, in proportion, as near as circumstances admit, to the capital paid up on those shares at the date. (b) Such offer shall be made by a notice specifying the number of shares offered and limiting a time not less than thirty days from the date of the offer and the offer if not accepted, will be deemed to have been declined. (c) The offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to them in favour of any other person and the notice referred to in sub clause (b) thereof shall contain a statement of this right. PROVIDED THAT the Directors may decline, without assigning any reason to allot any shares to any person in whose favour any member may renounce the shares offered to him. (d) After expiry of the time specified in the aforesaid notice or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose off them in such manner and to such person (s) as they may think, in their sole discretion, fit.

II. Notwithstanding anything contained in sub-clause (I) thereof, the further shares may be offered to any persons (whether or not those persons include the persons referred to in clause (a) of sub-clause (I) hereof) in any manner whatsoever. a. If a special resolution to that effect is passed by the company in General Meeting, or b. Where no such special resolution is passed, if the votes cast (whether on a show of hands or on a poll as the case may be) in favour of the proposal contained in the resolution moved in the general meeting (including the casting vote, if any, of the Chairman) by the members who, being entitled to do so, vote in person, or where proxies are allowed, by proxy, exceed the votes. If any, cast against the proposal by members, so entitled and voting and the Central Government is satisfied, on an application made by the Board of Directors in this behalf that the proposal is most beneficial to the company.

III. Nothing in sub-clause (c) of (I) hereof shall be deemed : a. To extend the time within the offer should be accepted, or b. To authorize any person to exercise the right of renunciation for a second time on the ground that the person in whose favour the renunciation was first made has declined to take the shares comprised in the renunciation.

IV. Nothing in this Article shall apply to the increase of the subscribed capital of the company caused by the exercise of an option attached to the debenture issued or loans raised by the company: a. to convert such debentures or loans into shares in the company, or b. to subscribe for shares in the company (whether such option is conferred in these Articles or otherwise). PROVIDED THAT the terms of issue of such debentures or the terms or such loans includes a term providing for such option and such terms: i. Either has been approved by the Central Government before the issue of the debentures or the raising of the loans or is in conformity with Rules, if any, made by that Government in this behalf, and ii. In the case of debentures or loans of other than debentures issued to or loans obtained from Government or any institution specified by the Central Government in this behalf, has also been approved by a special resolution passed by the company in General Meeting before the issue of the debentures or raising of the loans.

Shares at the disposal of the Directors 9D Subject to the provisions of Section 81 of the Act and these Articles, the shares in the capital of the company for the time being shall be under the control of the Directors who may issue, allot or otherwise dispose of the same or any of them to such persons, in such proportion and on such terms and conditions and either at a premium or at par or (subject to the compliance with the provision of Section 79 of the Act) at a discount and at such time as they may from time to time think fit and with the sanction of the company in the General Meeting to give to any person or persons the option or right to call for any shares either at par or premium during such time and for such consideration as the Directors think fit, and may issue and allot shares in the capital of the company on payment in full or part of any property sold and transferred or for any services rendered to the company in the conduct of its business and any shares which may so be allotted may be issued as fully paid up shares and if so issued, shall be deemed to be fully paid shares. Provided that option or right to call of shares shall not be given to any person or persons except with the sanction of the Company in the General Meeting.

Joint-Holders of Shares

Fee on sub-division of shares, Issue of new certificates etc.

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13. Where two or more persons are registered as the holders of any share they shall be deemed to hold the same as joint-tenants with benefit of survivorship subject to the following provisions and to the other provisions of these Articles relating to joint holders:-

Maximum number a) The Company shall not be bound to register more than three persons as the joint-holders of any share.

Liability several as well as joint b) The joint holders of a share shall be liable severally as well as jointly in respect of all payments which ought to be made in respect of such shares.

Survivors of jointholders only recognised c) On the death of any one of such joint holders the survivor or survivors shall be the only person recognised by the Company as having any title to or interest in such share but the Board may require such evidence of death as it may deem fit.

Delivery of certificates d) Only the person whose name stands first in the Register as one of the joint-holders of any share shall be entitled to delivery of the certificate relating to such shares.

Vote of Joint Members e) If there are Joint Registered Holders of any shares, any one of such persons may vote at any meeting either personally or by proxy in repect of such shares, as if he were solely entitled to, provided that if more than one of the such joint holders be present at any meeting either personally or by proxy, then one of the said persons so present whose name stands on the register of members shall alone be entitled to vote in respect of such shares.

Calls

Calls 14. The Directors may, from time to time, subject to the terms on which any shares, may have been issued, make such calls as they think fit, upon the members in respect of all moneys unpaid on the shares held by them respectively, and not by the conditions of allotment there to made payable at fixed times and each member shall pay the amount of every call so made on him to the persons and at the times and places appointed by the Directors. A call may be made payable by installments.

When calls deemed to have been made 15. A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.

Notice of call 16. Not less than 30 (Thirty) days notice of any calls shall be given specifying the time and place of payment and to whom such call shall be paid.

Amount payable 17. If by the terms of issue of any share or otherwise, the whole or part of the amount of issue price thereof is made payable at any fixed time or by installments at fixed times, every such amount of issue price of instalment thereof shall be payable as if it was a call duly made by the Directors and of which due notice had been given and all the provisions herein contained in respect of calls shall apply to such amount or issue price or installments accordingly.

Interest to be charged on nonpayment of calls 18. If the sum payable in respect of any call or instalment be not paid on or before the day appointed for the payment thereof, the holder for the time being of the share in respect of which the call shall have been made or the instalment shall be due, shall pay interest for the same at the rate of 12 (Twelve) percent per annum, from the day appointed for the payment thereof the actual payment or at such other rate as the Directors may determine but they shall have power to waive the payment thereof wholly or in part.

Evidence in actions by company against share holders 19. On the trial or hearing of any action or suit brought by the Company against any member or his representative to recover any debt or money claimed to be due to the Company in respect of his shares, it shall

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be sufficient to prove that the name of the defendant is, or was when the claim arose, on the register of the Company as a holder, or one of the holders of the number of shares in respect of which such claim is made, that the resolution making the call is duly recorded in the minute book and that the amount claimed is not entered as paid in the books of the Company, and it shall not be necessary to prove the appointment of the Directors who made any call nor that a quorum of Directors was present at the meeting at which any call was made nor that such meeting was duly convened or constituted, nor any other matter but the proof of the matters aforesaid shall be conclusive evidence of the debt.

Payment in anticipation of call may carry interest 20.a.The Directors may, if they think fit, subject to the provisions of Section 92 of the Act, agree to and receive from any member willing to advance the same whole or any part of the moneys, due upon the shares held by him beyond the sums actually called for and upon the amount so paid or satisfied in advance, or such sum thereof as from time to time exceeds the amount of the calls than made upon the shares in respect of which such advance has been made, the company may pay interest at such rate, as the member paying such sum in advance and the Directors agree upon provided that money paid in advance of calls shall not confer a right to participate in profits or dividend. The Directors may at any time repay the amount so advanced. b. The members shall not be entitled to any voting rights in respect of the moneys so paid by him until the same would, but for such payment, become presently payable. c. The provisions of these Articles shall mutatis mutandis apply to the calls on debentures of the Company.

Forfeiture and Lien

Notice may be given for calls or instalment not paid 21. If any member fails to pay any call or instalment on or before the day appointed for the payment of the same, the Directors may at any time thereafter, during such time as the call or instalment remains unpaid, serve notice on such member requiring him to pay the same together with any interest that may have accrued and expenses, they may have been incurred by the Company by reasons of such non-payment.

Form of notice 22. The notice shall name a day (not being less than 30 (thirty) days from the date of the notice) and a place or places on and at which such call or instalment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of nonpayment on or before the time and at the place or places appointed, the shares in respect of which such call was made or instalment is payable will be liable to be forfeited.

If notice not complied with shares may be forfeited 23. If the requirement of any such notice as aforesaid be not complied with, any shares in respect of which such notice has been given may, at any time thereafter before repayment of all calls or installments, interest and expenses due in respect thereof, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share not actually paid before the forfeiture subject to Section 205 A of the Act. Neither the receipt by the Company of a portion of any money which shall, from time to time, be due from any member of the Company in respect of his shares, either by way of principal or interest, nor any indulgency granted by the Company in respect of the payment of any such money shall preclude the Company from thereafter proceeding to enforce a forfeiture of such share as herein provided.

Notice after forfeiture 24. When any shares shall have been so forfeited, notice of the forfeiture shall be given to the member in whose name it stood immediately prior to the forfeiture and an entry of the forfeiture with the date thereof, shall forthwith be made in the Register but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make such entry as aforesaid.

Forfeited share to become property of the Company 25. Any share so forfeited shall be deemed to be the property of the Company, and the Directors may sell, re- allot or otherwise dispose off the same in such manner as they think fit.

Power to annual forfeiture 26. The Directors may, at any time, before any share so forfeited are not sold, re-allotted or otherwise disposed off, annual the forfeiture thereof upon such conditions as they think fit.

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Arrears to be paid notwithstanding forfeiture 27. Any member whose shares have been forfeited shall not withstanding such forfeiture, be liable to pay and shall forthwith pay to the Company all calls, installments, interest and the expenses owing upon or in respect of such shares at the time of all installments, interest and the forfeited together with interest thereupon, from the time of the forfeiture until payment at 12 (Twelve) percent per annum or such other rate as the Director may determine and the Directors may enforce the payment thereof without any deduction of allowances for the value of shares at the time of forfeiture but shall not be under any obligation to do so.

Effect of forfeiture 28. The forfeiture of a share shall involve the extinction of all interest in and also of all claims and demands against the Company in respect of the share, and all their rights incidental to the share except only such of those rights as by these Articles are expressly saved.

Evidence of forfeiture 29. A duly verified declaration in writing that the declarant is a Director of the company and that certain shares in the Company have been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares and the receipt of the Company for the consideration, if any given for the shares on the sale or disposition thereof, shall constitute a written title to such shares.

Company's lien on shares/debentures 30 The Company shall have a first and paramount lien upon all the shares / debentures (Other than fully paid-up shares/ debentures) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares/ debentures and no equitable interest in any shares shall be created except upon the footing and condition that this Article will have full effect. And such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares/ debentures. Unless otherwise agreed the registration of a transfer of shares / debentures shall operate as a waiver of the Company's lien, if any, on such shares/ debentures. The Directors may at any time declare any shares/ debentures wholly or in part to be exempt from the provisions of this clause. That the fully paid shares shall be free from all lien and that in the case of partly paid shares the Company's lien shall be restricted to moneys called or payable at a fixed time in respect of such shares.

Intention as to enforcing lien/ Application of proceed of sale 31. For the purpose of enforcing such lien, the Directors may sell the shares subject thereto in such manner as they think fit, but no sale shall be made until such period as aforesaid shall have elapsed and until notice in writing of the intention to sell shall have been served on such member, his committee, curator bonis or other person recognised by the company as entitled to represent such member and default shall have been made by him or them in the payment of the sum payable as aforesaid for thirty days after such notice. The net proceeds of any such sale shall be applied in or towards satisfaction of such part of the amount in respect of which the lien exists as is presently payable by such member, and the residue (if any) paid to such member, his executors, administrators, or other representatives or persons so recognised as aforesaid.

Validity of Shares 32. Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers by these presents given, the Director may appoint some person to execute an instrument of transfer of the shares sold and cause the purchaser's name to be entered in the register in respect of the shares sold and aft er his name has been entered in the Register in respect of such shares his title to such shares shall not be affected by any irregularity or invalidity in the proceedings in reference to such forfeiture, sale or disposition, nor impeached by any person and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively.

Power to issue new certificate 33. Where any shares under the powers in that behalf herein contained are sold by the Directors and the certificate thereof has not been delivered

Transfer and Transmission of Shares

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Execution of transfer etc. 34. Subject to the provisions of the Act, no transfer of shares shall be registered unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor or transferee has been delivered to the Company together with the certificate or certificates of the shares, or if no such certificate is in existence along with the letter of allotment of shares. The instrument of transfer of any shares shall be signed both by or on behalf of the transferor and by or on behalf of transferee and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Registered in respect thereof.

34A. The instrument of transfer of any shares in the Company shall be executed by or on behalf of the transferor and the transferee and a common form of transfer shall be used.

Application for transfer 35. Application for the registration of the transfer of a share may be made either by the transferor or the transferee provided that, where such application is made by the transferor, no registration shall in the case of partly paid shares be effected unless the Company gives notice of the application to the transferee in the manners prescribed by the Act, and, subject to the provision of Articles hereof, the company shall, unless objection is made by the transferee within two weeks from the date of receipt of the notice, enter in the Register, the name of the transferee in the same manner and subject to the same conditions as if the application for registration was made by the transferee.

Notice of transfer to registered holder 36. Before registering any transfer tendered for registration, the Company may, if it so thinks fit, give notice by letter posted in the ordinary course to the registered holder that such transfer deed has been lodged an that, unless objection is taken, the transfer will be registered and if such registered holder fails to lodge an objection in writing at the office of the Company within two weeks from the posting of such notice to him he shall be deemed to have admitted the validity of the said transfer.

Register of transfer 37. The Company shall keep a "Register of Transfers" and therein shall be fairly and distinctly entered particular of every transfer of any share.

Directors may refuse to register 38. Subject to the provisions of Section 111 of the Act and, Section 22A of the Securities Contracts (Regulation) Act, 1956, the Directors may, at their own absolute and uncontrolled discretion and by giving reasons, decline to register or, acknowledge any and by giving reasons, decline to register or acknowledge any transfer of shares whether fully paid or not and the right of refusal, shall not be affected by the circumstances that the proposed transferee is already a member of the Company but in such cases, the Directors shall within one month from the date on which the instrument of transfer was lodged with the Company, send to the transferee and transferor notice of the refusal to register such transfer provided that registration of transfer shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the company on any account whatsoever except when the company has a lien on the shares. Transfer of shares/ debentures in whatever lot shall not be refused.

No transfer to person of unsound mind 39. (1) No transfer shall be made to a minor or a person of unsound mind.

No fee for registration for transfer etc. (2) No fee shall be charged for registration of transfer, transmission probate, succession certificate, letter of administration, marriage, Power of Attorney or Certificate of death or similar other instruments/documents.

When instrument of transfer to be retained 40. All instruments of transfer duly approved shall be retained by the Company and in case of refusal, instruments of transfer shall be returned to the person who lodges the transfer deeds.

Notice of refusal to register transfer 41. If the Directors refuse to register the transfer of any shares the Company shall, within one month from the date on which the instrument of transfer was lodged with the Company or intimation given, send to the transferor and the transferee or the person giving intimation of such transfer notice of such refusal.

Power to close Transfer books and Register

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42. On giving seven days' notice by advertisement in a newspaper circulating in the District in which the Office of the company is situated, the Register of Members may be closed during such time as the Directors think fit not exceeding in the whole forty five days in each year but not exceeding thirty days at a time.

Transmission of Registered shares 43. The executors or administrators or the holder of a succession certificate in respect of shares of a deceased member (not being one of several joint holders) shall be the only person whom the Company shall recognise as having any title to the shares registered in the name of such member and, in case of the death of any one or more of the joint holders of any registered shares the survivors shall be only person recognised by the Company as having any title to or interest in such share but nothing herein contained shall be taken to release the estate of a deceased joint-holder from any liability on shares held by him jointly with any other person. Before recognising any legal representative or heir or a person otherwise claiming title to the shares the Company may require him to obtain a grant of probate or letters of administration or succession certificate, or other legal representation as the case may be from a competent Court, provided nevertheless that in any case where the Board in its absolute discretion think fit it shall be lawful for the Board to dispense with production of probate or letters of administration or a succession certificate or such other legal representation upon such terms as to indemnity or otherwise as the Board may consider desirable.

As to transfer of shares of deceased or insolvent members / Transmission Article/ Notice of election to be registered/ All rights of executors and trustees 44. Any person becoming entitled to or to transfer of shares in consequence of that death or insolvency of any member, upon producing such evidence that he sustains the character in respect of which he propose to act under this article, or of his title as the Directors think sufficient, may with the consent of the Directors (which they shall not be under any obligation to give), be registered as a member in respect of such shares or may, subject to the regulations as to transfer hereinbefore contained, transfer such shares. This article is hereinafter referred to as "The transmission Article". Subject to any other provisions of these Articles if the persons so becoming entitled to shares under this or the last proceeding Article shall elect to be registered as a member in respect of the share himself he shall deliver or send to the company a notice in writing signed by him stating that he so elects. If he shall elect to transfer to some other person he shall execute in instrument of transfer in accordance with the provision of these articles relating to transfer of shares. All the limitations, restrictions and provisions of these Articles relating to the rights to transfer and the registration of transfer of shares shall be applicable to any such notice of transfer as aforesaid.

45. Subject to any other provisions of these articles if the Directors in their sole discretion are satisfied in regard thereof, a person becoming entitled to a share in consequences of the death or insolvency of a member may receive and give a discharge for any dividends or other money payable in respect of the share.

Provision of articles relating to transfer applicable 46. The instrument of transfer shall be in writing and all the provisions of Section 108 of the Companies Act, 1956 and of any statutory modification thereof for the time being shall be duly complied with in respect of all transfers of shares and the registration thereof.

Nomination 46A. Notwithstanding anything contained in the Articles of Association or in any other law for the time being in force, where a nomination has been made in the manner prescribed in Section 109A of the Act, purporting to confer on any person the right to vest the shares in, or debentures of the Company, the nominee shall, on the death of the shareholder or holder of debentures of the Company or, as the case may be, on the death of the joint holders, become entitled to all the rights in the shares or debentures of the company or, as the case may be, all the joint holders, in relation to such shares in or debentures of the Company to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner and the provisions contained in Sections 109A and 109B of the Act, shall be applicable to such cases.

Share Warrants

Power to issue share warrants 47. Subject to the provisions of Sections 114 and 115 of the Act, and subject to any directions which may be given by the Company in General Meeting, the Board may issue share-warrants in such manner and on such terms and conditions as the Board may deem fit. In case of such issue, Regulations 40 to 43 of table "A" in Schedule 1 to the Act, shall apply. Demat of Securities

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47A. (1) For the purpose of these Articles, the expressions "beneficial owner", "depository", registered owner" and "security" shall have the meaning as defined in the Depositories Act, 1996 or any other reenactments or modifications thereof. (2) Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialised/ rematerialize its securities and to offer securities in dematerialised form pursuant to the Depositories Act, 1996. (3) All the securities held by a Depository shall be dematerialised and be in a fungible form. (4) Notwithstanding anything to the contrary contained in these Articles, a Depository shall be deemed to be registered owner for the purpose of effecting transfer of ownership of security on behalf of the beneficial owner. The Depository shall not have any voting rights in respect of the securities held by it. (5) Nothing contained in these Articles relating to transfer of securities in physical form shall apply to transfer of securities held in a Depository (6) The register and index of beneficial owners maintained by a Depository shall be deemed to register and index of members and register and index of debenture holders of the Company. (7) Notwithstanding anything contained in these Articles where the securities are dealt in a Depository, the Company shall intimate the details of allotment of securities to the Depository immediately on allotment of such securities.

Stocks

Stocks 48. The company may exercise the power of conversion of its shares into stock and in that case regulations 37 to 39 to Table "A" in Schedule 1 to the Act, shall apply.

Alteration of Capital

Power to sub-divide and consolidate 49. The Company may, by ordinary resolution, from time to time, alter the condition of the Memorandum of Association as follows :- a) Increase the share Capital by such amount to be divided into shares of such amount as may be specified in the resolution. b) Consolidate and divide all or any of its share capital into shares of larger amount than its existing shares. c) Sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association, however that in the sub-division the proportion between the amount paid and the amount, if any unpaid on each reduced share shall be the same as it was in the share from which the reduced share is derived, and d) Cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the share so cancelled.

Surrender 50. Subject to the provisions of Section 100 to 104 of the Act, the Board may accept from any member the surrender of all or any of his shares on such terms and conditions as shall be agreed.

Modification of Rights

Power to modify rights 51. If at any time the share capital is divided into different classes of share the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be carried with consent in writing of the holders of three-fourths of the issued shares of that class, or with the sanction of a Special Resolution passed at a Separate Meeting of the holders of the shares of that class. To every such Separate Meeting the provisions of these Articles relating to general meeting shall apply, but so that the necessary quorum shall be two persons atleast holding or representing by proxy one-tenth of the issued shares of the class but so that if at any adjourned meeting of such holder a quorum as above defined is not present, those members who are present shall be a quorum and that any holder of shares of the class present in person or by proxy may demand a poll and, on a poll shall have one vote for each shares of the class of which he is the holder. The Company shall comply with the provisions of Section 192 of the Act as forwarding a copy of any such agreement or resolution to the Registrar of Companies.

Borrowing Powers

Power to borrow

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52. The Board may from time to time and at its description, subject to the provisions of Sections 58A, 292 and 293 of the Act, and Regulations made thereunder and directions issued by the RBI raise or borrow either from the Directors or from elsewhere and secure the payment of any sum or sums of money for the purpose of the Company.

Condition on which money may be borrowed 53. The Board may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in all respects as it thinks fit, and in particular, by the issue of bonds, perpetual or redeemable debenture or debenture-stock, or any mortgage, or other securities on the undertaking of the whole or part of the property of the Company (both present and future), including its uncalled capital for the time being, provided that debentures with the rights to allotment of or conversion into shares shall not be issued except with the sanction of the Company in general meeting and subject to the provisions of the Act.

Terms of issue of debenture 54. Any debentures, debenture-stocks, bonds or other securities may be issued at a discount, premium or otherwise and with any special privileges, as to redemption, surrender, drawings, allotment of shares, appointment of Directors and otherwise debentures, debenture-stocks, bonds and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued.

Instrument of transfer 55. Save as provided in Section 108 of the Act, no transfer of debenture shall be registered unless a proper instrument of transfer duly stamped and executed by the transferor and transferee has been delivered to the Company together with the certificate or certificates of debentures.

56. If the Board refuses to register the transfer of any debentures the Company shall within two months from due date on which the instrument of transfer was lodged with the Company, send to the transferee and to transfer of notice of the refusal.

Reserves

Reserves 57. Subject to the provisions of the Act, the Board shall in accordance with Section 205 (2A) of the Act, before recommending any dividend, set aside out of the profits of the Company such sums as it thinks proper as reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied and pending such application may at the description, either be employed in the business of the Company or be invested in such investments (other than shares of the Company as the Board may, from time to time, think). The Board may also carry forward any profit which it may think prudent not to divide without setting them aside as a reserve.

Capitalisation 58. Any General Meeting may resolve that the whole or any part of the undivided profits of the Company (which expression shall include any premiums received on the issue of shares and any profits or other sums which have been set aside as a reserve or reserves or have been carried forward without being divide) be capitalised and distributed amongst such of the members as would be entitled to receive the same if distributed by way of dividend and on the same proportions on the footing that they become entitled thereto as capita and that all or any part of each capitalised amount be applied on behalf of such members in paying up in full any unissued shares of the Company which shall be distributed accordingly in or towards payment of the uncalled liability on any issued shares, and that such distribution or payment shall be accepted by such member in full satisfaction of their interest in the said capitalised amount. Provided that any sum standing to the credit of a share premium account or a capital redemption reserve account may for the purpose of this Article only be applied in the paying up of unissued shares to be issued to members of the Company as fully-paid bonus shares.

Fractional Certificates 59. For the purpose of giving effect to any resolution under two last preceding Articles, the Directors may settle any difficulty which may arise in regard to the distribution as they think expedient and the particular may issue fractional certificate.

General Meetings

Extra ordinary General Meeting and Annual General Meeting

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60. The Directors may, whenever they think fit, call an extra ordinary General Meeting provided however if at any time they are not in India, Directors capable of acting who are sufficient in number to form a quorum any Director present in India may call an extra ordinary General Meeting as in the same manner as nearly as possible as that in which such a meeting may be called by the Board.

Calling of Extra ordinary General Meeting on requisition 61. The Board of Directors of the Company shall on the requisition of such member or members of the Company as is specified in Sub-section (4) of Section 169 of the Act, forthwith proceed to call an extra ordinary general meeting of the Company and in respect of any such requisition and of any meeting to be called pursuant thereto, all the other provisions of Section 169 of the Act and of any statutory modification thereof for the time being shall apply.

Notice of meeting 61A Twenty-one days, notice At least of every General Meeting, Annual or Extraordinary and by whomsoever called, specifying the day, place and hour of meeting and the general nature of the business to be transacted thereat shall be given in the manner hereinafter provided to such persons as are under these Articles or the Act entitled to receive notice from the Company provided that in the case of an annual meeting with consent in writing of all the members entitled to vote thereat and in case of any other meeting with consent of the members holding not less than 95% (Ninety five percent) of such part of the paid-up capital of the Company as give right to vote at the meeting. A meeting may be convened by shorter notice.

As to omission to give notice 61B The accidental omission to give any such notice to or the non-receipt of notice by any of the members or persons entitle to receive the same shall not invalidate the proceedings at any such meeting.

Quorum 62. The quorum for a General Meeting shall be atleast five members present in person.

Chairman 63. At every General Meeting, the Chair shall be taken by the Chairman of the Board of Directors. If at any meeting, the Chairman of the Board of Directors is not present within fifteen minutes after the time appointed for holding the meeting or, though present but unwilling to Act as Chairman, the members present shall choose one of the Directors present to be Chairman or if no Director shall be present or though present shall be unwilling to take the chair than the members present shall choose one of their members being a member entitled to vote to be the Chairman.

Sufficiency of ordinary resolutions 64. Any act or resolution which under the provision of this article or of the Act, is permitted shall be sufficiently so done or passed if effected by an ordinary resolution unless either the Act or the articles specifically require such Act to be done or resolution passed as a special resolution.

When if quorum not present, meeting to be dissolved and when adjourned 65. If within half an hour from the time appointed for the meeting a quorum be not present, the meeting, if convened upon a requisition of share holders shall be dissolved but in any other case it shall stand adjourned to the same day in the next week at same time and place, unless the same shall be public holiday when the meeting shall stands adjourned to the next day not being a public holiday at the same time and place and if at such adjourned meeting a quorum be not present within half an hour from the time appointed for the meeting, those members who are present and not being less than two persons shall be a quorum and may transact the business for which the meeting was called.

How question of resolution to be decided 66. In the case of an equality of votes the Chairman shall both on a show of hands and a poll have a casting vote in addition to the vote or votes to which he may be entitled as a member.

Power of adjourn General Meeting 67. The Chairman of a General Meeting may adjourn the same, from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. It shall not be necessary to give notice to the members of such adjournment or of the time, date and place appointed for the holding of the adjourned meeting.

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Poll to be taken if demanded 68. If poll is demanded the same shall be taken at such time (not later than forty-eight hours from the time when the demand was made) and place and either by open voting or by ballot as the Chairman shall direct and either at once or after an interval or adjournment or otherwise and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for poll may be withdraw at any time by the persons who made the demand of a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded.

Scrutineers at the Poll 68A Where a poll is to be taken, the Chairman of the meeting shall appoint two scrutineers to scrutinize the votes given on the poll and to report thereon to him. One of the scrutineers so appointed shall always be a member (not being an officer or employee of the Company) present at the meeting, provided such a member is available and willing to be appointed. The Chairman shall have power at any time before the result of the poll is declared to remove a scrutineer from the office and fill vacancies in the office of scrutineer arising from such removal or from any other cause.

In what case poll taken without adjournment 68B Any poll duly demanded on the election of a Chairman of a meeting or on any question of adjournment shall be taken at the meeting forthwith.

Vote of Members

Vote of members 69. (1) On a show of hands every member present in person and being a holder of Equity Shares shall have one vote and every person present either as a proxy on behalf of a holder of equity Shares or as a duly authorised representative of a body corporate being a holder of Equity Shares, if he is not entitled to vote in his own rights, shall have one vote. (2) On a poll the voting rights of a holder of Equity Shares shall be as specified in Section 87 of the Act. (3) The voting rights of the holders of the Preference Shares including the Redeemable Cumulative Preference Shares shall be in accordance with the provision of Section 87 of the Act. (4) No Company or body corporate shall vote by proxy so long as a resolution of its Board of Director sunder Section 187 of the Act is in force and the representative named in such resolution is present at the General Meeting at which the vote by proxy is tendered.

Vote in respect of deceased, involvent and insane members 70. A person becoming entitled to a share shall not before being registered as member in respect of the share, entitled to exercise in respect to thereof any right conferred by membership in relation to the meeting of the Company. If any member be a lunatic or idiot, he may vote whether on a show of hands or at poll by his committee or other legal curator and such last mentioned persons may give their votes by proxy provided that twenty four hours atleast before the time of holding the meeting or adjourned meeting as the case may be, at which any such person purposes to vote he shall satisfy the Board of his rights under this Article unless the Board shall have previously admitted his right to vote at such meeting in respect thereof.

Joint holder 71. Where there are joint holders of any shares any one of such persons may vote at any meeting either personally or by proxy in respect of such shares as if he were solely entitled thereto and if more than one of such joint-holders be present at any meeting either personally or by proxy than that one of the said persons so present whose name stands prior in order on the register in respect of such share shall alone be entitled to vote in respect thereof. Several executor or administrators of deceased member in whose name any share stands shall for the purpose of this Article be deemed joint holders thereof.

Instrument appointing proxy be made to in writing 72. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his Attorney duly authorised in writing or is such appointer is a corporation under its common seal or the hand of its Attorney.

Instrument appointing proxy to be deposited at the office 73. The instrument appointing a proxy and the Power of Attorney or other authority (if any) under which it is signed or a notarally certified copy of that power of authority shall be deposited at the office not less than forty

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eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote in default the instrument of proxy shall not be treated as valid.

When vote by proxy valid through authority revoked 74. A vote given in accordance with the terms of an instrument appointing a proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of transfer of the share in respect of which the vote is given. Provided no intimation in writing of the death, insanity, revocation or transfer of the share shall have been received at the office or by the Chairman of the Meeting before the vote is given. Provided nevertheless that the Chairman of the meeting shall be entitled to require such evidence as he may in his discretion think fit of the due execution of an instrument of proxy and that the same has not been revoked.

Form of Instrument Appointing proxy 75. Every instrument appointing a proxy shall, as nearly as circumstance will admit be in the form set out in Schedule IX to the Act.

Restriction on voting 76. No objection shall be taken to the validity of any vote except at the meeting or poll at which such vote shall be tendered and every vote not disallowed at such meeting or poll and whether given personally or by proxy or otherwise shall be deemed valid for all purposes.

Validity of vote 77. No member shall be entitled to exercise any voting rights either personally or by proxy at any meeting of the company in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the Company has exercised any right or lien.

Dividends

How profits shall be divisible 114. Subject to Rights of members entitled to shares (if any) with preferential or special rights attached to them the profits of the Company, from time to time, determined to be distributed as dividend in respect of any year of other period shall be applied for payment of dividend on the shares in proportion to the amount of capital paid up on the Shares provided that unless the Board otherwise determines all dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid up on the shares during any portion or portions of the period in respect of which dividend is paid. Provided always that subject as aforesaid any capital paid up on a share during the period in respect of which a dividend is declared shall (unless the Board otherwise determines or the terms of issue otherwise provide, as the case may be), only entitled the holder of such share to an apportioned amount of such dividend as from the date of payment but so that where capital is paid up in advance of calls such capital shall not confer a right to participate in profits.

Declaration of dividends 115. The Company in General Meeting may declare a dividend to be paid to the members according to their rights and interest in the profits and may subject to the provisions of Section 205 of the Act, fix the time for payment.

Restriction on Amount of dividends 116. No larger dividend shall be declared than is recommended by the Directors, but the Company in General Meeting may declare a smaller dividend.

Dividend out of profit only 117. No dividend shall be payable exceed out of the profits of the Company of the year or any other undistributed profits and no dividend shall carry interest as against the Company

What to be deemed net profits 118. The declaration of the Directors as to the amount of the net profits in the audited annual accounts of the Company for any year shall be conclusive.

Interim dividends 119. The Directors may, from time to time, pay to the members such interim dividends as in their judgement the position of the Company justifies.

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Debts may be deducted 120. Subject to Section 205 A of the Act, the Director may retain any dividends on which the Company has a lien and may apply the same in or towards satisfaction of debts, liabilities or engagements in respect of which the lien exists.

Dividend and call together 121. Subject to Section 205A of the Act any General Meeting declarating a dividend may make a call on the members of such amount as the meeting fixes but so that the call on each member shall not exceed the dividend payable to him and so that the call be made payable at the same time as the dividend and the dividend may, if so arranged between the Company and the member, be set off against the call.

122. A transferor of shares shall not pass the rights of any dividends declared thereon before the registration of the transfer.

Retention in certain cases 123. Subject to Section 205 A of the Act, the Directors may retain the dividends payable upon shares in respect of which any person is under the etransmission Article entitled to become a member or which any person under the Article is entitled to transfer until such persons hall duly become a member in respect thereof or shall transfer the same.

Dividend to jointholders 124. Any one of the several persons who are registered as joint-holders of any share may give effectual receipts of all dividends and payment on account of dividends in respect of such shares.

Payment by post 125. A. Unless otherwise directed, any dividend may be paid by cheque or warrant sent through the post to the registered address of the member or person entitled thereto, or in the case of jointholders to the registered address of that one whose name stands first on the Register in respect of the joint holding or to such person and such address and the member or person entitled or such joint-holders as the case may be, may direct and every cheque or warrant shall be made payable at par to the person or to the order of such the person to whom it is sent or to the order of such other person as the member or person entitled or such joint-holders, as the case may be, may direct.

When payment good discharge 125. B. The payment of every cheque or warrant sent under the provisions of the last preceding Article shall, if such cheque or warrant purports to be duly endorsed be a good discharge to the Company in respect thereof, provided nevertheless that the Company shall not be responsible for the loss of any cheque, dividend, warrant or postal money order which shall be sent by post to any member or by his order to any other person in respect of any dividend.

Unpaid or unclaimed Dividend 126. a. Where the Company has declared a dividend but which has not been paid or the dividend warrant in repect thereof has not been posted within 30 days from the date of declaration to any shareholder entitled to the payment of the dividend, the Company shall within 7 days from the date of expiry of the said period of 30 days, open a special account in that behalf in any scheduled bank called "Unpaid dividend of --Co. NAME--" and transfer to the said account, the total amount of dividend which remains unpaid or in relation to which no dividend warrant has been posted. b. Any money transferred to the unpaid dividend account of the company which remains unpaid or unclaimed for a period of Seven years from the date of such transfer, shall be transferred by the company to the Investor Education and Protection Fund. A claim to any money so transferred to the Investor Education and Protection Fund may be preferred to the Central Government by the shareholders to whom the money is due. c. No unclaimed or unpaid dividend shall be forfeited by the Board before the claim becomes barred by law.

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OTHER INFORMATION

Material Contracts And Documents For Inspection The following contracts which are or may be deemed material, have been entered or are to be entered into by the Company. These Contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company situated at C-4/1, 100 Ft. Road, Shahdara, Delhi - 110094. The same will be available from the date of the Draft Red Herring Prospectus until the date of closure of the Issue between 10.00 am to 1.00 p.m. on any working day.

1. MoU dated September 06, 2005 with UTI Bank Limited, Book Running Lead Manager to the Issue and Allianz Securities Limited, Joint Book Running Lead Manager to the Issue 2. Engagement Letter dated July 23, 2005 received from the Company appointing UTI Bank Limited to act as Book Running Lead Manager to the Issue and Allianz Securities Limited to act as Joint Book Running Lead Manager to the Issue. 3. MoU dated September 12, 2005 signed with Karvy Computershare Private Limited, Registrar to the Issue 4. Tripartite Agreement dated [•] between the Company, NSDL and Karvy Computershare Private Limited, Registrar to the Company 5. Tripartite Agreement dated [•] between the Company, CDSL and Karvy Computershare Private Limited, Registrar to the Company 6. Copy of MoU with M/s Richi Look Marketing (P) Limited dated August 22, 2005 7. Copy of MoU with M/s Seven Dayz Restaurants (P) Limited dated August 22, 2005 8. Copies of agreements entered into with Omaxe Construction Limited For Mall dated August 22, 2005 For Wedding Mall dated August 22, 2005 9. Copies of MoUs for leased properties entered into with: • Tulip Info Services (P) Limited dated July 08, 2005 • P R Infrastructure Limited dated July 17, 2005 10. Agreement with Gautam & Gautam Associates, Architect and Interior Designers dated August 17, 2005

Documents for Inspection 1. Memorandum and Articles of Association of SRS Entertainment Limited, as amended from time to time 2. Initial certificate of Incorporation of dated August 29, 2000 and subsequent Certificate of Incorporation dated January 25, 2005 consequent to change of name of the Company 3. Annual Reports of the Company for F.Ys 2001, 2002, 2003, 2004 and 2005 (last five FYs) 4. Certified copy of the Board resolution dated June 01, 2005 authorising the proposed Public Issue 5. Resolution passed under 81(1A) of the Act, at the Extra Ordinary General Meeting of the Member of the Company held on June 30, 2005 authorising the proposed Public Issue. 6. Consent from the directors, compliance officer, Auditor, Book Running Lead Manager, Joint Book Running Lead Manager, Registrar to the Issue, Bankers to the Issue, Bankers to the Company and Legal Advisor to the Issue to include their names in the Draft Red Herring Prospectus to act in their respective capacities 7. Resolution of the meeting of the Board of Directors of the Company held on for the constitution of Audit committee, Investor Grievance Committee and Remuneration Committee. 8. Resolution of the IPO Committee, authorised by the Board of Directors, approving the Draft Red Herring Prospectus dated September 12, 2005 9. Sanction Letter No.CP:ADV:2005:642 dated June 13, 2005 from Union Banlk Of India, Bankers to the Company 10. In-principle approval by UTI Bank Limited dated September 08, 2005 for secured term loan facility of Rs.2000 lacs extended to the Company for he purpose of the Project 11. Documents received form the Auditors' of the Company: i. Auditor’s report dated August 29, 2005 included in the offer document and copies of the balance sheet referred in the said report ii. Tax Benefit certificate dated August 29, 2005 iii. Eligibility Certificate dated August 25, 2005 iv. Schedule of Funds Deployed dated August 30, 2005 12. Due diligence Certificate dated August 31, 2005 from Vaish Associates, Legal Advisor to the Issue 13. Copy of Agreement with PVR Limited dated July 28, 2004 14. Copies of Initial listing agreements entered into with BSE and NSE 15. Copy of in-principal approvals from NSE and BSE 16. Due diligence certificate dated September 12, 2005 to SEBI from UTI Bank Limited

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17. SEBI observation letter dated [•]

Any of the contracts or documents mentioned in the Draft Red Herring Prospectus may be amended or modified at any time if so required in the interest of the Company or if required by the other parties, without reference to the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

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DECLARATION

No statement made in the Draft Red Herring Prospectus shall contravene any of the provisions of the Companies Act, 1956 and the rules made thereunder. All the legal requirements connected with the said Issue as also the guidelines, instructions etc. issued by SEBI, Government and any other competent authority in this behalf have been duly complied with and no statement made in the Draft Red Herring Prospectus is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or rules made there under or guidelines issued, as the case may be.

We further certify that all the disclosures made in the Draft Red Herring Prospectus are true and correct.

Signed by the Directors of the Company

1. Dr. Raj Kumar Aggarwal 2. Mr. Sunil Jindal, Managing Director 3. Mr. Raju Bansal 4. Mr. Pavan Kumar Vijay 5. Mr. Vinod Kumar 6. Mr. R. S. Gupta 7. Mr. K. M. Mehta 8. Mr. Devendra Singh

Signed by the Chief Executive Officer Mr. Ashok Bansal

Signed by the Chief Financial Officer and Compliance Offier Mr. Arun Kumar Gupta

Place: Delhi Date: September 12, 2005

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