Directors’ Report Dear Shareholders,

Your directors are pleased to present the twelfth Annual Report and financial statements for the year ended March 31, 2007. Financial Overview (Rs. Lacs) 2006-07 2005-06 Income 17,196 10,602 Expenditure 13,933 8,709 Earnings before depreciation interest and tax (EBIDTA) 3,263 1,893 Depreciation 1,241 707 Interest 550 323 Profit before Tax 1,472 863 Provision for Taxation including Deferred Tax 419 315 Profit after Tax 1,053 548 Balance brought forward from previous year 1,339 885 Transfer from Debenture Redemption Reserve - 226 Profit available for appropriation 2,392 1,659 Appropriations Interim Dividend on Preference Shares 100 52 on Equity Shares 229 329 229 281 Corporate Dividend tax46 39 Surplus carried to Balance Sheet 2,017 1,339

Financial Review Total Income of the Company grew by 62% from Rs.10,602 lacs in previous year to Rs.17,196 lacs for the year under review. Earnings before interest depreciation and tax (EBIDTA) increased from Rs.1,893 lacs in previous year to Rs.3,266 lacs for the year under review, marking a growth of 73%.

Profit after Tax (PAT) increased by 93% from Rs.548 lacs in previous year to Rs.1,053 for the year under review. Dividend

During the year under review your Directors declared and paid:

- 5% interim dividend on 20,000,000 Redeemable Preference Shares and

- 10% interim dividend on 22,915,370 Equity Shares of the Company held by the respective shareholders of the Company as on 21st, March 2007, for the financial year 2006-07 .

14 Dear Shareholders, Your Directors have recommended that these be treated as movies followed by variety of food offerings. the only dividends for the year. The growth in the Income was achieved through a Your directors are pleased to present the twelfth Annual Report and financial statements for the year ended healthy mix of growth in Income of existing cinemas and March 31, 2007. Operations Review by opening of new cinemas. During the year under review your Company had The total number of Financial Overview launched a new brand of cinema called ‘PVR Talkies’ to patrons who (Rs. Lacs) cater the demand of the cinema viewing public in class B & watched movies at 2006-07 2005-06 C cities at a lower price range of Rs. 40 to Rs. 60 for an our cinemas during enhanced movie viewing experience. The first of PVR the year was Income 17,196 10,602 Talkies multiplexes were opened at Aurangabad and Latur in 14.73 million, as Expenditure 13,933 8,709 the state of Maharashtra. compared to 8.78 million in Earnings before depreciation interest and tax (EBIDTA) 3,263 1,893 the previous year. The average occupancy In current financial year, the Company has entered into in our cinemas during the year was 43% as compared to Depreciation 1,241 707 the business of Food Court by launching its first outlet at 46% in the previous year. The Occupancies of the cinemas Sahara Mall, Gurgaon, Haryana by the name of ‘PVR Food Interest 550 323 which operated for full year both in 2005-06 & 2006-07 Union’. This has increased the bouquet offering available to increased from 46% to 49% however, new properties Profit before Tax 1,472 863 the movie viewing Patrons who now have a better mix of Provision for Taxation including Deferred Tax 419 315 Profit after Tax 1,053 548 which operated for a part of the year 2006-07 had lower occupancy levels as the same were in the process of stabilizing. Balance brought forward from previous year 1,339 885 Transfer from Debenture Redemption Reserve - 226 New Cinemas which commenced operations Profit available for appropriation 2,392 1,659 During the year under review the Company commenced commercial operations from seven new multiplex projects and one project became operational during the current financial year thereby adding 31 new screens under its operation. Appropriations Details of these new cinema properties added by the Company are as under : Interim Dividend on Preference Shares 100 52 Cinema Screens Seats Commencement date on Equity Shares 229 329 229 281 PVR Juhu , Mumbai 5 1279 April 2006 PVR Indore 5 1199 April 2006 Corporate Dividend tax46 39 PVR Lucknow 4 874 April 2006 Surplus carried to Balance Sheet 2,017 1,339 PVR Mulund, Mumbai 6 1815 June 2006 PVR Sahara Mall, Gurgaon 2 528 July, 2006 PVR Talkies, Aurangabad 3 1151 September 2006 PVR Talkies , Latur 3 1148 September 2006 Financial Review PVR Vadodra 3 1096 May , 2007 Total Income of the Company grew by 62% from Rs.10,602 lacs in previous year to Rs.17,196 lacs for the year under review. Earnings before interest depreciation and tax (EBIDTA) increased from Rs.1,893 lacs in previous year Except the multiplexes at Gurgaon and Vadodra all the above projects have been granted exemption from the payment to Rs.3,266 lacs for the year under review, marking a growth of 73%. of entertainment tax as per Entertainment Tax Exemption Policy of the respective State.

Profit after Tax (PAT) increased by 93% from Rs.548 lacs in previous year to Rs.1,053 for the year under review. Your Company now operates and manages 82 screens across the country spread over Delhi, Haryana, Karnataka, Uttar Pradesh, Andhra Pradesh, Maharashtra, Gujarat and Madhya Pradesh. Dividend Employee Stock Option Scheme (ESOS) During the year under review your Directors declared and paid: During the Year, your Company has allotted 136,500 Equity Shares to the eligible employees of the company on - 5% interim dividend on 20,000,000 Redeemable Preference Shares and exercising the rights of stock options granted to them earlier in the preceding year.

- 10% interim dividend on 22,915,370 Equity Shares of the Company The details of the shares issued under ESOS during the year under review is as follows: held by the respective shareholders of the Company as on 21st, March 2007, for the financial year 2006-07 . 38000 Equity shares allotted on January 31, 2007. 98500 Equity shares allotted on March 31, 2007.

14 15 The other details of ESOS as required under the SEBI M/s Sunrise Infotainment Private Limited is (Employee Stock Option Scheme and Employee Stock implementing the six screens Multiplex Project at Oberoi Purchase Scheme) Guidelines, 1999 are annexed as Mall, Goregaon Mumbai. The Multiplex is a part of much Annexure I hereto and forms part of this report. awaited mall development at the prime location of suburb Increase in Equity Share Mumbai. Capital The Company has obtained an exemption from the Ministry of Corporate Affairs Government of India vide its Consequent upon the allotment of shares to the eligible letter no. 47/277/2007-CL-3 dated 7th June, 2007 in employees under the Employee Stock Option Scheme the terms of Section 212(8) of the Companies Act, 1956 paid-up equity share capital of the Company has increased from attaching the audited accounts of its subsidiaries for from Rs. 22,87,73,700/- to Rs. 23,01,38,700/- divided the financial year. In pursuance thereof, the Company into 23013870 equity shares of Rs. 10 each. undertakes that annual accounts of the subsidiary companies and the related detailed information for the year Subsidiaries ended March 31, 2007 will be made available to its investors and subsidiary companies’ investors seeking such As on March 31, 2007 the Company has two information at any point of time. The annual accounts of the subsidiary companies namely M/s PVR Pictures Limited subsidiary companies are also kept for inspection by any (PVR Pictures) and M/s C R Retail Malls (India) Private investor at the registered office of the Company and Limited (CRR) in which it holds 100% shareholding. In concerned subsidiary companies. The statement required current financial year Company has also acquired the entire pursuant to the above referred approval letters is disclosed share holding of M/s Sunrise Infotainment Private Limited after the Consolidated Accounts of the Company forming (SUNRISE) thereby making it wholly owned subsidiary of part of this Annual Report. the Company. Corporate Governance PVR Pictures Limited is engaged in the business of film distribution and has therefore successfully distributed It has always been your Company’s endeavor to excel various Hollywood and Hindi movies. PVR Pictures has got through good Corporate Governance practices. Corporate its offices in Delhi, Mumbai, Bangalore, Indore and governance is all about the effective management of Hyderabad and distributes movies in all territories in India relationships among constituents of the system – on its own or with the help of its associates. shareholders, management, employees, customers, PVR Pictures is now looking at making a bigger foothold vendors, regulatory and the community at large. Your in the Hindi film distribution business and is exploring Company strongly believes that this relationship can be options for alliances, tie ups with producers to exploit film strengthened through corporate fairness, transparency and rights. PVR Pictures has during the year tied up with M/s accountability. Your Company complies with all the Aamir Khan Productions Private Limited to co-produce provisions of revised clause 49 of the Listing Agreement. two movies which are at present in an advance stage of The Corporate Governance Report in terms of Clause production. PVR Pictures shall additionally be distributing 49 of the Listing Agreement is attached and forms part of these movies on pan India basis. this Annual Report.

Your Company has also been deploying certain portion The certificate from the Practicing Company Secretary of the IPO funds in the film distribution and film production on the compliance of Corporate Governance Code business as well in line with the shareholders approval. embodied in Clause 49 of the Listing Agreement is attached M/s CR Retail Malls (India) Private Limited is and form part of this Annual Report. implementing the seven screens Multiplex Project at Management Discussion and The Phoenix Mills compound, Lower Parel, Mumbai, Analysis Report a prime retail and entertainment destination in Mumbai. The project is in advance stage and expected A detailed chapter on ‘Management Discussion to start commercial operation in third quarter of this and Analysis’ pursuant to Clause 49 of the Listing financial year. Agreement is annexed to the Annual Report and forms Your Company has during the year deployed a portion part of this report. of IPO funds to enhance its Equity Capital exposure in this subsidiary to Rs.2,000 lacs.

16 The other details of ESOS as required under the SEBI M/s Sunrise Infotainment Private Limited is Investor Grievance mail with the provisions of the Companies Act, 1956 for (Employee Stock Option Scheme and Employee Stock implementing the six screens Multiplex Project at Oberoi safeguarding the assets of the Company and for preventing Purchase Scheme) Guidelines, 1999 are annexed as Mall, Goregaon Mumbai. The Multiplex is a part of much address and detecting fraud and other irregularities; Annexure I hereto and forms part of this report. awaited mall development at the prime location of suburb Your Company has created the following e-mail ID for Mumbai. redressing the Investor complaints: iv) That they had prepared the annual accounts on a going Increase in Equity Share concern basis. Capital The Company has obtained an exemption from the [email protected] Ministry of Corporate Affairs Government of India vide its Conservation of Energy, Consequent upon the allotment of shares to the eligible letter no. 47/277/2007-CL-3 dated 7th June, 2007 in Directors Technology Absorption, employees under the Employee Stock Option Scheme the terms of Section 212(8) of the Companies Act, 1956 As per the provisions of Section 255 and 256 of the Foreign Exchange Earning paid-up equity share capital of the Company has increased from attaching the audited accounts of its subsidiaries for Companies Act, 1956, Mr. Renaud Jean Palliere retires by from Rs. 22,87,73,700/- to Rs. 23,01,38,700/- divided the financial year. In pursuance thereof, the Company and Outgo rotation in the forthcoming Annual General Meeting and into 23013870 equity shares of Rs. 10 each. undertakes that annual accounts of the subsidiary being eligible, offers himself for re-appointment. A statement giving details of Conservation of Energy, companies and the related detailed information for the year technology absorption, foreign exchange earnings, and Subsidiaries ended March 31, 2007 will be made available to its outgo, in accordance with Section 217(1)(e) of the investors and subsidiary companies’ investors seeking such Fixed Deposits As on March 31, 2007 the Company has two Companies Act, 1956 read with Companies (Disclosure information at any point of time. The annual accounts of the During the year, the Company has not accepted any subsidiary companies namely M/s PVR Pictures Limited of Particulars in the Report of Board of Directors) Rules, subsidiary companies are also kept for inspection by any fixed deposits from the public. (PVR Pictures) and M/s C R Retail Malls (India) Private 1988, is given as Annexure - II hereto and forms part of investor at the registered office of the Company and Limited (CRR) in which it holds 100% shareholding. In this report. concerned subsidiary companies. The statement required current financial year Company has also acquired the entire Auditors and Auditors’ pursuant to the above referred approval letters is disclosed share holding of M/s Sunrise Infotainment Private Limited Report Particulars of Employees after the Consolidated Accounts of the Company forming (SUNRISE) thereby making it wholly owned subsidiary of part of this Annual Report. The Statutory Auditors of the Company, M/s. S.R. The statement of Particulars of Employees under the Company. Batliboi & Co., Chartered Accountants, New Delhi, retire Section 217(2A) of the Companies Act 1956 and rules framed thereto is given as Annexure III hereto and forms PVR Pictures Limited is engaged in the business of film Corporate Governance at the conclusion of the ensuing Annual General Meeting of part of this report. distribution and has therefore successfully distributed the Company and are eligible for re-appointment and have It has always been your Company’s endeavor to excel confirmed that their re-appointment if made, shall be within various Hollywood and Hindi movies. PVR Pictures has got through good Corporate Governance practices. Corporate its offices in Delhi, Mumbai, Bangalore, Indore and the limits of Section 224(1B) of the Companies Act, 1956. Acknowledgement governance is all about the effective management of The Board recommends the re-appointment of M/s S.R. Hyderabad and distributes movies in all territories in India Your Directors thank the Company’s customers / relationships among constituents of the system – Batliboi & Co., Chartered Accountants as Auditors of the on its own or with the help of its associates. patrons, vendors, investors and bankers for their continued shareholders, management, employees, customers, Company. support during the year. PVR Pictures is now looking at making a bigger foothold vendors, regulatory and the community at large. Your Company strongly believes that this relationship can be The comment given by the Auditors in the Annexure of in the Hindi film distribution business and is exploring Your directors also place on record their deep strengthened through corporate fairness, transparency and their report is self explanatory and therefore do not call for options for alliances, tie ups with producers to exploit film appreciation of the contribution made by the employees at accountability. Your Company complies with all the any further comments under section 217 (3) of the rights. PVR Pictures has during the year tied up with M/s all levels. Your Company’s consistent growth was made provisions of revised clause 49 of the Listing Agreement. Companies Act, 1956. Aamir Khan Productions Private Limited to co-produce possible by their hard work, integrity, cooperation and two movies which are at present in an advance stage of support. The Corporate Governance Report in terms of Clause Directors’ Responsibility production. PVR Pictures shall additionally be distributing 49 of the Listing Agreement is attached and forms part of these movies on pan India basis. this Annual Report. Statement On behalf of the Board Pursuant to the requirement under Section 217(2AA) Your Company has also been deploying certain portion The certificate from the Practicing Company Secretary of the Companies Act, 1956, with respect to Directors’ of the IPO funds in the film distribution and film production on the compliance of Corporate Governance Code Ajay Bijli Responsibility Statement, the Directors confirm: business as well in line with the shareholders approval. embodied in Clause 49 of the Listing Agreement is attached Chairman cum Managing Director M/s CR Retail Malls (India) Private Limited is and form part of this Annual Report. i) That in the preparation of the annual accounts, the implementing the seven screens Multiplex Project at applicable accounting standards have been followed and no Place : Gurgaon, Haryana The Phoenix Mills compound, Lower Parel, Mumbai, Management Discussion and material departures have been made from the same; Date : July 20, 2007 a prime retail and entertainment destination in Analysis Report ii) That they had selected such accounting policies and Mumbai. The project is in advance stage and expected A detailed chapter on ‘Management Discussion applied them consistently and made judgements and to start commercial operation in third quarter of this and Analysis’ pursuant to Clause 49 of the Listing estimates that are reasonable and prudent so as to give true financial year. Agreement is annexed to the Annual Report and forms and fair view of the state of affairs of the Company at the Your Company has during the year deployed a portion part of this report. end of the financial year and of the profit of the Company of IPO funds to enhance its Equity Capital exposure in this for that period; subsidiary to Rs.2,000 lacs. iii) That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance 16 17 Annexure – 1 to Directors’ Report

Information regarding the Employees Stock Option Scheme(s) as on March 31, 2007 Sl. Particulars No. 1 Total number of Stock Options granted 170,000 2 Pricing Formula 118000@ Rs. 20/- and 52000@ Rs. 47.50/- 3 Options Vested during the year under review 136,500 4 Number of options exercised 136,500 5 Number of shares arising as a result of exercise of option 136,500 6 Number of option lapsed 33,500 7Variation of terms of options N.A. 8 Money realized by exercise of options Rs. 3,885,000/- 9 Total number of options in force There are no options outstanding at the year end. 10 Employee wise details of options granted to : i) Senior Managerial Personnel (a) Mr. Pramod Arora 15250 (b) Mr. N.C. Gupta 14500 (c) Mr. Sunil Patil 10000 (d) Mr. Amitabh Vardhan 20000 (e) Mr. Ashish Saxena 8750 (f) Mr. Ashish Shukla 11000 ii) Any other employee who receives a grant in any one year N.A. of option amounting to 5% or more of option granted during that year; iii) Identified employees who were granted options, during any one year, N.A. equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. 11 Diluted Earnings Per Share (EPS) pursuant to issue of shares on Rs.4.12 exercise of options calculated in accordance with Accounting Standard (AS) 20 ‘ Earning Per Share’ 12 In case, the employees compensation cost is calculated on the basis of N.A. intrinsic value of stock option, the difference between the employees compensation of the stock option cost based on intrinsic value of the stock and the employees compensation of the stock option cost based fair value, and the impact of this difference on profits and on EPS of the Company 13 For options whose exercise price either equals or exceeds or is less than the market price of the stock the following are disclosed separately: a) Weighted average exercise price Rs.28.46 b) Weighted average fair value - 14 A description of the method and significant assumptions used during the year to estimate the fair value of options, including the following weighted average information: i) risk free interest rate; 5.5% ii) expected life; 10.72 months iii) expected volatility; 8.61% iv) expected dividends and v) the price of the underlying shares in the Not Listed on the Grant Date, 18 market at the time of option grant. However valued at Rs.80/- Annexure – 1 to Directors’ Report Annexure – 2 to Directors’ Report Information regarding the Employees Stock Option Scheme(s) as on March 31, 2007 CONSERVATION OF ENERGY, TECHNOLOGY • The air conditioning system preventive maintenance Sl. Particulars ABSORPTION, FOREIGN EXCHANGE EARNINGS routine services are monitored to make the system No. AND OUTGO efficient. Also regulation of the AHU timings for proper utilisation has further helped in saving electricity 1 Total number of Stock Options granted 170,000 Particulars required under Section 217(1) (e) of the consumption. Companies Act, 1956, read with Rule 2 of the Companies 2 Pricing Formula 118000@ Rs. 20/- and • All the new fittings are with CFL or energy savers which 52000@ Rs. 47.50/- (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are as mentioned hereinbelow: uses less electrical power as compared to old GL lamps 3 Options Vested during the year under review 136,500 • Temperature sensors are being put in audi’s for better i) Conservation of Energy 4 Number of options exercised 136,500 control on AC 5 Number of shares arising as a result of exercise of option 136,500 Energy conservation measures taken: • Seat lights of LED’s are used in place of GSL light to save energy 6 Number of option lapsed 33,500 • Power factor is being maintained above 0.95 with the 7 Variation of terms of options N.A. use of capacitor banks. These banks are used to neutralize • Outside consultants have been appointed to suggest the inductive current by providing capacitive current. As a energy saving measures over and above the existing 8 Money realized by exercise of options Rs. 3,885,000/- result a power factor improves and gets rebate applicable system. They will suggest on optimisation of energy 9 Total number of options in force There are no options outstanding at on energy bills from Electricity Distribution Companies distribution, Lux level of various areas, design aspects of the year end. (Tata Power/BSES). electrical and HVAC system etc. so that other aspects of energy conservation and equipment efficiency can be 10 Employee wise details of options granted to : • Switching on/off procedure is being followed for entire maintained. i) Senior Managerial Personnel lighting and other load within the premises. Timers are (a) Mr. Pramod Arora 15250 being used to ensure this. (b) Mr. N.C. Gupta 14500 (c) Mr. Sunil Patil 10000 ii) Foreign Exchange Earnings & Outgo (d) Mr. Amitabh Vardhan 20000 (e) Mr. Ashish Saxena 8750 March 31, 2007 March 31, 2006 (f) Mr. Ashish Shukla 11000 ii) Any other employee who receives a grant in any one year N.A. Earnings in foreign currency (on accrual basis) of option amounting to 5% or more of option granted during that year; Income from Sale of Film Rights Nil 1,958,175 iii) Identified employees who were granted options, during any one year, N.A. Expenditure in foreign currency (on accrual basis) equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. Traveling 892,881 484,431 11 Diluted Earnings Per Share (EPS) pursuant to issue of shares on Rs.4.12 Technical and Professional fees (including expenses, net of income tax) 5,690,411 13,520,343 exercise of options calculated in accordance with Accounting Standard (AS) 20 ‘ Earning Per Share’ Others 183,665 - 12 In case, the employees compensation cost is calculated on the basis of N.A. Total 6,766,957 14,004,774 intrinsic value of stock option, the difference between the employees compensation of the stock option cost based on intrinsic value of the CIF Value of Imports stock and the employees compensation of the stock option cost based fair value, and the impact of this difference on profits and on EPS Capital Goods 14,660,135 33,504,582 of the Company Software 2,832,926 527,736 13 For options whose exercise price either equals or exceeds or is less than the market price of the stock the following are disclosed separately: Total 17,493,061 34,122,318 a) Weighted average exercise price Rs.28.46 b) Weighted average fair value - 14 A description of the method and significant assumptions used during the year to estimate the fair value of options, including the following weighted average information: i) risk free interest rate; 5.5% ii) expected life; 10.72 months iii) expected volatility; 8.61% iv) expected dividends and v) the price of the underlying shares in the Not Listed on the Grant Date, market at the time of option grant. However valued at Rs.80/- 18 19 20

Annexure – 3 to Directors’ Report Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 referred to in the Directors’ Report for the year ended March 31, 2007 and forming part thereof of showing names and other particulars of the employees who were employed throughout the year and were in receipt of remuneration for the year in the aggregate of not less than Rs. 24,00,000/- or not less than Rs. 2,00,000/- per month in respect of those who were employed for part of the year. Name Designation Nature of Duties Qualifications Age Date of Total Gross Previous Employment of the Employees Commencement experience Remuneration of Employment (in years)( in Rs.)

EMPLOYED FOR FULL YEAR Mr. Ajay Bijli Chairman cum General Management B.Com, O P M P 40 years 23.04.2002 17 years 9,907,200 Director - The Amritsar Managing Director (Harvard Business Transport Company School) Private Limited Mr. Sanjeev Kumar Executive Director General Management Bachelor’s Degree 35 years 24.07.2003 12 years 5,263,200 Director - Priya Exhibitors in Finance & Private Limited Accounting, MBA Mr. Pramod Arora President – Corporate Business Development B.E, MBA 36 years 01.12.2001 15 years 4,813,032 Business Development Strategy and Business Manager – Priya Exhibitors Development Private Ltd. Mr. N. C. Gupta Chief – Legal and Corporate Affairs B Com, FCA , ACS 63 years 28.08.199738 years 2,949,444 Group Financial Controller Corporate Affairs – Priya Exhibitors Private Limited Mr. Amitabh Vardhan COO- Exhibition Operations- Exhibition Diploma in Hotel 37 years 01.05.2003 14 Years 3,199,387 Advisor, Hindustan L ever Management, Limited Diploma in Training & Development Mr. Ashish Shukla CEO – Digital Operations - Digital BA, Diploma In 35 Years 05.04.1998 14 years 3,568,567Taj Group of Hotels Hotel Management, MBA Mr. Ashish Saksena COO- Film Cell Programming & Distribution B.Tech 41 years 16.11.2002 18 Years 3,263,879 Inox Leisure Ltd. EMPLOYED FOR PART OF THE YEAR Mr. Sanjay Malhotra Chief Financial Officer Finance B Com (Hons), 42 years 19.11.2001 19 years 3,550,926 President – Dimension FCA Consulting Private Ltd Mr. Gautam Dutta Chief Marketing Officer Marketing BA 37 Years 05.06.2006 19 Years 2,054,761 Rediffussion Dentsu Young & Rubicam Pvt. Ltd. Mr. Vinay Sharma Director, H R Human Resource B.Sc , MBA 56 Years 18.09.2006 33 years 1,677,040 Self Employed, Management Consultant Mr. Kamal COO PVR Pictures Operation- Distribution B.Com, PGDM 36 Years 01.04.2002 10 years 2,047,846 Fun Republic Gianchandani NOTES: 1. Gross remuneration comprises of Salary, Allowances, Company’s contribution to Provident fund and taxable value of perquisites. 2. Except Mr. Ajay Bijli (Chairman cum Managing Director) and Mr. Sanjeev Kumar (Joint Managing Director), all other employees are on non-contractual basis. 3. None of the employees mentioned above is a relative of any Director of the Company. 4. None of the employees mentioned above holds 2% or more share capital of the Company. 5. Other terms and conditions- NIL Group of Hotels roup Financial Controller ediffussion Dentsu Young Fun Republic Fun Director - Priya Exhibitors Private Limited Self Employed, Private Limited Business Development Consulting Private Ltd Director - The Amritsar Limited & Rubicam Pvt. Ltd. Management Consultant Advisor, Advisor, Hindustan Lever Limited President – Dimension – Priya Exhibitors Private Inox Leisure Ltd. 13,032 63,879 2,047,846 Manager – Priya Exhibitors 3,568,567Taj 2,054,761 R 5,263,200 Gross Previous Employment 1,677,040 Private Ltd. 9,907,200 3,199,387 2,949,444 G 3,550,926 ferred to in the Directors’ Report for the year the for Report Directors’ the in to ferred out the year and were in receipt of receipt in were and year the out ears ears ears 3,2 years years years years 4,8 years years years years re on non-contractual basis. t of those who were employed for part of the year. the of part for employed were who those of t otal experience Remuneration (in years)( in Rs.) Management 05.06.2006 19 Y Commencement 01.04.2002 10 05.04.1998 14 01.12.2001 15 24.07.2003 12 Date of T of Employment 01.05.2003 14 Y 18.09.2006 33 28.08.199738 28.08.199738 16.11.2002 18 Y 19.11.2001 19 23.04.2002 17 ears ears ears years years years years years years years Discussion

ons), 42 Analysis Com, FCA , ACS 63 Hotel Management, in Finance & B.Com, PGDM 36 Years School) Accounting, MBA & Development BA, Diploma InMBA 35 Y FCA B.Com, O P M P 40 Management, Diploma in Training & orporate Affairs B General Management Bachelor’s Degree 35 Marketing BA 37 Y of the Employees Programming & Distribution B.Tech 41 General Management Finance B Com (H to Directors’ Report 3 3 3 3 3 e e – – e – e e – – President – CorporateStrategy and Business Business Development B.E, MBA 36 Executive Director Chief Marketing Officer Designation Nature of Duties Qualifications Age Managing Director (Harvard Business Company Transport Director, Director, H RCOO PVR Pictures Human Resource Operation- Distribution B.Sc , MBA 56 Y Development Corporate Affairs Chief Financial Officer Gross remuneration comprises of Salary, Allowances, Company’s contribution to Provident fund and taxable value of perquisites. 3. None of the 4.employees mentioned above is a None relative of of the any 5.employees Director mentioned of above the holds Company. 2% or Other more terms share and capital conditions- of NIL the Company. 2. Except Mr. Ajay Bijli (Chairman cum Managing Director) and Mr. Sanjeev Kumar (Joint Managing Director), all other employees a Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 re 1975 Rules, Employees) of (Particulars Companies the with read 1956 Act, Companies the of 217(2A) Section per as Information Annexur Annexur Gianchandani Mr. Mr. N. C. Gupta Chief – Legal and C Mr. Mr. Pramod Arora Mr. Ashish Shukla CEO – Digital Operations - Digital Mr. Mr. Sanjeev Kumar Mr. Gautam Dutta Annexur Name Mr. Ashish Saksena COO- Film Cell EMPLOYED FOR FULL YEAR Mr. Ajay Bijli Chairman cum Mr. Mr. Amitabh Vardhan COO- Exhibition Operations- Exhibition Diploma in Hotel 37 Mr. Vinay Sharma Mr. Kamal EMPLOYED EMPLOYED FOR PART OF THE YEAR Mr. Sanjay Malhotra Annexur Annexur NOTES: 1. 20 through employed were who employees the of particulars other and names showing of thereof part forming and respec 2007 in 31, month March per ended 2,00,000/- Rs. than less not or 24,00,000/- Rs. than less not of aggregate the in year the for remuneration 21 The following Management Discussion and Analysis powered a total 21% growth in box office revenues in Section should be read in conjunction with the financial 2006 taking the estimated size of the Indian domestic box statements and notes to accounts for the period ended 31st office market to Rs. 64 billion. The domestic box office March, 2007. The reference to FY 07 and FY 06 in this market is expected to grow at a CAGR of 13% and nearly section refers to the year ended 31st March, 2007 and year double its size from Rs 64 Bn in 2006 to an estimated Rs. ended 31st March, 2006 respectively. This discussion 119 billion over the next five years. contains certain forward looking statements based on Overall, the size of the Indian film industry is estimated current expectations, which entail various risks and at Rs. 85 billion, having grown by 24% from 2005. This uncertainties that could cause the actual results to differ high increase was attributed to higher average ticket prices, materially from those reflected in them. All references to propelled by the growth of multiplexes. The Indian film “PVR”, “we”, “our”, “Company” in this report refer to PVR industry is expected to grow at a CAGR of 16% to Rs. Limited and should be construed accordingly. 175 billion by 2011. Industry Outlook

2006 was an excellent year for the Indian box office. The top five films alone grossed over Rs. 3 billion. This

Projected growth of the Indian film Industry

Rs. Bn

Projected growth of the domestic box office

Rs. Bn

(Source: PWC –The Indian Entertainment and Media Industry Report 2007)

22 The following Management Discussion and Analysis powered a total 21% growth in box office revenues in At a glance The revenue growth under various heads during the Section should be read in conjunction with the financial 2006 taking the estimated size of the Indian domestic box year under review is summarised as under : Number of films produced in 2006 1,090 statements and notes to accounts for the period ended 31st office market to Rs. 64 billion. The domestic box office Rs. In Lakhs March, 2007. The reference to FY 07 and FY 06 in this market is expected to grow at a CAGR of 13% and nearly Number of single screens Approx. 12,000 section refers to the year ended 31st March, 2007 and year double its size from Rs 64 Bn in 2006 to an estimated Rs. FY 07FY 06 Number of multiplex screens Approx. 325 ended 31st March, 2006 respectively. This discussion 119 billion over the next five years. Ticket Sales 12,169 8,801 38% contains certain forward looking statements based on Filmed Entertainment Industry Estimated at Overall, the size of the Indian film industry is estimated current expectations, which entail various risks and Rs.84.5 billion in at Rs. 85 billion, having grown by 24% from 2005. This Income from Revenue Sharing 1,900 489 289% uncertainties that could cause the actual results to differ 2006; high increase was attributed to higher average ticket prices, materially from those reflected in them. All references to Sale of Food and Beverages 3,735 2,401 56% propelled by the growth of multiplexes. The Indian film Projected to grow “PVR”, “we”, “our”, “Company” in this report refer to PVR Royalty Income 159 120 32% industry is expected to grow at a CAGR of 16% to Rs. to Rs.175 billion by Limited and should be construed accordingly. 175 billion by 2011. 2011 Advertisement Revenue 1,810 941 92% Management fees 8787 0% Industry Outlook Domestic Box Office Market Estimated at Rs.64 Sale of Film Rights 20 2006 was an excellent year for the Indian box office. billion in 2006; The top five films alone grossed over Rs. 3 billion. This Gross Income from 19,860 12,858 54% Projected to grow Operations to Rs.119 billion by Less : Entertainment tax 2,915 2,244 30% 2011 Less : Sales Tax / VAT52% 407268 (Source: PWC –The Indian Entertainment and Media Industry Projected growth of the Indian film Industry Report 2007) Less : Service Tax 129 44 193% Net Operating Income 16,409 10,302 59% Rs. Bn Other Income 787 300 162% Profit & Loss Review TOTAL INCOME 17,196 10,602 62% Revenues Revenue from Sale of Tickets Total Revenue of the Company for the year under Revenue from Sale of tickets is the total amount paid by review increased to Rs.17,196 lacs as compared to patrons for admission to our cinemas and includes state Rs.10,602 lacs in previous year, registering a growth entertainment taxes. of 60%. Our Revenue from Sale of tickets depends on the Revenue Composition & Growth number of patrons that visit our cinemas and the average The Net revenue composition for FY07 under various ticket price that we charge our patrons. Both these factors heads was as under: are critical for optimising the profitability of our cinemas and form an integral part of our management information system. Our Revenue from sale of tickets for the year under Projected growth of the domestic box office review increased to Rs.12169 lacs as compared to Rs.8801 lacs in previous year, registering a growth of 38%. Rs. Bn The Company paid an entertainment tax of Rs.2915 lacs during FY 07 as compared to Rs.2244 lacs during the FY 06. As a % of Gross Operating Income, the average tax rate of the Company reduced from 17.5% in FY 06 to 14.7% in FY 07. Income from Revenue Sharing Income from revenue share represents revenue earned by Company from multiplex properties being operated by the company under a revenue share arrangement with the developers. The Company presently operates 4 multiplex properties at Ghaziabad, Mulund-Mumbai, Lucknow and Indore under the present arrangement. The revenue from (Source: PWC –The Indian Entertainment and Media Industry Report 2007) ticket sales at these cinemas is accounted for on the basis of the revenue share with the developer. 22 23 The total income from Revenue share for the year Management fee under review increased to Rs.1900 lacs as compared Management fee includes to Rs.489 lacs in previous year, registering a growth of 289%. • Basic revenue share fee/ management fee for services provided by us generally to the property developer in Overall revenue from ticket sales and income from relation to the multiplex, which is usually a percentage revenue sharing for FY 07 was higher by 51% over of turnover. FY 06. • Incentive fee calculated as a percentage of gross Food and Beverages Revenue operating profit (before interest, depreciation and Gross revenue from sale of food and beverages is the management fee). total amount paid by patrons at our in-cinema concession The Company presently operates two multiplex stands for food and beverages and includes sales tax / value properties at SRS PVR, Faridabad and Spice PVR, Noida added tax. under a franchisee arrangement where it earns a Our Gross food and beverages revenue (inclusive of management fee revenue. Our Management fee Revenue, sales tax / value added tax), for the year under review amounting to Rs 87 Lacs was similar to that of the previous increased to Rs.3,735 lacs as compared to Rs.2,401 lacs year. The management fee revenues for FY 06 included in previous year, registering a growth of 56%. one time management income amounting to Rs 40 Lacs for rendering project management, design and We generally try to maximize the revenues from the consultancy services. sale of food and beverages by increasing the number of transactions within the limited time our patrons have, prior Other Income to the start of a film or during the interval of a film and by Other income includes rent income from surplus space increasing the average transaction size. within our cinemas that has been leased to third parties, We attempt to increase the number of transactions by interest received on surplus operating cash flow and interest installing adequate number of points of sale counters, meal income on investment of IPO proceeds in short term combos (combining 2 or more items as a ‘Combo’) and investments, and other miscellaneous income. service on seats. We attempt to increase our average Our other Income for the year under review increased to transaction size by selling a combination of two or more Rs.787 lacs as compared to Rs.300 lacs in previous year, products at a discounted price thereby appealing to our registering a growth of 162%. The break-up of Other patrons’ desire to obtain better value for money. Income for FY 07 and comparison with previous year is as Royalty Income under : Royalty income (pouring rights) is income received (Rs. Lacs) from certain of our beverage suppliers for us agreeing not FY 2006-07 FY 2005-06 growth to sell directly competing products. Our Royalty Income, Interest / Dividend income 592 168 252% for the year under review increased to Rs.159 lacs as compared to Rs.120 lacs in previous year, registering a Rent Received 37 - growth of 32%. Royalty Income 47 54 -13% Advertisement Revenue Miscellaneous income 110 79 40% Advertisement revenue includes our revenue from on- Total 786 301 161% screen advertisements, off-screen advertisements and cinema association. Operating performance review Our Advertisement revenue, including service tax, for The operating performance has been analysed by the year under review increased to Rs.1810 lacs as comparing property on property growth over FY 07 and compared to Rs.941 lacs in previous year, registering a FY 06. For the above, the cinema properties have been growth of 92%. classified under Comparable properties, Non Comparable We optimise the usage of interval and pre movie time, properties and New properties. Comparable properties to advertise, without compromising the overall movie represent cinemas which were operational during FY 07 & experience. We have also entered into multiple corporate FY 06. Non Comparable properties represent cinemas alliances with some of the leading brands, who find it quite which were operational for full year in FY 07 but only for a useful to advertise in our cinemas. part period during FY 06. New Properties represent cinemas which commenced operations in FY 07.

24 The total income from Revenue share for the year Management fee Footfalls Average Ticket Price under review increased to Rs.1900 lacs as compared Management fee includes We entertained 14.73 million patrons at our cinemas The average ticket prices across our cinema circuit during to Rs.489 lacs in previous year, registering a growth during FY 2007 as compared to 8.78 million patrons FY 07 was as under : of 289%. • Basic revenue share fee/ management fee for services during the FY 06, registering a growth of 68%. (Rs.) provided by us generally to the property developer in Overall revenue from ticket sales and income from FY 2006-07 FY 2005-06 Growth relation to the multiplex, which is usually a percentage The growth in footfalls was driven by a combination of revenue sharing for FY 07 was higher by 51% over of turnover. increase in footfalls in older cinemas and start of operations Comparable properties 129 120 8% FY 06. of new cinemas. • Incentive fee calculated as a percentage of gross Non Comparable 109 9712% Food and Beverages Revenue operating profit (before interest, depreciation and We strive to increase the footfalls at our cinemas by properties Gross revenue from sale of food and beverages is the management fee). maximizing the number of screenings of popular movies to total amount paid by patrons at our in-cinema concession increase our capacity (session seats), through bulk sales of New Properties 99 The Company presently operates two multiplex stands for food and beverages and includes sales tax / value tickets, by providing remote access (our website, Total 119 119 0% properties at SRS PVR, Faridabad and Spice PVR, Noida added tax. telephones) to patrons for buying tickets, movie focused under a franchisee arrangement where it earns a marketing and promotional activities, flexible pricing keeping The Comparable properties achieved an average ticket Our Gross food and beverages revenue (inclusive of management fee revenue. Our Management fee Revenue, in view demand patterns based on time of the day price increase of 8% and Non Comparable properties sales tax / value added tax), for the year under review amounting to Rs 87 Lacs was similar to that of the previous (morning, afternoon, evening) and day of the week achieved an average ticket price increase of 12% during the increased to Rs.3,735 lacs as compared to Rs.2,401 lacs year. The management fee revenues for FY 06 included (weekend – weekday). We also focus on our product year under review. in previous year, registering a growth of 56%. one time management income amounting to design and placement and the service levels to provide a Rs 40 Lacs for rendering project management, design and We generally try to maximize the revenues from the unique entertaining and hospitable environment to our The average ticket pricing at New properties of the consultancy services. sale of food and beverages by increasing the number of patrons. Company at Lucknow, Indore, Aurangabd & Latur is lower than the existing average and hence the overall average transactions within the limited time our patrons have, prior Other Income (Numbers in Mn) to the start of a film or during the interval of a film and by ticket pricing of the Company for FY 07 level is similar to Other income includes rent income from surplus space FY 2006-07 FY 2005-06 Growth increasing the average transaction size. last year at Rs.119. within our cinemas that has been leased to third parties, We attempt to increase the number of transactions by Comparable properties 8.69 8.29 5% interest received on surplus operating cash flow and interest Spend per Head installing adequate number of points of sale counters, meal income on investment of IPO proceeds in short term Non Comparable 2.69 0.49 combos (combining 2 or more items as a ‘Combo’) and properties The average spend per head across our cinema circuit investments, and other miscellaneous income. service on seats. We attempt to increase our average during FY 07 was as under : Our other Income for the year under review increased to New Properties 3.35 transaction size by selling a combination of two or more (Rs.) Rs.787 lacs as compared to Rs.300 lacs in previous year, products at a discounted price thereby appealing to our Total 14.73 8.78 68% registering a growth of 162%. The break-up of Other FY 2006-07 FY 2005-06 Growth patrons’ desire to obtain better value for money. Income for FY 07 and comparison with previous year is as Comparable properties 32.2 30.5 6% Royalty Income under : Occupancy Non Comparable 29.4 28.8 2% (Rs. Lacs) Royalty income (pouring rights) is income received The average occupancy across our cinema circuit during properties from certain of our beverage suppliers for us agreeing not FY 2006-07 FY 2005-06 growth FY 07 was as under: to sell directly competing products. Our Royalty Income, New Properties 23.0 Interest / Dividend income 592 168 252% FY 2006-07 FY 2005-06 for the year under review increased to Rs.159 lacs as Total 28.0 30.0 -7% compared to Rs.120 lacs in previous year, registering a Rent Received 37- Comparable properties 49% 46% The Comparable properties achieved an average growth of 32%. Royalty Income 4754 -13% Non Comparable properties 64% 64% increase of 6% in spend per head and Non Comparable Advertisement Revenue properties achieved an average increase of 2% in spend per Miscellaneous income 110 79 40% New Properties 30% Advertisement revenue includes our revenue from on- head during the year under review. Total 786 301 161% Total 43% 46% screen advertisements, off-screen advertisements and Average spend per head New properties is lower due cinema association. Operating performance review The Comparable properties have continued to show to lower Spend per head in markets outside the metros of Delhi, Mumbai, Bangalore and Hyderabad where the food Our Advertisement revenue, including service tax, for The operating performance has been analysed by an impressive growth in overall occupancy and average and beverage pricing and ticket pricing is also lower. the year under review increased to Rs.1810 lacs as comparing property on property growth over FY 07 and occupancy across the properties is higher as compared to compared to Rs.941 lacs in previous year, registering a FY 06. For the above, the cinema properties have been last year levels. Expenditure growth of 92%. classified under Comparable properties, Non Comparable The average occupancies at New properties opened by Our Company’s expenditure mainly comprises of properties and New properties. Comparable properties We optimise the usage of interval and pre movie time, the Company during the year are expected to stabilize over direct cost including Film Distributors’ share and represent cinemas which were operational during FY 07 & to advertise, without compromising the overall movie the current year and move upwards. The company is Consumption of food and beverages. Other costs include FY 06. Non Comparable properties represent cinemas experience. We have also entered into multiple corporate focused on aggressive promotions and pricing to drive Personnel Costs, Rent, Operating and other costs. Because alliances with some of the leading brands, who find it quite which were operational for full year in FY 07 but only for a footfalls in newer markets. useful to advertise in our cinemas. part period during FY 06. New Properties represent cinemas which commenced operations in FY 07.

24 25 the majority of our costs are linked to the number of Meetings held on January 31, 2007 and March 31, 2007 patrons and the number of cinemas we operate, increase in respectively. Further, the Company has during the year the number of patrons and the number of cinemas under ended March 31, 2007 forfeited options equivalent to our operation have resulted in an increase in our total costs. 33,500 shares on resignation of the concerned staff, prior to vesting date of options given under Employee Film Distributors’ Share Stock Option Scheme. As a result, the share capital Film Distributor share comprises of payments made to stands increased to 23,013,870 equity shares as on March distributors for supplying movies to be played at our 31st, 2007. cinemas. Film hire cost as a % of Net Operating Income Accordingly, the amount expensed out on account of for FY 07 was 27% as compared to 26.3% in FY 06. the above for the year under review was Rs 29 Lakhs as Consumption of Food and Beverages compared to Rs.70.5 lacs in previous year. Food and Beverage cost comprise the cost of food and Operating and Other Expenses beverage items sold at the cinemas and disposables. The Operating and other expenses include rent for our total cost of food and beverages consumed for the year cinemas and corporate office, repair and maintenance costs under review was Rs.1146 lacs as compared to Rs. relating to our cinemas, our corporate office and the Rs.712 lacs in previous year. The average consumption of equipment installed thereon, security charges for third- food and beverages as a % of Food and beverage sales parties to provide security at our cinemas, electricity charges (net of Sales tax / VAT) was 34.4% in FY 07 as compared and water charges, and insurance charges, expenditure on to 33.4% in FY 06. This was on account of lower average advertisement and publicity and sales and business spend per patron and higher F&B costs at new cinemas promotion, expenditure incurred on various administrative opened by the Company in Aurangabad, Latur, Lucknow and other overheads such as travelling, printing & and Indore. stationery, professional fees, communication expenses, Personnel Cost bank charges and charges for prepayment of term loans. Personnel cost is the expenditure incurred on The total Operating and other expenses for the year employees and comprises salaries, wages and allowances, under review was Rs. 6,351 lacs as compared to Rs. 3960 contributions to provident and other funds, gratuity lacs in previous year, due to increase in number of cinema payments, staff welfare costs, and recruitment and training properties. As a percentage of net operating revenue, costs. For our cinema staff, we have a group incentive Operating and other expenses were 38.7% in FY 07, as system for each of our cinemas, wherein we give monthly compared to 38.4% in FY 06. incentives to our cinema staffs on their exceeding the Financial Expenses monthly targets of the cinemas managed by them. Total Personnel costs for the year under review were Rs.1927 Financial expenses for the year under review was lacs as compared to Rs.1216 lacs in previous year. As a % Rs.550 lacs as compared to Rs. 323 lacs in previous year. of net Revenue from operations, Personnel costs were As a percentage of net revenue from operations, Financial 11.7% in FY 07 as compared to 11.8% in FY 06. expenses were increased to 3.3% in FY 07 as compared to 3.1 % in FY 06. Till March 31, 2006 Company was providing for leave benefits based on actuarial valuation in accordance with old Depreciation and Amortization Accounting Standard 15. In the current year, the Company Depreciation and amortization for the year under has opted for early adoption of the Accounting Standard 15 review was Rs. 1242 lacs as compared to Rs. 707 lacs in (Revised 2005) which is otherwise mandatory for previous year. This increase was due to the charging of accounting periods commencing on or after December 7, depreciation on fixed assets relating to our new cinemas 2006. Accordingly the Company has changed the basis of opened in fiscal FY 07 as well as full year impact of providing short term leave benefits. As a result, properties which operated for a part of fiscal FY 06. As a actuarial valuation of leave as at April 1, 2006 is higher by percentage of net revenue from operations, Depreciation Rs. 2.70 Lacs (net of income-tax Rs. 1.37 Lacs) which in and amortization expenses were 7.5% in FY 07as accordance with the transitional provision in the revised compared to 6.8% in FY 06. Accounting Standard, has been adjusted to the opening balance of Profit and Loss Account. This change does not Depreciation for the year under review is after reversal have material impact on the profit for the current year. of excess depreciation of Rs . 66 Lacs (Rs. 44 lacs net of income tax) provided till last year. ESOS Ta x a t i o n In terms of the ESOS Scheme , the Company has alloted 38,000 and 98,500 equity shares in its Board The Company provided Rs. 419 lacs as provision for 26 tax for the year under review after taking into consideration the majority of our costs are linked to the number of Meetings held on January 31, 2007 and March 31, 2007 the tax credit of Rs. 26 lacs for earlier years, as compared The free reserves of the Company as on 31st March, patrons and the number of cinemas we operate, increase in respectively. Further, the Company has during the year to Rs. 315 lacs in the previous year. Of this Rs. 265 lacs 2007 were Rs. 2017 after providing for an interim dividend the number of patrons and the number of cinemas under ended March 31, 2007 forfeited options equivalent to were towards current tax and Rs.180 lacs were towards of 10% on equity shares and a preference dividend of 5% our operation have resulted in an increase in our total costs. 33,500 shares on resignation of the concerned staff, deferred tax. Our effective rate of tax was 28.46% in FY on preference shares. prior to vesting date of options given under Employee 07 and 36.5% in FY 06. Film Distributors’ Share Secured Loans Stock Option Scheme. As a result, the share capital Key reasons for decrease in average rate of tax was tax Film Distributor share comprises of payments made to stands increased to 23,013,870 equity shares as on March The Company availed loans from various banks and free dividend income earned by Company from investment distributors for supplying movies to be played at our 31st, 2007. institutions during the year, to fund its capital in mutual fund schemes and tax credit for earlier years. cinemas. Film hire cost as a % of Net Operating Income expenditure requirements pending its initial public Accordingly, the amount expensed out on account of for FY 07 was 27% as compared to 26.3% in FY 06. Profits offering of equity shares. the above for the year under review was Rs 29 Lakhs as Consumption of Food and Beverages compared to Rs.70.5 lacs in previous year. The Profit before Interest Depreciation and Taxes of Changes in secured Loans during the year were as the Company for the year under review increased to Rs. under: Food and Beverage cost comprise the cost of food and Operating and Other Expenses 3263 lacs as compared to Rs.1893 lacs in previous year, beverage items sold at the cinemas and disposables. The (Rs. Lacs) Operating and other expenses include rent for our registering a growth of 73%. total cost of food and beverages consumed for the year cinemas and corporate office, repair and maintenance costs Total Secured loans as on 1st April, 2006 6136 under review was Rs.1146 lacs as compared to Rs. The Profit after Tax of the Company for the year under relating to our cinemas, our corporate office and the Fresh loans availed during the year 1000 Rs.712 lacs in previous year. The average consumption of equipment installed thereon, security charges for third- review increased to Rs.1053 lacs as compared to Rs.548 food and beverages as a % of Food and beverage sales parties to provide security at our cinemas, electricity charges lacs in previous year, registering a growth of 93%. Loans repaid during the year 1130 (net of Sales tax / VAT) was 34.4% in FY 07 as compared and water charges, and insurance charges, expenditure on EPS Total Loans as on 31st March 2007 6006 to 33.4% in FY 06. This was on account of lower average advertisement and publicity and sales and business spend per patron and higher F&B costs at new cinemas Basic Earnings per share (EPS) of the Company was promotion, expenditure incurred on various administrative Rs.4.12 in FY 07 as compared to Rs. 2.62 in FY 06. Unsecured Loans opened by the Company in Aurangabad, Latur, Lucknow and other overheads such as travelling, printing & The unsecured loans as on 31st March 2007 were NIL and Indore. stationery, professional fees, communication expenses, Diluted Earnings per share (EPS) of the Company was Personnel Cost bank charges and charges for prepayment of term loans. Rs.4.12 in FY 07 as compared to Rs.2.62 in FY 06. Fixed Assets Personnel cost is the expenditure incurred on The total Operating and other expenses for the year The Company’s gross block stood at Rs.16978 lacs as st employees and comprises salaries, wages and allowances, under review was Rs. 6,351 lacs as compared to Rs. 3960 Balance Sheet Review on 31 March, 2007, compared with Rs.10095 lacs as at contributions to provident and other funds, gratuity lacs in previous year, due to increase in number of cinema 31st March, 2006. The increase was primarily due to fresh Shareholders Fund payments, staff welfare costs, and recruitment and training properties. As a percentage of net operating revenue, capital investments in new multiplex projects and some costs. For our cinema staff, we have a group incentive Operating and other expenses were 38.7% in FY 07, as The maintenance of an appropriate level of capital to recurring capital expenditure at existing cinemas. compared to 38.4% in FY 06. fund, the huge expansion plans of the Company remains system for each of our cinemas, wherein we give monthly In addition, the Capital Work in Progress on various one of the major priorities of the management and the incentives to our cinema staffs on their exceeding the Financial Expenses projects under execution declined from Rs.4393 lacs in same is subject to review on an ongoing basis. The monthly targets of the cinemas managed by them. Total 2005-06 to Rs.1443 lacs in 2006-07 and Pre-operative Financial expenses for the year under review was Entertainment Industry, especially the filmed entertainment Personnel costs for the year under review were Rs.1927 expenses pending capitalisation declined from Rs.1418 lacs Rs.550 lacs as compared to Rs. 323 lacs in previous year. sector is poised for a major growth in the coming years and lacs as compared to Rs.1216 lacs in previous year. As a % in 2005-06 to Rs.379 lacs in 2006-07. of net Revenue from operations, Personnel costs were As a percentage of net revenue from operations, Financial your Company intends to play a major role in this space. 11.7% in FY 07 as compared to 11.8% in FY 06. expenses were increased to 3.3% in FY 07 as compared Investments to 3.1 % in FY 06. • Share Capital Till March 31, 2006 Company was providing for leave The Company’s investments as on 31st March, 2007 The equity share capital of the Company comprises of benefits based on actuarial valuation in accordance with old Depreciation and Amortization were Rs. 6290 lacs and comprised of 23,013,870 equity shares having face value of Rs.10 each Accounting Standard 15. In the current year, the Company Depreciation and amortization for the year under and 20,000,000 preference shares having face value of • Investments in equity share capital of subsidiary has opted for early adoption of the Accounting Standard 15 review was Rs. 1242 lacs as compared to Rs. 707 lacs in Rs.10 each. companies – M/s CR Retail Malls (India) Private Limited (Revised 2005) which is otherwise mandatory for previous year. This increase was due to the charging of Rs.2000 lacs and in M/s PVR Pictures Limited Rs.150 lacs; accounting periods commencing on or after December 7, depreciation on fixed assets relating to our new cinemas In terms of The ESOS Scheme , the Company has allotted 2006. Accordingly the Company has changed the basis of opened in fiscal FY 07 as well as full year impact of 38,000 and 98,500 equity shares in its Board Meeting held on • Investments in Mutual fund schemes Rs. 4084 lacs and providing short term leave benefits. As a result, properties which operated for a part of fiscal FY 06. As a January 31, 2007 and March 31, 2007 respectively. Further, the • Investments in National Savings Certificate schemes actuarial valuation of leave as at April 1, 2006 is higher by percentage of net revenue from operations, Depreciation Company has during the year ended March 31, 2007 forfeited Rs.56 lacs Rs. 2.70 Lacs (net of income-tax Rs. 1.37 Lacs) which in and amortization expenses were 7.5% in FY 07as options equivalent to 33,500 shares on resignation of the accordance with the transitional provision in the revised compared to 6.8% in FY 06. concerned staff, prior to vesting date of options given under Loans and Advances Accounting Standard, has been adjusted to the opening Employee Stock Option Scheme. As a result , the share capital Depreciation for the year under review is after reversal The total loans and advances of the Company as on balance of Profit and Loss Account. This change does not stands increased to 23,013,870 equity shares as on March st of excess depreciation of Rs . 66 Lacs (Rs. 44 lacs net of 31 March,2007 were Rs.6750 lacs as against Rs.5283 have material impact on the profit for the current year. 31st, 2007 st income tax) provided till last year. lacs as on 31 March, 2006. The increase in loans and ESOS • Reserves and Surplus advances during the year was on account of payment of Taxation deposits to various developers for new multiplex projects In terms of the ESOS Scheme , the Company has Reserves and Surplus comprised of Share Premium The Company provided Rs. 419 lacs as provision for being signed by the Company, advances given for various alloted 38,000 and 98,500 equity shares in its Board account and Free Reserves of the Company. projects under construction and an advance of Rs 1180 26 tax for the year under review after taking into consideration 27 lacs given to M/s PVR Pictures Ltd, a 100% subsidiary of horizontally and vertically by strengthening its presence in the Company. film exhibition, distribution and production business besides entering into innovative retail entertainment concepts. Working Capital With several opportunities yet to be tapped in the The Company has a negative working capital cycle. filmed entertainment space, the Company expects to Most of the Company’s revenue from ticket sales and food derive a greater operating leverage out of its investments and beverage sales at the cinemas is collected in cash. The with the objective of maximising shareholders’ wealth. total working capital of the Company (excluding cash and bank balances and Loans and Advances) as on 31st March, Cautionary Statement 2007 was negative Rs. 2,425 lacs as compared to negative Statements in the Management Discussion and Analysis Rs.2442 lacs as on 31st March, 2006. Report with regard to projections, estimates and The amount of Current Liabilities and Provisions expectations have been made in good faith. Many predominantly represented the amount payable to unforeseen factors may come into play and affect the actual Company’s creditors for expenses incurred by the results, which could be different from what the Company pertaining to day to day operations, income management envisages in terms of performance and received in advance from sale of advertisement spaces at outlook. Market data and product information contained in Company’s multiplexes and project creditors who have this report have been based on information gathered from rendered services pertaining to Company’s multiplexes. various published and unpublished reports and their accuracy, reliability and completeness cannot be assured. Internal control systems and their adequacy The management of the Company reserves the right to The Company has proper and adequate systems of revisit any of the predictive statements to decide the best internal controls in commensuration with the size of its course of action for the maximisation of shareholders’ operations for various aspects of its business, which form value apart from meeting social and human obligations. the backbone of our operational and internal controls. Control over daily cash collections is done through an effective cash management system, stocks are verified regularly on a weekly basis. Bulk of our fixed assets are typical to a cinema and do not involve frequent cross location movements. We have a policy of physically verifying fixed assets every alternate year. The Company has effective systems in place for ensuring, optimum and effective utilisation of resources, monitoring thereof and compliance with applicable laws. The Company has engaged M/s KPMG (Regd.) as its internal auditors to carry out independent audits of our operations, systems and processes. In addition, the company tries to measure the effectiveness of internal controls through internal audit checks conducted by its own staff covering areas like safety, security, stores, cash control, food and beverage sales etc. In addition to the above, the Company has also hired an external agency to review and audit the quality of service and efficiency in operations at its cinemas. We also have a formal mystery customer feedback system, acting as an effective tool for bringing improvement in vrious aspects of our business. Outlook The Company continues to be recognised by its customers across the country as a preferred movie going destination, preferred multiplex operator by leading mall developers and the film industry. In view of this, the company is making substantial capital investments to grow 28 lacs given to M/s PVR Pictures Ltd, a 100% subsidiary of horizontally and vertically by strengthening its presence in the Company. film exhibition, distribution and production business besides entering into innovative retail entertainment concepts. Working Capital With several opportunities yet to be tapped in the The Company has a negative working capital cycle. filmed entertainment space, the Company expects to Most of the Company’s revenue from ticket sales and food derive a greater operating leverage out of its investments and beverage sales at the cinemas is collected in cash. The with the objective of maximising shareholders’ wealth. total working capital of the Company (excluding cash and bank balances and Loans and Advances) as on 31st March, Cautionary Statement 2007 was negative Rs. 2,425 lacs as compared to negative Statements in the Management Discussion and Analysis Rs.2442 lacs as on 31st March, 2006. Report with regard to projections, estimates and The amount of Current Liabilities and Provisions expectations have been made in good faith. Many predominantly represented the amount payable to unforeseen factors may come into play and affect the actual Company’s creditors for expenses incurred by the results, which could be different from what the Company pertaining to day to day operations, income management envisages in terms of performance and received in advance from sale of advertisement spaces at outlook. Market data and product information contained in Company’s multiplexes and project creditors who have this report have been based on information gathered from rendered services pertaining to Company’s multiplexes. various published and unpublished reports and their accuracy, reliability and completeness cannot be assured. Internal control systems and their adequacy The management of the Company reserves the right to The Company has proper and adequate systems of revisit any of the predictive statements to decide the best internal controls in commensuration with the size of its course of action for the maximisation of shareholders’ operations for various aspects of its business, which form value apart from meeting social and human obligations. ReportReportonon the backbone of our operational and internal controls. Control over daily cash collections is done through an effective cash management system, stocks are verified CorporateCorporate regularly on a weekly basis. Bulk of our fixed assets are typical to a cinema and do not involve frequent cross location movements. We have a policy of physically verifying GovernanceGovernance fixed assets every alternate year. The Company has effective systems in place for ensuring, optimum and effective utilisation of resources, monitoring thereof and compliance with applicable laws. The Company has engaged M/s KPMG (Regd.) as its internal auditors to carry out independent audits of our operations, systems and processes. In addition, the company tries to measure the effectiveness of internal controls through internal audit checks conducted by its own staff covering areas like safety, security, stores, cash control, food and beverage sales etc. In addition to the above, the Company has also hired an external agency to review and audit the quality of service and efficiency in operations at its cinemas. We also have a formal mystery customer feedback system, acting as an effective tool for bringing improvement in vrious aspects of our business. Outlook The Company continues to be recognised by its customers across the country as a preferred movie going destination, preferred multiplex operator by leading mall developers and the film industry. In view of this, the company is making substantial capital investments to grow 28 29 Company’s Philosophy on The Company has an Executive Chairman and the Corporate Governance number of the independent directors is not less than half of total number of Directors. The composition of the Board PVR has always believed that Corporate Governance is is in conformity with Clause 49 of the Listing Agreement. more a way of business life than a mere legal compulsion. It is the application of best management practices, None of the Directors on the Board is a member of Compliance of law in true letter and spirit and adherence to more than 10 Committees and Chairman of more than ethical standards for effective management discharge of 5 Committees (as specified in Clause 49), across all the social responsibilities for sustainable development of all companies in which he is a Director. stakeholders. The necessary disclosures regarding other directorships The Company has made a strong foundation for and committee positions have been made by the Directors. making Corporate Governance a way of life by constituting The Company’s definition of independent a Board with balanced mix of experts of eminence and directors integrity, forming a core group of top level executives, inducting competent professionals across organization and An Independent director shall mean a non-executive putting in place best system, process and technology. director of the Company who:

The Company is committed to pursue growth by a) apart from receiving director’s remuneration, does not adhering to the highest standards of Corporate have any material pecuniary relation or transaction with the Governance. The Company’s philosophy on Corporate Company, its promoters, its directors, its senior Governance is based on the following principles: management or its holding company, its subsidiaries and associates that may affect independence of the director; • Lay solid foundations for the management b) is not related to promoters or persons occupying • Structure the Board to add value management positions at the Board level or at one level • Safeguard integrity in Company’s financial reporting below the Board;

• Make timely and balanced disclosure c) has not been an executive of the Company in the immediately preceding three financial years; • Recognize and manage business risks d) is not a partner or an executive or was not a partner or • Respect the right of shareholders an executive during the preceding three years, of any of the following: • Remunerate fairly and responsibly i) the statutory audit firm or the internal audit firm that is • Legal and statutory compliance in its true spirit associated with the Company, and

• Highest importance to Investor Relations ii) the legal firm(s) and consulting firm(s) that have a material association with the Company. • Adherence to Corporate ethics and Code of Conduct e) is not a material supplier, service provider or customer or a lessor or lessee of the Company, which may affect Board of Directors independence of the Director; and f) is not a substantial shareholder of the Company i.e. Composition of the Board owning two percent or more of the block of voting The current policy of the Company is to have an shares. appropriate mix of executive and independent directors on the Board for effective management of the Company.

The Board of the Company is comprised of six members, out of whom two members are Executive Directors and four members are Non Executive Directors. The Non Executive Directors bring in a wide range of skills and experience to the Board. The resume of each of our directors is available on the website of the Company at 30 www.pvrcinemas.com Company’s Philosophy on The Company has an Executive Chairman and the The table below sets out the names of directors, status and number of directorship held in other companies. number of the independent directors is not less than half of 2 Corporate Governance total number of Directors. The composition of the Board Name of the Category Shareholding Number Number of Committee No. of Board attendance Director in the of other Memberships and Meetings at the last PVR has always believed that Corporate Governance is is in conformity with Clause 49 of the Listing Agreement. Company Directorships1 Chairmanship in all attended AGM held more a way of business life than a mere legal compulsion. It (No. of Companies including during the on Sept. 6, is the application of best management practices, None of the Directors on the Board is a member of Shares)PVR Limited year 2006 Compliance of law in true letter and spirit and adherence to more than 10 Committees and Chairman of more than 5 Committees (as specified in Clause 49), across all the Member- Chairman- ethical standards for effective management discharge of ships ship companies in which he is a Director. social responsibilities for sustainable development of all Ajay Bijli Promoter, 18172 2 1 - 7 Yes stakeholders. The necessary disclosures regarding other directorships Executive director Sanjeev Kumar Executive director - 2 - - 6 Yes The Company has made a strong foundation for and committee positions have been made by the Directors. making Corporate Governance a way of life by constituting Sumit Chandwani Non Executive, - 3 3 - 3 Yes The Company’s definition of independent Nominee (ICICI a Board with balanced mix of experts of eminence and directors Venture Funds integrity, forming a core group of top level executives, Management inducting competent professionals across organization and An Independent director shall mean a non-executive Company Ltd.) putting in place best system, process and technology. director of the Company who: Vikram Bakshi Independent - 4 1 - 4 Yes The Company is committed to pursue growth by a) apart from receiving director’s remuneration, does not Amit Burman Independent - 73 - 2 Yes adhering to the highest standards of Corporate have any material pecuniary relation or transaction with the Renaud Jean Independent - - 1 - 1 No Governance. The Company’s philosophy on Corporate Company, its promoters, its directors, its senior Palliere3 Governance is based on the following principles: management or its holding company, its subsidiaries and associates that may affect independence of the director; 1. The directorships held by the directors, as mentioned above, do not include the directorships held in foreign companies, • Lay solid foundations for the management private limited companies and companies under Section 25 of the Companies Act. b) is not related to promoters or persons occupying • Structure the Board to add value management positions at the Board level or at one level 2. The committees considered for the purpose are those prescribed under Clause 49(1)(C)(ii) of the Listing Agreement(s) viz. Audit Committee and Investor Grievance Committee of Indian Public Limited Companies. • Safeguard integrity in Company’s financial reporting below the Board; 3. Mr. Renaud Jean Palliere was appointed as a member of the Audit Committee on March 31, 2007. • Make timely and balanced disclosure c) has not been an executive of the Company in the immediately preceding three financial years; • Recognize and manage business risks Number of Board Meetings • Fatal or serious accidents, dangerous occurrences; d) is not a partner or an executive or was not a partner or During the year under review Board met seven times an executive during the preceding three years, of any of the • Any material default in financial obligations to and by the • Respect the right of shareholders on April 24, 2006; May 15, 2006; July 31, 2006; following: Company or substantial non-payment for services provided • Remunerate fairly and responsibly October 31, 2006; January 31, 2007; March 16, 2007 by the Company; i) the statutory audit firm or the internal audit firm that is and March 31, 2007. and the maximum gap between any • Legal and statutory compliance in its true spirit associated with the Company, and two meetings did not exceed four months as stipulated • Any issue, which involves possible public or product under clause 49. liability claims of substantial nature, if any • Highest importance to Investor Relations ii) the legal firm(s) and consulting firm(s) that have a material association with the Company. Information available to the Board • Details of any joint venture or collaboration agreement; • Adherence to Corporate ethics and Code of Conduct e) is not a material supplier, service provider or customer The Board has complete access to all the relevant • Transactions involving substantial payment towards or a lessor or lessee of the Company, which may affect information within the Company. The information regularly goodwill, brand equity, or intellectual property. independence of the Director; and supplied to the Board includes the following: Board of Directors • Significant labour problems and their proposed solutions. f) is not a substantial shareholder of the Company i.e. • Annual operating plans, budgets and any updates therein; Composition of the Board • Sale of material nature of investments, subsidiaries, owning two percent or more of the block of voting • Capital budgets and any updates therein; assets, which is not in normal course of business. The current policy of the Company is to have an shares. appropriate mix of executive and independent directors on • Quarterly results for the Company and its operating • Material non-compliance of any regulatory, statutory listing the Board for effective management of the Company. divisions or business segments; requirement and shareholders services such as non- payment of dividend, delay in share transfer etc. The Board of the Company is comprised of six • Minutes of meetings of audit committee and other members, out of whom two members are Executive committees of the Board; • Details of investment of surplus funds available with the Directors and four members are Non Executive Directors. Company The Non Executive Directors bring in a wide range of skills • Information on recruitment/remuneration of senior and experience to the Board. The resume of each of our officers just below the Board level; • Minutes of the Board Meetings of the subsidiary directors is available on the website of the Company at companies • Material show cause, demand, prosecution notices and www.pvrcinemas.com 30 penalty notices, if any ; 31 The above information is generally provided as part of the Companies Act, 1956, the agenda papers of the Board meeting and /or is placed at the Company is required to the table during the course of the meeting. The president pay an all inclusive severance and other senior management staff are also invited to the pay equal to salary and perks Board meetings to present reports on the Company’s as defined above for the entire operations and internal control systems. remaining period of employment or 12 months The Company in consultation with the Chairman, whichever is higher. prepares the agenda. All Board members are at liberty to suggest agenda items for inclusion. The detailed Non Executive Directors agenda is sent to the members a week before the Board During the year under review, the Non- Executive meeting date. Directors of the company were paid remuneration for Remuneration of Directors attending meetings of the Board/Committee of the Directors as follows: Executive Directors Name of the Directors Remuneration Rs. The details of the remuneration and perquisites to the Mr. Amit Burman 100,000/- Executive Directors are as under: Mr. Renaud Jean Palliere 20,000/- Mr. Ajay Bijli, Chairman cum Managing Director (CMD) Mr. Sumit Chandwani* 180,000/- and Mr. Sanjeev Kumar, Executive Director of the company were paid following remuneration and perquisites during Mr. Vikram Bakshi 140,000/- the year under review, value of which has been calculated as *Remuneration to Mr. Sumit Chandwani was paid to per Income Tax Act, 1961 and approval whereof has been ICICI Venture Funds Management Co. Ltd. by virtue of his granted by the Ministry of Company Affairs vide its letter being a nominee Director. No. 2/50/2005-CL. VII dated August 16, 2005: The company does not have any direct pecuniary Mr. Ajay Bijli Mr. Sanjeev Kumar relationship/transaction with any of its Non Executive Rs. Rs. Directors Basic Salary 57,60,000 30,60,000 Code of Conduct Perquisites 41,73,600 22,29,600 The Board has laid down a Code of Conduct for all Total 99,33,600 52,89,600 Board members and senior management of the Company, Perquisites include Company leased accommodation/ which is also available on the website of the Company HRA, Company maintained car, Employer’s Provident Fund www.pvrcinemas.com . All Board members and senior contribution management, that includes company executives who report directly to the Chairman and executive directors, have Salient features of the agreements executed by the affirmed their compliance with the said Code. A declaration Company with Mr. Ajay Bijli, Chairman cum Managing signed by the Chief Executive Officer to this effect is Director and Mr. Sanjeev Kumar, Executive Director are as provided elsewhere in the Annual Report. follows: Committees of the Board Period of Appointment July 24, 2003 to July 23, 2008 The Board has constituted various committees for Stock Options Nil smooth and efficient conduct of business. The minutes of Incentives additionally The CMD and Executive the meetings of the committees of directors are placed in approved Director shall be additionally the succeeding Board meeting for the Board to take note entitled to performance based of the same. incentive as approved by the Audit Committee Board based on previous year’s performance As on March 31, 2007, the Audit Committee comprises of four directors all being Non Executive and Severance Pay Except where the agreement majority being Independent. The Chief Financial Officer and is terminated without notice, the statutory auditors are the permanent invitees in the subject to the provisions of Committee meetings. 32 The above information is generally provided as part of the Companies Act, 1956, The terms of reference of the Audit committee are as k. To look into the reasons for substantial defaults in the the agenda papers of the Board meeting and /or is placed at the Company is required to follows: payment to the depositors, debenture holders, the table during the course of the meeting. The president pay an all inclusive severance shareholders (in case of non payment of declared and other senior management staff are also invited to the pay equal to salary and perks 1. The powers of the Audit committee shall include the dividends) and creditors. Board meetings to present reports on the Company’s as defined above for the entire following l. To review the functioning of the Whistle Blower operations and internal control systems. remaining period of a. To investigate any activity within its terms of reference. employment or 12 months mechanism, in case the same is existing. The Company in consultation with the Chairman, whichever is higher. b. To seek information from any employee. prepares the agenda. All Board members are at liberty m. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. to suggest agenda items for inclusion. The detailed Non Executive Directors c. To obtain outside legal or other professional advice. agenda is sent to the members a week before the Board During the year under review, the Non- Executive Composition and Attendance meeting date. d. To secure attendance of outsiders with relevant Directors of the company were paid remuneration for expertise, if it considers necessary. Name of the No. of meetings Remuneration of Directors attending meetings of the Board/Committee of the Director attended Directors as follows: 2. The role of the audit committee shall include the Executive Directors Mr. Sumit Chandwani 3 Name of the Directors Remuneration Rs. following : Mr. Amit Burman 2 The details of the remuneration and perquisites to the Mr. Amit Burman 100,000/- a. Oversight of the company’s financial reporting Executive Directors are as under: process and the disclosure of its financial information to Mr. Vikram Bakshi 3 Mr. Renaud Jean Palliere 20,000/- ensure that the financial statement is correct, sufficient and Mr. Ajay Bijli, Chairman cum Managing Director (CMD) Mr. Renaud Jean Palliere* - Mr. Sumit Chandwani* 180,000/- credible. and Mr. Sanjeev Kumar, Executive Director of the company Mr. Vikram Bakshi 140,000/- were paid following remuneration and perquisites during b. Recommending to the Board, the appointment, * Mr. Renaud Jean Palliere was appointed as member of the Audit committee w.e.f. March 31, 2007. the year under review, value of which has been calculated as *Remuneration to Mr. Sumit Chandwani was paid to re-appointment and, if required, the replacement or per Income Tax Act, 1961 and approval whereof has been ICICI Venture Funds Management Co. Ltd. by virtue of his removal of the statutory auditor and the fixation of During the year under review the Audit Committee granted by the Ministry of Company Affairs vide its letter being a nominee Director. audit fees. met four times on May 15, 2006; July 31, 2006; No. 2/50/2005-CL. VII dated August 16, 2005: October 31, 2006; January 31, 2007 and the maximum The company does not have any direct pecuniary c. Approval of payment to statutory auditors for any other gap between any two meetings did not exceed four Mr. Ajay Bijli Mr. Sanjeev Kumar relationship/transaction with any of its Non Executive services rendered by the statutory auditors. months as stipulated under clause 49. Rs. Rs. Directors d. Reviewing, with the management, the annual financial Remuneration Committee Basic Salary 57,60,000 30,60,000 Code of Conduct statements before submission to the Board for approval. Perquisites 41,73,600 22,29,600 Terms of Reference The Board has laid down a Code of Conduct for all e. Reviewing, with the management, the quarterly Total 99,33,600 52,89,600 Board members and senior management of the Company, financial statements before submission to the board for The remuneration committee of the Board consists Perquisites include Company leased accommodation/ which is also available on the website of the Company approval; of three members, all of whom are independent www.pvrcinemas.com . All Board members and senior HRA, Company maintained car, Employer’s Provident Fund f. Reviewing, with the management, performance of directors. The Remuneration committee has been management, that includes company executives who report contribution statutory and internal auditors, and adequacy of the internal constituted for the determination of remuneration directly to the Chairman and executive directors, have control systems. packages of the Directors. Salient features of the agreements executed by the affirmed their compliance with the said Code. A declaration Company with Mr. Ajay Bijli, Chairman cum Managing signed by the Chief Executive Officer to this effect is g. Reviewing the adequacy of internal audit function, Composition Director and Mr. Sanjeev Kumar, Executive Director are as provided elsewhere in the Annual Report. if any, including the structure of the internal audit Name of the Director follows: department, staffing and seniority of the official heading the Committees of the Board Mr. Amit Burman Period of Appointment July 24, 2003 to July 23, 2008 department, reporting structure coverage and frequency of The Board has constituted various committees for internal audit. Mr. Vikram Bakshi Stock Options Nil smooth and efficient conduct of business. The minutes of h. Discussion with internal auditors reqarding any Mr. Renaud Jean Palliere Incentives additionally The CMD and Executive the meetings of the committees of directors are placed in significant findings and follow up there on. During the year ended March 31, 2007, no approved Director shall be additionally the succeeding Board meeting for the Board to take note Committee meeting was held as there was no proposal entitled to performance based of the same. i. Reviewing the findings of any internal investigations by the internal auditors into matters where there is for variation in the remuneration of Executive Directors. incentive as approved by the Audit Committee Board based on previous suspected fraud or irregularity or a failure of internal The Remuneration policy of the Company is aimed at year’s performance As on March 31, 2007, the Audit Committee control systems of a material nature and reporting the rewarding performance, based on review of the comprises of four directors all being Non Executive and matter to the Board. Severance Pay Except where the agreement achievements on a regular basis. The remuneration paid majority being Independent. The Chief Financial Officer and is terminated without notice, j. Discussion with statutory auditors before the audit to the Executive Directors is recommended by the the statutory auditors are the permanent invitees in the subject to the provisions of commences, about the nature and scope of audit as well as Remuneration Committee and approved by the Board of Committee meetings. post-audit discussion to ascertain any area of concern. Directors in the Board meeting, subject to the subsequent 32 33 approval by the shareholders at the general meeting and Dematerialisation/ 37 37 - such other authorities as and when required. Rematerialisation of shares

Shareholders/Investors Grievance Committee Receipt of DDs against 44 44 - Dividend warrants Terms of Reference Non-receipt of refund 45 45 - The Investors Grievance Committee focuses on orders shareholders’ grievances and strengthening of investor Receipt of DD against 79 79 - relations. It looks into various investor complaints like Refund order from transfer of shares, non-receipt of annual reports and Company/Bank other such issues. Miscellaneous 169 169 - correspondence/ Composition and Attendance complaints

The Investor Grievance Committee comprises of Total 435 435 - three directors, two of whom are non-executive directors. Compensation Committee

Name of the No. of meetings Terms of Reference Director attended The Compensation Committee has been constituted Mr. Ajay Bijli 4 for the purposes of administering and supervising the ESPS Mr. Amit Burman 1 and ESOS and for determination of all such matters specified in the ESPS and ESOS. Mr. Sumit Chandwani 3 During the year under review the Investors Name of the Director Grievance Committee met four times on Mr. Vikram Bakshi May 15, 2006; July 31, 2006; October 31, 2006; January 31, 2007. Mr. Amit Burman Mr. Sumit Chandwani The Company Secretary, being the Compliance Officer, is entrusted with the responsibility, to look into During the year ended March 31, 2007, no the redressal of the Shareholders and investors Committee meeting was held as no fresh options were complaints and report the same to the Investor granted under PVR ESOS. Grievance Committee.

Details of complaints/ queries received and resolved during the financial year 2006-07 are as follows:

Nature of Complaints Number of Complaints/ Complaints/ complaints/ Queries Queries Queries resolved pending received during the Excess/ during the year during the year year

Excess/Short payment of 1 1 - Dividend

Non-receipt of Securities 1 1 -

Non-receipt of Annual 2 2 - Report Non-receipt of 4 4 - Dividend Warrants Non-receipt of Electronic 17 17 - Credits

Receipt of Refund orders 36 36 - for revalidations 34 approval by the shareholders at the general meeting and Dematerialisation/ 3737 - General Body Meetings such other authorities as and when required. Rematerialisation of shares Details of the last three Annual General Meetings (AGMs) of the Company are as under: Shareholders/Investors Grievance Committee Receipt of DDs against 44 44 - Financial Day & Date Time Venue Special Resolutions passed Dividend warrants Terms of Reference Year Non-receipt of refund 45 45 - 2003-04 Wednesday, 11:00 A.M. 50, West Regal Building, - The Investors Grievance Committee focuses on orders September 29, Connaught Place, 2004 New Delhi – 110001 shareholders’ grievances and strengthening of investor Receipt of DD against 79 79 - relations. It looks into various investor complaints like Refund order from 2004-05 Friday, 12:00 Noon 61, Basant Lok, - transfer of shares, non-receipt of annual reports and Company/Bank September 30, Vasant Vihar, other such issues. 2005 New Delhi – 110057 Miscellaneous 169 169 - correspondence/ Composition and Attendance 2005-06 Wednesday, 9:30 A.M. 61, Basant Lok, (i) Increasing the FII Shareholding complaints September 6, Vasant Vihar, limit under Foreign Exchange The Investor Grievance Committee comprises of 2006 New Delhi - 110057Management Act, 1999; Total 435 435 - (ii) Utilization of IPO funds in a three directors, two of whom are non-executive manner other than that directors. Compensation Committee mentioned in the prospectus.

Name of the No. of meetings Terms of Reference Director attended Special Resolution passed during the year The Compensation Committee has been constituted through postal ballot: Postal ballot forms 88 6,077 0.04% (of Mr. Ajay Bijli 4 with dissent for valid postal for the purposes of administering and supervising the ESPS the Resolution ballots received) During the year under review, the Company has Mr. Amit Burman 1 and ESOS and for determination of all such matters specified in the ESPS and ESOS. conducted a postal ballot for seeking approval of the The Chairman after receiving the Scrutinizer’s report Mr. Sumit Chandwani 3 shareholders by way of Special Resolution in pursuance to announced that the Special Resolution as per the Postal Section 192A of the Companies Act, 1956 and During the year under review the Investors Name of the Director Ballot Notice was duly passed with requisite majority Companies (Passing of the Resolution by Postal Ballot) Grievance Committee met four times on and directed that the resolution be recorded in the Mr. Vikram Bakshi Rules, 2001. May 15, 2006; July 31, 2006; October 31, 2006; minutes book. January 31, 2007. Mr. Amit Burman The notice of the postal ballot was published in Subsidiary Companies Mr. Sumit Chandwani Financial Express (English daily) and Jansatta (Vernacular The Company Secretary, being the Compliance newspaper). Officer, is entrusted with the responsibility, to look into The revised clause 49 of the listing agreement defines During the year ended March 31, 2007, no the redressal of the Shareholders and investors a “Material Non Listed Indian Subsidiary” as an unlisted Committee meeting was held as no fresh options were M/s Sameet Gambhir & Associates, Company complaints and report the same to the Investor subsidiary, incorporated in India whose turnover or net granted under PVR ESOS. Secretaries, New Delhi were appointed as scrutinizer by Grievance Committee. worth (i.e. paid up capital and free reserves) exceeds the Board. Mr. Sameet Gambhir had submitted his report 20% of the consolidated turnover or net worth on January 24, 2007 and the results were declared by the Details of complaints/ queries received and resolved respectively of the listed holding company and its Company on January 25th 2007. during the financial year 2006-07 are as follows: subsidiary in the immediately preceding accounting year. The summary of the results are as follows: Nature of Complaints Number of Complaints/ Complaints/ We do not have any Material Non-Listed Indian complaints/ Queries Queries Subsidiary. Particulars No. No. of % Queries resolved pending Postal Shares received during the Excess/ Ballot during the year during the Disclosures Forms year year a) Related Party Transactions Total postal ballot 489 17,893,370 78.21% Excess/Short payment of 1 1 - forms received (of total paid up Dividend There were no materially significant related party capital) transactions i.e. transactions of the company of material Non-receipt of Securities 1 1 - Less: Invalid postal 18 1,243 0.01% (of nature, with its promoters, directors or the management Non-receipt of Annual 2 2 - ballot forms (as per postal ballots or their relatives, its subsidiaries etc. during the year, that Report register) received) may have potential conflict with the interests of the Non-receipt of 4 4 - Net valid postal ballot 471 17,892,127 99.99% (of Company at large. All related party transactions have been Dividend Warrants forms (as per postal ballots disclosed in the Notes to the Accounts appearing register) received) Non-receipt of Electronic 1717 - elsewhere in this report. Credits Postal ballot forms 383 17,866,050 99.96% (of with assent for valid postal Receipt of Refund orders 36 36 - the Resolution ballots received) for revalidations 34 35 b) Compliances made by the Company The Annual Results of the Company were published in the following newspapers : There were no non-compliances during the last three years by the Company of any matter related to News Papers Language Region Capital Market. Financial Express English Delhi, Mumbai, Bangalore, There were no penalties imposed or strictures Hyderabad, Chennai, passed on the Company by Stock Exchanges, SEBI or Ahmedabad, Kolkata, any other Statutory Authority. Chandigarh, Kochi

c) Compliance with this clause Jansatta Hindi Bihar, Jharkhand, Delhi, Lucknow, Varanasi & The Company has complied with all the mandatory Meerut requirements of Clause 49 of the Listing Agreement entered into with the stock exchanges. General Shareholders’ Information Management 1. Annual General Meeting : 18th day of August 2007 10:30 A.M. at 61, Basant Lok, Vasant Vihar, The Management’s Discussion and Analysis Report is New Delhi- 110057 given separately and forms part of this Annual Report. 2. Financial calendar : Tentative Schedule:

CMD/CFO Certification Accounting Year April to March Adoption of Quarterly Results for the Quarter The Certificate from Mr. Ajay Bijli, CMD and ended 3rd /4th Week of Mr. Nitin Sood, Vice President – Finance & Investor’s June 30, 2007, July, 2007 Relations in terms of clause 49 (V) of the listing agreement September 30, 2007 October, 2007 with the stock exchanges for the year under review as December 31, 2007 January, 2008 March 31, 2008 May, 2008 placed before the Board is enclosed at the end of this 3. Book Closure Date : 13.08.2007 to 18.08.2007 report. (both days inclusive)

Shareholders 4. Dividend Payment : No further Dividend has been Date recommended. a) Disclosures Regarding appointment / 5. Listing on stock : Bombay Stock Exchange Limited exchanges (BSE) re-appointment of Directors National Stock Exchange of India Limited (NSE) The information as required under clause 49 (G) of the 6. Stock Code : BSE Script Code: 532689; Listing agreement with respect to the appointment / re- NSE Symbol : PVR appointment of the directors forms part of the explanatory ISIN : INE191H01014 statement annexed with the Notice of the ensuing Annual 7. Market Price Data General Meeting and the same is attached with this report. Monthly High Low for the year under review

b) Means of Communication NSEBSE The Company interacts with its shareholders through Month High Low High Low multiple forms of corporate and financial communication Apr 06 335 291 336 298 such as annual reports, result announcement and media May 06 334 252 337 250 releases. These results are also made available at the web June 06 279 188 265 190 site of the company www.pvrcinemas.com. The web site July 06 254 204 264 206 also displays official news releases. Aug 06 268 215 275 221 Our financial results are also posted on SEBI’s EDIFAR Sep 06 272 235 272 205 System. Oct 06 265 235 263. 234 All material information about the Company is promptly Nov 06 275 231 268 231 sent through facsimile to the Stock Exchanges where the Dec 06 255 209 257 210 shares of the Company are listed. Jan 07 259 223 260 222 Feb 07 244 165 243 175 Mar 07 184 149 196 148 36 b) Compliances made by the Company The Annual Results of the Company were published in 8. Performance of PVR Share price in comparison to: the following newspapers : There were no non-compliances during the last NSE NIFTY INDEX BSE SENSEX three years by the Company of any matter related to News Papers Language Region Capital Market. Financial Express English Delhi, Mumbai, Bangalore, There were no penalties imposed or strictures Hyderabad, Chennai, passed on the Company by Stock Exchanges, SEBI or Ahmedabad, Kolkata, any other Statutory Authority. Chandigarh, Kochi

c) Compliance with this clause Jansatta Hindi Bihar, Jharkhand, Delhi, Lucknow, Varanasi & The Company has complied with all the mandatory Meerut requirements of Clause 49 of the Listing Agreement entered into with the stock exchanges. General Shareholders’ Information 1. Annual General Meeting : 18th day of August 2007 Management 10:30 A.M. at 61, Basant Lok, 9.Registrar and Transfer Agents : Vasant Vihar, The Management’s Discussion and Analysis Report is New Delhi- 110057 Karvy Computershare Private Limited (KCPL) Karvy House, 46, Avenue 4, Street, No.1, Banjara Hills, given separately and forms part of this Annual Report. 2. Financial calendar : Tentative Schedule: Hyderabad – 500 034, Tel : +91-40-233 12454, Fax : +91-40-2343 1551, Website : www.kcpl.karvy.com

Accounting Year April to March 10. Share Transfer System : CMD/CFO Certification Adoption of Quarterly Share transfers in physical form can be lodged with KCPL at the above mentioned address Results for the Quarter The Certificate from Mr. Ajay Bijli, CMD and ended 3rd /4th Week of 11. (a) Distribution Schedule Mr. Nitin Sood, Vice President – Finance & Investor’s June 30, 2007, July, 2007 PVR LIMITED Relations in terms of clause 49 (V) of the listing agreement September 30, 2007October, 2007 Consolidated Distribution Schedule as on March 31, 2007 with the stock exchanges for the year under review as December 31, 2007 January, 2008 March 31, 2008 May, 2008 placed before the Board is enclosed at the end of this 3. Book Closure Date : 13.08.2007 to 18.08.2007 Category No. of Cases % of Cases Total Shares Amount % of Amount report. (both days inclusive) (Amount) 1-5000 16237 98.049515% 876768 8767680 3.809737% Shareholders 4. Dividend Payment : No further Dividend has been Date recommended. 5001-10000 135 0.815217% 105040 1050400 0.456420% a) Disclosures Regarding appointment / 5. Listing on stock : Bombay Stock Exchange Limited 10001-20000 62 0.374396% 92112 921120 0.400246% exchanges (BSE) re-appointment of Directors National Stock Exchange of India 20001-30000 31 0.187198% 76941 769410 0.334324% Limited (NSE) 30001-40000 15 0.090580% 54212 542120 0.235562% The information as required under clause 49 (G) of the 6. Stock Code : BSE Script Code : 532689; Listing agreement with respect to the appointment / re- NSE Symbol : PVR 40001-50000 14 0.084541% 67216 672160 0.292067% appointment of the directors forms part of the explanatory ISIN : INE191H01014 50001-100000 21 0.126812% 154073 1540730 0.669479% statement annexed with the Notice of the ensuing Annual 7. Market Price Data 100001 & Above 45 0.271739% 21587508 215875080 93.802164% General Meeting and the same is attached with this report. Monthly High Low for the year under review Total 16560 100% 23013870 230138700 100% b) Means of Communication NSE BSE (b) Shareholding pattern The Company interacts with its shareholders through Month High Low High Low Consolidated Shareholding Pattern as on March 31, 2007 multiple forms of corporate and financial communication Apr 06 335 291 336 298 such as annual reports, result announcement and media May 06 334 252 337250 Sl. No. Category No. of Cases Total Shares % to Equity releases. These results are also made available at the web June 06 279 188 265 190 1 Promoters 3 9286351 40.35% site of the company www.pvrcinemas.com. The web site 2 Foreign Institutional Investors 12 7175397 31.18% July 06 254 204 264 206 also displays official news releases. 3 Mutual Funds 10 4197723 18.24% Aug 06 268 215 275 221 4 Resident Individuals 15717 1323657 5.75% Our financial results are also posted on SEBI’s EDIFAR Sep 06 272 235 272 205 5 Bodies Corporates 346 624667 2.71% System. Oct 06 265 235 263. 234 6 Financial Institutions / Banks 2 347331 1.51% All material information about the Company is promptly Nov 06 275 231 268 231 7 HUF 330 33724 0.15% sent through facsimile to the Stock Exchanges where the Dec 06 255 209 257210 8 Non-Resident Indian 95 18427 0.08% shares of the Company are listed. Jan 07259 223 260 222 9 Clearing Members 41 6356 0.03% Feb 07244 165 243 175 10 Trusts 4 237 0.00% Mar 07184 149 196 148 Total 16560 23013870 100% 36 37 18 PVR - Sahara Sahara Mall, Gurgaon, Haryana 19 PVR Talkies Latur, Maharashtra 20 PVR Talkies Aurangabad, Maharashtra 21 PVR Talkies Vadodara, Gujarat

15. Address for correspondence : Mr. N.C. Gupta Company Secretary PVR Limited

Registered Office : 61, Basant Lok, Vasant Vihar, New Delhi - 110057 12. Dematerialisation of shares and liquidity Corporate Office : Our Equity Shares are tradable in dematerialized form Block 2A, IInd Floor, since its listing. We have entered into agreement with both DLF Corporate Park, DLF Qutab Enclave, the depositories viz. National Securities Depository Limited Gurgaon, Haryana – 122002 (NSDL) and Central Depository Services (India) Limited Investor grievance email : [email protected] (CDSL) to facilitate trading in dematerialized form in India. Tel : +91-124-2549300 Fax : + 91-124-2549309 The breakup of Equity Share capital held with Website : www.pvrcinemas.com depositories and in physical form is as follows: Sl. Category No. of Total Shares % to Equity No. Holders

1 Physical 463 38,73,694 16.83 2 NSDL 13,933 18,962,960 82.40 3 CDSL 2,164 177,216 0.77

Total 16,560 23,013,870 100.0

13. No GDRs / ADRs / Warrants or any Convertible instruments have been issued by the Company during the year. 14. Site Locations

Sl. Name of Site Address No. 1 PVR - Saket Saket, New Delhi 2 PVR - Priya Vasant Vihar, New Delhi 3 PVR - Naraina Naraina, New Delhi 4 PVR - Vikaspuri Vikas Puri, New Delhi 5 PVR - Plaza Connaught Place, New Delhi 6 PVR - Rivoli Connaught Place, New Delhi 7 PVR - Metropolitan Gurgaon, Haryana 8 PVR – Crown Plaza Faridabad, Haryana 9 SRS - PVR Faridabad, Haryana 10 PVR - EDM Kaushambi, Ghaziabad, U.P. 11 PVR - Bangalore The Forum, Bangalore, Karnataka 12 PVR - Indore M.G. Road, Indore, M.P. 13 PVR - Sahara Ganj Sahara Ganj, Lucknow, U.P. 14 PVR - Juhu Juhu, Mumbai 15 PVR - Punjagutta Hyderabad, Andhra Pradesh 16 Spice PVR Noida, U.P. 17 PVR – Nirmal Lifestyle Mulund, Mumbai 38 18 PVR - Sahara Sahara Mall, Gurgaon, Haryana 19 PVR Talkies Latur, Maharashtra 20 PVR Talkies Aurangabad, Maharashtra 21 PVR Talkies Vadodara, Gujarat

15. Address for correspondence : Mr. N.C. Gupta Company Secretary PVR Limited CMD’s Registered Office : 61, Basant Lok, Vasant Vihar, New Delhi - 110057 Declaration 12. Dematerialisation of shares and liquidity Corporate Office : Our Equity Shares are tradable in dematerialized form Block 2A, IInd Floor, since its listing. We have entered into agreement with both DLF Corporate Park, DLF Qutab Enclave, the depositories viz. National Securities Depository Limited Gurgaon, Haryana – 122002 (NSDL) and Central Depository Services (India) Limited Investor grievance email : [email protected] (CDSL) to facilitate trading in dematerialized form in India. Tel : +91-124-2549300 Fax : + 91-124-2549309 The breakup of Equity Share capital held with Website : www.pvrcinemas.com depositories and in physical form is as follows: DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT Sl. Category No. of Total Shares % to Equity PERSONNEL WITH THE COMPANY’S CODE OF CONDUCT, PURSUANT TO CLAUSE 49 OF THE LISTING No. Holders AGREEMENT. 1 Physical 463 38,73,694 16.83 2 NSDL 13,933 18,962,960 82.40 3 CDSL 2,164 177,216 0.77

Total 16,560 23,013,870 100.0 It is hereby declared that all Board Members and senior management personnel have affirmed compliance with the Code of Conduct for the Directors and Senior Management in respect of Financial Year ended March 31, 2007. 13. No GDRs / ADRs / Warrants or any Convertible instruments have been issued by the Company during the year. 14. Site Locations Place : Gurgaon, Haryana Sl. Name of Site Address Ajay Bijli No. Date : June 6, 2007 Chairman CUM Managing Director 1 PVR - Saket Saket, New Delhi 2 PVR - Priya Vasant Vihar, New Delhi 3 PVR - Naraina Naraina, New Delhi 4 PVR - Vikaspuri Vikas Puri, New Delhi 5 PVR - Plaza Connaught Place, New Delhi 6 PVR - Rivoli Connaught Place, New Delhi 7PVR - Metropolitan Gurgaon, Haryana 8 PVR – Crown Plaza Faridabad, Haryana 9 SRS - PVR Faridabad, Haryana 10 PVR - EDM Kaushambi, Ghaziabad, U.P. 11 PVR - Bangalore The Forum, Bangalore, Karnataka 12 PVR - Indore M.G. Road, Indore, M.P. 13 PVR - Sahara Ganj Sahara Ganj, Lucknow, U.P. 14 PVR - Juhu Juhu, Mumbai 15 PVR - Punjagutta Hyderabad, Andhra Pradesh 16 Spice PVR Noida, U.P. 17PVR – Nirmal Lifestyle Mulund, Mumbai 38 39 CMD and CFO’s Certification

We, Ajay Bijli , CMD, and Nitin Sood, Vice-President - Finance & Investor’s Relations, PVR Limited, to the best of our knowledge and belief, certify that : 1. We have reviewed the financial statements and cash flow statements for the year and to the best of our knowledge and belief: (i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; (ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations. 2. To the best of our knowledge and belief, no transactions entered into by the Company during the year are fraudulent, illegal or violative of the Company’s code of conduct; 3. We are responsible for establishing and maintaining internal controls for financial reporting and have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and Audit Committee, wherever applicable: a) Deficiencies in the design or operation of internal controls, if any, which come to our notice and steps have been taken / proposed to be taken to rectify these deficiencies; b) Significant changes in internal control over financial reporting during the year; c) Significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; d) Instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting

Place : Gurgaon, Haryana Ajay Bijli Nitin Sood Date : June 6, 2007 Chairman cum Managing Director Vice-President — Finance & Investor’s Relations

40 Certificate on compliance with the conditions of Corporate Governance under Clause 49 (as amended) of the Listing Agreement.

To the Members of PVR Limited CMD and CFO’s 1. We have reviewed the implementation of Corporate Governance procedures by PVR Limited during the period ended March 31, 2007 with the relevant records and documents maintained by the Company, furnished to us for our review and the report on Corporate Governance as approved by the Board of Directors. Certification 2. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to a review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

3. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

4. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has in all respect complied with the conditions of Corporate Governance as stipulated in Clause 49 (as amended) of the listing agreements with the stock exchanges and that no investor grievance is pending for a period We, Ajay Bijli , CMD, and Nitin Sood, Vice-President - Finance & Investor’s Relations, PVR Limited, to the best of our exceeding one month against the Company as per the records maintained by the Investors’ Grievance Committee. knowledge and belief, certify that : 1. We have reviewed the financial statements and cash flow statements for the year and to the best of our knowledge and belief: For Pradeep Debnath & Co. Company Secretaries (i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; Pradeep Debnath (Proprietor) (ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing Place : New Delhi M. No.:20020, C.P. No.:7313 accounting standards, applicable laws and regulations. Date : June 6, 2007 2. To the best of our knowledge and belief, no transactions entered into by the Company during the year are fraudulent, illegal or violative of the Company’s code of conduct; 3. We are responsible for establishing and maintaining internal controls for financial reporting and have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and Audit Committee, wherever applicable: a) Deficiencies in the design or operation of internal controls, if any, which come to our notice and steps have been taken / proposed to be taken to rectify these deficiencies; b) Significant changes in internal control over financial reporting during the year; c) Significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; d) Instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting

Place : Gurgaon, Haryana Ajay Bijli Nitin Sood Date : June 6, 2007 Chairman cum Managing Director Vice-President — Finance & Investor’s Relations

40 41 Standalone Financial statements

42 Auditors’ Report to the Members of PVR Limited

1. We have audited the attached balance sheet of PVR vi. In our opinion and to the best of our information and Limited as at March 31, 2007 and also the profit and loss according to the explanations given to us, the said account and the cash flow statement for the year ended on statements of account give the information required by the that date annexed thereto. These financial statements are Companies Act, 1956, in the manner so required and give the responsibility of the Company’s management. a true and fair view in conformity with the accounting Our responsibility is to express an opinion on these principles generally accepted in India; financial statements based on our audit. a) in the case of the balance sheet of the state of affairs of 2. We conducted our audit in accordance with auditing the Company as at March 31, 2007; standards generally accepted in India. Those Standards b) in the case of the profit and loss account of the require that we plan and perform the audit to obtain profit of the Company for the year ended on that date; and reasonable assurance about whether the financial statements are free of material misstatement. An audit c) in the case of cash flow statement of the cash flows of includes examining, on a test basis, evidence supporting the the Company for the year ended on that date. amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used For S. R. Batliboi & Co. and significant estimates made by management, as well as Chartered Accountants evaluating the overall financial statement presentation. Standalone We believe that our audit provides a reasonable basis for per Anil Gupta our opinion. Partner 3. As required by the Companies (Auditor’s Report) Membership No.: 87921 Order, 2003 (as amended) issued by the Central Place: New Delhi Financial Government of India in terms of sub-Section (4A) of Dated: June 6, 2007 Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in statements paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; ii. In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. v. On the basis of written representations received from the directors as on March 31, 2007, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2007 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

42 43 Annexure referred to in paragraph 3 of our report of even date

Re: PVR LIMITED 301 of the Companies Act, 1956. Therefore, the provisions of clause 4(iii) (f) and (e) of the Companies (i) (a) The Company has maintained proper records (Auditor’s Report) Order, 2003 (as amended) are not showing full particulars including quantitative details and applicable to the Company. situation of fixed assets. (iv) In our opinion and according to the information and (b) All fixed assets were physically verified by the explanations given to us, there is an adequate internal management in the current year in accordance with a control system commensurate with the size of the planned programme of verifying them once in two years Company and the nature of its business, for the purchase which, in our opinion, is reasonable having regard to the of inventory and fixed assets and for the sale of goods and size of the Company and the nature of its assets. services. During the course of our audit, no major As informed, no material discrepancies were noticed on weakness has been noticed in the internal control system in such verification. respect of these areas. (c) There was no substantial disposal of fixed assets during (v) (a) According to the information and explanations the year. provided by the management, we are of the opinion that (ii) (a) The management has conducted physical the particulars of contracts or arrangements referred to in verification of inventory at reasonable intervals during Section 301 of the Companies Act, 1956 that need to be the year. entered into the register maintained under Section 301 (b) The procedures of physical verification of inventory have been so entered. followed by the management are reasonable and adequate (b) In our opinion and according to the information and in relation to the size of the Company and the nature of its explanations given to us, the transactions made in business. pursuance of such contracts or arrangements exceeding (c) The Company is maintaining proper records of value of Rupees five lacs have been entered into during the inventory and no material discrepancies were noticed on financial year at prices which are reasonable having regard to physical verification. the prevailing market prices at the relevant time. (iii) (a) The Company has granted unsecured loans to two (vi) The Company has not accepted any deposits from the companies covered in the register maintained under Section public. 301 of the Companies Act, 1956. The maximum amount (vii) In our opinion, the Company has an internal audit involved during the year was Rs. 489,571,296 and the system commensurate with the size and nature of its year end balance of loans granted is Rs. 218,000,000. business. (b) In our opinion and according to the information and (viii) To the best of our knowledge and as explained, the explanations given to us, the rate of interest and the other Central Government has not prescribed maintenance of terms and conditions of the loans are not prima-facie cost records under clause (d) of sub-section (1) of Section prejudicial to the interest of the Company. 209 of the Companies Act, 1956 for the products of the (c) The terms of repayment of the above loans has not Company. been stipulated, as the same are stated to be repayable on (ix) (a) Undisputed statutory dues including provident demand. The Company has received the repayment of the fund, investor education and protection fund, or loans as and when demanded by it. The receipt of interest employees’ state insurance, income-tax, sales-tax, has been regular. wealth-tax, service-tax, customs-duty, excise-duty, (d) There is no overdue amount of loans granted to cess have generally been regularly deposited with the aforesaid two companies listed in the register maintained appropriate authorities though there has been a slight delay under Section 301 of the Companies act, 1956. in a few cases. (e) As informed, the Company has not taken any loans, (b) According to the information and explanations given to secured or unsecured from companies, firms or other us, no undisputed amounts payable in respect of provident parties covered in the register maintained under Section fund, investor education and protection fund, employees’ 44 state insurance, income-tax, wealth-tax, service tax, sales- tax, customs duty, excise duty, cess and other undisputed register maintained under Section 301 of the Companies Annexure referred to in paragraph 3 statutory dues were outstanding, at the year end, for a Act, 1956. of our report of even date period of more than six months from the date they (xix) The Company did not have any outstanding became payable. debentures during the year. (c) According to the information and explanations given to (xx) We have verified that the end use of money raised by us, there are no dues of income tax, sales-tax, wealth tax, public issues is as disclosed in the notes to the financial service tax, customs duty, excise duty and cess which have Re: PVR LIMITED 301 of the Companies Act, 1956. Therefore, the statements (Refer Note No. 9.2 of Schedule 24). provisions of clause 4(iii) (f) and (e) of the Companies not been deposited on account of any dispute. (i) (a) The Company has maintained proper records (xxi) Based upon the audit procedures performed for the (Auditor’s Report) Order, 2003 (as amended) are not (x) The Company has no accumulated losses at the end of showing full particulars including quantitative details and purpose of reporting the true and fair view of the financial applicable to the Company. the financial year and it has not incurred cash losses in the situation of fixed assets. statements and as per the information and explanations (iv) In our opinion and according to the information and current and immediately preceding financial year. (b) All fixed assets were physically verified by the given by the management, we report that no fraud on or by explanations given to us, there is an adequate internal management in the current year in accordance with a (xi) Based on our audit procedures and as per the the Company has been noticed or reported during the control system commensurate with the size of the planned programme of verifying them once in two years information and explanations given by the management, we course of our audit. Company and the nature of its business, for the purchase which, in our opinion, is reasonable having regard to the are of the opinion that the Company has not defaulted in of inventory and fixed assets and for the sale of goods and size of the Company and the nature of its assets. repayment of dues to banks. The Company did not have services. During the course of our audit, no major As informed, no material discrepancies were noticed on any loan from financial institutions and outstanding For S. R. Batliboi & Co. weakness has been noticed in the internal control system in such verification. debentures during the year. Chartered Accountants respect of these areas. (xii) According to the information and explanations given to (c) There was no substantial disposal of fixed assets during per Anil Gupta (v) (a) According to the information and explanations us and based on the documents and records produced to the year. Partner provided by the management, we are of the opinion that us, the Company has not granted loans and advances on Membership No.: 87921 (ii) (a) The management has conducted physical the particulars of contracts or arrangements referred to in the basis of security by way of pledge of shares, debentures verification of inventory at reasonable intervals during Section 301 of the Companies Act, 1956 that need to be and other securities. the year. entered into the register maintained under Section 301 Place : New Delhi have been so entered. (xiii) In our opinion, the Company is not a chit fund or a Date : June 6, 2007 (b) The procedures of physical verification of inventory nidhi / mutual benefit fund / society. Therefore, the followed by the management are reasonable and adequate (b) In our opinion and according to the information and provisions of clause 4(xiii) of the Companies (Auditor’s in relation to the size of the Company and the nature of its explanations given to us, the transactions made in Report) Order, 2003 (as amended) are not applicable to business. pursuance of such contracts or arrangements exceeding the Company. value of Rupees five lacs have been entered into during the (c) The Company is maintaining proper records of (xiv) In respect of dealing/trading in units of mutual funds, in inventory and no material discrepancies were noticed on financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time. our opinion and according to the information and physical verification. explanations given to us, proper records have been (iii) (a) The Company has granted unsecured loans to two (vi) The Company has not accepted any deposits from the maintained of the transactions and contracts and timely companies covered in the register maintained under Section public. entries have been made therein. The units have been held 301 of the Companies Act, 1956. The maximum amount (vii) In our opinion, the Company has an internal audit by the Company, in its own name. involved during the year was Rs. 489,571,296 and the system commensurate with the size and nature of its (xv) According to the information and explanations given to year end balance of loans granted is Rs. 218,000,000. business. us, the Company has given guarantee for loans taken by a (b) In our opinion and according to the information and (viii) To the best of our knowledge and as explained, the subsidiary company from a financial institution, the terms explanations given to us, the rate of interest and the other Central Government has not prescribed maintenance of and conditions whereof in our opinion are not prima-facie terms and conditions of the loans are not prima-facie cost records under clause (d) of sub-section (1) of Section prejudicial to the interest of the Company. prejudicial to the interest of the Company. 209 of the Companies Act, 1956 for the products of the (xvi) Based on information and explanations given to us by (c) The terms of repayment of the above loans has not Company. the management, out of proceeds of term loans from a been stipulated, as the same are stated to be repayable on (ix) (a) Undisputed statutory dues including provident bank of Rs. 100,000,000, unutilised amounts aggregating demand. The Company has received the repayment of the fund, investor education and protection fund, or to Rs. 64,028,472, were lying in bank accounts/mutual loans as and when demanded by it. The receipt of interest employees’ state insurance, income-tax, sales-tax, funds. Read with above, term loans were applied for the has been regular. wealth-tax, service-tax, customs-duty, excise-duty, purpose for which the loans were obtained. (d) There is no overdue amount of loans granted to cess have generally been regularly deposited with the (xvii) According to the information and explanations given aforesaid two companies listed in the register maintained appropriate authorities though there has been a slight delay to us and on an overall examination of the balance sheet of under Section 301 of the Companies act, 1956. in a few cases. the Company, we report that no funds raised on short- term basis have been used for long-term investment. (e) As informed, the Company has not taken any loans, (b) According to the information and explanations given to secured or unsecured from companies, firms or other us, no undisputed amounts payable in respect of provident (xviii) The Company has not made any preferential parties covered in the register maintained under Section fund, investor education and protection fund, employees’ allotment of shares to parties or companies covered in the state insurance, income-tax, wealth-tax, service tax, sales- 44 45 Balance Sheet as at 31 March, 2007

Schedules As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 430,138,700 428,773,700 Employees Stock Options Outstanding 2 - 2,915,966 Reserves and surplus 3 1,573,579,736 1,496,652,425

2,003,718,436 1,928,342,091

Loan funds Secured loans 4 600,664,739 613,655,281 Deferred Tax Liabilities (Net) 5 64,624,243 46,744,852

2,669,007,418 2,588,742,224 APPLICATION OF FUNDS Fixed Assets 6 Gross block 1,697,790,594 1,009,502,836 Less : Accumulated Depreciation 348,667,654 227,292,224

Net block 1,349,122,940 782,210,612 Capital Work-in-Progress including Capital Advances 144,275,380 439,322,967 Pre-operative expenses (pending allocation) 7 37,987,538 141,809,270

1,531,385,858 1,363,342,849

Intangible Assets (net of amortisation and including 8 6,059,864 3,551,235 capital work-in-progress and capital advances) Investments 9 629,016,644 309,269,691 Current Assets, Loans and Advances Interest accrued on long term investments 1,406,603 914,356 Inventories 10 17,615,286 9,246,574 Sundry debtors 11 55,259,967 28,954,797 Cash and bank balances 12 70,109,377 628,547,287 Other current assets 13 3,554,139 11,587,690 Loans and advances 14 674,979,616 528,306,040

822,924,988 1,207,556,744

Less: Current Liabilities and Provisions Current liabilities 15 251,964,248 223,953,987 Provisions 16 68,415,688 71,024,308

320,379,936 294,978,295

Net Current Assets 502,545,052 912,578,449

Miscellaneous Expenditure 17 - -

2,669,007,418 2,588,742,224

Notes to Accounts 24

The Schedules referred to above and Notes to Accounts form an integral part of the Balance Sheet As per our report of even date

For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS Chartered Accountants

Ajay Bijli Sanjeev Kumar N. C. Gupta Chairman cum Managing Director Joint Managing Director Company Secretary

per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash Partner Director Director Chief of Accounts Membership No 87921 Place : New Delhi 46 Date : June 6, 2007 Balance Sheet as at 31 March, 2007 Profit and Loss Account for the year ended March 31, 2007 Schedules As at As at March 31, 2007 March 31, 2006 Schedules For the year ended For the year ended (Rs.) (Rs.) March 31, 2007 March 31, 2006 (Rs.) (Rs.) SOURCES OF FUNDS INCOME Shareholders’ Funds Operating income 18 1,986,065,860 1,285,763,024 Share Capital 1 430,138,700 428,773,700 Less: Entertainment tax collected on sale of tickets 291,582,187 224,379,377 Employees Stock Options Outstanding 2 - 2,915,966 Less: Sales tax/Value Added tax collected on sale 40,692,112 26,779,327 of food and beverages Reserves and surplus 3 1,573,579,736 1,496,652,425 Less: Service tax collected on advertisement and 12,867,061 4,443,431 management fees 2,003,718,436 1,928,342,091 1,640,924,500 1,030,160,889 Other income 19 78,696,470 30,089,241 Loan funds Secured loans 4 600,664,739 613,655,281 1,719,620,970 1,060,250,130 Deferred Tax Liabilities (Net) 5 64,624,243 46,744,852 EXPENDITURE Film distributors’ share (net of recovery towards 442,734,136 271,362,572 publicity from distributors Rs. 4,376,315, 2,669,007,418 2,588,742,224 Previous year Rs. 3,034,500) Consumption of food and beverages 114,552,600 71,241,239 APPLICATION OF FUNDS Personnel expenses 20 192,734,730 121,607,674 Fixed Assets 6 Employee compensation expenses under employee 2,909,928 7,008,183 Gross block 1,697,790,594 1,009,502,836 share purchase scheme and employee stock option scheme Less : Accumulated Depreciation 348,667,654 227,292,224 Operating and other expenses 21 635,061,066 396,035,067

Net block 1,349,122,940 782,210,612 1,387,992,460 867,254,735 Capital Work-in-Progress including Capital Advances 144,275,380 439,322,967 Pre-operative expenses (pending allocation) 7 37,987,538 141,809,270 Profit before depreciation/amortisation, 331,628,510 192,995,395 interest and tax (EBITDA) 1,531,385,858 1,363,342,849 Depreciation/amortisation 124,153,009 70,717,148 Interest paid 22 54,962,272 32,256,609 Intangible Assets (net of amortisation and including 8 6,059,864 3,551,235 capital work-in-progress and capital advances) Profit Before Tax 152,513,229 90,021,638 Investments 9 629,016,644 309,269,691 Provision for taxes (Including wealth tax Rs. 50,000, (26,500,000) (27,100,000) Previous year Rs. 30,000) Current Assets, Loans and Advances Fringe benefit tax (5,000,000) (3,698,244) Interest accrued on long term investments 1,406,603 914,356 Deferred tax charge (18,016,497) (4,459,528) Inventories 10 17,615,286 9,246,574 Income tax credit for earlier years (net) 2,626,365 - Sundry debtors 11 55,259,967 28,954,797 Cash and bank balances 12 70,109,377 628,547,287 Total Tax Expense (46,890,132) (35,257,772) Other current assets 13 3,554,139 11,587,690 Loans and advances 14 674,979,616 528,306,040 Net Profit after tax 105,623,097 54,763,866 Balance brought forward from previous year 133,858,450 88,535,984 822,924,988 1,207,556,744 Less: Adjustment for Employee Benefits Provision (270,219) - (Net of Tax Rs. 137,106) (Refer Note No. 2 (b) in Schedule 24) Less: Current Liabilities and Provisions Transfer from Debenture Redemption Reserve - 22,600,000 Current liabilities 15 251,964,248 223,953,987 Profit available for appropriation 239,211,328 165,899,850 Provisions 16 68,415,688 71,024,308 Appropriations - Interim dividend on equity shares 22,915,370 22,877,370 320,379,936 294,978,295 - Interim dividend on preference shares 10,000,000 5,219,178 - Tax on dividend 4,616,381 3,944,852 Net Current Assets 502,545,052 912,578,449 Surplus carried to Balance Sheet 201,679,577 133,858,450 Miscellaneous Expenditure 17 - - Earnings per share 23 2,669,007,418 2,588,742,224 Basic [Nominal value of shares Rs. 10 (Previous Year : Rs. 10)] 4.12 2.62 Diluted [Nominal value of shares Rs. 10 (Previous Year : Rs. 10)] 4.12 2.62 Notes to Accounts 24 Notes to Accounts 24 The Schedules referred to above and Notes to Accounts form an integral part of the Balance Sheet The Schedules referred to above and Notes to Accounts form an integral part of the Profit & Loss Account. As per our report of even date As per our report of even date

For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS Chartered Accountants Chartered Accountants

Ajay Bijli Sanjeev Kumar N. C. Gupta Ajay Bijli Sanjeev Kumar N. C. Gupta Chairman cum Managing Director Joint Managing Director Company Secretary Chairman cum Managing Director Joint Managing Director Company Secretary

per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash Partner Director Director Chief of Accounts Partner Director Director Chief of Accounts Membership No 87921 Membership No 87921 Place : New Delhi Place : New Delhi 46 Date : June 6, 2007 Date : June 6, 2007 47 Cash Flow Statement for the year ended March 31, 2007

For the year ended For the year ended March 31, 2007 March 31, 2006 (Rs.) (Rs.)

A. Cash flow from operating activities: Profit before taxation 152,513,229 90,021,638 Adjustments for : Depreciation/amortisation 124,153,009 70,717,148 Loss on disposal of fixed assets (net) 1,246,098 2,515,492 Interest income (33,105,998) (13,444,643) Profit on sale of current investments (242,763) - Loss on sale of current investments - 35,506 Dividend income (26,060,706) (3,391,096) Interest expense 54,962,272 32,256,609 Employee compensation expenses under employee share purchase scheme and employee stock option scheme 2,909,928 7,008,183 Provision for doubtful debts and advances (net) 2,278,143 1,602,381

Operating profit before working capital changes 278,653,212 187,321,218 Movements in working capital : (Increase) in sundry debtors (28,583,314) (5,958,875) (Increase) in inventories (8,368,712) (2,469,958) (Increase) in loans and advances and other current assets (122,917,535) (102,344,854) (Decrease)/Increase in current liabilities and provisions 34,705,141 76,576,767

Cash generated from operations 153,488,792 153,124,298 Direct taxes paid (net of refunds) (37,896,873) (21,094,996)

Net cash from operating activities 115,591,919 132,029,302

B. Cash flows from investing activities Purchase of fixed assets (289,057,590) (564,259,310) Purchase of intangible assets (3,616,357) (1,211,103) Proceeds from sale of fixed assets 67,579 1,091,000 Consideration paid for acquiring interest in a subsidiary - (500,000) Purchase of investments (3,020,683,458) (722,169,691) Sale of investments 2,701,179,268 439,964,494 Loans given to subsidiaries (288,500,226) (232,713,803) Loans refunded by subsidiaries 298,571,296 9,642,733 Dividend received 26,060,706 3,391,096 Interest received 39,993,691 6,320,674 Fixed Deposits with banks placed (10,947,727) (623,325,033) Fixed Deposits with banks encashed 613,371,938 22,040,980

Net cash from/(used in) investing activities 66,439,120 (1,661,727,963)

C. Cash flow from financing activities Proceeds from issuance of share capital 3,885,000 1,484,100,000 Proceeds from long-term borrowings 105,800,000 360,361,101 Repayment of long-term borrowings (118,790,542) (201,779,288) Proceeds from short-term borrowings - 240,000,000 Repayment of short-term borrowings - (250,000,000) Expenditure on share issue - (113,037,501) Dividend and tax thereon paid (69,573,151) - Interest paid (57,410,961) (59,575,479)

Net cash (used in)/from financing activities (136,089,654) 1,460,068,833

Net increase/(decrease) in cash and cash equivalents (A+B+C) 45,941,385 (69,629,828) Cash and cash equivalents at the beginning of the year 11,738,414 81,368,242

Cash and cash equivalents at the end of the year 57,679,799 11,738,414

48 Cash Flow Statement for the year ended March 31, 2007 Cash Flow Statement for the year ended March 31, 2007 (continued)

For the year ended For the year ended Components of cash and cash equivalents as at* March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) Cash and cheques on hand 8,576,083 4,077,013 With banks - on current accounts 48,632,720 9,616,485 A. Cash flow from operating activities: - on book overdraft account - (1,955,084) Profit before taxation 152,513,229 90,021,638 - on unpaid and unclaimed dividend accounts 470,996 - Adjustments for : Depreciation/amortisation 124,153,009 70,717,148 57,679,799 11,738,414 Loss on disposal of fixed assets (net) 1,246,098 2,515,492 Interest income (33,105,998) (13,444,643) *difference of Rs. 12,429,578 (Previous year Rs. 616,808,873) from Schedule 12 represents short-term investments with an original Profit on sale of current investments (242,763) - maturity of three months or more. Loss on sale of current investments - 35,506 Dividend income (26,060,706) (3,391,096) NOTE: The above Cash Flow Statement has been prepared under the “Indirect Method” as stated in Accounting Standard 3 on Cash Interest expense 54,962,272 32,256,609 Flow Statement. Employee compensation expenses under employee share purchase scheme and employee stock option scheme 2,909,928 7,008,183 Provision for doubtful debts and advances (net) 2,278,143 1,602,381 As per our report of even date

Operating profit before working capital changes 278,653,212 187,321,218 For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS Movements in working capital : Chartered Accountants (Increase) in sundry debtors (28,583,314) (5,958,875) Ajay Bijli Sanjeev Kumar N. C. Gupta (Increase) in inventories (8,368,712) (2,469,958) Chairman cum Managing Director Joint Managing Director Company Secretary (Increase) in loans and advances and other current assets (122,917,535) (102,344,854) (Decrease)/Increase in current liabilities and provisions 34,705,141 76,576,767 per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash Partner Director Director Chief of Accounts Cash generated from operations 153,488,792 153,124,298 Membership No 87921 Direct taxes paid (net of refunds) (37,896,873) (21,094,996) Place : New Delhi Date : June 6, 2007 Net cash from operating activities 115,591,919 132,029,302

B. Cash flows from investing activities Purchase of fixed assets (289,057,590) (564,259,310) Purchase of intangible assets (3,616,357) (1,211,103) Proceeds from sale of fixed assets 67,579 1,091,000 Consideration paid for acquiring interest in a subsidiary - (500,000) Purchase of investments (3,020,683,458) (722,169,691) Sale of investments 2,701,179,268 439,964,494 Loans given to subsidiaries (288,500,226) (232,713,803) Loans refunded by subsidiaries 298,571,296 9,642,733 Dividend received 26,060,706 3,391,096 Interest received 39,993,691 6,320,674 Fixed Deposits with banks placed (10,947,727) (623,325,033) Fixed Deposits with banks encashed 613,371,938 22,040,980

Net cash from/(used in) investing activities 66,439,120 (1,661,727,963)

C. Cash flow from financing activities Proceeds from issuance of share capital 3,885,000 1,484,100,000 Proceeds from long-term borrowings 105,800,000 360,361,101 Repayment of long-term borrowings (118,790,542) (201,779,288) Proceeds from short-term borrowings - 240,000,000 Repayment of short-term borrowings - (250,000,000) Expenditure on share issue - (113,037,501) Dividend and tax thereon paid (69,573,151) - Interest paid (57,410,961) (59,575,479)

Net cash (used in)/from financing activities (136,089,654) 1,460,068,833

Net increase/(decrease) in cash and cash equivalents (A+B+C) 45,941,385 (69,629,828) Cash and cash equivalents at the beginning of the year 11,738,414 81,368,242

Cash and cash equivalents at the end of the year 57,679,799 11,738,414

48 49 Schedules to the accounts

Schedule 1 : Share capital

As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) Authorised share capital 30,000,000 (Previous year 30,000,000) equity shares of Rs. 10 each 300,000,000 300,000,000 20,000,000 (Previous year 20,000,000) preference shares of Rs. 10 each 200,000,000 200,000,000

500,000,000 500,000,000

Issued, subscribed and paid-up 23,013,870 (Previous year 22,877,370) equity shares of Rs. 10 each fully paid 230,138,700 228,773,700 20,000,000 (Previous year 20,000,000) 5% redeemable 200,000,000 200,000,000 preference shares of Rs. 10 each fully paid

430,138,700 428,773,700

NOTES:

1. Of the above 10,642,000 (Previous year 10,642,000) 5% redeemable preference shares are held by Mr. Ajay Bijli, Chairman cum Managing Director.

2. Preference shares are redeemable at par after three years with a put and call option at the end of two years from the date of allotment.

3. Of the above Nil (Previous year 80,000) equity shares of the face value of Rs. 10 each issued to the eligible employees under Employees Share Purchase Scheme.

4. Of the above 136,500 (Previous year Nil) equity shares of the face value of Rs. 10 each issued to the eligible employees under Employees Stock Option Scheme (Refer Note No. 5 of Schedule 24).

Schedule 2 : Employees Stock Options Outstanding

Employees stock options outstanding As per last account 2,915,966 - Add: Accounted for during the year (net) (Refer Note No. 5 of Schedule 24) 3,541,534 2,915,966 6,457,500 2,915,966 Less: Amount transferred to Securities Premium Account upon issue of equity shares 6,457,500 - - 2,915,966

Schedule 3 : Reserves and Surplus

Securities premium account - as per last account 1,362,793,975 250,306,573 Add: Received on issue of shares under employees share purchase/employees 2,520,000 5,600,000 stock option scheme Received on issue of shares to public during the year - 1,225,500,000 Amount transferred from Employees Stock Options Outstanding Account 6,457,500 - Excess provision for share issue expenses now written back and 128,684 - adjusted from securities premium account 1,371,900,159 1,481,406,573 Less: Share/debenture placement expenses written off - 118,612,598

1,371,900,159 1,362,793,975

Debenture redemption reserve - As per last account - 22,600,000 Less: Transferred to Profit and Loss Account on redemption of debentures - 22,600,000

- -

Profit and Loss Account Balance 201,679,577 133,858,450

50 1,573,579,736 1,496,652,425 Schedules to the accounts Schedules to the accounts

Schedule 1 : Share capital Schedule 4 : SecureD Loans As at As at As at As at March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) (Rs.) (Rs.) Authorised share capital Loans from banks 30,000,000 (Previous year 30,000,000) equity shares of Rs. 10 each 300,000,000 300,000,000 Term loans from banks 520,639,524 522,754,554 20,000,000 (Previous year 20,000,000) preference shares of Rs. 10 each 200,000,000 200,000,000 (Due within one year Rs. 139,008,752, (Previous year Rs. 102,096,655)) Car finance loans from banks 5,675,215 350,727 500,000,000 500,000,000 (Due within one year Rs. 1,125,553, (Previous year Rs. 162,538))

Issued, subscribed and paid-up Other loans 23,013,870 (Previous year 22,877,370) equity shares of Rs. 10 each fully paid 230,138,700 228,773,700 Term loan from small industries development bank of india (SIDBI) 74,350,000 90,550,000 20,000,000 (Previous year 20,000,000) 5% redeemable 200,000,000 200,000,000 (Due within one year Rs. 16,200,000, (Previous year Rs. 16,200,000)) preference shares of Rs. 10 each fully paid 600,664,739 613,655,281

430,138,700 428,773,700 NOTES :

NOTES: 1. a) Term loans from State Bank of Patiala, United Bank of India and Union bank of India to the extent of Rs. 233,139,524 (Previous year Rs. 322,754,554) are secured by first charge by way of hypothecation of the whole of the movable properties 1. Of the above 10,642,000 (Previous year 10,642,000) 5% redeemable preference shares are held by Mr. Ajay Bijli, Chairman including movable plant and machinery, machinery spares, tools and accessories and other movable assets cum Managing Director. (except vehicles hypothecated to banks) of all current and future operating theatres of the Company ranking pari passu with other lenders. These are further secured by the personal guarantee of two directors of the Company. 2. Preference shares are redeemable at par after three years with a put and call option at the end of two years from the date of allotment. b) Term Loan from ICICI Bank Limited to the extent of Rs. 187,500,000 (Previous year Rs. 200,000,000) is secured by first charge on all of the Company’s movable assets, save and except the assets at the Juhu multiplex, both present and future, on 3. Of the above Nil (Previous year 80,000) equity shares of the face value of Rs. 10 each issued to the eligible employees under pari passu basis with other term lenders. This loan is further secured by mortgage of the personal properties Employees Share Purchase Scheme. of two directors at Vasant Vihar and Kundli, New Delhi and is to be further secured by pledge of the PVR Brand/patent/ 4. Of the above 136,500 (Previous year Nil) equity shares of the face value of Rs. 10 each issued to the eligible employees under trademark. This loan is further secured by the personal guarantee of two directors of the Company. Employees Stock Option Scheme (Refer Note No. 5 of Schedule 24). c) Term Loan from Punjab National Bank to the extent of Rs. 100,000,000, (Previous year Rs. Nil) is secured by first pari passu charge with other lenders on all assets and movable property (excluding vehicles hypothecated to banks), including current assets namely current and movable fixed assets of any kind belonging to the Company both present and future except those at PVR Schedule 2 : Employees Stock Options Outstanding Juhu, Mumbai. This loan is further secured by second charge on all the movable and immovable assets namely current and movable fixed assets as well as the movable and immovable assets at PVR Juhu, Mumbai of the Company and PVR Phoenix, Employees stock options outstanding Mumbai of the subsidiary. As per last account 2,915,966 - 2. Car finance loans to the extent of Rs. 5,675,215 (Previous year Rs. 350,727) are to be secured by hypothecation of vehicles Add: Accounted for during the year (net) (Refer Note No. 5 of Schedule 24) 3,541,534 2,915,966 purchased out of the proceeds of the loans. 6,457,500 2,915,966 3. Loan from SIDBI to the extent of Rs. 74,350,000 (Previous year Rs. 90,550,000) is secured by a first pari passu charge by way of Less: Amount transferred to Securities Premium Account upon issue of equity shares 6,457,500 - hypothecation of all the movable assets (except vehicles hypothecated to banks) both present and future, of all cinemas of the - 2,915,966 Company. It is further secured by a second charge on personal properties of a director at Vasant Vihar and Jhandewalan, New Delhi and is also secured by the personal guarantee of two directors of the Company.

Schedule 3 : Reserves and Surplus Securities premium account - as per last account 1,362,793,975 250,306,573 Schedule 5 : Deferred Tax Liabilities (Net) Add: Received on issue of shares under employees share purchase/employees 2,520,000 5,600,000 As at As at stock option scheme March 31, 2007 March 31, 2006 Received on issue of shares to public during the year - 1,225,500,000 (Rs.) (Rs.) Amount transferred from Employees Stock Options Outstanding Account 6,457,500 - Excess provision for share issue expenses now written back and 128,684 - Deferred Tax Liabilities adjusted from securities premium account Differences in depreciation and other differences in block of 68,741,898 48,974,538 1,371,900,159 1,481,406,573 fixed assets as per tax books and financial books

Less: Share/debenture placement expenses written off - 118,612,598 Gross Deferred Tax Liabilities 68,741,898 48,974,538

1,371,900,159 1,362,793,975 Deferred Tax Assets Effect of expenditure debited to profit and loss account in the current year/ 2,713,419 1,605,906 Debenture redemption reserve - As per last account - 22,600,000 earlier years but allowable for tax purposes in following years Less: Transferred to Profit and Loss Account on redemption of debentures - 22,600,000 Provision for doubtful debts and advances 1,404,236 623,780

- - Gross Deferred Tax Assets 4,117,655 2,229,686

Profit and Loss Account Balance 201,679,577 133,858,450 Net Deferred Tax Liabilities 64,624,243 46,744,852

1,573,579,736 1,496,652,425 50 51 Rs. 088,727 305,814 145,576 828,979,723 186,490,706 439,322,967 145,576 292,224 159,452,462 26,156,887 64, 348,667,654 227,292,224 144,275,380 118,118,493 375,234,240

630,514 70, 980,614 691,271,286 elopers are subject to confirmation/reconciliation. However, the been discarded during the year. nses towards modification in the building structure and equipments, 568,483 1,022,444 123,045,281 70, 688,010 1,434,638971,198 227, 2,457,082 327,619 not be material would be made once the claims are confirmed/reconciled. 105,213,161 6, 441,349,668 113,692,178 4,582,596 782,210,612 875,595,687 255,530,620 12,997,848 1,697,790,594176,939,548 1,009,502,836 62, 668,260 121,331,777 38, 552,202,499 221,291,769 Improvements Machinery Fittings 190,299 106,109,527 Land Freehold Building Leasehold Plant & Furniture & Vehicles Total Previous Year Schedule 6 : Fixed Assets Deductions - - 11,013 373,543 1,285,295 - 1,669,851 2, For the yearthe For - 20,760 40,452,280 55,981,314 25, Gross Block At 01.04.2006 Additions Deductions 190,350 1,273,590 - -286,960,029 562,681,445 152,380,188 - - 6,017,234 265,258,070 1,009,502,836 15,600 313,819,441 905,199 2,062,729 - 2,983,528 5,967,593 At 31.03.2007Depreciation At 01.04.2006At 31.03.2007 For year190,350previous 1,273,590At 31.03.2007At 31.03.2006 - Capital work in progress Capital Advances (Unsecured, considered good) 169,539 - - 190,350 Total 65, rent. on taken 190,350 properties 20,760 the NOTES: of 1,083,2911.Fixed assets landlords of the cost of Rs. 2,843,668, various Previous year 2.Gross1,104,051Rs. the 2,759,480, Block (WDV of by Rs.1,209,941, Fixed Previous Assets year include Rs. Rs. 1,591,300) 43,951,089 have (Previous year claimed Rs. 28,152,000) being 446,092,972Company’s17,979,697 proportionate share of expe 3.Claim of Rs. 17,464,317 lodged by some developers on the Company Company has and duly claims accounted of for Rs. aforesaid 7,681,033 claims lodged in by the the books. 4. Company 698,656,139Adjustments, Depreciation on if provided the any, which for dev in the 38,186,986the year opinion is of net the of management, reversal will of excess depreciation of Rs. 6,564,399 provided till previous year. 192,559,422 190,350 13, 10,540,766 1,083,291 1,349,122,940 782,210,612 446,092,972 698,656,139 192,559,422 10,540,766 1,493,398,320 1,221,533,579 52 Net Block Rs. Schedules to the accounts revious Year 0,145,576 Schedule 7 : Pre-Operative Expenses (pending allocation) 64,088,727 828,979,723 186,490,706

439,322,967 As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) Balance brought forward 141,809,270 37,739,800

9,851 2,305,814 Salary and other allowances 11,772,450 13,759,472 Contribution to Provident and other funds 878,449 1,023,487 ,292,224 159,452,462

0,145,576 Staff welfare expenses 479,023 1,560,950 26,156,887 348,667,654 227,292,224 144,275,380 Employee compensation expenses under employee share purchase scheme and 631,607 707,782 118,118,493 375,234,240 employee stock option scheme Rent 1,103,250 26,041,848 Rates and taxes 1,961,832 13,333,453 Communication costs 239,894 1,176,856 Architect and other fees 10,966,796 15,526,857

ehicles Total P Professional charges 6,385,342 15,831,817 630,514 7 Travelling and conveyance 2,257,998 11,750,797 6,980,614 691,271,286 Printing and stationery 111,589 223,530 Insurance 322,230 1,092,301 Repairs and maintenance: -Buildings 3,179,095 6,703,152 elopers are subject to confirmation/reconciliation. However, the -Common areas maintenance - 4,766,886 Electricity and water charges 1,210,181 1,914,050 been discarded during the year. nses towards modification in the building structure and equipments, (Net of recovery Rs. 919,935, Previous year Rs. 1,879,699) 1,285,295 - 1,66

Furniture & V Security service charges 819,099 2,272,286 38,688,01025,568,483 1,434,638 1,022,444 227 123,045,281 7 62,971,198 2,457,082 13,327,619 not be material would be made once the claims are confirmed/reconciled.

105,213,161 Interest on fixed loans 2,520,124 22,625,124 Interest to Banks - 5,700,542 Foreign exchange fluctuation 46,567 - Bank and other charges - 3,560,000 Fringe benefit tax 192,646 993,502 Miscellaneous expenses 644,711 1,713,459 3,543 187,850,153 190,017,951 Less: Interest received (Gross, tax deducted at source Rs. Nil, - 1,957,816 441,349,668 113,692,178 4,582,596 782,210,612 875,595,687 255,530,620 12,997,848 1,697,790,594176,939,548 1,009,502,836 Previous year Rs. 439,338) Less: Amount recovered from developers towards re-negotiation of rent 5,593,662 - Less; Allocated to fixed assets 144,268,953 30,987,062 Less: Expenses pertaining to Lower Parel Project transferred to - 15,263,803 wholly owned subsidiary 9,697 38,186,986

11,013 37 Balance Carried Forward 37,987,538 141,809,270 15,600 905,199 2,062,729 - 2,983,528 5,967,593 Leasehold & Plant

65,668,260 121,331,777 NOTE : Rent includes amount paid to a director 918,000 918,000 265,258,070 313,819,441 552,202,499 221,291,769

Improvements Machinery Fittings Rates and taxes includes stamp duty on registration of lease deed 1,772,300 11,732,700

Schedule 8 : Intangible Assets Rs. Software Film Rights’ Cost Total Previous Year Development Cost 20,760 40,452,28020,760 55,981,314 17,97 Building 190,299 106,109,527 Gross Block at 01.04.2006 4,307,369 1,834,658 6,142,027 4,386,900 Additions 3,597,857 - 3,597,857 1,755,127

At 31.03.2007 7,905,226 1,834,658 9,739,884 6,142,027

Amortisation 190,350 1,083,291 446,092,972 698,656,139 192,559,422 10,540,766 1,493,398,320 1,221,533,579 At 01.04.2006 1,175,134 1,834,658 3,009,792 2,438,220 For the year 1,107,728 - 1,107,728 571,572 Land Freehold At 31.03.2007 2,282,862 1,834,658 4,117,520 3,009,792

For previous year 571,572 - 571,572 -

Net Block

At 31.03.2007 5,622,364 - 5,622,364 3,132,235

Capital Advances 437,500 419,000 (Unsecured, considered good)

At 31.03.2007 5,622,364 - 6,059,864 3,551,235 Schedule 6 : Fixed Assets Deductions - - Additions - - Gross Block At 01.04.2006 190,350 1,273,590 286,960,029 562,681,445 152,380,188 6,017,234 1,009,502,836 At 31.03.2007Depreciation At 01.04.2006For the yearAt 31.03.2007 For 190,350previous year 1,273,590At 31.03.2007At 31.03.2006 - Capital work in progress -Capital Advances (Unsecured, considered good) 169,539 - - 190,350 Total 190,350NOTES: 1,083,2911.Fixed assets of the cost of Rs. 2,843,668, Previous year 2.Gross1,104,051Rs. 2,759,480, Block (WDV of Rs.1,209,941, Fixed Previous Assets year include Rs. Rs. 1,591,300) 43,951,089 have (Previous year claimed Rs. by 28,152,000) the being 446,092,972various Company’s landlords proportionate of share the of properties expe taken on 3.Claimrent. of Rs. 17,464,317 lodged by some developers on the Company and claims of Rs. 7,681,033 lodged by the 698,656,139Company on the dev 192,559,422 10,540,766 1,349,122,940 782,210,612 Company has duly accounted for aforesaid claims in the books. 4. Adjustments, Depreciation if provided any, which for in the the year opinion is of net the of management, reversal will of excess depreciation of Rs. 6,564,399 provided till previous year. Deductions - - 52 Net Block At 31.03.2006 3,132,235 - 3,132,235 53 Schedules to the accounts

Schedule 9 : Investment As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) Long Term Investments Other than trade investments A. In Subsidiary Companies (Unquoted) Fully paid up equity shares of Rs. 10 each 20,000,000 (Previous year 710,000) in CR Retail Malls 200,000,000 7,100,000 (India) Private Limited 1,500,000 (Previous year 1,500,000) in PVR Pictures Limited 15,000,000 15,000,000 B. In Government Securities (Unquoted) 6 years National Savings Certificates* 5,548,000 5,000,000 (Deposited with Entertainment Tax Authorities) 6 years National Savings Certificates** 45,000 45,000 (Deposited with Municipal Corporation of Hyderabad) Current Investments Other than trade investments (Quoted)*** Units in mutual funds of Rs. 10 each 8,318,556.811 (Previous year Nil) units of P32ISD Prudential 83,185,568 - ICICI Liquid Plan - Super Institutional Daily Dividend 15,170,726.024 (Previous year Nil) units of OLPIPD HSBC Liquid Plus- 151,774,513 - Inst. Plus-Daily Dividend 13,022,840.564 (Previous year Nil) units of Reliance Liquidity Fund - daily 130,268,776 - dividend Reinvestment option - Reinvestment Nil (Previous year 4,092,598.134) units of B503DD Birla Cash Plus - - 41,005,787 Institutional Premium - Daily Dividend Reinvestment Nil (Previous year 5,059,051.637) units of Kotak FMP Series XV - Dividend - 50,590,516 Nil (Previous year 10,000,000) units of C93 Chola FMP - - 100,000,000 Series 2 (Quarterly Plan-I) - Dividend Nil (Previous year 5,000,000) units of C95 Chola FMP - Series 2 - 50,000,000 (Quarterly Plan-II) - Dividend Units in mutual funds of Rs. 1,000 each 42370.856 (Previous year Nil) units of UTI Liquid Cash Plan Institutional - 43,194,787 - Daily Income Option - Reinvestment Nil (Previous year 40,520.284) units of DSP Merrill Lynch Liquidity Fund - - 40,528,388 Institutional - Daily Dividend

629,016,644 309,269,691

NOTES : 1. *Held in the name of the Managing Director in the interest of the Company. 2. **Held in the name of the Employee in the interest of the Company. 3. ***Invested out of unutilised monies out of issue of share capital and loan proceeds. 4. The following units held in mutual funds were purchased and sold during the year: Purchased Value (Rs.)

- In Dividend option: Units in mutual funds of Rs. 10 each 5,000,000.000 units of Reliance Fixed Horizon Fund I 50,000,000 Monthly Plan-Series II Dividend Plan 15,006,491.916 units of Reliance Fixed Horizon Fund - 150,064,919 Monthly Plan A -Series IV Dividend Option 15,075,739.448 units of Reliance Fixed Horizon Fund - 150,757,394 Monthly Plan A -Series V Dividend Option 7,000,000.000 units of Reliance Fixed Horizon Fund Dividend Option 70,000,000 7,034,474.027 units of Reliance Fixed Horizon Fund 70,344,740 Monthly Plan A Series II -Dividend Option 5,076,255.500 units of ABN AMRO FTP Series 3 Quarterly Plan D Dividend 50,762,555 5,076,923.310 units of Sundaram BNP Paribas Fixed Term Plan 50,769,233 Series IX- Dividend Plan 5,024,112.866 units of TATA Fixed Horizon Fund Series -8 50,241,500 54 Scheme A IP -Dividend Schedules to the accounts Schedules to the accounts

Schedule 9 : Investment Schedule 9 : Investment (continued) As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) 7,712,499.816 units of P152RD Pru ICICI FMP Series 32- 77,124,998 Long Term Investments Three Month Plan -C- Retail Dividend Other than trade investments 7,100,589.169 units of Kotak FMP 3M Series 1-Dividend 71,005,900 A. In Subsidiary Companies (Unquoted) 10,519.040 units of Kotak FMP Series XV - Dividend 105,228 Fully paid up equity shares of Rs. 10 each 25,764,537.712 units of PFRDD Prudential ICICI Floating Rate Plan D - 257,645,377 20,000,000 (Previous year 710,000) in CR Retail Malls 200,000,000 7,100,000 Daily Dividend (India) Private Limited 14,994,404.654 units of HSBC Cash Fund IP - Daily Dividend 150,028,015 1,500,000 (Previous year 1,500,000) in PVR Pictures Limited 15,000,000 15,000,000 19,865,822.305 units of LIC MF Liquid Fund Dividend Plan 218,128,715 B. In Government Securities (Unquoted) 4,954,261.928 units of Sundaram BNP Paribas Money 50,014,760 6 years National Savings Certificates* 5,548,000 5,000,000 Fund Institutional Daily Dividend Reinvestment (Deposited with Entertainment Tax Authorities) 35,063,763.178 units of Reliance liquidity Fund Daily Dividend 350,746,329 6 years National Savings Certificates** 45,000 45,000 Reinvestment option (Re-investment) (GS-DP) (Deposited with Municipal Corporation of Hyderabad) 7,019,729.360 units of Principal Floating Rate Fund FMP Institutional. 70,202,207 Current Investments Option - Dividend Reinvestment Daily Other than trade investments (Quoted)*** 13,602.648 units of B503DD Birla Cash Plus - 136,292 Units in mutual funds of Rs. 10 each Institutional. Prem. - Daily Dividend - Reinvestment 8,318,556.811 (Previous year Nil) units of P32ISD Prudential 83,185,568 - 4,150,599.276 units of Kotak Liquid (Institutional Premium) - 50,753,943 ICICI Liquid Plan - Super Institutional Daily Dividend Daily Dividend 15,170,726.024 (Previous year Nil) units of OLPIPD HSBC Liquid Plus- 151,774,513 - 22,663,282.967 units of P32ISD Prudential ICICI 226,632,830 Inst. Plus-Daily Dividend Institutional Liquid Plan -Super Institutional Daily Dividend 13,022,840.564 (Previous year Nil) units of Reliance Liquidity Fund - daily 130,268,776 - 15170726.024 units of OLPIPD HSBC Liquid Plus-Inst. Plus - 151,774,513 dividend Reinvestment option - Reinvestment Daily Dividend Nil (Previous year 4,092,598.134) units of B503DD Birla Cash Plus - - 41,005,787 Units in mutual funds of Rs. 1000 each Institutional Premium - Daily Dividend Reinvestment 81,105.690 units of DSP Merrill Lynch Fixed Term Plan Series 1 D Dividend 81,105,847 Nil (Previous year 5,059,051.637) units of Kotak FMP Series XV - Dividend - 50,590,516 Nil (Previous year 10,000,000) units of C93 Chola FMP - - 100,000,000 101,017.788 units of G70 Standard Chartered Liquidity Managers- 101,027,890 Series 2 (Quarterly Plan-I) - Dividend Plus-Daily Dividend Nil (Previous year 5,000,000) units of C95 Chola FMP - Series 2 - 50,000,000 144,387.079 units of UTI Liquid Cash Plan Institutional- 147,194,787 (Quarterly Plan-II) - Dividend Daily Income Option-Re Investment Units in mutual funds of Rs. 1,000 each 101,257.74 units of DSP Merrill lynch Liquid Plus IP-Daily Dividend 101,277,992 42370.856 (Previous year Nil) units of UTI Liquid Cash Plan Institutional - 43,194,787 - 90,751.561 units of TATA Liquid Super High Investment Fund-Daily Dividend 101,144,430 Daily Income Option - Reinvestment 596.704 units of DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend 596,823 Nil (Previous year 40,520.284) units of DSP Merrill Lynch Liquidity Fund - - 40,528,388 Institutional - Daily Dividend Sold - In Dividend option: 629,016,644 309,269,691 Units in mutual funds of Rs. 10 each 5,000,000.000 units of C95 Chola FMP -Series 2 (Quarterly Plan II )-Dividend 50,021,500 NOTES : 10,000,000.000 units of C95 Chola FMP -Series 2 (Quarterly Plan I )-Dividend 100,093,000 1. *Held in the name of the Managing Director in the interest of the Company. 2. **Held in the name of the Employee in the interest of the Company. 5,000,000.000 units of Reliance Fixed Horizon Fund I Monthly Plan-Series II 50,000,000 3. ***Invested out of unutilised monies out of issue of share capital and loan proceeds. Dividend Plan 4. The following units held in mutual funds were 15,006,491.916 units of Reliance Fixed Horizon Fund - 150,064,919 purchased and sold during the year: Monthly Plan A -Series IV Dividend Option Purchased Value (Rs.) 15,075,739.448 units of Reliance Fixed Horizon Fund - Monthly Plan A - 150,757,394 Series V Dividend Option - In Dividend option: Units in mutual funds of Rs. 10 each 7,000,000.000 units of Reliance Fixed Horizon Fund Dividend Option 70,000,000 5,000,000.000 units of Reliance Fixed Horizon Fund I 50,000,000 7,034,474.027 units of Reliance Fixed Horizon Fund Monthly Plan A Series II - 70,344,740 Monthly Plan-Series II Dividend Plan Dividend Option 15,006,491.916 units of Reliance Fixed Horizon Fund - 150,064,919 5,076,255.500 units of ABN AMRO FTP Series 3 Quarterly Plan D Dividend 50,762,555 Monthly Plan A -Series IV Dividend Option 5,076,923.310 units of Sundaram BP Paribas Fixed Term Plan Series IX- Dividend Plan 50,769,233 15,075,739.448 units of Reliance Fixed Horizon Fund - 150,757,394 5,024,112.866 units of TATA Fixed Horizon Fund Series -8 Scheme A IP -Dividend 50,318,500 Monthly Plan A -Series V Dividend Option 7,712,499.816 units of P152RD Pru ICICI FMP Series 32- 77,124,998 7,000,000.000 units of Reliance Fixed Horizon Fund Dividend Option 70,000,000 Three Month Plan -C- Retail Dividend 7,034,474.027 units of Reliance Fixed Horizon Fund 70,344,740 7,100,589.169 units of Kotak FMP 3M Series 1-Dividend 71,006,478 Monthly Plan A Series II -Dividend Option 5,069,570.6775 units of Kotak FMP Series XV - Dividend 50,739,072 5,076,255.500 units of ABN AMRO FTP Series 3 Quarterly Plan D Dividend 50,762,555 25,764,537.712 units of PFRDD Prudential ICICI Floating Rate Plan D - 257,645,377 5,076,923.310 units of Sundaram BNP Paribas Fixed Term Plan 50,769,233 Daily Dividend Series IX- Dividend Plan 14,994,404.654 units of HSBC Cash Fund IP - Daily Dividend 150,028,015 5,024,112.866 units of TATA Fixed Horizon Fund Series -8 50,241,500 54 Scheme A IP -Dividend 55 Schedules to the accounts

Schedule 9 : Investment (continued)

19,865,822.305 units of LIC MF Liquid Fund Dividend Plan 218,128,715 4,954,261.928 units of Sundaram BNP Paribas Money Fund 50,014,760 Institutional Daily Dividend Reinvestment 22,040,922.615 units of Reliance Liquidity Fund Daily Dividend 220,477,553 Reinvestment option (Re-investment) (GS-DP) 7,019,729.360 units of Principal Floating Rate Fund FMP Institutional. Option - 70,202,207 Dividend Reinvestment Daily 4,106,200.781 units of B503DD Birla Cash Plus - Institutional. Prem. - 41,142,079 Daily Dividend - Reinvestment 4,150,599.276 units of Kotak Liquid (Institutional Premium) - Daily Dividend 50,753,943 14,344,726.156 units of P32ISD Prudential ICICI Institutional Liquid Plan - 143,447,262 Super Institutional Daily Dividend Units in mutual funds of Rs. 1000 each 81,105.690 units of DSP Merrill Lynch Fixed Term Plan Series 1 D Dividend 81,114,903 101,017.788 units of G70 Standard Chartered Liquidity Managers- 101,027,890 Plus-Daily Dividend 102,016.223 units of UTI Liquid Cash Plan Institutional-Daily Income Option - 104,000,000 Re Investment 101,257.74 units of DSP Merrill lynch Liquid Plus IP-Daily Dividend 101,277,992 90,751.561 units of TATA Liquid Super High Investment Fund-Daily Dividend 101,144,430 41,116.988 units of DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend 41,125,211

March 31, 2007 March 31, 2006 5. Aggregate value of investments Market Value Cost Market Value Cost Quoted 408,547,542 408,423,644 284,098,611 282,124,691 Unquoted 220,593,000 27,145,000 629,016,644 309,269,691

56 Schedules to the accounts Schedules to the accounts

Schedule 9 : Investment (continued) Schedule 10 : Inventories As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) 19,865,822.305 units of LIC MF Liquid Fund Dividend Plan 218,128,715 Food and beverages 4,802,084 2,408,114 4,954,261.928 units of Sundaram BNP Paribas Money Fund 50,014,760 Stores and spares 12,813,202 6,838,460 Institutional Daily Dividend Reinvestment 22,040,922.615 units of Reliance Liquidity Fund Daily Dividend 220,477,553 17,615,286 9,246,574 Reinvestment option (Re-investment) (GS-DP) 7,019,729.360 units of Principal Floating Rate Fund FMP Institutional. Option - 70,202,207 Dividend Reinvestment Daily Schedule 11 : Sundry debtor 4,106,200.781 units of B503DD Birla Cash Plus - Institutional. Prem. - 41,142,079 Debts outstanding for a period exceeding six months Daily Dividend - Reinvestment Secured, considered good 1,467,682 180,000 4,150,599.276 units of Kotak Liquid (Institutional Premium) - Daily Dividend 50,753,943 Unsecured, considered good 1,534,285 813,545 Unsecured, considered doubtful 3,802,710 1,602,381 14,344,726.156 units of P32ISD Prudential ICICI Institutional Liquid Plan - 143,447,262 Super Institutional Daily Dividend Other debts Secured, considered good 1,836,801 3,194,358 Units in mutual funds of Rs. 1000 each Unsecured, considered good 50,421,199 24,766,894 81,105.690 units of DSP Merrill Lynch Fixed Term Plan Series 1 D Dividend 81,114,903 Unsecured, considered doubtful 77,815 - 101,017.788 units of G70 Standard Chartered Liquidity Managers- 101,027,890 Plus-Daily Dividend 59,140,492 30,557,178 Less : Provision for doubtful debts 3,880,525 1,602,381 102,016.223 units of UTI Liquid Cash Plan Institutional-Daily Income Option - 104,000,000 Re Investment 55,259,967 28,954,797 101,257.74 units of DSP Merrill lynch Liquid Plus IP-Daily Dividend 101,277,992 90,751.561 units of TATA Liquid Super High Investment Fund-Daily Dividend 101,144,430 41,116.988 units of DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend 41,125,211 Schedule 12 : Cash and bank balances Cash on hand 7,586,018 3,277,925 Cheques on hand 990,065 799,088 March 31, 2007 March 31, 2006 Balances with scheduled banks: 5. Aggregate value of investments On current accounts 48,632,720 9,616,485 On deposit accounts* 12,429,578 614,853,789 Market Value Cost Market Value Cost On unpaid and unclaimed dividend accounts 470,996 - Quoted 408,547,542 408,423,644 284,098,611 282,124,691 Unquoted 220,593,000 27,145,000 70,109,377 628,547,287 629,016,644 309,269,691 * Includes unutilised monies out of issue of share capital amounting to Rs. Nil (Previous year Rs. 600,000,000) and fixed deposit receipts pledged with banks amounting to Rs. 12,035,576 (Previous year Rs. 12,727,565).

Schedule 13 : Other current assets Interest accrued on deposits and others 2,034,661 9,414,601 Income accrued for which invoices have been raised subsequently 1,372,999 2,105,546 Insurance claims receivable 146,479 67,543

3,554,139 11,587,690

Included in Other Current Assets are: i) Outstanding from a subsidiary, company under the same management 857,031 1,178,487 within the meaning of Section370(1B) of the Companies Act, 1956 i.e. CR Retail Malls (India) Private Limited ii) Maximum amount outstanding from such Company at any time during the year 11,201,788 1,178,487

56 57 Schedules to the accounts

Schedule 14 : Loans and advances As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) Unsecured, considered good Advances recoverable in cash or in kind or for value to be received 68,006,916 32,434,186 Inter-corporate loans to subsidiaries 218,000,000 228,071,070 Advance against share capital given to a proposed subsidiary 10,000,000 10,000,000 Advance payment of Income Tax/Tax Deducted at Source/Tax Refundable 61,498,433 28,324,933 Deposits - others 317,474,267 229,475,851 Unsecured, considered doubtful Advances recoverable in cash or in kind or for value to be received 250,798 250,798

675,230,414 528,556,838 Less : Provision for doubtful advances 250,798 250,798

674,979,616 528,306,040

Included in Loans and advances are: i) Outstanding from two subsidiaries, companies under the same management within the meaning of Section 370(1B) of the Companies Act, 1956 i.e. PVR Pictures Limited 118,000,000 11,500,000 CR Retail Malls (India) Private Limited 100,000,000 216,571,070 ii) Maximum amount outstanding from such companies at any time during the year PVR Pictures Limited 118,000,000 11,500,000 CR Retail Malls (India) Private Limited 376,571,296 218,213,803 iii) Outstanding from a private limited company in which some of the directors of the Company are interested as directors 2,500,000 4,750,000 (Previous year two private limited companies)

Schedule 15 : Current Liabilities Sundry Creditors 221,770,591 191,663,241 Unclaimed dividend (statutory liabilities as referred in 470,996 - Section 205C of the Companies Act, 1956)* Book overdraft with a bank - 1,955,084 Security deposits 9,391,804 5,368,000 Income received in advance (includes amount adjustable after one year Rs. Nil, 18,661,824 23,370,064 Previous year Rs. 833,333) Interest accrued but not due on loans 1,669,033 1,597,598

251,964,248 223,953,987

Dues to small scale industrial undertaking included in Sundry creditors - 5,501 Dues to other than small scale industrial undertakings included in Sundry creditors 221,770,591 191,657,740 Included in Sundry Creditors are: Payable to a subsidiary 556,986 262,284 Payable to Directors 482,668 358,300 * Shall be transferred to Investor Education and Protection Fund (when due)

Schedule 16 : Provisions For taxation 58,400,262 34,700,000 For Interim Dividend - on Equity Shares - 22,877,370 - on Preference Shares - 5,219,178 For Corporate Dividend Tax - 3,944,852 For Fringe Benefit Tax (Net of Payment) 792,646 150,000 For Staff benefit schemes - Leave Encashment 5,375,513 3,231,852 - Gratuity 3,847,267 901,056

68,415,688 71,024,308

58 Schedules to the accounts Schedules to the accounts

Schedule 14 : Loans and advances Schedule 17 : Miscellaneous Expenditure As at As at As at As at March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) (Rs.) (Rs.) Unsecured, considered good Miscellanous expenditure (To the extent not written off) Advances recoverable in cash or in kind or for value to be received 68,006,916 32,434,186 Share/debenture placement expenses Inter-corporate loans to subsidiaries 218,000,000 228,071,070 As per last account - 5,416,843 Advance against share capital given to a proposed subsidiary 10,000,000 10,000,000 Add: Incurred during the year - 113,195,755 Advance payment of Income Tax/Tax Deducted at Source/Tax Refundable 61,498,433 28,324,933 Deposits - others 317,474,267 229,475,851 - 118,612,598 Unsecured, considered doubtful Less: Written off during the year - 118,612,598 Advances recoverable in cash or in kind or for value to be received 250,798 250,798

675,230,414 528,556,838 - - Less : Provision for doubtful advances 250,798 250,798 NOTES: 674,979,616 528,306,040 1. The Company had, during the previous year incurred expenses amounting to Rs. 113,195,755 for the initial public offering (IPO) of 5,700,000 equity shares (excluding sale of 2,000,000 equity shares held by an existing shareholder). The share placement expenses Included in Loans and advances are: incurred on above issue was adjusted against securities premium account in the previous year. i) Outstanding from two subsidiaries, companies under the same management 2. Expenses incurred on the initial public offering, during the previous year included Rs. 4,866,240 paid to statutory auditors towards within the meaning of Section 370(1B) of the Companies Act, 1956 i.e. certification charges etc. and Rs. 158,254 paid as fringe benefit tax. PVR Pictures Limited 118,000,000 11,500,000 CR Retail Malls (India) Private Limited 100,000,000 216,571,070 ii) Maximum amount outstanding from such companies at any time during the year PVR Pictures Limited 118,000,000 11,500,000 Schedule 18 : Operating Income CR Retail Malls (India) Private Limited 376,571,296 218,213,803 iii) Outstanding from a private limited company in which some of the directors Income from sale of tickets of films (including entertainment tax collected 1,216,957,384 880,052,280 of the Company are interested as directors 2,500,000 4,750,000 Rs. 291,582,187, Previous year Rs. 224,379,377) (Previous year two private limited companies) Income from Revenue Sharing 190,043,320 48,884,692 Income from sale of film rights and distribution of films - 1,958,175 Sale of food and beverages (including sales tax collected Rs. 40,692,112, Previous 373,452,389 240,076,617 year Rs. 26,779,327) Schedule 15 : Current Liabilities Advertisement (Gross Tax Deducted at source Rs. 4,963,656, Previous year 181,059,767 94,062,849 Rs. 2,787,728) Sundry Creditors 221,770,591 191,663,241 Royalty Income (to the extent of pouring fee, from a customer) (Gross Tax Deducted 15,874,775 12,036,768 Unclaimed dividend (statutory liabilities as referred in 470,996 - at source Rs. 670,956, Previous year Rs. Nil) Section 205C of the Companies Act, 1956)* Management fees (Gross Tax Deducted at source Rs. 242,469, Previous year 8,678,225 8,691,643 Book overdraft with a bank - 1,955,084 Rs. 386,528) (including service tax collected Rs. 955,695, Previous year Security deposits 9,391,804 5,368,000 Rs. 799,107) Income received in advance (includes amount adjustable after one year Rs. Nil, 18,661,824 23,370,064 Previous year Rs. 833,333) 1,986,065,860 1,285,763,024 Interest accrued but not due on loans 1,669,033 1,597,598

251,964,248 223,953,987 Schedule 19 : Other Income Dues to small scale industrial undertaking included in Sundry creditors - 5,501 Interest Dues to other than small scale industrial undertakings included in Sundry creditors 221,770,591 191,657,740 On bank deposits (Gross, Tax Deducted at Source Rs. 2,230,429, 10,354,979 11,071,161 Included in Sundry Creditors are: Previous year Rs. 2,472,685) Payable to a subsidiary 556,986 262,284 On long term investments - Non Trade (Gross, Tax Deducted at Source Rs. Nil, 492,247 442,662 Payable to Directors 482,668 358,300 Previous year Rs. Nil) * Shall be transferred to Investor Education and Protection Fund (when due) From subsidiaries (Gross, Tax Deducted at Source Rs. 4,836,675, 21,557,678 1,930,820 Previous year Rs. 451,226) From others (Gross, Tax Deducted at Source Rs. Nil, Previous year Rs. Nil) 701,094 - Dividend income (from current investments - other than trade) 26,060,706 3,391,096 Schedule 16 : Provisions Profit on sale of Current Investments - other than trade 242,763 - For taxation 58,400,262 34,700,000 Rent received 3,754,199 - Royalty Income (to the extent of sign on fee, from a customer) 4,707,264 5,394,004 For Interim Dividend Foreign exchange fluctuation (net) - 34,965 - on Equity Shares - 22,877,370 Miscellaneous income (Gross, Tax Deducted at Source Rs. Nil, Previous year 10,825,540 7,824,533 - on Preference Shares - 5,219,178 Rs. 22,997) For Corporate Dividend Tax - 3,944,852 For Fringe Benefit Tax (Net of Payment) 792,646 150,000 For Staff benefit schemes - Leave Encashment 5,375,513 3,231,852 78,696,470 30,089,241 - Gratuity 3,847,267 901,056

68,415,688 71,024,308 Schedule 20 : Personnel Expenses Salary and other allowances 164,388,702 103,123,019 Contribution to gratuity fund 3,771,802 1,727,917 Contribution to provident and other funds 16,164,247 10,152,459 Staff welfare expenses 8,409,979 6,604,279

192,734,730 121,607,674 58 59 Schedules to the accounts

Schedule 21 : Operating and other expenses As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.)

Rent (net of receipt from sub-lessees of Rs. 16,075,502, 177,144,336 114,404,254 Previous year Rs. 14,074,573) Rates and taxes 7,988,447 5,623,803 Communication costs 16,417,732 8,819,818 Professional charges 18,086,333 11,467,891 Advertisement and publicity (excluding Rs. 28,229,326, 70,048,508 44,719,299 Previous year Rs. 23,540,874 borne by other co-sponsors) Business promotion and entertainment 2,226,836 3,175,581 Travelling and conveyance 35,573,156 18,830,565 Printing and stationery 9,483,906 6,493,993 Insurance 7,436,269 5,190,407 Repairs and maintenance : - Buildings 27,197,282 11,238,792 - Plant & Machinery 16,309,327 13,069,886 - Common area maintenance 90,443,457 61,355,837 - Others 8,821,833 7,350,110 Electricity and water charges 94,823,047 48,998,346 Auditor’s remuneration - Audit fee 1,741,580 1,290,760 - Tax audit fee 280,900 224,480 - Quarterly limited review of accounts 1,010,160 220,400 - Certification etc. 123,464 418,350 - Out-of-pocket expenses 28,141 3,184,245 57,670 Security service charges 19,695,965 12,308,626 Discount on sales 971,113 1,068,235 Donations 527,525 171,000 Irrecoverable balances written off (net) 173,152 - Provision for doubtful debts 2,278,143 1,602,381 Loss on sale/discard of fixed assets (net) 1,246,098 2,515,492 Loss on sale of current investments - other than trade - 35,506 Directors Sitting Fees 440,000 320,000 Bank and other charges 5,992,286 3,751,007 Miscellaneous expenses 18,552,070 11,312,578

635,061,066 396,035,067

Rent includes amount paid to directors 4,374,000 4,374,000

Schedule 22 : Interest paid Interest on fixed loans and debentures 54,544,491 30,890,193 to banks and others 417,781 1,366,416

54,962,272 32,256,609

60 Schedules to the accounts Schedules to the accounts

Schedule 21 : Operating and other expenses Schedule 23 : Earning per share (EPS) As at As at As at As at March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) (Rs.) (Rs.)

Rent (net of receipt from sub-lessees of Rs. 16,075,502, 177,144,336 114,404,254 Net profit as per profit and loss account 105,623,097 54,763,866 Previous year Rs. 14,074,573) Less: Dividend on Preference Shares and tax thereon 11,402,500 5,951,168 Rates and taxes 7,988,447 5,623,803 Communication costs 16,417,732 8,819,818 Net Profit for calculation of basic and diluted EPS 94,220,597 48,812,698 Professional charges 18,086,333 11,467,891 Advertisement and publicity (excluding Rs. 28,229,326, 70,048,508 44,719,299 Weighted average number of equity shares in calculating basic EPS: Previous year Rs. 23,540,874 borne by other co-sponsors) Number of equity shares outstanding at the beginning of the year 22,877,370 17,097,370 Business promotion and entertainment 2,226,836 3,175,581 Equity shares allotted on January 31, 2007 (outstanding for 59 days) 38,000 - Travelling and conveyance 35,573,156 18,830,565 Equity shares allotted on March 31, 2007 (outstanding for 1 day) 98,500 - Printing and stationery 9,483,906 6,493,993 Equity shares allotted on September 22, 2005 (outstanding for 191 days) - 80,000 Insurance 7,436,269 5,190,407 Equity shares allotted on December 27, 2005 (outstanding for 95 days) - 5,700,000 Repairs and maintenance : Number of equity shares outstanding at the end of the year 23,013,870 22,877,370 - Buildings 27,197,282 11,238,792 - Plant & Machinery 16,309,327 13,069,886 Weighted number of equity shares of Rs. 10 each outstanding during the year 22,883,782 18,622,795 - Common area maintenance 90,443,457 61,355,837 - Others 8,821,833 7,350,110 Weighted average number of equity shares in calculating diluted EPS: Electricity and water charges 94,823,047 48,998,346 Weighted number of equity shares of Rs. 10 each 22,883,782 18,622,795 Auditor’s remuneration outstanding during the year (as above) - Audit fee 1,741,580 1,290,760 Add: Effect of stock options - 33,593 - Tax audit fee 280,900 224,480 - Quarterly limited review of accounts 1,010,160 220,400 - Certification etc. 123,464 418,350 Weighted number of equity shares of Rs. 10 each outstanding during the year 22,883,782 18,656,388 - Out-of-pocket expenses 28,141 3,184,245 57,670 Security service charges 19,695,965 12,308,626 Basic Earnings Per Share 4.12 2.62 Discount on sales 971,113 1,068,235 Diluted Earnings Per Share 4.12 2.62 Donations 527,525 171,000 Irrecoverable balances written off (net) 173,152 - Provision for doubtful debts 2,278,143 1,602,381 Loss on sale/discard of fixed assets (net) 1,246,098 2,515,492 Loss on sale of current investments - other than trade - 35,506 Directors Sitting Fees 440,000 320,000 Bank and other charges 5,992,286 3,751,007 Miscellaneous expenses 18,552,070 11,312,578

635,061,066 396,035,067

Rent includes amount paid to directors 4,374,000 4,374,000

Schedule 22 : Interest paid Interest on fixed loans and debentures 54,544,491 30,890,193 to banks and others 417,781 1,366,416

54,962,272 32,256,609

60 61 Notes to the accounts

Schedule 24: Notes to the (e) Intangibles Accounts Software 1. Nature of Operations Cost relating to purchased softwares is capitalised and is PVR Limited is in the business of film exhibition. The Company amortised on a Straight-Line Basis over their estimated useful lives also earns revenue from in- cinema advertisements/product of six years. displays and in-cinema sale of food and beverages. Software licenses costing Rs. 5,000 and below are fully 2. Statement of Significant Accounting Policies depreciated in the year of acquisition. (a) Basis of preparation Film Right’s Cost The financial statements are prepared to comply in all material Film right cost is capitalized and is amortised fully as and when the respects with the mandatory Accounting Standards issued by the film is released. Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. The financial statements (f) Expenditure on new projects and substantial are prepared under the historical cost convention on an accrual expansion basis. The accounting policies have been consistently applied by Expenditure directly relating to construction activity is capitalised. the Company and except for the change in accounting policy Indirect expenditure incurred during construction period is disclosed more fully below, are consistent with those used in the capitalised as part of the indirect construction cost to the extent previous year. expenditure is related to construction or is incidental thereto. Other indirect expenditure (including borrowing costs) incurred (b) Change in Accounting Policy during the construction period, which is not related to the Till March 31, 2006 Company was providing for leave benefits construction activity nor is incidental thereto is charged to the based on actuarial valuation in accordance with old Accounting Profit and Loss Account. Income earned during construction Standard 15. In the current year, the Company has opted for period is adjusted against the total of the indirect expenditure. early adoption of the Accounting Standard 15 (Revised 2005) which is otherwise mandatory for accounting periods commencing All direct capital expenditure on expansion is capitalised. on or after December 7, 2006. Accordingly the Company has As regards indirect expenditure on expansion, only that portion is changed the basis of providing short term leave benefits. As a capitalised which represents the marginal increase in such result, actuarial valuation of leave as at April 1, 2006 is higher by expenditure involved as a result of capital expansion. Both direct Rs. 270,219 (net of income-tax Rs. 137,106) which in and indirect expenditure are capitalised only if they increase the accordance with the transitional provision in the revised value of the asset beyond its originally assessed standard of Accounting Standard, has been adjusted to the opening balance of performance. Profit and Loss Account. This change does not have material (g) Investments impact on the profit for the current year. Investments that are readily realizable and intended to be held for (c) Fixed Assets not more than a year are classified as current investments. Fixed Assets are stated at Cost less accumulated depreciation and All other investments are classified as long term investments. impairment losses, if any. Cost comprises the purchase price and Current investments are carried at lower of cost and fair value any directly attributable cost of bringing the asset in its working determined on an individual investment basis. Long term condition for its intended use. Financing costs relating to acquisition investments are carried at cost. However, provision for of qualifying Fixed Assets are also included to the extent they relate diminution in the value is made to recognize a decline other to the period till such assets are ready for their intended use. than temporary in the value of the investments. Leasehold improvements represent expenses incurred towards (h) Inventories civil works, interior furnishings, etc. on the leased premises at the Inventories are valued as follows: various locations. Food and Lower of cost and net realizable (d) Depreciation beverages value. Cost is determined on First In Leasehold Improvements are amortized over the estimated useful First Out Basis. life or unexpired period of lease (whichever is lower) on a straight Stores and spares Lower of cost and net realizable value. line basis. Cost is determined on First In First Out Basis. Cost of structural improvements at premises where Company has entered into agreement with the parties to operate and Net realizable value is the estimated selling price in the manage Multiscreen/Single Screen Cinemas on revenue sharing ordinary course of business, less estimated costs necessary to basis are amortized over the estimated useful life or lock in period make the sale. of the agreement (whichever is lower) on a straight line basis (i) Leases Depreciation on all other assets is provided on Straight-Line Where the Company is the lessee Method at the rates computed based on estimated useful life of the Finance leases, which effectively transfer to the Company assets, which are equal to the corresponding rates prescribed in substantially all the risks and benefits incidental to ownership of the Schedule XIV to the Companies Act, 1956. Depreciation on leased item, are capitalized at the lower of the fair value and additions/deletions to fixed assets due to foreign exchange present value of the minimum lease payments at the inception of fluctuation is provided/adjusted over the remaining useful life of the lease term and disclosed as leased assets. Lease payments are such assets. apportioned between the finance charges and reduction of the Assets costing Rs. 5,000 and below are fully depreciated in the lease liability based on the implicit rate of return. Finance charges year of acquisition. are charged directly against income. Lease management fees, 62 legal charges and other initial direct costs are capitalised. Notes to the accounts Notes to the accounts

Schedule 24: Notes to the (e) Intangibles If there is no reasonable certainty that the Company will obtain Interest Income the ownership by the end of the lease term, capitalized leased Interest revenue is recognised on a time proportion basis, taking Accounts Software assets are depreciated over the shorter of the estimated useful life into account the amount outstanding and the rates applicable. 1. Nature of Operations of the asset or the lease term. Cost relating to purchased softwares is capitalised and is Dividend Income PVR Limited is in the business of film exhibition. The Company amortised on a Straight-Line Basis over their estimated useful lives Leases where the lessor effectively retains substantially all the risks Revenue is recognized where the shareholder’s right to receive also earns revenue from in- cinema advertisements/product of six years. and benefits of ownership of the leased term, are classified as payment is established by the balance sheet date. displays and in-cinema sale of food and beverages. operating leases. Operating lease payments are recognized as an Software licenses costing Rs. 5,000 and below are fully Rent Income 2. Statement of Significant Accounting Policies depreciated in the year of acquisition. expense in the Profit and Loss Account on a straight-line basis over the lease term. Revenue from rent is recognized based upon the contract, for the (a) Basis of preparation Film Right’s Cost period the property has been let out. The financial statements are prepared to comply in all material Where the Company is the lessor Film right cost is capitalized and is amortised fully as and when the (k) Foreign currency transactions respects with the mandatory Accounting Standards issued by the film is released. Assets given under a finance lease are recognised as a receivable Institute of Chartered Accountants of India and the relevant at an amount equal to the net investment in the lease. Lease (i) Initial Recognition provisions of the Companies Act, 1956. The financial statements (f) Expenditure on new projects and substantial rentals are apportioned between principal and interest on the IRR Foreign currency transactions are recorded in Indian Rupees by are prepared under the historical cost convention on an accrual expansion method. The principal amount received reduces the net applying to the foreign currency amount, the exchange rate basis. The accounting policies have been consistently applied by Expenditure directly relating to construction activity is capitalised. investment in the lease and interest is recognised as revenue. between the Indian Rupee and the foreign currency prevailing at the Company and except for the change in accounting policy Indirect expenditure incurred during construction period is Initial direct costs such as legal costs, brokerage costs, etc. are the date of the transaction. disclosed more fully below, are consistent with those used in the capitalised as part of the indirect construction cost to the extent recognised immediately in the Profit and Loss Account. (ii) Conversion previous year. expenditure is related to construction or is incidental thereto. Assets subject to operating leases are included in fixed assets. Foreign currency monetary items are reported using the closing Other indirect expenditure (including borrowing costs) incurred rate. Non-monetary items which are carried in terms of historical (b) Change in Accounting Policy Lease income is recognised in the Profit and Loss Account on a during the construction period, which is not related to the cost denominated in a foreign currency, are reported using the Till March 31, 2006 Company was providing for leave benefits straight-line basis over the lease term. Costs, including construction activity nor is incidental thereto is charged to the exchange rate at the date of the transaction and non-monetary based on actuarial valuation in accordance with old Accounting depreciation are recognised as an expense in the Profit and Loss Profit and Loss Account. Income earned during construction items which are carried at fair value or other similar valuation Standard 15. In the current year, the Company has opted for Account. Initial direct costs such as legal costs, brokerage costs, period is adjusted against the total of the indirect expenditure. denominated in a foreign currency are reported using the early adoption of the Accounting Standard 15 (Revised 2005) etc. are recognised immediately in the Profit and Loss Account. exchange rates that existed when the values were determined. which is otherwise mandatory for accounting periods commencing All direct capital expenditure on expansion is capitalised. (j) Revenue recognition on or after December 7, 2006. Accordingly the Company has As regards indirect expenditure on expansion, only that portion is (iii) Exchange Differences Revenue is recognized to the extent that it is probable that the changed the basis of providing short term leave benefits. As a capitalised which represents the marginal increase in such Exchange differences arising on the settlement of monetary items economic benefits will flow to the Company and the revenue can result, actuarial valuation of leave as at April 1, 2006 is higher by expenditure involved as a result of capital expansion. Both direct at rates different from those at which they were initially recorded be reliably measured. Amount of entertainment tax, sales tax and Rs. 270,219 (net of income-tax Rs. 137,106) which in and indirect expenditure are capitalised only if they increase the during the year, or reported in previous financial statements, are service tax collected on generating operating revenue has been accordance with the transitional provision in the revised value of the asset beyond its originally assessed standard of recognized as income or as expense in the year in which they shown as a reduction from the operating revenue. Accounting Standard, has been adjusted to the opening balance of performance. arise except gain or loss on transactions relating to acquisition of Fixed Assets/Intangibles from outside India, which is adjusted to the Profit and Loss Account. This change does not have material (g) Investments Sale of Tickets of Films carrying amount of the Fixed Assets/Intangibles. impact on the profit for the current year. Investments that are readily realizable and intended to be held for Revenue from sale of tickets of films is recognised as and when the film is exhibited. (c) Fixed Assets not more than a year are classified as current investments. (l) Retirement and other employee benefits All other investments are classified as long term investments. Fixed Assets are stated at Cost less accumulated depreciation and Sale of Food and Beverages i. Retirement benefits in the form of Provident Fund is a defined impairment losses, if any. Cost comprises the purchase price and Current investments are carried at lower of cost and fair value Revenue from sale of food and beverages is recognised upon contribution scheme and the contributions are charged to the determined on an individual investment basis. Long term any directly attributable cost of bringing the asset in its working passage of title to customers, which coincides with their delivery. Profit and Loss Account of the year when the contributions to the investments are carried at cost. However, provision for condition for its intended use. Financing costs relating to acquisition respective funds are due. There are no other obligations other Income from Distribution of films of qualifying Fixed Assets are also included to the extent they relate diminution in the value is made to recognize a decline other than the contribution payable to the respective trusts. to the period till such assets are ready for their intended use. than temporary in the value of the investments. Theatrical revenue from the distribution of films is accounted for on the basis of box office reports received from various exhibitors ii. Gratuity is a defined benefit obligation. The Company has Leasehold improvements represent expenses incurred towards (h) Inventories and revenue from the sale of satellite / TV rights is recognised at created an approved gratuity fund for the future payment of gratuity to the employees. The Company accounts for the gratuity civil works, interior furnishings, etc. on the leased premises at the Inventories are valued as follows: the time of initial period of transfer of right to the customer. liability, based upon the actuarial valuation carried out at the year various locations. Food and Lower of cost and net realizable Sharing Revenue end, by an independent actuary. Gratuity liability of an employee, beverages value. Cost is determined on First In (d) Depreciation Income from revenue sharing is recognized in accordance with the who leaves the Company before the close of the year and which First Out Basis. Leasehold Improvements are amortized over the estimated useful terms of agreement with parties to operate and manage is remaining unpaid, is provided on actual computation basis. life or unexpired period of lease (whichever is lower) on a straight Stores and spares Lower of cost and net realizable value. Multiscreen/ Single screen Cinemas, namely PVR EDM, PVR iii. Short term compensated absences are provided for on based line basis. Cost is determined on First In First Lucknow, PVR Indore, PVR Mullund and PVR Aligarh in on estimates. Long term compensated balances are provided for Out Basis. coordinated manner. Cost of structural improvements at premises where Company based on actuarial valuation. Leave encashment liability of an has entered into agreement with the parties to operate and Net realizable value is the estimated selling price in the Advertisement Revenue employee, who leaves the Company before the close of the year manage Multiscreen/Single Screen Cinemas on revenue sharing ordinary course of business, less estimated costs necessary to Advertisement revenue is recognised as and when advertisement and which is remaining unpaid, is provided for on actual basis are amortized over the estimated useful life or lock in period make the sale. is displayed at the cinema halls. computation basis. of the agreement (whichever is lower) on a straight line basis iv. Actuarial gains/losses are immediately taken to profit and loss (i) Leases Royalty income (to the extent of Pouring Fee, from a account and are not deferred. Depreciation on all other assets is provided on Straight-Line Where the Company is the lessee customer) and Management Fee Revenue Method at the rates computed based on estimated useful life of the Finance leases, which effectively transfer to the Company Revenue is recognised on an accrual basis in accordance with the (m) Income taxes assets, which are equal to the corresponding rates prescribed in substantially all the risks and benefits incidental to ownership of the terms of the relevant agreements. Tax expense comprises of current, deferred and fringe benefit tax. Schedule XIV to the Companies Act, 1956. Depreciation on leased item, are capitalized at the lower of the fair value and Royalty income (to the extent of Sign on Fee from customers) Current income tax and fringe benefit tax is measured at the additions/deletions to fixed assets due to foreign exchange present value of the minimum lease payments at the inception of Revenue of one time sign on fee from customers is recognized on amount expected to be paid to the tax authorities in accordance fluctuation is provided/adjusted over the remaining useful life of the lease term and disclosed as leased assets. Lease payments are an annual basis as per the agreements. The amount of sign on fee with the Indian Income Tax Act. Deferred income taxes reflect the such assets. apportioned between the finance charges and reduction of the received for unexpired period of agreements is deferred, which is impact of current year timing differences between taxable income recognized in the relevant year to which it pertains. Assets costing Rs. 5,000 and below are fully depreciated in the lease liability based on the implicit rate of return. Finance charges and accounting income for the year and reversal of timing year of acquisition. are charged directly against income. Lease management fees, differences of earlier years. legal charges and other initial direct costs are capitalised. 62 63 Notes to the accounts

Deferred tax is measured based on the tax rates and the tax laws (r) Employee Stock Compensation Cost enacted or substantively enacted at the balance sheet date. Measurement and disclosure of the employee share-based Deferred tax assets are recognised only to the extent that there is payment plans is done in accordance with the Guidance Note on reasonable certainty that sufficient future taxable income will be Accounting for Employee Share-based Payments, issued by the available against which such deferred tax assets can be realised. In Institute of Chartered Accountants of India. The Company case where the Company has unabsorbed depreciation or carry measures compensation cost relating to employee stock options forward tax losses, entire deferred tax assets are recognised only using the intrinsic value method. Compensation expense is if there is virtual certainty supported by convincing evidence that amortized over the vesting period of the option on a straight line they can be realised against future taxable profits. Unrealised basis. deferred tax assets of earlier years are re-assessed and recognized to the extent that it has become reasonably certain or 3. Segment Information virtually certain, as the case may be that sufficient future taxable Business Segments: income will be available against which such deferred tax assets can The Company is engaged in the business of film exhibition. The be realised. entire operations are governed by the same set of risk and (n) Earning Per share returns, hence, the same has been considered as representing a Basic Earnings Per Share is calculated by dividing the net profit or single primary segment. The said treatment is in accordance with loss for the year attributable to equity shareholders (after the guiding principles enunciated in the Accounting Standard – 17 deducting dividend on preference shares and attributable taxes) by on Segment Reporting. the weighted average number of equity shares outstanding during Geographical Segments: the year. The weighted average number of equity shares The following is the distribution of the Company’s consolidated outstanding during the year are adjusted for events of bonus issue; revenue by geographical markets, regardless of where the bonus element in a rights issue to existing shareholders; share expense against the same has been incurred. split; and reverse share split (consolidation of shares). Partly paid equity shares are treated as a fraction of an equity share to the March 31, 2007 March 31, 2006 extent that they were entitled to participate in dividends relative to (Rs.) (Rs.) a fully paid equity share during the reporting year. For the purpose of calculating Diluted Earnings Per Share, the net profit or loss for Domestic Market 1,985,730,080 1,283,804,849 the year attributable to equity shareholders and the weighted Overseas Markets - 1,958,175 average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. Total 1,985,730,080 1,285,763,024

(o) Impairment The following table shows the carrying amount of debtors by The carrying amounts of assets are reviewed at each balance geographical market. sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized March 31, 2007 March 31, 2006 wherever the carrying amount of an asset exceeds its recoverable (Rs.) (Rs.) amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the Domestic Market 60,513,491 32,662,724 estimated future cash flows are discounted to its present value at Overseas Markets - - the weighted average cost of capital. Total 60,513,491 32,662,724 (p) Provisions A provision is recognised when the Company has a present The Company has common fixed assets for providing services to obligation as a result of past event and it is probable that an domestic as well as overseas markets. Hence, separate figures for outflow of resources will be required to settle the obligation, in fixed assets/additions to fixed assets have not been furnished. respect of which a reliable estimate can be made. Provisions except those disclosed elsewhere in the financial statements, are not discounted to their present value and are determined based on best management estimate required to settle the obligation at each Balance Sheet date. These are reviewed at each Balance Sheet date and are adjusted to reflect the current best management estimates. (q) Cash and Cash equivalents Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

64 Notes to the accounts

Deferred tax is measured based on the tax rates and the tax laws (r) Employee Stock Compensation Cost enacted or substantively enacted at the balance sheet date. Measurement and disclosure of the employee share-based Total Grand Deferred tax assets are recognised only to the extent that there is payment plans is done in accordance with the Guidance Note on reasonable certainty that sufficient future taxable income will be Accounting for Employee Share-based Payments, issued by the available against which such deferred tax assets can be realised. In Institute of Chartered Accountants of India. The Company case where the Company has unabsorbed depreciation or carry measures compensation cost relating to employee stock options forward tax losses, entire deferred tax assets are recognised only using the intrinsic value method. Compensation expense is if there is virtual certainty supported by convincing evidence that amortized over the vesting period of the option on a straight line they can be realised against future taxable profits. Unrealised basis. deferred tax assets of earlier years are re-assessed and 67,500,000- 67,500,000 recognized to the extent that it has become reasonably certain or 3. Segment Information virtually certain, as the case may be that sufficient future taxable Business Segments: income will be available against which such deferred tax assets can The Company is engaged in the business of film exhibition. The be realised. entire operations are governed by the same set of risk and influenced by key management (n) Earning Per share returns, hence, the same has been considered as representing a 14,852,0009,444,000 14,852,000 9,444,000 Basic Earnings Per Share is calculated by dividing the net profit or single primary segment. The said treatment is in accordance with loss for the year attributable to equity shareholders (after the guiding principles enunciated in the Accounting Standard – 17 deducting dividend on preference shares and attributable taxes) by on Segment Reporting. the weighted average number of equity shares outstanding during Geographical Segments: the year. The weighted average number of equity shares The following is the distribution of the Company’s consolidated outstanding during the year are adjusted for events of bonus issue; revenue by geographical markets, regardless of where the bonus element in a rights issue to existing shareholders; share Relatives of Keysignificantly or owned Enterprises

expense against the same has been incurred. Personnel Management split; and reverse share split (consolidation of shares). Partly paid equity shares are treated as a fraction of an equity share to the March 31, 2007 March 31, 2006 extent that they were entitled to participate in dividends relative to (Rs.) (Rs.) a fully paid equity share during the reporting year. For the purpose of calculating Diluted Earnings Per Share, the net profit or loss for Domestic Market 1,985,730,080 1,283,804,849 the year attributable to equity shareholders and the weighted Overseas Markets - 1,958,175 average number of shares outstanding during the year are 243,000- - - 243,000 106,420,000- - - 106,420,000 adjusted for the effects of all dilutive potential equity shares. Total 1,985,730,080 1,285,763,024

(o) Impairment The following table shows the carrying amount of debtors by The carrying amounts of assets are reviewed at each balance geographical market. 6,451,2003,427,200 6,451,200 3,427,200 ------6,451,2003,427,200 6,451,200 3,427,200 sheet date if there is any indication of impairment based on 3,456,0003,456,000 - - 3,456,000 3,456,000 internal/external factors. An impairment loss is recognized March 31, 2007 March 31, 2006 wherever the carrying amount of an asset exceeds its recoverable (Rs.) (Rs.) amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the Domestic Market 60,513,491 32,662,724

Overseas Markets - - 1,800,000- - - - - 1,800,000

estimated future cash flows are discounted to its present value at 93,580,000- - - - - 93,580,000 the weighted average cost of capital. Total 60,513,491 32,662,724 (p) Provisions

A provision is recognised when the Company has a present The Company has common fixed assets for providing services to Companythe over Director)Managing Joint relatives their or personnel or significant influenceand Director (Managing 4,920,768------4,920,768 - 4,330,000- 4,330,000------4,330,000 - - 4,330,000 - obligation as a result of past event and it is probable that an 4,920,068------4,920,068 -

domestic as well as overseas markets. Hence, separate figures for 14,009,29511,039,680 - - - - 14,009,295 11,039,680 outflow of resources will be required to settle the obligation, in fixed assets/additions to fixed assets have not been furnished. respect of which a reliable estimate can be made. Provisions except those disclosed elsewhere in the financial statements, are not discounted to their present value and are determined based on best management estimate required to settle the obligation at 14,500,000------14,500,000 each Balance Sheet date. These are reviewed at each Balance Sheet date and are adjusted to reflect the current best management estimates.

(q) Cash and Cash equivalents CompaniesSubsidiary controlhaving Enterprises Personnel Management Key 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 160,000,226218,213,803 ------160,000,226 218,213,803 Cash and cash equivalents in the cash flow statement 192,900,000128,500,00014,500,000 ------128,500,000 192,900,000 14,500,000 - comprise cash at bank and in hand and short term investments with an original maturity of three months or less. Sanjeev KumarSanjeev Rent Expense LimitedPrivate Exhibitors Priya ------Transactions during the year the during Transactions Remuneration paid Ajay BijliLimitedWorld Leisure -- LimitedPrivate Exhibitors Priya ------Ajay BijliKumarSanjeev Film Distributors Share (net expense of recovery LimitedPictures PVR towards publicity) NetworkDistribution Factory PVR Fixed Assets Purchased LimitedPrivate Exhibitors Priya Purchase of Shares of Ajay a Bijli Subsidiary KumarSanjeev BijliSandhurao Interim Dividend Paid for Bijli Investments Private Limited31,189,041 2005-06 - - - Ajay Bijli- KumarSanjeev 17,710,966 BijliSandhurao Selena Bijli- Interim Dividend Paid - for Bijli Investments -Private Limited 2006-07 LimitedPrivate Exhibitors Priya - - - Ajay BijliInfusion - of - Preference Ajay - Bijli Share - Capital Executor and Trustee India Western - - Fund-1)Advantage (India Limited Company - - -Infusion of Equity (including - share - LtdPvt Exhibitors Priya - premium) - - - - - Allotment - of - Shares - Share against Application - LimitedPictures PVR Money - - Subscription to share 1,836,000 LtdPvt (India) Malls -Retail CR capital - - - - Inter - - - Corporate - Loans LimitedPictures PVR Given - 1,836,000 LtdPvt (India) Malls Retail R -C ------243,000 - 100 100 ------18,172------10,000 1,526,807 - - - 100 - 1,836,000 31,189,041 100 - - - - 1,836,000 - 17,710,966 - - - - 1,526,807 ------243,000 10,000 100 100 100 - - 100 18,172- - - - - 64 Disclosure Party Related 4. 65 otal over the Companythe over Director)Managing Joint relatives their or personnel or significant influenceandDirector (Managing Personnel Management influenced by key management 00,000 ------200,000,000 7,100,000 Subsidiary Companies Subsidiary control having Enterprises Personnel Management Key Relatives of Keysignificantlyor owned Enterprises T Grand 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 Contd. Inter Corporate Loans Repaid PVRPictures Limited C R Retail Malls (India) Pvt LtdInterest Received PVRPictures Limited Ltd Pvt (India) Malls Retail R C Guarantees Given (Corporate Guarantees) C R Retail276,571,296 Malls (India) Pvt LtdGuarantees Taken (Personal 22,000,000 Guarantees) Ajay Bijli1,642,733 16,472,112SanjeevKumar Assets Mortgaged 8,000,000 5,085,566 Ajay Bijli1,519,452 250,000,000 SanjeevKumar Balance outstanding at - end the of the year 411,368Limited Pictures Trade PVR Payable NetworkDistribution Factory PVR - LimitedPrivate Exhibitors Priya - - LtdPvt Co. Transport Amritsar The Ajay Bijli- Sanjeev Kumar -Security - Deposits PriyaExhibitors Private Limited - -- -LeisureWorld Limited Inter - Corporate - Loans Limited556,986Pictures PVR -- - -CR- Retail Malls (India) Pvt LtdInterest - Receivable Ltd- Pvt (India) Malls Retail CR -- -262,284 Investment in Equity - - CR Retail Share Malls (India) Capital Pvt Ltd------100,000,000 - -- - 118,000,000 - - 1,100,081- - 857,031 216,571,070 -- -11,500,000 - - 200,000,000 378,929 1,178,487 ------2,500,000 - 7,1 ------2,500,000 ------129,500239,900 - -- - 276,571,296 - - - 230,400 127,900 -22,000,000 - 16,472,1121,642,733 -- - - 8,000,000 1,519,452 5,085,566 250,000,000 - -- 411,368 ------587,375 -- -29,227 - 1,100,081 ------556,9862,400,000 - - - -378,929 - -2,500,000 2,400,000 - -262,284 - - -587,375 - 2,400,000 100,000,000 239,900 2,500,000 118,000,000 129,500 * 29,227 * 857,031 216,571,070 2,400,000 * 11,500,000 * 230,400 127,900 1,178,487 66 Disclosure Party Related 4. PicturesPVR Limited Guarantees Given (Corporate Guarantees) C R Retail Malls (India) Pvt LtdGuarantees Taken (Personal Guarantees) Ajay BijliSanjeevKumar Assets Mortgaged Ajay Bijli15,000,000 250,000,000 SanjeevKumar 15,000,000 ------* * * * * * * *- - - -15,000,000 250,000,000 15,000,000 ------* * * * * * * * Notes to the accounts 411,368 7,100,000 216,571,070

Grand Total Grand Subsidiaries CR Retail Malls (India) Private Limited PVR Pictures Limited (with effect from April 5, 2005) Key Management Personnel Ajay Bijli, Managing Director and Sanjeev Kumar, Joint Managing Director 5,085,566

100,000,000 Relatives of Key Management Personnel Sandhuro Rani Bijli and Selena Bijli Enterprises having control or significant Bijli Investments Private Limited, Priya Exhibitors Private Limited, Western India influence over the Company Trusteeand Executor Company Limited (India Advantage Fund-1) (till December 27, 2005) Enterprises owned or significantly influenced The Amritsar Transport Co. Private Limited, PVR Pictures Limited by key management personnel or (till April 4, 2005), ATC Carriers Private Limited, their relatives Leisure World Limited, PVR Factory Distribution Network (till May 31, 2006) influenced by key management NOTES: 2,400,0002,400,000 2,400,000 2,400,000 a) * The Company has availed loans from banks and Small Industries Development Bank of India (SIDBI) of Rs. 494,989,524 (Previous year Rs. 613,304,554) which are further secured by personal guarantee of two directors of the Company. Loan from ICICI Bank Limited is further secured by mortgage of the personal properties of two directors of the Company located at Vasant Vihar and Kundli, New Delhi. Loan from SIDBI is further secured by second charge on personal properties of a director at Vasant Vihar and Jhandewalan, New Delhi. b) The above particulars exclude expenses reimbursed to/by related parties.

Relatives of Keysignificantly or owned Enterprises c) No amount has been provided as doubtful debt or advance/written off or written back in the year in respect of debts due from/to Management Personnel Management above related parties except as disclosed above. 5. The Company has provided various share-based payment schemes to its employees. During the year ended March 31, 2007, the following schemes were in operation:

Plan I Plan II Plan III Date of grant October 10, 2005 October 10, 2005 October 10, 2005 Date of Board Approval September 8, 2005 September 8, 2005 September 8, 2005 Date of Shareholder’s approval September 15, 2005 September 15, 2005 September 15, 2005 Number of options granted 80,000 38,000 52,000

239,900230,400 - - 239,900 230,400 Fair value of Company’s share 75 75 77.50 Method of Settlement (Cash/Equity) Cash Cash Cash Vesting Period 18 months 12 months 18 months Exercise Period 3 months 3 months 3 months Vesting Conditions Continued employment Continued employment Continued employment

The details of activity under different plans have been summarized below:

2006-07 2005-06 over the Companythe over Director)Managing Joint relatives their or personnel

or significant influenceand Director (Managing Numberof Weighted Number of Weighted 2,500,0002,500,000 - - - - 2,500,000 2,500,000 Shares Average Exercise Shares Average Exercise Price (Rs.) Price (Rs.)

Outstanding at the beginning of the year 170,000 28.41 Nil Nil Granted during the year - - 170,000 28.41 411,368------

7,100,000- - - - Forfeited during the year - - 200,000,000 33,500 28.21 - - 216,571,070- - - - Exercised during - the year - 136,500 28.46 - - Expired during the year - - - - Outstanding at the end of the year - - 170,000 28.41 Exercisable at the end of the year - - - - Weighted average remaining contractual Nil Nil 10.72 28.41 Subsidiary CompaniesSubsidiary controlhaving Enterprises Personnel Management Key 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 31-Mar-07 31-Mar-06 15,000,00015,000,000 ------15,000,000 15,000,000 22,000,0008,000,000 ------22,000,000 8,000,000 100,000,000 250,000,000- - - - - 250,000,000------250,000,000 - - - - 250,000,000 - 200,000,000 life (in months) Weighted average fair value of options granted Nil Nil 170,000 75.76

The weighted average share price at the date of exercise for stock options was Rs. 189.67. Contd. There are no stock options outstanding at the end of the year on March 31, 2007. C R Retail Malls (India) Pvt LtdInterest Received LimitedPictures PVR 276,571,296 1,642,733 5,085,566 ------276,571,296 1,642,733 Inter Corporate Loans LimitedPictures Repaid PVR Inter Corporate Loans LimitedPictures PVR LtdPvt (India) Malls Retail CR 118,000,000 11,500,000 ------118,000,000 11,500,000 Leisure World LimitedWorld Leisure ------4. Related Party Disclosure Party Related 4. Guarantees Taken (Personal Guarantees) Ajay BijliKumarSanjeev Assets Mortgaged Ajay BijliKumarSanjeev Balance outstanding at end the of the year Limited Pictures Trade PVR Payable NetworkDistribution Factory PVR LimitedPrivate Exhibitors Priya LtdPvt Co. Transport Amritsar The Ajay Bijli- - - 556,986 ------262,284 ------1,100,081Guarantees - Taken (Personal - - Guarantees) - Ajay Bijli378,929 KumarSanjeev - -- Assets - Mortgaged Ajay Bijli- KumarSanjeev ------587,375- - * * 29,227 1,100,081- - * * 556,986 - -- * * 378,929 - - - 262,284 * * 587,375 * * 29,227 * * ------* * * * * * * * C R Retail Malls (India) Pvt LtdPvt (India) Malls Retail R C Guarantees Given (Corporate Guarantees) LtdPvt (India) Malls Retail R C 16,472,112 1,519,452 - Sanjeev KumarSecurity Deposits LimitedPrivate Exhibitors Priya - - - LimitedPictures PVR Guarantees Given (Corporate - - Guarantees) LtdPvt (India) Malls Retail R C - - - - - 129,500 - 127,900 16,472,1121,519,452 - - 129,500 127,900 Interest Receivable LtdPvt (India) Malls Retail CR Investment in Equity LtdPvt (India) Malls Retail CR Share Capital 857,031 1,178,487 ------857,031 1,178,487 66 67 Notes to the accounts

As at March 31, 2006

Range of Number of options Weighted average Weighted average exercise prices outstanding remaining contractual exercise price life of options (in months)

Rs. 20 to Rs. 47.50 170,000 10.72 28.41

Stock Options granted The Company has not granted any stock options during the year ended March 31, 2007. 2006-07 2005-06

Exercise Price 28.46 - Expected Volatility 8.61% - Historical Volatility -- Life of the options granted (Vesting and exercise period) in months 19.12 - Expected dividends 68,250 - Average risk-free interest rate 5.50% - Expected dividend rate 5.00%

The expected volatility was determined based on management estimates as there was no historical volatility data available. Effect of the employee share-based payment plans on the Profit and Loss Account and Pre-Operative Expenditure and on its financial position:

2006-07 2005-06* Total

Liability for employee stock options outstanding 2,915,965 - 2,915,965 at the beginning of the year Total Employee Compensation Cost pertaining to share-based payment 4,502,428 2,553,183 7,055,611 plans debited to Profit and Loss Account Less: Amount reversed upon forfeiture of options (1,592,500) - (1,592,500) Net Impact in the Profit and Loss Account 2,909,928 2,553,183 5,463,111 Add: Pre-Operative Expenditure (ESOP) 631,607 362,782 994,389 Liability for employee stock options outstanding as at year end - 2,915,965 2,915,965 Amount transferred to Securities Premium Account upon 6,457,500 - 6,457,500 exercise of granted options

* Amount debited to Profit and Loss Account and Pre-Operative Expenditure during the previous year further includes amount of Rs. 4,455,000 and Rs. 345,000 respectively 80,000 equity shares issued to the certain employees under Employee Share Purchase Scheme approved in the previous year.

6. The Company has till date, incurred/made expenses/payments on a multi-screen project at Goregaon, Mumbai such as Pre- Operative Expenditure (including architect fee, traveling expenses, interest on loan taken etc.), payment of Capital Advances to a supplier and Security Deposit to developers etc. of Rs. 8,290,632, Rs. 710,000 and Rs. 26,660,340 respectively on behalf of a proposed subsidiary i.e. Sunrise Infotainment Private Limited. The Company intends to recover these expenses/payments as and when the final decision is taken. Pending final decision, the aforesaid amount has been shown under respective heads in the accounts.

7. The followings are the details of loans and advances of the Company, outstanding at the end of the year in terms of Securities & Exchange Board of India’s circular dated January 10, 2003:

Outstanding amount as at Maximum amount outstanding during the year March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 Rs. Rs. Rs. Rs.

Loans and Advances to Subsidiaries (including accrued interest) - CR Retail Malls (India) Private Limited 100,857,031 217,749,557 387,773,084 219,392,290 - PVR Pictures Limited 118,000,000 11,500,000 118,000,000 11,500,000

Repayment of principal amount is not due as per stipulation. 8. Security Deposits (paid) include Rs. 10,332,089 recoverable from three parties, with whom the Company had entered into Memorandum of Understanding for taking multiplex/office space on rent. The Company has filed legal case for recovery of deposit of Rs. 2,832,089 in case of one party. The Company is in discussions with the parties for the recovery of the aforesaid amount and is hopeful of recovering the same. Hence, no provision against the same has been considered necessary.

68 Notes to the accounts Notes to the accounts

As at March 31, 2006 9.1 During the previous year, the Company had successfully completed its public issue. This comprised of 5,700,000 equity shares of Rs. 10 each at a premium of Rs. 215 per share. Alongwith this public issue, there was also a sale of 2,000,000 equity shares by a Range of Number of options Weighted average Weighted average shareholder of the Company i.e. Western India Trustee and Executor Company Limited (India Advantage Fund-I). exercise prices outstanding remaining contractual exercise price life of options 9.2 Utilization of IPO funds: Amount in Rs. (in months) As per Prospectus Total Estimated Amount to be Amount Spent Balance to be Rs. 20 to Rs. 47.50 170,000 10.72 28.41 Objects Project Cost spent till till March 31, spent March 31, 2007 2007

Stock Options granted Setting up of New Cinemas 1,380,000,000 1,343,000,000 481,385,767 898,614,233 The Company has not granted any stock options during the year ended March 31, 2007. Equity Investment/ Unsecured 2006-07 2005-06 Loan in CR Retail , a wholly owned subsidiary Exercise Price 28.46 - for setting up a Multiplex 300,000,000 300,000,000 300,000,000 - Expected Volatility 8.61% - Equity Investment/ Unsecured Historical Volatility -- Loan in PVR Pictures Ltd, Life of the options granted (Vesting and exercise period) in months 19.12 - a wholly owned subsidiary Expected dividends 68,250 - for Film Distribution Business 70,000,000 70,000,000 11,500,000 58,500,000 Average risk-free interest rate 5.50% - Unsecured Loan in Expected dividend rate 5.00% PVR Pictures Ltd, a wholly owned subsidiary for The expected volatility was determined based on management estimates as there was no historical volatility data available. Film Production Business 200,000,000 - 106,500,000 93,500,000 Effect of the employee share-based payment plans on the Profit and Loss Account and Pre-Operative Expenditure and on its financial General Corporate Expenses* 62,000,000 62,000,000 71,833,661 - position: Issue Expenses* 120,000,000 120,000,000 110,166,339 - Prepayment of high cost loans** Nil Nil 108,086,341 (108,086,341) 2006-07 2005-06* Total Total 2,132,000,000*** 1,895,000,000 1,189,472,108 942,527,892 Liability for employee stock options outstanding 2,915,965 - 2,915,965 at the beginning of the year NOTES: Total Employee Compensation Cost pertaining to share-based payment 4,502,428 2,553,183 7,055,611 i) Unspent money is temporarily invested in the units of Mutual Funds. plans debited to Profit and Loss Account Less: Amount reversed upon forfeiture of options (1,592,500) - (1,592,500) ii) * The Board of Directors of the Company have approved the inter-se re-allocation of unspent monies amounting to Rs. Net Impact in the Profit and Loss Account 2,909,928 2,553,183 5,463,111 9,833,661 from issue expenses to general corporate expenses. Add: Pre-Operative Expenditure (ESOP) 631,607362,782994,389 iii) ** The Company had temporarily during the last year, used part of proceeds of share issue of Rs. 108,086,341 to prepay the Liability for employee stock options outstanding as at year end - 2,915,965 2,915,965 high cost loans, which would be replaced by borrowing new additional loan(s) in future. Amount transferred to Securities Premium Account upon 6,457,500 - 6,457,500 iv) *** includes Rs. 1,282,500,000 raised through public issue of equity shares. exercise of granted options v) Certain expenditure on setting up of new cinemas and equity investment in a subsidiary Company have been deferred to the year * Amount debited to Profit and Loss Account and Pre-Operative Expenditure during the previous year further includes amount of 2007-08, due to which current year’s expenditure were lower. Rs. 4,455,000 and Rs. 345,000 respectively 80,000 equity shares issued to the certain employees under Employee Share Purchase Scheme approved in the previous year. 10. Derivative Instruments and unhedged Foreign Currency Exposure : Particulars of Sundry Creditors and Capital Advances not covered by foreign exchange contracts 6. The Company has till date, incurred/made expenses/payments on a multi-screen project at Goregaon, Mumbai such as Pre- Operative Expenditure (including architect fee, traveling expenses, interest on loan taken etc.), payment of Capital Advances to a supplier and Security Deposit to developers etc. of Rs. 8,290,632, Rs. 710,000 and Rs. 26,660,340 respectively on behalf of a Amount in foreign currency proposed subsidiary i.e. Sunrise Infotainment Private Limited. The Company intends to recover these expenses/payments as and Particulars Currency March 31, 2007 March 31, 2006 when the final decision is taken. Pending final decision, the aforesaid amount has been shown under respective heads in the accounts. Sundry Creditors USD Nil 21,959 GBP Nil 7,974 7. The followings are the details of loans and advances of the Company, outstanding at the end of the year in terms of Securities & Capital Advances USD 29,875 587,054 Exchange Board of India’s circular dated January 10, 2003: EURO Nil 18,897

Outstanding amount as at Maximum amount outstanding 11. Gratuity and leave benefit plans: (AS 15 Revised) during the year The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance Rs. Rs. Rs. Rs. company in the form of a qualifying insurance policy. Loans and Advances to Subsidiaries The Company also provides 18-24 earned leaves to employees every year to be accumulated upto a maximum level of (including accrued interest) 54-48 leaves respectively. These benefits are unfunded.The following tables summarize the components of net benefit expense - CR Retail Malls (India) Private Limited 100,857,031 217,749,557 387,773,084 219,392,290 recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective - PVR Pictures Limited 118,000,000 11,500,000 118,000,000 11,500,000 plans.

Repayment of principal amount is not due as per stipulation. 8. Security Deposits (paid) include Rs. 10,332,089 recoverable from three parties, with whom the Company had entered into Memorandum of Understanding for taking multiplex/office space on rent. The Company has filed legal case for recovery of deposit of Rs. 2,832,089 in case of one party. The Company is in discussions with the parties for the recovery of the aforesaid amount and is hopeful of recovering the same. Hence, no provision against the same has been considered necessary.

68 69 Notes to the accounts

Profit and Loss Account Net employee benefit expense (recognized in Employee Cost)

Leave Gratuity Encashment

2006-07 2006-07

Current service cost 1,773,3601,439,748 Interest cost on benefit obligation 223,633 420,146 Expected return on plan assets - (364,795) Net actuarial loss recognized in the year - 48,676 on account of return on plan assets Net actuarial loss recognised in the year 755,805 2,228,027 Net benefit expense 2,752,798 3,771,802

Actual return on plan assets - (316,119)

Balance sheet Details of Provision for leave encashment benefits and gratuity

Leave Encashment Gratuity

2006-07 2006-07

Defined benefit obligation 4,799,565 8,917,260 Total value of Provident fund contribution on closing liability 575,948 - Fair value of plan assets - 5,069,993

5,375,513 3,847,267

Less: Unrecognised past service cost - -

Plan (liability) (5,375,513) (3,847,267)

Changes in the present value of the defined benefit obligation are as follows:

Leave Encashment Gratuity

2006-07 2006-07

Opening defined benefit obligation 3,249,265 6,184,201 Interest cost 223,633 420,146 Current service cost 1,773,3601,439,748 Actual return on plan assets - 316,119 Benefits paid (1,202,498) (1,038,743) Actuarial losses on obligation 755,805 2,228,027

Closing defined benefit obligation 4,799,565 8,917,260

Changes in the fair value of plan assets are as follows: Gratuity

2006-07

Opening fair value of plan assets 4,891,561 Expected return 364,795 Contributions by employer 901,056 Benefits paid (1,038,743) Actuarial (losses) (48,676)

Closing fair value of plan assets 5,069,993

The Company has since contributed Rs. 3,771,802 to the gratuity fund.

70 Notes to the accounts Notes to the accounts

Profit and Loss Account The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: Net employee benefit expense (recognized in Employee Cost) Gratuity Leave Gratuity Encashment 2006-07

2006-07 2006-07 % Investments with insurer 80.14 Current service cost 1,773,360 1,439,748 Cash and bank balance with the insurer 19.86 Interest cost on benefit obligation 223,633 420,146 Expected return on plan assets - (364,795) The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the Net actuarial loss recognized in the year - 48,676 period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to the on account of return on plan assets improved debt market scenario. Net actuarial loss recognised in the year 755,805 2,228,027 Net benefit expense 2,752,7983,771,802 The principal assumptions used in determining gratuity and leave encashment obligations for the Company’s plans are shown below: Actual return on plan assets - (316,119) Leave Encashment Gratuity 2006-07 2006-07 Balance sheet Details of Provision for leave encashment benefits and gratuity %%

Leave Encashment Gratuity Discount rate 7.75 7.75 Expected rate of return on plan assets - 7.50 2006-07 2006-07 Increase in compensation cost 5.50 5.50 Employee turnover upto 30 years 25 25 Defined benefit obligation 4,799,565 8,917,260 above 30 years but upto 44 years 15 15 Total value of Provident fund contribution on closing liability 575,948- above 44 years 10 10 Fair value of plan assets - 5,069,993 The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. 5,375,513 3,847,267 Amounts for the current and previous four periods are as follows: Less: Unrecognised past service cost - - Leave Gratuity Plan (liability) (5,375,513) (3,847,267) 2006-07 2006-07 Changes in the present value of the defined benefit obligation are as follows: Defined benefit obligation 4,799,565 8,917,260 Leave Encashment Gratuity Plan assets - 5,069,993 Deficit 4,799,565 3,847,267 2006-07 2006-07 Experience adjustments on plan liabilities - - Experience adjustments on plan assets - - Opening defined benefit obligation 3,249,265 6,184,201 Interest cost 223,633 420,146 NOTE : The actuarial valuation of gratuity and leave encashment liability in the previous year was done in accordance with the Current service cost 1,773,360 1,439,748 pre-revised Accounting Standard, AS-15 – Employee Benefits. Accordingly, comparative numbers of previous years have not been Actual return on plan assets - 316,119 furnished. Benefits paid (1,202,498) (1,038,743) Actuarial losses on obligation 755,805 2,228,027 Defined Contribution Plan:

Closing defined benefit obligation 4,799,565 8,917,260 2006-07 2005-06

Changes in the fair value of plan assets are as follows: Contribution to Provident Fund

Gratuity Charged to Profit and Loss Account 1,1924,420 7,563,474

2006-07 Charged to Pre-operative expenses 771,623 901,862

Opening fair value of plan assets 4,891,561 The Company expects to contribute Rs. 5,000,000 to gratuity fund in the year 2007-08. Expected return 364,795 Contributions by employer 901,056 12. Leases Benefits paid (1,038,743) i) Rental expenses in respect of operating leases are recognized as an expense in the Profit and Loss Account and Pre-Operative Actuarial (losses) (48,676) Expenditure (pending allocation), as the case may be, on a straight line basis over the lease term. Operating Lease (for assets taken on lease) Closing fair value of plan assets 5,069,993 a) The Company has taken various cinemas, multiplexes, offices and godown premises under operating lease agreements. These are The Company has since contributed Rs. 3,771,802 to the gratuity fund. generally cancelable at the option of the Company. b) Lease payments for the year are Rs. 188,729,426 (Previous year Rs. 154,520,675). ii) Rental income in respect of operating leases are recognized as an income in the Profit and Loss Account and netted off from rent expense, as the case may be, on a straight line basis over the lease term. Operating Lease (for assets given on lease) a) The Company has given various spaces under operating lease agreements. These are generally cancelable at the option of the Company. 70 b) Rental income for the year are Rs. 19,829,701 (Previous year Rs. 14,074,573). 71 Notes to the accounts

March 31, 2007 March 31, 2006 (Rs.) (Rs.) 13. Capital Commitments Estimated amount of contracts remaining to be 92,406,246 91,204,288 executed on capital account and not provided for 14. Contingent Liabilities (not provided for) in respect of: a) Labour cases pending* Amount not Amount not ascertainable ascertainable b) Claims against the Company not acknowledged as debts 2,961,730 1,290,311 (including Rs. 2,961,730, Previous Year Rs. 854,057 paid under protest which is appearing in the schedule of Loans and Advances)* c) Corporate guarantee given against the loan of Rs. 500,000,000 250,000,000 - sanctioned by a financial institution to the subsidiary, to the extent of loan drawn. * In view of the large number of cases pending at various forums/courts, it is not practicable to furnish the details of each case. * Based on the discussions with the solicitors/meeting the terms and conditions by the Company, the management believes that the Company has a strong chance of success in the cases and hence no provision thereagainst is considered necessary. 15. Supplementary Statutory Information 15.1 Managing Directors’ Remuneration* Salary 5,760,000 5,760,000 Contribution to Provident fund 691,200 691,200 Perquisites 3,456,000 3,456,000

To t a l 9,907,200 9,907,200 15.2 Executive Director’s Remuneration* Salary 3,060,000 3,060,000 Contribution to Provident fund 367,200 367,200 Perquisites 1,836,000 1,836,000

To t a l 5,263,200 5,263,200

*excluding gratuity and leave encashment expenses since they are not eligible for the same. 15.3 Earnings in foreign currency (on accrual basis) Income from Sale of Film Rights Nil 1,958,175 15.4 Expenditure in foreign currency (on accrual basis) Travelling 892,881 484,431 Technical and Professional fees (including expenses, net of income tax) 5,690,411 13,520,343 Others 183,665 -

To t a l 6,766,957 14,004,774 15.5 CIF Value of Imports Capital Goods 14,660,135 33,504,582 Software 2,832,926 527,736

To t a l 17,493,061 34,122,318 15.6 Net Dividend remitted in foreign currency* Number of NRI Shareholders - Number of Shares held by them - Dividend Paid (in Rs.) - Year to which dividend relates (Interim) 2005-06 and 2006-07 * excluding dividend credited to FCNR/NRE account of NRI’s and also payments of dividend to Foreign Institutional Investors on repatriation basis. 16. In view of the diverse nature of the food and beverages items (each being less than 10% in value of the total turnover of the Company) being sold by the Company, it is not practicable to give the quantitative details thereof.

72 Notes to the accounts Notes to the accounts

March 31, 2007 March 31, 2006 17.Previous Year Comparatives (Rs.) (Rs.) 13.Capital Commitments (a) The Company has during the year started commercial operations at Juhu Mumbai, Indore, Lucknow, Mullund Mumbai, Estimated amount of contracts remaining to be 92,406,246 91,204,288 Sahara Gurgaon, Aurangabad, Latur and Aligarh. Hence, current year’s figures are not strictly comparable with those of executed on capital account and not provided for previous year. 14.Contingent Liabilities (not provided for) in respect of: b) Previous year’s figures have been regrouped where necessary to conform to current year’s classification. a) Labour cases pending* Amount not Amount not Signature to Schedule 1 to 24 ascertainable ascertainable b) Claims against the Company not acknowledged as debts 2,961,730 1,290,311 (including Rs. 2,961,730, Previous Year Rs. 854,057 paid under protest which is appearing in the schedule of Loans and Advances)* As per our report of even date c) Corporate guarantee given against the loan of Rs. 500,000,000 250,000,000 - For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS sanctioned by a financial institution to the subsidiary, Chartered Accountants to the extent of loan drawn. * In view of the large number of cases pending at various forums/courts, it is not practicable to furnish the details of each Ajay Bijli Sanjeev Kumar N. C. Gupta case. Chairman cum Managing Director Joint Managing Director Company Secretary * Based on the discussions with the solicitors/meeting the terms and conditions by the Company, the management believes per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash that the Company has a strong chance of success in the cases and hence no provision thereagainst is considered Partner Director Director Chief of Accounts necessary. Membership No 87921 15.Supplementary Statutory Information Place : New Delhi Date : June 6, 2007 15.1 Managing Directors’ Remuneration* Salary 5,760,000 5,760,000 Contribution to Provident fund 691,200 691,200 Perquisites 3,456,000 3,456,000

Total 9,907,200 9,907,200

15.2 Executive Director’s Remuneration* Salary 3,060,000 3,060,000 Contribution to Provident fund 367,200 367,200 Perquisites 1,836,000 1,836,000

Total 5,263,200 5,263,200

*excluding gratuity and leave encashment expenses since they are not eligible for the same. 15.3 Earnings in foreign currency (on accrual basis) Income from Sale of Film Rights Nil 1,958,175 15.4 Expenditure in foreign currency (on accrual basis) Travelling 892,881 484,431 Technical and Professional fees (including expenses, net of income tax) 5,690,411 13,520,343 Others 183,665 -

Total 6,766,957 14,004,774

15.5 CIF Value of Imports Capital Goods 14,660,135 33,504,582 Software 2,832,926 527,736

Total 17,493,061 34,122,318

15.6 Net Dividend remitted in foreign currency* Number of NRI Shareholders - Number of Shares held by them - Dividend Paid (in Rs.) - Year to which dividend relates (Interim) 2005-06 and 2006-07 * excluding dividend credited to FCNR/NRE account of NRI’s and also payments of dividend to Foreign Institutional Investors on repatriation basis. 16. In view of the diverse nature of the food and beverages items (each being less than 10% in value of the total turnover of the Company) being sold by the Company, it is not practicable to give the quantitative details thereof.

72 73 Consolidated Financial statements

74 Auditors’ Report

Auditors’ Report to the Board Of Directors of In our opinion, and on the basis of the information and PVR Limited on the consolidated financial statements explanations given to us and based on the consolidation of of PVR Limited and its subsidiaries (CR Retail Malls separate audit reports on individual financial statement of (India) Private Limited and PVR Pictures Limited) PVR Limited and its subsidiaries, the consolidated financial statements of PVR Limited and its subsidiaries give a true We have audited the attached Consolidated Balance and fair view in conformity with the accounting principles Sheet of PVR Limited and its Subsidiaries (hereinafter generally accepted in India: referred as the “PVR Group”) as at March 31, 2007, the Consolidated Profit and Loss Account and the (i) in the case of the Consolidated Balance Sheet, Consolidated Cash Flow Statement for the year ended on of the consolidated state of affairs of PVR Group as at that date annexed thereto. These financial statements are March 31, 2007; the responsibility of the PVR Limited’s management. Our (ii) in the case of the Consolidated Profit and Loss responsibility is to express an opinion on the consolidated Account, of the Profit of the PVR Group for the year financial statements based on our audit. ended on that date; and We conducted our audit in accordance with the auditing (iii) in the case of the Consolidated Cash Flow Statement, standards generally accepted in India. Those Standards of the Cash Flows of the PVR Group for the year ended require that we plan and perform the audit to obtain on that date. reasonable assurance about whether the financial Consolidated statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles For S. R. Batliboi & Co. Financial used and significant estimates made by management, Chartered Accountants as well as evaluating the overall financial statement presentation. We believe that our audit provides a per Anil Gupta reasonable basis for our opinion. Partner Membership No.:87921 statements We did not audit the financial statements of the subsidiaries of PVR Limited whose financial statements Place : New Delhi reflect total assets of Rs. 760,761,010 as at March 31, Date : June 6, 2007 2007 (Rs. 267,129,805 as at March 31, 2006), total revenues of Rs. 35,525,699 for the year ended March 31, 2007 (Rs. 23,027,777 for the year ended March 31, 2006) and cash flows amounting to Rs. 43,647,646 for the year ended March 31, 2007 (Rs. 257,241 for the year ended March 31, 2006). The financial statement and other financial information of the above subsidiaries have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of the subsidiaries is based solely on the report of those auditors. We report that the consolidated financial statements have been prepared by PVR Limited’s management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of PVR Limited and its subsidiaries included in the consolidated financial statements.

74 75 Consolidated Balance Sheet as at 31 March, 2007

Schedules As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 430,138,700 428,773,700 Employees Stock Options Outstanding 2 - 2,915,966 Reserves and surplus 3 1,569,937,423 1,495,069,904

2,000,076,123 1,926,759,570 Loan funds Secured loans 4 850,664,739 613,655,281 Unsecured loans 5 30,000 2,405,443 850,694,739 616,060,724

Deferred Tax Liabilities (Net) 6 64,682,669 45,831,506 2,915,453,531 2,588,651,800 APPLICATION OF FUNDS Fixed Assets 7 Gross block 1,701,728,652 1,011,597,845 Less : Accumulated Depreciation 349,657,282 227,948,447 Net block 1,352,071,370 783,649,398 Capital Work-in-Progress including Capital Advances 659,920,725 642,272,967 Pre-operative expenses (pending allocation) 8 72,965,631 158,592,525

2,084,957,726 1,584,514,890 Intangible Assets (net of amortisation and including 9 29,628,684 15,663,642 capital work-in-progress and capital advances) Investments 10 421,016,644 294,169,691 Current Assets, Loans and Advances Interest accrued on long term investments 2,987,165 1,847,568 Inventories 11 17,615,286 9,246,574 Sundry debtors 12 68,869,662 42,509,429 Cash and bank balances 13 115,370,862 630,166,780 Other current assets 14 4,946,904 10,409,203 Loans and advances 15 567,250,916 310,403,908 777,040,795 1,004,583,462 Less: Current Liabilities and Provisions Current liabilities 16 328,051,790 238,669,167 Provisions 17 69,138,528 71,610,718 397,190,318 310,279,885 Net Current Assets 379,850,477 694,303,577 Miscellaneous Expenditure 18 - - 2,915,453,531 2,588,651,800

Notes to Accounts 25

The schedules referred to above and notes to accounts form an integral part of the Consolidated Balance Sheet. As per our report of even date For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS Chartered Accountants Ajay Bijli Sanjeev Kumar N. C. Gupta Chairman cum Managing Director Joint Managing Director Company Secretary

per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash Partner Director Director Chief of Accounts Membership No 87921 Place : New Delhi 76 Date : June 6, 2007 Consolidated Balance Sheet as at 31 March, 2007 Consolidated Profit and Loss Account for the year ended March 31, 2007

Schedules As at As at Schedules For the year ended For the year ended March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) (Rs.) (Rs.) SOURCES OF FUNDS INCOME Shareholders’ Funds Operating income 19 2,012,305,870 1,304,669,038 Share Capital 1 430,138,700 428,773,700 Less: Entertainment tax collected on sale of tickets 291,582,187 224,379,377 Employees Stock Options Outstanding 2 - 2,915,966 Less: Sales tax/Value Added tax collected on sale of 40,692,112 26,779,327 food and beverages Reserves and surplus 3 1,569,937,423 1,495,069,904 Less: Service tax collected on advertisement and 12,867,061 4,443,431 2,000,076,123 1,926,759,570 management fees 1,667,164,510 1,049,066,903 Other income 20 61,295,246 28,973,633 Loan funds Secured loans 4 850,664,739 613,655,281 1,728,459,756 1,078,040,536 Unsecured loans 5 30,000 2,405,443 EXPENDITURE 850,694,739 616,060,724 Film distributors’ share (net of recovery towards 437,604,901 268,056,021 publicity from distributors Rs. 4,376,315, Previous year Rs. 3,034,500) Deferred Tax Liabilities (Net) 6 64,682,669 45,831,506 Consumption of food and beverages 114,552,600 71,241,239 Personnel expenses 21 196,212,582 125,530,030 2,915,453,531 2,588,651,800 Employee compensation expenses under employee 2,909,928 7,008,183 APPLICATION OF FUNDS share purchase scheme and employee stock option scheme Fixed Assets 7 Operating and other expenses 22 649,503,798 404,496,207 Gross block 1,701,728,652 1,011,597,845 1,400,783,809 876,331,680 Less : Accumulated Depreciation 349,657,282 227,948,447 Profit before depreciation/amortisation, 327,675,947 201,708,856 Net block 1,352,071,370 783,649,398 interest and tax (EBITDA) Capital Work-in-Progress including Capital Advances 659,920,725 642,272,967 Depreciation/amortisation 133,379,013 83,349,792 Pre-operative expenses (pending allocation) 8 72,965,631 158,592,525 Interest paid 23 43,861,440 30,737,157

2,084,957,726 1,584,514,890 Profit Before Tax 150,435,494 87,621,907 Provision for taxes (Including wealth tax Rs. 50,000, (27,048,000) (27,365,000) Intangible Assets (net of amortisation and including 9 29,628,684 15,663,642 Previous year Rs. 30,000) capital work-in-progress and capital advances) Fringe benefit tax (5,157,721) (3,883,194) Investments 10 421,016,644 294,169,691 Deferred tax charge (18,988,268) (3,508,820) Current Assets, Loans and Advances Income tax credit for earlier years (net) 2,653,439 - Interest accrued on long term investments 2,987,165 1,847,568 Total Tax Expense (48,540,550) (34,757,014) Inventories 11 17,615,286 9,246,574 Net Profit after tax 101,894,944 52,864,893 Sundry debtors 12 68,869,662 42,509,429 Balance brought forward from previous year 132,251,446 88,827,953 Cash and bank balances 13 115,370,862 630,166,780 Pre-Acquisition losses adjusted against Goodwill 1,668,361 - Other current assets 14 4,946,904 10,409,203 Less: Adjustment for Employee Benefits Provision (Net of (270,219) - Loans and advances 15 567,250,916 310,403,908 Tax Rs. 137,106) (Refer Note No. 4 (b) in Schedule 25) Transfer from Debenture Redemption Reserve - 22,600,000 777,040,795 1,004,583,462 Profit available for appropriation 235,544,532 164,292,846 Less: Current Liabilities and Provisions Appropriations - Interim dividend on equity shares 22,915,370 22,877,370 Current liabilities 16 328,051,790 238,669,167 - Interim dividend on preference shares 10,000,000 5,219,178 Provisions 17 69,138,528 71,610,718 - Tax on dividend 4,616,381 3,944,852 397,190,318 310,279,885 Surplus carried to Balance Sheet 198,012,781 132,251,446 Net Current Assets 379,850,477 694,303,577 Earnings per share 24 Miscellaneous Expenditure 18 - - Basic [Nominal value of shares Rs. 10 (Previous Year : Rs. 10)] 3.95 2.62 Diluted [Nominal value of shares Rs. 10 (Previous Year : Rs. 10)] 3.95 2.62 2,915,453,531 2,588,651,800 Notes to Accounts 25 Notes to Accounts 25 The schedules referred to above and notes to accounts form an integral part of the Consolidated Profit and Loss Account. The schedules referred to above and notes to accounts form an integral part of the Consolidated Balance Sheet. As per our report of even date As per our report of even date For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS Chartered Accountants Chartered Accountants Ajay Bijli Sanjeev Kumar N. C. Gupta Ajay Bijli Sanjeev Kumar N. C. Gupta Chairman cum Managing Director Joint Managing Director Company Secretary Chairman cum Managing Director Joint Managing Director Company Secretary

per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash Partner Director Director Chief of Accounts Partner Director Director Chief of Accounts Membership No 87921 Membership No 87921 Place : New Delhi Place : New Delhi 76 Date : June 6, 2007 Date : June 6, 2007 77 Consolidated Cash Flow Statement for the year ended March 31, 2007

For the year ended For the year ended March 31, 2007 March 31, 2006 (Rs.) (Rs.)

A. Cash flow from operating activities: Profit before taxation 150,435,494 87,621,907 Adjustments for : Depreciation/amortisation 133,379,013 83,349,792 Loss on disposal of fixed assets (net) 1,303,110 2,515,492 Interest income (15,099,773) (12,329,035) Profit on sale of current investments (242,763) - Dividend income (26,214,457) (3,391,096) Loss on sale of current investments - 35,506 Interest expense 43,861,440 30,737,157 Employee compensation expenses under employee share purchase 2,909,928 7,008,183 scheme and employee stock option scheme Provision for doubtful debts and advances (net) 2,278,143 1,602,381

Operating profit before working capital changes 292,610,135 197,150,287 Movements in working capital : (Increase) in sundry debtors (28,638,377) (10,241,597) (Increase) in inventories (8,368,712) (2,469,958) (Increase) in loans and advances and other current assets (120,661,321) (105,901,431) Increase in current liabilities and provisions 96,077,503 87,684,217

Cash generated from operations 231,019,228 166,221,518 Direct taxes paid (net of refunds) (39,797,666) (21,910,604)

Net cash from operating activities 191,221,562 144,310,914 B. Cash flows from investing activities Purchase of fixed assets (608,190,120) (782,524,369) Purchase of intangible assets (23,919,888) (18,436,730) Proceeds from sale of fixed assets 10,567 1,091,000 Purchase of investments/advance against share capital (2,852,783,458) (722,169,691) Sale of investments 2,726,179,268 439,964,494 Consideration paid for acquiring interest in subsidiary - (500,000) Loans given to others (101,000,000) - Loans refunded by others - 1,500,000 Dividend received 26,214,457 3,391,096 Interest received 18,768,864 5,785,043 Fixed Deposits with banks placed (10,947,727) (623,350,033) Fixed Deposits with banks encashed 613,371,938 22,040,980

Net cash (used in) investing activities (212,296,099) (1,673,208,210) C. Cash flow from financing activities Proceeds from issuance of share capital 3,885,000 1,484,100,000 Proceeds from long-term borrowings 355,800,000 360,361,101 Repayment of long-term borrowings (118,790,542) (201,779,288) Proceeds from short-term borrowings - 240,000,000 Repayment of short-term borrowings (2,375,443) (250,569,124) Expenditure on share issue - (113,037,501) Dividend and tax thereon paid (69,573,151) - Interest paid (58,287,950) (59,575,479)

Net cash from financing activities 110,657,914 1,459,499,709

Net increase/(decrease) in cash and cash 89,583,377 (69,397,587) equivalents (A+B+C) Balance at the time of acquisition of subsidiary - 1,286,028 Cash and cash equivalents at the beginning of the year 13,332,907 81,444,466

Cash and cash equivalents at the end of the year 102,916,284 13,332,907

78 Consolidated Cash Flow Statement for the year ended March 31, 2007 Cash Flow Statement for the year ended March 31, 2007 (continued)

For the year ended For the year ended For the year ended For the year ended March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) (Rs.) (Rs.) Components of cash and cash equivalents as at* March 31, 2007 March 31, 2006 A. Cash flow from operating activities: Cash and cheques on hand 8,628,024 4,274,236 Profit before taxation 150,435,494 87,621,907 With banks - on current accounts 93,817,264 11,013,755 Adjustments for : With banks - on book overdraft account - (1,955,084) Depreciation/amortisation 133,379,013 83,349,792 With banks - on unpaid and unclaimed dividend accounts 470,996 - Loss on disposal of fixed assets (net) 1,303,110 2,515,492 Interest income (15,099,773) (12,329,035) 102,916,284 13,332,907 Profit on sale of current investments (242,763) - Dividend income (26,214,457) (3,391,096) *difference of Rs. 12,454,578 (Previous year Rs. 616,833,873) from Schedule No. 13 represents short-term investments with an Loss on sale of current investments - 35,506 original maturity of three months or more. Interest expense 43,861,440 30,737,157 Employee compensation expenses under employee share purchase 2,909,928 7,008,183 NOTE: The above Cash Flow Statement has been prepared under the “Indirect Method” as stated in Accounting Standard 3 on Cash scheme and employee stock option scheme Flow Statement. Provision for doubtful debts and advances (net) 2,278,143 1,602,381

Operating profit before working capital changes 292,610,135 197,150,287 As per our report of even date Movements in working capital : For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS (Increase) in sundry debtors (28,638,377) (10,241,597) Chartered Accountants (Increase) in inventories (8,368,712) (2,469,958) (Increase) in loans and advances and other current assets (120,661,321) (105,901,431) Ajay Bijli Sanjeev Kumar N. C. Gupta Increase in current liabilities and provisions 96,077,503 87,684,217 Chairman cum Managing Director Joint Managing Director Company Secretary

Cash generated from operations 231,019,228 166,221,518 per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash Direct taxes paid (net of refunds) (39,797,666) (21,910,604) Partner Director Director Chief of Accounts Membership No 87921 Net cash from operating activities 191,221,562 144,310,914 Place : New Delhi B. Cash flows from investing activities Date : June 6, 2007 Purchase of fixed assets (608,190,120) (782,524,369) Purchase of intangible assets (23,919,888) (18,436,730) Proceeds from sale of fixed assets 10,567 1,091,000 Purchase of investments/advance against share capital (2,852,783,458) (722,169,691) Sale of investments 2,726,179,268 439,964,494 Consideration paid for acquiring interest in subsidiary - (500,000) Loans given to others (101,000,000) - Loans refunded by others - 1,500,000 Dividend received 26,214,457 3,391,096 Interest received 18,768,864 5,785,043 Fixed Deposits with banks placed (10,947,727) (623,350,033) Fixed Deposits with banks encashed 613,371,938 22,040,980

Net cash (used in) investing activities (212,296,099) (1,673,208,210)

C. Cash flow from financing activities Proceeds from issuance of share capital 3,885,000 1,484,100,000 Proceeds from long-term borrowings 355,800,000 360,361,101 Repayment of long-term borrowings (118,790,542) (201,779,288) Proceeds from short-term borrowings - 240,000,000 Repayment of short-term borrowings (2,375,443) (250,569,124) Expenditure on share issue - (113,037,501) Dividend and tax thereon paid (69,573,151) - Interest paid (58,287,950) (59,575,479)

Net cash from financing activities 110,657,914 1,459,499,709

Net increase/(decrease) in cash and cash 89,583,377 (69,397,587) equivalents (A+B+C) Balance at the time of acquisition of subsidiary - 1,286,028 Cash and cash equivalents at the beginning of the year 13,332,907 81,444,466

Cash and cash equivalents at the end of the year 102,916,284 13,332,907

78 79 Schedules to the Consolidated accounts

Schedule 1 : Share Capital As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) Authorised share capital 30,000,000 (Previous year 30,000,000) equity shares of Rs. 10 each 300,000,000 300,000,000 20,000,000 (Previous year 20,000,000) preference shares of Rs. 10 each 200,000,000 200,000,000 500,000,000 500,000,000 Issued, subscribed and paid-up 23,013,870 (Previous year 22,877,370) equity shares of Rs. 10 each fully paid 230,138,700 228,773,700 20,000,000 (Previous year 20,000,000) 5% redeemable preference 200,000,000 200,000,000 shares of Rs. 10 each fully paid 430,138,700 428,773,700 NOTES: 1. Of the above 10,642,000 (Previous year 10,642,000) 5% redeemable preference shares are held by Mr. Ajay Bijli, Chairman cum Managing Director of the Parent Company. 2. Preference shares are redeemable at par after three years with a put and call option at the end of two years from the date of allotment. 3. Of the above Nil (Previous year 80,000) equity shares of the face value of Rs. 10 each issued to the eligible employees of the Parent Company under Employees Share Purchase Scheme. 4. Of the above 136,500 (Previous year Nil) equity shares of the face value of Rs. 10 each issued to the eligible employees of the Parent Company under Employees Stock Option Scheme (Refer Note No. 7of Schedule 25).

Schedule 2 : Employees Stock Options Outstanding

Employees stock options outstanding As per last account 2,915,966 - Add: Accounted for during the year (net) (Refer Note No. 7 of Schedule 25) 3,541,534 2,915,966

6,457,500 2,915,966 Less: Amount transferred to Securities Premium Account upon issue of equity shares 6,457,500 -

- 29,15,966

Schedule 3 : Reserves and Surplus Capital Reserve (on consolidation) difference between the cost of the investment 24,483 24,483 in a subsidiary and Parent Company’s portion in equity of the subsidiary at the time of acquisition (Refer Note No. 3 of Schedule 25) Securities premium account - as per last account 1,362,793,975 250,306,573 Add: Received on issue of shares under employees share 2,520,000 5,600,000 purchase/employees stock option scheme Received on issue of shares to public during the year - 1,225,500,000 Amount transferred from Employees Stock Options Outstanding Account 6,457,500 - Excess provision for share issue expenses now written back and 128,684 - adjusted from securities premium account 1,371,900,159 1,481,406,573 Less: Share/debenture placement expenses written off - 118,612,598

1,371,900,159 1,362,793,975

Debenture redemption reserve - as per last account - 22,600,000 Less: Transferred to Profit and Loss Account on redemption of debentures - 22,600,000

- -

Profit and Loss Account Balance 198,012,781 132,251,446

1,569,937,423 1,495,069,904

80 Schedules to the Consolidated accounts Schedules to the Consolidated accounts

Schedule 1 : Share Capital Schedule 4 : SecureD Loans As at As at As at As at March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) (Rs.) (Rs.) Authorised share capital 30,000,000 (Previous year 30,000,000) equity shares of Rs. 10 each 300,000,000 300,000,000 Loans from banks 20,000,000 (Previous year 20,000,000) preference shares of Rs. 10 each 200,000,000 200,000,000 Term loans from banks 520,639,524 522,754,554 (Due within one year Rs. 139,008,752, (Previous year Rs. 102,096,655)) 500,000,000 500,000,000 Car finance loans from banks 5,675,215 350,727 Issued, subscribed and paid-up (Due within one year Rs. 1,125,553, (Previous year Rs. 162,538)) 23,013,870 (Previous year 22,877,370) equity shares of Rs. 10 each fully paid 230,138,700 228,773,700 Other loans 20,000,000 (Previous year 20,000,000) 5% redeemable preference 200,000,000 200,000,000 Term loan from a financial institution 250,000,000 - shares of Rs. 10 each fully paid (Due within one year Rs. 1,151,316, (Previous year Rs. Nil)) 430,138,700 428,773,700 Term loan from small industries development bank of india (SIDBI) 74,350,000 90,550,000 NOTES: (Due within one year Rs. 16,200,000, (Previous year Rs. 16,200,000)) 1. Of the above 10,642,000 (Previous year 10,642,000) 5% redeemable preference shares are held by Mr. Ajay Bijli, Chairman cum Managing Director of the Parent Company. 850,664,739 613,655,281 2. Preference shares are redeemable at par after three years with a put and call option at the end of two years from the date of allotment. 3. Of the above Nil (Previous year 80,000) equity shares of the face value of Rs. 10 each issued to the eligible employees of the Parent NOTES : Company under Employees Share Purchase Scheme. 4. Of the above 136,500 (Previous year Nil) equity shares of the face value of Rs. 10 each issued to the eligible employees of the Parent 1. a) Term loans from State Bank of Patiala, United Bank of India and Union bank of India to the extent of Rs. 233,139,524 Company under Employees Stock Option Scheme (Refer Note No. 7of Schedule 25). (Previous year Rs. 322,754,554), are secured by first charge by way of hypothecation of the whole of the movable properties including movable plant and machinery, machinery spares, tools and accessories and other movable assets (except vehicles hypothecated to banks) of all current and future operating theatres of the Parent Company ranking pari passu with other Schedule 2 : Employees Stock Options Outstanding lenders. These are further secured by the personal guarantee of two directors of the Parent Company. b) Term Loan from ICICI Bank Limited to the extent of Rs. 187,500,000 (Previous year Rs. 200,000,000) is secured by first Employees stock options outstanding charge on all of the Parent Company’s movable assets, save and except the assets at the Juhu multiplex, both present and As per last account 2,915,966 - future, on pari passu basis with other term lenders. This loan is further secured by mortgage of the personal properties of two Add: Accounted for during the year (net) (Refer Note No. 7 of Schedule 25) 3,541,534 2,915,966 directors of Parent Company at Vasant Vihar and Kundli, New Delhi and is to be further secured by pledge of the Parent Company’s PVR Brand/patent/trademark. This loan is further secured by the personal guarantee of two directors of the Parent 6,457,500 2,915,966 Company. Less: Amount transferred to Securities Premium Account upon issue of equity shares 6,457,500 - c) Term Loan from Punjab National Bank to the extent of Rs. 100,000,000, (Previous year Rs. Nil) is secured by first pari passu charge with other lenders on all assets and movable property (excluding vehicles hypothecated to banks), including current assets - 29,15,966 namely current and movable fixed assets of any kind belonging to the Parent Company both present and future except those at PVR Juhu, Mumbai of the Parent Company. This loan is further secured by second charge on all the movable and immovable assets namely current and movable fixed assets as well as the movable and immovable assets at PVR Juhu, Mumbai of the Schedule 3 : Reserves and Surplus Parent Company and PVR Phoenix, Mumbai of a subsidiary. 2. Car finance loans to the extent of Rs. 5,675,215 (Previous year Rs. 350,727) are to be secured by hypothecation of vehicles Capital Reserve (on consolidation) difference between the cost of the investment 24,483 24,483 purchased out of the proceeds of the loans. in a subsidiary and Parent Company’s portion in equity of the subsidiary at the time 3. Loan from a financial institution to the extent of Rs. 250,000,000 (Previous year Rs. Nil) is secured by first equitable mortgage, by of acquisition (Refer Note No. 3 of Schedule 25) way of a registered mortgage deed, alongwith assignment of its leasehold rights, of the project land at Phoenix Mills, Lower Parel, Securities premium account - as per last account 1,362,793,975 250,306,573 Mumbai and construction thereon of a subsidiary company, present and future. This loan is further secured by hypothecation of all Add: movable assets and assignment of all present and future receivables of the seven screen multiplex at Phoenix Mills, Lower Parel, Received on issue of shares under employees share 2,520,000 5,600,000 Mumbai of a subsidiary company. It is further secured by corporate guarantee from Parent Company and undertaking from Parent purchase/employees stock option scheme Company to the effect that they will continue to hold a minimum of 76% of the shareholding of the subsidiary during the currency of Received on issue of shares to public during the year - 1,225,500,000 the loan. Amount transferred from Employees Stock Options Outstanding Account 6,457,500 - 4. Loan from SIDBI to the extent of Rs. 74,350,000 (Previous year Rs. 90,550,000) is secured by a first pari passu charge by way of hypothecation of all the movable assets (except vehicles hypothecated to banks) both present and future, of all cinemas of the Parent Excess provision for share issue expenses now written back and 128,684 - Company. It is further secured by a second charge on personal properties of a director of Parent Company at Vasant Vihar and adjusted from securities premium account Jhandewalan, New Delhi and is also secured by the personal guarantee of two directors of the Parent Company. 1,371,900,159 1,481,406,573 Less: Share/debenture placement expenses written off - 118,612,598 Schedule 5 : Unsecured Loans 1,371,900,159 1,362,793,975 As at As at Debenture redemption reserve - as per last account - 22,600,000 March 31, 2007 March 31, 2006 Less: Transferred to Profit and Loss Account on redemption of debentures - 22,600,000 (Rs.) (Rs.) Other loans: - - Short Term Loans (Repayable within one year) From a body corporate 30,000 1,040,443 Profit and Loss Account Balance 198,012,781 132,251,446 From a Director of a subsidiary company (Interest free) - 1,365,000 1,569,937,423 1,495,069,904 30,000 2,405,443

80 81 Schedules to the Consolidated accounts

Schedule 6 : Deferred Tax Liabilities (Net) As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) Deferred Tax Liabilities Differences in depreciation and other differences in block of fixed assets 68,800,324 49,015,971 as per tax books and financial books

Gross Deferred Tax Liabilities 68,800,324 49,015,971 Deferred Tax Assets Effect of expenditure debited to profit and loss account in the current year/ 2,713,419 1,605,906 earlier years but allowable for tax purposes in following years Carried Forward business loss and unabsorbed depreciation in one of - 954,779 the subsidiary company Provision for doubtful debts and advances 1,404,236 623,780

Gross Deferred Tax Assets 4,117,655 3,184,465

Net Deferred Tax Liabilities 64,682,669 45,831,506

NOTE : Deferred Tax Liabilities include Rs. Nil (Previous year Rs. 37,362) acquired at the time of acquisition of a subsidiary company.

82 Schedules to the Consolidated accounts Rs. Schedule 6 : Deferred Tax Liabilities (Net) Year revious As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.) otal P Deferred Tax Liabilities Differences in depreciation and other differences in block of fixed assets 68,800,324 49,015,971 37,643,980 267,038,727 as per tax books and financial books 70,644,905 - 622,276,745 375,234,240 659,920,725 642,272,967

Gross Deferred Tax Liabilities 68,800,324 49,015,971

Deferred Tax Assets Effect of expenditure debited to profit and loss account in the current year/ 2,713,419 1,605,906 earlier years but allowable for tax purposes in following years 630,514 Carried Forward business loss and unabsorbed depreciation in one of - 954,779 the subsidiary company Provision for doubtful debts and advances 1,404,236 623,780

Gross Deferred Tax Assets 4,117,655 3,184,465 any on the developers are subject to confirmation/

Net Deferred Tax Liabilities 64,682,669 45,831,506 Fittings been discarded during the year. ,285,295 - 1,715,332 2,305,814 2,062,729 - 3,029,009 5,967,593 of expenses towards modification in the building structure and Furniture &Furniture Vehicles T

NOTE : Deferred Tax Liabilities include Rs. Nil (Previous year Rs. 37,362) acquired at the time of acquisition of a subsidiary company. the opinion of the Parent Company, will not be material would be ear Rs. 94,989) respectively acquired at the time of acquisition of a 9,024 1 Machinery 5,600 950,680 ,291,769 441,556,779 113,825,597 4,582,596 783,649,398 - Leasehold& Plant rovements 7,979,697 38,333,013 13,367,133 65,668,26040,452,280 121,477,804 56,039,122 38,727,524 25,573,945 1,434,638 1,022,444 227,948,447 123,424,167 159,609,356 70,644,905 106,109,527 177,097,902 63,016,174 2,457,082 349,657,282 227,948,447 Building ,273,590 286,960,029 563,034,583 152,553,121 6,017,234 1,011,597,845 830,548,661 1,273,590 552,202,499 876,123,513 255,703,5531,083,291 12,997,848 1,701,728,652 446,092,972 1,011,597,845 699,025,6111,083,291 192,687,379 446,092,972 10,540,766 1,352,071,370 699,025,611 192,687,379 783,649,398 10,540,766 2,011,992,095 - 90,350 1,104,051 221 90,350 1 190,350 190,350 190,350 5,6163,788 - 20,760 20,760 1 470,682786,298 - - 169,539 190,299 ,098,256 1 ,568,938 1 ,668,361 - - 265,258,070 314,039,610 105,213,161 6,980,614 693,159,816 187,016,777 GoodwillFreehold Land 3,237,299 2,451,001 2,451,001 (on Consolidation)(on Imp subsidiary company. equipments, claimed by the various landlords of the properties taken on rent by the Parent Company. reconciliation. However, the Parent Company has duly accounted for aforesaid made claims once in the the claims books. are Adjustments, confirmed/reconciled. if any, which in 5. Depreciation provided for the year is net of reversal of excess depreciation of Rs. 6,564,399 provided till previous year. 3. Claim of Rs. 17,464,317 lodged by some developers on the Parent Company and claims of Rs. 7,681,033 lodged by the Parent Comp 4. Additions to Fixed Assets and Depreciation for the year include Rs. Nil, (Previous year Rs. 474,812), and Rs. Nil (Previous y Depreciation At 01.04.2006 yearthe For 31 2. Gross Block of Fixed Assets include Rs. 43,951,089 (Previous year Rs. 28,152,000) being Parent Company’s proportionate share Schedule 7 : Consolidated Fixed Assets At 31.03.2007 Deductions At 31.03.2007 yearprevious For Net Block At 31.03.2007 At 31.03.2006 31 good) considered (Unsecured, Advances Capital - Total 1 NOTES: -1. Fixed assets of the cost of Rs. 2,843,668, Previous year Rs. 2,759,480, (WDV Rs.1,209,941, Previous year Rs. 1,591,300) have - 11,013 41 Capital work in progress in work Capital Gross Block Gross At 01.04.2006 1 Deductions - - - 1 Additions 1 82 83 Schedules to the Consolidated accounts

Schedule 8 : Pre-Operative Expenses (pending allocation) As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.)

Balance brought forward 158,592,525 37,739,800 Salary and other allowances 14,195,431 13,759,472 Contribution to provident and other funds 1,042,562 1,023,487 Staff welfare expenses 507,139 1,560,950 Employee compensation expenses under employee share purchase 631,607 707,782 scheme and employee stock option scheme Rent 1,218,000 26,041,848 Rates and taxes 2,992,832 13,333,453 Communication costs 252,654 1,176,856 Architect and other fees 11,388,774 15,526,857 Professional charges 6,966,080 15,831,817 Travelling and conveyance 2,712,036 11,750,797 Printing and stationery 111,589 223,530 Insurance 322,230 1,092,301 Repairs and maintenance: - Buildings 3,179,095 6,703,152 -Common area maintenance - 4,766,886 Electricity and water charges (Net of recovery Rs. 1,037,161, 1,092,955 1,914,050 Previous year Rs. 1,879,699) Security service charges 819,099 2,272,286 Interest on fixed loans 14,497,945 24,144,576 Interest to banks - 5,700,542 Foreign exchange fluctuation 46,567 - Bank and other charges 1,403,000 3,560,000 Fringe benefit tax 192,646 993,502 Miscellaneous expenses 663,480 1,713,459

222,828,246 191,537,403 Less : Interest received (Gross, tax deducted at source Rs. Nil, - 1,957,816 Previous year Rs. 439,338) Less : Amount recovered from developers towards re-negotiation of rent 5,593,662 - Less : Allocated to fixed assets 144,268,953 30,987,062

Balance Carried Forward 72,965,631 158,592,525

NOTE: Rent includes amount paid to a director 918,000 918,000 Rates and taxes includes stamp duty on registration of lease deed 1,772,300 11,732,700

Schedule 9 : consolidated Intangible Assets Rs.

Software Film rights’ Cost Total Previous Year Development Cost

Gross Block At 01.04.2006 4,307,368 26,175,374 30,482,742 4,386,900 Additions 3,597,856 20,303,532 23,901,388 26,095,842 At 31.03.2007 7,905,224 46,478,906 54,384,130 30,482,742 Amortisation At 01.04.2006 1,175,133 14,062,967 15,238,100 2,438,220 For the year 1,107,727 8,847,119 9,954,846 12,799,880 At 31.03.2007 2,282,860 22,910,086 25,192,946 15,238,100 For previous year 571,572 12,228,308 12,799,880 - Net Block At 31.03.2007 5,622,364 23,568,820 29,191,184 15,244,642 Capital Advances (Unsecured, considered good) 437,500 419,000 At 31.03.2007 5,622,364 23,568,820 29,628,684 15,663,642 At 31.03.2006 3,132,235 12,112,407 15,244,642 - NOTE: Additions to Film Rights Cost include Rs. Nil (Previous year Rs. 7,115,088), acquired at the time of acquisition of a subsidiary 84 company. Schedules to the Consolidated accounts Schedules to the Consolidated accounts Schedule 8 : Pre-Operative Expenses (pending allocation) Schedule 10 : Investment As at As at As at As at March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) (Rs.) (Rs.)

Balance brought forward 158,592,525 37,739,800 Long Term Investments Salary and other allowances 14,195,431 13,759,472 Other than trade investments Contribution to provident and other funds 1,042,562 1,023,487 In Government Securities (Unquoted) Staff welfare expenses 507,139 1,560,950 6 years National Savings Certificates* 12,548,000 12,000,000 Employee compensation expenses under employee share purchase 631,607 707,782 (Deposited with Entertainment Tax Authorities) scheme and employee stock option scheme 6 years National Savings Certificates** 45,000 45,000 Rent 1,218,000 26,041,848 (Deposited with Municipal Corporation of Hyderabad) Rates and taxes 2,992,832 13,333,453 Communication costs 252,654 1,176,856 Current Investments Architect and other fees 11,388,774 15,526,857 Other than trade investments (Quoted)*** Professional charges 6,966,080 15,831,817 Units in mutual funds of Rs. 10 each Travelling and conveyance 2,712,036 11,750,797 8,318,556.811 (Previous year Nil) units of P32ISD Prudential 83,185,568 - Printing and stationery 111,589 223,530 ICICI Liquid Plan - Super Institutional Daily Dividend Insurance 322,230 1,092,301 15,170,726.024 (Previous year Nil) units of OLPIPD HSBC 151,774,513 - Repairs and maintenance: Liquid Plus-Inst. Plus-Daily Dividend - Buildings 3,179,095 6,703,152 13,022,840.564 (Previous year Nil) units of Reliance Liquidity Fund - 130,268,776 - -Common area maintenance - 4,766,886 Daily Dividend Reinvestment option -Reinvestment Electricity and water charges (Net of recovery Rs. 1,037,161, 1,092,955 1,914,050 Previous year Rs. 1,879,699) Nil (Previous year 4,092,598.134) units of B503DD Birla Cash Plus - - 41,005,787 Security service charges 819,099 2,272,286 Institutional Premium - Daily Dividend Reinvestment Interest on fixed loans 14,497,945 24,144,576 Nil (Previous year 5,059,051.637) units of Kotak FMP Series XV - Dividend - 50,590,516 Interest to banks - 5,700,542 Nil (Previous year 10,000,000) units of C93 Chola FMP - Series 2 - 100,000,000 Foreign exchange fluctuation 46,567 - (Quarterly Plan-I) - Dividend Bank and other charges 1,403,000 3,560,000 Fringe benefit tax 192,646 993,502 Nil (Previous year 5,000,000) units of C95 Chola FMP - Series 2 - 50,000,000 Miscellaneous expenses 663,480 1,713,459 (Quarterly Plan-II) - Dividend Units in mutual funds of Rs. 1,000 each 222,828,246 191,537,403 42370.856 (Previous year Nil) units of UTI Liquid Cash Plan Institutional - 43,194,787 - Less : Interest received (Gross, tax deducted at source Rs. Nil, - 1,957,816 Daily Income Option - Reinvestment Previous year Rs. 439,338) Nil (Previous year 40,520.284) units of DSP Merrill Lynch Liquidity Fund - - 40,528,388 Less : Amount recovered from developers towards re-negotiation of rent 5,593,662 - Institutional - Daily Dividend Less : Allocated to fixed assets 144,268,953 30,987,062 421,016,644 294,169,691 Balance Carried Forward 72,965,631 158,592,525 NOTES: NOTE: 1. *Held in the name of the Managing Director in the interest of the 5,548,000 5,548,000 Rent includes amount paid to a director 918,000 918,000 Parent Company. Rates and taxes includes stamp duty on registration of lease deed 1,772,300 11,732,700 2. *Held in the name of the Director in the interest of the Subsidiary Company. 7,000,000 7,000,000 3. **Held in the name of the Employee in the interest of the Parent Company. Schedule 9 : consolidated Intangible Assets 4. ***Invested out of unutilised monies out of issue of share capital and loan proceeds. Rs. 5. The following units held in mutual funds were purchased and sold during the year: Software Film rights’ Cost Total Previous Year Purchased Value (Rs.) Development Cost - In Dividend option: Units in mutual funds of Rs. 10 each Gross Block 5,000,000.000 units of Reliance Fixed Horizon Fund I Monthly Plan- 50,000,000 At 01.04.2006 4,307,36826,175,374 30,482,7424,386,900 Series II Dividend Plan Additions 3,597,856 20,303,532 23,901,388 26,095,842 15,006,491.916 units of Reliance Fixed Horizon Fund - Monthly Plan A - 150,064,919 Series IV Dividend Option At 31.03.2007 7,905,224 46,478,906 54,384,130 30,482,742 15,075,739.448 units of Reliance Fixed Horizon Fund - Monthly Plan A - 150,757,394 Amortisation Series V Dividend Option At 01.04.2006 1,175,133 14,062,967 15,238,100 2,438,220 7,000,000.000 units of Reliance Fixed Horizon Fund Dividend Option 70,000,000 For the year 1,107,727 8,847,119 9,954,846 12,799,880 7,034,474.027 units of Reliance Fixed Horizon Fund Monthly Plan A Series II- 70,344,740 At 31.03.2007 2,282,860 22,910,086 25,192,946 15,238,100 Dividend Option 5,076,255.500 units of ABN AMRO FTP Series 3 Quarterly Plan D Dividend 50,762,555 For previous year 571,572 12,228,308 12,799,880 - 5,076,923.310 units of Sundaram BNP Paribas Fixed Term Plan Series IX- 50,769,233 Net Block Dividend Plan At 31.03.2007 5,622,364 23,568,820 29,191,184 15,244,642 5,024,112.866 units of TATA Fixed Horizon Fund Series -8 Scheme A IP -Dividend 50,241,500 7,712,499.816 units of P152RD Pru ICICI FMP Series 32- Three Month Plan -C- 77,124,998 Capital Advances (Unsecured, considered good) 437,500 419,000 Retail Dividend At 31.03.2007 5,622,364 23,568,820 29,628,684 15,663,642 7,100,589.169 units of Kotak FMP 3M Series 1-Dividend 71,005,900 At 31.03.2006 3,132,235 12,112,407 15,244,642 - 10,519.040 units of Kotak FMP Series XV - Dividend 105,228 25,764,537.712 units of PFRDD Prudential ICICI Floating Rate Plan D - 257,645,377 NOTE: Additions to Film Rights Cost include Rs. Nil (Previous year Rs. 7,115,088), acquired at the time of acquisition of a subsidiary Daily Dividend 84 company. 85 Schedules to the Consolidated accounts

14,994,404.654 units of HSBC Cash Fund IP - Daily Dividend 150,028,015 19,865,822.305 units of LIC MF Liquid Fund Dividend Plan 218,128,715 4,954,261.928 units of Sundaram BNP Paribas Money Fund Institutional 50,014,760 Daily Dividend Reinvestment 35,063,763.178 units of Reliance liquidity Fund Daily Dividend 350,746,329 Reinvestment option (Re-investment) (GS-DP) 7,019,729.360 units of Principal Floating Rate Fund FMP Institutional. Option - 70,202,207 Dividend Reinvestment Daily 13,602.648 units of B503DD Birla Cash Plus - Institutional. Prem. - 136,292 Daily Dividend - Reinvestment 4,150,599.276 units of Kotak Liquid (Institutional Premium) - Daily Dividend 50,753,943 22,663,282.967 units of P32ISD Prudential ICICI Institutional Liquid Plan - 226,632,830 Super Institutional Daily Dividend 15170726.024 units of OLPIPD HSBC Liquid Plus-Inst. Plus - 151,774,513 Daily Dividend Units in mutual funds of Rs. 1000 each 81,105.690 units of DSP Merrill Lynch Fixed Term Plan Series 1 D Dividend 81,105,847 101,017.788 units of G70 Standard Chartered Liquidity Managers-Plus-Daily Dividend 101,027,890 144,387.079 units of UTI Liquid Cash Plan Institutional-Daily Income Option - 147,194,787 Re Investment 101,257.74 units of DSP Merrill lynch Liquid Plus IP-Daily Dividend 101,277,992 90,751.561 units of TATA Liquid Super High Investment Fund-Daily Dividend 101,144,430 596.704 units of DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend 596,823 24,673.949 units of UTI Liquid Cash Plan Institutional - Daily Income Option - 25,153,751 Reinvestment Sold - In Dividend option: Units in mutual funds of Rs. 10 each 5,000,000.000 units of C95 Chola FMP -Series 2 (Quarterly Plan II )-Dividend 50,021,500 10,000,000.000 units of C95 Chola FMP -Series 2 (Quarterly Plan I )-Dividend 100,093,000 5,000,000.000 units of Reliance Fixed Horizon Fund I Monthly Plan-Series II 50,000,000 Dividend Plan 15,006,491.916 units of Reliance Fixed Horizon Fund - Monthly Plan A - 150,064,919 Series IV Dividend Option 15,075,739.448 units of Reliance Fixed Horizon Fund - Monthly Plan A - 150,757,394 Series V Dividend Option 7,000,000.000 units of Reliance Fixed Horizon Fund Dividend Option 70,000,000 7,034,474.027 units of Reliance Fixed Horizon Fund Monthly Plan A Series II - 70,344,740 Dividend Option 5,076,255.500 units of ABN AMRO FTP Series 3 Quarterly Plan D Dividend 50,762,555 5,076,923.310 units of Sundaram BP Paribas Fixed Term Plan Series IX- Dividend Plan 50,769,233 5,024,112.866 units of TATA Fixed Horizon Fund Series -8 Scheme A IP -Dividend 50,318,500 7,712,499.816 units of P152RD Pru ICICI FMP Series 32- Three Month Plan -C- 77,124,998 Retail Dividend 7,100,589.169 units of Kotak FMP 3M Series 1-Dividend 71,006,478 5,069,570.6775 units of Kotak FMP Series XV - Dividend 50,739,072 25,764,537.712 units of PFRDD Prudential ICICI Floating Rate Plan D-Daily Dividend 257,645,377 14,994,404.654 units of HSBC Cash Fund IP - Daily Dividend 150,028,015 19,865,822.305 units of LIC MF Liquid Fund Dividend Plan 218,128,715 4,954,261.928 units of Sundaram BNP Paribas Money Fund Institutional Daily 50,014,760 Dividend Reinvestment 22,040,922.615 units of Reliance Liquidity Fund Daily Dividend Reinvestment 220,477,553 option (Re-investment) (GS-DP) 7,019,729.360 units of Principal Floating Rate Fund FMP Institutional. Option - 70,202,207 Dividend Reinvestment Daily 4,106,200.781 units of B503DD Birla Cash Plus - Institutional. Prem. - 41,142,079 Daily Dividend - Reinvestment 4,150,599.276 units of Kotak Liquid (Institutional Premium) - Daily Dividend 50,753,943

86 Schedules to the Consolidated accounts Schedules to the Consolidated accounts

14,994,404.654 units of HSBC Cash Fund IP - Daily Dividend 150,028,015 14,344,726.156 units of P32ISD Prudential ICICI Institutional Liquid Plan - 143,447,262 19,865,822.305 units of LIC MF Liquid Fund Dividend Plan 218,128,715 Super Institutional Daily Dividend 4,954,261.928 units of Sundaram BNP Paribas Money Fund Institutional 50,014,760 Units in mutual funds of Rs. 1000 each Daily Dividend Reinvestment 81,105.690 units of DSP Merrill Lynch Fixed Term Plan Series 1 D Dividend 81,114,903 35,063,763.178 units of Reliance liquidity Fund Daily Dividend 350,746,329 Reinvestment option (Re-investment) (GS-DP) 101,017.788 units of G70 Standard Chartered Liquidity Managers-Plus- 101,027,890 Daily Dividend 7,019,729.360 units of Principal Floating Rate Fund FMP Institutional. Option - 70,202,207 Dividend Reinvestment Daily 102,016.223 units of UTI Liquid Cash Plan Institutional-Daily Income Option - 104,000,000 Re Investment 13,602.648 units of B503DD Birla Cash Plus - Institutional. Prem. - 136,292 101,257.74 units of DSP Merrill lynch Liquid Plus IP-Daily Dividend 101,277,992 Daily Dividend - Reinvestment 90,751.561 units of TATA Liquid Super High Investment Fund-Daily Dividend 101,144,430 4,150,599.276 units of Kotak Liquid (Institutional Premium) - Daily Dividend 50,753,943 22,663,282.967 units of P32ISD Prudential ICICI Institutional Liquid Plan - 226,632,830 41,116.988 units of DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend 41,125,211 Super Institutional Daily Dividend 24,673.949 units of UTI Liquid Cash Plan Institutional - Daily Income Option - 25,153,751 15170726.024 units of OLPIPD HSBC Liquid Plus-Inst. Plus - 151,774,513 Reinvestment Daily Dividend 5. Aggregate value of investments March 31, 2007 March 31, 2006 Units in mutual funds of Rs. 1000 each Market Value Cost Market Value Cost 81,105.690 units of DSP Merrill Lynch Fixed Term Plan Series 1 D Dividend 81,105,847 Quoted 408,547,542 408,423,644 284,098,611 282,124,691 101,017.788 units of G70 Standard Chartered Liquidity Managers-Plus-Daily Dividend 101,027,890 Unquoted 12,593,000 12,045,000 144,387.079 units of UTI Liquid Cash Plan Institutional-Daily Income Option - 147,194,787 421,016,644 294,169,691 Re Investment 101,257.74 units of DSP Merrill lynch Liquid Plus IP-Daily Dividend 101,277,992 90,751.561 units of TATA Liquid Super High Investment Fund-Daily Dividend 101,144,430 Schedule 11 : Inventories 596.704 units of DSP Merrill Lynch Liquidity Fund - Institutional - Daily Dividend 596,823 Food and beverages 4,802,084 2,408,114 24,673.949 units of UTI Liquid Cash Plan Institutional - Daily Income Option - 25,153,751 Stores and spares 12,813,202 6,838,460 Reinvestment Sold 17,615,286 9,246,574 - In Dividend option: Units in mutual funds of Rs. 10 each Schedule 12 : Sundry debtors 5,000,000.000 units of C95 Chola FMP -Series 2 (Quarterly Plan II )-Dividend 50,021,500 Debts outstanding for a period exceeding six months 10,000,000.000 units of C95 Chola FMP -Series 2 (Quarterly Plan I )-Dividend 100,093,000 Secured, considered good 1,467,682 180,000 5,000,000.000 units of Reliance Fixed Horizon Fund I Monthly Plan-Series II 50,000,000 Unsecured, considered good 1,987,330 941,573 Dividend Plan Unsecured, considered doubtful 3,802,710 1,602,381 15,006,491.916 units of Reliance Fixed Horizon Fund - Monthly Plan A - 150,064,919 Other debts Series IV Dividend Option Secured, considered good 1,836,801 3,194,358 15,075,739.448 units of Reliance Fixed Horizon Fund - Monthly Plan A - 150,757,394 Unsecured, considered good 63,577,849 38,193,498 Series V Dividend Option Unsecured, considered doubtful 77,815 - 7,000,000.000 units of Reliance Fixed Horizon Fund Dividend Option 70,000,000 72,750,187 44,111,810 7,034,474.027 units of Reliance Fixed Horizon Fund Monthly Plan A Series II - 70,344,740 Less : Provision for doubtful debts 3,880,525 1,602,381 Dividend Option 5,076,255.500 units of ABN AMRO FTP Series 3 Quarterly Plan D Dividend 50,762,555 68,869,662 42,509,429 5,076,923.310 units of Sundaram BP Paribas Fixed Term Plan Series IX- Dividend Plan 50,769,233 5,024,112.866 units of TATA Fixed Horizon Fund Series -8 Scheme A IP -Dividend 50,318,500 Schedule 13 : Cash and bank balances 7,712,499.816 units of P152RD Pru ICICI FMP Series 32- Three Month Plan -C- 77,124,998 Cash on hand 7,637,959 3,463,772 Retail Dividend Cheques on hand 990,065 810,464 7,100,589.169 units of Kotak FMP 3M Series 1-Dividend 71,006,478 Balances with scheduled banks: On current accounts 93,817,264 11,013,755 5,069,570.6775 units of Kotak FMP Series XV - Dividend 50,739,072 On deposit accounts* 12,454,578 614,878,789 25,764,537.712 units of PFRDD Prudential ICICI Floating Rate Plan D-Daily Dividend 257,645,377 On unpaid and unclaimed dividend accounts 470,996 - 14,994,404.654 units of HSBC Cash Fund IP - Daily Dividend 150,028,015 19,865,822.305 units of LIC MF Liquid Fund Dividend Plan 218,128,715 115,370,862 630,166,780 4,954,261.928 units of Sundaram BNP Paribas Money Fund Institutional Daily 50,014,760 * Includes unutilised monies out of issue of share capital amounting to Rs. Nil (Previous year Rs. 600,000,000) and fixed deposit Dividend Reinvestment receipts pledged with banks and customs department amounting to Rs. 12,060,576 (Previous year Rs. 12,752,565). 22,040,922.615 units of Reliance Liquidity Fund Daily Dividend Reinvestment 220,477,553 option (Re-investment) (GS-DP) Schedule 14 : Other current assets 7,019,729.360 units of Principal Floating Rate Fund FMP Institutional. Option - 70,202,207 Dividend Reinvestment Daily Interest accrued on deposits and others 3,427,426 8,236,114 Income accrued for which invoices have been raised subsequently 1,372,999 2,105,546 4,106,200.781 units of B503DD Birla Cash Plus - Institutional. Prem. - 41,142,079 Insurance claims receivable 146,479 67,543 Daily Dividend - Reinvestment 4,150,599.276 units of Kotak Liquid (Institutional Premium) - Daily Dividend 50,753,943 4,946,904 10,409,203

86 87 Schedules to the Consolidated accounts

Schedule 15 : Loans and advances As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.)

Unsecured, considered good Loan to a Partnership firm - 1,033,426 Loan to a body corporate 101,000,000 - Advances recoverable in cash or in kind or for value to be received 74,979,541 39,619,156 Advance against share capital given to a proposed subsidiary 10,000,000 10,000,000 Advance payment of Income Tax/Tax Deducted at Source/Tax Refundable* 63,797,108 29,265,032 Deposits - others 317,474,267 230,486,294 Unsecured, considered doubtful Advances recoverable in cash or in kind or for value to be received 250,798 250,798

567,501,714 310,654,706 Less : Provision for doubtful advances 250,798 250,798

567,250,916 310,403,908

Included in Loans and advances are: Outstanding from a private limited company in which some of the directors of the 2,500,000 4,750,000 Parent Company are interested as directors (Previous year two private limited companies) *includes Rs. 70,000, (Previous year Rs. Nil) acquired by a subsidiary company at the time of dissolution of its partnership firm

Schedule 16 : Current Liabilities Sundry Creditors 287,857,638 197,912,563 Unclaimed dividend (statutory liabilities as referred in Section 205C of the 470,996 - Companies Act, 1956)* Book overdraft with a bank - 1,955,084 Security deposits 9,391,804 5,368,000 Income received in advance (includes amount adjustable after one year Rs. Nil, 28,662,319 31,835,922 Previous year Rs. 833,333) Interest accrued but not due on loans 1,669,033 1,597,598

328,051,790 238,669,167

Dues to small scale industrial undertaking included in Sundry creditors - 5,501 Dues to other than small scale industrial undertakings included in Sundry creditors 287,857,638 197,907,062 Included in Sundry Creditors are: Payable to Directors of the Parent Company 482,668 358,300 *Shall be transferred to Investor Education and Protection Fund (when due)

Schedule 17 : Provisions For taxation 59,128,262 35,285,000 For Interim Dividend - on Equity Shares - 22,877,370 - on Preference Shares - 5,219,178 For Corporate Dividend Tax - 3,944,852 For Fringe Benefit Tax (Net of Payment) 787,486 151,410 For Staff benefit schemes - Leave Encashment 5,375,513 3,231,852 - Gratuity 3,847,267 901,056

69,138,528 71,610,718

88 Schedules to the Consolidated accounts Schedules to the Consolidated accounts Schedule 15 : Loans and advances Schedule 18 : Miscellaneous Expenditure As at As at As at As at March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 (Rs.) (Rs.) (Rs.) (Rs.)

Unsecured, considered good Miscellanous expenditure (To the extent not written off) Loan to a Partnership firm - 1,033,426 Loan to a body corporate 101,000,000 - Share/debenture placement expenses Advances recoverable in cash or in kind or for value to be received 74,979,541 39,619,156 As per last account - 5,416,843 Advance against share capital given to a proposed subsidiary 10,000,000 10,000,000 Add: Incurred during the year - 113,195,755 Advance payment of Income Tax/Tax Deducted at Source/Tax Refundable* 63,797,108 29,265,032 Deposits - others 317,474,267 230,486,294 - 118,612,598 Unsecured, considered doubtful Less: Written off during the year - 118,612,598 Advances recoverable in cash or in kind or for value to be received 250,798 250,798 - - 567,501,714 310,654,706 Less : Provision for doubtful advances 250,798 250,798 NOTES: 1. The Parent Company had during the previous year incurred expenses amounting to Rs. 113,195,755 for the initial public offering 567,250,916 310,403,908 (IPO) of 5,700,000 equity shares (excluding sale of 2,000,000 equity shares held by an existing shareholder of the Parent Company). The share placement expenses incurred on above issue was adjusted against securities premium account in the Included in Loans and advances are: previous year. Outstanding from a private limited company in which some of the directors of the 2,500,000 4,750,000 2. Expenses incurred on the initial public offering, during the previous year included Rs. 4,866,240 paid to statutory auditors of Parent Company are interested as directors (Previous year two Parent Company towards certification charges etc. and Rs. 158,254 paid as fringe benefit tax. private limited companies) *includes Rs. 70,000, (Previous year Rs. Nil) acquired by a subsidiary company at the time of dissolution of its partnership firm Schedule 19 : Operating Income Income from sale of tickets of films (including entertainment tax collected 1,216,957,384 880,052,280 Rs. 291,582,187, Previous year Rs. 224,379,377) Income from Revenue Sharing 190,043,320 48,884,692 Schedule 16 : Current Liabilities Income from sale of film rights/distribution of films/commission of films 26,240,010 20,864,189 Sundry Creditors 287,857,638 197,912,563 Sale of food and beverages (including sales tax collected Rs. 40,692,112, 373,452,389 240,076,617 Unclaimed dividend (statutory liabilities as referred in Section 205C of the 470,996 - Previous year Rs. 26,779,327) Companies Act, 1956)* Advertisement (Gross Tax Deducted at source Rs. 4,963,656, 181,059,767 94,062,849 Book overdraft with a bank - 1,955,084 Previous year Rs. 2,787,728) Security deposits 9,391,804 5,368,000 Royalty Income (to the extent of pouring fee, from a customer) 15,874,775 12,036,768 Income received in advance (includes amount adjustable after one year Rs. Nil, 28,662,319 31,835,922 (Gross Tax Deducted at source Rs. 670,956, Previous year Rs. Nil) Previous year Rs. 833,333) Management fees (Gross Tax Deducted at source Rs. 242,469, 8,678,225 8,691,643 Interest accrued but not due on loans 1,669,033 1,597,598 Previous year Rs. 386,528) (including service tax collected Rs. 955,695, Previous year Rs. 799,107) 328,051,790 238,669,167 2,012,305,870 1,304,669,038 Dues to small scale industrial undertaking included in Sundry creditors - 5,501 Dues to other than small scale industrial undertakings included in Sundry creditors 287,857,638 197,907,062 Included in Sundry Creditors are: Payable to Directors of the Parent Company 482,668 358,300 Schedule 20 : Other Income *Shall be transferred to Investor Education and Protection Fund (when due) Interest On bank deposits (Gross, Tax Deducted at Source Rs. 2,230,429, 10,356,753 11,072,561 Previous year Rs. 2,472,685) Schedule 17 : Provisions On long term investments - Non Trade (Gross, Tax Deducted at Source 1,139,597 1,041,173 For taxation 59,128,262 35,285,000 Rs. Nil, Previous year Rs. Nil) For Interim Dividend From others (Gross, Tax Deducted at Source Rs. 649,283, Previous year Rs. Nil) 3,603,423 215,301 - on Equity Shares - 22,877,370 Dividend income (from current investments - other than trade) 26,214,457 3,391,096 - on Preference Shares - 5,219,178 Profit on sale of Current Investments - other than trade 242,763 - For Corporate Dividend Tax - 3,944,852 Rent received 3,754,199 - For Fringe Benefit Tax (Net of Payment) 787,486 151,410 Royalty Income (to the extent of sign on fee, from a customer) 4,707,264 5,394,004 For Staff benefit schemes - Leave Encashment 5,375,513 3,231,852 Foreign exchange fluctuation (net) - 34,965 - Gratuity 3,847,267 901,056 Miscellaneous income (Gross, Tax Deducted at Source Rs. Nil, 11,276,790 7,824,533 Previous year Rs. 22,997) 69,138,528 71,610,718 61,295,246 28,973,633

Schedule 21 : Personnel Expenses Salary and other allowances 167,605,937 106,839,248 Contribution to gratuity fund 3,771,802 1,727,917 Contribution to provident and other funds 16,380,492 10,339,117 Staff welfare expenses 8,454,351 6,623,748

196,212,582 125,530,030

88 89 Schedules to the Consolidated accounts Schedule 22 : Operating and other expenses As at As at March 31, 2007 March 31, 2006 (Rs.) (Rs.)

Rent (net of receipt from sub-lessees of Rs. 16,075,502, 177,504,336 114,660,004 Previous year Rs. 14,074,573) Rates and taxes 9,339,697 5,623,803 Communication costs 16,887,176 9,218,529 Professional charges 21,973,423 14,658,748 Advertisement and publicity (excluding Rs. 28,229,326, 75,249,270 46,649,504 Previous year Rs. 23,540,874 borne by other co-sponsors) Business promotion and entertainment 2,563,994 3,467,973 Travelling and conveyance 37,774,636 20,498,555 Printing and stationery 9,551,355 6,568,303 Insurance 7,436,269 5,190,407 Repairs and maintenance : - Buildings 27,197,282 11,238,792 - Plant & Machinery 16,309,327 13,069,886 - Common area maintenance 90,443,457 61,355,837 - Others 8,821,833 7,350,110 Electricity and water charges 94,902,697 49,036,196 Auditor’s remuneration - Audit fee 1,800,357 1,368,470 - Tax audit fee 306,930 246,520 - Quarterly limited review of accounts 1,010,160 220,400 - Certification etc. 123,464 426,350 - Out-of-pocket expenses 28,141 58,630 Security service charges 19,695,965 12,308,626 Discount on sales 971,113 1,068,235 Donations 527,525 182,000 Irrecoverable balances written off (net) 173,534 - Provision for doubtful debts 2,278,143 1,602,381 Loss on sale/discard of fixed assets (net) 1,303,110 2,515,492 Loss on sale of current investments - other than trade - 35,506 Directors Sitting Fees 440,000 320,000 Bank and other charges 6,074,733 3,804,044 Miscellaneous expenses 18,815,871 11,752,906

649,503,798 404,496,207

Rent includes amount paid to directors 4,374,000 4,374,000 Schedule 23 : Interest paid Interest on fixed loans and debentures 43,439,556 29,370,741 to banks and others 421,884 1,366,416

43,861,440 30,737,157 Schedule 24 : Earning Per share (eps) Net profit as per profit and loss account 101,894,942 52,864,893 Less: Dividend on Preference Shares and tax thereon 11,402,500 5,951,168 Net Profit for calculation of basic and diluted EPS 90,492,442 46,913,725 Weighted average number of equity shares in calculating basic EPS: Number of equity shares outstanding at the beginning of the year 22,877,370 17,097,370 Equity shares allotted on January 31, 2007 (outstanding for 59 days) 38,000 - Equity shares allotted on March 31, 2007 (outstanding for 1 day) 98,500 - Equity shares allotted on September 22, 2005 (outstanding for 191 days) - 80,000 Equity shares allotted on December 27, 2005 (outstanding for 95 days) - 5,700,000 Number of equity shares outstanding at the end of the year 23,013,870 22,877,370 Weighted number of equity shares of Rs. 10 each outstanding during the year 22,883,782 18,622,795 Weighted average number of equity shares in calculating diluted EPS: Weighted number of equity shares of Rs. 10 each outstanding during the year (as above) 22,883,782 18,622,795 Add: Effect of stock options - 33,593 Weighted number of equity shares of Rs. 10 each outstanding during the year 22,883,782 18,656,388 Basic Earnings Per Share 3.95 2.52 3.95 90 Diluted Earnings Per Share 2.51 Schedules to the Consolidated accounts Notes to the Consolidated accounts Schedule 22 : Operating and other expenses Schedule 25: Notes to The Consolidated Accounts As at As at NOTES annexed to and forming part of the Consolidated Balance Sheet as at March 31, 2007, Consolidated Profit and Loss Account March 31, 2007 March 31, 2006 and Consolidated Cash Flow Statement for the year ended on that date. (Rs.) (Rs.) 1.Principles of Consolidation Rent (net of receipt from sub-lessees of Rs. 16,075,502, 177,504,336 114,660,004 Previous year Rs. 14,074,573) The Consolidated Financial Statements relate to PVR Limited (Parent Company) and its Subsidiary Companies (hereinafter referred Rates and taxes 9,339,697 5,623,803 as the “PVR Group”). The Consolidated Financial Statements have been prepared on the following basis: Communication costs 16,887,176 9,218,529 (i) The financial statements of the Parent Company and its Subsidiary Companies have been combined on a line by line basis by Professional charges 21,973,423 14,658,748 adding together the book values of like items of assets, liabilities, income and expenses after fully eliminating intra group Advertisement and publicity (excluding Rs. 28,229,326, 75,249,270 46,649,504 balances and intra group transactions resulting in unrealized profits or losses, if any, as per Accounting Standard – 21, Previous year Rs. 23,540,874 borne by other co-sponsors) Consolidated Financial Statements, issued by The Institute of Chartered Accountants of India. Business promotion and entertainment 2,563,994 3,467,973 Travelling and conveyance 37,774,636 20,498,555 (ii) In case of one Subsidiary (PVR Pictures Limited, having interest in a partnership firm), interest in the assets, liabilities, income and Printing and stationery 9,551,355 6,568,303 expenses of a Joint Venture Partnership Firm have been consolidated using proportionate consolidation method upto the date of Insurance 7,436,269 5,190,407 dissolution of said partnership firm. Intra group balances, transactions and unrealized profit/losses, if any, have been eliminated Repairs and maintenance : to the extent of Subsidiary’s proportionate share. - Buildings 27,197,282 11,238,792 - Plant & Machinery 16,309,327 13,069,886 (iii) The Subsidiary Companies which are included in the consolidation and the Parent Company’s holding therein is as under: - Common area maintenance 90,443,457 61,355,837 - Others 8,821,833 7,350,110 Name of Subsidiary Company Country Of Incorporation Percentage of Ownership as Electricity and water charges 94,902,697 49,036,196 at March 31, 2007 Auditor’s remuneration - Audit fee 1,800,357 1,368,470 CR Retail Malls (India) Private Limited India 100 - Tax audit fee 306,930 246,520 PVR Pictures Limited (including PVR Factory India 100 - Quarterly limited review of accounts 1,010,160 220,400 Distribution Network - A partnership firm in which - Certification etc. 123,464 426,350 the company was a partner to the extent of - Out-of-pocket expenses 28,141 58,630 50% till May 31, 2006) Security service charges 19,695,965 12,308,626 Discount on sales 971,113 1,068,235 (iv) The financial statements of the Subsidiary Companies used in the consolidation are drawn for the same period as that of the Donations 527,525 182,000 Parent Company i.e. year ended March 31, 2007. Irrecoverable balances written off (net) 173,534 - Provision for doubtful debts 2,278,143 1,602,381 (v) Goodwill represents the difference between the Parent Company’s share in the net worth of a Subsidiary Company (CR Retail Loss on sale/discard of fixed assets (net) 1,303,110 2,515,492 Malls (India) Private Limited) and the cost of acquisition at the time of making the investment in the Subsidiary Company. For Loss on sale of current investments - other than trade - 35,506 this purpose, the Parent Company’s share of net worth of the Subsidiary Company is determined on the basis of the latest Directors Sitting Fees 440,000 320,000 financial statements of the Subsidiary Company prior to acquisition, after making necessary adjustments for material events Bank and other charges 6,074,733 3,804,044 between the date of such financial statements and the date of respective acquisition. Goodwill is amortised pro-rata over a Miscellaneous expenses 18,815,871 11,752,906 period of 5 years from the date of acquisition.

649,503,798 404,496,207 (vi) Capital Reserve represents the difference between the Parent Company’s share in the net worth of a Subsidiary Company (PVR Pictures Limited) and the cost of acquisition at the time of making the investment in the Subsidiary Company. For this purpose, the Parent Company‘s share of net worth of the Subsidiary Company is determined on the basis of the latest financial Rent includes amount paid to directors 4,374,000 4,374,000 statements of the Subsidiary Company prior to acquisition, after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. Schedule 23 : Interest paid (vii) As far as possible, the Consolidated Financial Statements have been prepared using uniform accounting policies for like Interest transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the on fixed loans and debentures 43,439,556 29,370,741 Parent Company’s separate financial statements. Differences in the accounting policies, if any, have been disclosed separately. to banks and others 421,884 1,366,416 2.Goodwill (on Consolidation) 43,861,440 30,737,157 The Goodwill in the Consolidated Financial Statements represents the excess of the purchase consideration of investment over the PVR Limited’s share in the net assets of its subsidiary – CR Retail Malls (India) Private Limited.

Schedule 24 : Earning Per share (eps) Particulars March 31, 2005 (Rs.) Net profit as per profit and loss account 101,894,942 52,864,893 Investment - Fresh equity shares issued by CR Retail Malls (India) Private Limited 7,000,000 Less: Dividend on Preference Shares and tax thereon 11,402,500 5,951,168 on October 4, 2004 Net Profit for calculation of basic and diluted EPS 90,492,442 46,913,725 PVR Limited’s share in the net assets of its subsidiary 5,448,602 Weighted average number of equity shares in calculating basic EPS: Goodwill (A) 1,551,398 Number of equity shares outstanding at the beginning of the year 22,877,370 17,097,370 Equity shares allotted on January 31, 2007 (outstanding for 59 days) 38,000 - Investment – Additional equity shares purchased from The Phoenix Mills Limited 100,000 Equity shares allotted on March 31, 2007 (outstanding for 1 day) 98,500 - on March 28, 2005 Equity shares allotted on September 22, 2005 (outstanding for 191 days) - 80,000 PVR Limited’s share in the net assets of its subsidiary 82,460 Equity shares allotted on December 27, 2005 (outstanding for 95 days) - 5,700,000 Goodwill (B) 17,540 Number of equity shares outstanding at the end of the year 23,013,870 22,877,370 March 31, 2007 (Rs.) Weighted number of equity shares of Rs. 10 each outstanding during the year 22,883,782 18,622,795 Investment – Additional equity shares issued by CR Retail Malls (India) Private Limited 192,900,000 on March 30, 2007 Weighted average number of equity shares in calculating diluted EPS: PVR Limited’s share in the net assets of its subsidiary 191,231,639 Weighted number of equity shares of Rs. 10 each outstanding during the year (as above) 22,883,782 18,622,795 Add: Effect of stock options - 33,593 Goodwill (C) 1,668,361 Weighted number of equity shares of Rs. 10 each outstanding during the year 22,883,782 18,656,388 Total Goodwill (A+B+C) 3,237,299 Basic Earnings Per Share 3.95 2.52 Diluted Earnings Per Share 3.95 2.51 90 91 Notes to the Consolidated accounts

PVR Limited has made investment by way of 19,290,000 equity shares of Rs. 10 each of CR Retail Malls (India) Private Limited on March 30, 2007. Goodwill amounting to Rs. 1,668,361 has been worked out based on the net assets value of the subsidiary as on March 29, 2007. Financial statements as at March 29, 2007 drawn by the management for this purpose have been audited by their statutory auditors. 3. Capital Reserve (on Consolidation) The Capital Reserve in the Consolidated Financial Statements represents the excess of the PVR Limited’s share in the net assets of its subsidiary (PVR Pictures Limited) over the purchase consideration of investment.

Particulars March 31, 2006 (Rs.) Fresh equity shares issued by PVR Pictures Limited on April 5, 2005 14,500,000 PVR Limited’s share in the net assets of its subsidiaries 14,524,483 Capital Reserve (A) 24,483 Investment – Additional equity shares purchased from erstwhile shareholders of PVR Pictures Limited 500,000 PVR Limited’s share in the net assets of its subsidiary 500,000 Capital Reserve (B) - Total Capital Reserve (A + B) 24,483 4. Statement of Significant Accounting Policies (a) Basis of preparation The financial statements are prepared to comply in all material respects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. The financial statements are prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the PVR Group and except for the change in accounting policy disclosed more fully below, are consistent with those used in the previous year. (b) Change in Accounting Policy Till March 31, 2006 the Parent Company was providing for leave benefits based on actuarial valuation in accordance with old Accounting Standard 15. In the current year, the Parent Company has opted for early adoption of the Accounting Standard 15 (Revised 2005) which is otherwise mandatory for accounting periods commencing on or after December 7, 2006. Accordingly the Parent Company has changed the basis of providing short term leave benefits. As a result, actuarial valuation of leave as at April 1, 2006 is higher by Rs. 270,219 (net of income-tax Rs. 137,106) which in accordance with the transitional provision in the revised Accounting Standard, has been adjusted to the opening balance of Profit and Loss Account. This change does not have material impact on the profit for the current year. (c) Fixed Assets Fixed Assets are stated at Cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any directly attributable cost of bringing the asset in its working condition for its intended use. Financing costs relating to acquisition of qualifying Fixed Assets are also included to the extent they relate to the period till such assets are ready for their intended use.Leasehold improvements represent expenses incurred towards civil works, interior furnishings, etc. on the leased premises at the various locations. (d) Goodwill Goodwill represents the difference between the Parent Company’s share in the net worth of the Subsidiary Company and the cost of acquisition at the time of making the investment in the Subsidiary Company. For this purpose, the Parent Company’s share of net worth of the Subsidiary Company is determined on the basis of the latest financial statements of the Subsidiary Company prior to acquisition, after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. (e) Depreciation Leasehold Improvements are amortized over the estimated useful life or unexpired period of lease (whichever is lower) on a stra ight line basis. Cost of structural improvements at premises where Parent Company has entered into agreement with the parties to operate and manage Multiscreen/Single Screen Cinemas on revenue sharing basis are amortized over the estimated useful life or lock in period of the agreement (whichever is lower) on a straight line basis. Depreciation on all other assets is provided on Straight-Line Method at the rates computed based on estimated useful life of the assets, which are equal to the corresponding rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions to fixed assets due to foreign exchange fluctuation is provided/adjusted over the remaining useful life of such assets. Assets costing Rs. 5,000 and below are fully depreciated in the year of acquisition. Goodwill arising out of acquiring share in a Subsidiary Company is amortised pro-rata over a period of 5 years from the date of acquisition.

92 Notes to the Consolidated accounts Notes to the Consolidated accounts PVR Limited has made investment by way of 19,290,000 equity shares of Rs. 10 each of CR Retail Malls (India) Private Limited on (f) Intangibles March 30, 2007. Goodwill amounting to Rs. 1,668,361 has been worked out based on the net assets value of the subsidiary as on March 29, 2007. Financial statements as at March 29, 2007 drawn by the management for this purpose have been audited by their Software: statutory auditors. Cost relating to purchased software’s is capitalised and is amortised on a Straight-Line Basis over their estimated useful lives of six 3.Capital Reserve (on Consolidation) years. The Capital Reserve in the Consolidated Financial Statements represents the excess of the PVR Limited’s share in the net assets of its Software licenses costing Rs 5,000 and below are fully depreciated in the year of acquisition. subsidiary (PVR Pictures Limited) over the purchase consideration of investment. Film Rights’ Cost: Particulars March 31, 2006 (Rs.) Film right cost is capitalised and is amortised fully as and when the film is released. Fresh equity shares issued by PVR Pictures Limited on April 5, 2005 14,500,000 (g) Leases PVR Limited’s share in the net assets of its subsidiaries 14,524,483 Where the PVR Group is the lessee: Capital Reserve (A) 24,483 Finance leases, which effectively transfer to the PVR Group substantially all the risks and benefits incidental to ownership of the leased Investment – Additional equity shares purchased from erstwhile shareholders of PVR Pictures Limited 500,000 item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability PVR Limited’s share in the net assets of its subsidiary 500,000 based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and Capital Reserve (B) - other initial direct costs are capitalised. Total Capital Reserve (A + B) 24,483 If there is no reasonable certainty that the PVR Group will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. 4.Statement of Significant Accounting Policies Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as (a) Basis of preparation operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a straight-line basis over the lease term. The financial statements are prepared to comply in all material respects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. The financial statements are Where the PVR Group is the lessor: Assets given under a finance lease are recognised as a receivable at an amount equal to the prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the PVR net investment in the lease. Lease rentals are apportioned between principal and interest on the IRR method. The principal amount Group and except for the change in accounting policy disclosed more fully below, are consistent with those used in the previous year. received reduces the net investment in the lease and interest is recognised as revenue. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss Account. (b) Change in Accounting Policy Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Profit and Loss Account on a Till March 31, 2006 the Parent Company was providing for leave benefits based on actuarial valuation in accordance with old straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Profit and Loss Account. Accounting Standard 15. In the current year, the Parent Company has opted for early adoption of the Accounting Standard 15 Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss Account. (Revised 2005) which is otherwise mandatory for accounting periods commencing on or after December 7, 2006. Accordingly the Parent Company has changed the basis of providing short term leave benefits. As a result, actuarial valuation of leave as at April 1, (h) Expenditure on new projects and substantial expansion 2006 is higher by Rs. 270,219 (net of income-tax Rs. 137,106) which in accordance with the transitional provision in the revised Accounting Standard, has been adjusted to the opening balance of Profit and Loss Account. This change does not have material Expenditure directly relating to construction activity is capitalised. Indirect expenditure incurred during construction period is impact on the profit for the current year. capitalised as part of the indirect construction cost to the extent expenditure is related to construction or is incidental thereto. Other indirect expenditure (including borrowing costs) incurred during the construction period, which is not related to the construction (c) Fixed Assets activity nor is incidental thereto is charged to the Profit and Loss Account. Income earned during construction period is adjusted against the total of the indirect expenditure. Fixed Assets are stated at Cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any directly attributable cost of bringing the asset in its working condition for its intended use. Financing costs relating to acquisition of All direct capital expenditure on expansion is capitalised. As regards indirect expenditure on expansion, only that portion is capitalised qualifying Fixed Assets are also included to the extent they relate to the period till such assets are ready for their intended which represents the marginal increase in such expenditure involved as a result of capital expansion. Both direct and indirect use.Leasehold improvements represent expenses incurred towards civil works, interior furnishings, etc. on the leased premises at expenditure are capitalised only if they increase the value of the asset beyond its originally assessed standard of performance. the various locations. (i) Investments (d) Goodwill Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All Goodwill represents the difference between the Parent Company’s share in the net worth of the Subsidiary Company and the cost of other investments are classified as long term investments. Current investments are carried at lower of cost and fair value acquisition at the time of making the investment in the Subsidiary Company. For this purpose, the Parent Company’s share of net determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in the worth of the Subsidiary Company is determined on the basis of the latest financial statements of the Subsidiary Company prior to value is made to recognize a decline other than temporary in the value of the investments. acquisition, after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. (j) Inventories (e) Depreciation Inventories are valued as follows: Leasehold Improvements are amortized over the estimated useful life or unexpired period of lease (whichever is lower) on a straight Food and beverages Lower of cost and net realizable value. Cost is determined on First In First Out line basis. Basis. Cost of structural improvements at premises where Parent Company has entered into agreement with the parties to operate and Stores and spares Lower of cost and net realizable value. Cost is determined on First In First Out manage Multiscreen/Single Screen Cinemas on revenue sharing basis are amortized over the estimated useful life or lock in period of Basis. the agreement (whichever is lower) on a straight line basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. Depreciation on all other assets is provided on Straight-Line Method at the rates computed based on estimated useful life of (k) Revenue recognition the assets, which are equal to the corresponding rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions to fixed assets due to foreign exchange fluctuation is provided/adjusted over the remaining useful life of such Revenue is recognized to the extent that it is probable that the economic benefits will flow to the PVR Group and the revenue can be assets. reliably measured. Amount of entertainment tax, sales tax and service tax collected on generating operating revenue has been shown as a reduction from the operating revenue. Assets costing Rs. 5,000 and below are fully depreciated in the year of acquisition. Sale of Tickets of Films Goodwill arising out of acquiring share in a Subsidiary Company is amortised pro-rata over a period of 5 years from the date of Revenue from sale of tickets of films is recognised as and when the film is exhibited. acquisition. Sale of Food and Beverages Revenue from sale of food and beverages is recognised upon passage of title to customers, which coincides with their delivery.

92 93 Notes to the Consolidated accounts

Income from Distribution of films Theatrical revenue from the distribution of films is accounted for on the basis of box office reports received from various exhibitors and revenue from the sale of satellite / TV rights is recognised at the time of initial period of transfer of right to the customer. Sharing Revenue Income from revenue sharing is recognized in accordance with the terms of agreement with parties to operate and manage Multiscreen/ Single screen Cinemas, namely PVR EDM, PVR Lucknow, PVR Indore, PVR Mulund and PVR Aligarh in coordinated manner. Advertisement Revenue Advertisement revenue is recognised as and when advertisement is displayed at the cinema halls. Royalty Income (to the extent of Pouring Fee, from a customer) and Management Fee Revenue Revenue is recognised on an accrual basis in accordance with the terms of the relevant agreements. Royalty Income (to the extent of Sign on Fee from customers) Revenue of one time sign on fee from customers is recognized on an annual basis as per the agreements. The amount of sign on fee received for unexpired period of agreements is deferred, which is recognized in the relevant year to which it pertains. Interest Income Interest revenue is recognised on a time proportion basis, taking into account the amount outstanding and the rates applicable. Dividend Income Revenue is recognized where the shareholder’s right to receive payment is established by the balance sheet date. Rent Income Revenue from rent is recognized based upon the contract, for the period the property has been let out. (l) Foreign currency transactions (i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction and non- monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. (iii) Exchange Differences Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year or reported in previous financial statements, are recognized as income or as expense in the year in which they arise except gain or loss on transactions relating to acquisition of Fixed Assets/Intangibles from outside India, which is adjusted to the carrying amount of the Fixed Assets/Intangibles. (m) Retirement and other employee benefits i. Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts. ii. Gratuity is a defined benefit obligation. The PVR Group has created an approved gratuity fund for the future payment of gratuity to the employees. The PVR Group accounts for the gratuity liability, based upon the actuarial valuation carried out at the year end, by an independent actuary. Gratuity liability of an employee, who leaves the PVR Group before the close of the year and which is remaining unpaid, is provided on actual computation basis. iii. Short term compensated absences are provided for on based on estimates. Long term compensated balances are provided for based on actuarial valuation. Leave encashment liability of an employee, who leaves the PVR Group before the close of the year and which is remaining unpaid, is provided for on actual computation basis. iv. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred. (n) Income taxes Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In case where the Concerned Company has unabsorbed depreciation or carry forward tax losses, entire deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. Unrealised deferred tax assets of earlier years are re-assessed and recognized to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

94 Notes to the Consolidated accounts Notes to the Consolidated accounts Income from Distribution of films (o) Segment Reporting Polices Theatrical revenue from the distribution of films is accounted for on the basis of box office reports received from various exhibitors and revenue from the sale of satellite / TV rights is recognised at the time of initial period of transfer of right to the customer. Identification of segments The PVR Group’s operating businesses are organized and managed separately according to the nature of products and services Sharing Revenue provided, with each segment representing a strategic business unit that offers different products and serves different markets. The Income from revenue sharing is recognized in accordance with the terms of agreement with parties to operate and manage analysis of geographical segments is based on the areas in which major operating divisions of the PVR Group operate. Multiscreen/ Single screen Cinemas, namely PVR EDM, PVR Lucknow, PVR Indore, PVR Mulund and PVR Aligarh in coordinated manner. Unallocated items The Corporate and Other segment includes general corporate income and expense items which are not allocated to any business Advertisement Revenue segment. Advertisement revenue is recognised as and when advertisement is displayed at the cinema halls. (p) Impairment Royalty Income (to the extent of Pouring Fee, from a customer) and Management Fee Revenue Revenue is recognised on an accrual basis in accordance with the terms of the relevant agreements. The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized wherever the carrying amounts of an asset exceed its recoverable amount. The Royalty Income (to the extent of Sign on Fee from customers) recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash Revenue of one time sign on fee from customers is recognized on an annual basis as per the agreements. The amount of sign on fee flows are discounted to their present value at the weighted average cost of capital. received for unexpired period of agreements is deferred, which is recognized in the relevant year to which it pertains. (q) Provisions Interest Income Interest revenue is recognised on a time proportion basis, taking into account the amount outstanding and the rates applicable. A provision is recognised when the PVR Group has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Dividend Income Revenue is recognized where the shareholder’s right to receive payment is established by the balance sheet date. Provisions except those disclosed elsewhere in the financial statements, are not discounted to their present value and are determined based on best management estimate required to settle the obligation at each Balance Sheet date. These are reviewed at each Rent Income Balance Sheet date and are adjusted to reflect the current best management estimates. Revenue from rent is recognized based upon the contract, for the period the property has been let out. (r) Earning Per share (l) Foreign currency transactions Basic Earnings Per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting (i) Initial Recognition dividend on preference shares and attributable taxes) by the weighted average number of equity shares outstanding during the year. Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange The weighted average number of equity shares outstanding during the year are adjusted for events of bonus issue; bonus element in rate between the reporting currency and the foreign currency at the date of the transaction. a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares). Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity (ii) Conversion share during the reporting year. Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction and non- For the purpose of calculating Diluted Earnings Per Share, the net profit or loss for the year attributable to equity shareholders and monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. the exchange rates that existed when the values were determined. (s) Cash and Cash equivalents (iii) Exchange Differences Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short term investments with an original recorded during the year or reported in previous financial statements, are recognized as income or as expense in the year in maturity of three months or less. which they arise except gain or loss on transactions relating to acquisition of Fixed Assets/Intangibles from outside India, which (t) Employee Stock Compensation Cost is adjusted to the carrying amount of the Fixed Assets/Intangibles. Measurement and disclosure of the employee share-based payment plans is done in accordance with the Guidance Note on (m) Retirement and other employee benefits Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India. The Parent Company i. Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations amortized over the vesting period of the option on a straight line basis. other than the contribution payable to the respective trusts. 5.Segment Information ii. Gratuity is a defined benefit obligation. The PVR Group has created an approved gratuity fund for the future payment of Business Segments gratuity to the employees. The PVR Group accounts for the gratuity liability, based upon the actuarial valuation carried out at The PVR Group has organized its operations into two primary segments, Exhibition of Films and Distribution of Films, these have the year end, by an independent actuary. Gratuity liability of an employee, who leaves the PVR Group before the close of the been identified taking into account the nature of activities carried out. The PVR Group’s operations predominantly relate to exhibition year and which is remaining unpaid, is provided on actual computation basis. of films. Other business segment i.e. distribution of films is very small and reported under others category. iii. Short term compensated absences are provided for on based on estimates. Long term compensated balances are provided for Costs directly attributable to either segment are accounted for in the respective segment. based on actuarial valuation. Leave encashment liability of an employee, who leaves the PVR Group before the close of the year and which is remaining unpaid, is provided for on actual computation basis. The following table presents the revenue and profit information of the business segments for the year ended March 31, 2007 and March 31, 2006 and certain asset and liability information regarding business segments as at March 31, 2007 iv. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred. and March 31, 2006. (n) Income taxes Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In case where the Concerned Company has unabsorbed depreciation or carry forward tax losses, entire deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. Unrealised deferred tax assets of earlier years are re-assessed and recognized to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

94 95 Rs. ended 313,788 3,355,590 1,602,381 34,757,014 83,349,792 30,737,157 52,829,387 12,329,035 102,988,227 972,172,115 833,906,722 959,470,450 241,204,477 730,967,638 For the year 13,253,502 2,898,931,685 1,939,461,235 1,049,066,903 March 31, 2006 ended 315,616 2,278,143

48,540,550 43,861,440 26,457,220 15,099,773

153,055,559 101,894,946 368,527,999 879,357,058 646,800,600 133,379,013 617,133,922

19,738,253 1,247,885,057 2,695,509,930 For the year

686,902,763 1,062,320,405 3,312,643,852

1,667,164,510

March 31, 2007 - - - ended (556,152) (556,152) For the year (3,306,551) March 31, 2006 - - - ended (556,986) 129,235) (3,306,551) 1, 129,235) (3,306,551) (556,986) For the year (5,129,235) March 31, 2007 - ended 22,861,154 12,318,856 - - 13,061,889 36,404,534 (2,415,194) For the year 22,212,565 March 31, 2006 ended 8,910,390 6,383,036

451,250 20,637,424 45,809,446 16,584,860

31,369,245 For the year

March 31, 2007 ended 1,602,381 - - - - 71,030,936 811,045,568 228,698,740 105,403,421 For the year 13,253,502 1,903,612,853 March 31, 2006 1,030,160,889 ended 2,278,143

124,468,623 352,500,125 146,672,523 626,163,176

19,287,003 2,650,257,470 For the year

1,640,924,500

Movie exhibition Others Elimination Total Capital Expenditure Capital Depreciation/Amortisation Amortisation of Goodwill of Amortisation Expense Interest of sale on Income/Profit/Loss Dividend investments current information Other Assets Segment Liabilities Segment Revenue SegmentBusiness Other Income RevenueTotal Results Results Segment March 31, 2007 1,660,211,503 1,043,414,391Tax) Deferred and Profit Net 31,820,495Assets Unallocated 22,212,565Assets Total Liabilities Unallocated (5, Liabilities Total Debts Doubtful for Provision Income from Operations Income Interest 96 (including Tax Income for Provision Tax, Benefit Fringe Tax, Wealth Rs. Notes to the Consolidated accounts ended 313,788

3,355,590 1,602,381 Geographical segments 34,757,014 30,737,157 52,829,387 12,329,035 83,349,792 102,988,227 241,204,477 730,967,638 972,172,115 959,470,450 833,906,722 The following is the distribution of the PVR Group Consolidated revenue by geographical markets, regardless of where the expenses against the same has been incurred. For the year 13,253,502 1,939,461,235 2,898,931,685 1,049,066,903 March 31, 2006 March 31, 2007 March 31, 2006

Domestic Markets 1,662,607,560 1,036,757,628 Overseas Markets 4,556,950 12,309,275 ended 315,616 2,278,143

48,540,550 43,861,440 26,457,220 15,099,773

To t a l 1,667,164,510 1,049,066,903 153,055,559 101,894,946 368,527,999 879,357,058 646,800,600 617,133,922 133,379,013

19,738,253 2,695,509,930 1,247,885,057 For the year

3,312,643,852 1,686,902,763 1,062,320,405 1,667,164,510 The following table shows the carrying amount of debtors by geograhical market

March 31, 2007 Domestic Markets 71,960,846 44,111,810 Overseas Markets 789,341 - - - -

ended To t a l 72,750,187 44,111,810

(556,152) (556,152) The Group has common fixed assets for providing services to domestic as well as overseas markets. Hence, separate figures for fixed assets/ For the year

(3,306,551) additions to fixed assets have not been furnished. March 31, 2006 - - - ended (556,986) (556,986) (5,129,235) (3,306,551) For the year (5,129,235) March 31, 2007 - ended 22,861,154 - - 36,404,534 13,061,889 12,318,856 (2,415,194) For the year 22,212,565 March 31, 2006 thers Elimination Total ended 8,910,390 6,383,036 451,250

20,637,424 45,809,446 16,584,860

31,369,245 For the year

March 31, 2007 ended 1,602,381- - - - 71,030,936 811,045,568 228,698,740 105,403,421 For the year 13,253,502 1,903,612,853 March 31, 2006 1,030,160,889 Movie exhibitionMovie O ended 2,278,143

352,500,125 146,672,523 124,468,623 626,163,176

19,287,003 2,650,257,470 For the year

1,660,211,503 1,043,414,391 31,820,495 22,212,565 1,640,924,500

March 31, 2007

Amortisation of Goodwill of Amortisation Expense Interest of sale on Income/Profit/Loss Dividend investments current information Other Assets Segment Liabilities Segment Expenditure Capital Revenue Business Segment Other Income RevenueTotal Results Results Segment Tax) Deferred and Profit Net Assets Unallocated Assets Total Liabilities Unallocated Liabilities Total Debts Doubtful for Provision Income from Operations Income Interest Provision for Income Tax (including Tax Income for Provision Tax, Benefit Fringe Tax, Wealth 96 Depreciation/Amortisation 97 ------

1,000 10,000 544,124 243,000 243,000 763,404 215,301 1,800,000 3,427,200 6,451,200 1,836,000 3,456,000 9,444,000 31st Mar, 06 Mar, 31st 11,039,680 ------100 100 100 100

18,172

451,250 1,000,000 1,033,426 1,010,443 1,365,000 4,330,000 4,920,068 4,330,000 3,427,200 1,836,000 3,456,000 4,920,768 6,451,200

14,852,000 14,009,295 31st Mar, 07 Mar, 31st

------544,124 763,404 215,301 9,444,000 31st Mar, 06 Mar, 31st relatives ------personnel or their or personnel by key management key by 451,250

1,000,000 1,033,426 1,010,443

14,852,000 31st Mar, 07 Mar, 31st

------1,000 10,000 31st Mar, 06 Mar, 31st ------100 100

31st Mar, 07 Mar, 31st ------243,000 243,000 3,427,200 6,451,200 1,836,000 3,456,000 31st Mar, 06 Mar, 31st ------

------100 100

18,172

1,365,000 6,451,200 1,836,000 3,456,000 3,427,200

31st Mar, 07 Mar, 31st ------1,800,000 31st Mar, 06 Mar, 31st 11,039,680 ------

- or significantor influence PersonnelPersonnel Management significantlyinfluenced 4,330,000 4,920,068 4,330,000 4,920,768

14,009,295 Enterprises having controlhaving Enterprises Company Parent the over Management Kay kay Relativesof or owned Enterprises Toral Grand 31st Mar, 07 Mar, 31st

K Sera Sera Production Limited Production Sera Sera K PVR Factory Distribution Network Distribution Factory PVR The Phoenix Mills Limited Mills Phoenix The Priya Exhibitors Private Limited Private Exhibitors Priya Bijli Investments Private Limited Private Investments Bijli Ajay Bijli Ashok Kumar Ruia Kumar Ashok Selena Bijli Selena Sandhurao Bijli Sandhurao Priya Exhibitors Private Limited Private Exhibitors Priya Ajay Bijli Bijli Investments Private Limited Private Investments Bijli Sanjeev Kumar Sanjeev Sanjeev Kumar Sanjeev Bijli Selena Ajay Bijli Sandhurao Bijli Sandhurao PVR Factory Distribution Network Distribution Factory PVR Fixed Assets Purchased Assets Fixed Limited Private Exhibitors Priya Sanjeev Kumar Sanjeev Ajay Bijli K Sera Sera Production Limited Production Sera Sera K 98 Network Distribution Factory PVR Loan Recovered Loan Interim Dividend Paid Dividend Interim for 2006-07 Loan Repaid Loan Interim Dividend Paid Dividend Interim for 2005-06 Purchase of shares of Purchase Film Distributors Share expense Share Distributors Film publicity) towards recovery of (net Remuneration paid Remuneration Kumar Sanjeev Ajay Bijli Limited World Leisure Rent expense Rent Limited Private Exhibitors Priya 6. Related Party Disclosure: Party Related 6. Transactions during the year the during Transactions Received Interest towards recevied Compensation Filmson Commission ------

* * * * * * * * 1,000 10,000 29,227 544,124 243,000 243,000 763,404 230,400 127,900 378,929 293,868 119,696 215,301 1,800,000 3,427,200 6,451,200 1,836,000 3,456,000 9,444,000 2,400,000 2,500,000 1,040,443 1,365,000 1,033,426 1,000,000 31st Mar, 06 Mar, 31st 31st Mar, 06 Mar, 31st 11,039,680 67,500,000 93,580,000 106,420,000 ------* * * * 100 100 100 100

18,172 30,000

239,900 129,500 451,250

1,000,000 1,033,426 1,010,443 1,365,000 4,330,000 4,330,000 4,920,068 3,427,200 1,836,000 3,456,000 2,500,000 1,100,081 4,920,768 6,451,200 2,400,000

14,852,000 14,009,295 31st Mar, 07 Mar, 31st 31st Mar, 07 Mar, 31st

------29,227 544,124 763,404 293,868 119,696 215,301 9,444,000 2,400,000 1,040,443 1,033,426 1,000,000 31st Mar, 06 Mar, 31st 31st Mar, 06 Mar, 31st 67,500,000 uenced relatives re latives ------ificantly influenced ificantly personnel or their or personnel personnel or their or personnel by key management key by by key management key by Enterprises owned orowned Enterprises Toral Grand Enterprises owned orowned Enterprises Toral Grand 30,000

451,250

1,000,000 1,033,426 1,010,443 2,400,000

14,852,000 31st Mar, 07 Mar, 31st 31st Mar, 07 Mar, 31st

------1,000 10,000 31st Mar, 06 Mar, 31st 31st Mar, 06 Mar, 31st ------100 100 Relatives of kay of Relatives Relatives of kay of Relatives

31st Mar, 07 Mar, 31st 31st Mar, 07 Mar, 31st ------* * * * 243,000 243,000 230,400 127,900 3,427,200 6,451,200 1,836,000 3,456,000 1,365,000 31st Mar, 06 Mar, 31st 31st Mar, 06 Mar, 31st 106,420,000 ------

------* * * * PersonnelPersonnel Management significantlyinfl PersonnelPersonnel Management sign 100 100

18,172

239,900 129,500

1,365,000 6,451,200 1,836,000 3,456,000 3,427,200

31st Mar, 07 Mar, 31st 31st Mar, 07 Mar, 31st ------378,929 1,800,000 2,500,000 31st Mar, 06 Mar, 31st 31st Mar, 06 Mar, 31st 11,039,680 93,580,000 ------

------or significant influence significant or or significant influence significant or 4,330,000 4,920,068 2,500,000 1,100,081 4,330,000 4,920,768

14,009,295 Enterprises having controlhaving Enterprises Company Parent the over Management Kay Enterprises having controlhaving Enterprises Management Kay over the Parent Company Parent the over 31st Mar, 07 Mar, 31st 31st Mar, 07 Mar, 31st

Contd. K Sera Sera Production Limited Production Sera Sera K PVR Factory Distribution Network Distribution Factory PVR The Phoenix Mills Limited Mills Phoenix The Ajay Bijli Ruia Kumar Ashok Priya Exhibitors Private Limited Private Exhibitors Priya Bijli Investments Private Limited Private Investments Bijli Selena Bijli Selena Sandhurao Bijli Sandhurao Sanjeev Kumar Sanjeev Ajay Bijli Priya Exhibitors Private Limited Private Exhibitors Priya Bijli Investments Private Limited Private Investments Bijli Selena Bijli Selena Sandhurao Bijli Sandhurao Sanjeev Kumar Sanjeev Ajay Bijli PVR Factory Distribution Network Distribution Factory PVR Fixed Assets Purchased Assets Fixed Limited Private Exhibitors Priya Sanjeev Kumar Sanjeev Ajay Bijli K Sera Sera Production Limited Production Sera Sera K Sanjeev Kumar Sanjeev Ajay Bijli Sanjeev Kumar Sanjeev Ajay Bijli Leisure World Limited World Leisure PVR Factory Distribution Network Distribution Factory PVR PVR Factory Distribution Network Distribution Factory PVR Ashok Kumar Ruia Kumar Ashok The Phoenix Mills Limited Mills Phoenix The Limited Production Sera Sera K Ajay Bijli Kumar Sanjeev Priya Exhibitors Private Limited Private Exhibitors Priya The Amritsar Transport Co. Pvt. Ltd. Pvt. Co. Transport Amritsar The PVR Factory Distribution Network Distribution Factory PVR K Sera Sera Production Limited Production Sera Sera K Priya Exhibitors Private Limited Private Exhibitors Priya Company Limited (India Advantage Fund-1) Advantage (India Limited Company Limited Private Exhibitors Priya Ajay Bijli Sanjeev Kumar Sanjeev Ajay Bijli Sanjeev Kumar Sanjeev Ajay Bijli Western India Trustee and Executor and Trustee India Western Loan Recovered Loan Loan Repaid Loan Interim Dividend Paid Dividend Interim for 2006-07 Interim Dividend Paid Dividend Interim for 2005-06 Purchase of shares of Purchase Film Distributors Share expense Share Distributors Film publicity) towards recovery of (net Remuneration paid Remuneration Kumar Sanjeev Ajay Bijli Limited World Leisure Assets Mortgaged Assets Guarantees Taken Guarantees Guarantees) (Personal Unsecured Loan Given Loan Unsecured Unsecured Loan Unsecured Recoverable Advance Security deposits Security Rent expense Rent Limited Private Exhibitors Priya 6. Related Party Disclosure Party Related 6. Balance outstanding at the at outstanding Balance year the of end Payable Trade 6. Related Party Disclosure: Party Related 6. Infusion of Equity (including Equity of Infusion premium) share Infusion of Preference of Infusion Capital Share Assets Mortgaged Assets Guarantees Taken Guarantees Guarantees) (Personal Compensation recevied towards recevied Compensation Filmson Commission - 98 year the during Transactions Received Interest 99 Notes to the Consolidated accounts

Key Management Personnel Ajay Bijli, Sanjeev Kumar, Ashok Kumar Ruia and Atul K Ruia, Ram Gopal Varma (till May 31, 2006). Relatives of Key Management Personnel Sandhuro Rani Bijli and Selena Bijli Enterprises having control or significant Bijli Investments Private Limited influence over the Parent Company Priya Exhibitors Private Limited Western India Trustee and Executor Company Limited (India Advantage Fund-1) (till December 27, 2005) Enterprises owned or significantly influenced The Amritsar Transport Co. Private Limited by key management personnel or their ATC Carriers Private Limited relatives Leisure World Limited PVR Factory Distribution Network (till May 31, 2006) The Phoenix Mills Limited R.R. Hosiery Private Limited K Sera Sera Production Limited (till May 31, 2006) NOTES: a) * The Parent Company has availed loans from banks, a body corporate and Small Industries Development Bank of India (SIDBI) of Rs 494,989,524 (Previous year Rs. 613,304,554) which are further secured by personal guarantee of two directors of the Parent Company. Loan from ICICI Bank Limited is further secured by mortgage of the personal properties of two directors of the Parent Company located at Vasant Vihar and Kundli, New Delhi. Loan from SIDBI is further secured by second charge on personal properties of a director of the Parent Company at Vasant Vihar and Jhandewalan, New Delhi. b) The above particulars exclude expenses reimbursed to/by related parties. c) No amount has been provided as doubtful debt or advance/written off or written back in the year in respect of debts due from/to above related parties except as disclosed above. 7. The Parent Company has provided various share-based payment schemes to its employees. During the year ended March 31, 2007, the following schemes were in operation:

Plan I Plan II Plan III

Date of grant October 10, 2005 October 10, 2005 October 10, 2005 Date of Board Approval September 8, 2005 September 8, 2005 September 8, 2005 Date of Shareholder’s approval September 15, 2005 September 15, 2005 September 15, 2005 Number of options granted 80,000 38,000 52,000 Fair value of Company’s share 75 75 77.50 Method of Settlement (Cash/Equity) Cash Cash Cash Vesting Period 18 months 12 months 18 months Exercise Period 3 months 3 months 3 month

Vesting Conditions Continued employment Continued employment Continued employment

The details of activity under different plans have been summarized below: 2006-07 2005-06 Numberof Weighted Number of Weighted Shares Average Exercise Shares Average Exercise Price (Rs.) Price (Rs.)

Outstanding at the beginning of the year 170,000 28.41 Nil Nil Granted during the year - - 170,000 28.41 Forfeited during the year 33,500 28.21 - - Exercised during the year 136,500 28.46 - - Expired during the year - - - Outstanding at the end of the year - - 170,000 28.41 Exercisable at the end of the year - - - - Weighted average remaining contractual Nil Nil 10.72 28.41 life (in months) Weighted average fair value of options Nil Nil 170,000 75.76 granted The weighted average share price at the date of exercise for stock options was Rs. 189.67. There are no stock options outstanding at the end of the year on March 31, 2007. As at March 31, 2006 Range of Number of options Weighted average Weighted average exercise prices outstanding remaining contractual exercise price life of options (in months)

Rs. 20 to Rs. 47.50 170,000 10.72 28.41 100 Notes to the Consolidated accounts Notes to the Consolidated accounts Key Management Personnel Ajay Bijli, Sanjeev Kumar, Ashok Kumar Ruia and Atul K Ruia, Ram Gopal Varma Stock Options granted (till May 31, 2006). The Parent Company has not granted any stock options during the year ended March 31, 2007. Relatives of Key Management Personnel Sandhuro Rani Bijli and Selena Bijli 2006-07 2005-06 Enterprises having control or significant Bijli Investments Private Limited influence over the Parent Company Priya Exhibitors Private Limited Exercise Price 28.46 - Western India Trustee and Executor Company Limited (India Advantage Fund-1) Expected Volatility 8.61% - (till December 27, 2005) Historical Volatility -- Life of the options granted (Vesting and exercise period) in months 19.12 - Enterprises owned or significantly influenced The Amritsar Transport Co. Private Limited Expected dividends 68,250 - by key management personnel or their ATC Carriers Private Limited Average risk-free interest rate 5.50% - relatives Leisure World Limited PVR Factory Distribution Network (till May 31, 2006) Expected dividend rate 5.00% The Phoenix Mills Limited R.R. Hosiery Private Limited The expected volatility was determined based on management estimates as there was no historical volatility data available. K Sera Sera Production Limited (till May 31, 2006) Effect of the employee share-based payment plans on the Profit and Loss Account and Pre-Operative Expenditure and on its financial NOTES: position: a) * The Parent Company has availed loans from banks, a body corporate and Small Industries Development Bank of India (SIDBI) of Rs 494,989,524 (Previous year Rs. 613,304,554) which are further secured by personal guarantee of two directors of the 2006-07 2005-06* Total Parent Company. Loan from ICICI Bank Limited is further secured by mortgage of the personal properties of two directors of the Parent Company located at Vasant Vihar and Kundli, New Delhi. Loan from SIDBI is further secured by second charge on personal Liability for employee stock options outstanding 2,915,965 - 2,915,965 properties of a director of the Parent Company at Vasant Vihar and Jhandewalan, New Delhi. at the beginning of the year b) The above particulars exclude expenses reimbursed to/by related parties. Total Employee Compensation Cost pertaining to share-based 4,502,4282,553,1837,055,611 c) No amount has been provided as doubtful debt or advance/written off or written back in the year in respect of debts due from/to payment plans debited to Profit and Loss Account above related parties except as disclosed above. Less: Amount reversed upon forfeiture of options (1,592,500) - (1,592,500) Net Impact in the Profit and Loss Account 2,909,9282,553,1835,463,111 7. The Parent Company has provided various share-based payment schemes to its employees. During the year ended March 31, Add: Pre-Operative Expenditure (ESOP) 631,607 362,782 994,389 2007, the following schemes were in operation: Liability for employee stock options outstanding as at year end - 2,915,965 2,915,965 Amount transferred to Securities Premium Account upon 6,457,500 - 6,457,500 Plan I Plan II Plan III exercise of granted options

Date of grant October 10, 2005 October 10, 2005 October 10, 2005 * Amount debited to Profit and Loss Account and Pre-Operative Expenditure during the previous year further includes amount of Date of Board Approval September 8, 2005 September 8, 2005 September 8, 2005 Rs. 4,455,000 and Rs. 345,000 respectively 80,000 equity shares issued to the certain employees under Employee Share Purchase Date of Shareholder’s approval September 15, 2005 September 15, 2005 September 15, 2005 Scheme approved in the previous year. 8. The Parent Company has till date, incurred/made expenses/payments on a multi-screen project at Goregaon, Mumbai such as Number of options granted 80,000 38,000 52,000 Pre-Operative Expenditure (including architect fee, traveling expenses, interest on loan taken etc.), payment of Capital Advances to Fair value of Company’s share 75 75 77.50 a supplier, and Security Deposit to developers etc. of Rs. 8,290,632, Rs. 710,000 and Rs. 26,660,340 respectively on behalf of a Method of Settlement (Cash/Equity) Cash Cash Cash proposed subsidiary i.e. Sunrise Infotainment Private Limited. The Parent Company intends to recover these expenses/payments as Vesting Period 18 months 12 months 18 months and when the final decision is taken. Pending final decision, the aforesaid amount has been shown under respective heads in the consolidated accounts. Exercise Period 3 months 3 months 3 month 9. Security Deposits (paid) include Rs. 10,332,089 recoverable from three parties, with whom the Parent Company had entered into Memorandum of Understanding for taking multiplex/office space on rent. The Parent Company has filed legal case for recovery of Vesting Conditions Continued employment Continued employment Continued employment deposit of Rs. 2,832,089 in case of one party. The Parent Company is in discussions with the parties for the recovery of the aforesaid amount and is hopeful of recovering the same. Hence, no provision against the same has been considered necessary. The details of activity under different plans have been summarized below: 10.1 During the previous year, the Parent Company had successfully completed its public issue. This comprised of 5,700,000 equity shares of Rs. 10 each at a premium of Rs. 215 per share. Alongwith this public issue, there was also a sale of 2,000,000 equity shares by 2006-07 2005-06 a shareholder of the Parent Company i.e. Western India Trustee and Executor Company Limited (India Advantage Fund-I). Numberof Weighted Number of Weighted Shares Average Exercise Shares Average Exercise 10.2 Utilization of IPO funds: Amount in Rs. Price (Rs.) Price (Rs.) As per Prospectus Outstanding at the beginning of the year 170,000 28.41 Nil Nil Objects Total Estimated Amount to be Amount Spent Balance to be Granted during the year - - 170,000 28.41 Project Cost spent till till March 31, spent Forfeited during the year 33,500 28.21 - - March 31, 2007 2007 Exercised during the year 136,500 28.46 - - Expired during the year - - - Setting up of New Cinemas 1,380,000,000 1,343,000,000 481,385,767 898,614,233 Outstanding at the end of the year - - 170,000 28.41 Equity Investment/ Unsecured Exercisable at the end of the year - - - - Loan in CR Retail Malls (India) Pvt. Ltd., Weighted average remaining contractual Nil Nil 10.72 28.41 a wholly owned subsidiary life (in months) for setting up a Multiplex 300,000,000 300,000,000 300,000,000 - Weighted average fair value of options Nil Nil 170,000 75.76 granted Equity Investment/ Unsecured Loan in PVR Pictures Ltd, The weighted average share price at the date of exercise for stock options was Rs. 189.67. a wholly owned subsidiary for Film Distribution Business 70,000,000 70,000,000 11,500,000 58,500,000 There are no stock options outstanding at the end of the year on March 31, 2007. Unsecured Loan in As at March 31, 2006 PVR Pictures Ltd, a wholly owned subsidiary for Range of Number of options Weighted average Weighted average Film Production Business 200,000,000 - 106,500,000 93,500,000 exercise prices outstanding remaining contractual exercise price life of options General Corporate Expenses* 62,000,000 62,000,000 71,833,661 - (in months) Issue Expenses* 120,000,000 120,000,000 110,166,339 - Prepayment of high cost loans** Nil Nil 108,086,341 (108,086,341) Rs. 20 to Rs. 47.50 170,000 10.72 28.41 100 Total 2,132,000,000*** 1,895,000,000 1,189,472,108 942,527,892 101 Notes to the Consolidated accounts

NOTES: i) Unspent money is temporarily invested in the units of Mutual Funds. ii) * The Board of Directors of the Parent Company have approved the inter-se re-allocation of unspent monies amounting to Rs. 9,833,661 from issue expenses to general corporate expenses. iii) ** The Parent Company had temporarily during the last year, used part of proceeds of share issue of Rs. 108,086,341 to prepay the high cost loans, which would be replaced by borrowing new additional loan(s) in future. iv) *** includes Rs. 1,282,500,000 raised through public issue of equity shares. v) Certain expenditure on setting up of new cinemas and equity investment in a subsidiary company have been deferred to the year 2007-08, due to which current year’s expenditure were lower. 11. Derivative Instruments and Unhedged Foreign Currency Exposure : Particulars of Unhedged Foreign Currency Exposure as at the Consolidated Balance Sheet date:

Amount in Respective currency Particulars Currency March 31, 2007 March 31, 2006

Sundry Creditors USD Nil 28,670 GBP Nil 7,974 Income received in advanced USD 66,650 43,987 Capital Advances USD 40,608 587,054 EURO Nil 18,897 Debtors USD 17,541 Nil 12. Gratuity and leave benefit plans: (AS 15 Revised) The Parent Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy. The Parent Company also provides 18-24 earned leaves to employees every year to be accumulated upto a maximum level of 54-48 leaves respectively. These benefits are unfunded. The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans. Profit and Loss Account Net employee benefit expense (recognized in Employee Cost)

Leave Encashment Gratuity

2006-07 2006-07

Current service cost 1,773,360 1,439,748 Interest cost on benefit obligation 223,633 420,146 Expected return on plan assets - (364,795) Net actuarial loss recognized in the year on account of return on plan assets - 48,676 Net actuarial loss recognised in the year 755,805 2,228,027 Net benefit expense 2,752,798 3,771,802 Actual return on plan assets - (316,119) Balance sheet Details of Provision for leave encashment benefits and gratuity

Leave Encashment Gratuity

2006-07 2006-07

Defined benefit obligation 4,799,565 8,917,260 Total value of Provident fund contribution on closing liability 575,948 -

Fair value of plan assets - 5,069,993

5,375,513 3,847,267

Less: Unrecognised past service cost - -

Plan (liability) (5,375,513) (3,847,267)

102 Notes to the Consolidated accounts Notes to the Consolidated accounts NOTES: Changes in the present value of the defined benefit obligation are as follows: i) Unspent money is temporarily invested in the units of Mutual Funds. ii) * The Board of Directors of the Parent Company have approved the inter-se re-allocation of unspent monies amounting to Rs. Leave Encashment Gratuity 9,833,661 from issue expenses to general corporate expenses. iii) ** The Parent Company had temporarily during the last year, used part of proceeds of share issue of Rs. 108,086,341 to prepay 2006-07 2006-07 the high cost loans, which would be replaced by borrowing new additional loan(s) in future. iv) *** includes Rs. 1,282,500,000 raised through public issue of equity shares. Opening defined benefit obligation 3,249,265 6,184,201 v) Certain expenditure on setting up of new cinemas and equity investment in a subsidiary company have been deferred to the year Interest cost 223,633 420,146 2007-08, due to which current year’s expenditure were lower. Current service cost 1,773,360 1,439,748 11.Derivative Instruments and Unhedged Foreign Currency Exposure : Actual return on plan assets - 316,119 Benefits paid (1,202,498) (1,038,743) Particulars of Unhedged Foreign Currency Exposure as at the Consolidated Balance Sheet date: Actuarial losses on obligation 755,805 2,228,027

Amount in Respective currency Closing defined benefit obligation 4,799,565 8,917,260 Particulars Currency March 31, 2007 March 31, 2006

Sundry Creditors USD Nil 28,670 Changes in the fair value of plan assets are as follows: GBP Nil 7,974 Income received in advanced USD 66,650 43,987 Gratuity Capital Advances USD 40,608 587,054 EURO Nil 18,897 2006-07 Debtors USD 17,541 Nil Opening fair value of plan assets 4,891,561 12.Gratuity and leave benefit plans: (AS 15 Revised) Expected return 364,795 Contributions by employer 901,056 The Parent Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a Benefits paid (1,038,743) gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an Actuarial (losses) (48,676) insurance company in the form of a qualifying insurance policy. The Parent Company also provides 18-24 earned leaves to employees every year to be accumulated upto a maximum level of Closing fair value of plan assets 5,069,993 54-48 leaves respectively. These benefits are unfunded. The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded The Parent Company has since contributed Rs. 3,771,802 to the gratuity fund. status and amounts recognized in the balance sheet for the respective plans. The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: Profit and Loss Account Net employee benefit expense (recognized in Employee Cost) Gratuity

Leave Encashment Gratuity 2006-07

2006-07 2006-07 % Investments with insurer 80.14 Current service cost 1,773,360 1,439,748 Cash and bank balance with the insurer 19.86 Interest cost on benefit obligation 223,633 420,146 Expected return on plan assets - (364,795) The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the Net actuarial loss recognized in the year on account of return on plan assets - 48,676 period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to the Net actuarial loss recognised in the year 755,805 2,228,027 improved debt market scenario. Net benefit expense 2,752,7983,771,802 The principal assumptions used in determining gratuity and leave encashment obligations for the Parent Company’s plans are Actual return on plan assets - (316,119) shown below:

Balance sheet Leave Encashment Gratuity Details of Provision for leave encashment benefits and gratuity 2006-07 2006-07 Leave Encashment Gratuity %% 2006-07 2006-07 Discount rate 7.75 7.75 Defined benefit obligation 4,799,565 8,917,260 Expected rate of return on plan assets - 7.50 Increase in compensation cost 5.50 5.50 Total value of Provident fund contribution on closing liability 575,948- Employee turnoverupto 30 years 25 25 above 30 years but upto 44 years 15 15 Fair value of plan assets - 5,069,993 above 44 years 10 10

5,375,513 3,847,267 The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Less: Unrecognised past service cost - - Amounts for the current and previous four periods are as follows: Plan (liability) (5,375,513) (3,847,267) Leave Gratuity

2006-07 2006-07

Defined benefit obligation 4,799,565 8,917,260 Plan assets - 5,069,993 Deficit 4,799,565 3,847,267 102 103 Notes to the Consolidated accounts

Experience adjustments on plan liabilities - - Experience adjustments on plan assets - -

NOTE: The actuarial valuation of gratuity and leave encashment liability in the previous year was done in accordance with the pre-revised Accounting Standard, AS-15 – Employee Benefits. Accordingly, comparative numbers of previous years have not been furnished.

Defined Contribution Plan:

2006-07 2005-06

Contribution to Provident Fund - -

Charged to Profit and Loss Account 12,231,350 7,722,459

Charged to Pre-operative expenses 803,990 901,862

The PVR Group expects to contribute Rs. 5,000,000 to gratuity fund in the year 2007-08. 13. Leases

i) Rental expenses in respect of operating leases are recognized as an expense in the Profit and Loss Account and Pre-Operative Expenditure (pending allocation), as the case may be, on a straight line basis over the lease term. Operating Lease (for assets taken on lease) a) The PVR Group has taken various cinemas, multiplexes, offices and godown premises under operating lease agreements. These are generally cancelable at the option of the Company. b) Lease payments for the year are Rs. 189,204,176 (Previous year Rs. 154,776,425). ii) Rental income in respect of operating leases are recognized as an income in the Profit and Loss Account and netted off from rent expense, as the case may be, on a straight line basis over the lease term. Operating Lease (for assets given on lease) a) The Company has given various spaces under operating lease agreements. These are generally cancelable at the option of the Company. b) Rental Income for the year are Rs. 19,829,701 (Previous year Rs. 14,074,573). March 31, 2007 March 31, 2007 (Rs.) (Rs.) 14. Capital Commitments Estimated amount of contracts remaining to be executed on capital account 150,947,882 359,076,048 and not provided for. 15. Contingent Liabilities (not provided for) in respect of: a) Labour cases pending Amount not Amount not ascertainable ascertainable b) Claims against the PVR Group not acknowledged as debts 2,961,730 1,290,311 (including Rs. 2,961,730, Previous Year Rs. 854,057 paid under protest which is appearing in the schedule of Loans and Advances)* *In view of the large number of cases pending at various forums/courts, it is not practicable to furnish the details of each case. *Based on the discussions with the solicitors/meeting the terms and conditions by the PVR Group , the management believes that the PVR Group has a strong chance of success in the cases and hence no provision there-against is considered necessary. 16. Supplementary Statutory Information 16.1 Managing Directors’ Remuneration (of Parent Company)* Salary 5,760,000 5,760,000 Contribution to Provident fund 691,200 691,200 Perquisites 3,456,000 3,456,000

TOTAL 9,907,200 9,907,200 16.2 Executive Director’s Remuneration (of Parent Company)* Salary 3,060,000 3,060,000 Contribution to Provident fund 367,200 367,200 Perquisites 1,836,000 1,836,000

TOTAL 5,263,200 5,263,200

*excluding gratuity and leave encashment expenses since they are not eligible for the same. 104 Notes to the Consolidated accounts Notes to the Consolidated accounts Experience adjustments on plan liabilities - - 17.Previous Year Comparatives Experience adjustments on plan assets - - (a) The Parent Company has during the year started commercial operations at Juhu Mumbai, Indore, Lucknow, Mullund Mumbai, NOTE: Sahara Gurgaon, Aurangabad, Latur and Aligarh. Consolidated financial statements include one subsidiary having interest in a joint The actuarial valuation of gratuity and leave encashment liability in the previous year was done in accordance with the pre-revised venture partnership firm, namely PVR Factory Distribution Network. The said partnership firm was dissolved on May 31, 2006, Accounting Standard, AS-15 – Employee Benefits. Accordingly, comparative numbers of previous years have not been furnished. whereas pervious year figures included for the period of twelve months accounts. Hence, current year’s figures are not strictly comparable with those of previous year. Defined Contribution Plan: (b) Previous year’s figures have been regrouped where necessary to conform to current year’s classification.

2006-07 2005-06 Signatures to Schedule 1 to 25

As per our report of even date Contribution to Provident Fund - - For S. R. Batliboi & Co. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS Chartered Accountants Charged to Profit and Loss Account 12,231,350 7,722,459 Ajay Bijli Sanjeev Kumar N. C. Gupta Charged to Pre-operative expenses 803,990 901,862 Chairman cum Managing Director Joint Managing Director Company Secretary The PVR Group expects to contribute Rs. 5,000,000 to gratuity fund in the year 2007-08. per Anil Gupta Sumit Chandwani Renaud Jean Palliere Neeraj Prakash 13. Leases Partner Director Director Chief of Accounts Membership No 87921 i) Rental expenses in respect of operating leases are recognized as an expense in the Profit and Loss Account and Pre-Operative Expenditure (pending allocation), as the case may be, on a straight line basis over the lease term. Place : New Delhi Date : June 6, 2007 Operating Lease (for assets taken on lease) a) The PVR Group has taken various cinemas, multiplexes, offices and godown premises under operating lease agreements. These are generally cancelable at the option of the Company. b) Lease payments for the year are Rs. 189,204,176 (Previous year Rs. 154,776,425). ii) Rental income in respect of operating leases are recognized as an income in the Profit and Loss Account and netted off from rent expense, as the case may be, on a straight line basis over the lease term. Operating Lease (for assets given on lease) a) The Company has given various spaces under operating lease agreements. These are generally cancelable at the option of the Company. b) Rental Income for the year are Rs. 19,829,701 (Previous year Rs. 14,074,573). March 31, 2007 March 31, 2007 (Rs.) (Rs.) 14.Capital Commitments Estimated amount of contracts remaining to be executed on capital account 150,947,882 359,076,048 and not provided for. 15.Contingent Liabilities (not provided for) in respect of: a) Labour cases pending Amount not Amount not ascertainable ascertainable b) Claims against the PVR Group not acknowledged as debts 2,961,730 1,290,311 (including Rs. 2,961,730, Previous Year Rs. 854,057 paid under protest which is appearing in the schedule of Loans and Advances)* *In view of the large number of cases pending at various forums/courts, it is not practicable to furnish the details of each case. *Based on the discussions with the solicitors/meeting the terms and conditions by the PVR Group , the management believes that the PVR Group has a strong chance of success in the cases and hence no provision there-against is considered necessary. 16.Supplementary Statutory Information 16.1 Managing Directors’ Remuneration (of Parent Company)* Salary 5,760,000 5,760,000 Contribution to Provident fund 691,200 691,200 Perquisites 3,456,000 3,456,000

TOTAL 9,907,200 9,907,200

16.2 Executive Director’s Remuneration (of Parent Company)* Salary 3,060,000 3,060,000 Contribution to Provident fund 367,200 367,200 Perquisites 1,836,000 1,836,000

TOTAL 5,263,200 5,263,200

*excluding gratuity and leave encashment expenses since they are not eligible for the same. 104 105 Summarised Financial Statements of Subsidiaries for the Financial Year Ended 31.03.07

(Rs.)

Name of the Subsidiary SI. No. PVR Pictures Limited CR Retail Malls (India) Pvt.Ltd. 2006-20072005-2006 2006-20072005-2006

1 Capital 15,000,000 15,000,000 200,000,000 7,100,000 2 Reserves and surplus 1,015,073 (1,890,319) (1,729,768) (776,157) 3 Total Assets 134,073,498 24,609,680 541,300,233 219,478,843 (Fixed Assets + Current Assets) 4 Total Liabilities 118,058,426 11,500,000 350,030,000 220,155,000 5 Investments - 7,000,000 7,000,000 (except in case of investment in subsidiary company) 6 Turnover 34,887,253 21,569,983 647,350 598,511 7 Profit before tax 4,354,566 (2,699,130) (744,391) 523,918 8 Provision for tax 1,449,174 (767,168) 209,220 180,000 9 Profit after tax 2,905,392 (1,931,962) (953,611) 343,918 10 Proposed Dividend - - - -

106 ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○

Attendance Slip PVR LIMITED Registered Office: 61, Basant Lok, Vasant Vihar, New Delhi - 110057 Summarised Financial (To be handed over at the Attendance Counter)

Statements of Subsidiaries for Folio No. DP ID No.

the Financial Year Ended 31.03.07 No. of Shares Client ID No.

I/We record my/our presence at the 12th Annual General Meeting of the Company at 61, Basant Lok, Vasant Vihar, New Delhi - 110057 on Saturday, 18th August, 2007. 1. Name of the Member : 1. Mr./Mrs./Miss ______and Joint Holder (s)2. Mr./Mrs./Miss ______(in block ./Mrs./Missletters)3. ______Mr 2. Address : ______

3. Name of Proxy : Mr./Mrs./Miss ______

______(Rs.) Signature of the Proxy Signature(s) of Member and Joint Holder(s)

Name of the Subsidiary ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ SI. No. PVR Pictures Limited CR Retail Malls (India) Pvt.Ltd. 2006-2007 2005-2006 2006-2007 2005-2006

1 Capital 15,000,000 15,000,000 200,000,000 7,100,000 Proxy Form 2 Reserves and surplus 1,015,073 (1,890,319)(1,729,768)(776,157) PVR LIMITED 3 Total Assets 134,073,498 24,609,680 541,300,233 219,478,843 Registered Office: 61, Basant Lok, Vasant Vihar, New Delhi - 110057 (Fixed Assets + Current Assets) Folio No. DP ID No. 4 Total Liabilities 118,058,426 11,500,000 350,030,000 220,155,000 5 Investments - 7,000,000 7,000,000 No. of Shares Client ID No. (except in case of investment in subsidiary company) I/We R/o 6 Turnover 34,887,253 21,569,983 647,350 598,511 being a Member/Members of PVR Limited hereby 7 Profit before tax 4,354,566 (2,699,130)(744,391) 523,918 appoint Mr./Mrs./Miss R/o 8 Provision for tax 1,449,174 (767,168) 209,220 180,000 failing him/her Mr./Mrs./Miss 9 Profit after tax 2,905,392 (1,931,962) (953,611) 343,918 R/o whose specimen 10 Proposed Dividend - - - - signatures are given hereunder, to vote for me/us and on my/our behalf at the 12th Annual General Meeting of the Company to be held on Saturday, 18th August, 2007 at 10.30 A.M and at any adjournment thereof.

1.

2. ______Revenue Specimen signature of the Proxy(ies Signature ofStamp member

Signed at this ______day of ______2007.

NOTE: The proxy must be returned so as to reach the registered office of the Company not less than 48 hours (i.e. latest by 10.30 th 106 A.M on 16 August, 2007) before the time for holding the aforesaid meeting. The proxy need not be a member of the Company.