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PVR LIMITED DIRECTORS‘REPORT

TO THE MEMBERS Your Board of Directors takes pleasure in presenting the Ninth Annual Report and the Audited Accounts for the year ended 31st March 2004. FINANCIAL HIGHLIGHTS Rs. in lacs Year ended 31-03-2004 31-03-2003

Income 6116 5472 Profit Before Interest, Depreciation and Tax 880 729 LESS: Interest 236 197 Depreciation 381 617 258 455 Profit Before Tax 263 274 LESS: Provision for current Income Tax 23 48 Provision for Deferred Tax 85 108 47 95 Profit After Tax 155 179 ADD: Excess Provision of Income tax for

earlier years written back. 08

Net Profit for the year 155 187 Less : Transfer to Debenture redemption reserve 145 Surplus carried to Balance Sheet 10

OPERATION Your Company has recorded good performance by registering a growth of 27% in the Net Revenues, despite the fact that the Financial Year under reference has not been very encouraging for the Industry. During the year there was rationalisation of Entertainment Tax rates in state of Delhi from 60 percent to 30 percent, as a result of which the ticket pricing in cinemas was reduced to pass on the benefit to the consumers. The year under report saw fewer movie releases during the year and events like the cricket world cup and general elections did lead to postponement of few film releases. Your company attracted a record total of 3.4 mn admissions during the year at its cinemas during 2003-04 up from 2.99 mn during the previous year. The Concessions sales of the company grew by almost 26% from Rs. 869lacs during the previous year to Rs.1105 lacs during the financial year under reference. The average spend per patron on the Candy-bar of PVR cinemas also increased by 11% during the financial year.

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During the year, the Company opened the largest Multiplex in India, a seven screen Multiplex in Gurgaon. The profit before interest, depreciation and tax has gone up to Rs 880 lacs during the financial year under report from a Rs 729 lacs in the previous year. However the net profit after provision of depreciation and Deferred Tax Liability is lower at Rs. 155 Lacs as against Rs. 187 Lacs in the previous year. This is primarily due to the phased opening of the company’s new 7 screens Multiplex in Gurgaon during the year. The Cinema has opened to encouraging response, the Company had to work hard to effectively change the existing norm of paying Minimum Guarantees for the films in the territory. The MGs paid initially did lead to higher costs of film hire, which did depress the profits for some time. The matter has been subsequently resolved. The company has recently commissioned 2 new cinemas recently in May 2004 at Plaza, Connaught Place (single screen) and Faridabad (2 screens) and the customer response has been very encouraging. Both the cinemas are operating at more than 70% occupancy levels. Your Directors are hopeful of much better performance of the Company during the current financial year.

NEW PROJECTS Your Directors are pleased to inform that the Company will be commissioning its projects in Bangalore comprising of eleven (11) screens, Juhu (Mumbai) with five (5) screens, Mulund (Mumbai) with eight (8) screens, Hyderabad with five (5) screens and East Delhi Mall (Delhi) with three (3) screens in 2004-05. This will take the Company’s screen count to nearly 55 by the end of 2004-05. The Company has also signed many new projects for development, including Phoenix Mills (Mumbai) (7 to 8 screens), Goregaon (6 to 8 screens), Rivoli (single screen), Saket Place (6 screens), Indore (4 screens) and West Delhi (3 screens). The Company continues to pursue other new projects in Bangalore, Delhi, Punjab, UP, Kolkatta, Chennai. With the growth plans charted out, the Company shall continue to maintain its leadership position in the Industry and expects healthy profits and returns on investments. GROWTH PLANS AND FUNDING PARTNERS The Company has embarked upon a Growth path which involves an investment of over Rs. 100 Crores by March 2005. To partly fund this growth, the Company had attracted investment from “THE ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED (Funds Manager of The Western India Trustee and Executor Company Limited), of Rs 33 Crores to partly fund its growth plans.

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Over and above the above investment the company also built strong financing relationships with various banks and financial institutional, such as ICICI Bank, IL&FS, United Bank, SIDBI, Citibank, State Bank of Patiala, Union Bank, who have supported the Company by funding its growth. The company also raised a financial closure of Rs.55 crs. of debt funding to fund its above expansion plans . The average cost of borrowing of the company has progressively come down from almost 13.8% in the previous year to about 10% in during the financial year under reference. This is expected to come down further during the current financial year 2004-05 to below 9%. We would like to place on record our appreciation of the Investors, Banks and the Financial Institutions for supporting the Company’s growth and showing faith in the Company and the Management team.

DIVIDEND Your Directors have not recommended any dividend for the year under review, keeping in view the funds requirements of the Company for its upcoming projects. DIRECTORS The Board of your company has been further strengthened by the induction of Mr. Ramesh Darmaji, a nominee Director representing Small Industries Development Bank Of India (SIDBI) and Mr. Sunay Mathure, a nominee Director representing ICICI Venture Funds Management Company Limited. Mr. Ramesh Dharmaji has been coopted as director of the company w.e.f 29th July 2004 and as per Small Industries Development Bank Of India Act 1989, his term of appointment is not liable to retire by rotation. Mr. Sunay Mathure has been appointed as an additional Director of the Company and he shall hold the office till the date of ensuing Annual General Meeting. Mr. Sumit Chandwani, Director of the Company, retires by rotation at the ensuing annual general meeting and is eligible for reappointment, which your Board recommends. AUDITORS The Auditors Messrs S. R. Batliboi & Co, Chartered Accountants, retires at the conclusion of ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. They have confirmed that re-appointment if

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made will be in accordance with the Provisions of sub-section (1B) of Section 224 of the Companies Act, 1956.

FIXED DEPOSITS The company has not accepted any fixed deposits from the public within the meaning of section 58A of the Companies Act, 1956.

DIRECTORS’ RESPONSIBILITY STATEMENT As required under section 217 (2AA) of the Companies Act, 1956, we hereby state:

a) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2004 and its profit for the year ended on that date;

c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the Directors have prepared the annual accounts on a going concern basis.

HUMAN RESOURCES We continue to have cordial and harmonious relationship with our employees. The statement of Particulars of Employees under Section 217(2A) of the Companies Act, 1956 and Rules framed there under is annexed and form part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars required under Section 217(1) (e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules. 1988 are as mentioned hereinbelow:

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i) CONSERVATION OF ENERGY

Energy conservation measures taken:

• Power factor is being maintained above 0.9 with the use of capacitor banks. These banks are used to neutralize the inductive current by providing capacitive current. As a result a power factor improves and gets rebate applicable on energy bills from Electricity Distribution Companies (Tata Power/BSES).

• Switching on/off procedure is being followed for entire lighting and other load within the premises.

• The air conditioning system was overhauled and chemical dosing was used to recover the loss of ageing and reduced capacity. As a result, the current required for getting the desired result has reduced and hence savings on the total electricity consumption. Also regulation of the AHU timings for proper utilisation has further helped in saving electricity consumption.

• Controlling the losses in air conditioning system by isolating the air conditioned area from any openings to avoid mixing of hot air which increases A.C. load and inturn increases the power consumed.

• All the new fittings are with CFL or energy savers which uses less electrical power as compared to old GL lamps

ii) FOREIGN EXCHANGE :

Rs. in Lacs Current Previous

Year Year (a) Foreign Exchange Earning 13.69 14.48

(Income from Sale of Film Rights) (b) Foreign Exchange Outgo

- Remittance of Dividend - 30.68 - Import of Capital Goods 0.75 -

- Film Rights Cost (Net of Income Tax) 14.07 17.86 - Travelling Expenses 0.30 5.08

- Software Development (Including Expenses) 8.66 11.91 - Technical Fees (Including Expenses) 53.81 48.16 - Annual Maintenance Charges (Net of Income tax) 2.03 0.69

Total 79.62 114.38

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ACKNOWLEDGEMENTS We take this opportunity to thank the employees for their dedicated service and contribution towards the growth of the Company. We also thank our Investors, Banks, Financial Institutions and other business associates for their continued support extended towards conduct of efficient operations of the Company.

By Order of the Board

-Sd- -Sd- AJJAY BIJLI SANJEEV KUMAR

Place: New Delhi Managing Director Executive Director Date: 30-08-2004

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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, 2004 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 Mr. Gerald V Dibbayawan* Mr. Sanjay Malhotra Mr. Pramod Arora

Designation Chief Executive Officer Chief Financial Officer

Vice President (Business Development & Projects)

Age (Years) 37 39 33Gross Remuneration (In Rs.) 58,64,684/- 36,36,208/- 25,25,887/-

Qualification

CA( Member of Institute of Chartered Accountant of

Australia) FCA B.E, MBAExperience (Years) 15 16 12 Date of Appointment 01.04.2003 19.11.2001 01.12.2001

Last Employment Designation Held

Senior Executive Vice President President

Business Development Manager

(Home Video)Last Employment Since 1996 2000 10.06.1996

Name of Last Employer M/s Village Roadshow

LimitedM/s Dimension

Consulting Private Ltd M/s Priya Exhibitors

Private Ltd. * Employed for part of the year. NOTES:

1. The appointment of all employees is subject to the rules and regulations of the Company in force from time to time and is not contractual except that of Managing Director.

2. Remuneration includes Salary, Company’s Contribution to Provident &

Superannuation Funds, Medical Expenses, House Rent Allowance, Leave Travel Allowance, taxable value of perquisites and other allowances as per Company’s Rules.

3. Mr. Gerald V Dibbayawan, Mr. Sanjay Malhotra and Mr. Pramod Arora

are not related to any Director of the Company.

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AUDITORS’ REPORT TO THE MEMBERS OF PVR LIMITED a) We have audited the attached Balance Sheet of PVR LIMITED as at March 31, 2004 and also the

Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

b) We conducted our audit in accordance with auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 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 used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

c) As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government

of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

d) Further to our comments in the Annexure referred to in para (c) 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 these 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, 2004 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2004 from being appointed as a Director in terms of Section 274 (1) (g) of the Companies Act, 1956;

e) In our opinion, and to the best of our information and according to the explanations given to us,

the said accounts, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2004, (ii) In the case of the Profit & Loss Account, of the profit of the Company for the year ended on

that date, and (iii) In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on

that date. For S.R. Batliboi & Co. Chartered Accountants per Anil Gupta (Partner) Membership No. 87921 Date: Place:

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Annexure referred to in paragraph (c) of our report of even date Re: PVR Limited

1) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. The frequency of physical verification, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. There was no substantial disposal of fixed assets during the year.

2) The management has conducted physical verification of inventory at reasonable intervals

during the year. The procedures for physical verification of inventory followed by the management, in our opinion, are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3) As informed to us, the Company has granted unsecured loans, to a company covered in the

register maintained under Section 301 of the Companies Act, 1956.

Sl. No.

Name of the Party Relationship with the Company Amount (Rs.)

Year endBalance (Rs.)

1. PVR Pictures Limited

Company in which two Directors of the Company are interested as Directors.

18,000,000 14,000,000

In our opinion and according to the information and explanations given to us, the rate of interest and the other terms and conditions of the loans are not prima facie prejudicial to the interest of the Company. The payment of interest has been regular. As informed to us, the Company has not taken any loan secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4) In our opinion and according to the information and explanations given to us, there are

adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

5) According to the information and explanations provided by the management, we are of the

opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. In our opinion and according to the information and explanations given to us, in respect of transactions with a party with whom transactions exceeding value of Rupees five lakhs have been entered into during the financial year are at prices which are reasonable having regard to the prevailing market prices at the relevant time. However, transactions entered into with another party with whom transactions exceeding value of Rupees five lakhs have been entered into during the financial year, because of the unique and specialized nature of transactions and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

6) The Company has not accepted any deposits from the public.

7) In our opinion, the Company has an internal audit system commensurate with the size and

nature of its business. 8) To the best of our knowledge and as explained, the Central Government has not prescribed

maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for the products of the Company.

9) Undisputed statutory dues including provident fund, investor education and protection fund,

or employees’ state insurance, income-tax, sales-tax, wealth-tax, custom duty, excise duty, cess have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases. According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, no

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employees’ state insurance, income-tax, wealth-tax, sales-tax, customs duty, excise duty, cess and other statutory dues, were outstanding, at the year end for a period of more than six months from the date they became payable. According to the information and explanations given to us, there are no dues of sales-tax, income-tax, custom duty, wealth-tax, excise duty and cess which have not been deposited on account of any dispute.

10) The Company has no accumulated losses at the end of the financial year and it has not

incurred cash losses in the current and immediately preceding financial year.

11) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks and debenture holders.

12) According to the information and explanations given to us and based on the documents and

records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

14) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and

other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

15) According to the information and explanations given to us, the Company has not given any

guarantee for loans taken by others from banks or financial institutions.

16) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

17) According to the information and explanations given to us and on overall examination of the

balance sheet and cash flow statement of the Company, we report that the Company has used funds raised on long-term basis for short-term requirements. The Company has issued equity share capital and optionally convertible debentures amounting to Rs. 1501.88 lacs and Rs. 649.25 lacs respectively for long term fund requirements. The Company has utilized an amount of Rs. _____ lacs towards working capital requirements and an amount of Rs. 240 lacs have been invested in liquid investments payable on demand. The maximum amount of idle/surplus fund invested during the year was Rs. 1171.66 lacs of which Rs.240 lacs was outstanding at the end of the year. The Company has used no funds raised on short-term basis for long-term investment.

18) The Company has not made any preferential allotment of shares to parties or companies

covered in the register maintained under Section 301 of the Companies Act, 1956. 19) Based on books and records provided to us by the management, securities have been created

in respect of debentures issued.

20) The Company has not raised any money through a public issue during the year.

21) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S.R. Batliboi & Co. Chartered Accountants per Anil Gupta (Partner) Membership No. 87921 Date: Place:

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PVR LimitedBalance Sheet as at March 31, 2004

Schedules As at As atMarch 31, March 31,

2004 2003(Rs.) (Rs.)

SOURCES OF FUNDSShareholders' FundsShare Capital 1 133,118,500 101,500,000 Advance against share capital - 50,000,020

Reserves and surplus 2 177,465,794 58,150,728 310,584,294 209,650,748

Loan fundsSecured loans 3 233,339,605 176,636,319 Unsecured loans 4 69,001,272 67,880,826

302,340,877 244,517,145 Deferred Tax Liabilities (Net) 5 34,461,066 25,950,656

TOTAL 647,386,237 480,118,550

APPLICATION OF FUNDSFixed Assets 6Gross block 480,653,698 316,687,834 Less : Depreciation 111,716,804 74,121,470 Net block 368,936,893 242,566,364 Capital work-in-progress including capital advances 84,626,225 109,061,544 Pre-operative expenses (pending allocation) 7 32,167,893 31,887,408

485,731,011 383,515,315

Intangible Assets 8 2,619,515 -

Investments 9 5,000,000 -

Current Assets, Loans and AdvancesInventories 10 3,080,095 3,556,346 Sundry debtors 11 25,946,229 4,827,654 Cash and bank balances 12 26,200,409 96,535,497 Other current assets 13 714,151 623,095 Loans and advances 14 177,435,147 97,338,900 Less : Current Liabilities and ProvisionsLiabilities 15 87,087,689 101,890,063 Provisions 16 3,189,266 10,195,504

Net Current Assets 143,099,076 90,795,925

Miscellaneous Expenditure 17(to the extent not written off or adjusted) 10,936,636 5,807,310

TOTAL 647,386,237 480,118,549 Notes to Accounts 24The 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 & Company For and on behalf of the BoardChartered Accountants of Directors

per Anil Gupta Ajjay Bijli Sanjeev Kumar Sumit Chandwani N.C. Gupta Sanjay MalhotraPartner [Managing Director] [Executive Director] [Director] [Company Secretary] [Chief Financial Officer]Membership No. 87921Place: New DelhiDate:

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PVR LimitedProfit and Loss Account for the year ended March 31, 2004

Schedules For the year ended For the year endedMarch 31, 2004 March 31, 2003

(Rs.) (Rs.)

INCOME

Operating income 18 589,553,085 531,442,719

Other income 19 22,074,984 15,741,139

611,628,069 547,183,858

EXPENDITURE

Entertainment tax 105,874,608 149,133,670

130,845,203 85,619,702

Film rights' cost - 4,194,110

Consumption of food and beverages 32,505,200 29,313,998

Personnel expenses 20 58,848,204 40,371,314

Operating and other expenses 21 195,211,351 165,345,660

Depreciation / amortisation 38,128,605 25,809,229

Financial expenses 22 23,615,745 19,726,359

Miscellaneous expenditure written off 288,249 288,249

585,317,165 519,802,292

Profit before tax 26,310,904 27,381,567 Provision for income tax (including Rs. 55,060 (net) for earlier years) 2,255,060 4,825,000 Deffered Tax 8,510,410 4,644,229 Excess provision of income tax for earlier years written back (net) - (750,795)

0 10,765,470 8,718,434 Net Profit after tax 15,545,434 18,663,133 Balance brought forward from previous year 58,150,728 60,794,022 Less: Provision for Deferred tax liability (net) for the year upto 31.03.2002. - (21,306,427) Profit available for appropriation 73,696,162 58,150,728 Transfer to Debenture Redemtion Reserve 14,560,568 - Surplus carried to Balance Sheet 59,135,594 58,150,728

Earnings per share 23

Basic [Nominal value of shares Rs. 10 (Previous Year : Rs. 10)] 1.23 1.84

Diluted [Nominal value of shares Rs. 10 (Previous Year : Rs. 10)] 1.22 1.84

Notes to Accounts 24

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

For S. R. Batliboi & Company For and on behalf of the BoardChartered Accountants of Directors

Per Anil Gupta Ajjay Bijli Sanjeev Kumar Sumit Chandwani N.C. Gupta Sanjay MalhotraPartner [Managing Director] [Executive Director] [Director] [Company Secretary] [Chief Financial Officer]Membership No. 87921Place: New DelhiDate:

TOTAL

Film distributors' share (net of recovery towards publicity from distributors Rs. 3,121,253 , Previous year Rs. 3,132,440)

TOTAL

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PVR LimitedSchedules to the Accounts

As at As atMarch 31, 2004 March 31, 2003

(Rs.) (Rs.)Schedule 1 : Share Capital

Authorised200,000,000 200,000,000

Issued, subscribed and paid-up133,118,500 101,500,000

Schedule 2 : Reserves and Surplus

Share Premium AccountReceived during the year 118,569,375 - Less: Share/debenture placement expenses written off 4,807,167 - Premium on redemption of Optionally convertible debentures adjusted 9,992,576 -

103,769,632 -

Profit and Loss Account 59,135,594 58,150,728

59,135,594 58,150,728

Debenture Redemtion Reserve 14,560,568 -

14,560,568 -

177,465,794 58,150,728

Schedule 3 : Secured Loans

Debentures5000 Redeemable non - convertible debentures of Rs.10,000/- each 50,000,000 bearing interest @ ICICI Bank cost of funds plus 3.33% p.a. privately placed withICICI Bank Limited.Less: Installment redeemed 1,041,667 48,958,333 - (Balance amount is redeemable at par in 47 monthly installments commencing from April15, 2004)(Due within one year Rs. 125.00 lacs)

Loans from banksTerm loans from banks 142,120,131 124,171,599 (Due within one year Rs. 275.68 lacs (Previous year Rs. 279.46 lacs))Car finance loans from banks 2,261,141 2,464,720 (Due within one year Rs. 14.17 lacs (Previous year Rs.12.66 lacs))

Other loansTerm loan from a body corporate 20,000,000 - (Due within one year Rs. 3.33 lacs (Previous year Rs. nil))Term loan from small industries development bank of india (SIDBI) 20,000,000 - (Due within one year Rs. 2.78 lacs (Previous year Rs. nil))Loan from a body corporate - 50,000,000

233,339,605 176,636,319

Notes:1) Term loan from State Bank of Patiala to the extent of Rs. 1021.20 lacs is 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 vehicleshypothecated to banks) of Priya Cinema Complex, Vasant Vihar, New Delhi, PVR Cinema Naraina, New Delhi and PVR Cinema Vikaspuri, New Delhiboth present and future. Term loan from United Bank of India to the extent of Rs. 400 lacs is secured by a first pari passu charge on all movable(excluding vehicles hypothecated to banks) and immovable assets of the Company including its movable plant and machinery, machinery spares,tools and accessories and other movables both present and future.

2) Secured Redeemable non - convertible debentures are secured by mortgage of land at Village Irana, District Mehsana; plant and machinery (immovable ormovable), tangible movable assets (other than the assets which form part of the current assets) pertaining to PVR Metropolitan, PVR Juhu, PVR Bangaloreand PVR Santacruz and such plant and machinery and tangible movable assets acquired by the Company at any time after the execution of and during thecontinuance of the indenture. These are further secured by rights of the Company in respect of Intellectual Property Rights, Goodwill and Company's rights,title and interest in the undertakings of the Company; and all such assets acquired by the Company after the execution of and during the continuance of theindenture. These charges will rank pari passu with the security created for non-fund based facility.

3) Car finance loans are to be secured by hypothecation of vehicles purchased out of the proceeds of the loans.

4) Term loan from a body corporate to the extent of Rs. 200 lacs is secured by a pari passu first charge on all present and future movables (exceptvehicles hypothecated to banks) and immovable fixed assets and current assets (including income/receivables/revenues) of all current and futureoperating theatres of the Company. It is furthersecured by the personal guarantee of two directors of the Company.

5) Loan from SIDBI to the extent of Rs. 200 lacs is secured by a first pari passu charge by way of hypothecation of all the movable asets (except vehicleshypothecated to banks) both present and future, of all cinemas of the Company. It is further secured against the mortgage of personal properties of adirector at Vasant Vihar and Jhandewalan, New Delhi and is also secured by the personal guarantee of two directors of the Company.

6) Non fund based facility from a bank for Rs. 150 lacs is secured by first legal mortgage of land at Gujarat, and pari passu charge on the propertyconsisting of movable properties, intangible properties and general assets. These charges will rank pari passu with the security created forRedeemable non-convertible debentures. It is further secured by first charge against the mortgage of personal properties of two directors at VasantVihar and Jhandewalan, New Delhi and at Sonepat, Haryana.

20,000,000 equity shares of Rs.10/- each

13,311,850 (Previous year 10,150,000) equity shares of Rs. 10/- each fully paid

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As at As atMarch 31, 2004 March 31, 2003

(Rs.) (Rs.)Schedule 4 : Unsecured Loans

1,366,850 0% Optionally convertible debentures* 64,925,375 -

Debenture application money - 50,000,000

Other loan: From a bank Dropline overdraft facility** 4,075,897 17,880,826

69,001,272 67,880,826

* The Company has, during the year, issued 1,366,850 zero percent unsecured, Optionally convertible debentures (OCD), of the face value of Rs. 47.50 each at par, which are redeemable at a premium varying from Rs. 24.32 to Rs. 51 (depending upon the period for which the OCD isoutstanding) by utilising cashflows or by raising debt at any time after March 31, 2005 but before March 31, 2007. The debentureholder has the optionbut not the obligation to convert the unredeemed OCD into equity shares at any time before March 31, 2007 in the ratio of 1 fully paid up equity share ofRs. 10 each for each unredeemed OCD of Rs.47.50, in full setllement.

** Dropline overdraft facility from a bank is secured by a pari passu charge in favour of bank, on receivables, present and future, in respect of credit card,debit card charge slips/billings including but not limited to Master Card, Visa Card, Diners Card, Citibank Credit Cards etc. It is further secured by thepersonal guarantees of two directors and two shareholders of the Company.

Schedule 5 : Deffered Tax Liabilities (Net)

Deffered Tax LiabilitiesDifferences in depreciation and other differences in block of fixed assets asper tax books and financial books 34,354,532 26,141,043 Effect of expenditure not debited to profit and loss account in an earlieryear but allowed in tax in an earlier year 847,380 847,380

Gross Deferred Tax Liabilities 35,201,912 26,988,423 Deffered Tax AssetsEffect of expenditure debited to profit and loss account in the current yearbut allowable for tax purposes in following years 572,764 822,074 Provision for doubtful debts/advances 168,082 215,693

Gross Deferred Tax Assets 740,846 1,037,767 Net Deferred Tax Liability 34,461,066 25,950,656

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PVR Limited363684268.8

Schedule 6 : Fixed Assets

Rs.

Land Freehold BuildingLeasehold

Improvements Plant & MachineryFurniture, Fittings &

Office Equipment Vehicles Total Previous YearGross BlockAt 01.04.2003 - 1,273,590 86,209,739 179,885,268 43,403,917 5,915,320 316,687,834 313,267,435 Additions 190,350 - 50,976,425 81,737,165 31,182,488 1,850,496 165,936,923 10,445,669 Deductions - - - 128,060 1,488,434 354,566 1,971,060 7,025,270 At 31.03.2004 190,350 1,273,590 137,186,163 261,494,373 73,097,971 7,411,250 480,653,698 316,687,834

DepreciationAt 01.04.2003 - 107,259 22,874,558 41,131,107 9,028,326 980,221 74,121,470 52,694,114 For the year - 20,760 10,922,936 19,546,841 6,910,431 689,419 38,090,387 25,809,228 Deletions/Adjustments - - - 62,277 269,971 162,805 495,053 4,381,872 At 31.03.2004 - 128,018 33,797,494 60,615,672 15,668,785 1,506,835 111,716,804 74,121,470 For previous year - 20,760 7,415,984 14,258,781 3,633,506 480,199 25,809,228 Net BlockAt 31.03.2004 190,350 1,145,572 103,388,669 200,878,702 57,429,185 5,904,415 368,936,893 242,566,364 At 31.03.2003 - 1,166,331 63,335,181 138,754,161 34,375,591 4,935,100 242,566,364

Note:1. Fixed Assets of the cost of Rs. 14.88 lacs (WDV Rs. 12.18 lacs) have been discarded during the year.

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As at As atMarch 31, 2004 March 31, 2003

(Rs.) (Rs.)

Schedule 7 : Pre-operative expenses (pending allocation)

Balance brought forward 31,887,408 6,623,479 Salary and other allowances 2,338,396 3,151,999 Contribution to provident and other funds 166,008 203,456 Staff welfare expenses 600,121 9,743 Rates and taxes 480,500 522,000 Communication costs 79,008 85,029 Professional charges 4,122,147 1,723,592 Preopening publicity (net of recovery Rs. 1,000,000, Previous year Rs. nil) 1,681,134 1,227,193 Architect and other fees 9,941,981 8,995,496 Travelling and conveyance 3,071,192 4,310,811 Printing and stationery 72,393 - Insurance 126,528 11,377 Repairs and maintenance: - Buildings 262,177 - Electricity and water charges (Net of recovery Rs. 113,165, Previous year Rs. nil) 323,446 - Security charges 231,098 140,420 Interest on term loans 1,456,289 - Interest to bank and others 1,663,557 4,204,384 Interest on car finance loans 2,122 11,089 Bank and other charges 520,000 1,000,000 Miscellaneous expenses 121,040 400

59,146,545 32,220,468 Less : Interest received ( Gross, Tax Deducted at Source Rs. 306,593, Previous year Rs. 69,943) 1,483,235 333,060 Less : Charged off to revenue 277,500 - Less : Allocated to fixed assets 25,217,917 - Balance Carried Forward 32,167,893 31,887,408

Schedule 9 : Investments

Long Term Invetsments (At Cost)

A. Other than Trade (Unquoted)Government Securities(Deposited with Entertainment Tax Authorities)

6 years National Savings Certificates * 5,000,000 -

5,000,000 - * Held in the name of the Managing Director.

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As at As atMarch 31, 2004 March 31, 2003

(Rs.) (Rs.)

Schedule 10 : Inventories

Food and beverages 662,338 439,414 Stores and spares 2,417,757 3,116,932

3,080,095 3,556,346

Schedule 11 : Sundry Debtors

Debts outstanding for a period exceeding six monthsUnsecured, considered good 2,863,223 157,321 Unsecured, considered doubtful 217,723 219,186

Other debtsUnsecured, considered good 23,083,006 4,670,333

26,163,952 5,046,840 Less : Provision for doubtful debts 217,723 219,186

25,946,229 4,827,654

Schedule 12 : Cash and Bank Balances

Cash on hand 554,901 1,031,662 Cheques on hand 428,645 1,530,139 Balances with scheduled banks: On current accounts 4,935,604 63,888,866 On deposit accounts* 20,281,259 30,084,831

26,200,409 96,535,497 * [Receipts for Rs. nil (Previous year Rs. 124.87 lacs) pledged with banks]

Schedule 13 : Other Current Assets

Interest accrued on long term investments 54,444 - Interest accrued on deposits 659,707 623,095

714,151 623,095

Schedule 14 : Loans and advances

Unsecured, considered good

Advances recoverable in cash or in kind or for value to be received 21,461,093 10,549,831 Inter-corporate deposits 14,000,000 - Advance against share capital to proposed wholly owned subsidiary 10,000,000 10,000,000 Advance payment of Income Tax / Tax Deducted at Source/ Tax Refundable 7,481,756 10,984,057 Deposits - others 124,492,298 65,805,013

Unsecured, Considered doubtfulAdvances recoverable in cash or in kind or for value to be received 250,798 382,048

177,685,945 97,720,949

Less : Provision for doubtful advances 250,798 382,048 177,435,147 97,338,901

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As at As atMarch 31, 2004 March 31, 2003

(Rs.) (Rs.)

Schedule 15 : Current Liabilities

Sundry Creditors For goods and expenses 55,511,278 76,392,577 For other finance 3,400,915 4,124,373 For book overdraft from a bank - 1,408,809 Security deposits 3,886,184 920,000 Income received in advance (includes amount adjustable after one year Rs. 75.00 lacs, 13,925,147 18,485,160 Previous year Rs. 108.33 lacs)Premium on reedemption of Optionally convertible debentures 9,992,576 - Interest accrued but not due on loans 371,589 559,145

87,087,689 101,890,063

Dues to small scale industrial undertaking included in Sundry Creditors for goods and 16,914 11,774,666 expensesDues to other than small scale industrial undertakings included in Sundry Creditors for goods 55,494,364 64,617,911 and expensesThe small scale industrail undertaking to whom amount is outstanding for more than 30 days are Krishna Bozella Limited and Krishna Quinette Seats Pvt. Limited.

Due to a Director 5,885 -

Schedule 16 : ProvisionsProvision for taxation 2,230,000 8,304,205 Current Tax (including Wealth Tax Rs. 55,000 , Previous year Rs. 30,000)Provision for staff benefit schemes 959,266 1,891,299

3,189,266 10,195,504

Schedule 17 : Miscellaneous Expenditure(To the extent not written off or adjusted)

Website development cost

As per last account 480,407 768,656

Less: Written off during the year 288,249 288,249

192,158 480,407

Share/debenture placement expenses

As per last account 5,326,903 -

Add: Incurred during the year 10,224,742 5,326,903 15,551,645 5,326,903

Less: Written off during the year 4,807,167 - 10,744,478 5,326,903

10,936,636 5,807,310

The Company has, incurred expenses for the proposed issue of 4,631,580 equity shares of a face value of Rs. 10 each for cash at a premium of Rs.37.50per share and 2,315,790 Optionally convertible debentures of a face value of Rs. 47.50 each at par to Western India Trustee and Executor Company Limited(India Advantage Fund-1). Out of this, the Company has allotted 3,161,850 equity shares and 1,366,850 0% Optionally convertible debentures during the yearended March 31, 2004. Proportionate write off of Share/debenture placement expenses incurred on above proposed issue (to the extent of projectsalready commissioned out of the proposed projects for which the issue had been floated) has been adjusted against the share premium account.

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P V R L i m i te d

NOTES TO ACCOUNTS Schedule 24: Notes to Accounts

1. Nature of Operations

PVR Limited is in the business of film exhibition. The Company also earns revenue from in- cinema advertisements/ product displays and in-cinema sale of food and beverages.

2. Statement of Significant Accounting Policies

(a) Basis of preparation

The financial statements have been 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 have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and except for the change in accounting policy discussed more fully below, are consistent with those used in the previous year.

(b) Change in Accounting Policy

In light of Accounting Standard 26, on Intangible Assets issued by Institute of Chartered Accountants of India, the Company has during the year capitalised software development costs and film rights cost under the intangible assets, which were hitherto capitalised to fixed assets and shown under inventory respectively. However, due to above change there is no impact on the profit of the Company.

(c) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation. 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 fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.

(d) Pre Operative expenses

Expenditure directly relating to construction activity is capitalised. Indirect expenditure incurred during construction period is capitalised as part of the indirect construction cost to the extent to which the expenditure is indirectly 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 activity nor is incidental thereto is charged to the Profit & Loss Account. Income earned during construction period is deducted from the total of the indirect expenditure. All direct capital expenditure on expansion is capitalised. As regards indirect expenditure on expansion, only that portion is capitalised which represents the marginal increase in such expenditure involved as a result of capital expansion. Both direct and indirect expenditure are capitalised only if they increase the value of the asset beyond its originally assessed standard of performance.

(e) Depreciation

Depreciation on fixed assets except for leasehold improvements, which are amortized over the unexpired period of lease, is provided using the straight-line method at the rates prescribed in Schedule XIV of the Companies Act, 1956.

(f) Intangibles

Software Cost pertaining to software’s, which are purchased, are capitalised and amortised on a straight-line basis over their six years useful lives. Software costing less than Rs. 5,000 is depreciated fully in the year of acquisition.

Film Rights’ Cost Film right cost is capitalised and amortised fully as and when the film is released.

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P V R L i m i te d

NOTES TO ACCOUNTS (g) Inventories Inventories of Food, Beverages, Stores and Spares are valued at lower of cost and net realisable value.

Cost is determined on First in First Out basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost to make the sale.

(h) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue from sale of tickets of films is recognised as and when the film is displayed. Revenue from sale of food and beverages is recognised upon passage of title to customers, which generally coincides with their delivery. 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 these are transferred to the customer. Interest revenue is recognised on a time proportion basis, taking into account the amount outstanding and the rates applicable.

(i) Leases

Leases where the Company as the lessor effectively retains substantially all the risks and benefits of ownership of the leased term are classified as 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.

(j) Deferred Revenue Expenditure

Web Site Development Cost Costs incurred on web site development are being written off over a period of thirty-six months from the date these are incurred. Share/debenture placement expenses Costs incurred in issuing of shares/debentures are amortised proportionately over the projects for which the issue was raised, and amortised costs are adjusted against Share Premium Account.

(k) Foreign currency translation

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.

(iii)Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise except gain or loss on transaction relating to acquisition of fixed assets, which is adjusted to the carrying amount of fixed assets.

(l) Retirement benefits

i. Provident Fund is charged to the Profit & Loss Account of the year when the contribution to the provident fund is due.

ii. The Company has created an approved gratuity fund for the future payment of gratuity to the employees. The Company accounts for gratuity liability, based upon the actuarial valuation, which is contributed to the Fund.

iii. Provision for leave encashment is accrued and provided for on the basis of an actuarial valuation made at the end of each financial year. Leave Encashment liability of an employee, who leaves before the close of the year and which is remaining unpaid, are provided for on actual basis.

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P V R L i m i te d

NOTES TO ACCOUNTS

(m) Income taxes

Tax expense comprises both current and deferred taxes. 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. Deferred tax assets are recognised on carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty that such deferred tax assets can be realised against future taxable profits. Unrecognised deferred tax assets of earlier years are re-assessed and recognised to the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax assets can be realised.

(n) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. 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 share during the reporting year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

3. Segment Information

Business Segments: The Company is engaged in a single business i.e. movie exhibition. The entire operations are governed by

the same set of risk and returns. Hence, the same has been considered as representing a single segment. The said treatment is in accordance with the guiding principles enunciated in the Accounting Standard 17 on Segment reporting. Geographical Segments: There is no geographical segment as the entire operations of the Company are limited to India alone.

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P V R L i m i te d

NOTES TO ACCOUNTS 4. Related Party Disclosure (Rs. in lacs) Parties or group of

individuals having control or significant influence over the Company and relatives of such individuals

Key Management Personnel (Managing Director and Executive Director)

Erstwhile Holding Company Enterprises owned or significantly influenced by key management personnel or their relatives

Grand Total

Transactions during the year March 31, 2004

March 31, 2003

March 31, 2004

March 31, 2003

March 31, 2004

March 31, 2003

March 31, 2004

March 31, 2003

March 31, 2004

March 31, 2003

Remuneration paid - - 0.91 0.56 - - - - 0.91 0.56 Management services expense 107.55 142.95 - - - - - - 107.55 142.95 Rent expense 95.75 93.26 - - - - - - 95.75 93.26 Advertisement Income - 3.81 - - - - - - - 3.81 Film Distributors Share expense (net of recovery towards publicity)

- - - - - - 45.74 18.30 45.74 18.30

Other Expenses - 0.24 - - - - - - - 0.24 Interim Dividend Paid - 66.78 - - - 54.14 - - - 120.92 Guarantees Taken (Personal Guarantees)

- - ** ** - - - - ** **

Assets Mortgaged - - ** ** - - - - ** ** Guarantees Redeemed - 571.17 178.81 - - - - - 178.81 571.17 Infusion of Equity (including share premium)

1501.88 - - - - - - - 1501.88 -

Optionally Convertible Debentures (OCD)

649.25 - - - - - - - 649.25 -

Premium on redemption of OCD

99.93 - - - - - - - 99.93 -

Interest Paid - 0.66 - - - - - - - 0.66 Loan Taken and repaid - 100.00 - - - - - - - 100.00 Inter Corporate Deposits Given - - - - - - 180.00 - 180.00 - Inter Corporate Deposits Repaid

- - - - - - 40.00 - 40.00 -

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P V R L i m i te d

NOTES TO ACCOUNTS Interest Received - - - - - - 7.91 - 7.91 - Balance outstanding at the end of the year

Trade Payable 99.93 67.78 0.07 0.26 - - - 0.02 99.99 68.06 Trade Receivables 0.29 0.13 - - - - 41.51 8.47 41.80 8.60 Inter Corporate Deposits - - - - - - 140.00 - 140.00 - Guarantees Taken (Personal Guarantees)

- - ** ** - - - - ** **

Assets Mortgaged - 745.03 ** ** - - - - ** 745.03 & **

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P V R L i m i te d

NOTES TO ACCOUNTS Names of related Parties: Erstwhile Holding company Bijli Investments Limited Key Management Personnel Ajjay Bijli and Sanjeev Kumar Relatives of Key Management Personnel

Sandhuro Rani Bijli and Selena Bijli

Enterprises having control or significant influence over the Company

Bijli Investments Private Limited (formerly Bijli Investments Limited) Priya Exhibitors Private Limited Western India Trustee and Executor Company Limited (India Advantage Fund-1) Village Roadshow Limited

Enterprises owned or significantly influenced by key management personnel or their relatives

PVR Pictures Limited The Amritsar Transport Co. (P) Limited ATC Carriers Private Limited Leisure World Private Limited

Notes: 1. a) ** The Company has, during the year, availed loan of Rs. 200 lacs from a body corporate,

which is secured by the personal guarantee of two directors of the Company. The Company has also during the year, availed loan of Rs. 200 lacs from SIDBI, which is secured by second charge against the mortgage of 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. The Company has also availed a non fund based facility from a bank for Rs. 150 lacs which is secured by first charge against the mortgage of personal properties of two directors at Vasant Vihar and Jhandewalan, New Delhi and at Sonepat, Haryana. The Company has, during the year, availed dropline overdraft facility of Rs. 40.16 lacs from a Bank, which is secured by the personal guarantee of two directors and two shareholders of the Company. The Company had during the previous year, availed loan of Rs. 500 lacs from a body corporate, which is collaterally secured by unconditional, irrevocable, joint and several personal guarantee of two directors of the Company.

2. The above particulars exclude expenses reimbursed to/by related parties. 3. 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. (Rs. in lacs) March 31, 2004 March 31, 2003 5. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for.

1052.33 175.43

6. Contingent Liabilities not provided for a) Guarantees given by the Company 39.79 73.39 b) Case pending with Custom Department on account of

provisional assessment of an import Amount not ascertainable

Amount not ascertainable

c) Claims against the Company not acknowledged as debts - 7. Supplementary Statutory Information 7.1 Managing Directors’ Remuneration Salary 0.60 0.56 Contribution to Provident fund 0.07 0.00 Perquisites 0.24 0.00 0.91 0.56

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P V R L i m i te d

NOTES TO ACCOUNTS 7.2 Earnings in foreign currency Income from Sale of Film Rights 13.69 14.48 7.3 Expenditure in foreign currency Annual Maintenance charges (Net of Income Tax) 2.03 0.69 Travelling 0.30 5.08 Technical Fees (including expenses, net of Income Tax) 53.81 48.16 56.14 53.93 7.4 CIF Value of Imports Capital Goods 0.75 - Film Rights Cost (Net of Income Tax) 14.07 17.86 Software 8.66 11.91 23.48 29.77 7.5 Net dividend remitted in foreign exchange Period to which it relates - 1.4.2001 to

31.3.2002 Number of non-resident shareholder - 1 Number of equity shares held on which dividend was due - 4,060,000 Amount remitted (ASD) - 114,740 Amount remitted (Rupees) (net of tax) - 3,068,000

8. The Company has, during the year, issued a) 5,000 Secured Redeemable Non - Convertible Debentures (NCD) of Rs. 10,000 each,

which are redeemable at par in 48 monthly installments commencing from March 15, 2004,

b) 1,366,850 zero percent unsecured, Optionally Convertible Debentures (OCD), of the face value of Rs. 47.50 each at par, which are redeemable at a premium; at any time after March 31, 2005 but before March 31, 2007. The debentureholder has the option but not the obligation to convert the unredeemed OCD into equity shares at any time before March 31, 2007 in the ratio of 1 fully paid up equity share of Rs. 10 each for each unredeemed OCD of Rs.47.50, in full settlement.

9. The Company has, during the year, issued 1,366,850 zero percent unsecured, Optionally

convertible debentures (OCD), of the face value of Rs. 47.50 each at par, which are redeemable at a premium varying from Rs. 24.32 to Rs. 51 (depending upon the period for which the OCD is outstanding) by utilizing cash flows or by raising debt at any time after March 31, 2005 but before March 31, 2007. The debentureholder has the option but not the obligation to convert the unredeemed OCD into equity shares at any time before March 31, 2007 in the ratio of 1 fully paid up equity share of Rs. 10 each for each unredeemed OCD of Rs.47.50, in full settlement. The high rate of premium on redemption as compared to the prevailing market rate, has been agreed upon, as the OCD is unsecured, and further the debentureholder has subscribed to 3,161,850 equity shares of Rs. 10 each at a premium of Rs. 37.50 each and has agreed to subscribe to 1,469,730 equity shares of Rs.10 each at a premium of Rs. 37.50 each.

10. The Company has, during the year, given an Inter Corporate Deposit of Rs. 140 lacs to a

company listed in the register maintained under Section 301 of the Companies Act, 1956. The Company is of the view, based on the future profit projections, that the said company will earn profit in coming years and as such no provision there against is considered necessary.

11. The Company is disputing demand towards load violation charges raised by BSES Rajdhani

Power Limited (formerly Delhi Vidyut Board) amounting to Rs 47.24 lacs against which the Company had deposited a sum of Rs. 15 lacs as per court order in an earlier year. The Company had filed Writ petition before Hon’ble High Court at New Delhi against the above

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P V R L i m i te d

NOTES TO ACCOUNTS

demand. The Company had, in earlier years, provided Rs. 23.62 lacs against the said demand, as advised by the Company’s advocate, which in the opinion of the management is adequate. The aforesaid amount of liability is being carried forward in the books.

12. In view of the diverse nature of the food and beverages being sold by the Company, it is not

practicable to give the quantitative details thereof.

13. Previous Year Comparatives

Previous year’s figures have been regrouped where necessary to conform to this year’s classification.

As per our report of even date For S.R.BATLIBOI & COMPANY Chartered Accountants

For and on behalf of the Board of Directors

per Anil Gupta Partner Membership No. 87921

Ajjay Bijli [Managing Director]

Sumit Chandwani [Director]

N.C. Gupta [Company Secretary]

Sanjeev Kumar

[Executive Director]

Sanjay Malhotra [Chief Financial Officer]

Place : New Delhi Date :

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PVR LIMITED

Cash Flow Statement as at March 31, 2004

2003-04 2002-03(Rs.) (Rs.)

A. Cash flow from operating activities:

Net profit before taxation 26,310,904 27,381,567

Adjustments for :Depreciation/amortisation 38,128,605 25,809,229 Loss on disposal of fixed assets (net) 1,256,362 2,787,468 Deferred revenue expenditure written off 288,249 288,249 Interest income (2,184,572) (2,823,408) Interest expense 19,104,141 18,809,793 Provision for doubtful debt and advance (132,713) 338,084

Operating profit before working capital changes 82,770,975 72,590,982

Movements in working capital :Decrease/(Increase) in sundry debtors (21,117,112) 5,396,475 Decrease/(Increase) in inventories 476,251 (498,323) Decrease/(Increase) in loans and advances (69,467,297) (39,020,822) Increase/(Decrease) in current liabilities - 38,723,868

Cash generated from operations (7,337,183) 77,192,179 Direct taxes paid (net of refunds) 4,826,964 4,627,494

Net cash from operating activities (12,164,147) 72,564,685

B. Cash flows from investing activitiesPurchase of fixed assets (140,143,357) (138,770,976) Purchase of intangible assets (2,657,733) - Proceeds from sale of fixed assets 219,645 22,250 Purchase of investments (5,000,000) Deposits with other companies (14,000,000) - Advance against share capital - (10,000,000) Interest received 3,576,751 3,004,909

Net cash from investing activities (158,004,693) (145,743,817)

C. Cash flow from financing activitiesProceeds from issuance of share capital 100,187,855 50,000,020 Proceeds from long term borrowings 263,425,375 101,429,000 Repayment of long term borrowings (191,796,714) (19,838,985) Proceeds from short term borrowings 4,075,897 30,000,000 Repayment of short term borrowings (17,880,826) (12,119,174) Expenditure on share/ debenture placement (10,224,742) (5,326,903) Interest paid (22,413,665) (23,092,619) Interim dividend paid - (9,023,973)

Net cash from financing activities 125,373,180 112,027,366 Net increase in cash and cash equivalents (A + B + C) (44,795,660) 38,848,234 Cash and cash equivalents at the beginning of the year 96,535,497 57,687,263 Cash and cash equivalents at the end of the year 26,200,409 96,535,497

Components of cash and cash equivalents as at

Cash and cheques on hand 983,546 2,561,800 With banks - on current accounts 4,935,604 63,888,866 - on deposit accounts 20,281,259 30,084,831

As per our report of even date

For S. R. Batliboi & Co.Chartered Accountants

For and on behalf of the Board

per Anil GuptaPartner Managing Director Company Secretary Chief Financial OfficerMembership No. 87921

Place: New DelhiDate:

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