FAME INDIA LIMITED · Draft Letter of Offer September 27, 2011 For Equity Shareholders of our Company only FAME INDIA LIMITED Our Company was incorporated in India on October 26,

Draft Letter of Offer September 27, 2011

For Equity Shareholders of our Company only

FAME INDIA LIMITED

Our Company was incorporated in India on October 26, 1999 as Shringar Cinemas Private Limited under the Companies Act, 1956. The name was changed to Shringar Cinemas Limited on December 24, 2004 pursuant to a fresh certificate of incorporation consequent to change of name upon conversion to public company. The name of our Company was then changed to the present name Fame India Limited on January 25, 2008 pursuant to a fresh certificate of incorporation consequent to change of name with Corporate Identification Number L92490MH1999PLC122381. For details of change of name of our Company, please see the chapter “History and Other Corporate Matters” on page 71 of this Draft Letter of Offer.

Registered Office: Citi Mall, 2nd Floor, Oshiwara Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India. Tel: +91 22 6640 3636 Fax: +91 22 6640 3637

Contact Person: Mr. Suratha Satpathy, Company Secretary and Compliance Officer. E-mail: [email protected] Website: www.fame.co.in

PROMOTER OF OUR COMPANY: INOX LEISURE LIMITED FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY

ISSUE OF [●] EQUITY SHARES WITH A FACE VALUE OF ` 10 EACH AT A PREMIUM OF ` [●] PER EQUITY SHARE (“EQUITY SHARES”) FOR AN AMOUNT NOT EXCEEDING ` 9,000 LACS ON A RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF FAME INDIA LIMITED (THE “COMPANY” OR THE “ISSUER”) IN THE RATIO OF [●] EQUITY SHARE(S) FOR EVERY [●] FULLY PAID-UP EQUITY SHARE(S) HELD BY THE EXISTING EQUITY SHAREHOLDERS ON THE RECORD DATE, THAT IS ON [●] (THE “ISSUE”). FOR FURTHER DETAILS, PLEASE SEE “TERMS OF THE ISSUE” ON PAGE 295 OF THIS DRAFT LETTER OF OFFER. This Draft Letter of Offer may not be sent to any person or any jurisdiction in which it would not be permissible to deliver the Equity Shares and rights to purchase the Equity Shares, and the Equity Shares and rights to purchase the Equity Shares may not be offered, sold, resold, transferred or delivered, directly or indirectly, to any such person or in any such jurisdiction. The Equity Shares and rights to purchase the Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, allotted, taken up, exercised, renounced, pledged, transferred or delivered, directly or indirectly, within the United States (as defined in Regulation S under the Securities Act (“Regulation S”)).

GENERAL RISK Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, Investors must rely on their own examination of our Company and the Issue including the risks involved. The securities being offered in the Issue have not been recommended or approved by Securities and Exchange Board of India (the “SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Letter of Offer. Investors are advised to refer to the “Risk Factors” on page IX of this Draft Letter of Offer before making an investment in the Issue.

COMPANY’S ABSOLUTE RESPONSIBILITYOur Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to our Company and the Issue, which is material in the context of the Issue, that the information contained in the Draft Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Letter of Offer as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING The existing Equity Shares are listed on the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”). We have received "in-principle" approvals from the BSE and the NSE for listing the Equity Shares arising from the Issue vide their letters dated [●] and [●], respectively. For the purposes of the Issue, the Designated Stock Exchange is [●].

LEAD MANAGER REGISTRAR TO THE ISSUE

Enam Securities Private Limited 801/802, Dalamal Towers, Nariman Point, Mumbai 400 021 Maharashtra, India. Tel: +91 22 6638 1800 Fax: +91 22 2284 6824 Website: www.enam.com E-mail: [email protected] Investor Grievance E-mail: [email protected] Contact Person: Ms. Simran Gadh SEBI Reg. No: INM000006856

Link Intime India Private Limited C- 13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai - 400 078, Maharashtra, India Tel: +91 22 2596 0320 Fax: +91 22 2596 0329 Website: www.linkintime.co.in Email: [email protected] Contact Person: Mr. Pravin Kasare SEBI Registration No: INR000004068

ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON

[●] [●] [●]

TABLE OF CONTENTS

SECTION I – GENERAL ........................................................................................................................................... I DEFINITIONS AND ABBREVIATIONS................................................................................................................. I NOTICE TO OVERSEAS SHAREHOLDERS ...................................................................................................... VI PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA ............................... VII FORWARD LOOKING STATEMENTS ............................................................................................................ VIII SECTION II - RISK FACTORS .............................................................................................................................. IX PROMINENT NOTES ....................................................................................................................................... XXVIII SECTION III – INTRODUCTION ............................................................................................................................ 1 SUMMARY OF INDUSTRY ..................................................................................................................................... 1 SUMMARY OF BUSINESS ...................................................................................................................................... 4 SUMMARY FINANCIAL INFORMATION .......................................................................................................... 8 THE ISSUE ................................................................................................................................................................ 20 GENERAL INFORMATION .................................................................................................................................. 21 CAPITAL STRUCTURE ......................................................................................................................................... 26 SECTION IV – PARTICULARS OF THE ISSUE ................................................................................................. 40 OBJECTS OF THE ISSUE ...................................................................................................................................... 40 BASIS OF ISSUE PRICE ......................................................................................................................................... 44 STATEMENT OF TAX BENEFITS ....................................................................................................................... 47 SECTION V – ABOUT US ........................................................................................................................................ 57 INDUSTRY OVERVIEW ........................................................................................................................................ 57 BUSINESS OVERVIEW ......................................................................................................................................... 62 KEY INDUSTRY REGULATIONS ....................................................................................................................... 69 HISTORY AND OTHER CORPORATE MATTERS ......................................................................................... 71 MANAGEMENT ...................................................................................................................................................... 77 PROMOTER AND PROMOTER GROUP ........................................................................................................... 89 DIVIDEND POLICY ................................................................................................................................................ 94 SECTION VI – FINANCIAL INFORMATION.................................................................................................... 95 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION .......................................................................................................................................................... 214 MARKET PRICE INFORMATION .....................................................................................................................231 FINANCIAL INDEBTEDNESS .............................................................................................................................233 SECTION VII – LEGAL AND OTHER INFORMATION.................................................................................236 OUTSTANDING LITIGATIONS AND DEFAULTS ........................................................................................ 236 MATERIAL DEVELOPMENTS .......................................................................................................................... 273 GOVERNMENT APPROVALS ........................................................................................................................... 276 OTHER REGULATORY AND STATUTORY DISCLOSURES ......................................................................284 SECTION VIII – OFFERING INFORMATION .................................................................................................295 TERMS OF THE ISSUE ........................................................................................................................................ 295 SECTION IX – STATUTORY AND OTHER INFORMATION ...................................................................... 324 DESCRIPTION OF EQUITY SHARES AND TERMS OF THE ARTICLES OF ASSOCIATION ............ 325 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION .......................................................... 344 DECLARATION .................................................................................................................................................... 346

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SECTION I – GENERAL

DEFINITIONS AND ABBREVIATIONS Definitions In this Draft Letter of Offer, unless the context otherwise requires, the terms defined and abbreviations expanded herein below shall have the same meaning as stated in this section. In this Draft Letter of Offer, unless otherwise indicated or the context otherwise requires, all references to “Fame India Limited”, “Fame”, the/our “Company”, “we”, “our”, “us” or similar terms are to Fame India Limited or, as the context requires, Fame India Limited and its Subsidiaries and Joint Ventures on a consolidated basis, and references to “you” are to the prospective investors in the Equity Shares. Conventional/ General Terms

Term Description Act/ Companies Act The Companies Act, 1956 and amendments thereto Depositories Act The Depositories Act, 1996 and amendments thereto EPS The Earnings Per Share IT Act The Income Tax Act, 1961 and amendments thereto Indian GAAP Generally Accepted Accounting Principles In India NAV Net Asset Value PAT Profit After Tax SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments thereto SEBI Regulations/ SEBI ICDR Regulations

The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and amendments thereto

Securities Act The United States Securities Act of 1933, as amended Takeover Code The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

and amendments thereto Wealth Tax Act The Wealth Tax Act, 1957 and amendments thereto Issue related terms Term Description Abridged Letter of Offer The abridged letter of offer to be sent to the Equity Shareholders as on the

Record Date with respect to this Issue in accordance with SEBI Regulations Allotment Unless the context requires, the allotment of Equity Shares pursuant to the Issue Allottees Persons to whom Equity Shares are issued pursuant to the Issue Application Supported by Blocked Amount/ ASBA

The application (whether physical or electronic) used compulsorily by QIB and Non Institutional Investor and optionally by Retails Individual Investors to make an application authorizing the SCSB to block the amount payable on application in their specified bank account

ASBA Account Account maintained with a SCSB which will be blocked by such SCSB to the extent of the appropriate amount in relation to an application by an ASBA Investor

ASBA Investor Equity Shareholders proposing to subscribe to the Issue through ASBA process and: a) Are holding the Equity Shares of our Company in dematerialized form as

on the Record Date and have applied for their Rights Entitlements and/or additional Equity Shares in dematerialized form;

b) Have not renounced their Rights Entitlements in full or in part; c) Are not Renouncees; and d) Are applying through blocking of funds in a bank account maintained with

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Term Description SCSBs

All QIBs and Non-Insitutional Investors, complying with the above conditions, must mandatorily invest through the ASBA process. All Retail Individual Investors complying with the above conditions may optionally apply through the ASBA process.

Bankers to the Issue [●] Composite Application Form / CAF

The form used by an Investor to make an application for the Allotment of Equity Shares in the Issue

Consolidated Certificate In case of holding of Equity Shares on physical form, the certificate that our Company would issue for the Equity Shares Allotted to one folio

Controlling Branches of the SCSBs

Such branches of the SCSBs which coordinate with the Lead Manager, the Registrar to the Issue and the Stock Exchanges, a list of which is available on http://www.sebi.gov.in/pmd/scsb.html

Designated Stock Exchange

[●]

Designated Branches Such branches of the SCSBs which shall collect application forms used by ASBA Investors and a list of which is available on http://www.sebi.gov.in

Draft Letter of Offer The Draft Letter of Offer dated September 27, 2011 filed with SEBI for its observations

NECS National Electronic Clearing Services Equity Share(s) or Share(s)

Equity shares of our Company having a face value of ` 10 unless otherwise specified in the context thereof

Equity Shareholder / Shareholder

Means a holder of Equity Shares of our Company

Financial Year/ Fiscal/ Fiscal Year/ FY

Any period of twelve months ended March 31 of that particular year, unless otherwise stated.

Issue/ Rights Issue Issue of [●] Equity Shares with a face value of ` 10 each at a premium of ` [●] per Equity Share for an amount not exceeding ` 9,000 lacs on a rights basis to the existing Equity Shareholders in the ratio of [●] Equity Share(s) for every [●] fully paid-up Equity Share(s) held by the existing Equity Shareholders on the Record Date. The issue price is [●] times the face value of the Equity Shares.

Investor(s) Equity Shareholders as on Record Date and/or Renouncees applying in the Issue.

Issue Closing Date [●] Issue Opening Date [●] Issue Price ` [●] per Equity Share. Issue Proceeds The proceeds of the Issue that are available to our Company Issue Size The issue of [●] Equity Shares not exceeding ` 9,000 lacs Lead Manager Enam Securities Private Limited Letter of Offer The final letter of offer to be filed with the Stock Exchanges after incorporating

the observations received from the SEBI on the Draft Letter of Offer Listing Agreement The listing agreements entered into between our Company and the Stock

Exchanges MICR Magnetic Ink Character Recognition Non Institutional Investors

All Investors including sub-accounts of FIIs registered with SEBI, which are foreign corporate or foreign individuals, that are not QIBs or Retail Individual Investors and who have applied for Equity Shares for an cumulative amount more than ` 2 lacs.

Net Proceeds The Issue Proceeds less the Issue related expenses. For further details, please see the “Objects of the Issue” on page 40 of this Draft Letter of Offer

Promoter The Promoter of our Company, being Inox Leisure Limited Promoter Group / GFL Unless the context requires otherwise, the entities forming part of the promoter

group in accordance with the SEBI Regulations and which are disclosed by our

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Term Description Company to the Stock Exchanges from time to time, being Gujarat Fluorochemicals Limited

QIBs or Qualified Institutional Buyers

Public financial institutions as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FIIs and subaccount registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual, multilateral and bilateral development financial institution, venture capital fund registered with SEBI, foreign venture capital investor registered with SEBI, state industrial development corporation, insurance company registered with IRDA, provident fund with minimum corpus of ` 2,500 lacs, pension fund with minimum corpus of ` 2,500 lacs, National Investment Fund set up by the Government of India and insurance funds set up and managed by the army, navy or air force of the Union of India and insurance funds set up and managed by the Department of Posts, India

Record Date [●] Refund through electronic transfer of funds

Refunds through NECS, Direct Credit, RTGS, NEFT or ASBA process, as applicable.

Registrar of Companies/ RoC

The Registrar of Companies, Maharashtra, Mumbai located at 100, Everest, Marine Drive, Mumbai – 400 002.

Registrar to the Issue Link Intime India Private Limited Renouncees Any persons who has / have acquired Rights Entitlements from the Equity

Shareholders Retail Individual Investors

Individual Investors who have applied for Equity Shares for an amount not more than ` 2 lakhs (including HUFs applying through their Karta)

Rights Entitlement The number of Equity Shares that an Investor is entitled to in proportion to the number of Equity Shares held by the Investor on the Record Date

RTGS Real Time Gross Settlement. SAF(s) Split Application Form(s) SCSB(s) A Self Certified Syndicate Bank, registered with SEBI, which acts as a banker

to the Issue and which offers the facility of ASBA. A list of all SCSBs is available at http://www.sebi.gov.in

Share Certificate The certificate in respect of the Equity Shares allotted to a folio Stock Exchange(s) BSE and NSE where the Equity Shares are presently listed and traded Company Related and Industry Related Terms

Term Description ATP Average Ticket Price being the total ticketing revenues generated over a period

divided by the total number of tickets issued in that period Articles/ Articles of Association

The articles of association of our Company, as amended

Auditor M/s. Patankar & Associates, Chartered Accountants, the statutory auditor Board/ Board of Directors

Board of Directors of our Company including any committees thereof

Content Matter exhibited for the patron to view ESOP 2009 / ESOP Employee Stock Option Plan 2009 for the employees of our Company as

approved by the shareholders by way of a resolution dated September 27, 2006 and subsequent amendments thereto

F & B Food and Beverages Fit-Out The various physical components and accessories required to deliver a quality

cinema audio and video theatre experience to the Patron. This would include audio and video equipment, chairs, carpeting, acoustics, etc.

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Term Description Joint Ventures Joint ventures of our Company being Swanston Multiplex Cinemas Private

Limited and Headstrong Films Private Limited Memorandum/ Memorandum of Association

The memorandum of association of our Company, as amended

Patron Any person attending a movie for a show Preference Shares Preference shares of our Company having a face value of ` 10 unless otherwise

specified in the context thereof Registered Office The registered office of our Company situated at Citi Mall, 2nd Floor, Oshiwara

Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India Share Purchase Agreement

Share purchase agreement dated February 5, 2010 entered into between our Promoter (i.e. Inox Leisure Limited) and Mr. Shyam Gobindram Shroff, Mr. Balkrishna Gobindram Shroff and Mr. Shravan Shyam Shroff as partners of South Yarra Holdings

SPH Spend Per Head is the ratio of the total collection of F & B and related products sold at the concessions counter over a period of time to the total number of tickets issued in that period

Subsidiaries Fame Motion Pictures Limited and Big Pictures Hospitality Services Private Limited

UPDF The United Producers and Distributors Forum Abbreviations

Term Description AGM Annual General Meeting AS Accounting Standards issued by the Institute of Chartered Accountants of India BSE Bombay Stock Exchange Limited CDSL Central Depository Services (India) Limited CEPS Cash Earnings Per Share DP Depository Participant DR Depository Receipts ECB External Commercial Borrowing EGM Extraordinary General Meeting FCCB Foreign Currency Convertible Bonds FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 FII(s) Foreign Institutional Investors registered with SEBI under applicable laws FIPB Foreign Investment Promotion Board GDR Global Depository Receipt HUF Hindu Undivided Family ISIN International Securities Identification Number IT Information Technology JV Joint Venture NR Non Resident NRI(s) Non Resident Indian(s) NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OCB Overseas Corporate Body PAN Permanent Account Number PAT Profit After Tax PBT Profit Before Tax PLR Prime Lending Rate RBI Reserve Bank of India

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Term Description Regulation S Regulation S of the Securities Act Re./`/Rupees/INR Indian Rupees. SEBI Securities and Exchange Board of India. Securities Act U.S. Securities Act of 1933, as amended Stock Exchanges BSE and NSE STT Securities Transaction Tax TP Act The Transfer of Property Act, 1882 Takeover Code/Regulations

SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended

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NOTICE TO OVERSEAS SHAREHOLDERS

The rights and the securities of our Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof (the “United States” or “U.S.”), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in the Draft Letter of Offer are being offered in India, but not in the United States. The offering to which the Draft Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said Equity Shares or rights. Accordingly, the Draft Letter of Offer or Letter of Offer and the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time. Neither our Company nor any person acting on behalf of our Company will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who our Company or any person acting on behalf of our Company has reason to believe is in the United States when the buy order is made. Envelopes containing a CAF should not be postmarked in the United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal to make an offer, and all persons subscribing for the Equity Shares and wishing to hold such Equity Shares in registered form must provide an address for registration of the Equity Shares in India. Our Company is making the issue of Equity Shares on a rights basis to Equity Shareholders of our Company on the Record Date and the Letter of Offer and CAF will be dispatched only to Equity Shareholders who have an Indian address. Any person who acquires rights and the Equity Shares will be deemed to have declared, represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the Equity Shares or the Rights Entitlements, it will not be, in the United States when the buy order is made, (ii) it does not have a registered address (and is not otherwise located) in the United States, and (iii) it is authorised to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations. Our Company reserves the right to treat as invalid any CAF which: (i) does not include the certification set out in the CAF to the effect that the subscriber does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations; (ii) appears to our Company or its agents to have been executed in or dispatched from the United States; (iii) where a registered Indian address is not provided; or (iv) where our Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and our Company shall not be bound to allot or issue any Equity Shares or Rights Entitlement in respect of any such CAF.

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PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA In this Draft Letter of Offer, unless otherwise indicated or the context otherwise requires, all references to “Fame India Limited”, “Fame”, the/our “Company”, “we”, “our”, “us” or similar terms are to Fame India Limited or, as the context requires, Fame India Limited and its Subsidiaries and Joint Ventures on a consolidated basis, and references to “you” are to the prospective investors in the Equity Shares. Unless stated otherwise, the financial data in this Draft Letter of Offer is derived from the Standalone and Consolidated Restated Financial Information of our Company which has been prepared in accordance with Indian GAAP and are included in the Draft Letter of Offer. The financial year of our Company commences on April 1 and ends on March 31. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off, and unless otherwise specified, all financial numbers in parenthesis represent negative figures. All references in the Draft Letter of Offer to “Rupees”, “`”, “Rs.”, “Indian Rupees” and “INR” are to Indian Rupees, the official currency of the Republic of India. All references to “U.S.$”, “U.S. Dollar”, “USD” or “$” are to United States Dollars, the official currency of the United States of America. Please Note: One million is equal to 10,00,000/10 lacs One billion is equal to 1,000 million/100 crores One lacs is equal to 100 thousand One crore is equal to 10 million/100 lacs Unless stated otherwise, industry data used throughout this Draft Letter of Offer has been obtained from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe that industry data used in this Draft Letter of Offer is reliable, it has not been independently verified. Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares. The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and the U.S. Dollar (in Rupees per U.S. Dollar) based on the reference rates released by the RBI. No representation is made that the Rupee amounts actually represent such amounts in U.S. Dollars or could have been or could be converted into U.S. Dollars at the rates indicated, at any other rates or at all.

Year ended March 31 Period End Average* High* Low* 2009 50.95 45.91 52.06 39.89 2010 45.14 47.42 50.53 44.94 2011 44.65 45.27 45.95 44.65

Month ended Period End Average* High* Low* August, 2011 46.02 45.28 46.13 44.05

July, 2011 44.16 44.42 44.69 43.95 June -2011 44.72 44.85 45.10 44.61 May- 2011 45.03 44.90 45.38 44.30

April- 2011 44.38 44.37 44.68 44.04 March-2011 44.65 44.98 45.27 44.65

1. Source: RBI website at www.rbi.org.in 2. *Note: High, low and average are based on the RBI reference rate The RBI reference rate on September 23, 2011 was U.S. $1.00 = ` 49.67

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FORWARD LOOKING STATEMENTS Certain statements in this Draft Letter of Offer which contain words or phrases such as “will”, “may”, “aim”, “is likely to result”, “believe”, “expect”, “continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “pursue” and similar expressions or variations of such expressions, that are “forward looking statements”. All forward looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our Company’s expectations include, but are not limited to:

• General economic conditions • Changes in political and social conditions in India • The outcome of legal or regulatory proceedings that we are or might become involved in • Contingent liabilities, environmental problems and uninsured losses • Developments affecting the Indian economy • Uncertainty in global financial markets

For a further discussion of factors that could cause the actual results to differ, see “Risk Factors” on page IX of this Draft Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither our Company nor the Lead Manager nor any of their respective affiliates or advisors have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI and Stock Exchanges’ requirements, our Company and Lead Manager shall ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.

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SECTION II - RISK FACTORS An investment in equity shares involves a high degree of risk. You should carefully consider all of the information in this Draft Letter of Offer, including the risks and uncertainties described below, before making an investment in the Equity Shares. The financial and other implications of material impact of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. However there are a few risk factors where the impact is not quantifiable and hence the same has not been disclosed in such risk factors. The ordering of the risk factors has been done based on materiality and does not in any manner indicate the importance of one risk factor over the other. To obtain a complete understanding, you should read this section in conjunction with the chapters titled “Business Overview”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the section titled “Financial Information” beginning on page 62, 214 and 95 respectively as well as the other financial and statistical information contained in this Draft Letter of Offer. Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The Equity Shares have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this Draft Letter of Offer. The occurrence of any of the following events could have a material adverse effect on our business, results of operations, financial condition and prospects and cause the market price of the Equity Shares to fall significantly, and you may lose all or part of your investment. Additionally, our business operations could also be affected by additional factors that are not presently known to us or that we currently consider as immaterial to our operations. The following factors have been considered for determining the materiality: 1. Some events may not be material individually but may be found material collectively; 2. Some events may have material impact qualitatively instead of quantitatively; 3. Some events may not be material at present but may have material impact in future. RISKS ASSOCIATED WITH OUR BUSINESS 1. Our Company, our Subsidiaries and our Joint Ventures are involved in a number of legal and

regulatory proceedings that, if determined against us or our Subsidiaries or our Joint Ventures, could have a material adverse impact on our business, financial conditions and results of operations.

Our Company, some of our Subsidiaries and our Joint Ventures are currently involved in certain legal and regulatory proceedings. The amounts claimed in these proceedings have been disclosed to the extent ascertainable, excluding contingent liabilities and include amounts claimed jointly and severally from us and other parties. These proceedings are pending at different levels of adjudication before various courts and tribunals. We cannot assure you that these proceedings will be decided in our favour. Furthermore, should there be a change in Indian law or in the laws of any such jurisdiction applicable to any of our Subsidiaries or our Joint Ventures, against our interest or an adverse outcome in one or more of the outstanding proceedings; we may need to make appropriate provisions in our financial statements, which could adversely impact our business results. A summary of these legal and other proceedings involving our Company, our Subsidiaries and our Joint Ventures are given in the following table: Litigation against our Company

Sr. No.

Nature of the litigation Number of outstanding litigations

Aggregate amount involved (`) in lacs

1. Civil 9 Not ascertainable

x

Sr. No.



2. Tax 12 Not ascertainable 3. Labour 1 Not ascertainable

Total 22 Not ascertainable Litigation by our Company

Sr. No.



1. Civil 14 Not ascertainable 2. Tax 3 Not ascertainable Total 17 Not ascertainable

Litigation against our Subsidiaries

Name of the Subsidiary Nature of the

litigation

Number of outstanding litigations


Fame Motion Pictures Limited Civil 1 Not ascertainable Total 1 Not ascertainable

Litigation by our Subsidiaries


litigation



Fame Motion Pictures Limited Civil 4 262.66 Tax 7 Not ascertainable Total 11 Not ascertainable

Litigation against our Joint Ventures


litigation



Swanston Multiplex Cinemas Private Limited

Criminal 4 Not ascertainable Labour 1 Not ascertainable Tax 5 Not ascertainable

Total 10 Not ascertainable Litigation by Joint Ventures


litigation



Swanston Multiplex Cinemas Private Limited

Civil 1 198.11 Tax 1 48.87

Total 2 246.98

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For further details of the legal proceedings, please see the chapter “Outstanding Litigations and Defaults” on page 236 of this Draft Letter of Offer. 2. Some of our Directors and Promoter are involved in certain legal and regulatory proceedings. An

adverse outcome of these proceedings could have a negative impact on our reputation and thereby on our business, financial conditions and results of operations.

Some of our Directors and Promoter are currently involved in certain legal and regulatory proceedings. These proceedings are pending at different levels of adjudication before various courts and tribunals. We cannot assure you that these legal proceedings will be decided in favour of these parties. Though we are not a direct party to some of these proceedings, an adverse outcome of these proceedings could have a negative impact on our reputation and thereby on our business, financial conditions and results of operations. The amounts claimed in these proceedings have been disclosed to the extent ascertainable, excluding contingent liabilities and include amounts claimed jointly and severally from us and other parties. A summary of these legal and other proceedings is given in the following table: Litigation against our Promoter / Directors

Names of the Promoter Nature of the

litigation



Inox Leisure Limited Civil 22 Not ascertainable Tax 7 Not ascertainable Consumer 2 0.86

Total 31 Not ascertainable

Names of the Director Nature of the

litigation



Kishore Biyani Civil 11 Not ascertainable Criminal 13 Not ascertainable

Total

24 Not ascertainable

Names of the Director Nature of

the litigation



Amit Jatia Civil 1 Not ascertainable Criminal 3 Not ascertainable

Total

4 Not ascertainable

Names of the Director Nature of

the litigation



Mr. Pavan Kumar Jain Criminal 1 Not ascertainable Total 1 Not ascertainable

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Litigation by our Promoter / Directors

Names of our Promoter Nature of the

litigation



Inox Leisure Limited

Civil 33 Not ascertainable Criminal 2 1.71 Tax 29 Not ascertainable

Total 64 Not ascertainable For details on the above litigations, please refer the chapter titled “Outstanding Litigations and Defaults” beginning on page 236. 3. As of the date of this Draft Letter of Offer, our Company does not have a managing or whole-time

director or manager and is in breach of the provisions of the Companies Act and rules made thereunder.

Under section 269 of the Companies Act and the rules made thereunder, we are required to have either a managing director or a whole-time director or a manager. Our Company re-appointed our erstwhile promoter, Mr. Shravan Shroff as our managing director on December 19, 2010. On January 21, 2011, Mr. Shravan Shroff resigned from his post as the managing director. As of the date of this Draft Letter of Offer, our Company is yet to appoint a managing director or a whole-time director or a manager and is in breach of the applicable provisions of the Companies Act and the rules made there under.

We are in the process of finding a suitable replacement to fill this position. Our Company and every officer of our Company who is in default in this regard is punishable with fine which may extend up to ` 5,000 and with a further fine which may extent to ` 500 for every day after the first day during which the contravention i.e. breach of the provision of the Companies Act, continues.

4. We made a compounding application relating to our ineligibility to issue FCCBs for an aggregate

amount of USD 200 lakhs in the year 2006 and may become liable to pay penalty under the FEMA, that may be imposed upon us by the RBI which could have a materially negative impact on our financial position.

Our Company issued FCCBs for an aggregate amount of USD 200 lakhs by an offering circular dated April 17, 2006 which were listed on the Singapore Stock Exchange. Our Company vide letter dated June 16, 2011 approached our authorized dealer (“AD”) seeking permission to redeem the outstanding FCCBs at approximately 82% of the redemption value, subject to approval from the FCCB holders. On July 7, 2011 our AD received a letter from the RBI seeking clarification as to whether our Company was an eligible borrower being in the service sector, at the time of obtaining the loan registration number and whether the FCCBs issued complied with the extant ECB guidelines. We filed our response to the AD on July 13, 2011 stating that the funds raised through FCCB were utilized in line with the AP (DIR Series) circular number 5 dated August 1, 2005 (“Circular”) and that issuance of FCCBs was done under the bona fide belief that our Company was an eligible borrower under the automatic route. We received a letter from RBI dated July 27, 2011 conveying no objection for redeeming outstanding FCCBs at approximately 82% of the redemption value subject to approval from the FCCB holders and stating that our Company being ineligible borrower to raise ECB under the automatic route may consider filing a compounding application. On August 2, 2011 we filed the compounding application. Under the terms of the FEMA, a penalty could be imposed upon us which could have a materially negative impact on our financial position.

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5. We do not have valid lease agreements for 3 (three) of our multiplexes which could result in legal

proceedings being instituted against us, the outcome of which could have a materially negative impact on our business and financial position.

We signed a letter of intent to lease the premises for our multiplex in Forum Value Mall at Whitefield in Bengaluru. While we continue to operate our multiplex on the said premises we did not execute a valid lease agreement within the period stipulated in the letter of intent and as such the letter of intent is terminated. Similarly, for our multiplex at Kalyan in Mumbai, we agreed upon the terms of the lease with our lessor at a meeting, the minutes of which are signed by us and the lessor however we have not formalized these terms by way of a lease agreement. For our multiplex situated in Raghu Leela Mall at Kandivali in Mumbai, the term of the lease under the lease agreement, expired on February 2, 2011. As of the date of this Draft Letter of Offer, we are operating our multiplex on the said premises without entering into or renewing the lease agreement for the same. Pending the execution of valid lease agreements for these premises the interest free deposit of ` 116.74 lakhs paid by our Company to the lessor for our multiplex in Forum Value Mall at Whitefield in Bengaluru could be forfeited and there could be legal proceedings instituted against us. The outcome of such legal proceedings could have a materially negative impact on our business and financial position. 6. We are in breach of the terms of our conduct agreement for the multiplex in Surat and our joint

venture agreement for our multiplex in Bengaluru (i.e. Lido) and may become unable to operate these multiplexes which may negatively affect our business and financial condition.

Under the terms of our conduct agreement dated October 23, 2003 which sets out the terms on which we manage the multiplex in Surat, the companies that own the multiplex have a right to terminate the conduct agreement by giving us (6) six months written notice in the event that Mr. Shravan Shroff is not in operational control of our Company. Also, Our Company and Mr. V.R. Manjunath entered into joint venture agreements for the operation of our multiplex in Bengaluru (i.e. Lido). Under the terms of the agreements, if the control / management of our Company is taken over by a third party or our Company is merged with any entity or in case there is any substantial change in the shareholding of our Company, Mr. V.R. Manjunath has the option of terminating the joint venture agreement by giving 30 days prior written notice to our Company. Pursuant to the Share Purchase Agreement there was a substantial change in the shareholding of our Company and Mr. Shravan Shroff is no longer in operational control of our Company. Accordingly, we are in breach of the terms of the above agreements. While as of the date of this Draft Letter of Offer a termination notice in this regard has not been issued to us, we cannot assure you that the same will not be issued in future. In case such a notice is issued, it could lead to a litigation in which we may not be successful and may become unable to operate the relevant multiplex which could negatively affect our business and financial condition. Further, if the joint venture agreement for our multiplex in Bengaluru (i.e. Lido) is terminated by Mr. V.R. Manjunath for the above reasons, our Company will be required to pay Mr. V.R. Manjunath his proportionate share in the joint venture i.e. 25% of the net sale value of the fit-outs installed at the multiplex after their disposal, or in the alternative, our Company will have to appoint a valuer to assess the fair value of the fit-outs installed and pay the value so arrived; either of which could have a negative effect on our financial condition. 7. We have sent notices of termination for various MOUs entered into by us for setting up new

multiplexes seeking refund of the security deposits under these MOUs. In the event we do not receive the security deposits in full or in part or if there is a delay in receiving the same, it could have a negative impact on our business and financial position.

We entered into various MOUs / letters of intent or documents of similar nature with counter parties for the purposes of setting up, managing and operating multiplexes / theaters in various cities in the ordinary course of our business. We have sent notice of termination for 25 MOUs on grounds of inability on the part of counter parties to fulfill their obligations under the terms of the respective MOUs. Upon termination of the MOUs, we are

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entitled to refund of the amount of security deposit under the respective MOUs. In the event we do not recover the security deposits in full or in part or if there is a delay in recovering the same, it could have a negative impact on our business and financial position. 8. The withdrawal of or refusal to grant entertainment tax incentives or the grant of entertainment tax

incentives on commercially unviable terms for our existing and proposed multiplexes and / or theaters would have a material adverse effect on our results of operations and financial position.

One of the considerations influencing our decision to open new multiplexes and/ or theaters is the availability of entertainment tax holidays and incentives announced by various state governments. For details of the entertainment tax exemptions available in the states where we operate, please see the chapter titled “Key Industry Regulations” beginning on page 69. The withdrawal of the announced tax holidays and incentives or the refusal by relevant authorities to grant entertainment tax exemptions for our existing or proposed multiplexes and / or theaters would have a material adverse effect on our results of operations and financial conditions and may also affect our decision to proceed with such multiplexes and theaters, thus hampering our expansion plans. Further, if the terms of such entertainment tax exemptions are not favorable to us, we may not be able to avail of these exemptions, which may materially affect our business and results of operations. Further, in some states like Maharashtra, West Bengal etc, in order to avail of the entertainment tax exemption, we are required to operate our multiplexes and theaters for a fixed period of time. In the event we fail to meet this condition, we will be required to return the amount of entertainment tax exemption availed of by us, together with penal interest. 9. Our Company had negative net cash flows in recent fiscal years. Our Company had negative net cash flows in the past three fiscals (on consolidated basis), the details of which is summarized below:

(Amount in ` lakhs) Particulars Fiscal 2009 Fiscal 2010 Fiscal 2011

Net cash (used in) investing activities (4,376.15) (2,229.37) (862.43) Net cash generated from / (used in) financing activities

2,255.79 699.42 (2,103.87)

Net increase (decrease) in Cash & Cash Equivalents

(105.61) 257.11 (430.69)

For further details please see the chapter titled “Financial Information” and the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on pages 95 and 214 respectively. 10. Our Contingent Liabilities could adversely affect our financial condition. We have not provided for certain contingent liabilities as on March 31, 2011, which if materialise could adversely affect our financial position. Our contingent liabilities where quantifiable on consolidated basis as on March 31, 2011 is as follows:

(Amount in ` lakhs) Particulars As of March 31, 2011 Claims not acknowledged as debts 345.26 Total entertainment tax that is currently exempted for every property that ceases operations prior to completing the minimum period of operations

6,906.76

Bank Guarantees in favour of various Government authorities 51.53 The Company may incur additional cost towards electricity from June 1, 2007 to March 31, 2010

389.83

Service tax liability reversed and service tax liability not provided for 737.44

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If a significant portion of these liabilities materialise, it could have an adverse effect on our business, financial condition and results of operations. For further information on our contingent liabilities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 214 and the chapter titled “Financial Information” beginning on page 95.

11. We recently became a subsidiary of ILL which is in similar line of business as us which could result

in conflict of interest which in turn could have a negative impact on our business and financial condition.

We became a subsidiary of ILL with effect from January 6, 2011. Our Company and ILL are in the same line of business i.e. multiplex operation and hence we compete with ILL. Further, while we are in the process of integrating our operations in order to achieve benefits of synergy, there can be no assurance that we will be able to successfully integrate our operations or that the expected benefits of synergy will be realised. 12. Changes in the projection technologies from the traditional mode to the digital mode may require us

to incur substantial capital expenditure.

The exhibition industry is in the early stages of conversion from celluloid film-based media to electronic based media. There are a variety of constituencies associated with this anticipated change, which may significantly impact industry participants, including content providers, distributors, equipment providers and exhibitors. Should the conversion process rapidly accelerate, we may have to raise additional capital to finance the conversion costs associated with this potential change. The additional capital necessary may not, however, be available to us on attractive terms, if at all. 13. Our business is seasonal and our results of operations fluctuate from quarter-to-quarter. Historically, our revenues have been higher during the festive and holiday season primarily on account of the release of big budget Indian movies during this period. As a result of this, our quarter-to-quarter results may not be comparable or serve as a meaningful indicator of our future performance. 14. Our business is dependent on the popularity and content of the films we exhibit.

Our ability to attract patrons to our multiplexes and theaters is dependent amongst other factors, on the popularity and appeal of the films we display on our screens. Although a large number of films are released every year, only a few amongst them go on to become box office hits and consequently if the films we exhibit are not popular, the number of our patrons will decline, which would adversely affect our business and results of operations. Further, attendance levels at some of our multiplexes and theaters particularly in tier II cities are in part dependent on the market for local language films, and the inclination of our patrons to spend their leisure time attending commercial movies compared to consumers in large urban areas. As a result of such factors, attendance levels at our multiplexes and theaters in tier II cities may not be sufficient to permit us to operate them on a positive cash flow basis. 15. In past, there have been disagreements on revenue sharing and other terms between the distributors

and us which stalled several movie releases and impacted our revenue negatively. Any such disputes with industry participants in future can adversely affect our business and financial condition.

In the year 2009, there were disagreements on revenue sharing and other terms between us and various producers / distributors which stalled several movie releases, impacting our revenue and cash flow negatively. Subsequently, various terms including revenue sharing between us and producers / distributors were settled. Pursuant to this settlement, standard agreements were entered into between us and various

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producers / distributors setting out specific terms in respect of each film, designated screens, number of prints, weekly revenue share percentages between us and the producers / distributors. For further details, see – “History and Other Corporate Matters” on page 71. These standard agreements expired on June 30, 2011. Since the expiry of these agreements our company has been entering into weekly arrangements for film exhibition with the producers / distributors typically under a booking contract. We cannot assure you that we will be able to enter into or renew the agreements with producers / distributors on terms favorable to us or at all. In addition, there can be no assurance that we will not have similar disruptions in our relationship with the film production companies or other industry participants, in the future, which could have a material adverse effect on our business, financial condition and results of operations. 16. We face risks associated with the implementation of new multiplexes and theaters. We face several risks in developing new multiplexes and theaters, including the following: • The multiplexes that we may propose to develop may be capital intensive. The budgeted resources for

implementation of these new projects may be inadequate and we may incur cost overruns, which could adversely affect our financial position and our results of operations.

• Delays in the scheduled implementation of the proposed projects for any reason, including delays in receipt of government approvals or delays in delivery of equipment by suppliers, could adversely affect our financial position.

• Our new multiplexes and theaters may not achieve the requisite levels of patronage projected by us at the project evaluation stage, which could adversely affect our results of operations and financial condition.

In addition, if we are unable to manage the growth we achieve from our new multiplexes and theaters, our results of operations, financial conditions and the implementation of our business strategy may be adversely affected. 17. Piracy may drive down the attendance level in our multiplexes / theaters which could have a

material adverse effect on our business, financial condition and results of operations.

Piracy is an illegal practice of making unauthorised copies of various audio and visual media content, software or other digital content available for use at highly reduced prices. While anti-piracy laws have been enacted and attempts have been made to restrict or curb piracy, piracy is still capable of influencing the decision of our patrons to visit our multiplexes and theatres which could have a material adverse effect on our business, financial condition and results of operations. 18. A reduction in our advertisement and royalty revenue could have a material adverse affect on our

profitability. During Fiscal Year 2011 we earned ` 1,466.44 lakhs revenue from advertisement and royalty. This constituted 8.49 % of our total income for the same period. We generally utilize our existing theater infrastructure to display advertisements for our advertising customers. Our gross margin on advertisement and royalty revenues is high as we do not incur significant additional cost for each Rupee of additional revenue from advertisement and royalty. Consequently, decrease in our advertisement and royalty revenue will have a negative impact on our profit before tax. 19. We are dependent on our senior management team and the loss of key members or failure to attract

skilled personnel may adversely affect our business. We believe we have a team of professionals to oversee the operations and growth of our business. Our success is substantially dependent on the expertise and services of our management team. While we have introduced an employees’ stock option scheme to encourage employee retention, we cannot assure you that we will be able to retain any or all of the key members of our management team. The loss of the services of

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such key members of our management team could have an adverse effect on our business and the results of our operations. Further, our ability to maintain our position in the multiplex operation business depends on our ability to attract, train, motivate, and retain highly skilled personnel. In the event we fail to meet these requirements, it could have an adverse effect on our business and results of operations. For further details of our senior management team, please see the section titled “Management” beginning on page 77. 20. We are subject to intense competition. If we are unable to cope effectively with competition this may

have a material adverse effect on our business. We have many competitors who are present in the film screening and exhibition business in India who may have more financial resources than us and consequently greater capability than us to invest in new multiplex projects and also to sustain losses in the initial stages of multiplex development. In future we may also face competition from global entertainment companies who may set up shop in India. Besides, our multiplexes and theaters are subject to varying degrees of competition in the geographic locations in which we operate. Competitors may be national players, regional players or smaller independent exhibitors. The competition for patrons is dependent upon factors such as the availability of popular motion pictures, the location and number of multiplexes and screens in a market, the comfort and quality of the multiplexes and pricing. Many of our competitors have sought to increase the number of screens that they operate. Our competitors have built or may be planning to build multiplexes and theaters in certain areas where we operate, which could result in excess capacity and increased competition for patrons. 21. There are certain licenses and approvals that we have applied for or made application for renewal of

but not yet received and there are certain licenses and approvals that we have not applied for. If we are unable to obtain such licences in the ordinary course of business in a timely manner or at all, it may adversely affect our business, financial conditions and results of operations.

We are required to maintain certain licenses and approvals in the normal course of our business some of which have expired. We have applied for the renewal of certain licenses and approvals but for which grant / approval have not yet been received. Additionally, there are certain licenses and approvals that we have not applied for as on the date of this Draft Letter of Offer. Any failure to renew or obtain such licenses and approvals in the ordinary course of business in a timely manner or at all may adversely affect our business, financial conditions and results of operations. For a list of licenses and approvals for which we have applied for or made application for renewal of and for which we have not yet applied for please see the section titled “Government Approvals” beginning on page 276. 22. We did not utilise a portion of the proceeds raised pursuant to our IPO towards the stipulated

objects. We did not utilise a portion of the proceeds raised pursuant to our IPO towards the stipulated objects within the timeframe estimated for the same. In April 2005 our Company raised ` 4,319.50 lakhs through its IPO of 81,50,180 Equity Shares. Out of the proceeds of our IPO, we envisaged using ` 3,370 lakhs towards funding exhibition growth, ` 599.50 lakhs towards funding distribution growth through our subsidiary i.e. Fame Motion Pictures Limited and ` 350.00 lakhs towards issue expenses. On September 30, 2009, the shareholders of the Company approved the utilization of the balance unutilized IPO proceeds of ` 1,600 lakhs, inter alia, for expansion activities of our Company in India for opening of new multiplexes and expenses related thereto, including but not limited to repayment of loans taken for such purposes. For further details, please see the chapter titled “Financial Information” beginning on page 95 of the Draft Letter of Offer. As on March 31, 2011 our Company has utilized an aggregate amount of ` 1,390.56 lakhs towards funding

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exhibition growth, ` 441.62 lakhs towards issue expenses and ` 2,487.32 lakhs towards repayment of loans. 23. The uncertainty of title to the land where our multiplexes and theaters are located or non-renewal of

any of our multiplexes’ lease agreements on terms favourable to us or at all could have a material adverse impact on our current and future revenue.

We may not be able to assess or identify all risks and liabilities associated with the land where our multiplexes and theaters are located such as faulty title or irregularities in title of the lessor, including due to non-execution or non-registration or inadequate stamping of conveyance deeds and other acquisition documents; unregistered encumbrances; adverse possession rights; discrepancies between the area mentioned in the revenue records, the area mentioned in the title deeds and/or the actual physical area of some of our properties; or other defects. Property records in India have not been fully computerized and are generally maintained manually through physical records of all land related documents, which are also manually updated. Further, some of our multiplexes are developed through joint ventures or management contracts with third parties where the title to the land may be owned by one or more of such third parties. In such instances, there can be no assurance that the persons with whom we have or may enter into joint venture or management arrangements have or will have clear title to such land. Additionally, our multiplexes and theaters which are on leasehold properties require compliance with the terms and conditions of their leases. These terms and conditions, amongst others, require compliance with various rules. Our inability to fulfill and perform the terms and conditions of the leases may attract penalties and may adversely affect our rights over such premises. Upon expiry of the term of the lease, if the same is not renewed on terms favourable to us or at all, it could have a material adverse impact on our current and future revenue. Finally, legal disputes in respect of land title can take several years and considerable expense to resolve if they become the subject of court proceedings and their outcome can be uncertain. If either we or the owner of the land where our multiplexes and theaters are located are unable to resolve such disputes with these claimants, we may lose our ability to operate on such disputed land.

24. We face competition from other multiplexes and from alternate entertainment channels such as

Direct to Home (“DTH”), Mobile Television, etc. Our inability to effectively deal with such competition could potentially negatively influence our consumers and adversely impact our business, financial condition and results of operations.

We face competition from other movie theaters, particularly multiplexes, as also from alternative entertainment channels. The increasing popularity of DTH services makes it possible for film goers to get latest films delivered directly to their doorstep in a short span of time after the film release. Typically, after its release, the film is first screened in theaters before it is made available to DTH operators and to other entertainment channels and before home videos (i.e. CDs / DVDs) of the film are released. However, DTH services are lower-priced compared to multiplex tickets which make for an appealing proposition for our potential consumers to wait till the film is showcased by DTH operators and watch the films from the comfort of their home. Further, we face competition from other forms of out-of-home entertainment including sporting events, concerts, live theatre. Our inability to effectively deal with such competition could potentially affect our patrons adversely, and negatively impact our business, financial condition and results of operations. Customarily, when distributors license their products to the domestic exhibition industry, they refrain from licensing their films to other delivery vehicles for a period of time, commonly called the theatrical release window. A material contraction of the current theatrical release window could significantly dilute the consumer’s appeal of the multiplex / theater offering, which could have a material adverse effect on our results of operations.

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25. Upon completion of the Issue, our Promoter will continue to exercise significant control over our Company, which will allow them to influence the outcome of matters submitted to the shareholders for approval.

Upon completion of this Issue, our Promoter will continue to own a majority of our Equity Shares. As a result, our Promoter will have the ability to exercise significant influence over all matters requiring shareholders’ approval. Our Promoter will also be in a position to influence any shareholder action or approval requiring a majority vote, except where they may be required by applicable law to abstain from voting. This control could also delay, defer or prevent a change in control of our Company, impede a merger, consolidation, takeover or other business combination involving our Company, or discourage a potential acquirer from obtaining control of our Company even if it is in the best interests of our Company. Further, the interests of our Promoter could conflict with the interests of our other Equity Shareholders, and in such circumstances our Promoter could make decisions that materially and adversely affect your investment in the Equity Shares. 26. We have entered into various MOUs / letters of intent or documents of similar nature for the

purposes of operating multiplexes / theaters in various cities. If these MOUs do not become definitive business agreements, it may have a negative impact on our business and financial condition.

In the ordinary course of our business we enter into memoranda of understanding / letters of intent or documents of similar nature for the purposes of setting up, managing and operating multiplexes / theaters in various cities before we enter into definitive business agreements. We cannot assure you if we will be able to execute definitive business agreements as envisaged in these MOUs / letters of intent which may have a negative impact on our business and financial condition. Further, some of these MOUs/ letters of intent may be terminable by our clients without cause on a short notice period affecting our business at a particular point of time. 27. We rely extensively on our standard operating procedures and IT systems. Any failures in these

systems could adversely impact our business. We rely extensively on our standard operating procedures and IT systems. These systems provide us connectivity across our business functions through our software, hardware and network systems. We are dependent upon internet booking and tele-booking services for ticket sales. Our business processes are IT enabled, and any failure in our IT systems or loss of connectivity or any loss of data arising from such failure can impact us adversely.

28. Accidents in our multiplexes and theaters may lead to public liability consequences. Though we take all possible steps to ensure adoption and compliance with high standards of safety and fire control in our multiplexes and theaters, we cannot assure you that these mechanisms will be adequate to contain safety risks that may arise in the future. Though we maintain public liability insurance cover for our theaters, in the event of an accident, we may be exposed to civil, tort and criminal liabilities. 29. Any inability to manage our growth could disrupt our business and reduce our profitability. We have experienced significant growth in recent years. Our consolidated revenue from operations has grown to ` 17,034.90 lakhs for the Fiscal Year 2011 at a three year CAGR of 21.74 %. Any future organic growth and other acquisitions may place significant demands on our operational, financial and internal controls across the organization. It may also impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees; adhering to our high quality and process execution standards; maintaining high levels of client satisfaction; integrating expanded operations while preserving our culture, values and entrepreneurial environment; and developing and improving our internal administrative infrastructure, particularly our financial, operational, communications, and other internal systems. We may, thus, face difficulties in

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executing our strategy including the proposed expansion plans and any future growth strategy. If we are unable to manage our growth, it could have an adverse effect on our business, results of operations and financial condition. Our future financial performance and our ability to commercialize our products and to compete effectively will depend, in part, on our ability to manage any growth effectively, and our failure to do so could adversely affect our business, financial condition, results of operations and growth prospects. For further details on our financial performance please refer to the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 214. 30. Our insurance coverage may not adequately protect us against certain operating hazards and this

may have a material adverse effect on our business. Operating and managing a business involves many risks that may adversely affect our Company’s operations, and the availability of insurance is therefore important to our operations. Our Company believes that our insurance coverage is generally consistent with industry practice. However, to the extent that any uninsured risks materialize or if it fails to effectively cover itself for any risks, we could be exposed to substantial costs and losses that would adversely affect financial condition. In addition, our Company cannot be certain that the coverage will be available in sufficient amounts to cover one or more large claims, or that our insurers will not disclaim coverage as to any claims. A successful assertion of one or more large claims against our Company that exceeds our available insurance coverage or that leads to adverse changes in our insurance policies, including premium increases or the imposition of a large deductible or coinsurance requirement, could adversely affect our financial condition and results of operations. Our Company has however, not availed key man insurance policies. Further, our Company has not availed of business interruption / loss of profits insurance cover. 31. We cannot assure you that we will be able to secure adequate financing in the future on acceptable

terms, in time, or at all. Further, we cannot assure you that for the financing secured by us we will be able to continue servicing the principal amount, interest or both.

We may require additional funds in connection with future business expansion and development initiatives. In addition to the net proceeds of this Issue and our internally generated cash flow, we may need additional sources of funding to meet these requirements, which may include entering into new debt facilities with lending institutions or raising additional debt in the capital markets. If we decide to raise additional funds through the incurrence of debt, our interest obligations will increase, and we may be subject to additional covenants. Such financings could cause our debt to equity ratio to increase or require us to create charges or liens on our assets in favour of lenders. We cannot assure you that we will be able to secure adequate financing in the future on acceptable terms, in time, or at all. Our failure to obtain sufficient financing could result in the delay or abandonment of any of our business development plans and this may affect our business and future results of operations. 32. We have in the past entered into related party transactions and may continue to do so in the future. We have, in the course of our business, entered into transactions with related parties including entities forming part of our Promoter Group and our key managerial personnel. There can be no assurance that we could not have achieved more favourable terms had such transactions not been entered into with related parties. Such related party transactions may give rise to potential conflicts of interest with respect to dealings between us and the related parties. Furthermore, it is likely that we will continue to enter into related party transactions in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and results of operations. For details of related party transactions entered into by us please refer to the chapter “Financial Information- Annexure XXIV” beginning on page 193 of this Draft Letter of Offer.

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33. We are subject to restrictive covenants under our credit facilities that could limit our flexibility in managing the business.

The agreements governing our existing indebtedness contain restrictions and limitations, such as restriction on, utilization of facility solely for the purpose sanctioned, incurring further indebtedness, creating further encumbrances on our assets, effecting any scheme of amalgamation or restructuring and undertaking guarantee obligations. In addition, some of these borrowings may contain financial covenants, which require us to maintain, among other matters, positive net worth. We cannot assure you that we will be able to comply with these financial or other covenants or that we will be able to obtain the consents necessary to take the actions we believe are necessary to operate and grow our business. A default under one debt instrument may also trigger cross-defaults under our other debt instruments. An event of default under any debt instrument, if not cured or waived, could have a material adverse effect on us. 34. We may be exposed to claims for infringement of intellectual property rights of third parties. While we take all possible care to ensure that necessary consents are obtained from third parties for acquiring intellectual property rights relevant for exhibition of films and undertaking promotions thereof, we may be exposed to infringement claims by such third parties, which if determined against us, may impact our results of operation and our financial condition. 35. A significant portion of Net Proceeds would be utilised for repayment of loan and hence would not

result in creation of tangible assets. We intend to use a significant portion of the Net Proceeds towards repayment of a portion of the debt outstanding on the books of the Company. The Company proposes to utilise [●] % of the Issue Proceeds for repayment of debt. For further details on the use of the Issue Proceeds, please see the section "Objects of the Issue" beginning on page 40. The Issue proceeds shall not result in the creation of any tangible assets. 36. We have not entered into any definitive agreements to monitor the utilization of the Issue Proceeds. As per the SEBI ICDR Regulation, appointment of monitoring agency is required only for Issue size above ` 50,000 lakhs. Hence we have not appointed any monitoring agency and the deployment of Net Proceeds as stated in the “Objects of the Issue” beginning on page 40 of the Draft Letter of Offer is not subject to monitoring by any independent agency. Further, pending utilization of the Net Proceeds of the Issue, the management of our Company, in accordance with the policies formulated by it from time to time, will have flexibility in deploying the same. Our Company intends to temporarily invest the funds in interest bearing liquid instruments including investments in mutual funds and other financial products, such as principal protected funds, derivative linked debt instruments, other fixed and variable return instruments, listed debt instruments, rated debentures or deposits with banks as may be approved by the Board. For further details please refer the chapter titled “Objects of the Issue” beginning on page 40. RISKS ASSOCIATED WITH INDIA AND INVESTMENTS IN INDIAN COMPANIES 37. Our business is substantially affected by prevailing economic conditions in India. We are incorporated in India, and the majority of our assets and employees are located in India. As a result, we are highly dependent on prevailing economic conditions in India and our results of operations are significantly affected by factors influencing the Indian economy. Factors that may adversely affect the Indian economy, and hence our results of operations, may include:

• any increase in Indian interest rates or inflation; • any scarcity of credit or other financing in India, resulting in an adverse impact on economic

conditions in India;

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• prevailing income conditions among Indian consumers and Indian corporations; • volatility in, and actual or perceived trends in trading activity on, India’s principal Stock Exchanges; • changes in India’s tax, trade, fiscal or monetary policies; • political instability, terrorism or military conflict in India or in countries in the region or globally,

including in India’s various neighboring countries; • prevailing regional or global economic conditions, including in India’s principal export markets;

and • other significant regulatory or economic developments in or affecting India or its entertainment

industry.

Any slowdown or perceived slowdown in the Indian economy, or in specific sectors of the Indian economy, could adversely impact our business and financial performance and the price of the Equity Shares. 38. Natural disasters and health epidemics could have a negative impact on the Indian economy and

cause our business to suffer. India has experienced significant natural disasters in recent years such as earthquakes, tsunami, flooding and drought. The extent, location and severity of these natural disasters determine their impact on the Indian economy and our business. Further natural disasters could reduce economic activity in India generally and damage our multiplexes and theaters, which would adversely affect our business. Similarly global health epidemics could disrupt our business. In April 2009, Influenza A (H1N1), a highly contagious virus, was detected in Mexico and developed into a pandemic that affected certain regions of the world, including India. Any future outbreak of health epidemics may restrict the level of business activity in affected areas, which may in turn adversely affect our business and cause the trading price of the Equity Shares to decline. 39. The Indian entertainment sector is highly regulated and changes in regulations may have an

adverse effect on our business. The Indian entertainment sector is highly regulated by both the central and the state governments. These regulations and policies are highly detailed and extend to all aspects of building and safety requirements, specific preconditions to be met for licensing requirements, show tax and entertainment tax registrations and the pre-conditions for grant of exemptions from the payment of entertainment tax. These regulations and policies have an important impact on our ability to operate theaters and the viability of our multiplexes in different states. Changes in these regulations may have an adverse effect on our business or render the same unviable by increasing compliance requirements and compliance costs. 40. Any downgrading of India’s sovereign debt rating or a decline in India’s foreign exchange reserves may

adversely affect our ability to raise additional debt financing. Any adverse revisions by international rating agencies to the credit ratings of the Indian national government’s sovereign domestic and international debt may adversely affect our ability to raise additional financing by resulting in a change in the interest rates and other commercial terms at which we may obtain additional financing. This could have a material adverse effect on our capital expenditure plans, business and financial performance. A downgrading of the Indian national government’s debt rating may occur, for example, upon a change of government tax or fiscal policy outside our control.

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41. Our ability to freely raise foreign currency denominated debt outside India may be constrained by Indian law.

While we are eligible under the automatic approval route of foreign direct equity investment by the Government, at present, we are required to obtain regulatory approvals to raise foreign currency denominated indebtedness outside India. The need to obtain such regulatory approval for future indebtedness, if any, could limit our ability to raise funds necessary for us to grow our business, including to modernize our facilities and make strategic acquisitions. No assurance can be given that any required approvals will be obtained in a timely manner, or at all. 42. The proposed adoption of IFRS could result in our financial condition and results of operations

appearing materially different than under Indian GAAP. We may be required to prepare annual and interim financial statements under IFRS in accordance with the roadmap for the adoption of, and convergence with, IFRS announced by the Ministry of Corporate Affairs, GoI in January 2010. The convergence of certain Indian Accounting Standards with IFRS was notified by the Ministry of Corporate Affairs on February 25, 2011. The date of implementing such converged Indian accounting standards has not yet been determined, and will be notified by the Ministry of Corporate Affairs in due course after various tax-related and other issues are resolved. Our financial condition, results of operations, cash flows or changes in shareholders’ equity may appear materially different under IFRS than under Indian GAAP. This may have a material effect on the amount of income recognised during that period and in the corresponding period in the comparative period. In addition, in our transition to IFRS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems. 43. A significant change in the Government of India’s economic liberalization and deregulation policies

could disrupt our business and cause the price of the Equity Shares to decline. Our assets and customers are located in India. The government of India has traditionally exercised and continues to exercise a dominant influence over many aspects of the economy. Its economic policies have had and could continue to have a significant effect on private sector entities, including us, and on market conditions and prices of Indian securities, including the Equity Shares. The present Indian government is headed by the Indian National Congress and is a coalition of several political parties. Any significant change in the government’s policies or any political instability in India could adversely affect business and economic conditions in India and could also adversely affect our business, our financial performance and the price of the Equity Shares. 44. Investors may not be able to enforce a judgment of a foreign court against us. The enforcement by investors in the Equity Shares of civil liabilities, including the ability to affect service of process and to enforce judgments obtained in courts outside of India may be affected adversely by the fact that we are incorporated under the laws of the Republic of India and almost all of our executive officers and directors reside in India. Nearly all of our assets and the assets of our executive officers and directors are also located in India. As a result, it may be difficult to enforce the service of process upon us and any of these persons outside of India or to enforce outside of India, judgments obtained against us and these persons in courts outside of India. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Recognition and enforcement of foreign judgments are provided for under Section 13 and Section 44A of the Civil Procedure Code respectively. The Government of India has under Section 44A of the Civil Procedure Code notified certain countries as reciprocating countries, as discussed below. Section 13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent jurisdiction, (ii) where the judgment has not been given on the merits of the case, (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable, (iv) where the proceedings in

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which the judgment was obtained were opposed to natural justice, (v) where the judgment has been obtained by fraud, or (vi) where the judgment sustains a claim founded on a breach of any law in force in India. Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a court in any country or territory outside India, which the Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Procedure Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a similar nature or in respect of a fine or other penalties and does not include arbitration awards. The United Kingdom and some other countries have been declared by the Government to be a reciprocating territory for the purposes of Section 44A. However, the United States has not been declared by the Government to be a reciprocating territory for the purposes of Section 44A. A judgment of a court in the United States may be enforced in India only by a suit upon the judgment, subject to Section 13 of the Civil Procedure Code and not by proceedings in execution. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. Generally, there are considerable delays in the disposal of suits by Indian courts. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with public policy in India. A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the RBI under FEMA to repatriate any amount recovered pursuant to execution and any such amount may be subject to income tax in accordance with applicable laws. Any judgment or award in a foreign currency would be converted into Indian Rupees on the date of the judgment or award and not on the date of the payment. Generally, there are considerable delays in the processing of legal actions to enforce a civil liability in India, and therefore it is uncertain whether a suit brought in an Indian court will be disposed off in a timely manner or be subject to considerable delays. 45. Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries

could adversely affect our business and the Indian financial markets. Public places like theaters could and have in the past been targets for terrorist attacks and rioting. Any violence in public places such as theaters could cause damage to life and property, and also impact customer sentiment and their willingness to visit theaters, which would have a material adverse effect on our business and results of operations. Our insurance policies for assets cover, among other things, terrorism, fire and earthquakes. However, our insurance policies may not be adequate to cover the loss arising from these events, which could adversely affect our results of operations and financial condition. India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well as other adverse social, economic and political events in India could have an adverse impact on us. Regional or international hostilities, terrorist attacks or other acts of violence of war could have a significant adverse impact on international or Indian financial markets or economic conditions or on Government policy. Such incidents could also create a greater perception that investment in Indian companies involves a higher degree of risk and could have an adverse impact on our business and the price of the Equity Shares. 46. Investing in securities that carry emerging market risks can be affected generally by volatility in the

emerging markets. The markets for securities bearing emerging market risks, such as risks relating to India, are, to varying degrees, influenced by economic and securities market conditions in other emerging market countries. Although economic conditions differ in each country, investors’ reactions to developments in one country may affect securities of issuers in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets may cause increased volatility in Indian financial markets and the Indian economy in general. Any worldwide financial instability could also have a negative impact on

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the Indian economy, including the movement of exchange rates and interest rates in India, which could adversely affect the Indian financial sector in particular. Any such disruption could have an adverse effect on our Company’s business, future financial performance, financial condition and results of operations, and affect the price of the Equity Shares. Accordingly, the price and liquidity of the Equity Shares may be subject to significant fluctuations, which may not necessarily be directly or indirectly related to our financial performance. RISKS ASSOCIATED WITH THE EQUITY SHARES AND THIS ISSUE 47. Future issues or sales of Equity Shares by our Company may significantly affect the trading price of

the Equity Shares. The future issue of Equity Shares or the disposal of Equity Shares by any of our major Equity Shareholders or the perception that such issues or sales may occur may significantly affect the trading price of the Equity Shares. There is no restriction on our ability to issue Equity Shares or the relevant Equity Shareholders’ ability to dispose of their Equity Shares, and there can be no assurance that we will not issue Equity Shares or that any such Equity Shareholder will not dispose of, encumber, or pledge, its Equity Shares. 48. After this Issue, the price of the Equity Shares may be highly volatile. The prices of the Equity Shares on the Indian Stock Exchanges may fluctuate after this Issue as a result of several factors, including: • volatility in the Indian and global securities market or in the Rupee’s value relative to the U.S.

dollar, the Euro and other foreign currencies; • our profitability and performance; • perceptions about our future performance or the performance of Indian film / entertainment

companies in general; • performance of our competitors in the Indian film / entertainment industry and the perception in

the market about investments in the film / entertainment industry; • adverse media reports on us or the Indian film / entertainment industry; • changes in the estimates of our performance or recommendations by financial analysts; • significant developments in India’s economic liberalisation and deregulation policies; and • significant developments in India’s fiscal, environmental and other regulations.

There can be no assurance that an active trading market for the Equity Shares will be sustained after this Issue, or that the prices at which our Equity Shares have historically traded will correspond to the price at which the Equity Shares are offered in this Issue or the prices at which the Equity Shares will trade in the market subsequent to this Issue. The Indian stock markets have witnessed significant volatility in the past and the Equity Share price may be volatile and may decline post listing. 49. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect

your ability to sell, or the price at which you can sell, Equity Shares at a particular point in time. We are subject to a daily “circuit breaker” imposed by all Stock Exchanges in India, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Indian Stock Exchanges. The percentage limit on our circuit breakers is set by the Stock Exchanges based

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on the historical volatility in the price and trading volume of our Equity Shares. The Stock Exchanges do not inform us of the percentage limit of the circuit breaker in effect from time to time, and may change it without our knowledge. This circuit breaker limits the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance may be given regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity Shares at any particular time. 50. There is no guarantee that the Equity Shares will be listed on the BSE and the NSE in a timely

manner or at all, and any trading closures at the BSE and the NSE may adversely affect the trading price of the Equity Shares.

In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted until after those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorising the issuing of Equity Shares to be submitted. There could be a failure or delay in listing the Equity Shares on the BSE and / or the NSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in Europe and the U.S. Indian Stock Exchanges have in the past experienced problems, including temporary exchange closures, broker defaults, settlements delays and strikes by brokerage firm employees, which, if continuing or recurring, could affect the market price and liquidity of the securities of Indian companies, including the Equity Shares, in both domestic and international markets. A closure of, or trading stoppage on, the BSE and / or the NSE could adversely affect the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the future. 51. You may be subject to Indian taxes arising out of capital gains. Any gain realised on the sale of

equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognised stock exchange and as result of which no Securities Transaction Tax (STT) has been paid, will be subject to capital gains tax in India.

Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally taxable in India. Any gain realised on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if the STT has been paid on the transaction. The STT will be levied on and collected by a domestic stock exchange on which equity shares are sold. Any gain realised on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognised stock exchange and as result of which no STT has been paid, will be subject to capital gains tax in India. Further, any gain realised on the sale of listed equity shares held for a period of 12 months or less will be subject to capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from tax in India in cases where such exemption is provided under the tax treaty between India and the country of which the seller is a resident. Generally, Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of certain countries may be liable for tax in India, as well as in their own jurisdictions on gain upon a sale of the Equity Shares. 52. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares. The Indian securities markets are smaller and may be more volatile than securities markets in more developed economies. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in the U.S. and Europe. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. Indian stock exchanges have, in the past, experienced problems that have affected the market price and

xxvii

liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and increased margin requirements. Further, disputes have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity of the Equity Shares could be adversely affected. A closure of, or trading stoppage on, either the BSE or the NSE could adversely affect the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the future. There can be no assurance that an active trading market for the Equity Shares will be sustained after this Issue, or that the prices at which our Equity Shares have historically traded will correspond to the price at which the Equity Shares are offered in this Issue or the prices at which the Equity Shares will trade in the market subsequent to this Issue. The Indian stock markets have witnessed significant volatility in the past and the Equity Share price may be volatile and may decline post listing. 53. You will be subject to market risks until the Equity Shares credited to your demat account are listed

and permitted to trade. You can start trading the Equity Shares allotted to you only after they have been credited to your demat account, and are listed and permitted to trade on the Stock Exchanges. Pursuant to Indian regulations, certain actions must be completed before the Equity Shares can be listed and trading may commence. The investors’ book entry or “demat” accounts with Depository Participants in India are expected to be credited within two Working Days of the date of allotment. Thereafter, upon receipt of final approval from the Stock Exchanges trading in the Equity Shares is expected to commence within seven Working Days of the date on which the basis of allotment is approved by the Designated Stock Exchange. Since our Equity Shares are currently traded on the Stock Exchanges, you will be subject to market risk from the date you pay for the Equity Shares to the date when trading approval is granted for the same. Further, there can be no assurance that the Equity Shares allocated to you will be credited to your demat account or that trading in the Equity Shares will commence in a timely manner. This risk factor is for the information of investors and does not in any way dilute the right of investors and our obligations.

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PROMINENT NOTES 1. This is an Issue of [●] Equity Shares at a premium of ` [●] per Equity Share for an amount not

exceeding ` 9,000 lakhs on a rights basis to the existing Equity Shareholders of our Company in the ratio of [●] Equity Share(s) for every [●] fully paid-up Equity Share(s) held by the existing Equity Shareholders on the Record Date.

2. The net worth of our Company ((Equity Share capital + securities premium + reserves and surplus

(excluding revaluation reserve) – miscellaneous expenditure (to the extent not adjusted or written off) - deficit in profit and loss account)) as on March 31, 2011 was ` 7,312.07 lakhs. The net asset value (net worth / number of Equity Shares outstanding) of our Company as on March 31, 2011 was ` 20.92.

3. We have, in the course of our business, entered into transactions with related parties including entities

forming part of our Promoter Group and our key managerial personnel. For details of related party transactions entered into by us please refer to the chapter “Financial Information- Annexure XXIV” beginning on page 193 of this Draft Letter of Offer.

4. There has been no financing arrangement whereby the Promoter Group, the Directors of the Company,

who are the Promoters and their relatives, have financed the purchase by any other person of securities of our Company other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing of the Draft Letter of Offer with SEBI.

5. All information shall be made available by the Lead Manager and our Company to the public and

investors at large and no selective or additional information would be available only to a section of investors in any manner whatsoever.

6. The Lead Manager and our Company shall update this Draft Letter of Offer and keep our shareholders

/ public informed of any material changes till listing and trading permission in respect of the Equity Shares is received.

Investors may contact the Lead Manager for any complaint, clarifications and information pertaining to the Issue. Any clarification or information relating to this Issue shall be made available by the Lead Manager to the public and investors at large and no selective or additional information would be made available only to a section of the investors in any manner. All grievances relating to ASBA process may be addressed to the Registrar to the Issue, with a copy to the relevant SCSBs, giving full details such as name, address of the applicants, application number, number of Equity Shares applied for, Bid Amounts blocked, ASBA Account number and the Designated Branch of the SCSBs where the ASBA Bid-cum-Application Form has been submitted by the ASBA Bidder. For contact details please refer to the chapter titled “General Information” beginning on page 21.

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SECTION III – INTRODUCTION

SUMMARY OF INDUSTRY

The information presented in this section has been obtained from publicly available documents from various sources, including officially prepared materials from the Government of India and its various ministries, industry websites and the FICCI – KPMG Indian Media and Entertainment Industry Report 2010 and 2011. Industry websites and publications generally state that the information contained therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe industry, market and government data used in this Draft Letter of Offer is reliable, it has not been independently verified. The FICCI – KPMG Indian Media and Entertainment Industry Report 2010 and 2011 endeavors to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. These reports expressly disclaim legal responsibility and liability of the person / organisation preparing the report for any loss or damage resulting from the contents of such reports. Accordingly, our Company and the Lead Manager do not take any responsibility for the data, projections, forecasts, conclusions or any other information contained in this section. Certain information contained herein pertaining to prior years is presented in the form of estimates as they appear in the respective reports/ source documents. The actual data for those years may vary significantly and materially from the estimates so contained. Indian Economy India, the world’s largest democracy with a population of 1.19 billion people had a GDP on purchasing power parity basis of approximately US$ 4.05 trillion in 2010. This makes India the fifth largest economy in the world after the European Union, United States of America, China and Japan in purchasing power terms. Source: CIA World Fact Book The Indian economy has emerged with remarkable rapidity from the slowdown caused by the global financial crises of 2007-09. India achieved 9.3% GDP growth in FY 2007-08, 6.8% GDP growth in FY 2008-09 and 8% GDP growth in FY 2009-10. Source: Economic Survey 2010-11 The following table sets forth the key indicators of the Indian Economy in the past five financial years:

Data categories and

components

Units 2005-06 2006-07 2007-08 2008-09 2009-10

Growth Rate % 9.5 9.6 9.3 6.8 8.0 Index of industrial production# (growth)

% 8.0 11.9 8.7 3.2 10.5

Inflation (Wholesale price index) (12 month average)

% change 4.3 6.5 4.8 8.0 3.6

Foreign Exchange Reserves

US$ billion 151.6 199.2 309.7 252.0 279.1

2

#The annual growth rates have been recompiled from 2005-06 onwards since the indices have been recompiled from April 2004 onwards using new series of wholesale price index and index of industrial production. Source: Economic Survey 2010-11 Indian Media and Entertainment Industry The Indian M&E industry grew from ` 587 billion in 2009 to ` 652 billion in 2010, registering an overall growth of 11 percent. Backed by positive industry sentiment and growing media consumption, the industry is estimated to achieve growth of 13 percent in 2011 to touch ` 738 billion. As the industry braces for exciting times ahead, the sector is projected to grow at a CAGR of 14 percent to reach ` 1,275 billion by 2015. The Indian M&E industry has evolved significantly over the last decade and the pace of this evolution is only expected to increase going forward. Overcoming the gloom that had set in during the economic slowdown of 2008-09, the Indian Media and Entertainment (M&E) industry bounced back in 2010 registering a growth rate of 11 percent compared to a mere 1.4 percent in 2009. The overall industry size is as follows:

Overall Industry

size (` Bn)

2007 2008 2009 2010 CAGR (2007-

10)

2011P 2012P 2013P 2014P 2015P CAGR (2010-

15)

Television 211 241 257 297 12% 341 389 455 533 630 16% Print 160 172 175 193 6% 211 231 254 280 310 10% Film 93 104 89 83 -3% 91 98 109 120 132 10% Radio 7 8 8 10 11% 12 15 18 21 25 20% Music 7 7 8 9 5% 9 11 13 16 19 17% Out of Home

14 16 14 17 6% 19 22 24 27 30 12%

Animation and VFX

14 17 20 24 18% 28 33 40 47 56 19%

Gaming 4 7 8 10 32% 13 17 23 31 38 31% Digital

Advertising 4 6 8 10 39% 13 18 22 28 36 28%

Total 516 579 587 652 8% 738 834 957 1,104 1,275 14% Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2011 Indian Film Industry 2010 was a challenging year for the Indian film industry as most films failed to create a mark at the box office. The Indian film industry was estimated to be ` 83.3 billion in 2010, indicating a decline of 6.7 percent in overall industry revenues vis-a-vis 2009. The industry believes that lack of quality content led to an overall drop in occupancy levels and box office collections. While overseas theatrical revenues experienced some decline; it was the home video segment that witnessed a steep fall in revenues. Cable and Satellite rights experienced a healthy growth of 33 percent owing to growing demand from broadcasters. Ancillary revenue streams also witnessed a growth of 15 percent over 2009. Size of the Indian film industry:

Film Industry

(` Bn)

2007 2008 2009 2010 CAGR (2007-

10)

2011P 2012P 2013P 2014P 2015P CAGR (2010-

14) Domestic Theatrical

71.5 80.2 68.5 62.0 -4.6% 67.4 72.2 79.2 87.0 94.8 8.9%

Overseas Theatrical

8.7 9.8 6.8 6.6 -8.8% 6.7 7.2 7.9 8.7 9.5 7.5%

Home Video

3.3 3.8 4.3 2.3 -11.0% 2.5 2.6 2.8 2.9 3.0 5.0%

3

Cable & Satellite Rights

6.2 7.1 6.3 8.3 10.3% 9.6 11.0 12.6 14.5 16.6 14.8%

Ancillary Revenue Streams

2.9 3.5 3.5 4.1 11.4% 4.7 5.4 6.2 7.1 8.2 15.0%

Total 92.7 104.4 89.3 83.3 -3.5% 90.9 98.4 108.6 120.1 132.1 9.6% Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2011

Overall Industry Size

Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2011

CAGR 10 %

4

SUMMARY OF BUSINESS

Overview We are engaged in the business of operating and managing a chain of multiplexes in India. In addition to our primary business of multiplex operation we are also involved in the business of distribution through our subsidiary Fame Motion Pictures Limited (‘FMPL’). In our multiplex business we have a wide presence across 13 cities with 24 multiplexes and (3) three single screens aggregating to 102 screens and 28,518 seats. On February 3, 2010, Inox Leisure Limited (“ILL”) acquired 43.28% of share capital of our Company under the terms of the Share Purchase Agreement followed by acquisition of additional Equity Shares to the extent of 7.21% from open market on February 5, 2010. Pursuant to these acquisitions, ILL made an open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997 to the Equity Shareholders of our Company to acquire 8,231,759 Equity Shares of ` 10 each fully paid up. Post the conclusion of the open offer, ILL held 50.27% of the then issued and paid up equity share capital of our Company. Accordingly, our Company became a subsidiary of ILL with effect from January 6, 2011. Our Company has two wholly owned subsidiaries namely FMPL and Big Pictures Hospitality Services Private Limited (‘BPHSPL’). FMPL is engaged in the business of film distribution and BPHSPL is engaged in the food court business. Further, our Company has made investment in (2) two joint venture companies namely, Swanston Multiplex Cinemas Private Limited (‘SMCPL’) and Headstrong Films Private Limited (‘HFPL’), in each of which we hold 50% of the paid-up equity share capital. SMCPL is engaged in the business of operating multiplexes while HFPL is engaged in the business of film production and distribution. For Fiscal Year 2010 and Fiscal Year 2011 our total income was ` 17,587.72 lakhs and ` 17,276.23 lakhs respectively. For the same periods our net loss after tax was ` 120.57 lakhs and ` 412.17 lakhs respectively. Multiplex operation business We operate a chain of multiplexes and theaters under the brand name ‘FAME’. As of the date of this Draft Letter of Offer, we operated 27 multiplexes and theatres with a total of 102 screens and 28,518 seats. In Fiscal Year 2011 we served 106.98 lakh patrons. Income from multiplex operation primarily comprises income from theatrical exhibition (i.e. ticket sales net of taxes paid / payable and discounts), sale of food and beverage, management fees, advertisement and royalty income. For the Fiscal Year 2010 and Fiscal Year 2011, our income from multiplex operations amounted to ` 15,395.09 lakhs and ` 16,395.69 lakhs contributing 87.53 % and 94.90 % to our total income respectively. We typically enter into long term agreements for the premises where our multiplexes and theaters are situated. With the exception of our multiplex in Anand which is situated on our own property and with the exception of a multiplex each in Surat, Kolkata and Baroda which are only managed by us, all our multiplexes and theaters are located on leased premises whereby we incur the capital expenditure in setting up the multiplex. For the multiplexes managed by us we typically get a revenue / profit share with or without minimum guarantee. The table below provides details of our multiplexes and theaters: Sr. No

City Location Screens Seats Commencement Date Owned/ leased

property Properties under Fame India Limited 1 Mumbai Inorbit Mall, Malad 7 1,591 September 2004 Leased

5

Sr. No


property Properties under Fame India Limited 2 Raghu Leela Mall, Kandivali 4 1,275 June 2005 Leased 3 Thakur Fame, Dahisar 4 1,784 August 2007 Leased 4 Thakur Movie 1 418 October 2007 Leased 5 Raghuleela Vashi 6 1,015 July 2008 Leased 6 Neelyog Mall, Ghatkopar 4 1,268 December 2008 Leased 7 Kalyan 5 1,320 July 2009 Leased 8 Kolkatta Metropolitan Mall, Hiland

Park 4 979 December 2005 Leased

9 Southcity 6 1,426 March 2008 Leased 10 Pune Jai Ganesh Mall, Pimpri 3 1,009 May 2006 Leased 11 Fun N Shop 3 1,015 September 2009 Leased 12 Bengaluru

Shankarnag 1 612 March 2009 Leased

13 Whitefield 5 781 July 2009 Leased 14 Anand Anand 3 624 March 2007 Owned 15 Nasik Nashik Shirdi Road 3 1,318 November 2004 Leased 16 Aurangabad CIDCO, Aurangabad 3 1,012 December 2006 Leased 17 Baroda Seven Seas 4 1,116 July 2009 Leased 18 Dhanbad Shriram Mall 4 996 October 2008 Leased 19 Bharuch Shalimar Mall 3 890 October 2008 Leased 20 Panchkula Shalimar Mega Mall 3 652 February 2009 Leased 21 Chennai Chandra Metro Mall 5 1,327 July 2011 Leased Properties operated in joint venture 22 Bengaluru

(1) Lido 4 993 January 2008 Leased

23 Mumbai (2) Citi Mall, Andheri 5 1,282 April 2002 Leased 24 Mumbai (3) Nakshatra Mall, Dadar 1 280 October 2006 Leased Properties under management model 25 Surat Raj Empire Mall 6 1,840 June 2006 Managed 26 Baroda Vihar 3 994 December 2009 Managed 27 Kolkata Hind Fame 2 701 April 2011 Managed

Total 102 28,518 Our Company’s share of the joint venture- (1) 75% (2) 50% (3) 66% Distribution Business As a film distributor, to ensure maximization of the revenue potential of the film, we draw strategies on print and publicity and execute the same in terms of managing the logistics of distribution of prints, selection of exhibition locations, marketing, billing and collections etc. For the Fiscal Year 2010 and for the Fiscal Year 2011, our income from distribution business amounted to ` 1,762.48 lakhs and ` 471.49 lakhs contributing 10.02% and 2.73 % to our total income respectively.

6

Competitive Strengths Alliance with our corporate Promoter We are a subsidiary of ILL and benefit from the management and administration skills of our Promoter. We believe that the management and administration skills of our Promoter will enable us in enhancing revenue potential from corporate customers through ticket revenue, advertising deals, bulk bookings and marketing tie-ups etc. Further, this will help us in rationalization of our cost of raising capital, sourcing costs pertaining to various materials used for fit-outs, effectively leading to lower capital outlays for new properties and cost of repairs for existing properties. In addition, we believe that this alliance will help us in rationalizing other operating costs such as costs associated with food and beverage etc.

Leading brand with strong consumer recognition The ‘FAME’ brand over the years has been identified with high quality cinema viewing experience. We believe that our brand has been established in consumers’ mind and has a high recall value because of our sustained focus on providing convenience to our patrons. Our initiatives include facilities such as telephonic booking, internet booking, mobile ticketing, installation of kiosks and hosting of film premiers on a regular basis. We believe that our well recognized brand ensures that we are at the forefront of consumers’ mind leading to customer loyalty translating into repeat visits from existing patrons while simultaneously attracting new customers to our multiplexes and theaters. Driving growth through innovation and marketing We believe that our consistent innovation in a variety of marketing tools has helped us sustain the interest of our audience to a great extent. We regularly arrange for special screening of films and host premieres. We maintain a customer relationship management database which gives us an insight into all the varied movie watching patterns of the consumer through which we roll out customized specific offers for our patrons. Additionally, we undertake promotional activities like movie contests and festival related contests and showcase a variety of alternate viewing content like theatre plays, cricket matches and early morning shows. At our multiplexes and theaters, we engage our patrons in activities like lucky draw for seats and food and beverages combos which are bundled with free merchandise. We believe in spreading our presence by associating with television shows with high target rating point (“TRP”) and with radio channels to ensure that our promotions are well spread and are viewed by the final consumer. To target consumers in the high income brackets we have introduced recliners in many of our theaters even in tier II cities such as Nasik and Aurangabad. Our Strategy Further expansion in metropolitan cities and tier II cities One of the key factors for the success of any theater is its location. We have the requisite skills to identify various locations in terms of catchment area and spending patterns of the people. We intend to continue to improve our existing position and market share by establishing multiplexes in key markets that we consider to be of high growth potential and that will complement our existing network of multiplexes and theaters. We believe that as the disposable income of people in India rises, entertainment will be one of the major growth sectors in India. Our strategy is to position ourselves to capitalize on the continued growth of the entertainment sector in India. In particular, we aim to add more number of screens in the metropolitan cities in the north given the volume of audience and demand for hindi films in this region. Similarly, we aim to expand further into tier II cities in south India given the range of content which is available for exhibition.

7

Achieve growth through entering into management contracts While we continue to consider selective additions to our multiplexes, we view the pursuit of asset-light strategies as a key growth strategy. To this end, we actively seek and pursue the management model and will look at entering into management contracts as a means of providing a steady source of revenue. We currently manage a multiplex each at Surat, Baroda and Kolkata. By entering into management contracts for which we typically receive a management fee based on revenue / profits, we can expand our business without the need for substantial investment or capital expenditure. Under the management model, we provide guidance on design, specifications, fit outs and time schedule, advising on and managing all operational issues such as ticket pricing, staffing, concessions and other revenues, sales and marketing initiatives and screening programming. Enhancing our human capital Investing in human capital is a key part of our business strategy. We periodically assess and instruct our employees, particularly our ticketing and customer care associates across all levels to make them conscious to the needs of our consumers. Additionally, we aim to focus on various areas which we believe will enable us to retain and attract experienced and qualified employees by (i) aligning the interests of our employees with ours; (ii) spreading responsibility for achieving our business objectives throughout our organization; (iii) extending best practices amongst our employees; and (iv) to train and develop employees in building skills and capabilities with a focus on functional requirements and generic skills enhancements. We benchmark our compensation and benefits with industry standards to pay our associates accordingly.

8

SUMMARY FINANCIAL INFORMATION

The following tables set forth summary financial information derived from our standalone and consolidated restated financial information for and as of the financial year ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007. These financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations and are presented in “Financial Information” on page 95 of this Draft Letter of Offer.

Statement of restated profit and loss

( ` in lakhs) Particulars For the year ended

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Income Revenue from operations -- Sales and service income 12,245.96 11,595.09 8,987.68 6,495.93 4,448.81 -- Sale of food and beverage 3,660.29 3,272.51 2,359.43 1,460.74 868.95 Other income 216.99 205.83 281.06 524.02 896.52

Total (A) 16,123.23 15,073.43 11,628.17 8,480.69 6,214.28 Expenditure Direct cost 5,771.61 5,311.58 3,712.20 2,510.21 1,692.56 Personnel cost 1,556.06 1,309.06 1,345.41 1,036.49 648.23 Other administrative expenses 6,851.31 6,274.35 5,039.38 3,027.37 2,041.75 Depreciation / amortisation 1,709.74 1,697.59 1,161.67 603.90 435.09 Interest 608.30 688.55 488.74 299.99 355.43 Amortisation of Foreign Currency Monetary Item Translation Difference Account ('FCMITDA') (76.31) (64.37) 13.58 (76.44) -

Total (B) 16,420.71 15,216.76 11,760.98 7,401.52 5,173.06 Restated net profit / (loss) before tax and extra-ordinary items (A-B) (297.48) (143.33) (132.81) 1,079.17 1,041.22

Provision for tax -- Current tax - - - 118.99 62.72 -- Minimum Alternate Tax (‘MAT’)

credit - - - (118.99) (62.72) -- Fringe benefits tax - - 23.00 26.50 13.18 Restated net profit / (loss) before extra-ordinary items (297.48) (143.33) (155.81) 1,052.67 1,028.04 Extra-ordinary items - - - - -

Restated net profit / (loss) after adjustment and extra-ordinary items (297.48) (143.33) (155.81) 1,052.67 1,028.04

Restated profit / (loss) brought forward from previous year 879.29 1,022.62 1,178.43 125.76 (902.28) Restated balance carried forward to statement of restated assets and liabilities 581.81 879.29 1,022.62 1,178.43 125.76

9

Statement of restated assets and liabilities

( ` in lakhs) Particulars As at

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

A Fixed assets (i) Gross block 18,475.00 18,591.41 15,405.91 9,134.48 5,638.41

Less : Accumulated

depreciation / amortisation 6,009.38 4,385.98 2,701.97 1,560.01 956.87 Net block 12,465.62 14,205.43 12,703.94 7,574.47 4,681.54

(ii) Capital work in progress /

advances 2,094.93 1,274.29 3,467.89 2,858.30 1,473.00 Total fixed assets 14,560.56 15,479.72 16,171.83 10,432.77 6,154.54B Investments 2,086.06 2,135.56 2,227.18 2,698.01 2,491.55C Foreign Currency Monetary Item

Translation Difference Account ('FCMITDA') - - 27.16 - -

D Current assets, loans and advances

(i) Inventories 75.46 70.38 51.70 31.03 20.22 (ii) Sundry debtors 670.23 385.99 129.75 222.21 310.91 (iii) Cash and bank balances 1,726.72 2,173.03 1,875.49 2,073.36 6,758.39 (iv) Loans and advances 5,275.21 6,548.04 5,919.78 5,773.13 3,808.24 7,747.63 9,177.45 7,976.72 8,099.73 10,897.76

Total assets (A+B+C+D) 24,394.24 26,792.72 26,402.88 21,230.51 19,543.85E Liabilities and provisions Secured loans 3,289.02 6,038.42 4,666.10 2,043.03 2,311.19 Unsecured loans 8,197.15 7,030.30 8,176.00 6,550.60 9,700.50

Foreign Currency Monetary Item Translation Difference Account ('FCMITDA') - 64.37 - 229.32 -

Current liabilities and provisions 6,020.21 5,759.40 5,202.92 3,208.69 2,000.69 Total liabilities and provisions 17,506.39 18,892.49 18,045.02 12,031.64 14,012.38 Net worth (A+B+C+D-E) 6,887.85 7,900.23 8,357.87 9,198.87 5,531.47F Represented by (i) Share capital -- Equity share capital 3,494.70 3,479.53 3,479.53 3,479.53 3,158.95 -- Preference share capital 0.10 0.10 0.10 0.10 0.10 3,494.80 3,479.63 3,479.63 3,479.63 3,159.05 (ii) Reserves and surplus -- Securities premium 2,811.14 3,541.21 3,855.52 4,540.71 2,246.56 -- Capital redemption reserve 0.10 0.10 0.10 0.10 0.10 -- Profit and loss account 581.81 879.29 1,022.62 1,178.43 125.76 3,393.05 4,420.60 4,878.24 5,719.24 2,372.42

Net worth 6,887.85 7,900.23 8,357.87 9,198.87 5,531.47

10

Statement of restated cash flow

( ` in lakhs) Particulars For the year ended 31 March

2011 31 March

2010 31 March

2009 31 March

2008 31 March

2007

Cash flow from operating activities Profit / (loss) for the year before tax and extra-ordinary items (297.48) (143.33) (132.81) 1,079.17 1,041.22

Adjustments for: Depreciation / amortization 1,709.74 1,697.59 1,161.67 603.90 435.09 Amortisation of FCMITDA (76.31) (64.37) 13.58 (76.44) - Bad debts 2.27 8.19 8.43 13.23 14.51 Provision for doubtful debts / advances 6.36 20.34 108.65 39.84 15.80 Provision for diminution for value of investments 13.00 - - - - Advances and receivables written off to profit and loss account 37.00 94.63 - - - Payable written back to profit and lossaccount - (4.63) - - - Interest expense 608.30 688.55 488.74 299.99 355.43 Loss on sale of fixed assets, net / assetwritten off 21.94 14.35 3.50 0.44 2.24 Dividend from non-trade investments (0.95) (12.96) (78.25) (73.23) (91.56) Interest on National Saving Certificates (‘NSCs’) (4.34) (17.25) (15.63) (16.27) (12.00) Interest – others (0.61) (0.20) (1.05) (130.82) (405.13) Interest on fixed deposits (94.67) (113.55) (156.03) (149.94) (133.77) Unrealised foreign exchange gain, net - - (0.19) (186.13) (123.09) Profit on sale of investments (net) (2.34) - (0.28) (3.58) (0.15)

Operating profit before changes in working capital 1,921.93 2,167.36 1,400.33 1,400.16 1,098.59 Adjustments for: Decrease / (increase) in working capital Sundry debtors (292.87) (280.15) 54.91 36.53 (143.63) Loans and advances 1,068.98 (390.11) (123.27) (1,769.50) (1,533.45) Inventories (5.09) (18.68) (20.67) (17.47) (12.68) Current liabilities 120.56 392.16 604.12 432.44 305.89 Provisions (2.56) 2.48 26.95 (8.04) 16.60

Net changes in working capital 889.02 (294.30) 542.04 (1,326.04) (1,367.27)

11

Statement of restated cash flow (Continued)


31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Direct taxes paid (including fringe benefits tax) (53.53) (69.90) (149.34) (175.95) (77.02)

Net cash generated from / (used in) operations 2,757.41 1,803.16 1,793.03 (101.83) (345.70)

Cash flow from investing activities Purchase of fixed assets (1,377.09) (2,142.90) (5,125.61) (4,502.27) (2,574.52) Proceeds from sale of fixed assets 47.57 0.71 - 0.20 7.57 Proceeds from sale of investment in mutual funds 2,588.02 3,788.58 1,151.38 1,121.10 1,403.94 Purchase of investment in mutual funds (2,585.68) (3,788.58) (650.07) (1,323.98) (1,203.96) Purchase of NSCs - (8.38) (4.70) - - Investment in the equity share capital of Headstrong Films Private Limited (‘HFPL’) - - (0.50) - - Share application money paid to HFPL - - (25.00) - - Share application money paid to Swanston Multiplex Cinemas Private Limited (‘SMCPL’) - (125.00) - - - Dividend received 5.50 8.41 86.27 65.21 91.56 Interest received 161.31 107.29 204.05 273.79 532.56 Refund of share application money 12.50 Proceeds on maturity of NSCs 124.00 - - - -

Net cash (used in) investing activities (1,023.88) (2,159.87) (4,364.18) (4,365.95) (1,742.85)

12



31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Cash flow from financing activities Proceeds from issue of share capital 15.18 - - 1.29 2.30Share premium received 6.78 - - 2.58 4.60 Proceeds from issue of Foreign Currency Convertible Bonds (‘FCCBs’) - - - - 9,010.00 FCCB issue expenses - - - - (249.09) Interest paid (690.49) (779.74) (438.21) (317.58) (349.99) Vehicle loan repaid - - (0.20) (4.35) (10.27) Term loans from banks taken - 2,500.00 3,900.00 500.00 763.21 Term loans from banks repaid (2,920.27) (1,807.92) (667.80) (698.40) (1,213.50) Secured loan / bank overdraft disbursed during the year (net) 183.94 680.91 (618.68) (65.40) (477.82) Unsecured loans taken 1,425.00 1,166.00 650.00 595.00 615.00 Unsecured loans repaid (200.00) (1,105.00) (452.00) (223.00) (930.00) Net cash (used in) / generated from financing activities (2,179.86) 654.25 2,373.11 (209.86) 7,164.44 Net (decrease) / increase in cash andcash equivalents (446.32) 297.54 (198.04) (4,677.64) 5,075.89 Cash and cash equivalents at the beginning of the year 2,173.03 1,875.49 2,073.36 6,758.39 1,851.41 Effect of exchange gain on cash and cash equivalents - - 0.17 (7.39) (168.91) Cash and cash equivalents at the endof the year 1,726.72 2,173.03 1,875.49 2,073.36 6,758.39 Cash and cash equivalents at the / year end comprise: Cash on hand 21.26 23.81 18.38 27.22 31.40 Balances with Scheduled banks in -- Deposit accounts 1,427.98 1,426.00 1,670.52 1,648.64 6,600.70 -- Current accounts 277.48 723.22 185.78 315.99 93.92 Balances with other banks in -- Current accounts - - 0.81 81.51 32.37 1,726.72 2,173.03 1,875.49 2,073.36 6,758.39 Refer Note - 1,195.06 1,600.00 1,850.00 1,850.00

13


Note:

1 Cash and cash equivalents include un-utilised amount of the public issue, which has been temporarily invested in fixed deposits / mutual funds.

2 Cash and cash equivalents include amounts pledged against bank guarantees issued and pledged against bank overdraft. Further, the cash flows related to the respective projects are required to be routed through the accounts maintained with the respective banks.

3 The cash flow statement has been prepared under the indirect method as set out in Accounting Standard 3 (AS -3) on Cash flow statement.

4 To be read together with Statement of significant accounting policies (Annexure IV) and Statement of changes and Notes to statement of restated profit and loss and restated assets and liabilities (Annexure V) in Financial Information on page 95.

14

Statement of consolidated restated profit and loss

(` in lakhs) Particulars For the Year ended

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Income

Revenue from operations

-- Sales and service income 13,218.76 13,928.89 11,204.70 7,803.53 7,878.52 -- Sale of food and beverage 3,816.13 3,420.66 2,535.18 1,638.19 1,053.21 Other income 241.33 238.17 240.26 518.76 866.32 Total (A) 17,276.23 17,587.72 13,980.14 9,960.48 9,798.05

Expenditure Direct cost 6,508.82 7,242.02 5,399.55 3,242.67 4,284.47 Personnel cost 1,663.42 1,435.95 1,484.87 1,189.27 797.24 Other administrative expenses 7,320.55 6,706.05 5,334.51 3,399.36 2,407.32 Depreciation / amortisation 1,774.95 1,765.76 1,239.53 720.82 893.60 Interest 507.31 582.66 395.51 221.50 311.32 Amortisation of Foreign Currency Monetary Item Translation Difference Account ('FCMITDA') (76.31) (64.37) 13.58 (76.44) - Total (B) 17,698.74 17,668.07 13,867.55 8,697.18 8,693.95

Restated net profit / (loss) before tax and extra-ordinary items (A-B) (422.51) (80.35) 112.59 1,263.30 1,104.10 Provision for tax -- Current tax 1.65 19.14 106.86 162.13 87.22 -- Deferred tax charge / (release) (10.62) 21.08 (4.01) (53.24) (5.48) -- Minimum Alternate Tax (‘MAT’) credit (1.37) - - (118.99) (62.71) -- Fringe benefits tax - - 25.05 28.68 15.13 Restated net profit / (loss) before extra-ordinary items (412.17) (120.57) (15.31) 1,244.72 1,069.95 Extra-ordinary items - - - - - Restated net profit / (loss) after adjustment and extra-ordinary items (412.17) (120.57) (15.31) 1,244.72 1,069.95 Restated profit / (loss) brought forward from previous year 1,329.84 1,450.41 1,481.69 249.05 (795.98) Less: Appropriations -- Transferred to general reserve - - (3.22) (2.73) (12.64) -- Tax on dividend - - (12.75) (9.35) (12.28) - - (15.97) (12.08) (24.92) Restated balance carried forward to consolidated statement of restated assets and liabilities 917.67 1,329.84 1,450.41 1,481.69 249.05

15

Statement of consolidated restated assets and liabilities (` in lakhs)

Particulars As at 31 March

2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007 (A) Fixed assets

(i) Gross block 19,109.19 19,428.05 18,918.68 12,649.00 9,106.27 Less : Accumulated depreciation / amortisation 6,552.37 5,057.98 6,003.95 4,805.49 4,085.43

Net block 12,556.82 14,370.07 12,914.73 7,843.51 5,020.84 (ii) Capital work in progress /

advances 2,094.93 1,274.29 3,521.13 2,911.54 1,474.30

Total fixed assets 14,651.75 15,644.36 16,435.86 10,755.05 6,495.14

(B) Goodwill on consolidation 467.30 467.30 467.30 467.18 467.18

(C) Investments 29.10 208.88 134.30 687.05 501.54 (D) Foreign Currency Monetary

Item Translation Difference Account ('FCMITDA') - - 27.16 - -

(E) Deferred tax asset – net 35.40 24.78 45.86 41.85 - (F) Current assets, loans and

advances

(i) Inventories 78.04 84.93 58.32 32.12 21.61

(ii) Sundry debtors 792.76 701.73 625.97 617.68 532.98

(iii) Cash and bank balances 1,879.26 2,309.95 2,052.84 2,158.27 6,897.08

(iv) Loans and advances 5,473.25 6,790.26 6,131.70 6,014.66 4,746.72 8,223.31 9,886.87 8,868.83 8,822.73 12,198.39

Total assets (A+B+C+D+E+F) 23,406.86 26,232.19 25,979.31 20,773.85 19,662.25

(G) Liabilities and provisions

Secured loans 3,289.02 6,038.42 4,666.10 2,043.03 2,315.35

Unsecured loans 6,558.65 5,416.80 6,623.50 5,196.10 8,743.00 Foreign Currency Monetary Item Translation Difference Account ('FCMITDA') - 64.37 - 229.32 -

Deferred tax liability (net) - - - - 11.39 Current liabilities and provisions 6,215.43 6,241.78 5,783.99 3,686.45 2,823.64

Total liabilities and provisions 16,063.10 17,761.37 17,073.59 11,154.89 13,893.38

(H) Net worth (A+B+C+D+E+F-G) 7,343.76 8,470.82 8,905.72 9,618.96 5,768.87

16

Particulars As at

31 March 2011

As at 31 March

2010

As at 31 March 2009

As at 31 March

2008

As at 31 March

2007 (I) Represented by

(i) Share capital -- Equity share capital 3,494.70 3,479.53 3,479.53 3,479.53 3,158.95 3,494.70 3,479.53 3,479.53 3,479.53 3,158.95 (ii) Reserves and surplus -- Securities premium 2,811.14 3,541.21 3,855.53 4,540.71 2,246.56 -- Capital redemption

reserve 0.10 0.10 0.10 0.10 0.10 -- General reserve 120.15 120.15 120.15 116.93 114.21 -- Profit and loss

account 917.67 1,329.84 1,450.41 1,481.69 249.05 3,849.06 4,991.30 5,426.19 6,139.43 2,609.92 Net worth 7,343.76 8,470.83 8,905.72 9,618.96 5,768.87

17

Statement of consolidated restated cash flows ( ` in lakhs)

Particulars

31 March

2011

For the year ended 31 March

2010 31 March

2009 31 March

2008 31 March

2007

Cash flow from operating activities

Profit / (loss) for the year before tax and extra-ordinary items (422.51) (80.35) 112.59 1,263.30 1,104.10

Adjustments for :

Depreciation / amortisation 1,774.95 1,765.76 1,239.53 720.82 893.60

Amortisation of FCMITDA (76.31) (64.37) 13.58 (76.44) -

Bad debts 5.88 149.87 20.69 22.41 27.00

Provision for doubtful debts / advances 57.85 43.69 57.51 48.58 18.29 Advances and receivables written off to profit and loss account 37.84 94.63 - - - Payable written back to profit and loss account (9.71) (17.70) (0.06) (25.98) (5.24)

Interest expense 507.31 582.66 395.51 221.50 311.32

Loss on sale of fixed assets, net / asset written off 22.83 19.61 6.99 0.44 4.24

Dividend from non-trade investments (8.13) (14.16) (5.45) (23.37) (8.41) Interest on National Saving Certificates (‘NSCs’) (4.34) (17.25) (15.63) (16.27) (12.00)

Interest – others (0.61) (0.20) (1.24) (130.82) (10.74)

Interest on fixed deposit (97.66) (116.99) (158.47) (152.81) (533.53)

Unrealised foreign exchange gain, net - - (0.19) (186.13) (123.09) Amortisation of pre-operative expenses - - - 19.94 2.16

Provision for doubtful debts / advances reversed - (35.28) - - -

Profit on sale of investments (net) (2.34) - (0.28) (3.58) (0.16)

Amortisation of stock 12.01 - - - -

Operating profit before changes in working capital 1,797.06 2,309.92 1,665.08 1,681.59 1,667.54

Adjustments for : Decrease / (increase) in working capital

Sundry debtors (140.59) (272.49) (58.71) (153.23) (54.79)

Loans and advances 1,106.36 (561.04) (97.91) (1,337.73) (1,545.63)

Inventories (5.88) (26.60) (26.21) (17.17) (13.12)

Current liabilities (146.32) 452.58 734.50 328.68 648.18

Provisions (8.60) 2.59 53.48 (8.50) 17.63 Preoperative expenses - - - - (23.75)

Net changes in working capital 804.97 (404.96) 605.15 (1,187.95) (971.48) Direct taxes paid (including fringe benefits tax) (66.42) (117.90) (255.47) (217.80) (106.05) Net cash generated from / (used in) operations 2,535.61 1,787.06 2,014.76 275.84 590.01

18

Statement of consolidated restated cash flows (Continued)

(` in lakhs)

Particulars 31 March

2011

For the year ended

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Cash flow from investing activities

Purchase of fixed assets (1,378.28) (2,175.50) (5,151.05) (4,594.67) (3,159.32)

Proceeds from sale of fixed assets 56.12 0.81 1.75 0.19 8.50

Proceeds on maturity of NSCs 124.00 - - - - Proceeds from sale of investment in mutual funds 2,850.98 3,788.57 1,210.00 1,331.10 1,533.98 Purchase of investment in mutual funds (2,692.86) (3,954.78) (652.27) (1,513.03) (1,293.02)

Purchase of NSCs - (8.38) (4.70) - -

Dividend received 12.68 9.61 13.47 15.36 8.41

Interest received 164.94 110.30 206.65 276.74 537.33 Net cash (used in) investing activities (862.43) (2,229.37) (4,376.15) (4,484.31) (2,364.12)

Cash flow from financing activities Proceeds from issue of share capital 15.18 - - 1.29 2.30 Share premium received 6.78 - - 2.58 4.60 Proceeds from issue of Foreign Currency Convertible Bonds (‘FCCBs’) - - - - 9,010.00 FCCB issue expenses - - - - (249.09)

Interest paid (589.50) (673.57) (344.79) (220.17) (321.12) Dividend distribution tax paid - - (12.75) (9.35) (12.28) Vehicle loan repaid - - (0.20) (4.35) (10.27) Term loans from banks taken - 2,500.00 3,900.00 500.00 763.21 Term loans from banks repaid (2,920.27) (1,807.92) (667.80) (702.57) (1,213.51) Secured loan / bank overdraft disbursed during the year (net) 183.94 680.91 (618.67) (65.41) (545.94) Unsecured loans taken 1,200.00 - - - - Unsecured loans repaid - - - (25.00) (536.00)

Net cash (used in) / generated from financing activities (2,103.87) 699.42 2,255.79 (522.98) 6,891.90

Net (decrease) / increase in cash and cash equivalents (430.69) 257.11 (105.60) (4,731.45) 5,117.79 Cash and cash equivalents at the beginning of the year 2,309.95 2,052.84 2,158.27 6,897.08 1,948.20 Effect of exchange gain on cash and cash equivalents - - 0.17 (7.36) (168.91) Cash and cash equivalents at the end of the year 1,879.26 2,309.95 2,052.84 2,158.27 6,897.08

19

Statement of consolidated restated cash flows (Continued)

(` in lakhs)

Particulars

31 March 2011

For the year ended

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Cash and cash equivalents at the year end comprise:

Cash on hand 22.64 27.24 21.73 29.75 37.24

Cheques on hand - - - - 12.72

Balances with Scheduled banks in

-- Deposit accounts 1,449.06 1,474.64 1,732.84 1,730.35 6,632.75

-- Current accounts 407.56 808.07 297.46 316.66 182.00

Balances with other banks in

-- Current accounts - - 0.81 81.51 32.37

1,879.26 2,309.95 2,052.84 2,158.27 6,897.08

Note - 1,195.06 1,600.00 1,850.00 1,850.00

Note:




4 To be read together with Statement of significant accounting policies adopted by the Group in preparing its consolidated financial statement (Annexure XXI) and Statement of changes and notes to statement of consolidated restated profit and loss and statement of consolidated restated assets and liabilities (Annexure XXII) in Financial Information on page 95.

20

THE ISSUE The following is a summary of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, more detailed information in “Terms of the Issue” on page 295 of this Draft Letter of Offer. Equity Shares outstanding prior to the Issue

3,49,83,635 Equity Shares

Equity Shares outstanding after the Issue (assuming full subscription for and allotment of the Rights Entitlement)

[●] Equity Shares

Rights Entitlement [●] Equity Share(s) for every [●] fully paid-up Equity Share(s) held on the Record Date

Record Date [●] Face Value per Equity Share ` 10 each Issue Price per Equity Share ` [●] each Terms of the Issue For more information, please see “Terms of the Issue” on page 295

of this Draft Letter of Offer. Use of Issue Proceeds For further information, please see “Objects of the Issue” on page

40 of this Draft Letter of Offer. Terms of Payment The full amount of ` [●] per Equity Share is payable on application.

21

GENERAL INFORMATION Registered Office of our Company Citi Mall, 2nd Floor, Oshiwara Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India. Tel: +91 22 6640 3636 Fax: +91 22 6640 3637 Website: www.fame.co.in Email: [email protected] Corporate Identification No.: L92490MH1999PLC122381 Address of the Registrar of Companies The Registrar of Companies, Maharashtra, Mumbai 100, Everest, Marine Drive, Mumbai – 400 002, Maharashtra, India. Board of Directors Our Board comprises of four Directors.

Name, Designation and Occupation

Age (Years)

DIN Address

Mr. Pavan Kumar Jain Designation Non-Executive Director Occupation Business

60 00030098 31, Benzer Terrace, A.G. Khan Road, Worli, Mumbai – 400 018, Maharashtra, India.

Mr. Deepak Asher Designation Non-Executive Director Occupation Service

52 00035371 17/1, Utkanth Society, Behind Alkapuri Club, Vadodara – 390 007, Gujarat, India.

Mr. Amit Jatia Designation Independent Director Occupation Business

44 00016871

Avanti, 67-A, Bhulabhai Desai Road, Mumbai – 400 026, Maharashtra, India.

Mr. Kishore Biyani Designation Independent Director Occupation Business

51 00005740

406, Jeevan Vihar, Manav Mandir Road, Malabar Hill, Mumbai – 400 006, Maharashtra, India.

22

Brief Profile of the Board of Directors Please refer to the chapter titled “Management” on page 77 of this Draft Letter of Offer. Company Secretary and Compliance Officer Mr. Suratha Satpathy Fame India Limited Citi Mall, 2nd Floor, Oshiwara Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India. Tel: +91 22 6640 3636 Fax: +91 22 6640 3637 Email: [email protected] Statutory Auditors of our Company Patankar & Associates, Chartered Accountants, Ameya, 4, Anand Bag Co-operative Housing Society, 999, Navi Peth, Pune – 411 030. Tel: +91 20 2453 7277 Fax: +91 20 2453 7178 Email: [email protected] Firm Registration No.: 107628W Membership No.: 049051 Bankers to our Company AXIS Bank Limited Royal Accord IV, Lokhandwala Circle, Andheri (W), Mumbai – 400053, Maharashtra. Tel: +91 22 24252525 Fax: +91 22 24254045 Email: [email protected] Website : www.axisbank.com Contact Person: Mr. Sanjay Tendulkar

ING Vyasa Bank Limited C 12, G Block, 8th Floor, Bandra Kurla Complex, Bandra East, Mumbai – 400 051, Maharashtra. Tel: + 91 22 33095000 Fax: + 91 22 2652 2812 Email: [email protected] Website: www.ingvyasabank.com Contact Person: Mr. Girish Natarajan

Lead Manager to the Issue Enam Securities Private Limited 801/802, Dalamal Towers, Nariman Point, Mumbai 400 021 Maharashtra, India. Tel: +91 22 6638 1800 Fax: +91 22 2284 6824 Website: www.enam.com E-mail: [email protected] Investor Grievance E-mail: [email protected] Contact Person: Ms. Simran Gadh SEBI Reg. No: INM000006856

23

Bankers to the Issue [●] Domestic Legal Counsel to the Issue Khaitan & Co One Indiabulls Centre, 13th Floor, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai – 400 013, Maharashtra, India. Tel: + 91 22 6636 5000 Fax: + 91 22 6636 5050 Registrar to the Issue Link Intime India Private Limited C- 13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai - 400 078, Maharashtra, India Tel: +91 22 2596 0320 Fax: +91 22 2596 0329 Website: www.linkintime.co.in Email: [email protected] Contact Person: Mr. Pravin Kasare SEBI Registration No: INR000004068 Self Certified Syndicate Banks All QIBs and Non – Institutional Investors must mandatorily and Retail Individual Investors may optionally apply through the ASBA process provided that they hold Equity Shares as on the Record Date in dematerialised form. The Equity Shareholders are required to fill the ASBA Form and submit the same to their Self Certified Syndicate Banks (“SCSB”) which in turn will block the amount as per the authority contained in the ASBA Form and undertake other tasks as per the specified procedure. The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided in the SEBI website www.sebi.gov.in. On allotment, the amount would be unblocked and the account would be debited only to the extent required to pay for the Equity Shares allotted. For further details on the ASBA process, please refer to details given in ASBA form and also refer to the section “Terms of the Issue” beginning on page 295 of this Draft Letter of Offer. The list of banks that have been notified by SEBI to act as SCSBs for the ASBA Process are available at the SEBI website (URL reference: http:// www.sebi.gov.in). Details relating to designated branches of SCSBs collecting the ASBA forms are available at the above mentioned link. Investors may please contact the Registrar to the Issue or our Company Secretary and Compliance Officer for any pre-issue /post-issue related matter. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the SCSB, giving full details such as name, address of the applicant, number of Equity Shares applied for, Amount blocked, ASBA Account number and the Designated Branch of the SCSB where the CAF was submitted by the ASBA Investors.

24

Allocation of responsibilities Enam Securities Private Limited is the sole Lead Manager to this Issue, the list of major responsibilities of the Lead Manager inter alia, are as follows: No. Activities 1. Capital structuring with the relative components and formalities such as composition of debt and equity, type

of instruments. 2. Drafting and design of the offer document and of advertisement / publicity material including newspaper

advertisements and brochure / memorandum containing salient features of the offer document. To ensure compliance with the SEBI Regulations and other stipulated requirements and completion of prescribed formalities with Stock Exchange and SEBI.

3. Retail/Non-institutional marketing strategy which will cover, inter alia, preparation of publicity budget, arrangements for selection of (i) ad-media, (ii) bankers to the issue, (iii) collection centres (iv) distribution of publicity and issue material including composite application form and the Abridged Letter of Offer and the draft letter of offer to the extent applicable.

4. Institutional marketing strategy to the extent applicable. 5. Selection of various agencies connected with the issue, namely Registrar to the Issue, printers, and

advertisement agencies. 6. Follow-up with bankers to the issue to get quick estimates of collection and advising the issuer about closure of

the issue, based on the correct figures. 7. The post-issue activities will involve essential follow-up steps, which must include finalisation of basis of

allotment / weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as registrars to the issue, bankers to the issue, and bank handling refund business. Even if many of these post-issue activities would be handled by other intermediaries, the Lead Manager shall be responsible for ensuring that these agencies fulfill their functions and enable him to discharge this responsibility through suitable agreements with the Issuer.

Issue Schedule Issue Opening Date: [●] Last date for receiving requests for split forms: [●] Issue Closing Date: [●] Credit rating As the Issue is a rights issue of Equity Shares, no credit rating is required. No ratings have been received by us in the past. Monitoring Agency Our Company is not required to appoint a monitoring agency is pursuant to Regulation 16 of the SEBI Regulations. Appraisal Reports None of the purposes for which the Net Proceeds are proposed to be utilised have been financially appraised. Principal Terms of Loans and Assets charged as security For details of the principal terms of loans and assets charged as security, please see “Financial Indebtedness” on page 233 of this Draft Letter of Offer.

25

Experts Except for the reports of the Auditor of our Company on the restated financial informations and statement of tax benefits, included in the Draft Letter of Offer, our Company has not obtained any expert opinions. Underwriting The Issue shall not be underwritten.

26

CAPITAL STRUCTURE The share capital structure of our Company and related information as on date of this Draft Letter of Offer, prior to and after the proposed Issue, is set forth below:

(` in lacs except per share data) Particulars Aggregate

value at Face value

Aggregate value at Issue price

Authorized Share Capital 6,29,90,000 Equity Shares 6,299.00 10,000 Preference Shares 1.00 Issued, Subscribed and Paid-up Capital before the Issue 3,49,83,635 Equity Shares 3,498.36 1,000 Preference Shares 0.10

Present Issue being offered to the Equity Shareholders through the Draft Letter of Offer* [●] Equity Shares at a premium of ` [●], i.e. at a price of ` [●] per share

[●] [●]

Paid up capital after the Issue [●] Equity Shares [●] [●] 1,000 Preference Shares 0.10 Share premium Account Before the Issue 4,341.65# After the Issue [●] *This Issue has been authorized by resolution of our Board dated April 19, 2011. # Includes gain on account of redemption of FCCBs at a discount of 18% to the original redemption value of the Bonds and a corresponding reduction in withholding tax liability aggregating to ` 1,566.45 lakhs. For details, please refer section “Financial Information” on page 95 of this DLOF. Details of increase in the Authorized Share Capital since incorporation

Sr. No.

Particulars Date of the shareholders

resolution 1. The authorized share capital of ` 10,00,000 comprising of 50,000 Equity

Shares and 50,000 Preference Shares Incorporation

2. The initial authorized share capital of ` 10,00,000 comprising of 50,000 Equity Shares and 50,000 Preference Shares was increased and reclassified to ` 50,00,000 divided into 5,00,000 Equity Shares.

March 08, 2001

3. The authorized share capital of our company of ` 50,00,000 comprising of 5,00,000 Equity Shares was further increased and reclassified to ` 25,00,00,000 divided into 2,49,90,000 Equity Shares and 10,000 Preference Shares.

March 20, 2004

4. The authorized share capital of our company of ` 2,500,00,000 comprising of 2,49,90,000 Equity Shares and 10,000 Preference Shares was further increased to ` 35,00,00,000 divided into 3,49,90,000 Equity Shares and 10,000 Preference Shares.

November 11, 2004


March 8, 2006

27


April 9, 2011

Notes to the Capital Structure

1. Share Capital History

(a) Equity share capital history of our Company

Date of allotment

of the Equity Shares

No. of Equity Shares allotted

Face Value (`)

Issue Price

(`)

Nature of Considerati

on

Nature of Allotment

Issued Equity Capital

(`)

Cumul ative

number of Equity Shares

Cumulative Equity Share

Capital (`)


Premium (`)

October 26, 1999

2,000 10 10 Cash Initial Allotment based on

subscription to

Memorandumof

Association1

20,000 2,000 20,000 Nil

March 30, 2001

12,280 10 226.38 Cash Further allotment of

Shares2

1,22,800 14,280 1,42,800 26,57,200

June 16, 2001


shares3

4,90,000 63,280 6,32,800 3,71,66,920

March 27, 2002


shares4

3,67,200 1,00,000 10,00,000 4,39,99,720

March 30, 2004

28,53,039 10 19.85 Cash Further allotment of

shares5

2,85,30,390 29,53,039 2,95,30,390 7,20,95,785

March 30, 2004


shares6

1,43,60,410 43,89,080 4,38,90,800 18,78,59,326

June 25, 2004


shares7

11,09,200 45,00,000 4,50,00,000 18,83,37,131A

July 10, 2004

1,88,33,000 10 Nil Bonus (Out of share

premium account)

In the ratio of 4.1851Shares as bonus for every one share held8

18,83,30,000 2,33,33,000 23,33,30,000 7,131B

December 24, 2004

83,333 10 45 Cash Further Allotment of

Shares9

8,33,330 2,34,16,333 23,41,63,330 29,23,786

April 22, 2005

81,50,180 10 53 Cash Allotment of shares under initial public

offering10

8,15,01,800 3,15,66,513 31,56,65,130 3,53,381,526

February 1, 2007

20,662 10 30 Cash Allotment under ESOP

Scheme 200411

2,06,620 3,15,87,175 31,58,71,750 30,96,33,041C

28

Date of allotment

of the Equity Shares

No. of Equity Shares allotted

Face Value (`)

Issue Price

(`)

Nature of Considerati

on

Nature of Allotment

Issued Equity Capital

(`)

Cumul ative

number of Equity Shares


Capital (`)


Premium (`)

March 26, 2007


Scheme 200412

23,340 3,15,89,509 31,58,95,090 30,96,79,721

July 25, 2007


Scheme 200413

30,000 3,15,92,509 31,59,25,090 22,47,16,240D

December 20, 2007

15,04,999 10 90 Cash Conversion of FCCB14

1,50,49,990 3,30,97,508 33,09,75,080 3,451,16,160

January 16, 2008

16,87,850 10 107 Cash Conversion of FCCB15

1,68,78,500 3,47,85,358 3,478,53,580 50,88,37,610

February 11, 2008


Scheme 200416

99,040 3,47,95,262 34,79,52,620 50,90,35,690

May 29, 2010

151,770 10 14.47 Cash Allotment under ESOP

Scheme 200917

15,17,700 3,49,47,032 34,94,70,320 35,47,99,403E

August 10, 2011

36,603 10 14.47 Cash Allotment under ESOP

Scheme 200918

3,66,030 3,49,83,635 34,98,36,350 27,75,19,567F

TOTAL 3,49,83,635 34,98,36,350 27,75,19,567

1. Initial subscription to MoA by Mr. Shyam Shroff (500 Equity Shares), Mr. Balkrishna Shroff (500 Equity Shares), Mr. Shravan Shroff (500 Equity Shares), Mr. Aditya Shroff (500 Equity Shares).

2. Further allotment of Shares to Fame Motion Pictures Limited (12,280 Equity Shares).

3. Further allotment of Shares to India Value Fund Trustee Company Private Limited (49,000 Equity Shares).

4. Further allotment of Shares to Fame Motion Pictures Limited (36,720 Equity Shares).

5. Further allotment of Shares to South Yarra Holdings (through its partners Mr. Shyam Shroff and Mr. Balkrishna Shroff) (28,53,039 Equity Shares).

6. Further allotment of Shares to India Value Fund Trustee Company Private Limited (14,36,041 Equity Shares).

7. Further allotment of Shares to IVF (Mauritius) PCC (1,10,920 Equity Shares)

8. Allotment of bonus Shares to South Yarra Holdings (through its partners Mr. Shyam, Shroff and Mr. Balkrishna

Shroff) (1,21,54,814 Equity Shares), India Value Fund Trustee Company Private Limited (62,14,890 Equity Shares), IVF (Mauritius) PCC (4,63,292 Equity Shares), Rupinder Singh Arora jointly with Shyam Shroff and Dilawar Singh Arora (4 Equity Shares)

9. Further allotment of Shares to India Value Fund Trustee Company Private Limited (83,333 Equity Shares)

10. Further allotment of Shares by Initial Public Offering (81,50,180 Equity Shares)

11. Allotment of Shares under ESOP Scheme 2004 to Mr. Shriram Krishnan (9,466 Equity Shares), Mr. Mukesh

Gupta (2,400 Equity Shares), Mr. Sundaresan Kumar (2,666 Equity Shares), Mr. Sunil Punjabi (500 Equity Shares), Ms. Chandrakala (266 Equity Shares), Mr. Avisha Wadhera (500 Equity Shares), Mr. N.B. Prasad (466 Equity Shares), Mr. Prasanna Manjrekar (3,066 Equity Shares), Mr. Clyde Monterio (466 Equity Shares), Mr. Giridhar Duseja (866 Equity Shares)

29

12. Allotment of Shares under ESOP Scheme 2004 to Ms. Sushma Kadam (534 Equity Shares), Mr. Sameer Tawade (734 Equity Shares), Mr. Virendra Sharma (600 Equity Shares), Mr. Mangesh Nerurkar (466 Equity Shares)

13. Allotment of Shares under ESOP Scheme 2004 to Mr. Arshad Kazi (3,000 Equity Shares) 14. Allotment of Shares to Grants Investment Limited on conversion of FCCB (15,04,999 Equity Shares)

15. Allotment of Shares to Swiss Finance Corp Mauritius Limited on conversion of FCCB (16,87,850 Equity Shares)

16. Allotment of Shares under ESOP Scheme 2004 to Mr. Shriram Krishnan (4,734 Equity Shares), Mr. Prasanna

Manjrekar (1,534 Equity Shares), Mr. Arshad Kazi (1,500 Equity Shares), Mr. Sundaresan Kumar (1,334 Equity Shares), Mr. Girdhar Duseja (434 Equity Shares), Mr. N.B. Prasad (234 Equity Shares), Ms. Chandrakala Yadav (134 Equity Shares)

17. Allotment of Shares under ESOP Scheme 2009 to Mr. Prasanna Manjrekar (34,350 Equity Shares), Mr. Rishi

Negi (33,585 Equity Shares), Mr. Naushad Shaikh (19,320 Equity Shares), Mr. Arshad Kazi (11,835 Equity Shares), Mr. N.B Prasad (8,730 Equity Shares), Mr. Deepak Shinde (7,425 Equity Shares), Mr. Atul Bhandarkar (6,780 Equity Shares), Ms. Nupur Vaidya (5,145 Equity Shares), Mr. Nimesh Waghela (5,160 Equity Shares), Mr. Sandeep Gurav (3,525 Equity Shares), Mr. Sunil Patil (2,745 Equity Shares), Mr. John Chelliah (2,415 Equity Shares), Mr. Inderjit (2,370 Equity Shares), Mr. Giten Sayla (2,055 Equity Shares), Mr. Ananth Prabhakar (1,470 Equity Shares), Mr. Kamlesh Dwivedi (1,050 Equity Shares), Mr. Satish Mundhe (1,035 Equity Shares), Mr. Rupesh Kolge (990 Equity Shares), Mr. Nitin Ghorpade (900 Equity Shares), Mr. Kaushik Mukherjee (885 Equity Shares)

18. Allotment of Shares under ESOP Scheme 2009 to Mr. Sunil Patil (2,539 Equity Shares), Mr. Sandeep Gurav (3,525 Equity Shares), Mr. Giten Salya, (1,901 Equity Shares), Mr. Naushad Shaikh (13,524 Equity Shares), Mr. Atul Bhandarkar (5,763 Equity Shares), Mr. Kaushik Mukherjee (753 Equity Shares), Mr. Satish Mundhe (880 Equity Shares), Mr. Nimesh Waghela (3,000 Equity Shares), Mr. John Chelliah (2,415 Equity Shares), Mr. Raja Jain (2,303 Equity Shares).

A. Preliminary expenses amounting to `19,72,143 incurred on account of increase of Authorised Capital from ` 50,00,000 to ` 25,00,00,000 were set-off against securities premium account as at March 31, 2004.

B. On July 10, 2004 our Company allotted 1,88,33,000 Bonus shares having an aggregate value of ` 18,83,30,000 by

utilizing the securities premium account. C. Share issue expenses amounting to ` 4,41,61,726 were set-off against securities premium account as at March 31,

2006. D. FCCBs issue expenses amounting to ` 2,98,13,462 and provision for premium for redemption of FCCBs for the

Financial Year 2006-07 amounting to ` 5,52,10,019 were set-off against securities premium account as at March 31, 2007.

E. (i) Exchange loss on conversion of FCCB during the FY 2007-08 amounting to ` 4,02,59,890 and provision for

premium on redemption of FCCBs for the FY 2007-08 amounting to ` 1,47,04,797 were set-off against securities premium account during the Financial Year ended March 31, 2008.

(ii) Provision for premium on redemption of FCCBs for the FY 2008-09 amounting to ` 6,85,18,626 was set-off against securities premium account during the Financial Year ended March 31, 2009. (iii) Provision for premium on redemption of FCCBs for the FY 2009-10 amounting to ` 3,14,31,386 was set-off against securities premium account during the Financial Year ended March 31, 2010.

F. (i) Provision for premium on redemption of FCCBs for the FY 2010-11and potential withholding tax liability

thereof aggregating to ` 7,36,85,804 was set-off against securities premium account during the Financial Year ended March 31, 2011 (ii) Provision for premium on redemption of FCCBs for the period April 1, 2011 upto the original due date of redemption, and potential withholding tax liability thereof as revalued as at June 30, 2011 aggregating to ` 37,57,649 was set-off against securities premium account during the current Financial Year beginning April 1, 2011.

30

(b) Preference share capital history of our Company

Date of

allotment of the

Preference Shares

No. of Preference

Shares allotted

Face Value

(`)

Issue Price

(`)

Nature of Consideration

Nature of Allotment

Issued Preference

Capital (`)

Cumulative

number ofPreference

Shares

Cumulative

Preference Share

Capital (`)

Cumulative Preference

Share Premium

(`)

March 22, 2004

1,000 10 10 Cash Allotment1 10,000 1,000 10,000 Nil

TOTAL 1,000 10,000 Nil 1. Allotment of Preference Shares to Fame Motion Pictures Limited (1,000 Preference Shares).

(c) Equity Shares allotted for consideration other than Cash:

Date of

allotment of Equity Shares

No. of Equity Shares of ` 10

issued as bonus

Issue Price (`)

Reasons for allotment

Persons to whom the

Equity Shares were issued

Benefits to our Company

July 10, 2004 1,88,33,000 Nil Bonus Issue in the ratio of 4.1851 Bonus Shares for every 1 Equity Share held

All existing shareholders of our company as on the record date for declaration of bonus issue

Nil

(d) Equity Shares issued under the Employee Stock Options Scheme aggregated quarter wise

indicating the aggregate number of Equity Shares issued: Allotment of Equity

Shares made

during the

Quarter

Number of

Equity Shares

Issue Price

(`)

Consideration Nature of allotment

Cumulativenumber of

Equity Shares


Capital (`)

CumulativeEquity Share

Premium (`)

January – March 2007

22,996 30 Cash Allotment under ESOP Scheme 2004

22,996 2,29,960 4,59,920

July – September 2007


25,996 2,59,960 5,19,920

January – March 2008


35,900 3,59,000 7,18,000

April – June 2010

1,51,770 14.47 Cash Allotment under ESOP Scheme 2009

1,87,670 18,76,700 13,96,412

July – September 2011

36,603 14.47 Cash Allotment under ESOP Scheme 2009

2,24,273 22,42,730 15,60,027

TOTAL 2,24,273 22,42,730 15,60,027

31

2. Build up of Promoter

a) Details of buildup of the shareholding of our Promoter / acquisitions made by the Promoter in

last one year

Name of the

Promoter

Date of Allotment /Transfer

Number of Equity Shares allotted

Face Value

(`)

Acquisition Price

(`)

Consideration (`)

Nature of the transaction

(Cash, consideration

other than cash)

% to Pre

Issue Capital

Allotment /

Transfer


February 3, 2010*

1,50,57,751 10 44.00 66,25,41,044 Cash 43.04 Transfer


February 5, 2010

25,07,537 10 50.75 12,72,57,503

Cash 7.17 Transfer


January 6, 2011

1,075 10 51.00 54,825

Cash 0.00 Transfer

TOTAL 1,75,66,363 50.21 *1,50,57,751 Equity Shares were kept in escrow facility and on January 6, 2011, subsequent to completion of the open offer were released. The Promoter and Promoter Group have confirmed that they intend to subscribe to the full extent of their Rights Entitlement in the Issue. Subject to compliance with the Takeover Code, the Promoter and Promoter Group reserve their right to subscribe for Equity Shares in this Issue by subscribing for renunciation, if any, made by any Promoter Group or any other shareholders. The Promoter and Promoter Group have provided an undertaking dated September 27, 2011 to our Company to apply for additional Equity Shares, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent Allotment, the Promoter and Promoter Group may acquire Equity Shares over and above their Rights Entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the Rights Entitlement. Such subscription and acquisition of additional Equity Shares by the Promoter and the Promoter Group through this Issue, if any, will not result in change of control of the management of our Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the chapter “Objects of the Issue” on page 40 of this Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist our Company, even if, as a result of Allotments to the Promoter and Promoter Group, in this Issue, the Promoter’s shareholding in our Company exceeds their current shareholding. The Promoter and Promoter Group shall subscribe to such unsubscribed portion as per the relevant provisions of the law. The Promoter and the Promoter Group shall subscribe to, and/or make arrangements for the subscription of, such unsubscribed portion as per the relevant provisions of law and in compliance with clause 40A of the Listing Agreement. Our Company hereby certifies that such subscription to any undersubscribed portion of the Issue by the Promoters and the Promoter Group, in the manner contemplated above, shall be subject to compliance with the provisions of Rule 19(2)(b) of the SCRR and clause 40A of the Listing Agreement with respect to the requirement of minimum public shareholding of 25% of the post-Issue paid-up capital of our Company.

32

3. Shareholding pattern of our Company

The table below presents the shareholding pattern of our Company as on June 30, 2011:

Statement Showing Shareholding Pattern

CATEGOR

Y COD

E

CATEGORY OF SHAREHOLDE

R

TOTAL SHAREHOLDING AS A % OF TOTAL NO OF

SHARES

SHARES PLEDGE OR OTHERWISE ENCUMBERED

NO OF SHAREHO

LDERS

TOTAL NUMBER

OF SHARES

NO OF SHARES HELD IN DEMATERIALIZED FORM

AS a PERCENTAG

E OF (A+B)

AS a PERCENTAGE

OF (A+B)

NUMBER OF

SHARES

AS a PERCENT

AGE

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX)=(VIII) (IV)*100

(A) Shareholding of

Promoter And Promoter Group2

(1) Indian (a) Individual/Hindu

Undivided Family 0 0 0 0.00 0.00 0 0.00

(b) Central Government/State Government(s)

0 0 0 0.00 0.00 0 0.00

(c) Bodies Corporate 1 17566363 17566363 50.27 50.27 0 0.00 (d) Financial

Institutions / Banks

0 0 0 0.00 0.00 0 0.00

(e) Any Others (Specify)

0 0 0 0.00 0.00 0 0.00

Sub-Total A(1): 1 17566363 17566363 50.27 50.27 0 0.00

(2) Foreign (a) Individuals

(NRIs/Foreign Individuals)

0 0 0 0.00 0.00 0 0.00

(b) Bodies Corporate 0 0 0 0.00 0.00 0 0.00 (c) Institutions 0 0 0 0.00 0.00 0 0.00 (d) Any Others

(Specify) 0 0 0 0.00 0.00 0 0.00

Sub-Total A(2): 0 0 0 0.00 0.00 0 0.00 Total

Shareholding of Promoter and Promoter Group A=A(1)+A(2)

1 17566363 17566363 50.27 50.27 0 0.00

(B) Public

Shareholding

(1) Institutions (a) Mutual Funds

/UTI 0 0 0 0.00 0.00

(b) Financial Institutions /Banks

0 0 0 0.00 0.00

(c) Central Government / State Government(s)

0 0 0 0.00 0.00

(d) Venture Capital Funds

0 0 0 0.00 0.00

(e) Insurance Companies

0 0 0 0.00 0.00

33

(f) Foreign Institutional Investors

3 664899 664899 1.90 1.90 0 0.00

(g) Foreign Venture Capital Investors

0 0 0 0.00 0.00 0 0.00

(h) Any Other (Specify)

0 0 0 0.00 0.00 0 0.00

Sub-Total B(1): 3 664899 664899 1.90 1.90 0 0.00

(B) (2) Non-Institutions (a) Bodies Corporate 262 14555338 14555338 41.65 41.65 0 0.00 (b) Individuals

(i) Individuals: Individual shareholders holding nominal share capital upto ` 1 lakh

7271 1502350 1500366 4.30 4.30 0 0.00

(ii) Individuals Shareholders holding nominal share capital in excess of `1 lakh

10 598500 598500 1.71 1.71 0 0.00

(c) Any Others (specify)

0 0 0 0.00 0.00 0 0.00

(c-i) Clearing members 67 21425 21425 0.06 0.06

0 0.00

(c-ii) Non-Resident Indians (REPAT)

46 33455 33455 0.10 0.10 0.00

Non-Resident Indians (NON REPAT)

10 4102 4102 0.01 0.01 0 0.00

Trusts 1 600 600 0.00 0.00 0 0.00 Sub-Total (B) (2): 7667 16715770 16713786 47.83 47.83 0 0.00 Total Public

Shareholding (B)=B(1)+B(2):

7670 17380669 17378685 49.73 49.73 0 0.00

Total (A+B): 7671 34947032 34945048 100.00 100.00 0 0.00

(C) Shares held by custodians, against which Depository Receipts have been issued

1 Promoter and

Promoter Group 0 0 0 0.00 0.00 0 0.00

2 Public 0 0 0 0.00 0.00 0 0.00 Sub-Total (C) 0 0 0 0.00 0.00 0 0.00 GRAND

TOTAL (A+B+C):

7671 34947032 34945048 100.00 100.00 0 0.00

34

Statement showing Shareholding of persons belonging to the category Promoter and Promoter Group as on June 30, 2011

Sr. No. Name of the Shareholder

Total Share held Share pledged or otherwise encumbered

Number As a % of

grand total (A)+(B)+(C)

Number As a percentage

As a % of grand total (A)+(B)+(C) of sub-clause

(I) (a) (I) (II) (III) (IV) (V) (VI)=(V)/(III)*100 (VII)

1 Inox Leisure Limited 17566363 50.27 0 0.00 0.00

Total 17566363 50.27 0 0.00 0.00 Statement showing Shareholding of persons belonging to the category “Public” and holding more than 1% of the total number of shares as on June 30, 2011

Sr. No. Name of the Shareholder Number of Shares Shares as % of Total Number of Shares

1 Reliance Capital Limited Reliance Land Pvt. Ltd. Surendra Pipara

1,23,68,952 35.39

2 The Indianman Fund (Mauritius) Limited 4,80,000 1.37 3 Money Matters Advisory Services Limited 3,92,210 1.12 4 Vikas Srivastava 3,80,000 1.09 5 Religare Finvest Ltd. 3,70,200 1.06

Total 1,39,91,362 40.04

4. Top Ten Shareholders The list of the top ten shareholders of our Company and the number of Equity Shares held by them is provided below:

a) The top ten shareholders of our Company and the number of Equity Shares held by them as close to the date of filing this Draft Letter of Offer i.e. as on September 23, 2011 are as follows:

S. No. Shareholder Total No. of Equity Shares Held

Pre Issue %

1. Inox Leisure Limited 1,75,66,363 50.21 2. Reliance Capital Limited

Reliance Land Private Limited Mr Surendra Pipara

1,23,68,952 35.36

3. The Indiaman Fund (Mauritius) Limited 4,80,000 1.37 4. Money Matters Advisory Services Limited 3,92,210 1.12 5. Mr Vikas Srivastava 3,80,000 1.09 6. Religare Finvest Limited 3,70,200 1.06 7. Hotz Industries Limited 3,22,860 0.92 8. Dnyaneshwar Trading and Investments Private

Limited 3,02,915 0.87

9. Anushreya Investment Private Limited 2,50,000 0.71 10. Premier Capital and Securities Private Limited 2,35,000 0.67

35

b) The top ten shareholders of our Company and the number of Equity Shares held by them ten days prior to filing of this Draft Letter of Offer i.e. September 16, 2011 are as follows:


Pre Issue %

11. Inox Leisure Limited 1,75,66,363 50.21 12. Reliance Capital Limited

Reliance Land Private Limited Mr Surendra Pipara

1,23,68,952 35.36

13. The Indiaman Fund (Mauritius) Limited 4,80,000 1.37 14. Money Matters Advisory Services Limited 3,92,210 1.12 15. Mr Vikas Srivastava 3,80,000 1.09 16. Religare Finvest Limited 3,70,200 1.06 17. Hotz Industries Limited 3,22,860 0.92 18. Dnyaneshwar Trading and Investments Private

Limited 3,02,915 0.87

19. Anushreya Investment Private Limited 2,50,000 0.71 20. Premier Capital and Securities Private Limited 2,35,000 0.67

c) Our top ten shareholders and the number of Equity Shares held by them two years prior to

filing this Draft Letter of Offer i.e. September 25, 2009 are as follows:


Pre Issue %

1. Mr Shravan Shroff Mr Shyam Shroff Mr Balkrishna Shroff

1,50,57,760 43.28

2. Aranda Investments (Mauritius) Pte Limited 31,48,633 9.05 3. Dunearn Investments (Mauritius) Pte Limited 15,46,750 4.45 4. Rathi Global Finance Limited 13,81,000 3.97 5. Mr Manish Acharya 11,26,551 3.24 6. M B Finmart Private Limited 3,73,301 1.07 7. Money Matters Advisory Services Limited 3,55,847 1.02 8. Premier Investment Fund Limited 2,74,900 0.79 9. Emerald Square Private Limited 1,70,042 0.49 10. Mr Mahesh Damani 1,45,000 0.42 5. Employee Stock Option Scheme

The details of ESOP scheme of our Company, pursuant to which options to acquire Equity Shares will be granted to employees of our Company are as provided below:

ESOP Outstanding Options

Details

ESOP 2009

2,00,872 The Employee Stock Option Scheme (“ESOS 2009”) was formulated and approved by the remuneration committee of directors of our Company on May 21, 2009 pursuant to the authority vested in it by the shareholders of our Company vide a special resolution passed in the Annual General Meeting held on September 27, 2006 and in accordance with the provisions of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended. The grant date for ESOP 2009 is May 21, 2009.

36

Sr. No.

Particulars Grant till date

ESOP 2009 Scheme FY 2010 FY 2011 FY 2012

(From April 1, 2011 upto the date of

filing of the DLOF) A Options granted 11,28,600 Nil Nil B Pricing Formula Closing market price

of the Equity Shares of our Company one day prior to the grant date i.e. ` 14.47

NA NA

C Options Vested NIL 1,51,770 43,785 D Options Exercised NIL 1,51,770 36,603 E Total number of shares

arising as result of exercise of options

NIL 1,51,770 36,603

F Options lapsed 65,300 6,37,750 36,305 G Variation of terms of

options Nil Nil Nil

H Money realised by exercise of options (` in lakhs)

Nil 21.96 5.30

I Total number of options in force

10,63,300 2,73,780 2,00,872

J Employee wise details of options granted to: (i) Senior Management Personnel Mr. Prasanna D

Manjrekar 2,29,000

Mr. Rishi Negi 2,23,900 Mr. Naushad Shaikh 1,28,800 Mr. Arshad Kazi 78,900 (ii) Any other employee who receives a grant in any one year of option amounting to 5% or more of

option granted during that year. Mr. Prasanna D

Manjrekar 2,29,000

Mr. Rishi Negi 2,23,900 Mr. Naushad Shaikh 1,28,800 Mr. Arshad Kazi 78,900 Mr. N. B. Prasad 58,200 (i) Identified employees

who were granted options, during any one year equal to or exceeding 1% of the issued equity shares (excluding outstanding warrants and conversions) at the time of grant

NIL

K Vesting schedule / conditions

Options granted under ESOS 2009 would vest not less than 1 year and not more than 5 years from the date of grant of such options. Vesting of options would be a function of continued employment with our Company (passage of time) and achievement of performance criteria as

37

Sr. No.


ESOP 2009 Scheme specified by the remuneration committee as communicated at the time of grant of options.

L Diluted EPS in accordance with AS 20 ‘Earnings Per Share’ based on standalone financial statements for the Financial Year 2010-11

0.37

M In case the employee compensation cost is calculated using intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options and the impact of this difference on the profits and on the earnings per share of our Company for the Financial Year 2010-11

Particulars ` in Lacs (except for EPS)

Net income As reported 198.81 Add: intrinsic value compensation cost

0.00

Less: Fair value compensation cost

(0.95)

Adjusted Proforma net income - 199.76 Earning Per Share: Basic As reported 0.57 Adjusted proforma 0.60 Earning Per Share: Diluted As reported 0.37 Adjusted proforma 0.40

N Weighted average exercise price of options granted during the year

Weighted average exercise price of options granted during the year whose (a) Exercise price equals market price: `14.47 (b) Exercise price is greater than market price: NA (c) Exercise price is less than market price: NA Weighted average fair value of options granted during the year whose (a) Exercise price equals market price: ` 9.32 (b) Exercise price is greater than market price: NA (c) Exercise price is less than market price: NA

O Method and significant assumptions used to estimate the fair value of options granted during the year:

The fair value of the options granted has been estimated using the Black-Scholes option pricing Model.

P Risk free interest rate 6.08% Q Expected life The minimum life of a stock option is the minimum period before which

the options cannot be exercised and the maximum life is the maximum period after which the options cannot be exercised i.e. 5.83.

R Expected volatility We have considered the historical volatility of the stock till the date of grant to calculate the fair value i.e. 63.21%.

S Expected Dividends Nil

38

Sr. No.


ESOP 2009 Scheme T Price of underlying

shares in market at the time of option grant

` 14.80

(The financial numbers disclosed in the ESOP 2009 Scheme disclosure above as per the audited accounts for the Fiscal Year ended March 31, 2011)

6. There are no financing arrangements whereby our Promoter Group, Directors of our Promoter, our Directors and their relatives have financed the purchase by any other person of the Equity Shares of our Company during the period of 6 months immediately preceding the date of filing of the Draft Letter of Offer with SEBI.

7. The Issue being a rights issue, as per Regulation 34(c) of the SEBI Regulations, the requirement of promoters’ contribution and lock-in are not applicable.

8. The Promoters, Directors, immediate relatives of the Directors and members of the Promoter

Group have not undertaken/ financed, directly or indirectly, any transaction in the Equity Shares in the six months preceding the date of filing of this Draft Letter of Offer.

9. Our Company has not raised any bridge loans against the Net Proceeds.

10. Neither our Company, nor the Directors or the Promoters, or the Lead Managers have entered into any buy-back and/or standby arrangements for the purchase of the Equity Shares of our Company.

11. We have not issued any Equity Shares for consideration other than cash except the following:

Date of allotment of the Equity

Shares No. of Equity Shares Issue Price (`) Nature of Allotment

July 10, 2004 1,88,33,000 Nil Bonus issue

12. There are no outstanding warrants, financial instruments or any rights, which would entitle the Promoters or the shareholders of our Company or any other person any option to acquire any of the Equity Shares, except than options granted under the ESOP 2009 as set forth in note number 5.

13. Except for the initial public offering of our Company which closed on April 29, 2005 our

Company has not made any public issue or rights issue of any kind or class of securities since incorporation.

14. The Equity Shares offered through this Issue shall be made fully paid-up at the time of Allotment. All our outstanding Equity Shares are fully paid-up.

15. No further issue of capital by way of issue of bonus shares, preferential allotment, rights issue or

public issue or in any other manner which will affect the equity capital of our Company, shall be made during the period commencing from the filing of the Draft Letter of Offer with the SEBI to the date on which the Equity Shares issued under the Draft Letter of Offer are listed or application moneys refunded on account of the failure of the Issue, except that upon vesting our Company may allot further Equity Shares to our employees pursuant to exercise of options granted under ESOP 2009.

16. Further, our Company has no intention to alter the equity capital structure by way of

split/consolidation of the denomination of the shares, or issue of shares on preferential basis or issue of bonus rights or public issue of shares or any other securities for a period of six months

39

from the date of the opening of the Issue, except than options granted under the ESOP 2009 as set forth in note number 5.

17. Except as disclosed in the chapter titled “Management” beginning on page 77 of the Draft Letter of Offer, none of our Directors or Key Managerial Personnel holds any Equity Shares.

18. Our Company has not issued or allotted any Equity Shares in terms of scheme approved under

sections 391-394 of the Companies Act.

19. Our Company has not revalued its fixed assets since incorporation.

20. Our Company, Directors, Promoters or Promoter Group shall not make any payments direct or indirect, discounts, commissions, allowances or otherwise under this Issue except as disclosed in this Draft Letter of Offer.

21. There shall be only one denomination of Equity Shares, unless otherwise permitted by law. Our

Company shall comply with such disclosure and accounting norms as may be specified by SEBI from time to time.

22. As of June 30, 2011, the total number of holders of Equity Shares is 7,671.

23. Except under for issuance of Equity Shares under ESOP 2009, our Company has not made any

issue of specified securities at a price lower than the Issue Price during the preceding one year.

24. No Equity Shares have been issued during the preceding one year from the date of filing of this Draft Letter of Offer to the Promoter or the Promoter Group. Further, none of the Equity Shares have been issued to Promoter or member of the Promoter Group for consideration other than cash.

25. The Issue will remain open for 15 (fifteen) days. However, the Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 30 (thirty) days including the Issue Opening Date.

40

SECTION IV – PARTICULARS OF THE ISSUE

OBJECTS OF THE ISSUE The objects of the Issue are: 1. Repayment of debt; 2. General corporate purposes. The main objects clause set out in our Memorandum of Association and objects incidental to the main objects enable us to undertake our existing activities and the activities for which funds are being raised by us through the Issue. The fund requirement and deployment have not been appraised. Requirement of Funds and Means of Finance The details of the Net Proceeds are set forth in the following table:

(In ` lacs) Sr. No. Description Amount

1. Gross proceeds of the Issue 9,000

2. Issue related expenses [●]

3. Net Proceeds of the Issue [●] Utilization of Net Proceeds The following table details the objects of the Issue and the amount proposed to be financed from the Net Proceeds of the Issue:

(In ` lacs) Sr. No.

Objects of the Issue Amount proposed to be financed from Net Proceeds of the Issue

1. Repayment of debt 7,000

2. General corporate purposes [●] The entire requirements of the objects detailed above are intended to be funded from the Net Proceeds of the Issue. Accordingly, our Company confirms that there is no requirement for it to make firm arrangements of finance through verifiable means towards at least 75% of the stated means of finance, excluding the amount to be raised through the Issue. Details of the Objects of the Issue The objects of the Issue are proposed to be financed entirely out of the Net Proceeds of the Issue. The Net Proceeds, after deduction of all Issue related expenses, are estimated to be approximately ` [●] lacs. The details in relation to Objects of the Issue are set forth herein below. 1. Repayment of debt Our Company has raised term loan from ING Vyasya Bank Limited (the “Bank”), which is proposed to be repaid from the Issue Proceeds. The term loan facility amounts to ` 8,500 lacs and the amount avialed and outstanding under this facility as on September 15, 2011 is ` 7,000 lakhs (the “Term Loan”). The purpose of the Term Loan was repayment of FCCBs. For details of the FCCBs please see section titled ‘History and Other Corporate Matters’ on page 71 of the Draft Letter of Offer.

41

The details of the Term Loan are as follows: Name of

the lender

and date of the loan agreement

Purpose of the loan

Amount sanctioned

(In ` lacs)

Amount availed and outstanding

on September 15, 2011

(In ` lakhs)

Security Repayment Date/

Schedule

Rate of Interest (% per annum)

Prepayment Clause

ING Vysya Bank Limited Agreement for unsecured facility dated April 19, 2011 Amendment to agreement for unsecured facility dated April 22, 2011 Second amendment agreement to agreement for unsecured facility dated May 9, 2011 Third amendment agreement to agreement for unsecured facility dated July 22, 2011

Repayment of FCCB

8,500.00 7,000.00 Irrevocable and unconditional corporate guarantee from Gujarat Flourochemicals Limited dated April 19, 2011

Bullet repayment within 15 days from any future offering of equity (follow on or rights issue), debenture, preference or any other equity linked instruments by our Company or one year from date of disbursement, whichever is less.

11.50% p.a. (interest reset after 6 months from the date of disbursement)

1. Prepayment without penalty permitted if the said prepayment is made through proceeds of the offering of equity and with 15 days prior notice. 2. For prepayment through other than the proceeds of the offering of equity, our Company shall give the bank not less than 15 business days prior notice, requesting the prepayment of the whole or any part of the loan, within 7 business days following receipt of the notice referred to in the paragraph above, the bank shall notify our company whether the prepayment has been accepted (in which case our Company shall be entitled to prepay the relevant loan or part thereof upon such terms and subject to such

42

Name of the

lender and date

of the loan agreement

Purpose of the loan

Amount sanctioned

(In ` lacs)



(In ` lakhs)


Schedule


Prepayment Clause

conditions as may be advised to our Company by the bank) or not.

Total 8,500.00 7,000.00 2. General Corporate Purposes Our Company intends to deploy the balance Net Proceeds aggregating ` [●] lacs for general corporate purposes, including but not restricted to, capital expenditure, renovations, strategic initiatives, partnerships, joint ventures and acquisitions, as well as meeting exigencies which our Company may face in the ordinary course of business, or any other purposes as may be approved by the Board of Directors. 3. Issue related expenses The Issue related expenses include, among others, fees to various advisors, printing and distribution expenses, advertisement expenses, and registrar and depository fees. The estimated Issue related expenses are as follows:

Activity Expense (in ` lacs)

Expense (% of total expenses)

Expense (% of Issue Size)

Fees of bankers to the Issue, legal advisor, for other professional services and statutory fees

[●] [●] [●]

Fees of the Lead Manager [●] [●] [●]

Fees of Registrar to the Issue [●] [●] [●]

Advertising, traveling and marketing expenses [●] [●] [●]

Printing and stationery expenses [●] [●] [●]

Total estimated Issue related expenses [●] [●] [●] Schedule of Implementation and Deployment of Funds Our Company proposes to repay the loan funds at the earliest from the date of receipt of Issue proceeds. We further propose to utilize the Issue proceeds towards the other Objects mentioned above, within a period of two years from the date of receipt of such Issue proceeds. Interim use of proceeds The management of our Company, in accordance with the policies formulated by it from time to time, will have flexibility in deploying the Net Proceeds of the Issue. Pending utilization of the Net Proceeds of the Issue for the purposes described above, our Company intends to temporarily invest the funds in interest bearing liquid instruments including investments in mutual funds and other financial products, such as principal protected funds, derivative linked debt instruments, other fixed and variable return instruments, listed debt instruments, rated debentures or deposits with banks as may be approved by the Board. Such investments would be in accordance with the investment policies approved by the Board from time to time.

43

Appraisal Report The Net Proceeds are not proposed to be utilized for any project hence our Company has not obtained any appraisal of the use of proceeds of the Issue by any bank or financial institution. Monitoring of Utilisation of Funds Our Company has not appointed monitoring agency for monitoring the utilization of the Issue proceeds. Pursuant to clause 49 of the Listing Agreement, our Company shall on a quarterly basis disclose to the Audit Committee the uses and applications of the Net Proceeds of the Issue. On an annual basis, our Company shall prepare a statement of funds utilized for purposes other than those stated in the Draft Letter of Offer and place it before the Audit Committee. Such disclosure shall be made only until such time that the Net Proceeds of the Issue have been utilised in full. The statement shall be certified by the statutory auditors of our Company. Furthermore, in accordance with clause 43A of the Listing Agreement our Company shall furnish to the Stock Exchanges on a quarterly basis, a statement including material deviations if any, in the utilisation of the proceeds of the Issue from the objects of the Issue as stated above. This information will also be published in newspapers simultaneously with the interim or annual financial results, after placing the same before the Audit Committee. No part of the Issue Proceeds will be paid by our Company as consideration to the Promoters, the Directors, our Company’s key management personnel or companies promoted by the Promoters, except in the usual course of business.

44

BASIS OF ISSUE PRICE

The Issue Price has been determined by our Company, in consultation with the Lead Manager, on the basis of market conditions and on the basis of the following quantitative and qualitative factors. The information presented in this section for Fiscal 2009, 2010 and 2011 is derived from our Company’s restated audited unconsolidated summary financial information, prepared in accordance with Indian GAAP and the Companies Act and restated in accordance with the SEBI Regulations. You should read the following summary with the sections titled “Risk Factors”, “Business Overview” and “Financial Information” on pages IX, 62 and 95, respectively, of this Draft Letter of Offer, to get a more informed view before making an investment decision. The trading price of the Equity Shares could decline and you may lose all or part of your investments. The Issue price of ` [●] has been determined by our Company in consultation with the Lead Manager, on the basis of market conditions. Investors should also refer to the chapter titled “Risk Factors” beginning on page IX and “Financial Information” beginning on page 95 to get a more informed view before making an investment decision. Qualitative Factors Some of the qualitative factors which form the basis for computing the prices are:

• Alliance with our corporate Promoter • Leading brand with strong consumer recognition • Driving growth through innovation and marketing

For a detailed discussion on the qualitative factors, which form the basis for computing the price, please refer to the sections titled “Our Business – Competitive Strengths” and “Risk Factors” on pages 64 and IX respectively of this Draft Letter of Offer. Quantitative Factors Information presented in this section is derived from our Company’s restated stand-alone and consolidated financial informations prepared in accordance with Indian GAAP, Companies Act and the SEBI Regulations. Some of the quantitative factors, which form the basis for computing the price, are as follows: 1. Basic and Diluted Earnings per share (EPS)- Standalone

Period Basic EPS ` Diluted EPS ` Weight

Fiscal 2011 (0.85) (0.85) 3 Fiscal 2010 (0.41) (0.44) 2 Fiscal 2009 (0.45) (0.45) 1

Weighted Average (0.64) (0.65)

2. Basic and Diluted Earnings per share (EPS)- Consolidated Period Basic EPS ` Diluted EPS ` Weight

Fiscal 2011 (1.18) (1.18) 3 Fiscal 2010 (0.35) (0.38) 2 Fiscal 2009 (0.04) (0.04) 1

Weighted Average (0.71) (0.72)

45

Note: i. The figures disclosed above are based on the Standalone and Consolidated Restated Financial

Information of our Company. ii. The face value of each Equity Share is ` 10.

iii. EPS calculation have been done in accordance with Accounting Standard 20- “Earning per share” issued by the Institute of Chartered Accountants of India

iv. The above statement should be read with Significant Accounting Policies and the Notes to the Standalone Restated Financial Information as appearing on page 104 of this Draft Letter of Offer.

3. Price Earnings Ratio (P/E) in relation to the Issue price of ` [●] per Equity Share of ` 10 each

Sr. No. Particulars Standalone Consolidated 1. P/E ratio based on basic EPS for the

Fiscal 2011 at the Issue Price: [●] [●]

2. P/E ratio based on diluted EPS for the Fiscal 2011 at the Issue Price:

[●] [●]

Industry P/E*

P/E Ratio Name of the company Face value of the equity shares `

Highest 56.36 Inox Leisure Limited 10 Lowest 15.97 Cinemax India Limited 10 Average** 37.05

* P/E based on Fiscal 2011 EPS for the industry peers mentioned below ** Average of industry peers as mentioned below

4. Return on Networth (RoNW)* – Standalone

Period RoNW (%) Weight

Fiscal 2011 (4.32) 3 Fiscal 2010 (1.81) 2 Fiscal 2009 (1.86) 1

Weighted Average (3.07) *Based on Standalone Restated Financial Information

5. Return on Networth* (RoNw) – Consolidated

Period RoNW (%) Weight Fiscal 2011 (5.61) 3 Fiscal 2010 (1.42) 2 Fiscal 2009 (0.17) 1

Weighted Average (3.31) *Based on Consolidated Restated Financial Information

6. Minimum Return on Net Worth after Issue needed to maintain Pre-Issue Basic EPS for Fiscal 2011:

a. At the Issue Price on basic EPS – [●] % and [●] % based on restated standalone and consolidated financial informations respectively.

46

b. At the Issue Price on diluted EPS- [●] % and [●] % based on restated standalone and consolidated financial informations respectively.

7. Net Asset Value

Period Standalone ` Consolidated `

Fiscal 2011 19.71 21.01 Fiscal 2010 22.70 24.34 Fiscal 2009 24.02 25.59

Issue Price* : ` [●] per Equity Share NAV (Standalone) after the Issue : ` [●] per Equity Share NAV (Consolidated) after the Issue : ` [●] per Equity Share *Issue Price per Equity Share will be determined on conclusion of the Rights Issue

8. Comparison of Accounting Ratios with Industry Peers

Name of the company

Standalone/ Consolidated

Face Value (`

Per share)

EPS for fiscal 2011

(`)

P/E Ratio***

RoNW%** Book value per share for

fiscal 2010 `**

Fame India Limited

Consolidated* 10 (1.18) (5.61) 21.01

Peer Group** Inox Leisure Limited

Consolidated 10 0.81 56.36 0.21% 50.96

PVR Limited Consolidated 10 3.02 38.82 0.09% 125.74 Cinemax India Limited

Consolidated 10 1.95 15.97 3.19% 61.20

* Based on restated financials information of the Company for Fiscal 2011. **Source: Respective annual reports / extracts of financial information of the companies, as available, for the Fiscal Year 2011 Information on industry peers is on a consolidated basis. ***Source: Based on closing market price as on September 12, 2011 on BSE and EPS for the year ended March 31, 2011, extracted from the respective annual reports / extracts of financial statements of the companies, as available.

47

STATEMENT OF TAX BENEFITS

Statement of possible direct tax benefits available to Fame India Limited and its shareholders To, Fame India Limited 2nd Floor, Fame Adlabs, Oshiwara Link Road, Andheri – (West) Mumbai – 400053 Dear Sirs, Sub: Proposed Rights Issue of Equity Shares (the “Issue”) by Fame India Limited (the “Company”) We report that the enclosed statement states the possible direct tax benefits available to the Company and to its shareholders under the Income-tax Act, 1961 and Wealth Tax Act, 1957, presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon their fulfilling such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed in the enclosed annexure are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the Issue. Neither we are suggesting nor advising the investor to invest money based on this statement. We do not express any opinion or provide any assurance as to whether: i) the Company or its shareholders will continue to obtain these benefits in future; or ii) the conditions prescribed for availing the benefits have been / would be met with. The contents of the enclosed statement are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. For Patankar & Associates Chartered Accountants Firm Registration No. 107628W (Sanjay Agrawal) Partner Membership No: 049051 Place: Pune Date: September 23, 2011

48

ANNEXURE

Statement of direct tax benefits available to the Company and the shareholders I. Tax Benefits available to the Company under the Income-tax Act, 1961 1. Under section 10(34) of the Income-tax Act, 1961 (‘the IT Act’), any income by way of dividends

referred to in Section 115-O paid by domestic companies is exempt from tax in the hands of recipient. However, as per the provisions of section 14A of the IT Act read with Rule 8D of the Income-tax Rules, 1962 (“IT Rules”) the expenses incurred for earning such exempt dividend will not be allowed as deduction in the hands of the recipient. Further, as per provisions of section 94(7) of the IT Act, losses arising from sale/transfer of shares, where such shares were purchased within three months prior to record date and sold within three months from record date, will be disallowed to the extent such loss does not exceed the amount of such exempt dividend.

2. As per the provisions of section 10(35) of the IT Act, any income received from units of a Mutual

Fund specified under Section 10(23D) of the IT Act, is exempt from tax. 3. As per provisions of section 111A of the IT Act, in respect of short-term capital gains on sale of shares

in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), tax will be chargeable at 15 percent (plus applicable surcharge and education cess). However, no deduction under Chapter VI-A of the IT Act would be allowed from such short term capital gains subjected to tax under Section 111A. In other cases, where the transaction is not subjected to STT, the short term capital gains would be taxable at the normal corporate tax rate as a part of the total income.

4. As per provisions of Section 10(38) of the IT Act, the long-term capital gains on sale of shares in a

transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, is exempt from tax. However, in case the company is liable to pay tax on book profits under section 115JB of the IT Act, such long term capital gain would be liable to tax under that section.

5. As per the provisions of section 112 of the IT Act, long term gains from the transfer of shares

otherwise than as mentioned in point 3 above, is chargeable to tax at 20 percent (plus applicable surcharge and education cess). For this purpose, the amount of taxable capital gains is computed on the basis of indexed cost. Further, if the amount of tax on such capital gains, computed at 10 percent on the basis of actual cost as against indexed cost, is lower than the tax so computed at 20 percent, then such long term capital gains is chargeable to tax at 10 percent (plus applicable surcharge and education cess). In either case, no deduction under Chapter VI-A of the IT Act would be allowed from such long term capital gains subjected to tax under Section 112.

6. The Company is entitled to claim exemption in respect of tax on long term capital gains (other than

those exempt under Section 10(38) of the IT Act) under Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum amount of investment in the above bonds in a financial year is Rs. 5 million. However, according to Section 54EC(2) of the IT Act, if the Company transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the previous year in which such bonds are transferred or otherwise converted into money.

7. The characterization of the gains/losses, arising from sale of shares, as capital gains or business income

in the hands of the Company would depend on the nature of holding and various other factors. In case the income of the Company from transfer of shares is treated as business income then the income would be computed under the head profit and gains from business / profession and the provisions of

49

the IT Act would apply accordingly. Further, the amount of STT paid by the Company in respect of the taxable securities transactions entered into the course of its business would be eligible for deduction as per section 36(xv) of the IT Act.

8. The Company can claim depreciation allowance under section 32 of the IT Act at the prescribed rates

on tangible assets such as building, plant and machinery, furniture and fixtures, etc. and intangible assets, acquired after 31 March 1998, such as patent, trademark, copyright, know-how, licenses, etc. Unabsorbed depreciation if any, can be carried forward and set off against any source of income in subsequent years in accordance with the provisions of the IT Act.

9. Under Section 72 of the IT Act, unabsorbed business losses, if any, can be carried forward and set off

against business profits for subsequent years (up to 8 years) subject to the conditions specified therein. However, in order to carry forward such unabsorbed business loss, the return of income is required to be filed within the time allowed under section 139(1) of the IT Act.

10. Under Section 74 of the IT Act, unabsorbed loss, if any, under the head “Capital gains”, can be carried

forward and set off in the specified manner against the capital gains for subsequent years (up to 8 years) subject to the conditions specified therein. However, in order to carry forward such loss under the head “Capital Gains”, the return of income is required to be filed within the time allowed under section 139(1) of the IT Act.

11. The Company is entitled to deduction under Section 80G of the IT Act in respect of amounts

contributed as donations to various charitable institutions and funds covered under that section, subject to fulfillment of conditions specified therein.

12. As per the provisions of section 35D of the Act, the Company will be entitled to a deduction in respect specified preliminary expenditure, subject to stipulated limits, incurred in connection with the extension of its undertakings or in connection with setting up a new unit by way of amortization over a period of 5 successive years.

13. As per the provisions of section 35DD of the Act, the Company will be entitled to a deduction in respect of expenditure incurred in connection with amalgamation / demerger of an undertaking by way of amortization over a period of 5 successive years.

14. As per the provisions of section 35DDA of the Act, the Company will be entitled to a deduction in

respect of payments made to its employees in connection with their voluntary retirement in accordance with any voluntary retirement schemes, subject to fulfillment of stipulated conditions, by way of amortization over a period of 5 successive years.

15. If the Company is required to pay Minimum Alternate Tax (“MAT”) on book profits under section 115JB of the IT Act, then the difference between the MAT paid and the tax payable on the total taxable income (computed as per the normal provisions of the IT Act) for that year is allowed to be carried forward. The Company is entitled to carry forward such credit and set off the same in subsequent years to the extent the amount of tax payable on the total taxable income (computed as per the normal provisions of the IT Act) is higher than the amount of MAT payable on book profits for that year. The carry forward of such credit is allowed for ten years from the year in which such credit becomes available.

II. Tax Benefits available to shareholders of the Company under the IT Act A. Resident Shareholders 1. Under section 10(34) of the Income-tax Act, 1961 (‘the IT Act’), any income by way of dividends

referred to in Section 115-O paid by domestic companies is exempt from tax in the hands of recipient. However, as per the provisions of section 14A of the IT Act read with Rule 8D of the Income-tax

50

Rules, 1962 (“IT Rules”) the expenses incurred for earning such exempt dividend will not be allowed as deduction in the hands of the recipient. Further, as per provisions of section 94(7) of the IT Act, losses arising from sale/transfer of shares, where such shares were purchased within three months prior to record date and sold within three months from record date, will be disallowed to the extent such loss does not exceed the amount of such exempt dividend.

2. As per provisions of section 111A of the IT Act, in respect of short-term capital gains on sale of shares

in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), tax will be chargeable at 15 percent (plus applicable surcharge and education cess). However, no deduction under Chapter VI-A of the IT Act would be allowed from such short term capital gains subjected to tax under Section 111A. In other cases, where the transaction is not subjected to STT, the short term capital gains would be taxable as a part of the total income and the tax payable thereon would depend on the applicable income tax rates.


transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, is exempt from tax. However, in case of a shareholder being a company liable to pay tax on book profits under section 115JB of the IT Act, such long term capital gain would be liable to tax under that section.



5. A shareholder of the Company will be entitled to claim exemption in respect of tax on long term

capital gains (other than those exempt under Section 10(38) of the IT Act) under Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum amount of investment in the above bonds by any shareholder in a financial year is Rs. 5 million. However, according to Section 54EC(2) of the IT Act, if the said bonds are transferred or otherwise converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such bonds are transferred or otherwise converted into money.

6. Shareholders who are individuals or Hindu undivided families can avail of an exemption in respect of

long term capital gain under Section 54F of the IT Act by utilization of the net sales consideration arising from the sale of the Company’s share held for a period of more than 12 months [which is not exempt under Section 10(38)], for purchase / construction of a residential house (“new asset”) within the specified time period and subject to the fulfillment of the conditions specified therein which also includes conditions to be satisfied post acquisition of a new asset.


in the hands of a shareholder would depend on the nature of holding and various other factors. In case the income of the shareholder from transfer of shares is treated as business income then the income would be computed under the head profit and gains from business / profession and the provisions of the IT Act would apply accordingly. Further, the amount of STT paid by the shareholder in respect of the taxable securities transactions entered into the course of his business would be eligible for deduction as per section 36(xv) of the IT Act.

8. Under Section 74 of the IT Act, unabsorbed loss, if any, under the head “Capital gains” can be carried

forward and set off in the specified manner against the capital gains for subsequent years (up to 8

51

years) subject to the conditions specified therein. However, in order to carry forward such loss under the head “Capital Gains”, the return of income is required to be filed within the time allowed under section 139(1) of the IT Act.

9. Under Section 10(32) of the IT Act, any income of minor children clubbed with the total income of the

parent under Section 64(1A) of the IT Act, will be exempt from tax to the extent of Rs. 1,500 per minor child whose income is so included.

B. Non Resident Shareholders B. 1 Non-resident shareholders – other than Foreign Institutional Investors and Non Resident Indians 1. Under section 10(34) of the Income-tax Act, 1961 (‘the IT Act’), any income by way of dividends



in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), tax will be chargeable at 15 percent (plus applicable surcharge and education cess). However, no deduction under Chapter VI-A of the IT Act would be allowed from such short term capital gains subjected to tax under Section 111A. In other cases, where the transaction is not subjected to STT, the short term capital gains would be taxable as a part of the total income and the tax payable thereon would depend on the applicable income tax rates.


transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, is exempt from tax. However, in case of a shareholder being a company liable to pay tax on book profits under section 115JB of the IT Act, such long term capital gain would be liable to tax under that section.





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6. Shareholders who are individuals can avail of an exemption in respect of long term capital gain under Section 54F of the IT Act by utilization of the net sales consideration arising from the sale of the Company’s share held for a period of more than 12 months [which is not exempt under Section 10(38)], for purchase / construction of a residential house (“new asset”) within the specified time period and subject to the fulfillment of the conditions specified therein which also includes conditions to be satisfied post acquisition of a new asset.


in the hands of the shareholder would depend on the nature of holding and various other factors. In case the income of the shareholder from transfer of shares is treated as business income then the income would be computed under the head profit and gains from business / profession and the provisions of the IT Act would apply accordingly. Further, the amount of STT paid by the shareholder in respect of the taxable securities transactions entered into the course of his business would be eligible for deduction as per section 36(xv) of the IT Act.



9. Under the provisions of Section 90(2) of the IT Act, if the provisions of the DTAA between India and

any specified territory / country of residence of the non-resident are more beneficial to the non-resident, then the provisions of the DTAA shall be applicable provided the non-resident is the tax resident of that country and fulfills the other conditions specified in DTAA.

B.2 Foreign Institutional Investors 1. Under section 10(34) of the Income-tax Act, 1961 (‘the IT Act’), any income by way of dividends



in the hands of a shareholder would depend on the nature of holding and various other factors. In case the income of the shareholder from transfer of shares is treated as business income then the income would be computed under the head profit and gains from business / profession and the provisions of the IT Act would apply accordingly. Further, the amount of STT paid by the shareholder in respect of the taxable securities transactions entered into the course of its business would be eligible for deduction as per section 36(xv) of the IT Act.

3. As per provisions of section 115AD of the IT Act, in respect of short-term capital gains on sale of

shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), tax will be chargeable at 15 percent (plus applicable surcharge and education cess). However, no deduction under Chapter VI-A of the IT Act would be allowed from such short term capital gains subjected to tax under Section 115AD. In other cases, where the transaction is not subjected to STT, the short term capital gains would be taxable at 30 percent (plus applicable surcharge and education cess).


transaction carried out through a recognized stock exchange in India, and where such transaction is

53

chargeable to STT, is exempt from tax. However, in case of a shareholder being a company having a permanent establishment in India and liable to pay tax on book profits under section 115JB of the IT Act, such long term capital gain would be liable to tax under that section.

5. As per the provisions of Section 115AD of the IT Act, long term gains accruing to the shareholders of

the Company being Foreign Institutional Investors (“FII’s”) from the transfer of shares of the Company listed on recognized stock exchanges, otherwise than as mentioned in point 4 above, are chargeable to tax at 10 percent (plus applicable surcharge and education cess). Adjustment with respect to fluctuation in foreign exchange rate would be available. However, no deduction under Chapter VI-A of the IT Act would be allowed from such short term capital gains subjected to tax under Section 115AD.





8. Under the provisions of Section 90(2) of the IT Act, if the provisions of the DTAA between India and

any specified territory / country of residence of the non-resident are more beneficial to the non-resident, then the provisions of the DTAA shall be applicable provided the non-resident is the tax resident of that country and fulfills the other conditions specified in DTAA.

B.3 Non-Resident Indians 1. Under section 10(34) of the Income-tax Act, 1961 (‘the IT Act’), any income by way of dividends



in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), tax will be chargeable at 15 percent (plus applicable education cess). However, no deduction under Chapter VI-A of the IT Act would be allowed from such short term capital gains subjected to tax under Section 111A. In other cases, where the transaction is not subjected to STT, the short term capital gains would be taxable as a part of the total income and the tax payable thereon would depend on the applicable income tax rates.


transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, is exempt from tax.

54

4. As per the provisions of section 115E of the IT Act, long term gains from the transfer of shares acquired or purchased or subscribed in foreign currency, otherwise than as mentioned in point 3 above, is chargeable to tax at 10 percent (plus applicable education cess). However, no deduction under Chapter VI-A of the IT Act would be allowed from such long term capital gains subjected to tax under Section 115E.

5. A shareholder of the Company is entitled to claim exemption in respect of tax on long term capital

gains (other than those exempt under Section 10(38) of the IT Act) under Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum amount of investment in the above bonds by the shareholder in a financial year is Rs. 5 million. However, according to Section 54EC(2) of the IT Act, if the shareholder transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the previous year in which such bonds are transferred or otherwise converted into money.

6. Non-resident Indian Shareholders can avail of an exemption in respect of long term capital gain under

Section 54F of the IT Act by utilization of the net sales consideration arising from the sale of the Company’s share held for a period of more than 12 months [which is not exempt under Section 10(38)], for purchase / construction of a residential house (“new asset”) within the specified time period and subject to the fulfillment of the conditions specified therein which also includes conditions to be satisfied post acquisition of a new asset.

7. As per provisions of section 115F, a non-resident Indian Shareholders can avail of an exemption in

respect of long term capital gain arising from the transfer of shares acquired or purchased or subscribed in foreign currency, otherwise than as mentioned in point 3 above, by investing the net sales consideration in any specified asset or in the savings certificates (both as defined in Chapter XXI-A of the IT Act) within the specified time period and subject to the fulfillment of the conditions specified therein.


in the hands of a shareholder would depend on the nature of holding and various other factors. In case the income of the shareholder from transfer of shares is treated as business income then the income would be computed under the head profit and gains from business / profession and the provisions of the IT Act would apply accordingly. Further, the amount of STT paid by the shareholder in respect of the taxable securities transactions entered into the course of his business would be eligible for deduction as per section 36(xv) of the IT Act.



10. Under section 10(32) of the IT Act, any income of minor children clubbed with the total income of the

parent under Section 64(1A) of the IT Act, will be exempt from tax to the extent of Rs. 1,500 per minor child whose income is so included.

11. As per the provisions of section 115G of the IT Act, it is not necessary for a non-resident Indian to

furnish his return of income if – (a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both; and (b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.

55

12. As per the provisions of section 115H of the IT Act, in case a non-resident Indian shareholder becomes a resident in India, the provisions of the Chapter XII-A can continue to apply in relation to investment made when such shareholder was a non-resident Indian. In this regard, the non-resident Indian shareholder needs to furnish a declaration in writing to the Assessing Officer along with his return of income.

13. As per the provisions of section 115I, a non-resident Indian Shareholder may elect not to be governed

by the special provisions of the Chapter XII-A of the IT Act and if such shareholder exercises such option, then the tax on total income will be charged in accordance with the other provisions of the IT Act.

II. Tax Benefits available to the shareholders under the Wealth-Tax Act, 1957 Shares of company held by the shareholder will not be treated as an asset within the meaning of Section 2(ea) of Wealth Tax Act, 1957. Hence, no Wealth Tax will be payable on the value of shares held by the shareholder of the Company. III. Tax Benefits available to Mutual Funds As per the provisions of Section 10(23D) of the IT Act, any income of Mutual Funds registered under the SEBI Act, 1992 or regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions or authorised by the Reserve Company of India would be exempt from income tax, subject to the conditions as the Central Government may by notification in the Official Gazette specify in this behalf. However, Mutual Funds will be liable to pay tax on income distributed to unit holders under Section 115R of the IT Act. V. Tax Deduction at Source No income-tax is deductible at source from income by way of capital gains under the present provisions of the IT Act, in case of residents. However, as per the provisions of section 195 of the IT Act, any income by way of capital gains [except the long-term capital gains exempt under section 10(38) of the IT Act], payable to non residents, may be covered by the provisions of withholding tax, subject to the provisions of the relevant DTAA with the country of residence of the non-resident provided the non-resident is the tax resident of that country and fulfills the other condition specified in DTAA. Accordingly, income tax may have to be deducted at source in the case of a non- resident shareholder at the rate under the domestic tax laws or under the DTAA, whichever is beneficial to the non-resident unless a lower withholding tax certificate is obtained by the non-resident from the Indian Tax authorities and the same is submitted to the Company. Notes: 1. For the year ended 31st March 2012 viz. assessment year 2012-13:

a) In case of non-corporate tax payers, no surcharge is applicable and education cess is applicable @ 3 percent.

b) In case of domestic companies, surcharge is applicable @ 5 percent if total income is in excess of Rs. 100 lakhs. Further, education cess is applicable @ 3 percent in all cases.

c) In case of foreign companies, surcharge is applicable @ 2 percent if total income is in excess of Rs. 100 lakhs, Further, education cess is applicable @ 3 percent in all cases.

2. All the above benefits are as per the Finance Act 2011. Many of these benefits are subject to the Company and the Shareholders complying with various conditions specified in the relevant tax laws.

3. The above statement of possible tax benefits sets out the provisions of law in a summary manner only and is not a complete analysis or list of all potential tax consequences. This is not an opinion or assurance that the Company and/or shareholders will be eligible for any of the tax benefits.

56

4. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the Issue.

5. In respect of non-residents, the tax rates and the consequent taxation, mentioned in this section shall be further subject to any benefits available under the, if any, between the Government of India and the Government of any specified territory / country in which the non-resident has fiscal domicile provided the non-resident is the tax resident of that country and fulfills the other condition specified in DTAA;

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SECTION V – ABOUT US

INDUSTRY OVERVIEW

The information presented in this section has been obtained from publicly available documents from various sources, including officially prepared materials from the Government of India and its various ministries, industry websites and the FICCI – KPMG Indian Media and Entertainment Industry Report 2010 and 2011. Industry websites and publications generally state that the information contained therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe industry, market and government data used in this Draft Letter of Offer is reliable, it has not been independently verified. The FICCI – KPMG Indian Media and Entertainment Industry Report 2010 and 2011 endeavors to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. These reports expressly disclaim legal responsibility and liability of the person / organisation preparing the report for any loss or damage resulting from the contents of such reports. Accordingly, our Company and the Lead Manager do not take any responsibility for the data, projections, forecasts, conclusions or any other information contained in this section. Certain information contained herein pertaining to prior years is presented in the form of estimates as they appear in the respective reports/ source documents. The actual data for those years may vary significantly and materially from the estimates so contained. Indian Economy India, the world’s largest democracy with a population of 1.19 billion people had a GDP on purchasing power parity basis of approximately US$ 4.05 trillion in 2010. This makes India the fifth largest economy in the world after the European Union, United States of America, China and Japan in purchasing power terms. Source: CIA World Fact Book The Indian economy has emerged with remarkable rapidity from the slowdown caused by the global financial crises of 2007-09. India achieved 9.3% GDP growth in FY 2007-08, 6.8% GDP growth in FY 2008-09 and 8% GDP growth in FY 2009-10. Source: Economic Survey 2010-11 The following table sets forth the key indicators of the Indian Economy in the past five financial years:

Data categories and

components

Units 2005-06 2006-07 2007-08 2008-09 2009-10

Growth Rate % 9.5 9.6 9.3 6.8 8.0 Index of industrial production# (growth)

% 8.0 11.9 8.7 3.2 10.5

Inflation (Wholesale price index) (12 month average)

% change 4.3 6.5 4.8 8.0 3.6

Foreign Exchange Reserves

US$ billion 151.6 199.2 309.7 252.0 279.1

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#The annual growth rates have been recompiled from 2005-06 onwards since the indices have been recompiled from April 2004 onwards using new series of wholesale price index and index of industrial production. Source: Economic Survey 2010-11 Indian Media and Entertainment Industry The Indian M&E industry grew from ` 587 billion in 2009 to ` 652 billion in 2010, registering an overall growth of 11 percent. Backed by positive industry sentiment and growing media consumption, the industry is estimated to achieve growth of 13 percent in 2011 to touch ` 738 billion. As the industry braces for exciting times ahead, the sector is projected to grow at a CAGR of 14 percent to reach ` 1,275 billion by 2015. The Indian M&E industry has evolved significantly over the last decade and the pace of this evolution is only expected to increase going forward. Overcoming the gloom that had set in during the economic slowdown of 2008-09, the Indian Media and Entertainment (M&E) industry bounced back in 2010 registering a growth rate of 11 percent compared to a mere 1.4 percent in 2009. The overall industry size is as follows:

Overall Industry

size (` Bn)

2007 2008 2009 2010 CAGR (2007-

10)

2011P 2012P 2013P 2014P 2015P CAGR (2010-

15)

Television 211 241 257 297 12% 341 389 455 533 630 16% Print 160 172 175 193 6% 211 231 254 280 310 10% Film 93 104 89 83 -3% 91 98 109 120 132 10% Radio 7 8 8 10 11% 12 15 18 21 25 20% Music 7 7 8 9 5% 9 11 13 16 19 17% Out of Home

14 16 14 17 6% 19 22 24 27 30 12%

Animation and VFX

14 17 20 24 18% 28 33 40 47 56 19%

Gaming 4 7 8 10 32% 13 17 23 31 38 31% Digital

Advertising 4 6 8 10 39% 13 18 22 28 36 28%

Total 516 579 587 652 8% 738 834 957 1,104 1,275 14% Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2011 Indian Film Industry 2010 was a challenging year for the Indian film industry as most films failed to create a mark at the box office. The Indian film industry was estimated to be ` 83.3 billion in 2010, indicating a decline of 6.7 percent in overall industry revenues vis-a-vis 2009. The industry believes that lack of quality content led to an overall drop in occupancy levels and box office collections. While overseas theatrical revenues experienced some decline; it was the home video segment that witnessed a steep fall in revenues. Cable and Satellite rights experienced a healthy growth of 33 percent owing to growing demand from broadcasters. Ancillary revenue streams also witnessed a growth of 15 percent over 2009. Size of the Indian film industry:

Film Industry

(` Bn)

2007 2008 2009 2010 CAGR (2007-

10)

2011P 2012P 2013P 2014P 2015P CAGR (2010-

14) Domestic Theatrical

71.5 80.2 68.5 62.0 -4.6% 67.4 72.2 79.2 87.0 94.8 8.9%

Overseas Theatrical

8.7 9.8 6.8 6.6 -8.8% 6.7 7.2 7.9 8.7 9.5 7.5%

Home 3.3 3.8 4.3 2.3 -11.0% 2.5 2.6 2.8 2.9 3.0 5.0%

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Film Industry

(` Bn)

2007 2008 2009 2010 CAGR (2007-

10)

2011P 2012P 2013P 2014P 2015P CAGR (2010-

14) Video

Cable & Satellite Rights

6.2 7.1 6.3 8.3 10.3% 9.6 11.0 12.6 14.5 16.6 14.8%

Ancillary Revenue Streams

2.9 3.5 3.5 4.1 11.4% 4.7 5.4 6.2 7.1 8.2 15.0%

Total 92.7 104.4 89.3 83.3 -3.5% 90.9 98.4 108.6 120.1 132.1 9.6% Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2011

Overall Industry Size

Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2011 Film Exhibition Business With the growing relevance of multiplexes over the last few years, the Indian film exhibition industry has undergone a metamorphosis. Even though multiplexes typically have lower capacity per screen as compared to a single screen theatre (nearly 300 for multiplexes compared to 500 for single screens) they currently contribute around 25 percent of the total domestic theatrical revenues for the overall Indian film industry and as much as 60 percent for Hindi films. Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2010 The industry which currently has approximately 1000 multiplex screens is likely to double its screen count over the next 5 years. This multiplex growth is expected to be the key driving force for the growth of Indian film industry. With the length of Indian movies coming down in recent years, multiplexes are able to accommodate more shows per screen. This trend coupled with the increase in number of screens has led to an overall increase in footfalls. All these factors combined with a marginal growth in average ticket prices have accounted for greater revenues for most multiplex players in 2010.

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Meanwhile, multiplex operators have been intelligently programming their shows across locations to ensure a healthy mix of films across genres and languages to suit the varied tastes of the audiences. In addition, multiplexes are rolling out innovative schemes to lure audiences to cinemas and address drop in occupancy levels. Key Growth Drivers:

1. Urbanization and growing middle class: Rising urbanization is expected to drive multiplex growth through two levers – (i) a population that increasingly spends on discretionary items such as entertainment, and (ii) availability of quality spaces such as malls which are suitable for multiplexes.

2. Under screened market: When compared to global benchmarks such as USA, UK, France, Spain, India is a significantly under screened market. Mumbai and Bangalore have a higher number of screens per million at 23 and 21 respectively, while cities such as Hyderabad and Chennai have only about 6.

3. Better viewing experience: Multiplexes offer a better viewing experience, audio capability and comfortable seating. Moreover, the also offer better hygiene and cleanliness making it a popular medium for cinema consumption.

Key Challenges:

1. Competing entertainment formats such as cricket: Competition from sporting events, particularly cricket and IPL has created an 8 week black window for multiplexes. Some multiplex owners are now starting to screen alternative content such as India's matches for the cricket world cup and thereby bring in audiences.

2. Escalating rental costs: With a boom in the real estate market, rental costs have seen an upward trend for most multiplexes. These escalating costs are causing pressure on margins, thereby impacting their profitability.

3. Revenue share: As the theatrical window for movies has reduced, the first two weeks now account for majority of the box office collections. The opening week collections account for as much as 50 percent of the revenues of box office collections for a movie at a multiplex. With the revised revenue sharing policy in 2009, multiplexes are now sharing slightly greater revenues with producers.

Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2011 Film Distribution Business Given the high stakes and risks involved, independent distributors are more selective while picking up films. As a consequence, bargaining opportunities available for distributors have increased and some large studios are increasing their focus on distribution in order to take advantage of such opportunities. With increasing fragmentation of the audience, even large distributors are considering distribution in select territories, as opposed to all-India distribution. The number of prints for domestic theatrical release has seen an approximate 50 percent increase in 2010 versus 2009.This trend is largely reflected for big and medium budget films, and is not as pronounced for small budget films. Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2011 The indicative revenue contribution from domestic film territories for Hindi films is as follows:

Territory Percent Bombay (Mumbai, Thane, Western Maharashtra, Gujarat) 40% Delhi and UP (Delhi City and UP) 20 - 22%

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Territory Percent Punjab (Punjab, Haryana, J&K, Himmachal) 7.5 - 9% Rajasthan 5 - 5.5% C.I. (parts of Madhya Pardesh) 3.5% CP Berar (majority of MP, all Chittisgarh, East Maharahstra) 5 - 5.5% Bihar and Jharkhand 1 - 2% Bengal 4.5 - 5% Assam 0.5% Orissa 0.5% Nizam and Andhra (South East Maharahstra and all AP) 5 - 5.5% Mysore (all Karnataka) 3.5 - 4.5% Tamil Nadu and Kerala 1 - 1.5% Nepal 0.25% Source: FICCI – KPMG Indian Media and Entertainment Industry Report 2010

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BUSINESS OVERVIEW

Overview We are engaged in the business of operating and managing a chain of multiplexes in India. In addition to our primary business of multiplex operation we are also involved in the business of distribution through our subsidiary Fame Motion Pictures Limited (‘FMPL’). In our multiplex business we have a wide presence across 13 cities with 24 multiplexes and (3) three single screens aggregating to 102 screens and 28,518 seats. On February 3, 2010, Inox Leisure Limited (“ILL”) acquired 43.28% of share capital of our Company under the terms of the Share Purchase Agreement followed by acquisition of additional Equity Shares to the extent of 7.21% from open market on February 5, 2010. Pursuant to these acquisitions, ILL made an open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997 to the Equity Shareholders of our Company to acquire 8,231,759 Equity Shares of ` 10 each fully paid up. Post the conclusion of the open offer, ILL held 50.27% of the then issued and paid up equity share capital of our Company. Accordingly, our Company became a subsidiary of ILL with effect from January 6, 2011. Our Company has two wholly owned subsidiaries namely FMPL and Big Pictures Hospitality Services Private Limited (‘BPHSPL’). FMPL is engaged in the business of film distribution and BPHSPL is engaged in the food court business. Further, our Company has made investment in (2) two joint venture companies namely, Swanston Multiplex Cinemas Private Limited (‘SMCPL’) and Headstrong Films Private Limited (‘HFPL’), in each of which we hold 50% of the paid-up equity share capital. SMCPL is engaged in the business of operating multiplexes while HFPL is engaged in the business of film production and distribution. For Fiscal Year 2010 and Fiscal Year 2011 our total income was ` 17,587.72 lakhs and ` 17,276.23 lakhs respectively. For the same periods our net loss after tax was ` 120.57 lakhs and ` 412.17 lakhs respectively. Multiplex operation business We operate a chain of multiplexes and theaters under the brand name ‘FAME’. As of the date of this Draft Letter of Offer, we operated 27 multiplexes and theatres with a total of 102 screens and 28,518 seats. In Fiscal Year 2011 we served 106.98 lakh patrons. Income from multiplex operation primarily comprises income from theatrical exhibition (i.e. ticket sales net of taxes paid / payable and discounts), sale of food and beverage, management fees, advertisement and royalty income. For the Fiscal Year 2010 and Fiscal Year 2011, our income from multiplex operations amounted to ` 15,395.09 lakhs and ` 16,395.69 lakhs contributing 87.53 % and 94.90 % to our total income respectively. We typically enter into long term agreements for the premises where our multiplexes and theaters are situated. With the exception of our multiplex in Anand which is situated on our own property and with the exception of a multiplex each in Surat, Kolkata and Baroda which are only managed by us, all our multiplexes and theaters are located on leased premises whereby we incur the capital expenditure in setting up the multiplex. For the multiplexes managed by us we typically get a revenue / profit share with or without minimum guarantee. The table below provides details of our multiplexes and theaters: Sr. No


property Properties under Fame India Limited 1 Mumbai Inorbit Mall, Malad 7 1,591 September 2004 Leased

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Sr. No


property Properties under Fame India Limited 2 Raghu Leela Mall, Kandivali 4 1,275 June 2005 Leased 3 Thakur Fame, Dahisar 4 1,784 August 2007 Leased 4 Thakur Movie 1 418 October 2007 Leased 5 Raghuleela Vashi 6 1,015 July 2008 Leased 6 Neelyog Mall, Ghatkopar 4 1,268 December 2008 Leased 7 Kalyan 5 1,320 July 2009 Leased 8 Kolkatta Metropolitan Mall, Hiland

Park 4 979 December 2005 Leased

9 Southcity 6 1,426 March 2008 Leased 10 Pune Jai Ganesh Mall, Pimpri 3 1,009 May 2006 Leased 11 Fun N Shop 3 1,015 September 2009 Leased 12 Bengaluru

Shankarnag 1 612 March 2009 Leased

13 Whitefield 5 781 July 2009 Leased 14 Anand Anand 3 624 March 2007 Owned 15 Nasik Nashik Shirdi Road 3 1,318 November 2004 Leased 16 Aurangabad CIDCO, Aurangabad 3 1,012 December 2006 Leased 17 Baroda Seven Seas 4 1,116 July 2009 Leased 18 Dhanbad Shriram Mall 4 996 October 2008 Leased 19 Bharuch Shalimar Mall 3 890 October 2008 Leased 20 Panchkula Shalimar Mega Mall 3 652 February 2009 Leased 21 Chennai Chandra Metro Mall 5 1,327 July 2011 Leased Properties operated in joint venture 22 Bengaluru

(1) Lido 4 993 January 2008 Leased

23 Mumbai (2) Citi Mall, Andheri 5 1,282 April 2002 Leased 24 Mumbai (3) Nakshatra Mall, Dadar 1 280 October 2006 Leased Properties under management model 25 Surat Raj Empire Mall 6 1,840 June 2006 Managed 26 Baroda Vihar 3 994 December 2009 Managed 27 Kolkata Hind Fame 2 701 April 2011 Managed

Total 102 28,518 Our Company’s share of the joint venture- (1) 75% (2) 50% (3) 66% Distribution Business As a film distributor, to ensure maximization of the revenue potential of the film, we draw strategies on print and publicity and execute the same in terms of managing the logistics of distribution of prints, selection of exhibition locations, marketing, billing and collections etc. For the Fiscal Year 2010 and for the Fiscal Year 2011, our income from distribution business amounted to ` 1,762.48 lakhs and ` 471.49 lakhs contributing 10.02% and 2.73 % to our total income respectively.

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Competitive Strengths Alliance with our corporate Promoter We are a subsidiary of ILL and benefit from the management and administration skills of our Promoter. We believe that the management and administration skills of our Promoter will enable us in enhancing revenue potential from corporate customers through ticket revenue, advertising deals, bulk bookings and marketing tie-ups etc. Further, this will help us in rationalization of our cost of raising capital, sourcing costs pertaining to various materials used for fit-outs, effectively leading to lower capital outlays for new properties and cost of repairs for existing properties. In addition, we believe that this alliance will help us in rationalizing other operating costs such as costs associated with food and beverage etc.

Leading brand with strong consumer recognition The ‘FAME’ brand over the years has been identified with high quality cinema viewing experience. We believe that our brand has been established in consumers’ mind and has a high recall value because of our sustained focus on providing convenience to our patrons. Our initiatives include facilities such as telephonic booking, internet booking, mobile ticketing, installation of kiosks and hosting of film premiers on a regular basis. We believe that our well recognized brand ensures that we are at the forefront of consumers’ mind leading to customer loyalty translating into repeat visits from existing patrons while simultaneously attracting new customers to our multiplexes and theaters. Driving growth through innovation and marketing We believe that our consistent innovation in a variety of marketing tools has helped us sustain the interest of our audience to a great extent. We regularly arrange for special screening of films and host premieres. We maintain a customer relationship management database which gives us an insight into all the varied movie watching patterns of the consumer through which we roll out customized specific offers for our patrons. Additionally, we undertake promotional activities like movie contests and festival related contests and showcase a variety of alternate viewing content like theatre plays, cricket matches and early morning shows. At our multiplexes and theaters, we engage our patrons in activities like lucky draw for seats and food and beverages combos which are bundled with free merchandise. We believe in spreading our presence by associating with television shows with high target rating point (“TRP”) and with radio channels to ensure that our promotions are well spread and are viewed by the final consumer. To target consumers in the high income brackets we have introduced recliners in many of our theaters even in tier II cities such as Nasik and Aurangabad. Our Strategy Further expansion in metropolitan cities and tier II cities One of the key factors for the success of any theater is its location. We have the requisite skills to identify various locations in terms of catchment area and spending patterns of the people. We intend to continue to improve our existing position and market share by establishing multiplexes in key markets that we consider to be of high growth potential and that will complement our existing network of multiplexes and theaters. We believe that as the disposable income of people in India rises, entertainment will be one of the major growth sectors in India. Our strategy is to position ourselves to capitalize on the continued growth of the entertainment sector in India. In particular, we aim to add more number of screens in the metropolitan cities in the north given the volume of audience and demand for hindi films in this region. Similarly, we aim to expand further into tier II cities in south India given the range of content which is available for exhibition.

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Achieve growth through entering into management contracts While we continue to consider selective additions to our multiplexes, we view the pursuit of asset-light strategies as a key growth strategy. To this end, we actively seek and pursue the management model and will look at entering into management contracts as a means of providing a steady source of revenue. We currently manage a multiplex each at Surat, Baroda and Kolkata. By entering into management contracts for which we typically receive a management fee based on revenue / profits, we can expand our business without the need for substantial investment or capital expenditure. Under the management model, we provide guidance on design, specifications, fit outs and time schedule, advising on and managing all operational issues such as ticket pricing, staffing, concessions and other revenues, sales and marketing initiatives and screening programming. Enhancing our human capital Investing in human capital is a key part of our business strategy. We periodically assess and instruct our employees, particularly our ticketing and customer care associates across all levels to make them conscious to the needs of our consumers. Additionally, we aim to focus on various areas which we believe will enable us to retain and attract experienced and qualified employees by (i) aligning the interests of our employees with ours; (ii) spreading responsibility for achieving our business objectives throughout our organization; (iii) extending best practices amongst our employees; and (iv) to train and develop employees in building skills and capabilities with a focus on functional requirements and generic skills enhancements. We benchmark our compensation and benefits with industry standards to pay our associates accordingly. Description of Business Multiplex operation business We operate 27 theatres with a total of 102 screens and 28,518 seats. We typically enter into long term agreements for the premises where our multiplexes and theaters are situated. With the exception of our multiplex in Anand which is situated on our own property and with the exception of a multiplex each in Surat, Baroda and Kolkata which are only managed by us, all our multiplexes and theaters are located on leased premises whereby we incur the capital expenditure in setting up the multiplex. For the multiplexes managed by us we typically get a revenue / profit share with or without minimum guarantee. The main factors that we consider before selecting a property for multiplex development include the spending capacity of people in the area and competition / potential competition from other theaters as well as from other available avenues of entertainment in the surrounding areas. Outline of revenue sharing arrangements with the producers / distributors In the year 2009 there were disagreements on revenue sharing and other terms between us and various producers / distributors which stalled several movie releases, impacting our revenue negatively. Consequently, following a settlement with the producers / distributors, various terms including revenue sharing between us and producers / distributors were finalized.

Pursuant to this settlement, standard agreements were entered into between us and various producers / distributors setting out specific details in respect of each film, designated screens, number of prints, weekly revenue share percentages between us and the producers / distributors. These standard agreements expired on June 30, 2011. Since the expiry of these agreements our company has been entering into weekly arrangements with the producers / distributors typically under a booking contract which set out amongst other things, the name of

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the film, name of the multiplex where such film will be exhibited, date from which screening of the film shall commence and weekly revenue share percentages between us and the producers / distributors. Producers / distributors’ share is typically a percentage of the net box office collections of a film and is based on various parameters including the number of weeks for which the film is exhibited, category of theater i.e. single screen or a multiplex and duration and language of the film. Typically, the producer / distributor’s share of net box office collections is the highest for the first week of exhibition and reduces as the exhibition week progresses. Sources of income Income from multiplex operation primarily comprises income from theatrical exhibition (i.e. ticket sales net of taxes paid / payable and discounts), sale of food and beverage and advertisement and royalty income. For the Fiscal Year 2010 and Fiscal Year 2011 a total of 109.96 lakh and 106.98 lakh patrons visited our multiplexes and theaters with an ATP of ` 138 and ` 152 and SPH of ` 38 and ` 44 respectively. For the Fiscal Year 2010 and Fiscal Year 2011, our income from ticket sales amounted to ` 10,794.84 lakhs and ` 11,078.27 lakhs, income from sale of food and beverages amounted to ` 3,420.65 and ` 3,816.13 lakhs and income from advertisement and royalty amounted to ` 1,127.50 lakhs and ` 1,466.44 lakhs respectively. Ticket sales Ticket sale depends primarily upon the number of patrons that visit our multiplexes and theaters and the admission price per ticket. Both these factors are critical for optimising the profitability of our multiplexes and theaters. Pricing of a ticket depends on various factors such as location of the multiplex, month of the year, day of the week, show timing, etc. Food and beverages A part of our revenue is generated from the sale of food and beverages in our multiplexes and theaters. We try to maximize our revenue from the sale of food and beverages by increasing the number of transactions in the limited time our patrons have prior to the start of a film or during the interval of a film by increasing the average transaction size by offering attractive deals. We attempt to increase the number of transactions by installing adequate number of points of sale counters in our multiplexes / theaters. Advertisement and royalty

Revenue from advertising and royalty is generated from on-screen advertising, displays inside and outside the multiplexes and theaters, promotional kiosks, etc. While advertisement is not a big component of our total income, it is good for our profit margin because our margin of profit on the revenue generated from advertisement is high as the costs associated with the display of advertisements are almost negligible. Key cost components Distributors’ share and rental cost are the key components of our expenditure and amounted to ` 4,292.15 lakhs and ` 3,627.49 lakhs respectively for the Fiscal Year 2010 and ` 4,678.59 lakhs and ` 4,142.49 lakhs respectively for the Fiscal Year 2011. Food and beverage cost amounted to ` 1,050.64 lakhs for Fiscal Year 2010 and ` 1,123.36 lakhs for the Fiscal Year 2011.

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Marketing We have various channels of marketing as below: • Experiential marketing- We organize star visits where the audience gets a chance to meet and

exchange notes with the celebrities and also organize paid previews and premieres to provide an opportunity to watch the movie before the slated release date. At our multiplexes and theaters our patrons could have their guest lists to organize special events like birthdays and corporate get together.

• Online and Website marketing- For the convenience of our patrons we offer various facilities such as internet booking on multiple domains, telephonic-booking, mobile ticketing and installation of ticket kiosks and various offers and schemes for our online users. We also have tie-ups with various financial institutions and a telecom player to attract customers. Our customer relationship management database help us in understanding various movie watching patterns of the patrons through which customized specific offers are rolled out for our patrons.

• Social Media Marketing- We are active on mediums such as facebook, twitter etc. and conduct activities like movie promotions, movie contest and festival related contests by giving free movie key-chains, t-shirts and other movie merchandise.

Competition Multiplexes and theaters operated by us compete for audiences with other multiplexes and theaters based on geographical location. In particular we compete with the other domestic multiplex chains i.e. Big Cinemas, PVR, Inox, Fun Republic, and Cinemax. Our success is dependent on our ability to compete in areas such as ticket prices, content of the film, quality of service, location of multiplexes / theaters and brand recognition, among others. We also have to compete with any new multiplex or theater that commences operations in the cities in which we operate. Further, we face competition from other forms of out-of-home entertainment including sporting events, concerts and live theatre. In future, we may also face competition from global entertainment companies who may set up shop in India. Our ability to respond to the expected growth in the number of multiplexes and theaters, and the consequent competition in the entertainment industry, will be critical to our results of operations. Intellectual Property We own the intellectual property rights for the brand ‘Fame’ and have made an application for the registration of our logo as appearing on the cover page of this Draft Letter of Offer. In addition we, along with our subsidiaries, have 46 registered trademarks. Insurance We maintain annually renewable insurance policies covering a variety of risks including insurance on the building and all of the fixed assets and entire inventories at our multiplexes and theaters against risk of fire and natural disasters such as earthquake, and against terrorism damage. We also maintain money insurance (covering insurance for money in transit and money on premises and insurance for money against riot, strike and malice); employees’ group personal accident, employee group medical and life insurance and insurance for automobiles owned by our Company. Further we maintain public liability insurance and director and officer insurance covering liability of all of our directors and officers. We are not insured against losses due to an interruption of our business or for loss of profits. Employees

We employed 698 employees as of August 31, 2011. We believe our ability to grow depends on our human resources.

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Properties Our Registered Office is located at Citimall, 2nd Floor Oshiwara Link Road, Andheri West, Mumbai- 400053. We have an existing leave and license agreement for our Registered Office which is valid until May 15, 2013. For details of the properties currently used by us for the purpose of our business and the basis on which the same have been acquired please refer to the table appearing on page 62 of this Draft Letter of Offer.

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KEY INDUSTRY REGULATIONS

The government of India has formulated various regulations and policies over the years for regulation of our industry in India. The following description is a brief summary of some of the regulations applicable to our Company: The Cinematograph Act, 1952 and The Cinematograph (Certification) Rules, 1983 Any film intended for exhibition must be certified under The Cinematograph Act, 1952 (“Cinematograph Act”). A Board of Film Certification (“the Board”) has been set up for such certification. The Board evaluates the appropriateness of the film intended for exhibition and accordingly issues a certificate. This certificate is valid for 10 years from the date of issue. The exhibitor is required to ensure compliance with all conditions specified by the Board. A person aggrieved by the Board’s decision may appeal to an appellate tribunal. Films certified under the Cinematograph Act may be re-examined by the Board if any complaint is received in its respect. All publicity regarding the film should indicate that the film has been certified. If films are exhibited contrary to restrictions specified by the Board, the exhibitor is liable for punishment with imprisonment and/or a fine. The Board may provide restrictions and may direct the applicant to carry out modifications, as it deems fit. The obligation to obtain such certificate for exhibition is on the producer of a film and a duplicate copy of the same must be provided to the distributor or the exhibitor according to the Cinematograph (Certification) Rules, 1983. The Cinematograph Film Rules, 1948 (“Cinematograph Rules”) The Cinematograph Rules apply to the storage and transport of cinematograph films. A license must be obtained for these purposes. A license granted under the Cinematograph Rules is valid till December 31 of the year in which it is granted and may be renewed annually. The licensee may also transfer the license to another person upon application at any time before the expiry of the license. The licensing authority is also empowered to cancel a license upon contravention of any provision of the Petroleum Act, 1934. The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981 (“Cinema Workers Act”) The Cinema Workers Act provides regulates the conditions of employment of certain cine workers and cinema theatre workers and for related matters. The Act makes the Payment of Gratuity Act, 1972, and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 applicable to the employees of cinema theatres in which five or more persons are employed. Labour Laws Employees (Provident Fund and Miscellaneous Provisions) Act, 1952 (“EPF Act”) The EPF Act applies to establishments employing 20 or more employees and such other establishments and industrial undertakings as notified by the Government from time to time. It requires all such establishments to be registered with the appropriate State Provident Fund Commissioner. An employer is required to contribute the prescribed percentage of the basic wages, dearness allowances and remaining allowance payable to employees to the employees’ provident fund under the EPF Act. Employees are also required to make an equal contribution to the fund. Employers are required to maintain registers and submit monthly returns to the relevant State Provident Fund Commissioner.

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Employees State Insurance Act, 1948 (“ESI Act”) The ESI Act applies to all establishments employing 20 or more persons. Such establishments are required to be registered with the Employees State Insurance Corporation. The ESI Act requires all such employees to be insured in the manner provided. Further, both employers and employees are required to contribute to the ESI fund and file returns with the ESI department. Such establishments are also required to be registered under the provisions of local shops and establishments legislations applicable in the states in which commercial establishments are located. Such legislations regulate the working and employment conditions of workers employed in shops commercial establishments and provide for fixation of working hours, rest intervals, overtime, holidays, leave, termination of service, and other rights and obligations of the employers and employees. Such laws are enforced by the Chief Inspector of Shops and various inspectors under the supervision and control of the Labour Commissioner. Entertainment Tax law The Company’s operations are subject to entertainment tax levied under various state laws in which we operate. Exemption from payment of entertainment tax may be granted in certain states, subject to compliance with certain prescribed conditions. The extent of entertainment tax reliefs available to cinema owners varies from state to state. The Copyright Act, 1957 (“Copyright Act”) The Copyright Act governs laws relating to copyright in India. It defines infringement and provides remedies for the same. Copyright is the exclusive right to do or authorise others to do certain acts in relation to original (1) literary, dramatic or musical works, not being a computer programme, (2) computer programme, (3) artistic work, (4) cinematograph film and (5) sound recording. The Copyright Act protects the author of a copyrighted work from unlawful reproduction or exploitation. Copyright subsists during the life of the creator of the work and 60 years thereafter in case the author is a natural person. Copyright subsists for 60 years from the date of publication of the work concerned in all other cases. Trade Marks Act, 1999 (“Trade Marks Act”) Under the Trade Marks Act, a trademark is a mark used in relation to goods so as to indicate a connection in the course of trade between the goods and some person having the right to use the mark as proprietor. Such mark may consist of words or invented words, signatures, devices, letters, numbers, brands, headings, labels, names written in a particular style, shapes of goods other than those for which a mark is proposed to be used, or any combinations thereof or a combination of colours and so forth. The right to use a mark can be exercised either by the registered proprietor or a registered user the difference being that a registered trademark has remedies under the Trade Marks Act besides common law remedies. The present term of registration of trademarks is ten years and is renewable thereafter.

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HISTORY AND OTHER CORPORATE MATTERS Corporate Profile and Brief History Our Company was incorporated in India on October 26, 1999 as Shringar Cinemas Private Limited under the Companies Act, 1956. The name was changed to Shringar Cinemas Limited on December 24, 2004 pursuant to a fresh certificate of incorporation consequent to change of name upon conversion to public company. The name of our Company was then changed to the present name Fame India Limited on January 25, 2008 pursuant to a fresh certificate of incorporation consequent to change of name with Corporate Identification Number L92490MH1999PLC122381. The name of our Company was changed to Fame India Limited to accentuate our brand “FAME”. Mr. Shyam Shroff, Mr. Balkrishna Shroff, Mr. Shravan Shroff and Mr. Aditya Shroff were the original promoters of our Company. On March 27, 2002 our Company became a subsidiary of Fame Motion Pictures Limited (‘FMPL’), which held 51% of its Equity Share capital. On March 25, 2004, FMPL transferred its shareholding in our Company to South Yarra Holdings. Accordingly, our Company ceased to be a subsidiary company of FMPL effective that date. On March 27, 2004, our Company purchased 9,99,900 equity shares (i.e. 100% of the paid-up equity share capital) of FMPL from its erstwhile shareholders. Consequently, FMPL became a 100% subsidiary of our Company. In April 2005 our Company made an initial public offering amounting (“IPO”) to ` 4,319.50 lacs comprising of 81,50,180 Equity Shares at ` 53 per Equity Share through 100% book building process. The Equity Shares of our Company are listed on the BSE and NSE. On March 8, 2006, our Company purchased 10,000 equity shares (i.e. 100% of the paid-up equity share capital) of Big Pictures Hospitality Services Private Limited (“BPHSPL”) thereby making it a wholly owned subsidiary of our Company. BPHSPL is in the business of management of food courts. On February 3, 2010, the Promoter acquired from Mr. Shyam Gobindram Shroff, Mr. Balkrishna Gobindram Shroff and Mr. Shravan Shyam Shroff as partners of South Yarra Holdings (the “Sellers”) 1,50,57,751 equity shares of our Company at a price of ` 44 per Equity Shares (“Sale Shares”) constituting 43.28% of the issued and paid up Equity Share capital of our Company at that time by carrying out a block deal on the BSE. Further, on February 5, 2010 the Promoter acquired 25,07,537 Equity Shares constituting 7.21% of the issued and paid up Equity Share capital of our Company at that time, at a price of ` 50.75 per Equity Share by carrying out a block deal on the BSE and entered into Share Purchase Agreement with the Sellers to set out the terms and conditions agreed between them for the sale and purchase of the Sale Shares. On December 16, 2010, the Promoter alongwith Gujarat Fluorochemicals Limited, the persons acting in concert made an open offer under the Takeover Code, as amended to the Equity Shareholders for acquisition of 82,31,759 Equity Shares at ` 51 per Equity share for cash representing 20.25% of the equity share capital of our Company at that time. Pursuant to the open offer, the Promoter acquired 1,075 Equity Shares of our Company. Presently the Promoter holds 50.21% of the equity share capital of our Company. FCCB issuance and redemption: Our Company vide Board resolution dated January 28, 2006, shareholders resolution dated March 8, 2006 and offering circular dated April 17, 2006 made the following FCCB issue:

1. 12,000, Zero Coupon Series A Unsecured Foreign Currency Convertible Bonds (“Series A Bonds”) of the face value of USD 1,000 each and

2. 8,000, 0.5% per annum Series B Unsecured Foreign Currency Convertible Bonds (“Series B Bonds”) of the face value of USD 1,000 each.

The total of Series A Bonds and Series B Bonds aggregated to USD 200 lacs. On May 10, 2006 the FCCBs were listed on Singapore Stock Exchange. Key terms of the FCCB issue:

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1. The Series A Bonds would not bear any interest. 2. The Series B Bonds would bear interest at the rate of 0.5 per cent per annum which would accrue

semi-annually in arrears on 31 December and 30 June of each year. Interest would accrue on each interest payment date and on maturity, accrued interest will be paid.

3. The FCCBS would unless converted into Equity Shares of our Company prior to April 12, 2011, mature on 22 April 2011.

4. The FCCBs were convertible at any time on or after May 21, 2006 and prior to April 12, 2011 at the option of the bond holders into Equity Shares of our Company at a conversion price of (i) ` 90 per share for Series A Bonds; and (ii) ` 107 per share for Series B Bonds at the rate of exchange equal to the US Dollar to Rupees exchange rate as announced by the Reserve Bank of India (the “RBI”) on the business day immediately prior to the issue date.

5. The conversion price to be adjusted in certain circumstances. 6. Unless previously converted, redeemed or repurchased and cancelled, (i) the Series A Bonds

would be redeemed on April 22, 2011 at 137.01 percent of their principal amount representing a gross yield to maturity of 6.5%; and (ii) the Series B Bonds would be redeemed on April 22, 2011 at 140.69 percent of their principal amount representing a gross yield to maturity of 7.5%.

With the permission of RBI vide letter dated July 27, 2011, with the necessary consent of the FCCB holders and passing resolution by the Board of Directors on September 2, 2011, our Company entered into a supplemental trust deed on September 8, 2011 with the Bank of New York Mellon, trustee for redemption of outstanding FCCBs at 82% of the original maturity value of the FCCBs. In September 2011, our Company redeemed the outstanding FCCBs in two tranches by making a payment of USD 101.11 lacs towards Series A Bonds and USD 46.15 lacs towards Series B Bonds and has incurred a withholding tax liability thereof, together aggregating to ` 7,154 lakhs. Accordingly, on September 22, 2011 the FCCBs stand fully redeemed and our Company does not have any further obligations in respect of the FCCBs. Main Objects of our Company The main objects of our Company are: 1. To carry on the business of Proprietors, Agents, Managers, Lessees, Hirers, Licencees, Partners of Multiplexes, Studios, Theatres, places of amusements or entertainments, Music Halls, Cinemas, Picture Places and Concert halls, Play Pools and Game Parlours, Shopping Arcades etc. and for these purposes construct and/or acquire theatres, sound and recording equipments and all other Plant and machinery required for purpose of attaining the above object. 2. To carry on the Business of Proprietors, Agents, Managers, Lessors, Hirers, Licensors, Partners of Organising and conducting shows, concerts, Stage Shows and Plays, Mega Events, Events of Glamour, Pomp and Show, Events of World Importance and in general show Business and Import & Export of Talent and to act as Motion Pictures, T.V., Video Software Manufacturers, Producers, Distributors, Exhibitors, Exploiters and Importers and Exporters in India and Abroad of all types and formats of Indian/Foreign Films, Serials and Software and to own and conduct Film, T.V., Video and Software Studios and franchises thereof. Amendments to our Memorandum of Association Since our incorporation, the following changes have been made to our Memorandum of Association:

EGM Date / Date of

declaration of Postal Ballot

Nature of amendment

June 15, 2000 Alteration of Objects Clause of the Memorandum of Association by insertion of thefollowing clause after clause 25 as sub clause 25A: To Guarantee the payment of money unsecured or secured by or payable under or inrespect of promissory notes, bonds, debentures, debenture-stock, contracts, mortgages,

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EGM Date / Date of

declaration of Postal Ballot

Nature of amendment

charges, obligations, instruments and securities or any company or of any authority,supreme, municipal, local, or otherwise or of any persons whomsoever whetherincorporated or not incorporated, and generally to guarantee or become sureties for the performance of any contract or obligation.

March 8, 2001 The initial authorised share capital of ` 10,00,000 comprising of 50,000 Equity Shares and 50,000 Preference Shares was increased and reclassified to ` 50,00,000 divided into 5,00,000 Equity Shares.

March 20, 2004 The authorised share capital of our company of ` 50,00,000 comprising of 5,00,000 Equity Shares was further increased and reclassified to ` 25,00,00,000 divided into 2,49,90,000 Equity Shares and 10,000 Preference Shares.

November 11, 2004

The authorised share capital of our company of ` 25,00,00,000 comprising of 2,49,90,000 Equity Shares and 10,000 Preference Shares was further increased to `35,00,00,000 divided into 3,49,90,000 Equity Shares and 10,000 Preference Shares.

December 19, 2004

Conversion into public company and consequent change of name to Shringar Cinemas Limited

March 8, 2006 The authorised share capital of our company of ` 35,00,00,000 comprising of 3,49,90,000 Equity Shares and 10,000 Preference Shares was further increased to `52,00,00,000 divided into 5,19,90,000 Equity Shares and 10,000 Preference Shares.

January 11, 2008 Change of name of our Company to Fame India Limited. April 9, 2011 The authorised share capital of our company of ` 52,00,00,000 comprising of

5,19,90,000 Equity Shares and 10,000 Preference Shares was further increased to `63,00,00,000 divided into 6,29,90,000 Equity Shares and 10,000 Preference Shares.

Changes in the Registered Office

Sr. No.

Date From To Reason

1. June 15, 2000

2-G, Naaz Building, Lamington Road, Road, Mumbai – 400 004, Maharashtra, India

B-103, Kailash, Juhu Church, Road, Juhu, Mumbai – 400 049, Maharashtra, India

Administrative convenience

2. September 29, 2005

B-103, Kailash, Juhu Church, Road, Juhu, Mumbai – 400 049, Maharashtra, India

Fame Adlabs, 2nd Floor, Andheri Link Road, Oshiwara, Mumbai – 400 053, Maharashtra, India


3. January 21, 2011

Fame Adlabs, 2nd Floor, Andheri Link Road, Oshiwara, Mumbai – 400 053, Maharashtra, India

Citi Mall, 2nd Floor, Oshiwara Link Road, Andheri-West, Mumbai-400 053, Maharashtra, India


Major events in the history of our Company

Year Major Event 2001 Investment by India Value Fund Trustee Company Private Limited to fund expansion 2002 Swanston Multiplex Cinemas Private Limited launched Fame Adlabs Multiplex at

Versova Mumbai 2004 Launched Fame Malad and Fame Nasik 2005 Initial public offering amounting to ` 4,319.50 lacs comprising of 81,50,180 Equity

Shares at ` 53 per Equity Share through 100% book building process and consequent listing on BSE and NSE

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Year Major Event 2005 Aranda Investments (Mauritius) Pte Limited and Dunearn Investments (Mauritius) Pte

Limited, which are a part of the Temasek Holdings purchased 47,03,383 Equity Shares upto 14.9% of the paid up share capital of our Company at that time from India Value Fund Trustee Company Limited

2006 Issuance of FCCBs 2006 Commenced 6 screen multiplex at Surat under management model 2007 Purchase of 3 screen multiplex building and proportionate share of land appurtenant

thereto at Anand, Gujarat 2008 Achieved 50 operational screens at various locations within India 2009 Exhibited for first time ‘Monster versus Alien’ a 3D movie at Fame, Malad

Introduction of 2K digital projection systems 2011 Change of control and management of our Company 2011 Achieved over 100 operational screens at various locations within India

Injunction or Restraining Order Our company is not operating under any injunction or restraining order. Our Shareholders As on June 30, 2011, the total number of holders of Equity Shares, including nominees is 7,671. For further details of our shareholding pattern, please refer to the chapter titled “Capital Structure” on page 26 of the Draft Letter of Offer. Revaluation of Assets Our Company has not revalued its fixed assets since incorporation. Issuance of Equity or Debt Other than as disclosed in “Capital Structure” on page 26 of the Draft Letter of Offer, our Company has not issued any capital in the form of equity or debt. For details on the description of our Company’s activities, the growth of our Company, please refer to “Business Overview”, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and “Basis of Issue Price” on pages 62, 214 and 44 of the Draft Letter of Offer. Awards, Achievements and Certifications Our Company has not received any awards / certifications. Changes in the activities of our Company during the last five years There no changes in the activities of our Company during the last five years, other than in the normal course of business. Defaults or Rescheduling of borrowings with financial institutions/ banks There have been no defaults or rescheduling of borrowings with the financial institutions / banks. Lock-out or strikes There have been no lock-outs or strikes in our Company since inception.

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Business Acquisitions Our Company entered into a sale deed dated March 29, 2007 (the ‘Agreement’) with City Pulse Theatre Limited (‘CPTL’). Pursuant to the Agreement, our Company acquired from CPTL the existing 3 screen multiplex business of City Pulse Theatre alongwith its assets, machineries, multiplex building and share of land at Anand, Gujarat. The acquisition added 624 seats to our aggregate seating capacity. Subsidiaries Our Company has two subsidiaries, Fame Motion Pictures Limited and Big Pictures Hospitality Services Private Limited. The equity shares of our Subsidiaries are not listed on any stock exchange and they have not raised capital by way of a public issue of securities since inception. Our Subsidiaries have not become sick companies under the SICA and are not under winding up. 1. Fame Motion Pictures Limited Fame Motion Pictures Limited (‘FMPL’) was incorporated on April 19, 1999 under the Companies Act as Shringar Films Private Limited. On June 5, 2006 the name of Shringar Films Private Limited was changed to Shringar Films Limited. Further on April 14, 2011 the name of Shringar Films Limited was changed to the present name. FMPL is engaged in the business of film distribution. FMPL become our Subsidiary on March 27, 2004. The authorised share capital of FMPL is ` 200 lacs divided into 20,00,000 equity shares of ` 10 each. The issued and paid up share capital of FMPL is ` 99.99 lacs divided into 9,99,900 equity shares of ` 10 each. Our Company, along with its nominees, holds 9,99,900 equity shares in FMPL i.e. 100% of the issued and paid up capital of FMPL. The following table sets forth the summary audited financial data of FMPL:

(` in lacs, except Share data) Particulars For the years ended

March 31, 2009 March 31, 2010 March 31, 2011 Equity Capital 99.99 99.99 99.99 Reserves and Surplus 1,795.18 1,814.83 1,779.74 Income (including Other Income) 1,904.56 2,048.94 679.31 Profit / (Loss) after Tax 148.28 19.65 (25.36) Earnings per Share (`) 14.83 1.96 (3.51) Net Asset value per share (`) 189.54 191.50 187.99 No. of Shares 9,99,900 9,99,900 9,99,900 Note: Face value of each Equity Share is ` 10 each. There are no accumulated profits or losses of the FMPL that are not accounted by our Company. 2. Big Pictures Hospitality Services Private Limited Big Pictures Hospitality Private Limited (‘BPHSPL’) was incorporated on September 9, 2004 under the Companies Act. BPHSPL is engaged in food court business. BPHSPL became our Subsidiary on March 8, 2006. The authorised share capital of BPHSPL is ` 5 lacs divided into 50,000 equity shares of ` 10 each. The issued and paid up share capital of BPHSPL is ` 5 lacs divided into 50,000 equity shares of ` 10 each. Our Company, along with its nominees, holds 50,000 equity shares in BPHSPL i.e. 100% of the issued and paid up capital of BPHSPL.

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The following table sets forth the summary audited financial data of BPHSPL: (` in lakhs, except Share data)

Particulars For the years ended March 31, 2009 March 31, 2010 March 31, 2011

Equity Capital 5.00 5.00 5.00 Reserves and Surplus including debit balance in Profit and Loss account

(97.62) (98.21) (98.34)

Income (including Other Income) 0.06 0 0.36 Profit / (Loss) after Tax (30.28) (0.60) (0.12) Earnings per Share (`) (60.56) (1.20) (0.24) Net Asset value per share (`) (185.24) (186.42) (186.68) No. of Shares 50,000 50,000 50,000 Note: Face value of each Equity Share is ` 10 each. There are no accumulated profits or losses of the BPHSPL that are not accounted by our Company. Shareholders Agreements As on the date of the Draft Letter of Offer, there are no subsisting shareholders agreements. Joint Ventures Our Company has made investment in 2 joint venture companies: 1. Swanston Multiplex Cinemas Private Limited On June 14, 2002, our Company entered into a shareholder agreement with Mr. Vassanji Mamania, Ms. Pooja Shetty, Ms. Arti Shetty (together known as “VM Group”) and Swanston Multiplex Cinemas Private Limited (‘SMCPL’) for promoting SMCPL for the purpose of carrying out the business of managing multiplex. Consequent upon the shareholders agreement, our Company held 50.01% and VM Group held 49.99% of the paid-up equity share capital of SMCPL. On September 1, 2005 our Company transferred 78 shares constituting 0.01% shareholding of SMCPL to Reliance Media Works Limited (formerly known as Adlabs Films Limited). Consequently, SMCPL ceased to be a subsidiary of our Company effective that date. Presently our Company holds 3,90,000 equity shares of ` 10 each fully paid-up of SMCPL. 2. Headstrong Films Private Limited On November 3, 2008, our Company purchased 5,000 equity shares (i.e. 50% of the paid-up equity share capital) of Headstrong Films Private Limited (‘HFPL’). HFPL is primarily engaged in production and distribution of films. The remaining 50% of the paid up equity share capital of HFPL is held by Provogue India Limited (2,500 equity shares), Late Mr. Manish Acharya (2,499 equity shares) and Mr Shyam Shroff (1 equity share). Material Agreements There are no material agreements, apart from those entered into in the ordinary course of business carried on or intended to be carried on by us. Strategic Partners As on the date of the Draft Letter of Offer, our Company does not have any strategic partners. Financial Partners As on the date of the Draft Letter of Offer, apart from the various arrangements with bankers and lenders which our Company undertakes in the ordinary course of business, our Company does not have any other financial partners.

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MANAGEMENT

Board of Directors The Articles of Association of our Company provides that our Company shall not have less than three Directors and not more than twelve Directors. Our Company currently has four Directors on the Board. The following table sets forth details of the Board of Directors of our Company as of the date of filing of this Draft Letter of Offer with SEBI:

Name, Address, Occupation, Term

and DIN

Nationality Age (Years)

Designation Other Directorships

Mr. Pavan Kumar Jain Address: 31, Benzer Terrace, A.G. Khan Road, Worli, Mumbai – 400 018, Maharashtra, India. Occupation: Business Date of appointment: February 28, 2010 Term: Liable to retire by rotation DIN: 00030098

Indian 60

Non-executive Director

1. Inox Air Products Limited 2. Inox Leasing and Finance Limited 3. Gujarat Flurochemicals Limited 4. Inox India Limited 5. Inox Leisure Limited 6. Vindhyachal Hydro Power Limited 7. Inox Chemicals Private Limited 8. Siddhomal Investment Private

Limited 9. Siddhapavan Trading and Finance

Private Limited 10. Devansh Trading and Finance

Private Limited 11. Devansh Gases Private Limited 12. Rajni Farms Private Limited 13. Inox Infrastructure Private Limited 14. Siddhomal Air Products Private

Limited 15. Sitashri Trading and Finance

Private Limited 16. Inox Renewables Limited 17. Inox International Private Limited

Mr. Deepak Asher Address: 17/1, Utkanth Society, Behind Alkapuri Club, Vadodara – 390 007, Gujarat, India. Occupation: Service Date of appointment: February 28, 2010 Term: Liable to retire by rotation DIN: 00035371

Indian 52

Non-executive Director

1. Inox Leasing and Finance Limited 2. Inox Leisure Limited 3. Gujarat Fluorochemicals Limited 4. Inox Motion Pictures Limited 5. Inox Wind Limited 6. Inox Infrastructure Private Limited 7. Inox Renewables Limited 8. Fame Motion Pictures Limited 9. Big Pictures Hospitality Services

Private Limited 10. Swanston Multiplex Cinemas

Private Limited 11. Headstrong Films Private Limited 12. GFL GM Fluorspar (SA)

Mr. Amit Jatia Indian 44 Independent 1. Horizon Impex Private Limited

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and DIN



Address: Avanti, 67-A, Bhulabhai Desai Road, Mumbai – 400 026, Maharashtra, India. Occupation: Business Date of Appointment: December 21, 2004 Term: Liable to retire by rotation DIN: 00016871

Director 2. Saubhagya Impex Private Limited 3. Subh Ashish Exim Private Limited 4. Anand Veena Twisters Private

Limited 5. Achal Exim Private Limited 6. Acacia Impex Private Limited 7. Akshay Ayush Impex Private

Limited 8. Sterling Holiday Resorts (India)

Limited 9. Vandeep Tradelink Private Limited 10. Triple A Foods Private Limited 11. Hardcastle Restaurants Private

Limited 12. West Pioneer Properties Limited 13. Inox Leisure Limited 14. Westpoint Leisureparks Private

Limited 15. Smt. Gigidevi Durgadutt Jatia

Charitable Trust 16. Blue Ocean Investment Trust

Mr. Kishore Biyani Address: 406, Jeevan Vihar, Manav Mandir Road, Malabar Hill, Mumbai – 400 006, Maharashtra, India. Occupation: Business Date of appointment: February 28, 2010 Term: Liable to retire by rotation DIN: 00005740

Indian 51

Independent Director

1. Pantaloon Retail (India) Limited 2. Embassy Property Developments

Limited 3. Jagran Prakashan Limited 4. Future Capital Holdings Limited 5. Future Generali India Life

Insurance Company Limited 6. Future Generali India Insurance

Company Limited 7. Future Ventures India Limited 8. Future Media (India) Limited 9. Kumar Urban Development Limited 10. Future Corporate Resources Limited 11. ESES commercials Private Limited 12. Samreen Multitrading Private

Limited 13. Eclipse Infrastructure Private

Limited 14. Taraka Infrastructure Private

Limited 15. Radha Multitrading Private Limited 16. Sanavi Multitrading Private Limited 17. Saachi Multitrading Private Limited 18. Tanushri Infrastructure Private

Limited 19. Ucchal Infrastructure Private

Limited 20. Liquid Foot Infraprojects Private

Limited 21. Raja Infrastructure Private Limited 22. U-phase Infraprojects Private

Limited

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and DIN



23. Raaka Multitrading Private Limited 24. Kavi Sales Agency Private Limited 25. Softtouch Multitrading Private

Limited 26. Brahmabrata Trading Private

Limited 27. Salarjung Multitrading Private

Limited 28. White Circle Mercantile Private

Limited 29. Silver Base Infrastructure Private

Limited 30. Oviya Multitrading Private Limited 31. Gargi Developers Private Limited 32. White Knight Mercantile Private

Limited 33. Retailers Association of India

Except as disclosed below, none of our Directors hold current and/ or past directorship(s) for a period of five years in listed companies whose shares have been or were suspended from being traded on the BSE or the NSE or in listed companies who have been / were delisted from stock exchanges: Mr Pavan Kumar Jain, one of the Directors of our Company, is a director on the board of Inox Leasing and Finance Limited, whose shares have been delisted from the BSE. The details of which are as follows: Name of the Company Inox Leasing and Finance Limited

Listed on BSE

Date of delisting April 30, 2003

Compulsory or voluntary delisting Voluntary

Reason for delisting Consequent upon public offer under regulation 21 (3) (a) of the Takeover Code

Whether relisted No

Term of Directorship Since incorporation on February 17, 1995 till date

Mr Deepak Asher, one of the Directors of our Company, is a director on the board of Inox Leasing and Finance Limited, whose shares have been delisted from the BSE. The details of which are as follows: Name of the Company Inox Leasing and Finance Limited

Listed on BSE




Whether relisted No

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Term of Directorship From March 24, 2008 till date Relationship between Directors None of the Directors of our Company are related to each other. Brief Profile Mr. Pavan Kumar Jain is a chemical engineer from Indian Institute of Technology, New Delhi, and an industrialist with over 35 years of experience. He has been instrumental in diversifying the Inox Group into various industries such as refrigerant gases, chemicals, cryogenic engineering, entertainment and renewable energy. Mr. Deepak Asher is a graduate in commerce and law from the Maharaja Sayajirao University, Vadodara. He is a qualified Chartered Accountant from the Institute of Chartered Accountants of India and Cost Accountant from the Institute of Costs and Works Accountant of India. He is associated with the Inox Group for more than 20 years, in different capacities. He is responsible for the Inox Group’s corporate finance function and diversification into the cinema, emission trading and the wind energy businesses. He is a member of the Entertainment Committee of the Federation of Indian Chambers of Commerce and Industry and is the President of Multiplex Association of India. He was awarded the ‘Theatre World Newsmaker of the Year 2002’ award for his contribution to the cinema exhibition industry. Mr. Amit Jatia holds a degree in business administration from the University of Southern California, Los Angeles. He is the vice-chariman and executive director of Hardcastle Restaurants Private Limited which operates McDonald's stores in West and South India. He has an overall experience of 15 years. He is a member of the Young Presidents’ Organization. Mr. Kishore Biyani is a commerce graduate from the university of Mumbai and post graduate diploma in marketing management from the university of Mumbai. He is the chief executive officer of Future Group of Companies. He has over 25 years of experience in the field of manufacturing and retailing. He has received several awards including ‘the CEO of the Year – 2001’, ‘the most Admired Retailer of the Year – 2004’, ‘the Retail Face of the Year - Images Retail Awards 2005’ and ‘the E&Y Entrepreneur of the Year – Services – 2006’. Borrowing Powers of the Board The Articles of Association, subject to the provisions of the Companies Act, authorise the Board, at its discretion, to generally raise or borrow or secure the payment of any sum or sums of money for the purposes of our Company. However, the Board of Directors shall not without the sanction of our Company exceed the aggregate of the paid up capital and free reserves of our Company. The consent of the members of our Company was accorded, vide resolution passed at the EGM held on March 8, 2008, authorizing the Board of Directors to borrow at any time amount not exceeding ` 30,000 lacs over and above the paid up capital and free reserves of our Company. Details of Service Contracts Our Company has not entered into any service contracts with the present Board of Directors. Remuneration of the Directors During the Financial Year 2010-11, our Company has not paid any remuneration and sitting fees to the present Board of Directors.

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ESOP granted to the Directors During the Financial Year 2010–11, our Company has not granted any option under the ESOP 2009 scheme to its Directors. Shareholding of Directors in our Company None of the Directors hold Equity Shares in our Company. Payment or benefit to Directors of our Company Except as disclosed in the “Related Party Transactions in Financial Information” on page 133 of the Draft Letter of Offer, no amount or benefit has been paid or given within the two preceding years or is intended to be paid or given to any of our officers except the normal remuneration for services rendered as Directors, officers or employees. Interest of the Directors All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association, and to the extent of remuneration paid to them for services rendered as an officer or employee of our Company. Some of the Directors may be deemed to be interested to the extent of consideration received/paid or any loan or advances provided to any body corporate including companies and firms and trusts, in which they are interested as directors, members, partners or trustees. Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or that may be subscribed by and allotted to the companies, firms, and trusts, if any, in which they are interested as directors, members, promoters, and /or trustees pursuant to this Issue. Certain of our Directors also hold directorships in the Promoter and Promoter Group. None of our Directors have been appointed on our Board pursuant to any arrangement with our major shareholders, customers, suppliers or others. Except as stated in this section “Management” or the chapter titled “Related Party Transactions in Financial Information” on page 77 and 133 of the Draft Letter of Offer and described herein to the extent of shareholding in our Company, if any, our Directors do not have any other interest in our business. Our Directors have no interest in any property acquired by our Company within two years of the date of the Draft Letter of Offer. Our Directors are not interested in the appointment of or acting as Registrar and Bankers to the Issue or any such intermediaries registered with SEBI. Changes in the Board in the last three years The following changes have occurred in Board of Directors of our Company in the last three years:

Name Date of Appointment / Re-appointment / Cessation

Reason for change

Mr. Padmanabh Sinha July 10, 2008 Resignation Mr. Salim Govani July 10, 2008 Appointment as additional director Mr. Salim Govani September 27, 2009 Re-designation as independent

director Mr. Kishore Biyani February 28, 2010 Appointment as additional director Mr. Balkrishna Shroff February 28, 2010 Resignation

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Name Date of Appointment / Re-appointment / Cessation

Reason for change

Mr. Pavan Kumar Jain February 28, 2010 Appointment as additional director Mr. Deepak Asher February 28, 2010 Appointment as additional director Mr. Vishal Nevatia August 12, 2010 Resignation

Mr. Deepak Asher September 22, 2010 Re-designation as non-executive director

Mr. Pavan Kumar Jain September 22, 2010 Re-designation as non-executive director

Mr Kishore Biyani September 22, 2010 Re-designation as non-executive director

Mr. Shravan Shroff December 19, 2010 Re-appointment as Managing Director

Mr. Shravan Shroff January 21, 2011 Resignation as Managing Director and Director

Mr. Shyam Shroff January 21, 2011 Resignation Ms. Susan Thomas January 21, 2011 Resignation Mr. Salim Govani January 21, 2011 Resignation Mr. Amit Jatia July 14, 2011 Re-appointment as independent

director Mr. Deepak Asher July 14, 2011 Re-appointment as non-executive

director Managerial Organizational Structure

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Corporate Governance Our Company has complied with the provisions of the Listing Agreement including Clause 49 of the Listing Agreement and other requirements under the Listing Agreement in relation to the meetings of the Audit Committee and the Investor Grievance Committee. The Board of Directors consists of a total of 4 Directors of which 2 are independent Directors (as defined under Clause 49), which constitutes 50% of the Board of Directors. This is in compliance with the requirements of Clause 49. The details of the Audit Committee, Remuneration Committee, Compensation Committee and Investor Grievance Committee, of our Company are given below: Audit Committee The Audit Committee was re-constituted at the Board meeting held on January 21, 2011. The Audit Committee comprises of the following members: 1. Mr. Amit Jatia – Chairman 2. Mr. Kishore Biyani 3. Mr. Deepak Asher Terms of reference/scope of the Audit Committee:

1. Oversight of our Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

2. Recommending to the Board, the appointment, re-appointment and if required, the replacement or removal of the statutory auditors and fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. Reviewing, with the management the annual financial statements before submission to the Board for approval, with particular reference to :

a) Matters required being included in the Directors’ Responsibility Statement to be included in

the Board’s report in terms of clause (2AA) of Section 217 of the Companies Act, 1956. b) Changes, if any, in accounting policies and practices and reasons for the same. c) Major accounting entries involving estimates based on the exercise of judgement by

management. d) Significant adjustments made in the financial statements arising out of audit findings. e) Compliance with listing and other legal requirements relating to financial statements. f) Disclosure of any related party transaction. g) Qualification in the draft audit report.

5. Reviewing with the management, the quarterly financial statements before submission to the

Board for approval. 6. Reviewing with the management, performance of statutory and internal auditors, and adequacy of

the internal control systems. 7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal

audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

8. Discussion with internal auditors any significant findings and follow-up thereon. 9. Reviewing the findings of any internal investigations by the internal auditors into matters where

there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

10. Discussion with the statutory auditors before the audit commences, about the nature and scope of audit as well as post audit discussion to ascertain any area of concern.

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11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

12. To review the functioning of the Whistle Blower Mechanism, in case the same exists. 13. Carry out any other function as is mentioned in the terms of reference of Audit Committee

Remuneration Committee The Remuneration Committee was re-constituted at the Board meeting held on January 21, 2011. The Remuneration Committee comprises of the following members: 1. Mr. Pavan Kumar Jain – Chairman 2. Mr. Deepak Asher 3. Mr. Amit Jatia The role of the Remuneration Committee is to review market practices and to decide on remuneration packages applicable to the Managing Director and Senior Executives of our Company. Compensation Committee The Compensation Committee was re-constituted at the Board meeting held on January 21, 2011. The Compensation Committee comprises of the following members: 1. Mr. Pavan Kumar Jain – Chairman 2. Mr. Kishore Biyani 3. Mr. Amit Jatia The role of the Compensation Committee is to oversee the implementation of the ESOP 2009 scheme of our Company. Shareholders/ Investor Relations Committee The Shareholders/Investor Relations Committee was re-constituted at the Board meeting held on January 21, 2011. The Investor Grievance Committee comprises of the following members: 1. Mr. Pavan Kumar Jain – Chairman 2. Mr. Deepak Asher 3. Mr. Kishore Biyani The Committee normally meets as and when required. The committee looks into the following:

1. It shall have the authority to investigate into any matter in relation to transfer of securities or referred to it by the Board and for this purpose, shall have full access to information contained in the records of our Company and external professional advice, if necessary.

2. To investigate any activity within its terms of reference. 3. To seek information from any employee. 4. To seek information from share transfer agents. 5. To obtain outside legal or other professional advice. 6. To secure attendance of outsiders with relevant expertise, if it consider necessary. 7. To approve issue of duplicate share certificates and to oversee and review all matters connected

with the transfer, transmission and issue of securities. 8. To approve share transfer / transmission of securities periodically, whether by circular resolution

or otherwise. 9. To look into redressing of shareholders’ complaint like transfer of shares, non-receipt of balance

sheet, non receipt of declared dividends, etc. 10. To oversee the performance of the Registrar and Transfer Agents and recommend measures for

overall improvement in the quality of investors services.

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Policy on Prevention of Insider Trading Our Company is in compliance with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992. Mr. Suratha Satpathy, Company Secretary and Compliance Officer, is responsible for setting forth policies, procedures, monitoring and adhering to the rules for the prevention of dissemination of price sensitive information and the implementation of the code of conduct under the overall supervision of the Board. Key Managerial Personnel The Key Management Personnel of our Company as of the date of this Draft Letter of Offer are as follows: Mr. Rajiv Patni, 46 years, is the Director-Operations of our Company. He has done diploma in hotel management catering and nutrition certified by the Board of Technical Education, Delhi. He has overall work experience of about 24 years and held management positions with various 5 star hotels in India. He has been deputed to our Company from ILL since February 2011. Mr. Naushad Shaikh, 34 years is the Chief Financial Officer of our Company. He is commerce graduate and qualified chartered accountant from the Institute of Chartered Accountants of India. He has over 10 years of experience in the field of finance, management information systems, accounting and performance management. He was previously employed with The Walt Disney Company India Private Limited and Star India Private Limited, Standard Chartered Bank. He joined our Company in June 2007. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 37.80 lacs. Mr. Suratha Satpathy, 46 years is a qualified company secretary from The Institute of Company Secretaries of India and also holds a masters degree in commerce from Utkal University, Orissa. He has joined our Company in April 2010 and is the Company Secretary of our Company. He has an overall experience of 22 years in various corporate functions like company secretarial, finance, human resource, legal. In the past, he has worked for Zoom Vallabh Steels Limited, Sree Metaliks Limited, Tata Referectories Limited, Orissa Extrusions Limited. He joined our Company in April 2010. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 8.78 lacs. Mr. Atul Bhandarkar, 36 years, is the Assistant Vice President- Operations of our Company. He holds a higher secondary certificate and has an overall work experience of about 15 years. In the past, he has worked with Adlabs Films Limited, Ramee Group of Hotels in the fields of multiplex operations and hotel operations. He joined our Company in January 2008. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 22.12 lacs. Mr. Nimesh Waghela, 31 years, is the Deputy General Manager – Food and Beverages and Materials Management. He has joined our Company since February 2006. He holds a bachelor of commerce from the University of Mumbai and a diploma in hotel and catering management from the Institute of Professional Development & Research Management. He was previously associated with Ramee Group of Hotels. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 11.15 lacs. Mr. Milind Lotlikar, 41 years holds a post graduate diploma in personnel management and industrial relations from Narsee Monjee Institute of Management Studies. He is the Deputy General Manager – Human Resources for our Company and is responsible for managing human resources function. He brings experience of over 15 years and has worked in hotels like ITC, Kamats, Raheja Hospitality. He has been associated with our Company since August 2010. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 7.19 lacs. Mr. Satwik Lele, 37 years is the Regional General Manager – Operations of our Company. He is a bachelor of mechanical engineering and holds a post graduate diploma in business administration. He has

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overall work experience of about 12 years. He has previously worked with Mukta Arts Limited, Reliance Media Works Limited, E-Square Leisure Private Limited in the field of multiplex operations. He has joined our Company in March 2011. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 0.24 lacs. Mr. Nilesh More, 36 years is the Manager –Liasoning of our Company. He has done bachelors in science from University of Mumbai and has experience of 13 years. Prior to joining us in April 2010, he has worked with Lodha Group and Reliance Industries. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 5.86 lacs. Mr. Sunil Patil, 36 years is the Manager – Information Technology of our Company. He holds a bachelors degree in science from University of Mumbai and has 11 years of experience. Prior to joining our Company in July 2007, he was associated with Dodsal Enterprises Private Limited. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 9.13 lacs. Ms. Mitchelle C, 30 years, is the Creative Head of our Company. She has done masters in literature and has experience of 10 years. Prior to joining us in August 2005, she has worked with Sai Advertisers Private Limited, Inter publicity Private Limited, Ventures Private Limited. During the Financial Year 2010-11, she was paid an aggregate remuneration on a cost to company basis of ` 6.46 lacs. Mr. Vikas Gawade, 36 years is the Manager – Maintenance of our Company. He holds a bachelors degree of arts from the University of Mumbai and diploma in electrical engineering from National Institute of Engineering. He has experience of 17 years and has worked with CBRE, Star Bazaar and ITC Group. He has been associated with our Company since September 2010. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 2.92 lacs. Mr. Abhishek Rai, 33 years, is the Senior Manager –Programming of our Company. He holds a diploma in computer science from Computer Maintenance Corporation and has experience of 10 years. He has joined our Company in April 2007 and was previously employed with 20th Century Fox. During the Financial Year 2010-11, he was paid an aggregate remuneration on a cost to company basis of ` 11.68 lacs. Except Mr Rajiv Patni, all the Key Managerial Personnel are permanent employees of our Company. Nature of any family relationship between the Key Managerial Personnel None of the Key Managerial Personnel are in any way related to each other. Shareholding of Key Managerial Personnel Except as below, none of the Key Managerial Personnel hold Equity Shares of our Company,: Sr. No. Name of Key managerial personnel Number of shares held

1. Mr. Sunil Patil 539 2. Mr. Naushad Shaikh 12,524 3. Mr. Atul Bhandarkar 2,763 4. Mr. Nimesh Waghela 1,000

ESOPs granted to our Key Managerial Personnel Except as disclosed in the chapter titled ‘Capital Structure’ on page 26 of this Draft Letter of Offer, there are no other ESOP’s granted to our Key Managerial Personnel.

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Changes in Key Managerial Personnel The following are the changes in Key Managerial Personnel during the last three years: Sr. No.

Name of employee Designation Date of change Reason

1. Mr. Raja Jain Head – Adsales May 11, 2009 Appointment 2. Mr. Abhishek Raina Assistant Vice President –

Marketing and Advertisement Sales

September 9, 2009

Resignation

3. Mr. Aditya Shroff Assistant Vice President – Programming and Corporate Sales

October 1, 2009 Appointment

4. Mr. Abhishek Mahorey

Company Secretary and Head Legal

March 15, 2010 Resignation

5. Mr. Suratha Satpathy

Company Secretary April 6, 2010 Appointment

6. Mr. Prasanna Manjrekar

Head – Projects & Business Development

July 14, 2010 Resignation

7. Mr. Arshad Kazi Head – Information Technology


8. Mr. Javeed Merchant

Deputy General Manager – Human Resources


9. Mr. Milind Lotlikar Deputy General Manager – Human Resources

August 10, 2010 Appointment

10. Mr. Vikas Gawade Manager – Maintenance September 10, 2010

Appointment

11. Mr. Deepak Shinde Assistant Vice President – Operations

January 10, 2011

Resignation

12. Mr. Aditya Shorff Assistant Vice President – Programming and Corporate Sales

January 14, 2011

Resignation

13. Mr. N.B.Prasad Assistant Vice President – Finance and Accounts

February 28, 2011

Resignation

14. Mr. Rishi Negi Chief Operating Officer February 28, 2011

Resignation

15. Mr. Rajiv Patni Director-Operations February 10, 2011

Deputation

16. Mr. Swastik Lele Regional General Manager – Operations

March 28, 2011 Appointment

17. Ms. Swapna Amin Manager – Marketing May 27, 2011 Resignation 18. Mr. Raja Jain Head – Advertisement Sales July 6, 2011 Resignation 19. Mr. Emanuel

Baptise Regional General Manager – Operations

September 5, 2011

Resignation

Bonus or profit sharing plan for Directors and Key Managerial Personnel Our Company does not have a performance linked bonus or a profit sharing plan for the present Directors and Key Managerial Personnel.

88

Interest of Key Managerial Personnel The Key Managerial Personnel of our Company do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business. Arrangements and Understanding with Major Shareholders None of our key management personnel have been selected pursuant to any arrangement or understanding with any major shareholders, customers or suppliers of our Company, or others. However, Mr. Rajiv Patni, Director-Operations, has been deputed on February 10, 2011 vide a secondment agreement to our Company by our Promoter. Payment of Benefits to Officers of our Company Except as disclosed in the Draft Letter of Offer, other than statutory payments and remuneration, in the last two years our Company has not paid or has intended to pay any non-salary amount or benefit to any of its officers. Loans taken by Directors / Key Managerial Personnel None of the Directors / Key Managerial Personnel have taken loan from our Company.

89

PROMOTER AND PROMOTER GROUP Our Promoter is Inox Leisure Limited. As on the date of the Draft Letter of Offer, we are subsidiary of the Promoter, who holds 50.21% of the Equity Shares of our Company. INOX LEISURE LIMITED (“ILL / Promoter”) Brief History ILL (CIN: L92199GJ1999PLC044045) is a public limited company. ILL was incorporated on November 9, 1999 under the Companies Act with the Registrar of Companies, New Delhi. The registered office was shifted at Vadodara in the State of Gujarat with effect from April 27, 2004 to ABS Towers, Old Padra Road, Vadodara – 390 007, Gujarat, India. ILL is a film exhibition company, in the business of setting up, operating and managing a national chain of multiplexes under the brand name ‘INOX’. The authorized capital of ILL is ` 7,500 lacs divided into 7,50,00,000 equity shares of ` 10 each. The subscribed and paid up capital is ` 61,89,55,480 divided into 6,18,95,548 equity shares of ` 10 each. The equity shares of ILL are listed on BSE and NSE. Shareholding Pattern The shareholding pattern of ILL as on June 30, 2011 is as follows: Categ

ory Code

Category of shareholder

Total shareholding as a % of total no of shares

Shares pledge or otherwise encumbered

No of shareholde

rs

Total number of shares

No of shares held

in dematerialized form

As a percentage of

(a+b)

As a percenta

ge of (a+b)

Number of shares

As a percentage

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX)=(VIII) (IV)*100

(A) PROMOTER AND PROMOTER GROUP

(1) INDIAN (a) Individual/HUF 0 0 0 0.00 0.00 0 0.00 (b) Central

Government/State Government(s)

0 0 0 0.00 0.00 0 0.00

(c) Bodies Corporate 2 41144551 2044551 66.47 66.47 0 0.00 (d) Financial

Institutions / Banks

0 0 0 0.00 0.00 0 0.00

(e) Others 0 0 0 0.00 0.00 0 0.00 Sub-Total A(1): 2 41144551 2044551 66.47 66.47 0 0.00

(2) FOREIGN (a) Individuals

(NRIs/Foreign Individuals)

0 0 0 0.00 0.00 0 0.00

(b) Bodies Corporate 0 0 0 0.00 0.00 0 0.00 (c) Institutions 0 0 0 0.00 0.00 0 0.00 (d) Others 0 0 0 0.00 0.00 0 0.00

Sub-Total A(2): 0 0 0 0.00 0.00 0 0.00 Total

A=A(1)+A(2) 2 41144551 2044551 66.47 66.47 0 0.00

90

Category

Code




No of shareholde

rs


No of shares held


As a percentage of

(a+b)

As a percenta

ge of (a+b)

Number of shares

As a percentage

(B) PUBLIC SHAREHOLDING

(1) INSTITUTIONS (a) Mutual Funds

/UTI 0 0 0 0.00 0.00

(b) Financial Institutions /Banks

3 77292 77292 0.12 0.12

(c) Central Government / State Government(s)

0 0 0 0.00 0.00

(d) Venture Capital Funds

0 0 0 0.00 0.00

(e) Insurance Companies

0 0 0 0.00 0.00

(f) Foreign Institutional Investors

1 1070 1070 0.00 0.00

(g) Foreign Venture Capital Investors

0 0 0 0.00 0.00

(h) Others 0 0 0 0.00 0.00 Sub-Total B(1): 4 78362 78362 0.13 0.13

(2) NON-INSTITUTIONS

(a) Bodies Corporate 893 6633188 6633188 10.72 10.72 (b) Individuals

(i) Individuals holding nominal share capital upto `1 lakh

43737 8838967 8813000 14.28 14.28

(ii) Individuals holding nominal share capital in excess of `1 lakh

59 1628953 1628953 2.63 2.63

(c) Others CLEARING

MEMBERS 66 104186 104186 0.17 0.17

TRUSTS 9 373540 8463 0.60 0.60 NONRESIDENT

INDIANS 359 568801 568801 0.92 0.92

DIRECTORS 5 2525000 1325000 4.08 4.08 Sub-Total B(2): 45128 20672635 19081591 33.40 33.40 Total

B=B(1)+B(2): 45132 20750997 19159953 33.53 33.53

Total (A+B): 45134 61895548 21204504 100.00 100.00

(C) Shares held by custodians, against which

Depository Receipts have been issued

(1) Promoter and Promoter Group

(2) Public 0 0 0 0.00 0.00

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Category

Code




No of shareholde

rs


No of shares held


As a percentage of

(a+b)

As a percenta

ge of (a+b)

Number of shares

As a percentage

GRAND

TOTAL (A+B+C):

45134 61895548 21204504 100.00 0.00 0 0.00

Board of Directors As on the date of this Draft Letter of Offer, the board of directors of ILL comprises of the following persons: Name Designation Mr. Pavan Kumar Jain Non-Executive Director Mr. Vivek Kumar Jain Non-Executive Director Mr. Deepak Asher Non-Executive Director Mr. Siddarth Jain Non-Executive Director Mr. Amit Jatia Independent Director Mr. Haigreve Khaitan Independent Director Mr. Sanjeev Jain Independent Director Financial Information The summary of audited financial statements of ILL is set forth below:

(` in Lacs, except share data) Particulars Fiscal 2009 Fiscal 2010 Fiscal 2011

Equity Share Capital (par value `10 per equity share)

6,146.63 6,149.41 6,154.18

Reserves and Surplus (excluding revaluation reserve if any)

22,215.01 24,863.77 25,624.41

Total Income 22,788.03 25,611.31 34,236.76 Profit/(Loss) after Tax 2,434.08 2,605.76 695.79 Earnings Per Share (EPS) (basic and diluted)

3.96 4.24 1.13

Profit and Loss Account (debit balance)

0 0 0

Miscellaneous Expenditure (to the extent not written off)

0 0 0

Networth 28,465.05 31,091.20 31,804.02 Net Asset Value (NAV) per share 45.99 50.23 51.38 Takeover and change in control The initial promoters of our Company were Mr. Shyam Shroff, Mr. Balkrishna Shroff, Mr. Shravan Shroff and Mr. Aditya Shroff. On February 3, 2010 the Promoter acquired from Mr. Shyam Gobindram Shroff, Mr. Balkrishna Gobindram Shroff and Mr. Shravan Shyam Shroff as partners of South Yarra Holdings (the “Sellers”) 1,50,57,751 equity shares of our Company at a price of ` 44 per Equity Shares (“Sale Shares”) constituting 43.28% of the issued and paid up Equity Share capital of our Company, for a consideration of ` 6,625.41 lacs by carrying out a block deal on the BSE. Further, on February 5, 2010 the Promoter acquired 25,07,537 Equity Shares constituting 7.21% of the issued and paid up Equity Share capital of our

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Company, at a price of ` 50.75 per Equity Share by carrying out a block deal on the BSE and entered into Share Purchase Agreement with the Sellers to set out the terms and conditions agreed between them for the sale and purchase of the Sale Shares. For terms and conditions of the agreement see section titled “History and Other Corporate Matters” on page 71 of the Draft Letter of Offer. On December 16, 2010, the Promoter alongwith Gujarat Fluorochemicals Limited, the persons acting in concert made an open offer under the Takeover Code, as amended to the Equity Shareholders for acquisition of 82,31,759 Equity Shares at ` 51 per Equity share for cash representing 20.25% of the equity share capital of our Company at that time. Pursuant to the open offer the Promoter acquired 1,075 Equity Shares of our Company. Presently the Promoter holds 50.21% of the equity share capital of our Company. Interests of Promoter and Common Pursuits The Promoter is interested in our Company to the extent that it is the promoter of our Company, their shareholding in our Company, dividend payable, other distributions in respect of the Equity Shares and to the extent of appointment / deputation of director and/ or key managerial personnel to our Company. Further, Mr. Deepak Asher and Mr. Pavan Kumar Jain are the Directors of our Company and may additionally be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration payable or reimbursement of expenses to him, if any, as per the terms of appointment. Except as stated in the “Financial Information - Related Party Transactions” as stated on page 133 in the Draft Letter of Offer, we have not entered into any contract, agreements or arrangements in which our Promoter is directly or indirectly interested and no payments have been made to them in respect of the contracts, agreements or arrangements which are proposed to be made with them including the properties purchased by our Company other than in the normal course of business. Payment or benefits to our Promoter in the last two years Except as stated in the section titled “Management” and “Financial Information - Related Party Transactions” on page 77 and on page 133 of the Draft Letter of Offer, no benefits have been paid or given to the Promoter within the two years preceding the date of the Draft Letter of Offer. Other confirmations ILL is neither a sick company within the meaning of SICA nor under winding up. There are no violations of securities laws committed by our Promoter in the past or are pending against them. Our Promoter is not interested in any property acquired by our Company in the two years immediately preceding the date of the Draft Letter of Offer, or proposed to be acquired by our Company. There has been no change in the control or management of our Promoter in the preceding three years prior to the filing of this Draft Letter of Offer with SEBI. None of our Promoter, Promoter Group entities or persons in control of our Promoter or bodies corporate forming part of the Promoter Group have been (i) prohibited from accessing the capital markets under any order or direction passed by SEBI or any other authority or (ii) refused listing of any of the securities issued by such entity by any stock exchange, in India or abroad. We confirm that the PAN, Bank Account Number, the Company Registration Number and the addresses of the Registrars of Companies with respect to our Promoter will be submitted to the BSE and NSE at the time of filing the draft offer document with them.

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Natural Persons in control of the Promoter – Mr. Pavan Kumar Jain and Mr. Vivek Kumar Jain

Mr. Pavan Kumar Jain is the non-executive director of our Company. For further details see “Management” on page 77 of this Draft Letter of Offer. His driving license number is P2048ND and passport number is Z2176100.

Mr. Vivek Kumar Jain, 57 years, is graduate in economics from St Stephens, New Delhi, and a post graduate in business administration with specialization in finance. He has business experience of over 29 years, and is presently the managing director of Gujarat Fluorochemicals Limited. He is a resident of India and is presently residing at 47, Golf Links, New Delhi - 110 003. His driving license number is DL-0219930001576(P) and passport number is G8799246. Presently, he is a director of Gujarat Fluorochemicals Limited, Inox Air Products Limited, Inox India Limited, Inox Leasing and Finance Limited, Inox Renewables Limited, Inox Chemicals Private Limited, Siddhomal Investments Private Limited, Siddhapavan Trading and Finance Private Limited, Devansh Trading and Finance Private Limited, Devansh Gases Private Limited, Rajni Farms Private Limited, Inox Infrastructure Private Limited, Inox International Private Limited, Inox DPNC Outsourcing Services Private Limited, Kingston Smith INOX-DC Outsourcing Private Limited, Vindhyachal Hydro Power Limited, Megnasolace City Private Limited, Siddhomal Air Products Private Limited, Sitashri Trading and Finance Private Limited.

Promoter Group and group companies Pursuant to provision of 2 (1) (zb) of the SEBI Regulations, GFL shall comprise the Promoter Group. There are no companies, firms or ventures which have been promoted by our Promoter other than our Company.

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DIVIDEND POLICY

Under the Companies Act, an Indian company pays dividends upon a recommendation by its board of directors and approval by a majority of the shareholders, who have the right to decrease but not to increase the amount of dividend recommended by the board of directors. Under the Companies Act, dividends may be paid out of profits of a company in the year in which the dividend is declared or out of the undistributed profits or reserves of the previous Fiscal Years or out of both. Our Company does not have a formal dividend policy. Any dividends declared are recommended by the Board of Directors depending upon the financial condition, results of operations, capital requirements and surplus, contractual obligations and restrictions, the terms of the credit facilities and other financing arrangements of our Company at the time a dividend is considered, and other relevant factors and approved by the Equity Shareholders at their discretion. Our Company has not paid any dividend in the previous 5 Financial Years. Dividends are payable within 30 days of approval by the Equity Shareholders at its annual general meeting. The Articles also give the Board of Directors the discretion to declare and pay interim dividends without obtaining Shareholder approval. When dividends are declared, all the Equity Shareholders whose names appear in the register of members of our Company as on the “record date” are entitled to be paid the dividend declared by our Company. Any Equity Shareholder who ceases to be an Equity Shareholder prior to the record date, or who becomes an Equity Shareholder after the record date, will not be entitled to the dividend declared by our Company.

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SECTION VI – FINANCIAL INFORMATION To, The Board of Directors Fame India Limited Citimall, 2nd Floor Link Road, Oshiwara Andheri (West) Mumbai – 400 053. Dear Sirs

1 We have examined the attached standalone restated financial information and consolidated restated financial information (together, ‘Financial Information’) of Fame India Limited (‘Fame’ or ‘the Company’) as approved by the Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II of Schedule II to the Companies Act, 1956 ('the Act') and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009, as amended to date (‘SEBI Regulations’), the Guidance note on “Reports in Company's Prospectus” (Revised) issued by the Institute of Chartered Accountants of India ('ICAI'), to the extent applicable ('Guidance Note') and in terms of our engagement letter dated 8 September, 2011 in connection with the proposed Rights Issue of equity shares of the Company.

2 This Financial Information has been extracted by the Management from the standalone financial statements of the Company for the years ended 31 March 2011, 31 March 2010, 31 March 2009, 31 March 2008 and 31 March 2007 and from the consolidated financial statements of the Company for the years ended 31 March 2011, 31 March 2010, 31 March 2009, 31 March 2008 and 31 March 2007. The audit of the Company for these financial years was conducted by another firm of Chartered Accountants, B S R & Company, and accordingly reliance has been placed on the financial statements audited by them. Our examination of the Financial Information is based solely on the financial statements audited by them.

3 In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI Regulations, Guidance Note and terms of our engagement agreed with you, we further report that: i) The Statement of standalone restated assets and liabilities as at 31 March 2011, 2010,

2009, 2008 and 2007 examined by us, as set out in Annexure II to this report, and the Statement of standalone restated profit and loss and the Statement of standalone restated cash flows for the years ended 31 March 2011, 2010, 2009, 2008 and 2007 examined by us, as set out in Annexures I and III respectively to this report, read with the Statement of significant accounting policies in Annexure IV, are after making adjustments and regrouping as in our opinion were appropriate and more fully described in ‘Statement of changes and notes to statements of restated profit and loss and restated assets and liabilities as set out in Annexure V to this report.

ii) The Statement of consolidated restated assets and liabilities as at 31 March 2011, 2010, 2009, 2008 and 2007 examined by us, as set out in Annexure XIX to this report, and the Statement of consolidated restated profit and loss and the Statement of consolidated restated cash flows for the years ended 31 March 2011, 2010, 2009, 2008 and 2007 examined by us, as set out in Annexures XVIII and XX respectively to this report, read with the Statement of significant accounting policies in Annexure XXI, are after making adjustments and regrouping as in our opinion were appropriate and more fully described in ‘Statement of changes and notes to statements of consolidated restated profit and loss

96

and consolidated restated assets and liabilities as set out in Annexure XXII to this report.

4 Based on the above, we are of the opinion that the Financial Information has been made after incorporating:

i. adjustments for the changes in accounting policies adopted by the Company retrospectively in respective financial years to reflect the same accounting treatment as per changed accounting policy for all the reporting periods;

ii. adjustments for prior period and other material amounts in the respective financial years to which they relate, and

iii there are no qualifications requiring adjustments.

5 The Company has not declared any dividend during the financial years ended 31 March 2011, 2010, 2009, 2008 and 2007.

6 We have also examined the following other financial information set out in the Annexures prepared by the Management and approved by the Board of Directors relating to the Company for the years ended 31 March 2011, 2010, 2009, 2008 and 2007: i) Statement of standalone accounting ratios, as restated - Annexure VI ii) Statement of disclosure as required by AS – 18 Related Party Relationships - Annexure

VII iii) Statement of standalone secured loans, as restated - in Annexure VIII iv) Statement of standalone unsecured loans, as restated - in Annexure IX v) Statement of standalone investments, as restated - in Annexure X vi) Statement of standalone sundry debtors, as restated - in Annexure XI vii) Statement of standalone loans and advances, as restated - in Annexure XII viii) Statement of standalone other income, as restated - in Annexure XIII ix) Statement of standalone segment information, as restated - in Annexure XIV x) Statement of standalone contingent liabilities, as restated - in Annexure XV xi) Statement of standalone capitalisation, - in Annexure XVI xii) Statement of tax shelters - in Annexure XVII

7 We have also examined the consolidated financial information of the Company and its subsidiaries Fame Motion Pictures Limited (formerly Shringar Films Limited), Big Pictures Hospitality Services Private Limited and its joint ventures Swanston Multiplex Cinemas Private Limited and Headstrong Films Private Limited (‘the Group’) for the years ended 31 March 2011, 2010, 2009, 2008 and 2007 comprising: i) Statement of consolidated accounting ratios, as restated - in Annexure XXIII ii) Statement of disclosure as required by AS – 18 Related Party Relationships appearing in

Annexure XXIV iii) Statement of consolidated secured loans, as restated - in Annexure XXV iv) Statement of consolidated unsecured loans, as restated - in Annexure XXVI v) Statement of consolidated investments, as restated - in Annexure XXVII vi) Statement of consolidated sundry debtors, as restated - in Annexure XXVIII vii) Statement of consolidated loans and advances, as restated - in Annexure XXIX

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viii) Statement of consolidated other income, as restated - in Annexure XXX ix) Statement of consolidated segment information, as restated - in Annexure XXXI x) Statement of contingent liabilities, as restated - in Annexure XXXII xi) Statement of consolidated capitalisation, - in Annexure XXXIII

8 In our opinion the financial information contained in Annexure VI to XXXIII of this report read along with the summary of significant accounting policies (refer Annexures IV and XXI) and other significant notes and changes in the business of the Company (Refer Annexures V and XXII) has been prepared after making adjustments and regrouping as considered appropriate and have been prepared in accordance with Paragraph B, Part II of Schedule II of the Act and the SEBI Regulations.

9 The report should not in any way be construed as a re-issuance or re-dating of any of the previous audit reports issued by the previous auditor.

10 We have no responsibility to update our report for events and circumstances occurring after the date of the report.

11 Our report is intended solely for use of the management and for inclusion in the offer document in connection with the proposed rights issue of equity shares of the Company. Our report should not be used, referred to or distributed for any other purpose except with our prior consent in writing.

For Patankar & Associates, Chartered Accountants Firm’s Registration No: 107628W Sanjay Agrawal Partner Membership Number: 49051 Pune Date: 23 September, 2011

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Fame India Limited Annexure I

Statement of restated profit and loss (Rupees in lakhs)

Particulars For the year ended

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Income Revenue from operations -- Sales and service income 12,245.96 11,595.09 8,987.68 6,495.93 4,448.81-- Sale of food and beverage 3,660.29 3,272.51 2,359.43 1,460.74 868.95 Other income 216.99 205.83 281.06 524.02 896.52

Total (A) 16,123.23 15,073.43 11,628.17 8,480.69 6,214.28 Expenditure Direct cost 5,771.61 5,311.58 3,712.20 2,510.21 1,692.56 Personnel cost 1,556.06 1,309.06 1,345.41 1,036.49 648.23 Other administrative expenses 6,851.31 6,274.35 5,039.38 3,027.37 2,041.75 Depreciation / amortisation 1,709.74 1,697.59 1,161.67 603.90 435.09 Interest 608.30 688.55 488.74 299.99 355.43 Amortisation of Foreign Currency Monetary Item Translation Difference Account ('FCMITDA') (76.31) (64.37) 13.58 (76.44) -

Total (B) 16,420.71 15,216.76 11,760.98 7,401.52 5,173.06 Restated net profit / (loss) before tax and extra-ordinary items (A-B) (297.48) (143.33) (132.81) 1,079.17 1,041.22

Provision for tax -- Current tax - - - 118.99 62.72 -- Minimum Alternate Tax (‘MAT’)

credit - - - (118.99) (62.72) -- Fringe benefits tax - - 23.00 26.50 13.18 Restated net profit / (loss) before extra-ordinary items (297.48) (143.33) (155.81) 1,052.67 1,028.04 Extra-ordinary items - - - - -

Restated net profit / (loss) after adjustment and extra-ordinary items (297.48) (143.33) (155.81) 1,052.67 1,028.04

Restated profit / (loss) brought forward from previous year 879.29 1,022.62 1,178.43 125.76 (902.28) Restated balance carried forward to statement of restated assets and liabilities 581.81 879.29 1,022.62 1,178.43 125.76 Note: To be read together with Statement of significant accounting policies (Annexure IV) and

Statement of changes and Notes to statement of restated profit and loss and restated assets and liabilities (Annexure V).

Fame India Limited Annexure II

99

Statement of restated assets and liabilities (Rupees in lakhs)

Particulars As at

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

A Fixed assets (i) Gross block 18,475.00 18,591.41 15,405.91 9,134.48 5,638.41

Less : Accumulated depreciation

/ amortisation 6,009.38 4,385.98 2,701.97 1,560.01 956.87 Net block 12,465.62 14,205.43 12,703.94 7,574.47 4,681.54

(ii) Capital work in progress /

advances 2,094.93 1,274.29 3,467.89 2,858.30 1,473.00 Total fixed assets 14,560.56 15,479.72 16,171.83 10,432.77 6,154.54B Investments 2,086.06 2,135.56 2,227.18 2,698.01 2,491.55C Foreign Currency Monetary Item

Translation Difference Account ('FCMITDA') - - 27.16 - -

D Current assets, loans and advances (i) Inventories 75.46 70.38 51.70 31.03 20.22 (ii) Sundry debtors 670.23 385.99 129.75 222.21 310.91 (iii) Cash and bank balances 1,726.72 2,173.03 1,875.49 2,073.36 6,758.39 (iv) Loans and advances 5,275.21 6,548.04 5,919.78 5,773.13 3,808.24 7,747.63 9,177.45 7,976.72 8,099.73 10,897.76

Total assets (A+B+C+D) 24,394.24 26,792.72 26,402.88 21,230.51 19,543.85E Liabilities and provisions Secured loans 3,289.02 6,038.42 4,666.10 2,043.03 2,311.19 Unsecured loans 8,197.15 7,030.30 8,176.00 6,550.60 9,700.50

Foreign Currency Monetary Item Translation Difference Account ('FCMITDA') - 64.37 - 229.32 -

Current liabilities and provisions 6,020.21 5,759.40 5,202.92 3,208.69 2,000.69 Total liabilities and provisions 17,506.39 18,892.49 18,045.02 12,031.64 14,012.38 Net worth (A+B+C+D-E) 6,887.85 7,900.23 8,357.87 9,198.87 5,531.47F Represented by (i) Share capital -- Equity share capital 3,494.70 3,479.53 3,479.53 3,479.53 3,158.95 -- Preference share capital 0.10 0.10 0.10 0.10 0.10 3,494.80 3,479.63 3,479.63 3,479.63 3,159.05 (ii) Reserves and surplus -- Securities premium 2,811.14 3,541.21 3,855.52 4,540.71 2,246.56 -- Capital redemption reserve 0.10 0.10 0.10 0.10 0.10 -- Profit and loss account 581.81 879.29 1,022.62 1,178.43 125.76 3,393.05 4,420.60 4,878.24 5,719.24 2,372.42

Net worth 6,887.85 7,900.23 8,357.87 9,198.87 5,531.47

Note: To be read together with Statement of significant accounting policies (Annexure IV) and

Statement of Changes and Notes to statement of restated profit and loss and restated assets and liabilities (Annexure V).

Fame India Limited Annexure III

100

Statement of restated cash flow (Rupees in lakhs)

Particulars For the year ended 31 March

2011 31 March

2010 31 March

2009 31 March

2008 31 March

2007

Cash flow from operating activities Profit / (loss) for the year before tax and extra-ordinary items (297.48) (143.33) (132.81) 1,079.17 1,041.22

Adjustments for: Depreciation / amortization 1,709.74 1,697.59 1,161.67 603.90 435.09 Amortisation of FCMITDA (76.31) (64.37) 13.58 (76.44) - Bad debts 2.27 8.19 8.43 13.23 14.51 Provision for doubtful debts / advances 6.36 20.34 108.65 39.84 15.80 Provision for diminution for value of investments 13.00 - - - - Advances and receivables written off to profit and loss account 37.00 94.63 - - - Payable written back to profit and loss account - (4.63) - - - Interest expense 608.30 688.55 488.74 299.99 355.43 Loss on sale of fixed assets, net / asset written off 21.94 14.35 3.50 0.44 2.24 Dividend from non-trade investments (0.95) (12.96) (78.25) (73.23) (91.56) Interest on National Saving Certificates (‘NSCs’) (4.34) (17.25) (15.63) (16.27) (12.00) Interest – others (0.61) (0.20) (1.05) (130.82) (405.13) Interest on fixed deposits (94.67) (113.55) (156.03) (149.94) (133.77) Unrealised foreign exchange gain, net - - (0.19) (186.13) (123.09) Profit on sale of investments (net) (2.34) - (0.28) (3.58) (0.15)

Operating profit before changes in working capital 1,921.93 2,167.36 1,400.33 1,400.16 1,098.59 Adjustments for: Decrease / (increase) in working capital Sundry debtors (292.87) (280.15) 54.91 36.53 (143.63) Loans and advances 1,068.98 (390.11) (123.27) (1,769.50) (1,533.45) Inventories (5.09) (18.68) (20.67) (17.47) (12.68) Current liabilities 120.56 392.16 604.12 432.44 305.89 Provisions (2.56) 2.48 26.95 (8.04) 16.60

Net changes in working capital 889.02 (294.30) 542.04 (1,326.04) (1,367.27)


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Statement of restated cash flow (Continued) (Rupees in lakhs)


31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Direct taxes paid (including fringe benefits tax) (53.53) (69.90) (149.34) (175.95) (77.02)

Net cash generated from / (used in) operations 2,757.41 1,803.16 1,793.03 (101.83) (345.70)

Cash flow from investing activities Purchase of fixed assets (1,377.09) (2,142.90) (5,125.61) (4,502.27) (2,574.52) Proceeds from sale of fixed assets 47.57 0.71 - 0.20 7.57 Proceeds from sale of investment in mutual funds 2,588.02 3,788.58 1,151.38 1,121.10 1,403.94 Purchase of investment in mutual funds (2,585.68) (3,788.58) (650.07) (1,323.98) (1,203.96) Purchase of NSCs - (8.38) (4.70) - - Investment in the equity share capital of Headstrong Films Private Limited (‘HFPL’) - - (0.50) - - Share application money paid to HFPL - - (25.00) - - Share application money paid to Swanston Multiplex Cinemas Private Limited (‘SMCPL’) - (125.00) - - - Dividend received 5.50 8.41 86.27 65.21 91.56 Interest received 161.31 107.29 204.05 273.79 532.56 Refund of share application money 12.50 Proceeds on maturity of NSCs 124.00 - - - -

Net cash (used in) investing activities (1,023.88) (2,159.87) (4,364.18) (4,365.95) (1,742.85)


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Statement of restated cash flow (Continued) Particulars For the year ended

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Cash flow from financing activities Proceeds from issue of share capital 15.18 - - 1.29 2.30 Share premium received 6.78 - - 2.58 4.60 Proceeds from issue of Foreign Currency Convertible Bonds (‘FCCBs’) - - - - 9,010.00 FCCB issue expenses - - - - (249.09) Interest paid (690.49) (779.74) (438.21) (317.58) (349.99) Vehicle loan repaid - - (0.20) (4.35) (10.27) Term loans from banks taken - 2,500.00 3,900.00 500.00 763.21 Term loans from banks repaid (2,920.27) (1,807.92) (667.80) (698.40) (1,213.50) Secured loan / bank overdraft disbursed during the year (net) 183.94 680.91 (618.68) (65.40) (477.82) Unsecured loans taken 1,425.00 1,166.00 650.00 595.00 615.00 Unsecured loans repaid (200.00) (1,105.00) (452.00) (223.00) (930.00) Net cash (used in) / generated from financing activities (2,179.86) 654.25 2,373.11 (209.86) 7,164.44 Net (decrease) / increase in cash and cash equivalents (446.32) 297.54 (198.04) (4,677.64) 5,075.89 Cash and cash equivalents at the beginning of the year 2,173.03 1,875.49 2,073.36 6,758.39 1,851.41 Effect of exchange gain on cash and cash equivalents - - 0.17 (7.39) (168.91) Cash and cash equivalents at the end of the year 1,726.72 2,173.03 1,875.49 2,073.36 6,758.39 Cash and cash equivalents at the / year end comprise: Cash on hand 21.26 23.81 18.38 27.22 31.40 Balances with Scheduled banks in -- Deposit accounts 1,427.98 1,426.00 1,670.52 1,648.64 6,600.70 -- Current accounts 277.48 723.22 185.78 315.99 93.92 Balances with other banks in -- Current accounts - - 0.81 81.51 32.37 1,726.72 2,173.03 1,875.49 2,073.36 6,758.39 Refer Note 1 - 1,195.06 1,600.00 1,850.00 1,850.00


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Statement of restated cash flow (Continued) Note:




4 To be read together with Statement of significant accounting policies (Annexure IV) and Statement of changes and Notes to statement of restated profit and loss and restated assets and liabilities (Annexure V).

Fame India Limited Annexure IV Statement of significant accounting policies adopted by the Company in preparing its financial statements (Continued)

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1 Background Fame India Limited (‘FIL’ or ‘the Company’) was incorporated as a private limited company on 26 October 1999. Pursuant to a special resolution passed by the Company at its Extra-ordinary General Meeting held on 19 December 2004, the Company converted itself into a public limited company. On 25 January 2008, the Company changed its name from Shringar Cinemas Limited to Fame India Limited pursuant to the approval from Government of India, Ministry of Corporate Affairs. The Company’s principal activity is exhibition of films in India including owning / managing multiplexes.

The Company was a subsidiary of Fame Motion Pictures Ltd. (‘FMPL’) (formerly known as Shringar Films Limited (‘SFL’)), which held 51% of its equity share capital. FMPL is mainly engaged in distribution and programming of films. On 25 March 2004, FMPL sold its shareholding in the Company to South-Yarra Holdings (‘SYH’), a partnership firm in which two of the then Directors were partners. Accordingly, the Company ceased to be a subsidiary company of FMPL effective that date.

On 27 March 2004, the Company purchased 999,900 equity shares (i.e. 100% of the paid-up equity share capital) of FMPL from its erstwhile shareholders. Consequently, FMPL became a 100% subsidiary of the Company.

During the year ended 31 March 2006, the Company issued 8,150,180 equity shares of Rs. 10 each at a premium of Rs. 43 per share pursuant to its Initial Public Offering (‘IPO’) on 22 April 2005.

During the year ended 31 March 2010, Inox Leisure Limited (‘INOX’) acquired from the partners of SYH, 43.28% of the share capital of the Company, followed by acquisition of additional equity shares of the Company to the extent of 7.21% from Open Market.

On 16 December 2010, an open offer was made by INOX along with Gujarat Fluorochemicals Limited (the “Persons Acting in Concert” or “PAC”) to the equity shareholders for acquisition of additional 8,231,759 equity shares at Rs. 51 per equity share for cash representing 20.25% of the equity share capital of the Company. Pursuant to the open offer, INOX acquired 1,075 equity shares of the Company. Post the open-offer, INOX holds 50.27% of the paid-up share capital of the Company. Accordingly, the Company is now a subsidiary of INOX with effect from 6 January 2011. The Company also held 50.01% of the paid-up equity share capital of Swanston Multiplex Cinemas Private Limited (‘SMCPL’), which is primarily engaged in operating a multiplex. Pursuant to the shareholders’ agreement, the Company on 31 August 2005 transferred 0.01% holding to Reliance MediaWorks Limited (formerly known as Adlabs Films Limited). Consequently, SMCPL ceased to be a subsidiary of the Company effective that date. On 8 March 2006, the Company purchased 10,000 equity shares (i.e. 100% of the paid-up equity share capital) of Big Pictures Hospitality Services Private Limited (‘Big Pictures’). Big Pictures is in the business of management of food courts and malls.

On 3 November 2008, the Company purchased 5,000 equity shares (i.e. 50% of the paid-up equity share capital) of Headstrong Films Private Limited (‘HFPL’). HFPL is primarily engaged in production and distribution of films.

2 Basis of preparation of financial statements

The financial statements are prepared and presented under the historical cost convention, on the accrual basis of accounting, and in accordance with the provisions of the Companies Act, 1956 (‘the Act’) and the accounting principles generally accepted in India (‘Indian GAAP’) and comply with the Accounting Standards (‘AS’) as notified in the Companies (Accounting Standards) Rules, 2006, to the extent applicable.


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3 Going Concern

As at 31 March 2011, the Company had term loans of Rs. 1,066.67 lakhs due for repayment within the next twelve months. Further, an amount of Rs. 8,240.01 lakhs (worth face value of USD 13 million and accrued interest, as per the exchange rate as at 31 March 2011) in accordance with the terms and conditions of the Foreign Currency Convertible Bonds (‘FCCBs’) would have become payable in April 2011.

Subsequent to the year-end, the Company has taken a short term unsecured loan from ING Vysya Bank for an amount of Rs. 7,000.00 lakhs and redeemed the outstanding FCCBs in September 2011. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations in respect of the Bonds. The Board of Directors at their meeting held on 19 April 2011, have accorded consent to issue equity shares on rights basis to the existing equity shareholders of the Company up to Rs. 9,000 lakhs. Based on the above, the financial projections made by the management, and the financial strength and management support of the Promoter Group, the Company continues to adopt the going concern basis in preparing the financial statements.

4 Use of estimates

The preparation of financial statements in accordance with generally accepted accounting principles (‘GAAP’) in India requires that management makes estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of relevant facts and circumstances as at the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

5 Fixed assets, intangible assets, Capital work in progress and depreciation / amortisation

Fixed assets, intangible assets and Capital work-in-progress (‘CWIP’)

Fixed assets are stated at cost of acquisition less accumulated depreciation / amortisation and impairment loss, if any. The cost of fixed assets includes freight, duties, taxes (to the extent not recoverable from tax authorities) and any directly attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs directly attributable to acquisition or construction of qualifying fixed assets are capitalised.

Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost of fixed assets not ready for their intended use before such date are disclosed under Capital Work-in-Progress. Capital work-in-progress includes estimates of work completed, as certified by management.

In respect of accounting period commencing on or after 7 December 2006 and ending on or before 31 March 2011, consequent to the insertion of para 46 of AS-11 ‘The Effects of Changes in Foreign Exchange Rates’, notified under the Companies (Accounting Standards) Rules, 2006, (as more fully explained in Schedule 2.10), the cost of depreciable capital assets includes foreign exchange differences arising on translation of long term foreign currency monetary items as at the balance sheet date in so far as they relate to the acquisition of such assets.

Depreciation/amortisation

Depreciation on fixed assets specific to multiplexes is provided pro-rata to the period of use, under the straight line method, at the rates prescribed in Schedule XIV to the Act, except as stated below, which, in management’s opinion, reflect the estimated useful economic lives of these fixed assets. Useful lives being followed by the Company that are shorter than those prescribed under Schedule XIV to the Act are summarised as below:


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Particulars Useful life Computer software (purchased) 1 year Furniture and fixtures 10 years Office equipment 10 years Air conditioners 10 – 21 years Theatrical equipment 14 – 15 years

Depreciation on other fixed assets is provided pro-rata to the period of use, using the written down value method at the rates prescribed in Schedule XIV to the Act, which in management’s opinion reflect the estimated useful economic lives of those fixed assets.

Individual assets costing upto Rs. 5,000 are depreciated at the rate of 100% pro-rata over the period of one year.

Leasehold improvements are amortised over the lower of the useful life of the asset and the lease term of the leasehold premises, on a straight-line basis, which represents the period over which the economic benefits of the assets are expected to be consumed by the lessee, as determined at the inception of the lease term.

Assets retired from active use and held for disposal are written down to their estimated realisable value and are classified as ‘Assets held for sale’.

6 Impairment of assets

In accordance with AS 28 on ‘Impairment of Assets’ where there is an indication of impairment of the Company’s assets, the carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of an asset or the cash generating unit to which it belongs exceeds its recoverable amount. Impairment loss is recognised in the profit and loss account, where applicable.

If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is re-assessed and the asset is reflected at the recoverable amount subject to a maximum of the depreciated historical cost.

Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life.

7 Investments Long-term investments are carried at cost. Provision is made when there is a decline, other than temporary, in the carrying value of such investments, determined separately for each investment, and the resultant reduction in the carrying amount is charged to the profit and loss account.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each investment.

Profit or loss on sale of investments is determined on the basis of weighted average carrying amount of investments disposed off.


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8 Revenue recognition

Multiplex operations There are weekly arrangements with distributors for exhibition of films at the multiplexes operated by the Company.

Revenue from theatrical exhibition is recognised on the date of exhibition of the films and comprises proceeds from sales of tickets, net of discounts. As the Company is the primary obligor with respect to exhibition activities, the share of distributors and the joint-venture investors in these proceeds is disclosed as exhibition costs.

Revenue from food and beverage sales is recognised at the point of sale at the counter.

Revenue from advertisements and royalty is recognised on the date of the exhibition of the advertisement / event or over the period of the contract, as applicable.

Revenue from management of multiplexes and from facilities within the multiplexes is recognised on an accrual basis as per the contractual arrangement entered into with the multiplex and facilities providers.

Programming The Company enters into contracts with theatre owners for programming film exhibition at these theatres for a contracted period. The Company also enters into weekly arrangements with distributors for exhibition of films in these theatres.

Revenue from programming is recognised on the date of exhibition of the films and comprises proceeds from sale of tickets, net of taxes and theatre-owner’s share. As the Company is the primary obligor with respect to the programming activities, the shares of distributors and joint venture investors (joint control does not exist in any of the joint ventures) in these proceeds are disclosed as programming costs. Others Dividend income is recognised when the unconditional right to receive payment is established. Income from interest on deposits, loans and interest-bearing securities is recognised on time proportion basis.

9 Employee benefits

(a) Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is charged to the profit and loss account in the period in which such services are rendered.

(b) Post-employment benefits

Defined contribution plans

The Company’s provident fund contribution paid / payable under the recognised provident fund


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scheme and the employees’ state insurance contribution is recognised as an expense in the profit and loss account during the period in which the employee renders the related service.

Defined benefit plans

The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods. These benefits are discounted to determine its present value, and the fair value of any plan assets is deducted therefrom.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation at each balance sheet date by an independent actuary, using the Projected Unit Credit Method, which recognises each period of service as giving rise to one additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligations are measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligations under the defined benefit plan are based on the market yields on government bonds as at the balance sheet date.

All actuarial gains and losses arising during the year are recognised immediately in the profit and loss account.

(c) Other long-term employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defined benefit obligations at the balance sheet date based on an actuarial valuation by an independent actuary using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligations under the defined benefit plan are based on the market yields on government bonds as at the balance sheet date.

10 Inventories

Inventories of food and beverages are valued at the lower of cost and net realisable value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on the First-In, First-Out (‘FIFO’) basis.

11 Foreign currency transactions Foreign currency transactions are recorded using the exchange rates prevailing on the date of the respective transactions. Exchange difference arising on foreign currency transactions, between the actual rate of settlement and the rate on the date of the transactions, is charged or credited to profit and loss account.

The Central Government has vide its notification dated 31 March 2009 amended AS 11, ‘The Effects of Changes in Foreign Exchange Rates’, notified under the Companies (Accounting Standards) Rules, 2006, to the extent it relates to the recognition of losses or gains arising on restatement of long-term foreign currency monetary items in respect of accounting periods commencing on or after 7 December 2006 and ending on or before 31 March 2011.

As stipulated in the notification, the Company has exercised the option to adopt the following policy irrevocably and retrospectively for accounting periods commencing from 1 April 2007.

Long term monetary assets and liabilities, other than those which form part of the Company’s net investment in non-integral foreign operations, denominated in foreign currency as at the balance sheet date are translated at the exchange rate prevailing on the balance sheet date and the net exchange gain / loss on such conversion, if any, is:


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a) adjusted to the cost of the asset, where the long-term foreign currency monetary items relate to the acquisition of a depreciable capital asset (whether purchased within or outside India), and depreciated over the balance life of the assets and;

b) accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ (FCMITDA) and amortised over the balance period of long-term monetary asset / liability but not beyond 31 March 2011, in cases other than those falling under (a) above.

Other monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at the exchange rates prevailing on the balance sheet date and the overall net exchange gain or loss on such conversion, if any, is credited / charged to the profit and loss account. Non monetary assets are recorded at the rates prevailing on the date of the transactions.

12 Taxation

Tax expense comprises current tax and deferred tax charge or credit

Current tax

Provision for current tax is recognised in accordance with the provisions of the Income tax Act, 1961 and is made based on the tax liability after taking credit for tax allowances and exemptions.

Minimum Alternative Tax (‘MAT’) credit is recognised only to the extent there is convincing evidence that the Company will pay normal income tax in excess of MAT during the specified period.

MAT credit entitlement is reviewed as at each balance sheet date and written down to the extent there is no longer convincing evidence that the Company will pay normal income tax during the specified period.

Deferred tax

Deferred tax liability or asset is recognised for timing differences between the profits or losses offered for income taxes and profits / losses as per the financial statements. Deferred tax assets and liabilities and the corresponding deferred tax credit or charge are measured using the tax rates and tax laws that have been enacted or substantively enacted as at the balance sheet date.

Deferred tax asset is recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax asset is recognised only if there is a virtual certainty of realisation of such asset. Deferred tax asset is reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain to be realised.

13 Leases The lease term is the non-cancellable period for which the lessee has agreed to take on lease the asset together with any further periods for which the lessee has the option to continue the lease of the asset, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise.

Assets taken on operating lease

Lease rentals in respect of assets acquired on operating leases are charged-off to the profit and loss account on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern of the user’s benefit.


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14 Earnings per share (‘EPS’)

Basic EPS is computed by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti-dilutive. The dilutive potential equity shares are deemed to be converted as of the beginning of the year, unless they have been issued at a later date.

15 Employees’ Stock Option Scheme (‘ESOS’) In accordance with the Securities and Exchange Board of India (‘SEBI’) guidelines, the excess, if any, of the fair value of shares at the date of grant of the options under the ESOS over the exercise price is treated as employee compensation and amortised on a straight-line basis over the vesting period.

16 Provisions and contingencies

Provisions comprise liabilities of uncertain timing or amount. Provisions and loss contingencies arising from claims, litigation, assessment, fines, penalties, etc. are recognised when the Company has a present obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Fame India Limited Annexure V

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Notes to statements of restated profit and loss (Annexure I) and restated assets and liabilities (Annexure II)

Adjustments in the restated profit and loss (Rupees in lakhs)


201131 March

2010 31 March

2009 31 March

2008 31 March

2007

Net Profit/(loss) for the year after tax, as per audited financial statements 198.81 (624.49) 187.71 1,242.13 982.92 Adjustments [expense/(income)] in Statement of restated profit and loss arising out of: Prior period adjustment -- Other administrative expenses (Note1) 432.94 (449.78) 29.30 (12.46) - -- Other income (Note 2) - - 15.18 (15.18) 27.45 -- Income tax (Note 3) (31.84) - 13.89 7.74 10.21 -- Other administrative expenses (Note 4)

-

-

135.68

(116.75)

(18.93)

-- Personnel cost (Note 4) - - 1.85 (1.65) (0.20) -- Personnel cost (Note 5) - (31.38) 31.38 - - -- Deferred tax (Note 11) - - 130.13 (130.13) - Change in accounting policy -- Other income (Note 6) - - - 570.49 - -- FCMITDA (Note 6) - - - (76.44) - -- Depreciation / amortisation (Note 6) - - - (6.04) -Effect of tax adjustments -- Provision for tax (Profit and loss account) (Note 9) (41.00) - (13.89) (38.75) (0.93) -- Minimum Alternate Tax Credit (Note 10) 136.19 - - 8.62 (62.72) Regroupings -- Other income (Note 7) 345.27 379.06 384.19 184.75 158.45 -- Revenue from operations (Note 7) (345.27) (379.06) (384.19) (184.75) (158.45) Restated net profit / (loss) after adjustment and extra-ordinary items (297.48) (143.33) (155.81) 1,052.67 1.028.84


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Notes to statements of restated profit and loss (Annexure I) and restated assets and liabilities (Annexure II) (Continued) Adjustments in the restated assets and liabilities

Cumulative effect of above [increase/ (decrease)] in Statement of restated assets and liabilities:

As at 31 March

2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

Prior period adjustment -- Loans and advances (18.31) 86.04 86.04 238.75 82.78 -- Current liabilities and provisions (30.79) (422.73) 58.43 (2.25) 10.21 -- Deferred tax liability - - - 130.13 - -- Profit and loss account (Note 12) - - - - (27.45)

Change in accounting policy -- Foreign Currency Monetary Item translation difference account (FCMITDA) (Note 6) - - - (229.32) - -- Fixed assets (net block) and CWIP (Note 6) - - - (258.69) - -- Profit and loss account (Note 6) - - - 488.01 -

Regroupings -- Current liabilities and provisions (Note 8) 29.97 (10.21) (3.83) (3.83) 17.50-- Loans and advances (Note 8) 29.97 (10.21) (3.83) (3.83) 17.50


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Notes to statements of restated profit and loss (Annexure I) and restated assets and liabilities (Annexure II) (Continued)

A) Notes on adjustments for restated statements

1) During the financial year ended 31 March 2008, the Company provided for service tax on lease rentals with effect from 1 June 2007 on introduction of levy of service tax on renting of immovable properties. During the financial year ended 31 March 2009, in view of the judgment of the Honorable High Court of Delhi dated 18 April 2009 in the case of Home Solution Retail India Limited and others vs. Union of India upholding the activity of renting immovable property as “ultra vires” of the Finance Act, 1994 and based on an expert opinion obtained by the management, the unpaid service tax on renting of immovable property was reversed. Pursuant to the amendment made by the Finance Act, 2010, renting of immovable property was defined as a taxable service with retrospective effect from 1 June 2007. Accordingly, during the financial year ended 31 March 2010, the Company provided for service tax on renting of immovable properties with retrospective effect from 1 June 2007. However, based on the legal opinion obtained during the year ended 31 March 2011, the Company reversed the entire service tax liability standing in the books of accounts as at 30 September 2010. This reversal has been given effect to, in the respective years to which the service tax relates.

2) During the years ended 31 March 2007 and 31 March 2009, the Company recognised refund of entertainment tax paid from the date of commencement of its multiplexes, Fame Highland Park and Fame Southcity respectively, on receipt of the Order recommending the above multiplexes as a Multiplex Theatre Complex under section 3 of the West Bengal Act. These refund amounts have been reflected in the respective years to which they relate.

3) During the year ended 31 March 2011, the Company accounted for additional tax arising for earlier financial years - based on first appellate authority’s order received for the financial year ended 31 March 2007, assessment order received for the financial year ended 31 March 2008 and short provision of income tax for financial year ended 31 March 2009. These amounts have been adjusted in the respective years to which they relate.

4) Pursuant to the clarification by Central Board of Excise and Customs (CBEC) vide Circular No. File No. 137/72/2008-CX.4 dated 21 November 2008, the accumulated CENVAT/Service tax credit upto 31 March 2008 could be utilised by the Company for payment of output service tax without any restriction of time limit. The Company recognised CENVAT/Service tax credit for the period upto 31 March 2008 by crediting respective expenses in the financial year ended 31 March 2009. For the purpose of restatement, these amounts have been credited to the expenses of the year to which they relate.

5) During the year ended 31 March 2010, certain amounts recovered by the Company from a joint venture of the Company in the earlier year were reversed. For the purpose of restatement, the reversal has been given effect to in the year in which the expenses arose.


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A) Notes on adjustments for restated statements (Continued)

6) The Central Government vide notification dated 31 March 2009 amended AS 11 ‘The Effects of Changes in Foreign Exchange Rates’ to the extent it relates to the recognition of losses or gains arising on restatement of long-term foreign currency monetary items in respect of accounting periods commencing on or after 7 December 2006 and ending on or before 31 March 2011. In line with the transitional provisions, exchange differences on translation of long term foreign currency monetary items pertaining to the financial year ended 31 March 2008 which were recognised in the profit and loss account before the exercise of the said option, depreciation credit and amortisation of FCMITDA for the year ended 31 March 2008, were adjusted against opening balance in profit and loss account as on 1 April 2009. For the purpose of restatement, these amounts have been adjusted in the financial year ended 31 March 2008.

7) The refund of entertainment tax and income from facilities within the multiplex earlier presented under other income are regrouped under revenue from operations for consistency and comparability of the treatment of entertainment tax exemption respectively.

8) These represent regrouping of amounts for consistency of presentation. 9) These amounts represents increase/(decrease) in tax expenses of respective years on account of

restatement effects given in the financial information. 10) The amount of Minimum Alternate tax represents, credit that is available to be carried forward and

eligible to be offset in the future years as per Income Tax laws. The same has been restated in respective years.

11) During the year ended 31 March 2009, the deferred tax liability was fully set off with the deferred tax asset leading to reversal of deferred tax liability previously recognized during the year ended 31 March 2008. The restatement adjustments and subsequent stand taken by the Company has resulted in increase in the deferred tax asset, fully setting off the deferred tax liability as of 31 March 2008. Consequently, the recognition of net deferred tax liability during the year ended 31 March 2008 has been reversed.

12) As per the audited financial statements for the year ending 31 March 2007, the balance in profit and loss account brought forward as at 1 April 2006 was at a loss of Rs. 929.73 lakhs. Restatement adjustment credit pertaining to the year ended 31 March 2006 of Rs. 27.45 lakhs on account of treatment of entertainment tax subsidy (refer note 3 above) is adjusted against the opening balance. Accordingly, the restated balance in profit and loss account brought forward as at 1 April 2006 is a loss of Rs.902.28 lakhs.


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B) Non Adjustments - Audit qualifications in the Companies (Auditor's Report) Order 2003, which do not require any corrective adjustment in the financial information, are as follows:

1) Utilisation of money raised by public issue Financial year 2006-2007: The Company had utilised an amount of Rs. 1,511.60 lakhs for purposes other than those stated / specified in the offer document as at 31 March 2006. Further, during the year ended 31 March 2007, the Company utilised Rs. 349.40 lakhs for purposes other than that stated in the offer document. The unutilised money was temporarily invested in the units of mutual funds aggregating to Rs. 300 lakhs and in fixed deposits aggregating to Rs. 1,550 lakhs (of which Rs. 600 lakhs was pledged against overdraft facility) and mutual funds Rs. 300 lakhs. Financial year 2007-2008: The Company had utilised an amount of Rs. 1,898.61 lakhs for purposes other than those stated / specified in the offer document as at 31 March 2008. The unutilised money was temporarily invested in the units of mutual funds aggregating to Rs. 500 lakhs and fixed deposits aggregating to Rs. 1,350 lakhs (of which Rs. 990 lakhs was pledged against overdraft facility and Rs. 210 lakhs was under lien against bank guarantees given by the Company.)

2) Differences observed in physical verification of fixed assets Financial year 2006-2007: Pursuant to its physical verification program, by which all fixed assets are verified in a phased manner once in three years, certain fixed assets were physically verified by the management. As at the year end, management was in the process of reconciling the differences observed on such verification and effect of the same was not considered in the financial statements for that year, as management believed that the effect of discrepancies, if any, would not be material. There are no significant adjustments resulting therefrom.

3) Updation of quantitative details in the fixed asset register Financial year 2010-2011: The Company has maintained proper records to show full particulars including situation of fixed assets. However, the Company is in the process of updating the quantitative details.


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C) Other significant notes (based on audited financial statements) and changes in the business of the Company during the last five financial years

1) Change in useful lives of certain fixed assets:

During the year ended 31 March 2007, the Company had revised the estimated useful lives of certain blocks of fixed assets, since the management believed that these revised useful lives more appropriately reflect the period of economic benefit to be derived from the use of such assets and hence would result in a more appropriate preparation and presentation of the financial statements. The revised useful lives of the assets along with those estimated earlier are stated below:

Asset block Revised useful lives Earlier estimated useful life Air conditioners 21 years 10 Years Projection equipments 15 Years 10 Years Electrical equipments 21 years 10 Years Concession equipments 15 Years 10 Years

As a result of this change in estimate, the depreciation charge and the deferred tax charge for the year ended 31 March 2007 was lower by Rs. 11.11 lakhs and Rs. 3.78 lakhs respectively and the net profit and reserves and surplus were higher by Rs. 14.89 lakhs and net fixed assets were higher by Rs. 11.11 lakhs.

2) Transfer of programming segment to Fame Motion Pictures Limited:

The Company has discontinued its programming segment / arrangements with effect from 1 July 2007 and transferred the said arrangements to FMPL, a wholly owned subsidiary of the Company with a view to achieve increased focus on the programming business. Revenue and direct cost relating thereto and pertaining to the period till the date of such transfer included in statement of restated profit and loss (refer Annexure I) are summarised below:

(Rupees in lakhs)

For the year ended 31 March 2008* 31 March 2007 Programming revenue 33.63 129.39Programming costs 26.80 108.28

* for the period from 1 April 2007 to 30 June 2007.


117


3) Commitments

a) Operating lease The Company is obligated under non-cancellable leases for multiplex premises and office premises, which are renewable on a periodic basis at the option of both the lessor and the lessee. The future minimum lease payments in respect of non-cancellable portion of operating leases together with any further periods for which the Company has the option to continue the lease, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise, for agreements entered into are as follows:

(Rupees in lakhs) Particulars As at

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Amount due within one year from the balance sheet date 3,027.62 3,079.83 2,335.98 1,293.23 831.19 Amount due in the period between one year and five years 12,989.20 13,236.54 10,360.82 4,521.65 3,675.81 Amount due after five years 9,296.67 9,613.61 4,749.76 3,296.22 1,470.38 25,313.49 25,929.98 17,446.56 9,111.10 5,977.38

The Company has entered into lease agreements / Memorandum of Understanding (‘MOUs’) for multiplex premises at various locations. The lease rentals for these premises accrue from the date of commencement of commercial operations. Accordingly, these leases have been excluded from the above disclosure. The number of such lease agreements/MOUs are as under:

Particulars As at

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

No. of lease agreements / MOUs not included 43 49 60 85 50


118


3) Commitments (Continued)

b) Capital commitments (Rupees in lakhs)


2011 31 March

201031 March

200931 March

2008 31 March

2007 The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 170.51 599.28 593.89 433.71 1,049.77

4 Employee stock option scheme (‘ESOS’)

On 21 December 2004, the Company established the ‘Employee Stock Option Scheme’ (‘ESOS - 2004 scheme’). Under the ESOS-2004 scheme, the Company was authorised to issue not more than 5% of its equity share capital to eligible employees. Employees covered by the Plan were granted an option to purchase the shares of the Company subject to the requirements of vesting. A compensation committee constituted by the Board of Directors of the Company administered the ESOS-2004 scheme.

As per the ESOS 2004 scheme, the Committee issued stock options to the employees at an exercise price of Rs. 30 per option. Total allotments under the ESOS-2004 scheme were 35,900 shares.

Further , on 21 May 2009, the Company established the ‘Employee Stock Option Scheme 2009’ (‘ESOS - 2009 scheme’). Under the ESOS-2009 scheme, the Company is authorised to issue not more than 5% of its equity share capital to eligible employees. Employees covered by the ESOS-2009 scheme are granted an option to purchase the shares of the Company subject to the requirements of vesting. A compensation committee constituted by the Board of Directors of the Company administers the ESOS-2009 scheme.

As per the ESOS -2009 scheme, the Committee shall issue stock options to the employees at an exercise price of Rs. 14.47 per option. Further, the participants shall exercise the options within a period of 5 years commencing on or after the respective date of vesting of the options.

The above schemes provide that these options would vest in tranches as follows:

Period within which options will vest unto the participant

% of options that will vest ESOS - 2009 ESOS – 2004

Grant A Grant B End of 12 months from the date of grant of options 15 - 33.33 End of 24 months from the date of grant of options 15 10 33.33 End of 36 months from the date of grant of options 20 25 33.34 End of 48 months from the date of grant of options 25 25 - End of 60 months from the date of grant of options 25 40 -


119


4 Employee stock option scheme (‘ESOS’) (Continued)

The terms and conditions of the ESOS- 2004 scheme were in line with the amended Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

The terms and conditions of the ESOS – 2009 scheme, as approved by the remuneration committee of the Board of Directors of the Company in its meeting held on 21 May 2009 in pursuance to the approval of the Company at its Annual General Meeting held on 27 September 2006, are in line with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock Purchase Scheme) Guidelines, 1999 as amended vide Circular no SEBI/CFD/DIL/ESOP/5/2009/03/09 dated 3 September 2009 and in accordance with the terms of the resolutions passed by the Company.

Employee stock option activity under the scheme / schemes is as follows;

For the year ended

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

ESOS-2009 Scheme ESOS-2004 Scheme

Outstanding at the beginning of the year 1,063,300 - - 13,804 52,500

Granted during the year - 1,128,600 - - -

Forfeited during the year* (637,750) (65,300) - (900) (15,700)

Exercised during the year (151,770) - - (12,904) (22,996)

Outstanding at the end of the year **273,780 1,063,300 - - 13,804

Out of above vested and exercisable at the end of the year - - - - 3,000

* On account of employees leaving the organisation prior to the date of vesting. ** Subsequent to the year-end, 43,785 options have vested on 21 May 2011, out of which 36,603 options have been exercised.

5) Initial Public Offering (‘IPO’)

Vide a special resolution passed at the Extra ordinary General Meeting of the members of the Company held on 23 December 2004, under Section 81(1A) of the Act, and the resolution passed by the board at the meeting held on 21 December 2004, consent was accorded to offer /issue/ allot 8,150,000 equity shares of face value of Rs. 10 each at a premium through the 100% book building process through an initial public offering (‘IPO’). In this offering, 250,000 shares were reserved for employees of the Company. On 22 April 2005, pursuant to the IPO, the Company issued 8,150,180 equity shares of Rs. 10 each at a premium of Rs. 43 per share.


120


5) Initial Public Offering (‘IPO’) (Continued)

Utilisation of IPO proceeds: (Rupees in lakhs)

Particulars Projection in offer

document

Actual funds utilised till

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Funding exhibition growth # 3,370.00 1,390.56 1,390.56 1,390.56 1,140.06 1,140.06 Funding distribution growth through subsidiary 599.50 - - - - -

Issue expenses * 350.00 441.62 441.62 441.62 441.62 441.62

Repayment of loans # - 2487.32 1,292.26 887.32 887.32 887.32

Total 4,319.50 4,319.50 3,124.44 2,719.50 2,469.00 2,469.00

Un-utilised IPO proceeds had been temporarily invested as follows:


31 March 2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

Mutual funds - - - 500.00 300.00

Fixed deposits ** - 1,195.06 1,600.00 1,350.00 1,550.00

Total - 1,195.06 1,600.00 1,850.00 1,850.00

** Fixed Deposit under lien - 1,195.06 1,600.00 1,200.00 600.00

# The above utilisation of IPO proceeds is in accordance with ‘objects of the issue’ read with ‘interim use of proceeds’ clause as mentioned in the prospectus. *The issue expenses were higher by Rs. 91.62 lakhs as compared to the projections in the Prospectus. This is due to increase in lead management fee, underwriting and selling commission, advertising and marketing expenses and legal and professional charges. The issue expenses incurred were adjusted in the year of issue against the Securities Premium Account. The shareholders of the Company, at their Annual General Meeting held on 30 September 2009 have approved vide a special resolution, the utilisation of balance un-utilised IPO proceeds of Rs. 1600.00 lakhs as at that date inter-alia for expansion activities of the Company in India for opening up new multiplexes and expenses related thereto, including but not limited to repayment of loans taken for such purposes. Accordingly, during the year ended 31 March 2011 and the year ended 31 March 2010, the Company utilised Rs. 1,195.06 lakhs and Rs. 404.94 lakhs respectively for repayment of term loans taken for its multiplex capital expenses.


121


6) Foreign Currency Convertible Bonds

On 21 April 2006, the Company, pursuant to a resolution of the Board of Directors dated 28 January 2006 and by a resolution of the shareholders dated 8 March 2006, issued

(i) 12,000, Zero Coupon Series A Unsecured Foreign Currency Convertible Bonds (“Series A Bonds”) of the face value of US $ 1000; and

(ii) 8,000, 0.5% per annum Series B Unsecured Foreign Currency Convertible Bonds (“Series B Bonds”) of the face value of US $ 1000

aggregating to US$ 20,000,000 due in 2011 (the Series A Bonds and the Series B Bonds are collectively called the “Bonds”).

The Bonds were convertible at the option of the bond holders into newly issued, ordinary equity shares of par value of Rs. 10 per share (“Shares”), at an initial conversion price of Rs. 90 per share for Series A Bonds; and Rs. 107 per share for Series B Bonds, as defined in terms and conditions of the Bonds.

Unless previously converted, redeemed or repurchased and cancelled, Series A Bonds were redeemable on 22 April 2011 at 137.01 percent of their principal amount representing a gross yield to maturity of 6.5%; and Series B Bonds were redeemable on 22 April 2011 at 140.69 percent of their principal amount representing a gross yield to maturity of 7.5%.

During the year ended 31 March 2008, 1,504,999 equity shares of Rs. 10 each were allotted against 3,000 Series A Bonds and 1,687,850 equity shares of Rs. 10 each were allotted against 4,000 Series B Bonds. Exchange gain / loss arising on such conversion has been adjusted against securities premium account. Premium on FCCB amortised and adjusted to the securities premium account upto the date of conversion has been reversed.

The bond issue expenses have been adjusted against securities premium as per the provision of Section 78 of the Companies Act 1956.


122


6) Foreign Currency Convertible Bonds (Continued)

Utilisation upto 31 March 2011 of the proceeds from the FCCB issue is as under: (Rupees in lakhs)

Particulars As at 31 March 2011

-- New cinema complexes 8,243.24

-- Expansion / modernisation of existing cinema complexes 245.61

-- FCCB issue expense 242.07

Total 8,730.92

Premium payable on redemption of FCCB is charged to the securities premium account.

(Rupees in lakhs) Particulars For the year ended

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Opening balance 1,698.65 1,384.34 699.15 552.10 Nil

Add: Provision for the year# 755.30 472.17 493.13 367.82 552.10

(Less) / Add: Exchange difference on account of restatement of the outstanding premium payable (18.44) (157.85) 192.06 (30.01) Nil

Less : Uuntilised amounts reversed during the year Nil Nil Nil (190.76) Nil Closing balance 2,435.51 # 1,698.65 1,384.34 699.15 552.10

# Closing balance of premium on redemption of Foreign Currency Convertible Bonds as at 31 March 2011 includes potential withholding tax liability aggregating to Rs. 257.13 lakhs Events subsequent to 31 March 2011

With the permission of Reserve Bank of India and with the necessary consent of the bondholders, the Company has redeemed the outstanding bonds in September 2011 at a final redemption price of 112.35 percent of their principal amount for Series A Bonds and 115.37 percent of their principal amount for Series B Bonds, which represents a discount of 18% to the original redemption value of the Bonds. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations in respect of the Bonds.

The resultant gain and the corresponding reduction in withholding tax liability on redemption of Bonds have been credited to the securities premium account.


123


7) Foreign currency exposure The Company uses forward contracts to hedge its risks associated with foreign currency fluctuations. The Company does not enter into any forward contract which is intended for trading or speculation purposes. The details of forward contracts outstanding at the year-end are as follows


31 March 2011

31 March 2010 31 March 2009 31 March 2008 31 March 2007

In US $

In INR

In US $

In INR In US $ In INR In US $ In INR In US $ In INR

Number of contracts

- - - - 7

Amount of contracts (in lakhs)

-

-

-

-

-

-

-

-

57.00

2,484.66

Foreign currency exposure not hedged by a derivative instrument or otherwise is as under;


31 March 2011 31 March 2010 31 March 2009 31 March 2008 31 March 2007

In US $ In INR In US $ In INR In US $ In INR In US $

In INR In US $

In INR

Bank balance - - - - 0.01 0.81 2.04 81.51 58.69 2,558.25

FCCB liability 130.00 5,804.50 130.00 5,868.20 130.00 6,623.50 130.00 5,196.10 200.00 8,718.00

YTM on FCCB 48.79 2,178.38 37.63 1,698.65 27.17 1,384.34 17.49 699.15 12.67 552.10

Note: Subsequent to the year end, the outstanding Bonds have been redeemed in September 2011 (for details, refer ‘events subsequent to 31 March 2011’ given above).


124


8) Earnings per share (Rupees in lakhs)


31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

(297.48) (143.33) (155.81) 1,052.67 1,028.04

Restated net profit /(loss) after tax attributable to equity shareholders (Numerator used for calculation of Basic EPS) (A)

Add: Interest paid on FCCB 11.25 10.87 7.34 17.91 16.94 Add: Exchange difference considered as interest cost as per para 4(e) of AS – 16 - - 131.21 - -

Add/(Less): Amortisation of FCMITDA (76.31) (64.37) 13.58 (67.78) -

Less : Net exchange gain on FCCB - ( 25.96) (88.54)

Add/(Less): Depreciation on exchange difference capitalised on account of AS 11 notification 9.52 14.70 45.52 (5.36) - Restated net profit /(loss) after tax attributable to equity shareholders (Numerator used for calculation of Dilutive EPS) (B) (353.01) (182.13) 41.84 971.48 956.45 Weighted average number of equity shares outstanding during the year – Basic (C) 34,922,915 34,795,262 34,795,262 32,366,968 31,569,835

Add: Weighted average number of equity shares arising out of outstanding stock options and on conversion of FCCB # that have dilutive effect on the EPS 6,444,016 6,880,884 6,202,850 8,625,432 8,115,038

Weighted average number of equity shares outstanding during the year – Diluted (D) 41,366,931 41,676,146 40,998,112 40,992,396 39,684,873

Basic earnings per share of face value of Rs. 10 each (A)/(C) (0.85) (0.41) (0.45) 3.25 3.26

Diluted earnings per share of face value of Rs. 10 each (B)/(D) (0.85) (0.44) (0.45) 2.37 2.41

Note 1. Earnings Per Share calculations are in accordance with Accounting Standard 20 (AS – 20) Earnings Per

Share. 2. All the adjustments have been made net of applicable taxes for the respective year, wherever applicable. 3. Subsequent to 31March 2011, the Company has redeemed the outstanding bonds in September 2011 (refer

note C-6 of Annexure V for details). As at each balance sheet date, the potential equity shares in respect of outstanding FCCBs have been considered for the computation of diluted EPS in accordance with AS – 20.

4. The effects of anti-dilutive potential equity shares are ignored in calculating diluted earnings per share.


125

Notes to statements of restated profit and loss (Annexure I) and restated assets and liabilities (Annexure II) (Continued) 9 Disclosure pursuant to Accounting Standard - 15 (Revised 2005) 'Employee Benefits’ Effective 1 April 2007 the Company has adopted Accounting Standard 15 (Revised 2005) on ‘Employee Benefits’.

General description of significant defined benefit plans i) Gratuity Plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.

ii) Leave Plan

All employees can carry forward and avail / en-cash on superannuation, death, permanent disablement or resignation, subject to maximum accumulation of 60 days.

The Company has classified the various benefits provided to employees as under: i) Defined contribution plans

Amounts contributed to Provident Fund and Employee’s State Insurance Corporation and recognised as an expense and included in "Personnel costs" in the profit and loss account is summarised below:


31 March 2011 For the year

ended 31 March 2010

For the year ended

31 March 2009

For the year ended

31 March 2008

Provident Fund and Employee’s State Insurance Corporation 96.89 76.11 58.96 35.69


126


9 Disclosure pursuant to Accounting Standard - 15 (Revised 2005) 'Employee benefits’ (Continued)

II Defined benefit obligation (Rupees in lakhs)

Particulars For the year ended 31 March 2011

For the year ended 31 March 2010 For the year ended 31 March 2009

For the year ended 31 March 2008

Gratuity (Unfunded)

Leave encashment and compensated

absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Change In benefit obligation

Projected benefit obligation at beginning of the year

42.08 42.47 36.99 45.08 22.89 31.23 16.85 31.27

Current service cost 12.47 15.48 13.35 19.34 11.79 19.71 2.12 16.94

Interest cost 3.09 3.82 3.63 4.41 2.77 3.88 1.48 3.67

Actuarial loss / (gain) due to change in assumptions

18.09 (7.22) (11.36) (19.13) (0.46) (4.92) 3.52 (15.87)

Settlements (31.77) (20.50) (0.53) (7.23) - (4.82) (1.08) (4.78)

Past service cost (vested) 0.65 - - - - - - -

Past service cost (non vested) 3.34 - - - - - - -

Projected benefit obligation at end of the year

47.95 34.05 42.08 42.47 36.99 45.08 22.89 31.23


127



III Reconciliation of present value of Defined benefit obligation and fair value of plan assets (Rupees in lakhs)





Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded))

Projected benefit obligation at end of the year 47.95 34.05 42.08 42.47 36.99 45.08 22.89 31.23

Ending asset - - - - - - - - Funded status asset / (liability) (47.95) (34.05) (42.08) (42.47) (36.99) (45.08) (22.89) (31.23) Unrecognised past service cost-non vested benefit - - - - - - - (liability) recognised in balance sheet

(47.95) (34.05) (42.08) (42.47) (36.99) (45.08) (22.89) (31.23)


128



IV Expenses recognised in profit and loss account (Rupees in lakhs)

For the year ended 31 March 2011 For the year ended 31 March 2010 For the year ended 31 March 2009


Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded))

Current service cost

12.47

15.48

13.36

19.34

11.78

19.71

2.12

16.94

Interest cost

3.09

3.82

3.63

4.41

2.77

3.88

1.47

3.67

Expected return on plan asset - - - - - - - -

Net actuarial loss / (gain) to be recognised in year

18.09

(7.21)

(11.36)

(19.13)

(0.46)

(4.91)

3.52

(15.87)

Past service cost 1.48 - - - - - - -

Expenses recognised in the statement of profit and loss account

35.13

12.09

5.63

4.62

14.09

18.68

7.11

4.74


129



For the year ended 31 March 2011 For the year ended 31 March 2010



Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)


absences (Unfunded)

Gratuity (Unfunded)

Leave encashment and

compensated absences

(Unfunded) V Actuarial assumptions Discount rate 8% 8% 8% 8% 7.25% 7.25% 8% 8%

Salary escalation 12% 12% 12% 12% 12% 12% 10% 10%

The discounting rate is based on the gross redemption yield on government securities.


130


9 Disclosure pursuant to Accounting Standard - 15 (revised 2005) 'Employee benefits’ (Continued) VI Experience adjustments

(Rupees in lakhs)

For the year ended


Gratuity(unfunded)

Present value of defined benefit obligation 47.95 42.08 36.99 22.89 Fair value of the plan assets - - - - Deficit in the plan (47.95) (42.08) (36.99) (22.89) Actuarial loss / (gain) due to change in assumptions - (2.46) 0.55 (5.27) Experience actuarial loss / (gain) adjustments on: Plan liabilities (18.09) (8.90) (1.01) 8.79 Plan assets - - - Leave encashment (unfunded) present value of defined benefit obligation 34.05 42.47 45.08 31.23 Fair of the plan asset - - - - Deficit in the plan (34.05) (42.47) (45.08) (31.23) Actuarial (gain) / loss due to change in assumptions - (2.69) 4.21 (13.77) Experience actuarial (gain) adjustments on: Plan liabilities (7.21) (16.43) (9.12) (2.10) Plan assets - - -

Fame India Limited Annexure VI

131

Statement of accounting ratios, as restated

(Rupees in lakhs*)


As at 31 March 2010

As at 31 March 2009

As at 31 March 2008

As at 31 March 2007

Net profit / (loss) after tax, as restated (A) (297.48) (143.33) (155.81) 1,052.67 1,028.04 Net worth at the end of the year (including capital redemption

reserve) (refer Note 2 below)

(B) 6,887.85 7,900.23 8,357.87 9,198.87 5,531.47

Net worth excluding preference share capital at the end of the year

(including capital redemption reserve) (refer Note 2 below)

(C) 6,887.75 7,900.13 8,357.77 9,198.77 5,531.37

Weighted average number of equity shares outstanding during the

year for (D)

-- Basic EPS (number of shares) # 34,922,915 34,795,262 34,795,262 32,366,965 31,569,835 -- Diluted EPS (number of shares) # 41,366,931 41,676,146 40,998,112 40,992,396 39,684,873 Total number of equity shares outstanding at the end of the year # (E) 34,947,032 34,795,262 34,795,262 34,795,262 31,589,509 Earnings per equity share (A/D) -- Basic (Rs. per share) (0.85) (0.41) (0.45) 3.25 3.26 -- Diluted (Rs. per share) (0.85) (0.44) (0.45) 2.37 2.41

Return on net worth (%) (A/B) (4.32) (1.81) (1.86) 11.44 18.59

Net asset value per share (Rs.) (C/E) 19.71 22.70 24.02 26.44 17.51

# face value of Rs. 10 each * excluding details of number of shares which are in full figures and EPS which is represented in Rs. per share

Fame India Limited Annexure VI

132

Statement of accounting ratios, as restated (Continued)

Notes:

1 The ratios have been computed as follows:

Net profit / (loss) after tax, as restated, attributable to equity shareholders Earnings per equity share (in Rupees) _______________________________________________________________

Weighted average number of equity shares outstanding during the year

Net profit / (loss) after tax, as restated

Return on Net worth (%) _______________________________________________________________ X 100

Net worth, as at the end of the year

Net worth, excluding preference share capital at the end of the year Net asset value per equity share (in Rupees) ________________________________________________________________

Number of equity shares outstanding at the end of the year

2 Net worth = Equity Share Capital + Securities Premium + Reserves and surplus (excluding Revaluation Reserve and Extra-ordinary items) – Miscellaneous expenditure (to the extent not adjusted or written off) - Deficit in profit and loss account.

3 Restated net profit / (loss) excluding extraordinary items, as appearing in the Statement of restated profits and losses and net worth, as restated, as appearing in the Statement of restated assets and liabilities, has been considered for the purpose of computing the above ratios. These ratios are computed on the basis of the standalone restated financial information of the issuer company.

4 Earnings per share calculations are done in accordance with Accounting Standard 20 “Earnings Per Share”.

5 Calculation of ratios post issue has not been considered.

6 Subsequent to 31 March 2011, the Company has redeemed the outstanding bonds in September 2011 (refer note C-6 of Annexure V for details). As at each balance sheet date, the potential equity shares in respect of outstanding FCCBs have been considered for the computation of diluted EPS in accordance with AS – 20.

Fame India Limited Annexure VII

133

Statement of disclosure as required by AS – 18 ‘Related Party Relationships’

Related party relationship


31 March 2011

For the year ended

31 March 2010

For the year ended

31 March 2009

For the year ended

31 March 2008

For the year ended

31 March 2007 Where Control exists Inox Leisure Limited (‘INOX’)

Holding Company (holds 50.27% of the equity share capital of the Company w.e.f. 6 January 2011)

- - - -

Gujarat Fluorochemicals Limited (‘GFL’)

Intermediate holding company (holds 65.62% of the equity share capital of INOX as of 31 March 2011)

- - - -

Inox Leasing & Finance Limited

Ultimate holding company (holds 52.54% of the equity share capital of GFL as of 31 March 2011)

- - - -

Fame Motion Pictures Limited (formerly Shringar Films Limited) (‘FMPL’)

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Big Pictures Hospitality Services Private Limited (BPHSPL)

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Other related parties where transactions have taken place South Yarra Holdings (SYH)

- Enterprise holding 43.28% of the equity share capital (upto 3 February 2010)

Enterprise holding 43.28% of the equity share capital



M/s Shringar Films (SF) enterprises over which directors have significant influence (upto 21 January 2011)

enterprises over which directors have significant influence




Adlabs Shringar Multiplex Cinemas Private Limited (‘ASMCPL’)

enterprises over which directors have significant influence (upto 21 January 2011)





M/s Toorak Holdings enterprises over which directors have significant influence (upto 21 January 2011)






134

Statement of disclosure as required by AS – 18 ‘Related Party Relationships’ (Continued)

Related party relationship (Continued)


For the year ended

31 March 2010

For the year ended

31 March 2009

For the year ended

31 March 2008

For the year ended

31 March 2007Gobindram Naoomal (HUF)

- - - enterprises over which directors have significant influence


Swanston Multiplex Cinemas Private Limited (SMCPL)

Joint Venture Joint Venture Joint Venture Joint Venture Joint Venture

Headstrong Films Private Limited (formerly Parkville Multiplex Cinemas Private Limited) (HFPL)

Joint Venture Joint Venture Joint Venture (w.e.f. 03 November 2008)

- -

Shravan Shroff Key managerial personnel (Managing Director) (Resigned on 21 January 2011)

Key managerial personnel (Managing Director)




Rishi Negi Key managerial personnel (Chief Operating Officer) (Resigned on 28 February 2011)

Key managerial personnel (Chief Operating Officer) (w.e.f. 23 July 2009)

- - -

Aditya Shroff Key managerial personnel (Asst. Vice President - programming and corporate sales (Resigned on 14 January 2011)

Key managerial personnel (Asst. Vice President - programming and corporate sales (w.e.f. 1 October 2009)

- - -


135


Transaction between the Company and the related parties and the status of outstanding balances


31 March 2011For the year ended

31 March 2010 For the year ended



31 March 2007

Transactions Distributor share - FMPL 12.30 38.29 72.37 45.31 204.61 - SF 60.48 - - - -Interest expense - FMPL 100.99 106.17 93.43 79.73 54.00 - ASMCPL - 7.32 - - - - INOX 0.72 - - - - Directors remuneration - Shravan Shroff 71.51 92.50 100.00 70.00 70.00 Remuneration to key managerial personnel -Rishi Negi 38.47 37.00 - - - -Aditya Shroff 7.52 6.00 - - - Rent paid -ASMCPL 15.78 21.72 18.47 21.11 27.77 Dividend received -SMCPL - - 75.00 55.02 87.60Salaries, wages and bonus -HFPL - 0.18 - - - -BPHSPL - - - 38.09 0.82 -FMPL - - 0.46 - --SMCPL 9.62 28.81 15.28 58.41 25.47

- - - - - Rent -BPHSPL - - - 3.16 - -SMCPL 5.82 5.88 6.64 6.13 4.13

Outsourced personnel cost -SMCPL - - - - 0.36 Printing and stationery FMPL 0.07 - - - - -SMCPL 0.28 0.01 0.22 0.22 0.15

Communication expenses -SMCPL 0.49 0.77 0.15 - 0.33 -FMPL 0.01 - - 0.01 0.02 -BPHSPL - - - - 0.11 Advertising and marketing -FMPL - 2.67 0.13 - - -SMCPL 2.06 2.88 9.62 14.58 8.89


136

Statement of disclosure as required by AS – 18 ‘Related Party Relationships’ (Continued) Transaction between the Company and the related parties and the status of outstanding balances (Continued)






31 March 2007Travelling and conveyance -SF 0.39 13.94 - - - -HFPL - - 0.03 - - -FMPL - - 0.10 - - -BPHSPL - - - - 0.24 Professional and consultancy charges -HFPL - 0.23 - - - -BPHSPL - - - 9,917 5,143 -SMCPL 0.40 0.79 0.67 0.57 0.74

Courier charge -SMCPL - - - - 0.40 Staff welfare -SMCPL - - 0.80 0.31 0.21 Repairs and maintenance -SMCPL 3.79 4.08 0.49 1.10 0.69 Staff training expenses -SMCPL - - - - 0.08 Insurance charges -FMPL 0.13 0.58 - 0.58 0.71 -SF - - - - - -SMCPL 4.22 1.87 - 0.24 0.09

Projector hiring charge -SMCPL 14.32 - - - - Other Expenses -FMPL 0.11 - - - - -SF 0.04 0.28 - - - -SMCPL 0.15 1.02 1.95 4.07 0.37 Reimbursement of expenses (paid) Property tax -SMCPL 3.20 3.20 3.20 - -


137


Transaction between the Company and the related parties and the status of outstanding balances (Continued)






31 March 2007Communication expenses -FMPL - - - 0.03 - -SMCPL 1.10 0.94 10.40 8.04 8.17

Salaries, wages and bonus -FMPL - - 0.34 - - -BPHSPL - - 11.34 - - -SMCPL - - - - 0.01Advertisement and marketing -SF - - 0.06 - - -FMPL - - - 0.64 0.14 -SMCPL - - 0.05 0.04 4.45

Lodging and boarding expenses -SF - - 0.29 - - Courier charges -FMPL - - - 0.03 0.01 -SMCPL - - - - 0.65

Legal and professional fees -SMCPL - - 0.14 - 4.57 -FMPL - - - 0.08 - Printing and stationary -FMPL - - 1.51 - --SMCPL - - 0.32 - - Print delivery charges -FMPL - - 0.05 - - Staff welfare expenses -SF - - 0.33 - - Travelling and local conveyance -SF - 3.19 0.88 - - -INOX 4.22 - - - - News paper and periodical -SF - 0.06 0.04 - -


138








31 March 2007Repairs and maintenance -SMCPL - 0.53 - 0.13 - Others expenses -FMPL - 0.03 - - - -SF - 0.05 - - - -SMCPL 0.05 0.83 - - 0.15 License Charges -INOX 1.45 - - - - ICD taken -FMPL 250.00 566.00 650.00 595.00 615.00 -ASMCPL - 600.00 - - - -INOX 1,200.00 - - - - ICD repaid -FMPL 225.00 505.00 452.00 223.00 430.00 -ASMCPL - 600.00 - - - Loan /advances given -BPHSPL - 4.95 128.62 48.54 84.83 Advance/ deposit repaid -BPHSPL - 156.22 48.66 - - -Toorak Holdings - 82.80 - - - -SF - - - - 20.00 Gobindram Naoomal-HUF - - - - 24.50 Investment in equity share capital -HFPL - - 0.50 - - Advance against share application money paid -SMCPL - 125.00 - - - -HFPL - - 25.00 - -


139








31 March 2007Outstanding Balances

Deposits -Toorak Holding - - 82.80 82.80 82.80 Loans (Credit balance) -FMPL 1,638.50 1,613.50 1,552.00 1354.50 982.50 -INOX 1,200.65 Creditors -FMPL 0.85 1.24 14.37 3.99 18.92-ASMCPL - - - - - -BPHSPL - 9.91 - - - Creditors (Other dues) -SMCPL 3.77 6.27 3,7.33 - - -INOX 5.56 - - - - Advance To distributors -FMPL - - - 11.48 - Advance receivable in cash or kind -BPHSPL 93.29 93.29 244.56 175.94 86.05 -HFPL - 0.03 0.03 - -FMPL - - - - 25.99 -SMCPL - - - 3.05 - Shravan Shroff # 3.49 - - - - Provision for doubtful debts -BPHSPL 93.29 93.29 79.52 - - Advance against share application money -SMCPL 125.00 125.00 - - -

# As at 31 March 2011, the remuneration of erstwhile Managing Director for the period from 19 December 2010 till the date of his resignation, being in excess of limits prescribed under the Companies Act, 1956, was subject to requisite approvals of the shareholders and the Central Government, pending which the same was considered as recoverable from the director. Subsequent to the year-end, the Company has received the approval of Central Government and the shareholders and accordingly, there is no amount recoverable in respect thereof.

Fame India Limited Annexure VIII

140

Statement of secured loans, as restated (Rupees in lakhs)

Particulars As at 31 March 2011 As at 31 March 2010 As at 31 March 2009 As at 31 March 2008 As at 31 March 2007

Term loans from banks 2,166.66 5,100.00 4,408.59 1,166.65 1,365.05

Bank overdraft 1,122.36 938.42 257.51 876.18 941.59

Vehicle finance loans from banks - - - 0.20 4.55

Total 3,289.02 6,038.42 4,666.10 2,043.03 2,311.19

The security given for the above loans as on 31 March 2011 is as follows:

Term loans from Banks Name of the bank/ institution

Balance outstanding as at 31 March 2011 (Rupees in lakhs)

Rate of interest

Prepayment terms Penalty/ interest Repayment terms Securities offered

Axis Bank Limited

750.00 BPLR – 2.75%, at present 13.00% p.a payable at monthly rests

The Company shall have no right to repay the outstanding financial assistance in full or in part for the first two years from the date of disbursement. The pre-payment premium to be decided by the bank in case of pre-payment is within two years. Any pre-payment after the first two years will entail pre-payment penalty of 1% p.a on the outstanding principal amount.

Penal Interest at the rate of 2%

Five years (including moratorium period of six months from the date of 1st disbursement). Repayable in 18 quarterly installments of ` 100 lakhs each after moratorium period of six months from the date of first disbursement

First pari-passu charge on the movable assets acquired out of the Bank’s finance installed at the following locations Bangalore, Ghatkopar, Vashi, Thane, Chandigarh, Panchkula, Bharuch, Dhanbad, Vadodara, Pune, Kalyan and Ludhiana

Escrow of entire cash flows on pari passu basis arising of the projects funded by the bank.

Escrow of entire cash flows on pari passu basis arising of Fame theatres at Thakur Fame (Dahisar), Anand, Thakur cinema and Thakur movie (Kandivali), Southcity (Kolkata) and Lido Bangalore)

Equitable mortgage on pari passu basis of immovable property at Anand multiplex

Personal guarantee of promoter directors (Mr. Shravan Shroff and Mr. Shyam Shroff).


141

Statement of secured loans, as restated (Continued)

Name of the bank/ institution


Rate of interest

Prepayment terms Penalty/ interest Repayment terms Securities offered

IDBI Bank Limited

1,416.66 IDBI bench mark prime less 125 bps. Disbursement made pending creation of final security shall carry additional interest @ 1% p.a (plus interest tax if applicable after three months from the date of first disbursement till creation of security

The Company shall not prepay the outstanding principal amounts of the loan in full or in part, before the due dates and except after obtaining the prior approval of the bank. In case the rate of interest levied on reset is not acceptable to the Company, the financial assistance may be prepaid, without payment of any prepayment premium, on the reset dates.

18 quarterly installments after moratorium of 6 months from date of first disbursement

Creation of first pari passu charge with other lenders Axis Bank Limited and Standard Chartered Bank by deposit of title deeds of immovable properties located at Fame-Anand multiplex at Old City Pulse Theatre, Near Hero Honda Showroom, Gujarat – 388001. First charge by way of hypothecation of the Company’s entire movables (save and except book debts), including movable machinery, machinery spares, tools and accessories, present and future, in respect of the Company’s existing multiplexes at Fame South City, Fame Lido, Fame Dahisar, Fame Thakur, Fame Anand, Fame Inorbit, Fame Raghuleela, Fame Highland Park, Fame Akurdi, and new multiplexes at Bangalore, Ghatkopar, Vashi, Prabhat, Chandigarh, Panchkula, Bharuch, Dhanbad, Pune, Kalyan, Vadodara and Surat, subject to prior charges created and/or to be created in favour of the Company’s bankers on the Company’s stocks of raw material, semi-finished and finished goods, consumable stores and such other movables as may be agreed to by the bank for securing the borrowing for working capital requirements in the ordinary course of business. An irrevocable and unconditional personal guarantee from Mr. Shravan Shroff in favour of the bank * Escrow of entire cash flows arising out of existing multiplexes at South City – Kolkata, Lido-Bangalore, Fame Dahisar, Fame Thakur-Kandivali on pari-passu basis with Axis Bank and Standard Chartered Bank Escrow of entire cash flows arising out of new multiplexes at Bangalore, Ghatkopar, Vashi, Prabhat, Chandigarh, Panchkula, Bharuch, Dhanbad, Pune, Kalyan, Vadodara and Surat on pari-passu basis with Axis Bank and Standard Chartered Bank

Total 2,166.66

Note: Subsequent to the year-end, the credit facility from Axis Bank Limited has been revised pursuant to which the outstanding loan from IDBI Bank Limited has been taken over by Axis Bank Limited and personal guarantees issued by the erstwhile promoter directors of the Company have been released and replaced with corporate guarantee of INOX. The sanctioned limit under the revised term loan facility has been enhanced to Rs. 2,566.00 lakhs including the run down liability as on the date of loan agreements.


142

Statement of secured loans, as restated (Continued) Bank overdraft

(Rupees in lakhs)

Name of the bank/ institution Balance outstanding as at 31 March 2011

Sanctioned limits

Rate of interest

Securities offered

Axis Bank Limited – Overdraft * 369.03 510.00 11.10% Fixed deposits

Axis Bank Limited – Cash Credit / Overdraft #

493.09 300.00 13.75% First charge on movable fixed / current assets of our Company both present and future Personal guarantee of promoter directors (Mr. Shravan Shroff and Mr. Shyam Shroff).

Standard Chartered Bank –Overdraft * - 350.00 12.75% First charge on all movable fixed assets of Fame Malad, Fame Kolkata and Fame Nashik First charge on all current assets of Fame Malad, Fame Kolkata, Fame Nashik Second charge on all movable fixed assets of Fame Kandivli and Fame Pune

IDBI Bank Limited – Overdraft * 260.24 675.00 8.40% Fixed deposits

Total 1,122.36

Note: Subsequent to the year-end, * these credit facilities have been discontinued # the credit facility from Axis Bank Limited has been revised pursuant to which the personal guarantees issued by the erstwhile promoter directors of the Company have been released and replaced with corporate guarantee of INOX. The sanctioned limit under the revised Cash Credit / Overdraft facility has been enhanced to Rs. 650.00 lakhs.

Fame India Limited Annexure IX

143

Statement of unsecured loans, as restated (Rupees in lakhs)


As at 31 March 2010

As at 31 March 2009

As at 31 March 2008

As at 31 March 2007

Inter Corporate Deposits 2,839.15 1,613.50 1,552.50 1,354.50 982.50 FCCB 5,358.00 5,416.80 6,623.50 5,196.10 8,718.00

Total 8,197.15 7,030.30 8,176.00 6,550.60 9,700.50 Of the above, unsecured loans from Promoters / Group Companies of Promoters / Subsidiaries include: -- From INOX -- From FMPL

1,200.65 1,638.50

- 1,613.50

- 1,552.50

- 1,354.50

- 982.50

The details of terms and conditions of the above loans as at 31 March 2011 is as follows: Inter Corporate Deposit:

(Rupees in lakhs) Name of the Company Balance outstanding

as at 31 March 2011 Rate of interest

Repayment terms

FMPL 1,638.50 6.50% Repayable over a mutually agreeable term, not less than 12 months

INOX 1,200.65 11.00% Repayable after 3 years from the date of disbursement

Total 2,839.15

FCCB:

(Rupees in lakhs) Particulars Balance

outstanding as at 31 March 2011

Rate of interest

Repayment terms

8,000 Zero-coupon Series A Foreign Currency Convertible Bonds (‘Bonds’) of US $ 1,000 per bond

3,572.00 - The Bonds are convertible at any time prior to 12 April 2011 at the option of the bond holders into newly issued, ordinary equity shares of par value of Rs. 10 per share (“Shares”), at an initial conversion price of Rs. 90 per share. Unless previously converted, redeemed or repurchased and cancelled, the Series A Bonds were redeemable on 22 April 2011 at 137.01 percent of their principal amount representing a gross yield to maturity of 6.5%.

4,000 0.5% per annum Series B Foreign Currency Convertible Bonds of US $ 1,000 per bond

1,786.00 0.50 % The Bonds are convertible at any time prior to 12 April 2011 at the option of the bond holders into newly issued, ordinary equity shares of par value of Rs. 10 per share (“Shares”), at an initial conversion price of Rs. 107 per share. Unless previously converted, redeemed or repurchased and cancelled, the Series B Bonds were redeemable on 22 April 2011 at 140.69 percent of their principal amount representing a gross yield to maturity of 7.5%.

5,358.00

Note: Subsequent to the year-end, the Company has availed an unsecured short term loan of Rs. 7,000.00 lakhs from ING Vysya Bank, the terms of which provide for a bullet repayment within 15 days from any future offering of equity (follow on or rights issue), debenture, preference or any other equity linked instruments by the Company or one year from date of disbursement, whichever is earlier.

Fame India Limited Annexure IX

144

Statement of unsecured loans, as restated (Continued) Subsequent to the above, the Company has redeemed the outstanding FCCBs in September 2011. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations in respect of the FCCBs. (For details, refer Annexure V, note C-6, under the head ‘events subsequent to 31 March 2011’)

Fame India Limited Annexure X

145

Statement of investments, as restated (Rupees in lakhs)


2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007 Unquoted Subsidiaries 1,912.86 1,912.86 1,912.86 1,912.86 1,912.86 Joint ventures 167.52 180.02 180.02 154.52 154.52 Less: Provision for diminution in the value of investment (13.00) - - - - National Savings Certificates 18.68 42.68 134.30 129.60 124.00 Units in mutual funds - - - 501.03 300.17 Total 2,086.06 2,135.56 2,227.18 2,698.01 2,491.55

Investment include following amounts invested in subsidiaries and joint ventures Investment in subsidiaries

(Rupees in lakhs) Name of the subsidiaries As at

31 March 2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007 Fame Motion Pictures Limited 1,907.86 1,907.86 1,907.86 1,907.86 1,907.86 Big Pictures Hospitality Services Private Limited 5.00 5.00 5.00 5.00 5.00

Total 1,912.86 1,912.86 1,912.86 1,912.86 1,912.86

Investment in joint ventures

(Rupees in lakhs) Name of the joint venture As at

31 March 2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007 Swanston Multiplex Cinemas Private Limited 154.52 154.52 154.52 154.52 154.52Headstrong Films Private Limited 0.50 25.50 25.50 - - Share application money paid to Headstrong Films Private Limited pending allotment 12.50 - - - - Provision for diminution in the value of investments (13.00) - - - - Total 154.52 180.02 180.02 154.52 154.52

Fame India Limited Annexure XI

146

Statement of sundry debtors, as restated (Rupees in lakhs)

Age-wise breakup As at 31 March

2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

Debtors exceeding six months 161.18 11.80 92.66 63.93 59.71

Others 521.99 380.77 129.75 221.82 271.61

Less: Provision for doubtful debts (12.94) (6.58) (92.66) (63.54) (20.41)

Total 670.23 385.99 129.75 222.21 310.91

There are no debts due from Directors, Promoters and Group Companies of Promoters * The list of persons / entities classified as ‘Promoters’ and “Group Companies of Promoters” has been determined by the Management and relied upon by auditor. The auditor have not performed any procedures to determine whether this list is accurate or complete. (Also refer Annexure VII - Statement of disclosure as required by AS 18 – Related Party Relationships)

Fame India Limited Annexure XII

147

Statement of loans and advances, as restated (Rupees in lakhs)


2011

As at 31 March

2010

As at 31 March 2009

As at 31 March 2008

As at 31 March 2007

Considered good Advance to distributors 87.79 173.71 45.03 196.82 121.97Deposits * 3,668.11 3,765.99 3,961.22 3902.95 2,963.61Advances recoverable in cash or in kind or for value to be received 990.05 2,241.83 1,698.85 1,514.31 534.55 Advance towards share application money 125.00 125.00 - - - Interest accrued on debentures and others - - - - 105.58Accrued interest on fixed deposits and NSCs 59.51 64.99 97.48 136.85 - Advance tax and tax deducted at source (net of provision for Income-tax and FBT)

344.75 176.53 117.20 22.20 82.53 Considered doubtful -- Advances recoverable in cash or in kind or for value to be received 93.28 93.28 79.52 - - -- Advances to distributors 2.29 2.29 2.29 2.29 5.54Less: Provision for doubtful advances (95.57) (95.57) (81.81) (2.29) (5.54) Total 5,275.22 6,548.05 5,919.79 5,773.13 3,808.24

Of the above, dues from Directors, persons related to Directors, Promoters and Group Companies of Promoters include: **

Advances recoverable in cash or in kind or for value to be received - Shravan Shroff # 3.49 - - - -

* The Company may be subjected to forfeiture of deposit of Rs. 116.74 lakhs paid for one of its multiplexes in case of failure to enter into a formal lease deed between the parties.

** The list of persons / entities classified as ‘Promoters’ and “Group Companies of Promoters” has been determined by the Management and relied upon by auditor. The auditor have not performed any procedures to determine whether this list is accurate or complete. (Also refer Annexure VII - Statement of disclosure as required by AS 18 – Related Party Relationships)

# As at 31 March 2011, the remuneration of erstwhile Managing Director for the period from 19 December 2010 till the date of his resignation, being in excess of limits prescribed under the Companies Act, 1956, was subject to requisite approvals of the shareholders and the Central Government, pending which the same was considered as recoverable from the director. Subsequent to the year-end, the Company has received the approval of Central Government and the shareholders and accordingly, there is no amount recoverable in respect thereof.

Fame India Limited Annexure XIII

148

Statement of other income, as restated (Rupees in lakhs)

Particulars For the year ended 31 March

2011 31 March

2010 31 March

2009 31 March

2008 31 March

2007 Recurring /

Non recurring

Related to business activities

Interest on National Saving Certificates (‘NSCs’) 4.34 17.25 15.63 16.27 12.00 Recurring Miscellaneous income 114.08 61.87 29.82 48.04 30.09 Recurring

Not related to business activities Dividend from non-trade investments 0.95 12.96 78.25 73.23 91.56 Non recurring Interest on fixed deposits 94.67 113.55 156.03 149.94 133.77 Non recurring Interest - Others 0.61 0.20 1.05 130.82 405.13 Non recurring Profit on sale of Investments 2.34 - 0.28 3.58 0.15 Non recurring Net exchange gain (including gain / loss on cancellation of forward contract) - - - 102.14 223.82 Non recurring 216.99 205.83 281.06 524.02 896.52

Notes:

The classification of Other Income as recurring / non-recurring is based on the current operations and the business activities of the Company as determined by the management

Fame India Limited Annexure XIV Segmental Information, as restated

149

The business of the Company is divided into two segments, Multiplex operations and others (managing of multiplexes). Segments have been identified taking into account the nature of the business, the differing risks and returns, the organisation structure and internal reporting system. Accordingly, the Company has disclosed business segment as the primary segment. The Company caters only to the domestic market and risks and rewards being similar across the market, there are no reportable Geographic segments. The accounting policies adopted for segment reporting are in line with the accounting policies adopted by the Company for the purpose of these financial statements, except in respect of inter-segment revenues, which have been accounted on the basis of prevailing market rates. Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each segment as also amounts allocable on a reasonable basis. Income and expenses which are not directly attributable to any business segments are shown as unallocated corporate income / expenses. Assets and liabilities that cannot be allocated between the segments are shown as a part of unallocated corporate assets and liabilities respectively.

Fame India Limited Annexure XIV Segmental Information, as restated (Continued)

150

(Rupees in Lakhs)






Multiplex Operations Others Total Multiplex

Operations Others Total Multiplex Operations Others Total Multiplex

Operations Others Total Multiplex Operations Others Total

Revenue Revenue from operations 15,746.44 93.70 15,840.15 14,798.90 68.70 14,867.60 11,270.94 76.17 11,347.11 7,851.79 104.88 7,956.67 5,150.67 167.09 5,317.76Other income 185.13 - 185.13 79.32 - 79.32 46.50 - 46.50 78.70 18.28 96.98 27.62 7.74 35.36Total revenue 15,931.57 93.70 16,025.28 14,878.22 68.70 14,946.92 11,317.44 76.17 11,393.61 7,930.49 123.16 8,053.65 5,178.29 174.83 5,353.12Segment result 559.26 93.37 652.63 688.86 68.70 757.56 429.97 76.07 506.04 1,107.75 94.26 1,202.01 676.92 55.78 732.70Dividend income 0.95 12.95 78.26 73.23 91.56Interest income 94.67 113.55 156.03 248.09 531.16Unallocated corporate income 2.34 - 0.28 107.84 238.43Unallocated corporate expense (439.76) (338.85) (384.67) (252.01) (197.20)Profit/(loss) before interest and tax 310.83 545.21 355.94 1,379.16 1,396.65Interest expense (608.30) (688.54) (488.74) (299.99) (355.43)Income tax expense (including FBT) - - (23.00) (26.50) (13.18)Profit/ (loss) for the period/ year, as restated (297.47) (143.33) (155.80) 1,052.67 1,028.04Other information Segmental assets (refer note below) 19,051.84 655.82 19,707.66 20,911.79 555.28 21,467.07 20,666.03 677.38 21,343.41 15,016.86 671.13 15,687.99 9,156.99 670.68 9,827.67Unallocated corporate assets 4,428.63 4,985.05 4,990.55 5,181.74 9,570.93Total assets 24,136.29 26,452.12 26,333.96 20,869.73 19,398.60Segmental liabilities 3,178.56 91.48 3,270.04 3,391.23 71.69 3,462.92 3,515.81 72.13 3,587.94 2,017.94 64.98 2,082.92 1,198.78 53.53 1,252.31Unallocated corporate liabilities 2,750.17 2,296.48 1,848.10 915.60 734.72Total liabilities 6,020.21 5,759.40 5,436.04 2,998.52 1,987.03Capital expenditure 905.15 991.90 6,642.04 5,146.10 2,915.32Depreciation / amortisation 1,709.74 1,697.59 1,161.67 609.94 435.09Non-cash expenses other than depreciation 43.57 28.54 130.65 53.06 30.31Total assets exclude: Advance tax and tax deducted at source (including FBT) 257.95 340.61 281.28 158.48 145.25Total liabilities exclude: Secured loans 3,289.02 6,038.42 4,666.10 2,043.03 2,311.19Unsecured loans 8,197.15 7,030.30 8,176.00 6,550.60 9,700.50FCMITDA - 64.37 (27.16) 229.32 -Provision for tax - - 6.38 7.88 13.67

151

Fame India Limited Annexure XV

Statement of contingent liabilities, as restated (Rupees in lakhs)


2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007 Claims against the Company not acknowledged as debts 345.26 124.53 185.53 239.17 78.39

The Company will be liable to pay the total entertainment tax that is currently exempted for every property that ceases operations prior to completing the minimum period of operations and / or does not comply with the rules prescribed in the multiplex policy of the relevant State. 6,074.26 5,145.74 3,196.56 2,224.35 1,069.82

Bank Guarantees & Corporate guarantees in favour of various Government authorities 51.53 88.36 253.36 232.81 22.81

The Company may incur additional cost towards electricity for the period from 1 June 2007 to 31 March 2010 pursuant to the increase in the tariff in case the appeal made with Maharashtra Electricity Regulatory Commission ‘MERC’ by the Company through the Multiplex Association of India is rejected and the case filed in the Supreme Court by one of the electricity supplier against the order of the Appellate Tribunal for Electricity, dated 19 January 2009, for change in category, in favor of the appeal made by the Multiplex Association of India is passed in favor of the electricity supplier. The Company has paid the whole amount to the respective authorities under protest. 389.83 389.83 260.06 92.92 -

As per the amendment made by the Finance Act 2010, renting of immovable property is defined as a taxable service with retrospective effect from 1 June 2007. Accordingly, during the year ended 31 March 2010, the Company accounted for Rs. 463.35 lakhs being service tax on lease rentals for the period upto 31 March 2010 and continued to provide for service tax on lease rentals up to the quarter ending 30 September 2010. This levy has been challenged by the Company by filing writ petitions with various Honorable High Courts and some of the Honorable High Courts have granted a stay against the levy of service tax in respect of immovable properties of the Company situated within their respective jurisdictions. Further, based on a legal opinion obtained in the quarter ended 31 December 2010, the Company reversed the entire service tax liability aggregating to Rs. 576.90 lakhs accrued till 30 September 2010. Further, the Company has not provided for service tax liability aggregating to Rs. 144.16 lakhs pertaining to the period from 1 October 2010 to 31 March 2011. * 721.05 432.94 204.23 44.35 -

Total 7,581.93 6,181.40 4,099.74 2,833.60 1,171.02

*Subsequent to the year-end, the Honourable Bombay High Court has upheld the levy vide judgment dated 4 August 2011, operation of which has been stayed until 30 September 2011 and the Company is considering appropriate legal action in this regard.

152

Fame India Limited Annexure XVI

Statement of capitalisation, as restated

(Rupees in lakhs) Particulars Pre-issue as at

31 March 2011

Adjusted for Post Issue

Borrowings Short term debts (refer Note 1) 7,547.02 [ · ] Long term debts 3,939.15 [ · ] Total debts 11,486.17 [ · ] Shareholders’ funds: Share capital including preference share capital 3,494.80 [ · ] Reserves 2,811.24 [ · ] Profit and loss account 581.82 [ · ] Total shareholders’ funds 6,887.85 [ · ] Long term debt / equity ratio 0.57:1 [ · ]

(1) Debts maturing within the next one year from 31 March 2011 are considered as short-term debts, including FCCBs aggregating to Rs. 5,358.00 lakhs. Subsequent to the year-end, the Company has redeemed the outstanding bonds in September 2011. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations in respect of the FCCBs. (For details, refer annexure V, note C-6, under the head ‘events subsequent to 31 March 2011’)

(2) The post-issue debt equity ratio will be computed only after allotment of shares in the rights issue.

(3) The figures included above are as per the statement of restated assets and liabilities and statement of restated profit and loss.

Fame India Limited Annexure XVII

153

Statement of tax shelters (Rupees in lakhs)


2011 31 March

2010 31 March

2009 31 March

2008 31 March

2007 Profit / (loss) before current, deferred and fringe benefits taxes, as restated

A (297.48) (143.33) (132.80) 1,079.17 1,041.22

Tax Rate - Normal B 33.2175% 33.99% 33.99% 33.99% 33.66% Tax Rate - MAT C 19.93% 16.995% 11.33% 11.33% 11.22% Tax expense at applicable tax rate on restated profits (refer Note 3)

D = A*B (98.81) (48.72) (45.14) 366.81 350.47

Adjustments: Permanent differences: Expenditure allowable U/s. 35 D of the Income tax Act, 1961

(59.63) (147.95) (147.95) (147.95) (147.95)

Disallowance u/s 14A of the Income tax Act, 1961

0.67 - 11.65 4.46 20.28

Subsidy under multiplex policies from State Governments - Capital receipt

(928.52) (1,238.55) (1,356.40) (1,419.98) (883.67)

Amortisation of FCMITDA (76.31) (64.37) 13.58 (76.44) - Foreign exchange (gain) / loss on FCCB - (3.99) 131.21 (75.81) (215.13) Profit on sale of investment - - (0.28) - - Exempt dividend income (0.95) - (78.25) (73.23) (91.56) Other disallowances 18.21 16.48 7.01 0.73 6.72 Total E (1,046.52) (1,438.38) (1,419.43) (1,788.22) (1,311.30)

Temporary differences Difference between tax depreciation and book depreciation

193.72 (76.06) (141.95) (171.18) (39.70)

Loan processing charges – capitalized 44.14 8.66 9.36 - - Difference due to allowability / dis-allowability of section 43B items

(133.32) 61.38 168.63 (14.47) 34.05

Loss on sale of fixed assets / asset written off

21.94 15.65 3.50 - 2.08

Provision for gratuity 37.63 5.63 14.10 10.00 5.22 Provision for rent straight-lining 142.63 102.18 - - - Provision for doubtful debts (net) 6.36 20.34 108.65 39.84 15.80 Bad debts w/off to provisions - (94.63) - - -Losses / unabsorbed depreciation carried forward

1,030.91 1,538.56 1,389.95 844.85 252.62

Total F 1,344.00 1,581.71 1,552.23 709.05 270.07

Net adjustments G = E+F 297.48 143.33 132.80 (1,079.17) (1,041.23) Tax impact on account of net adjustments - (tax savings) / additional charge

H = G*B 98.81 48.72 45.14 (366.81) (350.48)

154

Fame India Limited Annexure XVII

Statement of tax shelters (Continued) (Rupees in lakhs)


2011 31 March

2010 31 March

2009 31 March

2008 31 March

2007

Tax under normal provisions of Income tax Act, 1961 ( refer Notes 4 and 5)

I = H-D - - - - -

Tax under MAT, on restated profits - - - 118.99 62.72 Actual MAT paid 30.80 - 13.89 157.74 63.65 Impact on MAT on account of net adjustments - (tax savings) / additional charge

(30.80) - (13.89) (38.75) (0.93)

Note:

1) The above statement has been prepared as per the Statement of restated profits and losses of the Company.

2) The permanent / timing differences have been computed considering the draft computation prepared by the Company for the year ended 31 March 2011 and tax returns filed by the Company for earlier years. Material disallowances in the assessment / appellate proceedings, to the extent not contested by the Company, have been given effect to,

3) Where the restated result before taxes is a loss, Tax expense at applicable tax rate (B) is taken as Nil.

4) Where the tax impact of adjustments (H) results into savings greater than the tax liability (D), tax under normal provisions (I) is taken as Nil.

5) For the financial years ended 31 March 2007 to 31 March 2009 and 31 March 2011, the Company has computed and / or paid tax under MAT.

155

Fame India Limited Annexure XVIII

Statement of consolidated restated profit and loss (Rupees in lakhs)

Particulars For the Year ended

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Income

Revenue from operations

-- Sales and service income 13,218.76 13,928.89 11,204.70 7,803.53 7,878.52 -- Sale of food and beverage 3,816.13 3,420.66 2,535.18 1,638.19 1,053.21 Other income 241.33 238.17 240.26 518.76 866.32 Total (A) 17,276.23 17,587.72 13,980.14 9,960.48 9,798.05

Expenditure Direct cost 6,508.82 7,242.02 5,399.55 3,242.67 4,284.47 Personnel cost 1,663.42 1,435.95 1,484.87 1,189.27 797.24 Other administrative expenses 7,320.55 6,706.05 5,334.51 3,399.36 2,407.32 Depreciation / amortisation 1,774.95 1,765.76 1,239.53 720.82 893.60 Interest 507.31 582.66 395.51 221.50 311.32 Amortisation of Foreign Currency Monetary Item Translation Difference Account ('FCMITDA') (76.31) (64.37) 13.58 (76.44) - Total (B) 17,698.74 17,668.07 13,867.55 8,697.18 8,693.95

Restated net profit / (loss) before tax and extra-ordinary items (A-B) (422.51) (80.35) 112.59 1,263.30 1,104.10 Provision for tax -- Current tax 1.65 19.14 106.86 162.13 87.22 -- Deferred tax charge / (release) (10.62) 21.08 (4.01) (53.24) (5.48) -- Minimum Alternate Tax (‘MAT’) credit (1.37) - - (118.99) (62.71) -- Fringe benefits tax - - 25.05 28.68 15.13 Restated net profit / (loss) before extra-ordinary items (412.17) (120.57) (15.31) 1,244.72 1,069.95 Extra-ordinary items - - - - - Restated net profit / (loss) after adjustment and extra-ordinary items (412.17) (120.57) (15.31) 1,244.72 1,069.95 Restated profit / (loss) brought forward from previous year 1,329.84 1,450.41 1,481.69 249.05 (795.98) Less: Appropriations -- Transferred to general reserve - - (3.22) (2.73) (12.64) -- Tax on dividend - - (12.75) (9.35) (12.28) - - (15.97) (12.08) (24.92) Restated balance carried forward to consolidated statement of restated assets and liabilities 917.67 1,329.84 1,450.41 1,481.69 249.05

Fame India Limited

Annexure XVIII Statement of consolidated restated profit and loss

156

(Continued)

Note: To be read together with Statement of significant accounting policies adopted by the Group in preparing its consolidated financial statement (Annexure XXI) and Statement of changes and notes to statement of consolidated restated profit and loss and statement of consolidated restated assets and liabilities (Annexure XXII).

Fame India Limited

Annexure XIX Statement of consolidated restated assets and liabilities

157

(Rupees in lakhs)


2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007 (A) Fixed assets

(iii) Gross block 19,109.19 19,428.05 18,918.68 12,649.00 9,106.27 Less : Accumulated depreciation / amortisation 6,552.37 5,057.98 6,003.95 4,805.49 4,085.43

Net block 12,556.82 14,370.07 12,914.73 7,843.51 5,020.84 (iv) Capital work in progress /

advances 2,094.93 1,274.29 3,521.13 2,911.54 1,474.30

Total fixed assets 14,651.75 15,644.36 16,435.86 10,755.05 6,495.14

(B) Goodwill on consolidation 467.30 467.30 467.30 467.18 467.18

(C) Investments 29.10 208.88 134.30 687.05 501.54 (D) Foreign Currency Monetary

Item Translation Difference Account ('FCMITDA') - - 27.16 - -

(E) Deferred tax asset – net 35.40 24.78 45.86 41.85 - (F) Current assets, loans and

advances

(i) Inventories 78.04 84.93 58.32 32.12 21.61

(ii) Sundry debtors 792.76 701.73 625.97 617.68 532.98

(iii) Cash and bank balances 1,879.26 2,309.95 2,052.84 2,158.27 6,897.08 (iv) Loans and advances 5,473.25 6,790.26 6,131.70 6,014.66 4,746.72

8,223.31 9,886.87 8,868.83 8,822.73 12,198.39

Total assets (A+B+C+D+E+F) 23,406.86 26,232.19 25,979.31 20,773.85 19,662.25

(G) Liabilities and provisions

Secured loans 3,289.02 6,038.42 4,666.10 2,043.03 2,315.35

Unsecured loans 6,558.65 5,416.80 6,623.50 5,196.10 8,743.00 Foreign Currency Monetary Item Translation Difference Account ('FCMITDA') - 64.37 - 229.32 -

Deferred tax liability (net) - - - - 11.39 Current liabilities and provisions 6,215.43 6,241.78 5,783.99 3,686.45 2,823.64

Total liabilities and provisions 16,063.10 17,761.37 17,073.59 11,154.89 13,893.38

(H) Net worth (A+B+C+D+E+F-G) 7,343.76 8,470.82 8,905.72 9,618.96 5,768.87

Fame India Limited

Annexure XIX Statement of consolidated restated assets and liabilities (Continued)

158

(Rupees in lakhs)


As at 31 March 2010

As at 31 March

2009

As at 31 March 2008

As at 31 March

2007 (I) Represented by

(i) Share capital -- Equity share capital 3,494.70 3,479.53 3,479.53 3,479.53 3,158.95 3,494.70 3,479.53 3,479.53 3,479.53 3,158.95 (ii) Reserves and surplus -- Securities premium 2,811.14 3,541.21 3,855.53 4,540.71 2,246.56 -- Capital redemption

reserve 0.10 0.10 0.10 0.10 0.10 -- General reserve 120.15 120.15 120.15 116.93 114.21 -- Profit and loss account 917.67 1,329.84 1,450.41 1,481.69 249.05

3,849.06 4,991.30 5,426.19 6,139.43 2,609.92

Net worth 7,343.76 8,470.83 8,905.72 9,618.96 5,768.87

Note: To be read together with Statement of significant accounting policies adopted by the Group in preparing its consolidated financial statement (Annexure XXI) and Statement of changes and notes to statement of consolidated restated profit and loss and statement of consolidated restated assets and liabilities (Annexure XXII)

Fame India Limited

Annexure XX Statement of consolidated restated cash flows

159

(Rupees in lakhs)

Particulars

31 March

2011


2010 31 March

2009 31 March

2008 31 March

2007

Cash flow from operating activities

Profit / (loss) for the year before tax and extra-ordinary items (422.51) (80.35) 112.59 1,263.30 1,104.10

Adjustments for :

Depreciation / amortisation 1,774.95 1,765.76 1,239.53 720.82 893.60

Amortisation of FCMITDA (76.31) (64.37) 13.58 (76.44) -

Bad debts 5.88 149.87 20.69 22.41 27.00

Provision for doubtful debts / advances 57.85 43.69 57.51 48.58 18.29 Advances and receivables written off to profit and loss account 37.84 94.63 - - -

Payable written back to profit and loss account (9.71) (17.70) (0.06) (25.98) (5.24)

Interest expense 507.31 582.66 395.51 221.50 311.32

Loss on sale of fixed assets, net / asset written off 22.83 19.61 6.99 0.44 4.24

Dividend from non-trade investments (8.13) (14.16) (5.45) (23.37) (8.41) Interest on National Saving Certificates (‘NSCs’) (4.34) (17.25) (15.63) (16.27) (12.00)

Interest – others (0.61) (0.20) (1.24) (130.82) (10.74)

Interest on fixed deposit (97.66) (116.99) (158.47) (152.81) (533.53)

Unrealised foreign exchange gain, net - - (0.19) (186.13) (123.09) Amortisation of pre-operative expenses - - - 19.94 2.16

Provision for doubtful debts / advances reversed - (35.28) - - -

Profit on sale of investments (net) (2.34) - (0.28) (3.58) (0.16)

Amortisation of stock 12.01 - - - -

Operating profit before changes in working capital 1,797.06 2,309.92 1,665.08 1,681.59 1,667.54

Adjustments for :

Decrease / (increase) in working capital

Sundry debtors (140.59) (272.49) (58.71) (153.23) (54.79)

Loans and advances 1,106.36 (561.04) (97.91) (1,337.73) (1,545.63)

Inventories (5.88) (26.60) (26.21) (17.17) (13.12)

Current liabilities (146.32) 452.58 734.50 328.68 648.18

Provisions (8.60) 2.59 53.48 (8.50) 17.63 Preoperative expenses - - - - (23.75)

Net changes in working capital 804.97 (404.96) 605.15 (1,187.95) (971.48) Direct taxes paid (including fringe benefits tax) (66.42) (117.90) (255.47) (217.80) (106.05)

Net cash generated from / (used in) operations 2,535.61 1,787.06 2,014.76 275.84 590.01

Fame India Limited

Annexure XX Statement of consolidated restated cash flows (Continued)

160

(Rupees in lakhs)


2011

For the year ended

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Cash flow from investing activities

Purchase of fixed assets (1,378.28) (2,175.50) (5,151.05) (4,594.67) (3,159.32)

Proceeds from sale of fixed assets 56.12 0.81 1.75 0.19 8.50

Proceeds on maturity of NSCs 124.00 - - - - Proceeds from sale of investment in mutual funds 2,850.98 3,788.57 1,210.00 1,331.10 1,533.98 Purchase of investment in mutual funds (2,692.86) (3,954.78) (652.27) (1,513.03) (1,293.02)

Purchase of NSCs - (8.38) (4.70) - -

Dividend received 12.68 9.61 13.47 15.36 8.41

Interest received 164.94 110.30 206.65 276.74 537.33 Net cash (used in) investing activities (862.43) (2,229.37) (4,376.15) (4,484.31) (2,364.12)

Cash flow from financing activities Proceeds from issue of share capital 15.18 - - 1.29 2.30 Share premium received 6.78 - - 2.58 4.60 Proceeds from issue of Foreign Currency Convertible Bonds (‘FCCBs’) - - - - 9,010.00 FCCB issue expenses - - - - (249.09)

Interest paid (589.50) (673.57) (344.79) (220.17) (321.12) Dividend distribution tax paid - - (12.75) (9.35) (12.28) Vehicle loan repaid - - (0.20) (4.35) (10.27) Term loans from banks taken - 2,500.00 3,900.00 500.00 763.21 Term loans from banks repaid (2,920.27) (1,807.92) (667.80) (702.57) (1,213.51)Secured loan / bank overdraft disbursed during the year (net) 183.94 680.91 (618.67) (65.41) (545.94) Unsecured loans taken 1,200.00 - - - - Unsecured loans repaid - - - (25.00) (536.00)

Net cash (used in) / generated from financing activities (2,103.87) 699.42 2,255.79 (522.98) 6,891.90

Net (decrease) / increase in cash and cash equivalents (430.69) 257.11 (105.60) (4,731.45) 5,117.79 Cash and cash equivalents at the beginning of the year 2,309.95 2,052.84 2,158.27 6,897.08 1,948.20 Effect of exchange gain on cash and cash equivalents - - 0.17 (7.36) (168.91) Cash and cash equivalents at the end of the year 1,879.26 2,309.95 2,052.84 2,158.27 6,897.08

Fame India Limited


161

(Rupees in lakhs) Particulars

31 March 2011

For the year ended

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Cash and cash equivalents at the year end comprise:

Cash on hand 22.64 27.24 21.73 29.75 37.24

Cheques on hand - - - - 12.72

Balances with Scheduled banks in

-- Deposit accounts 1,449.06 1,474.64 1,732.84 1,730.35 6,632.75

-- Current accounts 407.56 808.07 297.46 316.66 182.00

Balances with other banks in

-- Current accounts - - 0.81 81.51 32.37

1,879.26 2,309.95 2,052.84 2,158.27 6,897.08

Note 1 - 1,195.06 1,600.00 1,850.00 1,850.00

Fame India Limited


162

Note:




4 To be read together with Statement of significant accounting policies adopted by the Group in preparing its consolidated financial statement (Annexure XXI) and Statement of changes and notes to statement of consolidated restated profit and loss and statement of consolidated restated assets and liabilities (Annexure XXII).

Fame India Limited Annexure XXI

Statement of significant accounting policies adopted by the Group in preparing its consolidated financial statement (Continued)

163

1. Background

Fame India Limited (‘FIL’ or ‘the Company, or ‘the Parent Company’) was incorporated as a private limited company on 26 October 1999. Pursuant to a special resolution passed by the Company at its Extra-ordinary General Meeting held on 19 December 2004, the Company converted itself into a public limited company. On 25 January 2008, the Company changed its name from Shringar Cinemas Limited to Fame India Limited pursuant to the approval from Government of India, Ministry of Corporate Affairs. The Company’s principal activity is exhibition of films in India including programming of theatres and owning / managing multiplexes. The Company was a subsidiary of Fame Motion Pictures Limited (‘FMPL’) (formerly Shringar Films Limited (‘SFL’)), which held 51% of its equity share capital. FMPL is mainly engaged in distribution and programming of films. On 25 March 2004, FMPL sold its shareholding in the Company to South-Yarra Holdings (‘SYH’), a partnership firm in which two of the then Directors were partners. Accordingly, the Company ceased to be a subsidiary company of FMPL effective that date. On 27 March 2004, the Company purchased 999,900 equity shares (i.e. 100% of the paid-up equity share capital) of FMPL from its erstwhile shareholders. Consequently, FMPL became a 100% subsidiary of the Company. During the year ended 31 March 2006, the Company issued 8,150,180 equity shares of Rs. 10 each at a premium of Rs. 43 per share pursuant to its Initial Public Offering (‘IPO’) on 22 April 2005. During the year ended 31 March 2010, Inox Leisure Limited (‘INOX’) acquired from the partners of SYH, 43.28% of the share capital of the Company, followed by acquisition of additional equity shares of the Company to the extent of 7.21% from Open Market. On 16 December 2010, an open offer was made by INOX along with Gujarat Fluorochemicals Limited (the “Persons Acting in Concert” or “PAC”) to the equity shareholders for acquisition of additional 8,231,759 equity shares at Rs. 51 per equity share for cash representing 20.25% of the equity share capital of the Company. Pursuant to the open offer, INOX acquired 1,075 equity shares of the Company. Post the Open-offer, INOX holds 50.27% of the paid-up share capital of the Company. Accordingly, the Company is now a subsidiary of INOX with effect from 6 January 2011. The Company also held 50.01% of the paid-up equity share capital of Swanston Multiplex Cinemas Private Limited (‘SMCPL’), which is primarily engaged in managing a multiplex. Pursuant to the shareholders’ agreement, the Company on 31 August 2005 transferred 0.01% holding to Reliance MediaWorks Limited (formerly known as Adlabs Films Limited). Consequently, SMCPL ceased to be a subsidiary of the Company effective that date. On 8 March 2006, the Company purchased 10,000 equity shares (i.e. 100% of the paid-up equity share capital) of Big Pictures Hospitality Services Private Limited (‘Big Pictures’). Big Pictures is in the business of management of food courts and malls. On 3 November 2008, the Company purchased 5,000 equity shares (i.e. 50% of the paid-up equity share capital) of Headstrong Films Private Limited (‘HFPL’). HFPL is primarily engaged in production and distribution of films. The consolidated financial statements include the financial statements of FIL and its subsidiaries and joint ventures (collectively referred to as ‘the Group’). The list of subsidiaries considered in these consolidated financial statements with percentage holding is summarised below:



164

Name of the subsidiary Country of

incorporation % shareholding Period

FMPL India 100.00 From 27 March 2004 Big Pictures India 100.00 From 8 March 2006

The joint ventures considered in these consolidated financial statements along with the period covered is summarised below:

Name of the venture Country of

incorporation % shareholding Period

SMCPL India 50.00 From 1 September 2005 HFPL India 50.00 From 3 November 2008

2. Statement of significant accounting policies

2.1 Basis of preparation of consolidated financial statements

The consolidated financial statements are prepared and presented under the historical cost convention, on the accrual basis of accounting, and in accordance with the provisions of the Companies Act, 1956 (‘the Act’) and the accounting principles generally accepted in India (‘Indian GAAP’) and comply with the Accounting Standards (‘AS’), as notified in the Companies (Accounting Standards) Rules, 2006, to the extent applicable.

2.2 Going concern

As at 31 March 2011, the Company had term loans of Rs. 1,066.67 lakhs due for repayment within the next twelve months. Further, an amount of Rs. 8,240.01 lakhs (worth face value of USD 13 million and accrued interest as per the exchange rate as at 31 March 2011) in accordance with the terms and conditions of the Foreign Currency Convertible Bonds (‘FCCBs’) would have become payable in April 2011.

Subsequent to the year-end, the Company has taken a short term unsecured loan from ING Vysya Bank for an amount of Rs. 7,000.00 lakhs and redeemed the outstanding FCCBs in September 2011. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations in respect of the Bonds. The Board of Directors at their meeting held on 19 April 2011, have accorded consent to issue equity shares on rights basis to the existing equity shareholders of the Company up to Rs. 9,000 lakhs. Based on the above, the financial projections made by the management, and the financial strength and management support of the Promoter Group, the Company continues to adopt the going concern basis in preparing the financial statements..

2.3 Principles of consolidation

The consolidated financial statements are prepared in accordance with AS 21 - ‘Consolidated Financial Statements’ and AS 27 – ‘Financial Reporting of Interests in Joint Ventures’ as prescribed in the Companies (Accounting Standards) Rules, 2006. The consolidated financial statements are prepared using uniform accounting policies for transactions and other events in similar circumstances except where it is not practicable to do so. The consolidated financial statements are presented, to the extent possible, in the same format as that adopted by the Company for its independent standalone financial statements. The consolidated financial statements have been consolidated on the following basis:



165

Subsidiaries

The excess of cost to the Parent Company of its investment in subsidiaries over its portion of equity in the subsidiaries at the respective dates on which investment in subsidiaries was made is recognised in the consolidated financial statement as goodwill. The Parent Company’s portion of equity in the subsidiaries is determined on the basis of the book value of assets and liabilities as per financial statements of the subsidiaries as on the date of investment.

The financial statements of the Parent Company and its subsidiaries have been consolidated on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances / transactions and resulting unrealised profits in full. Unrealised losses resulting from intra-group transactions have also been eliminated except to the extent that recoverable value of related assets is lower than their cost to the group. The amounts shown in respect of reserves comprise the reserve as per the balance sheet of the Parent Company and its share in the post-acquisition increase / decrease in the relevant reserve / accumulated losses of its subsidiaries.

Joint venture entities

Interests in entities in which the Parent Company or any of its subsidiaries has joint control with one or more co venturers, are reported using proportionate consolidation method i.e. share of the assets, liabilities, income and expenses of the jointly controlled entity are shown as separate items in the consolidated financial statements. Most of the procedures for doing so are similar to the procedures for the consolidation of investments in subsidiaries.

2.4 Use of estimates

The preparation of consolidated financial statements in accordance with generally accepted accounting principles in India requires that management makes estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as of the date of the consolidated financial statements and reported amounts of revenue and expenses during the reported period. The estimates and assumptions used in the consolidated financial statements are based upon management’s evaluation of relevant facts and circumstances as at the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.5 Goodwill on consolidation

The excess of cost to the Parent Company of its investment in the subsidiaries over its portion of equity in the subsidiaries at the date, on which investment was made, has been recognised as goodwill in the consolidated financial statements. Goodwill is reviewed for decline other than temporary, whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

2.6 Revenue recognition

Multiplex operations

There are weekly arrangements with distributors for exhibition of films at the multiplexes operated by the Group. Revenue from theatrical exhibition is recognised on the date of exhibition of the films and comprises proceeds from sales of tickets, net of discounts. As the exhibitor is the primary obligor with respect to exhibition activities, the share of distributors and the joint-venture investors in these proceeds are disclosed as exhibition costs.



166

Revenue from food and beverage sales is recognised at the point of sale at the counter. Revenue from advertisements and royalty is recognised on the date of the exhibition of the advertisement / event or over the period of the contract, as applicable.

Revenue from management of multiplexes and from facilities within the multiplexes is recognised on an accrual basis as per the contractual arrangement entered into with the multiplex and facilities providers.

Distribution

Revenue from theatrical exploitation of film rights comprising proceeds from sales of tickets, net of taxes and exhibitor’s share, is recognised on the date of exhibition of the film. As the Group is the primary obligor in respect of the distribution activity, the share of producers, joint venture investors (other than those in jointly controlled assets) and sub-agents / sub-distributors are included in revenues from theatrical exploitation and are correspondingly disclosed as direct cost. Revenue from non-theatrical exploitation of film rights is recognised on the date of availability of these rights to the licensee.

Programming

Contracts are entered into with theatre owners for programming film exhibition at these theatres for a contracted period. Also, weekly arrangements are entered into with distributors for exhibition of films in these theatres. Revenue from programming is recognised on the date of exhibition of the films and comprises proceeds from sale of tickets, net of taxes and theatre-owner’s share. As the Group is the primary obligor with respect to the programming activities, the share of distributors and joint venture investors (joint control does not exist in any of the joint ventures) in these proceeds are disclosed as programming costs.

Food court operations

Conducting agreements are entered into with various vendors to run Food Court business. The revenue recognised on monthly accrual basis is of fixed amount plus share of net sales or net profit, as per contractual agreements.

Film production operations

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue from sale of theatrical exploitation of film rights comprises proceeds from sales of tickets, net of taxes and exhibitor’s and distributor’s share, and is recognised on the date of exhibition of the film. Revenue from non-theatrical exploitation of film rights is recognised on the date of availability of these rights to the licensee as per the respective contractual terms.

Others

Dividend income is recognised when the unconditional right to receive payment is established.

Income from interest on deposits, loans and interest-bearing securities is recognised on time proportion basis.



167

2.7 Fixed assets, intangible assets, Capital work-in-progress and depreciation / amortisation

Intangible assets

Film rights comprise of negative rights and distribution rights.

Negative rights are generally exploited through media such as theatrical exhibition, television/ satellite, cable, etc. The cost of negative rights comprises its purchase price.

Distribution rights in films are for a contractually specified mode of exploitation, period and territory and are stated at cost less accumulated amortisation and impairment. Cost is ascertained on specific identification basis where possible. In case multiple films / rights are acquired for a consolidated amount, cost is allocated to each film / right based on managements’ best estimates.

Cost of distribution rights comprises original purchase price / minimum guarantee, net of contributions by joint venture investors. In respect of unreleased films, payments towards films rights are classified under capital advances and contributions of joint venture partners are classified under current liabilities, as the amounts are refundable in the event of non-release of the film.

Computer software is accounted at the cost of acquisition.

Tangible fixed assets and Capital work in progress (CWIP)

Fixed assets are stated at cost of acquisition less accumulated depreciation / amortisation and impairment loss, if any. The cost of fixed assets includes freight, duties, taxes (to the extent not recoverable from tax authorities) and any directly attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs directly attributable to acquisition or construction of qualifying fixed assets are capitalised. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost of fixed assets not ready for their intended use before such date are disclosed under Capital Work-in-Progress. Capital work-in-progress includes estimates of work completed, as certified by management.

In respect of accounting periods commencing on or after 7 December 2006 and ending on or before 31 March 2011, consequent to the insertion of para 46 of AS-11 ‘The Effects of Changes in Foreign Exchange Rates’, notified under the Companies (Accounting Standards) Rules, 2006, (as more fully explained in paragraph 2.14 below), the cost of depreciable capital assets includes foreign exchange differences arising on translation of long term foreign currency monetary items as at the balance sheet date in so far as they relate to the acquisition of such assets.

Depreciation and amortisation

Intangible assets

Cost of film rights (including negative rights) is amortised in the ratio that gross revenues for the period bear to the total estimated gross revenues. Total estimated gross revenues represent useful life of the film rights and are determined by the management based on the expected pattern of income flow. If estimates of total revenues and other events or changes in circumstances indicate that a right has a fair value that is less than its unamortised cost, a loss is recognised for the excess of the unamortised cost over the film right’s fair value.

Cost of computer software is amortised over one year period, being the useful life of such software as estimated by the management.



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Tangible fixed assets

Depreciation on fixed assets specific to multiplexes is provided pro-rata to the period of use, under the straight line method, at the rates prescribed in Schedule XIV to the Act, except as stated below, which, in management’s opinion, reflect the estimated useful economic lives of these fixed assets.

Useful lives being followed by the Group that are shorter than those prescribed under Schedule XIV to the Act, are summarised as below:

Particulars Useful life Computer software (purchased) 1 year Furniture and fixtures 10 years Office equipment 10 years Air conditioners 10 – 21 years Theatrical equipment 14 – 15 years

Depreciation on other fixed assets is provided pro-rata to the period of use, using the written down value method at the rates prescribed in Schedule XIV to the Act, which in management’s opinion reflect the estimated useful economic lives of those fixed assets. Individual assets costing upto Rs. 5,000 are depreciated at the rate of 100% pro-rata over the period of one year. Leasehold improvements are amortised over the lower of the useful life of the asset and the lease term of the leasehold premises, on a straight-line basis, which represents the period over which the economic benefits of the assets are expected to be consumed by the lessee, as determined at the inception of the lease term.

Assets retired from active use and held for disposal are written down to their estimated realisable value and are classified as ‘Assets held for sale’.

2.8 Impairment of assets In accordance with AS 28 on ‘Impairment of Assets’, where there is an indication of impairment of the assets, the carrying amounts of the assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of an asset or the cash generating unit to which it belongs exceeds its recoverable amount. Impairment loss is recognised in the profit and loss account or against revaluation surplus, where applicable. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is re-assessed and the asset is reflected at the recoverable amount subject to a maximum of the depreciated historical cost. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life.

2.9 Investments

Long-term investments are carried at cost. Provision is made when there is a decline, other than temporary, in the carrying value of such investments, determined separately for each investment, and the resultant reduction in the carrying amount is charged to profit and loss account.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each investment.



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Profit or loss on sale of investments is determined on the basis of weighted average carrying amount of investments disposed off.

2.10 Jointly controlled assets and joint venture investors

Jointly controlled assets comprise film rights in respect of which both financial and operating control is exercised jointly with another venturer. The company in such cases recognises its share of jointly controlled assets, any liability and expenses that it incurs and share of jointly incurred liabilities, and only its share of income and expenses related to the venture.

The Group also accepts joint venture investments for distribution and exploitation of theatrical rights in respect of certain films and such joint venture investors do not have any control in the operations of those films.

2.11 Inventories

Food and beverages

Inventories of food and beverages are valued at the lower of cost and net realisable value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on the First-In, First-Out (‘FIFO’) basis.

2.12 Leases

The lease term is the non-cancellable period for which the lessee has agreed to take on lease the asset together with any further periods for which the lessee has the option to continue the lease of the asset, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise.

Assets taken on operating lease

Lease rentals in respect of assets acquired on operating leases are charged-off to the profit and loss account on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern of the user’s benefit.

2.13 Employee benefits

(a) Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is charged to the profit and loss account in the period in which such services are rendered.

(b) Post-employment benefits

Defined contribution plans

The provident fund contribution paid / payable under the recognised provident fund scheme and the employees’ state insurance contribution is recognised as an expense in the profit and loss account during the period in which the employee renders the related service.



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Defined benefit plans

The gratuity benefit scheme is a defined benefit plan. The net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods. These benefits are discounted to determine its present value, and the fair value of any plan assets is deducted therefrom.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation at each balance sheet date by an independent actuary, using the Projected Unit Credit Method, which recognises each period of service as giving rise to one additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligations are measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligations under the defined benefit plan are based on the market yields on government bonds as at the balance sheet date.

All actuarial gains and losses arising during the year are recognised immediately in the profit and loss account.

(c) Other long-term employment benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defined benefit obligations at the balance sheet date based on an actuarial valuation by an independent actuary using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligations under the defined benefit plan are based on the market yields on government bonds as at the balance sheet date.

2.14 Foreign currency transactions

Foreign currency transactions are recorded using the exchange rates prevailing on the date of the respective transactions. Exchange difference arising on foreign currency transactions, between the actual rate of settlement and the rate on the date of the transactions, is charged or credited to the profit and loss account. The Central Government has vide its notification dated 31 March 2009 amended AS 11, ‘The Effects of Changes in Foreign Exchange Rates’, notified under the Companies (Accounting Standards) Rules, 2006, to the extent it relates to the recognition of losses or gains arising on restatement of long-term foreign currency monetary items in respect of accounting periods commencing on or after 7 December 2006 and ending on or before 31 March 2011. As stipulated in the notification, the Company has exercised the option to adopt the following policy irrevocably and retrospectively for accounting periods commencing from 1 April 2007. Long term monetary assets and liabilities, other than those which form part of the Company’s net investment in non-integral foreign operations, denominated in foreign currency as at the balance sheet date are translated at the exchange rate prevailing on the balance sheet date and the net exchange gain / loss on such conversion, if any, is;

c) adjusted to the cost of the asset, where the long-term foreign currency monetary items relate to the acquisition of a depreciable capital asset (whether purchased within or outside India), and depreciated over the balance life of the assets and;

d) accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ (FCMITDA) and amortised over the balance period of long-term monetary asset / liability but not beyond 31 March 2011, in cases other than those falling under (a) above.



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Other monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at the exchange rates prevailing on the balance sheet date and the overall net exchange gain or loss on such conversion, if any, is credited / charged to the profit and loss account. Non monetary assets are recorded at the rates prevailing on the date of the transaction.

2.15 Taxation

Tax expense comprises current tax and deferred tax charge or credit.

Current tax

Provision for current tax is recognised in accordance with the provisions of the Income tax Act, 1961 and is made based on the tax liability after taking credit for tax allowances and exemptions.

Minimum Alternate Tax (‘MAT’) credit is recognized only to the extent there is convincing evidence that the company will pay normal income tax in excess of MAT during the specified period.

MAT credit entitlement is reviewed as at each balance sheet date and written down to the extent there is no longer convincing evidence that the company will pay normal income tax during the specified period.

Deferred tax

Deferred tax liability or asset is recognised for timing differences between the profits or losses offered for income taxes and profits / losses as per the individual standalone financial statements. Deferred tax assets and liabilities and the corresponding deferred tax credit or charge are measured using the tax rates and tax laws that have been enacted as at the balance sheet date.

Deferred tax asset is recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax asset is recognised only if there is a virtual certainty of realisation of such asset. Deferred tax asset is reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain to be realised.

2.16 Earnings per share (‘EPS’)

Basic EPS is computed by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti-dilutive. The dilutive potential equity shares are deemed to be converted as of the beginning of the year, unless they have been issued at a later date.

2.17 Employees’ Stock Option Scheme (‘ESOS’) In accordance with the Securities and Exchange Board of India (‘SEBI’) guidelines, the excess, if any, of the fair value of shares at the date of grant of the options under the ESOS over the exercise price is treated as employee compensation and amortised on a straight-line basis over the vesting period.

2.18 Provision and contingencies

Provisions comprise liabilities of uncertain timing or amount. Provisions and loss contingencies arising from claims, litigation, assessment, fines, penalties, etc. are recognised when there is a



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present obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Fame India Limited Annexure XXII

Statement of changes and notes to statement of consolidated restated profit and loss (Annexure XVIII) and statement of consolidated restated assets and liabilities (Annexure XIX)

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Adjustments in the consolidated restated profit and loss (Rupees in lakhs)

31 March 2011

For the year ended

31 March

2010

31 March

2009

31 March

2008

31 March

2007

Net Profit/(loss) for the year after tax, as per audited financial statements 90.47 (633.43) 343.56 1,408.39 975.66

Adjustments [expense/(income)] in the Statement of consolidated restated profit and loss arising out of:

(A) Prior period adjustment -- Other administrative expenses (Note 1) 449.33 (466.17) 29.30 (12.46) - -- Other income (Note 2) - - 15.18 (15.18) 27.45 -- Income tax (Note 3) (32.26) 48.55 22.88 0.42 (40.57) -- Other administrative expenses (Note 4) - - 135.67 (116.74) (18.93) -- Personnel cost (Note 4) - - 1.85 (1.66) (0.19) -- Personnel cost (Note 5) - (15.69) 15.69 - - -- Revenue from operations (Note 7) - (84.77) - - - -- Other administrative expenses (Note 8) - - - (13.49) 2.42 -- Other administrative expenses (Note 9) - (12.33) 25.77 (13.44) - --Deferred tax (Note 14) (9.62) - 130.13 (120.51) - (B) Change in accounting policy -- Other income (Note 10) - - - 570.49 - -- FCMITDA (Note 10) - - - (76.44) - -- Depreciation / amortisation (Note 10) - - - (6.04) - (C) Effect of tax adjustments -- Provision for tax (Profit and loss account) (Note 6) (41.00) 17.55 (17.60) (44.61) (1.75) --MAT credit entitlement (Note 12) 136.19 - - 13.33 (62.72) (D) Regroupings -- Other income (Note 11) 345.27 379.06 384.19 184.74 162.30 -- Revenue from operations (Note 11 and 13) (345.27) (379.06) (384.19) (184.18) (150.63) -- Other administrative expenses (Note 13) - - - (0.56) (11.67) Restated net profit / (loss) after adjustment and extra-ordinary items (412.17) (120.57) (15.31) 1,244.72 1,069.95


Statement of changes and notes to statement of consolidated restated profit and loss (Annexure XVIII) and statement of consolidated restated assets and liabilities (Annexure XIX) (Continued)

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Adjustments in the consolidated restated assets and liabilities

(Rupees in lakhs)

Cumulative effect of the above [increase / (decrease)] in the Statement of consolidated restated assets and liabilities

As at 31 March

2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

(A) Prior period adjustment -- Loans and advances 12.59 91.24 127.47 311.23 134.50 -- Current liabilities and provisions (44.27) (452.70) 96.39 51.39 78.50-- Deferred tax liability (Note 14) - - - 130.13 - -- Deferred tax asset (Note 15) - (9.62) (9.62) (9.62) - -- Profit and loss account (Note 16) - - - - 38.29 (B) Change in accounting policy -- Foreign Currency Monetary Item

translation difference account (FCMITDA) (Note 10) - - - (229.32) -

-- Fixed assets (net block) (Note 10) - - - (258.68) - -- Profit and loss account (Note 10) - - - 488.01 - Regroupings -- Current liabilities and provisions (Note 13) 55.83 15.65 27.06 26.57 47.07-- Loans and advances (Note 13) 55.83 15.65 27.06 26.57 47.07

A) Notes on adjustments for restated statements

1) During the financial year ended 31 March 2008, the Company provided for service tax on lease rentals with effect from 1 June 2007 on introduction of levy of service tax on renting of immovable properties. During the financial year ended 31 March 2009, in view of the judgment of the Honorable High Court of Delhi dated 18 April 2009 in the case of Home Solution Retail India Limited and others vs. Union of India upholding the activity of renting immovable property as “ultra virus” of the Finance Act, 1994 and based on an expert opinion obtained by the management, the unpaid service tax on renting of immovable property was reversed. Pursuant to the amendment made by the Finance Act, 2010, renting of immovable property was defined as a taxable service with retrospective effect from 1 June 2007. Accordingly, during the financial year ended 31 March 2010, the Group provided for service tax on renting of immovable properties with retrospective effect from 1 June 2007. However, based on the legal opinion obtained during the year ended 31 March 2011, the Group reversed the entire service tax liability standing in the books of accounts as at 30 September 2010. This reversal has been given effect to, in the respective years to which the service tax relates.

2) During the years ended 31 March 2007 and 31 March 2009, the Company recognised refund of entertainment tax paid from the date of commencement of its multiplexes, Fame Highland Park and Fame Southcity respectively, on receipt of the Order recommending the above multiplexes as a Multiplex Theatre Complex under section 3 of the West Bengal Act. These refund amounts have been reflected in the respective years to which they relate.

3) During the period ended 31 March 2011, the Group accounted for additional tax arising for earlier financial years - based on first appellate authority’s order received, assessment order received and short / excess provision of income tax. These amounts have been adjusted in the respective years to which they relate.



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4) Pursuant to the clarification by Central Board of Excise and Customs (CBEC) vide Circular No. File No. 137/72/2008-CX.4 dated 21 November 2008, the accumulated CENVAT/Service tax credit upto 31 March 2008 could be utilised by the Company for payment of output service tax without any restriction of time limit. The Company recognised CENVAT/Service tax credit for the period upto 31 March 2008 by crediting respective expenses in the financial year ended 31 March 2009. For the purpose of restatement, these amounts have been credited to the expenses of the year to which they relate.

5) During the year ended 31 March 2010, certain amounts recovered by the Company from a joint venture in the earlier year were reversed. For the purpose of restatement, the reversal has been given effect to in the year in which the expenses arose.

6) These amounts represents increase / (decrease) in tax expenses of respective years on account of restatement effects given in the restated financial information.

7) SMCPL had received demand orders for payment of entertainment tax collected by SMCPL and not paid to the authorities aggregating Rs. 198.11 lakhs for the period from 24 June 2005 to 5 January 2006. Based on a legal opinion obtained by the Company, the Company had made a provision aggregating to Rs. 18.31 lakhs in the books of accounts during the year ended 31 March 2006 in this regard. The Bombay High Court passed an Order dated 21 October 2008 in favour of the Company upholding the exemption from payment of entertainment tax available to the Company and also directed the State Government to refund the amount of Rs. 20 lakhs deposited by the management. The State Government had preferred a special leave petition (‘SLP’) before the Supreme Court of India challenging the said Order and the judgment passed by the Bombay High Court. During the year ended 31 March 2010, the Supreme Court vide its Order dated 27 July 2009, allowed the appeal in favour of the State Government. Accordingly, the tax liability of Rs. 187.35 lakhs has since been paid by the Company. For the purpose of restatement the amount of entertainment tax has been reduced from revenue of the relevant year.

8) During the year ended 31 March 2007, SMCPL had received a letter from Pramukh Development Corporation for charges towards common area maintenance of the property leased form them for the period from January 2002 to March 2007. Since, this was not part of the agreement no provision was made in the books of accounts. After negotiations, SMCPL paid an amount of Rs. 26.98 lakhs during the year ended 31 March 2008. For the purpose of restatement, this amount has been charged in the respective years to which it relates.

9) Based on the order of the Appellate Tribunal for Electricity, dated 19 January 2009, in favor of the appeal made by the Multiplex Association of India Vs Maharashtra Electricity Regulatory Commission, Tata Power Co. Limited and Reliance Energy Ltd and the legal opinion sought by the management with respect to creation of new category for multiplexes, which has been held as entirely unjustified, electricity expenses aggregating to Rs. 26.89 lakhs (for the period from 1 May 2007 to 31 March 2008) were reversed by SMCPL in the financial year ended 31 March 2009 and equivalent amount, net of adjustment, was included in advances recoverable in cash or kind or for value to be received as recoverable from Tata Power Co. Limited. SMCPL has since received the said amount in twelve equal installments commencing from February 2009. Similarly, the management had also reversed electricity expenses aggregating Rs. 24.65 lakhs for the period from 1 June 2008 to 31 March 2009 during the financial year ended 31 March 2009 for increase in electricity rate by Tata Power Co Ltd based on principles listed in the above order / opinion and the equivalent amount was included in advances recoverable in cash or kind. However, pursuant to the unfavorable Order dated 28 October 2009 passed by the Appellate Tribunal for Electricity in the appeal made by the Multiplex Association of India Vs Maharashtra Electricity Regulatory Commission and Tata Power Co. Limited, SMCPL charged off the entire amount of Rs. 24.65 lakhs to the profit and loss account. For the purpose of restatement, both the above amount has been reflected in the respective years to which they relate.

10) The Central Government vide notification dated 31 March 2009 amended AS 11 ‘The Effects of Changes in Foreign Exchange Rates’ to the extent it relates to the recognition of losses or gains arising on restatement of long-term foreign currency monetary items in respect of accounting



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periods commencing on or after 7 December 2006 and ending on or before 31 March 2011. In line with the transitional provisions, exchange differences on translation of long term foreign currency monetary items pertaining to the financial year ended 31 March 2008 which were recognised in the profit and loss account before the exercise of the said option, depreciation credit and amortisation of FCMITDA for the year ended 31 March 2008, were adjusted against opening balance in profit and loss account as on 1 April 2009. For the purpose of restatement, these amounts have been adjusted in the financial year ended 31 March 2008.

11) The income from facilities within the multiplex earlier presented under other income is regrouped under revenue from operations for consistency of presentation. Similarly refund of entertainment tax earlier presented under other income is regrouped under revenue from operations for consistency and comparability of the treatment of entertainment tax exemption.

12) The amount of Minimum Alternate tax represents, credit that is available fo be carried forward and eligible to be offset in the future years as per Income Tax laws. The same has been restated in respective years.

13) These represent regrouping of amounts for consistency of presentation. 14) During the year ended 31 March 2009, the deferred tax liability was fully set off with the deferred

tax asset leading to reversal of deferred tax liability previously recognized during the year ended 31 March 2008. The restatement adjustments and subsequent stand taken by the Company has resulted in increase in the deferred tax asset, fully setting off the deferred tax liability as of 31 March 2008. Consequently, the recognition of net deferred tax liability during the year ended 31 March 2008 has been reversed..

15) In case of FMPL, the deferred tax asset reversed during the year ended 31 March 2011 has been given effect in the year to which it relates.

16) Reconciliation of balance in profit and loss account as at 1April 2006 (Rupees in lakhs)

Profit and loss account balance as at 1April 2006 (audited) (757.69) Adjustments on account of restatement pertaining to earlier years -- Other income (Note 2) 27.45 -- Income tax (Note 3) (0.98)-- Provision for tax (Profit and loss account) (Note 6) 31.08 -- Revenue from operations (Note 7) (84.77) -- Other administrative expenses (Note 8) (11.07)Net adjustments (38.29) Profit and loss account balance as at 1April 2006 (restated) (795.98)



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B) Other significant notes, as restated where applicable and changes in the business of the Group during the last five financial years

1 Change in useful lives of certain fixed assets:

During the year ended 31 March 2007, the Group Company had revised the estimated useful lives of certain blocks of fixed assets, since the management believed that these revised useful lives more appropriately reflect the period of economic benefit to be derived from the use of such assets and hence would result in a more appropriate preparation and presentation of the financial statements. The revised useful lives of the assets along with those estimated earlier are stated below:

Asset block Revised useful lives Earlier estimated useful life Air conditioners 21 years 10 Years Projection equipments 15 Years 10 Years Electrical equipments 21 years 10 Years Concession equipments 15 Years 10 Years

As a result of this change in estimate, the depreciation charge and the deferred tax charge for the year ended 31 March 2007 was lower by Rs. 11.11 lakhs and Rs. 3.78 lakhs respectively and the net profit and reserves and surplus were higher by Rs. 14.89 lakhs and net fixed assets were higher by Rs. 11.11 lakhs.

2 Commitments

a) Operating lease The Group is obligated under non-cancellable leases for multiplex premises and office premises, which are renewable on a periodic basis at the option of both the lessor and the lessee. The future minimum lease payments in respect of non-cancellable portion of operating leases together with any further periods for which the Group has the option to continue the lease, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise, for agreements entered into are as follows:

(Rupees in lakhs)

Particulars 31 March 2011 31 March 2010

31 March 2009

31 March 2008

31 March 2007

Amount due within one year from the balance sheet date 3,220.63 3,382.76 2,438.31 1,398.85 937.99 Amount due in the period between one year and five years 13,166.12 13,621.50 10,360.82 4,622.32 3,879.73

Amount due after five years 9,296.67 9,613.61 4,749.76 3,296.22 1,470.38 25,683.42 26,617.87 17,548.89 9,317.39 6,288.11



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B) Other significant notes, as restated where applicable and changes in the business of the Group during the last five financial years (Continued)

The Group has entered into lease agreements / Memorandum of Understanding (‘MOUs’) for multiplex premises at various locations. The lease rentals for these premises accrue from the date of commencement of commercial operations. Accordingly, these leases have been excluded from the above disclosure. The number of such lease agreements/ MOUs are as under:


2011 31 March

201031 March

200931 March

2008 31 March

2007No. of lease agreements / MOUs not included 47 53 61 85 55

b) Capital commitments (Rupees in lakhs) Particulars As at

31 March 2011 31 March 2010

31 March 2009

31 March 2008

31 March 2007

The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 173.73 599.28 593.89 436.40 1,049.77

3 Employee stock option scheme (‘ESOS’)

On 21 December 2004, the Company established the ‘Shringar Employee Stock Option Scheme’ (‘ESOS – 2004 scheme’). Under the ESOS – 2004 scheme, the Company was authorised to issue not more than 5% of its equity share capital to eligible employees. Employees covered by the ESOS – 2004 scheme are granted an option to purchase the shares of the Company subject to the requirements of vesting. A compensation committee constituted by the Board of Directors of the Company administered the ESOS – 2004 scheme.

As per the ESOS – 2004 scheme, the Committee issued stock options to the employees at an exercise price of Rs. 30 per option. Total allotments under the ESOS-2004 scheme were 35,900 shares.

Further, on 21 May 2009, the Company established the ‘Employee Stock Option Scheme 2009’ (‘ESOS – 2009 scheme’). Under the ESOS – 2009 scheme, the Company is authorised to issue not more than 5% of its equity share capital to eligible employees. Employees covered by the ESOS – 2009 scheme are granted an option to purchase the shares of the Company subject to the requirements of vesting. A compensation committee constituted by the Board of Directors of the Company administers the ESOS – 2009 scheme.

As per the ESOS – 2009 scheme, the Committee shall issue stock options to the employees at an exercise price of Rs. 14.47 per option. Further, the participants shall exercise the options within a period of 5 years commencing on or after the respective date of vesting of the options.



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3 Employee stock option scheme (‘ESOS’) (Continued)

The above schemes provide that these options would vest in tranches as follows:

Period within which options will vest unto the participant

% of options that will vest

ESOS - 2009 ESOS – 2004

Grant A Grant End of 12 months from the date of grant of options 15 - 33.33

End of 24 months from the date of grant of options 15 10 33.33

End of 36 months from the date of grant of options 20 25 33.34

End of 48 months from the date of grant of options 25 25 -

End of 60 months from the date of grant of options 25 40 -

The terms and conditions of the ESOS – 2004 scheme were in line with the amended Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock Purchase Scheme) Guidelines, 1999.

The terms and conditions of the ESOS-2009 scheme, as approved by the remuneration committee of the Board of Directors of the Company in its meeting held on 21 May 2009 in pursuance to the approval of the Company at its Annual General Meeting held on 27 September 2006, are in line with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock Purchase Scheme) Guidelines, 1999 as amended vide Circular no SEBI/CFD/DIL/ESOP/5/2009/03/09 dated 3 September 2009 and in accordance with the terms of the resolutions passed by the Company.

Employee stock option activity under the scheme / schemes is as follows;

For the year ended

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

ESOS-2009 Scheme ESOS-2004 Scheme

Outstanding at the beginning of the year 1,063,300 - - 13,804 52,500

Granted during the year - 1,128,600 - - -

Forfeited during the year* (637,750) (65,300) - (900) (15,700)

Exercised during the year (151,770) - - (12,904) (22,996)

Outstanding at the end of the year **273,780 1,063,300 - - 13,804

Out of above vested and exercisable at the end of the year - - - - 3,000

* On account of employees leaving the organisation prior to the date of vesting.

** Subsequent to the year-end, 43,785 options have vested on 21 May 2011, out of which, 36,603 options have been exercised.



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4 Initial Public Offering (‘IPO’)

Vide a special resolution passed at the Extra ordinary General Meeting of the members of the Company held on 23 December 2004, under Section 81(1A) of the Act, and the resolution passed by the board at the meeting held on 21 December 2004, consent was accorded to offer /issue/ allot 8,150,000 equity shares of face value of Rs. 10 each at a premium through the 100% book building process through an initial public offering (‘IPO’). In this offering, 250,000 shares were reserved for employees of the Company. On 22 April 2005, pursuant to the IPO, the Company issued 8,150,180 equity shares of Rs. 10 each at a premium of Rs. 43 per share.

Utilisation of IPO proceeds:

(Rupees in lakhs) Particulars Projection

in offer document

Actual funds utilised till

31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Funding exhibition growth # 3,370.00 1,390.56 1,390.56 1,390.56 1,140.06 1,140.06

Funding distribution growth through subsidiary 599.50 - - - - -

Issue expenses * 350.00 441.62 441.62 441.62 441.62 441.62

Repayment of loans # - 2,487.32 1,292.26 887.32 887.32 887.32

Total 4,319.50 4,319.50 3,124.44 2,719.50 2,469.00 2,469.00

Un-utilised IPO proceeds were temporarily invested as follows:

(Rupees in lakhs) Particulars

31 March

2011

For the year ended

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Mutual Funds - - - 500.00 300.00 Fixed Deposits ** - 1,195.06 1,600.00 1,350.00 1,550.00

Total - 1,195.06 1,600.00 1,850.00 1,850.00

**Fixed Deposit under lien - 1,195.06 1,600.00 1,200.00 600.00



181


5 Initial Public Offering (‘IPO’) (Continued) # The above utilisation of IPO proceeds is in accordance with ‘objects of the issue’ read with ‘interim use of proceeds' clause as mentioned in the prospectus.

*The issue expense were higher by Rs. 91.62 lakhs as compared to the projections in the Prospectus. This is due to increase in lead management fee, underwriting and selling commission, advertising and marketing expenses and legal and professional charges. The issue expenses incurred were adjusted in the year of issue against the Securities Premium Account.

The shareholders of the Company, at their Annual General Meeting held on 30 September 2009 have approved vide a special resolution, the utilisation of balance un-utilised IPO proceeds of Rs. 1,600.00 lakhs as at that date inter-alia for expansion activities of the Company in India for opening up new multiplexes and expenses related thereto, including but not limited to repayment of loans taken for such purposes. Accordingly, during the year ended 31 March 2011 and during the year ended 31 March 2010, the Company utilised Rs. 1,195.06 lakhs and Rs. 404.94 lakhs respectively for repayment of term loans taken for its multiplex capital expenses.

6 Foreign Currency Convertible Bonds

On 21 April 2006, the Company, pursuant to a resolution of the Board of Directors dated 28 January 2006 and by a resolution of the shareholders dated 8 March 2006, issued

(i) 12,000, Zero Coupon Series A Unsecured Foreign Currency Convertible Bonds (“Series A Bonds”) of the face value of US $ 1000; and

(ii) 8,000, 0.5% per annum Series B Unsecured Foreign Currency Convertible Bonds (“Series B Bonds”) of the face value of US $ 1000

aggregating to USD 20,000,000 due in 2011 (the Series A Bonds and the Series B Bonds are collectively called the “Bonds”).

The Bonds were convertible at the option of the bond holders into newly issued, ordinary equity shares of par value of Rs. 10 per share (“Shares”), at an initial conversion price of Rs. 90 per share for Series A Bonds; and Rs. 107 per share for Series B Bonds, as defined in terms and conditions of the Bonds.

Unless previously converted, redeemed or repurchased and cancelled, Series A Bonds were redeemable on 22 April 2011 at 137.01 percent of their principal amount representing a gross yield to maturity of 6.5%; and Series B Bonds were redeemable on 22 April 2011 at 140.69 percent of their principal amount representing a gross yield to maturity of 7.5%.



182


6 Foreign Currency Convertible Bonds (Continued)

During the year ended 31 March 2008, 1,504,999 equity shares of Rs. 10 each were allotted against 3,000 Series A Bonds and 1,687,850 equity shares of Rs. 10 each were allotted against 4,000 Series B Bonds. Exchange gain / loss arising on such conversion has been adjusted against securities premium account. Premium on FCCB amortised and adjusted to the securities premium account upto the date of conversion has been reversed.

The bond issue expenses have been adjusted against securities premium as per the provision of Section 78 of the Companies Act 1956.

Utilisation upto 31 March 2011 of the proceeds from the FCCB issue is as under:


31 March 2011-- New cinema complexes 8,243.24

-- Expansion / modernisation of existing cinema complexes 245.61

-- FCCB issue expense 242.07

Total 8,730.92



183


6 Foreign Currency Convertible Bonds (Continued)

Premium payable on redemption of FCCB is charged to the securities premium account. (Rupees in lakhs)

Particulars

31 March 2011

For the year ended

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Opening balance 1,698.65 1,384.34 699.15 552.10 Nil

Add: Provision for the year* 755.30 472.17 493.13 367.82 552.10

(Less) / Add: Exchange difference on account of restatement of the outstanding premium payable (18.44) (157.86) 192.06 (30.01) Nil

Less : Un -utilised amounts reversed during the year Nil Nil Nil (190.76) Nil

Closing balance # 2,435.51 1,698.65 1,384.34 699.15 552.10

# Closing balance of premium on redemption of Foreign Currency Convertible Bonds as at 31 March 2011 includes potential withholding tax liability aggregating to Rs. 257.13 lakhs.

Events subsequent to 31 March 2011

With the permission of Reserve Bank of India and with the necessary consent of the bondholders, the Company has redeemed the outstanding bonds in September 2011 at a final redemption price of 112.35 percent of their principal amount for Series A Bonds and 115.37 percent of their principal amount for Series B Bonds, which represents a discount of 18% to the original maturity value of the Bonds. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations in respect of the Bonds.

The resultant gain and the corresponding reduction in withholding tax liability on redemption of Bonds have been credited to the securities premium account.

7 Foreign currency exposure

The Company uses forward contracts to hedge its risks associated with foreign currency fluctuations. The Company does not enter into any forward contract which is intended for trading or speculation purposes.



184


7 Foreign currency exposure (Continued)

The details of forward contracts outstanding at the year-end are as follows


2011

For the year ended

31 March 2010

31 March 2009 31 March 2008

31 March 2007

In US $ In INR In US $ In INR In US $ In INR In US $ In INR In US $ In INR

Number of contracts - - - - 7

Amount of contracts (in lakhs)

-

-

-

-

-

-

- - 57.00 2,484.66

Foreign currency exposure not hedged by a derivative instrument or otherwise is as under; (Rupees in lakhs)

Particulars

31 March2011

For the year ended


In US$ In INR In US$ In INR In US$ In INR In US$ In INR In US $ In INR

Bank balance - - - - 0.01 0.81 2.04 81.51 58.69 2,558.25

FCCB liability 130.00 5,804.50 130.00 5,868.20 130.00 6,623.50 130.00 5,196.10 200.00 8,718.00

YTM on FCCB 48.79 2,178.38 37.63 1,698.65 27.17 1,384.34 17.49 699.15 12.67 552.10

Note: Subsequent to the year end, the outstanding Bonds have been redeemed in September 2011 (for details, refer ‘events subsequent to 31 March 2011’ given above).



185


8 Earnings per share (Rupees in lakhs)


2011


2010 31 March

2009 31 March

2008 31 March

2007

Restated net profit /(loss) after tax attributable to equity shareholders (Numerator used for calculation of Basic EPS) (A) (412.17) (120.57) (15.31) 1,244.72 1,069.95

Add: Interest paid on FCCB 11.25 10.87 7.34 17.91 16.94

Less : Net exchange gain on FCCB credited to profit and loss account (tax adjusted) - - - ( 25.96) (88.54)

Add: Exchange difference considered as interest cost as per para 4(e) of AS – 16 - - 131.21 - -

Add: Amortisation of FCMITDA (76.31) (64.37) 13.58 (67.78) -

Add: Depreciation on exchange difference capitalised on account of AS 11 notification 9.52 14.70 45.52 (5.36) -

Restated net profit /(loss) after tax attributable to equity shareholders, as restated (Numerator used for calculation of Dilutive EPS) (B) (467.70) (159.37) 182.33 1163.53 998.36

Weighted average number of equity shares outstanding during the year - Basic (C) 34,922,915 34,795,262 34,795,262 32,366,964 31,569,835

Add: Weighted average number of equity shares arising out of outstanding stock options and on conversion of FCCB that have dilutive effect on the EPS 6,444,016 6,880,884 6,202,850 8,625,432 8,115,038

Weighted average number of equity shares outstanding during the year - Diluted (D) 41,366,931 41,676,146 40,998,112 40,992,396 39,684,873

Basic earnings per share of face value of Rs. 10 each (A)/(C) (1.18) (0.35) (0.04) 3.85 3.39

Diluted earnings per share of face value of Rs. 10 each (B)/(D) (1.18) (0.38) (0.04) 2.84 2.52



186


8 Earnings per share (Continued)

Note 1. Earnings Per Share calculations are in accordance with Accounting Standard 20 (AS – 20)

Earnings Per Share 2. All the adjustments have been made net of applicable taxes for the respective year, wherever

applicable. 3. Subsequent to 31 March 2011, the Company has redeemed the outstanding bonds in September

2011 (refer note B-6 of Annexure XXII for details). As at each balance sheet date, the potential equity shares in respect of outstanding FCCBs have been considered for the computation of diluted EPS in accordance with AS – 20.

2. The effects of anti-dilutive potential equity shares are ignored in calculating diluted earnings per share.

9 Disclosure pursuant to Accounting Standard - 15 (Revised 2005) 'Employee benefits'

Effective 1 April 2007 the Company has adopted Accounting Standard 15 (Revised 2005) on ‘Employee benefits’.

General description of significant defined benefit plans

iii) Gratuity Plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.

iv) Leave Plan

All employees can carry forward and avail / en-cash on superannuation, death, permanent disablement or resignation, subject to maximum accumulation of 60 days.

The Group has classified the various benefits provided to employees as under: (Rupees in lakhs)

Particulars

31 March 2011

For the year ended

31 March 2010 31 March 2009 31 March 2008 I Defined Contribution Plans

Amounts contributed to Provident Fund and Employee's State Insurance Corporation aggregating and recognised as an expense and included in "Personnel costs" in the profit and loss account

100.70 79.14 60.38 36.66



187


9 Disclosure pursuant to Accounting Standard - 15 (Revised 2005) 'Employee benefits' (Continued)

II Defined benefit obligations (Rupees in lakhs)





Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Gratuity (Unfunded)

Leave encashmen

t and compensated absences

(Unfunded)

Change In Benefit Obligation

Projected benefit obligation at beginning of the year

52.45 45.22 47.86 47.52 32.33 33.02 26.39 32.91

Current service cost 12.46 15.48 13.84 19.96 12.30 20.20 3.85 18.18

Interest cost 3.09 3.82 4.54 4.65 3.57 4.06 2.37 3.82

Actuarial (gain)/loss due to change in assumptions

18.09 (7.21) (13.26) (19.68) (0.34) (4.94) 0.8 (17.10)

Settlements (42.13) (23.26) (0.53) (7.23) - (4.82) (1.08) (4.79)

Past service cost – vested

0.65 - - - - - - -

Past service cost- non –vested

3.34 - - - - - - -

Projected benefit obligation at end of the year

47.95 34.05 52.45 45.22 47.86 47.52 32.33 33.02

Share of joint venture 0.19 0.12 0.28 0.12 0.10 0.01 0.08 0.08



188



III Reconciliation of present value of defined benefit obligation and fair value of plan assets

(Rupees in lakhs)Particulars For the year ended




31 March 2008

Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Projected benefit obligation at end of the year 47.94 34.05 52.45 45.22 47.86 47.52 32.33 33.02

Ending asset - - - - - - - - Funded status (liability) (47.94) (34.05) (52.45) (45.22) (47.86) (47.52) (32.33) (33.02) Unrecognized part service cost-non vested benefit 2.50 - - - - - - - (Liability) recognized in balance sheet (45.44) (34.05) (52.45) (45.22) (47.86) (47.52) (32.33) (33.02)

Share of joint venture 0.19 0.16 0.28 0.12 0.10 0.01 (0.08) (0.08)



189



IV Expenses recognised in profit and loss account (Rupees in lakhs)





Gratuity (Unfunded)

Leave encashment and compensated absences (Unfunded)

Gratuity (Unfunded)


Gratuity (Unfunded)


Gratuity (Unfunded)


Current service cost

5.30 15.61 13.84 19.96 12.30 20.20 3.85 18.18

Interest cost 3.09 3.82 4.54 4.65 3.57 4.06 2.37 3.82

Expected return on plan asset

- - - - - - -

Net actuarial (gain)/loss to be recognized in year

18.09 (7.21) (13.26) (19.68) (0.34) (4.94) 0.8 (17.10)

Past service cost

1.48 - - - - - - -

Expenses recognised in the statement of profit and loss account

27.96 12.21 5.12 4.93 15.53 19.32 7.02 4.90

Share of joint venture

0.03 0.08 0.19 0.11 0.02 (0.07) 0.04 0.03

V Actuarial Assumptions (Rupees in lakhs)





Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Gratuity (Unfunded)

Leave encashment

and compensated absences

(Unfunded)

Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Gratuity (Unfunded)

Leave encashment

and compensated

absences (Unfunded)

Actuarial assumptions

Discount rate 8% 8% 8% 8% 7.25% 7.25% 8% 8%

Salary escalation

12% 12% 12% 12% 12% 12% 10% 10%

The discounting rate is based on the gross redemption yield on government securities.



190


9 Disclosure pursuant to Accounting Standard - 15 (Revised 2005) 'Employee Benefits' (Continued)

VI Experience adjustments

(Rupees in lakhs)

Gratuity (Unfunded) For the year ended

31 March 2011

For the year ended

31 March 2010

For the year ended

31 March 2009


Present value of defined benefit obligation 47.95 52.73 47.95 32.41 Fair value of plan assets - - - - Deficit in the plan (47.95) (52.73) (47.95) (32.41) Actuarial (gain)/ loss due to change in assumptions - (2.59) 0.83 (4.80) Experience actuarial loss/(gain) adjustments on: -- Plan liabilities (18.09) (10.56) (0.33) 6.48 -- Plan assets - - - - Share of Joint Venture (0.09) 0.12 0.12 (0.22)

(Rupees in lakhs)



2011

For the year ended

31 March 2010

For the year ended

31 March 2009

For the year ended

31 March 2008

Present value of defined benefit obligation 34.05 45.34 47.53 33.10 Fair value of plan assets - - - - Deficit in the plan (34.05) (45.34) (47.53) (33.10) Actuarial (gain)/ loss due to change in assumptions - (2.59) 4.68 (13.92) Experience actuarial (gain) adjustments on: -- Plan liabilities (07.21) (16.81) (9.70) (2.76) -- Plan assets - - - - Share of Joint Venture 0.01 0.11 (0.08) (0.06)

Fame India Limited Annexure XXIII

Statement of consolidated accounting ratios, as restated

191

(Rupees in lakhs*)


2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

Net profit / (loss) after tax as restated (A) (412.17) (120.57) (15.31) 1,244.72 1,069.95

Net worth at the end of the year (including capital redemption reserve) (refer Note 2 below) (B) 7,343.76 8,470.83 8,905.72 9,618.96 5,768.87

Weighted average number of equity shares outstanding during the year (C) -- Basic (number of shares) # 34,922,915 34,795,262 34,795,262 32,366,964 31,569,835 -- Diluted (number of shares) # 41,366,931 41,676,146 40,998,112 40,992,396 39,684,873

Total number of equity shares outstanding at the end of the year # (D) 34,947,032 34,795,262 34,795,262 34,795,262 31,589,509

Earnings per equity share (A/C) -- Basic (Rs. per share) (1.18) (0.35) (0.04) 3.85 3.39 -- Diluted (Rs. per share) (1.18) (0.38) (0.04) 2.84 2.52 Return on net worth (%) (A/B) (5.61) (1.42) (0.17) 12.94 18.55

Net asset value per share (Rs.) (B/D) 21.01 24.34 25.59 27.64 18.26

# face value of Rs. 10 each * excluding details of number of shares which are in full figures and EPS which is represented in Rs. per share.

Fame India Limited Annexure XXIII

Statement of consolidated accounting ratios, as restated (Continued)

192

Notes:

7 The ratios have been computed as follows: Net profit / (loss) after tax, as restated, attributable to equity shareholders Earnings per equity share (in Rupees) _______________________________________________________________

Weighted average number of equity shares outstanding during the year

Net profit / (loss) after tax, as restated

Return on Net worth (%) _______________________________________________________________ X 100 Net worth, as at the end of the year

Net worth, as at the end of the year

Net asset value per equity share (in Rupees) ________________________________________________________ Number of equity shares outstanding at the end of the year

8 Net worth = Equity Share Capital + Securities Premium + Reserves and surplus (excluding Revaluation Reserve and Extra-ordinary items) – Miscellaneous

expenditure (to the extent not adjusted or written off) - Deficit in profit and loss account. 9 Restated net profit / (loss) after extraordinary items, as appearing in the Statement of consolidated restated profits and losses and net worth, as restated, as appearing

in the Statement of consolidated restated assets and liabilities, has been considered for the purpose of computing the above ratios. These ratios are computed on the basis of the consolidated restated financial information of the issuer company.

10 Calculation of ratios post issue has not been considered. 11 Earnings per share calculations are done in accordance with Accounting Standard 20 “Earnings Per Share” (AS – 20). 12 Subsequent to 31 March 2011, the Company has redeemed the outstanding bonds in September 2011 (refer note B-6 of Annexure XXII for details). As at each

balance sheet date, the potential equity shares in respect of outstanding FCCBs have been considered for the computation of diluted EPS in accordance with AS – 20.

Fame India Limited Annexure XXIV

Statement of disclosure as required by AS 18 – Related Party Relationships (Continued)

193

Related party relationships:

Particulars For the year ended 31 March 2011 31 March

201031 March

200931 March

2008 31 March

2007a) Where control exists Inox Leisure Limited (INOX) Holding

Company (holds 50.27% of the

equity share capital of the

Company w.e.f. 6 January 2011) - - - -

Gujarat Fluorochemicals Limited (GFL) Intermediate holding

company (holds 65.62% of the

equity share capital of INOX as of 31 March

2011 - - - -Inox Leasing & Finance Limited Ultimate

holding company (holds

52.54% of the equity share

capital of GFL as of 31 March

2011) - - - - b) Other related parties where transactions have taken place South Yarra Holdings (SYH) - Enterprise

holding 43.28% of the

equity share capital upto

3 February 2010

Enterprise holding

43.28% of the equity share

capital

Enterprise holding

43.28% of the equity

share capital

Enterprise holding

47.67% of the equity

share capital

M/s Shringar Films (SF) enterprises over which directors have significant influence (upto

21 January 2011)

enterprises over which

directors have significant influence




directors have

significant influence


directors have




194


31 March 2011 31 March 2010

31 March 2009

31 March 2008

31 March 2007

M/s Toorak Holdings enterprises over which directors have significant influence (upto

21 January 2011)






directors have



directors have


Gobindram Naoomal (HUF) - - - enterprises over which

directors have



directors have


Adlabs Shringar Multiplex Cinemas Private Limited (‘ASMCPL’)

enterprises over which directors have significant influence (upto

21 January 2011)






directors have



directors have


M/s Issardas Naoomal enterprises over which directors have significant influence (upto

21 January 2011)






directors have



directors have


Shravan Shroff Key managerial personnel

(Managing Director)(Resig

ned on 21 January 2011)

Key managerial

personnel (Managing

Director)

Key managerial

personnel (Managing

Director)

Key managerial

personnel (Managing

Director)

Key managerial

personnel (Managing

Director)

Rishi Negi Key managerial personnel

(Chief Operating

Officer)(Resigned on 28

February 2011)

Key managerial

personnel (Chief

Operating Officer)

(w.e.f. 23 July 2009)

- - -

Shyam Shroff Key managerial personnel –

Director (Resigned on 21

January 2011)

Key managerial personnel -

Director


Director


Director


Director

Balkrishna Shroff - Key managerial personnel-

Director (Resigned on 28 February

2010)

Key managerial personnel-

Director


Director


Director



195

Related party relationships (Continued):

Particulars For the year ended 31 March 2011 31 March

201031 March

200931 March

2008 31 March

2007Aditya Shroff Key managerial

personnel -Asst. Vice President -

programming and corporate

sales (Resigned on 14 January

2011)


Director (FMPL)

(resigned on 30 September

2009). Asst. Vice

President - programming and corporate sales (w.e.f. 1

October 2009)


Director (FMPL)

Key managerial personnel –

Director (FMPL)

-

Manish Acharya Key managerial personnel-

Director (HFPL)

(Deceased on 4 December

2010)

Key managerial personnel –

Director (HFPL)


Director (HFPL)

- -

PVR Pictures Limited - Joint Venture Partners

Joint Venture Partners



Reliance MediaWorks Limited Joint Venture Partner of joint

venture

Joint Venture

Partner of joint venture

Joint Venture Partner of

joint venture

Joint Venture

Partner of joint

venture

Joint Venture

Partner of joint

venture



196

Related party transactions:

(Rupees in lakhs)

Particulars 31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Transactions Distributor share - Shringar Films 60.47 3.00 24.11 - - Interest income - South Yarra Holdings - - - - 3.00 Interest expenses - INOX 0.72 - - - - Royalty paid - Issardas Naoomal - - 3.38 6.80 - Remuneration to key managerial personnel (including Directors remuneration) - Shravan Shroff 71.51 92.50 100.00 70.00 70.00 - Balkrishna Shroff 22.50 30.00 30.00 24.00 24.00 - Shyam Shroff 22.50 30.00 30.00 24.00 24.00 - Rishi Negi 38.47 37.00 - - - - Aditya Shroff 7.52 12.00 12.00 12.00 12.00 Rent paid - ASMCPL 184.91 135.59 131.78 133.49 132.10 - SF 41.84 10.84 - - - Professional and consultancy charges - Manish Acharya 0.51 4.18 5.13 - - Reimbursement of expenses (received) Communication expenses - Shringar Films - 0.47 - - 0.29 Advertising, publicity and marketing - Shringar Films - - 0.00 - 1.16 - Issardas Naoomal - - - 0.43 - Travelling and conveyance - Shringar Films 0.39 - - - 0.58 Professional and consultancy charges - Shringar Films - - 0.06 - - Insurance - ASMCPL - - - 0.24 - License charges - ASMCPL 1.03 - - - - Other - Shringar Films 0.04 - - - 0.05



197

Particulars 31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Reimbursement of expenses (paid) Property tax - ASMCPL 24.67 30.59 30.59 28.44 28.44 Lodging and boarding expenses - Sringar Films - - 0.29 - - Publicity expenses - Issardas Naoomal - - - 0.19 - Print delivery charges - Shringar Films - - 0.33 - - Travelling and local conveyance - Shringar Films - - 0.88 - - - INOX 4.22 - - - - License Charges - INOX 1.45 - - - - News paper and periodical - Shringar Films - - 0.04 - - Miscellaneous expenses - Shringar Films - - - 0.18 - Others expenses - Shringar Films - - - - 0.11 Repayment of advances given - ASMCPL - - - - 13.20 Advance / deposit repaid - Shringar Films 19.68 - - - 20.00 - Toorak Holdings - 82.80 - - - - Gobindram Naoomal (HUF) - - - - 24.50 - ASMCPL - 96.50 - - - - South Yarra Holdings 78.09 Deposit received - INOX 1200.00 - - - - Balances Deposits - Toorak Holdings - - 82.80 82.80 82.80 - Shringar Films - 19.68 19.68 19.68 19.68 - ASMCPL - 96.50 - - - Loans and advances (Dr balance) - Shringar Films - - - - 0.02 - Shravan Shroff # 3.49 - - - - Unsecured Loans - INOX 1200.65 - - - - Credit balances - Issardas Naoomal - - - 6.00 - - INOX 5.56 - - - -

# As at 31 March 2011, the remuneration of erstwhile Managing Director for the period from 19 December 2010 till the date of his resignation, being in excess of limits prescribed under the Companies Act, 1956, was subject to requisite approvals of the shareholders and the Central Government, pending which the same was considered as recoverable from director. Subsequent to the year-end, the Company has received the approval of Central Government and the shareholders and accordingly, there is no amount recoverable in respect thereof.

Fame India Limited

Annexure XXV Statement of consolidated secured loans, as restated (Continued)

198

(Rupees in lakhs)

Particulars As at 31 March 2011 As at 31 March 2010

As at 31 March 2009

As at 31 March 2008 As at 31 March 2007

Term loans from banks 2,166.66 5,100.00 4,408.59 1,166.65 1,369.21 Bank overdraft 1,122.36 938.42 257.51 876.18 941.59

Vehicle finance loans from banks - - - 0.20 4.55

Total 3,289.02 6,038.42 4,666.10 2,043.03 2,315.35

The security given for the above loans as on 31 March 2011 is as follows

Term loans from banks: Name of the bank/ institution


Rate of interest Prepayment terms Penalty/ interest Repayment terms Securities offered

Axis Bank Limited

750.00 BPLR – 2.75%, at present 13.00% p.a. payable at monthly rests

The Company shall have no right to repay the outstanding financial assistance in full or in part for the first two years from the date of disbursement. The pre-payment premium to be decided by the bank in case of pre-payment is within two years. Any pre-payment after the first two years will entail pre-payment penalty of 1% p.a on the outstanding principal amount.

Penal Interest at the rate of 2%

Five years (including moratorium period of six months from the date of 1st disbursement). Repayable in 18 quarterly installments of Rs. 100 lakhs each after moratorium period of six months from the date of first disbursement

First pari-passu charge on the movable assets acquired out of the Bank’s finance installed at the following locations Bangalore, Ghatkopar, Vashi, Thane, Chandigarh, Panchkula, Bharuch, Dhanbad, Vadodara, Pune, Kalyan and Ludhiana

Escrow of entire cash flows on pari passu basis arising of the projects funded by the bank.

Escrow of entire cash flows on pari passu basis arising of Fame theatres at Thakur Fame (Dahisar), Anand, Thakur cinema and Thakur movie (Kandivali), Southcity (Kolkata) and Lido Bangalore)

Equitable mortgage on pari passu basis of immovable property at Anand multiplex

Personal guarantee of promoter directors (Mr. Shravan Shroff and Mr. Shyam Shroff).

Fame India Limited


199

Name of the bank/ institution


Rate of interest Prepayment terms Penalty/ interest Repayment terms Securities offered

IDBI Bank Limited

1,416.66 IDBI bench mark prime less 125 bps. Disbursement made pending creation of final security shall carry additional interest @ 1% p.a. (plus interest tax if applicable after three months from the date of first disbursement till creation of security

The Company shall not prepay the outstanding principal amounts of the loan in full or in part, before the due dates and except after obtaining the prior approval of the bank. In case the rate of interest levied on reset is not acceptable to the Company, the financial assistance may be prepaid, without payment of any prepayment premium, on the reset dates.

18 quarterly installments after moratorium of 6 months from date of first disbursement

Creation of first pari passu charge with other lenders Axis Bank Limited and Standard Chartered Bank by deposit of title deeds of immovable properties located at Fame-Anand multiplex at Old City Pulse Theatre, Near Hero Honda Showroom, Gujarat – 388001.

First charge by way of hypothecation of the Company’s entire movables (save and except book debts), including movable machinery, machinery spares, tools and accessories, present and future, in respect of the Company’s existing multiplexes at Fame South City, Fame Lido, Fame Dahisar, Fame Thakur, Fame Anand, Fame Inorbit, Fame Raghuleela, Fame Highland Park, Fame Akurdi, and new multiplexes at Bangalore, Ghatkopar, Vashi, Prabhat, Chandigarh, Panchkula, Bharuch, Dhanbad, Pune, Kalyan, Vadodara and Surat, subject to prior charges created and/or to be created in favour of the Company’s bankers on the Company’s stocks of raw material, semi-finished and finished goods, consumable stores and such other movables as may be agreed to by the bank for securing the borrowing for working capital requirements in the ordinary course of business

An irrevocable and unconditional personal guarantee from Mr. Shravan Shroff in favour of the bank

Escrow of entire cash flows arising out of existing multiplexes at South City – Kolkata, Lido-Bangalore, Fame Dahisar, Fame Thakur-Kandivali on pari-passu basis with Axis Bank and Standard Chartered Bank

Fame India Limited


200

Escrow of entire cash flows arising out of new multiplexes at Bangalore, Ghatkopar, Vashi, Prabhat, Chandigarh, Panchkula, Bharuch, Dhanbad, Pune, Kalyan, Vadodara and Surat on pari-passu basis with Axis Bank and Standard Chartered Bank

Total 2,166.66

Note: Subsequent to the year-end, the credit facility from Axis Bank Limited has been revised pursuant to which the outstanding loan from IDBI Bank Limited has been taken over by Axis Bank Limited and personal guarantees issued by the erstwhile promoter directors of the Company have been released and replaced with corporate guarantee of INOX. The sanctioned limit under the revised term loan facility has been enhanced to Rs. 2,566.00 lakhs including the run down liability as on the date of loan agreements.

Fame India Limited


201

Bank overdraft Name of the bank/ institution Balance outstanding as at

31 March 2011 (Rupees in lakhs)

Sanction limits

Rate of Interest Securities Offered

Axis Bank Limited – Overdraft * 369.03 510.00 11.10% Fixed deposits

Axis Bank Limited – Cash Credit / Overdraft #

493.09 300.00 13.75% First charge on movable fixed / current assets of our Company both present and future Personal guarantee of promoter directors (Mr. Shravan Shroff and Mr. Shyam Shroff).

Standard Chartered Bank –Overdraft* - 350.00 12.75% First charge on all movable fixed assets of Fame Malad, Fame Kolkata and Fame Nashik First charge on all current assets of Fame Malad, Fame Kolkata, Fame Nashik Second charge on all movable fixed assets of Fame Kandivali and Fame Pune

IDBI Bank – Overdraft * 260.24 675.00 8.40% Fixed deposits

Total 1,122.36

Note: Subsequent to the year-end, * these credit facilities have been discontinued # the credit facility from Axis Bank Limited has been revised pursuant to which the personal guarantees issued by the erstwhile promoter directors of the Company have been released and replaced with corporate guarantee of INOX. The sanctioned limit of Cash Credit / Overdraft facility has been enhanced to Rs. 650.00 lakhs.

Fame India Limited

Annexure XXVI Statement of consolidated unsecured loans, as restated

202


31 March 2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

-- Inter Corporate Deposit (ICD) 1,200.65 -- FCCBs 5,358.00 5,416.80 6,623.50 5,196.10 8,718.00 -- Others - - - - 25.00

Total 6,558.65 5,416.80 6,623.50 5,196.10 8,743.00 Of the above, unsecured loans from Promoters / Group Companies of Promoters include:

-- From INOX 1,200.65 - - - -

The details of terms and conditions of the above loans as at 31 March 2011 is as follows: Inter Corporate Deposit:

(Rupees in lakhs)

Name of the Company Balance outstanding as at 31 March 2011

Rate of interest

Repayment terms

Inox Leisure Limited 1,200.65 11.00% Repayable after 3 years from the date of disbursement

Total 1,200.65

FCCBs:

(Rupees in lakhs)

Particulars Balance outstanding as at

31 March 2011 (Rupees in lakhs)

Rate of interest

Repayment terms

8,000 Zero-coupon Series A Foreign Currency Convertible Bonds (‘Bonds’) of US $ 1,000 per bond

3,572.00 - The Bonds are convertible at the option of the bond holders into newly issued, ordinary equity shares of par value of Rs. 10 per share (“Shares”), at an initial conversion price of Rs. 90 per share. Unless previously converted, redeemed or repurchased and cancelled, the Series A Bonds were redeemable on 22 April 2011 at 137.01 percent of their principal amount representing a gross yield to maturity of 6.5%.

4,000 0.5% per annum Series B Foreign Currency Convertible Bonds of US $ 1,000 per bond

1,786.00 0.50 % The Bonds are convertible at the option of the bond holders into newly issued, ordinary equity shares of par value of Rs. 10 per share (“Shares”), at an initial conversion price of Rs. 107 per share. Unless previously converted, redeemed or repurchased and cancelled, the Series B Bonds were redeemable on 22 April 2011 at 140.69 percent of their principal amount representing a gross yield to maturity of 7.5%.

5,358.00

Fame India Limited

Annexure XXVI Statement of consolidated unsecured loans, as restated

203

(Continued) Note: Subsequent to the year-end, the Company has availed an unsecured short term loan of Rs. 7,000.00 lakhs from ING Vysya Bank, the terms of which provide for a bullet repayment within 15 days from any future offering of equity (follow on or rights issue), debenture, preference or any other equity linked instruments by the Company or one year from date of disbursement, whichever is earlier. Subsequent to the above, the Company has redeemed the outstanding FCCBs in September 2011. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations in respect of the FCCBs. (For details, refer Annexure XXII, note 6, under the head ‘events subsequent to 31 March 2011’)

Fame India Limited

Annexure XXVII Statement of consolidated investments, as restated

204


31 March 2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

Unquoted NSCs 18.68 42.68 134.30 129.60 124.00 Units in mutual funds 10.42 166.20 - 557.45 377.54

Total 29.10 208.88 134.30 687.05 501.54

Fame India Limited

Annexure XXVIII Statement of consolidated sundry debtors, as restated

205

(Rupees in lakhs)

Age-wise breakup As at 31 March

2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

Debtors exceeding six months 269.06 76.61 253.55 137.28 140.14

Others 581.62 639.63 478.98 566.54 427.13

Less: Provision for doubtful debts (57.92) (14.51) (106.56) (86.14) (34.29)

Total 792.76 701.73 625.97 617.68 532.98 There are no debts due from Directors, Promoters and Group Companies of Promoters*

* The list of persons / entities classified as ‘Promoters’ and “Group Companies of Promoters” has been determined by the Management and relied upon by auditors. The auditors have not performed any procedures to determine whether this list is accurate or complete. (Also refer Annexure XXIV - Statement of disclosure as required by AS 18 – Related Party Relationships)

Fame India Limited

Annexure XXIX Statement of consolidated loans and advances, as restated

206

(Rupees in lakhs)


As at 31 March 2010

As at 31 March 2009

As at 31 March 2008

As at 31 March 2007

Considered good Advance to producers 3.95 24.16 54.94 149.87 538.39 Advance to distributors 93.67 178.93 54.40 197.47 107.62 Deposits * 3,765.42 3,882.97 4,010.89 3,989.54 3,052.67 Advances recoverable in cash or in kind or for value to be received 1,126.54 2,231.81 1,584.68 1,323.87 480.09 Accrued interest on fixed deposits and NSCs 59.85 65.98 98.04 137.38 106.20

Advance tax and tax deducted at source (net of provision for Income-tax and FBT) 423.82 406.41 328.74 216.51 461.74 Considered doubtful Advance to producers 31.04 16.59 45.91 44.37 44.79 Advances to distributors 2.91 2.91 2.63 2.63 5.88 Advances recoverable in cash or in kind or for value to be received - - 26.34 0.29 1.76 Less: Provision for doubtful advances (33.94) (19.51) (74.88) (47.29) (52.42) Total 5,473.25 6,790.26 6,131.70 6,014.66 4,746.72

Of the above, dues from Directors, persons related to Directors, Promoters Group Companies of Promoters include ** Advances recoverable in cash or in kind or for value to be received -- Shravan Shroff # 3.49 - - - -

* The Company may be subjected to forfeiture of deposit of Rs. 116.74 lakhs paid for one of its multiplexes in case of failure to enter into a formal lease deed between the parties ** The list of persons / entities classified as ‘Promoters’ and “Group Companies of Promoters” has been determined by the Management and relied upon by auditors. The auditors have not performed any procedures to determine whether this list is accurate or complete. (Also refer Annexure VII - Statement of disclosure as required by AS 18 – Related Party Relationships). # As at 31 March 2011, the remuneration of erstwhile Managing Director (with effect from 19 December 2010 till the date of his resignation) being in excess of limits prescribed under the Companies Act, 1956, was subject to requisite approvals of the shareholders and the Central Government, pending which the same was recorded as advance recoverable in cash or kind. Subsequent to the year-end, the Company has received the approval of Central Government and the approval of shareholders and accordingly, there is no amount recoverable in respect thereof.

Fame India Limited Annexure XXX

Statement of consolidated other income, as restated

207

(Rupees in lakhs)


31 March 2011

31 March 2010

31 March 2009

31 March 2008

31 March 2007

Recurring / Non

recurring Related to business activities Interest on National Saving Certificates (NSCs) 4.34 17.25 15.63 16.27 12.00 Recurring

Miscellaneous income 118.54 71.87 58.94 62.83 61.67 Recurring

Not related to business activities

Dividend from non-trade investments 8.13 14.16 5.45 23.37 8.41 Non Recurring

Interest on fixed deposits 97.66 116.99 158.47 152.81 136.14 Non Recurring

Interest - Others 0.61 0.20 1.24 131.78 418.72 Non Recurring Profit on sale of fixed assets, net - - - 0.16 Non Recurring

Profit on sale of investments 2.34 - 0.28 3.58 0.16 Non Recurring

Net exchange gain (including gain / loss on cancellation of forward contract) - - 0.19 102.14 223.82 Non Recurring

Provision for doubtful debts / bad debts/ advances / expenses no longer required written back 9.71 17.70 0.06 25.98 5.24 Non Recurring 241.33 238.17 240.26 518.76 866.32

Notes: 1) The classification of Other Income as recurring / non-recurring is based on the current operations

and the business activities of the Group as determined by the management

Fame India Limited Annexure XXXI

Segment information, as restated

208

The business of the Group is divided into three segments, theatrical exhibition, film distribution and others which comprise programming arrangements, management contracts and productions of movies. Segments have been identified taking into account the nature of the business, the differing risks and returns, the organisation structure and internal reporting system. Accordingly, the Company has disclosed business segment as the primary segment.

The Company caters only to the domestic market and risks and rewards being similar across the market, there are no reportable Geographic segments.

The accounting policies adopted for segment reporting are in line with the accounting policies adopted by the Company for the purpose of these financial statements, except in respect of inter-segment revenues, which have been accounted on the basis of prevailing market rates.

Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each segment as also amounts allocable on a reasonable basis.

Income and expenses which are not directly attributable to any business segments are shown as unallocated corporate income / expenses.

Assets and liabilities that cannot be allocated between the segments are shown as a part of unallocated corporate assets and liabilities respectively.

Fame India Limited

Annexure XXXI Segment Information, as restated (Continued)

209

(Rupees in Lakhs) For the year ended 31 March 2011 For the year ended 31 March 2010 For the year ended 31 March 2009 For the year ended 31 March 2008 For the year ended 31 March 2007 Theatrical Distribution Others Total Theatrical Distribution Others Total Theatrical Distribution Others Total Theatrical Distribution Others Total Theatrical Distribution Others Total

Revenue External revenue 16,395.69 471.49 167.71 17,034.89 15,395.09 1,762.48 191.98 17,349.55 11,956.08 1,503.89 279.91 13,739.88 8,590.35 621.26 230.11 9,441.72 5,998.39 2,749.99 183.35 8,931.73 Inter segmental sales - 15.20 - 15.20 - 39.70 - 39.70 - 76.43 - 76.43 - 52.19 - 52.19 - 228.49 - 228.49 Total segment revenue 16,395.69 486.69 167.71 17,050.09 15,395.09 1,802.18 191.98 17,389.25 11,956.08 1,580.32 279.91 13,816.31 8,590.35 673.45 230.11 9,493.91 5,998.39 2,978.48 183.35 9,160.22 Less: Inter segmental sales - 15.20 - 15.20 - 39.70 - 39.70 - 76.43 - 76.43 - 52.19 - 52.19 - 228.49 - 228.49 Net revenue 16,395.69 471.49 167.71 17,034.89 15,395.09 1,762.48 191.98 17,349.55 11,956.08 1,503.89 279.91 13,739.88 8,590.35 621.26 230.11 9,441.72 5,998.39 2,749.99 183.35 8,931.73 Other Income 121.66 4.02 0.36 126.04 90.92 15.20 0.91 107.03 49.14 26.66 - 75.80 86.15 31.75 18.28 136.18 36.04 28.57 7.74 72.35 Total segment revenue 16,517.35 475.51 168.07 17,160.93 15,486.01 1,777.68 192.89 17,456.58 12,005.22 1,530.55 279.91 13,815.68 8,676.50 653.01 248.39 9,577.90 6,034.43 2,778.56 191.09 9,004.08 Segment result 479.79 (152.29) 82.16 409.66 737.88 (111.06) 87.60 714.42 624.92 28.07 79.37 732.36 1,223.17 40.11 93.77 1,357.05 1,103.15 (307.88) 23.37 818.64 Dividend income (includes Interest) 108.12 131.14 163.92 951.51 555.54 Other un-allocable expenditure - - - - - Net of un-allocable Income (432.98) (343.54) (388.36) (823.75) 41.23 Profit / (loss) before interest and tax 84.80 502.02 507.92 1,484.81 1,415.41 Interest expense (507.31) (582.38) (395.32) (221.50) (311.32) Income tax -- Current tax (including previous year) (1.65) (19.14) (106.87) (162.13) (87.22) -- Fringe benefits tax - - (25.05) (28.68) (15.12) -- Deferred tax 10.62 (21.08) 4.01 53.24 5.49 -- MAT credit entitlement 1.37 - - 118.99 62.72 Net Profit / (loss) for the period / year, as restated (412.17) (120.58) (15.31) 1,244.73 1,069.96 Other information Segmental assets (refer note below) 19,337.13 116.49 679.40 20,133.02 21,165.84 340.34 641.58 22,147.76 20,994.15 537.58 917.50 22,449.23 15,442.88 517.40 819.33 16,779.61 7,488.49 847.43 763.99 9,099.91 Unallocated corporate assets 2,740.67 3,619.42 3,094.84 3,501.66 10,100.83 Total assets 22,873.69 25,767.18 25,544.07 20,281.27 19,200.74 Segmental liabilities 3,238.05 99.83 210.18 3,548.06 3,459.27 369.23 100.55 3,929.05 3,651.10 383.90 136.37 4,171.37 2,203.02 218.34 128.92 2,550.28 1,396.84 352.28 88.97 1,838.09 Un-allocated corporate liabilities 2,654.99 2,293.79 1,598.54 841.17 731.46 Total liabilities 6,203.05 6,222.84 5,769.91 3,391.45 2,569.55 Capital expenditure 906.34 1,602.10 6,755.41 5,210.76 4,819.86 Depreciation / amortization 1,698.64 1,765.76 1,297.02 726.86 893.60 Non-cash expenses other than depreciation 99.56 172.05 136.54 62.20 - Total assets exclude : Advance tax and tax deducted at source (including FBT) 497.77 440.24 362.22 249.97 461.47 Deferred tax asset 35.40 24.78 45.86 41.85 - Total liabilities exclude: Secured loans 3,289.02 6,038.42 4,666.10 2,043.03 2,315.35 Unsecured loans 6,558.65 5,416.80 6,623.50 5,196.10 8,743.00 Deferred tax liability - - - - 11.39 FCMITDA - 64.37 (27.16) 229.32 - Provision for tax (including FBT) 12.38 18.94 14.08 94.24 254.06

Fame India Limited

Annexure XXXII Statement of contingent liabilities, as restated

210

A) Where quantifiable:

(Rupees in Lakhs)


2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

Claims against the group not acknowledged as debts 345.26 124.53 185.53 239.17 78.39

The Group will be liable to pay the total entertainment tax that is currently exempted for every property that ceases operations prior to completing the minimum period of operations and / or complying with the rules prescribed in the multiplex policy of the relevant State. 6,906.76 5,978.24 4,122.75 3,150.54 1,971.48

Bank guarantees in favour of various Government authorities 51.53 88.36 253.36 232.81 22.81

The Company may incur additional cost towards electricity from 1 June 2007 to 31 March 2010 pursuant to the increase in the tariff in case the appeal made with Maharashtra Electricity Regulatory Commission ‘MERC’ by the Company through the Multiplex Association of India is rejected and the case filed in the Supreme Court by one of the electricity supplier against the order of the Appellate Tribunal for Electricity, dated 19 January 2009, for change in category, in favor of the appeal made by the Multiplex Association of India is passed in favor of the electricity supplier. The Company has paid the whole amount to the respective companies under protest. 389.83 389.83 260.06 92.92 -

Fame India Limited

Annexure XXXII Statement of contingent liabilities, as restated (Continued)

211

A) Where quantifiable (Continued):


31 March 2011

As at 31 March

2010

As at 31 March

2009

As at 31 March

2008

As at 31 March

2007

As per the amendment made by the Finance Act 2010, renting of immovable property is defined as a taxable service with retrospective effect from 1 June 2007. Accordingly, during the year ended 31 March 2010, the Group accounted for Rs. 479.74 lakhs (including share of joint venture Rs. 16.39 lakhs) being service tax on lease rentals for the period upto 31 March 2010 and continued to provide for service tax on lease rentals up to the quarter ending 30 September 2010. This levy has been challenged by the Company by filing writ petitions with various Honorable High Courts and some of the Honorable High Courts have granted a stay against the levy of service tax in respect of immovable properties of the Company situated within their respective jurisdictions. Further, based on a legal opinion obtained in the quarter ended 31 December 2010, the levy of service tax on renting of immovable property cannot be said to be final. On the basis of the same, the Group reversed the entire service tax liability aggregating to Rs. 593.28 lakhs accrued till 30 September 2010. Further, the Company has not provided for service tax liability aggregating to Rs. 144.16 lakhs pertaining to the period from 1 October 2010 to 31 March 2011. (including share of joint venture Rs. Nil) * 737.44 449.32 213.46 44.35 -

*Subsequent to the year-end, the Honourable Bombay High Court has upheld the levy vide judgment dated 4 August 2011, operation of which has been stayed until 30 September 2011 and the Company is considering appropriate legal action in this regard.

Fame India Limited

Annexure XXXII Statement of contingent liabilities, as restated (Continued)

212

B) Where not quantifiable:

1 The Maharashtra Value Added Tax Act, 2003 lists the scheduled entry, interalia, "Copy right" w.e.f. 1.4.2005. Pursuant to this enactment/scheduled entry, the entertainment industry has made a written representation to the Finance Minister, Maharashtra for deletion of the scheduled entry from the Act. Similar representation was made by the industry in some other states, as a result of which the Act was modified to delete this scheduled entry. The industry is awaiting a positive response from the Ministry of Finance in respect of the assurance given. Accordingly, no provision has been made in the books of accounts of FMPL. However based on the trade circular issued by Commission of Sales Tax dated 6 April 2007, FMPL has made a provision in the books of accounts. However the Government of Maharashtra vide notification No. VAT 1511/ CR 54(2)/ Taxation-1 dated 27.04.2011 has amended the earlier notification No. VAT-1505/CR-114/ Taxation-1 dated 01.06.2005 to exclude the copyrights for distribution and exhibition of cinematographic films in theatres and cinema halls from the definition of “Copyright” under the Maharashtra Value Added Tax Act.

2 FMPL has received a show cause cum demand notice dated 5 December 2005 for custom duty payable by them on import of cinematographic films under Rule 2(2), Rule 7(A) and Rule 9(2) of the Customs Valuation Rule, 1988. Nothing has been deposited with the authorities as the amount is not quantified by the authorities. However, on 28 September 2006, FMPL has filed an appeal against the Commissioner's Order to the Appellate Tribunal under Section 129-A of the Customs Act, 1962 and the same is pending hearing.

213

Annexure XXXIII Statement of consolidated capitalization, as restated

(Rupees in lakhs)

Particulars Pre-issue as at Adjusted for

31 March 2011 Post-Issue

Borrowings

Short term debts 7,547.02 [ · ]

Long term debts 2,300.65 [ · ]

Total borrowings 9,847.67 [ · ]

Shareholders’ funds

Share capital including preference share capital 3,494.70 [ · ] Reserves 2,931.39 [ · ]

Profit and loss account 917.67 [ · ]

Total shareholders’ funds 7,343.76 [ · ]

Long term debt / equity ratio 0.31 : 1 [ · ]

1 Debts maturing within the next one year from 31 March 2011 are considered as short-term debts ,

including FCCBs aggregating to Rs. 5,358.00 lakhs. Subsequent to the year-end, the Company has redeemed the outstanding bonds in September 2011. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations in respect of the FCCBs. (For details, refer annexure II, note B-6, under the head ‘events subsequent to 31 March 2011’).

2 The post-issue figures will be computed only after allotment of shares in the rights issue.

3. The figures included above are as per the statement of consolidated restated assets and liabilities and statement of consolidated restated profit and loss.

214

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

You should read the following discussion of our financial condition and results of operations together with our consolidated restated financial information for Fiscal Year 2009, Fiscal Year 2010 and Fiscal Year2011 including the notes thereto and the reports thereon, which are included in this Draft Letter of Offer. Our consolidated restated financial information are prepared in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act and the SEBI Regulations. You should also read the sections titled “Risk Factors” and “Forward-Looking Statements” beginning on page IX and page VIII, respectively, of this Draft Letter of Offer which discuss a number of factors and contingencies that could impact our financial condition and results of operations. Our fiscal year ends on March 31 and all references to Fiscal Year refer to the twelve month period ended on March 31 of the indicated year. OVERVIEW We are engaged in the business of operating and managing a chain of multiplexes in India. In addition to our primary business of multiplex operation we are also involved in the business of distribution through our subsidiary Fame Motion Pictures Limited (‘FMPL’). In our multiplex business we have a wide presence across 13 cities with 24 multiplexes and (3) three single screens aggregating to 102 screens and 28,518 seats. On February 3, 2010, Inox Leisure Limited (“ILL”) acquired 43.28% of share capital of our Company under the terms of the Share Purchase Agreement followed by acquisition of additional Equity Shares to the extent of 7.21% from open market on February 5, 2010. Pursuant to these acquisitions, ILL made an open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997 to the Equity Shareholders of our Company to acquire 8,231,759 Equity Shares of ` 10 each fully paid up. Post the conclusion of the open offer, ILL held 50.27% of the then issued and paid up equity share capital of our Company. Accordingly, our Company became a subsidiary of ILL with effect from January 6, 2011. Our Company has two wholly owned subsidiaries namely FMPL and Big Pictures Hospitality Services Private Limited (‘BPHSPL’). FMPL is engaged in the business of film distribution and BPHSPL is engaged in the food court business. Further, our Company has made investment in (2) two joint venture companies namely, Swanston Multiplex Cinemas Private Limited (‘SMCPL’) and Headstrong Films Private Limited (‘HFPL’), in each of which we hold 50% of the paid-up equity share capital. SMCPL is engaged in the business of operating multiplexes while HFPL is engaged in the business of film production and distribution. For Fiscal Year 2010 and Fiscal Year 2011 our total income was ` 17,587.72 lakhs and ` 17,276.23 lakhs respectively. For the same periods our net loss after tax was ` 120.57 lakhs and ` 412.17 lakhs respectively. FACTORS AFFECTING OUR RESULTS OF OPERATIONS Our financial condition and results of operations are affected by a number of factors, in particular the following: Ticket sales, food and beverage revenue and revenue from advertising and royalty Our total income is primarily affected by the number of patrons that visit our multiplexes and theaters, our ticket price, revenue generated from the sale of food and beverages and the amount we receive from those who advertise with us.

215

Ticket sales Ticket sale depends primarily upon the number of patrons that visit our multiplexes and theaters and the admission price per ticket. Both these factors are critical for optimising the profitability of our multiplexes and theaters. Pricing of a ticket depends on various factors such as location of the multiplex, month of the year, day of the week, show timing, etc. Food and beverages A part of our revenue is generated from the sale of food and beverages in our multiplexes and theaters. We try to maximize our revenue from the sale of food and beverages by increasing the number of transactions in the limited time our patrons have prior to the start of a film or during the interval of a film by increasing the average transaction size by offering attractive deals. We attempt to increase the number of transactions by installing adequate number of points of sale counters in our multiplexes / theaters. Advertisement and royalty

Revenue from advertising and royalty is generated from on-screen advertising, displays inside and outside the multiplexes and theaters, promotional kiosks, etc. While advertisement is not a big component of our total income, it is good for our profit margin because our margin of profit on the revenue generated from advertisement is high as the costs associated with the display of advertisements are almost negligible. Distributor’s share To be able to provide our services consistently it is imperative for us to have a steady supply of films. In addition, the quality of content also has a bearing on our ability to attract patrons. Distributor’s share towards exhibition is our largest head of expense. Distributors share is typically a percentage of the net box office collections of a movie and is based on various parameters including the number of weeks for which the film is exhibited, category of theater i.e. single screen or a multiplex and duration and language of the film. Generally, the distributor’s share of net collections reduces as the exhibition week progresses. Distributors’ share constituted 24.76 % of our total expenditure in Fiscal Year 2010 and 26.86 % in Fiscal Years 2011.

Changes in Market Conditions affecting the entertainment Sector Our financial results are driven by factors affecting demand in the entertainment sector. The key factor affecting demand in the entertainment sector is the condition of the Indian economy. Amongst other things, the condition of the Indian economy has a bearing on the disposable income of our patrons which drives ticket sales and sale of food and beverages which impacts the success of our overall business. Condition of the economy also affects our revenue from advertisement and royalty as the marketing budget of corporates declines in bad economic environment. Entertainment Tax Entertainment tax represents the tax payable on the box office collections. This usually is a key component of cost, except in cases where the multiplex enjoys a concessional tax regime due to a tax exemption policy. The availability of entertainment tax exemptions affects our financial results. Many states in India have, in order to encourage the growth of the entertainment industry, announced an entertainment tax policy, which grants exemptions to multiplexes subject to fulfillment of certain conditions. Certain of our multiplexes currently enjoy an entertainment tax exemption. Such exemption, where available improve our profitability.

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Competition Multiplexes and theaters operated by us compete for audiences with other multiplexes and theaters based on geographical location. In particular we compete with the other domestic multiplex chains i.e. Big Cinemas, PVR, Inox, Fun Republic, and Cinemax. Our success is dependent on our ability to compete in areas such as ticket prices, content of the film, quality of service, location of multiplexes / theaters and brand recognition, among others. We also have to compete with any new multiplex or theater that commences operations in the cities in which we operate. Further, we face competition from other forms of out-of-home entertainment including sporting events, concerts and live theatre. In future, we may also face competition from global entertainment companies who may set up shop in India. Our ability to respond to the expected growth in the number of multiplexes and theaters, and the consequent competition in the entertainment industry, will be critical to our results of operations. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Background Fame India Limited (‘FIL’ or ‘the Company’) was incorporated as a private limited company on October 26, 1999. Pursuant to a special resolution passed by the Company at its Extra-ordinary General Meeting held on December 19, 2004, the Company converted itself into a public limited company. On January 25, 2008, the Company changed its name from Shringar Cinemas Limited to Fame India Limited pursuant to the approval from Government of India, Ministry of Corporate Affairs. The Company’s principal activity is exhibition of films in India including owning / managing multiplexes. The Company was a subsidiary of Fame Motion Pictures Ltd. (‘FMPL’) (formerly known as Shringar Films Limited (‘SFL’)), which held 51% of its equity share capital. FMPL is mainly engaged in distribution and programming of films. On March 25, 2004, FMPL sold its shareholding in the Company to South-Yarra Holdings (‘SYH’), a partnership firm in which two of the then directors were partners. Accordingly, the Company ceased to be a subsidiary company of FMPL effective that date. On March 27, 2004, the Company purchased 999,900 equity shares (i.e. 100% of the paid-up equity share capital) of FMPL from its erstwhile shareholders. Consequently, FMPL became a 100% subsidiary of the Company. During the year ended March 31, 2006, the Company issued 8,150,180 equity shares of ` 10 each at a premium of ` 43 per share pursuant to its Initial Public Offering (‘IPO’) on April 22, 2005. During the year ended March 31, 2010, Inox Leisure Limited (‘INOX’) acquired from the partners of SYH 43.28% of the share capital of the Company, followed by acquisition of additional equity shares of the Company by INOX to the extent of 7.21% from Open Market. On December 16, 2010, an open offer was made by INOX along with Gujarat Fluorochemicals Limited (the “Persons Acting in Concert” or “PAC”) to the equity shareholders for acquisition of additional 8,231,759 equity shares at ` 51 per equity share for cash representing 20.25% of the equity share capital of the Company. Pursuant to the open offer, INOX acquired 1,075 equity shares of the Company. Post the open-offer, INOX holds 50.27% of the paid-up share capital of the Company. Accordingly, the Company is now a subsidiary of INOX with effect from January 6, 2011. The Company also held 50.01% of the paid-up equity share capital of Swanston Multiplex Cinemas Private Limited (‘SMCPL’), which is primarily engaged in operating a multiplex. Pursuant to the shareholders’ agreement, the Company on August 31, 2005 transferred 0.01% holding to Reliance MediaWorks Limited (formerly known as Adlabs Films Limited). Consequently, SMCPL ceased to be a subsidiary of the Company effective that date. On March 8, 2006, the Company purchased 10,000 equity shares (i.e. 100% of the paid-up equity share

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capital) of Big Pictures Hospitality Services Private Limited (‘Big Pictures’). Big Pictures is in the business of management of food courts and malls. On November 3, 2008, the Company purchased 5,000 equity shares (i.e. 50% of the paid-up equity share capital) of Headstrong Films Private Limited (‘HFPL’). HFPL is primarily engaged in production and distribution of films. Basis of preparation of financial statements The financial statements are prepared and presented under the historical cost convention, on the accrual basis of accounting, and in accordance with the provisions of the Companies Act, 1956 (‘the Act’) and the accounting principles generally accepted in India (‘Indian GAAP’) and comply with the Accounting Standards (‘AS’) as notified in the Companies (Accounting Standards) Rules, 2006, to the extent applicable. Going Concern As at March 31, 2011, the Company had term loans of ` 1,066.67 lakhs due for repayment within the next twelve months. Further, an amount of ` 8,240.01 lakhs (worth face value of USD 13 million and accrued interest as per the exchange rate as at March 31, 2011) in accordance with the terms and conditions of the Foreign Currency Convertible Bonds (‘FCCBs’) would have become payable in April 2011. Subsequent to the year-end, the Company has taken a short term unsecured loan from ING Vysya Bank for an amount of ` 7,000.00 lakhs and redeemed the outstanding FCCBs in September 2011. Accordingly, the Bonds stand fully discharged and the Company does not have any further obligations towards the Bonds. The Board of Directors at their meeting held on April 19, 2011, have accorded consent to issue equity shares on rights basis to the existing equity shareholders of the Company up to ` 9,000 lakhs. Based on the above, and management projections for the future, as also the financial strength and management support of INOX, the Company continues to adopt the going concern basis in preparing the financial statements. Use of estimates The preparation of financial statements in accordance with generally accepted accounting principles (‘GAAP’) in India requires that management makes estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of relevant facts and circumstances as at the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. Fixed assets, intangible assets, Capital work in progress and depreciation / amortization Fixed assets, intangible assets and Capital work-in-progress (‘CWIP’) Fixed assets are stated at cost of acquisition less accumulated depreciation / amortisation and impairment loss, if any. The cost of fixed assets includes freight, duties, taxes (to the extent not recoverable from tax authorities) and any directly attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs directly attributable to acquisition or construction of qualifying fixed assets are capitalised. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost of fixed assets not ready for their intended use before such date are disclosed under Capital Work-in-Progress. Capital work-in-progress includes estimates of work completed, as certified by management. In respect of accounting period commencing on or after December 7, 2006, and ending on or before

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March 31, 2011, consequent to the insertion of para 46 of AS-11 ‘The Effects of Changes in Foreign Exchange Rates’, notified under the Companies (Accounting Standards) Rules, 2006, (as more fully explained in Schedule 2.10), the cost of depreciable capital assets includes foreign exchange differences arising on translation of long term foreign currency monetary items as at the balance sheet date in so far as they relate to the acquisition of such assets. Depreciation/amortization Depreciation on fixed assets specific to multiplexes is provided pro-rata to the period of use, under the straight line method, at the rates prescribed in Schedule XIV to the Act, except as stated below, which, in management’s opinion, reflect the estimated useful economic lives of these fixed assets. Useful lives being followed by the Company that are shorter than those prescribed under Schedule XIV to the Act are summarised as below:

Particulars Useful Life Computer software (purchased) 1 year Furniture and fixtures 10 Years Office equipment 10 years Air conditioners 10-21 years Theatrical equipment 14-15 years

Depreciation on other fixed assets is provided pro-rata to the period of use, using the written down value method at the rates prescribed in Schedule XIV to the Act, which in management’s opinion reflect the estimated useful economic lives of those fixed assets. Individual assets costing upto ` 5,000 are depreciated at the rate of 100% pro-rata over the period of one year. Leasehold improvements are amortised over the lower of the useful life of the asset and the lease term of the leasehold premises, on a straight-line basis, which represents the period over which the economic benefits of the assets are expected to be consumed by the lessee, as determined at the inception of the lease term. Assets retired from active use and held for disposal are written down to their estimated realisable value and are classified as ‘Assets held for sale’. Impairment of assets In accordance with AS 28 on ‘Impairment of Assets’ where there is an indication of impairment of the Company’s assets, the carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of an asset or the cash generating unit to which it belongs exceeds its recoverable amount. Impairment loss is recognised in the profit and loss account, where applicable. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is re-assessed and the asset is reflected at the recoverable amount subject to a maximum of the depreciated historical cost. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life.

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Investments Long-term investments are carried at cost. Provision is made when there is a decline, other than temporary, in the carrying value of such investments, determined separately for each investment, and the resultant reduction in the carrying amount is charged to the profit and loss account. Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each investment. Profit or loss on sale of investments is determined on the basis of weighted average carrying amount of investments disposed off. Revenue recognition Multiplex operations There are weekly arrangements with distributors for exhibition of films at the multiplexes operated by the Company. Revenue from theatrical exhibition is recognised on the date of exhibition of the films and comprises proceeds from sales of tickets, net of discounts. As the Company is the primary obligor with respect to exhibition activities, the share of distributors and the joint-venture investors in these proceeds is disclosed as exhibition costs. Revenue from food and beverage sales is recognised at the point of sale at the counter. Revenue from advertisements and royalty is recognised on the date of the exhibition of the advertisement / event or over the period of the contract, as applicable. Revenue from management of multiplexes and from facilities within the multiplexes is recognised on an accrual basis as per the contractual arrangement entered into with the multiplex and facilities providers. Programming The Company enters into contracts with theatre owners for programming film exhibition at these theatres for a contracted period. The Company also enters into weekly arrangements with distributors for exhibition of films in these theatres. Revenue from programming is recognised on the date of exhibition of the films and comprises proceeds from sale of tickets, net of taxes and theatre-owner’s share. As the Company is the primary obligor with respect to the programming activities, the shares of distributors and joint venture investors (joint control does not exist in any of the joint ventures) in these proceeds are disclosed as programming costs. Others Dividend income is recognised when the unconditional right to receive payment is established. Income from interest on deposits, loans and interest-bearing securities is recognised on time proportion basis. Employee benefits Short-term employee benefits All employee benefits payable wholly within twelve months of rendering the services are classified as

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short-term employee benefits. These benefits include compensated absences such as paid annual leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is charged to the profit and loss account in the period in which such services are rendered. Post-employment benefits Defined contribution plans The Company’s provident fund contribution paid / payable under the recognised provident fund scheme and the employees’ state insurance contribution is recognised as an expense in the profit and loss account during the period in which the employee renders the related service. Defined benefit plans The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods. These benefits are discounted to determine its present value, and the fair value of any plan assets is deducted therefrom. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation at each balance sheet date by an independent actuary, using the Projected Unit Credit Method, which recognises each period of service as giving rise to one additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligations are measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligations under the defined benefit plan are based on the market yields on government bonds as at the balance sheet date. All actuarial gains and losses arising during the year are recognised immediately in the profit and loss account. Other long-term employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defined benefit obligations at the balance sheet date based on an actuarial valuation by an independent actuary using the Projected Unit Credit Method. The discount rates used for determining the present value of the obligations under the defined benefit plan are based on the market yields on government bonds as at the balance sheet date. Inventories Inventories of food and beverages are valued at the lower of cost and net realisable value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on the First-In, First-Out (‘FIFO’) basis. Foreign currency transactions Foreign currency transactions are recorded using the exchange rates prevailing on the date of the respective transactions. Exchange difference arising on foreign currency transactions, between the actual rate of settlement and the rate on the date of the transactions, is charged or credited to profit and loss account. The Central Government has vide its notification dated March 31, 2009 amended AS 11, ‘The Effects of Changes in Foreign Exchange Rates’, notified under the Companies (Accounting Standards) Rules, 2006, to the extent it relates to the recognition of losses or gains arising on restatement of long-term foreign

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currency monetary items in respect of accounting periods commencing on or after December 7, 2006 and ending on or before March 31, 2011. As stipulated in the notification, the Company has exercised the option to adopt the following policy irrevocably and retrospectively for accounting periods commencing from April 1, 2007. Long term monetary assets and liabilities, other than those which form part of the Company’s net investment in non-integral foreign operations, denominated in foreign currency as at the balance sheet date are translated at the exchange rate prevailing on the balance sheet date and the net exchange gain / loss on such conversion, if any, is: adjusted to the cost of the asset, where the long-term foreign currency monetary items relate to the acquisition of a depreciable capital asset (whether purchased within or outside India), and depreciated over the balance life of the assets and; accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ (FCMITDA) and amortised over the balance period of long-term monetary asset / liability but not beyond March 31, 2011, in cases other than those falling under (a) above. Other monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at the exchange rates prevailing on the balance sheet date and the overall net exchange gain or loss on such conversion, if any, is credited / charged to the profit and loss account. Non monetary assets are recorded at the rates prevailing on the date of the transactions. Taxation Tax expense comprises current tax and deferred tax charge or credit Current tax Provision for current tax is recognised in accordance with the provisions of the Income tax Act, 1961 and is made based on the tax liability after taking credit for tax allowances and exemptions. Minimum Alternative Tax (‘MAT’) credit is recognised only to the extent there is convincing evidence that the Company will pay normal income tax in excess of MAT during the specified period. MAT credit entitlement is reviewed as at each balance sheet date and written down to the extent there is no longer convincing evidence that the Company will pay normal income tax during the specified period. Deferred tax Deferred tax liability or asset is recognised for timing differences between the profits or losses offered for income taxes and profits / losses as per the financial statements. Deferred tax assets and liabilities and the corresponding deferred tax credit or charge are measured using the tax rates and tax laws that have been enacted or substantively enacted as at the balance sheet date. Deferred tax asset is recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax asset is recognised only if there is a virtual certainty of realisation of such asset. Deferred tax asset is reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain to be realised. Leases The lease term is the non-cancellable period for which the lessee has agreed to take on lease the asset together with any further periods for which the lessee has the option to continue the lease of the asset, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise.

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Assets taken on operating lease Lease rentals in respect of assets acquired on operating leases are charged-off to the profit and loss account on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern of the user’s benefit. Earnings per share (‘EPS’) Basic EPS is computed by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti-dilutive. The dilutive potential equity shares are deemed to be converted as of the beginning of the year, unless they have been issued at a later date. Employees’ Stock Option Scheme (‘ESOS’) In accordance with the Securities and Exchange Board of India (‘SEBI’) guidelines, the excess, if any, of the fair value of shares at the date of grant of the options under the ESOS over the exercise price is treated as employee compensation and amortised on a straight-line basis over the vesting period. Provisions and contingencies Provisions comprise liabilities of uncertain timing or amount. Provisions and loss contingencies arising from claims, litigation, assessment, fines, penalties, etc. are recognised when the Company has a present obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reasonably estimated. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. OVERVIEW OF INCOME AND EXPENDITURE The following descriptions set forth information with respect to key components of our income statement. Income • Revenue from operations: Revenue from operations represents revenue from distribution, revenue

from multiplex operation and programming revenue. Revenue from distribution is net of taxes and exhibitors share. Revenue from multiplex operation primarily comprises revenue from theatrical exhibition (i.e. ticket sales net of taxes paid/ payable and discounts), sale of food and beverage and advertisement and royalty revenue.

• Other income: Other income includes dividend from non-trade investments, interest received on fixed deposits, national saving certificates and miscellaneous income.

Expenditure • Direct costs: Direct costs include distribution cost, exhibition cost, programming cost and food

and beverages cost. Distribution cost includes producers share, share of joint venture partners and agents commission. Exhibition cost includes distributor’s share, share of joint venture partners and other exhibition related cost. Programming cost comprises of distributors share, supervision and print and publicity expenses.

• Personnel costs: Personnel costs include salaries, wages and bonus, outsourced personnel costs

and our Companies contribution to provident and other funds and staff welfare expenses.

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• Other administrative expenses: Other administrative expenses primarily includes rent and charges,

repairs and maintenance, electricity and water charges, advertisement and marketing rates and taxes, professional and consultancy fees, travelling and conveyance, security charges, insurance, auditors remuneration and other miscellaneous expenses.

• Depreciation / amortisation: Depreciation consists of depreciation on tangible fixed assets. Amortisation consists of depreciation on intangible fixed assets.

• Interest: Interest primarily includes interest on term loans and bank overdraft.

• Amortisation of Foreign Currency Monetary Item Translation Difference Account ('FCMITDA'):

Amortisation of FCMITDA consists of foreign exchange difference in accordance with AS11. RESULTS OF OPERATIONS The following table sets forth information with respect to our consolidated results of operations as a percentage to our total income for the Fiscal Years 2009, 2010 and 2011:

Fiscal Year2009 2010 2011

(` lakhs) % (` lakhs) % (` lakhs) % Income Revenue from operations -- Sales and service income 11,204.70 80.15 13,928.89 79.20 13,218.76 76.51 -- Sale of food and beverage 2,535.18 18.13 3,420.66 19.45 3,816.13 22.09 Other income 240.26 1.72 238.17 1.35 241.33 1.40 Total (A) 13,980.14 100 17,587.72 100 17,276.23 100 Expenditure Direct cost 5,399.55 38.62 7,242.02 41.18 6,508.82 37.68 Personnel cost 1,484.87 10.62 1,435.95 8.16 1,663.42 9.63 Other administrative expenses 5,334.51 38.16 6,706.05 38.13 7,320.55 42.37 Depreciation / amortisation 1,239.53 8.87 1,765.76 10.04 1,774.95 10.27 Interest 395.51 2.83 582.66 3.31 507.31 2.94 Amortisation of Foreign Currency Monetary Item Translation Difference Account ('FCMITDA')

13.58 0.10 (64.37) (0.37) (76.31) (0.44)

Total (B) 13,867.55 99.19 17,668.07 100.46 17,698.74 102.45 Restated net profit / (loss) before tax and extra-ordinary items (A-B)

112.59 0.81 (80.35) (0.46) (422.51) (2.45)

Provision for tax

-- Current tax 106.86 0.76 19.14 0.11 1.65

(0.01) -- Deferred tax charge / (credit) (4.01) (0.03) 21.08 0.12 (10.62) (0.06) -- Minimum Alternate Tax (‘MAT’) credit

- - - - (1.37) (0.01)

-- Fringe benefits tax 25.05 0.18 - - - Restated net profit/(loss) before extra-ordinary items

(15.31) (0.11) (120.57) (0.69) (412.17) (2.39)

Extra-ordinary items - - - - - Restated net profit/(loss) after adjustment and extra-ordinary items

(15.31) (0.11) (120.57) (0.69) (412.17) (2.39)

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Fiscal Year 2011 compared to Fiscal Year 2010 Revenue from operations. Our revenue from operations amounted to ` 17,034.89 lakhs in Fiscal Year 2011 compared to revenue from operations of ` 17,349.55 lakhs in Fiscal Year 2010 reflecting a marginal decrease of 1.85%. This decrease was on account of decrease in revenue from distribution and programming lines of businesses which was partially offset by an increase in revenue on account of full period impact that was reflected in Fiscal Year 2011 of 5 (five) new properties opened in Fiscal Year 2010. The revenue from theatrical exhibition (comprising revenue from ticket sales, sale of food and beverages and revenue from advertisement and royalty) grew to ` 16,395.69 lakhs in Fiscal Year 2011 compared to ` 15,395.09 lakhs in Fiscal Year 2010 on account of additional revenue earned in Fiscal Year 2011 on account of full period impact of the 5 (five) new properties opened in Fiscal Year 2010. The growth in sales from food and beverages was partly due to better realizations ‘per patron’. Growth in revenue from advertisement and royalty in Fiscal Year 2011 is on account of lower revenue generated in the Fiscal Year 2010 for the period from April to June 2009 due to non availability of films for exhibition during the strike called by the UPDF. Other income. Other income amounted to ` 241.33 lakhs in Fiscal Year 2011 compared to other income of ` 238.17 lakhs, in Fiscal Year 2010 reflecting a marginal increase of 1.33 %. Direct costs. Direct costs amounted to ` 6,508.82 lakhs in Fiscal Year 2011 compared to direct costs of ` 7,242.02 lakhs in Fiscal Year 2010 reflecting a decrease of 10.12 %. The decrease in direct costs was on account of lower revenue from film distribution and programming which resulted in corresponding lower share to the producer and distributor. The reduction in direct costs was partially offset by higher share to the distributor and increase in the cost of food and beverages on account of increase in revenue from ticket sales and sale of food and beverages respectively. Personnel costs. Personnel costs amounted to ` 1,663.42 lakhs in Fiscal Year 2011 compared to personnel costs of ` 1,435.95 lakhs in Fiscal Year 2010 reflecting an increase of 15.84% mainly due to the full period impact of increase in the number of staff supporting the new properties opened in Fiscal Year 2010 and general upward revision in the salaries of the employees. Other administrative expenses. Other administrative expenses amounted to ` 7,320.55 lakhs in Fiscal Year 2011 compared to other administrative expenses of ` 6,706.05 lakhs in Fiscal Year 2010 reflecting an increase of 9.16%. The increase in number of properties operated by our Company led to increase in other administrative expenses such as lease rentals, electricity charges, repairs and maintenance and such associated costs of running multiplexes and theaters. Depreciation/ amortisation. Depreciation / amortisation amounted to ` 1,774.95 lakhs in Fiscal Year 2011 compared to depreciation / amortization of ` 1,765.76 lakhs in Fiscal Year 2010 reflecting a marginal increase of 0.52%. Interest. Interest cost amounted to ` 507.31 lakhs in Fiscal Year 2011 compared to Interest cost of ` 582.66 lakhs in Fiscal Year 2010 reflecting a decrease of 12.93%. The decrease in interest was primarily on account of payment of term loan installments and lower utilization of bank overdrafts during the year. Adjusted net profit / (loss) before tax and extra-ordinary items. Due to the reasons discussed above, adjusted net loss before tax and extra ordinary items for Fiscal Year 2011 was ` 422.51 lakhs compared to adjusted net loss before tax and extra-ordinary items of ` 80.35 lakhs in Fiscal Year 2010. Provision for taxes. Provision for taxation in Fiscal Year 2011 amounted to a credit of ` 10.34 lakhs (which included a current tax provision of ` 1.65 lakhs and a deferred tax release of ` 10.62 lakhs and a credit of minimum alternate tax of `1.37 lakhs) as compared to provision for taxation in Fiscal Year 2010 amounting to ` 40.22 lakhs (which included a current tax provision of ` 19.14 lakhs, a deferred tax charge

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of ` 21.08 lakhs). Our tax provisions decreased in Fiscal Year 2011 primarily as a result of lower taxable profits and release of deferred tax. Restated net profit / (loss) after adjustment and extraordinary items. Due to the reasons discussed above, restated net loss after adjustment and extraordinary items for Fiscal Year 2011 was ` 412.17 lakhs as compared to restated net loss after adjustment and extraordinary items of ` 120.57 lakhs in Fiscal Year 2010. Fiscal Year 2010 compared to Fiscal Year 2009 Revenue from operations. Our revenue from operations amounted to ` 17,349.55 lakhs in Fiscal Year 2010 compared to revenue from operations of ` 13,739.88 lakhs in Fiscal Year 2009 reflecting an increase of 26.27%, primarily on account of full period impact that was reflected in Fiscal Year 2010 of 6 (six) new properties opened in Fiscal Year 2009. Additionally, 5 (five) new properties were also opened in Fiscal Year 2010, which contributed to the revenue from operations. This was in spite of the lower revenue generated in the period from April to June 2009 due to non availability of films for exhibition during the strike called by the UPDF. The revenue from theatrical exhibition grew to ` 15,395.09 lakhs in Fiscal Year 2010 compared to ` 11,956.08 lakhs in Fiscal Year 2009 on account of revenue earned by new properties, increase in the number of patrons and due to the release of high quality films such as Ajab Prem Ki Gazab Kahani, 2012, Avatar, 3 Idiots etc. The growth in sales from food and beverages was partly due to better realizations ‘per patron’. Other income. Other income amounted to ` 238.17 lakhs in Fiscal Year 2010 compared to other income of ` 240.26 lakhs, in Fiscal Year 2009 reflecting a decrease of 0.87 % primarily on account of reduction in the interest income on fixed deposits. Direct costs. Direct costs amounted to ` 7,242.02 lakhs in Fiscal Year 2010 compared to direct costs of ` 5,399.55 lakhs in Fiscal Year 2009 reflecting an increase of 34.12 %. The increase in number of properties operated by our Company in Fiscal Year 2010 led to this corresponding increase in direct costs such as distributor’s share and food and beverage cost. Additionally, the distributor’s share was revised following a settlement with the producers / distributors after the strike called by the UPDF which also increased our direct costs. Personnel costs. Personnel costs amounted to ` 1,435.95 lakhs in Fiscal Year 2010 compared to personnel costs of ` 1,484.87 lakhs in Fiscal Year 2009 reflecting a marginal reduction of 3.29% mainly due to rationalization of staffing and compensation, partially offset by increased number of staff supporting new properties. Other administrative expenses. Other administrative expenses amounted to ` 6,706.05 lakhs in Fiscal Year 2010 compared to other administrative expenses of ` 5,334.51 lakhs in Fiscal Year 2009 reflecting an increase of 25.71%. The increase in number of properties operated by our Company led to increase in other administrative expenses such as lease rentals, electricity charges, repairs and maintenance and such associated costs of running multiplexes and theaters. Depreciation/ amortisation. Depreciation / amortisation amounted to ` 1,765.76 lakhs in Fiscal Year 2010 compared to depreciation / amortization of ` 1,239.53 lakhs in Fiscal Year 2009 reflecting an increase of 42.45%. Our Company made certain additions amounting to ` 3,524.08 lakhs to tangible fixed assets resulting in increase in the depreciation / amortisation for the year. Interest. Interest cost amounted to ` 582.66 lakhs in Fiscal Year 2010 compared to Interest cost of ` 395.51 lakhs in Fiscal Year 2009 reflecting an increase of 47.32%. In Fiscal Year 2010, our Company took additional secured loans of ` 2,500 lakhs, which primarily resulted in this increase.

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Adjusted net profit / (loss) before tax and extra-ordinary items. Due to the reasons discussed above, adjusted net loss before tax and extra ordinary items for Fiscal Year 2010 was ` 80.35 lakhs compared to adjusted net profit before tax and extra-ordinary items of ` 112.59 lakhs in Fiscal Year 2009. Provision for taxes. Provision for taxation in Fiscal Year 2010 amounted to ` 40.22 lakhs (which included a current tax provision of ` 19.14 lakhs and a deferred tax charge of ` 21.08 lakhs) as compared to provision for taxation in Fiscal Year 2009 amounting to ` 127.90 lakhs (which included a current tax provision of ` 106.86 lakhs, a deferred tax release of ` 4.01 lakhs and fringe benefits tax provision of ` 25.05 lakhs). Our tax provisions decreased in Fiscal Year 2010 primarily as a result of lower current tax charge in view of lower taxable profits. Restated net profit / (loss) after adjustment and extraordinary items. Due to the reasons discussed above, restated net loss after adjustment and extraordinary items for Fiscal Year 2010 was ` 120.57 lakhs as compared to restated net loss after adjustment and extraordinary items of ` 15.31 lakhs in Fiscal Year 2009. LIQUIDITY AND CAPITAL RESOURCES Liquidity Our primary liquidity requirements are to finance our working capital needs and our capital expenditures. We finance working capital needs through cash from operations and short-term borrowings, if necessary. We require working capital to finance recurring expenditures, make necessary advances to suppliers and undertake the maintenance and upkeep of our properties. Cash Flows The following table summarises our cash flows for each of the Fiscal Years 2009, 2010 and 2011:

(Amount in ` lakhs) Particulars Fiscal 2009 Fiscal 2010 Fiscal Year 2011

Net cash generated from / (used in) operations 2,014.76 1,787.06 2,535.61 Net cash (used in) investing activities (4,376.15) (2,229.37) (862.43) Net cash (used in) / generated from financing activities

2,255.79 699.42 (2,103.87)

Net (decrease) / increase in Cash & Cash Equivalents

(105.60) 257.11 (430.69)

Operating Activities Cash flow from operations mainly depends on our operating profits and changes in net working capital. Net cash generated from operations in Fiscal Year 2011 was ` 2,535.61lakhs comprising of ` 422.51 lakhs of loss before tax, adjustments of non cash items and other adjustments amounted to ` 2,219.57 lakhs followed by decrease in working capital amounting to ` 804.97 lakhs. The major non cash adjustments included depreciation for the year amounting to ` 1,774.95 lakhs. Decrease in working capital was due to decrease in loans and advances of ` 1,106.36 lakhs and increase in sundry debtors of ` 140.59 lakhs and increase in current liabilities of ` 146.32. Tax for the year amounted to ` 66.42 lakhs. Net cash generated from operations in Fiscal Year 2010 was ` 1787.06 lakhs comprising of ` 80.35 lakhs of loss before tax, adjustments of non cash items and other adjustments amounted to ` 2,390.27 lakhs followed by increase in working capital amounting to ` 404.96 lakhs. The major non cash adjustments included depreciation for the year amounting to ` 1,765.76 lakhs. Increase in working capital was primarily due to an increase in sundry debtors of ` 272.49 lakhs and increase in loans and advances of ` 561.04 lakhs partially offset by increase in current liabilities of ` 452.58 lakhs. Tax for the year amounted to ` 117.90 lakhs.

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Net cash generated from operations in Fiscal Year 2009 was ` 2,014.76 lakhs comprising of ` 112.59 lakhs of profit before tax, adjustments of non cash items and other adjustments amounting to ` 1,552.49 lakhs followed by decrease in working capital amounting to ` 605.15 lakhs. The major non cash adjustment included depreciation for the year amounting to ` 1,239.53 lakhs. Decrease in working capital was primarily due to an increase in current liabilities of ` 734.50 lakhs partially offset by increase in sundry debtors of ` 58.71 lakhs and increase in loans and advances of ` 97.91 lakhs, which increased our cash flows from operating activities. Tax for the year amounted to ` 255.47 lakhs. Investing activities Net cash used in investing activities in Financial Year 2011was ` 862.43 lakhs primarily incurred on purchase of fixed assets of our Company for the launch of new multiplexes amounting to ` 1,378.28 lakhs offset by proceeds of sale of investment in mutual funds (net of purchases) amounting to ` 158.12 lakhs and proceeds on maturity of NSCs amounting to ` 124.00 lakhs. Net cash used in investing activities in Financial Year 2010 was ` 2,229.37 lakhs primarily incurred on purchase of fixed assets of our Company for the launch of new multiplexes amounting to ` 2,175.50 lakhs and purchase of investment in mutual funds (net of sales) amounting to ` 166.21lakhs. Net cash used in investing activities in Fiscal Year 2009 was ` 4,376.15 lakhs primarily incurred on purchase of fixed assets of our Company for the launch of new multiplexes amounting to ` 5,151.05 lakhs, offset partially by proceeds from sale of investments in mutual funds (net of purchase) amounting to ` 557.73 lakhs. Financing activities Net cash used in financing activities in Fiscal Year 2011 amounted to ` 2103.87 lakhs. During Fiscal Year 2010 we repaid term loans amounting to ` 2,920.27 lakhs, raised unsecured loans of ` 1,200.00, utilised bank overdraft of ` 183.94 lakhs and paid interest on loan of ` 589.50 lakhs. Net cash from financing activities in Fiscal Year 2010 amounted to ` 699.42 lakhs. During Fiscal Year 2010 we raised term loans of ` 2,500 lakhs, bank overdraft of ` 680.91 lakhs and repaid term loans worth ` 1,807.92 lakhs and paid interest on loan of ` 673.57 lakhs. Net cash from financing activities in Fiscal Year 2009 was ` 2,255.79 lakhs, primarily incurred on raising term loans of ` 3,900 lakhs partially offset by repayment of term loans of ` 667.80 lakhs and repayment of bank overdraft of ` 618.67 lakhs and payment of interest on loans of ` 344.79 lakhs. CONTINGENT LIABILITIES The following table sets forth details of our contingent liabilities where quantifiable, as of March 31, 2011:

(Amount in ` lakhs) Particulars As of March 31, 2011 Claims not acknowledged as debts 345.26 Total entertainment tax that is currently exempted for every property that ceases operations prior to completing the minimum period of operations

6,906.76

Bank Guarantees in favour of various Government authorities 51.53 Our Company may incur additional cost towards electricity from June 1, 2007 to March 31, 2010

389.83

Service tax liability reversed and service tax liability not provided for 737.44 For more information on our contingent liabilities, see the chapter titled “Financial Information –Annexure XXXII” beginning on page 210 of this Draft Letter of Offer.

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CAPITAL EXPENDITURES Our main capital expenditure requirements are for development and renovation of new multiplexes. We generally fund our capital expenditure requirements through long-term borrowings or cash from operations. For the Fiscal Years 2009, 2010 and 2011 we spent ` 5,151.05 lakhs, ` 2,175.50 lakhs and ` 1,378.28 lakhs, respectively, on capital expenditures. Our capital expenditure plans are based on market conditions and outlook as of the time these plans were prepared, and on our current strategic objectives. These could change, thereby requiring changes to our capital expenditure plans and expected amounts. OFF BALANCE SHEET ARRANGEMENTS We do not have any off-balance sheet arrangements, derivative instruments, swap transactions or relationships with unconsolidated entities or financial partnerships that would have been established for the purpose of facilitating off-balance sheet arrangements. RELATED PARTY TRANSACTIONS We have, in the course of our business, entered into transactions with related parties including entities forming part of our Promoter Group and our key managerial personnel. For details of related party transactions entered into by us please see the section “Financial Information- Annexure XXIV” beginning on page 193 of this Draft Letter of Offer. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS Interest Rate Risk Our principal exposure to market risks derives from changes in interest rates. Our interest rate risk arises from our short-term and long-term borrowings. Of our total outstanding indebtedness of ` 9,847.67 lakhs as of March 31, 2011, ` 7,187.92 lakhs was at fixed interest rates and ` 2,659.75 lakhs was at floating interest rates. We are subject to interest rate risk on our floating interest rates as well as for new borrowings or refinancing we may need to make. Inflation Risk We are subject to the risks of cost inflation, in particular the costs of energy and manpower. To the extent we are not able to offset inflation in costs by appropriately pricing our tickets and food and beverage items, our profitability could be adversely affected. OTHER INDUSTRY AND COMPANY SPECIFIC INFORMATION Unusual or infrequent events or transactions In 2009 UPDF called a strike due to differences over revenue sharing between the producers / distributors and the multiplex owners which stalled several movie releases in multiplexes, impacting our revenue negatively. In April 2009, the outbreak of H1N1 flu, resulted in a lower patron turnout at our multiplexes / theaters and affected our business adversely. In 2009 and 2011, turbulence in the financial sector severely impacted the global economy which had a negative impact on our profitability.

Significant economic changes/ regulatory changes There have been no significant economic or regulatory changes which would have any material impact on our operations. For details of regulations and policies please see the chapter titled “Key Industry Regulations” beginning on page 69 of this Draft Letter of Offer.

229

Known trends or uncertainties

Except as described in the section titled “Risk Factors” beginning on page IX of this Draft Letter of Offer and the chapter titled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” beginning on page 214 of this Draft Letter of Offer, to our knowledge, there are no known trends or uncertainties that have or had or expected to have any material adverse impact on revenues or income of our Company from continuing operations. Future Changes in relationship between cost and revenue We operate a majority of our multiplexes on leased properties. The lease rentals for these properties are subject to an upward revision typically once in every (3) three years. We do not foresee any other future relationship between cost and revenue that could have a material impact on our revenues or income of our Company. New products or business segment We do not intend to manufacture new products or enter into new business segment. Seasonality of business

Our business is seasonal. Our revenues have been higher during the festive and holiday season primarily on account of the release of big budget Indian movies during this period. For details of seasonality of business please see the section titled “Risk Factors” beginning on page IX of this Draft Letter of Offer Dependence on a few customers Our patrons are well diversified and we do not depend on single or few customers. Competitive conditions For details on competition, please see the section titled “Risk Factors” beginning on page IX of this Draft Letter of Offer and the chapter titled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” beginning on page 214 of this Draft Letter of Offer. MATERIAL DEVELOPMENTS AFTER MARCH 31, 2011 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS Except as stated below or elsewhere in this Draft Letter of Offer, to our knowledge no circumstances have arisen since March 31, 2011 which materially and adversely affect or are likely to affect, our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next 12 months:

• With the permission of Reserve Bank of India and with the necessary consent of the FCCB holders, our Company redeemed the outstanding FCCBs in September 2011 at 82% of the original maturity value of the FCCBs. Accordingly, the FCCBs stand fully discharged and our Company does not have any further obligations in respect of the FCCBs.

• Our Company raised term loan from ING Vyasya Bank Limited on April 19, 2011. The purpose of the term loan was repayment of the FCCBs. The term loan facility is for an amount of ` 8,500 lakhs and the amount outstanding under this facility as at September 15, 2011 is ` 7,000 lakhs.

• Pursuant to resolution passed by the members of our Company through a postal ballot on April 9, 2011, our Company increased its authorized share capital to 63,000,000 divided into 62,990,000 equity shares of ` 10 each and 10,000 preference shares of ` 10 each.

• On April 19, 2011, the Board of Directors at their meeting accorded consent to issue equity shares on rights basis to the existing equity shareholders of our Company up to ` 9,000 lakhs.

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• Our Company commenced operations of new multiplex at Hind Fame, Kolkata on April 22, 2011. This multiplex is operated by us on management model and has 2 screens and 701 seats.

• Our Company commenced operations of new multiplex at Chandra Metro Mall, Chennai on July 8, 2011. This multiplex has 5 screens and 1,327 seats.

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MARKET PRICE INFORMATION

BSE The high and low closing prices recorded on the BSE for Fiscal 2011, 2010 and 2009 and the number of Equity Shares traded on the days the high and low prices were recorded are stated below: Fiscal Year

High (`)

Date of High Volume on date of High (Number of

Equity Shares)

Low (`)

Date of Low

Volume on date of

Low (Number of Equity Shares)

Average Price for the Year

(`)

2011 91.80 January 5, 2011

6,16,284 40.20 March 15, 2011

1,75,375 75.27

2010 90.75 February 23, 2010

38,980 10.84 April 1, 2009 45,285 33.25

2009 66.25 April 21, 2008

65,460 9.03 March 12, 2009

7,560 32.43

NSE The high and low closing prices recorded on the NSE for Fiscal 2011, 2010 and 2009 and the number of Equity Shares traded on the days the high and low prices were recorded are stated below: Fiscal Year

High (`)

Date of High Volume on date of High (Number of

Equity Shares)

Low (`)

Date of Low Volume on date of Low

(Number of Equity Shares)

Average Price for the Year

(`)

2011 92.55 January 5, 2011

1,159,010 40.05 March 15, 2011

77,765 75.32

2010 92.00 February 23, 2010

1,45,619 10.9 April 1, 2009 79,322 33.30

2009 66.25 April 21, 2008

48,071 9.05 March 12, 2009

14,254 32.45

BSE The high and low prices and volume of Equity Shares traded and the total number of trading days on the respective dates on the BSE during the last six months is as follows:

Month, Year

High (`)

Date of High

Volume on date of

High (Number of Equity Shares)

Low (`)

Date of Low

Volume on date of


Average Price

for the Month

(`)

Total No of

Trading Days

Aug-11

51

01-Aug-11

518

38.9

26-Aug-11

3608

45.00

21

Jul-11 62.7

15-Jul-11 118336

47.15

12-Jul-11

3163

52.17

21

232

Month, Year

High (`)

Date of High

Volume on date of


Low (`)

Date of Low

Volume on date of


Average Price

for the Month

(`)

Total No of

Trading Days

Jun-11 56.1

20-Jun-11

18971

46.45

13-Jun-11

235

49.83

22

May-11 54.05

02-May-11

537

43.65

26-May-11

600

47.97

22

Apr-11 64.4

20-Apr-11

21392

53.35

11-Apr-11

2432

57.88

18

Mar-11 76.85

22-Mar-11

685514

40.2

15-Mar-11

175375

54.07

22

NSE The high and low prices and volume of Equity Shares traded and the total no of trading days on the respective dates on the NSE during the last six months is as follows: Month,

Year High (`)

Date of High

Volume on date of High


Low (`)

Date of Low

Volume on date of High


Average Price

for the Month

(`)

Total No of

Trading Days

Aug-11

51

01-Aug-11

190

39.5

29-Aug-11

948

44.87

21

Jul-11

62.8

15-Jul-11

217009

47.1

12-Jul-11

1871

52.20

21

Jun-11

56.3

17-Jun-11

12915

46.3

13-Jun-11

1678

49.98

22

May-11

53.95

02-May-11

2964

44.6

25-May-11

759

47.75

22

Apr-11

63

20-Apr-11

17821

52.2

13-Apr-11

192449

57.26

18

Mar-11 76.95

22-Mar-11

1221533

40.05

15-Mar-11

77765

54.16 22

Closing market price on the date of Board resolution of approving the Issue The closing market price immediately after the date on which the resolution of the Board of Directors approving the Issue was approved i.e April 20, 2011 was BSE ` 64.90 and NSE ` 63.00.

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FINANCIAL INDEBTEDNESS

Secured Loans

Name of the

lender and date of the

loan agreement

Purpose Of the loan

Amount sanctioned

(In ` lakhs)



(In ` lakhs)


Schedule


PrepaymentClause

Axis Bank Limited Letter of arrangement for cash credit advances dated June 28, 2011 Term loan agreement dated June 28, 2011 Term loan agreement dated June 28, 2011 Deed of guarantee dated June 28, 2011

Part financing of multiplex projects at 12 different locations and working capital

Overdraft facility amounting to ` 650 lacs Term loan I amounting to ` 900 lacs Term loan II amounting to ` 1,666 lacs Bank guarantee amounting to ` 500 lacs Total facility amounting to ` 3,716 lacs

1,741.96 Primary security: 1. First charge on on the entire present and future current assets including debts. Collateral security: 1. First charge on present and future movable fixed assets. 2. Debt service reserve of one month interest 3. First charge by way of equitable mortgage of property at Anand belonging to the Company Guarantee: 1. Corporate gurantee of Inox Leisure Limited

Term loans: 10 qurterly installments Cash credit / overdraft: repayable on demand

Term loan - I, II, overdraft @ base rate + 2.75% presently at 12.25% p.a., payable at monthly rests. Other limits are stipulated by the bank

Pre-payment penalty of 1% of the outstanding principle amount in case of prepayment of term loans

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Unsecured Loans Name of

the lender

and date of the loan agreement

Purpose of the loan

Amount sanctioned

(In ` lakhs)



2011 (In ` lakhs)


Schedule


Prepayment Clause

ING Vysya Bank Limited Agreement for unsecured facility dated April 19, 2011 Amendment to agreement for unsecured facility dated April 22, 2011 Second amendment agreement to agreement for unsecured facility dated May 9, 2011 Third amendment agreement to agreement for unsecured facility dated July 22, 2011

Repayment of FCCB

8,500.00 7,000.00 Irrevocable and unconditional corporate guarantee from Gujarat Flourochemicals Limited dated April 19, 2011

Bullet repayment within 15 days from any future offering of equity (follow on or rights issue), debenture, preference or any other equity linked instruments by the Company or one year from date of disbursement, whichever is less.

11.50% p.a. (interest reset after 6 months from the date of disbursement)

1. Prepayment without penalty permitted if the said prepayment is made through proceeds of the offering of equity and with 15 days prior notice. 2. For prepayment through other than the proceeds of the offering of equity, The Company shall give the bank not less than 15 business days prior notice, requesting the prepayment of the whole or any part of the loan, within 7 business days following receipt of the notice referred to in the paragraph above, the bank shall notify the company whether the prepayment has been accepted (in which case the Company shall be entitled to prepay the relevant loan or part thereof upon such terms and subject to such conditions as

235

Name of the

lender and date

of the loan agreement

Purpose of the loan

Amount sanctioned

(In ` lakhs)



2011 (In ` lakhs)


Schedule


Prepayment Clause

may be advised to the Company by the bank) or not.

1. In the Fiscal Year 2003-04 our Company has taken loan of ` 691.00 lacs from Fame Motion Pictures

Limited at the rate of 6.5% p.a. The outstanding balance as on September 15, 2011 is ` 1738.50 lacs. The loan is repayable over a mutually agreeable term, of not less than 12 months.

2. On March 30, 2011 our Company has taken loan of ` 1,200 lacs from Inox Leisure Limited at the rate

of 11% p.a for 3 years. The outstanding balance as on September 15, 2011 is ` 1,200 lacs. The loan is repayable after 3 years of disbursement.

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SECTION VII – LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATIONS AND DEFAULTS Except as stated below there are no outstanding litigations, suits, criminal or civil prosecutions, proceedings or tax liabilities against our Company, our Subsidiaries, our Joint Ventures, our Directors and our Promoter and there are no defaults, non payment of statutory dues, over-dues to banks/financial institutions, defaults against banks/financial institutions, defaults in dues payable to holders of any debenture, bonds and fixed deposits and arrears of preference shares issued by our Company and our Subsidiaries, default in creation of full security as per terms of issue/other liabilities, no amounts owed to small scale undertakings exceeding ` 1 lakhs, which is outstanding for more than 30 days, no proceedings initiated for economic/civil/any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) other than unclaimed liabilities of our Company and our Subsidiaries and no disciplinary action has been taken by SEBI or any stock exchanges against our Company, our Subsidiaries, our Joint Ventures, our Promoter and our Directors. Proceedings involving our Company Proceedings against our Company

1. Our Company entered into a memorandum of understanding (the “MOU”) dated August 25, 2005

with Advance India Project Limited ("AIPL") for renting 44,000 sq. ft. of multiplex premises at the Celebration Mall, Amritsar, Punjab (the “Property”) for a period of 25 years. Our Company vide letter dated February 14, 2009 requested AIPL to terminate the MOU, refund the security deposit of `17.60 lacs and gave option to AIPL to start negotiations with third parties subject to refund of the security deposit. On March 3, 2009, AIPL made a demand of `17.60 lacs per month for the entire lock-in period of 10 years, gave an option to our Company to pay the differential amount in case the Property is let out to a third party. Further, AIPL also undertook to intimate our Company about negotiations with a third party. AIPL without intimating our Company let out the Property to Cinepolis India Private Limited (the “CIPL”). Our Company vide its letter dated August 29, 2009 informed CIPL about the subsistence of MOU till receipt of refund of security payment and informed CIPL to abstain from dealing with the Property. AIPL filed an application under section 9 of the Arbitration and Conciliation Act bearing O.M.P Number 46 of 2010 dated January 2010 in the Delhi High Court for restraining our Company from causing any obstruction or interfering with possession of the Property by CIPL. The High Court of Delhi passed an interim order dated January 25, 2010 (the “Interim Order”) restraining our Company from causing any obstruction or interfering in any manner with the peaceful possession of CIPL of the multiplex theatre in the Celebration Mall, Amritsar. AIPL filed an arbitration application number 22 of 2010 dated January 21, 2011 in Delhi High Court for appointment of arbitrators. On February 14, 2011, the High Court disposed the application confirming the Interim Order till the disposal of the arbitration proceeding. On February 2, 2011, AIPL filed a statement of claim, inter alia, claiming `719.61 lacs along with pendent-lite and future interest at the rate of 18 per annum from February 14, 2010. The matter is pending.

2. Vijay Enterprises filed an appeal bearing number 2093 of 2010 dated December 13, 2010 before the Ministry of Revenue and Forest, Mantralya against the order dated October 14, 2010 (“Order 1”) of the Divisional Commissioner, Nashik. Our Company leased the multiplex theatre Vijay Mamta at Nashik from Vijay Enterprises by entering into lease deed dated March 31, 2004. Vijay Enterprises received a demand notice number Desk-1/Entertainment / Kavi / 23 7/10 dated February 17, 2010 from Additional Commissioner, Nashik demanding `7.83 lacs towards penalty for alleged wrongful collection of entrance fee for tax free films exhibited during the Financial Years 2005-06, 2006-07 and 2007-08. The Additional Commissioner, Nashik levied penalty of `7.83 lacs vide order number Desk / Entertainment / Ka. Vi. / 663 / 2010 dated May 5, 2010 (the “Order”). Vijay Enterprises being aggrieved by the Order filed an appeal number 4 of 2010 dated June 4, 2010 before the Divisional Commissioner, Nashik. The Divisional Commissioner, Nashik

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rejected the appeal vide Order 1 and issued a demand notice for payment of penalty of `7.83 lacs. Our Company paid the penalty amount under protest and filed the present appeal. The matter is pending.

3. Maharashtra Navnirman Kamgar Sena (“Complainant”) has filed a complaint number 424/2010 dated October 13, 2010 before the Industrial Court, Mumbai (“Court”) against our Company (“Repondent 1”), SMCPL (“Respondent 2”), Shravan Shroff (“Respondent 3”), Deepak Shinde (“Respondent 4”) and Atul Bhandarkar (“Respondent 5”) (together referred to as the “Respondents”) under section 28(1) and 30 read with items 1 (a), 1(b) of Schedule II and items 6,9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Union and Prevention of Unfair Labour Practices Act, 1971 (“MRT Act”). The Complainant claims that they represent 34 workmen employed with the Respondents who are its members. The Complainant has alleged that the Respondents have engaged in and are continuing to engage in unfair trade practices with effect from October 11, 2010 inter-alia on the reasons that, the increment of employees has elapsed for one year. The Complainant filed the above complaint praying, inter alia, that the Court may hold and declare the Respondents to have indulged in unfair labour practices, to direct the Respondents to refrain from using force and violence, to grant all facilities of casual leave, holidays, give concerned workers permanent status etc. The Complainant filed an application for interim relief dated October 13, 2010 stating that pending the hearing and final disposal of the main complaint, our Company be restrained from terminating the services of the employees and from imposing illegal lock-out and further to appoint an investigating officer to ascertain the number of employee, to investigate and submit its report. The Respondent 1 and 3 and Respondent 2 and 3 had filed their written statement dated November 15, 2010, praying for dismissal of the above complaint, without granting any relief as claimed by the Complainant. The matter is pending.

4. Assistant Commissioner of Income Tax –11 (1), has filed an appeal number 6387/Mum-2010 dated August 27, 2010 before the Income Tax Appellate Tribunal, Mumbai (“ITAT”) against the order of the Commissioner of Income Tax (Appeals) (“CIT (A)”), Mumbai. Our Company had filed revised return of income on March 31, 2009 declaring the taxable income loss as ` 292.61 lacs for the assessment year 2007-2008. The Assistant Commissioner of Income Tax-11 (1) (“Assessing Officer”) vide order dated December 18, 2009 (“Order 1”) passed under Section 143 (3) of the Income Tax Act computed the loss of ` 221.46 lacs. Further, a demand notice dated December 18, 2009 was issued demanding payment of ` 11.43 lacs and penalty proceedings were initiated under section 271 (1) (c). Aggrieved our Company filed an appeal before the Commissioner of Income Tax (Appeals) against Order 1 and the CIT (A) vide its order dated June 16, 2010 (“Order 2”) partly allowed the appeal. Subsequently, the Assessing Officer filed the Appeal before the ITAT against Order 2, on the ground that the CIT (A) erred in directing the Assessing Officer to allow deduction under section 14 A of the Income Tax Act, 1961 and praying that Order 2 be set aside and that Order 1 be restored. The matter is pending.

5. Assistant Commissioner of Income Tax-11(1) (“ACIT”) filed an appeal number 6365/Mum-2010 (“Appeal”) before the Income Tax Appellate Tribunal, Mumbai against the order dated November 22, 2010 (“Order”) passed by the Commissioner of Income Tax (Appeals) (“CIT(A)”). Our Company had filed return of income for the assessment year 2006-07 declaring a total income loss of ` 645.64 lacs. The Assistant Commissioner of Income Tax (“Assessing Officer”) vide order dated December 10, 2008 passed under Section 143 (3) of the Income Tax Act computed the taxable income as a total income loss of ` 505.00 lacs and further penalty proceedings were initiated under section 271(1)(c) of the Income Tax Act. Subsequently, the Commissioner of Income Tax (Appeals) vide Order, directed the assessing officer to quantify the indirect expenditure by adopting reasonable basis for computing disallowance under section 14A of the Income Tax Act, also directed the assessing officer to reduce cost/ written down value of plant and machinery by the amount of entertainment tax subsidy . Aggrieved by the Order, ACIT filed the Appeal. The matter is pending.

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Notices received by our Company

1. Our Company entered into a memorandum of understanding (the “MOU”) dated December 4, 2006 with Ganpati Townships Limited ("GTL") to take on lease multiplex portion for a period of 10 years with 6 years lock-in-period at the Ganpati Mall, Bathinda, Punjab. Our Company vide its letter dated July 19, 2008 requested GTL to terminate the MOU and refund the security deposit of `47.81 lacs. On August 26, 2008, GTL made demand to pay the unrealised rentals from the date of termination till the entire lock-in period of 6 years. On June 8, 2009, GTL sent a legal notice to our Company, inter alia, for recovery of damages of `1,000.00 lacs for breach of the MOU. On June 25, 2009 our Company replied to GTL demanding the refund of security deposit and a sum of `1,500.00 lacs towards damages against opportunity and business loss over a period of 10 years.

2. Our Company entered into license agreement dated May 9, 2007 (the “Agreement”) with Bruhat

Bengaluru Mahanagara Palika (“BBMP”) for operating and maintaining the theatre Fame Shankanag Chitramandira. As per the Agreement, BBMP was required to obtain permission for all utility items, including electricity supply to be supplied within 15 days from the receipt of request from our Company. Our Company made several requests to BBMP for power supply in the theatre, paid the requisite fees and deposited the amount on behalf of BBMP for supply of electricity, however BBMP failed to obtain the requisite permissions. On February 14, 2011, our Company received a demand notice from BBMP to pay a sum of `192.01 lacs as license fee for the period from August 2008 to March 2009 and along with cess, service tax and penalty. On February 21, 2011, our Company replied to the demand notice and denied all allegations in the demand notice.

3. Fame Tapadia received a show cause notice on February 2, 2011 from the Entertainment Tax

Department, Aurangabad for violating certain terms and conditions laid down by the Controller and Auditor General of India in its report for the year 2008-09. The show cause notice demanded explanation from our Company as to why the exemption certificate granted to Fame Tapadia should not be cancelled and why should entertainment tax not be charged from the date of opening the theatre. On February 28, 2011, our Company replied to the notice denying all allegations.

4. Our Company received a notice on December 2, 2010 from Pune Cantonment Board (“PCB”) proposing to increase the annual rateable value with respect to Fame FNS, Fatima Nagar, Pune from `1 to `118.65 lacs. On December 8, 2010 we replied to the notice stating that the proposed annual rateable value being unreasonable. Subsequently, on March 28, 2011 we have filed a detailed reply in continuation to the reply dated December 8, 2010. Further vide letter dated August 2, 2011, our Company requested PCB to provide copy of the assessment order. Subsequently, PCB has sent copy of the assessment order.

5. Our Company received a letter on March 16, 2011 from the office of the Deputy Commissioner of

Central Excise and Service Tax Division, Dhanbad requesting to submit service and registration certificate, ST-3 Returns and income tax returns for the periods 2008-09 and 2009-2010 along with balance sheet and profit and Loss account. Deputy Commissioner of Central Excise and Service Tax Division in the letter has alleged that the activity performed by our Company at Dhanbad falls within the ambit of service tax under the category of franchisee service. Our company replied on March 24, 2011 denying the applicability of service tax under the category of franchisee service.

6. Our Company received a demand notice dated November 11, 2010 bearing number ACIT-

11(1)/Recovery/10-11 from the Assistant Commissioner of Income Tax-11(1) (“ACIT”), Mumbai to pay `49.38 lacs and `177.17 lacs for the assessment years 2007-08 and 2008-09. Our Company replied to the demand notice on November 25, 2010 stating that the assessment was completed for the assessment year 2007-08 and the regular demand of `11.43 lacs was paid January 11, 2010 and for the assessment year 2008-09 there is no outstanding dues moreover there was refund due of `10.88 lacs. ACIT issued a reminder notice bearing number ACIT-11(1)/Recovery/10-11 on

239

January 14, 2011. On January 19, 2011 our Company replied to the reminder notice issued by ACIT.

7. Our Company has received a notice number kra.k.kar/kaksha-5/T-1/vyaa-08 dated March 18, 2011 from the Collector’s Office, Thane with respect to Fame, Vashi alleging that our Company had not obtained the renewal of 4 (2) (b) permission for the year 2008 and making demand for entertainment tax from January 1, 2008 to December 31, 2008 along with penalty. Our Company replied to the said notice on May 4, 2011 stating that notice was issued erroneously as the period mentioned above is prior to opening of our commercial operations.

8. Our Company has received a notice number kra.k.kar/kaksha-5/T-3/08 dated March 18, 2011 from the Collector’s Office, Thane with respect to Fame, Vashi alleging that our Company did not reserve a screen for Marathi movies, did not exhibit the requisite number of Marathi movie and making demand of ` 10.04 lacs as penalty. Our Company replied to the said notice dated on May 4, 2011 stating that the notice was wrongly addressed and hence the same needs to be withdrawan.

9. Directorate of Enforcement, Government of India issued a notice number F.No.T-1/220-B/2010/PJ/AS dated December 24, 2010 to our Company requiring us to furnish inter-alia the documents/information pertaining to, complete profile of our Company, details of accounts maintained by our Company with banks in India and outside, copies of returns filed with Registrar of Companies from inception till date, details in respect of any branch or subsidiary or joint venture or wholly owned subsidiary outside India etc, in connection with certain investigations being conducted under Foreign Exchange Management Act, 1999. Our Company vide its reply dated January 18, 2011 furnished the information sought by Directorate of Enforcement.

10. On August 2, 2011 our Company submitted an application for compounding of FEMA contravention (“Application”) to the RBI under rule 4 of the Foreign Exchange Management (Compounding Proceedings) Rules, 2000. Our Company vide letter dated June 16, 2011 approached authorized dealer (“AD”) seeking permission to redeem outstanding FCCBs at approximately 82% of the redemption value, subject to approval from FCCB holders. The AD vide letter dated June 22, 2011 bearing reference number AXIS/TFC/3276/11-12 approached RBI for the same. AD received a letter from RBI dated July 7, 2011 bearing reference number FED/CO/ECBD/566/03.02.775/2011-12 seeking clarification as to whether our Company was an eligible borrower at the time of obtaining the loan registration number and whether the FCCBs issued complied with the extant ECB guidelines. Our Company vide letter dated July 13, 2011 filed response to the AD stating that the funds raised through FCCB were utilized in line with the AP (DIR Series) circular number 5 dated August 1, 2005 (“Circular”) and that issuance of FCCBs was done under the bona fide belief that our Company was an eligible borrower under the automatic route. Our Company received a letter from RBI dated 27 July 2011 bearing reference number FED/CO/ECBD/2313/03.02.775/2011-12 conveying no objection for redeeming outstanding FCCBs at approximately 82% of the redemption value, subject to approval from FCCB holders and stating that our Company being ineligible borrower to raise ECB under the automatic route, may consider filing a compounding application. Our Company submitted the Application for contravention of para 1(A) of the Circular wherein issue of FCCBs was permissible under the automatic route for companies operating in the real sector-industrial sector and infrastructure sector and issuance of FCCBs by companies engaged in other sectors and not eligible under the automatic, requiring prior permission of RBI. The matter is pending.

11. The Competition Commission of India (the “Authority”) has issued a notice bearing number DG/CCI/IW/1/23/2010/09757 dated April 15, 2011 against our Company (Fame Multiplex, Bangalore) under section 36(2) read with section 41(2) of the Competition Act, 2002. The Authority is conducting an investigation regarding the alleged anti-competitive activities of the Karnataka Film Chamber of Commerce (“KFCC”) regarding the release of their films. The Authority claims that KFCC has written a letter dated July 23, 2010 to our Company (Fame Multiplex, Bangalore) regarding withholding of share amount in respect of ‘I Hate Luv Stories’ and Knight and Day’. As part of the investigation, our Company was issued the present notice

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directing us to furnish inter alia the following information i.e., (i) whether it is necessary for the distributors and exhibitors to become members of KFCC (ii) Whether it is necessary to register every film with the KFCC before its release in the State of Karnataka etc, by way of an affidavit latest by April 20, 2011. Our Company vide an affidavit dated May 02, 2011 responded to the said notice addressing the information sought.

12. Our Company was issued a notice bearing number AC (Desk audit)/e-704/MVAT/11-12/B-29434 dated July 2011by the Sales Tax Officer, Mumbai under section 64 of the Maharashtra Value Added Tax Act, 2002 (“MVAT”) alleging discrepancies in the audit report filed under section 61 of MVAT for financial year 2008-2009 and demanding our Company to produce all books of accounts pertaining to financial year 2008-2009.

13. Our Company was issued a demand notice bearing number 200A/MUMCT812/0000014426 dated July 9, 2011 by the Income Tax officer (OSD)(TDS)-1(2), Mumbai for the assessment year 2010-2011demanding our Company to pay an amount of ` 12.30 lacs, `1,380 and ` 0.48 lacs determined to be payable for the first, second and fourth quarter respectively of the financial year in respect of deduction of tax for payments other than salary and an amount of ` 9.18 lacs determined to be payable for the fourth quarter of the financial year in respect of deduction of tax for salary. Our Company filed its reply vide letters dated August 30, 2011.

14. Our Company was issued a demand notice dated June 16, 2011 by the Income Tax officer

(OSD)(TDS)-1(2), Mumbai for the assessment year 2011-2012 demanding our Company to pay an amount of ` 21.47 lacs and ` 25.74 lacs determined to be payable for the second and third quarter respectively of the financial year 2010-11 in respect of deduction of tax for payments other than salary. Our Company replied vide notice dated July 14, 2011.

15. Our Company was issued a notice bearing number ACIT/CIR. 18(1)/2011-12 dated July 8, 2011

by the Assistant Commissioner of Income Tax, Circle 18 (1), New Delhi for verifying and confirming the Form 16 A – certificate of deduction of tax at source of ` 1.24 lacs for financial year 2009-10 under section 203 of the Income Tax Act, 1961 in favour of M/s UFO Movies India Limited. Our Company vide reply dated August 5, 2011 confirmed that the actual amount of TDS deducted and Form 16A issued was ` 1.24 lacs.

16. Our Company was issued a notice bearing number ITO (OSD)(TDS)1(1) & 1(2)/Mismatch/2011-

2012 dated May 16, 2011by the Income Tax Officer (OSD)(TDS)-1(1) & 1(2), Mumbai for TDS database clean up for the financial year 2009-10. Our Company was called upon to verify the correctness of the TDS claims of the deductees, verify PANs of the deductees and revise e-TDS returns for financial year 2009-10 with valid and correct PANs, file revised returns if PAN has not been quoted against the deductees while filing e-TDS returns for the financial year 2009-10. Our Company replied to the said notice vide reply dated July 19, 2011.

17. Our Company was issued a notice bearing number F.No. DG/CCI/IW/1/12/2011/2019 dated

September 8, 2011 by the Competition Commission of India (“Authority”) under section 36(2) read with section 41 (2) of the Competition Act, 2002 (“Act”). The Authority claims that it has received information under section 19 of the Act against our Company for taking collective decision in respect of exhibition of films putting unreasonable terms and conditions on the producers/distributors, and this office has received direction for investigation on the allegations levelled by the informant, viz Film and Film Producers Guild of India. Further, in exercise of the powers conferred under section 36 (2) read with section 41 of the Act our company was called upon to furnish inter-alia the following information or document (i) Constitution of our company in brief, (ii) details of all agreements entered into with the MAI or other multiplex owners or association of producers/directors, (iii) details of our membership with various associations, viz producers, distributors, exhibitors etc may be provided.

18. Our Company and ILL was issued a notice bearing number POL/MNR/VAS/4110-4111 dated September 19, 2011 by the Collector stating that the multiplex cinema theatres are not liable to

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collect service charge and the collection of service charge is to be enjoyed only by single screen theatre/cinema. Further, both ILL and our Company were called upon to determine the service charge that has been collected month wise from the time of starting of the multiplex cinema theatre till date.

19. Our company was issued a summons bearing number T-3/38-B/2011/PJ/AS/815 dated September 22, 2011 by the Directorate of Enforcement, Department of Revenue in respect of an investigation being carried out under the provisions of the Foreign Exchange Management Act, 1999.

Proceedings by our Company

1. Our Company and others (the “Petitioners”) filed a writ petition bearing W.P. No. 20598 of 2010 (the “Writ Petition”) in the High Court of Calcutta (the “High Court”) against Union of India and others (the “Respondents”), challenging the constitutional validity and the amendment made to section 65(105) (zzzz) by the Finance Act, 2010 for the levy of service tax on renting of immovable property. The High Court passed an interim order dated October 4, 2010 (the “Interim Order”) in favour of our Company, whereby the Respondents were restrained from taking any coercive steps against our Company for its properties in Calcutta. The High Court in the same order gave directions that Respondent No. 5 South City Projects (Kol) Limited (the “South City”), the owner of the Fame South City Mall, Kolkata, shall not part with or alienate the property without leave of the High Court and shall not charge service tax on renting of immovable properties. Against the Interim Order, South City filed an appeal bearing number 20599 of 2010 dated January 3, 2011 at the Division Bench of the High Court. The Division Bench of the High Court vide its order dated February 2, 2011 disposed the appeal and held that the order against South City was beyond the scope of the Writ Petition and directed deletion of the same. The Interim Order restraining the Respondents from taking any coercive steps against our Company for its properties in Calcutta is operative and the matter is pending.

2. Our Company (the “Petitioner”) filed a writ petition bearing W.P. No. 1453 of 2010 (“Petition”) dated July 17, 2010 in the High Court of Bombay (the “High Court”) against Union of India and others (the “Respondents”), challenging the constitutional validity and the amendment made to section 65(105) (zzzz) by the Finance Act, 2010 on the levy of service tax on renting of immovable property. The High Court passed an interim order dated August 6, 2010 in favour of our Company, whereby the Respondents have been restrained from taking any coercive steps against our Company for its properties in Maharashtra. The High Court vide order dated August 4, 2011, dismissed the Petition and extended the stay upto September 30, 2011.

3. Multiplex Association of India (the "MAI"), (of which our Company is a member), filed an appeal bearing number 68 of 2008 and bearing number 69 of 2008 dated 14 March, 2008 (the “Appeal”) before the Appellate Tribunal for Electricity, New Delhi (the “Appellate Tribunal”) against the order passed by Maharashtra Electricity Regulatory Commission (the "MERC") dated April 24, 2007 (the “Original Order”) and the corrigendum to the Original Order dated July 26, 2007 (the “Corrigendum”) against Tata Power Company Limited (the “TPC”) and Reliance Energy Limited (the "REL") respectively. In the Appeal, MAI challenged the introduction of LT-IX category in electricity tariff by REL for shopping malls and multiplexes under the tariff order passed by MERC in pursuance of Annual Revenue Requirements (the "ARR") and the determination of the multiyear tariff for the first control period of 3 years commencing from Financial Year 2007-08 to Financial Year 2009-10. Further, the Appeal also challenged introduction of LT-V category in electricity tariff by TPC for shopping malls and multiplexes in pursuance of ARR and determination of the multiyear tariff for the first control period of 3 years commencing from FY 2007-08 to FY 2009-10.

On January 19, 2009 the Appellate Tribunal, passed an order (the “Order”) in favour of MAI by setting aside the Original Order and the Corrigendum. The Order directed that the additional tariff collected from the members of MAI, by placing them in the new category, be refunded by adjusting the same equally in the future bills of next twelve months. MERC was directed to make suitable adjustments in the ARR's of REL and TPC. REL preferred an appeal number 1602 of 2009 dated March 3, 2009 against the Order in the

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Supreme Court of India. The Supreme Court vide order dated March 27, 2009 stayed the operation of the order. The matter is pending. TPC adhered to the order by adjusting the additional tariff collected in the subsequent bills.

4. Multiplex Association of India (the "MAI"), of which our Company is a member, filed three appeals bearing appeal number 9 of 2009, appeal number 10 of 2009, and appeal number 11 of 2009 dated October 15, 2008 against Tata Power Company Limited (the “TPC”), Reliance Energy Limited (the “REL”), and Maharashtra State Electricity Distribution Company Limited (the “MSEDCL”) respectively before the Appellate Tribunal for Electricity, New Delhi (the “Appellate Tribunal”) against the orders passed by Maharashtra Electricity Regulatory Commission (the "MERC") dated June 6, 2008. REL, TPC and MSEDCL charged exorbitant tariff for commercial category consumers under the HT-II (Comm) category and sub-categories under LT-II (Comm) category introduced in pursuance of approving Annual Performance Review and Tariff Determination in respect of distribution business for the FY 2008-09. The Appellate Tribunal vide order dated October 28, 2009 dismissed appeal number 9 of 2009 filed against TPC. The appeal numbers 10 of 2009 and 11 of 2009 filed against REL and MSEDCL were allowed by the Appellate Tribunal vide order dated November 5, 2009 and October 23, 2009 respectively. However, the effect of the order has been kept in abeyance till the stay is operative in the Supreme Court on matters involving a similar dispute. The matter is pending.

5. Multiplex Association of India (the "MAI"), of which our Company is a member, filed two

appeals bearing appeal number 34 of 2010 and appeal number 35 of 2010 dated March 31, 2010 against Maharashtra State Electricity Distribution Company Limited (the “MSEDCL”) and Reliance Energy Ltd (the “REL”) respectively before the Appellate Tribunal for Electricity, New Delhi (the “Appellate Tribunal”) against the order August 17, 2009 and order June 15, 2009 respectively passed by Maharashtra Electricity Regulatory Commission (the "MERC"). REL and MSEDCL were charging exorbitant tariff introduced for commercial category consumers under the HT-II (Comm) category and newly introduced sub-categories under LT-II (Comm) category introduced in pursuance of approving their Annual Performance Review and Tariff Determination in respect of distribution business for the Financial Year 2009-2010. The matter is pending.

6. Our Company filed a suit bearing special civil suit number 2059 of 2008 dated November 17, 2008 (the “Suit”) in the Court of Civil Judge, Pune (the “Court”) against Kakade Developers Private Limited ("KDPL") and others seeking for specific performance of the memorandum of understanding dated October 5, 2005 (the “MOU”) executed between our Company and KDPL. Pursuant to the MOU, KDPL had agreed to grant lease of approximately 36722 sq. ft carpet area in the mall on the second, third floor and box office on the ground floor in Kakade City Mall for running and operating a multiplex theatre for a period of ten years to our Company at a monthly rent of `31 per sq. ft. per month. On April 5, 2008 our Company received a letter from KDPL for increase of the lease rent to `50 per sq. ft. per month. Our Company filed the Suit for specific performance of the MOU and suitable injunctive reliefs, inter alia, an order of injunction against Kakade from creating third party rights, selling or disposing of the suit premises, appointment of court receiver and in the event the Court does not grant specific performance of the MOU then in alternative award damages to the tune of `3,336.00 lacs. On August 16, 2010, an application for extension of status quo and adjournment for conducting the exhibit 5 application were granted by the Court. Kakade Construction Private Limited (“KCPL”), the defendant number 2 made an application dated November 17, 2008 bearing number 2069 of 2008 before the Court under order 7 rule 11 to strike out its name for want of cause of action against them. The Court allowed the application vide its order dated January 20, 2010 stating that the plaint stands rejected against KCPL. The matter is pending.

7. Our Company filed a suit bearing suit number 3190 of 2007 dated August 24, 2007 (the “Suit”) in the High Court of Bombay (the “High Court”) against Bharat Bala Productions Private Limited and others (the “Defendants”). Our Company and the Defendants had entered into an agreement dated June 5, 2006 under which exclusive license in respect of theatrical rights pertaining to vocal and instrumental version of the National Anthem (“Work”) were given to our Company for a

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period of 5 years. However during August 2007, our Company observed that other theatre operators were also using the Work and hence filed the Suit inter-alia praying that the Defendants be ordered to pay to our Company the sum of ` 50.00 lacs together with interest at the rate of 24% per annum for violation of our Company’s exclusive license and theatrical rights, payment of 50% of the income received by granting permission to third parties, restraining the Defendants from infringing the plaintiff’s exclusive theatrical rights in the Work. The Court granted interim reliefs in favour of our Company vide its order dated September 27, 2007 (“Interim Order”) restraining the Defendants from infringing the plaintiff’s exclusive theatrical rights in the Work and also ordered to deliver the infringing copy of the said Work which are in the possession of the Defendants. An appeal bearing number 93 of 2008 dated January 07, 2008 was filed by the Defendants before the High Court, Mumbai against the Interim Order. The High Court of Mumbai vide its order dated October 21, 2008 dismissed the said appeal. The matter is pending.

8. Our Company challenged the interpretation of the notification dated April 1, 2007 bearing number GHT/2007/4/MNR/102007/803/A issued by the Gujarat State Government allowing only non-multiplex theatres to collect service charge to the extent of ` 4 per ticket for air-conditioned cinema and ` 3 per ticket for non air-conditioned cinema. The Respondents issued two notices dated December 30, 2008 and February 4, 2009 demading deposit of service charge collected by our Company. The High Court vide its order dated February 27, 2009 ordered withdrawal of the notices dated December 30, 2008 and February 4, 2009. Our Company filed a special civil application number 1225 of 2009 dated April 22, 2009 in the High Court of Gujarat at Ahmadabad (the “High Court”) against the State of Gujarat and others (“Respondents”) which was disposed off. Subsequently, District Collector, Bharuch issued an assessment order bearing number POL-MNR-WS-2022 to 2025 dated June 16, 2009 against our Company for payment of `4.82 lacs for charging service tax to customers. Our Company filed an appeal bearing dispute application number 5 of 2009 against the assessment order before the Collector, Entertainment Tax and District Magistrate, at Bharuch and the Collector, Entertainment Tax and District Magistrate vide its order dated November 22, 2009 dismissed the appeal. Our Company filed a review application number 22 of 2010 before the Commissioner, Entertainment Tax, Ghandhinagar against the order dated November 22, 2009. The matter is pending.

9. Our Company filed a special application number 4051 of 2009 in the High Court of Gujarat at Ahmedabad (the “High Court”) against the State of Gujarat and others (“Respondents”).Our Company challenged the interpretation of the notification bearing number GHT/2004/3/MNR/102003/200 dated February 9, 2004 and the three notices issued dated July 19, 2007, January 4, 2008 and January 30, 2009 issued by the Gujarat State Government to print tickets without service charge. Our Company filed a special application number 1007 of 2009 dated February 4, 2009 in the High Court of Gujarat at Ahmedabad (the “High Court”) against the State of Gujarat and others (“Respondents”).The High Court vide its order dated February 27, 2009 ordered withdrawal of the notices dated July 19, 2007, January 4, 2008 and January 30, 2009. Subsequently, the District Collector issued a notice dated July 6, 2009 restraining our Company from printing ‘service charge’ on tickets. Our Company filed a Special Civil Application bearing number 4051 before the High Court challenging the notice dated July 6, 2009. The matter is pending.

10. Our Company filed an appeal number 1810/Mum-2011 dated March 01, 2011 (“Appeal”) before the Income Tax Appellate Tribunal, Mumbai (“ITAT”) against the order of the Commissioner of Income Tax (Appeals)-3 dated November 22, 2010 (“Order”). Our Company had filed return of income for the assessment year 2006-07 declaring a total income loss of ` 645.64 lacs. The Assistant Commissioner of Income Tax (“Assessing Officer”) vide order dated December 10, 2008 passed under Section 143 (3) of the Income Tax Act computed the taxable income as a total income loss of ` 505.00 lacs and further penalty proceedings were initiated under section 271(1)(c) of the Income Tax Act. Subsequently, the Commissioner of Income Tax (Appeals) vide Order, directed the assessing officer to quantify the indirect expenditure by adopting reasonable basis for computing disallowance under section 14A of the Income Tax Act, also directed the

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assessing officer to reduce cost/ written down value of plant and machinery by the amount of entertainment tax subsidy. Aggrieved by the Order, our Company filed the Appeal on the grounds that CIT (A) erred in directing the assessing officer to quantify the indirect expenditure by adopting reasonable basis for effecting apportionment, for the purposes of computing disallowance under section 14 A of the Income Tax Act, also the assessing officer erred in directing the assessing officer to reduce the cost/written down value of plant and machinery by the amount of entertainment tax subsidy. The matter is pending.

11. Our Company has filed an appeal dated January 28, 2011 before the Commissioner of Income Tax (Appeals) III, Mumbai against the order of the Assistant Commissioner of Income Tax- 11 (1), Mumbai (“Assessing Officer”). Our Company had filed return of income for the assessment year 2008- 09 declaring a loss of ` 772.65 lacs and book profit of ` 1,324.18 lacs. Subsequently, the return was revised when the loss was revised to ` 896.69 lacs. The Assessing Officer vide order dated December 28, 2010 passed under Section 143 (3) of the Income Tax Act computed the taxable income of ` 853.93 lacs and ascertained the total book profit to be ` 1,392.21 lacs. Further, a demand notice was issued demanding payment of ` 177.18 lacs and penalty proceedings were initiated under section 271 (1) (c). Our company filed its reply dated July 27, 2011 stating that a rectification petition has been filed under section 154 of the Income Tax Act, 1961 and once the rectification is carried out, there would be no alleged demand outstanding. The matter is currently pending.

12. Our Company has filed an appeal number 6046/Mum-2010 dated July 15, 2010 before the Income Tax Appellate Tribunal, Mumbai (“ITAT”) against the order of the Commissioner of Income Tax (Appeals) III(“CIT (A)”), Mumbai. Our Company had filed return of income on October 31, 2007 declaring the taxable income as ` 477.50 lacs for the assessment year 2007-2008. The Assistant Commissioner of Income Tax-11 (1) (“Assessing Officer”) vide order dated December 18, 2009 (“Order 1”) passed under Section 143 (3) of the Income Tax Act computed the taxable income as ` 617.58 lacs. Further, a demand notice dated December 18, 2009 was issued demanding payment of ` 11.43 lacs and penalty proceedings were initiated under section 271 (1) (c). Aggrieved our Company filed an appeal before the Commissioner of Income Tax (Appeals)-3 against Order 1 and the CIT (A) vide its order dated June 16, 2010 (“Order 2”) partly allowed the appeal. Subsequently, our Company filed the present appeal before the ITAT against Order 2, confirming the action of the Assessment Officer invoking Rule 8 D, while allegedly applying the provisions of section 14 A of the Income Tax Act. The matter is pending.

13. Our Company filed a petition dated May, 2011 (“Petition”) before the High Court of Delhi at New Delhi against Ruchi Malls Private Limited (“Respondent”) under Section 9 of the Arbitration and Conciliation Act, 1996. Our Company had entered into a Memorandum of Understanding dated August 17, 2006 (“MoU”) with Respondent acting through its attorney M/s Alpha G Corp Development Private Limited to grant on lease shopping cum entertainment complex ‘AlphaOne’ (“Demised Premises”). Our Company claims that it had in part performance of its obligations under the MoU paid an amount of ` 34.72 lacs towards part security deposit to the Respondent and that the Respondent had failed to ensure completion of the construction of the commercial complex and handover the possession of the Demised Premises in accordance with the MoU. Aggrieved our Company has filed the Petition praying that the Respondents be restrained from committing any breach or violation of the MoU and in particular from transferring, alienating, parting with possession of, or creating third party interests in the Demised Premises and pass ex-parte ad interim order in respect of the above. The Respondents vide its reply dated September 6, 2011 denied all the allegations of our Company and prayed that the Petition be dismissed. The matter is pending.

Our Company has also sent a legal notice dated September 1, 2011 to Ruchi Malls Private Limited invoking the arbitration proceedings under clause 22 of the MOU.

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Notice issued by our Company

1. Our Company entered into a service agreement dated April 23, 2010 (the “Agreement”) with Unilink Teleservices India Private Limited (“UTIPL”) for call centre services for booking / sale of movie tickets. Pursuant to the Agreement, UTIPL was obliged to the all charges incurred for inbound call centre activity including PRI lines rentals, call forwards charges. UTIPL failed to pay PRI line rentals despite several reminders from our Company. On December 24, 2010, our Company issued a legal notice calling upon UTIPL to pay PRI rentals of `1.74 lacs and `1.34 lacs in respect of PRI lines at Bangalore and Kolkata respectively and damages of `43.70 lacs for revenue loss suffered by our Company and inconvenience caused to our patrons with 7 days from receipt of the notice.

2. Our Company entered into an agreement dated June 6, 2009 with Goldwin Health Care Private Limited (“GHCPL”) to promote and exhibit the energy drinks at our multiplexes. Pursuant to the agreement, GHCPL was obliged to pay ` 0.60 lacs per quarter per operational multiplex as quarterly advertising and promotional charges. GHCPL terminated the agreement and despite several reminders failed to pay `23.78 lacs towards the advertising and promotional activities undertaken by our Company. On September 30, 2010, our Company issued a legal notice calling upon GHCPL to pay `23.78 lacs.

Proceedings involving our Subsidiaries Proceedings against Fame Motion Pictures Limites (“FMPL”)

1. Shree Karma Productions Private Limited (“Plaintiff”) has filed a civil suit number 44 of 2007 dated December 24, 2007 before the principal district judge, Vadodara against FMPL and Percept Picture Company Private Limited (together referred to as the “Defendants”). The Plaintiff claims that they are the registered copyright owners of ‘Bal Hanuman’ and also the proprietor of the said character. The Plaintiff further claims that the Defendants and Silvertoon had produced, released, published and were distributing a cinematographic film based on the story and script in which the Plaintiffs had a copyright, in the Telugu language. Hence, aggrieved the Plaintiff had filed the present suit inter-alia praying for perpetual injunction restraining the defendants form infringing Plaintiffs copyright in the artistic work “Bal Hanuman” and from using the character “Bal Hanuman”. The Plaintiff has also filed an application under Order 39 Rule 1 and Rule 2, Section 151 of the Code of Civil Procedure Code, 1908 dated December 24, 2007 seeking an order of injunction restraining the defendant from infringing Plaintiff copyright in the artistic work “Bal Hanuman” and for using the character “Bal Hanuman” pending hearing and final disposal of the case. The Principal District Judge, Vadodara vide order dated December 24, 2007 granted the interim injunction as sought in the application dated December 24, 2007 for a period up to January 17, 2008. Aggrieved, Percept Picture Company Private Limited has filed a civil application number 15737 of 2007 in appeal from order number 467 of 2007 before the High Court of Gujarat, Ahmedabad. Subsequently, the High Court of Gujarat, Ahmedabad vide order dated December 28, 2007 vacated the injunction in favour of Percept Picture Company Private Limited.

Proceedings by Fame Motion Pictures Limited (“FMPL”)

1. FMPL filed a complaint dated March 04, 2003 before the Indian Motion Picture Distributors Association (“IMPDA”) against Surya Movies for not refunding the unrecouped portion of the print costs, publicity expenses, commission etc., as per the Memorandum of Understanding dated April 20, 2000 (“MOU”). Surya Movies entered into an MOU with FMPL and granted distribution rights to FMPL for their film “Dil Hi Dil Mein” for Bombay circuit. FMPL claimed that as per clause 5 of the MOU, if FMPL did not recover exploitation commission at the rate of 20%, cost of prints, publicity expenses and other expenses within 3 months from date of the MOU, then the producer shall make immediate payment of all the shortfall amounts. Accordingly an amount of ` 2.22 lacs was recoverable from Surya Movies. Surya Movies failed to pay the said amount and hence the present complaint was filed. Subsequently, IMPDA vide award dated

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September 19, 2003 admitted the complaint and Surya Movies was called upon to pay the aforesaid amount along with interest at the rate of 24% per annum from July 19, 2000.

2. FMPL filed a complaint before the Indian Motion Picture Distributors Association (“IMPDA”) against Oasis Enterprises. Oasis Enterprises have entered into an agreement dated December 15, 2007 with FMPL for grant of the distribution, exhibition and exploitation rights for the movie “AL RISALAH” for Mumbai circuit and FMPL had released the movie on January 04, 2009. FMPL has claimed balance advance of ` 7.06 lacs along with interest at the rate of 24%. The present complaint with IMPDA for recovery of the aforesaid amount along with interest. Subsequently, an award dated September 02, 2010 was passed by IMPDA inter-alia admitting the claim of FMPL and calling upon Oasis Enterprises along with two other persons to pay the sum of ` 7.07 lacs in 7 monthly installments starting from September 18, 2010. Further, if Oasis Enterprises fails to remit even single installment on due date then Oasis Enterprise shall pay entire amount in one lump sum within 7 days along with interest at the rate of 24% from the date of default till date of final payment. The matter is pending.

3. A Memorandum of Understanding dated October 20, 2003 (“MOU”) was entered between Movie World (“MW”) and Shree Vijay Raj Entertainment and Software Limited (“SVRESL”) for distribution, exhibition and exploitation right of the movie Ab Tumhare Hawale Wattan Sathiyon. SVRESL assigned all the right, title and interest in favour of FMPL by a MOU dated October 29, 2003 (“MOU1”). FMPL filed a complaint dated April 26, 2005 against MW and Mr. Anil Sharma (“Respondents”)with the Indian Motion Picture Distributors Association (“IMPDA”) for un-recouped portion of refundable advance amount of ` 253.36 lacs along with interest at the rate of 24 per cent per annum from May 23, 2005 till receipt and `500 for complaint fees. An ex-parte award dated August 26, 2005 was passed by IMPDA, whereby the Responsents were jointly and severally liable to pay FMPL the balance un-recouped portion of refundable advance. FMPL filed an execution application number 483 of 2006 dated July 20, 2007 before High Court of Bombay for attachment of immovable property of the respondents. The High Court vide its order dated November 16, 2006 issued a warrant attaching the immovable properties, the office and residential premises of Mr. Anil Sharma. Respondents filed chamber summons numbers 1663 of 2006 on December 21, 2006 and chambers summons numbers 40 and 41 of 2007 dated January 11, 2007 in execution application number 483 of 2006 interalia praying for raising attachment and stay of the execution application number 483 of 2006. The matter is pending.

4. FMPL filed a complaint before the Indian Motion Picture Distributors Association (“IMPDA”)

against Yashish Enterprises. A Memorandum of Understanding dated July 18, 2001 (“MOU”) was entered into between Yashish Enterprises and FMPL, wherein distribution, exhibition and exploitation rights of the Movie ‘Yeh Raaste Hain Pyaar Ke’ was granted to FMPL. According to the MOU, an amount of ` 150.00 lacs was paid by FMPL to Yashish Enterprises towards refundable advance amount. As per clause 10 of the said MOU, if FMPL is unable to recover/ realise the refundable deposit amount of ` 150.00 lacs within 6 months from the date of release of the Movie, then Yashish Enterprises shall immediately pay FMPL the remaining amounts on demand. FMPL claimed ` 60.02 lacs being the unrecouped advance from Yashish Enterprises. IMPDA vide its award dated July 19, 2002 (“Award”) directed Yashish Enterprises to pay ` 60.02 lacs together with interest at the rate of 24% from February 10, 2003 within 30 days to FMPL. A letter of arrangement dated October 11, 2002 (“LOA”) was entered into by the parties for deferred payment of the amount due. Yashish Enterprises failed to pay the balance amount of ` 8.32 lacs in accordance of the LOA . Therefore, FMPL filed an execution application number 180 of 2004 dated May 06, 2004 before the High Court of Bombay, for execution of the Award. Pursuant to the execution application, the High Court of Bombay issued warrant of attachment of immovable property dated July 01, 2004 against Mr. Deepak Shivdasani, the sole proprietor of Yashish Enterprises. Further, Mr. Deepak Shivdasani (“Plaintiff”) filed a suit bearing number 1001 of 2006 dated March 20, 2006 before the High Court of Mumbai, against IMPDA, FMPL and Shivani Films. The Plaintiff claimed that he was entitled to get ` 8.00 lacs from Shivani Films and had directed

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Shivani Films to make the payment of `8.00 lacs to FMPL. IMPDA was already holding some amount of Shivani Films and Shivani Films further deposited ` 0.50 lacs with IMPDA. Plaintiff claims that IMPDA was holding the entire amount of `8.00 lacs to be paid to FMPL in trust. Plaintiff states that the amount deposited with IMPDA to be paid to FMPL was deposited by IMPDA in the Court of Panvel but in a separate case filed by a third party against Shivani Films. Plaintiff claims that IMPDA was aware that the amount deposited by Shivani Films was to be paid to FMPL and IMPDA has committed a mistake by depositing the same in some other matter. A Notice of Motion number 1110 2006 in suit number 1001 of 2006 was also filed by Plaintiff praying for discharge from liabilities under the Award and a declaration that nothing is payable to FMPL in term of the Award and an order of injunctions against IMPDA from declining to register any of the films of the Plaintiff. The High Court vide order dated April 26, 2006 rejected the relief sought by the Plaintiff and held that, the same can only be granted subject to providing bank guarantee of ` 8 Lacs. The matter is pending.

5. FMPL filed seven appeals dated February 03, 2006 before the Commissioner of Customs

(Appeals) under section 128 of the Customs Act against the orders bearing numbers CA/HSN/872/JC/SVC/05-06 (“Order 1”), CA/HSN/873/JC/SVC/05-06 (“Order 2”), CA/HSN/874/JC/SVC/05-06 (“Order 3”), CA/HSN/875/JC/SVC/05-06 (“Order 4”), CA/HSN/876/JC/SVC/05-06 (“Order 5”), CA/HSN/877/JC/SVC/05-06 (“Order 6”) and CA/HSN/878/JC/SVC/05-06 (“Order 7”) respectively dated December 05, 2005 passed by the Joint Commissioner of Customs. FMPL imported cinematographic films from Alliance Atlantis Pictures International Inc, Canada (“Atlantis”), Multi Video Services, Burke Virginia (“Multi Video”), Capitol Films Limited (“Capitol Films”), Rosellini and Associates, Inc, Canada (“Rosellini”), Lions Gate Films International, Canada (“Lions Gate”), Leela Productions, USA (“Leela Productions”) and Amsell Entertainment Inc, USA (“Amsell”) respectively for the purpose of distribution, exhibition and exploitation rights of the cinematographic films in India for a fixed period from the date of its first release. The Joint Commissioner of Customs vide Order 1, Order 2, Order 3, Order 4, Order 5, Order 6 and Order 7 held that FMPL, Atlantis, Multi Video, Capitol Films, Rosellini, Lions Gate, Leela Productions and Amsell respectively are related under rule 2(2) of Customs Valuation Rules, 1988. Further, the invoice value was rejected and ordered payment of customs duty based on intrinsic value of imported films as determined under rule 7(A) of the Customs Valuation Rules, 1988 by the assessing groups with additions under rule 9(2) if any. The Joint Commissioner of Customs also ordered inclusion of payments made by FMPL and any royalty/license fee/deposits, in the assessable value under rule 9 of the Customs Valuation Rule, 1988. Hence, aggrieved FMPL filed the present appeals to dismiss Order 1, Order 2, Order 3, Order 4, Order 5, Order 6 and Order 7. The matter is pending.

Proceedings involving our Joint Ventures Swanston Multiplex Cinemas Private Limited (SMCPL) Proceeding against SMCPL

1. Security Guard Board (“Complainant”) for Brihan Mumbai and Thane District (“Board”) has

filed a criminal case bearing number 2485/SS/2005 dated September 26, 2005 before Additional Chief Judicial Magistrate, 38th Court, Mumbai (“Additional CJM”) against SMCPL, Mr. Shravan Shroff, Mr. Satendra Singh and Smt Shushma Kadam alleging an offence under clause 42 for contravention of clause 13(1)(c) of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Scheme 2002 (“Scheme”) read with section 3(3) of Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 (“Act”). The Complainants allege that non-exempted security guards were on duty at SMCPL premises on July 06, 2005 and SMCPL was not a registered member of the Board, hence the principal employers have violated the provisions and requirements of the Scheme and the Act.

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Mr. Shravan Shroff (“Applicant”) has filed a revision application bearing number 312/2009 dated November 04, 2008 along with an application for condonation of delay bearing number 1820 of 2008 dated November 04, 2008 before the honourable Court of Sessions, Mumbai against the order dated September 20, 2005 (“Order 1”) passed by the Additional Chief Judicial Magistrate, 38th Court, Mumbai in respect of criminal complaint number 2485/SS/2005. The Applicant prays that the records and proceedings of case number 2485/SS/2005, pending before the Additional CJM and the Order 1, should be called for and the same should be quashed and set aside. Further the proceedings in case number 2485/SS/2005 be stayed till the final disposal of the present petition. The Court of Session allowed the application for condonation of delay. Subsequently, the Additional Sessions Judge vide order dated April 19, 2011 dismissed the revision petition. Aggrieved, SMCPL is intending to file an appeal before the High Court.

2. Bombay Municipal Corporation (“Complainant”) has filed a case bearing number 5787/SS/2008

before the Court of Metropolitan Magistrate, Mumbai against Mr. Shravan Shroff as Managing Director of Fame Adlabs and Fame Adlabs (together referred to as the “Accused”) for unauthorized construction of overhead tank on the terrace. The Complainant vide notice bearing number PCO/657/KW/08 (“Notice”) dated April 25, 2008, issued under Section 381 A of the Mumbai Municipal Corporation Act, called upon the accused to remove the above said tank. The Complainant alleged that the accused failed to comply with the Notice and thus committed an offence under Section 471 of the Mumbai Municipal Corporation Act. Hence, the present complaint is filed to initiate process against the accused. The matter is pending.

3. Bombay Municipal Corporation (“Complainant”) has filed a case bearing number 5788/SS/2008 before the Court of Metropolitan Magistrate, Mumbai against Mr. Shravan Shroff as Managing Director of Fame Adlabs and Fame Adlabs (together referred to as the “Accused”) for unauthorized construction of 6 cooling towers on the terrace. The Complainant vide notice bearing number PCO/656/KW/08 (“Notice”) dated April 25, 2008, issued under Section 381 A of the Mumbai Municipal Corporation Act, called upon the accused to dismantle and remove the cooling tower entirely from the premises. The Complainant alleged that the accused failed to comply with the Notice and thus committed an offence under Section 471 of the Mumbai Municipal Corporation Act. Hence, the present complaint is filed to initiate process against the accused. The matter is pending.

4. Maharashtra Navnirman Kamgar Sena (“Complainant”) has filed a complaint number 424/2010

dated October 13, 2010 before the Industrial Court, Mumbai (“Court”) against Fame India Limited (“Repondent 1”), SMCPL (“Respondent 2”), Shravan Shroff (“Respondent 3”), Deepak Shinde (“Respondent 4”) and Atul Bhandarkar (“Respondent 5”) (together referred to as the “Respondents”) under section 28(1) and 30 read with items 1 (a), 1(b) of Schedule II and items 6,9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Union and Prevention of Unfair Labour Practices Act, 1971 (“MRT Act”). The Complainant claims that they represent 34 workmen employed with the Respondents who are its members. The Complainant has alleged that the Respondents have engaged in and are continuing to engage in unfair trade practices with effect from October 11, 2010 inter-alia on the reasons that, the increment of employees has elapsed for one year. The Complainant filed the above complaint praying, inter alia, that the Court may hold and declare the Respondents to have indulged in unfair labour practices, to direct the Respondents to refrain from using force and violence, to grant all facilities of casual leave, holidays, give concerned workers permanent status etc. The Complainant filed an application for interim relief dated October 13, 2010 stating that pending the hearing and final disposal of the main complaint, Fame India Limited be restrained from terminating the services of the employees and from imposing illegal lock-out and further to appoint an investigating officer to ascertain the number of employee, to investigate and submit its report. The Respondent 1 and 3 and Respondent 2 and 3 had filed their written statement dated November 15, 2010, praying for dismissal of the above complaint, without granting any relief as claimed by the Complainant. The matter is pending.

5. Bombay Municipal Corporation (“Complainant”) has filed a complaint bearing number 10019/SS/2008 before the Court of Metropolitan Magistrate, Mumbai against Mr. Shravan Shroff

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and Fame Adlabs (SMCPL) (together referred to as the “Accused”) for keeping celluloid base film at the premises as per license issued by MCGM L No. 699841761085956 infringing general condition 6 of the license. The Complainant alleged that the Accused has committed an offence punishable under Section 394 read with section 471 of the Mumbai Municipal Corporation Act. Hence, the present complaint is filed to initiate process against the accused. The matter is pending.

Notices received by SMCPL

1. SMCPL received notice under section 143(1) of the Income Tax Act, 1961 on December 13, 2005 from the Income Tax Department, Mumbai to pay `9.07 lacs for the assessment year 2005-06. SMCPL replied to the notice on January 25, 2006 stating that the tax deducted at source has been wrongly charged and surcharge and education cess have been doubled calculated resulting in the alleged demand of ` 9.07 lacs.

2. SMCPL received an assessment order dated December 22, 2006 from the Income Tax Department, Mumbai determining assessable income of `510.24 lacs for the assessment year 2004-05 along with a notice of demand (“Notice”) under section 156 of the Income Tax Act, 1961 determining tax payable as ‘Nil’. SMCPL replied to the Notice on April 19, 2007 claiming the refund of ` 14.21 lakhs and stating that the ‘Nil’ position determined is incorrect.

3. SMCPL received an assessment order dated December 12, 2009 from the Income Tax

Department, Mumbai determining the income at `442.02 lacs for the assessment year 2007-08 and determining `3.92 lacs as refund. SMCPL vide its letter dated December 24, 2009 requested for rectification u/s 154 of the Income Tax Act, 1961 stating that the revised returns submitted by them on March 31, 2009 was not taken into consideration while passing the assessment order. Therefore, the present request to rectify the assessment order and to issue refund was filed. The refund due after rectification would be Rs 98.32 lakhs.

4. SMCPL was issued a show cause notice bearing number AC(D-850)/DC-28/Unit-4/Show Cause/B-771 dated May 20, 2011 by the Assistant commissioner of Sales Tax, Mumbai demanding SMCPL to show cause as to why sale of ice cream and flavoured ice tea should not be treated as misclassification under schedule C- 107 (11) (f) at the rate of 4%, instead of schedule E 1 at the rate of 12.5% for 2008-2009 and sale of popcorn should not be treated as misclassification under schedule A-39 at the rate of 0%, instead of schedule E 1 at the rate of 12.5% for 2008-2009. SMCPL replied to the said notice vide letter dated June 6, 2011 accepting the misclassification of sale of ice cream and flavoured ice tea and agreeing to pay the differential tax of 8.5% on these and further denied the allegation that sale of popcorn would fall under schedule E1 for the financial year 2008-2009 at the rate of 12.5%.

5. SMCPL was issued a notice bearing number STO//IB Cell (4) / 2011-12 / B-1666 dated July 28,

2011 by the Sales Tax Officer (IB-4), Mumbai under section 64 of the Maharashtra Value Added Tax Act, 2002 alleging non discharge of tax liability correctly for the financial year 2008-2009 and demanding SMCPL to produce interalia the copy of the audit form 704 with annexure, profit and loss account and balance sheet, sale and purchase invoices, purchase registers and ledgers and account for the period April 1, 2008 to March 31, 2009. The matter is pending.

Proceedings by SMCPL

1. SMCPL filed a review petition dated August 26, 2009 before the Supreme Court of India against the judgment and order dated July 27, 2009 passed in civil appeal number 4718 of 2009. The State of Maharashtra & others (“Respondents”) amended the Bombay Entertainment Duty Act, 1923 and provided for certain exemptions from the payment of entertainment tax. The Respondents further issued a government resolution laying down the procedure to avail the benefit of entertainment tax exemption. SMCPL in its fourth year of exemption printed the full entertainment duty on its tickets but paid only 25 % of the same to the Respondents. Hence, the

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Respondents issued notice to SMCPL demanding payment of 75% of the entertainment tax amounting to ` 116.96 lacs between June 2005 till December 2005. Aggrieved, SMCPL filed a writ petition before the High Court bearing number 22 of 2006. The Respondents further demanded a sum of ` 70.40 lacs for a further period of September 23, 2005 till January 05, 2006. The High Court of Bombay vide its interim order dated February 14, 2006 (“Order”) directed SMCPL to deposit ` 20.00 lacs. Subsequently, the High Court of Bombay vide its interim order dated February 21, 2006 (“Order 1”) directed SMCPL to deposit the entire sum of ` 198.11lacs (`116.96 lacs + ` 70.40 lacs + ` 10.75 lacs) as claimed by the Respondents towards demand for payment of entertainment tax and interest within 4 weeks. SMCPL has filed a special leave petition bearing number 4992/2006 before the Supreme Court of India against Order 1. The Supreme Court vide its order dated March 20, 2006 granted interim stay on realization of the amounts, pending the writ petition before the High Court. Subsequently, the High Court vide its order dated October 21, 2009 set aside the demand notices issued by the Respondents and held that the benefit of entertainment tax exemption is meant for the multiplex theatre owners and the Respondents are not entitled to claim more than 25% of the rate of tax as entertainment duty during the 4th and 5th year. Aggrieved, the Respondents filed a special leave petition bearing number 7853 of 2009. The Supreme Court vide its order dated July 27, 2009 (“Order 3”) in civil appeal number 4718 of 2009 arising out of special leave petition bearing number 7853 of 2009, allowed the appeal and directed the Respondents to realise the amount to the extent SMCPL had unjustly enriched itself and pay the same to a voluntary or charitable organisation. Aggrieved by Order 3 SMCPL had filed the present review petition.

Subsequently, the Respondent (Tehsildar) had issued a demand notice dated December 03, 2009 (“Demand Notice”) as per Order 3 demanding payment of ` 187 lacs. SMCPL has paid the entire amount as sought in the Demand Notice. Further on December 07, 2009 the Respondent (Tehsildar) issued a second demand notice (“Demand Notice 1”) demanding payment of a further amount of ` 179.86 lacs as interest. SMCPL replied to the Demand Notice 1 vide letter dated December 14, 2009 stating that the demand of interest is illegal and contrary to Order 3. SMCPL did not receive any further correspondence in the matter.

2. SMCPL has filed an appeal dated March 01, 2011 before the Commissioner of Income Tax (Appeals)-3, Mumbai against the assessment order passed by the Assistant Commissioner of Income Tax- 11(1), Mumbai (“Assessing Officer”) dated December 23, 2010. SMCPL filed a revised return of income for the assessment year 2008- 2009 declaring an income of ` 92.37 lacs. The Assessing Officer vide rectification order dated December 23, 2010 passed under Section 154 of the Income Tax Act computed the taxable income as a total income of ` 141.24 lacs and total book profit of ` 87.40 lacs, further penalty proceedings were initiated under section 271 (1)(c). Hence, aggrieved SMCPL had filed the present appeal inter-alia on the ground that the Assessing Officer made an error in law and on the facts in making an addition of ` 48.87 lacs in respect of entertainment tax subsidy, by treating the same as revenue receipt. The matter is pending and the amount in dispute is ` 48.87 lacs.

Proceedings involving our Promoter Proceedings against Inox Leisure Limited (“ ILL”) 1. On June 15, 2006 ILL entered into a Business Conducting cum Agency Agreement (the “Agreement”)

with Om Metals Infraprojects Limited (the “OMIL”) for running the multiplex cinema theatre situated at Kota, Rajasthan. OMIL made an application to Additional District Magistrate, Kota for endorsing the cinema license in the name of ILL. The Additional District Magistrate, Kota notified the Collector (Stamps), Kota about the Agreement as it involved liability of stamp duty. The Collector (Stamps) vide its order dated March 28, 2007 stated that the document executed was a lease deed and demanded `3.10 lacs towards deficient stamp duty on the Agreement. On April 25, 2007 ILL paid the deficient stamp duty amount of `3.10 lacs. However, the Sub Registrar, Registration, Kota filed a revision petition bearing revision case number Stamp/1174/07/Kota dated June 3, 2011 before the Rajasthan Tax Board, Ajmer against the order passed by the Collector (Stamps) on March 28, 2007. In the

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revision petition the Sub Registrar, Registration, Kota claimed mistake in computation of stamp duty and prayed that the stamp duty to be levied as per the duty prescribed in Article 33(c) of the schedule appended to the Rajasthan Stamp Act 1998. The matter is pending.

2. Ms. Riyaz Shaikh and Ms. Pratima Shaikh (the “Complainants”) filed a consumer case against ILL

before Additional Consumer Forum, Pune bearing PDF 349/2010 dated June 16, 2010, claiming damages of `4.66 lacs. ILL issued letter of intents (the “LOIs”) dated April 1, 2010 by ILL to Complainants for kiosk space for the period April 1, 2010 till March 31, 2011. The Complainants paid `1.05 lacs to ILL as deposit. ILL terminated the LOIs on May 6, 2010 as the Complainants were unable to obtain food license. ILL has filed its reply affidavit on March 4, 2011. The matter is pending.

3. Jalan Distributors Private Limited (the “JDPL”) filed a civil suit number 35 of 2007 (the “Suit”) dated

February 15, 2007 against Calcutta Cine Private Limited (the “CCPL”) before the High Court of Calcutta (the “High Court”) for specific performance of the agreement dated August 14, 2006 entered between JDPL and CCPL. CCPL, pursuant to the agreement, agreed to exhibit each and every film released by JDPL from August 2006 till Diwali 2007. JDPL claimed damages for non-exhibition of movies by CCPL amounting to ` 13.26 lacs. CCPL was amalgamated with ILL by virtue of an order of the High Court dated March 13, 2007. JDPL filed a general application number 2045 of 2009 dated July 29, 2009 in the Suit to convert the suit for specific performance into a claim for damages simplicitor and bring ILL on record instead of CPL. The High Court vide its order dated February 24, 2011 allowed the same and directed ILL to file its written statement. The matter is pending.

4. Mr. Rajesh Vasantrao Ayare (the “Plaintiff”), an employee of TNN, a news channel, filed a suit

bearing special civil suit number 713/03 before the Civil Judge (SD), Vadodara dated December 29, 2003 for compensation of `5.00 lacs along with interest of 12% from the date of filing the suit against ILL. Plaintiff and his cameraman alleged that they were manhandled by the security staff of ILL at Vadodara when they tried to enter the premises to cover the year end party. Plaintiff filed a suit, inter alia, for compensation for permanent disablement caused, medical treatment expenses, mental distress, shock. ILL filed written statement on April, 2004. The matter is pending.

5. Dr. Divya Narendra Parikh (the “Complainant”) filed a consumer complainant bearing C.D.R.F. No.

412 of 2006 dated May 18, 2006 before the District Consumer Disputes Redressal Forum at Vadodara against the Manager of ILL alleging that a rat bit him while he was watching a movie at INOX – Vadodara. Compensation of ` 0.52 lacs sought for expenditure incurred towards medical treatment and towards mental distress, shock, etc. The matter is pending.

6. Jagrut Nagrik on behalf of Ms. Sunita G. Sonar (the “Complainant”) filed a consumer complaint

bearing number C.D.R.F. 376 of 2007 dated April 10, 2007 before the District Consumer Disputes Redressal Forum at Vadodara against the manager of ILL for damages caused to her vehicle in the parking lot of INOX – Vadodara. Complainant alleged deficiency in service and unfair trade practices and has claimed compensation of ` 0.28 lacs towards parking charges, repairing charges, police complaint, miscellaneous expenses, mental pain and agony. The matter is pending.

7. Jagrut Nagrik on behalf of Government of Gujarat (“Complainant”) filed a consumer complaint

bearing number C.D.R.F. No. 456 of 2008 dated June 9, 2008 before District Consumer Disputes Redressal Forum at Vadodara, against ILL and others for selling mineral water at higher MRP at INOX Multiplex, Vadodara. Complainant alleged deficiency of service and unfair trade practice by ILL. Complainant demanded a total compensation of `5.20 lacs towards punitive damages, miscellaneous / legal expenses and cost of complaint. The complainant also demanded seeking ` 6 with 18% rate of interest from the date of purchase of bottle till realization, towards higher prize charged. The matter is pending.

8. Lok Jagrut Grahak Suraksha Mandal for Mr. Jignesh H. Pandya (the “Complainant”) filed a consumer

complaint bearing number C.D.R.F. No. 129 of 2007 dated March 2, 2007 before District Consumer

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Disputes Redressal Forum at Vadodara, against ILL for selling eatables at higher MRP at INOX Multiplex, Vadodara. Complainant alleged deficiency of service and unfair trade practice by ILL and demanded compensation of `0.50 lacs and return of excess amount charged for the eatables consumed by the Complainant and reduction in prices at market price of eatables sold in the premises. The matter is pending.

9. ILL received a notice dated February 18, 2011 along with a copy of the consumer complaint bearing

number 33 of 2007 filed by Ms. Kanika Sharma and Mr. Atul Sharma (“Complainants”) before the District Consumer Court for deficiency in service and unfair trade practice by ILL at their multiplex, Royal Box of Kota. The Complainants in their complaint allege that when the seats were inclined, the screen was not completely visible. The Complainants demanded `0.05 lacs each as compensation and refund of the ticket price. The matter is pending.

10. The Deputy Director, Employees State Insurance Corporation (the “ESIC”) initiated proceedings

under Section 45A of the Karnataka Employees’ State Insurance Act, 1948 against ILL and demanded ` 9.71 lacs as contributions based on the inspection by the social security office and the memo issued by the inspector on August 30, 2008. ILL paid ` 0.53 lacs and disputed certain other claims. The Deputy Director, ESI Corporation passed an order number KAR.INS.IV.53-00-022069-000-1201 dated December 12, 2010 (the “Order”) demanding contributions of ` 9.70 lacs payable for the period 2005 to 2008. ILL filed an appeal dated January 31, 2011 against the Order before the Appellate Authority at Bangalore. The Appellate Authority vide order dated July 27, 2011 partly allowed the appeal and set aside the Order. The matter is pending.

11. The Directorate General of Central Excise Intelligence (“DGCEI”) initiated enquiry on payment of

architect fee to foreign architects by ILL and receipt of pouring and signing fee from Coca Cola India Private Limited (“CCIPL”), during the year 2007. During the course of investigation, ILL deposited a sum of ` 14.21 lacs, which includes ` 10.67 lacs towards service tax on architect fee and ` 3.54 lacs towards interest vide challan dated 28 April 2007 for the period from 2002-2003 to 2004-2005. On completion of the investigation, ILL was served a show cause notice F. No. DGCEI/MZU/ I&IS’D’/12(4)102/2007/7054 dated October 6, 2008 (“Notice 1”) alleging that signing fee and pouring fee were taxable under the business auxiliary services (“BAS”), and that ILL was liable to pay service tax on import of architect service. ILL was asked to show cause to the Commissioner of Service Tax, Mumbai as to why, inter alia, service tax should not be demanded on BAS and architect services. Subsequently, ILL was served one more show cause notice F.No. ST/MUM/DIV.III/GR-I/INOX/08 dated 23 July 2009 by the Commissioner of Service Tax, Mumbai (“Notice 2”) demanding service tax on pouring fee received by ILL during the financial year 2008-09.

ILL submitted detailed reply to both Notice 1 and Notice 2, and also appeared for personal hearing before the Commissioner of Service Tax, Mumbai (“Adjudicating Authority”). The Adjudicating Authority passed a common order-in-original number 39-40/STC-I/BR/10-11 (“Order”) dated January 18, 2011 for both Notice 1 and Notice 2, wherein the learned Commissioner has confirmed the demand of service tax of ` 54.19 lacs on signing fee, pouring fee and architect services and also levied penalty under section 76, 77 and 78 of the Finance Act. On April 27, 2011 ILL has filed an appeal at Customs Excise and Service Tax Appeallate Tribunal. The matter is pending.

12. The Deputy Commissioner of Income Tax, Circle 1-(2) (“Assessing Officer”), Baroda has filed an

appeal number 1984/ Ahd-2009 dated June 13, 2009 before the Income Tax Appellate Tribunal, Ahmedabad for setting aside the order of Commissioner of Income Tax (Appeals)-I Baroda (“CIT (A)”) and for restoring the order passed by the Assessing Officer in respect of assessment year 2003-2004. ILL had filed return of income declaring a total loss of ` 521.49 lacs and the deemed income under section 115JB was declared as ` 10.96 lacs. The Assessing Officer vide assessment order dated March 30, 2006 passed under Section 143 (3) of the Income Tax Act computed the total loss as ` 370.51 lacs and deemed income under section 115JB was declared at ` 33.07 lacs. Subsequently, on giving effect to the CIT (A)’s order dated March 24, 2009 the revised loss was determined to be ` 912.55 lacs and the revised book profit to be ` 23.29 lacs. Aggrieved, the Assessing Officer filed the present appeal inter alia on the ground that the CIT (A) erred in holding the entertainment tax

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exemption of ` 185.07 lacs and ` 114.48 lacs in respect of Pune and Baroda Multiplexes as capital receipt which is not exigible to tax, further the CIT (A) erred in treating the expenditure of ` 35.96 lacs as capital expenditure cancelling the enhancement of book profit by the amount of provision for gratuity amounting to ` 5.10 lacs and direction to allow deduction under section 80 IB as claimed by ILL. The ITAT vide order dated September 9, 2011 upheld the order of CIT (A) dated March 24, 2009, holding the entertainment tax exemption of ` 185.07 lacs and ` 114.48 lacs in respect of Pune and Baroda Multiplexes as capital receipt which is not exigible to tax, treating the expenditure of ` 35.96 lacs as capital expenditure and the cancelling of enhancement of book profit by the amount of provision for gratuity amounting to ` 5.10 lacs. However, with regard to the direction to allow deduction under section 80IB as claimed by ILL, the same was remanded back to the Assessing Officer for fresh adjudication.

12. The Deputy Commissioner of Income Tax, Circle 1-(2), Baroda (“Assessing Officer”), Baroda has

filed an appeal number 2299/Ahd 2009 dated July 21, 2009 before the Income Tax Appellate Tribunal, Ahmedabad for setting aside the order of Commissioner of Income Tax (Appeals) (“CIT (A)”) and for restoring the order in original passed by the Assessing Officer in respect of assessment year 2004-2005. ILL had filed return of income on October 26, 2004 declaring loss of ` 107.84 lacs and the deemed income under Section 115JB is ` 284.01 lacs. The Assessing Officer vide assessment order dated November 30, 2006 passed under Section 143 (3) of the Income Tax Act computed the total loss as ` 106.51 lacs and the deemed income under section 115JB is ` 470.29 lacs and raised a demand for ` 16.61 lacs. Aggrieved by the Order, ILL filed an appeal with CIT (A). The CIT (A) vide order dated May 14, 2009 partly allowed this appeal. Aggrieved, the Assessment Officer has filed the present appeal inter alia on the ground that the CIT (A) erred in holding the entertainment tax exemption of ` 756.98 lacs as capital receipt which is not exigible to tax, cancelling the enhancement of book profit by the amount of provision for gratuity amounting to ` 5.55 lacs and direction to allow deduction under section 80 IB as claimed by ILL. The ITAT vide order dated September 9, 2011 upheld the order of CIT (A) dated May 14, 2009, holding the entertainment tax exemption of ` 756.98 lacs as capital receipt which is not exigible to tax, the cancelling of enhancement of book profit by the amount of provision for gratuity. However, with regard to the direction to allow deduction under section 80IB as claimed by ILL, the same was remanded back to the Assessing Officer for fresh adjudication.

13. The Deputy Commissioner of Income Tax, Circle 1-(2) (“Assessing Officer”), Baroda has filed an

appeal number 2300/ Ahd2009 dated July 21, 2009 before the Income Tax Appellate Tribunal, Ahmedabad for setting aside the order of Commissioner of Income Tax (Appeals) (“CIT (A)”) and for restoring the order in original passed by the Assessing Officer in respect of assessment year 2005-2006. ILL had filed revised return of income on March 23, 2007 declaring income as Nil and deemed income under Section 115JB at ` 936.93 lacs. The Additional Commissioner of Income Tax Range I, Baroda vide assessment order dated December 31, 2007 passed under Section 143 (3) of the Income Tax Act computing the total income as ` 137.80 lacs and book profit under section 115JB as ` 1425.21 lacs. Further, a demand notice was issued demanding payment of ` 46.27 lacs. Aggrieved by the assessment order ILL preferred an appeal before CIT (A). Subsequently, the CIT (A) vide order dated May 14, 2009 partly allowed the appeal filed by ILL against the assessment order dated December 31, 2007. Aggrieved, the Assessing Officer has filed the present appeal inter alia on the ground that the CIT (A) erred, in deleting the disallowance of ` 24.30 lacs being losses from currency swap transaction treated as speculative loss, holding the entertainment tax exemption of ` 1,083.20 lacs as capital receipt which is not exigible to tax, cancelling the enhancement of book profit by the amount of provision for gratuity amounting to ` 7.69 lacs and direction to allow deduction under section 80 IB as claimed by ILL. The ITAT vide order dated September 9, 2011 upheld the order of CIT (A) dated May 14, 2009, holding the entertainment tax exemption of ` 1,083.20 lacs as capital receipt which is not eligible to tax, the cancelling of enhancement of book profit by the amount of provision for gratuity. However, with regard to the direction to allow deduction under section 80IB as claimed by ILL and deletion of disallowance of ` 24.30 lacs being losses from currency swap transaction treated as speculative loss, the same was remanded back to the Assessing Officer for fresh adjudication.

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14. The Deputy Commissioner of Income Tax, Circle 1-(2) (“Assessing Officer”), Baroda has filed an appeal number 441/Ahd2010 dated February 10, 2010 before the Income Tax Appellate Tribunal, Ahmedabad for setting aside the order of Commissioner of Income Tax (Appeals) I, Baroda (“CIT (A)”) and for restoring the order passed by the Assessment Officer in respect of assessment year 2006-2007. ILL had filed revised return of income on February 01, 2008 declaring income of ` 567.87 lacs and deemed income under section 115JB at ` 1,981.74 lacs. The Assessing Officer vide assessment order dated December 29, 2008 passed under Section 143 (3) of the Income Tax Act computed the total income as ` 967.67 lacs and deemed income under section 115JB at ` 1981.74 lacs. Further, a demand notice was issued demanding payment of ` 57.28 lacs. Subsequently, the CIT (A) vide order dated October 27, 2009 partly allowed the appeal filed by ILL against the assessment order dated December 31, 2007. Aggrieved, the Deputy Assessing Officer has filed the present appeal inter alia on the ground that the CIT (A) erred, in deleting addition of ` 1,468.90 lacs on account of treating the entertainment tax as revenue receipt as against the claim as capital receipt. The matter is pending.

15. Pilla Satyanrayana (“Complainant”) filed a consumer complaint bearing number CC. No 54 of 2011 dated February 26, 2011 before District Consumer Forum – II at Vijayawada, against ILL and others for selling mineral water and eatables at higher MRP at INOX Urvashi Multiplex, Vijayawada. Complainant alleged deficiency of service and unfair trade practice by ILL. Complainant has demanded a total compensation of `0.50 lakhs and the cost of the complaint for inconvenience caused. The matter is pending.

16. Pernod Ricard (I) Private Limited (“Applicant”) filed an application dated February 21, 2011 before

the Intellectual Property Appellate Board against ILL (“Respondent 1”) and the Registrar of Trade Marks (“Respondent 2”) (together referred to as the “Respondents”). The Applicant claims that they have been in continuous and commercial use of the trade mark ‘Fuel’ in India and that the trade mark ‘Fuel’ now falls within the meaning of section 2 (1) (zg) of the Trade Marks Act, 1999. The Applicant further claims that they have applied for registration of the trade mark ‘FUEL’ in class 32 under application number 1363175 as on June 10, 2005 and the same is pending. Further the applicant has also filed applications for registration under class 33 bearing number 1363173 and 1406913 dated June 10, 2005 and December 16, 2005 respectively. Subsequently, the Applicant came to know about the impugned trade mark registration of Respondent 1 of ‘REFUEL” in almost all the classes of Fourth Schedule including in class 33. Aggrieved, the Applicant has filed the present application praying that the Respondent 2 be directed to remove the trade mark registration number 1186629 in class 33 from the Register of Trade Marks and also for an order as to the costs of the proceedings. The matter is pending.

17. Pernod Ricard (I) Private Limited (“Applicant”) filed an application dated March 07, 2011 before the Intellectual Property Appellate Board against ILL (“Respondent 1”) and the Registrar of Trade Marks (“Respondent 2”) (together referred to as the “Respondents”). The Applicant claims that they have been in continuous and commercial use of the trade mark ‘Fuel’ in India and that the trade mark ‘Fuel’ now falls within the meaning of section 2 (1) (zg) of the Trade Marks Act, 1999. The Applicant further claims that they have applied for registration of the trade mark ‘FUEL’ in class 32 under application number 1363175 as on June 10, 2005 and the same is pending. Further the applicant has also filed applications for registration under class 33 bearing number 1363173 and 1406913 dated June 10, 2005 and December 16, 2005 respectively. Subsequently, the Applicant came to know about the impugned trade mark registration of Respondent 1 of ‘REFUEL” in almost all the classes of Fourth Schedule including in class 32. Aggrieved, the Applicant has filed the present application praying that the Respondent 2 be directed to remove the trade mark registration number 1186628 in class 32 from the Register of Trade Marks and also for an order as to the costs of the proceedings. The matter is pending.

18. G. L. Narasimha Rao (“Complainant”) filed a complaint dated March 15, 2010 before the IVth Additional Chief Metropolitan Magistrate, Hyderabad (“Court”) against ILL (“Accused 1”) and Big Tree Entertainment Private Limited (“Accused 2”) (together referred to as the “Accused”) under section 200 read with section 190 of the Criminal Procedure Code, 1953. The Complainant alleges that the Accused 1 is trying to sell tickets online through its agents without getting the necessary permissions from the licensing authority in accordance with the Cinematograph Act, 1952

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(“Cinematograph Act”). Further, the Accused 1 is trying to sell tickets online at excess rates than permitted by the government. Aggrieved, the Complainant filed the present complaint praying the Court to take cognizance of the offence punishable under section 9 A of the Cinematograph Act read with section 420 of the Indian Penal Code, 1860 and refer the matter to the concerned police under section 156 (3) of the Criminal Procedure Code, 1953 and direct to secure the original documents of the accounts from the hands of the Accused. The Court vide order dated March 19, 2010 forwarded the matter to Punjagutta police station and a case was registered with number Cr. No. 317 of 2010. The Punjagutta police has taken up the matter for investigation. The Punjagutta Police issued a Notice dated May 10, 2011 to ILL informing that the section of law was altered from 9A of the Cinematograph Act and section 420 of the Indian Penal Code, 1860 to Section 9 (A) of the Andhra Pradesh Cinemas (Regulation) Act, 1955. The matter is pending.

19. Seagram India Private Limited (“Applicant”) filed an opposition number BOM 228295 dated September 18, 2006 to application number 1264409 in class 42 in the name of ILL before the Trade Mark Registry, Mumbai. The Applicant filed the notice to oppose the registration of trade mark/service mark ‘REFUEL’ in class 42 advertised under number 1264409 for retail outlets and departmental stores in Trade Mark Journal number 1335 dated October 15, 2005. The Applicant claims that the use of impugned trade mark ‘REFUEL’ by ILL is likely to cause confusion or deception amongst the consumers, particularly if used in relation to alcoholic and non alcoholic beverages. The Applicant hence prays that the impugned application be refused and cost of proceedings be awarded to the Applicant. Pernod Ricard India Private Limited (earlier known as Seagram India Private Limited) filed an interlocutory petition dated December 31, 2007 before the Registrar of Trade Mark praying that the name of the petitioner/opponent in the notice of opposition be changed to Pernod Ricard India Private Limited and to pass such other order as it may deem fit. The matter is pending.

20. Sanjay Products (“Opponent”) has filed a notice of opposition dated June 21, 2004 before the

Registrar of Trade Marks against application number 1186595 in class 31 filed by ILL. The Opponent claims that they have adopted the trade mark ‘CHATAPAT’ for the confectionary goods in the year 1984 and since then used the trade mark. The Opponent further claims that appropriate application has been filed for registration of trademark. The Opponent also claims that the registration of the impugned trade mark in the name of ILL would be contrary to section 9, 11 and 18 of the Trade Mark Act, 1999. Hence the opponent prays that the impugned application may be rejected and costs be awarded to the Opponent. ILL has filed its counter statement dated August 21, 2007. The matter is pending.

21. Sanjay Products (“Opponent”) has filed a notice of opposition dated June 21, 2004 before the Registrar of Trade Marks against application number 1186593 in class 29 filed by ILL. The Opponent claims that they have adopted the trade mark ‘CHATAPAT’ for the confectionary goods in the year 1984 and since then used the trade mark. The Opponent further claims that appropriate application has been filed for registration of trademark. The Opponent also claims that the registration of the impugned trade mark in the name of ILL would be contrary to section 9, 11 and 18 of the Trade Mark Act, 1999. Hence the opponent prays that the impugned application may be rejected and costs be awarded to the Opponent. ILL has filed its counter statement dated August 21, 2007. The matter is pending.

22. Kantilal Karia and Company (“Opponent”) has filed a notice of opposition dated May 18, 2004 (“Notice”) before the Registrar of Trade Marks against application number 1186631 for trade mark ‘REFUEL in class 20 filed by IIL. The Opponent claims that they have adopted the trade mark ‘FUEL’ in the year 2002 and has been in use since then. The Opponent further claims that the trade mark ‘REFUEL’ for which the applicants are seeking registration under application number 1186631 is confusingly and deceptively similar to the reputed trade mark ‘FUEL’. Hence aggrieved the Opponent has filed the Notice praying that the impugned application be refused and the Notice be allowed. ILL filed its counter statement dated February 7, 2005. The matter is currently pending.

23. Kantilal Karia and Company (“Opponent”) has filed a notice of opposition dated November 17, 2003 (“Notice”) before the Registrar of Trade Marks against application number 1186624 for trade mark ‘REFUEL in class 28 filed by IIL. The Opponent claims that they have adopted the trade mark ‘FUEL’ in the year 2002 and has been in use since then. The Opponent further claims that the trade mark

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‘REFUEL’ for which the applicants are seeking registration under application number 1186624 is confusingly and deceptively similar to the reputed trade mark ‘FUEL’. Hence aggrieved the Opponent has filed the Notice praying that the impugned application be refused, the Notice be allowed and ILL be ordered to pay costs. ILL filed its counter statement dated April 27, 2004. The matter is pending.

24. Kantilal Karia and Company (“Opponent”) has filed a notice of opposition dated May 4, 2004 (“Notice”) before the Registrar of Trade Marks against application number 1186611 for trade mark ‘REFUEL in class 14 filed by IIL. The Opponent claims that they have adopted the trade mark ‘FUEL’ in the year 2002 and has been in use since then. The Opponent further claims that the trade mark ‘REFUEL’ for which the applicants are seeking registration under application number 1186611 is confusingly and deceptively similar to the reputed trade mark ‘FUEL’. Hence aggrieved the Opponent has filed the Notice praying that the impugned application be refused, the Notice be allowed and ILL be ordered to pay costs. ILL filed its counter statement dated December 22, 2004. The matter is pending.

25. Kantilal Karia and Company (“Opponent”) has filed a notice of opposition dated May 22, 2004 (“Notice”) before the Registrar of Trade Marks against application number 1186613 for trade mark ‘REFUEL’ in class 16 filed by IIL. The Opponent claims that they have adopted the trade mark ‘FUEL’ in the year 2002 and has been in use since then. The Opponent further claims that the trade mark ‘REFUEL’ for which the applicants are seeking registration under application number 1186613 is confusingly and deceptively similar to the reputed trade mark ‘FUEL’. Hence aggrieved the Opponent has filed the Notice praying that the impugned application be refused, the Notice be allowed and ILL be ordered to pay costs. ILL filed its counter statement dated February 7, 2005. The matter is currently pending.

26. IPCA Laboratories Limited (“Opponent”) has filed a notice of opposition dated May 6, 2004

(“Notice”) before the Registrar of Trade Marks against application number 1126785 for trade mark ‘INOX’ in class 5 filed by ILL. The opponent claims that they have adopted and commenced the use of trade mark ‘IMOX’ in the year 1982 and have registered the same in the year 1986. The Opponent further claims that the trade mark ‘INOX’ for which the applicants are seeking registration under application number 1126785 is confusingly similar to the reputed trade mark ‘IMOX’. Hence aggrieved the Opponent has filed the Notice praying that the impugned application be refused, the Notice be allowed and ILL be ordered to pay costs. ILL filed its reply dated December 22, 2004.

27. K Suresh Kumar (“Complainant”) filed a consumer complaint number 96/2011 dated May 18, 2011before the Alternate Consumer Dispute Redressal Cell against ILL. The Complainant alleges that he was cheated by the outer box office counter ticket issuer of ILL to take the ticket against the Complainant’s will. Further, the Complainant claims that the food items are being sold at rates higher than the M.R.P. Aggrieved, the complainant filed the complaint praying for a refund of ` 5,000/-. The matter is pending.

28. Mr. Surendra Kohli (the “Complainant”) filed a consumer complainant bearing No. 1051 of 2010 (“Complaint”) before the District Consumer Disputes Redressal Forum at Jaipur against ILL alleging that a rat bit him while he was watching a movie at INOX – Vaishali Nagar, Jaipur. The Complainant further alleged that due to the rat bite he fell down rupturing his ligament. Aggrieved the Complainant filed the Complaint claiming compensation amounting to ` 0.81 lakhs for expenditure incurred towards medical treatment, mental distress, shock, etc. ILL received a notice from District Consumer Disputes Redressal Forum demanding appearance on August 24, 2011. ILL filed its reply dated August 24, 2011. The matter is pending.

Notices against Inox Leisure Limited (“ILL”)

1. ILL was issued a show cause notice number 687 of 2008 dated June 24, 2011 by the Additional

Collector of Lucknow for nonpayment of adequate stamp duty in respect of a Leave and License Agreement dated December 8, 2006 (“Agreement”) between Amrit Bottlers Private Ltd and ILL. The

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Additional Collector Lucknow calculated the stamp duty on the Leave and License Agreement at ` 94.04 lacs which as per them has not been paid by ILL. ILL has filed its objections on September 16, 2011.

2. Our Company and ILL was issued a notice bearing number POL/MNR/VAS/4110-4111 dated September 19, 2011 by the Collector stating that the multiplex cinema theatres are not liable to collect service charge and the collection of service charge is to be enjoyed only by single screen theatre/cinema. Further, both ILL and our Company were called upon to determine the service charge that has been collected month wise from the time of starting of the multiplex cinema theatre till date.

Proceedings by Inox Leisure Limited (“ILL”) 1. Multiplex Association of Gujarat (of which ILL is a member) (the “Petitioners”) filed a Writ Petition,

being special civil application number 5391 of 2004 dated April 29, 2004 before the High Court of Gujarat (the “High Court”) against the State of Gujarat and others (the “Respondents”), challenging the manner of assessment and calculation of the entertainment tax exempted by the State of Gujarat (the “State”).

ILL approached Tourism Corporation of Gujarat Limited (the “TCGL”) for availing of tax benefits under the Incentive for Tourism Project 1995-2000 (the “Scheme”). The State Level Committee under the Scheme passed an order dated February 16, 2006 (the “State Order”), rejecting eligibility on the ground that ILL did not start its commercial operations on or before July 31, 2002. ILL filed a special civil application number 4319 of 2006 against the State Order. Since both these petitions and several other petitions have common cause of action they were heard together.

The High Court passed a common order dated June 26, 2009 (the “Order”), inter alia holding that, ILL was entitled for availing of tax benefits under the Scheme and remanded the matter to the State authorities with a direction to decide afresh, to issue final eligibility certificate and raise the demand or grant refund, as the case may be. The State vide their order dated June 28, 2010 upheld that the State Order (the “Second State Order”). ILL filed miscellaneous petition number 1791 of 2010 dated July 7, 2010 before the High Court requesting to give directions to the State as contained in the Order. The High Court vide its order dated August 18, 2010, inter alia, quashed and set aside the Second State Order and directed to decide issue of eligible capital investment made upto November 30, 2002 in terms of the directions issued in the Order. The TCGL vide their letter dated December 9, 2010 again rejected ILL’s claim for entitlement of eligibility certificate.

ILL filed a miscellaneous civil application number 3642 of 2010 dated December 28, 2010 (“Application”) in High Court seeking directions against the State to grant final eligibility certificate and determine amount of eligible capital investment. The High Court vide its interim order dated February 4, 2011 directed the State to grant final eligibility certificate and determine amount of eligible capital investment. Subsequently, the High Court vide order dated April 28, 2011 disposed the Application directing ILL to furnish expenditure details of the extended four months along with chartered accountants certificate, and State was directed to extend the benefit of eligible capital investment upto a period of November 30, 2002. The State filed a special leave petition number 27456 of 2009 before the Supreme Court of India against the Order, in respect of the manner of assessment and method of calculation of entertainment tax. The matter is pending.

2. ILL entered into a lease agreement with Chennai Citi Center Holdings Private Limited (the

“CCCHPL”) dated August 10, 2006 for the premises located at Chennai Citi Centre at Radhakrishnan Salai, Mylapore, Chennai. ILL also entered into a ‘Common Area Maintenance’ agreement and a ‘Facilities and Utilities’ agreement both dated August 10, 2006 with CCCHPL. According to the agreement, ILL agreed to reimburse CCCHPL the common area maintenance charges (“CAM charges”) at an agreed rate of `5 per square feet and any further increase in power tariff and/or other inflationary factor. On November 19, 2007, ILL and CCCHPL mutually agreed to increase the CAM Charges from `5 per square feet to `8 per square feet and a fixed escalation of 12 per cent in CAM charges every 3 years subject to adjustment towards increase in power charges. CCCHPL further

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proposed to increase the CAM charges to `16.95 per square feet and sent an e-mail on July 10, 2008. ILL responded to the e-mail on July 15, 2008 and stated that they have fully complied with their obligations under the agreement and the increased claim was against the mutual understanding between them as discussed in the meeting on November 19, 2007. CCCHPL subsequently sent few reminders to increase the CAM charges and ILL replied taking the same stand. ILL filed two applications bearing numbers O.A.1236 of 2008 and A.No. 5373 of 2008 under S.9 of the Arbitration and Conciliation Act,1996 before the High Court of Madras (“the High Court”) seeking for an order of interim injunction restraining CCCHPL from demanding CAM charges other than in accordance with the agreement and for an interim order directing CCCHPL to continue to provide the services respectively. ILL nominated Justice Umesh Chandra Banerjee vide letter dated February 2, 2009 as the arbitrator. CCCHPL replied to the letter on February 23, 2009 disagreeing with ILL’s nomination without stating any reasons.ILL filed a petition under section 11 of the Arbitration and Conciliation Act, 1996 before the High Court for appointment of arbitrator. The High Court on April 21, 2009 dismissed O.A.1236 of 2008 and A.No. 5373 of 2008 by a common order. ILL thereafter filed an appeal bearing numbers OSA 125 and OSA 126 of 2009 against the said order and the High Court vide an interim order dated May 05, 2009 directed ILL to pay CAM Charges at ` 10 per square feet till June 15, 2009 and to maintain status quo till June 15, 2009. The High Court also clarified that this arrangement for payment of CAM charges is purely of a temporary nature and further directed the Registrar of the High Court to list the said appeals before the regular bench. The High Court after hearing the appeals, vide its final order dated November 24, 2009 in OSA 125 and OSA 126 of 2009 granted ILL interim protection against any coercive action by CCCHPL and further directed CCCHPL to provide CAM services as per agreed terms with ILL. However, the High Court directed ILL to pay CAM charges at the rate of `12 per square feet with effect from April 1, 2008 till the matter is finally decided by the Arbitrator. The said order also recorded the consent of parties to appoint Justice R.Jayasimha Babu, Judge (Retd.), Madras High Court as the sole arbitrator to resolve the disputes between parties with regard to the common area maintenance charges. The Arbitrator entered upon the reference on January 11, 2010 and on 27 June, 2010 issues were framed. At present, CCHPL and ILL are negotiating settlement terms and the matter is pending.

3. ILL filed a writ petition bearing number 3783 of 2010 on May 28, 2010 against Union of India and others before the High Court of Delhi (the “High Court”) challenging the constitutional validity and the amendment made to Section 65(105) (zzzz) by the Finance Act, 2010 on the levy of service tax on renting of immovable property. The High Court passed interim order dated July 16, 2010 stating that till further orders, there shall be no recovery of service tax in respect of renting of immovable properties for the properties held by ILL situated in Delhi. The matter is pending.

4. ILL filed a writ petition bearing number 35967 of 2010 dated November 18, 2010 against Union of

India and others before the High Court of Karnataka (the “High Court”), challenging the constitutional validity and the amendment made to Section 65(105) (zzzz) by the Finance Act, 2010 on the levy of service tax on renting of immovable property. The High Court passed an interim order dated December 3, 2010 stating that there shall be no recovery of service tax in respect of renting of immovable property, for the properties held by ILL, located in Karnataka and if there is any other service other than what is regarded as the service of renting, the service provider would be liable to pay service tax on such service and in respect of such service. The matter is pending.

5. ILL filed a writ petition bearing number 9214 of 2010 dated October 30, 2010 (“Petition”) against

Union of India and others before the High Court of Bombay challenging the constitutional validity and the amendment made to Section 65(105) (zzzz) by the Finance Act, 2010 on the levy of service tax on renting of immovable property. The High Court passed interim order dated April 21, 2011 stating that till further orders, there shall be no coercive steps to be taken for recovery of service tax in respect of renting of immovable properties for the properties held by ILL situated in Mumbai. Subsequently, the High Court vide order dated August 4, 2011 dismissed the Petition.

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6. ILL filed a writ petition bearing number 153782 of 2010 dated November 22, 2010 against Union of India and others before the High Court of Judicature of Andhra Pradesh at Hyderabad, challenging the constitutional validity and the amendment made to Section 65(105)(zzzz) by the Finance Act, 2010 on the levy of service tax on renting of immovable property. The matter is pending.

7. The inquiry officer of Brihanmumbai Municipal Corporation (the “BMC”), passed four orders bearing

numbers ACR/212 of 2004-05, ACR/422 of 2005-06, ACR 216 of 2006-07 and ACR/234 of 2008-09 on March 26, 2010 (the “Orders”), fixing the ratable value of the ILL’s multiplex situated at Nariman Point, Mumbai (the “Property”) at `111.77 lacs per annum. ILL filed four appeals bearing numbers 1817 of 2010, 1818 of 2010, 1819 of 2010 and 1820 of 2010 dated April 9, 2010 in the Court of Small Causes, Mumbai (the “Court”) against the Orders challenging the ratable value of the Property. The Court directed BMC to file property tax computation sheet and on December 7, 2010 BMC filed the property tax computation sheet. On March 15, 2010, ILL filed an affidavit in reply. The matter is pending.

8. On October 4, 2007, ILL filed a civil suit number 57 of 2007 before the District and Sessions Court,

Panaji (the “Court”) against State of Goa and the Commissioner of Entertainment Tax, Goa (“State”) challenging the order dated June 27, 2007 rejecting ILL’s refund claim of `448.01 lacs passed by Commissioner of Entertainment Tax, Goa and the Chief Secretary, Government of Goa under the Goa Entertainment Tax Subsidy for Cinema Houses (Theatres) Scheme, 2004 (the “Scheme”) for non applicability of the Scheme to ILL.

The Additional District Judge at Panaji, Goa on April 30, 2008 passed a judgment decree (the “Decree”) in favour of ILL, directing the State to refund `448.01 under the Scheme. The State filed an appeal no. 207 of 2008 dated August 1, 2008 against the Decree in the High Court of Bombay at Goa (the “High Court”) and the appeal was admitted on September 17, 2008. ILL filed an application bearing number EXA/15/2010 dated March 30, 2010 for execution of the Decree. The State filed civil application number 147 of 2010 dated August 23, 2010 for stay on the execution of Decree. The said application was allowed by the High Court on August 25, 2010 with a direction to the State to deposit the decree amount being `448.01 lacs within eight weeks. The State filed a miscellaneous civil application number 719 of 2010 praying for extension of the period for deposit of `448.01 lacs for further three weeks and the High Court on October 25, 2010 granted such extension. Subsequently, the State deposited the said amount in the High Court vide cheque bearing number 183227 dated November 12, 2010. The matter is pending.

9. ILL entered into an agreement (“Agreement”) and memorandum of understanding (the “MOU”) both dated April 21, 2004 with Goa State Infrastructure Development Corporation Limited (the “GSIDCL”) for construction and development of multiplex and appurtenant services at Panaji, Goa. On April 18, 2008 ILL made an application for appointment of arbitrator and the High Court of Bombay at Goa appointed an arbitrator to resolve the dispute between the parties. ILL in its statement of claim dated July 21, 2008 claimed that GSIDCL has failed and neglected to fulfill its various obligations under the said Agreement and MOU. ILL also claimed that there were disputes inter-alia on, the deduction and retention of a sum of ` 600.00 lacs already paid to ILL as bonus, deduction and retention of a sum of ` 12.91 lacs as fair rent for the premises occupied by ILL based on rates issued by the Public Works Department etc. GSIDCL in its counter claim dated September 09, 2008 inter-alia claimed that an amount of ` 20.00 lacs was advanced by GSIDCL to ILL as preoperative expenses and ILL have retained the same even after completion of work. The counter claim was later withdrawn.

The arbitrator passed an award on December 28, 2009 (the “Award”) allowing the claims of ILL against GSIDCL towards ` 60 lacs, as bonus for completing the project before the deadline along with interest at the rate of 15% on the same from the date of deduction till its realization, `38.16 lacs towards service tax with interest at the rate of 15% per annum from the date of the submission of the invoice till its realization, `12.91 lacs towards rent charged to ILL along with interest at the rate of 15% per annum from the date such amount was withheld till its realization, claim of `10.50 lacs towards civil and structural work along with interest thereon at the rate of 15% per annum from the date payment was withheld till its realization.

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GSIDCL filed an application under section 34 of the Arbitration and Conciliation Act, 1996 bearing miscellaneous civil application number 66/2010 dated March 25, 2010 before the Court of Principal District Judge, North Goa at Panaji for setting aside the Award. ILL filed a reply on August 3, 2010 and GSIDCL served a copy of the rejoinder to ILL on September 23, 2010. The matter is pending.

10. On April 1, 2010 ILL filed a criminal complaint under section138 of the Negotiable Instruments Act,

1881 before the Metropolitan Magistrate, Andheri bearing number 1853/SS/of 2010 against Worldlink Public Relations for dishonor of two cheques for amounts aggregating to `0.85 lacs. The matter is pending.

11. ILL filed a civil suit number 95 of 2008 dated May 6, 2008 before the Calcutta High Court (the “High Court”) against Eastern India Motion Picture Association (“EIMPA”). EIMPA at their Extra Ordinary General Meeting on November 5, 2007, increased their annual fees payable by members of Multiplex Cinema Theatres. The High Court in its interim order dated May 13, 2008 directed ILL to deposit the annual fees payable to EIMPA in a separate account and directed EIMPA not to appropriate the said money and not to remove ILL from membership. ILL filed a general application number 1559 of 2008 dated June 23, 2008 in civil suit number 95 of 2008, restraining EIMPA from substantially increasing their annual fees payable by the members of EIMPA and not removing ILL from its membership. The High Court vide its order dated September 13, 2010 modified the order dated May 13, 2008 to the extent that the ILL will continue making payment of the entire amount in accordance with the amended article, but EIMPA will not be permitted to appropriate any more than a quarter of the deposit without previous leave of the High Court. The matter is pending.

12. ILL filed a writ petition number 28898 of 2010 (the “Writ Petition”) in the High Court at Hyderabad (the “High Court”) against Government of Andhra Pradesh and others (the “Respondents”) on November 18, 2010 praying to issue a writ of mandamus declaring the action of the Respondents in conducting the inspection and seizing the fast food items packaged and sold by ILL within its Multiplex at GVK One Mall for the purported violation of provisions of the Standards of Weights and Measures Act, 1976 as illegal, arbitrary and unconstitutional, quash all the proceedings initiated thereof and consequently direct the Respondents not to conduct any further inspection or seizure in relation to the fast food items being sold by ILL within its Multiplex. The High Court vide its order dated November 22, 2010 granted interim stay and directed to issue a show cause notice to the Respondents as to why ILL’s application to stay all further proceedings pending the disposal of the Writ Petition should not be complied with. The matter is pending.

13. On October 2010, the Inspector and District Inspector from Legal Metrology, Weights & Measures, Secunderabad visited and inspected Inox’s Multiplex at Hyderabad and conducted a panchnama and seized five packages each of “Veg. Sandwich” and “Veg. Burgers”. The Panchnama report, drawn by Inspector and District Inspector, Legal Metrology, accuses and alleges that ILL has violated Rules 4, 6(1)(a)(d)&(f), 6(1)A, 23(1) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and Section 33 read with Section 51 and Section 39 of the Standards of Weights and Measures (Enforcement) Act, 1985. ILL filed a Writ Petition No. 6673 of 2011 in the High Court at Hyderabad on March 15, 2011 praying to issue a writ order or directions, one more particularly in the nature of a writ of mandamus. In the Writ Petition, ILL prayed to declare the actions of the Respondents as illegal, arbitrary and unconstitutional and quash all the proceedings initiated thereof and consequently direct the Respondents not to conduct any further inspection or seizure in relation to the fast food items being sold by ILL within its multiplex. The matter is pending.

14. On March 25, 2011, ILL filed a criminal complaint bearing number CC/SS/756 of 2011 dated March 25, 20111 before the Metropolitan Magistrate, Andheri under section 138 of the Negotiable Instruments Act, 1881 against Adil Mohammed Umar Dalal for dishonor of two cheques for amounts aggregating to ` 0.86 lacs. The matter is pending.

15. ILL filed an appeal dated September 9, 2010 before the Appellate Tribunal against the order of the

Commissioner (Appeals-I) bearing number F.No.45(ST)/RPR/APPEAL-I/2009 dated June 30, 2010

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(“Order 1”). ILL was charged service tax by its landlord City Mall Developers for the premises rented by them at 3rd floor, Mall-36,NH-6, Raipur. ILL filed a refund claim of `5.36 lacs before the Office of the Assistant Commissioner, Central Excise and Customs Division, Raipur. The Assistant Commissioner vide its order number 08/REF/ST/AC/RPR/09-10 dated October 7, 2009 (“Order”) rejected the refund claim. ILL filed an appeal before the Commissioner (Appeals-I) vide appeal number 40(ST)/RPR-I/2010 on September 25, 2010. The Commissioner (Appeals-I) disposed off the appeal rejecting ILL’s claim vide order 1 Aggreived ILL filed the present appeal. The matter is pending.

16. ILL filed an appeal dated November 22, 2010 before the Commissioner (Appeals) against the order

number 399/R/2010 dated October 25, 2010 (“Order”) passed by the Assistant Commissioner. ILL was charged service tax by its landlord OM-Cineplex, Kota for the premises rented by them. The service tax collected by the landlord from ILL was paid to the Central Government. ILL vide their letter dated May 22, 2009 filed a refund claim of `3.34 lacs before the Office of the Assistant Commissioner, Central Excise Division, Kota. The Assistant Commissioner vide his letter C.No.IV(16)(10)/Misc/Refd/07/162 dated May 26, 2009 rejected the claim. ILL filed an appeal before the Commissioner (Appeal) dated August 31, 2009, Central Excise, Raipur and simultaneously again filed the refund claim before the Assistant Commissioner. The Assistant Commissioner disposed off the claim and returned the papers on October 20, 2009 to ILL for non-submission of relevant documents. The Commissioner (Appeal) vide its order number 45(DK)ST/JPR-I/2010 dated February 02, 2010 remanded back the matter to Assistant Commissioner the decide the case afresh on principle of natural justice. ILL filed a fresh refund application on July 16, 2010 before the Assistant Commissioner but the same was rejected by the Assistant Commissioner vide Order. Aggreived ILL filed the present appeal. This matter is pending.

17. ILL filed an appeal dated December 10, 2010 before the Commissioner (Appeals) against the order of

the Assistant Commissioner bearing number C.No. V (STD) 18/60/Ref-Inox/09/2935 dated September 9, 2009 (“Order”). ILL was charged service tax by its landlord Showtime Entertainment Private Limited (“SEPL”) for the premises rented by them at Space Cinema, Jaipur. The service tax collected by the landlord from ILL was paid to the Central Government. ILL filed a refund application dated May 30, 2009 to the Assistant Commissioner of Central Excise, Jaipur for `4.36 lacs. The Assistant Commissioner vide Order rejected the refund application on the ground that service tax was paid by SEPL and not ILL, and ILL was not entitled to file the refund claim. Aggrieved, ILL filed the present appeal before the Commissioner (Appeal). The matter is pending.

18. ILL was charged service tax by its landlord Amrit Bottlers for the premises rented by them at Plot

number 3, Vipin Khand, Gomtinagar, Lucknow. The service tax collected by the landlord from ILL was paid to the Central Government. A refund application dated May 24, 2009 was made to the Assistant Commissioner, Central Excise and Service Tax Division-I, Lucknow for `3.74 lacs. The Assistant Commissioner vide his letter 71/Refund/Inox/Gr-5/2009 dated June 10, 2009 requested ILL to re-submit the refund claim alongwith relevant documents evidencing that the service tax was paid by ILL. The matter is pending.

19. ILL filed an appeal dated March 7, 2011 before the Customs, Excise and Service Tax Appellate,

Tribunal, Delhi against the order of the Commissioner (Appeals) bearing number IND/398/2010 dated November 26, 2010 (“Order”). ILL was charged service tax by its landlord Suresh Chandra Khandelwal and Company for the premises rented by ILL at Sapna Sangeeta Mall, Indore (MP). The service tax collected by the landlord from ILL was paid to the Central Government. A refund application dated May 21, 2009 was made to the Assistant Commissioner for `5.44 lacs. The Assistant Commissioner vide its order number 35/Ref/AC/ST/2010-11 dated June 8, 2010 (“Order 1”) rejected the refund application. ILL filed an appeal before the Commissioner (Appeals) bearing number 399-ST/IND/APPL/2010 and the Commissioner (Appeals) vide Order upheld Order 1 and dismissed the appeal. Aggrieved, ILL filed the present appeal. The matter is pending.

20. ILL filed an appeal dated April 15, 2010 before the Commissioner of Central Excise (Appeals) against

the order number C.NoV/18/27/2008-Refunds dated December 18, 2009 (“Order”) passed by the

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Assistant Commissioner. ILL was charged service tax by its landlord Urvasi Theatre Private Limited (“UTPL”) for the premises rented by ILL at Urvasi Trio Theatres Complex, Vijayawada. The service tax collected by the landlord from ILL was paid to the Central Government. ILL submitted the refund claim on July 17, 2009 amounting to ` 2.98 lacs. The Assistant Commissioner vide Order rejected the refund claim inter-alia on the ground that service tax was paid by UTPL, and UTPL has neither protested nor challenged the levy and hence the tax assessed has attained finality. Aggrieved, ILL filed the present appeal before the Commissioner (Appeals). The matter is pending.

21. ILL filed a refund application for `4.89 lacs to the Assistant Commissioner, Central Excise on May 25,

2009. ILL was charged service tax by its landlord Kalpana Forgings Limited for the premises rented by them at 3rd floor, 12/7, Crown Interiorz Mall, Sector -35, Delhi Mathura Road, Faridabad. The service tax collected by the landlord from ILL was paid to the Central Government. The matter is pending.

22. ILL filed an appeal bearing stamp number 214/KOI/09/3764 dated September 16, 2011before the

Commissioner of Central Excise (Appeals-I) against the order bearing C.No.V(18)82/Refund/D-II/ST/Kol/2009/6071 dated July 15, 2009 (“Order”). ILL was charged service tax by its landlord Wellside Infrastructure Private Limited for the premises rented by them at City Centre, Salt Lake City, Kolkatta. The service tax collected by the landlord from ILL was paid to the Central Government. ILL filed a refund application of `3.04 lacs to the Deputy Commissioner, DIV-II, Service Tax Commissionerate, Kolkata on May 11, 2009. The Deputy Commissioner vide its Order rejected the refund claim stating that the landlord had earlier made a similar claim for refund which was being dealt separately by the department. Subsequently, the Commissioner of Central Excise (Appeals-I) vide order bearing number 286/ST/KOL/2011 dated September 09, 2011 remanded the case back to Deputy Commissioner, DIV-II, Service Tax Commissionerate, Kolkata to decide the matter afresh.

23. ILL has filed an appeal dated July 02, 2010 before the Commissioner of Central Excise (Appeals)-I,

Kolkata under section 85 of the Finance Act, 1994 against the order bearing number R/282/ST/DIV-III, 2009-2010 dated March 31, 2010 (“Order 1”) passed by the Deputy Commissioner of Service Tax, Division III, Kolkata. ILL has taken the multiplex situated at ‘Forum Mall’, 5th Floor, 10/3 Elgin Road, Kolkata on lease from SSB Properties, at a monthly licensee fee of ` 5.19 lacs exclusive of service tax as applicable. ILL paid service tax as charged by the landlord on their monthly lease rent bills till July, 2008. Subsequently, the High Court in the case of Home Solution Retail India Limited vide a judgment dated April 18, 2009 held that renting of immovable property by itself is not a service and hence, not a taxable service within the meaning of section 65(105)(ZZZZ) of the Finance Act, 1994. ILL relying on the judgment dated April 18, 2009 has filed an application for refund of service tax amounting to ` 2.56 lacs for the period from April 2008 to July 2008. The Deputy Commissioner of Service Tax, Division III, Kolkata vide order 1 rejected the refund claim. Aggrieved, ILL has filed the present appeal inorder to set aside Order 1. The matter is pending.

24. ILL was charged service tax by its landlord Ganpati Parks Limited for the premises rented by ILL at

Swabhumi, Kolkatta. The service tax collected by the landlord from ILL was paid to the Central Government. A refund application dated May 21, 2009 was made to the Assistant Commissionerate of Service Tax Division-I, Kolkatta for `0.15 lacs. The Assistant Commissioner vide his letter number V(13)6/Refund/ST/D-I/Kol/09-10/2012 issued a show cause notice dated July 23, 2009 as to why the claim of refund should not be rejected. ILL replied to the show notice August 28, 2009 stating that they were entitled to the refund claim as they had complied with the provisions of section 11B of the Central Excise Act, 1944 as made applicable to service tax in terms of section 83 of the Finance Act, 1944 and requested to cancel the show cause notice issued by the Assistant Commissioner. The matter is pending.

25. ILL filed an appeal dated December 10, 2010 before the Commissioner Appeal, Kolkatta-IV against the order V(18)02/ST/Refund/INOX/GTK-DIVN/09-10/3119 dated September 15, 2010 (“Order”) passed by the Deputy Commissioner. ILL was charged service tax by its landlord Maryland Resorts Limited for the premises rented by ILL at Rink Mall, Darjeeling. The service tax collected by the landlord from ILL was paid to the Central Government. A refund application dated May 21, 2009 was made to the Central Excise Division Office, Gangtok Division, Siliguri for `2.56 lacs. The Range

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officer vide his letter number V(18)02/ST/Refund/INOX/GTX-DIVN/09-102191 issued a show cause notice dated July 13, 2009 stating that the landlord has defaulted in payment of service tax for the period from April 2008 to September 2008 and therefore the ILL’s refund application cannot be considered and the refund claim is time-barred. ILL replied to the show notice July 27, 2010 requesting to cancel the show cause notice issued by the department and to keep the refund claim in abeyance till the issue of service-tax on immovable is decided in the Delhi High Court or the Supreme Court of India. The Deputy Commissioner vide its order V(18)02/ST/Refund/INOX/GTK-DIVN/09-10/3119 dated September 15, 2010 rejected ILL’s refund claim and request to keep the claim in abeyance. ILL filed an appeal dated December 10, 2010 before the Commissioner Appeal, Kolkatta-IV. The matter is pending.

26. ILL filed a refund application for `19.52 lacs to the Assistant Commissioner, Central Excise on July 31, 2009. ILL was charged service tax by its landlord Entertainment Society for the premises rented by them at Panjim, Goa. The service tax collected by the landlord from ILL was paid to the Central Government. The Deputy Commissioner vide letter number CX-ST/6/Refund/Inox dated July 31, 2009 replied to the refund claim stating that pending the disposal of special leave petition filed by their department before the Supreme Court in Home Solution Retail India Limited v/s Union of India, the refund claim would be kept in abeyance. The matter is pending.

27. ILL has filed an appeal number 1991/Ahd2009 dated June 12, 2009 before the Income Tax Appellate

Tribunal, Ahmedabad against the order of Commissioner of Income Tax (Appeals)-1, Baroda (“CIT (A)”) in respect of assessment year 2004-2005. ILL had filed return of income on October 26, 2004 declaring loss of ` 107.84 lacs and the deemed income under section 115JB is ` 284.01 lacs. The Assistant Commissioner of Income Tax Circle 1 (2), Baroda (“Assessing Officer”) vide assessment order dated November 30, 2006 passed under Section 143 (3) of the Income Tax Act computed the total loss as ` 106.51 lacs and the deemed income under section 115JB is ` 470.29 lacs and raised a demand for ` 16.61 lacs. Aggrieved, ILL filed an appeal with CIT (A). The CIT (A) vide order dated May 14, 2009 partly allowed this appeal. Aggrieved, ILL has filed the present appeal inter alia on the ground that the CIT (A) erred in confirming disallowance of ` 21.32 lacs in respect of abandoned projects at Gurgaon and also excluding interest income for deduction under section 80 IB. The ITAT vide order dated September 9, 2011 held that claim of ILL amounting to `21.32 lacs is allowed and dismissed the claim for inclusion of interest income in deduction under section 80IB.

28. ILL has filed an appeal number 1992/Ahd2009 dated June 12, 2009 before the Income Tax Appellate

Tribunal, Ahmedabad against the order of Commissioner of Income Tax (Appeals) (“CIT (A)”) in respect of assessment year 2005-2006. ILL had filed revised return of income on March 23, 2007 declaring income as Nil. The Additional Commissioner of Income Tax Range I, Baroda vide assessment order dated December 31, 2007 passed under Section 143 (3) of the Income Tax Act computed the total income as ` 137.80 lacs and book profit under section 115JB as ` 1,425.21 lacs. Further, a demand notice was issued demanding payment of ` 46.27 lacs. Aggrieved by the assessment order ILL preferred an appeal before CIT (A). Subsequently, the CIT (A) vide order dated May 14, 2009 partly allowed the appeal filed by ILL against the assessment order dated December 31, 2007. Aggrieved, ILL has filed the present appeal inter alia on the ground that the CIT (A) erred in confirming the disallowance of ` 23.25 lacs in respect of abandoned projects in Andheri and Allahabad and, also in confirming the exclusion of interest income of ` 0.53 lacs from the income of Baroda multiplex while computing deduction under section 80 1B of Income Tax Act. The ITAT vide order dated September 9, 2011 allowed the claim of ILL amounting to `23.25 lacs and dismissed the claim for inclusion of interest income in deduction under section 80IB.

29. ILL has filed an appeal number 272/ Ahd2010 dated January 21, 2010 before the Income Tax

Appellate Tribunal, Ahmedabad for setting aside the order of Commissioner of Income Tax (Appeals) I, Baroda (“CIT (A)”) in respect of assessment year 2006-2007. ILL had filed revised return of income on February 01, 2008 declaring income of ` 567.87 lacs and deemed income under section 115JB at ` 1,981.74 lacs. The Deputy Commissioner of Income Tax, Circle 1-(2), Baroda vide assessment order dated December 29, 2008 passed under Section 143 (3) of the Income Tax Act computed the total income as ` 967,67 lacs and deemed income under section 115JB at ` 1,981.74 lacs. Further, a demand

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notice was issued demanding payment of ` 57.28 lacs. Subsequently, the CIT (A) vide order dated October 27, 2009 partly allowed the appeal filed by ILL against the assessment order dated December 31, 2007. Aggrieved, ILL has filed the present appeal inter alia on the ground that the CIT (A) erred, in confirming the disallowance of ` 4.49 lacs in respect of abandoned projects in Andheri, Mumbai and confirming the non allowance of deduction of ` 1,488.91 lacs being incentive by way of exemption from entertainment tax. The matter is pending.

30. ILL has filed an appeal number 273/Ahd2010 dated January 27, 2010 before the Income Tax Appellate

Tribunal, Ahmedabad for setting aside the order of Commissioner of Income Tax (Appeals) I, Baroda (“CIT (A)”) in respect of assessment year 2007-2008. ILL had filed a revised return of income on March 30, 2009 declaring income of ` 191.68 lacs and deemed income under section 115JB at ` 300.76 lacs. The Deputy Commissioner of Income Tax, Circle 1-(2), Baroda vide assessment order dated October 21, 2009 passed under Section 143 (3) of the Income Tax Act computed the total income as ` 2,111.02 lacs. Further, a demand notice was issued demanding payment of ` 316.32 lacs. Subsequently, the CIT (A) vide order dated December 30, 2009 partly allowed the appeal filed by ILL against the assessment order dated October 21, 2009. Aggrieved, ILL has filed the present appeal inter alia on the ground that the CIT (A) erred, in disallowing deduction of ` 244.25 lacs being incentive by way of exemption from entertainment tax. The matter is pending.

31. ILL has filed an appeal dated October 18, 2010 before the Commissioner of Income Tax (Appeals) for

setting aside the assessment order of Deputy Commissioner of Income Tax, Circle 1-(2), Baroda (“Assessment Officer”) in respect of assessment year 2008-2009. ILL had filed a revised return of income on March 12, 2010 declaring income as Nil and deemed income under section 115JB at ` 3,284.60 lacs. The Assessment Officer vide assessment order dated August 31, 2010 passed under Section 143 (3) of the Income Tax Act computed the total income as Nil and the book profit as ` 3,284.60 lacs. Aggrieved, ILL has filed the present appeal inter alia on the ground that the Assessment Officer erred in, not excluding the amount of ` 1,527.28 lacs being incentive by way of exemption from entertainment tax, from total income and, not allowing deduction for the amount of ` 197.06 lacs being remuneration to employees by way of employee’s stock option plan. Disallowing expenditure of ` 69.30 lacs on prints considering the same as capital expenditure. The matter is pending.

32. ILL has filed an appeal dated December 16, 2009 (“Appeal”) before the Commissioner of Customs

and Central Excise (Appeals), Vadodara against the order in original number Ref/STC/VAD-II/AC/Inox Leisure/13/2009 (“Order”) dated July 17, 2009 passed by the Assistant Commissioner of Central Excise and Customs, Vadodara. ILL was charged service tax by its landlord Sanskriti Recreation & Builders Private Limited (“Owner”) for the premises rented by ILL situated at Baruch. The service tax collected by the landlord from ILL was paid to the Central Government. Subsequently, ILL has filed a refund claim of `3.52 lacs under section 11-B of the Central Excise Act, 1944, read with section 83 of the Finance Act, 1994 on May 28, 2009 to the extent of rent paid to the Owner of the immovable property situated at Baruch. The application for refund claim was rejected by the Order. Aggrieved ILL has filed an Appeal to dismiss the Order. Subsequently, Commissioner of Customs and Central Excise (Appeals), Vadodara vide order bearing number Commr. (A)/24/VDR-II/ 2011 dated January 21, 2011 upheld the Order. On April 20, 2011 ILL has filed an appeal before the Customs Excise and Service Tax Appeallate Tribunal. The matter is pending.

33. ILL has filed an appeal dated February 02, 2011 before the Commissioner of Central Excise (Appeals)

under section 85 of the Finance Act, 1994 against the order in original number 13/VDR-II/S.Tax/ADC/Adj/Inox/2010-11 dated October 29, 2010 (“Order”). The Additional Commissioner of Central Excise & Customs, Vadodara-II vide Order confirmed the demand and recovery of the wrongly availed Cenvat Credit amounting to ` 4.40 lacs under rule 14 of the Cenvat Credit Rules, 2004 read with section 73 of the Finance Act, 1994, also the service tax short paid amounting to ` 1.06 lacs during the period October 2008 to September 2009 under proviso to Section 73 (1) of the Finance Act, 1994. Further, the demand for interest and penalty as applicable under the Act was also confirmed. Hence, aggrieved ILL has filed the present appeal inter-alia praying for grant of stay against the recovery arising out of the Order and for setting aside the Order. The matter is pending.

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34. ILL has filed an appeal dated January 18, 2010 before the Commissioner of Central Excise (Appeals ) Vadodara II against order bearing number OIO-09/VDR-II/S.Tax/ADC/122/BRH/09-10, dated September 30, 2009 (“Order”) passed by the Assistant Commissioner of Central Excise and Customs, Vadodara (“Assessing officer”). The Assessing officer vide Order confirmed inter-alia, the recovery of the wrongly availed Cenvat Credit amounting to ` 20.37 lacs, recovery of the service tax short paid amounting to ` 0.19 lacs during the period August 2007 to September 2008, recovery of interest at the appropriate rates on the amount of service tax of ` 0.19 lacs, further imposition of penalty of ` 20.37 lacs and ` 0.19 lacs. Aggrieved ILL has filed the present appeal dated January 18, 2010 along with a stay application for dispensation with the requirement of pre-deposit of the dues and an unconditional stay on the recovery of the said dues and operation of the Order. Subsequently, the Commissioner of Central Excise (Appeals ), Vadodara II vide order bearing number Commr.(A)/23/VDR-II/2011 dated January 21, 2011 upheld the Order. On April 20, 2011 ILL has filed an appeal before the Customs Excise and Service Tax Appeallate Tribunal. The matter is pending.

35. ILL has filed a refund claim for `4.44 lacs in Form R dated June 11, 2009 to the Assistant Commissioner of Central Excise and Service Tax for the period April 2008 to July 2008, stating that they have paid service tax on the service of renting of premises at ILL, Milan Mall, Mumbai. The Deputy Commissioner of Service Tax-I, Division III vide order number Refund/SJ/33/11 dated February 28, 2011 (“Order”) rejected the refund claim under section 11B of the Central Excise Act, 1944 as made applicable to service tax vide section 83 of the Finance Act, 1994. Subsequently, ILL filed an appeal dated June 3, 2011 before the Commissioner of Central Excise (Appeal), Mumbai under Section 85 of the Finance Act, 1994 to set aside the Order.The matter is pending.

36. ILL has filed a refund claim in Form R dated October 25, 2010 before the Assistant Commissioner of Service Tax, Div I- Mumbai (“Assessing Authority”) on the ground that ILL Nariman Point multiplex paid excess service tax for the month of October 2007 for ` 2.36 lacs. ILL had received a sum of ` 179.95 lacs from Future Media (I) Limited for display of advertisement in ILL’s various multiplexes. Further due to calculation errors in allocation of amount in various units, ILL Nariman Point unit had paid excess payment of ` 2.86 lacs. Hence the refund application was made ILL. The Deputy Commissioner vide order number DMD/R-83/2011 dated March 28, 2011 (“Order”) rejected the refund applicaton. Subsequently, ILL filed an appeal dated July 6, 2011 before the Commissioner of Central Excise (Appeals) under section 85 of the Finance Act, 1994 to set aside the Order and for grant of refund claimed. The matter is pending.

37. ILL has filed an appeal dated December 10, 2009 before the Commissioner (Appeals), Central Excise,

Jaipur against order bearing number C.No. V (STD) 18/60/Ref-Inox/09/2935 dated September 09, 2009 (“Order”) passed by the Assistant Commissioner, Service Tax Division, Jaipur. ILL claimed that service tax has been charged on rent of the premises at Crystal Palm, Sardar Patel Marg, Shankar Bhawan, C-Scheme, Jaipur by the landlord Jaipur Need Nirman Private Limited, Jaipur and the same has been deposited with the department. ILL further claimed that, service tax on rent has been illegally charged by the landlord and unconstitutionally paid to the Central Government. The Assistant Commissioner, Service Tax Division, Jaipur vide Order rejected the refund claim for ` 5.06 lacs. Aggrieved, ILL filed the present appeal before the Commissioner (Appeals). The matter is pending.

38. ILL has filed an appeal dated December 10, 2009 before the Commissioner (Appeals), Central Excise,

Jaipur against order bearing number C.No. V (STD) 18/59/Ref-Inox/09/2934 dated September 09, 2009 (“Order”) passed by the Assistant Commissioner, Service Tax Division, Jaipur. ILL claimed that service tax bas been charged on rent of the premises at Space Cinema, City Plaza, Jhotwara Road, Jaipur by the landlord Show Time Entertainment Private Limited, Jaipur and the same has been deposited with the department. ILL further claimed that, service tax on rent has been illegally charged by the landlord and unconstitutionally paid to the Central Government. The Assistant Commissioner, Service Tax Division, Jaipur vide Order rejected the refund claim for ` 4.36 lacs. Aggrieved, ILL filed the present appeal before the Commissioner (Appeals). The matter is pending.

39. ILL was charged service tax by its landlord M/s Euromer Gaurda Resorts (India) Private Limited for

the premises rented by them at Garuda Mall, Bangalore. The service tax collected by the landlord from

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ILL was paid to the Central Government. ILL filed a refund application of `6.14 lacs to the Deputy Commissioner, DIV-III, Central Excise and Service Tax Department dated May 11, 2009. The matter is pending.

40. ILL was charged service tax by its landlord M/s Chennai Citi Centre Holding Private Limited for the

premises rented by them at Chennai Citi Centre, Mylapore, Chennai. The service tax collected by the landlord from ILL was paid to the Central Government. ILL filed a refund application of `4.87 lacs to the Assistant Commissioner of Central Excise, Chennai dated May 28, 2009. The matter is pending.

41. ILL filed a writ petition bearing number 21290 of 2011 dated July 21, 2011 (‘Petition”) before the High Court of Judicature at Hyderabad (“Court”) against Government of Andhra Pradesh (“Respondent 1”) and Commissioner of Police (“Respondent 2”) (together referred to as the “Respondents”). The Respondent 1 vide G.O. M.S number 110 dated February 19, 2009 purported to restrict the agency rights of conducting the online business to one agency appointed by it. The Respondent 2 vide notice dated May 4, 2011 directed ILL to suspend the sale of tickets through online agencies. ILL claims that on account of the action of the Respondents, ILL is not only being restricted from using the services of online agencies, but also is stopped from conducting sale of its tickets directly through online mechanism. Aggrieved ILL filed the Petition praying that an interim order restraining the Respondents from interfering with the ILL’s sale and conduct of business through on-line ticket booking pending disposal of the Petition. Further, ILL also prayed the Court be pleased to declare an order in the nature of ‘mandamus’ directing the Respondents from interfering with the business rights of ILL for conducting online booking of tickets by insisting upon a separate license as illegal and arbitrary as per the provisions of the Andhra Pradesh Cinemas (Regulations) Rules, 1970 and also to direct the Respondents not to interfere with the business of ILL and to consider and grant the petitioner’s request for issue of online agency license under Rule 11 (c) of the Andhra Pradesh Cinemas (Regulations) Act, 1955 and the Andhra Pradesh Cinemas (Regulations) Rules, 1970. Subsequently, the Court vide order dated July 28, 2011 allowed the interim relief. The matter is pending.

42. ILL has filed notice of opposition dated March 22, 2004 before the Registrar of Trade Marks against

application number 1133315 in class 16 filed by Proactive Overseas (“Applicant”). ILL claims that they are the original adopters, users and proprietors of the trade mark ‘Inox’ under number 1126796 in class 16 and the adoption of trade mark ‘Inox’ by Applicant is illegal and dishonest. ILL further claims that the registration of mark under the impugned application in the name of the Applicant will be contrary to the provisions of Sections 9, 11(1), 11(2), 11(3), 11(10) and 18(1) of the Trade Marks Act, 1999. Aggrieved ILL filed the present opposition praying that the impugned application be rejected and the notice of opposition be allowed. The Applicant has filed the counter statement dated August 31, 2004. The matter is pending.

43. ILL has filed notice of opposition dated March 22, 2004 before the Registrar of Trade Marks against

application number 1180405 in class 25 filed by Inox Shoes (“Applicant”). ILL claims that they have adopted the trade mark ‘Inox’ in the year 2002 and has been in continuous use since then. ILL claims that it has filed necessary registrations under number 1126805 in class 25 and the adoption of trade mark ‘Inox’ by the Applicant is deliberately done to trade on the goodwill and reputation of ILL. ILL further claims that the registration of mark under the impugned application in the name of the Applicant does not qualify for registration under section 9 of the Trade Marks Act, 1999. Aggrieved ILL filed the present opposition praying that the impugned application be rejected and the notice of opposition be allowed. The matter is pending.

44. ILL has filed notice of opposition dated July 30, 2009 before the Registrar of Trade Marks against

application number 1670005 in class 19 filed by Inox Ceramics (“Applicant”). ILL claims that they have adopted the trade mark ‘Inox’ in the year 2002 and has been in continuous use since then. ILL claims that it has filed necessary registrations under number 1126799 in class 19 and the adoption of trade mark ‘Inox’ by the Applicant is deliberately done to trade on the goodwill and reputation of ILL. ILL further claims that the registration of mark under the impugned application in the name of the Applicant does not qualify for registration under section 9 of the Trade Marks Act, 1999. Aggrieved

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ILL filed the present opposition praying that the impugned application be rejected and the notice of opposition be allowed. The Applicant has filed the counter statement dated November 23, 2010. The matter is pending.

45. ILL filed an appeal dated June 26, 2010 (“Appeal”) before the Customs, Excise and Service Tax Appellate Tribunal, GOA (“CESTAT”) against the order number ST/03/Commr.Goa/2005-06 dated March 28, 2006 (“Order”) passed by the Commissioner of Customs and Central Excise, Panaji-Goa (“Commissioner”). ILL is the holder of registration number C-Eng/Panaji/Goa/123/04-05 dated April 27, 2004, issued as per section 69 of chapter V of the Finance Act, 1994 (“Act”) for rendering services of consulting engineer, advertising, business auxilory, event management and business exhibition. The Commissioner issued a show cause notice number F.No. CX-ST/INOX/5200/05-06 dated October 21, 2005 to ILL demanding ILL to show cause as to why service tax amounting to ` 28.16 lacs and education cess amounting to ` 0.56 lacs totalling to ` 28.72 lacs not paid by ILL on the taxable construction service rendered from September 10, 2004 onwards and the value of said taxable received up to September 10, 2005 should not be recovered and further interest and penalty should not be imposed. Subsequently, the Commissioner vide Order confirmed the demand of service tax totalling to ` 28.72 lacs, interest of ` 3.37 lacs and penalty of ` 0.37 lacs and ` 28.72 lacs under sections 76 and 78 respectively. Aggrieved, ILL filed the Appeal before the CESTAT praying that the Order and the demand of tax, interest and penalty be set aside. ILL also filed a stay application dated June 26, 2010 for dispensing with deposit of ` 21.54 lacs and stay of recovery. The CESTAT vide order dated September 4, 2006, remanded the case back to the Commissioner after waiving pre deposit of ` 21.54 lacs. The matter is pending .

46. ILL filed an appeal dated August 18, 2011 (“Appeal”) before the Commissioner (Appeals), Central Excise and Customs for setting aside the order in original number D/STC/AC/AB/04/INOX/2011-12 dated May9, 2011 (“Order”) and for grant of stay against recovery arising out of Order. The Assistant Commissioner of Central Excise and Customs issued a show cause notice number STCG-I/INOX/BCH/56/10-11 dated December 15, 2010 seeking ILL to show cause as to why the wrongly availed cenvat credit amounting to ` 1.86 lacs should not be recovered under rule 14 of the Cenvat Credit Rules, 2004 read with section 73 of the Finance Act, 1994 and why interest under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 should not be levied on ` 1.86 lacs. Further, the service tax short paid amounting to ` 0.72 lacs during the period from October 2009 to March 2010 should not be recovered under section 73 (1) of Finance Act, 1994 and why interest under Section 75 of the Finance Act, 1994 should not be levied in respect of the same. ILL was also asked to show cause as to why penalty should not be imposed under Rule 15(3) of Cenvat Credit Rules, 2004 and under section 76 and 77 of the Finance Act, 1994. ILL vide its reply notice dated January 29, 2011 claimed that the show cause notice dated December 15, 2010 is illegal and void ab-initio, hence the same should be dropped and further ILL should be given a personal hearing before the case is decided. Subsequently the Assistant Commissioner of Central Excise and Customs vide Order confirmed the recovery of the wrongly availed cenvat credit amounting to ` 1.86 lacs, recovery of the service tax short paid amounting to `0.72 lacs, recovery of interest and penalty. Aggrieved ILL filed the Appeal and the matter is pending.

47. ILL filed an appeal before the Commissioner of Income Tax (Appeals) against the order dated March 28, 2011 of the Deputy Commissioner of Income Tax Circle - 1(2) (“Assessing Officer”) in respect of assessment year 2009-2010. ILL filed the appeal inter-alia on the grounds that the Assessing Officer erred in, not excluding the amount of ` 1,044.83 lacs being incentive by way of exemption from entertainment tax from total income, not allowing deduction for the amount of ` 12.41 lacs being remuneration to employees by way of Employees’ Stock Option Plan, giving credit for only ` 158.14 for tax deducted at source, although the amount of tax deducted at source was ` 166.16 lacs. The matter is currently pending.

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Proceedings involving our Directors Mr. Pavan Kumar Jain Proceedings by Mr. Pavan Kumar Jain None Proceedings against Mr. Pavan Kumar Jain 1. Jitendra Mohan Khurgar and others (“Complainants”) filed a criminal complaint bearing number

1040 0f 2004 in the court of Judicial Magistrate First Class, Indore dated October 12, 2004 against Mr. Pavan Kumar Jain and others (“Defendants”) for an offence under section 406, 408, 420, 467, 471 read with section 34 of the Indian Penal Code. The Complainants had invested `13.55 lacs in Northern Air Products Private Limited (“NAPPL”). The Complainants held 21% in NAPPL and the Defendants held the remaining portion. The Complainants alleged that the Defendants conspired to sell the assets of NAPPL by undervaluing the assets and the signatures of the Complainants were forcefully taken. Mr. Pavan Kumar Jain and others applied for an anticipatory bail before the District Judge, Indore and the District Judge vide its order dated February 2, 2005 granted anticipatory bail. The Defendants filed a Miscellaneous Criminal Petition bearing number 1114 of 2005 (“Petition”) before the High Court of Madhya Pradesh Bench at Indore (“High Court”) for quashing the order of cognizance dated October 12, 2004 passed by the Judicial Magistrate First Class, Indore. The Petition was dismissed by the High Court vide its order dated July 25, 2005. The matter is pending.

Mr. Amit Jatia Proceedings against Mr. Amit Jatia

1. The Food Inspector, Food and Drugs Administration, Indore (“Complainant”) has filed a criminal complaint number 19742/08 before the Chief Judicial Magistrate First Class (Special Court), Indore against Mr. Amit Jatia and others (together referred to as the “Accused”) under section 7 (i) read together with section 16(1)(a)(i) of the Prevention of Food Adulteration Act, 1954. The Complainant collected a sample of vanilla ice cream from a McDonald’s restaurant in Indore on November 18, 2007 which was declared adulterated by the Public Analyst. The matter is pending.

2. The Food Inspector, Food and Drug Control Authority, Ahmedabad (“Complainant”) has filed a

criminal complaint number 9294/04 dated December 17, 2004 before the Chief Judicial Magistrate First Class, Ahmedabad against Mr. Amit B. Jatia and others (together referred to as the “Accused”) under Section 7 (1), 7(2) and Section 16 of the Prevention of Food Adulteration Act, 1954. The Complainant collected a sample of strawberry mix from a McDonald’s restaurant in Ahmedabad. The Assistant Commissioner and the Local Health Authority, Ahmedabad, declared that the sample of strawberry mix was adulterated. Subsequently, an application was made to the Chief Judicial Magistrate for getting the sample tested by the Central Food Laboratory, Mysore. The report from the Central Food Laboratory is awaited and the matter is pending.

3. Nimit Realtors Private Limited (“Complainant”) has filed a criminal complaint number 3/S/99

dated November 17, 1998 before the Additional Chief Metropolitan Magistrate Court, Number 23, Esplanade Court, Mumbai against Mr. Amit Jatia and others (together referred to as the “Accused”) under section 420/418 and 114 of the Indian Penal Code alleging non-payment of brokerage/service charges in relation to a premise. The matter is currently pending.

4. Mr. Amit Jatia received a show cause notice number ROC/STA (G)/122381 /IPO /62 dated July

03, 2009 (the “Show Cause Notice”) from the Office of the Registrar of Companies, Mumbai for alleged violation of section 62 of the Companies Act stating that our Company had utilized an amount of ` 15.12 lacs out of the issue proceeds of the initial public offering for purposes other

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than those stated in the prospectus during the year ended March 31, 2006 and ` 349.40 lacs during the year ended March 31, 2007. Mr. Amit Jatia was called upon to show cause as to why legal action should not be instituted against him under section 62 of the Companies Act. Mr. Amit Jatia vide his reply notice dated July 29, 2009 denied all allegations stated in the Show Cause Notice and requested withdrawal of the same.

Proceedings by Mr. Amit Jatia There are no proceedings initiated by Mr. Amit Jatia. Mr. Kishore Biyani Proceedings against Mr. Kishore Biyani 1. Mr. Rakesh K. Agarwal (“Complainant”) has filed a complaint bearing number 157/2010 dated May

04, 2010 before the Consumer Dispute Redressal Forum, South Mumbai against Pantaloon Retail (India) Limited, Kishore Biyani and Big Bazaar Orchid City Centre, Mumbai (together referred to as the “Respondent”). The Complainant alleges that he had been over charged by ` 35 for the three products purchased by him from the store. Aggrieved, the Complainant has filed the present complaint. The matter is pending.

2. Local Health Authority, Municipal Corporation of Ranchi (“Complainant”) filed four criminal cases

bearing Numbers 41 to 44 of 2008 dated May 12, 2008 before the Chief Judicial Magistrate, Ranchi against Kishore Biyani and others (“Offenders”), in relation to adulteration and misbranding of food items namely “Toordal”, “Chana Dal”, “Chana Besan” and “Chana Sattu”. The samples of the said food items collected by the Municipal Corporation from Big Bazaar at Ranchi were found to be adulterated and misbranded. The Complainant has submitted the matter to take cognizance against the offenders and alleged that an offence under section 16 of the Prevention of Food Adulteration Act, 1954 has been committed. The Offenders filed four Misc. Writ Petitions (“Petitions”) bearing numbers 944, 930, 936 and 934 of 2009 in the High Court of Ranchi (the “High Court”) and the High Court has granted stay to take cognizance against the offenders in the criminal cases filed by the Complainant and directed that no coercive action to be taken against the offenders till the Petitions are heard. The matter is pending.

3. Local Health Authority, Municipal Corporation of Indore through its Food Inspector (“Complainant”)

has filed a criminal case bearing number 20668 of 2008 dated August 28, 2008 before the First Class Judicial Magistrate, Indore against Kishore Biyani and other directors of Pantaloon Retail (India) Limited (“PRIL”). The sample of the product namely “N-Joi”, seized by the Complainant, from PRIL’s store was found to contain a synthetic food colour “ponceau 4R”, on a test conducted by the public analyst. There was no declaration on the label of the sample pack to this effect and hence it has been alleged that there has been a violation of rule 24 and proviso (b) of rule 32 of the Prevention of Food Adulteration Rules, 1955. It is also alleged that the said product were adulterated and misbranded as per the Prevention of Food Adulteration Act, 1954. Mr. Kishore Biyani and 9 others (together referred to as the “Petitioner”) has filed a criminal miscellaneous petition bearing number 509 of 2009 dated January 13, 2009 (“Petition”) before the Madhya Pradesh High Court, Indore Bench under section 482 of Criminal Procedure Code, 1973 for quashing the criminal case number 20668/2008 and order dated August 20, 2008. The High Court vide order bearing number 509 of 2009 dated February 06, 2009 disposed of the Petition and granted exemption from personal appearance to all the directors of PRIL till the final disposal of the case in the lower court. The matter is pending.

4. Local Health Authority, Municipal Corporation of Indore through its Food Inspector (“Complainant”) has filed a criminal case bearing number 28669 of 2008 before the First Class Judicial Magistrate, Indore against Kishore Biyani and other directors of Pantaloon Retail (India) Limited (“PRIL”) (together referred to as “Accused”). The sample of the product namely “Fresh and Pure Toast Biscuits” and “Bradman Cookie Chips” seized by the Municipal Corporation of Indore, from a store of Pantaloon Retail (India) Limited situated at M.G. Road, Indore was found to contain a synthetic food

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colour on a test conducted by the public analyst that was not declared on the label of the sample pack. It was alleged that the Accused has violated section 7 (i) of the Prevention of Food Adulteration Act, 1954 by selling the adulterated biscuit which is a punishable offence under section 7 read with section 16 (1) (a). The Accused filed a criminal miscellaneous petition bearing number 1509/2009 before the High Court of Madhya Pradesh for quashing the criminal case and, the order dated November 10, 2008 taking cognizance of the offence. The High Court of Madhya Pradesh vide order dated March 20, 2009 has disposed of the petition and granted exemption from personal appearance to all the Accused till the final disposal of the case in the lower court. The matter is pending.

5. A case bearing No. 220 of 2007 has been filed by the Municipal Authority of Delhi before the Metropolitan Magistrate, Karkardooma, New Delhi, against Pantaloon Retail (India) Limited and its directors including Mr. Kishore Biyani in relation to carrying on business at the Food Bazaar at Rohini Delhi without the health trade license. Pantaloon Retail (India) Limited has stated that the application for grant of the said license was made to Municipal Corporation of Delhi and business was commenced pending issuance of the same. Pantaloon Retail (India) Limited has challenged the proceeding before the Sessions Court, Delhi. The matter is pending.

6. Local Health Authority, Municipal Corporation of Kamrup, Guwahati through its Food Inspector (“Complainant”) filed a criminal case bearing number 4556 of 2008 dated August 18, 2008 before the Chief Judicial Magistrate, Kamrup, Guwahati (“Court”) against Mr. Kishore Biyani and the directors of Pantaloon Retail (India) Limited, in relation to adulteration of food products. The samples of “Pure Cow Ghee” seized by the Food Inspector, Guwahati from Pantaloon store, Guwahati, was found to be artificially coloured with “Beta Carotene” in contravention to the standard specified in Appendix “B” of the Prevention of Food Adulteration rules 5 read with Prevention of Food Adulteration rule 26. The Complainant also alleges that the food product was also misbranded due to declaration as “Pure” in contravention to Prevention of Food Adulteration rule 37 D. Hence the Complainant has lodged the present complaint under the Prevention of Food Adulteration Act 1954. Subsequently, the Accused has filed a criminal miscellaneous petition in the High Court of Guwahati and the court vide order dated November 24, 2010 granted stay against the proceedings of the Court. The matter is pending.

7. Local Health Authority, Municipal Corporation of Kamrup, Guwahati through its Food Inspector

(“Complainant”) filed a criminal case bearing No. 4557 of 2008 dated August 20, 2008 before the Chief Judicial Magistrate, Kamrup, Guwahati (“Court”) against Kishore Biyani and the directors of Pantaloon Retail (India) Limited including, in relation to adulteration of food products. The samples of “Kalazira” seized by the Municipal Corporation of Kamrup, Guwahati from Big Bazaar, Guwahati was found to be polished with hydrocarbon oil. It was also found that the sample contained excessive numbers of living insects. The Complainant alleges violation of rule 50 of the Prevention of Food Adulteration rules and hence has committed a punishable offence under section 7 of the Prevention of Food Adulteration Act, 1954. Subsequently, the Accused has filed a criminal miscellaneous petition in the High Court of Guwahati and the High Court vide order dated November 24, 2010 granted stay against the proceedings of the Court. The matter is pending.

8. Local Health Authority, Ahmedabad Municipal Corporation, through its Food Inspector

(“Complainant”) filed a criminal case bearing number 2357 of 2009 dated May 28, 2009 before the Metropolitan Magistrate, Ahmedabad against Mr. Kishore Biyani in the capacity of director of Pantaloon Retail (India) Limited and 6 others (“Accused”), in respect of ‘Coconut Cookies’ supplied at Pantaloon India Limited’s retail outlet at Ahmedabad. The public analyst allegedly found the product to be misbranded as per section 2 (ix) (k) of the Prevention of Food Adulteration Act, 1954 vide its report number Q-4/598/2008 dated December 22, 2008 as it did not conform to the standards and provisions of rule 32 (b) and (e) of the Prevention of Food Adulteration Rules, 1955. The matter is pending.

9. The Food and Drug Administration department, Thane (“Complainant”) filed a case bearing CC.No.

926 of 2006 dated December 21, 2006 before the Judicial First Class Court, Vashi against Pantaloon Retail (India) Limited, Mr. Kishore Biyani for alleged adulteration in food Product viz pure mustard

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oil, sold by Pantaloon Retail ( India) Limited and thereby contravening the provisions of the Prevention of Food Adulteration Act, 1954. The matter is pending.

10. Local Health Authority Government of Delhi through its Food Inspector (“Complainant”) has filed a criminal complaint bearing number 1902/2009 dated August 10, 2009 before the Additional Chief Metropolitan Magistrate against Mr. Kishore Biyani and 10 others (“Accused”). The sample of the product namely ‘Malatni Madras Mixture’, seized by the Municipal Corporation of Delhi, from the Pantaloon Retail (India) Limited’s store was found by the Public Analyst to be misbranded because ‘Best before Date’ is not declared as per rule 32 i of Prevention of Food Adulteration Rules, 1955. There was also a violation of rule 36 (2) (a). The Complainant has filed the present complaint requesting the court to take cognizance of the said offence. A writ petition bearing number 13068/2009 was filed before the Delhi High Court against the summons order dated August 10, 2009, wherein the court granted a stay by an order dated November 11, 2009 against the directors. The matter is pending.

11. The Local Health Authority, Udaipur through its Food Inspector (“Complainant”) filed a criminal complaint bearing number 69/2010 dated June 09, 2010 before the Additional Chief Metropolitan Magistrate I, Udaipur against Mr. Kishore Biyani and 8 others (“Accused”). The Complainant alleged that the sample of ‘Maida’ collected from Big Bazaar, Udaipur was found to be misbranded and the same did not confirm to the standards and provisions of the Prevention of Food Adulteration Act, 1954. The analysis report number LS/777/2009/8 dated January 08, 2010 found the food product ‘Maida’ to be misbranded. Hence, its an offence under section 2 (ix) (k) of Prevention of Food Adulteration Act, 1954 and thus the Complainant filed the present complaint alleging violation of rule 32 (c) of the Prevention of Food Adulteration Rules, 1955. The matter is pending.

12. Sports and Leisure Apparels Limited (“SLAL”) filed a civil suit bearing number 1241 of 2009 dated April 20, 2009 before the High Court of Judicature, Mumbai against Pantaloon Retail (India) Limited, Mr. Kishore Biyani and others (“Defendants”) in respect of shops 6A and 6B situated at Ground Floor, Cross Road Mall, Pandit M M Malviya Road, Haji Ali,Mumbai (“Cross Road Mall”).SLAL have sought an injunction against the defendants from creating any third party right, interest and parting with possession or inducting third party in possession of the demised property until the final disposal of the suit and has claimed compensation of `191 lacs towards the loss of business and ` 791 lacs as damages. The notice of motion for an ad interim relief was duly dismissed by an order dated July 3, 2009 (“Order”). An appeal was filed against the said Order, which was also dismissed. The matter is pending.

13. Delhi Pollution Control (“Complainant”) has filed a criminal complaint number 272/2011 (“Complaint’) before the Chief Metropolitan Magistrate, Rohini District Court, Delhi, against Pantaloon Retail ( India) Limited (“Accused 1”), Mr. Kishore Biyani (“Accused 2”) and others (together referred to as the “Accused”) under section 15, 16 and 19 of the Environment Protection Act, 1986 (“Act”) read with section 190 of the Criminal Procedure Code, 1973. The Complainant alleges that Accused 1 has violated the provisions of section 5 of the Act read with notification bearing number F.08/EA/ENV./2008/9473 dated January 07, 2009 in as much as the Accused 1 was found using, storing and selling goods in plastic bags. Aggrieved, the Complainant has filed the Complaint praying that cognizance of the complaint should be taken and the Accused be summoned, tried and punished in accordance with law. The matter is currently pending.

14. Mr. Dilip Madhavji Thakkar (“Complainant”) has filed a criminal case number 40276 of 2010 dated December 29, 2010 (“Complaint”) before the Judicial Magistrate First Class, Pune against Embassy Property Developers Ltd (“Accused 1”), Mr. Kishore Biyani (Director of Accused 1) & 6 others (together referred to as the “Accused”) under sections 341 and 385 read with section 34 of Indian Penal Code (“Act”). The Complainant alleges that the Accused, who had acquired the adjoining land, has created obstruction to the Complainants free ingress and egress to his land premises. Further, the Complainant alleges the Accused of voluntarily and wrongfully restraining the Complainant from proceeding to and from the direction of his owned plot with the ulterior motive of grabbing the Complainants land or illegally extort money from the Complainant. Aggrieved, the Complainant filed the Complaint praying that process may be issued against the Accused for having committed the offence under section 341 and 385 read with section 34 of the Act. The matter is currently pending.

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15. The Food Inspector, Thane (“Complainant”) filed a criminal complaint bearing number 1184 of 2010 dated December 29, 2010 (“Complaint”) before the Judicial Magistrate, First Class, Vashi, Navi Mumbai against M/s Food Bazar, Mr. Kishore Biyani and 17 others (“Accused”). The Complainant alleged that the sample of ‘Power Horse’ energy drink collected from Food Bazaar, City Centre, Vashi was found to be not confirming to the standards and provisions of the Prevention of Food Adulteration Act, 1954 (“Act”) and thereby the Accused committed an offence under section 7(1) read with section 2 (1a) (a), section 2 (1a)(m); section 7(v) read with rule 39 and 42 and rendered them punishable under section 16 and 17 of the Prevention of Food Adulteration Act 1954 and Rules made there under. Aggrieved the Complainant filed the Complaint praying that process be issued against the Accused. The matter is currently pending.

16. Charming Apparels Private Limited (“Plaintiff”) filed a civil suit for recovery bearing number 47/2011 dated July 6, 2011 (“Suit”) before the Court of Senior Civil Judge North, Delhi (“Court”) against Mr. Kishore Biyani (Managing Director, Pantaloon Retail India Limited) & 3 others. The Plaintiff alleged that an amount of 1.73 lacs was outstanding against the supply of cloths / fabrics by the Plaintiffs. Hence, the Plaintiff filed the Suit praying that a decree be passed in favour of the Plaintiff for an amount of ` 1.73 lacs along with interest at the rate of 24% per annum on the suit amount from the date of filing of the suit till the realisation of the entire decreed amount. The matter is pending.

17. Garg Techno Conveyors Private Limited (“Complainant”) filed a consumer complaint bearing number 106/2011 (“Complaint”) before the District Consumer Disputes Redressal Forum, Delhi against Mr. Kishore Biyani and Manager, electronic division, Big Bazar (together referred to as the “Opponents”). The complainant alleges that the two 'Okaya' brand air conditioners that he had purchased from the Opponents store were defective as some parts were missing. The Complainant further claims that in spite of repeated requests the defects were not cured. Hence aggrieved the Complainant filed the Complaint praying that the Opponent be directed to supply the missing drain pipe and inlet outlet gas piping set along with compensation amounting to ` 50,000. The matter is currently pending.

Proceedings by Mr. Kishore Biyani

There are no proceedings initiated by Mr. Kishore Biyani. Notices against Mr. Kishore Biyani 1. Equinox Business Parks Private Limited (“Equinox”) has issued a legal notice dated April 05, 2011 to

Agre Developers Limited (“Agre”), Mr. Kishore Biyani and 5 others. Agre had entered into a leave and license agreement dated October 11, 2010 (“Agreement”) with Equinox for the use and occupation of certain commercial premises from January 01, 2011 to November 30, 2015. Equinox alleged that Agre has failed to take possession of the premises as per the Agreement and demanded a sum of ` 820.24 lacs towards payment of licensee fee, amenities charges, common area maintenance charges and brokerage.

2. Eight Separate notices have been issued by the Registrar of Companies, Mumbai against Mr. Kishore Biyani, Mr. Rakesh Biyani and Mr. Gopikishan Biyani in their capacity as directors of Pantaloon Retail (India) Limited (“PRIL”) and PRIL on grounds including interalia (i) not furnishing the particulars of employees to the Registrar of Companies or to the inspecting officer (ii) non disclosure of the complete registered office address in the balance sheet (iii) not furnishing the particulars of export activities (iv) irregularities in approving accounts (v) irregularities in accounts related disclosures (vi) finalization of the balance sheets and profits and loss accounts without obtaining confirmation of unsecured loans, current assets, loans and advances and current liabilities, (vii) not furnishing/annexing the statements in pursuance of section 212 of the Companies Act for the four subsidiaries. Pantaloon Retail India (Limited) has responded to the notice on its behalf and on behalf of its directors and has not received any further correspondence in the matter. Directors have filed a compounding application in respect to one of the ROC Notices for which hearing has been completed with CLB and the order in respect to the same is awaited.

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MATERIAL DEVELOPMENTS In the opinion of the Board, other than as disclosed in the Notes to our Financial Information in the section “Financial Information” on page 95 and in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 214 of the Draft Letter of Offer, there has not arisen, since the date of the last financial statements set out herein, any circumstance that materially or adversely affects our profitability taken as a whole or the value of our consolidated assets or our ability to pay our material liabilities over the next 12 months. Unaudited standalone financial results subjected to limited review for the quarter ended June 30, 2011 are as follows:

(` in Lakhs) Sr No

Particulars

3 months ended

30/06/2011 (Unaudited)

3 months ended


Year ended 31/03/2011 (Audited)

1 (a) Income from operations 4,422 3,800 15,561 (b) Other Operating Income 115 91 464 Total Income (a)+(b) 4,537 3,891 16,025

2 Expenditure (a) Direct Cost (i) Distributors’ share 1,274 1,067 4,442 (ii) Consumption of food & beverages 295 269 1,077 (iii) Other direct cost 75 62 289 (b) Employees cost 372 432 1,552

(c) Rent 826 788 2,743 (d) Amortisation of FCMITDA - (8) (76) (e) Depreciation 438 464 1,710 (f) Other expenses 968 976 3,642 Total (a) to (f) 4,248 4050 15,379

3 Profit / (Loss) from Operations before Other Income, Interest, Tax and Exceptional Items

289 (159) 646

4 Other Income 27 18 98 5 Profit / (Loss) before Interest, Tax and

Exceptional Items 316 (141) 744

6 Interest 113 225 608 7 Profit / (Loss) after Interest but before

Tax and Exceptional Items 203 (366) 136

8 Exceptional Items - - - 9 Profit from Ordinary Activities before

Tax 203 (366) 136

10 Tax expense - Provision for taxation for the period 3 - 10 - Less : taxation in respect of earlier years - - (73)

11 Net Profit / (Loss) from Ordinary Activities after Tax

200 (366) 199

12 Extraordinary Items (net of tax expense) - - - 13 Net profit / (Loss) for the period 200 (366) 199 14 Paid up equity share capital (face value Rs

10/- per share) 3,495 3,495 3,495

15 Reserves excluding Revaluation Reserves - - 3,381 16 Earnings Per Share (EPS) in Rs - quarterly

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figures are not annualised a) Basic EPS 0.57 (1.05) 0.57 b) Diluted EPS 0.50 (1.05) 0.37

17 Public Shareholding - Number of shares 17,380,669 *34,947,018 17,380,669 - Percentage of shareholding 49.73% 100.00% 49.73%

18 Promoters and promoter group shareholding a) Pledged/encumbered - Number of shares Nil Nil Nil - Percentage of shares (as a % of the total

shareholding of promoter and promoter group)

Nil Nil Nil

- Percentage of shares (as a % of the total share capital of the company)

Nil Nil Nil

b) Non-encumbered - Number of shares 17,566,363 14 17,566,363 - Percentage of shares (as a % of the total

shareholding of promoter and promoter group)

100% 100% 100%

- Percentage of shares (as a % of the total share capital of the company)

50.27% 0.00% 50.27%

*Include 15,057,751 shares held by Inox Leisure Limited in “SCB A/C South Yarra Holding Inox Escrow A/c” pending completion of Open Offer under Securities and Exchange Board of India (Substantial Acquisitions of Shares and takeover) Regulations, 1997. The same have since been released from escrow upon completion of Open Offer formalities on 6th January 2011.

Segmentwise revenue, results and capital employed for the quarter ended 30th June, 2011

` in Lakhs

Sr No

Particulars

3 months ended


3 months ended


Year ended 31/03/2011 (Audited)

[I] Segment Revenue I Theatrical Exhibition 4,505 3,775 15,932 Ii Others 32 24 93 Total segmental revenue 4,537 3,799 16,025

[II] Segment result I Theatrical Exhibition 338 (40) 992 ii Others 32 24 93 Total Segment Result 370 (16) 1,085 Less: Interest 113 225 608 Less: Other un-allocable expenditure net of

un-allocable income 54 125 341

Total Profit before tax 203 (366) 136 [III] Segment Capital employed (Segment

Assets – Segment Liabilities)

I Theatrical Exhibition 14,731 16,309 15,874 Ii Others 508 330 564 Iii Un-allocable assets less liabilities (8,201) (9,777) (9,563) Total 7,038 6,862 6,875

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Notes 1. The above results, reviewed by the Audit Committee, were taken on record at the meeting of the Board

of Directors held on 10th August, 2011. The statutory auditors of the Company have carried out Limited Review of the above results.

2. Information on investors complaints – (Nos) for the quarter: Opening Balance – Nil, Received – Nil, Disposed of– Nil, Closing Balance – Nil.

3. Corresponding figures for previous period / year have been regrouped / recast wherever necessary to

correspond to current period / year classification.

4. The figures for the current quarter are not comparable with those of the quarter ended 30th June, 2010 since service tax of Rs 71 lakhs on rentals was provided for in the accounts for the quarter ended 30th June 2010. Subsequently, provision for service tax on rentals for the period upto 30th September 2010 of Rs 577 lakhs was reversed during the quarter ended 31st December 2010.

5. No provision of Service Tax payable on Renting of Immovable Property has been made as the

Company has challenged this levy before the Honourable High Courts of Kolkata and Bombay. The petition before the Honourable Kolkata High Court is pending and the Honourable Bombay High Court has upheld the levy vide judgement delivered on 4th August 2011, operation of which has been stayed for four weeks. The Company is awaiting written order of the judgement and will take appropriate steps accordingly. The amount not provided in the accounts for the quarter ended 30th June, 2011 is Rs 72 lakhs and for the year ended 31st March, 2011 is Rs 288 lakhs. Cumulative amount as on 30th June, 2011 is Rs 793 lakhs.

6. Provision for current tax is made on the basis that the amount of entertainment tax exemption availed for some of its multiplexes is a capital receipt and consequently the provision for current taxation is for Minimum Alternate Tax payable on book profits. The Company is entitled to carry forward of Minimum Alternate Tax (MAT) paid by it and utilize in subsequent years. In the opinion of the management, on the basis of projections and estimates of future taxable income, the Company would have normal tax liability within the specified period to avail such MAT credit. Consequently, the Company has recognized the MAT credit entitlement of Rs 38 lakhs for the quarter ended 30th June 2011. Cumulative amount as on 30th June, 2011 is Rs 302 lakhs.

7. The Foreign Currency Convertible Bonds raised by the Company in April 2006 have matured on 22nd April 2011 and are due for payment. The Company is taking necessary steps in this regard.

8. The Company has allotted 36,603 equity shares in its Board Meeting held on 10th August 2011 pursuant to exercise of Stock Options by certain employees under the Employee Stock Option Scheme 2009.

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GOVERNMENT APPROVALS

Except as stated below, our Company has received the necessary consents, licenses, permissions and approvals from the Government of India and various governmental agencies required for our present business and to undertake the Issue and no further material approvals are required for carrying on our present activities. In addition, except as mentioned in this chapter “Government Approvals”, as on the date of the Draft Letter of Offer, there are no pending regulatory and government approvals and no pending material renewals of licenses or approvals in relation to the activities undertaken by the Company or in relation to the Issue. I. Approvals for the Issue: 1. Board resolution dated April 19, 2011 approving the Issue.

2. In-principle approval from the BSE dated [●]. 3. In-principle approval from the NSE dated [●]. II General: Permanent Account Number: AAACE6898B III Approvals in relation to the business of our Company We require various approvals and/ or licences under various rules and regulations to conduct our business. As our business is spread in various locations in India, the approvals and/or licences differ on the location of the multiplex. For conducting our business, we enter into long term lease agreements with the builder/developer/multiplex owner, who are responsible for obtaining the permits, licences and approvals from the appropriate regulatory and governing authorities in accordance with the terms of the agreements. Some of the material approvals required by us to undertake our businesses are set out below: (i) Registration under the Shops & Establishments Act (ii) License to exhibit cinema (iii) License from the Police Commissioner/District Magistrate to sell or keep for sale or offer or

expose for sale any ticket of admission, pass or other evidence of the right of admission to a cinema.

(iv) Certificate from the Executive Engineer, Public Works Department stating that the theater has been found fit for public amusement to exhibit cinema shows. (v) No Objection Certificate from the chief fire officer. (vi) License to work the lift. (vii) License for manufacture/sale/storage/distribution of eatables. (ix) License for games from police commissioner. (x) Permission to pay entertainment duty and surcharge due in respect of cinematograph for the given year. (xi) License for putting up advertising hoardings/neons.

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(xii) License from electric inspector stating that all electrical equipment is kept as required. (xiii) License for storing cinematographic films. (xiv) No objection certificate from health officer. (xv) Occupational certificate to be provided by the builder (xvi) Completion certificate to be provided by the builder (xvii) Computerised ticketing license from Collector (xviii) NOC from Public Health Department Insecticide Branch water storage tank (xix) NOC from Public Health Department Insecticide Branch cooling tank (xx) Food License from commissioner of police (xxi) Certificate of registration under State Sales Tax / Value Added Tax. (xxii) Certificate of registration under Central Sales Tax Act, 1956. (xxiii) No Objection Certificate from the Traffic Department. (xxiv) Pollution Control License from State Pollution Control Board. (xxv) Show tax registration and trade license. (xxvi) Film Division certificate for running of approved films. (xxvii) Permission from Urban Development Authority. (xxviii) Registration certificate of establishment granted to cafe (xxix) Trademarks / copyright registration certificate (xxx) License from Indian News Reel (INR)

(xxxi) License from Indian Performing Rights Society Limited (IPRS) (xxxii) License from Phonographic Performance License (PPL) IV. List of pending approvals and registrations 1. Food license from Commissioner of Police applied for renewal on March 30, 2011 in respect of Fame

Raghuleela, Kandivali.

2. NOC from Fire Department applied for renewal on November 22, 2010 in respect of Fame Dahisar, Mumbai.

3. Licence for storing cinematographic films issued under Rules 394 of the Mira Bhayendar Municipal

Corporation Act applied for renewal on January 30, 2010 in respect of Fame Dahisar, Mumbai. 4. Licence for storing cinematographic films issued under Rules 394 of the MMC Act applied on March

24, 2011 in respect of Fame Nakshatra, Mumbai.

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5. Licence for storing cinematographic films issued under Rules 394 of the MMC Act applied for renewal

on April 17, 2011 in respect of Fame Neelyog, Ghatkopar.

6. Food License from Commissioner of Police applied on March 30, 2011 in respect of Fame Neelyog, Ghatkopar.

7. Licence for a cinema, from Police Commissioner / District Magistrate under section 3/ rule 101 of the

Bombay Cinema (Regulation) Act, 1953 for each screen in a Multiplex applied for renewal on December 16, 2010 in respect of Fame Raghuleela, Vashi.

8. NOC from pollution control board applied on April 19, 2011 in respect of Fame Raghuleela, Vashi.

9. Licence from the Police Commissioner / District Magistrate, under rule 108 of the Maharashtra

Cinemas (Regulation) Rules, 1966 to sell or keep for sale or offer or expose for sale any ticket of admission, pass or other evidence of the right of admission to a cinema applied for renewal on December 16, 2010 in respect of Fame Raghuleela, Vashi.

10. Licence for storing cinematographic films applied on March 25, 2011 in respect of Fame Raghuleela,

Vashi.

11. Food license from Commissioner of Police applied on December 8, 2009 in respect of Fame Metro Junction, Kalyan.

12. NOC from Fire Department applied on January 31, 2011 in respect of Fame Nashik, Vijay. 13. Licence for a cinema, from District Magistrate under section 3/ rule 101 of the Bombay Cinema

(Regulation) Act, 1953 for each screen in a Multiplex applied on November 19, 2010 in respect of Fame Nashik, Vijay.

14. Licence from District Magistrate, under Rule 108 of the Maharashtra Cinemas (Regulation) Rules,

1966 to sell or keep for sale or offer or expose for sale any ticket of admission, pass or other evidence of the right of admission to a cinema applied for renewal on November 19, 2010 in respect of Fame Nashik, Vijay.

15. Licence for storing cinematographic films issued under Rules 394 of the MMC Act applied on March

23, 2011 in respect of Fame Nashik, Vijay.

16. Food license from Commissioner of Police applied on November 19, 2010 in respect of Fame Nashik, Vijay.

17. NOC from Fire Department applied for renewal on November 18, 2010 in respect of Fame Fun-n-

Shop, Pune.

18. Hoarding License applied on October 5, 2010 in respect of Fame Fun-n-Shop, Pune.

19. Licence for storing cinematographic films issued under Rules 394 of the MMC Act applied on March 23, 2011 in respect of Fame Fun-n-Shop, Pune.

20. Neon board license applied on October 5, 2010 in respect of Fame Fun-n-Shop, Pune.

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21. Trade license applied on April 4, 2011 in respect of Fame Fun-n-Shop, Pune. 22. NOC from Pollution Control Board applied on April 18, 2011 in respect of Fame Jai Ganesh, Pune.

23. Licence for storing cinematographic films applied on March 23, 2011 in respect of Fame Jai Ganesh,

Pune.

24. Hoarding license applied on April 4, 2011 in respect of Fame Jai Ganesh, Pune.

25. Neon board license applied on April 4, 2011 in respect of Fame Jai Ganesh, Pune. 26. Licence for storing cinematographic films applied on March 25, 2011 in respect of Fame Tapadiya,

Aurangabad.

27. Hoarding license applied on March 23, 2011 in respect of Fame Tapadiya, Aurangabad. 28. Food license from Commissioner of Police applied on March 31, 2011 in respect of Fame Tapadiya,

Aurangabad.

29. Cyber cafe license applied on March 22, 2011 in respect of Fame Tapadiya, Aurangabad.

30. Hoarding license for commercial use applied on March 23, 2011 in respect of Fame Tapadiya, Aurangabad.

31. Neon board license applied on March 23, 2011in respect of Fame Tapadiya, Aurangabad. 32. Hoarding license applied on April 21, 2011 in respect of Fame Lido, Bangalore.

33. NOC from fire department applied for renewal on June 02, 2010 in respect of Fame Prestige,

Bangalore.

34. Application for renewal of cinema license applied on March 18, 2010 in respect of Fame Shankarnag, Bangalore.

35. Hoarding license applied on April 21, 2011 in respect of Fame Shankarnag, Bangalore.

36. NOC from fire department applied on April 21, 2011 in respect of Fame Shalimar, Bharuch.

37. Application for renewal of cinema license to District Magistrate for the year 2011 dated December 30,

2010 in respect of Fame Seven Seas, Baroda.

38. Escalator license applied for renewal on October 20, 2009 in respect of Fame Anand, Ghandinagar.

39. Application for renewal of cinema license to District Magistrate for the year 2011 dated December 13, 2010 in respect of Fame Anand, Ghandinagar.

40. Application for permanent cinema license made on November 14, 2008 in respect Fame Shri Ram

Mall, Dhanbad.

41. NOC from electrical department applied on December 28, 2010 in respect Fame Shri Ram Mall, Dhanbad.

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42. NOC from fire department applied on December 28, 2010 in respect Fame Shri Ram Mall, Dhanbad.

43. Trade license applied for renewal on April 12, 2011 in respect of Fame Southcity, Calcutta.

44. NOC from health department applied on April 21, 2011 in respect of Fame Southcity, Calcutta.

45. Computerised ticketing license applied on April 20, 2011 in respect of Fame Southcity, Calcutta.

46. NOC from electrical department applied on April 25, 2011 in respect of Fame Southcity, Calcutta.

47. Trade license applied for renewal on April 11, 2010 in respect of Fame Highland Park, Calcutta.

48. Computerised ticketing license applied on April 20, 2011 in respect of Fame Highland Park, Calcutta.

49. Amusement license applied on April 12, 2011 in respect of Fame Highland Park, Calcutta.

50. NOC from fire department applied on March 15, 2009 in respect of Fame Highland Park, Calcutta.

51. NOC from electrical department applied on April 25, 2009 in respect of Fame Highland Park, Calcutta.

52. NOC from Fire Department applied for renewal on October 27, 2010 in respect of Fame Shalimar, Panchkula.

53. NOC from electrical department applied and inspection carried out on January 2, 2010 in respect of

Fame Shalimar, Panchkula.

54. Computerized ticketing license applied on April 21, 2011 in respect of Fame Shalimar, Panchkula.

55. Collector’s license 4(2)(b) applied for renewal on December 16, 2010 in respect of the Fame Adlabs, Andheri.

56. Food license from Commissioner of Police applied for renewal on March 30, 2011 in respect of the

Fame Adlabs, Andheri.

V. List of approvals required to be made but not yet made: 1. Food license from Commissioner of Police not yet applied in respect of Fame Fun-n-Shop, Pune. The

food license will be applied on receipt of Fire NOC.

2. Cyber cafe license not yet applied in respect of Fame Fun-n-Shop, Pune. The cyber cafe license will applied on receipt of Fire NOC.

VI List of Trademarks:

1. The trade mark bearing registration number 1244838, under class 41 is valid up to October 22, 2013.

2. The trade mark “VIA 1, Food Street (Logo)” bearing registration number 1440286, under class 29 is valid up to March 29, 2016.

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4. The trade mark “VIA 1, Food Street (Logo)” bearing registration number 1440284, under class 32 is

valid up to March 29, 2016.


6. The trade mark “Jubilee (logo)” bearing registration number 1329463, under class 41 is valid up to

December 31, 2014.

7. The trade mark “Jubilee (logo)” bearing registration number 1329464, under class 42 is valid up to December 31, 2014.

8. The trade mark “Device of Star & Fame (logo)” bearing registration number 1329466, under class 42

is valid up to December 31, 2014.

9. The trade mark “Cinema World” bearing registration number 1329470, under class 42 is valid up to December 31, 2014.

10. The trade mark “City Screens” bearing registration number 1329471, under class 42 is valid up to

December 31, 2014.

11. The trade mark “City Cinema” bearing registration number 1329472, under class 42 is valid up to December 31, 2014.

12. The trade mark “Device of Star & Fame (Logo)” bearing registration number 1329473, under class 42

is valid up to December 31, 2014.

13. The trade mark “Movie World (Word)” bearing registration number 1329474, under class 42 is valid up to December 31, 2014.

14. The trade mark “Just Movies (Word)” bearing registration number 1329475, under class 42 is valid up

to December 31, 2014.

15. The trade mark “Fame Pearls (Label)” bearing registration number 1329484, under class 42 is valid up to December 31, 2014.

16. The trade mark “Fame Pearls (Word)” bearing registration number 1329485, under class 41 is valid up


17. The trade mark “Cinetown (Word)” bearing registration number 1329487, under class 42 is valid up to December 31, 2014.

18. The trade mark “Device of Star & Fame (Logo White In Black Background” bearing registration

number 1244839, under class 41 is valid up to October 22, 2013. 19. The trade mark “World Cinema (Word)” bearing registration number 1329465, under class 42 is valid

up to December 31, 2014.

20. The trade mark “Cinema City (Word)” bearing registration number 1329467, under class 42 is valid up to December 31, 2014.

21. The trade mark “Fame City (Word)” bearing registration number 1329468, under class 42 is valid up


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22. The trade mark “City Screens” bearing registration number 1244842, under class 41 is valid up to

October 22, 2013.

23. The trade mark “Buzz Fact (Word)” bearing registration number 1371490, under class 41 is valid up to July 15, 2015.

24. The trade mark “Fame Zone (Word)” bearing registration number 1329481, under class 41 is valid up


25. The trade mark “Fame City (Word)” bearing registration number 1329480, under class 41 is valid up to December 31, 2014.

26. The trade mark “Fame Park (Word)” bearing registration number 1329483, under class 42 is valid up


27. The trade mark “Fame Park (Word)” bearing registration number 1329479, under class 41 is valid up to December 31, 2014.

28. The trade mark “Fame Zone (Word)” bearing registration number 1329469, under class 42 is valid up


29. The trade mark “Buzz (Word)” bearing registration number 1371494, under class 35 is valid up to July 15, 2015.

30. The trade mark “Buzz Fact (Word)” bearing registration number 1371491, under class 35 is valid up to

July 15, 2015.

31. The trade mark “Star & Fame Buzz Chahiye? Aa Jayiye” bearing registration number 1361760, under class 35 is valid up to June 6, 2015.

32. The trade mark “Buzz Chahiye? Aa Jayiye” bearing registration number 1361762, under class 35 is

valid up to June 6, 2015.

33. The trade mark “Weekend @ Buzz Fame With Device Of Star” bearing registration number 1371495, under class 41 is valid up to July 15, 2015.

34. The trade mark “Buzz Chahiye? Aa Jayiye (logo)” bearing registration number 1361759, under class

41 is valid up to June 6, 2015.

35. The trade mark “Device of Star & Fame and Buzz Chahiye? Aa Jayiye (Logo)” bearing registration number 1361761, under class 41 is valid up to June 6, 2015.

36. The trade mark “Device of Star (in White Background)” bearing registration number 1329477, under

class 42 is valid up to December 31, 2014.

37. The trade mark “Device of Star (White In Black Background)” bearing registration number 1329478, under class 42 is valid up to December 31, 2014.

38. The trade mark “Device of Star With Color Background” bearing registration number 1244850, under

class 41 is valid up to October 22, 2013.

39. The trade mark “Cinema World (word)” bearing registration number 1244851, under class 41 is valid up to October 22, 2013.

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40. The trade mark “Device of Star Without Background” bearing registration number 1244855, under class 41 is valid up to October 22, 2013.

41. The trade mark “Cinema City (word)” bearing registration number 1244845, under class 41 is valid up

to October 22, 2013.

42. The trade mark “Big Star (Word)” bearing registration number 1244848, under class 41 is valid up to October 22, 2013.

43. The trade mark “Just Movies (Word)” bearing registration number 1244847, under class 41 is valid up

to October 22, 2013.

44. The trade mark “Cinetown (Word)” bearing registration number 1244843, under class 41 is valid up to October 22, 2013.

45. The trade mark “Movie World (Word)” bearing registration number 1244846, under class 41 is valid

up to October 22, 2013.

46. The trade mark “Fame PREMIERE magic” bearing registration number 1631184, under class 35 is valid up to December 13, 2017.

We have made applications with the trademark registry on April 18, 2011 for change of name to Fame India Limited for some of the trademarks.

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OTHER REGULATORY AND STATUTORY DISCLOSURES Authority for the Issue This Issue of Equity Shares to the Equity Shareholders of our Company as on the Record Date is being made in accordance the resolution passed by our Board of Directors under Section 81(1) of the Companies Act, at its meeting held on April 19, 2011. Prohibition by SEBI Our Company, our Promoters, our Promoter Group, Directors or the companies with which the Directors are associated as directors or promoters, have not been prohibited or debarred from accessing or operating in the capital market under any order or direction passed by SEBI. Further, none of our Company, the Associates, the Promoters or the members of the Promoter Group have been declared willful defaulters by the RBI or any Government authority and no violations of securities laws have been committed by them in the past and no proceedings in relation to such violations are currently pending against them. Except as stated below, none of the Directors of our Company are associated with any entity which is engaged in securities market related business in any manner: Mr Kishore Biyani, one of the Directors of the Company, is associated with Future Capital Holdings Limited, details of which are as follows: SEBI Registration No. INP000003062

Category of Registration Portfolio Manager

Details of any enquiry/investigation conducted by SEBI at any time

Nil

Penalty imposed by SEBI, if any Nil Except as disclosed below, none of our Directors hold current or have held directorship(s) in the last five years in a listed company whose shares have been or were suspended from trading on BSE or the NSE or in a listed company which has been / was delisted from any stock exchange: Mr Pavan Kumar Jain, one of the Directors of the Company, is a director on the board of Inox Leasing and Finance Limited, whose shares have been delisted from the BSE. The details of which are as follows: Name of the Company Inox Leasing and Finance Limited

Listed on BSE




Whether relisted No

Term of Directorship Since incorporation on February 17, 1995 till date

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Mr Deepak Asher, one of the Directors of our Company, is a director on the board of Inox Leasing and Finance Limited, whose shares have been delisted from the BSE. The details of which are as follows: Name of the Company Inox Leasing and Finance Limited

Listed on BSE




Whether relisted No

Term of Directorship From March 24, 2008 till date Compliance with part A of schedule VIII of SEBI Regulations Pursuant to clause (3) of part E of Schedule VIII of the SEBI Regulations, our Company is eligible to offer this Issue in terms of Part A of Schedule VIII of the SEBI Regulations. DISCLAIMER CLAUSE OF SEBI AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS DRAFT LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED / CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS DRAFT LETTER OF OFFER. THE LEAD MANAGER, ENAM SECURITIES PRIVATE LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE THE LEAD MANAGER, ENAM SECURITIES PRIVATE LIMITED HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED SEPTEMBER 27, 2011 WHICH READS AS FOLLOWS:

1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATIONS LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE ISSUER, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES AND INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE

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OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:

a) THE DRAFT LETTER OF OFFER FILED WITH THE BOARD IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

b) ALL THE LEGAL REQUIREMENTS TO THE ISSUE AS ALSO THE REGULATIONS, GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID.

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS – NOT APPLICABLE.

5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT LETTER OF OFFER WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER. – NOT APPLICABLE.

6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUES OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER – NOT APPLICABLE.

7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE

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REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE ISSUER ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE.

8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE “MAIN OBJECTS” LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT THE MONIES RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONIES SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FORM ALL THE STOCK EXCHANGES MENTIONED IN THE LETTER OF OFFER. WE FURHTER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION.

10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.

11. WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN THE ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER:

a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME, THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF THE ISSUER AND

b) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO THE ADVERTISMENT IN TERMS OF SECURITIES AND EXCHANGE BOARD OF INDIA

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(ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.

14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OF THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE ETC.

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE APPLICABLE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.

THE FILING OF THIS DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCE AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER ANY IRREGULARITIES OR LAPSES IN THIS DRAFT LETTER OF OFFER. Disclaimer clauses from our Company and the Lead Manager Our Company and the Lead Manager accept no responsibility for statements made otherwise than in this Draft Letter of Offer or in any advertisement or other material issued by our Company or by any other persons at the instance of our Company and anyone placing reliance on any other source of information would be doing so at his own risk. The Lead Manager and our Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of this Draft Letter of Offer with SEBI. Investors who invest in the Issue will be deemed to have represented to our Company and Lead Manager and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares, and are relying on independent advice / evaluation as to their ability and quantum of investment in this Issue. Caution Investors that bid in this Issue will be required to confirm and will be deemed to have represented to our Company and the LM and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares and will not offer, sell, pledge or transfer the Equity Shares to any person who is not eligible under applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares. Our Company, the LM and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire Equity Shares in the Issue.

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Disclaimer with respect to jurisdiction

This Draft Letter of Offer has been prepared under the provisions of Indian laws and the applicable rules and regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only.

Designated Stock Exchange

The Designated Stock Exchange for the purpose of the Issue will be [●].

Disclaimer Clause of BSE

As required, a copy of this Draft Letter of Offer has been submitted to the BSE. The Disclaimer Clause as intimated by the BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing with the Stock Exchanges.

Disclaimer Clause of the NSE

As required, a copy of this Draft Letter of Offer has been submitted to the NSE. The Disclaimer Clause as intimated by the NSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing with the Stock Exchanges.

Selling Restrictions The distribution of this Draft Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. Our Company is making this Issue of Shares on a rights basis to the shareholders of our Company and will dispatch the Letter of Offer/Abridged Letter of Offer and CAFs to shareholders who have provided an Indian address. The Abridged Letter of Offer, along with CAF, shall be dispatched through registered post or speed post to all the existing shareholders at least three days before the date of opening of the issue. Provided that, the Letter of Offer shall be given by our Company or Lead Manager to any existing shareholder who has made a request in this regard.

No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer has been filed with SEBI. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the Equity Shares, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in our Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date. For further details, please see “Notice to Overseas Shareholders” on page VI of this Draft Letter of Offer. Filing This Draft Letter of Offer has been filed with the Corporation Finance Department of the SEBI, located at SEBI Head Office, SEBI Bhavan, Plot No. C4-A, “G” Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051, Maharashtra, India for its observations. After SEBI gives its observations, the final Letter of Offer will be filed with the Designated Stock Exchange as per the provisions of the Companies Act.

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Listing The existing Equity Shares are listed on BSE and NSE. Our Company has made applications to BSE, and NSE for permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of this Draft Letter of Offer. Our Company has received in-principle approvals from BSE by letter dated [●] and NSE by letter dated [●]. Our Company will apply to BSE and NSE for listing of the Equity Shares to be issued pursuant to this Issue. If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock Exchanges mentioned above, we shall forthwith repay, without interest, all monies received from applicants in pursuance of this Draft Letter of Offer. If such money is not paid within 8 days after we becomes liable to repay it, then our Company and every Director of our Company who is an officer in default shall, on and from expiry of 8 days, be jointly and severally liable to repay the money with interest as prescribed under the Section 73 of the Act. Consents Consents in writing of the Directors, the Auditors, the Lead Manager, the Legal Counsel, the Registrar to the Issue and the Bankers to the Issue and experts to act in their respective capacities have been obtained and such consents have not been withdrawn up to the date of the Draft Letter of Offer. M/s. Patankar & Associates, Chartered Accountants, the Auditors of our Company, have given their written consent for the inclusion of their report in the form and content appearing in this Draft Letter of Offer and such consent and report have not been withdrawn up to the date of this Draft Letter of Offer. Expert Opinion Other than reports of our Auditor in respect of the information in the section “Financial Information” and “Statement of Tax Benefits” on page 95 and page 47, no expert opinion has been obtained by our Company in relation to the Issue. Issue Expenses

The Issue related expenses include, among others, fees payable to intermediaries including Lead Manager, printing and distribution expenses, advertisement and marketing expenses and registrar, legal and depository fees among others and are estimated at ` [●] lacs (approximately [●] per cent of the total Issue size) and will be met out of the proceeds of the Issue.

Activity Expense (` in lacs)

Expense (% of total expenses)

Expense (% of Issue Size)*

Fees of the Lead Manager, Registrar to the Issue, Bankers to the Issue, legal advisor, for other professional services and statutory fees

[●] [●] [●]

Advertising, traveling and other expenses [●] [●] [●]Printing and stationery expenses [●] [●] [●]Total estimated Issue related expenses [●] [●] [●]*Amount will be finalized at the time of filing the Letter of Offer and determination of Issue Price and other details. Fees Payable to the Lead Manager to the Issue The fees payable to the Lead Manager to the Issue are set out in the engagement letter issued by our Company to the Lead Manager entered into by our Company with the Lead Manager, copies of which are available for inspection at the registered office of our Company.

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Fees Payable to the Registrar to the Issue The fees payable to the Registrar to the Issue are set out in the engagement letter issued by our Company to the Registrar. Previous Issues by our Company Our Company has not undertaken any public or rights issue during the last five years. Outstanding Debentures/Bonds and Preference Shares For details pertaining to outstanding preference shares see section titled “Capital Structure” on page 26 of the Draft Letter of Offer. Previous Public Issues by group companies/ Subsidiaries None of our Subsidiaries / group companies have made any public or rights issue in the past three years. Option to Subscribe Other than as disclosed in the section titled “Capital Structure” on page 26 our Company has not given any person any option to subscribe for the Equity Shares. Previous issue of Equity Shares for consideration other than cash Other than as disclosed in the section titled “Capital Structure” on page 26 our Company has not made any issue of Equity Shares for consideration other than cash. Investor Grievances and Redressal System Our Company has adequate arrangements for redressal of Investor complaints as well as a well-arranged correspondence system developed for letters of routine nature. The share transfer and dematerialization for our Company is being handled by the Registrar and Share Transfer Agent, Link Intime India Private Limited. Letters are filed category wise after being attended to. The Redressal norm for response time for all correspondence including shareholders complaints is within 7 (seven) to 10 (ten) days. The Shareholders/Investors Grievances Committee consists of Mr. Pavan Kumar Jain as Chairman and Mr. Deepak Asher, and Mr. Kishore Biyani as members of the said committee. All investor grievances received by our Company have been handled by the Registrar and Share Transfer agent in consultation with the compliance officer. The contact details of the Registrar and Share Transfer agent to our company are as follows: Link Intime India Private Limited C- 13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai - 400 078, Maharashtra, India Tel: +91 22 2596 0320 Fax: +91 22 2596 0329 Website: www.linkintime.co.in Email: [email protected] Contact Person: Mr. Pravin Kasare SEBI Registration No: INR000004068

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Investor grievances arising out of this Issue Our Company’s investor grievances arising out of the Issue will be handled by Link Intime India Private Limited, who is the Registrar to the Issue. The Registrar will have a separate team of personnel handling only post-Issue correspondence. The agreement between our Company and the Registrar will provide for retention of records with the Registrar for a period of at least one year from the last date of dispatch of Allotment Advice/ share certificate / refund order to enable the Registrar to redress grievances of Investors. All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio no., name and address, contact telephone / cell numbers, email id of the first applicant, number and type of shares applied for, Application Form serial number, amount paid on application and the name of the bank and the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished. The average time taken by the Registrar for attending to routine grievances will be 7-10 days from the date of receipt of complaints. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to attend to them as expeditiously as possible. Our Company undertakes to resolve the Investor grievances in a time bound manner. Investors may contact the Compliance Officer at the below mentioned address and/ or Registrar to the Issue at the above mentioned address in case of any pre-Issue/ post -Issue related problems such as non-receipt of allotment advice/share certificates/ demat credit/refund orders etc. Mr. Suratha Satpathy Company Secretary and Compliance Officer Fame India Limited Citi Mall, 2nd Floor, Oshiwara Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India. Tel: +91 22 6640 3636 Fax: +91 22 6640 3637 E-mail: [email protected] Website: www.fame.co.in Status of Complaints (a) Total number of complaints received during Fiscal 2009: 18 (b) Total number of complaints received during Fiscal 2010: Nil (c) Total number of complaints received during Fiscal 2011: 3

(d) Total number of complaints received during quarter ended June 30, 2011: Nil (e) Time normally taken for disposal of various types of investor complaints: 15 days Status of outstanding investor complaints As on June 30, 2011, there were no outstanding investor complaints.

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Changes in Auditors during the last three years Sr. No. Nature of change Date of change Reason for change

1. Resignation of M/s. B S R & Co., Chatered Accountants

July 14, 2011 Unwillingness to be re-appointed

2. Appointment of M/s. Patankar & Associates, Chartered Accountants

July 14, 2011 Appointment on resignation of the previous statutory auditor

Capitalization of Reserves or Profits / Issuance of Equity Shares for consideration other than cash Other than as disclosed in the section titled “Capital Structure” on page 26 of the Draft Letter of Offer, our Company has not capitalized any of its reserves or profits / issued shares for consideration other than cash. Revaluation of Fixed Assets There has been no revaluation of our Company’s fixed assets in the last five years. Performance vis-à-vis Objects During the period of ten years immediately preceding the date of filing this Draft Letter of Offer, our Company has made one public issue, being its Initial Public Offering (“IPO”) in 2005. Performance vis-à-vis Objects – Last Three Public/ Rights Issues of our Company Our Company made an IPO amounting to `4,319.50 lacs comprising of 81,50,180 Equity Shares at `53 per Equity Share through 100% book building process through a prospectus dated April 15, 2005. Our Company has fully utilized the amount raised in IPO towards the objects of the IPO and expenses in relation to the IPO. The objects of our IPO were as follows:

• Funding exhibition growth • Funding distribution growth through subsidiary i.e. Fame Motion Pictures Limited

The variance between proposed and actual deployment of the proceeds raised pursuant to our IPO is as follows:

` (In lacs) Particulars Projection in prospectus Actual utilization*

Funding exhibition growth 3,370.00 1,390.56 Funding distribution growth through subsidiary i.e. Fame Motion Pictures Limited

599.50 0.00

Issue expenses 350.00 441.62 Repayment of loans 0.00 2,487.32

TOTAL 4,319.50 4,319.50 * Owing to the highly competitive business environment and dynamic nature of the business, the management of our Company was authorised to revise the business plan and funds requirement from time to time. On September 30, 2009 the members of our Company by passing a special resolution approved the revision in utilization of unutilized portion IPO proceeds as on September 30, 2009 amounting to `1,600 lacs inter alia for expansion activities of our Company in India for opening of new mutliplexes and expenses related thereto, including but not limited to repayment to loans taken for such purposes. Performance vis-à-vis Objects – Last One Issue of group companies/ Subsidiaries/ Associates None of our group companies/ Subsidiaries/ associates are listed.

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Stock market data for Equity Shares For stock market data please see section titled “Market Price Information” on page 231of this Draft Letter of Offer.

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SECTION VIII – OFFERING INFORMATION

TERMS OF THE ISSUE The Equity Shares proposed to be issued are subject to the terms and conditions contained in the Draft Letter of Offer, the Letter of Offer, the Abridged Letter of Offer and the enclosed CAF, the Memorandum of Association and Articles of Association of our Company, the provisions of the Companies Act, the terms and conditions as may be incorporated in the FEMA, as amended, applicable guidelines and regulations issued by SEBI, or other statutory authorities and bodies from time to time, the Listing Agreements entered into by our Company, terms and conditions as stipulated in the allotment advice or security certificate and rules as may be applicable and introduced from time to time. All rights/obligations of Equity Shareholders in relation to application and refunds pertaining to this Issue shall apply to the Renouncee(s) as well. Basis for the Issue The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the Depositories for the purpose of this Rights Issue in respect of the Equity Shares held in the electronic form and on the register of members of our Company in respect of the Equity Shares held in physical form at the close of business hours on the Record Date, fixed in consultation with the Designated Stock Exchange. Rights Entitlement As your name appears as a beneficial owner in respect of the Equity Shares held in the electronic form or appears in the register of members as an Equity Shareholder of our Company as on the Record Date, i.e., [●], you are entitled to the number of Equity Shares as set out in Part A of the enclosed CAFs. The distribution of the Letter of Offer and the issue of the Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Our Company is making the issue of the Equity Shares on a rights basis to the Equity Shareholders and the Letter of Offer, Abridged Letter of Offer and the CAFs will be dispatched only to those Equity Shareholders who have a registered address in India. Any person who acquires Rights Entitlements or the Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of the Letter of Offer, that it is not and that at the time of subscribing for the Equity Shares or the Rights Entitlements, it will not be, in the United States and in other restricted jurisdictions. PRINCIPAL TERMS OF THE EQUITY SHARES ISSUED UNDER THIS ISSUE Face Value Each Equity Share will have the face value of `10. Issue Price Each Equity Share shall be offered at an Issue Price of ` [●] for cash at a premium of `[●] per Equity Share. The Issue Price has been arrived at by our Company in consultation with the Lead Manager prior to determination of the Record Date. Entitlement Ratio The Equity Shares are being offered on a rights basis to the Equity Shareholders in the ratio of [●] Equity Shares for every [●] Equity Shares held on the Record Date.

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Terms of Payment The full amount of ` [●] per Equity Share is payable on application. Fractional Entitlements The Equity Shares are being offered on a rights basis to the existing Equity Shareholders of our Company in the ratio of [●] Equity Shares for every [●] Equity Shares held as on the Record Date. For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the Equity Shareholders is equal to or less than [●] Equity Shares or is not in multiple of [●], the fractional entitlement of such Equity Shareholders shall be ignored for computation of the Rights Entitlement. However, Equity Shareholders whose fractional entitlements are being ignored earlier will be given preference in the allotment of one additional Equity Share each, if such Equity Shareholders have applied for additional Equity Shares. Those Equity Shareholders holding less than [●] Equity Shares and therefore entitled to zero Equity Shares under this Issue shall be dispatched a CAF with zero entitlement. Such Equity Shareholders are entitled to apply for additional Equity Shares. However, they cannot renounce the same in favour of any third parties. CAF with zero entitlement will be non-negotiable /non-renunciable. Ranking The Equity Shares being issued shall be subject to the provisions of our Memorandum of Association and Articles of Association. The Equity Shares issued under this Issue shall rank pari passu, in all respects including dividend, with our existing Equity Shares. Listing and trading of Equity Shares proposed to be issued Our Company’s existing Equity Shares are currently listed and traded on BSE (Scrip Code: 532631) and the NSE (Scrip Code: FAME) under the ISIN – INE886G01011. The listing and trading of the Equity Shares shall be based on the current regulatory framework applicable thereto. Accordingly, any change in the regulatory regime would affect the schedule. Upon Allotment the Equity Shares shall be traded on Stock Exchanges in demat segment only. Our Company has made an application for “in-principle” approval for listing of the Equity Shares respectively to BSE and the NSE and has received such approval from BSE pursuant to the letter no. [●], dated [●] and from the NSE pursuant to letter no. [●], dated, [●]. Our Company will apply to the Stock Exchanges for final approval for the listing and trading of the Equity Shares. All steps for the completion of the necessary formalities for listing and commencement of trading of the Equity Shares to be allotted pursuant to the Issue shall be taken within seven working days from the finalisation of the basis of allotment. The fully paid up Equity Shares proposed to be issued on a rights basis shall be listed and admitted for trading on the Stock Exchanges under the existing ISIN for fully paid up Equity Shares of our Company. Rights of the Equity Shareholder Subject to applicable laws, the Equity Shareholders of our Company shall have the following rights:

Right to receive dividend, if declared;

Right to attend general meetings and exercise voting powers, unless prohibited by law;

Right to vote in person or by proxy;

Right to receive offers for rights shares and be allotted bonus shares, if announced;

Right to receive surplus on liquidation;

Right to free transferability of Equity Shares; and

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Such other rights as may be available to a shareholder of a listed public company under the Companies Act and Memorandum of Association and Articles of Association.

General Terms of the Issue Market Lot The market lot for the Equity Shares of our Company in dematerialised mode is one Equity Share. In case an Equity Shareholder holds Equity Shares in physical form, our Company would issue to the allottees one certificate for the Equity Shares allotted to each folio (“Consolidated Certificate”). In respect of Consolidated Certificates, our Company will upon receipt of a request from the respective holder of Equity Shares, split such Consolidated Certificates into smaller denominations within one weeks time from the receipt of the request in respect thereof. Our Company shall not charge a fee for splitting any of the Share Certificates. The request for such split of Consolidated Certificate being restricted to 5 by the Equity Shareholder. Joint Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint holders with the benefit of survivorship subject to the provisions contained in the Articles of Association. Nomination In terms of Section 109A of the Companies Act, nomination facility is available in respect of the Equity Shares. An Investor can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. In case of Equity Shareholders who are individuals, a sole Equity Shareholder or the first named Equity Shareholder, along with other joint Equity Shareholders, if any, may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity Shares. A person, being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Shares by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. Fresh nominations can be made only in the prescribed form available on request at the Registered Office of our Company or such other person at such addresses as may be notified by our Company. The Investor can make the nomination by filling in the relevant portion of the CAF. In terms of Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, 1956, shall upon the production of such evidence as may be required by the Board, elect either: ● to register himself or herself as the holder of the Equity Shares; or ● to make such transfer of the Equity Shares, as the deceased holder could have made. Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the Equity Shares, until the requirements of the notice have been complied with. Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already registered the nomination with our Company, no further nomination needs to be made for Equity Shares that may be allotted in this Issue under the same folio.

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In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depositary Participant (“DP”) of the investor would prevail. Any investor desirous of changing the existing nomination is requested to inform their respective DP. Notices All notices to the Equity Shareholder(s) required to be given by our Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one regional language daily newspaper with wide circulation in the state within which our Company’s registered office is located or, will be sent by ordinary post / registered post / speed post to the registered holders of the Equity Shares from time to time. Additional Subscription by the Promoters The Promoter and Promoter Group have confirmed that they intend to subscribe to the full extent of their Rights Entitlement in the Issue. Subject to compliance with the Takeover Code, the Promoter and Promoter Group reserve their right to subscribe for Equity Shares in this Issue by subscribing for renunciation, if any, made by Promoter Group or any other shareholders. The Promoter and Promoter Group have provided an undertaking dated September 27, 2011 to our Company to apply for additional Equity Shares, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent Allotment, the Promoter and Promoter Group may acquire Equity Shares over and above their Rights Entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the Rights Entitlement. Such subscription and acquisition of additional Equity Shares by the Promoter and the Promoter Group through this Issue, if any, will not result in change of control of the management of our Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the chapter “Objects of the Issue” on page 40 of this Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist our Company, even if, as a result of Allotments to the Promoter and Promoter Group, in this Issue, the Promoter’s shareholding in our Company exceeds their current shareholding. The Promoter and Promoter Group shall subscribe to such unsubscribed portion as per the relevant provisions of the law. The Promoter and the Promoter Group shall subscribe to, and/or make arrangements for the subscription of, such unsubscribed portion as per the relevant provisions of law and in compliance with clause 40A of the Listing Agreement. Our Company hereby certifies that such subscription to any undersubscribed portion of the Issue by the Promoters and the Promoter Group, in the manner contemplated above, shall be subject to compliance with the provisions of Rule 19(2)(b) of the SCRR and clause 40A of the Listing Agreement with respect to the requirement of minimum public shareholding of 25% of the post-Issue paid-up capital of our Company. For details, please see the chapter “Terms of the Issue - Basis of Allotment” on page 304 of this Draft Letter of Offer. Procedure for Application The CAF for rights Equity Shares would be printed for all Equity Shareholders. In case the original CAFs are not received by the Investor or is misplaced by the Investor, the Investor may request the Registrars to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the signature of the Equity Shareholder(s) does not match with the specimen registered with our Company, the application is liable to be rejected. The CAF consists of four parts: Part A: Form for accepting the rights Equity Shares and for applying for additional rights Equity Shares; Part B: Form for renunciation of Equity Shares;

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Part C: Form for application for renunciation of Equity Shares by Renouncee(s); Part D: Form for request for split Application forms. Acceptance of the Issue You may accept the offer to participate and apply for the rights Equity Shares offered, either in full or in part, by filling Part A of the enclosed CAFs and submit the same along with the application money payable to the collection branches of the Bankers to the Issue as mentioned on the reverse of the CAFs before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of our Company in this regard. Investors at centres not covered by the branches of collecting banks can send their CAFs together with the cheque drawn at par on a local bank at Mumbai/demand draft payable at Mumbai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. For further details on the mode of payment, see “Mode of Payment for Resident Equity Shareholders / Investors” and “Mode of Payment for Non-Resident Equity Shareholders/Investors” on page 306 of this Draft Letter of Offer. Option available to the Equity Shareholders The CAFs will clearly indicate the number of rights Equity Shares that the Shareholder is entitled to. If the Equity Shareholder applies for an investment in rights Equity Shares, then he can: • Apply for his Rights Entitlement of rights Equity Shares in full; • Apply for his Rights Entitlement of rights Equity Shares in part;

• Apply for his Rights Entitlement of rights Equity Shares in part and renounce the other part of the

rights Equity Shares; • Apply for his Rights Entitlement in full and apply for additional rights Equity Shares; • Renounce his Rights Entitlement in full. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above your Rights Entitlement, provided that you are eligible to apply under applicable law and have applied for all the rights Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, subject to sectoral caps and in consultation if necessary with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue - Basis of Allotment” on page 304 of this Draft Letter of Offer. If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. Renouncees should note that they shall not be able to apply for any additional Equity Shares. Renouncees should note that they shall not be able to apply for any additional Equity Shares. Where the number of additional Equity Shares applied for exceeds the number available for Allotment, the Allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange. Renunciation This Issue includes a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons. Your attention is drawn to the fact that our Company shall not Allot and / or register and Equity Shares in favour of more than three persons (including joint holders), partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under the Societies Registration Act, 1860 or the Indian Trust Act, 1882 or any other applicable law relating to societies or trusts and is authorized under its constitution or bye-laws to hold equity shares, as

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the case may be). Additionally, existing Equity Shareholders may not renounce in favour of persons or entities in the United States, who are not Qualified Institutional Buyers (as defined the US Securities Act), or who would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights Entitlement under applicable securities laws. By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, the existing Equity Shareholders of our Company who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of Renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-resident entities in terms of Regulation 5(1) of RBI Notification No.20/2000-RB dated May 3, 2000 under FDI Scheme with the prior approval of Government if the investment is through Government Route and with the prior approval of RBI if the investment is through Automatic Route on case by case basis. Shareholders renouncing their rights in favour of OCBs may do so provided such Renouncee obtains a prior approval from the RBI. On submission of such approval to our Company at our Registered Office, the OCB shall receive the Abridged Letter of Offer and the CAF. Part ‘A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‘B’ of the CAF) duly filled in shall be conclusive evidence for our Company of the person(s) applying for Equity Shares in Part ‘C’ of the CAF to receive Allotment of such Equity Shares. Renouncees should note that they shall not be able to apply for any additional Equity Shares. Part ‘A’ of the CAF must not be used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any Equity Shares in favour of any other person. Procedure for renunciation To renounce all the Equity Shares offered to an Equity Shareholder in favour of one Renouncee If you wish to renounce the offer indicated in Part ‘A’, in whole, please complete Part ‘B’ of the CAF. In case of joint holding, all joint holders must sign Part ‘B’ of the CAF. The person in whose favour renunciation has been made should complete and sign Part ‘C’ of the CAF. In case of joint Renouncees, all joint Renouncees must sign Part ‘C’ of the CAF. To renounce in part / or renounce the whole to more than one person(s) If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of SAFs in the space provided for this purpose in Part ‘D’ of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for SAFs. On receipt of the required number of SAFs from the Registrar, the procedure as mentioned in paragraph above shall have to be followed. In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not match with the specimen registered with our Company, the application is liable to be rejected. Renouncee(s) The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part ‘C’ of the CAF and submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date along with the application money in full. The Renouncee cannot further renounce.

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Change and/or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is / are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. However, this right of renunciation is subject to the express condition that the Board of Directors of our Company shall be entitled in its absolute discretion to reject the request for Allotment from the Renouncee(s) without assigning any reason thereof. Instructions for Options The summary of options available to the Equity Shareholder is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the enclosed CAF:

Option Available Action Required 1. Accept whole or part of your Rights

Entitlement without renouncing the balance.

Fill in and sign Part A (All joint holders must sign)

2. Accept your Rights Entitlement in full and apply for additional Equity Shares

Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

3. Accept a part of your Rights Entitlement and renounce the balance to one or more Renouncee(s)

OR

Renounce your Rights Entitlement of all the Equity Shares offered to you to more than one Renouncee

Fill in and sign Part D (all joint holders must sign) requesting for SAFs. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for SAFs. Splitting will be permitted only once. On receipt of the SAF take action as indicated below. For the Equity Shares you wish to accept, if any, fill in and sign Part A. For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the Renouncee. Each of the Renouncee should fill in and sign Part C for the Equity Shares accepted by them.

4. Renounce your Rights Entitlement in full to one person (Joint Renouncees are considered as one).

Fill in and sign Part B (all joint holders must sign) indicating the number of Equity Shares renounced and hand it over to the Renouncee. The Renouncee must fill in and sign Part C (All joint Renouncees must sign)

5. Introduce a joint holder or change the sequence of joint holders

This will be treated as a renunciation. Fill in and sign Part B and the Renouncee must fill in and sign Part C.

Please note that:

• Part ‘A’ of the CAF must not be used by any person(s) other than the Equity Shareholder to whom this Draft Letter of Offer has been addressed. If used, this will render the application invalid.

• Request for Split Application Forms / SAF should be made for a minimum of one Equity Share or,

in either case, in multiples thereof and one SAF for the balance Equity Shares, if any.

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• Request by the Investor for the SAFs should reach the Registrar on or before [●].

• Only the Equity Shareholder to whom this Draft Letter of Offer has been addressed shall be entitled to renounce and to apply for SAFs. Forms once split cannot be split further.

• SAFs will be sent to the Investor (s) by post at the applicant’s risk.

• Equity Shareholders may not renounce in favour of persons or entities in the United States, who

are not Qualified Institutional Buyers (as defined the US Securities Act), or who would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights Entitlement under applicable securities laws.

Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the Investor, the Registrar to the Issue will issue a duplicate CAF on the request of the Investor who should furnish the registered folio number / DP and Client ID number and his / her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue within eight days from the Issue Opening Date. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the Investor violates such requirements, he / she shall face the risk of rejection of both the applications. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain paper, along with demand draft (after deducting banking and postal charges) payable at Mumbai which should be drawn in favour of “Fame India Limited – Rights Issue - R” in case of resident shareholders and non-resident shareholders applying on non-repatriable basis and in favour of “Fame India Limited – Rights Issue – NR” in case of non-resident shareholders applying on repatriable basis and send the same by registered post directly to the Registrar to the Issue so as to reach Registrar to the Issue on or before the Issue Closing Date. The envelope should be superscribed “Fame India Limited – Rights Issue - R” in case of resident shareholders and Non-resident shareholders applying on non-repatriable basis, and “Fame India Limited – Rights Issue – NR” in case of non-resident shareholders applying on repatriable basis. The application on plain paper, duly signed by the applicant(s) including joint holders, in the same order as per specimen recorded with our Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars: • Name of Issuer, being Fame India Limited; • Name and address of the Equity Shareholder including joint holders; • Registered Folio Number/ DP and Client ID no.; • Number of Equity Shares held as on Record Date; • Number of Equity Shares entitled to; • Number of Equity Shares applied for; • Number of additional Equity Shares applied for, if any; • Total number of Equity Shares applied for; • Total amount paid at the rate of `[●] per Equity Share; • Particulars of cheque/demand draft/pay order; • Savings/Current Account Number and name and address of the bank where the Equity

Shareholder will be depositing the refund order. In case of Equity Shares allotted in demat form, the bank account details will be obtained from the information available with the Depositories;

• Except for applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue;

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• Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the records of our Company; and

• Additionally, all such applicants are deemed to have accepted the following: “I/We understand that neither the Rights Entitlement nor the Equity Shares have been, and will be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or any United States state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the territories or possessions thereof (the “United States”). I/we understand the Equity Shares referred to in this application are being offered in India but not in the United States. I/we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand this application should not be forwarded to or transmitted in or to the United States at any time. I/we understand that none of our Company, the Registrar, the Lead Manager or any other person acting on behalf of our Company will accept subscriptions from any person, or the agent of any person, who appears to be, or who our Company, the Registrar, the Lead Manager or any other person acting on behalf of our Company has reason to believe is, a resident of the United States or is ineligible to participate in the Issue under the securities laws of their jurisdiction. I/We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence. I/We understand and agree that the Rights Entitlement and Equity Shares may not be reoffered, resold, pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement and/or the Equity Shares is/are, outside the United States, and (ii) is/are acquiring the Rights Entitlement and/or the Equity Shares in an offshore transaction meeting the requirements of Regulation S. I/We acknowledge that our Company, the Lead Manager, their affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.” Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the Investor violates such requirements, he/she shall face the risk of rejection of both the applications. Our Company shall refund such application amount to the Investor without any interest thereon. Last date for Application The last date for submission of the duly filled in CAF is [●]. If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the invitation to offer contained in the Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the chapter “Terms of the Issue – Basis of Allotment” on page 304 of this Draft Letter of Offer.

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Basis of Allotment Subject to the provisions contained in the Letter of Offer, the Articles of Association of our Company and the approval of the Designated Stock Exchange, the Board will proceed to Allot the Equity Shares in the following order of priority: (a) Full Allotment to those Equity Shareholders who have applied for their Rights Entitlement either in

full or in part and also to the Renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part.

(b) Allotment pertaining to fractional entitlements in case of any shareholding other than in multiples of [●]. (c) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them

as part of the Issue and have also applied for additional Equity Shares. The Allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full Allotment in (a) and (b) above. The Allotment of such Equity Shares will be at the sole discretion of the Board / Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and will not be a preferential Allotment.

Renouncees should note that they shall not be able to apply for any additional Equity Shares. After taking into account Allotment to be made under (a) to (c) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code. The Promoter and Promoter Group have confirmed that they intend to subscribe to the full extent of their Rights Entitlement in the Issue. Subject to compliance with the Takeover Code, the Promoter and Promoter Group reserve their right to subscribe for Equity Shares in this Issue by subscribing for renunciation, if any, made by Promoter Group or any other shareholders. The Promoter and Promoter Group have provided an undertaking dated September 27, 2011 to our Company to apply for additional Equity Shares, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent Allotment, the Promoter and Promoter Group may acquire Equity Shares over and above their Rights Entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the Rights Entitlement. Such subscription and acquisition of additional Equity Shares by the Promoter and the Promoter Group through this Issue, if any, will not result in change of control of the management of our Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the chapter “Objects of the Issue” on page 40 of this Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist our Company, even if, as a result of Allotments to the Promoter and Promoter Group, in this Issue, the Promoter’s shareholding in our Company exceeds their current shareholding. The Promoter and Promoter Group shall subscribe to such unsubscribed portion as per the relevant provisions of the law. The Promoter and the Promoter Group shall subscribe to, and/or make arrangements for the subscription of, such unsubscribed portion as per the relevant provisions of law and in compliance with clause 40A of Listing Agreement. Our Company hereby certifies that such subscription to any undersubscribed portion of the Issue by the Promoters and the Promoter Group, in the manner contemplated above, shall be subject to compliance with the provisions of Rule 19(2)(b) of the SCRR and clause 40A of the Listing Agreement with respect to the requirement of minimum public shareholding of 25% of the post-Issue paid-up capital of our Company. Underwriting The Issue shall not be underwritten.

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PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA Process. Our Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Draft Letter of Offer. Equity Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and to ensure that the CAF is correctly filled up, specifying the number of the bank account maintained with the Self Certified Syndicate Bank (“SCSB”) in which the Application Money will be blocked by the SCSB. The Lead Manager, our Company, its directors, affiliates, associates and their respective directors and officers and the Registrar to the Issue shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc. in relation to applications accepted by SCSBs, Applications uploaded by SCSBs, applications accepted but not uploaded by SCSBs or applications accepted and uploaded without blocking funds in the ASBA Accounts. It shall be presumed that for applications uploaded by SCSBs, the amount payable on application has been blocked in the relevant ASBA Account. The list of banks which have been notified by SEBI to act as SCSBs for the ASBA Process is provided on http://www.sebi.gov.in/pmd/scsb.pdf. For details on Designated Branches of SCSBs collecting the CAF, please refer the above mentioned SEBI link. Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Equity Shares through the ASBA Process is available only to the Equity Shareholders of our Company on the Record Date. All QIBs and Non – Institutional Investors must and all Retail Individual Investors may apply through the ASBA process subject to satisfaction of the following parameters: To qualify as ASBA Applicants, eligible Equity Shareholders:

• are required to hold Equity Shares in dematerialized form as on the Record Date and apply for (i) their Rights Entitlement or (ii) their Rights Entitlement and Equity Shares in addition to their Rights Entitlement in dematerialized form;

• should not have renounced their Right Entitlement in full or in part; • should not have split the CAF; • should not be Renouncees; and • should apply through blocking of funds in bank accounts maintained with SCSBs.

CAF The Registrar will dispatch the CAF to all Equity Shareholders as per their Rights Entitlement on the Record Date for the Issue. Those Equity Shareholders who must apply or who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF. Application in electronic mode will only be available with such SCSBs who provide such facility. The Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. Acceptance of the Issue You may accept the Issue and apply for the Equity Shares either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit

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the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of our Company in this regard. Mode of payment The Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB. After verifying that sufficient funds are available in the bank account details of which are provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrar. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per the Registrar’s instruction from the bank account maintained with the SCSB, as mentioned by the Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI Regulations, into the separate bank account maintained by our Company as per the provisions of section 73(3) of the Companies Act. The balance amount remaining after the finalisation of the basis of Allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Manager to the respective SCSB. The Equity Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, our Company would have a right to reject the application only on technical grounds. Options available to the Equity Shareholders applying under the ASBA Process The summary of options available to the Equity Shareholders are presented below. You may exercise any of the following options with regard to the Equity Shares, using the respective CAFs received from Registrar:

Option Available Action Required 1. Accept whole or part of your Rights Entitlement

without renouncing the balance. Fill in and sign Part A of the CAF (All joint holders must sign)

2. Accept your Rights Entitlement in full and apply

for additional Equity Shares Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

The Equity Shareholders applying under the ASBA Process will need to select the ASBA process option in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSBs with the relevant details required under the ASBA process option and the SCSBs block the requisite amount, then that CAF would be treated as if the Equity Shareholder has selected to apply through the ASBA process option. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011, all applicants who are QIBs, Non Institutional Investors or are applying in this Issue for Equity Shares for an amount exceeding Rs. 2,00,000 shall mandatorily make use of ASBA facility.

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Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares that you are entitled to, provided that you are eligible to apply for Equity Shares under applicable law and you have applied for all the Equity Shares (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and Allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue - Basis of Allotment” on page 304 of this Draft Letter of Offer. Renouncees should note that they shall not be able to apply for any additional Equity Shares. If you desire to apply for additional Equity Shares please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF and who is applying under the ASBA Process may make an application to subscribe to the Issue on plain paper. The envelope should be superscribed “Fame India Limited – Rights Issue”. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per the specimen recorded with our Company, must reach the SCSBs before the Issue Closing Date and should contain the following particulars: • Name of Issuer, being Fame India Limited; • Name and address of the Equity Shareholder including joint holders; • Registered Folio Number/ DP and Client ID no.; • Number of Equity Shares held as on Record Date; • Number of Equity Shares entitled to; • Number of Equity Shares applied for; • Number of additional Equity Shares applied for, if any; • Total number of Equity Shares applied for; • Total amount to be blocked at the rate of `[●] per Equity Share; • Except for applications on behalf of the Central or State Government and the officials appointed

by the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue; and

• Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the records of our Company.

• Additionally, all such applicants are deemed to have accepted the following: “I/We understand that neither the Rights Entitlement nor the Equity Shares have been, and will be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or any United States state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the territories or possessions thereof (the “United States”). I/we understand the Equity Shares referred to in this application are being offered in India but not in the United States. I/we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand this application should not be forwarded to or transmitted in or to the United States at any time. I/we understand that none of our Company, the Registrar, the Lead Manager or any other person acting on behalf of our Company will accept subscriptions from any person, or the agent of any person, who appears to be, or who our Company, the Registrar, the Lead Manager or any other person acting on behalf of our Company has reason to believe is, a resident of the United States or is ineligible to participate in the Issue under the securities laws of their jurisdiction.

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I/We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence. I/We understand and agree that the Rights Entitlement and Equity Shares may not be reoffered, resold, pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement and/or the Equity Shares is/are, outside the United States, and (ii) is/are acquiring the Rights Entitlement and/or the Equity Shares in an offshore transaction meeting the requirements of Regulation S. I/We acknowledge that our Company, the Lead Manager, their affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.” Option to receive Equity Shares in Dematerialized Form EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE HELD BY SUCH ASBA APPLICANT ON THE RECORD DATE. General instructions for Equity Shareholders applying under the ASBA Process (a) Please read the instructions printed on the CAF carefully. (b) Application should be made on the printed CAF only and should be completed in all respects. The

CAF found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of the Letter of Offer, Abridged Letter of Offer are liable to be rejected. The CAF must be filled in English.

(c) The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose

bank account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks (assuming that such Collecting Bank is not a SCSB), to our Company or Registrar or Lead Manager to the Issue.

(d) All applicants, and in the case of application in joint names, each of the joint applicants, should

mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. Except for applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, CAFs without PAN will be considered incomplete and are liable to be rejected. With effect from August 16, 2010, the demat accounts for Investors for which PAN details have not been verified shall be “suspended for credit” and no allotment and credit of Equity Shares shall be made into the accounts of such Investors.

(e) All payments will be made by blocking the amount in the bank account maintained with the SCSB.

Cash payment or payment by cheque / demand draft / pay order is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth

Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression

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must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company and/or Depositories.

(g) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and

as per the specimen signature(s) recorded with the depository / our Company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.

(h) All communication in connection with application for the Equity Shares, including any change in

address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of Allotment in this Issue quoting the name of the first/sole applicant Equity Shareholder, folio numbers and CAF number.

(i) Only the person or persons to whom the Equity Shares have been offered shall be eligible to participate

under the ASBA Process. (j) Only persons outside restricted jurisdictions and who are eligible to subscribe for Rights Entitlement

and Equity Shares under applicable securities laws are eligible to participate.

(k) Only the Equity Shareholders holding shares in demat are eligible to participate through ASBA process.

(l) Equity shareholders who have renounced their entitlement in part/ full are not entitled to apply using ASBA process.

(m) Please note that pursuant to the applicability of the directions issued by SEBI vide its circular

bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011, all applicants who are QIBs, Non Institutional Investors or are applying in this Issue for Equity Shares for an amount exceeding Rs. 2,00,000 shall mandatorily make use of ASBA facility.

Do’s: (a) Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled

in. (b) Ensure that the details about your Depository Participant and beneficiary account are correct and the

beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only. (c) Ensure that the CAFs are submitted with the Designated Branch of the SCSBs and details of the

correct bank account have been provided in the CAF. (d) Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied

for} X {Issue Price of Equity Shares, as the case may be}) available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.

(e) Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable

on application mentioned in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same.

(f) Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in

physical form. (g) Except for CAFs submitted on behalf of the Central or State Government, the residents of Sikkim and

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the officials appointed by the courts, each applicant should mention their PAN allotted under the I. T. Act.

(h) Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary

account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF.

(i) Ensure that the Demographic Details are updated, true and correct, in all respects.

(j) Ensure that the account holder in whose bank account the funds are to be blocked has signed

authorising such funds to be blocked.

(k) Apply under the ASBA process only if you comply with the defination of an ASBA investor. Don’ts: (a) Do not apply if your are in the United States of America or are not eligible to participate in the Issue

under the securities laws applicable to your jurisdiction.

(b) Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. (c) Do not pay the amount payable on application in cash, by money order or by postal order. (d) Do not send your physical CAFs to the Lead Manager to Issue / Registrar / Collecting Banks

(assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only.

(e) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this

ground.

(f) Do not apply if the ASBA account has been used for five applicants. Grounds for Technical Rejection under the ASBA Process In addition to the grounds listed under “Grounds for Technical Rejection for non-ASBA Investors” on page 317 of this Draft Letter of Offer, applications under the ABSA Process are liable to be rejected on the following grounds: (a) Application on a SAF.

(b) Application for allotment of Rights Entitlements or additional shares which are in physical form.

(c) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available

with the Registrar.

(d) Sending CAF to a Lead Manager / Registrar / Collecting Bank (assuming that such Collecting Bank is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company.

(e) Insufficient funds are available with the SCSB for blocking the amount.

(f) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen pursuant to regulatory orders.

(g) Account holder not signing the CAF or declaration mentioned therein.

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(h) CAFs that do not include the certification set out in the CAF to the effect that the subscriber does not

have a registered address (and is not otherwise located) in restricted jurisdictions and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations.

(i) CAFs which have evidence of being executed in/dispatched from restricted jurisdiction.

(j) An Equity Shareholder, who is not complying with any or all of the conditions for being an ASBA Investor, applies under the ASBA process.

(k) QIBs and Non – Institutional Investors who holds Equity Shares in dematerialised form and is not a

Renouncee not applying through the ASBA process.

(l) The application by an Equity Shareholder whose cumulative value of Equity Shares applied for is more than ` 2,00,000 but has applied separately through split CAFs of less than ` 2,00,000 and has not done so through the ASBA process.

Depository account and bank details for Equity Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Equity Shareholders applying under the ASBA Process should note that on the basis of name of these Equity Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Equity Shareholders such as address, bank account details for printing on refund orders and occupation (“Demographic Details”). Hence, Equity Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF. These Demographic Details would be used for all correspondence with such Equity Shareholders including mailing of the letters intimating unblocking of bank account of the respective Equity Shareholder. The Demographic Details given by the Equity Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Equity Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Letters intimating Allotment and unblocking the funds would be mailed at the address of the Equity Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. The Registrar to the Issue will give instrucuctions to the SCSBs for unblocking funds in the bank account utilised under the ASBA process to the extent equity shares are not allotted to such shareholders. Equity Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of the funds may get delayed if the same once sent to the address

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obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Equity Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of the funds. Note that any such delay shall be at the sole risk of the Equity Shareholders applying under the ASBA Process and none of our Company, the SCSBs or the Lead Manager shall be liable to compensate the Equity Shareholder applying under the ASBA Process for any losses caused due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that matches three parameters, (a) names of the Equity Shareholders (including the order of names of joint holders), (b) the DP ID and (c) the beneficiary account number, then such applications are liable to be rejected. Issue Schedule

Issue Opening Date: [●] Last date for receiving requests for SAFs: [●] Issue Closing Date: [●]

The Board may however decide to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. Allotment Advices / Refund Orders Our Company will issue and dispatch Allotment advice/ share certificates/demat credit and/or letters of regret along with refund order or credit the allotted Equity Shares to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day our Company becomes liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier) our Company and every Director of our Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act. Investors residing at centers where clearing houses are managed by the RBI will get refunds through National Electronic Clearing Service (“NECS”) except where Investors have not provided the details required to send electronic refunds. In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, advice regarding their credit of the Equity Shares shall be given separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within 15 days of the Issue Closing Date. In case of those Investors who have opted to receive their Rights Entitlement in physical form and our Company issues letter of allotment, the corresponding share certificates will be kept ready within three months from the date of Allotment thereof or such extended time as may be approved by our Company Law Board under Section 113 of the Companies Act or other applicable provisions, if any. Investors are requested to preserve such letters of allotment, which would be exchanged later for the share certificates. For more information, please see the chapter “Terms of the Issue” on page 295 of this Draft Letter of Offer. The letter of allotment / refund order would be sent by registered post/speed post to the sole/first Investor’s registered address. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole/first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose.

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Payment of Refund Mode of making refunds The payment of refund, if any, would be done through any of the following modes: 1. NECS – Payment of refund would be done through NECS for Investors having an account at any of the

68 centres where such facility has been made available. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories/the records of the Registrar. The payment of refunds is mandatory for Investors having a bank account at any centre where NECS facility has been made available (subject to availability of all information for crediting the refund through NECS).

2. NEFT – Payment of refund shall be undertaken through NEFT wherever the Investors’ bank has been

assigned the Indian Financial System Code (IFSC), which can be linked to a MICR, allotted to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Investors have registered their nine digit MICR number and their bank account number with the registrar to our Company or with the depository participant while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the Investors through this method.

3. Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to

receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by our Company.

4. RTGS – If the refund amount exceeds ` 2 lakhs, the investors have the option to receive refund

through RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through NECS or any other eligible mode. Charges, if any, levied by the refund bank(s) for the same would be borne by our Company. Charges, if any, levied by the Investor’s bank receiving the credit would be borne by the Investor.

5. For all other Investors the refund orders will be despatched through Speed Post/ Registered Post. Such

refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first Investor and payable at par.

6. Credit of refunds to Investors in any other electronic manner permissible under the banking laws,

which are in force, and is permitted by the SEBI from time to time. Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the Investor’s bank account are mandatorily required to be given for printing on the refund orders. Bank account particulars, where available, will be printed on the refund orders/refund warrants which can then be deposited only in the account specified. Our Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Allotment advice / Share Certificates/ Demat Credit Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the first named Investor or respective beneficiary accounts will be credited within 15 days, from the Issue Closing Date. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share certificates.

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Option to receive Equity Shares in Dematerialized Form Investors shall be allotted the Equity Shares in dematerialized (electronic) form at the option of the Investor. Our Company has signed a tripartite agreement with NSDL on March 14, 2005 which enables the Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates. Our Company has also signed a tripartite agreement with CDSL on March 11, 2005 which enables the Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates. In this Issue, the allottees who have opted for Equity Shares in dematerialized form will receive their Equity Shares in the form of an electronic credit to their beneficiary account as given in the CAF, after verification with a depository participant. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar to the Issue but the Investor’s depository participant will provide to him the confirmation of the credit of such Equity Shares to the Investor’s depository account. CAFs, which do not accurately contain this information, will be given the Equity Shares in physical form. No separate CAFs for Equity Shares in physical and/or dematerialized form should be made. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM. The procedure for availing the facility for Allotment of Equity Shares in this Issue in the electronic form is as under: • Open a beneficiary account with any depository participant (care should be taken that the beneficiary

account should carry the name of the holder in the same manner as is registered in the records of our Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as registered in the records of our Company). In case of Investors having various folios in our Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those Equity Shareholders who have already opened such beneficiary account(s) need not adhere to this step.

• For Equity Shareholders already holding Equity Shares in dematerialized form as on the Record

Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity Shares by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the Allotment of Equity Shares arising out of this Issue may be made in dematerialized form even if the original Equity Shares are not dematerialized. Nonetheless, it should be ensured that the depository account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of our Company.

The responsibility for correctness of information (including Investor’s age and other details) filled in the CAF vis-à-vis such information with the Investor’s depository participant, would rest with the Investor. Investors should ensure that the names of the Investors and the order in which they appear in CAF should be the same as registered with the Investor’s depository participant. If incomplete / incorrect beneficiary account details are given in the CAF, the Investor will get Equity Shares in physical form. The Equity Shares allotted to applicants opting for issue in dematerialized form, would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s depository participant will provide to the applicant the confirmation of the credit of such Equity Shares to the applicant’s depository account. Renouncees will also have to provide the necessary details about their beneficiary account for Allotment of

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Equity Shares in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected. General instructions for non-ASBA Investors (a) Please read the instructions printed on the enclosed CAF carefully. (b) Application should be made on the printed CAF, provided by our Company except as mentioned

under the head “Application on Plain Paper” on page 302 of this Draft Letter of Offer and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer or Abrigded Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father’s / husband’s name must be filled in block letters.

The CAF together with the cheque/demand draft should be sent to the Bankers to the Issue/Collecting Bank or to the Registrar to the Issue and not to our Company or Lead Manager to the Issue. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by our Company for collecting applications, will have to make payment by demand draft payable at Mumbai of an amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by registered post. If any portion of the CAF is/are detached or separated, such application is liable to be rejected.

Applications where separate cheques/demand drafts are not attached for amounts to be paid for Equity Shares are liable to be rejected.

(c) Except for applications on behalf of the Central and State Government, the residents of Sikkim

and the officials appointed by the courts, all Investors, and in the case of application in joint names, each of the joint Investors, should mention his/her PAN number allotted under the I.T. Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

(d) Investors, holding Equity Shares in physical format, are advised that it is mandatory to provide

information as to their savings/current account number and the name of the bank with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected.

(e) All payment should be made by cheque/demand draft only. Application through the ASBA

process as mentioned above is acceptable. Cash payment is not acceptable. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth

Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company.

(g) In case of an application under power of attorney or by a body corporate or by a society, a certified

true copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Issue and to sign the application and certified true a copy of the Memorandum and Articles of Association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with our Company, the same

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need not be a furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue.

(h) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order

and as per the specimen signature(s) recorded with our Company. Further, in case of joint Investors who are Renouncees, the number of Investors should not exceed three. In case of joint Investors, reference, if any, will be made in the first Investor’s name and all communication will be addressed to the first Investor.

(i) Application(s) received from NRs/NRIs, or persons of Indian origin residing abroad for Allotment

of Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, Allotment of Equity Shares, subsequent issue and Allotment of Equity Shares, interest, export of share certificates, etc. In case a NR or NRI Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF. Additionally, applications will not be accepted from NRs/NRIs in the United States or its territories and possessions, or any other jurisdiction where the offer or sale of the Rights Entitlements and Equity Shares may be restricted by applicable securities laws.

(j) All communication in connection with application for the Equity Shares, including any change in

address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of Allotment in this Issue quoting the name of the first/sole Investor, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of Allotment, should be sent to the Registrar and Transfer Agents of our Company, in the case of Equity Shares held in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form.

(k) SAFs cannot be re-split. (l) Only the person or persons to whom Equity Shares have been offered and not Renouncee(s) shall

be entitled to obtain SAFs. (m) Investors must write their CAF number at the back of the cheque /demand draft. (n) Only one mode of payment per application should be used. The payment must be by cheque /

demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted.

(o) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-

dated cheques and postal / money orders will not be accepted and applications accompanied by such outstation cheques / outstation demand drafts / money orders or postal orders will be rejected.

(p) No receipt will be issued for application money received. The Bankers to the Issue / Collecting

Bank/ Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.

(q) The distribution of the Draft Letter of Offer and issue of Equity Shares and Rights Entitlements to

persons in certain jurisdictions outside India may be restricted by legal requirements in those jurisdictions. Persons in the United States and such other jurisdictions are instructed to disregard the Draft Letter of Offer and not to attempt to subscribe for Equity Shares.

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Do’s for non-ASBA Investors: (a) Check if you are eligible to apply i.e. you are an Equity Shareholder on the Record Date; (b) Read all the instructions carefully and ensure that the cheque/ draft option is selected in part A of

the CAF and necessary details are filled in; (c) In the event you hold Equity Shares in dematerialised form, ensure that the details about your

Depository Participant and beneficiary account are correct and the beneficiary account is activated as the Equity Shares will be allotted in the dematerialized form only;

(d) Ensure that your Indian address is available to our Company and the Registrar, in case you hold

Equity Shares in physical form or the depository participant, in case you hold Equity Shares in dematerialised form;

(e) Ensure that the CAFs are submitted at the collection centres of the syndicate only on forms

bearing the stamp of the Lead Manager; (f) Ensure that the value of the cheque/ draft submitted by you is equal to the (number of Equity

Shares applied for) X (Issue Price of Equity Shares, as the case may be) before submission of the CAF;

(g) Ensure that you receive an acknowledgement from the collection centers of the collection bank for

your submission of the CAF in physical form; (h) Ensure that you mention your PAN allotted under the I.T. Act with the Bid cum Application Form,

except for Bids on behalf of the Central and State Governments, residents of the state of Sikkim and officials appointed by the courts;

(i) Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the

beneficiary account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF;

(j) Ensure that the demographic details are updated, true and correct, in all respects. Don’ts for non-ASBA Investors: (a) Do not apply if you are in the United States of America or are not eligible to participate in the

Issue the securities laws applicable to your jurisdiction; (b) Do not apply on duplicate CAF after you have submitted a CAF to a collection center of the

collection bank; (c) Do not pay the amount payable on application in cash, by money order or by postal order; (d) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this

ground; (e) Do not submit Bid accompanied with Stock invest; Grounds for Technical Rejections for non-ASBA Investors. Investors are advised to note that applications are liable to be rejected on technical grounds, including the following:

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• Amount paid does not tally with the amount payable; • Bank account details (for refund) are not given and the same are not available with the DP (in the

case of dematerialized holdings) or the Registrar (in the case of physical holdings); • Age of Investor(s) not given (in case of Renouncees); • Except for CAFs on behalf of the Central or State Government, the residents of Sikkim and the

officials appointed by the courts, PAN number not given for application of any value; • In case of CAF under power of attorney or by limited companies, corporate, trust, relevant

documents are not submitted; • If the signature of the Equity Shareholder does not match with the one given on the CAF and for

renounce(s) if the signature does not match with the records available with their depositories; • CAFs are not submitted by the Investors within the time prescribed as per the CAF and the Letter

of Offer; • CAFs not duly signed by the sole/joint Investors; • CAFs by OCBs without specific RBI approval; • CAFs accompanied by Stockinvest / outstation cheques / post-dated cheques / money order /

postal order / outstation demand draft; • In case no corresponding record is available with the depositories that matches three parameters,

namely, names of the Investors (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity;

• CAFs that do not include the certifications set out in the CAF to the effect that, among other thing, the subscriber is not located in restricted jurisdictions and is authorized to acquire the Rights Entitlements and Equity Shares in compliance with all applicable laws and regulations;

• CAFs which have evidence of being executed in/dispatched from restricted jurisdictions; • CAFs by ineligible non-residents (including on account of restriction or prohibition under

applicable local laws); • CAFs where our Company believes that CAF is incomplete or acceptance of such CAF may

infringe applicable legal or regulatory requirements; • In case the GIR number is submitted instead of the PAN; • Applications by Renouncees who are persons not competent to contract under the Indian Contract

Act, 1872, including minors; and • Multiple CAFs, including cases where an Investor submits CAFs along with a plain paper

application. • Applications from QIBs or from Non Institutional Investors or Investrors applying in this Issue for

Equity Shares for an amount exceeding ` 2,00,000, which are not in ASBA process.

Please read the Letter of Offer or Abridged Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are an integral part of the Letter of Offer and must be carefully followed. The CAF is liable to be rejected for any non-compliance of the provisions contained in the Letter of Offer or the CAF. Mode of payment for Resident Equity Shareholders/ Investors • All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank

(specified on the reverse of the CAF), crossed ‘A/c Payee only’ and marked “Fame India Limited – Rights Issue”;

• Investors residing at places other than places where the bank collection centres have been opened

by our Company for collecting applications, are requested to send their CAFs together with Demand Draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed ‘A/c Payee only’ and marked “Fame India Limited – Rights Issue” payable at Mumbai directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

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Investment by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs: No single FII can hold more that 10% of our Company’s post-Issue paid-up share capital. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 5% of the total paid-up share capital of our Company, in case such sub-account is a foreign corporate or an individual. Applications will not be accepted from FIIs in restricted jurisdictions. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011, all applicants who are QIBs, Non Institutional Investors or are applying in this Issue for Equity Shares for an amount exceeding Rs. 2,00,000 shall mandatorily make use of ASBA facility. Investment by NRIs Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. Applications will not be accepted from FIIs in restricted jurisdictions. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011, all applicants who are QIBs, Non Institutional Investors or are applying in this Issue for Equity Shares for an amount exceeding Rs. 2,00,000 shall mandatorily make use of ASBA facility. Procedure for Applications by Mutual Funds A separate application can be made in respect of each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011, all applicants who are QIBs, Non Institutional Investors or are applying in this Issue for Equity Shares for an amount exceeding Rs. 2,00,000 shall mandatorily make use of ASBA facility. Mode of payment for Non-Resident Equity Shareholders/ Investors As regards the application by non-resident Equity Shareholders, the following conditions shall apply: • Individual non-resident Indian applicants who are permitted to subscribe for Equity Shares by

applicable local securities laws can obtain application forms from the following address:

Link Intime India Private Limited SEBI Registration No: INR000004068 C- 13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai - 400 078, Maharashtra, India Tel: +91 22 2596 0320 Fax: +91 22 2596 0329

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Website: www.linkintime.co.in Email: [email protected] Contact Person: Mr. Pravin Kasare

• Payment by non-residents must be made by demand draft payable at Mumbai/cheque payable drawn on a bank account maintained at Mumbai or funds remitted from abroad in any of the following ways:

Application with repatriation benefits • By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from

abroad (submitted along with Foreign Inward Remittance Certificate); or • By cheque/draft on a Non-Resident External Account (NRE) or FCNR Account maintained in

India; or • By Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and

payable in Mumbai; or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.

• Non-resident investors applying with repatriation benefits should draw cheques/drafts in favour of

‘Fame India Limited – Rights Issue - NR’ and must be crossed ‘account payee only’ for the full application amount.

• Non-resident Indian applicants may please note that only such applications as are accompanied by payment in free foreign exchange shall be considered for allotment under the reserved category. The non-resident Indians who intend to make payment through NRO accounts shall use the form meant for Resident Indians and shall not use the forms meant for reserved category.

Application without repatriation benefits • As far as non-residents holding Equity Shares on non-repatriation basis are concerned, in addition

to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in India or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the Allotment of Equity Shares will be on non-repatriation basis.

• All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be

drawn in favour of Fame India Limited – Rights Issue - NR and must be crossed ‘account payee only’ for the full application amount. The CAFs duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

• Investors may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO

accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected.

• New demat account shall be opened for holders who have had a change in status from resident

Indian to NRI.

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Notes: • In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the

investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to the IT Act.

• In case Equity Shares are allotted on a non-repatriation basis, the dividend and sale proceeds of the

Equity Shares cannot be remitted outside India. • The CAF duly completed together with the amount payable on application must be deposited with

the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

• In case of an application received from non-residents, Allotment, refunds and other distribution, if

any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such Allotment, remittance and subject to necessary approvals.

Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-section (1) of section 68A of the Companies Act which is reproduced below: “Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or otherwise induces a Company to Allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years”. Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue. Disposal of application and application money No acknowledgment will be issued for the application moneys received by our Company. However, the Bankers to the Issue / Registrar to the Issue / SCSBs receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the Investor within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day our Company becomes liable to repay it, our Company and every Director of our Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act. For further instructions, please read the CAF carefully.

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Utilisation of Issue Proceeds The Board of Directors declares that: (i) All monies received out of this Issue shall be transferred to a separate bank account referred to sub-

section (3) of Section 73 of the Companies Act; (ii) Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head in

the balance sheet of our Company indicating the purpose for which such monies have been utilised; (iii) Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate

separate head in the balance sheet of our Company indicating the form in which such unutilized monies have been invested; and

(iv) Our Company may utilize the funds collected in the Issue only after listing and trading permission is

received from the Stock Exchanges in respect of this Issue. Undertakings by our Company Our Company undertakes the following: 1. The complaints received in respect of the Issue shall be attended to by our Company expeditiously

and satisfactorily. 2. All steps for completion of the necessary formalities for listing and commencement of trading at

all Stock exchanges where the Equity Shares are to be listed will be taken within seven working days of finalization of basis of Allotment.

3. The funds required for making refunds to unsuccessful applicants as per the modes disclosed shall

be made available to the Registrar to the Issue by our Company. 4. Our Company undertakes that where refunds are made through electronic transfer of funds, a

suitable communication shall be sent to the Investor within 15 days of the Issue Closing Date, giving details of the banks where refunds shall be credited along with amount and expected date of electronic credit of refund.

5. Adequate arrangements shall be made to collect all ASBA applications and to consider them

similar to non-ASBA applications while finalising the basis of Allotment.

6. The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within the specified time.

7. No further issue of securities affecting equity capital of our Company shall be made till the securities issued/offered through the Letter of Offer Issue are listed or till the application money are refunded on account of non-listing, under-subscription etc.

8. At any given time there shall be only one denomination of equity shares of our Company. 9. Our Company accepts full responsibility for the accuracy of information given in this Draft Letter

of Offer and confirms that to the best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this Draft Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.

10. All information shall be made available by the Lead Manager and the Issuer to the Investors at large and no selective or additional information would be available for a section of the Investors in

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any manner whatsoever including at road shows, presentations, in research or sales reports etc.

11. Our Company shall comply with such disclosure and accounting norms specified by SEBI from time to time.

Minimum Subscription If our Company does not receive minimum subscription of 90% of the Issue including participation by the Promoters and Promoter Group of the undersubscribed portion of the Issue, the entire subscription shall be refunded to the Applicants within 15 days from the Issue Closing Date. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date), our Company will pay interest for the delayed period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act. Important • Please read this Draft Letter of Offer carefully before taking any action. The instructions contained

in the accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.

• All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for

SAFs must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and super scribed ‘Fame India Limited-Rights Issue’ on the envelope and postmarked in India) to the Registrar to the Issue at the following address:

Link Intime India Private Limited SEBI Registration No: INR000004068 C- 13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai - 400 078, Maharashtra, India Tel: +91 22 2596 0320 Fax: +91 22 2596 0329 Website: www.linkintime.co.in Email: [email protected] Contact Person: Mr. Pravin Kasare

• It is to be specifically noted that this Issue of Equity Shares is subject to the risk factors mentioned in the section “Risk Factors” on page IX of this Draft Letter of Offer.

The Issue will remain open for a minimum 15 days. However, the Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.

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SECTION IX – STATUTORY AND OTHER INFORMATION

Option to subscribe Other than the present Issue, and except as disclosed in the section “Terms of the Issue” on page 295 of this Draft Letter of Offer, our Company has not given any person any option to subscribe to the Equity Shares. The Investors shall have an option to get the Equity Shares offered in this Issue in physical or dematerialized form.

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DESCRIPTION OF EQUITY SHARES AND TERMS OF THE ARTICLES OF ASSOCIATION Set forth below is certain information relating to our Company’s share capital and the important terms of Articles of our Company. Please note that each provision herein below is numbered as per the corresponding article number in the Articles of Association and capitalized/defined terms herein have the same meaning given to them in the Articles of Association. Pursuant to Schedule II of the Companies Act and the SEBI Regulations, the main provisions of the Articles of Association relating to voting rights, dividend, lien, forfeiture, restrictions on transfer and transmission of Equity Shares or debentures and/or on their consolidation/splitting are detailed below. Description of Equity Shares The authorized share capital of our Company is ` 6,300 lacs divided into 62,990,000 Equity Shares and 10,000 Preference Shares. The Equity Shares are listed on the BSE and the NSE. As at the date of the Draft Letter of Offer, 34,983,635 Equity Shares were issued and paid-up. Our Company’s register of members is maintained at its Registered Office. Terms of Articles of Association CAPITAL 4. Authorized Share Capital- The Authorized Share Capital of the Company be read as is given in Clause V of the Memorandum of Association of the Company. 5. Further Issue Of Shares (1) Where at the time after the expiry of two years from the formation of the Company or at any time after the expiry of one year from the allotment of shares in the Company made for the first time after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the Company by allotment of further shares either out of the un-issued capital or out of the increased share capital then:

(a) Such further shares shall be offered to the persons who at the date of the offer, are holders of the equity shares of the Company, in proportion, as near as circumstances admit, to the Capital paid up on those shares at the date.

(b) Such offer shall be made by a notice specifying the number of shares offered and within

not less than thirty days from the date of the offer and the offer if not accepted, will be deemed to have been declined.

(c) The offer aforesaid shall be deemed to include a right exercisable by the person

concerned to renounce the shares offered to them in favour of any other person and the notice referred to in sub clause (b) hereof shall contain a statement of this right, provided that the directors may decline, without assigning any reason to allot any shares to any person in whose favour any member may renounce the shares offered to him.

(d) After expiry of the time specified in the aforesaid notice or an receipt of earlier intimation

from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner and to such person(s) as they may think, in their sole discretion, fit.

(2) Notwithstanding anything contained in clause (1) thereof, the further shares aforesaid may be offered to any persons (whether or not those persons include the persons referred to in clause (a) of clause

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(1) hereof) in any manner whatsoever:

(a) If a special resolution to that effect is passed by the Company in General Meeting, or

(b) Where no such special resolution is passed, if the votes cast (whether on show of hands or on a poll as the case may be) in favour of the proposal contained in the resolution moved in the general meeting (including the casting vote, if any, of the Chairman) by the members who, being entitled to do so, vote in person, or where proxies are allowed, by proxy exceed the votes, if any, cast against the proposal by members, so entitled and voting and the Central Government is satisfied, on an application made by the Board of Directors, in this behalf that the proposal is most beneficial to the Company.

(3) Nothing in sub-clause (c) of clause (1) hereof shall be deemed:

(a) To extend the time within which the offer should be accepted; or

(b) To authorise any person to exercise the right of renunciation for a second time on the ground that the person in whose favour the renunciation was first made has declined to take the shares comprised in the renunciation.

(4) Nothing in this Article shall apply to the increase of the subscribed Capital of the Company caused by the exercise of an option attached to the debenture issued or loans raised by the Company:

(a) To convert such debentures or loans into shares in the company; or

(b) To subscribe for shares in the Company (whether such option is conferred in these Articles or otherwise).

PROVIDED that the terms of issue of such debentures or the terms of such loans include a term providing for such option and such term:

(a) Either has been approved by the Central Government before the issue of the debentures or the raising of the loans or is in conformity with Rules, if any, made by that Government in this behalf; and

(b) In the case of debentures or loans or other than debentures issued to or loans obtained

from Government or any institution specified by the Central Government in this behalf, has also been approved by a special resolution passed by the Company in General Meeting before the issue of the debentures or raising of the loans.

6. Shares to be under the control of the Directors Subject to the provisions of Section 81 of the Act and these Articles, the shares in the capital of the Company for the time being shall be under the control of the Directors who may issue, allot or otherwise dispose of the same or any of them to such persons, in such proportion and on such terms and conditions and either at a premium or at par or (subject to the compliance with the provision of Section 79 of the Act) at a discount and at such time as they may from time to time think fit and with the sanction of the Company in the General Meeting to give to any person or persons the option or right to call for any shares consideration as the Directors think fit, and may issue and allot shares in the capital of the Company on payment in full or part of any property sold and transferred or for any services rendered which may so be allotted or may be issued as fully paid up shares. Provided that option or right to call of shares shall not be given to any person or persons without the sanction of the Company in the General Meeting. 7. Return of Allotments As regards all allotments made, from time to time, the Directors shall comply with Section 75 of the Act.

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8. Installments on Shares to be duly paid If by the conditions of allotment of any share the whole or part of the amount or issue price there of shall be payable by installments, every such installment shall, when due to be paid to the Company by the person who for the time being shall be the registered holder of the shares or his legal representatives, and shall for the purpose of these Articles be deemed to be payable on the date fixed for payment and in the case of non-payment the provisions of these Articles as to payment of interest and expenses, forfeiture and the like and all other relevant provisions of the Articles shall apply as if such installments were a call duly made and notified as hereby provided. 9. Commission for placing Shares The Company may, subject to the compliance with the provisions of Section 76 of the Act exercise the power of paying commission. 10. Brokerage The Company may, subject to limits prescribed by the Act, pay a reasonable sum of brokerage on any issue of shares. 11. Shares at a Discount With the previous authority of the Company in General Meeting and the sanction of the Company Law Board and upon otherwise complying with the provisions of Section 79 of the Act, the Directors may issue shares at a discount. 12. Liability of joint holders of Shares. The joint holders of shares shall be severally as well as jointly liable for the payment of all installments and calls due in respect of such share but the person first named in the Register shall as regards notice at meetings, proxy receipt of dividends or bonus, service of voting and all or any other matters connected with the company, except the transfer of shares, be deemed the sole holder thereof. 13. Number of joint holders Not more than four persons shall be registered as joint-holders of any share. 14. Certificates of Shares Subject to the provisions of the Companies (Issue of Shares Certificate) Rules, 1960 or any statutory modification or re-enactment thereof share certificates shall be issued in the manner following: 15. Certificates (1)The Certificates of title to shares and duplicates thereof, when necessary shall be issued under the Seal of the Company which shall be affixed in the presence of (i) one Director or a Director and a person acting on behalf of another Director under a duly registered power-of-attorney or two persons acting as attorneys for two Directors as aforesaid, and (ii) the Secretary or some other person appointed by the Board for the purpose all of the whom shall sign such share certificates provided that, if the composition of the Board permits at least one of the aforesaid two Directors shall be a person other than a Managing or whole time Director or a Director. Every member or allottee of shares shall be entitled, without payment, to receive certificates for the shares of the same class registered in his name. Every share certificate shall specify the name of the person in whose favor it is issued, the share certificate number and the distinctive number(s) of the shares to which it relates and the amount paid up thereon. Such share certificate shall be issued only in pursuance of a resolution passed by the Board or any committee thereof and on surrender to the Company

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of its letter of allotment or its fractional coupons of requisite value, save in cases of issues against letters of acceptance or of renunciation or in cases of issue of bonus shares provided that if the letter of allotment is lost or destroyed, the Board or any committee thereof may impose such reasonable terms, if any, as it thinks fit, as to evidence and indemnity and the payment of out of pocket expenses incurred by the Company in investigating the evidence. (2)Printing of blank forms for issue of share certificates and maintenance of books and documents relating to issue of Share Certificate shall be in accordance with the provisions of the Companies (Issue of Share Certificates) Rules, 1960 or any statutory modification or re- enactment thereof for the time being in force. 16. To which of the joint holders certificates to be issued If any share stands in the name of two or more persons, the person first named in the Register shall, as regards receipt of dividends or bonus or service of notices and all or any other matter connected with the Company except voting at meeting and the transfer of the shares, be deemed the sole holder thereof but the joint holders of a share shall severally as well as jointly be liable for the payment of all installment and calls due in respect of such share and for all incidents thereof according to the Company’s regulations. 17. Fully paid Shares for consideration other than cash. Subject to the provisions of the Act and these Articles, the Board may allot and issue shares in the capital of the Company as payment of any property sold or transferred or for service rendered to the Company in the conduct of its business or in satisfaction of any outstanding debt or obligation of the Company and any shares which may be so issued shall be deemed to be fully paid-up shares. 18. Acceptance of Shares Any application signed by or on behalf of any applicant for shares in the Company, followed by an allotment of any shares therein, shall be an acceptance of shares within the meaning of these Articles; and every person who thus or otherwise accepts any shares and whose name is therefore placed on the register shall, for the purposes of these Articles, be a member. 19. Issue of new certificate in place of one defaced, lost or destroyed (1) If any certificate be worn out, defaced, mutilated or torn or if there be no further space on the back thereof for endorsement of transfer, then upon production and surrender thereof to the Company, a new Certificate may be issued in lieu thereof, and if any certificate is lost or destroyed then upon proof thereof to the satisfaction of the Company and on execution of such indemnity as the Company deem adequate, being given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. Every certificate under the Article shall be issued without payment of fees if the Directors so decide, or on payment of such fees (not exceeding ` 2/- for each certificate) as the Directors shall prescribe. Provided that no fee shall be charged for issue of new certificates in replacement of those which are old, defaced or worn out or where there is no further space on the back thereof for endorsement of transfer. Provided that notwithstanding what is stated above the Directors shall comply with such Rules or Regulation or requirements of any Stock Exchange or the Rules made under the Act or the rules made under Securities Contracts (Regulation) Act, 1956 or any other Act, or rules applicable in this behalf. (2)The provisions of this Article shall mutatis mutandis apply to debentures of the Company. 20. Payment in anticipation of call may carry interest (1) The Directors may, if they think fit, subject to the provisions of Section 92 of the Act, agree to and receive from any member willing to advance the same whole or any part of the moneys due upon the shares held by him beyond the sums actually called for, and upon the amount so paid or satisfied in advance or so much thereof as from time to time exceeds the amount of the calls then made upon the shares in respect of

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which such advance has been made, the Company may pay interest at such rate as the member paying such sum in advance and the Directors agree upon, provided that the money paid in advance of calls shall not confer a right to participate in profits or dividend. The Directors may at any time repay the amount so advanced. (2) The members shall not be entitled to any voting rights in respect of the moneys so paid by him until the same would but for such payment, become presently payable. The provisions of these Articles shall mutatis mutandis apply to the calls on debentures of the Company. 21. Company not bound to recognize any interest in share other than that of the registered holder Except as ordered by a Court of competent jurisdiction or as required by the Act or any other law for the time being in force, the Company shall not be bound to recognize, even when having notice thereof, any equitable, contingent, future or partial interest in any share or (except only as is by these Articles otherwise expressly provided) any right in respect of a share other than an absolute right thereto, in accordance with these Articles, in the person from time to time registered as holders thereof, but the board shall be at liberty at their sole discretion to register any share in the joint names of any two or more persons (but not exceeding 4 persons) of the survivor or survivors of them. 22. Trust not recognized Save as herein provided, the Company shall be entitled to treat the person whose name appears on the Register of Members as the holder of any share as the absolute owner thereof, and accordingly shall not (except as ordered by a Court of competent jurisdiction or as by law required) be bound to recognize any benami, trust or equitable, contingent, future or partial claim or claims or right to or interest in such share on the part of any other person whether or not it shall have express or limited notice thereof. The provisions of Section 153 of the Act shall apply. 23. Right of nomination Every holder of shares in, or holder of debentures of, the Company may, at any time, nominate a person to whom his shares in, or debentures of the Company shall vest in the event of his death. 24. Limitation of time for issue of certificates Every member shall be entitled, without payment, to one or more certificates in marketable lots, for all the shares of each class or denomination registered in his name, or if the Directors so approve (upon paying such fee as the Directors may from time to time determine) to several certificates, each for one or more of such shares and the Company shall complete and have ready for delivery such certificates within three months from the date of allotment, unless the conditions of issue thereof otherwise provide, or within one month of the receipt of application of registration of transfer, transmission, sub-division, consolidation or renewal of any of its shares as the case may be. Every certificate of shares shall be under the seal of the Company and shall specify the number and distinctive numbers of shares in respect of which it is issued and amount paid-up thereon and shall be in such form as the Directors may prescribe or approve, provided that in respect of a share or shares held jointly by several persons, the Company shall not be borne to issue more than one certificate and delivery of a certificate of shares to one of several joint holders shall be sufficient delivery to all such holders. CALLS ON SHARES 25. Calls The Directors may from time to time subject to any terms on which any shares may have been issued make such calls as they think fit upon the members in respect of all money unpaid on the shares held by them respectively and each member shall pay the amount of every call so made on him to the Company and at

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the times and places appointed by the Directors. A call money may be made payable by installments. Provided that the Board shall not give the option or right to call on shares to any person except with the sanction of the Company in General Meeting. Any amount paid up in advance of calls on any shares shall not in respect thereof confer a right to dividend or participate in profits. 26. When call deemed to have been made. A call shall be deemed to have been made at the time when the resolution of the Directors authorizing such call was passed and due notice thereof has been posted or delivered to the shareholders. 27. Restriction on power to make calls No call shall exceed one fourth of the nominal amount of share or be made payable within one month after the last proceeding call was payable. 28. Notice of call Not less than 14 days notice of any call shall be given specifying the time and place of payment and to whom such call shall be paid. 29. When interest on call or installment payable (1) If the sum payable in respect of any call or installment be not paid on or before the day appointed for payment thereof the holder for the time being of the share in respect of which the call shall have been made or the installment shall be due shall pay interest for the same at the rate of 10 percent per annum from the day appointed for the payment thereof to the time of the actual payment as the Directors may determine. (2) The Directors shall be at liberty to waive payment of any such interest wholly or in part. 30. Amount payable at fixed time or by installments payable as call. If by the terms of issue of any share or otherwise any amount is made payable at any fixed time or by installments at fixed times whether on account of the amount of the share or by way of premium every such amount or installment shall be payable as if it were a call duly made by the Directors and of which due notice had been given and all the provisions herein contained in respect of calls shall relate to such amount or installment accordingly. 31. Evidence in action by Company against shareholders On the trail on hearing of any action or suit for the recovery at any money due for any call it shall be sufficient to prove that the name of the persons sued is or was when the claim arose, on the Register of Members of the Company as a holder or one of the holders of the number of shares in respect of which such claim is made, that the amount claimed is not entered as paid in the books of accounts of the Company that the resolution making the call is duly recorded in the minute book of the Board and that the notice of such call was duly given to the person sued, in pursuance of these presents, and it shall not be necessary to prove the appointment of the Directors who made such call or any other matters whatsoever but the proof of the matter aforesaid shall be conclusive evidence of the debts. 32. No entitlement in case call not paid No member shall be entitled to receive any dividend or to exercise any privilege as a member until he shall have paid all calls for the time being due and payable on every share held by him whether alone or jointly with any other person together with interest and expenses (if any).

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FORFEITURE AND LIEN 33. If call or installment not paid notice may be given If any member fails to pay any call or installment on or before the day appointed for the payment of the same the Directors may at any time thereafter during such time as the call or installment remain unpaid serve a notice on such member requiring him to pay the same forthwith within a further stipulated period together with any interest that may have accrued thereon calculated at 10 percent per annum from the date on which the same fell due and all expense that may have been incurred by the Company by reason of such non payment. 34. Form of notice The notice shall name a day (not being less than fourteen days from the date of notice) and a place or places on and at which such call or installment, and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of nonpayment at or before the time and at the place appointed, the shares in respect of which such call was made or installment is payable will be liable to be forfeited. 35. If notice not complied with, Shares may be forfeited. If the requisitions of any such notice as aforesaid be not complied with any shares in respect of which such notice has been given may at any time thereafter, before payment of all calls or installment, interest and expenses due in respect thereof, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture. 36. Notice after forfeiture When any shares shall have been so forfeited notice of the resolution shall be given to the member in whose name it stood immediately prior to the forfeiture and an entry of the forfeiture with the date thereof shall forthwith be made in the Register, but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make such entry as aforesaid. 37. Forfeited Shares become property of Company Any share so forfeited shall be deemed to be the property of the Company and the Directors may sell, re-allot and otherwise dispose of the same in such a manner as they think fit. 38. Power to annul forfeiture The Directors may, at any time before any share so forfeited shall have been sold re-allotted or otherwise disposed of; annul the forfeiture thereof upon such conditions as they think fit. 39. Arrears to be paid not withstanding forfeiture Any member whose shares shall have been forfeited shall, not withstanding, be liable to pay and shall forthwith pay to the Company all calls, installments, interest and expenses, owing upon or in respect of such shares at the time of the forfeiture together with interest thereon from the time of forfeiture until payment at 10 percent per annum, and the Directors may enforce the payment thereof without any deduction or allowance for the value of the shares at the time of forfeiture, which they shall not be under any obligation to do so. 40. Effect of forfeiture The forfeiture of a share shall involve the extinction of all interest in and also of all claims and demands against the Company in respect of the share and all other rights incident to the share except only such of those rights as by these Articles are expressly saved.

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41. Evidence of forfeiture A duly verified declaration in writing that the declarant is a Director of the Company and that certain shares in the Company have been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares and such declaration and the receipt of the Company for the consideration, if any, given for the shares on the sale or, disposal thereof shall constitute a good title to such shares and the person to whom the shares are sold shall be registered as the holder of such shares who shall not be bound to see the application of the purchase money nor shall his title to such shares be affected by any irregularity of invalidity in the proceedings in reference to such forfeiture, sale or disposal. 42. Company’s lien on Shares The Company shall have a first and paramount lien upon all partly paid shares and that the lien shall be restricted to moneys called or payable at a fixed time in respect of such shares. 43. Notice to be given For the purpose of enforcing such lien the Directors may sell the shares subject thereto in such a manner as they think fit but no sale shall be made until such period as aforesaid shall have arrived and until notice in writing of the intention to sell shall have been served on such member, his executors or, administrators or his committee, or other legal curator, and default shall have been made by him or them in the payment fulfillment, or discharge of such debts, liabilities or engagements until the expiry on seven days after such notice. 44. Application of proceeds of sale The net proceeds on any such sale after payment of the costs of such sale shall be applied in or towards satisfaction of the debts and liabilities of such members or engagements and the residue (if any) shall be paid to such member, his heirs, executors, administrators, committee or curator. 45. Validity of sale under Article 42 Upon any sale after forfeiture or for enforcing a line in purported exercise of the powers herein before given the Directors may cause the purchase’s name to be entered in Register in respect of the shares sold and the purchaser shall not be bound to see to the regularity of the proceeding or to the application of the purchase money and after his name has been entered in the Register in respect of such shares the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively. 46. Directors may issue new certificates Where any share under the posers in that behalf herein contained are sold by the Directors and the certificate thereof has not been delivered to the Company by the former holder of the said share, the Directors may issue a new Certificate for such share distinguishing it in such manner as they think fit from the certificate not so delivered. TRANSFER AND TRANSMISSION OF SHARES 47. Transfer fee not to be charged No fee shall be charged for registration of transfer, transmission, probate, succession certificate and letters of administration, certification of death or marriage, power of attorney or similar other document.

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48. Transmission of Shares The legal representative of a deceased member shall be entitled to be recognized by the Company as having title to the shares of the deceased member on production of probate or letters of administration or a succession certificate from a competent court of law, provided that the Directors may dispense with the production of such probate letters of administration or succession certificates on the legal representative furnishing such indemnity as the Directors may require. 49. Instrument of transfer The instrument of transfer shall be in writing and all provisions of Section 108 of the Act and statutory modification thereof for the time being shall be duly complied with in respect of all transfer of shares and registration thereof. 50. Registration of transfer Every instrument of transfer duly stamped and executed shall be left at the office of the Company for registration, accompanied by the certificates of the shares to be transferred and such other evidence as the Company may require to prove the title of the transferor or his right to transfer the shares. The Company shall retain all instruments of transfer, which shall be registered, but any instrument of transfer, which the Directors may decline to register, shall, on demand be returned to the person deposing the name. 51. Shares of the Company to be freely transferable: Subject to (i) the other provisions of these Articles of Association, (ii) the provisions of the Shareholders Agreement, and, (iii) the provisions of Section 111A of the Act, and the provisions of other Applicable Law, the shares of the Company shall be freely transferable 52. Title to the Share of deceased member (1)The Executors or administrators of a deceased Member (not being one of several joint-holders) shall be the only persons recognized by the Company, as having any title to the shares registered in the name of such Member and in the case of death of any one or more of the joint-holder of any registered share the survivors shall be the only persons recognized by the Company as having any title to or interest in such shares provided that if the deceased Member was a Member of a joint Hindu family as the Directors, of being satisfied to that effect and on being satisfied that the shares standing in his name in fact belonged to the joint family may recognize the survivor or the Karta thereof as having title to the shares registered in the name of such members. In any case it shall be lawful for the Directors in their absolute discretion to dispense with production of probate or letter of Administration or other legal representation upon such terms as to indemnity or otherwise as the Directors may deem expedient and justified. (2)In case of the death of any one or more of the persons named in the Register of Members as the joint holders of any share, the survivor or survivors shall be the only persons recognized by the Company, subject to the provisions of the clause on right to nomination, as having any title to or interest in such share, but nothing herein contained shall be taken to release the estate of a deceased joint holder from any liability on shares held by him with any other person. 53. Registration of transmission Any person, becoming entitled to shares in consequence of the death or bankruptcy of any member upon producing such evidence that he sustains the character in respect of which proposed to act under this clause or his title as the Directors may think sufficient, may with the consent of the Directors (which they shall not be under any obligation to give) be registered as a Member in respect of such shares subject to the regulation as to transfer herein before referred to as the “Transmission Clause”.

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54. Directors right to refuse registration of transmission The Directors right to refuse registration of transmission shall be subject to the provisions of the Act. 55. No transfer to minor etc The Board shall not issue or register a transfer of any share to a minor (except in case where they are fully paid) or insolvent or person of unsound mind. 56. Instrument of transfer The instrument of transfer of any share shall be in the prescribed form under the Companies (Central Governments) General Rules and Forms, 1956 and in accordance with the requirements of Section 108 of the Act. 57. Application for transfer (1) An application for registration of a transfer of the shares in the Company may be made either by the transferor or the transferee. (2)Where the application is made by the transferor and relates to partly paid shares, the transfer shall not be registered unless the Company gives notice of the application to the transferee and the transferee makes no objection to the transfer within two weeks from the receipt of the notice. (3)For the purpose of clause (2) above, notice to the transferee shall be deemed to have been duly given if it is dispatched by prepaid registered post to the transferee at the address given in the instrument of transfer and shall be deemed to have been duly delivered in the ordinary course of post. 58. Execution of transfer The instrument of transfer of any share shall be duly stamped and executed by or on behalf of both the transferor and the transferee and shall be attested, if required. The transferor shall be deemed to remain the holder of such shares until the name of the transferee shall have been entered in the Register of Members in respect thereof. 59. Register of members when closed. The Board of directors shall have power on giving not less than seven days previous notice by advertisement in some news paper circulating in the district in which the registered office of the Company is situated to close the Register of Members and/or Register of Debenture Holder at such time or times and for such period or periods, not exceeding thirty days at a time, and not exceeding in the aggregate forty five days in each year as it may seem expedient to the Board. 60. Company not liable for discharge of a notice prohibiting registration of a transfer The Company shall incur no liability or responsibility whatsoever in consequence of its registering or giving effect to any transfer of shares made or purporting to be made by any apparent legal owner thereof as shown or appearing in the Register of Members to the prejudice of persons having or claiming any equitable right, title or interest to or in the said shares, notwithstanding that the Company may have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer and may have entered such notice or referred thereto in any book of the Company and the Company shall not be bound or required to regard or attend or give effect to any notice which may be given to it of any equitable

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right, title or interest, or be under any liability whatsoever for refusing or neglecting to do so, though it may have been entered or referred to in some book of the Company, but the Company shall nevertheless, be at liberty to regard and attend to any such notice and give effect thereto, if the Board of Directors shall so think fit. 61. Compliance with rules, regulations and requirements of stock exchanges, etc. The Company shall comply with the rules, regulations and requirements of the Stock Exchange or the rules made under the Act, or the rules made under the Securities Contracts (Regulation) Act, 1956 or any other law or Rules applicable, relating to the transfer or transmission of shares or debentures. SHARE WARRANTS 62. Power to issue Share Warrant The Company may issue share warrants subject to and in accordance with the provisions of Section 114 and 115. 63. Deposit of Share Warrant (1) The bearer of a share warrant may, at any time, deposit, the warrant at the office of the Company, and so long as the warrant remains so deposited, the depositor shall have the same right of signing a requisition for calling a meeting of the Company, and of attending and voting and exercising the other privileges of the member at any meeting held after the expiry of two clear days from the time of deposit, as if his name were inserted in the Register of Members as the holder of the share included in the deposited warrant. (2) Not more than one person shall be recognized as depositor of the share warrant. (3) The Company shall, on two days written notice, return the deposited share warrant to the depositor. 64. Privileges and disabilities of the holders of Share Warrant (1) Subject as herein otherwise expressly provided, no person shall, as bearer of a share warrant, sign a requisition for calling a meeting of the Company, or attend or vote or exercise any other privileges of a member at a meeting of the Company, or be entitled to receive any notice from the Company. (2) The bearer of a share warrant shall be entitled in all other respect to the same privileges and advantages as if he were named in the Register of Members as the holder of the shares included in the warrant and he shall be a member of the Company. 65. Issue of new Share Warrant or coupon The Board may, from time to time, make bye-laws as to the terms on which (if it shall think fit) a new share warrant or coupon may be issued by way of renewal in case of defacement, loss of destruction. INCREASE, REDUCTION AND ALTERATION OF SHARE CAPITAL 66. Increase of capital The Company may, by a resolution passed in a General Meeting, from time to time increase the share capital by the creation of new shares of such amount as may be deemed expedient and specified in the resolution, subject to compliance with the provision of the Act and of any other laws that may be in force. 67. On what conditions new Shares may be issued (whether preferential or not) The new shares shall be issued upon such terms and conditions and with such rights and privileges attached

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thereto as are consistent with provisions of the Act and which the General Meeting, resolving upon the creation thereof shall direct and if no direction be given, as the Directors shall determine and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company and with a special or without any right of voting. 68. Provision relating to issue Before the issue of any new shares, the Company in General Meeting may make provisions as to the allotment and issue of the new shares and in particular may determine that the same shall be offered in the first instance either at par or at a premium and in default of any such provisions or so far as the same shall not extend, the Directors shall comply with the provisions of Section 81 of the Act. 69. How far new Shares to rank with shares in original capital Except so far as otherwise provided by the condition of issue or by these presents, any capital raised by the creation of new shares shall be considered as part of the original capital and shall be subject to the provisions herein contained with reference to the payment of calls and installments, transfer and transmission, forfeiture, lien and otherwise. 70. Inequality in number of new Shares If, owing to any inequality in the number of new shares to be issued and the number of shares held by members entitled to have the offer of such new shares, any difficulty shall arise in the apportionment of such new shares or any of them amongst the members, such difficulty shall, in the absence of any direction in the resolution creating the shares or by the Company in General Meeting, be determined by the Directors, keeping in view the provisions of Section 81 of the Act. 71. Consolidation, subdivision and cancellation of Shares (1) The Company may by an Ordinary Resolution:

(a) Consolidate and divide its shares or any of them into shares of larger amount than its existing shares.

(b) Sub-divide its existing shares or any of them into shares of smaller amount than is fixed

originally by the Memorandum of Association, so however that in the subdivision the proportion between the amount paid and the amount, if any unpaid on each reduced share be the same as it was in the case of the share from which the reduced share is derived and other conditions, if any laid down by these Articles.

(c) Cancel any shares which at the date of the passing of the ordinary resolution, have not

been taken or agreed to be taken by any person and also may diminish the amount of its share capital by the amount of the shares so cancelled.

(2) The Company shall file with the Registrar Notice of exercise of any power referred to in sub clauses (a), (b) or (c) of Clause (1) of this Article within thirty days from the exercise thereof. 72. Sub-division into preferred and ordinary The resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division one or more of such shares shall have some preference or special advantage as regards dividend, capital, voting or otherwise over or as compared with other or others, subject, nevertheless, to the provisions of Section 94 of the Act.

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73. Reduction of capital The Company may, from time to time, by Special Resolution reduce its share capital or any Share Premium account in any manner and with, and subject to any incident authorized and consent required by law. 74. Surrender of Shares Subject to the provisions of the Act the Directors may accept from any member the surrender of all or any of his shares. 75. Issue at discount etc. or with special privileges Subject to the provisions of Section 79 of the Act any debenture, debenture-stock or other securities may be issued at a discount, premium or otherwise and may be issued on condition that they shall be convertible into shares of any denomination and with any privileges and conditions as to redemption, surrender, drawing, allotment of shares, attending (but not voting) at the General Meeting, appointment of Directors and otherwise. Debentures with the right to conversion into or allotment of shares shall be issued only with the consent of the Company in the General Meeting by a Special Resolution. MODIFICATION OF RIGHTS OF SHARE HOLDERS 76. Power to modify rights to shareholders If at any time the capital by reason of the issue of preference shares of otherwise, is divided into different classes of shares, all or any of the rights and privileges attached to each class may be raised subject to the provisions of Sections 106 and 107 of the Act and all the provisions hereinafter contained as to General Meetings, shall mutatis mutandis, apply as regards meeting, if any, to be held for the purpose. VOTES OF MEMBERS 98. Votes of members On a show of hands every member present in General Meeting in person or by proxy or attorney shall has one vote and upon a poll every member present in person or by proxy shall have one vote for every share held by him provided that the holders of preference shares shall not be entitled to vote unless a resolution is proposed affecting rights or privileges of the holders of preference shares. A member is not prohibited from exercising his voting rights on the ground that he had not held his shares or interest in the Company for any specified period preceding the date on which the vote is taken. 99. Votes in respect of Shares of deceased or insolvent members Any person entitled under the Transmission Claim to transfer any shares may vote at any General Meeting in respect thereof in the same manner as if he were the registered holder of such shares, provided that 48 hours at least before the time of holding the meeting or adjourned meeting as the case may be at which he proposes to vote, he shall satisfy the Directors of his right to transfer such shares unless the Directors shall have previously admitted his right to vote at such meeting in respect thereof. 100. Vote in case of lunacy A member of unsound mind or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll by his committee or other legal guardian, and any such committee or guardian may on a poll vote by proxy. 101. Joint holders of any Share Where there are joint registered holders of any share the person first named in the register against the

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holder vote at any meeting either personally or by proxy in respect of such share as if he were solely entitled thereto. Several executors or administrators of a deceased member in whose name any share stands shall for the purpose of this Article be deemed joint-holders thereof. 102. Proxy permitted Votes may be given either personally or by power of proxy / representative to vote or by a duly authorized representative under Section 187 of the Act in case of a body corporate. 103. Instruments appointing Proxy to be in writing The instrument appointing proxy shall be in writing under the hand of the appointer or of his attorney duly authorized in writing or if such appointer is a corporation or body corporate either under its common seal or the hand of an officer at attorney so authorized. A proxy who is appointed for a specified meeting only shall be called a special proxy. Any other proxy shall be called a general proxy. Any person may be appointed as a proxy who need not be a member of the Company and qualified to vote save that corporation or body corporate being a member of the Company may appoint its proxy any officer of such corporation or body corporate whether member of the Company or not. 104. Instrument appointing a proxy to be deposited at the office The instrument appointing a proxy and the power of attorney (if any) under which it is signed or notarized certified copy of that power of authority shall be deposited at the office not less than 48 hours before the time for holding the meeting or adjourned meeting as the case may be at which the person named in such instrument proposes to vote and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration of twelve months from the date of its execution. 105. When vote be valid though authority revoked A vote given in accordance with the terms of an instrument appointing a proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument or transfer of the share in respect of which the vote is given provided no intimation in writing of the death or insanity, revocation or transfer shall have been received at the office of the Company before the meeting. Provided that the Chairman of any meeting shall be entitled to require such evidence as he may in his discretion think fit of the due execution of an instrument of proxy and that the same has not been revoked. 106. Form of instrument appointing Every instrument appointing a proxy shall as nearly as circumstances admit be in either of the form prescribed in Schedule IX to the Act. 107. Restriction on voting No member shall be entitled to be present or to vote on any question either personally or by proxy or as proxy for another member at any General Meeting or upon a poll or to be reckoned in a quorum whilst any call or other sum payable to the Company in respect of any of the shares of such member shall remain unpaid, and no member shall be entitled to be present or to vote at any meeting in respect of any share that he has acquired by transfer unless his name is entered as the registered holder of the share in respect of which he claims to vote, but this shall not affect shares acquired under a testamentary disposition or by succession to an intestate estate or under an insolvency or liquidation. 108. Representation of a body corporate A body corporate (whether a company within the meaning of the Act or not) may, if it is member or creditor of the Company (including a holder of debentures), authorize such person as it thinks fit, by a

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resolution of its Board of Directors or other Governing Body, of its applicable internal procedures to Act as its representatives at any meeting of the Company or any class of members of the Company or at any meeting of the creditors of the Company or debenture holders of the Company. A person authorized by resolution or its applicable internal resolution as aforesaid shall be entitled to exercise the same rights and power (including the right to vote by proxy) on behalf of the body corporate, which he represents as that body, could exercise if it were an individual member, creditor or holder of debentures of the Company. The production of a copy of the resolution or other certification of its applicable internal procedures referred above, certified by a Director or the Secretary or other officer of such body corporate before the commencement of the meeting shall be accepted by the Company as sufficient evidence of the validity of the said representatives appointment and his right to vote thereat. 109. Rights of members to use votes differently. On a poll taken at the meeting of the Company a member entitled to more than one vote or his proxy, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses. 110. No proxy to vote on a show of hands. No proxy shall be entitled to vote on a show of hands. 111. Time for objection to vote No objection shall be made to the qualification of any voter or to the validity of a vote except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote, whether given personally or by proxy, not disallowed at such meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the meeting. 112. Chairman of any meeting to be the judge of validity of any vote The Chairman of any meeting shall be the sole judge of the validity of every vote tendered at such meeting. The Chairman present at the taking of the poll shall be the sole judge of validity of every vote tendered at such poll. The decision of the Chairman shall be final and conclusive. CAPITALIZATION OF RESERVES 153. Capitalization of reserves Any general meeting may resolve that any moneys, investments or other assets forming part of the undivided profits of the Company standing to the credit of the Reserves or any Capital Redemption Reserve Account or in the hands of the Company and available for dividends or representing premiums received on the issue of shares and standing to the credit of the share premium account be capitalized and distributed amongst such of the Members as would be entitled to receive the same if distributed by way of dividends and in the same proportion on the footing that they become entitled thereto as capital and that all or any part of such capitalized fund be applied on behalf of such members in paying up in full any un-issued shares, debentures or debenture-stock of the Company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares, and that such distribution, of payment shall be accepted by such members in full satisfaction of their interest in the said capitalized sum. Provided that any sum standing to the credit of the Share premium Account or a Capital Redemption Reserve Account may, for the purpose of this Article only be applied in the paying up of un-issued shares to the issued to members of the Company as fully paid bonus shares. 154. Surplus moneys A General meeting may resolve that any surplus money arising from the realization of any capital assets of the Company or any investment representing the same, or any other undistributed profits of the Company

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not subject to charge for income-tax be distributed among the members on the footing that they receive the same as capital. 155. Fractional certificates For the purpose of giving effect to any resolution under the two last preceding Articles, the Board may settle any difficulty which may arise in regard to the distribution as it thinks expedient and in particular may issue fractional certificates and may fix the value for distribution of any specific assets, and may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest such cash or specific assets. Where requisite, a proper contract shall be filed in accordance with Section 75 of the Act, and the Board may appoint any Person to sign contract on behalf of the Members entitled to the dividend or capitalized fund, and such appointment shall be effective. 156. Equitable interest not to be recognized The Company shall not be bound by or recognize any equitable, contingent, future or partial interest in any fractional part of a share or (except only as by these presents otherwise expressly provided) any other right in respect of any share except an absolute right to the entirely thereof as the registered holder. DIVIDEND 157. Dividend to be declared in General Meeting The Company in General Meeting may declare dividends to be paid to the Members according to their respective right and interest in the profits. No dividend shall exceed the amount recommended by the Directors, but the Company may declare a smaller dividend in a General Meeting. The provisions regarding the manner and time of payment of dividend embodied in Sections 205, 206, 207 and 93 of the Act shall apply accordingly. 158. Interim dividends The Directors may from time to time pay the Members such interim dividends as appear to them to be justified. 159. Dividends out of profit only No dividend shall be paid otherwise than out of the profits of the Company arrived at in the manner provided for in Section 205 of the Act. The declaration of the Directors as to the net profits of the Company shall be conclusive. 160. Division of profits Subject to the rights of persons if any entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the dividend is paid, but if and so long as nothing is paid upon any of shares in the Company, dividends may be declared and paid according to the amounts paid on the shares. No amount paid or credited as paid on a share in advance of calls shall be treated for the purpose of this regulation as paid on the share. 161. Debts may be deducted The Directors may retain any dividends on which the Company has a lien and may apply the same in or towards the satisfaction of the debts, liabilities or engagements in respect of which the lien exists.

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162. Capital paid up in advance at interest not to earn dividend Where the capital is paid in advance of the calls upon the footing that the same shall carry interest, such capital shall not, whilst carrying interest, confer a right, to dividend or to participate in profits. 163. Dividends in proportion to amount paid up. (1) All dividends shall be paid proportionately to the amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid but if any share is issued on terms, providing that it shall rank for dividends as from a particular date such share shall rank for dividend accordingly. (2)No member to receive dividend whilst indebted to the Company and the Company’s right of reimbursement thereof. (3)No member shall be entitled to receive payment of any interest or dividend or bonus in respect of his share or shares, whilst any money may be due or owing from him to the Company in respect of such share or shares (or otherwise however either alone or jointly with any other person or persons) and the Board of Directors may deduct from the interest or dividend to any member all such sums of money so due from him to the Company. 164. Effect of transfer of Shares A transfer of shares shall not pass the right to any dividend declared therein before the registration of the transfer. 165. Dividend to joint holders (1) Any one of several persons who are registered as joint holders of any share may give effectual receipts for all dividends or bonus and payments on account of dividends in respect of such share. (2) A person entitled to a share by transmission shall subject to the right of the Directors to retain such dividends or money as is hereafter provided be entitled to receive dividend without being registered as member and may give a discharge for any dividends or other moneys payable in respect of the share. 166. Dividend how remitted The dividend payable in cash may be paid by transfer to bank account or by cheque or warrant sent through post direct to registered address of the share-holder entitled to the payment of the dividend or in case of joint holders to the registered address of that one of the joint holders which is first named on the register of members or to such person and to such address as they may direct in writing. The Company shall not be liable or responsible for any Cheque or Warrant or pay slip or receipt lost in transition or for any dividend lost, to the member or person entitled thereto by forged endorsement of any cheque or warrant or forged signature on any pay slip or receipt or the fraudulent recovery of the dividend by any other means. 167. Reserves The Directors may, before recommending or declaring any dividend set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors be applicable for meeting contingencies or for any other purposes to which the profits of the Company may be properly applied and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company) as the Directors may from time to time think fit. 168. Dividend to be paid within thirty days The Company shall pay the dividend or send the warrant in respect thereof to the shareholders entitled to

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the payment of dividend, within thirty days from the date of the declaration unless:

(i) where the dividend could not be paid by reason of the operation of any law;

(ii) where a shareholder has given directions regarding the payment of the dividend and those directions cannot be complied with;

(iii) where there is a dispute regarding the right to receive the dividend;

(iv) where the dividend has been lawfully adjusted by the Company against any sum due to it

from shareholder, or

(v) where for any other reason, the failure to pay the dividend or to post the warrant within the period aforesaid was not due to any default on the part of the Company.

169. Unclaimed dividend No unclaimed dividend shall be forfeited by the Board and the Directors shall comply with provisions of Sections 205A and 205B of the Act, as regards unclaimed dividends. 170. No interest on dividends Subject to the provisions of Section 205 A of the Act no dividend shall bear interest as against the Company. 171. Dividends in cash No dividend shall be payable except in cash, provided that nothing in this Article shall be deemed to prohibit the capitalization of the profits or reserves of the Company for the purpose of issuing fully paid up bonus shares or paying up any amount for the time being unpaid on any shares held by members of the Company. REGISTERS AND DOCUMENTS 172. Inspection of Registers The minutes of all proceeds of general meetings shall be open to inspection and extracts may be taken therefrom and copies thereof may be required by any member of the Company in the same manner to the same extent and on payment of the same fees as in case of the Register of Members of the Company, provided for in the Act. Copies of entries in the these Registers shall be furnished to the persons entitled to the same on such days and during such business hours as may consistently be determined by the provisions of the Act. 173. Buy Back of Shares The Company may buy back its own shares or other specified securities subject to the provisions of Sections 77A, 77AA and 77B of the Act and any related guidelines issued in connection therewith. 174. Sweat Equity The Company may issue sweat equity shares subject to the provisions of Section 79A of the Act and any other related provisions as may be required for the time being in force.

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DEMATERIALIZATION OF SECURITIES 175. Dematerialization of securities Notwithstanding anything contained in the Articles, the Company shall be entitled to dematerialize its securities, rematerialize its securities held by the depositories and/or to offer its fresh securities in the dematerialized form pursuant to the Depositories Act, 1996 and the rules framed there under, if any. 176. Option given to investors (1) Every person shall have the option to hold the securities with a depository. Such a person who is a beneficial owner of the securities can at any time opt out of a depository in respect of such security in the manner provided by the Depositories Act and the Company shall, in the manner and within the time prescribed, issue to the beneficial owner the required certificate of securities. (2) If a person opts to hold his security with a depository, the Company shall intimate such depository the details of allotment of the security and on receipt of the information, the depository shall enter in its record the name of the allottee as the beneficial owner of the security. 177. Securities in Depository to be in fungible form All securities held by a Depository shall be dematerialized and shall be in fungible form. Nothing contained in Sections 153, 153A, 153B, 187A, 187B, 187C and 372A of the Act shall apply to a depository in respect of securities held by it on behalf of the beneficial owners. No certificate shall be issued for the securities held by the depository. 178. Voting rights of Depository and beneficial owner (1) The Depository shall be deemed to be the registered owner for the purpose of effecting transfer of ownership of securities on behalf of a beneficial owner. (2)Save as otherwise provided here in above, the Depository as a registered owner shall not have any voting rights or any other rights in respect of securities held by it. (3)Every person holding securities and whose name is entered as the beneficial owner in the records of the Depository shall be deemed to be a member of the Company. The beneficial owner shall be entitled to all the rights and benefits and shall be subject to all the liabilities in respect of such of his securities that are held by the Depository. 179. Allotment of securities by the Depository Notwithstanding anything contained in the Act or the Articles, where the Depository holds the securities, the Company shall intimate the details thereof to the depository immediately on allotment of such securities. 180. Register and Index of beneficial owners The register and index of beneficial owners maintained by the Depository under the Depositories Act shall be deemed to be the Register and Index of Members and security holders for the purpose of these Articles except as is mentioned in the provisions of Section 150, 151 and 152 of the Act. 181. Transfer of securities Nothing contained in Section 108 of the Act or these Articles shall apply to a transfer of securities affected by a transferor and transferee both of whom are entered as beneficial owners in the records of a depository.

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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The contracts referred to in para (A) below (not being contracts entered into in the ordinary course of business carried on by our company) which are or may be deemed material have been entered into by our Company. The contracts together with the documents referred to in para (B) below may be inspected at the registered office of our company between 11.00 a.m. to 2.00 p.m. on any working day from the date of this Letter of Offer until the closure of the subscription list. (A) MATERIAL CONTRACTS 1. Engagement letter dated August 29, 2011 between our Company and Enam Securities Private Limited,

Lead Manager to the issue.

2. Issue Agreement dated September 23, 2011 between our Company and Enam Securities Private Limited, Lead Manager to the issue.

3. Agreement dated September 23, 2011 between our Company and Link Intime India Private Limited,

Registrar to the Issue.

(B) DOCUMENTS FOR INSPECTION 1. Memorandum and Articles of Association of our Company; 2. Certificate of incorporation of our Company dated October 26, 1999 and subsequent fresh certificates

of incorporation dated December 24, 2004 and January 25, 2008; 3. Resolution of the Board of Directors under section 81(1) of Companies Act, 1956 passed in its meeting

dated April 19, 2011 authorising the Issue;

4. Prospectus of our Company dated April 15, 2005.

5. Certificate pertaining to Equity Shares allotted under Employees Stock Option Scheme 2009 and other matters.

6. Tripartite Agreement dated March 14, 2005 between our Company, National Securities Depository

Ltd. (NSDL) and Link Intime India Private Limited (formerly known as Intime Spectrum Registry Limited).

7. Tripartite Agreement dated March 11, 2005 between our Company, Central Depository Services (India) Limited (CDSL) and Link Intime India Private Limited (formerly known as Intime Spectrum Registry Limited).

8. Consents of the Directors, Company Secretary and Compliance Officer, Statutory Auditors, Lead

Manager to the Issue, Legal Advisor to the Issue, Federation of Indian Chambers of Commerce and Industry, Bankers to our Company and Registrar to the Issue to include their names in the Draft Letter of Offer to act in their respective capacities;

9. Annual reports of our Company for the year ended March 31, 2007, March 31, 2008, March 31, 2009 March 31, 2010 and March 31, 2011;

10. The Report of the Auditors being, M/s. Patankar & Associates, as set out herein dated September 23,

2011 relation to the audited financial information of our Company.

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11. Due Diligence Certificate dated September 27, 2011 by Enam Securities Private Limited, Lead

Manager to the Issue; 12. In-principle listing approval(s) dated [•] and [•] from BSE & NSE respectively; 13. Observation letter no. [•] dated [•] received from SEBI;

Any of the contracts or documents mentioned in the Draft Letter of Offer may be amended or modified at any time if so required in the interest of our Company or if required by the other parties, without reference to the Equity Shareholders, subject to compliance with applicable law.

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DECLARATION We hereby certify that no statement made in the Draft Letter of Offer contravenes any of the provisions of the Companies Act and the rules made thereunder. We further certify that all the legal requirements connected with the Issue as also the guidelines, instructions, etc., issued by SEBI, the Government and any other competent authority in this behalf, have been duly complied with. We further certify that all disclosures made in the Draft Letter of Offer are true and correct.

Name Signature

Pavan Kumar Jain Non-executive Director

Deepak Asher Non-executive Director

Amit Jatia Independent Director

Kishore Biyani Independent Director

Place: Mumbai Naushad Shaikh Date: September 27, 2011 Chief Financial Officer

Documents

FAME INDIA LIMITED · Draft Letter of Offer September 27, 2011 For Equity Shareholders of our Company only FAME INDIA LIMITED Our Company was incorporated in India on October 26,