mukta - text - main - 2008€¦ · anil kapoor, salman khan, katrina kaif, mithun chakraborty,...

CYAN MAGENTA YELLOW BLACK

CYAN MAGENTA YELLOW BLACK1

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BOARD OF DIRECTORS

Mr. Subhash Ghai, Chairman & Managing DirectorMr. Parvez A. Farooqui, Executive DirectorMr. Rahul Puri, Executive DirectorMr. Anil HarishMr. Vijay ChorariaMr. Pradeep Guha

Company Secretary & Compliance OfficerMr. Ravi B Poplai

AuditorsM/s Shamit Majmudar Associates

Internal AuditorsM/s Haribhakti & Co.

BankersPunjab National Bank LimitedHDFC Bank LimitedIDBI Bank Limited

Registrar & Transfer AgentsIntime Spectrum Registry LimitedC-13, Pannalal Silk Mills CompoundL.B.S. Marg, Bhandup (W)Mumbai – 400 078

Registered Office6, Bashiron, 28th RoadTPS – III, Bandra (W)Mumbai – 400 050

Financial Highlights 2

Chairman’s Statement 3

Management Discussion & Analysis 5

Notice 7

Directors’ Report 11

Corporate Governance 15

FINANCIALS

Mukta Arts Limited 23

Consolidated Financial of Mukta Arts Limited & 41it’s Subsidiaries

Whistling Woods International Limited 54

Connect.1 Limited (Formerly known as 75Mukta Art International Limited)

Mukta Tele Media Limited 84

Red Carpet Films Limited 94

CONTENTS



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PERFORMANCE

Performance at a glance Rupees in millions

Year Year Year Year Yearended ended ended ended ended

31st March 31st March 31st March 31st March 31st March2008 2007 2006 2005 2004

Realisation from productions, 1,094.66 965.21 374.80 451.44 187.00distribution & exhibition

Equipment Hire Income 12.07 2.22 25.09 28.60 29.84

Other Income 24.93 49.12 36.12 31.59 96.89

TOTAL INCOME 1,131.66 1,016.55 436.01 511.63 313.72

Profit/(Loss) before Interest,Depreciation and Tax 166.41 167.04 (27.15) (134.86) 88.36

Depreciation 17.64 22.64 29.98 32.14 29.61

Interest 0.43 0.63 0.60 0.56 0.30

Profit/(Loss) before Tax 148.34 143.77 (57.73) (167.56) 58.45

Profit/(Loss) after Tax 130.30 137.16 (56.46) (169.67) 33.93

Dividend 45.16 45.16 - - 22.58

Dividend Rate 40% 40% - - 20%

Gross Fixed Assets 334.60 313.31 369.84 361.98 343.82

Net Fixed Assets 187.10 157.09 184.06 204.73 216.14

Total Assets 1,402.21 1,279.66 1,195.53 1,144.66 1,314.89

Equity Share Capital 112.92 112.92 112.92 112.92 112.92

Reserves and Surplus 1,138.38 1,060.92 975.25 1,029.60 1,199.55

Net Worth 1,251.30 1,173.83 1,088.17 1,142.52 1,312.47

Earnings per Share (EPS)

In Rupees

EPS Basic 5.77 6.07 – – 1.50

EPS Adjusted to Rs. 5 5.77 6.07 – – 1.50



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Chairman’s Statement

It has been a busy year for me. In the past I have generally focused on one movieat a time. In the year under review I not only had to work on two movies at the sametime but also oversee several other productions, not to mention the running ofWhistling Woods International. During the year we have had a much higher levelof activity with six movies on the floor and several more in pre-production. This hasbeen a result of the enhanced bandwidth created, systems put in place, andadditional trained management skills brought in. In fact the Company’s focus ontalent has increased and our investment in Whistling Woods International, which isexpected to be a fountainhead of talent for the Company, is likely to start yieldingresults soon. The first batch of students has already entered the industry.

Last year when we had declared a turnover exceeding Rs.1 Billion and a healthy bottom line, many cynicshad pointed out that this was possible primarily owing to the one-off block deal with a TV channel for Satellitere-issue rights of a part of the Company’s library. I had then explained that this was not the case and theCompany’s consistent policy of amortizing 100% of investment in a film in the year of release is capable ofconsistently providing profit year after year and this has been proved right in the current year when therehave been no significant library sales. The Company has been able to show Profit Before Tax, exceedingRs.140 millions and a turnover of over Rs.1.13 Billion. The healthy profits persuaded the Board to declare aninterim dividend of 40% reflecting the Board’s and Management’s confidence in the continued strength ofthe Company.

In the year under review the Company released four movies “Good Boy Bad Boy” directed by AshwiniChaudhary starring Tushaar Kapoor, Emraan Hashmi, Isha Shravani, Tanushree Dutta and others “Bombayto Bangkok” directed by Nagesh Kuknoor, starring Shreyas Talpade and others, “Black & White” directedby me starring Anurag Sinha, Anil Kapoor, Shefali Shah and others and the Company’s first Marathi movie“Valu- The Wild Bull” directed by Umesh Kulkarni starring Atul Kulkarni, Dr. Mohan Agashe, Bharti Achrekar,Girish Kulkarni and others.

“Black & White” received rave reviews and was highly appreciated by critics and viewers. It also threw updecent profits for the Company and is an asset for the library. “Valu- the Wild Bull” turned out to be aBlockbuster and celebrated a 25 week run in the theatres. The Movie was also invited to several film festivalsincluding the Rotterdam Film Festival, Warsaw Film Festival, Pune International Film Festival (PIFF), IndianFilm Festival in Germany etc. This has inspired the Company to venture into more Marathi movies and wealready have two more Marathi movies including the recently released “Sanai Choughade” directed byRajeev Patil starring Shreyas Talpade, Tushar Dalvi, Shipa Tulaskar, Subhodh Bhave, Bharti Achrekar andalso have financed “Prarambh” directed by Vasant Purohit starring Suhas Joshi, Dr. Vilas Ujawane andothers. Additionally in the pipeline and due to be released during the Financial Year 2008-09 are Hindimovies “Yuvraaj” directed by me starring Salman Khan, Anil Kapoor, Katrina Kaif, Zayed Khan and otherswhich should be releasing later this year. “Right Yaaa Wrong” directed by Neeraj Pathak, starring SunnyDeol, Irfan Khan, Konkona Sen Sharma, Isha Koppikar and others, also scheduled for release during theFinancial Year 2008-09. “Hello Darling” directed by Manoj Tiwari starring Javed Jaffrey, Celina Jaitley, GulPanag, Isha Koppikar, Chunky Pandey and “Paying Guest” directed by Paristosh Painter starring ShreyasTalpade, Ashish Choudhary, Vatsal Seth, Javed Jaffrey, Celina Jaitley, Riya Sen, Neha Dhupia, Sayali Bhagat.

During the year the Company expanded its exhibition business and took on additional theatres for programmingincluding PVR theatres in Mumbai.

Whistling Woods International has grown in strength and it is already accepted as a reputed InternationalFilm School and has become a must visit for media professionals from around the world. Among the keyevents of Whistling Woods International institute during the year were the visit of the Mayor of London Mr.Ken Livingston along with Amitabh Bachchan when an Agreement between Film London and Film & TelevisionProducers Guild was signed at the Whistling Woods International campus. A visit by the Brookings Instituteled by former US Deputy Secretary of State, Mr. Strobe Talbott and Ms. Brooke Shearer who had an interactivesession with leading panelists including Ms. Shabana Azmi, Dr. Jabbar Patel, Ms. Anupama Chopra amongothers. The Brookings delegates included Chairmen and CEO’s of many leading American companies.



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Whistling Woods International also participated in and assisted in the French Film Festival – Rendezvous inMumbai coinciding with the visit of the French President to India. The film delegation led by Mr. ClaudeLelouch visited Whistling Woods International. Claude also held a Master Class for the students.

The first Convocation of Whistling Woods International was held on 18th July 2008 in the presence of ShriDilip Kumar, Shri Anand Mahindra and Dr. Arun D. Sawant Acting Vice Chancellor, University of Mumbai.Seventy five students were awarded Diplomas with most of them already employed in the industry withleading Companies including Mukta Arts Limited

In the second year of operations Whistling Woods International continues to be in investment mode. TheCompany has however narrowed its operating losses and is expected to break even in 2008-09 on cashbasis. This is a pretty healthy performance for a Company in Media Education.

One of the major initiatives Whistling Woods International has taken during the year is to collaborate with theManipal University to conduct the traineeship of their MBA in Media Management at Whistling WoodsInternational. Whistling Woods International strength is also seen from the fact that during the year a groupof MA students from the Portsmouth University – UK attended a paid workshop on Bollywood at WhistlingWoods International. A group of students of Syracuse University, USA also attended a one month internshipprogramme at Whistling Woods International in May 2008.

During the year key personalities from the Indian and international film industry visited the institute andconducted workshops with students. These included Om Puri, Salman Khan, Pankaj Kapur, MakrandDeshpande, Sushil Rajpal, Alim Hakim and others.

Whistling Woods International was able to negotiate with Pune International Film Festival (PIFF) to introducea section in its Festival branded “The Whistling Woods International Student Film Section”. This sectionshowcases student films from film schools around the world and during the year 125 films were received forthis section of which 10 short-listed films were screened to an international Jury.

During the year the Company acquired controlling stake in Red Carpet Films Limited, a company owned byMr. Manish Goswami which had tied up a Funding and Distribution deal with Eros Multimedia. Red CarpetFilms is currently developing projects and we expect output of production in the year 2008-09.

I am happy to inform you that the Audeus commercial complex at Andheri is almost ready and we should beable to lease it out by early 2009 adding to our revenues. Work on the Communication Centre at Goregaonwhich was taken over by the Company in a tender bid is also progressing well and we hope to have it readyby mid-2009.

I am happy to inform you that in the PIFF WWI Students Film section, a film made by a WWI student won theBest Film Award.

Other Awards won in international Film Festivals by Whistling Woods International students included theSilver Award Cell Story (mobile film section) & Silver Award for Student Short Fiction section at the IDPAAward 2008.

During the year we have successfully completed Beta testing of two of our online properties,www.indianfilmtrade.com a portal which focuses on Film Trade and is a B2B site andwww.bollywoodmoviemax.com a B2B site that facilitates downloads of Indian movies online. Both theseproperties are expected to augment the Company’s online initiatives globally.

The stock price of the Company during the year fluctuated in a wide range. The stock price before the March2008 crash hit a high of 244 and was rated as the Best Performing Media stock. Nevertheless as a matter ofpolicy, stock prices are not what we focus on. We focus on the Company’s performance and I must alsoconfess that I do not understand the way the stock market works. As Warren Buffet said “Wall Street is theonly place that people ride to in a Rolls Royce to take advice from people who take the subway”. We believewe have created a Company with great intrinsic value that sooner rather than later will be unlocked to thebenefit of those who have believed in the Company and stayed with it.

I thank you for your support and believe that you would get the value that you deserve. I continue to seekyour support and appreciate the confidence you have reposed in me.



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MANAGEMENT DISCUSSION AND ANALYSIS

Industry Performance:

As per the PriceWaterhouseCooper Report of2008 presented at FICCI 2008, the Entertainmentindustry has been on track in all sectors of theindustry along the lines projected in the previousyear’s report and was expected to continue tooutpace the GDP growth clocking 21% growth insome segments of the industry. The growthareas expected in the industry include:

a) Significant growth in Multiplexes.

b) Significant growth in Digital ProjectionSystems.

c) Continued growth in the number of TVChannels.

d) Significant growth in the Sports segmentowing to the launch of IPL.

e) Significant growth in FM Radio.

f) Significant growth in Animation and Gamingsegment.

g) Significant growth in DTH market.

All the above growth areas signify businessopportunities for content creation.

Management therefore believes that our strengthin content creation clubbed with access to newtalent from Whistling Woods International wouldposition the Company well to meet the changingneeds of the industry.

Among the concern areas in the industry hasbeen the stagnation of CAS and the lack ofGovernment will to push through CAS in othercentres despite Government making noises ofcommitments from time to time. The significantgrowth of Channels especially in News andEntertainment are likely to lead to cannibalizationand the area of high TRPs would soon disappear.With a view to position itself to enhance contentcreation, Management has not only increased theoperating bandwidth of Mukta Arts Limited buthad also invested in Red Carpet Films Limitedwhich has film funding and distribution tie-up inplace. Management also proposes to launchdigital films using new and fresh talent and is inthe process of negotiating distribution in thisregard.

A Review of Operations:

During the year the Company released fourmovies “Good Boy Bad Boy” directed byAshwini Chaudhary starring Tushaar Kapoor,Emraan Hashmi, Isha Shravani, Tanushree Duttaand others, “Bombay to Bangkok” directed byNagesh Kuknoor, starring Shreyas Talpade andothers, “Black & White” directed bySubhash Ghai starring Anurag Sinha, AnilKapoor, Shefali Shah and others and theCompany’s first Marathi movie “Valu- The WildBull” directed by Umesh Kulkarni starring AtulKulkarni, Dr. Mohan Agashe, Bharti Achrekar,Girish Kulkarni and others. In the pipeline theCompany has the following movies “Yuvraaj”directed by Subhash Ghai starring Salman Khan,Anil Kapoor, Katrina Kaif, Zayed Khan and others.“Right Yaaa Wrong” directed by Neeraj Pathak,starring Sunny Deol, Irfan Khan, Konkona SenSharma, Isha Koppikar and others, “HelloDarling” directed by Manoj Tiwari starring JavedJaffrey,Celina Jaitley, Gul Panag, Isha Koppikar,Chunky Pandey and “Paying Guest” directed byParistosh Painter starring Shreyas Talpade,Ashish Choudhary, Vatsal Seth, Javed Jaffrey,Celina Jaitley, Riya Sen, Neha Dhupia, SayaliBhagat all of which are expected to release inthe Financial Year 2008-09. Several more filmsare in the pipeline and currently in pre-production.

During the year, the Company touched a turnoverof about Rs.1.13 Billion showing 11% growth intop line and clocked Rs.147 million as profit. TheCompany continued to consolidate its positionby strengthening its library and now has over 30movies in its library. The Company is also one ofthe largest Real Estate owner among MovieProduction companies in the country with MuktaArts Limited and Whistling Woods Internationalhaving nearly 3,00,000 sqft of constructedproperties. Additionally Whistling WoodsInternational has access to 20 acres of Primeland in Film City.

Both Audeus as well as the CommunicationCentre complexes are progressing well andwould add value to the Company not only by wayof increasing its Real Estate stock but would alsooffer the Company the power to leverage thisstrength in strategic tie-ups.



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Distribution and Exhibition:

The Company showed significant growth in theDistribution and Exhibition areas and has addedadditional theatres for booking during the year.During the year the Company released severalmovies in some select territories including Black& White, Aap Ka Suroor, Shaka Laka BoomBoom, Rush Hour-3, Harry Potter & The Orderof the Phoenix, Die Hard, Shivaji - The Boss, TheTrain, Darling, Aggar, Naya Daur (Colour), KyaLove Story Hai and Good Boy Bad Boy.

Whistling Woods International Limited:

During the year Whistling Woods InternationalLimited issued Non-convertible RedeemablePreference shares worth Rs.200 millions toMukta Arts Limited.

The total investment in Whistling WoodsInternational has increased to about Rs.726millions including:

Rs. 200 millions as Equity

Rs. 200 millions as Preference shares

Rs. 176 millions as loan from Mukta Arts Limited

Rs. 120 millions as Term loan from PunjabNational Bank

Rs. 30 millions as deposit towards services

Whistling Woods International has nowcompleted two years of operation and its firstbatch has entered the industry. The studentshave performed very well and their movies havebeen sent to various film festivals and have wonseveral National and International Awards.

The student population has grown to 260. TheInstitute is expected to break even by 2010.

To ensure growth in the education businessWhistling Woods International has tied up withManipal University to conduct the traineeship oftheir MBA in Media Management at WhistlingWoods International.

Outlook:

In the forthcoming year the Company expects torelease five movies including the magnum opus“Yuvraaj” directed by Subhash Ghai.

During the year the Company has completedBeta testing of www.indianfilmtrade.com a portalwhich focuses on Film Trade and is a B2B siteand www.bollywoodmoviemax.com a B2C sitethat facilitates downloads of Indian movies online.Both these properties are expected to augmentthe Company’s online initiatives globally.



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NOTICE

Notice is hereby given that the 26th Annual General Meeting of Mukta Arts Limited will be held on Saturday, the 20th ofSeptember, 2008 at 4.00 p.m. at the Whistling Woods Institute Auditorium, Dada Saheb Phalke Chitra Nagari, Goregaon(E), Mumbai- 400 065 to transact the following business:

Ordinary Business:1 To receive, consider, and adopt the audited Profit and Loss Account of the Company for the year ended 31st March,

2008 and the Balance Sheet as at that date together with the Director’s Report and Auditor’s Report thereon.

2 To appoint Director in place of Mr. Vijay Choraria, who retires by rotation and, being eligible, offers himself forreappointment.

3 To consider and pass with or without modifications, the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to section 224 of the Companies Act, 1956 M/s. Shamit Majmudar Associates, CharteredAccountants, Mumbai, be and are hereby appointed as the Statutory Auditors of the Company to hold office from theconclusion of the Twenty-sixth Annual General Meeting until the conclusion of the Twenty-seventh Annual GeneralMeeting, on such remuneration as may be approved by the Board of Directors.”

Special Business:4. To consider and if thought fit to pass with or without modification(s) the following resolution as an Ordinary Resolution:

“RESOLVED THAT Mr. Rahul Puri, who was appointed as an Additional Director in the meeting of the Board ofDirectors of the Company held on 23rd October, 2007 and who holds office upto the date of the this Annual GeneralMeeting, and in respect of whom notice under Section 257 of the Companies Act, 1956 has been received from oneof the members signifying intention to propose Mr. Rahul Puri as a candidate for the office of the Director of theCompany, be and is hereby appointed as Director of the Company.”

5 To consider and if thought fit to pass with or without modification(s) the following resolution as a Special Resolution:“RESOLVED THAT subject to the approval of the members in the General Meeting and subject to the provisions ofSections 198, 269, 309, 310, 311 and Schedule XIII of the Companies Act, 1956 and other applicable provisions ifany and subject to the approval of the Central Government, if required, the approval is hereby given to the re-appointment of Mr. Subhash Ghai as Managing Director of the Company for the period of three years wef 1st April2008 on such terms and conditions as are contained in the draft agreement to be entered into between the companyand Mr. Subhash Ghai, a copy of which as placed before the meeting and duly initialled by the Chairman for the sakeof identification be and is hereby approved.”

RESOLVED FURTHER THAT, Mr. Vijay Choraria, Director of the Company be and is hereby authorised to sign theAgreement as approved above on behalf of the Company and the Common Seal of the Company be affixed thereonin his presence.”

6. To consider and if thought fit to pass with or without modification(s) the following resolution as a Special Resolution:“RESOLVED THAT subject to the approval of the members in the General Meeting and subject to the provisions ofSections 198, 269, 309, 310, 311 and Schedule XIII of the Companies Act, 1956 and other applicable provisions ifany and subject to the approval of the Central Government, if required, the approval is hereby given to the appointmentof Mr. Rahul Puri as Whole Time Director (to be designated as Executive Director) of the Company for the period ofthree years wef 23rd October 2007 on such terms and conditions as are contained in the draft agreement to beentered into between the company and Mr. Rahul Puri, a copy of which as placed before the meeting and dulyinitialled by the Chairman for the sake of identification be and is hereby approved.

RESOLVED FURTHER THAT Mr. Vijay Choraria, Director of the Company be and is hereby authorised to sign theAgreement as approved above on behalf of the Company and the Common Seal of the Company be affixed thereonin his presence.”

Registered Office: By Order of the Board6, Bashiron, 28th RoadTPS – III, Bandra (W) Ravi B PoplaiMumbai – 400 050 Company Secretary

Place: MumbaiDate: 25th July, 2008



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NOTES:1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY / PROXIES

INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE PROXY FORMS,TO BE EFFECTIVE SHOULD BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LATERTHAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING.

2. The Explanatory Statement pursuant to section 173 of the Companies Act, 1956 that sets out details relating to theSpecial Business under Item No. 4, 5 & 6 is annexed hereto.

3. The Register of Members and Share Transfer Books of the Company will remain closed from Saturday, the 13th

September, 2008 to Saturday, the 20th September, 2008 (both days inclusive).4. Members seeking any information or clarification on the Accounts are requested to send in written queries to the

Company, at least seven days before the date of the meeting. Replies to such written queries received, will beprovided only at the meeting.

5. Members/proxies should bring the Attendance Slip sent herewith, duly filled in, along with the Annual Report forattending the meeting.

6. Dividends pertaining to Financial Years 2001-02, 2002-03, 2003-04, 2006-07, 2007-08 which remain unclaimed fora period of seven years will be transferred to Investor Education and Protection Fund, in pursuance to Section 205Ato Section 205C of Companies Act, 1956. The actual dates on which transfers will be made are provided in theCorporate Governance Report for reference. Members who have, till date, not encashed their dividend warrants forthese years are advised to claim the dividend from the Investor Services Department at the Registered Office of theCompany at the earliest. Once unclaimed dividends are transferred to the Investor Education and Protection Fund,Members will not be entitled to claim these dividends.

Registered Office: By Order of the Board6, Bashiron, 28th RoadTPS – III, Bandra (W) Ravi B PoplaiMumbai – 400 050 Company Secretary


ANNEXURE TO NOTICEEXPLANATORY STATEMENT PURSUANT TO SECTION 173 (2) OF THE COMPANIES ACT, 1956:

Item No. 4 :To consider and if thought fit to pass an Ordinary Resolution for appointment of Mr. Rahul Puri as the Director ofthe CompanyIn the meeting of the Board of Directors held on 23rd October, 2007, the Board of Directors appointed Mr. Rahul Puri asthe Additional Director of the Company under section 260 of the Companies Act, 1956. Mr. Rahul Puri, Director vacateshis office at the conclusion of the ensuing Annual General Meeting and being eligible offers himself for re-appointment.Notice in writing under section 257 of the Act has been received from one of the members, proposing the candidature ofMr. Rahul Puri for appointment as Director of the Company.Therefore, the above resolutions no. 4 is recommended for your approval.None of the other Directors of the Company except Mr. Subhash Ghai may be deemed to be concerned or interested inthis resolution.Item No. 5 :To consider and if thought fit to pass a Special Resolution for re-appointment of Mr. Subhash Ghai as the ManagingDirector of the CompanyMr. Subhash Ghai is the Principal Promoter of the Company. The Company has made tremendous progress with hisefforts, guidance & leadership.Mr. Subhash Ghai was appointed as Managing Director of the Company vide agreement dated 4th July, 2005 for a periodof five years. The said agreement was duly approved by the members vide resolution passed at the Annual GeneralMeeting held on 29th September, 2005. It was thereafter proposed to reconsider and curtail the tenure of the said agreementto three years, till 31.03.2008.Now it is proposed to reappoint Mr. Subhash Ghai as the Managing Director of the Company for a further period of 3 yearscommencing from 1st April, 2008, on the terms and conditions contained in the draft agreement entered into between theCompany and Mr. Subhash Ghai. The remuneration committee has recommended the remuneration in the meeting heldon 21st March, 2008.



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The Main terms of the said agreement are as under:-SALARY:Rs. 1,000,000/- per month with the liberty to the Board to review and increase the same from time to time upto amaximum of Rs. 1,500,000/- per month during the tenure of this contractPERQUISITES:In addition to the aforesaid salary, the Managing Director shall be entitled to the following perquisites:a) Fully furnished residential accommodation. Where no accommodation is provided by the Company, suitable house

rent allowance in lieu thereof may be paid. The expenses on furnishings, gas, electricity, water and other utilitiesshall be borne by the Company.

b) Reimbursement of all medical expenses incurred for self and family.c) Leave Travel assistance for self and family as per Company rules.d) Fees of maximum of two clubs, which will include admission and life membership fees.e) Personal accident insurance, premium whereof does not exceed Rs. 25,000/- per annum.f) A car with driver for official purpose.g) Telephones (including Mobile phones), fax and other communication facilities at residence for official purpose. All

personal usage will be charged to his account.h) Gratuity at rate not exceeding half a month’s salary for each completed year of service, andi) Leave at the rate of one month for every eleven month’s of service. Leave not availed of may be encashed.j) Education Allowance for the education of his children not exceeding Rs. 25000/- per annum per child.k) Exgratia – One month basic per annumFamily for the above purpose means wife, dependent children and dependent parents of the Managing DirectorFor the purpose of computation of the ceiling on remuneration, the following perquisites shall not be included.Gratuity at the rate not exceeding half a month’s salary for each completed year of service and encashment of leave atthe end of the tenure.None of the Directors of the Company except, Mr. Subhash Ghai, Mr. Rahul Puri and Mr. Parvez A. Farooqui may bedeemed to be concerned or interested in this resolution.A copy of the draft agreement entered into between the Company and Mr. Subhash Ghai will be available for inspectionat the Registered Office of the Company during business hours and will also be available at the meeting.Item No. 6:To consider and if thought fit to pass a Special Resolution for appointment of Mr. Rahul Puri as the Whole-TimeDirector of the CompanyMr. Rahul Puri is B.Sc (Hons) Business Management from Kings College London, and has rich experience in Finance &Strategic Planning. He was working with UBS Warburg, London before coming to India and joined Ambit CorporateFinance and afterwards joined Nimbus Communication Limited as Manager (Strategy & Services).In 2003, he joined Mukta Arts Limited as Vice President – Finance and Business Strategy and has been involved in thedevelopment of the company and the release of numerous films including ‘Aitraaz’, ‘Kisna’, ‘Shaadi Se Pehle’ and therecent hit, ’36 Chinatown’. He is also keenly involved in the financing and set up of the company’s biggest asset, WhistlingWoods International Limited, a Film, Television and Animation School in Film City.He was instrumental in the set up of the company’s niche film banner, Mukta Searchlight Films and produced MuktaSearch light Films’ first production, the critically acclaimed blockbuster ‘Iqbal’, in 2005. It is in recognition of his contributionhe was elected to the Mukta Arts Limited Board as Executive Director in October 2007.Mr. Rahul Puri was appointed as Executive Director on 23.10.2007 for a term of 3 years on the terms and conditionsmentioned in the agreement entered into between Mr. Rahul Puri and the Company which was duly approved by theBoard of Directors in the Meeting held on Meeting held on 23.10.2007The Remuneration Committee in its meeting held on 16.10.2007 had recommended his remuneration if appointed asWhole time Director by the Board, on the terms and conditions contained in the agreement entered into between theCompany and Mr. Rahul Puri.The Main terms of the said agreement as under:-SALARY:Rs.: 70,000/- per month with the liberty to the Board to review and increase the same from time to time, upto a maximumof Rs 300,000/- per month during the tenure of this contract.PERQUISITES:In addition to the aforesaid salary, the Executive Director shall be entitled to the following perquisites:i) Fully furnished residential accommodation. Where no accommodation is provided by the Company, suitable house

rent allowance in lieu thereof may be paid. The expenses on furnishing, gas, electricity, water and other utilities shallbe borne by the Company.



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ii) Reimbursement of all medical expenses incurred for self and family.iii) Leave Travel assistance for self and family as per Company rules.iv) Fees of maximum of two clubs, which will include admission and life membership fees.v) Personal accident insurance, premium whereof does not exceed Rs. 25,000/- per annum.vi) A car with driver for official purpose.vii) Telephone (including Mobile phones), fax and other communication facilities at residence for official purpose. All

personal usage will be charged to his account.xiii) Contribution to provident fund, superannuation fund or annuity fund to the extent these either singly or put together

are not taxable under the Income Tax Act, 1961ix) Gratuity at rate not exceeding half a months salary for each completed year of service, andx) Leave at the rate of one month for every eleven months of service. Leave not availed of may be encashed.xi) Education Allowance for the education of his children not exceeding Rs. 2000/- per annum per child.xii) Exgratia – One month basic per annum

Family for the above purpose means wife, dependent children and dependent parents of the Executive Director.For the purpose of computation of ceiling on remuneration, the following perquisites shall not be included.1. Contribution to provident fund, superannuation fund or annuity fund to the extent these either singly or put

together are not taxable under the Income Tax Act, 1961.2. Gratuity at the rate not exceeding half a month salary for each completed year of service and encashment of

leave at the end of the tenure.None of the Directors of the Company except Mr. Rahul Puri and Mr. Subhash Ghai, may be deemed to be concernedor interested in this resolution.A copy of the draft agreement entered into between the Company and Mr. Rahul Puri will be available for inspectionat the Registered Office of the Company during business hours and will also be available at the meeting.

Brief profile of Mr. Vijay Choraria, Director, who retires by rotation and is eligible for re-appointment.A Chartered Accountant and Bachelor of General Law, Mr. Vijay Choraria is the Promoter and Managing Director ofSharyans Resources Ltd (listed on the BSE and NSE) and Prebon Yamane (India) Ltd. (a JV with Tullett Prebon of TheNetherlands operating in debt, forex and credit derivatives). He is actively involved in the financial & real estate market formore than 23 years. He is on the board of several reputed companies like JMC Projects (India) Ltd. (construction &infrastructure contracts) B. E. Billimoria & Company Ltd. (civil engg.) SAI Consulting Engineers Pvt. Ltd. (project mgt.consultancy), Collins Stewart Inga Pvt. Ltd. (Investment Banking), Mukta Arts Ltd. (media and entertainment) and WhistlingWoods International Ltd. (an institute for films, TV and media).

By Order of the Board

Ravi B PoplaiCompany Secretary


Note: A Company bus will be available outside Goregaon (East) Station to carry the shareholders to the AGM venue, till3.30 p.m. Also BEST buses route no. 343 are available on a regular basis.



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DIRECTORS’ REPORTTo the Members ofMukta Arts Limited

Your Directors take pleasure in presenting the Twenty-Sixth Annual Report and Audited Statement of Accounts of theCompany for the Accounting year ended 31st March, 2008:

Financial Results: (Figures in millions)

Particulars Year ending Year ending31.03.2008 31.03.2007

(Rs.) (Rs.)-------------------------------- --------------------------------

Profit before interest, depreciation & tax 166.41 167.04Less: Interest 0.43 0.63

-------------------------------- --------------------------------Profit after interest, before depreciation & tax 165.98 166.41Less: Depreciation 17.64 22.64

Profit before tax 148.34 143.77Less: Provision for taxation 12.18 6.00

Fringe Benefit Tax 5.57 1.48Deferred Tax Liability/(Asset) 0.29 (0.87)

-------------------------------- --------------------------------Profit available for appropriation 130.30 137.16Less: Interim Dividend 45.16 45.16

Tax on Interim Dividend 7.68 6.33-------------------------------- --------------------------------

Profit for the year 77.46 85.67Add: Balance brought forward 29.32 (56.35)

-------------------------------- --------------------------------Profit Carried forward to Balance Sheet 106.78 29.32

================ ================

DividendThe Company has declared Interim Dividend of 40%, viz. Rs. 2/- per share on 14th April, 2008 and distributed the sameon 25th April, 2008. The Board of Directors has considered the interim dividend paid as the final dividend for the financialyear ended 31st March 2008.

Company’s PerformanceDuring the year the total revenues of the Company rose to Rs. 1.13 Billion as compared to Rs. 1.02 Billion of last year.This is the highest turnover of the Company for any financial year till date.

The Company’s performance has been discussed in the Management Analysis in details.

New InitiativesThe Company has acquired 25047 shares of Rs. 10/- each of Red Carpet Films Limited, having their office at 24, KartikComplex, New Link Road Andheri (W), Mumbai 400053. Red Carpet Films Limited (RCFL) is promoted by Mr. ManishGoswami, the promoter of Siddhant Cine Vision Ltd. This acquisition would enable the Company to enlarge the size andrange of its production as Red Carpet Films Private Limited has a tie-up with Eros Multimedia Pvt. Ltd., to fund anddistribute films.

The Company has also bagged the tender to complete the construction of the Communication Centre in Film City on BOTbasis and plans to shift all its offices there and also earn by way of leasing out balance areas.

Share CapitalThe Share Capital remained the same during the year under review.

DirectorsDuring the year Mrs. Meghna Ghai Puri has resigned from the Board w.e.f. 23rd October, 2007. Board places on record itsappreciation of the valuable services rendered by her.

Mr. Rahul Puri has been appointed as Whole Time Director (designated as Executive Director) of the Company w.e.f. 23rd

October, 2007 subject to approval of members in the Annual General Meeting.

Mr. Vijay Choraria, Director, retires by rotation at the ensuing Annual General Meeting and being eligible offers himself forreappointment. The requisite particulars in respect of director seeking re-appointment are given in Annexure I.



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Employees Stock Purchase SchemeDuring the year 200,000 shares of the Company have been transferred in the name of Mr. Ravi Gupta, Chief ExecutiveOfficer of the Company on the recommendation of the Remuneration Committee and approved by the Board of Directors.Auditor’s Report and CertificateThe Company’s explanation to the Auditors’ observation in their Report have been detailed in Note Nos. 2 (f) & 2 (g) in thenotes forming part of Accounts contained in Schedule “P” which forms part of the Annual Report. The Auditors have alsocertified the Company’s Compliance of the requirements of Corporate Governance in terms of Clause 49 of the ListingAgreement and the same is enclosed as an Annexure to the Report on Corporate Governance.Directors’ Responsibility Statement [Section 217 (2AA)]The Directors confirm that:

in the preparation of the annual accounts, the applicable accounting standards have been followed along with properexplanation relating to material departures;the Directors had selected such accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end ofthe financial year and of the loss of the company for the year;the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;the Directors had prepared the annual accounts on a going concern basis;

Auditors:M/s Shamit Majmudar Associates, Chartered Accountants retire at the ensuing Annual General Meeting and being eligibleoffer themselves for reappointment as the Auditors of the Company.Statutory Disclosures:The Statements relating to the subsidiary companies viz. Whistling Woods International Limited, Connect.1 limited(Previously Mukta Arts International Limited), Mukta Tele Media. Ltd., and Red Carpet Films Limited pursuant to Section212 of the Companies Act, 1956 are attached to the Balance Sheet.Particulars of employees required under Section 217 (2A) of the Companies Act, 1956 and the Companies (Particulars ofEmployees) Rules, 1975, as amended, are given in Annexure II.Particulars regarding Foreign Exchange earnings and outgo required under Section 217 (1) (e) of the Companies Act,1956 and Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988 are given in ScheduleP (Statement of Significant Accounting Policies and Notes forming Part of Accounts) of this report.A cash flow statement for the year ended 31.03.2008 is included with the Balance Sheet.Corporate GovernanceThe Company has been proactive in following the principles and practices of good Corporate Governance. The companyhas taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in clause 49 of the ListingAgreements of the Stock Exchanges are complied with.A separate statement on corporate governance is produced as a part of the Annual Report along with the Auditorscertificate on its compliance.Conservation of Energy and Technology AbsorptionThe Company is not engaged in manufacturing activities, and as such the particulars relating to conservation of energyand technology absorption are not applicable. The Company makes every effort to conserve energy as far as possible inits post-production facilities, Studios, Offices, etc.Fixed DepositsThe Company has not accepted any deposits during the year and as such no amount of principal or interest was outstandingat the Balance Sheet date.Social CommitmentsYour Company is aware of its social responsibility and has been from time to time contributing to social causes.AcknowledgementsThe Board of Directors wishes to thank and record its appreciation to the Artistes, Technicians, film distributors, Bankers,Media and shareholders who have extended their continued support to the Company.Your Directors thank especially all employees of the Company for their dedicated services to the Company.

On Behalf of the Board of Directors

Place: Mumbai Subhash GhaiDate: 25th July, 2008 Chairman & Managing Director



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ANNEXURES TO DIRECTORS’ REPORTAnexure-I

PARTICULARS ABOUT DIRECTORS SEEKING RE-APPOINTMENT

Name Qualification Age Area of Directorship of other Companiesexpertise

Mr. Vijay Choraria B. Com, ACA, 44 Real Estate & PUBLIC LIMITED COMPANIESBGL Financial Markets

1 Sharyans Resources Limited2 B.E.Billimoria & Co. Limited2 Intime Spectrum Securities Limited3 Prebon Yamane (India) Limited4 Sidhant Cinevision Limited5 Whistling Woods International Limited6 JMC Projects (India) Ltd.8 Mukta Tele Media Limited9 Sky Industries Limited10 Red Carpet Films Ltd.11 Tamarind Tours Pvt. Ltd.12 Sharyans Wealth Management Pvt. Ltd.

Annexure-II

Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees)Rules, 1975 and forming part of the Directors’ Report:

Name Designation Qualification Age Date of Experience Gross PreviousJoining Remuneration Employment

(Rs.)Subhash Chairman & B.Com, 65 years 07.09.1982 39 years 11,590,741 Promoter ofGhai Managing Diploma in the Company

Director Cinema fromFTII, Pune

Ravi Gupta CEO M.Sc., M.B.A 56 years 1.04.2004 33 years 3,304,000 Global CEOLMB HoldingsLimited Isle

the Companyof Man

Notes:

Remuneration includes salary and other allowances.



14

CORPORATE INFORMATIONMr. Subhash Ghai, Chairman & Managing Director

Mr. Parvez A. Farooqui, Executive DirectorMr. Rahul Puri, Executive Director

Mr. Anil HarishMr. Vijay ChorariaMr. Pradeep Guha

Company Secretary and Compliance OfficerMr. Ravi B Poplai

AuditorsM/s Shamit Majmudar Associates

Chartered Accountants

Registered Office6, Bashiron, 28th RoadTPS – III, Bandra (W)

Mumbai – 400 050

Audit CommitteeMr. Vijay Choraria - Chairman

Mr. Anil HarishMr. Parvez A. Farooqui

Remuneration CommitteeMr. Anil Harish - Chairman

Mr. Vijay ChorariaMr. Parvez A. Farooqui

Shareholders/Investors Grievances Committee:Mr. Vijay Choraria - Chairman

Mr. Parvez A. FarooquiMr. Pradeep Guha

Share Transfer CommitteeMr. Parvez A. Farooqui - Chairman

Mr. Vijay ChorariaMr. Pradeep Guha

BankersPunjab National Bank Limited

HDFC Bank LimitedIDBI Bank Limited

Registrar & Transfer AgentsIntime Spectrum Registry LimitedC-13, Pannalal Silk Mills Compound

LBS Marg, Bhandup (W)Mumbai – 400 078



15

CORPORATE GOVERNANCEMukta Arts Limited believes in maintaining high level of ethical standards in its business practices. Whilst the Companyappreciates that Growth and Profitability is important, it is equally conscious of the business enablers and gives them asmuch importance as financial performance. The Company encourages independence and flexibility within an establishedframework of policies and processes with a view to create vibrant value systems for future growth. Information aboutmajor company developments is shared with the shareholders through public notices, press releases and through AnnualReports. In addition, we give below the information on areas covered under Corporate Governance section under clause49 of the Listing Agreement.

COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE

The Company’s Corporate Governance policies recognize the Company’s commitment to good and efficient CorporateGovernance. The Board of Directors, the Company’s highest policymaking body, is committed in its responsibility for alldecisions to all constituents, including investors, employees and regulatory authorities. The Company recognizes thatthe shareholders are ultimately the persons who are catalyst to the economic activities and also the ultimate beneficiariesthereof.

COMPOSITION OF BOARD

The Chairman of the Board of Mukta Arts Limited is also its Managing Director. All Directors including Non-ExecutiveDirectors are suitably qualified, experienced and competent. At present, the Board consists of six members, of whichthree are Non-Executive & Independent Directors. During the year Mrs. Meghna Ghai Puri resigned as a Non ExecutiveDirector and Mr. Rahul Puri has been appointed as Executive Director at the Board Meeting on 23.10.2007.

The list of Executive and Non-Executive Directors is given below:

S.No Name of the Director Designation Status of the Director

1 Mr. Subhash Ghai Chairman & Managing Director Executive Director

2 Mr. Parvez A. Farooqui Executive Director Executive Director

3 Mr. Rahul Puri Executive Director Executive Director (wef 23.10.2007)

4 Mr. Anil Harish Director Non–Executive Director & Independent

5 Mr. Vijay Choraria Director Non–Executive Director & Independent

6 Mr. Pradeep Guha Director Non–Executive Director & Independent

BOARD MEETINGS AND ATTENDANCE

Five Board meetings were held during the year ended 31st March, 2008. Agenda for the Board meetings is sent to theDirectors sufficiently in advance to allow them to examine and interact on the issues involved. Also the senior Executivesof the Company are invited to make presentation from time to time.

The information as required under Annexure IA to Clause 49 of the Listing Agreement is made available to the Board. Theagenda and the papers for consideration at the Board meeting are circulated sufficiently in advance prior to the meeting.Adequate information is circulated as part of the Board papers and is also made available at the Board meeting to enablethe Board take informed decisions.

The dates on which meetings were held are as follows:

S. No. Date of Meeting Board Strength No. of Directors Present1 19.04.2007 6 5

2 31.07.2007 6 5

3 27.08.2008 6 4

4 23.10.2007 6 4

5 18.01.2008 6 4



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ATTENDANCE OF EACH DIRECTOR AT THE BOARD MEETINGS AND LAST ANNUAL GENERAL MEETING (AGM)AND THE NUMBER OF COMPANIES AND COMMITTEES WHERE HE IS DIRECTOR / MEMBER (AS ON THE DATEOF THE DIRECTOR’S REPORT)

Directors No. of Attendance No. of No. of Membershipsmeetings at the last Directorship in other BoardAttended AGM in other Committees held

during the held on Boards as on in other Companies **period 29.09.2007 31.03.2008*

For whole year Chairman MemberMr. Subhash Ghai 4 No 5 Nil 1Mr. Parvez A. Farooqui 5 Yes 3 Nil NilMr. Rahul Puri(From 23.10.2007) 2 N.A. 2 Nil NilMr. Anil Harish 2 Yes 15 5 10Mr. Vijay Choraria 4 No 10 5 9Mr. Pradeep Guha 2 No 9 NIL NIL

* Directorships in Private Companies, Foreign Companies and Not for Profit Companies are excluded for this purpose.

** For this purpose Audit Committee, Shareholders/Investors’ Grievance and Remuneration Committee is considered.

COMMITTEES OF DIRECTORSThe Board of Directors provide guidance to operating management on policy matters as well as in the monitoring of theactions of operating management. This involvement is formalized through the constitution of designated committees ofthe Board. The committees are intended to provide regular exchange of information and ideas between the Board andoperating management.

AUDIT COMMITTEETo provide assistance to the Board of Directors of the Company the Audit Committee was constituted. It consists ofChairman and two other members. The Chairman of the Audit Committee is independent Non-Executive Director. TheAudit Committee provides direction to and oversees the Audit and Risk Management functions, reviews the financialaccounts, interacts with statutory auditors and reviews matters of special interest.

COMPOSITION, NAME OF MEMBERS, CHAIRMAN AND OTHERS DETAILS

Mr. Vijay Choraria ChairmanMr. Anil Harish MemberMr. Parvez A. Farooqui Member

During the year under review, the Audit Committee met five times and the no. of times each member attended themeeting is given below.

Meetings & attendance during the year

Members Meetings held during the Meetings Attendedtenure of the Directors

Mr. Vijay Choraria 5 4Mr. Anil Harish 5 3Mr. Parvez A. Farooqui 5 5

REMUNERATION COMMITTEEThe Committee comprises of following Directors

Mr. Anil Harish Chairman

Mr. Vijay Choraria Member

Mr. Parvez A. Farooqui Member

The Remuneration Committee was constituted to recommend and review remuneration package of Directors and SeniorExecutives and to present report to the Board on remuneration package of Directors and other Senior ManagementOfficials.

The Company follows the market linked remuneration policy which is aimed at enabling the Company to attract and retainthe best talent. Compensation is also linked to individual and team performance as they support the achievement ofCorporate Goals.



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MEETINGS & ATTENDANCE DURING THE YEAR

Members Meetings held during the Meetings Attendedtenure of the Directors

Mr. Vijay Choraria 2 2

Mr. Anil Harish 2 Nil

Mr. Parvez A. Farooqui 2 2

DETAILS OF REMUNERATION TO EXECUTIVE DIRECTORS

Particulars Mr. Subhash Ghai Mr. Parvez A. Farooqui Mr. Rahul PuriChairman & Managing Executive Director Executive Director

Director wef 23.10.2007

Salary 10,895,000 1,380,750 694,710Employers Contribution toProvident Fund — 125,100 55,239Perquisites 695,741 15,407 11,368Total 11,590,741 1,521,257 761,317

DETAILS OF SERVICE CONTRACT

Names Period of Contract Dates of AppointmentMr. Subhash Ghai 3 Years 1st April, 2008Mr. Parvez A. Farooqui 5 Years 1st April, 2005Mr. Rahul Puri 3 Years 23rd October, 2007

DETAILS OF REMUNERATION TO NON-EXECUTIVE DIRECTORS

Names Sitting fees Salary & perquisites Commission Total(Rs.) (Rs.) (Rs.) (Rs.)

Mr. Anil Harish 10,000 Nil Nil 10,000Mr. Vijay Choraria 20,000 Nil Nil 20,000Mr. Pradeep Guha 10,000 NIL Nil 10,000Mrs. Meghna Ghai Puri 20,000 NIL NIL 20,000

TOTAL 60,000

DETAILS OF SHARES ISSUED UNDER EMPLOYEES STOCK PURCHASE SCHEME

Employee No. of SharesMr. Ravi Gupta 400,000

EQUITY SHARES OF MUKTA ARTS LIMITED HELD BY DIRECTORS AS ON 31ST MARCH, 2008

Members No. of Shares held

Mr. Subhash Ghai 12,392,990Mr. Parvez A. Farooqui 77,300Mr. Rahul Puri NILMr. Anil Harish NILMr. Vijay Choraria NILMr. Pradeep Guha NIL

SHAREHOLDERS / INVESTOR GRIEVANCE COMMITTEEShareholders / Investor Grievance Committee comprising the following Directors, approves transfer of shares, splittingand consolidation of shares, issuance of duplicate shares and reviewing shareholder’s complaints and resolution thereof.

COMPOSITION, NAME OF MEMBERS AND CHAIRMAN

Mr. Vijay Choraria Chairman

Mr. Parvez A. Farooqui Member

Mr. Pradeep Guha Member



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MEETINGS AND ATTENDANCE DURING THE YEAR

Members Meetings held during the Meetings Attendedtenure of the Director

Mr. Vijay Choraria 4 3Mr. Parvez A. Farooqui 4 4Mr. Pradeep Guha 4 3

Company Secretary is the Compliance Officer of the Company for matters relating to shareholders, Stock Exchanges,The Securities Exchange Board of India (SEBI) and other related regulatory authorities.

NO. OF COMPLAINTS PENDING WITH THE COMPANY

The Company and its Registrar & Transfer Agents M/s Intime Spectrum Registry Limited received 12 letters / complaintsduring the financial year ended 31st March, 2008 and all were replied to the satisfaction of the shareholders.

SHARE TRANSFER COMMITTEEShare Transfer Committee provides assistance to the Board of Directors in ensuring that the transfer of shares takesplace within the stipulated period of one month from the date they are lodged with the Company. The Committee framesthe policy for ensuring timely transfer of shares including transmission, splitting of shares into marketable lots, consolidation,changing joint holding into single holding and vice versa and also for issuing duplicate share certificates in lieu of thosetorn/destroyed, lost or defaced.

COMPOSITION, NAME OF MEMBERS AND CHAIRMAN

Mr. Parvez A. Farooqui ChairmanMr. Vijay Choraria MemberMr. Pradeep Guha Member

MEETINGS AND ATTENDANCE DURING THE YEAR

Members Meetings held during the Meetings Attendedtenure of the Director

Mr. Parvez A. Farooqui 3 3Mr. Vijay Choraria 3 3Mr. Pradeep Guha 3 2

GENERAL BODY MEETINGSLocation and time of the General Body Meetings held during the last three years

Description of Location Date TimeMeeting25th AGM* * Whistling Woods Institution’s Auditorium 29.09.2007 4.00 P.M.

Dada Saheb Phalke Chitra NagariGoregaon (E), Mumbai-400 065

24th AGM Whistling Woods Institution’s AuditoriumDada Saheb Phalke Chitra NagariGoregaon (E), Mumbai-400 065 12.08.2006 4.00 P.M.

23rd AGM* Adlabs Films Limited’s AuditoriumDada Saheb Phalke Chitra NagariGoregaon (E), Mumbai-400 065 29.09.2005 4.00 P.M.

* * In the 25th AGM the following special resolutions were passed1. Allotment of Company’s Equity Shares to the Employees of the Company.2. Reappointment of Mr. Siraj A. Farooqui as Chief Operating Officer (Production & Studio) from 01.04.2007.* In the 23rd AGM the following special resolutions were passed1. Reappointment of Mr. Subhash Ghai as Managing Director.2. Reappointment of Mr. Parvez A. Farooqui as Executive Director.

DISCLOSURES1) The Company has entered into certain transactions with Directors and / or companies in which the Directors or the

Management or their relatives, etc., have interest. However, these transactions are of routine nature and do nothave any potential conflict with the interest of the Company at large.



19

2) Neither has any non-compliance with any of the legal provisions of law been made by the Company nor any penaltyor stricture imposed by the Stock Exchanges or SEBI or any other statutory authority, on matters related to thecapital markets, during the last 3 years.

RISK MANAGEMENTThe Company appreciates that the Film Industry is prone to the vagaries of varying likes and dislikes of viewing public.To mitigate such risks, an attempt is being made not only to produce large number of Films covering wider spectrum ofviewership but also in different languages. The Company released a Marathi film during the year, i.e. ‘Valu’. The Companyis also widening its distribution network in the market to expand its reach. Whistling Woods Institute, the Film andTelevision Institute promoted by the Company’s subsidiary Whistling Woods International Limited, had commenced itsoperations from 18th July 2006. This endeavour will help in sourcing and grooming pool of talent for the Company’sprojects in future. The first batch of students has completed the course in July 2008.

CEO/ CFO CERTIFICATIONThe Chief Executive Officer has signed a certificate accepting responsibility for the financial statements and confirmingthe effectiveness of the internal control systems, as required in Clause 49 of the Listing Agreement. The certificate iscontained in this Annual Report.

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCEThe company has obtained a certificate from the auditors of the company regarding compliance with the provisionsrelating to Corporate Governance laid down in Clause 49 of the Listing Agreement with Stock Exchanges which is attachedherewith.

MEANS OF COMMUNICATIONInformation like Quarterly Financial Results and Press Releases on significant developments in the Company has beenmade available from time to time to the Press and has also been submitted to the Stock Exchanges to enable them toput them on their web sites. The quarterly Financial Results are published in English and vernacular newspapers. TheCompany has its own website and all the vital information relating to the Company is displayed on the said website.The address of the website is www.muktaarts.com.

SHAREHOLDERS’ INFORMATION

A. Annual General Meeting : 26th Annual General MeetingDate : 20th September, 2008Time : 4.00 P.M.Venue : Whistling Woods Auditorium,

Whistling Woods InstituteDada Saheb Phalke Chitra NagariGoregaon (E), Mumbai – 400 065

B. Financial Calendar :Financial Year : 1st April to 31st MarchAdoption of Quarterly ResultsI st Quarter By the end of July 2008II nd Quarter By the end of October, 2008III rd Quarter By the end of January, 2009IV th Quarter By the end of June, 2009

C. Date of Book Closure : 13th September, 2008 to20th September, 2008 (both days inclusive)

D. Registered Office : 6, Bashiron28th Road, TPS – IIIBandra (W), Mumbai – 400 050

E. Listing on Stock Exchanges : Bombay Stock Exchange LimitedPhiroze Jeejeebhoy Towers, DalalStreet,Mumbai – 400 001Tel: + 91 – 22 – 2265 5581Fax: + 91 – 22 –2272 3719 / 2272 2039

National Stock Exchange of India LtdExchange Plaza, Bandra KurlaComplex, Bandra (E),Mumbai – 400 051Tel: +91-22- 26598100 - 8114Fax: + 91 – 22 – 2659 8237 / 38



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Calcutta Stock Exchange Association Ltd.7, Lyons Range, Kolkata – 700 001Tel: + 91 – 33 – 2210 4470 - 77Fax:+ 91 – 33 – 2210 4492 / 2210 4500

The Listing fees for the year 2008–09 have already been paid to all the Stock Exchanges where the Company’s sharesare listed.

F. Stock Code : Bombay Stock Exchange LimitedCode No: 532357Symbol: MUKTARDMISIN No. INE374B01019National Stock Exchange of India LtdSymbol: MUKTAARTS

Calcutta Stock Exchange Association Ltd.Scrip Code – 23922

G. Market Price Data

Given below is the Market Price Data in respect of The Stock Exchange, Mumbai and National Stock Exchange ofIndia Limited.

Month BSE NSEApril 2007 Highest Rate Lowest Average Highest Lowest Averageto Rate Volume Rate Rate VolumeMarch 2008 (Rs.) (Rs.) Traded (Rs.) (Rs.) Traded

(Nos.)April 97.70 69.00 24276 97.60 68.00 16290May 115.35 86.00 22997 115.65 86.20 16520June 113.90 88.30 9627 114.45 89.00 4571July 96.40 79.00 16303 96.35 78.05 9877August 90.90 69.15 14064 91.00 70.00 7073September 117.85 83.10 30634 117.95 80.50 21891October 132.00 85.10 25222 132.90 88.00 16209November 169.95 94.00 43170 169.90 90.00 37924December 228.00 167.00 63644 230.00 165.75 53412January 244.00 142.00 47126 241.50 140.95 29341February 170.20 125.20 20799 172.00 124.35 18078March 145.65 81.00 25317 141.00 85.25 14087

H. Address of Registrars and Transfer AgentsIntime Spectrum Registry LimitedC-13, Pannalal Silk Mills CompoundL.B.S. Marg, Bhandup (W) Mumbai – 400 078.

I. Share Transfer SystemThe Company has entrusted the administrative work of share transfers, transmissions, issuance of duplicatecertificates etc., and all tasks related to shareholdings to Intime Spectrum Registry Limited, the Registrars andShare Transfer Agents.

J. Distribution of Shareholding as on 31st March, 2008

Shareholding of No. of % of Total Share Amount % of TotalNominal Value (Rs) Shareholders Shareholders (Rs.) Share AmountRange1 - 5000 5249 93.58 4199720 3.725001 - 10000 131 2.34 1012960 0.9010001 - 20000 82 1.46 1211640 1.0720001 - 30000 35 0.62 881075 0.7830001 - 40000 16 0.29 575855 0.5140001 - 50000 18 0.32 852570 0.7650001 - 100000 26 0.46 1853270 1.64100000 and above 52 0.93 102318910 90.62TOTAL 5609 100.00 112906000 100.00



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K. Dematerialization of Shares

As on 31st March, 2008, 22,557,857 shares were dematerialised, which is 99.90% of total paid up capital.

L. Company’s Branches/Locations

Production HouseBait-Ush-Sharaf29th Road, Bandra, Mumbai- 400 050.

Premises under Construction1) “Audeus”

Plot No. A – 18, Opp. Laxmi Industrial Estate,Off Link Road, Andheri (w), Mumbai – 400 053

2) “Communication Centre”Film City Complex,Goregaon East,Mumbai 400065

M. Address for correspondence

Shareholders can address their correspondence to the Registered Office of the Company at Mumbai and/or atCompany’s Registrar and Transfer Agents:

Company Registrar and Transfer AgentsContact Person Mr. Ravi B Poplai Mr. N. Mahadevan Iyer

Mr. Parvez A. Farooqui Mr. Kirtikumar/ Mr.Raghunath PujariAddress 6, Bashiron Intime Spectrum Registry Limited

28th Road, C-13, Pannalal Silk Mills Compound,TPS – III, Bandra (W) L.B.S. Marg, Bhandup (W)Mumbai – 400 050 Mumbai – 400 078

Telephone No. (022) 2642 1332 (022) 2596 3838Fax No. (022) 2640 7449 (022) 2596 2691/ 2594 6969

Email ID [email protected]

N Nomination Facility

Shareholders holding shares in physical form and desirous of making a nomination in respect of their shareholdingin the Company, as permitted under Section 109A of the Companies Act, 1956, are requested to submit their requestto the Registrar and Transfer Agents, M/s Intime Spectrum Registry Limited.

O Unclaimed Dividend

Dividends pertaining to the Financial Years 2001-02 to 2007-08 which remain unclaimed for a period of seven yearswill be transferred to Investor Education and Protection Fund (IEPF) in due course. To enable the members to claimtheir Dividend before its transfer to the above fund the proposed dates are given below:

Dividend Reference Date of Declaration Due Date for transfer to IEPFFinal Dividend 2001 30-04-2002 29-04-2009

Final Dividend 2002 31-07-2003 30-07-2010

Final Dividend 2004 29-07-2004 28-07-2011

Interim Dividend 2007 14-03-2007 13-03-2014

Interim Dividend 2008 14-04-2008 13-04-2015

P Governance of Subsidiaries

The subsidiaries of the Company function independently, with an adequately empowered Board of Directors andsufficient resources, however for effective Governance the working of the said subsidiaries is reviewed by the Boardfrom time to time.



22

AUDITOR’S REPORT ON CORPORATE GOVERNANCETo the Board of Directors of

Mukta Arts Limited

We have read the Report of the Board of Directors on Corporate Governance and have examined relevant recordsrelating to compliance of conditions of Corporate Governance by Mukta Arts Limited, for the year ended 31st March, 2008,as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the management. Our examination,conducted in the manner described in the “Guidance Note on Certification of Corporate Governance” issued by theInstitute of Chartered Accountants of India, was limited to procedures and implementation thereof adopted by the Companyfor ensuring compliance with the conditions of Corporate Governance. Our examination was neither an audit nor was itconducted to express an opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanation given to us and on the basis of ourexamination described above, the Company has complied with the conditions of Corporate Governance as stipulated inClause 49 of the above mentioned Listing Agreement.

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

M/s Shamit Majmudar AssociatesChartered Accountants

Shamit MajmudarPlace: Mumbai ProprietorDate : 25th July, 2008 Membership No. 10595

CEO CERTIFICATIONI Ravi Gupta, Chief Executive Officer certify that:

(a) I have reviewed the stand alone and Consolidated financial results and the cash flow statement of Mukta ArtsLimited (the Company) for the year and that to the best of my knowledge and belief:

(i) these statements do not contain any materially untrue statement or omit any material fact or contain statementsthat might be misleading;

(ii) these statements together present a true and fair view of the company’s affairs and are in compliance withexisting accounting standards, applicable laws and regulations.

(b) There are, to the best of my knowledge and belief, no transactions entered into by the company during the yearwhich are fraudulent, illegal or violative of the company’s code of conduct.

(c) I accept responsibility for establishing and maintaining internal controls for financial reporting and that I have evaluatedthe effectiveness of the internal control systems of the company pertaining to financial reporting and I have disclosedto the auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of whichI am aware and the steps I have taken or propose to take to rectify these deficiencies.

(d) I have indicated to the auditors and the Audit committee

(i) significant changes in internal control over financial reporting during the year;

(ii) significant changes in accounting policies during the year and that the same have been disclosed in the notesto the financial statements; and

iii) instances of significant fraud of which I become aware and the involvement therein, if any, of the managementor an employee having a significant role in the company’s internal control system over financial reporting.

For and on behalf ofMukta Arts Limited

Ravi GuptaChief Executive Officer

Place: Mumbai

Date: 25th July 2008

MAGENTA BLACK

MAGENTA BLACK23

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AUDITORS’ REPORT

To the Members

1. We have audited the attached Balance Sheet of Mukta Arts Ltd. as at 31st March 2008 and the related Profit andLoss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financialstatements are the responsibility of the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms ofsub-section (4A) of Section 227 of the Companies Act, 1956, we give in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above:

(i) we have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purposes of our audit;

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appearsfrom our examination of such books;

(iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreementwith the books of account;

(iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply with the requirements of the Accounting Standards referred to in sub-section (3C) of Section 211 of theCompanies Act, 1956;

(v) on the basis of the written representations received from the directors as on 31st March, 2008, and taken onrecord by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2008 frombeing appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accountsread with significant accounting policies and other notes thereon, give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008;

(ii) in the case of Profit and Loss Account of the profit of the Company for the year ended on that date, and

(iii) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For SHAMIT MAJMUDAR ASSOCIATESChartered Accountants

Place : Mumbai SHAMIT MAJMUDARDated : 25th July 2008 Proprietor

Membership No. 10595

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ANNEXURE TO THE AUDITORS’ REPORT[Referred to in paragraph (3) thereof]

(i) The nature of the Company’s business/ activities during the year is such that clauses (viii) and (xiii) of paragraph 4of the Companies (Auditor’s Report) order, 2003 are not applicable to the Company for the year ending 31st March2008.

(ii) In respect of fixed assets:

(a) The Company has maintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) The fixed assets of the company have been physically verified by the management at the end of the yearand we are informed that no discrepancies between book records and the physical inventory have beennoticed.

(c) In our opinion and according to the information and explanations given to us, the Company has not madeany substantial disposals during the year.

(iii) In respect of inventories:

(a) As explained to us, inventories were physically verified during the year by the management at reasonableintervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physicalverification of inventories followed by the management were reasonable and adequate in relation to the sizeof the Company and the nature of its activity during the year.

(c) In our opinion and according to the information and explanations given to us, the Company has maintainedproper records of its inventories and no material discrepancies were noticed on physical verification.

(iv) In respect of loans, secured or unsecured, granted or taken by the Company to or from companies, firms or otherparties covered in the register maintained under section 301 of The Companies Act, 1956:

According to the information and explanations given to us the Company has given unsecured loan to a subsidiaryCompany, the maximum outstanding balance during the year was Rs 260 millions and the outstanding balance ason 31.03.2008 is Rs. 176.5 millions. The outstanding interest on unsecured loan as on 31.03.2008 is Rs. 10.32millions. The same is not overdue and the rate of interest and other terms and conditions of loan is in our opinionnot prima facie prejudicial to the interest of the Company. Apart from the above the Company has neither grantednor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the registermaintained under section 301 of The Companies Act, 1956.

(v) In our opinion and according to the information and explanations given to us, there are adequate internal controlprocedures commensurate with the size of the Company and nature of its business, for purchase of inventory andfixed assets. There are no sales of goods.

(vi) In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act1956:

(a) To the best of our knowledge and belief and according to the information and explanations given to us,transactions that needed to be entered into the register have been so entered.

(b) According to the information and explanations given to us, there are transactions/arrangements in excessof Rs 0.50 millions in respect of subsidiary companies in which directors are interested and prices arereasonable having regard to the prevailing market prices at the relevant time.

(vii) The Company has not accepted any deposits from the public to which the provisions of Section 58A and section58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975, are applicable.

(viii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature ofits business.

(ix) According to the information and explanations given to us in respect of statutory and other dues:

(a) The Company has been generally regular in depositing undisputed statutory dues, including ProvidentFund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Cess and any otherstatutory dues with the appropriate authorities during the year. There were no undisputed amount ofoutstanding statutory dues as at 31st March 2008 for more than six months from the date they becamepayable.

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(b) Disputed dues in respect of Income Tax (TDS) is Rs 4.96 millions out of which Rs 2.48 millions has not beenpaid since the matter is pending before Appellate Tribunal. (Kindly refer Note no.2(f)(ii) in Schedule P.

Disputed dues in respect of Service Tax is Rs 2.12 millions out of which Rs 0.88 millions has not been paid sincethe matter is pending before CESTAT. (kindly refer Note no. 2(g) in schedule P)

(x) The Company has no accumulated losses as at the end of the year. The Company has not incurred cash lossesduring the financial year and the last financial year.

(xi) According to the information and explanations given to us, the Company was not liable to repay any dues to anyfinancial institution and bank, and there were no debenture holders during the year.

(xii) According to the information and explanations given to us, the Company has not given any loans and advances onthe basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii)of the companies (Auditor’s Report) Order, 2003 are not applicable to the company.

(xiv) According to the information and explanations given to us and on the basis of our examination of the Company’srecords we are of the opinion that the Company is maintaining adequate records regarding transactions in it’strading activities in the units of Mutual Funds (Debt Schemes) and timely entries have been made in these records.The investments have been held by the Company in it’s own name.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken bysubsidiary Whistling Woods International Limited from Punjab National Bank during the previous year.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, the Companyhas not taken any term loan during the year.

(xvii) According to the cash flow statement and other records examined by us and the information and explanationsgiven to us, on an overall basis, funds raised on short term basis have, prima facie, not been used during the yearfor long term investment (fixed assets etc.) and vice versa.

(xviii) The Company has not made any preferential allotment during the year.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud onor by the Company was noticed or reported during the year.


Place: Mumbai SHAMIT MAJMUDARDated: 25th July 2008 Proprietor


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BALANCE SHEET AS AT 31ST MARCH, 2008

Current Year Previous YearSCHEDULE 31.03.2008 31.03.2007

Amount in Rs. Amount in Rs.–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

SOURCES OF FUNDSShareholders’ FundShare Capital A 112,917,500 112,917,500Reserves & Surplus B 1,138,376,957 1,060,916,631Loan FundsSecured Loans C 150,912,550 105,822,182

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––TOTAL 1,402,207,007 1,279,656,313

================================ ================================

APPLICATION OF FUNDSFixed Assets DGross Block 334,595,873 313,308,687Less : Depreciation 177,384,191 159,746,841

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––Net Block without WIP 157,211,682 153,561,846Add : Capital Work in Progress 29,888,313 3,531,529

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––Net Block 187,099,995 157,093,375Investments E 684,501,046 718,411,130Deferred Tax Asset/(Liability) (9,355,035) (9,061,949)Current Assets, Loans & AdvancesInventories F 288,732,011 144,596,923Debtors G 172,598,021 116,424,936Cash & Bank Balances H 83,941,746 68,185,799Loans, Advances & Deposits I 478,620,269 336,482,069

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––1,023,892,047 665,689,727

Less : Current Liabilities & Provisions J 494,192,960 267,868,840–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

Net Current Assets 529,699,087 397,820,887Miscellaneous Expenditure 10,261,914 15,392,870(to the extent not written off)

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––TOTAL 1,402,207,007 1,279,656,313

================================ ================================

Statement of Significant Accounting Policies Pand Notes forming part of Accounts

As per our report of even date For and on behalf of the Board

For SHAMIT MAJMUDAR ASSOCIATES SUBHASH GHAI PARVEZ A. FAROOQUIChartered Accountants Chairman & Managing Director Executive Director

RAHUL PURI ANIL HARISHExecutive Director Director

SHAMIT MAJMUDARProprietor PRADEEP GUHA VIJAY CHORARIAMembership No. 10595 Director Director

Place : Mumbai RAVI GUPTA RAVI POPLAIDate : 25th July 2008 Chief Executive Officer Company Secretary

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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2008



INCOMERealisation from Productions, Distribution & Exhibition K 1,094,659,601 965,207,645Equipment Hire Income 12,068,681 2,220,883Other Income L 24,932,495 49,117,783

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––1,131,660,777 1,016,546,311

================================ ================================

EXPENDITURECost of Production, Distribution & Exhibition M 886,659,990 729,590,308Administrative and other expenses N 73,830,363 115,066,292Depreciation 17,637,350 22,648,786Preliminary Expenses Written off 5,130,956 5,130,956

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––983,258,659 872,436,342

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

Profit/(Loss) Before Extraordinary, Non Recurring 148,402,118 144,109,969and Prior Period itemsLess:Extraordinary, Non Recurring & Prior Period Exp. O 64,856 343,948

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––Profit/(Loss) Before Tax 148,337,262 143,766,021Less : a) Provision for Taxation 12,181,100 6,000,000

b) Fringe Benefit Tax 5,565,000 1,480,000c) Deferred Tax Liability/(Asset) 293,086 (872,389)

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––Profit/(Loss) after Tax 130,298,076 137,158,410Add : Balance brought forward from last year 29,316,717 (56,345,266)

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––Profit available for Appropriation 159,614,793 80,813,144Less : Interim Dividend paid during the year 45,162,400 45,162,400

Tax on Interim Dividend 7,675,350 6,334,027–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

Balance carried forward 106,777,043 29,316,717================================ ================================







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CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008

Current Year Previous Year31.03.2008 31.03.2007


A. CASH FROM OPERATING ACTIVITIESNet Profit/(Loss) before tax and extraordinary items : 148,402,118 144,109,969Adjustments for :Depreciation 17,637,350 22,648,786Interest, dividend, etc., received (23,930,409) (45,945,632)Miscellaneous expenditure written off 5,130,956 5,130,956(Profit)/Loss on sale of fixed assets (443,009) (1,593,929)(Gain)/Loss on exchange fluctuation - 2,951Provision for Dimunation of LIC Mutual fund 219,545 245,767Operating profit before working capital changes 147,016,551 124,598,868Adjustments for :(Increase)/ Decrease in Inventories (144,135,088) 129,117,115(Increase)/ Decrease in Receivables (56,173,085) (38,296,761)(Increase)/ Decrease in Loans and advances (63,649,441) (22,904,183)Increase/(Decrease) in Trade Creditors 100,213,428 15,854,121Inc./ (Dec.) in Other current liabilities and provisions 108,364,592 (58,907,851)Cash generated from/(used in) operations 91,636,957 149,461,309Direct Taxes paid (78,488,758) (15,029,637)Prior period adjustments (64,856) (343,948)Cash flow before extraordinary items 13,083,343 134,087,724Extraordinary items :Miscellaneous Expenditure - -Net Cash Generated from/(used in) Operating Activities 13,083,343 134,087,724

B. CASH FLOW FROM INVESTING ACTIVITIESPurchases of fixed assets (56,195,283) (10,101,473)Sale/disposal of fixed assets 8,994,320 16,010,000(Additions to)/Redemption of investments 33,690,539 (87,587,019)Interest, dividend, etc. received 23,930,409 45,945,632Net cash generated from/(used in) investing activities 10,419,985 (35,732,860)

C. CASH FLOW FROM FINANCING ACTIVITIESLoans borrowed (net) 45,090,368 (1,532,752)Dividend paid (45,162,400) (45,162,400)Tax on Dividend paid (7,675,350) (6,334,027)Loss on exchange fluctuation - (2,951)Net cash recovered from/(used in) financing activities (7,747,382) (53,032,130)Net increase/(decrease) in cash and cash equivalents 15,755,946 45,322,734(A+B+C)Cash and cash equivalents (opening) 68,185,800 22,863,066Cash and cash equivalents (closing) 83,941,746 68,185,800






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SCHEDULE DFixed Assets (Amount in Rs.)

GROSS BLOCK DEPRECIATION NET BLOCKParticulars As on Additions Insurance Ded./Adj. Total Depreciation Additions Ded./Adj. Total As on As on

01.04.2007 during the Claim during as on up to during during Depreciation 31.03.2008 31.03.2007year Received the year 31.03.2008 31.03.2007 the year the year up to

31.03.2008Block ‘A’

Ownership Premises 107,594,600 - 1,194,907 - 106,399,693 23,810,465 812,225 - 24,622,690 81,777,003 83,784,135

Block ‘B’

Plant & Machinery 158,401,637 25,932,650 6,504,007 304,662 177,525,618 107,257,625 11,503,967 64,289 118,825,881 58,699,737 51,144,012

Block ‘C’

Motor Vehicles & Others 25,718,252 967,148 - 347,329 26,338,071 14,416,261 3,022,029 66,138 17,504,428 8,833,643 11,301,991

Block ‘D’

Furniture Fixture & 18,474,788 2,938,701 200,408 - 21,213,081 12,167,080 1,963,341 - 14,130,421 7,082,660 6,307,708

Office Equipments

Block ‘E’

Computer Software 619,410 - - 619,410 619,410 - - 619,410 - -

Intangible Assets

Exhibition Rights 2,500,000 - - 2,500,000 1,476,000 205,361 - 1,681,361 818,639 1,024,000

TOTAL 313,308,687 29,838,499 7,899,322 651,991 334,595,873 159,746,841 17,506,923 130,427 177,384,191 157,211,682 153,561,846

Previous Year 369,839,214 6,569,944 - 63,100,472 313,308,687 185,782,455 22,648,786 18,684,400 159,746,841 153,561,846 184,056,759

Capital WIP 3,531,529 26,356,784 - - 29,888,313 - - - - 29,888,313 3,531,529 316,840,216 56,195,283 7,899,322 651,991 364,484,186 159,746,841 17,506,923 130,427 177,384,191 187,099,995 157,093,375

SCHEDULES FORMING PART OF THE ACCOUNTS



SCHEDULE AShare CapitalAuthorised Share Capital24,000,000 Equity Shares of Rs. 5/- each 120,000,000 120,000,000(Previous year 24,000,000 Equity Shares of Rs. 5/- each) ================================ ================================Issued, Subscribed & Paid-up Capital22,581,200 Equity Shares of Rs.5/- each 112,906,000 112,906,000 (Previous year 22,581,200 Equity Shares ofof Rs 5/- each out of which 16,490,000 shares wereallotted as fully paid up by way of Bonus Shares bycapitalisation of reserves)Add:- Forfeited shares 11,500 11,500(Amount originally paid up) –––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

112,917,500 112,917,500================================ ================================

SCHEDULE BReserves & SurplusShare Premium 973,360,000 973,360,000General Reserve

Balance as per last balance sheet 58,239,914 58,239,914 Add : Transfer during the year - -

–––––––––––––––––––––––––––– –––––––––––––––––––––––––––– 58,239,914 58,239,914

Balance as per Profit & Loss account 106,777,043 29,316,717–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

1,138,376,957 1,060,916,631================================ ================================

SCHEDULE CSecured LoansFrom banks against finance of cars 999,300 2,122,182From LIC against Keyman Insurance Policy of CMD 149,913,250 103,700,000

–––––––––––––––––––––––––––– –––––––––––––––––––––––––––– 150,912,550 105,822,182

================================ ================================

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SCHEDULE EInvestmentsA UNITS OF MUTUAL FUNDS - QUOTED

Units of LIC Mutual Fund : 45,299,815 199,398,124LICMF Floating Rate Fund - Growth Plan( No. of Units 4,434,721.095, Previous year 19,604,118.381)

Units of DWS Mutual Fund : 20,623,680 –Units of DWS Credit Opportunity Cash Fund:( No. of Units 2,053,754.02, Previous year Nil) –––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

65,923,495 199,398,124Less: Provision for Dimunation of LIC Mutual fund 219,545 245,767

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––65,703,950 199,152,357

PRINCIPAL PNB MF FIXED MATURITY 11,116,400 10,000,000( A ) 76,820,350 209,152,357

(NAV of LIC Mutual Fund as on 31.03.2008 is Rs 45,299,815)(NAV of LIC Mutual Fund as on 31.03.2007 is Rs 199,152,357)(NAV of DWS Mutual Fund as on 31.03.2008 is Rs 20,650,086)

B INTER CORPORATE DEPOSITS (UNQUOTED)With Companies ( B ) 232,560,468 334,389,015(Includes loan to a subsidiary Rs 176,500,000Previous year Rs.250,000,000)

C LONG TERM INVESTMENTS IN EQUITY SHARESIn wholly owned subsidiaries (Unquoted)Equity Shares of Connect.1 Ltd. 594,000 594,000(594 shares of Rs.1000/- each, Previous year 594 shares)Equity Shares of Whistling Woods International Ltd. 169,997,000 169,997,000(169,997 shares of Rs 1000/- each, Previous year 169,997 shares)Equity Shares of Mukta Tele Media Ltd. 499,600 499,600(4,996 shares of Rs.100/- each, Previous year 4,996 shares)8% RC Preference Shares of Whistling Woods International Ltd. 200,000,000 –(200,000 Preference Shares of Rs 1000/- each, Previous year Nil)Equity Shares of Red Carpet Films Ltd. 250,470 –(25,047 shares of Rs.10/- each, Previous year Nil)Others (Unquoted)Shares of Bashiron Co. Op. Hsg. Society Ltd 500 500(10 Shares of Rs. 50/- each, Previous year - 10 shares )Shares of Bait-Ush-Sharaf Co. Op. Hsg.Society. Ltd. 500 500(10 Shares of Rs. 50/- each, Previous year - 10 shares)Equity Shares of Indiasound Ltd. 3,778,158 3,778,158(7,500,000 Equity Shares of 0.1 Pence each,Previous year 7,500,000 Equity Shares)

( C ) 375,120,228 174,869,758–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

TOTAL ( A + B+ C ) 684,501,046 718,411,130================================ ================================

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SCHEDULE FInventoriesRights of Films (Exhibition, Distribution & other commercial rights including Copyrights) 3,550,000 4,550,000Work In Progress- Under production films 284,822,550 139,769,276- Stock of Materials 359,461 277,647

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––288,732,011 144,596,923

================================ ================================SCHEDULE GSundry Debtors (Unsecured)a) Debts outstanding for a period exceeding six months

- considered good 35,399,889 30,121,895- considered doubtful - 3,256,002

b) Other Debts Considered good- considered good 137,198,132 83,047,039

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––172,598,021 116,424,936

================================ ================================SCHEDULE HCash & Bank balancesCash in Hand 414,057 459,693With Scheduled Banks:In Current Accounts 57,332,064 43,151,421(Includes Rs. 131,078 in EEFC account,Previous year Rs.143,343)Fixed Deposit with Scheduled Banks 26,195,625 24,574,685

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––83,941,746 68,185,799

================================ ================================SCHEDULE ILoans & AdvancesAdvances recoverable in cash or in kind or for value 178,476,109 126,028,342to be received(Includes Rs 16,959,681 from Subsidiary CompaniesPrevious year Rs 58,049,175)(Includes Rs 21,000,000 from a trust in which one of the Directorsis Trustee, Previous year Rs 21,000,000)Advance Taxes and other payments 230,062,611 151,573,853Advances to Staff 1,381,056 929,028Deposits 68,700,493 57,950,846{Including Rs.300,000 to a firm of which Managing Director isproprietor, Previous year Rs.300,000}{Including Rs 500,000 to Managing Director for use of premises,Previous year Rs.500,000}{Including Rs.Nil to a Company in which Managing Directoris Director, Previous year Rs 1,000,000}(Includes Rs 37,300,000 to Subsidiary CompaniesPrevious year Rs 34,000,000)

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––478,620,269 336,482,069

================================ ================================

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SCHEDULE JCurrent Liabilities & Provisions:Sundry Creditors for goods and services rendered 174,865,614 74,652,186Provision for Taxation 110,813,078 93,122,980Advances towards films and other services 207,830,208 99,743,742Unclaimed Dividend 684,060 349,932

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––494,192,960 267,868,840

================================ ================================SCHEDULE KRealisation from Production, Distribution & ExhibitionRecovery from Music – 6,500,000Recovery from New Productions 343,307,936 418,126,850Recovery from old films, Distribution & Exhibition 751,351,665 540,580,795

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––1,094,659,601 965,207,645

================================ ================================SCHEDULE LOther IncomeInterest 18,570,374 39,102,023Other Income 559,077 1,578,222Profit on Sale of Assets 443,009 1,593,929Dividend / Income from Units of Mutual Funds 5,360,035 6,843,609

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––24,932,495 49,117,783

================================ ================================SCHEDULE MCost of Production, Distribution & ExhibitionCost of Music - 1,904,451Cost of New Productions 245,691,501 395,852,188Expenses of old films, Distribution & Exhibition 640,968,489 331,833,669

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––886,659,990 729,590,308

================================ ================================

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SCHEDULE NAdministrative and Other ExpensesPersonnel Expenses 34,518,379 33,186,551(Including Directors Remuneration of Rs 13,873,315Previous year - Rs.12,519,338)Repairs & Maintenance : Buildings 2,622,147 1,649,034

Machinery 1,067,173 1,001,527Others 60,174 234,496

Printing & Stationery 998,615 1,177,358Telephone & Trunkcalls 2,128,797 2,185,581Insurance 1,308,752 40,787,158Brokerage & Commission 2,601,653 30,000Electricity Charges 705,727 721,868Rent 1,748,065 1,203,547Travelling Expenses 1,479,634 2,208,467Auditors Remuneration 1,932,500 1,256,750Professional Expenses 4,243,211 4,168,456Legal Expenses 778,008 276,775Interest 162,182 242,202Bank Charges 270,634 383,575Rates & Taxes 3,497,191 9,865,261Bad Debts -Written off 3,307,208 5,020,677Publicity Expenses 1,778,634 419,411Motor Car Expenses 2,419,221 2,268,066Miscellaneous Expenses 6,202,458 6,779,533

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––73,830,363 115,066,292

================================ ================================SCHEDULE OExtraordinary, Non Recurring & Prior Period Exp.Prior Period Expenses 64,856 343,948

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––64,856 343,948

================================ ================================

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SCHEDULE “P”

Statement of Significant Accounting Policies and Notes forming Part of Accounts

1 Significant Accounting Policies

(a) Basis of Preparation of Accounts

The financial statements have been prepared under the historical cost convention, in accordance with AccountingStandards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act,1956, as adopted consistently by the Company. All income and expenditure having a material bearing on thefinancial statements are recognised on accrual basis.

The preparation of financial statements in conformity with Accounting Standards requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities at the date offinancial statements, and the reported amounts of revenues and expenses during the year.

(b) (i) Fixed Assets

Fixed Assets are stated at cost of acquisition including the attributable costs to bring the assets to theirworking condition. Exhibition Rights (Intangible assets) are recorded at the consideration paid for acquisition.

(ii) Depreciation

Depreciation has been provided on Written Down Value Method as per the provision of Companies Act,1956 and at the rate specified in Schedule XIV of the Companies Act, 1956.

(iii) Capital work in progress

Capital work in progress is shown in Asset Schedule, however pending completion of project no depreciationis provided on the same.

(c) Investments

Investments in the units of Mutual Funds are stated at lower of ‘Cost’ or ‘Net Asset Value’ at the end of thefinancial year and where ever the net asset value is less than the cost the same is treated as diminution andprovided for in the accounts.Other investments are stated at cost.

Holding of investments in subsidiaries and Associate Companies are of strategic importance to the Companyand therefore the company does not consider it necessary to provide decrease in the book value of suchinvestments, till such relationship continues with the investee Company.

(d) Inventories

Inventories of under production films and serials are valued at actual amount spent,which includes amountpaid, bills settled and advance paid for which bills are awaited.The residual value of old films are valued at Nilas total cost of production is charged to revenue at the time of first release of such film. Other inventories arestated at cost.

(e) Transactions in Foreign Currencies

Transactions in Foreign Currencies are accounted at standard exchange rates. Current assets and currentliabilities in foreign currencies are realigned with rates ruling on Balance Sheet date. Any gain/loss arising onrealignment or realisation is charged to the Profit and Loss Account.

(f) Revenue recognition

(i) Recovery of old films are recognised at Gross overflows and royalties earned.

Sales/Realisations are recognised on despatch of softwares to the respective parties.

(ii) Interest Income is accounted on accrual basis.

(iii) Dividend income is accounted for when right to receive is established.

(g) Miscellaneous Expenditure

Share issue expenses are amortised over a period of 10 years.

(h) Retirement benefits

(i) Contribution to Provident Fund and other recognised dues are charged to revenue.

(ii) Gratuity is provided on the basis of actuarial valuation made by LIC in accordance with its group gratuityscheme However, for the current year based on the acturial valuation no further provision was required.

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Rupees Rupees–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

2 Contingent Liabilitiesa Claims against the company not acknowledged as Debts Nil Nilb Guarantees given by Bank on behalf of the company 82,523,213 40,147,120c Letters of Credit given by bank on behalf of the company Nil Nild Estimated amount of contracts remaining to be executed on

Capital Account & not provided for (net of advance) Nil Nile Legal suits filed against the company Nil Nil

(having monetory implication)f (i) The Income Tax Assessment of the Company is

completed upto Assessment Year 2005-06. There arecertain additions made in various assessment for whichvarious appeals are pending at first appellate stageand Tribunal stage (including the appeal decided infavour of Company where in Department is in furtherappeal).The disputed Tax amount in respect of the above is : 21,879,805 21,119,173

(ii) Survey action was conducted by the Income Tax TDSdepartment in the registered office of the Company on27.08.2003. The assessment of the same was completed during the previous year and demand ofRs 4,957,270 was raised. Aggrieved by the order the Company had filed appeal before the CIT(Appeals).The Company had paid Rs 2,478,636 under protest against the said demand. During the year Companyhas received Appellate order allowing appeal issues partly. The Company has preferred appeal beforehon. Tribunal against the order of CIT (Appeals). Appeal effect to the CIT (Appeal)’s order is pending. TheDirectors are of the opinion that at this stage no further provision is required for the above pending matters.

g Department of Service Tax has levied service tax of Rs 2.12 million on sponsorship fees received for variousfilms treating the Company as an ‘Advertising Agency’. Further the department had issued show cause noticeproposing to levy Rs 2.02 millions service tax on a similar issue.Against the levy of Rs 2.12 million, the Company filed appeal before the Commissioner of Central Excise(Appeals) and subsequently before Honorable Tribunal, claiming that the provisions of Service Tax Act is notapplicable in this matter.The Company has paid Rs 1.24 millions under protest and the same is shown as ‘advance recoverable in cashor kind’ since the matter is pending before the CESTAT and based on legal opinion sought, the management isof the opinion that the Company will have no liability on this account and that no provision is necessary.

h The Company Law Board has passed an order directing Central Government to undertake the investigationunder section 237 of the Companies Act, 1956. The Company aggrieved by the order has moved the BombayHigh Court and obtained stay on order. The hearing in this matter has been completed and order awaited. Themanagement believes that the Order of Company Law Board is defective and management has not voilatedany rules, laws or regulations and there is no cause of concern in this regard.

i The Company has given Corporate guarantee for loans taken by subsidiary Whistling Woods InternationalLimited from Punjab National Bank during the previous year.

3 Additional information required to be given pursuant to Part II of Schedule VI to the Companies Act, 1956 isas follows :The Company is in the business of production, distribution and exhibition of Entertainment software, hiring ofequipments etc. which is not subject to any licence and as such information regarding consumption of Raw Materials,Production and sales is not applicable. Further the nature of business of the Company is such that the installedcapacity is not quantifiable

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4 Business segment-wise Report (as per the reporting requirements of AS-17) (Rs in millions)Current Year Previous Year

31.03.2008 31.03.2007Rupees Rupees

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––a. Revenue

Software Division 1,094.66 965.21Equipment Division 12.07 2.22Others 24.93 49.12

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––TOTAL 1,131.66 1,016.56

================================ ================================b. Results

Software Division 208.00 235.62Equipment Division (1.99) (18.65)Others 24.93 49.12

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––TOTAL 230.94 266.09

================================ ================================c. Capital Employed

Software Division 510.74 347.93Equipment Division 151.49 145.88

5 Earnings in Foreign ExchangeRealisation from Films & Music (Exploitation of Rights) 5,193,706 846,599

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––5,193,706 846,599

================================ ================================6 Expenditure in Foreign Currency

Travelling 330,958 747,931For Films * 51,222,009 16,154,434Publicity 289,117 -

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––51,842,084 16,902,365

================================ ================================(*) Expenses include expenditure incurred on overseas locationstowards travelling, lodging & boarding, payments to artists remuneration, etc.

7 Auditors Remuneration :Statutory Audit Fees 600,000 551,000Tax Audit Fees 200,000 150,000For Taxation matters 325,000 300,000For Other Services 125,000 125,000Reimbursement of Expenses 132,500 130,750

–––––––––––––––––––––––––––– –––––––––––––––––––––––––––– 1,382,500 1,256,750

================================ ================================8 Managerial Remuneration u/s 198 of the Companies Act, paid or

payable during the year :Salary 12,970,460 12,287,000Contribution to Provident Fund 180,339 144,000Perquisites 722,516 88,338

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––13,873,315 12,519,338

================================ ================================9 Value of imports of material on CIF basis

Machinery Spares 6,905,318 -

10 a) Fixed deposits with scheduled banks include interest accrued (net of taxes) upto 31.03.08 Rs 1.56 million(Previous year Rs 0.61 million). Fixed deposits of Rs 11.76 million (Previous Year Rs 24.59 million) are pledgedas security against bank guarantees given for the Company.

b) Lien has been marked on Investments to the extent of 3,163,311 units, previous year -4,950,000- units of LICMF Floating Rate Fund - Dividend Re-investment Plan in favour of Punjab National Bank against bank guaranteesgiven for the Company.

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11 Taxes on Income(a) Current Tax - Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961(b) Deferred Tax Position - For the purpose of quantifying deferred tax amount as on Balance Sheet date deferred

tax is recognised on timing differences being difference between the taxable income and accounting incomethat originate in one period and are capable of reversal in one or more subsequent periods. Deferred TaxLiability till balance sheet date amounts to Rs 9,355,034 (Previous year Deferred Tax Liability Rs 9,061,948).

12 Related Party Transaction

(A) The list of related parties and nature of their relationship is furnished below:

Companies under the same management-

Whistling Woods International Ltd. 84.99% - subsidiaryConnect.1 Ltd. (Formerly known as Mukta Arts 99% - subsidiary International Limited)Mukta Tele Media Ltd. 99.92% - subsidiaryRed Carpet Films Ltd 50.09% - subsidiaryMukta Tele Arts Pvt. Ltd. CMD is director

Firms-Mukta Arts Proprietory firm of CMD

Trusts-MAL Employees Welfare Trust Executive Director is settler and One of the

Directors is Trustee

Directors of the company-

Chairman & Managing Director Mr.Subhash GhaiExecutive Director Mr.Parvez A. FarooquiExecutive Director Mr.Rahul Puri (From 23.10.2007)

Non Executive Directors Mr. Anil HarishMr. Vijay ChorariaMr. Pradeep Guha

Relatives of Directors-Mr. Ashok Ghai Brother of CMDMr. Siraj Farooqui Brother of Executive DirectorMr. Sameer Farooqui Brother of Executive Director

(B) Transactions with and outstanding balances of related parties are furnished below.

Volume of transactions during the year (Amount in Rupees)

Volume of transactions during the yearSubsidiaries Associates Key Relatives of Total Outstanding

Management key Balancepersonnel management 31.03.2008

personnel

Purchase & Other ServicesConnect.1 Ltd. 240,000 - - - 240,000 -

Mukta Arts - 60,000 - - 60,000 -

Mukta Tele Media Ltd. 108,000 - - - 108,000 -

Interest RecoveriesWhistling Woods International Ltd. 13,345,872 - - - 13,345,872 -

Receiving of ServicesAshok Ghai - - - 1,575,000 1,575,000 -

Payment of Salaries

Rahul Puri - - - 617,290 617,290 -

Siraj Farooqui - - - 1,347,750 1,347,750 -

Sameer Farooqui - - - 228,000 228,000 -

Investments8% Redeemable Prefrence Sharesof Whistling Wood International Ltd. 200,000,000 200,000,000 200,000,000

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Volume of transactions during the yearSubsidiaries Associates Key Relatives of Total Outstanding

Management key Balancepersonnel management 31.03.2008

personnelShares of Whistling WoodsInternational Ltd. - - - - - 169,997,000Shares of Connect.1 Ltd. - - - - - 594,000Shares of Mukta Tele Media Ltd. - - - - - 499,600Shares of Red Carpet Films Ltd. 250,470 - - - 250,470 250,470Loan RecoveredWhistling Woods International Ltd. 73,500,000 73,500,000 176,500,000Interest RecoverableWhistling Woods International Ltd. 10,321,697 10,321,697 10,321,697Advances RecoverableMAL Employees Welfare Trust - - - - - 21,000,000Mukta Tele Media Ltd. - - 6,637,984Managerial RemunerationSubhash Ghai - - 11,590,741 - 11,590,741 -Parvez A. Farooqui - - 1,521,257 - 1,521,257 -Rahul Puri - - 761,317 - 761,317 -Deposits for Premisestaken on lease or otherwiseConnect.1 Ltd. 200,000 - - - 200,000 3,300,000Mukta Tele Arts Pvt. Ltd. 1,000,000 - - - 1,000,000 -Mukta Arts - - - - - 300,000Subhash Ghai - - - - - 500,000Muka Tele Media Ltd. - - - - - 4,000,000Whistling Woods International Ltd. - - - - - 30,000,000

Note: The company has paid to it’s Non-executive Directors, the sitting fees @ Rs.5,000/- per Board-meeting attended.

13 (a) There were no amounts payable to Small Scale Industrial Undertaking on the Balance Sheet date.

(b) The Company has not received any intimation from “Suppliers” regarding their status under the Micro, Smalland Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid asat the year end together with interest paid / payable as required under the said Act have not been given.

14 Current Investments bought and sold during the year

No. of units

LIC MF FLOATING RATE FUND Sold 15,169,397.286

DWS CREDIT OPPORTUNITY CASH FUND Bought 2,053,754.020

15 Previous year figures have been regrouped wherever necessary.






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BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I REGISTRATION DETAILS

Registration No.: L92110MH1982PLC028180 State Code: 011

Balance Sheet Date: 31-03-2008

II CAPITAL RAISED (AMOUNT IN RS. THOUSANDS)

Public Issue NIL Rights Issue NIL

Bonus Issue NIL Private Placement NIL

III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS(AMOUNT IN RS. THOUSANDS)

Total Liabilities 1402207 Total Assets 1402207

SOURCES OF FUNDS

Paid-up Capital 112918 Reserves & Surplus 1138377

Secured Loans 150912 Unsecured Loans NIL

APPLICATION OF FUNDS

Net Fixed Assets 187100 Investments 684501

Net Current Assets 520345 Misc. Expenditure 10261

Accumulated Losses NIL

IV PERFORMANCE OF COMPANY (AMOUNT IN RS. THOUSANDS)

Turnover 1131661 Total Expenditure 983324

Profit/(Loss) Before Tax 148337 Profit/(Loss) After Tax 130298

Earnings Per Share in Rs. 5.77 Dividend Rate % 40%

V GENERIC NAMES OF PRINCIPAL PRODUCTS/ SERVICES OF THE COMPANY

Item Code No. Not Applicable

Product Description SOFTWARE PRODUCTION, DISTRIBUTION & EQUIPMENT HIRE

MAGENTA BLACK

MAGENTA BLACK40

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Auditors’ report to the Board of Directors of Mukta Arts Limited on the Consolidated FinancialStatement of Mukta Arts Limited and its Subsidiaries

1. We have audited the attached consolidated Balance Sheet of Mukta Arts Ltd. (the company) and its subsidiaries asat 31st March, 2008 the consolidated Profit and Loss Account for the year ended on that date annexed thereto, andthe consolidated cash flow statement for the year ended on that date, which we have signed under reference to thisreport. These consolidated financial statements are the responsibility of the management of Mukta Arts Limited .Ourresponsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are freeof material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

2. We report that the consolidated financial statements have been prepared by the Company in accordance with therequirements of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of CharteredAccountants of India and on the basis of the separate audited financial statements of Mukta Arts Limited and itsSubsidiaries included in the consolidated financial statements.

3. On the basis of the information and explanations given to us and on consideration of the separate audit reports onindividual audited financial statements of Mukta Arts Limited and its Subsidiaries, in our opinion, the consolidatedfinancial statements together with the notes thereon and attached thereto give a true and fair view in conformity withthe accounting principles generally accepted in India:(a) in the case of the consolidated balance sheet of the consolidated state of affairs of Mukta Arts Limited and its

Subsidiaries as at 31st March 2008 ;

(b) in the case of the consolidated profit and loss account, of the consolidated results of operations of Mukta ArtsLimited and its Subsidiaries for the year ended on that date ;

(c) in the case of the consolidated cash flow statement, of the consolidated cash flows of Mukta Arts Limited andits subsidiaries for the year ended on that date .




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CONSOLIATED BALANCE SHEET OF MUKTA ARTS LTD AND ITS SUBSIDIARIES AS AT31ST MARCH-2008


Amount in Rs. Amount in Rs.––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––

SOURCES OF FUNDSShareholders’ FundShare Capital A 112,917,500 112,917,500Minority Interest 30,161,814 29,916,902Reserves & Surplus B 863,840,092 916,962,654Loan FundsSecured Loans C 257,282,925 227,976,025

–––––––––––––––––––––––––– ––––––––––––––––––––––––––TOTAL 1,264,202,331 1,287,773,081

====================================================== ======================================================APPLICATION OF FUNDS

Fixed Assets DGross Block 1,001,109,051 909,623,837Less : Depreciation 327,964,827 224,265,621

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Net Block without WIP 673,144,224 685,358,216Add : Capital Work in Progress 35,332,572 3,531,529

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Net Block 708,476,796 688,889,745

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Investments E 137,216,175 297,844,509Deferred Tax Asset/(Liability) (8,397,737) (9,061,949)Current Assets, Loans & AdvancesInventories F 292,467,417 148,331,931Debtors G 183,215,463 124,180,837Cash & Bank Balances H 136,713,054 73,254,049Loans, Advances & Deposits I 444,383,654 297,483,250

–––––––––––––––––––––––––– –––––––––––––––––––––––––– 1,056,779,588 643,250,067

Less : Current Liabilities & Provisions J 640,620,175 349,148,992–––––––––––––––––––––––––– ––––––––––––––––––––––––––

Net Current Assets 416,159,413 294,101,075Miscellaneous Expenditure 10,747,684 15,999,701(to the extent not written off)

–––––––––––––––––––––––––– ––––––––––––––––––––––––––TOTAL 1,264,202,331 1,287,773,081

====================================================== ======================================================







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CONSOLIATED PROFIT & LOSS ACCOUNT OF MUKTA ARTS LTD AND ITS SUBSIDIARIESFOR THE YEAR ENDED 31ST MARCH, 2008



INCOMERealisation from Productions, Distribution & Exhibition K 1,094,659,601 965,207,645Equipment Hire Income 12,068,681 2,220,883Fees from Students 97,322,656 46,363,449Other Income L 37,623,255 53,255,766

–––––––––––––––––––––––––– ––––––––––––––––––––––––––1,241,674,193 1,067,047,743====================================================== ======================================================

EXPENDITURECost of Production, Distribution & Exhibition M 886,659,990 729,590,310Administrative and other expenses N 227,917,850 231,904,427Depreciation 103,699,206 84,229,730Preliminary Expenses Written off 5,316,898 5,302,998

–––––––––––––––––––––––––– ––––––––––––––––––––––––––1,223,593,944 1,051,027,465====================================================== ======================================================

Profit/(Loss) Before Extraordinary, Non Recurring 18,080,249 16,020,278and Prior Period itemsLess:Extraordinary, Non Recurring and Prior Period items O 642,173 12,113,181

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Profit/(Loss) Before Tax 17,438,076 3,907,097Less : a) Provision for Taxation 12,215,100 6,013,500

b) Fringe Benefit Tax 6,172,000 1,955,000c) Deferred Tax Liability/(Asset) (664,212) (872,389)

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Profit/(Loss) after Tax (284,812) (3,189,014)Add : Balance brought forward from last year (114,637,260) (59,951,819)

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Profit available for Appropriation (114,922,072) (63,140,833)Less : Interim Dividend paid during the year 45,162,400 45,162,400

Tax on Interim Dividend 7,675,350 6,334,027–––––––––––––––––––––––––– ––––––––––––––––––––––––––

Balance carried forward (167,759,822) (114,637,260)====================================================== ======================================================







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CONSOLIDATED CASHFLOW STATEMENT OF MUKTA ARTS LIMITED AND ITS SUBSIDIARIESFOR THE YEAR ENDED 31ST MARCH, 2008


Amount in Rs. Amount in Rs.––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––

A. CASH FROM OPERATING ACTIVITIESNet Profit before tax and extraordinary items : 18,080,249 16,020,278Adjustments for :Depreciation 103,699,206 84,229,730Interest, dividend, etc., received (24,751,548) (46,119,733)Miscellaneous expenditure written off 5,316,898 5,302,998(Profit)/Loss on sale of fixed assets (443,009) (1,593,929)(Gain)/Loss on exchange fluctuation - 2,951Provision for Dimunation of Investment 219,545 245,767

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Operating profit before working capital changes 102,121,341 58,088,062

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Adjustments for :(Increase)/ Decrease in Inventories (144,135,486) 129,117,114(Increase)/ Decrease in Receivables (59,034,626) (46,052,662)(Increase)/ Decrease in Loans and advances (65,848,164) 25,987,810Increase/(Decrease) in Trade Creditors 164,134,037 78,875,204Inc./ (Dec.) in Other current liabilities and provisions 127,337,146 (43,778,837)Cash generated from/(used in) operations 124,574,248 202,236,691Direct taxes paid (81,052,240) (17,202,289)Prior period adjustments (642,173) (12,113,181)Cash flow before extraordinary items 42,879,835 172,921,221Extraordinary items :Miscellaneous Expenditure - -

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Net Cash Generated from/(used in) Operating Activities 42,879,835 172,921,221

–––––––––––––––––––––––––– ––––––––––––––––––––––––––B. CASH FLOW FROM INVESTING ACTIVITIES

Purchases of fixed assets (79,821,175) (273,282,934)Sale/disposal of fixed assets 8,551,313 16,010,000(Additions to)/Redemption of investments 90,628,334 20,135,269Interest, dividend, etc. received 24,751,548 46,119,733Net cash generated from/(used in) investing activities 44,110,020 (191,017,932)

C. CASH FLOW FROM FINANCING ACTIVITIESLoans borrowed (net) 29,306,900 119,693,133Dividend paid (45,162,400) (45,162,400)Tax on Dividend paid (7,675,350) (6,334,027)Loss on exchange fluctuation - (2,951)Net cash recovered from/(used in) financing activities (23,530,850) 68,193,755

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Net increase in cash and cash equivalents (A+B+C) 63,459,005 50,097,045

–––––––––––––––––––––––––– ––––––––––––––––––––––––––Cash and cash equivalents (opening) 73,254,049 23,157,004Cash and cash equivalents (closing) 136,713,054 73,254,049






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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS



SCHEDULE AShare CapitalAuthorised Share Capital24,000,000 Equity Shares of Rs. 5/- each 120,000,000 120,000,000(Previous year 24,000,000 Equity Shares of Rs. 5/- each) ======================================================== ========================================================Issued, Subscribed & Paid-up Capital22,581,200 Equity Shares of Rs.5/- each 112,906,000 112,906,000 (Previous year 22,581,200 Equity Sharesof Rs 5/- each out of which 16,490,000 shares were|allotted as fully paid up by way of Bonus Shares by|capitalisation of reserves)Add:- Forfeited shares 11,500 11,500(Amount originally paid up)

–––––––––––––––––––––––––– ––––––––––––––––––––––––––112,917,500 112,917,500

SCHEDULE BReserves & SurplusShare Premium 973,360,000 973,360,000General ReserveBalance as per last balance sheet 58,239,914 58,239,914 Add : Transfer during the year – -

–––––––––––––––––––––––––– ––––––––––––––––––––––––––58,239,914 58,239,914

Balance as per Profit & Loss account (167,759,822) (114,637,260)–––––––––––––––––––––––––– ––––––––––––––––––––––––––

863,840,092 916,962,654========================================================= =========================================================

SCHEDULE CSecured LoansFrom banks against finance of cars 1,700,673 3,499,427From LIC against Keyman Insurance Policy of CMD 149,913,250 103,700,000Term Loan from Banks 105,669,002 120,776,598

–––––––––––––––––––––––––– ––––––––––––––––––––––––––257,282,925 227,976,025

========================================================= =========================================================

MAGENTA BLACK

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46

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94,90

7-

118,6

56,31

325

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73

1

,318,0

66-

27,26

8,339

91,38

7,974

93,90

0,947

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666,9

64-

--

666,9

6466

6,964

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666,9

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8,693

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6,992

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--

275,6

86,23

19,4

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0,027

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66,20

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8,494

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31,63

3,813

6,504

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304,6

6222

3,319

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16,30

817

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8164

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128,8

56,47

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2986

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2,225

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5422

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80,40

0,788

24,62

7,209

--

105,0

27,99

79,3

10,79

417

,551,1

66-

26,86

1,960

78,16

6,037

71,08

9,994

Bloc

k ‘D’

Motor

Veh

icles

& O

thers

28,18

1,371

2,241

,116

200,4

0834

7,329

29,87

4,750

15,03

2,853

3,682

,820

66,13

818

,781,8

1111

,092,9

3913

,148,5

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204,5

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8123

,454,6

798,8

86,24

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32,34

0,923

29,61

7,558

33,93

7,541

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6161

,164,8

2069

,266,7

40Bl

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2,586

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1,911

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4,497

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1,911

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-4,4

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49,67

04,4

37,08

790

9,623

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100,0

36,52

77,8

99,32

2 65

1,991

1,001

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5122

4,265

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103,5

68,77

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0,427

327,9

64,82

767

3,144

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685,3

58,21

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SCHEDULE EInvestmentsA UNITS OF MUTUAL FUNDS - QUOTED

Units of LIC Mutual Fund : 45,299,815 199,398,124LICMF Floating Rate Fund - Growth Plan(No. of Units 4,434,721.095, Previous year 19,604,118.381)Units of DWS Mutual Fund : 20,623,680 –Units of DWS Credit Opportunity Cash Fund:(No. of Units 2,053,754.02, Previous year Nil)

–––––––––––––––––––––––––– ––––––––––––––––––––––––––65,923,495 199,398,124

Less: Provision for Dimunation of LIC Mutual fund 219,545 245,767–––––––––––––––––––––––––– ––––––––––––––––––––––––––

65,703,950 199,152,357PRINCIPAL PNB MF FIXED MATURITY 11,116,400 10,000,000

( A ) 76,820,350 209,152,357(NAV of LIC Mutual Fund as on 31.03.2008 is Rs 45,299,815)(NAV of LIC Mutual Fund as on 31.03.2007 is Rs 199,152,357)(NAV of DWS Mutual Fund as on 31.03.2008 is Rs 20,650,086)

B INTER CORPORATE DEPOSITS (UNQUOTED)With Companies ( B ) 56,060,468 14,389,015

C LONG TERM INVESTMENTS IN EQUITY SHARESIn wholly owned subsidiaries (Unquoted)Shares of Bashiron Co. Op. Hsg. Society Ltd 500 500(10 Shares of Rs. 50/- each, Previous year - 10 shares)Shares of Bait-Ush-Sharaf Co. Op. Hsg.Society. Ltd. 750 750(15 Shares of Rs. 50/- each, Previous year - 15 shares)Equity Shares of Indiasound Ltd. 3,778,158 3,778,158(7,500,000 Equity Shares of 0.1 Pence each,Previous year 7,500,000 Equity Shares)

( C ) 3,779,408 3,779,408D FIXED DEPOSIT

With Banks (Including interest accrued) ( D ) 555,949 523,729–––––––––––––––––––––––––– ––––––––––––––––––––––––––

TOTAL (A + B+ C +D) 137,216,175 227,844,509===================== =====================

SCHEDULE FInventoriesRights of Films (Exhibition, Distribution & othercommercial rights including Copyrights) 3,750,000 4,750,000Work In Progress- Under production films 288,357,957 143,304,284- Stock of Materials 359,460 277,647

–––––––––––––––––––––––––– ––––––––––––––––––––––––––292,467,417 148,331,931

===================== =====================

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SCHEDULE GSundry Debtors (Unsecured)a) Debts outstanding for a period exceeding six months

- considered good 37,116,985 32,377,270- considered doubtful 884,147 3,256,002

b) Other Debts Considered good- considered good 146,098,478 88,547,565

–––––––––––––––––––––––––– ––––––––––––––––––––––––––184,099,610 124,180,837

Less: Provision for doubtful debts 884,147 -–––––––––––––––––––––––––– ––––––––––––––––––––––––––

183,215,463 124,180,837===================== =====================

SCHEDULE HCash & Bank balancesCash in Hand 476,899 512,859With Scheduled Banks:In Current Accounts 110,015,530 45,766,505(Includes Rs. 131,078 in EEFC account,Previous year Rs.143,343)Fixed Deposit with Scheduled Banks 26,220,625 26,974,685

–––––––––––––––––––––––––– ––––––––––––––––––––––––––136,713,054 73,254,049

===================== =====================SCHEDULE ILoans & AdvancesAdvances recoverable in cash or in kind or for value 169,236,453 70,944,208to be received(Includes Rs 21,000,000 from a trust in which one of the Directorsis Trustee, Previous year Rs 21,000,000)Advance Taxes and other payments 237,262,999 156,210,759Advances to Staff 1,381,056 929,028Deposits 36,503,146 69,399,255{Including Rs.300,000 to a firm of which Managing Director isproprietor, Previous year Rs.300,000}{Including Rs 500,000 to Managing Director for use of premises,Previous year Rs.500,000}{Including Rs. Nil to a Company in which Managing Directoris Director, Previous year Rs 1,000,000}

–––––––––––––––––––––––––– ––––––––––––––––––––––––––444,383,654 297,483,250

===================== =====================SCHEDULE JCurrent Liabilities & Provisions:Sundry Creditors for goods and services rendered 312,222,261 148,088,224Provision for Taxation 114,633,376 95,790,783Advances towards films and other services 213,080,478 104,920,053Unclaimed Dividend 684,060 349,932

–––––––––––––––––––––––––– –––––––––––––––––––––––––– 640,620,175 349,148,992

===================== =====================

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SCHEDULE KRealisation from Production, Distribution & ExhibitionRecovery from Music - 6,500,000Recovery from New Productions 343,307,936 418,126,850Recovery from old films, Distribution & Exhibition 751,351,665 540,580,795

–––––––––––––––––––––––––– –––––––––––––––––––––––––– 1,094,659,601 965,207,645===================== =====================

SCHEDULE LOther IncomeInterest 19,391,513 39,276,124Other Income 12,428,698 5,542,104Profit on Sale of Assets 443,009 1,593,929Dividend / Income from Units of Mutual Funds 5,360,035 6,843,609

–––––––––––––––––––––––––– ––––––––––––––––––––––––––37,623,255 53,255,766

===================== =====================SCHEDULE MCost of Production, Distribution & ExhibitionCost of Music - 1,904,451Cost of New Productions 245,691,501 395,852,190Expenses of old films, Distribution & Exhibition 640,968,489 331,833,669

–––––––––––––––––––––––––– –––––––––––––––––––––––––– 886,659,990 729,590,310

===================== =====================SCHEDULE NAdministrative and Other Expenses Personnel Expenses 63,625,291 58,569,035(Including Directors Remuneration of Rs 18,616,594Previous year - Rs.13,747,213)Repairs & Maintenance :

Buildings 8,460,907 1,649,034Machinery 1,651,673 1,001,527Others 60,174 4,065,414

Printing & Stationery 2,531,625 3,556,170Telephone & Trunkcalls 6,193,090 5,176,730Insurance 1,870,625 40,864,136Brokerage & Commission 2,601,653 30,000Electricity Charges 11,456,178 9,586,909Rent 15,818,241 3,847,687Travelling Expenses 4,634,014 4,821,626Auditors Remuneration 2,449,145 1,605,954Professional Expenses 33,558,264 19,715,218Legal Expenses 778,008 284,443Interest 27,454,942 21,467,619Bank Charges 270,634 383,700Rates & Taxes 8,526,113 15,484,371Bad Debts -Written off 7,093,612 5,020,677Publicity Expenses 9,745,849 13,101,980Motor Car Expenses 3,297,875 2,831,779Miscellaneous Expenses 15,839,937 18,840,418

–––––––––––––––––––––––––– –––––––––––––––––––––––––– 227,917,850 231,904,427

===================== =====================SCHEDULE OExtraordinary, Non Recurring & Prior Period Exp.Prior Period Expenses 642,173 12,113,181

–––––––––––––––––––––––––– ––––––––––––––––––––––––––642,173 12,113,181

===================== =====================

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SCHEDULE “P”Statement of Significant Accounting Policies and Notes forming Part of Consolidated Accounts1 Significant Accounting Policies

(a) Basis of Preparation of AccountsThe financial statements have been prepared under the historical cost convention, in accordance withAccounting Standards issued by the Institute of Chartered Accountants of India and the provisions of theCompanies Act, 1956, as adopted consistently by the Company. All income and expenditure having a materialbearing on the financial statements are recognised on accrual basis.The preparation of financial statements in conformity with Accounting Standards requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities at the date offinancial statements, and the reported amounts of revenues and expenses during the year.

(b) Principles of consolidationThe consolidated financial statements relate to Mukta Arts Limited (“The Company”) and its subsidiaries. Theconsolidated financial statements have been prepared on the following basis:1. The financial statements of the Company and its subsidiaries have been combined on a line-by-line basis

by adding together the book values of like items of assets, liabilities, income and expenses (other thanthose allocated to particular films & serials), after eliminating intra-group balances and intra-grouptransactions.

2. The consolidated financial statements have been prepared using uniform accounting policies for liketransactions and other events in similar circumstances and are presented to the extent possible, in thesame manner as Company’s separate financial statements.

% voting power % voting power(c) The Subsidiaries considered in the consolidated financial statement are : as on 31.03.08 as on 31.03.07

Connect.1 Limited 99.00 99.00(Formerly known as Mukta Arts International Limited)Whistling Woods International Limited 84.99 84.99Mukta Tele Media Limited 99.92 99.92Red Carpet Films Limited 50.09 -

2 Other Significant Accounting PoliciesThese are set out in the notes to the financial statements under significant of Accounting Policies of the financialstatements of the company and its Subsidiaries.

Current Year Previous Year3 Contingent Liabilities Rupees Rupees

a Claims against the company not acknowledged as Debts- Nil Nilb Guarantees given by Bank on behalf of the company 82,523,213 40,147,120c Letters of Credit given by bank on behalf of the company Nil Nild Estimated amount of contracts remaining to be executed on

Capital Account and not provided for (net of advances)(i) Whistling Woods International Ltd. 11,459,263 348,950e Legal suits filed against the company (having monetary implication) Nil Nilf (i) The Income Tax Assessment of the Company is completed upto

Assessment Year 2005-06. There are certain additions made invarious assessment for which various appeals are pending at firstappellate stage and Tribunal stage (including the appeal decided infavour of Company where in Department is in further appeal).The disputed Tax amount in respect of the above is : 21,879,805 21,119,173

(ii) Survey action was conducted by the Income Tax TDS departmentin the registered office of the Company on 27.08.2003.The assessment of the same was completed during the previous year and demand ofRs 4,957,270 was raised. Aggrieved by the order the Company had filed appeal before theCIT(Appeals). The Company had paid Rs 2,478,636 under protest against the said demand. Duringthe year Company has received Appellate order allowing appeal issues partly. The Company haspreferred appeal before hon. Tribunal against the order of CIT (Appeals). Appeal effect to the CIT(Appeal)’s order is pending. The Directors are of the opinion that at this stage no further provision isrequired for the above pending matters.

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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTSg Department of Service Tax had levied service tax of Rs 2.12 million on sponsorship fees received for various

films treating the Company as an ‘Advertising Agency’. Further the department had issued show cause noticeproposing to levy Rs 2.02 millions service tax on a similar issue.Against the levy of Rs 2.12 million, the Company filed appeal before the Commissioner of Central Excise(Appeals) and subsequently before Honorable Tribunal, claiming that the provisions of Service Tax Act is notapplicable in this matter. The Company had paid Rs 1.24 millions under protest and the same is shown as‘advance recoverable in cash or kind’ since the matter is pending before the CESTAT and based on legalopinion sought, the management is of the opinion that the Company will have no liability on this account andthat no provision is necessary.

h The Company Law Board has passed an order directing Central Government to undertake the investigationunder section 237 of the Companies Act, 1956. The Company aggrieved by the order has moved the BombayHigh Court and obtained stay on order. The hearing in this matter has been completed and order awaited. Themanagement believes that the Order of Company Law Board is defective and management has not voilatedany rules, laws or regulations and there is no cause of concern in this regard.

i The Company has given Corporate guarantee for loans taken by subsidiary Whistling Woods InternationalLimited from Punjab National Bank during the previous year.

j Matters in respect of Whistling Woods International Ltd.Income Taxi) Assessment year 2003-04

There are certain additions made in the assessment and department has raised a demand Rs 2,913,501(including interest Rs. 6651,159), aggrieved by the assessment order, the Company had filed an appealbefore CIT (Appeal) which has been upheld. The Company has preferred an appeal with the Income TaxAppellate Tribunal on the above order.The Company’s management is of the opinion that at this stage noprovision is required.

ii) Assessment year 2004-05Certain additions made in the assessment and a demand of Rs 3,452,771 (including interest Rs 711,905)has been raised. Aggrieved by the assessment order, the Company has filed an appeal before the CIT(Appeal) which has been upheld. The Company has preferred an Appeal with the Income Tax Appellate Tribunalon the above order. The Company’s management is of the opinion that at this stage no provision is required.

iii) Assessment year 2005-06Certain additions are made in the assessment and a demand of Rs 894,495 has been raised. Aggrievedby the assessment order the Company has filed an appeal before the CIT (Appeal). The Company’smanagement is of the opinion that at this stage no provision is required.

Others(1) Public Interest Litigation (‘PIL’) has been filed by Mr. Abdul Hamid Patel & Others alleging that the Maharashtra

Film Stage and Cultural Development Corporation Limited (MFSCDCL) has not followed proper procedure whileallotting the 20 acre land to the Company. The PIL is admitted and pending before the High Court. However, noinjunction/interim relief was granted to the petitioners. In the opinion of the management, the Company has agood chance of wining the case. (2)In the year 1973-74, the Government of Maharashtra (‘GOM’) as per thescheme invited applications of plots for development of film industry infrastructure in film city at Goregaon (East),Mumbai. Many applications were received and M/s PDR Videotronics (India) Private Limited (‘PDR’) was one ofthe applicant The GOM issued a letter to PDR for allotment of one hectare of land Thereafter, MFSCDCL wasformed for development of film city and as per the recommendation of Godbole Committee, the above schemewas scrapped. However, before scrapping of the scheme, PDR filed a suit in the High Court demanding specificperformance of the scheme. The High Court admitted the suit and same is still pending.Meanwhile, PDR took outa notice of motion saying that MFSCDCL is carrying out the activities on the allotted land thereby affecting theirrights. Since the MFSCDCL didn’t argue the High Court granted the injuction in favour of PDR.Thereafter in theyear 2003, the contempt petition was filed by PDR alleging that the construction works of Whistling WoodsInternational Ltd are being carried out on the said allotted land in violation of injuction. However, subsequently thecontempt petition was disposed off by the High Court. PDR took out another Notice of motion on the same issue.The High Court refused to grant any relief to PDR and directed that the notice of motion be clubbed with theoriginal suit of PDR against MFSCDCL and same suit to be expedited. With a view to peacefully resolve the issue,the Company has offered to earmark one hectare of land out of the available free land for a possible assignmentto PDR, in case the final decision of the High Court is in the favour of PDR. In the opinion of the management theCompany has a good chance of wining the case.Arrears of dividend on RCPS not provided Rs 15,123,281 (2007:Rs Nil) Amounts payable on account of property tax disputes Rs 4,405,643 (2007: Rs Nil)

4 Business segment-wise Report (as per the reporting requirements of AS-17) (Rs in millions)Current Year Previous Year

–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––a. Revenue

Software Division 1,094.66 965.21Equipment Division 12.07 2.22Fees from students 97.32 46.36Others 37.62 53.26

––––––––––––––––––––– –––––––––––––––––––––TOTAL 1,241.67 1,067.05

––––––––––––––––––––– –––––––––––––––––––––

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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTSb. Results (Rs in millions)

Current Year Previous Year–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––

Software Division 208.00 235.62Equipment Division (1.99) (18.66)Fees from students 97.32 46.36Others 37.62 6.89

––––––––––––––––––––– –––––––––––––––––––––TOTAL 340.96 270.22

––––––––––––––––––––– –––––––––––––––––––––c. Capital Employed

Software Division 503.31 349.22Equipment Division 151.49 145.88Fees from students 128.69 57.39

5 Related Party Transaction(A) The list of related parties and nature of their relationship is furnished below:

Companies under the same management-Whistling Woods International Ltd. 84.99% - subsidiaryConnect.1 Limited 99% - subsidiaryMukta Tele Media Ltd. 99.92% - subsidiaryRed Carpet Films Ltd 50.09% - subsidiaryMukta Tele Arts Pvt. Ltd. CMD is directorFirms-Mukta Arts Proprietory firm of CMDTrusts-MAL Employees Welfare Trust Executive Director is settler & One of the Directors is TrusteeDirectors of the company-Chairman & Managing Director Mr.Subhash GhaiExecutive Director Mr.Parvez A. FarooquiExecutive Director Mr.Rahul Puri (From 23.10.2007)Non Executive Directors Mr. Anil Harish

Mr. Vijay ChorariaMr. Pradeep Guha

Relatives of Directors-Mr. Ashok Ghai Brother of CMDMr. Siraj Farooqui Brother of Executive DirectorMr. Sameer Farooqui Brother of Executive Director

(B) Transactions with and outstanding balances of related parties are furnished below.

Volume of transactions during the yearKey Relatives Total Outstanding

Associates management of key Balancepersonnel management 31.03.2008Personnel

Rs. Rs. Rs. Rs. Rs.Purchase & Other Services Mukta Arts 60,000 - - 60,000 - Receiving of services Ashok Ghai - - 1,575,000 1,575,000 - Payment of Salaries Rahul Puri - - 617,290 617,290 - Siraj Farooqui - - 1,347,750 1,347,750 - Sameer Farooqui - - 228,000 228,000 - Advances recoverable MAL Employees Welfare Trust - - - - 21,000,000

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Volume of transactions during the yearKey Relatives Total Outstanding

Associates management of key Balancepersonnel management 31.03.2008Personnel

Rs. Rs. Rs. Rs. Rs.Managerial Remuneration Subhash Ghai - 11,590,741 - 11,590,741 - Parvez A. Farooqui - 1,521,257 - 1,521,257 - Rahul Puri 761,317 761,317 Meghna Ghai Puri 1,943,279 1,943,279 Manish R. Goswami - 2,800,000 - 2,800,000 - Deposits for Premises taken on lease or otherwise Mukta Tele Arts Pvt. Ltd. 7,300,000 - - 7,300,000 - Mukta Arts - - - - 300,000 Subhash Ghai - - - - 500,000

Current Previous6 Calculation of Minority Interest Year Year

------------------------------------------ ------------------------------------------a) Whistling Woods International Ltd.

Paid up value of 15.0015% shares 30,003,000 30,003,000Less: 15.0015% of Preliminary Expenses 69,251 92,335

------------------------------------------ ------------------------------------------29,933,749 29,910,665

=================================================== ===================================================b) Mukta Tele Media Ltd.

Paid up value of 0.08% shares 400 400Less: 0.08% of Preliminary Expenses 47 59

------------------------------------------ ------------------------------------------353 341

=================================================== ===================================================c) Connect.1 Limited

(Formerly known as Mukta Arts International Limited)Paid up value of 1% shares 6,000 6,000Less: 1% of Preliminary Expenses 70 105

------------------------------------------ ------------------------------------------5,930 5,895

=================================================== ===================================================d) Red Carpet Films Limited

Paid up value of 49.906% shares 249,530 -Less: 49.906% of Preliminary Expenses 27,748 -

------------------------------------------ ------------------------------------------221,782 -

=================================================== ==================================================Total Minority Interest 30,161,814 29,916,901

7 The consolidated financial statements have been prepared in accordance with the Accounting Standard ( AS-21)“Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India, except for thoseincome and expenses allocated to particular films.







WHISTLING WHISTLING WHISTLING WHISTLING WHISTLING WWWWWOODS INTERNOODS INTERNOODS INTERNOODS INTERNOODS INTERNAAAAATIONTIONTIONTIONTIONAL LIMITEDAL LIMITEDAL LIMITEDAL LIMITEDAL LIMITED

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DIRECTORS’ REPORT

Dear Members ofWhistling Woods International Limited,Your Directors take pleasure in presenting the Seventh Annual Report and the Audited Statement of Accounts for theAccounting Year ended 31st March 2008.OperationsThe Institute operated successfully for the second year in succession. Student population on the campus increased andthe revenues from student fees increased by a 100%. The Institute which was inaugurated on 18th July 2006, held its firstConvocation on 18th July 2008 and 75 successful students were awarded Diplomas. 36 of these students received jobassignments during the campus recruitment where virtually all the top Media Companies were present. The salary rangereceived by the students varied from Rs.300,000 to Rs.770,000 p.a. exceeding the Target.The Gross Block of Fixed Assets of the Company as on 31.03.2008 excluding capital work-in-progress was placed atRs.663 millions as compared to previous year figures of Rs.588 millions, which included Rs.30 millions towards the rightto use of the land as per the agreement with Maharashtra Film, Stage and Cultural Development Corporation Limited, inlieu of which shares of Rs.30 million have been allotted to them. The Capital Work in Progress as at 31st March 2008stood at 5.44 millions.During the year the Company recorded an income of Rs.108.88 million and the total loss after tax is Rs.128.4 million.Being the second year of operation, the Company is still in investment mode and the losses have to be seen as investments.The expenses include a significant amount of Rs.85.7 million as depreciation. The Institute has enrolled two batchesduring the year and is operating at about 60% occupancy. It is expected to reach optimum capacity utilization by the fourthyear.Share CapitalPreference shares worth Rs.200 million have been allotted to Mukta Arts Limited during the year.DirectorsMr. Pradeep Guha and Mr. Manmohan Shetty retire by rotation at the ensuing Annual General Meeting and being eligibleoffer themselves for reappointment.Mr. Bhushan Gagrani who was the Managing Director of the Maharashtra Film State and Cultural Development CorporationLimited was replaced by Mr. Sanjay Sethi. Therefore, Mr. Sanjay Sethi was appointed as Nominee Director of WhistlingWoods International Limited on 27th June, 2008.Auditors' ReportThe Management's explanation to the Auditors' observation in their Report is detailed herein below:i) The auditors have observed that no provision has been made in the financial statements for Income Tax liability for

Assessment Year 2003-04, 2004-05, and 2005-06. Management has capitalized all costs till commencement ofProject. In case interest income is considered, as per Appellate Tribunal Order, then corresponding administrativeexpenses for the relevant period also need to be considered which will leave no taxable income. Management hasgone in appeal as only the income has been considered disallowing capitalization of the same. Management hasbeen advised by its tax consultants of its argument being sound and is confident of winning in appeal, hence noprovision is made.

ii) Fixed Asset Register were prepared and presented for the perusal of the Auditors, however it was observed that thesaid Register needs certain improvements. Accordingly it is proposed to seek the help of a professional agency toprepare Fixed Assets Register to incorporate the improvements suggested.

iii) The Institute is presently working at 60% of its optimum capacity in line with the projections prepared at the time ofcommencement of the Institute. Also the losses include large amounts of depreciation provided. Management ishopeful of wiping the accumulated losses over the next few years as the optimum capacity utilization is achieved.

iv) During the project development stage, the short term funds available with the Company have been utilized partly forproject related capital expenditures.

Directors' Responsibility Statement [Section 217 (2AA)]The Directors confirm that:i) in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with

proper explanation relating to any material departures.ii) the Directors have selected such Accounting Policies and applied them consistently and made judgments and estimates

that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end ofthe Financial Year and the loss of the Company for that period;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

iv) the Annual Accounts are prepared on a going concern basis;

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AuditorsM/s. BSR & Co. Chartered Accountants retire at the ensuing Annual General Meeting and being eligible offer themselvesfor reappointments as the Auditors of the Company. The Directors recommend the appointment of M/s. BSR & Co.,Chartered Accountants as the Auditors of the Company for the year 2008-09.

Statutory DisclosuresParticulars of employees required under Section 217 (2A) of the Companies Act, 1956 and the Companies (Particulars ofemployees) Rules, 1975, as amended, are given in Annexure I.

Particulars regarding Foreign Exchange earnings and outgo required under Section 217(1)(e) of the Companies Act 1956and Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988 are given in Schedule 28(statement of Significant Accounting Policies and Notes forming Part of Accounts) of this report.

The particulars regarding disclosure about Conservation of energy, technology absorption are not applicable to the Company.

AcknowledgementsThe Board of Directors wishes to thank and record its appreciation to the Government of Maharashtra. The MaharashtraFilm State and Cultural Development Corporation Limited, Film Fraternity, Bankers and Media who have extended andare expected to extend their continued support to the Company.

Your Directors thank all Governing Council Members, Advisory Board Members, employees and faculty members of theCompany for their dedicated services to the Company.

On Behalf of the Board of Directors

Place: Mumbai Subhash GhaiDate: 22nd July, 2008 Chairman

ANNEXURE TO DIRECTORS' REPORTAnnexure-I

Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees)Rules, 1975 and forming part of the Director's Report:

Name Designation Qualification Age Date of Experience Gross PreviousJoining Remu- Employment

neration(Rs.)

Kurt Inderbitzin Dean M.B.A (Fin)- 44 1.02.2006 20 years 59,40,420 Professor atChicago, years University ofM.F.A - La Verne(Master in FineArts-NewOrleans)

Notes:

Remuneration includes salary and other allowances.


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AUDITORS’ REPORTTo the Members ofWhistling Woods International Limited

We have audited the attached Balance Sheet of Whistling Woods International Limited ('the Company') as at 31 March 2008and the related Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date, annexedthereto. These financial statements are the responsibility of the Company's management. Our responsibility is to expressan opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

1 As required by the Companies (Auditor's Report) Order, 2003 ('the Order'), issued by the Central Government of Indiain terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said Order.

2 As more fully explained in Schedule 21, the Company has disputed the demand from income tax authorities aggregatingto Rs 7.26 million (including interest Rs 1.55 million) for the financial years ended 31 March 2003 (assessment year2003-04), 31 March 2004 (assessment year 2004-05) and 31 March 2005 (assessment year 2005-06) and the matteris subjudice. The relevant liability for the subsequent financial years, if any has not yet been crystallised. No provisionhas been made in the financial statements for such liabilities. The impact of non provision on the loss for the year andnet assets position as at year end is presently not ascertainable pending final adjudication.

3 Further to our comments in the Annexure referred to above, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthe purposes of our audit;

b. in our opinion, proper books of account as required by law has been kept by the Company so far as appears from ourexamination of those books;

c. the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report are in agreement withthe books of account;

d. in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report complywith the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ('the Act');

e on the basis of written representations received from the directors of the Company as at 31 March 2008, and taken onrecord by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2008 from beingappointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and

f. in our opinion, except for the effects of any adjustment that may arise from the matters stated in paragraph 2 above,and to the best of our information and according to the explanations given to us, the said financial statements give theinformation required by the Companies Act, 1956 in the manner so required, and give a true and fair view in conformitywith the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2008;

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; and

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

For BSR & Co.Chartered Accountants

Place : Mumbai Akeel MasterDated : 22nd July 2008 Partner


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Annexure to Auditors' Report- 31 March 2008(Referred to in our report of even date)

i) (a) The Company has maintained proper records showing full particulars including quantitative details and situationof fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets areverified in a phased manner over a period of two years. In our opinion, this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme,certain fixed assets were physically verified during the period and no material discrepancies were noticed on suchverification.

(c) There is no disposal of fixed assets during the year. Thus, paragraph 4 (i) (c) of the Order is not applicable.

ii) The Company is a service company, primarily rendering training to the students. Accordingly it does not hold anyphysical inventories. Thus, paragraph 4(ii) of the Order is not applicable.

iii) (a) The Company has not granted any loans to companies, firms or other parties covered in the register maintainedunder Section 301 of the Act.

(b) The Company has taken loans from a company covered in register maintained under Section 301 of the Act. Themaximum amount outstanding during the year was Rs 260 million and the year end balance of such loans was Rs176.5 million.

(c) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from a companylisted in the register maintained under Section 301 of the Act are not prima facie prejudicial to the interest of theCompany.

(d) In case of loans taken from a company listed in the register maintained under Section 301 of the Act, no specificterms of repayment has been specified and repayments are being made regularly on demand.

iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation thatreceipts/rendering of certain services are for the Company's specialized requirements and suitable alternative sourcesare not available to obtain comparative quotations, there is an adequate internal control system commensurate with thesize of the Company and the nature of its business with regards to sale of services. However, controls over purchaseand recording of fixed assets need to be strengthened. The Company's nature of operations does not involve purchaseof inventory and sale of goods.

v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts orarrangements referred to in Section 301 of the Act have been entered in the register required to be maintainedunder that Section.

(b) In our opinion and according to the information and explanations given to us, except for purchases of certainservices which are for the Company's specialised requirements and for which suitable alternative sources are notavailable to obtain comparable quotations, the transactions made in pursuance of contracts and arrangementsreferred to in (a) above and exceeding the value of Rs 5 Lakhs with a party during the year have been made atprices which are reasonable having regard to the prevalent market prices at the relevant time. However, on thebasis of information and explanations provided, the same appear reasonable.

vi) The Company has not accepted any deposit from the public.

vii) In our opinion, the Company has an internal audit system commensurate with the size and the nature of its business.

viii) The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Act for anyof the services rendered by the Company.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of theCompany, amounts deducted /accrued in the books of accounts in respect of undisputed statutory dues includingProvident fund, Income tax, Sales tax/ VAT, Service tax, Custom duty and other material statutory dues havebeen generally regularly deposited by the Company with appropriate authorities. As explained to us, the Companydid not have any dues on account of Investor Education and Protection fund, Employees' State Insurance, Exciseduty and Wealth tax.

There were no dues on account of Cess under Section 441A of the Act since the date from which the aforementionedSection comes into force has not been notified by the Central Government.

According to the information and explanations given to us, no undisputed amounts payable in respect of Providentfund, Income tax, Sales tax/ VAT, Service tax, Custom duty and other material statutory dues were in arrears asat 31 March 2008 for a period of more than six months from the date they became payable.


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(b) According to the information and explanations given to us, the following dues of income-tax have not been depositedby the Company on account of disputes:

Name of Nature of Amount Period to which Forum where disputethe Statute the Dues (including the amount relates is pending

interest) (Assessment Year)

Income tax Act, Assessment dues 974,691 2003-04 Income Tax Appellate1961 Tribunal

1,133,360 2004-05 Income Tax AppellateTribunal

477,382 2005-06 CIT Appellate

x) The Company has accumulated losses at the end of the financial year which is exceeding 50% of its net worth. TheCompany has incurred cash losses in the current financial year and the immediately preceding financial year.

xi) In our opinion and according to the information and explanation given to us, the Company has not defaulted in repaymentof dues to its banker. The Company did not have any outstanding debentures or dues to any financial institutions duringthe year.

xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debenturesor other securities.

xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or nidhi/mutual benefit fund/ society.

xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities,debentures and other investments.

xv) According to the information and explanations given to us, the Company has not given any guarantees for loans takenby others from banks or financial institutions.

xvi) In our opinion and according to the information and explanations given to us, the term loans taken by the Companyhave been applied for the purpose for which they are raised.

xvii) According and information and explanations given to us and on overall examination of the balance sheet of the Company,we report that the Company has used funds raised on short term basis for long term investments. The company hasused short term credit from the suppliers aggregating to Rs 101.16 million to fund fixed assets and operating loss.

xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the registermaintained under Section 301 of the act.

xix) The Company did not have any outstanding debentures during the year

xx) The Company has not raised any money by public issues during the year.

xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reportedduring the course of our audit.

For BSR & Co.Chartered Accountants

Place : Mumbai Akeel MasterDated : 22nd July 2008 Partner


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BALANCE SHEET AS AT 31ST MARCH, 2008(Currency: Indian rupees)

Schedule 2008 2007-------------------------------------- --------------------------------------

SOURCE OF FUNDSShareholders’ fundsShare capital 3 400,000,000 200,000,000Loan fundsSecured loans 4 106,370,375 122,153,843Unsecured loans 5 176,500,000 250,000,000

-------------------------------------- --------------------------------------682,870,375 572,153,843

====================================== ======================================APPLICATION OF FUNDSFixed assets 6Gross block 658,378,264 588,180,238Less: Accumulated depreciation /amortisation 148,778,247 63,057,455

-------------------------------------- --------------------------------------Net block 509,600,017 525,122,783Capital work-in-progress (including capital advances) 5,444,259 -

-------------------------------------- --------------------------------------515,044,276 525,122,783

Deferred tax asset (net) 7 - -Current assets, loans and advancesSundry debtors 8 10,617,442 7,755,901Cash and bank balances 9 5,879,770 4,708,857Loans and advances 10 17,977,968 18,935,849

-------------------------------------- --------------------------------------34,475,180 31,400,606

Less: Current liabilities and provisionsCurrent liabilities 11 131,857,284 122,458,673Provisions 12 3,772,798 2,654,303

-------------------------------------- --------------------------------------Net current assets (101,154,902) (93,712,369)Miscellaneous expenditure 13 461,627 615,504(to the extent not written-off or adjusted)Profit and loss account 268,519,375 140,127,925

-------------------------------------- --------------------------------------682,870,375 572,153,842

====================================== ======================================Significant accounting policies 2Notes to the accounts 20-33

The schedules referred to above form an integral part of this Balance Sheet.


For BSR & CO. SUBHASH GHAI MEGHNA GHAI PURIChartered Accountants Chairman Director

AKEEL MASTER MANMOHAN SHETTY PRADEEP GUHAPartner Director DirectorMembership No: 046768

SANJAY SETHI DISHA BALCHANDANIDirector Company Secretary

Place : MumbaiDate : 22nd July 2008


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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008(Currency: Indian rupees)

Schedule 2008 2007============================================ ======================================

IncomeFees from students 14 97,322,656 46,363,449Other income 15 11,559,988 10,819,020

-------------------------------------------------- --------------------------------------------------108,882,644 57,182,469

========================= =========================ExpenditurePersonnel costs 16 25,877,933 25,382,484Operating and administrative expenses 17 97,198,292 77,237,962Depreciation /amortisation 6 85,720,792 61,221,498Finance charges 18 27,292,760 21,225,417

-------------------------------------------------- --------------------------------------------------236,089,777 185,067,361

========================= =========================(Loss) before tax and prior period expenses (127,207,133) (127,884,892)Prior period expenses 19 577,317 11,768,033

-------------------------------------------------- --------------------------------------------------(Loss ) before tax (127,784,450) (139,652,925)Less: Provision for taxFringe benefits tax 607,000 475,000

-------------------------------------------------- --------------------------------------------------(Loss) after tax (128,391,450) (140,127,925)Accumulated balance brought forward (140,127,925) –

-------------------------------------------------- --------------------------------------------------Balance carried forward to balance sheet (268,519,375) (140,127,925)

========================= =========================Earnings per share of face value of Rupees 1,000 each 31 (641.96) (700.64)Significant accounting policies 2Notes to the accounts 20-33

The schedules referred to above form an integral part of this Profit and Loss Account.






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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008(Currency: Indian rupees)

Schedule 2008 2007-------------------------------------------------- --------------------------------------------------

Cash flows from Operating activitiesNet loss before tax (127,207,133) (127,884,892)Adjustments:Prior period expenses (577,317) (11,768,033)Depreciation/amortisation for the year 85,720,792 61,221,498preliminary expenses written off 153,877 153,877Interest and financial expenses 27,292,760 21,225,417Provision for doubtful debts 884,147 -Interest income (38,367) (139,433)

-------------------------------------------------- --------------------------------------------------Operating profit before working capital changes (13,771,239) (57,191,566)

(Increase) in sundry debtors (3,745,689) (7,755,900)(Increase) in loans and advances 3,295,382 (2,043,087)Increase in current liabilities 12,304,026 95,207,962Increase in provisions 511,495 2,459,203

-------------------------------------------------- --------------------------------------------------Cash generated from operations (1,406,025) 30,676,612Income tax paid (2,337,501) (2,674,822)

-------------------------------------------------- --------------------------------------------------Net cash generated from operating activities (3,743,526) 28,001,790

Cash flows from Investing Activities

Purchase of fixed assets (74,958,206) (236,924,191)Interest received 38,367 139,433

-------------------------------------------------- --------------------------------------------------Net cash generated / (used) in investing activities (74,919,839) (236,784,758)

Cash flows from Financing Activities

Capital inflow 200,000,000 -Secured loans received - 121,721,148Unsecured loans received 105,588,809 182,000,000Secured loans repaid (15,783,467) (495,263)Unsecured loans repaid (179,088,809) (74,500,000)Interest and financial expenses paid (30,882,254) (15,477,122)

-------------------------------------------------- --------------------------------------------------Net cash generated from financing activities 79,834,279 213,248,763

-------------------------------------------------- --------------------------------------------------Net increase in cash and cash equivalents 1,170,913 4,465,795

Cash and cash equivalents at the beginning of the year 4,708,857 243,062-------------------------------------------------- --------------------------------------------------

Cash and cash equivalents at the end of the year 5,879,770 4,708,857========================= =========================

Th Company follows indirect method as prescribed in AS-3 Cash Flow Statements.







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1. Background

Whistling Woods International Limited (‘the Company’) was incorporated in 2001 and is a subsidiary of Mukta ArtsLimited (‘MAL’ or ‘the holding company’). MAL holds 85% of the equity share capital of the Company. The Companyis an education, research and training institute and imparts training in various skills related to films, television andmedia industry. The Company commenced commercial operations during the previous year.

2. Summary of significant accounting policies

2.1 Basis of preparation of financial statements

The financial statements have been prepared and presented under the historical cost convention, on the accrualbasis of accounting and in accordance with the provisions of the Companies Act, 1956 and the accounting principlesgenerally accepted in India and comply with the accounting standards prescribed in the Companies (AccountingStandards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee onAccounting Standards, to the extent applicable.

2.2 Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles (‘GAAP’) inIndia requires management to make estimates and assumptions that affect the reported amount of assets andliabilities and disclosure of contingent liabilities as of the date of the financial statements, and the reported amountof revenue and expenses during the reporting period. The estimates and assumptions used in the accompanyingfinancial statements are based upon management’s evaluation of the relevant facts and circumstances as of thedate of the financial statements. Actual results may differ from the estimates used in preparing the accompanyingfinancial statements. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.3 Going concern

The Company has accumulated losses exceeding 50% of its equity as at 31 March 2008. However, these financialstatements have been prepared on a going concern basis as the Company’s management believes that, based onthe projected operating plans and the operating and financial support from its principal shareholder, the Companywill be able to operate as a going concern in the foreseeable future. These financial statements do not include anyadjustments relating to the recoverability and classification of the carrying amounts of assets or to the amounts andclassification of liabilities that may be necessary if the entity is unable to continue as a going concern.

2.4 Fixed assets and depreciation

Tangible assets

Tangible fixed assets are carried at cost of acquisition or construction or revalued amount less accumulated depreciationand impairment loss, if any. Cost includes inward freight, duties, taxes, and expenses incidental to acquisition/construction of the fixed assets up to the time the assets are ready for intended use.

Intangible assets

Intangible assets comprise of intellectual property rights (‘IPR’) in course curriculum, diploma film rights and libraryof books.

IPR in course curriculum consists of expenses incurred on internal development of course curriculum. The coursewarehas been submitted to Registrar of Copyrights for registration

Diploma film rights comprise of cost of production of the film. Cost is ascertained on specific identification basis.

Depreciation /amortisation

Depreciation on fixed assets is provided pro-rata to the period of use, using the written down value method (‘WDV’)at rates prescribed in Schedule XIV to the Companies Act, 1956.

Tangible assets individually costing up to Rs 5,000 are depreciated fully in the year of capitalisation.

The amortisation on intangible assets is provided pro-rata on straight line basis over the useful life of intangibles asmentioned below.

Intangible assets Estimated useful life

Intellectual property rights (course curriculum) 5 years

Diploma film rights (refer Note 1)

Library (books and copyrights) 1 year

Note 1: The individual film forecast method is used to amortise the cost of diploma films. Under this method, costsare amortized in the proportion that gross revenues realized bear to management’s estimate of the total grossrevenues expected to be received. If estimates of the total revenues and other events or changes in circumstancesindicate that the realisable value of a right is less than its unamortised cost, a loss is recognised for the excess ofunamortized cost over the film right’s realisable value

SCHEDULES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2008(Currency: Indian rupees)

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2. Summary of significant accounting policies (Continued)2.5 Impairment

In accordance with AS 28 on ‘Impairment of Assets’, where there is an indication of impairment of the Company’sassets, the carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whetherthere is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unitto which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment lossis recognised whenever the carrying amount of an asset or the cash generating unit exceeds its recoverable amount.Impairment loss is recognised in the profit and loss account or against revaluation surplus, where applicable.

Value in use is the present value of estimated future cash flows expected to arise from the continuing use of theassets and from their disposal at the end of their useful life.

2.6 Retirement benefits(a) Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-termemployee benefits. These benefits include compensated absences such as paid annual leave and sickness leave.The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services renderedby employees is recognized during the period.

(b) Post-employment benefits

Contributions payable to Government administered provident fund scheme, which is a defined contribution scheme,are charged to the profit and loss account as incurred.

The Company provides gratuity and leave encashment to its employees on retirement/ separation. Post employmentand other long term employee benefits are recognized as an expense in the profit and loss account for the year inwhich the employee has rendered services. The expense is recognized at the present value of the amount payabledetermined using actuarial valuation carried out by an independent actuary at the balance sheet date using ProjectedUnit Credit Method.

2.7 Revenue recognitionRevenue from tuition fee is recognized over the period of the course. Revenue from acceptance and admission feesis recognized at the time of acceptance/admission of the student. Revenue from sale of prospectus and othermaterials/goods is recognized on delivery to the student.

Facilitation charges include revenue from provision of hostel and other related facilities to the students and arerecognized on a time proportionate basis.

Revenue from hire of premises and equipments is recognized over the period of hire.

Interest income is recognized on a time proportionate basis.

2.8 Foreign currency transactionsTransactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of thetransaction. Exchange differences arising on foreign exchange transactions settled during the period are recognisedin the profit and loss account of the period.

Monetary assets and liabilities in foreign currency which are outstanding as at the period-end are translated at theperiod-end at the closing exchange rate and the resultant exchange differences are recognised in the profit and lossaccount. Non monetary foreign currency items are carried at cost adjusted in the carrying amount of the related fixedasset.

2.9 Taxes on incomeIncome tax expense comprises of current tax expense, fringe benefits tax and deferred tax expense or credit.

Current taxes

Provision for current income-tax is recognized in accordance with the provisions of the Income-tax Act, 1961 and ismade annually based on the tax liability after taking credit for tax allowance and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differencesthat result between the profits offered for income taxes and the profits as per the financial statements. Deferred taxassets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantivelyenacted at the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonablecertainty that the assets can be realized in the future; however, where there is unabsorbed depreciation or carriedforward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of recognition ofsuch assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at eachbalance sheet date.



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2. Summary of significant accounting policies (Continued)

Fringe benefits tax

Provision for Fringe Benefits Tax is made on the basis of the applicable rates on the taxable value of eligibleexpenses of the Company as prescribed under the Income-tax Act, 1961.

2.10 Provisions and contingencies

Provision is recognized in the balance sheet when the Company has a present obligation as a result of a past event,and it is probable that an outflow of economic benefits will be required to settle the obligation and reliable estimationcan be made of the amount required to settle the obligation. Contingent liabilities arising from claims, litigation,assessment, fines, penalties etc. are disclosed when there is a possible obligation or a present obligation as a resultof a past event where it is not probable that an outflow of economic benefits will be required to settle the obligation,and the amount can be reasonably estimated. When there is a possible obligation or a present obligation in respectof which the likelihood of outflow of resources is remote, no provision or disclosure is made.

2.11 Earnings per share (‘EPS’)

Basic EPS is computed using the weighted average number of equity shares outstanding during the period. DilutedEPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstandingduring the period except where the results would be anti dilutive.

2.12 Borrowing costs

Borrowing costs directly attributable to the acquisition / construction of qualifying assets are capitalised as part of thecost of those assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.

2.13 Operating lease

Lease payments under operating lease are recognised as an expense in the statement of profit and loss account ona straight line basis over the lease term.

2.14 Amortisation of miscellaneous expenditure

Preliminary expenses and expenses on underwriting or subscription of shares are amortised on a straight line-basisover a period of ten years.


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SCHEDULES TO THE FINANCIAL STATEMENTS AS AT 31 MARCH 2008 (Continued)(Currency: Indian rupees)

2008 2007-------------------------------------------------- --------------------------------------------------

3. Share capitalAuthorised 200,000 (2007: 200,000) equity shares of Rupees 1,000 each 200,000,000 200,000,000 200,000 (2007: 200,000) 8% redeemable cumulative 200,000,000 200,000,000preference shares of Rupees 1,000 each

-------------------------------------------------- --------------------------------------------------400,000,000 400,000,000

========================= =========================Issued, subscribed and paid-up 200,000 (2007: 200,000) equity shares ofRupees 1,000 each, fully paid-up 200,000,000 200,000,000200,000 (2007: Nil) 8% redemeable cumulativepreference shares of Rupees 1,000 each,fully paid-up 200,000,000 -

-------------------------------------------------- --------------------------------------------------400,000,000 200,000,000

========================= =========================Of the above:(a) 30,000 (2007: 30,000) equity shares have been alloted as fully paid-up, pursuant to a contract without payment

being received in cash.(b) 169,997 (2007: 169,997) equity shares are held by Mukta Arts Limited, the holding company.(c ) During the year, 200,000, 8% redeemable cumulative preference shares (‘RCPS’) were issued to Mukta Arts

Limited, the holding company.These preference shares may be redeemed at any time on or after 21 June 2012and on or prior to 21 June 2027. Also refer Schedule 23.

4. Secured loansTerm loan from bank 105,669,002 120,776,598( Secured against hypothecation of building and machinery,the term loans are repayable in 16 quarterly installments,commencing on 7 December 2007. The amount repayablewithin one year is Rs 15 million (2007: Rs Nil). Also includesinterest accrued and due Rs 1,025,557(2007: Rs 1,123,838)Vehicle loan 701,373 1,377,245(Secured against hypothecation of related vehicles)

-------------------------------------------------- --------------------------------------------------106,370,375 122,153,843

========================= =========================5. Unsecured loans

Borrowings from holding company - Mukta Arts Limited 176,500,000 250,000,000(No terms of repayment have been specified)

-------------------------------------------------- --------------------------------------------------176,500,000 250,000,000

========================= =========================


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6. Fixed assets

Description Gross block Accumulated Net blockdepreciation /amortisation

As at Additions As at As at Charge for As at As at As at1 April 2007 during 31 March 1 April 2007 the year 31 March 31 March 31 March

the year ** 2008 2008 2008 2007Tangible assetsLeasehold land # 30,000,000 - 30,000,000 - - - 30,000,000 30,000,000Ownership premises 4,064,607 - 4,064,607 700,385 168,211 868,596 3,196,011 3,364,222Institute building * 268,693,232 6,992,999 275,686,231 9,459,474 13,160,553 22,620,027 253,066,204 259,233,758Temporary shed 666,964 - 666,964 666,964 - 666,964 - -Plant and machinery 40,195,027 5,701,163 45,896,190 4,258,683 5,769,488 10,028,171 35,868,019 37,058,532Motor vehicles 2,463,119 1,273,968 3,737,087 616,592 660,791 1,277,383 2,459,704 1,846,527Furniture and fixtures 33,472,619 1,594,906 35,067,525 10,373,835 6,486,264 16,860,099 18,207,426 23,098,784Office equipment 4,874,045 32,654 4,906,699 707,019 435,632 1,142,651 3,764,048 3,044,838Electrical installation 24,567,099 657,395 25,224,494 2,225,823 3,181,617 5,407,440 19,817,054 22,341,276Cinematographyequipments 80,400,788 24,627,209 105,027,997 9,310,794 17,551,166 26,861,960 78,166,037 71,089,994Computers andaccessories andIT equipment 90,649,568 27,406,671 118,056,239 21,041,803 35,508,590 56,550,393 61,505,845 69,607,765Intangible assetsIntellectual propertyrights (Coursecurriculum) 5,546,359 - 5,546,359 1,109,272 887,417 1,996,689 3,549,670 4,437,087Library of books 2,586,811 1,911,063 4,497,874 2,586,811 1,911,063 4,497,874 - -Total 588,180,238 70,198,026 658,378,264 63,057,455 85,720,792 148,778,247 509,600,017 525,122,7832007 44,250,076 543,930,162 588,180,238 1,835,957 61,221,498 63,057,455 525,122,783Capital work-in-progress (including capital advances) 5,444,259 -

Note:# The Company has perpetual right to use the land,and hence the same is not amortised.* The shares of Bait Ush Sharaf C.H.S valuing 250 have been capitalised.** Interest capitalised during the year Rs Nil (2007: Rs 5,124,313).


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2008 2007-------------------------------------------------- --------------------------------------------------

7 Deferred tax assets(net)Deferred tax liabilitiesExcess of depreciation allowable under income-tax law overdepreciation provided in accounts 15,069,568 10,241,418Deferred tax assetsSection 43B Disallowances 1,231,435 667,883Carry forward losses as per Income tax Act,1961 13,838,133 9,573,535

-------------------------------------------------- -------------------------------------------------- - -

========================= =========================Deferred tax assets on account of carry forward losses hasbeen recognised only to the extent of the deferred tax liability,as this amount is considered to be virtually certain of realisation

8 Sundry debtorsUnsecuredDebts outstanding for a period exceeding six months- considered good 1,717,096 2,255,375- considered doubtful 884,147 -Other debts, considered good 8,900,346 5,500,525

-------------------------------------------------- --------------------------------------------------11,501,589 7,755,901

Less: Provision for doubtful debts 884,147 --------------------------------------------------- --------------------------------------------------

10,617,442 7,755,901========================= =========================

9 Cash and bank balancesCash in hand 39,435 49,171Balances with scheduled banks- in current account 5,815,335 2,259,686- in term deposit account 25,000 2,400,000

-------------------------------------------------- --------------------------------------------------5,879,770 4,708,857

========================= =========================10 Loans and advances

(Unsecured and considered good)Advances recoverable in cash or in kind or for value to be received 6,015,896 2,965,042Deposits 5,102,173 11,448,410Advance tax and tax deducted at source 6,252,899 3,914,332Advance fringe benefits tax 607,000 608,065

-------------------------------------------------- --------------------------------------------------17,977,968 18,935,849

========================= =========================Amounts recoverable from companies under the same management :Name of the Company: Mukta Arts LimitedAdvances recoverable (considered good) include Rs Nil (2007: Rs Nil).Maximum amount due at any time during the year Rs 993,160 (2007: Rs 91,342).



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2008 2007-------------------------------------------------- --------------------------------------------------

11 Current liabilitiesSundry creditors for goods and services (refer Schedule 27) 47,372,730 45,227,001Unearned revenue 39,932,068 28,196,168Deposit received 30,000,000 30,000,000Interest accrued but not due 10,321,697 13,911,191Other liabilities 4,230,789 5,124,313

-------------------------------------------------- -------------------------------------------------- 131,857,284 122,458,673

========================= =========================12 Provisions

Fringe benefits tax 1,277,100 670,100Gratuity 1,431,131 1,296,394Leave encashment 1,064,567 687,809

-------------------------------------------------- --------------------------------------------------3,772,798 2,654,303

========================= =========================

13 Miscellaneous expenditure 461,627 615,504(to the extent not written off or adjusted)

-------------------------------------------------- --------------------------------------------------461,627 615,504

========================= =========================14 Fees from students

Admission/acceptance fees 15,000,000 13,454,047Tuition fees 82,016,317 32,297,500Sale of prospectus/application forms 306,339 611,902

-------------------------------------------------- --------------------------------------------------97,322,656 46,363,449

========================= =========================15 Other income

Interest (Tax deducted at source Rs 5,673 (2007: Rs 19,443)) 38,367 139,433Sale of laptops and other accessories to students - 3,353,688Facilitation charges recovered from students 6,776,535 7,063,705Hire charges 3,907,996 -Miscellaneous income 837,090 262,194

-------------------------------------------------- -------------------------------------------------- 11,559,988 10,819,020

========================= =========================16 Personnel costs

Salaries, bonus and allowances 24,274,094 23,045,630Contributions to provident and other funds 519,474 312,919Staff welfare expenses 1,084,364 2,023,935

-------------------------------------------------- --------------------------------------------------25,877,933 25,382,484

========================= =========================


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2008 2007-------------------------------------------------- --------------------------------------------------

17 Operating and administrative expensesRent 13,650,400 9,318,000Travelling and conveyance 3,154,380 2,613,159Telephone 4,057,674 2,991,149Electricity 10,712,841 8,840,847Repairs and maintenance-Building 5,838,760 3,830,918Printing and stationery 1,533,010 2,378,812Legal and professional fees 29,277,553 15,541,710Insurance 561,873 466,823Courier and postage 77,654 314,258Advertisement and publicity 7,967,215 12,682,569Laptop and other course material purchased or written off 584,500 3,353,688Motor car expenses 878,654 563,713Auditors’ remuneration (refer Schedule 30) 413,215 300,000Rates and taxes 5,026,422 5,619,110Security charges 4,476,296 3,526,762Sets/ student practicals 2,268,293 981,144Miscellaneous expenses 1,250,284 3,761,425Preliminary expenses written-off 153,877 153,877Scholarships awards 1,428,125 -Bad debts written off 2,337,757 -Provision for doubtful debts 884,147Advances given written off 564,500 -Prizes 100,861 -

-------------------------------------------------- --------------------------------------------------97,198,292 77,237,962

========================= =========================

18 Finance chargesInterestOn term loans from banks 13,808,923 6,365,684On term loans from others 13,346,838 17,936,038

-------------------------------------------------- --------------------------------------------------27,155,761 24,301,722

On other loans for vehicles 93,724 121,441Less: Capitalised - (5,141,588)

-------------------------------------------------- --------------------------------------------------27,249,485 19,281,575

Financial expensesLoan processing charges and other bank charges 43,275 1,943,842

-------------------------------------------------- --------------------------------------------------27,292,760 21,225,417

========================= =========================19 Prior period expenses

Personnel expenses - 572,280Travelling expenses - 3,276,722Advertisement expenses - 5,439,861Preliminary expenses written-off - 769,385Security expenses 49,531Professional fees 488,246 -Miscellaneous expenses 39,540 1,709,785

-------------------------------------------------- --------------------------------------------------577,317 11,768,033

========================= =========================


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20. Capital commitmentsThe estimated amount of contracts remaining to be executed on capital account and not provided for at 31 March2008 aggregate Rs 11,459,263 ( 2007: Rs 348,950).

21. ContingenciesIncome tax

· Assessment year 2003-04There are certain additions made in the assessment and department has raised a demand Rs 2,913,501 (includinginterest Rs 651,159), aggrieved by the assessment order, the Company had filed an appeal before CIT (Appeal)which has been upheld. The Company has preferred an appeal with the Income Tax Appellate Tribunal on theabove order. The Company’s management is of the opinion that at this stage no provision is required.

· Assessment year 2004-05Certain additions made in the assessment and a demand of Rs 3,452,771 (including interest Rs 711,905) has beenraised. Aggrieved by the assessment order, the Company has filed an appeal before the CIT (Appeal) which hasbeen upheld. The Company has preferred an appeal with the Income Tax Appellate Tribunal on the above order.The Company’s management is of the opinion that at this stage no provision is required.

· Assessment year 2005-06Certain additions are made in the assessment and a demand of Rs 894,495 has been raised. Aggrieved by theassessment order, the Company has filed an appeal before the CIT (Appeal). The Company’s management is of theopinion that at this stage no provision is required.OthersPublic Interest Litigation (‘PIL’) has been filed by Mr. Abdul Hamid Patel & Others alleging that the Maharashtra FilmStage and Cultural Development Corporation Limited (MFSCDCL) has not followed proper procedure while allottingthe 20 acre land to the Company. The PIL is admitted and pending before the High Court. However, no injunction/interim relief was granted to the petitioners. In the opinion of the management, the Company has a good chance ofwining the case.In the year 1973-74, the Government of Maharashtra (‘GOM’) as per the scheme invited applications of plots fordevelopment of film industry infrastructure in film city at Goregaon (East), Mumbai. Many applications were receivedand M/s PDR Videotronics (India) Private Limited (‘PDR’) was one of the applicant The GOM issued a letter to PDRfor allotment of one hectare of land.Thereafter, MFSCDCL was formed for development of film city and as per the recommendation of Godbole Committee,the above scheme was scrapped. However, before scrapping of the scheme, PDR filed a suit in the High Courtdemanding specific performance of the scheme. The High Court admitted the suit and same is still pending.Meanwhile, PDR took out a notice of motion saying that MFSCDCL is carrying out the activities on the allotted landthereby affecting their rights. Since the MFSCDCL didn’t argue the High Court granted the injuction in favour ofPDR.Thereafter in the year 2003, the contempt petition was filed by PDR alleging that the construction works of WhistlingWoods International Ltd are being carried out on the said allotted land in violation of injuction. However, subsequentlythe contempt petition was disposed off by the High Court. PDR took out another Notice of motion on the same issue.The High Court refused to grant any relief to PDR and directed that the notice of motion be clubbed with the originalsuit of PDR against MFSCDCL and same suit to be expedited.With a view to peacefully resolve the issue, the Company has offered to earmark one hectare of land out of theavailable free land for a possible assignment to PDR, in case the final decision of the High Court is in the favour ofPDR. In the opinion of the management the Company has a good chance of wining the case.Arrears of dividend on RCPS not provided Rs 15,123,281 (2007: Rs Nil)Amounts payable on account of property tax disputes Rs 4,405,643 (2007: Rs Nil)

22 Managerial remuneration

2008 2007-------------------------------------------------- --------------------------------------------------

Salaries, bonus and allowances 1,564,000 1,000,000

Contribution to provident and other fund 160,200 108,000

Perquisites 219,079 119,825-------------------------------------------------- --------------------------------------------------

Total 1,943,279 1,227,825========================= =========================

Computation of net profits in accordance with the relevant provisions of the Companies Act, 1956 has not beendisclosed as no commission is payable to the Director. The amount does not include gratuity and leave encashmentbenefits, which are actuarially determined on an overall basis for the Company and individual information in respectof the Director is not available.

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23 Pursuant to the Extra Ordinary General Meeting of the members of the Company held on 24 February 2007, themembers had authorized issuance of 200,000 8% Redeemable Cumulative Preference Shares of Rs.1,000 each(‘RCPS’) to the persons who at 4 April 2007 (date of offer) are the holders of the equity shares of the Company inproportion of 1 RCPS for 1 equity share. Consequently, the Board of Directors have passed a resolution in themeeting dated 21 June 2007 to allot all the RCPS to MAL as other shareholders had denied the offer. Accordingly,the existing term loan from MAL, aggregating to Rs 200,000,000 was converted to preference share capital. Thesepreference shares are redeemable at any time on or after 21 June 2012 but before 21 June 2027.

24 Related party disclosures

(A) Related parties and their relationship:

Sr. Category of related parties NamesNo

I Related parties where control exists

Holding company Mukta Arts Limited

II Related parties with whom transactions have Enterprise over which key managerial person alongtaken place during the year with the relatives exercises significant influence

Mukta Tele Arts Private Limited.

III Key managerial personnel Mrs. Meghna Ghai Puri (Whole time director)

(B) Transactions with related partiesParticulars Holding Enterprise Key Total

Company over which managerialkey managerial personnel

person alongwith the relatives

exercisessignificant

influence

Loan received 105,588,809 - - 105,588,809(182,000,000) (-) (-) (182,000,000)

Repayment of loan 179,088,809 - - 179,088,809(74,500,000) (-) (-) (74,500,000)

Advance received/ 1,340,884 - - 1,340,884reimbursement of exp (902,000) (-) (-) (902,000)

Payment of interest on loan 13,345,872 - 13,345,872(17,936,038) (-) (17,936,038)

Rent expenses - -(91,342) (91,342)

Deposit received - - - -(30,000,000) (-) (-) (30,000,000)

Advance refunded - - - -(6,895,525) (-) (-) (6,895,525)

Security Deposit paid - - -(-) (6,300,000) (-) (6,300,000)

Security Deposit refunded 6,300,000 6,300,000(-) (-)

Remuneration paid - - 1,943,279 1,943,279 (Refer Schedule 22) (-) (-) (1,227,825) (1,227,825)

Corporate guarantees given on 120,000,000behalf of the Company (120,000,000)

Issue of RCPS 200,000,000(-)



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24 Related party disclosures (Continued)

(C) Balances with related parties:

Particulars Holding Enterprise Key TotalCompany over which managerial

key managerial personnelperson along

with the relativesexercises

significantinfluence

Unsecured Loan 176,500,000 - - 176,500,000(250,000,000) (-) (-) (250,000,000)

Interest accrued but not due 10,321,697 - - 10,321,697(13,911,191) (-) (-) (13,911,191)

Deposit receivable - - - -- (6,300,000) (-) (6,300,000)

Current account balance payable - - -(90,000) (-) (90,000)

Note: - Previous Year Figures are given within brackets.

25 The Company is engaged in imparting training in various skills related to films, television and media field which is theprimary business segment. The Company does not have any exports. The Company has only one reportablebusiness segment, which is imparting training in various skills related to films, television and media and only onereportable geographical segment which is India. Accordingly, the segment information as required by the AccountingStandard 17 on Segment Reporting has not been separately disclosed.

26. The Company is obligated under non-cancellable leases primarily for premises. The future minimum lease paymentsin respect of non-cancellable operating lease are as follows:-

Period 2008 2007-------------------------------------------------- --------------------------------------------------

Amount due within one year from the balance sheet date 4,798,463 4,021,000

Amount due in the period between one year and five years 1,471,500 1,035,000

Amount due after five years - --------------------------------------------------- --------------------------------------------------

Total 6,269,963 5,056,000-------------------------------------------------- --------------------------------------------------

Lease rent of Rs.13,650,400 (Previous Year Rs 9,318,000) has been included under ‘Rent’ in Profit and Loss Account.

27. On the basis of information and records available with management, there are no Micro, Small and Medium enterprises,who have registered with the competent authorities. This information has not been disclosed for the previous year,as the company was in the process of compiling the requisite list of Micro, Small and Medium enterprises under theMicro, Small and medium Enterprises Development Act,2006.

28 Expenditure in foreign currency

Particulars 2008 2007-------------------------------------------------- --------------------------------------------------

Traveling expenses 573,459 339,052

Advertisement expenses 212,540 86,842

Storage and health expenses 271,810 303,083

DVD purchased ( shown under library) - 266,981

Prizes 41,042 -

Professional fees 50,673 -

29 CIF value of imports

Particulars 2008 2007-------------------------------------------------- --------------------------------------------------

Capital goods 21,489,884 30,825,520


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30 Auditors' remuneration (net of service tax)

Particulars 2008 2007-------------------------------------------------- --------------------------------------------------

Statutory audit fees 413,215 300,000

Taxation matters - -

Fees for other services - -

Reimbursement of expenses - --------------------------------------------------- --------------------------------------------------

Total 413,215 300,000-------------------------------------------------- --------------------------------------------------

31 Earnings per share ('EPS')

a) Net loss attributable to equity shareholders (128,391,450) (140,127,925)

b) Weighted average number of shares outstanding during the year 200,000 200,000

Basic and diluted earning per share of Rs 1,000 each (641.96) (700.64)

32 Information with regard to other matters specified in Part II of Schedule VI to the Companies Act, 1956 of India, iseither nil or not applicable to the Company for the year.

33 Previous year's figures

Prior year figures has been regrouped or reclassified in order to conform to the current year's presentation.

For and on behalf of the Board

SUBHASH GHAI MEGHNA GHAI PURIChairman Director

MANMOHAN SHETTY PRADEEP GUHADirector Director




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Registration No.: U92141MH2001PTC130394 State Code: 011


II CAPITAL RAISED (AMOUNT INRS. THOUSANDS)

Public Issue NIL Rights Issue 200,000,000


III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. THOUSANDS)

Total Liabilities 818,500457 Total Assets 818,500,457

SOURCES OF FUNDS

Paid-up Capital 400,000,000 Loans 282,870,375


Net Fixed Assets 515,044,274 Investments NIL

Net Current Assets (101,154,902) Misc. Expenditure 461,627

Accumulated Losses 268,519,375


Turnover/Other Income 108,882,644 Total Expenditure 236,667,094

Profit/(Loss) Before Tax (127,784,450) Profit/(Loss) After Tax (128,391,450)

Earnings Per Share (641.96) Dividend Rate % NIL

V GENERIC NAMES OF PRINCIPAL PRODUCTS/SERVICES OF COMPANY (AS PER MONETARY TERMS)


Product Description Education, Research & Training Institute

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DIRECTORS’ REPORT

To the Members ofConnect.1 Limited,

Your Directors take pleasure in presenting the Eighth Annual Report and the Audited Accounts of the Company for theAccounting Year ended 31st March 2008.

Operations:The Income to the tune of Rs. 280,580 has been earned during the year. The Company has a profit of Rs. 65,496 after taxduring the year. The Directors are considering projects to enhance the profitability of the Company.

Directors:Mrs. Meghna Ghai Puri retires by rotation at the ensuing Annual General Meeting and being eligible offers himself forreappointment.

Share Capital:The Share Capital remains the same during the year under review.

Directors' Responsibility Statement [Section 217 (2AA)]:The Directors confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with properexplanation relating to material departures;

ii) the directors had selected such accounting policies & applied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give true & fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the company for the year;

iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

iv) the annual accounts are prepared on a going concern basis;

Auditors:M/s Shamit Majmudar Associates, Chartered Accountants retire at the ensuing Annual General Meeting and being eligibleoffer themselves for reappointment as the Auditors of the Company. The Directors recommend the reappointment ofM/s Shamit Majmudar Associates as the Auditors of the Company for the year 2008-09.

Disclosure about conservation of energy, technology absorption and foreign exchange outgo and earnings:

The Company is not engaged in manufacturing activities and as such particulars regarding disclosure about Conservationof energy, technology absorption are not applicable to the Company.

There has been no foreign exchange outgo and earnings.

Other Statutory InformationThe Company does not have any employees requiring disclosure as required under Section 217 (2A) of the CompaniesAct, 1956.

Acknowledgements:The Board of Directors wishes to thank and record its appreciation to the Government Authorities and the Bankers, whohave extended their continued support to the company.

Registered Office: On Behalf of Board of Directors11, Bait-Ush-Sharaf, 29th Road,TPS - III, Bandra (W), Subhash GhaiMumbai - 400 050 Chairman

Place: Mumbai

Date: 25th July, 2008

CONNECTCONNECTCONNECTCONNECTCONNECT.1 LIMITED.1 LIMITED.1 LIMITED.1 LIMITED.1 LIMITED(Formerly known as Mukta Arts International Limited)

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AUDITORS REPORTTo the Members

1. We have audited the attached Balance Sheet of CONNECT.1 LIMITED (Formerly known as Mukta Arts InternationalLtd). as at 31st March 2008 and the related Profit and Loss Account and the Cash Flow Statement for the year endedon that date, which we have signed under reference to this report. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these financial statements based onour audit.











(ii) in the case of Profit and Loss Account of the profit of the Company for the year ended on that date, and


For SHAMIT MAJMUDAR ASSOCIATES Chartered Accountants



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Annexure to the Auditors’ Report[Referred to in paragraph (3) thereof]

(i) The nature of the Company’s business/ activities during the year is such that clauses (ii), (vii), (viii), (x), (xi), (xii),(xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) & (xx) of paragraph 4 of the Companies (Auditor’s Report) order, 2003 are notapplicable to the Company for the year ended.


(a) The Company has maintained proper records showing full particulars including quantitative details and situationof fixed assets.

(b) The fixed assets of the company have been physically verified by the management at the end of the year andwe are informed that no discrepancies between book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, the Company has not made anydisposals during the year.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to or from companies, firms or otherparties covered in the register maintained under section 301 of The Companies Act, 1956:

According to the information and explanations given to us the Company has neither granted nor taken any loans,secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section301 of The Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal controlprocedures commensurate with the size of the Company and nature of its business, for purchase of fixed assets.There are no purchase of inventories and no sale of goods.

(v) In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956:

To the best of our knowledge and belief and according to the information and explanations given to us, transactionsthat needed to be entered into the register have been so entered.

(vi) The Company has not accepted any deposits from the public to which the provisions of Section 58A and section58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975, are applicable.

(vii) According to the information and explanations given to us in respect of statutory and other dues there were noundisputed amount payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Dutyoutstanding as at 31st March, 2008 for more than six months from the date they became payable.

(viii) The Company has no accumulated losses as at the end of the year. The Company has not incurred cash lossesduring the financial year and the previous year.

(ix) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud onor by the Company was noticed or reported during the year.

For SHAMIT MAJMUDAR ASSOCIATES Chartered Accountants




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BALANCE SHEET AS AT 31ST MARCH 2008Current Year Previous Year

SCHEDULE 31.03.2008 31.03.2007Rupees Rupees

------------------------------------ ------------------------------------SOURCES OF FUNDSShareholders’ FundShare Capital A 600,000 600,000

-------------------------------- --------------------------------TOTAL 600,000 600,000

================== ==================APPLICATION OF FUNDSFixed Assets BGross Block 3,931,950 3,931,950Less: Depreciation 863,224 701,712

-------------------------------- -------------------------------- 3,068,726 3,230,238

================== ==================Investments C 555,949 523,729Current Assets, Loans & AdvancesCash & Bank Balance D 271,962 301,074Loans & Advances E 172,308 114,508

-------------------------------- --------------------------------444,270 415,582

Less : Current Liabilities & Provisions F 3,356,768 3,526,368-------------------------------- --------------------------------

Net Current Assets (2,912,498) (3,110,786)Miscellaneous Expenditure G 7,000 10,500Profit & Loss Account (119,177) (53,681)

-------------------------------- --------------------------------TOTAL 600,000 600,000

================== ==================Statement of Significant Accounting Policies Iand Notes forming part of accounts


For SHAMIT MAJMUDAR ASSOCIATES SUBHASH GHAIChartered Accountants Chairman

SHAMIT MAJMUDAR PARVEZ A. FAROOQUIProprietor DirectorMembership No. 10595

Place : Mumbai MEGHNA GHAI PURIDate : 25th July 2008 Director

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PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2008


Rupees Rupees-------------------------------------- --------------------------------------

IncomeRental Income 240,000 240,000Interest Income 40,580 34,668

-------------------------------- --------------------------------280,580 274,668

================== ==================ExpenditureAdministration and other expenses H 16,072 24,625Depreciation B 161,512 170,013Preliminary Expenses Written off 3,500 3,500

-------------------------------- --------------------------------181,084 198,138

================== ==================Profit/(Loss) before Taxation 99,496 76,530Less: Provision for Tax 34,000 13,500

-------------------------------- --------------------------------Profit/(Loss) after Tax 65,496 63,030Add: Balance brought forward from last year 53,681 (9,349)

-------------------------------- --------------------------------Balance Carried to Balance Sheet 119,177 53,681

================== ==================Statement of Significant Accounting Policies Iand Notes forming part of accounts






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Current Year Previous Year31.03.2008 31.03.2007 (Rupees) (Rupees)

-------------------------------------- --------------------------------------A. CASH FROM OPERATING ACTIVITIES

Net Profit before tax and extraordinary items : 65,496 76,530

Adjustments for :

Depreciation 161,512 170,013

Interest, dividend, etc., received (40,580) (34,668)

Miscellaneous expenditure written off 3,500 3,500

Operating profit before working capital changes 189,928 215,375

Adjustments for :

(Increase)/ Decrease in Loans and advances - 247

Increase/(Decrease) in Trade Creditors (3,600) 6,256

Inc./ (Dec.) in Other current liabilities and provisions (166,000) 13,500

Cash generated from/(used in) operations 20,328 235,378

Direct Taxes paid (57,800) 13,670

Cash flow before extraordinary items (37,472) 249,048

Net Cash Generated from/(used in) Operating Activities (37,472) 249,048

B. CASH FLOW FROM INVESTING ACTIVITIES

(Addition to)/ Redemption of Investments (32,220) (23,729)

Interest, dividend, etc., received 40,580 34,668

Net cash generated from/(used in) investing activities 8,360 10,939

Net increase/(decrease) in cash and cash equivalents (29,112) 259,987(A+B)

Cash and cash equivalents (opening) 301,074 41,087

Cash and cash equivalents (closing) 271,962 301,074





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SCHEDULES FORMING PARTS OF ACCOUNTSCurrent Year Previous Year

31.03.2008 31.03.2007 Rupees Rupees

-------------------------------------- --------------------------------------SCHEDULE - ASHARE CAPITALAuthorised Capital5,000 Equity Share of Rs 1,000/- each(Previous year 5,000 equity shares of Rs 1,000/- each) 5,000,000 5,000,000

================= =================Issued, subscribed & paid up 600,000 600,000600 Equity Shares of Rs 1,000/- each(Previous year 600 equity shares of Rs 1,000/- each) ----------------------------------------- -----------------------------------------

Total 600,000 600,000================= =================

SCHEDULE - BFixed Assets (Amount in Rs.)

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As on Additions Total Depreciation Depreciation Total As on As on01.04.2007 during the as on as on for the Depreciation 31.03.2008 31.03.2007

year 31.03.2008 31.03.2007 year upto 31.03.2008

Block ‘A’

OwnershipPremises 3,931,950 - 3,931,950 701,712 161,512 863,224 3,068,726 3,230,238

TOTAL 3,931,950 - 3,931,950 701,712 161,512 863,224 3,068,726 3,230,238Previous year 3,931,950 - 3,931,950 531,699 170,013 701,712 3,230,238 3,400,251

Current Year Previous Year 31.03.2008 31.03.2007

Rupees Rupees-------------------------------------- --------------------------------------

SCHEDULE - CInvestmentsFixed Deposit with Scheduled bank 555,949 523,729----------------------------------------- -----------------------------------------

555,949 523,729================= =================

SCHEDULE - DCash & Bank BalancesCash in hand 8,934 1,464With Scheduled Bank (in current account) 263,028 299,610

----------------------------------------- ----------------------------------------- 271,962 301,074

================= =================SCHEDULE - ELoans & AdvancesAdvance Taxes & Other Payments 172,308 114,508

----------------------------------------- ----------------------------------------- 172,308 114,508

================= =================SCHEDULE - FCurrent Liabilities & ProvisionSundry Creditors 9,268 12,868Deposits 3,300,000 3,500,000Provision for Income Tax 47,500 13,500

----------------------------------------- ----------------------------------------- 3,356,768 3,526,368

================= =================SCHEDULE - GMiscellaneous ExpenditurePreliminary Expenses (to the extent not written off) 7,000 10,500

----------------------------------------- ----------------------------------------- 7,000 10,500

================= =================


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Current Year Previous Year 31.03.2008 31.03.2007

Amount in Rs. Amount in Rs.-------------------------------------- --------------------------------------SCHEDULE - H

Administration and other expensesElectricity Expenses (400) 7,032Audit Fees 6,742 6,742Professonal Fees - 2,526Bank Charges - 125Filing Fees 2,530 1,000Society Charges 7,200 7,200----------------------------------------- -----------------------------------------

16,072 24,625================= =================

SCHEDULE IStatement of Significant Accounting Policies and Notes forming Part of Accounts1 Significant Accounting Policies

(a) Basis of Preparation of AccountsThe financial statements have been prepared under the historical cost convention, in accordance with AccountingStandards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act,1956, as adopted consistently by the Company. All income and expenditure having a material bearing on thefinancial statements are recognised on accrual basis.The preparation of financial statements in conformity with the Accounting Standards require management tomake estimates and assumptions that affect the reported amounts of assets and liabilities at the date offinancial statements, and the reported amounts of expenses during the year.

(b) (i) Fixed AssetsFixed Assets are stated at cost of acquisition and attributable costs.

(ii) DepreciationDepreciation has been provided on Written Down Value Method as per the provisions of Companies Act,1956 and at the rates specified in Schedule XIV of the Companies Act, 1956.

(c) Revenue recognitionInterest Income and Rentel Income are accounted on accrual basis.

Current Year Previous Year2 Contingent Liabilities Nil Nil3 (a) There were no amounts payable to Small Scale Industrial Undertaking on the Balance Sheet date.

(b) The Company has not received any intimation from “Suppliers” regarding their status under the Micro, Smalland Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid asat the year end together with interest paid / payable as required under the said Act have not been given.

4 Auditors Remuneration : Current Year Previous YearRupees Rupees

Statutory Audit Fees 6,742 6,7425 Previous year figures have been regrouped wherever necessary.





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Registration No.: U92110MH2000PLC124018 State Code: 011


II CAPITAL RAISED (AMOUNT INRS. THOUSANDS)



III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. THOUSANDS)


SOURCES OF FUNDS

Paid up Capital 600 Reserves & Surplus NIL

Secured Loans NIL Unsecured Loans NIL


Net Fixed Assets 3068 Investments 556

Net Current Assets (2912) Misc. Expenditure 7

Accumulated Losses (119)



Profit/(Loss) Before Tax 99 Profit/(Loss) After Tax 65

Earnings Per Share-Rs. 109.16 Dividend Rate % NIL

V GENERIC NAMES OF PRINCIPAL PRODUCTS / SERVICES OF COMPANY


Product/Services Marketing of filmsDescription

MUKTMUKTMUKTMUKTMUKTA A A A A TELE MEDIA LTDTELE MEDIA LTDTELE MEDIA LTDTELE MEDIA LTDTELE MEDIA LTD.....

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DIRECTORS’ REPORTTo the Members ofMukta Tele Media Limited,Your Directors take pleasure in presenting the Sixth Annual Report and the Audited Accounts of the Company for theAccounting year ended 31st March 2008.Operations:The Company’s object is to take up production of tele-serials, management of event shows and entertainment software.The Income to the tune of Rs. 108,000 has been earned during the year. Due to administrative expenses and other fixedexpenses the result for the year show a net loss of Rs. 116,182.Share Capital:The Capital remains the same during the year under review.Directors:Mr. Vijay Choraria retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.Directors’ Responsibility Statement [Section 217 (2AA)]:The Directors confirm that:i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper

explanation relating to material departures;ii) the directors had selected such accounting policies & applied them consistently and made judgments and estimates

that are reasonable and prudent so as to give true & fair view of the state of affairs of the company at the end of thefinancial year and of the loss of the company for the year;

iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

iv) the annual accounts are prepared on a going concern basis; despite the fact, that the Company’s net worth isnegative

Auditors and Auditors’ Report:M/s Shamit Majmudar Associates, Chartered Accountants, the Auditors, retire at the ensuing Annual General Meetingand being eligible offer themselves for reappointment as the Auditors of the Company. The Directors recommend thereappointment of M/s Shamit Majmudar Associates as Auditors of the Company for the year 2008-09.In response to the Auditor’s comment on the negative networth of the Company, the management is considering someprojects to explore new profit generating avenues.Disclosure about conservation of energy, technology absorption and foreign exchange outgo and earnings:The Company is not engaged in manufacturing activities and as such particulars regarding disclosure about Conservationof energy, technology absorption are not applicable to the Company.There has been no foreign exchange outgo and earnings.Other Statutory Information:The Company does not have any employees requiring disclosure as required under Section 217 (2A) of the CompaniesAct, 1956.Acknowledgements:The Board of Directors places on record its gratitude to, bankers, and the media for their continued support, patronageand goodwill. The Board also expresses its deep sense of appreciation to the employees and consultants for their guidanceand support.

Registered Office: By Order of Board of Directors6, Bashiron, 28th Road,TPS – III, Bandra (W),Mumbai – 400 050 Vijay Choraria

ChairmanPlace: MumbaiDate: 25th July, 2008

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AUDITORS REPORTTo the Members

1. We have audited the attached Balance Sheet of Mukta Tele Media Ltd. as at 31st March 2008 and related the Profitand Loss Account and Cash Flow Statement for the year ended on that date, which we have signed under referenceto this report. These financial statements are the responsibility of the Company’s management. Our responsibility isto express an opinion on these financial statements based on our audit.











(ii) in the case of Profit and Loss Account of the loss of the Company for the year ended on that date, and






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ANNEXURE TO THE AUDITORS’ REPORT[Referred to in paragraph (3) thereof]

(i) The nature of the Company’s business/ activities during the year is such that clauses (vii), (viii), (xi), (xii), (xiii), (xiv),(xv), (xvi), (xvii), (xviii), (xix) & (xx) of paragraph 4 of the Companies (Auditor’s Report) order, 2003 are not applicableto the Company for the year ended.


(a) The Company has maintained proper records showing full particulars including quantitative details and situationof fixed assets.

(b) The fixed assets of the company have been physically verified by the management at the end of the year andwe are informed that no discrepancies between book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, the Company has not made anydisposals during the year.

(iii) In respect of inventories:

(a) As explained to us, inventories were physically verified during the year by the management at reasonableintervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verificationof inventories followed by the management were reasonable and adequate in relation to the size of the Companyand the nature of its activity during the year.

(c) In our opinion and according to the information and explanations given to us, the Company has maintainedproper records of its inventories and no material discrepancies were noticed on physical verification.

(iv) In respect of loans, secured or unsecured, granted or taken by the Company to or from companies, firms or otherparties covered in the register maintained under section 301 of The Companies Act, 1956:

According to the information and explanations given to us the Company has neither granted nor taken any loans,secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section301 of The Companies Act, 1956.

(v) In our opinion and according to the information and explanations given to us, there are adequate internal controlprocedures commensurate with the size of the Company and nature of its business, for purchase of inventory andfixed assets. There is no sale of goods.

(vi) In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956:

To the best of our knowledge and belief and according to the information and explanations given to us, transactionsthat needed to be entered into the register have been so entered.

(vii) The Company has not accepted any deposits from the public to which the provisions of Section 58A and section58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975, are applicable.

(viii) According to the information and explanations given to us in respect of statutory and other dues there were noundisputed amount payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Dutyoutstanding as at 31st March, 2008 for more than six months from the date they became payable.

(ix) The Company has accumulated losses at the beginning of the year. The Company has incurred loss during the year.The accumulated losses have exceeded the entire net worth of the Company.

(x) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud onor by the Company was noticed or reported during the year.




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BALANCE SHEET AS AT 31ST MARCH 2008


Amount in Rs. Amount in Rs.–––––––––––––––––––––––––– ––––––––––––––––––––––––––SOURCES OF FUNDS

Shareholders’ Fund

Share Capital A 500,000 500,000–––––––––––––––––––––––––– ––––––––––––––––––––––––––

TOTAL 500,000 500,000====================================================== ======================================================


Fixed Assets B

Gross Block 4,304,963 4,304,963

Less: Depreciation 939,165 759,614–––––––––––––––––––––––––– ––––––––––––––––––––––––––

3,365,798 3,545,349

Investments C 250 250

Current Assets, Loans & Advances

Inventories D 3,735,407 3,735,007

Deposits E 480 -

Cash and Bank Balances F 90,275 58,319–––––––––––––––––––––––––– ––––––––––––––––––––––––––

3,826,162 3,793,326

Current Liabilities & Provisions G 10,644,784 10,689,982–––––––––––––––––––––––––– ––––––––––––––––––––––––––

Net Current Assets (6,818,622) (6,896,656)

Balance as per Profit & Loss account 3,893,914 3,777,732

Preliminary Expenses (to the extent not written off) 58,660 73,325–––––––––––––––––––––––––– ––––––––––––––––––––––––––

TOTAL 500,000 500,000====================================================== ======================================================

As per our report of even date For and on Behalf of the Board

For SHAMIT MAJMUDAR ASSOCIATES VIJAY CHORARIAChartered Accountants Chairman


MEGHNA GHAI PURIPlace : Mumbai DirectorDate : 25th July 2008


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PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008


Amount in Rs. Amount in Rs.–––––––––––––––––––––––––– ––––––––––––––––––––––––––INCOME

Rental Income 108,000 108,000–––––––––––––––––––––––––– ––––––––––––––––––––––––––

Total 108,000 108,000

EXPENDITURE

Administration and other Expenses H 29,966 84,428


Preliminary Expenses written Off 14,665 14,665–––––––––––––––––––––––––– ––––––––––––––––––––––––––

Total 224,182 288,526===================================================== =====================================================

Profit/(Loss) after tax (116,182) (180,526)

Add: Balance brought forward from last year (3,777,732) (3,597,206)–––––––––––––––––––––––––– ––––––––––––––––––––––––––

Balance carried to Balance Sheet (3,893,914) (3,777,732)===================================================== =====================================================

Statement of Significant Accounting Policies Iand Notes forming part of accounts





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Amount in Rs. Amount in Rs.–––––––––––––––––––––––––– ––––––––––––––––––––––––––

A. CASH FROM OPERATING ACTIVITIES

Net Profit / (Loss) before tax and extraordinary items : (116,182) (180,526)

Adjustments for :


Miscellaneous expenditure written off 14,665 14,665

Operating profit before working capital changes 78,034 23,572

Adjustments for :

(Increase)/ Decrease in Inventories (400) -

(Increase)/ Decrease in Loans and advances (480) -

Increase/(Decrease) in Trade Creditors (45,198) 9,958

Inc./ (Dec.) in Other current liabilities and provisions - 15,000

Cash generated from/(used in) operations 31,956 48,530

Net Cash Generated from/(used in) Operating Activities 31,956 48,530

B. CASH FLOW FROM INVESTING ACTIVITIES

Net cash generated from/(used in) investing activities - -

C. CASH FLOW FROM FINANCING ACTIVITIES

Net cash recovered from/(used in) financing activities - -

Net increase/(decrease) in cash and cash equivalents (A+B+C) 31,956 48,530

Cash and cash equivalents (opening) 58,319 9,789

Cash and cash equivalents (closing) 90,275 58,319






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SCHEDULE - CInvestments (Unquoted)Shares of Bait-Ush-Sharaf Co. Op. Hsg. Society Ltd.(5 shares of Rs 50 each , Previous year 5 shares) 250 250–––––––––––––––––––––––– ––––––––––––––––––––––––

250 250=============================================== ================================================

SCHEDULES FORMING PARTS OF ACCOUNTS


Amount in Rs. Amount in Rs.–––––––––––––––––––––––––– ––––––––––––––––––––––––––SCHEDULE - A

Share CapitalAuthorised Share Capital50,000 Equity Shares of Rs.100/- each(Previous year 50,000 Equity Shares of Rs.100/- each) 5,000,000 5,000,000

================================================== ==================================================Issued, subscribed & paid up Capital5,000 Equity Shares of Rs. 100/- fully paid-up(Previous year 5,000 Equity Shares of Rs. 100/- fully paid-up) 500,000 500,000–––––––––––––––––––––––– ––––––––––––––––––––––––

500,000 500,000=============================================== ==================================================

SCHEDULE - B

Fixed Assets

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As on Additions Total Depreciation Depreciation Total As on As on01.04.2007 during the as on as on for the Depreciation 31.03.2008 31.03.2007

year 31.03.2008 31.03.2007 year up to31.03.2008

Block ‘A’OwnershipPremises 4,260,063 - 4,260,063 737,712 176,118 913,830 3,346,233 3,522,351

Block ‘B’Furniture &Fixture 10,800 - 10,800 5,234 1,007 6,241 4,559 5,566

Block ‘C’Mobile Handset 5,000 - 5,000 4,999 1 5,000 - 1Air Conditioners 29,100 - 29,100 11,669 2,425 14,094 15,006 17,431

TOTAL 4,304,963 - 4,304,963 759,614 179,551 939,165 3,365,798 3,545,349

Previous year 4,304,963 - 4,304,963 570,181 189,433 759,614 3,545,349 3,734,782

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SCHEDULES FORMING PARTS OF ACCOUNTS



SCHEDULE - DInventoriesRemake Rights of Films 200,000 200,000Under Production T.V.Serials 3,535,407 3,535,007

–––––––––––––––––––––––– ––––––––––––––––––––––––3,735,407 3,735,007

=============================================== ===============================================SCHEDULE - E

Deposits

Reliance Energy Limited 480 -–––––––––––––––––––––––– ––––––––––––––––––––––––

480 - =============================================== ===============================================

SCHEDULE - F

Cash & Bank Balances

Cash in hand 1,483 2,531

With Scheduled Banks:

In Current Account 88,792 55,788–––––––––––––––––––––––– ––––––––––––––––––––––––

90,275 58,319 =============================================== ===============================================

SCHEDULE - G

Current Liability & Provisions

Amount due (to Holding Company ) 10,637,984 10,637,984

Sundry Creditors for goods and services rendered 6,800 51,998–––––––––––––––––––––––– ––––––––––––––––––––––––

10,644,784 10,689,982 =============================================== ===============================================

SCHEDULE - H

Administrative Expenses

Electricity Charges - 17,162

Auditors Remuneration 6,800 42,472

Professional Fees - 2,526

Prior Period Expenses - 1,200

Subscription Charges - 400

Society Charges 14,000 14,000

Rates & Taxes 2,500 -

Filing Fees 6,666 6,668–––––––––––––––––––––––– ––––––––––––––––––––––––

29,966 84,428 =============================================== ===============================================


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SCHEDULE “I”Statement of Significant Accounting Policies and Notes forming Part of Accounts1 Significant Accounting Policies

(a) Basis of Preparation of AccountsThe financial statements have been prepared under the historical cost convention, in accordance with AccountingStandards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act,1956, as adopted consistently by the Company. All income and expenditure having a material bearing on thefinancial statements are recognised on accrual basis.The preparation of financial statements in conformity with the Accounting Standards require management tomake estimates and assumptions that affect the reported amounts of assets and liabilities at the date of financialstatements, and the reported amounts of expenses during the year.

(b) (i) Fixed AssetsFixed Assets are stated at cost of acquisition and attributable costs.

(ii) DepreciationDepreciation has been provided on Written Down Value Method as per the provisions of Companies Act,1956 and at the rates specified in Schedule XIV of the Companies Act, 1956.

(c) InventoriesInventories of under production of serials are valued at actual cost.

(d) Revenue recognitionSales/Realisations are recognised on despatch of softwares to the respective parties.

(e) Preliminary ExpensesPreliminary Expenses are amortised over a period of 10 Years


Current Year Previous YearRupees Rupees–––––––––––––––––––––––––– ––––––––––––––––––––––––––

3 Contingent Liabilities Nil Nil

4 The Company’s accumulated losses as at 31st March 2008 far exceeds its paid-up capital and reserves as at thatdate. Since the Directors are looking for right opportunity to explore the similar line of business activity, the Directorsconsider that it is appropriate to prepare the financial statements on going concern basis.

5 (a) There were no amounts payable to Small Scale Industrial Undertaking on the Balance Sheet date.(b) The Company has not received any intimation from “Suppliers” regarding their status under the Micro, Small

and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid asat the year end together with interest paid / payable as required under the said Act have not been given.

6 Additional information required to be given pursuant to Part II of Schedule VI to the Companies Act, 1956 isas follows :The Company is in the business of production of software which is not subject to any licence and as such informationregarding consumption of Raw Materials, Production and sales is not applicable.Further the nature of business of the Company is such that the installed capacity is not applicable.

7 Auditors Remuneration :Current Year Previous Year

Rupees Rupees–––––––––––––––––––––––––– ––––––––––––––––––––––––––Statutory Audit Fees 6,800 22,040For Other Services - 20,000–––––––––––––––––––––––––– ––––––––––––––––––––––––––

6,800 42,040–––––––––––––––––––––––––– ––––––––––––––––––––––––––





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Registration No.: U92100MH2002PLC137312 State Code: 011


II CAPITAL RAISED (AMOUNT IN RS. THOUSANDS)



III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS(AMOUNT IN RS. THOUSANDS)


SOURCES OF FUNDS

Paid up Capital 500 Reserves & Surplus –

Secured Loans – Unsecured Loans –


Net Fixed Assets 3,366 Investments –

Net Current Assets (6,819) Misc. Expenditure 59

Accumulated Losses 3,894



Profit/(Loss) Before Tax (116) Profit/(Loss) After Tax (116)

Earnings Per Share in Rs. – Dividend Rate % NIL

V GENERIC NAMES OF PRINCIPAL PRODUCTS/ SERVICES OF COMPANY


Product Description Product of Television Software

RED CARPET FILMS LIMITEDRED CARPET FILMS LIMITEDRED CARPET FILMS LIMITEDRED CARPET FILMS LIMITEDRED CARPET FILMS LIMITED

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DIRECTORS’ REPORTTo,

The Members ofRed Carpet Films Limited,

Your Directors have pleasure in presenting the First Annual Report together with Audited statement of accounts in regardto the working of the company for the Period ended 31st March, 2008.

FINANCIAL RESULTS & BUSINESS ACTIVITIES :

Operations :

Your directors are pleased to present before you the working results for the first period.

Particulars Current Year

Other Income 742,192Net Profit(loss) before tax (3,098,051)Deferred Tax Asset 957,298Profit(loss) after deferred Tax (2,140,753)

DIRECTORSAs per the per the provisions of the companies Act,1956 read with Articles of Association of the company, Ms AnuradhaM Goswami and Mr Sidhant Goswami are liable to retire by rotation and are eligible for reappointment as per notice ofAnnual General Meeting and directors mentioned herein offer themselves for reappointment.

DIRECTORS RESPONSIBILITY STATEMENTS :The Directors wish to state:i. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with

proper explanation relating to material departures;ii. that the directors had selected such accounting policies and applied them consistently and made judgment and

estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company atthe end of the financial year and of the profit of the company for that period;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities.

iv. that the directors have prepared the annual accounts on a going concern basis.

DEPOSITS :The Company has not accepted any deposits from the public during the year under Audit.

DIVIDEND :The Directors do not propose any dividend due to loss.

PARTICULARS OF EMPLOYEES :The Company has paid remuneration in excess of Rs.200,000/- per month or Rs.2,400,000/- per annum to Mr. Manish R.Goswami amounting to Rs.2,800,000/-.

EARNINGS & OUTGOING IN FOREIGN CURRENCY : NILRESEARCH AND DEVELOPMENT :The volume of the company does not permit out-lay on research and development.

CONSERVATIONS OF ENERGY AND TECHNOLOGY ABSORPTIONInformation in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies(Disclosure of particulars in the report of Board of Directors) Rules 1988 regarding conservation of energy and technologyabsorption is not applicable to your Company.

AUDITORS:M/s. Sekhri & Company Chartered Accountants, the Auditors of the Company retire at the conclusion of the ensuingAnnual General Meeting and are eligible for reappointment as the Auditors of the Company.

For AND ON BEHALF OF THE BOARD

Place: Mumbai. (MANISH R GOSWAMI)Date: 26th June 2008 CHAIRMAN

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AUDITORS REPORT TO THE MEMBERS OF RED CARPET FILMS LIMITED1. We have audited the attached Balance Sheet of RED CARPET FILMS LIMITED (the Company), as at 31st March

2008, and also the Profit and Loss Account and Cash Flow Statement for the period annexed thereto. These financialstatements are the responsibility of the company management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free from material misstatements. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 and amended CARO, 2004 issued by the CentralGovernment of India in terms of sub-section (4A) of section 227 of ‘The Companies Act, 1956’, we enclose in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purpose of our audit;

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as itappears from our examination of the books.

c) The Balance Sheet & Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreementwith books of accounts of the company.

d) In our opinion, the Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by thisreport comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act;

e) On the basis of written representations received from the directors, as on 31st March, 2008 and taken onrecord by the Board of Directors, We report that none of the directors is disqualified from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 of the Act;

f) In our opinion and to the best of our information and according to the explanations given to us, the said financialstatements together with the notes thereon and attached thereto, give in the prescribed manner the informationrequired by the Act and give a true and fair view in conformity with the accounting principles generally acceptedin India:

(i) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2008;

(ii) in the case of the Profit and Loss Account, of the “Loss” of the Company for the period ended on that date.

(iii) in the case of the Cash Flow Statement, of the “Cash Flows” of the Company for the period ended on thatdate.

FOR SEKHRI & CO.Chartered Accountants

A K SEKHRIPlace : Mumbai (Partner)Date : 26th June 2008 Membership No. 80029


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ANNEXURE TO THE AUDITORS REPORT(Annexure referred to in paragraph 3 of our report of even date)

1. The company has no fixed assets. Therefore, this clause is not applicable to the Company.2. There were no inventories maintained by the Company as on 31st March 2008.3. As per information and explanation given to us, the company has not taken or given any unsecured loan from or to

companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.4. In our opinion and according to the information and explanations given to us, there are adequate internal control

procedures commensurate with the size of the company and the nature of its business for the purchase and sale ofservices and fixed assets. On the basis of our examinations and explanations given to us, we have neither comeacross nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internalcontrol procedure.

5. (a) In our opinion and according to the information and explanations given to us, particulars of such contracts orarrangements required to be maintained under sec 301 of the Companies Act, 1956 have been so entered inthe register.

(b) There are no similar transactions with other parties during the year hence we are unable to comment whetherthe transactions made in pursuance of contracts or arrangements entered in register maintained u/s 301 of theAct and exceeding the value of Rs. 5 lacs in respect of any party during the year, have been made at theprevailing market price or not.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of theAct and the rules framed there under.

7. The requirement to comment on Internal Audit System is not applicable to the Company.8. We have been informed that the Central Government has not prescribed the maintenance of cost records under

Section 209(1)(d) of the Companies Act, 1956 for any of the products of the Company.9. a) According to the information and explanations given to us and according to the records of the Company examined

by us, the Company is generally regular in depositing the undisputed statutory dues including provident fund,investor education and protection fund, employees state insurance, profession tax, income tax deducted atsource, sales tax, wealth tax, customs duty, excise duty, service tax, cess and other statutory dues as applicablewith the appropriate authorities. We are informed that there is no undisputed demand which is outstanding asat 31st March 2008 for a period of more than six months from the date they became payable.

(b) According to the records of the company and the information and explanations given to us, there are no duesin respect of sales tax, income tax, customs duty, wealth tax, excise duty, service tax, cess, which have notbeen deposited on account of any dispute.

10. The Company has not been registered for more than five years therefore the requirement to comment on accumulatedlosses is not applicable to the Company.

11. The Company has not taken any loan from financial institution or bank.12. According to the information and explanation given to us the Company has not granted any loans and advances on

the basis of security by way of pledge of shares, debentures and other securities.13. In our opinion and according to the information and explanations given to us, the nature of the activities of the

company does not attract any special statute applicable to chit-fund/nidhi/mutual benefit fund/ societies.14. In our opinion, the Company does not deal or trade in shares, securities, debentures and other investments.15. According to the information and explanations given to us, the company has not given any guarantee for loans taken

by others from banks or financial institutions during the year.16. In our opinion, the term loans have been applied for the purpose for which they were obtained.17. According to the information and explanations given to us and on an overall examination of the balance sheet of the

company, we report that no funds raised for short-term purposes have been used for long-term investment.18. The company has not made any preferential allotment of shares to parties or companies covered in the register

maintained under section 301 of the Act during the year.19. The Company has not issued any debentures during the year; hence clause xix of the said order is not applicable to

the Company.20. The Company has not raised Capital by public issues during the year; hence clause xx of the said order is not

applicable to the Company.21. Based on the audit procedures performed and according to the information and explanations given to us by the

management we report that no fraud on or by the Company, has been noticed or reported during the year.

FOR SEKHRI & CO.Chartered Accountants

A K SEKHRIPlace : Mumbai (Partner)Date : 26th June 2008 Membership No. 80029

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BALANCE SHEET AS AT 31ST MARCH 2008

P A R T I C U L A R S Schedule Current Year31.3.2008

Amount In Rs.––––––––––––––––––––––––––

SOURCES OF FUNDSSHAREHOLDERS FUNDSShare Capital A 500,000Reserves and Surplus B -

––––––––––––––––––––––––––TOTAL 500,000

=====================================================

APPLICATION OF FUNDSDeferred Tax Asset 957,298CURRENT ASSETS, LOANS AND ADVANCES CCash and Bank Balances 46,529,301Loans and Advances 1,872,310

–––––––––––––––––––––––––– 48,401,611

Less : CURRENT LIABILITIES & PROVISIONS DCurrent Liabilities 51,055,262Provision for Taxation -

–––––––––––––––––––––––––– 51,055,262

NET CURRENT ASSETS (2,653,651)MISCELLANEOUS EXPENDITUREPreliminary Expenses 55,600(To the extent not written off or adjusted)Profit & Loss Account 2,140,753

––––––––––––––––––––––––––TOTAL 500,000

=====================================================

Notes to the accounts F

As per our attached report of even date attached. For and on behalf of the Board

For Sekhri & Co.Chartered Accountants

A. K. Sekhri MANISH R. GOSWAMI(Partner) DirectorMembership No.80029

Place: Mumbai RAHUL PURIDated: 26th June 2008 Director


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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2008

P A R T I C U L A R S Schedule Current Year31.3.2008

Amount In Rs.––––––––––––––––––––––––––

INCOMEInterest received 742,192

––––––––––––––––––––––––––742,192

=====================================================

EXPENDITURE

Administration Expenses E 3,840,243––––––––––––––––––––––––––

TOTAL 3,840,243=====================================================

PROFIT BEFORE TAX (3,098,051)

Provision for Taxation

- Current Tax –

- Deferred Tax (957,298)

- Fringe Benefit Tax –

PROFIT AFTER TAX (2,140,753)––––––––––––––––––––––––––

BALANCE CARRIED TO THE BALANCE SHEET (2,140,753)=====================================================

Notes to the accounts F





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CASH FLOW STATEMENT (INDIRECT METHOD)

P A R T I C U L A R S Current Year31.3.2008

Amount In Rs.–––––––––––––––––––––––––––––––

(A) Cash Flow from operating activitiesNet Profit before taxation and extraordinary items (3,098,051)Adjustment for:-Preliminery Expenses written off 13,900

––––––––––––––––––––––––––Operating profit before working capital changes (3,084,151)Increase in Loans & Advances (1,872,310)Increase in Sundry Creditors 50,042,581Increase in other Current Liabilities 1,012,681

––––––––––––––––––––––––––Cash generated from operations 46,098,801Income-tax paid -

––––––––––––––––––––––––––Net cash from operating activities 46,098,801

––––––––––––––––––––––––––(B) Cash flows from investing activities

Purchase of fixed assets -Proceeds from sales of Investment -Interest received -Dividends received -

––––––––––––––––––––––––––Net cash from investing activities -

––––––––––––––––––––––––––

(C) Cash flows from financing activities

Proceeds from issuance of share capital 500,000Proceeds from long-term borrowings -Repayment of long-term borrowings -Preliminery Expenses (69,500)Interest paid -Dividends paid -

––––––––––––––––––––––––––Net cash used in financing activities 430,500

––––––––––––––––––––––––––Net increase in cash and cash equivalents(A+B+C) 46,529,301Cash and cash equivalents at beginning of period -Cash and cash equivalents at end of period 46,529,301






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SCHEDULES FORMING PART OF ACCOUNTS


Amount In Rs.–––––––––––––––––––––––––––––––

SCHEDULE “A” :

SHARE CAPITAL

AUTHORISED

50,000 Equity Shares of Rs.10/- each 500,000––––––––––––––––––––––––––

ISSUED, SUBSCRIBED & PAID-UP CAPITAL

50,000 * Equity Shares of Rs.10/- each fully paid up 500,000––––––––––––––––––––––––––

500,000=====================================================

* 25,047 Equity Shares of Rs. 10/- each fully paid upare held by holding company i.e. Mukta Arts Ltd.

SCHEDULE “B” :

RESERVES & SURPLUS

Add : Profit & Loss for the year -––––––––––––––––––––––––––

-SCHEDULE “C” :

CASH & BANK BALANCES

Cash Balance on hand 12,990

Balance with Scheduled Banks

On Current Account 46,516,311––––––––––––––––––––––––––

46,529,301––––––––––––––––––––––––––

LOANS AND ADVANCES

(Unsecured and Considered Good)

Advances recoverable in cash or in kind or for value to be received 1,704,129

Income Tax 168,181––––––––––––––––––––––––––

1,872,310––––––––––––––––––––––––––

SCHEDULE “D” :

CURRENT LIABILITIES

Sundry Creditors 50,042,581

Other Liabilities 1,012,681––––––––––––––––––––––––––

51,055,262=====================================================

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SCHEDULES FORMING PART OF ACCOUNTS


Amount In Rs.–––––––––––––––––––––––––––––––

SCHEDULE “E” :

ADMINISTRATIVE EXPENSES

Remuneration to Directors 2,800,000

Salary 428,979

Office Rent 419,776

Legal & Professional Charges 37,500

Electricity Charges 38,010

Telephone Expenses 6,619

Subscription & Membership Fees 5,321

Auditors’ Remuneration

For Statutory Audit 56,180

For Other Services 33,708

Title Registration Charges 250

Preliminary Expenses written off 13,900––––––––––––––––––––––––––––––

3,840,243=====================================================


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SCHEDULES FORMING PART OF ACCOUNTSSCHEDULE “F”: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES:

1) Basis Of Accounting

The financial statements have been prepared under the historical cost convention on the accrual basis ofaccounting in accordance with generally accepted accounting principles and comply with the AccountingStandards issued by the Institute of Chartered Accountants of India and the relevant provisions of the CompaniesAct, 1956, to the extent applicable.

2) Revenue Recognition

Income is recognized on accrual basis.

3) Miscellaneous Expenditure

Preliminary Expenses are being written off over a period of 5 years

4) Foreign Currency Transactions

Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of the transactions.Monetary assets and liabilities are translated at the year end closing rate if remain unsettled at the year end.The resulting gain or loss on account of exchange difference either on settlement or on translation is recognizedin the Profit & Loss Account.

5) Employee Benefits

a. The Company is not covered under the provisions of Provident Fund.

b. None of the employee has completed five years or more of service, therefore, Gratuity has not beenprovided in the books.

6) Income tax

Income Tax Expense comprises current and fringe benefit (i.e. amount of taxes for the period determined inaccordance with the Income Tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of timingdifferences between accounting income and taxable income for the period). The deferred tax charge or creditand the corresponding deferred tax liabilities or assets are recognized using the tax rates that have beenenacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can berealized in future. However, where there is unabsorbed depreciation or carried forward loss under taxationlaws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferredtax assets are reviewed as at each Balance Sheet date and written down or written up to reflect the amount thatis reasonably / virtually certain (as the case may be) to be realized.

7) Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. ContingentLiabilities, if material, are disclosed by way of notes to the accounts. Contingent Assets are not recognized.

8) Earnings per Share

Basic and Diluted earnings per share is computed using the weighted average number of equity sharesoutstanding during the period.

9) Intangible Assets

Intangible Assets are initially measured at cost and amortized so as to reflect the pattern in which the asset’seconomic benefits are consumed.

2. NOTES TO THE ACCOUNTS

1) Red Carpet Films Limited (the Company) was incorporated on September 27, 2007 as a Private Limited Companyand subsquently converted into Public Limited Company on March 7, 2008 with the objective of production offilms and Television Serials. The Company is a subsidiary of Mukta Arts Ltd.

2) The current year being first year of incorporation of company therefore, no previous year figures have beenstated.

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3) Remuneration to Director Current YearDirector Remuneration 2,800,000

4) Payment to AuditorsFor Statutory Audit 56,180For Other Services 33,708

5) Foreign Currency Transaction Current YearExpenditure in Foreign Currency -Earning in Foreign Currency -

6) Employees who were in employment of the company for the full year and drawing remuneration of Rs. 2400000/- ormore per annum

a) Mr. Manish R. Goswami 2,800,000

7) In terms of Accounting Standard – 17 (Segment Reporting) issued by the Institute of Chartered Accountants ofIndia, the Company operates in only one segment i.e. Production of Films & Television Serials.

8) As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of thetransactions with the related parties as defined in the Accounting Standard are given below:

(i) List of related parties where control exists and related parties with whom transactions have taken place &nature of relationship:

S. No. Name of the related party Nature of Relationship1 Manish R.Goswami Key Managerial Personnel2 Sidhant Cinevision Limited Associate Concernii) Transaction during the year with related parties:

S. No. Nature of Transaction Name of the related party Amount (In Rs.)1 Directors Remuneration Manish R.Goswami 2,800,0002 Office Rent Manish R.Goswami 240,0003 Office Rent Sidhant Cinevision Limited 179,776

9) In the opinion of the management, Sundry creditors do not include dues to Small Scale Industrial Undertakingsto whom amounts outstanding for more than 30 days and exceeding Rupees 1,00,000/-.

10) Based on the information available with the Company, there are no dues to micro and small enterprises underthe Micro, Small and Medium Enterprises Development Act, 2006.

11) Calculation of Earnings per share

Particulars Current YearNet Profit as per Profit & Loss Account (In Rs.) (2,140,753)Weighed Average of Equity shares (Nos.) * 50,000Earnings Per Share ( Basic ) Rs. (42.82)* Earnings Per Share has been worked out with reference to fully paid up shares.

12) In the opinion of the management, Current Assets, Loans and Advances appearing in the Company’s bookshave value on realization in the ordinary course of business at least equal to the amount at which they arestated. Also, provision made for all known liabilities are adequate and not in excess of the amount consid-ered reasonable and necessary.

13) The Balance of Sundry Debtors, Sundry Creditors, Loans & Advances are subject to confirmation.

14) Other information pursuant to Part II of Schedule VI to Companies Act, 1956 are either Nil or not applicable.

For and on behalf of the Board

For Sekhri & Co. MANISH R. GOSWAMIChartered Accountants Director

A. K. Sekhri RAHUL PURI(Partner) DirectorMembership No.80029

Place: MumbaiDated: 26th June 2008


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Registration Details

Registration No. U92120MH2007PLC174564

State Code 11

Balance Sheet Date 31st March 2008

(In Rupees)

Capital raised during the year

Public Issue -

Right Issue -

Bonus Issue -

Private Placement 500,000

Position of mobilisation and development of funds

Total Liabilities 500,000

Total Assets 500,000

Source of Funds

Paid-Up Capital 500,000

Reserves & Surplus -

Application of Funds

Net Current Assets (2,653,651)

Miscellaneous Expenditure 55,600

Profit & Loss Account 2,140,753

Performance of Company

Turnover (Gross) 742,192

Total Expenditure 3,840,243

Profit/(Loss) before Tax (3,098,051)

Profit/(Loss) after Tax (2,140,753)

Earnings per Share (42.82)

Dividend Rate (%) -

Generic names of three principal products / services of the company

Item Code No. (ITC Code) Production of T.V. Serials & Films

Product Description

mukta - text - main - 2008€¦ · anil kapoor, salman khan, katrina kaif, mithun chakraborty,...

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