8/14/2019 project p 1

1/73

ACKNOWLEDGEMENT

A good project work requires sound knowledge of the subject concerned and skilled tomake proper use of this knowledge.

I would like to extend my sincere regards to the teachers of my institute and staff

members of" Srs Entertainment & Retail Ltd. " who supported me in this project. It was

a good time for me to work as a team member to learn more about team spirit which

makes things more easy and the environmental amicable.

I also express my teap gratitude to my parents and friends who always encourage

and helped me to complete this project.

With Regards

1

8/14/2019 project p 1

2/73

ABOUT SRS ENTERTAINMENT LIMITED

INDUSTRY OVERVIEW

INTRODUCTION

The Company lays great emphasis on growth of the retail sector to determine its future

growth pattern. Multiplexes today reflect the emergence of organised Indian retailindustry. They have also emerged as the fastest growing niche in the Indian media sector.Their rise reflects:_Metamorphosis of Indian retail (rise of organised retail, malls etc)_Increasing disposable incomes

_Rising aspirations of the urban consumer and a change in consumer behaviour whichhas altered the spending pattern of the urban consumer.Going by this trend, the business model of SRSEL is a perfect blend of the retail andentertainment sectors. It includes development and management of Multiplex, whichincludes Cineplex, shopping malls, coffee lounge, food court, health club etc.The estimated consumption spend in India has doubled from US$250bn to US$500bn in

the last 5 years, based on the changing demographics. In particular, the sharp rise in thenumber of upper end and rich households (as per the recent NCAER survey) isindicative of the potential consumption spend. People are richer, younger and moreaspirational than ever before, supporting the growth in the retail and entertainmentsectors.

Summary

Industry

SRSEL lays great emphasis on growth of the retail sector to determine its future growthpattern. Multiplexes today reflect the emergence of organised Indian retail industry. Theyhave also emerged as the fastest growing niche in the Indian media sector. Their risereflects:

Metamorphosis of Indian retail (rise of organised retail, malls etc)

2

8/14/2019 project p 1

3/73

Increasing disposable incomes

Rising aspirations of the urban consumer and a change in consumer behaviorWhich has altered the spending pattern of the urban consumer.

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

Entertainment:

Though distribution and exhibition are the last links in the chain bringing filmedentertainment to the masses, they are of paramount importance, as the success of the filmdepends on successful distribution and exhibition. In India the current infrastructure for

Film exhibition is inadequate to meet existing and potential demand. For a nation with50,000 lac admissions every year (roughly a weekly entry of about 1000 lac), there areonly around 12,900 theatres spread over the country. Further to this, the theatrical salesconstitute dominant source of revenues for the film industry and represent box officeticket sales to the viewers at the cinema halls. Ticket sales constitute to be around 90% ofthe total revenues in the film industry. (Source FICCI Report)

The trends suggest that with the advent of multiplexes and modern theatres the exhibitionbusiness has indeed become lucrative. To take guidance from international trends, theatreoccupancy in England, Germany, US and Australia tripled with the multiplex boom and

similar growth could be expected in India with adequate exhibition infrastructure -multiplexes, megaplexes and miniplexes. In fact, only 32% of the screens in the US aresingle theatre screens, the rest falling under either multiplexes, megaplexes or miniplexescategory whereas the in India 95% of the screens are in single screen theaters.

Improving Movie Going Habits

The attendance level in the contemporary theatre has reduced over the years but with theadvent of multiplexes and megaplexes the trend has reversed. By moving up the value

chain companies can generate higher revenues. Higher prices can be charged foradditional value delivered.

International trends

So far various international markets are highly under screened. Looking at the presentstructure, The US has about 9000 persons per screen, Europe around 27000 people perscreen, Latin America around 69000 and Asia around 105000 people per screen. This

3

8/14/2019 project p 1

4/73

shows that Indian Multiplex market is extremely under screened. This survey also statesthat factors like location, type of theatre, dining and shopping are most important featuresin selecting a theatre and entertainment joint.

Retail:

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

Real Estate:

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

The Companys Business

The business model of SRS Entertainment Limited is a hybrid model, which involves amix of entertainment cum retailing and real estate. The Companys maiden project, SRSMultiplex, is a unique complex, combining a 3 screen Cineplex with most facilities of amodern shopping mall. SRS Multiplex commenced operations from November 12, 2004and has been proved profitable within the first 6 months of its operation. The averageticket prices at SRS PVR Cinemas range from Rs.75/- to Rs.150/-. All the showrooms

and shop blocks in the mall have been completely sold / leased out.

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

Retail

Overview

Retailing in India has traditionally been the domain of the unorganised sector. The retaillandscape is dominated by the local setups like kirana shops, family run general storesand small local merchandise retailers. In fact India has 120 lac retail outlets, the worldslargest retail network. The retail sector generates 15% of the total employment in thecountry and is the largest contributor to Indias GDP.

4

8/14/2019 project p 1

5/73

Current trends

The retail sector in India is witnessing a huge revamping exercise as traditional marketsmake way for new formats such as departmental stores, hypermarkets, supermarkets andspecialty stores. Western-style malls begun their journey from metros and are now

turning towards second-rung cities introducing the Indian consumer to a shoppingexperience like never before. Rated the fifth most attractive emerging retail market,India is being seen as a potential goldmine.

Key drivers for growth

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

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

3. Surge in mall construction.The number of malls is expected to rise from the current 40 to around 300 by 2007. Closeto 500 lac sq. ft .of retail space is being planned for the next 2 years. Over the mediumterm, retailing could substantially enhance the overall productivity. Moreover, it is thesector that could potentially provide the forward linkages for mass marketing of

processed and packaged goods including farm goods. The growth of theorganised retailing sector, would, however, be in part dependent on the governmentfacilitating 100% foreign direct investment (FDI) in retailing, providing the necessarysupply chain infrastructure and the relatively high cost of real estate all of whichcontinue to be constraints in the rapid growth of organized retailing in India.

4. Scalable and profitable retail models are well established for most of the categories.Last few years have seen development of the scalable and profitable retail models acrosscategories. LargeIndian corporate groups like Tata, , Raheja, , , Piramal Group, Pantaloon have taken bigleap in setting up the retail chain business. Various other renowned groups have

expressed serious interest in investing in retailing. In addition, foreign investors andprivate equity players are also firming up plans to identify\ investment opportunities inthe Indian retail sector. Investments into the sector are estimated at Rs. 2,000-2,500 crore in the next 2-3 years, and over Rs. 20,000 crore by the end of 2010, asreported by KSA Technopak. Successful development of value based concepts such asBig Bazaar, Giant and Vishal MegaMart as well as development of retail space in smaller cities and towns will driveorganised retail into the next level of cities. Small towns with a population of 5-10 lacs

5

8/14/2019 project p 1

6/73

are witnessing a defined increase indisposable income coupled with high aspirationallevels leading to enhanced spending on consumer goods along with lesser aversion tocredit. Thus, the retail boom, 85% of which has so far been concentrated in the metrosis beginning to percolate down to smaller cities and towns. The contribution of these tier-II cities to total organised retailing sales is expected to grow to 20-25%.

5. Retail space no longer a constraintMall developers across the country are creating superior real estate options at a frenziedpace. From 35-40 operational malls currently occupying approximately 6 million sq ft ofretail space, India is expected to have over 300 new malls by 2007, thereby adding retailspace to the tune of 50 million sq ft. Further, by 2010, 500-600 malls occupying approx120 million sq ft are at various stage of planning. Of the 300 malls expected to belaunched by 2007, about 50% are estimated to come up in 6 metros - NCR, Mumbai,Bangalore, Kolkata, Hyderabad and Chennai with NCR and Mumbai alone accountingfor almost 60 of these new malls. However, by 2010, mall developments are anticipated

to spread across 60 cities in the country.

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

7. Suppliers/brands willing to partner with retailersManufacturers in industries such as FMCG, consumer durables, paints, etc are waking upto the growing clout of the retailers as a shift in bargaining power from the former to thelatter becomes imminent.

6

8/14/2019 project p 1

7/73

Already, a number of manufacturers in India, in line with trends in developed markets,have set up dedicated units to service the retail channel. Also, instead of viewing retailerswith suspicion, or as a necessary evil as was the case earlier, manufacturers arebeginning to acknowledge them as channel members to be partnered with for providingsolutions to the end-consumer more effectively.

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

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

and ensure additional footfalls for the entire Multiplex.

The way ahead

The focal point of organised retail has been the explosive development of shopping mallsand entertainment centers in India over the past three years. According to the Indianbranch of the International Council for Shopping centers, 40 malls have been built inIndia in the last three years, with 300 more scheduled to be completed by 2007. The paceof development of amusement and entertainment centers in India is extremely high. Indiais scheduled to complete the same number of entertainment project in 4 years that tookother countries, even developed ones, almost 30 years to develop.

A.T. Kearney has estimated India's total retail market at US $202.6 billion which isexpected to grow at a compounded 30% over the next five years.

In 2003-04, organised retailing, which has an annual growth rate of 8.5%, sweptpast the Rs.200 billion marks (US $4.5 billion), a figure that appears quite small ifone were to compare the extent of the total market.

Organised retail, at present comprises merely 2% of the total market in India. Thismeans that the untapped segment amounts to a whopping Rs.9,800 billion(approx. US $225 billion).

The share of modern retail is likely to grow from its current 2% to 15-20%over the next decade, analysts feel.

According to a study conducted by KSA Technopak, a retail consultancy firm, major partof the investment over the next two years is likely to go into development of 93 malls in14 major cities. Of the 93 malls, about 39 will be launched in 2005 and the remaining 54

7

8/14/2019 project p 1

8/73

in 2006. By 2010, about 300 malls are estimated to come up. Also, development of mallsis likely to spread across 60 cities by the end of the decade. The National Capital region(NCR) comprising of New Delhi, Gurgaon, Noida and Faridabad will see the maximumdevelopment with 14 retail malls with a cumulative space of 3.35 million square feetexpected to be operational in 2005. This is on account of the high spending power

traditionally demonstrated in this region.

Entertainment

Overview

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

Indian Film Industry

The Indian film industry, with an output of 800-850 movies a year, ranks as the worldslargest and most prolific film industry in the world. Though there has been a discernibletrend towards corporation and organized financing, film production continues to be afragmented and unorganised business. Despite the pervasive influence of films on theIndian public, the quality of movie theatres is very poor. With an estimated 13,000 movietheatres in India, most of them single-screeners and family-owned, film-exhibitionbusiness continues to be a highly fragmented segment.

Film exhibition:

Multiplexes are catalyzing investments and consolidation The impact in the Metros andlarger cities is unmistakable where multiplexes have mushroomed over the last few years.State governments have also done their bit by announcing tax holidays for multiplexes,thereby stimulating investments and helping projects to achieve a faster breakeven. Mostof the players are rolling out multiplex chains by either leasing out space in upcomingmalls or leasing old single-screen theatres and converting them into multiplexes. The new

players are bringing in modern retailing practices to maximize profitability of theirproperties. Their rising clout in the film-exhibition segment is helping them to strikebetter deals with film distributors.

Based on media reports, it is estimated that the segment is in the process of addingaround 200 additional screens to the existing 150 in the next 2-3 years Most of theplayers are rolling out multiplex chains by either leasing out space in upcoming malls orleasing old single-screen theatres and converting them into multiplexes. The new players

8

8/14/2019 project p 1

9/73

are bringing in modern retailing practices to maximize profitability of their properties.Their rising clout in the film-exhibition segment is helping them to strike better dealswith film distributors. Based on media reports, it is estimated that the segment is in theprocess of adding around 200 additional screens to the existing 150 in the next 2-3 years

Key metrics:

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

Current trends

One of the advantages of a multiplex is that a patron has multiple movie options at any

given point in time. This allows a movie patron to watch another movie, if the tickets forthe movie of his choice are not immediately available. It also allows the movie patron torevisit the theater complex at a greater frequency as compared to a single screen theater;Multiplexes generally offer international quality audio and video equipment apart fromquality seating and ambience, thus providing a patron with a high quality viewer shipexperience.

Key factors for growth

a) Organised Retail boom

There has been a boom in the organised retail market in India. There are malls coming inmany cities and towns. One of the key elements driving the success of a mall is its abilityto drive footfalls consistently. Hence each mall design looks at a mix of tenants largeand small. Multiplexes are one of the anchor tenants to large format malls. This gives amall assured footfalls as movies have a higher frequency of consumption.

b) Highly fragmented industry

The Exhibition business is currently highly fragmented, with no single entity havingcontrol over a large number of theaters. This offers an opportunity for a multiplex player

to set up a chain of multiplexes and thus build control over a large number of screens.With increasing control on screens the bargaining power increases with distributors,vendors and other suppliers

c) Quality Theater Complexes

Films are a key destination for entertainment. Exhibition is the last mile in the film valuechain where the patron interacts with the film. The poor condition of most single screens

9

8/14/2019 project p 1

10/73

has turned away family audiences. Multiplexes offer the quality ambience and servicelevels. Although multiplex tickets are usually priced at a premium to the ticket prices ofsingle screens, they continue to attract patrons (both individuals and families) on accountof the better quality of service and ambience that they provide.

d) Entertainment Tax Benefits

The existing rate of Entertainment tax in various states is high. This has resulted in apressure on profitability for a number of players in the exhibition business. As a result,exhibitors (especially the single screen owners) have not been able to channeliseinvestments for maintaining and/or upgrading their theaters. A worsening quality oftheaters has resulted in a lower audience turnout, which put a further strain onprofitability.

e) Growing corporatisation:

Over the last 5 years, the Film Industry is gradually getting corporatised. Severalproduction houses have also raised capital from the equity markets. This is resulting in agrowth in the number of films produced by top quality producers / directors. A lot ofniche / innovative films are also being produced by such production houses. All this isdirectly beneficial to Multiplexes.

Advantages of multiplexes over single screen theatres

The Entertainment Tax exemption being offered by various state governments isproving to be a major incentive for new multiplexes. For instance in Maharashtra,theatres pay 31% of the ticket price as entertainment tax, which directly affectsthe revenues and profits of the theatre owners.

The ultimate aim of a multiplex is to provide wholesome entertainment to afamily ranging from movies, games and food courts.

Multiplexes offer flexibility in terms of the wider variety of content that can bescreened. Most multiplexes built are of the 3 screen format thus offering a greatervariety of movies to the discerning viewer.

Due to a larger number of screens, timings of movies can be staggered allowinggreater flexibility to viewers.

Multiplexes offer a quality conscious consumer the Value For Money concept better ambience, better viewing, parking facilities etc.

10

8/14/2019 project p 1

11/73

Though distribution and exhibition are the last links in the chain bringing filmed

entertainment to the masses, they are of paramount importance, as the success of the filmdepends on successful distribution and exhibition. In India the current infrastructure forFilm exhibition is inadequate to meet existing and potential demand. For a nation with5,000 million admissions every year (roughly a weekly entry of about 100 million), thereare only around 12,900 theatres spread over the country. Further to this, the theatricalsales constitute dominant source of revenues for the film industry and represent boxoffice ticket sales to the viewers at the cinema halls. (Source FICCI Report)

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

11

8/14/2019 project p 1

12/73

Improving Movie Going HabitThe attendance level in the contemporary theatre has reduced over the years but with theadvent of multiplexes and megaplexes the trend has reversed. By moving up the valuechain companies can generate higher revenues. Higher prices can be charged foradditional value delivered.

International trends

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

Favourable Demographics

Some key finding of the study conducted to study the demographics of the Indianentertainment consumer.

Maximum film-watchers fall in age of 15 years to 55 years.

49% of the teenagers are frequent movies goers

Due to the population boom of 1980s and 1990s more and more people areexpected to come in the category of 13+ and 18+. Thus market for frequentmovie goers is expected to increase.

Indian entertainment market is heavily under screened as compared to the USand European markets. Actually, one of the main reasons for the depressedindustry scenario in developed countries is large number of screens per million ofpopulation

.

India is primarily at the single screen theatre stage with few multiple screencinema halls existing in metro cities. Increase in number of screens in India due toadvent of multiple screen cinemas and multiplexes will be beneficial for the

industry as pointed out earlier with overseas examples illustrating that cinemaattendance goes up with multiplexes.

An average Indian spends about 30% of his annual income on familyentertainment (activities housed in family entertainment centers for e.g.multiplexes and megaplexes) (source: study by KSA Technopak)

12

8/14/2019 project p 1

13/73

Government Policies

Entertainment tax is a state subject in India and hence is levied on cinemas, theatres andother forms of entertainment. Quite a few state governments such as Maharashtra,Gujarat, West Bengal, Madhya Pradesh and

Uttar Pradesh has announced an entertainment tax holiday to new mulitplexes being setup in their respective states. The Governments of Maharashtra and Gujarat have beenamongst the first to come out with such policies, which envisage exemption fromentertainment tax 100% for first 3 years and 75 per cent for the balance two years formultiplex operators. At the Central level, the Union government has given section 80 I Bbenefits of 50 per cent income tax deduction to multiplexes being set up in non-metrocities.

Entertainment Tax Holiday (ETH) is definitely the single most significant factor in thecommercial feasibility of multiplexes. However the success of multiplexes in Delhi(where this holiday is not available) point out to the fact that a good operational

exhibition facility with premium pricing can still attract audience. The ETH wouldimprove the project payback period and also enable multiplex owners to invest in otherentertainment facilities, which would generate revenues to compensate when the rebateexpires after 5 years.

Entertainment Tax Rates and Govt. Polices for Multiplexes

States Entertainment Tax

Rates

Government Policies

Bihar 110 % Further compounding of taxes from 10 to 30%based on gross collection capacity per show

MadhyaPradesh

50% Further compounding of taxes at 10% to45% based on gross collection capacity

Maharashtra 45%

Tax Exemption for 3 Years and 75% rebate forfollowing two years to multiplexes with morethan 4 screens and capacity > 1200 seats

UttarPradesh

60% Tax Exemption for 5 year for multiplexes(project) worth Rs.150 lacs or more.

.

13

8/14/2019 project p 1

14/73

Haryana 50% No tax exemption available

Punjab _

Tax exemption for 5 years for multiplexeshaving capacity of minimum 1000 seats, set up

in an area of 4000 sq. yards and minimuminvestment of Rs.2000 lacs

Rajasthan_

Tax exempt for 3 years as follows:

75% for the 1st year

50% for the 2nd year

25% in the 3rd year

Gujarat

50%Tax Exemption for 3 Years and 75% rebate forfollowing two years to multiplexes with morethan 4 screens and capacity > 1200 seats

Real Estate

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

The global real-estate consulting group Knight Frank has ranked India 5th in the list of 30emerging retail markets and predicted an impressive 20% growth rate for the organisedretail segment by 2010. The organized segment is expected to grow from a mere 2% to20% by the end of the decade, it said.

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

According to a survey by real estate consulting firm CB Richard Ellis (CBRE), officespace in Mumbai is more expensive than Manhattan. The CBRE survey, called GlobalMarket Rents, has ranked Mumbai as the world's 15th most expensive place, Manhattan,

the 20th, while Delhi stands at the 32nd position. The cost of occupation in Mumbai is$56.83 per square feet per annum, while in Manhattan, it is $52.04 per sq ft and in Delhi,it is $40.62. Technically, occupation cost represents rent plus local taxes and servicecharges.

14

8/14/2019 project p 1

15/73

Key trends of the real estate boom:

Over 300 malls with a combined retail space of 2.5 crore square feet aresprouting across the country at an investment of Rs 12,500 crore, eight times ofRs 1,500 crore invested till last year.

According to an ICICI study, malls are estimated to become a Rs.38,447 crore($8.3 billion) sector by 2010.

As the competition in the market is intense, builders are going out of their wayto be different. Specialised malls have become the order of the day. Gurgaon, onthe suburbs of New Delhi will soon have an auto mall and jewellery mart, whileBangalore is about to get an exclusive furniture mall.

Similarly in the home segment, which is driven by the availability of easy homefinance, most builders are trying to woo investors with interesting features, each

more tempting than the other.

Closed-circuit television and earthquake proofing are expected as standardfeatures in most up market blocks. Evershine Builders, for instance, is providinga range of facilities from modular kitchens to piped gas and Internet connections.

BUSINESS OVERVIEW

The Company's business model is a hybrid model, which involves a mix of

entertainment cum retailing and real estate. The Companys maiden project, SRSMultiplex, is a unique complex, combining a 3 screen Cineplex with most facilities of amodern shopping mall.

SRS Multiplex commenced operations on November 12, 2004 and has been profitablesince commencement. It is located on NH-2, Delhi-Agra Road at Faridabad, just 25 kmsaway from Connaught Place in New Delhi. The complex is spread over 23,000 sq. ft.with a total built up area of 1,22,000 approx sq. ft., of which total commercial leasablearea expands to 33,358.35 sq. ft. and 3.5 acres of parking space to accommodate over2,500 vehicles at a time. The location is significant as it has the advantage of beingaccessible to the population of Faridabad as well as being within reach of the affluent

population of New Delhi. The complex being situated on the main Delhi-Agra highwayhas the potential to attract tourists who visit the Taj Mahal and Mathura.

SRS Multiplex was conceived to provide entertainment experience combining high-techarchitecture, technology and world class amenities to provide a truly global experience tovisitors. The Company has incorporated several new design concepts and ideas to ensurethat SRS Multiplex offers an experience that is not provided anywhere else in India. The

15

8/14/2019 project p 1

16/73

Company contracted the services of Gautam & Gautam Associates for conceptualisingthe architecture of the complex while the task of construction was undertaken by EraConstruction India Limited

Some of the major architectural and design features that highlight

SRSM and render it the remarkableness are:

A star shaped atrium

Ecological form building

Modern technology with structure of steel and glass in vibrant colours

A video wall in the central lobby with a mini water fall Guang

A separate tower for the high speed Zen 2 lift from China: this lift tower is the soleentry point for members of the exclusive SRS Club and Cineplex patrons

Glass Tunnel housing the Auto walk Travelator: this tunnel is 40 feet above theground and connects he Cineplex with the Zen 2 lift tower

A swimming pool that is housed indoors on the roof top and is dust free

Fire-retardant fabric is used throughout the Cineplex

The average capacity utilization of the Cineplex is approximately 40% and ticket prices

range from Rs.75/- to s.150/- per ticket. The total shopping area leased out stands at32,936.41 sq. ft. Of which 13,665.47 sq. ft. area has been sold and leased back by theCompany.

Floor Wise Features

The complex is divided into 5 floor levels and Roof Top with each housing differentfacilities.

Lower Ground Level Facilities

Little Freedom: Childrens Play Area

The children play area includes the facility of modern games like, Bowling Alley, AirHockey, Video games, Catchers, Pool Table and kids rides etc. This Little Freedomspans over 4000 sq. ft. area of SRSM.

16

8/14/2019 project p 1

17/73

Mini Theatre

Mini Theater has capacity of 72 luxury seats. This provides the facility for corporatemembers to arrange conferences, presentations, annual general meetings, product

launches, training program, tele conferences etc.

SRS Value Bazaar

The Company is in the process of establishing a branded chain of value based massretailing stores christened SRS Value Bazaar. SRSEL will inaugurate its first SRSValue Bazaar at SRS Multiplex. The Bazaar will be spread over an elaborate area of16000 sq. ft. It is expected to be opened to public by around October 2005. The conceptof the bazaar is reflected in its title Sab Kuch Sab Khush.

Ground Level Facilities

Yellow Chilly

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

Music World

A grand collection of all types of audio and video cassettes, CDs and DVDs of all variousclassical, film, non film, folks etc. are available. The chain of music world was setup byfamous R.P.G. Group owner of HMV Brand has drizzling environment and uniquecollection.

World of Titan

Indias Brand Icon in the field of watches, with its brands has presence in SRSM.

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

Rayban

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

17

8/14/2019 project p 1

18/73

Dukes

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

F S Jeans

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

Sangini

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

Nokia

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

Mc-Donald

The leading international chain of fast food restaurants. It has seating capacity for morethan 60 people.

Cream Bell

This is an exclusive ice cream outlet

There are various other brands/ outlets having their presence at SRSM and attract variedaudiences. Some of them are:

Sanjh Savera

U.S. Garments

Orchid Blues

AMPm Kitchen Corner

Walk and Style

18

8/14/2019 project p 1

19/73

Silver and Chants

First Level Facilities

Food Court 7 Dayz family restaurant

A multi cuisine ethnic food court with specialisation of North Indian, Chinese, Fast Food,South Indian and Italian food under one roof. This restaurant has attracted the attention ofmany mall developers around the country due to the delicious cuisine offered at the foodcourt

Pizza Hut

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

Nescafe

The coffee shop with decent seating arrangements

Juice Zone

A juice junction for refreshing moods and providing of all type of seasonal and Nonseasonal variety

Planet Fashion

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

Archies

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

Cowboyz

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

19

8/14/2019 project p 1

20/73

Candico and many more

A corridor stalls of Indian and imported candies.

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

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

Second Level Facilities

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

Visitors Lounge

A spacious furnished and luxurious lounge has been provided for the waiting customers,near the screens. It hasa seating capacity for up to 40 people.

Coffee Lounge

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

Travelator

Indias first and only auto walks system at the SRS Multiplex by OTIS. A luxury, whichis often facilitated at International Airport has its presence in India. This is the firstTravelator which has been installed in India.

Third Level Facilities

20

8/14/2019 project p 1

21/73

Dazzel Restro BarThe classical dine and wine restaurant with a small discotheque forms part of of SRSMultiplex. The DJ keeps the environment warm and cozy with the harmonious music andtunes. It has a seating capacity of approximately 90 seats.

Roof Top Facilities

Crystal Restaurant

An open air roof top restaurant near the periphery of swimming pool provides the hill topexperience. It also includes pool facing bar with Indian and imported drinks has itsmagnificent presence. The management of this restaurant is with Dazzle Restro Bar. Itsseating capacity is up to 70 seats.

Swimming Pool

An imported Australian pool at the roof above the screen is first of its kind in Asia. It wasthe dream facility of SRSEL for being the very first and only in India for the clubmembers of SRS Multiplex.

The following facilities are also proposed to be included in the SRS Club:

Health Club

Slimming Center

Steam Bath

Sauna Bath

Jacuzzi

Yoga

Agreement with Pepsi Foods (P) Limited

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

21

8/14/2019 project p 1

22/73

Infrastructure facilities at SRS Multiplex

Raw Materials

The Company does not have any manufacturing activities and therefore, there is no rawmaterial requirement.

Manpower

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

Power

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

Water

Water is not required as such for the operation of Multiplex/cinemas/ retailstores/restaurants. The requirement of water is restricted to human consumption, cookingand cleaning purposes. For this purpose, a water treatment plant, based on Reverse

Osmosis process has been installed at SRS Multiplex.

Sewage

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

Fire Fighting Facilities

At SRS Multiplex the Company has installed Fire Hydrant and Sprinkler system whichessentially consists of pipes connected to a source of water supply and provided with

outlets for tapings water under pressure. Water outlets are applied at desired pointsmanually through hoses during fire fighting operations.

A man-made water storage tank of 60 cum capacity in two interconnected compartmentswith a common suction sump to facilitate cleaning and maintenance.

22

8/14/2019 project p 1

23/73

Marketing

1. Marketing Arrangements for SRS Multiplex

SRS Multiplex has established itself as one of the premier Multiplex providing some ofthe best facilities. The Company has been advertising in the newspapers, Radio FM,direct marketing and promotion events like paid previews, contests, DJ, social events likedance competition, fancy dress, singing competition etc. Different brands having theirshopping set up in the Multiplex also manage their individual schemes/ campaign for promotional purpose which indirectly adds to the promotion of SRS Multiplex.Hoardings have been installed at prominent places at Faridabad to promote the SRSbrand.

Film premiers are shown at cinemas at SRS Multiplex.

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

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

2. Marketing arrangement for the proposed Project

The existing leading brands in apparels, fast food, jewellery etc. which have associatedwith the Multiplex has given the Company confidence to extend these brands to the otherMultiplexes. With the SRS brand being extended to SRS Value Bazaar and SRSCinemas, the Company expects to enjoy strong brand recollection. This would help theCompany to sell space, services and facilities at the forthcoming Multiplex/Cineplex/Bazaars/restaurants.In the coming years, marketing communications will be carried out along the following

lines:

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

Events led communications23

8/14/2019 project p 1

24/73

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

Business strategy

The Company plans to target potential cities in North India as such cities arecatching up with Metros in terms of culture, disposable income and lifestyle. Thecities have been chosen based on the population, education centers providingpenetration among the youth and being the advantage of among the first in suchcities.

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

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

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

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

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

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

24

8/14/2019 project p 1

25/73

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

The existing total operative capacity at SRS PVR Cinemas is 776 seats. The followingtable shows the capacity utilization for the months April to July 2005:

Sr. No. Month Capacity utilization

1. April 22.51%

2. May 38.54%

3. June 44.75%

4. July 46.47%

Competitive Strengths

SRS Multiplex is well placed in the highly competitive retail and entertainment sector, inFaridabad. Few of its competitive strengths are:

Professional and young management team possessing a good business acumen

Strong communication skills

Focus

Innovative and focused marketing strategies

Understanding of entertainment, retail and real estate businesses

Purchase of property

25

8/14/2019 project p 1

26/73

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

KEY INDUSTRY REGULATIONS AND POLICIES

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

The Company (SRS Entertainment Limited) currently has one Multiplex comprising ofshopping center, theatre screens, eateries, etc. located at Faridabad (NCRDelhi) and has

plans to come up with other similar Mutilpexes in different States and is therefore subjectto various State enactments also.

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

Pursuant to the applicable laws in force in various States in India in which the Company'sMultiplex/ Cineplex/ restaurant would be situated, each of the operation requiresmandatory registrations/ licenses/ consents/ permissions under the statutes listed outbelow (the list of requisite statutes/ legislation set out below is by way of illustration and

is not exhaustive for the present purpose): -

Sr. No. Industry Relevant Laws to be complied with

1.Real Estate i) Transfer of Property Act, 1882;

ii) Foreign Direct Investment Policy;iii) Respective States Rent Control Act,1958iv.) The Building and other Construction

Workers (Regulation of Employment &Conditions of Service) Act, 1996;v) The Contract Labour (Regulation andAbolition) Act, 1970;vi.) The Employers Liability Act, 1938;vii) The Environment Protection Act, 1986;

viii) The Industrial Dispute Act, 1947;

26

8/14/2019 project p 1

27/73

ix) The Minimum Wages Act, 1948;x)The Workmens Compensation Act, 1923

2. Retail i) Foreign Direct Investment Policy;ii). Central Sales Tax Act and/ or State Sales Tax

Act(s) or, as the case may be, Value Added TaxAct;iii). Respective States Shops and CommercialEstablishment Act;iv) Other miscellaneous indirect tax statutes

3. Entertainment i) Cinematography Act, 1952;ii) Cine-Workers and Cinema Theatre WorkersRegulation of Employment Act;iii) Advertisement Act of 1954;iv) Respective States Cinema Regulation Act;

v) Copyright Act, 19574. Eateries i) Prevention of Food Adulteration Act, 1954;

ii) Prevention of Food Adulteration Rules, 1955;iii) Respective States Food Adulteration Rules;iv) Value Added Tax Act;v) Consumer Protection Act, 1986.

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

The Cinematograph Act, 1952

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

The Act authorizes the Central Government to constitute Board of Film Certification (theBoard) in accordance with the Cinematograph (Certification) Rules, 1983 for thepurpose of sanctioning films for public exhibition in India. The Board may certify filmsfor either restricted or unrestricted exhibition, or in the alternative, may prohibit the

exhibition of the film.

The certificate issued by the Board is valid for a period of 10 (ten) years. In terms of theAct, an establishment that exhibits films would have to obtain a license for suchexhibition to confirm that the establishment has complied with the provisions of the Actand that the safety standards of the establishment are adequate. Noncompliance with theprovisions of the Act would attract penalties in the form of imprisonment and/or fines.

27

8/14/2019 project p 1

28/73

The Cinematograph Film Rules, 1948

In terms of the Cinematograph Film Rules, 1948 (the Rules), a license must beobtained prior to storing of any film unless specifically exempted. Any persontransporting, storing or handling films would have to ensure compliance with the

provisions of the Rules pertaining to precautions against fire, restriction of access to filmsby unauthorized personnel, supervision of operations, minimum space between workers,storage of any loose films, minimum specifications for aisle space and exits in storagerooms, electrical installations in the storage rooms etc. The Rules also specify the formand the procedure for applying for licenses, renewal of licenses, transfer of licenses, andprocedure for transport of film, refusal of licenses and cancellation of licenses.

The Punjab Cinema Regulation Act, 1952/ The Punjab Cinema

Regulation Rules, 1952

Punjab Cinema Regulation Act, 1952 (the PCR Act) extends to the whole of the State

of Punjab and Haryana. This is State enactment to make provisions for regulatingexhibitions by means of cinematographs in the State of Punjab and Haryana. Under theprovisions of this Act, no person shall give an exhibition by means of cinematograph,elsewhere than in a place licensed under this Act or otherwise than in compliance withany condition and restriction imposed by such license.

The Punjab Entertainment Duty Act, 1955/ The Punjab Entertainment

Duty Rules, 1956

The Punjab Entertainment Duty Act, 1955 (the PED Act) extends to the whole of theState of Punjab and Haryana. The applicability of the PED Act has been extended toHaryana in terms of Haryana Adaptation of Laws (State and Concurrent Subjects) Order,1968.

The PED Act, inter alia, provides for the levy of an entertainment duty in respect ofadmission to public entertainments. The PED Act provides that a person admitted to anentertainment shall be liable to pay an entertainment duty at a rate not exceeding onehundred and twenty five percent of the amount of payment for admission, which theGovernment may specify, by a notification in this behalf, and the said duty shall be

collected by the proprietor and rendered to the Government in the manner prescribed.Proprietor in relation to any entertainment includes the owner, partner or a personresponsible for the management thereof.

The Punjab Entertainments Tax (Cinematograph Shows) Act, 1954/The

Punjab Entertainments Tax (Cinematograph Shows) Rules, 1954

28

8/14/2019 project p 1

29/73

The Punjab Entertainments Tax (Cinematograph Shows) Act, 1954 (the PET Act)extends to the whole of the State of Punjab and Haryana. The applicability of the PETAct has been extended to Haryana in terms of Haryana Adaptation of Laws (State andConcurrent Subjects) Order, 1968.

The PET Act, inter alia, provides for levy, charge and payment to the State government,on all public cinematograph exhibitions to which persons are admitted on payment, andentertainment at such rates as theState government may, from time to time, by notification fix, but not exceeding tenpercent of the entertainment duty payable at the rate notified under Section 3 of thePunjab Entertainment Duty Act, 1955.

The Haryana Value Added Tax Act, 2003/ Central Sales Tax Act, 1956

The Haryana Value Added Tax Act, 2003 (the HVAT Act) was introduced in the Stateof Haryana with effect from April 1, 2003. Every dealer who is liable to pay tax has to

apply for registration under the HVAT Act / Central Sales Tax Act within the prescribedtime limit.

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

Value Added Tax (VAT)

In terms of the policies enumerated in the Central Governments budget proposals for thefiscal year 2005-06, implementation of value added tax (VAT) is to be completedacross all the States in India within this fiscal year. VAT levy will be administered by theValue Added Tax Act and the Rules made there under. Initially, it will replace the presentlevy of local sales tax. Under the current single-point system of tax levy, themanufacturer or importer of goods into a State is liable to sales tax. There is no sales taxon the further distribution channel. VAT, is a multi-point levy on each of the entities inthe supply chain with the facility of set-off of input tax (i.e., the tax paid at the stage ofpurchase of goods by a trader and on purchase of raw materials by a manufacturer). Only

the value addition at each stage of distribution is subject to VAT.VAT has been introduced and implemented in the States of Punjab and the NationalCapital Territory of Delhi with effect from April 1, 2005.

The Haryana Local Area Development Tax Act, 2000The provisions of Haryana Local Area Development Act (the Act) have becomeeffective from 5.5.2000. Section 3 of the Act provides that there shall be levied andcollected a tax (LADT) on entry into a local area, of all goods (except those specified

29

8/14/2019 project p 1

30/73

in Schedule A to the Act), for consumption or use therein, at such rates not exceedingtwenty percent of the value of petroleum based fuels and not exceeding ten percent of thevalue of other goods, as may, by notification, be specified by the State Government, anddifferent dates and different rates may be specified in respect of different goods ordifferent classes of goods or different local areas. The LADT shall be paid by the

importer. However, an importer shall not be liable to pay tax so long as the aggregatevalue of taxable goods he brings into or receives on their entry into any local area doesnot, in a year, exceed ten lacs rupees or such other sum as the State Government may, bynotification, specify. It has been further provided that an importer who has once becomeliable to pay tax under this Act shall continue to be so liable until the expiry of threeconsecutive years during each of which the aggregate value of any taxable goods hebrings into or receives on their entry into any local area does not exceed the amountspecified.

Foreign Investment Regulations

As per the current policy on foreign direct investment, foreign direct investment in Indiancompanies carrying on business in the Indian retail-trading sector isprohibited.

Fiscal Regulations

Income earned by way of profits by a company incorporated in India is subject to levy ofincome tax on it in accordance with the tax rate prescribed in the Income-tax Act readwith Rules framed there under. The Company, like other companies, is eligible to availcertain benefits/ exemptions/ deductions available under the Income-tax Act. For detailsof the tax benefits see Tax Benefits on page no. 33 of the Draft Red Herring Prospectus.

HISTORY AND CORPORATE STRUCTURE

History

Address of the Registered/Corporate Office

C-4/1, 100 Ft. Road, Shahdara, Delhi - 110094

Constitution Public Limited Company

Activity

30

8/14/2019 project p 1

31/73

Existing Construction and management of multiplexes,amusement parks, cinema halls, hotels, clubs andcommercial and residential buildings.

Proposed Same as above

Date of incorporation January 25, 2005

Complexes located at:

Existing Setor-12, NH-2, Delhi-Agra Road, Faridabad(NCR) Haryana 121007

Proposed Please refer to para "Business Overview - Locationof the Project" on page no.50 of the Draft RedHerring Prospectus

SRSEL was incorporated as 'SRS Commercial Co. Limited' under the Companies Act,1956 on August 29, 2000 which was engaged in the business of trading in commodities.

Witnessing the rapid development in the NationalCapital Region in terms of civic infrastructure, quality of population, standards of livingand general economic growth, the Company decided to venture into a different line ofbusiness to capitalize on the retail and entertainment business potential in the country.Thereafter, it changed its name to SRS Entertainment Limited on January 25, 2005 withthe main object to engage in activities of construction and management of Multiplexes,Amusement Parks, Cinema Halls, Hotels, Clubs and Commercial and ResidentialBuildings etc. in and outside India.

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

SRS Multiplex started commercial operations November 12, 2004. SRS Multiplex is anintegrated project consisting of a 3 screen multiplex, a modern shopping mall, a familyrestaurant and food court and a health club with a rooftop swimming pool. The big nameslike McDonalds, Pizza Hut, Nescafe, Rayban, Airtel, and Music World etc. to name a few

31

8/14/2019 project p 1

32/73

add glory to the Multiplex. M/s ERA Construction was the main contractor for buildingup the project along with other different contractors for different contracts. SRSMultiplex received compliments from various celebrities and dignitaries for itsattractiveness and colorfulness. The Multiplexs enjoys recognition and is well acceptedby the passers-by. Now, the Company receives many offers for similar replica for other

cities. For its SRS Multiplex, the Company tied up with PVR Limited for content andmanagement of the 3 screens built on the natures theme of Sun, Moon and Galaxy. Thelatest movies having strong mass appeal are displayed on the screens. The food jointshave been selected on their various tastes from spicy to sweets.

Main Objects of the Company

The main objects of the Company as detailed in its Memorandum are:

1. To carry on the business of all kinds of entertainment, running and managing themultiplex, Cinema halls, open/digital theatres, stage programmes, restaurants, bar, caf,

discotheques, club, gymnasium, swimming pool, amusement parks, children games andsports centre, video games parlor, casino, hotels, holiday resorts, beauty parlor andsaloon, recreational and other activities, banquet halls, marriage home, departmentalstore, auditorium and all other activities required for running the business of multiplex.

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

3. To carry on the business of consultancy and marketing of activities related to

entertainment and in particular to sell or otherwise provide on rent, the space foradvertisements to the persons, firms, corporate or any body interested for the same, toorganise events, road shows, etc., for the purpose of marketing and business promotion,within and outside the multiplex, restaurant, banquet, cinema halls and any otherbuilding.

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

5. To get the rights for broadcasting, telecasting and marketing the musical programmes,serials, and quiz programmes, thrillers, family dramas, news, sports etc., whether in all orin episodes and to broadcast and telecast the same.

Changes to the main object of the Memorandum of Association

32

8/14/2019 project p 1

33/73

Sr.

No.

Date of

Resolution

Particulars Passed as

1. 20. 09. 2002 Insertion of New Clause No.6 in the MainObject Clause

To carry on the business of multiplexes,cinema halls, open theatres, stageprogrammes, disco halls, disco theque, Bar,club, Gym, Banquet halls, swimming poolrestaurants, amusement parks, Recreationaland sports activities, Beauty Parlor,Departmental store and all other activitiesrequired for running the.

SpecialResolution

2. 06. 12. 2004 Replacing Clauses 1-6 by inserting new

Clauses no. 1-5To carry on the business of all kinds ofentertainment, running and managing themultiplex, Cinema halls, open/digital theatres,stage programmes, restaurants, bar, caf,discotheques, club, gymnasium, swimmingpool, amusement parks, children games andsports center, video game parlor, casino,hotels, holiday resorts, beauty parlor andsaloon, recreational and sports activities,banquet halls, marriage home, departmental

store, auditorium and all other activitiesrequired for running the business ofmultiplex.

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

these things.

To carry on the business of consultancy andmarketing of activities related toentertainment and in particular to sell orotherwise provide on rent, the space foradvertisement to the persons, firms, corporateor anybody interested for the same, to

33

8/14/2019 project p 1

34/73

organize events, road shows etc., for thepurpose of marketing and business promotion,within and outside the multiplex, restaurant,banquet, cinema halls and any other building.

To buy exchange or otherwise acquire aninterest in any immovable property for thepurpose of construction of multiplex, cinemashalls, open/digital theatres, restaurants, bar,discotheques, club, gymnasium, swimmingpool, amusement parks, beauty parlor andsaloon, recreational and sports museum,banquet halls, departmental store, auditoriumand any other such type of building.

To get the rights for broadcasting,telecasting and marketing the musicalprogrammes, serials, quiz programmes,thrillers, family dramas, news, sports etc.,whether in all or in episodes and to broadcastand telecast the same.

3. 04. 02. 2005 Amendment of existing clause no.2, 7, 13, 18,34 Insertion of new clauses in Objects

Incidental or ancillary to the attainment of theMain Objects 13A, 35, 36 and 37

13A. Subject to the provisions of Section 78,79, 80 and 81 of the Companies Act, 1956,rules and regulations made there underand the directions issued by the RBI or underFEMA, to receive money as Share capitalfrom any person, Corporations, Company orOrganisations whether in India and/or abroadand to describe the same as investment madeby NRIs/ FII and to apply to any of the StockExchange as recognised by SEBI for listing ofits securities

To undertake, carryout, promote and sponsorany programme for promoting the business ofthe company or for any social or charitablepurpose and to increase any expenditure on

SpecialResolution

34

8/14/2019 project p 1

35/73

the same programme and in order toimplement any such programme do all theactivities as it may deem fit.

Subject to the provisions of the Companies

Act, 1956, to give to any director, officers,servants or employees of the company anyshare or interest in the profits of the companybusiness by way of commission or otherwisecarried on by own means or through theagency of any subsidiary company and forthat purpose to enter into any arrangementswhich the company may think fit

To do all event and every thing necessary,suitable orproper for the accomplishment of

any of the purposes or the attainment of anyof the objects of the company.

Major Events

Event Date

Got Allotment Letter from HUDA 28.01.2002

Bhoomi poojan and start of construction 26.06.2002

Sanction of Term Loan of Rs.1000 Lac by PNB, Janpath, NewDelhi

05.12.2002

Got DPC Certificate from HUDA 10.12.2002

Soft launch of SRS Multiplex 22.10.2004

Final launch of SRS Multiplex on the eve of Deepawali 12.11.2004

Sanction of Term Loan of Rs.1850lac from Union Bank ofIndia (UBI), Connaught Place, New Delhi under Union RentalScheme @ 9.75% p. a.

20.05.2005

Sanction Letter No.CP:ADV:2005:642 from UBI for reductionin rate of interest by 1% thereby making it 8.75%

13.06.2005

35

8/14/2019 project p 1

36/73

MoU with Tulip Info Services (P) Limited for leased spacemeasuring 50,000 Sq. Ft. construction and management ofCineplex, Restaurant and SRS Value Bazaar at Jodhpur,Rajasthan.

08.07.2005

MoU with P. R. Infrastructure for leased space measuring23,000 Sq. Ft. construction and management of Cineplex andRestaurant at Amritsar

17.07.2005

Grant of ISO 9001:2000 Certification 19.08.2005

Franchise agreement with Richi Look Marketing (P) Limited Cineplex

22.08.2005

Agreement with Omaxe Construction Limited for leased spacemeasuring 18,000 sq.ft. each for construction and managementof Theatre at Omaxe Plaza and Wedding Mall at Gurgaon

22.08.2005

Subsidiaries

The Company has not promoted any other company and hence does not havesubsidiaries.

Shareholders Agreements

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

Other Agreements

1. M/s Seven Dayz Restaurants (P) Limited (Seven Dayz)

On August 22, 2005, the Company entered into an MoU with Seven Dayz that gives theCompany an exclusive right to use the brand 7 Dayz for the food courts/restaurants.Seven Dayz will not have any right/control over the properties on which by way ofSRSEL the 7 Dayz is used and shall only be entitled to royalty/fee. The profit or lossarising out of operating the business of food courts/restaurants run/managed through the

agreement shall be sole responsibility of SRSEL. The consideration, defined asroyalty/fee is Rs.1,00,000/- per annum which shall be paid by SRSEL by cheque/ demanddraft.The MoU requires the two parties to enter into definitive agreements within 60 days fromthe date of the MoU. The definitive agreement shall be in force for a minimum period ofnine years commencing from the date of commencement of commercial operation ofCineplex/Food Court and can be renewed for a further period by the parties at mutuallyacceptable terms and conditions.

36

8/14/2019 project p 1

37/73

2. M/s Omaxe Construction Limited (Omaxe)

i. Omaxe Plaza

On August 22, 2005, the Company entered into an agreement with Omaxe ConstructionLimited for obtaining on lease the multiplex theatre to run 2 screens theatre on 2nd floorin Omaxe Plaza, measuring approximately 18,000 sq. ft. Under the terms of theagreement, Omaxe would provide on lease the multiplex at Omaxe Plaza to SRSEL torun a two screen theatre. Possession of the said premises will be given to SRSEL inOctober 2005 for the purpose of carrying out interior fit outs. SRSEL will payconsideration by way of monthly lease rent of Rs.3,78,000 (Rs.21/- per sq. ft.) to Omaxe.The agreement is valid for a period of nine years from the date of grant of CompletionCertificate by the concerned authorities.

ii. Wedding Mall

On August 22, 2005, the Company entered into an agreement with Omaxe ConstructionLimited for obtaining on lease the multiplex theatre to run 3 screens theatre on 3rd and4th floor in the Wedding Mall measuring approximately 18,000 sq. ft. of. Under the termsof the agreement, Omaxe would provide on lease the multiplex at Wedding Mall toSRSEL to run a three screen theatre. Possession of the said premises will be given toSRSEL in February 2007 for the purpose of carrying out interior fit outs. SRSEL will payconsideration by way of monthly lease rent of Rs.3,78,000 (Rs.21/- per sq. ft.) to Omaxe.The agreement is valid for a period of nine years from the date of grant of CompletionCertificate by the concerned authorities.

3. Gautam & Gautam Associates

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

4. PVR Limited

On July 28, 2004, the Company entered into an agreement with PVR for the operationand management of the SRS PVR Cinemas. Under the terms of the agreement, PVRprovides management consultancy to SRSEL for Cineplex at SRSM for the considerationof 5% of the gross turnover of the Cineplex at SRSM. The gross turnover, as defined in

the agreement, means the turnover of the Multiplex Cinema including without limitationall revenue eared by the Company from concession, cafeteria sales, advertising inside theauditorium and in the foyer area for show window, product display etc. marketing andpromotions, campaigns less entertainment tax applicable and paid by the Company onCineplex admissions at SRSM. The agreement is valid for a period of nine years from thecommencement date which is November 12, 2004, the date when SRSEL inauguratedSRSM at Faridabad, Haryana.

37

8/14/2019 project p 1

38/73

Brief profile of key Management personnel

Mr. Ashok Bansal, CEO

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

Ms. Navneet Chhabra, COO and Co. Secretary

She is Post Graduate in Commerce, the member of Institute of Company Secretaries ofIndia and currently pursuing law from Delhi University. She has joined the Company as

Company Secretary and Sr. Manager (Project) and within a short span of 1 years gotthis position. She is the person responsible for complete cinema operations of theMultiplex.

Mr. Rahul Das

Mr. Das is a B.A (Hons) Graduate in Economics. His experience spans over 20 years. Heheld independent charge as profit center head in Karam Chand Thapar (Africa) LimitedPrior to that he was the Vice-President International Sourcing with Ashco, Inc. He hasalso been a partner in J.B. Nayak & Sons and assistant manager with the AssamCompany India Ltd, Assam.

Mr. Arun Kumar Gupta, CFO

Mr. Gupta is a qualified Chartered Accountant from the Institute of CharteredAccountants of India. He has varied experience in the field of Finance, Accounts andTaxation. He has been assigned the complete responsibility of Accounts, Finance andTaxation Department.

Mrs. Seema Narang, CAO

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

Mr. Narender Singh Vaid, Head (I. T.)

Mr. Vaid has done his B. E. (Electronics) from Aurangabad University. He is MicroSoftSupport Engineer (MCSE) and presently pursuing Cisco Certified Network Administrator

38

8/14/2019 project p 1

39/73

(CCNA). Having an experience of more than 9 years, he heads the I.T. Department andlooks after all requirements be it software, hardware, development of website etc.

Mr. D. P. Singh, Mall Manager (Technical)

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

Mr. Parvesh Kumar, Mall Manager (Maintenance) and Cinema

Engineer

Mr. Parvesh is a qualified Civil Engineer from C. R. Institute of Engineering, Rohtak. Heis with the Project since its inception. Having an experience of more than 10 years, he isan expert in structures and finishing of the buildings. He looks after the engineering

matters of SRSM in particular the cinema operations.

Corporate Governance compliance

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

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

The Company is in compliance with the applicable provisions of listing agreementpertaining to corporate governance, including appointment of independent Directors andconstitution of the following committees of the Board of Directors:

Audit Committee

The Audit Committee consists of Dr. R. K. Aggarwal, Mr. Sunil Jindal and Mr. K. M.Mehta. Any two members would constitute a quorum for a meeting of the AuditCommittee which will be chaired by Mr. R. K. Aggarwal. The Audit Committee acts asan interface between the management and the statutory and internal auditors overseeingthe internal audit functions. The Audit Committee was first constituted by the Board ofDirectors in its meeting held on June 12, 2003 pusuant to compliance of the CompaniesAct, 1956. The Audit Committee was reconstituted on January 04, 2005 and March 28,2005. The committee is entrusted with the functions, scope and powers as envisaged in

39

8/14/2019 project p 1

40/73

Section 292 (a) of the Companys Amendment Act, 2000 and/or any modification /amendment thereof from time to time.

Remuneration Committee

The Remuneration Committee consists of Dr. R. K. Aggarwal, Mr. K. M. Mehta and Mr.R. S. Gupta. All the members of the committee are non-executive independent directors.Any two members would constitute quorum for a meeting of the RemunerationCommittee. The Remuneration Committee is broadly responsible to reviewand approvethe compensation package for senior management personnel including the ManagingDirector and Chief Executive Officer.

The committee is scheduled to meet once a year and will be chaired by Mr. R. K.Aggarwal. The Company Secretary of the Company, Ms. Navneet Chhabra would act asthe secretary of the committee.

Investor Grievance Committee

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

Shareholding of Directors including Qualification Shares

The following table details the shareholding of our Directors, as at the date of the DraftRed Herring Prospectus:

Name of Director No. of Shares of

Rs.10/- each

Mr. Sunil Jindal 1,36,600

Mr. Raju Bansal 45,000

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

40

8/14/2019 project p 1

41/73

Details of Borrowing Powers of Directors

The borrowing power of the Board of Directors of the Company has been increased uptoRs.10000 Lacs vide resolution dated 12.8.2005 passed in the EOGM of the company. TheCompany has presently utilised Rs. 1850 Lacs under union rent scheme of Union Bank of

India, Connaught Palace, New Delhi. The Company has approached UTI Bank Limitedfor its debt requirement for the proposed project and UTI Bank Limited has vide its letterno. UTIBK/RMD-DEL/AM/172 dated September 8, 2005.

Interest of the Directors

Except to the extent of the shareholding in the Company, the Directors do not have anyother interest in the Company.

In term of Section 301 of the Companies Act, 1956 no notice has been received from theDirectors of the Company that need to be entered in the register maintained under section

301 of the Companies Act, 1956.

PROMOTERS

1.Mr. Sunil Jindal

Mr. Sunil Jindal is the founder promoter of SRS Entertainment Limited. He is aged 28years and is the Managing Director of the Company. He is a Law Graduate and has over5 years of experience in the business and financial activities. He has also promoted AkritiFinancial Services (P) Limited where he a director. He also serves as a director of BTL

Investments Limited and has been instrumental in the growth of its business as well asdiversified the business activities. He supervises the day-to-day operations of SRSELapart from the strategic planing for growth and expansion of the Company.

Mr. Sunil Jindals personal details are as under:

Voter Id no. N.A

Driving License No. 3196/F/2005

41

8/14/2019 project p 1

42/73

2. Mr. Raju Bansal

Mr. Raju Bansal is the founder promoter of SRS Entertainment Limited. He is aged years

and is the Executive Director of the Company. He is a Commerce graduate and has over4 years of experience in the business of financial activities. Other than SRSEL, he hasalso promoted Ferro Plast Limited. His active involvement and role conceptualisation andimplementation of the SRS Multiplex have been critical to success.

Mr. Raju Bansal's personal details are as under:

Voter ID No. HR/06/53/0140005

Driving License No. Driving License No.

Copy of the Permanent Account Number, Bank Account Number and passport of the

above have been submitted to the National Stock Exchange of India Limited and theBombay Stock Exchange Limited.

Promoter Group

A. Relatives of Promoters

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

B. Corporate Bodies

1. Bansla Finlease Limited

The company was incorporated on October 11, 1991 as Bansla Finlease (P) Limited andreceived a fresh Certificate of Incorporation on February 20, 1996 subsequent upon

42

8/14/2019 project p 1

43/73

change of name to Bansla Finlease Limited on conversion to public limited company.The registration number of the company with ROC is 55-45921. The company is engagedin the activity of financing of vehicles, consumer goods etc.

It is promoted by Mr. Sushil Singla, Mr. Rajesh Singla and Mr. Vinod Jindal. The Board

of Directors of the company comprises of Mr. Sushil Singla, Mr. Sanjay Singla, Mr.Praveen Singla, Mr. Rajesh Singla, Mr. Vinod Jindal and Mr. Bishan Bansal..

Shareholding Pattern:

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

Name of Shareholder No. of Shares % of Shareholding

Promoters

Mr. Sushil Singla 1,24,325 1.54

Mr. Rajesh Singla 1,05,300 1.30

Mr. Vinod. Jindal 1,07,600 1.34

Relatives, Friends &Associates

74,12,775 95.82

Total 80,81,800 100.00

Financial Performance:Financial highlights for the last three years are as follows:

(Rupees in Lacs)

Particulars 2004-05 2003-04 2002-03

Income 242.71 167.54 77.60

Expenses 234.77 160.27 72.74

Profit/ (Loss) Before Tax (PBT) 7.95 7.26 4.86

Profit/ (Loss) after Tax (PAT) 4.38* 5.82 4.43

Equity Share Capital 808.18 700.00 662.35

43

8/14/2019 project p 1

44/73

Share Application Money 1.62 31.00 9.30

Reserve And Surplus 339.56 10.65 8.75

EPS 0.05 0.08 0.07

NAV 14.20 10.15 10.13

*The company earned higher PBT in F.Y2005 as compared to the previous year.However, the company enjoyed lower depreciation benefit as per Income Tax Act ascompared to previous years. Therefore, higher provision for tax has been made inF.Y2005.

2. BTL Commercial Limited

The company was originally incorporated on October 16, 2000 as Manu CommercialLimited and received certificate of commencement of business on the same day.Thereafter, on November 14, 2003 name of the company was changed to BTLCommercial Limited. Registration number of the company with ROC is 55-107788. It trades in Tea under the brand name of Rahee. The primary business area ofthe company is Haryana and Delhi.

It is promoted by Mr. Vinod Jindal and Mrs. Ritu Jindal. Its Board of Directors includesMr. Vinod Jindal, Mrs. Ritu Jindal and Mrs. Shashi Jindal

Shareholding Pattern:

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

Name of Shareholder No. of Shares % of Shareholding

Promoters

Sh. Vinod Jindal 69,050 4.60

Smt. Ritu Jindal 1,31,600 8.78

Relatives, Friends &Associates

12,99,350 86.62

Total 15,00,000 100.00

44

8/14/2019 project p 1

45/73

Financial Performance:Financial highlights for the last three years are as follows:

(Rupees in Lacs)

Particulars 2004-05 2003-04 2002-03

Income 90.74 31.80 32.77

Expenses 89.38 30.91 31.92

Profit/ (Loss) Before Tax(PBT)

1.37 0.89 0.85

Profit/ (Loss) after Tax (PAT) 1.03 0.88 0.04

Equity Share Capital 150.00 117.24 60.00

Share Application Money 41.46 0.00 6.84

Reserve & Surplus 185.09 53.98 0.79

EPS 0.07 0.08 0.01

NAV 22.11 14.26 9.36

3. BTL Impex (India) Limite