ACKNOWLEDGEMENT

A good project work requires sound knowledge of the subject concerned and skilled to
make 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
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 retail
industry. 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 which
has altered the spending pattern of the urban consumer.
Going by this trend, the business model of SRSEL is a perfect blend of the retail and
entertainment sectors. It includes development and management of Multiplex, which
includes 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 the
number of ‘upper end’ and ‘rich’ households (as per the recent NCAER survey) is
indicative of the potential consumption spend. People are richer, younger and more
aspirational than ever before, supporting the growth in the retail and entertainment
sectors.

Summary

Industry

SRSEL lays great emphasis on growth of the retail sector to determine its future growth
pattern. Multiplexes today reflect the emergence of organised Indian retail industry. 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)

2
 • Increasing disposable incomes
• Rising aspirations of the urban consumer and a change in consumer behavior
Which has altered the spending pattern of the urban consumer.

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

Entertainment:

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 film
depends on successful distribution and exhibition. In India the current infrastructure for
Film exhibition is inadequate to meet existing and potential demand. For a nation with
50,000 lac admissions every year (roughly a weekly entry of about 1000 lac), there are
only around 12,900 theatres spread over the country. Further to this, the theatrical sales
constitute dominant source of revenues for the film industry and represent box office
ticket sales to the viewers at the cinema halls. Ticket sales constitute to be around 90% of
the total revenues in the film industry. (Source FICCI Report)

The trends suggest that with the advent of multiplexes and modern theatres the exhibition
business has indeed become lucrative. To take guidance from international trends, theatre
occupancy 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 are
single theatre screens, the rest falling under either multiplexes, megaplexes or miniplexes
category 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 the
advent of multiplexes and megaplexes the trend has reversed. By moving up the value
chain companies can generate higher revenues. Higher prices can be charged for
additional value delivered.

International trends

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

3
shows that Indian Multiplex market is extremely under screened. This survey also states
that factors like location, type of theatre, dining and shopping are most important features
in selecting a theatre and entertainment joint.

Retail:

The retail sector in India is witnessing a huge revamping exercise as traditional markets
make way for new formats such as departmental stores, hypermarkets, supermarkets and
specialty stores. Western-style malls begun their journey from metros and are now
turning towards second-rung cities introducing the Indian consumer to a shopping
experience 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 Retail
Development 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 segment
is expected to grow from a mere 2% to 20% by the end of the decade.

The Company’s Business

The business model of SRS Entertainment Limited is a “hybrid” model, which involves a
mix of entertainment cum retailing and real estate. The Company’s maiden project, SRS
Multiplex, is a unique complex, combining a 3 screen Cineplex with most facilities of a
modern shopping mall. SRS Multiplex commenced operations from November 12, 2004
and has been proved profitable within the first 6 months of its operation. The average
ticket 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 SRS
Multiplex.

Retail
Overview

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

4
Current trends

The retail sector in India is witnessing a huge revamping exercise as traditional markets
make way for new formats such as departmental stores, hypermarkets, supermarkets and
specialty stores. Western-style malls begun their journey from metros and are now
turning towards second-rung cities introducing the Indian consumer to a shopping
experience 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 entering
the 20-34 age group every year) backed by easy finance options and low nominal interest
rates. Further, the attitudinal shift towards both a preference for value-added products and
convenience also supports the ‘mall’ culture.

2. Burgeoning middle class.

As per a study conducted by the NCAER the Indian middle class (household income
between Rs 0.20-10lac) at 570 lac in 2001- 02 is expected to cross 920 lac by 2005-06
and 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. Close
to 500 lac sq. ft .of retail space is being planned for the next 2 years. Over the medium
term, retailing could substantially enhance the overall productivity. Moreover, it is the
sector that could potentially provide the forward linkages for mass marketing of
processed and packaged goods including farm goods. The growth of the
organised retailing sector, would, however, be in part dependent on the government
facilitating 100% foreign direct investment (FDI) in retailing, providing the necessary
supply chain infrastructure and the relatively high cost of real estate – all of which
continue 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 across
categories. Large
Indian corporate groups like Tata, , Raheja, , , Piramal Group, Pantaloon have taken big
leap in setting up the retail chain business. Various other renowned groups have
expressed serious interest in investing in retailing. In addition, foreign investors and
private equity players are also firming up plans to identify\ investment opportunities in
the 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, as
reported by KSA Technopak. Successful development of value based concepts such as
Big Bazaar, Giant and Vishal Mega
Mart as well as development of retail space in smaller cities and towns will drive
organised retail into the next level of cities. Small towns with a population of 5-10 lacs

5
are witnessing a defined increase indisposable income coupled with high aspirational
levels leading to enhanced spending on consumer goods along with lesser aversion to
credit. Thus, the ‘retail boom’, 85% of which has so far been concentrated in the metros
is 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 constraint

Mall developers across the country are creating superior real estate options at a frenzied
pace. From 35-40 operational malls currently occupying approximately 6 million sq ft of
retail space, India is expected to have over 300 new malls by 2007, thereby adding retail
space to the tune of 50 million sq ft. Further, by 2010, 500-600 malls occupying approx
120 million sq ft are at various stage of planning. Of the 300 malls expected to be
launched by 2007, about 50% are estimated to come up in 6 metros - NCR, Mumbai,
Bangalore, Kolkata, Hyderabad and Chennai with NCR and Mumbai alone accounting
for 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 retailers

Over the last few years, many international retailers have entered the Indian market on
the strength of rising affluence levels of the young Indian population along with the
heightened awareness of global brands and international shopping experiences and the
increased availability of retail real estate space. Luxury brands such as LVMH,
Ermenegildo Zegna, Bvlgari, Escada, Hugo Boss, Tommy Hilfiger, Cartier, etc have
entered the Indian market with presence mostly in five-star hotels in New Delhi and
Mumbai. Many others are firming up plans to set up shop in the country to offer new-age
global Indians an aspirational lifestyle they have demanded for long. A significant trend
is that most of these brands are introducing their latest collections in India in line with
developed markets even at the cost of taking a hit on their profitability due to the high
import duties. This bears testimony to the seriousness with which luxury retailers are
exploring the Indian market with a view to long-term sustainability. Development of
India as a sourcing hub will further make India an attractive retail opportunity for the
global retailers.
Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle, etc are
stepping up their sourcing requirements from India and moving from third-party buying
offices to establishing their own wholly owned/wholly managed sourcing and buying
offices which will further make India an attractive retail opportunity for the global
players. 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 crore
within the next 3-4 years.

7. Suppliers/brands willing to partner with retailers

Manufacturers in industries such as FMCG, consumer durables, paints, etc are waking up
to the growing clout of the retailers as a shift in bargaining power from the former to the
latter becomes imminent.

6
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 retailers
with suspicion, or as a ‘necessary evil’ as was the case earlier, manufacturers are
beginning to acknowledge them as channel members to be partnered with for providing
solutions to the end-consumer more effectively.

SRSM offers a wide variety of restaurants that offer visitors a range of delicacies to
choose from. Some of the available cuisines are Mexican, Indian, continental and also
fast 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 the
Multiplex and will begin commercial operations in October 2005. SRS Value Bazaar
would be a hyper-market in the retail business of various products at the sites in the
format and type of retail chain with different content of products depending on needs and
aspirations of customers. The discount store concept in the form of SRS Value Bazaar
would 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 malls
and entertainment centers in India over the past three years. According to the Indian
branch of the International Council for Shopping centers, 40 malls have been built in
India in the last three years, with 300 more scheduled to be completed by 2007. The pace
of development of amusement and entertainment centers in India is extremely high. India
is scheduled to complete the same number of entertainment project in 4 years that took
other 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 is
expected 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%, swept
past the Rs.200 billion marks (US $4.5 billion), a figure that appears quite small if
one were to compare the extent of the total market.

• Organised retail, at present comprises merely 2% of the total market in India. This
means 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 part
of the investment over the next two years is likely to go into development of 93 malls in
14 major cities. Of the 93 malls, about 39 will be launched in 2005 and the remaining 54

7
in 2006. By 2010, about 300 malls are estimated to come up. Also, development of malls
is 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 maximum
development with 14 retail malls with a cumulative space of 3.35 million square feet
expected 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 and
entertainment potential. A multiplex embodies the luxuries, amenities of the modern day
theatre; multiple screen choices, state-of-art technology, ergonomic seating, eye-catching
architecture and top of the line cafes and food courts. Currently there are about 50 - 55
multiplexes operational in India with prominent ones being in Mumbai, Pune, Delhi, and
Bangalore.

Indian Film Industry

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

Film exhibition:

Multiplexes are catalyzing investments and consolidation The impact in the Metros and
larger 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. Most
of the players are rolling out ‘multiplex chains’ by either leasing out space in upcoming
malls or leasing old single-screen theatres and converting them into multiplexes. The new
players 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 deals with film distributors.

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

8
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 deals
with film distributors. Based on media reports, it is estimated that the segment is in the
process 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 multiplex
and the key operating challenge is to maximize these variables. Costs such as distributor
share (as % age of ticket receipts), property rentals etc vary minimally in the medium
term.

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 for
the movie of his choice are not immediately available. It also allows the movie patron to
revisit the theater complex at a greater frequency as compared to a single screen theater;
Multiplexes generally offer international quality audio and video equipment apart from
quality seating and ambience, thus providing a patron with a high quality viewer ship
experience.

Key factors for growth

a) Organised Retail boom

There has been a boom in the organised retail market in India. There are malls coming in
many cities and towns. One of the key elements driving the success of a mall is its ability
to drive footfalls consistently. Hence each mall design looks at a mix of tenants – large
and small. Multiplexes are one of the anchor tenants to large format malls. This gives a
mall 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 having
control 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 value
chain where the patron interacts with the film. The poor condition of most single screens

9
has turned away family audiences. Multiplexes offer the quality ambience and service
levels. Although multiplex tickets are usually priced at a premium to the ticket prices of
single screens, they continue to attract patrons (both individuals and families) on account
of 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 a
pressure 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 channelise
investments for maintaining and/or upgrading their theaters. A worsening quality of
theaters has resulted in a lower audience turnout, which put a further strain on
profitability.

e) Growing corporatisation:

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

Advantages of multiplexes over single screen theatres

• The Entertainment Tax exemption being offered by various state governments is

proving to be a major incentive for new multiplexes. For instance in Maharashtra,
theatres pay 31% of the ticket price as entertainment tax, which directly affects
the revenues and profits of the theatre owners.

• The ultimate aim of a multiplex is to provide wholesome entertainment to a

family ranging from movies, games and food courts.

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

• Due to a larger number of screens, timings of movies can be staggered allowing

greater flexibility to viewers.

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

10
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 film
depends on successful distribution and exhibition. In India the current infrastructure for
Film exhibition is inadequate to meet existing and potential demand. For a nation with
5,000 million admissions every year (roughly a weekly entry of about 100 million), there
are only around 12,900 theatres spread over the country. Further to this, the theatrical
sales constitute dominant source of revenues for the film industry and represent box
office 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 exhibition
business has indeed become lucrative. To take guidance from international trends, theatre
occupancy 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 are
single theatre screens, the rest falling under either multiplexes, megaplexes or miniplexes
category whereas the in India 95% of the screens are in single screen theaters.

11
Improving Movie Going Habit
The attendance level in the contemporary theatre has reduced over the years but with the
advent of multiplexes and megaplexes the trend has reversed. By moving up the value
chain companies can generate higher revenues. Higher prices can be charged for
additional value delivered.

International trends

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

Favourable Demographics

Some key finding of the study conducted to study the demographics of the Indian
entertainment 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 1980’s and 1990’s more and more people are
expected to come in the category of 13+ and 18+. Thus market for frequent
movie goers is expected to increase.

• Indian entertainment market is heavily under screened as compared to the US

and European markets. Actually, one of the main reasons for the depressed
industry scenario in developed countries is large number of screens per million of
population
.
• India is primarily at the single screen theatre stage with few multiple screen
cinema halls existing in metro cities. Increase in number of screens in India due to
advent of multiple screen cinemas and multiplexes will be beneficial for the
industry as pointed out earlier with overseas examples illustrating that cinema
attendance goes up with multiplexes.

• An average Indian spends about 30% of his annual income on family

entertainment (activities housed in family entertainment centers for e.g.
multiplexes and megaplexes) (source: study by KSA Technopak)

12
Government Policies
Entertainment tax is a state subject in India and hence is levied on cinemas, theatres and
other 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 set
up in their respective states. The Governments of Maharashtra and Gujarat have been
amongst the first to come out with such policies, which envisage exemption from
entertainment tax – 100% for first 3 years and 75 per cent for the balance two years for
multiplex operators. At the Central level, the Union government has given section 80 I B
benefits of 50 per cent income tax deduction to multiplexes being set up in non-metro
cities.

Entertainment Tax Holiday (ETH) is definitely the single most significant factor in the
commercial 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 would
improve the project payback period and also enable multiplex owners to invest in other
entertainment facilities, which would generate revenues to compensate when the rebate
expires after 5 years.

Entertainment Tax Rates and Govt. Polices for Multiplexes

States Entertainment Tax Government Policies

Rates

Bihar 110 % Further compounding of taxes from 10 to 30%

based on gross collection capacity per show

Madhya 50% Further compounding of taxes at 10% to

Pradesh 45% based on gross collection capacity

Maharashtr Tax Exemption for 3 Years and 75% rebate for

a 45% following two years to multiplexes with more
than 4 screens and capacity > 1200 seats

Uttar 60% Tax Exemption for 5 year for multiplexes

Pradesh (project) worth Rs.150 lacs or more.
.

13
 Haryana 50% No tax exemption available

Tax exemption for 5 years for multiplexes

Punjab _ having capacity of minimum 1000 seats, set up
in an area of 4000 sq. yards and minimum
investment of Rs.2000 lacs
Tax exempt for 3 years as follows:
_ • 75% for the 1st year
Rajasthan • 50% for the 2nd year
• 25% in the 3rd year
Tax Exemption for 3 Years and 75% rebate for
Gujarat 50% following two years to multiplexes with more
than 4 screens and capacity > 1200 seats

Real Estate
Driven by the positive growth in industry, real estate in India is booming. The
development 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 30
emerging retail markets and predicted an impressive 20% growth rate for the organised
retail segment by 2010. The organized segment is expected to grow from a mere 2% to
20% by the end of the decade, it said.

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

According to a survey by real estate consulting firm CB Richard Ellis (CBRE), office
space in Mumbai is more expensive than Manhattan. The CBRE survey, called Global
Market 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 service
charges.

14
Key trends of the real estate boom:
• Over 300 malls with a combined retail space of 2.5 crore square feet are
sprouting across the country at an investment of Rs 12,500 crore, eight times of
Rs 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 way
to be different. Specialised malls have become the order of the day. Gurgaon, on
the suburbs of New Delhi will soon have an auto mall and jewellery mart, while
Bangalore is about to get an exclusive furniture mall.

• Similarly in the home segment, which is driven by the availability of easy home
finance, 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 standard

features in most up market blocks. Evershine Builders, for instance, is providing
a 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 Company’s maiden project, SRS
Multiplex, is a unique complex, combining a 3 screen Cineplex with most facilities of a
modern shopping mall.

SRS Multiplex commenced operations on November 12, 2004 and has been profitable
since commencement. It is located on NH-2, Delhi-Agra Road at Faridabad, just 25 kms
away 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 leasable
area expands to 33,358.35 sq. ft. and 3.5 acres of parking space to accommodate over
2,500 vehicles at a time. The location is significant as it has the advantage of being
accessible 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 highway
has the potential to attract tourists who visit the Taj Mahal and Mathura.

SRS Multiplex was conceived to provide entertainment experience combining high-tech

architecture, technology and world class amenities to provide a truly global experience to
visitors. The Company has incorporated several new design concepts and ideas to ensure
that SRS Multiplex offers an experience that is not provided anywhere else in India. The

15
Company contracted the services of Gautam & Gautam Associates for conceptualising
the architecture of the complex while the task of construction was undertaken by Era
Construction 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 sole
entry point for members of the exclusive SRS Club and Cineplex patrons

• Glass Tunnel housing the Auto walk Travelator: this tunnel is 40 feet above the
ground 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 at
32,936.41 sq. ft. Of which 13,665.47 sq. ft. area has been sold and leased back by the
Company.

Floor Wise Features

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

Lower Ground Level Facilities

• Little Freedom: Children’s Play Area

The children play area includes the facility of modern games like, Bowling Alley, Air
Hockey, Video games, Catchers, Pool Table and kid’s rides etc. This Little Freedom
spans over 4000 sq. ft. area of SRSM.

16
• Mini Theatre

Mini Theater has capacity of 72 luxury seats. This provides the facility for corporate
members 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 mass
retailing stores christened “SRS Value Bazaar”. SRSEL will inaugurate its first SRS
Value Bazaar at SRS Multiplex. The Bazaar will be spread over an elaborate area of
16000 sq. ft. It is expected to be opened to public by around October 2005. The concept
of 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. Sanjeev
Kapoor, 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 super
specialty curtsy for food lovers.

• Music World

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

• World of Titan

India’s Brand Icon in the field of watches, with its brands has presence in SRSM.

• Airtel

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

• Rayban

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

17
• 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 of
mobile phones and accessories.

• Mc-Donald

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

• Cream Bell

This is an exclusive ice cream outlet

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

• Sanjh Savera

• U.S. Garments

• Orchid Blues

• AMPm Kitchen Corner

• Walk and Style

18
• 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 of
many mall developers around the country due to the delicious cuisine offered at the food
court

• Pizza Hut

Pizza Hut is a brand well known among the gourmet. They have a chain of Pizza Hut
restaurants around the country. One of such restaurants is presence at SRSM too. It uses
the 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 Non
seasonal variety

• Planet Fashion

A mega store having the unique brand of Madura Garments viz. Van Heusen, Allen
Solly, 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
• 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 Western
Wear that provide exclusive wear.

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

Second Level Facilities

• SRS PVR Cinemas

This floor houses the Cineplex with three theme based screens with the concept of the
SUN, MOON and GALAXY. It has been christened SRS PVR Cinemas. At present, the
combined 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 in
length which is among the large screen size available in multiplexes in India. Moon and
Galaxy 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 has
a seating capacity for up to 40 people.

• Coffee Lounge

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

• Travelator

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

Third Level Facilities

20
• Dazzel Restro Bar
The classical dine and wine restaurant with a small discotheque forms part of of SRS
Multiplex. The DJ keeps the environment warm and cozy with the harmonious music and
tunes. 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 top
experience. It also includes pool facing bar with Indian and imported drinks has its
magnificent presence. The management of this restaurant is with Dazzle Restro Bar. Its
seating 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 was
the dream facility of SRSEL for being the very first and only in India for the club
members 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 with
Pepsi Foods (P) Limited. As per the agreement Pepsi will provide advertisement and
promotional support for SRS Multiplex for consideration that its products will be sold at
the SRS PVR Cinemas and food court at the SRS Multiplex.

21
Infrastructure facilities at SRS Multiplex

Raw Materials

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

Manpower

The Company sources its manpower requirements from consultancy firms like MSR
Marketing (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 power
requirements. It has obtained approval for 1750 KVA of electricity line from HSEB. As a
measure of precaution, SRSEL has installed two DG Sets of capacity of 500 KVA each
and one DG set of 160 KVA at SRS Multiplex. The DG sets are sufficient to generate
power in the event of power failure.

Water

Water is not required as such for the operation of Multiplex/cinemas/ retail

stores/restaurants. The requirement of water is restricted to human consumption, cooking
and 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 SRS
Multiplex. 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 which
essentially 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 points
manually through hoses during fire fighting operations.

A man-made water storage tank of 60 cum capacity in two interconnected compartments

with a common suction sump to facilitate cleaning and maintenance.

22
Marketing

1. Marketing Arrangements for SRS Multiplex

SRS Multiplex has established itself as one of the premier Multiplex providing some of
the best facilities. The Company has been advertising in the newspapers, Radio FM,
direct marketing and promotion events like paid previews, contests, DJ, social events like
dance competition, fancy dress, singing competition etc. Different brands having their
shopping 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 SRS
brand.

• Film premiers are shown at cinemas at SRS Multiplex.

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

• The brand objective of the Company is to expand its customer base, ensure
customer loyalty by creating a world class shopping and movie watching
experience 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 associated
with the Multiplex has given the Company confidence to extend these brands to the other
Multiplexes. With the SRS brand being extended to SRS Value Bazaar and SRS
Cinemas, the Company expects to enjoy strong brand recollection. This would help the
Company 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 Media

Print and outdoor mass media using top end print media like local dailies, magazines and
moving further to electronic media including radio and television

• Events led communications

23
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 young
population. 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 are
catching up with Metros in terms of culture, disposable income and lifestyle. The
cities have been chosen based on the population, education centers providing
penetration among the youth and being the advantage of among the first in such
cities.

• SRS Value Bazaar would be a hyper-market in the retail business of various

products at the sites in the format and type of retail chain with different content of
products depending on needs and aspirations of customers. The discount store
concept in the form of SRS Value Bazaar would provide value for money to the
population at large apart from the target segment and ensure additional footfalls
for the entire Multiplex.

SRS Value Bazaar is a unique concept. It would be located in own multiplexes

and in leased multiplexes of the Company. The Company would procure raw
material 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 opening
of other stores. The store will operate as a discount store and provide various
categories 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 by

the Company. The present project envisages Cineplex set up in 7 cities across the
country, having 21 screens with a capacity of about 20,000 seats.

• With the increasing numbers in terms of locations, the Company is growing

horizontally by opening of new Multiplexes/ Cineplex/ Bazaar and Food Courts
which would provide economies of scale as the outsourcing / purchasing for all
the locations would be done centrally.

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

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

24
 • 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 following
table 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, in
Faridabad. 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
The Company plans to purchase property at 3 places viz. Agra, Ludhiana and
Muzaffarnagar. The Company has given advance worth Rs.250 lacks for the purchase of
properties. 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 various
legislations over the years, which apply to companies engaged in the business of
entertainment, real estate, retail and eateries in India.

The Company (SRS Entertainment Limited) currently has one Multiplex comprising of
shopping center, theatre screens, eateries, etc. located at Faridabad (NCR–Delhi) and has
plans to come up with other similar Mutilpexes in different States and is therefore subject
to 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's
Multiplex/ Cineplex/ restaurant would be situated, each of the operation requires
mandatory registrations/ licenses/ consents/ permissions under the statutes listed out
below (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

Real Estate i) Transfer of Property Act, 1882;

1. ii) Foreign Direct Investment Policy;
iii) Respective State’s Rent Control Act,1958
iv.) The Building and other Construction
Workers’ (Regulation of Employment &
Conditions of Service) Act, 1996;
v) The Contract Labour (Regulation and
Abolition) Act, 1970;
vi.) The Employers’ Liability Act, 1938;
vii) The Environment Protection Act, 1986;

viii) The Industrial Dispute Act, 1947;

26
 ix) The Minimum Wages Act, 1948;
x)The Workmen’s 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 Tax
Act;
iii). Respective State’s Shops and Commercial
Establishment Act;
iv) Other miscellaneous indirect tax statutes

3. Entertainment i) Cinematography Act, 1952;

ii) Cine-Workers and Cinema Theatre Workers
Regulation of Employment Act;
iii) Advertisement Act of 1954;
iv) Respective State’s Cinema Regulation Act;
v) Copyright Act, 1957
4. Eateries i) Prevention of Food Adulteration Act, 1954;
ii) Prevention of Food Adulteration Rules, 1955;
iii) Respective State’s 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 the
certification of cinematograph films for exhibition and for regulating exhibition of films
by means of cinematographs.

The Act authorizes the Central Government to constitute Board of Film Certification (the
“Board”) in accordance with the Cinematograph (Certification) Rules, 1983 for the
purpose of sanctioning films for public exhibition in India. The Board may certify films
for 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 the
Act, an establishment that exhibits films would have to obtain a license for such
exhibition to confirm that the establishment has complied with the provisions of the Act
and that the safety standards of the establishment are adequate. Noncompliance with the
provisions of the Act would attract penalties in the form of imprisonment and/or fines.

27
The Cinematograph Film Rules, 1948

In terms of the Cinematograph Film Rules, 1948 (the “Rules”), a license must be
obtained prior to storing of any film unless specifically exempted. Any person
transporting, storing or handling films would have to ensure compliance with the
provisions of the Rules pertaining to precautions against fire, restriction of access to films
by unauthorized personnel, supervision of operations, minimum space between workers,
storage of any loose films, minimum specifications for aisle space and exits in storage
rooms, electrical installations in the storage rooms etc. The Rules also specify the form
and the procedure for applying for licenses, renewal of licenses, transfer of licenses, and
procedure 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 regulating
exhibitions by means of cinematographs in the State of Punjab and Haryana. Under the
provisions 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 with
any 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 the
State of Punjab and Haryana. The applicability of the PED Act has been extended to
Haryana 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 of
admission to public entertainments. The PED Act provides that a person admitted to an
entertainment shall be liable to pay an entertainment duty at a rate not exceeding one
hundred and twenty five percent of the amount of payment for admission, which the
Government 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 person
responsible for the management thereof.

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

Punjab Entertainments Tax (Cinematograph Shows) Rules, 1954

28
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 PET
Act has been extended to Haryana in terms of Haryana Adaptation of Laws (State and
Concurrent 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, and
entertainment at such rates as the
State government may, from time to time, by notification fix, but not exceeding ten
percent of the entertainment duty payable at the rate notified under Section 3 of the
Punjab 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 State
of 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 prescribed
time limit.

Section 3 of the HVAT Act provides that every dealer who would have continued to be
liable 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 during
the year immediately preceding the appointed day exceeded the taxable quantum as
defined 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 in
the State.

Value Added Tax (VAT)

In terms of the policies enumerated in the Central Government’s budget proposals for the
fiscal year 2005-06, implementation of value added tax (“VAT”) is to be completed
across all the States in India within this fiscal year. VAT levy will be administered by the
Value Added Tax Act and the Rules made there under. Initially, it will replace the present
levy of local sales tax. Under the current single-point system of tax levy, the
manufacturer or importer of goods into a State is liable to sales tax. There is no sales tax
on the further distribution channel. VAT, is a multi-point levy on each of the entities in
the supply chain with the facility of set-off of input tax (i.e., the tax paid at the stage of
purchase 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 National
Capital Territory of Delhi with effect from April 1, 2005.

The Haryana Local Area Development Tax Act, 2000

The provisions of Haryana Local Area Development Act (the “Act”) have become
effective from 5.5.2000. Section 3 of the Act provides that there shall be levied and
collected a tax (“LADT”) on entry into a local area, of all goods (except those specified

29
in Schedule A to the Act), for consumption or use therein, at such rates not exceeding
twenty percent of the value of petroleum based fuels and not exceeding ten percent of the
value of other goods, as may, by notification, be specified by the State Government, and
different dates and different rates may be specified in respect of different goods or
different 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 aggregate
value of taxable goods he brings into or receives on their entry into any local area does
not, in a year, exceed ten lacs rupees or such other sum as the State Government may, by
notification, specify. It has been further provided that an importer who has once become
liable to pay tax under this Act shall continue to be so liable until the expiry of three
consecutive years during each of which the aggregate value of any taxable goods he
brings into or receives on their entry into any local area does not exceed the amount
specified.

Foreign Investment Regulations

As per the current policy on foreign direct investment, foreign direct investment in Indian
companies carrying on business in the Indian retail-trading sector is prohibited.

Fiscal Regulations

Income earned by way of profits by a company incorporated in India is subject to levy of

income tax on it in accordance with the tax rate prescribed in the Income-tax Act read
with Rules framed there under. The Company, like other companies, is eligible to avail
certain benefits/ exemptions/ deductions available under the Income-tax Act. For details
of 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/ C-4/1, 100 Ft. Road, Shahdara, Delhi - 110094
Corporate Office

Constitution Public Limited Company

Activity

30
 Existing Construction and management of multiplexes,
amusement parks, cinema halls, hotels, clubs and
commercial 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 - Location

of the Project" on page no.50 of the Draft Red
Herring 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 National
Capital Region in terms of civic infrastructure, quality of population, standards of living
and general economic growth, the Company decided to venture into a different line of
business 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 with
the main object to engage in activities of construction and management of Multiplexes,
Amusement Parks, Cinema Halls, Hotels, Clubs and Commercial and Residential
Buildings etc. in and outside India.

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

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

31
add glory to the Multiplex. M/s ERA Construction was the main contractor for building
up the project along with other different contractors for different contracts. SRS
Multiplex received compliments from various celebrities and dignitaries for its
attractiveness and colorfulness. The Multiplex’s enjoys recognition and is well accepted
by 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 and
management of the 3 screens built on the nature’s theme of Sun, Moon and Galaxy. The
latest movies having strong mass appeal are displayed on the screens. The food joints
have 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 the
multiplex, Cinema halls, open/digital theatres, stage programmes, restaurants, bar, café,
discotheques, club, gymnasium, swimming pool, amusement parks, children games and
sports centre, video games parlor, casino, hotels, holiday resorts, beauty parlor and
saloon, recreational and other activities, banquet halls, marriage home, departmental
store, 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 into
partnership, joint venture, franchise or any type of association with any other person, firm
or 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 for
advertisements to the persons, firms, corporate or any body interested for the same, to
organise events, road shows, etc., for the purpose of marketing and business promotion,
within and outside the multiplex, restaurant, banquet, cinema halls and any other
building.

4. To buy exchange or otherwise acquire an interest in any immovable property for the
purpose of construction of multiplex, cinema halls, open/digital theatres, restaurants, bar,
discotheques, club, gymnasium, swimming pool, amusement parks, beauty parlor and
saloon, recreational and sports museum, banquet halls, departmental store, auditorium
and 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 or
in episodes and to broadcast and telecast the same.

Changes to the main object of the Memorandum of Association

32
Sr. Date of Particulars Passed as
No. Resolution

1. 20. 09. 2002 Insertion of New Clause No.6 in the Main Special
Object Clause Resolution

To carry on the business of multiplexes,

cinema halls, open theatres, stage
programmes, disco halls, disco theque, Bar,
club, Gym, Banquet halls, swimming pool
restaurants, amusement parks, Recreational
and sports activities, Beauty Parlor,
Departmental store and all other activities
required for running the.

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

Clauses no. 1-5
To carry on the business of all kinds of
entertainment, running and managing the
multiplex, Cinema halls, open/digital theatres,
stage programmes, restaurants, bar, café,
discotheques, club, gymnasium, swimming
pool, amusement parks, children games and
sports center, video game parlor, casino,
hotels, holiday resorts, beauty parlor and
saloon, recreational and sports activities,
banquet halls, marriage home, departmental
store, auditorium and all other activities
required for running the business of
multiplex.

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
into partnership, joint venture, franchise or
any type of association with any other person,
firm or company engaged in doing any of
these things.

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 for
advertisement to the persons, firms, corporate
or anybody interested for the same, to

33
 organize events, road shows etc., for the
purpose of marketing and business promotion,
within and outside the multiplex, restaurant,
banquet, cinema halls and any other building.

To buy exchange or otherwise acquire an

interest in any immovable property for the
purpose of construction of multiplex, cinemas
halls, open/digital theatres, restaurants, bar,
discotheques, club, gymnasium, swimming
pool, amusement parks, beauty parlor and
saloon, recreational and sports museum,
banquet halls, departmental store, auditorium
and any other such type of building.

To get the rights for broadcasting,

telecasting and marketing the musical
programmes, serials, quiz programmes,
thrillers, family dramas, news, sports etc.,
whether in all or in episodes and to broadcast
and telecast the same.”

3. 04. 02. 2005 Amendment of existing clause no.2, 7, 13, 18, Special
34 Insertion of new clauses in Objects Resolution
Incidental or ancillary to the attainment of the
Main 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 under
and the directions issued by the RBI or under
FEMA, to receive money as Share capital
from any person, Corporations, Company or
Organisations whether in India and/or abroad
and to describe the same as investment made
by NRI’s/ FII and to apply to any of the Stock
Exchange as recognised by SEBI for listing of
its securities

To undertake, carryout, promote and sponsor

any programme for promoting the business of
the company or for any social or charitable
purpose and to increase any expenditure on

34
 the same programme and in order to
implement any such programme do all the
activities 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 any
share or interest in the profits of the company
business by way of commission or otherwise
carried on by own means or through the
agency of any subsidiary company and for
that purpose to enter into any arrangements
which the company may think fit

To do all event and every thing necessary,

suitable or proper for the accomplishment of
any of the purposes or the attainment of any
of 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, New 05.12.2002

Delhi

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 of 20.05.2005

India (UBI), Connaught Place, New Delhi under Union Rental
Scheme @ 9.75% p. a.

Sanction Letter No.CP:ADV:2005:642 from UBI for reduction 13.06.2005

in rate of interest by 1% thereby making it 8.75%

35
 MoU with Tulip Info Services (P) Limited for leased space 08.07.2005
measuring 50,000 Sq. Ft. construction and management of
Cineplex, Restaurant and SRS Value Bazaar at Jodhpur,
Rajasthan.

MoU with P. R. Infrastructure for leased space measuring 17.07.2005

23,000 Sq. Ft. construction and management of Cineplex and
Restaurant at Amritsar

Grant of ISO 9001:2000 Certification 19.08.2005

Franchise agreement with Richi Look Marketing (P) Limited – 22.08.2005

Cineplex
Agreement with Omaxe Construction Limited for leased space 22.08.2005
measuring 18,000 sq.ft. each for construction and management
of Theatre at Omaxe Plaza and Wedding Mall at Gurgaon

Subsidiaries
The Company has not promoted any other company and hence does not have
subsidiaries.

Shareholders Agreements

The Company has not entered into agreement with any of it shareholders. The Company
is 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 the
Company 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 of
SRSEL the ‘7 Dayz’ is used and shall only be entitled to royalty/fee. The profit or loss
arising out of operating the business of food courts/restaurants run/managed through the
agreement shall be sole responsibility of SRSEL. The consideration, defined as
royalty/fee is Rs.1,00,000/- per annum which shall be paid by SRSEL by cheque/ demand
draft.
The MoU requires the two parties to enter into definitive agreements within 60 days from
the date of the MoU. The definitive agreement shall be in force for a minimum period of
nine years commencing from the date of commencement of commercial operation of
Cineplex/Food Court and can be renewed for a further period by the parties at mutually
acceptable terms and conditions.

36
2. M/s Omaxe Construction Limited (Omaxe)

i. Omaxe Plaza

On August 22, 2005, the Company entered into an agreement with Omaxe Construction
Limited for obtaining on lease the multiplex theatre to run 2 screens theatre on 2nd floor
in Omaxe Plaza, measuring approximately 18,000 sq. ft. Under the terms of the
agreement, Omaxe would provide on lease the multiplex at Omaxe Plaza to SRSEL to
run a two screen theatre. Possession of the said premises will be given to SRSEL in
October 2005 for the purpose of carrying out interior fit outs. SRSEL will pay
consideration 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 Completion
Certificate by the concerned authorities.

ii. Wedding Mall

On August 22, 2005, the Company entered into an agreement with Omaxe Construction
Limited for obtaining on lease the multiplex theatre to run 3 screens theatre on 3rd and
4th floor in the Wedding Mall measuring approximately 18,000 sq. ft. of. Under the terms
of the agreement, Omaxe would provide on lease the multiplex at Wedding Mall to
SRSEL to run a three screen theatre. Possession of the said premises will be given to
SRSEL in February 2007 for the purpose of carrying out interior fit outs. SRSEL will pay
consideration 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 Completion
Certificate by the concerned authorities.

3. Gautam & Gautam Associates

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

4. PVR Limited

On July 28, 2004, the Company entered into an agreement with PVR for the operation
and management of the SRS PVR Cinemas. Under the terms of the agreement, PVR
provides management consultancy to SRSEL for Cineplex at SRSM for the consideration
of 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 limitation
all revenue eared by the Company from concession, cafeteria sales, advertising inside the
auditorium and in the foyer area for show window, product display etc. marketing and
promotions, campaigns less entertainment tax applicable and paid by the Company on
Cineplex admissions at SRSM. The agreement is valid for a period of nine years from the
commencement date which is November 12, 2004, the date when SRSEL inaugurated
SRSM at Faridabad, Haryana.

37
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 the
assignment at SRSEL recently. He has been instrumental in tying up for new projects at
various places through his initiatives. He would be a key person in the Company's future
endeavours.

Ms. Navneet Chhabra, COO and Co. Secretary

She is Post Graduate in Commerce, the member of Institute of Company Secretaries of

India 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 1½ years got
this position. She is the person responsible for complete cinema operations of the
Multiplex.

Mr. Rahul Das

Mr. Das is a B.A (Hons) Graduate in Economics. His experience spans over 20 years. He
held independent charge as profit center head in Karam Chand Thapar (Africa) Limited
Prior to that he was the Vice-President International Sourcing with Ashco, Inc. He has
also been a partner in J.B. Nayak & Son’s and assistant manager with the Assam
Company India Ltd, Assam.

Mr. Arun Kumar Gupta, CFO

Mr. Gupta is a qualified Chartered Accountant from the Institute of Chartered

Accountants of India. He has varied experience in the field of Finance, Accounts and
Taxation. He has been assigned the complete responsibility of Accounts, Finance and
Taxation Department.

Mrs. Seema Narang, CAO

Mrs. Narang has varied experience in accounts. She takes care of Internal Control and
Audit 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 MicroSoft
Support Engineer (MCSE) and presently pursuing Cisco Certified Network Administrator

38
(CCNA). Having an experience of more than 9 years, he heads the I.T. Department and
looks 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 18
years in the field of construction. After seeing his hard work and zeal, he has been
entrusted 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. He

is with the Project since its inception. Having an experience of more than 10 years, he is
an 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 committees
of the Board. However, primary responsibility for upholding high standards of corporate
governance and providing necessary disclosures within the framework of legal provisions
and institutional conventions with commitment to enhance shareholders’ value vests with
the Board of Directors.

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

The Company is in compliance with the applicable provisions of listing agreement

pertaining to corporate governance, including appointment of independent Directors and
constitution 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 Audit
Committee which will be chaired by Mr. R. K. Aggarwal. The Audit Committee acts as
an interface between the management and the statutory and internal auditors overseeing
the internal audit functions. The Audit Committee was first constituted by the Board of
Directors in its meeting held on June 12, 2003 pusuant to compliance of the Companies
Act, 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
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 Remuneration
Committee. The Remuneration Committee is broadly responsible to review and approve
the compensation package for senior management personnel including the Managing
Director 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 as
the 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 of
Directors in its meeting held on June 14, 2005 pursuant to clause 49 of the Listing
Agreement. It has been constituted for addressing the grievances of the shareholders/
investors, and to suggest and monitor measures to improve investors’ satisfaction. The
committee 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 of
shareholder and investor complaints, issue of duplicate share certificates. It shall have full
access to information contained in the records of the Company and external professional
advice, if necessary.

Shareholding of Directors including Qualification Shares

The following table details the shareholding of our Directors, as at the date of the Draft
Red 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 the

Company in the Articles of Association of the Company.

40
Details of Borrowing Powers of Directors

The borrowing power of the Board of Directors of the Company has been increased upto
Rs.10000 Lacs vide resolution dated 12.8.2005 passed in the EOGM of the company. The
Company 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 Limited
for its debt requirement for the proposed project and UTI Bank Limited has vide its letter
no. 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 any
other interest in the Company.

In term of Section 301 of the Companies Act, 1956 no notice has been received from the
Directors 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 28
years and is the Managing Director of the Company. He is a Law Graduate and has over
5 years of experience in the business and financial activities. He has also promoted Akriti
Financial 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 as
diversified the business activities. He supervises the day-to-day operations of SRSEL
apart from the strategic planing for growth and expansion of the Company.

Mr. Sunil Jindal’s personal details are as under:

Voter Id no. N.A

Driving License No. 3196/F/2005

41
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 over
4 years of experience in the business of financial activities. Other than SRSEL, he has
also promoted Ferro Plast Limited. His active involvement and role conceptualisation and
implementation 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 the
Bombay Stock Exchange Limited.

Promoter Group

A. Relatives of Promoters

The other individuals who form part of the Promoter Group of SRS Entertainment
Limited are Mr. Lalit Bansal, Mr. N. C. Bansal, Mr. Bishan Bansal, Mr. Suresh Bansal
and Mrs. Sanjna Bansal. These individuals are not holding any directorships in the
Company 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 and
received a fresh Certificate of Incorporation on February 20, 1996 subsequent upon

42
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 engaged
in 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 Herring
Prospectus 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 & 74,12,775 95.82

Associates

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
 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 as
compared to previous years. Therefore, higher provision for tax has been made in
F.Y2005.

2. BTL Commercial Limited

The company was originally incorporated on October 16, 2000 as Manu Commercial
Limited and received certificate of commencement of business on the same day.
Thereafter, on November 14, 2003 name of the company was changed to BTL
Commercial 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 of
the company is Haryana and Delhi.

It is promoted by Mr. Vinod Jindal and Mrs. Ritu Jindal. Its Board of Directors includes
Mr. 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 Herring
Prospectus 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 & 12,99,350 86.62

Associates

Total 15,00,000 100.00

44
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 1.37 0.89 0.85

(PBT)

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) Limited

BTL Impex (India) Limited was originally incorporated on February 27, 1997 as G.S.J.P.
Leasing & Credits Limited which received Certificate of Commencement of business on
the same day. Name of the company was subsequently changed to BTL Home Finvest
Limited and finally to BTL Impex (India) Limited. The registration number of the
company with ROC is 55-85457. The company has the authorised service station and sub
dealership of TVS motors and direct selling agents of various finance companies to
finance of vehicles.

The company is promoted by Mrs. Ritu Jindal and Mr. Rishi Prakash Chikkara. Its Board
of Directors are Mrs. Ritu Jindal, Mr. Rishi Prakash and Mrs. Sangeeta Kapoor.

45
Shareholding Pattern:

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

Name of Shareholder No. of Shares % of Shareholding

Promoters

Mrs. Ritu Jindal 68,300 4.91

Mr. Rishi Prakash Chikkara 32,400 2.33

Relatives, Friends & 2,89,600 92.76

Associates

Total 13,90,300 100.00

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

(Rupees in Lacs)
Particulars 2004-05 2003-04 2002-03

Income 136.00 23.24 5.02

Expenditure 130.60 22.50 4.91

PBT 1.46 0.75 0.10

PAT (0.35)* 0.69 0.06

Share Capital 139.03 116.12 50.00

Share Application Money 3.30 5.80 0.00

Reserves & Surplus 84.35 16.89 0.08

46
 EPS 0.00 0.06 0.01

NAV 15.69 10.96 9.99

* The company has made provission for differed tax liability to the tune of Rs.1,70,200
for the prior years in the current year.

4. BTL Industries Limited

The company was originally incorporated on January 22, 1997 as Brightways Trade-
Finlease Limited and received certificate of commencement of business on February 03,
1997. Name of the company was changed to BTL Industries Limited on January 13,
1998. The registration number of the company with ROC is 55-84630.The company is
doing business in Haryana & Delhi with the brand name of “Rahee”. The products are
refined oil, mustered oil and other kiryana items

The company is promoted by Mr. Girraj Prasad Jindal and Mr. Karamvir Singh and its
Board of Directors comprises of Mr. Girraj Prasad Jindal, Mr. Karamvir Singh and Mr.
Khem Chand.

Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring
Prospectus with RoC is as under

Name of Shareholder No. of Shares % of Shareholding

Promoters:

Sh. Girraj Prasad Jindal 1,28,300 8.21

Sh. Karamvir Singh 1,14,600 7.34

Relatives, Friends & Associates 13,19,275 84.45

Total 15,62,175 100.00

47
Financial Performance:
Financial highlights for the last three years are as follows:

Particulars 2004-05 2003-04 2002-03

Income 418.82 53.17 53.42

Expenses 412.71 47.28 51.39

Profit/ (Loss) Before Tax (PBT) 6.11 5.89 2.03

Profit/ (Loss) after Tax (PAT) 3.86 5.42 1.86

Equity Share Capital 156.22 111.79 95.57

Share Application Money 0.00 0.02 9.20

Reserve & Surplus 196.69 63.95 11.54

EPS 0.25 0.48 0.19

NAV 22.59 15.72 11.21

*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 as
compared to previous years. Therefore, higher provision for tax has been made in
F.Y2005.

5. BTL Investments Limited

The company was originally incorporated on May 19, 1995 as RRA Capital Services (P)
Limited. Subsequently and changed its name to RRA Capital Services Limited upon
conversion to public company limited. Finally its name was changed to BTL Investments
Limited on September 05, 1997. The registration number of the company with
ROC is 55-68803. The company has been awarded ISO 9001:2000 certificate for its
qualitative services. The company is engaged in the activity of financing of vehicles,
consumer goods etc..

48
It is promoterd by Mr. Naresh Goel, Mr. Nanak Chand Tayal and Mr. Dinesh Kumar
Goel. Its Board of Directors comprises of:

1. Mr. Naresh Goel

2. Ms. Manju Rani Jain
3. Mr. Sunil Jindal
4. Mr. Nanak Chand Tayal
5. Mr. Dinesh Kumar Goel
6. Mr. Vipin Nalwa

Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring
Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding

Promoters

Naresh Goel 1,14,300 1.51

Nanak Chand Tayal 1,03,400 1.36

Dinesh Kumar Goel 1,14,700 1.52

Relatives, Friends & Associates 72,47,475 95.61

Total 75,79,875 100.00

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

Particulars 2004-05 2003-04 2002-03

Income 389.75 379.78 150.19

Expenses 383.95 374.73 143.19

Profit/ (Loss) Before Tax (PBT) 5.80 5.05 7.01

Profit/ (Loss) after Tax (PAT) 3.41* 4.49 6.45

Equity Share Capital 757.99 700.00 700.00

49
 Share Apllication Money 31.22 0.00 29.95

Reserve And Surplus 188.93 11.56 11.98

EPS 0.04 0.06 0.09

NAV 12.49 10.17 10.17

*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 as
compared to previous years. Therefore, higher provision for tax has been made in
F.Y2005.

6. BTL Sales Limited

The company was incorporated on November 01, 1990 as Pappu Investment Company
(India) Private Limited. On June 11, 1996 it was converted to a public limited company
and nme changed to Pappu Investment Company (India) Limited. Subsequently, on
November 18, 2003 its name was changed from Gomti Manutrade Limited to BTL Sales
Limited and the company received a fresh Cetificate of Incorporation. The registration
number of the company with ROC is 55-41949. The company deals in manufacturing and
trading of milk, edible oil, Vanspati Ghee, and other consumable items. Promoters of the
company are Mr. Dheeraj Gupta and Mrs. Sanjana Bansal. Its Board of Directors are Mr.
Dheeraj Gupta, Mr. Nitin Kumar and Mrs. Sanjan Bansal.

Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring
Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding

Promoters

Mr. Dheeraj Gupta 80,500 6.84

Mrs. Sanjna Bansal 80,500 6.84

Relatives, Friends & 10,16,720 86.32

Associates

Total 11,77,720 100.00

50
Financial Performance:
Financial highlights for the last three years are as follows:

Particulars 2004-05 2003-04 2002-2003

Income 180.56 1.66 0.53

Expenses 179.55 1.64 0.46

Profit/ (Loss) Before Tax (PBT) 1.01 0.02 0.07

Profit/ (Loss) after Tax (PAT) 0.60 0.01 0.04

Equity Share Capital 117.77 74.25 10.00

Share Application Money 0.00 43.65 12.98

Reserve & Surplus 203.96 64.32 0.05

EPS 0.05 0.00 0.04

NAV 27.24 18.57 9.28

7. Madhavtech India (P) Limited

The company was incorporated on February 22, 2000. The registration of the company
with ROC is 55-103892. The company deals in manufacturing and trading of ferrous and
nonferrous plastic mould components. Promoters of the company are Mr. Vinod Gupta,
Mr. Rakesh Gupta, Mr. Ashish Gupta and Mr. Rahul Gupta. It’s Board of Directors
comprises of Mr. Vinod Gupta and Mr. Ashish Gupta.

Shareholding Pattern:
The shareholding pattern of this company as on the date of filing the Red Herring
Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding

Promoters Share Holding

Mr. Vinod Gupta 100 0.025

51
 Mr. Rakesh Gupta 100 0.025

Mr. Ashish Gupta 2,26,250 49.95

Mr. Rahul Gupta 2,26,500 50.00

Total 4,52,950 100.00

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

Particulars 2004-05 2003-04 2002-03

Income 2.65 0.71 0.35

Expenses 0.24 0.29 0.38

Profit/ (Loss) Before Tax (PBT) 2.41 0.42 (0.03)

Profit/ (Loss) after Tax (PAT) 2.28 0.31 (0.03)*

Equity Share Capital 45.29 37.55 31.17

Share Apllication Money 0.00 0.00 0.42

Reserve And Surplus 78.61 53.33 34.20

EPS 0.50 0.08 0.00

NAV 27.29 24.10 20.82

*In F.Y 2003, the company has suffered a loss of approximately Rs.0.15 lacs on sale of
quoted investment.

8. Neelabh Engineers (P) Limited

The company was incorporated on December 22, 1996. Its registration number with ROC
is 55-33403. The company deals in manufacturing of automobile parts.

The company is promotered by Mr. Vinod Gupta, Mrs. Monica Gupta and Vinod Kumar
HUF. The Board of Directors of the company comprises of Mr. Vinod Gupta and Mrs.
Monica Gupta

52
Shareholding Pattern:

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

Name of Shareholder No. of Shares % of Shareholding

Promoters

Sh. Raju Gupta 89,400 6.72

Sh. Dinesh Khatri 1,03,200 5.82

Relatives, Friends & 13,43.645 87.46

Associates

Total 15,36,245 100.00

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

Particulars 2004-05 2003-04 2002-03

Income 0.00 0.00 0.00

Expenses 0.00 0.00 0.00

Profit/ (Loss) Before Tax (PBT) 0.00 0.00 0.00

Profit/ (Loss) after Tax (PAT) 0.00 0.00 0.00

Equity Share Capital 18.02 18.02 17.72

Share Apllication Money 1.85 1.70 1.70

Reserve And Surplus 26.85 26.85 26.85

EPS 0.00 0.00 0.00

NAV 24.41 24.41 24.66

53
9. North Delhi Credit & Investments Limited

The company was incorporated on December 02, 1993. The registration number of the
company with ROC is 55-56269. The company is engaged in the activity of money
lending/financing and as an investment company by acquiring the shares in the other
companies.

It is promoted by Mr. Raju Gupta and Mr. Dinesh Khatri. Borad of Directors of the
company are Mr. Raju Gupta and Mr. Dinesh Khatri

Shareholding Pattern:

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

Name of Shareholder No. of Shares % of Shareholding

Promoters

Sh. Raju Gupta 89,400 6.72

Sh. Dinesh Khatri 1,03,200 5.82

Relatives, Friends & Associates 13,43.645 87.46

Total 15,36,245 100.00

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

Particulars 2004-05 2003-04 2002-03

Income 31.42 40.82 30.87

Expenses 30.11 39.59 29.73

Profit/ (Loss) Before Tax (PBT) 1.31 1.23 1.14

Profit/ (Loss) after Tax (PAT) 0.85* 1.04 0.97

Equity Share Capital 153.62 128.04 108.41

54
 Share Apllication Money 0.00 0.00 24.50

Reserve And Surplus 138.65 61.72 1.80

EPS 0.06 0.08 0.09

NAV 19.03 14.82 10.17

*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 as
compared to previous years. Therefore, higher provision for tax has been made in
F.Y2005.

10. Parvati Finlease Limited

The company was incorporated on May 23, 1996. The registration number of the
company with ROC is 55- 79137. The company is engaged in the activity of money
lending/financing and as an investment company by acquiring the shares in the other
companies.
Promotes of the company are Mr. Ashwani Taneja and Mrs. Meena Aggarwal. Its Board
of Directors Mr. Ashwani Taneja, Mrs. Meena Aggarwal and Mr. Ritesh Aggarwal.

Shareholding Pattern:
The shareholding pattern of this company as on the date of filing this Red Herring
Prospectus with RoC is as under:

Name of Shareholder No. of Shares % of Shareholding

Promoters

Mr. Ashwani Taneja 30,010 7.34

Mrs. Meena Aggarwal 2,50,010 61.10

Relatives, Friends & Associates 1,29,150 31.56

Total 4,09,170 100.00

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

55
 Particulars 2004-05 2003-04 2002-03

Income 3.68 2.43 1.93

Expenses 3.35 2.22 1.73

Profit/ (Loss) Before Tax (PBT) 0.33 0.21 0.21

Profit/ (Loss) after Tax (PAT) 0.21 0.14 0.13

Equity Share Capital 40.92 40.92 40.92

Share Apllication Money 51.05 28.80 13.80

Reserve And Surplus 0.63 0.42 0.28

EPS 0.05 0.03 0.03

NAV 10.15 10.10 10.05

There is no change in the management in any of the above Promoter Group companies
during the last three financial years.

The Permanent Account Numbers, Bank Account Numbers, the Company Registration
Numbers and the addresses of the Registrars of Companies where the Promoter Group
companies are registered have been submitted to the National Stock Exchange of India
Limited and The Bombay Stock Exchange Limited.

Payment of benefit to Promoters of the Issuer Company

No other payment or benefit is given to our Promoters save in their capacity as

shareholders or remuneration as Executive Directors.

RISK FACTORS

Any investment in Equity Shares involves a high degree of risk and so you should
carefully consider the risks described below before you make an investment decision.
Risks have been quantified, wherever possible. If any of the following risks actually
occur, our business, financial condition and results of operations could suffer, the trading
price of our Equity Shares could decline and you may lose all or part of your investment.

56
INTERNAL RISK FACTORS

1. The Company has not declared dividend since inception.

Management Perception:
Our Company was incorporated on August 29, 2000, but began commercial operations on
November 12, 2004. Due to this, our Company has not declared dividend in the past.
However, this is not an indicative of future Company policy for dividend declaration.
Any future declaration of dividends is subject to availability of profits and other financial
and economic considerations.

2. The Company has not registered some of the brand names it proposes
to establish through the Project. As a result, the Company may have
lesser recourse to initiate legal proceedings to protect the in-house
brands. This may lead to a dilution in the brand value of the in-house
brands.
The Company presently has two trademarks registered in the name of the SRS
Commercial Co. Limited viz. SRS World and SRS Cinemas. The Company applied for
registration of trademarks for SRS Value Bazaar and SRS Club. Pending the registration
of these trademarks the Company may have a lesser recourse to initiate legal proceedings
to protect the in-house brands. This may lead to a dilution in the brand value of the in
house product brands.

Management Perception
Our success with our in-house brands depends, partly on our ability to protect and defend
our current and future intellectual property rights relating to such brands. We are in the
business of building retail and entertainment brands, failure to obtain the registration may
have an adverse impact on our business. If, we fail to adequately protect our intellectual
property and market products/services under brands similar to our brands.

3. The business plans of the Company may need substantial capital and
additional financing in the form of debt and/or equity to meet the
requirements.

Management Perception
Our proposed business plan is substantially funded through this IPO and partly by
Promoters equity and debt. However, the actual amount and timing of future capital
requirements may differ from estimates including but not limited to unforeseen delays or
cost over runs, unanticipated expenses, market developments or new opportunities in the
industry. We may also not be able to generate internal cash in our Company as estimated
and may have to resort to alternate sources of funds. Sources of additional financing may
include commercial borrowings, vendor financing, or further issue of equity or debt

57
instruments. If we decide to raise additional funds through the debt route, the interest
obligations would increase and we may be subject to additional covenants, which could
limit our ability to access cash flows from the operations. If we decide to raise additional
funds through equity route, your shareholding in the Company could get diluted.

4. Any adverse impact on the title/ownership rights/development rights

of the landlords (including the Promoters/ Promoter Group) from
whose real estate premises the Company would carry out its operations
may impede the Company’s effective operations of its Multiplex /
Cineplex /restaurants in the future.

Management Perception
With a view to deepen our penetration into several cities across the country, our
Company plans to obtain a few properties on which a part of the Project will be operated,
by entering into transactions in the nature of long-term lease or sub-lease or leave and
licence or conducting basis and /or other contractual arrangements basis with third parties
and/or our Promoters or the Promoter Group Companies. Any adverse impact on the
title /ownership rights/development rights of our landlords (including our Promoters or
the Promoter Group Companies) from whose real estate premises we propose operate our
Multiplexes/ Cineplexes/Bazaars/restaurants may impede our Company’s effective
operations.

5. The Company has not yet executed the required definitive agreements
or arrangements for fully utilizing the Issue proceeds. Also, it has not
yet finalised consultants and contractors for several of the proposed new
Multiplex/Cineplex/retail stores/restaurants.

Management Perception
We have executed preliminary contractual agreements for the three properties that we
propose to acquire each at Agra, Ludhiana and Muzaffarnagar, the lease sites at Jodhpur
and Amritsar for the Cineplex and Food Court, at Gurgaon for the Food Court. However,
final contractual agreements have not been entered into. We have not entered into any
agreements for the three locations where SRS Value Bazaar and Food Court/ restaurants
are proposed to be set up on lease basis for which we are raising funds through this Issue.
We have not yet finalised consultants and contractors for our proposed Project, nor have
we placed orders for the equipment and furniture that we may require. Should we not
execute our expansion plan as envisaged because of this there could be time and cost
overruns affecting the performance of our Company. Further, our expansion plan
includes the lease model to be implemented in seven cities. In such cases, any delay on
the part of the lessor to give possession of the property in a timely manner would delay
the implementation of the Project and besides delays it may also cause may cause
substantial cost overruns.

58
6. The Company has not entered into definitive agreement or placed
orders for construction, machinery and equipment required to operate
the proposed Project.

Management Perception
The deployment of funds as stated in the “Introduction - Objects of the Issue” is entirely
at our discretion and is not subject to monitoring by any independent agency. All the
figures included under the “Introduction - Objects of the Issue” are based on our own
estimates. The estimated capital expenditure including contingency provisions towards
the Project is estimated to be Rs. 10623.70 Lacs and out of the total working capital
reqirement of Rs.906.30 Lacs, Rs. 681.30 Lacs that will be financed out of the proceeds
of this Issue. For more information regarding the status of the Project see “Introduction -
Objects of the Issue” and “Business Overview - Location of the Project” on page no. 24
and 50 respectively of the Draft Red Herring Prospectus.

7. The Company has not received final sanction for debt of Rs.2000.00
Lacs required for the Project
Management Perception:
We have received in-principle approval for the debt portion of the means of finance from
UTI Bank Limited amounting to Rs. 2000 lacs. Any delay in getting the final sanction
from the bank may cause delay in implementation of our Project.

8. Fluctuations in exchange rates may adversely affect the cost of our

Project.
Management Perception:
We intend to use part of proceeds from the Issue to meet capital expenditure required for
the expansion plan described in section “Introduction - Objects of the Issue” beginning
on page no.24 of the Draft Red Herring Prospectus. Some of the equipment we intend to
deploy is expected to be imported and be paid for in foreign currency. Changes in foreign
exchange rates affecting the value of the Rupee adversely may affect the cost of the
Project.

9. Success of the Cineplex business depends upon the commercial

success of various films.

Management Perception:
Success of the Cineplex business depends upon the commercial success of various films.
In cases where a film is not a box office success, it may not attract crowds subsequently
we will not enjoy high capacity utilization. Further, lack of quality content in a film will
be reflected in the box office performance and will in turn impact our profitability. The
profitability of the Cineplex business will also depend on the purchase price of the film.
There is no guarantee that the box office performance will be commensurate with the
price paid.

59
10. The multiplex business is cyclical in nature during the different
periods of the year.
Management Perception:
Our business is cyclical during the different periods of the year. Our revenues are higher
during the April- June and October-December quarters. Any substantial decrease in our
sales in these quarters can have a material adverse impact on our financial performance.
Our revenues increase in the third quarter of the financial year (October-December
quarter) due to the occurrence of festivals like Durga Puja, Diwali, Christmas, etc, as well
as during the summer vacation season (April-June quarter). Also, major big banner
Hindi movies are released during the above mentioned quarters. As a result of this, the
quarter to quarter comparison of financial results may not be accurate or meaningful
indicator of our future performance.

11. Sustainability of income from leased property will depend on the

performance of its clients operating out of the shopping mall at the
Multiplexes

Management Perception:
The location of SRS Multiplex has the advantage of being accessible to the population of
Faridabad as well as being within reach of the population of New Delhi. The complex,
being situated near the main Delhi- Agra highway in the city center of Faridabad has the
potential to attract tourists who visit the Taj Mahal and Mathura. Also, the brands having
their presence at SRS Multiplex are renowned names. Therefore, we do not envisage a
problem of performance by such brands. In the future also, we intend to set up the Project
at the best available sites in the cities our Company plans to penetrate and tie up with
well established and renouned brands for the shopping malls.

12. Related party transactions

The Company’s paid up capital constitutes of 2,70,38,500 equity shares of Rs.10/- each
out of which 1,80,58,700 equity shares (constituting 66.79% of the total pre-Issue
shareholding) are held by 10 (ten) corporate shareholders which form part of the
Promoter Group. Out of these 10 companies, being the majority shareholders (pre-Issue)
of the Company, 5 companies have also entered into Lease Agreements in respect of
commercial space situated at SRS Multiplex at Faridabad.

External Risk Factors

1. The retail/entertainment industry is prone to unforeseen shifts in

tastes and preferences of audiences, which could have an impact on the
operations of the Company.

60
Management Perception
Our success will depend on our ability to understand the business environment and
change our business strategy accordingly

2. Competition from existing shopping malls, single cinema theaters and

multiplexes and future entrants in the retail/shopping malls and
Cineplex business in which the Company operates and proposes to
operate. The concentration of shopping malls and multiplexes in a
particular area will impact the footfalls and in turn adversely impact
the profitability.

Management Perception
Our success will depend in developing the business strategy to cope with the competition
by adopting new strategies in accordance with the changing circumstances.

3. Changes in cinema/theatre technology may render our current

technologies obsolete or require us to make substantial capital
investments.

Management Perception
The Company would adopt strategy to shift the equipments to other areas where existing
technology may be useful and adopt new technology in the areas wherever required to
meet and respond to the competition.

4. Public places such as Multiplex/Cineplex/retail stores/restaurants

could be likely targets for unforeseen acts of violence (including
terrorist acts and rioting), which may impact the retail and
entertainment business

Management Perception
Any violence in public places such as retail stores and malls could cause damage to life
and property, and also impact consumer sentiment and their willingness to visit public
places.

5. One of the major segments in which the Company operates, the retail
industry, is restricted in its ability to raise financial resources for its
growth

Management Perception
The retail sector has not been granted industry status by the Government of India. The
capital requirements for a retailer are in the real estate (which banks have historically
restricted lending to) and for meeting working capital requirements. Banks and financial

61
institutions are further reluctant to lend to the sector because of lack of collaterals since
most of the assets are on lease.

While some of the leading retailers are still able to get bank funding, the smaller ones are
constrained for growth funding. Similarly, equity options are also restricted with Foreign
Direct Investment not being permitted in the retail trading sector.

6. Retail sector generally depends upon various external

merchandisers/vendors on whom absolute control is not possible

Management Perception
Generally, the retail sector depends upon various vendors to provide them the
merchandise. Operations could be adversely affected if supplies of merchandise are not
obtained in a timely manner from the vendors or if the supply of such merchandise is
discontinued or if vendors are not able to meet with the growth requirements.

7. Regional conflicts in South Asia could adversely affect the Indian

economy, disrupt the Company’s operations and cause its business to
suffer.

Management Perception
South Asia has, from time to time, experienced instances of civil unrest and hostilities
among neighbouring countries, such as between India and Pakistan. In recent years there
have been military confrontations along the India-Pakistan border. Military activity or
terrorist attacks in the future could influence the Indian economy. This could have a
material adverse effect on the market for securities of Indian companies, including the
Equity Shares and also on the market for the Company’s offering.

8. Multiplicity of local taxes and levies including VAT, service tax and
entertainment tax may impact the growth of organised retail and
entertainment industries.

Management Perception
Each state in India has different local taxes and levies including sales tax, VAT,
Entertainment Tax, octroi, etc, which has enhanced the complexity for organised retailers
as well as added to their costs. Incidence of various levies as well as the requirement to
mention the Maximum Retail Price (MRP) on various products has led to organised
retailers functioning in a sub optimal level, impacting their competitiveness vs.
unorganised players who also gain by way of tax evasion. Unfavourable changes in these
local taxes and levies might marginally impact the performance adversely since these are
indirect levies and are recovered from the ultimate consumer(s).

62
9. The fortunes of the retail and enertainment sector, especially of
companies retailing lifestyle products, are linked to the overall
performance of the economy

Management Perception
The retail sector is dependent on consumer spend for its performance. Overall economic
conditions can impact the consumer spend, and more so in areas such as lifestyle
products. Any impact on the Indian economy due to internal or external reasons could
impact consumer spend. Since retailers have fixed costs in the short term, any downtrend
in the economy can impact the retail sector adversely and impact fashion and lifestyle
retailers even more.

10. Availability of large quantities of retail space can be affected by

change in interest rates or banking policies

Management Perception
Prevailing interest rates in the economy as well as the yields available on the lease of
property have been instrumental in making real estate available for retail by permitting
investors to borrow and invest in real estate and lease it to retail companies. Any change
in interest rates, or yields on property or change in banking policies pertaining to lending
against real estate or securitisation of lease rentals could impact availability of real estate
for retail.

11. Attrition rates at the entry level are very high for the industry

Management Perception
Our industry competes with other emerging service sectors such as ITES in its ability to
hire and retain quality people in addition to competition amongst the players in the sector.
Hence, availability of trained manpower poses a key risk for the retail sector.
As organised retail grows rapidly, there will be further pressure on existing players as
new entrants would look for trained manpower at various levels. Opening up of Foreign
Direct Investment (FDI) in retail could see the entry of international retail majors and put
further pressure on the manpower.

12. Stability of policies and political situation in India can determine the fortunes of
the industry

Management Perception
The Indian Central and State Governments play an important role for the sector by
regulating policies and regulations governing businesses, including malls/multiplex/retail.
We cannot assure that the current policies will continue in future. The rate of economic
liberalisation could change and specific laws and policies affecting our industries and
other policies affecting investment in our securities could change as well. A significant
change in India’s economic liberalisation and deregulation policies could disrupt business
and economic conditions in India and thereby affect our business.

63
13. Any change in the current policies pertaining to foreign direct
investment in the retail sector could impact our business.

Unstable internal and international political environment could impact the economic
performance in both short term and long term.

14. There has been no public market for the Equity Shares of our
Company and the prices of the Equity Shares may fluctuate.

Management Perception
There can be no assurance that an active trading market for the Equity Shares will
develop or be sustained after this Issue or that the prices at which the Equity Shares are
sold in this Issue will correspond to the prices at which the Equity Shares will trade in the
market subsequent to this Issue.

NOTES TO RISK FACTORS

1. Public Issue of 2,28,57,200 Equity Shares of Rs.10 each of SRS Entertainment Limited
(the “Company”) at a price of Rs. [ ] per Equity Share for cash aggregating Rs. [ ]
Lacs.

2. Investors are advised to refer to the section titled "Introduction - Basis of Issue Price"
on page no.31 before investing in this Issue.

3. Networth as on June 30, 2005 is Rs.2636.49 Lacs.

4. The Book value per share as on June 30, 2005 is Rs. 15.47

5. The investors may contact the Book Running Lead Manager for any clarifications or
information pertaining to the Issue.

6. Average cost of acquisition per share by Mr. Sunil Jindal and Mr. Raju Bansal is Rs.10
per equity share

7. The Promoters do not have any interest in the business of the Company, except to the
extent of investments made by them and their Promoter Group / investment companies in
SRSEL. For details on the same, please refer to page no.88 of the Draft Red Herring
Prospectus.

8. The Investors are advised to refer to the section titled ‘Introduction - Basis of Issue
Price’ on page no. 31 of the Draft Red Herring Prospectus before making an investment
in the Issue.

64
9. Trading in Equity Shares of the Company for all the investors shall be in
dematerialized form only.

10. Investors may note that in case of over-subscription in the Issue, allotment to Non-
Institutional Bidders and Retail Bidders shall be on a proportionate basis.

Common Pursuits

There are no common pursuits in the business of our Company and our Promoter Group
companies

Interest of Promoters

The Promoters do not have any interest in the business of SRSEL, except to the extent of
investments made by them and their Promoter Group / investment companies in SRSEL
and earning returns thereon. For details of the salary and remuneration of the Managing
Director, please refer to the section titled “Terms of Appointment and Remuneration of
Directors” on page no. 74 of the Draft Red Herring Prospectus.

The Company has entered into various agreements/transactions with its Promoter Group
companies. For further details, please refer to “Risk Factors” on page no. viii of the Draft
Red Herring Prospectus and “Related Party Transactions” in the Para below.

Payment of benefit to Promoters of the Issuer Company

No other payment or benefit is given to our Promoters save in their capacity as

shareholders or remuneration as Executive Directors.

GROUP COMPANIES

1. Akriti Financial Services (P) Limited

The company was incorporated on May 23, 1996 as Akriti Financial Services Private
Limited the registration number of the company with ROC is 55-79126. The company is
engaged in the activity of financing of articles or commodities of all and every kind of
description by way of hire purchase, installment purchase or deferred payment or similar
transaction.

65
It is promoted by Mr. Raj Kumar Aggarwal, and Mr. Sunil Jindal. The Board of Directors
of the company comprises of Mr. Raj Kumar Aggarwal, Mrs. Shakuntla Devi, Mr. Sunil
Jindal and Mr. Ritesh Kumar Aggarwal.

2. Ferro Plast Limited

The company was incorporated on December 04, 1973 as Ferro Plast Private Limited and
received a fresh Certificate of Incorporation on April 8, 1996 subsequent upon change of
name to Ferro Plast Limited on conversion to public limited company. The registration
number of the company with ROC is 55-6980. The company is engaged in the business
as factors, financers, guarantors, finance brokers and agent to do business of financing by
way of Hire purchase, leasing, installment purchase or similar transaction.

It is promoted by Mr. Rajeev Vashisht, Mrs. Annapurna Gupta and Mr. Raju Bansal. The
Board of Directors of the company comprises of Mr. Rajeev Vashisht, Mrs. Annapurna
Gupta, Mr. Raju Bansla and Mr. Sunil Aggarwal.

Related Party Transactions

For related party transactions kindly refer to the section titled ‘Financial Information -
Related Party Disclosure" on page no. 103 of the Draft Red Herring Prospectus.

Currency of presentation
For currency of presentation used in the Draft Red Herring Prospectus kindly refer to the
section titled ‘Currency of Presentation’ on page no. vi of the Draft Red Herring
Prospectus.

Dividend Policy
The declaration and payment of dividends will be recommended by our Board of
Directors and our shareholders, in their discretion, and will depend on a number of
factors, including but not limited to our earnings, capital requirements and overall
financial condition. The Company has not declared or paid dividend since its inception
since the Company began commercial operations in November 2004.

SIGNIFICANT ACCOUNTING POLICIES:

Statement of Significant Accounting Polices

1. Basis of accounting: The accounts of company are prepared under historical cost
convention and in accordance with applicable accounting standards except where
otherwise stated. Accounting policies not specifically referred to are consistent with
generally accepted accounting practices. Revenue / Income and Costs and Expenditure
are generally accounted on accrual basis, as they are earned or incurred.

66
2. Fixed Assets and Depreciation:
All the fixed assets purchased are stated at cost of acquisition except in case of those
assets which are revalued.

3. Depreciation: Depreciation of other assets is provided on "Straight line Method”, at the

rates prescribed by Schedule XIV to the Companies Act, 1956.

4. Sundry Debtors/Loans and Advances: are stated net of provision for identified doubtful
debts/advances.

5. Valuation of work in progress: The work in progress has been determined by the
Management at the estimated realizable cost.

6. Revenue Recognition: In respect of Construction contracts, revenue is recognised on

Percentage completion method based on the Bills submitted, certified and sanctioned by
the appropriate authorities. The relevant cost is recognized in accounts in the year of
recognition of the revenue. The total costs of contract are estimated, based on technical
and other estimates Revenue from theater business is recognised on the basis of tickets
sold for the period under accounting and revenue from candy bar is recognised at the time
of factual sale at the counter. Revenue from other services is recognized on due basis
which is in terms of accounting standard issued by the ICAI on Revenue Recognition.
The Non Refundable Life membership fees of the club member are treated as revenue in
nature and revenue recognized on mercantile basis.

7. Borrowing cost: Borrowing cost is accounted on accrual basis.

8. Contract Receipts - Joint venture: Proportionate Consolidation method of accounting

and reporting is followed in respect of Joint venture entered into by the Company. The
Income from such joint venture is recognised on the basis of Bills submitted, certified
and sanctioned by the appropriate authorities. The actual expenses for such Project in
Joint Venture are accounted on the basis of the Profit sharing ratio.

9. Earning per Share: Earning per Share is calculated by dividing the net profit or loss for
the period attributable to equity shareholders by the weighted average number of equity
shares outstanding during the period.

10. Taxation: Provision for Income tax comprises of current tax and deferred tax charge
or release. Deferred tax is recognised, subject to consideration of prudence, on timing
differences, being difference between taxable and accounting income/expenditure that
originate in one period and are capable of reversal in one or more subsequent period(s).
Deferred tax assets are not recognised unless there is "virtual certainty" that sufficient
future taxable income will be available against which such deferred tax assets will be
realised

67
11. Contingencies: Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty are treated as contingent and disclosed by way of
notes to the accounts.

12. Retirement Benefits:

The retirement benefits in the form of Provident Fund and Pension Schemes, whether in
pursuance of any law or otherwise, is accounted on accrual basis and charged to the profit
and loss account of the year.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

You should read the following discussions of financial condition and results of operations
together with audited financial statement for the year ending on March 31, 2001, 2002,
2003, 2004 and 2005 under Indian GAAP including scheduled, Annexure and notes
thereto and the reports thereon, which appear in the Draft Red Herring Prospectus. These
financial statements are prepared in accordance with Indian GAAP, the Companies Act
and SEBI Guidelines and restated as described in the Auditor’s Report of T. K. Gupta &
Associates dated August 29,2005 in the section with the title “Financial Information” at
page no. 91 of the Draft Red Herring Prospectus. Unless otherwise stated, the financial
information used in this section is derived from our audited unconsolidated financial
statements under Indian GAAP, as restated.

Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year
are to the 12-month period ended March 31 of that year.

Company's business model

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

entertainment cum retailing and real estate.

The Company’s maiden project, SRS Multiplex began commercial operations from
November 12, 2004. The Multiplex is a unique complex, combining a 3 screen Cineplex,
all the facilities of a modern shopping mall, a club house, restaurants/Food Court and a
coffee loungecoffee lounge.

The second is in the real estate sector. The Multiplex consists of 23,000 sq. ft. area of
shopping complex. This is either let out on either lease rental basis or sold. Many brands
such as Rayban, Airtel, Pizza Hut, Mc-Donalds etc. have their presence in the Multiplex.

Going ahead, the Company plans to foray into the retail segment by launching a chain of
its retail stores under the name and style "SRS Value Bazaar". The Bazaar will offer

68
lifestyle products in several price ranges to cater to the aspirational needs of the
consumers in each of their locations. The products stocked in these Bazaars will reflect
the unique tastes and purchasing power capacities of each city individually.

The first SRS Value Bazaar is being set up in the SRS Multiplex at Faridabad. This is
expected to become operative from October 01, 2005. Products such as garments,
accessories, household items, groceries, cosmetics etc will be made available at this
bazaar at discounted rates upto 40%. The Company plans to make the SRS Value Bazaar
a common feature of its proposed Project and expects it to become a major revenue driver
for the Company.

Location of the Project

The Company’s business model is based on the latent demand for upscale entertainment
and retail options in non-metro urban cities, also known as Tier-II cities. These areas are
increasing grabbing the attention of Fast Moving Consumer Goods (FMCG) companies
and F&B retailers. It is estimated that the growth of organized retail in Tier-II cities will
outstrip the relative growth in the metros by three times.

The Company has devised a three pronged approach:

1. Ownership model

SRSEL proposes to expand the mall operations under the SRS Multiplex business model
by buying land and building smaller replicas of the existing SRS Multiplex in three
different cities. The cities have been identified as:

City State

Agra Uttar Pradesh

Ludhiana Punjab

Muzaffarnagar Uttar Pradesh

These Multiplexes will provide SRS Cinemas, SRS Value Bazaars, 7 Dayz Restaurant –
Food Court, other restaurants and a shopping area that will house various leading brands.

2. Lease Model

SRSEL plans to expand its operations through leasing of properties. Four of such sites,
i.e., two at Gurgaon and one each at Amritsar and Jodhpur would provide SRS Cineplex
and 7 Dayz Restaurant – Food Court. At Jodhpur, the Company also plans to also

69
introduce the SRS Value Bazaar. SRS Value Bazaar would also be set up, on lease
arrangement basis, at three other locations, i.e., Ambala, Jalandhar and Meerut. At these
locations the Company proposes to implement the SRS Cineplex and 7 Dayz Restaurant
– Food Court on a franchise arrangement basis described below.

M/s Omaxe Construction Limited is in process of development and construction of two

shopping malls cum multiplex named Omaxe Plaza and Wedding Mall at Gurgaon. The
Company has entered into agreements with Omaxe Construction Limited to take on lease,
premises for running theatres at the said malls cum multiplex. For details on the
agreements please refer to the section titled "History and Corporate Structure - Other
Agreements"

The Company has already entered into MoUs for two properties details of which are as
follows:

City State Lessor Date of MoU

Amritsar Punjab P R Infrastructure Limited 17.07.2005

Jodhpur Rajasthan Tulip Info Services (P) 08.07.2005

Limited

Details of the aforesaid MoUs is as follows:

• MoU with P R Infrastructure Limited

MoU has been signed between SRSEL and M/s P R Infrastructure Limited for their
upcoming shopping mall at Batala, Verka Chowk, Amritsar for 4 theatre screens in a
super area of 23000 sq. ft. for period of 9 years divided into 3 slots of 3 years each. A
ticket window would be provided at the ground floor at an approximate area of 150 sq.ft.

• MoU with Tulip Info Services (P) Limited

MoU has been signed with M/s Tulip Info Services (P) Limited. The company plans to
set up a shopping mall at Jodhpur, Rajasthan in collaboration with His Highness Gaj
Singh, referred as Majestic Stadia. SRSEL would be running 4 screen theatres and a food
court on an approximate super area of 50,000 sq. ft. for a total period of 9 years.

3. Franchise Model

SRSEL has entered into a MoU with M/s Richi Look Marketing (P) Limited to provide
marketing assistance to implement the franchisee model. The Company would authorise
Richi Look to use/franchise the brand for SRS Cinemas and 7 Dayz. SRSEL would

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provide recruitment advice and training to the personnel and put the I.T. and allied
infrastructure in place. For this, SRSEL proposes to develop software that would
facilitate the centrally controlled system for logistics, purchases, revenue generated etc. at
each of the sites.

Plant, machinery, technology, process:

Land and Building

The Company is in the process of acquiring land at Agra, Ludhiana and Muzzafarnagar,
where it plans to construct and manage Multiplexes on ownership basis. The Company
through SRS Buildcon (P) Limited has identified properties at Agra and Ludhiana and
necessary due deligence is being conducted for acquisition. The Company is also in the
process of identifying property at Muzzafarnagar through Tarang Buildcon (P) Limited

Equipment

The Company is currently negotiating with various suppliers for supply of various
fixtures, furniture, equipments, hardware and software required to operate the Project.
The detail of the equipment with the respective suppliers and consultants the Company is
in dialogue is as given hereunder:

Significant developments subsequent to the last financial year

The Directors of the Company confirm that in their opinion, no circumstances have arisen
since the date of the last financial statements as disclosed in the Red Herring Prospectus
and which materially and adversely affect or is likely to affect the trading or profitability
of the Company, or the value of its assets, or its ability to pay its liabilities within the next
twelve months.

Factors that may affect Results of the Operations

Several factors have affected our results of operations, financial condition and cash flow
significantly in the F.Y 2004-05. These factors include:

• New films are being released across a larger number of theaters with a larger number
of prints in order to maximize theatrical revenues in the shortest time period;

• Entertainment tax sops for developing and operating multiplexes are being offered by
certain states. This has encouraged the growth of multiplexes and also encouraged
single screen theaters to convert into multiplexes.

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• Growth in multiplexing – catching the retail boom.

These factors and a number of future developments may affect our results of operations,
financial condition and cash flow in future periods. We believe that the following future
developments may affect our future results of operations, financial condition and cash
flow:
• Retail

• Multiplexes are fast emerging as the one of the key anchor tenants for most
organised retail outlets in India.

• Improving regulatory environment.

• Multiplexing – highly fragmented industry with scattered ownership –

opportunities exists for nationwide film exhibition chain through chain of
multiplexes.

Future plan
The SRS Group is committed to excel in every business it has presence in and become a
trusted, valued brand. Apart from this, it is guided by a business philosophy that
commercial growth can best happen when married with the welfare of the larger society.

Driven with these values, SRS aims to develop 1, 00,000 dwelling units and provide
employment, on its rolls, to more than 10,000 people by the end of 2013.

SRS also aims at establishing a university at the Nehar Par (Greater Faridabad) area of
Faridabad that will offer all contemporary faculties. SRS has already acquired land of
about 25 acres for this university, which will not only serve as a home town university for
students of Faridabad but will also draw talent from other cities.

In addition to this, the SRS Group wants to roll-out another innovative idea to bring out
the hidden sports talent in India. It intends to do so by setting up a dedicated Sports
Academy in the nature of a full-fledged sports university that will offer day boarding
along with nutritious meals to its students. It is the hope of the SRS Group that once set
up, this academy will be the breeding ground of world-class sportsmen and experts who
will bring glory to the country.

Values

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• The company believes in simplicity and maintains clear and effective
communication in the organization.
• The company believes in team work with well-defined responsibilities and
accountability.
• The company strives to provide best value for money to our customers by
synergizing our intellectual resources and experience.
• The company believes in according top priority to our customers through
prompt and appropriate response.
• The company believes in respect and care for all those associated with us
by meeting commitments, and
• The company believes that hard work always works

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