Notes to Accounts of Shree Ashtavinayak Cine Vision Ltd.

Mar 31, 2013

Note 1 CONTINGENT LIABILITIES AND COMMITMENTS

Disclosure pursuant to Note no. 6(T) of Part I of Schedule VI to the Companies Act. 1956

31st March, 2013 31st March, 2012 Particulars

A. Contingent Liabilities

(1) Claims against the company not acknowledged as debt

- Penal Interest charges by STCI Finance Ltd. 1,910,277

- IDBI Bank - Legal Charges and Others 542,932

(2) Guarantees - -

(3) Other money for which the company is contingently 25,000,000 liable

(4) Income-tax demand for Assessment Year 2010-11 for which the Company has preferred appeal 139,406,289 166,589,498

Sub Total (A) 166,859,498 -

B. Commitments

(1) Estimated amount of contracts remaining to be 2,761,700,000 2,317,440, 000 executed on capital account and not provided for

(2) Uncalled liability on shares and other investments partly paid

(3) Other commitments

Sub Total (B) 2,761,700,000 2,317,440, 000

Total Contingent Liabilities and Commitments (A B) 2,928,559,498 2,137,440,

2. The value on realization of current assets in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet. According to the management, provision for all the known liabilities is adequate.

3. Balances in Debtors, Creditors, loans, advances, loans taken, and other current assets are subject to confirmation and reconciliation.

4. The Company has advanced funds to its various subsidiaries as mentioned hereunder for various projects and products akin to business of the Group. The Capital Advances, work in progress, and other application of funds made by these subsidiary companies in opinion of the management are good in nature; and the same have been considered as good in the respective annual accounts of the said subsidiary companies.

(a) Amount advanced to subsidiary is in nature of loan, where the loan is re-payable on demand.

(b) Advances to employees are not in the nature of loans and there are no other advances in the nature of loans.

(c) No advances in the nature of loan are given to any subsidiary or an associate for investment in shares of the Company.

5. (a) The Company has dispute with certain parties from whom loans were received balance amounting to Rs. 5,582,426 at the yearend against pledge of shares of the directors / promoter group. These parties have not sent their loan confirmations, and the same are reflected in accounts based on the last information available with the Company without prejudice to the Company''s rights against these parties as claimed before the humble Court. These parties have filed a suit against the Company for recovery of loans including winding up of the Company. The Company has taken appropriate legal remedies to defend the cases.

(b) The Company is to pay amount due on account of interest amounting to Rs. 139,822,427 to the banks and financial institutions for a period from three months to fifteen months on the date of Balance Sheet. The Company is in process of renegotiating the terms of loans with the banks and Institutions. A few banks and Institutions have not sent their loan confirmations, and the same are reflected in accounts based on the last information available with the Company. One of the lenders has taken symbolic possession of office premises of the Company. Some of these banks and Institutions have filed suits against the Company for recovery of their debts. However, since the loan accounts were Non Performing Assets according the Regulations of Reserve bank of India, they have not charged interest to the loan accounts. The Company has made provision of interest payable at normal rates in its accounts. To that extent, the loan balances vary in accounts of the Company and in accounts of the said banks and institutions.

(c) The Company is challenged on financial front; and thus has not been able to repay the loans, secured and unsecured, and other unsecured creditors. A few unsecured creditors have filed suit against the Company for recovery of their dues as well as winding up of the Company. The Company has also not been able to pay statutory dues like income-tax and wealth tax for Assessment Year 2012-13, TDS for Assessment year 2012-13 and 2013-14, Employees'' profession tax, Provident fund and ESIC partly for the year under consideration, and Service Tax for the year, although appropriate provisions for liabilities are made in accounts. The Company is yet to file its return of income and wealth for Assessment Year 2012-13 and TDS quarterly statements for Assessment Year 2012-13 and 2013-14, and other returns for service tax, profession tax, provident fund, and ESIC. The Company might face penal actions from Appropriate Authorities for these non compliances.

(d) Owing to non payments of loans taken for / on motor cars, the concerned lender have invoked the securities. However, the Company is intimated by the lenders that a few cars were sold by them after the year end. Since, technically the Company owned these cars on the balance sheet date, the same have been shown as assets in the balance sheet and depreciation is provided on them. Necessary entries for sale and other consequential entries will be passed by the Company in next financial year. In view of taking possession of the prime securities in form of motor cars, these loans are secured against only personal guarantees of directors; and have been classified as such as secured short term liabilities.

(e) One of the main reasons for the financial challenges is moneys raised by the Company through various sources are deployed in various projects of production and distribution of films which have delayed owing to various reasons beyond control. The moneys advanced to Indian and foreign subsidiaries of the Company are deployed by the said subsidiaries in various production and distribution of films projects which are also delayed. The management is working hard to overcome the challenges that are in way, and is confident of completing these projects in near future or otherwise realize the moneys deployed in these projects in form of capital advances or capital work in progress. Appropriate provisions for doubtful debts in opinion of the management have been created in accounts to take care of contingencies. The management is of the view that amounts realizable by the Company are larger than the liabilities of the Company, and the present financial challenges are part of a temporary phase. The details of major capital work in progress, receivables, and capital advances vis-a-vis external liabilities (apart from promoters’ loans) are as under:

In view of this, the management is of the view that, the Company is a going concern, and the accounts are drawn accordingly.

6. Foreign Currency Convertible Bonds (“FCCB”)

The Company had outstanding 2.875 per cent FCCB due in December 2012 of l)S$ 100,000 each convertible into equity shares aggregating to US$ $ 21,627,000. The Bond holders had the option to convert these FCCB into equity shares of the Company at a price of Rs. 45 (number adjusted after split of face value) per share (reset to Rs. 43.98 (number adjusted after split of face value), subject to further adjustment, if any) with a fixed exchange rate of Rs. 39.35 per US$ 1, at any time on or after January 21, 2008 and before November 22, 2012.

These FCCBs are converted by the Company on December 18, 2012 into 19,347,757 equity shares of Rs. 1 each, and bonus in the ratio of 1:4 was issues by way of 77,391,028 bonus shares utilizing securities premium account as per the terms of FCCB issue based on notices received during the period August 2010 for conversion of 147.77 Lakhs bonds. Balance 68.50 Lakhs number of FCCB have been converted by the Company in interest of the bond holders in absence of communication from the bonds holders in this regard vide resolution of the Board of Directors dated December 18, 2012. However, the Company is yet to file Return of Allotment with Registrar of Companies with reference to Balance 68.50 Lakhs number of FCCB so converted in 6,128,087 equity shares and 24,512,348 bonus equity shares thereon in absence of relevant information of the / from the bonds holders, although the paid share capital of the Company is raised by the full number and value of shares in books of the Company.

Premium payable of Rs. 284,194,814 on FCCBs so converted that was written off against securities premium account in accordance with section 78 (2) read with section 2 (12) of the Companies Act 1956 is reaccredited to the securities premium account in view of the same being not payable.

Accrued interest for the year payable of Rs. 42,487,294 on FCCBs so converted that was provided in accounts is written back in view of this conversion. Since no interest is payable on FCCB so converted, and the moneys raised through these FCCBs were advanced to foreign subsidiary of the Company, the management has decided not to charge interest to the foreign subsidiary during the year considering factors like expectation as to ultimate collection and interest of the group at large. In view of this, the Company has reversed interest charge of Rs. 265,137,330 (Rs. 199,085,362 from April 1, 2012 to December 31, 2012 and Rs. 66,051,968 for the period January 1, 2013 to March 31, 2013). The Company is in process of obtaining necessary approvals from Appropriate Authority in this regard.

At end of the year, the Company had outstanding bonds of $ 0 (Previous year $ 21,627,000).

7. In the opinion of the management, current assets and loans and advances are of the value stated in the financial statements and realisable in the ordinary course of the business, and are subject to confirmation and reconciliation. The provision for all known liabilities are adequate and are not in excess of the amounts considered reasonably necessary. Unsecured loans, items of capital work-in- excess of the amounts considered reasonably necessary. Unsecured loans, items of capital work-in- progress, and capital advances are subject to confirmation. According to management, the amount standing in respective accounts of capital work-in-progress and capital advances are stated at cost.

8. The Company has not received any intimation from the suppliers regarding status under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) and hence disclosure regarding:

(a) Amount due and outstanding to suppliers as at the end of the accounting year;

(b) Interest paid during the year;

(c) Interest payable at the end of the accounting year;

(d) Interest accrued and unpaid at the end of the accounting year, has not been provided.

The Company is making efforts to get the confirmations from the suppliers as regards their status under the act. The management believes that figure for disclosure will not be significant.

9. During the year, the Company has written off RS. 486,643,000 incurred towards incomplete films the production of which was stalled owing to multiple reasons.

Notes:

Related party relationship have been identified by the management and relied upon by the auditors.

During the period, some loan creditors, whom equity shares of the Company held by the Related parties were offered as securities, liquidated the shares against loans granted to the Company. The amount recovered by the loan creditors is accordingly removed from their account and credited to the concerned related parties. The same are reflected in above statement as loans taken and given.

The estimates of the future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other related factors, such as supply and demand in the employment market.

The business of the Company is divided into three segments - Film production & distribution, Film distribution and other These segments have been identified taking into account the nature of the business, the differing risks and returns, the organisation structure and internal reporting system.

Film production & distribution, represents share of net income from movies produced/co-produced or in which the Company has invested, and content production and distributed or sold by the Company. Films distribution operation represents acquisition of movie rights for overseas as well as Indian distribution for a fixed period and exploitation thereof. These rights generally include as a package, theatrical rights and video and television rights. Others represent realization from sale of items '' '' mainly used production materials such as production sets, costumes and other inventories.

Segment revenue, results, assets and liabilities include respective amounts identifiable to each segment. Income and expenses which are not directly attributable to any business segment are shown as unallocated corporate income / expenses. Assets and liabilities that cannot be allocated between the segments are shown as a part of unallocated corporate assets and liabilities respectively.

(a) Geographic segment:

The Company operates only in India and therefore is considered as a single geographic segment.

Exchange rate difference arising on account of Loans given to foreign non-integral operation is charged to revenue in accordance with paragraph 15 and 16 of AS-11 in view of fixed period of loan. The Exchange rate difference arising on investment value of the non-integral operation is transferred to foreign currency translation reserve in the enterprise''s financial statements until the disposal of the net investment, at which time it will be recognized as income or as expenses.

10. Other information pursuant to General Instructions for preparation of Balance Sheet and Profit & Loss Account of Schedule VI to the Companies Act, 1956 is not applicable.

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Mar 31, 2012

1. The value on realization of current assets in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet. According to the management, provision for all the known liabilities is adequate.

2. Balances in Debtors, Creditors, loans, advances, and other current assets are subject to confirmation and reconciliation.

3. The Company has advanced funds to its various subsidiaries valued at a sum of RS. 5,485,562,401 for various projects and products akin to business of the Group. The Capital Advances, work in progress, and other application of funds made by these subsidiary companies in opinion of the management are good in nature; and the same have been considered as good in the respective annual accounts of the said subsidiary companies.

4. (a) The Company has dispute with certain parties from whom loans were received balance amounting to Rs. 9,176,109 at the yearend against pledge of shares of the directors / promoter group. These parties have not sent their loan confirmations, and the same are reflected in accounts based on the last information available with the Company without prejudice to the Company's rights against these parties as claimed before the hon'ble Court. Certain parties have filed a suit against the Company for recovery of loans including winding up of the Company. The Company is taking appropriate legal remedies to defend the cases.

(b) The Company is to pay amount due on account of interest amounting to Rs. 9,233,206 to the financial institutions for a period three months on the date of Balance Sheet. The Company is in process of renegotiating the terms of loans with the Institutions. These Institutions have not sent their loan confirmations, and the same are reflected in accounts based on the last information available with the Company.

5. Foreign Currency Convertible Bonds ("FCCB")

The Company has outstanding 2.875 per cent FCCB due in December 2012 of US$ 100,000 each convertible into equity shares aggregating to US$ $ 21,627,000. The Bond holders have the option to convert these FCCB into equity shares of the Company at a price of Rs. 45 (number adjusted after split of face value) per share (reset to Rs. 43.98 (number adjusted after split of face value), subject to further adjustment, if any) with a fixed exchange rate of Rs. 39.35 per US$ 1, at any time on or after January 21, 2008 and before November 22, 2012.

The FCCB may be redeemed, in whole but not in part, at the option of the Company at any time on or after December 21, 2010 but before December 22, 2012, subject to the satisfaction of certain conditions. The FCCB are redeemable on December 22, 2012 at a premium of 26.41465 percent of their principal amount unless previously converted, redeemed, purchased or cancelled. The Bonds are listed on the Singapore Exchange Securities Trading Limited ('SGXST')

Premium payable on FCCB not converted on the date of these accounts is written off against securities premium account in accordance with section 78 (2) read with section 2 (12) of the Companies Act 1956.

At end of the period, the Company had outstanding bonds of $ 21,627,000. The Company has received notices for conversion for bonds amounting to $ 14,777,000 which is pending, awaiting court order.

6. In the opinion of the management, current assets and loans and advances are of the value stated in the financial statements and realisable in the ordinary course of the business, and are subject to confirmation and reconciliation. The provision for all known liabilities are adequate and are not in excess of the amounts considered reasonably necessary. Unsecured loans, items of capital work-in- progress, and capital advances are subject to confirmation. According to management, the amount standing in respective accounts of capital work-in-progress and capital advances are stated at cost.

7. The Company has not received any intimation from the suppliers regarding status under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) and hence disclosure regarding:

(a) Amount due and outstanding to suppliers as at the end of the accounting year;

(b) Interest paid during the year;

(c) Interest payable at the end of the accounting year;

(d) Interest accrued and unpaid at the end of the accounting year, has not been provided.

The Company is making efforts to get the confirmations from the suppliers as regards their status under the act. The management believes that figure for disclosure will not be significant.

8. There is an outstanding amount of undisputed income-tax of an amount of Rs. 23,668,054 wealth tax of Rs. 285,554 and tax deducted at source of an amount of Rs. 13,928,334 on the Balance Sheet Date for more than six months. The default with respect to wealth tax for Assessment Year 2011-12 is made good by making the payment along with interest on the date of this signing this annual report.

During the year, the Company has written off RS. 203,924,133 incurred towards incomplete films the 14. production of which was stalled owing to multiple reasons.

9. Other information pursuant to General Instructions for preparation of Balance Sheet and Profit & Loss Account of Schedule VI to the Companies Act, 1956 is not applicable.

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Mar 31, 2011

1. 1 Foreign Currency Convertible Bonds ("FCCB")

The Company has outstanding 2.875 per cent FCCB due in December 2012 of US$ 100,000 each convertible into equity shares aggregating to US$ $ 21.627,000. The Bond holders have the option to convert these FCCB into equity shares of the Company at a price of Rs 45 (number adjusted after split of face value) per share (reset to Rs 43 98 (number adjusted after split of face value), subject to further adjustment, if any) with a fixed exchange rate of Rs.39.35 per US$ 1, at anytime en or after January 21, 2008 and before November 22, 2012.

The FCCB may be redeemed, in whole but not in part, at the option of the Company at any time on or after December 21, 2010 but before December 22, 2012, subject to the satisfaction of certain conditions. The FCCB are redeemable on December 22, 2012 at a premium of 26.41465 percent of their principal amount unless previously converted, redeemed, purchased or cancelled. The Bonds are listed on the Singapore Exchange Securities Trading Limited ('SGXST)

Premium payable on FCCB not converted on the date of these accounts is written off against securities premium account in accordance with section 78 (2) read with section 2 (12) of the Companies Act 1956. At end of the period, the Company had outstanding bonds of $ 21,627,000. The Company has received notices for conversion for bonds amounting to Rs 14,777,000 which is pending, awaiting court order.

1. 2 Capital Commitments

Estimated amounts of contracts remaining to be executed on capital account (for production) and not provided are Rs. 2,381,700,000 (Previous Period! ,786,800,000).

5. 7 In the opinion of the management, current assets and loans and advances are of the value stated in the financial statements and realisable in the ordinary course of the business, and are subject to confirmation and reconciliation. The provision for all known liabilities are adequate and are not in excess of the amounts considered reasonably necessary. Unsecured loans, items of capital work-in-progress, and capital advances are subject to confirmation. According to the manaaement. the amount standina in respective accounts of capital work-in-Droaress andcaortal

5. 8 The Company has not received any intimation from the suppliers regarding status under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) and hence disclosure regarding:

(a) Amount due and outstanding to suppliers as at the end of the accounting year;

(b) Interest paid during the year:

(c) Interest payable at the end of the accounting vear;

(d) Interest accrued and unpaid at the end of the accounting year, has not been provided.

The Company is making efforts to get the confirmations from the suppliers as regards their status under the act. The manaaement believes that fiaure for disclosure will not be sianificant.

5. 9 There is an outstanding amount of undisputed income-tax of an amount of Rs. 23.67 Million and tax deducted at source of an amount of Rs.25.94 Million on the Balance Sheet Date for more than six months.

fe) Particulars of installed capacities and actual production

The Company is in the business of film production, distribution and other allied entertainment businesses which is not subject to any license: hence licensed capacity is not given. Further, in this type of business, the installed capacity, consumption of raw materials, components, spare parts and other inputs are not quantifiable.

ff) Quantitative details

The Company is engaged in production of films which requires various types, qualities and quantities of raw materials and inputs in different denominations Due to multiplicity and complexity of the items, it is not practicable to maintain quantitative records of stock registers as the process of making films is not amenable to it Hence, quantitative details are not maintained

(a) Geoaraphic segment:

The Company operates only in India and therefore is considered as a single geographic segment

Exchange rate difference arising on account of Loans given to fgreign non-integral operation is charged to revenue in accordance with paragraph 15 and 16 of AS-11 in view of fixed period of loan The Exchange rate difference arising on investment value of the non-integral operation is transferred to foreign currency translation reserve in the enterprise's financial statements until the disposal of the net investment, at which time it will be recognized as income or as expenses.

5.18 Figures of previous year have been regrouped / rearranged wherever considered necessary.