To The Members,

Your Directors pleased to present their 17th annual report on the business and operations of your Company for the year ended on 31st March 2006.

Financial Results



Dividend

As the Company plans to implement new projects, your directors recommend conserving the profits for the projects.

Business Performance Review:

Your company has renewed the confidence of its strategy and its business philosophy. After a lull for some time, the revival strategy has worked out well. During the year, the company released "Ullam Ketkume" (a Tamil Movie) This movie received rave reviews from the Print and Electronic media. The film completed 100 days run and reconfirmed the company's core competence of making quality movies. The movie "Indru" which was also released by the company re-established the capabilities of the company.

The Company has launched the production of "Mayavi & Paramapadam" the first ever live action 3D Television Serial on 29th August, 2005 at AVM Studios,Chennai. Mr Daniel Symmes from Los Angels, the inventor of 3DR, has consented to shoot the 52 episode serial along with his crew of very high international standard. This Serial will be a multi -lingual production in Tamil and Hindi and other languages to be broadcast on leading Satellite Channels.

The company has also signed an MOU with Drushya Entertainment Broadcast Streams Ltd for Webcasting the Internet Film rights of the company on a revenue sharing basis.1-Net of Singapore will be the Broadcasting partner for the Internet films.

Rights Issue

During the year the company made an Rights Issue of 40,42,52,000 equity shares of Rs.1/- each for cash at par. The issue closed on Sep 14, 2005, received full subscription from the shareholders and allotment was done on Oct 4th, 2005. The Directors thank the shareholders for re-affirming their confidence on the company and the new management. The shares of the company were listed and got trading permission from The Bombay Stock Exchange, The Madras Stock Exchange and The Hyderabad Stock Exchange.

The Company has utilized the funds raised in the abovesaid Right lssue as per the purpose mentioned in the offer document.

Future prospects & Outlook

The Indian entertainment sector is estimated to grow at over 18% p.a. with revenues jumping from Rs.22,000 crores to Rs.60,000 crores by the year 2010. The business structure of film production, exhibition, distribution and web-casting of your company will ensure that the company has assured revenue stream in the years to come. Recent reduction in the rate of entertainment tax by Tamil Nadu Government will also help the Industry for its robust growth.

The company successfully completed an issue of GDR for US$ 20.5 million and an FCCB of USD 4.5 million on April 20, 2005. Substantial portion of the funds raised through these issues will be utilized for asset building operations of the Company by adding more Multiplex theatres to the existing activities.

Your Company is having an ambitious plan for creating "GV Studio City" a hotel cum multiplex Complex. The project outlay is expected over Rs.2000 crores. Part of the fund required for this is proposed to be raised by issue of equity shares and other instruments. The necessary resolutions are proposed in the notice to the members.