a. Sale of lease rights of pictures is accounted in the year of release of the pictures.

b. Fixed assets are stated at cost of acquisition less accumulated depreciation. Depreciation has been provided on the assets on Written Down Value Method at the applicable rates and in the manner prescribed in the Schedule XIV of the Companies Act, 1956.

c. Inventories represent films under production, Internet film rights and other film rights. Films under production and internet film rights are valued at cost. The negative film rights for distribution/exhibition are valued as per the current market potential of the pictures as at the year-end. The Company has entered into a MoU with a Company for webcasting films for which it holds internet film rights, on a revenue sharing basis. The Company has also billed the webcasting company Rs.90 lacs as `access fee' for making available the company's films for webcasting. Considering the fact that the company has started exploiting the internet film rights, the valuation of internet film rights in the books at cost is considered appropriate.

2. SCHEME OF AMALGAMATION (of Oneworld Media Network Infotainment Limited (Omni Ltd.) with the Company [Scheme])

a) Pursuant to the Shareholders approval at the meeting held on 27th February 2004 which was convened as per the Orders of the Hon'ble High Court of Judicature at Madras (Court) and its Order in Company Petition Nos.89 & 90 of 2004 on 29th April 2004 sanctioning the Scheme, the assets and liabilities of Omni Ltd. whose principal business was also production and distribution of feature films were transferred to and vested in the Company with effect from the appointed date viz. 30th September 2003 in accordance with the Scheme so sanctioned. The Scheme has, accordingly, been given effect to in the Accounts for the year ended 31st March 2004 itself.

b) The amalgamation has been accounted for under the Purchase Method of Accounting as prescribed by Accounting Standard 14 (AS-14) issued by the Institute of Chartered Accountants of India. The assets and liabilities of the erstwhile Omni Limited as at 30th September 2003 have been taken over at their book values.

c) Pursuant to the Scheme as approved by the Hon'ble High Court of Judicature at Madras, referred to in (a) above, the company has allotted 3,85,00,000 Equity shares of Rs. 10/- each fully paid to the shareholders of the erstwhile Omni Ltd on 14th May 2004 . Accordingly, the company had also paid the necessary fees for increasing the authorized capital of the company to the Registrar of companies on 14th May 2004, after the receipt of sanction order from the Court.

d) The difference between the value of the net assets acquired on amalgamation and the amount of shares issued to the shareholders of the amalgamating company (Omni Ltd.) resulting in goodwill of Rs. 30.50 crores, which will be amortised over a period of 5 years from the year in which the films that are acquired from Omni Ltd. through amalgamation are released.

3. The company had increased the authorized capital during the financial year to Rs. 100 crores and the equity shares of Rs. 10/- each were split into equity shares of Rs. 1/- each resulting increase in number of shares. The necessary fee payable to Registrar of companies for the increase in the authorized capital of the company is yet to be remitted.

4. Balance Confirmation letters have been dispatched to various Sundry Debtors and Sundry Creditors. Confirmations have been received from some parties and reconciliation work is taken up for cases where balances are not confirmed.

5. The Audit Sub-Committee Meeting held on 28.04.2003 has noted a shortfall in physical cash balance of Rs.68.60 lacs. The Board also discussed this issue in the meeting held on 09.05.2003 and had decided to transfer the balance to the account of Late Mr. G. Venkateswaran. The new 26 Management has now initiated an enquiry into this shortfall. Pending completion of enquiry, the amount of shortfall is still included in the cash balances as at 31.03.2004 and 31.03.2005.

6. Deferred tax assets has not been considered in the accounts due to lack of virtual certainty for sufficient future taxable income.

7. Provision for taxation - Rs.20,000

8. Contingent Liabilities - Rs.46 lacs (Income tax and sales tax dues)

9. Expenditure in foreign currency - Nil.

10. Earnings in Foreign Exchange - Nil.

11. Expenditure incurred on employees in receipt of remuneration of not less than Rs.24,00,000 per annum where employed throughout the period or not less than Rs.2,00,000 per month where employed for a part of the period is NIL (NIL).

12. Salary includes Rs.2,40,000/- paid to Mr. VP Mani, whole time director of the Company and Rs. 86,660/- paid to Mr. P. Raghuraman, whole time director of the company.

13. Retirement benefit in respect of Gratuity is provided as per the provisions of Gratuity Act, 1972.

14. Figures in brackets represent previous year figures.

15. Figures have been rounded off to the nearest rupee.

16. Previous year figures have been regrouped/reclassified wherever considered necessary.

17. Segmental reporting is not necessary since the company is operating in only one segment.