a. Revenue from sale of various rights of films and television serials are recognized in the year of concluding sale agreements.
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.
During the year, the internet films acquired by the Company which are meant for exploitation through webcasting and costing Rs.89 crores and which were shown under inventories are now, more appropriately, regrouped under fixed assets under the head `Webcasting Portal under Development.' This regrouping, as such, does not have any effect on the income.
c. Inventories represent films under production and other film rights. Films under production are valued at cost. The film rights are valued as per the current market potential of the pictures as at the year-end.
d. The Goodwill of Rs.30.50 crores arising out of the amalgamation of Omni Ltd. with the Company (refer point no.2 below) was to be written off over a period of 5 years from the year in which the films that were acquired from Omni Ltd. through amalgamation are released. However, considering the share premium of Rs.79.50 crores available in the company and also as a conservative measure, the management has decided to adjust the goodwill of Rs.30.50 crores against the share premium after obtaining necessary approvals from the shareholders, Hon'ble High Court of Madras and all other relevant regulatory agencies.
e. The rights issue expenditure and the GDR/FCCB issue expenditure will be adjusted against share premium along with the adjustment of Goodwill as mentioned in point no. ( c ) above.

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.) has resulted in a Goodwill of Rs. 30.50 crores.

3. 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.

4. The Audit Sub-Committee in their Meeting held on 28.04.2003 had noted a shortfall in physical cash balance of Rs.68.60 lacs. The Board also discussed this issue in their meeting held on 09.05.2003 and had decided to transfer the balance to the account of Late Mr. G. Venkateswaran. The new 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 and 31.3.2006.

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

6. During the year, the company has increased its authorized capital to Rs.225 crores from Rs.100 crores. The fees for such increase payable to Registrar of Companies, Chennai was paid subsequent to the Balance Sheet date.

7. Provision for taxation - Rs 42,96,222 (Previous Year Rs.20,000)

8. Contingent Liabilities not provided for Rs. 5,50,75,000 towards Capital work in progress and Rs.46 lacs towards Income tax and sales tax dues. ( Previous year Rs 46 lacs)

9. Expenditure in foreign currency _ Rs 41,13,184 (Previous Year Nil) includes payment of Rs.33,05,702 (Previous Year Nil) as professional Fees.

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. 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.