1. During the year ended 31st March 2010, the Company had acquired
 1,50,57,751 equity shares in Fame (India) Limited (Fame), being the
 Promoters'' shareholding, through a block deal carried out on the Bombay
 Stock Exchange. The Company had thereafter acquired another 25,07,537
 equity shares in Fame, from the market, through two separate block
 deals carried out on the Bombay Stock Exchange. As a result of these
 acquisitions, the Company held 1,75,65,288 equity shares comprising of
 50.48% stake in Fame. Pursuant thereto, as required under the
 Securities and Exchange Board of India (Substantial Acquisition of
 Shares and Takeover) Regulations, 1997, an Open Offer was made to the
 Shareholders of Fame for acquisition of 82,31,759 equity shares in Fame
 at a price of Rs 51 per share. In this regard, the Company had placed
 Rs. 42 crores, being 100% of the funds required under the Open Offer,
 in escrow with HDFC Bank, and the
 1,50,57,751 equity shares acquired from the Promoters of Fame were
 placed in escrow with Standard Chartered Bank, till the conclusion of
 the Open Offer formalities.
 
 During the current year, the open offer was made from 16th December
 2010 to 4th January 2011 and after completion thereof, on 6th January
 2011 the amount of Rs. 42 crores and the equity shares placed in escrow
 were released. The Company''s stake in Fame now stands at 50.27% of the
 existing issued and paid-up capital of Fame. Accordingly, as per the
 provisions of Companies Act, 1956, Fame has become a subsidiary of Inox
 Leisure Limited w.e.f. 6th January 2011.
 
 2 During the year ended 31st March 2006, the Company had issued 500,000
 equity shares of Rs. 10 each at a premium of Rs. 5 per share to Inox
 Leisure Limited – Employees'' Welfare Trust (Trust) to be transferred
 to the employees of the Company under the scheme of ESOP framed by the
 Company in this regard. The Company has provided finance of Rs. 75 lacs
 to the Trust for subscription of these shares at the beginning of the
 plan.
 
 As per the Guidance Note on Accounting for Employee Share-based
 Payments issued by the Institute of Chartered Accountants of India,
 shares allotted to the Trust but not transferred to employees is
 required to be reduced from Share Capital and Reserves. Out of the
 500,000 equity shares allotted to the Trust, 146,263 shares have been
 transferred to employees up to 31st March 2011. Accordingly, for the
 balance number of shares, the Company has reduced the Share Capital by
 the amount of face value of equity shares and Share Premium Account by
 the amount of share premium on such shares. The Company has also given
 effect to the above in the calculation of its Basic and Diluted
 earnings per share.
 
 Following stock options have been granted to the employees:
 
 On 29th January 2007 (First Grant) 244,120 shares
 
 On 27th October 2009 (Second Grant) 33,332 shares
 
 The vesting period for these equity settled options is between one to
 four years from the date of the grant. The options are exercisable
 within one year from the date of vesting. The compensation costs of
 stock options granted to employees are accounted by the Company using
 the intrinsic value method.
 
 All stock options are exercisable at the exercise price of Rs. 15 per
 option and the weighted average remaining contractual life is as under:
 
 Options granted on 29th January 2007 0.83 years
 
 Options granted on 27th October 2009 2.08 years
 
 In respect of the options granted under the Employees'' Stock Option
 Plan, in accordance with the Guidance Note on Accounting for Employee
 Share-based Payments issued by the Institute of Chartered Accountants
 of India, the accounting value of options is amortized over the vesting
 period. Consequently, ‘Salaries, Wages, Allowances and Benefits'' in
 Schedule 17 includes Rs. 9.87 lacs (previous year Rs. 16.22 lacs) being
 the amortization of employee compensation.
 
 Had the Company adopted fair value method in respect of options
 granted, the employee compensation cost would have been higher by Rs.
 0.58 lacs, profit after tax lower by Rs. 0.58 lacs and the basic and
 diluted earnings per share would have been lower by less than Rs. 0.01
 each.
 
 3.  In respect of Service-tax Matters
 
 As per the amendment made by the Finance Act 2010, renting of immovable
 property was defined as a taxable service with retrospective effect
 from 1 June, 2007. Accordingly, in the annual accounts for the year
 ended 31st March 2010, the Company had provided service tax for Rs.
 561.34 lakhs in respect of rentals paid for the year ended 31st March,
 2009 and 31st March, 2010.
 
 During the current year, the Company has challenged this levy by filing
 Writ Petition with various High Courts. While Honourable High Court of
 Mumbai, Delhi and Karnataka have granted stay for the levy of service
 tax in respect of immovable properties of the Company situated within
 their respective jurisdictions, matter is pending for hearing at
 Honourable Andhra Pradesh High Court.
 
 Based on legal advice obtained by the Company, the levy of service tax
 on renting of immovable property cannot be said to be final, and
 accordingly no provision of service tax of Rs 423.63 lakhs on lease
 rentals is made for the year ended 31st March, 2011. Further, the
 amount of Rs 561.34 lakhs provided in the accounts during the year
 ended 31st March 2010, towards service tax on lease rentals for the
 year ended 31st March 2009 and 31st March 2010, has been reversed and
 netted in Schedule 17: Operating and Other Expenses.
 
 4.  In respect of taxation matters
 
 (a) In the appellate proceedings before the Commissioner of Income-tax
 (Appeals) the Company''s contention that the amount of entertainment tax
 exemption availed for some of its multiplexes is a capital receipt has
 been accepted.  Accordingly, treating the amount of entertainment tax
 exemption amounts as a capital receipt in respect of multiplexes in
 those States covered by the orders of the Commissioner of Income-tax
 (Appeals), during the year ended 31st March 2010 the Company had
 recomputed its current tax liability and deferred tax liability, and
 credited an amount of Rs. 192.63 lakhs in the Profit and Loss Account
 under ‘Taxation in respect of Earlier Years''.
 
 Provision for current tax is also made on the same basis and
 consequently the provision for current taxation is for Minimum
 Alternate Tax payable on book profit.
 
 (b) The Minimum Alternate Tax (MAT) paid by the Company is entitled to
 be carried forward and utilized in subsequent years. In the opinion of
 management, on the basis of projections, estimates of future taxable
 income and the extension of period for utilization of MAT credit as per
 the amendment made by the Finance Act (No. 2), 2009, the Company would
 have normal tax liability within the specified period to avail such MAT
 credit. Consequently, during the year ended 31st March 2010, the
 Company had recognized the MAT credit entitlement of Rs. 978.00 lakhs
 in respect of earlier years.
 
 5.  In the opinion of Board of Directors, the current assets, loans and
 advances are approximately of the values stated if realised in the
 ordinary course of business and the provisions of depreciation and of
 all known liabilities are adequate and not in excess of the amount
 reasonably necessary.
 
 6.  Term loan from Axis Bank is secured by mortgage of immovable
 property situated at Vadodara and charge on all stocks, debts and
 movable properties situated at Burdhwan, Indore Central, Rajarhat
 (Kolkata), Jayanagar (Bangalore), Siliguri and Maleshwaram (Bangalore)
 multiplexes.
 
 Term loan from Citi Bank is secured by mortgage of immovable property
 situated at Pune and charge on all movable assets situated at Pune,
 Thane and Rajapark (Jaipur) multiplexes and five future multiplexes.
 
 Term loan from ING Vysya Bank is secured by charge on immovable
 property situated at Nariman Point and exclusive charge on all the
 current and fixed assets situated at Vizag Beach Road, Vizag CMR Mall,
 Kanpur, Belgaum, J.P.Nagar (Bangalore) multiplexes and two future
 multiplexes.
 
 Term loan from Canara Bank was secured by mortgage of immovable
 property situated at Nariman Point and hypothecation of movable
 properties and current assets at Nariman Point.
 
 7.  Contingent Liabilities:
 
 a.  Claims against the Company not acknowledged as debt – Rs. 79.45
 lacs (Previous Year Rs. 58.95 lacs) b Bank Guarantees in respect of:
 
 i.  Entertainment tax exemption availed – Rs. 498.20 lacs (previous
 year Rs. 384.47 lacs)
 
 ii Other matters – Rs. 6.07 lacs (previous year Rs. 7.07 lacs) 
 
 c Municipal Tax demand – Rs. 475.39 lacs (Previous Year Rs. 402.45 lacs)
 
 
 d Entertainment Tax demand – Rs. 53.06 lacs (Previous Year Rs. 53.06
 lacs) 
 
 e Service Tax demand – Rs. 97.31 lacs (Previous Year Rs. 55.74
 lacs) 
 
 
 f ESIC demand – Rs. 9.71 lacs (Previous Year Rs. Nil) 
 
 g In respect of service tax on lease rentals – refer to note 
   no. 4 above
 
 9.  In respect of Entertainment Tax liability of the Company and its
 treatment in these accounts: -
 
 a. The exemption from payment of Entertainment Tax in respect of
 Multiplexes of the Company, which are eligible for such exemption, is
 subject to fulfillment of the terms and conditions of the respective
 Government policies issued in this regard. The amount of Entertainment
 Tax exemption availed so far by the Company, which is liable to be paid
 if the relevant multiplex ceases operations prior to completing the
 minimum period of operations in terms of the respective policies of the
 States – Rs. 7404.63 lacs (previous year Rs. 6744.70 lacs).
 
 b The Entertainment Tax exemption in respect of some of the Multiplexes
 of the Company has been accounted on the basis of eligibility criteria
 as laid down in the respective Schemes but is subject to final Orders
 yet to be received from respective authorities. Accordingly the amount
 of Rs 440.46 lacs (Previous Year Rs. 277.14 lacs) being Entertainment
 Tax in respect of such Multiplexes has not been charged to profit &
 loss account. Cumulative amount as on 31st March 2011 - Rs. 2812.86
 lacs (as on 31st March 2010 - Rs. 2372.40 lacs).
 
 c In respect of the Multiplex Cinema Theatre at Vadodara, the issues in
 respect of the eligibility for exemption from payment of entertainment
 tax and the method of computing the exemption availed, have been
 decided in favour of the Company by the Honourable High Court of
 Gujarat vide its order dated 26th June, 2009. The matter regarding
 method of computation of eligibility amount is challenged by the
 Government Department before the Honourable Supreme Court. Pending
 receipt of final eligibility certificate the figures indicated in the
 (b) above include the figures pertaining to the said Multiplex.
 
 8.  Estimated amounts of contracts remaining to be executed on capital
 account and not provided for, net of advances - Rs.  174.50 lacs
 (Previous Year Rs. 1109.42 lacs)
 
 9.  In view of the diverse nature of food and beverages sold by the
 Company, in the opinion of the management, it is not practical to give
 quantitative details thereof. Consequently, quantitative information
 regarding purchases, turnover, opening / closing stocks in respect of
 the same are not given. All items of food and beverages are
 indigenously procured.
 
 10. Amount of Rs. 94.58 lacs (Previous year Rs. 266.96 lacs) is paid
 towards Legal & Professional fees to four firms in which one of the
 directors is a partner.
 
 11. Tax deducted at source from Interest received is Rs. 32.45 lacs
 (Previous Year Rs. 4.81 lacs).
 
 12. The arbitration award in the matter of disputed recoveries
 pertaining to one of the multiplex of the Company has been received in
 favour of the Company and the arbitrator has further granted interest
 claimed on the unpaid amount at the rate of 15% p.a. The Company has
 accordingly accounted interest of Rs. 18.23 lakhs. (Previous Year Rs.
 75.07 lacs, including for earlier years) Total amount of interest
 receivable upto 31st March, 2011 is Rs.93.30 lakhs. During the current
 year the said award has been challenged before the District Court and
 the matter is pending.
 
 13. The Company''s significant leasing arrangements are in respect of :-
 a.  Operating leases for premises (offices and residential
 accommodations for employees) - Generally, these lease arrangements are
 non-cancelable, range between 11 months to 33 months and are usually
 renewable by mutual consent on mutually agreeable terms. Lease rentals
 of Rs. 2.62 lacs (Previous Year Rs. 3.01 lacs) are included in
 ‘Property Rent and Conducting Fees'' in Schedule 17 to the Profit and
 Loss Account.
 
 b. The Company is operating some of the multiplexes under Operating
 Lease / Business Conducting Arrangement.  These arrangements are for a
 period of 9-25 years with a minimum lock-in period of 3-10 years and
 the agreement provides for escalation in rentals after pre-determined
 periods. Property Rent and Conducting Fees of Rs. 4335.15 lacs
 (Previous Year Rs. 3006.30 lacs) are included in ‘Property Rent and
 Conducting Fees'' in Schedule 17 to the Profit and Loss Account.
 
 22. The operating licenses in respect of some of the multiplexes are
 not in the name of the Company.
 
 B.  Information about Secondary (Geographical) Segment
 
 All the multiplexes of the Company are located in India and all the
 movies are produced/distributed in India. The power is also generated
 and sold / captively consumed in India. Hence the Company is operating
 in a single geographical segment.
 
 C.  Notes:
 
 a.  The Company operates in following business segments:
 
 i Theatrical Exhibition Business – Operating & Managing Multiplex
 Entertainment Centres and cinema theatres ii Film Distribution Business
 – Distribution of Movies iii Film Production Business – Production of
 Movies iv Power Business – Generation of Wind Power
 
 b.  Inter-segment revenue of Distribution Business comprises of film
 distributors'' share in respect of movies distributed by the Company and
 exhibited in its multiplexes. Inter-segment revenue of Power Business
 comprises of power generated and consumed in Multiplex Business.
 Inter-segment revenues are priced at market price.
 
 c.  The above segment information includes the respective amounts
 identifiable to each of the segments and amounts allocated on a
 reasonable basis.
 
 14. Employee Benefits:
 
 a) Defined Contribution Plans: Contribution to Provident Fund of Rs.
 121.16 lacs (Previous year Rs. 94.05 lacs) is recognized as an expense
 and included in ‘Contribution to Provident & Other Funds'' in the Profit
 and Loss Account and Rs. 1.32 lacs (Previous Year Rs. 2.35 lacs) is
 included in pre-operative expenses.
 
 b) Defined Benefit Plans: The amounts recognized in respect of Gratuity
 and Leave Encashment – as per Actuarial valuation
 
 The above defined benefit plans are unfunded. The estimate of future
 salary increase, considered in actuarial valuation, take account of
 inflation, seniority, promotion and other relevant factors such as
 supply and demand in the employment market.
 
 15. Related Party Disclosure:
 
 (i) Where Control Exists
 
 a.  Gujarat Fluorochemicals Limited – Holding Company
 
 b.  Inox Leasing & Finance Limited – Ultimate Holding Company
 
 c.  Fame India Limited – Subsidiary Company (w.e.f. 6th January, 2011)
 
 d.  Fame Motion Pictures Limited (formerly Shringar Films Limited) –
 subsidiary of Fame India Limited
 
 e.  Big Pictures Hospitality Services Private Limited – subsidiary of
 Fame India Limited
 
 (ii) Other related parties with whom there are transactions:
 
 a.  Inox Motion Pictures Limited – Fellow Subsidiary
 
 b.  Mr. Alok Tandon (Manager) – Key Management Personnel
 
 16. In respect of amounts mentioned under unclaimed dividends, the
 actual amount to be transferred to the Investor Education and
 Protection Fund shall be determined on the due date.
 
 17. Statement Pursuant to Part IV of Schedule VI to the Companies Act,
 1956, is enclosed vide Annexure.