1.  We have audited the attached balance sheet of PVR Limited (the
 Company) as at March 31, 2011 and also the profit and loss account and
 the cash flow statement for the year ended on that date annexed
 thereto. These financial statements are the responsibility of the
 Companys management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (as
 amended) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  Without qualifying our opinion, we draw attention to the following:
 
 (a) Note 7 of Schedule 22 of the financial statements, wherein as per
 requirements of the Finance Act 2010, the Company may be liable to pay
 service tax in respect of renting of immovable properties as lessee of
 such properties. The Company has challenged the impugned provisions of
 law by way of a writ petition filed with the Honble High Court of
 Delhi and an interim stay order is obtained. The Company has also been
 legally advised that no Service Tax is payable on renting of immovable
 properties as lessee of such properties. Pending the final outcome of
 this matter, no provision for service tax liability amounting to Rs.
 141,624,348 (including Rs. 87,303,515 pertaining to earlier years) (net
 of service tax credit claimable) has been made.
 
 (b) Note No. 22.1 of Schedule 22 of the financial statements, the
 Company has during the year ended March 31, 2011 paid managerial
 remuneration to Mr.  Ajay Bijli which is in excess of the approval
 granted by Ministry of Corporate Affairs, Central Government (CG) by
 Rs. 1,628,903. In the previous years, the Company had paid managerial
 remuneration in excess of the approval granted by Ministry of Corporate
 Affairs, Central Government by Rs. 6,848,852 paid to Mr. Ajay Bijli.
 The Company has filed representations in the matter with the CG and a
 separate representation is being filed with CG for waiver of excess
 remuneration of Rs. 1,628,903 paid to Mr. Ajay Bijli during the
 financial year 2010-11. Pending the final outcome of the Companys
 representations, no adjustments have been made to the accompanying
 financial statements in this regard.
 
 5.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i. We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 ii. In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 iii. The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. In our opinion, the balance sheet, profit and loss account and cash
 flow statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 v. On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 b) in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 c) in the case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 Re: PVR Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets.  No material
 discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) The procedures of physical verification of inventory followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) The Company has granted loan to one company covered in the
 register maintained under Section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs. 670,608,652 and the
 year end balance of loan granted to such party was Rs. 596,902,802.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) The loans granted are re-payable on demand.  As informed, the
 Company has not demanded repayment of any such loan during the year,
 thus, there has been no default on the part of the parties to whom the
 money has been lent. The payment of interest has been regular.
 
 (d) There is no overdue amount of loans granted to companies, firms or
 other parties listed in the register maintained under Section 301 of
 the Companies Act, 1956.
 
 (e) According to information and explanations given to us, the Company
 has not taken any loans, secured or unsecured, from companies, firms or
 other parties covered in the register maintained under Section 301 of
 the Companies Act, 1956.  Accordingly, the provisions of clause
 4(iii)(e) to (g) of the Order are not applicable to the Company and
 hence not commented upon.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of inventory and fixed assets and for the sale of goods and
 services. During the course of our audit, we have not observed any
 major weakness or continuing failure to correct major weakness in
 internal control system of the company in respect of these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the companies Act, 1956 that
 need to be entered into the register maintained under Section 301 have
 been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) To the best of our knowledge and as explained, the Central
 Government has not prescribed maintenance of cost records under clause
 (d) of sub-Section (1) of Section 209 of the Companies Act, 1956 for
 the products of the Company.
 
 (ix)(a) The Company is generally regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, employees state insurance,
 income- tax, wealth tax, sales-tax, service tax, customs duty, excise
 duty and other material statutory dues applicable to it.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under Section 441 A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth- tax, service tax, sales-tax, customs duty, excise duty, cess
 and other material statutory dues were outstanding, at the year end,
 for a period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the   Nature of      Amount    Period to which   Forum where
 
 statute        dues     (Rs. in Crores) the amount     dispute is
 
                                         relates        pending
 
 Income Tax   Income Tax       *4.10     Assessment 
                                         Years          IncomeTax 
                                                        Appellate
 Act, 1961                               2006-07,  
 
                                         2007-08        Tribunal and
 
                                         and 2008-09    Commissioner 
                                                        of Income Tax 
                                                        (Appeals)
 
                               4.10
 
 * Net of Rs. 7.32 Crores paid under protest and disclosed in Schedule
 13 Loans and Advances.
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, banks or debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In respect of dealing/trading in mutual funds, in our opinion and
 according to the information and explanations given to us, proper
 records have been maintained of the transactions and contracts and
 timely entries have been made therein. The units and securities have
 been held by the Company in its own name except for Rs. 5,413,000.
 
 (xv) According to the information and explanations given to us, the
 Company had given guarantee for loans taken by a subsidiary company
 from a financial institution, the terms and conditions whereof in our
 opinion are not prima-facie prejudicial to the interest of the Company.
 
 (xvi) Based on the information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (xix) The Company has secured debentures outstanding as at the year
 end. The Company has created security or charge in respect of
 debentures issued.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
 
 For S.R. Batliboi & Co.
 
 Firm registration number: 301003E 
 
 Chartered Accountants
 
 per Yogender Seth
 
 Partner
 
 Membership No.: 94524
 
 Place : Gurgaon 
 
 Date : May 27th, 2011