1.  I have audited the attached Balance Sheet of M/s.PYRAMID SAIMIRA
 THEATRE UMITED as at 30 June 2009 the Profit and Loss account and
 also the Cash Flow Statement for the period ended on that date annexed
 thereto. These financial statements are the responsibility of the
 Companys Management. My responsibility is to express an opinion on
 these financial statements based on my audit.
 
 2.  I have conducted my audit in accordance with auditing standards
 generally accepted in India. Those standards require that I 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. I-believe that my audit provides a reasonable basis for
 my opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 issued
 by the Central Government of India in terms of sub section (4A) of
 section 227 of the Companies Act, 1956, and on the basis of the
 information and explanations given to me and the books and records
 examined by me in the normal course of my audit and to the best of my
 knowledge and belief, I give below my report on the matters specified
 in paragraphs 4 and 5 of the said order.
 
 4.  Further to the comments in the Annexure referred to above I report
 that:
 
 a) I have obtained all the information and explanations, which to the
 best of my knowledge and belief were necessary for the purpose of my
 audit.
 
 b) In my opinion, proper books of account as required by law have been
 kept by the Company so far as appears from my examination of those
 books, excepting inadequate maintenance of Daily Collection Reports
 (DCRs) on day by day basis from different locations -refer Note No. 10
 of Schedule 18 to the financial statements
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account.
 
 d) In my 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, subject to:
 
 i) Deviation ofAS-5 in respect of prior period items - refer Note No.
 14 to Schedule 18 to the financial statements
 
 ii) Non disclosure of details as required under AS -15refer Note No.22
 to Schedule 18 to the financial statements
 
 iii) Non Compliance of AS - 21 and SEBI regulations regarding
 Consolidation of financial Statements of subsidiaries and non -
 compliance of Sec.212 of the Companies Act, 1956 in relation to the
 subsidiaries - refer Note No.11 to schedule 18 to the financial
 statements
 
 e) On the basis of written representations received from the Directors,
 as on 30th June 2009 and taken on record by the Board of Directors, I
 report that none of the Directors is disqualified from being appointed
 as a Director in terms of clause
 
 (g) of sub section (1) of section 274 of the Companies Act, 1956 on the
 said date.
 
 f) In my opinion and to the best of my information and according to the
 explanations given to me, the said accounts, including the Balance
 Sheet and Profit and Loss account and Cash Flow Statement dealt with by
 this report read with the Notes thereon and documents annexed thereto,
 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 30th June 2009,
 
 b.  In the case of the Profit and Loss Account, of the loss for the
 period ended on that date and
 
 c.  In the case of Cash Flow Statement, of the cashflows for the period
 ended on that date.
 
 subject to:
 
 1 As stated in Note No 9 of Schedule 18 to the financial statements
 Balance confirmation certificates as on 30th June 2009 were not
 obtained by the Company from debtors, creditors and other parties and
 some of the banks and consequently adjustments required, if any, has
 not been carried out in the financial results.
 
 2 As stated in Note No 10 of Schedule 18 to the financial statements
 internal controls needs to be improved considerably including in
 respect of maintaining proper books of account in time, reconciliation
 of accounts and balance confirmation of banks, debtors and creditors
 and other parties, in order to safeguard the interest of the Company
 Further Internal Audit Report for the period were not made available to
 me.
 
 3. As stated in Note No 10 of Schedule 18 to the financial statements
 the Daily Collection Reports (DCRs) incorporating the Theatre Revenues
 and Expenses on day by day basis in the Theatres operated by the
 Company in different locations are not available in full for my
 verification. Therefore, I am not in a position to express any opinion
 on the Income and Expenses arising out of the theatre Operations.
 
 4.  As stated in Note No 1 1 of Schedule 18 to the financial statements
 the audited annual accounts of the Subsidiary Companies were not
 available and in the absence of the same I am not in a position to
 express any opinion on the value of the Investment, Advances made and
 Amounts Due from Subsidiaries.
 
 Owing to the nature of Company s records and significance of the
 matters discussed in the preceding paragraphs 1 to 4 lam not in a
 position to express any opinion on the impact of the above in the
 financial statement.
 
 5.  a), As stated in Note No 14 of Schedule 18 to the financial
 statements, wherein loss arising on account of investment.  in
 subsidiaries towards share capital advance pending allotment were shown
 as Prior Period Items and below the line which is not a Prior Period
 Item as per the provisions of AS 5. This has resulted in the loss for
 the year being understated by Rs. 76.94 Crores
 
 b), As stated in Note No 15 of Schedule 18 regarding Non Provision for
 Doubtful Debts amounting to Rs.35,39,41,087. This has resulted in the
 losses for the year being understated by Rs.35,39,41:087/-
 
 The overall effect ofthe above is that losses for the period is being
 understated by Rs. 35+76
 
 6) Attention is invited to Note No.6 (b) of Schedule 18 to the
 fianancial statments regarding non disclosure of quantitative details
 in respect of the Food & Beverages, as required under part 11 of
 schedule VI to the Companies Act, 1956.
 
 ANNEXURE TO AUDITORS REPORT OF Mls._PYRAMID SAIMIRA THEATRE LIMITED
 FOR THE PERIOD ENDED 30* JUNE 2009.
 
 Referred to in paragraph 3 of my report of even date.
 
 i.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of Fixed
 Assets which requires to be updated.
 
 (b) All the Assets have been physically verified by the management
 during the period and there is a regular programme of verification
 which, in my 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) The Company has not disposed off substantial part of its Assets.
 
 ii.  (a) The Company has no Inventory and hence the provision relating
 to physical verification and sub clauses
 
 (b) and (c) does not arise.
 
 iii.  The Company had not taken/given loan from/to the Directors and
 other Parties listed in the Register maintained u/s 301 of the
 Companies Act, 1956 and hence sub clauses b,c,d,e,f and g of clause
 (iii) of the said order not applicable.
 
 iv.  In my opinion and according to the information and explanations
 given to me, the internal control system are not adequate commensurate
 with the size of the Company and the nature of its Business with regard
 to purchases of Inventory, Fixed Assets and sale of goods and services.
 During the course of my audit, there is continuing failure to correct
 major weaknesses in internal controls system.  
 
 v.  (a) According to the information and explanations given to me,
 there are no ctransactions that need to be entered into the register
 maintained under section 301 of the Companies Act, 1956. 
 
 (b) In my opinion and according to the information and explanations
 given to me, there are no transactions made in pursuance of contracts
 or arrangements exceeding the value of Rupees Five Lakhs in respect of
 any party during the period have been made.
 
 vi.  The company has not accepted any deposit from the Public.
 
 vii.  In my opinion, the Company has no adequate internal audit system
 commensurate with the size and nature of its Business.
 
 viii.  As per the information & explanations given to me the provision
 relating the maintenance of cost records under section 209(1)
 
 (d) of the Companies Act, 1956 does not apply to the Company.
 
 ix.  (a) The Company is not regular in depositing with appropriate
 authorities undisputed Statutory dues including Provident Fund,,
 
 Employee s State Insurance, Income Tax, Sales Tax,, Cess and other
 material statutory dues applicable to it and has defaulted in their
 payment as listed below:
 
 Name of the Statute    Nature of Dues     Amount(Rs.)
 
 Income Tax             Tax Deducted      4.14.45.111/-
 Act, 1961              at Source
 
 Employee State         ESI-Employer      3.42.368/-
 lnsurance              & Employee
 Corporation            Contribution
 
 EPF&Misc.              EPF-Employer       1,14,05,062/-
 Provisions             & Employee
 Act,1952               Contribution
 
 TNVAT                     VAT             3,82,848/-
 
 Kerala Labour          Labour Welfare     168/-
 Welfare Fund           Fund
 
 Kerala Shop &         Shop & Commercial    1070/-
 Commercial            Establishments Fund
 Establishments Act
 
 Profeesional Tax       Professional Tax    3,39,288/-
 
 
 
 
 Name of the Statute   Period to which   Due Date   Date of Payment
                       the amount relates
 
 Income Tax Act, 1961  April08-June09   7th of succeeding Not Paid
                                         month
 
 Employee State
 Insurance
 Corporation            April08-June09 20th of succeeding Not Paid
                        month
 
 EPF & Misc.
 Provisions
 Act,1952               April08-June09 20th of succeeding Not Paid
                        month
 
 TNVAT                  Mar 09         20-4-2009          Not Paid
 
 Kerala Labour 
 Welfare Fund           Dec08-Jan09                       Not Paid
 
 Kerala Shop & 
 Commercial Establishments
 Act                    Mar09                             Not Paid
 
 Profeesional Tax       Apr08-June09                      Not Paid
 
 (b) According to the information and explanation given to me, other
 than Income Tax, there are no dues of Sales Tax, , Service Tax, Customs
 Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on
 account of any dispute.
 
 Name of the Statue   Nature of Dues   Amount     Forum Where
                                                  Dispute is Pending
 
 Income Tax Act       Income Tax-
                      Asst.Year 
                      2008-09         Rs.26,59,21,8401- CIT
 
 x.  The Company does not have any accumulated losses as at 30th June
 2009. However the Company has incurred cash loss during the period.
 
 xi.  In my opinion and according to the information and explanation
 given to me, the Company has defaulted in repayment of dues to the
 following financial institution and Banks.
 
 S.No.  Name of the 
        Lender    Nature of Loan  Amount Outstanding
                                     (Rs)            Period of 
                                                     Default
 
 1    ICICIBank      Term Loan      1,97,96,026/-     5Months
 
 2    Indus lnd Bank Term Loan      1,35,00,000/-     7Months
 
 3    Bank of India  Term Loan      50,00,00,000/-    8Months,
 
 4    Barclays Bank  Term Loan       4,30,00,000/-    2Months 
 
 5    Punjab National
      Bank           Term Loan      80,53,258/-       4Months
 
 6    Syndicate Bank Cash Credit    14,78,26,515/-    3Months
 
 7    Bank of Rajasthan Cash Credit 2,13,64,357/-     5Months
 
 8   State Bank of 
     Patiala          CashCredit     5,12,91,414/-    IMonth
 
 9   Patni Financial 
     Advisors P Ltd    ICD           5,00,00,000/-    7Months
 
 xii.  In my opinion and according to the information and explanation
 given to me the Company has not granted any Loans and Advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 xiii.  In my 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 are not applicable to the
 Company.
 
 xiv.  In my opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
 2003 are not applicable to the Company.
 
 xv. In my opinion, the terms & conditions on which the Company has
 given guarantees for loans taken by others from Banks or Financial
 Institutions are not prejudicial to the interest of the company.
 
 xvi.  In my opinion and according to the information and-explanations
 given to me the company has not availed any term loan during the
 period.
 
 xvii. According to the information and explanations given to me and on
 an overall examination of the Balance Sheet of the Company, I report
 that the no funds raised on short term basis have been used for long
 term investment.
 
 xviii. During the year the Company has not made preferential allotment
 of Shares to the parties covered under section 301 of the Companies
 act, 1956 other than the Convertible Share Warrants, after obtaining
 the appropriate approvals, and the terms of issue are not prejudicial
 to the interest of the company.
 
 xix. According to the information and explanations given to me, during
 the period covered by my Audit Report, the Company has not issued any
 Debentures and therefore the question of creating security or charge in
 respect thereof does not arise.
 
 xx.  TheCompany has not raised any money by Public Issue during the
 period.
 
 xxi. According to the information and explanations given to me, based
 upon the audit procedures performed and representations made by the
 management no fraud on or by the Company has been noticed or reported
 during the course of my audit.
 
 Place: CHENNAI                      (R.MUGUNTHAN)
 
 Date 25-10-2009                  Chartered Accountant
                                  Membership No.21397