డైరెక్టర్ల నివేదిక Pyramid Saimira Theatre Ltd.

The Directors are pleased to present their report on the business and operations of your Company for the 15 months ended June 30, 2009. Financial Results

An overview on financial performance of the company:

(Rs. in lakhs)

For the year For the year Particulars ended ended June 30, 2009 March 31,2008 (15 Months)

Total Income 78566.22 74930.59

Operating Expenditure 70344.71 63510.39

Profit Before Interest, 8221.51 11420.20

Depreciation and Tax 3218.41 881.50

Interest 1682.75 1118.99

Depreciation & Amortisation 2215.70 -

Impairment of Assets 7110.26 -

Loss on forex fluctuation exchange (6005.50) 9419.71

Profit Before Tax (LOSS) 789.71 3632.34

Provision for Tax (6795.31) 5787.37

Net Profit for the year(LOSS) 7306.45 1519.08

Balance brought forward from previous year 7694.22 -

Less: Prior Period Item-Impairment of assets

Amount available for appropriation (7183.08) 7306.45

Appropriations NIL NIL

Balance carried to the Balance Sheet (7183.08) 7306.45

Earning per share (Basic) (13.28) 20.47

Earning per share (Diluted) (6.60) 14.52

Results of Operations

The company suffered heavy set back during the period under review, due to overall recessionary trend across the industry.

For the 15 months ended 30th June 2009 the total income earned by the company was Rs.785.66 crores, marginally higher by 5% compared to previous year of 12 months. As the subsidiaries and joint ventures are in different stages of closure of Accounts, we have not consolidated the Accounts and hence published the results on a stand alone basis. Further the board has decided to treat all the associated business as pure financial investments and these companies have also been segregated management wise. These companies have received / in the process of receiving fresh investment from third parties. Further board has also authorized to use these investments for settling the debts of the company. Part of investments in these companies will also be distributed to the shareholders of the company free of cost.

Profit before adjustment of extraordinary items was at Rs 33.20 Crores, equal to 4.23% of the total income. The Company has provided for erosion in value of investments and notional loss on account of fluctuation in foreign exchange.

Business Overview

A separate section on "Management Discussion and Analysis" has been annexed to the Corporate Governance Report under Clause 49 of the Listing Agreements. The board has disclosed all the relevant points for better appreciation of members. In the business overview the following points are provided:-

- Problems company faced and is facing due to Income tax attachment

- Problems / note on SEBI proceedings against the company

- What went wrong in the company business model and what steps the board implementing/ proposing to implement for revival of the business.

Dividend

Your Directors have not recommended any dividend for the year under review. Considering the recessionary trends and provision for extraordinary items your directors could not declare any dividend.

Capital & Finance

Share Capital

During the period under review, one of the promoters for whom the Company had allotted Warrants in October 2007, had exercised his option to convert 1,485000 warrants into equity shares at Rs 310/ per share.

Convertible Warrants

Pursuant to the resolution passed by the members at the annual general meeting held on 29* September 2007, the company has allotted 36,40,000 warrants on 22nd October 2007, convertible into equal no of equity shares of Rs. 10/- each at a conversion price of Rs.310/- (Rupees three hundred ten only) per share, at any time during 18 months from the date of allotment of the warrants. The company has received an amount of Rs.l 1,28,40,000/- on date of allotment of warrants from the allottees being 10% of the total price payable on conversion. The Warrant holder exercised his option to convert 1485000 warrants into equity shares at Rs 310 per share. The balance amount of 10% advance amount was forfeited which amounts to Rs 6,98,34,668 taken to miscellaneous income.

Public Deposits

Your Company had not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

Responsibility Statement of Board of Directors

As per requirement under Section 217 (2AA) of the Companies Act, 1956 and based on the representations received from the operating management, the directors here by confirm that:

(i) - in the preparation of the annual accounts for the financial period of 15 months ended 30th June 2009, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are

reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for that period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the

provisions of the Companies Act, 1956 for safeguarding the assets of the company and to prevent and/or detect fraud and other irregularities;

(iv) the Directors have prepared the accounts for the period under review on a going concern basis.

Corporate Governance

A report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges forms part of the Annual Report.

Certificate of Auditor on Compliance with Corporate Governance

A certificate from the Auditor of the Company on compliance with Corporate Governance guidelines as stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges is annexed and forms part of this report.

Subsidiary/ Joint Venture Companies and Consolidated Financial Statements

The following companies, classified as Subsidiaries, joint ventures and investments. Joint Venture:

> Pyramid Saimira Theatre Chain (M) Sdn. Bhd., Malaysia

> Pyramid longzhe culture & Theatre co Ltd, China

Investments:

> Pyramid Saimira Entertaiment Limited, Singapore

> Dimples Cine Advertising Pvt. Ltd., India

> Pyramid Saimira Production International Limited, India

> Pyramid Saimira Production Services Limited, India

> Pyramid Saimira Entertainment America

Subsidiary

- Pyramid Saimira Content Distribution Private Limited

As the Closure of Accounts of the above JVs Investments and subsidiaries at different stages, we have furnished financials of Pyramid Saimira Theatre Limited only. During the period under review, your company has written off some of the investments

- Rs 23.66 Crores out of the proposed investments made in the Joint Venture, PSTC, Malaysia due to loss incurred on purchase of contents was written off, as per Board Resolution(USD5920000 @ Rs 39.97)

- Rs 53.28 crores were written off from the investment proposed in PSEA due to loss incurred on content purchased as per the Board Resolution.(USD 13330000@Rs 39.97)

- Rs 13.65 Crores written off from the investment made in M/S Aurona Technologies Ltd, London due to serious liquidity crunch and depreciation of UK Sterling Pounds.

- Rs 8.5 Crores out of the proposed investment made in a DTH Company through PSEA and SPIZE TV

- The total impairment of investments amount to Rs 99.09 Crores

Sharing of Investments

The Company, though facing lot of liquidity and legal problems, has decided in the Board Meeting held on 20th February 2010, to issue shares of the companies in which PSTL has invested, to the existing shareholders, Creditors including Banks and FCCB Holders of PSTL at an agreed ratio

Internal Check/Control

During the period under review, the Income Tax Department, by an order has attached all the Bank Accounts and Receivables across the country. Due to the IT attachment, the Company could not access the revenue generation and account books of the theatres as the latter resorted to running of the exhibition on their own and submitting periodical memorandum statements to the company. The company has to rely on such statements for revenue recognition. Our checks and balances and the vigilance were at stake during the period under review. We have pleaded with the IT department to invoke the attachments to re-rail our operations.

SEBI Ban Order

On 10th November 2009, SEBI has issued an order banning the Company from accessing the Capital Market in any form for 7 years. Ths Company has appealed to Securities Appellate Tribunal (SAT).

Pending Legal Cases

Due to IT Attachment and SEBI Ban, the company was forced to face lot of legal entanglements and failure to meet its commitments to creditors and Bankers. We are furnishing a list of pending legal cases as detailed below

List of Pending Legal Proceedings and Orders against the company PSTL - including Tax authorities

S.No: Party/Company In the Matter of Pending in

1 IT Department 4th Dec 2008 Income Tax- attachment High Court, Madras

2 IT Department 6th March 2009 Revised Return CIT

3 3rd Aug 2009 Income Tax - Appeal HC,Madras

4 26th Nov 2009 New Garnishee Order ITO

6 11th Jan 2010 Revised return assessment ITO

7 23rd Apr 2009 ESOP and others SEBI

8 Seven Years Ban SEBI

9 Appeal SAT

10 Investors appeal SAT

11 Show cause notice

12 Patni Winding up HC, Madras

13 Indus Ind Bank Winding up HC, Madras

14 FCCB-part Winding up HC, Madras

15 First Leasing Winding up HC,Madras

16 First Leasing Arbitration application HC, Madras



Party/Company Current Status

IT Department 4th Dec 2008 Disposed on 30th Apr 2009 with an order of removing Garnishee with the Banks where the company has Overdraft or Term Loan Provisions

IT Department 6th March2009 Ordered by the Commissioner during June 2009 to assess the revised return

3rd Aug 2009 Disposed with an order to remove the Garnishee

26th Nov 2009 Assessment by ITO was ordered

11th Jan 2010 Ordered to pay 50% of the pending liability by the Assessment Officer

23rd Apr 2009 Final Order is pending

Posted on 30th March 2010

Posted on 30th March 2010

to be replied

Patni pending for disposal

Indus Ind Bank pending for disposal

FCCB- part pending for disposal

First Leasing pending for disposal

First Leasing disposed with an order of appointment of Advocate commissioner



S.No: Party/Company In the Matter of Pending in

17 First Leasing Not to Alienate from the property HC, Madras

18 First Leasing Garnishee order of Receivable HC,Madras

19 First leasing Attachment Petition HC,Madras

20 11th Feb 2010. State Bank of Partial DRT-1

21 Indus Ind Bank DRT-1

22 Axis Bank DRT-1

Magistrate Court 23 138 Patni Financial Saidapet Services

Magistrate Court 24 138 First leasing Egroore

25 138 Colour Chips Magistrate Court -Hyd

26 Ambur Murugan Damage Suit HC,Madras

Party/Company Current Status

First Leasing Interim Injunction was granted

First Leasing Interim Injunction was granted

First leasing pending for disposal

11th Feb 2010 pending for disposal

Admission of Petition

Admission of Petition

138 pending for disposal

138 pending for disposal

138 pending for disposal

Ambur Murugan Dismissed

Dues to Banks

As the Company was stalled to operate in all respects, the Banks were not serviced regularly and due to the same, some of the Banks have gone legally against the company vide the list above. We conducted Bankers Meet three times during the period under review and presented draft CDR Proposal to the Banks. We look forward to the Banks for a positive response soon. The following table depicts the Principal payable to the Banks.

SI.No Name of the Bank Rs Lakhs

I UCO Bankl 200.00

2 Punjab National Bank 1082.00

3 Federal Bank Ltd 1440.00

4 State Bank of Patiala 480.00

5 Syndicate Bank 480.00

6 BankofRajasthan 200.00

7 Union Bank of India 500.00

8 Indus Ind Bank Ltd-CC 100.00

9 Axis Bank Ltd 1250.00

10 Barclays Bank Ltd 430.00

11 Bank of India 5000.00

12 Indus Ind Bank Ltd-TL 135.00

13 ICICI Term Loan 200.00

12497.00

Statutory Dues

Due to liquidity crunch and the IT attachment the Company could not pay the statutory dues in time and pending for a long time. It includes TDS, Provident Fund and Professional Tax, totaling a sum of Rs 600 Lakhs

Directors

Since the last Annual General Meeting, the following changes have taken place in the Board of Directors:

(1) Mr. Nirmal Kotecha, Director, resigned from the Board on 17th November 2008

(2)Mr. N. Venkatraman, Director resigned from the Board with effect from 24* Feb 2009

(3)Mr. N.Narayanan, Director of the company was appointed as Chairman from 27* May 2009

(4)Mr. P S Saminathan was re-appointed as Managing Director with effect from 29" September 2009

(5)Mr. Seetharaman, has joined as Independent Director with effect from 28th October 2009

(6)Mr. G Ramakrishnan, Director resigned from the Board with effect from 31st January 2010

(7) Mr. K. Natarahjan, Director resigned with effect from 20th February 2010

(8)Mr. K.S.. Kasiraman, Independent Director resigned from the Board with effect from 20" February 2010

(9)Mr. Sugumaran joined the Board as Independent Director, with effect from 20th February 2010

Auditors

Mr. R. Mugunthan, Chartered Accountant, Statutory Auditor of the company is retiring at the forthcoming Annual General Meeting and is eligible for re-appointment.

Reports of the statutory auditor on the stand-alone accounts for the period ended 30th June 2009 contain some qualification which are due to stalemate status of the operations and are not irreversible.

Particulars of Employees

Particulars of employees as required under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is forming part of this Report as Annexure. In terms of section 219( 1 )(i v) of the Companies Act, 1956 the report is being sent with out attaching the annexure. But it is available for inspection at the registered office during working hours for a period of twenty-one days before the date of the annual general meeting. If, any shareholder is interested for a copy of the same, he may write to the company secretary at the registered office.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under section 217(l)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is attached to this report as Annexure.

SIGNIFICANT EVENTS AFTER FINANCIAL YEAR

New Investor- M/s RDB Industries Kolkatta

In October 2009, M/s RDB Industries Limited Kolkhatta has joined our Production Entity, Pyramid Saimira Production International Limited as a 40% stake holder. The company is rechristened as Regent Saimira Entertainment Limited (RSEL) and is functioning under a newly constituted Board of Directors. The Company, on a conservative estimate plan to produce 12 movies in the year 2010-11.

ACKNOWLEDGEMENT

The Directors are thankful to the members, investors, customers, vendors and bankers for their confidence and continued support extended to the company during the most difficult and critical period. The directors are grateful to the Central and State Governments, Securities and Exchange Board of India, Reserve Bank of India and other Government/ Regulatory Authorities for their continued support.

The Directors would like to express their sincere thanks to the Film Producers Council, Distributors Associations and various other agencies associated with film Industry and place on record the support extended by them.

The Directors also place on record their appreciation to all the employees for their commendable contribution at various levels particularly during the difficult period.

For and on behalf of the Board

Chennai P S Saminathan

25th October 2009 Managing Director