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Notes to Accounts of Prime Focus Ltd.

Jun 30, 2015

A. Rights, preferences and restrictions at ached to shares

The Company has one class of equity shares having a par value of Rs, 1 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all liabilities, in proportion to their shareholding.

b. In the Board of Directors meeting held on July 02, 2014 approval was granted to introduce and implement Employee Stock Option Scheme titled 'PFL-ESOP Scheme 2014' whereby stock options up to 6% of the paid up capital of the Company (post preferential allotment) aggregating 17,932,738 stock options would be issued to eligible employees of the Company, its subsidiaries and associates. The said scheme was approved by the shareholders in the Extra-ordinary General Meeting held on August 01, 2014.

c. On November 05, 2012, the Company issued 1,901 Zero Coupon Unsecured Redeemable Non-Convertible Debentures (NCDs) of Rs, 1,000,000 each, of the aggregate nominal value of Rs, 1,901,000,000 to Standard Chartered Private Equity (Mauritius) III Limited. The Debentures were issued in two series being the Series A NCDs and the Series B NCDs. The Series A NCDs comprised of 1,010 Debentures aggregating Rs,1,010,000,000 redeemable after 5 years and the Series B NCDs comprised of 891 Debentures aggregating Rs, 891,000,000 redeemable after 6 years.

The amounts payable on redemption on Debentures are as follows:

i. With respect to the Series A NCDs, an amount equal to 188.17% of the Principal amount of Series A NCDs.

ii. With respect to the Series B NCDs, an amount equal to 213.41% of the Principal amount of Series B NCDs

In the event that either the Company or the Debenture Holders are desirous of redeeming the Debentures prior to its scheduled maturity other than upon the occurrence of an Event of Default, the Company and the Debenture Holders shall mutually agree on the amounts payable to the Debenture Holders upon such early redemption and the other terms of such redemption.

b. On February 20, 2015 the Company made an offer for the issuance of up to 4,000 unlisted, unrated, redeemable debentures not convertible into Equity Shares of the Company of face value of Rs, 100,000 each ("Debentures") aggregating up to Rs, 270,000,000 with a Green Shoe Option of up to Rs, 130,000,000 on a private placement basis. On March 04, 2015, 2,891 Debentures aggregating Rs, 289,100,000 were allot ed. On April 07, 2015 the Company made an additional offer for the issuance of up to 2,000 unlisted, unrated, redeemable debentures not convertible into Equity Shares of the Company of face value of Rs, 100,000 each ("Debentures") aggregating up to Rs, 200,000,000. On May 05, 2015, the Company allotted 1,580 debentures under Tranche - 1, aggregating Rs, 158,000,000 and on May 08, 2015 the Company further allotted 420 debentures under Tranche – 2, aggregating Rs, 42,000,000. In aggregate, the company allotted 4,891 debentures amounting to Rs, 489,100,000 at 14% interest payable quarterly and a redemption premium payable on maturity of the debenture to make the IRR of 17%. Of these Debentures Rs, 289,100,000 matures in August 2017 and Rs, 200,000,000 matures in November 2017.

c. On November 06, 2012, the Company entered into a term loan agreement with a bank to borrow Rs, 495,000,000 to fund the redemption of FCCB at an interest rate of base rate margin (as may be agreed with the bank from time to time) for a tenor up to a maximum of 4 years. The base rate and margin were 14.75% during the previous period. The term loan was to be repaid in 45 monthly installments starting from the end of 4th month from the date of disbursement. The outstanding balance as at June 30, 2015 and June 30, 2014 is Rs, Nil and Rs, 330,000,000 respectively. The term loan was secured by a specific charge on immovable assets of the Company, personal guarantees of the promoters and pledge of shares of the company held by the promoter.

d. On August 13, 2014, the Company entered into a long term loan agreement with others to borrow Rs, 450,000,000 at an interest rate of 12.50% p.a., to repay the existing term loan and for general corporate purpose which includes working capital and advance payment for capital expenditure. The term loan is to be repayable in 120 equated monthly installment starting from October 01, 2014 for loan availed on August 29, 2014 and from November 01, 2014 for loan availed on September 05, 2014. Further, the term loan is secured by a specific charge on immovable properties of the Company. At the year end, outstanding balance of the term loan is Rs, 432,737,071.

e. Lease obligations towards assets acquired under finance leases:

Finance lease obligations are secured by hypothecation of plant and equipment, Office equipment and vehicles taken on lease.

f. Foreign currency loans – buyer's credit are secured by pari passu charge on the immoveable assets of the Company, both present and future (except building in Royal Palms, Goregaon, Mumbai), pari passu charge on the Company's current assets both present and future and personal guarantees of the promoter director.

The Company had recognized a deferred tax asset on the carry forward losses in the earlier years. Although the Company has incurred taxable losses in the current year, based on the agreements entered into by the Company for lease/ sub-lease of its premises and to render outsourcing service to its subsidiaries coupled with the revenue from existing business activities, the management is confident that sufficient taxable income to offset carry forward losses would be generated.

The Company did not have any long-term contracts including derivative contracts for which any provision was required for any foreseeable losses.

a. In February 2011, the Company entered into an agreement for a working capital demand loan of Rs, 250,000,000 from a bank for a term of six months at an interest rate of 13% Per Annum. This is renewed periodically and is secured by first pari passu charge on the Company's current assets both present and future, personal guarantees and pledge of shares by the promoter director. As at June 30, 2015, Rs, 100,000,000 and as at June 30, 2014, Rs, 250,000,000 is outstanding and is included in short-term demand loans.

b. On November 06, 2012, the Company entered in to an agreement for pre-shipment financing under export orders ("Facility") of Rs, 385,000,000 for funding against confirmed orders up to 100% of export sales. The interest rate for the facility drawn in Indian rupees is base rate plus margin and for facility drawn in currency other than Indian rupees is LIBOR plus margin. There are sub-limits under the facility for financial guarantees / standby letter of credit for payment undertaking for buyer's credit, pre-shipment financing under export letter of credit, export bills discounting, export invoice financing, import invoice financing, overdraft , short-term loans and bonds/ guarantees. The Facility is secured by first pari-passu charge on stock and book debts of the Company, personal guarantee of the promoters, first pari-passu charge on movable fixed assets of the Company, first pari-passu charge on immovable fixed assets located at Royal Palms-Mastermind, Goregoan, Mumbai and Raghuvanshi Mills, Mumbai and pledge of shares of the Company. As at June 30, 2015 Rs, 146,718,825 and June 30, 2014 Rs, 292,267,856 is outstanding under the Facility. As at June 30, 2015 Rs, nil and June 30, 2014 Rs, 166,900,000 is included in short-term demand loans and as at June 30, 2015 Rs, 146,718,825 and June 30, 2014 Rs, 125,367,856 is included in cash credit / overdraft .

c. On October 28, 2014, the Company borrowed Rs, 5,000,000 as working capital demand loan from a bank for a term of ten months at an interest rate of 13.75%. The short-term demand loan is secured by first pari passu charge on the Company's current assets both present and future, personal guarantees and pledge of shares by the promoter director. As at June 30, 2015, Rs, 5,000,000 is outstanding and is included in short-term demand loans.

d. On November 05, 2014, the Company raised Rs, 50,000,000 from a financial institution at an interest rate of 15.5% Per Annum for a term of 6 months from date of disbursement. This loan is renewed and is secured by pledge of shares by a promoter director. As at June 30, 2015 Rs, 50,000,000 was outstanding and is included under short-term demand loan.

e. On February 18, 2015, the Company raised Rs, 50,000,000 from a financial institution at an interest rate of 17% Per Annum for a term of 363 days from the date of disbursement. The short-term demand loan is secured by pledge of shares by a promoter director. As at June 30, 2015 Rs, 50,000,000 was outstanding and is included under short-term demand loan.

f. Cash credits/ overdraf from banks are secured against first pari passu charge on the Company's current assets both present and future, personal guarantees and pledge of shares by the promoter director. The cash credit is repayable on demand and carries interest at the rate of 14.50% to 14.75% Per Annum. As at June 30, 2015 and June 30, 2014, the cash credits/ overdraf outstanding were Rs, 183,587,792 and Rs, 179,919,806, respectively.

g. On January 31, 2013, the Company entered into an agreement for a working capital loan of Rs, 150,000,000 from others at an interest rate of 16% Per Annum for a term of 12 months from the date of disbursement. This loan is renewed periodically and is secured by personal guarantee and pledge of shares by a promoter director. On February 01, 2015, the Company rolled over the said loan at an interest rate of 15.50% Per Annum for a term of 12 months from the date of renewal. On January 21, 2015, the Company additionally borrowed Rs, 50,000,000 for general corporate purpose at an interest rate of 15.50% Per Annum for a term of 12 months from the date of disbursement. The general corporate purpose loan is secured by personal guarantee and pledge of shares by a promoter director. As at June 30, 2015 Rs, 177,400,000 and as at June 30, 2014 Rs, 135,000,000 was outstanding and is included under short-term demand loan.

h. On November 27, 2014, the Company raised Rs, 50,000,000 through inter corporate borrowing for working capital at an interest rate of 18% Per Annum for a term of 60 days from the date of disbursement. The working capital loan was secured by pledge of shares by a promoter director. The loan was repaid during the year.

i. On July 01, 2014, the Company raised working capital term loan of Rs, 3,000,000,000 from others at an interest rate of 13.5% Per Annum. The loan was repaid on March 31, 2015. This loan was secured by pledge of the Company's shares in PF World Ltd. (Mauritius).

Other payables include withholding taxes, service tax payable and employer and employee contribution to provident and other funds.

b. Plant and equipment and vehicles include assets taken on finance lease as under: Gross block: Rs, 41,233,601 (Previous period: Rs, 50,899,305)

Depreciation charge for the year: Rs, 7,171,487 (Previous period: Rs, 5,281,414) Accumulated depreciation: Rs, 13,906,109 (Previous period: Rs, 14,775,579) Net block: Rs, 27,327,492 (Previous period: Rs, 36,123,726)

c. Building includes leasehold premises of Rs, 651,900,000 and its accumulated depreciation of Rs, 5,055,351 (Previous Year: Rs, Nil)

a. Sof ware includes assets taken on finance lease as under: Gross block: Rs, Nil (Previous period: Rs, 1,550,000) Depreciation charge for the period: Rs, Nil (Previous period: Rs, 313,726) Accumulated depreciation: Rs, Nil (Previous period: Rs, 1,061,295) Net block: Rs, Nil (Previous period: Rs, 488,705)

b. On March 31, 2015 the Company sold its entire holdings of 21,492,003 ordinary shares of Prime Focus London Plc., a subsidiary company incorporated in the U.K. for a consideration of Rs, 37,074,693. After the reversal of provision of Rs, 514,636,483 made in respect of this investment in the past, the Company incurred a loss of Rs, 106,971,970, which has been disclosed as an exceptional item (Refer Note 22). Of total consideration, Rs, 19,987,159 is outstanding as at June 30, 2015.

a. Loans given to subsidiaries except for Prime Focus International Limited is considered under "Short-Term Loans and Advances" and are repayable on demand and management intends to receive the loan within an operating cycle. Prime Focus International Limited loan is without planned maturity nor is repayable on demand.

b. All the above loans are with interest of 10% - 15% except for loan of Rs, 909,785,248 given to Gener8 India Media Services Limited (acquired in business combination) which is interest free.

c. All loans are given for general corporate purpose of the subsidiaries.

d. There are no advances in the nature of loans. ii. Investment by loaned in the shares of the subsidiaries.

Investment by Prime Focus Technologies Private Limited in subsidiaries.

a. Other loans and advances includes prepaid expenses, loans and advances to employees and others, advances to suppliers and service taxes receivable.

b. Loans and advances include amount due from private companies in which directors is a member / director.

a. Margin money deposits aggregating Rs, 23,448,636 (previous period: Rs, 59,898,384) are subject to first charge to secure the foreign currency loans – buyer's credit and bank guarantees.

b. Margin money deposits aggregating Rs, 20,957,600 (previous period: Rs, Nil) are subject to first charge to secure the interest of non-convertible debenture holders.

1. The disclosures as required under Accounting Standard 15 "Employee Benefits" are as follows:

a. Defined benefit plan:

The Company has a defined benefit gratuity plan (unfunded). This plan provides a lump sum payment to employees on retirement or termination of employment, an amount based on respective employee's last drawn salary and tenure of employment with the Company.

Major drivers in actuarial assumptions typically are years of service and employee compensation. The estimates of rate of escalation in salary, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, including supply and demand in the employment market. The above information is as certified by the actuary.

b. Defined contribution plan:

The Company contributed Rs, 2,965,436 (Previous period: Rs, 5,200,609) to provident fund during the year and recognized the contribution as an expense, which is included in note 19 as contribution to provident fund and other funds.

2. Leases

The Company has taken premises on non-cancellable operating lease basis. The tenure of leases ranges from 36 to 180 months with non-cancellable periods ranging from 12 to 60 months. Future lease rentals in respect of the premises taken on non-cancellable operating leases are as follows:

Amount of lease rental charged to the Statement of Profit and Loss in respect of non-cancellable operating leases is Rs, 1,736,056 (Previous period: Rs, 10,834,829).

The Company has taken certain premises on cancellable operating lease basis. The tenure of the lease ranges from 11 to 180 months. Amount of lease rental charged to the Statement of Profit and Loss in respect of cancellable operating leases is Rs, 90,358,148 (Previous period: Rs, 65,960,287).

The Company has sublet certain premises on cancellable operating lease basis with a lock in period of one year. The tenure of the lease is of 60 months. An amount of Rs, 80,773,094 (Previous period: Rs, 2,906,798) has been recognized as other operating income in respect of the sublease (Refer Note 27).

3. Segment information

Business is the primary segment for the Company being post production activities. Since, the Company's entire operations are governed by the same set of risks and returns, these have been considered as representing a single segment.

4. Related party disclosures

a. List of Parties where control exists, irrespective of transactions: i) Subsidiary companies

Prime Focus London Plc, UK (till March 31, 2015) (Refer Note 13(b))

Prime Focus International Limited.

Prime Focus Technologies Private Limited

Prime Focus Visual Effects Private Limited

GVS Sof ware Private Limited

Prime Focus Motion Pictures Limited

PF World Limited

PF Investments Limited

Prime Focus 3D India Private Limited

Gener8 India Media Services Limited. (w.e.f. April 07, 2015) (formerly known as Prime Focus Entertainment Services Limited / Reliance

MediaWorks Entertainment Services Limited)

Reliance MediaWorks (Mauritius) Limited (w.e.f. April 07, 2015)

PF Overseas Limited (w.e.f. July 26, 2013)

ii) Step-down subsidiary companies

Subsidiary companies of PF World Limited

Prime Focus Luxembourg S.a.r.l

Gener8 Digital Media Services Limited (w.e.f. December 24, 2014)

Prime Focus 3D Cooperatief U.A. (Subsidiary of Prime Focus Luxembourg S.a.r.l)

Prime Focus World N.V. (Subsidiary of Prime Focus 3D Cooperatief U.A.)

Prime Focus International Services UK Limited (Subsidiary of Prime Focus World N.V.)

Prime Focus North America Inc. (Subsidiary of Prime Focus World N.V.)

1800 Vine Street LLC (Subsidiary of Prime Focus North America, Inc.)

Prime Focus Creative Services Canada Inc. (Subsidiary of Prime Focus World N.V.)

Prime Focus VFX Australia Pty Limited (Subsidiary of Prime Focus World N.V.) (Liquidated in FY 2014)

Vegas II VFX Limited (w.e.f. May 30, 2013) (Subsidiary of Prime Focus Creative Services Canada Inc.)

Prime Focus VFX USA, Inc. (Subsidiary of Prime Focus World N.V.)

Prime Focus ME Holdings Limited (Subsidiary of Prime Focus World N.V.)

Prime Focus China Limited (Subsidiary of Prime Focus World N.V.)

Prime Focus (HK) Holdings Limited. (Subsidiary of Prime Focus China Limited)

Prime Focus World Creative Services Private Limited (Subsidiary of Prime Focus World N.V.)

Double Negative Holdings Limited (w.e.f. July 01, 2014) (Subsidiary of Prime Focus World N.V.)

Double Negative Limited (w.e.f. July 01, 2014) (Subsidiary of Double Negative Holdings UK)

Double Negative Singapore Pte Limited (w.e.f. July 01, 2014) (Subsidiary of Double Negative Holdings UK)

Double Negative Canada Productions Limited (w.e.f. July 01, 2014) (Subsidiary of Double Negative Holdings UK)

Double Negative Films Limited (w.e.f. July 01, 2014) (Subsidiary of Double Negative Holdings UK)

Subsidiary companies of Prime Focus London Plc, UK (till March 31, 2015)

VTR Media Services Limited (formerly known as Prime Focus Visual Entertainment Services Limited) (Under Liquidation)

VTR Media Investments Limited

PF Broadcast & Commercial Limited (Under Administration)

Busy Buses Limited

Prime Focus Broadcast Limited (Liquidated in FY 2014)

Slipstream Limited

VTR Post Limited (formerly known as Prime Focus Post Limited/ Amazing Spectacles Limited) (Subsidiary of VTR Media Investments Limited)

Prime Post (Europe) Limited (formerly known as Prime Focus (MW) Limited) (Subsidiary of VTR Media Investments Limited till October 14, 2014, Subsidiary of Prime Focus Technologies UK Limited w.e.f. October 15, 2014)

VTR Media Investments 2 Limited (formerly known as Prime Focus Productions 1 Limited) (Subsidiary of VTR Media Investments Limited)

Prime VFX Limited (formerly known as PF Television VFX Limited) (Subsidiary of VTR Media Investments Limited)

DMJM Film Limited (Subsidiary of VTR Media Investments Limited) (Liquidated in FY 2013)

PF Broadcast VFX Limited (Under Administration) (Subsidiary of VTR Media Investments Limited)

Prime Focus Productions 5 Limited (Dissolved on July 28, 2015) (Subsidiary of VTR Media Investments Limited)

PF Film UK Limited (Under Administration) (Subsidiary of VTR Media Investments Limited)

Subsidiary companies of Prime Focus Technologies Private Limited

Prime Focus Technologies UK Limited

Prime Focus Technologies, Inc.

Prime Post Europe Ltd (Subsidiary of Prime Focus Technologies UK Limited w.e.f. October 15, 2014)

DAX PFT LLC (Subsidiary of Prime Focus Technologies, Inc.)

DAX Cloud ULC (Subsidiary of DAX PFT LLC)

Subsidiary companies of Reliance Media Works (Mauritius) Limited (w.e.f. April 07, 2015)

Reliance Lowry Digital Imaging Services Inc.

b. List of related parties with whom transactions have taken place during the year / period i. Subsidiary companies

Prime Focus Technologies Private Limited

Prime Focus London Plc, UK

Prime Focus Visual Effects Private Limited

GVS Sof ware Private Limited

Prime Focus 3D India Private Limited

Prime Focus Motion Pictures Limited

Prime Focus International Limited

PF World Limited

Gener8 India Media Services Limited

Reliance MediaWorks (Mauritius) Limited

ii. Step down subsidiary companies

Prime Focus North America, Inc

Prime Focus Creative Services Canada Inc

Prime Focus International Services UK Limited

Prime Focus ME Holdings Limited

Prime Focus World N.V.

Prime Focus World Creative Services Private Limited

Prime Focus Technologies, Inc iii. Key management personnel

Mr. Namit Malhotra – CEO, Chairman and Executive Director (w.e.f June 25, 2014)

Mr. Naresh Malhotra – Whole-time Director (Chairman till June 24, 2014)

Mr. Ramakrishnan Sankaranarayanan – Managing Director (w.e.f June 25, 2014), CEO (till June 24, 2014)

Mr. Vikas Rathee – CFO (w.e.f August 01, 2014)

Mr. Nishant Fadia – CFO (till July 31, 2014)

Ms. Kirti Desai – Company Secretary (resigned w.e.f. July 07, 2015) iv. Enterprises owned or Significantly influenced by Key Management Personnel or their relatives

Blooming Buds Coaching Private Limited

N2M Reality Private Limited

Monsoon Studio Private Limited v. Enterprises exercising Significant influence over the Company

Reliance MediaWorks Limited (w.e.f. April 07, 2015)

Standard Chartered Private Equity (Mauritius) III Limited

Standard Chartered Private Equity (Mauritius) Limited

Standard Chartered Bank

** The balance outstanding as at June 30, 2015 have not been disclosed, since as at the year-end these companies were not related parties (Refer Note 13(b))

## There are no provisions for doubtful debts / amounts writ en off / writ en back in respect of dues from / to related parties except in respect of the following:

a. Provision for doubtful loans and advances of Rs, Nil (previous period: Rs, 1,353,249,789) (net) has been made in respect of for Prime Focus London Plc, UK. Of the total provision Rs, 1,353,249,789 (previous period: Rs, Nil) has been writ en off during the year.

b. Provision for diminution in the value of investments of Rs, Nil (previous period: Rs, 514,636,483) has been made in respect of investments made in Prime Focus London Plc, UK (Refer Note 13b).

5. On April 07, 2015, 23,076,923 and 90,384,615 equity shares were allot ed to Monsoon Studio Private Limited and Reliance MediaWorks Limited ("RMW"), respectively, on a preferential basis at Rs 52 per share. Of these 67,307,692 equity shares were issued to Reliance Media Works Limited as consideration other than cash towards the transfer of its film and media services business to the Company in accordance with the Business Transfer Agreement dated November 19, 2014 between the Company, RMW and Reliance Land Private Limited. In accordance with the said Agreement, the transfer of BOT Agreement pertaining to the Studio including other business assets and liabilities related to the BOT Agreement ("Studios") and debt facilities of Rs,. 2,000,000,000 crore was to be effected post receipt of the necessary additional approvals. Upon receipt of the necessary statutory approvals, with effect from the closing date of April 07, 2015, net assets of film and media services business were transferred to and recorded by the Company at the fair value of Rs,. 4,017,690,352 as determined by the independent values. However, pending receipt of the additional approvals, the Studios' and the debt facilities have not been transferred to and recorded by the Company. Presently, the Company has recorded a capital reserve of Rs,. 517,690,352 being the difference between consideration for the transaction being Rs,. 3,500,000,000 and fair value of the net assets transferred as detailed below. Post receipt of additional approvals, the Studios' and the debt facilities will be recorded at fair value with the diff eventual being adjusted against the capital reserve.

6. Details of dues to micro and small enterprises as defined under the MSMED Act, 2006

The Company does not have suppliers who are registered as micro, small or medium enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 as at June 30, 2015. The information regarding micro, small and medium enterprises has been determined on the basis of information available with the management.

7. Effective June 30, 2014, the Company sold its 'Backend Business', which includes (a) business of providing the services of conversion of 2D audio visual/ moving images to stereo 3D audio visual/moving images provided by the Company to Prime Focus World N.V., a company incorporated and operating under the laws of Netherlands ("PFW") ('Conversion Business'); and (b) the business of providing the services of computer generated film visual special effects by the Company to PFW ("VFX Business"), to Prime Focus World Creative Services Private Limited.', a company incorporated in India and an indirect controlled subsidiary of the Company on a going concern basis by way of slump sale for a total consideration of Rs, 2,297,049,000. The gain recognized on the backend slump sale of Rs,. 1,972,058,739 was recorded as exceptional item in previous period (Refer Note 22). Consequently, the figures for the current year exclude the 'backend business' and hence are not comparable with the figures of the previous period.

8. Pursuant to the enactment of the Companies Act, 2013 ("the Act"), effective 1st April, 2014, the Company has revised the estimated useful lives of its fixed assets to ensure compliance with the stipulations of Schedule II to the Act. Accordingly, the unamortized depreciable amounts of the fixed assets as at 1st July, 2014 have been charged over the revised remaining useful lives. This has the impact of decreasing depreciation charge for the year ended June 30, 2015 by Rs, 24,700,563. Further, in accordance with the stipulations of the said Schedule, writ en down values of fixed assets, whose lives had expired as at 1st July, 2014 aggregating Rs, 10,260,080 (net of tax) have been adjusted against retained earnings.

9. The Board of Directors of the Company vide circular resolution passed on March 24, 2014 inter-alia, considered and approved the extension of the previous financial year i.e. (April 01, 2013 to March 31, 2014) of the Company by a period of three (3) months in accordance with the provisions of Section 210 of the Companies Act, 1956. Accordingly, the Previous Year's financial year of the Company was for a period of fifteen (15) months i.e. commencing from April 01, 2013 and ending on June 30, 2014 and therefore the financial results of the last financial period are not comparable with financial results of the current year which are for twelve (12) months.


Jun 30, 2014

1. Corporate information

Prime Focus Limited (the Company) is a public listed company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of post-production including digital intermediate, visual eff ects, 2D to 3D conversion and other technical and creative services to the Media and Entertainment industry.

2. The disclosures as required under Accounting Standard 15 "Employee Benefits" are as follows:

a. Defined benefit plan:

The Company has a defined benefit gratuity plan (unfunded). This plan provides a lumpsum payment to employees on retirement or termination of employment, an amount based on respective employee''s last drawn salary and tenure of employment with the Company.

Major drivers in actuarial assumptions typically are years of service and employee compensation. The estimates of rate of escalation in salary, considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors, including supply and demand in the employment market. The above information is as certifi ed by the actuary.

b. Defined contribution plan:

The Company contributed Rs. 5,200,609 (Previous year: Rs. 2,809,463) to provident fund during the period and recognized the contribution as an expense, which is included in note 19 as contribution to provident fund and other funds.

3. Leases

The Company has taken premises on non-cancellable operating lease basis. The tenure of leases ranges from 36 to 180 months with non-cancellable periods ranging from 12 to 60 months. Future lease rentals in respect of the premises taken on non-cancellable operating leases are as follows:

Amount of lease rental charged to the Statement of Profit and Loss in respect of non-cancellable operating leases is Rs. 10,834,829 (Previous year: Rs. 9,881,074).

The Company has taken certain premises on cancellable operating lease basis. The tenure of the lease ranges from 11 to 180 months. Amount of lease rental charged to the Statement of Profit and Loss in respect of cancellable operating leases is Rs. 65,960,287 (Previous year: Rs. 46,171,297).

The Company has sublet certain premises on cancellable operating lease basis. The tenure of the lease is of 60 months. An amount of Rs. 2,906,798 (Previous year: Rs. Nil) has been recognized as other income in respect of the sublease (Refer note 27).

4. Segment information

Business is the primary segment for the Company being post production activities. Since, the Company''s entire operations are governed by the same set of risks and returns, these have been considered as representing a single segment.

Segment information for secondary segment reporting (by geographical segment based on location of customers)

5. Related party disclosures

a. List of Parties where control exists, irrespective of transactions: i) Subsidiary companies

Prime Focus London Plc, UK

Prime Focus International Limited

Prime Focus Technologies Private Limited

Prime Focus Visual Eff ects Private Limited

GVS Sof ware Private Limited

Prime Focus Motion Pictures Limited

PF World Limited

PF Investments Limited

Prime Focus 3D India Private Limited

Prime Focus World Creative Services Private Limited (w.e.f. July 12, 2013 it is a subsidiary of Prime Focus World N.V.)

PF Overseas Limited (w.e.f. July 26, 2013)

ii) Step-down subsidiary companies

Subsidiary companies of PF World Limited

Prime Focus Luxembourg S.a.r.l

Prime Focus 3D Cooperatief U.A. (Subsidiary of Prime Focus Luxembourg S.a.r.l)

Prime Focus World N.V. (Subsidiary of Prime Focus 3D Cooperatief U.A.)

Prime Focus International Services UK Limited (Subsidiary of Prime Focus World N.V.)

Prime Focus North America Inc. (Subsidiary of Prime Focus World N.V.)

1800 Vine Street LLC (Subsidiary of Prime Focus North America, Inc.)

Prime Focus Creative Services Canada Inc. (Subsidiary of Prime Focus World N.V.)

Prime Focus VFX Australia Pty Limited (Subsidiary of Prime Focus World N.V.) (Liquidated in FY 2014)

Prime Focus VFX USA, Inc. (Subsidiary of Prime Focus World N.V.)

Prime Focus ME Holdings Limited (formerly known as Lifestyles Interseas Limited) (Subsidiary of Prime Focus World N.V.)

Prime Focus China Limited (Subsidiary of Prime Focus World N.V.)

Prime Focus (HK) Holdings Limited (Subsidiary of Prime Focus China Limited)

Prime Focus World Creative Services Private Limited (Subsidiary of Prime Focus World N.V. w.e.f. July 12, 2013)

Subsidiary companies of Prime Focus London Plc, UK

Prime Focus Visual Entertainment Services Limited

VTR Media Investments Limited

PF Film UK Limited (Liquidated in FY 2013)

PF Broadcast & Commercial Limited (Liquidated in FY 2013)

Busy Buses Limited

Prime Focus Broadcast Limited (Liquidated in FY 2014)

Clipstream Limited

Amazing Spectacles Limited (Subsidiary of VTR Media Investments Limited)

Prime Focus MW Limited (Subsidiary of VTR Media Investments Limited)

Prime Focus Productions 1 Limited (Subsidiary of VTR Media Investments Limited)

PF Television VFX Limited (Subsidiary of VTR Media Investments Limited)

PF Broadcast VFX Limited (Subsidiary of VTR Media Investments Limited) (Liquidated in FY 2014)

Prime Focus Productions 5 Limited (Subsidiary of VTR Media Investments Limited)

DMJM Film Limited (Subsidiary of VTR Media Investments Limited) (Liquidated in FY 2014)

Subsidiary companies of Prime Focus Technologies Private Limited

Prime Focus Technologies UK Limited

Prime Focus Technologies, Inc.

DAX PFT LLC (Subsidiary of Prime Focus Technologies, Inc.)

DAX Cloud ULC (Subsidiary of DAX PFT LLC)

b. List of related parties with whom transactions have taken place during the period / year i. Subsidiary companies

Prime Focus Technologies Private Limited

Prime Focus London Plc, UK

Prime Focus Visual Eff ects Private Limited

GVS Sof ware Private Limited

Prime Focus 3D India Private Limited

Prime Focus Motion Pictures Limited

PF Investments Limited

Prime Focus International Limited

PF Overseas Limited

Prime Focus World Creative Services Private Limited

ii. Step down subsidiary companies

PF Broadcast & Commercial Limited

Prime Focus Visual Entertainment Services Limited

Prime Focus North America, Inc

Prime Focus Creative Services Canada Inc

Prime Focus International Services UK Limited

Prime Focus ME Holdings Limited

Prime Focus World N.V.

Prime Focus World Creative Services Private Limited

iii. Key management personnel

Mr. Namit Malhotra – CEO, Chairman and Executive Director (w.e.f June 25, 2014)

Mr. Naresh Malhotra – Whole-time Director (Chairman till June 24, 2014)

Mr. Ramakrishnan Sankaranarayanan – Managing Director (w.e.f June 25, 2014), CEO (till June 24, 2014)

iv. Relative of Key management personnel

Mr. Namit Malhotra –Son of Mr. Naresh Malhotra

v. Enterprises owned or significantly infl uenced by Key Management Personnel or their relatives

Blooming Buds Coaching Private Limited N2M Reality Private Limited

vi. Enterprises exercising significant infl uence over the Company

Standard Chartered Private Equity (Mauritius) III Limited Standard Chartered Private Equity (Mauritius) Limited Standard Chartered Bank

* Key management personnel have given personal guarantee and have pledged part of their shareholdings for borrowings obtained by the

Company. (Refer notes 5 and 9). ## There are no provisions for doubtful debts / amounts writ en off / writ en back in respect of dues from / to related parties except in

respect of the following.

a. Provision for doubtful loans and advances of Rs. 1,353,249,789 (net) has been made in respect of for Prime Focus London Plc, UK (Refer note 15 & 22).

b. Provision for diminution in the value of investments of Rs. 514,636,483 has been made in respect of investments made in Prime Focus London Plc, UK (Refer note 13)

6. Contingent liabilities in respect of in Rs As at June As at March 30, 2014 31, 2013

i Income Tax mat ers under dispute* 73,808,523 125,731,981

Relates to demands raised by the income tax authorities for various assessment years mainly on account of disallowances of depreciation on computer based assets, additions under the Transfer Pricing provisions and Tax deducted at source (TDS) amounts.

* In the above mat er, the Company is hopeful of succeeding and as such does not expect any significant liability to crystalize. ii On account of undertakings given by the Company in favour of Customs authorities at the time - 640,740,299 of import of capital goods underEPCG Scheme.

iii Guarantees given on behalf of subsidiaryand step-down subsidiary companies 5,093,282,586 2,185,619,913

7. Details of dues to micro and small enterprises as defi ned under the MSMED Act, 2006

The Company does not have suppliers who are registered as micro, small or medium enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 as at June 30, 2014. The information regarding micro, small and medium enterprises has been determined on the basis of information available with the management.

8. Effective June 30, 2014, the Company sold its ''Backend Business'', which includes (a) business of providing the services of conversion of 2D audio visual/ moving images to stereo 3D audio visual/moving images provided by the Company to Prime Focus World N.V., a company incorporated and operating under the laws of Netherlands ("PFW") (''Conversion Business''); and (b) the business of providing the services of computer generated fi lm visual special eff ects by the Company to PFW ("VFX Business"), to Prime Focus World Creative Services Private Limited.'', a company incorporated in India and an indirect controlled subsidiary of the Company on a going concern basis by way of slump sale for a total consideration of Rs. 2,297,049,000. The carrying values of net assets transferred under slump sale is given below:

The gain recognized on the backend slump sale of Rs. 1,972,058,739 is recorded as exceptional item (Refer note 22).

9. The Board of Directors of the Company vide circular resolution passed on March 24, 2014 inter-alia, considered and approved the extension of the current financial year i.e. (April 01, 2013 to March 31, 2014) of the Company by a period of three (3) months in accordance with the provisions of Section 210 of the Companies Act, 1956. Accordingly, the current financial year of the Company is for a period of fifteen (15) months i.e. commencing from April 01, 2013 and ending on June 30, 2014 and therefore the fi nancial results of the current fi nancial period are not comparable with fi nancial results of the year ended March 31, 2013 which are for twelve (12) months.

10. Previous year''s figures have been regrouped where necessary to confi rm to current period''s classifi cation.


Mar 31, 2013

1. corporate information

Prime Focus Limited (the Company) is a public company domiciled in India and incorporated under the provision of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the business of post-production including digital intermediate, visual efects, 2D to 3D conversion and other technical and creative services to the Media and entertainment industry.

2. Segment information

The Company is presently operating an integrated post production setup. The entire operations are governed by the same set of risks and returns and hence have been considered as representing a single segment. The said treatment is in accordance with the guiding principles enunciated in the Accounting Standard on Segment Reporting (AS-17).

3. related party disclosures

a. list of Parties where control exists, irrespective of transactions:

i) Subsidiary Companies Prime Focus London Plc. Prime Focus International Limited. Prime Focus Technologies Private Limited

Prime Focus Visual efects Private Limited (earlier known as Flow Post Solutions Private Limited) GVS Sofware Private Limited Prime Focus Motion Pictures Limited PF World Limited PF Investments Limited Prime Focus 3D India Private Limited Prime Focus World Creative Services Private Limited (earlier known as Prime Focus Post Production Private Limited)

ii) Step-down Subsidiaries

Subsidiary companies of PF World Limited

Prime Focus Luxembourg S.a.r.l

Prime Focus 3D Cooperatief U.A. (Subsidiary of Prime Focus Luxembourg S.a.r.l)

Prime Focus World N.V. (Subsidiary of Prime Focus 3D Cooperatief U.A.)

Prime Focus International Services UK Limited (Subsidiary of Prime Focus World N.V.)

Prime Focus North America Inc. (Subsidiary of Prime Focus World N.V.)

1800 Vine Street LLC (Subsidiary of Prime Focus North America, Inc.)

Prime Focus Creative Services Canada Inc. (Subsidiary of Prime Focus World N.V.)

Prime Focus VFX Australia Pty Limited (Subsidiary of Prime Focus World N.V.)

Prime focus VFX USA, Inc. (Subsidiary of Prime Focus World N.V.)

Lifestyles Interseas Limited (Subsidiary of Prime Focus World N.V.)

Subsidiary companies of Prime Focus london Plc.

Prime Focus Visual entertainment Services Limited

VTR Media Investments Limited

PF Film UK Limited (Liquidated in FY 2013)

PF Broadcast & Commercial Limited

Busy Buses Limited

Prime Focus Broadcast Limited

Clipstream Limited

Amazing Spectacles Limited (Subsidiary of VTR Media Investments Limited)

Prime Focus MW Limited (earlier known as Meanwhile Content Limited) (Subsidiary of VTR Media Investments Limited)

Prime Focus Productions 1 Limited (Subsidiary of VTR Media Investments Limited)

PF Television VFX Limited (Subsidiary of VTR Media Investments Limited)

PF Broadcast VFX Limited (Subsidiary of VTR Media Investments Limited)

Prime Focus Productions 5 Limited (Subsidiary of VTR Media Investments Limited)

DMJM Film Limited (Subsidiary of VTR Media Investments Limited)

Subsidiary companies of Prime Focus Technologies Private limited

Prime Focus Technologies UK Limited Prime Focus Technologies, Inc.

b. list of other related parties with whom transactions have taken place during the year

i. Key management personnel

Mr. Naresh Malhotra - Chairman and Whole-time Director

Mr. Ramakrishnan Sankaranarayanan - Managing Director (from October 11, 2011 to November 5, 2012) and Chif executive Ofcer

Mr. Namit Malhotra (up to October 11, 2011)

ii. Relative of Key management personnel

Mr. Namit Malhotra - Son of Chairman and Whole-time Director

iii. enterprises owned or signifcantly infuenced by Key Management Personnel or their relatives Blooming Buds Coaching Private Limited N2M Realty Private Limited

iv. entities with signifcant infuence over the Company Standard Chartered Private equity (Mauritius) III Limited Standard Chartered Private equity (Mauritius) Limited Standard Chartered Bank

4. details of dues to micro and small enterprises as defned under the mSmed act, 2006

The Company does not have suppliers who are registered as micro, small or medium enterprise under the Micro, Small and Medium enterprises Development Act, 2006 as at March 31, 2012. The information regarding micro, small and medium enterprises has been determined on the basis of information available with the management.

5. Previous year''s fgures have been regrouped where necessary to confrm to current year''s classifcation.


Mar 31, 2012

1. Corporate information

Prime Focus Limited (the Company) is a public company domiciled in India and incorporated under the provision of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the business of Post Production, Visual Effects, 2D to 3D conversion and providing complete solutions in terms of other technical and creative services to the entire Media and Entertainment Industry.

2. Long-term borrowings

a. On December 12, 2007, the Company issued 550 Foreign Currency Convertible Bonds (FCCBs) of a face value of $ 100,000 each, aggregating to $ 55 million (equivalent - Rs. 2,162,696,800). The net proceeds from the issue of the FCCBs are to be used for strategic acquisitions and/or strategic alliances outside of India, for investment into wholly owned subsidiaries and/or joint ventures outside of India, for announced and future acquisitions, for foreign currency capital expenditure or for any other use, as may be permitted under applicable laws or regulations from time to time.

As per the terms of the issue, the holders have an option to convert FCCBs into equity shares at a reset conversion rate of Rs. 110.90 per equity share. Further, under certain conditions, the Company has the option to redeem the bonds on or after December 12, 2010. Unless previously converted or redeemed or purchased and cancelled, the Company will redeem these bonds, at 143.66% at the end of the five years from the date of issue i.e. on December 13, 2012. As at March 31, 2012, no bonds have been converted into equity shares and the entire balance of 550 bonds have been included and disclosed as current maturities of long-term borrowings in other current liabilities.

The FCCBs as detailed above are compound instruments with an option of conversion into specified number of shares and an underlying foreign currency liability with the redemption at a premium in the event of non conversion at the end of the period. The bonds are redeemable only if there is no conversion of bonds earlier. The payment of premium on redemption is contingent in nature, the outcome of which is dependent on uncertain future events. Hence no provision is considered necessary nor has been made in the accounts in respect of such premium amounting to Rs. 889,009,734 (Previous year: Rs. 598,162,095). However, in the event of redemption, the premium payable would be adjusted against the balance in the securities premium account.

The management is of the opinion that the bonds are a non monetary liability and hence, the exchange gain/loss on translation of FCCB liability in the event of redemption have not been recognized. Had the Company revalued the bonds as at March 31, 2012 considering it as a long term monetary liability, the profit for the year ended March 31, 2012 would have been lower by Rs. 383,223,143 (Previous yean Rs. 39,062,293). The reserves as on that date would have been lower byRs. 636,186,650 (Previous year: Rs. 252,963,508) and foreign currency monetary item would have been Rs. Nil (Previous year: Rs. 39,062,293).

b. In May 2011, the Company entered into an agreement with a financial institution to borrow Rs. 100,000,000 for a term of one year at an interest rate of 14.50% per annum. Interest rate was fixed for six months and can be reset after six months. A promoter director of the Company has pledged shares of the Company held as promoter holding as collateral security. As at March 31, 2012, Rs. 100,000,000 is outstanding and is included in current maturities of long-term borrowings.

c. In May 2011, the Company entered into an agreement with a financial institution to borrow Rs. 100,000,000 at an interest rate of 13.50% for general corporate purposes which includes working capital and advance payment for capital expenditure. The loan is repayable after twenty-four months with a put/call option at the end of twelve months and every six months thereafter. A promoter director of the Company has pledged shares of the Company held as promoter holding as collateral security. As at March 31, 2012, Rs. 100,000,000 is outstanding and is included in long term borrowings.

d. In February 2012, the Company entered into an agreement with a financial institution to borrow Rs. 100,000,000 at an interest rate of 14.50% per annum for a term of nine months.. A promoter of the Company has pledged shares of the Company held as promoter holding as collateral security. Further, the loan has been guaranteed by the personal guarantee of a promoter director of the Company. As at March 31,2012, Rs. 100,000,000 is outstanding and is included in long-term borrowings.

e. In May 2008, the Company entered into a term loan agreement with a bank to borrow Rs. 200,000,000 at an interest rate of 14.50% to 14.75% to refinance capital expenditure incurred by the Company. The loan is repayable by way of sixty installments starting from the month following the month of first disbursement of term loan. In July 2011, the Company entered into a term loan agreement with the same bank to borrow Rs. 90,000,000 at an interest rate of 13.75% to refinance capital expenditure incurred by the Company during fiscal year 2011. The loan is repayable byway often monthly installments ofRs. 5,000,000 and five monthly installments of Rs. 8,000,000. The loan is secured by way of mortgage of building of the Company, subservient charges on all existing and future receivables and moveable fixed assets of the Company. Further, the loan has been guaranteed by the personal guarantees and pledge of shares of the Company by promoter directors of the Company. As at March 31,2012, Rs. 53,734,670 (Previous year: 56,767,678) is outstanding, of which Rs. 53,734,670 (Previous year: Rs. 48,658,008) is included in current maturities of long-term borrowings and balance ofRs. Nil (Previous year: Rs. 8,109,670) is included in long-term borrowings.

f. In September 2008, the Company entered into a term loan agreement with a bank to borrow Rs. 350,000,000 at an interest rate of 12.50% per annum or prime lending rate 2.50%, whichever is higher (at March 31, 2012 :15.25%). The loan is repayable in 84 equal monthly installments including interest of Rs. 6,272,500 w.e.f. one month after disbursement. The loan is secured by first charge on the project assets along with mortgage of office premises financed. Further, the loan has been guaranteed by the personal guarantee of a promoter director of the Company. As at March 31, 2012, Rs. 206,213,809 (Previous year: Rs. 248,616,978) is outstanding, of which Rs. 47,087,220 (Previous year: Rs. 42,403,169) is included in current maturities of long-term borrowings and balance of Rs. 159,126,589 (Previous year: Rs. 206,213,809) is included in long-term borrowings.

g. In January 2010, the Company entered into a term loan agreement as sub limit of capital letter of credit with a bankto borrowRs. 250,000,000 at an interest rate of 11.50% per annum, repayable in 24 equal monthly installments after initial moratorium of 3 months from the date of each drawdown Rs. 130,888,966 was outstanding as at March 31, 2011 of which Rs. 120,785,400 is included in current maturities of long-term borrowings and the balance of Rs. 10,103,566 is included in long-term borrowings The loan was fully repaid duringthe year-ended March 31,2012.

3. Gratuity and other post-employment benefit plans

a. Defined benefit plans:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days of basic salary (last drawn salary) for each completed year of service. This plan is unfunded. The following tables summarize the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

4. Deferral/ capitalization of exchange differences

The Ministry of Corporate Affairs (MCA) has issued the amendment dated December 29, 2011 to AS 11 The Effects of Changes in Foreign Exchange Rates, to allow companies deferral/ capitalization of exchange differences arising on long-term foreign currency monetary items. In accordance with the amendment/ earlier amendment to AS 11, the Company has capitalized exchange loss, arising on long-term foreign currency loans, amounting to Rs. 29,358,628 (Previous year exchange gain Rs. 151,722) to the cost of fixed assets.

5. Segment information

The Company is presently operating an integrated post production setup. The entire operations are governed by the same set of risks and returns and hence have been considered as representing a single segment. The said treatment is in accordance with the guiding principles enunciated in the Accounting Standard on Segment Reporting (AS-17).

6. Related party disclosures

a. List of parties where control exists, irrespective of transactions: i) Subsidiary companies

Prime Focus London Pic.

Prime Focus International Limited.

Prime Focus Technologies Private Limited

Flow Post Solutions Private Limited

GVS Software Private Limited

Prime Focus Motion Pictures Limited

PF World Limited

PF Investments Limited Prime Focus 3D India Private Limited Prime Focus Post Production Private Limited

ii) Step-down subsidiary Companies

Subsidiary companies of PF World Limited

Prime Focus Luxembourg S.a.r.l

Prime Focus 3D Cooperatief U.A. (Subsidiary of Prime Focus Luxembourg S.a.r.l)

Prime Focus World N.V. (Subsidiary of Prime Focus 3D Cooperatief U.A.)

Prime Focus International Services UK Limited (Subsidiary of Prime Focus World N.V.)

Prime Focus North America Inc (Subsidiary of Prime Focus World N.V.)

1800 Vine Street LLC (Subsidiary of Prime Focus North America, Inc)

Prime Focus Creative Services Canada Inc (Subsidiary of Prime Focus World N.V.)

Prime Focus VFX Australia Pty Limited (Subsidiary of Prime Focus World N.V.)

Prime focus VFX USA, Inc

Subsidiary companies of Prime Focus London Pic.

Prime Focus Visual Entertainment Services Limited

VTR Media Investments Limited

PF Film UK Limited

PF Broadcast & Commercial Limited

Busy Buses Limited

Amazing Spectacles Limited (Subsidiary of VTR Media Investments Limited)

Clipstream Limited (Subsidiary of VTR Media Investments Limited)

Meanwhile Content Limited (Subsidiary of VTR Media Investments Limited)

Prime Focus Productions 1 Limited (Subsidiary of VTR Media Investments Limited)

PF Television VFX Limited (Formerly known as Prime Focus Productions 2 Limited) (Subsidiary of VTR Media Investments Limited)

PF Broadcast VFX Limited (Formerly known as Prime Focus Production 3 Limited) (Subsidiary of VTR Media Investments Limited)

Prime Focus Productions 5 Limited (Subsidiary of VTR Media Investments Limited)

DMJM Film (SubsidaryofVTR Media Investment Limited)

Subsidiary company of Prime Focus Technologies Private Limited

Prime Focus Technologies UK Limited

b. List of other related parties with whom transactions have taken place during the year i) Key management personnel

Mr. Naresh Malhotra - Chairman and Whole-time Director Mr. Namit Malhotra - Managing Director (upto October 11,2011) Mr. Ramakrishnan Sankaranarayanan - Managing Director (w.e.f. Octoberll, 2011) ii) Enterprises owned or significantly influenced by key management personnel or their relatives Blooming Buds Coaching Private Limited N2M Reality Private Limited

7. Contingent liabilities

As at March 31,

2012 2011

i. On account of undertakings given by the Company in favour of Customs authorities at 624,224,149 693,529,871 the time of import of capital goods under EPCG Scheme. The Company is confident of meeting its future obligations on such undertakings in the normal course of business.

ii. On account of undertaking given on future probable obligation on behalf of subsidiary - 60,966,157 company in the course of acquisitions made.

iii. Matters pending with tax authorities towards addition made by the tax authorities for 5,271,860 5,271,860 the AY 2007-08. Company has gone for an appeal to CIT (Appeals) and has made full payment of demand under protest.

iv. Matters pending with Tax Authorities toward addition made by the tax authorities for the 17,362,955 - AY 2004-05.

v. Matters pending with tax authorities related to Tax Deducted at Source (TDS) demand 88,207,071 - raised by the tax authorities for AY 2007-08 to 2011-12. Company has gone for an appeal to CIT (Appeals).

vi. Guarantees given on behalf of subsidiary companies and step-down subsidiary 1,627,254,046 1,240,761,318

($24,452,904) ($21,372,904)

(Rs.4,702,000) (Rs.4000,000)

vii. Premium on conversion of FCCB (See note 5) 889,009,734 598,162,095

8. Subsequent events

Share warrants

On April13,2012the Board approved the allotment of 10,000,000 equity shares against conversion of warrants held by promoter of the company at a premium of Rs. 54.478 per share (each warrant convertible into one equity share of face value of Rs. 1 each). The paid up share capital of the Company increased to Rs. 148,867,446 effective April 13,2012 (post warrant conversion of 10,000,000 warrants) and the promoter holding increased to 50.91% on the enhanced capital.

9. Loans and advances in the nature of loans given to subsidiaries and associates and firms/companies in which directors are interested:

1. Prime Focus London Pic:

Balance as at March 31,2011: Rs. 600,642,180 (Previous year: Rs. 492,046,944.)

Maximum Amount outstandingduringthe year Rs. 600,642,180 (Previousyear: Rs. 492,046,944)

2. Prime Focus Technologies Private Limited:

Balance as at March 31,2011: Rs. 49,035,938 (Previous year: Rs. 84,897,278)

Maximum Amount outstanding duringthe year Rs. 228,666,535 (Previous year: Rs. 85,244,098)

10. Details of dues to micro and small enterprises as defined under the MSMED Act, 2006

The Company does not have suppliers who are registered as micro, small or medium enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2012. The information regarding micro, small and medium enterprises has been determined on the basis of information available with the management.

11. Previous year figures

Previous year's figures have been regrouped where necessary to confirm to this year's classification.


Mar 31, 2011

1. Nature of operations:

prime focus Limited is engaged in the business of post production and Visual effects services for films and television content.

2. the company does not have suppliers who are registered as micro, small or medium enterprise under the micro, small and medium enterprises Development act, 2006 as at march 31, 2011. the information regarding micro, small ") and medium enterprises has been determined on the basis of information available with the management.

3. segment information:

the company is presently operating an integrated post production setup. the entire operations are governed by the same set of risks and returns and hence have been considered as representing a single segment. the said treatment is in accordance with the guiding principles enunciated in the accounting standard on segment reporting (as-17).

4. related party Disclosures:

a. List of Parties where control exists, irrespective of transactions:

i) Subsidiary Companies

prime focus London plc.

prime focus international Limited (formerly known as prime focus investments Limited)

prime focus technologies private Limited

flow post solutions private Limited

gVs software private Limited

prime focus motion pictures Limited

ii) Step-down Subsidiaries

Subsidiary of Prime Focus International Limited

prime focus international services uK Limited

prime focus North america, inc

1800 Vine street LLc (subsidiary of prime focus North america, inc)

prime focus VfX services i inc

prime focus VfX services ii inc

prime focus VfX technology inc

prime focus VfX pacific inc

prime focus VfX usa inc

prime focus VfX australia pty Limited

Subsidiary of Prime Focus London Plc.

prime focus Visual entertainment services Limited

Vtr media investments Limited

pf film uK Limited (formerly known as 37 Dean street Limited)

pf Broadcast & commercial Limited

Busy Buses Limited

prime focus technologies uK Limited

amazing spectacles Limited (subsidiary of Vtr media investments Limited)

clipstream Limited

meanwhile content Limited (formerly known as united sound & Vision Limited) (subsidiary of Vtr media investments Limited)

prime focus productions 1 Limited (subsidiary of Vtr media investments Limited)

prime focus productions 2 Limited (subsidiary of Vtr media investments Limited)

prime focus productions 3 Limited (subsidiary of Vtr media investments Limited)

prime focus productions 5 Limited (subsidiary of Vtr media investments Limited)

b. List of related parties with whom transactions have taken place during the year

i) Key Management Personnel

mr. Naresh malhotra - chairman and Whole-time Director

mr. Namit malhotra - managing Director

ii) Relatives of Key Management Personnel

mr. premnath malhotra

iii) Enterprises owned or significantly influenced by Key Management Personnel or their relatives

Blooming Bud coaching private Limited

N2m reality private Limited

5. Leases:

b. the company has taken certain premises on cancellable operating lease basis. the tenure of the lease ranges from 11 to 180 months.

c. amount of lease rental charged to the profit and loss account in respect of operating leases is Rs. 33,796,375/- (previous year Rs. 31,380,774/-).

6. stock split/sub-Division of equity shares:

the company has sub-Divided the existing 12,822,588 nos. of equity shares from every oNe equity share of Rs. 10/- each into teN equity shares ofRs. 1/- each (i.e. 12,822,588 equity shares ofRs. 10/- each in the capital of the company on which the sum of Rs. 10/- is credited as fully paid up into 128,225,880 equity shares of Rs. 1/- each of which the sum of Rs. 1/- is credited as fully paid up.) the record date fixed for the purpose of sub division of equity shares of the company was November 1, 2010.

7. qualified institutions placement:

the company has allotted 10,641,566 equity shares of face value of Rs. 1/- each to qualified institutional Buyers under qip as per chapter Viii of the seBi regulations at a price of Rs. 68.58 per equity share (including a premium ofRs. 67.58 per equity share), aggregating to Rs. 729,798,596 on November 10, 2010. further the floor price in respect of the aforesaid qualified institutions placement, based on the pricing formula as prescribed in regulation 85 of chapter Viii of seBi regulations is Rs. 68.58 per equity share and the relevant Date for this purpose in terms of regulation 81 of chapter Viii of seBi regulations is November 4, 2010.

8. issue of Warrants:

pursuant to the Board approval dated august 27, 2010 and shareholders' approval dated september 30, 2010, the company has allotted 1,000,000 warrants convertible into equity shares on october 15, 2010 to mr. Namit malhotra, a member of the promoters and promoter group carrying an option/entitlement to subscribe to equivalent number of equity shares on a future date not exceeding 18 months from the date of allotment of such warrants. each warrant shall be convertible into one equity share of nominal value of Rs. 10/- each at a price not less than the minimum price determined in accordance with the provision of chapter Vii of seBi (icDr) regulations. the company has received from mr. Namit malhotra, a sum equivalent to 25% of the price of the equity share to be issued in surrender/ exchange of each of such warrant.

9. No amortization has been done for film rights in the current year as the rights are not exercisable in the current year. since the rights are available for a period of more than 10 years the useful life of the rights is considered to be more than 10 years.

10. contingent Liabilities Not pro vided for:

(amount in Rs.)

2011 2010

i. on account of undertakings given by the company in favour of customs authorities at the time of import of capital goods under epcg scheme. the 693,529,871 748,591,339 company is confident of meeting its future obligations on such undertakings in the normal course of business.

ii. on account of undertaking given on future probable obligation on behalf of subsidiary company in the course of acquisitions made. 60,966,157 61,080,721 (refer Note 25 to schedule 16)

iii. matters pending with tax authorities (Block assessment). company has 112,684 112,684 been advised that it has a valid case based on similar decided matters.

iv. matters pending with tax authorities towards addition made by the tax authorities for the ay 2007-08. company has gone for an appeal to cit 5,271,860 5,271,860 (appeals) and has made full payment of demand under protest.

v. guarantee for Lease taken by step-down subsidiary. 44,631,320 44,979,660

(usD 1,000,000) (usD 1,000,000)

vi. premium on conversion of fccB (refer Note 19 (c) to schedule 16) 598,162,095 420,381,905

11. gratuity and other post-employment Benefit plans:

a. Define benefit plans:

the company has a defined benefit gratuity plan. every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. this plan is unfunded.

the following tables summarise the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans.

Changes in the fair value of plan assets are as follows:

the company does not fund the gratuity nor it has plans presently to contribute in the next year and hence the disclosure relating to fair value of plan assets is not applicable.

b. Defined Contribution Plan:

amount recognized as an expense and included in schedule - 14 as contribution to provident fund Rs. 2,777,813/- (previous year Rs. 1,585,924/-).

12. Details of loans given to subsidiaries and associates and firms/companies in which directors are interested:

1. prime focus London plc :

Balance as at march 31, 2011: Rs. 492,046,944/-. (previous year Rs. Nil) maximum amount outstanding during the year Rs. 492,046,944/- (previous year Rs. 241,870,474/-)

2. prime focus technologies private Limited :

Balance as at march 31, 2011: Rs. 84,897,278/- (previous year Rs. 41,624,979/-) maximum amount outstanding during the year Rs. 85,244,098/- (previous year Rs. 45,258,248/-)

13. foreign currency convertible Bonds (fccB):

a. on December 12, 2007, the company issued 550 foreign currency convertible Bonds (fccB's) of a face value of usD 100,000 each, aggregating to usD 55.00 million (equivalent - Rs. 2,162,696,800/-). the net proceeds from the issue of the Bonds are to be used for strategic acquisitions and/or strategic alliances outside of india, for investment into wholly owned subsidiaries and/or joint ventures outside of india, for announced and future acquisitions, for foreign currency capital expenditure or for any other use, as may be permitted under applicable laws or regulations from time to time.

b. as per the terms of the issue, the holders have an option to convert fccB into equity shares at a reseted conversion rate of Rs. 110.90 per equity share. further, under certain conditions, the company has the option to redeem the bonds on or after December 12, 2010. unless previously converted or redeemed or purchased and cancelled, the company will redeem these bonds, at 143.66% at the end of the five years from the date of issue i.e. on December 13, 2012. as at march 31, 2011, no bonds have been converted into equity shares ofRs. 1/- each and the entire balance of 550 bonds have been included and disclosed in the schedule of "unsecured Loans".

c. the fccB's as detailed above are compound instruments with an option of conversion into specified number of shares and an underlying foreign currency liability with the redemption at a premium in the event of non , conversion at the end of the period. the bonds are redeemable only if there is no conversion of bonds earlier. j the payment of premium on redemption is contingent in nature, the outcome of which is dependent on uncertain future events. Hence no provision is considered necessary nor has been made in the accounts in respect of such premium amounting to Rs. 598,162,095/- (previous year Rs. 420,381,905/-). However, in the event of redemption, the premium payable would be adjusted against the balance in the securities premium account.

d. the management is of the opinion that the bonds are a non monetary liability and hence, the exchange gain/ loss on translation of fccB liability in the event of redemption have not been recognized.

e. Had the company revalued the bonds as at march 31, 2011 considering it as a long term monetary liability, the profit for the year ended march 31, 2011 would have been lower by Rs. 39,062,293/- (previous year: Rs. 46,124,146/-) . the reserves as on that date would have been lower by Rs. 252,963,508/- (previous year: Rs. 265,060,354/-) and foreign currency monetary item would have been Rs. 39,062,293/- (previous year: Rs. 46,124,146/-).

14. miscellaneous income:

as the company is engaged in providing post production services, net income of Rs. 3,475,819/- (previous year Rs. 1,955,719/-) from production of tV programme (gross Rs. 13,600,000/-(previous year Rs. 27,096,993/-) less: direct cost of Rs. 10,124,181/- (previous yearRs. 25,141,274/-)) is disclosed under other income as miscellaneous income. the revenue of the company for the year including revenue from tV production income is Rs. 1,368,658,259/- (previous year Rs. 979,822,586/-).

15. investments:

a. investments include Rs. 610,703,583/- (previous year: Rs. 610,703,583/-) in prime focus London plc, uK ['pf uK'], a subsidiary company. pf uK has been recording profits since march 2009. the market value of shares as on march 31, 2011 is Rs. 238,552,428/- (previous year: Rs. 150,345,934/-). the share trading of the company were suspended on march 31, 2011, and hence the last traded price on september 29, 2010 of pence 17 has been considered for calculation of market value of investments.

these being long term and strategic investments and also in view of the projected profitable operations of these companies, the management is of the view that there is no diminution other than temporary in the value of these investments.

16. During the fy 2008-09 the company was allotted 505,050 ordinary shares of 5 pence each in prime focus London plc, a subsidiary of the company, as fully paid up, for consideration other than cash, for providing an undertaking on certain future obligations, to the vendors under the share purchase agreement entered by prime focus London plc. to acquire machine effects Limited. the outcome is dependent on certain future events for which no reliable estimate can be made. further, in current year, the company has filed a suit in the Bombay High court alleging that the terms of the undertaking are not tenable and hence no provision is considered necessary.

17. previous year's figures have been regrouped where necessary to confirm to this year's classification.

 
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