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GREYCELLS EDUCATION LIMITEDD-2, 1st Floor, Poddar Chambers, 126, Mathuradas Compound, N.M. Joshi Marg, Lower Parel (West), Mumbai – 400013

Annual Report2009 - 2010

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ANNUAL REPORT 2009-2010

NOTICENOTICE is hereby given that the ANNUAL GENERAL MEETING of theshareholders of GREYCELLS EDUCATION LIMITED will be held at theRegistered office of the Company at D-2, 1st Floor, Poddar Chambers, 126,Mathuradas Compound, N.M. Joshi Marg, Lower Parel (West), Mumbai - 400013on Friday, September 24, 2010 at 9.30 a.m. to transact the following business:ORDINARY BUSINESS1. To receive, consider and adopt the Audited Balance Sheet as on March

31, 2010 and the Profit and Loss Account for the year ended on thatdate together with the Reports of the Directors’ and Auditors’ thereon.

2. To appoint a Director in place of Dr. Anil Naik, who retires by rotationand, being eligible, offers himself for re-appointment.

3. To appoint M/s. Ford, Rhodes, Parks & Co., Chartered Accountants,the retiring Auditors to hold office from the conclusion of this AnnualGeneral Meeting until the conclusion of next Annual General Meetingon a remuneration to be fixed by the Board of Directors of the Company.

SPECIAL BUSINESS4. To consider and if thought fit, to pass with or without modification(s),

the following resolution as a Special Resolution :“RESOLVED THAT pursuant to the provisions of Section 293(1)(a) andall other applicable provisions, if any, of the Companies Act, 1956,consent of the members of the Company be and is hereby accorded tothe Board of Directors of the Company (hereinafter referred to as “theBoard” which term shall be deemed to include any Committee thereof)to create such charges, mortgages and hypothecations on all or anyone or more movable and immovable properties or such other assetsof the Company, wherever situated, both present and future, and wholeor part of the undertakings of the Company of any nature and kindwhatsoever in favour of banks, financial institutions and any otherlenders whether Indian or International (hereinafter referred to as“Lenders” in such manner as the Board may deem fit, to secure theamount proposed to be borrowed by the Company by way of Rupee/Foreign Currency Loans and Working Capital facilities, from such Lendersfrom time to time for the due payment of the principal monies togetherwith interest thereon, additional interest, compound interest, liquidateddamages, commitment charges, premia on pre-payment or onredemption, or any other costs, charges, expenses in respect of suchborrowings, which shall not, at any time exceed the limit of Rs.50 croresand such security in such manner as may be agreed to between theconcerned Lender and as may be thought expedient by the Board.RESOLVED FURTHER THAT any one of the Directors of the Companybe and is hereby authorized to negotiate and settle the terms andconditions with the concerning Banks/Financial Institutions etc, to finalizeand execute the agreements, deeds and other documents as may berequired for creating the charge, mortgage, liens, hypothecation,assignment, transfer and/or other form of securities and to do all suchacts, deeds, matters and things as may be necessary for the purposeof giving effect to this resolution.”

By Order of the Board of Directors

Place : Mumbai Dharmesh ParekhDate : 13th August, 2010 Company Secretary

NOTES:1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING

IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEADOF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THECOMPANY.

2. THE INSTRUMENT APPOINTING PROXY SHOULD HOWEVER BEDEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOTLESS THAN FORTY-EIGHT HOURS BEFORE THE COMMENCEMENTOF THE MEETING.

3. The Explanatory Statement pursuant to Section 173(2) of the CompaniesAct, 1956 in respect of the Special Business is appended hereto.

4. Members are requested to bring their copy of the Annual Report to themeeting.

5. The Register of Members & Share Transfer Books of the Company willremain closed from September 20, 2010 to September 24, 2010 (bothdays inclusive).

6. Member/s desirous of getting any information on the accounts andoperations of the Company are requested to write to the Company atleast seven days before the date of the meeting.

7. As per the provisions of the amended Companies Act, 1956 facility fornominations is now available to the shareholders of the Company.

8. Members are requested to intimate change of address, if any, to theCompany’s Registrar & Share Transfer Agent, Bigshare Services Pvt.Ltd. at E-2/3, Ansa Industrial Estate, Sakivihar Road, Saki Naka, Andheri(East), Mumbai – 400 072.

9. Corporate Members are requested to send a duly certified copy of theBoard Resolution authorizing their representatives to attend and voteat the meeting.

10. Attendance Slip is annexed to the Proxy Form. Members are requestedto fill up the particulars of the attendance slip, affix their signature inthe appropriate place and hand it over to the Company’s officials/Registrars at the entrance of the Meeting venue.

ANNEXURE TO THE NOTICE

INFORMATION PURSUANT TO CLAUSE 49 OF THE LISTING AGREEMENTREGARDING RE-APPOINTMENT OF DIRECTORDr. Anil Naik, aged 68 years, is a Ph. D. from University of Mumbai (DoctoralThesis on Turnaround Strategies), and M. Com University of Mumbai. He isrecipient of the First Bidhan Chandra Roy Memorial Prize of IIM Calcutta foroverall outstanding performance during 1964-66 and S. S. Nadkarni Fellowshipat University of Mumbai for post Doctoral Research for the year 2000-01.He is awarded the post of Professor Emeritus & Dean Research by PrincipleL. N. Welingkar Institute of Management Development & Research in theyear 2000, Tarneja Award of Bombay Management Association for the BestManagement Paper in 1992 and awarded Best Teacher of Management forthe year 2002-03 by the Bombay Management Association.He is appointed as Counsellor by the British Council, Mumbai for ManagementCourses conducted by British Universities in India in 1999, appointed onBoard of Advisors of Business Week, Asian Edition by McGraw HillPublications in year 2005, appointed on Board of Studies for ManagementEducation Programmes of the University for period of 5 years w.e.f.1st September, 2005 by University of Mumbai.He is instrumental in designing and conducting Management DevelopmentProgrammes for a number of corporates across sectors.He has written and published articles on Arthashastra, Industrial Sickness inIndia, Environment Scanning & Scenario Building, Evolving Role of CharteredAccountants in the New Economy, Hall Marks of New Economy and WinningCompetencies.He is independent, non-executive director on Company’s Board. He is amember of Audit Committee of the Company. He does not hold any equityshares in the Company.He is also on Board of Oil Field Instrumentation India Limited, NetersonTechnologies Limited, Dai Ichi Karkaria Limited and India Cancer Society.



EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THECOMPANIES ACT, 1956Item No. 4As per the provisions of Section 293(1)(a) of the Companies Act, 1956, theBoard of Directors of a public Company cannot sell, lease or otherwise disposeof the whole or substantially the whole of the undertaking of the Company orwhere the Company owns more than one undertaking, of the whole, orsubstantially the whole, of any such undertaking without the consent of theshareholders in the General Meeting.As the mortgage/charge/hypothecation by the Company on its assets asaforesaid in favour of the Banks and Financial Institutions may be regardedas disposal of the Company’s properties/undertaking therefore it is necessaryfor the members to pass a resolution under section 293(1)(a) of theCompanies Act, 1956, for creation of said charge/mortgage/ hypothecationon properties of the Company to secure such borrowing.Your Directors recommend the resolution for your approval.None of the Directors of the Company are in any way concerned or interestedin the said resolution.



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GREYCELLS EDUCATION LIMITED

DIRECTORS’ REPORTDear Shareholders,

Your Directors present the Annual Report of the Company along with theAudited Statement of Accounts for the financial year ended 31st March, 2010.

Financial Results

Despite global recessionary conditions, your company’s consolidatedrevenues has increased to Rs. 791.30 lacs for the year as against Rs.518.94 lacs in the previous year, registering a growth of 52% over theprevious year. Standalone revenues during the year stood at Rs. 486.12lacs as against Rs. 237.98 lacs in the previous year, registering a growthof 104% over the previous year.

The consolidated loss before tax for the year stood at Rs. 9.97 lacs asagainst Rs. 615.71 lacs in the previous year. Standalone profit before taxfor the year was Rs. 32.03 lacs as against loss of Rs. 579.37 lacs in theprevious year.

Dividend

The Directors have refrained from recommending dividend for the year.

Operations

The Company is currently engaged in the field of Education and Training inMedia & Entertainment under the brand name of “EMDI Institute of Media& Communication” – in India and Dubai.

As evident from the financials, the India operations have shown a robustgrowth. The economic scenario in Dubai has inversely affected the businessof the subsidiary company resulting in a loss on consolidated basis.

At the onset of the academic year 2010-11, the Company has added a fewfeathers to its cap - The Company’s 2 years Post Graduate Diploma inAdvertising and Communication delivered by EMDI in India has beenconferred accreditation from International Advertising Association (IAA),IAA headquartered in New York, was founded in 1938 to championresponsible marketing. IAA, with its 56 chapters in 76 countries, is a one-of-a-kind global partnership whose members comprise advertisers, media,advertising and public relations agencies, media companies, and academics.IAA is a platform for industry issues and is dedicated to protecting andadvancing freedom of commercial speech, responsible advertising, consumerchoice, and the education of marketing professionals. This is first suchrecognition granted to an education institution in India.

All the courses delivered by EMDI in India & Dubai continue to be accreditedby City and Guilds, UK’s largest vocational awarding body.

In association with Mr. Ashok Advani – Founder Publisher of Business India,the Company has forayed in Financial Education with the launch of BusinessIndia Institute of Finance (BIIF) in New Delhi. To start with course offeringsinclude Post Graduate Diploma in Finance with two primary specializations –Wealth & Investment Management and Banking & Corporate Finance.

During the current year, the company has acquired majority equity stakein Eduhub Education Private Limited, a company engaged in education inmedia & entertainment and sports management. Course offerings includethe courses run under the brand name EMDI Institute of Media &Communication and International Institute of Sports Management (IISM).India’s first-ever comprehensive program to train future sports marketingand management professionals in association with Jai Hind College. IISMhas the support of Industry stalwarts like Ravi Shastri – Former IndianTeam Captain and Commentator, Mahesh Bhupati – Managing Director,Globosport, Prof. Ratnakar Shetty – Chief Administrative Officer, BCCI,Ameya Hete – Executive Director, Valuable Group, Dhiraj Malhotra –Marketing, ICC, Vivek Singh – Joint Managing Director, Procam International,Shailendra Singh – Managing Director, Percept D’Mark, to name few.

Towards further tapping the huge potential of students in the country, theIndian operations have expanded geographically by setting up new centresacross India.

Change of Name

To reflect the business of the Company, the name of the Company hasbeen changed from Greycells Entertainment Limited to Greycells EducationLimited vide fresh Certificate of Incorporation consequent upon change of

name issued by the Ministry of Corporate Affairs, Registrar of Companies,Maharashtra, Mumbai dated 11th February, 2010.

Directors

In accordance with the provisions of the Companies Act, 1956 and Articlesof Association of the Company, Dr. Anil Naik retires by rotation as Directorat the ensuing Annual General Meeting and being eligible, offers himselffor reappointment. Brief resume of Dr. Anil Naik is annexed to the Noticeof Annual General Meeting as stipulated under Clause 49 of the ListingAgreement with the Bombay Stock Exchange.

Rights Issue

During the year under review, your Company has allotted 22,76,215 equityshares of Rs. 10/- each at a premium of Rs. 40/- per share aggregatingRs. 1138.11 lacs to the existing shareholders on rights basis in the ratioof 61 equity shares for every 100 equity shares held by them.

At the end of 30th June, 2010, the Company has utilized Rs. 1051.37 lacstowards the object of the rights issue and the balance unutilized amountof Rs. 85.03 lacs has been temporarily invested in units of mutual fundand balance in current account.

Share Capital

During the year under review, the paid-up share capital of your companystands increased from Rs. 3,73,15,000 to Rs. 6,00,77,150 post allotmentof 22,76,215 equity shares on rights basis.

Subsidiary Company

A statement of financial position of the Company’s wholly owned subsidiary,EMDI (Overseas) FZ LLC pursuant to Section 212 of the Companies Act,1956 is annexed and forms part of this Report.

Joint Venture

Post closure of the financial year, your Company has acquired majorityequity stake in Eduhub Education Private Limited, a company engaged ineducation in media & entertainment and sports management education.

De-classification of Promoters

Pursuant to the consent of the shareholders by postal ballot on May 04, 2010Mr. Uday Sinh Wala, Mr. Udaysinh Virawala Wala and Ms. Simeron Ghei (“UdayWala & Group”) have been declassified as promoters of the Company.

Change in Registered Office

The registered office of the Company has been shifted from VMDL Campus,4th Floor, Opp. Lilavati Hospital, Bandra Reclamation, Mumbai – 400050 toD-2, 1st Floor, Poddar Chambers, 126, Mathuradas Compound, N.M. JoshiMarg, Lower Parel (West), Mumbai – 400013 w.e.f. 13th August, 2010.

Auditors

The Company’s statutory auditors, M/s. Ford, Rhodes, Parks & Co.,Chartered Accountants, retire at the ensuing Annual General Meeting andbeing eligible, offer themselves for re-appointment.

The notes on accounts referred to in the Auditors’ Report are selfexplanatory and therefore don’t require further clarification by the Board ofDirectors.

Fixed Deposits

During the year under review, the Company has not accepted any depositsunder Section 58-A of the Companies Act, 1956.

Particulars of employees

Since none of the employees of the Company was drawing remuneration inexcess of the limits laid down pursuant to Section 217(2A) of the CompaniesAct, 1956 read with the Companies (Particulars of Employees) Rules, 1975as amended, details therewith are not furnished.

Particulars of Conservation of Energy, technology absorption and foreignexchange earning and outgo

(a) Conservation of Energy

The Company is not involved in any manufacturing activity and hencehas low energy consumption levels. Nevertheless, the Companymakes all efforts to conserve and optimize the use of energy by

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using energy-efficient infrastructure, computers and equipments withlatest technologies.

(b) Technology Absorption and Research and Development

The Company’s research and development focus is on developingnew frameworks, processes and methodologies to improve the speedand quality of service delivery.

(c) Foreign Exchange Earnings and Outgo

The earnings and expenditure in foreign exchange were as under:

Earnings Nil

Expenditure Rs.7.63 lacs

Corporate Governance

A separate section on Corporate Governance along with ManagementDiscussion & Analysis forming part of Director’s Report and the certificatefrom the Secretary in whole time practice regarding compliance of conditionsof Corporate Governance as stipulated in Clause 49 of the Listing Agreementis annexed to and forms part of the Director’s Report.

Directors Responsibility Statement

In terms of Section 217 (2AA) of the Companies Act, 1956, in relation tofinancial statements for the year ended 31st March, 2010, the Board ofDirectors confirm/state that:

i. In the preparation of the Annual Accounts the applicable accountingstandards have been followed along with proper explanation relatingto material departures;

ii. The Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company as at 31st March, 2010 and of theprofit or loss of the Company for the year ended as on that date;

iii. The Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with theprovisions of the Companies Act, 1956 and for safeguarding the assetsof the Company and for preventing and detecting fraud and otherirregularities;

iv. The Directors have prepared the Annual Accounts on a going concernbasis.

Acknowledgements

Your Directors wish to thank all Employees, Bankers, Investors, BusinessAssociates etc. for their continued support.


Place: Mumbai Abbas PatelDate: 13th August, 2010 Chairman

REPORT ON CORPORATE GOVERNANCE(Pursuant to Clause 49 of the Listing Agreement)

Company’s Philosophy on Corporate Governance

Your Company’s philosophy on Corporate Governance is aimed at optimizingthe balance between stakeholders’ interest and corporate goals throughthe efficient conduct of its business and meeting their obligation in a mannerthat is guided by transparency, accountability and integrity. The Companyendeavours to comply with the requirements of Corporate Governance notmerely as a regulatory requirement but also in spirit.

The Board of Directors of the Company fully support and endorsesCorporate Governance practices as per the provisions of the amendedClause 49 of the Listing Agreement as applicable from time to time. Thefollowing is a report on the status with respect to compliance with CorporateGovernance for the year ended 31 March, 2010.

COMPLIANCE WITH SEBI CODE OF CORPORATE GOVERNANCE

1. Board of Directors:

Nine meetings of the Board of Directors were held during the yearended March 31, 2010 on 26.06.2009, 31.07.2009, 25.08.2009,30.10.2009, 09.11.2009, 03.12.2009, 12.01.2010, 21.01.2010 and19.03.2010. Attendance of Directors at the Board Meetings & AnnualGeneral Meeting are as under:

Sr. Names of Number of board Number of Whether attendedNo. Directors meetings held Board meetings last AGM held on

whilst a Board attended 30.09.2009member

1 Uday Sinh Wala 9 1 No

2 Bela Desai 9 9 Yes

3 Abbas Patel 9 9 Yes

4 Deepak Choudhary 9 9 Yes

5 Nowshir Engineer 9 1 No

6 Anil Naik 9 4 Yes

The Directors of the Company possess highest personal andprofessional ethics, integrity and values, and are committed torepresenting the long term interest of the stakeholders. TheCompany’s Board comprises 6 Directors with considerable experiencein their respective fields. Of these 4 Directors are Non ExecutiveDirectors. The Chairman of the Board is an Independent Non-ExecutiveDirector.

Details of Composition, Category of Directors, their other Directorships,Committee memberships:

Composition and category of Directors

Sr. Name Designation Category Directorship Board BoardNo. in other Committees Committees

Companies on which on whichmember Chairperson

1 A b b a s P a t e l Chairman & Independen t , 1 2 2Director Non-Execut ive

Director

2 Uday Sinh Director Non Independent, 2 1 0Wala Non - Executive

Director

3 Bela Desai Director Promoter , 3 2 2Non-Execut iveDirector

4 D e e p a k M a n a g i n g Non- independen t , 3 2 0Choudhary Director (Indian Executive Director

Operat ions)

5 Nowsh i r M a n a g i n g Non- independen t , 3 0 0E n g i n e e r Director Executive Director

( In ternat iona lOperat ions)

6 Anil Naik Director I ndependen t , 4 3 0Non-Execut iveDirector

No Director is related to any other Director on the Board in terms ofthe definition of relative given under the Companies Act, 1956.

No compensation is paid to Non-Executive Directors except sittingfees. No sitting fee is paid to the Executive Directors for attendingthe board meetings.

Equity Shares held by Non-Executive Directors are as follows:

Name of Director Equity Shares held

Uday Sinh Wala 1,12,300

Abbas Patel 40,000

Bela Desai 3,44,100

Anil Naik Nil

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The Board of Directors has laid down the Code of Conduct applicableto the Board members and senior executives of the Company. Adeclaration by the Managing Director affirming compliance to the Codeof Conduct by the board members & senior executives is also annexedseparately at the end of this report.

A brief resume of the Director offering himself for re-appointment atthe Annual General Meeting is provided in the annexure / explanatorystatement annexed to the notice convening the Annual GeneralMeeting for the year 2010.

2. Audit Committee

The Company has an Audit Committee at the Board level with powersand role that are in accordance with Clause 49 II (C) and (D) of theListing Agreement. The Company has a qualified and IndependentAudit Committee with all its members being Non-Executive Directors,to oversee the accounting and financial governance of the Company.The Committee acts as a link between the management, statutoryauditors and the Board of Directors. Details of Committee meetingsheld during the year ended 31st March, 2010 and attendance ofmembers are as under:

Sr. Name Designation Category Number ofNo. Meetings

Held Attended

1 Abbas Patel Chairman & Independent, 5 5Member Non-Executive Director

2 Bela Desai Member Promoter, 5 5Non-Executive Director

3 Anil Naik Member Independent, 5 2Non-Executive Director

The scope of the functioning of the audit committee is to review,from time to time, the internal control procedures, the accountingpolicies of the Company and such other functioning as may berecommended from time to time by SEBI, Stock Exchanges and/orthe Companies Act, which inter-alia include review of:

1. Management Discussion and Analysis of financial condition andresult of operations.

2. Statement of significant related party transactions submittedby the management.

3. Internal audit reports relating to internal control strengths &weaknesses.

4. Appointment, removal & terms of remuneration of InternalAuditors.

3. Shareholders / Investors’ Grievance Committee

The Company has a Shareholders / Investors’ Grievance Committeeto focus on the prompt and effective redressal of the shareholdersgrievances and strengthening of the investor relations. The broadfunctions of the Committee includes redressal of shareholder andinvestor complaints pertaining to transfer of shares, non-receipt ofshare certificates, non-receipt of annual report, change of address,non-receipt of declared dividend and any other complaints receivedfrom the Shareholders/Investors etc.

During the year under review, the Committee met four times, detailsof attendance by the Committee members are as under:


Held Attended

1 Bela Desai Chairperson & Promoter, 4 4Member Non-Executive Director

2 Abbas Patel Member Independent, 4 4Non-Executive Director

3 Deepak Member Non-independent, 4 4Choudhary Executive Director

Mr. Dharmesh Parekh – Company Secretary is the Compliance Officerof the Company as approved by the Board of Directors.

During the year ended March 31, 2010 the Company did not receiveany complaints and there were no outstanding complaints pendingfor more than one month. There were no cases, which were not solvedto the satisfaction of shareholders.

4. Remuneration Committee

The Company has a Remuneration Committee at the Board level withthe powers and role that are in accordance with Clause 49A of theListing Agreement and the Members of the Committee are as under :


Held Attended

1 Abbas Patel Chairman & Independent, 1 1Member Non-Executive Director

2 Bela Desai Member Promoter, 1 1Non-Executive Director

3 Uday Sinh Member Non Independent,Wala Non-Executive Director 1 0

The Remuneration Committee perform the following functions :

1. To frame the Company’s Policy from time to time on :

a. Compensation Policy to Directors

b. Role of Directors

c. Other matters relating to Directors and Employees

2. To recommend suitable candidates to Board for appointment asExecutive/Non-Executive Director.

3. To review performance and recommend remuneration ofExecutive Directors’ to the Board.

4. To review the role and conduct of Director’s other than Membersof the Committee and inform the Board.

Remuneration Policy

The Company has a credible and transparent policy in determiningand accounting for the remuneration of Directors. The remunerationpolicy is aimed at attracting and retaining high caliber talent.Executive Directors are entitled for the remuneration by way of Salaryand Commission not to exceed limits prescribed under the CompaniesAct, 1956.

Both the Executive Directors are appointed for period of 3 yearsw.e.f. 1st July, 2008. The details of remuneration paid to ManagingDirectors during the year ended 31st March, 2010, have been providedunder Notes on Accounts.

5. Other Committees

The Share Transfer Committee, which approves share transfers,transmission, issue of duplicate shares etc. and to sign documents,share certificates, deeds etc. in this regard.

6. Subsidiary Company

During the year under review the Company have one unlisted subsidiaryCompany namely EMDI (Overseas) FZ LLC. The Audit Committee reviewsthe financial statement of the subsidiary company. The statements ofall significant transactions of the unlisted subsidiary company areplaced regularly before the Board of Directors for their review.

7. Joint Venture

Post closure of the financial year, your Company has acquired majorityequity stake in Eduhub Education Private Limited, a company engagedin education in media & entertainment and sports managementeducation.

8. Disclosures

There are no material transactions with related parties, which requireseparate disclosure. A comprehensive list of related party transactionsas required by Accounting Standard (AS) 18 issued by the Instituteof Chartered Accountants of India, forms part of note no.10 of Notesto Accounts of schedule L to the accounts in the Annual Report.

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There were no materially significant related party transactions i.e.transactions of the Company of material nature, with its Promoters,Directors or the Management, their subsidiaries or relatives etc. thatmay have potential conflict with the interest of the Company at large.

There is no material pecuniary transaction with any Non-Executiveas well as Independent Directors of the Company that requires aseparate disclosure.

The Board reviews the risk assessment and minimization procedurefrom time to time. The risk management issues are discussed in detailin the report of Management Discussion and Analysis.

The Management Discussion and Analysis Report is prepared inaccordance with the requirements laid out in Clause 49 of the ListingAgreement.

The Company has complied with the requirements of the ListingAgreement as well as the regulations/guidelines prescribed by theSecurities and Exchange Board of India. There has been no instanceof non-compliance by the Company or no penalties were imposed onthe Company by the Bombay Stock Exchange Limited or SEBI orany other statutory authority on any matter related to capital marketduring the last three years.

The details of compliance with mandatory requirements of Clause 49are as contained in this Report.

9. CEO Certification

Certificate from Mr. Deepak Choudhary, Managing Director (IndianOperations) in terms of Clause 49 (V) of the Listing agreement enteredinto with the Bombay Stock Exchange Limited was placed before theBoard of Directors of the Company at their meeting held on 13thAugust, 2010 and is annexed to this report.

10. Company Secretaries’ Certificate on Corporate Governance

Certificate from M/s. A. K. Jain & Co, Company Secretaries in termsof Clause 49 (VII) of the Listing agreement is attached and formspart of this report.

11. General Body Meetings

Location and time of last three AGMs held

Year ended Date of AGM Time of Venue31st March AGM

2009 September 30, 2009 10 A.M. VMDL Campus, 4th Floor,Opp. Lilavati Hospital, BandraReclamation, Mumbai - 400 050

2008 September 22, 2008 9 A.M. VMDL Campus, 4th Floor,Opp. Lilavati Hospital, BandraReclamation, Mumbai - 400 050

2007 September 24, 2007 9 A.M. #2, Vijay Park, Janki Kutir, Juhu,Mumbai - 400 049

During the year under review, the following special resolution(s) werepassed by the Company’s shareholders through postal ballot underSection 192A of the Companies Act, 1956 and Companies (Passingof Resolutions by Postal Ballot) Rules, 2001 :

1. Change of Name2. To increase limit of Investment by FII’s/NRI’s

Further, no resolution proposed at the ensuing Annual General Meetingneeds to be passed through Postal Ballot.

12. Means of communications

Quarterly / annual results are published in Free Press Journal & NavShakti. Up-to-date financial results, annual reports, shareholdingpatterns and press releases are also available on the Company’swebsite www.greycellsltd.com. Shareholders information forms partof the Annual Report.

SHAREHOLDER INFORMATION

AGM: Date, Time and Venue Friday, September 24, 2010 at 9.30 a.m.at D-2, 1st Floor, Poddar Chambers, 126,Mathuradas Compound, N.M. Joshi Marg,Lower Parel (West), Mumbai – 400013

Corporate Identity Number L65910MH1983PLC030838(CIN) With the MCA21 initiative of the Ministry

of Corporate Affairs going live, theCompany’s master data and details ofcorporate filings made by the Companywith the MCA may be viewed by themembers and other stakeholders atwww.mca.gov.in using the abovementioned CIN

Financial Calendar for 2010-11 (tentative and subject to change)

Financial reporting for the On or before August 15, 2010quarter ending June 30, 2010

Financial reporting for the On or before November 15, 2010quarter ending September30, 2010

Financial reporting for the On or before February 15, 2011quarter ending December31, 2010

Financial reporting for the year End May, 2011ending March 31, 2011

Date of Book Closure September 20, 2010 to September 24,2010 (both days inclusive)

Dividend Payment Date N.A.

Listing on Stock Exchanges The Bombay Stock Exchange Ltd.Stock code Code – 508918Fees The Listing fees paid to the BSE for the

financial year 2010-11

Market price data The Company’s shares are frequentlytraded.

Registrar and Share Transfer Bigshare Services Private LimitedAgents E-2/3, Ansa Industrial Estate,

Sakivihar Road, Saki Naka,Andheri (E), Mumbai – 400 072Phone : 28470652 / 53Fax : 28475207Email: [email protected]

Share Transfer System Shares transfers in physical form areregistered and returned within 30 daysof lodgment, if documents are clear inall respects and demat request arenormally confirmed within prescribedtime from date of the receipt. During theyear under review there are no transfersof shares.

Dematerialization of shares The Company’s equity shares have beenand liquidity admitted in electronic/dematerialized

mode by both Central Depository Services(India) Limited and National SecuritiesDepository Limited under the InternationalSecurities Identification Number (ISIN)INE791H01011. This number is requiredto be mentioned in each correspondencerelating to the dematerialization of sharesof the Company. As on 31st March, 2010,57,36,751 equity shares representing95.49% of the company’s total numberof shares have been dematerialized. TheCompany has paid the custodial chargesto the respective depository participantfor the financial year 2010-11.

Outstanding GDRs/ ADRs/ N.A.Warrants or any Convertibleinstruments, conversion dateand likely impact on equity

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Plant Locations N.A.

Registered Office and Address GREYCELLS EDUCATION LTD.for correspondence D-2, 1st Floor, Poddar Chambers,

126, Mathuradas Compound,N.M. Joshi Marg, Lower Parel (West),Mumbai – 400013

Stock Market Data

The Monthly High and Low quotation of equity shares traded on BSE areas under :

Month Bombay Stock Exchange

High (Rs.) Low (Rs.)

April’ 09 260.00 250.00

May’ 09 249.00 243.00

June’ 09 252.00 142.55

July’ 09 166.50 134.90

August’ 09 143.75 115.00

September’ 09 127.55 68.80

October’ 09 75.35 59.75

November’ 09 68.00 51.10

December’ 09 68.90 54.80

January’ 10 84.80 57.35

February’ 10 61.50 51.35

March’ 10 59.50 48.00

� Distribution of Shareholding as on March 31, 2010

Distribution – As on March 31, 2010

Range Shareholders SharesNo. of Shares Numbers % to Total Numbers % to Total

1 – 5000 513 67.68 73,312 1.22

5001 – 10000 58 7.65 47,878 0.80

10001 – 20000 56 7.39 88,220 1.47

20001 – 30000 21 2.77 53,465 0.89

30001 – 40000 14 1.85 50,657 0.84

40001 – 50000 12 1.58 56,123 0.93

50001 – 100000 24 3.16 1,86,151 3.10

100001and above 60 7.92 54,51,909 90.75

Total 758 100.00 60,07,715 100.00

� Shareholding Pattern as on March 31, 2010

Category No. of shares held Percentage ofshareholding

Promoter’s holding

- Indian Promoters 12,73,867 21.20%

- Foreign Promoters — —

Non-Promoters Holding

Foreign Institutional Investors 9,71,843 16.18%

Bodies Corporate 13,36,225 22.24%

Indian Public 13,65,045 22.72%

Clearing Member 1,389 0.02%

Non Resident Indians 10,59,346 17.63%

Total 60,07,715 100.00%

7


Managing Director’s Certification pursuant to Clause 49 of the Listing AgreementI, Deepak Choudhary, Managing Director (Indian Operations) of Greycells Education Limited, to the best of my knowledge and belief, certify that:

1. I have reviewed the Balance Sheet as on and Profit and Loss Account for the year ended 31st March, 2010 (consolidated and unconsolidated), andall its schedules and notes on accounts, as well as the cash flow statements and the Directors’ Report;

2. Based on my knowledge and information, these statements do not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to thestatements made;

3. Based on my knowledge and information, the financial statements, and other financial information included in this report, present in all materialrespects, a true and fair view of, the company’s affairs, the financial condition, results of operations and cash flows of the company as of, andfor, the periods presented in this report, and are in compliance with the existing accounting standards and / or applicable laws and regulations;

4. To the best of my knowledge and belief, no transactions entered into by the Company during the year are fraudulent, illegal or violative of theCompany’s code of conduct;

5. I am responsible for establishing and maintaining disclosure controls and procedures and internal controls over financial reporting for the Company,and I have:

a) designed such disclosure controls and procedures to ensure that material information relating to the company, including its consolidatedsubsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Company’s disclosure, controls and procedures; and

d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recentfiscal year that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting;

6. I have disclosed based on our most recent evaluation, wherever applicable, to the Company’s auditors and the Audit Committee of the Company(and persons performing the equivalent functions)

a) all deficiencies in the design or operation of internal controls, which could adversely affect the company’s ability to record, process, summarizeand report financial data, and have identified for the Company’s auditors, any material weaknesses in internal controls over financial reportingincluding any corrective actions with regard to deficiencies;

b) significant changes, if any, in internal controls during the year covered by this report;

c) all significant changes in accounting policies during the year, if any, and that the same have been disclosed in the notes to the financialstatements;

d) instances of significant fraud of which I am aware, that involves management or other employees who have a significant role in the Company’sinternal control system;

7. I affirm that I have not denied any personnel, access to the Audit Committee of the Company (in respect of matters involving alleged misconduct)and I have provided protection to ‘whistle blowers’ from unfair termination and other unfair or prejudicial employment practices; and

8. I further declare that all board members and senior executives have affirmed compliance with the code of conduct for the current year.

For Greycells Education Limited

Place: Mumbai Deepak ChoudharyDate : 13th August, 2010 Managing Director (Indian Operations)

Certificate on Corporate Governance pursuant to Clause 49 of the Listing AgreementToThe Members ofGreycells Education Limited.

We have examined the compliance of conditions of Corporate Governance by Greycells Education Limited (the Company), for the year ended 31stMarch, 2010, as stipulated in Clause 49 of the Listing Agreement of the Company with the Bombay Stock Exchange Ltd.

The compliance of the conditions of Corporate Governance is the responsibility of the Management. Our examination in accordance with the guidancenote on certification of Corporate Governance as stipulated in clause 49 of the Listing Agreement and was limited to procedures and implementationthereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an express ofopinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, the Company has complied with the conditions ofCorporate Governance as stipulated in the above mentioned Listing Agreements.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with whichthe management has conducted the affairs of the Company.

For A.K. Jain & CoCompany Secretaries

Mumbai Ashish JainAugust 13, 2010 Proprietor

(C.P.No. 6124)

8


MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. Education Industry

Currently India is going through one of its finest ties in the field ofeducation. The passing of the Right to Education Act will have greatsignificance for India. The Right to Education Act provides that everychild has a right to free and compulsory education of equitable quality.Children who have attained the age of 6 years shall have the right tobe provided free and compulsory full-time elementary education; thusa fundamental right guaranteed by the Constitution has now beenenshrined in law. The passage of bill is a path breaking and watersheddevelopment in the emerging education scenario in India. The passageof the bill heralds hope that over the next ten years we will seecontinuous move towards reforms in the education and newopportunities being thrown up. Overall, the passage of the bill has tobe seen in the larger context of a very positive development forparticipants in India’s education sector over the medium to long term.The growth of Indian economy will achieve a double digit growth rate.

The Government spends approximately 3.7 of GDP which is around$30bn and an $50bn annual spend on private education ($80bn by2012E) 14% CAGR over FY08-12E. In the last five years, thegovernment has been focusing on the education sector throughincreased fund allocations. This amount would be spent under variousschemes like the Sarva Shiksha Abhiyan (SSA), the Mid-day MealScheme, Kasturba Gandhi Balika Vidyalaya and Teacher’s Education.

It is estimated that India’s population will comprise around 1.4 billionpeople by 2026, with the potential target education market (in the 5-24 age group) expected to be approximately 446 million people, makingit one of the largest education markets in the world. Due to its largepopulation and cultural ethos, India is home to the largest growth ofpotential consumers of education services in the world. TheGovernment has identified education as a focus area to maintainsustainable economic growth and the private sector is coming upwith new structures to increase participation. India’s education sectorcould see long-term secular growth with rewards for early movers.

The government has imposed an education cess on income tax tofund its various programs, which target to improve the quality andprovide specific equity funding to the government’s spending planson education. The government has created a flagship program calledthe Sarva Shiksha Abhiyan to ensure primary education for all, forwhich it is mobilizing more resources through the education cess.Collection of education cess will also help in providing subsidies andaids to a large number of institutions to improve accessibility for thelower and middle class families to educate their children. For the 11th

Five year plan, the Centre has allocated a 6 times higher spend oneducation.

The Indian Government is focused on improving and expanding boththe quality and reach of the education system in the country. To thisend, it has made a significant budgetary allocation and has beenlooking at further liberalization of policies to allow greater and morediverse investment in the education sector in India. Further in viewof urgent need for greater clarity on regulation, which would reducethe need for current complicated structures of ownership andencourage greater public-private participation in the education sector,the Government has shown favor towards greater private participationand more Foreign Direct Investment (FDI) in the education sector.The Indian Government is expected to continue to play a leadingrole in the expansion of the education market in India.

India has the highest numbers of illiterate people in the world, thiscreates a large market of potential clients for education companiesto cater to. Further the quantity and quality of education has becomean immediate concern for the Indian economy and is leading to an

increased awareness of the need for education, which creates furthergrowth opportunities for the private sector.

Our Prime Minister Dr. Manmohan Singh addressed to the nation fromthe Red Fort on Independence Day, 2007 on Education. He told thatfor every one of our people to benefit from new employmentopportunities being created across the economy, we must ensurethat every Indian is educated and skilled. No nations can progressunless the people are educated. An education alone is the foundationon which a progressive, prosperous society can be built. The vastmajority of our youth seek skilled employment after schooling. Indiawill soon launch a mission on Vocational Education and SkillDevelopment, through which we will open 1600 new Industrial TrainingInstitutes (ITIs) and polytechnics, 10,000 new vocational schools and50,000 new Skill Development Centres. We will ensure that annually,over 100 lakh students get vocational training which is a four-foldincrease from today’s level. We will seek the active help of the privatesector in this initiative so that they not only assist in the training butalso lend a hand in providing employment opportunities. I wish tosee a revolution in the field of modern education in the next fewyears. It is my fervent desire that India becomes a fully educated,modern, progressive nation. I would like this message to go to everycorner of India- we will make India a nation of educated people, ofskilled people and of creative people.

Worldwide, education comprises of two different deliverable factions– mainstream education and vocational education. Fields such asevent management, hospitality and advertising have now emerged ascareer options for students. In India, as elsewhere in the world,courses imparting practical knowledge are the fastest growing segmentin the world of education. India is one of the largest markets foreducation in the world. Due to its large population and cultural ethos,India is home to the largest growth of potential consumers of educationservices in the world.

Parents are willing to sacrifice their quality time for their children’seducation and students too compete fiercely to win the rate race. Inthis scenario, the rise in income levels of the middle class, increasingurbanization and high family spending on education are leading toconsiderable opportunity to meet the growing demand for highereducation especially in Metros is a good news for industry.

The global talent shortage is a well articulated subject. The changesin work force dynamics, both from the demand and supply side, arechanging the skill set requirement. This existing skills shortagecoupled with the issues of relevance, reach, inclusion and quality ofeducation have huge ramifications for the Indian economy. The supplychain for quality human resources shows an increasing populationon one side with an education system on the other side trying tocope with both quality and quantity issues.

2. Vocational Training in India and the need for private participation

With an enormously large base of school drop outs, who pursue variousemployability options, the prospects of emerging streams likeVocational Training looks bright and shining. The various Commissionsand Committees formed by the respective governments have maderecommendations for expansion and improvement of industrial,technical and vocational education in the Country and accordinglygovernment has expanded number of technical schools both as partof secondary schools as wells as separate vocational and industrialtraining institutes. The Commission, however, stressed theresponsibility of technical and vocational education for training notonly those who will seek employment but also for those who will createemployment.

The Government has introduced so many schemes for imparting skilltraining in various vocational trades to meet the skilled manpower

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requirement of the industry on the one hand and to reduce unemploymentamong educated youth by equipping them with employable skills onthe other. The objective of such schemes is to enhance individualemployability, reducing mis-match between demand and supply of skilledmanpower, providing an alternative to those pursuing higher educationwithout any aim or purpose. Large infrastructure has been created forvocationalisation of education. In vocational institutions, students whohave not completed their schooling, are given vocational and generaleducation. The rough break-up of the time table in vocational traininginstitute indicated that 6% of the time is devoted to general education,40% to special theoretical background of various vocations and 54%for practical work. This however, differs from trade to trade. (Source :education.nic.in)

The Administration Division of Ministry of Human ResourceDevelopment operates a Fund for providing grants in the field ofeducation. Grants are also provided to physically handicappedindividuals to pursue educational and vocational training to enablethem to advance in their career and also in life. Grants are alsoprovided for the education of exceptionally brilliant children whoseparents are no more or whose parent’s income does not exceed Rs.5,000/- per month.

Nearly 41% of the nation is below 21 years of age – which means thatIndia is home to the world’s largest youth population. The Indiangovernment is set to formulate a broad framework on Public-PrivatePartnerships model (PPPs) to attract private agencies to collaborate inexpanding educational facilities in India. The PPP model is expected tobe embraced at all levels of education – vocational, higher andsecondary. Educational institutions are turning to private companies thatcan provide them value-added products to help increase their customerbase. The government has identified education as a focus area to maintainsustainable economic growth and the private sector is coming up withthe new structures to increase participation. India’s education sectorcould see long-term secular growth with rewards for early movers.

In India very less number of school students move up the valuechain and educational levels to complete their educations. With anenormously large base of school drop outs, who pursue variousemployability options, the prospects of emerging streams likeVocational Training looks bright and shining. In India, as elsewherein the world, courses imparting practical knowledge are the fastestgrowing segment in the world of education.

Our Company attempts to bridge the widening gap between academiaand industry requirements by catering to the student base at vocationallevel and making them industry ready. Our vision is to be an Instituteof vocational learning, focusing on developing intellectual, personaland employability skills of our students. In the Indian privateeducational space, Greycells is a name synonymous for a wide rangeof high quality educational services and content, services andsatisfaction have been the 3 critical success levers in Company’sjourney and they continue to be our core strengths. As an educationcompany, the Company’s inherent ability to attune itself to emergingtrends in educational panorama places company to right among thetop players in the segment. There has been considerable growth, ourfocus continues to be imparting quality education with the practicalskills necessary for the start of a successful career. Industry’schanging landscape and emerging challenges, our courses are wellpoised to deliver talent and harness the potential of young minds.Our courses in tandem with industry are well poised to train the youthto meet the challenges of a rapidly developing society and nation.

The Company offers programs that range from skill enhancementcourses to job-oriented. The comprehensive courses and content willprovide segment specific guidance to make candidates the best intheir chosen field. The Company focused on imparting industry relevantskill to youth to make them industry – ready and skilled personnelusing quality content and practices. Vocational education is education

for employability therefore all our course encourage candidates toenhance employability skills, provide additional skills, look at industrieswhich are growing and attract value.

3. Media and Entertainment (M&E) Industry and Developments

Indian M&E industry stood at US$ 12.91 billion in 2009, up 1.4%over the previous year. India is now being looked at as a vibrantcountry, and despite economic slowdown, the M&E industry is slatedto grow at a compounded annual growth rate (CAGR) of 13% by 2014.The phenomenal exponential development witnessed in recent yearsin media & entertainment has made these one of the most rapidlyperforming sectors in our economy. Government’s liberal economicpolicy paved way for dynamic local entrepreneurs to spearhead thisboom. Key drivers for Entertainment Industry is economic growth ofthe country in general and rising disposable income levels in particular,gradually liberalizing attitude of the government, greater interface withinternational companies, favorable regulatory initiatives, liberalizedforeign investment regime etc. (Source : Ministry of External Affairs,Government of India – report by FICCI and KPMG)

The M&E industry is expected to grow steadily over the next 5 yearperiod. The industry is looking at tapping newer target segments,geographies and mediums, while tapping the potential of the existingones. The M&E industry is increasingly becoming fragmented in naturedue to entry of newer players and newer customers and regionsgetting added. The entry of newer players in the market has had apositive impact on the overall market as it has helped in expandingthe market size. This will continue in future with new players emergingto capture newer set of audiences with advancements in their product,marketing and distribution to tap these customer segments. We haveseen existing players expanding horizons by coming out of theirtraditional businesses and establishing presence in other domains.Also, players from other sectors like IT, Telecom etc have enteredthe industry. Foreign players are also looking at increasinginvestments in their Indian portfolios. Growing regionalization is alsohelping some regional players to become strong by tapping newermarkets. Also, media players are looking at leveraging their contentacross platforms leading to emergence of conglomerates.

These trends giving rise to increasing competition are expected togive way to consolidation of operations. The players which are ableto weather the downturn will look at enhancing their market shares.This will help in emergence and growth of players with superior product,marketing, distribution, technological and innovation capabilities. Itwill aid the growth in the overall market size and reach for the industry.

The M&E industry relies heavily on its human capital for businesssuccess and differentiation, as it is talent driven to a great extent.The industry has dealt with a lack of supply of trained professionalsin the sector for a long time. Investment in educational institutionsproviding specialized courses for skilled technicians is a step in theright direction to develop talent and meet the demand of the industry.The curriculum in media schools can be made sensitive to the actualneeds of the industry to impart basic and advanced skills. This willhelp in creating talent within the M&E industry, thereby reducing theneed to hire people from other sectors.

Innovation is essential for players to adapt to the changing marketscenario, technology and consumer behavior. If done rightly, it notonly helps in making an impact in the increasingly competitive marketplace but also increases the overall market size by tapping newercustomer segments and retaining the existing ones. It requirescontinuous investment in research and development and is an ongoingeffort on the part of the players in order for them to be responsiveand to market needs and consumer choices.

There is an increasing need for investments and focus on researchin concept testing, new product development and delivery platforms.

10


Companies are increasing spends on consumer research as thestakes have increased. Many players have a separate team withinthe organization to concentrate on research as an ongoing process,whereas others take help of outside research agencies for specificprojects / concepts. In a market like India, need for research isenhanced due to the inherent diversity in consumer preferences. Alsoconsumers are becoming more savvy and demanding. Furthermore,in order to monetize pay audiences, product needs to be developedwith a consumer oriented approach across pricing, distribution andpromotion. This would not only help in growing the overall contentmarket, but will also help target niche segments.

Today, more than 1,500 EMDI students alone are employed and workat various companies in event management, advertising, PR & mediasector at various levels. Our Company is marshalling its talent pooland resources to contribute relevant, top-of-the-line work in the fieldof vocational training, both in India and abroad. We are one of thevery few companies providing integrated vocational training in mediaand entertainment space in India and Dubai.

The Company is among India’s few professional training institute tooffer its students a global learning experience in the Entertainmentand Media industry. The 4 day workshops like “Certificate inInternational Strategic Marketing Communication” organized by theCompany, conducted by experts in the communication andentertainment industry from Dubai and UK, offered to events / PRand advertising students the unique opportunity to learn bestinternational practices. It has also provided an opportunity to themto have to one interaction with global experts and experience a wholenew gamut of ideas, thoughts and communication in an internationalscenario.

The strength of reputation and brand name of the Company isdependent on the quality and scope of our course offerings, and wecontinue to devote significant resources to enhance our currentofferings and develop new quality educational programs and servicesthat are responsive to the evolving market. The mission of theCompany is to create a global conglomerate that sets new standardsof excellence in Education and grooms future leaders of the industry.

4. Environment

The financial year 2009-10 saw a significant shift in economic trendsfrom an uncertain outlook in the beginning of the year to cautiousoptimism at the end of the year. The year started with global economicturmoil with widespread fear of an economic collapse, recessionarytrends in many global economies and extreme risk aversion resultingin cut back on investments and recruitment across sectors. Theenvironment changed dramatically at the year end there were signsof economic recovery globally, strong growth projections for India,China and other emerging economies and return of businessconfidence with projections of robust recruitment across sectors.

The year closed amid recovering world markets and brighteningsentiment, punctuated intermittently by the receding aftershocks ofthe global economic crisis. Employment witnessed a rebound effectamong rapidly developing economies like India & China. Howevervolatility in energy prices, exchange rates and inflation do not showany signs of subsiding and increasingly appear to have become thenew facts of life. In this environment, the education and trainingsector remains a key determinant of economic growth and recovery,both for India and rest of the world. Governments are increasinglylooking to education and skill development to promote economic growth.Extensive funding and policy reforms are occurring in India with skillsdevelopment and vocational training high on the agenda of theGovernment and the Planning Commission.

5. Union Budget 2010-11

Education which was mainly under States subjects has seen asubstantial increase in Central Government’s intervention since 1987when New Education Policy was announced. The Union Budget for2010-2011 has identified the need to have a well, regulated educationsystem of a global standard. In Budget 2010-11 a total of Rs. 42036crores have been provided for allocation to Education. The allocationfor Department of School Education and Literacy is Rs. 31036 Croresand allocation for Department of Higher Education is Rs. 11000Crores. The above allocation is 15% higher than the previous year’sallocation.

An allocation of Rs. 1300 Crores has been provided to Adult education.Allocation to adult education has been more than doubled increasingit from Rs. 450 crores to Rs. 1,300 crores. With strong economicgrowth there is a greater urge to address the issues on masseducation.

6. Outlook

Vocational Training is the ‘sun rise’ industry. The Company will continueits process of exploring the potential in additional areas of relatedservice offerings. These new developments will have a positive impacton the Company in the years to come.

The Company plans to continue to expand its brand and productportfolios and its service and distribution networks in India and abroadin the near future, both organically and inorganically via strategicacquisitions.

The Company believes that growth is planned & focused and basedon efficient use of available resources to grow the business and weplan to retain and strengthen our leadership position in themarketplace.

The Company will endeavor to be ‘partner by choice’ to both theindustry and students and thereby increase the number of studentsmultifold in the years to come.

Growth is a way of life in Greycells. Our growth is a combination ofboth organic and inorganic growth. We are investing in organic growthby penetration into more cities. Inorganically we have been verystrategic in our thinking, our acquisitions and partnership opportunitieshave bought us access to markets and expand our geographicalpresence. Greycells shall continue to look for strategic opportunitiesin the acquisition are as well as fast and efficient penetration intothe Indian domestic market for organic growth. The Company willcontinue to seek to pursue selective strategic acquisitions, majorityinvestments and joint venture investments to augment its capabilities,broaden its service offerings and increase its geographic presenceand to tap the huge unexplored markets both at domestic front aswell as global front.

Our vision has to be broad enough to be able to see how we makethe individual productive in changing world and what role educationand learning can play in it. A broad vision such as this helps craftsa corporate strategy that creates superior value for our shareholders.Your Company has continued its journey towards sustainable growthand capitalization of the opportunities presented by the rapidlyexpanding education market. The Company has aggressive plans tobecome preferred player and to increase number of students to 5,000levels in next couple of years.

7. Opportunities and Threats

Opportunities

The Company will look to maximise locations and offering in variousverticals in education to reach out to the student community and

11


provide world class education. The Company shall seek to build onstrengths and the management expertise and have to build a valuebased organisation that will come to dominate the media educationindustry.

Being a largely under-penetrated field, the education industry in Indiaholds enormous opportunities for growth. While the entry barriers arelikely to stay high for new companies in the near future, those thathave already established themselves are likely to see tremendousgrowth. This is mainly due to the growing awareness of the need forquality education as well as the increasing population of students inthe country, which are likely to lead to companies in the industryadopting operation models that can enable them to overcome bothrigid regulations as well as low scalability. In areas of services,expertise and knowledge, your Company with its team of professionalsis expected to tap the potential opportunities for growth.

Institutions have varying requirements and the private sector maybe able to offer innovative solutions that offer quality services andvalue for money. An inefficient public education system, high socio-aspirational value attached to education and increasing affordabilityhave all converged to drive demand for quality education. Whileinefficiencies in the public education system and price discovery havecreated a substantial opportunity in the private education space inIndia, there is a dearth of players across segments offering scale.We believe this is the key reason for the sector to have attractedlimited capital. Therefore opportunities for the new initiative are risingacross the gamut of private sector.

The Company is always trying to push the envelope on ways toleverage the opportunities to provide high quality education contentto students. It is trying to bring these to the students in every mannerin which they would like to utilize it – through varying formats, stylesand different devices. The Company has been on the forefront ofheralding the next advancement in learning, thus becoming adistinctive player in bringing knowledge to students acrossgeographical and cultural borders. The Company has taken a premisesin Lower Parel for class rooms and office purpose and increases itsinfrastructure for utilization of students.

The Company will look at presence both domestic and internationallyas in locations, collaboration with leading universities/educationinstitutions to deliver courses to their existing students and resource/research opportunities globally. This shall mean a multifaceted andmulti cultural education imparting entities with focus on world classeducation and standards. The Company plans to continue to expandits brand, scalability and distribution networks through franchisee/business associates in India and abroad.

The Company by geographic coverage strengthening its presence inbusiness with a clear focused approach which would help increaserevenue growth, improve profitability as well as de-risk the companyfrom economic slowdowns.

The Company will continue to tap opportunity to grow its businessboth organically and inorganically via strategic acquisitions in Indiaand abroad.

The Growing acceptance of vocational institutes and the focus onthe media and entertainment sector as a serious career option in theminds of parents, key decision makers, students alike – will ensurethat courses presented by Greycells are readily accepted in themarket.

The Company is pursuing and shall pursue new and complimentaryproducts/ventures. To this end Greycells has signed an MOU withMr. Ashok Advani – founder publisher of Business India for innovatingnew program in financial education. The Company strengthened itspresence by launching Business India Institute of Finance (BIIF) inNew Delhi. BIIF has forayed into financial education with Post Graduate

Diploma in Finance with two primary specializations – Wealth &Investment Management and Banking & Corporate Finance. BIIF ispoised to be a phenomenon in finance and business education. Itsmandate is to provide contemporary, industry-specific courses byway of continuing education, workshops, intensive programs andseminars, which would be accredited by finance industry boards. Thislarge platform is a key driver for our growth and ensures ourcommitment to quality education. Currently located in the heart ofthe capital of India, the institute has ambitious plans.

To capitalize opportunities available in vocational business, theCompany entered into 51:49 joint venture with Eduhub EducationPrivate Limited. In addition to offering courses under the brand nameEMDI Institute of Media & Communication from Thane which includescourses in Event Management, Public Relations, Advertising andJournalism amongst others.

Eduhub has also launched International Institute of Sports Management(IISM) - India’s first-ever comprehensive program to train future sportsmarketing and management professionals, by offering Post GraduateDiploma in Sports Management and Diploma in Sports Management inassociation with Jai Hind college.

Threats

Indian Education system is facing challenges like “poor quality ofeducation” and “access to education”. Both these challenges lead tothe underperformance of the education system. The further challengesare uneducated population, irrelevance of courses, inadequatesyllabus, inadequate practical training, poor enrolment, high drop-outs, lack of employment opportunities etc. Low enrollments and highdropout rates all though the chain, results in a very inadequate supplyto the organized work force.

The industry will need a vast talent pool of creative professionals tomeet the growing demand and it remains the biggest concern to limitinggrowth and expansion. It is imperative for the Government anduniversities to take the onus of fostering education in the field ofmedia and communication. This could be either through tie-ups witheducational institutions or through a structured approach by trainingthe people in media and education. However, given our reputationand relationships, we expect to be able to continue to overcome thisweakness and attract quality talent.

One of the related challenge is to attract talented people to workwith the Company and also retaining the pool of this talent. TheCompany is focused on ensuring and has implemented employeefriendly policies.

The key management is responsible for the day-to-day operationsand they are indeed the key force in driving the business growth.There is always a risk that we may lose our key management team.If key management unable or unwilling to continue with us, we mayfind it difficult to replace such people and our business may beadversely affected. As we are in service industry, our growth andoperations are dependent on the management team.

Our success is mainly attributable to our reach, experience and qualityprocesses. We recognize that we can only grow and prosper if we can:

a. acquire and retain top quality talent on a continual basis.

b. execute efficiently and manage growth challenges

c. education for employability

d. 100% Industry Faculty Model

e. deliver relevant and innovative content to the students

f. remain close to the students at all times

g. on the job training

h. earn while you learn

12


i. placement opportunities

Another large challenge is managing expectation from students. Dueto the previous achieved success in the field, especially when therewas the first mover advantage - if the new courses or existing coursesdo not live upto expectations, it may lead to dissatisfaction.

8. Segment-wise Performance

The Company operates only in one segment and hence segment wiseperformance has not been given.

9. Risks

Risk is an integral part of corporate world today for any going concernand our endeavor has been to maximize stakeholder value byachieving on appropriate balance between risks and return. Sincerisk taking is intrinsic to business growth, all business entities facerisks either from external environment or from internal operations.The most significant risks which the company has identified withmitigation plan are :

� External Risks (Political, Environment, Slowdown in economicgrowth, Change in Education policy, Currency Rate Fluctuation,Competition, Changes in Law and Natural Calamities) and

� Internal Risks (Business Concentration, Investment Process,Human Resource Management, Core Faculty etc.)

Further any change in tax law in India, particularly income tax andservice tax might be to increase tax liability of the company therebyputting pressure on profitability.

To mitigate the same, the Company has constantly endeavored tobroaden the charter of risk management to include opportunities aswell as threats. It uses an integrated risk management approach,based on a number of techniques to cover the full range of risks inthe framework. Today, risk assessment and mitigation is an importantpart of decision making and management at all levels of the company.

Global recession has affected our Dubai operations. To mitigate this,the Company will initiate steps for rationalization of infrastructure.

Apart from the regular operational & business risks, the other majorrisks faced by the Company are:

a) Business Concentration

The Company’s business today is largely concentrated invocational training primarily in few verticals of media andentertainment. Further, a major proportion of the Company’srevenue is derived from education business services.

The poor performance of our Business Associates leads todownfall in projected revenues, which is out of our control.Further low quality services rendered by Business Associatesto students may also one of the risk areas for the Company.To mitigate this risk, our senior officers frequently visit thecenters and ensure that courses shall be conducted accordingto the Operational Manual established by the Company. TheCompany can also take corrective measures to keep up therequisite academic standards.

To mitigate the risk arising from this concentration, the Companywill strive towards expanding the Company’s’ business inadditional areas of related service offerings. Further theCompany strengthened its presence by launching Business IndiaInstitute of Finance (BIIF) in New Delhi and International Instituteof Sports Management (IISM) for innovating new programs.

b) Core Faculty

Education is a powerful agency, which brings about the desiredchanges in the economical, social and cultural existence of anation is shaped and moulded by the human personalities calledthe faculty, who plays a pivotal role in the system of education.The Company is also weak due to inadequate full time employedfaculty, insufficient practical training, overall lack of practitionersand lack of market responsiveness. Further majority of ourfaculty members are visiting faculties from various industriesand are in other occupation besides teaching at our centres.Any exodus by the visiting faculties can have adverse impacton business of the company. Failure to attract / retain qualifiedfaculty members who have the necessary domain expertise orfailure to provide continuous training to our faculty members soas to keep them abreast with the changing student expectations,examination pattern and other key trends that are necessaryto effectively deliver the course may affect the pace of ourgrowth and teaching quality across all our learning centres indifferent locations. Also, non availability of qualified faculty inone or more of our locations may have a material and adverseeffect on our business.

The lack of trained faculties will be a serious area of concern.To overcome, the Company taps professionals from relevantindustry. All faculty members lecture on subjects of theirexpertise, resulting in experience sharing, interaction andnetworking of these professional with the students. The facultymembers contribute to our overall performance by providing goodquality training to the students and thus enable us to maintainour brand and reputation. The team of outstanding anddedicated faculty members provides comprehensive andsystematic guidance to students who aspire for nothing but thebest.

c) Human Resource Management

The Company’s ability to deliver value to its customers dependslargely on its ability to attract and retain skilled and talentedprofessionals. There is significant competition for theseresources which has been heightened by the entry of overseascompetitors into the Indian market. Recruiting and retaining talentcontinues to be one of the priorities of the Company. TheCompany seeks to attract talented professionals by showcasingthe variety and the quality of work that the Company’s employeeshave delivered to its customers. Further to overcome, theCompany is focused on ensuring increasing levels of employee’ssatisfactions and has implemented employee friendly policies.

d) Entry of Other players

The lack of an entry barrier with respect to a private setupoffering similar certificate courses is a threat. Centres offeringsimilar courses are the first level of competition, howevercompetition which enters the market, offers a poor product andthen is forced to shut down later on is even worse as it spoilsthe education market and trust towards the other credibleplayers.

e) Enrollment of students

The Company’s ability to attract students to enroll for coursesdepend on several factors such as to offer new courses,enhancing existing courses in response to changing industryneeds, student’s demands, expanding our geographic reach,effectively marketing courses to a broader base of prospectivestudents and responding to competitive pressures. Our coursecontent incorporates the latest global trends and concepts, whichrequired by fast growing and ever changing industry.

13


10. Social Responsibility

India ramps up its economic development engine, millions of job willbe created which need a new educational order to deliver the skilledpeople that the economy needs. Education serves a critical functionin helping societies become learning institutes and knowledgeeconomies. Your Company believes in being a responsible part ofthe community and contributing back to it in every possible manner.We are thinking deeply about how we can deliver on the same. TheCompany’s focus has been the differently abled part of the society.The Company fulfills its mission with a huge sense of corporate socialresponsibility. The Company’s aim is to nurture excellence in theprofessional and personal growth of geographically dispersed studentsby developing a unique study culture among them. This is achievedby providing education and training to make them employable.

There has been considerable growth, the focus continues to beimparting a quality education with the practical skills necessary forthe start of a successful career. The courses developed in tandemwith Industry are well poised to train the youth to meet the challengeof a rapidly developing society and nation. Further there is mismatchin demand and supply of skilled manpower and provide an alternativefor those pursuing higher education, we intend to provide trainingservices to such market segments to enhance industry specific skillsand making them ready to pursue employment.

SWAT (Students Working Against Tobbaco) a registered NGO is ayouth initiative against tobacco, operating at an awareness platform.The objective of SWAT is to urge India’s youth to stay away fromthe ravages and dangers of smoking. The SWAT team has takenvarious initiatives in the form of events to spread this message overthe years by organizing Smoke Free Bike Rally, College FestivalActivities, Candle Walk, Loud and Proud Smoke Free Rock Concertetc.

Our business is focused on delivering good products and servicesto our customers and creating wealth for our shareholders; we mustalso be mindful of our contribution to society and use our finite capitaland time to contribute to advancing the wealth of knowledge in societyand making the lives of young people more fulfilling.

11. Internal Control Systems

The Company recognizes the importance of internal controls and hassuitable internal control systems and processes in place for the smoothconduct of the business. Company’s internal controls arecommensurate with its size and nature of its business. Internal controlsystems in the Company are intended to provide reasonable assurancethat assets are safeguarded against loss from unauthorized use andall transactions are executed in accordance with Management’s

authorization and properly and promptly recorded and accountingrecords are adequate for the preparation of financial statements andother financial information. The management continuously reviews theinternal control systems and procedures to ensure orderly and efficientconduct of business. The management duly considers and takesappropriate action on the recommendations made by the statutoryauditors and independent Audit Committee.

12. Discussion on Financial Performance with respect to OperationalPerformance

The financial performance of the year ending March 31, 2010 reflectsthe steps have been initiated to become a more focused company,moving into areas where we have huge opportunities and greater longterm potential.

The authorized share capital of the Company is Rs. 8,00,00,000/-divided into 80,00,000 equity shares of Rs. 10/- each. The paid upshare capital of the Company is Rs. 6,00,77,150/- divided into60,07,715 equity shares of par value Rs. 10/- each.

Highlights of the Company’s standalone financial performance are asunder:

(Rs. in thousand)

Particulars 2009-2010 2008-2009

Revenues 48612.21 23797.75

PBDIT 9756.65 (9145.74)

PBT 3202.85 (57937.10)

PAT 4158.76 (58363.88)

EPS:- Basic & Diluted 0.90 (16.32)

13. Human Resources

The key management is responsible for the day-to-day operationsand they are indeed the key force in driving the business growth.The Company has strong management team with experience andexpertise and focus in the areas of media and entertainmenteducation. The management team effectively plans and overseesimplementation of growth strategies. We believe that the strong andexperienced management team enables us to understand the needsand preferences of the student community and industry that is criticalfor overall success and growth of the Company. To reduce attritionlevels, the Company has initiated a number of programs that includean empowered work environment, learning opportunities, andcompetitive compensation packages.

FORWARD LOOKING STATEMENT

Forward-looking statement in this Annual Report should be read in conjunction with the following cautionary statements. Certain expectations andprojections regarding future performance of the Company referenced in this Annual Report are forward – looking statements. These expectations andprojections are based on currently available competitive, financial and economic data along with the Company’s operating plans and are subject tocertain future events and uncertainties, that could cause actual results to differ materially from those that may be indicated by such statements. TheCompany undertakes no obligations to publicly update or revise any forward-looking statements, whether as a new information, future events or otherwise.

14


Annexure to the Auditors’ Report(Referred to in paragraph 3 thereof)

As required by the Companies (Auditor’s Report) Order, 2003 issued bythe Central Government in terms of Section 227 (4A) of the CompaniesAct, 1956 (the Act), and on the basis of such checks as we consideredappropriate and according to the information and explanations given to usduring the course of the audit, we further report that: -

1. (a) The Company has maintained proper records showing fullparticulars, including quantitative details and situation of its fixedassets.

(b) The fixed assets of the Company have been physically verifiedby the management during the year and there were no materialdiscrepancies noticed on such physical verification. In ouropinion, the frequency of verification is reasonable having regardto the size of the Company and the nature of its business.

(c) During the year, the Company has not disposed off a substantialpart of fixed assets so as to affect the going concern statusof the Company.

2. The Company did not hold any inventories during the year.

3. (a) The Company has granted interest free unsecured loans to twocompanies covered in the register maintained under Section301 of the Companies Act, 1956. The maximum amount involvedduring the year was Rs. 5,287,655/-. The year-end balance ofsuch loans granted was Rs. 1,737,210/-. The Company has notgranted any other loan to companies covered in the registermaintained under Section 301 of the Act.

As informed to us there is no stipulation as to the repaymentof the principal amount of these loans.

Based on the explanations given by the management regardingthe nature of these loans, in our opinion, the rate of interestand other terms and conditions of the aforesaid loans grantedby the Company are prima facie not prejudicial to the interestof the Company.

(b) The Company had taken an unsecured interest free loan fromone company and a party covered in the register maintainedunder Section 301 of the Act. The Company has also taken aninterest bearing loan from a party covered in the registermaintained under Section 301 of the Act. The maximum amountof such loans involved during the year was Rs. 9,063,083/- andthe year end balance of the loans taken was Rs. 2,210,000/-.

In our opinion, the rate of interest and the other terms andconditions of the aforesaid loans taken by the Company arenot, prima facie, prejudicial to the interest of the Company.

The Company is regular in the repayment of interest in case ofthe interest bearing loans. As informed to us there is no stipulationas to the repayment of the principal amount of these loans.

4. In our opinion and according to the information and explanations givento us, there are adequate internal control procedures commensuratewith the size of the Company and the nature of its business, withregard to purchase of fixed assets and for the sale of services.During the course of our audit, we have neither been informed norhave we observed any continuing failure to correct major weaknessesin internal controls.

5. a) According to the information and explanations given to us, weare of the opinion that the particulars of contracts andarrangements referred to in Section 301 of the Act have beenentered in the register required to be maintained under thatsection.

b) Based on the information and explanations given to us, we areunable to comment on whether such transactions exceeding thevalue of rupees five lakhs in respect of each party during theyear have been made at prices which are reasonable having regardto the prevailing market prices, as no comparative prices wereavailable in view of the exclusive nature of these transactions.

AUDITORS’ REPORT TO THE SHAREHOLDERS OFGREYCELLS EDUCATION LIMITED (FORMERLYNAMED AS GREYCELLS ENTERTAINMENT LIMITED)1. We have audited the attached Balance Sheet of Greycells Education

Limited as at 31st March, 2010, together with the Profit and LossAccount of the Company for the year ended on that date annexedthereto and the Cash Flow Statement for the year ended on thatdate. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinionon these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government in terms of Section 227 (4A) of theCompanies Act, 1956, as amended to date, we annex hereto astatement on the matters specified in paragraphs 4 and 5 of the saidOrder.

4. Further to our comments referred to in paragraph (3) above, we reportthat:

a) We have obtained all the information and explanations which tothe best of our knowledge and belief were necessary for thepurposes of our audit;

b) In our opinion, proper books of account as required by lawhave been kept by the Company so far as appears from ourexamination of the books;

c) The Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement with thebooks of account;

d) In our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by this report are incompliance with the accounting standards referred to in Section211 (3C) of the Companies Act, 1956;

e) On the basis of the written representations received from thedirectors, as on 31st March, 2010 and taken on record by theBoard of Directors, we report that none of the directors aredisqualified as on 31st March, 2010 from being appointed as adirector in terms of Section 274 (1)(g) of the Companies Act, 1956;

f) In our opinion and to the best of our information and accordingto the explanations given to us, the accounts read with thenotes thereon, give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fairview in conformity with the accounting principles generallyaccepted in India:

i) in the case of the Balance Sheet, of the state of affairsof the Company as at 31st March, 2010,

ii) in the case of the Profit and Loss Account, of the profitfor the year ended on that date, and

iii) in the case of the Cash Flow Statement, of the cash flowsfor the year ended on that date.

For Ford, Rhodes, Parks & Co.Chartered Accountants

Firm’s Registration No. 102860W

Astha KariyaPlace : Mumbai PartnerDate : 28th May, 2010 Membership No. 122491

15


6. The Company has not accepted any deposits from the public withinthe meaning of the provisions of Sections 58A and 58AA or anyrelevant provisions of the Act.

7. The Company has no internal audit system in operation during theyear. However, in our opinion, the Company had adequate internalcontrols in place during the year, commensurate with its size andthe nature of its business.

8. The Central Government has not prescribed maintenance of costrecords under section 209 (1) (d) of the Companies Act, 1956, forany of the products of the Company.

9. a) According to the information and explanations given to us bymanagement and on the basis of the examination of the booksof account carried out by us, the Company has been regular indepositing undisputed statutory dues including Provident Fund,Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax,Service Tax, Excise Duty, Cess and other statutory dues,wherever applicable, with the appropriate authorities. There wereno undisputed arrears of statutory dues outstanding as at31st March 2010 for a period of more than six months from thedate they became payable.

b) According to the information and explanations given to us bythe management and the records of the Company examined byus, there were no disputed dues in respect of Income tax, Sales-tax, Custom Duty, Wealth Tax, Service tax, Excise Duty andCess which have not been deposited.

10. The accumulated losses of the Company as at 31st March 2010, arenot more than fifty percent of its net worth. The Company has notincurred cash losses during the financial year ended on that datebut has incurred a cash loss in the immediately preceeding financialyear.

11. In our opinion, and according to the information and explanationsgiven to us, we are of the opinion that the Company has not defaultedin repayment of its dues to any financial institution or bank. TheCompany has not issued any debentures during the year.

12. As per the books and records of the Company examined by us, theCompany has not granted any loans or advances on the basis ofsecurity by way of pledge of shares, debentures and other securities.

13. Clause (xiii) of the Order is not applicable, as the Company is not achit fund company or nidhi/ mutual benefit fund / society.

14. The Company has not dealt or traded in shares, securities, debenturesor other investments during the year.

15. According to the information given to us and as per the recordsexamined by us, the Company has not given any guarantee for theloans taken by others from banks or financial institutions during theyear.

16. As per the information and explanations given to us, the Companyhas not taken or utilised any term loan during the year.

17. According to the information and explanations given to us and on anoverall examination of the balance sheet of the Company, we reportthat no funds raised on short-term basis have been used for long-term investment.

18. The Company has not made preferential allotment of shares to partiesand companies covered in the register maintained under Section 301of the Act, during the year.

19. The Company has not issued any debentures during the year.

20. We have verified the end use of the money raised by rights issuefrom the public during the year as disclosed in the notes to the financialstatements with the Letter of Offer filed with SEBI.

21. According to the information and explanations given to us by themanagement and on the basis of our examination of the books ofaccount carried out in accordance with the generally accepted auditingpractices in India, we have neither come across nor have we beeninformed of any instance of fraud on or by the Company during theyear.



Astha KariyaPlace : Mumbai PartnerDate : 28th May, 2010 Membership No. 122491

16


BALANCE SHEET AS AT 31ST MARCH, 2010Schedule As At 31st March, 2010 As At 31st March, 2009

Rs. Rs. Rs. Rs.

SOURCES OF FUNDS :

SHAREHOLDERS FUNDS

Share Capital A 60,081,025 37,318,875

Share Application Money Received - 79,950,000

Reserves and Surplus B 286,459,666 195,411,066

346,540,691 312,679,941

UNSECURED LOANS

From Director 2,210,000 5,010,000

DEFERRED TAX LIABILITY (NET) - 405,897

TOTAL 348,750,691 318,095,838

APPLICATION OF FUNDS :

FIXED ASSETS C

Gross Block 61,439,440 61,004,268

Less: Provision for Accumulated

Depreciation / Impairment of Assets 51,670,440 48,942,342

Net Block 9,769,000 12,061,925

Capital Advance 307,244 -

10,076,244 12,061,925

INVESTMENTS D 277,674,814 243,018,087

DEFERRED TAX ASSET (NET) 547,184 -

CURRENT ASSETS, LOANS AND ADVANCES

Current Assets :

Sundry Debtors E 2,275,713 1,117,420

Cash and Bank Balances F 5,022,323 1,893,374

Loans and Advances G 9,259,931 16,557,967 9,490,255 12,501,050

Less: CURRENT LIABILITIES AND

PROVISIONS H

Current Liabilities 10,692,750 8,191,870

Provisions 643,598 11,336,348 723,643 8,915,513

Net Current Assets 5,221,620 3,585,537

MISCELLANEOUS EXPENDITURE

(To the extent not written off / adjusted)

Preliminary Expenses 81,400 122,100

PROFIT AND LOSS ACCOUNT 55,149,430 59,308,189

TOTAL 348,750,691 318,095,838

ACCOUNTING POLICIES ANDNOTES TO THE ACCOUNTS L

As Per Our Report Of Even Date For and on behalf of boardFor Ford, Rhodes, Parks & Co.Chartered AccountantsFirm’s Registration No. 102860W

Astha Kariya Deepak Choudhary Bela DesaiPartner Managing Director DirectorMembership No: 122491 (Indian Operations)

Place : Mumbai Dharmesh ParekhDated : 28th May, 2010 Company Secretary

17


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010Schedule Year Ended 31st March, 2010 Year Ended 31st March, 2009

Rs. Rs. Rs. Rs.

INCOME

Course Fees 46,573,212 21,679,362

Other Income I 2,038,993 48,612,205 2,118,388 23,797,750

EXPENDITURE

Direct Expenses J 16,665,405 3,805,896

Employee Cost 5,741,726 3,998,606

Advertisement and Marketing Expenses 5,771,682 7,181,500

Administrative Expenses K 10,636,045 17,916,792

Interest and Finance Charges 187,396 -


Depreciation / Amortisation 2,955,819 41,998,773 3,308,986 36,252,480

PROFIT / (LOSS) BEFORE TAX AND EXCEPTIONAL ITEMS 6,613,432 (12,454,730)

EXCEPTIONAL ITEMS

Impairment of Assets - (45,482,368)

Right Issue Expenses (3,410,578) -

PROFIT / (LOSS) BEFORE TAX 3,202,854 (57,937,098)

Previous Year Tax Adjustment 2,825 37,046

Fringe Benefit Tax - (78,025)

Deferred Tax Adjustment 953,081 (385,803)

PROFIT / (LOSS) AFTER TAX 4,158,759 (58,363,881)

Balance Brought forward from Previous Year (59,308,189) (944,308)

Balance carried forward to Balance Sheet (55,149,430) (59,308,189)

Earning Per Share (EPS) - Basic and Diluted - Rs. 0.90 (16.32)(See note no.12 )





18


SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEETAS AT 31ST MARCH, 2010

As At 31st March, 2010 As At 31st March, 2009

Rs. Rs.

SCHEDULE ‘A’

SHARE CAPITAL

AUTHORISED CAPITAL

8,000,000 Equity Shares of Rs.10/- each 80,000,000 80,000,000

ISSUED,SUBSCRIBED AND PAID UP CAPITAL

6,007,715 (Previous year 3,731,500) Equity Shares of Rs.10 each fully paid up. 60,077,150 37,315,000

Add : Amount paid up on 1550 Forfeited Equity Shares 3,875 3,875

TOTAL 60,081,025 37,318,875

Notes :

1. Out of above 1,190,000 shares are issued for consideration other than cash.

2. During the year, 2,276,215 equity shares of Rs.10 each fully paid up wereissued and alloted at a premium of Rs.40 per share on Rights Basis.

SCHEDULE ‘B’

RESERVES AND SURPLUS

Share Premium :

As per last Balance Sheet 194,530,500 28,530,500

Add : Addition during the year 91,048,600 166,000,000

285,579,100 194,530,500

General Reserve :

As per last Balance Sheet 880,566 880,566

TOTAL 286,459,666 195,411,066

SCHEDULE ‘C’ FIXED ASSETS

PARTICULARS GROSS BLOCK ADDITIONS DISPOSAL GROSS BLOCK DEPRECIATION DEPRECIATION DISPOSAL IMPAIRMENT OF CUMMULATIVE W. D.V. W. D.V.AS AT D U R I N G D U R I N G AS AT UPTO FOR THE D U R I N G ASSETS FOR DEPRECIATION AS AT AS AT

31.03.09 THE YEAR THE YEAR 31.03.10 31.03.09 YEAR THE YEAR THE YEAR UPTO 31.03.10 31.03.10 31.03.09Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Tangible :

Furniture & Fixtures 1 ,199 ,988 2 7 9 , 9 7 9 - 1 ,479 ,967 2 0 4 , 1 5 6 1 9 1 , 5 5 8 - - 3 9 5 , 7 1 4 1 ,084 ,253 9 9 5 , 8 3 2

Office Equipment 2 9 2 , 9 6 1 8 1 , 2 7 2 - 3 7 4 , 2 3 3 6 5 , 6 1 1 4 5 , 5 5 0 - - 1 1 1 , 1 6 1 2 6 3 , 0 7 2 2 2 7 , 3 5 0

Computer System 2,583 ,786 5 7 2 , 3 9 5 - 3 ,156 ,181 9 7 0 , 3 6 7 7 3 2 , 8 0 0 - - 1 ,703 ,167 1 ,453 ,014 1 ,613 ,419

Air Condit ioners 2 3 0 , 0 0 0 7 3 , 0 0 0 - 3 0 3 , 0 0 0 3 1 , 9 9 3 3 1 , 1 5 9 - - 6 3 , 1 5 2 2 3 9 , 8 4 8 1 9 8 , 0 0 7

Motor Car 5 8 5 , 0 0 0 - 5 8 5 , 0 0 0 - 1 5 1 , 4 5 6 7 6 , 2 6 5 2 2 7 , 7 2 1 - - - 4 3 3 , 5 4 4

Electr ical Instalat ion 9 9 , 2 4 5 2 2 , 0 2 6 1 2 1 , 2 7 1 1 1 , 6 1 1 1 3 , 4 1 5 - - 2 5 , 0 2 6 9 6 , 2 4 5 8 7 , 6 3 4

Radio System 4 0 0 , 0 0 0 - - 4 0 0 , 0 0 0 5 5 , 6 4 0 4 7 , 9 0 0 - - 1 0 3 , 5 4 0 2 9 6 , 4 6 0 3 4 4 , 3 6 0

Sound Equipment 5 0 , 0 0 0 - 8 , 5 0 0 4 1 , 5 0 0 6 , 9 5 5 5 , 9 8 8 - - 1 2 , 9 4 3 2 8 , 5 5 7 4 3 , 0 4 5

Library Books 9 5 , 0 0 0 - - 9 5 , 0 0 0 9 5 , 0 0 0 - - - 9 5 , 0 0 0 - -

Intangible :

G o o d w i l l 7 ,635 ,920 - - 7 ,635 ,920 1 ,527 ,184 1 ,527 ,184 - - 3 ,054 ,368 4 ,581 ,552 6 ,108 ,736

Computer Software 3 5 0 , 0 0 0 - - 3 5 0 , 0 0 0 1 4 0 , 0 0 1 8 4 , 0 0 0 - - 2 2 4 , 0 0 1 1 2 5 , 9 9 9 2 0 9 , 9 9 9

Trade Marks 2 ,000 ,000 - - 2 ,000 ,000 2 0 0 , 0 0 0 2 0 0 , 0 0 0 - - 4 0 0 , 0 0 0 1 ,600 ,000 1 ,800 ,000

Perpetual Right (Ek Din) 23 ,912 ,368 - - 23 ,912 ,368 23 ,912 ,368 - - - 23 ,912 ,368 - -

Perpetual Right (WWR) 15 ,100 ,000 - - 15 ,100 ,000 15 ,100 ,000 - - - 15 ,100 ,000 - -

Perpetual Right (Anjuman) 6 ,470 ,000 - - 6 ,470 ,000 6 ,470 ,000 - - - 6 ,470 ,000 - -

TOTAL 61,004,268 1,028,672 593,500 61,439,440 48,942,342 2,955,819 227,721 - 51,670,440 9,769,000 12,061,925

Capital Advance - - - - - - - - - 307,244 -

Total - - - - - - - - - 10,076,244 12,061,925

PREVIOUS YEAR 59,153 ,223 1 ,851 ,045 - 61 ,004 ,268 1 5 0 , 9 8 8 3 ,308 ,986 - 45 ,482 ,368 48 ,942 ,342 - -

19



SCHEDULE ‘D’ : INVESTMENTS

NAME OF THE COMPANY NO OF SHARES / NO OF SHARES / COST AS AT COST AS ATUNITS AS AT UNITS AS AT 31-3-2010 31-3-2009

31-3-2010 31-3-2009 RS. RS.

LONG TERM INVESTMENTS IN SHARES / UNITS :

A FULLY PAID-UP EQUITY SHARES (UNQUOTED)

i) IN SUBSIDIARY :

Investment in EMDI (Overseas) FZ LLC 50 45 161,002,810 144,599,087

ii) IN OTHERS :

Investment in EMDI Web Solutions Pvt Ltd (F.V Rs.10/- ) 1,900 1,900 19,000 19,000

Investment in Access AtlantechEdutainment (I) Ltd (F.V Rs.10/- ) 245,554 245,554 50,400,000 50,400,000

Investment in Concept Communication Ltd (F.V Rs.10/- ) 175,000 175,000 35,000,000 35,000,000

Grey Cells Communication & Production Pvt Ltd (F.V Rs.10/- ) 50,000 50,000 13,000,000 13,000,000

259,421,810 243,018,087

B UNITS OF MUTUAL FUNDS (QUOTED)

HDFC Cash Management Fund Treasury Advantage Plan 1,819,568.780 - 18,253,004 -

TOTAL INVESTMENTS TOTAL A + B 277,674,814 243,018,087

AS ON AS ON31-3-2010 31-3-2009

Cost Market Value Cost Market ValueRs. Rs. Rs. Rs.

Aggregate Value of Quoted Investments 18,253,004 18,253,004 - -

Aggregate Value of Unquoted Investments 259,421,810 - 243,018,087 -

277,674,814 18,253,004 243,018,087 -

Note : The NAV of the units as on 31st March, 2010 is taken as

market value

20


SCHEDULE ‘E’

SUNDRY DEBTORS - (Unsecured)

Debts outstanding for more than six months :

Considered Good 1,320,257 1,067,420

Considered Doubtful 6,127,935 7,448,192 5,896,574 6,963,994

Other Debts Considered Good 955,456 50,000

8,403,648 7,013,994

Less : Provision for Doubtful Debts (6,127,935) (5,896,574)

TOTAL 2,275,713 1,117,420

SCHEDULE ‘F’

CASH AND BANK BALANCES

Cash on hand 244,623 45,568

Balances with Scheduled Bank :

In Current Account 3,277,701 447,806

In Fixed Deposit 1,500,000 1,400,000

4,777,701 1,847,806

TOTAL 5,022,324 1,893,374

SCHEDULE ‘G’

LOANS AND ADVANCES

Loans 1,737,210 4,537,210

Advances Recoverable in Cash or in

kind or for value to be received 4,393,016 3,729,496

Deposit 2,231,800 215,000

Interest Accrued and Due 26,214 2,243

Advance Tax and TDS 871,691 1,006,307

TOTAL 9,259,931 9,490,256

SCHEDULE ‘H’

CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES

Sundry Creditors 2,684,634 3,858,270

Advance Fees received from Students 8,008,116 4,333,600

10,692,750 8,191,870

PROVISIONS

Provision for Tax 433,025 723,643

Provision for Gratuity 210,573 -

TOTAL 11,336,348 8,915,513



Rs. Rs. Rs. Rs.

21


SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2010

Year Ended Year Ended31st March, 2010 31st March, 2009

Rs. Rs.

SCHEDULE ‘I’

OTHER INCOME

Premier Relationship Fees 1,450,000 950,000

Interest on Income Tax Refund 34,753 6,952

Interest accrued on Bank Fixed Deposits 149,319 2,243

(TDS Rs.21,664/- , PY Rs. NIL)

Dividend Income 253,004 -

Provision for diminution in the value of Investments reversed - 427,494

Sundry balances written back 15,134 729,712

Miscellaneous Income 136,783 1,987

TOTAL 2,038,993 2,118,388

SCHEDULE ‘J’

DIRECT EXPENSES

Faculty Fees 3,399,926 2,653,595

Business Auxiliary Services 12,870,921 -

Work shop Expenses 12,000 831,450

Student activity 327,260 268,851

Software Fees 55,298 52,000

TOTAL 16,665,405 3,805,896

SCHEDULE ‘K’

ADMINISTRATIVE EXPENSES

Rates and Taxes 5,000 -

Repair and Maintenance 186,692 1,417,629

Legal and Professional Fees 2,642,194 4,032,494

Business Development Expenses 306,387 -

Auditors Remuneration :

Audit Fees 50,000 33,090

Taxation matters - 16,545

Others 39,536 56,506

Postage and Courier 33,860 34,116

Printing and Stationery 436,986 688,942

Company Law Matter and Listing Fees 221,031 471,771

Rent and Other Compensation 4,131,373 3,258,128

Telephone Expenses 445,829 334,486

Travelling Expenses 1,142,755 920,631

Conveyance Expenses 281,845 241,359

Provision for Doubtful Debts 231,361 5,896,574

Loss on Sale of Investments - 355,865

Loss on Sale of Fixed Assets 122,279 -

Other Miscellaneous Expenses 358,917 158,656

TOTAL 10,636,045 17,916,792

22


SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AND PROFIT ANDLOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2010

Schedule ‘L- ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS

(A) SIGNIFICANT ACCOUNTING POLICIES:

(i) Accounting ConventionThe accompanying Financial Statements have been prepared inaccordance with the historical cost convention and in accordancewith the Companies Act, 1956 and in all material aspects withapplicable accounting standards issued by the Institute of CharteredAccountants of India.

(ii) Revenue RecognitionThe Company follows the mercantile system of accounting andrecognizes income and expenditure on accrual basis. Income fromthe student fees are recognized over the period of instruction ofcourse. Non-refundable premier relationship fees receivable underbusiness association agreements are taken to income as and whendue.Dividend income is accounted for as and when declared.

(iii) Fixed assets and depreciationFixed assets are carried at cost of acquisition less accumulateddepreciation / amortization.a) The Company provides depreciation on tangible fixed assets

as per written down value method at the rates prescribed underSchedule XIV to the Companies Act, 1956.

b) Intangible assets are amortized as under :i) Goodwill over the period of five years.ii) Trade Mark over the period of ten years.iii) Computer software are written off equally over a period of

three years.(iv) Impairment of Assets

At each balance sheet date the Company reviews the carrying valueof assets for any possible impairment. An impairment loss isrecognized when the carrying amount of asset exceeds its recoverableamount which is the higher of net realizable amount as on the BalanceSheet date and the present value of the economic benefit resultingfrom the future use of the asset.

(v) InvestmentsInvestments are capitalized at cost of acquisition plus incidentalexpenses. Provision for diminution in the value of long terminvestments is made in accordance with Accounting Standard 13issued by the Institute of Chartered Accountants of India.

(vi) Employee BenefitsThe Company provides for gratuity benefits to its employees as perthe provisions of The Payment of Gratuity Act, 1972. The gratuitybenefit scheme is unfunded and provision for the same is made onactuarial basis.

(vii) Provisions and Contingent LiabilitiesProvisions involving substantial degree of estimation in measurementare recognized when there is a present obligation as a result of pastevents and it is probable that there will be an outflow of resources.Contingent liabilities are disclosed in the notes to accounts.

(viii) TaxationProvision for taxation has been made in accordance with the incometax laws prevailing for the relevant assessment years.

(ix) Deferred TaxationDeferred tax assets / liabilities resulting from timing differencesbetween book and tax profits is accounted for at the current rate oftax to the extent that the timing differences are expected to crystallisein future. Deferred tax assets in respect of carried forward businesslosses and unabsorbed depreciation as per Income Tax provisions isrecognized only if there is virtual certainty of recoupment of the sameout of future taxable income.

NOTES TO THE ACCOUNTS1. Capital commitments not provided for (net of capital advances) –

Rs.98,786/- (Previous Year - Rs. Nil).2. No vendors have informed the Company of their being registered under

the Micro, Small and Medium Enterprises Development Act, 2006.Hence, as per the information available with the Company, there areno amounts payable to such vendors as at the year end.

3. Managerial Remuneration:

2009-10 2008-09(Rs.) (Rs.)

Salary and Allowances 1,146,783/- 720,000/-

4. Deferred Tax Asset of Rs.547,184/- (Previous Year - Deferred TaxLiability Rs.405,897/-) as on 31.03.2010 is on account of :

(Rs.) (Rs.)Depreciation (407,316) (405,897)Provision for Doubtful Debts 71,491 -Right Issue Expenses 843,095 -Others 39,914 -

547,184 (405,897)

No Deferred tax asset has been recognized on unabsorbeddepreciation and carried forward business losses as there is no virtualcertainty that the same will be realized out of future taxable income.

5. The Company operates an unfunded gratuity scheme for itsemployees. The disclosures in respect of the scheme as required inthe Accounting Standard 15 – ‘Employee Benefits’, issued by theInstitute of Chartered Accountants of India’ are given below :

Defined Benefit PlansGratuity Scheme (Unfunded Scheme)

In accordance with Accounting Standard 15 (Revised 2005), actuarialvaluation was performed in respect of the aforesaid defined benefitplans based on the following assumptions:-

2009-10Discount Rate (per annum) 8.00%Salary Escalation 6.00%Attrition Rate 2.00%Expected Average remaining working lives ofemployees (years) 2 years

A) Changes in the Present Value of Benefit Obligation 2009-10 (Rs.)Opening Present Value of Obligation at thebeginning of the Current Period 87,862Interest Cost 6,809Current Service Cost 105,623Past Service cost- Non Vested Benefit -Past Service cost- Vested Benefit -Liability Transferred in -Actuarial (gain) / loss on obligations 10,279Closing Present Value of Obligation 210,573Included in Provisions (Refer Schedule H)

B) Table of Recognition of Transitional Liability 2009-10Unrecognized Transitional Liability at the startof the period -Transitional Liability recognized during the period -Unrecognized Transitional Liability at the end ofthe period -

C) Amount recognized in the Balance Sheet 2009-10Fair Value of Plan Assets as at the end of the year -Present value of obligation at the end of the period 210,573Difference (210,573)Past service cost – Non vested Benefitrecognized at the end of the period -Unrecognized transitional liability at the endof the period -Liability/(Asset) recognized in the Balance Sheet -Net amount recognized in the balance sheet (210,573)

D) Expenses recognized in the Income Statement 2009-10Current Service Cost 105,623Interest Cost 6,809Actuarial (Gain)/Loss 10,279Past service cost – Non vested Benefitrecognized during the period -Past service cost – Vested Benefit recognizedduring the period -Transitional liability recognized during the period -Total Expenses recognized in theProfit and Loss Account 122,711

23


E) Balance Sheet Reconciliation 2009-10Opening Net Liability 87,862Expenses as above 122,711Net Transfer In -(Net Transfer out) -Employer’s Contribution -Net amount Recognized in the balance sheet 210,573

This being the first year in which the provision for gratuity is made,previous year’s figures are not shown.

6. The Company has carried out business operations only in the segmentof ‘Education’ during the year and also the previous year. Hence segmentreporting as per Accounting Standard 17 – ‘Segment Reporting’, issuedby The Institute of Chartered Accountant of India, has not been given.

However, the Company has provided / written back the followingamounts during the previous year pertaining to the erstwhileentertainment business carried on in earlier years :

Particulars 2009-10 2008-09 Income/ Income/

(Expenses) (Expenses) Rs. Rs.

Impairment of perpetual rights in films Nil (45,482,368)Provision for doubtful debts Nil (5,896,574)Write back of creditors Nil 729,712Net Expenses Nil (50,649,230)

7. Investments Purchased and Sold during the year :

Particulars No. of Units Cost ofAcquisition (Rs.)

HDFC Cash Management Fund 199,371.98 2,000,000/-

8. During the year, the Company made a right issue of 2,276,215 equityshares @ Rs.50/- per share including premium of Rs.40/- per share.The right issue was fully subscribed and the shares were allotted on09.11.2009. An amount of Rs.95,445,480/- out of the proceeds ofthe right issue has been utilized upto 31st March, 2010 towards theobjects of the issue and the balance amount of Rs.18,365,270/- ispending to be utilized and has been temporarily substantially investedin units of mutual fund.

Deployment of funds collected through rights issue :

Particulars Proposed AmountDeployment Deployed till

– (Rs.) 31.03.10 - (Rs.)Investment in Subsidiary 16,403,723 16,403,723Setting up of New Centre 20,500,000 2,274,152Repayment of Borrowings 43,500,000 43,500,000Issue Expenses 3,550,000 3,410,578General Corporate Purposes 29,857,027 29,857,027Total 113,810,750 95,445,480Balance 18,365,270

9. During the year, the Company has acquired a further 10% of the equityshares in its subsidiary company- EMDI (Overseas) FZ, LLC, a limitedliability company registered in Dubai, United Arab Emirates, which isengaged in vocational training. With the acquisition of this 10% shares,the Company now holds 100% of the equity shares in the subsidiary.

10. Related Party disclosures :

(A) List of Companies under Common Control

EMDI (Overseas) FZ LLC

(B) Names of related parties with whom transactions have taken placeduring the year / previous year :a) Companies where significant influence exists:

EMDI Institute of Event Management Pvt.Ltd.Event Management Development Institute (Bombay) Pvt.Ltd.

EMDI Web Solutions Pvt. Ltd. (only in previous year)Value Line Advisors Pvt. Ltd. (only in previous year)Systematik Finvest Pvt. Ltd. (only in previous year)

b) Key Management Personnel :Deepak ChoudharyNowshir EngineerBela Desai (only in previous year)Uday Sinh Wala (only in previous year)

(C) Transactions with Related Parties

Nature of Transactions 2009-10 2008-09(Rs.) (Rs.)

a) With Companies where significantinfluence exists:Legal & Professional Fees incurred NIL 1,138,000/-Loans Repaid by the Company NIL 1,000,000/-Loan Given by the Company NIL 725,000/-Business support services NIL 200,000/-

b) With Key Managerial Personnel:Managing Director’s Remuneration 1,146,782/- 720,000/-Share Application money received NIL 10,200,000/-Loan Received NIL 1,050,000/-Purchase of Investments 16,403,723/- 144,400,000/-Issue of Shares NIL 135,000,000/-

(D) Year end Balances of Related Parties

Balances of related enterprises at 2009-10 2008-09the year end (Rs.) (Rs.)

Debit/(Credit) Debit/(Credit)

a) Subsidiary NIL NILb) Companies where significant

influence exists NIL 5,746,000/-c) Key Managerial Personnel NIL (5,065,000/-)

11. Foreign Currency Income and Expenses

2009-10 2008-09(Rs.) (Rs.)

Earnings In Foreign Currency – NIL NILExpenses in Foreign Currency-Travelling 113,466/- 302,756/-Work shop expenses NIL 831,450/-Marketing 260,644/- NILAccredited Certification Fees 351,017/- NILFixed Assets Purchase 38,171/- NIL

12. Earnings per share:

2009-10 2008-09(Rs.) (Rs.)

(a) Net Profit/ (Loss) after tax 4,158,760 (58,363,881)(b) Weighted average number of

equity shares of Rs. 10/- eachoutstanding during the year(No. of shares) 4,623,277 3,576,541

c) Basic and diluted earnings pershare (Rs.) 0.90 (16.32)

13. Loans amounting to Rs.1,737,210/- (Previous Year - Rs. 4,537,210/-)shown under ‘Loans and Advances’ represents amounts due from aprivate company in which a director of the Company is a director.

14. Figures of the previous year have been regrouped and reclassifiedwherever necessary to make them comparable with the figures of thecurrent year.


Astha Kariya Deepak Choudhary Bela DesaiPartner Managing Director DirectorMembership No: 122491 (Indian Operations)Place : Mumbai Dharmesh ParekhDated : 28th May, 2010 Company Secretary

24


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 201031st March 2010 31st March 2009

Rs. Rs.

Cash Flow from Operating Activities

Net Profit/(Loss) before tax before exceptional item 6,613,432 (12,454,730)

Adjustment for:

Depreciation 2,955,819 3,308,986

Preliminary Expenses w/off 40,700 40,700

Provision for diminution in the value of Investments reversed - (427,494)

Loss on sale of Assets 122,279 -

Interest 187,396 -

Interest on Fixed Deposit (149,319) -

Dividend Income (253,004) -

Loss on sale of Investments - 355,865

Operating Profit/(Loss) before working capital changes 9,517,303 (9,176,673)

Adjustment for:

Trade and other Receivables (1,158,293) 4,779,154

Trade and other Payables 2,500,880 6,518,006

Loans and Advances 301,244 (2,955,260)

Provision for Gratuity 210,573 -

1,854,404 8,341,900

Cash generated from operations 11,371,707 (834,774)

Direct taxes (paid)/refund (358,712) (460,315)

Cash Flow before extra ordinary items 11,012,995 (1,295,088)

Extra ordinary items/Exceptional Items - -

Net Cash from Operating Activities 11,012,995 (1,295,088)

Cash Flow from Investing Activities

(Purchase)/Sale of Fixed Assets (785,172) (1,851,045)

(Purchase)/Sale of Investments (34,656,727) (94,819,180)

Capital Advance (307,244) -

Net Cash used in Investing Activities (35,749,143) (96,670,225)

Cash Flow from Financing Activities

Issue of Equity Shares 33,860,750 37,400,000

Rights issue Expenses (3,410,578) -

Share application money received* - 77,150,000

Interest (187,396) -

Interest on FD 149,319 -


Loans received/(repaid) during the year* (2,800,000) (19,750,000)

Net Cash from Financing Activities 27,865,099 94,800,000

Net Increase/(Decrease) in cash and cash equivalents 3,128,951 (3,165,313)

Cash and cash equivalents at the beginning of theyear (Opening Balances) 1,893,374 5,058,687

Cash and cash equivalents at the end of theyear (closing Balances) 5,022,325 1,893,374




25


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I Registration Details

CIN Number L65910MH1983PLC030838 State Code 11

Balance Sheet Date 31-Mar-10

II Capital Raised during the year (Amount in ‘000 Rs.)

Public Issue Nil Bonus Issue Nil

Right Issue 113810.75 Private Placement Nil

III Position of Mobilization and Deployment of Funds (Amount in ‘000 Rs.)

Total Liabilities 348751 Total Assets 348751

Sources of Funds :

Paid-up Capital 60081 Reserves & Surplus 286460

Secured Loans Nil Unsecured Loans 2210

Deferred Tax Liability Nil

Application of Funds :

Net Fixed Assets 10076 Investments 277675

Net Current Assets 5222 Misc. Expenditure 81

Accumulated Losses 55149

IV Performance of Company (Amount in ‘000 Rs.)

Turnover 48,612 Total Expenditure 45,409

Profit /(Loss) Before Tax 3,203 Profit /(Loss) After Tax 4,159

Earnings Per Share in Rs. 0.90 Dividend rate % Nil

V Generic Names of Principal Products / Services of Company (As per Monetary Terms)

Item Code No. N.A.

( ITC Code )

Product Description NOT APPLICABLE




26


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TOSUBSIDIARY COMPANY

Name of the Subsidiary EMDI (FZ) Overseas LLC

(A) The Financial Year of the Subsidiary Company 31st March, 2010

(B) Shares of the Subsidiary held by GREYCELLS EDUCATION LIMITED on the above dates

(a) Number and face value 50 Equity Shares of AED 1000each fully paid up.

(Previous year 45 Equity shares)

(b) Extent of holding 100 %

(Previous year 90.00%)

(C) The net aggregate of Profit/ (Loss) of the Subsidiary Companies so far as it concerns themembers of GREYCELLS EDUCATION LTD.

(a) not dealt with in the accounts of GREYCELLS EDUCATION LTD for the year endedMarch 31, 2010 amounted to -

(i) For the Subsidiary’s financial year ended as in (A) above. AED (325,573)

(ii) For the previous financial years of the Subsidiary since they became theHolding Company’s Subsidiary. AED (349,676)

(b) dealt with in the accounts of GREYCELLS EDUCATION LTD for the year endedMarch 31, 2010 amounted to -

(i) For the Subsidiary’s financial year ended as in (A) above. Nil

(ii) For the previous financial years of the Subsidiary since they became theHolding Company’s Subsidiary. Nil

27


AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENT

Report of the Auditors to the Board of Directors of Greycells Education Limited (Formerly named as Greycells Entertainment Limited) on the consolidatedfinancial statement of Greycells Education Limited and its subsidiary.

1. We have audited the attached Consolidated Balance Sheet of Greycells Education Limited (“the Company”) and its subsidiary (“the Group”) as atMarch 31, 2010, the Consolidated Profit and Loss Account for the year ended on that date annexed thereto, and the Consolidated Cash FlowStatement for the year ended on that date, which we have signed under reference to this report. These consolidated financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on ouraudit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, onthe test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of the subsidiary, whose financial statements reflect total assets of Rs.55.23 lakhs as at March 31,2010, total revenues of Rs. 305.15 lakhs and total net cash outflows of Rs. 14.65 lakhs for the year ended on that date.

These financial statements have been audited by other auditor whose reports have been furnished to us, and our opinion, in so far as it relates tothe amounts included in respect of the subsidiary, is based solely on the report of the other auditors.

4. Attention is drawn to note 14 of schedule L to these consolidated financial statements, which states the reasons for the financial statements ofsubsidiary being prepared on a going concern basis notwithstanding the accumulated losses and excess of current liabilities over current assetsas on March 31, 2010.

5. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of AccountingStandard 21 - ‘Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India and on the basis of the separateaudited financial statements of Greycells Education Limited and its subsidiary.

6. Further to the matter referred to in paragraph 4 above and on the basis of the information and explanations given to us and on consideration of theseparate audit reports on individual audited financial statements of Greycells Education Limited and its aforesaid subsidiary, in our opinion, theconsolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the consolidated balance sheet, of the state of affairs of the Group as at March 31, 2010;

(b) in the case of the consolidated profit and loss account, of the results of operations of the Group for the year ended on that date; and

(c) in the case of the consolidated cash flow statement, of the cash flows of the Group for the year ended on that date.



Astha KariyaPartner

Mumbai : 28th May, 2010 Membership No. 122491

28


CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010Schedule As At 31st March, 2010 As At 31st March, 2009

Rs. Rs. Rs. Rs.

SOURCES OF FUNDS :

SHAREHOLDERS FUNDS

Share Capital A 60,081,025 37,318,875

Share Application Money Received - 79,950,000

Reserves and Surplus B 286,459,666 195,411,066

346,540,691 312,679,941

UNSECURED LOANS

From Director 11,925,414 15,948,519

From Others 4,403,189 16,328,603 4,953,145 20,901,663

DEFERRED TAX LIABILITY (NET) - 405,897

TOTAL 362,869,294 333,987,501

APPLICATION OF FUNDS :

FIXED ASSETS C

Gross Block 237,246,135 220,280,387

Less: Provision for Accumulated

Depreciation / Impairment of Assets 52,693,080 49,578,815

Net Block 184,553,055 170,701,572

Capital Advance 307,244 -

184,860,299 170,701,572

INVESTMENTS D 116,672,004 98,419,000

DEFERRED TAX ASSET (NET) 547,184 -

CURRENT ASSETS, LOANS AND ADVANCES

Current Assets :

Sundry Debtors E 3,450,892 2,615,641

Cash and Bank Balances F 5,135,030 3,667,951

Loans and Advances G 11,404,134 19,990,056 10,786,807 17,070,400

Less: CURRENT LIABILITIES AND

PROVISIONS H

Current Liabilities 22,461,178 18,179,856

Provisions 1,393,702 23,854,880 1,307,240 19,487,097

Net Current Assets (3,864,824) (2,416,697)

MISCELLANEOUS EXPENDITURE(To the extent not written off/adjusted)


PROFIT AND LOSS ACCOUNT 63,682,130 63,640,635

FOREIGN CURRENCY TRANSLATION ACCOUNT - (DEBIT BALANCE) 891,101 3,520,891

TOTAL 362,869,294 333,987,501





29


CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010Schedule Year Ended 31st March, 2010 Year Ended 31st March, 2009

Rs. Rs. Rs. Rs.

INCOME

Course Fees 76,825,902 48,898,320

Other Income I 2,304,111 79,130,013 2,996,179 51,894,499

EXPENDITURE

Direct Expenses J 19,490,814 5,838,836

Employee Cost 14,783,176 12,550,514

Advertisement and Marketing Expenses 12,818,941 13,148,924

Administrative Expenses K 26,053,807 33,419,141

Interest and Finance Charges 187,396 6,691


Depreciation / Amortisation 3,342,001 76,716,835 3,751,752 68,756,557

PROFIT / (LOSS) BEFORE TAX AND EXCEPTIONAL ITEMS 2,413,178 (16,862,058)

EXCEPTIONAL ITEMS

Impairment of Assets - (45,482,368)

Effect of ceasation of interest in the subsidiary - 773,286

Right Issue Expenses (3,410,578) -

PROFIT / (LOSS) BEFORE TAX (997,400) (61,571,140)

Current Tax - -

Previous Year Tax Adjustment 2,824 37,046

Fringe Benefit Tax - (78,025)

Deferred Tax Adjustment 953,081 (385,803)

PROFIT / (LOSS) AFTER TAX (41,495) (61,997,922)

Balance Brought forward from Previous Year (63,640,635) (1,642,713)

Balance carried forward to Balance Sheet (63,682,130) (63,640,635)

Earning Per Share (EPS)-Basic and Diluted (See note no.12) (0.01) (17.33)





30


SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEETAS AT 31ST MARCH, 2010


Rs. Rs.

SCHEDULE ‘A’

SHARE CAPITAL

AUTHORISED CAPITAL8,000,000 Equity Shares of Rs.10 each 80,000,000 80,000,000

ISSUED,SUBSCRIBED AND PAID UP CAPITAL6,007,715 (Previous year 3,731,500) Equity Shares of Rs.10 each fully paid up. 60,077,150 37,315,000

Add : Amount paid up on 1550 Forfeited Equity Shares 3,875 3,875

TOTAL 60,081,025 37,318,875

Notes :

1. Out of above 1,190,000 shares are issued for consideration other than cash.

2. During the year, 2,276,215 equity shares of Rs.10 each fully paid up wereissued and alloted at a premium of Rs.40 per share on Rights Basis.

SCHEDULE ‘B’

RESERVES AND SURPLUS

Share Premium :

As per last Balance Sheet 194,530,500 28,530,500

Add : Addition during the year 91,048,600 166,000,000

285,579,100 194,530,500

General Reserve :

As per last Balance Sheet 880,566 880,566

TOTAL 286,459,666 195,411,066

SCHEDULE ‘C’ FIXED ASSETS

PARTICULARS GROSS ADDITIONS DISPOSAL/ GROSS DEPRECIATION DEPRECIATION DISPOSAL / IMPAIRMENT OF CUMMULATIVE W. D.V. W. D.V.B L O C K D U R I N G ADJUSTMENTS B L O C K UPTO 31.03.09 FOR THE ADJUSTMENTS ASSETS FOR DEPRECIATION AS AT AS AT

AS AT THE YEAR D U R I N G AS AT YEAR D U R I N G THE YEAR UPTO 31.03.10 31.03.10 31.03.0931.03.09 THE YEAR 31.03.10 THE YEAR

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Tangible :

Furniture & Fixtures 3 ,791 ,689 3 4 8 , 3 3 6 - 4 ,140 ,025 7 1 9 , 0 8 7 4 7 3 , 5 1 2 - - 1 ,192 ,599 2 ,947 ,426 2 ,842 ,017

Office Equipment 2 9 2 , 9 6 1 8 1 , 2 7 2 - 3 7 4 , 2 3 3 6 5 , 6 1 1 4 5 , 5 5 0 - - 1 1 1 , 1 6 1 2 6 3 , 0 7 2 2 2 7 , 3 5 0

Computer System 2,782 ,604 6 3 0 , 8 9 7 - 3 ,413 ,500 1 ,056 ,988 7 6 1 , 0 7 9 - - 1 ,818 ,068 1 ,595 ,433 1 ,713 ,158

Air Condit ioners 2 3 0 , 0 0 0 7 3 , 0 0 0 - 3 0 3 , 0 0 0 3 1 , 9 9 3 3 1 , 1 5 9 - - 6 3 , 1 5 2 2 3 9 , 8 4 8 1 9 8 , 0 0 7

Motor Car 1 ,060 ,410 - 5 8 5 , 0 0 0 4 7 5 , 4 1 0 1 8 6 , 3 6 1 1 5 2 , 2 1 4 2 2 7 , 7 2 1 - 1 1 0 , 8 5 4 3 6 4 , 5 5 6 8 2 5 , 1 4 0

Electr ical Instalat ion 9 9 , 2 4 5 2 2 , 0 2 6 - 1 2 1 , 2 7 1 1 1 , 6 1 1 1 3 , 4 1 5 - - 2 5 , 0 2 6 9 6 , 2 4 5 8 7 , 6 3 4

Radio System 4 0 0 , 0 0 0 - - 4 0 0 , 0 0 0 5 5 , 6 4 0 4 7 , 9 0 0 - - 1 0 3 , 5 4 0 2 9 6 , 4 6 0 3 4 4 , 3 6 0

Sound Equipment 5 0 , 0 0 0 - 8 , 5 0 0 4 1 , 5 0 0 6 , 9 5 5 5 , 9 8 8 - - 1 2 , 9 4 3 2 8 , 5 5 7 4 3 , 0 4 5

Library Books 9 5 , 0 0 0 - - 9 5 , 0 0 0 9 5 , 0 0 0 - - - 9 5 , 0 0 0 - -

Intangible :

Goodwil l onConso l i da t i on 156,010,185 16 ,403 ,723 - 172,413,908 - - - - - 172,413,908 156,010,185

G o o d w i l l 7 ,635 ,920 - - 7 ,635 ,920 1 ,527 ,184 1 ,527 ,184 - - 3 ,054 ,368 4 ,581 ,552 6 ,108 ,736

Computer Software 3 5 0 , 0 0 0 - - 3 5 0 , 0 0 0 1 4 0 , 0 0 1 8 4 , 0 0 0 - - 2 2 4 , 0 0 1 1 2 5 , 9 9 9 2 0 9 , 9 9 9

Trade Marks 2 ,000 ,000 - - 2 ,000 ,000 2 0 0 , 0 0 0 2 0 0 , 0 0 0 - - 4 0 0 , 0 0 0 1 ,600 ,000 1 ,800 ,000

Perpetual Right(Ek Din) 23 ,912 ,368 - - 23 ,912 ,368 23 ,912 ,368 - - - 23 ,912 ,368 - -

Perpetual Right(WWR) 15 ,100 ,000 - - 15 ,100 ,000 15 ,100 ,000 - - - 15 ,100 ,000 - -

Perpetual Right(An juman) 6 ,470 ,000 - - 6 ,470 ,000 6 ,470 ,000 - - - 6 ,470 ,000 - -

T O T A L 220,280,382 17,559,254 593,500 237,246,135 49,578,799 3,342,001 227,721 - 52,693,080 184,553,055 170,409,631

Capital Advance - - - - - - - - - 307,244 -

Total - - - - - - - - - 184,581,446 170,409,631

PREVIOUS YEAR 75,520 ,608 161,638,664 16 ,878 ,885 220,280,387 9 9 6 , 9 7 5 3 ,751 ,752 6 5 2 , 2 8 0 45,482,368 49,578,815 - -

31



SCHEDULE ‘D’ : INVESTMENTS

NAME OF THE COMPANY NO OF SHARES / NO OF SHARES / COST AS AT COST AS ATUNITS AS AT UNITS AS AT 31-3-2010 31-3-2009

31-3-2010 31-3-2009 RS. RS.

LONG TERM INVESTMENTS IN SHARES / UNITS :

A FULLY PAID-UP EQUITY SHARES (UNQUOTED)

IN OTHERS :

Investment in EMDI Web Solutions Pvt Ltd (F.V Rs.10/- ) 1,900 1,900 19,000 19,000

Investment in Access AtlantechEdutainment (I) Ltd (F.V Rs.10/- ) 245,554 245,554 50,400,000 50,400,000

Investment in Concept Communication Ltd (F.V Rs.10/- ) 175,000 175,000 35,000,000 35,000,000

Grey Cells Communication & Production Pvt Ltd (F.V Rs.10/- ) 50,000 50,000 13,000,000 13,000,000

98,419,000 98,419,000

B UNITS OF MUTUAL FUNDS (QUOTED)

HDFC Cash Management Fund Treasury Advantage Plan 1,819,568.780 - 18,253,004 -

TOTAL INVESTMENTS TOTAL A + B 116,672,004 98,419,000

AS ON AS ON31-3-2010 31-3-2009

Cost Market Value Cost Market ValueRs. Rs. Rs. Rs.

Aggregate Value of Quoted Investments 18,253,004 18,253,004 - -

Aggregate Value of Unquoted Investments 98,419,000 - 243,018,087 -

116,672,004 18,253,004 243,018,087 -

Note : The NAV of the units as on 31st March, 2010 is taken asmarket value

32


SCHEDULE ‘E’

SUNDRY DEBTORS - (Unsecured)

Debts outstanding for more than six months :

Considered Good 1,320,257 1,067,420

Considered Doubtful 6,127,935 7,448,192 5,896,574 6,963,994

Other Debts Considered Good 3,058,225 1,548,221

10,506,417 8,512,215

Less : Provision for Doubtful Debts (7,055,525) (5,896,574)

TOTAL 3,450,892 2,615,641

SCHEDULE ‘F’

CASH AND BANK BALANCES

Cash on hand 244,614 82,247

Balances with Scheduled Bank :

In Current Account 3,390,416 1,400,000

In Fixed Deposit 1,500,000 2,185,704

4,890,416 3,585,704

TOTAL 5,135,030 3,667,951

SCHEDULE ‘G’

LOANS AND ADVANCES

Loans 1,737,210 6,741,712

Advances Recoverable in Cash or in

kind or for value to be received 5,433,445 2,821,545

Deposit 3,335,574 215,000

Interest Accrued and Due 26,214 2,243

Advance Tax and TDS 871,691 1,006,307

TOTAL 11,404,134 10,786,807

SCHEDULE ‘H’

CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES

Sundry Creditors 5,621,620 4,864,734

Advance Fees received from Students 16,839,558 13,315,122

22,461,178 18,179,856

PROVISIONS

Provision for Tax 433,025 723,643

Provision for Gratuity 960,677 583,597

TOTAL 23,854,880 19,487,097


As At 31st March, 2010 As At 31st March, 2009Rs. Rs. Rs. Rs.

33


SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH 2010

Year Ended Year Ended31st March, 2010 31st March, 2009

Rs. Rs.

SCHEDULE ‘I’OTHER INCOME

Premier Relationship Fees 1,450,000 950,000

Interest on Income Tax Refund 34,753 6,952

Interest accrued on Bank Fixed Deposits 149,319 2,243

(TDS Rs.21,664/- PY Rs. NIL)


Provision for diminution in the value of Investments reversed - 427,494

Sundry balances written back 15,134 737,140

Rent 248,992 864,817

Miscellaneous Income 152,909 7,533

TOTAL 2,304,111 2,996,179

SCHEDULE ‘J’DIRECT EXPENSES

Faculty Fees 5,576,473 4,336,829

Business Auxiliary Services 12,870,921 -

Work shop Expenses 12,000 831,450

Student activity 327,260 268,851

Other Direct Exps 648,862 349,706

Software Fees 55,298 52,000

TOTAL 19,490,814 5,838,836

SCHEDULE ‘K’

ADMINISTRATIVE EXPENSES

Rates and Taxes 5,000 -

Repair and Maintenance 247,585 3,787,327

Legal and Professional Fees 5,372,070 6,697,568

Business Development Expenses 306,387 -

Auditors Remuneration :

Audit Fees 50,000 285,889

Taxation matters - 16,545

Others 39,536 56,506

Postage and Courier 33,860 47,559

Printing and Stationery 671,773 1,127,217

Company Law Matter and Listing Fees 221,031 509,771

Rent and Other Compensation 14,003,049 11,513,362

Telephone Expenses 1,440,815 853,750

Travelling Expenses 1,282,926 1,180,361

Conveyance Expenses 281,845 305,650

Vehicle Expenses 76,026 56,684

Web Designing charges - 130,094

Provision for Doubtful Debts 1,158,951 5,896,574

Loss on Sale of Investments - 355,865

Loss on Sale of Fixed Assets 122,279 229,915

Other Miscellaneous Expenses 740,674 368,504

TOTAL 26,053,807 33,419,141

34


SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET ANDPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2010

Schedule ‘L- ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS

(A) SIGNIFICANT ACCOUNTING POLICIES :

I Accounting Convention

The accompanying Financial Statements have been prepared inaccordance with the historical cost convention and in accordancewith the Companies Act, 1956 and in all material aspects withapplicable accounting standards issued by the Institute of CharteredAccountants of India.

II. Principles of Consolidation

The consolidated financial statements have been prepared on thefollowing basis:

a) The Financial Statements of Subsidiary have been combinedon a line by line basis by adding together the book values oflike item of assets, liabilities, income and expenditure aftereliminating intra-group balances and intra-group transactionsresulting in unrealized profits or losses.

b) The consolidated financial statements are prepared by adoptinguniform accounting policies for like transactions or other eventsin similar circumstances and are presented to the extentpossible, in the same manner as the Parent Company’s financialstatements.

c) The functional currency of the Parent Company is Indian Rupee.The functional currency of the subsidiary is its respective localcurrency. Its accounts are converted from its local currency toIndian Rupees in the following manner:

All income and expense items are translated at the averagerate of exchange applicable for the period. All monetary andnon-monetary assets and liabilities are translated at the closingrate as on Balance Sheet date. The equity share capital isstated at the exchange rate at the date of investment. Theexchange difference arising out of the year / period endtranslation is debited or credited to Foreign Currency TranslationAccount.

d) The difference between the Company’s Cost of investments inthe subsidiaries over its portion of equity at the time of acquisitionof shares is recognized in the consolidated financial statementsas Goodwill or Capital Reserve as the case may be.

III. Revenue Recognition

The Company follows the mercantile system of accounting andrecognizes income and expenditure on accrual basis. Income fromthe student fees are recognized over the period of instruction ofcourse. Non-refundable Premier relationship fees receivable underbusiness association agreements is taken to income as and whendue.

Dividend income is accounted for as and when declared.

IV. Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulateddepreciation / amortisation.

a) Depreciation on tangible fixed assets is provided as per writtendown value method at the rates prescribed under Schedule XIVto the Companies Act, 1956

b) Intangible assets are amortized as under :

i) Goodwill (except goodwill arising on account of thisconsolidation) over the period of five years.

ii) Trade Mark over the period of ten years.

iii) Computer software are written off equally over a period of3 years.

V. Impairment of Assets

At each balance sheet date, the carrying value of assets is reviewedfor any possible impairment. An impairment loss is recognized whenthe carrying amount of asset exceeds its recoverable amount whichis the higher of net realizable amount as on the Balance Sheet dateand the present value of the economic benefit resulting from thefuture use of the assets.

VI. Investments

Investments are capitalized at cost of acquisition plus incidentalexpenses. Provision for diminution in the value of long terminvestments is made in accordance with Accounting Standard 13issued by the Institute of Chartered Accountants of India.

VII. Employee Benefits

Gratuity benefits to employees is provided as per the provisions ofThe Payment of Gratuity Act, 1972. The gratuity benefit scheme isunfunded and provision for the same is made on actuarial basis.

VIII. Provisions and Contingent Liabilities

Provisions involving substantial degree of estimation in measurementare recognized when there is a present obligation as a result of pastevents and it is probable that there will be an outflow of resources.Contingent liabilities are disclosed in the notes to accounts.

IX. Taxation

Provision for taxation has been made in accordance with the incometax laws prevailing for the relevant assessment years.

X. Deferred Taxation

Deferred tax assets / liabilities resulting from timing differencesbetween book and tax profits is accounted for at the current rate oftax to the extent that the timing differences are expected to crystallisein future. Deferred tax assets in respect of carried forward businesslosses and unabsorbed depreciation as per Income Tax provisions isrecognized only if there is virtual certainty of recoupment of the sameout of future taxable income.

(B) NOTES TO THE ACCOUNTS

1 The subsidiary companies considered in the consolidated financialsstatements are:

Name of the Country of Incorporation Proportion of Accounting yearSubsidiaries ownership ending on

interest

EMDI (Overseas) U.A.E 100% 31.03.2010FZ LLC

Greycells India 100%* NACommunication &Productions Pvt Ltd*

*ceased to be a subsidiary of the Company w.e.f. 19th June, 2008and hence not considered for consolidation in this year but includedfor previous years figures.

2 Capital commitments not provided for (net of capital advances) –Rs.98,786/- (Previous year Rs. Nil).

3 No vendors have informed the Company of their being registered underthe Micro, Small and Medium Enterprises Development Act, 2006.Hence, as per the information available with the Company, there areno amounts payable to such vendors as at the year end.

4 Managerial Remuneration

Particulars 2009-10 2008-09(Rs.) (Rs.)

Salary and Allowances 4,185,279 3,795,106

35


5 Deferred Tax Asset of Rs.547,184/- (Previous Year Deferred TaxLiability Rs.405,897/-) as on 31.03.2010 is on account of :

Particulars 2009-10 2008-09Rs. Rs.

Depreciation (407,316) (405,897)

Provision for Doubtful Debts 71,491 -

Right Issue Expenses 843,095 -

Others 39,914 -

Total 547,184 (405,897)

No Deferred tax asset has been recognized on unabsorbeddepreciation and carried forward business losses as there is no virtualcertainty that the same will be realized out of future taxable income.

6 The Group operates an unfunded gratuity scheme for certain of itsemployees. The disclosures in respect of the scheme as required inthe Accounting Standard 15 – ‘Employee Benefits’, issued by theInstitute of Chartered Accountants of India’ are given below :

Defined Benefit Plans

Gratuity Scheme - unfunded Scheme

In accordance with Accounting Standard 15 (Revised 2005), actuarialvaluation was performed in respect of the aforesaid defined benefitplans based on the following assumptions:-

2009-10

Discount Rate (per annum) 8.00%Salary Escalation 6.00%

Attrition Rate 2.00%

Expected Average remaining working lives ofemployees (years) 2 years

A) Changes in the Present Value of Benefit Obligation 2009-10Rs.

Opening Present Value of Obligation at the beginningof the Current Period 87,862

Interest Cost 6,809Current Service Cost 1,05,623

Past Service cost- Non Vested Benefit -

Past Service cost- Vested Benefit -Liability Transferred in -

Actuarial (gain) / loss on obligations 10,279

Closing Present Value of Obligation 210,573Included in Provisions (Refer Schedule H)

B) Table of Recognition of Transitional Liability 2009-10

Unrecognized Transitional Liability at thestart of the period -

Transitional Liability recognized during the period -

Unrecognized Transitional Liability at theend of the period -

C) Amount recognized in the Balance Sheet 2009-10

Fair Value of Plan Assets as at the end of the year -Present value of obligation at the end of the period 2,10,573

Difference (2,10,573)

Past service cost – Non vested Benefitrecognized at the end of the period -Unrecognized transitional liability at theend of the period -

Liability/(Asset) recognized in the Balance Sheet -

Net amount recognized in the balance sheet (2,10,573)

D) Expenses recognized in the Income Statement 2009-10

Current Service Cost 105,623

Interest Cost 6,809

Actuarial (Gain)/Loss 10,279

Past service cost – Non vested Benefit recognizedduring the period -

Past service cost – Vested Benefit recognizedduring the period -

Transitional liability recognized during the period -

Total Expenses recognized in theProfit and Loss Account 1,22,711

E) Balance Sheet Reconciliation 2009-10

Opening Net Liability 87,862

Expenses as above 1,22,711

Net Transfer In -

(Net Transfer out) -

Employer’s Contribution -

Net amount Recognized in the balance sheet 2,10,573

This being the first year in which the provision for gratuity is made,previous year’s figures are not shown

Subsidiary: A charges is made for the full amount of the statutorygratuity due to employees as at the balance sheet date in accordancewith the UAE Labour Law. The cost of providing these benefits ischarged as an expense and the charge for the year ended 31st March,2010 was AED 18882 (2009 : AED 42351).

7 The Group has carried out business operations only in the segmentof ‘Education’ during the year and also the previous year. Hencesegment reporting as per Accounting Standard 17 – ‘SegmentReporting’, issued by The Institute of Chartered Accountant of India,has not been given. However, the Group has provided / written backthe following amounts during the previous year pertaining to theerstwhile entertainment business carried on in earlier years :

Particulars 2009-10 2008-09Income/ Income/

(Expenses) (Expenses)Rs. Rs.

Impairment of perpetual rights in films Nil (45,482,368)Provision for doubtful debts Nil (5,896,574)Write back of creditors Nil 729,712Net Expenses Nil (50,649,230)

8 Investments Purchased and Sold during the year :

Particulars No. of Cost ofUnits Acquisition

(Rs.)

HDFC Cash Management Fund 199,371.98 2,000,000

9 During the year, Greycells Education Limited made a right issue of2,276,215 equity shares @ Rs.50/- per share including premium ofRs.40/- per share. The right issue was fully subscribed and the shareswere allotted on 09.11.2009. An amount of Rs.95,445,480/- out ofthe proceeds of the right issue has been utilized upto 31st March,2010 towards the objects of the issue and the balance amount ofRs.18,365,270/- is pending to be utilized and has been temporarilysubstantially invested in units of mutual fund.

Deployment of funds collected through rights issue :

Particulars Proposed AmountDeployment Deployed till

31.03.10(Rs.) (Rs.)

Investment in Subsidiary 16,403,723 16,403,723Setting up of New Centre 20,500,000 2,274,152Repayment of Borrowings 43,500,000 43,500,000Issue Expenses 3,550,000 3,410,578General Corporate Purposes 29,857,027 29,857,027Total 113,810,750 95,445,480

Balance 18,365,270

36


10 During the year, Greycells Education Limited acquired a further 10%of the equity shares in its subsidiary company- EMDI (Overseas) FZ,LLC, a limited liability company registered in Dubai, United ArabEmirates, which is engaged in vocational training. With the acquisitionof this 10% of shares, the company now holds 100% of the equityshares in the subsidiary. As the Company was holding 100% of thecontrolling interest in this subsidiary in terms of the share purchaseagreement dated 2nd April, 2008 at the time of acquisition of theinitial 90% of the shares in the previous year, the cost of acquisitionof these additional 10% shares amounting to Rs.1,64,03,723/- hasbeen accounted as goodwill in these financial statements.

11 Related Party disclosures:

(A) Names of related parties with whom transactions have taken placeduring the year / previous year :

a) Companies where significant influence exists:

EMDI Institute of Event Management Pvt.Ltd.

Event Management Development Institute (Bombay) Pvt.Ltd.

EMDI Web Solutions Pvt. Ltd. (only in previous year)

Value Line Advisors Pvt. Ltd. (only in previous year)

Systematik Finvest Pvt. Ltd. (only in previous year)

b) Key Management Personnel :

Deepak Choudhary

Nowshir Engineer

Bela Desai (only in previous year)

Uday Sinh Wala (only in previous year)

(B) Transactions with Related Parties


a) With Companies where significantinfluence exists:

Legal & Professional Fees incurred NIL 2,168,000

Loans Repaid by the Company NIL 1,000,000

Loan Given by the Company NIL 725,000

Business support services NIL 200,000

Loan received by the Company NIL 11,988,000

b) With Key Managerial Personnel :Managing Director’s Remuneration 4,185,280 3,795,000Share Application money received NIL 10,200,000Loan Received NIL 11,988,000Purchase of Investments 16,403,723 144,400,000Issue of Shares NIL 135,000,000

(D) Year end Balances of Related Parties

Balances of related enterprises 2009-10 2008-09at the year end (Rs.) (Rs.)

Debit/ Debit/(Credit) (Credit)

a) Companies where significantinfluence exists NIL 5,746,000

b) With Key Managerial Personnel (9,715,415) (16,001,000)

12 Earnings per share

Particulars 2009-10 2008-09(Rs.) (Rs.)

a) Net Profit/ (Loss) after tax (41,495) (61,997,922)b) Weighted average number of equity

shares of Rs. 10/- each Outstandingduring the year (No. of shares) 4,623,277 3,576,541

c) Basic and diluted earningsper share (Rs.) (0.01) (17.33)

13 Loans amounting to Rs.1,737,210/- (PY - Rs. 4,537,210/-) shown under‘Loans and Advances’ represents amounts due from a private companyin which a director of the Company is a director.

14 Going Concern Basis :

These financial statements of subsidiary company has been preparedon a going concern basis notwithstanding the accumulated loss ofAED 1,773,573 as at 31 March, 2010 (2009: 1,448,000), and excessof current assets of AED 680,519 (2009: AED 393,225).

The continuation of the Company’s operations is dependent uponfuture profitable operations, and continued financials support of theshareholders. The Shareholders have confirmed their willingness toprovide necessary support, financial or otherwise, for the companyto meet its future obligations as they fall due.

15 Figures of the previous year have been regrouped and reclassifiedwherever necessary to make them comparable with the figures ofthe current year.





37


CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 201031st March 2010 31st March 2009

Rs. Rs.

Cash Flow from Operating ActivitiesNet Profit/(Loss) before tax before exceptional item 2,413,178 (16,862,058)Adjustment for:Depreciation 3,342,001 3,751,752Preliminary Expenses w/off 40,700 40,700Provision for diminution in the value of Investments reversed - (427,494)Loss on sale of Assets 122,279 229,915Interest 187,396 6,691Interest on Fixed Deposit (149,319) -Dividend Income (253,004) -Loss on sale of Investments - 355,865

Operating Profit/(Loss) before working capital changes 5,703,232 (12,904,629)Adjustment for:Stock in trade - 4,582,019Working In Progress - 800,000Trade and other Receivables (835,250) 5,327,969Trade and other Payables 4,281,321 14,848,733Loans and Advances (546,408) (7,596,318)Provision for Gratuity 377,080 583,597

3,276,743 18,545,999Cash generated from operations 8,979,975 5,641,370Direct taxes paid/refund (358,712) (460,315)Cash Flow before extra ordinary items 8,621,263 5,181,056Extra ordinary items/Exceptional Items 2,629,779 -Effect of ceasation of interest in the subsidiary - 741,405Foreign Currency Transalation Reserve 2,629,779 (3,520,891)Net Cash from Operating Activities 11,251,041 2,401,570Cash Flow from Investing Activities(Purchase)/Sale of Fixed Assets (912,031) (4,350,080)Adjustment of Goodwill (16,403,723) (6,260,015)(Purchase)/Sale of Investments (18,253,004) (98,220,093)Capital Advance (307,244) -Net Cash used in Investing Activities (35,876,002) (108,830,188)Cash Flow from Financing ActivitiesIssue of Equity Shares 33,860,750 37,400,000Rights issue Expenses (3,410,578) -Share application money received* - 77,150,000Interest on Loan (187,396) (6,691)Interest on FD 149,319 -Dividend Income 253,004 -Loans received/(repaid) during the year* (4,573,060) (9,515,874)

Net Cash from Financing Activities 26,092,039 105,027,436

Net Increase/(Decrease) in cash and cash equivalents 1,467,078 (1,401,183)Cash and cash equivalents at the beginning of theyear (Opening Balances) 3,667,951 5,069,134Cash and cash equivalents at the end of theyear (closing Balances) 5,135,030 3,667,951




38

EMDI (OVERSEAS) FZ LLC

DIRECTORS’ REPORT

To,The Members ofEMDI (Overseas) FZ LLC

Your Directors present the Annual Report and the Audited Annual Accounts for the year ended March 31, 2010.

Operations

During the year under review, the Company incurred a loss of AED 3,25,573. The Middle East is also under pressure of the global downturn, yourdirectors are confident of achieving better performance and all efforts are on to take the Company to next stage.

The Company offers courses in Diploma in Event Management and Innovative Marketing, Diploma in Advertising and Media, Diploma in Graphic Designand Visual Communication, Diploma in Public Relations and Corporate Communication, Diploma in Journalism and Online Communication, Diploma inRadio Jockeying and Programming, Diploma in Disco Jockeying and Music Production, Diploma in Wedding Planning and Certificate in Adobe Photoshop.The Company has ambitions to become the largest vocational training institute in the Middle East offering courses for the Creative, Media and Entertainmentindustry.

Dividend

In view of the loss incurred during the year, your Directors could not consider any proposal for dividend.

Employee Relation

Relations between the employees and the management continued to remain cordial during the year under review. The Directors hereby place on recordtheir appreciation of the efficient and loyal services rendered by the Company’s employees at all levels.

Acknowledgements

We are thankful to our Banker for their extended co-operation during the year.

For and on behalf of the Board of Directors

Dubai,Date: 16th May, 2010 Founder, Executive Director

39


INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF EMDI (Overseas) FZ LLC

We have audited the financial statements of EMDI (Overseas) FZ LLC which comprise the balance sheet as at 31st March, 2010, and the incomestatement, statement of changes in equity and the cash flow statement for the year then ended, and a summary of significant accounting policies andother explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial ReportingStandards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation offinancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; andmaking accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with InternationalStandards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurancewhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The proceduresselected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due tofraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and presentation of thefinancial statements, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Establishment as of 31st March, 2010, and itsfinancial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Report on Other Legal and Regulatory Requirements.

We have obtained all the information and explanations which we required for the purpose of our audit and, to the best of our knowledge and belief, noviolations of the constitution of the Establishment came to our attention which would materially affect the Establishment’s financial position.

In our opinion the Establishment has maintained proper books of accounts and the accompanying financial statements are in agreement therewith.

ANTIA Chartered Accountants

Nozer AntiaRegistration No. : 56

Dubai,

Date: 16 May, 2010

40


BALANCE SHEET AS AT 31ST MARCH, 2010Note As At 31st March, 2010 As At 31st March, 2009

AED AED

ASSETS EMPLOYED

PROPERTY, PLANT AND EQUIPMENT 3 170,718 190,818

CURRENT ASSETS

Accounts Receivable 4 95,933 108,724

Prepayments & Other Receivables 5 175,036 94,089

Bank balances and cash 6 9,201 128,779

280,170 331,592

CURRENT LIABILITIES

Accounts payable and accruals 9 239,754 73,038

Other payables 9 720,934 651,779

960,689 724,817

NET CURRENT ASSETS (680,519) (393,225)

(509,801) (202,407)

FUNDS EMPLOYED

EQUITY

SHARE CAPITAL 50,000 50,000

RETAINED EARNINGS (1,773,573) (1,448,000)

Opening balance (1,448,000)

Profit for the year (325,573)

NON CURRENT LIABILITIES 1,213,772 1,195,593

Loan from Director 793,095

Loan from Others 359,444

Provision for Gratuity 61,233

(509,801) (202,407)

As Per Our Report Of Even Date For and on behalf of boardFor ANTIAChartered Accountants

Nozer Antia Nowshir EngineerRegistration No: 56 Founder, Executive Director

Place : DubaiDated : 16th May, 2010

41


STATEMENT OF INCOME FOR THE PERIOD 1ST APRIL, 2009 TO 31ST MARCH, 2010Note Year Ended 31st March, 2010 Year Ended 31st March, 2009

AED AED

Course fees 2,344,967 2,196,861

Other operating Income 20 20,550 70,848

Gross Profit 2,365,517 2,267,709

Operating Expenses :

General & Administration 17 2,095,471 2,081,405

Selling expenses 18 546,252 492,135

Finance expenses 19 19,434 10,682

Depreciation 3 29,934 33,163

2,691,091 2,617,385

Operating Profit / (loss) (325,573) (349,676)

Other income - -

- -

Net profit / (loss) for the year (325,573) (349,676)

Retained profits brought forward (1,448,000) (1,098,324)

Retained profits carried forward (1,773,573) (1,448,000)

As Per Our Report Of Even Date For and on behalf of boardFor ANTIAChartered Accountants

Nozer Antia Nowshir EngineerRegistration No: 56 Founder, Executive Director

Place : DubaiDated : 16th May, 2010

42


STATEMENT OF CHANGES IN EQUITY

Period ended March 31, 2010

Share Capital Statutory Reserve Retained Earnings TotalAED AED AED AED

Opening balance as at April 01, 2009 50,000 - (1,448,000) (1,398,000)

Net Profit for the year - - (325,573) (325,573)

Transfer to statutory Reserve - - - -

Dividends - - - -

Closing balance as at March 31, 2010 50,000 - (1,773,573) (1,723,573)

Opening balance as at April 01, 2008 50,000 - (1,098,324) (1,048,324)



Dividends - - - -


Opening balance as at April 01, 2007 50,000 - (264,520) (214,520)



Dividends - - - -


EMDI (Overseas) FZ LLC

STATEMENT OF CASH FLOW FOR THE PERIOD ENDED MARCH 31, 2010

31-03-2010 31-03-2009AED AED

OPERATING ACTIVITIES

Net profit for the year (325,573) (349,676)

Adjustments for:

Depreciation 29,934 33,163

Disposal of assets - 18,556

Finance charges - 540

(295,639) (297,417)

(Increase) / Decrease in receivables + related parties 12,791 (105,709)

(Increase) / Decrease in prepaid & other receivables (80,947) (52,735)

(Decrease) / Increase in other payables 69,155 239,280

(Decrease) / Increase in a/c payable & accruals + related parties 166,716 (10,062)

167,716 70,774

Net cash from Operating activities (127,923) (226,643)

INVESTING ACTIVITIES

Purchase/Sale of plant & equipment (9,834) (173,956)

Net Cash used in Investing activities (9,834) (173,956)

FINANCING ACTIVITIES

Increase/(Decrease) in share capital - -

Finance charges - (540)

Increase/(Decrease) in non current liabilities 18,179 459,947

Net cash from Financing activities 18,179 459,407

INCREASE/(DECREASE) IN BANK BALANCES AND CASH (119,578) 58,808

Opening bank balances and cash as at Apr 01 2009 128,779 69,971

BANK BALANCES AND CASH AS AT March 31 2010 9,201 128,779

43


NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2010

1 Status and Activities

EMDI (Overseas) FZ LLC is incorporated as a free zone Company with Limited Liability pursuant to Dubai Technology and Media Free ZonePrivate Companies Regulations 2003 issued under Law no. 1 of 2000 of the Emirate of Dubai (as amended).

The Company is registered as a professional training centre with Dubai Knowledge Village offering vocational certificates and diploma courses inthe advertising, media and entertainment industry sector.

2 BASIS OF PREPARATION & SIGNIFICANT ACCOUNTING POLICIES & ESTIMATES

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards.

The accounting policies have been consistently applied with regard to material items.

The financial statements are prepared under the historical cost convention.

Changes in Accounting Policies

The Establishment has adopted all applicable new and revised standards and interpretations that have been issued and are applicable on or after1 January 2007 particularly IFRS 7 and amendment to IAS 1. The Establishment has not adopted the new accounting standards or interpretationsthat have been issued but are not yet effective.

Property, plant & equipment

Plant & Equipment are initially recorded at cost.Revaluations are carried out when management’s estimates of their market values are significantlydifferent from the book values. Net surpluses arising on revaluation are credited to a revaluation reserve. The difference between depreciationbased on the asset’s original cost and revalued amounts is transferred annually to retained earnings. On disposal the related revaluation surplusis credited to retained earnings.

Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:

Motor Vehicles 20%

Computers & Accessories 40%

Office Equipment & Electricals 25%

Furniture & Fixtures 15%

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carryingvalue may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assetsare written down to their recoverable amount, being the higher of their fair value less cost to sell and their value in use.

Accounts receivable

Accounts receivable are stated at original invoice amount less a provision for any uncollectible amounts. An estimate for doubtful debts is madewhen collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery.

Accounts payable and accruals

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed or not billed to the entity.

Fees

Course fees represents the fees charged by the company during the year net of discounts and rebates allowed and are apportioned over theperiod of instruction.

Financial instruments

Financial instruments comprise cash, receivables, payables and certain other assets and liabilities. The fair values of the financial instrumentsare based on the management’s best estimates.

Employees’ end of service benefits

Provision is made for the full amount of statutory gratuity due to employees for their periods of service upto the balance sheet date in accordancewith the UAE Labour Law.

Cash & cash equivalents

These consist of cash and bank balances, bank overdrafts, and short term loans with an original maturity of less than 3 months.

Provisions

Provisions are recognised when the Establishment has an obligation (legal or constructive) arising from a past event, and the costs to settle theobligation are both probable and able to be reliably measured.

Impairment

At each balance sheet date, the Company assesses if there is any objective evidence indicating impairment of financial assets or non collectabilityof receivables.

An impairment loss, if any arrived at as a difference between the carrying amount and the recoverable amount, is recognised in the statement ofincome. The recoverable amount represents the present value of expected future cash flows discounted at original effective interest rate.Cashflows relating to short term receivables are not discounted.

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3 PLANT & EQUIPMENT

Depreciation is calculated to write off costs on a straight line basis over the estimated useful life of the assets

Motor Vehicles 20%

Computers 40%

Office Equipment & Electricals 25%

Furniture & Fixtures 15%

Motor Vehicles Computers Office equipment Total& furniture

AED AED AED AED

Cost:

Opening balance 34,500 14,428 188,077 237,005

Additions - 4,535 5,299 9,834

Disposals - - - -

Closing balance 34,500 18,963 193,376 246,839

Depreciation Reserve:

Opening balance 2,533 6,286 37,368 46,187

Additions 5,887 2,192 21,855 29,934

Disposals - - - -

Closing balance 8,420 8,478 59,223 76,121

Net carrying amount at March 31, 2010 26,080 10,485 134,153 170,718

Net carrying amount at March 31, 2009 31,967 8,142 150,709 190,818

4 ACCOUNTS RECEIVABLE 2010 2009AED AED

Trade receivables (net) 95,933 108,724

- -

95,933 108,724

5 OTHER RECEIVABLES AND PREPAYMENTS

Deposits + Others 90,104 19,152

Prepaid 84,933 74,937

Related parties - -

175,038 94,089

6 BANK BALANCES AND CASH

Bank balances and cash 9,201 128,779

Bank deposits - -

9,201 128,779

7 SHARE CAPITAL

Share capital comprises of 50 issued, subscribed and paid up shares of AED 1,000/- each.

8 EMPLOYEES’ END OF SERVICE BENEFITS

A charge is made for the full amount of the statutory gratuity due to employees as at the balance sheet date in accordance with the UAE LabourLaw.

The cost of providing these benefits is charged as an expense and the charge for the year ended 31st March 2010 was AED 18,882 (2009 - AED42,351).

9 ACCOUNTS PAYABLE AND ACCRUALS 2010 2009

AED AED

Trade accounts payable 239,754 73,038

Advance fees received 720,934 651,779

Related parties - -

960,689 724,817

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10 RELATED PARTY TRANSACTIONS

The Establishment in the normal course of business, carries on transactions with other entities that fall within the definition of related party. Thedetails of such transactions entered into are set out below. The management believes that the terms of such transactions are not significantlydifferent from those that could have been obtained from third parties.

2010 2009

AED AED

Sales - -

Purchases - -

Expenses - -

AMOUNTS DUE FROM RELATED PARTIES - -

AMOUNTS DUE TO RELATED PARTIES

Loan from Director 793,095 793,796

11 Compensation of Key Management Personnel

The compensation of key management during the year was as under :

Salary, bonus etc 235,522 213,016

Employees end of service benefits 14,548 35,178

12 FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments comprise financial assets and financial liabilities.

Financial assets include trade and other accounts receivable, cash and bank balances. Financial liabilities include trade and other accountpayables, and accrued expenses.

The fair value of the company’s financial assets and liabilities are not materially different from their carrying values.

13 CONTINGENT LIABILITIES

There are no contingent liabilities as at 31 March 2010.

14 RISK MANAGEMENT

Credit Risk

The credit risk faced by the establishment is mainly due to student dropouts, particularly during this period of recession.

Even though there may be returned PDCs on hand the cost of taking legal action would be prohibitive considering the amount .to be recoveredper cheque.

Credit risk is limited to the carrying values of financial assets.

Currency Risk

The establishment had no significant currency risk as at 31 March 2010.

Liquidity Risk

The establishment manages its liquidity risk according to the normal conduct of business of this nature trying to keep it to a minimum byproactive follow up procedures followed by the management.

15 KEY SOURCES OF ESTIMATION UNCERTAINTY

Impairment of Accounts Receivable

An estimate of the collectible amount of the trade accounts receivable is made when collection of the full amount is no longer probable. Forindividually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which arepast due, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates.

At the balances sheet date, gross trade accounts receivable were AED 95,933. Any difference between the amounts actually collected in futureperiods and the amounts expected will be recognised in the income statement.

16 COMPARATIVE FIGURES

Where necessary, the prior year figures have been reclassified to conform with the current year presentation.

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17 GENERAL & ADMINISTRATIVE EXPENSES

Period Ended Period Ended31st March, 2010 31st March, 2009

AED AED

Staff salaries & benefits 446,423 434,864

Staff gratuity 18,882 42,351

Director’s Remuneration 235,522 213,016

Other direct expenses 50,295 28,225

Motor vehicle expenses 5,893 4,575

Faculty fees 168,710 135,855

Travelling & conveyance 10,865 26,152

Rent 765,180 666,286

Communications 55,006 42,995

Stationary & printing 18,199 35,374

Professional charges 211,600 235,100

Renovation - 185,750

Insurance 1,581 2,250

Repairs & Maint 4,720 5,510

Doubtful debts 71,900 -

Previous expenses 22,118 -

Sundry expenses 8,576 4,545

Loss on sale of assets - 18,557

2,095,471 2,081,405

18 SELLING EXPENSES

Representation / Promotion 33,213 -

Web design & hosting - 10,500

Advertisement 513,039 481,635

546,252 492,135

19 FINANCE EXPENSES

Interest / Bank chgs 19,434 10,142

Finance Charges - 540

Exchange loss / (gain) - -

19,434 10,682

20 OTHER INCOME

Classroom rental 19,300 69,800

Sundry 1,250 1,048

20,550 70,848

21 Going Concern Basis

These financial statements have been prepared on a going concern basis notwithstanding the accumulated loss of AED 1,773,573 at 31 March2010 (2009 :AED1,448,000), and excess of current liabilities over current assets of AED 680,519 (2009 :AED393,225). The continuation of theCompany’s operations is dependent upon future profitable operations, and continued financial support of the shareholders.The shareholders haveconfirmed their willingness to provide necessary support, financial or otherwise, for the company to meet its future obligations as they fall due.

47


ATTENDANCE SLIP

GREYCELLS EDUCATION LIMITEDD-2, 1st Floor, Poddar Chambers, 126, Mathuradas Compound, N.M. Joshi Marg, Lower Parel (West), Mumbai - 400013

(Please complete this Attendance Slip and hand it over at the entrance of the meeting hall)

I hereby record my presence at the Annual General Meeting of the Shareholders of the Company being held on Friday,

September 24, 2010 at 9.30 a.m at D-2, 1st Floor, Poddar Chambers, 126, Mathuradas Compound, N.M. Joshi Marg,

Lower Parel (West), Mumbai - 400013

Folio No. No. of Shares held

DP Id. Client Id.

Name of the Shareholder:(1st name)

(Joint Holder)

Name of Proxy (To be filled in case of the proxy attends instead of shareholder)

Signature of Shareholder/Proxy* * Strike out whichever is not applicable

Signed this day of 2010

Note : The proxy form must be returned so as to reach the Registered Office of the Company not less than 48 hours

before the time for holding the aforesaid meeting. The proxy need not be a shareholder of the Company.

PROXY FORM

GREYCELLS EDUCATION LIMITEDD-2, 1st Floor, Poddar Chambers, 126, Mathuradas Compound, N.M. Joshi Marg, Lower Parel (West), Mumbai - 400013

Folio No. No. of Shares held

DP Id. Client Id.

I/We

of being a member/members of GREYCELLS EDUCATION

LIMITED hereby appoint of

or falling him/her of

as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on

Friday, September 24, 2010 or any adjournment thereof.

Affix aRe.1/-

RevenueStamp

TEAR HERE

Tea

r H

ere

��

GREYCELLS EDUCATION LIMLTED

OR

IEN

T

BOOK POST

If undelivered please return to:

GREYCELLS EDUCATION LIMITEDD-2, 1st Floor, Poddar Chambers, 126, Mathuradas Compound, N.M. Joshi Marg, Lower Parel (West), Mumbai – 400013

Annual Report2009 - 2010

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