SCHEME OF AMALGAMATION

UNDER SECTIONS 391-394 OF THE COMPANIES ACT 1956

FOR THE AMALGAMATION OF AIR INDIA LIMITED (Transferor

No 1 Company) AND INDIAN AIRLINES LIMITED (Transferor No
2 Company) WITH NATIONAL AVIATION COMPANY OF INDIA
LIMITED (Transferee Company)

WHEREAS

A. AIR INDIA Limited (“AI” or the “Transferor No 1 Company”) is a

Company incorporated under the Companies Act, 1956, having its

registered office at Air India Ltd, 3rd Floor, Tower-II, Jeevan

Bharati, 124, Connaught Circus, New Delhi - 110 001. AI is a

Government Company, within the meaning of Section 617 of the

Companies Act, 1956 and is under the administrative control of the

Ministry of Civil Aviation, Government of India. AI is an unlisted

Company.

B. AI is primarily engaged in the business as an airline for providing

air transport and allied services.

C. Indian Airlines Limited (“IA” or the “Transferor No 2 Company”) is

a public company registered under the Companies Act, 1956 and

Page 1 of 42
 having its registered office at 113, Gurudwara Rakabganj Road,

New Delhi 110 001. IA is a Government Company within the

meaning of Section 617 of the Companies Act, 1956 and is under the

administrative control of the Ministry of Civil Aviation. IA is an

unlisted company.

D. IA is primarily engaged in the business as an airline for providing

air transport and allied services.

E. National Aviation Company of India Limited (the Transferee

Company) is a Company incorporated under the Companies Act

1956, having its registered office at Airlines House, 113 Gurudwara

Rakabganj Road, New Delhi 110 001. National Aviation Company of

India Limited is a Government Company within the meaning of

Section 617 of the Companies Act, 1956 and is under the

administrative control of the Ministry of Civil Aviation. National

Aviation Company of India Limited has been established as a

Government Company to be engaged in the business as an airline

for providing air transport and allied services.

F. This Scheme proposes the amalgamation of AI and IA in the

Transferee Company, which would result in consolidation of the

Page 2 of 42
 business of all in one entity (i.e. National Aviation Company of

India Limited, the Transferee Company).

G. (a) The Scheme proposes to amalgamate each of the Transferor

Companies (viz AI and IA ) with the Transferee Company

(viz. National Aviation Company of India Limited).

(b) Rationale for the Scheme

The Indian Aviation environment has changed significantly

over the last few years with rapid increase in demand for

domestic and international air services. Expansion of

capacity by current airline players (domestic private and

global), as well as entry of new players has helped meet this

demand and at the same time significantly altered the

competitive landscape. Rising fuel prices and shortage of

skilled manpower is expected to put further pressure on all

current airline operators.

Both the Transferor Companies, which were operating in a

largely protected environment, are now faced with fierce

competition from domestic private and global airline

Page 3 of 42
companies. Market shares have declined substantially for

both airlines.

Significant increase in competitive activity has eroded

historical advantage of both carriers. Leading international

carriers have increased coverage and frequency to major

cities in India Domestic carriers too, have significantly

ramped up operations

Fleet renewal and expansion are imperative from a business

perspective but the same will add further pressure on

account of interest dues and depreciation expenses

Thus, the declining market, operating and financial

performance poses a serious threat to future survival of the

two airlines on a stand-alone basis. Value for and entry into

one of the global airline alliances, which control almost 70%

of global passenger traffic, is best facilitated through a single

‘Flag’ carrier with an integrated international and domestic

footprint.

Page 4 of 42
 This is even more imperative given that both the Transferor

Companies, which historically had distinctive roles (with the

Transferor Company No.1 focusing largely on International

sectors and the Transferor Company No.2 focusing largely on

domestic sectors), now have increasingly overlapping

networks, as the Transferor Company No.2 has expanded its

footprint to key international locations.

Finally, in an increasingly consolidating global aviation

environment, where ‘critical mass/size’ is a key success factor,

combining the two state owned airlines into a single merged

entity will better equip them to survive and prosper amidst

fierce global and domestic competition.

(c) Benefits of Merger

Merger of the Transferor Companies with the Transferee

Company, along with a comprehensive transformation

program, is imperative to improve competitiveness. It will

provide an opportunity to leverage combined assets and

capital better and build a stronger sustainable business.

Specifically, the merger will

Page 5 of 42
• Create the largest airline in India and comparable to

other airlines in Asia

• Provide an Integrated international/ domestic footprint

which will significantly enhance customer proposition and

allow easy entry into one of the three global airline

alliances

• Enable optimal utilisation of existing resources through

improvement in load factors and yields on commonly

serviced routes as well as deploy ‘freed up’ aircraft

capacity on alternate routes

• Provide an opportunity to fully leverage strong assets,

capabilities and infrastructure

• Provide an opportunity to leverage skilled and

experienced manpower available with both the Transferor

Companies to the optimum potential.

• Provide a larger and growth oriented company for the

people and the same shall be in larger public interest.

Page 6 of 42
• Potential to launch high growth & profitability businesses

(Ground Handling Services , Maintenance Repair and

Overhaul etc.)

• Provide maximum flexibility to achieve financial and

capital restructuring through revaluation of assets.

• Provide anincreased thrust and focus on airline support

businesses

Revenue synergies will be driven by integration of the

‘complementary’ networks of the Transferor Companies. Cost

and capital productivity synergies will be driven by

opportunities for leveraging economies of scale and

opportunities for rationalizing overlapping facilities and

infrastructure

In addition to these synergies, the amalgamation will also

provide an opportunity to initiate a comprehensive

transformation program to improve the overall

competitiveness of the merged airline i.e. the Transferee

Company. This, while improving the financial position would

help position and equip the merged entity to better face the

Page 7 of 42
 current and future challenges arising out of intense

competition and declining industry profitability.

In furtherance of the aforesaid, this Scheme of amalgamation

provides for the transfer and vesting of all the undertakings,

properties, assets and liabilities of each of the Transferor

Companies to and in the Transferee Company.

H The amalgamation, restructuring and vesting of the Transferor

Companies (AI and IA) into National Aviation Company of India

Limited, the Transferee Company is in the interest of the

shareholders, creditors, employees, customers and all stakeholders,

as the same would enable a focused business approach with

maximization of benefits to all stakeholders.

I. The amalgamation of the IA and AI with National Aviation

Company of India Limited is in accordance with Section 2 (1B) of

the Income tax act, 1961.

J. PARTS OF THE SCHEME

This Scheme of amalgamation is divided into the following parts:-

Part I deals with the definitions of the terms used in this

Scheme of amalgamation and the share capital of the

Page 8 of 42
 respective Transferor Companies and the Transferee

Company

Part II deals with the Amalgamation of the Transferor

Companies (viz. AI and IA) into the Transferee Company (

viz. National Aviation Company of India Limited)

Part III deals with the issue of shares and matters relating

to accounts.

Part IV deals with the General Terms and Conditions

K. The Transferor Companies and the Transferee Company now

propose by this Scheme of Amalgamation (“The Scheme”) to

amalgamate the Transferor Companies (viz AI and IA) with the

Transferee Company (viz National Aviation Company of India

Limited)

Page 9 of 42
 PART I

1. DEFINITIONS AND INTERPRETATION

1.1 In this Scheme, unless inconsistent to the meaning or context

thereof, the following expressions shall have the meanings given to

them herein below: -

(a) “Act” means the (Indian) Companies Act, 1956.

(b) “Appointed Date” means the 1st day of April, 2007.
(c) “Effective Date” shall have the meaning given to it in
clause 5.5.
(d) “Scheme” means the Scheme of Amalgamation as set out
herein.
(e) “Transferor Companies” collectively means AI and IA,

Government Companies registered under the Companies Act,

1956, having their registered offices at Air India Ltd, 3rd

Floor, Tower-II, Jeevan Bharati,124, Connaught Circus, New

Delhi - 110 001, and, 113, Gurudwara Rakabganj Road, New

Delhi 110 001, respectively ,and includes: -

(i) any and all immovable property, including land,

buildings, movable assets including plant, machinery
and equipments, whether leased or otherwise, any and
all rights, title, interest, covenant, undertakings,
liabilities including continuing rights, title and interest
in connection with the immovable properties whether

Page 10 of 42
 leasehold or otherwise comprised in this business
undertaking together with all present and future
liability including contingent liabilities and debts
appertaining to this business undertaking, as per the
records of AI and IA

(ii) any other property or assets real or personal, in

possession or reversion, corporeal or incorporeal,
tangible or intangible, present or contingent, owned,
held, used or otherwise enjoyed by AI and IA ;

(iii) any and all permits, quotas, rights, entitlements,

licences, tenancies, trademarks, service-P marks,
patents, copyrights, privileges and benefits of all
contracts, agreements and all other rights including
lease rights, licences, time slots (including those at
foreign airports) powers and facilities of every kind and
description whatsoever appertaining to this business
undertaking, as per the records of AI and IA.

(iv) any and all debts, borrowings and liabilities, present or

future, whether secured or unsecured, pertaining to
the business undertaking, as per the records of AI and
IA;

(v) any and all permanent (including those who have

retired/retired voluntarily from the Transferor
Companies) temporary daily rated casual, badlies and
contractual employees of AI and IA engaged in or in

Page 11 of 42
 relation to this business undertaking at their
respective offices branches, factories, depots or
otherwise at their current terms and conditions as per
the records of AI and IA;

(vi) any and all earnest monies and / or security deposits,

or other entitlements in connection with or relating to
this business undertaking, as per the records of AI and
IA; and

(vii) any and all investments and loans and advances

including accrued interest, in connection with or
relating to this business undertaking, as per the
records of AI and IA.

(g) “Transferee Company” means National Aviation Company

of India Limited, a Government Company incorporated under
the Companies Act, 1956, and having its registered office at
Airlines House, 113 Gurudwara Rakabganj Road, New Delhi
110 001.

1.2 In this Scheme, unless the context otherwise requires:

a) references to persons shall include individuals, bodies

corporate (wherever incorporated), unincorporated
associations and partnerships;

b) the headings are inserted for ease of reference only and shall
not affect the construction or interpretation of this Scheme;

Page 12 of 42
 c) references to one gender includes all genders; and

d) words in the singular shall include the plural and vice versa.

1.3 Any references in the Scheme to “upon the Scheme becoming

effective” or “effectiveness of the Scheme” shall mean the Effective

Date.

1.4 All terms and words not defined in this Scheme shall, unless

repugnant or contrary to the context or meaning thereof, have the

same meaning ascribed to them under the Act and other applicable

laws, rules, regulations, bye laws, as the case may be, including any

statutory modification or re-enactment thereof from time to time.

2. SHARE CAPITAL

2.1.1 As per the latest audited accounts on March 31, 2006 the capital
structure of the Transferor Companies is as under:

A. Transferor Company No 1 - AI

AUTHORIZED SHARE CAPITAL AMOUNT

42,56,36,820 Equity Shares of Rs. 10 each Rs. 425,66,38,200/-

Page 13 of 42
 74,36,318 Redeemable Preference Shares Rs. Rs. 74,36,31,800/-
100 each
Total Rs. 500,00,00,000/-

ISSUED, SUBSCRIBED & PAID-UP AMOUNT

SHARE CAPITAL
15,38,36,427 Equity shares of Rs. 10 each Rs. 153,83,64,270/-
fully paid

As on April 1, 2007 the Authorized Capital, the Issued, Subscribed

and Paid up Share Capital of AI remains the same.

B. Transferor Company No 2 – IA

AUTHORIZED SHARE CAPITAL AMOUNT

94,99,58,200 Equity Shares of Rs. 10 each Rs. 949,95,82,000/-
50,04,180 Redeemable Preference Shares Rs. 50,04,18,000/-
Rs. 100 each
Total Rs. 1000,00,00,000/-

ISSUED, SUBSCRlBED & PAID-UP AMOUNT

SHARE CAPITAL

Page 14 of 42
 43,21,36,489 Equity shares of Rs. 10 each Rs. 432,13,64,890/-
fully paid

As on April 1, 2007 the Authorized Capital, the Issued Subscribed

and Paid up Share Capital of IA remains the same

2.1.2 As on April 1, 2007 the capital structure of the Transferee Company

is as under:

Transferee Company – National Aviation Company of India Limited

AUTHORIZED SHARE CAPITAL AMOUNT

50,000 Equity Shares of Rs. 10 each Rs. 5,00,000/-

ISSUED, SUBSCRIBED & PAID-UP AMOUNT

SHARE CAPITAL
50,000 Equity Shares of Rs. 10 each Rs. 5,00,000/-

Page 15 of 42
 PART II

3. AMALGAMATION OF AI and IA INTO NATIONAL

AVIATION COMPANY OF INDIA LIMITED

A. Transfer and Vesting of the Transferor Companies

Transfer of Assets
3.1 With effect from the Appointed Date and upon the Scheme

becoming effective, the Transferor Companies shall be transferred

to and be vested in and/or be deemed to have been transferred to

and be vested in and managed by the Transferee Company, as a

going concern, without any further deed or act, together with all its

properties, assets, rights, benefits and interest therein, subject to

existing charges thereon in favour of banks and financial

institutions or otherwise, as the case may be and as may be

modified by them, subject to the provisions of this Scheme, in

accordance with Sections 391-394 of the Act and all other applicable

provisions of law, if any.

3.2 Without prejudice to Clause 3.1 above in respect of such of the

assets of the Transferor Companies as are movable in nature or

intangible property or are otherwise capable of transfer by manual

delivery or by endorsement and delivery including plant, aircraft,

Page 16 of 42
 machinery and equipments, the same shall be so transferred or

shall be deemed to be so transferred to the Transferee Company and

shall upon such transfer become the property and an integral part

of the Transferee Company. In respect of such of the said assets

other than those referred hereinabove, the same shall, without any

further act, instrument or deed, be vested in and / or be deemed to

be vested in the Transferee Company in accordance with the

provisions of Section 394 of the Act.

3.3 With effect from the Appointed Date and upon the Scheme

becoming effective, all land, together with the buildings standing

thereon held by the Transferor Companies, respectively, and any

documents of title/ rights and easements in relation thereto shall be

vested in and / or be deemed to have been vested in the Transferee

Company and shall belong to the Transferee Company. With effect

from the Appointed Date, the Transferee Company shall in relation

to such properties, be liable for ground rent, municipal taxes and

any other applicable taxes. The mutation of title to the immovable

properties shall be made and duly recorded by the appropriate

authorities pursuant to the sanction of the Scheme and upon the

Scheme becoming effective in accordance with the terms hereof in

favour of the Transferee Company.

Page 17 of 42
3.4 All assets and liabilities of the Transferor Companies as on the

Appointed Date, whether or not included in the books of the

Transferor Companies, and all assets and properties which are

acquired by the Transferor Company on or after the Appointed Date

but prior to the Effective Date shall be deemed to be and shall

become the assets and properties of the Transferee Company and

shall under the provisions of Sections 391 to 394 and all other

applicable provisions if any of the Act, without any further act,

instrument or deed , be and stand transferred to and vested in and

be deemed to have been transferred to and vested in the Transferee

Company upon the coming into effect of this Scheme pursuant to

the provisions of Sections 391to 394 of the Act, provided however

that no onerous asset shall have been acquired by the Transferor

Companies after the Appointed Date without the prior written

consent of the Transferee Company .

3.5 The Transferor Company No 1 has the following Subsidiaries

a) Air India Engineering Services Limitedb) Air India Air Transport
Services Limited
c) Hotel Corporation of India Limited
d) Air India Charters Limited

The Transferor Company No 2 has the following subsidiaries

a)Airlines Allied Services Limited
b) Vayudoot Limited

Page 18 of 42
 c) IAL Airports Services Limited

From the Appointed Date and upon the Scheme becoming effective,
subject to the terms and conditions of this Scheme, the above
subsidiaries of the Transferor Companies shall become the
subsidiaries of the Transferee Company
Transfer of Liabilities

3.6 (a) With effect from the Appointed Date and upon the Scheme

becoming effective, all debts, liabilities, duties and

obligations, secured or unsecured, and whether or not

provided for in the books of accounts of the Transferor

Companies, whether disclosed or undisclosed in the balance

sheet, shall be the debts, liabilities, duties and obligations of

the Transferee Company and the Transferee Company

undertakes to meet, discharge and satisfy the same.

(b) Where any of the liabilities and obligations attributed to the

Transferor Companies on the Appointed Date has been

discharged by the Transferor Companies after the Appointed

Date and prior to the Effective Date, such discharge shall be

deemed to have been for and on behalf of the Transferee

Company.

Page 19 of 42
3.7 All loans raised and used and liabilities incurred by the Transferor

Companies after the Appointed Date but before the Effective Date

for operations of the Transferor Companies shall be loans and

liabilities of the Transferee Company. Any guarantee/letter of

comfort/commitment letter given by the Government or any agency

or bank in favour of the Transferor Companies with regard to any

loan or lease finance shall continue to be operative in relation to the

Transferee Company

Contracts, Deeds, Approvals, Exemptions etc

3.8 (a) With effect from the Appointed Date and upon the Scheme

becoming effective, all contracts, deeds, bonds, agreements,

schemes arrangements, insurance policies, indemnities,

gurantees and other instruments of whatsoever nature in

relation to the Transferor Companies, or to the benefit of

which the Transferor Companies may be eligible, and which

are subsisting or having effect immediately before the

Effective Date, shall be in full force and effect on or against or

in favour of the Transferee Company and may be enforced as

fully and effectually as if, instead of the Transferor

Companies, the Transferee Company had been a party or

Page 20 of 42
 beneficiary or obligee thereto.

(b) With effect from the Appointed Date and upon the Scheme

becoming effective, all rights and licenses relating to

trademarks, know-how, technical know-how, trade names,

descriptions, trading style, franchises, labels, label designs,

logos, emblems, and items of such nature, colour schemes,

utility models, holograms, bar codes, designs, patents,

copyrights, privileges and any rights, title or interest in

intellectual property rights in relation to the Transferor

Companies to which the Transferor Companies are a party or

to the benefit of which the Transferor Companies may be

entitled /eligible shall be in full force and effect on, or against,

or in favour of, the Transferee Company as the case may be,

and may be enforced as fully and effectually as if, instead of

the Transferor Companies, the Transferee Company had

been a party or beneficiary or obligee thereto.

(c) The Transferee company shall be entitled to the benefit of all

insurance policies which have been issued in respect of the

Transferor Companies and the name of the Transferee

Page 21 of 42
 company shall be substituted as “Insured” in the policies as if

the Transferee company was initially a party

(d) With effect from the Appointed Date and upon the Scheme

becoming effective the Transferee Company shall replace the

Transferor Companies in the respective Air Services

Agreements as the designated carrier of India.

3.9 With effect from the Appointed Date and upon the Scheme

becoming effective, all permits including operating permits, quotas,

rights, entitlements, licenses including those relating to tenancies,

time slots (including those at foreign airports ) trademarks, patents,

copy rights, privileges, powers, facilities of every kind and

description of whatsoever nature in relation to the Transferor

Companies, including specifically ,licenses and permits for

operating as airlines and carriers of passengers, cargo and mail

,and all rights relating thereto to the benefit of which the

Transferor Companies may be eligible and which are subsisting or

having effect immediately before the Effective Date, shall be and

remain in full force and effect in favour of or against the Transferee

Company, and may be enforced fully and effectually as if, instead of

Page 22 of 42
 the Transferor Companies, the Transferee Company had been a

beneficiary or obligee thereto.

3.10 With effect from the Appointed Date and upon the Scheme

becoming effective, any statutory licenses, permissions, approvals,

exemption schemes, or consents required to carry on operations in

the Transferor Companies, respectively, shall stand vested in or

transferred to the Transferee Company without any further act or

deed, and shall be appropriately mutated by the statutory

authorities concerned therewith in favour of the Transferee

Company. The benefit of all statutory and regulatory permissions,

licenses, environmental approvals and consents including the

statutory licenses, permissions or approvals or consents required to

carry on the operations of the Transferor Companies shall vest in

and become available to the Transferee Company pursuant to the

Scheme.

3.11 The Transferee Company, at any time after the Scheme becoming

effective in accordance with the provisions hereof, if so required

under any law or otherwise, will execute deeds of confirmation or

other writings or arrangements with any party to any contract or

arrangement in relation to the Transferor Companies to which the

Page 23 of 42
 Transferor Companies are a party in order to give formal effect to

the above provisions. The Transferee Company shall, under the

provisions of this Scheme, be deemed to be authorised to execute

any such writings on behalf of the Transferor Companies and to

carry out or perform all such formalities or compliances, referred to

above, on behalf of the Transferor Companies.

Legal Proceedings

3.12 With effect from the Appointed Date and upon the Scheme

becoming effective, the Transferee Company undertakes to have

such legal, quasi judicial or other proceedings initiated by or against

the Transferor Companies, transferred in its name and to have the

same continued, prosecuted and enforced by or against the

Transferee Company to the exclusion of the Transferor Companies,

as the case may be. The Transferee Company also undertakes to

deal with all legal or other proceedings which may be initiated

against the Transferor Companies after the Effective Date relating

to the Transferor Companies in respect of the period up to the

Effective Date, in its own name and account and to the exclusion of

the Transferor Companies, and further undertakes to pay all

amounts including interest, penalties, damages, etc. which the.

Page 24 of 42
 Transferor Companies may be called upon to pay or secure in

respect of any liability or obligation relating to the Transferor

Companies for the period up to the Effective Date.

Employees
3.13 (a). With effect from the Appointed Date and upon the Scheme

becoming effective, any and all employees employed in

connection with the working of the Transferor Companies as

on the Effective Date shall become employees of the

Transferee Company employed without any breach or

interruption of service and subject to the provisions of the

Scheme, on terms and conditions not less favourable than

those applicable to them as on Effective Date. The Transferee

Company may alter/modify/change the conditions of service of

the employees any time after the Effective Date in accordance

with the provisions of the applicable law.

(b) The transfer of the services of any officer or other employee of

the Transferor Companies to the Transferee Company shall

not entitle such officer or employee to any compensation

under any act or law for the time being in force.

Page 25 of 42
(c) The officers or other employees who have retired before the

Appointed Date from the services of the Transferor

Companies and are entitled to any benefits ,rights or

privileges shall be entitled to receive the similar benefit,

rights or privileges from the Transferee Company

(d) With regard to Provident Fund, Gratuity Fund,

Superannuation Fund or any other special fund created or

existing for the benefit of such employees of the Transferor

Companies, it is the aim and intent of the Scheme that all the

rights, duties, powers and obligations of the Transferor

Companies in relation to such schemes or funds shall become

those of the Transferee Company. Upon the Scheme

becoming effective, the Transferee Company shall stand

substituted for the Transferor Companies for all purposes

whatsoever relating to the obligation to make contributions to

the said funds in accordance with the provisions of such

schemes or funds in the respective trust deeds or other

documents. The existing Provident Fund, Gratuity Fund and

Superannuation Fund trusts created by the Transferor

Companies for their employees shall be continued for the

benefit of such employees on the same terms and conditions

Page 26 of 42
 till such time that they are transferred to the relevant funds

of the Transferee Company. It is clarified that the services of

all employees of the Transferor Companies transferred to the

Transferee Company will be treated as having been

continuous and uninterrupted for the purpose of the aforesaid

schemes or funds.

(e) The Transferee Company undertakes to continue to abide by any

agreement(s) / settlement(s) entered into with any recognized

labour unions/ employees and also applicable awards of Tribunal

/ Arbitrator by the Transferor Companies. The Transferee

Company agrees that for the purpose of payment of any

retrenchment compensation, gratuity and other terminal

benefits, the past services of such permanent employees, if any,

with the Transferor Companies, as the case may be, shall also be

taken into account, and agrees and undertakes to pay the same

as and when payable.

(f) The liabilities of the employees/officers towards the Transferor

Companies shall stand transferred to the Transferee Company.

Further any prosecution or disciplinary action, initiated,

pending or contemplated against and any penalty (ies) imposed

in this regard on any employee by the Transferor Companies as

Page 27 of 42
 on the Effective Date shall be continued/continue to operate

against the concerned employee and shall be enforced fully and

effectually by the Transferee Company.

Other Entitlements

3.14 Subject to the other provisions contained in this Scheme, all

contracts, business /asset purchase agreements, memoranda of

undertakings, memoranda of agreement, memoranda of agreed

points, letters of agreed points, arrangements, undertakings

whether written or otherwise, lease rights, deeds, bonds, other

agreements and instruments of whatsoever nature to which the

Transferor Companies are a party or having effect immediately

before the Effective Date, shall remain in full force and effect

against and in favour of the Transferee Company and may be

enforced fully and effectually as if, instead of the Transferor

Companies, as the case may be , the Transferee Company had been

a party thereto. The Transferee Company shall also be entitled to

the fulfillment of all contractual obligations under lease agreements

entered into by both Transferor companies under their respective

contracts

Page 28 of 42
3.15 The Transferee Company shall be entitled to use all and any

labelling and marking materials for any goods manufactured and

packaged which the Transferor Company is entitled to use pursuant

to the packing laws and Weights And Measures Laws and other

similar laws till such time as such packaging materials, labels,

wrappers, boxes carrying such labelling rights and disclosures and

information in accordance with these laws are exhausted.

3.16 With effect from the Appointed Date in accordance with the

CENVAT Credit Rules 2004 framed under the Central Excise Act.

1944 as are prevalent at the time of sanction of the Scheme the

CENVAT Credit including the service tax credits lying un-utilised

in the Transferor Companies shall stand transferred to the

Transferee Company as if the same were the CENVAT credit

utilized in the Transferee Company’s accounts. It is declared that

the transfer of the CENVAT Credit including for service tax credits

stands allowed as stock of inputs as such or in process, including

capital goods and service tax paid for the input services are also

transferred by the Transferor Companies to the Transferee

Company. The inputs including services or capital goods on which

the credit has been availed of have been duly accounted for.

Page 29 of 42
3.17 The Transferor Companies are entitled to various benefits under

incentive schemes and policies under various laws, regulations and

notifications. Pursuant to this Scheme it is declared that the

benefits under all of such schemes and policies shall be transferred

to and vest in the Transferee Company and all benefits,

entitlements and incentives of any nature whatsoever’ including

sales tax concessions and incentives shall be claimed by the

Transferee Company and these shall relate back to the Appointed

Date as if the Transferee Company was originally entitled to all

benefits under such incentive scheme and policies, subject to

continued compliance by the Transferee Company of all the terms

and conditions subject to which the benefits under the incentive

schemes and policies were made available to the Transferee

Company. The Transferee Company shall be entitled to all benefits

which the Transferor Companies were provided under Section 10

(15A) of the Income Tax Act,1961 in respect of the lease contracts

entered into by the Transferor Companies. Further where any

payment made by the Transferor Companies is exempt from

deduction of tax at source under the provisions of the Income Tax

Act , 1961, such exemption from tax will continue to be available as

if the provisions of the said Act were operative in relation to the

Transferee Company

Page 30 of 42
3.18 Since each of the permissions, approvals, consents, sanctions,

remissions, special reservations, sales tax remissions, holidays,

incentives, concessions and other authorizations of the Transferor

Companies, shall stand transferred by the order of the Ministry of

Company Affairs, Government of India to the Transferee Company,

the Transferee Company shall file the relevant intimations, for the

record of the statutory authorities who shall take them on file,

pursuant to the vesting orders of the Ministry of Company Affairs,

Government of India.

3.19 For the purpose of giving effect to the vesting order passed under

Section 391 and 394 in respect of this Scheme, the Transferee

Company shall at any time pursuant to the orders on this Scheme

be entitled to get the recordal of the change in the legal right(s)

upon the vesting of the Transferor Companies in the Transferee

Company, in accordance with the provisions of Section 391 and 394

of the Act.

Conduct of Business

3.20 With effect from the Appointed Date and upto and including the

Effective Date:

Page 31 of 42
(a) The Transferor Companies shall be deemed to have been

carrying on and to be carrying on all business and activities

relating to the Transferor Companies respectively, for and on

behalf of and in trust for the Transferee Company.

(b) All profits accruing to the Transferor Companies and all

taxes thereof or losses arising or incurred by it relating to the

Transferor Companies shall, for all purposes, be treated as

the profits, taxes or losses as the case may be of the

Transferee Company.

(c). Any exemption from or any assessment with respect to any

tax which has been granted or made, or any benefit by way of

set off or carry forward as the case may be of any unabsorbed

depreciation or investment allowance or other allowance or

loss which has been extended or is available to the Transferor

Companies under the Income Tax Act shall be available to

the Transferee Company

(d) The Transferee Company and the Transferor Companies

shall carry on their business activities with reasonable

diligence and business prudence and shall not undertake any

Page 32 of 42
 additional financial commitments of any nature whatsoever,

borrow any amounts or incur any other liabilities or

expenditure issue any additional guarantees indemnities,

letters of comfort or commitment either for itself or on behalf

of its subsidiaries or group companies or any third party, or

vary the terms and conditions of the service of its respective

staff, workmen and employees except in the ordinary course

of business or sell transfer, alienate, charge, mortgage or

encumber or deal, save and except, in each case, in the

following circumstances:

(i) if the same is in the ordinary course of business as

carried on by it as on the date of filing this Scheme

with the Ministry of Company Affairs, Government of

India; or

(ii) if the same is expressly permitted by this Scheme; or.

(iii) if written consent of the Transferee Company has been

obtained.

B. Dissolution of the Transferor Companies:

Page 33 of 42
3.21 Upon the Scheme becoming effective, and from the Appointed Date,

the Transferor Companies shall stand dissolved without being

wound up.

C. General Terms and Conditions:

3.22 Upon the coming into effect of this Scheme the resolutions, if any, of

the Transferor Companies, which are valid and subsisting on the

Effective Date shall continue to be valid and subsisting and be

considered as resolutions of the Transferee Company and if any

such resolutions have upper monetary or other limits being imposed

under the provisions of the Act, or any other applicable provisions,

then the said limits shall be added and shall constitute the

aggregate of the said limits in the Transferee Company.

PART III

4. ISSUE OF SHARES; MATTERS RELATING TO ACCOUNTS

Issue of Shares

4.1 Upon this Scheme coming into effect and upon vesting of the

Transferor Company in the Transferee Company,

Page 34 of 42
(a) The Transferee Company shall (without further application,

act or deed) issue at par and allot to the shareholders of the

Transferor Companies equity shares in the Transferee

Company in the following proportion

(i) 3,80,53,960 shares of Rs. 10each in the

Transferee Company fully paid up for all the

equity shares held by them in the Transferor

Company No 1 on the effective date

(ii) 10,68,96,040 shares of Rs. 10 each in the

Transferee Company fully paid up for all the

equity shares held by them in the Transferor

Company No 2 on the effective date

(b) The said equity shares in the Transferee Company to be

issued to the shareholders of the Transferor Companies shall

rank pari passu in all respects, to the existing equity shares

in the Transferee Company from the Appointed Date. Such

shares in the Transferee Company to be issued to the

shareholders of the Transferor Company will, for all

purposes, be deemed to have been held by each such member

from the Appointed Date

Page 35 of 42
 (c) All shareholders of the Transferor Companies whose names

shall appear on the Register of Members of the Transferor

Companies on the Effective Date shall surrender their share

certificates for cancellation thereof to the Transferee

Company.

(d) On the approval of the Scheme by the members of the

Transferee Company pursuant to Section 391 of the Act, it

shall be deemed that the said members have also accorded

their consent under Section 81(1A) of the Act or other

provisions of the Act as may be applicable.

4.2 Accounting Treatment

In the books of the Transferee company

On the Scheme becoming effective, the Transferee Company shall

account for the merger in its books as specified hereunder:

i. With effect from the Appointed Date, all the assets, excluding

immovable assets, but including investments, and liabilities

appearing in the books of accounts of the Transferor

Companies shall stand transferred to and vested in the

Transferee Company pursuant to the Scheme and shall be

Page 36 of 42
 recorded by the Transferee Company at their book values.

The said immovable assets appearing in the books of

accounts of the Transferor Companies shall stand transferred

to and vested in the Transferee Company pursuant to the

Scheme and shall be recorded by the Transferee Company at

their fair values.

The Transferee Company shall credit to the Share Capital

Account in its books of account, the aggregate face value of

the Equity Shares of the Transferee Company issued and

allotted under the Scheme by it to the equity shareholders of

the Transferor Companies pursuant to this Scheme.

ii. The difference, being the excess of the value of the net assets

of the Transferor Companies transferred to the Transferee

Company over the value of shares allotted by the Transferee

Company shall be credited to General Reserve Account which

shall be treated as Free Reserves and shall be available to

the Transferee Company for such purposes as Transferee

Company at its own discretion considers proper including but

not limited to declaration of dividends.

Page 37 of 42
 iii. In case of there being a shortfall, the same shall be debited to

Goodwill Account.

iv. To the extent that there are inter-corporate loans or balances

between the Transferor Companies inter se, the obligations

in respect thereof shall come to an end and corresponding

effect shall be given in the books of account and records of the

Transferee Company for the reduction of any assets or

liabilities, as the case may be.

PART IV

5. GENERAL TERMS AND CONDITIONS

5.1 The Transferee Company is expressly permitted to revise

Transferor Companies Income Tax and Service Tax returns issue

TDS certificates and the right to claim refund of Income Tax,

advance Income Tax credits, adjust excess Service Tax etc. upon

this Scheme becoming effective and have expressly reserved the

right to make such revisions in the Income Tax and Service Tax

returns TDS certificates and the right to claim such refunds,

advance tax credits, adjust Service Tax etc. pursuant to the sanction

of this Scheme.

Page 38 of 42
5.2 All costs, charges, taxes, including duties, levies and fees and all

other, expenses, if any, arising out of or incurred in carrying out

and implementing the terms and conditions or provisions of this

Scheme and incidental to the completion of the amalgamation in

pursuance of this Scheme, shall be borne by the Transferee

Company.

5.3 The Transferee Company and the Transferor Companies, through

its directors or authorised persons, may in their full and absolute

discretion, assent to any alteration or modification to which the

Ministry of Company Affairs, Government of India and/or any other

Authority may deem fit to approve or impose and may consider

necessary to settle any question or difficulty arising under the

Scheme or in regard to its implementation or in any matter

connected therewith. The Transferee Company and the Transferor

Companies, through its directors or authorised persons, may also in

their full and absolute discretion, withdraw or abandon this Scheme

at any stage of the proceedings.

5.4 Upon the coming into effect of this Scheme:

Page 39 of 42
 Clause V of the Memorandum of Association of the Transferee

Company shall, without any further act, instrument or deed be and

stand altered, modified and amended pursuant to Section 94 and

394 and other applicable provisions of the Act in the manner set

forth in Schedule I hereto.

5.5 The Scheme is conditional and is subject to —

(a) All necessary certified copies of the orders of the Ministry of

Company Affairs, Government of India referred to in this

Scheme being filed with the Registrar of Companies, Delhi.

(b) The Scheme being agreed to by the respective requisite

majorities of the members (either by way of a meeting or a

letter of consent from the shareholders) (on behalf of the

Transferor Companies and the Transferee Company) and the

creditors of the Transferor Companies and the Transferee

Company (except where exempted by the Ministry of

Company Affairs, Government of India) under Section 391 of

the Act.

(c) Any other sanction or approval of any statutory or regulatory

authorities, as may be considered necessary by the board of

directors of the Transferor Companies or the Transferee

Page 40 of 42
 Company, being obtained.

The last of the date on which any of the above three events occur

shall be the Effective Date.

5.6 In the event of this Scheme failing to take effect finally, this Scheme

shall become null and void and in that case, no rights and liabilities

whatsoever shall accrue to or be incurred inter-se by the parties or

their shareholders or creditors or employees or any other person.

Page 41 of 42
 SCHEDULE – I

AMENDMENT TO THE MEMORANDUM OF ASSOCIATION

Clause V of the Memorandum of Association of the Transferee Company

shall stand modified and amended by deleting the Clause and replacing it

with the following:

“The Authorised Share Capital of the Company is Rs.15,00,05,00,000/-

(Rupees Fifteen Hundred Crores and Five Lakhs Only) divided into

1,37,56,45,020 (One Hundred and Thirty Seven Crores, Fifty Six Lakhs,

Forty Five Thousand and Twenty) Equity Shares of Rs.10/- each and

1,24,40,498 (One Crore, Twenty Four Lakhs, Forty Thousand, Four

Hundred and Ninety Eight) Preference Shares of Rs. 100/- each.”

Page 42 of 42