This presentation enumerates the practical aspects of merger, demerger and reduction of capital and the strategies involved therein. It also highlights certain key issues involved in corporate restructuring.

1. Unlocking The Value Through Corporate Restructuring Pavan Kumar Vijay 19.05.2007

2. GOVERNING PROVISION SECTION 391-394 of Companies Act, 1956 Most liberal sections in the entire Companies Act, 1956. By way of SCHEME you can propose & achieve whatever you want

3. TYPES OF RESTRUCTURING REDUCTION OF CAPITAL MERGER DEMERGER

4. RESTRUCTURING BIFR High Court Approving Authorities

5. MERGER “ Combining of two or more commercial organizations into one in order to increase efficiency and sometimes to avoid competition ”. MERGER REVERSE MERGER “ As a commercial term, it means when a Healthy Company (in terms of size, capital or listing status)is merging in a Weak Company (in terms of size, or unlisted)”. SECTION 391-394 of Companies Act, 1956

6. DEMERGER “ Division of a Company with two or more identifiable business units into two or more separate companies ” SECTION – 2(19AA) of Income Tax Act, 1961.

7. “ Extinguishing or Reducing the paid-up capital, Securities Premium Account or liability of members with respect to their unpaid calls” -AN EFFECTIVE WAY OF INTERNAL RESTRUCTURING REDUCTION OF CAPITAL SECTION – 100 – 105 of Companies Act, 1956 SECTION 100 to 105 of Companies Act, 1956

10. ADDITIONAL REQUIREMENTS FOR LISTED COMPANIES Compliance of Listing Agreement Clause 40A: Non-promoters holding for Continuous Listing Lock-in requirements Clause 24(f): Prior Approval Clause 24(a): In principle approval

11. Stock Exchange’s Norms Presently, Stock Exchange(s) are laying various other norms before giving approval to the Companies for ‘ Merger ’, ‘ Demerger ’ ‘ Reduction of Capital ’

12. Compliance of Other Laws “ The Stock Exchange(s) alongside considers the compliance of Securities laws, regulations, rules etc. applicable on the Company and Companies Act also”

13. MERGER THROUGH BIFR AN EFFECTIVE WAY TO REVIVE YOUR SICK COMPANY

15. DEMERGER Reliance Natural Resources Ltd Reliance Capital Ventures Ltd

22. Case Studies

26. Financial Benefits to Shareholder Particulars Amount (Rs.) as on 24th March 2005 Amount (Rs.) as on 18 th May 2007 Value of the shares held by a shareholder as on record date (5 th Jan,2004) (A) 100 shares @55 5,500 Shares in MRL 100 shares @125 12,500 @436 43,600 Shares in MTL 51.5 shares @80 4,120 @57 2,907 Total (B) 16,620 46,507 Net Value Addition (B-A) 11,120 41,007

30. Benefits achieved…….. *No value after 26.05.06 has been considered as there has been further restructuring Particulars Amount (Rs.) 24th March 2006 Amount (Rs.) 26th May 2006* Value of the shares held by a shareholder as on record date (25 th Jan,2006) (A) 100 shares @928 92800 Shares in RIL 100 (@708) 70800 (@950) 95000 Shares in REVL 100 (@38) 3800 (@37) 3700 Shares in RCOVL 100 (@290) 29000 (@270) 27000 Shares in RCVL 100 (@24) 2400 (@23) 2300 Shares in RNRL 100 (@23) 2300 (@27) 2700 Total 108300 130700 Net benefit 15500 37900

32. Bajaj Group… demerger Bajaj Auto Vehicle Manufacturing Financial Service Bajaj Holding & Invest Bajaj Finserv Bajaj Auto (Holding Company)

34. REDUCTION OF CAPITAL

35. Types of Reduction of Capital Writing off Losses & Fictitious Assets Correction of Over- Capitalization Distinguishment of the Liability in respect of unpaid portion of face value. Distribution of accumulated profits by Payment to shareholders a part of share capital.

36. Reduction of Capital- A Strategic Step To Clean-up the Balance Sheet To rationalize the capital base Revival of Sick Company

37. RESTRUCTURING STRATEGIES What's Your Move??

38. FEW STRATEGIC MOVES Strategy I LISTING (Without offer to Public) Strategy II RAISING PROMOTERS’ HOLDING (Beyond 55%)

39. FEW STRATEGIC MOVES..contd Strategy III ACQUISITION OF LISTED CO. ( Exemption from Takeover Code) Strategy IV INCREASEING THE RESOURCES (Without raising Capital)

42. Strategy IB LISTING THROUGH MERGER Acquisition of Regional Listed Company(RSE) Merger of financially sound unlisted co with listed co Now your Company is ready for Listing INDONEXT LISTING DIRECT LISTING

48. Thanks a lot… Pavan Kumar Vijay