This document discusses various types of corporate restructuring such as mergers, demergers, and reduction of capital. It outlines the regulatory framework and listing requirements for such transactions. It also provides examples of restructuring strategies that listed companies can pursue, such as direct listings, increasing promoter holdings, acquiring other listed companies, and increasing resources without raising additional capital. Overall, the document presents corporate restructuring as a strategic tool for companies to grow, add shareholder value, and unlock their full potential.

1. Dated: 11.11.2006 Pavan Kumar Vijay,MD CORPORATE RESTRUCTURING Regulatory framework for Listed Companies & Strategies

2. TYPES OF RESTRUCTURING REDUCTION OF CAPITAL MERGER DEMERGER

3. M ERGER Meaning of Merger “ Combining of two or more commercial organizations into one in order to increase efficiency and sometimes to avoid competition ”.

4. Meaning of Demerger “ Division of a Company with two or more identifiable business units into two or more separate companies ”

6. STOCK EXCHANGE’S ROLE REQUIREMENTS PERSPECTIVE Listing Agreement Compliances Stock Exchange Internal Norms Observations Compliance of Securities laws Compliance of Companies Act

7. 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 ’

8. Stock Exchange Norms..contd MINIMUM CAPITAL REQUIREMENTS 1. Issued & paid up Equity Capital – Rs 10 crores (if there is a change in management/control) OR Issued & paid up Equity Capital – Rs 3 crores (If there is no change in management/control) AND 2. Minimum Net Worth – 20 crores (Post amalgamation) *BSE Stipulations

10. Stock Exchange Norms..contd LOCK IN REQUIRMENTS (In case of merger of unlisted company) At the discretion of the stock Exchange Generally “ 25% of the newly issued capital pursuant to the scheme of amalgamation should be kept under lock in for 3 yrs from the date of listing” “ The lock in period is varied by the stock exchange on case to case basis” *BSE Stipulations

11. 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

14. MERGER THROUGH BIFR – “ The Exempted Law ” Exemption from applicability of : Clause 40A of Listing Agreement Takeover Code

15. DEMERGER Reliance Natural Resources Ltd Reliance Capital Ventures Ltd

21. Case Studies

23. Salient Features of the Scheme MRL MTL, Subsidiary Co of MRL 92% Shareholder’s Trust 8% Shareholders of MRL Investment Distribution MRL MTL TWO LISTED ENTITIES

24. Benefits achieved…….. No tax implication in the hands of the companies involved or the shareholders. Shareholders get shares in two listed entities. It also helped MTL to wipe out past losses, making the balance sheet clean and attractive. No loss of carry forward of past losses.

25. Financial Benefits to Shareholder 11,120 16,620 @80 4,120 @125 12500 @55 5500 Amount (Rs.) (Pre-arrangement scenario) @100 5,150 51.5 shares Shares in MTL 74550 Total (B) 69,050 Net benefit (B-A) @694 69400 100 shares Shares in MRL 100 shares Value of the shares held by a shareholder as on record date (5 th Jan,2004) (A) Amount (Rs.) (post arrangement scenario Particulars

29. Benefits achieved *Last traded price. Due to next restructuring the scrip is suspended. 15500 108300 (@23) 2300 (@24) 2400 (@290) 29000 (@38) 3800 (@708) 70800 @928 92800 Amount (Rs.) 24th March 2006 67130 175430 (@23.70) 2370 (@20.35) 2035* (@391.30) 3913 0 (@32.80) 3280* (@1286.25) 128625 Amount (Rs.) 10 th Nov 2006 100 Shares in RIL 100 Shares in RCOVL 100 Shares in RCVL 100 Shares in RNRL Total Net benefit 100 Shares in REVL 100 shares Value of the shares held by a shareholder as on record date (25 th Jan,2006) (A) Shares Particulars

30. REDUCTION OF CAPITAL

31. 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.

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

33. RESTRUCTURING STRATEGIES What's Your Move??

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

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

38. 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

43. Thanks a lot… Pavan Kumar Vijay