Scheme of Reduction Equity-Share

8/6/2019 Scheme of Reduction Equity-Share

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Nicholas Piramal India LimitedRegd Office: Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400013.

NOTICE TO EQUITY SHAREHOLDERS

A. Court Convened Meeting of Equity Shareholders

B. Extra Ordinary General Meeting

Date : Friday, 23rd November 2007

Venue : M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd floor, 18/20 Kaikhushru Dubash Marg,

(Kala Ghoda), Mumbai - 400 001

SR. NO. CONTENTS PAGES

A Court Convened Meeting of the Equity Shareholders

(1) Notice of Court Convened Meeting 2

(2) Explanatory Statement under Section 393 3-12

of the Companies Act, 1956

(3) Composite Scheme of Arrangement under Sections 391 to 394 13-24

of the Companies Act, 1956

(4) Form of Proxy 25

(5) Attendance Slip 27

B Extra Ordinary General Meeting (EGM)

(1) EGM Notice 29-34

(2) Explanatory Statement under Section 173 of the Companies Act, 1956 35-40

(3) Form of Proxy 41

(4) Attendance Slip 43


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IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONCOMPANY APPLICATION NO. 1099 OF 2007

In the matter of the Companies Act, 1956 (1 of 1956);

ANDIn the matter of Sections 391 to 394 read with Sections 78and 100 of the Companies Act, 1956;

ANDIn the matter of Composite Scheme of Arrangement

between Nicholas Piramal India Limited and NPILResearch and Development Limited and their Respective

Shareholders and Creditors.

NICHOLAS PIRAMAL INDIA LIMITED, a companyincorporated under the Indian Companies Act,

1913 having its registered office at NicholasPiramal Tower, Ganpatrao Kadam Marg, Lower

Parel, Mumbai - 400 013.

NOTICE CONVENING THE MEETING OF EQUITY SHAREHOLDERS OFNICHOLAS PIRAMAL INDIA LIMITED

To,

The Equity Shareholders of NICHOLAS PIRAMAL INDIA LIMITED, the Applicant Company:

a. TAKE NOTICE that by an Order made on the 19th day of October 2007, in the above CompanyApplication, the Honble High Cour t of Judicature at Bombay has directed that a meeting of the EquityShareholders of NICHOLAS PIRAMAL INDIA LIMITED, the Applicant Company, be convened and held

on Friday, the 23rd day of November 2007 at 10.30 a.m. at M.C. Ghia Hall, Bhogilal HargovindasBuilding, 2nd floor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai 400 001, for the

purpose of considering and if thought fit, approving, with or without modifications, the arrangementsembodied in the Composite Scheme of Arrangement (the Scheme) between Nicholas Piramal India

Limited and NPIL Research and Development Limited.

b. TAKE FURTHER NOTICE that in pursuance of the said Order, a meeting of the Equity Shareholders

of Nicholas Piramal India Limited (NPIL), will be held on Friday, the 23rd day of November 2007at 10.30 a.m. at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd floor, 18/20 KaikhushruDubash Marg, (Kala Ghoda), Mumbai 400 001, at which day, date, time and place you are requested

to attend.

c. TAKE FURTHER NOTICE that you may attend and vote at the said meeting in person or by proxyprovided that a proxy in the prescribed form (enclosed), duly signed by you or your authorisedrepresentative, is deposited at the Registered Office of NPIL at Nicholas Piramal Tower, Ganpatrao

Kadam Marg, Lower Parel, Mumbai - 400 013 not later than 48 hours before the time appointed forholding the meeting.

d. The Honble High Court has appointed Mr. Ajay G. Piramal, Chairman of NPIL, and failing him, Mr. R.A. Shah, Director of NPIL, to be the Chairman of the said Meeting.

e. A copy each of the Scheme, the Statement under Section 393 of the Companies Act, 1956, the

Attendance Slip and a Form of Proxy are enclosed herewith.

Ajay G. PiramalDated this 25th day of October 2007. Chairman appointed for the Meeting

Registered Office:Nicholas Piramal Tower,

Ganpatrao Kadam Marg,Lower Parel, Mumbai - 400 013

Enclosures : As above

} .....Applicant Company


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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

COMPANY APPLICATION NO.1099 OF 2007

In the matter of the Companies Act, 1956 (1 of 1956);AND

In the matter of Sections 391 to 394 read with Sections 78and 100 of the Companies Act, 1956;

AND

In the matter of Composite Scheme of Arrangementbetween Nicholas Piramal India Limited and NPIL

Research and Development Limited and their RespectiveShareholders and Creditors.


1913 having its registered office at NicholasPiramal Tower, Ganpatrao Kadam Marg, Lower

Parel, Mumbai - 400 013.

EXPLANATORY STATEMENT UNDER SECTION 393 OF THE COMPANIES ACT, 1956

1. Pursuant to the Order dated 19th day of October 2007 passed by the Honble High Court of Judicature

at Bombay, in the Company Application referred to hereinabove, a meeting of the Equity Shareholders

of Nicholas Piramal India Limited, the Applicant Company, is convened on Friday, the 23rd day of

November 2007 at 10.30 a.m. at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd floor, 18/20

Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai - 400 001, for the purpose of considering and, if

thought fit, approving with or without modifications, the arrangements embodied in the Composite

Scheme of Arrangement (the Scheme) between Nicholas Piramal India Limited and NPIL Research

and Development Limited, which is annexed hereto and forms part of this Explanatory Statement.

2. In this Statement, Nicholas Piramal India Limited is hereinafter referred to as the Applicant Company

or the Demerged Company or NPIL and NPIL Research and Development Limited is hereinafter

referred to as NRDL or the Resulting Company. The other definitions contained in the Scheme will

apply to this Explanatory Statement also.

3. NPIL was incorporated under the provisions of the Indian Companies Act, 1913 in Mumbai, the State of

Maharashtra on 26th April, 1947 under the name Indian Schering Limited which name was changed

to Nicholas Laboratories India Limited with effect from 27th September, 1979 and further changed

to the present name Nicholas Piramal India Limited with effect from 2nd December, 1992. NPIL is

listed on the Bombay Stock Exchange Limited & National Stock Exchange of India Limited.

4. Soon after its incorporation, NPIL was engaged in the business of manufacture, sale and distribution

of medicines, drugs and pharmaceutical preparations. NPIL with its subsidiaries, joint ventures and

strategic alliances is at present engaged in various segments of healthcare business i.e. manufacture,

sale and distribution of medicines, drugs, pharmaceutical preparations, vitamins, fine chemicals,

diagnostic equipments/instruments and pathological laboratory.

5. The Registered Office of NPIL is situated at Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower

Parel, Mumbai 400 013.

}.....Applicant Company


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NPIL Research and Development Private Limited. Subsequently, NRDL has been converted into a

public limited company and a new set of Articles of Association has been adopted. The Registrar of

Companies, Maharashtra at Mumbai has issued Fresh Certificate of Incorporation consequent upon

change of name on conversion to Public Limited Company dated 10th October, 2007 pursuant to Section

23(1) of the Companies Act 1956, from which date the name of the Company is NPIL Research and

Development Limited.

9. NRDL was incorporated with the main object of undertaking scientific and technical research and

development. However, since then, no activity was undertaken by NRDL.

10. The Registered Office of the NRDL is situated at Nicholas Piramal Tower, Ganpatrao Kadam Marg,

Lower Parel, Mumbai - 400 013.

11. The share capital structure of NRDL as at March 31, 2007 was as under:

Particulars Rupees in lacs

Authorised Capital

50,000 Equity Shares of Rs. 10 each 5.00

Issued, Subscribed and Paid-up

10,000 Equity shares of Rs. 10 each fully paid up 1.00

TOTAL 1.00

Subsequent to the aforesaid Balance Sheet date, the Authorised Share Capital of NRDL has been

increased and further equity shares have been allotted to NPIL, and the Authorised, Issued, Subscribed

and Paid-up Share Capital of NRDL has been changed as under:


Authorised Capital

50,00,000 Equity shares of Rs. 10 each 500.00


45,50,000 Equity shares of Rs. 10 each, fully paid up 455.00

TOTAL 455.00

As on date, the entire issued, subscribed and paid-up capital of NRDL is held by NPIL.

12. Some of the objects specified in the Memorandum of Association of NRDL are briefly as under:

(i) To undertake, conduct, participate in, carry on, support or otherwise be associated with anyresearch, development, investigation, technical and/or other studies on or in connection with

human health and/or animal health and/or aqua life, to establish, conduct research laboratories

and experimental workshops for scientific and technical researches, experiments and tests

and to promote studies and research, investigation and inventions of all kinds, to carry out

preclinical and clinical research and other trials or otherwise any work, in the fields of generic

drugs, new drug delivery systems, new molecular entities, genomics, medicine, disease

management, pain management, immunology and in other related areas, and to develop


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medicines, vaccinations, drugs and other human, animal or aqua health products and all other

kinds of medicines including ayurvedic medicines and herbal preparations derived by chemical

means or by the process of biotechnology, either exclusively on its own or with one or more

other institution, firm, company, person or party, whether by way of collaboration, contract,

licensing, cross-licensing or otherwise and also to render technical and consulting services to

Indian and foreign institutions in the field of pharmacology, toxicology, pharmacokinetics, drug

metabolism, biostatistics, bioanalytics, technical writing and regulatory affairs as related to the

drug development process and to develop and/or acquire know-how, trademarks, copyrights

and other intellectual property, to commercialise the same or to deal with the same in such

manner as may be prudent or expedient and also to set up laboratories, research centres

and related units in India and/or abroad and/or to have aIliances or collaborations with any

laboratory, research centres and related units and to accept funding or grants of sponsorship

from any institution, company or person for the aforesaid purpose/s.

(ii) To carry on the business of manufacturing, marketing, detailing, promoting, selling, purchasing,

importing, exporting, trading, distributing or otherwise dealing in all kinds of pharmaceutical

and healthcare products including medicines, bulk drugs, formulations, medicinal preparations,

chemicals, compounds, chemical reagents, diagnostic products and other healthcare products,whether in India or abroad.

(iii) To acquire the business of and/or to amalgamate fully or partially with any other company,

person or firm carrying on or engaged in or about to carry on or engage in any business or

transaction included in the objects of the Company.

13. The Board of Directors and the duly authorised Committee of Directors of NPIL in their Meetings held

on 31st day of August 2007 and 5th day of September 2007 and the Board of Directors of NRDL in

their Meeting held on 5th day of September 2007, approved the Scheme for the demerger of the NCE

Research Unit to NRDL.

14. The main benefits of the proposed Scheme are, inter alia, summarized as under:

a) Research for New Chemical Entities (NCE) is a high-risk high-reward business. De-merging

this activity into a separate entity de-risks NPIL from the down sides of NCE Research.

b) At the same time, it provides NPILs shareholders the opportunity to directly participate in the

rewards that NCE Research holds should the NCEs successfully progress to market.

c) It also provides shareholders who may not wish to participate in the high-risk high-reward

activity, to sell their shareholding in NRDL at a time of their choosing, since the shares of

NRDL would be listed on the BSE & NSE.

d) The NCE business has tremendous growth opportunities and is at a stage requiring focussed

management attention. This would be achieved with the proposed demerger.

e) NCE Research also requires substantial funding / investments. De-merging this activity into

a separate entity would be conducive for attracting such funding / investments by potential

investors, who would be inclined to invest large funds solely for NCE Research.

15. The salient features of the Scheme are as follows:

a) The Appointed Date for the Scheme is April 1, 2007.


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b) With effect from the Appointed Date, the NCE Research Unit of NPIL along with all the assets

and liabilities relating thereto and inclusive of unutilized monies collected under the Rights

Issue of NPIL in 2005 and intended for NCE Research to the extent of Rs.95 crores shall stand

transferred to and vested in and / or be deemed to be transferred to and vested in NRDL as

a going concern, with all its assets and liabilities.

c) Out of the Securities Premium Account of Rs.3,243,595,120appearing in the books of NPIL,a sum of Rs.1,463,166,490 representing the Securities Premium applicable to the said Rights

Issue of NPIL and pertaining to the NCE Research Unit shall also be transferred to NRDL and

shall become the Securities Premium in the books of NRDL.

d) Upon the Scheme becoming operative, NRDL shall, in consideration of the transfer of the

NCE Research Unit from NPIL to NRDL, issue and allot to every member of NPIL, holding

Equity Shares in NPIL, 1 (One) equity share of the face value of Rs 10 credited as fully paid

up for every 10 (Ten) equity shares of the face value of Rs. 2 each held in NPIL as on the

Record Date, subject to shares to be issued by NRDL in respect of such of the Rights shares

and/or entitlement to such shares of NPIL, which are held in abeyance, shall also be kept in

abeyance.

e) Upon the Scheme becoming operative, NRDL shall, subject to Clause 5.2.8 of the Scheme,

in consideration of the transfer of the NCE Research Unit from NPIL to NRDL, issue and allot

to every member of NPIL, holding Preference Shares in NPIL:

(i) 1 (One) 5% Cumulative Redeemable Preference Share of the face value of Rs. 10

credited as fully paid up in the capital of NRDL for every 1 (One) 5% Cumulative

Redeemable Preference Share of the face value of Rs 100 held in NPIL (Series I

Preference Shares) as on the Record Date;

(ii) 1 (One) 5% Cumulative Redeemable Preference Share of the face value of Rs. 10

credited as fully paid up in the capital of NRDL for every 10 (Ten) 5% Cumulative

Redeemable Preference Shares of the face value of Rs 10 each held in NPIL (Series

II Preference Shares) as on the Record Date;

f) The Shares to be issued by NRDL under the Scheme shall be listed on the Stock Exchanges

on which NPILs shares are listed i.e on the Bombay Stock Exchange Limited and the National

Stock Exchange of India Limited.

g) NPIL has obtained report of valuers, M/s Dalal & Shah, Chartered Accountants confirming the

Share entitlement ratio for the proposed demerger. The valuers, in their report have confirmed

that the above ratio is fair considering that all the shareholders of NPIL will upon the demerger,

be ultimate beneficial shareholders of NRDL in the same ratio (inter-se) as they hold shares

in NPIL.

h) Re-organisation of Equity Share Capital of NPIL

(i) With effect from the Appointed Date, the paid up value of equity shares of NPIL shall

be reduced by Rs.2,09,01,314. The reduction shall be effected by reducing the paid

up value of the equity shares of NPIL from Rs.2 per equity share to Rs.1.90 per equity

share.

(ii) However, simultaneously with the reduction of the paid up value of equity shares of


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NPIL as mentioned above, an equivalent amount of Rs.2,09,01,314 shall be capitalized

from out of the balance in the General Reserve and be credited to the Equity Share

Capital Account of NPIL. Consequently, the paid up value of equity shares of NPIL

shall be reorganized from Rs 1.90 per equity share to Rs 2 per equity share.

i) As regards Preference Shares, upon issue of the Preference Shares by NRDL as provided in

the Scheme;

(i) the face value of the Series I Preference Shares of NPIL, shall stand reduced from

Rs.100 per share to Rs.90 per share by cancellation of Rs 10 from the face value of

each share.

(ii) the face value of the Series II Preference Shares of NPIL, shall stand reduced from

Rs.10 per share to Rs.9 per share by cancellation of Re 1 from the face value of each

share.

j) The credit arising in respect of the aforesaid reduction of preference share capital will be

recorded in the Capital Reserve Account of NPIL.

k) However, as clarified under Clause 5.2.8 of the Scheme, if prior to the Effective Date, the

Preference Shares are redeemed by NPIL, then to that extent no consideration would be

payable by NRDL to the Preference Shareholders of NPIL and consequently, the provisions

relating to issue of Preference Shares by NRDL and reduction of Preference Share Capital

of NPIL referred to above and as more specifically set out in Clauses 5.2.1 to 5.2.7 of the

Scheme shall have no effect. However, NRDL will reimburse to NPIL the amount of redemption

value and preference dividend paid by NPIL to the extent that the paid up value of preference

shares of NPIL would have reduced in terms of Clause 5.2.3(a) & (b) of the Scheme.

The features set out above being only the salient features of the Scheme, the members are requestedto read the enclosed Scheme to get themselves acquainted with all the detailed provisions thereof.

16. The existing Equity and Preference shareholding pattern of NPIL as on 30th September 2007, are asunder:

Equity Shareholding Pattern

Shareholding Category No. of shares %

Promoter and Promoter Group 10,43,96,595 49.95

Public :

Institutions 4,92,83,044

Non Institutions 5,53,33,505 2

Total 20,90,13,144 100.00


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Shareholding Pattern of the Series I Preference Shares


Promoter and Promoter Group 15,00,000 100

Public :

Institutions

Non Institutions

Total 15,00,000 100

Shareholding Pattern of the Series II Preference Shares


Promoter and Promoter Group 47,40,415 20.28

Public :

Institutions 1,25,86,781

Non Institutions 60,45,084 2

Total 2,33,72,280 100.00

There will be no change in the shareholding pattern of the Equity and Preference Shares of NPIL

consequent to the Scheme and hence, the pre and post Scheme shareholding pattern of the Equity

and Preference Shares of NPIL would be the same.

17. The pre and post-Scheme Equity and Preference shareholding pattern of NRDL, are as under:

Equity Shareholding Pattern

Shareholding Category Pre-Scheme Post-Scheme

No. of shares % No. of shares %

Promoter and Promoter Group 45,50,000 100 1,49,89,659 58.90

Public :

Institutions 49,28,304 19.36

Non Institutions 55,33,351 21.74

Total 45,50,000 100 2,54,51,314 100.00


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Preference Shareholding Pattern*

Shareholding Category Pre-Scheme Post-Scheme

No. of shares % No. of shares %

Promoter and Promoter Group 19,74,042 51.45

Public :

Institutions 12,58,678 32.80

Non Institutions 6,04,508 15.75

Total 38,37,228 100.00

* Note : As clarified under clause 5.2.8 of the Scheme, if prior to the Effective Date, the Preference Shares of NPIL are redeemed,then to that extent, no Preference Shares would be issued by NRDL under the Scheme.

18. The Directors of NPIL and NRDL may be deemed to be concerned and/ or interested in the proposed

Scheme to the extent of their shareholding or that of the companies, firms and/or institutions of which

they are Directors, Partners or Members and which hold shares in NPIL. Save as aforesaid, none of

the Directors of the Applicant Company have any material interest in the proposed Arrangement.

19. The extent of the shareholding of the Directors of NPIL in itself and NRDL are as follows:

Name of the No of % No. of % No. of % No. of %

Director Equity Shares Series I Series II Equity Shares

held in Preference Preference held in

NPIL Shares Shares NRDL

held in held in

NPIL NPIL

Ajay G Piramal 6,70,790 0.32 1120 0.00 10# 0.00

(Promoter)*

Keki Dadiseth

Rajesh Khanna

Y. H. Malegam 3,850 0.00

Swati A. Piramal 4,46,686 0.21 10# 0.00

S. Ramadorai

R. A. Shah 3,43,393 0.16 600 0.00

Deepak Satwalekar

N. Vaghul

N. Santhanam 83,750 0.04 10# 0.00

* Shareholding of promoter group is given elsewhere in this Explanatory Statement#These shares are held as joint holders with NPIL, which holds 45,50,000 Equity Shares in NRDL


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20. The extent of shareholdings of the Directors of NRDL in itself and the Applicant Company are as

follows:

Name of the No. of % No. of % No. of % No. of %

Director Equity Shares Equity Shares Series I Series II

held in held in Preference Preference

NRDL NPIL Shares Sharesheld in NPIL held in NPIL

Ajay G Piramal 10# 0.00 6,70,790 0.32 1,120 0.00

Swati A Piramal 10# 0.00 4,46,686 0.21

Somesh Sharma 1,80,000 0.09

N. Santhanam 10# 0.00 83,750 0.04

#These shares are held as joint holders with NPIL, which holds 45,50,000 Equity Shares in NRDL

21. No investigation proceedings have been instituted or are pending under Section 235 and 250A of the

Companies Act, 1956 in respect of Applicant Company.

22. The financial position of the Applicant Company will not be adversely affected by the Scheme. The

financial position of the Applicant Company will continue to remain strong and it will be able to meet

and pay its debts as and when they arise.

23. The Applicant Company has received No Objection letters from the Bombay Stock Exchange Limited

and the National Stock Exchange of India Limited for filing the Scheme with the Honourable High Court

of Judicature at Bombay.

24. The rights and interests of the members and creditors of NPIL will not be prejudicially affected by the

Scheme.

25. All costs, charges, taxes including duties, levies and all other expenses, if any (save as expresslyotherwise agreed) of NPIL and NRDL arising out of or incurred in carrying out and implementing this

Scheme and matters incidental thereto shall be borne by NRDL.

26. Inspection of the following documents may be had at the Registered Office of NPIL on any working

day (except Saturdays) prior to the date of the meeting, between 10 a.m. to 12 noon.

(a) Order dated 19th day of October 2007 of the Honble High Court of Judicature at Bombay,

directing the convening of separate meetings of the Equity and Preference Shareholders of

NPIL.

(b) Memorandum and Articles of Association of NPIL and NRDL.

(c) The Audited financial statements of NPIL & NRDL as on March 31, 2007

(d) Copies of the No Objection letters dated October 1, 2007 and October 8, 2007 received by

NPIL from Bombay Stock Exchange Limited and National Stock Exchange of India Limited

respectively.


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(e) Report of M/s Dalal & Shah, Chartered Accountants on the share entitlement ratio.

A copy of the Scheme and Explanatory Statement may also be obtained from the Registered Office

of Nicholas Piramal India Limited.

Ajay G. PiramalChairman appointed for the Meeting

Dated this 25th day of October 2007.

Registered Office:

Nicholas Piramal Tower,Ganpatrao Kadam Marg,

Lower Parel, Mumbai - 400 013


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COMPOSITE SCHEME OF ARRANGEMENT

BETWEEN

NICHOLAS PIRAMAL INDIA LIMITED

AND

NPIL RESEARCH & DEVELOPMENT LIMITED

AND

THEIR RESPECTIVE SHAREHOLDERS & CREDITORS

Preamble1 This Composite Scheme of Arrangement is presented under Sections 391 to 394 and other applicable

provisions of the Companies Act, 1956 for the Demerger of New Chemical Entity Research Unit (NCEResearch Unit), a division of Nicholas Piramal India Limited, into NPIL Research & Development

Limited on a going concern basis.

2 The Scheme is divided into following parts:

a. Part A deals with Introduction and Definitions.

b. Part B deals with the demerger of NCE Research Unit, a division of Nicholas Piramal India

Limited into NPIL Research & Development Limited

c. Part C deals with General Terms and Conditions.

PART A - INTRODUCTION AND DEFINITIONS

1 DEFINITIONS

1.1 Act means the Companies Act, 1956 and includes any statutory re-enactment or modifications

thereof from time to time.

1.2 Appointed Date means April 1, 2007 or such other date as may be approved by the High

Court of Judicature at Bombay.

1.3 Effective Date means the date on which certified copies of the Orders of High Court of

Judicature at Bombay sanctioning the Scheme are filed with the Registrar of Companies at

Maharashtra, Mumbai by each of NPIL and NRDL.

1.4 NRDL or the Resulting Company means NPIL Research & Development Limited, acompany incorporated under the Companies Act, 1956 and having its registered office atNicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013.

1.5 NPIL or the Demerged Company means Nicholas Piramal India Limited, a companyincorporated under the Companies Act, 1913 and having its registered office at Nicholas

Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013.


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1.6 NCE Research Unit or the Demerged Unit means and includes the New Chemical Entity

Research Unit of NPIL proposed to be transferred to NRDL and including but not limited to:

1.6.1 All assets (whether movable or immovable, real or personal, corporeal or incorporeal,

present, future or contingent, tangible or intangible) and liabilities which relate theretoor are necessary therefor and including specifically the following:

(i) All properties and assets of whatsoever nature and wherever situated,required for/ pertaining to NCE Research Unit, including all fixed assets, plant

and machinery, equipments, appliances, furniture and fixtures, accessories,vehicles, current assets, liquid funds, samples, plant and other extracts, andother properties and assets pertaining to NCE Research Unit;

(ii) All the debts (whether secured or unsecured), liabilities (including contingentliabilities), duties and obligations of NCE Research Unit of every kind, nature

and description whatsoever and howsoever accruing or arising out of, and allloans and borrowings raised or incurred and utilized for its businesses, activities

and operations pertaining to NCE Research Unit;

(iii) All rights including lease rights, tenancy rights, permits, quota rights, licenses,

titles, intellectual property rights relating to information, data, records,

photographs and such other property collected or acquired, including patents,trade marks and copyrights, whether applied for or to be applied for, and all

tenancies in relation to office, powers and facilities of every kind, nature anddescription whatsoever and all the privileges and benefits (including obligations)

of all contracts, agreements and arrangements and all other rights, interests,licenses, records, powers and facilities of every kind, nature and description,

whatsoever pertaining to NCE Research Unit;

(iv) All municipal and other statutory and/or regulatory permissions, approvals,

recognitions, consents, licenses, registrations, subsidies, concessions,exemptions, remissions, tax deferrals and all rights and entitlements to use andavail of telephones, telexes, facsimile connections and installations, utilities,

electricity and other services and all other interests in connection with or

pertaining to NCE Research Unit;

(v) All records, files, papers, computer programs, right to use the software,manuals, data, catalogues, quotations, lists of present and former customers

and suppliers, and other records, whether in physical form or electronic formin connection with or relating to NCE Research Unit;

(vi) All duties and obligations, which are relatable to NCE Research Unit:

For the purpose of this Scheme, it is clarified that liabilities pertaining to NCEResearch Unit includes and shall be transferred in the manner as defined in

Section 2(19AA) of the Income Tax Act, 1961 as follows:

The liabilities debts/obligations at the close of business on the day

immediately preceding the Appointed Date which arise out of the activitiesor operations of the NCE Research Unit;

There are no specific loans and borrowings raised, incurred and utilisedsolely for the activities or operation of NCE Research Unit at the close

of business on the day immediately preceding the Appointed Date andaccordingly, no transfer of any such loans is required; and

No general/ multipurpose borrowings at the close of business on the dayimmediately preceding the Appointed Date have been utilised for theactivities or operation of NCE Research Unit and accordingly, no transfer


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of any such borrowings is required;

1.6.2 All permanent employees of NPIL working for or employed in NCE Research Unit, asidentified and agreed between NPIL and NRDL.

1.6.3 Any question that may arise as to whether a specified asset or liability pertains ordoes not pertain to NCE Research Unit or whether or not it arises out of the activities

or operations of NCE Research Unit shall be decided by mutual agreement betweenthe Board of Directors of NPIL and NRDL or committee(s) thereof authorized by the

respective Board of Directors as on the Effective Date or in such other manner asagreed between NPIL and NRDL.

1.7 Record Date means the date to be fixed mutually by the Board of Directors of NPIL andNRDL for the purposes of issue of shares of NRDL to the shareholders of NPIL on demergerof NCE Research Unit into NRDL.

1.8 Remaining Business means all the businesses and undertakings of NPIL other than NCEResearch Unit.

1.9 Scheme or the Scheme or this Scheme means this Composite Scheme of Arrangementin its present form or with any modification(s) made under Clause 15 of this Scheme.

2 DATE OF TAKING EFFECT AND OPERATIVE DATE

The Scheme set out herein in its present form or with any modification(s) approved or as imposed or

directed by the High Court of Judicature at Bombay, shall be deemed to take effect from the AppointedDate but shall come into operation from the Effective Date.

3 SHARE CAPITAL

3.1 The share capital of NPIL as on March 31, 2007 is as under:


Authorised Capital

25,00,00,000 Equity Shares of Rs. 2 each 5000.00

30,00,000 Preference Shares of Rs. 100 each 3000.00

2,40,00,000 Preference Shares of Rs. 10 each 2400.00

10,50,00,000 unclassified shares of Rs. 2 each 2100.00

Total 12500.00



15,00,000 5% Cumulative Redeemable 1500.00Preference Shares of Rs. 100 each

2,33,72,280 5% Cumulative Redeemable 2337.00Preference Shares of Rs. 10 each

Total 8017.00


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Subsequent to the aforesaid Balance Sheet date, the Issued, Subscribed and Paid-up Share

Capital of NPIL has been changed as under:

Issued, Subscribed and Paid-up Rupees in lacs


15,00,000 5% Cumulative Redeemable 1500.00Preference Shares of Rs. 100 each

2,33,72,280 5% Cumulative Redeemable 2337.00Preference Shares of Rs. 10 each

Total 8017.00

3.2 The share capital of NRDL as on the latest audited balance sheet date i.e. 31st March 2007

was as under:


Authorised Capital

50,000 Equity Shares of Rs. 10 each 5.00


10,000 Equity shares of Rs. 10 each fully paid up 1.00

TOTAL 1.00

Subsequent to the aforesaid Balance Sheet date, Authorised Share Capital has been increased

and further equity shares have been allotted to NPIL, and the Authorised, Issued, Subscribedand Paid-up Share Capital of NRDL has been changed as under:


Authorised Capital

50,00,000 shares of Rs. 10 each 500.00


45,50,000 Equity shares of Rs. 10 each, fully paid up 455.00

TOTAL 455.00

As on date, the entire issued, subscribed and paid-up capital of NRDL is held by NPIL. Uponimplementation of the Scheme, NRDL will cease to be a subsidiary of NPIL.

PART B: DEMERGER OF NCE RESEARCH UNIT INTO NRDL

4 TRANSFER AND VESTING OF UNDERTAKING

The NCE Research Unit of NPIL, as defined in Clause 1.6, shall stand transferred to and vested inor deemed to be transferred to and vested in NRDL, as a going concern, in accordance with Section2(19AA) of the Income Tax Act, 1961 and in the following manner:

4.1 With effect from the Appointed Date, NCE Research Unit shall, pursuant to the provisionscontained in Sections 391 to 394 and all other applicable provisions, if any, of the Act and without

any further act, deed, matter or thing, stand transferred to and vested in and / or be deemedto be transferred to and vested in NRDL as a going concern, in the following manner:

4.1.1 With effect from the Appointed Date the NCE Research Unit shall, under the provisions


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of Sections 391 to 394 and all other applicable provisions, if any, of the Act, without

any further act or deed, be transferred to and vested in and/ or be deemed to betransferred to and vested in NRDL, free from all encumbrances, so as to vest in NRDL,

all the rights, title and interest of NPIL therein, existing as at the close of the businesson the day immediately preceding the Appointed Date.

4.1.2 All the movable assets pertaining to NCE Research Unit, which are capable of being

physically transferred including cash on hand, shall be physically handed over bydelivery to NRDL to the end and intent that the property therein passes to NRDL. Suchdelivery and transfer shall be made on a date to be mutually agreed upon betweenthe respective Boards of Directors or Committees thereof of NPIL and NRDL, within

60 days from the Effective Date.

4.1.3 In respect of any assets pertaining to NCE Research Unit, including actionable

claims, sundry debtors, outstanding loans, advances recoverable in cash or kind orfor value to be received and deposits with the Government, semi-Government, local

and other authorities and bodies and customers, NRDL may, and NPIL shall, on beingso requested by NRDL, issue notices in such form as NRDL specifies stating thatpursuant to the High Court of Judicature at Bombay having sanctioned this Scheme

under Sections 391 and 394 of the Act, the relevant debt, loan, advance, deposit or

other asset, be paid or made good to, or be held on account of, NRDL as the personentitled thereto, to the end and intent that the right of NPIL to receive, recover orrealise the same, stands transferred to NRDL and that appropriate entries should be

passed in their respective books to record the aforesaid changes.

4.1.4 With effect from the Appointed Date, the amount of Rs.95.00 crores out of the proceeds

of the Rights Issue made by NPIL in August 2005 and intended to be used for the NCEResearch Unit but remaining unspent as at the Appointed Date, shall be deemed tobe an asset of the NCE Research Unit to be recoverable from NPIL.

4.1.5 With effect from the Appointed Date, out of the Securities Premium of Rs.3,243,595,120appearing in the books of NPIL, a sum of Rs.1,463,166,490 representing the Securities

Premium applicable to the Rights Issue of NPIL pertaining to NCE Research Unit shall

also be transferred to NRDL and shall become the Securities Premium in the booksof NRDL.

4.1.6 With effect from the Appointed Date, all debts, liabilities, duties and obligations of every

kind, nature and description of NPIL relatable to NCE Research Unit shall also, underthe provisions of Sections 391 to 394 and all other applicable provisions, if any, of theAct, without any further act or deed, be transferred to or be deemed to be transferred

to NRDL, so as to become as from the Appointed Date the debts, liabilities, dutiesand obligations of NRDL and it shall not be necessary to obtain the consent of any

third party or other person who is a party to any contract or arrangement by virtue ofwhich such debts, liabilities, contingent liabilities, duties and obligations have arisen

in order to give effect to the provisions of this sub-clause.

4.1.7 It is clarified that if any assets (estate, claims, rights, title, interest in or authorities

relating to such assets) or any contract, deeds, bonds, agreements, schemes,arrangements or other instruments of whatsoever nature in relation to NPIL, whichNPIL owns or to which NPIL is a party to, cannot be transferred to NRDL for any reason

whatsoever, NPIL shall hold such assets or contracts, deeds, bonds, agreements,schemes, arrangements or other instruments of whatsoever nature, in trust for the

benefit of NRDL, insofar as it is permissible so to do, till such time as the transfer iseffected.

4.1.8 The transfer and vesting of the undertaking of NCE Research Unit shall be subjectto the existing securities, charges and mortgages, if any, in relation to the liabilities of


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NCE Research Unit transferred to NRDL under Clause 4.1.6 above.

5 ISSUE OF SHARES

5.1 ISSUE OF EQUITY SHARES BY NRDL

5.1.1 Upon this Scheme becoming operative and upon vesting of the undertaking of NCEResearch Unit in NRDL, in terms of this Scheme, NRDL shall, in consideration of

transfer of NCE Research Unit from NPIL to NRDL, without any further application ordeed, issue and allot to every member of NPIL, holding Equity Shares in NPIL and

whose name appears in the Register of Members of NPIL, on the Record Date, or tohis/ her heirs, executors, administrators or the successors-in-title, as the case may be,

1 (One) equity share of the face value of Rs 10 credited as fully paid up in the capitalof NRDL for every 10 (Ten) equity shares of the face value of Rs 2 each held in NPILfully paid up, subject to Shares to be issued by NRDL, in respect of such of the right

shares and/or entitlement to such shares of NPIL, which are held in abeyance, shallalso be kept in abeyance.

5.1.2 The new equity shares in NRDL to be issued to the members of NPIL pursuant toClause 5.1.1 above shall be subject to the Memorandum and Articles of Association

of NRDL and shall rank pari passu in all respects, including dividend, with the existing

equity shares of NRDL.

5.2 ISSUE OF PREFERENCE SHARES BY NRDL & RE-ORGANISATION OF PREFERENCESHARE CAPITAL OF NPIL

5.2.1 Upon this Scheme becoming operative and upon vesting of the undertaking of NCE

Research Unit in NRDL, in terms of this Scheme and subject to clause 5.2.8 of thisScheme, NRDL shall, in consideration of transfer of NCE Research Unit from NPIL

to NRDL without any further application or deed, issue and allot to every member ofNPIL, holding fully paid up Preference Shares in NPIL and whose name appears in

the Register of Members of NPIL on the Record Date, or to his/ her heirs, executors,administrators or the successors-in-title, as the case may be,

a) 1 (One) 5% Cumulative Redeemable Preference Share of the face value ofRs. 10 credited as fully paid up in the capital of NRDL for every 1 (One) 5%Cumulative Redeemable Preference Share of the face value of Rs. 100 held in

NPIL.

b) 1 (One) 5 % Cumulative Redeemable Preference Share of the face value of

Rs. 10 credited as fully paid up in the capital of NRDL for every 10 (Ten) 5%Cumulative Redeemable Preference Shares of the face value of Rs. 10 each

held in NPIL.

5.2.2 The preference shares to be issued pursuant to Clause 5.2.1 above shall be subject

to the following terms and conditions:

a) They shall be subject to the Memorandum and Articles of Association ofNRDL;

b) They shall carry the right to receive cumulative preferential dividend of 5% perannum of the amount credited as having been paid as above in respect thereof

for each financial year of NRDL with effect from the Appointed Date;

c) They shall be redeemable out of the profits and/or proceeds of issue of fresh

shares or as may be permitted under the Act at the option of NRDL at any timebefore the expiry of 20 years from the Appointed Date, by giving not less than

30 days notice to the holders of the preference shares;


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d) They shall rank for dividend in priority to the equity shares of NRDL, and shall,

on winding up of NRDL be entitled to rank, as regards repayment of capital uptothe commencement of winding up, in priority to the equity shares of NRDL;

e) They shall inter se rank pari passu with each other;

f) NRDL shall be entitled in future to create and/or issue further preference shares

ranking subsequent to the aforesaid preference shares.

5.2.3 Upon issue of Preference Shares by NRDL as per Clause 5.2.1 above,

a) 5% Cumulative Redeemable Preference Shares of the face value of Rs 100each held by the shareholders in NPIL, shall stand reduced to 5% Cumulative

Redeemable Preference Shares of the face value of Rs. 90 each by cancellationof Rs 10 from the face value of each Preference Share.

b) 5% Cumulative Redeemable Preference Shares of the face value of Rs 10

each held by the shareholders in NPIL, shall stand reduced to 5% CumulativeRedeemable Preference Shares of the face value of Rs 9 each by cancellation

of Rs 1 from the face value of each Preference Share.

5.2.4 The share certificates of NPIL in relation to the shares held by its preference

shareholders whose names appear in the Register of Members as on the RecordDate, shall, without any further application, act, instrument or deed, be deemed to

have been automatically cancelled and new share certificates will be issued to theshareholders of NPIL. It is clarified that the shares held in dematerialised form willbe reduced automatically and it will be deemed that on such reduction, the shares

were reduced in accordance with Clause 5.2.3 above.

5.2.5 The reduction as aforesaid in Clauses 5.2.3 above, shall be effected as a part of the

Scheme only and not in accordance with sub-section (2) of Section 101 of the Actas the same does not involve either diminution of liability in respect of unpaid share

capital or payment to any shareholder of any paid up share capital and the order ofthe Court sanctioning the Scheme shall be deemed to be an order under Section 102

of the Act confirming the reduction.

5.2.6 Upon reduction of Preference Share Capital as per Clause 5.2.3 above, the AuthorisedCapital clause in the Memorandum and Articles of Association of NPIL shall stand

amended appropriately.

5.2.7 The credit arising in respect of the aforesaid reduction of capital will be recorded in

the Capital Reserve Account of NPIL.

5.2.8 It is hereby clarified that if prior to the Effective Date, the Preference Shares are

redeemed by NPIL, then to that extent no consideration will be payable by NRDLas per Clause 5.2.1 above and consequently, Clauses 5.2.1 to 5.2.7 shall have no

effect. However, NRDL will reimburse to NPIL the amount of redemption value andpreference dividend paid by NPIL to the extent that the paid up value of preferenceshares of NPIL would have reduced in terms of Clause 5.2.3(a) & (b) above.

5.3 OTHER TERMS APPLICABLE TO ISSUE OF SHARES

5.3.1 In the event of there being any pending share transfers, whether lodged or outstanding,

of any shareholder of NPIL, the Board of Directors or any Committee thereof of NPILshall be empowered in appropriate cases, prior to or even subsequent to the Record

Date, to effectuate such a transfer in NPIL as if such changes in registered holderwere operative as on the Record date, in order to remove any difficulties arising to the

transferor or transferee of the share in NRDL issued by NRDL after the effectiveness


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of this Scheme. The Board of Directors or any Committee thereof of NPIL shall be

empowered to remove such difficulties as may arise in the course of implementationof this Scheme and registration of new members in NRDL on account of difficulties

faced in the transition period.

5.3.2 The Board of Directors of NRDL shall consolidate all fractional entitlement(s), if any,

arising and allot Shares in lieu thereof to a director or an officer of NRDL or such

other person as the Board of Directors of NRDL shall appoint in this behalf who shallhold the Shares in trust on behalf of the members entitled to fractional entitlementswith the express understanding that such director(s) or officer(s) or person(s) shallsell the same at such time or times and at such price or prices and to such person or

persons, as it/ he/ they may deem fit, and pay to NRDL, the net sale proceeds thereof,whereupon NRDL shall distribute such net sale proceeds, subject to taxes, if any, to

the members in proportion to their respective fractional entitlements.

5.3.3 The Shares of NRDL shall, subject to the execution of the listing agreement and

payment of the appropriate fee, be listed on the Bombay Stock Exchange Limited andNational Stock Exchange of India Limited, in pursuance of Clause 8.3.5 of the SEBI(Disclosure & Investor Protection) Guidelines, 2000.

5.3.4 The Shares of NRDL will be issued in dematerialised form to those shareholders whohold the shares of NPIL in dematerialised form, provided all details relating to the

account with the depository participant are available to NRDL. All those shareholderswho hold shares of NPIL in certificate form will be issued Shares of NRDL in the

certificate form unless otherwise communicated in writing by the shareholders onor before such date as may be determined by the Board of Directors of NRDL or a

committee thereof.

5.3.5 Shares allotted by NRDL pursuant to the Scheme and issued in dematerializedform shall remain frozen in the depositories system, till listing / trading permission is

given by the Bombay Stock Exchange Limited and National Stock Exchange of IndiaLimited.

5.3.6 The Authorised Share Capital of NRDL shall be increased appropriately to enable the

issue of shares to the shareholders of NPIL in terms of this Scheme.

6 REORGANISATION OF CAPITAL

6.1 With effect from the Appointed Date, the paid up value of equity shares of NPIL shall be

reduced by Rs.2,09,01,314.

6.2 The reduction as envisaged in Clause 6.1 above, shall be effected by reducing the paid up

value of the equity shares of NPIL from Rs.2 per equity share to Rs.1.90 per equity share.

6.3 Simultaneously, with the reduction of the paid up value of equity shares of NPIL in accordance

with Clause 6.2 above, an amount of Rs.2,09,01,314 shall be capitalized from out of the balancein General Reserve and be credited to equity share capital account of NPIL. Consequently, thepaid up value of equity shares of NPIL shall be reorganized from 20,90,13,144 Equity Shares

of Rs 1.90 each to 20,90,13,144 Equity Shares of Rs 2 each.

6.4 The reduction / reorganization of the equity share capital of NPIL as mentioned above, shall

be effected as a part of the Scheme only and not in accordance with sub-section (2) of Section101 of the Act as the same does not involve either diminution of liability in respect of unpaid

share capital or payment to any shareholder of any paid up share capital and the order of theCourt sanctioning the scheme shall be deemed to be an order under Section 102 of the Actconfirming the reduction and no separate sanction under Sections 100 102 of the Act will

be necessary.


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7 ACCOUNTING TREATMENT

7.1 IN THE BOOKS OF NRDL

7.1.1 NRDL shall record the assets and liabilities, pertaining to NCE Research Unit, at the

respective book values as appearing in the books of NPIL on the opening of businesshours on the Appointed Date.

7.1.2 NRDL shall credit to its Share Capital Account, the aggregate face value of the equityshares issued by it pursuant to Clause 5.1.1 of this Scheme.

7.1.3 If prior to the Effective Date, the Preference Shares are redeemed by NPIL, then

NRDL shall create a liability in its books for an amount equivalent to the amount thatit will reimburse to NPIL in accordance with Clause 5.2.8 of this Scheme.

7.1.4 If prior to the Effective Date, the Preference Shares are not redeemed by NPIL, thenNRDL shall credit to the Share Capital Account the aggregate face value of preference

shares issued in accordance with Clause 5.2.1 of this Scheme.

7.1.5 NRDL shall credit to the Securities Premium Account a sum equivalent to the amount

transferred from NPIL as pertaining to the NCE Research Unit.

7.1.6 The excess of book value of assets over liabilities after giving effect to 7.1.1 to 7.1.5above and after making adjustments, if any, for Deferred Tax Liability required to becreated in respect of the NCE Research Unit shall be credited to Capital ReserveAccount. In case of there being a shortfall, the same shall be debited to Goodwill

Account.

7.2 IN THE BOOKS OF NPIL

7.2.1 The book values of the assets and liabilities pertaining to the NCE Research Unittransferred to NRDL, shall be reduced from the book values of the assets and liabilities

appearing in the books of NPIL.

7.2.2 The excess of book values of assets over liabilities transferred to NRDL, after adjusting

the reduction in equity share capital referred to in clause 6.1 above, to the extent of

Rs.2,09,01,314 and after giving effect to clause 4.1.5 above, shall be debited to theSecurities Premium Account in the books of NPIL.

7.2.3 The amount of Rs.2,09,01,314 capitalized in terms of clause 6.3 above, shall bedebited to the General Reserves Account.

7.2.4 The reduction of Securities Premium as aforesaid, shall be effected as an integral partof this Scheme without having to follow the process under Section 78 read with 100

to 103 of the Act separately and the Order of the High Court sanctioning the Schemeshall be deemed to be also the Order under Section 102 of the Act for the purpose of

confirming the reduction. The provisions of sub-section (2) of Section 101 of the Actwill not be applicable as the reduction would not involve either a diminution of liabilityin respect of unpaid share capital or payment of paid-up share capital.

8 TRANSACTIONS BETWEEN APPOINTED DATE AND EFFECTIVE DATE

With effect from the Appointed Date and up to the Effective Date:

8.1 NPIL shall carry on and be deemed to have carried on its business and activities relating toNCE Research Unit and shall be deemed to have held and stood possessed of and shall hold

and stand possessed of its entire businesses and undertakings relating to NCE Research Unitfor and on account of and in trust for NRDL;

8.2 All the profits or income accruing or arising to NPIL relatable to NCE Research Unit or


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expenditure or losses arising or incurred by NPIL relatable to NCE Research Unit shall for all

purposes be treated and deemed to be and accrue as the profits or income or expenditure orlosses (as the case may be) of NRDL;

8.3 NRDL shall be entitled, pending the sanction of the Scheme, to apply to the Central Governmentand all other agencies, departments and authorities concerned as are necessary under any

law for such consents, approvals and sanctions which NRDL may require to carry on the

business of NCE Research Unit;

8.4 NPIL shall not utilize its profits or income of NCE Research Unit for the purpose of declaringor paying any dividend or for any other purpose (other than in the ordinary course of itsbusiness) in respect of the period falling on and after the Appointed Date, without the prior

written consent of the Board of Directors of NRDL;

8.5 NPIL shall not without the prior written consent of the Board of Directors of NRDL or pursuant to

any pre-existing obligation, sell, transfer or otherwise alienate, charge, mortgage or encumberor otherwise deal with or dispose of its undertaking relating to NCE Research Unit or any part

thereof or any material assets, except in the ordinary course of its business; and

8.6 NPIL shall not, without the prior written consent of the Board of Directors of NRDL or pursuant

to any pre-existing obligation, vary the terms and conditions of service of the employees

working for the NCE Research Unit except in the ordinary course of its business or consistentwith past practice.

8.7 With effect from the date of filing of this Scheme with the High Court of Judicature at Bombayup to and including the Effective Date, NPIL and NRDL shall not issue any further shares,

either by any increase, (by issue of equity shares on a rights basis, bonus shares, convertibledebentures or otherwise), decrease, reduction, reclassification, subdivision or consolidation,

re-organisation, or in any other manner which may, in any way, affect the Share ExchangeRatio under the Scheme, except by mutual consent of the respective Boards of Directors of

the NPIL and NRDL or unless any such change in the capital structure has commenced priorto the filing of this Scheme or unless the same is in accordance with the provisions of thisScheme.

9 STAFF, WORKMEN & EMPLOYEES

9.1 On the Scheme becoming operative, all staff, workmen and employees of NPIL working for

the NCE Research Unit, who are in service as on the Effective Date shall be deemed tohave become staff, workmen and employees of NRDL, with effect from the Appointed Date,

without any break in their service and on the basis of continuity of service, and the terms andconditions of their employment with NRDL shall not be less favorable than those applicable

to them with reference to their employment with NPIL on the Effective Date. NRDL agreesthat the services of all such employees with NPIL up to the Effective Date shall be taken intoaccount for purposes of all retirement benefits to which they may be eligible in NPIL on the

Effective Date. Any question that may arise as to whether any staff, workman or employeebelongs to or does not belong to NCE Research Unit, shall be decided mutually by Board of

Directors of NPIL and NRDL or committee(s) thereof.

9.2 It is expressly provided that, on the Scheme becoming effective, the Provident Fund, GratuityFund, Superannuation Fund or such other Special Fund, if any, or Trusts (hereinafter collectivelyreferred as Funds) created for the benefit of the staff, workmen and employees of NPIL shall,to the extent they relate to the staff, workmen and employees working for the NCE Research

Unit, become Funds of NRDL, or shall be transferred to NRDL for all purposes whatsoeverin relation to the administration or operation of such Funds or in relation to the obligation to

make contributions to the said Funds in accordance with the provisions thereof as per theterms provided in the respective Trust Deeds, if any, to the end and intent that all rights, duties,

powers and obligations of NPIL in relation to such Funds shall become those of NRDL. It is


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15 MODIFICATION OR AMENDMENTS TO THE SCHEME

NPIL and NRDL by their respective Board of Directors may assent to any modifications/ amendmentsto the Scheme or to any conditions or limitations that the Court and / or the Stock Exchanges and /or

any other authority may deem fit to direct or impose or which may otherwise be considered necessary,desirable or appropriate by them (i.e. the Board of Directors). NPIL and NRDL by their respective Boardof Directors are hereby authorised to take all such steps as may be necessary, desirable or proper to

resolve any doubts, difficulties or questions whether by reason of any directive or orders of any otherauthorities or otherwise howsoever arising out of or under or by virtue of the Scheme and/or any matter

concerned or connected therewith.

16 CONDITIONALITY OF THE SCHEME

This Scheme is and shall be conditional upon and subject to:

16.1 The Scheme being approved by the requisite majorities in number and value of such classes

of persons including the respective members and /or creditors of NPIL and NRDL as may bedirected by the Bombay High Court.

16.2 The Scheme being sanctioned by the Bombay High Court or any other authority under Sections391 to 394 and other applicable provisions of the Act.

16.3 Certified or authenticated copies of the Orders of the Bombay High Court sanctioning the

Scheme being filed with the Registrar of Companies, Maharashtra, Mumbai by NPIL andNRDL.

17 EFFECT OF NON-RECEIPT OF APPROVALS

In case the Scheme is not sanctioned by the High Cour t of Judicature at Bombay, or in the event any of

consents, approvals, permissions, resolutions, agreements, sanctions or conditions enumerated in theScheme not being obtained or complied or for any other reason, the Scheme cannot be implemented

by December 31, 2008, or by such later date as may be agreed by the respective Board of Directorsof NPIL and NRDL, the Scheme shall become null and void, and in that event no rights and liabilitieswhatsoever shall accrue to or be incurred by any of the companies or their shareholders or creditors

or employees or any other person. In such a case, each Company shall bear its own cost, charges

and expenses in connection with the Scheme unless otherwise mutually agreed.

18 COSTS, CHARGES & EXPENSES

All costs, charges, taxes including duties, levies and all other expenses, if any (save as expressly

otherwise agreed) of NPIL and NRDL arising out of or incurred in carrying out and implementing thisScheme and matters incidental thereto shall be borne by NRDL.


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IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONCOMPANY APPLICATION NO. 1099 OF 2007

In the matter of the Companies Act, 1956 (1 of 1956);AND

In the matter of Sections 391 to 394 read with Sections 78and 100 of the Companies Act, 1956;

AND

In the matter of Composite Scheme of Arrangementbetween Nicholas Piramal India Limited and NPIL

Research and Development Limited and their respectiveShareholders and Creditors.


1913 having its registered office at NicholasPiramal Tower, Ganpatrao Kadam Marg, LowerParel, Mumbai - 400 013.

FORM OF PROXY

I/ We ________________________________________, the undersigned, being the Equity Shareholder(s)

of Nicholas Piramal India Limited, the Applicant Company do hereby appoint Mr./Ms. ___________________________ of __________________________________ and failing him/her _________________________of ____________________________________ as my/our proxy, to act for me/us at the meeting of the

Equity Shareholders to be held on Friday, the 23rd day of November 2007 at 10.30 a.m. at M.C. Ghia Hall,Bhogilal Hargovindas Building, 2nd floor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai-400 001,

for the purpose of considering and, if thought fit, approving, with or without modifications, the arrangementsembodied in the proposed Composite Scheme of Arrangement between Nicholas Piramal India Limitedand NPIL Research and Development Limited and their Respective Shareholders and Creditors and at

such meeting, and any adjournment / adjournments thereof, to vote, for me/us and in my/ our name(s)_____________________________________ (herein, if for, insert FOR, if against insert AGAINST and

in the latter case, strike out the words either with or without modifications after the word Arrangementhereinbelow) the said arrangement embodied in the Composite Scheme of Arrangement either with or without

modifications as my/our proxy may approve.

Dated this ________ day of ____________________, 2007

Name : _________________________________________ Signature

Address: _________________________________________

_________________________________________

Folio No. _________________________________________

Client ID No. _________________________________________

DP ID No. _________________________________________ Signature(s) across the stamp

No. of shares _________________________________________

Notes:

(1) The Proxy must be deposited at the Registered Office of the Company at Nicholas Piramal Tower,Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 at least 48 hours before the time appointed

for holding the meeting. The proxy need not be a member of Nicholas Piramal India Limited.

(2) All alterations made in the form of Proxy should be initialled.

(3) In case of multiple proxies, the proxy later in time shall be accepted.

} .....Applicant Company

AffixRe.1

RevenueStamp


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ATTENDANCE SLIP

PLEASE COMPLETE THIS ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE

MEETING HALL.

I hereby record my presence at the Meeting of the Equity Shareholders of the Company, convened pursuant

to the Order dated 19th day of October 2007 of the Honble High Court of Judicature of Bombay, at M.C.

Ghia Hall, Bhogilal Hargovindas Building, 2nd floor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda),

Mumbai - 400 001, on Friday, the 23rd day of November 2007 at 10.30 a.m.

Name and Address of Equity Shareholder (IN BLOCK LETTERS):

___________________________________________________

Signature : ______________________________________

Folio No. : ______________________________________

Client ID : ______________________________________

D.P. I.D. : ______________________________________

No. of Shares : ______________________________________

Name of the Proxy (IN BLOCK LETTERS) : ________________________________________________

Signature : ______________________________________

NOTE : Shareholders attending the Meeting in person or by Proxy are requested to complete the Attendance

Slip and hand it over at the entrance of the meeting hall.


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NOTICE OF EXTRA-ORDINARY GENERAL MEETING OF THE SHAREHOLDERSOF NICHOLAS PIRAMAL INDIA LIMITED

NOTICE is hereby given that an Extraordinary General Meeting of the Shareholders of Nicholas Piramal India

Limited (NPIL or the Company) will be held on Friday, the 23rd day of November, 2007 at 11.30 a.m. or

soon after the conclusion of the Court Convened Meeting of the Preference Shareholders which has been

convened on the same date at 11.15 a.m. by the Honble High Court of Judicature at Bombay, whichever is

later, at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd floor, 18/20 Kaikhushru Dubash Marg, (Kala

Ghoda), Mumbai 400 001, to transact the following business :

1. Reduction of Equity Share Capital and simultaneous capitalisation of equivalent amount from

General Reserves

To consider and if thought fit, to pass with or without modification(s), the following Resolution as a

Special Resolution:

RESOLVED THAT subject to the confirmation by the Honble High Court of Judicature at Bombay,

consent of the Company be and is hereby accorded, pursuant to the provisions of Section 100 and

all other applicable provisions, if any, of the Companies Act, 1956 read with Article 8 of the Articles

of Association of the Company, to the reduction in the paid up value of the equity shares of the

Company from Rs.2 per equity share to Rs.1.90 per equity share, aggregating to a total reduction

of Rs.2,09,01,314 in the Equity Share Capital of the Company (Equity Capital Reduction), in themanner as provided in Clause 6 of the Composite Scheme of Arrangement between Nicholas Piramal

India Limited and NPIL Research and Development Limited (Scheme) which is subject to sanction

by the Honble High Court;

RESOLVED FURTHER THAT pursuant to Article 174 of the Articles of Association of the Company,

the members do hereby consent to the simultaneous capitalization and transfer of an amount of

Rs.2,09,01,314, which is equivalent to the Equity Capital Reduction, from out of the balance in

General Reserves to the Equity Share Capital Account of the Company, as provided in Clause 6.3 of

the Scheme, consequent to which, the paid up value of the equity shares of the Company shall be

reorganized from Rs 1.90 per Equity Share to Rs 2 per Equity Share;

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorizedto do all such acts, deeds, matters and things, as may be necessary, proper or expedient, for or in

connection with or for giving effect to this resolution and to resolve all difficulties and to delegate the

authority conferred by this resolution to such person or persons as the Board may deem fit.

2. Reduction of Preference Share Capital [Series I]


Special Resolution:


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of Association of the Company, to the reduction in the face value of the 5% Cumulative Redeemable

Preference Shares of Rs 100 each (Series I Preference Shares) of the Company from Rs.100 per

share to Rs.90 per share (Series I Preference Share Value Reduction), in the manner as provided in

Clause 5.2.3 of the Composite Scheme of Arrangement (Scheme) between Nicholas Piramal India

Limited and NPIL Research and Development Limited (NRDL) which is subject to sanction by the

Honble High Court, which reduction may take place in the event of the issue of Preference Shares

by NRDL to the holders of the Series I Preference Shares of the Company under Clause 5.2.1 of the

Scheme;

RESOLVED FURTHER THAT the members do hereby note that as provided in Clause 5.2.8 of the

Scheme, in the event of the Series I Preference Shares being redeemed by the Company prior to the

Effective Date (as defined in the Scheme), no Preference Shares would be issued by NRDL as per

Clause 5.2.1 of the Scheme to the holders of the Series I Preference Shares of the Company and

consequently, the aforesaid Series I Preference Share Value Reduction would not take place and

Clauses 5.2.1 to 5.2.7 of the Scheme shall have no effect;

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized

to do all such acts, deeds, matters and things, as may be necessary, proper or expedient, for or in



3. Reduction of Preference Share Capital [Series II]


Special Resolution:




of Association of the Company, to the reduction in the face value of the 5% Cumulative Redeemable

Preference Shares of Rs 10 each (Series II Preference Shares) of the Company from Rs.10 per

share to Rs.9 per share (Series II Preference Share Value Reduction), in the manner as provided in

Clause 5.2.3 of the Composite Scheme of Arrangement (Scheme) between Nicholas Piramal India

Limited and NPIL Research and Development Limited (NRDL) which is subject to sanction by the

Honble High Court, which reduction may take place in the event of the issue of Preference Shares

by NRDL to the holders of the Series II Preference Shares of the Company under Clause 5.2.1 of the

Scheme;

RESOLVED FURTHER THAT the members do hereby note that as provided in Clause 5.2.8 of theScheme, in the event of the Series II Preference Shares being redeemed by the Company prior to the

Effective Date (as defined in the Scheme), no Preference Shares would be issued by NRDL as per

Clause 5.2.1 of the Scheme to the holders of the Series II Preference Shares of the Company and

consequently, the aforesaid Series II Preference Share Value Reduction would not take place and

Clauses 5.2.1 to 5.2.7 of the Scheme shall have no effect;


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4. Alteration of Authorised Share Capital


Special Resolution:

RESOLVED THAT in the event of allotment of Preference Shares by NRDL being made to the holders

of the 15,00,000 - 5% Cumulative Redeemable Preference Shares of Rs 100 each (Series I Preference

Shares) and the holders of the 2,33,72,280 - 5% Cumulative Redeemable Preference Shares of Rs 10

each (Series II Preference Shares) of the Company under clause 5.2.1 of the Composite Scheme of

Arrangement (Scheme) between Nicholas Piramal India Limited and NPIL Research and Development

Limited, resulting in the reduction in the face value of the Series I Preference Shares from Rs.100 per

share to Rs.90 per share and in the face value of the Series II Preference Shares from Rs.10 per share

to Rs.9 per share as contemplated under clause 5.2.3 of the Scheme, the Authorised Share Capital of

the Company shall be consequently altered and the existing Clause V (being Capital Clause) of the

Memorandum of Association of the Company shall be substituted by the following Clause:

Clause V

The Authorised Share Capital of the Company is Rs. 121,16,27,720 (Rupees One hundred twenty one

crores, sixteen lakhs, twenty seven thousand, seven hundred and twenty only) divided into 25,00,00,000

Equity Shares of Rs. 2/- each, 15,00,000 Preference Shares of Rs. 90/- each, 15,00,000 Preference

Shares of Rs. 100/- each, 2,33,72,280 Preference Shares of Rs.9/- each, 6,27,720 Preference Shares

of Rs.10/- each and 10,50,00,000 Unclassified Shares of Rs.2/- each. Subject to the provisions of

the Companies Act, 1956 (the Act) the Board shall have power to increase or reduce the Authorised

Share Capital, to classify the unclassified shares, to re-classify the classified shares, and to divide

the shares so classified or re-classified in shares of several classes permissible under the Act and to

attach thereto respectively such preferential, deferred, qualified and other special rights, privileges,

restrictions and conditions as may be determined under the provisions of the law in force for the time

being and the regulations of the Company and to vary, modify, abrogate or deal with any such rights,

privileges, restrictions and conditions in the manner prescribed by the regulations of the Company

and under the provisions of the law in force.

RESOLVED FURTHER THATconsequent to the alteration of the Authorised Share Capital as aforesaid

and pursuant to Section 31 and other applicable provisions, if any, of the Companies Act, 1956, Article

3 of the Articles of Association of the Company be altered by substituting the following Article in place

and in lieu thereof:

Article 3

The Authorised Share Capital of the Company is Rs. 121,16,27,720 (Rupees One hundred twenty one

crores, sixteen lakhs, twenty seven thousand, seven hundred and twenty only) divided into 25,00,00,000

Equity Shares of Rs. 2/- each, 15,00,000 Preference Shares of Rs. 90/- each, 15,00,000 Preference

Shares of Rs. 100/- each, 2,33,72,280 Preference Shares of Rs.9/- each, 6,27,720 Preference Shares

of Rs.10/- each and 10,50,00,000 Unclassified Shares of Rs.2/- each.


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5. Utilisation of Securities Premium Account


Special Resolution:

RESOLVED THAT pursuant to the provisions of Sections 78, 100 and other applicable provisions,

if any, of the Companies Act, 1956 and Article 8 of the Articles of Association of the Company and

subject to the sanction of the Composite Scheme of Arrangement (Scheme) between Nicholas

Piramal India Limited and NPIL Research and Development Limited (NRDL) by the Honble High

Court of Judicature at Bombay under Sections 391 to 394 of the Companies Act, 1956, consent of

the Company be and is hereby accorded for debiting the Securities Premium Account in the books of

account of the Company pursuant to Clause 7.2.2 of the Scheme, the excess of book values of assets

over liabilities of the Company transferred to NRDL under the Scheme, after adjusting the reduction

in equity share capital referred to in Clause 6.1 of the Scheme to the extent of Rs.2,09,01,314 and

after giving effect to Clause 4.1.5 of the Scheme;



connection with or for giving effect to this resolution and to resolve all difficulties and to delegate theauthority conferred by this resolution to such person or persons as the Board may deem fit.

6. Re-appointment of Dr. (Mrs.) Swati A. Piramal as Director Strategic Alliances &

Communications


Special Resolution:

RESOLVED THAT pursuant to the provisions of sections 198, 269, 309 read with Schedule XIII and

other applicable provisions, if any, of the Companies Act, 1956 (the Act) (including any statutory

modifications or re-enactment thereof for the time being in force), approval of the members be and

is hereby accorded to the renewal of appointment of Dr. (Mrs.) Swati A. Piramal (Dr. Piramal) asDirector in whole-time employment of the Company (designated as Director Strategic Alliances &

Communications), not liable to retire by rotation, for a further period of five years with effect from 20th

November, 2007, upon the terms and conditions including payment of remuneration, perquisites and

benefits as are set out in the Draft Agreement proposed to be entered into between the Company and

Dr. Piramal and main terms of which are set out hereunder, which Draft Agreement is hereby approved,

with liberty and powers to the Board of Directors (including its Committee constituted for the purpose)

to reallocate / re-designate the duties and responsibilities of Dr. Piramal and to grant increments and

alter and vary from time to time the terms and conditions, including the amount and type of perquisites,

allowances and benefits to be provided to Dr. Piramal so as not to exceed the remuneration limits as

specified in Schedule XIII of the Act, or any amendments thereto:

a) Basic Salary : Rs. 100 lakhs per annum (i.e. about Rs.8.33 lakhs per month) with an authority

to the Board to review the same from time to time as it may deem fit;

b) Performance Linked Bonus: Such amount as may be determined by the Board for each financial

year of the Company or part thereof;

c) Special Allowance : Rs.14 lakhs per annum (i.e. about Rs.1.16 lakhs per month) or such other

amount as per Company Policy in force from time to time or as may be decided by the Board;


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d) Perquisites and Allowances:

In addition to salary, performance linked bonus and special allowance, Dr. Piramal will be entitled

to perquisites, benefits and allowances like furnished residential accommodation or house rent

allowance in lieu thereof, reimbursement of expenses in respect of gas, electricity and water,

reimbursement of telephone expenses, furnishing and repairs, medical reimbursement for self

and family, Leave Travel Allowance, personal accident insurance, leave and encashment of leave,contributions to provident fund and superannuation or annuity fund, gratuity and/or contribution

to gratuity fund, chauffeur driven company maintained cars and such other payments in the

nature of perquisites, benefits and allowances as may be decided by the Board;

RESOLVED FURTHER THAT if in any financial year the Company has no profits or its profits

are inadequate, Dr. Piramal shall be entitled to receive the same remuneration, perquisites and

benefits as above, subject to compliance with the applicable provisions of Schedule XIII of the

Act, if and to the extent necessary, with the approval of the Central Government.

7. Appointment of Mr. N. Santhanam as Director

To consider and if thought fit, to pass with or without modification(s), the following Resolution as anOrdinary Resolution:

RESOLVED THAT Mr. N. Santhanam who was appointed by the Board of Directors of the Company

at its meeting held on 25th October 2007 as an additional Director, under Section 260 of the Companies

Act 1956 and Article 115 of the Articles of Association of the Company, be and is hereby appointed

as a Director of the Company.

8. Appointment of Mr. N. Santhanam as Executive Director & Chief Financial Officer


Special Resolution:

RESOLVED THAT in accordance with the provisions of sections 198, 269, 309 read with Schedule XIIIand other applicable provisions, if any, of the Companies Act, 1956 (the Act) (including any statutory

modifications or re-enactment thereof for the time being in force), approval of the members be and

is hereby accorded to the appointment of Mr. N. Santhanam as Director in whole-time employment

of the Company (designated as Executive Director & Chief Financial Officer) for a period of 3 years

with effect from 25th October 2007, not liable to retire by rotation, upon the terms and conditions

including payment of remuneration, perquisites and benefits as are set out in the draft of the Agreement

to be entered into between the Company and Mr. N. Santhanam and main terms of which are set

out hereunder, which Draft Agreement is hereby approved, with liberty and powers to the Board of

Directors (including its Committee constituted for the purpose) to reallocate / re-designate the duties

and responsibilities of Mr. N. Santhanam and to grant increments and alter and vary from time to time

the terms and conditions, including the amount and type of perquisites, allowances and benefits to beprovided to Mr. N. Santhanam so as not to exceed the remuneration limits as specified in Schedule

XIII of the Act, or any amendments thereto:

a) Basic Salary : Rs. 42 lakhs per annum (i.e. Rs.3.50 lakhs per month) with an authority to the

Board to review the same from time to time as it may deem fit;

b) Performance Linked Bonus: Such amount as may be determined by the Board for each financial

year of the Company or part thereof;


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c) Special Allowance : Rs.38,71,450 per annum (i.e. about Rs.3,22,620 per month) or such other

amount as per Company Policy in force from time to time or as may be decided by the Board;

d) Perquisites and Allowances:

In addition to salary, performance linked bonus and special allowance, Mr. N. Santhanam will

be entitled to perquisites, benefits and allowances like furnished residential accommodation (or

house rent allowance in lieu thereof) reimbursement of expenses in respect of gas, electricity and

water, reimbursement of telephone expenses, furnishing and repairs, medical reimbursement

for self and family, Leave Travel Allowance, personal accident insurance, leave and encashment

of leave, contributions to provident fund and superannuation or annuity fund, gratuity and/or

contribution to gratuity fund, chauffeur driven company maintained cars and such other payments

in the nature of perquisites, benefits and allowances as may be decided by the Board;

RESOLVED FURTHER THAT if in any financial year the Company has no profits or its profits are

inadequate, Mr. N. Santhanam shall be entitled to receive the same remuneration, perquisites

and benefits as above, subject to compliance with the applicable provisions of Schedule XIII of

the Act, if and to the extent necessary, with the approval of the Central Government.

By Order of the Board of DirectorsFor Nicholas Piramal India Limited

Leonard DSouzaCompany Secretary

Dated this 25th day of October 2007

Registered Office:Nicholas Piramal Tower,Ganpatrao Kadam Marg,Lower Parel, Mumbai - 400 013.

NOTES :

1. The relevant Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 is annexed

hereto.

2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote

instead of himself and the proxy need not be a member of the Company.

3. The proxy form duly completed must reach the Registered Office of the Company not later than 48

hours before the time appointed for holding the meeting.

4. All documents referred to in the Notice and the Explanatory Statement are open for inspection by the

Members at the Registered Office of the Company on any working day (except Saturdays) prior to the

date of the meeting between 10.00 a.m. and 12.00 noon.

5. All alterations made in the Form of Proxy should be initialled.


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EXPLANATORY STATEMENT PURSUANT TOSECTION 173(2) OF THE COMPANIES ACT, 1956

Introductory Note for item nos. 1 - 5

Reference of shareholders is invited to the Notice convening the meeting of the shareholders on 23rd

November 2007 pursuant to the Order made by the Honble High Court of Judicature at Bombay, for thepurpose of considering and approving the Composite Scheme of Arrangement (Scheme) between Nicholas

Piramal India Limited (NPIL) and NPIL Research and Development Limited (NRDL) for demerger of the

New Chemical Entity Research Unit as defined under the Scheme (NCE Research Unit) of NPIL into NRDL

under sections 391 to 394 of the Companies Act, 1956 and for consequential capital re-organisation and

utilisation of the Securities Premium Account under sections 78 and 100 of the said Act. The Explanatory

Statement under Section 393 of the Companies Act, 1956 and a copy of the Scheme are enclosed to the said

Notice circulated to the shareholders, which explains in detail the arrangements embodied in the Scheme.

In consideration for the demerger of the NCE Research Unit under the Scheme, NRDL will allot to the equity

shareholders of NPIL, 1 (One) equity share of the face value of Rs. 10 credited as fully paid up for every 10

(Ten) equity shares of the face value of Rs. 2 each held in NPIL. Post demerger, the equity shareholders of

NPIL will hold about 82% and NPIL will hold about 18% of the Equity Capital of NRDL.

Likewise, NRDL will issue Prefere

Documents

Scheme of Reduction Equity-Share