Scheme of Reduction Equity-Share

Nicholas Piramal India Limited
Regd Ofce: Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400013. NOTICE TO EQUITY SHAREHOLDERS
A. B.
Court Convened Meeting of Equity Shareholders Extra Ordinary General Meeting
Date
: Friday, 23rd November 2007
Venue : M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd oor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai - 400 001 SR. NO. A (1) (2) CONTENTS Court Convened Meeting of the Equity Shareholders Notice of Court Convened Meeting Explanatory Statement under Section 393 of the Companies Act, 1956 (3) Composite Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 (4) (5) B (1) (2) (3) (4) Form of Proxy Attendance Slip Extra Ordinary General Meeting (EGM) EGM Notice Explanatory Statement under Section 173 of the Companies Act, 1956 Form of Proxy Attendance Slip 29-34 35-40 41 43 25 27 13-24 2 3-12 PAGES
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 78 and 100 of the Companies Act, 1956; AND In the matter of Composite Scheme of Arrangement between Nicholas Piramal India Limited and NPIL Research and Development Limited and their Respective Shareholders and Creditors. NICHOLAS PIRAMAL INDIA LIMITED, a company incorporated under the Indian Companies Act, 1913 having its registered office at Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013.
.....Applicant Company
NOTICE CONVENING THE MEETING OF EQUITY SHAREHOLDERS OF NICHOLAS 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 Company Application, the Honble High Court of Judicature at Bombay has directed that a meeting of the Equity Shareholders 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 Hargovindas Building, 2nd oor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai 400 001, for the purpose of considering and if thought t, approving, with or without modications, the arrangements embodied in the Composite Scheme of Arrangement (the Scheme) between Nicholas Piramal India Limited and NPIL Research and Development Limited. 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 2007 at 10.30 a.m. at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd oor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai 400 001, at which day, date, time and place you are requested to attend. TAKE FURTHER NOTICE that you may attend and vote at the said meeting in person or by proxy provided that a proxy in the prescribed form (enclosed), duly signed by you or your authorised representative, is deposited at the Registered Ofce of NPIL at Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 not later than 48 hours before the time appointed for holding the meeting. 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. 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. Piramal Chairman appointed for the Meeting
b.
c.
d. e.
Dated this 25th day of October 2007. Registered Ofce: Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Enclosures : As above
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 78 and 100 of the Companies Act, 1956; AND In the matter of Composite Scheme of Arrangement between Nicholas Piramal India Limited and NPIL Research and Development Limited and their Respective Shareholders and Creditors. NICHOLAS PIRAMAL INDIA LIMITED, a company incorporated under the Indian Companies Act, 1913 having its registered office at Nicholas Piramal 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 oor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai - 400 001, for the purpose of considering and, if thought t, approving with or without modications, 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. 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 denitions contained in the Scheme will apply to this Explanatory Statement also. 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. 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, ne chemicals, diagnostic equipments/instruments and pathological laboratory. The Registered Ofce of NPIL is situated at Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013.
2.
3.
4.
5.
6.
The share capital of the Applicant Company as per the Audited Balance sheet as at March 31, 2007 was as under: Particulars Authorised Capital 25,00,00,000 Equity Shares of Rs. 2 each 30,00,000 Preference Shares of Rs. 100 each 2,40,00,000 Preference Shares of Rs. 10 each 10,50,00,000 Unclassied Shares of Rs. 2 each Total Issued, Subscribed and Paid-up 20,90,13,133 Equity Shares of Rs. 2 each 15,00,000 5% Cumulative Redeemable Preference Shares of Rs. 100 each 2,33,72,280 5% Cumulative Redeemable Preference Shares of Rs. 10 each Total 4180.00 1500.00 2337.00 8017.00 5000.00 3000.00 2400.00 2100.00 12500.00 Rupees in lacs
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 20,90,13,144 Equity Shares of Rs. 2 each 15,00,000 5% Cumulative Redeemable Preference Shares of Rs. 100 each 2,33,72,280 5% Cumulative Redeemable Preference Shares of Rs. 10 each Total Rupees in lacs 4180.00 1500.00 2337.00 8017.00
7.
Some of the objects specied in the Memorandum of Association of the Applicant Company are briey as under: i) To carry on business of chemists, druggists, chemical manufacturers and dealers, dry salters, importers and manufacturers of and dealers in all kinds of medicines, drugs, pharmaceutical, medicinal, chemical, industrial and other preparations and articles and makers of and dealers in proprietary articles of all kinds and of electrical, chemical, photographical, surgical and scientic apparatus and materials; To buy, manufacture, rene, sell or otherwise deal in salts of all varieties and minerals and acids, alkaloids, sulphates of all kinds, alums, alkalies, medical products and chemical products; To sell or dispose off the undertaking of the Company or any part thereof for such consideration as the Company may think t, and in particular for shares, debentures or securities of any other company having object or objects altogether or in part similar to those of this company.
ii) iii)
8.
NRDL was incorporated on the 27th day of June, 2001 under the Companies Act, 1956 under the name
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 Certicate 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. 10. 11. NRDL was incorporated with the main object of undertaking scientic and technical research and development. However, since then, no activity was undertaken by NRDL. The Registered Ofce of the NRDL is situated at Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013. The share capital structure of NRDL as at March 31, 2007 was as under: Particulars Authorised Capital 50,000 Equity Shares of Rs. 10 each Issued, Subscribed and Paid-up 10,000 Equity shares of Rs. 10 each fully paid up TOTAL 1.00 1.00 5.00 Rupees in lacs
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: Particulars Authorised Capital 50,00,000 Equity shares of Rs. 10 each Issued, Subscribed and Paid-up 45,50,000 Equity shares of Rs. 10 each, fully paid up TOTAL 455.00 455.00 500.00 Rupees in lacs
As on date, the entire issued, subscribed and paid-up capital of NRDL is held by NPIL. 12. Some of the objects specied in the Memorandum of Association of NRDL are briey as under: (i) To undertake, conduct, participate in, carry on, support or otherwise be associated with any research, 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 scientic 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 elds 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
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, rm, 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 eld 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. To acquire the business of and/or to amalgamate fully or partially with any other company, person or rm carrying on or engaged in or about to carry on or engage in any business or transaction included in the objects of the Company.
(iii)
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. The main benets 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. 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. 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. The NCE business has tremendous growth opportunities and is at a stage requiring focussed management attention. This would be achieved with the proposed demerger. 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.
14.
b)
c)
d)
e)
15.
The salient features of the Scheme are as follows: a) The Appointed Date for the Scheme is April 1, 2007.
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. Out of the Securities Premium Account of Rs.3,243,595,120 appearing 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. 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. 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; 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;
c)
d)
e)
(ii)
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. NPIL has obtained report of valuers, M/s Dalal & Shah, Chartered Accountants conrming the Share entitlement ratio for the proposed demerger. The valuers, in their report have conrmed that the above ratio is fair considering that all the shareholders of NPIL will upon the demerger, be ultimate benecial shareholders of NRDL in the same ratio (inter-se) as they hold shares in NPIL. 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. However, simultaneously with the reduction of the paid up value of equity shares of
g)
h)
(ii)
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. 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.
(ii)
j)
The credit arising in respect of the aforesaid reduction of preference share capital will be recorded in the Capital Reserve Account of NPIL. However, as claried 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 specically 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.
k)
The features set out above being only the salient features of the Scheme, the members are requested to 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 as under: Equity Shareholding Pattern Shareholding Category Promoter and Promoter Group Public : Institutions Non Institutions 4,92,83,044 5,53,33,505 20,90,13,144 23.58 26.47 100.00 No. of shares 10,43,96,595 % 49.95
Total
Shareholding Pattern of the Series I Preference Shares Shareholding Category Promoter and Promoter Group Public : Institutions Non Institutions No. of shares 15,00,000 15,00,000 % 100 100
Total
Shareholding Pattern of the Series II Preference Shares Shareholding Category Promoter and Promoter Group Public : Institutions Non Institutions 1,25,86,781 60,45,084 2,33,72,280 53.86 25.86 100.00 No. of shares 47,40,415 % 20.28
Total
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 No. of shares Promoter and Promoter Group Public : Institutions Non Institutions 45,50,000 100 49,28,304 55,33,351 2,54,51,314 19.36 21.74 100.00 45,50,000 % 100 Post-Scheme No. of shares 1,49,89,659 % 58.90
Total
Preference Shareholding Pattern* Shareholding Category Pre-Scheme No. of shares Promoter and Promoter Group Public : Institutions Non Institutions 12,58,678 6,04,508 38,37,228 32.80 15.75 100.00 % Post-Scheme No. of shares 19,74,042 % 51.45
Total
* Note : As claried 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, rms 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. The extent of the shareholding of the Directors of NPIL in itself and NRDL are as follows: Name of the Director No of Equity Shares held in NPIL % No. of Series I Preference Shares held in NPIL % No. of Series II Preference Shares held in NPIL 1120 % No. of Equity Shares held in NRDL %
19.
Ajay G Piramal (Promoter)* Keki Dadiseth Rajesh Khanna Y. H. Malegam Swati A. Piramal S. Ramadorai R. A. Shah Deepak Satwalekar N. Vaghul N. Santhanam
6,70,790
0.32
0.00
10#
0.00
3,850 4,46,686 3,43,393 83,750
0.00 0.21 0.16 0.04
600
0.00
10# 10#
0.00 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
10
20.
The extent of shareholdings of the Directors of NRDL in itself and the Applicant Company are as follows: Name of the Director No. of Equity Shares held in NRDL 10# 10# 10# % No. of Equity Shares held in NPIL 6,70,790 4,46,686 1,80,000 83,750 % No. of Series I Preference Shares held in NPIL % No. of Series II Preference Shares held in NPIL 1,120 %
Ajay G Piramal Swati A Piramal Somesh Sharma N. Santhanam

#
0.00 0.00 0.00
0.32 0.21 0.09 0.04
0.00
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. The nancial position of the Applicant Company will not be adversely affected by the Scheme. The nancial 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. The Applicant Company has received No Objection letters from the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited for ling the Scheme with the Honourable High Court of Judicature at Bombay. The rights and interests of the members and creditors of NPIL will not be prejudicially affected by the Scheme. 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 this Scheme and matters incidental thereto shall be borne by NRDL. Inspection of the following documents may be had at the Registered Ofce 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. Memorandum and Articles of Association of NPIL and NRDL. The Audited nancial statements of NPIL & NRDL as on March 31, 2007 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.
22.
23.
24.
25.
26.
(b) (c) (d)
11
(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 Ofce of Nicholas Piramal India Limited.
Ajay G. Piramal Chairman appointed for the Meeting Dated this 25th day of October 2007. Registered Ofce: 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 Preamble
1 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 (NCE Research Unit), a division of Nicholas Piramal India Limited, into NPIL Research & Development Limited on a going concern basis. The Scheme is divided into following parts: a. b. c. Part A deals with Introduction and Denitions. Part B deals with the demerger of NCE Research Unit, a division of Nicholas Piramal India Limited into NPIL Research & Development Limited Part C deals with General Terms and Conditions. PART A - INTRODUCTION AND DEFINITIONS 1 DEFINITIONS 1.1 1.2 1.3 Act means the Companies Act, 1956 and includes any statutory re-enactment or modications thereof from time to time. Appointed Date means April 1, 2007 or such other date as may be approved by the High Court of Judicature at Bombay. Effective Date means the date on which certied copies of the Orders of High Court of Judicature at Bombay sanctioning the Scheme are led with the Registrar of Companies at Maharashtra, Mumbai by each of NPIL and NRDL. NRDL or the Resulting Company means NPIL Research & Development Limited, a company incorporated under the Companies Act, 1956 and having its registered ofce at Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013. NPIL or the Demerged Company means Nicholas Piramal India Limited, a company incorporated under the Companies Act, 1913 and having its registered ofce at Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013.
1.4
1.5
13
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 thereto or are necessary therefor and including specically the following: (i) All properties and assets of whatsoever nature and wherever situated, required for/ pertaining to NCE Research Unit, including all xed assets, plant and machinery, equipments, appliances, furniture and xtures, accessories, vehicles, current assets, liquid funds, samples, plant and other extracts, and other properties and assets pertaining to NCE Research Unit; All the debts (whether secured or unsecured), liabilities (including contingent liabilities), duties and obligations of NCE Research Unit of every kind, nature and description whatsoever and howsoever accruing or arising out of, and all loans and borrowings raised or incurred and utilized for its businesses, activities and operations pertaining to NCE Research Unit; 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 ofce, powers and facilities of every kind, nature and description whatsoever and all the privileges and benets (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; 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 and avail 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; All records, les, 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 form in connection with or relating to NCE Research Unit; All duties and obligations, which are relatable to NCE Research Unit: For the purpose of this Scheme, it is claried that liabilities pertaining to NCE Research Unit includes and shall be transferred in the manner as dened 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 activities or operations of the NCE Research Unit; There are no specic loans and borrowings raised, incurred and utilised solely for the activities or operation of NCE Research Unit at the close of business on the day immediately preceding the Appointed Date and accordingly, no transfer of any such loans is required; and No general/ multipurpose borrowings at the close of business on the day immediately preceding the Appointed Date have been utilised for the activities or operation of NCE Research Unit and accordingly, no transfer
(ii)
(iii)
(iv)
(v)
(vi)
14
of any such borrowings is required; 1.6.2 1.6.3 All permanent employees of NPIL working for or employed in NCE Research Unit, as identied and agreed between NPIL and NRDL. Any question that may arise as to whether a specied asset or liability pertains or does 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 between the 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 as agreed between NPIL and NRDL.
1.7
Record Date means the date to be xed mutually by the Board of Directors of NPIL and NRDL for the purposes of issue of shares of NRDL to the shareholders of NPIL on demerger of NCE Research Unit into NRDL. Remaining Business means all the businesses and undertakings of NPIL other than NCE Research Unit. Scheme or the Scheme or this Scheme means this Composite Scheme of Arrangement in its present form or with any modication(s) made under Clause 15 of this Scheme.
1.8 1.9 2
DATE OF TAKING EFFECT AND OPERATIVE DATE The Scheme set out herein in its present form or with any modication(s) approved or as imposed or directed by the High Court of Judicature at Bombay, shall be deemed to take effect from the Appointed Date but shall come into operation from the Effective Date.
SHARE CAPITAL 3.1 The share capital of NPIL as on March 31, 2007 is as under: Particulars Authorised Capital 25,00,00,000 Equity Shares of Rs. 2 each 30,00,000 Preference Shares of Rs. 100 each 2,40,00,000 Preference Shares of Rs. 10 each 10,50,00,000 unclassied shares of Rs. 2 each Total Issued, Subscribed and Paid-up 20,90,13,133 Equity Shares of Rs. 2 each 15,00,000 5% Cumulative Redeemable Preference Shares of Rs. 100 each 2,33,72,280 5% Cumulative Redeemable Preference Shares of Rs. 10 each Total 4180.00 1500.00 2337.00 8017.00 5000.00 3000.00 2400.00 2100.00 12500.00 Rupees in lacs
15
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 20,90,13,144 Equity Shares of Rs. 2 each 15,00,000 5% Cumulative Redeemable Preference Shares of Rs. 100 each 2,33,72,280 5% Cumulative Redeemable Preference Shares of Rs. 10 each Total 3.2 Rupees in lacs 4180.00 1500.00 2337.00 8017.00
The share capital of NRDL as on the latest audited balance sheet date i.e. 31st March 2007 was as under: Particulars Authorised Capital 50,000 Equity Shares of Rs. 10 each Issued, Subscribed and Paid-up 10,000 Equity shares of Rs. 10 each fully paid up TOTAL 1.00 1.00 5.00 Rupees in lacs
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, Subscribed and Paid-up Share Capital of NRDL has been changed as under: Particulars Authorised Capital 50,00,000 shares of Rs. 10 each Issued, Subscribed and Paid-up 45,50,000 Equity shares of Rs. 10 each, fully paid up TOTAL 455.00 455.00 500.00 Rupees in lacs
As on date, the entire issued, subscribed and paid-up capital of NRDL is held by NPIL. Upon implementation 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 dened in Clause 1.6, shall stand transferred to and vested in or deemed to be transferred to and vested in NRDL, as a going concern, in accordance with Section 2(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 provisions contained 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 deemed to 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
16
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 be transferred 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 business on 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 by delivery to NRDL to the end and intent that the property therein passes to NRDL. Such delivery and transfer shall be made on a date to be mutually agreed upon between the respective Boards of Directors or Committees thereof of NPIL and NRDL, within 60 days from the Effective Date. In respect of any assets pertaining to NCE Research Unit, including actionable claims, sundry debtors, outstanding loans, advances recoverable in cash or kind or for 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 being so requested by NRDL, issue notices in such form as NRDL species stating that pursuant 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 person entitled thereto, to the end and intent that the right of NPIL to receive, recover or realise the same, stands transferred to NRDL and that appropriate entries should be passed in their respective books to record the aforesaid changes. 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 NCE Research Unit but remaining unspent as at the Appointed Date, shall be deemed to be an asset of the NCE Research Unit to be recoverable from NPIL. With effect from the Appointed Date, out of the Securities Premium of Rs.3,243,595,120 appearing 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 books of NRDL. 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, under the provisions of Sections 391 to 394 and all other applicable provisions, if any, of the Act, 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, duties and 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 of which such debts, liabilities, contingent liabilities, duties and obligations have arisen in order to give effect to the provisions of this sub-clause. It is claried 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, which NPIL 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 benet of NRDL, insofar as it is permissible so to do, till such time as the transfer is effected. The transfer and vesting of the undertaking of NCE Research Unit shall be subject to the existing securities, charges and mortgages, if any, in relation to the liabilities of
4.1.3
4.1.4
4.1.5
4.1.6
4.1.7
4.1.8
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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 NCE Research 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 or deed, 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 to his/ 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 capital of NRDL for every 10 (Ten) equity shares of the face value of Rs 2 each held in NPIL fully 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, shall also be kept in abeyance. The new equity shares in NRDL to be issued to the members of NPIL pursuant to Clause 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.
5.1.2
5.2
ISSUE OF PREFERENCE SHARES BY NRDL & RE-ORGANISATION OF PREFERENCE SHARE 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 this Scheme, 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 of NPIL, 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 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. 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.
b)
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) b) They shall be subject to the Memorandum and Articles of Association of NRDL; They shall carry the right to receive cumulative preferential dividend of 5% per annum of the amount credited as having been paid as above in respect thereof for each nancial year of NRDL with effect from the Appointed Date; They shall be redeemable out of the prots and/or proceeds of issue of fresh shares or as may be permitted under the Act at the option of NRDL at any time before the expiry of 20 years from the Appointed Date, by giving not less than 30 days notice to the holders of the preference shares;
c)
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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 upto the commencement of winding up, in priority to the equity shares of NRDL; They shall inter se rank pari passu with each other; NRDL shall be entitled in future to create and/or issue further preference shares ranking subsequent to the aforesaid preference shares.
e) f) 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 100 each held by the shareholders in NPIL, shall stand reduced to 5% Cumulative Redeemable Preference Shares of the face value of Rs. 90 each by cancellation of Rs 10 from the face value of each Preference Share. 5% Cumulative Redeemable Preference Shares of the face value of Rs 10 each held by the shareholders in NPIL, shall stand reduced to 5% Cumulative Redeemable Preference Shares of the face value of Rs 9 each by cancellation of Rs 1 from the face value of each Preference Share.
b)
5.2.4
The share certicates of NPIL in relation to the shares held by its preference shareholders whose names appear in the Register of Members as on the Record Date, shall, without any further application, act, instrument or deed, be deemed to have been automatically cancelled and new share certicates will be issued to the shareholders of NPIL. It is claried that the shares held in dematerialised form will be reduced automatically and it will be deemed that on such reduction, the shares were reduced in accordance with Clause 5.2.3 above. 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 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 the Court sanctioning the Scheme shall be deemed to be an order under Section 102 of the Act conrming the reduction. Upon reduction of Preference Share Capital as per Clause 5.2.3 above, the Authorised Capital clause in the Memorandum and Articles of Association of NPIL shall stand amended appropriately. The credit arising in respect of the aforesaid reduction of capital will be recorded in the Capital Reserve Account of NPIL. It is hereby claried that if prior to the Effective Date, the Preference Shares are redeemed by NPIL, then to that extent no consideration will be payable by NRDL as 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 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) above.
5.2.5
5.2.6
5.2.7 5.2.8
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 NPIL shall 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 holder were operative as on the Record date, in order to remove any difculties 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 difculties as may arise in the course of implementation of this Scheme and registration of new members in NRDL on account of difculties 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 ofcer of NRDL or such other person as the Board of Directors of NRDL shall appoint in this behalf who shall hold the Shares in trust on behalf of the members entitled to fractional entitlements with the express understanding that such director(s) or ofcer(s) or person(s) shall sell 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 t, 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. 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 and National Stock Exchange of India Limited, in pursuance of Clause 8.3.5 of the SEBI (Disclosure & Investor Protection) Guidelines, 2000. The Shares of NRDL will be issued in dematerialised form to those shareholders who hold the shares of NPIL in dematerialised form, provided all details relating to the account with the depository participant are available to NRDL. All those shareholders who hold shares of NPIL in certicate form will be issued Shares of NRDL in the certicate form unless otherwise communicated in writing by the shareholders on or before such date as may be determined by the Board of Directors of NRDL or a committee thereof. Shares allotted by NRDL pursuant to the Scheme and issued in dematerialized form shall remain frozen in the depositories system, till listing / trading permission is given by the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. 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.
5.3.3
5.3.4
5.3.5
5.3.6 6
REORGANISATION OF CAPITAL 6.1 6.2 6.3 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 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. 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 balance in General Reserve and be credited to equity share capital account of NPIL. Consequently, the paid 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. 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 Section 101 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 the Court sanctioning the scheme shall be deemed to be an order under Section 102 of the Act conrming the reduction and no separate sanction under Sections 100 102 of the Act will be necessary.
6.4
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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 business hours on the Appointed Date. NRDL shall credit to its Share Capital Account, the aggregate face value of the equity shares issued by it pursuant to Clause 5.1.1 of this Scheme. 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 that it will reimburse to NPIL in accordance with Clause 5.2.8 of this Scheme. If prior to the Effective Date, the Preference Shares are not redeemed by NPIL, then NRDL 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. NRDL shall credit to the Securities Premium Account a sum equivalent to the amount transferred from NPIL as pertaining to the NCE Research Unit. The excess of book value of assets over liabilities after giving effect to 7.1.1 to 7.1.5 above and after making adjustments, if any, for Deferred Tax Liability required to be created in respect of the NCE Research Unit shall be credited to Capital Reserve Account. In case of there being a shortfall, the same shall be debited to Goodwill Account.
7.1.2 7.1.3
7.1.4
7.1.5 7.1.6
7.2
IN THE BOOKS OF NPIL 7.2.1 The book values of the assets and liabilities pertaining to the NCE Research Unit transferred to NRDL, shall be reduced from the book values of the assets and liabilities appearing in the books of NPIL. 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 the Securities Premium Account in the books of NPIL. The amount of Rs.2,09,01,314 capitalized in terms of clause 6.3 above, shall be debited to the General Reserves Account. The reduction of Securities Premium as aforesaid, shall be effected as an integral part of 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 Scheme shall be deemed to be also the Order under Section 102 of the Act for the purpose of conrming the reduction. The provisions of sub-section (2) of Section 101 of the Act will not be applicable as the reduction would not involve either a diminution of liability in respect of unpaid share capital or payment of paid-up share capital.
7.2.2
7.2.3 7.2.4
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 to NCE 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 Unit for and on account of and in trust for NRDL; All the prots or income accruing or arising to NPIL relatable to NCE Research Unit or
8.2
21
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 prots or income or expenditure or losses (as the case may be) of NRDL; 8.3 NRDL shall be entitled, pending the sanction of the Scheme, to apply to the Central Government and 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; NPIL shall not utilize its prots or income of NCE Research Unit for the purpose of declaring or paying any dividend or for any other purpose (other than in the ordinary course of its business) in respect of the period falling on and after the Appointed Date, without the prior written consent of the Board of Directors of NRDL; 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 encumber or 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 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 consistent with past practice. With effect from the date of ling of this Scheme with the High Court of Judicature at Bombay up 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, convertible debentures or otherwise), decrease, reduction, reclassication, subdivision or consolidation, re-organisation, or in any other manner which may, in any way, affect the Share Exchange Ratio 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 prior to the ling of this Scheme or unless the same is in accordance with the provisions of this Scheme.
8.4
8.5
8.6
8.7
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 to have 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 and conditions 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 agrees that the services of all such employees with NPIL up to the Effective Date shall be taken into account for purposes of all retirement benets to which they may be eligible in NPIL on the Effective Date. Any question that may arise as to whether any staff, workman or employee belongs 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. It is expressly provided that, on the Scheme becoming effective, the Provident Fund, Gratuity Fund, Superannuation Fund or such other Special Fund, if any, or Trusts (hereinafter collectively referred as Funds) created for the benet 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 whatsoever in 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 the terms 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
9.2
22
claried that the services of the staff, workmen and employees working for the NCE Research Unit will be treated as having been continuous for the purpose of the said Funds. 9.3 In the event that NRDL does not have its own Funds in respect of any of the above, NRDL, may subject to necessary approvals and permissions, continue to contribute to the relevant Funds of NPIL, until such time as NRDL creates its own Funds, at which time the Funds and the investment and contributions, pertaining to staff, workmen and employees working for NCE Research Unit shall be transferred to the funds created by NRDL.
10
LEGAL PROCEEDINGS All legal proceedings of whatsoever nature by or against NPIL pending and/ or arising on or after the Appointed Date and relating to NCE Research Unit, shall not abate or be discontinued or be in any way prejudicially affected by reason of the Scheme or by anything contained in this Scheme but shall be continued and enforced by or against NRDL, as the case may be, in the same manner and to the same extent as it would have been continued and enforced by or against NPIL. In the event of any difference or difculty as to whether any specic legal or other proceeding relates to NCE Research Unit or not, a certicate jointly issued by the Board of Directors of NPIL and NRDL as to whether such proceeding relates to NCE Research Unit or not, shall be conclusive evidence of the matter.
11
CONTRACTS, DEEDS, ETC. Subject to the other provisions of this Scheme, all contracts, deeds, bonds, agreements, insurance policies and other instruments, if any, of whatsoever nature relating to NCE Research Unit and to which NPIL is a party and subsisting or having effect on the Effective Date, shall be in full force and effect against or in favour of NRDL, and may be enforced by or against NRDL as fully and effectually as if, instead of NPIL, NRDL had been a party thereto. NRDL shall enter into and/ or issue and/ or execute deeds, writings or conrmations or enter into any tripartite arrangements, conformations or novations, to which NPIL will, if necessary, also be a party in order to give formal effect to the provisions of this Scheme, if so required or becomes necessary. NRDL shall be deemed to be authorized to execute any such deeds, writings or conrmations on behalf of NPIL and to implement or carry out all formalities required on the part of NPIL to give effect to the provisions of this Scheme.
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SAVING OF CONCLUDED TRANSACTIONS The transfer and vesting of NCE Research Unit as above and the continuance of proceedings by or against NPIL in relation to NCE Research Unit shall not affect any transaction or proceedings already concluded on or after the Appointed Date till the Effective Date, to the end and intent that NRDL accepts and adopts all acts, deeds and things done and executed by NPIL in respect thereto as done and executed on behalf of themselves. REMAINING BUSINESS The Remaining Business and all the assets, liabilities and obligations pertaining thereto shall continue to belong to and remain in and be managed by NPIL.
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PART C: GENERAL TERMS AND CONDITIONS
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APPLICATION TO HIGH COURT NPIL and NRDL shall make applications/ petitions under Sections 391 to 394 and other applicable provisions of the Act to the High Court of Judicature at Bombay for holding/dispensing with the meetings of the shareholders and/or creditors of both the Companies and for sanction of this Scheme under the provisions of law.
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15
MODIFICATION OR AMENDMENTS TO THE SCHEME NPIL and NRDL by their respective Board of Directors may assent to any modications/ amendments to the Scheme or to any conditions or limitations that the Court and / or the Stock Exchanges and /or any other authority may deem t 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 Board of Directors are hereby authorised to take all such steps as may be necessary, desirable or proper to resolve any doubts, difculties or questions whether by reason of any directive or orders of any other authorities 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 be directed by the Bombay High Court. The Scheme being sanctioned by the Bombay High Court or any other authority under Sections 391 to 394 and other applicable provisions of the Act. Certied or authenticated copies of the Orders of the Bombay High Court sanctioning the Scheme being led with the Registrar of Companies, Maharashtra, Mumbai by NPIL and NRDL.
16.2 16.3
17
EFFECT OF NON-RECEIPT OF APPROVALS In case the Scheme is not sanctioned by the High Court of Judicature at Bombay, or in the event any of consents, approvals, permissions, resolutions, agreements, sanctions or conditions enumerated in the Scheme 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 Directors of NPIL and NRDL, the Scheme shall become null and void, and in that event no rights and liabilities whatsoever 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 this Scheme and matters incidental thereto shall be borne by NRDL.
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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 78 and 100 of the Companies Act, 1956; AND In the matter of Composite Scheme of Arrangement between Nicholas Piramal India Limited and NPIL Research and Development Limited and their respective Shareholders and Creditors. NICHOLAS PIRAMAL INDIA LIMITED, a company incorporated under the Indian Companies Act, 1913 having its registered office at Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, 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 oor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai-400 001, for the purpose of considering and, if thought t, approving, with or without modications, the arrangements embodied in the proposed Composite Scheme of Arrangement between Nicholas Piramal India Limited and 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 modications after the word Arrangement hereinbelow) the said arrangement embodied in the Composite Scheme of Arrangement either with or without modications as my/our proxy may approve. Dated this ________ day of ____________________, 2007 Name : Address: _________________________________________ _________________________________________ _________________________________________ Folio No. Client ID No. DP ID No. _________________________________________ _________________________________________ _________________________________________ Signature(s) across the stamp Signature Afx Re.1 Revenue Stamp
No. of shares _________________________________________ Notes: (1) The Proxy must be deposited at the Registered Ofce 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. All alterations made in the form of Proxy should be initialled. In case of multiple proxies, the proxy later in time shall be accepted.
(2) (3)
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Regd Ofce: Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400013. 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 oor, 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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Regd Ofce: Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400013.
NOTICE OF EXTRA-ORDINARY GENERAL MEETING OF THE SHAREHOLDERS OF 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 oor, 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 t, to pass with or without modication(s), the following Resolution as a Special Resolution: RESOLVED THAT subject to the conrmation 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 the manner 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 authorized to 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 difculties and to delegate the authority conferred by this resolution to such person or persons as the Board may deem t. 2. Reduction of Preference Share Capital [Series I] To consider and if thought t, to pass with or without modication(s), the following Resolution as a Special Resolution:
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RESOLVED THAT subject to the conrmation 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 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 dened 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 connection with or for giving effect to this resolution and to resolve all difculties and to delegate the authority conferred by this resolution to such person or persons as the Board may deem t. 3. Reduction of Preference Share Capital [Series II] To consider and if thought t, to pass with or without modication(s), the following Resolution as a Special Resolution: RESOLVED THAT subject to the conrmation 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 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 the Scheme, in the event of the Series II Preference Shares being redeemed by the Company prior to the Effective Date (as dened 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;
30
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 connection with or for giving effect to this resolution and to resolve all difculties and to delegate the authority conferred by this resolution to such person or persons as the Board may deem t. 4. Alteration of Authorised Share Capital To consider and if thought t, to pass with or without modication(s), the following Resolution as a 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 Unclassied 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 unclassied shares, to re-classify the classied shares, and to divide the shares so classied or re-classied in shares of several classes permissible under the Act and to attach thereto respectively such preferential, deferred, qualied 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 THAT consequent 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 Unclassied Shares of Rs.2/- each.
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5.
Utilisation of Securities Premium Account To consider and if thought t, to pass with or without modication(s), the following Resolution as a 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; 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 connection with or for giving effect to this resolution and to resolve all difculties and to delegate the authority conferred by this resolution to such person or persons as the Board may deem t.
6.
Re-appointment of Dr. (Mrs.) Swati A. Piramal as Director Strategic Alliances & Communications To consider and if thought t, to pass with or without modication(s), the following Resolution as a 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 modications 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) as Director in whole-time employment of the Company (designated as Director Strategic Alliances & Communications), not liable to retire by rotation, for a further period of ve years with effect from 20th November, 2007, upon the terms and conditions including payment of remuneration, perquisites and benets 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 benets to be provided to Dr. Piramal so as not to exceed the remuneration limits as specied 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 t; Performance Linked Bonus: Such amount as may be determined by the Board for each nancial year of the Company or part thereof; 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;
b)
c)
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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, benets 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, benets and allowances as may be decided by the Board; RESOLVED FURTHER THAT if in any nancial year the Company has no prots or its prots are inadequate, Dr. Piramal shall be entitled to receive the same remuneration, perquisites and benets 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 t, to pass with or without modication(s), the following Resolution as an Ordinary 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 Ofcer To consider and if thought t, to pass with or without modication(s), the following Resolution as a Special Resolution: RESOLVED THAT in accordance with 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 modications 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 Ofcer) 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 benets 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 benets to be provided to Mr. N. Santhanam so as not to exceed the remuneration limits as specied 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 t; Performance Linked Bonus: Such amount as may be determined by the Board for each nancial year of the Company or part thereof;
b)
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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; Perquisites and Allowances: In addition to salary, performance linked bonus and special allowance, Mr. N. Santhanam will be entitled to perquisites, benets 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, benets and allowances as may be decided by the Board; RESOLVED FURTHER THAT if in any nancial year the Company has no prots or its prots are inadequate, Mr. N. Santhanam shall be entitled to receive the same remuneration, perquisites and benets 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.
d)
By Order of the Board of Directors For Nicholas Piramal India Limited Leonard DSouza Company Secretary
Dated this 25th day of October 2007 Registered Ofce: 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. 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. The proxy form duly completed must reach the Registered Ofce of the Company not later than 48 hours before the time appointed for holding the meeting. All documents referred to in the Notice and the Explanatory Statement are open for inspection by the Members at the Registered Ofce 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. All alterations made in the Form of Proxy should be initialled.
2.
3.
4.
5.
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EXPLANATORY STATEMENT PURSUANT TO SECTION 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 the purpose 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 dened 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 Preference Shares to the Preference Shareholders of NPIL, subject to clause 5.2.8 of the Scheme, as follows: a) 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). 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).
b)
The Scheme inter alia provides for Reduction in the Equity Share Capital, Reduction in the Series I & II Preference Share Capital and Utilisation of the Securities Premium Account, as explained below in the notes for the resolutions at Item Nos. 1 to 5 of the accompanying Notice. Item No.1 Reduction of Equity Share Capital and simultaneous capitalisation of equivalent amount from General Reserve A portion of the proceeds of the Rights Issue raised by NPIL in August 2005 was earmarked for the NCE Research Unit, which is being transferred to NRDL under the Scheme. As a consequence, as provided in Clause 4.1.5 of the Scheme, corresponding portion of the Securities Premium is being transferred to NRDL. Likewise, corresponding portion of the equity capital is being reduced from the Equity Share Capital Account of NPIL as provided in Clause 6 of the Scheme. Accordingly, the paid up value of the equity shares of NPIL shall be reduced from Rs.2 per equity share to Rs.1.90 per equity share, aggregating to a total equity capital reduction of Rs.2,09,01,314 (Equity Capital Reduction) as provided by Clauses 6.1 and 6.2 of the Scheme. Taking into consideration the administrative inconveniences, costs and other relevant factors that would arise out of / relating to the Equity Capital Reduction, Clause 6.3 of the Scheme provides that simultaneously
35
with the Equity Capital Reduction, an amount equivalent to the Equity Capital Reduction i.e. Rs.2,09,01,314, shall be capitalized from out of the balance in 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. In terms of section 100 of the Companies Act 1956 read with Article 8 of the Articles of Association of the Company, your approval to the Equity Capital Reduction is therefore sought by the Special Resolution at item no. 1 of the accompanying Notice. Your approval to the said capitalisation of Rs.2,09,01,314 from the General Reserve for transfer to the Equity Share Capital Account is also sought by the said Special Resolution. Item Nos. 2, 3 & 4 Reduction of Preference Share Capital (Series I & II) and consequential alteration of Authorised Share Capital In consideration for the demerger of the NCE Research Unit under the Scheme, apart from payment of consideration to the equity shareholders of NPIL as per Clause 5.1 of the Scheme, clause 5.2.1 of the Scheme provides for payment of consideration by NRDL to the Preference Shareholders of NPIL, as follows: a) 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). 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).
b)
Clause 5.2.3 of the Scheme provides that upon issue of the Preference Shares by NRDL to the Preference Shareholders of NPIL as aforesaid, the face value of the Series I Preference Shares of NPIL shall be reduced from Rs.100 per share to Rs.90 per share and the face value of the Series II Preference Shares of NPIL shall be reduced from Rs.10 per share to Rs.9 per share (hereinafter collectively referred to as the Preference Share Value Reduction). The credit arising in respect of the Preference Share Value Reduction will be recorded in the Capital Reserve Account of NPIL as provided in Clause 5.2.7 of the Scheme. Considering that the Series I Preference Shares and the Series II Preference Shares of NPIL (hereinafter collectively referred to as the NPIL Preference Shares) are redeemable by NPIL on or before 30th September 2008 and 30th November 2008 respectively, Clause 5.2.8 of the Scheme provides that if prior to the Effective Date of the Scheme, the NPIL Preference Shares are redeemed by NPIL, then to that extent no consideration will be payable by NRDL to the holders of the NPIL Preference Shares as per Clause 5.2.1 of the Scheme and consequently, Clauses 5.2.1 to 5.2.7 of the Scheme, including the provisions relating to the Preference Share Value Reduction, shall have no effect. However, in such an event, 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 the NPIL Preference Shares would have reduced in terms of Clause 5.2.3 of the Scheme. In terms of section 100 of the Companies Act 1956 read with Article 8 of the Articles of Association of the Company, your approval is therefore sought for the Preference Share Value Reduction by the respective Special Resolutions at item nos. 2 & 3 of the accompanying Notice. In the event of the Preference Share Value Reduction taking place, the Authorised Share Capital of the Company would be consequently altered to reect the reduced face value of the NPIL Preference Shares as aforesaid, leading to consequential alteration of the Capital Clause in the Memorandum of Association and
36
Article 3 of the Articles of Association of the Company. Your approval is therefore sought for such alteration by the Special Resolution at item no. 4 of the accompanying Notice. Since the resolutions at item nos. 2 to 4 affect the rights of the holders of the Series I Preference Shares and the Series II Preference Shares, they are entitled to vote on the resolutions at item nos. 2 & 3 respectively and the resolution at item no.4. Item No.5 Utilisation of Securities Premium Account The Scheme amongst others, also envisages the utilization of Securities Premium Account of NPIL for adjusting the excess of book values of assets over liabilities transferred to NRDL, after adjusting the Equity Capital Reduction 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. Section 78(1) of the Companies Act, 1956 (the Act), provides that the utilization of the Securities Premium Account for purposes other than those specied in Section 78(2) of the Act requires compliance with the provisions of the Act concerning capital reduction. Accordingly, the proposed utilization of Securities Premium Account in the Company would be deemed to be a capital reduction and your approval is therefore sought by the Special Resolution at item no. 5 of the accompanying Notice. The existing shareholding pattern / capital structure of the Company is disclosed in the Explanatory Statement under Section 393 of the Companies Act, 1956 which is circulated alongwith the Notice convening the meeting of the Equity and Preference Shareholders (Series II) pursuant to the Order made by the Honble High Court of Judicature at Bombay. There would not be any change in the shareholding pattern / capital structure of the Company consequent to the Scheme. Your Directors recommend the resolutions at item nos. 1 to 5 of the accompanying Notice. The Directors of the Company may be deemed to be interested in the Scheme to the extent of their shareholding in NPIL as disclosed in the aforesaid Explanatory Statement under Section 393 of the Companies Act, 1956. Save as aforesaid, none of the directors of the Company are, in any way, concerned or interested in these resolutions. Inspection of the following documents may be had at the Registered Ofce of the Company on any working day (except Saturdays) prior to the date of the meeting, between 10 a.m. to 12 noon: (a) Order dated 19th 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. Memorandum and Articles of Association of NPIL.
(b)
Item No.6 Re-appointment of Dr. (Mrs.) Swati A. Piramal as Director Strategic Alliances & Communications The existing tenure of 5 years for appointment of and payment of remuneration to Dr. Swati A. Piramal as Director in whole-time employment of the Company (designated as Director - Strategic Alliances & Communications) which was approved by the members at the Extra-ordinary General Meeting held on 13th January, 2003, is upto 19th November 2007. The Board of Directors at their meeting held on 25th October 2007 have, subject to the approval of the members, re-appointed Dr. Swati A. Piramal as Director in whole-time employment of the Company (designated as Director - Strategic Alliances & Communications),
37
for a further period of ve years from 20th November 2007. Dr. Piramal has been instrumental in several alliances and strategic relationships developed with both domestic and global pharmaceutical companies during her 5-year tenure. Her efforts have been particularly rewarding towards making the Company a partner of choice for global pharmaceutical companies. Dr. Piramal also continues to play a crucial role in aptly overseeing corporate communications, which assumes signicance in the present dynamic environment. Dr. Piramal acquired her medical degree from Bombay University in 1980. She completed her Masters in Public Health from the Harvard School of Public Health, Boston, USA. During her tenure at Harvards, she conducted a research on the increase of chronic diseases in India and also explored the potential of mass media in the prevention of nutritionally linked diseases under the Harvard Health and Fitness Programme. She also specialized in Marketing Corporate Communications and Information Technology with special reference to health care. In recognition of her services, Dr. Piramal has received several awards, including the Chevalier de lOrdre National du Merite (Knight of the Order of Merit) in 2006 from the French President Mr. Jacques Chirac. Recently, she was awarded the Rajiv Gandhi Award for Outstanding Woman Achiever. She is a member of the Council of Scientic and Industrial Research (CSIR) and an Expert Member of the Planning Commission, Government of India. She is also the Vice President of ASSOCHAM. The details of Dr. Piramals directorships and committee membership in public companies and subsidiary of public companies are given below: Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Name of Company Membership of Board / Board Committees Director Director Director Director Director Director Director Director Director Director Member of Audit Committee Director
NPIL Research and Development Limited Piramal Enterprises Limited Gujarat Glass Limited Life Insurance Corporation of India ICICI Prudential Asset Management Co. Ltd. SBI Capital Markets Ltd. NPIL Dr.Phadke Pathology Laboratory & Infertility Center Pvt.Ltd. NPIL Fininvest Pvt.Ltd. NPIL Laboratories & Diagnostics Pvt.Ltd. Allergan India Pvt. Ltd.
11.
Piramal Capital Pvt. Ltd.
The main terms and conditions, including remuneration payable to Dr. Piramal as contained in the Draft Agreement proposed to be entered into by the Company with Dr. Piramal are set out in the resolution at Item No.6 of the Notice seeking approval of the members to her re-appointment and the payment of remuneration.
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The Board recommends the said resolution for approval of the shareholders. Dr. Piramal is the wife of Mr. Ajay G. Piramal, Chairman of the Company. Dr. Piramal, as it concerns her, and Mr. Ajay G. Piramal, being her relative, are deemed to be concerned or interested in this resolution. The above may be treated as an abstract of the Draft Agreement proposed to be entered into by the Company with Dr. Piramal, as required under section 302 of the Companies Act, 1956. The said Draft Agreement is available for inspection of the Members of the Company on any working day (except Saturdays) prior to the date of the Meeting, between 10.00 a.m. to 12.00 noon at the Registered Ofce of the Company. Item Nos. 7 & 8 Appointment of Mr. N. Santhanam as Executive Director & Chief Financial Ofcer Mr. N. Santhanam is the Group President - Finance and Legal and Chief Financial Ofcer of the Company. He has been looking after the Finance and Legal Functions since the time he joined the Company in December 2001. He has played a key role in the restructuring of several businesses over the last few years, which has added signicant value to the Company. In addition to his responsibilities as head of Finance and Legal functions, Mr. Santhanam has also been entrusted with certain business divisions of the Company, which have seen signicant growth under his leadership. Taking into consideration the meritorious performance of Mr. Santhanam and recognizing his proven skills in handling greater responsibilities, the Board at its meeting held on 25th October 2007 inducted him as an Additional Director on the Board of the Company under Section 260 of the Companies Act, 1956 read with Article 115 of the Articles of Association of the Company. The Board also appointed him as Director in wholetime employment designated as Executive Director & Chief Financial Ofcer. Mr. N. Santhanam is a Chartered Accountant and a Rank holder. He has 36 years of rich and varied experience in Corporate Accounts, Finance, Secretarial and Legal, apart from gaining deep insight into general business management.
39
The details of Mr. Santhanams directorships and committee membership in public companies and subsidiary of public companies are given below: Sr. No. 1. 2. Name of Company Membership of Board / Board Committees Director Director Member of Audit Committee Director Director Director Director Director Director Director
NPIL Research and Development Ltd. Gujarat Glass Ltd.
3. 4. 5. 6. 7. 8. 9.
Piramal Enterprises Ltd. The Swastik Safe Deposit & Investments Ltd. NPIL Laboratories and Diagnostics Pvt. Ltd. Nicholas Piramal Consumer Products Pvt. Ltd. NPIL Dr. Phadke Laboratory & Infertility Centre Pvt. Ltd. Savoy Finance & Investments Pvt. Ltd. Piramal Capital Pvt. Ltd.
As required under section 257 of the Companies Act, 1956, the Company has received a joint notice alongwith deposit from some members proposing the candidature of Mr. N. Santhanam as Director of the Company. The main terms and conditions, including remuneration payable to Mr. N. Santhanam as contained in the draft Agreement proposed to be entered into by the Company with Mr. N. Santhanam, are set out in the resolution at item no. 8 of the accompanying Notice seeking approval of the members to his appointment and payment of remuneration. The Board recommends the resolutions appearing at Item Nos. 7 & 8 of the accompanying Notice for your approval. As it concerns him, Mr. N. Santhanam is deemed to be concerned and interested in these Resolutions. The above may be treated as the requisite abstract of the Draft Agreement proposed to be entered into by the Company with Mr. N. Santhanam, as required under section 302 of the Companies Act, 1956. The said draft Agreement is open for inspection of the members of the Company, on all working days (except Saturdays) prior to the date of the Meeting, between 10.00 a.m. to 12.00 noon at the Registered Ofce of the Company. By Order of the Board of Directors For Nicholas Piramal India Limited Leonard DSouza Company Secretary
Dated this 25th day of October 2007 Registered Ofce: Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013
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Regd Ofce: Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400013.
FORM OF PROXY
I/We*___________________________________________of________________________________ being a member / members* of Nicholas Piramal India Limited, hereby appoint ____________________________ _____of____________________ failing him / her*________________________of_____________________ as my / our* proxy to attend and vote for me / us* on my / our* behalf at the Extra Ordinary General Meeting of the Company to 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 oor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai 400 001, and at any adjournment thereof.
*Strike out what is not necessary Dated this ___ day of _________, 2007 Name : Address: _________________________________________ _________________________________________ _________________________________________ _________________________________________ Folio No. _________________________________________ Signature(s) across the stamp Afx Re.1 Revenue Stamp Signature
Client ID No.$ _________________________________________ DP ID No.$ _________________________________________
No. of shares _________________________________________

$
Applicable for shareholders holding shares in dematerialised form.
Notes: (1) (2) A Proxy need not be a member. The Proxy must be deposited at the Registered Ofce of the Company at least 48 hours before the time appointed for holding the meeting. All alterations made in the form of Proxy should be initialled.
(3)
41
42

Regd Ofce: Nicholas Piramal Tower, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400013. ATTENDANCE SLIP PLEASE FILL THIS ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL. DP.ID* _______________________________________ Folio No. ______________________________ Client ID* _____________________________________ No. of Share(s) held _____________________ NAME AND ADDRESS OF THE SHAREHOLDER (in block letters): ____________________________________________________________________________________
____________________________________________________________________________
NAME AND ADDRESS OF THE PROXY HOLDER (in block letters, to be lled in by the proxy attending instead of the Shareholder): ____________________________________________________________________________________
____________________________________________________________________________
I hereby record my presence at the Extra Ordinary General Meeting of the Shareholders of the Company at M.C. Ghia Hall, Bhogilal Hargovindas Building, 2nd oor, 18/20 Kaikhushru Dubash Marg, (Kala Ghoda), Mumbai 400 001, 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.
Signature of the Shareholder or Proxy:
_____________________________________
*Applicable for shareholders holding shares in dematerialised form.
Note: Shareholders are requested to bring the Attendance Slip with them when they come to the meeting and hand it over at the entrance after xing their signature on it.
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Scheme of Reduction Equity-Share

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Scheme of Reduction Equity-Share

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Nicholas Piramal India Limited

Court Convened Meeting of Equity Shareholders Extra Ordinary General Meeting

: Friday, 23rd November 2007

3,850 4,46,686 3,43,393 83,750

0.00 0.21 0.16 0.04

Ajay G Piramal Swati A Piramal Somesh Sharma N. Santhanam

0.00 0.00 0.00

0.32 0.21 0.09 0.04

(b) (c) (d)

PART C: GENERAL TERMS AND CONDITIONS

Nicholas Piramal India Limited

Nicholas Piramal India Limited

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

Piramal Capital Pvt. Ltd.

NPIL Research and Development Ltd. Gujarat Glass Ltd.

Nicholas Piramal India Limited

Client ID No.$ _ DP ID No.$ _

No. of shares _________________________________________

Applicable for shareholders holding shares in dematerialised form.

Nicholas Piramal India Limited

Signature of the Shareholder or Proxy:

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