1. Page 1 Case Study – Business Restructuring 11 October 2013

2. Page 2 Case Study - Background and objectives ► Company X (‘Co X’), an Indian private limited company is engaged in two lines of businesses ► IT Services - Business A ► Real estate - Business B ► Co X holds 100% shares in Company Y (‘Co Y’), an Indian private limited company, currently engaged in small businesses including similar to Business A ► Co X is contemplating a strategic partnership or sale of entire business or at least Business A ► Subsequently, Co X is approached by an interested party - Company Z (‘Co Z’), an Indian private limited company engaged in the business of IT Services Options evaluated 1. Slump sale of Business A by Co X to Co Y followed by demerger of Business A to Co Z 2. Merger with retrospective appointed date of Co X and Co Z Co Z IT Services Co X Business A Business B Co Y 100%

3. Page 3 Option 1 – Slump sale followed by demerger Mechanics 1. Co X to transfer Business A to Co Y vide slump sale for a consideration of INR 1000 (‘fair value’) ► INR 50 is paid in cash to Co X and balance would entail creation of a payable in the books of Co Y to Co X. 2. Once buyer Co Z is identified, Business A to be demerged into Co Z vide a High Court Approved Process. ► Consideration for demerger by issuance of Redeemable Preference Shares to Co X ► May be redeemed at a subsequent stage ► Payable of INR 950 to transfer from Co Z to Co X ► To be settled by payment in cash by Co Z post demerger Co ZCo X Business A Business B Co Y 100% Co Z Co X Business A Business B Co Y 100% Slump Sale Cash + Creation of payable Issue of redeemable preference shares Step 1 Step 2 Demerger IT Services

4. Page 4 Option 1 – Slump sale followed by demerger Key considerations ► Tax implications on slump sale of Business A from Co X to Co Y? ► Cost step up on assets of Business A? ► Tax neutrality of demerger of Business A from Co Y to Co Z? ► Sufficient time gap between slump sale and demerger and commercial substance ► Time consuming option since High Court process involved ► CCI and Stamp Duty implications to be considered Co ZCo X Business A Business B Co Y 100% Co Z Co X Business A Business B Co Y 100% Slump Sale Cash + Creation of payable Issue of redeemable preference shares Step 1 Step 2 Demerger IT Services

5. Page 5 Option 2 – Merger with retrospective appointed date Mechanics 1. Once buyer Co Z is identified, Co X to merge into Co Z vide a High Court approved Scheme of Amalgamation. Co Z to issue shares to shareholders of Co X as consideration. ► Retrospective Appointed date for merger, say, 1 April 2011 Key considerations ► Tax implications on merger? ► Option helpful in the event Co X is incurring tax losses ► Issuance of preference shares vis-à-vis equity share as consideration ► Transferability on MAT Credit on merger ► Commercial Viability of owning Business B by Co Z ► Time consuming option since High Court process involved ► CCI and Stamp Duty implications to be considered Co Z Co X Business A Business B Co Y 100% Co Z Business A Business B Co Y 100% Merger Resultant Structure post merger IT Services

6. Page 6 Thank You For further information/clarifications, please contact: “This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EY LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.” Pranav Sayta Partner – Tax & Regulatory Services Email : pranav.sayta@in.ey.com Mobile : +91 98203 45976 Phone : +91 22 6192 0870