DAMODARAM SANJIVAYYA NATIONAL LAW

UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

SCHEME OF MERGER
(ONBEHALF OF IDEA CELLULAR LIMITED)

Company Law - II

Submitted To:-
Dr. Dayananada Murthy C. P.
Submitted By:-
G. Naga Lahari : 2013048
Amit Singh : 2013017
Section A
8th Semester, 4th Year.

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 ACKNOWLEDGEMENT

I consider myself lucky that I got the chance to do a work on this topic that was to “scheme of merger and
feasibility report on behalf of idea management”.

I thank the subject teacher, Dr. Dayananda Murthy CP, for letting me choose the topic.

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FEASIBILITY REPORT

ABOUT IDEA CELLULAR LIMITED:

Idea Cellular Limited (“Idea”) is the third largest wireless operator in India with a Revenue Market
Share (RMS) of 18.7% (Q2FY17). In the 15 Established Service Areas, its RMS stands at a strong
level of 21.7% (Q2FY17). The company carried around 2.28 billion minutes on a daily basis during
the quarter Q3FY17. Idea is the sixth largest mobile telecommunications company (counted on
operations in a single country) in the world based on number of subscribers (GSMA Intelligence, as
of September 30, 2016). Company is listed on National Stock Exchange and Bombay Stock
Exchange in India with a market capitalization of Rs. 267 billion (as on December 31, 2016).

Promoters and key shareholders:

Aditya Birla Nuvo Ltd. 23.25%
Birla TMT Holdings Pvt. Ltd. 7.87%
Hindalco Industries Ltd 6.34%
Grasim Industries Ltd 4.75%
Others 0.23%
Total 42.45%
Axiata Group Berhad, through its affiliates, has 19.77% shareholding in Idea Cellular. Axiata is one
of the largest Asian telecommunication group focused on high growth low penetration emerging
markets. The Group currently has controlling interests in its mobile communications operations in
Malaysia, Indonesia, Sri Lanka, Bangladesh, Cambodia and Nepal as well as significant strategic
stakes in India and Singapore through its various subsidiaries and affiliates. The Group, including its
subsidiaries and associates, has almost 300 million mobile subscribers in Asia and provides
employment to 25,000 people across Asia.

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The Corporate Structure:

Idea Cellular Limited (Idea)

-Subsidiary-Idea cellular Infrastructure services limited (ICISL)

-Subsidiary-Idea cellular Services Limited (ICSL)

-Subsidiary-Idea Telesystem Limited (ITL)

-Subsidiary-Idea mobile Commerce Services Limited (IMCSL)

-Subsidiary-Aditya Birla Telecom Limited (ABTL) & Joint venture with Indus towers
Limited (Indus)

-Associate-Aditya Birla Idea payments Bank Limited (ABIPBL)

ICISL – A tower company owing towers (with transfer of towers from Idea to ICISL, it now owns all
towers of Idea group’s tower portfolio)

ICSL- provides manpower services to idea

ITL- engaged in the business of sale and purchase of communication devices

IMCSL- to promote mobile banking related initiatives

ABTL- currently holds 11.15% (16% as an December 31, 2016) share holding in Indus and engaged
in business of sale & purchase of communication devices

Indus- A joint venture between bharti Infratel, Vodafone India and Idea (through ABTL), to provide
passive infrastructure services in 15 service areas.

ABIPBL- An association with Aditya Birla Nuvo Limited (ABNL). ABNL got in-principle approval
from RBI for payments bank.

ABOUT VODAFONE INDIA LIMITED:

Vodafone India is the second largest mobile network operator in India by subscriber base,
after Airtel with a market share of 18.42%. It is head quartered in Mumbai, Maharashtra. It has
approximately 200 million customers as of August 2016.

Revenue: 425 billion INR (US$6.3 billion, 2015)

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 Founded: 1994

Parent organization: Vodafone Group Plc.

Subsidiaries: Vodafone Mobile Services Limited & Vodafone India Limited

MERGER INTERPRETATION

A merger is a deal to unite two existing companies into one new company. There are several
types of mergers and also several reasons why companies complete mergers. Most mergers unite two
existing companies into one newly named company. Mergers are commonly done to expand a
company’s reach, expand into new segments, or gain market share. All of these are done to please
shareholders and create value.

NEED OF MERGER

The need of merger arises to get full benefit of the synergy and with synergy benefit it results
in higher profits and leverage which were expected to reduced, the combined entity's equity
valuation also rises. Also the market share and the number of customers also increased through this
mergers which ultimately provide boost in the revenue of both of the firms. It also helps in reducing
the effect of tariff war that generally occurs in the Telco market. Also with this merger both company
enjoy benefits in term of network and also in terms of services. To became biggest Telco sector in
India this merger is required.

EFFECTS FROM MERGER-

Accordingly, experts believe Vodafone India and Idea's attempts to unlock synergies across
22 circles amid a bruising price war with 4G networks not yet up to market expectations could have
limited success.

HOW FAR IS IT FEASIBLE?

1. The Vodafone-Idea merged entity expects to extract synergy benefits worth $10 billion in net
present value (NPV) terms after integration of costs and spectrum liberalization payments and
an estimated $2.1 billion of savings by the fourth year of completion. Aggressive entry of
reliance jio has launched big price war. With its free services, reliance-jio has upset the
bigger players.
2. The Vodafone idea merged entity will only add fuel to the fire. Which ultimately effects the
tariff plans price.

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 3. Overall consolidation in the debt-ridden telecom industry will lead to better financial healthy
and sustainability of companies. Since consolidation will leave only three big companies in
industry, there will be less competition and bigger revenue.
4. Vodafone idea merger will result in duplication of resources across the country, which
require job cuts too.The Vodafone idea merger in telecom sector will lead to pooling of vital
resources and infrastructure which will inevitably lead to better service quality and customer
experience.

BENEFITS FOR CUSTOMERS-

1. The chances of better services is more.Customer as a king in market due to impact on tariff
prices.Chances of better and faster network is more. Also both of the companies starts
working on better coverage of 4G and 5G which ultimately grew the future expectation of
customers.
2. The due diligence teams would identify potential areas of value erosion from the merger and
would look for any tax liabilities arising out of combining the two firms. The announcement
of the merger is expected later this week, according to various news reports.
3. A possible Vodafone-Idea combine with a total subscriber base of 39 crore will surpass
Bharti Airtel as the largest telecommunication company and will be far ahead of Reliance
Jio’s 10 crore.
4. Further, the combined entity would have 43% of the revenue market share and 40% of the
active subscriber base. The two operators complement each other, with Vodafone having
strong presence in urban areas and Idea being an established player in the hinterland. The
new capital that Vodafone brings in may be used to pare the substantial debt that Idea has on
its books.

RATIONALE FOR THIS SCHEME

The management of each of the parties believes that this scheme will result in interalia the following
benefits:

 Consolidation of the telecommunications business of the parties resulting in expansion of

such companies business and creation of greater value for shareholders and all other
stakeholders;

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  Synergies in opertional processes and logistics alignment leading to economics of scale,
rationalism of network infrastructure, creation of efficiencies and optimisation of capital and
opertional expenditure (including lower maintenance expenses and savings in energy costs);
 Availability of the combined resources together with the synergies in the opertional processes
and consequent reduction in cost could be utilized for strengthening the customer base, and
providing high quality service to customers at competitive prices in a manner that would
assist in achieving the Indian government’s ‘Digital India’ vision;
 Higher spectrum availability and larger single radio access network deployment coupled with
re-deployment of overlapping equipment from rationalised sites resulting in lower capital
expenditure;
 Harmonisation of sales and servivce channels;
 Sustained investment acclerating pan-india expansion of wireless broadband services,
supporting introduction of digital content and internet of things services as well as expanding
financial inclusion through mobile money services for the benefit of a common information
technology system; and
 General and administrative cost reduction and productivity gains by pooling of financial,
managerial and technical resources, personnel capabilities, skills, expertise and technologies
of the parties.

The proposed scheme is in the interest of all parties and their respective shareholders and creditors.

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 SCHEME OF MERGER
TABLE OF CONTENTS

ARTICLE PAGE NO.

ARTICLE I:- Definitions, Interpretation, Effective 09

date and share capital

ARTICLE II -Purchase of the purchase shares 16

ARTICLE III- Closing and Deliveries 16

ARTICLE IV-Rights of the purchaser(idea 18

Cellular) during the special rights period

ARTICLE V- Covenants and Undertakings of 19

Seller(VODAFONE INDIA)

ARTICLE VI-Rights of the purchaser in the event 24

that proposed IPO is not completed prior to the final
IPO date

ARTICLE VII -Intent and effect of this agreement 24

ARTICLE VIII-General terms & conditions 27

ARTICLE IX-Sunset Clause 33

ARTICLE X -Notices 33

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On the behalf of Vodafone India Plc.

THIS AGREEMENT is made on this Monday of April 10th 2017 between:

1. VODAFONE INDIA PLC. LIMITED, a company incorporated in India under the provisions
of the Companies Act having its registered office at Mumbai, India and having its (the
“Seller” which expression shall, unless it be repugnant to the context or meaning thereof, be
deemed to mean and include its successors and permitted assigns) of the ONE PART.

2. IDEA CELLULAR, a company incorporated in India under the provisions of the Companies
Act, (the "Company", which expression shall, unless it be repugnant to the context or
meaning thereof, be deemed to mean and include its successors and permitted assigns) of the
SECOND PART.

The Seller, Purchaser and the Company may wherever the context so permits, be referred to as
“Parties” and individually as a “Party”.

WHEREAS

A. The Seller has discussed with the Purchaser and the Company, the sale, by the Seller to the
Purchaser of certain equity shares of the Company currently owned by the Seller.
B. The Purchaser has agreed to acquire the shares from the Seller upon the terms and subject to
the conditions contained herein.
C. Upon purchase of the equity shares of the Company from the Seller, the Purchaser will be a
minority shareholder of the Company with certain rights as detailed in this Agreement and
D. The Parties are entering into this Agreement in order to set out the rights and obligations of
the Parties in relation to the acquisition of the Purchase Shares (as defined hereinafter) by the
Purchaser and other matters in connection therewith, which they agree will be interpreted,
acted upon and governed solely in accordance with the terms and conditions of this
Agreement.

THE PARTIES HERETO AGREE AS FOLLOWS:

1. ARTICLE I - DEFINITIONS AND INTERPRETATION:-

a. Definitions. In this Agreement, unless the context otherwise requires, the following
expressions shall have the following meanings:
“Act” means the Companies Act, 1956 (1 of 1956), as amended from time to time
and shall include any statutory replacement or re-enactment thereof;

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 “Affiliate” shall mean and include, in respect of a Party, any Person existing as of the
date of this Agreement or at any time in the future:
“Board” means the board of directors of the Company which shall be deemed to
include any Committee of the Board.
“Board of directors” in relation to a party, means the board of directors of such
party.
“Business Day” means any day excluding Saturdays and Sundays and holidays
declared under the provisions of the Negotiable Instruments Act, 1881.
“Brand License Agreement” means (i) the trade mark licence agreement to be
executed by VIL and Vodafone sales & services limited prior to the effective date,
and (ii) the variation thereto between vodafone sales & services limited and the
Transferee company that will take effect at the effective date.
“CCI” means the competition commission of India.
“CENVAT” means central value added tax.
“Charter Documents” mean the Memorandum of Association and the Articles of
Association, or equivalent under applicable law.
“Confidential Information” means any and all confidential or proprietary
information and materials, as well as all trade secrets belonging to a Party to this
Agreement and/or its Affiliates or customers which is furnished to the other Party(s)
to this Agreement (the “Receiving Party” in relation to or pursuant to this Agreement
with expectations of confidentiality to the extent the Receiving Party(s) knows or
reasonably should know of such expectations, regardless of whether such information
or material is expressly identified as confidential or proprietary or not or whether it is
stored in any medium or not.

Parties agree that such Confidential Information may include-

a. technical information and materials, including but not limited to computer

programs, software, databases, methods, know-how, formulae, compositions,
molecular compositions, technological data, technological prototypes, processes,
discoveries, machines, inventions, and similar items;
b. business information and materials, including but not limited to financial
information, business plans, business proposals, customer contract terms and
conditions, pricing and bidding methodologies and data, sales data, customer or
Purchaser lists, customer or contact information, customer preferences and other

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 business information, supplier lists, supplier contact information, supplier
preferences and other business information, vendor lists, vendor contact
information, vendor preferences and other business information, business partner
lists, business partner contact information, business partner preferences and other
business information, and similar items;
c. information and materials relating to future plans, including but not limited to
marketing strategies, new materials research, pending projects and proposals,
proprietary production processes, research and development strategies, and similar
items;
d. personnel information and materials, including but not limited to employee lists
and contact information, employee performance information, employee
compensation information, recruiting sources, contractor and consulting
information, contacts, and cost, and similar information;
e. any information or material that gives the Company (or other discloser of
information, as applicable) an advantage with respect to its competitors by virtue
of not being known by those competitors;
f. original information supplied by the Company, the Subsidiaries or the Purchaser;
g. information relating to the Company or the Subsidiaries or the Purchaser which is
obtained whether (without limitation) in writing, pictorially, in machine-readable
form, on floppy diskettes or orally, and whether or not marked "confidential" by
any Party or its representatives from either the Company, the Subsidiaries or any
of their representatives, in each case in connection with the business relationship
between the Company, the Subsidiaries, and the Purchaser;
h. other valuable, confidential information and materials and/or trade secrets that are
customarily treated as confidential or proprietary, whether or not specifically
identified as confidential or proprietary;
Provided, however that, no information shall constitute a Confidential Information
if it is independently developed by a Receiving Party or its Affiliates or was
otherwise publicly known and/or is in the public domain at the time when it is
disclosed to the Receiving Party(s), or comes into the public domain due to no
fault of the Receiving Party(s);
“Control” together with its grammatical variations when used with respect to any
Person, means and includes the power to direct the management and policies of such

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 Person, directly or indirectly, whether through the ownership of the vote carrying
securities, by contract or otherwise howsoever;
“contract” means any contract, lease, licence, indenture, agreement, commitment or
other legally binding arrangement.
“DoT” means the department of Telecommunications, Ministry of communications,
Government of India.
“Designated Account” shall have the meaning ascribed to it in Clause 3(c) (i);
“Designated Bank Account” shall have the meaning ascribed to it in Clause 3(c) (ii)
“Dispute” shall mean any dispute, controversy or claim between the Parties arising
out of or in connection with this Agreement, including the breach, termination or
invalidity thereof;
“Equity Shares” means the issued and fully paid up equity shares of the Company,
having a face value of Rs.10/- (Rupees ten only) each;
“Encumbrance” means any encumbrance including but not limited to any claim,
mortgage, pledge, charge (fixed or floating), hypothecation, lien, deposit by way of
security, bill of sale, option or right of pre-emption, beneficial ownership, right of
retention of title or any form of security interest or any obligation (including any
conditional obligation) to create any of the same, including without limitation, any
discretion on the use, voting, transfer, receipt of income or other attributes of
ownership;
“Final Closing” means Transfer of title of the Purchase Shares in favour of the
Purchaser;
“Final Closing Date” shall have the same meaning ascribed to it in Clause 3 (d)
hereto;
“FIPB” means the foreign Investment promotion board, department of economic
affairs, ministry of finance, government of India or any other successor
governmentalauthority, if applicable.
“Government Approvals” means any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, certificate, exemption, order,
registration, declaration, filing, report or notice, of, with or to any Governmental
Authority;
“Group” means the Vodafone group or the Idea Group, as the context may require.
“ICL” means Idea Cellular Limited, a public company incorporated with limited
liability under the provisions of the companies Act, 1956 with its registered office.

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 “ICL Merger Group” means ICL and its subsidiaries.
“Initial Closing” means the deposit of the Purchase Shares by the Seller with the
Purchaser, and the deposit of Purchase Price by the Purchaser with the Seller;
“Initial Closing Date” shall have the meaning ascribed to it in Clause 3 (b);
“IPO” means an offering to the public, in any applicable jurisdiction, of the Equity
Shares of the Company and listing of the Equity Shares on recognised stock
exchanges in India, of which at least one must be either the Bombay Stock Exchange
Limited or the National Stock Exchange of India Limited;
“Losses” means and includes all losses, claims, costs, and damages (whether direct,
indirect, general or special, absolute, accrued, conditional or otherwise and whether or
not resulting from third party claims), including interests and penalties with respect
thereto and out-of-pocket expenses, including reasonable attorneys' and accountants'
fees and disbursements;
“Person” means any individual, corporation, company, partnership, limited liability
Company, joint venture, association or trust or any other entity or organization;
“Purchase Price” means a sum of Rs. XXXXXXXXXXonly to be paid by the
Purchaser to the Seller as an aggregate consideration for the purchase of the Purchase
Shares.
“Purchase Shares” means the Equity Shares each currently held by the Seller and
representing agreed (_) % of the Fully Diluted equity share capital of the Company;
“Revised Purchase Price” shall have the meaning ascribed to it in the clause 3 and 4
“Rupees” or “Rs.” means the currency of the Republic of India;
“Special Rights Period” means the period commencing on the Initial Closing Date
until the Final Closing Date;
“Tax” or “Taxation” means all forms of taxation, duties, levies, imposts and social
security charges, including without limitation corporate income tax, wage withholding
tax, stamp duties payable in any jurisdiction, fringe benefit tax, provident fund,
employee state insurance and gratuity contributions, value added tax, customs and
excise duties, and other legal transaction taxes, dividend withholding tax, real estate
taxes, other municipal taxes and duties, environmental taxes and duties and any other
type of taxes or duties in any relevant jurisdiction, together with any interest,
penalties, surcharges or fines relating thereto, due, payable, levied, imposed upon or
claimed to be owed in any relevant jurisdiction;

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 “Transfer” shall mean (in either the noun or the verb form including, with respect to
the verb form, all conjugations thereof within their correlative meanings) with respect
to any Purchase Shares, the sale, assignment, transfer, conveyance, setting over, or
delivery (whether for or without consideration, whether directly or indirectly, and
whether voluntary, involuntary or by operation of law) of any such Purchase Shares
and all interest therein;
“US $” or “USD” means the currency of the United States of America.
“VMSL” means Vodafone mobile services limited
“VIL” means Vodafone India Limited
1.1. EFFECTIVE DATE
The scheme set out herein in its present form, or with modification(s), if any, made in
accordance with the provisions of the scheme and the directions of the Tribunal, shall become
effective and operative from the effective date.
1.2. SHARE CAPITAL
The authorised, issued, subscribed and paid-up capital of VMSL as on 19 march 2017 is as
under:

SHARE CAPITAL AMOUNT IN RUPEES

Authorised share capital

10,516,000,000 equity shares of

Rs.10 each 105,160,000,000

694,412,000 equity shares of Rs.85

each 55,200,020,000

200,000 0.1% non-cumulative 20,000,000

redeemable preferences shares of
Rs.100 each
5,000 0.001% non-cumulative 5,000,000,000
preference shares of Rs.1,000,000
each
48,000,000 preference shares of 4,800,000,000
Rs.100 each

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 170,180,020,000
Total

Issued, subscribed and paid-up

capital
1,376,302,720 equity shares of 13,763,027,200
Rs.10 each
Total 13,763,027,200

The authorised, issued, subscribed and paid-up capital of VIL as on 19 March 2017 is as under:

SHARE CAPITAL AMOUNT IN Rs.

Authorised Share Capital

5,000,000,000 equity shares of Rs.10 50,000,000,000

each

TOTAL 50,000,000,000

Issued, subscribed & paid-up capital

2,813,295,823 equity shares of Rs.10 28,132,958,230

each

Total 28,132,958,230

The authorised, issued, subscribed and paid-up capital of ICL as on 19th March, 2017 is as under:

SHARE CAPITAL AMOUNT IN Rs.

Authorised share capital

67,750,000,000
6,775,000,000 equity shares of Rs.10 each

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 SHARE CAPITAL AMOUNT IN Rs.

1,500 redeemable cumulative non-convertible 15,000,000,000

preferences shares of Rs.10,000,000 each

TOTAL

Issued, subscribed and paid-up capital

3,603,497,124 equity shares of Rs.10 each 36,034,971,240

Total 36,034,971,240

2. ARTICLE II -PURCHASE OF THE PURCHASE SHARES-

a. Upon the terms and subject to the conditions set forth in this Agreement, in
consideration of the mutual rights and obligations of the Parties hereunder and relying
on the Warranties, undertakings and indemnities to and for the benefit of the
Purchaser under this Agreement, the Purchaser agrees to purchase, and the Seller
agrees to transfer and deliver, the Purchase Shares, free and clear of all Encumbrances
and with all attached and accrued rights, for the consideration of, as full and final
payment for the Purchase Shares, the Purchase Price, to the Purchaser.
b. The Purchase Shares transferred to the Purchaser by the Seller shall rank pari passu
with the other Equity Shares of the Company in all respects, including, entitlement to
receive proportionately the dividends and other distributions declared or to be
declared in respect of the equity capital of the Company.
3. ARTICLE III-CLOSING AND DELIVERIES-
a. Initial Closing- Subject to the terms and conditions of this Agreement, the Initial
Closing shall take place at 10 A.M. (Indian Standard Time) on the Initial Closing Date
at Mumbai or such other place as the Seller and the Purchaser may mutually agree.
b. Initial Closing Date- Subject to the terms and conditions of this Agreement, the Initial
Closing shall occur on a date (the "Initial Closing Date") which shall be 3 (three)
Business Days after the satisfaction and/or waiver of all the Initial Conditions
Precedent set forth under Clause 4 (a), or such other date, time and place as may be
mutually agreed between the Seller and the Purchaser.

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 c. Initial Closing Agenda. On the Initial Closing Date, the following events shall take
place:
i. The Seller shall transfer the Purchase Shares to such dematerialised account of
the Purchaser with the Purchaser’s depositary as the Purchaser may designate
(“Designated Account”); provided, however, that written notice regarding
details of such designated dematerialised account shall be sent to the Seller at
least 2 (two) Business Days prior to the Initial Closing Date.
The Purchaser does hereby agree, and confirm that pending the Final Closing;
the Purchaser shall hold the Purchase Shares, deposited by the Seller with the
Purchaser on the Initial Closing Date, in escrow for the period from the Initial
Closing Date till the Final Closing Date. The Purchaser does hereby further
agree, declare and confirm that the Purchase Shares shall not be deemed to
have absolutely vested in the Purchaser till the Final Closing occurs. In the
event, the Final Closing does not occur on or before the Final Closing Date,
the consequences as set out in Clause 8 shall follow.
ii. Upon receiving the Purchase Shares in the Designated Account, the Purchaser
shall transfer the Purchase Price by telegraphic transfer to such bank account
of the Seller that has been notified to the Purchaser in writing on the corporate
letterhead of the Seller by its authorised signatory at least 3 (three) Business
Days prior to the Initial Closing Date (“Designated Bank Account”).
The Seller does hereby agree, and confirm that pending the Final Closing the
Seller shall be holding the Purchase Price, deposited by the Purchaser with the
Seller on the Initial Closing Date, in escrow for the period from the Initial
Closing Date till the Final Closing Date. The Seller does hereby further agree,
declare and confirm that the Purchase Price shall not be deemed to have
absolutely vested in the Seller till the Final Closing occurs. In the event, the
Final Closing does not occur on or before the Final Closing Date, the
consequences as set out in Clause 8 shall follow-
iii. The Purchaser shall provide to the Seller, an acknowledgement receipt
evidencing receipt by the Purchaser of the Purchase Shares in the Designated
Account.
iv. The Seller shall provide to the Purchaser, an acknowledgement receipt, in a
form and manner acceptable to the Purchaser, evidencing receipt by the Seller
of the Purchase Price in the Designated Bank Account.

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 d. Final Closing: The Final Closing Shall deemed to have taken place immediately on
date of receipt of an intimation from the Company by the Purchaser and the Seller that
the red herring prospectus has been filed by the Company with Securities and
Exchange Board of India and the Registrar of Companies in respect of IPO of the
Company’s Equity Shares, which shall, in no case, be later than Final IPO Date
(“Final Closing Date”).For the sake of clarification, the Seller and the Purchaser
hereby agree and confirm that till the Final Closing has happened, the legal and
beneficial title to the Purchase Shares shall not be deemed to have been transferred in
favour of the Purchasers, nor shall the Seller be entitled to the Purchase
Consideration.
4. ARTICLE IV : RIGHTS OF THE PURCHASER (IDEA CELLULAR) DURING THE
SPECIAL RIGHTS PERIOD-
a. Anti-Dilution-. The Company agrees and undertakes (and the Seller agrees and
undertakes that it shall cause the Company to ensure) that during the Special Rights
Period:
i. The Company shall not without prior written consent of the Purchaser, issue
any Equity Shares (with the exception of the Equity Shares to be issued in
connection with the proposed IPO, and pursuant to the exercise of options
outstanding at the date of this Agreement under the Employee Stock Option
Scheme as referred to in Annexure 2), preference shares or any rights, options,
warrants, debentures, securities, appreciation rights or instruments entitling the
holder to receive any Equity Shares or any options to purchase or rights to
subscribe to securities, by their terms convertible into, or exchangeable for,
Equity Shares or any other securities which would have an actual or potential
dilutive effect on the Purchaser's share holding in the Company; and
ii. in the event that, pursuant to the written consent of the Purchaser, the
Company does issue an instrument to any Person (including without
limitation, by way of a preferential issue) which, in terms of the agreement
mentioned in this document, does have an actual or potential dilutive effect on
the Purchaser's share-holding in the Company, the Purchaser shall, subject to
applicable law, have the right but not an obligation to subscribe to and receive
such number of additional Equity Shares of the Company so as to maintain the
equity shareholding of the Purchaser, in the Company at five (5) % of the total
paid-up and issued share capital of the Company (on a Fully Diluted basis).

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 The price payable by the Purchaser for subscription of such additional Equity
Shares shall be the lowest possible price payable by the Purchaser in
accordance with and subject to applicable law.
b. Information Rights. The Company and the Seller shall, at all times during the Special
Rights Period:
i. keep the Purchaser appraised as to the process and progress of the proposed
IPO (including, without limitation, providing copies, if requested by the
Purchaser of all drafts of the offer document, copies of all filings made with
SEBI and responses received and updates as to the progress made with the
marketing of the Equity Shares); and
ii. deliver to the Purchaser, copies of any and all reports filed by the Company
(or any Subsidiary, if any) or the Promoters, with any relevant securities
exchange, or Governmental Authority, as may be requested by the Purchaser
from time-to-time.
c. Access Rights. The Company shall (and the Seller shall ensure that the Company
does) give reasonable access to the Purchaser and its authorized representatives
(including lawyers, accountants, auditors and other professional advisors) to visit and
inspect all properties, assets, corporate, financial and other records, reports, books,
contracts and commitments of the Company, and to discuss and consult its business,
actions plans, budgets and finances with the directors and executive officers of the
Company, upon reasonable notice. All costs incurred in connection with such
inspection shall be borne by the Purchaser.
5. ARTICLE V: COVENANTS AND UNDERTAKINGS OF THE SELLER (VODAFONE
INDIA):
a. Conduct before Final Closing: The Seller agree, undertake and covenant that during
the period between the signing of this Agreement and the Final Closing Date, without
the prior written consent of the Purchaser:
i. enter into any commitment or transaction that could potentially adversely
impact the Transfer of the Purchase Shares or have a Material Adverse Effect;
or
ii. Do or permit anything which would constitute a breach of any of the
Warranties or covenants.

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 b. Notification of Material Event: If, during the period between the signing of this
Agreement and the Final Closing Date, the Company and/or the Seller becomes aware
that:
i. there has been or there is likely to be a Material Adverse Effect; or
ii. the Company is involved in, or has been threatened with, any material
litigation filed or threatened to be filed against the Company; or
iii. there has been or is likely to be any breach of any of the Warranties;
then the Company and/or the Seller shall immediately notify the Purchaser of
that fact or event, as the case may be in writing and shall provide all
information in their possession in relation to such fact and/or event to the
Purchaser. Moreover,Vodafone PLC.(herein referred as seller shall implement
the following-
 Vodafone to combine its subsidiary Vodafone India (excluding its 42%
stake in Indus Towers) with Idea which is listed on the Indian Stock
Exchanges.
 Highly complementary combination will create India’s largest
telecoms operator with the country’s widest mobile network and a
strong commitment to deliver the Indian government’s ‘Digital India’
vision.
 Sustained investment by the combined entity will accelerate the pan-
India expansion of wireless broadband services using 4G/4G+/5G
technologies support the introduction of digital content and ‘Internet of
Things’ (IoT) services as well as expand financial inclusion through
mobile money services for the benefit of Indian consumers, businesses
and society as a whole.
 Merger of equals with joint control of the combined company between
Vodafone and the Aditya Birla Group governed by a shareholders’
agreement.
 The merger ratio is consistent with recommendations from the joint
independent valuers.
 The implied enterprise value is INR828 billion for Vodafone India and
INR722 billion for Idea excluding its stake in Indus Towers valuing

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 Vodafone India at 6.4x EV/LTM EBITDA and Idea excluding its stake
in Indus Towers at 6.3x / EV/LTM EBITDA.
 Substantial cost and capex synergies with an estimated net present
value of approximately INR 670 billion after integration costs and
spectrum liberalisation payments, with estimated run-rate savings of
INR140 billion on an annual basis by the fourth full year post
completion.

Vodafone will own 45.1% of the combined company after transferring

a stake of 4.9% to the Aditya Birla Group for circa INR39 billion in
cash concurrent with completion of the merger. The Aditya Birla
Group will then own 26.0% and has the right to acquire more shares
from Vodafone under an agreed mechanism with a view to equalising
the shareholdings over time.

 If Vodafone and the Aditya Birla Group’s shareholdings in the

combined company are not equal after four years.Vodafone will sell
down shares in the combined company to equalise its shareholding to
that of the Aditya Birla Group over the following five-year period.

 Until equalisation is achieved, the voting rights of the additional shares

held by Vodafone will be restricted and votes will be exercised jointly
under the terms of the shareholders’ agreement.

 Vodafone India will be deconsolidated by Vodafone on announcement

and reported as a joint venture post-closing reducing Vodafone Group
net debt by approximately INR552 billion (US$8.2 billion) and
lowering Vodafone Group leverage by around 0.3x Net
Debt/EBITDA4. The transaction is expected to be accretive to
Vodafone’s cash flow5 from the first full year post-completion.

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  The transaction is expected to close during calendar year 2018, subject
to customary approvals
c. Amendment of the Charter Documents. The Company shall (and the Seller shall cause
the Company to) amend its Charter Documents appropriately, within 7 Business Days
of the Final Closing Date, so as to incorporate the terms of this Agreement therein.
d. No Favorable Terms. The Company and the Seller shall not provide any new or
potential purchaser, desirous of making an investment in the Equity Shares of the
Company, with (a) a purchase or investment price per Equity Share, which is less than
the price of an Equity Share as agreed under this Agreement; and (b) rights which are
more favorable than those granted to the Purchaser under this Agreement, including
without limitation, rights relating to voting and entitlement to dividend.
e. Post Final Closing Obligations-
i. The Company and the Seller shall, no later than seven (7) days from Final
Closing Date, file all forms, declarations and reports with such Governmental
Authority as may be required under applicable laws, in relation to or pursuant
to the Transfer of the Purchase Shares in a manner contemplated under this
Agreement and shall provide the Purchaser with documentary evidence
thereof.
ii. The Company and the Seller shall, no later than thirty (30) days from the Final
Closing Date, provide to the Purchaser a statement of the shareholding pattern
of the Company reflecting the Equity Shares held by the Purchaser, in a format
as set out in Annexure 2-Part B of this Agreement which shall be duly
certified by its Company Secretary;
f. Taxes. The Purchaser shall be responsible for the payment of all stamp duty charges
attributable to the execution of this Agreement.
g. Exercise of Voting Rights. The Seller agrees and undertakes that it shall exercise its
voting rights in a meeting of shareholders of the Company, in such manner, and cause
the directors nominated by it on the Board of the Company to exercise their votes in
such manner, so as to cause the Company to give full legal effect to the terms of this
Agreement, including but not limited to, for the purposes of amending the Charter
Documents of the Company, if required, to incorporate the terms of this Agreement.
h. Post IPO Adjustment- The Seller and the Purchaser agree and understand that the
Purchase Price under this Agreement has been determined on the understanding that
total valuation of the overall equity of the Company is USD One billion. In the event

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 the proposed IPO of the Company is done at a valuation which is less than USD One
billion, then it shall be deemed that the valuation of the Purchase Shares at the
Purchase Price was higher than the actual value of the Purchase Shares, and the Seller
shall return to the Purchaser or its nominee (identified by the Purchaser) the additional
consideration paid by the Purchaser to the Seller for the Purchase Shares in the
following manner:
i. Within 3 (three) Business Days of valuation of the overall equity of the
Company, in relation to the proposed IPO, being determined, the Seller and
the Purchaser shall recalculate the consideration for a Purchase Share, in
accordance with the valuation of the Company as determined at the time of the
proposed IPO (the “Revised Purchase Price”).
ii. Along with the determination of the Revised Purchase Price, the Seller and the
Purchaser shall also calculate the Excess Purchase Price on the same day. The
Excess Purchase Price shall be equal to (a) the consideration paid hereunder
for each Purchase Share less the Revised Purchase Price multiplied by (b) the
total number of Purchase Shares.
iii. The Seller and the Purchaser agree that calculation of the Revised Purchase
Price and the Excess Purchase Price shall be done at the Forex Conversion
Rate.
iv. Within 3 (three) Business Days of determination of the Excess Purchase Price,
the Seller shall pay the Excess Purchase Price to the Purchaser by depositing
the same in such account of the Purchaser as the Purchaser may designate in
writing to the Seller.
v. The Seller and the Purchaser agree that, if the Purchaser in its sole discretion,
for any reason whatsoever, desires to adopt a method, other than what is
described under this Clause, for the purposes of receiving the refund of the
Excess Purchase Price, then the Seller and the Purchaser shall enter into
discussions based on good faith for such purposes and the Excess Purchase
Price shall be paid to the Purchaser accordingly.
Idea Cellular(purchaser herein referred) is the third largest wireless operator in India, Idea is
listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in
India. Idea is part of the Aditya Birla Group, which is one of the largest business groups in
India.

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 For the last twelve months to December 31, 2016, Idea Cellular reported revenue of
INR369billion (US$5.5 billion) and EBITDA of INR114 billion (US$1.7 billion).
The idea cellular shall have a separate shareholders agreement and shall be governed as per
guidelines and takeover code of SEBI time to time, after getting a clearance certificate from
the Competition Commission of India. For all kinds of dispute relating to the terms and
condition of the merger and share exchange ratio, determination of asset values shall be done
by an independent valuer appointed by the common consensus of both the companies.
However during the issue of public offer and till the commencement date of IPO and
a. Until the completion of allotment of shares issued pursuant to the IPO of the
Company; or
b. the Final IPO Date, the Purchaser shall not be entitled to Transfer and/or deal with
any or all of Purchase Shares, either directly or indirectly, to or for the benefit of, a
Person engaged in the business of operating commodity exchanges, in India or
otherwise, or any Affiliate of such Person.

6. ARTICLE VII:RIGHTS OF THE PURCHASER IN THE EVENT THAT THE PROPOSED

IPO IS NOT COMPLETED PRIOR TO THE FINAL IPO DATE-
In the event that the proposed IPO is not completed on or prior to the Final IPO Date (“No
IPO Event”), the Purchaser shall at his option return the Purchase Shares back to the Seller
and in such case the Seller shall be bound to return the Purchase Price back to the Purchaser
within 7 days from the No IPO Event. In such event, this Agreement shall stand terminated
and all the rights and obligations of the Parties under this Agreement shall come to an end,
except for the rights and obligations, which are expressly mentioned in this Agreement to
survive.
7. ARTICLE VII :INTENT AND EFFECT OF THIS AGREEMENT-
 The Company and/or the Seller shall not act in any matter that is prejudicial to the
rights of the Purchaser under this Agreement and the Company and/or the Seller shall
not act in any manner or do any deed or thing under this Agreement that would
derogate or adversely affect the rights of the Purchaser hereunder.
 Each Party undertakes to fully and promptly observe and comply with the provisions
of this Agreement to the extent and effect that each and every provision thereof shall
be enforceable by the Parties hereto inter se and in whatever capacity. In the event of

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 any conflict between this Agreement and the Articles of Association of the Company,
the provisions of this Agreement shall prevail as between both the Companies.
However, Proposed Transaction structure shall include the following-
 Idea will contribute all of its assets including its standalone towers with 15.4k
tenancies and its 11.15% stake in Indus Towers.
 Vodafone will contribute Vodafone India including its standalone towers with 15.8k
tenancies but excluding its 42% stake in Indus Towers.
 The merger ratio is consistent with recommendations from the joint independent
valuers. Based on Idea’s undisturbed share price (INR72.5 based on the 30 trading
day VWAP as at 27 January 2017), the agreed merger ratio implies an enterprise
value for Vodafone India of INR828 billion (US$12.4 billion) and an enterprise value
for Idea’s mobile business of INR722 billion (US$10.8 billion) excluding its 11.15%
stake in Indus. This is equivalent to valuing Vodafone India at 6.4x EV/LTM
EBITDA and Idea excluding its stake in Indus Towers at 6.3x EV/LTM EBITDA .
 Vodafone’s contribution of net debt will be dependent on Idea’s net debt at
completion as well as customary closing adjustments. Vodafone will contribute
INR25 billion (US$369 million) more net debt than Idea at completion. Based on
Idea’s net debt of INR527 billion (US$7.9 billion) as at 31 December 201610, this
would have implied INR552 billion (US$8.2 billion) of debt to be contributed by
Vodafone.
 Vodafone will own 45.1% of the combined company after transferring a 4.9% stake to
the Aditya Birla Group for INR39 billion (US$579 million) in cash, concurrent with
completion of the merger. The Aditya Birla Group will then own 26.0% of the
combined company and Idea’s other shareholders will own the remaining 28.9%.
 The Aditya Birla Group has the right to acquire up to a 9.5% additional stake from
Vodafone under an agreed mechanism with a view to equalising the shareholdings
over time. If the Aditya Birla Group does not equalise its stake then Vodafone will
reduce its holding in order to equalise its ownership with that of the Aditya Birla
Group.
Until equalisation is achieved the additional shares held by Vodafone will be restricted and
votes will be exercised jointly under the terms of the shareholders’ agreement.
Prior to completion of the transaction, Vodafone and Idea intend to sell their standalone
tower assets and Idea’s 11.15% stake in Indus Towers to reduce leverage in the combined

25 | P a g e
 company. Vodafone will also explore strategic options for its 42% stake in Indus Towers;
potential options include either a partial or a full disposal.
As the combined company will be jointly controlled by Vodafone and the Aditya Birla
Group, Vodafone will deconsolidate Vodafone India immediately.
Post-closing the combined company will be reported as a joint venture by Vodafone and
accounted for under the equity method resulting in a decrease of Vodafone’s net debt.
As described above, as at 31 December 2016 this would have been INR552 billion (US$8.2
billion) which together with the INR39 billion (US$579 million) of cash received from the
Aditya Birla Group would lower Vodafone Group’s reported leverage by around 0.3x Net
Debt/EBITDA.
The transaction is expected to be accretive to Vodafone’s cash flow from the first full year
post completion.
DIRECTOR’S RATIO :
The entity form is proposed to have 12 directors ,which will comprise of three directors
each of the Vodafone and idea respectively.
The chairman of Board of directors will be elected solely by idea ,as it will hold the right to
elect the chairman of the entity formed .
Mr. Kumar Mangalam Birla will be the chairman of the newly formed entity.
The new entity formed will have six independent directors .

Transfer of Liabilities

Upon this Scheme becoming effective and with effect from the Appointed Date, all
Liabilities of the Transferor Company, shall, without any requirement of a further act or
deed, be transferred to, or be deemed to be transferred to the Transferee Company so as to
become from the Appointed Date, the Liabilities of the Transferee Company and the
Transferee Company undertakes to meet, discharge and satisfy the same.

It is hereby clarified that, unless expressly provided for, 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 and Liabilities, have arisen, in order to give
effect to the provisions of Clause 3.

Upon this Scheme becoming effective and with effect from the Appointed Date, all loans
raised and used, if any, and Liabilities incurred, if any, by the Transferor Company after

26 | P a g e
 the Appointed Date shall be deemed to be transferred to, and discharged by the Transferee
Company without any requirement of a further act or deed.

The vesting of the Transferor Company as aforesaid, shall be subject to the existing
securities, charges, hypothecation and mortgages, if any, subsisting in relation to any loans
or borrowings of the Transferor Company, provided however, any reference in any
security documents or arrangements to which the Transferor Company is a party, wherein
the Assets of the Transferor Company have been or are offered or agreed to be offered as
securities for any financial assistance or obligations, shall be construed as a reference to
only the Assets pertaining to the Transferor Company as are vested in the Transferee
Company as per this Scheme, to the end and intent that any such security, charge,
hypothecation and mortgage shall not extend or be deemed to extend to any of the other
Assets of the Transferor Company or any of the Assets of the Transferee Company.
Provided further that the securities, charges, hypothecation and mortgages (if any
subsisting) over and in respect of the Assets or any part thereof of the Transferee
Company shall continue with respect to such Assets or part thereof and this Scheme shall
not operate to enlarge such securities, charges, hypothecation and mortgages.

The provisions of Clause 3 above shall operate notwithstanding anything to the contrary
contained in any deed or writing or the terms of sanction or issue or any security
document, all of which instruments shall stand modified and/or superseded by the
foregoing provisions. For avoidance of doubt the provisions of Clause 3 above shall not be
construed as limiting the operation of this Scheme.

Contracts, Deeds, Bonds and Other Instruments

Upon this Scheme becoming effective and with effect from the Appointed Date and
subject to the provisions of this Scheme, all contracts, deeds, bonds, lease deeds,
agreements entered into with various persons, arrangements and other instruments of
whatsoever nature in relation to the Transferor Company and to which the Transferor
Company is a party or to the benefit of which the Transferor Company may be eligible,
and which are subsisting or have effect as on the Effective Date, shall continue in full
force and effect on or against or in favour of, as the case may be, of the Transferee
Company and may be enforced as fully and effectually as if, instead of the Transferor
Company, the Transferee Company had been a party or beneficiary or obligee thereto or
thereunder, in all cases subject to the terms and provisions of such contracts, deeds, bonds,

27 | P a g e
 lease deeds, agreements, arrangements or instruments.in order to give formal effect to the
above provisions. The Transferee Company shall, under the provisions of this Scheme, be
deemed to be authorized to execute any such writings on behalf of the Transferor
Company and to carry out or perform all such formalities or compliances referred to above
on the part of the Transferor Company to be carried out or performed.

Without prejudice to the generality of the foregoing, it is clarified that upon this Scheme becoming
effective and with effect from the Appointed Date, all consents, agreements, permissions, all
statutory or regulatory licences, certificates, insurance covers, clearances, authorities, powers of
attorney given by, issued to or executed in favour of the Transferor Company shall stand transferred
to the Transferee Company as if the same were originally given by, issued to or executed in favour of
the Transferee Company, and the Transferee Company shall be bound by the terms thereof, the
obligations and duties thereunder, and the rights and benefits under the same shall be available to the
Transferee Company. In so far as the various incentives, subsidies, schemes, special status and other
benefits or privileges enjoyed, granted by any governmental body, local authority, or by any other
person, or availed by the Transferor Company are concerned, the same shall vest with and be
available to the Transferee Company on the same terms and conditions as applicable to the
Transferor Company, as if the same had been allotted and/or granted and/or sanctioned and/or
allowed to the Transferee Company.

EMPLOYEES CLAUSE:

1.Subject to Applicable Law, the existing provident fund, employee state insurance contribution,
gratuity fund, superannuation fund, the staff welfare scheme and any other schemes or benefits
created by the Transferor Company for the employees shall be continued on the same terms and
conditions and be transferred to the existing provident fund, employee state insurance contribution,
gratuity fund, superannuation fund, staff welfare scheme, etc., being maintained by the Transferee
Company without any separate act or deed/approval.

2.The idea cellular Ltd will go for staff reduction from HR department and technical expert
department upto 10%.

3.The employees belonging to the Idea Cellular Ltd. Newly formed entity will be governed by the
employee schemes of Idea Cellular.

4.The gratuity will be given to the employees who have worked in the Idea Cellular Ltd .for more
than 4 years if they are terminated from the service.

28 | P a g e
Advance payments of salary will be given for two months at the time of removal.

5.Payments of EPF will be given to the terminated employees within ten days of their termination
from employment.

6.The combined force of employees will be efficient enough for operating the cellular business hence
a nominal reduction of employees will be done.

Continuation of Legal Proceedings

From the Effective Date, all legal or other proceedings (including before any statutory or
quasi-judicial authority or tribunal) by or against the Transferor Company, whether pending on the
Appointed Date, or which may be instituted any time in the future

If any Proceeding(s) is/are pending, the same shall not abate, be discontinued or in any way
be prejudicially affected by reason of this Scheme and the proceedings may be continued,
prosecuted and enforced, by or against the Transferee Company in the same manner and to
the same extent as they would or might have been continued, prosecuted and enforced by or
against the Transferor Company, as if this Scheme had not been made.

Nothing contained in this Scheme shall be construed as prejudicing any rights granted to any
shareholder of the Transferor Company to defend and control proceedings in relation to any
claims in accordance with the provisions of the Implementation Agreement.

Treatment of Taxes

Upon this Scheme becoming effective and with effect from the Appointed Date, all taxes and
duties payable by the Transferor Company (including under the IT Act, Customs Act, 1962,
Central Excise Act, 1944, State Sales Tax laws), Central Sales Tax Act, 1956, VAT/ Service
tax and all other Applicable Laws), accruing and relating to the Transferor Company from
the Appointed Date onwards, including but not limited to advance tax payments, tax
deducted at source, minimum alternate tax, any refund and claims shall, for all purposes, be
treated as advance tax payments, tax deducted at source or refunds and claims, as the case
may be, of the Transferee Company.

Upon this Scheme becoming effective, all unutilized credits and exemptions, benefit of
carried forward losses and other statutory benefits, including in respect of income tax

29 | P a g e
(including but not limited to tax deducted at source, tax collected at source, advance tax, minimum
alternate tax credit etc.), cenvat, customs, value added tax, sales tax, service tax etc. to which the
Transferor Company is entitled to shall be available to and vest in the Transferee Company, without
any requirement of a further act or deed.

Synergy Opportunity-

The combination of Idea and Vodafone India will create the scale to meet customers’ rapidly
accelerating demand for data consumption and enable significant efficiencies. Run-rate cost
and capex synergies are expected to reach INR140 billion (US$2.18 Excluding IBS (in-
building solutions)This is equivalent to a net present value of approximately INR700 billion
(US$10.5 billion)14, after integration costs Operating cost savings represent 60% of the
expected run-rate savings.
The major expected sources of cost and capex synergies include:
 Rationalising network infrastructure, generating operational efficiencies, lower
maintenance expenses and savings in energy costs.
 Higher spectrum availability and larger single radio access network (RAN)
deployment coupled with re-deployment of overlapping equipment from rationalised
sites, resulting in lower capex.
 Service centres, back office and distribution efficiencies.
 Streamlining regional and nationwide IT systems and evolving to a single IT system
for the new entity and
 Optimising general and administration costs.
 The Parties also anticipate some regulatory dis-synergies. These are primarily driven
by spectrum liberalisation payments and requirements to meet regulatory spectrum
caps and market share thresholds in certain circles one year after completion of the
transaction. Spectrum liberalisation costs are expected to have a net present value
impact of approximately INR30 billion (US$0.5billion).
Equalisation Mechanism-
The Aditya Birla Group has the right to acquire more shares from Vodafone, under an agreed
mechanism, with a view to equalising the Parties’ shareholdings over time.
 Until equalisation is achieved, the additional shares held by Vodafone will be
restricted and votes will be exercised jointly under the terms of the shareholders’
agreement.

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  The Parties have agreed a standstill period for the first three years after closing during
which neither Party can buy any shares from or sell any shares to a third party.
 During the standstill period, the Aditya Birla Group has the right to purchase a stake
of up to 9.5% in the combined company from Vodafone at an agreed price that is
equivalent to an equity value of INR946 billion for 100% of the combined company
(post-closing).
 This is equivalent to INR130 per share which represents a premium of 80% to Idea’s
undisturbed share price of INR72.5 based on the 30 trading day VWAP as at 27
January 2017.
 If the Parties’ shareholdings have not been equalised over the first three years, the
Aditya Birla Group needs to inform Vodafone how many further shares it wishes to
acquire.
 The Aditya Birla Group then has a period of 12 months to complete such purchase at
the prevailing market price. At the end of the third year after closing, the standstill
provisions expire in relation to all shares other than those that the Aditya Birla Group
has committed to acquire if any.
 From the beginning of the fifth year after completion if Vodafone and the Aditya
Birla Group’s shareholdings in Idea are not yet equal Vodafone will sell down shares
in the combined company to equalise its shareholding to that of the Aditya Birla
Group over the following five-year period.
8. ARTICLE VIII:GENERAL TERMS AND CONDITIONS
Conduct of business untill the effective date: from the date on which the boards of
directors of each party approve this scheme until the effective date, each of the parties shall
inter-alia:
 Maintain and preserve its properties and assets in good working order and condition
consistent with past practice, normal wear and tear expected;
 Conduct its operations in the ordinary course and materially in compliance with
applicable law;
 Continue to manage its working capital in the ordinary course and consistent with past
practice;
 Not undertake, in a single transction or a series of related transactions, any act or
matter as agreed among the parties in the implementation agreement or any act which
is outside the ordinary course of business; and

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  Notify the other parties in writing of any matter, circunstance, act or omission which
constitutes a breach of this clause promptly after it becomes aware of any such matter,
circumstance, act or ommission.

Sequence of events: the following shall be deemed to have occurred on the effective date and
become effective and operative only in the sequence and in the order set out below:

 Filing of certified copies of the judgment(s) of the tribunal with the relevant RoCs by each of
VMSL, VIL and ICL pursuant to which amalgamation of the transferor company and
transferee company in accordance with the scheme shall become effective;
 Transfer of the authorised share capital of the transferee company to the transferee company
and consequential increase in the authorised share capital of the transferee company in the
according with the scheme;
 Issue and allotment of fully paid up equity shares of the transferee company to the transferor
company in accordance with the scheme;
 Dissolution of the transferor company without winding-up;

Agreements with ICL and VIL group companies:

 In connection with the scheme, ICL shall enter into (i) a recharges agreement with vodafone
group services limited, a group compnay of the VIL promoters, and (ii) a recharges
agreement with Aditya Birla Management corporation private limited, a group compant of
the ICL promoters, which, in each case, shall become effective on the effcetive date, and
shall set out the terms and conditions on which such companies will provide certain services
to ICL following the effective date(together, the “Recharges Agreements”)
 Pursuant to the scheme, on the effective date, ICL will become a party to the Brand Licence
Agreement with the Vodafone sales & services limited, a group company of the VIL
promoters, which shall govern the terms and conditions on which the vodafone brand shall be
licenced to the ICL.
 On the effective date, all existing contracts and other arrangements with related parties
entered into by each target group shall terminate other than the recharges agreements, the
brand licence agreement, the contracts listed as surviving the effective date in the recharges
agreements. The parties acknowledge and agree that each group has made good faith efforts
to identify contracts that are intended to survive the effective date.

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  Approval of the scheme by the shareholders of the transferee company shall be deemed to
constitute due compliance with section 188 and any other applicable provisions of the Act,
regulation 23 and any other applicable provision of the SEBI listing regulations and the
articles of association of the transferee company, and no further action under the Act, the
SEBI listing regulation or the articles of the association of the transferee company shall be
separetely required for the transferee company to became a party to the contracts.

Applications to the tribunal:the parties shall make applications and/or petitions under section 230
to 232 of the Act and other applicable provisions of the Act to the tribunal for approval of the
scheme and all matters ancillary or incidental thereto, as may be necessary to give effect to the terms
of the scheme.

Modifications or Amendment to the scheme:the parties, through their respective boards of

directors, may mutually agree ti any modification of or amendment to the scheme in accordance with
the implementation agreement. The parties, acting through their respective authorised
representatives, are hereby authorised to jointly take all such steps as may be necessary, desirable or
appropriate to resolve any difficulties or questions, whether by reason of any direction or order of the
tribunal or of any other authorities or otherwise arising out of or under or by virtue of the scheme
and/or any matter concerned or connected therewith, subject to the terms of the implementation
agreement.

If any provision in this scheme shall be held to be illegal, invalid or unenforceable, in whole or in
part, the provision shall apply with whatever deletion or modification is necessary so that the
provision is legal, valid and enforceable and gives effect to the commercial intention of the parties to
the implementation agreement.

Condition Precedent:The scheme is and shall be conditional upon satisfaction or waiver of the
following conditions at or prior to the long stop date, in the manner agreed in the implementation
agreement:

a) Stock exchanges approval: ICL shall have received no-objection letters from the stock
exchanges in respect of the scheme (prior to filing the scheme with the tribunal as well as
followingi approval of the scheme by the tribunal) and the transactions contemplated therein,
which shall be in form and substance acceptable to the parties, each acting reasonably and in
good faith.

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 b) Approval of the Tribunal:The scheme shall have been approved by the tribunal, either on
terms as originally approved by the relevant parties to the scheme, or subject to such
modifications approved by the tribunal, which shall be in form and substance acceptable to
the parties, each acting reasonably and in good faith.
c) Approval under competition law: The written approval of the CCI in respect of the
tranactions contemplated herein shall have been obtained, pursuant to a joint application by
VIL and ICL, which shall be in form and substance acceptable to the parties, each acting
reasonably and in good faith, or the waiting period during which the CCI is required to
provide its decision in respect of the application for approval in respect of the transctions
contemplated herein, together with any extensions thereof, shall have expired.
d) FIPB and RBI Approvals: the approval of the FIPB and the RBI shall have been obtained in
relation to the transactions contemplated herein pursuant to applications by ICL, which shall
be in form and substance acceptable to the parties, each acting reasonably and in good faith.
e) DoT: (a) the written approvals of the DoT with respect to the transactions contemplated
under the scheme shall have been received, which shall be in form and substance acceptable
to the parties, each acting reasonably and in good faith, and any conditions contained in such
approvals that are required to be satisfied shall have been so satisfied other than any
condition relating to the payment of demands or charges set out in such written approvals and
any other conditions which by their nature are capable of satisfaction only on or immediately
prior to the effectuve date; and (b) any demands or charges required to be paid by the terms
of the written approvals received from the DoT shall have been paid in accordance with
applicable law, by the party stated as being responsible for such demands or charges.
f) No injunctions or restraints;illegality:no governmental authority of competent
jurisdcitionshall have enacted, issued, promulgated, enforced or entered any law or
judgement that is in effect and restraints, enjoins, prohibits or otherwise makes illegal
consummation of the transactions contemplated under the scheme and other transaction
documents.
g) Shareholders and creditors approval: each of the scheme, the recharges agreements and
the brand licence agreement shall have been approved by the respective requisite majority of
various classes of members and creditors of the parties in accordance with the Act, the SEBI
ciecular and the SEBI listing regulations, as applicable.
h) Shareholder approval under SEBI circular: the public shareholders of ICL shall have
approved the transctions contemplated herein pursuant to, and in accordance with, the SEBI
circular.

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 i) Pre-merger Disposal:VIL shall have transferred its equity interest in indus to any other
person, provided that the vodafone group shall have complied with the relevant provisions of
the implementation agreement and made all reasonable endeavours to obtain any
governmental approvals necessary for such disposal, including approvals of the tribunal and
the FIPB, if applicable.
j) Others: such other conditions precedent as may be agreed among the parties under the
implementation agreement, including absence of any material adverse change and completion
of pre-closing adjustments to sequene of events.

IPR CLAUSE:

1. The intangible assets(intellectual property) of both the transferor companies will be Shared in
entirety.
2. The valuation of IPR of both the companies is done as follows :
The Idea values it’s spectrum enhancement technology at 200 crore given it’s automatic data
influx ability.
Idea further values it’s “irecharge” patent to worth over 580 crores.
Idea further values it’s automatic portable number patent no.2384/2010 to worth over 270
crores.
The total valuation of the patents and other intellectual property assets held by Idea to 10.01
billion rupees, as done by independent evaluators having expert knowledge in the field of
intangible property evaluation.
3. All IPR related issues will be dealt by Arbitration ,the aribitrator in the case of any dispute
between the merging companies will be appointed in the number of three .
4. One arbitrator will be appointed by the merging companies and one will be appointed through
institute of arbitrators from the list of arbitrators to which both parties agree.

Effect if Non-receipt of approvals; withdrawl: in the event the conditions precedent to the scheme
are not satisfied or waived on or prior to the long stop date, this scheme shall become null and void
and, except as agreed in writing among the parties, no rights or liabilities whatsoever shall accrue to,
or be incurred by, the parties or their respective shareholders or creditors or employees or any other
person. In addition, termination fees of US$ 500 million would become payable in accordance with
the implementation agreement under certain circumstances as specified therein.

The parties , acting through their respective boards of directors, may mutually agree in writing to
withdraw this scheme from the tribunal.

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Indemnity: the parties to the implementation agreement have agreed: (i) to indemnify each other for
certain events as set forth therein, including in relation to breach of representations and warranties
and covenants; and (ii) a mechanism for payments to each other pursuant to crystallisation of certain
identified contigent liabilities and refunds.

Costs and expenses: stamp duty costs incurred in connection with this scheme shall be borne by the
transferee company.

Residual Provisions: the consent of the shareholders and creditors of each of the parties to the
scheme in accordance with the Act and the SEBI circular, as applicable, shall be deemed to be
sufficient for purpose of effecting all the actions set out in this scheme and no additional actions of
the parties shall be separetly required.

Upon the scheme becoming effective, the transferee company shall be entitled to operate all bank
accounts, realise all monies and complete and enforce all pending contracts and transctions in the
name of the transferor companies to the extent necessary until the transfer of the rights and
obligations of the transferor companies to the transferee company under the scheme is formally
accepted and completed by the parties concerned. For avoidance of doubt, it is hereby clarified that
with effect from the effective date and until such time that the name of the bank accounts of the
transferor companies have been replaced with that of the transferee company, the transferee company
shall be entitled to operate the bank accounts of the transferor companies in the name of the relevant
transferor company in so far as may be necessary.

The transferee company may, at any time after the scheme becomes effective inaccordance with the
provision hereof, if so required under any law or otherwise, enter into, or issue or execute deeds,
writings, confirmations, novations, declarations or other documents with, or in favour of, any party
to any contract or arrangement to which any of the transferor companies is a party or any writings as
may be necessary to be exceuted in order to give formal effect to the provisions of the scheme. The
transferee company shall be deemed to be authorised to execute any such writings on behalf of the
transferor companies and to carry out or perform all such formalities or compliances required for the
purpose specified above by the transferor companies.

Upon the scheme becoming effective, all licences, incentives, remissions, tax incentives, subsidies,
privileges, consents, sanctions and other authorisations to which the transferor companies are
entitled, shall stand vested in the transferee company and permitted or continued by the order of
sanction of the tribunal. The transferee compnay shall file the scheme with applicable governmental
authorities for their record, who shall take it on record pursuant to the sanction order of the tribunal.

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 Conditions To Completion And Indicative Timetable-

 The transaction is subject to approvals from the relevant regulatory authorities.

Vodafone and Idea have undertaken preparatory work on the required scheme and
other necessary filings.
 The transaction is also subject to other customary closing conditions, including the
absence of any material adverse change. Shareholder approval will be required from
Idea shareholders under a scheme of arrangement. The transaction is not subject to
approval from Vodafone shareholders.
 The transaction has a break-fee of INR33 billion (US$500 million) that would become
payable under certain circumstances.
 Vodafone and Idea anticipate that completion will take place during the 2018 calendar
year.

CAPITAL STRUCTURE:

Balance sheet of Idea :

Parameter MAR'16 MAR'15 YoY

(₹ Cr.) (₹ Cr.) %Change

EQUITY AND LIABILITIES

Share Capital 3,600.51 3,597.84 0.07%

Share Warrants & Outstandings

Total Reserves 20,624.25 18,249.15 13.01%

Shareholder's Funds 24,295.91 21,890.14 10.99%

Long-Term Borrowings 0.00 0.00 0.00%

Secured Loans 4,099.59 6,201.68 -33.90%

Unsecured Loans 32,058.72 9,804.81 226.97%

Deferred Tax Assets / Liabilities 2,783.09 1,609.08 72.96%

Other Long Term Liabilities 2,850.95 632.07 351.05%

Long Term Trade Payables 610.77 542.83 12.52%

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Long Term Provisions 339.42 282.07 20.33%

Total Non-Current Liabilities 42,742.54 19,072.52 124.11%

Current Liabilities

Trade Payables 3,278.16 2,970.18 10.37%

Other Current Liabilities 7,494.05 13,292.74 -43.62%

Short Term Borrowings 1,645.58 151.39 986.95%

Short Term Provisions 1,133.88 1,181.99 -4.07%

Total Current Liabilities 13,551.67 17,596.30 -22.99%

Total Liabilities 80,590.12 58,558.97 37.62%

ASSETS

Non-Current Assets 0.00 0.00 0.00%

Gross Block 92,412.06 55,843.26 65.48%

Less: Accumulated Depreciation 27,495.75 23,729.35 15.87%

Less: Impairment of Assets 0.00 0.00 0.00%

Net Block 64,916.32 32,113.91 102.14%

Lease Adjustment A/c 0.00 0.00 0.00%

Capital Work in Progress 6,038.83 5,079.45 18.89%

Intangible assets under development 0.00 0.00 0.00%

Pre-operative Expenses pending 0.00 0.00 0.00%

Assets in transit 0.00 0.00 0.00%

Non Current Investments 1,666.85 1,646.61 1.23%

Long Term Loans & Advances 3,407.81 3,890.67 -12.41%

Other Non Current Assets 0.00 0.00 0.00%

Total Non-Current Assets 76,029.81 42,730.63 77.93%

Current Assets Loans & Advances

Currents Investments 832.10 11,167.50 -92.55%

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Inventories 85.15 58.30 46.05%

Sundry Debtors 1,136.06 932.19 21.87%

Cash and Bank 757.66 1,541.94 -50.86%

Other Current Assets 678.44 418.98 61.93%

Short Term Loans and Advances 1,070.90 1,709.43 -37.35%

Total Current Assets 4,560.31 15,828.34 -71.19%

Net Current Assets (Including Current Investments) -8,991.35 -1,767.97 408.57%

Total Current Assets Excluding Current Investments 3,728.21 4,660.84 -20.01%

Miscellaneous Expenses not written off 0.00 0.00 0.00%

Total Assets 80,590.12 58,558.97 37.62%

Contingent Liabilities 12,332.98 12,331.89 0.01%

Total Debt 40,852.93 25,875.42 57.88%

Book Value (in ₹) 67.28 60.72 10.80%

Key Financial Detail and Debt on Both the Companies-

12 Months Ending 31 Vodafone India (IFRS) Idea Cellular

December 2016 INR mn. (US $
mn.)

Revenue INR 446, 644 mn. (US $ 6, INR369,278mn.

6771 mn.) (US$5,516mn.)

EBITDA INR129,872mn. INR114,139m (US$1,705m)

(US$1,940mn.)

Capex INR78,644mn. (US$1,175mn.) INR74,721mn. (US$1,116mn.)

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 9. ARTICLE IX: SUNSET CLAUSE-
The rights stated in Clause 10 (Indemnification), Clause 11 (Confidentiality), Clause 15
(Notices) and Clause 17 (Governing Law, Jurisdiction and Dispute Resolution) shall survive
termination of this Agreement.
Joint Governance and Management-
Vodafone and the Aditya Birla Group have entered into a shareholders’ agreement, and it is
intended that the combined company’s articles will be amended at closing to reflect certain
rights for each Party.
Following completion, the Board of the combined entity will be comprised of 12 directors
including three directors appointed by each of Vodafone and the Aditya Birla Group, and six
independent directors.
10. ARTICLE X:NOTICES-
Service of Notice-. All notices or other communications to be given under this Agreement
shall be made in writing and by letter or facsimile transmission (save as otherwise stated) and
shall be deemed to be duly given or made when delivered (in the case of personal delivery),
when despatched (in the case of facsimile transmission, provided that the sender has received
a receipt indicating proper transmission and a hard copy of such notice or communication is
forthwith sent by prepaid post to the relevant address set out below) or 10 (ten) days after
being despatched in the post, postage prepaid, by the quickest mail available and by
registered mail if available (in the case of a letter) to such Party at its address or facsimile
number specified in Clause 15.2, or at such other address or facsimile number as such Party
may hereafter specify for such purpose to the others by notice in writing.
Details for Notices. The details for notices for the purpose of this Agreement are as follows:
 To try to make the numbers work in an all-share deal, the proposal excludes
Vodafone’s 42% share of an Indian towers company called Indus, worth about $4
billion. hat brings the value of the Vodafone mobile business closer to Idea’s market
capitalization, which jumped more than 25% to $5.2 billion on Monday (from $4.1
billion).
 If a deal is finalized, Vodafone could then sell down its stake in the merged company
over time, hopefully at a better price if it’s better able to withstand the heat from ITS
OTHER COMEPTITIORS. There will be synergies too from combining operational
and capital spending.

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  Under the agreement this new scheme of merger between vodafone and idea cellular
hopefully the Vodafone could sell its shares at better price to stand in the heat of its
fellow telecom operators. This draft hereby time and again referred these as follows-

The Seller as:-VODAFNE GROUP PLC,excluding its stake in the Indus tower and IDEA
CELLULAR as purchaser which is holding approx. 25 % stake in the combined merger scheme.

IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized representatives to
execute this Agreement on the day and year first hereinabove written.

Witnessed by:………………………………………………………………………………ABC LTD

Name:-G. NAGA LAHARI &

By: Advocate Mr.NARAYANA

Address:-SABBAVARAM NAYAYPRASTHA

Witnessed by:……………………………………………………………………………PQR LTD

Name:- AMIT SINGH

By: Advocate Mr.RANA

Address:-SABBAVARAM VISAKHAPATNAM

BIN- 8926T76R3767

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