The Hon. High Court of Delhi has by its Order dated November 23, 2007 sanctioned the Scheme of Arrangement under Sections 391 to 394 of The Companies Act, 1956 for demerger of the following undertaking from Indiabulls Financial Services Limited (IBFSL) to the Resulting Company:

In terms of the Scheme of Arrangement, the assets and liabilities relatable to the Demerged Undertaking have been transferred to the Resulting Company at values as appearing in the Books of Accounts of IBFSL as on the close of business on March 31, 2007.

This information is for the shareholders about the method of calculation of the Cost of Acquisition  and Date of Acquisition  to the Resulting Company’s (ISL’s) shares and Cost of Acquisition  of IBFSL’s shares as per the Provisions of the Income Tax Act, 1961 and is based on expert’s opinion.

The cost of acquisition in respect of each shareholder will be different. The formula for ascertaining Cost of Acquisition in each case in ISL as provided in Section 49(2C) of the Income Tax Act, 1961 will be as under:-

Cost of acquisition of shares in Indiabulls Securities Limited (ISL)=

Cost of acquisition of shares in Indiabulls Financial Services Limited (IBFSL)  x  Net book value of assets transferred to Indiabulls Securities Limited(ISL)
                                                                                                                                        Net Worth of Indiabulls Financial Services Limited(IBFSL)*

* pre demerger
The cost of acquisition of the shares of IBFSL in the hands of the respective shareholders will be reduced by the cost of acquisition ascribable to the shares in ISL.

For the purpose of determining the post demerger Cost of Acquisition of Equity Shares of IBFSL and Resulting Company(ISL) under the Income Tax Act 1961, the Shareholders are advised to apportion their pre-demerger cost of acquisition of IBFSL shares in the following manner:-

IBFSL has been advised that as per Section 47(vid) of the Income Tax Act, 1961, the issue of shares by the resulting company, in a scheme of demerger to the Shareholders of the demerged company in consideration of demerger of the undertaking will not be regarded as transfer. Accordingly, Date of Acquisition of shares of the Resulting Company will be deemed to be the date when the equity shares of the demerged company (IBFSL) were acquired.

This communication is for the benefit of the shareholders and Indiabulls Financial Services Limited/Indiabulls Securities Limited takes no express or implied liability in providing this guidance.