Schedule IV - Regulation 21(2) - Foreign Currency Exchangeable Bonds (FCEBs) - Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004

Schedule IV [See Regulation 21 (2)] Foreign Currency Exchangeable Bonds (FCEBs) 1. Currency :- The FCEB may be denominated in any freely convertible foreign currency. 2. Eligible Issuer. - The issuing company shall be part of the promoter group of the offered company and shall hold the equity shares being offered at the time of issuance of FCEB. 3. The Offered Company. - The Offered Company shall be a listed company which is engaged in a sector eligible to receive Foreign Direct Investment and eligible to issue or avail FCEB or External Commercial Borrowings (ECB). 4. Entities not eligible to issue FCEB. - An Indian company, which is not eligible to raise funds from the Indian securities market, including a company which has been restrained from assessing the securities market by the SEBI shall not be eligible to issue FCEB. 5. Eligible Subscriber. - Entities complying with the Foreign Direct Investment policy and adhering to subscribe to FCEB Prior approval of Foreign Investment Promotion Board, wherever required under the Foreign Direct Investment policy, should be obtained. 6. Entities not eligible to subscribe to FCEB. - Entities prohibited to buy, sell or deal in securities by the SEBI will not be eligible to subscribe to FCEB. 7. End-use of FCEB proceeds: Issuing Company: (i) The proceeds of FCEB may be invested by the issuing company outside India by way of direct investment including in Joint Ventures or Wholly Owned Subsidiaries abroad. Subject to the existing guidelines on Overseas Investment in Joint Ventures or Wholly Owned Subsidiaries (abroad). (ii) The proceeds on FCEB may be invested by the issuing company in the promoter group companies. 8. Promoter Group Companies. - Promoter Group Companies receiving such investments will not be permitted to utilize the proceeds for investments in the capital market or in real estate in India. 9. End-uses not permitted. - The promoter group companies receiving such investments will not be permitted to utilize the proceeds for investment in the capital market or in real estate in India. 10. All-in-cost. - The rate of interest payable on FCEB and the issue expenses incurred in foreign currency shall be within the all-in-cost ceiling as provided in the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 (Notification No. FEMA 3/2000-RB, dated May 3, 2000) and the direction issued in that behalf by the Reserve Bank of India. 11. Pricing of FCEB. - At the time of issuance of FCEB, the exchange price of the offered listed equity shares shall not be less than the higher of the following two: (i) The average of the weekly high and low of the closing prices of the shares of the offered company quoted on the stock exchange during the six months preceding the relevant date; and (ii) The average of the weekly high and low of the closing prices of the shares of the offered company quoted on a stock exchange during the two week preceding the relevant date. Explanation to clause (i) and (ii) : Relevant date means the date on which the Board of directors of the issuing company passes the resolution authorizing the issue of FCEB. 11. Average Maturity. - Minimum maturity of FCE8 shall be five years. The exchange option can be exercised at any time before redemption. While exercising the exchange option, the holder of the FCEB shall take delivery of the offered shares. Cash (Net) settlement of FCEB shall not be permissible. The proceeds of FCEB shall be retained and/or deployed overseas by the issuing/Group Companies in accordance with the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, (FEMA 3/2000-RB, dated May 3, 2000) and the directions issued in that behalf by the Reserve Bank from time to time. 12. Parking of FCEB proceeds abroad. - The proceeds of FCEB shall be retained and/or deployed overseas by the issuing/promoter group companies in accordance with the policy for the ECB. It shall be the responsibility of the issuing company to ensure that the proceeds of FCEB are used by the promoter group company only for the permitted end-uses prescribed under the ECB policy. The issuing company should also submit audit trail of the end-use of the proceeds by the issuing company/promoter group companies to the Reserve Bank duly certified by the designated Authorised Dealer bank. 13. Operational Procedure. - Issuance of FCEB shall require prior approval of the Reserve Bank of India as specified in the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, (Notification No. FEMA 3/2000-RB, dated May 3, 2000). 14. Reporting. - The provisions of the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, (Notification No. FEMA 3/2000-RB, dated May 3, 2000) 'with regard to reporting of external commercial borrowings shall apply to FCEB. **************** Notes: 1. Scheme IV inserted vide notification no. 188/2009 dated 3/2/2009 with effect from 23/9/2009.