Amalgamation of Air India Limited and Indian Airlines Limited

with National Aviation Company of India Limited.

  The Government of India, on 1 March 2007, approved the merger of Air India and Indian Airlines.
Consequent to the above, a new Company viz National Aviation Company of India Limited
(NACIL) was incorporated under the Companies Act, 1956 on 30 March 2007 with its Registered
Office at Airlines House, 113 Gurudwara Rakabganj Road, New Delhi.  The Certificate to
Commence Business was obtained on 14 May 2007.  Presently, the Board of NACIL consists of :

 Shri Raghu Menon, Addl Secretary & Financial Advisor, Ministry of Civil Aviation
 Shri R K Singh, Jt Secretary, Ministry of Civil Aviation
 Shri Rajiv Bansal, Director, Ministry of Civil Aviation

The Scheme of Amalgamation of Air India Limited and Indian Airlines Limited with National
Aviation Company of India Limited was approved by the Board of Directors of all the three
Companies.

Thereafter, the Meetings of Secured and Unsecured Creditors of Air India  and Indian Airlines
were held in New Delhi on 28 June 2007, in which the Scheme of Amalgamation was approved by
the Creditors.  The final hearing of the merger petition was held on 31 July 2007 wherein the last
date for submissions of objections was fixed on 8 August 2007  and the Order of the Ministry of
Corporate Affairs is awaited.

The Authorised and Paid-Up Share Capital of the merged entity will be Rs.1500, 05, 00,000/-
and  Rs.145,00,00,000/-, respectively.

It has been decided that post merger, the new entity will be known as “Air India” while
“Maharaja” will be retained as its mascot.  The logo of the new airline will be a red coloured flying
swan with the “Konark Chakra” in orange placed inside it.  The flying swan has been morphed
from Air India’s characteristic logo “The Centaur” whereas the “Konark Chakra” was reminiscent
of Indian’s logo.  The Corporate Office of NACIL will be at Mumbai.

The Government has approved the appointment of Shri V Thulasidas and Dr V Trivedi as
Chairman & Managing Director and Joint Managing Director, respectively, of the merged entity,
with effect from the date of merger.

NEW DELHI: A Parliamentary committee on Friday termed the merger of Air India
and Indian Airlines as a "marriage of two incompatible individuals" and slammed the
government for the "ill-conceived and whimsical" decision.

The Committee on Public Undertakings (COPU) in its report submitted to Parliament

also asked the government to have separate domestic and international airlines under a
single holding company.

It recommended fixing of responsibility on "agencies and individuals" who took such a

"whimsical" decision and sought "suitable action" to prevent such "intangible loss"
being caused to a state-run company.

Describing the merger as "ill-conceived and erroneous", the report said, "The root
cause of the ills plaguing NACIL (National Aviation Company of India Limited) is the
'merger' which was flawed at its very inception and which never really took off." Air
India has accumulated losses to the tune of Rs 7,000 crore.

In its hard-hitting report, the COPU headed by Congress leader V Kishore Chandra S
Doe said there was "no justifiable explanation for this abrupt haste" to merge the two
carriers.

"The so-called merger is a kind of marriage between two incompatible individuals

having wide variances with hardly any meeting ground," it said.

It recommended converting NACIL into a holding company under which NACIL-

Indian Airlines with its headquarters in Delhi and NACIL-Air India with headquarters
in Mumbai would function.

Each of the entities should be headed by a Managing Director who would report to the
Chairman of NACIL, it said, stressing that the government should "immediately" work
this out.

Hitting out at the Civil Aviation Ministry, the COPU said "having imposed the merger"
of the two airlines, it "has shown little initiative in monitoring the progress" and its
"failure" in not ensuring continuity of leadership.