Air India Limited (A Government of India Enterprise)

(This is an Information Memorandum prepared in conformity with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008)

Incorporated on 30th March, 2007 under the Companies Act, 1956 as a Company wholly owned by the Government of India (GOI),

Registered Office: Airlines House 113, Gurudwara Rakabganj Road, New Delhi 110001

DISCLOSURES UNDER SCHEDULE I OF SEBI (ISSUE AND LISTING OF DEBT SECURITIES) REGULATIONS, 2008

Issue:

Private Placement of Rated, Listed, Unsecured, Taxable, Redeemable, Non-Convertible Debentures of the face value of Rs.10 lakhs each (“Bonds”), aggregating to Rs.5,500 crores (Rupees Five Thousand Five Hundred Crores Only) (“Issue”) across Series 1 aggregating to Rs. 4,000 crore (Rupees Four Thousand Crores only) and Series 2 aggregating to Rs. 1,500 crore (Rupees One Thousand Five hundred Crores only)

Guarantee

The unconditional, irrevocable and continuing guarantee by the Government of India acting through Ministry of Civil Aviation for inter alia payment of principal and interest thereon throughout the tenor of the Bonds (“Government Guarantee” or “Guarantee”). The Government Guarantee has been approved by the Government of India acting through the Under Secretary to the Government of India, Department of Civil Aviation, Ministry of Civil Aviation (“GOI”) in its letter dated May 9, 2011 as provided in Annex- ure 5 (Guarantee letter from the GOI). The Guarantee shall be as per the format provided in Annexure 6 (Format of the Government Guarantee) hereto.

Company’s Absolute Responsibility

Air India Limited (“Company” or “Issuer”) having made all reasonable inquiries, accepts responsibility for and confirms that the information contained in this Information

Page 1 of 72 Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which may make this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

Rating:

ICRA Limited (“ICRA”) has assigned a rating of “ICRA AAA(SO)!” to the Bonds Issue of the Company guaranteed by the GOI. The expected rating of the Company is based on an unconditional, irrevocable and continuing guarantee by the GOI, for the rated debt programme, covering inter alia full payment of principal and all accrued interest.

CRISIL Limited (“CRISIL”) has after due consideration, assigned a rating of “CRISIL AAA(SO)/Stable” to the Bonds Issue by the Company guaranteed by the GOI. This rating indicates the highest degree of safety with regard to payment of interest and principal on the instrument.

For details of the rationale for these ratings, see Annexures 2 (Credit Rating Letter from ICRA) and 3 (Credit Rating Letter from CRISIL).

Listing:

The Bonds are proposed to be listed on Wholesale Debt Market segment of the Bombay Stock Exchange of India Limited (“BSE”). The BSE has, by their letter dated September 23, 2011, granted their in-principle approval for the listing of the Bonds.

Registrar & Transfer Agent Trustee

IDBI Trusteeship Services Limited Karvy Computershare Private Limited Asain Building, Ground Floor, Plot No. 17-24, Vittal Rao Nagar 17, R. Kamani Marg, Ballard Estate, Madhapura, Hyderabad 500 081, India Mumbai 400 001 Tel: +91 40 4465 5000 Tel: +91 22 6631 1771/2/3 Fax: +91 40 2343 1551 Fax: +91 22 6631 1776 Investor Grievance Email: ein- E-mail: [email protected] [email protected] Website: www.idbitrustee.co.in Contact Person: Mr Murali Krishna - Gen- Contact Person: Ms. Srividhya Sridhar eral Manager Website: http://karisma.karvy.com SEBI Registration Number: INR000000221

Page 2 of 72 Arranger to the Issue Company Secretary Transaction Legal Counsel

Mr S. Venkat Air India Building, st ICICI Bank Ltd. 21 Floor, ICICI Bank Towers, Nariman Point, AMARCHAND & Bandra-Kurla Complex, Mumbai 400021 MANGALDAS & SURESH Bandra (East), A SHROFF & CO Mumbai – 400 051. 5th Floor, Peninsula Chambers, Tel.: 022-26531027 Peninsula Corporate Park, Fax: 022-26531063 Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013

Page 3 of 72 DISCLAIMERS

This Information Memorandum is neither a prospectus nor a statement in lieu of prospectus. The issue of the Bonds proposed to be listed on the BSE is being made strictly on a private placement basis. Multiple copies hereof given to the same entity shall be deemed to be given to the same person and shall be treated as such. It does not constitute and shall not be deemed to constitute an offer or an invitation to subscribe to the Bonds to the public in general. Apart from this Information Memorandum, no offer document or prospectus has been prepared in connection with the offering of this Issue or in relation to the Company, nor is such a prospectus required to be registered under applicable laws. Accordingly, this Information Memorandum has neither been delivered for registration, nor is intended to be registered.

No invitation is being made to any persons other than those to whom application forms along with this Information Memorandum have been sent. Any application by a person to whom the Information Memorandum and the application form has not been sent by the Issuer or by the Arranger to the Issue shall be rejected without assigning any reason.

Any person who is in receipt of this Information Memorandum shall maintain utmost confidentiality regarding the contents of this Information Memorandum and shall not re- produce or distribute in whole or part or make any announcement in public or to a third party regarding the contents without the prior written consent of the Issuer.

None of the intermediaries or their agents or advisors associated with this Issue undertake to review the financial condition or affairs of the Company or the factors affecting the Bonds during the life of the arrangements contemplated by this Information Memoran- dum, or have any responsibility to advise any investor or potential investor in the Bonds of any information available with or subsequently coming to the attention of the intermediaries, agents or advisors.

The contents of this Information Memorandum are intended to be used only by those investors to whom it is distributed. It is not intended for distribution to any other person and should not be reproduced by the recipient. The person to whom a copy of the Information Memorandum is sent is alone entitled to apply for the Bonds.

No person has been authorized to give any information or to make any representation not contained or incorporated by reference in this Information Memorandum or in any material made available by the Issuer to any potential investor pursuant hereto and, if given or made, such information or representation must not be relied upon as having been authorized by the Issuer.

The intermediaries and their agents or advisors associated with this Information Memo- randum have not separately verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made, and no responsibility is accepted by any such intermediary, agent or advisor as to the accuracy or complete-

Page 4 of 72 ness of the Information contained in this Information Memorandum, or any other information provided by the Company. Accordingly, all such intermediaries, agents or advisors associated with this Issue shall have no liability in relation to the information contained in this Information Memorandum or any other information provided by the Com- pany in connection with this series.

Disclaimer Statement from the Issuer

The Company accepts no responsibility for statements made otherwise than in the Infor- mation Memorandum or any other material expressly stated to be issued by or at the instance of the Company and that anyone placing reliance on any other source of information would be doing so at their own risk.

This Information Memorandum has been prepared to provide general information about the Issuer to potential investors to whom it is addressed and who are willing and eligible to subscribe to the Bonds. This Information Memorandum does not purport to contain all the information that any potential investor may require. Neither this Information Memo- randum nor any other information supplied in connection with the Bonds is intended to provide the basis of any credit or other evaluation and any recipient of this Information Memorandum should not consider such receipt a recommendation to purchase any Bonds. Neither the GOI nor the Company intends to, or may be deemed to render any legal or other advice to any investor. Accordingly, we recommend that each investor should take independent advice in relation to the applicable provisions of Indian law, with respect to any such proposed investment.

DISCLAIMER IN RESPECT OF JURISDICTION

THIS INFORMATION MEMORANDUM DOES NOT CONSTITUTE, NOR MAY IT BE USED FOR OR IN CONNECTION WITH, AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NO ACTION IS BEING TAKEN TO PERMIT AN OFFERING OF THE BONDS OR THE DISTRIBUTION OF THIS INFORMATION MEMORANDUM IN ANY JURISDICTION WHERE SUCH ACTION IS REQUIRED. THE DISTRIBUTION OF THIS INFORMATION MEMORANDUM AND THE OFFERING AND SALE OF THE BONDS MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS. PERSONS INTO WHOSE POSSESSION THIS INFORMATION MEMORANDUM COMES ARE REQUIRED TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS.

This Information Memorandum does not, however, constitute an offer to sell or an invitation to subscribe to Bond(s) offered hereby in any other jurisdiction to any person/parties to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Information Memorandum comes is required to inform himself about and to observe any such restrictions.

Page 5 of 72

DISCLAIMER CLAUSE OF THE ARRANGER TO THE ISSUE

The Issuer has authorized ICICI Bank Limited to distribute this Information Memoran- dum in connection with the issue of the Bonds.

The “Arranger” includes ICICI Bank Limited and any group, subsidiary, associate or af- filiate of ICICI Bank Limited and their respective directors, representatives or employees and/or any persons connected with them.

The Issuer has prepared this Information Memorandum and the Issuer is solely responsible for its contents. The role of the Arranger in the assignment is confined to marketing and placement of the Bonds on the basis of this Information Memorandum. All the information contained in this Information Memorandum has been provided by the Issuer or is from publicly available information, and such information has not been independently verified by the Arranger. The Arranger hereby expressly disclaim, to the fullest extent permitted by law, any responsibility for the contents of this Information Memorandum and any liability, whether arising in tort or contract or otherwise, relating to or resulting from this Information Memorandum or any information or errors contained therein or any omissions therefrom. By accepting this Information Memorandum, you agree that the Ar- ranger will not have any such liability.

The Arranger shall use this Information Memorandum for the purpose of soliciting subscription from eligible investors in the Bonds to be issued by the Issuer on a private placement basis. It is to be distinctly understood that the aforesaid use of this Information Memorandum by the Arranger should not in any way be deemed or construed that the Information Memorandum has been prepared, cleared, approved or vetted by the Ar- ranger; nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Information Memorandum; nor do they take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Arranger.

You should carefully read and retain this Information Memorandum. However, you are not to construe the contents of this Information Memorandum as investment, legal, accounting, regulatory or tax advice, and you should consult your own advisors as to all legal, accounting, regulatory, tax, financial and related matters concerning an investment in the Bonds.

Disclaimer of the Stock Exchange

A copy of this Information Memorandum will be submitted to the BSE. It is to be distinctly understood that the submission of Information Memorandum to the BSE should not in any way be deemed or construed to mean that the Information Memorandum has been cleared or approved by the BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Information Memo- randum, nor does it warrant that the Bonds will be listed or will continue to be listed on

Page 6 of 72 the BSE; nor do the BSE take any responsibility for the financial or other soundness of the Issuer, its management or any scheme or project of this Issuer.

The Issuer does not undertake to update the Information Memorandum to reflect subsequent events after the date of the Information Memorandum and thus it should not be relied upon with respect to such subsequent events without first confirming its accuracy with the Issuer. Neither the delivery of this Information Memorandum nor any sale of Bonds made hereunder shall, under any circumstances, constitute a representation or cre- ate any implication that there has been no change in the affairs of the Issuer since the date hereof.

The Information Memorandum is made available to investors in the Issue on the strict understanding that it is confidential.

Page 7 of 72 GLOSSARY

Term Definition

AASL Airline Allied Services Limited

Actual basis Calculation of interest on the basis of 365 days in a year and 366 days in a leap year

AIATSL Air India Air Transport Services Limited

AICL Air India Charters Limited

AIESL Air India Engineering Services Limited

Application Form Application form for the allotment of Bonds made by a potential investor to whom the Information Memorandum has been circulated and in form as contained in Annexure 1 of the Information Memorandum

Arranger ICICI Bank, Mumbai

ASK Available seat kilometers Beneficial Owner The owner of the Beneficiary Account

Beneficiary Account The account of an applicant/Bondholder maintained with its De- pository Participant in accordance with the Depositories Act, 1996

Bondholders or Holders Person(s) to whom the Bonds have been allotted and who is entitled to receive payments on Due Dates, whose names are appearing in the register of Bondholders maintained by the Company or the Depository and any subsequent transferee of an existing bond holder.

Bonds or NCDs Rated, listed, unsecured, taxable, redeemable, non-convertible debentures of the face value of Rs.10,00,000/-, as applicable to Se- ries 1 and Series 2

BPLR Bank Prime Lending Rate

BSE Bombay Stock Exchange of India Limited

Business Day Being a day on which commercial banks are open for business in the city of Mumbai

CDSL Central Depository Services (India) Limited

Page 8 of 72 Term Definition

Company Air India Limited

CRISIL CRISIL Limited

Deemed Date of Allot- September 27, 2011 ment

Depository NSDL or CDSL

Depository Participant The depository participant having an account with the Depository or DP in accordance with the terms of the Depositories Act, 1996

Due Date The date on which payment of interest and/or principal on the Bonds falls due

EADS European Aeronautic Defence and Space Company

EASA European Aviation Safety Agency

ECS Electronic clearing service

EDC Bank Export Development Bank of Canada

FAA Federal Aviation Authority

ICRA ICRA Limited

GOI Government of India

Guarantee or Govern- The unconditional, irrevocable and continuing guarantee by the ment Guarantee or Government of India inter alia for payment of principal and the Guarantee from the GOI interest thereon throughout the tenor of the Bonds

Guarantee Agreement The agreement for Guarantee to be entered into between the GOI and the Trustee pursuant to which the GOI shall provide the Guarantee.

HCIL Hotel Corporation of India Limited

HUF Hindu undivided family

IALASL IAL Air Services Limited

IATA International Air Transport Association

Information Memoran- This information memorandum for the private placement of

Page 9 of 72 Term Definition dum Bonds prepared in accordance with the SEBI (Issue and Listing of Debt Securities) Regulations, May 16, 2008

Issue The issuance of Bonds to potential investors on a private placement basis across Series 1 and Series 2

JV Joint venture

LIBOR London Inter Bank Offer Rate

Market Lot 1 (one) Bond

MRO Maintenance, repair and overhaul

NRI Non-Resident India

NSDL National Securities Depository Limited

OCB Overseas corporate bodies

PAN Permanent Account Number allotted under the Income-tax Act, 1961

Rating Agencies ICRA and CRISIL

RBI Reserve Bank of India

Record Date/Book Clo- The date falling 3 (three) days prior to a Due Date sure Date

Refund Orders The warrants/drafts/cheques or any other instrument by way of which the application money is refunded to the applicats

Registrar and Transfer Karvy Computershare Private Limited Agent Plot No. 17-24, Vittal Rao Nagar Madhapura, Hyderabad 500 081, India Tel: +91 40 4465 5000 Fax: +91 40 2343 1551

Investor Grievance Email: [email protected] Contact Person: Mr Murali Krishna - General Manager Website: http://karisma.karvy.com SEBI Registration Number: INR000000221 RPK Revenue passenger kilometers RTGS Real Time Gross Settlement

Page 10 of 72 Term Definition

SATS Singapore Airport Terminal Services

SEBI Securities and Exchange Board of India

TFCI Tourism Finance Corporation of India

Trustee IDBI Trusteeship Services Limited

Trustee Agreement The agreement entered into between the Trustee and the Company whereby the Trustee is appointed as the debenture trustee for the Issue pursuant to SEBI (Debenture Trustee) Regulations 1993.

US$ or USD United States Dollars

USG US gallon

VL Vayudoot Limited

Page 11 of 72 GENERAL INFORMATION i) Name and address of the registered office of the Issuer/Company

Registered Office:

Airlines House. 113, Gurudwara Rakabganj Road, New Delhi – 110001

The Corporate Office:

Air India Building, Nariman Point, Mumbai 400021 ii) Brief particulars of the directors of the Issuer

The Air India Limited Board of Directors is made up of a diverse team of highly- qualified individuals with extensive experience in the aviation industry. In recent years, the Government of India has expanded the Board of Directors by bringing in a number of high-profile independent directors who are leaders in their respective fields to further strengthen the corporate governance as well as add value to the decision-making process of the Company at the corporate level.

Sr. Name, Designa- Date of Date of Current Residential No. tion and Birth Appoint- Term Address PAN Number ment

1 Mr. Rohit Nandan 27.01.1957 12.08.2011 3 years or 22 B Sterling until further Apartments, Chairman and orders which- 11th Floor, ever occurs Managing Director earlier Peddar Road Mumbai ABZPN5358D 400 026 2 Mr. E K Bharat 14.01.1955 20.03.2009 Till further C-II/94, Bhushan, orders Moti Bag, New Delhi, Government Direc- 110 021 tor

ACWPB1621J 3 Mr. Prashant Sukul, 22.10.1959 09.02.2009 Till further A-10, Sujan- orders singh Park, Government Direc- New Delhi, tor 110 003

BGBPS2370H

Page 12 of 72 Sr. Name, Designa- Date of Date of Current Residential No. tion and Birth Appoint- Term Address PAN Number ment

4 Mr. Vipin K 18.09.1955 18.09.2007 5 yrs from 214, Mavilla Sharma November 30, Aptartments, 2006 or date Mayur Vihar of Super- SBU Head-MRO annuation or Phase I, (Engineering & until further New Delhi Computers) order which- 110 091 ever occurs ANEPS1616B earlier 5 Mr. K M Unni 10.11.1955 18.09.2007 5 yrs from Flat No.11, 6th December 31, Flr SBU Head- 2006 or date 61B Air India of Super- MRO(Airframe) Aptartments, annuation or AAAPU3177E until further Pali Hill, order which- Bandra-W ever occurs Mumbai earlier 400 050 6 Air Chief Marshal 29.05.1947 5.03.2010 Non-Official 101,MS (Retd) F H Major Part-time Di- Apartments, rector- 81, Robertson ACVPM9588N 3 yrs from Road, Frazer date ap- Town, Banga- pointment or lore-560 005. until further orders whichever occurs earlier 7 Mr. Harshwardhan 19.07.1961 5.03.2010 Non-Official 7/2, Queens Neotia Part-time Di- Park, Kol- rector- katta- 700019 ABKPN2311A 3 yrs from date ap- pointment or until further orders whichever occurs earlier

Page 13 of 72 Sr. Name, Designa- Date of Date of Current Residential No. tion and Birth Appoint- Term Address PAN Number ment

8 Mr. Yusuffali M.A 15.11.1955 7.05. 2010 Non-Official In Abu Part-time Di- Dhabi ACNPY6727D rector- EMKE Group 3 yrs from P.O.Box date ap- 4048, pointment or Abu Dhabi, until further U.A.E orders whichever occurs In India earlier EMKE Mansion No- 1, Nattika PO, Thrissur Kerala India – 680566

Details of other directorships of all the Directors are as follows:

Sr. Name, Designation No. and Detail of Directorship PAN Number

1 Mr. Rohit Nandan (1)Air India Ltd. (2) Hotel Corporation of India Ltd Chairman and Man- (3) Air India Engineering services Ltd. aging Director (4)Air India Charters Ltd (5) Air India Air Transport Services Ltd ABZPN5358D (6) Airline Allied Services Ltd. (7) Vayudoot (8) Air India SATS Airport Services Pvt.Ltd. (9) Air Mauritius Ltd (10) Air Mauritius Holdings Limited

2 Mr. E K Bharat 1) Air India Ltd. Bhushan, (2)Air India Air Transport Services Ltd. Government Direc- (3) Air India Engineering service Ltd. tor (4)Hotel Corporation of India Ltd (5) Airport Authority of India ACWPB1621J (6) Pawan Hans Helicopters Ltd. (7) India Tourism Development Corporation

Page 14 of 72 Sr. Name, Designation No. and Detail of Directorship PAN Number

3 Mr. Prashant Sukul, (1)Air India Ltd. Government Direc- (2)Air India Air Transport Services Ltd tor (3) Air India Engineering services Limited. (4) Hotel Corporation of India Limited BGBPS2370H

4 Mr. Vipin K Sharma (1)Air India Ltd. SBU Head-MRO (2) Airlines Allied Service Ltd. (Engineering & (3) Vayudoot Ltd Computers)

ANEPS1616B

5 Mr. K M Unni Air India Ltd SBU Head- MRO(Airframe)

AAAPU3177E

6 Air Chief Marshal Air India Limited (Retd) F H Major Air India Air Transport Services Limited Independent Director Air India Engineering Services Limited Air India Charters Limited ACVPM9588N

Page 15 of 72 Sr. Name, Designation No. and Detail of Directorship PAN Number In Private Limited Company 7 Mr. Harshwardhan 1) RKBK Fiscal Services Private Limited. Neotia Independent Director In Public Limited Companies (1) Air India Ltd. ABKPN2311A (2) Bengal Ambuja Housing Development Limited (3) Bengal Ambuja Metro Development Limited (4) Ambuja Housing and Urban Infrastructure Com- pany Limited (5) Ambuja Realty Development Limited (6) GGL Hotel and Resort Company Limited (7) Ganapati Parks Limited (8) Neotia Healthcare Initiative Limited( Formerly Neotia Elbit Hospital Venture Limited ) (9) Choicest Enterprises Limited (10) Udayan Greenfield Developers Limited (Formarly Udayan Grenfield Developers Private Limited) (11) AIPL Ambuja Housing and Urban Infrastructure Limited (12) SAREGAMA India Limited (13) Energy Development Company Limited (14) Luxmi Township Limited (15) Dwarikesh Sugar Industries Limited

In Section 25 and Guarentee Companies (1) Park Hospitals (2) Indian Chamber of Commerce Calcutta (3) Shopping Centres Association of India (4) Ganapati Medical Institute (5) CREDAI Bengal

Page 16 of 72 Sr. Name, Designation No. and Detail of Directorship PAN Number

8 Mr. Yusuffali M.A In Private Limited Company Independent Director 1a)Lulu International Shopping Mall Pvt.Ltd. (2) Fair Exports(India)Pvt.Ltd. ACNPY6727D (3) Amroon Foods Pvt.Ltd. (4) Lulu International Convention Centre Pvt.Ltd. (5) Emay Petroleum Distribution Pvt. Ltd. (6) Line Properties Pvt.Ltd. (g) Lulu Properties Pvt.Ltd. (7) Lulu Flight Kitchen Pvt.Ltd. (8) Emmay Project (India)Pvt.Ltd. (9) Lulu Group International Pvt.Ltd (10) Lulu Centre International Pvt.Ltd. (11) Lulu Cyber World Pvt.Ltd. (12) Lulu Hypermarket Pvt.Ltd. (13) Lulu Projects Pvt.Ltd.

In Public Limited Companies (1) Air India Ltd. (2) Cochin International Airport Limited (3 ) Kerala State Industrial Development Corporation Limited (4) Lakeshore Hospital & Research Center Limited (5) Air Kerala International Services Limited (6) Infrastructures Kerala Limited (7) INKEL-KINFRA Infrastructure Projects Limited (8) INKEL-KSIDC Projects Limited (9) Roots NRK Development Initiative

iii) A brief summary of the business / activities of the Issuer and its line of business

BUSINESS OF THE COMPANY AND KEY INITIATIVES

Air India Limited was incorporated on March 30, 2007, as per the Government’s decision to merge erstwhile Air India and Indian Airlines into a new company and the certificate of commencement of business was obtained on May 14, 2007. The authorized share capital of the Company is Rs.5,000.05 crores (Rupees Five Thousand Crores and Five Lakhs Only) and the paid-up share capital of the Com- pany is Rs.2,145 crores (Rupees Two Thousand One Hundred and Forty Five Crores only) respectively as on March 31, 2011. GOI has infused an amount of Rs.

Page 17 of 72 800 crores (Rupees Eight Hundred Crores) during 2009-2010 followed by another injection of Rs 1,200 crores (Rupees One Thousand Two Hundred Crores) during 20010-11. The GOI has further infused an amount of Rs 1,200 crores (Rupees Twelve Hundred Crores only) towards equity during the financial year 2011-2012. The entire paid-up share capital of Company is held by GOI.

The Company is India's national flag carrier. The carrier has extensive network and operates flights from Mumbai, Delhi and 61 other Indian cities and 33 international destinations. As on March 31, 2011 the Company operates a fleet of 119 aircrafts of which 94 aircrafts are owned and 25 aircraft are on lease. The Com- pany’s subsidiary, Air India Charters Limited (AICL) has a fleet of 21 aircraft of which 17 Boeing 737-800 aircrafts are owned and the remaining 4 are leased. Fur- ther, another subsidiary of the Company, Allied Airline Services Limited operates a fleet of 11 leased aircraft. The main services of the Company are passenger service (international and domestic), cargo service (freight service), maintenance service (airframe maintenance, repair and overhaul, certification of aircraft, etc.) and ground services (ground handling such as passenger handling, ramp handling, security, etc.).

Air India Limited will further enhance its fleet with the introduction of the all- new, technology-leading 787-8 aircraft. Air India Limited is the first South Asian carrier to purchase the 787. A total of (27) 787-8 aircraft were scheduled to be delivered beginning October of 2011. Air India Limited will use this versatile, ad- vanced aircraft virtually throughout the entire route system, with the exception of North America, which will remain the domain of the 777 fleet.

Air India Limited and its subsidiary airlines plan to further expand the group’s fleet to 245 aircraft by 2017 through utilization of operating leases. The additional aircraft will allow the Company to capture a larger piece of the rapidly growing Indian market and regain some of its lost market share.

According to an Airbus global market outlook report, India will be the fastest growing country for air travel for the next 10 years with domestic traffic growing by an average of 12.2% per year. Traffic growth will also be amongst the world’s highest, averaging 7.3% over the next 20 years compared to the world average of 4.7%. According to Boeing’s 2009 current market outlook, the Indian market will require 1000 commercial jets in the next 20 years. India’s domestic passenger traffic last year reached 43.8 million, the highest in Indian history. Air travel in India which is tied closely to the country’s economic growth, will show a com- pounded growth of nearly 10%.

To adapt to this changing environment, the Company has adapted various strate- gies, including canceling or reducing services on less profitable routes, return leased aircraft to the lessors, route rationalization, etc. To improve efficiencies and cater to long-term demand, the Company has planned to induct brand new aircraft fleet on most of the international and domestic sectors.

Page 18 of 72

OBJECTIVES OF THE COMPANY

• To take effective steps to provide a high level of customer satisfaction;

• To enhance its competitive market standing and image;

• To optimize its share of the air market to and from India, consistent with the objectives of long term financial viability and sustainable growth;

• To optimize utilization of its resources i.e. aircraft fleet and employees;

• To optimize its profitability, and follow the necessary financial restructuring, to embark on the path of sustained growth in the long term;

• To achieve the highest level of safety of operations;

Operational results of the Company are summarized below:

Summary Operating Statistics- Air India Limited T FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 hTotal RPK's (Millions) 31, 768 31,702 31,295 26,436 29,448 eTotal ASK's (Millions) 48,012 48,602 49,264 44,691 45,748 Passenger Load Factor 66.20% 65.20% 63.80% 59.50% 64.80% ITotal Flight Hours 325,344 348,927 374,826 372,285 359,778 n dian economy rebounded from the global recession much more quickly than other economies. In fiscal year ended March 2010, annual traffic growth was as follows: domestic, 16 percent; international, 9 percent; total freight, 15 percent. The growth trend has continued through the first nine months of the current year with double-digit growth in all traffic categories. To effectively compete, the Company is enhancing its image and product offering by renewing its fleet as noted above. It is revising its network to not only offer excellent schedules and more non-stop flights and connectivity but also to maximize profit. Significant progress has been made at all functional levels in combining the two entities and the integration process is in full swing. Fuel costs and high level of competition have impacted the Company’s profitability. The Company has benefited due to synergies post merger of Air India and Indian Airlines and more gains would accrue when fully implemented.

Air India Limited has identified a number of initiatives that are required to turn around the Airline and make it a commercially viable enterprise. The key initiatives of the operational turnaround plan include: simplifying the business by fleet and route optimization; covering the market with different business models; providing non-stop, one-stop connectivity; improving operating efficiency including

Page 19 of 72 implementing best practices by building a strong IT backbone; leveraging of Air India brand; monetizing fixed assets; shifting MRO and ground handling to subsidiary companies to unlock value of current businesses; and starting new allied businesses such as catering, hospitality and an independent training center. Addi- tionally, Air India Limited continues to incorporate the recommendations from the 2008 Fuel Efficiency Gap Analysis that IATA prepared for the Airline which has already generated significant savings. The new fuel policy encompasses vital changes in operational techniques, equipment settings and use, fuel management, flight planning, engine maintenance, cabin weight management, etc. Execution of all these initiatives is estimated to generate savings that will allow the Airline to improve profitability.

The engineering bases equipped with hangars, modern workshops, test equipments are located at Kolkata, Delhi, Hyderabad and Mumbai are approved by the Directorate General of Civil Aviation, the Indian regulating authority, and meets the stringent requirements of manufacturers and regulatory agencies. Air India Engineering facility has been certified by the Federal Aviation Administration of the U.S. as a “FAR 145 Repair Station” for overhaul of engines and Auxiliary Power Units (APUs) including their accessories. Air India also acquired JAR-145 certification from the Joint Aviation Authority of Europe. The airline has been awarded the Quality System Certification ISO-9002, by the Bureau of Indian Standards, accredited to R.V.A., Netherlands for its Engineering and Engine Overhaul facilities and Ground Services. Air India has been able to train its own pilots, engineers, technicians and cabin crew in-house in most modern state of art training facilities centres at Hyderabad and Mumbai.

Progress on Integration Initiatives :

- Progressive integration of network/schedules – The Airline has reduced all overlaps between routes and schedules operated by the erstwhile companies Air India (IA) and Indian Airlines (IC). In order to avoid overlap and competition between the full service carrier (IA/IC coded flights) and low-cost carrier Air India Express (IX), it was planned to operate the routes with highly price sensitive market with the IX coded flights and the other routes which are relatively less price sensitive and also have market for business class passengers with the full service product of IC and IA. Also, the unproductive posi- tioning legs on international services were eliminated on almost all routes while keeping such operations to the bare minimum. - Progressive cross-utilization of aircraft fleet – Fleet planning is now done across the entire fleet leading to more optimal fleet deployment. This will lead to better utilization of existing fleet capacity thereby improving the average hours of fleet utilization per day. - Leveraging scale for joint procurement – By combining the procurement of the entire group including subsidiaries, Air India has been able to avail of vol- ume discounts in areas such as fuel, in-flight service items, aviation and non- aviation insurance thereby adding to the synergies of operation.

Page 20 of 72 - Initiation of PSS (Passenger Service System) project – The Airline has con- tracted with a PSS system provider and is in the process of implementation. With the implementation of the system in February 2011, Air India has finally moved to a single airline code. The common code will enable AI to offer online transfer connections (AI-AI) instead of interline transfer connections (AI-IC) as had occurred in the past. The online transfers will improve the schedule display of AI flights in Global Distribution Systems (GDS) and will help to build up customer confidence in the connecting services and therefore the transfer traffic volumes.

Being a national flag carrier, the Company gets considerable support from GOI. Various restructuring programs, including equity infusion are currently being en- visaged. The Company has received equity support from the GOI to the extent of Rs.800,00,00,000 (Rupees Eight Hundred Crores) during 2009-2010 followed by another injection of Rs 1200,00,00,000 (Rupees One Thousand Two Hundred Crores) during 2010-11. The GOI has further infused an amount of Rs 1200,00,00,000 (Rupees Twelve Hundred Crores only) towards equity during the financial year 2011-2012 The Government Guarantee for the Bonds issued by the Company will further add to the Companies’ profitability.

SUBSIDIARIES OF Air India Limited

(1) Air India Charters Limited (AICL)

AICL operates a low cost airline under the brand name “Air India Ex- press”. It was launched on April 29, 2005 with a fleet of 3 leased B737- 800 aircrafts. It operated from 3 stations in Kerala and 5 stations in the Gulf. As on March 31, 2011, AICL had a fleet of 21 B737-800 aircraft (17 owned & 4 leased). Air India Express offers flights to major international destinations within a distance of around 4 hrs from different cities in India. Most of the flights are quick-turn-around flights with a ground time of around 1-hour at the destinations. It operates to 13 Indian and 12 foreign on-line stations in its network.

Particulars 2009-10 (in Rs. Million) Company’s investment in equity 300.0 Total Income 14,018.6 Profit/(Loss) After Tax (3606.9)

Air India Express has been operating 174 international flights per week. Many new flights to new sectors have been added expanding its network in recent years. During the year 2009-10, Air India Express carried around 2.6 million passengers as against 2.2 million carried the previous year reg- istering a growth of 14%.

(2) Air India Air Transport Services Limited (AIATSL)

Page 21 of 72

In view of competition in ground handling activities at Indian airports and resultant falling rates (yields) and having regard to the GOI’s decision to restrict airport handling services to erstwhile Air India, Indian Airlines and the Airports Authority of India, the board of the erstwhile Air India approved the formation of a new subsidiary company, Air India Air Transport Services Limited (AIATSL) in January 2003.

Accordingly, AIATSL was incorporated on June 9, 2003, in order to carry out ground handling and other allied activities.

Particulars 2009-10 (in Rs. Million) Company’s investment in equity 0.50 Total Income 621.30 Profit/(Loss) After Tax (1.60)

AIATSL provides certain flight handling services such as passenger, baggage handling, cabin cleaning, ramp handling and cargo handling for the Company, Air India Express and some of the foreign airlines viz. Singa- pore Airlines, Ethiad, Saudia Airlines, Bahrain Airlines, Air Asia, Ethio- pian Airlines, Thai Airways, Malaysian Airlines, Continental Airlines, American Airlines, Austrian Airline, Emirates, South African Airways, and Kuwait Airways at Kozhikode, Chennai, Trichy, Mumbai, Delhi, Thi- ruvananthapuram, Kolkata, and Mangalore.

(3) Air India Engineering Services Limited (AIESL)

The erstwhile Air-India board approved the formation of a new engineering company i.e. Air-India Engineering Services Limited, for the purpose of carrying out engineering and other allied activities. AIESL was incorporated on March 11, 2004. It is planned to develop this company in MRO facility in this region with the Company providing the necessary initial support in terms of infrastructure and domain knowledge.

Particulars 2009-10 (in Rs. Million) Company’s investment in equity 0.500 Total Income - Profit/(Loss) After Tax (0.318)

Till date no business activity has been conducted by AIESL. AIESL would utilize surplus engineering capacity for third-party engineering activities. In fiscal year ended March 2010, this subsidiary was not in operation and thus reported no revenue; however, in the near future it will be reactivated and will hold all of the maintenance and engineering assets and activities of Air India Limited.

Page 22 of 72

(4) Airline Allied Services Limited (AASL)

Airlines Allied Services Limited started airline operations with B-737 aircraft under the brand name of ‘Alliance Air’ effective April 15, 1996. AASL operates under the name Alliance Air.

The objects of the company include the following:-

• To establish, maintain operate international and domestic air transport services, schedule and non-scheduled, for the carriage of passengers, mail and freight and for any other purpose.

• To buy sell, hire, let on hire and deal in aero planes, flying ma- chines, aircraft and the component parts and all kinds of machinery and appliances for use in connection therewith.

Particulars 2009-10 (in Rs. Million) NACIL’s investment in equity 22.50 Total Income 3686.28 Profit/(Loss) After Tax (415.40)

As on March 31, 2011 the Company had seven ATR-42-320 and four CRJ-700 leased aircraft in its fleet. As at the end of the year, the network of AASL consisted of 29 stations within the country for passenger operations. AASL has plans to expand its fleet and route network in coming years to provide air connectivity to a number of Tier 3 & Tier 4 cities, many of these not on air map as of today. The expansion would be carried out after due study of markets and traffic demand.

As per the terms of a memorandum of understanding entered into with the North Eastern Council, AASL has been operating air services in the North East. The arrangement is continuing since, December 31, 2002.

(5) Hotel Corporation of India Limited (HCIL)

In 1971, Air India entered the hotel industry. The objective is to offer to the passengers a better product, both at international airports and at other places of tourist interest.

Particulars 2009-10 (in Rs. Million) NACIL’s investment in equity 406.00 Total Income 412.85 Profit/(Loss) After Tax (291.11)

Page 23 of 72 HCIL originally had six business units viz (1) Centaur Hotel, Mumbai Airport, (2) Centaur Hotel, Juhu, Mumbai, (3) Indo Hokke Hotel, Rajgir, (4) Centaur Hotel, Delhi, (5) Centaur Lake View Hotel, Srinagar; and (6) Chef Air Flight Catering. The units mentioned in (1)-(3) have been sold off. Centaur Hotel, Delhi Airport has been renovated and HCIL proposes to run the unit.

(6) IAL Airport Services Limited (IALASL)

IALASL was a wholly owned subsidiary of erstwhile Indian Airlines and incorporated on 27 August 2003, for carrying out airport handling services and traffic services. However, IALASLs was not made operational post merger of erstwhile Indian Airlines and Air India and therefore wound up after approval of Ministry of Corporate Affairs with effect from March 25, 2011.

Particulars 2009-10 (in Rs. Million) NACIL’s investment in equity 0.500 Total Income - Profit/(Loss) After Tax (0.018)

(7) Vayudoot Limited (VL)

Vayudoot Limited was originally incorporated as a private limited company on January 20, 1981 under the Companies Act, 1956. After passing the necessary special resolution in the general meeting of the VL, the name of the Company was changed to Vayudoot Ltd and the Registrar of Com- panies New Delhi and Haryana gave the necessary certificate to that effect on February 17, 1983. The ownership of VL vested in erstwhile Indian Airlines and Air India jointly, through themselves or their nominees. The GOI, Ministry of Civil Aviation vide its letter No. AV.18030/44/92-ACVL dated May 25, 1993 conveyed GOI’s decision to merge VL with erstwhile Indian Airlines Limited. Consequent to the above decision of GOI, erstwhile Air India transferred its entire share holding of 1,82,100 equity shares of Rs.1000 each in VL to erstwhile Indian Airlines Limited for a to- ken consideration of Re.1/- in February 1994 there by making VL a wholly owned subsidiary of Indian Airlines Limited. The employees of VL were absorbed in Indian Airlines Limited and Air India Limited respectively. Currently, VL has no business activity and awaiting approval of its amal- gamation with Air India for which an application is pending with the Min- istry of Corporate Affairs under sections 391-396A of the Companies Act, 1956.

Page 24 of 72 Particulars 2009-10 (in Rs. Million) Company’s investment in equity 364.200 Total Income - Profit/(Loss) After Tax (0.423)

GROUP COMPANIES OF THE COMPANY

Nil

JOINT VENTURE/ AFFILIATES/ OF THE COMPANY / COMPANY PROMOTED/ CO-PROMOTED BY THE COMPANY

1. Joint venture between the Company and the Singapore Airport Ter- minal Services (SATS) on ground handling

Approval from the government was received for formation of a single JV company covering all metro airports including Bangalore and Hyderabad in the equity ratio of 50:50 between Air India Limited and SATS. The joint venture consortium commenced its operations at the Hyderabad airport on March 23, 2008 for ground handling and on May 23 2008 at Ban- galore airport for cargo/ground handling. Under the joint venture agreement all flights including the Company’s flights at these airports are being handled by the consortium pending the formation of a joint venture company. The JV agreement was signed in April 2010 and Air India SATS Airport Services Private Limited has since been incorporated. The JV now also does ground handling in Delhi. The existing staff at these airports for these activities have been deputed to the joint venture.

2. MRO joint ventures (JVs)

A MRO facility to undertake major checks of B777, B787 of the Company and B737 aircraft of Air India Express is being set up at Nagpur in a joint venture with Boeing. Work on the facility is likely to commence in 2010 and the facility is expected to be functional in 2012.

Air India signed an agreement with GE for GEnx engine overhaul which enables designating the Air India facility as a GE-branded repair station. The facility is expected to be one of the six GE engine MRO facilities in the world. Further, as per arrangement with GE, this will be the only GE engine MRO facility in India.

Also under consideration, an MRO JV between Air India and EADS a global leader in aerospace, defence and related services for creation of a Maintenance, Repair and Overhaul Centre (“MRO Centre”) for Airbus aircraft. This new MRO Centre will start its operations at Indira Gandhi International Airport, New Delhi, after it receives the approval of GOI and would become a member of the Airbus MRO Network. In addition to ap-

Page 25 of 72 provals from the Directorate General of Civil Aviation, the MRO will also obtain approvals from FAA/EASA which will help it to undertake outside party work. The JV will undertake airframe maintenance and repair of Air India’s fleet of Airbus aircraft to begin with. Later, it will extend the facility to other types of aircraft and aircraft of other airlines. The facility will cater to the markets in South Asia region and neighboring countries. iv) Brief History

Erstwhile Air India was India's national flag carrier and was established as Tata Airlines in 1932. The airline's inaugural flight from Karachi to Mumbai via Ahmadabad was operated by a light single-engine de Havilland Puss Moth, the first scheduled air service in the country. At the controls of the first flight was Mr. J.R.D. Tata, who was instrumental in establishing the airline. In 1933, the first full year of its operations, Tata Airlines, as Air India was then known, flew 160,000 miles, carried 155 passengers and 10.71 tonnes of mail. Tata Airlines was converted into a public company under the name of Air India in August 1946.

Towards the end of 1947, an agreement was reached with the Government of In- dia to form Air India International Limited to operate international services. Air India International inaugurated its international services on June 8, 1948, with a weekly flight from Mumbai to London via Cairo and Geneva.

In 1953 with the financial condition of various airlines operating in India deterio- rating, the Indian government nationalized the air transport industry and created Indian Airlines and Air India International.

Accordingly, erstwhile Indian Airlines was established in 1953 under Air Corpo- rations Act, 1953, to provide safe, efficient, adequate, economical and properly coordinated domestic air transport services. Indian Airlines was formed with the merger of eight domestic airlines to operate domestic services, while Air India In- ternational (‘International’ was dropped in 1962) was established to operate international flights. Indian Airlines was the only domestic carrier in the country till the advent of Vayudoot in 1981. Both airlines were governed under a special Air Corporations Act 1953.

On February 01, 1994, the erstwhile Air India and Indian Airlines were converted into limited companies governed by the Companies Act, 1956. The undertaking of Air-India was transferred to and vested in Air-India Limited, a public limited company registered under the Companies Act, 1956 with effect from March 01, 1994 after the Air Corporations (Transfer of Undertakings and Repeal) Act, 1994 came into effect.

Consequent to the GOI’s decision to merge erstwhile Air India and Indian Airlines into a new company, the National Aviation Company of India Limited i.e. the Company was incorporated on March 30, 2007.

Page 26 of 72

The final order on merger was passed by the Ministry of Corporate Affairs on Au- gust 22, 2007. The order was filed with the Registrar of Companies and the merger became effective August 27, 2007. Consequently, both Air India Limited and Indian Airlines Limited were dissolved without being wound up. As a result of this, all assets, liabilities, obligations of both these Companies were taken over by the Company effective August 27, 2007. The appointed date of the merger was April 01, 2007. Post Air India-Indian Airlines merger, the new entity is known as National Aviation Company of India Limited.

The name of NATIONAL AVIATION COMPANY OF INDIA LIMITED has been changed to AIR INDIA LIMITED with effect from 24th November, 2010, after following due procedure as per Section 21 of the Companies Act, 1956, ob- taining approval of the Central Government and issue of Fresh Certificate of In- corporation consequent upon Change of Name by the Registrar of Companies dated 24th November, 2010.

Consequently the name, Air India Limited stands substituted in place of National Aviation Company of India Limited wherever it occurs in all the previous contracts, deeds, bonds, agreements, schemes, arrangements or any other instruments of whatsoever nature with other entities in relation to or to the benefit of National Aviation Company of India Limited which were subsisting or having effect immediately before the change of name and shall remain in full force and effect. The change has been brought about only in the name of the company and that its ownership and legal obligations remain the same. Air India Limited will be responsible for all obligations there under as also exercise all its rights there under. All other terms and conditions would continue to be the same.

Shareholding Pattern

Authorised Share Capital

The authorized share capital of the Company as on March 31, 2011 was Rs.5,000.05 crores (Rupees Five Thousand Crores and Five Lakhs Only) divided into 487,56,45,020 (Four Hundred and Eighty Seven Crores, Fifty Six Lakhs, Forty Five Thousand and Twenty only) equity shares of Rs.10/- each and 1,24,40,498 (One Crore Twenty Four Lakhs, Forty Thousand, Four Hundred and Ninety Eight only) preference shares of Rs.100/- each.

Issued, Subscribed & Paid-up Share Capital

The issued, subscribed and paid-up share capital of the Company as on March 31, 2010 is Rs. 945 crores (Rupees Nine Hundred and Forty Five Crores only) divided into 94,50,00,000 (Ninety Four Crores and Fifty Lakhs) fully paid up equity shares of Rs.10 each, 100% owned by the GOI and representatives of GOI on be-

Page 27 of 72 half of the GOI. The issued, subscribed and paid up capital of the Company shall increase due to equity infusion by the GOI.

Names of shareholders as on September 19, 2011

Sl. No. Name of Shareholder Number of Shares 1. President of India 3344999920 2. Mr. Nasim Zaidi 10 3. Mr. Rohit Nandan 10 4. Mr. Alok Sinha 10 5. Mr. Prashant Narain Sukul 10 6. Mr. S K Chhikara 10 7. Mr. Syed Nasir Ali 10 8. Mr. E K Bharat Bhushan 10 9. Mr. Lakkadi Rajasekhar Reddy 10

The shares are owned by the office, not the individual. When a particular individual leaves office, the shares assigned to that individual transfer to the person who fills his/her vacated position within the government. As additional equity in- fusions are made, the number of shares held by the presidency will increase.

The Company has received equity support from the GOI to the extent of Rs 800 crores (Rupees Eight Hundred Crores) during 2009-2010 followed by another injection of Rs 1,200 crores (Rupees One Thousand Two Hundred Crores) during 2010-11. The GOI has further infused an amount of Rs 1,200 crores (Rupees Twelve Hundred Crores only) towards equity during the financial year 2011- 2012.

Capital Structure (as on March 31, 2010) (Rs. in crore) Particulars As on 31.03.10 1 SHARE CAPITAL 94,50,00,000 Equity shares of Rs. 10 each fully paid up 945.00 Total 945.00

2 RESERVES & SURPLUS Capital Reserve 64.43 Less: Transfer to Depreciation (P&L A/c) 1.95 Total 62.38

TOTAL (1+2) 1007.38

3 UNSECURED LOANS Secured Loans 6590.71

Page 28 of 72 Particulars As on 31.03.10 Unsecured Loans 18476.11 TOTAL (3) 25066.82

Share Capital History (since incorporation)

Consequent to the GOI’s decision to merge erstwhile Air India and Indian Air- lines, the share capital history of the newly formed company is as follows:

(Rs. in Crores) Year Authorized Capital Paid Up Equity Capital 2007-08 1500.05 145 2008-09 1500.05 145 2009-10 5000.05 945 2010-11 5000.05 2145

During the year 2009-10, the Company has increased its authorized share capital to Rs.5000.05 (Rupees Five Thousand Crores and Five Lakhs only) anticipating equity infusion from the GOI.

As mentioned above, the Company has received equity support from the GOI to the extent of Rs 800 crores (Rupees Eight Hundred Crores) during 2009-2010 followed by another injection of Rs 1,200 crores (Rupees One Thousand Two Hun- dred Crores) during 2010-11. The GOI has further infused an amount of Rs 1,200 crores (Rupees Twelve Hundred Crores only) towards equity during the financial year 2011-2012. v) Details of the Bonds

Nature of Debt Unsecured, Rated, Listed, Taxable, Redeemable, Non Con- Securities vertible Debentures Guarantee Unconditional, Irrevocable and Continuing Guarantee by the Government of India for inter alia payment of principal and the interest payments till all debt obligations in respect of the Bonds are outstanding Issue Amount Aggregate issue amount of Rs. 5,500 crores (Rupees Five Thousand Five Hundred Crores only) across Series 1 and Series 2 Series 1: Rs. 4,000 crore (Rupees Four Thousand Crores only) Series 2: Rs. 1,500 crore (Rupees One Thousand Five Hun- dred Crores only) Face Value Rs. 10,00,000 (Rupees Ten Lakhs only) per Bond

Page 29 of 72 Tenor Series 1: 15 years Series 2: 20 years Nature of inter- Fixed coupon bearing bond est payment Coupon Rate Series 1: 9.84% per annum, payable annually Series 2: 10.05% per annum, payable annually

Coupon payment Annual frequency Coupon Payment It is hereby clarified that the first interest payment date shall Date be the date falling one year after the Deemed Date of Al- lotment of the Bonds, i.e. September 27, 2012 and the last coupon payment date shall be September 27, 2026 for Se- ries 1 and September 27, 2031 for Series 2.

Redemption Series 1: In a bullet installment at par at the end of fifteen years from the Deemed Date of Allotment of Bonds, i.e. on September 27, 2026

Series 2: In a bullet installment at par at the end of twenty years from the Deemed Date of Allotment of Bonds, i.e. on September 27, 2031

Security Unsecured Mode of Issue On private placement basis to all eligible investors Event of Default The occurrence of any one of the following events shall constitute an “Event of Default”:

I. Default is committed in payment of the Issue amount of the Bonds or the coupon and or any amounts due and payable to the Bondholders or the Trustee when due and payable under the transaction documents, by funding the specified account 3 days prior to the Due Dates;

II. If the Issuer is unable to pay its debts within the meaning of Section 434 of the Companies Act, 1956 or if the Issuer is carrying on business at a loss and it appears to the Trustee that continuation of its business will endanger the ability of the Issuer to redeem the Bonds;

III. In the event of the Government taking over the assets pertaining to the projects and/or the entire undertaking of the Issuer and/or in the event of a moratorium being passed or in case the running of the business of

Page 30 of 72 the Issuer or its management or control is taken away either as part of any unemployment relief scheme or for any other reason whatsoever, or under the provisions of The Industries (Development and Regula- tion) Act, 1951 or under any other Act.

IV. Failure to procure the concluded/executed Guarantee from Government of India within a period of 180 calendar days from the date of GOI approval for issuance of Guarantee;

V. Any information given by the Issuer in the Informa- tion Memorandum/reports and other information furnished by the Issuer and the representations and warranties given/deemed to have been given by the Is- suer under any transaction document are misleading or incorrect in any material respect;

VI. Default is committed in the performance or observance of any covenant, condition or provision contained in the transaction documents or in the Infor- mation Memorandum including non-listing of Bonds, reports and other information furnished by the Issuer and any warranties/undertakings given or deemed to have been given by it to the Trustee;

VII. The Issuer has voluntarily or involuntarily become the subject of proceedings under any bankruptcy or insolvency law or the Issuer is voluntarily or involuntarily dissolved a receiver or a liquidator has been appointed or allowed to be appointed of all or any part of the undertaking of the Issuer or the Issuer ceases or threatens to cease to carry on its business or gives notice of its intention to do so;

VIII. The Issuer ceases or threatens to cease to carry on its business or gives notice of its intention to do so;

IX. Authority or permission to carry on the Issuer’s material business is revoked by a competent government authority. Undertaking by The Company undertakes that: the Issuer: 1. The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily;

Page 31 of 72

2. The listing on the wholesale debt market segment of BSE/NSE will be done immediately after the allotment. The Company shall take all steps for completion of formalities related to the listing of the Bonds.

3. Necessary co-operation to the credit rating agencies shall be extended in providing true and adequate information till all debt obligations in respect of the Bonds are outstanding.

4. Prior to disbursal of funds, the Company shall obtain GOI approval for issuance of Guarantee for the Issue of the Bonds. The Guarantee shall be unconditional and irrevocable for payment of principal and interest thereon for the proposed Issue of Bonds by the Company. The Guarantee shall remain valid till all debt obligations in respect of the Bonds are outstanding.

5. It shall conclude/execute the Guarantee within a period of 180 calendar days from the date of issue of the GOI approval for issuance of Guarantee.

vi) Issue Size

Rs. 5,500 crores (Rupees Five Thousand Five hundred Crores only) across Series 1 and Series 2;

Series 1: Rs. 4,000 crore (Rupees Four Thousand Crores only) Series 2: Rs. 1,500 crore (Rupees One Thousand Five Hundred Crores only) vii) Details of utilization of the issue proceeds

The proceeds of the Issue shall be used for refinancing the rupee loan taken for the purchase cost of aircraft, spare engines and other related equipments like simulator, BFE items, aircraft spares, workshop toolings, ground equipment for the Airbus aircraft delivered during April’09 to April’10 and financing of upfront financing charges, GOI Guarantee fee as may be applicable, etc. viii) Material Contracts and Inspection of Documents

Material Contracts

A. Leasing

Page 32 of 72 The Company and AICL have inducted aircraft on dry lease to augment their capacity before the arrival of new aircraft. As of April 30, 2011, the Company has 22 aircrafts on lease of which 7 aircrafts are on operating lease and 15 are on sale and leaseback. The Company has sold 15 of its aircrafts (eight A320s, five A310s and two B747-400) as on April 30, 2011 and leased back the same under sale- and-lease back arrangements. These leases are scheduled to end by April 2016.

Under Operating Lease

Sl. Aircraft Type of Name of Term of Scheduled Lease No. Registra- Aircraft Lessor Lease in month of Rent tion No years Return per month in USD February, 1 VT SCA A319 CIT 8.33 200,000 2014 March, 2 VT SCB A319 CIT 8.33 200,000 2014 3 VT SCC A319 CIT 8.33 May, 2014 200,000 4 VT SCE A319 AERCAP 8 April, 2014 170,000 5 VT SCD A319 AERCAP 8 April, 2014 170,000 October, 6 VT IWA A330 YAMASA 7 664,000 2014 November, 7 VT IWB A330 YAMASA 7 664,000 2014

Under Sale & Lease Back Arrangement

1 VT ESN B 747-400 INVESTEC 7 April, 2016 865,000 2 VT ESO B 747-400 INVESTEC 7 April, 2016 865,000 3 VT EJG A310 INVESTEC 5 March, 2012 245,000 4 VT EJH A310 INVESTEC 5 April, 2012 245,000 5 VT EJJ A310 INVESTEC 5 June, 2012 245,000 6 VT EJK A310 INVESTEC 5 July, 2012 245,000 7 VT EJL A310 INVESTEC 5 August, 2012 245,000 September, 8 VT EPB A320 INVESTEC 6.5 269,900 2013 September 9 VT EPC A320 INVESTEC 6.5 269,900 2013 September 10 VT EPF A320 INVESTEC 6.5 269,900 2013 September, 11 VT EPG A320 INVESTEC 6.5 269,900 2013 September, 12 VT EPH A320 INVESTEC 6.5 269,900 2013 13 VT EPI A320 INVESTEC 6.5 September, 269,900

Page 33 of 72 2013 September, 14 VT EPJ A320 INVESTEC 6.5 269,900 2013 15 VT ESB A320 INVESTEC 7 April, 2015 311,000

B. Insurance

The Insurance program of the Company is divided into three categories:

(i) Aviation insurance, (ii) Non-aviation insurance, and (iii) Self -insurance

(i) Aviation Insurance Policies

The Company’s 164 aircraft as on 1st October, 2010 (including all subsidiaries are insured for the agreed value of US$ 9.12 billion under the aviation insurance policies. Aircraft of erstwhile Air-India, erstwhile Indian Airlines, Air India Express and Alliance Air are covered under one policy. The policy period is from October 1, 2010 till September 30, 2011. Currently the policy is placed with M/s. ICICI Lombard General Insurance Company Limited. The combined single liability limit under the policy is of US$1.5 Billion and the hull war limit is of US$ 1 Billion. The aviation policies taken by the Company are-

1. Hull, Spares and Liabilities All Risk Policy.

2. Hull, Spares War Risk Policy.

3. Excess Third party War Risk Policy (AVN 52 E)

4. Hull Deductible Insurance

The following are covered by the above stated policies-

a) Aircraft frames and engines installed on the aircraft.

b) Aircraft spares & spare engines

c) Legal liability due death or injury to passenger from the operation of the Company’s aircraft.

d) Legal liability due to loss or damage to passenger baggage, cargo and mail from the operation of company’s aircraft.

Page 34 of 72 e) Liability for loss or damage whilst handling other operators under hangar keepers policies.

f) Third party liability for accidents caused by mobile vehicles (ramp equipments) and by aircraft. It will also cover third party liability arising from accidents to passenger or other persons at premises used by the Company.

(ii) Non-Aviation Insurance Policies

Assets other than aircraft and their spares are covered under four types of policies taken by the Company under non-aviation with various insurance companies. The following are covered under these policies:

a) Worldwide cash-in-safe and cash-in-transit.

b) Fidelity guarantee of staff handling cash or valuable property.

c) Public liability.

d) Transit insurance on stores, spares and other equipment.

e) Transit insurance on cabin service materials, publicity material and stationery.

f) Fire, theft and breakage in respect of office premises including appliances and equipment, wherever such insurances are taken out.

g) Comprehensive covers for Boeing Simulator, Sperry Univac computer and IBM computer.

h) Insurance of buildings and plant and workshop equipment.

i) Fire risk cover of stock of cabin service materials such as frozen food, liquor, cigarettes etc. at Santa Cruz.

j) Comprehensive insurance of registered vehicles.

k) Insurance of ramp equipments excluding third party liability.

l) Air India building for fire and loss of rent.

(iii) Self Insurance Covers

Page 35 of 72 This account represents adjustment of losses sustained or liability incurred by the Company under its own self insurance scheme. The Company does not contribute any premium to any insurance company.

(1) Self insurance covers against personal accident to staff carrying or ac- companying cash.

(2) Self insurance covers against flying risk of ground staff including flying crew whilst flying on duty.

(3) Adjustment of losses under self insurance scheme for compensation payable to staff travelling on duty or for loss of baggage.

(4) Adjustment of losses under self insurance scheme for compensation to staff, under the Workmen’s Compensation Act, 1923.

(5) Accident insurance of staff outside India on policies actually taken out by the corporation.

(6) The loss of licence insurance is covered through a self insurance scheme for pilots and flight engineers with effect from April 1, 1990 and July 10, 1991 respectively.

(7) Adjustment of claims of operating crew and cabin attendants under self insurance scheme against accidental death or injury.

(8) Insurance against accidents to staff travelling by surface.

A separate policy has been take by the Company for medical insurance for staff/officers based in India going on temporary posting and duty tours is taken at London every year for the policy period 1st January to 31st December

C. Fuel

The fuel contracts for uplifts of fuel within India for fuel requirements of the Company (including flights operated under call sign AI including freighter flights), Air India Charters Limited and Alliance Air have been signed with three major public sector oil marketing companies i.e. M/s. Indian Oil Corporation Limited, M/s. Bharat Petroleum Corporation Limited and M/s. Hindustan Petro- leum Corporation Limited. However, in 2 locations in India viz. Gaya and Madurai, the fuel contract has been awarded to M/s Reliance Industries Limited. The annual size of contract i.e. quantity and cost for existing jet fuel contract for Indian stations is as under:

Quantity - 365,561,900 USG equivalent 1,383,798 kilolitres Cost - Rs. 4,150 crores approximately

Page 36 of 72

The contracts for fuel upliftment for India is valid till June 30, 2011. The contract can be further extended by mutual consent of Air India and oil companies. To have better terms and conditions including price, tender has been issued for award of contract for subsequent periods of one-two years. Fuel contract for uplifts of fuel in stations abroad have been awarded to leading fuel suppliers like M/s Shell, World Fuel Services, Air BP, Exxon Mobil and others. The contract are for a period of 3 years ending on 31st March, 2012 for fuel requirement of the Company (flights operated under call sign AI including freighter flights) and Air India Char- ters Limited. The annual size of contract i.e. quantity and cost for existing jet fuel contract for foreign stations is as under:

Quantity - 255,857,000 USG equivalent to 968,524 kilolitres Cost - Rs. 3,450 crores approximately.

The Company also has lifting agreements with several international counterparties for its overseas operations.

D. Top Five outstanding Loans

Sl. Name of Aircraft Covered Currency Payment Due Balance No. Loan Upto as on 31- March- 2011 1 IDBI 9 A319, 4 A320 & INR September- 5413.52 Long 8 A321 2022 crores Term (A 319 Aircraft Loan namely VT-SCP, arranged VT-SCQ, VT-SCR, by IDBI. VT-SCS, VT-SCT, VT-SCU, VT-SCV, VT-SCW & VT- SCX + A 320 Air- craft namely VT- EDD, VT-EDC, VT-EDE & VT- EDF + A 321 Air- craft namely VT- PPN, VT-PPQ, VT-PPO, VT-PPT, VT-PPU, VT-PPV, VT-PPW & VT- PPX )

2 JP Mor- 3 B777-200 LR : USD September2021 767.660 gan VT-ALF, VT-ALG , VT- million

Page 37 of 72 Sl. Name of Aircraft Covered Currency Payment Due Balance No. Loan Upto as on 31- March- 2011 Chase ALH

4 B777-200 ER : VT-ALO, VT-ALP, VT- ALQ, VT-ALR

1 GE Spare Engine – 960640 3 ABN 4 B777-200 LR : USD December, USD Amro VT-ALA, VT-ALB , VT- 2019 643.374 ALC , VT-ALD million

3 B777-200 ER : VT-ALJ, VT-ALK, VT- ALL

2 GE Spare Engines – 906258 & 906405 4 KfW 6 A319 & 6 A321 USD February-2021 516.56 601 ar- (A 319 Aircraft million ranged namely VT-SCI, by KfW VT-SCK, VT-SCL, VT-SCN, VT-SCM & VT-SCO + A 321 Aircraft namely VT-PPH, VT-PPI, VT-PPJ, VT-PPK, VT-PPL & VT-PPM ) KfW 4 A319 & 6 A321 USD December - 407.04 518 ar- (A 319 Aircraft 2019 million ranged namely VT-SCF, by KfW VT-SCG, VT-SCH & VT-SCJ + A 321 Aircraft namely VT-PPA, VT-PPB, VT-PPD, VT-PPE, VT-PPF & VT- PPG)

Documents

Page 38 of 72 1. Memorandum and Articles of Association of the Company as amended from time to time.

2. Resolutions of Board of Directors of the Company dated January 19, 2011 authorizing the current Issue of Bonds.

3. Resolution from the shareholders of the Company dated March 25, 2011 authorizing the borrowing by the Company of upto Rs. 50,000 crore and a certificate from the Company confirming that the borrowings pursuant to the issue of the Bonds are within this limit.

4. Letter No. AV.18019/05/2006-AI dated May 9, 2011, issued by Ministry of Civil Aviation, Department of Civil Aviation conveying the approval of Government of India’s Guarantee to the Company to raise Rs. 5,500 crores (Rupees Five Thousand Five Hundred Crores) of Bonds across Se- ries 1 and Series 2 during the current year.

5. Consent from the Trustees to the Bondholders, Arranger to the Issue, Reg- istrar to the Issue referred to in this Information Memorandum to act in their respective capacities.

6. Copy of application made to the BSE for grant of in-principle approval for listing of Bonds.

7. Annual Reports of Air India Limited for Financial Year 2009-2010 and for Air India and Indian Airlines for the financial years 2006-2007 and 2007- 2008.

8. Letter from CRISIL conveying the credit rating for the Bonds of Air India Limited.

9. Letter from ICRA conveying the credit rating for the Bonds of Air India Limited.

10. In-principle listing and trading approvals dated September 23, 2011 from BSE. ix) Details of other borrowings (as on March 31, 2010)

Air India Limited (Rs. in crore) Particulars of Borrowings Amount as on 31.03.2010 (audited) Secured Loans 6590.71 Unsecured Loans 18476.11

Total 25066.82

Page 39 of 72

Air India Limited– I – Statement of Project Loan

Sl. Name of Date of Amount Interest Due Date Bal- No Lender Loan Rate ance as . Agree- on ment March 31, 2011 1. EDC Canada October, USD 7.4% for October, USD 1988 12.6 66.4% of 2039 3.069 million the loan and million the remaining part being interest free 2. KfW, HSN March , USD LIBOR + Decem- USD Nord Bank 2007 518.650 0.75% ber , 407.04 Germany million 2019 million 3. KfW, HSN Novem- USD LIBOR + February, USD Nord Bank ber, 2007 601.134 0.75% 2021 516.56 Germany million million 4. IDBI Bank August, INR IDBI BPLR Septem- INR Limited 2009 5413.52 – 100 bps ber, 2022 5413.5 crores for first year 2 and crores IDBI BPLR – 150 bps second year onwards

Air India Limited – A – Statement of Project Loan

Sl. Name of Date of Amount Interest Due Date Balance No. Lender Loan Rate as on Agreement March 31, 2011 1. EDC October 16, USD Interest March, USD Canada 1987 7.451 Free 2037 1.408 million million 2. ABN October 09, USD Libor – December, USD Amro 2007 862.557 0.04 con- 2019 643.374 million verted million into fixed rate in

Page 40 of 72 Sl. Name of Date of Amount Interest Due Date Balance No. Lender Loan Rate as on Agreement March 31, 2011 2008- 2009 3. ICICI October 09, USD LIBOR + December, USD Bank/ 2007 146.660 1.77 2012 83.062 State million million Bank of India 4. Standard September USD LIBOR – May, 2020 USD Chartered 19, 2008 363.316 0.5 280.099 Bank Million million 5. IDBI September INR 285 BPLR for February, INR Bank 19, 2008 crores 1st year 2014 213.750 Limited and BPLR crores – 0.50 afterwards 6. Royal March 25, USD LIBOR + May, 2011 USD Bank of 2009 135.075 4.00 115.529 Scotland million million 7. JP Mor- January 28, USD LIBOR + Septem- USD gan Chase 2010 830.837 0.93 ber2021 767.660 million million 8. Standard March 26, INR 700 9.13% March, INR Chartered 2010 crores 2020 700 Bank crores 9. Standard April 29, USD LIBOR + June, 2011 USD Chartered 2010 371.843 2.0 354.902 Bank million million 10. Standard August 06, USD LIBOR + June, 2011 USD Chartered 2010 22.968 2.0 22.968 Bank million million

x) Any material event / development or change at the time of issue

None.

xi) Particulars of debt securities issued (i) for consideration other than cash, whether in whole or part, (ii) at premium or discount, or (iii) in pursuance

None. xii) A list of highest ten holders of various instruments as on 31 March, 2011

Page 41 of 72

Equity

Sr. Name of Shareholder Number of Shares % Share- No. Held holding 1. Government of India (including its 214,50,00,000 100.00 nominees)

Bonds

The Company had previously issued ten years Rupee Bonds for Rs.700 crores with bullet repayment on maturity. The proceeds from bonds were drawn on 26th March 2010 and used to finance 15% of cost of purchase of 3 B777-200LR, 4 B777-300 ER and 1 GE 90 Spare Engine arranged by Standard Chartered Bank. The Bond had the rating of AAA (SO) from CRISIL and AAA (ind) (SO) from Fitch Ratings. The bond bear a fixed rate of interest of 9.13% p.a. and drawal has been made on 26-03-2010.

The remaining 85% cost was financed through US Dollar currency loan from JP Morgan supported by a guarantee of US Ex-Im Bank. Both bonds as well as loan facility are guaranteed by Government of India.

List of top ten holders of the Bonds are given below:

Page 42 of 72 LIST OF TOP 10 BONDHOLDERS as on 31.08.2011

SRL BONDHOLDER' S NAME No.of Bonds %

1 MAHARASHTRA STATE ELECTRICITY 1182 16.8857 BOARDS CONTRIBUTORY PROVIDENT FUND 2 PROVIDENT FUND OF TATA STEEL 550 7.8571 LIMITED 3 NALCO EMPLOYEES PROVIDENT FUND 290 4.1429 TRUST 4 INFOSYS TECHNOLOGIES LIMITED 270 3.8571 EMPLOYEES PROVIDENTFUND TRUST 5 NAVODAYA VIDYALAYA SAMITI 249 3.5571 CONTRIBUTORY PROVIDENT FUND A/C 6 TATA MOTORS LIMITED GRATUITY FUND 230 3.2857 7 OIL INDIA LIMITED EMPLOYEES 220 3.1429 PROVIDENT FUND 8 TRIPURA GRAMIN BANK 190 2.7143 9 NUCLEAR POWER CORPORATION OF 189 2.7000 INDIA LIMITED EMPLOYEES PROVIDENT FUND 10 TATA MOTORS LIMITED PROVIDENT 170 2.4286 FUND

TOTAL : 3540 50.5714 xiii) Undertaking – common form of transfer

The Bonds shall be transferred subject to and in accordance with the rules and procedures as prescribed by the NSDL and CDSL and Depository Participant of the transferor or transferee as the case may be, and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant. The transferee(s) should ensure that the transfer formalities are completed prior to the Re- cord Date. In the absence of the same, interest or redemption amount will be paid to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the Company. The Company undertakes that it shall use a common form/ procedure for transfer of Bonds issued under terms of this Information Memorandum, in the event the Bonds are rematerialised.

Page 43 of 72 xiv) Redemption Amount - Rs. 10 lakhs per Bond

Period of Maturity - Series 1: 15 years; Series 2: 20 years

Coupon Rate payable on the Bonds - Series 1: 9.84 % per annum, payable annually Series 2: 10.05 % per annum, payable annually xv) Information relating to the terms of offer

Face Value & Issue Price

Each Bond has a face value of Rs. 10 lakhs and is issued at par.

Minimum Application

The application should be for a minimum of 10 Bonds (i.e. Rs. 1,00,00,000/-) and in multiples of 1 Bond (i.e. Rs. 10,00,000) thereafter.

Interest on Application Money

Interest on application money will be paid separately by the Company wherever applicable. Thus, the same should not be deducted from the application amount. Interest at the Coupon Rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re- enactment thereof, as applicable) will be paid to all the applicants on the application money for the Bonds. Such interest shall be paid from the date of realisation of cheque(s)/ demand draft(s) up to one day prior to the Deemed Date of Allot- ment. The interest on application money will be computed on an Actual/Actual basis. Such interest would be paid on all the valid applications, including the re- funds. Where the entire subscription amount has been refunded, the interest on application money will be paid along with the Refund Orders. Where an applicant is allotted lesser number of Bonds than applied for, the excess amount paid on application will be refunded to the applicant along with the interest on application money. The interest cheque(s)/ demand draft(s) for interest on application money (along with Refund Orders, in case of refund of application money, if any) shall be dispatched by the Company within 15 (fifteen) days from the Deemed Date of Allotment and the relative interest warrant(s) along with the Refund Order(s), as the case may be, will be dispatched by registered post to the sole/ first applicant, at the sole risk of the applicant.

Interest on the Bonds

The Bonds shall carry interest at the Coupon Rate on the outstanding amount of the principal until redemption. Interest will be paid annually on September 27,

Page 44 of 72 each year throughout the tenure of the Bonds till redemption. It is hereby clarified that the first interest payment date shall be September 27, 2012 and the last interest payment date will be September 27, 2026 for Series 1 and September 27, 2031 for Series 2. In case the Deemed Date of Allotment is revised (preponed or postponed) then the given interest payment date may also be revised (preponed/ postponed) accordingly by the Company at its sole and absolute discretion. If any interest payment date falls on a day which is not a Business Day, then payment of interest will be made on the next day that is a Business Day but without liability for making payment of interest for the intervening period.

Computation of Interest

Interest for each of the interest periods shall be calculated, on an Actual/Actual days basis, on the face value of principal outstanding on the Bonds at the Coupon Rate rounded off to the nearest Rupee.

Deemed Date of Allotment

Interest on the Bonds shall accrue to the Bondholder(s) from the Deemed Date of Allotment. All benefits relating to the Bonds will be available to the investors from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. The Company reserves the right to keep multiple allotment date(s)/ deemed date(s) of allotment at its sole and absolute discretion without any notice. In case if the issue closing date is revised (pre-poned/ postponed), the Deemed Date of Allotment may also be revised (pre-poned/ postponed) by the Company at its sole and absolute discretion.

Event of Default

The Trustee may in its discretion, by a notice in writing to the Issuer, to be issued within XXXXX days of the occurrence of the Event of Default, that each Bond is, and each Bond shall thereupon immediately become, due and repayable at its redemption amount together with accrued interest as provided in the transaction documents, upon which the Company shall be required to make payment of such amounts immediately, if any of the following events (each an “Event of Default”) occur:

(i) Default is committed in payment of the Issue amount of the Bonds or the coupon and or any amounts due and payable to the Bondholders or the Trustee when due and payable under the transaction documents, by funding the specified account 3 days prior to the Due Dates;

(ii) If the Issuer is unable to pay its debts within the meaning of Section 434 of the Companies Act, 1956 or if the Issuer is carrying on business at a loss and it appears to the Trustee that continuation of its business will endanger the ability of the Issuer to redeem the Bonds;

Page 45 of 72 (iii) In the event of the Government taking over the assets pertaining to the projects and/or the entire undertaking of the Issuer and/or in the event of a moratorium being passed or in case the running of the business of the Is- suer or its management or control is taken away either as part of any unemployment relief scheme or for any other reason whatsoever, or under the provisions of The Industries (Development and Regulation) Act, 1951 or under any other Act.

(iv) Failure to procure the concluded/executed Guarantee from Government of India within a period of 180 calendar days from the date of GOI approval for issuance of Guarantee;

(v) Any information given by the Issuer in the Information Memoran- dum/reports and other information furnished by the Issuer and the representations and warranties given/deemed to have been given by the Issuer under any transaction document are misleading or incorrect in any material respect;

(vi) Default is committed in the performance or observance of any covenant, condition or provision contained in the transaction documents or in the In- formation Memorandum including non-listing of Bonds, reports and other information furnished by the Issuer and any warranties/undertakings given or deemed to have been given by it to the Trustee;

(vii) The Issuer has voluntarily or involuntarily become the subject of proceedings under any bankruptcy or insolvency law or the Issuer is voluntarily or involuntarily dissolved a receiver or a liquidator has been appointed or allowed to be appointed of all or any part of the undertaking of the Issuer or the Issuer ceases or threatens to cease to carry on its business or gives notice of its intention to do so;

(viii) The Issuer ceases or threatens to cease to carry on its business or gives notice of its intention to do so;

(ix) Authority or permission to carry on the Issuer’s material business is revoked by a competent government authority.

Depository Arrangements

The Company has appointed Karvy Computershare Private Limited, Unit - , Plot No. 17-24, Vittal Rao Nagar, Madhapura, Hyderabad 500081 as the Registrar and Transfer Agent for the Issue. The Company shall make necessary depository arrangements with NSDL and CDSL for issue and holding of Bonds in dematerialised form. In this context the Company shall sign two tripartite agreements as under:

Page 46 of 72 • Tripartite agreement between the Company, Registrar and Transfer Agent and NSDL for offering depository option to the investors.

• Tripartite agreement between the Company, Registrar and Transfer Agent and CDSL for offering depository option to the investors.

Investors can hold the bonds only in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time.

Procedure for applying for dematerialised facility

1. The applicant must have at least one Beneficiary Account with any of the Depository Participants (DPs) of NSDL or CDSL prior to making the application.

2. The applicant must necessarily fill in the details (including the Beneficiary Account number and Depository Participant’s ID) appearing in the Appli- cation Form under the heading ‘Details for Issue of Bonds in Electronic/ Dematerialised Form’.

3. Bonds allotted to an applicant will be credited directly to the applicant’s respective Beneficiary Account(s) with the DP.

4. For subscribing to the Bonds, names in the application form should be identical to those appearing in the account details in the Depository. In case of joint holders, the names should necessarily be in the same se- quence as they appear in the account details in the Depository.

5. Non-transferable allotment advice/refund orders will be directly sent to the applicant by the Registrar and Transfer Agent.

6. If incomplete/incorrect details are given under the heading ‘Details for Is- sue of Bonds in Electronic/ Dematerialised Form’ in the application form, it will be deemed to be an incomplete application and the same may be held liable for rejection at the sole discretion of the Company.

7. For allotment of Bonds, the address, nomination details and other details of the applicant as registered with its DP shall be used for all correspon- dence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the application form vis-à-vis those with his/her DP. In case the information is incorrect or in- sufficient, the Company would not be liable for losses, if any.

8. It may be noted that Bonds being issued in electronic form, the same can be traded only on the stock exchanges having electronic connectivity with

Page 47 of 72 NSDL or CDSL. Bombay Stock Exchange of India Limited, where the Bonds are proposed to be listed have connectivity with NSDL and CDSL.

9. Interest or other benefits would be paid to those Bondholders whose names appear on the list of Beneficial Owners given by the Depositories to the Company as on Record Date/ Book Closure Date. In case of those Bonds for which the Beneficial Owner is not identified by the Depository as on the Record Date/ Book Closure Date, the Company would keep in abeyance the payment of interest or other benefits, till such time that the Beneficial Owner is identified by the Depository and conveyed to the Company, whereupon the interest or benefits will be paid to the beneficiar- ies, as identified, within a period of 30 days.

Investors may note that pursuant to circular no. SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 issued by SEBI, the Bonds of the Company would be issued and traded only in dematerialised form.

Market Lot

The market lot will be a minimum of 1 (one) Bond (“Market Lot”). Since the bonds are being issued only in dematerialized form, the odd lots will not arise either at the time of issuance or at the time of transfer of bonds.

Letter(s) of Allotment/ Bond Certificate(s)/ Refund Order(s)

Issue of Letter(s) of Allotment

The Beneficiary Account of the investor(s) with NSDL/CDSL/Depository Partici- pant will be given credit within 2 working days from the Deemed Date of Allot- ment. The credit in the account will be akin to the letter of allotment. On completion of all statutory formalities, such credit in the account will be akin to a Bond certificate.

Issue of Bond Certificate(s)

Subject to the completion of all legal formalities within 3 (three) months from the Deemed Date of Allotment, or such extended period as may be approved by the appropriate authority(ies), the initial credit akin to a letter of allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted. The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of the Depositories Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof.

Dispatch of Refund Orders

Page 48 of 72

The Company shall ensure dispatch of Refund Order(s) by registered post / ECS / RTGS.

Terms of Payment

The full face value of the Bonds applied for is to be paid along with the Applica- tion Form. Investor(s) need to send in the Application Form and the cheque(s)/ demand draft(s) for the full face value of the Bonds applied for.

Face Value per Minimum Application Amount Payable on Applica- Bond for tion per Bond Rs. 10,00,000/- 10 Bonds Rs.10,00,000/-

Tax

Potential purchasers and sellers of the Bonds should be aware that they may be required to pay stamp duties or other documentary charges/taxes in accordance with the laws and practices of India. Payment and/or delivery of any amount due in respect of the Bonds will be conditional upon the payment of all applicable taxes, duties and/or expenses.

Bondholders should consult their own independent tax advisers to understand their tax positions. In addition, Bondholders should be aware that tax regulations and their application by the relevant taxation authorities change from time to time. Accordingly, it is not possible to predict the precise tax treatment which will apply at any given time. Therefore, Bondholders are advised to consider the tax implications in respect of subscription to the Bonds in consultation with their tax advisors.

As per the prevalent provisions of the Income Tax Act, 1961, the amount of interest received/ receivable by the Bondholders is treated as a taxable income in their hands. However, with effect from June 1, 2008, no tax is deductible at source from the amount of interest payable on any listed dematerialised security, held by a person resident in India. Since the Bonds shall be issued in dematerialized mode and shall be listed on the BSE, no tax will be deductible at sources on the payment/credit of interest on the Bonds held by any person resident in India. In the event of rematerialization of the Bonds or a change in applicable law governing the taxation of the Bonds, the following provisions shall apply:

In the event Company is required to deduct/withhold any tax on the income of the Bondholders by applicable law (“Tax Deduction”), the Company shall make the Tax Deduction and thereafter make payments to the Bondholders net of such Tax Deduction. The Company shall also immediately (but no later than 30 (thirty) days from the due date of payment of such Tax Deduction to the Governmental

Page 49 of 72 authority) deliver to the Trustee the withholding certificate or similar certificate in accordance with applicable law in connection with the Tax Deduction.

In the case of the Company, the amount of interest in respect of capital borrowed for the purpose of business is allowed as a deduction under section 36(1)(iii) of the Income Tax Act, 1961.

Redemption

The face value of the Bonds will be redeemed at par on September 27, 2026 for Series 1 and September 27, 2031 for Series 2. The Bonds shall not be redeemable before maturity. In case the redemption date falls on a day, which is not a Busi- ness Day, the payment due shall be made on the next Business Day without liability for making payment of additional interest for the intervening period.

Payment of Interest

The interest will be payable annually to the Bondholder(s) whose names appear in the list of Beneficial Owners given by the Depository to the Company on the Re- cord Date/ Book Closure Date. Payment of interest if made by way of cheque(s)/ interest warrant(s)/ demand draft(s) will be dispatched to the Beneficial Owner as given above, 3 (three) days before the Due Date(s) by registered post at the sole risk of the applicant. Payment of interest if made by the way of credit through RTGS / ECS system will be done on the interest payment date. Please see the table below for a detailed outline of the payment schedule.

Payment on Redemption

Payment on redemption will be made by cheque(s)/ warrants(s) / electronic transfer of funds in the name of the sole/first Bondholder whose name appears on the list of Beneficial Owners given by the Depository to the Company as on the Re- cord Date/ Book Closure Date. On the Company dispatching the redemption warrants to such Beneficiary(ies) by registered post, the liability of the Company shall stand extinguished.

The Bonds shall be taken as discharged on payment of the redemption amount by the Company on maturity to the list of Beneficial Owners as provided by NSDL/ CDSL/ Depository Participant. Such payment will be a legal discharge of the liability of the Company towards the Bondholders. On such payment being made, the Company will inform NSDL/ CDSL/ Depository Participant and accordingly the account of the Bondholders with NSDL/ CDSL/ Depository Participant will be adjusted.

The Company’s liability to the Bondholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the date of redemption in all events. Further the Company will not be liable to pay any interest or

Page 50 of 72 compensation from the date of redemption. On the Company dispatching the amount as specified above in respect of the Bonds, the liability of the Company shall stand extinguished. Please see the table below for a detailed outline of the payment schedule.

Interest Payments, Principal Repayments and Invocation of Government Guarantee

The instruments would be backed by unconditional, irrevocable and continuing guarantee by the Government of India for inter alia payment of all principal and interest payments till all debt obligations in respect of the Bonds are outstanding.

The Trigger Dates for the invocation of the GOI Guarantee would be any day on which ‘Event of Default’ is observed and is continuing or be as follows, where ‘T’ refers to the Due Date for payment of interest and/or principal:

Trigger Action Point Dates T-3 calendar If the account of the Trustee is not funded to the requisite extent days by T-3 calendar days, it shall constitute an Event of Default. T In case the account of the Trustee is not funded to the requisite extent by T, the Trustee shall send a notice to the GOI to notify the Event of Default. T+45 cal- If default continues for 45 calendar days, the Trustee shall in- endar days voke the GOI Guarantee by sending notice of invocation to the GOI. The Guarantor shall upon demand, forthwith (and in any event not later than 7(seven) working days from the date of such demand) pay to the account of the Trustee as per notice of invocation.

Record Date/ Book Closure Date

The ‘Record Date/ Book Closure Date’ for the Bonds shall be 3 days prior to a Due Date.

Effect of Holidays

Should any of dates defined above or elsewhere in this Schedule I disclosure, ex- cepting the Deemed Date of Allotment, fall on a Sunday or a public holiday, the next Business Day shall be considered as the effective date(s).

Mode of Transfer of Bonds

Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The nor-

Page 51 of 72 mal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant.

List of Beneficial Owners

The Company shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date/ Book Closure Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be.

Trustees for the Bondholders

The Company has appointed IDBI Trusteeship Services Limited to act as Trustees for the Bondholders. The text of letter from IDBI Trusteeship Services Limited. conveying their consent to act as Trustees for the bondholders is reproduced in Annexure 4 (Consent letter from the Debenture Trustee).

The Company and the Trustees will enter into a Trustee Agreement, inter alia, specifying the powers, authorities and obligations of the Trustees and the Com- pany. The Bondholder(s) shall by signing the application, without any further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the Bondholder(s). All rights and remedies of the Bondholders shall vest in and shall be exercised by the trustees without reference to the Bondholder. Any payment made by the Company to the Trustees on behalf of the Bondholder(s) shall discharge the Company pro tanto to the Bondholder(s). The Trustees will protect the interest of the Bondhold- ers in the event of default by the Company in regard to timely payment of interest and repayment of principal and they will take necessary action at the cost of the Company. No Bondholder shall be entitled to proceed directly against the Com- pany unless the Trustees, having become so bound to proceed, fail to do so.

Right to Accept or Reject Applications

The Board of Directors of the Company has severally authorized the Chairman & Managing Director, Director, Finance, Executive Director, Finance and the Com- pany Secretary to reserve its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s) until one day prior to the date of refund. The Ap- plication Forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be li-

Page 52 of 72 able to be rejected on one or more technical grounds, including but not restricted to:

1. Number of Bonds applied for is less than the minimum application size;

2. Applications exceeding the Issue size;

3. Bank account details not given;

4. Details for issue of Bonds in electronic/ dematerialized form not given;

5. PAN not given;

6. In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. relevant documents not submitted;

In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted.

How to Apply

This Information Memorandum is neither a prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds issued by the Company. The document is for the exclusive use of the entities to whom it is delivered and it should not be circulated or distributed to third parties. The document would be sent specifically addressed to the entities by the Company and/ or the Arranger.

Only eligible investors as given hereunder may apply for bonds by completing the Application Form in the prescribed format in BLOCK LETTERS in English as per the instructions contained therein. Applications should be for a minimum of 10 Bonds and in multiples of 1 Bond thereafter. Applications not completed in the said manner are liable to be rejected. Application Form duly completed in all respects must be submitted with the Company. The name of the applicant’s bank, type of account and account number must be filled in the Application Form. This is required for the applicant’s own safety and these details will be printed on the refund orders and interest/ redemption warrants.

The applicant or in the case of an application in joint names, each of the applicant, should mention their PAN number. As per the provision of Section 139A (5A) of the Income Tax Act, PAN needs to be mentioned on the TDS certificates. Hence, the investor should mention his PAN if the investor does not submit Form 15G/15AA/other evidence, as the case may be for non-deduction of tax at source. Applications without the PAN will be considered incomplete and are liable to be rejected. It is to be specifically noted that investors should not submit GIR No. or Form 60 or Form 61 instead of PAN, as such applications are liable to be rejected.

Page 53 of 72

Applications may be made in single or joint names (not exceeding three). In the case of joint applications, all payments will be made out in favour of the first applicant. All communications will be addressed to the first named applicant whose name appears in the Application Form at the address mentioned therein.

Unless the Company specifically agrees in writing with or without such terms or conditions it deems fit, a separate single cheque/ demand draft must accompany each Application Form. Applicants are requested to write their names and application serial number on the reverse of the instruments by which the payments are made.

All applicants are requested to tick the relevant column “Category of Investor” in the Application Form. Application Forms may be accompanied by either demand draft(s) or cheque(s) drawn or made payable in favour of “Air India Limited” and crossed “Account Payee Only” payable at IDBI Bank, Mumbai or application money may be transferred into the Company’s account through RTGS, details for which are given below:

IFSC Code: IBKL0000004 Bank & Branch: IDBI Bank, Nariman Point Branch Beneficiary Account No: 004103000036306 Beneficiary Name: NACIL Debt Service Account

Investors in centers which do not have any bank, including a co-operative bank, which is a member or sub-member of Banker’s Clearing House located at any of the centers mentioned above, will be required to make payments only through demand drafts payable at any one of the above centers. Cash, outstation cheques, money orders, postal orders and stockinvest shall not be accepted. The Company assumes no responsibility for any applications/ cheques/ demand drafts lost in mail.

No separate receipts shall be issued for the application money. However, the Company receiving the duly completed Application Forms will acknowledge the receipt of the applications by stamping and returning the acknowledgment slip to the applicant. Applications shall be deemed to have been received by the Com- pany only when submitted to the Company at its designated branches or on receipt by the Registrar and Transfer Agent as detailed above and not otherwise.

For further instructions, please read Application Form carefully.

Who Can Apply

The following categories of investors may apply for the Bonds, subject to fulfill- ing their respective investment norms/ rules by submitting all the relevant documents along with the application form.

Page 54 of 72

1. Scheduled Commercial Banks;

2. Financial Institutions;

3. Insurance Companies;

4. Primary/ State/ District/ Central Co-operative Banks;

5. Regional Rural Banks;

6. Mutual Funds;

7. Provident, Gratuity, Superannuation and Pension Funds;

8. Companies, Bodies Corporate authorized to invest in bonds;

9. Trusts registered under the Indian Trusts Act, 1882, Societies registered under the Societies Registration Act, 1860 or any other applicable laws, provided that such Trust/ Society is authorised to make such an investment under its constitution/ rules/ bye-laws.

Applications under Power of Attorney

A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/ document, if any, must be lodged along with the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Company or to the Registrar and Transfer Agent or to such other person(s) at such other address(es) as may be specified by the Company from time to time through a suitable communication.

Application by Mutual Funds

In case of applications by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the asset management company/ trustees of the mutual fund/ custo- dian clearly indicate their intention as to the scheme for which the application has been made.

Application by Provident Funds, Superannuation Funds and Gratuity Funds

Page 55 of 72 Investments by non-government provident funds, superannuation and gratuity funds into the Bonds guaranteed by the GOI shall be as per applicable law and the relevant regulatory guidelines governing such entities.

The application must be accompanied by certified true copies of (i) trust deeds/ bye-law(s), (ii) resolution authorizing investment and containing operating instructions, (iii) specimen signatures of authorized signatories and (iv) recognition certificate from the Income Tax Department/ self-declaration form as per the Fi- nance Act, 1999.

Future Borrowings

The Company shall be entitled to borrow/ raise loans or avail of financial assis- tance in whatever form as also issue bonds/ debentures/ notes/ other securities in any manner with ranking as pari-passu basis or otherwise and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as the Company may think appropriate, without the consent of, or intimation to, the Bondholder(s) or the Trustees in this connection.

Right to Re-purchase and Re-issue Bonds

The Company will have the power, as provided under the Companies Act, exer- cisable at its sole discretion from time to time, to repurchase from the open market some or all of the Bonds at any time prior to redemption. This right does not construe a call option. In the event of the Bond(s) being bought back, or redeemed before maturity, the Company reserves the right to, subject to the applicable provisions of its Articles of Association and the Companies Act, to cancel such Bond(s), to re-issue such Bond(s) or to issue other Bond(s) in their place. The Bond(s) bought back by the Company may be purchased at par or at a premium or discount in the open market, and resold at such price or terms or conditions as the Company deems fit.

Bondholder not a Shareholder

The Bondholders will not be entitled to any of the rights and privileges available to the Company’s shareholders.

Rights of Bondholders

1. The Bonds shall not, except as provided in the Companies Act, 1956, con- fer upon the Bondholder(s) thereof any rights or privileges available to the members of the Company including the right to receive notices or annual reports of, or to attend and/or vote, at the general meeting of the Company. However, if any resolution affecting the rights attached to the Bonds is to be placed before the shareholders, the said resolution will first be placed

Page 56 of 72 before the concerned registered Bondholders for their consideration. In terms of Section 219(2) of the Companies Act, 1956, Bondholder(s) shall be entitled to a copy of the balance sheet of the Company on a specific request made to the Company.

2. The rights, privileges and conditions attached to the Bonds may be varied, modified and/or abrogated with the consent in writing of the holders of at least three-fourths of the outstanding amount of the Bonds or with the sanction of Special Resolution passed at a meeting of the concerned Bondholders, provided that nothing in such consent or resolution shall be operative against the Company, where such consent or resolution modifies or varies the terms and conditions governing the Bonds, if the same are not acceptable to the Company.

3. The Bonds are subject to the provisions of the Companies Act, 1956, Se- curities Contract Regulation Act, 1956, terms of this Information Memo- randum, instructions contained in the Application Form and other terms and conditions as may be incorporated in the Trustee Agreement. The Bonds shall also be subject to the applicable provisions of the Depositories Act, 1996 and the laws as applicable, guidelines, notifications and regulations relating to the allotment and issue of capital and listing of securities issued from time to time by the GOI, RBI, SEBI, concerned Stock Ex- change(s) or any other authorities and other documents that may be executed in respect of the Bonds.

4. Save as otherwise provided in this Information Memorandum, the provisions contained in Annexure C and/ or Annexure D to the Companies (Central Government’s) General Rules and Forms, 1956 as prevailing and to the extent applicable, will apply to any meeting of the Bondholders, in relation to matters not otherwise provided for in terms of the Issue of the Bonds.

5. A register of Bondholders will be maintained in accordance with Section 152 of the Companies Act, 1956, and all interest and principal sums be- coming due and payable in respect of the Bonds will be paid to the registered holder thereof for the time being or in the case of joint-holders, to the person whose name stands first in the Register of Bondholders.

6. The Bondholders will be entitled to their Bonds free from equities and/or cross claims by the Company against the original or any intermediate holders thereof.

Investors should note that the benefit under Section 10(15)(iv)(h) of the Income Tax Act, 1961, if applicable, shall be available only to Bondholder(s) who have registered their name(s) and holdings with the Company.

Page 57 of 72 Variation of Bondholder(s) Rights

The rights, privileges and conditions attached to the Bond(s) may be varied, modified or abrogated in accordance with the Articles of Association of the Company and the Companies Act, 1956, and with the consent of the Bondholder(s).

Nomination

The Companies Act, 1956, vide Section 109A gives the Bondholder an option to nominate a person to whom his bond(s) shall rest in the event of his death. Nomi- nation can be made only by individuals. Nominee can only be an individual and not more than one person can be nominated. If the applicant makes more than one nominee the first nominee will be registered. Nominee shall become entitled to the Bond(s) in the event of death of the Bondholder on production of death certificate or such other evidence as may be required by the Company. Nomination shall be made in Form 2B under the Companies (Central Government) General Rules & Forms, 1956.

Succession

In the event of winding-up of the Bondholder(s), the Company will recognize the executor or administrator of the concerned Bondholder(s), or the other legal representative as having title to the Bond(s). The Company shall not be bound to recognize such executor or administrator or other legal representative as having title to the Bond(s), unless such executor or administrator obtains probate or letter of administration or other legal representation, as the case may be, from a court in India having jurisdiction over the matter.

The Company may, in its absolute discretion, where it thinks fit, dispense with production of probate or letter of administration or other legal representation, in order to recognize such holder as being entitled to the Bond(s) standing in the name of the concerned Bondholder on production of sufficient documentary proof or indemnity.

In case of individuals, in the event of demise of the holder(s) of the Bonds, the Company will recognize the executor or administrator of deceased Bondholder, or the holder of the succession certificate or other legal representative as having title to the Bonds. The Company shall not be bound to recognize such executor, administrator, or holder of succession certificate, unless such executor or administra- tors obtains probate or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court of India having jurisdiction over the matter. The Company may at its absolute discretion, where it thinks fit, dispense with production of probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Bonds standing in the name of the de-

Page 58 of 72 ceased Bondholder(s) on production of documentary proof or indemnity. In case of joint holding/nomination, the right shall vest in the surviving holder/nominee.

Costs

The Issuer shall bear all costs in relation to the proposed Issue. The costs shall include, inter alia, stamp duty on issue of the Bonds, Trustee costs, Registrar and Transfer Agent costs, rating and listing costs, dematerialization costs, costs of execution of documents and all legal expenses.

Notices

All notices to the Bondholder(s) required to be given by the Company or the Trus- tees shall be published in one English and one regional language daily newspaper in New Delhi, Mumbai, Kolkata and Chennai and/ or will be sent by post/ courier to the sole/ first Beneficial Owner of the Bonds, as the case may be from time to time.

All notice(s) to be given by the Bondholder(s) shall be sent by registered post or by hand delivery to the Company or to such persons at such address as may be notified by the Company from time to time through suitable communication.

Joint-Holders

Where two or more persons are holders of any Bond(s), they shall be deemed to hold the same as joint tenants with benefits of survivorship.

Sharing of Information

The Company may, at its option, use on its own, as well as exchange, share or part with any financial or other information about the Bondholders available with the Company, and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the Company nor its agents shall be liable for use of the aforesaid information.

Undertaking by the Issuer

The Company undertakes that: a) The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily; b) The listing on BSE will be done immediately after the allotment. The Com- pany shall take all steps for completion of formalities related to the listing of the Bonds.

Page 59 of 72 c) Necessary co-operation to the credit rating agencies shall be extended in providing true and adequate information till the debt obligations in respect of the instrument are outstanding.

d) It shall conclude/execute the Guarantee within a period of 180 calendar days from the date of GOI approval for issuance of Guarantee. xvi) The discount at which such offer is made and the effective price for the investor as a result of such discount.

The Bonds are being issued at par. xvii) The debt equity ratio prior to and after the Issue

Particulars (As on March 31, 2010, in Rs. Crores) DEBT Secured Loan 65,90.71 Unsecured loan 184,76.11 Total Debt 250,66.82

SHAREHOLDERS’ FUNDS Share Capital 945.00 Reserve & Surplus (excluding 62.48 Revaluation Reserve) Net Worth 1007.480

DEBT EQUITY RATIO 24.88

Since, the Accounts beyond the financial year 2009-10 are yet to be audited and approved by Parliament, the Company is not permitted to disclose them and therefore it is not possible to compute the post issue debt-equity. However, the proposed Bond Issue will be utilized to repay existing long term rupee term loan taken by the Company for purchase of 21 A320 family aircraft and hence per se will not impact the debt-equity ratio. xviii) Servicing behaviour on existing debt securities, payment of due interest on due dates on term loans and debt securities.

The Company hereby confirms that:

a) The Company has been servicing all its existing debt liabilities including payment of interest thereon on the due dates. As regards term loans, al- though there have been some delays in payment of interest recently, there has been no instance of default since inception and no lender has acceler- ated any loans.

Page 60 of 72 b) The Company has neither defaulted in repayment/ redemption of any of its borrowings nor affected any kind of roll over against any of its borrowings in the past. xix) Permission from the prior creditor for creation of pari passu charge

Since the Bonds are unsecured no approval is required from the creditors.

xx) The names of trustees and communications to holders of debt securities

IDBI Trusteeship Services Ltd. has given its consent to act as the trustee to the Is- sue and a copy of the letter issued by it is attached in Annexure 4 (Consent letter from the Debenture Trustee). The contact address of the trustees is given below:

Asian Building Ground Floor, 17, R.Kamani Marg, Ballard Estate, Mumbai- 400 001 xxi) The rating rationale adopted by the rating agencies

ICRA has assigned a rating of “ICRA AAA(SO)!” to the Bonds Issue guaranteed by GOI. The expected rating of the Company is based on unconditional, irrevocable and continuing guarantee by GOI for the rated debt programme covering full payment of principal and all accrued interest. The rating letter dated September 23, 2011, issued by ICRA, is attached in Annexure 2.

CRISIL has after due consideration, assigned a rating of “CRISIL AAA(SO)/Stable” to the Bond’s Issue (guaranteed by GOI) of the Company. This rating indicates highest degree of safety with regard to payment of interest and principal on the instrument. The rating letter datedSeptember 23, 2011, issued by CRISIL, is attached in Annexure 3.

xxii) Name of the stock exchange and in principle approval letter

The Bonds will be listed on the Wholesale Debt Market segment of the Bombay Stock Exchange.

Bombay Stock Exchange Limited Rotunda Building Dalal Street Fort, Mumbai 400 001

xxiii) A summary term sheet containing the following details of the securities to be issued

Page 61 of 72

Issuer Air India Limited (“the Issuer / the Company”)

Instrument Unsecured, rated, listed, taxable, redeemable, non-convertible debentures, (“Bonds”) guaranteed by GOI.

Rating Rating of AAA(SO) by ICRA and AAA(SO)/Stable by CRISIL.

Issue Size Rs. 5,500 crores (Rupees Five Thousand Five Hundred Crores only) across Series 1 and Series 2

Series 1: Rs. 4,000 crore (Rupees Four Thousand Crores only) Series 2: Rs. 1,500 crore (Rupees One Thousand Five hundred Crores only)

Mode of On private placement basis to all eligible investors Placement

Security None

Tenure Series 1: 15 years

Series 2: 20 years

Redemption Series 1: At par on September 27, 2026.

Series 2: At par on September 27, 2031.

Guarantee Unconditional, Irrevocable and Continuing Guarantee by the Govern- ment of India for inter alia payment of principal and the interest payments till all debt obligations in respect of the Bonds are outstanding

Face Value Rs. 10,00,000 (Rupees Ten Lakhs Only) per Bond

Issue Price At Par

Coupon Rate Series 1: 9.84% per annum, payable annually Series 2: 10.05% per annum, payable annually

Coupon Date Annually on September 27 each year, with the first coupon date falling due on September 27, 2012 and the last coupon date on the date of redemption i.e. September 27, 2026 for Series 1 and September 27, 2031 for Series 2.

Interest on ap- Interest on application money will be paid to the eligible investor from plication the date of realization of subscription money up to one date prior to the money Deemed Date of Allotment.*

Page 62 of 72 Listing Bonds are to be listed on the Wholesale Debt Market segment of the BSE and will be issued in the dematerialized format

Minimum Ap- 10 Bonds and in multiples of 1 Bond thereafter. plication Size

Market Lot 1 (one) Bond

Day Count Actual / Actual (i.e. 366 days in a leap year) Basis

Put/Call Op- None tion

Issue Opening September 26, 2011 Date

Issue Closing September 27, 2011 (or such earlier date of receipt of the entire Issue Date amount)

Pay-in Date September 26, 2011 to September 27, 2011

Deemed date September 27, 2011 of allotment

Payment Pro- Payment on redemption will be made by cheque(s)/ warrants(s) / elec- cedure tronic transfer of funds in the name of the sole/first Bondholder whose name appears on the list of Beneficial Owners given by the Depository to the Company as on the Record Date/ Book Closure Date. On the Company dispatching the redemption warrants to such Beneficiary(ies) by registered post, the liability of the Company shall stand extinguished.

Pay-in details IFSC Code: IBKL0000004 Bank & Branch: IDBI Bank, Nariman Point Branch Beneficiary Account No: 004103000036306 Beneficiary Name: NACIL Debt Service Account Trading in Dematerialized form only

Stock Ex- BSE change

Depository CDSL and NSDL

Issuance mode Dematerialized mode

* Subject to deduction of tax at source, as applicable.

Page 63 of 72

ANNEXURE 1 AIR INDIA LIMITED APPLICATION

FORM Registered Office: Airlines House 113, Gurudwara Ra- kabganj Road, New Delhi 110001 SERIAL NO. FOR OFFICE USE ONLY Telephone: Fax: Date of receipt Date of clearance Website: Of application of cheque E-mail:

Application Form for Unsecured, Rated, Listed, Redeemable Non-Convertible Bonds Date : Date of Application: ___/___/___

To, The Board of Directors, Air India Limited

Dear Sirs, Sub: Private Placement of Unsecured, Rated, Listed, Reedeemable, Non-Convertible Bonds.

We hereby apply for the applicable number of Bonds. Please place our name(s) on the Register of Bondholder(s). We hereby agree to abide by the terms and conditions governing the Bonds. We further agree to the allotment in full or part of the Bonds applied for in this form.

We are applying as (tick whichever is applicable)

Scheduled commercial banks

Financial institutions

Insurance companies

Primary/state/district/central cooperative banks

Regional rural banks

Provident funds, gratuity, superannuation and pension funds

Companies, body corporate authorized to invest in the Bonds

Mutual funds

Others, please specify ______

Page 65 of 72

Series 1 Series 2 No of Bonds applied for ( In words) No of Bonds applied for (in Figures) Amount (Rs) (in words)

Cheque/Demand Dated Name of the Bank & Bank Particulars for payment of Refund and/or Interest Current/Savings Name of the Bank & Branch Draft No. Branch Account No.

FIRST APPLICANT’S NAME IN FULL

SECOND APPLICANT’S NAME IN FULL (if applicable)

FIRST APPLICANT’S ADDRESS IN FULL

Pin code Contact Person Tel No. Fax No. First Applicant’s IT Circle/Ward/ Tax Status (Tick) PAN (Refer instruc- District • Non Exempt ______tion 8) • Exempt (Specify) ______

Request for Bonds in Electronic/Dematerialised form

Depository Name NSDL CDSL Specimen Signature of applicant Depository Partici- Sole/First DP/ID Second Beneficiary Account Third Name Of The Appli-

We understand that in case of allotment of Bonds to me/us. My/our Beneficiary Account as mentioned above would be credited to the extent of Bonds allotted.

Name of Authorised Signatory Designation Signature 1. 2.

(Please have the signatures of the above signatories for institutional applications attested as specified in instruction No.2)

Page 66 of 72

ACKNOWLEDGME AIR INDIA LIMITED NT SLIP Registered Office: APPLICATIO (To be filled in by Ap- N FORM plicant) Tel.: SERIAL Fax.: NUMBER Website : E-mail :

Received from M/s./Mr./Mrs. ______Cheque/Draft Nos.______dated ______drawn on ______for Rs.______( Rupees ______) being the subscription for ______No. of Bonds applied for .

(Note : Cheques and Drafts are subject to realisation)

INSTRUCTIONS

1. Application Forms must be completed in full in BLOCK LETTERS IN ENGLISH. A blank space must be left between two or more parts of the name, for example: A B C D E F G H I

2. Signatures should be made in English or in any of the Indian languages and must be attested by an authorised official of a bank or by a Magistrate/Notary Public under his/her official seal. Attestation may be done in the space provided in the Application Form or a separate signature attestation may be enclosed.

3. The application form should be submitted at the registered office of Air India Limited or the office of the Arranger as mentioned in the Information Memorandum.

4. Applications once submitted cannot be withdrawn.

5. Forms must be accompanied either by a demand draft or cheque, drawn and made payable in favour of “Air India Limited” Beneficiary Account No: 004103000036306 and crossed “Account Payee only”.

6. RTGS details

IFSC Code: IBKL0000004 Bank & Branch: IDBI Bank, Nariman Point Branch Beneficiary Account No: 004103000036306 Beneficiary Name: NACIL Debt Service Account

7. CASH OR STOCKINVEST WILL NOT BE ACCEPTED.

Page 67 of 72

8. First applicants should mention their Permanent Account Number, allotted under the Income-Tax Act, 1961 and also the Income-Tax Circle/Ward/District. Investors should not submit the GIR Number or Form 60/61 instead of the Permanent Account Number as the application in liable to be rejected on this ground.

9. The Application form in order to be complete, should be accompanied by the following documents, as applicable : (Please tick below for the documents submitted alongwith the application form) (i) Memorandum & Articles of Association in the case of Corporate investors/Trust Deed in the case of Trusts. (ii) Board Resolution/Power of Attorney or other authorisation empowering the signatories to make the investment. (iii) Signature attestation, for applications other than individual(s), if not attested in the space provided in the application form. The above documents need to be submitted in original or should be certified to be a true copy.

10. Receipt of applications will be acknowledged by the Air India Limited in the “Ac- knowledgement Slip” appearing below the Application Form.

11. Air India Limited is entitled, at its sole and absolute discretion, to accept or reject any application, in part or in full, without assigning any reasons. An application form which is not complete in all respects is liable to be rejected.

12. Provident, superannuation and gratuity funds should ensure that their investments are within the authorised limits under applicable law.

13. Trusts, public or private, religious, charitable or otherwise should ensure that their investments are authorised by their charter documents.

Page 68 of 72 ANNEXURE – 2

Credit Rating Letter from ICRA dated September 23, 2011 (Attached)

Page 69 of 72 ANNEXURE – 3

Credit Rating Letter from CRISIL dated September 23, 2011 (Attached)

Page 70 of 72 ANNEXURE – 4

Consent letter from the Debenture Trustee dated September 13, 2011 (Attached)

Page 71 of 72 ANNEXURE – 5

Format of the Government Guarantee dated September 23, 2011 (Attached)

Page 72 of 72