(1) The assets and liabilities relating to any commercial or industrial undertaking of the existing State of Andhra Pradesh, where such undertaking or part thereof is exclusively located in, or its operations are confined to, a local area, shall pass to the State in which that area is included on the appointed day, irrespective of the location of its headquarters:
Provided that where the operation of such undertaking becomes inter-State by virtue of the provisions of Part II, the assets and liabilities of––
(a) the operational units of the undertaking shall be apportioned between the two successor States on location basis; and
(b) the headquarters of such undertaking shall be apportioned between the two successor States on the basis of population ratio.
(2) Upon apportionment of the assets and liabilities, such assets and liabilities shall be transferred in physical form on mutual agreement or by making payment or adjustment through any other mode as may be agreed to by the successor States.