In this article we continue our analysis of Schr\"odinger operators on
arbitrary graphs given as certain Laplace operators. In the present paper we
give the proof of the composition rule for the scattering matrices. This
composition rule gives the scattering matrix of a graph as a generalized star
product of the scattering matrices corresponding to its subgraphs. We perform a
detailed analysis of the generalized star product for arbitrary unitary
matrices. The relation to the theory of transfer matrices is also discussed