The State Trading Corporation of India Limited

 

PRELIMIMARY INFORMATION MEMORANDUM

FEBRUARY 2002

ISSUED BY

Ernst & Young Private Limited

on behalf of the Government of India

 

IMPORTANT NOTICE

This Preliminary Information Memorandum (“PIM” or "Memorandum") has been prepared by Ernst & Young Private Limited (hereinafter referred to as “Ernst & Young” or “E&Y” which would be deemed to include its successors and assigns) based on information and opinions provided by the Management of The State Trading Corporation of India Limited (“STC or “the Company”).

The Memorandum is being made available to you or your financial adviser for your exclusive use and for the sole purpose of assisting you in deciding whether you wish to participate in the proposed disinvestment in the Company. The information and opinions contained in the Memorandum are strictly confidential. Accordingly, the contents of the Memorandum and any other information or opinions subsequently supplied or given to you will constitute confidential information and may not, without the written consent of STC or Ernst & Young, fully or partly be published, reproduced, copied or disclosed, to any person other than your financial advisers having a need to know and who are aware that it is confidential, nor used for any purpose other than the proposed disinvestment in the Company. You shall be responsible for any losses accruing to the Company in the event of any unauthorized disclosure.

By receiving the Memorandum, you agree that you will on request, return or procure the return of this Memorandum and all other information and material sent or made available in connection with the proposed disinvestment of the Company, without retaining any copy in whatever form and shall destroy any notes, analyses or memoranda or other stored information, even partial, of any kind prepared by you or on your behalf to the extent that they contain or are based on such information.

The Memorandum does not purport to be all-inclusive or necessarily to contain all the information the interested party may desire in investigating the Company and may be subject to updating, revision or amendment. The Memorandum is not intended to form the basis of any financial, legal, tax and any investment decision for you. Any interested party should carry out their own investigations and analysis of the Company and of the data referred to in the Memorandum and should consult their own advisers before proceeding with any offer.

The information contained in the Memorandum will not constitute or form part of any offer for sale of shares in the Company nor will any such information form the basis of any contract in respect thereof. Any purchaser must rely on the terms and conditions contained in such a contract subject to such limitations and restrictions as may be specified therein.

DISCLAIMER

 

The management of the Company has provided all information and opinions contained in the Memorandum and the Memorandum has not been independently verified as to its accuracy. No representation or warranty, express or implied, is given by STC, the Company or Ernst & Young or any of their respective directors, partners, officers, affiliates, employees, advisers or agents as to the accuracy, relevance or completeness of the contents of this Memorandum or any other document or information supplied, or which may be supplied at any time or any opinions or projections expressed herein or therein, nor is any such party under any obligation to update the Memorandum or correct any inaccuracies or omissions in it which may exist or become apparent. In particular, for reasons of commercial sensitivity, information on certain matters has not been included in the Memorandum. Such information may be made available at a later stage.

No responsibility or liability is accepted and any and all responsibility and liability is expressly disclaimed by Ernst & Young and the Company or any of them or any of their respective directors, partners, officers, affiliates, employees, advisers or agents for any errors, mis-statements, misrepresentations in or omissions from the Memorandum or any other document or information, howsoever communicated to you or your advisers in the course of your evaluation of the Company.

GENERAL

 

Ernst & Young is acting as financial adviser to STC and the Government of India  (“GOI”) only and to no other person in connection with the proposed disinvestment in the Company. Neither receipt of the Memorandum nor any information supplied in connection with the proposed disinvestment in the Company by any person is or is to be taken as constituting the giving of investment advice or to constitute any person as a client of Ernst & Young in connection with the proposed disinvestment. This Memorandum should not be considered as a recommendation by Ernst & Young or the Company or any of its subsidiaries or affiliates or their respective directors, partners, officers, affiliates, employees, agents or advisers to acquire or invest in the Company and each potential party must make its own independent assessment of the merits or otherwise of acquiring the issued share capital of the Company and each potential party should take its own professional advice.

Neither the issue of this Memorandum nor any part of its contents is to be taken as any form of commitment on the part of Ernst & Young or the Company or any of its subsidiaries or affiliates to proceed with the disinvestment exercise envisaged by the issue of this Memorandum and Ernst & Young and STC/Government of India reserve the right to amend the proposed timetable and/or the disinvestment procedure, to terminate the procedure and to terminate any discussions and negotiations with any prospective party at any time and without giving any reason. In no circumstances will Ernst & Young or STC/Government of India or any of its subsidiaries or affiliates, be responsible for any costs or expenses incurred in connection with any appraisal or investigation of the Company or for any other costs or expenses incurred by prospective party in connection with the proposed disinvestment in the Company. Any proposal to invest in the Company made in due course must be made in accordance with the procedure set out in the Memorandum as amended by the Company and communicated via Ernst & Young, if appropriate.

DISTRIBUTION

 

Should this Memorandum (through the act or default of the recipient) reach other persons without our written consent, the recipient will indemnify Ernst & Young, STC and GOI against any loss or damage or other liabilities (including all costs), which they may suffer as a result. In providing this Memorandum, GoI, STC and Ernst &Young undertake no obligation to invite the recipient to proceed with a further investigation of the Company or to provide the recipient with any additional information, nor otherwise to negotiate with or treat with the recipient in respect of  the Company.

 

 

CONTACT DETAILS

 

In case of all and any inquiries, additional information requirements or business interest please contact the representatives of Ernst &Young named below. No approach relating to this memorandum or the proposed business opportunity should be made to any director or employee of STC, except as may be authorized by Ernst &Young.

 

 

 

Badri Narayanan Corporate Advisory Services Ernst & Young Pvt. Ltd. Ernst & Young Tower, B-26, Qutab Institutional Area New Delhi: 110016 Tel No: +91-11-6611004-09 Fax No: +91-11-6611012-13 email: Badri.Narayanan @in.eyi.com

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Smriti Mishra Corporate Advisory Services Ernst & Young Pvt. Ltd. Ernst & Young Tower, B-26, Qutab Institutional Area New Delhi: 110016 Tel No: +91-11-6611004-09 Fax No: +91-11-6611012-13 email: Smriti.Mishra@in.eyi.com

 

                                                                                                                                                                                   

TABLE OF CONTENTS:

 

 

1.0	INTRODUCTION
2.0	THE STATE TRADING CORPORATION OF INDIA LIMITED
	2.1 Business Operations
	2.2 Nation-wide Reach
	2.3 Properties: Land & Buildings
	2.4 Management & Employee Profile
	2.5 Financial Highlights
	2.6 Subsidiaries
3.0	EXPRESSION OF INTEREST
	3.1 Submission of Expression of Interest
	3.2 Pre-Qualification Criteria
	3.3 Disqualification
	3.4 Future Process
	3.5 Governing Laws/ Jurisdiction
4.0	FORMATS
	4.1 Expression of Interest
	4.2 Statement of Legal Capacity
	4.3 Request for Qualification
	Annexure I: Key Financials of STC
	Annexure II: Expression Of Interest
	Annexure III: Government Circular

 

1.0                INTRODUCTION

The State Trading Corporation of India Limited (“STC or the Company”) is one of India’s leading trading corporations. STC’s turnover for the nine months ended December 31, 2001 was over Rs. 11,000 million, higher than the turnover for the year ended March 31, 2001 (Rs. 10,000 million).   The company has been a key trading arm of the Government of India.  The Government of India holds 91.02% of the equity of the Company with the balance being held by the public, FI’s and other companies.

 

The principal activities of STC are exporting, importing and domestic trading. It exports a diverse range of products that include agricultural commodities- tea, cashew, wheat, coffee, rice, pulses, castor oil/ seeds and rubber. The total exports turnover for the year ended March 31, 2001 was Rs. 4,633 million.

 

STC is a bulk importer of goods, which primarily include edible oils and gold & silver. STC has played a critical role in meeting shortfalls by bulk import of agricultural commodities in the domestic market. The total turnover from imports activities for the year ended March 31, 2001 was Rs. 4,248 million.

 

Within India STC is a major supplier to the defence services and other agencies for essential commodities and sale of imported cars surrendered by diplomats. The domestic trading activity for the year ended March 31, 2001 was Rs. 1522 million. The major contribution to the domestic trade activity has been from the trade of coal, tobacco and pulses & grains.

 

STC has two 100% subsidiaries, namely, Spices Trading Corporation Limited (“STCL”) and Tea Trading Corporation of India Limited (“TTCL”). STCL is based in Bangalore and is in the business of exporting, importing and domestic marketing of spices. TTCL was set up in 1971 for trading in tea and managing tea gardens. It owns five tea gardens and two godowns taken on lease from Calcutta Port Trust. TTCL became a

subsidiary of STC in 1986.

 

In addition, STC has minority stakes in Maharastra Small Scale Industries Development, The National Federation of Industrial Co-operative Limited, Andhra Pradesh State Trading Corporation, The National Tannery Company Limited, Indo Prin Gloves (P) Limited, Sindhu Resettlement Corporation Limited, Rich Field Aquatech Limited, Blue Gold Maritech Limited_.

 

The Government of India (“GoI”) intends to disinvest a 65.02% shareholding in The State Trading Corporation of India Limited. (“STC” or “The Company”) to a strategic partner with transfer of management control and has appointed Ernst & Young Private Limited. (“Ernst & Young or “E&Y”) to be its advisor to advise and manage the disinvestment process.  A proposal to de-link the tea subsidiary from STC prior to sale of STC is under the consideration of Government of India.

 

The relevant particulars of STC and the sale process are given in the Preliminary Information Memorandum (“PIM”) with the sole purpose to help interested parties to form an opinion on whether to participate in the disinvestment process of STC by submitting an Expression of Interest (“EoI”) in the prescribed format given in Section 4 of this PIM.

 

The EoI must be submitted to Ernst & Young no later than 17:00 hrs (Indian Standard Time), March 18, 2002.

 

Investment Highlights

 

The dis-investment of 65.02% shareholding in STC to a strategic partner along with transfer of management control will provide an opportunity for investment in one of India’s largest trading companies.

 

STC’s strengths include:

 

Ø        Strong international and domestic reputation as a trustworthy buyer and supplier having been a key trading arm of the Government of India.

Ø        Expertise in bulk trade handling

Ø        Strong network of branches across India giving it a nationwide reach

Ø        Relationships with local and international suppliers and buyers

Ø        Strong financial position

Ø        Access to prime real estate properties across main cities of India.

 

 

2.0          THE STATE TRADING CORPORATION OF INDIA LIMITED

 

The State Trading Corporation of India Limited (“STC or the Company”) is an international trading house and has been a key trading arm of the Government of India. STC was set up in 1956 with the aim of enhancing trade primarily with East European countries as also to supplement the efforts of private trade and industry in developing exports from the country. STC is registered as an autonomous company under the Companies Act 1956 and functions under the administrative control of the Ministry of Commerce & Industry (Department of Commerce), Government of India. The Government of India holds 91.02% of the equity of the Company.

 

2.1          Business Operations

 

Over the last four decades STC has been able to build a strong reputation both internationally and domestically as a trustworthy buyer and supplier. Over the years the Company has developed expertise in bulk trade handling. STC also owns brand names in the export market.

 

The primary business activities of STC are exporting, importing and domestic trading.

 

Exports:

Based on the provisional results, for the nine-month period ended December 31, 2001 STC’s exports stood at Rs.5272 million, forming 48% of the turnover of Rs.11,007 million. The exports for the year ended March 31, 2001 were Rs. 4633 million.

 

STC’s exports portfolio includes a diverse range of products (agricultural commodities, castor oil/seeds, sugar, chemicals, drugs, pharmaceuticals, medical disposables, construction materials, light engineering goods, spices, textiles & garments, jute products, leather ware, jewellery) to countries across the globe. With its strong infrastructure and expertise in the field of exports, STC has successfully promoted Indian exports in newer market. It also acts as an expert guide to international buyers of Indian goods.

 

The details of exports (product wise) for the last three financial years is given in the table below:

Rs. Million

Exports	1998-1999	1999-2000	2000-2001
Agricultural commodities	1,022	783	1,925
Castor Oil/Seeds	234	1,196	1,286
Rubber (deemed exports)	154	499	728
Counter Trade	-	1,617	276
Off- Shore	-	205	251
Sugar	415	-	-
Chemicals & Drugs	105	90	131
Engg. & Const. Material	202	22	-
Textile & Readymade Garments	45	21	30
Others*	28	16	6
Total	2205	4,449	4,633

* Others include consumer goods, jute goods, leatherwear, processed foods.

 

 

Imports: 

For the nine-month period ended December 31, 2001 the imports were Rs. 4903 million forming 45% of the turnover.  The imports for the year ended March 31, 2001 were Rs. 4248 million. 

 

The Corporation imports essential commodities in bulk on behalf of Government of India and other domestic clients. The imports include edible oils, gold, silver, fertilizers, hydrocarbons, chemicals, fatty acids, pulses, scientific instruments, hospital equipment etc. It is one of the14 agencies authorized to import gold into the country.  STC has played a critical role in meeting shortfalls by bulk import of agricultural commodities for the domestic market, market interventions on behalf of the Government.

 

The details of imports product wise for the last three financial years is given in the table below:

Rs. Million

Import	1998-1999	1999-2000	2000-2001
Edible & In-edible Oil	4,921	3,658	2,875
Gold & Silver	498	1,015	1,317
Agricultural commodities	9669	1,534	-
Fertilisers	566	332	-
Import for Bhakra etc.	66	62	47
Others	18	15	9
Total	15,738	6,616	4,248

 

 

Domestic trade:

For the nine-month period ended December 31, 2001 the domestic trade was Rs.  833 million. This forms 8% of the turnover.  The pulses and coarse grain trading (agricultural commodities) were the major contributors to the domestic trade for the nine-month period ended December 31, 2001.  STC is a key supplier of essential commodities to the defence services and other agencies. It is also engaged in the sale of imported cars surrendered by foreign diplomats.

The details of domestic sales product wise for the last three financial years is given in the table below:

 

Rs. Million

* Others include jute goods and leatherwear.

 

Key Trading Divisons:

               

STC’s prominent trading divisions include:                                     

 

 

Expertise in bulk handling:

Over the years STC has developed significant strength in bulk trade. STC’s in-house storage facilities at Mumbai (45000 MT tanking capacity) & Kakinanda (sheds) provides STC with the requisite infrastructure facilities. Given the trade volume handled by STC it has been able to negotiate best competitive price for imports for the Government and its other clients.

2.2          Nation-wide Reach:

STC has a network of 11 branch offices and 3 sub-branches all across India. These offices have developed strong relationships with key local suppliers and customers that have contributed significantly to the growth of the Company. Branches are taking advantage of the local conditions and are independently handling certain commodities.  The Mumbai and Visakhapatnam branches being port cities have been instrumental in facilitating the import of edible oil and the export of wheat. The Cochin branch has the requisite expertise in handling cashew exports and it directly undertakes such exports.

 

STC also has a representative office in Dubai, which has good relations with the Governmental agencies in the Middle East.

 

2.3          Properties: Land & Buildings:

 

STC owns several significant properties and real estate in various cities across India. A brief overview is presented below. The value of these assets is estimated to be significant.

 

 

Details of Prime Real Estate Properties

 

Location	Description of the property	Particulars
New Delhi	Jawahar Vypar Bhawan	Land  Area: 2.6 acres Covered Area (including basement): 420439 sq. ft
New Delhi	STC Residential Colony A Type Flats–   64 B Type Flats - 128 C Type Flats -   78 D Type Flats -   63 Total Flats–   333	23,360 sq. ft 51,200  sq. ft 46,800 sq. ft 56,700 sq. ft Total Area – 178060 sq. ft Total Colony Area: 13 acres
New Delhi	Asiad Village Flats A type Flats -3 B type Flats –5 Total Flats-8	362 sq. mts 905 sq. mts   Total Area-1267 sq. mts

 

 

2.4      The Management and Employee Profile:

Board of Directors:

Dr. S.M Dewan	Chairman & Managing Director
Dr. Arvind Pandalai	Director Marketing
Dr. T.S Sagar	Director Marketing
Shri P.K. Gupta	Director Finance
Shri S.D. Kapoor (From September 7, 1998)	Ex- Officio Director
Shri S.N. Menon (From March 5, 2001)	Ex- Officio Director
Shri Atul Sinha (From August 16, 2001)	Ex- Officio Director

 

 

Employees:

The  profile for the employees of STC as on December 31, 2001 is given in the table below:

 

 

Voluntary Retirement Scheme:

The first VRS by the Company was initiated in 1989 –90.  Significant number of employees have opted for the VRS. The details are given as follows:

 

 

 

 

2.5      Financial Highlights:

Rs. Million

Particulars	1998-99	1999-2000	2000-2001
Income from trading activity	18,939	11,626	10,403
Other Income	2,016	2,095	902
Total	20,955	13,721	11,305
PAT	125	229	28
Networth	4,454	4,616	4,473
Net Fixed Assets	285	282	320
Cash Balances	1,514	1,211	1,678

 

Key Points:

Income from trading activity:

·         The Company has reported a turnover of over Rs. 11,000 million for the nine months period ended December 31, 2001, which is higher than the turnover for the year ended March 31, 2001.

·         For the financial year ended March 31, 2001exports and domestic sales have shown growth of 4% and 171% respectively over the previous year, while the imports have declined by 36%. (on account of the decanalising policies of the Government of India)

Rs. Million

	1998-99	1999-2000	2000-2001
Exports
Non Canalised	2205	4449	4633
Imports
Government A/c	14495	3775	626
STC Account	1243	2840	3622
Total	15738	6615	4248
Domestic	996	561	1522
Total	18939	11626	10403

 

Profit After Tax:  STC has been a profit making and dividend paying Company., with a dividend of 20% each year over the last three years.

 

Networth:  STC has a strong reserve position. As at March 31, 2001 the reserves stood at Rs. 4173 million.

 

Outstanding Dues: Outstanding dues includes Rs. 1535 million recoverable from the Government of India/ Government Departments. The matter is under reconciliation and the management considers these as good.  

 

2.6          Subsidiariy

 

Spices Trading Corporation Limited

Spices Trading Corporation Limited, formerly known as Cardamom Trading Corporation Limited was incorporated under the Companies Act, 1956 in October 1982. With an aim to diversify its operations into the entire range of spices, the name of the company was changed to Spices Trading Corporation Limited with effect from August 1987. In 1998-99 STC purchased the entire shareholding of STCL form GoI for a total value of Rs.28.2 million, thereby making STCL a 100% subsidiary of STC.

 

Business operations:

Spices Trading Corporation Limited based in Bangalore, is in the business of exporting, and domestic marketing of spices. Recently, with the aid of STC, STCL has exported wheat. STCL assists the farming community to realise reasonable prices for their products, in a market environment with frequent price fluctuations. STCL has been a pioneer in conducting cardamom auctions through open bidding. STCL has established good trade relations with the farming community. The key financials of the company is as below-

 

Rs Million

Particulars	1998-99	1999-2000	2000-2001
Income from trading activity	560	807	1,004
Other Income	6	10	7
Total	566	817	1011
PAT	14	6	6
Networth	41	46	51
Net Fixed Assets	1	2	2
Cash Balances	30	28	34

 

 

Employees: As on December 31, 2001 STCL has 33 employees – 8 executives and 25 non-executives.

 

 3.0         EXPRESSION OF INTEREST

3.1          Submission of Expression of Interest

An advertisement has been issued in the newspapers inviting parties to submit their “Expression of Interest” (EoI) and “Request for Qualification” (RFQ) to participate in the proposed disinvestment process. A copy of the EoI & RFQ is enclosed as Section 4.

 

The EoI may be submitted by domestic/ international companies (whether currently existing or to be formed specifically to participate in the disinvestment process), either individually or as a consortium. The interested companies should submit, in duplicate, the EoI (in the format as provided in Section 4) accompanied by the RFQ duly signed by the interested party(ies)/ designated lead bidder of the consortium. However the RFQ must be submitted separately for each member of the consortium duly signed by an authorized official of that member.

 

The RFQ, as provided in Section 4, must be accompanied by the following details:

·         The audited balance sheet and profit & loss account for the last 5 financial years. In case of a consortium bid the above must be submitted for all the members of the consortium.

·         Write-up on the following-

q       Profile of the sole bidder

q       A statement of reasons for strategic interest in STC

q       Any other information considered material

 

·         In case of a consortium bid the above information must be provided for all the members of the consortium.

Any change by way of withdrawal/substitution of any member of the consortium or any change affecting the composition of the consortium may be permitted up to the stage of submission of the financial bid. STC/ GoI has the sole discretion to determine the impact of the change in composition on the quality of the consortium and reject a proposal for such a reason.

 

The EoI and RFQ must be in English and each copy must be bound separately. Submission of the above documents by electronic means is not permitted. The EoI and RFQ duly completed along with the details required must be submitted not later than 17:00 hours (Indian Standard Time) on March 18, 2002 in a sealed envelope superscribed “Private and Confidential – Expression of Interest for STC” to Ernst & Young at per contact details on page 4.

 

 

 

 

3.2          Pre-Qualification Criteria

§         The interested party (ies) should satisfy the following criteria:

q       Net worth should be in excess of Rs 750 mn

§         The interested party (ies) should have a  satisfactory business and management track record.

§         In case of consortium bid, the net worth of the lead bidder must be at least 51% of the amount indicated above.

§         Where the financial statements are expressed in a currency other than the Indian Rupee, the eligible amount as described above shall be computed by taking the equivalent USD at the exchange rate (as stipulated by Foreign Exchange Dealers Association of India) prevailing on the date(s) of such financial statement.

q       Networth is defined as the sum of the total paid up capital and free reserves. Free reserves shall mean all reserves credited out of the profit and loss account and share premium but excluding revaluation reserve, write back of depreciation provisions and amalgamations.

3.3          Disqualifications

§         Without prejudice, a company or consortium may be disqualified and its EoI dropped without further consideration for any of the reasons listed below:

q       Material misrepresentation by such company/ member of the consortium in the EoI and/or RFQ.

q       Failure by such company/consortium to provide the information required to be provided in the EoI/RFQ.

q       Submission of the EoI and RFQ in respect of any company/consortium where such company or member had already submitted an EoI or is a member of a consortium, which has already submitted an EoI.

§         If any information becomes known after the interested party has been qualified to receive the information memorandum which would have entitled GOI/STC to reject or disqualify the relevant company/consortium, GOI/STC reserves the right to reject the interested party at the time or at any time after such information becomes known to GOI/STC. Any EoI or RFQ that are found to be incomplete in contents or attachments or authenticity shall not be considered for qualification.

§         Further, GOI issued guidelines for disqualification of bidders seeking to acquire any public sector enterprises through the process of disinvestment vide Department of Disinvestment OM No.6/4/2001 – DD – II dated 13th July 2001, a copy of which has been included in the Annex III. The interested parties are requested to read the guidelines and satisfy themselves that they are qualified to bid for the stake in STC through the process of disinvestment and give an undertaking to the effect that they are qualified to bid for the stake in STC in the EoI submitted by them.

§         Further, interested parties are required to provide an undertaking to the effect

q       That in regard to matters other than the security and integrity of the country they have not been convicted by a Court of Law or no adverse order/indictment has been passed against them by any regulatory authority which would either cast a doubt on their ability to manage the units after disinvestment or involves a grave offence which would outrage the moral sense of the community.

q       That in regard to matters relating to the security and integrity of the country there is no charge sheet filed by a Government Agency pending against them and they have not been convicted by a Court of Law for an offence committed by them or any of their sister concerns.

q       That no investigation by any regulatory authority is pending against them or any of their sister concerns or any of their Directors.

§         Where the interested party is a consortium, GOI/STC may disqualify the entire consortium for any of the reasons specified above even if the disqualification criteria apply to any one or more of the members.

§         The companies/consortia not satisfying the eligibility and requisite qualification criteria specified in the above sections are not eligible.

§         The EoI submitted by the interested parties shall be evaluated on the basis of the criteria specified elsewhere in this document. If at any time during the evaluation process, GOI require any clarifications, it reserves the right to request such information from any or all of the companies/consortia and the companies/consortia will be obliged to provide the same within reasonable time frame.

§         This document constitutes no form of commitment on the part of the GOI/STC or Ernst & Young to provide further information on STC. Furthermore, this document confers neither the right nor an expectation on any party to participate in the proposed disinvestment process. The GoI/STC or Ernst & Young reserve the right to accept or reject any/all offer(s) without assigning any reasons.

3.4          Future Process

§         Based on an evaluation of EoI received, interested parties, which are deemed fit, hereinafter referred to as “Qualified Interested PartieS” or “QIP” will be qualified to participate in the subsequent selection process (without conferring any right or expectation whatsoever to QIP). The QIP will be provided with the detailed “Confidential Information Memorandum” or “CIM” and shall be invited to participate further in the process described in detail in the CIM.

3.5           Governing Laws/Jurisdiction

§         The laws of Union of India shall govern all matters relating to the disinvestment process and the bidding procedure. Only courts at New Delhi (with exclusion of all other courts ) shall have the jurisdiction to decide or adjudicate on any matter which may arise out of or in connection with the disinvestment process.

 

 

 

4.0          FORMATS

 

4.1          Expression of Interest

To

Badri Narayanan

Corporate Advisory Services

Ernst & Young Pvt. Ltd.

Ernst & Young Tower,

B-26, Qutab Institutional Area

New Delhi: 110016

 

Sir,

Expression of Interest (EOI) for participation either singly or as a consortium in disinvestment of stake of Government of India in The State Corporation of India Limited.

This is with reference to your advertisement dated _________ in ___________ calling for EoI for participating in the disinvestment of stake of GoI in STC. We are desirous of participating in the disinvestment process and, as specified in the aforesaid advertisement, propose to submit our EoI.

 

(In case of individual bids) The EoI is submitted in our individual capacity in the name of __________________.

 

(In case of consortium bids) The EoI is submitted on behalf of a consortium comprising ____ members as given below:

 

1.        ______________________

2.        ______________________

3.        ______________________

4.        ______________________

 

We have read and understood the contents of the Preliminary Information Memorandum (PIM) and the Preliminary Qualification Criterion for prospective bidders. We believe that to the best of our knowledge we/our consortium satisfy the criterion for qualification of bidders issued by the Government of India vide Department of Disinvestment OM No.6/4/2001-DD-II dated 13^th July 2001.

 

We certify that in regard to matters other than the security and integrity of the country we have not been convicted by a Court of Law or no adverse order/indictment has been passed against us by any regulatory authority which would either cast a doubt on our ability to manage the units after disinvestment or involves a grave offence which would outrage the moral sense of the community.

 

We certify that in regard to matters relating to the security and integrity of the country there are no charge sheets filed by a Government Agency pending against us and we have not been convicted by a Court of Law for an offence committed by us or any of our sister concerns.

 

We certify that no investigation by any regulatory authority is pending against us or any of our sister concerns or any of our Directors.

 

We undertake to intimate GoI/ STC immediately of any changes in circumstances or receipt of new facts, which might attract the disqualification criterion.

 

 

Yours faithfully,

 

Authorized Signatory

For and on behalf of

4.2          Statement of Legal Capacity

 

(To be forwarded on the letterhead of the interested party and/or each member of the consortium/ joint venture submitting the EoI).

 

Ref.                                                                                                                                         Date:

 

Sir,

 

Expression of Interest (EoI) – Participating in the Disinvestment Process of

The State Trading Corporation of India Limited

 

Statement of Legal Capacity

 

We refer to the advertisement dated ___________ of the Government of India (GOI)/ Preliminary Information Memorandum (PIM) in connection with the proposed disinvestment of The State Trading Corporation of India Limited.

 

We have read and understood the contents of the PIM and the advertisement and pursuant to this hereby confirm that

/ we satisfy the eligibility criteria laid out in the PIM and the advertisement*

 

/ we are a member of the consortium (constitution of which has been described in the Expression of Interest) which jointly satisfies the eligibility criteria as detailed in the PIM.*

 

We have agreed that (insert individual’s name) will act as our representative on our behalf and has been duly authorised to submit the EoI. Further, the authorised signatory is vested with requisite powers to furnish such letter and Request for Qualification and authenticate the same.*

 

We have agreed that (insert the name of the individual chosen as representative) will act as the representative of our consortium and on our behalf and has been duly authorised to submit the EoI. Further, the authorised signatory is vested with requisite powers to furnish such letter and Request for Qualification and authenticate the same.*

 

 

Yours faithfully,

 

 

Authorized Signatory

For and on behalf of

 

 

* Please strike out wherever not applicable

4.3          Request for Qualification

(To be submitted in respect of each member of the consortium)

 

Name of the Interested Party(ies)/Member(s): ________________________

 

Constitution (Tick wherever applicable)         

 

q            Public Limited Company

q            Private Limited Company

q            Others (please specify)

q            Public Sector

q            Joint Sector

q            Private Sector

q            Others (please specify)

 

Enclosed herewith is information on the following –

 

q            Nature of business/ products dealt with :

q            Date of Incorporation                                  :

q            Date of Commencement of Business        :

q            Full Address including phone/fax Nos.   :

q            Registered Office                                         :

q            Head Office                                                   :

q            Address for Correspondence                    :

q            Salient features of financial performance

for the last five years                                   :

 

Basis of eligibility for participation in the process for induction of Strategic Partner (Please mention the details of your eligibility)

 

 

Please attach supporting documents e.g. Certified Provisional/Audited Statement of Accounts/Annual Reports

 

Contact Person(s)

Yours faithfully,

                                                                               

Authorized Signatory

For and on behalf of

Annexure 1

 

 

The State Trading Corporation of India Limited

Balance Sheet: Rs. Million

 

*Cancellation of shares:

At the Extraordinary General Meeting held on January 25, 2002, the shareholders have approved the cancellation of 30% of the shares of the Company. Pursuant to this decision the reserves and surplus will be reduced by Rs. 484 million.

 

 

The State Trading Corporation of India Limited

Profit & Loss Account:

Rs. Million

 

 

Annexure II

Government of India

STRATEGIC SALE OF SHAREHOLDING IN THE STATE TRADING CORPORATION OF INDIA LTD.

 

Expression of Interest

 

The Government of India (“GoI”) intends to disinvest a 65.02% shareholding in The State Trading Corporation of India Ltd. (“STC” or “The company”) to a strategic partner with transfer of management control and has appointed Ernst & Young Private Ltd. (“E&Y”) to be its advisor to advise and manage the disinvestment process. GoI currently holds 91.02% of the equity capital of STC.

 

STC is one of India’s largest trading companies and has been a key trading arm of Government of India. STC reported a turnover of Rs 10 billion for the year ended March 31, 2001.  The company has significant strength in the area of agricultural commodities and other bulk products. Over the years the company has earned good reputation in the national and international markets. STC owns several significant prime real estate properties in major cities of India. The company has two subsidiaries operating in the area of tea and spices.

 

Process

Further information on STC (including the Preliminary Information Memorandum) can be obtained from the advisor or accessed at the websites listed below: www.stcindia.com, www.eyindia.com , www.divest.nic.in and  www.commin.nic.in.

 

Interested Parties are required to submit their Expression of Interest along with a Statement of Legal Capacity and Request for Qualification (“RFQ”) in the format specified in the Preliminary Information Memorandum to either of the under mentioned persons no later than 17.00 hrs (Indian Standard Time), March 18, 2002.

 

Badri Narayanan/Smriti Mishra, Corporate Advisory Services, Ernst & Young Pvt. Ltd., Ernst & Young Tower, B-26, Qutab Institutional Area, New Delhi: 110016, Tel No: +91-11-6611004-09, Fax No: +91-11-6611012-13, 6851744, e-mail: Badri.Narayanan@in.eyi.com, Smriti.Mishra@in.eyi.com

 

The GoI reserves the right to withdraw from the process or any part thereof, to accept or reject any or all offers at any stage of the process and/or modify the process or any part thereof or to vary any terms at any time without assigning any reason whatsoever. No financial obligation whatsoever shall accrue to GoI or E&Y in such event. Neither GoI nor E&Y shall be responsible for non-receipt of correspondence sent by post/courier/e-mail/fax.

 

 

Annexure III

GOVERNMENT CIRCULAR

 

No. 6/4/2001-DD-II

Government of India

Ministry of Disinvestment

Block 14, CGO Complex

New Delhi.

Dated 13^th July, 2001.

 

 

OFFICE MEMORANDUM

 

Sub:      Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment

 

Government has examined the issue of framing comprehensive and transparent guidelines defining the criteria for bidders interested in PSE-disinvestment so that the parties selected through competitive bidding could inspire public confidence.  Earlier, criteria like net worth, experience etc. used to be prescribed.  Based on experience and in consultation with concerned departments, Government has decided to prescribe the following additional criteria for the qualification / disqualification of the parties seeking to acquire stakes in public sector enterprises through disinvestment:

 

1.       In regard to matters other than the security and integrity of the country, any conviction by a Court of Law or indictment / adverse order by a regulatory authority that casts a doubt on the ability of the bidder to manage the public sector unit when it is disinvested, or which relates to a grave offence would constitute disqualification.  Grave offence is defined to be of such a nature that it outrages the moral sense of the community.  The decision in regard to the nature of the offence would be taken on case to case basis after considering the facts of the case and relevant legal principles, by the Government.

 

2.       In regard to matters relating to the security and integrity of the country, any charge-sheet by an agency of the Government / conviction by a Court of Law for an offence committed by the bidding party or by any sister concern of the bidding party would result in disqualification.  The decision in regard to the relationship between the sister concerns would be taken, based on the relevant facts and after examining whether the two concerns are substantially controlled by the same person/persons.

 

3.       In both (1) and (2), disqualification shall continue for a period that Government deems appropriate.

 

4.       Any entity, which is disqualified from participating in the disinvestment process, would not be allowed to remain associated with it or get associated merely because it has preferred an appeal against the order based on which it has been disqualified.  The mere pendency of appeal will have no effect on the disqualification.

 

5.       The disqualification criteria would come into effect immediately and would apply to all bidders for various disinvestment transactions, which have not been completed as yet.

 

6.       Before disqualifying a concern, a Show Cause Notice why it should not be disqualified would be issued to it and it would be given an opportunity to explain its position.

 

7.       Henceforth, these criteria will be prescribed in the advertisements seeking Expression of Interest (EOI) from the interested parties. The interested parties would be required to provide the information on the above criteria, along with their Expressions of Interest (EOI).  The bidders shall be required to provide with their EOI an undertaking to the effect that no investigation by a regulatory authority is pending against them.  In case any investigation is pending against the concern or its sister concern or against its CEO or any of its Directors/Managers/employees, full details of such investigation including the name of the investigating agency, the charge/offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government.  For other criteria also, a similar undertaking shall be obtained along with EOI.

 

 

-sd/-

(A.K. Tewari)

Under Secretary to the Government of India.

 

To

As per list attached.