Department of Disinvestment, Ministry of Finance, Govt. of India

21 May 2012 8:12:26 AM

Advertisements for Advisors

GOVERNMENT OF INDIA

MINISTRY OF DISINVESTMENT

 

ENGAGEMENT OF AN ADVISOR FOR DISINVESTMENT IN HINDUSTAN COPPER LIMITED (HCL)

 

The Government of India intends to disinvest its entire shareholding (98.95%)  in Hindustan Copper Limited . Expressions of Interest are invited by 28th January         2002 for engaging an Advisor to assist the Government in the disinvestment process. For further details the interested parties may visit the Company’s website www.hindustancopper.com or  www.nic.in/mines or www.divest.nic.in or contact Shri A D Mehta, Company Secretary, Hindustan Copper Limited, Tamra Bhavan, 1 Ashutosh Chowdhury Avenue, Kolkata-700019 (India) Tel No.240-0276, Fax No.(033) 240-8478/247-8640, E-mail: hindcop@vsnl.com

 

 

 

GOVERNMENT OF INDIA

DEPARTMENT OF DISINVESTMENT

 

The Government of India intends to disinvest its entire shareholding( 98.95% ) in Hindustan Copper Limited (HCL) through a sale to a buyer and proposes to appoint an Advisor to advise and manage the disinvestment process successfully.

 

Hindustan Copper Limited is a schedule “A” Central Public Sector Undertaking under the Department of Mines, Ministry of Coal and Mines, New Delhi engaged in the production and marketing of various types of copper products. It is the sole producer of primary copper in the country. The company was incorporated on 9th November, 1967. It has got integrated  facilities for manufacture of 31,000 tonnes of copper cathode per annum and two copper mines at Khetri Copper Complex at Rajasthan and 60,000 tonnes of wirerod per annum at Taloja Copper Project at Maharashtra. Besides, there is a smelter of 16500 tonnes capacity and one working mine at Indian Copper Complex at Ghatsila (Jharkhand). An open cast copper mine having ore production/milling capacity of 2 million tones per annum at Malanjkhand Copper Project is in Madhya Pradesh.

 

Company is having 9539 people on its roll as on 1.12.2001. At present, the paid-up share capital of the company is Rs.553.61 crores including Rs.10 crores for application money for shares. HCL has submitted capital restructuring proposal which is under reconsideration by GOI. Brief production and financial performance of the company is given in Annexure.

 

The responsibilities of the Advisor would involve advising and assisting Government of India in the disinvestment of HCL and would, inter alia, cover assessment and valuation of HCL, suggesting measures to enhance sales value, preparing a detailed Information Memorandum, marketing of the disinvestment, inviting and evaluating the bids, assisting during the negotiations with prospective buyers, drawing up the sale/other agreements, advising on post-disinvestment matters and all other related matters.

 

Submission of Expression of Interest  

 

Internationally reputed Merchant/Investment banks, Consulting firms and Financial institutions with expertise in privatization/restructuring/strategic sale etc. are invited to submit an Expression of Interest (EoI) for selection as Advisor, singly or as a consortium in the prescribed proforma on or before 28th January 2002. The interested bidders may collect the prescribed proforma for the Expression of Interest from the Company Secretary, Hindustan Copper Limited or download it from Hindustan Copper Limited website and send their Expressions of Interest to, and approach for further details, if any, the Company Secretary, Hindustan Copper Limited at the following address :-

 

 

Hindustan Copper Limited

Tamra Bhavan

1, Ashutosh Chowdhury Avenue

Kolkata-700019

Tel No.240-0276

Fax No.(033)240-8478/247-8640

E-mail hindcop@vsnl.com

Website www.hindustancopper.com or www.mines.nic.in or www.divest.nic.in

 

The bidders shall deposit alongwith their Expressions of Interest a non-refundable earnest fee of Indian rupee 20,000 (Rupees twenty thousand) or US $ equivalent by way of a Demand Draft payable at Kolkata in favour of “Hindustan Copper Limited”. The Government of India reserves the sole right to refuse any or all Expression of Interest without assigning any reason therefor.

  

 

   

Proforma for  Submission of  Expression of  Interest for Appointment as an Advisor for the  Disinvestment  of  Government  of  India’s  shareholding  in Hindustan Copper Limited

 

The interested parties may submit their Expression of Interest to act as the advisor, singly or as a consortium, for disinvest of 98.95% of Government of India’s shareholding in Hindustan Copper Limited (HCL), positively by 28th January 2002 by  1700 hours(IST) with the following details :

 

1.         Full particulars of the constitution, ownership and main business activities of the prospective Advisor (bidder). In case of consortium bids, the particulars of the coordinating firm having the principal responsibility for the mandate as well as those of other partners.

 

2.         Unabridged Annual Reports or audited financial accounts for the last three years of all the partners.

 

3.         Details of pending litigation and contingent liabilities, if any, that could affect the performance of the bidder under this mandate, as also details of any past conviction and pending litigation against sponsors/partners and any areas of possible conflicts of interest. The above particulars should be provided yearwise (wherever applicable) for the last three years.

 

4.         Government of India has recently issued guidelines prescribing certain qualifications for Advisors for disinvestment process. A copy of the guidelines (OM No.6/4/2001-DDII dated 13th July, 2001) is enclosed. You are requested to carefully go through the guidelines and after satisfying yourself that you are qualified to act as Advisor, furnish the following certificate as a part of the proposal :

 

“We certify that there has been no conviction by a Court of Law or indictment/adverse order by a regulatory authority for a grave offence against us or any of our sister concern. It is further certified that there is no investigation pending against us or our sister concern or the CEO, Directors/Managers/Employees of our concern or of our sister concern. It is certified that no conflict of interest exists as on date and in future such a conflict of interest arises we will intimate the Government of the same.”

 

The short-listed parties would be required to furnish ten copies of documentation at the time of making a presentation before an Inter-Ministerial Group (IMG), on the following criteria :

 

1.         Presence in India, including number of offices, manpower, funds deployed, period etc. and the level of commitment to India.

 

2.         Global experience.

 

3.         Privatisation experience.

 

4.         Details of similar transactions (Government, quasi Government and private sector, separately) executed/under execution by the bidder in a similar sector/industry. This should cover the role played by the bidder in deal structuring, valuation, transaction, marketing, preparation of information and sale memorandum, shareholders agreement etc. and bid evaluation and negotiations.

 

5.         Experience in capital market transactions (both equity and debt), in the Government, quasi Government and private sectors, separately, indicating the number of deals executed and quantum of funds raised.

 

6.         Expertise, including research coverage and capabilities in the mining sector including exports and imports and an understanding of HCL including a SWOT analysis incorporating key selling points and limitations.

 

7          .Proposed methodologies of the disinvestments/strategic sale transaction indicating the issues involved including

 

(a)       Valuation of HCL

(b)       Transaction structuring

(c)        Marketing strategy

(d)       Bid-evaluation methodology

(e)       Tentative time frame

 

8.         Details of deal team :

 

(a)       Experience and qualifications

(b)       Team members located abroad

(c)        Team members located in India.

 

The presentations will take place before the IMG in New Delhi. The interested parties would be intimated about the exact date, time and venue at which they would be required to make the presentation later.

 

The interested parties are required to submit at the time of presentation sealed financial bids incorporating the fee chargeable as a percentage of the sale proceeds from the disinvestments of the GOI stake in HCL gross of all taxes. The bid should be unconditional.

 

Expenditure on account of fees to legal/accounting or any other consultant, if appointed by GOI and/or HCL should not be included in the financial bid. The travel related expenses and all the other expenses including those related to due diligence would have to be borne by the Advisor.

 

The financial bid should also indicate a lumpsum amount to be charged as drop dead fee which would be payable if the GOI wants to call off the transaction.

 

Interested parties are required to deposit along with their Expression of Interest a non-refundable earnest fee of INR 20,000 (Rupees Twenty Thousand) or US $ equivalent by way of Demand Draft payable at Kolkata in favour of  “Hindustan Copper Limited”.  GOI reserves the sole right to reject any or all Expressions of Interest without assigning any reasons therefor.  Further clarifications, if any, should be sought from and the Expressions of Interest sent to HCL at the following address :

 

Company Secretary

Hindustan Copper Limited

“Tamra Bhavan”

1, Ashutosh Chowdhury Avenue

Kolkata-700019

 

Telephone No. 240-0423/2409/2529/2532/3032   2400276(Direct)

 

Fax No.(033) 240 8478/247 8640

 

E Mail : hindcop@vsnl.com

 

Website : www.hindustancopper.com

     

 

 

ANNEXURE

 

     Hindustan Copper Limited is having four operational units like Khetri Copper Complex (KCC) at Khetrinagar, Rajasthan, Indian Copper Complex (ICC) at Ghatsila, Jharkhand, Malanjkhand Copper Project at Malanjkhand, Madhya Pradesh and Taloja Copper Project at Taloja, Maharashtra. The production facilities of the respective units are given below :

 

     Khetri Copper Complex (KCC) :

 

1.   Khetri Mines : The ore body of the Khetri Mines in the form of lenses, are having a dipping at about 50 deg to 60 deg. Strike extension of lenses is 100 mtrs to 300 mtrs and vertical exten­sion is 50 mtrs to 250 mtrs. Around 50 lenses have been identi­fied. Total strike length of mine is around 3 kms. Width of the ore body varies from 5 mtrs to 50 mtrs. In addition, the develop­ment work has been done in adjacent to Khetri Mines namely Ban­was. The reserves (proved and possible) is 63.44 million tonne with an average grade of 1.34%.

 

2.   Kolihan Mines : 3 lodes of ore body have been identified but at each level only 2 lodes are available. Width of ore body is 20 mtrs to 100 mtrs. Lenses are having dipping of 60 deg to 80 deg. Total strike length of mine is around 0.60 km. The reserves (proved and possible) is 23.26 million tonne with an average grade of 1.23%.

 

     Manufacturing Facilities :  KCC is having the following manufacturing facilities :

 

 

Particulars

Technology

Technology Supplier/Turnkey Contractor

Metalin Concentrate

Conventionalbenefi-

ciation process

Venot-Pic of France

Smelting

Outokompu Flash Furnace Technology

Outokompu of Finland 

 

Refining

Conventional Method

Borr, Yogoslavia

 

Sulphuric Acid

Single conversion single absorption

For Plant-I by FEDO,Cochin and for                 Plant-II by NICCO,                                         Calcutta, SPECS,New                                            Delhi and PPCL,                                            Vadodara

 

 

Single Super

Phosphate

Conventional Process

 

FEDO, Cochin

 

Phosphoric Acid

Central Prayon Process-dihydrate/ hemihydrate route

Societie de Prayon,

Belgium

 

 

     The infrastructural facilities are available for expansion  to  1,00,000 TPA and with some investment the capacity can be enhanced from 31,000 TPA to 45,000 TPA.

 

 

3.                Production :

 

Production

Installed Capacity in tonne

                                Actual Production

 

 

98-99

% of installed capacity

99-00

% of installed capacity

2000-01

% of installed capacity

Refined Copper (Cathode)

31,000

25489

82

23670

76

22939

89@

 

@ Based on 10 months basis

     Indian Copper Complex (ICC) :

 

     Indian Copper Complex at Ghatsila is having one running mine i.e. Surda and having two concentrator plants, one smelter, refinery, two Sulphuric Acid Plants, PMR Plant etc.

 

     Surda :

 

     The Surda Mine is having 16.97 million tonnes with ore      grade of 1.21% cu. There are few small deposit mines around Mosaboni with certain amount of proven reserves and HCL is having lease of these mines. There is a possibility of open cast mining in this area subject to its economic viability in individual cases.

 

     Smelter and Refinery : Smelter is having Outokompu Technolo­gy with the capacity of 16,500 tonne per annum.

 

     Although the capacity is 16,500 TPA but with nominal invest­ment the capacity can be enhanced to 25,000 TPA.

 

 

Production :

                                                       

 

Production

 Installed Capacity in tonne

Actual Production

 

 

 

98-99

99-2000

2000-2001

Refined Copper

(Cathode)

16,500

10345(63%)

 14794(90%)

19306(117%)

 

 

 

     Malanjkhand Copper Project(MCP) :

 

     HCL is having an excellent Open Cast Mine at Malanjkhand. The annual production is around 22,000 tonne of concentrate. The cost of concentrate is less than the imported concentrate and HCL has been giving attention for the expansion of this project and as against 2 lakh tonne of ore milling at the Concentrator Plant, MCP is achieving more than 100% capacity. HCL has also taken prospecting lease in the adjoining area and drilling operations by MECL (A PSU) are being done to find out the exact grade and deposit in the adjoining areas of Malanjkhand.

 

     The proven ore reserves is around 35.30 million tonnes          with average grade of 1.11% cum. There is a possibility of expansion of Malanjkhand Concentrator Plant with some invest­ment.

 

     Production :

    

Production

Install-ed Capa-               city in tonne

Actual Production

 

 

98-99

% of installed capacity

99-00

% of installed capacity

2000-01

 

% of installed capacity

Ore Milled in (‘000 T)

2000000

2236

112

1900

95

2191

110

 

     Taloja Copper Project (TCP) :

 

     Taloja Copper Project at Taloja, Maharashtra, is having wire rod casting facilities with installed capacity of 60,000 tonne per annum. Taloja Plant is very modern having Southware Technolo­gy and produces best quality of Wire Rod for Indian Market and abroad. The capacity of Taloja Plant cannot be fully utilised for not having matching production facilities at Khetri and Ghatsila. Taloja Plant is having        No. of manpower and even with       50-60% capacity production, the plant can be made viable.

 

    

     The production at Taloja for the last three years are given below :

 

 

Production :

 

           

Production

Installed capacity in tonne

Actual Production

 

 

98-99

  %of installed capacity

99-00

  %of

installed capacity

2000-01

  %of installed capacity

Wirerod

60,000

33025

55

29937

50

30571

51

 

 

 

 

 

                                                 HINDUSTAN COPPER LIMITED                                                                        

OPERATING PERFORMANCE

 

 

RS IN CRORE

 

 

 

1998-99

1999-2000

2000-01

 

INCOME

 

 

 

 

NET SALES

494.78

514.36

554.39

 

OTHER INCOME

12.19

40.53

21.33

 

TOTAL

506.97

554.89

575.72

 

EXPENDITURE

 

 

 

 

RAW MATERIALS

141.52

129.50

88.87

 

POWER & FUEL

138.61

143.45

156.34

 

SALARIES & WAGES

212.01

182.88

150.57

 

OTHER MFG. EXPENSES

140.51

109.43

134.18

 

TOTAL

632.65

565.26

529.96

 

GROSS PROFIT/(LOSS)

(125.68)

(10.37)

45.76

 

INTEREST

31.85

62.26

81.97

 

INTEREST WAIVER ON GOVT. LOAN

(155.76)

0.00

0.00

 

DEPRECIATION

21.72

22.02

20.52

 

AMORTISATION

40.39

35.02

41.50

 

PROVISIONS,PRIOR YEAR Dr/(Cr)

(12.68)

17.79

7.57

 

NET PROFIT/(LOSS)

(51.20)

(147.46)

(105.80)

 

 

 

 

HINDUSTAN COPPER LIMITED

FINANCIAL POSITION

     

 

 

RS IN CRORE

 

AS ON 31 03 1999

AS ON 31 03 2000

AS ON 31 03 2001

             
ASSETS            
GROSS FIXED ASSETS

744.24

 

709.79

 

706.01

 
ACCUMMULATED DEPRECIATION

435.66

 

430.48

 

440.93

 
NET FIXED ASSETS  

308.58

 

279.31

 

265.08

CAPITAL WORK IN PROGRESS  

36.44

 

34.81

 

33.57

MINE DEVELOPMEMT EXPENDITURE  

300.18

 

319.99

 

321.18

CURRENT ASSETS

265.01

 

370.19

 

361.82

 
CURRENT LIABILITIES & PROVISIONS

280.77

 

413.12

 

335.87

 
NET CURRENT ASSETS  

(15.76)

 

(42.93)

 

25.95

ACCUMMULATED LOSSES  

195.19

 

342.60

 

448.40

MISC. EXPENDITURE NOT WRITTEN OFF  

28.99

 

202.47

 

268.13

TOTAL  

853.62

 

1136.25

 

1362.31

             
LIABILITIES            
EQUITY SHARE CAPITAL

305.20

 

350.88

 

362.88

 
SHARE MONEY AWAITING ALLOTMENT

45.68

350.88

12.00

362.88

0.00

362.88

             
PREFERANCE SHARE CAPITAL

0.00

 

180.73

 

180.73

 
SHARE MONEY AWAITING ALLOTMENT

180.73

180.73

0.00

180.73

0.00

180.73

             
RESERVE & SURPLUS  

7.03

 

6.99

 

6.98

SECURED LOAN  

139.66

 

282.33

 

409.52

UNSECURED LOAN  

175.32

 

303.32

 

402.20

TOTAL  

853.62

 

1136.25

 

1362.31

 


No. 6/4/2001-DD-II
Government of India
Department of Disinvestment

Dated 13th July, 2001

OFFICE MEMORANDUM

Subject: Guidelines for qualification of Advisors for disinvestment process

 

Government has examined the issue of framing comprehensive and transparent guidelines defining the criteria for selection of Advisors, so that the parties selected through competitive bidding inspire public confidence. Earlier, a set of criteria like sector experience, knowledge, commitment 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 to act as Advisors to the Government for the disinvestment transactions:-

 

(a)

Any conviction by a Court of Law or indictment / adverse order by a regulatory authority for a grave offence against the Advising concern or its sister concern would constitute a disqualification. Grave offence would be defined to be of such a nature that it outrages the moral sense of the community. The decision in regard to the nature of offence would be taken on a case to case basis after considering the facts of the case and relevant legal principles by the Government. Similarly, the decision in regard to the relationship between the sister concerns would be taken, based on relevant facts and after examining whether the two concerns are substantially controlled by the same person/persons.

(b

In case such a disqualification takes place, after the entity has already been appointed as Advisor, the party would be under an obligation to withdraw voluntarily from the disinvestment process, failing which the Government would have the liberty to terminate the appointment / contract.

(c)

Disqualification shall continue for a period that Government deems appropriate.

(d)

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.

(e)

The disqualification criteria would come into effect immediately and would apply to all the Advisors already appointed by the Government for various disinvestment transactions, which have not yet been completed.

(f)

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.

(g)

Henceforth, these criteria will be prescribed in the advertisements seeking Expressions of Interest (EOI) from the interested parties to act as Advisor. Further, the interested parties 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 the 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, similar undertaking will be obtained along with EOI. They would also have to give an undertaking that if they are disqualified as per the prescribed criteria, at any time before the transaction is completed, they would be required to inform the Government of the same and voluntarily withdraw from the assignment.

(h)

The interested parties would also be required to give an undertaking that there exists no conflict of interest as on the date of their appointment as Advisors in handling of the transaction and that, in future, if such a conflict of interest arises, the Advisor would immediately intimate the Government of the same. For disinvestment proposes, 'conflict of interest' is defined to include engaging in any activity or business by the Advisor in association with any third Party, during the engagement, which would or may be reasonably expected to, directly or indirectly, materially adversely affect the interest of Government of India or the Company (being disinvested) in relation to the transaction, and in respect of which the Advisor has or may obtain any proprietary or confidential information during the engagement, that, if known to any other client of the Advisor, could be used in any manner by such client to the material disadvantage of Government of India or the Company (being disinvested) in the transaction. The conflict of interest would be deemed to have arisen if any Advisor firm/concern, has any professional or commercial relationship with any bidding firm / concern for the same disinvestment transaction during the pendency of such transaction. In this context, both Advisor firm and bidding firm would mean the distinct and separate legal entities and would not include their sister concern, group concern or affiliates etc. The professional or commercial relationship is defined to include acting on behalf of the bidder or undertaking any assignment for the bidder of any nature, whether or not directly related to disinvestment transaction.

(i)

On receiving information on conflict of interest, the Government would give the option to the Advisor to either eliminate the conflict of interest within a stipulated time or withdraw from the transaction and the Advisor would be required to act accordingly, failing which Government would have the liberty to terminate the appointment/contract.

 

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