I.    Preliminary Information Memorandum for Sale of Hotel Anandpur Ashok, Anandpur Sahib, Punjab

I.     Preliminary Information Memorandum for Sale of Hotel Nilachal Ashok, Puri.

Preliminary Information Memorandum

Sale of

Hotel Anandpur Ashok, Anandpur Sahib, Punjab

Disclaimer and Important Notice

Lazard India Limited ("Lazard") has been retained by Government of India ("GoI") as its sole advisor in connection with the restructuring and disinvestment in India Tourism Development Corporation Limited (“ITDC”) which would include selling or leasing of its hotel properties (“the hotel properties”). Lazard has been authorised by GoI as its agent to issue this Confidential Memorandum  ("the Memorandum") to a limited number of recipients for the sole purpose of assisting those recipients in deciding whether they wish to be considered as prospective purchasers or lessees of the hotel properties.

Neither the issue of this Memorandum or Advertisement inviting Expressions of Interest nor any of its content is to be taken as any form of commitment on the part of GoI or of Lazard or of its subsidiaries, affiliates or associates or of ITDC or of Government of Punjab to proceed with the sale or lease envisaged by the issue of this Memorandum and the right is reserved, without prior notice, to amend the proposed timetable, to change the procedure, or to terminate the procedure and associated discussions and negotiations at any stage without assigning any reason.  In furnishing this Memorandum neither GoI nor Lazard undertakes to provide the recipient with access to any additional information or to update the information contained in this Memorandum or correct any inaccuracies in it.

The information contained in this Memorandum has been prepared by Lazard on the basis of information, which has been supplied by the ITDC and other sources deemed reliable and has not been independently verified by Lazard.  No liability whatsoever is accepted, and no representation, warranty or undertaking, express or implied is, or will be, made by Lazard or GoI for any of the information, projections or any of the opinions contained herein, or for any other written or oral communication transmitted or made available to the recipient, or for any errors, omissions or misstatements. Only those representations and warranties which may be made in any definitive agreement (which will not contain any representations, warranties or undertakings as to this Memorandum) shall have any effect.

Neither the issue of this Memorandum nor any part of its contents constitutes an offer to sell or an invitation to purchase any securities or any of the businesses or assets which comprise the hotel properties, and this Memorandum does not, and is not intended to, form the basis of any contract of sale/lease.

In no circumstances will Lazard or GoI be responsible for any costs or expenses incurred in connection with any appraisal or investigation of all or part of the hotel properties or for any other costs and expenses incurred by prospective purchasers/lessees in connection with the proposed sale/lease of the hotel properties.  In particular, no responsibility will be assumed for the discharge of any agents' fees of  prospective purchasers/lessees by deduction from the offer price or otherwise.

Recipients of this Memorandum should note that, in connection with any possible transaction with GoI, Lazard is acting for GoI and no one else and will not be responsible to anyone other than GoI for providing the protections afforded to customers of Lazard or for providing advice in relation to a possible transaction with GoI.

This Memorandum has been supplied only to persons who have signed an appropriate confidentiality undertaking.  Recipients are reminded that under the terms of the confidentiality undertaking the Memorandum must not be passed on to any other person nor reproduced in whole or in part without the prior written consent of Lazard.  The Memorandum and any authorised copies shall be returned promptly along with any other documents provided when the recipient has no further use of the Memorandum or at any time at the request of Lazard.

This Memorandum should not be considered as a recommendation by Lazard or by the GoI to acquire or lease the hotel properties and recipients are recommended to conduct their own investigation and analysis of the business, data and property described herein and to seek their own financial and other advice.

Recipients of the Memorandum should inform themselves about and observe any applicable legal requirements in their jurisdictions.

Lazard will act as the primary point of contact for prospective purchasers/lessees.  Under no circumstances should prospective purchasers/lessees contact the management, employees or shareholders of ITDC or GoI or visit any of the hotels in the hotel properties other than as bona fide customers.

All enquiries should be addressed to the following representatives of Lazard at:

Lazard India Limited

904 "Kailash"

Kasturba Gandhi Marg

New Delhi 110001

Saurabh Sood

Assistant Director

Tel : +91 11 2376 5166

Fax: +91 11 2376 5167
Glossary of terms

HOTEL ANANDPUR ASHOK, ANANDPUR SAHIB, PUNJAB

Background and History

PAHCL (unit: Hotel Anandpur Ashok at Anandpur Sahib, Punjab), a joint venture between ITDC and PTDC, set up in 1998 to undertake construction of a hotel at Anandpur Sahib in collaboration with PTDC.

Incorporation and Share Capital

In FY 2002-03, the shareholding pattern of the Company was:

Source : PAHCL Annual Report 2002-03 (Draft)

Real Estate

The total land area of the unit is 5 acres .  The total built up area is 27910 square feet, with total floor area of one room being 240 square feet. The land will be leased from the Government of Punjab for a period of 99 years.  According to prevailing local authority norms the permissible floor to area ratio is 1.5 : 1 .

Facilities *

* At present only a shell structure has been constructed.  The hotel is still under construction and not yet operational    

Source : PAHCL Management

Key Performance Indicators

Since the hotel is still under construction, operational information is not applicable in this case.

Advertisement Inviting EOI

An advertisement has been issued in the newspapers inviting interested parties to submit their EoI to participate in the disinvestment process of PAHCL, a copy of which is enclosed as Annexure 1.  The GoI reserves the right to terminate or alter the bidding process at any stage, without prior notice or assigning any reasons therefore and without incurring any liability in respect thereof.

The Process

Following receipt of this PIM, Interested Parties will be required to submit a package comprising an Expression of Interest, a Statement of Legal Capacity and a Request for Qualification (“RFQ”) in the format specified in Annexure 2, 3, and 4 together referred to as “the EOI Package”.

Based on an evaluation of the EoI Package received, Interested Parties which are deemed to be qualified by  ITDC/GoI ("Qualified Interested Parties" or "QIPs") will be allowed to participate in the subsequent selection process (without conferring any right or expectation whatsoever to the QIPs).

Following signing of a Confidentiality Agreement ("CA") by duly authorized personnel, QIPs will be provided with the Confidential Information Memorandum ("CIM") and invited to participate further in the process as detailed in the CIM.

Pre - Qualification Criteria

Interested parties submitting an EOI for the Hotel Anandpur Ashok, Punjab should have a combined net worth in excess of Rs. 2.00 crores as at the latest audited balance sheet date.

Net Worth = Equity Share Capital + Free Reserves & Surplus - Deferred Revenue / Miscellaneous Expenditure not written off – debit balance in Profit and Loss Account.

Where the financial statement is expressed in currency other than Indian Rupees, the eligible amount as described above shall be computed by taking the equivalent amount at the exchange rates prevailing on the date(s) of such financial statement as stipulated by Foreign Exchange Dealers Association of India. In the event that the date(s) are not co-terminus, the latest audited statements as approved by the Board of Directors or the closest exchange rates shall be reckoned for the purpose.

Bids by management/employees of PAHCL directly and independently or in consortium or Joint Venture or a Special Purpose Vehicle (SPV), along with a bank, venture capitalist or a financial institution will be considered if the legal entity so formed is qualified as per the criteria laid down in the PIM and the guidelines issued by Ministry of Disinvestment as per Annexure 6.

This PIM along with its enclosures does not constitute any commitment on the part of the GoI or ITDC or Government of Punjab or Lazard, whether in respect of the disinvestment process or otherwise.  Furthermore, this invitation confers neither any right nor expectations to any party to participate in the said process.  Further, this process would be in accordance with the provisions of the Articles of association of the Company.

The GoI reserve the right to withdraw from the process or any part thereof without assigning any reason whatsoever. No liability whatsoever shall accrue to the GoI or ITDC or Government of Punjab or Lazard in such an event.

Disqualification Criteria

The GoI shall not consider for the purpose of qualification, an EoI, which is found to be incomplete in content and/or attachments and/or authentication, etc.

Without prejudice, a sole bidder or a consortium may be disqualified and its EoI dropped from further consideration for, but not limited to, any of the reasons listed below:

·         misrepresentation by the bidder or any member of the consortium; or

·         failure by the parties mentioned above to provide necessary and sufficient information required to be provided in the EoI; or

·         where a party has already submitted an EoI as sole bidder and such party submits another EoI as a member of a consortium; or

·         where a party has already submitted an EoI as a member of a consortium and such party submits another EoI either as a sole bidder or a member of another consortium.

Further, the GoI has 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, and clarification issued on 10th January 2002, as may be modified from time to time (“Eligibility Guidelines”).  A copy of the Eligibility Guidelines is enclosed as Annexure 5.  The interested party(ies) are required to read the guidelines and satisfy themselves that they are qualified to bid for the stake in PAHCL through the process of disinvestment and give an undertaking to the effect that they are qualified to bid for the stake in PAHCL along with the EoI to be submitted by them.  Further, interested parties would be required to provide certain information on the criteria, laid down in the Eligibility Guidelines along with their EoI.  The interested party(ies) 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 chief executive officer (“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 GoI.

Where the interested party is a consortium, GoI may disqualify the entire consortium for any of the reasons (but not limited to) specified above, even if it applies to only one member of the consortium.

If an information becomes known which would have entitled the GoI to reject or disqualify the interested party(ies)/Bidder, the GoI reserves the right to reject such interested party(ies)/Bidder at any time after such information becomes known to the GoI.

The sole bidder, lead bidder, member of a consortium and the consortium as a whole not satisfying the eligibility and requisite qualification criteria specified in the above sections are not eligible. It must be noted that the sole bidder, lead bidder, member of a consortium and the consortium as a whole must be eligible, as per the criteria mentioned above, on the date of submission of the EoI and shall continue to be eligible throughout the Transaction.

Submission of EOI

The interested parties should submit their Expression of Interest (EOI) in Request for Qualification format enclosed as per Annexure 4.

Joint Ventures / Consortia

In case of a joint venture/consortium proposed to be formed specifically for the purpose of this investment, the details of the members of the joint venture/consortium, separate confirmation from each member of the proposed joint     venture/consortium and the extent of their interest therein are required to be given as        part of the EOI. Further changes in the membership of the proposed joint venture/consortium may be permitted up to the stage of submission of the financial bid, provided the quality of the joint venture/consortium is not adversely affected. GoI has the sole discretion to determine the impact of the change in membership on the quality of the joint venture/consortium and reject a proposal for such reason.

Interested Parties deemed fit by GoI/ ITDC and Lazard  (“Qualified Interested Parties”) will subsequently be provided with further information to enable them to evaluate the opportunity.

Foreign Direct Investment

Sector specific guidelines on foreign direct investment for hotels and tourism given in the Manual on Foreign Direct Investment in India (Annexure IV, Point 18) of the Secretariat for Industrial Assistance, Ministry of Commerce & Industry, Government of India of August 2003 will be applicable (http://www.dipp.nic.in).

Last Date of Submission of EOI

The completed RFQ with all relevant documents should be submitted to Lazard India Limited not later than February 10, 2004.

Enquiries

GoI reserves the right, in their sole discretion, not to respond to any questions raised or provide clarifications sought, if considered inappropriate or prejudicial to do so. Nothing in this section shall be taken or read as compelling or requiring the GoI to respond to any question or provide any clarification. No extension of any time and date referred to in this PIM shall be granted on the basis or grounds that the GoI has not responded to any question or provided any clarification.

Governing Law / Jurisdiction

This Transaction shall be governed by the laws of India. All disputes arising out of the disinvestment process shall be subject to the exclusive jurisdiction of the courts at New Delhi.

***

Annexure 1

GOVERNMENT OF INDIA

MINISTRY OF DISINVESTMENT

[This announcement is neither a prospectus nor an offer or an invitation for sale of shares, securities or debentures to the public.]

EXPRESSION OF INTEREST

INDIA TOURISM DEVELOPMENT CORPORATION LIMITED (ITDC)

In continuation of the restructuring / disinvestment programme of ITDC, 100% shareholding of the following two Joint Venture hotel companies of ITDC are being offered for sale:-              

Party(ies) interested in submitting EOI for the above hotel property/(ies) should have a combined net worth of at least Rs. 2.00 crores as on their latest audited balance sheet date.

Net Worth = Equity Share Capital + Free Reserves & Surplus - Deferred Revenue / Miscellaneous Expenditure not written off – debit balance in Profit and Loss Account.

The Preliminary Information Memorandum (PIM) containing additional information, qualification requirements, formats for Expression of Interest (EOI), Request for Qualification (RFQ) etc. can be accessed at: www.theashokgroup.com/ www.divest.nic.in or obtained from Mr. Saurabh Sood (saurabh.sood@lazard.com) at Lazard India Limited (Advisors to GoI), 904, Kailash, Kasturba Gandhi Marg, New Delhi – 110 001 (Phone: 91-11-23765166 Fax: 91-11-23765167). The Party(ies) interested in one or more of the above properties are required to submit the completed RFQ with all relevant documents to Mr. Saurabh Sood, Lazard India Limited not later than 1730 hrs (IST) February 10, 2004.

Annexure 2

{EXPRESSION OF INTEREST ('EOI')}

(To be forwarded on the letterhead of the interested parties/members of the consortium/joint venture submitting the EoI).

Ref   : _________

Date : _________

Sub: EXPRESSION OF INTEREST FOR PROPOSED ACQUISITION OF PUNJAB ASHOK HOTEL COMPANY LIMITED (unit : Hotel Anandpur Ashok, Anandpur Sahib)

Sir,

We refer to the advertisement dated____________ inviting Expression of Interest for proposed acquisition of Punjab Ashok Hotel Company Ltd (unit: Hotel Anandpur Ashok, Anandpur Sahib).

We have read and understood the contents of PIM and the advertisement and wish to participate in the above disinvestment process.

* We propose to submit our EoI in an individual capacity for and on behalf of (insert company name) for the acquisition of Punjab Ashok Hotel Company Ltd (unit: Hotel Anandpur Ashok, Anandpur Sahib).

* We have formed / propose to form a consortium/joint venture comprising the following members:

1. __________________(Insert company name)

2. __________________(Insert company name)

3. __________________(Insert company name)  

We confirm that we/our consortium/joint venture/proposed consortium / proposed joint venture* satisfy the eligibility criteria set out in the relevant sections of the PIM including the guidelines for qualification of bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment issued by the Government of India vide Department of Disinvestment OM No. 6/4/2001-DD-II dated 13th July, 2001. The Statement of Legal Capacity and Request for Qualification as per formats, indicated hereinafter duly signed by us/ respective members, who jointly satisfy the eligibility criteria, are enclosed.

We certify that in regard to matters other than security and integrity of the country, we have not been convicted by a Court of law or indicted or adverse orders passed by a regulatory authority which would cast a doubt on our ability to manage the public sector unit when it is disinvested or which relates to a grave offence that outrages the moral sense of the community.

We further certify that in regard to matters relating to security and integrity of the country, we have not been convicted by a court of Law for any offence committed by us or by any of our sister concerns and no charge sheet has been filed by any agency of the Government for any offence committed by us or by any of our sister concerns.

We further certify that no investigation by a regulatory authority is pending either against us or against our sister concerns or against our CEO or any of our Directors/Managers/employees.

The request of Qualification as per format duly signed by us/respective members, who jointly satisfy the eligibility criteria, is enclosed.

We shall be glad to receive further communication on this subject.

Yours faithfully,

Authorised Signatory

For and on behalf of

* strike off whichever is not applicable.

Annexure 3

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 :

Mr. Saurabh Sood

Assistant Director

Lazard India Limited

904 "Kailash"

Kasturba Gandhi Marg

New Delhi - 110001

Tel : 91 11 2376 5166

Fax: 91 11 2376 5167

Email : saurabh.sood@lazard.com

SUB: Expression of Interest (EoI) – Proposed Acquisition of Punjab Ashok Hotel Company Ltd (unit : Hotel Anandpur Ashok, Anandpur Sahib) - Statement of Legal Capacity

Sir,

We refer to the advertisement dated____________ inviting Expression of Interest for proposed acquisition of Punjab Ashok Hotel Corporation (unit: Hotel Anandpur Ashok, Anandpur Sahib).

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 representatives on our behalf and has been duly authorized to submit the EoI. Further, the authorized 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 of our consortium and on our behalf and has been duly authorized to submit the EoI. Further, the authorized signatory is vested with requisite powers to furnish such letter and Request for Qualification and authenticate the same. *

Yours faithfully,

Authorised Signatory
For and on behalf of

* strike off whichever is not applicable.

Annexure 4

REQUEST FOR QUALIFICATION (FORMAT)

 Name of the hotel property for which this RFQ is submitted:.                                     

1.    Name of the Interested Party                            :

2.    Legal Status                                                                         : Incorporated / Not Incorporated

3.    Year and Country of Incorporation  :

4.    Please Specify                                                                      : Public Company/ Private Company/ Joint                                                                                                                  Venture/Consortium/Partnership Firm etc.

(In case of a consortium, a specific commitment letter is required from each consortium member. A Power of Attorney in favour of the lead consortium member to act on behalf of the consortium is also required.

5.    Details of Shareholding/Interest                :       

6.    Role of each Member in the                      :

Consortium (if applicable) 

7.    Stock Exchange(s) where Listed     :                                                                    (if applicable)

8.    Address of Registered Office                     :

9.    Brief Description of Business (es)             :

      and Operations

10.           No. of Hotels and Rooms Owned/:                                                         

    Managed in each category such

        as 5-star, 4-star etc. (in case of

        Hotel Operators and Hotel

        Management Companies)

11.           Turnover and Networth                                :

      (Please attach audited Annual

      Reports for the last 3 years)

12.           Source(s) of Funding                                              :

13.          Possibility of Foreign Direct                           :                  Yes/No                                             Investment

14.           Contact Person(s)  - Name                           :

                                     - Designation

                                     - Address

                               - E-mail

                                     - Telephone No.

                                     - Fax No.

Note: Information requested at nos. 1 to 11 should be additionally provided for each member of the (proposed) joint venture or consortium.

Annexure 5

Government of India’s Disqualification Guidelines

No.6/4/2001-DD-II

Government of India

Department 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:

(a) 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.

(b) 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.

(c) In both (a) and (b), 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 bidders for various disinvestment transactions, which have not been completed as yet.

(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 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.

CLARIFICATION

Note : Vide clarification dated : 10.1.2002 to the above guidelines it has been provided that the following offence be treated as a grave offence

(1)     Orders of Securities and Exchange Board of India which directly relates to “fraud” as defined in the Securities and Exchange Board of India Act, 1992 and/or regulations made thereunder;

(2)     Orders of Securities and Exchange Board of India which  cast a doubt on the ability of the Strategic Partner to manage the Company after the sale of the Transaction Shares by the Government to the Strategic Partner;

(3)     Any conviction by a Court of Law;

(4) In cases in which Securities and Exchange Board of India also passes a prosecution order, disqualification of the Strategic Partner should arise only on conviction by the Court of Law.

Annexure 6

Guidelines for management-employee bids

No. 4/38/2002/DD-II

Government of India

Ministry of Disinvestment

Block No.14, CGO Complex,

Lodi Road, New Delhi.

Dated: 25^th April, 2003

OFFICE MEMORANDUM

Subject:- Guidelines for management-employee bids in strategic sale.

Employee participation and protection of employee interests is a key concern of the disinvestment process.   The practice of reserving a portion of the equity to be disinvested for allocation to employees, at concessional prices, has been adopted in a number of cases.  It is necessary and expedient to evolve and lay down guidelines to encourage and facilitate management-employee participation in the strategic sales and thus to acquire controlling stakes and manage disinvested public sector undertakings.  The undersigned is directed to state that Government has, therefore, decided to lay down the following guidelines for evaluating employee/management bids:-

(i)    The term ‘employee’ will include all permanent employees of a PSU and the whole time directors on the board of the PSU.  A bid submitted by employees or a body of employees will be called an “employee bid”.

(ii)   At least 15% of the total number of the employees in a PSU or 200 employees, which ever is lower, should participate in the bid.

(iii)   An employee bid would be exempted from any minimum turn over criterion but will be required to qualify in terms of the prescribed net worth criterion.  They will be required to follow the procedures prescribed for participation by Interested Parties in the process of strategic sale including, but not limited to, filing the expression of interest along with all details, as applicable to other investors, furnishing of bank guarantee for payment of the purchase price etc.

(iv)  Employees can either bid directly and independently or, for the purpose of meeting the financial criteria like net worth, can form a consortium or bid through a joint venture (JV) or a special purpose vehicle (SPV), alongwith a bank, venture capitalist or a financial institution.  However employees will not be permitted to form consortia with other companies.

(v)   If the bidding entity of the employees is a consortium, JV or SPV, employees must have a controlling stake and be in control of the bidding entity.

(vi)  If the bid is submitted through a consortium, JV or SPV, employees must contribute at least 10% of the financial bid.

(vii) If the employees form a consortium, the consortium partners would be prohibited from submitting individual bids independently. 

(viii) If it is not the highest bid, the employee bid shall be considered only if the said bid is within 10% of the highest bid.

(ix)  The employee bid shall, subject to fulfilling the conditions above, have the first option for acquiring the shares under offer provided they match the highest bid and the highest bid being equal to or more than the reserve price.

(x)   If the employee bid is not the highest bid and there are more than one employee bids within the 10% band, the highest of the employee bids will have precedence for purchase at the highest bid.  If such employee bidder is unwilling or unable to match the highest bid, the option will pass on to the next highest employee bid and so on till all the employee bids, within the 10% band, are exhausted.

(xi)  In the event of no employee bidder, within the 10% band, being willing or able to match the highest bid, the shares under offer will be sold to the highest bidding entity.

(xii) There will be a lock in period of three years for the shares disinvested by the Government.

2.       All the bidders for the management-employee buy-outs will also have to satisfy the provisions of the ‘Guidelines for qualification of bidders seeking to acquire stakes in Public sector Enterprise through the process of disinvestment’ issued vide the then Department of Disinvestment’s Office Memorandum No.6/4/2001-DD-II dated 13^th July 2001 or as amended subsequently along with other qualification criterion as generally applicable and not specifically excluded herein.

-sd-

(T.S. Krishnamachari)

Deputy Secretary to the Government of India

Preliminary Information Memorandum

Sale of

HOTEL NILACHAL ASHOK, PURI

Disclaimer and Important Notice

Lazard India Limited ("Lazard") has been retained by Government of India ("GoI") as its sole advisor in connection with the restructuring and disinvestment in India Tourism Development Corporation Limited (“ITDC”) which would include selling or leasing of its hotel properties (“the hotel properties”). Lazard has been authorised by GoI as its agent to issue this Confidential Memorandum  ("the Memorandum") to a limited number of recipients for the sole purpose of assisting those recipients in deciding whether they wish to be considered as prospective purchasers or lessees of the hotel properties.

Neither the issue of this Memorandum or Advertisement inviting Expressions of Interest nor any of its content is to be taken as any form of commitment on the part of GoI or of Lazard or of its subsidiaries, affiliates or associates or of ITDC or of Government of Orissa to proceed with the sale or lease envisaged by the issue of this Memorandum and the right is reserved, without prior notice, to amend the proposed timetable, to change the procedure, or to terminate the procedure and associated discussions and negotiations at any stage without assigning any reason.  In furnishing this Memorandum neither GoI nor Lazard undertakes to provide the recipient with access to any additional information or to update the information contained in this Memorandum or correct any inaccuracies in it.

The information contained in this Memorandum has been prepared by Lazard on the basis of information, which has been supplied by the ITDC and other sources deemed reliable and has not been independently verified by Lazard.  No liability whatsoever is accepted, and no representation, warranty or undertaking, express or implied is, or will be, made by Lazard or GoI for any of the information, projections or any of the opinions contained herein, or for any other written or oral communication transmitted or made available to the recipient, or for any errors, omissions or misstatements. Only those representations and warranties which may be made in any definitive agreement (which will not contain any representations, warranties or undertakings as to this Memorandum) shall have any effect.

Neither the issue of this Memorandum nor any part of its contents constitutes an offer to sell or an invitation to purchase any securities or any of the businesses or assets which comprise the hotel properties, and this Memorandum does not, and is not intended to, form the basis of any contract of sale/lease.

In no circumstances will Lazard or GoI be responsible for any costs or expenses incurred in connection with any appraisal or investigation of all or part of the hotel properties or for any other costs and expenses incurred by prospective purchasers/lessees in connection with the proposed sale/lease of the hotel properties.  In particular, no responsibility will be assumed for the discharge of any agents' fees of  prospective purchasers/lessees by deduction from the offer price or otherwise.

Recipients of this Memorandum should note that, in connection with any possible transaction with GoI, Lazard is acting for GoI and no one else and will not be responsible to anyone other than GoI for providing the protections afforded to customers of Lazard or for providing advice in relation to a possible transaction with GoI.

This Memorandum has been supplied only to persons who have signed an appropriate confidentiality undertaking.  Recipients are reminded that under the terms of the confidentiality undertaking the Memorandum must not be passed on to any other person nor reproduced in whole or in part without the prior written consent of Lazard.  The Memorandum and any authorised copies shall be returned promptly along with any other documents provided when the recipient has no further use of the Memorandum or at any time at the request of Lazard.

This Memorandum should not be considered as a recommendation by Lazard or by the GoI to acquire or lease the hotel properties and recipients are recommended to conduct their own investigation and analysis of the business, data and property described herein and to seek their own financial and other advice.

Recipients of the Memorandum should inform themselves about and observe any applicable legal requirements in their jurisdictions.

Lazard will act as the primary point of contact for prospective purchasers/lessees.  Under no circumstances should prospective purchasers/lessees contact the management, employees or shareholders of ITDC or GoI or visit any of the hotels in the hotel properties other than as bona fide customers.

All enquiries should be addressed to the following representatives of Lazard at:

Lazard India Limited

904 "Kailash"

Kasturba Gandhi Marg

New Delhi 110001

Saurabh Sood

Assistant Director

Tel : +91 11 2376 5166

Fax: +91 11 2376 5167
Glossary of terms

HOTEL NILACHAL ASHOK, PURI

Background and History

UAHC (unit: Hotel Nilachal Ashok at Puri ), a joint venture between ITDC and OTDC was inaugurated and put into operations in 1988.

Incorporation and Share Capital

In FY 2002-2003, the shareholding pattern of the Company was:

Figure 1 . 1: Break up of Share Capital

Source : UAHC Annual Report 2002-03

Real Estate

The total land area of the unit is 8 acres (348480 sq ft). The land will be leased from the Government of Orissa for a period of 99 years. The total built up area of the hotel is 55,396 square feet, with total floor area of one room being 265 sq ft.  According to the prevailing local authority norms, the permissible Floor to Area Ratio (FAR) is 2.5:1, with height restrictions 12 meters and ground coverage allowed 40%.

Facilities

Source : UAHC Management

Key Performance Indicators

The operating performance of the Company during the last few years is indicated below:

Figure 1 . 2 : Operational Statistics     

Employees                                                                                                                        

Executives – 2, Non Executives – 54

Advertisement Inviting EOI

An advertisement has been issued in the newspapers inviting interested parties to submit their EoI to participate in the disinvestment process of UAHC, a copy of which is enclosed as Annexure 1.  The GoI reserves the right to terminate or alter the bidding process at any stage, without prior notice or assigning any reasons therefore and without incurring any liability in respect thereof.

The Process

Following receipt of this PIM, Interested Parties will be required to submit a package comprising an Expression of Interest, a Statement of Legal Capacity and a Request for Qualification (“RFQ”) in the format specified in Annexure 2, 3, and 4 together referred to as “the EOI Package”.

Based on an evaluation of the EoI Package received, Interested Parties which are deemed to be qualified by  ITDC/GoI ("Qualified Interested Parties" or "QIPs") will be allowed to participate in the subsequent selection process (without conferring any right or expectation whatsoever to the QIPs).

Following signing of a Confidentiality Agreement ("CA") by duly authorized personnel, QIPs will be provided with the Confidential Information Memorandum ("CIM") and invited to participate further in the process as detailed in the CIM.

Pre - Qualification Criteria

Interested parties submitting an EOI for the Hotel Nilachal Ashok, Puri should have a combined net worth in excess of Rs. 2.00 crores as at the latest audited balance sheet date.

Net Worth = Equity Share Capital + Free Reserves & Surplus - Deferred Revenue / Miscellaneous Expenditure not written off – debit balance in Profit and Loss Account.

Where the financial statement is expressed in currency other than Indian Rupees, the eligible amount as described above shall be computed by taking the equivalent amount at the exchange rates prevailing on the date(s) of such financial statement as stipulated by Foreign Exchange Dealers Association of India. In the event that the date(s) are not co-terminus, the latest audited statements as approved by the Board of Directors or the closest exchange rates shall be reckoned for the purpose.

Bids by management/employees of UAHC directly and independently or in consortium or Joint Venture or a Special Purpose Vehicle (SPV), along with a bank, venture capitalist or a financial institution will be considered if the legal entity so formed is qualified as per the criteria laid down in the PIM and the guidelines issued by Ministry of Disinvestment as per Annexure 6.

This PIM along with its enclosures does not constitute any commitment on the part of the GoI or ITDC or Government of Orissa or Lazard, whether in respect of the disinvestment process or otherwise.  Furthermore, this invitation confers neither any right nor expectations to any party to participate in the said process.  Further, this process would be in accordance with the provisions of the articles of association of the Company.

The GoI reserve the right to withdraw from the process or any part thereof without assigning any reason whatsoever. No liability whatsoever shall accrue to the GoI or ITDC or Government of Orissa or Lazard in such an event.

Disqualification Criteria

The GoI shall not consider for the purpose of qualification, an EoI, which is found to be incomplete in content and/or attachments and/or authentication, etc.

Without prejudice, a sole bidder or a consortium may be disqualified and its EoI dropped from further consideration for, but not limited to, any of the reasons listed below:

·         misrepresentation by the bidder or any member of the consortium; or

·         failure by the parties mentioned above to provide necessary and sufficient information required to be provided in the EoI; or

·         where a party has already submitted an EoI as sole bidder and such party submits another EoI as a member of a consortium; or

·         where a party has already submitted an EoI as a member of a consortium and such party submits another EoI either as a sole bidder or a member of another consortium.

Further, the GoI has 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, and clarification issued on 10th January 2002, as may be modified from time to time (“Eligibility Guidelines”).  A copy of the Eligibility Guidelines is enclosed as Annexure 5.  The interested party(ies) are required to read the guidelines and satisfy themselves that they are qualified to bid for the stake in UAHC through the process of disinvestment and give an undertaking to the effect that they are qualified to bid for the stake in UAHC along with the EoI to be submitted by them.  Further, interested parties would be required to provide certain information on the criteria, laid down in the Eligibility Guidelines along with their EoI.  The interested party(ies) 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 chief executive officer (“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 GoI.

Where the interested party is a consortium, GoI may disqualify the entire consortium for any of the reasons (but not limited to) specified above, even if it applies to only one member of the consortium.

If an information becomes known which would have entitled the GoI to reject or disqualify the interested party(ies)/Bidder, the GoI reserves the right to reject such interested party(ies)/Bidder at any time after such information becomes known to the GoI.

The sole bidder, lead bidder, member of a consortium and the consortium as a whole not satisfying the eligibility and requisite qualification criteria specified in the above sections are not eligible. It must be noted that the sole bidder, lead bidder, member of a consortium and the consortium as a whole must be eligible, as per the criteria mentioned above, on the date of submission of the EoI and shall continue to be eligible throughout the Transaction.

Submission of EOI

The interested parties should submit their Expression of Interest (EOI) in Request for Qualification format enclosed as per Annexure 4.

.

Joint Ventures / Consortia

In case of a joint venture/consortium proposed to be formed specifically for the purpose of this investment, the details of the members of the joint venture/consortium, separate confirmation from each member of the proposed joint     venture/consortium and the extent of their interest therein are required to be given as        part of the EOI. Further changes in the membership of the proposed joint venture/consortium may be permitted up to the stage of submission of the financial bid, provided the quality of the joint venture/consortium is not adversely affected. GoI has the sole discretion to determine the impact of the change in membership on the quality of the joint venture/consortium and reject a proposal for such reason.

Interested Parties deemed fit by GoI/ ITDC and Lazard  (“Qualified Interested Parties”) will subsequently be provided with further information to enable them to evaluate the opportunity.

Foreign Direct Investment

Sector specific guidelines on foreign direct investment for hotels and tourism given in the Manual on Foreign Direct Investment in India (Annexure IV, Point 18) of the Secretariat for Industrial Assistance, Ministry of Commerce & Industry, Government of India of August 2003 will be applicable (http://www.dipp.nic.in).

Last Date of Submission of EOI

The completed RFQ with all relevant documents should be submitted to Lazard India Limited not later than February 10, 2004.

Enquiries

GoI reserves the right, in their sole discretion, not to respond to any questions raised or provide clarifications sought, if considered inappropriate or prejudicial to do so. Nothing in this section shall be taken or read as compelling or requiring the GoI to respond to any question or provide any clarification. No extension of any time and date referred to in this PIM shall be granted on the basis or grounds that the GoI has not responded to any question or provided any clarification.

Governing Law / Jurisdiction

This Transaction shall be governed by the laws of India. All disputes arising out of the disinvestment process shall be subject to the exclusive jurisdiction of the courts at New Delhi.

Annexure 1

GOVERNMENT OF INDIA

MINISTRY OF DISINVESTMENT

[This announcement is neither a prospectus nor an offer or an invitation for sale of shares, securities or debentures to the public.]

EXPRESSION OF INTEREST

INDIA TOURISM DEVELOPMENT CORPORATION LIMITED (ITDC)

In continuation of the restructuring / disinvestment programme of ITDC, 100% shareholding of the following two Joint Venture hotel companies of ITDC are being offered for sale:-              

Party(ies) interested in submitting EOI for the above hotel property/(ies) should have a combined net worth of at least Rs. 2.00 crores as on their latest audited balance sheet date.

Net Worth = Equity Share Capital + Free Reserves & Surplus - Deferred Revenue / Miscellaneous Expenditure not written off – debit balance in Profit and Loss Account.

The Preliminary Information Memorandum (PIM) containing additional information, qualification requirements, formats for Expression of Interest (EOI), Request for Qualification (RFQ) etc. can be accessed at: www.theashokgroup.com/ www.divest.nic.in or obtained from Mr. Saurabh Sood (saurabh.sood@lazard.com) at Lazard India Limited (Advisors to GoI), 904, Kailash, Kasturba Gandhi Marg, New Delhi – 110 001 (Phone: 91-11-23765166 Fax: 91-11-23765167). The Party(ies) interested in one or more of the above properties are required to submit the completed RFQ with all relevant documents to Mr. Saurabh Sood, Lazard India Limited not later than 1730 hrs (IST) February 10, 2004.

Annexure 2

{EXPRESSION OF INTEREST ('EOI')}

(To be forwarded on the letterhead of the interested parties/members of the consortium/joint venture submitting the EoI).

Ref   : _________

Date : _________

Sub: EXPRESSION OF INTEREST FOR PROPOSED ACQUISITION OF UTKAL ASHOK HOTEL CORPORATION LIMITED (unit : Hotel Nilachal Ashok, Puri)

Sir,

We refer to the advertisement dated____________ inviting Expression of Interest for proposed acquisition of Utkal Ashok Hotel Corporation (unit: Hotel Nilachal Ashok, Puri).

We have read and understood the contents of PIM and the advertisement and wish to participate in the above disinvestment process.

* We propose to submit our EoI in an individual capacity for and on behalf of (insert company name) for the acquisition of Utkal Ashok Hotel Corporation (unit : Hotel Nilachal Ashok, Puri)

* We have formed / propose to form a consortium/joint venture comprising the following members:

1. __________________(Insert company name)

2. __________________(Insert company name)

3. __________________(Insert company name)  

We confirm that we/our consortium/joint venture/proposed consortium / proposed joint venture* satisfy the eligibility criteria set out in the relevant sections of the PIM including the guidelines for qualification of bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment issued by the Government of India vide Department of Disinvestment OM No. 6/4/2001-DD-II dated 13th July, 2001. The Statement of Legal Capacity and Request for Qualification as per formats, indicated hereinafter duly signed by us/ respective members, who jointly satisfy the eligibility criteria, are enclosed.

We certify that in regard to matters other than security and integrity of the country, we have not been convicted by a Court of law or indicted or adverse orders passed by a regulatory authority which would cast a doubt on our ability to manage the public sector unit when it is disinvested or which relates to a grave offence that outrages the moral sense of the community.

We further certify that in regard to matters relating to security and integrity of the country, we have not been convicted by a court of Law for any offence committed by us or by any of our sister concerns and no charge sheet has been filed by any agency of the Government for any offence committed by us or by any of our sister concerns.

We further certify that no investigation by a regulatory authority is pending either against us or against our sister concerns or against our CEO or any of our Directors/Managers/employees.

The request of Qualification as per format duly signed by us/respective members, who jointly satisfy the eligibility criteria, is enclosed.

We shall be glad to receive further communication on this subject.

Yours faithfully,

Authorised Signatory
For and on behalf of

* strike off whichever is not applicable.

Annexure 3

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 :

Mr. Saurabh Sood

Assistant Director

Lazard India Limited

904 "Kailash"

Kasturba Gandhi Marg

New Delhi - 110001

Tel : 91 11 2376 5166

Fax: 91 11 2376 5167

Email : saurabh.sood@lazard.com

SUB: Expression of Interest (EoI) – Proposed Acquisition of Punjab Ashok Hotel Company Ltd (unit : Hotel Anandpur Ashok, Anandpur Sahib) - Statement of Legal Capacity

Sir,

We refer to the advertisement dated____________ inviting Expression of Interest for proposed acquisition of Punjab Ashok Hotel Corporation (unit: Hotel Anandpur Ashok, Anandpur Sahib).

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 representatives on our behalf and has been duly authorized to submit the EoI. Further, the authorized 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 of our consortium and on our behalf and has been duly authorized to submit the EoI. Further, the authorized signatory is vested with requisite powers to furnish such letter and Request for Qualification and authenticate the same. *

Yours faithfully,

Authorised Signatory
For and on behalf of

* strike off whichever is not applicable.

Annexure 4

REQUEST FOR QUALIFICATION (FORMAT)

 Name of the hotel property for which this RFQ is submitted:.                                     

1.       Name of the Interested Party                        :

2.       Legal Status                                                                    : Incorporated / Not Incorporated

3.       Year and Country of Incorporation       :

4.       Please Specify                                                                           : Public Company/ Private Company/ Joint                                                                                                                       Venture/Consortium/Partnership Firm etc.

(In case of a consortium, a specific commitment letter is required from each consortium member. A Power of Attorney in favour of the lead consortium member to act on behalf of the consortium is also required.

5.       Details of Shareholding/Interest           :       

6.       Role of each Member in the                          :

Consortium (if applicable) 

7.  Stock Exchange(s) where Listed     :                                                                    (if applicable)

8.       Address of Registered Office                         :

9.       Brief Description of Business (es)                  :

    and Operations

10. No. of Hotels and Rooms Owned/:                                                         

 Managed in each category such

     as 5-star, 4-star etc. (in case of

     Hotel Operators and Hotel

     Management Companies)

11. Turnover and Networth                                    :

      (Please attach audited Annual

      Reports for the last 3 years)

12. Source(s) of Funding                                        :

13.     Possibility of Foreign Direct                          :                  Yes/No                                              Investment

14. Contact Person(s)     - Name                           :

                                     - Designation

                                     - Address

                               - E-mail

                                     - Telephone No.

                                     - Fax No.

Note: Information requested at nos. 1 to 11 should be additionally provided for each member of the (proposed) joint venture or consortium.

Annexure 5

Government of India’s Disqualification Guidelines

No.6/4/2001-DD-II

Government of India

Department 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:

(a) 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.

(b) 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.

(c) In both (a) and (b), 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 bidders for various disinvestment transactions, which have not been completed as yet.

(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 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.

CLARIFICATION

Note : Vide clarification dated : 10.1.2002 to the above guidelines it has been provided that the following offence be treated as a grave offence

(1)     Orders of Securities and Exchange Board of India which directly relates to “fraud” as defined in the Securities and Exchange Board of India Act, 1992 and/or regulations made thereunder;

(2)     Orders of Securities and Exchange Board of India which  cast a doubt on the ability of the Strategic Partner to manage the Company after the sale of the Transaction Shares by the Government to the Strategic Partner;

(3)     Any conviction by a Court of Law;

(4) In cases in which Securities and Exchange Board of India also passes a prosecution order, disqualification of the Strategic Partner should arise only on conviction by the Court of Law.

Annexure 6

Guidelines for management-employee bids

No. 4/38/2002/DD-II

Government of India

Ministry of Disinvestment

Block No.14, CGO Complex,

Lodi Road, New Delhi.

Dated: 25^th April, 2003

OFFICE MEMORANDUM

Subject:- Guidelines for management-employee bids in strategic sale.

Employee participation and protection of employee interests is a key concern of the disinvestment process.   The practice of reserving a portion of the equity to be disinvested for allocation to employees, at concessional prices, has been adopted in a number of cases.  It is necessary and expedient to evolve and lay down guidelines to encourage and facilitate management-employee participation in the strategic sales and thus to acquire controlling stakes and manage disinvested public sector undertakings.  The undersigned is directed to state that Government has, therefore, decided to lay down the following guidelines for evaluating employee/management bids:-

(i)    The term ‘employee’ will include all permanent employees of a PSU and the whole time directors on the board of the PSU.  A bid submitted by employees or a body of employees will be called an “employee bid”.

(ii)   At least 15% of the total number of the employees in a PSU or 200 employees, which ever is lower, should participate in the bid.

(iii)   An employee bid would be exempted from any minimum turn over criterion but will be required to qualify in terms of the prescribed net worth criterion.  They will be required to follow the procedures prescribed for participation by Interested Parties in the process of strategic sale including, but not limited to, filing the expression of interest along with all details, as applicable to other investors, furnishing of bank guarantee for payment of the purchase price etc.

(iv)  Employees can either bid directly and independently or, for the purpose of meeting the financial criteria like net worth, can form a consortium or bid through a joint venture (JV) or a special purpose vehicle (SPV), alongwith a bank, venture capitalist or a financial institution.  However employees will not be permitted to form consortia with other companies.

(v)   If the bidding entity of the employees is a consortium, JV or SPV, employees must have a controlling stake and be in control of the bidding entity.

(vi)  If the bid is submitted through a consortium, JV or SPV, employees must contribute at least 10% of the financial bid.

(vii) If the employees form a consortium, the consortium partners would be prohibited from submitting individual bids independently. 

(viii) If it is not the highest bid, the employee bid shall be considered only if the said bid is within 10% of the highest bid.

(ix)  The employee bid shall, subject to fulfilling the conditions above, have the first option for acquiring the shares under offer provided they match the highest bid and the highest bid being equal to or more than the reserve price.

(x)   If the employee bid is not the highest bid and there are more than one employee bids within the 10% band, the highest of the employee bids will have precedence for purchase at the highest bid.  If such employee bidder is unwilling or unable to match the highest bid, the option will pass on to the next highest employee bid and so on till all the employee bids, within the 10% band, are exhausted.

(xi)  In the event of no employee bidder, within the 10% band, being willing or able to match the highest bid, the shares under offer will be sold to the highest bidding entity.

(xii) There will be a lock in period of three years for the shares disinvested by the Government.

2.       All the bidders for the management-employee buy-outs will also have to satisfy the provisions of the ‘Guidelines for qualification of bidders seeking to acquire stakes in Public sector Enterprise through the process of disinvestment’ issued vide the then Department of Disinvestment’s Office Memorandum No.6/4/2001-DD-II dated 13^th July 2001 or as amended subsequently along with other qualification criterion as generally applicable and not specifically excluded herein.

-sd-

(T.S. Krishnamachari)

Deputy Secretary to the Government of India