1                   Submission of Expression of Interest

1.1            Introduction

1.1.1          The Government of India (“GoI”) presently holds 81.57% of the total voting equity share capital in Manganese Ore (India) Limited (“MOIL") and intends to disinvest such portion of its equity which is equivalent to 51% of the total voting equity share capital in MOIL to a strategic investor along with management control through a competitive bidding process which shall be handled solely by GoI. The Government of Madhya Pradesh (“GoMP”), holding 8.81% of the total voting equity share capital in MOIL, also intends to disinvest its entire voting equity share capital to the strategic investor identified by GoI. The proposed disinvestment by GoI and the GoMP is hereinafter referred to as the “Transaction”. Further, the Transaction may also involve the disinvestment of 9.62% of the total voting equity share capital in MOIL held by the Government of Maharashtra (“GoM”).

1.1.2          This Preliminary Information Memorandum (“PIM”) has been prepared to enable potential bidders to submit their Expression of Interest (“EoI”), subject to the ‘Disclaimer and Important Notice’ set out earlier.

1.1.3          The GoI has appointed KPMG India Private Limited (“KPMG”) as the Advisors and L&L as the legal advisors for the disinvestment process. 

1.1.4          For the purposes of this Transaction, the potential bidder shall ascertain the applicability of all laws including Indian laws and shall ensure compliance with the same.

1.2            Advertisement Inviting EoI

1.2.1          An advertisement has been issued in the newspapers inviting interested parties to submit their EoI to participate in the disinvestment process of MOIL, a copy of which is enclosed as Annexure 6.  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.

1.3            The Process

1.3.1          The process has been divided into two stages:

Stage I

1.3.2          In the first stage, all interested parties would be required to submit an Expression of Interest (“EoI”), which shall comprise of the Expression Letter (provided in Annexure 1), Request for Qualification (“RFQ”, provided in Annexure 2) and Statement of Legal Capacity (provided in Annexure 3).  The EoI will be used for pre-qualifying the interested parties on the criteria specified, without conferring any right or expectation whatsoever.  All pre-qualified parties will be required to execute a Confidentiality Undertaking (“CU”).

Stage II

1.3.3          In the second stage, the pre-qualified parties who have executed the CU (“Bidder/s”) will be eligible to receive the Information Pack comprising a Confidential Information Memorandum (“CIM”) and draft Transaction document(s) from KPMG.  The process thereafter would be as specified in the CIM or in other communication.

1.4            Preliminary Eligibility Criteria

1.4.1          The EoI may be submitted by domestic or foreign incorporated entities either as a sole bidder or as part of a consortium, for acquiring the total voting equity share capital in MOIL being disinvested subject to the terms and conditions specified in this PIM and any other subsequent additions and modifications.

1.4.2          In case of a consortium bid, there will be a lead bidder, who will be singly required:

(a)                in the case of direct shareholding  in MOIL  by the consortium members - to be the single largest shareholder amongst the members of the consortium and such shareholding of the lead bidder shall be more than 50% of the  total voting equity share capital in MOIL being disinvested; or

 

(b)                in the case of joint venture/company promoted / to be promoted by the consortium members for acquiring the total voting equity share capital in MOIL being disinvested - to be the single largest shareholder of such company  and such shareholding of the lead bidder shall be more than 50% of the total voting equity share capital of such company.

1.4.3          For submitting the EoI and for being considered for subsequent qualification for Stage II of the disinvestment process the interested parties must satisfy the following eligibility criterion:

Particulars as per latest audited accounts as accepted by the Board of Directors:
Net worth	Indian Rupees 75,00,00,000

1.4.4          In the case of consortium bid, the above criterion would apply to the consortium as a whole and the net worth of the lead bidder must be at least 51% of the stipulated Net Worth criterion of Rs. 75,00,00,000. Further in the case of consortium bid, the Net Worth of only those members of the consortium shall be counted who propose to take at least 15% of the total voting equity share capital in MOIL being disinvested in case of a direct consortium bid or who propose to take at least 15% of the total voting equity stake in the company promoted / to be promoted by the consortium members for acquiring the total voting equity share capital in MOIL being disinvested.

1.4.5            Bids by management/employees of MOIL 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 5.

1.4.6          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.

1.4.7          Net Worth = Equity Share Capital + Free Reserves & Surplus - deferred revenue / miscellaneous expenditure not written off – debit balance in Profit and loss account.

1.4.8          This PIM along with its enclosures does not constitute any commitment on the part of the GoI or MOIL or KPMG, 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.

1.4.9          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 MOIL or KPMG in such an event.

1.5            Disqualification

1.5.1          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.

1.5.2          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:

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

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

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

n        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.

1.5.3          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 4.  The interested party(ies) are required to read the guidelines and satisfy themselves that they are qualified to bid for the stake in MOIL through the process of disinvestment and give an undertaking to the effect that they are qualified to bid for the stake in MOIL 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.

1.5.4          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.

1.5.5          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.

1.5.6          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.

1.6            Terms and Conditions for Submission

1.6.1          The interested parties should submit their EoI, in duplicate.  The EoI is to be duly signed by the authorized signatory of the interested party / designated lead bidder of the consortium.  However in the case of a consortium, the Statement of Legal Capacity and RFQ will also have to be submitted by each member of the consortium duly signed by an authorised official of the member of such consortium.

1.6.2          The RFQ as given in Annexure 2 should be duly filled in and accompanied by the following details.

1.6.3          In case of a sole bidder  the following shall be furnished together with the EoI:

n         Audited Balance Sheet and Profit & Loss Account of the sole bidder as approved by the Board of Directors (Indian /Foreign incorporated entity) for the last 3 financial years.

n        Write-up on:

-           Background of the sole bidder.

-           A statement of reasons for strategic interest in MOIL.

-           Details of litigation and/or legal/ statutory enquiry if any, including litigation by the bidder against MOIL.

-           Any other information considered material.

-           Statement as regards any indictment by any income tax, sales tax, customs and excise authorities. 

1.6.4          In case of a consortium bid the following shall be furnished together with the EoI :

n         Audited Balance Sheets and the Profit & Loss Accounts as approved by the Board of Directors for the last 3 financial years of all the members (Indian /Foreign incorporated entity(ies)) of the consortium.

n        Write-up on:

-          Background of the lead bidder.

-          A statement of reasons for strategic interest in MOIL as a consortium.

-          Background of all member companies in the consortium.

-          Details of litigations and/or legal/statutory enquiry, if any, of the lead bidder and every member of the consortium including litigation by any of them against MOIL.

-          Any other information considered material.

-           Statement as regards any indictment by any income tax, sales tax, customs and excise authorities. 

1.6.5          The EoI must be in English and each copy of the EoI shall be bound in separate volumes. Submission of the aforesaid documents by electronic means and/or facsimile will not be accepted. The EoI duly completed should be submitted not later than 17:30 hours on 23 June 2003 in a sealed envelope superscribed “Private and Confidential-Expression of Interest for MOIL” at the following address:

Mr. Ramit Sethi / Mr. Gaurav Khungar/ Ms. Parul Jain KPMG India Private Limited Block No. 4 B, DLF Corporate Park, DLF City, Phase III Gurgaon - 122 022 Haryana India

1.6.6          Any change by way of withdrawal/substitution of any member of the consortium or any change affecting the composition of the consortium or formation of a consortium by a sole bidder may be permitted by the GoI upto the stage of submission of final bid or such time as the GoI may in its sole discretion decide. The GoI has the sole discretion to determine the impact of the change in membership on the quality of the consortium and reject a proposal for such reason.

1.6.7          The EoI submitted by interested parties shall be evaluated on the basis of the criteria specified in the Preliminary Eligibility Criteria, the EoI submitted, public sources of information and the Disqualifications in this document.  If at any time during the evaluation process, GoI and/or KPMG require any clarifications, they reserve the right to request such information from the interested party(ies) and such interested party(ies) shall be obliged to provide the same  forthwith.

1.6.8          GoI reserves the right to accept or reject any EoI without stating any reasons thereof. Only those parties that are found eligible, in the sole discretion of the GoI will be informed of the same, and provided further information.  No liability whatsoever shall accrue to the GoI in such an event.

1.6.9          The bidder shall bear all costs associated with the preparation and submission of the EoI.  The GoI or MOIL or KPMG shall not, under any circumstances, be responsible or liable for any such costs, whether direct, incidental or consequential.

1.7            Enquiries

1.7.1          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.

1.8            Governing Law/Jurisdiction

1.8.1          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.

2                   Manganese Ore (India) Limited

2.1            Background and History

2.1.1          In the beginning of the 20th century, a British company named Central Provinces Prospecting Syndicate (“CPPS”) started manganese ore mining activities in the region now known as the states of Maharashtra and Madhya Pradesh.  In 1935, CPPS was renamed as the Central Provinces Manganese Ore Company Limited (“CPMO”).2.1.2          Manganese Ore (India) Limited was formed in 1962 to take over the mining activities of CPMO.  This Nagpur based company is primarily engaged in mining of manganese ore and presently operates ten manganese mines located in the states of Maharashtra and Madhya Pradesh. Whilst three of these mines are worked by opencast method, the rest are worked by underground method.  MOIL has the country’s largest underground manganese mining operations with its Balaghat mine being Asia’s deepest underground manganese mine.

2.2            Incorporation and Share Capital

2.2.1          MOIL was incorporated as a limited liability company in 1962 with a 17% equity share holding by the Government of India, 17% each by the State Governments of Maharashtra and Madhya Pradesh and the balance 49% held by CPMO.  In October 1977, the 49% shares held by CPMO were also acquired by the Central Government.  Subsequently in FY 1996, the Central Government infused funds of Rs 25 million into the Company by way of share capital.

2.2.2          Current authorized share capital of MOIL is Rs.300 million and the paid up capital is Rs.153.3 million.  In FY 2002, the shareholding pattern of the Company was:

Figure 2 . 1 : Share holding pattern

Name of Shareholder	% Holding
Government of India	81.57
Government of Maharashtra	9.62
Government of Madhya Pradesh	8.81
	100 .00
Source: MOIL Management

2.3            Management

2.3.1          A Board Of Directors nominated by the GoI and the State Governments of Maharashtra and Madhya Pradesh manages the Company.  There are presently five Directors, including the Chairman-cum-Managing Director.  Senior executives posted at the corporate office and at the respective mines manage the day-to-day affairs of the Company. 

2.3.2          The following table sets out the Board Of Directors.

Figure 2 . 2 : Names of the Board of Directors

Name	Designation
P.M. Reddy	Chairman-cum-Managing Director
Dr. S.N. Dash	Director
P.P. Mathur	Director
V.S. Dhumal	Director
Dr. K.L. Ukey	Company Secretary & Senior Deputy General Manager (Legal)
Source: MOIL Annual Report 2001-2002

2.3.3          The following table sets out the names of the key executives of the Company.

Figure 2 . 3 : Names of key executives

Name	Designation
B.B. Choudhary	Executive Director – Commercial
S.M. Bothra	General Manager –Technical and Environment
D.L. Choudhary	General Manager – Production
P.K. Banerjee	General Manager – Personnel
A.K. Mehra	General Manager – Materials
M.A.V. Goutham	General Manager – Finance
Source: MOIL Annual Report 2001-2002

2.4            Key locations

2.4.1          MOIL is presently operating ten manganese mines, six of them are in Maharashtra and four in Madhya Pradesh.  The Company’s corporate office is located at Nagpur, Maharashtra.  It has liaison offices at New Delhi, Visakhapatnam and one each at the ten mine sites. 

2.5            Diversification

2.5.1          The Company is primarily engaged in mining of manganese ore.  It also produces value added manganese through a 10,000 tonnes Ferro Manganese facility next to the Balaghat mine and a 1,000 tonnes Electrolytic Manganese Dioxide (“EMD”) facility in the Dongri Buzurg mine.

2.6            Market in India

2.6.1          As on 1 April 1995 the total recoverable reserves of manganese ore in India were estimated at about 167 million tonnes.

2.6.2          The following table sets out the state wise distribution of recoverable manganese ore in India as on that date:

Figure 2 . 4 : State wise distribution of reserves

State	Reserves in MT	Percentage (%)
Orissa	52.81	31.60
Karnataka	41.05	24.53
Madhya Pradesh	23.64	14.13
Goa	16.86	10.00
Maharashtra	16.66	9.96
Andhra Pradesh	11.90	7.11
Bihar	2.36	1.41
Gujarat	1.48	0.88
Rajasthan & West Bengal	0.55	0.38
Total	167.31	100
Source: MOIL management

2.6.3          The following table sets out the grade wise distribution of recoverable manganese ore in India as on 1 April 1995.

Figure 2 . 5 : Grade wise distribution of recoverable reserves

Grade	Reserves in MT	Percentage (%)
Battery grade ore	2.40	1.40
Ferro Manganese grade ore	33.00	19.70
Medium grade ore	38.63	23.10
Blast Furnace grade ore	65.50	39.20
Mixed and unclassified grades of ore	27.78	16.60
Total	167.31	100 .00
Source: MOIL management

2.6.4          India produced 1.58 MT and consumed 1.29 MT of manganese ore in the FY 2001.  The Indian manganese ore industry largely caters to the domestic requirements of various grades of manganese ore.  Imports are primarily restricted to EMD.  Exports of manganese ore from India are in small quantities.

2.6.5          The following table sets out the principal producers of manganese ore in India, in the year FY 2001:

Figure 2 . 6 : Principal producers of manganese ore in India

Principal Manganese Ore Producers	State in which mines are located
Aryan Mining & Trading Corporation (P) Limited	Orissa
Bharat Process & Mechanical Engineers Limited	Orissa
Manganese Ore India Limited	Madhya Pradesh, Maharashtra
Mangilal Rungta	Orissa
Orissa Manganese & Minerals (P) Limited	Orissa
Orissa Mineral Development Co. Limited	Orissa
Orissa Mining Corporation Limited	Orissa
R.B.S.S.D & F.N Das	Andhra Pradesh
Rashtriya Ispat Nigam Limited	Andhra Pradesh
Tata Iron & Steel Co. Limited	Orissa
The Sandur Manganese & Iron Ores Limited	Karnataka
Source: Indian Mineral Yearbook, 2001

2.6.6          The following table sets out the principal producers of manganese dioxide in India, in the year 2000-2001:

Figure 2 . 7 : Principal producers of EMD in India

Principal Manganese Dioxide Ore Producers	State in which mines are located
Bharat Process & Mechanical Engineers Ltd.	Orissa
Manganese Ore India Ltd.	Madhya Pradesh, Maharashtra
Mangilal Rungta	Orissa
Orissa Mineral Development Co. Ltd.	Orissa
Orissa Mining Corporation Ltd.	Orissa
Tata Iron & Steel Co. Ltd.	Orissa
Source: Indian Mineral Yearbook, 2001

2.7            MOIL’S Market in India

2.7.1          MOIL is the leading manganese ore player in India.  Manganese ore is an important material in iron and steel metallurgy.  It is an essential constituent of steel and there is no satisfactory substitute for it in the manufacturing of steel.  During FY 2001, MOIL’s sales were about 45% of the total domestic consumption of manganese ore.  MOIL’s market share in high-grade ore was 89% and that of dioxide ore was 42.5%.  Its market share in ferro manganese and EMD during the same year was about 4% and 8% respectively. 

Select clients

2.7.2          MOIL with its consistent quality of ore and understanding of the market requirements in India is a significant player in the domestic market.  Almost all the Indian producers of ferro manganese and silico manganese are procuring manganese ore from MOIL.  Some of the select customers of MOIL have been mentioned below:

n        Bhilai Steel Plant (Maharashtra Electrosmelters Limited)

n        Nav Bharat Ferro Alloys

n        Universal Ferro Allied & Chemicals

n        S.K. Sarawagi & Co.

n        Maithan Ferro Alloys

n        Srinivasa Ferro Alloys

n        Impex Ferro Tech.

n        Sova Ispat Ltd.

n        Shyam Ferro Alloys

n        Tata Iron & Steel Co.

2.8            Key Performance Indicators

2.8.1          Key financial indicators of MOIL’s performance have been set out below:

Figure 2 . 8 : Key financial indicators                                                                            Rs million

Particulars	FY 1998	FY 1999	FY 2000	FY 2001	FY 2002
Sales	1,128	1,182	1,341	1,652	1,679
Profit before Interest, Tax & Depreciation	290	260	228	368	384
As a percentage of sales	26%	22%	17%	22%	23%
Profit Before Tax	238	200	172	310	300
As a percentage of sales	21%	17%	13%	19%	18%
Profit After Tax	142	137	117	201	195
As a percentage of sales	13%	12%	9%	12%	12%
Dividend	31	31	31	41	41
Share Capital	153	153	153	153	153
Reserve & Surplus	552	655	736	890	1,044
Borrowings	Nil	44	Nil	Nil	Nil
Gross Block	676	771	810	901	966
Working Capital	321	452	490	623	761
Capital Employed	616	793	827	1,002	1,159
Source: MOIL management – as per annual audited accounts

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

Figure 2 . 9 : Production statistics                                                                                              

                                                                                                                                            tonnes                          

FY	Total	Ferro grade	EMD	Ferro manganese
1998	660,644	417,315	750	-
1999	614,365	384,523	764	2,690
2000	651,523	421,575	761	9,787
2001	654,448	450,991	781	11,327
2002	675,704	505,128	786	8,763
Source: MOIL management

 

2.8.3          The quantitative sales performance in tonnes for the last five years is indicated below:

Figure 2 . 10 : Grade wise sales quantity                                                                                                               

                                                                                                                                                     tonnes

Grade	FY 1998	FY 1999	FY 2000	FY 2001	FY 2002
Dioxide	20,848	22,719	24,600	26,426	26,354
Ferro Gr.	410,212	366,894	299,831	357,204	392,214
LGHS	131,195	155,817	155,504	142,562	137,539
Others	55,276	27,729	32,955	50,447	35,744
Export	-	16,250	57,150	69,800	76,000
Total ore	617,531	589,409	570,040	646,439	667,851
EMD	716	802	803	642	865
Ferro Mn.	-	1647	8,883	11,851	7,789
Source: MOIL management

2.8.4          MOIL is a debt free company.  It has working capital financing arrangement with consortium of bankers comprising the Bank of India and the Syndicate Bank.  However, it is not availing the facility as business operations and working capital are being funded through internal accruals.

2.9            Mining

2.9.1          Based on productivity, manganese ore mining in the country is carried out primarily by opencast method and only to a limited extent by underground method.  Out of the 171 mines in India, 8 are underground mines out of which 7 are operated by MOIL.  The Grades of manganese ore marketed by MOIL are listed below along with production figures for FY 2002:

Figure 2 . 11 : Grade wise ore production

Grade	Production (‘000 tonnes)	% Share of total
Ferro grade	406	60
LGHS ore	138	20
Fines	9	1
Drom	99	15
Peroxide	24	4
Total	676	100
Source: MOIL management

2.9.2          The following table sets out some key features of the mines located in Madhya Pradesh:

Figure 2 . 12 : Key features of mines in Madhya Pradesh

Location	Balaghat	Sitapatore-Sukli	Tirodi	Ukwa
Method of working	Underground	Opencast	Opencast	Underground
Area (hectares)
Lease	183.09	56.09	521.56	272.64
Forest	29.00	48.08	115.47	1.982
Source: MOIL management

2.9.3          The following table sets out some key features of the mines located in Maharashtra:

Figure 2 . 13 : Key features of mines in Maharashtra

Location	Beldongri	Chikla	Dongri Buzurg	Gumgaon	Kandri	Munsar
Method of working	Underground	Underground	Opencast	Underground	Underground	Underground
Area (hectares)
Lease	65.13	150.65	170.73	85.90	83.06	149.07
Forest	-	70.07	100.45	0.55	37.82	15.55
Source: MOIL management

2.10       Electrolytic Manganese Dioxide Facility

2.10.1      Electronic Manganese Dioxide is used in the manufacturing of dry cell batteries. As a part of its diversification plan, MOIL set up an EMD plant at its Dongri Buzurg mines, Maharashtra with a current production capacity of 1,000 tonnes per annum (tpa).  The details of production during the last  4 years is as below:

Figure 2 . 14 : EMD facility                                                                                                                                                                                         tonnes                                                                      

FY
1999	764
2000	761
2001	781
2002	786
Source: MOIL management

2.10.2      With advancement in battery technologies, zinc chloride batteries and alkaline batteries are gaining market due to their superior quality.  The quality of the EMD produced at MOIL was earlier suitable for conventional ammonium chloride batteries.  In an expansion phase, the equipments and methods have been changed to produce EMD suitable for zinc chloride batteries.  

2.10.3      The current customers of MOIL include some of the leading battery manufacturers in India, namely, Matsushita Lakhanpal Battery Limited, Indo National Limited and Geep Industrial Syndicate Limited.

2.11       Ferro Manganese

2.11.1      Ferro alloys are one of the key inputs required for producing all types of steel.  In FY1999, MOIL diversified into the metallurgical industry by setting up a Ferro Manganese facility of 5MVA (mega volt amperes), next to its Balaghat mine.

2.11.2      Manganese ore, coke and limestone/dolomite are the basic raw materials for production of high carbon ferro manganese (“HCFM”).  It is a carbon-electrothermic process where oxides are reduced by the carbon present in coke at a necessary temperature provided by an electric arc.  With load utilization of 95%, time utilization of 92% and plant availability of 95%, the facility is capable of producing 10,000 tonnes of HCFM or 6,800 tonnes of silico manganese.  It is able to sell its full production, primarily to stainless steel manufacturers.

2.12       Safety and safety policy

2.12.1      Mining by its nature, and particularly underground mining is a hazardous occupation.  MOIL is operating 10 manganese ore mines, of which 7 have extensive deep underground workings. 

Accident Statistics

2.12.2      The statistics of fatal, serious and reportable accidents at the company’s mines year-wise from FY 1985 to FY 2002 is given below:

Figure 2 . 15 : Accident statistics

Year	Number of accidents			Rate per thousand persons employed
	Fatal	Serious	Reportable	Fatal	Serious	Reportable
1998	1	10	136	.12	1.28	17.40
1999	3	10	80	.38	1.29	10.33
2000	1	10	63	.12	1.25	7.91
2001	1	5	39	.12	0.61	4.76
2002	2	14	23	.27	1.90	3.12
Source: MOIL management

Safety policy and Internal Safety Organization

2.12.3      The Company has adopted a comprehensive safety policy and has a full-fledged internal safety organization, headed by the General Manager - Safety and supported by safety officers at the respective mines.

National Safety Awards

2.12.4      The Company has been winning the National Safety Awards (Mines), consistently since its inception in 1982, reflecting satisfactory safety performance of the company.

2.13       Industrial relations

2.13.1      Industrial Relations continued to be cordial and peaceful during the year 2001-2002.

2.14       Research and Development

2.14.1      About two thirds of MOIL’s total production of manganese ore is from underground workings.  The thrust of the company’s R&D efforts is therefore directed towards meeting the challenges of safe and cost effective mining of manganese ore at an increasing depth.  Some of the key areas, which have been covered by these efforts, include the following.

Technologies developed in-house and fully adopted

n        Pre-mining ground re-enforcement by cable bolting in underground mines

n        Introduction of hydraulic sand stowing in the underground mines

n        Introduction of post pillar methods of mining to reduce consumption of timber

n        Use of steel for construction of ore passes and man ways in underground

Projects for technology up gradation under R&D stage:

n        Introduction of open stoping methods in select areas, initially on an experimental basis

n        Introduction of mechanical handling of ore in working stopes

n        Studies for effective use of under size material generated during mining and processing of ore

n        Optimization of process parameters in the EMD and the ferro manganese plant.

n        Up gradation of low-grade ores by different techniques of beneficiation, thereby improving usability and value of low-grade ores.

On-going R&D for continuous improvement in existing practices:

n        Rock mechanics instrumentation and application of recent advancements in rock mechanics for monitoring ground behavior in underground mines

n        Pit slope stability studies in open cast mines and optimization of slope angles to reduce development costs

n        Blast studies in underground as well as open cast mines, for optimization of blasting parameters, reduction in explosive consumption and blasting costs, and improvement in fragmentation of blasted material

2.15       Environmental Management

Eco-development and Environmental Preservation

2.15.1              Considering the nature and extent of problem and concern for conserving the environment, MOIL, took a lead in large scale afforestation around the Company’s mines, with special emphasis on reclamation of mined areas and rehabilitation of spoil dumps, supported by exhaustive research and development.  An integrated biotechnological approach has been adopted to achieve the goal of sustainable and eco friendly mining.  This has helped to improve mine environment.   

Status of afforestation and future plans

2.15.2              The total leasehold area held by MOIL is 1735.93 hectares for manganese ore, out of which 386.40 hectares or roughly 18% falls under spoil dumps.  The total area covered under afforestation upto FY2002 plantation season is 444 hectares, about 2/3rd of which is on spoil dumps.  More that 1.25 million saplings have been planted upto FY 2002 plantation season, and the survival rate is around 80%.

2.15.3              The major species planted are shishum, cassia, teak, neem, eucalyptus and mango.  Afforestation to the extent of 40,000 to 50,000 saplings would be undertaken in the coming years until the entire separable area is fully covered under plantation.  This brings almost 3/4th of the total land available within the Company’s leasehold area, which is separable for plantation activity, already covered under plantation.  The emphasis, however, has now shifted to maintenance of the existing plantation.

2.15.4              MOIL is also taking initiative to arrange plantation in the nearby public places such as local schools, along roadside and even at the Government land adjacent to the leasehold area.

Water

2.15.5              Mine water has no toxic effect and is chemically harmless.  Water is discharged to nearby sewages and agricultural land after duly ensuring that suspended solids are removed.  Drinking water is provided to the employees both at residential areas and mine from the public water distribution system, tube wells.  Regular monitoring of water quality is undertaken.

Air borne dust

2.15.6              To keep the air free from dust MOIL regularly sprinkles the mine roads in regular and systematic manner.  Regular monitoring of dust levels, oxides of nitrogen and silica oxide is carried out.

Noise

2.15.7              Generally, noise level in the mine is much below the threshold limit.  To keep levels within the threshold limits, regular maintenance of machines is done.

Vibrations

2.15.8              Regular R&D in respect of heavy blasting is done by engaging specialized research institutes and academic bodies, to reduce blasting vibrations, improve fragmentation.

2.15.9              Amplitude of ground vibrations due to heavy blasting is normally within the threshold limits and is harmless for the type of structures located in the surrounding areas.  Delay action detonators and restricted charge per hole/per delay are used to limit ground vibrations due to blasting and its effects.

Solid waste management

2.15.10           MOIL is systematically dumping solid waste separately for manganiferous rock and non-manganiferous rock so that in future if technology for utilizing the low-grade manganese ore is developed, these manganiferous dumps can be worked at much lesser cost to win low-grade manganese ore.

2.15.11           Waste dumps are planned in such a way that future handling and re-handling of these dumps is avoided.  Dump height is planned for 30MT, so as to occupy less space.  The dump spoil already matured are being systematically covered with either plantation or with shrubs/grass to prevent erosion due to rain and give better aesthetic view.

Training

2.15.12           To generate environmental awareness amongst mine employees, training programmes are organized and MOIL takes active part in observing annual mine environment and mineral conservation week every year, under the auspices of the Indian Bureau of Mines.

3.                  Financial Performance

3.1            Summarised Balance Sheet

3.1.1          The summarised balance sheet for MOIL for the last 5 years is shown below.

Figure 3 . 1 : Summarised balance sheet                                                                                                                                                                                                                                                                  Rs million

	FY 1998	FY 1999	FY 2000	FY 2001	FY 2002
Sources of funds
Shareholders Funds
Capital	153	153	153	153	153
Reserves and Surplus	552	655	736	890	1,043
Total Shareholders Funds	705	808	889	1043	1,197
Loan Funds
Secured Loans	-	44	-	-	-
Unsecured Loans	-	-	-	-	-
Total loan funds	-	44	-	-	-
Total sources of funds	705	852	889	1,043	1,197
Application of funds
Fixed Assets
Gross Block	676	771	810	901	966
Accumulated depreciation	381	430	473	522	568
Net Block	295	341	337	379	398
Capital Work-in-Progress	89	59	62	20	22
Net fixed assets	384	400	399	399	420
Current Assets, Loans & advances
Inventories	202	233	315	332	395
Sundry Debtors	280	451	388	336	391
Cash and Bank Balances	199	145	176	293	286
Other Current Assets	5	8	3	6	5
Loans and advances	42	68	90	100	121
Total current assets	728	905	972	1,067	1,198
Current Liabilities & Provisions	407	453	482	444	437
Net Current Assets	321	452	490	623	761
Miscellaneous Expenditure	-	-	-	21	16
Total application of funds	705	852	889	1,043	1,197
Source: Audited financial statements of MOIL

3.2            Summarised Profit and Loss Account

3.2.1          The summarised profit and loss account for MOIL for the last 5 years is shown below:

Figure 3 . 2 : Summarised profit and loss account                                                                                                                                                                                                                        Rs million

	FY 1998	FY 1999	FY 2000	FY 2001	FY 2002
Income
Gross revenue from operations	1,128	1,183	1,341	1,652	1,679
Less: Excise Duty	7	13	35	44	42
Net revenue from operations	1,121	1,170	1,306	1,608	1,657
Other Income	36	33	52	72	117
Accretion to Stocks	34	29	81	16	62
Total revenue	1,191	1.232	1,439	1,696	1,816
Expenditure
Ore raising/ operating expenses	754	763	807	846	1,018
Raw material consumption and manufacturing expenses	33	106	211	253	206
Administrative and selling expenses	80	89	136	177	179
Research and development expenses	9	9	8	7	9
Write off and provisions	-2	7	-	1	4
Miscellaneous expenditure written off	1	-	49	5	5
M P mineral development cess	23
Provision for unavailed leave	6	-	-	38	-
Charges for diversion of forest land	-	-	-	-	11
Gross profit	287	258	228	369	384
Finance charges (Net)	2	-	1	-	-
Depreciation	46	52	55	58	67
Profit for the Year	239	206	172	310	316
Prior Period Adjustments	1	-3	-	-	16
Profit Before Tax	238	200	172	310	300
Provision for Tax	96	63	55	109	104
PAT	142	137	117	200	195
Source: Audited financial statements of MOIL

4                   Key Strengths

4.1.1          Some of the key strengths of MOIL have been listed below:

n        Has demonstrated reserves to the tune of 27.481 million tones of recoverable saleable ore.  MOIL’s operations are in central India, in the central Indian manganese belt, and the manganese deposits in this belt are of regular shape with depth persistence.  It holds about 60% of the total demonstrated reserves of ferro grade manganese ore in India. 

n        MOIL is currently the market leader in manganese ore production in India.  MOIL’s sales are about 45% of the total domestic consumption of manganese ore.  MOIL’s market share in high-grade ore is 89% and that of dioxide ore is 42.5%.

n        Consistent track record of profitability with stable PBDIT and PAT margins over the past years.  Over 20% dividend has been declared each year over last nine years and last year a dividend of 27% was paid to the shareholders.

n        Zero Debt Company with adequate cash flows to support working capital requirement.  This allows an adequate scope for exploiting the benefits of leveraging in case any large-scale growth plan is envisaged.

n        Highly geared towards research and development for mining and a high rate of technology absorption has lead to greater efficiencies and safe methods of mining.  MOIL’s technological edge is also demonstrated in its proficiency and skill in underground mining methods.

n        A strategic partner would get access to an industry which is otherwise largely government controlled.  Currently in manganese mining, there is negligible competition from the private sector in India.

n        Has been receiving National Safety Awards regularly since 1982 for effectively implementing labour safety systems and reducing the labour accident rate to negligible.

n        The Company employs environment friendly methods of mining.  MOIL is amongst the few companies that have engaged in large-scale afforestation for conserving and maintaining the ecological balance.

A                         Annexures

A.1          Annexure 1 - Expression Letter

(To be forwarded on the letterhead of the sole bidder/lead bidder submitting the EoI)

 

Reference No.______________                                                          Date ___________

 

Executive Director – Corporate Finance

KPMG India Private Limited

Block No. 4 B, DLF Corporate Park, DLF City, Phase III

Gurgaon – 122 022 Haryana

India

 

Sub: Invitation of Expression of Interest for the strategic sale of 59.81% or more of the total voting equity share capital in  Manganese Ore (India) Limited (MOIL)

 

Sir,

This is with reference to the advertisement dated ________ inviting Expression of Interest for sale of  59.81% or more of the total voting equity share capital in MOIL .

As specified in the advertisement, we have read and understood the contents of the Preliminary Information Memorandum (PIM) and are desirous of participating in the above disinvestment process, and for this purpose:

We propose to submit our EoI in individual capacity as __________________ (insert  name)

 

OR

We have formed a consortium comprising of ____members as follows:

 

1.         ____________________________ (Insert name)

2.         ____________________________ (Insert name)

3.         ____________________________ (Insert name)

We understand that 59.81% or more equity stake of MOIL is proposed to be divested and we are interested in bidding for the same.

We believe that we/our consortium satisfies the eligibility criteria set out in 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 13^thJuly, 2001 and clarification issued on 10^th January 2002.

We certify that as regards 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 charge-sheeted by any agency of the Government or convicted by a Court of Law 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.

We undertake that in case, due to any change in facts or circumstances during the pendency of the disinvestment process, we are attracted by the provisions of disqualification in terms of the PIM and/or such other communication as may be addressed to us by GoI/Advisors, we would intimate GoI of the same forthwith.

The Statement of Legal Capacity and Request for Qualification as per formats indicated hereinafter, duly signed by us/respective consortium members, who jointly satisfy the eligibility criteria, are enclosed.

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

Yours faithfully,

 

 

Authorised Signatory

For and on behalf of the party/consortium

 

Enclosure:

1. Request for Qualification

2. Statement of Legal Capacity 

3. Undertakings in terms of Eligibility Guidelines

 

A.2          Annexure 2 - Request For Qualification

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

 

Name of the interested Party (ies)/Member(s) ___________________________

 

1.       Constitution (Tick, wherever applicable) 

i)                    Public Limited Company     

ii)                   Private Limited Company

iii)                 Others, if any (Please specify)

                  If the interested party is a foreign company/ OCB, specify list of statutory approvals from GoI/ RBI/ FIPB applied for/ obtained/ required:

 

2.       Sector (Tick, wherever applicable)

i)        Public Sector

ii)       Joint Sector

iii)     Others, If any (Please specify)

 

3.       Details of Shareholding

 

4.       Role/ Interest of each Member in the Consortium (if applicable)

 

5.       Nature of business/products dealt with:

 

6.       Date & Place of incorporation:

 

7.       Date of commencement of business:

 

8.       Full address including Phone No./Fax No.:

i)        Registered Office:

ii)       Head Office:                

 

9.       Address for correspondence:

 

10.   The Audited Balance Sheets and the Profit & Loss Accounts as approved by the Board of Directors for the last 3 financial years is attached. Also attached is a certificate from the chartered accountant/auditor certificate certifying the Net Worth according to the latest audited financial statements as approved by the Board of Directors.

 

11.   Please provide details of all contingent liabilities that, if materialized, would have or would reasonably be expected to have a material adverse affect on the business, operations (or results of operations), assets, liabilities and/or financial condition of the Company, or other similar business combination or transaction.

 

12.   Contact Person(s):

i)                                Name:

ii)                               Designation:

iii)                             Phone No.:

iv)                             Mobile No.:

v)                              Fax No.:

vi)                             Email:

 

13.   Please find attached the relevant information pursuant to Clause 1.6 of the Preliminary Information Memorandum.

 

Yours faithfully,

 

 

 

Authorised Signatory For and on behalf of the (party/member)

Authorised Signatory For and on behalf of the consortium

 

Place :

Date :

Note: Please follow the order adopted in the Format provided.  If the interested party is unable to respond to a particular question/ request, the relevant number must nonetheless be set out with the words “ No response given” against it.

 

A.3          Annexure 3 - Statement of Legal Capacity

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

 

Reference No.______________                                                          Date ___________

 

The Executive Director

KPMG India Private Limited

Block no. 4B, DLF Corporate Park

DLF City, Phase III, Gurgaon 122 002

India

 

Sub: Invitation of Expressions of Interest for the strategic sale of 59.81% or more of the total voting equity share capital in Manganese Ore (India) Limited

 

Sir,

 

This is with reference to the advertisement dated ________ inviting Expression of Interest for the sale of 59.81% or more of the total voting equity share capital in MOIL.

 

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 member’s name) will act as the lead member of our consortium.*

 

We have agreed that ______________(insert individual’s name) will act as our representative on our behalf and has been duly authorized (vide board resolution dated_______**) to submit the EoI. Signatures of ______________(insert individual’s name) are attested hereinbelow. 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) will be the representative of our consortium and is duly authorized (vide board resolution dated_______**) to submit the EoI on our behalf.  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 (party/member)

 

 

 

 

Signatures of ______________(insert individual’s name) Attested

 

Attested

 

Authorised Signatory

 For and on behalf of (party/member)

 

 

*Strike off whichever clause is not applicable

**Please attach a certified true copy of the extract of the relevant board resolution

A.4          Annexure 4 - 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.

 

 

A.5          Annexure 5 - 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

 

A.6          Annexure 6 - Advertisement Inviting Expression of Interest

 

Government of India

Ministry of Disinvestment

Block No. 11 & 14, CGO Complex, Lodi Road, New Delhi - 110003

Invitation for "Expression of Interest (EoI)" for Strategic Sale of shareholding in

 Manganese Ore India Limited

3, Mount Road Extension, Nagpur – 440 001, India

This announcement is neither a prospectus nor an offer or invitation for sale to the public of securities.

The Government of India (GoI) along with the Government of Madhya Pradesh (GoMP) intends to disinvest 59.81% of the total voting equity share capital in MOIL to a Strategic Investor (SI) along with management control, through a competitive bidding process.  Further, the process may also involve the disinvestment of 9.62% of the total voting equity share capital in MOIL held by the Government of Maharashtra (GoM).

KPMG India Private Limited has been appointed by the Ministry of Disinvestment as the Advisors to the Government of India for this proposed disinvestment.

MOIL was incorporated in 1962 to undertake manganese ore mining operations.  Its share capital is jointly held by the Central Government (81.57%), State Government of Maharashtra (9.62%) and State Government of Madhya Pradesh (8.81%).  MOIL is a leading producer of manganese in India.  It is operating 10 manganese ore mines in Maharashtra and Madhya Pradesh with current production levels of 700,000 tonnes per annum.  MOIL generates about 45% of India’s total output of manganese ore and about 89% of total output of high-grade ore.

For the year ended 31 March 2002, MOIL had a net worth of Rs 1,197 million, total revenue of Rs 1,816 million and a Profit After Tax of Rs 195 million.  MOIL is a zero debt company.  The company is not listed on any stock exchange.

Preliminary Information Memorandum (PIM) containing further information about MOIL, qualification requirements, formats for EoI can be obtained from the Advisors at the address mentioned below or accessed at the website http://www.moilind.com/ and / or http://divest.nic.in/

Interested party(ies) (sole bidder/ consortium) with a tangible net worth of at least Indian Rupees 750 million according to their latest audited financial statements as approved by the Board of Directors, are required to submit their EoI as per the format and process specified in the PIM at the under mentioned address not later than 17:30 hours on 23 June 2003. All queries related to the EoI may also be addressed to any of the following:

Ramit Sethi, Executive Director                              Email: ramitsethi@in.kpmg.com

Gaurav Khungar, Associate Director                      Email: gkhungar@in.kpmg.com

Parul Jain, Vice President                                       Email: paruljain@in.kpmg.com

Address:

KPMG Corporate Finance
KPMG India Private Limited
Block  4B, DLF Corporate Park
DLF City, Phase III
Gurgaon – 122 002
Haryana, INDIA
Tel: +91-124-654 9191/9192 Fax: +91-124-654 9185

Further clarifications, if any, may be sought from the aforementioned Advisors.

Only the parties that are found eligible, in the sole discretion of GoI will be informed of the same, and provided further information.

This advertisement does not constitute, and will not be deemed to constitute, any commitment on the part of GoI. Furthermore, this advertisement confers neither any right nor expectation on any party to participate. 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 there off or to vary any terms at any time without giving reasons. No financial obligation will accrue to GoI or the Advisors in such an event. Neither GoI nor the Advisors shall be responsible for non-receipt of correspondences sent by post/e-mail/fax/courier.