ENGAGEMENT OF AN ADVISOR FOR DISINVESTMENT THROUGH INDUCTION OF A JOINT VENTURE PARTNER IN NATIONAL INSTRUMENTS LIMITED (NIL) KOLKATA

 

EXPRESSION OF INTEREST

 

Government of India intends to disinvest through induction of a joint venture partner in National Instruments Limited, Kolkata, a company engaged in the field of design, development and manufacture of sophisticated opto-mechanical and opto-electronic instruments for various end-users. The company has been incurring losses over the years and it is registered with the Board for Industrial and Financial Reconstruction (BIFR).  The induction of the joint venture partner will be subject to the final approval of the BIFR.  Expressions of interest are invited by 17.00 Hrs. (IST) on 25^th July, 2002 for selection as Advisor to assist the Government of India in the disinvestment/joint venture formation process.  For further details, interested parties may visit website::www.divest.nic.in/ www.dhi.nic.in or contact: Shri P.K. Basu, Joint Secretary, Ministry of Disinvestment, 2^nd Floor, Block No. 11, CGO Complex, New Delhi 110 003 (Tel. No. 91-11-4368044, Fax: 91-11-4366524, E.Mail: pkbasu @ nic.in or Shri V.K.Mutreja, Advisor, Department of Heavy Industry, Udyog Bhawan, New Delhi, Telephone No.3013323.

 

GOVERNMENT OF INDIA

MINISTRY OF DISINVESTMENT

 

Engagement of an Advisor for Disinvestment through formation of joint venture  in National Instruments Limited(NIL), Kolkata

The Government of India (GOI) intends to disinvest through induction of a joint venture partner in National Instruments Limited, Kolkata.  NIL is a sick company registered with the Board for Industrial and Financial Reconstruction (BIFR). The proposed induction of joint venture partner will be subject to the final  approval of the BIFR.

2.         National Instruments Limited is a Company engaged in design, development and manufacture of surveying, opto-mechanical and opto-electronics equipment for various end users.  The Company is also engaging trading of surveying instruments.  As on 31/3/01 the authorized and paid-up capital of the company was Rs. 10 crores and Rs. 8.31 crores respectively.  The Government of India holds the entire share capital of the Company.  The Registered and Corporate Head Offices of the Company are situated at 1/1 Raja Subodh Chandra Mullick Road, Jadavpur, Kolkata 700032 and the service centers are located  at New Delhi, Mumbai, Chenna i and Bhubaneswar. 

3.         The Company has been incurring losses over the years.  The Company was referred to the BIFR in the year 1992.  A rehabilitation scheme for the company was sanctioned by the BIFR in November 1999.  The Company has not  been  able to achieve the targets envisaged in the sanctioned rehabilitation package.  The present effort of induction of a Joint Venture partner, which would be subject to final approval of the BIFR, is for the purpose of exploring further avenues for revival of the Company.  The Government has recently approved a financial restructuring which inter-alia includes providing of need based budgetary support in the interim.

4.         The responsibilities of the Advisor would, inter alia, cover rendering of advice and assisting GOI in the formation of joint venture in NIL  assessment and valuation of NIL, suggesting measures to enhance sale value, preparing a detailed information memorandum, marketing the proposition, inviting and evaluating the bids, assisting during the negotiations with prospective joint venture partners, drawing up the necessary agreements  and advising on post  joint venture formation matters. 

5.         The interested bidders may submit their Expression of interest to act as the Advisor, singly or as a consortium, for disinvestment of Government of India shareholding through joint venture formation in NIL positively by the 25^th July, 2002 by 1700 hours (IST) with the following details:

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

 

2.Unabridged Annual Reports or audited financial accounts for the last three years (in case of consortium of all the partners).

 

3.Details of the pending litigation and contingent liabilities, if any, that could affect the performance of the bidder under the mandate, as also details of any past conviction and pending litigation against sponsors/partners and any areas of possible conflicts of interest.

Note: The above particulars should be provided year-wise (wherever applicable) for the last three years.

 

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

 

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

 

The short listed bidders would be required to demonstrate their credentials before an Inter-Ministerial Group (IMG) through a presentation, covering the areas / criteria listed below, and to bring along 15 copies of the presentation, at the time of presentation:

 

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

2.   Global experience

3.   Privatisation experience

   

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

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

 

6. Expertise, including research coverage and capabilities in the concerned industry and an understanding of NIL including a SWOT analysis incorporating key selling points and limitations.

 

7. Proposed methodologies of the Disinvestment through joint venture formation indicating the issues involved, including;

a.      Valuation of NIL (excluding Asset Valuation of NIL)

                   b.  Transaction structuring

                   c.   Marketing Strategy

                  d.  Bid evaluation methodology

                  e.  Tentative time-frame

     8.    Details of deal team;

a.      Experience and qualifications

                  b.  Team members located abroad

                  c.  Team members located in India  

The presentations by the shortlisted bidders will take place before an Inter-Ministerial Group (IMG).  The date, time and venue for the presentation will be communicated later. 

 

The bidders are required to submit at the time of presentation sealed financial bids incorporating the fee chargeable as a percentage of the sale proceeds from the disinvestment of the GoI stake in NIL, gross of all taxes. The bid should be unconditional.

 

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

 

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

Interested bidders are required to deposit along with their Expression of Interest a non-refundable earnest fee of INR 20,000 (Rupees twenty thousand only) or US $ equivalent, by way of a Demand Draft payable at New Delhi in favour of Pay & Account Officer, Ministry of Disinvestment.

 

GOI reserves the sole right to reject any or all Expressions of interest without assigning any reasons therefor.

 

The Expression of interest should be sent to, by 25^th July, 2002, and further clarifications, if any, may be sought from: Shri P.K..Basu, Joint Secretary, Ministry of Disinvestment, CGO Complex, Block No.11, 2^nd Floor, New Delhi-110 003 (Tel.91-011-4368044, Fax: 91-011-4366524) E-Mail:   
pkbasu@nic.in

 

 

Appendix

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

Subject: Guidelines for qualification of Advisors for disinvestment  process

 

Government has examined the issue of framing comprehensive and transparent guidelines defining the criteria for selection of Advisors, so that the parties selected through competitive bidding inspire public confidence.  Earlier, a set of criteria like sector experience, knowledge, commitment etc. used to be prescribed. Based on experience and in consultation with concerned departments, Government has decided to prescribe the following additional criteria for the qualification / disqualification of the parties to act as Advisors to the Government for the disinvestment transactions:-

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

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

 

(c)    Disqualification shall continue for a period that Government deems appropriate.

 

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

 

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

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

(g)      Henceforth, these criteria will be prescribed in the advertisements seeking Expressions of Interest (EOI) from the interested parties to act as Advisor.  Further, the interested parties shall be required to provide with their EOI an undertaking to the effect that no investigation by a regulatory authority is pending against them.  In case any investigation is pending against the concern or its sister concern or against the CEO or any of its Directors/Managers/Employees, full details of such investigation including the name of the investigating agency, the charge/offence for which the investigation has been launched, name and designation  of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government. For other criteria also, similar undertaking will be obtained along with EOI.  They would also have to give an undertaking that if they are disqualified as per the prescribed criteria, at any time before the transaction is completed, they would be required to inform the Government of the same and voluntarily withdraw from the assignment.

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

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

 

 

 

 

(A.K. Tewari)

Under Secretary to the Government of India.