Preliminary Information

            Memorandum

            (PIM)  

 

of

 

 

Sponge Iron India Limited

(SIIL)

June, 2003

 

Introduction

1.1              Sponge Iron India Limited (SIIL or the Company) is a twenty-seven year old enterprise with Government of India (GoI) ownership of 98.7% and the remaining held by the Government of Andhra Pradesh (GoAP). The company has an installed annual capacity to manufacture 60,000 TPA of sponge Iron at its factory in Khammam District of Andhra Pradesh, around 300 Kms from Hyderabad. The company has a captive power plant to produce 4.5-5 MW of power. SIIL has also installed a Submerged Arc Furnace (SAF) in 1997 with a capacity to manufacture 8700 TPA of silico-manganese.

1.2              As a part of its disinvestment programme, GoI along with the GoAP wishes to disinvest 100% of equity of SIIL to a Strategic Partner.

1.3              M/s. A. F. Ferguson & Co. (“AFF”) have been appointed as Advisors to the GOI through the Ministry of Disinvestment (“MOD”) for the proposed disinvestment process and matters relating thereto.

Invitation of EoIs

1.4              GoI had earlier invited Expressions of Interest for the disinvestment of 100% shareholding in SIIL vide advertisements in leading Indian and International newspapers/ publications in December, 2000.

1.5              Subsequently, the financial restructuring package for SIIL has been approved resulting in improved financial position of the company. Also the issue relating to the land owned by SIIL in tribal areas has been settled based on an opinion obtained from the Attorney General of India. The industry scenario has also changed positively in recent years. In light of the above, there has been a material change in the prospective business and operating environment. Therefore, GoI proposes to re-invite EoIs for the disinvestment.

1.6              An advertisement has been issued in leading business newspapers/ publications inviting interested parties to submit their ‘Expressions of Interest’ (“EoI”) to participate in the disinvestment process, a copy of which is enclosed as Annexure-I.

1.7              Expressions of Interest may be submitted by domestic or foreign incorporated entities either as a sole bidder or as part of a consortium, for buying the GoI’s and GoAP’s stake of 100% of SIIL subject to the terms and conditions specified in this PIM and any other subsequent additions and modifications.

1.8              Interested parties who had responded to the earlier advertisement in December 2000 should submit EoIs afresh, as per the terms and conditions (including the eligibility criteria) laid down in this PIM.

Eligibility criteria

1.9              The interested party(ies) should meet  the following eligibility criteria:

(i)                  Experience in any manufacturing industry atleast for the last three years ;

(ii)                A combined Networth in excess of Rs.20 Crores as per the latest annual accounts ;

(iii)               A combined annual Sales in excess of Rs. 40 Crores as per the latest annual accounts

and should have a satisfactory business and management track record.

The definition of networth and sales for the purpose of the qualifying criteria are set out below:

Definitions

n       Networth  =

            Equity Share Capital

(+)       Reserves & Surplus (excluding Revaluation Reserves)

(–)        Miscellaneous expenses not written off

 

n       Sales =     

            Sales

(-)        Any taxes and duties levied, such as excise duty, sales tax, etc. (included in Sales)

 

1.10          For a consortium (incorporated or to be incorporated):

·         The lead bidder should meet the criterion mentioned in 1.9 (i) above.

·         The combined net worth and turnover of the constituent entities of the consortium should meet the above mentioned eligibility criteria given in 1.9 (ii) and (iii) above. The networth and turnover of only those members of the consortium shall be counted who propose to take at least 10% of the equity stake in the company promoted/ to be promoted by the consortium members for acquiring 100% equity in SIIL.

·         Further, the financial parameters of the lead bidder must be at least 51% of the amount indicated in para 1.9 (ii) and (iii) above and he should propose to take at least 26% of the equity stake in the company promoted/ to be promoted by the consortium members for acquiring 100% equity in SIIL.

1.11           Bids by management/employees of SIIL 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-II.

1.12          Where the financial statement is expressed in currency other than Indian Rupee, the eligible amount as described above shall be computed by taking the equivalent US Dollars at the exchange rates (as stipulated by Foreign Exchange Dealers Association of India) prevailing on the date(s) of such financial statement.

1.13          This Preliminary Information Memorandum (“PIM”) along with its enclosures does not constitute any commitment on the part of the GoI or SIIL or AFF, whether in respect of the disinvestment process or otherwise.  Furthermore, this invitation confers neither any right nor expectation to any party to participate in the said process.

Format for submission of EOIs

1.14          The interested parties should submit, in duplicate, the Expression of Interest (“EoI”), which shall comprise of the Expression Letter (Annexure III), Request for Qualification (the “RFQ” in Annexure IV), and Statement of Legal Capacity (the “SLC” in Annexure V). The Expression Letter, RFQ and SLC should be duly signed by the interested party/ designated lead bidder of the consortium.  However, the RFQ and SLC will have to be submitted by each member of the consortium duly signed by an authorised official of the member. The RFQ should be duly filled in and accompanied by the following details:

·         In case of a sole bidder

Ø      The Audited Balance Sheet and Profit & Loss Account (i.e. full accounts with all schedules and notes to accounts) of the sole bidder (Indian company/Foreign company) for the last 3 financial years (upto 2001-02).

Ø      Write-up on:

-          Profile of the sole bidder including details of business and management track record

-          A statement of reasons for interest in SIIL

-          Any other information considered material

·         In case of a consortium bid

Ø      The audited Balance Sheet and the Profit & Loss Account (Full accounts with all schedules and notes to accounts) for the last 3 financial years of the lead bidder and other member companies associated in the bid  (upto 2001-02).

·         Write-up on:

-          Name of the lead bidder and its profile

-          Profile of other member companies in the consortium

-          (including details of business and management track record of the lead bidder and other members of the consortium)

-          A statement of reasons for interest in SIIL

-          Any other information considered material

1.15          The parties should also keep the advisor informed of any material change in the business or in the performance of the parties after 31.3.2002

1.16          Any change by way of withdrawal/substitution of any member of the consortium or any change affecting the composition of the consortium may be permitted till such time as notified by GoI/ Advisors but not later than the stage of submission of the financial bid.  GOI have the sole discretion to determine the impact of the change in membership on the quality of the consortium inclusive of fulfillment of eligibility criteria and reject a proposal for such reason. 

1.17          The EOI must be in English and each copy shall be bound in a separate volume.  Submission of the aforesaid documents by electronic means will not be acceptable.  The EOI,  RFQ and SLC duly completed along with the details should be submitted not later than 17.30 Hrs. (IST) on  17^th July, 2003 in a sealed envelope superscribed “Private and Confidential – Expression of Interest for SIIL” at the following address:

Ms. Ritu Bammi, Director A F Ferguson & Co. C 109, Pasha Court 6-3-680, Somajiguda Hyderabad 500 482 Tel:+91-40-23407952, 55663756 E-mail: affhyd@hd2.dot.net.in

           

1.18          It is the responsibility of the interested party(ies) alone to ensure that its EOI with required documents is delivered at the above mentioned address by the stated time and date. GoI, SIIL or AFF shall not be responsible for non-receipt of any correspondence.

Disqualification

1.19          Without prejudice, a company/ consortium may be disqualified and its EOI dropped from further consideration for any of the reasons listed below:

·         Material misrepresentation by such company/member of consortium in the EOI/ RFQ and/or SLC.

·         Failure by such company/consortium to provide the information required to be provided in the EOI,  RFQ, and SLC and

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

1.20          If any information becomes known after the interested party has been qualified to receive the information memorandum which would have entitled Government of India/SIIL to reject or disqualify the relevant company/consortium, Government of India/SIIL reserves the right to reject the interested party at the time or at any time after such information becomes known to GOI or SIIL.  GOI shall not consider EOI which has been found to be incomplete in content or attachments or authenticity.

1.21          Further, Government of India 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 13^th July 2001, a copy of which is enclosed as Annexure-VI.  The interested party(ies) are required to read the guidelines and satisfy themselves that they are qualified to bid for the stake in SIIL through the process of disinvestment and give an undertaking to the effect that they are qualified to bid for the stake in SIIL in the Expression of Interest to be submitted by them.  Further, interested parties would be required to provide the information on the criteria, laid down in the guidelines of 13.7.2001 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 provided along with EOI. The final decision in this regard would be taken by the GoI.

1.22          Where the interested party is a consortium, GOI may disqualify the entire consortium for any of the reasons specified above, even if it applied to only one member of the consortium.

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

Other terms

1.24          The EOI submitted by interested parties shall be evaluated on the basis of the criteria specified elsewhere in this document.  If at any time during the evaluation process, GOI or AFF requires any clarification, they reserve the right to request such information from any or all of the companies/consortia and the companies/consortia will be obliged to provide the same within such reasonable time frame as GoI or AFF may require.

1.25          This document constitutes no form of commitment on the part of the GOI or AFF other than to provide further information on SIIL. Furthermore, this document confers neither the right nor an expectation on any party to participate in the proposed divestment process.

1.26          GOI reserves the right to withdraw from the process or any part thereof, to accept or reject any /all offer(s) at any stage of the process and/or modify the process or any part thereof or to vary any terms without assigning any reasons whatsoever. No financial obligations will accrue to GoI or AFF in such an event. Neither GoI nor AFF shall be responsible for non-receipt of correspondence sent by post / e-mail / courier / fax.

1.27          The GoI and AFF reserve the right, in their sole discretion, not to respond to any questions raised or provide clarification sought. Nothing in this document shall be taken or read as compelling or requiring the GoI and AFF to respond to any question or to provide any clarification. No extension of any time and date shall be granted on the basis or grounds that the GoI or AFF has not responded to any question/ provided any clarification.

Further Process

1.28          Based on an evaluation of EOIs received, interested parties, which are deemed fit (“qualified interested parties” “QIP”), will be qualified to participate in the subsequent selection process (without conferring any right or expectation whatsoever to QIP). All the pre-qualified parties will be required to execute a Confidential Undertaking (CU). The Confidential Information Memorandum (CIM) shall be issued only to the pre-qualified parties which execute the CU.

1.29          QIPs will be provided with the Confidential Information Memorandum (CIM) and shall be invited to participate further in the process. QIP will get an opportunity to conduct a due diligence and take up plant visits and will also have access to data rooms and hold discussions with the management of SIIL/ officials of Ministry of Steel/ Ministry of Disinvestment, Government of India. The rules regarding access to information in the data rooms will be provided to QIPs later. The QIPs will also get an opportunity to provide their comments/ suggestions on the Draft Share Purchase Agreement. The QIPs will be invited to submit their proposal and a binding price bid. The request for inviting financial bids will describe the terms and conditions and the process for submission of the price bids.

Governing Laws/Jurisdiction

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

 

2.1              Sponge Iron India Limited (‘SIIL’ or ‘The Company’) was set up in 1975 by the Government of India and the Government of Andhra Pradesh, with the assistance of UNIDO and UNDP. The project was set up as a Demonstration Plant to develop technologies and process for manufacture of Sponge Iron using lump ore and non-coking coal as the major raw materials with a view to fully utilise their abundance in the country.

2.2              GoI owns 98.7% of SIIL’s equity and the remaining is held by the GoAP.

2.3              Key features of SIIL have been summarized below:

·         A pioneer in the manufacture of sponge iron from using Iron Ore and Non-Coking Coal. Established presence for more than 2 decades.

·         Turned around in 2000-2001, after financial restructuring and with recent initiatives in reducing costs and in marketing.

·         Company is operating above its capacity

·         Availability of surplus land.

·         No debt company.

Registered Office and Plant

2.4              SIIL’s registered office is located at 10-3-311/A, 6th Floor, Castle Hills (NMDC Building), Masab Tank, Hyderabad 500 028. The plant is located at SIIL Campus, Paloncha, Khammam District, Andhra Pradesh.

2.5              SIIL has a total of 320.76 acres of land of which the constructed plant area is 100 acres and unconstructed plant area is 198 acres. The company has a township on about 22 acres.

2.6              GoI has obtained an opinion on the status and transferability of Company’s land in tribal areas from the Attorney General of India, who has opinioned that change in shareholding pattern in favour of a private party would not amount to a transfer of land in violation of Andhra Pradesh Scheduled Areas Land Transfer Regulations, 1959.

Operations

2.7              The initial project (set up as a Demonstration Plant) went into regular operation in 1980 with an installed capacity of 30,000 TPA (100 TPD for 300 Working Days). The plant had the flexibility to work with different combinations of ores and coals. Subsequently, in 1985 the company commissioned the second unit with a capacity of 100 TPD at the same location with in-house expertise. The company now has an installed annual capacity to manufacture 60,000 TPA of sponge Iron.

2.8              During 1987-88, SIIL conceived the diversification into manufacture of Pig Iron, from Char (a residue of burnt coal) using the excess power available from the captive power plant. Work on the project, to manufacture 45,000 TPA of high-grade pig iron using a Submerged Arc Furnace (SAF) (current net book value of Rs 20.5 Crores), started during 1992-93 and trial runs were completed during 1995-96. This plant has now been modified to produce 8700 tpa of Silico-Manganese.  This plant is not in production at present due to market factors.

2.9               SIIL uses technology supplied by Lurgi of Germany. The plants are based on Direct Reduction Method using non-coking coal. The company has adequate technical capability and has provided technical assistance in setting up Sponge Iron plants in India and abroad.

2.10          The company, over the years, has developed substantial technical acumen and has to its record several achievements. To eliminate wastage (as fines) in the rotary kiln process SIIL engineered and built a cold briquetting unit, the first of its kind in India, for the production of high density Sponge Iron briquettes with improved carbon content.

2.11          SIIL, to utilise the thermal energy lost through waste gases in the rotary kiln process, set up a Captive Power Plant, at the cost of Rs 9.2 Crores, capable of generating between 4.5 to 5 MW of electric power. This power is in surplus of the normal running requirements of the plant.

2.12          For the year ended 31.3.2002, the company produced 64507 tons yielding a capacity utiisation rate of 107.5%. For the period ended March 31, 2003, SIIL produced 71,603 tons of sponge iron.

2.13          SIIL’s Production and Sales over the last 5 years is as follows:

 

2.14          During last few years several initiatives have been taken by the Company to improve its operations. Some of these are:

·         Sourcing a regular supply of Iron ore from Chitradurg region in Karnataka (to the extent of 51.7% in 2001-02 and 85.1% in 2002-03).

·         Obtaining quality coal from Kothagudem mines nearer to the plant.

·         Expansion of marketing to the Western region covering Maharashtra and Goa.

·         Minimising the sale of Sponge Iron fines and increasing sale after conversion into cold bonded briquettes.

·         Reduction in cost of production through reduction in material cost, power cost administrative costs and manpower costs.

Equity Share Capital

2.15          SIIL’s  authorized capital  is Rs. 660 million divided into 6,600,000 equity shares of Rs. 100/- each. The issued and paid up capital of the Company as on March 31, 2003 is Rs. 650.98 million.

2.16          The Government of India holds 6,426,406 Equity shares of Rs.100 each fully paid up and GoAP holds 83,339 equity shares of Rs.100/- each fully paid up.

Employee Strength

2.17          The employee strength is 330 persons as on 31.3.2003-this includes 66 executives, 58 supervisory staff and 206 workmen. A VRS scheme was introduced in 1995-96 and subsequently re-introduced from time to time. In the period 1995-96 to 2002-03, a total of 275 employees opted for the scheme. The change in manpower numbers over the period is as follows:

Note: VRS scheme re-opened in February 2003 is an open-ended scheme.          

Financial Information of SIIL

2.18          The company has been able to turnaround in the last 3 years due to restructuring (covered in the next section), improvement in industry prospects and initiatives taken by the Company as indicated earlier.

2.19          The financial performance of the Company for the last 3 years is summarized below:

                                                                                                                 (Rs. Lakhs)

                Source: Annual Report of SIIL and provisional accounts

* Repaid fully in April, 2003

Detailed financial information of the company is provided in Annexure-VII.

2.20          The Company’s performance has significantly improved in the current year. The provisional results of the company for the period ended March 31,2003 are provided in Annexure VII :

2.21          The turnover and profitability has improved particularly due to improvement in capacity utilization and sales quantity (from about 108% of capacity to about 120% of capacity) (from about Rs.5000 per ton to about Rs. 5970 per ton).

Restructuring

2.22          GoI has approved a financial restructuring package in March 2001. Under this package the outstanding loan of Rs. 32.51 crores as at 31^st March 2000 has been converted into equity and the outstanding interest of Rs. 36.78 Crores (including Rs.13.23 Crores of penal interest) has been waived.

2.23          This has been considered by the company in its 2000-01 accounts, by writing back Rs.13.1 Crores to its income statement and Rs.10.46 Crores to interest capitalised to its Fixed assets.

2.24          The restructuring has enabled the Company to reduce its interest costs. The Company has repaid the entire Government of India loan during April, 2003 and is therefore a debt free company now.

 

 

ANNEXURE-I

 

 

ADVERTISEMENT

 

                                                      

Government of India

Invitation for Expression of Interest for Disinvestment of entire shareholding in

Sponge Iron India Ltd.

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

The Government of India ("GoI") and the Government of Andhra Pradesh ("GoAP") wish to disinvest their entire equity stake in Sponge Iron India Ltd. (“SIIL") to a strategic investor. A.F.Ferguson & Co ("AFF") have been retained as the Advisor to the GoI in connection with the proposed sale.

SIIL is engaged in the business of manufacture of Sponge Iron with its factory in Andhra Pradesh.  GoI holds 98.7% of the paid up equity capital of SIIL and the balance is held by GoAP. SIIL reported a turnover of Rs.4414.31lacs and profit after tax of Rs.605.04 lacs (provisional figures) for  the year ended March 31, 2003.

GoI had invited Expression of Interest (EoIs) vide press advertisements in December 2000.  Due to certain subsequent changes, which are considered material, the GoI has decided to reinvite EoIs for disinvestment in SIIL.

Interested Parties, either individually or as a consortium, may submit their EoIs in the prescribed format specified in the Preliminary Information Memorandum (PIM) to the designated official specified in the PIM no later than 17.30 hours (IST) on 17^th July, 2003 (Interested parties who had responded to the earlier advertisement in December 2000 should submit EoIs afresh as per the current PIM.)

The PIM containing eligibility requirements, formats of EoI, further information about SIIL, etc. can be obtained either from the under-mentioned persons or accessed from the websites www.spongeironindia.com, www.steel.nic.in or www.divest.nic.in.

 

 

 

 

 

ANNEXURE - II

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: 25th 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 13th 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

ANNEXURE-III

EXPRESSION OF INTEREST

 

(To be forwarded on the letterhead of the interested party(ies) or

 lead bidder (s) of the consortium submitting the EOI)

 

Reference No.______________                                                  Date ___________

 

To

 

Ms. Ritu Bammi

Director

A.F. Ferguson & Co.

5, Nandanam Extension, 1^st Street

Nandanam

Chennai 600 035

 

EXPRESSION OF INTEREST (EOI) FOR ACQUISITION OF 100% SHARE HOLDING IN SIIL

 

Madam,

 

This is with reference to the advertisement dated ________ inviting Expression of Interest for Sponge Iron India Limited  As specified in the advertisement, the Preliminary Information Memorandum (PIM) was made available to us.

 

We have read and understood the contents of 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 __________________

                                                                        (OR)

 ** We have formed/propose to form a consortium comprising of members as follows:

 

We state that we/ our consortium/ proposed consortium** satisfies the eligibility criteria set out in 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 13^th July 2001. 

 

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 concern.

 

We further certify that no investigation by a regulatory authority is pending either against us or against our sister concern 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 subject guidelines, we would intimate the GOI of the same immediately.

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 shall be glad to receive further communication on the subject.

 

Yours faithfully,

 

 

Authorised Signatory

For and on behalf of

 

-------------------------

 

Enclosure: Statement of Legal Capacity and Request for Qualification of _____

 

 

 ** strike off whichever is not applicable.

 

ANNEXURE-IV

REQUEST FOR QUALIFICATION

(To be forwarded on the letterhead of the interested party(ies)/

each member(s) of the consortium submitting the EOI)

 

 

EXPRESSION OF INTEREST FOR ACQUISITION OF 100% SHARE HOLDING IN SIIL

 

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

 

1.      Constitution (Tick, wherever applicable)         Sector (Tick, wherever applicable)

Public Limited Company		Public Sector
Private Limited Company		Joint Sector
Others, If any

 

            If others, please specify                                  :

 

 

2.      Date & Place of incorporation                               :

3.      Date of commencement of business                   :

4.      Shareholding pattern                                             :

5.      Nature of business/ products dealt with               :

6.      Equity stake proposed to be taken by  each Member in the Consortium in the company promoted / to be promoted to acquire equity stake in SIIL. (if applicable):

7.      Basis of eligibility for participation in the disinvestment process (Please mention details of your eligibility as applicable)

a.      Please attach supporting documents e.g. Audited Statement of Accounts/ Annual Report for the last 3 years.

b.      Please provide a Chartered Accountant / Auditor certificate certifying the Net-worth and the Sales as per the eligibility criteria. Please also show the detailed computation of the net worth and the sales.

c.      Also provide brief description of manufacturing operations carried out by the interested party. (Please furnish necessary details of self/ Lead member/ other members of consortium with manufacturing experience of 3 years or more)

 

8.      Full address including phone No./fax No. :

·         Registered Office                                            :

·         Head Office                                                     :

·         Address for correspondence                          :

 

 

 

9.      Contact Person(s):

i)                    Name :

ii)                   Designation :

iii)                 Phone No. :

iv)                 Mobile No. :

v)                  Fax No. :

vi)                 Email :

 

 

Yours faithfully,

 

 

 

Authorised Signatory

For and on behalf of

 

________________

 

 

Place :

Date :

 

 

ANNEXURE-V

STATEMENT OF LEGAL CAPACITY

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

 

Reference No.______________                                                  Date ___________

 

To

 

Ms. Ritu Bammi

Director

A.F. Ferguson & Co.

5, Nandanam Extension, 1^st Street

Nandanam

Chennai 600 035

 

EXPRESSION OF INTEREST FOR ACQUISITION OF 100% SHARE HOLDING IN SIIL –

STATEMENT OF LEGAL CAPACITY

 

Madam,

 

This is with reference to the advertisement dated ________ inviting Expression of Interest for Sponge Iron India Limited (SIIL).

We have read and understood the contents of the Preliminary Information Memorandum (PIM) and the advertisement and pursuant to this hereby confirm that:

1.      We satisfy the eligibility criteria laid out in the PIM.

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

3.      We have agreed that ________ (insert member’s name) will act as the lead member of our consortium.**

4.      We have agreed that ______________(insert individual’s name) will act as our representative 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.**

5.      We have agreed that _____________ (insert the name of the individual) has been 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 (party/member)

  **Strike off whichever clause is not applicable

 

ANNEXURE-VI

 

GOVERNMENT CIRCULAR

 

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 sho