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PREFACE
Qualification for Bidders for strategic sale is an
important aspect of privatisation. The
broad guidelines for qualification of bidders had been spelt out in the
Manual: DISINVESTMENT POLICY &
PROCEDURES published by the Ministry of Disinvestment in 2001.
In its 30th Report presented to the Lok Sabha/ Rajya Sabha on
23.4.2002, the Standing Committee on Finance (13th Lok Sabha),
inter alia, recommended that
more comprehensive guidelines be framed regarding
qualification/disqualification of bidders seeking to acquire stake in PSUs
through the process of disinvestment. The
full text of the recommendations of the Committee in this regard is at
Annexure V. The guidelines on qualification of bidders have been
compiled keeping the recommendations of the Parliamentary Committee in view.
It is hoped that this publication would be useful not only to the
bidders but also to all those who are interested in understanding the
disinvestment process.
TABLE
OF CONTENTS
|
S.No |
Content |
|
1. |
Qualification for Bidders |
|
2. |
Frequently Asked Questions |
|
3. |
Annexure-I:-OM dated 13th July, 2001 |
|
4. |
Annexure-II:- Expression of Interest Format |
|
5. |
Annexure-III:- Statement of Legal Capacity Format |
|
6. |
Annexure-IV:- Request for Qualification Format |
|
7 |
Annexure:-V:- Recommendations of Parliamentary
Standing Committee on Finance |
QUALIFICATION
FOR BIDDERS
1.
Introduction
1.1
In a strategic sale, apart from Government’s interest in receiving a
good return or price for its companies, the Government is also concerned that
the company, which is taken over, should function well after disinvestment.
The strategic buyer should be able to bring in more capital and
improved technology, wherever needed, introduce better management practices
and should be in a position to take proper care of the work force. In short,
the strategic partner is expected to have a good track record of performance
so that the Government can be satisfied that its assets are being passed on to
capable hands.
1.2
In order to achieve this objective, it is important that the Government
evolves a selection procedure that ensures that only those entities get
selected as strategic partners who possess:
·
The requisite managerial and financial strength.
·
A proven track record of following good corporate practices.
·
A good reputation as regards integrity.
1.3
To address these considerations and to ensure greater transparency of
the process, the Ministry has taken the step to publish these “Guidelines on
qualifications for Bidders” to enable the bidders to understand the
requirements expected of them.
1.4
While any company, domestic or foreign, in private or public sector,
can take part in a strategic sale process, depending on the unique features
of a case, and taking into
consideration all relevant
factors including
1.5
The bidders are selected through a competitive bidding process but, for
Government companies to pass into private hands, there are some critical areas
which government has to ensure that the bidder is capable of complying with.
These critical areas are: -
·
Financial
capabilities of the bidder
·
Technical
and Legal capacity of the bidder
·
FDI
restrictions
·
Integrity
of the bidder
·
Security
considerations
1.6
The qualification/eligibility criteria for the bidders arise at two
stages of the bidding process:
·
At
the time of submission of Expression of Interest (EoI).
·
At
the time of submission of the financial bid which comes much later and at the
end of the process.
2.
Financial Capacity
2.1
Since the bidder has to buy a block of shares typically involving a
substantial financial outlay, it has to be ensured that, companies which are
financially sound and capable vis-à-vis the size and business of the CPSUs
being disinvested, are only allowed to bid.
The ‘open offer’ requirement of SEBI and ‘Put/Call’ option add
further to the financial strength/capacity required.
Therefore, while issuing an advertisement in the newspaper and website
for inviting bidders to take part in the disinvestment process through
submission of EOI (financial bids come much later at the end of the process)
the qualifying minimum networth criteria and/or minimum turnover required of
the bidding company is specified. This
gives a fair idea of the size and financial strength of the bidding company.
Besides, relevant financial and performance details are also sought
for. For example, while seeking
EOI from bidders in MECON Ltd., the minimum annual turnover stipulation was Rs.
150 crore and networth Rs. 50 crore, whereas in VSNL minimum networth was
specified as Rs. 2500 crore as VSNL was a much bigger company.
In case of consortium bids, Government may insist on each consortium
member satisfying individually a minimum networth/turnover criteria to be
included as a member of the consortium. In
the case of VSNL, each consortium member had to satisfy the minimum networth
criteria of 10% i.e. Rs. 250 crore. In some cases, in addition to this or in
lieu thereof, Government may require majority networth contribution from the
lead bidder. For example, in the
case of Shipping Corporation of India, the networth criteria is Rs. 800 crore
but it has been specified that the lead member of the consortium must have a
networth of at least Rs. 408 crore (i.e. 51%).
At this stage, those of the bidders who satisfy these criteria, get
shortlisted and get on to the next stage.
2.2
At the stage of submission of the financial bids, the prospective
bidders are required to furnish a bank guarantee which is retained only in the
case of the highest bidder. This
is meant to bind him to fulfil his commitments till the successful closing of
the transaction.
2.3
Before accepting the financial bid of any party, a certificate is
required either from the banker or from an independent Chartered Accountant
that the bidder has got enough funds to complete the transaction.
In addition to that the bidder gives an undertaking that he has not
been prohibited by any agreements with others from acquiring the equity stake
from government.
2.4
These prerequisites are also a deterrent to bidders who may be having
unhealthy balance sheets. The
bank guarantee is a further proof of their financial standing and reputation
in the financial world.
3.
Technical and Legal capacity
3.1
Every company must provide along with the EOI a representation, duly
executed by its authorised official/ representative that it has the requisite
corporate authorization to submit the EOI and that all information provided in
the EOI is complete and accurate in all material respects to the best of their
knowledge. If, at a subsequent date, it is discovered that the company or any
consortium member did not either possess the requisite authorization or that
any part of the information provided in the EOI was not complete or accurate
in any material respect, the Government reserves the right to disqualify such
company or consortium or member of the consortium from the process.
3.2
To access the technical capabilities of the prospective bidder, the
Government may ask them to provide a business plan so that the Government is
assured of continued services to the satisfaction of the user. In case of Air
India, the business plan was sought in advance.
In certain cases, Government may even require the bidders to satisfy a
criteria of minimum experience in a particular business/sector, say
manufacturing.
3.3
The bidder is required to submit enough information in the EOI for
Government to assess the bidding entity’s managerial, financial and
technical capability. Typically,
the EOI would contain the following details:
(i)
Executive Summary:
This provides a brief description of the bidding company and (where
appropriate) of each member in the consortium, containing details like
ownership structure, write up on business history and growth, business areas /
activities, respective revenue details, etc. It includes a brief commentary on
the capability of the company / consortium, as demonstrated, inter alia, in
its past track record, to run its own business.
(ii)
The Applicant:
The full name, address, telephone and facsimile numbers, e-mail address
of the company or of each member of the consortium and the names and the
titles of the persons who are the principal points of contact.
(iii)
Basic Information:
This contains the details of the place of incorporation,
registered office, current directors, key management personnel and principal
shareholders of the company/companies in the consortium. It also contains a
copy of its current Memorandum and Articles of Association and copies of
audited accounts for the last three years of the company / companies in the
consortium. (The latter details help in evaluating financial capabilities as
well).
(iv)Management
Organization:
An overview of the applicant's senior management and organization
structure and in the case of a consortium, that of each member;
summaries of the roles and responsibilities of the directors, key management
personnel of the applicant and, in case of a consortium, those of each member.
(v)
International Operations /
Joint Ventures / Alliances:
Brief write up of the company's or, in the case of a consortium,
of the members, of their international operations, joint ventures / alliances
(whether international or domestic), nature and size of such operations,
equity ownership, if applicable, copies of the audited accounts for the last
one year of such companies.
(vi)
Professional Advisors:
The names and addresses of those companies and the professional
firms, if any, who are (or will be) advising the applicant/consortium,
together with the names of the principal individual advisors at those
companies and firms.
(vii)Outstanding
Litigation:
Each company, and each member of a consortium must provide with
the EOI a statement of pending litigation.
4.
Foreign Direct Investment (FDI)
Restrictions
4.1
In case of foreign bidders, the prospective buyer has to comply with
the
sectoral Foreign Direct Investment (FDI) caps determined by Government of
India and revised from time to time. In
some cases of disinvestment, the FDI restrictions on the bidder are more
onerous than the sectoral restrictions. These
could be typically those PSUs, which are into businesses, which are sensitive
to national security. For
example, in the case of Air India, Government decision is to sell 40% stake
but a restriction of maximum 26% foreign holding was incorporated.
In the case of Shipping Corporation of India, foreign holding has been
restricted to 25% though there is no FDI restriction for the shipping sector.
5.
Integrity of the bidder
5.1
The Ministry of Disinvestment has laid down specific guidelines vide
letter no.6/4/2001/DD-II dated 13th July 2001 (Annexure
– I) for qualification in terms of
integrity of bidders seeking to acquire stakes in Public Sector Enterprises
through the process of disinvestment. The
prospective bidders have to give an undertaking at the stage of submission of
Expression of Interest (EOI) that they are eligible as per the criteria fixed
by the said guidelines and the bidders also have to make disclosures regarding
pending proceedings/investigations as per para (g) of these guidelines.
6.
Security Considerations
6.1
As PSUs, the companies were wholly or substantially owned by the
Government and were operated and managed by the Board of the company under the
administrative control of the Ministry concerned. In this arrangement,
security consideration, if any, were taken care of.
At the time of transfer of these companies to private players, the
Government has to ensure that the security of the country is not jeopardized
through use / abuse of these companies.
6.2
Government has excluded the “strategic areas” from disinvestment,
(strategic areas being defence related, atomic energy with few exceptions and
railway transport). However,
sectors like Airlines, Telecommunication etc. could also be called upon to
provide strategic services in times of war or otherwise.
In such cases, Government may require a separate security clearance for
each bidder. In addition, to
protect the security of the country, provisions are made in the transaction
documents to deter the purchaser from misuse of the company. In addition, there are covenants in the Agreements, which
oblige the new management to provide emergency services to the Government in
times of need. In such cases the
strategic partner may be asked to disclose his source of funds and give an
undertaking that he would ensure that no prohibited person (‘prohibited
person’ being a person who constitutes a threat to the security requirements
of the nation) gets control of the company.
If needed, restrictions in foreign shareholding can also be imposed.
For example, as referred to earlier, in the disinvestment of Shipping
Corporation of India, bidders are allowed to form Joint Venture Companies
along with a foreign partner but with a cap of 25% of foreign partners’
holding.
6.3
Further, the companies which have been charge-sheeted or convicted on
matters relating to “national security or integrity” under the provision
of the Indian Penal Code or Official Secrets Act or other relevant
legislation, are disqualified from the bidding process. (See para (b) Annexure
I)
7.
Confidentiality Undertaking
7.1
On being found suitable after submitting the EOI, the Qualified
Interested Parties are required to enter into a Confidentiality Undertaking
with the Government. Only then
are they allowed to participate in the disinvestment process.
7.2
Typically, this undertaking requires that the potential bidders do not
misuse this wealth of information. It is not uncommon for competitors to send
a bogus team to discover the trade secrets of the other parties. The undertaking is made by the bidder in favour of President
of India (acting through Joint Secretary of the administrative ministry), the
company and advisors to treat all the confidential information in confidence
and not to disclose to any person, the fact that he has been provided the
‘Confidential Information’ or has inspected any confidential documents or
the discussion/negotiation regarding the transaction.
7.3
‘Confidential Information’ means all information, concerning the
business, operations, prospects, finances, or other affairs of the company. It
includes, but is not limited to, documents delivered in connection with a due
diligence investigation, information concerning business activities, products,
specifications, data, know-how, compositions, designs, sketches, photographs,
graphs, drawings, research and development, marketing or distribution methods
and processes, customer lists, customer requirements, price lists, market
studies, computer software and programs, database technologies, systems
structures and architectures, historical financial projects and budgets,
historical and projected sales, capital spending budgets and plans, current or
prospective financing sources, the names and background of personnel,
personnel training techniques and materials.
7.4
Confidentiality undertaking also provides that the bidder shall not
deal with any officer, Director or employee of the Govt. or Company, regarding
the business, operations, and prospects or financing of the company without
advisor's express written consent.
7.5
The confidentiality undertaking contains an indemnity clause, whereby
the bidder agrees to indemnify the advisor, the Govt. and the company against
any damages, loss, cost or liability arising out of any unauthorized use or
disclosure by the bidder.
7.6 The undertaking stipulates that
the Strategic Partner will use the Confidential Information only to assist the
Strategic Partner in the evaluation of the Transaction and determine whether
or not to proceed with the Transaction and the Strategic Partner will not use
the Confidential Information for any purpose other than the Transaction or in
any other manner whatsoever and shall particularly ensure that the interests
of the Company/Advisors/Government are not adversely affected in any manner
whatsoever.
7.7 The undertaking stipulates that
in case the Bidder or any Consortium Member decides not to proceed with the
Transaction or if the Advisors or the Government notifies the Bidder or any
Consortium Member that the Government does not wish the Bidder or any such
Consortium Member to consider the Transaction any further, the terms of the
Undertaking survive the date of receipt of notification of such decision by
the relevant party.
7.8 The Bidder agrees through the
undertaking that after termination of access of the bidder by the Government,
all documents or other materials furnished by such Company/Advisors/Government
to the Strategic Partner, including those constituting Confidential
Information, together with all copies and summaries thereof in the possession
or under the control of the Strategic Partner, will be destroyed.
7.9
The language of the Undertakings may vary depending on the case, based
on legal advice.
8.
Qualification of Companies/Consortia
8.1
The advertisement for the transaction indicates the broad
qualifications of the prospective bidders. Based on the information submitted
in EOIs, the Ministry and the advisors carry out an evaluation of the
qualifications of the companies/consortia and subsequently notify in writing
those companies / consortia which qualify to participate in the next stage of
the process.
8.2
However, where a Consortium has submitted the EOI, it is generally
expected that there shall not be any changes in the Members of the Consortium
consequent to the submission of EOI.
8.3
If a Consortium bidder desire a change in the Consortium by
inclusion/exclusion of members or if a non-Consortium bidder desires to form a
Consortium by inducting new Member(s), it shall have to seek an approval from
GoI for such change. Such
requests would be entertained only before the financial bids are received by
Government.
8.4
Where the Bidder is a Consortium, the stake in the ordinary share
capital of the company can be acquired and held either through an investment
vehicle ("Special Purpose Vehicle") or through direct holding in the
company by each Member or through any Group Company (ies).
9.
Additional Information
9.1
Government reserves the right to seek any additional indemnities,
warranties, representations or performance obligations from the bidders or any
of their group companies to Government’s sole satisfaction.
10.
Reasons for Disqualification
10.1
Notwithstanding anything to the contrary contained in the Request for
Proposal document and without prejudice to any of the rights or remedies of
Government, Government shall be entitled in its sole discretion to determine
that a Bidder is to be disqualified at any stage of the process and its
participation in the Strategic Sale process and/or its Technical Proposal
and/or Financial Bid dropped from further consideration for any of the reasons
including without limitation those listed below:
(i)
if a misrepresentation/false statement is made by the bidder/Member, at
any stage in the Strategic Sale process, whether in the Technical Proposal,
the Financial Bid, supporting documentation or otherwise and whether written
or oral;
(ii)
if the Technical Proposal submitted by the bidder is in any respect
inconsistent with, or demonstrate any failure to comply with, the provisions
of the Request for Proposal ;
(ii)
if the Financial Bids submitted by the bidder is inconsistent with the
requirements of the Request for Proposal in any respect, including not being
accompanied by an Ernest Money Guarantee of the specified amount or the
Financial Bid being conditional in any respect;
(iv)
failure to comply with any other material requirement of this Request
for Proposal;
(v)
Government is not satisfied with sources of funds/ownership structure
of the bidder.
(vi)
failure to comply with the reasonable requests of Government in
relation ot the Strategic Sale process.
(vii)
Breach of Confidentiality Undertaking executed by the bidder.
(viii)
if it is discovered at any time that a bidder is subject matter of
winding up/insolvency or other proceedings of a similar nature;
(ix)
any information regarding the bidder which becomes known to
Government/Company/Advisor and which is detrimental
to Strategic Sale process and/or the interests of the Company.
(x)
initiation or existence of any legal proceedings, by or against the
bidder in respect of Company, which proceeding may be prejudiced by the
participation of the bidder in the selection process or the transaction, e.g.
inspection by a bidder of case files of the Company of matters filed against
that bidder; and
(xi)
the bidder or if the bidder is a Consortium then any member of such
Consortium not being qualified to participate in the process pursuant to the
Government of India office memorandum No. 6/4/2001-DDII dated July 13, 2001 as
amended from time to time.
10.2
If information becomes known after the bidder has been qualified, at
any stage, to proceed with the Strategic Sale process, which would have
entitled Government to reject or disqualify the relevant bidder/Consortium,
Government reserves the right to reject or disqualify the relevant
bidder/Consortium at the time, or at any time, such information becomes known
to Government. Where such party is a Consortium, Government may disqualify
the entire consortium, even if it applied to only one member of the
Consortium.
10.3.
Government determination that one or more of the events specified under
paragraph 10 has occurred shall be final and conclusive.
11.
Formats for submitting EOIs by interested parties
11.1
The formats for submitting Expression of Interest, statement of Legal
Capacity and Request For Qualification (RFQ) are enclosed as Annexure II, III
and IV.
Question: Does default in
payment by the bidder to a financial institution automatically disqualify the
bidder?
Answer: It is clarified that
Ministry of Disinvestment is guided by its guidelines dated 13.7.2001 as
mentioned earlier. It would be
seen from these guidelines that if the bidding party or its consortium members
are defaulting in payment of dues to financial institutions, they are not
automatically disqualified. This
is mainly because if the bidding parties have more than one business, there
may be cases where some of the businesses may be incurring losses due to which
it may not be possible for the bidding party to honour the commitment with
regard to payment of interest/repayment of principal in that particular unit.
So, any default on account of poor performance of a unit cannot ipso
facto mean that the party who is controlling the business is incapable of
running any other business.
What would be relevant here is
whether there has been a willful
default on the part of the bidding party, which could happen due to diversion
of funds from one unit to another. However,
it may be difficult in such cases for Ministry of Disinvestment to determine
whether default by a particular party is a willful one. Since the institutions, which have lent may claim the bidder
as a willful defaulter, while the bidder may say that he is not a willful
defaulter and that his default is due to reasons beyond his control.
This is really the task of a regulator i.e. RBI/SEBI to adjudicate on
such matters who can decide whether the default was willful or whether the
practice adopted by the bidder is unhealthy, unethical or unscrupulous.
MODI guidelines do cover such adverse orders by regulators.
Answer:
Even
on default by a member of the consortium the Government reserves the right to
disqualify all members of the consortium.
The other option that would be considered is that the bidder removes
the defaulting member from the consortium.
Answer:
The bidder is supposed to disclose all relevant material envisaged in
the Guidelines dated 13/7/2002 to the Government whenever it occurs or it
comes to his notice and Government reserves the right to disqualify the bidder
on receipt of such information at any stage of the process.
Answer: No.
The charge-sheet by an agency like CBI would result in disqualification
if the matter relates to the security and integrity of the country.
In other cases, there has to be a conviction by a court of law.
Answer:
An indictment /adverse order by a regulatory authority will disqualify
either:-
(a)
If such order casts a doubt on the ability of the
bidder to manage the public sector unit when it is disinvested or
(b)
If such an order relates to a grave offence where
grave offence is defined to be an offence of such a nature that outrage the
moral sense of the community e.g. fraud.
It is clarified that the decision in regard to the nature of the
offence would be taken on a case to case basis after considering the facts of
the case and relevant legal principles by the Government.
Answer:
Not necessarily. Government
may decide on the period for which such disqualification shall continue.
Answer:
The minimum net worth criteria is to ensure that the bidder has enough
financial muscle to run the PSU effectively post-disinvestment and to also be
in a position to raise enough resources in the future to enhance capacity,
other capex requirements etc. Though
there is no direct proportionality between the minimum net worth criteria
fixed and the net worth of the company being disinvested, Government does keep
in mind the net worth/turnover/business potential/resource requirements of the
company getting disinvested while fixing the net worth criteria.
Answer:
It is a fact that selection of the successful bidder is purely on the
basis of the price bid. Normally,
the bidder who bids the highest would be selected.
However, as clarified in every advertisement soliciting EOIs,
Government reserves the right always to make any changes in the procedure as
laid down in the Request for Proposal.
Moreover, the Government would like to be satisfied that the bidder has
a well thought out plan on the future of the company once he takes over.
Though this plan is not
legally binding on him after take over, it is expected that,
since the bidders are very carefully chosen and would be companies of
repute, they would honour the commitment made by them in their Technical
Proposal.
Question:
Why does every consortium change require GOI approval?
Answer: In every case of
disinvestment, there are some prequalifying criteria stipulated as explained
in the text. Therefore,
Government has to be certain that the consortium which finally gets selected
satisfy these eligibility criteria. Otherwise
Bidder A, having satisfied the net worth criteria set by Government, may get
shortlisted. Thereafter, he may
form a consortium with Bidder B, where Bidder B may not be independently
satisfying the net worth criteria.
Bidder A+B will obviously satisfy the criteria.
Later, Bidder A may
exit from this consortium and Bidder B would be left in the fray, though
originally it did not satisfy the eligibility criteria.
Secondly, since there are specific guidelines on integrity of bidders,
it is necessary that at each stage of addition of consortium members,
Government satisfy itself that the new entity also satisfies the eligibility
criteria.
Answer: Normally, a request for a change in consortium is entertained by
Government before financial bids are received.
No request is entertained once the financial bids have been received.
In certain specific cases, however, Government may require a request
for such change to be filed on a date earlier than the date financial bids are
received.
Answer:
Government would entertain a request even for inclusion of a new entity
as a member of the consortium by the bidder
(who was not one out of the entities who had filed EOIs) provided all
the eligibility criteria and qualification/disqualification criteria are
satisfied. Of course, the
decision of whether or not to permit a change in the consortium would finally
rest with the Government
No.
6/4/2001-DD-II
Government
of India
Ministry
of Disinvestment
Block
14, CGO Complex
New
Delhi.
Dated
13th 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 i ncluding 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
ANNEXURE-II
EXPRESSION OF INTEREST
(To
be forwarded on the letterhead of the interested party/lead
bidder/member
of the consortium submitting the EOI)
Reference
No.______________
Date ___________
To,
Senior Vice President &
Head Regional Office
ADVISOR NAME
Sub:
GLOBAL
INVITATION OF EXPRESSIONS OF INTEREST
FOR
DISINVESTMENT OF ____% STAKE IN
(CO.
NAME)
Sir,
This
is with reference to the advertisement dated ________ inviting Expression of
Interest for (CO. NAME)
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 of party)
OR
We
have formed/propose to form a consortium comprising of ____members as follows:
1. ____________________________
(Insert name)
2. ____________________________
(Insert name)
3. ____________________________
(Insert name)
We
understand that ____% equity stake of (CO. NAME)
is proposed to be divested and we are interested in bidding for the
same
We
believe 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 13th
July 2001 and subsequent amendments/clarifications thereto.
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 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 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
Enclosure:
1.
Statement of Legal Capacity
2.
Request for Qualification
ANNEXURE–III
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 ___________
To,
Senior Vice President &
Head Regional Office
ADVISOR NAME
Sub:
GLOBAL
INVITATION OF EXPRESSIONS OF INTEREST
FOR
DISINVESTMENT OF ____% STAKE IN
(CO.
NAME)
Sir,
This
is with reference to the advertisement dated ________ inviting Expression of
Interest for (CO. NAME)
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 to submit the EOI.
Further, the authorized signatory is vested with requisite powers to furnish
such letter and Request for Qualification and authenticate the same.*
We
have agreed that (insert the name of the individual) chosen as representative
of our consortium and on our behalf and has been duly authorized to submit the
EOI. Further, the authorized
signatory is vested with requisite powers to furnish such letter and Request
for Qualification and authenticate the same.*
Yours
faithfully,
Authorised
Signatory
For
and on behalf of (party/member)
*Strike
off whichever clause is not applicable
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/ awaiting:
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.
Salient features of
financial performance for the last three years |
: |
11.
Basis of eligibility for participation in the process (Please mention
details of your eligibility) as under:
Please
attach most recent Audited Statement of Accounts/Annual Report. Additionally,
please provide a chartered account/auditor certificate certifying the Turnover
and Net Worth as defined in the Eligibility criteria.
12.
Please provide details
of all contingent liabilities that, if materialized, that
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.
13.
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 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 be nonetheless be set out with the words “ No response given” against
it.
Annexure
V
Text of the Recommendations on Qualification for
Bidders, as contained in the 30th Report of the Parliamentary
Standing Committee on Finance
“The
Committee find that though the disinvestment process in our country is
continuing for more than a decade yet no guidelines regarding
qualification/disqualification of bidders seeking to acquire the stake in PSUs
through the process of disinvestment were formulated initially.
It was only in July 2001, when a circular was issued detailing some
guidelines for disqualifications for bidders.
The committee notes that it debars only those bidders who have been
actually convicted for an offence or have been charge sheeted for an offence
against national security and those who have been either indicted by SEBI or
RBI. The Committee feel that
these guidelines are not sufficient and do not cover the offences committed
under the Official Secrets Act and cases pertaining to willful default of
public money. The Committee are
of the opinion that these offences are in no way less serious than those
included in the guidelines.
Hence, the committee feels that weak, inadequate
and porous guidelines are being used to qualify and disqualify bidders. The committee strongly recommends that comprehensive
guidelines for qualification/disqualification of bidders seeking to acquire
stakes in the PSUs through the process of disinvestment may be drawn and
included in the Disinvestment Policy. The
Committee further desires that the scope of guidelines may also be broadened
which may include the business activities of unhealthy, unethical and
unscrupulous nature in its ambit. They
also desire that it should also cover the offences under the Official Secrets
Act and those pertaining to willful default of public money etc. in its
purview.”