PRELIMINARY INFORMATION MEMORANDUM (PIM)

   

OF

 

INDIAN PETROCHEMICALS CORPORATION LIMITED (IPCL)

 

TABLE OF CONTENTS

Disclaimer

Submission of Expression of Interest

Brief Profile of IPCL

Annexure-I (Copy of the advertisement inviting EOI)

Annexure-II (Proforma of EOI)

Annexure-III (Proforma for request for qualification of bidders)

Annexure-IV (Copy of the OM dated 13th July 2001 regarding guidelines for qualification of bidders)

   

DISCLAIMER

   

1.         The sole purpose of this PIM is to assist the recipient interested in being the ‘Strategic Investor’ to participate in the process leading to the proposed sale of 26% of the equity of Indian Petrochemicals Corporation Limited (“IPCL”).  The Government of India (“GOI”), as a part of its disinvestment programme, wishes to sell a part of its shareholding in IPCL, amounting to 26% of the equity capital to a Strategic Investor and to transfer control to manage the affairs of IPCL to the Strategic Investor.  The GOI will commit to sell at least a further 25% equity capital of IPCL from its holdings within a defined timeframe and the Strategic Investor will be given the right of first refusal for this further sell off, which commitment will be incorporated in the Shareholders Agreement.

 

2.         This document does not constitute an offer or invitation or solicitation of an offer, to subscribe to or purchase any securities.

 

3.         While this document has been prepared in good faith, no representation or warranty, express or implied, is or will be made, and no responsibility or liability will be accepted by IPCL, UBS-W or the GOI or any of their employees, advisors or agents as to or in relation to the accuracy or completeness of this document or any other oral or written information made available to any interested recipient or its advisors at any time during the disinvestment process and any liability thereof is hereby expressly disclaimed.  Any liability is accordingly expressly disclaimed even if any loss or damage is caused by any act or omission on part of the aforesaid, whether negligent or otherwise.

 

4.         Neither this document nor anything contained herein shall form a basis of any contract or commitment whatsoever.  Any prospective purchaser will be required to acknowledge in the purchase contract that he has not relied on or been induced to enter such agreements by any representation or warranty, save as expressly set out in such an agreement.

 

5.         This document is not intended to form the basis of any investment decision or any decision to purchase any securities.  Accordingly, interested parties are advised to carry out their own due diligence, investigations and analysis of any information contained or referred to herein or made available at any stage in the disinvestment process.

 

6.         UBS-W, IPCL and GOI undertake no obligation to provide the recipient with any additional information or update this document and reserve the right, at any time and without notice, to change or modify the procedure or process for disinvestment, terminate the due diligence or negotiations or any part of or the entire disinvestment process.

 

7.         This document has not been filed or registered with or approved by regulatory authorities in any jurisdiction.  Recipients of this document, particularly in jurisdictions outside India, should inform themselves of and observe any applicable legal requirements.

 

   

SUBMISSION OF EXPRESSION OF INTEREST (EOI)

 

  Introduction

 

1.         Indian Petrochemicals Corporation Limited (IPCL) was incorporated in 1969 as a Government of India undertaking.  Presently, IPCL is under the administrative control of the Department of Chemicals & Petrochemicals, Ministry of Chemicals and Fertilizers.

 

2.         As a part of its disinvestment programme, the Government of India (GOI) intends to disinvest 26% equity in IPCL and to transfer management control to a strategic investor.  The GOI will commit to sell at least a further 25% equity capital of IPCL from its holdings within a defined timeframe and the Strategic Investor will be given the right of first refusal for this further sell off, which commitment will be incorporated in the Shareholders Agreement.

 

3.         UBS Warburg (UBS-W) have been retained as advisors to the GOI for the proposed disinvestment process and matters relating thereto.

 

Advertisement inviting EOI

 

4.         An advertisement has been issued in the newspapers inviting interested parties to submit their ‘Expression of Interest’ (EOI) to participate in the disinvestment process, a copy of which is enclosed as Annexure I.

 

Format and submission of EOI

 

5.         EOI may be submitted by domestic/international companies (whether currently existing or to be formed specifically to participate in the joint venture formation process), either individually or as a consortium, for holding 26% equity of IPCL.

 

6.         The interested parties should submit, in duplicate, the EOI as per Annexure II accompanied by the ‘Request for Qualification’ (RFQ), duly signed by the interested  party(ies)/designated lead bidder of the consortium.  However, the RFQ will have to be submitted by each member of the consortium duly signed by an authorised official of the member.  The RFQ as given in Annexure III should be duly filled in and accompanied by the following details:

 

●     In case of a sole bidder

●        The Audited Balance Sheet and Profit & Loss Account of the sole bidder (Indian company/Foreign company) for the last 3 financial years

●        Write-up on:

­         Profile of the sole bidder

­         A statement of reasons for strategic interest in IPCL

­         Any other information considered material

 

●     In case of a consortium bid

●        The audited Balance Sheet and the Profit & Loss Account for the last 3 financial years of the lead bidder and other member companies associated in the bid.

●        Write-up on:

­         Lead bidder

        Profile of the lead bidder

        A statement of reasons for strategic interest in IPCL

        Any other information considered material by the lead bidder

­         Other member companies

        Profile of member companies in the consortium

        Any other information considered material

 

7.         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 up to the stage of submission of financial bid.  GOI have the sole discretion to determine the impact of the change in membership on the quality of the consortium and reject a proposal for such reason.

 

8.         Both EOI and RFQ must be in English and each copy should be bound in a separate volume.  Submission of the aforesaid documents by electronic means will not be acceptable.  The EOI and RFQ duly completed along with the details should be submitted not later than 17.30 Hrs.  (IST) on 18th December, 2001 in a sealed envelope superscribed “Private and Confidential – Expression of Interest for IPCL” in any of the following names:

 

Mr.  Ajay Sondhi Managing Director & Country Head UBS Warburg 2/F Hoechst House Nariman Point Mumbai 400 021, India	Ms.  Manisha Girotra Executive Director UBS Warburg 2/F Hoechst House Nariman Point Mumbai 400 021, India
Tel: +91-22-281 4649 Fax: +91-22-281 4676 Email: ajay.sondhi@ubsw.com	Tel: +91-22-281 4649 Fax: +91-22-281 4676 Email: manisha.girotra@ubsw.com

 

GOI reserve the right to withdraw from the process or any part thereof or vary any terms or accept or reject any / all offer(s) at any time without assigning any reasons whatsoever.  No financial obligation will accrue to GOI or UBS-W in such an event.  GOI/UBS-W shall not be responsible for non-receipt of correspondence sent by post/ courier/ e-mail-fax.

 

Pre qualification criteria

 

9.         The interested party(ies) should have a combined networth in excess of Rs. 2500 million as per the latest annual accounts and a satisfactory business and management track record.

 

10.       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.

 

11.            Definition

 

Networth  = Equity Capital + Reserves

 

Disqualifications

 

12.       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 and/or RFQ.

 

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

 

13.       If any information becomes known after the interested party has been qualified to receive the information memorandum which would have entitled Government of India/IPCL to reject or disqualify the relevant company/consortium, Government of India/IPCL reserves the right to reject the interested party at the time or at any time after such information becomes known to GOI or IPCL.  GOI shall not consider for the purpose of qualification, any EOI which has been found to be incomplete or incorrect in respect of its contents or attachments.

 

14.       Further, Government of India has issued guidelines for disqualification of bidders seeking to acquire any public sector enterprises through the process of disinvestment vide Department of Disinvestment OM No.6/4/2001-DD-II dated 13th July 2001, a copy of which is enclosed as Annexure-IV.  The interested party(ies) are required to read the guidelines and satisfy themselves that they are qualified to bid for the stake in IPCL through the process of disinvestment and give an undertaking to the effect that they are qualified to bid for the stake in IPCL in the EOI 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 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.

 

15.       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.

 

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

 

17.       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 require any clarification, it reserves 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 reasonable time frame.

 

18.       This document constitutes no form of commitment on the part of the GOI or UBS-W to complete the proposed disinvestment.  Furthermore, this document confers neither the right nor an expectation on any party to participate in the proposed disinvestment process.  The GOI and UBS-W reserve the right to withdraw from the process or any part thereof or vary any terms at any time without assigning any reasons.  The GOI reserves the right to accept or reject any /all offer(s) without assigning any reasons.

 

Future Process

 

19.       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).  QIP will get an opportunity to conduct due diligence and take up site visits and will also have access to data rooms and hold discussions with the management of IPCL/officials of Ministry of Chemicals and Petrochemicals / Ministry of Disinvestment, Government of India.  The rules regarding access to information in the data rooms will be provided to QIPs later.  QIPs will be invited to submit their proposal and a binding price bid.

 

Governing Laws/Jurisdiction

 

20.       The laws of Union of India shall govern all matters relating to the disinvestment process.  Only Courts at New Delhi (to the 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 proposed disinvestment.

   

BRIEF PROFILE OF INDIAN PETROCHEMICALS CORPORATION LIMITED (IPCL)

 

 

Introduction

 

Indian Petrochemicals Corporation Limited (“IPCL” or the “Company”) is a leading Indian integrated manufacturer of polymer, fibre and fibre intermediates and chemical products from hydrocarbon feed stocks. 

 

IPCL was established in 1969, as a Government of India undertaking, with the objective of promoting the development of the petrochemicals industry in India.  The Company began construction of its first petrochemicals complex at Vadodara in 1970.  Commercial production at the complex commenced in 1973.  The Company’s second petrochemicals complex in Nagothane was commissioned in 1992 and its third complex at Gandhar was commissioned in 1996.  In August 1992, the Company’s shares were listed on all the major stock exchanges in India.

 

IPCL operates three integrated petrochemicals complexes in India and manufactures a wide variety of internationally competitive products.

 

The Company has an extensive nation-wide distribution network which emphasises customer service, reliability of supply and product quality.  The Company markets its products throughout India and has been a pioneer in establishing new markets for the use of petrochemicals in India.

 

Through its research and development department, IPCL offers technical support to its customers, both before and after sales, and develops speciality applications for its products.

 

 

Shareholding Pattern

 

The Government of India (GOI) held 100% of the equity of IPCL till 1992 when it disinvested 20% of its share in the markets.  Subsequently, IPCL raised capital by making a public issue in November 1992, GDR issue in December 1994, reducing GOI’s stake to 59.95%.

 

The shareholding pattern of the Company’s equity as on 31^st March, 2001 was as under:-

President of India   59.95%

Financial Institutions   14.40%

Foreign Institutional Investors  2.39%

Domestic Companies  2.91%

Others   20.35%

Total 100.00%

 

 

Facilities and Operations

 

Production Facilities

 

Vadodara Complex - is a fully integrated Complex comprising of a Naphtha Cracker of 1,30,000 Mts. per annum capacity, Captive Power Plant, Xylene Plant, Propylene Separation Plant and 15 Downstream Plants.  The Complex is located on 700 Hectares site at Vadodara in the State of Gujarat.  The downstream plants were constructed by adopting diverse technologies to produce a wide range of products like Polymers - LDPE, PPCP, PP, PVC, PBR Fibre & Fibre Intermediates - Acrylic Fibre, Dry Spun Acrylic Fibre & Mono-ethylene Glycol Chemicals - Linear Alkyl Benzene, Ethylene Oxide, & Acrylates.

 

Nagothane Complex - is an integrated Complex with Ethane / Propane (C2 / C3) Cracker of 4,00,000 Mts. Per annum capacity, located on 938 hectares site at Nagothane in Raigadh District in the State of Maharashtra.  This Complex, besides Gas Cracker also possess a Captive Power Plant and Downstream Plants to produce a wide range of products like Polymers - LLDPE, LDPE, HDPE, PP, Wire & Cable, Fibre & Fibre Intermediates - Mono-ethylene Glycol Chemicals, Ethylene Oxide.

 

Gandhar Complex - is located on 658 hectares site near Jageshwar Village in Bharuch District in Gujarat State.  This integrated Complex was implemented in two Phases and went on full stream in the year 2000 and consists of a Gas Cracker of 3,00,000 Mts.per annum capacity, Captive Power Plant, Captive Jetty and Downstream Plants to produce a wide range of products like Polymers - PVC, HDPE, Fibre & Fibre Intermediates- Mono-ethylene Glycol Chemicals  - Caustic Soda, Ethylene Oxide.

 

In a bid to promote cost efficiency, IPCL has consistently focussed on infrastructure development for its three complexes.  Accordingly, each of the complexes has its own power generation and allied facilities.  The Vadodara complex has a 65 MW gas fired combined cycle power plant and two diesel generator sets with a combined capacity of 25 MW; the Nagothane complex has a 64 MW multi fuel combined cycle power plant; and the Gandhar complex has captive power plants of 65 MW for the first phase and another 95 MW for the second phase.

 

IPCL has been consistently working at capacity utilization levels of over 80% in its Vadodara Complex in Gujarat for the past 20 years.  The Nagothane Complex in Maharashtra went on stream in 1993 and is currently operating at over 95% capacity utilization.  Pursuant to commissioning of all Phase I and Phase II projects, the Gandhar Complex in Gujarat went fully on stream in the year 2000 and is currently operating at capacity utilization level of over 75%.

 

Environment Management

 

IPCL’s Environment Management is integrated in the business process through carefully devised strategies and systems.  IPCL’s Environmental Policy aims to maintain environment norms as per prevailing statutory standards, conserve natural resources, minimize waste generation in petrochemical plant operations, contribute to a green economy and encourage environmental awareness amongst employees and society for vigilant hazard management and prevention of pollution.  IPCL’s Nagothane Complex was conferred ISO-14001 Certification by Netherlands based Det Norske Veritas for maintaining high Environment Standards.

  

Product Profile

 

The following table summarizes the production capacities and principal application for each of the Company’s key products:

 

Installed capacity of key products (TPA)

Product category	Product	Vadodara	Nagothane	Gandhar	Principal Applications
Basic Chemicals	Ethylene	130,000	400,000	300,000	Feedstock for polyethylene
	Propylene	107,460	80,000	38,000	Feedstock for polypropylene
	Butadiene	36,000			Raw material for PBR
	Xylenes	96,500			Paraxylene for DMT/PTA and Orthoxylene for PAN
Polymers	HDPE			160,000	Bottle pipes & cans
	HDPE/LLDPE		220,000		Trash bags, packaging, film, toys, house-wares
	LDPE	80,000	80,000	-	Trash bags, packaging, film, toys, house-wares
	PP	130,000	60,000	-	Carpet backing, luggage, bottles
	PVC	55,000	-	150,000	Pipes, homesiding tiles
	PBR	50,000		-	Tyres, shoes, hoses
Fibre & Fibre Intermediates	Acrylonitrile	30,000		-	Intermediate chemical to make acrylic fibre, ABS, Acrylates, etc.
	MEG	7,800	50,000	100,000	Polyester fibre, yarn, films & bottle
	DMT	30,000		-	Polyester fibre, yarn, film
	Acrylic Fibre	24,000		-	Apparels
Chemicals	Ethylene Oxide	10,000	5,000	10,000	Pharma products, dyes & surfactants
	LAB	43,500	-	-	Synthetic detergents
	Caustic Soda	-	-	130,000	Surfactants
	Chlorine	-	-	115,000	Surfactants

   

In the financial year ended 31 March 2001, chemicals sales accounted for approximately twenty per cent of IPCL’s total sales, polymers for seventy per cent of total sales and fibres and fibre intermediates for ten per cent of total sales.

   

Infrastructure

IPCL has a 37% equity stake in Gujarat Chemical Port Terminal Company Limited, which operates a state of the art liquid chemical handling port at Dahej, in Gujarat, commissioned in the year 2000.  The jetty is extended upto nearly 2400 metres into the sea and has an available draft of about 18metres.  The facility enables IPCL to handle export consignments and access feedstock.

IPCL has created storage terminal for receiving propane at Pirpau Jetty near Mumbai, Maharashtra and connected it with the Nagothane Complex by a pipeline to augment the feedstock.  IPCL has also networked the manufacturing facilities at Gandhar and Vadodara Complex in Gujarat through three product pipelines to optimize capacity utilization of both the Complexes.

Business Strategy

In order to capitalise on the rapidly increasing demand for petrochemicals products in India and to effectively compete in an increasingly open market, the Company has developed a comprehensive business strategy which aims to profitably grow the Company’s market share in key growth segments and to establish itself as a leader in the Indian petrochemicals industry.  The Company intends to pursue continued growth over the medium term by:

●        Selective capacity expansion:

To capture expected demand growth in certain high growth segments of the market, the Company proposes to selectively expand production capacity for products such as ethylene, polyethylene, PVC, ACN and PBR, domestic demand for which is unlikely to be fully met by domestic supply.

●        Increasing production through efficient use of existing capacity:

The Company is focusing on increasing profitability by improving utilisation of existing capacity; increased integration of plants and machinery; and utilisation of state of the art technologies and processes to optimise production.

●        Pursuing vertical integration:

IPCL intends to derive advantage from downstream business opportunities to add value to its existing products.  As a part of its strategy to diversify into high value added products, IPCL has expanded into production of sophisticated catalysts & absorbents and is currently the sole domestic producer of products such as molecular sieves, activated alumina and dehydrogenated N.parafin catalyst.  The Company believes that vertical integration will both enhance operating margins and reduce the cyclicality of its earnings.

●        Increased research and development:

IPCL considers R & D as its core activity and the R & D Centre provides in-house support to operations and development of new products with focus on technology absorption, cost reduction in various plants, improvement of yield, quality of end products, reduction of wastes etc.  The areas of research encompass Polymers and material sciences, catalysts, chemical and process developments, chemical engineering and applied biology, chemical physical and analytical spectroscopy.  IPCL has been granted 12 patents which includes 8 international patents.  The International Patents includes two US Patents for the manufacture of Alpha Olefins and 3 US Patents for preparation of Molecular Sieve Adsorbents.

●        Exploiting its large domestic distribution network to increase market share:

IPCL believes that its extensive national marketing and distribution network, with its focus on customer service, product quality, and reliability of supply, provides the Company with a significant competitive advantage over its competitors.  With increased capacity as a result of the commissioning of its Gandhar Complex, the Company proposes to significantly increase the market penetration of its products by leveraging on the existence of its marketing and distribution organisation.

 

Summary Financials

Summary financials for IPCL are set out in the tables below:

 

Income Statement Data	Year ended 31 March,
Rs. Million (except per share data)	1999	2000	2001
Total revenue (1)	31,943	41,721	51,737
Cost of Sales (1)	26,223	32,665	39,940
Earnings before interest, depreciation and tax	5,720	9,056	11,797
Interest (net of capitalization)	2,619	3,876	4,909
Depreciation	2,703	3,188	4,149
Profit before taxation	398	1,992	2,739
(Less)/Add Prior period items	(69)	(21)	(19)
Provision for taxation	35	83	231
Profit for the period	294	1,888	2,489
Earnings per share	1.2	7.6	10

Source:   IPCL

Notes:

(1)          Net of excise duty

 

 

Balance Sheet Data	As at 31 March,
Rs.  Million	1999	2000	2001
Current assets, loans and advances	27,508	27,178	25,322
Fixed assets (Net)	61,307	64,286	61,443
Investments	697	741	1,091
Total assets	89,512	92,205	87,856
Current liabilities and provisions	13,364	15,135	13,714
Loans	46,518	47,461	42,758
Shareholders funds	29,630	29,609	31,384
Total Liabilities and shareholders funds	89,512	92,205	87,856

Source:   IPCL

 

 

The Opportunity

 

IPCL is one of the most modern and cost efficient producers of petrochemicals products in India.  The Company’s products are universally accepted and are established market leaders in their individual segments.  The Indian petrochemicals industry is set to grow at a rapid rate in the next few years.  The acquisition of a strategic stake in IPCL will thus enable the Strategic Investor to instantly gain a dominant and reliable foothold in one of Asia’s most promising markets through an investment in an established leader in the industry.  The opportunity provided by IPCL is further characterised by the following factors:

 

●        A leading producer of petrochemicals in India

IPCL is the second largest Indian integrated manufacturer of polymer and chemical products from hydrocarbon feed stocks.  It ranks second in the production of basic chemicals, first in polyethylenes (LDPE, LLDPE, HDPE), second in fibre and fibre intermediates (DMT, acrylic fibre) and is a major player in chemicals (LAB, Chlorine, OX) production.  The Company’s substantial production capacity for most of its products enables it to derive significant economies of scale from its operations, resulting in lower production costs and increased competitiveness.

 

●        Highly integrated operations

IPCL is a highly integrated producer of petrochemicals products.  Currently, a significant proportion of its products are captively consumed in downstream processes.  The operations of its three complexes form an integral part of a strong value chain linking IPCL’s upstream and downstream operations, thereby providing significant advantages in raw material procurement and generating steady internal demand for intermediate products.  In line with its business strategy, IPCL intends to increase integration and to derive further advantage of upstream and downstream business opportunities, thus adding greater value to its existing product portfolio.  These advantages, which can only be derived from highly integrated operations, facilitate stable operations, cost competitiveness and reduce the cyclicality of earnings for the Company.

 

●        High product quality

The Company has established good long term relationships with its customers and has gained an excellent reputation for the quality of its products.  It has received a number of ISO 9000 series certifications in recognition of the quality of its products.

 

●        Assured raw material supplies

IPCL enjoys a committed domestic supply of feedstock through long term arrangements, yet has the flexibility to access resources from international markets when necessary.  The majority of IPCL’s energy needs are satisfied by the company’s own power facilities; a more reliable and cost efficient form of energy supply than the state electricity boards.

 

●        Well established marketing and distribution network

IPCL has one of the largest marketing and distribution networks in India.  The Company’s sales force focuses on providing customer service, technical support, and after sales service with a view to promoting the use of petrochemical products in India by successfully establishing long term relationships with key customers.

 

●        Experienced Management

IPCL is being managed by a core team of professionals who have extensive experience in the petrochemicals industry both in India and overseas.  IPCL’s management team brings with it contemporary knowledge and rich experience.  The team is highly market-orientated and has managed IPCL with a view to re-establishing IPCL as the pre-eminent integrated petrochemicals manufacturer in India.  Once privatised, the management of IPCL should be in a position to respond faster to market conditions and further consolidate IPCL’s position in the Indian petrochemicals industry.

 

●        Strong research and development capabilities

IPCL’s R&D activities are conducted primarily at two levels.  Each complex has its own technical staff devoted to improving production processes and addressing specific technical problems.  IPCL has also established a separate research centre and product application centre (“PAC”), which employs over 130 scientists and engineers.  The PAC assists IPCL in creating markets for new products, in product and process development, in finding substitutability of competing materials and in productivity improvement for production plants etc. 

 

●        Exemplary safety and environmental track record

The Company is subject to extensive national and local environmental laws and regulations, which impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous wastes.  In order to comply with these, the Company has a comprehensive environmental management policy covering air and water pollution, noise pollution, disposal of gaseous, liquid and solid wastes and local ecology.

 

ANNEXURE - I

GOVERNMENT OF INDIA

 

Strategic Sale of Shareholding in Indian Petrochemicals Corporation Limited (IPCL)

 

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

 

EXPRESSION OF INTEREST (EOI)

 

The Government of India (“GOI”), as a part of its divestment programme, wishes to sell a part of its shareholding in Indian Petrochemicals Corporation Limited (“IPCL”), amounting to 26% of the equity capital to a Strategic Investor and to transfer control to manage the affairs of IPCL to the Strategic Investor.  The GOI will commit to sell at least a further 25% equity capital of IPCL from its holdings within a defined timeframe and the Strategic Investor will be given the right of first refusal for this further sell off, which commitment will be incorporated in the Shareholders Agreement.  UBS Warburg has been retained as Advisor to the GOI in connection with the proposed sale.

 

IPCL is a leading integrated manufacturer of polymer, fibre and fibre intermediates, and other chemical products from hydrocarbon feed stocks.  The company has been a pioneer in the Indian petrochemical industry since its formation in 1969.  IPCL has three manufacturing facilities in Western India with a gross installed capacity to produce approximately 3.9 million tones per annum of petrochemicals intermediates and products and has an extensive countrywide distribution network in place.  In the financial year ended 31^st March 2001, IPCL has a net turnover of Rs.50060 million.

 

Companies/Consortiums of Companies/Joint Ventures interested in acquiring shares from GOI and participating in the proposed divestment in IPCL (“Interested Parties”) should send to the under-mentioned addresses, their Expression of Interest (“EOI”) in the format prescribed in the Preliminary Information Memorandum (“PIM”) together with their latest audited Annual Report and a Profile describing their business and operations (the “EOI Package”) by not later than 17.00 Hrs. (IST) on 18.12.2001.  The Interested Party (Parties) should have a combined net worth in excess of Rs. 2500 million as per the latest annual accounts and a satisfactory business and management track record.

 

More information pertaining to the Company as well as the PIM can be accessed from the websites: www.divest.nic.in and www.ipcl.co.in

 

All queries related to the EOI may be addressed to the under-mentioned persons.

 

Mr.  Ajay Sondhi Managing Director & Country Head UBS Warburg 2/F Hoechst House Nariman Point Mumbai 400 021, India	Ms.  Manisha Girotra Executive Director UBS Warburg 2/F Hoechst House Nariman Point Mumbai 400 021, India
Tel: +91-22-281 4649 Fax: +91-22-281 4676 Email: ajay.sondhi@ubsw.com	Tel: +91-22-281 4649 Fax: +91-22-281 4676 Email: manisha.girotra@ubsw.com

ANNEXURE - II

 

 

EXPRESSION OF INTEREST

 

(To be forwarded on the letterhead of the interested party(ies)/lead bidder/member(s) of the consortium submitting the EOI)

 

Reference No. ______________ Date ___________

 

 

Mr.  Ajay Sondhi Managing Director & Country Head UBS Warburg 2/F Hoechst House Nariman Point Mumbai 400 021, India	Ms.  Manisha Girotra Executive Director UBS Warburg 2/F Hoechst House Nariman Point Mumbai 400 021, India
Tel: +91-22-281 4649 Fax: +91-22-281 4676 Email: ajay.sondhi@ubsw.com	Tel: +91-22-281 4649 Fax: +91-22-281 4676 Email: manisha.girotra@ubsw.com

 

EXPRESSION OF INTEREST FOR STRATEGIC PARTNER IN IPCL

 

Sir,

 

This is with reference to the advertisement dated ________ inviting Expression of Interest for Indian Petrochemicals Corporation Limited (IPCL).

 

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 __________________

 

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

 

1.____________________________

2.____________________________

3.____________________________

 

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.

 

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 chargesheeted by any agency of the Government/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 Ministry of Disinvestment of the same immediately.

 

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

 

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

 

Yours faithfully,

 

 

Authorised Signatory

 

Enclosure: Request for Qualification For and on behalf of

ANNEXURE - III

 

 

REQUEST FOR QUALIFICATION

 

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

 

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

 

 

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

 

-         Public Limited Company

-         Private Limited Company

-         Public Sector

-         Joint Sector

-         Others, If any

 

-         Nature of business/products dealt with :

-         Date of incorporation :

-         Date of commencement of business :

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

-         Registered Office :

-         Head Office:

-         Address for correspondence:

 

Basis of eligibility for participation in the process for induction of Strategic Partner (Please mention details of your eligibility)

 

Please attach supporting documents e.g. Certified Provisional/Audited Statement of Accounts/Annual Report.

 

Contact Persons

 

Yours faithfully,

 

Authorised Signatory

 

For and on behalf of

 

Place :

Date :

 

ANNEXURE - IV

 

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 including the name of the investigating agency, the charge/offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government.  For other criteria also, a similar undertaking shall be obtained along with EOI.

 

-sd/-

(A.K.  Tewari)

Under Secretary to the Government of India

 

To

As per list attached.