DISCLAIMER

 

1.       This document is being provided in connection with the proposed disinvestment of 51% equity by the Government of India (GoI) in Shipping Corporation of India Ltd. (SCI).

 

2.       The Advisors for the disinvestment are in the process of being appointed by the GoI.

 

3.       The sole purpose of this document is to assist the recipient in deciding whether they wish to proceed with a further investigation of the proposed disposal, but it is not intended to form the basis of any investment decision or any decision to purchase the Interest.  This document does not constitute nor should it be interpreted as an offer or invitation for the sale or purchase of securities described herein.

 

4.       This document is meant to provide information only and upon the express understanding that recipients will use it only for the purposes set out above.  It does not purport to be all inclusive or contain all the information about Shipping Corporation of India Ltd. or be the basis of any contract.  No representation or warranty, expressed or implied, is or will be made as to the reliability, accuracy or the completeness of any of the information contained herein. It shall not be assumed that there shall be no deviation or change in any of the herein mentioned information on Shipping Corporation of India Ltd.  While this document has been prepared in good faith, neither Shipping Corporation of India Ltd. nor GoI nor any of their respective officers or employees make any representation or warranty or shall have any responsibility or liability whatsoever in respect of any statements or omissions herefrom.  Any liability is accordingly expressly disclaimed by Shipping Corporation of India Ltd., GoI and any of their respective officers or employees even if any loss or damage is caused by any act or omission on the part of Shipping Corporation of India Ltd., GoI or any of their respective officers or employees, whether negligent or otherswise.

 

5.       By acceptance of this document, the recipient agrees that any information herewith will be superseded by any later written information on the same subject made available to the recipient by or on behalf of Shipping Corporation of India Ltd. and GoI.  Shipping Corporation of India Ltd. and any of their respective officers or employees undertake no obligation, among others, to provide the recipient with access to any additional information or to update this document or to correct any inaccuracies therein which may become apparent, and they reserve the right, at any time and without advance notice, to change the procedure for the sale of all or any part of the Interest or terminate negotiations or the due diligence process prior to the signing of any binding  purchase agreement.

 

6.       Accordingly, interested recipients should carry out an independent assessment and analysis of Shipping Corporation of India Ltd. and of the information, facts and observations contained herein.

 

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

SUBMISSION OF EXPRESSION OF INTEREST (EOI)

 

 

1.       INTRODUCTION

 

1.1     The Shipping Corporation of India Ltd. (SCI) was incorporated on 2^nd October, 1961.  The company is under the administrative control of Ministry of Shipping.

 

1.2     As a part of its disinvestment programme, the Government of India (GoI) intends to disinvest 51% equity of the company along with transfer of management through strategic sale and in the event of the strategic partner being a joint venture/consortium, the foreign holding, if any, shall not exceed 25%.

 

1.3     3.12% of the equity of the company would be reserved for disinvestment in favour of employees to be carried out immediately after the strategic sale is completed.  The offer price would be 1/3^rd of the market price or the price offered by the strategic buyer whichever is lower but not below Rs.10 (face value).

 

1.4     The advisors for the disinvestment transaction are being appointed.

 

2.       ADVERTISEMENT INVITING EOI

 

2.1            An advertisement has been issued in the business newspaper 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.

 

3.       EXPRESSION OF INTEREST

 

3.1     This section describes the outlines of participating in the disinvestment process and the requirements relating to information to be provided by interested parties, when submitting their Expression of Interest (EoI).

 

 

4.       ELIGIBILITY/ PRE-QUALIFICATION CRITERIA:

 

4.1     The interested party(ies)/consortium should have a combined net worth in excess of Rs.8000 million as per the latest annual accounts and a satisfactory business and management track record.

 

4.2     In case of a consortium bid, the financial parameters of the lead bidder must be at least 51% of the amount indicated in para 4.1 above.

 

4.3     In the event of the strategic partner being a joint venture/consortium, the foreign holding, if any, shall not exceed 25%.

 

4.4     In choosing between prospective strategic partner(s), GOI will pay due attention, inter-alia to the security requirements of the country.

 

4.5     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.

 

4.6     Interested parties should note that in terms of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997, the strategic partner selected to acquire shares of SCI from GoI, may be required to make a public offer to acquire further shares of SCI in accordance with the regulations.  For further details, interested parties may refer to the Securities and Exchange Board of India regulations in this regard.

 

4.7     The PIM along with its enclosures does not constitute a commitment on the part of the GoI or SCI, 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.

 

4.8     The GoI and SCI reserve the right to withdraw from the process or any part thereof, to accept or reject any or all offers at any stage of the process and/or modify the process or any part thereof or to vary any terms at any time without assigning any reason whatsoever.  No financial obligation whatsoever shall accrue to the GoI or SCI in such an event.

 

5.       INITIAL PROCESS

5.1     Following receipt of this PIM, Interested Parties will be required to submit an EoI Package comprising an Expression of Interest, a Statement of Legal Capacity and a Request for Qualification in the format specified in Annexure II, III,  and IV.

 

5.2     Based on an evaluation of the EoI Package received, Interested Parties which are deemed to be qualified by the GoI (“Qualified Interested Parties” or “QIPs”) will be allowed to participate in the subsequent selection process (without conferring any right or expectation whatsoever to the QIPs).

 

5.3     Following signing of a Confidentiality Agreement (“CA”) by duly authorized personnel, QIPs will be provided with the Confidential Information Memorandum (“CIM”) and invited to participate further in the process as detailed in the CIM.

 

6.       FILING REQUIREMENTS

 

6.1     Interested parties must submit, in duplicate, their EoI accompanied by a Statement of Legal Capacity and Request for Qualification (“RFQ”) the {“EoI Package”}, as per the formats given in Annexure II, III & IV of this PIM.

 

6.2     EoIs must be signed by a duly authorized representative of the interested party.  In the case of a consortium or joint venture the EoI must be signed by a duly authorized representative for the group.  In addition, Statements of Legal Capacity and RFQs have to be submitted by interested parties and each member of any consortium or joint venture.  This comprises the EoI Package.

 

6.3     All EoI Packages must be in English and each copy shall be bound in a separate volume.  Submission of the aforesaid documents by fax, e-mail or other electronic means will not be acceptable.  It is the responsibility of the interested party(ies) alone to ensure that its EoI with required documents is delivered at the address given below by the stated time and date.  The covering envelope containing the aforesaid document should be clearly marked “Expression of Interest for participation in disinvestment in SCI Ltd”.  Neither the GoI nor SCI shall be responsible for non-receipt of correspondence.

 

6.4     The EoI package must be submitted by no later than 17.00 hours (Indian Standard Time), February 18^th, 2002 at the following address:

V.P. Gupta,

Under Secretary,

Ministry of Disinvestment,

CGO Complex, Block No.11, 2^nd Floor,

New Delhi-110 003

 

7.       EOI FILED BY CONSORTIA/JOINT VENTURES

 

7.1     If a Consortium or Joint Venture is formed, or proposed to be formed, specifically for the purpose of this investment, details of the members of the Consortium or Joint Venture and the extent of their interest herein must be provided in the EoI Package.

 

7.2     Any subsequent change by way of withdrawal/substitution of any member of the consortium or joint venture or any change affecting the composition of the consortium or joint venture may be permitted, but only with the specific approval of the GoI.  The GoI has the sole discretion to determine the impact of the change in membership on the structure and quality of the Consortium or joint venture and reject a proposal without assigning any reason whatsoever.

The RFQ should be duly filled in and accompanied by the following details:

 

Ø                   In case of a sole bidder

 

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

 

v                  Write-up on:

·                     Profile of the sole bidder

·                     A statement of reasons for strategic interest in SCI

·                     Any other information considered material

 

Ø                   In case of a consortium bid

 

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

 

v                  Write-up on:

 

·                     Lead bidder

 

o                 Profile of the lead bidder

o                A statement of reasons for strategic interest in SCI

o                Any other information considered material by the lead bidder

 

·                     Other member companies

 

o                Profile of member companies in the consortium

o                Any other information considered material

 

 

 

 

8.       DISQUALIFICATION

 

8.1     The GoI shall not consider for the purpose of qualification, an EoI which is found to be incomplete in content and/or attachments and/or authentication etc.

 

8.2     Without prejudice to any other rights or remedies available to the GoI, a company/consortium/joint venture may be disqualified and its EoI dropped from further consideration for any reason whatsoever including those listed below:

 

·        Material misrepresentation by such company/any member of such consortium/joint venture whether, in the EoI along with the RFQ or otherwise

 

·        Failure by such company/consortium/joint venture to provide the information required to be provided in the EoI, along with the RFQ, pursuant to relevant sections of the PIM

 

·        Submission of an EoI along with RFQ in respect of any company/consortium/joint venture, where such company or any member of such consortium/ joint venture which has already submitted an EoI

 

8.3     If information becomes known, after the interested party has been qualified to receive the Confidential Information Memorandum (CIM), which would have entitled the GoI to reject or disqualify the relevant company/ consortium/ joint venture, the GoI reserves the right to reject the interested party at the time, or at any time after, such information becomes known to the GoI.

 

8.4     Where the interested party is a consortium/ joint venture, the GoI may disqualify the entire consortium/ joint venture for any of the reasons set out above, even if it applied to only one member of the consortium/ joint venture.

 

8.5     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-V.  The interested party(ies) are required to read the guidelines and satisfy themselves that they are qualified to bid for the stake in SCI through the process of disinvestment and give an undertaking to the effect that they are qualified to bid for the stake in SCI 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 13.07.2001 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.

 

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

 

 

9.       FUTURE PROCESS

 

9.1     Based on the EoI submitted by the interested parties, the GoI, advised by the Advisor (to be appointed), will carry out an evaluation of the qualification of such interested parties. If at any time during the evaluation process, the GoI or the Advisor requires any clarification in order to carry out the evaluation, it reserves the right to request such information from any or all of the companies/ consortium/ joint ventures and the companies/ consortium/ joint venture will be obliged to respond to any reasonable request for such information and to supply the same to the Advisor within such reasonable timeframe as the GoI or the Advisor may require.

 

9.2     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 be provided with the Confidential Information Memorandum (CIM) and shall be invited to participate further in the process described in detail in the CIM.  QIP will get an opportunity to conduct due diligence and take up plant visits and will also have access to data rooms and hold discussions with the management of SCI/officials of Ministry of Shipping/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.

 

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

 

10.     Enquiries

 

10.1   The GoI and the Advisor reserve the right not to respond to question raised or provide clarifications sought, in their sole discretion, if it is considered that it would be inappropriate to do so. Nothing in this section shall be taken or read as compelling or requiring the GoI and the Advisor to respond to any question or to provide any clarification. No extension of any time and date referred to in this IM shall be granted on the basis or grounds that the GoI and the Advisor  has not responded to any question/ provided any clarification.

 

11.     Governing Laws/ Jurisdiction/ Arbitration

 

11.1   All matters relating to the disinvestment process and the bidding procedure shall be governed by the law of Union of India. 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.

            THE SHIPPING CORPORATION OF INDIA LTD.

 

1.0              HISTORY

 

1.1       The Shipping Corporation of India Limited (SCI) was incorporated on 2^nd October ,1961 by merger of the Eastern and Western Shipping Corporations. It was indeed most appropriate that a company which was to carry the torch of self-reliance in the field of shipping was born on the birth anniversary of Mahatma Gandhi who gave the slogan of ‘Swadeshi’ to the Indian nation. The saga of the growth and development of modern Indian shipping is the saga of the growth and development of SCI, which can rightly claim the credit for putting India on the world maritime map.

 

1.2       The SCI had a modest beginning, owning at the time of its inception, 19 ships comprising 0.19 million DWT constituting about 14% of the total Indian tonnage. The SCI took over as the managing agents of Jayanti Shipping Co. (JSC) when Government of India took over the management of JSC on 10th June 1966.  Further on 17th October 1971, the Government took over all the shares (288,128) of the ailing JSC and transferred 288,028 shares to SCI, as a result of which JSC became a subsidiary of SCI.  For the purpose of securing co-ordination in policy, and efficiency and economy in operation, JSC was amalgamated with the SCI on 1^st January 1973. Further, The Mogul Line Ltd., a Government of India enterprise was merged with SCI on 30th June 1986.

 

1.3       In the 60s and particularly in the 70s, SCI’s fleet expanded rapidly as can be seen from Table 1 below :-

                                                Table 1

 

From Table 1 above, it can be seen that SCI tonnage multiplied by almost five times in span of just 12 years. This phase can be called as expansion phase.

 

1.4       However, since 1982, the SCI fleet has not grown vertically. More emphasis was laid since then to consolidate market share and to acquire modern and sophisticated tonnage to meet requirements of the Indian trade. This phase can be truly called the consolidation phase. During the late 70s and early 80s, the world fleet did not expand on account of deep and prolonged recession experienced by shipping industry world wide, and SCI fleet was also no exception. However, SCI took advantage of the lower shipbuilding prices and placed orders for a large number of ships. Thus SCI has been able to modernize its fleet by replacing old vessels with more modern tonnage.  Growth in SCI fleet since 1982 is depicted in Table 1A below -

                                                            Table IA

Year	Number of Vessels	DWT(Mil)
1983	143	5.00
1985	158	5.50
1987	138	5.19
1990	126	4.86
1993	126	4.97
1995	123	5.28
1996	122	5.44
1997	118	5.01
1998	117	5.01
1999	117	5.04
2000	112	4.94
2001	99	4.48

 

1.5       Not only has the SCI fleet expanded over the years but the composition of the fleet has undergone a sea change.  At the time of inception in 1961, the SCI started predominantly as a liner shipping company.  However, over the years the fleet has emerged as a highly diversified fleet comprising container vessels, dry bulk carriers, crude oil tankers, product tankers, chemical carriers, LPG/ammonia carriers, general cargo liner vessels, cellular vessels, combination carriers, offshore supply vessels, passenger-cum-cargo vessel and timber carrier.  A profile of the fleet owned by the SCI as on the date of inception i.e. 2.10.1961 and as on 31.12.2001 is enclosed at Enclosure I.  From this enclosure, it would be seen that while 81% of the total tonnage was constituted by liner ships in terms of deadweight at the time of inception, presently bulk tonnage (both wet and dry) constitutes a major portion i.e. 94% of the total tonnage in terms of deadweight.  It would also be seen that while at the time of inception the SCI fleet comprised 3 different types of ships, today the SCI fleet comprises 10 different types of ships.

 

1.6       Milestones

 

1.6.1    Diversification of tonnage

 

As mentioned in para 1.5 above, the SCI fleet has emerged as a highly diversified fleet and the SCI today operates in practically all areas of the shipping business including liner shipping, dry bulk shipping, wet bulk shipping (oil, chemicals) etc.  Table 2 below highlights diversification of the SCI fleet in terms of first time acquisition of different category of ships.

                                                      Table 2

 

1.5.2    Change in Equity Share capital

 

Table 3 below summarises the change in the equity share capital of the SCI since inception.

                                                            Table 3

Year	Addition to Paid up equity capital (Rs. Crore)	Total paid-up equity capital (Rs. crore)	Remarks
1961	23.45	23.45	Inception of SCI
1973	4.47	27.95	Jayanti Shipping merged with SCI
1983	42.08	70.00	Conversion of part Government loans into equity
1986	0.19	70.19	Mogul Line Ltd. merged with SCI
1990	195.04	261.23	Conversion of some Government/Ex-SDFC loans into equity
1991	21.06	282.30	Budgetary Support in the form of equity.

 

            The status of SCI has been changed from a Private Limited Co. to Public Limited from 18.09.1992. As a part of Government’s disinvestment plans, 19.88% of SCI’s equity has been divested in favour of Financial Institutions, Mutual Funds, Banks, FIIs and Retail Investors. SCI’s shares are today listed at major Stock Exchanges in India.

 

 

2.0              SCI TODAY

 

2.1       SCI has grown by leaps and bounds in the last 39 years.  As on 31.03.2001, it owned around 40% of Indian tonnage, with a fleet size of 99 vessels of 2.68 million GT (4.48 million DWT). SCI also has one vessel of 16,834 GT (26,714 DWT) on lease. SCI has always gone in for strategic acquisition of modern, state-of-art tonnage to meet the needs of the growing Indian trade. Its comparatively young fleet criss-crosses the globe, and it is SCI, which has given Indian Shipping, a global presence. As of 31.12.2001, the SCI's fleet comprises of 93 vessels of 2.60 million GT (4.36 million DWT).

 

            2.2       It’s not only the size but also the well-diversified fleet, which gives SCI an edge over other shipping majors. SCI has diversified into almost all areas of shipping services and its fleet includes ten different types of vessels i.e. Dry Cargo vessels, Cellular Container vessels, Bulk carriers, Crude carriers, Product carriers, Combination carriers, LPG / Ammonia carriers, Phosphoric Acid / Chemical carriers, Offshore Supply Vessels and Passenger-cum-Cargo vessels.

 

            2.3       Operations -

 

SCI’s shipping operations can be broadly classified into three categories as under:

 

2.3.1    Bulk Carrier & Tanker Services

 

This is by far the largest Profit Centre of the SCI and comprised 69 ships aggregating 4.098 million dwt (94% of the SCI fleet).  This Division generates about 80% of the SCI revenues and a significant percentage of its profit.  The operations of this Division can be classified into the following activities:

 

(i)                  Transport of crude oil for Indian oil refineries

(ii)                Import of petroleum products and their movement on the Indian coast

(iii)               Import of chemicals like phosphoric acid

(iv)              Import of LPG/Ammonia

(v)                Export of iron ore and import of coking coal and other dry bulk cargoes

(vi)              Cross trades

(vii)             Storage

 

Two SCI ships are used exclusively as storage vessels to store crude oil produced by the Bombay High offshore fields. A brief on the activities of the Bulk & Tanker division is given below -

 

(i) Transport of crude oil for Indian oil refineries:The SCI has ­27_ ships aggregating 22.93 lakh dwt catering to import of crude oil and the transport of Bombay High crude to various refineries on the Indian coast.  The SCI crude oil fleet ranges in the size range from 41123 dwt to 139115 dwt.  The youngest SCI crude oil tanker is about two years old and the oldest vessel in its crude oil tanker fleet is about 28 years.  These vessels are employed with the Indian Oil Industry under a Contract of Affreightment based on market related mechanisms. The SCI has a predominant share in transport of crude oil to Indian oil refineries. In recent years, however, its share has fallen as the SCI fleet has not kept pace with the increasing imports.  Notwithstanding the fall in its share the SCI still plays a dominant role in the transportation of crude oil for Indian refineries.  It may be relevant to point out that in the past, in times of national emergencies and international crisis, the SCI has played a crucial role in keeping the national crude oil supply line open and its performance has been commended on several occasions.

 

(ii) Import of petroleum products and their movement on the Indian coast: : The SCI product tanker fleet comprises 11 ships aggregating 4.18 lakh dwt.  Of these, at present 6 ships are deployed for import of petroleum products and 5 ships are deployed for movement of petroleum products on the Indian coast. However, it may be pointed out that all SCI product tankers have the capability to ply in International waters and the deployment of fleet is continually adjusted to meet with the requirements of Indian oil industry.  The youngest product carrier is 2 years old and the oldest product carrier is 19 years old.

 

(iii) Import of chemicals like phosphoric acid: The SCI acquired 3 phosphoric acid carriers during the years 1991-92.  This was the first ever acquisition of phosphoric acid carriers by an Indian shipping line.  These carriers are deployed for transport of phosphoric acid from Morocco to India.

 

(iv) Import of LPG/Ammonia: The SCI acquired 2 LPG/Ammonia carriers for the first time in 1991.  These two vessels are at present deployed for import of LPG from West Asia Gulf.

 

(v) Export of iron ore and import of coking coal and other dry bulk cargoes: The SCI bulk carrier fleet comprises 24 ships (excluding one ship which has been sold and leased back) aggregating 10.06 lakh dwt.  The youngest SCI bulk carrier is one year old and the oldest vessel is 23 years old.  The SCI carries Indian exports of iron ore to Japan.  On the way back to minimize the ballast leg these ships go to Australia to load coking coal for Indian steel mills.  In addition, depending upon the opportunities available, SCI ships carry India’s imports of grain, raw materials for fertilizers, etc.

 

(vi) Cross trades:  While the aim of the SCI is to provide ships for Indian trade, the freights are highly market driven, thus, whenever opportunities are available in the international market for carrying third country cargoes, the SCI exploits these opportunities to its commercial advantage.

 

            2.3.2    Liner & Passenger Services

 

            SCI operates a network of global liner services from India to various destinations namely, the UK-Continent, Far East-Japan, USA (East Coast)-Canada, South Africa, Mediterranean Ports, and Black Sea Ports through its fleet and leveraged additional container tonnage (by offering joint services on 20 vessels with 3 owned vessels).

 

While in most of the sectors SCI provides Combi service, it provides both break bulk and exclusive container services in the India / UK-Continent sector.

 

(i) India / UK-C Cellular Service: The SCI provides exclusive weekly container service in this sector through a slot sharing arrangement with the Israeli National Carrier, Zim Israel Navigation Company and Yang-Ming Line of Taiwan. SCI has deployed its three fully cellular container vessels in this service which was commenced with an objective of stabilising freight rates in this highly competitive sector for the benefit of Indian trade / shippers. The port rotation of this service is Jawaharlal Nehru Port (JNP) / Colombo / Barcelona / Felixstowe / Rotterdam / Hamburg / JNP.

 

            (ii) India / US East Coast Cellular Service (INDAMEX): During March’2000, SCI commenced a direct joint container service “IndAmEx” between India and the U.S. East Coast ports. This is a joint service with M/s. Contship Container Lines Ltd., Ipswich, U.K. and CMA-CGM S.A., Marseilles, France. This weekly service has recently included Tuticorin in its itinerary without comprising on schedule reliability and transit times and the revised port rotation is Tuticorin / Jawaharlal Nehru Port (JNP) / New York / Norfolk / Charleston / Port Said / Colombo / Tuticorin, offering Indian trade, the fastest transit time of 21 days between JNP and New York.

 

            (iii) India / Far East Cellular Service (INDFEX): The SCI together with ‘K’ Line, Japan, Pacific International Line (PIL), Singapore and Dongnama Shipping, Korea launched the INDFEX Service, a direct container service with fixed day weekly sailing linking India with the Far East ports of Korea and China. The port rotation is Jawaharlal Nehru Port (JNP) / Colombo / Singapore / Hong Kong / Busan / Shanghai / Hong Kong / Singapore / Colombo / JNP. The service was flagged off on 1st of June 2001 at Busan (South Korea) and has deployed five ships of approximately 1,400 TEU size.

 

            (iv) On the Feeder Sector, SCI operates a feeder service on Kolkata / Colombo route. SCI plans to forge strategic alliances with other players in the private sector to offer a wide array of services for the trade in the feeder sector.

 

            (v) SCI also provides a Joint Service with Rickmers Linie, Germany for shipment of break-bulk / general cargo from European ports to India.  This Service is structured basically with a view for both the lines to upgrade their services and respond to the needs of the market and trade.

 

(vi) In addition to International operations, SCI has been operating passenger-cum-cargo services between the Mainland and Andaman & Nicobar Islands and Lakshadweep Islands, as also Inter-Island services in these regions.  SCI has deployed two of its owned Passenger-cum-Cargo vessels and also manages the vessels owned by these Administrations on “cost plus” basis in these sectors.

 

            2.3.3    Technical & Offshore Services

 

(i) Technical Services – The Technical Services Department (TSD) of the T&OS Division plans, manages and implements the “Tonnage Acquisition Programme” of the Company by acquiring New-building / Second-hand vessels and also manages the “Scrapping Programme” of the Company by disposing of vessels which are commercially / technically unviable for scrap or for further trading. TSD also designs and implements a “Tariff Structure” for various workshops / shipyards empanelled with the SCI for undertaking repair / maintenance of SCI vessels, arranges for delivery of various circulars to SCI vessels etc. Activities undertaken by TSD ensures that the SCI has a young, modern and technically competent fleet confirming to the latest international rules / regulations and requirements of Class and also confirming to the most modern and exacting specifications. TSD also provides Technical Consultancy Services to organizations such as A&N / UTL Administration, DGLL, GSI, NIO etc for their various ship acquisition projects.

 

(ii) Offshore Services - As per its diversification plans, SCI ventured into offshore services sector and has been associated with the offshore oil industry for the past two decades.  The Offshore Services Department of the T&OS Division employs the SCI’s 10 Off-shore Supply Vessels on long-term charter to ONGCL and provides valuable logistic support in the offshore exploration / production activities. Over the years, SCI has also developed expertise for successful execution of state-of-art sub-sea jobs and has thus earned good merit as a technically competent offshore contractor.

 

2.4       Ship Management Services

 

Apart from operating its own vessels, SCI has, over the years, also gained expertise in managing vessels for various Govt. Departments / Organizations and has emerged as a major ship management company in India.  As on 31.12.2001, it manages 22 vessels of 0.084 million GT (0.039 million DWT) on behalf of Oil & Natural Gas Corporation Ltd., Andaman & Nicobar islands Administration, Union Territory of Lakshadweep Administration, Geological Survey of India, Director General of Lighthouses & Lightships and Department of Ocean Development. Unlike conventional vessels, these vessels require expert skills in operation as they are specialised vessels, which include Seismic Survey vessels, Well Stimulation vessels, Scientific Survey vessels, Light ships etc.

 

3.0       RESEARCH AND DEVELOPMENT

 

The SCI does not have its own research and development facilities nor does it have shipbuilding facilities as its ships are acquired from various shipyards around the world.  However, the SCI has a Technical Services Division staffed by Marine Engineers and Naval Architects to keep abreast with latest technological developments in shipping and shipbuilding.  Whenever new ships are ordered the specifications are designed so as to incorporate technological upgradation.  Also, driven by economic or safety considerations, SCI ships are retrofitted to incorporate technological changes.  To illustrate, when fuel prices went up sharply in the late 70s and early 80s, a number of ships were retrofitted to burn lower quality cheaper fuel.  A number of SCI ships have been retrofitted with Global Maritime Distress Signal System (GMDSS) to enhance safety of personnel on ships.

 

 

 

4.0       LOCATION OF VARIOUS OFFICES

 

            SCI has its head office at Mumbai with regional offices at New Delhi, Kolkata, Chennai and London.  Its network includes branch offices at Haldia and Port Blair and Representative offices at Kochi, Dhaka, New

York, Singapore and Tokyo. However, Representatives offices at Dhaka, New York & Singapore are temporarily suspended. Further, to augment its operations, the SCI has agents appointed at all major ports across the globe.

 

5.0     MANAGEMENT PROFILE

 

5.1       Organisation structure of SCI consists of five divisions viz. Liner & Passenger Services, Bulk Carrier & Tanker, Technical & Off-Shore Services, Finance, and Personnel & Administration, each headed by a full time Director. At the helm of affairs is the Chairman and Managing Director. There are four departments viz. Purchase & Services, Board Secretariat, Public Relations, and International Safety Management Cell, the heads of which report to the CMD and two other Departments viz. Information System and Plans & Conference under Director (Liner & Passenger Services).  In addition there is a Vigilance Department, which is headed by Chief Vigilance Officer.

 

5.2       Organisational set up of The Shipping Corporation of India Ltd. (SCI) consists of three profit centres and two service centers, details of which are given below:

 

¨      Profit Centres:

·        Liner & Passenger Services Division

·        Bulk Carrier & Tanker Division

·        Technical & Offshore Services Division

¨      Service Centres:

·        Finance Division

·        Personnel & Administration Division

¨      Other areas of work:

·        Board Secretariat

·        Purchases & Services

·        Public Relations

·        International Safety Management  (ISM)

·        Information System

·        Planning

·        Vigilance

 

5.3       Present Composition of the Board of Directors

 

The Board of Directors of SCI presently comprises 12 members with 6 Functional Directors and 6 non-Executive Directors. Of the non-Executive Directors, 4 are independent Directors.

 

Functional Directors (Full Time)

 

·     Chairman & Managing Director, Shri P. K. Srivastava

·     Director (Finance), Shri K. K. Kothari

·     Director (Liner & Passenger Services), Shri S. S. Rangnekar

·     Director (Bulk Carrier & Tanker), Shri K. M. Joseph

·     Director (Personnel & Administration), Shri S. Hajara

·     Director (Technical & Off-shore Services), Capt. T.D. Hazari

 

Govt. Directors (Part-Time)

·        Shri K. R. Bhati,  Addl. Secretary & F.A.,

Ministry of Shipping

·        Shri M. Ramachandran, Joint Secretary (Shipping),

Ministry of Shipping

 

Others

·        Shri S. H. Khan – Former CMD, IDBI

·        Dr. Pritam Singh, Director, IIM, Lucknow

·        Shri M. G. Bhide – Former CMD, Bank of India

·        Shri N. C.Singhal – Former Vice-Chairman & MD, SCICI Ltd.

 

6.0              MARKETING ARRANGEMENTS 

 

6.1       Selling arrangements for shipping are different from conventional marketing arrangements.  Bulk space for both liquid and dry bulk cargoes is generally sold through reputed chartering brokers.  Freight rates on this segment vary rapidly often on a daily basis and sometimes on an hourly basis. Rates are negotiated after continually monitoring the markets.  Operational and financial efficiencies are achieved through fleet deployment strategies which includes a diversifying deployment between time and voyage charters as well as a sense of timing in relation to locking in with respect to short and long term charters. SCI enters into Contract of Affreightment with Indian Oil Industry, SAIL, Japanese Steel Mills, Maroc Phos, etc for providing tonnage during the currency of the respective agreements at mutually negotiated / agreed rates, which are based on the international freight rates.

 

6.2       For liner vessels space is usually sold through a network of agents whose task include canvassing for cargoes and marketing of space on SCI vessels.   These agents are usually paid commissions as a percentage of revenues generated by them.  These marketing arrangements are in consonance with the industry practice. Over the years, the Company has been marketing its liner services for break-bulk as well as containerised cargoes by sales calls on clients through its own offices as well as through SCI appointed agents at various ports in order to counter the increased competition. SCI has embarked upon an all India customer contact programme from June 1999 for developing a sound rapport with the Govt. of India Departments, Public Sector Undertakings and major Export / Import Business Houses.

 

7.0       DETAILS ABOUT SUBSIDIARIES / INSTITUTES , ETC MANAGED BY THE COMPANY

 

The SCI has entered into the following Joint Ventures (also please refer Enclosure II) -

 

7.1       Irano Hind Shipping Company-  Irano Hind Shipping Company, a Joint Venture between SCI & Islamic Republic of Iran Shipping Lines (IRISIL) was established at Tehran, in March 1975.  As on 31.12.2001, the Company owns a fleet of 8 vessels aggregating 0.204 million DWT. This joint venture is primarily a liner shipping company.

 

 

7.2              Greenfield Holding Shipping Company–

 

7.2.1    LNG has been identified as the future fuel for India's power plants and as a feedstock for Chemical / Petrochemical industry. It is expected that by 2010, 30 MMTPA of LNG is likely to be imported by various terminals to be located on India's vast coastline. The SCI has identified carriage of Liquefied Natural Gas (LNG) as one of its prime thrust and growth areas and has ensured its presence by being the first Indian shipping company to venture into the field of LNG transportation.

 

            7.2.2    Thus, SCI formed a Joint Venture Company (JVC) Greenfield Shipping Co. Ltd. having Mitsui O.S.K. Lines with a stake of 60%, ACFI with a stake of 20% and the SCI with a stake of 20% as the shareholders of the LNG tanker s.s. “Lakshmi”. The LNG Tanker s.s. Lakshmi was delivered from M/s. Mitsubishi Heavy Industries Ltd., Japan on 15.11.2001. Although the vessel is chartered to the Dabhol Power Company (DPC), and given the current situation with DPC, it is expected that, DPC would not be in a position to charter the vessel. However, efforts are underway to secure an alternative charter arrangement on a long-term basis after appropriate termination of the existing charter with DPC. It is indicated that the LNG sector is the fastest growing sector compared to other sectors in the Hydrocarbons Industry and the prospect for utilization of the LNG Tanker in the immediate future is promising.

 

            7.3       Indian LNG Transport Co (No 1) & India LNG Transport Co, (No 2) Ltd: In line with our objective to emerge atleast as a regional player in the field of LNG transportation, the SCI, in consortium with the three Japanese lines viz. Mitsui OSK Lines, NYK and K Line have won the bid for the transportation of 5 MMTPA of LNG from Qatar's Rasgas for Petronet LNG's (PLL) Dahej project starting January '2004. The SCI and MOL have a 34.21% stake each in the consortium with the remaining 31.58% being shared by NYK (21.05%) and K Line (10.53%). The Time Charter Agreement was formally executed with PLL on 31.03.2001 for two LNG ships for a period of about 24 years each. For each vessel, a Malta based Special Purpose Vehicle (SPV) has been formed with the shareholding pattern in consonance with that of the consortium. As per the Time Charter Agreement, Rasgas would exercise its right to take 15% stake in the JVCs from the above companies on prorata basis. The Time Charter Agreement provides for transfer of know-how to SCI within 5 years after which SCI would manage the operations of the tankers and its shareholding would go upto 42.5%. The Agreement also provides that the tankers’ flag be changed to Indian flag subject to zero level of tonnage tax regime for LNG tankers declared by the Government of India. 

 

The Shipbuilding Contract for construction of two LNG Ships of 138,000 CBM was executed with Daewoo Shipbuilding & Marine Engineering Services (DSMES). The first ship would be delivered on 16.12.2003 while the second ship would be delivered on 16.12.2004. The first LNG cargo for the project will be carried in January ’2004. Two Special Purpose JVCs to construct, own and operate the LNG ships would be shortly set up at Malta. The SCI is also in the running to bid for more LNG shipping contracts in the future.

 

7.4       In addition to the above the following projects are in the pipeline -        

 

7.4.1   Indian Oil Corporation Ltd. (IOCL)’s Tender for installation of Floating Storage & Offloading System (FSO) at Sandheads : Indian Oil Corporation Ltd. (IOCL) had issued a Global Tender for installation of a Floating Storage Offloading System (FSO) at Sandheads, consisting of a ULCC / VLCC for transportation of large parcels of crude oil for meeting the requirements of Haldia and Barauni Refineries as also to overcome the draft limitations at the port of Haldia. SCI entered into a Joint Venture with M/s. Single Buoy Mooring Inc. (SBM), the world leaders in installation and operation of FSO / FPSO (Floating Production Storage and Offloading System), possessing extensive expertise in areas such as soil testing and survey, design and construction of Single Point Mooring System (SPM), SPM maintenance and upkeep, FSO mooring system, hose reel, floating hose, etc., in various parts of the world. A Memorandum Of Understanding (MOU) was signed between the SCI and SBM on 19.07.2001 and after several discussions with officials from SBM / IOC for studying the impact of the terms and conditions of tender and pre-bid meetings with officials from Kolkata Port Trust and Kolkata Custom’s, the SCI / SBM combine submitted its bid for the above tender on the due date i.e. 07.12.2001 to IOCL, NOIDA office.

 

7.4.2   ISI Maritime Ltd – Irano Hind Shipping Company, for the purpose of bulk carrier operations has formed a Malta based subsidiary, with a shareholding pattern of SCI - 1%; Irano Hind Shipping Company 98% and Islamic Republic of Iran Shipping Lines –1%. SCI has been gifted 1% shareholding in ISI Maritime Ltd.

 

7.4.3        Proposed India based Subsidiary – Another subsidiary for tanker operations is being formed in India with a shareholding pattern similar to ISI Maritime ltd

 

7.5       Maritime Training Institute -

 

Realising the importance of training required for personnel in a specialised field like shipping, SCI set up the Maritime Training Institute (MTI) at Mumbai in 1987.  One of the prime institutes in the field of maritime related training, MTI is recognised as a branch of World Maritime University, Malmo (Sweden) for conducting specialised short courses in India for the Asia and the Pacific region, besides being recognised by UNCTAD as a Trainmar Regional Training Centre.  As on date, MTI has conducted 5,689 courses imparting training to 1,10,476 people since its inception. India's first Global Maritime Distress and Safety System (GMDSS) Lab was commissioned at MTI in January 1998. MTI is also the first and only Maritime Institute in India to acquire quality standard of ISO-9001:1994 Certificate with Det Norske Veritas (DNV) for Design, Development, Delivery & Assessment of Marine Education & Training Research. MTI was awarded the "Golden Peacock National Training Award" in June 1998.

 

           

8.0       HUMAN RESOURCES

 

            8.1       Apart from its ships, it is the people running the company, who are its greatest assets.  SCI’s manpower profile is as diversified as its fleet and includes professionals who are Master Mariners, Marine Engineers, Business Graduates, Chartered Accountants, Cost Accountants, Computer specialists among others.  The current shore strength of employees consists of 924 officers and 499 staff, thus making a total of 1423 as on 31.12.2001. The current strength of floating staff employees is 3510 Officers & Petty Officers and 421 permanent crew members (in addition, SCI also employs officers on contract and crew from roster as per requirement). The wage bill for the year 2000-01 amounted to Rs.346.10 crs which includes Rs.270.46 crs paid to floating staff employees and Rs.75.64 crs paid to shore employees.

 

            8.2       Over the years, SCI has vigorously continued its pursuit of training and developing its manpower to meet the demands of its fleet for new trainees and especially in regard to the requirements of the International Maritime Organisation’s Standards of Training and Certificate of Watchkeeping (STCW) Convention. With the introduction of the new STCW’ 95, the MTI developed 10 new courses to fulfill the continued demands of the industry during the year 2000-01.

 

9.0       QUALITY CONTROL

 

9.1       The Safety Management System under the International Safety Management (ISM) code is a comprehensive, structured and controlled safety management system developed on the model of the International Quality Management of ISO 9000 series standard. The criterion of ISM has a very broad canvas and covers Safety, Environment and Quality improvement aspects.

 

9.2       The SCI is fully conscious of its responsibilities to ensure quality and safe shipping. The Company has set a separate cell, reporting directly to the CMD to implement and monitor the ISM code.

 

9.3       The SCI established a structured Safety Management System complying with the requirements imposed by the International Safety Management Code for the Safe Operation of Ships and Pollution Prevention which is a mandatory requirement as per Chapter IX of the International Convention of Safety at Sea (SOLAS) for all Passenger Ships, Bulk Carriers and Tankers by 1^st July, 1998 and for Liner vessels and Offshore Fleet by 1^st July, 2002.

 

            9.4       In accordance with the ISM Code, the Company alongwith 87 Phase I vessels (25 Bulk Carriers, 3 Chemical Tankers, 2 Liquefied Gas Tankers, 43 Oil Tankers and 14 Passenger Ships) have obtained the required certification from the Directorate General of Shipping (DGS) by 1^st July, 1998.

 

            9.5       During the year 1999-2000, Safety Management System was put in place on the newly acquired LR II Size Crude Oil Tanker and managed Passenger Ships and requisite certification obtained.  As of 31^st March, 2000, all the 89 vessels under Phase I owned / managed by SCI have the ISM Certification.  Annual Internal and Intermediate Safety Audits of the fleet by the DGS have been carried out as per schedule.

 

            9.6       The ISM Code requires all the Company’s offices associated with the operations of ships to be audited annually to ensure continuing validity of the Company’s Document of Compliance (DOC).  The Company’s Branch Offices and Operating Departments were audited during end January / 1^st week of February, 2000 by DGS / Indian Register of Shipping Audit Team and Annual Endorsement was obtained on the Company’s DOC before the due date.

 

9.7       The Company has undertaken required measures to obtain certification of the Safety Management System for the Phase II vessels i.e. Liner Vessels and Offshore Fleet which will become mandatory by 1^st July, 2002.  The DOC was received on 30.03.2001, 15 months ahead of schedule.

 

10.0     FINANCIALS

 

10.1     SCI has been able to weather many a storm in the international shipping scenario and has managed to keep a healthy balance sheet all through.  Although SCI has remained a consistent profit making company (except for a brief period of four years), the profit figures have taken a quantum jump from the year 1990-91 onwards which is co terminus with the era of liberalisation. In fact, the cumulative profits for the last five 5 years (upto 1999-2000) have been Rs. 1166 crs as against Rs.888 crores earned in the previous 34 years (1961-62 to 1994-95).

 

10.2     The year 2000-2001 was a good year for shipping globally due to resurgent markets conditions. During this period, the SCI has achieved a turnover of Rs.3,132.2 crores with a net profit after tax of Rs.382.6 crores.

 

            10.3     SCI has been a dividend paying company and has paid dividend of 15% (Rs.42.35 crores) for the year 1998-99, 16% (Rs.45.17 crores) for the Year 1999-2000 and 30% (Rs.84.69 Crores) for the Year 2000-2001. Enclosure III indicates the dividend paid in the last 10 years.

 

Financial Highlights of SCI for Past Three Years

                                                                                                (Fig. In Rs. Crores)

 

10.4         The important financial ratios for the last three years are as follows –

 

 It may be observed from above, that the Price Earnings Ratio does not reflect the intrinsic value of the shares. The movement of share prices from the year 1993 till date is attached at Enclosure IV.

 

            10.5    The Un-audited Financial Results for the six months ending 30.09.2001 compared to the corresponding period ending 30.09.2000 are as under:

                  (Rs. in Crores)

Particulars	Six month ending 30.09.2001	Six month ending 30.09.2000
Gross Earnings	1,543.1	1,422.4
Expenses	1,086.4	1,124.6
Gross Profit before interest, depreciation and tax.	456.7	297.7
Net Profit after Tax	176.1	102.9

 

11.0          STRENGTHS OF THE COMPANY

 

The inherent strengths of SCI are enumerated below –

 

(i) Goodwill & reputation for reliability, creditworthiness and a company enjoying strong support of the Govt.

 

(ii) Large and diversified fleet enabling -

a)      dominant position amongst shipping Cos. in India and abroad.

b)      economy of scale in the cost of operations and management of fleet.

c)      risk spread for consistency and stability of financial performance

 

(iii) Mixed age profile of the fleet for financial viability even under depressed market conditions.

 

(iv) Dominant position in the Indian market-

 

a)      constitutes nearly 40% of the total Indian tonnage.

b)      market leader in the field of crude transportation and Liner shipping (particularly containers).

c)      Pioneers in the field of mid sea lighterage operations for crude/POL, operation of specialised vessels, management consultancy services etc.

d)      Significant players in almost every other segments of shipping market in India.

e)      first Indian company - (1) to diversify into LNG shipping & (2) having an in-house training academy of international standards.

f)        accepted role as an adviser to the Govt. in the formulation of shipping policy.

 

(v) Availability of trained manpower, in-house expertise/systems and an extensive network of offices, Agents, J/V partners, alliances with major global shipping companies, associated Class/Club etc. to support global operations.

 

(vi) Unenviable trade record of;

 

a)      consistent profitability since inception (except for a short duration of 4 years).

b)      achieving the highest "outstanding" rating under MOU since last 10 years.

c)      generating a large asset base (including real estate), high networth and liquidity from internal resources.

d)      raising debt from domestic and international market at competitive rates.

e)      safety of operations and customer satisfaction.

 

(vi) A Company having sound moorings in quality and safe shipping.

 

(viii)           A Company having assured business stream for the next five years with the following diversifications –

a)      Nodal Agency for transportation of crude (subject to confirmation after 1.4.2002)

b)      A 20 year contract for employment of India’s first LNG carrier – ‘Lakshmi’ under its Joint Venture – Greenfield Shipping.

c)      A 25 year contract for employment of 2 LNG carriers under its Joint Venture for LNG transportation for Petronet.

d)      Technical, Manning and Management contract for 32 OSVs of ONGC (still under negotiation).

e)      Besides two owned vessels, SCI mans and manages the passenger vessels of Andaman & Nicobar Administration and Union Territory of Lakshadweep Administration to provide passenger service from Mainland to respective islands and also inter-island service (subject to government continuing with the present arrangement).

 

 

Enclosure I

SCI PHYSICAL PROFILE AT AGLANCE (2.10.61 vs 31.12.2001)

 

 

LEGEND

IRISL               Islamic Republic of Iran Shipping Lines

MOL                Mitsui O.S.K. Liner Ltd

NYK                 Nippon Yusen Kabushika Kaisha

K-Line              Kawasaki Kisen Kaisha Ltd.

Enclosure III

DIVIDEND PAID BY SCI IN LAST 10 YEARS

                                                (Rs.crs)

 

 

 

Annexure-I

 

                           

GOVERNMENT OF INDIA

MINISTRY OF DISINVESTMENT

 

Strategic Sale of shareholding in Shipping Corporation of India Ltd.

 

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

 

Expression of Interest

 

The Government of India intends to disinvest 51% of the share capital of Shipping Corporation of India Ltd. through strategic sale with transfer of management control.  The Advisors for the transaction are under appointment separately. 

 

Shipping Corporation of India Ltd. is a leading shipping company in India and practically operates in all areas of the shipping industry.  The company has a fleet of 94 ships and has recently diversified into the highly sophisticated area of LNG transportation.  The shares of the company are listed on Stock Exchange at Bombay, Calcutta, Delhi, Chennai and the National Stock Exchange.  

 

Company(ies)/Joint Venture(s)/Consortium(s) (incorporated or to be incorporated) interested in participating in the proposed disinvestment  (Interested Parties) are required to submit Expression of Interest (EOI) at the under-mentioned address, not later than 17.30 hours by 18^th February, 2002.

 

The Preliminary Information Memorandum (PIM) containing further information about SCI, qualification requirements, formats for EOI and RFQ, etc. can be obtained from the under-mentioned officer or accessed at www.divest.nic.in/www.shipping.nic.in/www.shipindia.com

 

V.P. Gupta,

Under Secretary,

Ministry of Disinvestment,

CGO Complex, Block No.11, 2^nd Floor,

New Delhi-110 003

Tel.91-011-4368036

Fax: 91-011-4366524

E-Mail: vp_gupta@hub.nic.in.

         

GoI reserves the right to withdraw from the process or any part thereof, to accept or reject any or all offers at any stage of the process and/ or modify the process or any part thereof or to vary any terms at any time without assigning any reason whatsoever.  No financial obligation, whatsoever shall accrue to GoI / SCI in such an event.  Neither GoI nor SCI shall be responsible for non receipt of correspondence sent by post / courier/ e-mail/ fax

ANNEXURE-II

 

{EXPRESSION OF INTEREST (‘EOI’)}

 

(To be forwarded on the letterhead of the interested parties/members of the consortium/joint venture submitting the EoI).

 

Ref : _________                                                                                                                                                                                                                 Date : _________

 

 

Sub:   EXPRESSION OF INTEREST FOR STRATEGIC PARTNER IN SCI

 

Sir,

 

We refer to the advertisement dated____________ inviting Expression of Interest for Shipping Corporation of India Ltd.

 

We have read and understood the contents of PIM and the advertisement and wish to participate in the above disinvestment process.

 

* We propose to submit our EoI in an individual capacity for and on behalf of (insert company name)

 

* We have formed / propose to form a consortium/joint venture comprising the following members :

 

1.     __________________(Insert company name)

2.     __________________(Insert company name)

3.     __________________(Insert company name)

 

We confirm that we/our consortium/joint venture/proposed consortium / proposed joint venture* satisfy the eligibility criteria set out in the 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.  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 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 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.

 

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 this subject.

 

Yours faithfully,

 

 

Authorised Signatory

For and on behalf of

* strike off whichever is not applicable.

 

ANNEXURE -III

STATEMENT OF LEGAL CAPACITY

 

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

 

Ref:                                                                                                                                                                                                                                                                                 Date :

 

Shri V.P. Gupta,

Under Secretary,

Ministry of Disinvestment,

CGO Complex, Block No.11, 2^nd Floor,

New Delhi-110 023

 

SUB: Expression of Interest (EoI)- Participating in the Disinvestment Process of SCILimited - Statement of Legal Capacity

 

Sir,

 

We refer to the advertisement dated________of the Government of India (GOI)/Preliminary Information Memorandum (PIM) in connection with the proposed disinvestments of SCI.

 

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 individual’s name) will act as our representatives 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

* strike off whichever is not applicable.

 

ANNEXURE-IV

 

REQUEST FOR QUALIFICATION (“RFQ”)

 

(To be submitted in the respect of the interested parties/ each member of the consortium/ joint venture).

 

Name of the interested Party (ies)/Member (s) : ____________________

 

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

 

-          Public Limited Company                                                                                           -                                       Public Sector

-          Private Limited Company                                                                                         -                                        Joint Sector

-          Co-op. Society                                                                                                                  -                                      Private Sector

-          Partnership                                                                                                                                                                     -                                      Co-op. Sector

-          Proprietary Concern/ Individual                                                                       -        Others

 

-          Particulars of Ownership :

 

-          Nature of business/ Products dealt with :

 

-          Date of incorporation :

 

-          Date of commencement of business :

 

-          Full address including telephone Nos./Fax Nos. :

 

-          Registered Office :

 

-          Address for communication :

 

Basis of eligibility for participating in the proposed disinvestment in the SCI: (Please mention details of your eligibility as per the PIM requirements))

 

(Please attach supporting documents including the latest Certified Provisional/ Audited/ Unaudited Statement of Accounts and Annual Reports for the last 3 years).

 

Contact Persons :

 

Yours faithfully,

 

 

Authorised Signatory

For and on behalf of

Place:

Date:

ANNEXURE-V

 

No. 6/4/2001-DD-II

Government of India

Department of Disinvestment

Block 14, CGO Complex

New Delhi.

Dated 13^th July, 2001.

OFFICE MEMORANDUM

 

Subject: Guidelines  for qualification of 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.

(A.K. Tewari)

Under Secretary to the Government of India.

NOTE:

 

The following would be treated as grave offence:

 

(i) Only those orders of SEBI are to be treated as coming under the category of “grave offences” which directly relate to “fraud” as defined in the SEBI Act and/or regulations.

 

(ii) Only those orders of SEBI that cast a doubt on the ability of the bidder to manage the public sector unit when it is disinvested, are to be treated as adverse.

 

(iii) Any conviction by a Court of Law.

 

(iv) In cases in which SEBI also passes a prosecution order, disqualification of the bidder should arise  only on conviction by the Court of Law.