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ENGAGEMENT OF ADVISOR FOR DISINVESTMENT IN THE STATE TRADING CORPORATION OF INDIA LTD. (STC)
The Government of India intends to disinvest 65.02% of shareholdings in State Trading Corporation of India (STC) to a strategic buyer. Expressions of Interest are invited by 29th November, 2001 for selection as Advisor to assist the Government in the disinvestment process. For further details, the interested parties may visit the website: www.stcindia.com or www.divest.nic.in or contact Director (Finance), The State Trading Corporation of India Ltd., Jawahar Vyapar Bhawan, Tolstoy Marg, New Delhi-110001, India (Tel.No.91-11- 3701192/331 3177).
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Government
of India
Ministry of Disinvestment
Requires an Advisor for Disinvestment of GOI Shareholdings in The State
Trading Corporation of India Ltd. (STC)
The Government of India intends to initiate disinvestment of its shareholding in The State Trading Corporation of India Ltd (STC) and proposes to appoint an Advisor to advise and assist it.
It has been decided to bring down the Government of India stake in STC to 26% from the present 91%. 16% would remain with the Government for the present and the balance 10% would be used for issue of Employees Stock options.
STC is a public sector undertaking, with Government of India holding about 91.02% of the equity. The other 9% of the equity was sold by the GOI in 1991/1992 to financial institutions and mutual funds who have since off- loaded part of the equity to the public. STC is a premier international trading company with a turnover of over Rs.1000 crore per annum. It exports a diverse range of items like wheat, rice, tea, coffee, cashew, castor oil, sugar, chemicals, drugs & pharmaceuticals, medical disposables and other consumer items. The major imports currently being undertaken by STC include edible oils, gold, silver and pulses. It also undertakes domestic trading in imported cars, tea, pulses and jute goods etc.
The responsibilities of the Advisor would involve preparation of a detailed operational scheme for disinvestments and would include, inter alia, advising and assisting in the disinvestments of STC . In accordance with the decision of the Government, Advisor would advise for disposing/demerging of STC’s subsidiaries, assessment and valuation of STC, drafting/preparation of detailed information memoranda, marketing literature, shareholders agreement, share purchase agreement, etc. for the various phases of disinvestment, marketing their strategic sale and sale to domestic financial institutions and other investors, inviting and evaluation of bids, negotiations with prospective buyers, advising on post sale matters and other related matters.
SUBMISSION OF EXPRESSION OF
INTEREST
Internationally reputed merchant/investment banks, consulting firms and financial institutions with expertise in privatization/strategic sales are invited to submit an Expression of Interest for selection as a Advisor, singly or as a consortium on or before 1700 hours on 29th November, 2001.
The interested bidders may collect the prescribed proforma for the Expression of Interest from the Company Secretary, State Trading Corporation of India Ltd or download it from the STC website and send their Expression of Interest to, and approach for further details, if any, the Company Secretary, STC, at the following address:
Director (Finance)
The State Trading Corporation of India Ltd
Jawahar Vyapar Bhawan
Tolstoy Marg
NEW DELHI-110011
Telephone No.3701192/3313177
Fax No. 3701123
E Mail: stcindia@vsnl.net
Website : www.stcindia.com
The bidders would be required to deposit, along with their Expression of Interest, a non-refundable earnest fee of INR 20,000 (Rupees Twenty Thousand or US $ equivalent) by way of a Demand Draft payable at New Delhi, India in favour of The State Trading Corporation of India Ltd. The Government of India reserves the sole right to refuse any or all Expressions of Interest without assigning any reasons therefor.
Proforma
for Submission of Expression of Interest for
Appointment as an Advisor
for the Disinvestment of Government of India’s shareholding in State Trading
Corporation Limited (STC)
The interested parties may submit their Expression of Interest to act
as the Advisor, singly or as a consortium, for disinvestment of 65.02% out of
Government of India’s 91.02% shareholding in State Trading Corporation
Limited (STC), positively by the 29th November 2001 by 1700 hours
(IST) with the following details:
1.
Full particulars of the constitution, ownership and main business
activities of the prospective Advisor (bidder).
In case of consortium bids, the particulars of the coordinating firm
having the principal responsibility for the mandate as well as those of other
partners.
2.
Unabridged Annual Reports or audited financial accounts for the last
three years of all the partners.
3.
Details of pending litigation and contingent liabilities, if any, that
could affect the performance of the bidder under this mandate, as also details
of any post conviction and pending litigation against sponsors/partners and
any areas of possible conflicts of interest.
The above particulars should be provided year-wise (wherever
applicable) for the last three years.
4.
Government of India has recently issued guidelines prescribing certain
qualifications for Advisors for disinvestment process.
A copy of the guidelines (OM No. 6/4/2001 – DDII dated 13th
July 2001) is enclosed. You are
requested to carefully go through the guidelines and after satisfying yourself
that you are qualified to act as Advisor, furnish the following certificate as
a part of the proposal.
“We
certify that there has been no conviction by a Court of Law or
indictment/adverse order by a regulatory authority for a grave offence against
us or any of our sister concern. It
is further certified that there is no investigation pending against us or our
sister concern or the CEO, Directors/Managers/Employees or our concern or of
our sister concern. It is
certified that no conflict of interest exists as on date and in future such a
conflict of interest arises we will intimate the Government of the same.”
The
short-listed parties would be required to furnish ten copies of documentation
at the time of making a presentation before an Inter-Ministerial Group (IMG),
on the following criteria:
1.
Presence in India, including number of offices, manpower, funds
deployed, period, etc. and the level of commitment to India.
2.
Global experience
3.
Privatisation experience
4.
Details of similar transactions (Government, quasi Government and
private sector, separately) executed/under execution by the bidder in a
similar sector/industry. This
should cover the role played by the bidder in deal structuring, valuation,
transaction, marketing, preparation of information and sale memorandum,
shareholders agreement, etc. and bid evaluation and negotiations.
5.
Experience in capital market transactions (both equity and debt), in
the Government, quasi Government and private sectors, separately, indicating
the number of deals executed and quantum of funds raised.
6.
Expertise, including research coverage and capabilities in the trading
sector including exports and imports and an understanding of STC including a
SWOT analysis incorporating key selling points and limitations.
7.
Proposed methodologies of the disinvestment/strategic sale transaction
indicating the issues involved including;
(a)
Action on subsidiaries including options for demerging etc .
(b)
Valuation of STC
(c)
Transaction structuring
(d)
Marketing strategy
(e)
Bid-evaluation methodology
(f)
Tentative time-frame
8.
Details of deal team:
(a)
Experience and qualifications
(b)
Team members located abroad
(c)
Team members located in India
The
presentations will take place before the IMG on 17th/18th
December 2001 in New Delhi. The interested parties would be intimated about
the exact time and venue at which they would be required to make the
presentation later.
The
interested parties are required to submit at the time of presentation sealed
financial bids incorporating the fee chargeable as a percentage of the sale
proceeds from the disinvestment of the GOI stake in STC, gross of all taxes.
The bid should be unconditional.
Expenditure
on account of fees to legal/accounting or any other consultant, if appointed
by GOI and/ or STC should not be included in the financial bid.
The travel related expenses and all the other expenses including those
related to due diligence would have to be borne by the Advisor.
The
financial bid should also indicate a lumpsum amount to be charged as drop dead
fee, which would be payable if the GOI wants to call-off the transaction.
Interested
parties are required to deposit along with their Expression of Interest a
non-refundable earnest fee of INR 20,000 (Rs. Twenty thousand) or US $
equivalent by way of Demand Draft payable at New Delhi in favour of STC.
GOI reserves the sole right to reject any or all Expressions of
Interest without assigning any reasons therefore.
Further clarifications, if any, should be sought from, and the
Expressions of Interest sent to STC at the following address:
Director (Finance),
The State Trading Corporation of India Ltd
Jawahar Vyapar Bhawan
Tolstoy Marg
NEW DELHI-110011
Telephone No.3701192/3313177
Fax No. 3701123
E Mail: stcindia@vsnl.net
Website : www.stcindia.com
No.
6/4/2001-DD-II Dated
13th July, 2001 OFFICE
MEMORANDUM Subject:
Guidelines for qualification of Advisors
for disinvestment process |
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Government
has examined the issue of framing comprehensive and transparent
guidelines defining the criteria for selection of Advisors, so that
the parties selected through competitive bidding inspire public
confidence. Earlier, a set of criteria like sector experience,
knowledge, commitment etc. used to be prescribed. Based on
experience and in consultation with concerned departments,
Government has decided to prescribe the following additional
criteria for the qualification / disqualification of the parties to
act as Advisors to the Government for the disinvestment
transactions:- |
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| (a) |
Any
conviction by a Court of Law or indictment / adverse order by a
regulatory authority for a grave offence against the Advising
concern or its sister concern would constitute a disqualification.
Grave offence would be defined to be of such a nature that it
outrages the moral sense of the community. The decision in regard to
the nature of offence would be taken on a case to case basis after
considering the facts of the case and relevant legal principles by
the Government. Similarly, the decision in regard to the
relationship between the sister concerns would be taken, based on
relevant facts and after examining whether the two concerns are
substantially controlled by the same person/persons. |
| (b)
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In
case such a disqualification takes place, after the entity has
already been appointed as Advisor, the party would be under an
obligation to withdraw voluntarily from the disinvestment process,
failing which the Government would have the liberty to terminate the
appointment / contract. |
| (c) |
Disqualification
shall continue for a period that Government deems appropriate. |
| (d) |
Any
entity, which is disqualified from participating in the
disinvestment process, would not be allowed to remain associated
with it or get associated merely because it has preferred an appeal
against the order based on which it has been disqualified. The mere
pendency of appeal will have no effect on the disqualification. |
| (e) |
The
disqualification criteria would come into effect immediately and
would apply to all the Advisors already appointed by the Government
for various disinvestment transactions, which have not yet been
completed. |
| (f) |
Before
disqualifying a concern, a Show Cause Notice why it should not 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
Expressions of Interest (EOI) from the interested parties to act as
Advisor. Further, the interested parties shall be required to
provide with their EOI an undertaking to the effect that no
investigation by a regulatory authority is pending against them. In
case any investigation is pending against the concern or its sister
concern or against the CEO or any of its
Directors/Managers/Employees, full details of such investigation
including the name of the investigating agency, the charge/offence
for which the investigation has been launched, name and designation
of persons against whom the investigation has been launched and
other relevant information should be disclosed, to the satisfaction
of the Government. For other criteria also, similar undertaking will
be obtained along with EOI. They would also have to give an
undertaking that if they are disqualified as per the prescribed
criteria, at any time before the transaction is completed, they
would be required to inform the Government of the same and
voluntarily withdraw from the assignment. |
| (h) |
The
interested parties would also be required to give an undertaking
that there exists no conflict of interest as on the date of their
appointment as Advisors in handling of the transaction and that, in
future, if such a conflict of interest arises, the Advisor would
immediately intimate the Government of the same. For disinvestment
proposes, 'conflict of interest' is defined to include engaging in
any activity or business by the Advisor in association with any
third Party, during the engagement, which would or may be reasonably
expected to, directly or indirectly, materially adversely affect the
interest of Government of India or the Company (being disinvested)
in relation to the transaction, and in respect of which the Advisor
has or may obtain any proprietary or confidential information during
the engagement, that, if known to any other client of the Advisor,
could be used in any manner by such client to the material
disadvantage of Government of India or the Company (being
disinvested) in the transaction. The conflict of interest would be
deemed to have arisen if any Advisor firm/concern, has any
professional or commercial relationship with any bidding firm /
concern for the same disinvestment transaction during the pendency
of such transaction. In this context, both Advisor firm and bidding
firm would mean the distinct and separate legal entities and would
not include their sister concern, group concern or affiliates etc.
The professional or commercial relationship is defined to include
acting on behalf of the bidder or undertaking any assignment for the
bidder of any nature, whether or not directly related to
disinvestment transaction. |
| (i) |
On
receiving information on conflict of interest, the Government would
give the option to the Advisor to either eliminate the conflict of
interest within a stipulated time or withdraw from the transaction
and the Advisor would be required to act accordingly, failing which
Government would have the liberty to terminate the
appointment/contract. |
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