shares of Haldia Petrochemicals Limited of Haldia Petrochemicals Limited held by Government of West...

Preliminary Information Memorandum

Disinvestment of entire equity shares and preference

shares of

Haldia Petrochemicals Limited

held by

Government of West Bengal (GoWB)

May 2013 Transaction Advisor Deloitte Touche Tohmatsu India Private Limited (This is neither a prospectus nor an offer/invitation to public for sale of securities) (For private circulation only)

Preliminary Information Memorandum Page 2 Haldia Petrochemicals Limited

Disclaimer and Important Notice

The sole purpose of this Preliminary Information Memorandum ("PIM") is to assist the recipients interested in purchasing the stake of Government of West Bengal ("GOWB") in Haldia Petrochemicals Limited (“the Company” or “HPL”) by providing preliminary information regarding HPL and to facilitate recipients' own evaluation for the purpose of participating in the disinvestment process. PIM does not purport to contain all the information that a prospective investor may desire. This document does not comprise an offer of shares to public or an invitation to public to subscribe for shares or an investment advice. In all cases, recipients should carry out their own evaluation and analysis of the Company and all data set forth in this PIM.

Deloitte Touche Tohmatsu India Private Limited (“DTTIPL”) has been appointed as Transaction Advisors for the proposed sale process being conducted by West Bengal Industrial Development Corporation Limited (“WBIDC”), a Government of West Bengal (“GoWB”) undertaking for disinvestment of stake held by GoWB in HPL through WBIDC, West Bengal Industrial Infrastructure Corporation Limited (‘WBIIDC”) and West Bengal Infrastructure Finance Corporation Limited (“WBIDFC”) to an entity capable of reviving and restructuring HPL.

This PIM is issued by DTTIPL on behalf of WBIDC who has authorized its issue.

By acceptance of the PIM, the recipient agrees that any information herein will be superseded by any later written information on the same subject made available to the recipient by or on behalf of WBIDC and DTTIPL. WBIDC and DTTIPL and any of their respective officers or employees, advisors and agents undertake no obligation, among others, to provide the recipient with access to any additional information or to update the PIM or to correct any inaccuracies herein 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 equity and/or terminate negotiations or the due diligence process and/or refuse the delivery of information, at any time prior to the execution of the transaction documents without any prior notice or stating any reasons thereof and without incurring any liability in respect thereof.

DTTIPL has not independently verified any of the information contained in this PIM. DTTIPL or its shareholders, director, partners, employees, affiliates, advisors, representatives or agents do not make any representation or warranty as to the accuracy or completeness of the PIM, and shall not have any liability for any misrepresentation (express or implied) contained in, or for any omissions from, the PIM or any other written or oral communication transmitted to the recipient in the course of its evaluation of HPL. It should be noted that any estimates contained herein or subsequently communicated to the recipient are based on the information provided by WBIDC/HPL. Such estimates involve subjective judgment and accordingly, no representations are made as to their attainability. Any change in external / internal environment could significantly affect the analysis and findings stated.

The details on the economy and industry do not purport to be a complete review of the industry in which HPL carries on or proposes to carry on its business. The information set out in the chapters of the PIM has been extracted from published sources of information as available in terms of industry publications as well as discussions held with WBIDC and HPL. No independent verification of such sources has been carried out. The information contained therein generally reflects the latest available data, the same may not always relate to the most recent years and is therefore not wholly up-to-date. The chapters of the PIM should therefore be read with caution.

The PIM has been prepared and issued strictly in order to provide details of HPL and its business for the limited purpose of submitting expression of interest. DTTIPL has relied upon information, both documented and oral, provided by WBIDC/HPL. DTTIPL has not carried out any independent audit or due diligence exercise to verify either the past or current financial data pertaining to the businesses including the balance sheet or profit and loss account as provided to us. DTTIPL may mention that its scope of work for this exercise did not include technical/ financial feasibility or market research.

DTTIPL is not making nor has the authority to make any representation or give any warranty, in either case whether express or implied and whether by or pursuant to statute or otherwise, in relation to the shares, assets, business or prospects of the Company.

This PIM should not be considered as a recommendation by either GOWB, WBIDC, DTTIPL or the Company to acquire/ invest in / form an alliance with the Company, and recipients interested in doing so with the Company are recommended to seek their own independent financial, legal and


other advice from persons authorized and specializing, as necessary, in investments / alliances of the kind in question. DTTIPL does not accept any responsibility for any loss/ damage/ penalty or otherwise in any form or nature, whatsoever, that may occur to any person out of such person or entity committing any act or abstinence based on any information, factual or otherwise, contained in this PIM.

Neither the receipt of this PIM nor any information (whether written, electronic or oral) made available in connection with the proposed sale of shares, constitutes or is to be taken as constituting, the giving of investment advice by DTTIPL.

Mere receipt of PIM does not qualify the recipient for participating in the bidding process.

Recipient of this PIM in jurisdictions outside India should inform themselves about and observe all applicable requirements in their jurisdictions. In particular, the distribution of this PIM in certain jurisdictions may be restricted by law and accordingly, recipient represent that they are able to receive this PIM without any contravention of any unfulfilled registration requirements or other legal restrictions in the jurisdiction in which they reside or conduct business.


Contents

Disclaimer and Important Notice ................................................................................................................................ 2

Contents .................................................................................................................................................................... 4

1. Introduction ....................................................................................................................................................... 6

1.1 Overview of HPL ...................................................................................................................................... 6

1.2 Overview of the Transaction .................................................................................................................... 6

1.3 Bidding process ....................................................................................................................................... 7

1.4 Advertisement.......................................................................................................................................... 7

2. Industry Snapshot ............................................................................................................................................. 8

2.1 Global industry overview .......................................................................................................................... 8

2.2 Indian petrochemical industry .................................................................................................................. 9

3. Company Overview ........................................................................................................................................ 12

3.1 Background ........................................................................................................................................... 12

3.2 Capital structure and promoters ............................................................................................................. 12

3.2.1 West Bengal Industrial Development Corporation Limited ................................................................ 13

3.2.2 Chatterjee Petrochem (Mauritius) Company (CP(M)C) ..................................................................... 13

3.3 Board representation ............................................................................................................................. 13

3.3.1 Corporate Debt Restructuring (CDR) ................................................................................................ 15

3.4 Right of First Refusal (ROFR) ................................................................................................................ 15

3.5 Dispute between WBIDC and CP(M)C .................................................................................................. 15

3.6 Business activities and potential ............................................................................................................ 16

3.6.1 Power plant, off-sites and infrastructure ............................................................................................ 17

3.6.2 Operating performance ..................................................................................................................... 17

3.6.3 Financial performance ....................................................................................................................... 18

3.6.4 Value proposition and growth potential ............................................................................................. 20

4. Terms and conditions for Bidders ................................................................................................................... 21

5. Information for Bidders.................................................................................................................................... 23

5.1 General restrictions ............................................................................................................................... 23

5.2 Primary eligibility criteria ........................................................................................................................ 23

5.3 Financial benchmarks ............................................................................................................................ 23

5.4 Disqualification ...................................................................................................................................... 24

5.5 Governing Law / Jurisdiction .................................................................................................................. 24


For any clarifications, please contact any of the following:

Deloitte Touche Tohmatsu India Private Limited

Kalpana Jain Senior Director [email protected] Phone: +91-124-679 2266

Sandeep Negi Director [email protected] Phone: +91-124-679 2144

Manish Sharma Manager [email protected] Phone: +91-124-679 2145 Mobile: +91 98716 75889

Address: Deloitte Touche Tohmatsu India Private Limited 7th Floor, Building 10, Tower B DLF Cyber City Complex, DLF City Phase II Gurgaon 122 002, India

Phone: +91-124-679 2000 Fax: +91-124-679 2012 Email: [email protected]

mailto:[email protected]





1. Introduction

1.1 Overview of HPL

Haldia Petrochemicals Limited (hereinafter referred to as “HPL” or “the Company”) was incorporated at Kolkata in India on 16 September, 1985 to manufacture and market petrochemical products. It is one of the largest petrochemical companies in India with a naphtha cracking capacity at 700 Kilo Tonnes per Annum (KTA). The Company has its registered office at Kolkata, and its plant (the Plant) is located at Haldia, an industrial port town around 125 km from Kolkata.

HPL is an unlisted public company, with significant shareholding of Government of West Bengal (hereinafter referred to as “GoWB”) through West Bengal Industrial Development Corporation Limited (hereinafter referred to as “WBIDC”), West Bengal Industrial Infrastructure Development Corporation Limited (hereinafter referred to as “WBIIDC”) and West Bengal Industrial Development Finance Corporation Limited (hereinafter referred to as “WBIDFC”). WBIDC, WBIIDC and WBIDFC are wholly owned by GoWB. The present shareholding holding structure of the Company is as follows:

Amount in INR

Shareholder Equity amount

% of equity

Preference amount

% of preference

Share capital % of total

WBIDC 6,750,000,000 39.99 174,841,650 6.45 6,924,841,650 35.35

WBIIDC - - 589,780,820 21.76 589,780,820 3.01

WBIDFC - - 1,946,195,710 71.79 1,946,195,710 9.93

Tata Group* 450,000,000 2.67 - - 450,000,000 2.30

IOC** 1,500,000,000 8.89 - - 1,500,000,000 7.66

CP(M)C# 4,328,571,480 25.64 - - 4,328,571,480 22.10

ITML**** 1,071,428,520 6.35 - - 1,071,428,520 5.47

Winstar 1,274,000,000 7.55 - - 1,274,000,000 6.50

Others 227,327,770 1.35 - - 227,327,770 1.16

Consortium Lenders^

1,278,057,550 7.57 - - 1,278,057,550 6.52

Total 16,879,385,320 100.00 2,710,818,180 100.00 19,590,203,500 100

Holding of GoWB

6,750,000,000 39.99 2,710,818,180 100.00 9,460,818,180 48.29

#CP(M)C - Chatterjee Petrochem (Mauritius) Co.

^Consortium of lenders led by IDBI Bank Limited; represents conversion of loan to equity as part of CDR package of 2004 and Master Restructuring Agreement of December 16, 2004.

*Shares mainly held by Tata Motors Limited and Tata Power Company Limited

** Indian Oil Corporation Limited

****India Trade Mauritius Limited

1.2 Overview of the Transaction

HPL is the flagship investment of WBIDC and has been spearheading the petrochemical sector in eastern region. WBIDC, through HPL, has spurred development of related downstream petrochemical industry in the last decade. Significant downstream industries have spawned which utilise HPL’s products as feed to manufacture a variety of products. However, performance of the industry and HPL in particular has suffered in recent years due to various sectoral issues. GoWB, in the interest of public and the industry, is keen to revive and encourage the petrochemical industry and HPL’s operations in particular. Given this objective, GoWB intends to disinvest its stake in HPL to restructure its operations and put the Company


on a high growth path. The incoming shareholder, through its capabilities and understanding of petroleum/ petrochemical sector, is expected to enhance and unlock the operational potential of HPL plant and implement innovative processes so as to maximise value creation.

With the aforesaid in view, GoWB through WBIDC intends to disinvest its entire equity and preference shareholding in HPL representing 675 million equity shares and 271 million preference shares (“the Stake”) of nominal value of INR 10 each to potential investors (“Potential Investors”) capable of such revival and restructuring through a competitive bidding process (“Transaction”). The preference shares, issued in 2004, are compulsory redeemable cumulative. No dividend has been paid since issue and as such in terms of Section 87 of Companies Act, 1956, these shares carry voting rights on par with equity shares, each preference share carrying one vote.

WBIDC, HPL and Chatterjee Petrochem (Mauritius) Company (“CP(M)C”), the key private shareholder in the Company, are involved in legal proceedings with respect to certain shares in the Company. Those shares, held by WBIDC, are part of the Transaction. The current status of the legal case is presented in Section 3. The Transaction process has been approved by GoWB and the Board of HPL has been apprised of this Transaction after due consideration of such legal matters.

Deloitte Touche Tohmatsu India Private Limited (hereinafter referred to as “DTTIPL”) has been appointed as transaction advisor (“Transaction Advisor” or “TA”) to WBIDC for sale of WBIDC’s, WBIIDC’s and WBIDFC’s shareholding in HPL.

This Preliminary Information Memorandum (PIM) is prepared to provide Potential Investors an overview of the opportunity and the bidding process to enable them to submit their Expression of Interest (“EoI”), subject to the Disclaimer and Important Notice, set out earlier.

For the purpose of the Transaction, the Potential Investors should ascertain the applicability of all laws including Indian laws and need to comply with all laws including Indian laws.

1.3 Bidding process

The bidding process has been divided into two stages.

Stage I – submission of Expression of Interest (EoI)

In the first stage, all Potential Investors can obtain the PIM, which contains the terms and conditions, pre-bid qualification criteria in detail and an overview of HPL’s operations. The aim of PIM is to enable Potential Investors in evaluation of the opportunity and preparation of documents as specified in the PIM which would be used for shortlisting the bidders in accordance with the criteria specified. Please refer Section 4 and 5 and Annexures for more information on terms and conditions and process of EoI.

Stage II – submission of financial bid and completion of the Transaction

In the second stage, Potential Investors shortlisted at the first stage will receive Bid Pack comprising

− Confidential Information Memorandum (“CIM”),

− Draft Share Purchase Agreement (“SPA”) and

− Request for Proposal (“RFP”) setting out the Transaction process in detail.

In this stage, shortlisted bidders shall have an opportunity to carry out due diligence on, as well as visit facilities of the Company. Thereafter shortlisted bidders will submit their financial bids for the Transaction. The successful offer received from Selected Bidder (bidder whose financial bid is the highest) would be subject to ‘Right of First Refusal (ROFR)' of CP(M)C in terms of Articles of Association of HPL. In case CP(M)C decides not to exercise its ROFR within 30 days of the offer by WBIDC, the Selected Bidder shall acquire the Stake in HPL. In case the ROFR is exercised but CP(M)C fails to make payment within 30 days, the Selected Bidder shall acquire the Stake in HPL. Please refer Section 3 for more information on ROFR and Section 4 “Terms and Conditions for Bidders” for compensation to Selected Bidder in case ROFR is exercised. WBIDC reserves the right to alter or cancel the bidding process at any stage, without assigning any reasons thereto.

1.4 Advertisement

An advertisement has been issued in public media inviting interested parties to submit their EoI for qualification to participate in the proposed sale process. A copy of the same is enclosed as Annexure 5.


Capacity

(MTA)

Demand

(MTA)

Exp.

Capacity

(MTA)

Exp.

Demand

(MTA)

Capacity

CAGR (%)

Demand

CAGR (%)

2010 2010 2015* 2015* 2010-15 2010-15

Ethylene 147.00 120.00 165.00 151.00 2.3 4.7

Propylene 94.00 75.00 113.00 94.00 3.6 4.6

Butadiene 14.00 9.60 15.00 11.60 1.4 3.9

Total 255.00 204.60 293.00 256.60 2.8 4.6

PET 19.00 15.30 27.00 20.60 7.3 6.1

PVC 46.00 35.00 55.00 44.00 3.6 4.7

PP 60.00 49.00 75.00 64.00 4.6 5.5

HDPE 41.00 33.00 50.00 44.00 4.1 5.9

LLDPE 28.00 21.00 34.00 29.00 4.0 6.7

LDPE 22.00 19.00 25.00 22.00 2.6 3.0

Total 216.00 172.30 266.00 223.60 4.3 5.4

Benzene 56.00 41.00 62.00 47.00 2.1 2.8

p-Xylene 35.00 28.00 45.00 37.00 5.2 5.7

Total 91.00 69.00 107.00 84.00 3.3 4.0

Total 307.00 241.30 373.00 307.60 4.0 5.0

Fig. in

MTAProduct

Olefins

Polymers

Aromatics

2. Industry Snapshot

2.1 Global industry overview The range of products and usage of petrochemicals is extremely wide and diverse - petrochemicals are broadly categorized into building blocks, plastics, synthetic rubbers, synthetic fibres, fibre intermediates and basic chemicals. Petrochemicals play a vital role in economic development and growth. While the petrochemical industry has matured in the developed world, it is the emerging economies that are currently driving growth of this industry. Emerging economies of Asia with their large and growing market, and the Middle East with its major feedstock advantage driven by state subsidy have been the prime movers for the growth of the industry. Global petrochemical industry, valued at USD 1.3 trillion, has grown at 5.3% per year in the recent past, a GDP multiplier of 1.2X-1.3X. Ethylene capacity, a key indicator representing the scale of petrochemical industry, has witnessed a steady rise in production capacity globally. The global capacity and demand for basic petrochemicals is as follows:

Source: Report of Sub-group on Chemicals & Petrochemicals for the 12th Five Year Plan

PET: Polyethylene Terephthalate PVC: Polyvinyl Chloride PP: Polypropylene HDPE: High Density Polyethylene LDPE: Low Density Polyethylene LLDPE: Linear Low Density Polyethylene p-Xylene: Paraxylene

Demand for petrochemicals is likely to remain robust in near future and is expected to grow at CAGR of 5% globally. Polymers, which constitute bulk of petrochemical demand, at ~70%, are expected to grow at healthy 5.4% during 2010-2015. LLDPE, HDPE and PP which together contribute the highest demand among polymers and also constitute the major products of HPL, are estimated to grow at about 6%, more than the global average during the same period.

India’s share in global polymer production has been about 4% in the recent past.



While global economic slowdown and sluggish recovery in the last three years affected demand in the developed world which witnessed shutdowns and closure of some petrochemical facilities, Asia, particularly Middle East, China and India have witnessed new capacity additions. Growth in Asia and India is expected to be higher given the demand pull from consuming sectors such as automobiles, household goods, consumer durables and construction.

2.2 Indian petrochemical industry

Petrochemical industry in India had a humble beginning in mid-sixties when the first 20 KTA naphtha cracker was established in Mumbai closely followed by 60 KTA cracker by NOCIL Limited. Since then, industry has matured significantly and is self-reliant in manufacturing almost all building blocks. However, industry size is much smaller compared to population and potential demand of petrochemicals. In addition, India imports several petrochemical products.

The industry has come a long way since with global scale plants operating in major product categories, not only meeting growing local demand but also exporting products to overseas markets.

In terms of overall size, India is today the world’s third largest polymer market after China and the US. However, per capita consumption of plastics in India is much lower at 7/kg per year compared to these countries.

Per capital consumption in kg per year


Low per capita consumption indicates significant potential for growth over the long term as deeper market penetration is yet to come. Given the high untapped demand potential, polymers are projected to grow at a high GDP multiplier of around 1.5X. India’s current demand, estimated at about 10,280 KTA, is projected to grow at a healthy CAGR of 10.0% to reach 16,560 KTA by 2017, whereas capacity is estimated to grow at CAGR of 7.5% to reach 15,975 KTA during the same period. The demand-capacity gap of polymers is expected to turn from “Surplus” in 2011-12 to a shortfall of 588 KTA by 2016-17. In line with the global

India 4%

Former Soviet Union 2%

Europe 2%

Africa 1%

West Europe 16%

Southeast Asia 7%

South America 5% Northeast Asia

31%

North America 21%

Middle East 11%

Regional share in Global Polymer Production (2010)

0 20 40 60 80 100 120

USA

Brazil

China

India


petrochemical markets, polymers constitute 70% of petrochemicals market in India. The expected demand-supply situation in India is summarised below:


Demand for polyolefins, particularly HDPE, LLDPE and PP which are the main products of HPL, is expected to grow at 9.2%, 11.6% and 10.9% respectively, higher than overall polymer growth rate. In addition, demand for Butadiene, a high value product manufactured by the Company, is also likely to grow sharply subsequent to domestic capacity additions of Styrene Butadiene Rubber (SBR) and Poly Butadiene Rubber (PBR).

Robust consumption growth is expected in fibre intermediates, commodity plastics, building blocks, synthetic fibres and synthetic rubber category in next five years in India driven by growth in packaging, infrastructure, consumer goods, agriculture, and healthcare sectors.

The major polymer producers in India and their corresponding installed capacity are as follows:

Figures in KTA

Company PP HDPE LLDPE LDPE Total PE

Reliance Industries Limited (RIL) 2,665 180 690 200 1,070

Indian Oil Corporation Limited (IOCL)

600 300 350 - 650

Haldia Petrochemicals Limited 341 334 386 - 720

GAIL (India) Limited - 230 270 - 500

Fig. in KTPAConsumption

Growth (%)

Actual Projected During Actual Projected Actual Projected

2011-12 2016-17 2011/12-16/17 2011-12 2016-17 2011-12 2016-17

Butadiene 124 470 30.5 295 528 171 58

Ethylene 3,785 6,805 12.4 3,867 7,087 82 282

Propylene 3,700 4,823 5.4 4,117 4,987 417 164

Styrene 496 647 5.5 0 0 -496 -647

Total 8,105 12,746 9.5 8,279 12,602 175 -143

LDPE 405 597 8.1 205 605 -200 8

LLDPE 1,198 2,076 11.6 835 1,960 -363 -116

HDPE 1,657 2,573 9.2 1,825 3,090 168 517

PP 2,993 5,015 10.9 4,140 4,715 1147 -300

PVC 1,925 3,102 10 1,330 1,635 -595 -1,467

PS 377 638 11.1 640 666 263 28

Total 8,555 14,001 10.4 8,975 12,671 420 -1,330

Benzene 595 935 9.5 1,235 2,110 640 1,175

Toluene 440 650 8.1 270 270 -170 -380

Mixed

Xylenes88 130 8 90 90 2 -40

Ortho

Xylenes266 379 7.4 420 420 154 41

Phenol 212 288 6.3 74 374 -138 86

ACN 125 181 7.6 40 40 -85 -141

Total 1,726 2,563 8.2 2,129 3,304 403 742

Total 10,281 16,564 10.0 11,104 15,975 823 -588

Polymers

Aromatics

Consumption Capacity Gap

Olefins


Company PP HDPE LLDPE LDPE Total PE

HPCL Mittal Energy Limited 440 - - -

TOTAL 4,046 1,044 1,696 200 2,940

Source: HPL

Given the positive demand outlook, considerable capacity additions are planned in next few years by almost all players which include:

RIL’s proposed addition of 1,365 KTA of Ethylene and 154 KTA of Propylene as well as expansion in aromatics and polyesters by 2016;

Mangalore Refinery and Petrochemicals Limited is slated to come with a PP plant of 440 KTA in 2013 at Mangalore, Karnataka;

ONGC Mangalore Petrochemicals Limited is setting up an aromatics complex with 920 KTA Paraxylene and 140 KTA Benzene capacity at Mangalore, Karnataka. The plant is expected to be commissioned in 2014;

ONGC Petro Additions Limited is also expected to enter the market with a 1,100 KTA PE plant and 360 KTA PP plant in 2014-15 at Dahej SEZ, Gujarat;

GAIL (India) Limited is expected to double PE capacity by 2015 at its facility at Pata in Uttar Pradesh.

Given the expected growth in demand, petrochemical market outlook is expected to be robust in the coming years.


3. Company Overview

3.1 Background

HPL was incorporated on 16 September, 1985 under the Companies Act, 1956 in Kolkata, India with the objective to manufacture and market petrochemical products.

The Company operates an integrated and modern petrochemical complex (the Plant) at Haldia town, an industrial hub around 125 km from Kolkata. Haldia is an industrial port town with developed logistics infrastructure both port as well as road connectivity.

Location of Haldia

The Plant is spread over 1,200 acres with a separate township on an additional 240 acres of land.

The Plant was mechanically completed in April 2000 in a record period of 37 months and after trial production and stabilization, commercial production commenced in August 2001. The initial capacity of the Naphtha Cracker Unit (NCU) was 420 KTA which has been subsequently enhanced to current capacity of 700 KTA through optimisation, debottlenecking and capacity expansion initiatives of the Company.

HPL has supported the economic growth of the region by propelling significant investments in downstream processing industries. Through strategic market focus, innovative product application development and excellent customer support services, HPL has catalysed emergence of more than 550 downstream processing industries in West Bengal.

3.2 Capital structure and promoters

The Company is principally promoted by GoWB through WBIDC in joint venture with private shareholders. While WBIDC has been a strategic promoter since incorporation, private shareholders have changed over the years. Initially, the private participant in the Company was R. P. Goenka Group (RPG) (in 1985). Over

Haldia

West Bengal

India


the years, private participant changed and presently, the private participants are Chatterjee Petrochem (Mauritius) Company Group and Tata Group (comprising Tata Motors Limited and Tata Power Company Limited).

Indian Oil Corporation Limited was inducted as a shareholder in 2005. Further, as part of Corporate Debt Restructuring (CDR) package in 2004, a portion of loan from consortium of lenders was converted to equity in 2012.

The current authorised share capital of HPL is INR 25,000 million and the issued and paid-up share capital is INR 19,590 million consisting of 1,687.94 million equity shares of INR 10 each and 946.08 million preference shares of INR 10 each. The present capital structure of the Company is as follows:

Figures in INR

Shareholder Equity amount

% of equity

Preference amount

% of preference

Share capital % of total

WBIDC 6,750,000,000 39.99 174,841,650 6.45 6,924,841,650 35.35

WBIIDC - - 589,780,820 21.76 589,780,820 3.01

WBIDFC - - 1,946,195,710 71.79 1,946,195,710 9.93

Tata Group 450,000,000 2.67 - - 450,000,000 2.30

IOC 1,500,000,000 8.89 - - 1,500,000,000 7.66

CP(M)C 4,328,571,480 25.64 - - 4,328,571,480 22.10

ITML 1,071,428,520 6.35 - - 1,071,428,520 5.47

Winstar 1,274,000,000 7.55 - - 1,274,000,000 6.50

Others 227,327,770 1.35 - - 227,327,770 1.16

Consortium Lenders^

1,278,057,550 7.57 - - 1,278,057,550 6.52

Total 16,879,385,320 100.00 2,710,818,180 100.00 19,590,203,500 100.00

Holding of GoWB

6,750,000,000 39.99 2,710,818,180 100.00 9,460,818,180 48.29

^ Consortium of lenders led by IDBI Bank Limited; represents conversion of loan to equity as part of CDR package of 2004 and Master Restructuring Agreement of 16 December, 2004.

The preference shares are compulsory redeemable cumulative and carried 1% coupon rate redeemable on 24 February, 2012 with provision for extension. This was extended for an additional five year term at the dividend rate at par with equity dividend rate for the respective year. No dividend has been paid so far and as such these shares carry voting rights on par with equity shares at present in accordance with section 87 of Companies Act, 1956.

3.2.1 West Bengal Industrial Development Corporation Limited WBIDC, a Government of West Bengal Undertaking, is a Public Financial Institution engaged in the promotion and development of medium and large scale industries in the state of West Bengal in India. Its activities mainly comprise identification, promotion, facilitation and financing of industrial projects as well as infrastructural guidance and development support services to entrepreneurs/industrial units. Besides HPL, WBIDC has promoted / assisted a number of companies in diverse fields including chemicals, electronics, steel, and textiles in the state of West Bengal, India.

3.2.2 Chatterjee Petrochem (Mauritius) Company (CP(M)C)

CP(M)C is a company incorporated under the laws of Mauritius, with its registered office at Port Louis, Mauritius. CP(M)C Group includes Winstar India Investment Company Limited PCC, India Trade Mauritius Company also domiciled in Mauritius and Chatterjee Petrochem India Private Limited a company incorporated under the Companies Act with its registered office at Kolkata.

3.3 Board representation

The Board of HPL comprise nominees of GoWB/WBIDC, CP(M)C and consortium of lenders led by IDBI Bank Limited as follows:


Shareholder Number of nominee Directors

Promoters

WBIDC 4

CP(M)C 4

Lender consortium 5

Independent^ 1

Managing Director 1

At present, Mr. Partha Chatterjee, Minister-in Charge, Commerce and Industries, GoWB is the Chairman while Mr. Sumantra Choudhury, IAS (Retd.) is the Managing Director of the Company. The present Board of Directors of the Company is as follows:

Name Position held Category

Mr. Partha Chatterjee Chairman, HPL

Minister-In-Charge, Commerce & Industries, GoWB

Non-Executive

Mr. Basudeb Banerjee, IAS

Nominee Director, GoWB

Principal Secretary, Home Department, GoWB

Non-Executive

Mr. Chanchalmal Bachhawat, IAS

Nominee Director, GoWB

Principal Secretary, Commerce and Industry Department, GoWB

Non-Executive

Mr. Krishna Gupta, IAS Managing Director, WBIDC Non-Executive

Mr. Sumantra Choudhury, IAS (Retd)

Managing Director, HPL

Former Additional Chief Secretary, GoWB

Executive

Dr. Purnendu Chatterjee

Nominee Director, CP(M)C

Promoter, TCG

Non-Executive

Mr. Vijay K Chaudhry Nominee Director, CP(M)C Non-Executive

Mr. S Chatterjee Nominee Director, CP(M)C Non-Executive

Mr. R Vasudevan, IAS (Retd.)

Nominee Director, CP(M)C

Former Secretary, Ministry of Power. Presently, Associate -Management & Economic Advisors

Non-Executive

Mr. Jamshyd N Godrej^

Industrialist Non-Executive, Independent

Mr. K P Nair Nominee Director, Lender

Chief General Manager IDBI Bank Limited

Non-Executive

Mr. Sumit Sanghai Nominee Director, Lender

Dy. General Manager, ICICI Bank Limited

Non-Executive

Mr. Umesh Jain Nominee Director, Lender

General Manager IDBI Bank Limited

Non-Executive

Mr. T K Ray # Nominee Director, Lender

Executive Director, IFCI Limited

Non-Executive


Name Position held Category

Mr. Sisir Kumar Mukherjee

Nominee Director, Lender

Ex-Chief General Manager (Retd.), State Bank of India

Non-Executive

IAS – Indian Administrative Service

^ The position of the independent director is subject matter of ongoing litigation before the Calcutta High Court. For details kindly see the Section 3.5 on Dispute.

# IFCI Limited has nominated Mr. S. K. Arora, Chief General Manager, IFCI Limited, in place of Mr. T. K. Ray and Mr. Arora is expected to be appointed in the forthcoming Board meeting of the Company

3.3.1 Corporate Debt Restructuring (CDR)

The debts of the Company were restructured by the Corporate Debt Restructuring (CDR) Cell under the ageis of Reserve Bank of India in 2004. To formalize the implementation of the CDR package, a Master Restructuring Agreement (“MRA’’) was entered into between the Company and lenders on 16 December, 2004.

In terms of the CDR Package and the MRA, several reliefs and concessions were granted to HPL. Also, debt of HPL worth INR 128 crore (approx.) has been converted to 128 million equity shares (approx.) of INR 10 each and allotted to the Lenders. Further, as per the MRA, until repayment of all the outstanding amounts under the restructuring documents, the Company is restricted from changing its shareholding pattern except with the prior approval of the lender monitoring committee constituted under the MRA. In the meeting held on 7 February 2013, the Lenders under the CDR Cell have requested completion of this disinvestment process.

3.4 Right of First Refusal (ROFR) As per the Articles of Association of the Company (“Articles”), if and when WBIDC decides to sell their shares in the Company, it will give first right of purchase in CP(M)C and then to TATAs subject to such approvals of authorities and provisions of law as may be required. Similarly, should CP(M)C and/or TATAs decide to sell their shares in the company, CP(M)C or TATAs or both, as the case may be, will offer first right of purchase to WBIDC. Further, please refer to the following section with respect to ROFR.

3.5 Dispute between WBIDC and CP(M)C

Certain disputes and differences between WBIDC and the Chatterjee Group relating to management and control of HPL were agitated before the Company Law Board in 2005 and were finally decided by the Supreme Court of India vide order dated 30 September, 2011. The claim of the Chaterjee group was rejected.

Subsequently, in March 2012 CP(M)C initiated arbitration proceedings at the International Court of Arbitration (“ICA”) of the International Chamber of Commerce, Paris seeking, inter alia, a direction to WBIDC to transfer 155 million Shares to Chatterjee Petroleum (India) Private Limited (“CPIL”), a nominee of CP(M)C, and a direction to WBIDC to transfer such of its shareholding in the Company to CP(M)C or its nominee CPIL to ensure that CP(M)C/its nominees/affiliates have 51% of the total paid-up equity of the Company.

The initiation of arbitration proceedings was challenged by HPL in a civil suit before the Calcutta High Court in May 2012. WBIDC and GoWB supported HPL in the said civil suit. The Calcutta High Court has granted interim injunction restraining the arbitration proceedings. CP(M)C has preferred an appeal against the said order before the Division Bench of the Calcutta High Court. Presently, the appeal is pending before the Division Bench of the Calcutta High Court.

In this backdrop, this Transaction has been approved by GoWB with due consideration of the Board of HPL.

Winstar India Investment Company Limited ("Winstar"), an affiliate of CP(M)C has initiated arbitration to enforce the terms of the Share Subscription Agreement dated 30 July, 2004. It may be mentioned that a disputed clause of the purported agreement states that Winstar has a tag-along right that entitles Winstar to participate in a share sale transaction along with WBIDC to sell its 127,400,000 shares in the Company to the prospective purchaser on same terms. The Arbitral Tribunal is yet to be constituted. Winstar filed an application under section 9 of Arbitration and Conciliation Act, 1996 before the Calcutta High Court for certain interim reliefs, including an order restraining WBIDC from transferring any of its shares in HPL. The said application was decided on 29 April,2013 and the Hon’ble Single Judge was pleased inter-alia,to direct: ““…WBIDC is restrained from transferring their shares without giving one months’ notice to Winstar or CPMC to buy them at a price not more that offered to them by an intending purchaser. Thereafter the shares may be sold to anybody else.” The disinvestment process and sale of shares thereunder will be subject to the said order or such orders as may be passed by the appellate court should an appeal be preferred. As regards the issue of appointment of director, the court further directed “I direct that Mr.


Jamshyd Godrej is not to act as an additional director of HPL. His place is to be filled up by the nominee of Winstar or kept vacant.” – the operation of this portion of the order has been stayed for a period of two weeks, as of now and appeals have been preferred against the same by WBIDC and HPL.

3.6 Business activities and potential

HPL’s plant is naphtha based integrated and materially balanced petrochemical complex. It is the one of the largest petrochemical facilities in India and has been the only complex of its kind in entire east of India, which has witnessed the highest growth rate in polymer consumption in the country in recent past. The complex consists of a NCU and associated units to manufacture a range of polyolefins and chemicals.

The Plant is based on process technologies selected from internationally reputed vendors. The details of manufacturing units, plant licensors and vendors are as follows:

Products Licensor Contractor

Naphtha Cracker Unit (NCU) ABB Lummus Toyo, Japan

LLDPE Lyondell Basell Tecnimont, Italy

HDPE Mitsui Daelim, Korea

PP Lyondell Basell Daelim, Korea

Butadiene BASF Lurgi, Germany

Benzene Lurgi Lurgi, Germany

Pyrolysis Gasoline Hydrogenation (Feed basis)

Axens Lurgi, Germany

C4 hydrogenation Axens IDEA, India

Integrated Off-sites EIL, India

MW Captive power plant (116 MW) L&T, India

Naphtha, the key raw material, is procured on term contract basis from three main sources:

IOCL’s refinery at Haldia – meets around 25%-30% of requirement

Other domestic suppliers including Bharat Petroleum Corporation Limited, Hindustan petroleum Corporation Limited – meets around 5%-10% of requirement

Import – meets around 60%-70%. Key suppliers being Kuwait Petroleum Corporation and Abu Dhabi National Oil Company

The Company enjoys a special tax status as custom duty, amounting to 5%, has been waived on its imported naphtha.

The production capacity of each of finished products is as follows:

Products KTA

Polymers

HDPE 334

LLDPE 386

PP 341

Chemicals and fuels

Benzene 132

Butadiene 101

Py-Gas 130

C4 LPG 113

CBFS 89

Cyclo-Pentane 5.2


Products KTA

Motor Spirit (MS) 250

The Company, with its in-house engineering capabilities and innovation, conceptualised and established the unit for producing of Cyclopentane, a high value chemical product which has virtually no other producer in India. The Company has developed around 55 grades of polymers and has commercialised around 35 grades which form part of its regular product portfolio. HPL’s polymer products have gained high acceptance in the domestic and export markets and have set new benchmarks in premium product grades in the domestic market for specialised uses such as medical requirements, high-end packaging, etc.

Utilising in-house development and engineering capabilities, HPL has been producing Motor-Spirit (MS) through an innovative process of blending C6 Raffinate, Hydrogenated Pyrolysis Gasoline and Pentane. The MS produced is of very high quality and meets Euro IV fuel norms.

The Company has an approximate domestic market share of 22% in India, whereas in east India it has over 60% share of the market. HPL has a well-developed marketing network spread across all the consumption centres in India and exports products to countries including in South East Asia, China, etc.

3.6.1 Power plant, off-sites and infrastructure

The Plant has a dedicated Combined Cycle power and steam generation facility capable of producing 116 MW power, 480 TPH High Pressure and 44 TPH Medium Pressure steam to meet its power and steam requirements. The Plant also draws power of around 10 MW from Grid for non-critical activities.

The Plant has well developed utilities and offsite systems consisting of:

Raw water storage facility

2 water treatment plants

2 demineralization plants with a condensate polishing unit

Reverse osmosis unit

2 cooling towers and 1 mist cooling system

Waste water treatment plant

The Company’s facility adequately meets all government norms relating to waste treatment and relevant environmental regulations.

In addition, it has adequate feedstock and liquid storage terminals as well as a large product warehouse.

It has excellent connectivity and infrastructure:

Imported naphtha from Haldia port through dedicated pipeline connected with all the 3 oil jetties at the port

Naphtha pipeline from IOCL’s nearby Haldia refinery with crude processing capacity of 7.5 MMTPA

Fuel Grade Naphtha (FGN) Pipeline from IOCL to HPL premises

Product pipeline from Plant to Haldia port for Benzene, Butadiene and Pyrolysis gasoline/MS.

Also, Haldia is well connected by road to major consumption centres in the eastern region as well as rest of India.

The Plant has fully integrated processes with master control room and control rooms for each of the units. All the relevant operations of the Company are in SAP and plant management software is based on Windows platform.

The Company maintains global standards of Health, Safety, Environment and Fire (HSEF). HSE practices of HPL meets ISO 14001:2004 & OHSAS 18001: 2007 international standards.

3.6.2 Operating performance

The NCU’s initial nameplate capacity to process naphtha was 420 KTA of ethylene which was subsequently expanded with debottlenecking and optimisation to 520 KTA of ethylene by 2004.

Given the increasing demand for its product as well as to enjoy greater economies of scale, the Company undertook major capacity enhancement project, called “Project Supermax” to expand design capacity to 670 KTA of ethylene (@8,000 hours) by modifying or replacing existing equipments as well as installing new equipments. The expansion project was integrated with the existing facility taking a 3-month shutdown and was commissioned in February 2010. The salient details of Project Supermax are:


Period of implementation Conceptualized in 2004, construction from 2006-2010, commissioned in 2010

Capacity enhancement From 520 KTA to 670 KTA (name plate), operational capacity up to 700 KTA

Shutdown period of the Plant for integration and commissioning

About 3 months; from end of October 2009 till early February 2010

Project cost Completion cost – INR 12.88 billion

Technology and engineering ABB Lummus, Mitsui, Toyo Engineering

After initial stabilization, HPL ramped up capacity utilisation from 2003 onwards. From 2004-05 to 2007-08, the capacity utilisation was consistently above 100%, in the range of 115%, which generated healthy profits during the better petrochemical industry cycle.

The NCU’s throughput (Ethylene+Propylene) and utilisation for the last 5 years is as follows:

However, post commissioning of Project Supermax, the Plant successfully demonstrated revamped capabilities with utilisation at 95% of design load, which was more than maximum capacity possible given the partial recovery from damage due to fire. During plant commissioning and stabilization, few technical shortcomings of Project Supermax implementation were observed, which needed unplanned shutdowns to fix the problems. As a result, the capacity utilisation increased, but remained 87% in 2010-11 and 75% in 2011-12. Since January 2012, the Plant has been operated almost continuously and also achieved optimum utilisation of nearly 100% of new design capacity of 670 KTA after Project Supermax for significant duration.

3.6.3 Financial performance

An abstract of the financial statements is presented below:

0%

20%

40%

60%

80%

100%

120%

0

200

400

600

800

1000

1200

2007-08 2008-09 2009-10 2010-11 2011-12

NCU (P+E) (KTA) Utilisation (%)


Balance Sheet

INR million

Note: the actual statement for the year ending March 2012 has been prepared in a different format due to revision in Schedule VI of Companies Act, 1956 during 2011-12. For comparison purposes, 2011-12 statement has been presented in the same format as the previous years. The detailed audited Balance Sheet is presented in Appendix 1.

Profit & Loss Account

INR Million

Note: Please see detailed financial performance in Appendix 2

The Plant generated healthy operating and net profit margin during 2003-04 to 2007-08 when capacity utilisation was high at above 100%. Since 2008-2009, multiple factors, some internal and other external to the Company, simultaneously affected HPL’s operating environment:

In 2008-09, global economy went through a slowdown with adverse commodity environment; while the price of crude and naphtha increased, commodity prices crashed inducing inventory devaluation and petrochemical demand slowed down.

In 2009-10, planned shutdown on account of Project Supermax integration as well as unplanned outages due to incidents, the overall operating rate was low. While fixed costs remained almost unchanged, value additions from complex operation was low, leading to low operating profit. Even in such adverse circumstances, the Company generated sufficient operating profit to meet finance costs. However, bottom-line was affected due to non-cash depreciation charges.

In 2010-11 and 2011-12, petrochemical product margins collapsed after significant ethylene capacity additions in Middle East and Asia. The company also faced few technical issues while stabilizing plant at new design capacity. The increased finance cost due to term debt raised by HPL to finance Project Supermax coupled with reduced contribution margin affected the Company’s cash position in 2010-11 and 2011-12. While operating profit was sufficient to meet finance costs in 2020-11, all these factors affected Company’s operating position. To meet its working capital needs, HPL raised additional short term loans in 2011-12 which increased financial leverage of the Company. While the Plant’s physical operations revamped post Project Supermax, working capital constraints and leverage has limited the ability to operate the Plant at optimum utilisation.

With improved Plant performance since January 2012 and recovery in the polymer market, the Company is expected to improve financial performance substantially within a short span.

Particulars 31-Mar-08 31-Mar-09 31-Mar-10 31-Mar-11 31-Mar-12

SOURCES OF FUNDS

Shareholders Funds 28,441.06 25,116.26 23,470.33 20,973.62 14,789.98

Debt 30,361.60 30,959.22 29,853.89 28,332.26 32,785.05

Deferred Tax Liability (Net) 4,312.47 3,071.35 2,871.07 2,267.06 1,131.53

Total Equity & Liabilities 63,115.13 59,146.83 56,195.29 51,572.94 48,706.56

APPLICATION OF FUNDS

Fixed Assets 46,060.19 48,169.42 49,620.60 46,810.83 43,121.30

Investments 5,825.31 3,522.12 175.55 175.55 225.55

Net Current Assets 11,229.63 7,455.28 6,399.14 4,586.56 5,359.72

Total Assets 63,115.13 59,146.83 56,195.29 51,572.94 48,706.56

Particulars 2007-08 2008-09 2009-10 2010-11 2011-12

Total Income 75,637.64 72,367.54 35,716.00 76,323.71 81,532.72

Total Operating Expenses 66,303.57 71,292.33 33,001.17 72,969.39 82,933.81

Profit/(Loss) before Interest, Tax,

Depreciation and Ammortisation 9,334.07 1,075.21 2,714.83 3,354.32 (1,401.09)

Depreciation and Ammortisation 3,019.51 3,008.20 3,317.73 4,110.18 4,241.57

Finance Costs 2,223.76 2,683.51 1,875.41 2,557.47 3,875.08

Profit/(Loss) before Exceptional

Items and Tax 4,090.80 (4,616.50) (2,478.31) (3,313.33) (9,517.74)


3.6.4 Value proposition and growth potential

The Plant has numerous advantages and offers various avenues for growth.

1. Established plant – HPL facility is global scale and modern, given the extensive revamp during the Project Supermax expansion project, with all the required offsites and auxiliary infrastructure in place. It also has the requisite government approvals pertaining to environment regulations. Thus, it provides an excellent expansion opportunity and immediate foothold in the petrochemical market in India.

2. Sound customer base – The Company has an established customer base which comprises leading manufacturers in the consumer goods, automobile and other petrochemical consuming manufacturers in India.

3. Location advantages

a. Large downstream industrial base and further integration opportunities

b. Market opportunities in East India, South and South East (SE) Asia - East India with large population base is still untapped. Presence at Haldia provides opportunity to enlarge market share in emerging market with relatively low competition. Compared to all other coastal industrial bases in India, Haldia is closer to large petrochemical markets such as China and to emerging markets such as Bangladesh, Nepal and some SE Asian nations which have emerging demand but little/non-existent manufacturing base.

c. Infrastructure – Developed port, road, rail and airway connectivity

d. Adequate availability of water

4. Quality Products - A number of the Company's grades have been regarded as benchmark grades in both the domestic and international market due to its product quality as well as consistency. The polypropylene and HDPE grades in particular have been sought after whereas LLDPE grades have good acceptance too.

a. Blow moulding grades has been considered as the first choice grade for manufacturing of blow moulded containers for packaging of liquid products such as lubricants, edible oils etc.

b. Pipe grade produced by the company is the only pipe certified internationally as PE 112 grade as against the normal rating of PE 100.

c. In Polypropylene , grade B 202S used for manufacturing of bottles for Intravenous Fluids for medical uses, is a benchmark with no parallel not only amongst domestic manufacturers but also amongst international suppliers. Some of largest Indian manufacturers of intravenous fluids substantially rely on HPL material for production. Due to its unique features is the highest contributing grade amongst all the polymers manufactured by HPL.

5. Research and development (R&D) – HPL has an established R&D set-up; most of the premium grades produced by the Plant have been developed and customized by the in house team of Application Research & Development Centre.

6. Significant growth potential of the Plant - Availability of surplus land of over 200 acres within the HPL premises which can be utilised for expansion and adding downstream units to produce higher margin chemicals. HPL produces high quality chemical intermediates such C4 Raffinate, Butadiene and Benzene in quantities sufficient to support economic size downstream plants. Availability of these intermediate chemicals, large parcels of developed land, developed related infrastructure as well as skilled manpower can facilitate quick investment in value addition projects like Butene-1/MTBE, SBR/PBR, EPDM, Phenol & Acetone, MMA etc. These developments can increase the profitability margins sharply from current levels within a short span.


4. Terms and conditions for Bidders

1. Sellers WBIDC, WBIIDC and WBIDFC

2. Company HPL

3. Stake WBIDC – 39.99% equity in HPL WBIDC, WBIIDC and WBIDFC – entire preference equity in HPL

4. Bidding Entity

Bidding entity can be a company with experience in petroleum and/or petrochemical sector or existing shareholder(s) of HPL or a consortium of such companies and/or Fund with an identified Lead Bidder. Interested Parties may acquire GoWB’s equity share capital either directly or through a new company specially incorporated or to be incorporated for this purpose (Special Purpose Vehicle). Details specified in Section 5.

5. Eligibility criteria Bidding entity to have minimum net worth of INR 20,000 million and should have experience in the petroleum and/or petrochemical sector; details specified in Section 5

6. Terms of payment To be specified in the RFP to be issued in Stage II to shortlisted bidders

7. Lock in Selected Bidder needs to provide an undertaking that it shall not transfer its stake in HPL for a minimum period of 5 years from the date of the completion of disinvestment. The details are set out in Section 5.2.

8. Cost of bid

The bidder shall bear all costs associated with the preparation and submission of the bid. GoWB/WBIDC/ DTTIPL/ HPL, in no case, shall be responsible or liable for any such costs. In case a bidder is declared as the Selected Bidder and CP(M)C exercises its Right of First Refusal, then WBIDC proposes to reimburse the Selected Bidder INR 10 million for the Transaction.* Compensation to Selected Bidder will be payable within 30 days from receipt of full consideration for shares acquired by CP(M)C subject to submission of necessary documents in this regard.

9. Selection process

Selection in Stage II to be based on financial bid. Selected Bidder is the bidder whose financial bid is highest among all the financial bids received for GoWB’s Stake, subject to its quote being higher than the Reserve Price (to be determined by WBIDC).

10. Others The successful offer received from Selected Bidder would be subject to ‘Right of First Refusal' of CP(M)C in relation to purchase of WBIDC stake in HPL, as specified in this PIM.

*No compensation in case the Selected Bidder is existing Shareholder(s) of HPL with ROFR and/ or any of its affiliates/associates or its related party.

Interested parties should submit the EoI accompanied by Statement of Legal Capacity, RFQ, and Declaration, duly signed by the interested party(ies)/designated Lead Bidder of the consortium. The Statement of Legal Capacity, RFQ, and Declaration 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 3 is to be duly filled in and accompanied with the following details:

In case of a Sole Bid (as indicated in the definition under the Primary Eligibility Criteria specified in the Section 5 titled “Information for Bidders”).

− The Audited Balance Sheet and Profit & Loss Account of the sole bidder for the last three (3)

financial years − Write-up on:

Background of the sole bidder

Statement of purpose for the Transaction

Certificate from its statutory auditor to meet primary eligibility criteria

Any other information considered material

In case of a Consortium Bid (as indicated in the definition under the Primary Eligibility Criteria specified in the Section 5 titled “Information for Bidders”)


Kalpana Jain

Senior Director

Deloitte Touche Tohmatsu India Private Limited

7th Floor, Building 10, Tower B

DLF Cyber City Complex

DLF City Phase II

Gurgaon 122 002, India

− The audited Balance Sheet and the Profit & Loss Account for the last 3 financial years of the Lead Bidder and other member companies associated with the bid.

− Write-up on:

Lead Bidder − Background of the Lead Bidder − Statement of purpose for the Transaction − Certificate from its statutory auditor to meet primary eligibility criteria − Any other information considered material by the Lead Bidder

Other member companies − Background of member companies in the consortium − Any other information considered material

Each of the EoI, Statement of Legal Capacity, RFQ and Declaration must be in English. The EoI along with the aforesaid documents, duly signed and stamped, in duplicate, should be submitted no later than 21:00 hours on 10 June 2013 in a sealed envelope super scribed “Private and Confidential- Expression of Interest for HPL” at the address mentioned below or E-mail at [email protected] . EoI submitted by E-mail should be in scanned format. The maximum size acceptable per E-mail is 10 MB. In case size of documents is more than 10 MB, EoI can be submitted in multiple mails clearly mentioning the mails in which it has been segregated.

EOI sent by facsimile will not be accepted.

Any change by way of withdrawal/substitution of any member of the consortium or any change affecting the composition of the consortium or formation of consortium by a sole bidder may be permitted upto the stage of submission of financial bid. WBIDC/ DTTIPL have the sole discretion to determine the impact of the change in membership on the quality of the consortium and reject a proposal without assigning any reasons.

The EoI submitted by interested parties shall be evaluated on the basis of the criteria specified in Section 5 titled “Information for Bidders” in this document. If at any time during the evaluation process, WBIDC/ DTTIPL require any clarification, it reserves the right to request such information from any or all of the companies/consortium and the companies/consortium will be obliged to provide the same within reasonable time frame.

Only the bidders that are found eligible, at the sole discretion of WBIDC, will be informed of the same within reasonable timeframe by WBIDC/DTTIPL, and provided further information.

WBIDC reserves the right to accept or reject any EoI without assigning any reasons thereof.



5. Information for Bidders

5.1 General restrictions

Any Director/Partner/Proprietor of the bidder (any person or entity) should not have been subjected to punishment for any criminal act and the bidder must not have been convicted for an offence involving moral turpitude.

5.2 Primary eligibility criteria

EoI may be submitted by

A domestic/international company with experience in petroleum and/or petrochemical sector, as specified below, individually (“Sole Bid”) or

A consortium (“Consortium Bid”) of domestic/international Companies or/and Fund (with maximum 3 members in the consortium) with an identified Lead Bidder wherein the Lead Bidder should have 51% stake in the consortium and also is required to have experience in petroleum and/or petrochemical sector as specified below

Funds means Venture Capital Investors incorporated and established outside India and registered under the Securities and Exchange Board of India, Foreign Venture Capital Investor Regulations, 2000 / Venture Capital Funds registered under Securities and Exchange Board of India, SEBI(Alternate investment Funds) Regulation, 2012 / Private Equity Funds incorporated and established within or outside India)

An existing shareholder of HPL individually or in consortium with other shareholder(s) of HPL and/or other domestic/international company and/or Fund.

Bidding entity (Lead Consortium Member in the case of Consortium Bid) must have experience ( in terms of operations and investment) in the petroleum or petrochemical sector. This may cover experience in any of the following:

Oil & gas exploration and production

Crude oil refining

Distribution and marketing of petroleum products

Natural gas distribution and marketing

Petrochemical manufacturing

Petrochemical distribution and marketing

Any allied sector The above experience criteria do not apply incase:

o One of the existing shareholder of HPL submits its EoI as Sole Bid o One of the existing shareholder of HPL is part of the Consortium where in such shareholder is

the Lead Bidder of the Consortium (having a maximum of 3 members) To clarify incase the existing shareholder is part of the Consortium where in such shareholder is not the Lead Bidder of the Consortium, then the Lead Bidder needs to satisfy the experience criteria. However, the financial criteria and the 5 year lock-in condition as discussed below apply to all the bidding entities. Selected Bidder needs to provide an undertaking that Bidder shall continue to run the present Plant in its entirety as a going concern and shall not transfer/agree to transfer its stake in HPL for a minimum period of 5 years from the date of the completion of disinvestment. Incase of the Consortium, the Lead Bidder need to provide an additional undertaking that it will not dilute its stake in the Consortium (or SPV formed for the Transaction) below 51% for a minimum period of 5 years from the date of the completion of disinvestment.

5.3 Financial benchmarks

The interested parties must satisfy the following criterion to be eligible as Bidder(s) for the proposed sale process:


Sole Bid Average Net worth or Assets under management of INR 20,000 million (INR 2,000 crore) or more for the financial years 2010-11 and 2011-12* (no negative net worth in last 3 years)

Consortium Bid

Aggregate average Net worth or Assets under management of INR 20,000 million (INR 2,000 crore) or more for the consortium as a whole for the financial years 2010-11 and 2011-12* and the net worth of the lead bidder must be at least INR 10,000 million (INR 1,000 crore) or more. (with no member having a negative net worth in last 3 years).

* 2011 and 2012 incase of companies having financial year end at 31 December

Further, in case of a consortium bid:

The Lead Bidder would be responsible for all matters related to the Transaction

The Lead Bidder cannot be changed over the course of the Transaction Where the financial statement is expressed in currency other than Indian Rupees, the eligible amount as described above shall be computed by taking the equivalent US Dollars at the exchange rate prevailing on the date(s) of such financial statement. For clarification, the exchange rate used for computing equivalent US Dollars should be the closing exchange rate provided by the Central Bank (for clarity Central Bank would be equivalent to Federal Reserve of USA or Reserve Bank of India of the said country) of such country for that date. In the event that the date(s) are not co terminus, the latest available audited statements or the closest exchange rates shall be reckoned for the purpose. For the purpose of conversion from USD to INR, the closing exchange rate for the week ended 10 May 2013 published by Reserve Bank of India shall be considered.

Definitions

Net Worth = Equity Share Capital + free Reserves & Surplus (excluding Revaluation Reserve)

Asset under Management = cash available and yet to be invested + funds committed by its contributors + lower of Book Value or Mark to Market Value of investments held currently.

5.4 Disqualification Without prejudice, a company/consortium may be disqualified and its EoI dropped from further consideration for any (but not limited to) of the reasons listed below:

(i) Such bidder / member of the consortium has been convicted of an offence involving moral turpitude;

(ii) Such bidder / member of consortium has been charge-sheeted 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;

(iii) Material misrepresentation by such company/member of consortium in the EoI and/or RFQ; (iv) Failure by such company/consortium to provide the information required to be provided in the EoI

and RFQ and / or Statement of Legal Capacity; (v) Submission of EoI and RFQ in respect of any party, where such party had already submitted an EoI

or is a member of a consortium that has already submitted an EoI; (vi) The EoI and the accompanying documents submitted by any party, not being substantially

responsive to the requirements of this PIM; (vii) Failure to provide satisfactory declaration as per Annexure 4.

The sole bidder / consortium not satisfying the eligibility and requisite qualification criteria specified in the above sections would be disqualified. In case of a consortium bid, WBIDC may disqualify the entire consortium for any of the reasons (but not limited to) specified above, even if it applied to only one member of the consortium. It must be noted that in addition to the eligibility of the sole bidder, Lead Bidder, member of a consortium and the consortium as a whole must be eligible, as per criteria mentioned above, on the date of submission of the EoI and they must continue to be eligible throughout the Transaction.

5.5 Governing Law / Jurisdiction The terms of all Transaction documents, the entire sale process and any disputes or claims arising out of, or in connection with, the Transaction shall be governed by the laws of the Republic of Indian. The courts of Kolkata shall have exclusive jurisdiction to settle any disputes or claim that arises out of, or in connection with, the Transaction and/or the Transaction documents.


Appendix 1A Balance sheet in India Rupee (INR)

INR million

Note: Statement for year ending March 2012 has been presented in the same format as previous years for comparison purposes


SOURCES OF FUNDS

Share Capital 18,309.98 18,309.98 18,309.98 18,309.98 19,590.20

Reserves 10,131.08 6,806.28 5,160.35 2,663.64 (4,800.22)

Total Shareholders Funds 28,441.06 25,116.26 23,470.33 20,973.62 14,789.98

Secured Loans 28,361.60 30,959.22 28,053.89 26,332.26 32,785.05

Unsecured Loans 2,000.00 - 1,800.00 2,000.00 -

Total Debt 30,361.60 30,959.22 29,853.89 28,332.26 32,785.05

Deferred Tax Liability (Net) 4,312.47 3,071.35 2,871.07 2,267.06 1,131.53

Total 63,115.13 59,146.83 56,195.29 51,572.94 48,706.56


Fixed Assets

Gross Block 58,876.36 59,986.75 62,859.16 78,473.30 79,095.70

Less : Accumulated Depreciation 20,350.84 23,348.89 27,725.87 31,835.96 36,076.79

Net Block 38,525.52 36,637.86 35,133.29 46,637.35 43,018.91

Capital Work in Progress 7,534.67 11,531.56 14,487.31 173.49 102.39

Total Fixed Assets 46,060.19 48,169.42 49,620.60 46,810.83 43,121.30

Investments 5,825.31 3,522.12 175.55 175.55 225.55

Current Assets, Loans & Advances

Inventories 9,901.83 7,396.13 8,917.16 8,952.73 12,440.24

Sundry Debtors 2,221.29 1,242.43 2,235.58 1,755.87 1,619.64

Cash and Bank 808.72 3,572.60 142.35 281.88 859.43

Other Current Assets 213.31 142.80 137.62 449.08 1,297.07

Loans and Advances 6,759.59 6,943.25 6,034.20 6,324.69 7,603.80

Total Current Assets 19,904.74 19,297.21 17,466.91 17,764.25 23,820.16

Current Liabilities and Provisions

Liabilities 6,751.82 9,768.94 8,267.44 10,354.78 15,616.30

Provisions 1,923.30 2,072.99 2,800.33 2,822.91 2,844.15

Total Current Liabilities 8,675.12 11,841.93 11,067.77 13,177.69 18,460.45

Net Current Assets 11,229.63 7,455.28 6,399.14 4,586.56 5,359.72

Total Assets 63,115.13 59,146.83 56,195.29 51,572.94 48,706.56


Appendix 1B Balance Sheet, in INR, as per revised Schedule VI of Companies Act, 1956

INR million

Particulars 31-Mar-11 31-Mar-12

EQUITY & LIABILITIES

Shareholder's Funds

Share Capital 18,309.98 19,590.21

Reserves 2,663.64 (4,800.22)

Total Shareholders Funds 20,973.62 14,789.99

Non current Liabilities

Long Term Borrow ings 15,680.02 15,430.71

Deferred Tax Liability (Net) 2,267.06 1,131.58

Other Long Term Liabilities 9.00 10.31

Other Long Term Provisions 79.78 77.25

Total Non current Liabilities 18,035.86 16,649.85

Current Liabilities

Short Term Borrow ings 8,331.16 14,684.73

Trade Payables 6,913.31 13,051.72

Other Current Liabilities 7,521.39 4,853.06

Short Term Provisions 77.48 211.46

Total Current Liabilities 22,843.34 32,800.97

Total Equity & Liabilities 61,852.82 64,240.81

ASSETS

Non current Assets

Tangible Assets 45,644.89 42,261.04

Intangible Assets 992.45 757.86

Capital Work in Progress 170.44 100.64

Non current Investments 175.55 175.55

Long Term Loans and Advances 1,631.02 1,996.61

Total Non current Assets 48,614.35 45,291.70

Current Assets

Current Investments - 50.00

Inventories 8,979.49 12,440.22

Trade Receivables 1,589.96 1,619.64

Cash and Bank 281.88 859.55

Other Current Assets 449.08 1,124.20

Short Term Loans and Advances 1,938.06 2,855.50

Total Current Assets 13,238.47 18,949.11

Total Assets 61,852.82 64,240.81


Appendix 1C Balance Sheet in US$

US$ million

US$/INR exchange rate applied for conversion is as follows:

Date: 31 March US$/INR

2008 40.12

2009 50.73

2010 44.92

2011 44.59

2012 50.88

Source: Bloomberg


SOURCES OF FUNDS

Share Capital 456.38 360.93 407.61 410.63 385.03

Reserves 252.52 134.17 114.88 59.74 (94.34)

Total Shareholders Funds 708.90 495.11 522.50 470.37 290.68

Secured Loans 706.92 610.27 624.53 590.54 644.36

Unsecured Loans 49.85 - 40.07 44.85 -

Total Debt 756.77 610.27 664.60 635.39 644.36

Deferred Tax Liability (Net) 107.49 60.54 63.92 50.84 22.24

Total 1,573.16 1,165.92 1,251.02 1,156.60 957.28


Fixed Assets

Gross Block 1,467.51 1,182.47 1,399.36 1,759.89 1,554.55

Less : Accumulated Depreciation 507.25 460.26 617.23 713.97 709.06

Net Block 960.26 722.21 782.13 1,045.91 845.50

Capital Work in Progress 187.80 227.31 322.51 3.89 2.01

Total Fixed Assets 1,148.05 949.53 1,104.65 1,049.81 847.51

Investments 145.20 69.43 3.91 3.94 4.43

Current Assets, Loans & Advances

Inventories 246.81 145.79 198.51 200.78 244.50

Sundry Debtors 55.37 24.49 49.77 39.38 31.83

Cash and Bank 20.16 70.42 3.17 6.32 16.89

Other Current Assets 5.32 2.81 3.06 10.07 25.49

Loans and Advances 168.48 136.87 134.33 141.84 149.45

Total Current Assets 496.13 380.39 388.84 398.38 468.15

Current Liabilities and Provisions

Liabilities 168.29 192.57 184.05 232.22 306.92

Provisions 47.93 40.85 62.33 63.30 55.89

Total Current Liabilities 216.22 233.42 246.38 295.52 362.81

Net Current Assets 279.91 146.97 142.46 102.86 105.34

Total Assets 1,573.16 1,165.92 1,251.02 1,156.60 957.28


Appendix 1C Balance Sheet, in US$, as per revised Schedule VI of Companies Act, 1956

US$ million

Particulars 31-Mar-11 31-Mar-12

EQUITY & LIABILITIES

Shareholder's Funds

Share Capital 410.63 385.03

Reserves 59.74 (94.34)

Total Shareholders Funds 470.37 290.68

Non current Liabilities

Long Term Borrow ings 351.65 303.28

Deferred Tax Liability (Net) 50.84 22.24

Other Long Term Liabilities 0.20 0.20

Other Long Term Provisions 1.79 1.52

Total Non current Liabilities 404.48 327.24

Current Liabilities

Short Term Borrow ings 186.84 288.61

Trade Payables 155.04 256.52

Other Current Liabilities 168.68 95.38

Short Term Provisions 1.74 4.16

Total Current Liabilities 512.30 644.67

Total Equity & Liabilities 1,387.15 1,262.59

ASSETS

Non current Assets

Tangible Assets 1,023.66 830.60

Intangible Assets 22.26 14.90

Capital Work in Progress 3.82 1.98

Non current Investments 3.94 3.45

Long Term Loans and Advances 36.58 39.24

Total Non current Assets 1,090.25 890.17

Current Assets

Current Investments - 0.98

Inventories 201.38 244.50

Trade Receivables 35.66 31.83

Cash and Bank 6.32 16.89

Other Current Assets 10.07 22.10

Short Term Loans and Advances 43.46 56.12

Total Current Assets 296.89 372.43

Total Assets 1,387.15 1,262.59


Appendix 2A Profit & Loss Account in INR

INR million

Note: ‘Other income’ and ‘Exceptional items’ of previous years have been reclassified based on classification of those items in 2011-12 for comparison purposes

Particulars 2007-08 2008-09 2009-10 2010-11 2011-12

INCOME

Revenue from Operation (Gross) 86,022.39 83,275.01 38,162.33 83,804.93 90,111.10

Less: Excise Duty 11,350.30 9,451.76 3,981.16 8,303.88 8,766.63

Revenue from Operation (Net) 74,672.09 73,823.25 34,181.17 75,501.05 81,344.47

Other Income 965.55 (1,455.71) 1,534.83 822.66 188.25

Total Income 75,637.64 72,367.54 35,716.00 76,323.71 81,532.72

EXPENSES

Cost of Raw Materials Consumed 53,596.36 57,084.84 21,729.44 61,403.22 70,016.13

Purchase of Traded Goods 672.38 470.90 1,661.15 1,972.11 396.84

(Increase)/Decrease in Invesntories of Semi

Finished and Finished Goods (69.48) 255.05 1,129.24 (2,075.51) (371.69)

Employee Benefits and Expenses 661.03 656.89 735.66 849.51 920.31

Manufacturing and Other Expenses 11,443.28 12,824.65 7,745.68 10,820.06 11,972.22

Total Expenses 66,303.57 71,292.33 33,001.17 72,969.39 82,933.81


Depreciation and Ammortisation 9,334.07 1,075.21 2,714.83 3,354.32 (1,401.09)

Depreciation and Ammortisation 3,019.51 3,008.20 3,317.73 4,110.18 4,241.57

Finance Costs 2,223.76 2,683.51 1,875.41 2,557.47 3,875.08

Profit/(Loss) before Exceptional Items

and Tax 4,090.80 (4,616.50) (2,478.31) (3,313.33) (9,517.74)

Exceptional Items - - - - 932.11

Profit/(Loss) before Tax 4,090.80 (4,616.50) (2,478.31) (3,313.33) (8,585.63)

Current Tax - relating to earlier years 191.07 (637.94) (212.63) 13.71

Deferred Tax 1,097.00 (1,241.12) (603.99) (1,135.48)

Fringe Benefit Tax 15.88 16.72

Profit/(Loss) for the period 2,786.85 (3,392.10) (1,840.37) (2,496.71) (7,463.86)


Appendix 2B Profit & Loss Account in US$

US$ million

Average annual US$/INR exchange rate applied for conversion as follows:

Period US$/INR

2007-08 40.26

2009-09 45.82

2009-10 47.42

2010-11 45.57

2011-12 47.95

Source: Bloomberg; average computed based on daily exchange rate for the year

Particulars 2007-08 2008-09 2009-10 2010-11 2011-12

INCOME

Revenue from Operation (Gross) 2,136.67 1,817.44 804.77 1,839.04 1,879.27

Less: Excise Duty 281.92 206.28 83.96 182.22 182.83

Revenue from Operation (Net) 1,854.75 1,611.16 720.82 1,656.81 1,696.44

Other Income 23.98 (31.77) 32.37 18.05 3.93

Total Income 1,878.73 1,579.39 753.18 1,674.87 1,700.37

EXPENSES

Cost of Raw Materials Consumed 1,331.26 1,245.85 458.23 1,347.45 1,460.19

Purchase of Traded Goods 16.70 10.28 35.03 43.28 8.28

(Increase)/Decrease in Invesntories of Semi

Finished and Finished Goods (1.73) 5.57 23.81 (45.55) (7.75)

Employee Benefits and Expenses 16.42 14.34 15.51 18.64 19.19

Manufacturing and Other Expenses 284.23 279.89 163.34 237.44 249.68

Total Expenses 1,646.88 1,555.92 695.93 1,601.26 1,729.59


Depreciation and Ammortisation 231.84 23.47 57.25 73.61 (29.22)

Depreciation and Ammortisation 75.00 65.65 69.96 90.19 88.46

Finance Costs 55.23 58.57 39.55 56.12 80.82

Profit/(Loss) before Exceptional Items

and Tax 101.61 (100.75) (52.26) (72.71) (198.49)

Exceptional Items - - - - 19.44

Profit/(Loss) before Tax 101.61 (100.75) (52.26) (72.71) (179.05)

Current Tax - relating to earlier years 4.75 - (13.45) (4.67) 0.29

Deferred Tax 27.25 (27.09) - (13.25) (23.68)

Fringe Benefit Tax 0.39 0.36 - - -

Profit/(Loss) for the period 69.22 (74.03) (38.81) (54.79) (155.66)


Annexure 1

Expression of Interest

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

Reference number _________ Date_____________

Kalpana Jain Senior Director Deloitte Touche Tohmatsu India Private Limited 7th Floor, Building 10, Tower B DLF Cyber City Complex DLF City Phase II Gurgaon 122 002, India

INVITATION OF EXPRESSIONS OF INTEREST FOR ACQUIRING (i) WBIDC’S ENTIRE PAID-UP EQUITY SHARE CAPITAL, REPRESENTING 39.99% OF THE PAID UP EQUITY SHARE CAPITAL AND (ii) WBIDC’s, WBIIDC’S AND WBIDFC’S ENTIRE PAID-UP PREFERENCE SHAREHOLDING, REPRESENTING 100% OF THE PAID UP PREFERENCE SHARE CAPITAL IN HALDIA PETROCHEMICALS LIMITED

Madam,

This is with reference to the advertisement dated _________, inviting Expression of Interest for acquiring (i) WBIDC’s entire% paid-up equity share capital and (ii) WBIDC’s, WBIIDC’s and WBIDFC’s entire paid-up preference shareholding, representing 100% of the paid up preference share capital in Haldia Petrochemicals Limited (“HPL”).

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 sale process, and for this purpose:

We propose to submit our EoI in individual capacity as _________(insert name of party) *

OR

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

1. ______________________

2. ______________________

3. ______________________

We understand that WBIDC’s entire paid-up equity shareholding and WBIDC’s, WBIIDC’s and WBIDFC’s entire paid-up preference shareholding in HPL is proposed to be sold by WBIDC, WBIIDC and WBIDFC (“Proposed Transaction”) and we are interested in the Proposed Transaction and in bidding to acquire the same.

We confirm that we/our consortium/proposed consortium satisfy/ies the eligibility criteria set out in relevant sections of the PIM (including Annexure 6,7 and 8) 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 July 13, 2001 (refer Annexure 6) and subsequent amendments/clarifications thereto.


We certify that in regard to matters other than security and integrity of India, we have not been convicted by a Court of law or indicted and/or no adverse orders have been passed by a regulatory authority which would cast a doubt on our ability to be a shareholder of HPL 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 India, we have not been charge-sheeted by any agency of the Government or convicted by a Court of Law for any offence committed by us or by any of our sister concerns.

We further certify that no investigation by a regulatory authority is pending either against us or against our sister concerns or against our CEO or any of our Directors/ Managers/ employees.

We undertake that in case due to any change in facts or circumstances during the pendency of the sale process, we are attracted by the provisions of disqualification in terms of the PIM and the subject guidelines and/or such other communication as may be addressed to us by WBIDC/ Deloitte Touche Tohmatsu India Private Limited, we would intimate WBIDC and DTTIPL of the same immediately.

The Statement of Legal Capacity, Request for Qualification and Declaration as per formats indicated hereinafter; duly signed by us/respective members, who jointly satisfy the eligibility criteria, are enclosed.

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

Yours faithfully,

Authorised Signatory

For and on behalf of the (interested party/each member of the consortium)

Enclosure:

1. Statement of Legal Capacity

2. Request for Qualification

3. Declaration

*Strike off whichever clause is not applicable


Annexure 2

Statement of Legal Capacity

(To be forwarded on the letterhead of the interested party / each member of the consortium submitting the EOI)



INVITATION OF EXPRESSIONS OF INTEREST FOR ACQUIRING (i) WBIDC’S ENTIRE PAID-UP EQUITY SHARE CAPITAL, REPRESENTING

39.99% OF THE PAID UP EQUITY SHARE CAPITAL AND (ii) WBIDC’s, WBIIDC’S AND WBIDFC’S ENTIRE PAID-UP PREFERENCE SHAREHOLDING, REPRESENTING 100% OF THE PAID UP PREFERENCE SHARE CAPITAL IN HALDIA PETROCHEMICALS LIMITED

Madam,

This is with reference to the advertisement dated _________, inviting Expression of Interest for acquiring (i) WBIDC’s entire paid-up equity share capital and (ii) WBIDC’s, WBIIDC’s and WBIDFC’s entire paid-up preference shareholding representing 100% of the paid up preference share capital in Haldia Petrochemicals Limited (“HPL”).

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 Preliminary Information Memorandum/ 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 and the advertisement.*

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

We have agreed that ______________(insert individual’s name) will act as our representative on our behalf and has been duly authorized to submit the Expression of Interest. Further, the authorized signatory is vested with requisite powers to furnish such letter and Request for Qualification, Financial Bid and authenticate the same.

Yours faithfully,


For and on behalf of (interested party/each member of the consortium)

*Strike off whichever clause is not applicable


Annexure 3

Request for Qualification

(To be forwarded on the letterhead of the interested party / each member of the consortium submitting the EOI in respect of interested party/each member of the consortium)

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

1. Constitution (Tick, wherever applicable)

i. Public Limited Company

ii. Private Limited Company

iii. Others, if any (Please Specify)

If the interested party is a foreign company/ OCB or foreign owned or foreign controlled entity, specify list of statutory approvals from Government of India/ Reserve Bank of India/ Foreign Investment Promotion Board applied for/ obtained/ awaiting:

2. Memorandum and Articles of Association/Document of Constitution, i.e. Partnership Deed, Trust Deed etc. as may be applicable

3. A certificate duly signed by the Company

Secretary/ any other officer in charge of legal

affairs, stating that the Company is eligible to

participate in the proposed sale in terms of

Clause ______ of the Memorandum and

Articles of Association/_____________ name

of Document of Constitution, viz., Partnership

Deed, Trust Deed, etc. as may be

4. Sector (Tick, where applicable)

i. Public Sector

ii. Joint Sector

iii. Others, if any (Please Specify)


5. Details of Shareholding :

6. Audited Financial Statements/Annual Reports for the previous three financial years.

[For interested parties incorporated during the last 2 years which, subject to compliance with all applicable laws, do not have audited financial statements as on 31st March, 2012, Balance Sheet and Profit & Loss Account for 31st March, 2012 (if audit has been completed) or provisional Balance Sheet and Profit & Loss Account of the interest party for 31st March, 2012 as certified by its Board of Directors/ any other governing body should be submitted.)]

7. Role / Interest of each Member in the Consortium (if applicable)

:

8. Nature of business/products dealt with :

9. A profile containing information on the company/group’s area of operations

10. Date & Place of incorporation

:

11. Date of commencement of business :

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

i. Registered office :

ii. Head office :


13. Address for correspondence :

14. Salient features of financial performance for the last three years

:

15. Basis of eligibility for participation in the process (Please mention details of your eligibility) as under:

Please attach most recent Audited Statement of Accounts/Annual Report. Additionally, please provide a chartered account/auditor certificate certifying the Net Worth as defined in the Eligibility criteria of the Preliminary Information Memorandum.

Also, present your experience in the sector as per Section 4 and 5 of PIM

16. Please provide details of all contingent liabilities that, if materialized, that have or would reasonably be expected to have a material adverse affect on the business, operations (or results of operations), assets, liabilities and/or financial condition of the Company, or other similar business combination or transaction.

17. Contact Person(s):

i. Name:

ii. Designation:

iii. Phone No.:

iv. Mobile No.:

v. Fax No.:

vi. Email:

Yours faithfully,


For and on behalf of the (party/member)


For and on behalf of the consortium

Place:

Date:

Note: Please follow the order adopted in the Format provided. If the interested party is unable to respond to a particular question/ request, the relevant number must be nonetheless be set out with the words “No response given” against it.


Annexure 4

Declaration

(To be forwarded on the letterhead of the interested party / each member of the consortium submitting the EOI in respect of interested party/each member of the consortium)



INVITATION OF EXPRESSIONS OF INTEREST FOR ACQUIRING (i) WBIDC’S 39.99% PAID-UP EQUITY SHARE CAPITAL AND (ii) WBIDC’s,

WBIIDC’S AND WBIDFC’S ENTIRE PAID-UP PREFERENCE SHAREHOLDING , REPRESENTING 100% OF THE PAID UP PREFERENCE SHARE CAPITAL IN HALDIA

PETROCHEMICALS LIMITED

1) We solemnly declare that we or our Director(s), CEO or other employee(s) are not convicted by any court of law or are indicted or have received any adverse order from any regulatory authority relating to a grave offense with regard to matters other than those relating to the security and integrity of the country. Grave offense for this purpose shall include: a) What constitutes ‘Fraud’ under The Securities and Exchange Board of India Act, 1992,

and regulations made thereunder; b) Securities and Exchange Board of India (“SEBI”) orders on the bidder casting doubt

on the ability of the bidder to hold the stake in Haldia Petrochemicals Limited; c) Any conviction by a Court of Law in India or abroad; and d) In case of SEBI’s order of prosecution, conviction by a Court of Law in India.

2) We further declare that we or our sister companies have not been issued a charge sheet

by any agency of the Government or convicted by a Court of Law in India or abroad for any offense with regard to matters relating to the security and integrity of the country.

3) We further declare that we, our Director(s), CEO, Manager(s) / Employee(s) are not under investigation pending before any regulatory authority or other authority.

4) We declare that complete information as required is provided in the Expression of Interest and Request For Qualification and /or Statement of Legal Capacity.


Authorised Signatory For and on behalf of

Bidder Name

Bidder Address

In case any bidder is unable to give the above declaration in view of any conviction, indictment, order or investigation as above, full details of the same shall be provided including names of persons involved, designation, charge/offense, ordering/investigating agency, status/outcome and with supporting/relevant documents. Any entity, which is disqualified from participating in the sale 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.


Annexure 5

Copy of Advertisement

.

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

Invitation for “Expression of Interest” towards Disinvestment of Government of West Bengal’s entire shareholding held through WBIDC, WBIIDC and WBIDFC in

Haldia Petrochemicals Limited Government of West Bengal (“GoWB”), presently holding (i) 39.99% of the paid up equity share capital through WBIDC and (ii) entire (100%) paid up preference share capital through WBIDC, WBIIDC and WBIDFC of Haldia Petrochemicals Limited (“HPL” or the “Company”), intends to disinvest its entire equity and preference shareholding in HPL through a competitive bidding process with the objective of revival and restructuring the Company. WBIDC is authorized to act on behalf of GoWB, WBIIDC and WBIDFC to effect the Transaction and appoint Transaction Advisor. Deloitte Touche Tohmatsu India Private Limited (DTTIPL) has been appointed as Transaction Advisor (“TA”) to WBIDC to advise and manage the proposed disinvestment process. HPL operates an integrated and modern petrochemical complex, spread over 1,200 acres with its township encompassing an additional 250 acres, with a cracking capacity of nearly 700 KTA, at Haldia, an industrial port hub around 125 km from Kolkata. The Preliminary Information Memorandum (“PIM”), providing details of HPL and transaction process, can be obtained from TA at the address mentioned below or accessed at the websites http://www.wbidc.com/ or http://www.deloitte.com/in/haldia . Interested and eligible parties may submit their Expression of Interest (“EoI”) as per the terms specified in the PIM along with other requested documents in the format and as per the process

specified in PIM at the under mentioned address or email it to [email protected] not later than 21:00 hours (Indian Standard Time) on 10 June 2013: Kalpana Jain, Senior Director, Deloitte Touche Tohmatsu India Private Limited, 7th Floor, Building 10, Tower B, DLF Cyber City Complex, DLF City Phase II, Gurgaon 122 002, India Only the parties that are found eligible as per terms of PIM will be informed of the same, and provided further information. This disinvestment process is subject to provisions of Right Of First Refusal as per Articles of the Company and extant directions of the court(s). This advertisement does not constitute, and will not be deemed to constitute any commitment on part of WBIDC or TA. Furthermore, this advertisement confers neither any right nor expectation on any party to participate in this disinvestment process. WBIDC reserves the right to postpone/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 giving reasons. No financial obligation will accrue to WBIDC or TA in such an event. Neither WBIDC nor TA shall be responsible for non-receipt of correspondences sent by post/ email/ fax/ courier.

http://www.wbidc.com/

http://www.deloitte.com/in/haldia



Annexure 6

Guidelines for Bidders

No. 6/4/2001-DD-II

Government of India

Department of Disinvestment

Dated 13th 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.

(V.K. Singh)

Under Secretary to the Government of India.

CLARIFICATION Note: Vide clarification dated: 10.1.2002 to the above guidelines it has been provided that the following offence be treated as a grave offence (1) Orders of Securities and Exchange Board of India which directly relates to “fraud” as defined in the Securities and Exchange Board of India Act, 1992 and/or regulations made thereunder; (2) Orders of Securities and Exchange Board of India which cast a doubt on the ability of the Strategic Partner to manage the Company after the sale of the Transaction Shares by the Government to the Strategic Partner; (3) Any conviction by a Court of Law; (4) In cases in which Securities and Exchange Board of India also passes a prosecution order, disqualification of the Strategic Partner should arise only on conviction by the Court of Law.


Annexure 7

Text of the Recommendations on Qualification for Bidders, as contained in the 30th Report of the Parliamentary Standing Committee on Finance

“The Committee find that though the disinvestment process in our country is continuing for more than a decade yet no guidelines regarding qualification/disqualification of bidders seeking to acquire the stake in PSUs through the process of disinvestment were formulated initially. It was only in July 2001, when a circular was issued detailing some guidelines for disqualifications for bidders. The committee notes that it debars only those bidders who have been actually convicted for an offence or have been charge sheeted for an offence against national security and those who have been either indicted by SEBI or RBI. The Committee feel that these guidelines are not sufficient and do not cover the offences committed under the Official Secrets Act and cases pertaining to willful default of public money. The Committee are of the opinion that these offences are in no way less serious than those included in the guidelines.

Hence, the committee feels that weak, inadequate and porous guidelines are being used to qualify and disqualify bidders. The committee strongly recommends that comprehensive guidelines for qualification/disqualification of bidders seeking to acquire stakes in the PSUs through the process of disinvestment may be drawn and included in the Disinvestment Policy. The Committee further desires that the scope of guidelines may also be broadened which may include the business activities of unhealthy, unethical and unscrupulous nature in its ambit. They also desire that it should also cover the offences under the Official Secrets Act and those pertaining to willful default of public money etc. in its purview.”


Annexure 8

Guidelines for Management Employee Bids

No. 4/38/2002-DD-II

Government of India

Ministry of Disinvestment

Block 14, CGO Complex

New Delhi

Dated 25th April, 2003

OFFICE MEMORANDUM

Subject: - Guidelines for management-employee bids in strategic sale.

1. Employee participation and protection of employee interests is a key concern of the disinvestment process. The practice of reserving a portion of the equity to be disinvested for allocation to employees, at concessional prices, has been adopted in a number of cases. It is necessary and expedient to evolve and lay down guidelines to encourage and facilitate management-employee participation in the strategic sales and thus to acquire controlling stakes and manage disinvested public sector undertakings. The undersigned is directed to state that Government has, therefore, decided to lay down the following guidelines for evaluating employee/management bids:-

(i) The term ‘employee’ will include all permanent employees of a PSU and the whole time directors on the board of the PSU. A bid submitted by employees or a body of employees will be called an “employee bid”.

(ii) At least 15% of the total number of the employees in a PSU or 200 employees, whichever is lower, should participate in the bid.

(iii) An employee bid would be exempted from any minimum turn over criterion but will be required to qualify in terms of the prescribed Net Worth criterion. They will be required to follow the procedures prescribed for participation by Interested Parties in the process of strategic sale including, but not limited to, filing the expression of interest along with all details, as applicable to other investors, furnishing of bank guarantee for payment of the purchase price etc.

(iv) Employees can either bid directly and independently or, for the purpose of meeting the financial criteria like Net Worth, can form a consortium or bid through a joint venture (JV) or a special purpose vehicle (SPV), along with a bank, venture capitalist or a financial institution. However employees will not be permitted to form consortia with other companies.

(v) If the bidding entity of the employees is a consortium, JV or SPV, employees must have a controlling stake and be in control of the bidding entity.

(vi) If the bid is submitted through a consortium, JV or SPV, employees must contribute at least 10% of the financial bid.

(vii) If the employees form a consortium, the consortium partners would be prohibited from submitting individual bids independently.


(viii) If it is not the highest bid, the employee bid shall be considered only if the said bid is within 10% of the highest bid.

(ix) The employee bid shall, subject to fulfilling the conditions above, have the first option for acquiring the shares under offer provided they match the highest bid and the highest bid being equal to or more than the reserve price.

(x) If the employee bid is not the highest bid and there are more than one employee bids within the 10% band, the highest of the employee bids will have precedence for purchase at the highest bid. If such employee bidder is unwilling or unable to match the highest bid, the option will pass on to the next highest employee bid and so on till all the employee bids, within the 10% band, are exhausted.

(xi) In the event of no employee bidder, within the 10% band, being willing or able to match the highest bid, the shares under offer will be sold to the highest bidding entity.

(xii) There will be a lock in period of three years for the shares disinvested by the Government.

2. All the bidders for the management-employee buy-outs will also have to satisfy the provisions of the ‘Guidelines for qualification of bidders seeking to acquire stakes in Public Sector Enterprise through the process of disinvestment’ issued vide the then Department of Disinvestment’s Office Memorandum No.6/4/2001-DD-II dated 13th July 2001 or as amended subsequently along with other qualification criterion as generally applicable and not specifically excluded herein.

-sd-

(T.S. Krishnamachari)

Deputy Secretary to the Government of India


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