PRELIMINARY INFORMATION MEMORANDUM

For Inviting Expression of Interest

for

STRATEGIC DISINVESTMENT OF

SALEM STEEL PLANT (SSP)

by

STEEL AUTHORITY OF INDIA LIMITED (SAIL)

Transaction Advisor

SBI Capital Markets Limited

6th Floor, World Trade Tower, Barakhamba Lane, New Delhi 110 001
Head Office: 202, Maker Tower ‘E’, Cuffe Parade, Mumbai 400 005

July 04, 2019

Preliminary Information Memorandum and Request for EOI SAIL-SSP

Disclaimer Notice

SBI Capital Markets Limited (“SBICAP” or “Transaction Advisor”) and L&L Partners (Formerly
known as Luthra & Luthra Law Offices) (“L&L Partners” or “Legal Advisor”) (collectively “advisors”)
have been retained as advisors by Steel Authority of India Limited (“SAIL” or “the Company”) for
advising and managing the proposed strategic disinvestment on an ‘as is, where is’ basis of Salem Steel
Plant (hereinafter referred to as "SSP" or "the Plant"), pursuant to work order dated June 21, 2017
(aforesaid proposed strategic disinvestment hereinafter referred to as the “Transaction”). The sole purpose
of this Preliminary Information Memorandum (hereinafter referred to as the "PIM") is to provide the
recipient with limited and selected information pertaining to the Company in deciding to submit an
Expression of Interest (“EOI”) in respect of the Transaction. Unless otherwise specified, the information
contained herein is as of June 30, 2019, and may be subject to material updates, revision or amendment.
Neither SAIL nor the advisors, undertake to update this PIM, and do not intend for this PIM to form the
basis of an investment decision or a decision to participate in the Transaction. Interested bidders are
advised to conduct their own investigation and analysis of SSP in connection with a possible Transaction.
This PIM is not intended to form the basis for any investment decision.

The PIM may contain/include certain estimates, projections, statements, targets and forecasts with respect
to the Company/industry in which the Company and SSP operates. However, these estimates, projections,
statements, targets and forecasts in this PIM are based on the various assumptions made by the
management, officers or employees of the Company and/or the advisors which may or may not be accurate.
Actual results may differ materially from these forward-looking statements due to various factors and may
not be relied upon. Past performance is not a guide for future performance. Neither the Company, the
advisors nor any of their respective affiliates, subsidiaries, advisors, directors, officers, employees or agents
make any representations and/or warranty in respect thereof, and no reliance should be placed on any
estimates, projections, statements, targets and forecasts or the assumptions on which they may be based.
The information contained in this PIM has been included on the basis of information, which has been
supplied by SAIL (written and through oral communication) and has not been independently verified by
the advisors. Accordingly, neither the Company, the advisors nor any of their respective directors, officers,
retainers, consultants, agents, employees or advisers take any responsibility for, or will accept any liability
whether direct or indirect, express or implied, contractual, tortuous, statutory or otherwise, in respect of,
the accuracy, completeness, authenticity, correctness and fairness of the information or for any of the
opinions contained in the PIM or for any errors or omissions or for any loss/damage be it tangible or
intangible, howsoever arising, from the use of this PIM and therefore, any liability or responsibility of the
Company and the advisors is expressly disclaimed. The opinions in this PIM have been expressed in good
faith and are based on records/ information available as of June 30, 2019 unless otherwise specified. Any

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

liability arising out of or in connection with this PIM, whether directly or indirectly, is hereby expressly
disclaimed. Each interested bidder must conduct its own analysis of the information contained in the PIM
and is advised to carry out its own investigation in relation to the Company and the Plant, and any and all
matters pertinent to the proposed Transaction and to seek its own advice from professionals in relation to
entering into any agreement or arrangement relating to the Company and the Plant. The interested bidder
should rely on their own judgment only, in assessing business conditions and prospects of the Company
and the Plant.

This PIM has been delivered to you for information purposes only, without any regard to specific
objectives, suitability, financial situations and needs of any particular person and does not constitute any
recommendation, and should not be construed as an offer or invitation for sale or the solicitation of an offer
to buy, purchase or subscribe to any securities, if any, mentioned therein, and neither this document nor
anything contained herein shall form the basis of or be relied upon in connection with any agreement,
arrangement, contract or commitment whatsoever. This document does not solicit any action based on the
materials contained herein and is made available upon the express understanding that you will use it only
for the purpose set forth above. The PIM is being made available on the understanding that the recipient
agrees to, and will, keep the PIM and any information contained herein or any written or oral information
made available separately in connection with the PIM confidential, and that the recipient shall, upon
request by SBICAP, promptly return, without retaining any copy thereof, all such materials (including
this PIM) as may be received from SBICAP and/or the Company.

All acts, deeds and things done or caused or intended to be done, by the Company and the advisors
hereunder are based on and in reliance of your acceptance of the terms and conditions of this Disclaimer.

The Company and the advisors undertake no obligation to provide the recipient with access to additional
information or to update this PIM or to correct inaccuracies herein, and reserves the right to negotiate
with one or more prospective purchasers, without advance notice, to change the procedures for pursuing
the Transaction, terminate negotiations at any time prior to the signing of any binding agreement for the
Transaction and to enter into such an agreement with any other party. In no circumstances will the
advisors be responsible for any costs, losses or expenses, etc. incurred in connection with any appraisal,
review or investigation in relation to the Transaction.

This PIM has been prepared by SBICAP based upon information available to the public and sources,
believed to be reliable. This document has not been approved and will or may not be reviewed or approved
by any statutory or any regulatory authority or any stock exchanges. This document may not be all
inclusive and may not contain all of the information that the recipient may consider material.

This document and information contained herein or any part of it does not constitute or purport to
constitute investment advice or recommendation that may be contained herein have not been based upon a
consideration of the investment objectives, financial situation or particular needs of any specific recipient

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

and should not be printed, reproduced, transmitted, sold, distributed or published by the recipient without
the prior written approval from SBICAP.

The distributing/taking/sending/dispatching/transmitting of this document in certain jurisdictions other

than the Republic of India may be restricted or prohibited by law of such jurisdiction and persons into
whose possession this document comes should inform themselves about, and observe, any such restrictions.
Any failure to comply with these restrictions may constitute a violation of the laws of any such other
jurisdictions. Neither the Company, the advisors nor any of their respective affiliates, directors, employees,
agents or representatives shall be liable for any losses whether direct or indirect, incidental, special or
consequential including lost revenue or lost profits that may arise from or in connection with the use of
this PIM. This PIM may contain confidential, proprietary and/or legally privileged information and it
must be kept confidential by the recipient. Further, no representation or warranty, expressed or implied, is
made or given by or on behalf of the Company, the advisors or their respective affiliates, nor any person
who controls it or any director, officer, employee, advisor or agent of it, or affiliate of any such person or
such persons as to the accuracy, authenticity, completeness or fairness of the information or opinions
contained in this document and the Company, the advisors and their respective affiliates and such persons
do not accept any responsibility or liability for any such information or opinions and therefore, any
liability or responsibility is expressly disclaimed. The logos and trademarks used in this document are
owned by the respective owners and are used for representation purpose only without any explicit
permission of the owners.

This PIM is divided into chapters & sub-sections only for the purpose of reading convenience. Any partial
reading of this PIM may lead to inferences, which may be at divergence with the conclusions based on the
entirety of this PIM. Further, by accepting a copy of this PIM, the recipient accepts the terms of this
Notice, which forms an integral part of this PIM.

Note: Capitalized terms not defined shall have the same meaning ascribed to them in the Request for
Expression of Interest.

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

TABLE OF CONTENTS
IMPORTANT NOTICE ............................................................................................................................. 11

Part A: Preliminary Information Memorandum

1. Introduction......................................................................................................................................... 13

2. Company Overview ........................................................................................................................... 14

2.1 Introduction...................................................................................................................... 14

2.2 Capital Structure of SAIL ............................................................................................... 14

2.3 Board of Directors of SAIL ............................................................................................. 14

2.4 Financial Overview ......................................................................................................... 16

3. Details of The Salem Steel Plant ..................................................................................................... 17

3.1 Plant Location and Connectivity ................................................................................... 17

3.2 Land................................................................................................................................... 18

3.3 Plant and Machinery ....................................................................................................... 20

3.4 Intangible Assets - Trademark....................................................................................... 25

3.5 Plant infrastructure ......................................................................................................... 25

3.6 Raw Material Sourcing ................................................................................................... 28

3.7 Plant Performance and Product Mix ............................................................................ 30

3.8 Senior Management Personnel in SSP .......................................................................... 32

3.9 Human Resource Strength ............................................................................................. 32

3.10 Statutory Permits and Licenses ..................................................................................... 33

3.11 Safety and Quality Control ............................................................................................ 35

4. Financial Performance of the Salem Steel Plant ........................................................................... 37

4.1 Profit and Loss Statement............................................................................................... 37

4.2 Balance Sheet .................................................................................................................... 37

4.3 Working Capital Facilities of SAIL ............................................................................... 39

4.4 Contingent Liabilities ...................................................................................................... 39

5. Value Drivers ...................................................................................................................................... 41

5.1 Strengths .......................................................................................................................... 41

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

5.2 Opportunities .................................................................................................................. 41

6. Appendix ............................................................................................................................................. 43

6.1 Appendix I: Audited Financial Statement of SSP for FY 2018-19 ............................. 43

Part B: Request for Expression of Interest

1. Definitions........................................................................................................................................... 45

2. Introduction......................................................................................................................................... 48

2.1 Transaction Background................................................................................................. 48

2.2 Contact Details ................................................................................................................. 48

2.3 Important Dates ............................................................................................................... 48

2.4 Contents of EOI Request................................................................................................. 49

2.5 Clarification ...................................................................................................................... 50

3. Proposed Transaction ........................................................................................................................ 51

3.1 Salient Features of Proposed Transaction .................................................................... 51

3.2 Process for the proposed Transaction........................................................................... 53

4. Instructions To Interested Bidders ................................................................................................. 55

4.1 General Conditions ......................................................................................................... 55

4.2 Amendment to EOI Request .......................................................................................... 56

4.3 Submission of Expression of Interest ............................................................................ 56

4.4 Evaluation of EOI ............................................................................................................ 62

4.5 Governing Law / Jurisdiction ........................................................................................ 62

5. Eligibility Criteria .............................................................................................................................. 63

5.1 Eligibility Criteria ............................................................................................................ 63

5.2 Other Terms and Conditions ......................................................................................... 73

6. Disqualification .................................................................................................................................. 76

7. Annexures ............................................................................................................................................ 80

Annexure 1: Format for Letter of EOI ..................................................................................... 80

Annexure 2: Statement of Legal Capacity .............................................................................. 88

Annexure 3: Request for Qualification ................................................................................... 91

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

Annexure 4: Power of Attorney ................................................................................................ 96

Annexure 5: Power of Attorney for Employee Participation .............................................. 98

Annexure 6: Format for Consortium Agreement (In case IB is a Consortium) ............. 100

Annexure 7: Undertaking by the Interested Bidder ........................................................... 105

Annexure 9: Declaration in relation to Statement of Legal Proceedings ....................... 119

Annexure 10: Undertaking by Direct Subsidiary/ Direct Subsidiary LLP/ Direct Holding
Company .................................................................................................................................... 121

Annexure 11: Advertisement .................................................................................................. 123

Annexure 12: Department of Investment and Public Asset Management (DIPAM)

Guidelines .................................................................................................................................. 124

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

LIST OF TABLES
Part A: Preliminary Information Memorandum
Table 2-1: Capital structure and shareholding pattern of SAIL ..........................................................14
Table 2-2: Brief Profile of Board of Directors of SAIL (as on June 30, 2019) ......................................14
Table 2-3: Key financial indicators of SAIL (standalone) – (FY15-FY19)............................................16
Table 3-1: Allocation of land for the plant and ancillary facilities ......................................................18
Table 3-2: Details of land leased out of township area .........................................................................18
Table 3-3: Details of plant and machinery ..............................................................................................20
Table 3-4: INOX plant- Contracted quantity of Gases ..........................................................................22
Table 3-5: Capacity expansion- Salem Steel Plant of SAIL ...................................................................24
Table 3-6: Consumption of raw materials at SSP during FY 15-FY 19................................................28
Table 3-7: Raw materials, quantity and sources ....................................................................................29
Table 3-8: Production details and capacity utilization ....................................................................30
Table 3-9: Product specification- stainless steel manufactured by SSP ..............................................31
Table 3-10: Sales volume - SSP .................................................................................................................32
Table 3-11: Senior Management Personnel as on June 18, 2019 ..........................................................32
Table 3-12: Details of the permanent employees as on June 18, 2019 ................................................32
Table 3-13: List of Registered Unions at SSP ..........................................................................................33
Table 3-14: Clearances and approvals- SSP ............................................................................................33
Table 4-1: P&L - SSP of SAIL ....................................................................................................................37
Table 4-2: Balance Sheet- SSP of SAIL .....................................................................................................37
Table 4-3: Contingent liabilities of SSP as on March 31, 2019 ..............................................................39
Part B: Request for Expression of Interest

Table 2-1: Important Dates .......................................................................................................................48

Table 5-1: Illustrative Example 1: Consortium members and eligibility criteria ..............................68
Table 5-2: Illustrative Example 2: Consortium members and eligibility criteria ..............................69
Table 5-3: Illustrative Example 3: Sole Interested Bidder and eligibility criteria ..............................70
Table 5-4: Illustrative Example 4: Sole Interested Bidder and eligibility criteria ..............................70

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

LIST OF FIGURES
Part A: Preliminary Information Memorandum
Figure 3-1: Location in Tamil Nadu- Salem Steel Plant of SAIL .........................................................17
Figure 3-2: Overview of the manufacturing process.............................................................................24
Part B: Request for Expression of Interest
Figure 4-1: Illustration for Direct Subsidiary/Direct Subsidiary LLP/Direct Holding Company ...59

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

ABBREVIATIONS

AIF Alternative Investment Fund

AOD Argon Oxygen Decarburization
BHEL Bharat Heavy Electricals Ltd
BIS Bureau of Indian Standards
BOO Build Own Operate
BSNL Bharat Sanchar Nigam Limited
CCEA Cabinet Committee of Economic Affairs
CGD Core Group of Secretaries on Disinvestment
CIM Confidential Information Memorandum
CISF Central Industrial Security Force
CRM Cold Rolling Mill
CRSS Cold Rolled Stainless Steel
CVD Countervailing Duty
CWIP Capital work in progress
DIN Director Identification Number
DIPAM Department of Investment and Public Asset Management
EAF Electric Arc Furnace
EBITDA Earning before Interest Tax Depreciation and Amortization
EHTSC Extra High Tension Service Connections
GoI Government of India
GoTN Government of Tamil Nadu
HRAP Hot Rolled Annealed and Pickled
HRM Hot Rolling Mill
IB Interested Bidder
IEX Indian Energy Exchange
IISCO Indian Iron & Steel Company
ISO International Organisation for Standardisation
LA Legal Advisor
LF Ladle Furnace
MGD Million Gallons per Day
MoEF Ministry of Environment and Forest
MT Metric Tonne
MTPA Metric Tonne Per Annum
NITI Aayog National Institution for Transforming India
NSPCL NTPC-SAIL Power Company Limited
NTPC National Thermal Power Corporation
PAN Permanent Account Number
PAT Profit after Tax
PBDT Profit before Depreciation and Tax
PBDIT Profit before Depreciation ,Interest, and Tax
PIM Preliminary Information Memorandum
Rs. Indian Rupees
SAIL Steel Authority of India Limited
SBU Strategic Business Unit

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

SMS Steel Melting Shop

SPV Special Purpose Vehicle
SSP Salem Steel Plant
STOA Short Term Open Access
TANGEDCO Tamil Nadu Generation and Distribution Corporation
TPA Tonnes per Annum

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Preliminary Information Memorandum and Request for EOI SAIL-SSP

IMPORTANT NOTICE

Steel Authority of India Limited (“SAIL” or “the Company”), a Maharatna Public Sector
Undertaking, was incorporated under the Companies Act 1956, in the year 1973. It is under the
administrative control of the Ministry of Steel (“MoS”). SAIL was established as a holding
company for the management of steel plants in India and was later restructured as an operating
company. Presently, the Company has five integrated steel plants, a ferro alloys plant and three
special steel plants. In its meeting dated October 27, 2016, the Cabinet Committee on Economic
Affairs (“CCEA”) gave an in-principle approval for strategic disinvestment of several Central
Public Sector Enterprises in line with the recommendations of NITI Aayog including the Salem
Steel Plant (“SSP” or “the Plant”) located at Salem in Tamil Nadu.

The strategic disinvestment of SSP was approved ‘in-principle’ by Board of Directors of SAIL on
February 9, 2017. Thereafter the Board approved strategic disinvestment of 100% stake in SSP on
June 28, 2019.

This Preliminary Information Memorandum (PIM) and Request for Expression of Interest (EOI
Request) has been prepared for providing information about the Company and the proposed
Transaction to the Interested Bidders and inviting Expressions of Interest from Interested
Bidders for the strategic sale of Salem Steel Plant (“SSP” or “the Plant”).

This document has been divided into 2 parts:

 Part A: Preliminary Information Memorandum

 Part B: Request for Expression of Interest
The Preliminary Information Memorandum (“PIM”) and Request for Expression of Interest
(“EOI Request”) are available for downloading from websites of DIPAM at www.dipam.gov.in,
MoS at www.steel.gov.in, Company at www.sailtenders.co.in and Transaction Advisor at
www.sbicaps.com.

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Part A - Preliminary Information Memorandum SAIL-SSP

PART A –
Preliminary Information
Memorandum

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Part A - Preliminary Information Memorandum SAIL-SSP

1. INTRODUCTION

Steel Authority of India Limited (“SAIL” or “the Company”) is a Maharatna Public Sector
Enterprise of Government of India (GoI), incorporated on January 24, 1973, under the Companies
Act 1956 as a holding company and was later restructured as an operating company. SAIL,
presently, owns and operates five integrated steel plants, namely Bhilai Steel Plant, Bokaro Steel
Plant, Durgapur Steel Plant, Rourkela Steel Plant and IISCO Steel Plant, one ferro alloys plant,
namely Chandrapur Ferro Alloys Plant and three special steel plants, namely Alloy Steels Plant
(at Durgapur in West Bengal), Salem Steel Plant (at Salem in Tamil Nadu) and Visvesvaraya Iron
and Steel Plant (at Bhadravati in Karnataka). The total revenue from operations of the Company
was Rs 66,967 crore for FY 2018-19.1
The Company's authorized capital as on March 31, 2019 is Rs. 5,000 crores (5,00,00,00,000 equity
shares of Rs. 10.00 each and paid up share capital is Rs. 4,130.53 crore, comprising of
4,13,05,25,289 equity shares, out of which 3,09,77,67,449 shares are held by the GoI in the name of
the President of India (aggregating to 75.00% of the entire paid up share capital), and balance
(25.00%) are owned by the public. The total market capitalisation of SAIL, based on closing price
on July 03, 2019, was Rs.21,352 crore.
NITI Aayog, in its report dated August 02, 2016 recommended a set of central public sector
enterprises for disinvestment. The recommendations included strategic disinvestment of the
three special steel plants of SAIL - Alloy Steels Plant, Salem Steel Plant and Visvesvaraya Iron
and Steel Plant to a technology partner-cum investor with management control transferred to the
private partner. The recommendations for the disinvestment of these units was approved ‘in
principle’ by the Cabinet Committee of Economic Affairs (CCEA) in their meeting dated October
27, 2016.
The Board of Directors of SAIL approved, ‘in principle’, the strategic disinvestment of the special
steel plants in its meeting held on February 09, 2017. Thereafter the Board approved strategic
disinvestment of 100% stake in SSP on June 28, 2019.
As a part of the strategic disinvestment, SSP- Divested Unit will be transferred to the strategic
investor, on a going concern basis i.e. by way of slump sale through Business Transfer
Agreement. The strategic investor will be appointed through a competitive bidding process,
which shall be handled by the Government of India (“GOI”) and its functionaries including, but
not limited to, SAIL and Ministry of Steel.

This Preliminary Information Memorandum (PIM) has been prepared with the purpose of
providing information regarding the Salem Steel Plant (SSP) of SAIL, located at Salem in Tamil
Nadu and solicit Expression(s) of Interest from Interested Bidders for sale of Salem Steel Plant.

1 SAIL Audited financial results FY 2018-19

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Part A - Preliminary Information Memorandum SAIL-SSP

2. COMPANY OVERVIEW

2.1 Introduction
Steel Authority of India Limited (SAIL) is a Maharatna public sector enterprise, incorporated on
January 24, 1973 under the Companies Act, 1956 as a holding company and was later
restructured as an operating company. Presently, the Company owns and operates five
integrated steel plants, a ferro alloys plant and three special steel plants. As a public sector unit,
SAIL comes under the administrative control of Ministry of Steel, GoI. Salem Steel Plant is a
special steels unit of SAIL and produces wider width stainless steel sheets/ coils as well as mild
steel HR Coils.

2.2 Capital Structure of SAIL

The shareholding pattern of SAIL, as on March 31, 2019, is given below:-

Table 2-1: Capital structure and shareholding pattern of SAIL

No. of Equity Amount
Particulars
Shares (Rs. crores)*
Authorised Share Capital 5,00,00,00,000 5,000.00
Issued, Subscribed & Paid-up Share Capital 4,13,05,25,289 4,130.53
- Govt. of India (in name of the President of India) 3,09,77,67,449 3,097.77
- Others (public, depository receipts) 1,03,27,57,840 1,032.76
*Face value of each Equity Share is Rs. 10.00

2.3 Board of Directors of SAIL

The Board of Directors of SAIL as on June 30, 2019 comprised the following members:

Table 2-2: Brief Profile of Board of Directors of SAIL (as on June 30, 2019)
Name & Date of
S. No. DIN PAN Qualification
Designation Birth
Functional Directors
1. Shri Anil Kumar 11.12.1960 03256818 AADPC9882H B. Com (Hons.),
Chaudhary, ACMA, ACS, LLB,
Chairman PG Diploma in
Personnel
Management
2. Dr. G. 18.01.1960 07389419 ADBPV7438F B.E (Mechanical
Vishwakarma, Engineering),
Director, Projects M.E (Environment
& Business Science &
Planning Engineering),
Ph.D.

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Part A - Preliminary Information Memorandum SAIL-SSP

Name & Date of

S. No. DIN PAN Qualification
Designation Birth
3. 01.05.1962 08189837 ACQPR4038R B.Tech
Shri Harinand Rai,
(Metallurgy)
Director ,
Technical
4. Ms. Soma Mondal, 21.04.1963 06845389 AEQPM7503N B.Sc. (Engineering)
Director,
Commercial
5. Shri Atul 06.01.1962 07957068 ABDPS1136P B. Tech.
Srivastava, (Mechanical
Director, Engineering), Post
Personnel Graduate Diploma
in Management
(Human Resource)
6. Shri Vivek Gupta, 06.07.1960 08370793 ADDPG8033B BE (Civil Engg.)
Director (Raw from NIT,
Materials & Allahabad
Logistics)
Government Nominee Directors
7. Shri Saraswati 24.12.1960 07729788 ACYPP2298R Post Graduate in
Prasad, Special Physics
Secretary &
Financial Advisor,
Ministry of Steel,
8. Shri Puneet 13.10.1971 07151526 AKJPK8321K BE (Electronics),
Kansal, Joint MBA (Finance)
Secretary, Ministry
of Steel

Independent Directors
9. Prof. Ashok Gupta 06.06.1957 07342950 AAAPG1166D B.Tech., Ph.D.
10. CA Parmod Bindal 01.10.1962 06389570 AAQPB1314E Chartered
Accountant
11. Smt. Anshu Vaish 04.09.1952 02924346 ABSPV7032L M.A. (History),
M.A. (Economics)
12. Shri Nilanjan 03.08.1955 03026624 ABPPS9220A M.Sc. Physics,
Sanyal M.Phil (Pub.
Admn.), Diploma
in Development
Studies.
13. Dr. Samar Singh 20.06.1960 07725642 AGJPS5943H M.A., Ph.D.
14. Shri Kartar Singh 01.04.1964 07811175 AAHPC6872B B.Com (Hons),
Chauhan M.Com, F.C.A
15. Prof. Narendra 07.04.1955 07938062 AAFPT9809H MA (Economics),
Kumar Taneja Ph D.
16. Shri Krishan 01.03.1956 03476812 AANPG7718G BSc(Engg) -

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Part A - Preliminary Information Memorandum SAIL-SSP

Name & Date of

S. No. DIN PAN Qualification
Designation Birth
Kumar Gupta Mechanical,
MSc(Engg)
Diploma -
Rotodynamics

2.4 Financial Overview

Key financial indicators of SAIL for the past 5 years ended March 31, 2019 are provided below.

Table 2-3: Key financial indicators of SAIL (standalone) – (FY15-FY19)

(Rs. Crore)
Year Ending March 31, 2015 2016 2017 2018 2019
Revenue from Operations 51,149 43,875 49,767 58,962 66,967
Raw material consumed 18,523 17,155 21,126 26,679 32,291
EBITDA 5,586 (2,204) 672 5,184 10,251
Finance Costs 1,454 2,300 2,528 2,823 3,155
Depreciation 1,773 2,402 2,680 3,065 3,385
PAT 2,093 (4,021) (2,833) (482) 2,179
Net fixed assets (including CWIP) 65,365 70,853 73,561 77,007 77,373
Net-worth 43,505 39,196 36,009 35,714 38,152
*FY15 financials are as per GAAP method of accounting whereas FY16 - FY19 financials are according to
Ind AS, hence major differences observed in key financial indicators.

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Part A - Preliminary Information Memorandum SAIL-SSP

3. DETAILS OF THE SALEM STEEL PLANT

Salem Steel Limited was incorporated in the year 1972. Salem Steel Plant was originally operated
under Salem Steel Limited, which was dissolved and the undertaking was transferred to SAIL
pursuant to The Public Sector Iron and Steel Companies (Restructuring) and Miscellaneous
Provisions Act, 1978. The Salem Steel Plant of SAIL primarily produces stainless steel for
domestic industries and export. The plant facility is certified with ISO 9001:2015 for Quality
Management System (QMS), ISO 14001:2015 for Environment Management System (EMS),
Occupational Health and Safety Assessment Series (OHSAS) 18001: 2007 for Health Services, SA
8000:2008 for Social Accountability, ISO 14001:2015 EMS for Township.

Salem Steel Plant has been developed across multiple phases - the first phase comprising of cold
rolling mill (CRM) was commissioned in 1981, an additional CRM was commissioned in 1991,
followed by setting up of a hot rolling mill (HRM) in 1995 and a steel melting shop in 2010.

3.1 Plant Location and Connectivity

Salem Steel Plant is located in the Salem district in Tamil Nadu, 330 km south west of Chennai.
The following map indicates the location of the plant.

Figure 3-1: Location in Tamil Nadu- Salem Steel Plant of SAIL

The connectivity and access details of the plant facility are as under:

Railways : The nearest Railway station is Salem, about 8.3 km from the plant.
Roads : The plant site is well connected by national highway NH 44

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Part A - Preliminary Information Memorandum SAIL-SSP

Seaports : The nearest sea ports are at Chennai (350 km), Cochin (350 km) and Tuticorin (390
km).
Airport : The nearest airports are at Coimbatore (166 km), Bangalore (200 km) and Chennai
(350 km).

3.2 Land
The management of the Company has represented that total area amounts to 3973.08 acres. The
land use allocated to various facilities is as below:

Table 3-1: Allocation of land for the plant and ancillary facilities
S. No. Land use allocated Area (in acres)
1 Plant area 2,762.57
2 Township 801.85
3 Railway siding 183.40
4 Labour colony 69.35
5 Water supply 145.53
6 Land at Yercaud 10.38
Total 3,973.08
Out of the Plant area of 2,762.57 acres, the area within the plant boundary wall is approximately
1,130 acres. In addition, the office complex is constructed on approximately 264.90 acres of land,
comprising administrative building, Human Resources Development Centre (HRDC) and
Computers & Information Technology (C&IT) building, administrative canteen, DC CISF’s
Office, CISF barracks, old construction lab (which is presently used by CMO for storing
converted articles), air separation unit setup by Inox Air Products Ltd, administrative sub-station
and drinking water treatment plant for township.

 Part of the workshop in HRDC has been given on license basis to M/s LLM Appliances
Limited, a conversion agent, for setting up a 500 TPA facility for manufacturing of
utensils, kitchenware and tableware within SSP, vide agreement dated July 2015.
 Approximately 3.26 acres of land has been leased to M/s Inox Air Products Ltd. for
setting up and operating an air separation unit for supply of oxygen, nitrogen and argon
to SSP on BOO basis.

Out of the township area of 801.85 acres, 169.69 acres of land has been leased to the following
entities for setting up various facilities within SSP:

Table 3-2: Details of land leased out of township area

Sl. No Party*
1 Hindustan Petroleum Corporation Limited
2 Bharat Sanchar Nigam Limited (BSNL) –Telephone Exchange
3 State Bank of India
4 Government Mohan Kumaramangalam Medical College

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Part A - Preliminary Information Memorandum SAIL-SSP

5 Employees Housing Society

6 Sri Vijaya Vinayagar Bhaktha Mandali
7 Leasing of 118 houses (appurtenant land and undivided share of plinth area), as per
the ‘SAIL Scheme of Leasing of Houses to Employees 2001 and 2003’
* Certain leases have expired and renewal process is currently underway.

In addition, the township area comprises residential buildings, guest houses, hostels, hospital,
schools, community hall, auditorium, stadium, helipad, TRSS-1 and TRSS-2 substations, sewage
treatment plant and sewage lift station.

The water supply area of 145.53 acres includes Poolampatti Pump House

(including residential quarters), road from Poolampatti to plant site running approximately 28
km in a narrow strip varying between 12 to 18 metres in width. This water supply area also
includes approximately 15 acres of hill poromboke (“Koochikkaradu”) for service reservoir for
storing and distribution of drinking water for the township, situated on a separate parcel of land
located in Maramangalathu Patti village.

3.2.1 Land Proposed to be Divested to SSP – Divested Unit

The management of the Company has stated that out of the total area of 3973.08 acres, area
aggregating to 1708.10 acres is proposed to be disinvested as part of the Transaction, as detailed
subsequently, whereas the balance area of 2264.98 acres would be retained by SAIL.

1. Out of the total plant area of 2,762 acres approximately, approximately

(a) 1,130 acres of land has been identified which would form part of the unit to be
divested on long term perpetual lease basis, along with the plant assets located
on it.

A land parcel of 934 acres approximately out of the said 1130 acre land was
acquired for and on behalf of the Union Government under the Land Acquisition
Act, 1894 for the purpose of setting up a steel plant. The remaining 196 acres of
land (approximately) out of the said 1,130 Acres were handed over by the State
Government to the Union Government for setting up of a steel plant.

(b) Area of 264.90 acres over which office complex area is constructed (including air
separation unit which has been setup by M/s Inox Air Products Ltd.) would be
transferred to the SSP – Divested Unit on long term perpetual lease basis, subject
to the existing leasehold rights over an area of 3.26 acres granted to third parties.
Out of the said 264.90 acres, approximately 251.90 acres were acquired for and on
behalf of the Union Government under the Land Acquisition Act, 1894 for the
purpose of setting up a steel plant. The remaining 13 acres of land

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Part A - Preliminary Information Memorandum SAIL-SSP

(approximately) out of the said 264.90 Acres were handed over by the State
Government to the Union Government for setting up of a steel plant.
2. Out of the total area of 145.53 acres over which water supply related infrastructure is
built, comprising Poolampatti Pump House (including residential quarters), road from
Poolampatti to plant site and service reservoir for storing and distribution of drinking
water for the township, 129.80 acres would be transferred to the SSP – Divested Unit on
long term perpetual lease basis.

Out of the said 129.80 acres, approximately 104.53 acres were acquired for and on behalf
of the Union Government under the Land Acquisition Act, 1894 for the purpose of setting
up a steel plant. The remaining 25.27 acres of land (approximately) out of the said 129.80
Acres were handed over by the State Government to the Union Government for setting
up of a steel plant.

3. Area of 183.40 acres over which railway siding is built would be transferred to the SSP –
Divested Unit on long term perpetual lease basis.
Out of the said 183.40 acres, approximately 157.40 acres were acquired for and on behalf
of the Union Government under the Land Acquisition Act, 1894 for the purpose of
setting up a steel plant. The remaining 26 acres of land (approximately) out of the said
183.40 acres were handed over by the State Government to the Union Government for
setting up of a steel plant.

4. Other utilities and facilities i.e. hospital, guest houses, hostels, telephone exchange,
community hall and residential quarters, out of the township area, would be provided to
SSP – Divested Unit on lease/ leave and license basis at market determined rates, for a
period of 5 years.

Note: It is clarified that the land area stated in this PIM/EOI Request is subject to actual measurement.

3.3 Plant and Machinery

3.3.1 Equipment Details – Owned by SAIL
The plant comprises of three main units- Steel Melting Shop (SMS), Hot Rolling Mill (HRM) and
Cold Rolling Mill (CRM). The major components of plant and machinery, along with capacity are
listed below:

Table 3-3: Details of plant and machinery

S. No. Equipment Unit Capacity Commissioned/
year
I Steel Melting Shop
1 Electric Arc Furnace (EAF) MT per heat 55 Commissioned in

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S. No. Equipment Unit Capacity Commissioned/

year
2 Argon Oxygen MT per heat 60 2011
Decarburization (AOD)
3 Ladle Furnace (LF) MT per heat 60
4 Slab caster MT per year 1,80,000
Capacity- Steel Melting MT per year 1,80,000
Shop
II Hot Rolling Mill
1 Reheating furnace: Stainless MT per hr 55 Mill commissioned
steel in 1995
2 Reheating furnace: Carbon MT per hr 70
steel
3 Steckel Mill MT per year 3,64,080
4 Roll Grinding Machines -2 MT per year 3,70,000
nos.
Capacity- Hot Rolling Mill MT per year 3,64,080
III Cold Rolling Mill
1. Annealing and Pickling Line 6,80,000
(3 nos) CRM-I (Z Mill)
2. Bell Annealing Furnaces 24,000 commissioned in
(BAF) – 3 nos. 1981, CRM-II (Z
3. Z Mill I + Z Mill II 96,000 Mill) commissioned
4. Z Mill III MT per year 1,10,000 in 1991; Z Mill 3
5. Tension Levelling Line 70,000 commissioned in
6. Coil Buildup Line 1,20,000 2017
7. Skin Pass Mill 1,70,000
8. Rotary Polisher 1,000
9. Coin blanking line 3,600
Capacity- Cold Rolling Mill 1,46,028
IV Utilities
Fluidized Bed Combustion Boiler, Air Compressor, Feed water treatment

3.3.2 Equipment Details – On Build, Own & Operate (BOO) basis

Cryogenic air separation unit – The plant has entered into an agreement with INOX Air Products
Limited for supply of oxygen, nitrogen and argon for a period of 15 years from date of
stabilization i.e. January 22, 2011, extendable by 5 years on mutual agreement.

The land for the facility (admeasuring to 3.26 acres) has been leased to the contractor, INOX Air
Products Limited. For the contract period, the contractor would be the owner of the civil
structures, building and production facility. A fixed facility charge is payable by SSP to the
contractor on a monthly basis.

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Part A - Preliminary Information Memorandum SAIL-SSP

The base price for gases is based on the base cost of power and would vary depending on
variance in the base cost of power, linked to a pre-defined price variation formula. The total price
payable would include taxes and variable components associated with increase in power tariffs.

The contracted quantity of gases is listed below.

Table 3-4: INOX plant- Contracted quantity of Gases

S.no. Gases Quantity (Nm3/day)

1. Oxygen 75,600
2. High Pressure Nitrogen 28,800
3. Argon 11,200
The existing agreement with INOX Air Products Ltd. would be assigned to SSP – Divested Unit,
subject to prior written consent of INOX Air Products Ltd. and existing leasehold rights of INOX
Air Products Ltd.

3.3.3 Equipment Details – On License basis

The Company has entered into an agreement with M/s LLM Appliances Limited, a conversion
agent, for setting up a Strategic Business Unit (SBU) for conversion of approximately 500 tonnes
per annum of Cold Rolled Stainless Steel (CRSS) into utensils, kitchenware and tableware as per
the requirements of the Company, within SSP, vide agreement dated July 2015, and the SBU
commenced production in April 2016. The required space has been provided to the conversion
agent on License basis at a nominal rent. The contract is for an initial period of 3 years, and is
extendable for a further period of 3 years upon mutual consent. The agreement has been
extended upto September 30, 2019.

The existing agreement with LLM Appliances Limited would be assigned to the SSP – Divested
Unit subject to prior written consent of LLM Appliances Limited.

3.3.4 Manufacturing Process

At Steel Melting Shop, the production process begins with the melting of scrap and ferro-alloys
in the Electric Arc Furnace and molten metal is tapped at about 1640 degree celsius in a charging
ladle. In the next stage, the molten metal from Electric Arc Furnace is poured into Argon Oxygen
Decarburizing converter for refining. Required ferro-alloys are added to bring the melt within
the desired specification. To facilitate sequence casting as well as finer adjustment of composition
and temperature required for casting, the liquid metal is brought to the Ladle Furnace. From
Ladle Furnace the melt with desired composition and required super heat is sent to the Slab
Caster for casting of slab of pre-fixed width in the range of 900-1300 mm and 175 mm thickness.

At Hot Rolling Mill, stainless slabs from SMS and carbon steel slabs received from other units of
SAIL, are charged into re-heating furnace, heated to specified temperatures, passed through a
primary de-scaler and rolled into a 25 mm thick transfer bar in the roughing mill. It is then fed to

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Part A - Preliminary Information Memorandum SAIL-SSP

the Steckel Mill which rolls the strip and the hot rolled strip then passes through a laminar
cooling system to the down coiler where it is coiled and strapped automatically.

In the Cold Rolling Mill, the hot rolled coils are annealed in the Annealing and Pickling Line to
soften them, then shot blasted to remove scales and thereafter pickled with hydrofluoric and
nitric acids. The white coils are cold rolled in the Sendzimir Mills (Z Mills), where the thickness
is reduced to the desired level. The CRM is fully computerized to ensure precise flatness and
dimensional tolerances. After the cold rolling, the coils are again processed through the
Annealing and Pickling Line to soften the hardness of the coils. The processed coils are sent to
the Slitting Line for making coils or to the Shearing Line for making sheets.

The saleable steel capacity at SSP is 3,39,172 MTPA. The stainless steel is sold in Hot Rolled
Stainless Steel (HRSS), Hot Rolled Annealed and Pickled (HRAP) and Cold Rolled Stainless Steel
(CRSS) form. After commissioning of the third Z Mill in October 2017, the balance quantity of
steel, i.e. 1,93,144 MT is proposed to be sold as HRSS, HRAP and carbon steel (in form of hot
rolled coils or sheets). The manufacturing process is represented in the following figure.

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Part A - Preliminary Information Memorandum SAIL-SSP

Figure 3-2: Overview of the manufacturing process

3.3.5 Capacity Expansion

A capital expenditure programme was initiated in the year 2006, for capacity expansion of the
steel making facility of the plant. Details of steel making facility pre- and post-expansion are
given in the table below:

Table 3-5: Capacity expansion- Salem Steel Plant of SAIL

S. No. Unit- Capacity -> Date of commissioning Capacity (MT per annum)
Prior to expansion Post expansion
1. Crude steel February 2011 - 1,80,000
2. Hot rolled coils July 2009 1,86,000 3,64,080
3. Saleable stainless December 2010 1,75,000 3,39,172
steel
a) HRAP December 2010 1,10,000 1,93,144
b) CRSS October 2017 66,600 1,46,028

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Part A - Preliminary Information Memorandum SAIL-SSP

The Company had been sanctioned a structured package of assistance by the Government of
Tamil Nadu under the New Industrial Policy 2007 for the expansion project of Salem Steel Plant
viz.
a) Soft loan against VAT and CST for 14 years from the date of commercial production (i.e.
October 01, 2011) at nominal interest rate of 0.10% per annum. SSP has applied for a soft
loan for the eligible amount of Rs. 219 crores for the period October 2011 to March 2017.
b) Capital Subsidy of Rs. 1.50 crores, which is yet to be received.
c) Electricity Tax exemption for power purchased for 5 years from the date of commercial
production (i.e. October 01, 2011). SSP has received Electricity Tax refund amounting to
Rs. 8 crore while refund of Rs. 11.32 crores is yet to be received from TANGEDCO
d) Environment protection infrastructure subsidy of Rs. 30 lakhs for establishing acid
recovery system, which is yet to be received.
Government of Tamil Nadu vide G.O. dated November 16, 2018 have certified that SSP had
made the requisite investment in eligible fixed assets for expansion of Salem Steel Plant and is
eligible for Structured Package Assistance. SSP has applied to State Industries Promotion
Corporation of Tamil Nadu Ltd on November 26, 2018 for issue of Eligibility Certificate (EC),
and the process for same is under progress.
The Company has incurred an expenditure of Rs. 2,384.42 crore towards the capacity expansion
project as on December 31, 2019. The capex incurred for the expansion project has been funded
by internal accruals of about Rs. 1355.40 crore and term debt of Rs. 1029.02 crore which had been
raised by the Company at the corporate level and finance costs associated with the debt are being
allocated to SSP.

3.4 Intangible Assets - Trademark

‘SAIL SALEM STAINLESS’ along with SAIL logo is a registered trademark. As per the
registration details the trademark is under class 21 i.e. associated with domestic utensils,
kitchenware and tableware, made of metals and particularly made of stainless steel and under
class 6 i.e. associated with rolled and or otherwise fabricated metallic products (but not of
precious metals) and particularly from stainless steel.

SAIL proposes to retain and use the trademark till it continues to hold the products and its
services. However, Successful Bidder will have the liberty to approach the appropriate authority
for any trademark for its products and services other than SAIL name and/or SAIL logo in any
form.

3.5 Plant infrastructure

3.5.1 Water
The estimated water consumption for plant operations is about 2.0 MGD for the rated capacity of
production and for township is about 0.3 MGD. SSP has a government order for drawl of water

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Part A - Preliminary Information Memorandum SAIL-SSP

from river Cauvery at the rate of 3.5 million gallons per day (MGD). SSP has applied for renewal
of water drawal from river cauvery for 3.5 MGD, which was valid upto March 31, 2019. The
proposal is under renewal with Public Works Department, Govt. of Tamil Nadu. Water is being
pumped from river Cauvery from Poolamatty at about 15 km in the downstream of Mettur Dam.
Water is pumped through 28 km length of pipe line and is stored in two balancing reservoirs
(approximately 8 acres inside the plant area) and distributed to the process user points and
township from make-up water pump house located near the balancing reservoirs.

A ‘Shared facilities and support services’ agreement would be executed between SAIL and the
SSP – Divested Unit, for supply of water by SSP-Divested Unit to the township area. Salient
features of the said agreement are as under:

 Township water supply, township water treatment plant in office complex area would
have to be maintained by SSP – Divested Unit and distribution from there on and other
facilities for water distribution would be under SAIL.
 While sewage treatment facilities in township area will be under SAIL, treated sewage
water from township which is presently being fed to teak plantation inside plant area
will be continued.

Further details regarding the said agreement shall be provided in the CIM.

3.5.2 Power Supply

During FY 2017-18, the power consumption for plant operations was 191.275 Million including
township consumption of 1.594 Million Units. Electrical Power is being supplied to SSP plant
area and township by Tamil Nadu Generation and Distribution Corporation (TANGEDCO)
through two 230 kV feeders / Extra High Tension Service Connections (EHTSC) with a permitted
maximum demand of 45000 kVA respectively, for HRM, CRM and SMS Utilities and other
facilities. A separate service connection for Electric Arc furnace in SMS with a permitted
maximum demand of 39000 kVA also forms part of the TANGEDCO source through the two 230
kV feeders. In addition to this there is a separate 22 kV Service Connection SC 57 with a
permitted Maximum Demand of 500 kVA, for Poolampatty Head Works that pumps water to the
SSP’s facilities.

The 230 kV feeders are terminated in two main receiving substations at the plant. These
substations have three transformers for receiving the incoming line of 230 kV, stepping it down
to 33 kV for supply to various units of CRM, HRM, auxiliaries of SMS and to the township. There
are several downstream Load Block Sub-stations (LBSS) and other sub-stations for supplying
power to the Electric Arc Furnace and Ladle Furnace of Steel Melting Shop and for distributing
power to aforementioned units and the township at appropriate voltage levels.

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Part A - Preliminary Information Memorandum SAIL-SSP

Works are planned for two of the transformers at SSP, for installation of nitrogen injection fire
protection system, pursuant to observation of CEA.

From WRSS, over-head 11 kV Ring Mains system starts as two feeders. The total running length
of this 11 kV Ring mains system is approximately 28 km, 19 km inside plant boundary and 9 km
outside plant boundary (passing through balance plant area and township area). Through this
Ring Mains system, power is being supplied to various establishments outside the plant
boundary such as administration building, C& IT Building, Air separation unit, establishments
and facilities in the township area etc.

There is a separate 22 kV substation in Poolampatty Head Works with two transformers for
supplying power to the various pumps and residential quarters in Poolampatty Head works.

A standby arrangement for emergency power is provided in form of six diesel generator sets,
dedicated to administrative and work offices, steel melting shop, hot rolling mill, CRM and other
areas of the Plant i.e. SSP Township Hospital, Stainless House and for Poolampatty water works
etc.

SSP buys power from the Inter-state Power Exchange (IEX) to offset the tariff rates of
TANGEDCO, the volume depending on the unit rates prevailing on the exchange. 13.65 MW of
power from SAIL/NTPC SAIL Power Company Limited (NSPCL) captive unit in Bhilai to the
SSP of SAIL is also being availed under open access. SAIL has signed two Power Purchase
Agreements (PPAs) with PTC India Ltd. for purchase of power through exchange with effect
from July 1, 2017. The two agreements are valid till November 30, 2019 and December 31, 2019
respectively. The two PPAs with PTC India Ltd. would be assigned to the SSP – Divested Unit
subject to prior written consent of PTC India Ltd.

Supply from NSPCL is through Medium Term Open Access (MTOA) agreement for wheeling of
power with PGCIL from April 1, 2019 to March 31, 2020. Post the disinvestment, wheeling of
power from NSPCL’s captive unit in Bhilai would be discontinued. SSP- Divested Unit may
consider procuring power from the exchange by entering into agreements with trading partner
or from TANGEDCO, as deemed appropriate.

A ‘Shared facilities and support services’ agreement shall be executed between SAIL and SSP –
Divested Unit for maintenance of power related infrastructure. Salient features of the said
agreement are as under:

 The High Tension power source to the township area through Ring Mains and sub-
stations in township may be maintained by SSP- Divested Unit.
 Low Tension (LT) power distribution and maintenance in township would be under
SAIL.

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Part A - Preliminary Information Memorandum SAIL-SSP

Further details regarding the said agreement shall be provided in the CIM.

3.5.3 Railway Sidings

The existing railway sidings have been constructed by the Southern Railway Administration for
SSP pursuant to a memorandum of agreement between SAIL and the Southern Railway
Administration. The distance between Salem Junction Goods shed to SSP marshalling yard is 9.5
km. The railways track is maintained by the plant’s wing for track maintenance, which employs
labour on contractual basis. Salem Junction Goods shed to SSP marshalling yard is fully
electrified and maintained by Railway Electrical section. About 350 metres of SSP railway track
which is inside SSP junction area is being maintained by Indian Railways on payment basis
every year.

Right to use the railway sidings under the existing arrangement would be assigned to the SSP –
Divested Unit subject to prior written consent of the Southern Railway Administration.

3.5.4 Telephone Exchange

There are two intercom exchanges presently being maintained by Bharat Sanchar Nigam Limited
(BSNL). The numbers of lines in operation are approximately 575 lines inside the plant and 250
lines for the township. The exchanges comprise power back up infrastructure. Both exchanges
are configured as separate remote service units (RSU) and technically can be independent.

The services of BSNL have been hired for the maintenance of the telephone exchanges, for a
period of 1 (one) year starting from August 23, 2018. As per the work order, the infrastructure of
the telephone exchange is being provided to BSNL, by SSP, free of charge. The key services to be
provided under the work order are listed hereunder:

 Operations and maintenance of existing telephone exchanges

 Maintenance of telephone cables and instruments in plant, township and hospital areas
 Provision of new telephone lines whenever new connection is established
 Maintenance of infrastructure for power back up

The existing agreement with BSNL would be assigned to the SSP- Divested Unit subject to prior
written consent of BSNL.

3.6 Raw Material Sourcing

The raw material primarily comprises scrap metal, alloys, flux and fuel. The quantities consumed
during FY 2015- FY 2019, are provided under the following table.

Table 3-6: Consumption of raw materials at SSP during FY 15-FY 19

S. Raw Material Consumption (MT)
No.
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

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Part A - Preliminary Information Memorandum SAIL-SSP

S. Raw Material Consumption (MT)

No.
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
1. Slab (Mild Steel and 2,43,422 2,26,155 2,62,944 1,13,828 1,83,517
Stainless Steel)
2. Scrap 1,00,019 1,01,748 88,720 76,256 95,541
3. Ferro alloys 5,004 4,628 3,937 27 54
4. Ferro chrome 29,331 30,661 24,011 23,198 26,746
5. Ferro Manganese 3,095 1,733 1,882 2,451 2,437
6. Silico Manganese 6,003 4,019 4,251 4,640 5,613
7. Ferro Silicon 4,907 4,568 3,875 3,397 3,527
8. Nickel 715 256 648 792 1,191
9. Copper 550 316 390 410 534
10. Lime (flux) 15,038 14,235 13,533 13,071 13,602
11. Dolomite (flux) 11,052 10,176 8,945 8,561 8,825
12. Liquefied Petroleum Gas 22,111 21, 108 19,512 15,323 20,489
(LPG)
13. Furnace oil 1,198 1,133 1,620 727 842
The sources of procurement for each of the raw materials are listed below.

Table 3-7: Raw materials, quantity and sources

S. No. Raw Material Sourced from Transportation
1. Slab Other units of SAIL (Bhilai, Bokaro, Transported to the
Rourkela and ASP) plant by rail
2. Raw scrap Traders based out of India, UAE, The scrap is received
Singapore and the UK, specializing at and transported
on metal (steel, iron and iron ore) from Chennai port to
trade and manufacturing. ‘Revert the storage yard at
scrap’ which is the plant return the plant via road.
scrap, is collected from the rolling
mills
3. Ferro alloys
i. High Carbon Ferro
Multiple suppliers based out of
chrome
Kolkata, Chennai Bangalore, and
ii. High Carbon Ferro
other major centres in India.
Manganese Transported to the
Further, high carbon Ferro Chrome
iii. Low Carbon Ferro plant by road
is also imported and high carbon
Chrome
Ferro Manganese is also sourced
iv. Medium Carbon Silico
through inter-plant transfer.
Manganese
v. Ferro Silicon
4. Nickel Multiple domestic and international Transported to the
suppliers plant by road
5. Copper Multiple domestic suppliers Transported to the
plant by road
6. Lime (flux) Traders located in East Asia (Hong Received at Chennai

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S. No. Raw Material Sourced from Transportation

Kong) port and transported
to the plant by road
7. Dolomite (flux) Purchased from local traders, Received at and
sourced from Andhra Pradesh and transported from
imported from East Asia Chennai port to the
storage yard at the
plant via road.
8. Liquefied Petroleum Multiple suppliers based out of Transported to the
Gas (LPG) Coimbatore plant by road
9. Furnace oil Multiple domestic suppliers Transported to the
plant by road
Note: Presently, SSP procures conditioned slabs from Bhilai Steel Plant and Rourkela Steel Plant
of SAIL. However, there is no long term arrangement for procurement of the slabs from these
units. Post the disinvestment, the SSP - Divested Unit may consider procuring the slabs from
SAIL or any other suitable source, as deemed appropriate.

3.7 Plant Performance and Product Mix

3.7.1 Capacity Utilization
The existing capacity and its utilization at the plant are listed under the following table:

Table 3-8: Production details and capacity utilization

(MT /annum)

S. Production Capacity FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

No.
1. Crude steel (input) 1,80,000 1,24,874 1,19,671 1,07,511 96,532 1,16,775
2. Hot rolled coils 3,64,080 3,57,904 3,42,924 3,70,217 2,07,113 2,87,094
Saleable steel 3,39,172 3,60,399 3,38,571 3,66,925 1,96,667 2,76,899
Capacity utilization 106 100 108 58 82
(%)
1. Carbon steel 2,28,413 2,20,681 2,56,430 1,11,220 1,78,240
2. Stainless steel 1,31,986 1,17,890 1,10,495 85,447 98,659
a) HRSS 68,066 48,161 40,107 22,721 36,562
b) CRSS 63,920 69,729 70,388 62,726 62,097

3.7.2 Product Mix

SSP produces a wide range of hot rolled / cold rolled coils and cut lengths (sheets) in austenitic,
ferritic and martensitic grades of stainless steel conforming to BIS, ASTM and various other
specifications in a variety of sizes and finishes. The broad specifications for the steel products are
listed below.

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Table 3-9: Product specification- stainless steel manufactured by SSP

S. No. Stainless Steel Unit Value/ Range
1. Hot rolled Stainless Steel
Thickness mm 2.5 - 8.0
Width mm 750 – 1275
Coil inner diameter mm 762/610
Condition mm Annealed and Pickled
Edge mm Mill Edge
Sheet mm 1500 to 6300
2. Cold rolled Stainless Steel- coil
Thickness mm 0.3 to 6.00
Width mm 1000, 1250
Coil inner diameter mm 406, 508 or 610
3. Cold rolled Stainless Steel- sheet/ plate
Thickness mm 0.5 to 6.00
Width mm 1000, 1250
Length mm 1500, 2000, 2500, 3000, 3500,4000
Standard Grades
301, 301L, 304, 304L, 309S, 310S, 316, 316L, 321, SSLNA, SSLNB, SSLNM, SSLNQ,
SSLN1, SSLN4, 204Cu, 409, 409L, 409M, 410S, 420, 430, 439, 441
Standard Finishes
No0, No1, CR, 2D, 2B, No3, No4, No8
Special finishes
Moon Rock, Honeykomb, Stripe, SlipFree etc.

Commonly known as Salem Stainless, the products manufactured by SSP are employed in
industrial sectors such as dairy and food processing, chemical and fertilizer, heavy engineering,
railways, automobiles, bulk solid handling, power and building construction. Some prestigious
structures where Salem Stainless has been used are- Petronas Twin-Towers, Malaysia, retractable
roofing at Melbourne Tennis Stadium, Australia and Parliament House Library complex, New
Delhi. The coaches of the Jan–Shatabdi Express trains are furnished with modular rail marts and
sub-pantries made entirely of ‘Salem Stainless’. SSP also supplies 409M, a special grade of
stainless steel sheets to Indian Railways for fabrication of wagons for handling coal.

Key customers

SSP regularly participates in the tenders floated by government departments such as Railways
Board, Railway Coach Factories and Railway workshops, mints, public sector units like BHEL,
NTPC or any other such companies, for supply of its products.

Sales volume

The historical sales volumes are provided below.

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Part A - Preliminary Information Memorandum SAIL-SSP

Table 3-10: Sales volume - SSP

(MT /annum)

S. No. Production FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

1. Stainless steel* 1,32,036 1,10,151 1,11,668 82,398 82,019
2. Carbon steel 2,35,941 2,28,911 2,51,653 1,17,910 1,68,020
Total 3,67,977 3,39,134 3,63,321 2,00,308 2,50,039
*Includes converted articles

3.8 Senior Management Personnel in SSP

SSP of SAIL has a team of qualified and experienced professionals for managing its operations.
Brief details of the senior management personnel at SSP are given below.

Table 3-11: Senior Management Personnel as on June 18, 2019

Years of
S. No. Name Designation Qualification
Experience
1. Shri Sanjeev Taneja Executive Director BE Metallurgy 34
2. Dr Bhavana Venkata General Manager , F&A B.Tech, ICWA, PG 33
Srinivas Diploma in
Management,
PHD
3. Shri Chidambaram A General Manager BE Mechanical 34
incharge, Works
4. Shri Muthu Kumar T General Manager, Mills BE Metallurgy 31
& Quality
5. Shri Lakshmi General Manager , Steel BE Electrical & 36
Narayanan S & Maintenance Electronics
6. Dr. Rahul Mukherjee Director (M&HS) MBBS, 24
MS(surgery)

3.9 Human Resource Strength

The total manpower employed at SSP as on June 18, 2019 was 1775 with 941 permanent
employees and 834 contractual staff. The permanent staff comprises executives and non-
executive employees as detailed below:

Table 3-12: Details of the permanent employees as on June 18, 2019

Particulars No. of Employees
Works Non Works
Executive 138 51
Non-Executive 686 66
Total 824 117
The average age of employees at the plant is ~46 years. The retirement age of the employees is 60
years.

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Part A - Preliminary Information Memorandum SAIL-SSP

Out of 834 contractual staff, 333 are on labour contracts as on June 18, 2019 and engaged by Dr
BR Ambedkar Stainless Industrial Co-operative Society. The average number of staff on job
contracts is around 501.
Unions
The following is a list of the registered unions at the Salem Steel Plant.

Table 3-13: List of Registered Unions at SSP

S. No. Union (Political Affiliation) Registration no. Registered Date

1. Salem Steel National Employees Union 221/SLM 07.10.1977
(SSNEU-INTUC)
2. Steel Plant Employees Union (SPEU-CITU) 267/SLM 22.12.1978
3. Salem Urukkalai Thozhilalar Munnetra 487/SLM 02.02.1985
Sangam (SUTMS-LPF)
4. Salem Irumbalai Anna Thozhilalar Sangam 651/SLM 23.02.1990
(AIADMK)
5. Salem Steel Plant Pattali Thozhilalar 681/SLM 12.10.1990
Sangam (PTS-PMK)
6. Salem Steel Scheduled Caste and 712/SLM 31.12.1991
Scheduled Tribe Employees Union (LLF)
7. Bharathiya Salem Steel Employees Sangam 1391/SLM 30.08.2012
(BMS)

Out of these, Salem Steel National Employees Union and Steel Plant Employees Union are
recognized unions.
The details on number and category of employees to be transferred to the SSP - Divested Unit
would be provided subsequently in the CIM/ RFP.

3.10 Statutory Permits and Licenses

The key statutory approvals and clearances required for the operation of SSP and their status are
summarized below:

Table 3-14: Clearances and approvals- SSP

Act/ Rule and action Compliance Renewal
S. No. Authority
point status period
Applied for
renewal for 2019-
The Water Act- renewal Tamil Nadu Pollution
1. 20. Under Annual
of consent Control Board (TNPCB)
consideration
with TNPCB.
The Water Cess Act-
submission of monthly Complied up to
2. TNPCB Monthly
water consumption May 2019
returns
3. The Air Act- renewal of TNPCB Applied for Annual

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Part A - Preliminary Information Memorandum SAIL-SSP

Act/ Rule and action Compliance Renewal

S. No. Authority
point status period
consent renewal for 2019-
20. Under
consideration
with TNPCB.
Environmental
statement for
The Environment 2017-18
Environmental
Protection Rules- submitted to
statement- TNPCB;
submission of TNPCB Six
Compliance report- Annual;
environmental statement monthly
4. Ministry of six
for previous FY; compliance
Environment, Forests monthly
submission of six monthly report to MoEF
and Climate Change
compliance report to &CC submitted
(MoEF & CC)
MoEF & CC in Dec 2018.
(Next due in
June 2019)
The Hazardous Wastes Once in 5
(Management, Handling years.
Valid up to June
5. and Transboundary TNPCB Applied
2019.
Movement) Rules and for
amended upto 2010 renewal.
Once in 5
years.
Government Order for Valid up to
6. Govt. of Tamil Nadu Applied
water drawl March 2019.
for
renewal.
Public Liability Insurance Valid up to June
7. -- Annual
(for all units of SAIL) 2020
Required
Environmental Clearance Obtained on during
8. MoEF
for project expansion April 2008 project
expansion
Factory License- Under Joint Director of
Renewed till
9. Tamil Nadu Factories Industrial Safety and Annual
December 2019.
Rules 1950 Health, Salem
The Electricity Act 2003, Central Electricity Valid till October
10. -
Electricity Rules 2005 Authority 2019
Stamping of Weighing
Machines used in the
Plant – Under The Statutory authority Approval up to
11. One year
Standard of Weight & under the Act September 2019
Measures Act 1976 and
2007
Fluidised Bed Boiler Regulation Act Valid up to
12. Annual
Combustion Boiler No. 1 1950, Rule-389 November 2019

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Part A - Preliminary Information Memorandum SAIL-SSP

Act/ Rule and action Compliance Renewal

S. No. Authority
point status period
– License Renewal

Fluidised Bed Boiler Regulation Act Valid up to

13. Combustion Boiler No. 2 Annual
1950, Rule-389 November 2019
– License Renewal

Oil Fired Boiler- License Boiler Regulation Act Valid up to

14. Annual
Renewal 1950, Rule-389 March 2020
Petroleum Act – 1934,
Fuel Oil storage- License Valid up to
15. Article 6 of Sch- 1 and 3 years
Renewal December 2019
Rule 142
Petroleum Act – 1934,
Diesel storage of auto Valid up to
16. Article 5 of Sch- 1 and 3 years
garage- License Renewal December 2019
Rule 142

Diesel storage Valid up to

17. Poolampatty Water Petroleum Act, 1934 3 years
December 2020
Works- License Renewal
SMPV Rules (Unfired) Valid up to
18. LPG- License Renewal 3 years
1981, Rule 49 and 50 September 2020
Tamil Nadu Factories Valid up to
19. Pressure Vessels 4 years
Act 1950, Rule 56 December 2022

Renewal of Repairer’s The Standard of

Renewed till
20. license for Weighing Weights & Measures 5 years
31.12.2023
Machines Act 1976& 2007.
Petroleum and
Renewal of License for Explosives Safety Valid up to
21. Storage of Diesel for 6 10 years
Organization December 2024
MW DG Set (Petroleum Act, 1934)

3.11 Safety and Quality Control

Safety and Fire services

The Safety Engineering Department governs the industrial safety to be followed at the plant. The
department also controls and maintains records of industrial accidents (both Reportable and
Non-reportable accidents) as per the Factories Act. The department inspects and gives safety
clearance to the contract labor prior to starting any contractual work. All statutory requirements
and records are maintained by the department. The department procures and issues personal
protective equipment such as safety shoes, goggles, ear muff, face shield, aprons, helmet and
hand gloves.

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Part A - Preliminary Information Memorandum SAIL-SSP

The Fire Services carries out the fire-fighting function at the plant. The Services regularly check,
refill, inspect, and ensure healthiness and working condition of the various fire extinguishers.
The unit is presently under the Central Industrial Security Force (CISF) under the Central Home
Ministry and the fire services personnel are also CISF employees.

SSP is certified with ISO 14001:2004 for Environment Management System (EMS), OHSAS 18001:
2007 for Health Services, SA 8000:2008 for Social Accountability. The township is also certified
with ISO 14001:2004 EMS.

Quality control

Total Quality Management (TQM) department coordinates with all the other departments in
implementation of various Management Systems like QMS, EMS and Occupational Health and
Safety Assessment. It coordinates in quality circle activities and employees suggestion schemes.
The head of TQM is the Management Representative (MR) for all the ISO and OHSAS Systems.
TQM governs all the Internal and external audits with respect to the various ISO systems.

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Part A - Preliminary Information Memorandum SAIL-SSP

4. FINANCIAL PERFORMANCE OF THE SALEM STEEL

PLANT

4.1 Profit and Loss Statement

Table 4-1: P&L - SSP of SAIL

Rs. crore
Year Ending March 31, 2015 2016 2017 2018 2019
Revenue:
From Operations 2,211.27 1,775.67 2,022.84 1,350.44 1,693.08
Other 7.72 7.95 5.11 4.99 4.44
Stock transfer from other units 9.10 11.25 9.52 12.7 7.63
Total Revenue 2,228.09 1,794.87 2,037.47 1,368.13 1,705.15
Expenses:
Raw material consumed 1,413.97 1,069.72 1,091.86 854.16 1,365.88
Total Expenses 2,374.77 2,036.25 2,053.61 1,377.61 1,762.42
PBDIT (146.68) (241.38) (16.14) (9.48) (21.27)
Finance Costs 105.54 128.08 120.22 98.83 137.61
PBDT (252.22) (369.46) (136.36) (108.31) (158.88)
Depreciation 103.16 91.83 96.31 95.74 99.23
Add: Prior period Adjustments - - - 0
Profit before exceptional and (355.38) (461.29) (232.67) (204.05) (258.11)
extraordinary items
Add: Exceptional items - - (2.32) (7.02) (0.89)
PBT (355.38) (461.29) (234.99) (211.07) (259.00)

 The finance costs indicate the interest cost of the debt taken for capital expenditure incurred
and working capital in SSP. The debt is raised by SAIL at the corporate level and the interest
costs are allocated to SSP.
 It is clarified that no debt is proposed to be transferred to the SSP - Divested Unit.

4.2 Balance Sheet

Table 4-2: Balance Sheet- SSP of SAIL

Rs. crore
Year Ending March 31, 2015 2016 2017 2018 2019
Sources of funds
Shareholder's funds:
Equity - - - - -
Reserves & Surplus (2,041.93) (2,527.12) (2,769.15) (2,959.39) (3,217.99)
Net-worth (2,041.93) (2,527.12) (2,769.15) (2,959.39) (3,217.99)

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Part A - Preliminary Information Memorandum SAIL-SSP

Rs. crore
Year Ending March 31, 2015 2016 2017 2018 2019
Borrowed Funds:
Long term borrowings - 92.93 85.76 77.89 69.25
Deferred Tax Liabilities (Net) - - - -
Long-Term Provisions 57.65 59.20 58.65 40.52 54.05
Other Long Term Liabilities - 6.76 5.11 3.99 4.15
Total: Liabilities (non-current) 57.65 158.89 149.52 122.40 127.45

Short-Term Borrowings 1.92 1.14 0.55 0.42 1.48

Trade Payables 78.55 133.68 75.44 127.4 127.37
Other Current Liabilities 173.17 210.95 185.91 167.63 149.11
Short term provisions 30.78 30.04 47.00 43.32 32.79
Inter unit current account 6,885.48 6,512.06 6,767.21 6,406.71 7,590.46
Total Current Liabilities 7,169.90 6,887.87 7,076.11 6745.48 7,901.21

Total: Sources of funds 5,185.62 4,519.64 4,456.48 3,908.49 4,810.67

Use of funds
Non-current assets
Fixed Assets: Tangible 1,927.08 1,951.55 1,855.86 1,953.34 1,866.59
Fixed Assets: Intangible 0.08 0.03 - 0.59 0.46
Capital work in progress 133.89 180.56 190.11 3.7 0.23
Non-current investments - - - - -
Long term loans and advances 35.38 8.14 6.94 5.75 4.96
Other non –current assets 0.15 31.92 31.39 19.58 12.49
Deferred Tax Assets (Net) - - - - -
Total: non-current assets 2,096.58 2,172.20 2,084.30 1,982.96 1,884.73

Current assets
Inventories 866.17 617.27 405.95 432.25 913.57
Trade Receivables 1.81 1.46 0.18 0.1 0.10
Short-Term Loans and 16.63 4.35 3.89 2.81 3.48
Advances
Other Current Assets 55.97 61.47 58.54 39.61 53.20
Cash and cash equivalents 1.11 1.22 1.30 1.34 1.41
Inter unit current account 2,147.35 1,661.62 1,902.32 1,449.42 1954.18
Total: Current Assets 3,089.04 2,347.39 2,372.18 1925.53 2925.94
Assets held for sale - 0.05 - - -
Total Uses 5,185.62 4,519.64 4,456.48 3,908.49 4810.67

 As informed by the Company, there is no encumbrance on the plant’s land and fixed
assets.

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Part A - Preliminary Information Memorandum SAIL-SSP

Inter Unit Current Account-

The Inter Unit Current Account is maintained to account for the transfer of resources between
SAIL corporate office and other units of SAIL and the SSP. The amount owed to and due from
these branches is stated as current liability and current asset respectively. The closing balances of
receivables/payables of SSP (other than those due to / from SAIL corporate office) are transferred
to SAIL corporate office’s Inter Unit Account at the beginning of the next financial year. There
are net liabilities due to the corporate office from SSP under this account.
It is clarified that no assets/ liabilities on account of inter-unit adjustments would be transferred
to the SSP - Divested Unit.

Audited Financial Statements of SSP for FY 2018-19 has been provided in Appendix I.

4.3 Working Capital Facilities of SAIL

SAIL has availed Working Capital facilities of Rs. 15,000 crore from a Consortium of 16 Banks led
by SBI w.e.f. March 23 2018. The facility is secured by hypothecation of whole of the current
assets of SAIL and all capital equipment procured under project related LC (Capex LC), both
present and future. Accordingly, all current assets of SSP are hypothecated and NOC from
lenders for exclusion of current assets of SSP from the hypothecated assets would have to be
obtained prior to transfer of the same to SSP - Divested Unit The review of working capital
facilities is under process.

4.4 Contingent Liabilities

The contingent liabilities associated with SSP are listed below.

Table 4-3: Contingent liabilities of SSP as on March 31, 2019

S.no. Description Amount (Rs. Crore)
1. Claims by the Company pending appellate / judicial decisions:
i. Excise Duty 11.25
ii. Other sales tax matters 10.41
Iv Other duties, cess and levies 1.71
iv Miscellaneous** 70.97
2. Price escalation claims by contractors / suppliers and claims by 7.65
employees
Total 101.99

** includes claims of Rs 12.98 crore (as at 31st March, 2019), against which there are counter-
claims of Rs 9.52 crore (as at 31st March, 2019).

In its judgement, the Central Administrative Tribunal (CAT), Kolkata has directed that Ministry
of Steel shall consider the aspect of payment of arrears of revised perks and allowances and take
appropriate decision of payment of revised perks and allowances amounting to `7.65 crore to the
executives for the period 26.11.2008 to 4.10.2009. Ministry of Steel intimated the matter to the

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Part A - Preliminary Information Memorandum SAIL-SSP

Company on 7.12.2016. A stay petition in the matter has been filed on 22.12.2016 and is pending
before the Hon’ble Calcutta High Court. As the matter is sub-judice, the amount has been
disclosed as a Contingent Liability above.

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Part A - Preliminary Information Memorandum SAIL-SSP

5. VALUE DRIVERS

5.1 Strengths
 Well established facility: The CRM-I of the plant was commissioned in 1981, since then
multiple facilities have been commissioned, the latest being the Z mill-3 in October, 2017.
 Logistics and supply chain: The plant is well connected to major consumption centres and
raw material sources through an established road network through the NH 44 and Salem
Railway junction through railway sidings at the plant, which connect the facility to the
Chennai port and other commercial centres.
 Financial flexibility: The capex incurred for the expansion project was funded by internal
accruals and term debt was taken at the corporate level (SAIL). In addition, the working
capital requirement of the plant operations are also funded by debt raised at the corporate
level, through transfers from inter-unit current account. However, the aforementioned debt
will not form a part of the SSP - Divested Unit liabilities with reference to the stake sale. The
SSP - Divested Unit, hence, will have negligible leverage in an industry where most major
players have high finance costs and substantial debt.
 Technology Suppliers: The equipment has been purchased from reputed suppliers
including Schloemann Siemag, Germany, Toshiba, Japan, Danieli (India), etc. Automation
units have been supplied by Siemens, Germany.
 Brand recognition: ‘Salem Stainless Steel’ is a registered trademark and a recognized brand
name among the existing customer base. However, SAIL proposes to retain and use the
trademark till it continues to hold the products and its services. However, successful bidder
will have the liberty to approach the appropriate authority for any trademark for its
products and services other than SAIL name and/or SAIL logo in any form.
 Utilities’ infrastructure: The power and water supply are secured under respective
contracts with the utilities. The power requirement is being met from the exchange at
competitive rates.
 Presence of industrial units in the region: Industrial units associated with steel and
stainless steel products are also located in Salem.
 Product mix: The output/ product from the Salem plant facility is recognized across the
target market segment. With a capacity of over 1,46,000 MT of stainless steel, Salem would
be one of the major producers of specialty steel in India, in a market which substantially
comprises small scale and unorganized sector.

5.2 Opportunities
 Boost to Indian Infrastructure Sector: Demand for steel in India is expected to be driven by
increasing infrastructure spending due to following reasons:
o Growing urbanization coupled with rising income levels of the burgeoning Indian
middle class
o Several Government initiatives to boost construction and infrastructure sectors like

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Part A - Preliminary Information Memorandum SAIL-SSP

Make in India, Smart Cities, Digital India and Skill India, Affordable housing, expansion
and development of railway networks and shipbuilding, etc.
 Focus of Government on Steel Sector: The Government of India has approved National
Steel Policy 2017 to give impetus to the Steel Sector. Some of the key features of the policy
are as follows:
o To increase steel-making capacity from 100 MT in 2016-17 to 300 MT by 2030-31
o Ministry to ensure availability of raw materials to steel companies at competitive rates
o To facilitate increase in consumption of steel from existing per capita consumption of 60
kg to 160 kg by 2030-31
o For stainless steel industry,
 Necessary efforts will be made to protect the existing & upcoming stainless steel
facilities from unfair trade practices through suitable trade remedial measures
 Ministry would encourage steel producers to have strategic ventures in
production and development of technologically more complex products
including high end varieties of stainless steel
 To counter threats from competing materials, promotion of stainless steel
through mass campaigns, particularly in rural areas will be encouraged.
 Greater use of stainless steel in residential or commercial constructions in coastal
and earthquake prone areas of the country will also be promoted.
 Use of high quality stainless steel in drinking water pipelines, water storage,
packaging of food grains etc. will be promoted to prevent intake of hazardous
impurities
 Anti-Dumping Duty on CRSS and CVD on flat rolled products: In order to protect the
domestic stainless steel industry from continued dumping of these goods, the Government
had imposed anti-dumping duty ranging from 4.58% to 57.39% of landed value on Cold
Rolled Flat Products of Stainless Steel from China, Korea, European Union, South Africa,
Taiwan, Thailand and USA on April 17, 2014, which was further extended by five more
years as per Government notification dated December 11, 2015. Further, the government
imposed 18.95% countervailing duty (CVD) of landed value on flat rolled products of
stainless steel originating in or exported from the People’s Republic of China for a period of
five years.
 Strong growth potential for stainless steel products: Stainless steel is being increasingly
utilized in construction/ architecture and transport, and the demand is expected to grow
from subsectors such as housing, corporate buildings, organized retail, airport, railways
and metro-rail expansion, and other urban infrastructure.

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Part A - Preliminary Information Memorandum SAIL-SSP

6. APPENDIX

6.1 Appendix I: Audited Financial Statement of SSP for FY 2018-19

The audited financial statement of SSP for FY 2018-19 can be accessed at the link below:

https://sail.co.in/sites/default/files/SSP-Audited-Accounts-2018-2019.pdf

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Part B – Request for Expression of Interest SAIL-SSP

PART B –
Request for Expression of Interest

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Part B – Request for Expression of Interest SAIL-SSP

1. DEFINITIONS

Capitalized terms defined herein shall bear the meaning ascribed thereto in this Request for
Expression of Interest (EOI Request). Additionally, in this EOI Request, unless there is anything
repugnant to the subject or context thereof, the expressions listed below shall have the following
meanings:

“Advisors” shall refer to Transaction Advisor, Legal Advisor and Asset Valuer

“Affiliate(s)” with respect to any Person shall mean any other Person which, directly or
indirectly: (1) Controls such Person; or (2) is Controlled by such Person; or (3) is Controlled by
the same Person who, directly or indirectly, Controls such Person; or (4) is an associate company
of such Person. In such context, "associate company", shall have the same meaning as ascribed to
it in Clause (6) of section 2 of Companies Act, 2013, as amended.

“Asset Valuer” shall mean Protocol Insurance Surveyors & Loss Assessors Private Limited

“Consortium” shall refer to a group of maximum 3 (three) Eligible Entities that have collectively
submitted an EOI in accordance with the provisions of this EOI Request and pursuant to a
consortium agreement entered into amongst them, and includes an Employee Consortium;

"Consortium Member(s)" means an Eligible Entity participating in the Transaction as part of a

Consortium.

“Consortium SPV” means the SPV to be formed by Consortium Members in the event it is
designated as the Successful Bidder, as more particularly described in Clause 5.1.4.c

“Control” shall have the same meaning as assigned to it in Clause (27) of section 2 of Companies
Act, 2013, as amended

“Definitive Agreements” shall mean agreements to be entered into between SAIL and Successful
Bidder or Consortium SPV, as the case may be, to effectuate the sale of SSP-Divested Unit.

"Eligible Entity" shall mean the following domestic or international entit(ies), eligible to
participate in this bid process and submit an EOI in response to and in accordance with this EOI
Request

1. A company incorporated in India under the Indian Companies Act, 1956, or Companies
Act, 2013, as the case may be, excluding Central Public Sector Enterprises (CPSEs) i.e.
enterprises where the direct holding of the Central Government or of other CPSEs is 51%
or more;

2. A company incorporated outside India;

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Part B – Request for Expression of Interest SAIL-SSP

3. A limited liability partnership under the Limited Liability Partnership Act, 2008;

4. A limited liability partnership incorporated outside India;

5. Alternative Investment Funds (AIF) registered with SEBI as per SEBI (Alternative
Investment Funds) Regulations, 2012;

6. Employees (as defined hereinafter)

“Employees” shall mean permanent employees of SAIL.

“Expression of Interest or EOI” shall mean and include any document submitted by an
Interested Bidder, in response to this EOI Request, in accordance with the terms and conditions
as set out herein

“Fee” shall mean a non-refundable fee of Rs. 5 (Five) Lakhs, to be submitted by the Interested
Bidder alongwith the EOI, in the form and manner prescribed in Clause 4.3

“Governmental Authority” shall mean any government authority, statutory authority,

government department, agency, commission, board, tribunal or court or other law, rule or
regulation making entity having or purporting to have jurisdiction on behalf of the Republic of
India or any state or other subdivision thereof or any municipality, district or other subdivision
thereof.

“Government or GoI” shall mean Government of India acting through Ministry of Steel

“Group Company(ies)” means a company(ies) which is/are an Affiliate of another company.

“Holding Company” shall have the same meaning as assigned to it in Clause (46) of section 2 of
Companies Act, 2013, as amended.

“Interested Bidder or IB” shall mean an Eligible Entity, submitting the EOI, either
independently or collectively as a Consortium. Any reference to an Interested Bidder shall
include its successors and permitted assigns, as the context may require

“Lead Member” shall mean such Consortium Member holding at least twenty six percent (26%)
stake in the Consortium ( i.e. holding at least 26% of in the equity share capital of the Consortium
SPV) and is designated as Lead Member as per the Consortium Agreement executed among all
the Consortium Members.

“Legal Advisor” shall mean L&L Partners (Formerly known as Luthra & Luthra Law Offices)

"Person" means any individual, company, firm, association, trust, or any other organization or
entity (including the Government and any governmental or administrative subdivision)

“Place of Effective Management” shall have the meaning ascribed thereto in the Finance Act,
2015 to be determined in accordance with guidelines issued by Central Board of Direct Taxes
vide F. No. 142/11/2015-TPL dated January 24, 2017

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Part B – Request for Expression of Interest SAIL-SSP

“Promoter” shall have the same meaning as defined under the Companies Act, 2013 and the
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009, as amended

“Promoter Group” shall have the same meaning as defined under the Securities and Exchange
Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended

“Request for Expression of Interest or EOI Request” means this request for expression of
interest together with the annexures and documents referred herein, including the Preliminary
Information Memorandum and any addenda to this EOI Request.

“Shortlisted Bidders” shall refer to all those IBs who have been shortlisted for participating in
the Stage II of the Transaction, as more particularly described in Clause 3.2.A. (iv)

“SSP” shall mean Salem Steel Plant of SAIL which is proposed to be divested under the current
Transaction

“SSP – Divested Unit” shall mean those assets, agreements and liabilities of Salem Steel Plant,
which are proposed to be divested under the current Transaction as more particularly described
in Clause 3.1

“Subsidiary company or Subsidiary (ies)” shall have the same meaning as assigned to it in
Clause (87) of section 2 of Companies Act, 2013 as amended

“Subsidiary LLP”, in relation to a company/ LLP (that is to say the holding entity), means a LLP
in which the holding entity—

i. Contributes more than 50 percent of the capital or has majority profit share of the LLP; or
ii. has right to appoint majority of the designated partners; or
iii. has control over the management or business decisions of the LLP.

“Provided that such class or classes of holding companies/LLP as may be prescribed shall not
have layers of Subsidiaries or Subsidiaries LLP beyond such numbers as may be prescribed.”

“Successful Bidder” shall mean the Shortlisted Bidder that is finally selected in accordance with
Clause 3.2.B to enter into Definitive Agreements

“Transaction” shall mean strategic disinvestment of 100% stake in SSP along with the transfer of
management and Control

“Transaction Advisor” shall mean SBI Capital Markets Ltd

“Ultimate Beneficial Owners” shall have the meaning ascribed thereto in SEBI Master Circular
No. CIR/ISD/AML/3/2010 dated December 31, 2010 to be identified in accordance with
guidelines issued by SEBI Circular No. CIR/MIRSD/2/2013 dated January 24, 2013

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Part B – Request for Expression of Interest SAIL-SSP

2. INTRODUCTION

2.1 Transaction Background

Steel Authority of India Limited (“SAIL” or “the Company”), a Maharatna Public Sector
Undertaking, was incorporated under the Companies Act 1956, in the year 1973. It is under the
administrative control of the Ministry of Steel (“MoS”). SAIL was established as a holding
company for the management of steel plants in India and was later restructured as an operating
company. Presently, the Company has five integrated steel plants, a ferro alloys plant and three
special steel plants.

Salem Steel Plant of SAIL primarily produces stainless steel for domestic industries and export.
In its meeting dated October 27, 2016, the Cabinet Committee on Economic Affairs (“CCEA”)
gave an in-principle approval for strategic disinvestment of several Central Public Sector
Enterprises in line with the recommendations of NITI Aayog, including the Salem Steel Plant
(“SSP” or “the Plant”) located at Salem, Tamil Nadu.

2.2 Contact Details

All enquiries related to the Transaction should be addressed to the following representatives of
SBICAP at common email id [email protected]:
Mr. S.K. Arora Ms. Neha Soni

Senior Vice President Vice President

PA&SF Group PA&SF Group

SBI Capital Markets Ltd. SBI Capital Markets Ltd.

Contact : 011 – 2348 5306 Contact : 011 – 2348 5334

Interested Bidders (IBs) should note that all correspondence, enquiries, clarifications in relation
to the Transaction should be routed and addressed only through the above mentioned
representative(s) of the Transaction Advisor. The IB and its employees shall not reveal their
identity and/ or contact any member of SAIL or Ministry of Steel or DIPAM. Neither SAIL nor
Ministry of Steel (MoS) shall be responsible in any manner to reply to such communication
directly to IBs.

2.3 Important Dates

Table 2-1: Important Dates

Event Date

Publication of Advertisement, EOI Request and PIM July 4, 2019

First day of taking queries July 4, 2019

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Part B – Request for Expression of Interest SAIL-SSP

Event Date

Last Date for invitation of Queries through email/ Physical copy July 18, 2019

Last Date for release of response to queries in the form of FAQs, on the above July 25, 2019
mentioned websites

Last date & time for Submission of EoIs physically August 1, 2019

Intimation to the Shortlisted Bidders August 8, 2019

Interested Bidders shall be required to participate in the tender process inviting “Expression of
Interest” for Strategic Disinvestment of SSP and physically submit all the documents on or before
the date and time prescribed at Clause 2.3, at the following address:

Mr. S.K.Arora
Senior Vice President
PA&SF Group
SBI Capital Markets Ltd.
6th Floor, World Trade Tower
Barakhamba Lane
New Delhi – 110 001

2.4 Contents of EOI Request

1) An advertisement has been issued in the newspapers inviting IBs to submit their EOIs to
participate in the proposed Transaction. A copy of the advertisement is enclosed as Annexure
11.

2) This EOI Request contains the following:

a. Proposed Transaction
b. Instructions to Interested Bidders
c. Eligibility criteria
d. Conditions/ Circumstances which may lead to Disqualification of IBs
e. Format of EOI Letter
f. Format of Statement of Legal Capacity for Interested Bidder
g. Format of Request for Qualification
h. Format of Power of Attorney
i. Format of Power of Attorney for Employee Participation
j. Format for Consortium Agreement
k. Format of Undertaking by the Interested Bidder
l. Advertisement inviting EOI
m. Format of declaration with respect to statement of legal proceedings
n. Office Memorandum(s) of guidelines issued by DIPAM

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Part B – Request for Expression of Interest SAIL-SSP

3) This PIM and EOI Request along with annexures have been uploaded on websites of DIPAM
at www.dipam.gov.in, MoS at www.steel.gov.in, Company at www.sailtenders.co.in and
Transaction Advisor at www.sbicaps.com. Following receipt of EOI Request, Interested
Bidders are required to respond in the format as detailed in this EOI Request along with a
non-refundable Fee as detailed in Clause 4.3.

2.5 Clarification
Any queries or request for clarification/additional information concerning this EOI Request shall
be submitted on the letterhead of the IB duly signed by its authorized signatory physically at the
above mentioned address or the scanned copy of such a letter shall be mailed at
[email protected], not later than the date mentioned in Clause 2.3.

1) The communications shall clearly bear the following identification/ title:

"Queries/ Request for Additional Information: EOI for Strategic Disinvestment of SSP”

2) All queries or request for clarification/additional information should be sent in the following
format:

S. No. Clause No. Clarification/ Additional Rationale for clarification or

Information required additional information required

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Part B – Request for Expression of Interest SAIL-SSP

3. PROPOSED TRANSACTION

3.1 Salient Features of Proposed Transaction

The broad terms of the Transaction are detailed as below:

1) Salem Steel Plant is a special steels unit of SAIL and produces wider width stainless steel
sheets and coils in India, with a total saleable steel capacity of 3,39,172 MTPA. The Cabinet
Committee on Economic Affairs (CCEA) has given in-principle approval for strategic
disinvestment of SSP along with transfer of management control on October 27, 2016. The
Board of Directors of SAIL approved, ‘in principle, the strategic disinvestment of the special
steel plants in its meeting held on February 09, 2017. Thereafter the Board approved strategic
disinvestment of 100% stake in SSP on June 28, 2019.

2) As a part of the strategic disinvestment, SSP – Divested Unit will be transferred to the
strategic investor, on a going concern basis i.e. by way of slump sale through Business
Transfer Agreement. Further details regarding the Transaction structure shall be provided in
the RFP.

3) As part of the Transaction, SAIL proposes to transfer area aggregating to 1708.10 acres to SSP
– Divested Unit, as detailed below:

a) Area of 1,130 acres of plant land on long term perpetual lease basis, along with the plant
assets located on it.

b) Area of 264.90 acres over which office complex area is constructed (including air
separation unit which has been setup by M/s Inox Air Products Ltd.) on long term
perpetual lease basis, subject to the existing leasehold rights over an area of 3.26 acres
granted to third parties.

c) Area of 129.80 acres over which water supply related infrastructure is built, comprising
Poolampatti Pump House (including residential quarters) and road from Poolampatti to
plant site on long term perpetual lease basis.

d) Area of 183.40 acres over which railway siding is built on long term perpetual lease basis.

4) As part of the Transaction, other utilities and facilities i.e. hospital, guest houses, hostels,
telephone exchange, community hall and residential quarters, out of the township area,
would be provided to SSP – Divested Unit on lease/ leave and license basis at market
determined rates for period of 5 years

5) SAIL proposes to retain and use the trademark till it continues to hold the products and its
services. However, Successful Bidder will have the liberty to approach the appropriate

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Part B – Request for Expression of Interest SAIL-SSP

authority for any trademark for its products and services other than SAIL name and/or SAIL
logo in any form.

6) As part of the Transaction, SAIL proposes to assign the following to SSP – Divested Unit:

a) The existing agreement with INOX Air Products Ltd., subject to prior written consent of
INOX Air Products Ltd.

b) The existing agreement with LLM Appliances Limited, subject to prior written consent of
LLM Appliances Limited.

c) Right to use the railway sidings under the existing arrangement, subject to prior written
consent of the Southern Railway Administration.

d) The existing agreement with BSNL, subject to prior written consent of BSNL.

e) The existing two Power Purchase Agreements with PTC India Ltd., subject to prior
written consent of PTC India Ltd.

7) A ‘Shared facilities and support services’ agreement would be executed between SAIL and
the SSP – Divested Unit. The salient features of the agreement are as under:

a) Power, water supply and other utilities for township which are being provided from
plant area may continue to be provided by SSP – Divested Unit. Similarly township water
supply, township water treatment plant in office complex area would have to be
maintained by SSP – Divested Unit and distribution from there on and other facilities for
water distribution would be under SAIL.

b) While sewage treatment facilities in township area will be under SAIL, treated sewage
water from township which is presently being fed to teak plantation inside plant area and
the same will be continued.

c) Maintenance of HT power source to township area through Ring Mains and sub-stations
in township may be maintained by SSP – Divested Unit. LT power distribution and
maintenance in township would be under SAIL.

Further details regarding the said agreement shall be provided in the CIM.

8) No assets/ liabilities on account of inter-unit adjustments would be transferred to the SSP –

Divested Unit.

9) Debt raised by the Company for operations of SSP or for its capacity expansion programme is
not proposed to be transferred to the SSP – Divested Unit.

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Part B – Request for Expression of Interest SAIL-SSP

3.2 Process for the proposed Transaction

The process for the proposed Transaction has been divided into two stages, as detailed below:

A. Stage I:
i. Through this EOI Request, SAIL is providing the Interested Bidder with instructions for
submitting its Expression of Interest to the Transaction Advisor, which would be used for
prequalifying the Interested Bidder in accordance with the criteria specified herein in
order to proceed with the proposed Transaction.

ii. The EOIs will be evaluated based on the Eligibility Criteria and Disqualification
conditions detailed in this EOI Request.

iii. The Interested Bidders which qualify in accordance with the terms of this EOI Request
and are shortlisted to proceed with the Transaction, shall be referred to as the “Shortlisted
Bidders”.

B. Stage II:
i. The Shortlisted Bidders will be provided with Request for Proposal (“RFP”), access to the
data room to review documents pertaining to the Plant for conducting a due diligence on
the Plant and a Confidential Information Memorandum (“CIM”), which shall provide
further details of the Plant and the proposed Transaction including, interalia, the
transaction structure. The format and formalities related to the RFP shall be
communicated in due course.

ii. Subsequently, a site visit (cost of which will be borne by the Shortlisted Bidders) may be
scheduled to facilitate the Shortlisted Bidders in their assessment of the Plant at the
discretion of the Company. The modalities related to the visit and due diligence will be
provided in the RFP.

iii. The Shortlisted Bidders shall carry out their own due diligence, independent assessment
and appraisal of the plant and the Transaction. The Company or their respective
consultants, agents, officials, advisors and employees make no representations, in relation
thereto and shall not be liable in any manner whatsoever.

iv. The Financial Bids shall be submitted by the Shortlisted Bidders in the manner to be
provided in the RFP. The Shortlisted Bidders will also be required to furnish earnest
money, if so required by GOI/ Company, and a certificate from the banker or from its
statutory auditor that the Interested Bidder has got enough funds to complete the
Transaction.

v. Shortlisted Bidders shall have to participate in a transparent bidding process in

accordance with the terms of the RFP.

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Part B – Request for Expression of Interest SAIL-SSP

vi. Post-submission of Financial Bids, Core Group of Secretaries on Disinvestment will

decide, on case to case basis, whether security clearance is required. In case the security
clearance is required, the Administrative Ministry shall approach the Security Committee
on Strategic Disinvestment for seeking requisite clearance.

vii. In case the H1 Bidder fails in obtaining the security clearance, if required, next highest
bidder will be offered an option to match the financial bid of the H1 Bidder and the next
highest bidder’s details shall be sent for security clearance. Further details regarding the
modalities relating to security clearance will be provided in the RFP.

viii. The Shortlisted Bidder, after approval of the CCEA, would be designated as the
“Successful Bidder”.

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Part B – Request for Expression of Interest SAIL-SSP

4. INSTRUCTIONS TO INTERESTED BIDDERS

4.1 General Conditions

1) PIM and EOI Request is available for downloading from websites of DIPAM at
www.dipam.gov.in, MoS at www.steel.gov.in, Company at www.sailtenders.co.in and
Transaction Advisor at www.sbicaps.com.

2) The documents including this PIM and EOI Request and all attached documents are and shall
remain or become the properties of the GOI and are transmitted to the IBs solely for the
purpose of preparation and submission of an EOI in accordance herewith. IBs are to keep all
data/ information of SAIL (shared as part of the Transaction) as strictly confidential and shall
not use it for any purpose other than for preparation and submission of their EOI/ Financial
Bid.

3) The Interested Bidder and its employees shall not reveal their identity and/ or contact any
member of SAIL or Ministry of Steel or DIPAM.

4) The Interested Bidders shall bear all costs associated with the preparation and submission of
the EOI and also all costs associated with conducting the due diligence. The
Advisors/GOI/Company shall not, under any circumstances, be responsible or liable for any
such costs, whether direct, incidental or consequential and no cost incurred by the IBs in this
regard shall be borne by the Company, GOI or the Advisors

5) The Interested Bidders are expected to carry out their own investigations and other
examination in relation to the Transaction before submitting their EOIs.

6) Interested Bidders shall have satisfied themselves of their queries before participating in the
proposed Transaction.

7) Notwithstanding anything to the contrary contained in this PIM, the detailed terms specified
in the Definitive Agreements shall have overriding effect; provided, however, that any
conditions or obligations imposed on the IB hereunder shall continue to have effect in
addition to its obligations under the definitive agreements.

8) EOIs are liable to be rejected by the Company if IBs fails to meet the qualifying eligibility
criteria as specified in section titled ‘Eligibility Criteria’ and/or are disqualified in accordance
with the conditions specified in section titled ‘Disqualifications’ in this EOI Request or for any
other reason deemed fit, or even without assigning any reason whatsoever.

9) GOI/Company reserves the right to modify/postpone/cancel or call off the proposed

Transaction without communicating any reasons whatsoever. In such an event no financial

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Part B – Request for Expression of Interest SAIL-SSP

obligation whatsoever shall accrue to GOI, the Company, the Advisors or any of their
respective officers, employees, advisors or agents.

10) The GOI/ Company/ Advisors, and their respective officers, employees and agents or
advisors shall not be liable for any omission, mistake or error in respect of any of the above or
on account of any matter or thing arising out of or concerning or relating to the PIM or the
EOI process, including any error or mistake therein or in any information or data given by
the Transaction Advisor.

11) The GOI/ Company reserves the right not to respond to questions raised or provide
clarifications sought, at their sole discretion if considered inappropriate or prejudicial to do
so or even otherwise. Nothing contained in this document shall be taken or read as or
construed or deemed as compelling or requiring the GOI/ Company to respond to any
question or to provide any clarification to the IBs. No extension of any time and date referred
to in this EOI Request shall be granted on the basis or grounds that the GOI/ Company has
not responded to any question/ provided any clarification.

12) Notwithstanding anything contained in this EOI, the GOI reserves the right to reject any or
all EOIs on the grounds of national interest, national security, public interest or any other
grounds without communicating any reasons thereof and without any liability or any
obligation for such rejection.

13) The Interested Bidders may note that the files containing information about SSP can be in
various formats including without limitation, doc, xls, ppt, pdf, jpg, jpeg, zip etc. and it shall
be the responsibility of the Interested Bidder to have suitable facilities at their end to
download the uploaded files.

4.2 Amendment to EOI Request

At any time prior to the Due Date for submission of EOI, GOI/ Company may, for any reason,
whether at its own initiative or in response to clarifications requested by any Interested Bidder,
modify this EOI Request by the issuance of an addendum. Any addendum/clarification issued
shall be uploaded on websites of DIPAM at www.dipam.gov.in, MoS at www.steel.gov.in,
Company at www.sailtenders.co.in and Transaction Advisor at www.sbicaps.com.

In order to afford the Interested Bidders a reasonable time for taking an addendum into account,
or for any other reason, GOI/ Company may, in their sole discretion, extend the Due Date for
submission of EOI.

4.3 Submission of Expression of Interest

a) The Expression of Interest (EOI), conforming to the conditions of this EOI Request shall
be submitted physically along with all annexure(s) duly filled in, in original, at following
address on or before the scheduled date and time mentioned in Clause 2.3.

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Part B – Request for Expression of Interest SAIL-SSP

Mr. S.K. Arora

Senior Vice President
PA&SF Group
SBI Capital Markets Limited
6th Floor, World Trade Tower
Barakhamba Lane
New Delhi – 110 001

b) EOIs shall be submitted during the working hours (Monday to Friday 10:00 a.m. to 6.00
p.m.) on or before scheduled date and time as stipulated in Clause 2.3.

c) Submission of the EOI by any other means, electronic and/or facsimile, etc. will not be
accepted.

d) The completed forms, “Annexures” of the bid shall be considered a part of the Definitive
Agreements in the case of Successful Bidder.

e) The EOIs received after the appointed time and date at Clause 2.3 will be rejected.

f) The Interested Bidder shall submit the EOI physically by mentioning the page number on
each document and to be submitted in sequence in a sealed, covering envelope clearly
marked “Private and Confidential – Expression of Interest for the Strategic Sale of
Salem Steel Plant at Salem in Tamil Nadu” in different file folders as per the following
directions:

Covering envelope:

Envelope 1:

1. Demand Draft of Rs. 5,00,000 (Rupees Five Lakh Only) towards non-refundable fee
drawn in favour of “SBI Capital Markets Ltd. – Fee for EOI”, payable at New Delhi

2. EOI Letter in the format specified in Annexure 1.

3. Statement of Legal Capacity as per Annexure 2.

4. Duly filled in Request for Qualification by IB/ each Consortium Member along with
all supporting documents (as per Annexure 3), including but not limited to the
following key information/ supporting documents:

i. Executive summary providing brief description of the IB and (where

appropriate) of each Consortium Member, containing details like ownership
structure, identity of the natural persons who are the Ultimate Beneficial

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Owners and effectively control the IB/ Consortium Member, the Place of
Effective Management of business of the Interested Bidder and each
Consortium Member It shall include a brief commentary on the capability of
the Interested Bidder/ Consortium Member, as demonstrated, in its past track
record, to run its own business.

ii. Contact information of the IB/ each Consortium Member including full name,
address, telephone and facsimile numbers, e-mail address and the names and
the titles of the persons who are the principal points of contact for IB/ each
Consortium Member and identifying Lead Member of the Consortium (if
applicable). Details of the website, if maintained, of the IB/ each Consortium
Member are also to be provided.

iii. Basic information of the IB/ each Consortium Member pertaining to place of
incorporation, registered office, current directors, key management personnel
and principal shareholders.

iv. A copy of Memorandum of Association, Articles of Association, Certificate of

Incorporation, Certificate of Commencement of Business, Charter Documents,
Constitution Documents, Partnership Deed, etc. as may be applicable and SEBI
Registration Certificate for AIFs

v. A certificate for list of Board of Directors, principal shareholders, key

management personnel and designated partners (as applicable), duly signed
by the respective Company Secretary of IB/ each Consortium Member and also
counter signed by its authorized signatory.

vi. A certificate by an independent chartered accountant/ statutory auditor/

Company Secretary or any other office in-charge of secretarial affairs for the
shareholding pattern of the IB/ each Consortium Member.

vii. A certificate duly signed by Company Secretary/ any other officer in charge of
legal affairs, for eligibility to participate in the proposed Transaction.

viii. A certificate from Statutory Auditor of the Interested Bidder/ Lead Member of
Consortium certifying that it has been operating in [a Mining Industry/ Core
Industry/ Metal Industry] for atleast 5 (five) years OR self-certified true copies
of Consents to Operate issued by the relevant State Pollution Control Board.

ix. In the event IB/Lead Member of Consortium meets Technical Criteria through
its Direct Subsidiary/ Direct Subsidiary LLP/ Direct Holding Company, a
certificate from Statutory Auditor of the entity meeting technical criteria
certifying that such entity has been operating in [a Mining Industry/ Core
Industry/ Metal Industry] for atleast 5 (five) years OR self-certified true copies

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Part B – Request for Expression of Interest SAIL-SSP

of Consents to Operate issued by the relevant State Pollution Control Board.

The below example is solely for the purposes of reference and to illustrate
about Direct Subsidiary/ Direct Subsidiary LLP/ Direct Holding Company and
meant for guidance only

Figure 4-1: Illustration for Direct Subsidiary/Direct Subsidiary LLP/Direct Holding Company

Illustration: In above figure, company A has control over B as it has 51% shareholding in
company B and company B has control over C as B has 100% shareholding in company C. Hence,
B and C are Subsidiaries of the company A and company C is a subsidiary of the company B.
However, C is the “Direct subsidiary company” of company B whereas B is the “Direct
subsidiary company” of company A. Also, A is the holding company of company B and
company C and company B is the holding company of company C, however, company A is
“Direct holding company” of company B and company B is “Direct holding company” of
company C.

Hence, if company A is an IB then it can meets technical criteria through its Direct Subsidiary
company B. Likewise, if company C is an IB then it can meets technical criteria through its Direct
Holding company B and if company B is an IB then it can meets the technical criteria through
either A or C.

x. An independent chartered accountant/ statutory auditor certificate certifying

fulfillment of the Financial Criteria as defined in the Eligibility criteria.

xi. Audited Financial Statements (on standalone and consolidated basis)/Annual

Reports for the previous five financial years.

In case the IB/ Consortium Member is an unlisted company, and its audited
financial statements are not available for the immediately preceding financial
year, the latest available unaudited/provisional numbers may be submitted as

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Part B – Request for Expression of Interest SAIL-SSP

certified by the statutory auditors. In case the IB/ Consortium Member is a

listed company, and its audited financial statements are not available for the
immediately preceding financial year, the information contained in Quarterly
Limited Review report is to be submitted. However, if the IB/ Consortium
Member submits unaudited financials at the time of submission of EOI, it shall
submit the audited financial statements, as and when prepared as per the
statutory requirements and timelines of the relevant countries where the IB/
Consortium Member is incorporated.

xii. Extract of the charter documents and documents such as a board or

shareholders’ resolution in favor of the person executing the Power of
Attorney for the delegation of power on behalf of the IB.

xiii. Management Organization: An overview of IB’s and each Consortium

Member’s senior management and organization structure certified by its
company secretary

xiv. International Operations/ Joint Venture/ Alliances: Brief note of IB’s/ each
Consortium Member’s international operations, its joint ventures, and alliances
(whether international or domestic), including incorporation details, registered
office, effective management and control, nature and size of such operations,
equity ownership, if applicable, and copies of the audited financial statements
for the immediately preceding financial year (as per definition of financial year
in the respective jurisdiction) for such companies.

xv. Professional Advisors: Names and addresses of those companies and

professional firms, if any, who are (or will be) advising the IB/Consortium for
the proposed Transaction, together with the names of the principal individual
advisors at those companies and firms.

Note: This information can be provided at a later stage, if not available at this stage.

xvi. Outstanding Litigation: The IB / each Consortium Member, (including the

beneficial owner, Promoters, persons in control, thereof) must provide with the
EOI, a statement of those pending litigations that, if decided against the IB/
Consortium Member, shall disqualify them in terms of the prescribed
eligibility criteria and extant Government instructions on disinvestment.

xvii. FDI Restrictions: If the Interested Bidder is a foreign entity, specify list of
statutory approvals from the Government of India/ the Reserve Bank of India/
the Foreign Investment Promotion Board/ relevant ministry/ any other
Government agency applied for/ obtained/ awaited.

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Part B – Request for Expression of Interest SAIL-SSP

xviii. In the event IB/Lead Member of Consortium meets Technical Criteria through
its Direct Subsidiary/ Direct Subsidiary LLP/ Direct Holding Company:

a. A certificate duly signed by company secretary or statutory auditor of

the IB to demonstrate the relationship between IB and entity meeting
technical criteria.

b. A certified true copy of the register of members, register of partners,

register of designated partners, LLP agreement (as applicable), and any
other document or agreement (including shareholders’ agreement or
voting agreement) evidencing relation between the IB and entity
meeting technical criteria.

5. Duly executed Power of Attorney authorizing the signatory of the EOI to commit the
IB (as per Annexure – 4 or Annexure 5, as applicable).

6. In case of a Consortium (including Employee Consortium), a Consortium Agreement

duly executed amongst each of the Consortium Members (as per Annexure 6).

7. Duly executed Undertaking by the Interested Bidder (as per Annexure 7).

8. Duly executed Affidavit (as per Annexure 8).

9. A declaration in relation to statement of legal proceedings (as per Annexure 9).

10. In the event IB/Lead Member of Consortium meets Technical Criteria through its
Direct Subsidiary/ Direct Subsidiary LLP/ Direct Holding Company, duly executed
Undertaking from such entity. (as per Annexure 10)

11. A Compact Disc containing scanned copies of the EOI including all the supporting
documents referred in this EOI Request

g) Unless otherwise specified, a copy of any document that is not the original, shall be a
certified true copy (duly verified by a notary) for submission.

h) The EOI and all related correspondence and documents in relation to the EOI shall be in
English language. Any documents that are not in the English language shall be
accompanied by an official translation duly notarized and apostilled/ consularised by the
Indian mission of the home country.

i) GOI/ Company/ Transaction Advisor shall bear no responsibility for non-receipt of

documents sent by post/courier.

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Part B – Request for Expression of Interest SAIL-SSP

j) Any additional information supplied subsequent to the Due Date of submission of EOI as
prescribed in Clause 2.3, unless the same has been expressly sought for by GOI/
Company/ Transaction Advisor, shall be disregarded.

k) EOIs shall be opened only after the due date and time of submission of EoIs.

4.4 Evaluation of EOI

1) Any condition or qualification or any other stipulation contained in the EOI shall render the
EOI liable to rejection as a non-responsive EOI.

2) The Company reserves the right to call for any additional document (s)/ information /
physical copies of any document from the IBs, which may be considered necessary, without
any liability to the Company.

3) The Transaction Advisor may seek appropriate clarifications from the IB, if required, while
examining the EOI.

4) The GOI reserves the right to verify all statements, information and documents submitted by
the IB in response to the EOI Request, or the EOI process and the IB shall, when so required
by the GOI, make available all such information, evidence and documents as may be
necessary for such verification. Any such verification or lack of such verification, by the GOI
shall not relieve the IB of its obligations or liabilities hereunder nor will it affect any rights of
the GOI thereunder.

5) In shortlisting Interested Bidders and in selecting the Successful Bidder, the Company will
pay due attention, inter-alia to the security requirements of the country.

4.5 Governing Law / Jurisdiction

1) This EOI Request and all matters incidental hereto shall be governed by and construed in
accordance with the laws of India. All disputes arising out of and in connection herewith
shall be subject to the exclusive jurisdiction of the courts at New Delhi.

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Part B – Request for Expression of Interest SAIL-SSP

5. ELIGIBILITY CRITERIA

5.1 Eligibility Criteria

The Eligibility Criteria for the IBs are as follows:

1) Incorporation Criteria:
a. Any Eligible Entity which is permitted to invest under the laws of India (subject to such
entity obtaining all statutory approvals by themselves from the GOI, FIPB, RBI, relevant
ministry etc. as applicable) can submit an EOI either independently or as a Consortium
Member. (“Interested Bidder”)
b. No IB shall submit more than one EOI. An IB submitting EOI independently or as a
Consortium Member shall not be entitled to submit another EOI either independently or
as a member of any other Consortium, as the case may be.

It is clarified that Central Public Sector Undertakings (CPSUs) and Central Government
owned Cooperative Societies i.e. where Government’s ownership is 51% or more, are not
eligible to participate in the Transaction, in accordance with OM issued by Ministry of
Disinvestment vide letter No. 4(32)/2002-MoDI dated September 18, 2002. In such context,
Government’s ownership means direct holding of the Central Government or of other CPSEs.

2) Financial Criteria:
The Interested Bidder shall satisfy the following financial criteria:
a. Net-worth: The Interested Bidder should have a Minimum Net-worth of Rs. 900 Crore.

Explanation: Net-worth shall mean

• In case of a company – “Net-worth” shall be calculated as the aggregate value of the

paid-up share capital and all reserves created out of the profits and securities premium
account, after deducting the aggregate value of the accumulated losses, deferred
expenditure Intangible Assets, redemption reserves, reserves made for any specific
purpose and miscellaneous expenditure not written off, as per the audited balance sheet,
but does not include reserves created out of revaluation of assets, write-back of
depreciation and amalgamation. Further, the cross holding of investments amongst the
Consortium Members is also to be deducted where the IB is a Consortium.
• In case of LLP - “Net-worth” shall be calculated as Partners’ Capital and all reserves
created out of the profits, after deducting the aggregate value of the accumulated losses,
deferred expenditure, Intangible Assets redemption reserves, reserves made for any
specific purpose and miscellaneous expenditure not written off, as per the audited balance
sheet, but does not include reserves created out of revaluation of assets, write-back of

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Part B – Request for Expression of Interest SAIL-SSP

depreciation and amalgamation. Further, the cross holding of investments amongst the
Consortium Members is also to be deducted where IB is a Consortium.
• In case of AIF – Net-worth shall mean Maximum Permissible Investment Limit in a
single company
b. Sales: The Interested Bidder should have sales of atleast Rs. 1,350 Crore in each of the
past three financial years.

Explanation: Sales shall mean Gross Revenue from Operations

c. Profitability: The “cash profit” of the Interested Bidder must be ‘positive’ in at least
three of the immediately preceding five financial years.

Explanation: Cash Profit shall mean Profit after Tax plus Depreciation plus Deferred Tax
Liability

d. Financial Criteria shall be assessed on the basis of:

i. In case of entities other than AIFs and employees: Audited financial statement of
an Interested Bidder (on consolidated basis), of which the latest audited financial
statement shall not be older than 12 months from the date of publication of this
EOI Request.

 If the audited financial statements are not available for the immediately
preceding financial year, unaudited/provisional numbers as certified by the
statutory auditors (in case of an unlisted company) or information
contained in Quarterly Limited Review report (in case of a listed company)
shall be considered.
 The Financial Criteria should be certified by a statutory auditor (in case of a
company) or an independent chartered accountant (in case of other Eligible
Entities).

ii. In case of AIFs: The Maximum Permissible Investment Limit would be

considered as per independent Chartered Accountant/ Statutory Auditor’s
certificate not older than 3 months from the date of EOI Request.

iii. In case of bids by employees of SAIL:

 For Employees: Practicing Chartered Accountant’s certificate not older than

3 months from the date of EOI Request, certifying Net-worth of employees.
 For bank/ venture capitalist/ financial institution: Statutory Auditor/
practicing Chartered Accountant’s certificate not older than 3 months from
the date of EOI Request, certifying its Net-worth.

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Part B – Request for Expression of Interest SAIL-SSP

The ‘Sales’ and ‘Profitability’ criteria shall not be applicable in case of bids by
employees of SAIL.

e. Where the financial statements are expressed in a currency other than the Indian Rupee,
the eligible amount as described above shall be computed by taking the equivalent
amount at the exchange rates prevailing on the dates of such financial statement as
stipulated by Reserve Bank of India. All financial information required for satisfying
the eligibility criteria shall be represented in Indian Rupees.

f. In case an IB is a Direct Subsidiary/ Direct Subsidiary LLP of a Holding Company, the

Financial Criteria of such direct Holding company may also be considered:

Provided that, in such case, the IB must continue to be a Direct Subsidiary/ Direct
Subsidiary LLP of such Holding company until such time the IB meets the
aforementioned Financial Criteria threshold(s)

3) Technical Criteria:

a. The Technical Criteria can be met by:

i. The Interested Bidder, or

ii. Direct Holding Company of the IB, or

iii. Direct Subsidiary of the IB, or

iv. Direct Subsidiary LLP of the IB

b. Minimum five (5) years of

i. experience in mining of iron ore or manganese ore or chrome ore; or

ii. manufacturing/ processing experience in any Core Industry as included in Index

of Eight Core Industries published by Department of Industrial Policy &
Promotion, Ministry of Commerce and Industry or in Metals traded on London
Metal Exchange, as listed below:

Core Industry Metals traded on London Metal Exchange

Cement Aluminium
Coal Cobalt
Crude Oil Copper
Electricity Lead
Fertilizer Molybdenum
Natural Gas Nickel
Refinery Products Steel

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Part B – Request for Expression of Interest SAIL-SSP

Core Industry Metals traded on London Metal Exchange

Steel Tin
-- Zinc

c. The Technical Criteria shall not be applicable in case of bids by employees of SAIL.

4) Conditions for bidding by Consortium:

Eligible Entities are permitted to form a Consortium to participate in the Transaction.

a. Lead Member: The Consortium shall have only one (1) Lead Member.

b. Minimum stake requirement:

i. Lead Member shall hold atleast 26.00% stake in the Consortium (i.e. holding at
least 26% of the equity share capital of the Consortium SPV to be promoted in
case it becomes the Successful Bidder)

ii. Each Consortium Member shall hold at least 20% stake in the Consortium (i.e.
holding at least 20% of in the equity share capital of the Consortium SPV to be
promoted in case it becomes the Successful Bidder)

c. Formation of Consortium SPV: In case of EOI by a Consortium, the Consortium shall

incorporate a Special Purpose Vehicle, in the form of a company (the “Consortium SPV”)
in India/under the laws of India, within a stipulated time, once finally selected to enter
into the Definitive Agreements. The shareholding of the Consortium Members in the
Consortium SPV shall be the same as their shareholding in the Consortium.

d. Financial Criteria

i. Net-worth:

 Where IB is a Consortium, the Combined Net-worth of all the Consortium

Members should meet the Minimum Net-worth Criteria as mentioned in
Clause 2(a) above.

Explanation: Combined Net worth = (Net-worth of Lead Member X % Equity

shareholding in consortium) + (Net-worth of Member 2 X % Equity shareholding in
consortium) + (Net-worth of Member 3 X % Equity shareholding in consortium.

 The Lead Member of the Consortium shall have a Net-worth contribution, of

at least 26%, towards the calculation of Minimum Net-worth for testing its
eligibility

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Part B – Request for Expression of Interest SAIL-SSP

Explanation: Lead Member should have Net Worth of at-least 26% of the Minimum
Net-worth Criteria as mentioned in Clause 2(a) above i.e. 26% of Rs. 900 crore

 Each Consortium Member shall have a positive Net-worth.

ii. Sales:

Where IB is a Consortium, any one Consortium Member who meets the Technical
Criteria, must meet the Minimum Sales Criteria as mentioned in Clause 2(b)
above.

iii. Profitability Criteria:

Where IB is a Consortium, all Consortium Members (excluding AIFs and

employees), must meet the Profitability Criteria as mentioned in Clause 2(c)
above.

e. Technical Criteria

Where IB is a Consortium, the Technical Criteria stipulated in Clause 3(b) above, shall
have to be met by

i. The Lead Member of the Consortium, or

ii. Direct Holding Company of the Lead Member, or
iii. Direct Subsidiary of the Lead Member, or
iv. Direct Subsidiary LLP of the Lead Member

The following examples illustrate the compliance of IB with Eligibility Criteria. The below
examples are illustrative and solely for the purposes of reference to the IBs and meant for
guidance only.

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Table 5-1: Illustrative Example 1: Consortium members and eligibility criteria

Details of Consortium Members
M1 (Lead Member) M2 M3
Description Company operating in metals AIF, registered with Other company operating in
industry for the past 7 years SEBI core industry for past 5 years
% Stake in Consortium (i.e. equity share capital of the 30% 50% 20%
Consortium SPV)
Net-worth/ MPIL (in case of AIF) (Rs. Crore) 280 1,600 600
Sales (Rs. Crore) <1,350, in each of past 3 FYs NA >=1,350, in each of past 3 FYs
Cash Profit (+/-) (+) in 3 out of preceding 5 FYs NA (+) in 3 out of preceding 5 FYs
Eligibility criteria Eligibility of Members Eligibility of
Consortium
Technical criteria  NA  
Net-worth Criteria
- Combined Net-worth of Consortium to be minimum 280 X 30% = 84 1,600 X 50% =800 600 X 20% = 120

Rs. 900 crore Combined Net-worth Rs. 1,004 crore (84 + 800 + 120)
- Lead Member: Lead Member to have minimum 26% 
NA NA 
Net-worth contribution NW of 280 > 234 (26% X 900)
- Each Consortium Member to have +ve Net-worth    
Sales Criteria:
- Alteast Rs. 1,350 crores in each of the past 3 FYs 
 NA 
- To be met by any 1 Member meeting Technical (M3 meets Technical criteria)
criteria
Profitability Criteria:
- Positive Cash Profit in atleast 3 of the immediately
preceding 5 FYs  NA  
- To be met by all Consortium members (excluding AIF
& employees)
Consortium meets the eligibility criteria

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Table 5-2: Illustrative Example 2: Consortium members and eligibility criteria

Details of Consortium Members
M1 (Lead Member) M2 M3
Description Direct Holding Company of AIF LLP, in services sector
M1 is in Mining of iron ore
for the past 5 years
% Stake in Consortium (i.e. equity share capital of the Consortium 30% 50% 20%
SPV)
Net-worth/ MPIL (in case of AIF) (Rs. Crore) 230 1,600 800
Sales (Rs. Crore) >=1,350, in each of past 3 FYs NA <1,350, in each of past 3 FYs
Cash Profit (+/-) (+) in 2 out of preceding 5 FYs NA (+) in 3 out of preceding 5 FYs
Eligibility criteria Eligibility of Members Eligibility of
Consortium
Technical criteria  NA  
Net-worth Criteria
- Combined Net-worth of Consortium to be minimum Rs. 900 crore 230 X 30% = 69 1,600 X 50% =800 800 X 20% = 160

Combined Net-worth Rs. 1,029 crore (69 + 800 + 160)
- Lead Member: Lead Member to have minimum 26% Net-worth 
NA NA 
contribution NW of 230 < 234 (26% X 900)
- Each Consortium Member to have +ve Net-worth    
Sales Criteria:
- Alteast Rs. 1350 crores in each of the past 3 FYs  NA NA 
- To be met by any 1 Member meeting Technical criteria
Profitability Criteria:
- Positive Cash Profit in atleast 3 of the immediately preceding 5 FYs  NA  
- To be met by all Consortium members (excluding AIF & employees)
Consortium fails to meet the eligibility criteria

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Table 5-5-3: Illustrative Example 3: Sole Interested Bidder and eligibility criteria
Details of Interested Bidder
Description IB is an investment company. IB holds 15% non-controlling stake in another company which is in
Steel Manufacturing for the past 5 years.
Net-worth/ MPIL (in case of AIF) (Rs. Crore) 1,020
Sales (Rs. Crore) >=1,350, in each of past 3 FYs
Cash Profit (+/-) (+) in 3 out of preceding 5 FYs
Eligibility criteria Eligibility of IB
Technical criteria 
IB fails to meet the technical criteria as entity meeting technical criteria is not direct subsidiary of the
IB
Net-worth Criteria 
Sales Criteria: Alteast Rs. 1350 crores in each of the past 3 FYs 
Profitability Criteria: Positive Cash Profit in atleast 3 of the

immediately preceding 5 FYs
IB fails to meet the eligibility criteria

Table 5-4: Illustrative Example 4: Sole Interested Bidder and eligibility criteria
Details of Interested Bidder
Description Company X holds 51% controlling stake in IB and company X is its direct holding company.
Company X is a leading thermal power generation company in India for last 20 years.
Net-worth/ MPIL (in case of AIF) (Rs. Crore) 1120
Sales (Rs. Crore) >=1,350, in each of past 3 FYs
Cash Profit (+/-) (+) in 3 out of preceding 5 FYs
Eligibility criteria Eligibility of IB
Technical criteria 

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Details of Interested Bidder

Net-worth Criteria 
Sales Criteria: Alteast Rs. 1350 crores in each of the past 3 FYs 
Profitability Criteria: Positive Cash Profit in atleast 3 of the

immediately preceding 5 FYs
IB meets the eligibility criteria through its direct holding company

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f. Restriction on change in composition of Consortium:

i. Prior to Due Date for submission of EOI: The IB is permitted to change

Consortium Members prior to the due date of submission of EOI by withdrawing
the EOI and submitting a fresh EOI before the due date of submission of EOI.

ii. After the Due Date for submission of EOI till determination of Shortlisted
Bidders: No change, either by way of withdrawal/substitution/addition of any
Consortium Member or any change affecting the composition of the Consortium
will be permitted after the due date for submission of EOI, as prescribed in Clause
2.3, till shortlisting of Interested Bidders.

5) Conditions in case of employee bids:

a. Subject to compliance with Guidelines for management-employee bids in strategic sale

issued vide Office Memorandum No. 4/38/2002/DD-II dated April 25, 2003 (“Employee
Guidelines”) and the terms and conditions stipulated in this EOI Request, Employees can
participate in the Transaction as Interested Bidders either (a) directly and independently
(“Direct Employee Participation”) or (b) by forming of a consortium along with a bank,
venture capitalist or a financial institution (“Employee Consortium”).

b. Where EoI is submitted by Employees (whether as Direct Employee Participation or

Employee Consortium), it shall be accompanied by a duly executed Power of Attorney (as
per Annexure 5) where Employees forming part of such EOI shall appoint one
participating Employee to be their lawful attorney for submission of EOI and connected
documents and be the lawful attorney of the other participating Employees.

c. The GOI and Advisors may provide for such further clarifications, conditions, criteria as
it may deem necessary for the purposes of Employees to participate.

d. It is clarified that whole-time directors on the Board of SAIL cannot participate in the
Transaction. However, in case of any other conflict between the Employee Guidelines and
this EOI Request, the Employee Guidelines shall apply.

6) An IB can submit only one EOI i.e. either as a sole bidder or as a member of one
Consortium. In case, more than one EOI is submitted by an IB, all such EOIs shall be
disqualified.
7) IB should not have been convicted by a court of law or indicted/ have any adverse order
passed against them by any other regulatory authority in any matter involving a grave
offence and/ or which casts a doubt on its ability to participate in the proposed Transaction.
Further such entities or their Affiliates should not have any charge sheet filed against them
by any agency of Government of India or any court of law, which involves a matter
concerning security and integrity of India. The mere fact that an appeal against any such

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order mentioned above is pending in any court of law or any regulatory authority will not
affect the Disqualification. Additionally, IBs should not have any existing legal proceedings
by them or against them in respect of Company/ SSP and its Associate Companies

5.2 Other Terms and Conditions

1) The IB must meet the Eligibility Criteria as stated in Clause 5.1 of this EOI Request, on the
date of submission of the EOI and must continue to be eligible throughout the Transaction
until its completion. IB shall have the obligation to immediately notify the Transaction
Advisor on its becoming ineligible any time during the Transaction. In the event of any IB
getting disqualified or not meeting the eligibility criteria, such IB shall not be permitted to
continue to participate in the Transaction.

2) All the bid(s) shall be valid for 180 days from the last date of submission of EOI as stipulated
in Clause 2.3 and may need to be further extended by another 180 days on intimation to the
Interested Bidders of the same.

3) All financial statements or data to be derived therefrom for the evaluation of Financial
Criteria referred herein shall mean on a consolidated basis.

4) In the event the SSP – Divested Unit is transferred to an SPV (“SSP SPV”), the Successful
Bidder and Consortium SPV, if applicable, shall be required to lock-in its shareholding in SSP
SPV (including any shares subscribed to in future) for a minimum period of five (5) years
from the date of closing under the Definitive Agreements and the Successful Bidder/
Consortium SPV shall not be permitted to cede with Control of the SSP SPV for such period.
The Successful Bidder / Consortium SPV shall be obliged to ensure that the SSP SPV does not
part with the SSP – Divested Unit (or a substantial portion thereof) for the aforesaid period of
five (5) years from the date of closing under the Definitive Agreements. Further details and
other terms and conditions shall be provided in the RFP.

5) In the event the SSP – Divested Unit is transferred directly to the Successful Bidder or the
Consortium SPV, as the case may be, the Successful Bidder/ Consortium SPV shall not be
permitted to part with the SSP – Divested Unit (or a substantial portion thereof) for a
minimum period of five (5) years from the date of closing under the Definitive Agreements.
Further details and other terms and conditions shall be provided in the RFP.

6) Requisite approvals: The IB shall be required to obtain all necessary approvals under
applicable laws from relevant government agencies, including the Ministry of Steel, as may
be required to enable the Interested Bidder to enter into the Definitive Agreements before
completing the Transaction.

7) Where the Interested Bidder/ Consortium Member is a foreign entity, it shall ensure that it
meets extant FDI norms and regulations.

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8) The Interested Bidders shall evaluate and ensure that they are permitted to invest under
applicable laws to the extent they propose to participate.

9) Only Interested Bidders which are permitted under applicable laws to participate (to the
extent of their proposed participation) shall be permitted to bid.

10) After the submission of the EOI, there shall be no change in the Control of the Successful
Bidder and each Consortium Member for a minimum period of five (5) years from the date of
closing under Definitive Agreements, without prior approval of GOI/ Company.

11) Where the IB is a Consortium, upon being declared Successful Bidder,

a. The Lead Member of the Consortium shall continue to hold at least 26% equity
shareholding in the Consortium SPV for a minimum period of five (5) years from the
date of closing under the Definitive Agreements.

b. There shall be no change in composition of the Consortium SPV or dilution of

shareholding or change in inter se shareholding ratio of the Consortium Members in
the Consortium SPV, without the prior approval of Government of India/ SAIL, for a
period of five (5) years from the date of closing under the Definitive Agreements.

Further details and other terms and conditions shall be provided in the RFP.

12) In the event IB/ Lead Member of Consortium meets Technical Criteria through its Direct
Subsidiary/ Direct Subsidiary LLP/ Direct Holding Company, there shall be no change in the
relationship between IB/ Lead Member of Consortium and entity meeting , after the
submission of EOI, for a period of five (5) years from the date of closing under the Definitive
Agreements.

It is clarified that the IB shall continue to remain its direct Subsidiary/ direct Subsidiary LLP/
Direct Holding Company after the submission of EOI, for a period of 5 years from the date of
closing under the Definitive Agreements.

Further details and other terms and conditions including any continuing covenants shall be
provided in the RFP.

13) Change in Consortium or conversion of non-consortium IB to Consortium: If the

Shortlisted Bidder desires a change in the Consortium by inclusion/ exclusion of Consortium
Members or if a non-consortium Shortlisted Bidder desires to form a Consortium by
inducting new member(s), it shall have to apply for such change to the Transaction Advisor.
The TA in writing shall apprise the Ministry of Steel about such change, with due
consideration to the identity being concealed. The MoS may approve such inclusion/
exclusion, subject to the following:

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a. The change shall be permitted only once per Shortlisted Bidder/Consortium.

b. No change in Lead Member shall be allowed. In case of non-consortium Shortlisted
Bidder, such Shortlisted Bidder should act as Lead Member of the Consortium, upon
approval of induction of the new member.
c. Jumping from one Consortium to another shall not be permitted. Further, two or
more Shortlisted Bidders shall not be permitted to form a Consortium.

The application for such modification/ withdrawal/ substitution shall be made within 2 (two)
months from being designated as Shortlisted Bidder.

14) The Interested Bidder shall continue the business of the plant in its entirety as being
conducted on the completion of the Transaction on a going concern basis.

15) The Interested Bidder, alongwith the entity meeting Technical Criteria in accordance with
Clause 5.1.3.a, is expected to bring in requisite technology to run the plant efficiently.

16) The Interested Bidders shall ensure that they are permitted to invest under applicable laws to
the extent they propose to participate.

17) The GOI/ Company reserves the right to seek any additional indemnities, warranties,
representations or performance obligations from the Interested Bidders or any of their Group
Companies to its sole satisfaction.

18) Notwithstanding anything contained in this EOI Request, the GOI reserves the right to reject
any EOI and to annul the EOI process and reject all EOIs at any time without any liability or
any obligation for such acceptance, rejection or annulment, including on grounds of national
integrity, national security and national interest and without assigning any reasons therefore.
In the event that the GOI rejects or annuls all the EOIs, it may, in its discretion, invite all
eligible IBs to submit fresh EOIs hereunder.

19) The GOI reserves the right not to proceed with the EOI process at any time, without notice or
liability, and to reject any EOI without communicating any reasons.

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6. DISQUALIFICATION

1) GOI/ Company/ Transaction Advisor shall not consider for the purpose of qualification,
any EOI which has been found to be incomplete in content or attachments.

2) Without prejudice to any other rights or remedies available to GOI/ Company, the GOI/
Company reserves the right to disqualify any IB or Consortium Member and exclude its
EOI from further consideration for any of the reasons, including without limitation listed
below:

a. Any misrepresentation/ false statement made by an IB/ any Consortium Member at

any stage of the Transaction, whether in the EOI, the financial bid, supporting
documentation or otherwise and whether written or oral.

b. If the EOI submitted by the IB is in any respect inconsistent with, or demonstrates

any failure to comply with, the provisions of the EOI Request, including not being
accompanied by the non- refundable Fee.

c. Any condition or qualification or any other stipulation inserted by the IB/ any
Consortium Member, in the EOI

d. Failure by IB/ any Consortium Member to provide the necessary and sufficient
information required to be provided in the EOI in accordance with this EOI Request.

e. Failure by IB/ any Consortium Member to provide, within the time specified by the
GOI/ Company/ Transaction Advisor, the supplemental information sought by the
GOI/ Company/ Transaction Advisor for evaluation of the EOI.

f. Submission of more than one (1) EOI by any IB either as sole bidder or as Consortium
Member in which case, all such EOIs shall be rejected.

g. The IB not satisfying the eligibility and requisite qualification criteria specified in the
EOI Request and hence not being eligible.

h. Failure by IB/ any Consortium Member to comply with any other condition or
requirement as listed in the EOI Request.

i. In case the IB/ any Consortium Member is a CPSU or Central Government owned
Cooperative Societies i.e. where Government’s ownership is 51% or more

j. Failure to comply with any reasonable request of GOI/ Company/ Transaction

Advisor in relation to the Transaction.

k. If GOI/ Company is not satisfied with sources of funds/ownership structure of the IB.

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l. If at any time it is discovered that the IB/ Consortium Member are subjected to
winding up/insolvency/ bankruptcy proceedings or other proceedings of a similar
nature.

m. Any of the outstanding indebtedness of the IB/ any Consortium Member or its
respective parent or subsidiaries availed from either banks or financial institutions
being classified as ‘non-performing asset’ or any equivalent classification in their
respective jurisdiction.

n. Any information regarding or in connection with the IB/ Consortium Member which
becomes known that is detrimental to the national security and/or national interest
and/or the Transaction and/or the interests of the Company.

o. If at any stage of the Transaction, the IB/ Consortium Member and/ or its directors/
Promoters are denied security clearance or their security clearance is revoked by the
GOI.

p. Initiation or existence of any legal proceedings, by or against the IB/ Consortium

Member in respect of the Company, which proceeding may be prejudiced by the
participation of the IB/ Consortium Member in the selection process or the
Transaction.

q. IB/ Consortium Member or its Promoters or Promoter Groups or directors is

debarred from accessing or operating in the capital markets or restrained from
buying, selling or dealing in securities by any Governmental Authority.

r. IB/ Consortium Member or its Promoters or Promoter Groups or directors are

appearing in the RBI list of wilful defaulters or any such list by a competent authority
in their respective jurisdiction.

For the purpose of this clause, “Wilful Defaulter” means an issuer who is categorized
as a wilful defaulter by any bank or financial institution or consortium thereof, in
accordance with the guidelines on wilful defaulters issued by the Reserve Bank of
India and includes an issuer whose director or Promoter is categorized as such.

s. IB/ Consortium Member is an erstwhile Overseas Corporate Bodies (OCB) which is

incorporated outside India and are under the adverse notice of RBI.

For the purpose of this clause, “Overseas Corporate Bod(ies)” mean a company,
partnership firm, society and other corporate body owned directly or indirectly to the
extent of at least sixty per cent by Non-Resident Indians and includes overseas trust
in which not less than sixty per cent beneficial interest is held by Non-resident
Indians directly or indirectly but irrevocably, which was in existence as on the date
of commencement of the Foreign Exchange Management (Withdrawal of General

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Permission to Overseas Corporate Bodies (OCBs) Regulations, 2003) and

immediately prior to such commencement was eligible to undertake transactions
pursuant to the general permission granted under Foreign Exchange Management
Regulation Act, 1999.

t. IB/ Consortium Member is prohibited or restricted from investing in SAIL / SSP –

Divested Unit on the basis of status or sector in which SAIL operates under FEMA,
1999 or any regulations made thereunder and including the provisions of the
consolidated Foreign Direct Investment Policy (FDI Policy). It being clarified that
sectors where government approval is required will not be considered as ‘restricted’
from investing.

u. If it is discovered at any stage of the Transaction that the IB/ Consortium Member
does not possess requisite corporate authorizations to participate in the Transaction.

3) Where IB is a Consortium, if any of the Consortium Members are disqualified, the

Consortium shall automatically stand disqualified.

4) Breach of Undertaking executed by the IB;

5) In regard to matters relating to the national security and national integrity, any charge-
sheet by any Governmental Authority / conviction by a court of law including under the
provisions of the Indian Penal Code or Official Secrets Act or any other relevant legislation
for an offence committed by the IB or any of the Consortium Members or by any of their
respective Affiliate(s) or any of their Promoters, Promoter Group and directors would
result in disqualification. The decision in regard to the relationship between the IB or any
of the Consortium Members and the Affiliate(s) would be taken based on the relevant facts
and after examining whether the two entities are substantially controlled by the same
person/persons.

6) The IB / any Consortium Member who is not qualified to participate in the Transaction
pursuant to the Government of India office memorandum No. 3/9/2016-DoD-II-B dated
September 28, 2017 (as per Annexure 12A), as amended from time to time.

7) If the IB/ any Consortium Member does not satisfy any of the requirements as may be
issued by the GOI by way of notifications/ guidelines / circulars or such similar
notifications from time to time, including any conditions for qualification, the EOI
submitted by the IB shall be disqualified.

8) Integrity Pact Clause: If an IB/ any Consortium Member is found involved in corrupt
practices, unfair means or illegal activities during any stage of the Transaction or during
the bid process and during the negotiation and execution of the Definitive Agreements ,
the IB shall be disqualified, at the sole discretion of GoI.

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9) If any default, as above, becomes known after the IB has been shortlisted to receive the
CIM that would have entitled GOI to reject or disqualify the IB, GOI reserves the right to
reject or disqualify the IB at the time such information becomes known to GOI.

10) GOI’s determination that one or more of the events specified in this Clause 6 has occurred
shall be final and conclusive.

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7. ANNEXURES

Annexure 1: Format for Letter of EOI

(To be typed on the letterhead of the IB/ Lead Member of the Consortium submitting the EOI)

Reference No. ___________Date ___________

To,

Mr. S.K.Arora
Senior Vice President
PA&SF Group
SBI Capital Markets Ltd.
6th Floor, World Trade Tower
Barakhamba Lane
New Delhi – 110 001

Kind Attention: Mr. S.K. Arora

Sub: EXPRESSION OF INTEREST FOR STRATEGIC DISINVESTMENT OF SALEM STEEL

PLANT AT SALEM

Sir/ Madam,

This is with reference to the advertisement dated [●] (“Advertisement”) inviting Expression of
Interest (“EOI”) for strategic disinvestment of Salem Steel Plant at Salem, Tamil Nadu (“SSP” or
“the Plant”) by SAIL (“Company”) along with transfer of management control (“the
Transaction”).

This communication has been issued by the [Interested Bidder (as defined below) OR Lead
Member (as defined below) for and on behalf of the Consortium (as defined below).]2

We have read and fully understood the contents of the Advertisement, the Preliminary
Information Memorandum and EOI Request dated [●], including all of the qualification
requirements and information provided therein. Capitalised expressions used in this letter

2 Strike out, whichever is not applicable

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(including all enclosures) have the same meaning as ascribed thereto in the EOI Request dated
[●].

We hereby express our interest for participating in the Transaction and confirm and undertake as
follows:

1. We are interested in bidding for the strategic sale of SSP.

2. [We are submitting this EOI as [●] [insert name of Interested Bidder] having its registered
office at [●]

OR

2. We have formed a consortium comprising [●] members (“Consortium”) as follows:

a. [●] holding [●]% stake in the Consortium i.e. holding [●]% of the equity share
capital of the Consortium SPV and is designated as Lead Member as per the
Consortium Agreement executed among all the Consortium Members(“Lead
Member”);

b. [●] holding [●]% stake in the Consortium i.e. holding [●]% of the equity share
capital of the Consortium SPV; and

c. [●] holding [●]% stake in the Consortium i.e. holding [●]% of the equity share
capital of the Consortium SPV

OR

2. We are permanent employees of SAIL and are participating in this Transaction

independently. The list of employees is provided below:

Residential Identity PAN

Name of Employee Address proof and
S.
the Designation Code, if TAN
No. (Adhaar No/
Employee any
Passport No)

OR

2. We are permanent employees of SAIL have formed a consortium with [●] [insert name of
bank/ FI/ VC Fund]] as follows:

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a. Employees holding [●]% shareholding in the Consortium; and

b. [●] holding [●]% shareholding in the Consortium;

The list of employees is provided below:

Residential Identity PAN

Name of Employee Address proof and
S.
the Designation Code, if TAN
No. (Adhaar No/
Employee any
Passport No)

]3 (hereinafter referred to as the “Interested Bidder” or “IB”)

3. [We agree to form a Special Purpose Vehicle (in the form of a company), within a
stipulated time, once finally selected to enter into the Definitive Agreements. The
shareholding of the Consortium SPV shall be the same as the shareholding of the
Members in the Consortium.]4

4. We satisfy the eligibility criteria detailed in the Advertisement and the Request for
Expression of Interest, including the guidelines of Department of Investment and Public
Asset Management OM No. 3/9/2016–DoD-II-B dated September 28, 2017, as amended
from time to time.

5. [We are engaged in the [mining/ manufacturing/ processing] of [●] [insert name of
Mining Industry/ Core Industry/ Metal Industry in which IB operates]for the past [●]
years

OR

[●] [insert name of entity meeting technical criteria] is our [Direct Holding
Company/Direct Subsidiary Company/ Direct Subsidiary LLP]5 and is engaged in the
[mining/ manufacturing/ processing] of [●] [insert name of Mining Industry/ Core
Industry/ Metal Industry in which such entity operates] for the past [●] years..

3 Strike out, whichever is not applicable

4 Strike out in case of Sole IB
5 Strike out, whichever is not applicable

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Part B – Request for Expression of Interest SAIL-SSP

6. We confirm and represent that we have the requisite corporate authorisations to submit
the EOI.

7. We undertake and confirm that in the event we become the Successful Bidder,

a. We shall continue the business of the Plant in its entirety as being conducted on
the completion of the Transaction, on a going concern basis.

b. We shall bring in requisite technology to run the plant efficiently, [through our
[Direct Holding Company/Direct Subsidiary Company/ Direct Subsidiary LLP]6
whose experience has been utilized to meet the technical eligibility criteria]7.

c. In the event the SSP – Divested Unit is transferred to an SPV (“SSP SPV”), the
[Successful Bidder/ Consortium SPV]8 shall be required to lock-in its shareholding
in SSP SPV (including any shares subscribed to in future) and shall continue to be
in Control of SSP SPV for a minimum period of five (5) years from the date of
closing under the Definitive Agreements and shall be obliged to ensure that the
SSP SPV does not part with the SSP – Divested Unit (or a substantial portion
thereof) for the aforesaid period of five (5) years. We undertake to comply with
the terms and conditions which may be included in the RFP.

d. In the event the SSP – Divested Unit is transferred directly to the [Successful
Bidder / Consortium SPV]9, as the case may be, the Successful Bidder/ Consortium
SPV , shall not be permitted to part with the SSP – Divested Unit (or a substantial
portion thereof) for a minimum period of five (5) years from the date of closing
under the Definitive Agreements. We undertake to comply with the terms and
conditions which may be included in the RFP.

e. [The Lead Member of the Consortium shall continue to hold at least 26% equity
shareholding in the Consortium SPV for a minimum period of five (5) years from
the date of closing under the Definitive Agreements.

f. There shall be no change in composition of the Consortium SPV or dilution of

shareholding or change in inter se shareholding ratio of the Consortium Members
in the Consortium SPV, without the prior approval of Government of India/ SAIL,
for a period of five (5) years from the date of closing under the Definitive
Agreements.]10

6 Strike out, whichever is not applicable

7
Strike out, if not applicable
8
Strike out, if not applicable
9
Strike out, if not applicable
10 Strike out in case of Sole IB

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Part B – Request for Expression of Interest SAIL-SSP

8. We acknowledge that after the submission of the EOI, there shall be no change in Control
of [the Interested Bidder/ any Consortium Member]11, without the prior approval of
Government of India/ SAIL, for a period of five (5) years from the date of closing under
the Definitive Agreements (as applicable).

9. [We acknowledge and undertake that after the submission of the EOI, [●] [insert name of
Direct Subsidiary/ Direct Subsidiary LLP used for meeting the Technical Criteria], it shall
continue to remain our Direct Subsidiary/Direct Subsidiary LLP12), for a period of five (5)
years from the date of closing under the Definitive Agreements.

10. We certify that neither have we been convicted by any Court of law, indicted, nor has any
adverse order been passed against us by a regulatory authority which would cast a doubt
on our ability to manage the public sector unit when it is disinvested or which related to a
grave offence that outrages the moral sense of the community.

11. We further certify that in regard to matters relating to security and integrity of the
country, no charge sheet has been filed by any agency of the Government of India nor
have we been convicted by a Court of law, including under the provisions of the Indian
Penal Code or Official Secrets Act, for any offence committed by us or by any of our
Affiliates or Group Companies.

12. We further certify that no investigation by a regulatory authority is pending either

against us or against our Affiliates or Group Companies or against any of our directors or
key managerial personnel or employees.

13. In the event we are attracted by any of the disqualifications in terms of the EOI Request
during the pendency of the process of Strategic Disinvestment/ Transaction, owing to
change in facts or circumstances, we would intimate the Transaction Advisor of the same
immediately.

14. We represent that we are not disqualified to enter into or perform our obligations in
relation to the Transaction (including acting as Promoter of the company) pursuant to the
applicable laws including regulations, guidelines, orders, directions or instructions of any
regulatory authority (including SEBI or RBI), administrative authority or department or
ministry of central or state government or any court in India.

15. We however, understand that the GOI/ Company reserves the right to decide whether or
not to qualify our EOI without assigning any reason whatsoever and without any
liability.

11 Strike out, whichever is not applicable

12 Strike out, whichever is not applicable

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Part B – Request for Expression of Interest SAIL-SSP

16. We represent that the loans availed by us or by our parent or subsidiaries , have not been
classified as ‘non-performing asset’ or such equivalent classification by either banks or
financial institutions.

17. We represent that we or our Promoters or Promoter Groups or our directors are not
debarred from accessing or operating in the capital markets.

18. We represent that we or our Promoters or Promoter Groups or our directors not
appearing in the RBI list of wilful defaulters or any such competent authority in their
respective jurisdiction.

19. We represent that we are not erstwhile Overseas Corporate Bodies which are
incorporated outside India and are under the adverse notice of RBI.

20. We represent that we are not prohibited or restricted from investing in SAIL or SSP –
Divested Unit on the basis of status or sector in which SAIL operates, under FEMA, 1999.

21. We confirm that we are not and have not been classified as Central Public Sector
Undertaking or a central government owned Cooperative Society (i.e. where
Government’s ownership is 51% or more)

22. We shall keep this EOI valid for 180 days from the Due Date of submission of EOI as
specified in the EOI Request and shall be further extended by another 180 days on
intimation from the Company/ Transaction Advisor.

23. [The Statement of Legal Capacity, Declaration in relation to Statement of Legal

Proceedings and Request for Qualification as per formats given in Annexures of the EOI
Request, duly signed by us are enclosed along with the stamped and notarized Power of
Attorney.

OR

The Statement of Legal capacity, Declaration in relation to Statement of Legal

Proceedings, Request for Qualification, duly signed by representative members who
jointly satisfy the eligibility criteria are enclosed along with the certified true copy of the
Consortium Agreement between the Consortium Members as per formats given in
Annexures of the EOI Request. Further, the stamped and notarized Power of Attorney of
each Consortium Member is also enclosed.]13

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

13 Strike out, whichever is not applicable

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Part B – Request for Expression of Interest SAIL-SSP

(In case of entities having PAN and TAN registration in India)

Our PAN number is ___________. [insert PAN of IB/ Lead Member]

Our TAN number is ___________. [insert TAN of IB/ Lead Member]

(In case of entities not having PAN and TAN registration in India) [following details of the IB/
Lead Member to be provided]

 Name, Email-ID, contact number

 Address in the country of residence
 Country of tax residency
 Tax Identification Number (”TIN”) in the country of residence; if no TIN is being issued,
any other unique identification number issued by the government of such country.

Thank you.

Yours sincerely,

For and on behalf of: [name of the Interested Bidder/ Lead Member]

Signature: (Authorised Representative and Signatory)

Name of the Person: [●]

Designation: [●]

Enclosures:

1. Demand Draft for Non-refundable Fee

2. Statement of Legal Capacity

3. Request for Qualification, [submitted by each Consortium Member]14

4. Power of Attorney [submitted by each Consortium Member]15

14 Delete if not applicable

15 Delete if not applicable

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Part B – Request for Expression of Interest SAIL-SSP

5. [Certified true Copy of the Consortium Agreement between the Consortium Members]16

6. Declaration on Statement of legal proceedings [submitted by each Consortium Member]17

7. [Undertaking by direct Subsidiary/ direct Subsidiary LLP/ direct Holding Company]18

16 Delete if not applicable

17 Delete if not applicable
18
Delete if not applicable

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Part B – Request for Expression of Interest SAIL-SSP

Annexure 2: Statement of Legal Capacity

(To be submitted on the letterhead of the IB/ each Consortium Member submitting the EOI)

Reference No. ___________Date ___________

Mr. S.K. Arora

Senior Vice President
PA&SF Group
SBI Capital Markets Ltd.
6th Floor, World Trade Tower
Barakhamba Lane
New Delhi – 110 001

Kind Attention: Mr. S.K.Arora

Sub: EXPRESSION OF INTEREST FOR STRATEGIC DISINVESTMENT OF SALEM STEEL

PLANT AT SALEM (“SSP”)

Sir/Madam,

This is with reference to the advertisement dated [●] (“Advertisement”) inviting Expression of
Interest (“EOI”) for strategic disinvestment of Salem Steel Plant at Salem, Tamil Nadu (“SSP” or
“the Plant”) by SAIL (“Company”) along with transfer of management control (“Transaction”).

We have read and fully understood the contents of the Advertisement, the Preliminary
Information Memorandum and EOI Request dated [●], including all of the qualification
requirements and information provided therein and hereby express our interest for participating
in the Transaction and confirm and undertake as follows:

1. We are interested in bidding for the strategic sale of SSP.

2. [We are a member of the Consortium comprising [●] members (“Consortium”) as

follows:

a. [●] holding [●] % stake in the Consortium i.e. holding [●]% of the equity share
capital of the Consortium SPV and is designated as Lead Member as per the
Consortium Agreement executed among all the Consortium Members (“Lead
Member”);

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Part B – Request for Expression of Interest SAIL-SSP

b. [●] holding [●] % stake in the Consortium i.e. holding [●]% of the equity share
capital of the Consortium SPV and

c. [●] holding [●] % stake in the Consortium i.e. holding [●]% of the equity share
capital of the Consortium SPV

]19 (hereinafter referred to as the “Interested Bidder” or “IB”)

3. We have examined in detail and have understood the terms and conditions and eligibility
criteria stipulated in the Advertisement and the EOI Request and [we satisfy the
eligibility criteria OR we jointly satisfy the eligibility criteria alongwith other Consortium
Members]20 stipulated in the EOI Request and the Advertisement.

4. We represent that we have the requisite corporate authorisations to submit the EOI.

5. We represent that all the information provided in the EOI along with supporting
documents is complete and accurate in all material respects.

6. [We have agreed that [●] [insert name and designation of individual] will act as our
representative on our behalf (“Representative”) and has been duly authorised to submit
the EOI. Further, the Representative is vested with requisite powers to furnish this letter
and Request for Qualification and authenticate the same.

OR

6. We have agreed that [●] [insert name and designation of individual] chosen as
representative of our Consortium on our behalf (“Representative”) and has been duly
authorised to submit the EOI. Further, the Representative is vested with requisite powers
to furnish this letter and Request for Qualification and authenticate the same.]21

(In case of entities having PAN and TAN registration in India)

Our PAN number is ___________. [insert PAN of IB/ Consortium Member]

Our TAN number is ___________. [insert TAN of IB/ Consortium Member]

(In case of entities not having PAN and TAN registration in India) [following details of the IB/
Consortium Member to be provided]

 Name, Email-ID, contact number

 Address in the country of residence

19 Strike out if not applicable

20 Strike out, whichever is not applicable
21 Strike out, whichever is not applicable

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Part B – Request for Expression of Interest SAIL-SSP

 Country of tax residency

 Tax Identification Number (”TIN”) in the country of residence; if no TIN is being issued,
any other unique identification number issued by the government of such country.

Thank you.

Yours sincerely,

For and on behalf of: [name of the Interested Bidder/ Consortium Member]

Signature: (Authorised Representative and Signatory)

Name of the Person: [●]

Designation: [●]

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Part B – Request for Expression of Interest SAIL-SSP

Annexure 3: Request for Qualification

(To be submitted on letterhead of Interested Bidder/ each Consortium Member)

A. Name of the Interested Bidder/ Consortium Member _____________________

B. Executive Summary: providing brief description of the Interested Bidder/ Consortium

Member, containing details like

1) Ownership structure

2) Identity of the natural persons who are the Ultimate Beneficial Owners

3) The Place of Effective Management of business of the IB/ Consortium Member

4) Write up on business history and growth, business areas/ activities, revenue details.

It shall include a brief commentary on the capability of the IB/ Consortium Member, as
demonstrated, inter alia, in its past track record, to run its own business.

C. Contact Information of the IB/ Consortium Member:

1)Following details to be provided

a) Registered Office – Address, phone number, facsimile number

b) Head Office (if different from Registered Office)– Address, phone number,
facsimile number

c) Address for correspondence [indicate whether Registered Office/ Head Office/ any
other]

2)If IB is a Consortium, name of the Lead Member of the Consortium:

3)Contact Person(s):

a) Name:

b) Designation:

c) Phone No.:

d) Mobile No.:

e) Fax No.:

f) Email:

[please provide email ID that would be used for all correspondence with the IB]

4)Website details of IB/ Consortium Member.

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Part B – Request for Expression of Interest SAIL-SSP

D. Basic Information:

1) Constitution [strike out whichever is not applicable]

a) Public Limited Company

b) Private Limited Company

c) Limited Liability Partnership

d) Others, if any [Please specify]

2) Date and Place of incorporation of IB/ Consortium Member

3) Date of commencement of business of IB/ Consortium Member [in case of Public Limited
Company]

4) Role/ Interest of each Consortium Member (if applicable).

5) Nature of business carried out/ products dealt with by the IB/ Consortium Member and a
profile containing information on the IB’s/ Consortium Member’s operations.

6) Salient features of financial performance for the last years

E. Management Organization:

1) An overview of IBs/ Consortium Member’s senior management and organization

structure certified by the company secretary.

2) IB/ Consortium Member shall provide details on (a) the Ultimate Beneficial Owner (as
per SEBI Circular No. CIR/MIRSD/2/2013 dated January 24, 2013), (b) Place of Effective
Management of the business of the IB/ each Consortium Member (as per Central Board of
Direct Taxes Guideline F. No. 142/11/2015-TPL dated January 24, 2017).

F. International Operations/ Joint Ventures/ Alliances:

1) Brief note of IB/ Consortium Member’s international operations, joint ventures, alliances,
(whether international or domestic), including incorporation details, registered office,
nature and size of such operations, equity ownership, if applicable, copies of the audited
financial statements of immediately preceding financial year for such companies.

Provided that, in the event the such company is an unlisted company, and does not have
the audited financial statements of immediately preceding financial year, the latest
available unaudited/ provisional financial statements may be given as certified by its
statutory auditor; in case such company is a listed company, and its audited financial
statements are not available for the immediately preceding financial year, the
information contained in Quarterly Limited Review report is to be submitted. However,

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Part B – Request for Expression of Interest SAIL-SSP

the audited financial statements of such companies shall be submitted, as and when
prepared as per the statutory requirements and timelines of the relevant countries where
it is incorporated.

G. Professional Advisors:

1) Please provide names and addresses of those companies and professional firms, if any,
who are advising the IB for the Proposed Transaction, together with the names of the
principal individual advisors at those companies and firms.

Provided that in the event of appointment of any advisor after the submission of EOI, the
IB shall promptly submit the relevant details to the Transaction Advisor

Note: This information can be provided at a later stage, if not available at this stage.

H. Outstanding Litigation/ Contingent Liability:

1) IB/ Consortium Member to provide details of all outstanding litigations, if any, and if
materialised, have or would reasonably be expected to have, a material adverse effect on
the business, operations (or results of operations), assets, liabilities and/or financial
condition of the IB/ Consortium Member, or other similar business combination or
transaction.

2) IB/ Consortium Member to provide details of all contingent liabilities that, if

materialised, have or would reasonably be expected to have a material adverse effect on
the business, operations (or results of operations), assets, liabilities and/or financial
condition of the IB/ Consortium Member, or other similar business combination or
transaction.

I. Foreign Direct Investment (FDI) Restrictions:

1) If the IB/ Consortium Member is a foreign company/ overseas corporate body – Please
specify list of statutory approvals required from any Governmental Authority including,
inter-alia, the Government of India/ the Reserve Bank of India/ the Foreign Investment
Promotion Board/ Ministry of Steel/ any other Government agency, and whether these
have been applied for/ are obtained/ are awaited.

S. No. Clearance/ Approval Relevant Governmental Authority Status

Applied /
obtained/ Awaited

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Part B – Request for Expression of Interest SAIL-SSP

J. Enclosures

1) Certificate of Incorporation, Memorandum and Articles of Association, Certificate of

Commencement of Business, Charter Documents, or other Constitution Documents, i.e.,
Partnership Deed etc., as may be applicable and SEBI Registration Certificate for AIFs

2) A certificate for list of Board of Directors and key management personnel duly signed by
the Company Secretary of IB/ Consortium Member and also counter signed by its
authorized signatory.

3) A certificate by an independent chartered accountant/statutory auditor/Company

Secretary or any other office in-charge of legal affairs for the shareholding pattern of the
IB/ Consortium Member.

4) Basis of eligibility for participation in the Transaction:

a) A certificate duly signed by the Company Secretary/ any other officer in charge of
legal affairs, stating that the IB is eligible to participate in the proposed Transaction in
terms of Clause [●] [specific reference to the said provision may be drawn] of its
Memorandum and Articles of Association/Partnership Deed/ [●] [insert name of
relevant Constitution Document].

b) [A certificate from Statutory Auditor of the Interested Bidder/ Lead Member of

Consortium certifying that it has been operating in [a Mining Industry/ Core
Industry/ Metal Industry] for atleast 5 (five) years OR self-certified true copies of
Consents to Operate issued by the relevant State Pollution Control Board

OR

In the event IB/Lead Member of Consortium meets Technical Criteria through its
Direct Subsidiary/ Direct Subsidiary LLP/ Direct Holding Company, , a certificate
from Statutory Auditor of the entity meeting technical criteria certifying that such
entity has been operating in [a Mining Industry/ Core Industry/ Metal Industry] for
atleast 5 (five) years OR self-certified true copies of Consents to Operate issued by the
relevant State Pollution Control Board]

c) Certificate from an independent chartered accountant/statutory auditor certifying the

Financial Criteria (i.e. Net-worth, Sales, Cash Profit) as defined in Clause 5.1
Eligibility criteria, of the EOI Request. Such certificate should clearly mention that the
issuing authority is the [statutory auditor of the company OR independent chartered
accountant] and that each of the Financial Criteria stated therein has been computed
in accordance with Clause 5.1 of the EOI Request

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Part B – Request for Expression of Interest SAIL-SSP

5) Audited Financial Statements (on standalone and consolidated basis)/Annual Reports for
the previous five financial years.

Provided that, in the event the IB/ Consortium Member is an unlisted company, and its
audited financial statements as on [●], as the case may be, are not available, the
unaudited/ provisional financial statements may be given as certified by the statutory
auditors; in the event the IB/ Consortium Member is a listed company, and its audited
financial statements as on [●], as the case may be, are not available, the information
contained in Quarterly Limited Review report is to be submitted. However, if the IB/
Consortium Member submits unaudited financials at the time of submission of EOI, it
shall submit the audited financial statements, as and when prepared as per the statutory
requirements and timelines of the relevant countries where the IB/ Consortium Member
is incorporated.

6) Extract of the charter documents and documents such as a board or shareholders’

resolution in favour of the person executing the Power of Attorney for the delegation of
power on behalf of the IB/ Consortium Member.

Yours sincerely,

For and on behalf of: [name of the Interested Bidder/ Consortium Member]

Signature: (Authorised Representative and Signatory)

Name of the Person: [●]

Designation: [●]

Place:

Date:

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

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Part B – Request for Expression of Interest SAIL-SSP

Annexure 4: Power of Attorney

(To be appropriately stamped on non-judicial stamp paper of appropriate value as per Stamp
Act relevant to place of execution and notarized)

Power of Attorney for signing of Expression of Interest (EOI)

To all to whom these presents shall come, We………… [name of the IB] having our registered
office at ______________ [address of the registered office] do hereby exclusively, unconditionally
and irrevocably constitute, nominate, appoint and authorize Mr./Ms.
(name),…………son/daughter/wife of ………… and presently residing at …………, who is
presently employed with [us/ the Lead Member of our Consortium]22 and holding the position of
…………, as our true and lawful attorney (hereinafter referred to as the “Attorney”) to do in our
name and on our behalf, to do, execute, and perform all such acts, agreements, deeds, matters
and things as are necessary or required in connection with or incidental to submission of our
application for qualification for the proposed strategic sale of 100% stake in Salem Steel Plant at
Salem in Tamil Nadu, including but not limited to signing and submission of all applications,
EOIs, affidavits, bids, and other documents and writings, participating in participating in
conferences, if any, and providing information/ responses to GOI/Company/ Transaction
Advisor, representing us in all matters before GOI/ Company/ Transaction Advisor and generally
dealing with GOI/ Company/ Transaction Advisor in all matters in connection with or relating to
or arising out of our application for qualification for the Transaction (as defined in the EOI
Request dated [●] issued by Transaction Advisor).

AND we hereby agree to ratify and confirm and do hereby ratify and confirm all acts, deeds and
things done or caused to be done by our Attorney pursuant to and in exercise of the powers
conferred by this Power of Attorney and that all acts, deeds and things done by the Attorney in
exercise of the powers hereby conferred shall and shall always be deemed to have been done by
us concerning or touching these presents as fully and effectually as if we were present and had
done, performed or executed the same itself.

We confirm and declare that we have not executed any other power of attorney in favour of
any other person(s) in relation to the subject matter of this power of attorney and this power
of attorney is irrevocable.

All the terms used herein but not defined shall have the meaning ascribed to such terms in the
EOI Request dated [●].

22 Strike out whichever is not applicable

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Part B – Request for Expression of Interest SAIL-SSP

IN WITNESS WHEREOF WE………… THE ABOVE NAMED PRINCIPAL HAVE EXECUTED

THIS POWER OF ATTORNEY ON THIS ………… DAY OF ………………..

…………………………..

(Signature, name, designation and address)

In the presence of:

1.

2.

Accepted

(Signature, Name, Designation and Address of the Attorney)

[To be duly notarized]

[To affix common seal, if applicable]

Notes: 1) The mode of execution of the Power of Attorney should be in accordance with the procedure, if
any, laid down by the applicable law and the charter documents of the executant(s) and when it is so
required, the same should be under common seal affixed in accordance with the required procedure. 2)
Wherever required, the Interested Bidder should submit for verification the extract of the charter
documents and documents such as a board or shareholders’ resolution/ power of attorney in favour of the
person executing this Power of Attorney for the delegation of power hereunder on behalf of the Interested
Bidder. 3) For a Power of Attorney executed and issued overseas, the document will also have to be
legalized by the Indian Embassy and notarized in the jurisdiction where the Power of Attorney is being
issued. However, the Power of Attorney provided by Interested Bidders from countries that have signed the
Hague Legislation Convention 1961 are not required to be legalized by the Indian Embassy if it carries a
conforming Apostle certificate

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Part B – Request for Expression of Interest SAIL-SSP

Annexure 5: Power of Attorney for Employee Participation

(To be stamped on Rs. 1000 Stamp Paper and Notarized)

Special Power of Attorney

To all to whom these presents shall come, I …………, son/daughter/wife of ………… and
presently residing at ………… being presently employed with Steel Authority of India Limited
(SAIL) having employee code [●]/ being whole-time director on the Board of SAIL having DIN
No. [●], do hereby exclusively, unconditionally and irrevocably constitute, nominate, appoint
and authorize Mr./Ms. …………, son/daughter/wife of ………… and presently residing at
…………, who is presently employed with [●]

I, [●] , do hereby irrevocably nominate, constitute and appoint …………, as my true and lawful
attorney (hereinafter referred to as the “Attorney”) to do in my name and on my behalf, to do,
execute, and perform all such acts, agreements, deeds, matters and things as are necessary or
required in connection with or incidental to submission of our application for qualification for
the proposed Strategic Disinvestment by Steel Authority of India Limited of 100% stake in the
SSP – Divested Unit including but not limited to signing and submission of all applications,
participating in conferences, if any and providing information/ responses to GoI/Company/
Transaction Advisor and generally dealing with GoI/Company/ Transaction Advisor in all
matters in connection with or relating to or arising out of our application for qualification for the
Transaction (as defined in the EOI Request dated [●] issued by the Transaction Advisor.

AND we hereby agree to ratify and confirm and do hereby ratify and confirm all acts, deeds and
things done or caused to be done by our Attorney pursuant to and in exercise of the powers
conferred by this Power of Attorney and that all acts, deeds and things done by the Attorney in
exercise of the powers hereby conferred shall and shall always be deemed to have been done by
us concerning or touching these presents as fully and effectually as if we were present and had
done, performed or executed the same ourselves.

We confirm and declare that we have not executed any other power of attorney in favour of any
other person(s) in relation to the subject matter of this power of attorney and this power of
attorney is irrevocable.

All the terms used herein but not defined shall have the meaning ascribed to such terms in the
EoI Request dated [●].

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Part B – Request for Expression of Interest SAIL-SSP

IN WITNESS WHEREOF WE, ………… THE ABOVE NAMED PRINCIPAL HAVE EXECUTED
THIS POWER OF ATTORNEY ON THIS ………… DAY OF ………………..

…………………………..

(Signature, name, designation and address)

In the presence of:

1.

2.

Accepted

(Signature, Name, Designation and Address of the Attorney)

[To be duly notarized]

Notes: 1) For a Power of Attorney executed and issued overseas, the document will also have to be
legalized by the Indian Embassy and notarized in the jurisdiction where the Power of Attorney is being
issued. However, the Power of Attorney provided by Interested Bidders from countries that have signed the
Hague Legislation Convention 1961 are not required to be legalized by the Indian Embassy if it carries a
conforming Apostle certificate.

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Part B – Request for Expression of Interest SAIL-SSP

Annexure 6: Format for Consortium Agreement (In case IB is a Consortium)

(To be appropriately stamped on non-judicial stamp paper of appropriate value as per Stamp
Act relevant to place of execution and notarized)

THIS Consortium Agreement ("Agreement") is executed on this_______________ day of

___________Two thousand___________ between

1. M/s [insert name of Lead Member] _______________________________________________

[a limited liability partnership OR company] incorporated under the laws of
_____________________ and having its [Registered Office OR Principal Place of Business]
at ___________________ (hereinafter called the "Member-1", which expression shall
include its successors, executors and permitted assigns);

2. M/s ____________________________________ [a limited liability partnership OR

company] incorporated under the laws of ____________________________________ and
having its [Registered Office OR Principal Place of Business] at
____________________________________ (hereinafter called the "Member-2", which
expression shall include its successors, executors and permitted assigns);

3. M/s ____________________________________ [a limited liability partnership OR

company] incorporated under the laws of ____________________________________ and
having its [Registered Office OR Principal Place of Business] at
____________________________________ (hereinafter called the "Member-3", which
expression shall include its successors, executors and permitted assigns); and

for the purpose of submitting response to Advertisement dated [●] inviting Expression of
Interest for strategic disinvestment of 100% stake in Salem Steel Plant (“SSP” or “the Plant”) by
SAIL (“Company”) along with transfer of management control.

WHEREAS, each Member individually shall be referred to as the "Member" and all of the
Members shall be collectively referred to as the "Members" in this Agreement.

WHEREAS the Instructions for submitting EOI as per EOI Request stipulates that in case EOI is
being submitted by a Consortium of Interested Bidders, the Consortium Members will have to
submit a legally enforceable Consortium Agreement in a format specified by GOI.

Capitalised terms used in this Agreement but not defined herein shall have the meaning as per
EOI Request.

NOW THEREFORE, THIS AGREEMENT WITNESSTH AS UNDER:

In consideration of the above premises and agreements all the Members in this Consortium do
hereby mutually agree as follows:

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Part B – Request for Expression of Interest SAIL-SSP

1. We, the Consortium Members and Members to the Agreement do hereby unequivocally
agree that Member-1 (M/s_______________), shall act as the Lead Member as defined in
the EOI Request for self and agent for and on behalf of Member-2, _______ , and
Member-3, _______ , and to submit the EOI;
2. We have formed consortium comprising ____ members as follows:
1. ______________(Insert name)/%stake in the Consortium i.e. holding [●]% of the
equity share capital of the Consortium SPV

2. ______________(Insert name)/%stake in the Consortium i.e. holding [●]% of the

equity share capital of the Consortium SPV

3. ______________(Insert name)/%stake in the Consortium i.e. holding [●]% of the

equity share capital of the Consortium SPV

3. The Lead Member is hereby authorized by the Consortium Members and Members to the
Agreement to bind the Consortium and receive instructions for and on their behalf.
4. The Lead Member shall be liable and responsible for ensuring the individual and
collective commitment of each of the Consortium Members in discharging all of their
respective obligations. Each Member further undertakes to be individually liable for the
performance of its part of the obligations without in any way limiting the scope of
collective liability envisaged in this Agreement.
5. We undertake and confirm that in the event we become the Successful Bidder,
a. We shall continue the business of the Plant in its entirety as being conducted on
the completion of the Transaction, on a going concern basis.

b. We shall incorporate a Special Purpose Vehicle (in the form of a company), within
a stipulated time, to enter into the Definitive Agreements and the shareholding of
the Consortium Members in the Consortium SPV shall be the same as their
shareholding in the Consortium.

c. In the event the SSP – Divested Unit is transferred to an SPV (“SSP SPV”), the
Consortium SPV shall continue to be in Control of the SSP SPV for a minimum
period of five (5) years from the date of closing under the Definitive Agreements
and shall be obliged to ensure that the SSP SPV does not part with the SSP-
Divested Unit (or a substantial portion thereof) for the aforesaid period of five (5)
years from the date of closing under the Definitive Agreements. The entire
shareholding of the Consortium SPV in the SSP SPV (including any shares
subscribed to in future) shall be subject to lock-in restrictions for a minimum
period of five (5) years from the date of closing under the Definitive Agreements.

d. The Consortium Members shall continue to be in Control of the Consortium SPV

for a minimum period of five (5) years from the date of closing under the
Definitive Agreements and shall ensure that the Consortium SPV does not part

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with the SSP – Divested Unit (or a substantial portion thereof) for the aforesaid
period of five (5) years from the date of closing under the Definitive Agreements.

e. The composition of the Consortium shall be maintained for a period of 5 (five)

years from the date of closing under the Definitive Agreements (as applicable).
There shall be no dilution of shareholding or change in inter se shareholding ratio
of the Consortium Members in the Consortium SPV, without the prior approval
of Government of India/ SAIL, for a period of five (5) years from the date of
closing under the Definitive Agreements.

f. The Lead Member of the Consortium shall continue to hold at least 26% equity
shareholding in the Consortium SPV for a minimum period of five (5) years from
the date of closing under the Definitive Agreements.

6. We acknowledge that after the submission of the EOI, there shall be no change in Control
of each Consortium Member for a minimum period of 5 (five) years from the date of
closing under the Definitive Agreements.
7. The Lead Member, on behalf of the Consortium, shall inter alia undertake full
responsibility for liaising with any authority or persons as required.
8. In case of any breach of commitment by any of the Consortium Members, the Lead
Member shall be liable for the consequences thereof.
9. Except as specified in the Agreement, it is agreed that sharing of responsibilities as
aforesaid shall not in any way be a limitation of responsibility of the Lead Member under
these presents.
10. The Lead Member shall be liable irrespective of its scope of work or financial
commitments.
11. This Agreement shall be construed and interpreted in accordance with the Laws of India
and courts at New Delhi alone shall have the exclusive jurisdiction in all matters relating
thereto and arising thereunder.
12. It is further expressly agreed that the Agreement shall be in force and remain valid until
such time that each Consortium Member is a shareholder of the Consortium SPV, unless
expressly agreed to the contrary by the Consortium Members, with the prior written
consent of the Company and GOI.
13. The Lead Member is authorized and shall be fully responsible for the accuracy and
veracity of the representations and information submitted by the Consortium Members
respectively from time to time in the EOI.
14. It is hereby expressly understood between the Consortium Members that no Consortium
Member at any given point of time, may assign or delegate its rights, duties or
obligations under the EOI except with prior written consent of the Company and GOI.
15. This Agreement

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Part B – Request for Expression of Interest SAIL-SSP

(i) has been duly executed and delivered on behalf of each Member hereto and
constitutes the legal, valid, binding and enforceable obligation of each such
Member;
(ii) sets forth the entire understanding of the Members hereto with respect to the
subject matter hereof; and
(iii) may not be amended or modified except in writing signed by each of the
Members and with prior written consent of the Company and GOI .

IN WITNESS WHEREOF, the Members have, through their authorized representatives,

executed these present on the Day, Month and Year first mentioned above.
For M/s _________ [Member 1]

____________ (Signature, Name & Designation of the person authorized vide [board
resolution/power of attorney duly executed by such partners as authorized by the
partnership deed governing such partnership] dated [●])

Witnesses:

(i) Signature ________

Name:
Address:
(ii) Signature ________
Name:
Address:

For M/s _________ [Member 2]

____________ (Signature, Name & Designation of the person authorized vide [board
resolution/power of attorney duly executed by such partners as authorized by the
partnership deed governing such partnership] dated [●])

Witnesses:

(i) Signature ________

Name:
Address:
(ii) Signature ________
Name:
Address:

For M/s _________ [Member 3]

____________ (Signature, Name & Designation of the person authorized vide [board
resolution/power of attorney duly executed by such partners as authorized by the
partnership deed governing such partnership] dated [●])

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Part B – Request for Expression of Interest SAIL-SSP

Witnesses:

(i) Signature ________

Name:
Address:
(ii) Signature ________
Name:
Address:

___________________________

[Signature and stamp of Notary of the place of execution]

[To affix common seal, if applicable]

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Part B – Request for Expression of Interest SAIL-SSP

Annexure 7: Undertaking by the Interested Bidder

(To be appropriately stamped on non-judicial stamp paper of appropriate value as per Stamp
Act relevant to place of execution and notarized)

(If IB is a Consortium, to be signed and submitted by each Consortium Member)

UNDERTAKING BY THE INTERESTED BIDDER

This UNDERTAKING ("Undertaking") is made on this ………. day of …………., [●].

BY

M/s ___________________________________ [insert name of Interested Bidder/ Lead Member] a

[limited liability partnership OR company] incorporated under the laws of
_____________________[insert name of the country] and having its [Registered Office OR
Principal Place of Business] at ___________________ (hereinafter called the [“Interested Bidder”
OR "Lead Member"]23, which expression shall include its successors, executors and permitted
assigns);

[AND

M/s ___________________________________ [insert name of Consortium Member] a [limited

liability partnership OR company] incorporated under the laws of _____________________
[insert name of the country] and having its [Registered Office OR Principal Place of Business] at
(hereinafter called "Member-2", which expression shall include its successors, executors and
permitted assigns);

AND

M/s ___________________________________ [insert name of Consortium Member] a [limited

liability partnership OR company] incorporated under the laws of _____________________
[insert name of the country] and having its [Registered Office OR Principal Place of Business] at

23 Delete whichever is not applicable

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Part B – Request for Expression of Interest SAIL-SSP

(hereinafter called "Member-3", which expression shall include its successors, executors and
permitted assigns);

The Lead Member, Member-2 and Member 3, shall be collectively referred to as Interested
Bidder]24

OR

[The permanent employees of SAIL, as listed in the table below:

Residential Identity PAN

Name of Employee Address proof and
S.
the Designation Code, if TAN
No. (Adhaar No/
Employee any
Passport No)

(hereinafter called "Employees", which expression shall include its successors, executors and
permitted assigns);

AND

M/s ___________________________________ [insert name of bank/ FI/ VC Fund] a [bank/ FI/ VC

Fund] incorporated under the laws of _____________________ [insert name of the country] and
having its [Registered Office OR Principal Place of Business] at (hereinafter called "Employee
Consortium Member", which expression shall include its successors, executors and permitted
assigns);

The Employees and Employee Consortium Member, shall be collectively referred to as

Interested Bidder]25

IN FAVOUR OF:

The Joint Secretary, Ministry of Steel, (the “Administrative Ministry”);

AND

24 Delete if IB is not a Consortium

25 Delete if IB is not a group of Employees/ Employee Consortium

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Part B – Request for Expression of Interest SAIL-SSP

Steel Authority of India Limited (SAIL), a company incorporated under the Companies Act,
1956, bearing corporate identification number L27109DL1973GOI006454, having its registered
office at Ispat Bhawan, Lodhi Road, New Delhi -110003, India (“SAIL” or the “Company”).

AND

SBI Capital Markets Limited, whose registered office is at 202, Maker Tower ‘E’, Cuffe Parade,
Mumbai 400 005, India (hereafter referred to as the “Transaction Advisor”),

AND

L&L Partners (Formerly known as Luthra & Luthra Law Offices), whose registered office is at
103, Ashoka Estate, Barakhamba Road, New Delhi- 110001, India (hereafter referred to as the
“Legal Advisor”),

AND

Protocol Insurance Surveyors & Loss Assessors Private Limited, whose registered office is at B-
13B, SFS Flats, Mayur Vihar, Phase – 3, Delhi – 110096, India (hereafter referred to as the “Asset
Valuer”).

WHEREAS:

A. The Interested Bidder has submitted an Expression of Interest for participation in the
strategic disinvestment of Salem Steel Plant at Salem in Tamil Nadu (“SSP” or “the Plant”)
by SAIL (“the Company”) along with the transfer of management control (the "Transaction")

B. In the context of the IB‘s interest in the Transaction, the Disclosing Party (as defined
hereinafter) may disclose Confidential Information (as defined hereinafter) to the Receiving
Party (as defined hereinafter) to enable the IB to evaluate the Transaction.

NOW, THEREFORE, in consideration for receiving the Confidential Information, the IB hereby
executes this Undertaking and undertakes, represents, warrants, covenants and agrees to the
terms and conditions contained herein:

1. Capitalised terms and expressions used but not defined in this Undertaking shall have the
same meaning ascribed thereto in the EOI Request. The following capitalized expressions
used in this Undertaking (including the recitals) shall have the meaning assigned to them
hereunder;

1.1. "Confidential Information" means and includes any and all facts, knowledge,
information, documents and materials whether written or otherwise, concerning the
business, operations, prospects, finances, or other affairs of the Company, its Plant,
affiliates, associates or subsidiaries. It includes, without limitation, documents delivered

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in connection with due diligence, investigation, information relating to the existing

business of the Company and the Plant and new businesses (if any) proposed to be
undertaken by the Company, market and Plant-specific data, agreements related to its
business including know-how and technology agreements, agreements relating to
licence to use intellectual property rights, graphs, drawing, past, current, and planned
research and development, current and planned marketing or distribution methods and
processes, customer lists, current and anticipated customer requirements, price lists and
other end-user pricing related information, market studies, computer software and
programs, database technologies, systems, structures and architectures, historical
financial statements, activities, products, specifications, data, know-how, compositions,
designs, sketches, photographs, business plans, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, current or
prospective financing sources, the names and backgrounds of personnel, personnel
training techniques and materials, reports relating to the Company's and Plant’s
operations prepared by external consultants which are proprietary to the Company or
the GOI or the Administrative Ministry, and any information memorandum /or draft /
final offer document, request for proposal, drafts of shareholders and share purchase
agreements or other materials prepared in connection with the Transaction, howsoever
documented, that has been or may hereafter be provided or shown to the Receiving
Party by the Disclosing Party or is otherwise obtained from review of the Disclosing
Party’s documents or property or discussions with the Disclosing Party by the Receiving
Party irrespective of the form of the communication, and also includes all notes,
analyses, compilations, studies, summaries, and other material prepared by the
Receiving Party containing or based, in whole or in part, on any information included in
the foregoing.

Notwithstanding the foregoing, the following information will not constitute

"Confidential Information" for purposes of this Undertaking:

(a) Information which the Interested Bidder can prove was already in the possession of
the Receiving Party and was available to the Receiving Party on a non-confidential
basis prior to its disclosure to the Receiving Party by the Disclosing Party;

(b) Information which is obtained by the Receiving Party from a third person who,
insofar as is known to the Receiving Party, is not prohibited from disclosing the
information to the Receiving Party under a contractual, legal or fiduciary obligation
to the Disclosing Party; and

(c) Information which is or becomes generally available to the public otherwise than as
a result of a breach of this Undertaking by the Receiving Party.

The decision of the Government and/or the Company on whether any information
qualifies within the exceptions in (a), (b) and (c) above shall be final, conclusive and
binding.

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Part B – Request for Expression of Interest SAIL-SSP

1.2. "Disclosing Party" means the Advisors, the Company, the Administrative Ministry, the
GOI, other Governmental Authority and/or their respective Representatives, whether
jointly or severally.

1.3. "Receiving Party" means the Interested Bidder and its/ their Representatives, whether
jointly or severally.

1.4. "Representative(s)" of any Person includes the directors, officers, employees, agents,
consultants, advisors, lenders for financing of this Transaction or other representatives,
including legal counsel, accountants and financial advisors of such Person and also
includes the Representatives of the Representatives of any Person.

2. The Confidential Information disclosed by the Disclosing Party to the Receiving Party, or
acquired by the Receiving Party in the course of any studies conducted by the Receiving
Party, will be received and treated by the Receiving Party as strictly confidential, subject to
its obligations contained herein, and the Receiving Party shall not, without the Company’s as
well as the Government’s prior written consent or as expressly permitted herein, directly or
indirectly disclose to any other Person, or use or allow others to disclose or use, the
Confidential Information.

3. The Receiving Party will use the Confidential Information only to evaluate the Transaction
and to decide whether or not it wishes to proceed with the Transaction and not for any
purpose other than the Transaction. The Receiving Party will not directly or indirectly use
the Confidential Information for any other purpose or in any other manner whatsoever and
shall particularly ensure that the interests of the Company / GOI/ Advisors are not adversely
affected in any manner whatsoever.

4. In consideration of the Disclosing Party providing the Receiving Party with Confidential
Information, by the Interested Bidder's execution of this Undertaking, the Interested Bidder,
for itself and on behalf of all other Receiving Party, agrees that all of the Confidential
Information shall be held and treated by the Receiving Party in strict confidence. The
Interested Bidder agrees (a) to disclose Confidential Information only to Consortium
Members and/or those of its Representatives who need to know the Confidential Information
for the purposes of an evaluation of the Transaction and each such Interested Bidder or
Representative of the Interested Bidder will be informed and advised in writing by the
Interested Bidder of the confidential nature of such information and the contents of and the
obligations under this Undertaking and (b) to satisfy itself that each such Consortium
Member and/or Representative of the Interested Bidder will hold and treat the Confidential
Information in confidence and act in accordance therewith. The Interested Bidder agrees that
the Confidential Information shall not, without the Company’s as well as the Government’s
prior written consent, be disclosed by the Interested Bidder and/or its/ their Representatives
in any manner whatsoever, in whole or in part, to any third Person, and shall not be used by

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the Interested Bidder or its Representative other than in connection with an evaluation of the
Transaction.

The Interested Bidder recognises and acknowledges the competitive value and confidential
nature of the Confidential Information and the possible resultant impact to the Company and
the Government if the Confidential Information is disclosed or allowed to be disclosed to an
unauthorised party or used for any purpose other than evaluating the Transaction. The
Interested Bidder acknowledges and agrees that it is imperative that all Confidential
Information remains confidential.

The Interested Bidder, before disclosing any of the Confidential Information to any
shareholder/ member/ partner/ Representative of the Interested Bidder, or any shareholder/
member/ partner/ Representative of a Consortium Member(s), as the case may be, shall
ensure that such shareholder/member/ partner/ Representative of the Interested Bidder or
Consortium Member(s), as the case may be, has already executed and furnished to the
Advisors, a written undertaking identical in form and content as this Undertaking in favour
of the Government, the Company and the Advisors.

Notwithstanding any agreement or undertaking, the Interested Bidder agrees that it shall
continue to be responsible and liable for any breach of this Undertaking even though the
same is caused by any act or omission of any of the shareholders/ members/ partners/
Representative of the Interested Bidder and shareholder/ members/ partners/ Representative
of a Consortium Member(s), as the case may be, and shall indemnify and hold the
Government, the Company, and the Advisors harmless (including provisions of clause 6 and
15 set forth herein) from any breach of this Undertaking or consequences and claims arising
therefrom.

[In case the Interested Bidder is a Consortium, it agrees that for the purpose of this
Undertaking, its liability shall be joint and several with each of the Consortium Members.]26

5. Except as permitted by Clause 4 herein and except as expressly permitted by the Definitive
Agreements, entered into by the Interested Bidder, and/or any company formed and
promoted by them for the acquisition of SSP – Divested Unit, the Receiving Party will not
directly or indirectly disclose to any Person (including another prospective purchaser who
has been provided Confidential Information) the fact that the Confidential Information has
been made available to the Receiving Party or that the Receiving Party have inspected any
portion of the Confidential Information. Except with the prior written consent of the
Company and the Government, and except as expressly permitted by such definitive share

26 Delete, if IB is not a Consortium

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Part B – Request for Expression of Interest SAIL-SSP

purchase agreement, the Receiving Party will not directly or indirectly disclose to any Person
the fact that any discussions or negotiations are taking place concerning the Transaction,
including the status and content of such discussions or negotiations.

6. On acquiring the Confidential Information on the terms stated in this Undertaking or

otherwise, the Receiving Party shall comply with all applicable law, and the Interested
Bidder hereby jointly and severally indemnifies and agrees to hold the Advisors, the
Government and the Company indemnified and harmless (without prejudice to Clause 15 set
forth below) against all and any consequences arising from any violation by the Receiving
Party of such applicable laws.

7. If the Receiving Party is requested or becomes legally compelled (by oral questions,
summons, interrogatories, requests for information or documents, subpoena, civil or criminal
investigative demand, or similar process) or is required by a Governmental Authority and/or
regulatory body (including any self-regulated organisation) to make any disclosure that is
prohibited or otherwise constrained by this Undertaking or any similar undertaking or
agreement, the Receiving Party will provide the Advisors, the Government and the
Company with prompt written notice of such request so that the Advisors, the Government
or the Company may seek an appropriate injunction, protective order or other appropriate
remedy. Subject to the foregoing, the Receiving Party may furnish that portion (and only that
portion) of the Confidential Information that, in the written opinion of the Interested Bidder's
legal counsel (reasonably acceptable to the Advisors, the Government and the Company), the
Receiving Party is legally compelled or is otherwise legally required to disclose or else stand
liable for contempt or suffer other material censure or material penalty; provided, however,
that the Receiving Party must use best efforts to obtain reliable assurance that confidential
treatment will be accorded to any Confidential Information so disclosed.

8. The confidentiality obligations contained in this Undertaking may, at the discretion of the
Government, the Company and the Advisors, be amended, modified or superseded upon the
Interested Bidder and/or any company formed and promoted by them for executing
Definitive Agreements, but shall be without prejudice to any of the Advisors’, the
Government's or the Company's rights in respect of any breach of this Undertaking which
may have occurred prior to such amendment, modification or supersession.

The Interested Bidder agrees that the Government reserves the right, in its sole discretion to
modify the process of the Transaction in any part and/or to vary any terms at any time
without prior notice to the Interested Bidder and/or to reject any or all proposals made by the
Interested Bidder with regard to the Transaction.

9. The Government and/or the Company may elect at any time to terminate further access by
the Receiving Party to any Confidential Information required by the Interested Bidder in
connection with its evaluation of the Transaction. After any such termination by the

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Government and/or the Company as specified in Clause 8 above, or after the decision of the
Interested Bidder to not proceed with the Transaction, the Interested Bidder:
(a) will promptly deliver to the concerned Disclosing Party, all Confidential Information
including all documents or other materials furnished by such Disclosing Party to the
Receiving Party, together with all copies and summaries thereof in the possession or
under the control of the Receiving Party, and
(b) will destroy materials generated by the Receiving Party that include or refer to any
part of the Confidential Information, without retaining a copy of any such material.

Any such destruction pursuant to the foregoing must be confirmed by the Interested Bidder
in writing to each of the Advisors, the Government and the Company (such confirmation
must include a list of the destroyed materials). The Interested Bidder acknowledges that the
return of the Confidential Information and the return or destruction of the Confidential
Information pursuant to termination or otherwise shall not release the Receiving Party from
its obligations under this Undertaking.

10. The Receiving Party shall not deal or communicate (except in the ordinary course of its
business) with any officer, director or employee of the Government or the Company
regarding the business, operations, prospects or finances of the Company or the Plant,
without the Advisors’ prior written consent. It is understood that the Advisors will arrange
for appropriate contacts for due diligence purposes in connection with the Transaction.
Unless otherwise agreed to by the Advisors in writing (i) all communications regarding any
possible transaction, (ii) any requests for additional information, (iii) any requests for
management meetings, and (iv) any queries regarding the Transaction, will be directed
exclusively to the Advisors. However, if the Receiving Party is called upon by the
Government and/or the Company for any discussions, the Receiving Party will do so or meet
the Government and/or the Company only after duly informing the Advisors in writing.

11. The Disclosing Party and its employees shall not reveal their identity and/or contact any
member of the Company or the Administrative Ministry/ DIPAM and also keep the data/
information of the Company and SSP (shared as part of Transaction) strictly confidential.

12. The Government and/or the Company reserves the right, in its sole discretion, to reject any
and all proposals made by the Receiving Party with regard to the Transaction and to
terminate discussions and negotiations with the Receiving Party at any time. Without
limiting the preceding sentence, nothing in this Undertaking (i) requires either the Interested
Bidder or the Government to enter into the Transaction or to negotiate such Transaction for
any specified period of time or (ii) requires the Advisors, the Government or the Company to
enter into an agreement or an understanding, or prohibits the Advisors, the Government or
the Company from entering into any agreement or understanding, for proceeding with the
Transaction with any other Person.

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13. In the event that the Receiving Party is not declared as the Successful Bidder, it shall not,
directly or indirectly, solicit for employment or hire any employee of the Company for a
period of 1 year from the date of this Undertaking or till six months from the completion of
the Transaction, whichever is later.

14. The Receiving Party agrees that from the date of this Undertaking till the completion of the
Transaction or till the time the Interested Bidder decides not to proceed with the Transaction,
as the case may be, the Receiving Party shall not, directly or indirectly, buy, sell, negotiate, or
enter into any arrangements for the purchase of any interest in SSP, or advise any other
person directly or indirectly to buy, sell, negotiate or enter into any arrangements for
purchase and / or sale of any of the shares of the Company, or take any action or make any
statement or announcement that may affect the price of the shares of the Company on any
stock exchange or elsewhere or which may affect the existing shareholding structure of the
Company.

15. The Interested Bidder understands, acknowledges and agrees that the Government, the
Advisors and the Company retain the right to determine, in their sole discretion, the
information that they wish to make available to the Receiving Party and the personnel
through whom the same will be made available. Further, nothing in this Undertaking shall
amount to or be construed as the Disclosing Party making any representations or warranties,
express or implied, as to the accuracy and/or completeness of the Confidential Information
and the Disclosing Party shall have no liability whatsoever to the Receiving Party resulting
from the Interested Bidder’s use of the Confidential Information. The Interested Bidder also
agrees that if it determines to proceed with the Transaction, its determination will be solely
based on the terms of the Definitive Agreements as well as on its own investigation, analysis
and assessment of its investment. Moreover, unless and until such agreements are entered
into, neither the Government nor the Interested Bidder will be under any legal obligation of
any kind with respect to the Transaction except for the matters specifically agreed to in this
Undertaking or in another written and duly executed Definitive Agreement.

16. The Interested Bidder hereby indemnifies and agrees to hold the Advisors, the Government
and the Company indemnified and harmless from all and any damages, losses, costs, or
liabilities (including legal fees and the cost of enforcing this indemnity) arising out of or
resulting from any unauthorized use or disclosure by any Receiving Party of the Confidential
Information or other violation of this Undertaking (notwithstanding that a Receiving Party
may not be party to this Undertaking) or of any similar undertaking or agreement. In
addition, because an award of money damages (whether pursuant to the foregoing sentence
or otherwise) would be inadequate for any breach of this Undertaking or any similar
undertaking or agreement by the Receiving Party and any such breach would cause the
Disclosing Party irreparable harm, the Interested Bidder also agrees that, in the event of any
breach or threatened breach of this Undertaking or such similar undertaking or agreement,
the Advisors, the Government or the Company will also be entitled, without the requirement

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of posting a bond or other security, to equitable relief, including injunctive relief and specific
performance. Such remedies will not be the exclusive remedies for any breach of this
Undertaking but will be in addition to all other remedies available at law or equity to the
Advisors, the Government and/or the Company.

17. The Interested Bidder understands, acknowledges, confirms and agrees that each of the
Government, the Company and the Advisors are beneficiaries under this Undertaking. The
Interested Bidder further agrees and confirms that each of the Government, the Company
and the Advisors, will be entitled to and may enforce, either individually or jointly, the
obligations imposed on the Receiving Party under this Undertaking.

18. The Receiving Party agrees that in case the Interested Bidder or any Consortium Member
decides not to proceed with the Transaction or if the GOI/ Company/ Advisors notify the
Interested Bidder or any Consortium Member that the GOI/ Company does not wish the IB
or any such Consortium Member to consider the Transaction any further, the terms of the
Undertaking shall survive on even subsequent to the date of receipt of notification of such
decision by the relevant party.

19. The Interested Bidder agrees that no failure or delay by the Advisors/the Government / the
Company in exercising any right, power or privilege hereunder will operate as a waiver
thereof nor will any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereto.

20. The terms of this Undertaking may be varied only with the Company’s and the
Government's prior written agreement. This Undertaking shall be effective as of the date first
above given on the first page of this Undertaking.

21. This Undertaking shall be governed by and construed in accordance with the substantive
laws of India without giving effect to its conflict of law principles.

22. All notices required or permitted to be given hereunder shall be in writing and shall be valid
and sufficient if dispatched by registered airmail, postage prepaid, or by cable or facsimiles
as follows.

If the notice is to the Government:

Mr. Aman Sharma

Director,
Ministry of Steel
Room No. 185, Udyog Bhawan
New Delhi – 110 011

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Part B – Request for Expression of Interest SAIL-SSP

If the notice is to the Advisors:

Transaction Advisor:

Mr. S.K.Arora
Senior Vice President
PA&SF Group
SBI Capital Markets Limited
6th Floor, World Trade Tower
Barakhamba Lane
New Delhi – 110 001

Legal Advisor:

Mr. Samir Dudhoria, Partner / Ms. Damini Bhalla, Partner

L&L Partners (Formerly known as Luthra & Luthra Law Offices)
103, Ashoka Estate,
Barakhamba Road,
New Delhi- 110001

Asset Valuer:

Mr. Kunal Kanda

Head- Corporate Valuations
Protocol Insurance Surveyors & Loss Assessors Private Limited
H-54, Sector 63
Noida – 201307
Uttar Pradesh

If the notice is to the Company:

Mr. MB Balakrishnan
DGM & Company Secretary
Steel Authority of India Limited
Ispat Bhawan, Lodhi Road
New Delhi 110 003

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Part B – Request for Expression of Interest SAIL-SSP

If the notice is to the Interested Bidder:

IB/ Lead Member [Member-2 Member-3]27

[●] [●] [●]

Any of the Interested Bidder, the Company or the Advisors may change its address by a notice
given to the other in the manner set forth above. All notices and other communications shall be
deemed to have been duly given (i) on the expiry of seven days after posting, if transmitted by
registered airmail or (ii) on the date immediately after the date of transmission with confirmed
answer back if transmitted by cable or facsimile whichever shall first occur.

IN WITNESS WHEREOF, this Undertaking has been executed by the duly authorized
representative of the Interested Bidder on the date and year first hereinabove written.

Witnessed by: [Name of the Interested Bidder/ Lead Member

of Consortium]

By:
Name:
Name:
Address:
Designation:

Witnessed by: [Name of the Consortium Member]

By:

Name: Name:

Address: Designation:

Witnessed by: [Name of the Consortium Member]28

By:

Name: Name:

Address: Designation:

27 Delete if not applicable

28 Delete if not applicable

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Annexure 8: Format of Affidavit

(To be duly executed and adequate stamp duty to be paid by the Interested Bidder/ Lead
Member of Consortium with respect to this document.)

AFFIDAVIT

I, [name] aged [age] years, resident of [address] working as [designation] an Authorised

Signatory on behalf of [name of the Interested Bidder]( “Interested Bidder”) hereby state as
under:

1. I am the [designation of the deponent] of the Interested Bidder. I am conversant with

the facts and circumstances surrounding the subject of this affidavit [and have been
authorised to depose to the same pursuant to the power of attorney dated [date]
issued pursuant to [particulars of corporate approval]]. I am filing this affidavit to
place on record verification of facts and documents in connection with the bidding
process concerning strategic disinvestment of Salem Steel Plant (SSP).

2. [Insert separate paragraphs for each information/ document physically submitted

with the Transaction Advisor, in a chronological sequence].

3. [If applicable, ____________________________________].

4. That nothing has been concealed in the information submitted as mentioned above.

Solemnly affirmed and verified on this [day] day of [month][year] at [place].

(Signature)

Name, Designation & Address

VERIFICATION

I, [name], [the [designation of the deponent] of] the Interested Bidder above named, having my
office at [address], do hereby solemnly declare that what is stated above is on the basis of the
books and records of the Interested Bidder, and verify that the contents of the above affidavit are
true and correct, no part of it is false and nothing material has been concealed therefrom.

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Verified at [day] day of [month] [year] at [place].

Deponent

(Signature)

[particulars of notarisation]

Name, Designation & Address

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Annexure 9: Declaration in relation to Statement of Legal Proceedings

(To be forwarded on the letterhead of the IB /each Consortium Member submitting the EOI)

DECLARATION

1. We solemnly declare that we, our Group Companies, our Director(s), CEO, principal
officers, managers, promoters or partners are not convicted by any court of law or are
indicted or have received any adverse order from regulatory authority which would cast a
doubt on our ability to manage the SSP – Divested Unit or which relates to a grave
offence with regard to matters other than the security and integrity of the country.

Grave offence for this purpose shall be an offence which is of such nature that outrages the
moral sense of the community and shall include:

a) SEBI orders which directly relate to “Fraud” as defined in the SEBI Act and/ or
regulations
b) SEBI o rders casting doubt on the ability of the IB to manage the SSP – Divested
Unit, when it is disinvested
c) Any conviction by a court of law
d) In case SEBI passes a prosecution order, disqualification will arise only on
conviction by court of law.

2. We further declare that we, our Group Companies, our Director(s), CEO, principal
officers, managers, promoters or partners have not been issued a charge sheet by any
Governmental Authority or convicted by a court of law for any offence with regard to
matters relating to the security and integrity of the country.

3. We further declare that we, our Group Companies, our Director(s), CEO, principal
officers, managers, promoters or partners are not under any investigation pending
before any Governmental Authority, regulatory authority or other authority, which if
decided against us or our Group Companies, our Director(s), CEO, principal officers,
managers, promoters or partners (as the case may be), would disqualify us in terms of (1)
and/ or (2) above or in terms of the Eligibility Criteria and Disqualification conditions
detailed in the EOI Request.

4. We declare that complete information as required is provided in the EOI and Request for
Qualification and Statement of Legal Capacity.

Yours sincerely,
For and on behalf of: [name of the Interested Bidder/ Consortium Member]

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Signature: (Authorised Representative and Signatory)

Name of the Person: [●]

Designation: [●]

Note: In case any IB is unable to give above undertaking in view of any conviction, indictment, adverse
order or investigation as above, full details of the same shall be provided including names of persons
involved, designation, charge/ offence, ordering/ investigating agency, status/ outcome etc. with
supporting/ relevant documents to the satisfaction of GoI. Any entity, which is disqualified from
participating in the Transaction, shall 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.

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Annexure 10: Undertaking by Direct Subsidiary/ Direct Subsidiary LLP/

Direct Holding Company
(To be executed in the event IB/Lead Member of Consortium meets Technical Criteria through
Direct Subsidiary/ Direct Subsidiary LLP/ Direct Holding Company)

(To be appropriately stamped on non-judicial stamp paper of appropriate value as per Stamp
Act relevant to place of execution and notarized)

UNDERTAKING BY THE DIRECT SUBSIDIARY/ DIRECT SUBSIDIARY LLP/ DIRECT

HOLDING COMPANY OF INTERESTED BIDDER/ LEAD MEMBER OF CONSORTIUM29

This UNDERTAKING ("Undertaking") is made on this ………. day of …………., [●].

BY

M/s ___________________________________ [insert name of the entity] a [limited liability

partnership OR company] incorporated under the laws of _____________________[insert name of
the country] and having its [Registered Office OR Principal Place of Business] at
___________________ (hereinafter called the [“Connected Company”, which expression shall
include its successors, executors and permitted assigns);

IN FAVOUR OF:

The Joint Secretary, Ministry of Steel, (the “Administrative Ministry”);

AND

Steel Authority of India Limited (SAIL), a company incorporated under the Companies Act,
1956, bearing corporate identification number L27109DL1973GOI006454, having its registered
office at Ispat Bhawan, Lodhi Road, New Delhi -110003, India (“SAIL” or the “Company”).

We confirm that [●] [insert name of IB] is our [Direct Subsidiary/ Direct Subsidiary LLP/ Direct
Holding Company]30 and is interested in bidding for the strategic sale of SSP and proposes to use

29 Strike out whichever is not applicable

30
Strike out whichever is not applicable

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our experience to meet the Technical Criteria stipulated in the Preliminary Information
Memorandum and EOI Request dated [●].

We undertake and confirm that in the event [●] [insert name of IB] becomes the Successful
Bidder:

1. [We shall continue to remain its Direct Holding Company after the submission of EOI, for a
period of five (5) years from the date of closing under the Definitive Agreements]31.
2. We shall bring in requisite technology to run the plant efficiently.

Yours sincerely,

For and on behalf of Connected Company:

Signature: (Authorised Representative and Signatory)

Name of the Person: [●]

Designation: [●]

31 Strike out if IB not meeting criteria through its Direct holding

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Annexure 11: Advertisement

GLOBAL INVITATION FOR EXPRESSION OF INTEREST FOR PROPOSED

STRATEGIC DISINVESTMENT OF ALLOY STEELS PLANT AT DURGAPUR,
VISVESVARAYA IRON AND STEEL PLANT AT BHADRAVATI AND SALEM STEEL
PLANT AT SALEM BY STEEL AUTHORITY OF INDIA LTD.

Steel Authority of India Limited (SAIL) (“Company”) is a ‘Maharatna’ Public Sector Enterprise,
promoted by the Government of India. The Company was incorporated under the Companies
Act 1956, in the year 1973. Presently, the Company has five Integrated Steel Plants, a Ferro Alloys
Plant and three Special Steel Plants. Alloy Steels Plant (ASP), Visvesvaraya Iron & Steel Plant
(VISP) and Salem Steel Plant (SSP) of SAIL are proposed for Strategic Disinvestment and the
Company has appointed SBI Capital Markets Limited (SBICAP) as its Transaction Advisor to
advise and manage the Strategic Disinvestment process.

This Strategic Disinvestment process is to be implemented through open competitive bidding

route. Accordingly, Expression of Interest (EOI) is invited from Interested Bidders, to be
submitted at the below mentioned address by 6.00 p.m. on August 1, 2019. The details of PIM/
EOI Requests for each of the above three Plants can be downloaded from websites of DIPAM at
www.dipam.gov.in, Ministry of Steel at www.steel.gov.in, Company at www.sailtenders.co.in
and Transaction Advisor at www.sbicaps.com. In future any amendments to the PIM/ Request
for Expression of Interest/ extension in time for submission of EOI will be uploaded on the above
websites only.

Address for submission of EOI:

Mr. S.K. Arora

Senior Vice President
PA&SF Group
SBI Capital Markets Limited
6th Floor, World Trade Tower
Barakhamba Lane
New Delhi – 110 001

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Annexure 12: Department of Investment and Public Asset Management

(DIPAM) Guidelines
DIPAM has issued Guidance Note – I toV on strategic disinvestment. Please find below the link
for reference:

http://dipam.gov.in/sites/default/files/Guidance%20Note%20on%20Strategic%20Disinvestment.p
df?download=1

https://dipam.gov.in/sites/default/files/Revised%20Guidance%20Notes%20II%20to%20V%20%28
May%202018%29_0.pdf

Annexure 12A: Guidelines for qualification of Bidders seeking to acquire stakes in Public
Sector Enterprises through the process of disinvestment

No. 3/9/2016-DoD-II-B
Government of India
Department of Investment and Public Asset Management
Block 14, CGO Complex
New Delhi.

Dated: 28th September, 2017

OFFICE MEMORANDUM

Sub: Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector
Enterprises through the process of disinvestment

Government has examined the issue of framing comprehensive and transparent guidelines
defining the criteria for bidders interested in PSE-disinvestment so that the parties selected
through competitive bidding could inspire public confidence. Earlier, criteria like net worth,
experience etc. used to be prescribed. Based on experience and in consultation with concerned
departments, Government has decided to prescribe the following additional criteria for the
qualification / disqualification of the parties seeking to acquire stakes in public sector enterprises
through disinvestment:

a) In regard to matters other than the security and integrity of the country, any conviction
by a Court of Law or indictment / adverse order by a regulatory authority that casts
a doubt on the ability of the bidder to manage the public sector unit when it is
disinvested, or which relates to a grave offence would constitute disqualification. ‘Grave
Offence’ is defined to be of such a nature that it outrages the moral sense of the
community. The decision in regard to the nature of the offence would be taken on case to
case basis after considering the facts of the case and relevant legal principles, by the
Government. ‘Grave Offence’ would include the below noted cases:

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a. Only those orders of SEBI are to be treated as coming under the category of ‘Grave
Offences’ which directly relate to ’fraud’ as defined in the SEBI Act and/or
regulations.

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

c. Any conviction by Court of Law;

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

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 its Associate Company as defined in Companies Act, 2013
would result in disqualification. The decision in regard to the relationship interse
between the 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 bidder, 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) 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, which if decided against the bidder,
may disqualify the bidder in terms of (a) & (b) above or the eligibility criteria prescribed
in the EoI, is pending against them. In case any investigation is pending in case which if
decided against the bidder, may disqualify the bidder in terms of (a) & (b) above on the
eligibility criteria prescribed in EoI against the bidder or the concern in which the bidder
has substantial interest or against its CEO or any of its Directors/ Managers, full details of
such investigation including the name of the investigating agency, the charge/

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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 filed along with EOI.

(-sd/-)

(Aseem Kumar Jha)

Under Secretary to the Government of India

Please find below the link for the aforementioned OM for reference:

http://dipam.gov.in/sites/default/files/guidelines.pdf?download=1

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Annexure 12B: Participation of Central Public Sector Undertakings (PSUs)/Cooperative

Societies controlled by the Government in disinvestment of other PSUs.

No. 4(32)/2002-MoDI
Government of India
Ministry of Disinvestment

Block No. 14, CGO Complex,

Lodi Road, New Delhi -110003.
Dated 18th September, 2002

OFFICE MEMORANDUM

Sub: Participation of Central Public Sector Undertakings (PSUs)/Cooperative Societies

controlled by the Government in disinvestment of other PSUs.

The undersigned is directed to say that the issue of participation of Central Public Sector
Undertakings (PSUs) and Central Government owned Cooperative Societies in the disinvestment
of other PSUs has been engaging the attention of the Government for the past some time.
Government has examined this issue in the light of policy of the Government on Disinvestment.

2. After careful examination of the various issues, the Government of India has now decided that
henceforth, as a general policy, Central Public Sector Undertakings and Central Government
owned Cooperative Societies (i.e. where Government’s ownership is 51% or more), should not be
permitted to participate in the disinvestment of other PSUs as bidders. If in some specific case,
any deviation from these restrictions is considered desirable in public interest, the
Ministry/Department concerned may bring up an appropriate proposal for consideration of the
Core Group of Secretaries on Disinvestment.

3. The Ministries/Department are requested to communicate the above decision of the

Government to all the PSUs and the Cooperative Societies under their administrative control.

(T.S. Krishnamachari)
Deputy Secretary to the Government of India
Phone no. 436 8523
Fax No. 436 6524

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Annexure 12C: Guidelines for Management-Employee Bids in Strategic Sale.

No. 4(38)/2002-DD-II
Government of India
Ministry of Disinvestment

Block No. 14, CGO Complex,

Lodi Road, New Delhi -110003.
Dated: 25th April, 2003

OFFICE MEMORANDUM

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, which ever
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), alongwith 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.

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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.

(T.S. Krishnamachari)
Deputy Secretary to the Government of India
Tel. no. 2436 8039

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