GENERAL INFORMATION Authority for the Offer
The Offer has been approved by the GoI and communicated by the MoPNG to the Company vide its D.O.No. G-34015/3/2003-Fin.II dated December 26, 2003 authorizing disinvestment of up to 10% Equity Shares of the Company, amounting to 84,565,160 shares, in the domestic capital market. Pursuant to the decision taken by GoI, the MoPNG acting for and on behalf of the President of India, has been authorized to offer up to 84,565,160 shares held by the President of India in the Company by way of Offer for Sale through a public offer.
As per the letter no. 4 / 3 / 2004 / DD-II, dated February 9, 2004, from the Ministry of Disinvestment, the Selling Shareholder has voluntarily decided to substantially adopt the SEBI Guidelines, particularly the guidelines for procedure for the 100% Book Building Process save for specified deviations (See “Deviations from SEBI Guidelines”).
The Company has noted the Offer in terms of a resolution passed by the Board of Directors on January 8, 2004. The Company has approved this Preliminary Sale Document through the Board resolution dated February 17, 2004.
The Selling Shareholder has good and clear title to the Equity Shares forming part of this Offer and the Equity Shares are free of all restrictions on transfer, liens, encumbrances, security interests and claims whatsoever. There are no legal or regulatory restrictions on the Selling Shareholder undertaking this Offer.
THE SHARES OFFERED UNDER THIS SALE OFFER BEING ALREADY LISTED ON THE STOCK EXCHANGES, THE SEBI GUIDELINES FOR PUBLIC ISSUES/OFFERS ARE NOT APPLICABLE TO THIS SALE OFFER BY THE SELLING SHAREHOLDER. THE SELLING SHAREHOLDER HAS ON ITS OWN VOLITION DECIDED TO FOLLOW THE PROCESS THAT IS SUBSTANTIALLY SIMILAR TO THE PROCESS SPECIFIED IN THE SEBI GUIDELINES. HOWEVER THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER DOCUMENT OR PROSPECTUS IN TERMS OF THE SEBI GUIDELINES. THIS IS NOT A DOCUMENT ISSUED BY OR ON BEHALF OF THE COMPANY. THE DOCUMENT HAS BEEN VOLUNTARILY FORWADED BY THE SELLING SHAREHOLDER TO SEBI FOR SEEKING ITS GUIDANCE/SUGGESTIONS AND THE SELLING SHAREHOLDER HAS ON ITS OWN VOLITION ALSO DECIDED ON THE TERMS OF THE OFFER, PRICE BAND, ALLOCATION PATTERN ETC. SEBI’S GUIDANCE TO THE SELLING SHAREHOLDER SHOULD NOT IN ANY WAY BE CONSTRUED OR DEEMED THAT THE SALE DOCUMENT HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECTS OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS SALE DOCUMENT, THE COMPANY HAS CONFIRMED THAT THE REQUIREMENTS UNDER THE LISTING AGREEMENT HAVE BEEN COMPLIED WITH.
THE BOOK RUNNING LEAD MANAGERS, HSBC SECURITIES AND CAPITAL MARKETS (INDIA) PRIVATE LIMITED AND ICICI SECURITIES LIMITED HAVE FURNISHED TO THE SELLING SHAREHOLDER A DUE DILIGENCE CERTIFICATE DATED FEBRUARY, 17, 2004.
Caution
The Selling Shareholder, the Company, the Directors and the BRLMs accept no responsibility for statements made otherwise than in the Preliminary Sale Document or in the advertisements or any other material issued by or at their instance and anyone placing reliance on any other source of information including the Company’s website, would be doing so at his or her own risk.
However, the Company accepts responsibility for the information that it has disclosed to the public in the past pursuant to the requirements of the listing agreements with the Stock Exchanges.
The BRLMs accept no responsibility, save to the limited extent as provided in the Underwriting Agreement to be entered into among the Selling Shareholder, the Underwriters and the Company and the Memorandum of Understanding among the Selling Shareholder, the BRLMs and the Company dated January 21, 2004.
All information shall be made available by the Selling Shareholder, the Company and the BRLMs to the public and investors at large and no selective or additional information will be available for a section of the investors in any manner whatsoever including at road show presentations, in research or sales reports or at bidding centres.
DISCLAIMER IN RESPECT OF JURISDICTION
This Offer is being made in India to persons resident in India including Indian nationals
resident in India who are majors, HUFs, companies, corporate bodies and societies
registered under the applicable laws in India and authorized to invest in shares, Indian
regional rural banks, co-operative banks (subject to RBI permission), Trusts registered
under the Societies Registration Act, 1860, as amended from time to time, or any other
Trust law (and who are authorised under their constitution to hold and invest in shares),
state industrial development corporations, insurance companies registered under the
Industrial Regulatory and Development Authority, pension funds with a minimum corpus
of Rs.250 million, provident funds with a minimum corpus of Rs. 250 million, and to
NRIs, FIIs, Multilateral and Bilateral financial institutions. This Preliminary Sale
Document does not, however, constitute an offer to sell or an invitation to subscribe to
shares offered hereby in any other jurisdiction to any person to whom it is unlawful to
make an offer or invitation in such jurisdiction. Any person into whose possession this
Preliminary Sale Document comes is required to inform himself or herself about, and to
observe, any such restrictions. Any dispute arising out of this Offer will be subject to the
jurisdiction of appropriate court(s) in New Delhi, India, only.
No action has been or will be taken to permit a public offering in any jurisdiction where
action would be required for that purpose, except that this Preliminary Sale Document
has been voluntarily forwarded by the Selling Shareholder to SEBI and SEBI has
provided guidance and suggestions regarding this Preliminary Sale Document.
Accordingly, the Equity Shares represented hereby may not be offered or sold, directly or
indirectly, and this Preliminary Sale Document may not be distributed, in any
jurisdiction, except in accordance with the legal requirements applicable in such
jurisdiction. Neither the delivery of this Preliminary Sale Document nor any sale
hereunder shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the information
contained herein is correct as of any time subsequent to this date.
Disclaimer Clause of the NSE
As required, a copy of this Preliminary Sale Document has been submitted to National
Stock Exchange of India Limited (hereinafter referred to as NSE). NSE has given vide its
letter dated February 6, 2004, granted permission to the Company to use the NSE’s name
in this Preliminary Sale Document as one of the stock exchanges on which the shares are
listed. The NSE has scrutinized this Preliminary Sale Document for its limited internal
purpose of deciding on the matter of granting the aforesaid permission to this Company.
It is to be distinctly understood that the aforesaid permission given by NSE should not in
any way be deemed or construed that the Preliminary Sale Document has been cleared or
approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or
completeness of any of the contents of this Preliminary Sale Document; nor does it
warrant that this Company’s securities will be listed or will continue to be listed on the
NSE; nor does it take any responsibility for the financial or other soundness of this
Company, its promoter, its management or any scheme or project of this Company.
Every person who desires to apply for or otherwise acquires any securities of the
Company may do so pursuant to independent inquiry, investigation and analysis and shall
not have any claim against the NSE whatsoever by reason of any loss which may be
suffered by such person consequent to or in connection with such subscription/acquisition
whether by reason of anything stated or omitted to be stated herein or any other reason
whatsoever.
Disclaimer Clause of BSE
As required, a copy of this Preliminary Sale Document has been submitted to BSE. The
BSE has given vide its letter dated February 16,2004, permission to the Company to use
the BSE’s name in this Preliminary Sale Document as one of the stock exchanges on
which the shares comprising this Offer are proposed to be traded. The BSE has
scrutinised this Preliminary Sale Document for its limited internal purpose of deciding on
the matter of granting the aforesaid permission to this Company.
The BSE does not in any manner:
1. warrant, certify or endorse the correctness or completeness of any of the contents of this Preliminary Sale Document; or
2. warrant that this Company’s securities will be tradedor will continue to be listed on the BSE; or
3. take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company; and it should not for any reason be deemed or construed that this Preliminary Sale Document has been cleared or approved by the BSE. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the BSE whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.
[DISCLAIMER CLAUSE OF DSE DISCLAIMER IS AWAITED]
LISTING
The Equity Shares of the Company are listed on the NSE, BSE and the DSE. The National Stock Exchange has been chosen as the Designated Stock Exchange for the purposes of this Offer for Sale.
The Equity Shares are eligible for trading on BSE and DSE. Whilst, the Equity Shares are listed on NSE, trading permission from NSE is not available in respect of the Equity Shares on Offer. The Company has made an application to NSE seeking the requisite permission for dealing in the Equity Shares on Offer. If the permission to deal in is not granted by the NSE, the Selling
Shareholder will forthwith repay, without interest, all moneys received from the applicants in pursuance of this Preliminary Sale Document. If such money is not repaid within eight days after the GoI becomes liable to repay it i.e. from the date of refusal or within 70 days from the date of Offer Closing Date, whichever is earlier, then the Selling Shareholder shall, on and from expiry of eight days, be liable to repay the money, with interest at the rate of 15% per annum on application money.
The Company and/or the Selling Shareholder shall ensure that all steps for the completion of the necessary formalities for commencement of dealing at the NSE is taken within seven working days of finalization and adoption of the basis of Allocation for the Offer.
FILING
SEBI vide its letter no. DIL/NB/2132/2004 dated January 29, 2004 has inter alia stated “the document may be called ‘sale document’ ”. Further, the GoI has in terms of its letter NO. 4/3/2004/DD-II dated February 12, 2004 communicated that RoC filing for the Offer be made as per letter no. 1/32/DI-/D.Cell dated February 10, 2004 issued by the Department of Company Affairs, Ministry of Finance, GoI. The Department of Company Affairs in its aforementioned letter clarified in a transaction similar to the Offer that “It has been noted that SEBI has informed
that the offer document is to be called “Preliminary Sale Document”. Accordingly, therefore, the Ministry of Disinvestment may please file this “Preliminary Sale Document” with the Registrar of Companies, alongwith the requiste fee so that it can be placed on record for public inspection”.
A copy of the Preliminary Sale Document along with the supporting documents may be filed with the RoC, if required. The Preliminary Sale Document is not a document issued by or on behalf of the Company. A copy of the Preliminary Sale Document is being voluntarily filed with the Corporation Finance Department of SEBI at Ground Floor, Mittal Court, “A” Wing, Nariman Point, Mumbai 400 021 for the purposes of guidance only.
PROHIBITION FROM ACCESSING CAPITAL MARKETS
The Company, its Directors, joint venture companies, other companies or entities promoted by the Company and companies or entities with which the Company’s directors are associated as directors have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI.
CONSENTS
Consents in writing of: (a) the Directors, the Company Secretary and Compliance Officer, the Auditors, Legal Advisors and Bankers to the Offer; and (b) Book Running Lead Managers to the Offer and Syndicate Members, Escrow Collection Bankers and Registrar to the Offer, to act in their respective capacities, have been obtained and filed along with a copy of the Preliminary Sale Document with the RoC.
M/s S. Mann and Company, chartered accountants, the statutory auditors have given their written consent to the inclusion of their report in the form and context in which it appears in this Preliminary Sale Document and such consent and report has not been withdrawn up to the time of
Expert Opinion
Except as stated elsewhere in this Preliminary Sale Document, the Selling Shareholder has not obtained any expert opinions.
Basis of Allocation
The present Offer in terms of this Preliminary Sale Document is for up to 84,565,160 fully paid- up Equity Shares. The Offer would constitute up to 10% of the paid up capital of the Company. The Selling Shareholder, reserves the right, at its sole discretion, after determination of the Offer Price, to transfer the Equity Shares to Retail Bidders at a differential lower price, as compared to the Offer Price at which Equity Shares will be transferred to Non-Institutional Bidders and QIBs. The Selling Shareholder has voluntarily decided that the basis of allocation for this Offer is as follows:
(A) For Employees
• Bids received from the Employee bidders at or above the Offer Price within the Price Band shall be grouped together to determine the total demand under this category. The allocation to all the successful Employee bidders will be made at the Offer Price.The Selling Shareholder, in its sole discretion may decide to offer Equity Shares, to the Employees whose Bid Amount is a maximum of Rs. 50,000, at the same price at which Equity Shares are offered to the Retail Bidders.
• If the aggregate demand in this category is less than or equal to the Employee Portion at or above the Offer Price within the Price Band, full allocation shall be made to the Employee bidders to the extent of their demand. In the event of shortfall of demand in this category the number of Equity Shares in the Net Offer shall stand increased.
• If the aggregate demand in this category is greater than the Employee Portion at or above the Offer Price within the Price Band, the allocation shall be made on a proportionate basis up to a minimum of one Equity Share. For the method of proportionate basis of allocation, refer below.
(B) For Retail Bidders
• Bids received from the Retail Bidders at or above the Offer Price within the Price Band shall be grouped together to determine the total demand under this category. The allocation to all the successful Retail Bidders will be made at the Offer Price. The Selling Shareholder, reserves the right, at its sole discretion, after determination of the Offer Price, to transfer the Equity Shares to Retail Bidders at a differential lower price, as compared to the Offer Price at which Equity Shares will be transferred to Non- Institutional Bidders and QIBs.
• The Net Offer size less allocation to Non-Institutional Bidders and QIBs shall be available for allocation to Retail Bidders who have bid in the Offer at a price which is equal to or greater than the Offer Price within the Price Band.
• If the aggregate demand in this category is less than or equal to the Retail Portion at or above the Offer Price within the Price Band, full allocation shall be made to the Retail Bidders to the extent of their demand.
• If the aggregate demand in this category is greater than the Retail Portion at or above the Offer Price within the Price Band, the allocation shall be made on a proportionate basis up to a minimum of one Equity Share. For the method of proportionate basis of allocation, refer below.
(C) For Non-Institutional Bidders
• Bids received from Non-Institutional Bidders at or above the Offer Price within the Price Band shall be grouped together to determine the total demand under this category. The allocation to all successful Non-Institutional Bidders will be made at the Offer Price. • The Net Offer size less allocation to QIBs and Retail Portion shall be available for
allocation to Non-Institutional Bidders who have bid in the Offer at a price which is equal to or greater than the Offer Price within the Price Band.
• If the aggregate demand in this category is less than or equal to Non-Institutional Portion at or above the Offer Price within the Price Band, full allocation shall be made to Non- Institutional Bidders to the extent of their demand.
• In case the aggregate demand in this category is greater than Non-Institutional Portion at or above the Offer Price within the Price Band, allocation shall be made on a proportionate basis up to a minimum of one Equity Share. For the method of proportionate basis of allocation refer below.
(D) For QIBs
• Bids received from the QIBs Bidders at or above the Offer Price within the Price Band shall be grouped together to determine the total demand under this category. The allocation to all the QIBs will be made at the Offer Price.
• The Net Offer size less allocation to Non-Institutional Portion and Retail Portion shall be available for allocation to QIBs who have bid in the Offer at a price which is equal to or greater than the Offer Price within the Price Band.
• The Selling Shareholder, in consultation with the BRLMs, would have the discretion for any allocation to QIBs based on a number of criteria including the following: prior commitment, investor quality, price, earliness of the Bid, existing and continued shareholding of the QIB in the Company during the period prior to the Bid Opening Date and until the Pricing Date.
Method of Proportionate Basis of Allocation
In the event the Offer is over-subscribed, the basis of allocation to Retail Bidders and Non-