CONTENTS

SECTION/ ANNEX Section 1 Section 2 Section 3 Section 4 NAME OF THE SECTION/ANNEX PAGE NO.

INTRODUCTION PRELIMINARIES PREPARATION OF CABINET NOTE APPOINTMENT OF INTERMEDIARIES Constitution of Inter-Ministerial Group Role of Inter-Ministerial Group Selection and Appointment of Book Running Lead Managers

1-2 3-5 7-10 11-33 12 12-13 13-20 14 14 14 15 15-16 16-17 17-18 18 18-20 20 21-24 21-22 22 22 22 22 23 23

Appointment process in Department of Disinvestment (DoD) Eligibility Criteria Submission of proposal Documents to accompany technical bid Financial bid Examination of bid documents Evaluation of BRLMs on their past performance with DoD Bid evaluation process Specific questions when BRLMs make Presentations Process of appointment in cases of piggy-back

Appointment of Legal Advisers/Counsels

Limited tender system Pre-requisites for the bidders Qualifying conditions Submission of the proposals Documents to be submitted along with the technical bids Financial bids Background preparation
(i)

Bid evaluation process Procedure for appointment in cases of piggy-back

23-24 24 24-27 24-25 25 25 25 25 25 25 26 26-27 27 28-31 28-29 29 29 29-30 30 30 30 31 31 31-33 31-32 32 32 32 32 32-33 33

Appointment of Advertising Agency

Functions of Advertising Agencies What is to be remunerated by DoD What is to be remunerated by CPSEs What is to be remunerated by BRLMs Appointment process in DoD Eligibility criteria Submission of proposal Financial bid Methodology Procedure for appointment in cases of piggy-back

Appointment of Registrar

Functions of the Registrar Selection criteria Appointment process in DoD Eligibility criteria Submission of proposal Financial bid Methodology Procedure for appointment in case of piggy-back

Appointment of Auditor Appointment of Collection/ Refund Bankers

Duties and Responsibilities Appointment process in DoD Eligibility criteria Financial bid Documents to be submitted Methodology Procedure for appointment in piggy-back
(ii)

Section 5

ISSUE PROCESS Pre Issue - Kickoff to Issue Closure

35-67 35-63 35 35 35 36 36-39 39-40 41-42 42 43 44-47 47-48 49 49 49-51 52 52-53 53-57 57 57-59 59-60 61 61 61 61-63 63 63 63-66 63 63 65 65 66 66 66-67 69-70
(iii)

Section 6

Kick-off Meeting Publicity restriction guidelines Inter se allocation of responsibility amongst BRLMs Presentation by the CPSEs to Research Analysts Key regulatory requirements for Public Issue Timing of the Public Issue Constitution of IPO/FPO Committee Different Committees under Corporate Governance norms Approval required from regulatory authorities Draft Red Herring Prospectus Updation/changes in the Offer Document Payment of security deposit for issuance of new securities Red Herring Prospectus Road shows for marketing Pre Issue Advertisement Publicity campaign Fixation and announcement of Price Band/Floor Price Selection of bidding centres Categories of investors in a Public Issue Issue Opening/Issue Closing Revision of bids Withdrawal of bids Minimum Subscription Price discovery Signing of Underwriting Agreement Filing of Prospectus Post Issue timelines Basis of Allotment Transfer of Funds Filing of Application for Listing and Trading Permission Listing Agreement Listing of Shares

Post Issue - Issue closure to Listing

Typical timeline for a public offering

INVESTOR RELATIONS

Annex-I

Annex-II Annex-III Annex-IV Annex-V Annex-VI Annex-VII Annex-VIII Annex-IX Annex-X Annex-XI Annex-XII Annex-XIII Annex-XIV Annex-XV Annex-XVI Annex-XVII

DPE Guidelines on issue of bonus shares by Public Sector Undertakings, simplifying the procedure.[DPE OM No. DPE/12(6)/95-Fin. dated 10.11.1995] Format of Request for Proposal (RFP) for appointment of Book Running Lead Managers (BRLMs). Merchant Bankers technical bids check list. Illustration of combined scores using CQCCBS for appointment of BRLMs. Format for combined scores of short-listed Merchant Bankers. Format of mandate letter for appointment of Merchant Banker. Format of Request for Proposal (RFP) for appointment of Legal Advisers. Format of check-list for analysing the technical bids received from Law Firms. Format of mandate letter for appointment of Legal Advisers. Format of Request for Proposal for appointment of Advertising Agency. Format of mandate letter for appointment of Advertising Agency. Format of Request for Proposal for appointment of Registrar to the Issue. Format of mandate letter for appointment of Registrar to the Issue. Format of letter seeking willingness of banks for appointment as Bankers to the Issue. Format of mandate letter for appointment of Bankers to the Issue. Publicity Restrictions Dos and Donts. Tariffs to be charged by Stock Holding Corporation of India Limited for dematerialisation of shares.

71-74 75-89 91-92 93 95 97-100 101-107 109 111-117 119-145 147 149-154 155 157-158 159 160 161-162 163-164 165-167 169-173

Annex-XVIII Indicative time-line for various activities in the Issue Process [Non-ASBA] Annex-XIX Annex-XX Indicative time-line for various activities in the Issue Process [ASBA] Guidelines on Investor Relations for listed Central Public Sector Enterprises.

(iv)

SECTION 1 TO 6

SECTION 1 INTRODUCTION
1.1 Department of Disinvestment is mandated to handle all matters relating to the disinvestment of Government of India (GoI) shareholding in Central Public Sector Enterprises (CPSEs). This also includes sale of GoI shareholding through offer for sale or private placement in the erstwhile CPSEs. Since its inception in the year 1999, the Department of Disinvestment (DoD) has handled different kinds of disinvestment transactions which include: (i) Sale of large blocks of shares in a CPSE with transfer of management control to a strategic partner. Sale of all or a part of GoIs residual shareholding in disinvested CPSEs/companies either through public offer or private placement. Sale of GoI shareholding in profit making listed and unlisted CPSEs through public offer.

(ii)

(iii)

1.2 With a view to providing an opportunity to the citizens to participate in the wealth and prosperity of the CPSEs, the present disinvestment policy of the Government envisages: (i) Listing of the unlisted CPSEs with no accumulated losses and having earned net profit in three preceding consecutive years. Offer for sale by the GoI or issue of fresh equity by the CPSE or a combination of both in listed CPSEs, which do not meet Securities and Exchange Board of Indias (SEBI)s mandatory requirement of 10 percent public shareholding, in order to make them compliant with this requirement. Further public offerings by listed CPSEs taking into consideration their capital investment requirements. GoI may simultaneously or independently offer a portion of its shareholding for sale in such CPSEs. Retaining at least 51 percent equity and management control in all cases of disinvestment through public offer. All cases of disinvestment are to be decided on a case-by-case basis as each CPSE has different equity structure; financial strength; fund requirement; sector of operation etc., factors that will not permit a uniform pattern.

(ii)

(iii)

(iv)

(v)

1.3 The CPSEs have been enabled to use available surplus funds with them to provide for sustained investors interest in the Company and protect their market capitalization in the long term interest of the Companys ability to raise funds from the market. The Department of Disinvestment on behalf of the Government of India being the majority shareholder may tender shares on behalf of the Government of India in the buyback programme of the CPSEs. All CPSEs listed or unlisted, have to provide for a provision for Buyback in their Articles of Association. The Department of Public Enterprises (DPE) guidelines in this regard have been th issued vide O.M. No. DPE/14(24)/2011-Fin dated 26 March, 2012. 1.4 The Government has enabled CPSEs to buy the shares of other CPSEs from Department of Disinvestment to further their strategic business relations. In this regard DPE guidelines issued vide rd O.M. No. DPE/14(24)/2011-Fin dated 23 April, 2012 refers. 1.5 To give effect to the policy, the DoD has disinvested part of the GoI shareholding in a number of CPSEs through both initial and further public offerings. Initial Public Offer (IPO) is an offer of shares by an unlisted CPSE or the GoI out of its shareholding or a combination of both to the public for subscription for the first time. The unlisted CPSE by offering at least 10 percent shares to the public gets listed on the stock exchanges. Further Public Offer (FPO) is an offer of shares by a listed CPSE or the GoI of its shareholding or a combination of both to the public for subscription. The FPO could be (i) by way of a prospectus filing, (ii) Through Offer for Sale of shares by Promoters through the Stock Exchange Mechanism (OFS) or Institutional Placement Programme (IPP). The CPSEs divested through an IPO include NHPC Limited, Oil India Limited, SJVN Limited, Coal India Limited, Manganese Ore India Limited and National Building Construction Corporation Limited while CPSEs divested through an FPO by filing a prospectus include NTPC Limited, Rural Electrification Corporation Limited, NMDC Limited, Engineers India Limited, Power Grid Corporation of India Limited, Shipping Corporation of India Limited and Power Finance Corporation Limited. In the case of Oil and Natural Gas Corporation Limited the OFS route was used for the first time.

1.6 The approval of GoI is required for every public offering of a CPSE. The process of public offering begins with the approval of the Cabinet Committee on Economic Affairs (CCEA) on the proposal through public offer and ends with the listing of the shares on the Stock Exchanges. 1.7 The Government constitutes various committees to guide the process of disinvestment through public offer at different stages of the transaction. Such committees include the Core Group of Secretaries on Disinvestment (CGD) for taking decisions relating to the procedural issues and considering any deviations required from the present procedure for effective implementation of CCEA decisions; Inter Ministerial Group (IMG) for overseeing and guiding the process of divestment; and Committee of Officers for recommending to the Empowered Group of Ministers (EGoM) the price/price band/floor price of a public issue, Issue Price, inter se allocation of shares amongst different categories of investor and other related issues in case of pure offer for sale by the GoI. The EGoM considers the recommendations of the Committee of Officers and decides the price/price band/floor price and other related issues before the public issue opens and after the closure of the Issue it decides the final issue price of the shares and the inter se allocation amongst the investor categories. In case the public offer involves issue of fresh equity and simultaneously Government is also disinvesting a part of its shareholding, an IPO/FPO committee is formed by the Board of Directors of the concerned CPSE for assisting the Book Running Lead Managers (BRLMs) and the Legal Advisors to the Issue, in the preparation of the offer document and carrying out such other tasks as may be required in relation to the public offer. Such transactions are generally referred to as piggy back transactions. The Committee could also be empowered to recommend to the Board of Directors. The work done by the Committee of Officers in the case of pure disinvestment refer to above. The recommendations of the Board of Directors on pricing and price related issues are sent to Department of Disinvestment for placing it before the EGoM for a final decision. 1.8 The process of issuing/offering shares through public offer is technical in nature requiring indepth knowledge of the legal compliances and financial regulations and equity valuation methodologies amongst other things. It also involves close collaboration amongst the CPSE, the concerned Administrative Ministry, and the DoD. The DoD has gained a fair amount of experience in the processes involved in public offers while handling the initial and further public offers of a number of CPSEs. This handbook is an attempt to document the broad aspects of the processes involved in public offers with the expectation that it would serve as a reference for officers in the DoD, the Administrative Ministries and the CPSEs. 1.9 The handbook contains six sections on different aspects of the public offer. Section 2 on Preliminaries deals with the actions to be taken and legal requirements to be satisfied by the Government and the CPSE proposing to come out with a public offer. 1.10 Section 3 on the Preparation of Cabinet note explains in detail the procedure f or preparing the Cabinet note for public offers and all the aspects that need to be covered in the note. 1.11 Section 4 documents the details of selection of the Book Running Lead Managers and other intermediaries required for a public offer. 1.12 Section 5 describes in detail the procedural aspects of the public offer including the regulatory requirements that need to be fulfilled by the CPSEs and the concerned Administrative Ministry. This section 2is divided into two sub-sections one on the Pre Issue Activities and the other on Post Issue Activities. 1.13 The last section is on Investor Relations which outlines the steps required to be taken by the listed CPSEs to address the grievances of the investors and develop good investor relations. 1.14 The handbook is not a substitute for the SEBIs (Issue of Capital Disclosure Requirements) Regulations 2009 (ICDR Regulations), Securities Contracts (Regulation) Rules, 1957, Companies Act 1956 and the listing requirements of the Stock Exchanges; including amendments thereto from time to time.

SECTION 2 PRELIMINARY WORK

2.1 A company, which decides to raise funds through the capital market or in which the GoI wishes to off load its shareholding through a minority sale, and thereby list its equity shares on a recognised stock exchange, has to ensure that it fulfils various statutory and regulatory requirements and directives issued by the GoI from time to time. 2.2 An Initial Public Offer (IPO) or a Further Public Offer (FPO) could be through issue of fresh equity alone or offer for sale alone or a combination of both. Prior to taking up cases for disinvestment in an IPO/FPO the following aspects are to be examined and suitable action initiated by the CPSE concerned: (1) Amendments to Memorandum of Association (MoA) and Articles of Association (AoA): At the time of an IPO the following aspects are to be considered: (i) Whether the Articles and Memorandum of Association of the CPSE permit listing of the shares, free transfer of shares and comply with the requirements of the stock exchanges in respect of a listed company, i.e. if there are any restrictive clauses, the same need to be amended to facilitate listing. The Articles of Association should contain the provisions as prescribed by the recognised stock exchanges. Since a private limited company cannot approach the capital market, the unlisted CPSE planning to list its shares on the stock exchanges, has to take necessary steps to convert it into a public limited company if it is a private limited company. Further, before a CPSE proceeds with an IPO/FPO which has a component of fresh issue, it should check if sufficient authorised capital is available for issuing shares, if not, steps have to be taken to increase the authorised capital. (2) Amendments to Agreements with other shareholders: If there are other shareholders in the CPSE, it should be seen whether there are any agreements that may restrict the rights of the CPSE to freely transfer the shares and getting the shares listed; if so, appropriate action be taken for amending such restrictive clauses to facilitate listing. (3) Compliance with minimum listing norms of stock exchanges: The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have prescribed minimum paid-up equity capital of a Company, below which companies are not allowed to get listed. A CPSE before considering an IPO, needs to examine whether it complies with the thresholds prescribed by NSE & BSE. In case it does not meet the minimum paid up capital requirement, then it may need to increase its paidup capital either through issue of fresh equity or bonus shares or conversion of loan

(ii) (iii)

into equity etc. It may be noted that fresh capital being raised in the IPO will be considered for the purpose of counting the minimum paid-up capital requirement. Eligibility norms can be downloaded from websites of BSE (www.bseindia.com) and NSE (www.nseindia.com). (4) Issue of Bonus Shares: At the time of both, an IPO and an FPO, the following aspects relating to issue of bonus shares and/or splitting the face value of the share are to be considered: (i) The Department of Public Enterprises has issued guidelines vide OM No. DPE/ 12(6)/95-Fin. dated 10th November, 1995 [copy at Annex I] for issue of bonus shares, which inter alia provide that CPSEs having reserves in excess of three times their paid-up capital should immediately consider the scope for issuing bonus shares. Further, there may be cases of CPSEs where the book value of the share or the listed price is very high and therefore the likely per share price is expected to be high. Such a price may be perceived by the investors, particularly the small investors, as expensive. Therefore, the CPSEs may consider issue of bonus shares to reduce the per share price and to accommodate a larger number of shareholders leading to wider dispersal of the public shareholding. At the time of considering the issue of bonus shares, the CPSE should assess its ability to service the enlarged equity, post bonus issue. (5) Splitting of shares: Splitting the shares into face value of lower denomination could also be considered to reduce the per share value to provide wide dispersal of public shareholding. However, this should be done very carefully in the case of an IPO keeping the following aspects in view: ICDR Regulation 31 (1) states that the face value of the share at the time of an IPO should be `10 per share. If the face value is less than `10 (cannot be less than `1) the IPO pricing has to be `500 or more (this provision is not applicable to CPSEs engaged in the infrastructure sector as defined in ICDR Regulations). This Regulation is not applicable in the case of an FPO. As explained above, the issue of bonus shares and splitting the face value of the share could be considered independently or in combination, to achieve the objective of reducing the per share price and allowing wide dispersal of public shareholding. (6) Outstanding Convertible instruments: Regulation 26(5) of ICDR Regulations stipulates that no issuer shall make an IPO if there are any outstanding convertible securities or any other rights which would entitle any person any option to receive equity shares after the IPO, subject to certain conditions. This aspect needs to be examined by the CPSE. Stock options issued pursuant to SEBIs ESOP Guidelines Compliant Scheme are exempt from this Regulation.

(ii)

(7)

Eligibility under ICDR Regulations: At the time of an IPO the CPSE has to check whether it is eligible under the norms prescribed in the ICDR Regulation 26(1). In case the CPSE is not eligible under Regulation 26(1), then it will need to comply with ICDR Regulation 26(2). At the time of an FPO the CPSE has to check whether it is eligible under the norms prescribed in ICDR Regulation 27. A copy of the ICDR Regulations can be downloaded from SEBI s website www.sebi.gov.in.

(8)

Capital Restructuring A CPSE going in for listing may have an equity capital base which is disproportionately high compared to its physical assets, scale of operations etc., thus it may have low ratios such as Earning Per Share, Book Value per share etc. which will be lower than its listed peers. The high equity capital base may be due to historical reasons. On account of these, a proper valuation of CPSEs shares, prior to listing, may not be possible. To optimise the equity capital base, a capital restructuring exercise of the CPSE is desirable prior to listing, which may include capital reduction. The CPSE should check the extant Companies Act provisions, Institute of Chartered Accountants Guidelines and other regulatory provisions in force at the time of carrying out such restructuring and take approvals as may be required.

(9)

Reserve Report: The ore reserves are the key assets of any mining company. Similarly, for an oil & gas exploration & production company the hydro-carbon reserves are the key resources of such companies. The certainty of the quantities, grade and quality of resources and reserves available supports both the current and the future cash flow forecasts of the company and hence the valuation of the company. For the valuation of a mining company/oil & gas exploration and production company or any such company; the amount of mineral reserves/hydro-carbon reserves therefore need to be estimated/audited. Hence, CPSEs owning natural resources and planning to come out with a public offer should get the audit of the reserves done through an independent agency of international repute before filing the draft offer document with SEBI. It is desirable that this work is commissioned as soon as the company decides to go in for a public offer. For example, such reports were prepared before the public offerings of Oil India Limited, Coal India Limited and MOIL Ltd.

2.3 If preliminary work relating inter alia to the aspects mentioned is done with due care and diligence, the process of public offering will be smooth and quick once Government approval is available.

SECTION 3
PREPARATION OF CCEA NOTE AND APPROVAL PROCESS
3.1 Preparation of the CCEA note starts after in principle agreement between the Administrative Ministry, the DoD and the concerned CPSE regarding the public offering. The proposal can either be mooted by the CPSE through its Administrative Ministry, if it needs to issue fresh equity, or the DoD can propose to the Administrative Ministry that the GoI wishes to offload a part of its shareholding (minority sale) in a CPSE which meets the criteria laid down in the disinvestment policy. In both the cases, the agreement of the Administrative Ministry, the DoD and the concerned CPSE is important for the public offering to move forward successfully. 3.2 The CCEA note and the decisions thereof lay the foundation for the transaction. In order to ensure that the transaction runs smoothly, care must be taken that all aspects of the transaction are included in the CCEA note for a decision. 3.3 The CCEA Note should have the following standard items: (1) Brief introduction of the CPSE, including details on when it was set up, when it was converted into a public sector company; the areas of business; Government shareholding in the CPSE pre-issue and post-issue and the number of employees, etc. Financial performance of the CPSE for the last five years should be given on the following parameters: (` in crore) 2006- 07 Paid up equity Turnover Net Profit Net worth Face Value of the Share (`) Earnings Per Share (`) Book Value Per Share Dividend Percentage of Dividend Source: 2007-08 2008-09 2009-10 2010-11

(2)

(3)

The policy on disinvestment should be indicated, clearly mentioning that the CPSE meets with the disinvestment policy parameters. The history of any earlier disinvestment or share dilution, should be indicated. The extent of proposed disinvestment should be indicated along with its justification. If the CPSE also proposes issue of fresh equity, the Administrative Ministry must give full justification for the same together with the percentage of shares to be issued. This is to be later reflected in the Draft Red Herring Prospectus (DRHP) under Objects of the Issue. The percentage of disinvestment proposed, (together with the exact number of shares and the face value of the share) should be indicated with reasons. The reasons could be the fulfillment of mandatory listing norms, the fund requirement of the CPSE, the appetite of the capital market etc. The regulatory norms in this respect are : (a) In the case of an IPO, as per Rule 19(2)(c) of Securities Contracts (Regulation) Rules, 1957, a CPSE has to offer and allot at least 10% equity shares to public in terms of an offer document. In the case of a CPSE listed with less than 10% public shareholding, the public shareholding is required to be increased to the mandatory threshold of 10% within a period of three years from 9th August, 2010.

(4) (5)

(6)

(b)

(7)

The aspects relating to issue of bonus shares, splitting of shares and payment of special dividend should be examined and, if appropriate, the proposal be included in the CCEA note with full justification in context of the guidelines in respect of the same. While examining the issue of payment of special dividend, it may be kept in mind that some of the CPSEs may hold large reserves, including cash that may have accumulated due to the past monopolistic nature of their businesses or due to public policy. In this eventuality, such reserve should vest with the general public and not become the property of a few limited shareholders, post an IPO/FPO. Proposal to the CCEA for disinvestment/issue of fresh equity need not be held up pending these actions. In the CCEA note it may be mentioned that the CPSE has already initiated the process in respect of issue of bonus shares and or splitting the face value of the share.

(8)

The disinvestment policy envisages wide dispersal of public shareholding to enable the people of the country to share in the wealth and prosperity of CPSEs. Therefore, price incentives are generally offered to retail investors and the employees of the CPSE concerned. ICDR Regulation 29 deals with the discount that could be offered to retail investors as well as to employees. As per this Regulation the difference on which the shares can be issued to retail investors shall not be more than 10 per cent of the price at which shares are offered to other categories of investors. The same limit of discount has been prescribed for employees also.

Accordingly, if it is proposed that the retail investors and employees of the CPSE concerned be given discount on the issue price, the quantum of discount is to be indicated in the CCEA note and specific approval of the CCEA be obtained for the same. Normally, the discount offered to employees is the same as that offered to retail investors. It is advisable that approval is taken for discount up to a percentage of Issue Price. Lastly, ICDR Regulation 42 provides for reservation of up to 5% of the post issue capital of the CPSE for allotment to employees of the issuer; employees include, employees of the holding company, subsidiary company or that of material associate whose financial statements are consolidated with the financial statements of the Issuer CPSE. The CPSE may or may not reserve a part of the issue size for its employees but in order to maintain a sense of belonging, inclusiveness and to allow employee participation in the prosperity of the CPSE, it is important that reservation is made for the employees of the CPSE. While indicating the percentage of reservation for employees in the CCEA note, the CPSE should keep in view the interest shown by the employees in subscribing to the Issue and their capacity to pay for the shares since not all employees subscribe to the shares of the CPSE and any under subscription of the employees category does not send out positive signals to the other investors to the Issue. Maximum allotment under this category cannot exceed `2,00,000 per employee. (9) In case it is a piggy-back transaction, the heads under which the costs are to be shared between GoI and the CPSE and in what proportion, should be clearly indicated. This is now fairly standardised, the guiding principle being that DoD will bear the cost of those items where there are additional costs to the transaction on account of disinvestment. These include: Lead Managers success fee and commission Bidding software Registrars expenses Depository fees Printing Expenses Legal fees

(10) The approval of the CCEA may be sought for the BRLMs to be appointed through an open competitive bidding process and for the other appointments of intermediaries/ agencies through limited competitive bids. [This should be one of the proposals for approval of CCEA, even when the appointment of BRLMs/intermediaries has been completed under the new dispensation as explained subsequently in paragraph 4.4]. (11) If the required number of Independent Directors is not in place, this should be indicated in the Cabinet note. The need for timely appointment of Independent Directors should be highlighted and it may be mentioned that SEBI and the Stock Exchanges would not give their approval if the required number of Independent Directors are not in place at the time of filing the DRHP and SEBI will not accept the RHP in cases of Fast Track Issues under ICDR Regulations. In all such cases, comments of Department of Personnel & Training (DOPT) should also be invited at the draft Cabinet Note stage.

(12) In the case of piggy-back transactions it should be clearly mentioned that the fixation of the price band [or the floor price] and the final price would be decided by the EGOM. (13) If there are other stakeholders such as State Governments who also intend to offload their shareholding in conjunction with GoI, the same should be indicated in the CCEA note, including the percentage of equity and quantum of shares to be so offered. (14) While seeking the Finance Ministers approval for the draft CCEA note in the case of an offer for sale and the Minister in-charge of the CPSE in case of issue of fresh equity (piggy-back), the file should be routed through the Financial Advisor of the Ministry/Department concerned. After the draft CCEA note is approved by the Finance Minister/Minister in-charge of the CPSE, the same is circulated for inter-ministerial consultations and a copy is also required to be sent to the Prime Ministers Office (PMO). After incorporating the comments/views of the Ministries/Departments consulted, the final CCEA note is required to be sent to the Principal Secretary to the PM immediately and thereafter comments, if any, of the PMO should be awaited for seven working days. The final CCEA note can be sent to the Cabinet Secretariat only after seven working days from the date of sending the Note to PMO. (Reference Cabinet Secretariat OM NO. 1/13/2/2010-Cab. dated 19th November, 2010). (15) The DoD has three Divisions, each headed by a Joint Secretary level officer. One of the three Divisions also looks after policy matters. The administrative ministries have been allocated amongst these three Divisions. The Division in which the Administrative Ministry of a particular CPSE falls, prepares the Cabinet note proposing the public offering of that CPSE. However, the draft Cabinet note prepared by a Division is required to be sent to the Policy Division within the Department for the purpose of maintaining uniformity. (16) Once CCEA approval is received a press release is put up on the website of the Department under the whats new section. After a fortnight these details are shifted to the section forthcoming issues .

10

SECTION 4
PROCEDURE FOR APPOINTMENT OF BOOK RUNNING LEAD MANAGERS (BRLMS) AND OTHER INTERMEDIARIES
4.1 Disinvestment transactions through offer for sale of GoI shareholding in CPSEs in the domestic market through book building process are carried out in accordance with the ICDR Regulations. A book building process is a process undertaken to elicit demand and to assess the price for determination of the quantum or value of securities. 4.2 The process of public offer begins with the appointment of merchant bankers, to facilitate the public issue process, in accordance with regulation 5(1) of the ICDR Regulations. The number of merchant bankers appointed for the issue depends on the size of the issue. In a public offer through book building process, the merchant bankers act as Book Running Lead Managers (BRLMs). The other intermediaries for the issue are appointed in consultation with the BRLMs. 4.3 Intermediaries are not defined in the ICDR Regulations. However, the intermediaries registered with SEBI are Merchant Bankers, Underwriters, Bankers to the Issue, Registrars, Credit Rating Agencies, Brokers and Sub Brokers. Intermediaries are appointed to advise & assist in the Issue and carry out their obligations in accordance with the regulatory requirements. Besides the intermediaries registered with the SEBI, other entities associated with the Issue include Legal Advisers, Advertising Agency, Printers and Auditors. In this handbook, the term intermediary has been used to include all the above mentioned entities. 4.4 In May 2010, the DoD obtained the CCEAs approval for appointing the BRLMs and other intermediaries to the Issue immediately after the draft Cabinet note on public offering is approved by the Minister-in-charge of the Administrative Ministry of the CPSE in case of issue of fresh equity and by the Finance Minister in case of pure offer for sale of GoI shareholding in the CPSE. This was done to plan the public offerings in an efficient and expeditious manner so as to avoid bunching of the public issues. The BRLMs and the Legal advisors can commence the process of preparing the Draft Red Herring Prospectus (DRHP) immediately after their appointment. However, the approval of the CCEA on the proposal of disinvestment through public offer has to be taken before either the DRHP is filed with SEBI by the CPSE or in fast track issues the RHP is filed with SEBI and RoC. 4.5 BRLMs as well as other intermediaries are appointed by the DoD on a competitive basis i.e. through open or limited tender basis (except Collection/ Refund Bankers who are short-listed for appointment on the basis of well laid-out criteria as explained in paragraph 4.29 to 4.31), separately for each transaction. In the case of open tender, wide publicity is given to generate competition. In the case of limited tender, a sound and transparent basis is used to shortlist the parties for taking part in the bidding process. The DoD does not maintain any panels. 4.6 In case of pure offer for sale of GoI shareholding, the DoD selects and appoints the BRLMs and other intermediaries to the Issue. On the other hand in case of offer of fresh equity along with offer for sale of GoI shareholding, the CPSE concerned selects and appoints the BRLMs and other intermediaries to the Issue.

11 11

4.7 For the appointment of the BRLMs and other intermediaries, different committees are constituted by the DoD or the CPSE, as the case may be. (a) (i) Pure offer for sale of GoI shareholding through public offer The DoD constitutes an Inter Ministerial Group with the approval of the Minister of Finance for guiding the process of disinvestment through public offer. The composition of the IMG is as follows: (i) (ii) (iii) (iv) (v) (vi) Secretary, Department of Disinvestment Joint Secretary, concerned Administrative Ministry Joint Secretary, Department of Legal Affairs Financial Advisor, Department of Disinvestment Financial Advisor, concerned Administrative Ministry Joint Secretary Department of Economic Affairs Chairman

(vii) Joint Secretary, Department of Public Enterprises (viii) Joint Secretary, Ministry of Corporate Affairs (ix) (x) (xi) CMD, concerned CPSE Director (Finance), concerned CPSE Joint Secretary, Department of Disinvestment Convener

In certain cases the Secretary of the concerned Administrative Ministry could also be invited to co-chair the IMG (ii) Role of the IMG: The IMG approves the advertisement for inviting Expression of Interest (EoI) from the merchant bankers for selection as BRLMs to the Issue. IMG also approves the Request for Proposal (RFP) for the selection of the BRLMs and the Legal Advisers to the Issue and selects the BRLMs to the Issue. The points, on which IMG may need to deliberate in order to finalize the RFP for BRLMs, inter-alia, include: (i) The maximum number of merchant bankers required, depending on the size and complexity of the Issue. The minimum size of the issue handled by BRLMs in the past, to be determined as an eligibility criterion for selection. Quantum of the non-refundable fee. Number of application forms to be printed.

(ii)

(iii) (iv)

While finalizing the RFP for the Legal Advisers the IMG may need to deliberate on the following issues: (i) (ii) Number of law firms to be addressed Minimum number and size of issues undertaken by the legal advisers to be determined.

12 12

(iii)

Need for having or not having an International Legal Counsel (ILC) in case of very small size Issues of around ` 500 crore or less.

(iv)

Minimum experience in terms of number of domestic Issues undertaken by the ILC applying in consortium. (As per existing practice, the ILC should have handled at least one domestic issue)

The IMG may also constitute a smaller Selection Committee for the selection of Legal Advisers and Advertising/Public Relations agency for the Issue. The composition of the Selection Committee is as follows : (i) (ii) (iii) (iv) (v) (vi) (b) Secretary/Joint Secretary, Department of Disinvestment Financial Advisor, Department of Disinvestment Joint Secretary, Department of Disinvestment Representative of the concerned Administrative Ministry of the level of Director or above Representative of the Department of Legal Affairs of the level of Director or above Director (Finance), CPSE concerned. Convener Chairman

Issue of fresh equity by the CPSE along with offer for sale by the Government In case of issue of fresh equity by the CPSE along with offer for sale by the Government, generally the IPO/FPO committee is constituted by the Board of Directors of the CPSE concerned to oversee the process of public offer and appoints the BRLMs and other intermediaries to the Issue in consultation with the BRLMs.

4.8
4.8.1

Selection and Appointment of BRLMs to the Issue:

For each public issue (IPO/FPO), one or more merchant bankers are required to be

appointed. Regulation 5 and Schedule II of the ICDR Regulations deal with activities and responsibilities of the BRLMs. In brief, the functions of the BRLMs are to: (a) (b) (c) (d) (e) (f) (g) (h) Advise Government/CPSE on the timing and modalities of the Issue Ensure optimum return to the Government/CPSE Conduct due diligence of the CPSE and review the DRHP/RHP/Prospectus to ensure conformity with applicable laws Assist in the selection of intermediaries required in the process and coordinate the work/activities of intermediaries Control and supervise the work of intermediaries Market the Issue Conduct the road shows for the Issue Review the statutory advertisement and clear the same for publication in the newspaper

13 13

(i) (j)

Undertake functions such as underwriting, printing and distribution of stationery Coordinating post-issue activities like finalization of basis of allotment, allotment, transfer of shares in beneficiaries account, issue of refunds, listing of shares, transfer of funds to Government/CPSE account etc.

In brief, the BRLMs are overall responsible for all activities relating to the IPO/FPO. However, the draft red herring prospectus, the red herring prospectus and prospectus shall be drafted and prepared by the CPSE with the assistance of legal counsels appointed for the Issue.

4.9

Appointment Process in the Department of Disinvestment:

4.9.1 Once the Minister of Finance has approved the proposal for disinvestment through public offer, the process for selecting and appointing the BRLMs can begin. The first step is the constitution of an IMG as referred to in para 4.7(a)(i), with the approval of the Minister of Finance. 4.9.2 The RFP is to be approved by the IMG. The duties and responsibilities of the BRLMs have to be clearly brought out in the RFP. SEBI Regulations in this regard are also to be kept in view. The standard format of the RFP is given at Annex II. 4.9.3 The detailed RFP, inter-alia, containing a brief note on the CPSE, Governments intent on disinvestment/issue of fresh equity, responsibilities of BRLMs, eligibility criteria, weightage for evaluation of the BRLMs on each criteria etc. is placed on the website of the DoD, the Administrative Ministry and the CPSE concerned. 4.9.4 The process is taken forward as under: A. Eligibility criteria: (i) The prospective bidders should be reputed merchant bankers, registered with the SEBI having a valid certificate with experience and expertise in public offering in capital market. Bidders should have handled one or more domestic equity issue (IPO/FPO) of the size, to be decided in each case by the IMG on merits depending upon the issue size and keeping in view the past precedents, during the last three financial years and updated to the current financial year. Bidders must meet the prescribed guidelines for qualifications for Advisers for disinvestment process. Merchant bankers are allowed to submit their bids singly or in consortium with other bankers.

(ii)

(iii)

(iv)

B.

Submission of proposal: The prospective bidders are required to submit their proposal i.e. Technical Bid and Financial Bid. Three envelopes are to be submitted on or before the last date mentioned in the RFP (sealed envelope 1 containing prescribed documents, sealed envelope 2 technical bid and sealed envelope 3 financial bid). Details are given below.

14 14

C.

Documents to accompany the Technical Bid (sealed envelope-1): (i) Non-refundable earnest money. From the Issues in 2009 onwards it has been `1.00 lakh (ii) Certificate in the prescribed format (no conviction/ no pending investigation/ no conflict of interest) duly signed by the authorised signatory of the bidder (iii) Certificate to the effect that the fee quoted by the bidder is in accordance with the terms and conditions of the RFP (iv) Authority letter authorising the authorised signatory to sign the proposal and other documents (v) (vi) Copy of the valid certificate of registration as merchant banker issued by SEBI Undertaking/confirmation that it would enter into various agreements as per the format displayed on the website of DoD (www.divest.nic.in).

D.

The RFP mandates that the Technical Bid should contain the following sections (sealed envelope-2): (i) (ii) Profile of the bidder Experience and capabilities in handling similar transactions (iii)

Sector expertise, experience and understanding of the CPSE (iv) Deal team qualification and manpower commitment to the deal (v) Marketing strategy and post issue market support (vi) Local presence and commitment to India and strength in drawing retail investors participation (vii) Global presence and distribution capabilities (viii) Research capability (ix) E. Any additional information considered necessary by the bidder.

Financial Bid (sealed envelope-3): The Bidder is required to quote a fee in INR. The fee quoted should be a minimum of `1/- (Rupee one) or in multiples of `1 (Rupee one). The fee quoted by the bidder is to be inclusive of all the applicable taxes, cess, duties, etc. The fee quoted is required to be unconditional and inclusive of the expenditure to be incurred on other intermediaries e.g. printers and agencies such as stock exchanges and depository, as per the items mentioned in the RFP and as explained below: (i) (ii) Filing fee to SEBI Payment to NSE/BSE for use of software for the book building

15 15

(iii) (iv) (v) (vi)

Payments required to be made to the Depository or the Depository Participants for transfer of shares to the beneficiaries account Cost of preparation of statutory advertisements Expenses for organising road shows-both domestic and international-except tour expenses of Government and CPSE officials) Printing and distribution of stationery required for the Issue

In addition to the above, BRLMs are required to initially make payment of selling commission/ brokerage to brokers, which are subsequently reimbursed by DoD on production of documentary proof of actual disbursement. The Bidders may quote a drop-dead fee [to cover their costs, if any, payable by the Government or the CPSE, as the case may be], in the event the transaction is called off by the Government or the CPSE after initiation of the process. The drop-dead fee payable at various stages of the transaction is required to be indicated in the financial bid. The lowest drop dead fee quoted by any one of the finally selected Bidders is treated as drop-dead fee payable by Government, to be shared equally by all the BRLMs. The drop-dead fee is not a criterion in determining the H1 bidder, i.e. the party which secures the highest combined marks in technical and financial bids.

4.10 Examination of Bid documents:

4.10.1 The technical bids received by the appointed date and time need to be examined before the prospective bidders make their presentations to the IMG. This is done to ensure that the bids satisfy the eligibility criterion prescribed in the RFP. In the RFP, the date, time and place of opening of the sealed envelope of the technical bid is mentioned. The examination is carried out as under: (a) For this purpose, a committee is required to be set up normally consisting of three officers viz. Deputy Secretary/ Director of the concerned Division and one officer each from other two Divisions of DoD. (b) On the appointed date and time, the committee first opens the Envelope No 1 in the presence of the representatives of the bidders, if present, and in token the signatures of the committee members and of the authorised representative of the bidders present are obtained. This is done to ensure submission of all prescribed documents by the bidders. Any bidder who has not submitted all documents becomes ineligible for further participation in the process. (c) Thereafter, Envelope No.2 containing the technical bid is opened of only those bidders who have submitted all prescribed documents in envelope-1, in the presence of the representatives of the bidders, if present, and in token the signatures of the committee members and of the authorised representatives of the bidders are obtained.

16 16

(d)

Technical Bids are checked against a check-list. (see Annex III).

4.10.2 For cross-checking credentials of bidding merchant bankers, preparatory work before the receipt of bids may, inter-alia, include the following: (i) Verification of performance of merchant bankers in terms of Issue amount in domestic market, number of issues handled in domestic market and percentage of market share in international market during the last three years and updated to current financial year as obtained from standard publicly available database(s). Sector-specific performance of bidders both national & international from publically recognised databases. The DoDs chart on performance of merchant bankers in past GoI Issues, duly marked & evaluated, is to be available with the IMG. The methodology of calculating/deriving the marks is explained in the following two paragraphs. Preparing the list of Research Analysts as per ranking in the sector and the merchant banker group to which they belong as per publically available database.

(ii)

(iii)

(iv)

4.11 Evaluation of BRLMs on their past performance with the Department of Disinvestment
Merchant bankers are evaluated on their performance in the divestment issues handled by the DoD since 2009. For this purpose, the category-wise (viz. public sector financial institutions and non public sector institutions, Foreign Institutional Investors, High Net Worth Individuals and Retail Investors) procurement for each of the issues handled by the merchant bankers, as provided by the Registrars, is considered.

4.12 Methodology:
(i) The percentage contribution in each of the categories (i.e. public sector and non public sector financial institutions, foreign institutional investors, high net worth investors and retail investors) by each of the merchant bankers is computed for the individual Issues. Thereafter, the average procurement (%) of each merchant banker in each of the categories is worked out. In case of a particular merchant banker who has worked in more than one of the above mentioned issues, the average procurement (%) in a particular category is obtained by dividing the sum of its category-wise procurement (%) across various issues by the number of issues in which it had participated. Based on this average procurement in each category, scores are allotted to the merchant bankers. A maximum number is assigned on the basis of number of merchant bankers that have participated in various issues so far i.e. if there are 20 merchant bankers in total that have participated in various issues from 2009 onwards, a maximum of 20 is assigned to the merchant banker who has performed best in a particular category. The next best performers are assigned a score of 19, 18 and so on in the decreasing order of their performance. The one who has performed the least is assigned 1.

(ii)

(iii)

17 17

iv)

In order to arrive at the composite score of each merchant banker, weighted average of the scores of merchant bankers across the categories is taken. Since merchant bankers are required to make relatively more efforts with respect to procurement of bids from categories other than public sector financial institutions, a weight of 1 is given to the latter whereas all the other categories are assigned a weight of 2. As per the above methodology, marks are given to merchant bankers on their past performance with DoD.

(v)

4.13 Bid Evaluation Process:

4.13.1 The DoD follows the Combined Quality Cum Cost Based System (CQCCBS) as under: (i) The bidders whose Technical Bids are in order, are asked to make a presentation before the Inter-Ministerial Group. The presentation schedule is displayed on the website of the DoD. Before the prospective bidders make presentations, the IMG holds consultations to decide the cut-off marks for technical qualification. The cut-off marks are displayed on the notice board before the presentations begin. The IMG evaluates the bidders on the criteria mentioned below: Criteria Experience and capabilities in handling similar transactions as Advisers/global coordinators Past performance with DoD Sector Expertise, Experience and Understanding of CPSE Deal team qualification & manpower commitment to the deal Marketing strategy & post issue market support Local presence and commitment to India and strength in drawing Retail Investor participation Global presence and distribution capabilities Research capability Total Maximum Score 15 10 20 10 15 15 10 05 100

(ii)

(iii)

S.No. 1. 2. 3. 4. 5. 6. 7. 8.

NOTE : The merchant bankers who have not worked on any assignment in the past with the DoD are evaluated on all parameters except criteria 2 above and are awarded marks out of 90 instead of 100 and then proportionately increased to a scale of 100 so that they are neither at an advantage nor at a disadvantage. (iv) Specific questions/areas of concern to address when a BRLM makes a presentation include inter alia; (a) (b) Other public issues handled in the past its contribution and any unexpected situations that arose in those issues and how they were managed; Levels of representation of the merchant bankers, including the deal team;

18 18

(c) (d) (e)

Questions on deal teams including key personnel to be earmarked for the issue and their commitment in case they are mandated for other public Issues Past Issues successfully handled by the key personnel Their approach on preparation for the Issue how it proposes to leverage their experience and advise in the disinvestment process in the particular sector with reference to its understanding of the particular sector and the market opportunities Its understanding of the likely potential Issues in the global perspective Its research, analysis and likely valuation methodologies of the public issue Its views on appropriate timing of the Issue in the market How it would complete the Issue in a prescribed time frame Conflict of interest to be specifically quizzed on any competing interests Focus on retail participation and any tie-ups it may have entered into to reach out to retail investors where its own reach is limited.

(f) (g) (h) (i) (j) (k) (v)

Based on presentations and proposals of bidders, the IMG shortlists them for the purpose of opening their Financial Bids. The date and time of opening up of the financial bids is announced at the time of the presentations. The list of technically qualified parties is displayed on the notice board along with their scores. The Financial Bids of parties not technically qualified are returned unopened to the parties concerned after getting receipt.

(vi) (vii)

(viii) The Financial Bids of the technically qualified parties are opened by the IMG in the presence of such technically qualified bidders if present. The financial quote of each party is read out to the parties present on opening of each sealed envelope containing the Financial Bids. (ix) The marks scored by the short-listed bidders in the technical bid are given a weightage of 70. The financial bids of the short-listed bidders are given a weightage of 30. The combined score of technical and financial bids determines the selection of H1, H2, H3 and so on. An illustration of arriving at the combined scores using the CQCCBS towards appointment of BRLMs is given at Annex IV and the format of marking is at Annex V. The IMG then makes a recommendation that the party scoring the highest combined marks (H1) be offered appointment as BRLM for the transaction. It also recommends that the other technically qualified parties ranked as H2, H3 and so on in that order be asked individually to match the fees, in writing, quoted by H1 (including matching of lowest drop-dead fee), and the parties who so match the fees quoted by H1, are appointed till the required number of BRLM slots are filled up. The above recommendations of the IMG on the appointment of BRLMs are put up for approval of FM through the Secretary (Disinvestment). Once approved by the FM, the recommendations of the IMG are given effect to in the manner mentioned in the sub-para (x) above.

(x)

(xi)

19 19

(xii) Thereafter, the mandate letters appointing the BRLMs are issued by the DoD to all the selected BRLMs. (xiii) The fee quoted by H1 is required to be shared equally by all the appointed BRLMs. However, if any BRLM selected on this basis has quoted a lower fee than that quoted by H1, then the said BRLM gets a fee equal to the fee quoted by it divided by the number of BRLMs appointed for the transaction. (xiv) The expenses which are to be incurred by the appointed BRLMs on items as mentioned in paragraph 4.9.4-E above are to be shared equally by all the BRLMs. 4.13.2 The selected Bidders are required to work as a team as the BRLMs. 4.13.3 The mandate letter issued to the BRLMs not only defines the scope of work, but also reiterates their commitment of deal teams, confidentiality clause, assistance in post-issue, etc. An example of a typical mandate letter is at Annex VI.

4.14 Procedure for appointment in cases of piggy-back:

4.14.1 The DoD follows the above-mentioned procedures in the case of offer for sale. However, if the transaction involves fresh issue of equity by the company along with offer for sale by GoI, the CCEA note normally moved by the Administrative Ministry mentions that CPSE will appoint intermediaries by following its own procedures. In such cases, the CPSE takes charge of the issue process with the Government piggy backing. The CPSE may opt to follow the DoD procedures, with or without modifications. 4.14.2 The BRLMs are normally appointed through a competitive bidding process for which inter alia, the CPSE forms what are variously called an Oversight Committee or Selection Committee or IPO/FPO Committee. The composition of the committee is different from CPSE to CPSE. However, a nominee of Administrative Ministry and DoD is usually a member of the committee. In certain cases, Financial Adviser of the Administrative Ministry concerned could also be a member of the committee. 4.14.3 The Board of the CPSE delegates powers to this Committee to complete the selection of BRLMs. The companies usually follow the broad DoD procedures. In the evaluation parameters for BRLMs, marks earmarked for past performance with the DoD are excluded and apportioned as may be decided by the Companys Committee to other parameters. The role of the DoD s representative is to ensure consistency and uniformity in the process besides providing necessary guidance to the Committee from time to time. The Committees recommendations on appointments of BRLMs and other intermediaries are normally put up to the competent authority for approval. 4.14.4 The RFP for inviting proposals from prospective BRLMs by the CPSE is required to be uploaded on the website of the CPSE, in addition to the website of the Administrative Ministry and the CPSE

20 20

4.15 Appointment of Legal Advisers / Counsels:

Legal Advisers find a mention in Part-A (2) (VI) (B) (4) of Schedule VIII on Disclosures in Offer Document of the ICDR Regulations which states that the disclosure of names, addresses, telephones numbers, fax numbers and e-mail addresses of the Legal Adviser in the offer document (DRHP/RHP) is mandatory. Domestic Legal Advisers (DLC) are appointed in consortium with International Legal Counsels (ILC) as the latter is not appointed on standalone basis. In smaller sized public issues in certain sectors where the marketing will be limited to domestic bidders, there may be no need to engage an ILC. A final view in this regard may be taken by the IMG after consulting the BRLMs. In brief, the duties and responsibilities of Legal Advisers are given in paras 4.16 and 4.17 below.

4.16 Legal Advisers (Domestic):

Preparation of DRHP (excluding the sections being drafted by ILC) as well as carrying out legal due diligence; To ensure that all information given in the DRHP conforms to legal provisions and the requirements as per ICDR Regulations; Certain certifications are required to be signed by the Legal Advisers; Legal Advisers advise Government on legal issues involved in the process, if any. Review of the offer document to ensure compliance with disclosure and other requirements specified in the ICDR Regulations, Companies Act, Securities Contracts (Regulation), Rules 1957 and all applicable laws. Review of Companys litigation (against and by the CPSE) and litigation relating to Directors, subsidiary companies and joint ventures.

4.17 Legal Advisers (International):

ILC, who are also required in the process, prepare a document called the Wrap Document (part of the RHP/Prospectus) as well as provide necessary certifications for the process. This is required as per international standards, and therefore only, international legal counsel can certify the document. For example, ILC is required to give 10b-5 style certificate addressed to the book runners, providing written advice on internet restrictions etc. They also undertake drafting certain sections of DRHP (Business, Risk Factos, Industry and Management Discussion & Analysis) and various other legally required documents/letters as well as carry out legal due diligence. The ILC also looks into the accounting procedure and various compliances involved in the process.

4.18 Appointment process in the Department of Disinvestment

4.18.1 Through Limited Tender System : The DoD usually shortlists the names of the law firms from the data on domestic Legal Advisers (solicitor to the Issue, company, underwriters and investment banker) as per ranking available for the last three years on a publicly available/widely published database. All the four criteria are used in combination so as to make the ranking inclusive and wide-based. The RFP and list of prospective bidders from whom the proposals are to be invited are approved by the IMG. The standard format of RFP is given at Annex VII.

21 21

4.18.2 The process is taken forward as under: The selection of Legal Advisers/Counsels is done by the Selection Committee constituted for the purpose by the IMG. If the BRLMs are already in place, a representative from the BRLMs is usually requested to be in attendance at the presentation. However, such a representative does not participate in the award of scores to the Law Firms. A. Pre-requisites for the bidder (i) (ii) B. The bidder should be a reputed law firm; The bidder should have experience and expertise in public offerings in capital markets. (Number of issues, minimum size of issue to be stipulated by IMG).

Qualifying conditions (i) (ii) The Domestic Law Firm acting as the Lead Legal Adviser to the transaction is required to submit Proposals in consortium with an International Law Firm. ILC should have the requisite experience and expertise in public offerings in capital markets. ILC is not allowed to bid independently but only in tie-up with Domestic Legal Counsel. Unconditional acceptance to terms and conditions of the RFP.

(iii) C.

Submission of the proposal Legal Advisers are appointed through a 2-stage competitive bidding process comprising technical bid and financial bid. As such, the prospective bidders have to submit their proposal i.e. Technical Bid and Financial Bid.

D.

Technical bid The technical bid is required to contain the following sections in accordance with the RFP: (a) (b) (c) (d) (e) (f) Profile of the domestic law firm/international legal firm Experience and capability in handling public offerings Infrastructure and manpower Understanding of the regulatory framework Indicative timeline Strategy for the public offering

E.

Documents to be submitted along with the Technical Bids: (i) (ii) Certificate to the effect that there is no conviction by a court of law/no conflict of interest The confirmation letter duly signed by the authorised signatory of the consortium partner (International Law Firm) expressing their willingness to be a part of the consortium Unconditional acceptance to Terms and Conditions of the RFP

(iii)

22 22

F.

Financial Bids (i) (ii) (iii) (iv) (v) To quote a lump sum consolidated fee in Indian Rupees inclusive of the fee of International Legal Counsel. Fee quote should be gross of all taxes applicable and payable as per law by the applicant. The fee quote should be unconditional and inclusive of all expenditure. Bidders cannot prescribe any time limit for validity of the financial bid. Financial bids are submitted by the law firms at the time of their presentation.

4.19 Background preparation:

On receipt of the technical bids, a check-list containing the parameters on which the technical bids are evaluated by the DoD is prepared. The standard format of check-list is at Annex VIII. For cross checking credentials of bidding legal counsels, preparatory work may, inter-alia, include the following: (i) (ii) (iii) (iv) Data on ranking of legal counsels from publicly available/widely published database Verification in respect of their past engagements with the DoD and other CPSEs The ongoing mandates of DoD/CPSEs of both DLC and ILC The consortium tie-ups in the earlier DoD/CPSE mandates.

4.20 Bid Evaluation Process

4.20.1 The process is carried forward as under: (i) The technical bids received on the appointed date and time from the law firms is opened by a committee of three officers of the DoD in the presence of the representatives of the bidders, if present. All eligible law firms are invited for presentation before the Selection Committee on the appointed date and time. The time schedule of the presentation is displayed on the website of the DoD Before the presentation by the prospective bidders, the Selection Committee decides the cut-off marks for technical qualification The cut-off mark is displayed on the notice board before the commencement of presentations. The Committee evaluates the law firms on the criteria mentioned below: Criteria Experience and capabilities in handling public offerings Infrastructure & manpower Understanding of Regulatory frame work Indicative timeline Strategy for public offerings Total Maximum Score 25 25 15 10 25 100

(ii)

(iii) (iv) (v)

S.No. 1. 2. 3. 4. 5.

23 23

(vi)

Based on presentation and proposals of law firms, the Selection Committee awards the scores on technical parameters.

(vii) The scores obtained in technical evaluation by the law firms are displayed on the notice board. (viii) The financial bids of parties who are not technically qualified are returned unopened to the parties concerned after getting receipt. (ix) The financial bids of technically qualified bidders are opened by the Selection Committee in the presence of such technically qualified firms, if present. The law firm quoting the lowest fee is appointed as Legal Adviser.

(x)

4.18.2 The Selection Committees recommendation is put up for consideration and approval of the Minister of Finance through the Financial Adviser and Secretary (Disinvestment). 4.18.3 The mandate letter is issued by the DoD. The mandate letter not only defines the scope of work, but also reiterates commitment of deal teams, confidentiality clause, assistance in postissue, etc. by the appointed law firm. A typical mandate letter is at Annex IX.

4.19 Procedure for appointment in cases of piggy-back:

4.19.1 The DoD follows the above procedures in offer for sale. In public issues involving issue of fresh equity by CPSE and GoI piggy backing, the Cabinet note moved by the Administrative Ministry normally contains a mention that the CPSE will appoint intermediaries by following its own procedures. 4.19.2 CPSEs may opt to adopt the DoDs methods and procedures. The CPSE forms a committee variously called Oversight Committee or Selection Committee or IPO/FPO Committee. The typical composition of the committee is as under: (i) CMD; (ii) Director (Finance); (iii) A nominee of Administrative Ministry; and (iv) A nominee of the Department of Disinvestment. 4.19.3 The Board of the CPSE empowers this committee for selection. The committee s recommendations on appointments are normally put up to the competent authority for approval.

4.20 Appointment of Advertising Agency:

4.20.1 Advertising agency finds a mention under 4(c) of Schedule I and (8) of Schedule II in the ICDR Regulations. In brief, the functions of the ad agency are to: (i) (ii) (iii) (iv) (v) (vi) Formulate advertisement plan Undertake publicity campaign Release of advertisements related to the IPO/FPO Organise domestic road shows Undertake other public relation activities Print invitation cards, folders/brochures

24 24

The advertisement cost is shared amongst the DoD, concerned CPSE and the BRLMs as under: 4.20.2 To be remunerated by the Department of Disinvestment (i) Publication of statutory and Issue advertisement through the print media, electronic media and hoardings. (As per media plan for statutory & Issue advertisements through print media, electronic media and radio stations)

4.20.3 To be remunerated by CPSE (i) (ii) (iii) (iv) Conceptualising, designing, developing and broadcasting TV commercials and corporate plan for electronic media. Designing, developing and publication of corporate advertisements through print media and hoardings. Composing and broadcasting radio jingles. Preparing and cost of display of hoardings for advertisement at the airports etc.

4.20.4 To be remunerated by BRLMs (i) (ii) (iii) Public Relations work like arranging interviews of management in electronic and print media. Organising domestic road shows Designing and developing of statutory and Issue advertisements for the print media.

4.21 Appointment process in the Department of Disinvestment:

4.21.1 Through Limited Tender System: The selection of Advertising Agency is done by a smaller committee of the IMG, constituted by the IMG for this purpose. The composition of the committee usually is: A. Secretary and/or Joint Secy., Department of Disinvestment Joint Secretary, Department of Disinvestment Director (IFU), Department of Disinvestment Director/Deputy Secretary from Administrative Ministry Director (Finance), CPSE Director/Deputy Secretary concerned, Department of Disinvestment Eligibility Criteria: Usually, the EoIs are invited from the agencies that have participated in more than one issue during the last three years. For this purpose, the publicly available/widely published database is used. A copy of the RFP as at Annex X is sent to all such shortlisted agencies. They are also invited to make a presentation before the Selection Committee in the DoD. B. Submission of proposal: Advertising Agency for the IPO/FPO is appointed through a 2-stage competitive bidding process comprising presentation and financial bids. The bidders are required to submit their financial bids at the time of presentation.

25 25

C.

Financial Bid The financial bid is required to include the following costs: (i) Advertising Agency fees for the works to be done for the three parties, namely, the DoD, the CPSE and the BRLMs separately commensurate with the work given by each; Negotiated rates for release of statutory advertisements and issue advertisements as per media plan; Negotiated rates for release of advertisements in the electronic media as per media plan; Negotiated rated for radio jingles as per media plan.

(ii)

(iii)

(iv)

4.21 Methodology
4.21.1 The process is taken forward as under : (i) (ii) (iii) (iv) The invited bidders are asked to make a presentation before the Selection Committee. The presentation schedule is displayed on the website of the DoD. Sufficient time is given to the short-listed agencies to prepare the presentation. A representative of BRLM is requested to be present during presentations. They do not, however, participate in the award of scores to the Advertising Agencies for their selection. Before the presentation from the bidders, Selection Committee decides the cut-off mark for technical qualification. The cut-off mark is displayed on the notice board before the presentation starts. The Selection Committee evaluates the bidders on the criteria mentioned below: Maximum Score 30 40 20 10 100

(v)

(vi)

S. No. Criteria 1. 2. 3. 4. Experience of handling advertising for IPOs/FPOs in the last three years Presentation on advertising strategy for the Issue Capability of organising the press, analyst and brokers conference during the domestic road shows and the press conference Details of interviews, panel discussions etc. to be fixed on the business news channels with company officials, BRLMs and other experts Total (vii)

While the abilities of the bidder with respect to strategy, capability and discussion is evaluated by the Committee on the basis of presentation, the basis for award of marks for experience is based on the information culled out from the publicly available/ widely published database on the number of equity issues handled by each of the prospective bidders during the last three years and is made available to the Selection Committee beforehand.

26 26

(viii) The technical score obtained by each agency is conveyed to them as well as displayed on the notice board. (ix) (x) (xi) Immediately after the completion of each presentation, the bidder concerned is required to submit its financial bid in a sealed envelope to the Committee. The financial bids of agencies that are not technically qualified are returned to them unopened after getting a receipt. The Committee opens the financial bids of the technically short listed parties in the presence of their representatives. The fee quoted by each of the qualified Advertising Agencies is read out in front of the representatives of the technically qualified agencies.

(xii) The Committee recommends appointment of the agency, which quotes the lowest fee. (xiii) As per the RFP, the L-1 party whose cumulative fee for all the components specified in the RFP is the lowest is to be appointed as the advertising agency. However with respect to the different publications/media plans, in case L-1 had not quoted the lowest rate for a particular publication/media plan selected by the Department for release of advertisements, that agency L-1 is to match the lowest rate given by one of the other technically qualified agencies (L-2/L-3). (xiv) Accordingly, the selected advertising agency is asked to match its quote with the lowest quote of other agencies in respect of each publication/media plan. 4.21.2 Thereafter, the agency is appointed as Advertising Agency for the Issue with the approval of Financial Adviser and Secretary (DoD). 4.21.2 The mandate letter is issued to the selected agency by the DoD. The mandate letter states that the agency should immediately commence the work in coordination with the management of the company, the BRLMs and the Legal Advisers and prepare a detailed media plan for making a presentation before the Government/CPSE/BRLMs/Legal Advisers. An example of a mandate letter is at Annex XI. The advertising agency is also required to return a copy of the mandate letter duly signed by the authorised signatory in token of acceptance of the offer of appointment as Advertising Agency for the Issue.

4.22 Procedure for appointment in cases of piggy-back:

4.22.1 The DoD follows the above procedures in offer for sale. In public Issues involving issue of fresh equity by the CPSE and the GoI piggy backing, the Cabinet note moved by the Administrative Ministry usually states that CPSE will appoint intermediaries by following its own procedures. 4.22.2 CPSEs may opt to adopt the DoDs methods and procedures. The CPSE forms a committee variously called Oversight Committee or Selection Committee or IPO/FPO Committee. The typical composition is as under: (i) (ii) (iii) (iv) CMD; Director (Finance); A nominee of Administrative Ministry; and A nominee of the Department of Disinvestment.

4.22.3 The Board of the CPSE empowers the Committee for this purpose. The Committees recommendations on appointments are normally put up to the competent authority for approval.

27 27

4.23 Appointment of Registrar to the Issue:

4.23.1 Regulation 5(7) of ICDR states that the issuer shall appoint a Registrar which has connectivity with all the depositories. These regulations also prohibit appointment of a lead merchant banker as a Registrar to the Issue in which it is also handling the post-issue responsibilities. The Registrar is required to be appointed prior to filing of DRHP as the name of the Registrar has to be included in the DRHP. 4.23.2 In brief, the functions of the Registrar are as under: (i) Collection of bid cum application forms from various centres of the Escrow Collection Banks/ASBA banks (ii) Collection of the electronic bid data (including the ASBA bid data) from the Stock Exchanges (iii) Collection of the aggregate data in relation to the total number of ASBA applications uploaded by the Self Certified Syndicate Banks (SCSBs)/members of the syndicate/ sub-syndicate and the total number of equity shares and the total amount blocked against the uploaded ASBA applications, from each SCSB (iv) (v) Processing all applications in relation to the offer Reconciliation of the compiled data collected from the Stock Exchanges with the data collected from SCSBs/members of the syndicate/sub-syndicate (vi) Matching the DP ID, Client ID and PAN specified in the reconciled data with the depositorys database (vii) Informing the SCSBs/members of the syndicate/sub-syndicate about errors in the bid details and getting them rectified (viii) Identifying bids of rejection (including ASBA applications) in respect of which the DP ID, Client ID and PAN in the reconciled/rectified data does not match with the details in the depositorys database as well as weeding out multiple applications (ix) (x) Keeping a proper record of applications and monies received from the bidders Keeping, at all times, the electronic records related to ASBA applications received from all SCSBs/members of the syndicate/sub-syndicate and taken from the online Public Offer System of the Stock Exchanges including particulars relating to the (a) allocation and allotment of equity shares against valid ASBA applications, (b) Public Offer Account and (c) rejected/ withdrawn/ unsuccessful ASBA applications (xi) Providing correct data in time for determination and finalisation of the basis of allocation and allotment in coordination with the designated Stock Exchange (xii) Post communication of the basis of allotment, preparation of list of allottees (xiii) Dispatch of allotment advice/refund orders, credit of shares to the allottees, etc. (xiv) Issuing duplicate refund orders/revalidating refund order

28 28

(xv) Carrying out and complying with the procedures for monitoring activities of the intermediaries (xvi) Ensuring that proper grievance handling mechanism is in place at its office during the offer period and after closing of the offer, as per regulations (xvii) Settling investor complaints and grievances in a timely manner and maintaining their records (xviii) Assisting the selling shareholders/ CPSE by providing necessary reports, etc.

4.24 Selection Criteria to be decided by the Department of Disinvestment before issuing RFP:
The DoD determines the following eligibility criteria (to be specified based on the size of the Issue) for inviting quotations: (i) (ii) number and size of issues that the agencies should have handled; and number of shareholders and number of years serviced by the agencies in the past.

4.25 Appointment process in the Department of Disinvestment:

Through Limited Tender System: Registrar to the Issue is appointed on the basis of the quotations directly invited from the eligible Registrars fulfilling the below mentioned eligibility criteria. (i) After the criteria (as in 4.24 above) is decided, the names of Registrars meeting the criteria, based on publicly available/widely published database, are short-listed; The scope of work is finalised in consultation with BRLMs and the Legal Advisers; Short-listed Registrars are informed of the scope of work. They are asked to confirm, if interested, and send the detailed information on each of the above eligibility criteria along with financial bid. A copy of the standard format of RFP is at Annex XII.

(ii) (iii)

A.

Eligibility criteria: As per the DoDs existing practice, eligibility/qualifications to act as Registrar may, interalia, include the following: (i) Should be Category I SEBI Registered Registrar, with validity covering at least next 6 months. {SEBI (Registrar to an Issue & Share Transfer Agents) Regulation 1993 defines Category I to carry on the activities as a Registrar to an issue and share transfer agent} Clean Track record no penalty/debarment from SEBI in the past. Should have adequate financial net worth and profit record in all the past three years. Have a functional work site at Delhi or closer to the registered office of the CPSE.

(ii) (iii) (iv)

29 29

(v)

Possess technology for client/Investor servicing (dissemination of information on allotments/refunds through Website, IVRS, Alerts, Reports, web access to data base of CPSE, etc.) Possess Technical infrastructure Data base maintenance, redundancy in capacity, scalability, DRS and BCP, data security, achieve and retrieval, communication, Voice data management, integrity and validation.

(vi)

(vii) Area of work site, storage facilities. (viii) Despatch arrangement self GPC or through mailing agents. B. Submission of proposal (i) The prospective Registrar submits the detailed information on each of the eligibility criterion along with financial bid; While the confirmation with reference to the criteria is to be in an unsealed envelope, the financial bid is required to be in a sealed cover.

(ii)

C.

Financial Bid The financial bid should be unconditional and should include the following: (i) Per application charges inclusive of fee for processing of applications, out of pocket expenses or any other expenditure involved. Postage charges for refund to be on actual basis.

(ii)

SEBI requires that adequate funds should be placed with the Registrar to cover the cost of postage for refunds. With regard to postage charges, the CPSE initially makes advance payment to the Registrar and after final settlement, the same is reimbursed by the DoD to CPSE. This practice is followed to facilitate the process, as it is entirely time bound.

4.26 Methodology
4.26.1 The process is taken forward as under: (i) RFP submitted by the prospective agencies with reference to eligibility criteria is examined by the concerned Division in the DoD; The financial bid is opened on the date and time intimated to the parties by a committee of three officers in the DoD in the presence of eligible bidders, if present. If no party is present the bids are opened by the Committee. The financial quote of all the eligible bidders is read out to the parties present.

(ii)

(iii)

4.26.2 The Registrar quoting the lowest is appointed as Registrar to the Issue with the approval of the Financial Adviser and the Secretary (DoD). 4.26.3 The mandate letter is issued by the DoD. An example of a typical mandate letter is at Annex XIII.

30 30

4.27 Procedure for appointment in cases of piggy-back:

The DoD follows the above procedures in offer for sale. In public issues involving issue of fresh equity by the CPSE and the Government piggy backing, the Cabinet Note normally moved by the Administrative Ministry contains mention that the CPSE shall appoint intermediaries by following its own procedures. CPSE normally adopts the DoDs methods and procedures.

4.28 Appointment of Auditors:

4.28.1 In any transaction the Auditors are required to provide various certificates as well as audit accounts for the purpose of IPO/FPO, if required. The Auditors are appointed by the CPSE. The duties and responsibilities of the Auditors, in brief, are as under (however, these should be finalised in consultation with the BRLMs): (i) (ii) (iii) (iv) (v) (vi) Tax Benefit Certificate Financial Indebtedness Certificate Eligibility Certificate Cost of shares to Promoters Corporate Governance Certificate Basis for Issue Price Certificate

(vii) Comfort letters (viii) Circle up audit for DRHP, RHP and Prospectus 4.28.2 The statutory auditors are required to be appointed. The CPSE shall appoint the existing statutory auditors (a chartered Accountants firm) of the CPSE on reasonable remuneration following its internal procedure if meeting SEBI requirements as specified in Schedule VIII Clause IX, such as, auditors who have subjected themselves to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer Review Board of the ICAI. 4.28.3 The expenditure on account of appointment of auditors for the Issue is borne by the DoD in an offer for sale on successful completion of the Issue.

4.29 Appointment of Collection/Refund Bankers

4.29.1 Regulation 5(6) of the ICDR Regulations stipulates appointment of bankers who are registered with the Board. These also find mention in (4) (d) of Schedule I on Inter-se Allocation of Responsibilities and Part-A (2) (VI) (B) (6) of Schedule VIII on Disclosures in Offer Document of the ICDR Regulations. In brief, the duties and responsibilities of bankers are as under: (i) To work as collection bankers and or refund bankers as per SEBI and RBI rules and regulations To open and maintain escrow collection accounts, public issue account and or refund accounts, as the case may be As refund bankers, functions are normally to carry out NEFT (National Electronic Fund Transfer), NECS (National Electronic Clearing Service) & RTGS (Real Time Gross Settlement), and physical mode refunds

(ii)

(iii)

31 31

4.29.2 In the process of IPO/FPO, Bankers to the Issue are required to be appointed. The bankers act as the collection banks and some of them are also appointed as refund bankers. The number of bankers to be appointed in any public offering depends upon the size of the Issue. No fee is payable to the bankers. The appointment is done in such a way so as to have a combination of both private sector banks and PSU banks. Due representation to the existing banks handling the salary account of the CPSE concerned may also be given specially for locations in far flung areas.

4.30 Appointment Process in the Department of Disinvestment

4.30.1 The process is taken forward as under: A. Eligibility Criteria (i) The Bank should be a reputed one and registered with SEBI holding a valid registration certificate; (ii) (iii) It must have sufficient experience and expertise in public offerings in the capital market; Number of issues and issue amount during the last three years and updated for the current financial year undertaken by the banks are decided by the DoD depending upon the size of the Issue. B. Financial Bid: No fee is paid to Collection/Refund Bankers C. Documents to be submitted along with the willingness by Banks: (i) The willingness is required to be submitted on the letter head of the Bank duly signed by the authorised representative with the seal of the Bank in a standard format. (copy is attached as enclosure to Annex XIV). (ii) (iii) The willingness is required to be unconditional and binding. A written confirmation that the Bank agrees to sign the Escrow Agreement as uploaded on the website of the DoD, pass on 90% of the benefit calculated on deposits on day-to-day basis, with reference to the prevailing MIBOR rate, to GoI and render all activities in the public offering as per SEBI/RBI regulations.

4.31 Methodology:
(i) Work done by banks during the last three financial years and updated to current financial year is taken into consideration. For this purpose, data available on publicly available/widely published database on the Issue size in terms of amount, as decided on case- to-case basis, is made use of. (ii) (iii) Within the category of private banks, the order in the league tables is maintained. Depending upon the size of the issue the number of collection banks may usually be up to 10 out of which up to 3 are appointed as refund bankers.

32 32

(iv)

The banks so shortlisted are informed of the DoDs requirement and requested to convey their unconditional willingness, if interested, of the terms and conditions of appointment of collection banks. A copy of the standard format of the letter sent to banks by the DoD is given at Annex XIV.

4.31.1 Normally, bankers to the Issue are appointed in consultation with the BRLMs and the Registrar to the Issue. 4.31.2 Thereafter, mandate letter to the banks who have unconditionally accepted the terms is issued by the DoD. An example of the typical mandate letter is at Annex- XV.

4.32 Procedure for appointment in cases of piggy-back:

The DoD follows the above procedures in offer for sale. In public issues involving issue of fresh equity by the CPSE and the GoI piggy backing, the Cabinet note moved by the Administrative Ministry normally contains mention that the CPSE will appoint intermediaries by following its own procedures. CPSEs normally adopt the DoDs methods and procedures.

33 33

SECTION 5 ISSUE PROCESS

A. 5.1

Pre-Issue- Kick off to Issue closure

Kick-off Meeting:

Once the BRLMs and the legal advisors have been appointed for the Issue, the CPSE holds a kick-off meeting which is usually attended by the Secretary of the Administrative Ministry and Secretary, DoD. In the kick-off meeting the CPSE officials make a presentation before the BRLMs and legal advisors (both domestic and international) to the Issue, the concerned Administrative Ministrys officials and the officials of the DoD. The BRLMs discuss the way forward and the tentative timelines in addition to other matters relating to the public issue such as compliance with the provisions of clause 49 of the Listing Agreement, certification of the reserves by an independent agency in case the issuer CPSE is involved in mining/hydrocarbon activities etc. The domestic and the international legal counsels inform the CPSE on the dos and donts and publicity restrictions during the period of the public issue. 5.2 Publicity restriction guidelines: 5.2.1 Under the ICDR Regulations 60 and 66, publicity restrictions are applicable to public communications and publicity material including corporate and product advertisements of the CPSE. These restrictions kick in immediately after the CCEA approval to the public offer or after the appointment of the BRLMs and the legal counsels to the Issue whichever is earlier and continue till the date of allotment of securities offered in the Issue. However, since securities are offered to the US institutional investors, in practice, the publicity restrictions continue till 40 days after the allotment of securities offered in the Issue as required under the applicable US Securities laws. 5.2.2 After the kick-off meeting, the legal counsels to the Issue circulate detailed publicity restriction guidelines with dos and donts for the CPSE. The CPSE needs to follow these guidelines strictly; otherwise SEBI can seek explanations and/or initiate action including stipulating a requirement that denials be published by the CPSE. Some of the Dos and Donts for the CPSE are listed at Annex XVI. 5.3 Allocation of responsibilities amongst BRLMs: In cases where the public issue is managed by more than one merchant banker, the BRLMs in consultation with each other have to delineate the activity-wise allocation of responsibilities, as specified in Schedule I of the ICDR Regulations - Inter-se allocation of responsibilities pertaining to the activities or sub-activities to be carried out. In case the BRLMs are unable to reach a consensus on the activity-wise allocation of responsibilities, the CPSE/DoD can allocate responsibilities amongst the BRLMs. The CPSE/DoD/BRLMs can further break up the broad activities under Schedule I of the ICDR Regulations into sub-activities and allocate these to the BRLMs. Usually such allocation takes into account the strengths of the BRLMs in various areas of activities.

35 35

5.4 Presentation by the CPSE to Research Analysts:

5.4.1 In the case of IPO/FPO, the CPSE makes a presentation, similar to that made at the kickoff meeting, to the research analysts on the CPSEs historical performance, overall business / operations and financial performance etc. The research analysts, based on this information, prepare a pre deal research report and update it with the Draft Red Herring Prospectus (DRHP) to ensure that the disclosures are not different from the ones made in the DRHP. These research reports are released by the analysts as an introduction to the CPSE to the domestic and foreign institutional investors at least a day before the DRHP is filed with the SEBI. 5.4.2 After the DRHP has been filed with the SEBI, the research analysts of the BRLMs do their own marketing calls with fund managers and the fund managers analysts to give them detailed understanding on CPSEs business, future plans, financial health and peer comparison and try to get a sense on valuation and level of interest etc. In the process, they also get feedback on investors concerns so that when the management goes for road shows it is prepared with responses to such concerns. 5.4.3 The process is different in case of a fast track FPO. In a fast track Issue, while analysts are briefed by the CPSE, they do not write and release reports as only the Red Herring Prospectus (RHP) is filed with SEBI and Registrar of Companies (RoC) and the issue opens soon thereafter.

5.5
5.5.1

Key regulatory requirements for a public issue:

Board Composition:

5.5.1.1 Clause 49 of the Listing Agreement requires that the Board of the CPSE should have an optimum combination of executive and non-executive (independent) directors with not less than 50% of the Board of Directors comprising of non-executive directors. Where the Chairman of the Board is a non-executive director, at least 1/3 of the Board should comprise of independent directors and in case Chairman is an executive director, at least half of the Board should comprise of Independent Directors. 5.5.1.2 In case the non-executive Chairman is a promoter of the CPSE or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, then the Board of the CPSE will have not less than 50% Independent Directors. Compliance with this regulation has to be ensured at the time of filing of DRHP itself. The Government nominee directors on the Board of CPSEs are not independent directors 5.5.2 Dematerialisation of shares held by the Government:

5.5.2.1 Dematerialisation is the conversion of a share certificate held in the physical form into an electronic form. Dematerialisation of shares is optional and an investor can hold shares in the physical form. However, the ICDR Regulations require that, for an issuer company to be eligible to undertake a public issue, it should have, at the time of filing of its DRHP with SEBI, entered into an agreement with a depositary for dematerialisation of its shares already issued or proposed to be issued. Thus, for trading on the Stock Exchanges, the shares have to necessarily be in the dematerialised form. Similarly, if an investor purchases shares, the delivery of shares to the investor can only be in the dematerialised form.

36 36

5.5.2.2 In a public issue through pure offer for sale of Government shareholding or through offer of fresh equity by the CPSE in conjunction with offer for sale of the Government shareholding , the shares held by the Government have to be dematerialised in order to sell the shares to the investors. In such cases, the concerned Administrative Ministry has a choice of either converting only those shares that are being offered to the public into dematerialised form or converting the entire Government shareholding in the CPSE into dematerialised form. 5.5.2.3 However, in case of a public offer of only fresh equity by the CPSE, the Administrative Ministry has the option of not getting the Governments shares in the CPSE dematerialised. 5.5.2.4 For dematerialisation of shares, the Administrative Ministry appoints a Depository Participant registered with SEBI for opening a Demat account and then requests for the dematerialisation of Governments shares in the CPSE through the Depository Participant so that dematerialised shares are credited into that account. 5.5.2.5 Administrative Ministries may adopt different approaches as mentioned above. However, it is advisable to get the entire shareholding in the CPSE dematerialised as there is always a possibility of the physical share certificates getting lost or destroyed. 5.5.2.6 The Stock Holding Corporation of India Ltd., one of the Depository Participants, has on the request of the DoD, reduced the tariff applicable to the demat accounts of President of India and CPSEs/Government Undertaking. The details of the tariff is at Annex XVII. 5.5.3 Lock-in Period: As per the ICDR Regulations, in case of IPO, the GoI, being the promoter of CPSE, is required to lock-in shares held by it representing 20% of the post issue capital of the CPSE for a period of 3 years from the date of allotment in the public issue. The remaining shares held by the GoI are locked in for a period of 1 year from the date of allotment in the public issue. In case of an FPO either 20% of the issue size or 20% of the post issue capital held by the GoI as promoter of the CPSE is locked in for 3 years with the remaining shares held by it locked in for a period of 1 year from the date of allotment in the public issue. In case of an FPO, if the equity shares of the CPSE have been frequently traded on a recognised stock exchange for a period of at least three years and the CPSE has a track record of dividend payment for at least immediately preceding three years, then the post issue capital held by the GoI is locked in for a period of 1 year only.

Although ICDR Regulations allow for either 20% of the issue size or 20% of the post issue capital held by the promoter to be locked-in for a period of 3 years in the case of an FPO, the market practice is to lock-in 20% of the post issue capital held by the promoter in the CPSE for a period of 3 years. Examples of Lock-in in an IPO: a) GoI holds 100% share capital with 100 shares in a CPSE: Public issue through pure offer for sale of 10% GoI held equity: In pure offer for sale the pre-issue and post issue paid up capital remains the same. Hence, in this case 20% of the post issue capital i.e. 20 shares would have to be locked-in for a period of 3-years and remaining 70 shares (as 10

37 37

shares would be sold to the public through offer for sale) would be locked-in for a period of 1 year. Public issue through offer of fresh equity of 10% of the paid up capital by the CPSE in conjunction with 5% offer for sale of the GoI held equity in the CPSE: In this case the pre-issue paid up capital and the post-issue paid up capital of the CPSE would not be the same as the CPSE is coming out with offer of fresh equity in the market. Pre-issue capital in terms of shares Post-issue capital in terms of shares Post issue shares held by the GoI 20% of post issue shares = 100 shares = 100 +10% of 100 shares = 110 shares = 95 shares = 22 shares

Therefore, 22 shares held by the GoI in the CPSE would have to be locked-in for a period of 3 years and 73 shares (95shares -22 shares) would have to be locked in for a period of 1-year. Public issue of only fresh equity of 10% by the CPSE without any offer for sale by the GoI Pre-issue capital in terms of shares Post-issue capital in terms of shares = 100 shares = 100 +10% of 100 shares = 110 shares

Post issue shares held by the Government = 100 shares 20% of post issue shares = 22 shares

Therefore, 22 shares held by the GoI in the CPSE would have to be locked-in for a period of 3 years and 78 shares (100shares -22 shares) would have to be locked in for a period of 1-year. b) GoI holds 80% share capital in a CPSE: In case of pure offer for sale of say 10% of the pre-paid capital of the CPSE, 10 shares held by the GoI out of its total shareholding of 80 shares would have to be offered to public in the public issue. Pre-issue paid up shares Shares held by the GoI Shares offered for sale to public Post issue shareholding of the GoI 20% of the post issue shares = 100 shares = 80 shares = 10 shares =70 shares = 20 shares

Thus, 20 shares held by GoI in the CPSE would be locked-in for a period of 3 years and the remaining 50 shares (70 shares- 20 shares) would be locked-in for a period of 1 year. In the case of an IPO through pure offer for sale of GoI shareholding in the

38 38

CPSE or through issue of fresh equity by the CPSE in conjunction with offer for sale of GoI shareholding or through only issue of fresh equity by the CPSE, the Administrative Ministry may: (i) Dematerialise the entire GoI shareholding in the CPSE and then lock-in shares equivalent to 20% of the post issue capital of the CPSE for a period of 3 years with the remaining shares held by the Government, post issue, locked-in for a period of 1 year (or) (ii) Get the share certificate held by the GoI in the CPSE split into the following share certificates as indicated below and then get only those shares that are offered for sale to the public dematerialised:

One share certificate for the total number of shares to be divested through offer for sale (not required in case of issue of only fresh equity by the CPSE) One share certificate for shares which are equivalent to 20% of the post issue paid up capital of the CPSE One share certificate for the remaining shares that are held by the GoI post issue

The CPSE gets the share certificate split into share certificates mentioned above on the request of the Administrative Ministry.

5.6

Timing of the public issue:

5.6.1 The public issue is timed in such a way that the following regulatory requirements are met: a) As per regulation 68 of ICDR Regulations the information contained in the offer document/RHP and the particulars as per audited financial statements in the offer document should not be more than six months old from the issue opening date. Further, for United States Institutional investors to subscribe to the Indian securities it is necessary that the underwriters (BRLMs) take necessary steps to establish a due diligence defence consistent with US standards. These US standards require additional steps beyond the requirements of SEBI. One major requirement in this regard is a comfort letter issued by the auditors certifying that there have not been any material changes in the financials of the CPSE from the date of the most recently audited /reviewed financial statement. As per Statement on Auditing Standards 72 issued by the American Institute of Certified Public Accountants such a comfort letter can be issued only up to 135 days after the end of the most recent period for which the accountants/auditors have performed an audit or a review. For instance: When the auditors have audited the December 31, 2010, financial statements, the auditors may provide negative assurance on increases and decreases of specified financial statement items as of any date up to May 14, 2011 (135 days subsequent to December 31, 2010). When the auditors have audited the December 31, 2010, financial statements

b)

39 39

and have also conducted review of the interim financial information as of and for the quarter ended March 31, 2011, the auditors may provide negative assurance as to increases and decreases of specified financial statement items as of any date up to August 14, 2011 (135 days subsequent to March 31). 5.6.2 The Institute of Chartered Accountants of India has issued a Guidance Note on Reports in Company Prospectus, which relates to instances where companies coming out with public offers may request the auditors to provide a comfort letter on the financial information of the company to the BRLMs. Though not a legal requirement under the ICDR Regulations, the comfort letter assists BRLMs in performing a due diligence review process of the prospectus. 5.6.3 The comfort letter mentioned above is given by the auditors to the BRLMs at four stages of the transaction process as indicated below: (a) (b) (c) (d) Upon filing of the DRHP with SEBI; Upon filing of the RHP with RoC and SEBI Upon filing of the Prospectus with the RoC Upon allotment of shares in the public offer.

Accordingly, the public issue should be timed in such a manner that the allotment of shares to the investors is completed within 135 days from the date of the last audited/reviewed financial statement of the CPSE. Some tips for the Issue timing While deciding on the timing of the issue the following may be kept in view: Certain periods of the year may be considered inauspicious for making investment decisions in certain parts of the country. The public issue cannot be marketed to the foreign institutional investors during the period from mid December to first week of January as the investors go on vacation for Christmas and New Year. The monthly series in the Futures and Options Segment expires on the last Thursday of every month. Often two to three days prior to the expiry date, the stock witnesses volatility and may see some selling pressure due to unwinding of hedged F&O positions taken by investors in the stock. Hence this aspect may be discussed with BRLMs to decide on the day when the listing and trading of shares should commence. The Issue period should preferably open and close in the same week as investors may not be comfortable with keeping their application money locked in over the week end. Thus the opening day could be a Monday or Tuesday with the closing day falling on a Thursday or Friday. Opening of the public issue may be timed in such a way that it does not clash with the general/state elections in any part of the country. However, if it is not possible to change the period during which the pubic issue would remain open, then the DoD/ Administrative Ministry should take prior approval of the Election Commission of India to open the issue on the designated date.

40 40

5.7

Constitution of IPO/FPO Committee:

5.7.1 The Board of Directors of the CPSE constitutes an IPO/FPO committee to assist the legal counsels and the BRLMs in the preparation of the offer document by providing all relevant information/documents/records of the CPSE. The terms of reference of the IPO/FPO committee depend on what activities relating to the public issue are delegated to the committee by the Board of Directors of the CPSE and are slightly different in the case of pure offer for sale of GoI shareholding and issue of fresh capital by the CPSE in conjunction with the offer for sale of GoI shareholding in the CPSE. a) Pure offer for sale of GoI shareholding: The general terms of reference of the IPO/FPO committee would be to: (i) (ii) Approve the restated/audited financial statements for inclusion in the DRHP and/or the RHP and/or the Prospectus as the case may be in connection with the Issue. Approve, adopt and file the DRHP, RHP and the Prospectus for the Issue, with SEBI, the RoC, of the State in which the Corporate office of the CPSE is located and/or the Stock Exchanges, as the case may be, and to make any corrections or alterations therein. Finalise, approve, execute and deliver or arrange the delivery of the offer agreement, syndicate agreement, underwriting agreement, escrow agreement, certificates, registrar agreement and all other documents, agreements and instruments as may be required or desirable in relation to the issue and any amendments, supplements, notices or corrigenda thereto, together with any summaries thereto, as may be required or desirable in connection with the issue of the equity shares by the CPSE; Open with the bankers to the issue such account as are required by the regulations issued by SEBI Open and operate bank accounts of the CPSE in such name and style as may be decided for the handling/collecting/refund for the issue and to authorise one or more officers of the CPSE to execute all documents/deeds as may be necessary for the issue; Make applications to the Reserve Bank of India and such other authorities as may be required for the purpose of allotment of equity shares to non-resident investors.

(iii)

(iv) (v)

(vi)

(vii) Approve all actions required to dematerialise the equity shares of the CPSE; (viii) Do all such acts, deeds, matters and things and execute all such other documents etc. as it may , in its absolute discretion, deem necessary or desirable for such purpose, including without limitation, to allot the equity shares to the successful allottees as permissible in law, issue of share certificates in accordance with the relevant rules; (ix) Make applications for listing of the equity shares of the CPSE and to execute and to deliver or arrange the delivery of necessary documentation to the concerned stock exchange(s). Take all action as may be necessary or authorised in connection with the offer for sale;

(x)

41 41

(xi)

Seek the admission of the CPSEs equity shares into the Central Depository Services (India) Limited and the National Securities Depository Limited; Seek, if required, the consent of the CPSEs lenders, parties with whom the CPSE has entered into various commercial and other agreements, all concerned government and regulatory authorities in India or outside India, and any other consents that may be required in connection with the IPO/FPO;

(xii)

b)

Issue of fresh equity along with offer for sale of GoI shareholding: The general terms of reference of the IPO/FPO committee will include the following in addition to those mentioned in sub-para (a) above: (i) Appoint and enter into arrangements with the BRLMs, co-managers to the Issue, legal counsels to the Issue, underwriters to the Issue, syndicate members to the Issue, escrow collection bankers, auditors, depositories, trustees, custodians, registrar to the Issue, advertising and/or promotion or public relations agencies and any other agencies, persons or other intermediaries as may be involved with the IPO/FPO and to negotiate and finalise the terms of their appointment. Recommend the price band/issue price to the Board of Directors of the CPSE, approve the basis of allocation and confirm allocation of the equity shares to various categories of persons as disclosed in the DRHP, RHP and the Prospectus in consultation with the BRLMs and do all such acts and things as may be necessary and expedient for and incidental and ancillary to the Issue. Authorise and approve the expenditure and payment of fees in connection with the IPO/FPO. Determine the bid opening and closing dates and to recommend the allocation/ allotment/transfer of Equity Shares to retail investors/non-institutional investors/ qualified institutional buyers in consultation with the BRLMs, the stock exchanges and/or any other entity.

(ii)

(iii)

(iv)

5.8 Different Committees under Corporate Governance norms:

5.8.1 As per Schedule VIII of the ICDR Regulations the CPSE will have to make a disclosure in the DRHP that it has complied with the requirements of Corporate Governance contained in the Equity Listing Agreement particularly those relating to the constitution of committees like the Audit Committee, Investor Grievance Committee, Remuneration Committee and the appointment of the Compliance Officer. The details of these committees including the names of the committee members and a summary of the terms of reference under which these committees operate have to be disclosed in the DRHP and the RHP. 5.8.2 The aforementioned committees, if not already formed, are constituted while the DRHP is under preparation. 5.8.3 The constitution and scope of work of these committees is part of the Listing Agreement which is available on the websites of BSE and NSE.

42 42

5.9 Approvals required from Regulatory Authorities:

5.9.1 Approval from Reserve Bank of India (RBI) for transfer of shares in favour of the investors residing outside India: 5.9.1.1 Regulation 10A(b) of the Foreign Exchange Management (Transfer of Issue of Security to Persons resident outside India) Regulations, 2000 dated May 3, 2000, as amended from time to time, (the FEMA Regulations) provides that the transfer by way of sale of shares or debentures of an Indian company engaged in the activities listed within item nos. 1, 2 and 3 provided under Annexure B to Schedule I of the FEMA Regulations, from a person resident in India to a person resident outside India, shall require prior permission of the RBI. 5.9.1.2 Further, RBI has given permission to SEBI registered foreign institutional investors to invest in India under the Portfolio Investment Scheme. RBI circular no. A.P. (DIR Series) Circular No. 16 dated October 4, 2004, grants general permission in relation to transfer of shares by a person resident in India to a person resident outside India, in sectors other than the financial services sector provided the price at which the transfer takes place is in accordance with the pricing guidelines issued by the RBI from time to time. Presently, such pricing guidelines are prescribed as per RBI circular no. A.P. (DIR Series) Circular No. 49, dated May 4, 2010 (Pricing Circular). The explanation to Regulation 10A(b) of the FEMA Regulations defines financial services to mean services rendered by banking and non-banking companies regulated by the RBI, insurance companies regulated by Insurance Regulatory and Development Authority and other companies regulated by any other financial regulator, as the case may be. 5.9.1.3 However, since the price for the equity shares to be offered in the public offer is usually discovered through the book building process prescribed under the SEBI Regulations, the transfer of equity shares by the selling shareholder to the bidders may not be at a price as per the pricing guidelines prescribed by the RBI, under the Pricing Circular. 5.9.1.4 In view of the above, a public offer requires prior approval of the RBI. The CPSE should, therefore, after consulting the legal advisors to the Issue, seek the prior approval of RBI for transfer of equity shares of the CPSE to persons resident outside India, including foreign institutional investors registered with SEBI, non resident Indians, foreign venture capital investors and multilateral and bilateral development financial institutions, eligible under all applicable laws and regulations to hold such equity shares on a repatriation basis, at an offer price per equity share discovered through the book building process prescribed under the ICDR Regulations. 5.9.2 Foreign Investment Promotion Board (FIPB) approval: 5.9.2.1 Foreign Direct Investment (FDI) in activities not covered under the automatic route, requires prior Government approval. In case the activities of the CPSE are not covered under the automatic route then it should seek the FIPB approval for the public issue before filing the DRHP with SEBI. It is advisable to seek views of the legal counsel to the Issue on whether FIPB approval is required or not. For instance, FIPB approval was taken by NHPC Ltd. at the time of its IPO even though in terms of Schedule I to the FEMA Regulations, foreign investment of up to 100% was permitted in respect of the companys business activity of hydropower generation. This was done on the advice of the legal advisors to the Issue as they were of the opinion that in the event NHPC is deemed as an operating cum holding company in view of the companys existing investments in NHDC and PTC, in would be advisable, by way of abundant caution and for avoidance of any doubts, to seek FIPB approval for issuing and allotting equity shares to eligible non-resident investors in the companys IPO.

43 43

5.10

Draft Red Herring Prospectus:

5.10.1 Once the activity wise allocation of responsibilities have been finalised, the process of preparation of the Offer document called the DRHP begins. 5.10.2 For preparing the DRHP, the legal counsels start the process of due diligence by reviewing the CPSEs documents, records and business to identify potential legal problems and make required disclosures on the offer document. For this purpose, the CPSE is required to set-up a data room based on the information checklist submitted by the legal counsel to the Issue. The data room can be either physical (at the CPSEs corporate office) or virtual. The BRLMs carry out due diligence, independently, by verifying the information furnished in the offer document and the reasonableness of the views expressed therein. They have to ensure compliance with SEBI rules and regulations as also the ICDR Regulations. To this effect, they are required to submit to SEBI a due diligence certificate confirming that the disclosures made in the draft prospectus or letter of offer are true, fair and adequate to enable the prospective investors to make a well informed investment decision. 5.10.3 Depending on the nature of the business and the spread of locations the due diligence process may take from at least 4 weeks to 8 weeks. For instance, in case of the IPO of Coal India Limited (CIL), the due diligence took almost 8 weeks to be completed as 9 locations (CIL headquarters and its 8 subsidiaries spread over 6 States) had to be covered. During the process of preparation of the DRHP, the BRLMs and the legal counsels are assisted by the IPO/FPO committee and any other smaller committees constituted for the purpose of public offer. 5.10.4 The CPSE must ensure that DRHP duly reflects the Cabinet approvals in terms of the employee reservation, discount on the offer price to the retail investors and the employees etc. and contains complete disclosures. The CPSE should also ensure that the disclosures, especially those relating to the financial statements, made in the DRHP are correct. Any error in the DRHP or the RHP can lead to unnecessary delays and even serious consequences that could affect the pubic issue as had happened in a recent public issue. In this public issue, SEBI had, during the period the issue was open, received a complaint on the misrepresentation of a fact in the restated profit and loss account contained in the RHP filed with SEBI and RoC. On examining the complaint it was found that there was an error in the companys standalone summary statement of restated profit and loss where the amounts shown under the Accretion in stock and Other income for the quarter ended June 30, 2010 were inadvertently interchanged with each other. As a result, on SEBIs directions, a corrigendum along with the option to the bidders to withdraw their bids had to be issued in the newspapers. This had the potential of adversely affecting the public issue. 5.10.5 SEBI has now allowed the investors eligible for differential pricing in public issue to make payment at a price net of discount, if any, at the time of bidding itself. In public issues where the shares are proposed to be allotted to the retail investors and/or employees at a discount to the Issue price, it has to be ensured that appropriate disclosures are given in DRHP to the effect that investors eligible for discount can make payment after adjusting the discount, if any. These directions of SEBI will become applicable on RHP/Prospectus filed with the RoC after 15.6.2011. 5.10.6 The DRHP contains adequate disclosures relating to the CPSE, its business and the issue as mentioned in Schedule VIII of the ICDR Regulations. However there are some disclosures which are issue specific as indicated below: a) Appointment of a Monitoring Agency: Regulation 16 (1) of the ICDR Regulations requires the CPSE to appoint a monitoring agency, which could be a public financial institution or a scheduled commercial bank,

44 44

to monitor the use of proceeds of the issue only in case of fresh issue of capital exceeding five hundred crore by the CPSE. The name of the monitoring agency is required to be mentioned in the DRHP, RHP and the Prospectus. The monitoring agency has to submit half yearly reports to the issuer in a format specified in Schedule IX of the ICDR Regulation till the proceeds of the issue have been fully utilized. However, appointment of monitoring agency is not required in case of pure offer for sale of GoI shareholding in the CPSE or an issue of securities by a bank or a public financial institution. b) IPO grading: A CPSE coming out with an IPO has to obtain grading for the initial public offer from at least one credit rating agency registered with SEBI. The grade represents a relative assessment of the fundamentals of that issue in relation to the other listed equity securities in India. IPO grading is generally carried out after filing of the DRHP with SEBI. Usually, IPO grading is done after filing the DRHP with SEBI but before filing the RHP with SEBI and the RoC as the RHP must contain the grade/s given to the IPO by all the Credit Rating Agencies approached by the CPSE for grading such IPO. In case of an FPO there is no such requirement. 5.10.7 Filing of DRHP with SEBI The DRHP is first approved by the Board of Directors of the CPSE and then it is filed along with the requisite filing fee through the BRLMs with the SEBI. A declaration page certifying that all relevant provisions of the Companies Act and the regulations or guidelines issued by the Government of India or SEBI, as applicable, have been complied with and that all approvals and permissions required to carry on the business of the CPSE have been obtained which are valid and have been complied with has to be annexed to the DRHP/RHP/Prospectus filed with SEBI. This declaration page is required to be signed by all the Board of Directors, Chairman and Director (Finance) of the CPSE and the Selling Shareholder (in case of offer for sale by the GoI). A copy of the DRHP is also filed with the two Stock Exchanges i.e. BSE and the NSE. The following material documents are required to be filed along with the DRHP with SEBI: a) Offer Agreement: The CPSE, the Selling shareholder (the concerned Administrative Ministry in case of offer for sale of GoI shareholding in the CPSE) and the BRLMs to the issue enter into an agreement called the Offer Agreement or Issue Agreement in accordance with the SEBI Regulations. The ICDR Regulations provide a format of the agreement setting out the mutual rights, obligations and liabilities relating to the Issue. The format of the agreement in the ICDR Regulations is used only as a base and in practice the agreement is detailed and includes the issue terms, confidentiality obligation, sharing of information among the parties and indemnity provisions. The ICDR Regulations specify that the agreement shall not contain any clause whereby the liabilities and obligations of the lead merchant banker and CPSE under the Companies Act, the Securities Contracts Regulations Act, 1956, the

45 45

Depositories Act, 1996 and the rules and regulations made there under are diminished in any way. This agreement is among the material documents required to be made available by the CPSE at its office, for inspection by any potential investor. A model offer agreement prepared by the DoD and vetted by the Department of Legal Affairs is available on the DoDs website www.divest.nic.in b) Copy of the inter-se allocation of responsibilities of each of the BRLMs

In case the Issue is managed by more than one BRLM, a copy of the inter-se allocation signed by all the BRLMs to the issue has to be submitted along with the DRHP to SEBI. 5.10.8 Fees paid at the time of filing the DRHP with SEBI The filing fee charged by SEBI in a public issue depends on the size of the issue. The details of the filing fee are given at Schedule IV of the ICDR Regulations. 5.10.9 In-principle approval for listing of shares on the Stock Exchange(s) 5.10.9.1 The CPSE is required to list on at least one designated Stock Exchange but for better exposure the companies tend to list on both the NSE and the BSE. For the purpose of listing shares on the Stock Exchange(s), the CPSE is required to file an application for in-principle approval to the Stock Exchange(s) where the CPSE proposes to list its shares. Certain documents are required to be filed with stock exchanges while making an application for grant of in-principle approval. The list of such documents is available on the websites of BSE and NSE. This is done immediately after filing of the DRHP with SEBI. The CPSE receives the in-principle approval from the Stock Exchange(s) prior to or simultaneously with the comments on the DRHP from SEBI. 5.10.9.2 Once the in-principle listing approval is received from the Stock Exchanges, the CPSE has to mention one of the Exchanges as the designated Stock Exchange for the purpose of the Issue in the RHP. The designated Stock Exchange is involved in the process of finalisation of Basis of Allotment. 5.10.10 The DRHP filed with SEBI is made public for comments by hosting it on the websites of SEBI, recognised Stock Exchanges where specified securities are proposed to be listed and BRLMs associated with the issue for a period of 21 days from the date of filing of the DRHP. After the expiry of 21 days the BRLMS file a statement giving information of the comments received by them or the CPSE on the DRHP during the period and the consequential changes, if any, made to the DRHP with SEBI. 5.10.11 Fees paid to the Stock Exchanges (BSE & NSE) at the time of filing the DRHP The Stock Exchanges charge a processing fee for reviewing the DRHP. Currently, the processing fee (for IPOs and FPOs) is 0.05% of the issue size subject to a maximum amount of `25 lacs as per present rules on the subject. 5.10.12 Announcement of filing of DRHP through advertisement The CPSE in case of issue of fresh equity or the DoD in case of pure offer for sale has to either on the date of filing the DRHP with SEBI or on the next day make a public announcement in one English national daily newspaper with wide circulation, one Hindi national daily newspaper with

46 46

wide circulation and one regional language newspaper with wide circulation at the place where the registered office of the issuer is situated disclosing to the public the fact of filing of draft offer document with SEBI and inviting the public to give their comments to SEBI in respect of disclosures made in the DRHP. 5.10.13 Issues in which DRHP not required to be filed - Fast Track Issues:

5.10.13.1 As per ICDR Regulations an issue can be on the fast track mode if the following conditions are satisfied: a) the equity shares of the issuer have been listed on any recognised stock exchange having nationwide trading terminals for a period of at least three years immediately preceding the reference date; the average market capitalization of public shareholding of the issuer is at least five thousand crore rupees; the annualized trading turnover of the equity shares of the issuer during six calendar months immediately preceding the month of reference date has been at least two per cent of the weighted average number of equity shares listed during such six months period; the issuer has redressed at least ninety five percent of the complaints received from the investors till the end of the quarter immediately preceding the month of the reference date; the issuer has been in compliance with the equity listing agreement for a period of at least three years immediately preceding the reference date; the impact of auditors qualifications, if any, on the audited accounts of the issuer in respect of those financial years for which such accounts are disclosed in the offer document does not exceed five percent of the net profit or loss after tax of the issuer for the respective years; no show cause notices have been issued or prosecution proceedings initiated or pending against the issuer or its promoters or whole time directors on the reference date; and the entire shareholding of the promoter group of the issuer is held in dematerialised form on the reference date.

b) c)

d)

e) f)

g)

h)

5.10.13.2 If these conditions are fulfilled then the CPSE need not file the DRHP as is required in other cases. The RHP can be directly filed with SEBI and the Stock Exchanges.

5.11 Updation/Changes in the offer document

5.11.1 Updation/changes in the offer document are permitted under the ICDR Regulations. However, such updations/changes are categorised under Schedule VII of the ICDR Regulations, as under: a) Changes which require fresh filing of the draft RHP with SEBI along with the filing fees: Change in promoter or persons in control of the issuer.

47 47

Change in more than half of the board of directors of the issuer. Change in main object clause of the issuer. Any addition or deletion to objects of the issue resulting in a change in estimated issue size or estimated means of finance by more than ten per cent. Any increase or decrease in estimated issue size by more than ten per cent Any increase or decrease in estimated deployment in any of the objects of the issue by more than ten per cent. Changes which may result in non-compliance with the provisions of the ICDR Regulations and the lead merchant banker intends to seek relaxation under Regulation 109 of the said Regulations.

b)

Changes which require filing of the updated offer document with the Board, along with the updation fees: Section 1: Risk Factors: Any material development which may result in potential risk and may require updation in this section . Section 2: Capital Structure: An aggregate increase of five percent or more in the shareholding of the promoter or promoter group or an aggregate increase of five percent or more in the shareholding of the top ten shareholders. Section 3: Issue Size: Any addition or deletion to the objects of the issue resulting in a change in the estimated issue size or estimated means of finance by not more than ten percent. Section 4: Management: Appointment of any new director. Section 5: Promoter Group: Any addition to the promoter group or group companies. Section 6: Financial Statements: Any variation in net profit after tax or net loss after tax and/or extraordinary items in excess of ten percent over the last updated financials submitted to SEBI. Section 7: Legal and other information: Any new litigation or any development about a pending litigation which is material in view of the merchant bankers.

The CPSE can file the updated offer document with SEBI along with the updation fee mentioned in Schedule IV of the ICDR Regulations. c) Changes which require filing of updated offer document with the SEBI without any fee: All other updations/changes in the offer document which are not covered under subparagraphs (a) and (b) above can be carried out in the offer document and updated offer document is filed with the SEBI without fees. 5.11.2 While updation/changes in the offer document may be unavoidable in certain cases, the CPSE must ensure that complete disclosures are made in the DRHP and that the disclosures especially those relating to the financial statements are correct as any error in the DRHP or RHP can lead to unnecessary delays and other serious consequences that could potentially affect the pubic issue.

48 48

5.12

Payment of security deposit for issuance of new securities

5.12.1 As per clause 42 of the Listing Agreement, the CPSE has to deposit 1% of the issue size as security deposit before the opening of subscription list and keep deposited with the Stock Exchange for ensuring compliance by the CPSE, within the prescribed or stipulated period, of all prevailing requirements of law and all prevailing listing requirements and conditions as mentioned in, and refundable or forfeitable in the manner stated in the Rules, Bye-laws and Regulations of the Exchange for the time being in force. Further, 50% of the 1% security deposit is paid to the Exchange in cash. The balance amount can be provided for by way of a bank guarantee. The amount to be paid in cash is limited to Rs.3 crore. 5.12.2 However, in case of public issues by the CPSEs, SEBI usually exempts the CPSE from payment of 1% of the issue size as security deposit on the request of the DoD in case of pure offer for sale and of the concerned Administrative Ministry in case the public issue involves issue of fresh equity as well. This exemption is given only for the offer for sale portion of the issue and not on the issue of fresh equity. For example, in PFCs further public offer which consisted of issue of 15% fresh equity and 5% disinvestment by the Government of India, SEBI granted exemption to the PFC from payment of 1% security deposit only on the portion being disinvested by the GoI.

5.13 Red Herring Prospectus:

5.13.1 The DRHP filed with SEBI is incomplete in many ways as it does not include the date of opening and closing of the issue, certain material documents like the escrow agreement, syndicate agreement, registrar s agreement etc. 5.13.2 SEBI may give its comments within a period of 30 days of filing the DRHP with them. This period may get extended depending on the additional information/clarifications sought by SEBI in relation to the documents or any reference/clarification sought from any regulatory or other such agency. 5.13.3 After incorporating the comments/observations/updates received from SEBI, the RHP is filed with SEBI. SEBI reviews the same and issues a letter taking on record the changes. After receiving the letter from SEBI (which is generally received within 3-4 days), the RHP is updated to include the dates of opening and closing of public issue. The RHP is then placed before the Board of Directors of the CPSE for approval. Once the Board of the CPSE has approved the RHP the same is filed with SEBI and RoC along with all the material documents which include the registrars agreement, escrow agreement, syndicate agreement, agreement with the depositories etc. The RoC usually takes 1-2 days to give its approval. The responsibility of filing the RHP with SEBI is of the BRLMs to the issue and the responsibility of filing the RHP with the RoC is of the Company Secretary of the CPSE. 5.13.4 The book building fee is paid to the two Stock Exchanges at any time after the filing of the RHP with SEBI but before the issue opens.

5.14

Road shows for marketing:

5.14.1 The CPSE has to undertake road shows both within and outside the country and a domestic advertisement campaign through print media, television, radio, hoardings etc. to inform the public about the Issue. The BRLMs, in consultation with the CPSE officials and the legal counsel, prepare

49 49

a presentation document covering key aspects of the securities being offered, reasons for offering the securities, important aspects of the business of the CPSE, trend in the industry, market of the products of the company and any other issue of interest for the road shows. Road shows involve face to face meetings with various prospective institutional investors. In these meetings with the investors the CPSE officials make a presentation on the company and address the concerns and queries of the investors. CPSE officials participating in the road shows should familiarise themselves about the disclosures in the RHP and no information, other than what is disclosed in the RHP can be disclosed in the road shows. 5.14.2 Depending on the size of the issue and the demand for the issue by various investors in different cities, an assessment of the marketing needs is made by the BRLMs in consultation with the CPSE, the Administrative Ministry and the DoD. Accordingly, the BRLMs plan the road shows including the schedule, the cities and the investors that the management of the CPSE will visit for marketing the issue. The road shows are conducted in three stages; the premarketing road shows, the deal road shows and the domestic road shows. i) Pre-marketing road shows: The pre marketing road shows are conducted at places inside and outside India immediately after filing the DRHP and before filing the RHP with SEBI. Before the conduct of the pre-marketing road show the CPSE, the Administrative Ministry and the DoD seek specific inputs from the BRLMs on prevailing investor sentiment either from the Research Analysts of the BRLMs (in case a DRHP has been filed) or from the Advisory teams of the BRLMs (in case of fast track issue) to identify likely areas of greatest investor concern and focus around the given CPSE. A team of officers consisting of officials from the CPSE, the Administrative Ministry and the DoD (in case disinvestment of GoI shareholding through public offer is involved) meet the domestic and foreign institutional investors and make a presentation to them about the CPSE and the Issue and ensure that the issues of greatest investor concern are adequately and clearly explained subject to all applicable disclosure guidelines. The CPSE officials going for the road shows have to be on the same wavelength and give consistent message to the prospective investors. To ensure this the BRLMs conduct training sessions with the team members. The CPSE officials handle all queries relating to the CPSE that the potential investors have. The officials of the Administrative Ministry respond to the policy issues affecting the CPSE and the concerned sector and DoD, while playing the coordinators role, provides the overall disinvestment perspective of the GoI and responds to issues cutting across public issues and procedures to the prospective investors. No forward looking statements with regard to the financial parameters, which are not a part of the DRHP, can be made during these interactions. During this road show, the team and the representatives of the BRLMs gather feedback on the interest and pricing of the securities being marketed from the domestic and foreign institutional investors.

50 50

In pre-marketing road shows, investors in the following countries are usually covered: Singapore Hong Kong United Kingdom (if considered necessary by the BRLMs) Dubai/Abudhabi/Qatar (if considered necessary by the BRLMs) United States is not covered in the pre-marketing road show, as the US Securities laws require filing of the RHP before marketing the issue to the US institutional investors. Post the conduct of the pre marketing road shows and before filing of the RHP, DoD and the CPSE should seek specific inputs from the BRLMs on actual investor feedback. The Company should work towards ensuring that any areas of concern emerging from the investor community are further reflected and where required, more clearly articulated in the RHP and presentation for deal roadshows and proactively addressed in roadshows. If any such concerns pertain to matters of Government policy, they need to be examined and where possible required clarifications and perspectives made available as appropriate. ii) Deal road shows: The deal road shows start only after the RHP has been cleared by SEBI and filed with the RoC and SEBI. During this phase the team consisting of the CPSE officials, and officers of the concerned Administrative Ministry and the DoD meets with a different set of domestic and international institutional investors who were not covered during the pre-marketing road show. During the deal road show the team may give a copy of the RHP filed with the RoC to the institutional investors. In the deal road shows usually two teams each consisting of representatives of the CPSE, the concerned Administrative Ministry and the DoD (in case the public issue involves offer for sale of GoI shareholding) visit the following countries for marketing the securities: iii) Singapore Hong Kong United Kingdom Some European Countries (if considered necessary by the BRLMs) Some Middle Eastern countries (if considered necessary by the BRLMs) United States

Domestic Retail Road shows The domestic retail marketing of the securities generally starts after the price band is announced and continues till the second day of the Issue. The BRLMs plan the domestic retail road shows including the schedule and the cities to be covered. Depending on the size of the issue and the deal timeline select cities are covered for the retail marketing. On an average more than 10 cities are covered for retail marketing. The cities so selected for retail marketing include cities where the CPSE and/or its wholly owned subsidiaries are located. For retail marketing, teams of officials from the CPSE, Administrative Ministry and the DoD are formed who visit different cities

51 51

and meet the brokers and the press to market the Issue. As in the pre- marketing phase, no forward looking statements are allowed during these road shows also. For the domestic road shows the necessary arrangements have to be done by the BRLMs in coordination with the Advertising Agency appointed for the Issue.

5.15 Pre-Issue Advertisement:

5.15.1 The pre-issue advertisement is a mandatory requirement under regulation 47 of the ICDR Regulations. Immediately after registering the RHP with the RoC, the CPSE in case of issue of fresh equity or the DoD in case of offer for sale by the Government gets published a pre-issue advertisement in one English national daily newspaper with wide circulation, Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where the registered office of the CPSE is situated. 5.15.2 The pre-issue advertisement has to be in the format and should contain the disclosures specified in Part A of Schedule XIII of the ICDR Regulations.

5.16 Publicity Campaign:

5.16.1 A publicity campaign is crucial to generate awareness amongst the potential investors in the public offer. The publicity campaign is carried out through release of statutory, issue and corporate advertisements. 5.16.2 Statutory Advertisements: The statutory advertisements are mandatory advertisements required to be released in the print media at different stages of the public issue as per ICDR Regulations. The statutory advertisements are required to be released in one English national daily newspaper with wide circulation, Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where the registered office of the CPSE is situated. The statutory advertisements are released in the format prescribed by the ICDR Regulations at the following stages of the public issue: On the day of filing the DRHP with SEBI or on the next day disclosing to the public the fact of filing of DRHP with SEBI and inviting the public to give comments to SEBI in respect of disclosures made in the DRHP Immediately after registering the RHP with the RoC Immediately after fixing the price band/floor price for the issue disclosing to the public the price band/ floor price and the minimum lot size for the public issue Immediately after fixing the issue price for the issue Immediately after finalising the basis of allocation

5.16.3 Issue Advertisements: Issue advertisements are not mandatory advertisements. A company may release issue advertisements disclosing the issue opening and issue closing dates of the public issue in print media, electronic media and hoardings. However, the Issue Advertisements can be issued only in the format specified in Part B & Part C of Schedule XIII of the ICDR Regulations.

52 52

5.16.4 Corporate Advertisements: Corporate advertisements are released in the print media, electronic media and hoardings after filing the RHP with the RoC. The layout and the script of the corporate advertisements are finalised by the Advertising Agency in consultation with the BRLMs and the Legal Advisers to the Issue. The CPSE must ensure that the corporate advertisements carry only that information which is available in the RHP. The corporate advertisements start appearing in the print media, electronic media and on hoardings generally about 10 days before the issue opening date. 5.16.5 All publicity material have to strictly adhere to the provisions of Regulation 60 of the ICDR Regulations.

5.17 Fixation and announcement of price band/floor price:

5.17.1 The price band/floor price in case of public offer through book building process or the floor price in case of public offer through alternate book building process is fixed in consultation with the BRLMs. Since about 50% of the shares are offered to the Qualified Institutional Buyers (QIBs), it is the QIBs who indirectly play an important role in determining the price band. The BRLMs to the issue prepare a research report on the CPSE. Although the research reports are confidential documents they are circulated to the QIBs - both domestic and international. The BRLMs recommend a price band/floor price based on the feedback received from the Qualified Institutional Buyers during the road shows, different valuation methodologies like discounted cash flow methodology, net asset valuation, relative valuation etc., fundamentals of the CPSE and in case the CPSE stock is a traded stock, the market price and the average market price over a period of time. Lower end of the price band is referred to as the floor price and upper end of the price band is referred to as the cap price. The cap on the price band can be less than or equal to 120% of the floor price. 5.17.2 Valuation methodologies used for valuation of shares The valuation methodology used for a CPSE would depend on several factors including the nature of business of the CPSE. Hence it is not possible to lay down all the different valuation methodologies that can be used for the valuation of shares of a CPSE. However, there are three broad types of going concern models of valuation viz. the discounted cash flow model, the net asset value model and the relative valuation model which are mostly used for the valuation of a company. These have been explained in some details below: a) Discounted cash flow model: In the discounted cash flow model of equity valuation, the value of an asset is the present value of the expected cash flows on the asset, discounted back at a rate that reflects the riskiness of these cash flows. This method is widely used in strategic sale of shares of a company. However, it can also be used in valuation of shares in a public offer. Example: The discounted cash flow valuation methodology is a preferred valuation methodology when the company is in a strong growth phase with significant capital investment

53 53

being committed to the business. It is also an absolute valuation technique which doesnt require an extensive listed peer group for comparison. Further, in case of a company with highly illiquid and insignificant public float the more prevalent relative valuation methodology could give very unrealistic values. b) Net asset valuation model: The total value of a CPSEs assets less the total value of its liabilities is its net asset value (NAV). NAV is useful for the valuation of shares in sectors where the value of a CPSE comes from the assets it holds rather than the profits stream generated by the business. This valuation model is used for valuation of shares of real estate companies. NAV is also used elsewhere, such as for extractive industries (mining and oil), usually in combination with other metrics, shipping companies etc. Example: Net Asset Valuation model has been used for valuation of the shipping companies. Such companies are valued using the Net Asset Value (NAV) of the ships owned adjusted for net debt. Since typically the global shipping stocks trade at a discount to the prevailing NAV, the fair value of the shares may be worked out by applying an appropriate discount to the NAV. c) Relative Valuation: In relative valuation, the valuation of the companys shares is based on how similar companies shares are currently priced by the market. The idea underlying relative valuation is that similar companies shares should sell at similar prices. Relative valuation is typically implemented using price multiples. There are two components to relative valuation: Find similar or comparable companies. In relative valuation, companies that are in the same business as the company being valued are taken as comparables. Value the shares of the comparable companies on a relative basis, usually by converting prices into multiples of some common variable like earnings, book value, sales or revenues for publicly traded stocks.

The most common multiples used for relative valuation include enterprise value to earnings before interest, depreciation, tax and amortization (EV/EBIDTA), price to earnings (P/E) and price to book value (P/B) ratios. In selecting the multiples care has to be taken in assessing other parameters related to the company and its peers. Examples: In a company which has a capital structure which is very different from that of its comparable companies and has a large cash reserve on its balance sheet, the Profit after Tax (PAT) numbers are not strictly comparable. In such cases EV/ EBITDA (adjusted for the non operating income) is used to compare operational performance of the company to its peers. Valuation of companies in the financial sector such as banks and Infrastructure Finance companies is done using the price to book multiple as cash flows is the

54 54

raw material for the business and most assets and liabilities of the financial sector companies are valued at market values. Companies which generate profit out of intellectual capital and not out of deployment of capital into fixed assets and which have a very long history of high profitability in its line of business are usually valued using the price to earnings multiple. In such companies profit after tax (PAT) is the most important measure of business and hence P/E best captures the value of such companies.

5.17.3 Fixation of price band/floor price in a public offer The BRLMs in their presentation before the Committee of Officers (in case of pure offer for sale of GoI shareholding) and the IPO/FPO committee and the Board of Directors of the CPSE (in case of offer for sale in conjunction with issue of fresh equity) discuss the various valuation methodologies used for valuation of shares and then suggest the one which is most appropriate for the CPSE. a) Fixation of price band/floor price in case of pure offer for sale of GoI shareholding in the CPSE The price band recommended by the BRLMs is considered by a Committee of Officers comprising of the following: Secretary, Department of Disinvestment, Secretary, concerned Administrative Ministry (where he is co-chair) Joint Secretary, concerned Administrative Ministry Joint Secretary, Department of Disinvestment Financial Advisor of the concerned Administrative Ministry Financial Advisor, Department of Disinvestment

The Chairman and Managing Director and Director (Finance) of the CPSE attend the Committee of Officers meeting as special Invitees. The minutes of the meeting of the Committee of Officers are not signed by these special invitees. The BRLMs make a presentation before the Committee giving details of the key considerations as well as the valuation methodologies used for recommending a price band/floor price for the public issue. The members of the Committee consider the recommendations and recommend a price band/floor price, which may or may not be that recommended by the BRLMs, for the consideration of the Empowered Group of Ministers (EGoM). The EGoM comprise of the following: (i) (ii) (iii) (iv) Minister of Finance Minister of Home Affairs Minister of the concerned Administrative Ministry Deputy Chairman, Planning Commission in Chair

55 55

The EGoM after considering the price band recommended by the Committee of Officers decides the price band/floor price for the Issue. The DoD prepares the note for the EGoM. b) Fixation of price band/floor price in case of issue of fresh equity by the CPSE in conjunction with the offer for sale by the GoI. The BRLMs make a presentation before the IPO/FPO committee members giving details of the key considerations as well as the valuation methodologies used for recommending a price band/floor price for the public issue. The IPO/FPO committee considers the recommendations of the BRLMs and recommends a price band/floor price, which may or may not be that recommended by the BRLMs, to the Board of Directors of the CPSE. The Board of Directors considers the recommendations made by the IPO/FPO committee and makes its own recommendation of the price band/ floor price to the EGoM. The EGoM considers the price band recommended by the Board of Directors of the CPSE and decides the price band/floor price for the issue. Immediately after the price band/floor price is fixed the CPSE informs the two Stock Exchanges of the price band/floor price. c) Announcement of price band/floor price: Regulation 30 (2) of the ICDR Regulations provide that if the floor price or the price band is not mentioned in the RHP then, in case of an IPO, it should be announced at least two working days before the opening of the bid and in case of FPO at least one working day before the opening of the bid in all the newspapers in which the pre issue advertisement was released. In the case of FPO, since the shares are already listed there is a market price and fixation of the price band/floor price in advance can have an adverse effect on the CPSEs share market price. In order to minimize the volatility in the market price of the shares of the CPSE, the price band/floor price, in the case of the FPO, is announced one working day in advance of the offer opening. The advertisement announcing the price band/floor price also carries the information on the minimum lot size i.e. the minimum number of securities and multiples thereof which an investor has to bid for in the issue. The minimum lot size is determined in such a manner that the amount payable at the floor price and the cap price is in the range of `5000 to `7000. Bids should be for the minimum lots size or multiples thereof. By fixing the minimum lot size the issuer has the flexibility to fix the number of shares, which would form the minimum lot, which should be within amount range i.e. ` 5000 to `7000 prescribed in the ICDR Regulations. d) Provision for revision of price band during the period the bid is open (in case of book building process only) The CPSE, in consultation with the BRLMs, can revise the price band (upward or downward) during the period the bid is open. In case the price band is revised, the bidding has to be kept open for a minimum of 3 days after such revision to enable the

56 56

investors to react to the revision. The maximum revision permitted is not more than 20% on either side i.e. the floor price of the price band can move up or down to the extent of 20% of the floor of the price band fixed initially. The cap of the revised price band is fixed accordingly i.e. it is not more than 120% of the revised floor price. Any revision in the price band requires wide publicity by issuing press release and also indicating the change on the relevant website and the terminals of the syndicate members. Further, only in case of issue of fresh equity by the CPSE, the CPSE has to disclose in the RHP the manner in which the shortfall, if any, due to lowering of the price band would be met and that the allotment of the securities will not be made unless the financing is tied up. The GoI has so far not used this provision to revise the price band in any of the public offerings of the CPSEs.

5.18 Selection of Bidding Centers:

The BRLMs/Syndicate members appoint stock brokers who are members of the recognised Stock Exchange and registered with SEBI, for the purpose of accepting bid cum application forms and uploading the same on the book building software of BSE/NSE and ensure that the stock brokers so appointed are financially capable of honoring their commitments arising out of defaults of their clients/investors, if any. In the case of Application Supported by Blocked Amount (ASBA), Self Certified Syndicate Banks (SCSBs) also accept and upload the details of such applications in electronic bidding system of the Stock Exchange(s). The stock brokers and SCSBs accepting applications and application monies are deemed as bidding/collection centres. The bidding centres are finalised by the BRLMs in consultation with the Escrow Bankers and the Registrar to the Issue. However, the bidding centres so finalised must include the bidding/collection centres mentioned in Schedule III of the ICDR Regulations. Major/large cities usually have more than one bidding centre whereas very small towns may have only one bidding centre. Usually around 60 to 90 cities are identified for the bidding centres. The city, where the registered office of the CPSE is located, is inevitably identified as one of the bidding centres for the public issue. For instance, in the case of the IPO of CIL, cities like Dhanbad, Nagpur and Ranchi where the subsidiaries of CIL were located were also selected as bidding centres.

5.19 Categories of Investors in a Public Issue:

5.19.1 The following are the categories of investors who can bid in a public offer through book building/alternate book building process: a) Qualified Institutional Buyers: Regulation 2 (1)(zd) of the ICDR Regulations defines the qualified institutional buyer as a) b) c) d) e) a mutual fund, venture capital fund and foreign venture capital investor registered with the Board; a foreign institutional investor and sub-account (other than a sub account which is a foreign corporate or foreign individual), registered with the Board; a public financial institution as defined in section 4A of the Companies Act, 1956; a scheduled commercial bank; a multilateral and bilateral development financial institution;

57 57

f) g) h) i) j) k) l)

a state industrial development corporation; an insurance company registered w ith the Insurance Regulatory and Development Authority; a provident fund with minimum corpus of twenty five crore rupees; a pension fund with minimum corpus of twenty five crore rupees; National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India; Insurance funds set up and managed by army, navy or air force of the Union of India; Insurance funds set up and managed by the Department of Posts, India.

In case the CPSE satisfies the conditions stipulated under Regulation 26(1) of ICDR Regulations then up to 50 percent of the net issue can be allotted to the QIBs, not less than 15 percent can be allotted to the non-institutional investors and not less than 35 percent to the retail investors. Where the retail category is over subscribed, the company may allocate more than 35 percent to the retail category and less than 50 percent to the QIB. However, the decision to allocate more to the retail investors and less to the QIBs would depend on a number of factors such as level of oversubscription by QIB and retail, market practice, likely allocation to QIBs and prevailing market conditions. However, in case the company does not satisfy the conditions stipulated in regulation 26 (1) of the ICDR Regulations then at least 50 per cent of the net issue has to be made to the QIBs and not less than 15 percent and 35 percent to the non-institutional investors and retail investors respectively. In such a case the company has no choice but to allocate atleast 50 percent of the net offer to the QIBs. Further, at least 5% of the QIB portion is reserved for allotment to the Mutual Funds. QIBs can bid at any of the prices within the price band (including the floor price and ceiling price). However, only those QIBs who have bid at or above the offer price are eligible for allotment of shares. Shares in this category are allotted to all the investors on a proportionate basis in case of public offer through book building process. However, in case of a public offer through alternate book building process, the QIBs can bid at any price above the floor price. The QIB who bids at the highest price is allotted the number of securities that he has bided for and then the QIB who has bided at the second highest price and so on, until all the specified securities on offer are exhausted. Allotment to the QIBs is on price priority basis. Recently, SEBI, through its circular dated 29th April 2011, has made it mandatory for the QIBs to use ASBA facility for applying in a public issue. This would be applicable for RHP/Prospectus/ Letter of Offer filed with RoC/Stock Exchanges, on or after May 2, 2011. b) Non-Institutional Investors:

Individual / HUF investors, bodies corporate, trusts (registered under the Societies Act) and other eligible investors who do not come under the category of Qualified Institutional Buyers but are eligible to apply for shares with bid amount of more than `2,00,000 are considered under this category. Not less than 15% of the net issue is reserved for this category. The allotment, both in book building/alternate book building process is on a proportionate basis. The allotment in the book building process is made at the offer price whereas in the alternate book building process it is made at the floor price to this category of investors. Further, the non-institutional investors can use only ASBA facility for applying in a public issue for which the RHP/Prospectus/Letter of Offer has been filed with the RoC/Stock Exchanges on or after May 2, 2011.

58 58

c)

Retail Individual Investors:

Individual Bidders (including NRIs) and HUFs who apply for allotment of shares with bid amount of not more than `200,000/- fall under this category. Not less than 35% of the net issue size is reserved for allotment to this category. The shares under the book building process are allotted to retail individual buyers at the offer price or at a price which is at a discount to the offer price as decided by the CPSE. However, the discount cannot be more than 10% of the offer price. Further, the retail investors can bid at the cut off price. When the Retail Investors bid at the cut off price, he indicates his willingness to accept the shares at any price within the price band. In such a case, the retail investor does not indicate the price as a specific number. However, he is required to pay the margin amount calculated at the number of shares applied for multiplied by the cap price. Those retail individual investors who have applied at cut-off price are eligible to be considered for allotment irrespective of the Issue Price finally decided through the price discovery process. Syndicate members who receive the bid-cumapplication form, submit the bids in the NSE and BSE terminal by entering the number 9999 as the price at which the bids have come in. This indicates that these bids have been at the cut off price. The other categories of investors (QIBs and non-institutional bidders) are prohibited from bidding at the cut-off price. Any bid at cut off price by such investors is rejected. For public issues in which the RHP/Prospectus is filed with the RoC after 15.6.2011, the retail investors would be allowed to make payment at a price net of discount, if any, at the time of bidding. d) Employees:

ICDR Regulations provide for reservation of up to 5% of the post issue capital of the CPSE for allotment to employees of the CPSE. The CPSE may or may not reserve a part of the issue size for its employees but in order to maintain a sense of belonging, inclusiveness and to allow participation in the prosperity of the CPSE, it is important that shares of the Issue are reserved for the employees of the CPSE. The allotment is done on competitive basis. All the eligible employees should have to be clearly specified in the RHP. Directors/Employees of the CPSE who cannot subscribe to the shares in the public offer The Department of Public Enterprises has issued a circular dated 16th June, 2009 on dealing in shares by the management/employees of the CPSE. According to this circular, Directors of the CPSE, members of the IPO/FPO committee and those involved in the price fixation process of the public issue of the CPSE or otherwise in possession of unpublished price sensitive information in respect of shares cannot participate in the public offer. This fact has to be kept in mind while defining the eligible employees for the reservation. 5.19.2 As per the Central Civil Services (Conduct) Rules, 1964, Government employees who are involved in the decision making process of fixation of price of a public offer of shares of a CPSE cannot apply, either himself or through any member of his family or through any other person acting on his behalf, for allotment of shares in the public offer of such CPSE. These restrictions also apply to officers of All India Services.

5.20 Issue opening/Issue closing:

5.20.1 The CPSE, in case of issue of fresh equity, or the DoD, in case of pure offer for sale, may issue advertisements of issue opening and issue closing in a large number of national and regional newspapers including on television and radio.

59 59

5.20.2 As per Regulation 46(1) of the ICDR Regulations, a public issue should be kept open for at least three working days but not more than ten working days including the days for which the issue is kept open in case of revision in price band. In case the price band in a public issue made through the book building process is revised, the bidding (issue) period disclosed in the RHP should be extended for a minimum period of three working days provided that the total bidding period should not exceed ten working days. 5.20.3 According to the present rule, a public issue must be open for subscription for at least three working days. CPSEs can, at their discretion, keep it open for retail bids for an extra day. This facility has to be disclosed in advance in the offer document. The issuer cannot extend the bidding period at the last moment because of poor response from retail investors. In the public issues of the CPSEs, the practice is to keep the issue open for 4 days with the first 3 days for all the investors and one extra day for the retail and non-institutional investors. This is done keeping in view the present disinvestment policy of promoting greater and wider participation of retail investors in the public offers of the CPSE. The issue opens for subscription on the specified day. The QIBs can bid for the first three days of the issue period. The non institutional and the retail investors can bid on all the four days of the issue period. The BRLMs provide an hourly update of the bids received for the Issue. The aggregate daily position is also available on the website of the Stock Exchanges on an hourly basis. In case of Issues where the response is very positive the closing time for uploading of bids can be extended on the last day of the offer period with the permission of the Stock Exchanges. 5.20.4 The investors who desire to participate in a book building Issue are required to fill up a bidcum-application form and deposit the same with one of the designated bidding centres along with 100% payment. Each bid-cum-application form gives the investor a choice to make 3 bids at different prices within the price band and specify the number of shares bid for at each of these 3 prices. In such cases the investor has to pay the maximum amount bid for along with his bid-cumapplication form. 5.20.5 During the period the issue is open, the bidding centres i.e. the syndicate members/ brokers register the bids through online terminals connected to NSE or BSE and issue transaction registration slip indicating the details of the bid registered (application number, the quantum of shares at various prices) to the investor. In case of multiple bids, the syndicate member/broker enters the bid option of each investor into the electronic bidding system as a separate bid. Normally only those bids that are registered and figuring in the NSE / BSE (Electronic) book are eligible to be considered for allotment. 5.20.6 Applicants/bidders who bid for shares through the ASBA route can either apply online or through physical ASBA application forms. An ASBA applicant either visits the nearest designated SCSB for getting the ASBA form or downloads the ASBA form from the websites of the two Stock Exchanges. The application is filled up by the applicant and submitted to the designated SCSB. On receipt of the ASBA application, the SCSB issues an acknowledgement slip containing the application/reference number to the applicant and blocks the amount in the specified Bank account for the applied IPO and sends the application information to the designated Stock Exchange for that IPO. 5.20.7 Pursuant to a recent circular dated April 29, 2011, SEBI has notified that non retail investors i.e. QIBs and Non-Institutional Investors, making application in a public issue shall mandatorily make use of ASBA facility. In this regard, disclosures shall be made in the offer document such as

60 60

in issue procedure section as part of payment instructions. Recent SEBI Circulars also enable the syndicate/ sub-syndicate members to procure ASBA forms from the investors, upload the bid and other relevant details of such ASBA forms in the bidding platform and thereafter forward the ASBA forms to the SCSBs. For such applications through the route of Syndicate ASBA, the commission will be received by the syndicate member while a processing fee will be paid to SCSBs. 5.20.8 As per recent amendment in ICDR, at the end of the Issue closure, the BRLM, shall submit a compliance certificate for the period between the date of filing the draft offer document with the SEBI and the date of closure of the Issue, in respect of news reports appearing in various medias certifying that the information in such articles were within the scope of offer document.

5.21 Revision of bids:

Under the book building process, the investor can revise his bid in respect of the quantum of shares and/or the bid price. The investors can revise their bids any number of times before the closure of the issue. However, for every revision they are required to go to the same bidding centre where the original bid / earlier revision was registered along with the transaction registration slip issued by the bidding centre. The investors are also required to use the revision bid form printed on the last page of the application form set. If there is an upward revision (in terms of shares and/or price), the investors are required to pay the differential amount along with the revised bid. However, in case there is a downward revision (in terms of shares and/or price) the excess payment that the investor may have paid at the time of registering the original bid / earlier revision is not refunded to him by the bidding centre. The Registrars at the time of processing take care of the refund of the excess money paid.

5.22 Withdrawal of bids:

The QIBs can withdraw their bids during the period the Issue is open for QIB category. However, they cannot withdraw their bids after the closure of the Issue for the QIB category. On the other hand the non-institutional investors and the retail investors can withdraw their bids until the date of allotment of shares.

5.23 Minimum Subscription:

5.23.1 In case of issue of fresh equity by the CPSE, the minimum subscription required for a public issue is 90% of the offer size mentioned in the RHP. This condition of minimum subscription is not applicable in case of Offer for sale of GoI shareholding. Public issue by infrastructure companies if the disclosures regarding the alternate source of funding of the Objects of the Issue have been made in the RHP. The infrastructure company to which the condition of minimum subscription would not apply has been defined in regulation 14 (4) of the ICDR Regulations.

5.23.2 In case of non-receipt of minimum subscription of 90% of the issue size, the application monies received have to be refunded to the applicants within 70 days of the closure of the Issue in case of an underwritten issue where minimum subscription including devolvement obligations paid by the underwriters is not received within 60 days of the closure of the Issue.

61 61

5.24 Price discovery

5.24.1 Price discovery is made through the book building method. Book Building is essentially a process used by companies for raising capital through public offers to aid price and demand discovery. It is a mechanism where, during the period for which the book for the offer is open, the bids are collected from investors at various prices, which are within the price band specified by the issuer. The process is directed towards both the institutional as well as the retail investors. The price at which the entire book (shares issued in the public offer) get subscribed becomes the issue price. However, the issuer company has the discretion to fix the issue price at any price within the price band at which the book gets built 1 or more times.

Illustration:
Consider a public offer of 1000 shares with a price band of ` 25 to ` 30. The demand at various levels of price within the price band is as follows: Demand 900 shares 500 shares 300 shares 100 shares 50 shares Price `30 `29 `28 `26 `25

The book gets built 0.9 times (900 shares) at `30, 1.4 times (1400 shares) at and above `29, 1.7 times (1700 shares) at and above `28, 1.8 times (1800 shares) at and above `26 and 1.85 times (1850 shares) at and above `25. In this case, since the book gets completely built at `29 per share and below, the offer price can be fixed at a price anywhere between `25 to `29. In the above illustration, if 1000 or more shares had been subscribed at `30 then the book would have been completely built at `30 and the offer price could be fixed at a price anywhere between `25 to `30 per share. 5.24.2 After the issue closes the offer price based on the demand generated at various price levels is decided in consultation with the BRLMs. a) In case of pure offer for sale of GoI shareholding in the CPSE: The BRLMs make a detailed presentation before the Committee of Officers on the overall response of the investors to the public issue, oversubscription in various categories of investors, oversubscription at higher and lower end of the price band fixed for the public issue in case of the book building process and the quality of investors and jointly recommend the issue price. The members of the Committee consider the recommendations and recommend an issue price for the consideration of the EGoM. The EGoM decide on the issue price and the inter-se allocation of shares amongst various categories of investors. b) In case of issue of fresh equity by the CPSE in conjunction with the offer for sale by the GoI

62 62

The BRLMs make a detailed presentation before the IPO/FPO Committee on the overall response of the investors to the public issue, oversubscription in various categories of investors, oversubscription at higher and lower end of the price band fixed for the public issue in case of the book building process and the quality of investors and jointly recommend the issue price. The IPO/FPO committee considers the recommendations of the BRLMs and recommends an issue price to the Board of Directors of the CPSE. The Board of Directors considers the recommendations made by the IPO/FPO committee and recommends an issue price including the inter-se allocation of shares amongst the various categories of investors. The DoD prepares an agenda note based on the recommendations of the Board of Directors for the consideration of the EGoM. The EGoM decides on the issue price and the inter-se allocation of shares amongst various categories of investors. 5.24.3 Generally, when the issue is heavily oversubscribed at the top end of the price band, the issue price is fixed at the cap price. However, in order to create sufficient demand for the shares in the market post listing, a lower issue price may be fixed despite the heavy oversubscription from the investors at the cap price. 5.24.4 Announcement of Issue Price Once the Issue Price has been decided by the EGoM, the same is published through an advertisement in national and regional newspapers the next day.

5.25 Signing of the Underwriting Agreement

Once the issue price is decided by the EGoM, an Underwriting Agreement is signed amongst the BRLMs, Administrative Ministry (in case of offer for sale by the GoI) and the CPSE.

5.26 Filing of Prospectus

After the issue price has been decided and the Underwriting Agreement has been signed, the RHP is updated by including the issue price and other price related information. Any other pertinent information/development which has taken place since the time of filing the RHP can also be included/ updated in the Prospectus. The same is then approved by the Board of the CPSE and filed with the RoC, SEBI and the Stock Exchanges. The Prospectus has to be filed immediately after finalisation of the Issue price.

B.

Post Issue Issue closure to Listing of shares on the Stock Exchanges

5.27 Post Issue Timelines:

5.27.1 After the Issue closes the securities have to be listed on the Stock Exchanges within 12 working days from the date of the issue closure. Working days include all days except Sundays and bank holidays. The BRLM assigned with the responsibility of post issue activities coordinates with various agencies connected with the post-issue activity such as Registrars to the Issue, Bankers to the Issue, Self Certified Syndicate Banks, etc to get quick estimates of collection and advise the CPSE about the closure of the Issue, based on correct figures, finalization of the basis of allotment or weeding out of multiple applications, listing of the equity, dispatch of certificates or demat credit and refunds.

63 63

5.27.2 The indicative timeline schedule for various activities in a public issue for both non-ASBA and ASBA Bids, as mentioned in the ICDR Regulations, is given in the tables at Annex XVIII & XIX respectively.

5.28 Basis of Allotment:

5.28.1 The allotment is made on proportionate basis to the investors in the case of the book building issue. In the case of the alternate book building issue, the QIBs are allotted shares on a price priority basis whereas all the other investors are allotted shares on proportionate basis. 5.28.2 In the case of proportionate allotment, the allotment is done in marketable lots as explained below when issue is over-subscribed: a) b) Bidders are categorized according to the number of equity shares applied for; The total number of equity shares to be allotted to each category as a whole are arrived at on a proportionate basis which is the total number of equity shares applied for in that category (number of bidders in the category multiplied by the number of equity shares applied for) multiplied by the inverse of the over subscription ratio; c) Number of equity shares to be allotted to the successful bidders is arrived at on a proportionate basis which is total number of equity shares applied for by each bidder in that category multiplied by the inverse of the over-subscription ratio; d) In all bids where the proportionate allotment is less than the minimum lot size, the allotment is made as follows: Each successful bidder is allotted a minimum of equity shares equivalent to minimum lot size; and The successful bidders out of the total bidders for a category is determined by draw of lots in a manner such that the total number of equity shares allotted in that category is equal to the number of equity shares calculated in accordance with (b) above. (a) If the proportionate allotment to a bidder is a number that is more than lot size but is not a multiple of one (which is the marketable lot), the number in excess of the multiple of one would be rounded off to the higher multiple of one if that number is 0.5 or higher. If that number is lower than 0.5, it would be rounded off to the lower multiple of one. All bidders in such categories are allotted equity shares arrived at after such rounding off. (b) If the equity shares allocated on a proportionate basis to any category are more than the equity shares allotted to the bidders in that category, the remaining equity shares available for allotment are first adjusted against any other category, where the allotted shares are not sufficient for

64 64

proportionate allotment to the successful bidders in that category. The balance equity shares, if any, remaining after such adjustment is added to the category comprising bidders applying for minimum number of equity shares. In case of under subscription in any category the allotment is done in line with the ICDR Regulations. 5.28.3 The basis of allotment is approved by the Designated Stock Exchange and is signed by the Administrative Ministry (in case of offer for sale by GoI), CPSE, BRLMs and Registrar to the Issue. Post the same, the Board of Directors (or IPO/FPO Committee) of CPSE allots the shares (in case of fresh issue by CPSE) or notes the allotment (in case of offer for sale by GoI). Thereafter, the process of dispatch of refunds and demat credit of shares is initiated by the Registrar. 5.28.4 Announcement of basis of allotment

Advertisement giving details relating to oversubscription, basis of allotment, number, value and percentage of all applications including ASBA, number, value and percentage of successful allottees for all applications including ASBA, date of completion of dispatch of refund orders or instructions to Self Certified Syndicate Banks by the Registrar, date of dispatch of certificates and date of filing of listing application, etc. is released within 11 working days from the date of completion of the various activities in at least one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional language daily newspaper with wide circulation at the place where registered office of the CPSE is situated.

5.29 Transfer of funds:

5.29.1 The application money in the public offerings is received in the respective Escrow Accounts opened by the CPSE with the Bankers to the Issue. After the closure of the Issue, on finalization of the basis of allotment, the funds received in the Escrow Accounts are transferred to the Public Issue Account opened by each collection bank and the excess amount is transferred into the Refund Accounts held with the designated Refund Bankers on the joint instructions of the BRLMs and the Registrar. The funds from the ASBA applicants are then unblocked and transferred to the Public Issue Escrow Account. The funds from the Public Issue Account can be transferred to the GoI Account by the appointed Collection Bankers (and to the CPSE, if the public offering is a piggy-back transaction) only on or after listing/trading permission is received from the Stock Exchanges. 5.29.2 For the funds to be received by GoI, the DoD writes to Pay & Accounts Officer (DoD) indicating the tentative date of receipt of funds and confirming the details of the accounts in which the funds are to be credited. Further, the contact details of the Officer in DoD, the Pay & Accounts Officer and of the Bankers to the Issue are also mentioned in this letter which is also endorsed to all Bankers to the Issue. This ensures that contact details of all the Bankers to the Issue, the officials in DoD and the Officials in the Pay & Accounts Office are known to each other. On the day the funds are to be transferred, there should be close coordination among all the 3 parties so that funds are transferred quickly and smoothly into the bank account of Pay & Accounts Office, DoD, and then to Government account. Confirmation of transfer of funds and deposit in Government Account is obtained from the Pay & Accounts Office.

65 65

5.30 Filing of Application for Listing and Trading Permission:

5.30.1 A CPSE is required to file an application for listing and trading permission with the Stock Exchanges when It gets listed for the first time through an IPO or, It issues fresh equity in an FPO

5.30.2 In case of pure offer for sale by the GoI in a listed CPSE such listing and trading permission is not required since such permission already stands granted by the Stock Exchanges at the time of the listing of the CPSE through an IPO. For, instance if a listed CPSE comes out with a public offer of 10% fresh equity and 10% offer for sale by the GoI then it has to seek listing and trading permission for the fresh equity only and not for the shares offered for sale by the GoI.

5.31

Listing Agreement:

5.31.1 A listing agreement is an agreement that a CPSE enters into with Stock Exchange(s) for listing and trading its shares. The listing agreement is entered into immediately after the allotment of shares has been completed and the refunds have been dispatched by the Registrar to the Issue. Under the Listing Agreement, the CPSE undertakes to meet certain obligations vis--vis the Stock Exchange in return for the trading facility that it receives from the Exchange. The bulk of the obligations of the listed CPSEs are in the nature of periodic disclosures of information relating to their performance, shareholding pattern, happenings which are likely to materially affect the financial performance of the CPSE and its stock prices etc. that is of great significance to the existing and potential investors. In case the CPSE violates the provisions of the Listing Agreement, it can face disciplinary action, including suspension/delisting. 5.31.2 A Listing Agreement is signed by the CPSE when it comes out with an IPO and at the time of issue of fresh equity in an FPO. For instance, a CPSE, which comes out with an FPO consisting of only offer for sale by the GoI, does not have to sign the Listing Agreement with the Stock Exchanges.

5.32

Listing of shares:

The shares offered to the public in a public offer, whether it is an IPO or an FPO, get listed on the Stock Exchanges on or before the 12th working day from the date of closure of the issue period. In case the 12th working day falls on a Saturday then the shares have to be listed on the 11 th day. Hence, care should be taken at the time of finalising the issue dates that the 12th working day is not falling on a Saturday.

5.33 Typical timeline for a public offering

The timeline used in the IPO of CIL is given in following box.

66 66

TIMELINE FOR COAL INDIA IPO Date 12th April, 2010 Event Approval of FM for appointment of BRLMs and Legal Advisor pending CCEA approval for Disinvestment of 10 per cent equity in Coal India Constitutions of Inter Ministerial Group (IMG) for selection of BRLMs and Leagal Advisors Advertisement for appointment of BRLMs Issue of letters to Legal firms for submission of proposals for appointment as Legal Advisor Presentation by BRLMs Presentation by Legal Firms Approval of DoD proposal dated 18th May, 2010 for appointment of Intermediaries before the CCEA approval for the proposed IPO/FPO. Issuance of appointment letters to BRLMs and Legal Advisor Kick off meeting Approval of CCEA for disinvestment of 10 per cent paid up equity capital in Coal India Limited RFP issued to Advertising Agencies RFP issued to Registrars Presentation by the Advertising Agencies Issuance of appointment letter to the Registrar Issuance of appointment letter to the Advertising Agency Filing of the Draft Red Herring Prospectus with SEBI Issuance of letters for acceptance of offer to act as Escrow and Refund Bankers. Issuance of appointment letters to the Escrow and Refund Bankers Pre marketing Road Show, Domestic and International Filing of Red Herring Prospectus with SEBI Deal Road Show, Domestic and International

15th April, 2010 23rd April, 2010 23 April, 2010 5th and 6th May, 2010 11th May, 2010 26 May, 2010
th rd

2nd June, 2010 5th June, 2010 15 June, 2010 18th June, 2010 25 June, 2010 28 June, 2010 13th July, 2010 3 August, 2010 9 August, 2010 16 August, 2010 3rd September, 2010 3rd to 16th September, 2010 28 September, 2010 27 September to 8 October, 2010
th th th th th rd th th th

67

Date 10th and 11th October, 2010 12th October, 2010 11 to 19 October, 2010 18 October, 2010 21st October, 2010 24th and 25th October, 2010 25th October, 2010 28th October, 2010 4 November, 2010
th th th th

Event Meeting of Committee of Officers for recommendation of Price Band Meeting of EGoM for finalizing the Price Band Domestic Road Shows for retail investors The Issue opens The issue closes Meeting of the Committee of Officers for deciding the issue price and inter-se allocation Meeting of EGoM to finalise issue price and inter se allocation Finalisation of Basis of Allotment Listing of Shares on the Stock Exchanges

68

SECTION 6 INVESTOR RELATIONS

6.1 For a listed company an important focus area is relations with investors. Meetings with investors are not a onetime occurrence during the IPO/FPO process but are a continuous engagement. This interaction normally falls into two categories i.e. Investor Grievances and Investor Relations. A. Investors Grievance (i) Relating to the public issue: Following a public issue and post listing the Registrar to the issue, the BRLMs, SEBI, the two Stock Exchanges, the issuer company and the DoD may receive complaints from the individual investors relating to the public issue. These complaints generally fall into the following categories: Non-receipt of Refund Non- receipt of Shares o o o Shares not transferred Bids not uploaded Others which include non-allotment due to rejection of application under multiple application or technical reasons such as invalid/inactive demat amount, application below the offer price etc.

As per SEBI Rules and Regulations it is the duty of the Registrar to appoint a compliance officer (name and contact details given in the RHP) who will monitor and redress investors grievances. The ICDR Regulations also casts a responsibility on the BRLMs to monitor the redressal of investors grievances. The ICDR Regulations also directs the issuer company to appoint a compliance officer who will be responsible for monitoring and redressing investors grievances. (ii) Monitoring of Complaints: SEBI monitors the complaints received by it. However, the DoD monitors all the investor complaints, irrespective of which agency has received the complaint, on a weekly basis by getting a weekly report on the investor grievances status from the Registrar to the Issue. (iii) Ongoing Grievance Issues: Besides the immediate post listing grievances a listed company has to handle grievances received from time to time. In compliance with clause 47 of the Equity Listing Agreement of BSE/NSE entered into by a listed company, an

69 70 7

Investor Services cell is created wherein investor grievances are dealt with. The company is required to appoint a board committee under the chairmanship of a non-executive director to look into the redressal of shareholder and investors complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc. Normally the company secretary is the compliance officer for such grievances and his contact details are available on the companies website. B. Investor Relations: A company is reactive while dealing with grievances but it has to be pro-active in developing investor relations. Investor relation function is a strategic management function and is not prescribed under any rules or regulation. However, for a listed company the function is of utmost importance to: Clearly communicating the companys values, business plan, strategy, risks, growth prospects, etc. Differentiate the companys performance vis--vis competition. Differentiate the company as leaders in compliance, disclosures, transparency and corporate governance. Communicate to the investing community, what makes the company unique for the investor to invest their money.

In a nutshell investor relations serve as the bridge between the management and the investors and through which the investment community, can easily access information about the company. Investors and regulatory requirements today demand much greater transparency for promoting a sense of integrity and trustworthiness on the part of the company. Timely and accurate information is of utmost essence. Based on the feedback received from investors during the disinvestment process in FY 2009-10 and 2010-11 the DoD prepared an Investor Relations Guidelines for Listed Companies in March 2011. The guidelines contain the best practices from the public and private sector. These guidelines describe the principles and practices that the Central Public Sector Enterprises may apply in order to provide current and prospective investors with information necessary to make well reasoned investment decisions about its debt and equity securities. The Guidelines are at Annex XX.

69 70 7

ANNEXES - I TO XX

Annex - I DPE Guidelines on Issue of Bonus Shares by Public Sector Undertakings simplifying the Procedures. It has come to the notice of the Govt. that a number of Central Govt. Public Sector Undertakings are carrying substantial reserves in their balance sheets against a relatively small paid up capital base. The question of the need for these enterprises to capitalize a portion of their reserves by issuing Bonus Shares to the existing shareholders has been under consideration of the Govt. 2. The issue of Bonus Shares helps in bringing about at proper balance between paid up capital and accumulated reserves, elicit good public response to equity issues of the public enterprises and helps in improving the market image of the company. 3. Therefore, the Government has decided that the public enterprises, which are carrying substantial reserves in comparison to their paid up capital sold issue Bonus Shares to capitalize the reserves for which the following norms/conditions and criteria may be followed and fulfilled. 4. SEBI guidelines may be followed in deciding the correct proportion of reserves to be capitalized by issuing Bonus Shares. A copy of the bonus issue guidelines of SEBI is enclosed. 5. For the purpose of determining the quantum of bonus issue, PSUs should be guided by the following factors: (i) Likely increase in capital base from fresh public issues by PSUs in the next two to three years (which will dilute the GOIs equity). (ii) PSUs should prepare profit projections for the next three years on realistic basis as projected by them in their corporate plan and estimate their ability to service the enlarged equity after taking into account any fresh equity issue they expect to make for their expansion/diversification needs. 6. PSUs are at liberty to engage public/private sector merchant bankers to determine the quantum of bonus and provide advice on related matters. The mode of selection of merchant bankers and any fee payable for their services may be decided by PSU Boards. 7. While recommending proposals for capitalizing reserves, PSUs should also consider the need for increasing their authorised capital to accommodate the release of bonus shares and any subsequent public issues and recommend increase in the capital where necessary. 8. PSUs should ensure that after making the bonus there are enough reserves left which together with future plough-back of profit will be sufficiently large to inspire confidence and support from existing and potential shareholders. This is necessary to remain as an attractive scrip in the market. 9. Each administrative Ministry may direct the enterprises under their control that PSUs having reserves in excess of three times their paid-up capital should immediately consider the scope for issuing bonus shares to GOI (and pro-rata to other existing shareholders if partial disinvestment had occurred so far). PSUs having large reserves may be allowed to make any public issue only after examining the scope for capitalizing a portion of reserves. 10. Ministries/Departments should expeditiously examine and approve bonus issue proposals if the quantum of bonus and profit projections are found to be properly assessed and the PSUs certify that the proposals are in conformity with the SEBI guidelines.

71 71

11. Bonus issue proposals need not be referred to Ministry of Finance (MoF) for approval unless there are special reasons to do so. Likewise proposals involving increase in authorised capital need not be referred to MoF. It has been clarified earlier that increase in authorised capital does not require Cabinet approval. 12. Ministries should keep the Department of Public Enterprises informed about bonus issue proposals and authorised capital increases approved by them. 13. The above conditions shall cut down the procedural delays in obtaining the approval for bonus shares besides enabling the PSUs to finalize public issue plans quickly and tap the capital market when conditions are favourable. 14. The Financial Advisers in the administrative Ministries shall keep a control over the fulfillment of various conditions/criteria as mentioned above before agreeing to the bonus issues. (DPE O.M. No. DPE/12(6)/95-Fin. dated 10th November, 1995)

72 72

Enclosure

Copy of Securities and Exchange Board of India (SEBI)s RMB (DIP Series) Circular No. 2(94-95) dated 15th April, 1994 Guidelines for Disclosure and Investor Protection. In tune with the process of liberalization and reforms in the primary market, it has been decided to modify the extant guidelines for issue of bonus shares contained in Section M of the guidelines for Disclosure and Investor Protection issued by SEBI on June 11, 1992. The revised guidelines have done away with certain requirements relating to issue of bonus, namely profitability Test, Residual Reserves Test etc. A copy of the Press Release dated April 13, 1994 issued by SEBI in this connection is enclosed for your information.

73 73

Enclosure Copy of Securities and Exchange Board of India (SEBI)s guidelines dated 13th April, 1994 for Disclosure and Investor ProtectionBonus Issue Guidelines. In keeping with current pace of liberalization and reforms in the Primary Market, the Board of SEBI has decided to modify the extant guidelines for bonus shares, forming Section M of the Guidelines for Disclosure and Investor Protection issued by SEBI on June 11, 1992. SEBI believes that the Board of Directors of the companies wishing to make bonus issues will take into due consideration the relevant financial factors while deciding on bonus issues and observe the following guidelines. Section M (i) These guidelines are applicable to existing listed companies who shall forward a certificate duly signed by the issuer and duly countersigned by its statutory auditor or by a company secretary in practice to the effect that the terms and conditions for issue of bonus shares as laid down in these guidelines, have been complied with. Issue of bonus shares after any public/right issue is subject to the condition that no bonus issue shall be made which will dilute the value or rights of the holders of debentures, convertible fully or partly. In other words, no company shall, pending conversion of FCDs/PCDs, issue any shares by way of bonus unless similar benefit is extended to the holders of such FDCs/PCDs, through reservation of shares in proportion to such convertible part of FCDs or PCDs. The shares so reserved may be issued at the time of conversion(s) of such debentures on the same terms on which the bonus issues were made. (iii) (iv) (v) (vi) The bonus issue is made out of free reserves built out of the genuine profits or share premium collected in cash only. Reserves created by revaluation of fixed assets are not capitalized. The declaration of bonus issue, in lieu of dividend, is not made. The bonus issue is not made unless the partly-paid shares, if any existing, are made fully paid-up.

(ii)

(vii) The Company 1) 2) has not defaulted in payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on redemption thereof; and has sufficient reason to believe that it has not defaulted in respect of the payment of statutory dues of the employees such as contribution to provident fund, gratuity bonus etc.

(viii) A company, which announces bonus issue after the approval of the Board of Directors must implement the proposals within a period of six months from the date of such approval and shall not have the option of changing the decision. (ix) There should be a provision in the Articles of Association of the company for capitalization of reserves, etc. and if not, the company shall pass a Resolution at its General Body Meeting making provisions in the Articles of Association for capitalization. Consequent to the issue of bonus shares if the subscribed and paid-up capital exceed the authorised capital, a Resolution shall be passed by company at its General Body Meeting for increasing the authorised capital.

(x)

74 74

Annex- II Government of India Ministry of Finance Department of Disinvestment ENGAGEMENT OF BOOK RUNNING LEAD MANAGERS FOR DISINVESTMENT IN (CPSE Name) THROUGH INITIAL PUBLIC OFFER/FURTHER PUBLIC OFFER (as the case may be) IN THE DOMESTIC MARKET REQUEST FOR PROPOSALS 1. Introduction

1.1 State History of the CPSE in brief- its status, since when in existence, previous names, if any, major business, products & their usages, workforce etc. 1.2 State briefly the capital structure of the CPSE & its ownership.

1.3 The Government has decided to disinvest (%) paid-up equity capital of the Company and that before the proposed disinvestment the Company to issue bonus shares in the ratio of and also split the shares in the ratio of (as the case may be). The company has initiated action in respect of splitting and issue of bonus shares and the process is likely to be completed by end (if applicable). 2. Proposal

2.1 The Government has decided to disinvest(%) of paid up equity share capital of (CPSE) comprising of shares of face value of - each pre-bonus and split, out of its shareholding of %, through a Initial Public Offer/ Further Public Offer(as the case may be) in the domestic market. {The Offering would be a Fast Track Issue, if eligible under Regulation 10 of ICDR}(as the case may be). A part of the public offering will be reserved for employees of the company. The eligible employees and retail investors will be offered shares at a discount of on the Issue Price. 2.2 Proposals under the guidelines at para 5 hereunder are invited from reputed merchant bankers registered as such with SEBI having valid certificate; either singly or as a consortium; with experience and expertise in public offerings in the capital market; to act as Book Running Lead Managers (BRLMs) and to assist & advise the Government in the process. The Certificate of Registration with SEBI is required to be valid till the completion of all activities relating to Initial Public Offer/Further Public Offer. 3. Responsibilities of the Book Running-Lead Managers (BRLMs)

3.1 The Book Running Lead Managers will be required, inter alia, to undertake tasks related to all aspects of the Initial Public offer/Further Public Offer, including but not restricted to, as mentioned below: (i) (ii) Advise the Government of India on the timing and the modalities of the Initial Public offer/Further Public Offer. Structure the Initial Public offer/Further Public Offer in conformity with the prevailing framework and Regulations/ Guidelines of SEBI, the Stock Exchanges and Securities Contract (Regulations) Act, 1956; Securities Contracts (Regulation) Rules, 1957; and Companies Act, 1956, etc.
75 75

(iii) (iv) (v)

Undertake due diligence activities and prepare the DRHP/RHP/Prospectus and complete all stipulated requirements & formalities of regulatory/statutory authorities. Undertake filing of the DRHP/RHP/Prospectus with SEBI/ Stock Exchanges/ ROC. Advise on the regulatory norms and assist in securing approval and exemptions, wherever necessary, from regulatory agencies such as SEBI, Stock Exchanges, RBI, etc. Ensure best return to the Government. Conduct pre-market survey, road shows to generate interest amongst prospective investors. Arrange meetings with the key investors, facilitate communication about the growth potential of the Company and articulate the key marketing themes & positioning of the Company.

(vi) (vii)

(viii) Undertake market research, assist in the pricing of the Issue, allocation of shares and after provide sale support, etc. (ix) (x) (xi) (xii) Perform all other responsibilities connected with the Initial Public Offer/Further Public Offer. Underwrite the Initial Public Offer/Further Public Offer. Assist in selection of intermediaries to be appointed by Government and coordinate the work of all intermediaries. Prepare and approve the statutory advertisements for publication. The cost of the preparation will be borne by the BRLMs and the cost of publication will be borne by the Government.

(xiii) Organize road shows both domestic and international. All expenses in this regard will be borne by the BRLMs except the tour expenses of Government and (CPSE) officials. (xiv) Undertake the task of printing and distribution of stationery required for the Initial Public Offer/Further Public Offer as illustrated in Annexure-I. The BRLMs will ensure that the stationery is printed in adequate quantity and delivered to the Centres /Parties well in advance. The appointed BRLMs will have to print a minimum of crore (depends upon the size of the issue) Application Forms for all the categories taken together. Any deficiency noticed in this regard shall be viewed seriously by the Government. All expensed in this respect will be borne by the BRLMs (xv) The appointed BRLMs will also make the following payments: i. ii. iii. Filing fee to SEBI; NSE/BSE charges for use of software for the book building; Payments required to be made to Depository or the Depository Participants for transfer of shares to the beneficiaries account.

(xvi) Shall enter into the requisite agreements i.e Offer Agreement, Underwriting Agreement, Syndicate Agreement, Agreement with Registrar and Escrow Agreement based on the model agreements as available on the website www.divest.nic.in of the Department of Disinvestment.
76 76

(xvii) Ensure completion of all post issue related activities as laid down in the SEBI Regulations. (xviii) Rendering such other assistance as may be required in connection with the IPO/ FPO. (xix) The BRLMs will also undertake all activities required for the IPO related to State Govts. of who are piggy backing with the GOI.(if applicable) Note (a) The appointment of Bankers to the Issue, Registrar to the Issue, Legal Advisers Domestic and International, Auditors and Advertising Agency/Public Relation Agency will be made by the Government which will also bear the expenditure involved on account of these intermediaries. The expenses related to the tour programme of only Government and (CPSE) officials will be borne by the Government In case the Government decides to defer the Public Offering after the Application Forms have been printed, the Government would reimburse the actual cost of printing of Application Forms only and not the distribution cost. Further, in the event the filing fee is required to be paid again due to deferment of the offering, then Government will reimburse the initial filing fee paid by the BRLMs.

(b) (c)

3.2 The Government will select and appoint upto ( No.)(depends upon the size of the issue) Merchant Bankers with requisite experience in Public Offerings, who together will form a team and would be called Book Running Lead Managers. The BRLMs, in consultation with the Government, will form a syndicate as required under the SEBI Guidelines/Regulations. The Government will have the option of appointing additional syndicate member(s), if considered appropriate. 4. Eligibility

4.1 Bidders should have handled at least one domestic equity issue (Initial Public Offering or Further Public Offering) of the size of crore or more during the period from to (three years). For the purpose the completed (listed/ traded) Issues on will be taken into consideration. 4.2 The Government has prescribed guidelines for qualifications for Advisers for disinvestment process, enclosed at Annexure-III. The interested Bidders fulfilling eligibility criteria mentioned in paragraph 4.1 above are advised to go through the guidelines and if eligible, furnish the following certificate as a part of the Proposal: We certify that there has been no conviction by a Court of Law or indictment/adverse order by a regulatory authority for a grave offence against us or any of our sister concern(s). It is further certified that there is no investigation pending against us or our sister concern(s) or the CEO, Directors/Managers/ Employees of our concern or of our sister concern(s). It is certified that no conflict of interest as defined in O.M. No. 5/3/2011-Policy dated 8 th June, 2011 exists as on date and if in future such a conflict of interest arises, we will intimate the same to the Government of India/ Company.

77 77

Further, we certify that as on the date we are not advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select the Adviser, except for the list of the mandates, duly signed by us, in the same line of business and for the same type of transaction, as enclosed. Further, we certify and undertake that for a period commencing from the date of our appointment (if so appointed) as the Adviser till the completion of the transaction, we shall keep the Government/ CPSE informed of any mandate/contracts entered into, to advise or act on behalf of or associate ourselves with, any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company being disinvested, in respect of any transaction of same nature as the transaction in respect of which we have been appointed as the Adviser. (The certificate should be signed by the authorised signatory of the Bidder.) Note : The content of the certificate must not be changed. Clarification, if any, may be provided separately. 5. 5.1 Submission of Proposal: Proposals have to be submitted as per the following directions: (i) Envelope 1 (Sealed) containing the following: (a) Non-refundable fee of `1,00,000 (Rupees One lac only) by way of a demand draft drawn in favor of Pay and Accounts Officer, Ministry of Finance, Department of Disinvestment, New Delhi payable at Delhi (Enclosure-1); Certificate, duly signed by the authorised signatory of the bidder as per para 4.2 (Enclosure-2); Certificate in format at Annexure-IV (Enclosure 3); Authority letter authorizing the person of the bidder to sign the proposal and other documents (Enclosure 4); Copy of the valid certificate of merchant banker issued by SEBI (Enclosure 5); and Confirmation letter that you are agreeable to sign the agreements on the basis of model agreements in the format as placed on the website www.divest.nic.in of the Department of Disinvestment (Enclosure 6).

(b) (c) (d) (e) (f)

(ii)

Envelope 2 (Sealed) containing the technical bid as per format in para 5.4, to be opened in the presence of the bidders on at hrs.(date & time to be specified) in the Committee Room No. , Department of Disinvestment, Block 14, CGO Complex, New Delhi Envelope 3 (Sealed) containing the Financial Bid, to be opened only after the presentations and of only those parties who qualify in the technical bid. The bids will be opened in the presence of the bidders (who are technically qualified based on presentations) immediately after the presentations. Bids with conditionality will be summarily rejected.

(iii)

78 78

5.2 The proposal (all three envelopes) can be submitted by 1730 hours on (date) to Shri , Deputy Secretary/Under Secretary, Department of Disinvestment, Room No. 5th Floor, Block No. 14, CGO Complex, New Delhi-110003 in hard copies in original, duly signed by the authorised officer of the merchant banker. No proposal will be entertained after the appointed time and date. The Government will not be responsible for any postal/courier delay. The proposals received after the appointed time and date will be summarily rejected. 5.3 The Government reserves the sole right to accept or reject any or all Proposals thus received without assigning any reasons thereof. 5.4 Proposal Format:

The Proposals are to be submitted in detail as indicated in the following Sections. The weightage for evaluation of the Merchant bankers in respect of each criterion has been indicated against each Section. Section (A): Experience and Capabilities in handling similar transactions as Advisers/Global Coordinators (Weightage for evaluation 15/100) (from (period to be specified)) (i) Profile of the organization with full particulars of the constitution, ownership and business activities of the prospective Book Running Lead Manager (Bidder). In case of consortium bids, the particulars of the coordinating firm having the principal responsibility for the mandate (Consortium Leader) as well as those of other partners may be furnished along with letters of acceptance from each partner. The responsibility of the consortium bidders shall be joint and several. Note : 1. Consortium will be treated as one party and in case of selection, only consortium leaders name will appear in the documents like DRHP/RHP/ Prospectus. The partners of one consortium are precluded from participating in the bid, as a partner to another consortium.

2. (ii) (iii)

Unabridged Annual Reports or audited financial accounts for the last three years of the firm submitting the Proposal and of each consortium partner, if applicable. Details of all pending litigation and contingent liabilities, if any should be indicated. Details of past conviction and pending litigation against sponsors/partners, Directors etc., if any, and areas of possible conflicts of interest may also be indicated. Note : In case of consortia, similar details of each proposed partner will be required.

(iv)

Details of Domestic and International Equity Offerings managed as Book Running Lead Managers, in respect of issue size of ` crore or more, to be furnished in the format given in Annexure-II. Equity sales and distribution capacity with demonstrable capability of selling Indian Issues in particular, Asian equity and global equity; along with distribution network may be furnished.
79 79

(v)

Section (B): Past Performance with DoD (In offer for sale or fresh issue in conjunction with offer for sale with effect from 1.4.2009) (Weightage for evaluation 10/100) (i) The merchant banker would be evaluated on the number of applications and the issue amount procured by them for various issues in which DoD also divested Government of India shareholding. The quality of deal team and its ability to handle the issues that had arisen during the transactions. Understanding of the regulatory framework by the deal team and the time frame and quality of response to the queries of the Department/Company.

(ii) (iii) Section (C):

Sector Expertise, Experience and Understanding of CPSE. - (Weightage for evaluation 20/100) (i) (ii) (iii) (iv) (v) Section (D): Deal Team Qualification & Manpower Commitment to the Deal - (Weightage for evaluation 10/100) Details of core team that will be handling the proposed issue, their status in the organization, their background, qualification, experience and present addresses, telephone numbers office, residence, mobile, e-mail etc. hands-on experience should be furnished. Separately, similar details in respect of the supervisory team may be indicated. Details of other professionals who would provide back-up support may also be indicated separately. An undertaking is also to be given that if during the process, any of the core team members is not available due to resignation etc. another person of the same qualification and experience would be made available with concurrence of the Government. Section (E): Marketing strategy & Post Issue Market Support - (Weightage for evaluation 15/100) (i) (ii) (iii) Optimal syndicate structure suggested to maximize quality and quantity of demand. Proposal on syndicate incentivisation. Strategy for pre-marketing.
80 80

Indicate work done in the areas of sector, including CPSE - like studies or research undertaken. Exhibit strength/expertise in the areas of sector, including (CPSE), if any. The Public Offerings handled during the period from - to in the area of sector, including (CPSE). Research Reports done on the companies operating in areas sector, including(CPSE) SWOT analysis of the (CPSE)

(iv) (v) (vi) (vii)

Proposed Road Show venues and reasons for suggesting the same and the level of BRLM representatives who will travel on the domestic and international road shows. Demand analysis and aspects influencing demand. Strategy for marketing shares and identification of target investor groups. Commitment(s) which may act either as a constraint, or as a conflicting interest, to your involvement in the proposed Initial Public offer/Further Public Offer.

(viii) Strength in lending after market support, with specific reference to Indian issues managed in the past. (ix) (x) (xi) Identification of key selling points for marketing the Offering. Details of the valuation methodology to be followed in determining the price of the Initial Public offer/Further Public Offer. Underwriting capabilities including details of capital base of the Investment Bank available to support such underwriting, record of past underwriting commitments and experience. Details of the underwriting commitments (including hard underwriting) which could not be met. Indicate realistic time schedule for launching the proposed Initial Public Offer/Further Public Offer with breakup of all activities to be undertaken by various agencies involved in the process.

(xii)

Section (F): Local presence and commitment to India and strength in drawing Retail Investor participation (weightage for evaluation 15/100) A brief note evidencing the Bidders presence in India in both qualitative and quantifiable terms with specific reference to research teams and details of available infrastructure may be furnished. The details shall include manpower deployed in the investment banking (equity segment), offices in India and other relevant information. The distribution network strength to elicit maximum retail participation should be indicated. Section (G): Global Presence and Distribution Capabilities - (Weightage for evaluation 10/100) (i) (ii) (iii) Section (H): Research Capability - (Weightage for evaluation 5/100) Research strength in the country, sector, region and world, based on rating as established by independent global surveys. Details should be given relating to research capabilities, experience and background of the research team.
81 81

Indicate global network and distribution strength. The funds mobilized from international investors for Equity Public Offerings in India during the period from to . The understanding and relationship with international institutional investors.

NOTE ( refer to Section B): The Merchant bankers who have not worked on any assignment in the past with the Department of Disinvestment would be evaluated on all parameters except Section B above and would be awarded marks out of 90 instead of 100 and then proportionately increased to a scale of 100 so that they are neither at an advantage nor at a disadvantage. 5.5 The complete information sought above with any additional information considered necessary by the Bidder as a part of the Proposal, should be sent (maximum of 10 pages in font size 12) to the officer mentioned in para 5.2. 6. Payment of Selling Commission

6.1 The Government will bear the expenses relating to the payment of brokerage to the brokers etc. to elicit wider participation of retail investors. The brokerage will be 0.35% on allotment to Retail investors; 0.15% on allotment to non-institutional investors and 0.25% on allotment to eligible employees out of quota reserved for them. In the first instance the brokerage will be paid by the appointed BRLMs and on successful completion of the transaction the brokerage would be reimbursed on production of documentary proof of actual disbursement within the stipulated period of one month from the date of finalization of the basis of allotment. 7. Procedure for Selection of the Book Running-Lead Managers (BRLMs)

7.1 Qualified interested Bidders would be required to make a presentation of their credentials, in the format prescribed in paragraph 5.4 above, for the proposed transaction, before an InterMinisterial Group (IMG) at New Delhi in the Committee Room of Department of Disinvestment, Room No.515, Block No.14, CGO Complex, New Delhi-110003. The presentations will be held on at (Day & Date)). The time of the presentation will be posted on the website of DoD www.divest.nic.in on . Only the Team Leader of the Core Team shall make the presentation. 7.2 The IMG would evaluate the Bidders on the criteria mentioned in paragraph 5.4 above based on their presentation and Proposals received and shortlist them for the purpose of opening of their Financial Bids. Only the parties scoring predetermined marks/score out of 100, which will be announced before presentation, will be technically short listed. 7.3 After the short listing of Bidders based on their presentations, IMG would open the Financial Bids of only short listed Bidders. The short listed bidders, if they so desire, may remain present at the time of opening of the financial bids. The marks scored by the short listed bidders will be announced before opening of the financial bids. The date and time of opening of the financial bids would be announced at the time of the presentations. 7.4 The marks scored by the short listed bidders in the technical evaluation will then be given a weightage of 70. Similarly the financial bids of the short listed bidders will be given a weightage of 30. The combined score of technical and financial bids will determine the H1, H2, H3 and so on. 7.5 The party scoring the highest points/marks (H1) based on the above principles would be appointed for the transaction. The other technically qualified BRLMs ranked as H2, H3 and so on in that order would be asked to accept the fees quoted by H1 and the parties who so accept the fees quoted by H1 will also be appointed till the required number of BRLMs are filled up. Government may consider selecting lesser number of Bidders for appointment as BRLMs.
82 82

7.6 The fee quoted by H1 would be shared equally by all the appointed BRLMs. However, if any BRLM selected on this basis has quoted a lower fee than that quoted by H1 that BRLM will get a fee equal to the fee quoted by him divided by the number of BRLMs appointed for the transaction. However, the expenses to be incurred by the appointed BRLMs on items as mentioned in para 3.1 above would be shared equally by all the BRLMs. 7.7 8. The selected Bidders will work as a team and be called Book Running Lead Managers. Requirements for Financial Bids

8.1 The Bidder is required to quote a fee in INR (in a sealed envelope) for the transaction. The fee quoted by the Bidder should be inclusive of all the applicable taxes, cess, duties etc. The fee quoted should be minimum `1.00 (Rupee one) or in multiples of `1.00 (Rupee one), failing which the financial bid would be rejected. The different taxes should be indicated separately while raising the bills for payment of fee. All bills are to be raised in INR and will be payable in INR only after successful and satisfactory closure of the transaction. Note: All merchant bankers are required to furnish a break-up of expenses on items like printing of stationery; advertisement agency/public relation agency for preparation of statutory advertisements and road shows; fee payable to SEBI as filling fee; payment to NSE and BSE for use of software for the book building and payment required to be made to depositories or depository participants for transfer of shares; any additional selling commission/brokerage that the Merchant bankers may pay in addition to selling commission/brokerage that Government will pay. These details are to be provided along with the financial bid on a separate sheet being the annexure to the financial bid.

8.2 The fee quoted should be unconditional and inclusive of the expenditure to be incurred on the intermediaries and the work mentioned in paragraph 3.1 above. 8.3 The Bidders may quote a drop dead fee, if any, payable by Government in case of calling off of the transaction by the Government after initiation of the process by the Bidder. The drop dead fee applicable at various stages of the transaction should be indicated. The lowest drop dead fee quoted by any of the finally selected Bidders would be treated as drop dead fee payable by Government and be shared equally by all the Bidders. Drop dead fee will not be a criterion in determining the H1 Bidder. 8.4 The Bidders will be liable to pay taxes applicable as per law.

9. For any further clarification, contact Shri Deputy Secretary/Under Secretary, Department of Disinvestment, Ministry of Finance, Room No. , 5th Floor, Block No.14, CGO Complex, New Delhi - 110 003, Tel. 011 , Fax 011, e-mail:

83 83

Annexure - I INDICATIVE LIST OF STATIONERY FOR THE FPO or IPO (as the case may be) IN RESPECT OF (CPSE name)

S.No.
1. 2. 3. 4.

Description
DRAFT RED HERRING PROSPECTUS RED HERRING PROSPECTUS PROSPECTUS BID CUM APPLICATION FORM with Memorandum in Book form (RESIDENT/NRI/EMPLOYEES) (ORDINARY & SPECIAL)

5. 6.

POSTERS/BANNERS CAN, REFUND STATIONERY ETC.

84 84

Annexure - II DETAILS OF DOMESTIC/INTERNATIONAL EQUITY OFFERINGS

Parameters

Years as applicable Mandate Value (Rs. Cr)

Mandate

Value (Rs. Cr)

Mandate

Value (Rs. Cr)

DOMESTIC EQUITY PUBLIC OFFERINGS TOTAL INTERNATIONAL EQUITY PUBLIC OFFERINGS TOTAL PUBLIC OFFERINGS PULLED OUT/ WITHDRAW N PRE OR POST ROADSHOW TOTAL

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

Note: 1. Please indicate whether you were engaged by Government of India for any Equity Public Offering,
other than those mentioned above and if so, furnish details.

85 85

Annexure - III No. 5/3/2011-Policy Government of India Ministry of Finance Department of Disinvestment Block 14, CGO Complex, Lodhi Road, New Delhi- 110003 Dated the 8th June, 2011 OFFICE MEMORANDUM Subject: Guidelines for qualification of Advisers for disinvestment process. In order to inspire public confidence in the selection of Advisers through competitive bidding, the Government had framed comprehensive and transparent guidelines defining the criteria for their selection. In addition to using a set of criteria like sector experience, knowledge, commitment etc., additional criteria for qualification/disqualification of the parties to act as Advisers to the Government for disinvestment transactions were prescribed by the Department of Disinvestment vide its O.M. No. 5/3/2011 Policy dated 2.5.2011. 2. In supersession of the above-mentioned O.M. of this Department, the revised criteria for qualification/disqualification of the parties to act as Advisers for disinvestment transactions would be as under: (a) Any conviction by a Court of Law or indictment/adverse order by a regulatory authority for a grave offence against the Advising concern or its sister concern would constitute a disqualification. Grave offence would be defined to be of such a nature that it outrages the moral sense of the community. The decision in regard to the nature of offence would be taken on a case-to-case basis after considering the facts of the case and relevant legal principles by the Government. Similarly, the decision in regard to the relationship between the sister concerns would be taken based on relevant facts and after examining whether the two concerns are substantially controlled by the same person/persons. In case such a disqualification takes place, after the entity has already been appointed asAdviser, the party would be under an obligation to withdraw voluntarily from the disinvestment process, failing which the Government would have the liberty to terminate the appointment/contract. Disqualification shall continue for a period that Government deems appropriate. 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. The disqualification criteria would come into effect immediately and would apply to all the Advisers already appointed by the Government for various disinvestment transactions, which have not yet been completed. Before disqualifying a concern, a Show Cause Notice why it should not be disqualified would be issued to it and it would be given an opportunity to explain its position. Henceforth, these criteria will be prescribed in the advertisements seeking Expressions of Interest (EOI) from the interested parties to act asAdviser. Further, the interested parties shall be required

(b)

(c) (d)

(e)

(f) (g)

86 86

to provide with their EOI an undertaking to the effect that no investigation by a regulatory authority is pending against them. In case any investigation is pending against the concern or its sister concern or against the CEO or any of its Directors/Managers/Employees, full details of such investigation including the name of the investigating agency, the charge/offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government. For other criteria also, similar undertaking will be obtained along with EOI. They would also have to give an undertaking that if they are disqualified as per the prescribed criteria, at any time before the transaction is completed, they would be required to inform the Government of the same and voluntarily withdraw from the assignment. (h) The interested parties would also be required to submit a list of or disclose any mandated transactions which are in the same line of business as that of the company (being disinvested) in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser and confirm in writing that there exists no conflict of interest as on the date of submitting their proposal for appointment/ their appointment as Advisers in handling of the transaction and that, in future, if such a conflict of interest arises, the Adviser would immediately intimate the Government/Company (being disinvested) of the same. The Government/Company (being disinvested) shall at its sole discretion after providing due and reasonable opportunity decide whether such future conflict of interest shall materially adversely affect the interest of the Government and the Company (being disinvested) in relation to the transaction and shall be entitled to grant the consent to the Adviser to continue as Adviser or terminate the appointment of the Adviser. For disinvestment purposes, conflict of interest is defined to include engaging in any activity or business by the Adviser in association with any third Party, during the engagement, which would or may be reasonably expected to, directly or indirectly, materially adversely affect the interest of Government of India and/ or the Company (being disinvested) in relation to the transaction, and in respect of which the Adviser has or may obtain any proprietary or confidential information during the engagement, that, if known to any other client of the Adviser, could be used in any manner by such client to the material disadvantage of Government of India and/ or the Company (being disinvested) in the transaction. (i) The conflict of interest would be deemed to have arisen if any Adviser in respect of the transaction is appointed by a third party for advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser. Further, the decision of the Government/Company (being divested) as to whether such other person or entity is engaged in the same line of business as that of the Company being disinvested, shall be final and binding on the Adviser. The conflict of interest would also be deemed to have arisen if any Adviser firm/ concern has any professional or commercial relationship with any bidding firm/ concern for the same disinvestment transaction during the pendency of such transaction. In this context, both Adviser firm and bidding firm would mean the distinct and separate legal entities and would not include their sister concern, group concern or affiliates etc. The professional or commercial relationship is defined to include acting on behalf of the bidder or undertaking any assignment for the bidder of any nature, whether or not directly related to disinvestment transaction. (This clause is applicable in strategic sale only).

(j)

87 87

(k)

The interested parties would also be required to give information and disclose that as on the date of submitting their proposal for appointment/ their appointment as Advisers in respect of the transaction, they are advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser. - In the event the Adviser fails to disclose that it is advising or acting on behalf of or associated with any other person or entity which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/ or the Company (being disinvested) is proposing to select or have appointed the Adviser, at the time of giving the afore-mentioned undertaking, the Government/Company (being disinvested) shall be entitled to terminate their appointment. Before terminating the appointment, a show cause notice stating why its appointment should not be terminated would be issued giving it an opportunity to explain its position.

(l)

For a period commencing from the date of appointment of the Adviser till the completion of the transaction, the Adviser shall keep the Company/ Government informed of any mandate/ contract entered into to advise or act on behalf of or associate itself with, any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company being disinvested, in respect of any transaction of same nature as the transaction in respect of which the Adviser has been appointed as the Adviser. Provided that, if six months or more have elapsed from the date of appointment as Adviser to the government disinvestment transaction, the Adviser would normally be permitted by the Government/Company (being disinvested), save for exigent circumstances. The decision of the Government/Company (being disinvested) in this regard shall be final and binding on the Adviser. Further, the decision of the Government/Company (being divested) as to whether such other person or entity is engaged in the same line of business as that of the Company being disinvested, shall be final and binding on the Adviser. For the purpose of clauses (k) and (l) above, the nature of transaction may include, but not be limited to, a capital market transaction which in turn could include, but not be limited to, a domestic offering of shares or any other security, whether by way of initial public offer or further public offer or qualified institutions placement or issue of IDRs or by any other manner, as well as the international offering of securities, whether by way of issue of ADRs, GDRs or FCCBs or by any other manner. In the event the Adviser fails to obtain the prior written consent of the Government/Company (being disinvested) as aforesaid, the Government/ Company (being disinvested) shall be entitled to terminate the appointment of the Adviser. Before terminating the appointment, a show cause notice stating why its appointment should not be terminated would be issued to the Adviser giving it an opportunity to explain its position. Sd/(V.P. Gupta) Deputy Secretary to the Government of India Tel: 2436 8036

(m)

(n)

To, All Ministries/ Departments of the Government of India

88 88

AnnexureIV

FORMAT OF UNCONDITIONAL BID ON THE LETTERHEAD OF THE BIDDER

This is to certify that the fee quoted by us for engagement as Book Running Lead Managers for disinvestment in (CPSE) through Initial Public Offer/Further Public Offe r is in accordance with the terms and conditions laid down in the Request for Proposals displayed on the website of the DoD and is unconditional.

Seal with signatures of authorized signatory of the merchant banker

89 89

ANNEX - III SELECTION OF MERCHANT BANKS FOR APPOINTMENT AS BOOK RUNNING LEAD MANAGERS(BRLMS) FOR THE TRANSACTION IN (CPSE) Indicative Technical Bid Evaluation Sheet subject to revision on presentation/ presentation material S.No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Criteria/Information Single or Consortium Offer in time or not EM deposited or not Conviction if any Conflict of Interest Unconditional bid or not Authorization submitted or not Submission of Registration Certificate with SEBI Annual report for last 3 years Confirmation certificate to sign agreements List of pending litigations, if any. Underwriting Capability Experience of handling issue of Rs.200 or more Profile Experience Sector Experience Past performance with The Department of Disinvestment Distribution capability SWOY analysis of MOIL Deal team details & manpower commitment Commitment to replace team member Marketing strategy Post issue commitments Research Capability Local presence Global presence Information on printing of forms Information on commitment to time Line Information on intermediaries Concurrent mandates Additional information, if any

All Technical Bids as per Envelope 2 were opened by the Committee. ( ) Director ( ) Deputy Secretary ( ) Under Secretary

91 91

9. SI. No. Name of Merchant Bank Demand Draft Certificate, duly Signed by the authorised signatory Certificate in Format at Annexure-IV Authority letter

8.

7.

5. 6.

4.

3.

2.

1.

10.

( ) Director

SELECTION OF BRLMS FOR DISINVESTMENT IN (CPSE) TECHNICAL BID CHECKLIST

All Technical Bids as per Envelope 1 were opened by the Committee and signed.

92 92

( ) Deputy Secretary ( ) Under Secretary

Certificate of Category IMerchant Banker SEBI Confirmation letter that the bidder is agreeable to sign the agreements in the format prescribed by The Department of Disinvestment. Representativepresent

ANNEX - IV Illustration for using the CQCCBS towards appointment of BRLMs As an illustration, the following procedure is followed towards arriving at the combined score of technical and financial bids for selection of BRLMs following the CQCCBS. It may be decided to have minimum qualifying marks for technical qualifications as 70 and the weightage of the technical bids and financial bids to be kept as 70:30. In response to the RFP, 5 proposals, A, B, C, D and E are received. The committee awards them 75, 65, 80, 90 and 60 marks towards technical evaluation respectively. Since the minimum qualifying mark was 70, 3 proposals that of A, C and D are found to be technically suitable and their financial proposals are opened after notifying the date and time of bid opening to the successful participants. The financial proposals are examined and the financial bids (in %) are found to be as under: Proposal A C D Financial Bid (%) 1 2 1.5

Using the formula: (least financial bid/ financial bid) x 100, the committee gives the three bidders the following scores for their respective financial proposals: A: 1 / 1 x 100 C: 1 / 2 x 100 D: 1 / 1.5 x 100 = = = 100 50 66.67

In the combined evaluation, thereafter, the committee calculates the combined technical and financial score based on their respective weights as under: Proposal A: 75 x 0.70 + 100 x 0.30 = Proposal C: 80 x 0.70 + 50 x 0.30 = Proposal D: 90 x 0.70 + 66.67 x 0.30 = 82.50 71.00 83.00

The three proposals in the combined technical and financial evaluation are ranked as under: Proposal A: 82.50 Proposal B: 71.00 Proposal C: 83.00 : : : H2 H3 H1

93 93

Technical Ranking Merchant Banker Score in Technical Evaluation Weightage to Technical Evaluation Score after applying weightage of 70 Financial Ranking
95

COMBINED SCORE OF SHORTLISTED MERCHANT BANKERS FOR DISINVESTMENT IN CPSE

Financial Bid Weightage to Financial Bid Score of Financial Bid Score out of 30 Final Score Final Position

ANNEX - V

ANNEX - VI F.No. Government of India Ministry of Finance Department of Disinvestment Block No.14, CGO Complex, Lodhi Road, New Delhi 11 Dated the To, As per list Sub : Appointment of BRLMs for the disinvestment of % paid up equity capital of (CPSE) through Initial Public Offfering/Further Public Offering.

Sir, I am directed to refer to the Advertisement issued by the Department of Disinvestment in The Business Standard on (date), detailed Request for Proposal placed on the website of this Department on (Date), the Proposal received from your organization against the Request for Proposal, the presentations before the Inter Ministerial Group made by your organization on (Date) and the financial bids submitted after the presentations. 2. I am further directed to say that you have been appointed as Book Running Lead Managers (collectively referred to as BRLMs) for the disinvestment of % paid up equity capital of (CPSE) on the terms and conditions detailed herein:

I.

Scope of Services The scope of services of BRLMs shall be as indicated in the RFP and would include inter-alia: i. Advise the Government of India on the timing and the modalities of the Initial Public Offering/ Further Public Offering(As the case may be). ii. Structuring of the offering to the public in conformity with the prevailing framework of SEBI ICDR Regulations, 2009 and guidelines of the Stock Exchanges (SEs). iii. Undertaking due diligence activities and preparing the DRHP/RHP/Prospctus along with counsels and other advisers appointed for the FPO for filing with SEBI, the RoC and the Stock Exchanges. iv. Drafting and designing of the offer documents along with legal counsels in accordance with SEBI ICDR Regulations, 2009 and guidelines, Companies Act, 1956, Securities (Contract) Regulation Rules, 1957 ensuring compliance with the stipulated requirements and formalities of Stock Exchanges, Registrar of Companies (ROC) and any other statutory authorities and filing the same with SEBI /Stock Exchanges/ROC or any other regulatory authority. v. Advising on the regulatory norms and assisting in securing approvals/exemptions, wherever necessary from various regulatory agencies, such as SEBI and Stock Exchange(s).
97 97

vi.

vii.

viii. ix.

x. xi. xii. xiii.

xiv. xv. xvi. xvii.

Advising the Selling Shareholder and Company on the compliance of various regulatory norms, rules, SEBI ICDR Regulations, 2009 and/ guidelines, etc. and assisting in securing consents, approvals (including but not limited to FIPB and RBI approval) and exemption, wherever necessary, from various regulatory agencies such as SEBI, Registrar of Companies (ROC), Stock Exchanges and any other Government Agencies. Advising the Selling Shareholder in appointing other intermediaries of repute with the experience, to the Offering, such as registrars, syndicate members and Bankers, etc. The BRLMs will ensure that these intermediaries have necessary SEBI registrations wherever applicable. The BRLMs shall be responsible for the co-ordination of all activities among various intermediaries connected with the offering. Undertaking pre-marketing activities, collating feedback from investors, analyzing such feedback and suggesting an appropriate pricing and pricing method to optimize the return to selling shareholder. Final-decision on the pricing will be made by the Selling Shareholder. Undertaking management road-shows, including preparing a detailed presentation on company with key investment themes and arranging meetings with potential investors. Developing the equity story for the Offering and articulating the key marketing themes and positioning of the Company. Marketing the Offering including formulating marketing strategies. Drafting and designing of advertisements/ publicity material including newspaper advertisements and brochure/ memorandum containing salient feature of the Offers document. Advise the Government of India on timing of the Offering with due regard to the strengths, weakness of the Offering and prevalent market forces. Entering into requisite agreements in the format placed on the website of Department of Disinvestment in consultation with legal counsels to the Offering. Formulating an action plan for complying with various formalities relating to the Offering. Make arrangements for the selection of : a. b. c. d. Ad-Media; Centers for holding conferences with press, Brokers, Investors, etc.; Collection Centers; Distribution of publicity and issue material including application forms, prospectus, abridged prospectus and brochure and deciding on the quantum of issue material. The number of application forms should not be less than one crore for all categories taken together.

xviii. Setting up electronically linked network in consultation with the Syndicate Members, Brokers and Stock Exchanges and assisting Company in obtaining the required connectivity from such Stock Exchanges, viz Bombay Stock Exchange Limited (BSE) and the National Stock Exchanges (NSE) in various cities, for registration of electronic bids from the bidders. (to be decided by The Department of Disinvestment) xix. Prepare and maintain the book of demand. xx. Assisting in arriving at the price band in consultation with the Company and Selling Shareholder keeping in mind the expected post-offering performance and allocation to investors and assist the Company in investor Allocation of the book of demand.

xxi. Follow-up with the bankers to the Offering and Self Certified Syndicate Banks to get

98 98

quick estimates of collection and advising the Selling Shareholder about the closure of the Offering, based on the correct figures. xxii. After the book building, file the final prospectus along with the final price with the Registrar of Companies, (Place). xxiii. The post offering activities such as essential follow-up, which must include finalization of the basis of allotment, weeding out of multiple applications as per SEBI ICDR Regulations, 2009 and/ guidelines, dispatch of certificates and refunds, with the various agencies such as Registrars to the Offering, Bankers to the Offering and the bank(s) handling refund business and any such related activities. xxiv. Even if many of these post-offering activities would be handled by other intermediaries, the designated BRLMs shall be responsible for ensuring that these agencies fulfill their functions and enable them to discharge their responsibility through suitable agreements with the Company and the Selling Shareholder. xxv. To carry out the above assignment the BRLMs will depute their Deal Teams committed in their respective presentations and ensure that the strength of the Deal Teams will be maintained for the timely completion of the above assignment. xxvi. Any other services to be rendered as per term of the RFP and further deliberation in connection with the offering. xxvii.The above-mentioned scope of services is illustrative and not exhaustive and BRLMs are required to perform all such other incidental obligations/ acts as may be required to successfully launch and conclude the Initial Public Offer(IPO)/Follow on Public Offer (FPO). xxviii.Rendering such other assistance as may be required in connection with the Offering II. Fees and Expenses (a) (b) (c) You will be paid a fee of (Rupees) which is inclusive of all the applicable taxes, cess, duties, etc. This fee shall be shared equally by all the BRLMs. All bills are to be raised in INR and will be payable in INR only after successful and satisfactory closure of the transaction. No out of pocket expenses will be payable on the above (no other amount over and above rate/amount specified above would be borne by the Selling Shareholder).

III.

Underwriting Agreement (a) The BRLMs shall enter into an Underwriting Agreement with the Selling Shareholder and the company, which would include customary representations and warranties, conditions as to closing of the offering, force majeure provisions and provisions as to the indemnification of the BRLMs. This agreement is to be entered into in the format as put on the website of the Department of Disinvestment.

(b)

99 99

IV.

Confidentiality During the course of due diligence and interaction with the officials of the companies, it is possible that BRLMs may get some information which may be of commercial interest to the company and disclosure of that may adversely affect the company. Therefore, all BRLMs will maintain strict confidentiality about the information which may be in their possession relating to the company and may not be disclosed during or after completion of the transaction. Maintenance of documents and records BRLMs would be exchanging certain correspondence with the company and other connected with the transaction including with the investors and therefore all BRLMs will keep all papers properly documented and may produce the same as and when the same are required by the Government during or after completion of the transaction. Continued assistance to Department of Disinvestment After the completion of the transaction there may be issues which may require the views and opinion of the BRLMs like in the case of audit or any legal complications after the completion of the transaction. The BRLMs will be responsible to Department of Disinvestment even after the completion of the transaction in respect of the same. Deal Team The Deal Team and the leader of the team committed by you in the proposal should remain committed and available to the Department of Disinvestment for the transaction till its completion. No Conflict of Interest There should not be any conflict of interest at any stage of the assignment. If, however, there is any, you will immediately inform the Government. In this respect, the guildlines issued by this Ministry vide OM No.5/3/2011-Policy dated 8.6.2011 would be strictly adhered to.

V.

VI.

VII.

VIII.

3. In the event of any inconsistency or dispute between the terms set forth in this mandate letter and the agreement proposed to be signed between the Company, the Selling Shareholder and the BRLMs, the terms set forth in the proposed agreement shall prevail, save and except the terms in relation to fee set forth in para 2 on the fees and expenses under this mandate letter. 4. You are requested to immediately finalize the inter-se allocation of responsibilities amongst BRLMs and to suggest the time line & future course of activities. 5. Kindly acknowledge the receipt of letter and return a copy of letter duly signed by the authorised signatory as a token of acceptance of offer within 2 days from the date of receipt of this letter. Yours faithfully

( ) Under Secretary to the Government of India

Copy to: Director (Finance), CPSE

100

ANNEX - VII No. Government of India Ministry of Finance Department of Disinvestment **** Block No. 14, CGO Complex Lodhi Road, New Delhi-110003 Dated the To, As per list attached Subject: Appointment of Domestic Legal Advisers in Consortium with International Legal Advisers for the Public Offerings of (CPSE) in the domestic market Request for Proposals.

Sir, The Government intends to disinvest % paid up equity share capital of (CPSE)L out of its shareholding of %, through Initial Public Offer/ further Public Offer in the domestic market. The State Governments of are to piggy back with off-loading % each of their equity in (CPSE) along with Government of India(as the case may be) . Department of Disinvestment requires the services of reputed Domestic and International Law Firms with experience and expertise in Public Offerings in capital markets to act as Legal Advisers and assist Government in the aforesaid Public Offering. The scope of work of the Legal Advisers Domestic and International, is as detailed in Annexure-I and II respectively. 2. In case you are interested to be considered for the assignment, you are advised to send Proposals in the enclosed format for the above mentioned Public Offering by (Date & Time) to the undersigned i.e. , Under Secretary, Department of Disinvestment, Ministry of Finance, Room No. , Block 11, CGO Complex, Lodhi Road, New Delhi-110003. For any clarification in the matter, the undersigned can be contacted on Tel. , Fax , E-mail: . 3. Please note that the Proposal must be submitted only in hard copy. No proposal will be entertained after due date and time and the Department will not be responsible for any postal or courier delay. The proposal received after the appointed date & time will be summarily rejected. 4. It may further be noted that the Law Firms - Domestic & International would be required to present their proposals in Department of Disinvestment on (Date). The schedule of presentations will be posted on this Departments website on (Date). Yours faithfully,

Sd/( ) Under Secretary to the Govt. of India Tel:

101 101 101

ENGAGEMENT OF LEGAL ADVISERS DOMESTIC & INTERNATIONAL FOR DISINVESTMENT IN (CPSE Name) THROUGH INITIAL PUBLIC OFFER/FURTHER PUBLIC OFFERINGS IN THE DOMESTIC MARKET REQUEST FOR PROPOSALS 1. Introduction

State history of the CPSE in brief-its status, since when in existence, previous name, if any, major business, products & their usages, workforce etc. 1.2 State briefly the capital structure of the CPSE & its ownership.

1.3 The Government has decided to disinvest (%) paid-up equity capital of the Company and that before the proposed disinvestment the Company to issue bonus shares in the ratio of and also split the shares in the ratio of (as the case may be). The company has initiated action in respect of splitting and issue of bonus shares and the process is likely to be completed by end 1.4 The Offering would be a Fast Track Issue , if eligible under Regulation 10 of ICDR(as the case may be). A part of the public offering will be reserved for employees of the company. The eligible employees and retail investors will be offered shares at a discount of on the Issue Price. 1.5 The Department of Disinvestment, on behalf of Government of India, requires the services of reputed Law Firms domestic and International, with experience and expertise in Public Offerings in capital markets to act as Legal Advisers and assist Government in the process. The Domestic Law Firm will act as the Lead Legal Adviser to the transaction and is required to submit Proposals in consortium with an International Law Firm of repute, with similar experience and expertise in Public Offerings in capital markets. 1.6 The confirmation letter duly signed by the authorized signatory of the Consortium Partner (International Law Firm) may be furnished along with the Proposal; in support of their willingness to be a part of the Consortium. 1.7 The scope of work of Domestic Legal Adviser and that of International Legal Adviser is as detailed in Annexure I and II respectively. 2. Proposal format

2.1 Interested Domestic Law Firm may submit their Proposal in the following format. Information in respect of the International Law Firm may also be submitted in this format. 2.2 Bidders submitting the proposals should note that the International Law firm with whom they decide to tie up should have the relevant experience of managing India Capital market transactions i.e. IPOs/FPOs (SEC Rule 144A transactions) as counsels to the issuer or underwriters with drafting responsibility for the customary sections of the offer document and preparing international wraps together with requisite experience and capacity to issue 10b-5, or to issue any other opinion required for capital market transactions as is customary or mandatory.
102 102 102

2.3

Experience and capability in handling Public Offerings: (Weightage for evaluation 25/100) (i) (ii) (iii) (iv) Profile of the organization Capability, capacity and previous experience of the Firm and expertise in handling such assignment. Details of domestic/international offerings handled. Demonstrate ability to work with Government and in coordination with BRLMs and other intermediaries as a part of team, including ability to co-ordinate the work of International Law Firm.

2.4

Infrastructure & Manpower: (Weightage for evaluation 25/100) (i) Details of infrastructural facilities like office, manpower etc. in India and abroad. (ii) Detailed profile of the core and support teams (with CVs of each team member detailing qualification and relevant experience) that will be deployed on each assignment in the event of selection.

2.5

Understanding of the Regulatory framework: (Weightage for evaluation 15/100) (i) Demonstrate understanding of the legal, policy & regulatory issues in Public Offerings, i.e. SEBI, Companies Act, FDI etc. (ii) Indicate your expertise in handling the regulatory requirements and securing the required approvals from the concerned authorities.

2.6

Indicative Timeline : (Weightage for evaluation 10/100) (i) Both the transactions are proposed to be completed . Demonstrate ability to deliver in accordance with tight timetable requirements and the ability to commit key personnel for the entire duration of the transaction.

2.7

Strategy for the Public Offerings: (Weightage for evaluation 25/100) i. Indicate intended approach to the proposed transactions including the sequencing of the transaction. ii. Indicate strength in organizing the Data Room and the due diligence required for the public offerings. iii. Demonstrate capability of preparing quality document to be filed with SEBI (preparation of the DRHP/RHP) and other regulatory authorities.

3.

Undertaking To be furnished along with the proposal

We certify that there has been no conviction by a Court of Law or indictment/adverse order by a regulatory authority for a grave offence against us or any of our sister concern(s). It is further certified that there is no investigation pending against us or our sister concern(s) or the CEO, Directors/Managers/ Employees of our concern or of our sister concern(s). It is certified that no conflict of interest as defined in O.M. No. 5/3/2011-Policy dated 8 th June, 2011 exists as on date and if in future such a conflict of interest arises, we will intimate the same to the Government of India/ Company.
103 103 103

Further, we certify that as on the date we are not advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select the Adviser, except for the list of the mandates, duly signed by us, in the same line of business and for the same type of transaction, as enclosed. Further, we certify and undertake that for a period commencing from the date of our appointment (if so appointed) as the Adviser till the completion of the transaction, we shall keep the Government/ CPSE informed of any mandate/contracts entered into, to advise or act on behalf of or associate ourselves with, any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company being disinvested, in respect of any transaction of same nature as the transaction in respect of which we have been appointed as the Adviser. 4. Evaluation process

4.1 Qualified interested Law Firms (applicants), together with the Consortium Partner (International Law Firm), will be required to make a presentation in respect of their Proposal before a Selection Committee on (day & date) at New Delhi in the Committee Room (No. ) of Department of Disinvestment, CGO Complex. 4.2 The schedule of presentation will be posted on the Department of Disinvestment website (www.divest.nic.in) on (date) 4.3 Immediately after the presentation, the applicants will be required to hand over to the Convener of the Selection Committee, their financial bid in a sealed envelope. 4.4 The Selection Committee will evaluate the applicants on the criteria mentioned in paragraph 2 above and based on their Proposal and presentation; short-list them for considering their financial bids. The Selection Committee will open the Financial Bids of only short listed applicants. 5. Requirements for Financial Bids

5.1 The applicant is required to quote a lump sum fee inclusive of the International Law Firm and gross of taxes applicable and payable as per law by the applicant. The applicant has to furnish an unconditional acceptance to Terms and Conditions of the Request for Proposal. 5.2 The fee quoted should be unconditional and inclusive of all expenditure. It may be noted that the Domestic Law Firm cannot prescribe any time limit for validity of the financial bid. 6. For any further clarification, please contact Shri , Deputy Secretary/Under Secretary, Ministry of Finance, Department of Disinvestment, Floor, Block No., CGO Complex, Lodi Road, New Delhi - 110 003, Tel. 011- Fax 011, e-mail:

104 104 104

Annexure-I

Scope of Work for the Domestic Legal Adviser 1. Drafting of the Red Herring Prospectus and Prospectus for filing with SEBI, Stock exchanges and periodic updates to the RHP/Prospectus until the same are finalised and filed with Registrar of Companies. Drafting responses to queries received from SEBI, Stock Exchanges, depositories etc. until the completion of all activities relating to public offering. Legal due diligence resulting in a legal due diligence certificate/opinion -to give a certificate in a format and coverage similar to certificate under section 10b-5 of Securities Exchange Act provided for global transactions and submission of Due Diligence Report. Interacting with the Company along with the Book Runners to explain and agree upon the due diligence information and documentation requirement. Review of various agreements and material documents entered into by the Company. Drafting of the consent letters taken from all intermediaries. Review of Memorandum and Articles of Association and corporate governance procedures. Reviewing all other relevant legal and other documents. Review of disclosures regarding other ventures promoted/ partnered by the Company. Review of Companys litigation (against and by the Company) and litigation relating to Directors, subsidiary companies, joint ventures (if any). Reviewing employee share schemes (including ESOP) and management incentive schemes, if applicable. Review of the Offer Document to ensure compliance with disclosure and other requirements specified in the SEBI Regulations, Companies Act, SCRR and all applicable laws. Reviewing the drafting of the Offer Document and directing necessary changes in the same in context of the due diligence and regulatory requirements. Drafting and review of all Agreements relating to the Offer (including MoUs with BRLMs/ Joint BRLMs, Syndicate Agreement, Underwriting Agreement and Escrow Agreements, Agreement with Registrar, Bankers etc). Giving advice, consulting, holding discussions with the Book runners during the Offer process including pricing, marketing of the Offer, book building and settlement. Providing all other legal advice and written opinions, including comprehensive advice on research publication and dissemination, statutory and corporate advertisement in connection with the Offer as may be required. Analysis of legal, tax and process risks and providing solutions as required. Providing legal clearance on all issue material viz Draft Red Herring Prospectus, Red Herring Prospectus, Prospectus, Abridged Prospectus, Application Form, Public Notices, Bid Forms, Confirmation of Allocation Notes etc.

2. 3.

4. 5. 6. 7. 8. 9. 10. 11. 12.

13.

14. 15.

16. 17.

105 105 105

18. 19. 20. 21. 22.

Interacting with the auditors of the Company and negotiating the finalization of the comfort letter to be provided by the Auditors at different stages of the Offer. Legal sign-off on announcements regarding events during the Offer period. Drafting the domestic aspect of the international wrap. Drafting all board resolutions and Shareholder Resolutions required to be passed by the Company, if any. Coordinating and communicating with other parties involved in the Offer, including the officers and other management personnel of the Issuer, the auditors and legal counsel(s) to the Issuer. Extending closing Opinion for the Public Offering. Processing of FIPB/ RBI applications. Providing advice on the changes required in the Memorandum and Articles of Association, as applicable. Providing advice on the duties and actions of the Offeror, including drafting of any applications, letters, certificates etc in connection with the Offer. Providing advice in relation to the offer pertaining to domestic regulations. Assisting with respect to Closure of Offer. Any other matter connected with proposed Public Offering. Legal Counsel will also assist the State Govts. of who are piggy backing with the GOI.(if applicable)

23. 24. 25. 26. 27. 28. 29. 30.

106 106 106

Annexure-II Scope of Work for the International Legal Adviser 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. To give 10b-5 certificate favoring the issuer, offeror and book runners. Providing written advice relating to international publicity related restrictions. Providing written advice on draft international marketing documents (wraps including advice on US taxation law, blue-sky memorandum and research guidelines, etc). Providing written advice on internet restrictions. Other advice in relation to the offer pertaining to international law. Drafting of selling restrictions in the jurisdictions where the international marketing shall be done and filing of necessary documents in other jurisdictions. Opinion on US Investment Company Act. Drafting of Risk Factors, Business, MD&A chapters and any other chapters as may be required. Drafting of Comfort letters. Extending Closing Opinion for the Offer for Sale. Advising underwriters on P Note related matters. Drafting the closing Certificates, the closing checklist, the lawyers opinion and assisting with closing of the Offering jointly with the DLC. Conducting the customary bring-down diligence calls with the Company and the entire deal team at various critical stages of the transaction. Drafting and negotiating customary comfort letters with the Auditors required at different stages, preparing and reviewing the circle-ups on the Offer Documents, and preparing any other documentation with the Auditors. Assistance in the preparation of the transaction bible and due-diligence back-up documents in coordination with the DLC. Providing all other legal advice and written opinions in connection with the issue as may be required. Completion of all necessary legal formalities as may be required by competent authorities/ prescribed authorities as per applicable laws for the proposed Public Offering Any other matter connected with the proposed Public Offering.

15. 16. 17. 18.

107 107 107

ANNEX - VIII Ministry of Finance Department of Disinvestment Analysis of Technical Bids received for appointment of Legal Advisers for disinvestment in -(CPSE). S.No. Criteria/information 1. 2. 3. Proposal in time Consortium Partners name Experience in handling IPO/FPO by ILC 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. ILC confirmation letter Validity of contract with ILC Profile Experience in handlingIPO/FPO Experience in handling PSU/Govt. Issues Understanding of RegulatoryFrameworks Pending Litigations /Investigations, if any. No Conflict of interest Certificate Willingness to stick To the timeline given Details of Deal team & Manpower commitment given 14. 15. 16. Detailed strategy given Certificate of No conviction given Present The Department of Disinvestment Mandates with foreign partner 17. Remarks
111

ANNEX - IX No. Government of India Ministry of Finance Department of Disinvestment 5th Floor, Block No.14, CGO Complex, Lodi Road, New Delhi-110 003 Date To, (Agency name) SUBJECT: Disinvestment in (CPSE) through Initial Public Offer/ Further Public Offering engagement of Legal Counsel.

Sir/Madam, I am directed to refer this Departments letter of even number dated requesting you to furnish your proposal for consideration for appointment as Legal Adviser for the Initial Public Offering/ Further Public Offering of(CPSE). Further, attention is invited to your presentations before the Selection Committee on (Date) in the Department of Disinvestment and the financial bid (No.l dated . 2. We are pleased to appoint )Agency name) in consortium with (name of ILC) as the Legal Advisers for the public offering of % paid up equity capital of (CPSE) out of Government of India s shareholding through Initial Public offering/ Further Public Offering(as the case may be) on the following terms and conditions: a) The scope of work of the domestic Legal Adviser and the International Legal Counsel is given in the Annexure-I & II respectively. b) You will get the work of the international counsel executed through DLA Piper with whom you have tied up for the assignment. c) There should not be any conflict of interest at any stage of the assignment. It however, there is any, you will immediately inform the Government. In this respect, the guidelines issued by this Ministry vide O.M. No.5/3/2011-Policy dated 2.5.2011 would be strictly adhered to (copy enclosed as Annexure III). d) Fee: I. II. You shall be paid a lump sum fee of Rs./- (Rupees only), gross of all taxes. The aforesaid fee includes the fee of the international counsel and all taxes that may have to be paid by you. All expenditure towards traveling, boarding and lodging, out of pocket expenses etc. in connection with this assignment shall be borne by you.
111

III.

IV.

Fee shall be paid after satisfactory completion of the entire work.

3. The Deal Team and the leader of the team committed by you in the proposal should remain committed and available to the Department of Disinvestment for the transaction till its completion. 4. All the documents/reports prepared by you and/or the International Legal Counsel (ILC) in connection with the assignment shall be the sole property of the Department of Disinvestment, who shall be within its right to use the documents/reports for any purpose, whatsoever. 5. All the documents/reports so prepared by you and/or the ILC shall be confidential and neither you nor ILC will divulge the contents of the documents/reports in any form, whatsoever to any authority/person without the written permission of the Department of Disinvestment. 6. All information whether written or oral acquired from either Department of Disinvestment or (CPSE) in connection with the assignment shall be kept confidential and shall be used solely and exclusively for the assignment. 7. Please acknowledge receipt of this letter by signing and returning the duplicate copy in token of acceptance of the terms and conditions of the assignment. Yours faithfully,

(-) Under Secretary to the Government of India Tel. No. Encls. : As above NOTE : You are advised to immediately get in touch with the management of the (CPSE) for the work assigned to you.

Copy to : Chairman & Managing Director, (CPSE) for information.

112 112 112

Annexure - I Scope of Work for the Domestic Legal Adviser (Already part of RFP)

Annexure - II Scope of Work for the International Legal Adviser (Already part of RFP)

113 113 113

Annexure - III No. 5/3/2011-Policy Government of India Ministry of Finance Department of Disinvestment Block 14, CGO Complex, Lodhi Road, New Delhi- 110003 Dated the 8th June, 2011 OFFICE MEMORANDUM Subject: Guidelines for qualification of Advisers for disinvestment process. In order to inspire public confidence in the selection of Advisers through competitive bidding, the Government had framed comprehensive and transparent guidelines defining the criteria for their selection. In addition to using a set of criteria like sector experience, knowledge, commitment etc., additional criteria for qualification/disqualification of the parties to act as Advisers to the Government for disinvestment transactions were prescribed by the Department of Disinvestment vide its O.M. No. 5/3/2011 Policy dated 2.5.2011. 2. In supersession of the above-mentioned O.M. of this Department, the revised criteria for qualification/disqualification of the parties to act as Advisers for disinvestment transactions would be as under: (a) Any conviction by a Court of Law or indictment/adverse order by a regulatory authority for a grave offence against the Advising concern or its sister concern would constitute a disqualification. Grave offence would be defined to be of such a nature that it outrages the moral sense of the community. The decision in regard to the nature of offence would be taken on a case-to-case basis after considering the facts of the case and relevant legal principles by the Government. Similarly, the decision in regard to the relationship between the sister concerns would be taken based on relevant facts and after examining whether the two concerns are substantially controlled by the same person/persons. In case such a disqualification takes place, after the entity has already been appointed asAdviser, the party would be under an obligation to withdraw voluntarily from the disinvestment process, failing which the Government would have the liberty to terminate the appointment/contract. Disqualification shall continue for a period that Government deems appropriate. 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.

(b)

(c) (d)

114 114 114

(e)

The disqualification criteria would come into effect immediately and would apply to all the Advisers already appointed by the Government for various disinvestment transactions, which have not yet been completed. Before disqualifying a concern, a Show Cause Notice why it should not be disqualified would be issued to it and it would be given an opportunity to explain its position. Henceforth, these criteria will be prescribed in the advertisements seeking Expressions of Interest (EOI) from the interested parties to act asAdviser. Further, the interested parties shall be required to provide with their EOI an undertaking to the effect that no investigation by a regulatory authority is pending against them. In case any investigation is pending against the concern or its sister concern or against the CEO or any of its Directors/Managers/Employees, full details of such investigation including the name of the investigating agency, the charge/offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government. For other criteria also, similar undertaking will be obtained along with EOI. They would also have to give an undertaking that if they are disqualified as per the prescribed criteria, at any time before the transaction is completed, they would be required to inform the Government of the same and voluntarily withdraw from the assignment. The interested parties would also be required to submit a list of or disclose any mandated transactions which are in the same line of business as that of the company (being disinvested) in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser and confirm in writing that there exists no conflict of interest as on the date of submitting their proposal for appointment/ their appointment as Advisers in handling of the transaction and that, in future, if such a conflict of interest arises, the Adviser would immediately intimate the Government/Company (being disinvested) of the same. The Government/Company (being disinvested) shall at its sole discretion after providing due and reasonable opportunity decide whether such future conflict of interest shall materially adversely affect the interest of the Government and the Company (being disinvested) in relation to the transaction and shall be entitled to grant the consent to the Adviser to continue as Adviser or terminate the appointment of the Adviser. For disinvestment purposes, conflict of interest is defined to include engaging in any activity or business by the Adviser in association with any third Party, during the engagement, which would or may be reasonably expected to, directly or indirectly, materially adversely affect the interest of Government of India and/ or the Company (being disinvested) in relation to the transaction, and in respect of which the Adviser has or may obtain any proprietary or confidential information during the engagement, that, if known to any other client of the Adviser, could be used in any manner by such client to the material disadvantage of Government of India and/ or the Company (being disinvested) in the transaction.

(f)

(g)

(h)

(i)

The conflict of interest would be deemed to have arisen if any Adviser in respect of the transaction is appointed by a third party for advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern

115 115 115

or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser. Further, the decision of the Government/Company (being divested) as to whether such other person or entity is engaged in the same line of business as that of the Company being disinvested, shall be final and binding on the Adviser. (j) The conflict of interest would also be deemed to have arisen if any Adviser firm/ concern has any professional or commercial relationship with any bidding firm/ concern for the same disinvestment transaction during the pendency of such transaction. In this context, both Adviser firm and bidding firm would mean the distinct and separate legal entities and would not include their sister concern, group concern or affiliates etc. The professional or commercial relationship is defined to include acting on behalf of the bidder or undertaking any assignment for the bidder of any nature, whether or not directly related to disinvestment transaction. (This clause is applicable in strategic sale only). The interested parties would also be required to give information and disclose that as on the date of submitting their proposal for appointment/ their appointment as Advisers in respect of the transaction, they are advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser. - In the event the Adviser fails to disclose that it is advising or acting on behalf of or associated with any other person or entity which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/ or the Company (being disinvested) is proposing to select or have appointed the Adviser, at the time of giving the afore-mentioned undertaking, the Government/Company (being disinvested) shall be entitled to terminate their appointment. Before terminating the appointment, a show cause notice stating why its appointment should not be terminated would be issued giving it an opportunity to explain its position. (l) For a period commencing from the date of appointment of the Adviser till the completion of the transaction, the Adviser shall keep the Company/ Government informed of any mandate/ contract entered into to advise or act on behalf of or associate itself with, any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company being disinvested, in respect of any transaction of same nature as the transaction in respect of which the Adviser has been appointed as the Adviser. Provided that, if six months or more have elapsed from the date of appointment as Adviser to the government disinvestment transaction, the Adviser would normally be permitted by the Government/Company (being disinvested), save for exigent circumstances. The decision of the Government/Company (being disinvested) in this regard shall be final and binding

(k)

116 116 116

on the Adviser. Further, the decision of the Government/Company (being divested) as to whether such other person or entity is engaged in the same line of business as that of the Company being disinvested, shall be final and binding on the Adviser. (m) For the purpose of clauses (k) and (l) above, the nature of transaction may include, but not be limited to, a capital market transaction which in turn could include, but not be limited to, a domestic offering of shares or any other security, whether by way of initial public offer or further public offer or qualified institutions placement or issue of IDRs or by any other manner, as well as the international offering of securities, whether by way of issue of ADRs, GDRs or FCCBs or by any other manner. In the event the Adviser fails to obtain the prior written consent of the Government/Company (being disinvested) as aforesaid, the Government/ Company (being disinvested) shall be entitled to terminate the appointment of the Adviser. Before terminating the appointment, a show cause notice stating why its appointment should not be terminated would be issued to the Adviser giving it an opportunity to explain its position.

(n)

Sd/(V.P. Gupta) Deputy Secretary to the Government of India Tel: 2436 8036 To, All Ministries/ Departments of the Government of India

117 117 117

ANNEX - X No. Government of India Ministry of Finance Department of disinvestment Block No.14, CGO Complex, Lodhi Road, New Delhi-110003. Dated the To As per list Subject : Appointment of Advertising Agency for the Initial public offering/ Further Public Offering of (CPSE) Regarding. Sir, I am directed to say that the Government of India through the Department of Disinvestment is bringing out the public issue of % equity out of Government shareholding in (CPSE). The process for bringing out the Issue has already commenced with the appointment of BRLMs and Legal Advisers. In this regard, an advertising agency is required to be appointed. The scope of work is enclosed as Annexure X. The sharing of cost by the Department of Disinvestment, CPSE and the BRLMs will be as under: To be remunerated by the Department of Disinvestment Publication of statutory/Issue related through the print media, electronic media and hoardings. (Media plan for statutory ads & Issue ads through print media, electronic media and radio stations is as per Annexure A, B & C respectively) To be remunerated by (CPSE) Conceptualizing, designing, developing and airing TV Commercials & Corporate Plan for Electronic Media. Designing, developing and publication of corporate advertisements through print media Composing and airing radio jingles. Preparations and cost of display of hoardings for advertisement at the airports.

To be remunerated by BRLMs Public Relations work Organising domestic road shows Designing and developing of advertisements for the print media(statutory and Issue advertisements) 2. The Government shall have exhaustive rights to accept or reject any bid received against this enquiry and/ or cancel the process altogether without assigning any reason for the same.
119 119 119

3. The Government has prescribed guidelines for qualifications for Advisers for disinvestment process, enclosed at Annexure-I. The interested Bidders are advised to go through the guidelines and furnish the following certificate as a part of the Proposal. We certify that there has been no conviction by a Court of Law or indictment/adverse order by a regulatory authority for a grave offence against us or any of our sister concern(s). It is further certified that there is no investigation pending against us or our sister concern(s) or the CEO, Directors/Managers/ Employees of our concern or of our sister concern(s). It is certified that no conflict of interest as defined in O.M. No. 5/3/2011-Policy dated 8 th June, 2011 exists as on date and if in future such a conflict of interest arises, we will intimate the same to the Government of India/ Company. Further, we certify that as on the date we are not advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select the Adviser, except for the list of the mandates, duly signed by us, in the same line of business and for the same type of transaction, as enclosed. Further, we certify and undertake that for a period commencing from the date of our appointment (if so appointed) as the Adviser till the completion of the transaction, we shall keep the Government/ CPSE informed of any mandate/contracts entered into, to advise or act on behalf of or associate ourselves with, any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company being disinvested, in respect of any transaction of same nature as the transaction in respect of which we have been appointed as the Adviser. (The certificate should be signed by the authorized signatory of the Bidder.) NOTE: 1) 2) The content of the certificate must not be changed. Clarification, if any, may be provided separately. The above certificate must be submitted along with the confirmation for participating in the presentations. If no certificate is received you will not be eligible to make a presentation.

4. The bidders should note that all advertisements would be required to be in line with SEBI ICDR 2009 regulations and the publicity guidelines that have been circulated by legal counsels in relation to this proposed FPO issue. 5. On the basis of information available on the Prime Database, your agency has been shortlisted and is invited, if interested, to make a presentation before a Selection Committee comprising of officers from the Department of Disinvestment, Ministry of(Administrative) and the Company. Representatives of the BRLMs will assist the Selection Committee in the selection process. The presentation should cover the following aspects and will be awarded marks as indicated below: Experience of handling advertising for IPOs/FPOs in the last three years (30/100) Presentation on advertising strategy for the (CPSE) Issue(40/100) Capability of organising the press, analyst and brokers conference during the domestic road shows and the press conference(20/100) Details of interviews, panel discussions etc. to be fixed on the business news channels with Company officials, BRLMs and other experts(10/100)

120 120 120

6. In case your agency qualifies the cut off mark pre-decided by the Selection Committee, your financial bid (submitted at the time of presentation in a sealed envelope) will be opened. The bid should include the following costs: Advertising Agency fees for the works to be done for the three parties namely, Department of Disinvestment, - (Company) and the BRLMs separately commensurate with the work given by each as stated above. Note: (i) (ii) Expenditure on corporate advertising by the Company and the PR exercise by the BRLMs will be negotiable directly with them. Annexure Y may be read as it explains one of the conditions of appointment. Negotiated rates for release of statutory ads and Issue ads as per media plan given in Annexure A. Negotiated rates for release of ads in the electronic media as per media plan given in Annexure B. Negotiated rates for radio jingles as per plan given in Annexure C. Cost of printing hoardings. (Approx size 20 ft. X 10 ft.)

7. You will be invited to make a presentation of 25 minutes on (Date)(place). Schedule of presentation will be displayed on the website www.divest.nic.in of this Department on (date). 8. Kindly acknowledge receipt of this letter. You are also requested to confirm your participation in the presentations to the undersigned latest by (Date)

Yours faithfully

() Under Secretary to the Government of India Phone:

121 121 121

Annexure X Detailed Scope of Work for (CPSE)s IPO/FPO, Corporate Campaign, Public Offer/ Issue, Brokers/Analysts/Press Meet etc. Sl.No Heading 1. Advertisement Plan I. Description Formulating and presenting to THE DEPARTMENT OF DISINVESTMENT, CPSE and Book Running Lead Managers (BRLMs) the overall advertisement plan for the FPO in line with enclosed media plan including pre-issue image building c a m pa i g n , sta t u t o r y a d ve r t i se m e n ts, I ssu e - r el a t e d advertisements, along with the timing, frequency, size and publication details such as positioning etc. Developing an understanding of the Company and launching a Corporate Campaign in the Print, Electronic media and Radio media. Conceptualizing, Arranging and Drafting Interviews, Featured Articles, Talk Shows, Press Conferences, Press Releases etc. Conceptualizing, Designing and preparation of the statutory advertisements relating to Book Building in consultation with t h e B o o k R u nn e r s ( BR L M s) a s p e r t he r e g u l at o r y requirements. Conceptualizing, Designing and preparation of other IPO related advertisements such as Bid Advertisement, price indicative advertisements, offer opening advertisement, offer closing advertisement, price discovery advertisement, Thank You advertisements, Basis of allotment advertisement, Listing Advertisements. The Agency shall be responsible f or conceptualizing, Designing and preparation of draft and final art works for all advertisements (including I and II above) and their timely release. R e l ea se o f ab o ve a dve r t i se me n ts a s p e r t h e TH E DEPARTMENT OF DISINVESTMENT approved Plan. The PR Agency will be required to organize road shows for the Press, Analysts and Brokers in India for simulating interest in CPSEs IPO/ FPO. The Agency has to make all the required arrangements for successful conduct of the road shows. The agency has to book the venue at the hotels in consultation with Company for successful conduct of Brokers/ Analysts/ Press Conference which shall invariably include all logistics like Decoration, Press Compendium, Banners, Backdrops, Corporate Film, Audio-Visual Equipments and 42" LCD Displays, Aids etc., Photocopy/Internet/E-mail facilities etc. The agency should arrange successful coverage of the events in the Print and Electronic media (TV, Radio, Internet (Blog, banner etc.).
122 122 122

2. Publicity Campaign

I.

II.

3. Advertisements related to the IPO/FPO

I.

II.

III.

IV. 4. Organizing Road Shows I.

II. III.

IV.

V.

VI. VII.

VIII.

Co nc ep tu al izin g, De si gn in g an d Dra ft in g re qu ir ed communications to invitees (journalists, brokers, analysts etc) for various Road Shows in consultation with BRLMs and CPSE, as per prevalent SEBI Regulations. Ensuring wide and active participation by leading brokers, media personnel and analysts in the meets and conferences. Detailed and Extensive Photo and Video coverage of the road sh ow s to b e su bm it te d to THE D EPARTM EN T OF DISINVESTMENT (both edited and unedited). In case the hotel specified in the bid document is not available on the particular day for holding Conference, the conference should be held at a hotel of equal status as mentioned in the bid documents in consultation and with the approval of CPSE on prior production of original non-availability certificate issued by the hotel under its authorized signatory signatures and seal. The PR Agency shall comply with the PR Plan as tendered and further will be required to formulate a public relations plan for the Company in the pre-SEBI filing, Post-SEBI Filing, Issue-Period and Post-Issue Period including coverage of listing of shares. The Agency will be required to arrange select media interactions and ensure enough and proper coverage for CPSE in various mass communication media. The Agency will be required to conceptualize, design and draft all communications to the media such as press releases etc. The Agency shall produce and submit a daily written report to THE DEPARTMENT OF DISINVESTMENT from the date of award with the details of daily news coverage of CPSE in the media and also the BRLMs during the Public Issue, till the listing process is completed, including coverage of listing of shares. The Agency shall also plan any other events and activities during the FPO period and organize the listing ceremony. The PR Agency will be required to print and supply the following collaterals for conferences:a. Print invitation cards, Folders/Brochures, format for Press releases and sending Invitation to all concerned.b. Procurement of writing pads, pens, mementos.c. Arrangement of photographers, videographers etc for all press meet and Brokers, Analyst conferences including the road shows etc.d. Preparation of Banners, Backdrops, TV commercials, Radio Jingle, Press Compendium etc. Any other activity required for this purpose. The broad scope of work is indicative only and not exhaustive in any manner. THE DEPARTMENT OF DISINVESTMENT reserves the right to modify the same at any stage at its sole discretion.
123

5. Other Public Relation Activities

I.

II.

III.

IV.

V. 6. Collaterals I.

7. Miscellaneous

II. I.

Annexure A
PRINT MEDIA PLAN Campaign : Statutory Ads
Publication & Edition(s) Language Edition Size of Advt Total size No. of ins Card Rate (psqcm) Offered Rate (psqcm) Cost based on offered rate for 720/ 800 sqcm

1. Prospectus Ad & Price Discovery Ad TIMES OF INDIA GROUP TIMES OF INDIA Eng Ahd, Blr, Mum, Kol, Del, Goa, Hyd, Jai, Kan, Lko, Chen, Mlr, Mys, Nag, Pun, Ahd, Kol, Hyd, Pun, Del Ahd, Mum Del, Mum. 16 cm x 45 cm-B/W Eng Bho, Mum, Kol, Chd, Del, Lko, Pat, Ran, Agra, Allhd, Bhg, Bar, D doon, Del, Dhabd, Jmdpur, Kan, Lko, Merut, Muzzpur, Pat, Ran, Var Ahd, Blr, Mum, Kol, Del, Chen. 16 cm x 45 cm-B/W Eng Ahd, Vad, Mum, Kol, Chd, Del, Lko, Nag, Pun, Ahd, Blr, Mum, Kol, Chd, Koc, Del, Hyd, Lko, Chen, Pune Blr, Bhub, Belgaon, K kode, Koc, Koim, Hyd, Chen, Madu, S moga, Thiru, Tiru, Vwada, Visakh Del, Lko, Chd, Kol 720 2 720 2 Blr, Mum, Chd, Del, Lko, Chen. 16 cm x 45 cm-B/W 720 2

ECONOMIC TIMES

Eng

ECONOMIC TIMES ECONOMIC TIMES NAVBHARAT TIMES HINDUSTAN TIMES HINDUSTAN TIMES

Hin Guj Hin

HINDUSTAN

Hin

MINT

Eng

INDIAN EXPRESS

FINANCIAL EXPRESS

Eng

NEW INDIAN EXPRESS

Eng

JANSATTA

Hin

124

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 720/ 800 sqcm

2.

PPRICE BAND Announcement Ad 20 cm x 40 cm-B/W 800 Eng Ahd, Blr, Mum, Kol, Del, Goa, Hyd, Jai, Kan, Lko, Chen, Mlr, Mys, Nag, Pun, Ahd, Kol, Hyd, Pun, Del Ahd, Mum Del, Mum. 20 cm x 40 cm-B/W 800 Eng Bho, Mum, Kol, Chd, Del, Lko, Pat, Ran, Agra, Allhd, Bhg, Bar, D doon, Del, Dhabd, Jmdpur, Kan, Lko, Merut, Muzzpur, Pat, Ran, Var Ahd, Blr, Mum, Kol, Del, Chen. 20 cm x 40 cm-B/W 800 Eng Ahd, Vad, Mum, Kol, Chd, Del, Lko, Nag, Pun, Ahd, Blr, Mum, Kol, Chd, Koc, Del, Hyd, Lko, Chen, Pune Blr, Bhub, Belgaon, K kode, Koc, Koim, Hyd, Chen, Madu, S moga, Thiru, Tiru, V wada, Visakh Del, Lko, Chd, Kol 1 1 Blr, Mum, Chd, Del, Lko, Chen.

TIMES OF INDIA GROUP TIMES OF INDIA

ECONOMIC TIMES

Eng

ECONOMIC TIMES ECONOMIC TIMES NAVBHARAT TIMES HINDUSTAN TIMES GROUP HINDUSTAN TIMES

Hin Guj Hin

HINDUSTAN

Hin

MINT INDIAN EXPRESS GROU P INDIAN EXPRESS

Eng

FINANCIAL EXPRESS

Eng

NEW INDIAN EXPRESS

Eng

JANSATTA

Hin

Amount Service Tax Total

125

Annexure A 1
PRINT MEDIA PLAN Campaign : Issue ads (Issue open/Issue closes for QIB/Issue closes)
Publication & Edition(s) Language Edition Size of Advt Total No. of size ins Card Rate (psqcm) Offered Rate (psqcm) Cost based on offered rate for 640 sqcm

TIMES OF INDIA GROUP TIMES OF INDIA ` Eng Ahd, Blr, Mum, Kol, Del, Goa, Hyd, Jai, Kan, Lko, Chen, Mlr, Mys, Nag, Pun, Ahd, Kol, Hyd, Pun, Del Ahd, Mum Del, Mum. Mum, Pun Ahd, Bhav, Sur, Raj, Vad Blr, Bkote, Chitdga, Gan vati, Gulbarga, Hassan, Hbli, Mglr, Myr, Simoga Mum, Ahm, Pun, Blr Del Blr, Mum, Chd, Del, Lko, Chen.

16 cm x 40 cm-B/W 640

ECONOMIC TIMES

Eng

ECONOMIC TIMES ECONOMIC TIMES NAVBHARAT TIMES MAHARASHTRA TIMES SANDESH VIJAY KARNATAKA

Hin Guj Hin Mar Guj Kar

MIRROR SANDHYA TIMES

HINDUSTAN TIMES GROUP

Eng Hin

16 cm x 40 cm-B/W 640 Eng Bho, Mum, Kol, Chd, Del, Lko, Pat, Ran, Agra, Allhd, Bhg, Bar, D doon, Del, Dhabd, Jmdpur, Kan, Lko, Merut, Muzzpur, Pat, Ran, Var Ahd, Blr, Mum, Kol, Del, Chen. 16 cm x 40 cm-B/W 640 Eng Blr, Koc, Cbtre, Del Hyd, Chen, Madu, Mag, Pondi, Thiru, Tiru, V wada, Visakh

HINDUSTAN TIMES

HINDUSTAN

Hin

MINT THE HINDU GROUP THE HINDU

Eng

126

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 640 sqcm

HINDU - BUSINESS LINE

Eng

Blr, Koc, Cbtre, Del Hyd, Chen, Madu, Mag, Thiru, Tiru, V wada, Visakh , Kol Mum, Chen, Madurai, 16 cm x D gul, Tiru, 40 cm-B/W 640 Tansore, Ctore , Erode, Salem, Tri velli, Nagkoil, Vel, Cuddalore, Pon, Blr, Mum Ahd, Blr, Bhub, 16 cm x Mum, Kol, Chd, 40 cm-B/W 640 Koc, Del, Hyd, Lko Bho, Mum, Kol, Chd Del, Lko, Pat Ahd, Bhav,Sur, 40 cm x Raj, 4 col-B/W Vad, Mum Pune 16 cm x 40 cm-B/W 16 cm x 40 cm-B/W 640

DINA THANTHI

Tamil

BUSINESS STANDARD

Eng

BUSINESS STANDARD

Hin

GUJARAT SAMACHAR

Guj

160

SAKAL DAINIK BHASKAR GROUP DAINIK BHASKAR

Mar

1 2

Hin

Del, Ajmr, Alwar, Amb, Amtsar, Bhilai, Bho, Bika, Bilas, Bhil, Chd, F bad, Gwa, His, Indore. Jai, Jod, J dhar, Kot, Lud, Palli, Pani, Rai, Rat, Sag, Srig ngr, Shimla, Sikar, Ujjain, Udpur Ahd, Vad, Bhuj, Mum, Raj, Sut, S SamacharVavnagar. Mum, Jai, Ahd, Pun, Blr.

DIVYA BHASKAR

Guj

DNA

Eng

127

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 640 sqcm

DAINIK JAGRAN

Hin

Agra, Bar, 16 cm x 40 cm-B/W 640 D dun, Gkp, Ha dwar, Jansi, Kan, Lko, Mathura, Merut, N tal, Rai blli, Var Kolkata 16.3 cm x 40 cm-B/W 652

ANANDA BAZAR PATRIKA

Ben

TELEGRAPH DECCAN CHRONICLE

Eng Eng

Kolkata 16 cm x An tpur, Blr, Hyd, 40 cm-B/W 640 K ngr, Chen, Nel, RMundri, V wada, Visakh 16 cm x 40 cm-B/W 640 1

INDIAN EXPRESS GROU P

FINANCIAL CHRONICLE

Eng

Blr, Mum, Del, Hyd, Chen Ahd, Vad, Mum, Kol, Chd, Del, Lko, Nag, Pun, Ahd, Blr, Mum, Kol, Chd, Koc, Del, Hyd, Lko, Chen, Pune Blr, Bhub, Belgaon, K kode, Koc, Koim, Hyd, Chen, Madu, S moga, Thiru, Tiru, V wada, Visakh Del, Lko, Chd, Kol 16 cm x 40 cm-B/W 640 1

INDIAN EXPRESS

Eng

FINANCIAL EXPRESS

Eng

NEW INDIAN EXPRESS

Eng

JANSATTA TRIBUNE

Hin

Eng/Hin/ Chandigarh Pun

PUNJAB KESARI AJIT DECCAN HERALD PRAJAVANI

Hin Punjabi Eng Kar

Del, Jallandhar 16 cm x 40 cm-B/W 640 Jallandhar Bangalore Bangalore 16 cm x 40 cm-B/W 640 16 cm x 40 cm-B/W 640

1 1 1

128

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 640 sqcm

RAJASTHAN PATRIKA

Hin

Ajm, Alwar,Bik, 16 cm x Bhil, Banswara, 40 cm-B/W 640 Jai, Jod, Kota, Pali, Sik, Srig ngr, Udaipur Agra, Ali, Allh, 16 cm x Bar, Bulshr, 40 cm-B/W 640 Chd, Ddun, Del, Dshala, Gkp, Jam, Jan, Jul, Kan, Lko, Merut, Mbad, N tal, Var 16 cm x Kottayam, 40 cm-B/W 640 Koc, Thrissur, Palakat, Kozkod, Kannur, Mpuram, Pathnnamithita, Mum, Blr, Chen , Del, Mglr An pur, Blr, 16 cm x Mum, Cudapa, 40 cm-B/W 640 Del, Hyd, K mam, Kngr, Kumul, Chen, Meh ngr, N gonda, Nizbd, Nel, Ongole, R mdri, Sri Kakulam, Tedpalligudam, Tiru, Vwada, Visakh, Warangal Bhuvneshwar 16 cm x 40 cm-B/W 640

AMAR UJALA

Hin

MALAYALA MANORMA

Malayalam Thru, Kolam,

SAKSHI TELUGU DAILY

Telugu

SAMAY

Ori

ASSAMIYA PRATIDIN

Asam

Guwahati

16 cm x 40 cm-B/W 640

Amount Service Tax Total

* For GUJARAT SAMACHAR, the size of advertisment for Issue open/ issue close will be 160 (40cm x 4 col). For ANANDA BAZAR PATRIKA and TRLEGRAPH the size of advertisment for Issue open/ issue close will be 652 (16.3cm x 40 cm).

129

Annexure A 2
PRINT MEDIA PLAN Campaign : Basis of Allotment
Publication & Edition(s) Language Edition Size of Advt Total No. of size ins Card Rate (psqcm) Offered Rate (psqcm) Cost based on offered rate for 800 sqcm

TIMES OF INDIA GROUP TIMES OF INDIA Eng Ahd, Blr, Mum, Kol, Del, Goa, Hyd, Jai, Kan, Lko, Chen, Mlr, Mys, Nag, Pun, Ahd, Kol, Hyd, Pun, Del Ahd, Mum Del, Mum. Mum, Pun Ahd, Bhav, Sur, Raj, Vad Blr, Bkote, Chitdga, Gan vati, Gulbarga, Hassan, Hbli, Mglr, Myr, Simoga Mum, Ahm, Pun, Blr Del Blr, Mum, Chd, Del, Lko, Chen.

20 cm x 40 cm-B/W 800

ECONOMIC TIMES

Eng

ECONOMIC TIMES ECONOMIC TIMES NAVBHARAT TIMES MAHARASHTRA TIMES SANDESH VIJAY KARNATAKA

Hin Guj Hin Mar Guj Kar

MIRROR SANDHYA TIMES

HINDUSTAN TIMES GROUP

Eng Hin

20 cm x 40 cm-B/W 800 Eng Bho, Mum, Kol, Chd, Del, Lko, Pat, Ran, Agra, Allhd, Bhg, Bar, D doon, Del, Dhabd, Jmdpur, Kan, Lko, Merut, Muzzpur, Pat, Ran, Var Ahd, Blr, Mum, Kol, Del, Chen. 20 cm x 40 cm-B/W 800 Eng Blr, Koc, Cbtre, Del Hyd, Chen, Madu, Mag, Pondi, Thiru, Tiru, V wada, Visakh

HINDUSTAN TIMES

HINDUSTAN

Hin

MINT THE HINDU GROUP THE HINDU

Eng

130

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 800 sqcm

HINDU - BUSINESS LINE

Eng

Blr, Koc, Cbtre, Del Hyd, Chen, Madu, Mag, Thiru, Tiru, V wada, Visakh , Kol, Mum, Chen, Madurai, 20 cm x D gul, Tiru, 40 cm-B/W 800 Tansore, Ctore , Erode, Salem, Tri velli, Nagkoil, Vel, Cuddalore, Pon, Blr, Mum Ahd, Blr, Bhub, 20 cm x Mum, Kol, Chd, 40 cm-B/W 800 Koc, Del, Hyd, Lko Bho, Mum, Kol, Chd Del, Lko, Pat Ahd, Bhav,Sur, 40 cm x Raj, 5 col-B/W Vad, Mum Pune 1

DINA THANTHI

Tamil

BUSINESS STANDARD

Eng

BUSINESS STANDARD

Hin

GUJARAT SAMACHAR

Guj

200

SAKAL

Mar

20 cm x 40 cm-B/W 800 20 cm x 40 cm-B/W 800

DAINIK BHASKAR GROUP

DAINIK BHASKAR

Hin

Del, Ajmr, Alwar, Amb, Amtsar, Bhilai, Bho, Bika, Bilas, Bhil, Chd, F bad, Gwa, His, Indore. Jai, Jod, J dhar, Kot, Lud, Palli, Pani, Rai, Rat, Sag, Srig ngr, Shimla, Sikar, Ujjain, Udpur Ahd, Vad, Bhuj, Mum, Raj, Sut, S SamacharVavnagar. Mum, Jai, Ahd, Pun, Blr.

DIVYA BHASKAR

Guj

DNA

Eng

131

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 800 sqcm

DAINIK JAGRAN

Hin

Agra, Bar, 20 cm x 40 cm-B/W 800 D dun, Gkp, Ha dwar, Jansi, Kan, Lko, Mathura, Merut, N tal, Rai blli, Var Kolkata 20.4 cm x 40 cm-B/W 816

ANANDA BAZAR PATRIKA

Ben

TELEGRAPH DECCAN CHRONICLE

Eng Eng

Kolkata An tpur, Blr, 20 cm x Hyd, 40 cm-B/W 800 K ngr, Chen, Nel, RMundri, V wada, Visakh 20 cm x 40 cm-B/W 800 1

INDIAN EXPRESS GROU P

FINANCIAL CHRONICLE

Eng

Blr, Mum, Del, Hyd, Chen Ahd, Vad, Mum, Kol, Chd, Del, Lko, Nag, Pun, Ahd, Blr, Mum, Kol, Chd, Koc, Del, Hyd, Lko, Chen, Pune Blr, Bhub, Belgaon, K kode, Koc, Koim, Hyd, Chen, Madu, S moga, Thiru, Tiru, V wada, Visakh Del, Lko, Chd, Kol 20 cm x 40 cm-B/W 800 1

INDIAN EXPRESS

Eng

FINANCIAL EXPRESS

Eng

NEW INDIAN EXPRESS

Eng

JANSATTA TRIBUNE

Hin

Eng/Hin/ Chandigarh Pun Hin

PUNJAB KESARI

Del, Jallandhar 20 cm x 40 cm-B/W 800 Jallandhar Bangalore Bangalore 20 cm x 40 cm-B/W 800 20 cm x 40 cm-B/W 800

AJIT DECCAN HERALD PRAJAVANI

Punjabi Eng Kar

1 1

132

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 800 sqcm

RAJASTHAN PATRIKA

Hin

Ajm, Alwar,Bik, 20 cm x Bhil, Banswara, 40 cm-B/W 800 Jai, Jod, Kota, Pali, Sik, Srig ngr, Udaipur Agra, Ali, Allh, 20 cm x 40 cm-B/W 800 Bar, Bulshr, Chd, Ddun, Del, Dshala, Gkp, Jam, Jan, Jul, Kan, Lko, Merut, Mbad, N tal, Var 20 cm x 40 cm-B/W 800 Kottayam, Koc, Thrissur, Palakat, Kozkod, Kannur, Mpuram, Pathnnamithita, Mum, Blr, Chen, Del, Mglr An pur, Blr, 20 cm x Mum, Cudapa, 40 cm-B/W 800 Del, Hyd, K mam, Kngr, Kumul, Chen, Meh ngr, N gonda, Nizbd, Nel, Ongole, R mdri, Sri Kakulam, Tedpalligudam, Tiru, Vwada, Visakh, Warangal Bhuvneshwar Guwahati 20 cm x 40 cm-B/W 800 20 cm x 40 cm-B/W 800

AMAR UJALA

Hin

MALAYALA MANORMA

Malayalam Thru, Kolam,

SAKSHI TELUGU DAILY

Telugu

SAMAY ASSAMIYA PRATIDIN

Ori Asam

1 1

Amount Service Tax Total

* For GUJARAT SAMACHAR, the size of advertisment for Basis of Allotment will be 200 (40cm x 5 col). For ANANDA BAZAR PATRIKA and TRLEGRAPH the size of advertisment for Basis of Allotment will be 816 (20.4 cm x 40 cm).

133

Annexure A 3
PRINT MEDIA PLAN Campaign : Thanks You Advertisenent
Publication & Edition(s) Language Edition Size of Advt Total No. of size ins Card Rate (psqcm) Offered Rate (psqcm) Cost based on offered rate for 320 sqcm

TIMES OF INDIA GROUP TIMES OF INDIA Eng Ahd, Blr, Mum, Kol, Del, Goa, Hyd, Jai, Kan, Lko, Chen, Mlr, Mys, Nag, Pun, Ahd, Kol, Hyd, Pun, Del Ahd, Mum Del, Mum. Mum, Pun Ahd, Bhav, Sur, Raj, Vad Blr, Bkote, Chitdga, Gan vati, Gulbarga, Hassan, Hbli, Mglr, Myr, Simoga Mum, Ahm, Pun, Blr Del Blr, Mum, Chd, Del, Lko, Chen.

16 cm x 20 cm-B/W 320

ECONOMIC TIMES

Eng

ECONOMIC TIMES ECONOMIC TIMES NAVBHARAT TIMES MAHARASHTRA TIMES SANDESH VIJAY KARNATAKA

Hin Guj Hin Mar Guj Kar

MIRROR SANDHYA TIMES

HINDUSTAN TIMES GROUP

Eng Hin

16 cm x 20 cm-B/W 320 Eng Bho, Mum, Kol, Chd, Del, Lko, Pat, Ran, Agra, Allhd, Bhg, Bar, D doon, Del, Dhabd, Jmdpur, Kan, Lko, Merut, Muzzpur, Pat, Ran, Var Ahd, Blr, Mum, Kol, Del, Chen. 16 cm x 20 cm-B/W 320 Eng Blr, Koc, Cbtre, Del Hyd, Chen, Madu, Mag, Pondi, Thiru, Tiru, V wada, Visakh

HINDUSTAN TIMES

HINDUSTAN

Hin

MINT THE HINDU GROUP THE HINDU

Eng

134

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 320 sqcm

HINDU - BUSINESS LINE

Eng

Blr, Koc, Cbtre, Del Hyd, Chen, Madu, Mag, Thiru, Tiru, V wada, Visakh , Kol Mum, Chen, Madurai, 16 cm x D gul, Tiru, 20 cm-B/W 320 Tansore, Ctore , Erode, Salem, Tri velli, Nagkoil, Vel, Cuddalore, Pon, Blr, Mum Ahd, Blr, Bhub, 16 cm x Mum, Kol, Chd, 20 cm-B/W 320 Koc, Del, Hyd, Lko Bho, Mum, Kol, Chd Del, Lko, Pat Ahd, Bhav,Sur, 20 cm x Raj, 4 col-B/W Vad, Mum Pune 16 cm x 20 cm-B/W 16 cm x 20 cm-B/W 320

DINA THANTHI

Tamil

BUSINESS STANDARD

Eng

BUSINESS STANDARD

Hin

GUJARAT SAMACHAR

Guj

80

SAKAL

Mar

DAINIK BHASKAR GROUP DAINIK BHASKAR Hin Del, Ajmr, Alwar, Amb, Amtsar, Bhilai, Bho, Bika, Bilas, Bhil, Chd, F bad, Gwa, His, Indore. Jai, Jod, J dhar, Kot, Lud, Palli, Pani, Rai, Rat, Sag, Srig ngr, Shimla, Sikar, Ujjain, Udpur Ahd, Vad, Bhuj, Mum, Raj, Sut, S SamacharVavnagar. Mum, Jai, Ahd, Pun, Blr.

DIVYA BHASKAR

Guj

DNA

Eng

135

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 320 sqcm

DAINIK JAGRAN

Hin

Agra, Bar, 16 cm x 20 cm-B/W 320 D dun, Gkp, Ha dwar, Jansi, Kan, Lko, Mathura, Merut, N tal, Rai blli, Var Kolkata 16.3 cm x 20 cm-B/W 320

ANANDA BAZAR PATRIKA

Ben

TELEGRAPH DECCAN CHRONICLE

Eng Eng

Kolkata 16 cm x An tpur, Blr, Hyd, 20 cm-B/W 320 K ngr, Chen, Nel, RMundri, V wada, Visakh 16 cm x 20 cm-B/W 320 1

INDIAN EXPRESS GROU P

FINANCIAL CHRONICLE

Eng

Blr, Mum, Del, Hyd, Chen Ahd, Vad, Mum, Kol, Chd, Del, Lko, Nag, Pun, Ahd, Blr, Mum, Kol, Chd, Koc, Del, Hyd, Lko, Chen, Pune Blr, Bhub, Belgaon, K kode, Koc, Koim, Hyd, Chen, Madu, S moga, Thiru, Tiru, V wada, Visakh Del, Lko, Chd, Kol 16 cm x 20 cm-B/W 320 1

INDIAN EXPRESS

Eng

FINANCIAL EXPRESS

Eng

NEW INDIAN EXPRESS

Eng

JANSATTA TRIBUNE

Hin

Eng/Hin/ Pun Chandigarh

PUNJAB KESARI AJIT DECCAN HERALD PRAJAVANI

Hin Punjabi Eng Kar

Del, Jallandhar 16 cm x 20 cm-B/W 320 Jallandhar Bangalore Bangalore 16 cm x 20 cm-B/W 320 16 cm x 20 cm-B/W 320

1 1 1

136

Publication & Edition(s)

Language

Edition

Size of Advt

Total No. of size ins

Card Rate (psqcm)

Offered Rate (psqcm)

Cost based on offered rate for 320 sqcm

RAJASTHAN PATRIKA

Hin

Ajm, Alwar,Bik, 16 cm x Bhil, Banswara. 20 cm-B/W 320 Jai, Jod, Kota, Pali, Sik, Srig ngr, Udaipur Agra, Ali, Allh, 16 cm x 20 cm-B/W 320 Bar, Bulshr, Chd, Ddun, Del, Dshala, Gkp, Jam, Jan, Jul, Kan, Lko, Merut, Mbad, N tal, Var 16 cm x Kottayam, 20 cm-B/W 320 Koc, Thrissur, Palakat, Kozkod, Kannur, Mpuram, Pathnnamithita, Mum, Blr, Chen , Del, Mglr 16 cm x An pur, Blr, Mum, Cudapa, 20 cm-B/W 320 Del, Hyd, K mam, Kngr, Kumul, Chen, Meh ngr, N gonda, Nizbd, Nel, Ongole, R mdri, Sri Kakulam, Tedpalligudam, Tiru, Vwada, Visakh, Warangal Bhuvneshwar Guwahati 16 cm x 20 cm-B/W 320 16 cm x 20 cm-B/W 320

AMAR UJALA

Hin

MALAYALA MANORMA

Malayalam Thru, Kolam,

SAKSHI TELUGU DAILY

Telugu

SAMAY ASSAMIYA PRATIDIN

Ori Asam

1 1

Amount Service Tax Total

* For GUJARAT SAMACHAR, the size of advertisment for Thankyou will be 80 (20cm x 4 col). For ANANDA BAZAR PATRIKA and TRLEGRAPH the size of advertisment for Thankyou will be 326 (16.3cm x 20 cm).

137

Annexure B TELEVISION PLAN ISSUE

Sl. Channel No. Day Time Band No. of Days No. of spots per day Edit (sec) Card Negotiated Total Total rate per net Second- Rate per 10 10 cost age

sec 1 CNBC TV 18 (English) 2 AWWAZ (Hindi) 3 CNN IBN (English) 4 IBN 7 (Hindi) 5 NDTV Profit (English) 6 NDTV 24x7 (English) 7 NDTV India MonSun (English) MonSun ZEE NEWS MonSun (Hindi) MonSun ZEE BUSINESS MonSun (Hindi) MonSun DD News MonSun (Hindi) AAJ TAK MonSun MonSun MonSun MonSun MonSun MonSun MonSun MonSun MonSun MonSun MonSun MonSun 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 06002400 05001800 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 12 8 12 8 8 4 8 4 12 8 8 4 8 4 8 4 12 8 6 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 480 160 480 160 320 80 320 80 480 160 320 80 320 80 320 80 480 160 240

sec

10

11

6
138

20

360

Sl. Channel No.

Day

Time Band

No. of Days

No. of spots per day

Edit (sec)

Card Negotiated Total Total rate per net Second- Rate per 10 cost 10 age

sec MonSun 12 DELHI AAJ TAK MonSun (Hindi) MonSun Mon13 TEZ Sun (Hindi) MonSun 14 HEADLINE MonTODAY Sun (English) MonSun 15 ET NOW MonSun 16 TIMES NOW MonSun (Hindi) 18002400 05001800 18002400 05001800 18002400 05001800 18002400 18002400 18002400 2 3 2 3 2 3 2 2 2 6 6 6 6 6 6 6 6 6 20 20 20 20 20 20 20 20 20 240 360 240 360 240 360 240 240 240

sec

Amount Service Tax Total

139

Annexure - C
Stations Place Rate for 10 seconds Prime Band (in hrs.) Duration 20 seconds No. of spots Total amount for each station

Radio Mirchi Mumbai, Delhi, Ahmedabad, Surat, Vathe Department of Disinvestment, Rajkot, Jaipur Red FM Mumbai, Delhi, Ahmedabad, Vathe Department of Disinvestment, Rajkot, Jaipur Mumbai, Delhi, Ahmedabad, Surat, Jaipur

0700-1200 1700-2200

30

0700-1200 1700-2200

30

Radio City

0700-1200 1700-2200 0700-1200

30

AIR FM Gold Mumbai, Delhi Air Rainbow Mumbai, Delhi, Vathe Department of Disinvestment Mumbai, Delhi, Vathe Department of Disinvestment and Jaipur

30

1700-2200

Big FM

0700-1200 1700-2200

30

Amount Service Tax Total

140

Annexure - I No. 5/3/2011-Policy Government of India Ministry of Finance Department of Disinvestment Block 14, CGO Complex, Lodhi Road, New Delhi- 110003 Dated the 8th June, 2011 OFFICE MEMORANDUM Subject: Guidelines for qualification of Advisers for disinvestment process. In order to inspire public confidence in the selection of Advisers through competitive bidding, the Government had framed comprehensive and transparent guidelines defining the criteria for their selection. In addition to using a set of criteria like sector experience, knowledge, commitment etc., additional criteria for qualification/disqualification of the parties to act as Advisers to the Government for disinvestment transactions were prescribed by the Department of Disinvestment vide its O.M. No. 5/3/2011 Policy dated 2.5.2011. 2. In supersession of the above-mentioned O.M. of this Department, the revised criteria for qualification/disqualification of the parties to act as Advisers for disinvestment transactions would be as under: (a) Any conviction by a Court of Law or indictment/adverse order by a regulatory authority for a grave offence against the Advising concern or its sister concern would constitute a disqualification. Grave offence would be defined to be of such a nature that it outrages the moral sense of the community. The decision in regard to the nature of offence would be taken on a case-to-case basis after considering the facts of the case and relevant legal principles by the Government. Similarly, the decision in regard to the relationship between the sister concerns would be taken based on relevant facts and after examining whether the two concerns are substantially controlled by the same person/persons. In case such a disqualification takes place, after the entity has already been appointed as Adviser, the party would be under an obligation to withdraw voluntarily from the disinvestment process, failing which the Government would have the liberty to terminate the appointment/contract. Disqualification shall continue for a period that Government deems appropriate. 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. The disqualification criteria would come into effect immediately and would apply to all the Advisers already appointed by the Government for various disinvestment transactions, which have not yet been completed. Before disqualifying a concern, a Show Cause Notice why it should not be disqualified would be issued to it and it would be given an opportunity to explain its position.
141 141 141

(b)

(c) (d)

(e)

(f)

(g)

Henceforth, these criteria will be prescribed in the advertisements seeking Expressions of Interest (EOI) from the interested parties to act as Adviser. Further, the interested parties shall be required to provide with their EOI an undertaking to the effect that no investigation by a regulatory authority is pending against them. In case any investigation is pending against the concern or its sister concern or against the CEO or any of its Directors/Managers/Employees, full details of such investigation including the name of the investigating agency, the charge/offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government. For other criteria also, similar undertaking will be obtained along with EOI. They would also have to give an undertaking that if they are disqualified as per the prescribed criteria, at any time before the transaction is completed, they would be required to inform the Government of the same and voluntarily withdraw from the assignment. The interested parties would also be required to submit a list of or disclose any mandated transactions which are in the same line of business as that of the company (being disinvested) in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser and confirm in writing that there exists no conflict of interest as on the date of submitting their proposal for appointment/ their appointment as Advisers in handling of the transaction and that, in future, if such a conflict of interest arises, the Adviser would immediately intimate the Government/Company (being disinvested) of the same. The Government/Company (being disinvested) shall at its sole discretion after providing due and reasonable opportunity decide whether such future conflict of interest shall materially adversely affect the interest of the Government and the Company (being disinvested) in relation to the transaction and shall be entitled to grant the consent to the Adviser to continue as Adviser or terminate the appointment of the Adviser. For disinvestment purposes, conflict of interest is defined to include engaging in any activity or business by the Adviser in association with any third Party, during the engagement, which would or may be reasonably expected to, directly or indirectly, materially adversely affect the interest of Government of India and/ or the Company (being disinvested) in relation to the transaction, and in respect of which the Adviser has or may obtain any proprietary or confidential information during the engagement, that, if known to any other client of the Adviser, could be used in any manner by such client to the material disadvantage of Government of India and/ or the Company (being disinvested) in the transaction.

(h)

(i)

The conflict of interest would be deemed to have arisen if any Adviser in respect of the transaction is appointed by a third party for advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser. Further, the decision of the Government/Company (being divested) as to whether such other person or entity is engaged in the same line of business as that of the Company being disinvested, shall be final and binding on the Adviser. The conflict of interest would also be deemed to have arisen if any Adviser firm/ concern has any professional or commercial relationship with any bidding firm/ concern for the same disinvestment transaction during the pendency of such transaction. In this context,
142 142 142

(j)

both Adviser firm and bidding firm would mean the distinct and separate legal entities and would not include their sister concern, group concern or affiliates etc. The professional or commercial relationship is defined to include acting on behalf of the bidder or undertaking any assignment for the bidder of any nature, whether or not directly related to disinvestment transaction. (This clause is applicable in strategic sale only). (k) The interested parties would also be required to give information and disclose that as on the date of submitting their proposal for appointment/ their appointment as Advisers in respect of the transaction, they are advising or acting on behalf of or associated with any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/or the Company (being disinvested) is proposing to select or have appointed the Adviser. - In the event the Adviser fails to disclose that it is advising or acting on behalf of or associated with any other person or entity which is engaged in the same line of business as that of the Company (being disinvested), in respect of any transaction of same nature as the transaction for which the Government and/ or the Company (being disinvested) is proposing to select or have appointed the Adviser, at the time of giving the afore-mentioned undertaking, the Government/Company (being disinvested) shall be entitled to terminate their appointment. Before terminating the appointment, a show cause notice stating why its appointment should not be terminated would be issued giving it an opportunity to explain its position. (l) For a period commencing from the date of appointment of the Adviser till the completion of the transaction, the Adviser shall keep the Company/ Government informed of any mandate/ contract entered into to advise or act on behalf of or associate itself with, any other person or entity (including any company, partnership, proprietary concern or individual or an HUF or association of persons or body of individuals) which is engaged in the same line of business as that of the Company being disinvested, in respect of any transaction of same nature as the transaction in respect of which the Adviser has been appointed as the Adviser. Provided that, if six months or more have elapsed from the date of appointment as Adviser to the government disinvestment transaction, the Adviser would normally be permitted by the Government/Company (being disinvested), save for exigent circumstances. The decision of the Government/Company (being disinvested) in this regard shall be final and binding on the Adviser. Further, the decision of the Government/Company (being divested) as to whether such other person or entity is engaged in the same line of business as that of the Company being disinvested, shall be final and binding on the Adviser.

(m) For the purpose of clauses (k) and (l) above, the nature of transaction may include, but not be limited to, a capital market transaction which in turn could include, but not be limited to, a domestic offering of shares or any other security, whether by way of initial public offer or further public offer or qualified institutions placement or issue of IDRs or by any other manner, as well as the international offering of securities, whether by way of issue of ADRs, GDRs or FCCBs or by any other manner.
143 143 143

(n)

In the event the Adviser fails to obtain the prior written consent of the Government/Company (being disinvested) as aforesaid, the Government/ Company (being disinvested) shall be entitled to terminate the appointment of the Adviser. Before terminating the appointment, a show cause notice stating why its appointment should not be terminated would be issued to the Adviser giving it an opportunity to explain its position.

Sd/(V.P. Gupta) Deputy Secretary to the Government of India Tel: 2436 8036 To, All Ministries/ Departments of the Government of India

144 144 144

Annexure -Y It is clarified that the bidder whose cumulative fee for all the components specified in para 3 of the invite is the lowest will be appointed as the advertising agency. However, with respect to the different media plans (Annexure A, B & C) in case the agency which has been selected is not giving the lowest rate for a particular publication which is finally selected by the Department for release of Ads, that agency will have to agree to abide by a lower rate given by one of the other technically qualified agencies. Examples given below will illustrate the point:

Publication/ statutory ad Times of India Group (all editions) Hindustan Times Group (all editions) Indian Express Group (all edition) Total

Agency X Agency Y Rate/sq.cm Rate/sq.cm

Agency Z Rate/sq.cm

Agency A Rate/sq.cm

400/sq.cm

420/sq.cm

410/sq.cm

390/sq.cm

300/sq.cm

290/sq.cm

305/sq.cm

310/sq.cm

100/sq.cm 800/sq.cm L1 L2 L3 L4

110/sq.cm 820/sq.cm -

95/sq.cm 810/sq.cm Agency X Agency A Agency Z Agency Y

105/sq.cm 805/sq.cm

Here Agency X is the lowest bidder if all publications are taken together. However, if the Department decides to release the ads in the Indian Express group only then the lowest quotation for this group is from Agency Z. In that case the Condition of Appointment of Agency X is that it has to match the lowest rate offered by Agency Z which would be Rs 95/sq.cm. The condition is applicable to all media plans given.

145 145 145

Annex- XI F. No Government of India Ministry of Finance Department of Disinvestment Block No. 14, CGO Complex Lodhi Road, New Delhi 110 003 Dated the To (Selected Agency) Subject: Engagement of Advertising Agency for Initial Public Offer/Further Public Offer in CPSE) Sir, I am directed to invite reference to this Office letter of even number dated inviting proposal for consideration for appointment of Ad Agency for the Initial Public offer/ Further Public Offer in CPSE) being carried out by this Department and presentation made by you on (date) before the duly constituted Selection Committee. 2. This is to intimate that based on your proposals, presentations, the price bid of (date) and your letter dated wherein you have agreed to abide by the terms listed in the bid document and match the lowest rate/ quote by the other technically qualified agency L2, it has been decided to appoint you as the Ad Agency for IPO/FPO in (CPSE). 3. There should not be any conflict of interest at any stage of the assignment. If however there is any, you will immediately inform the Government. In this respect, the guidelines issued by this Ministry vide OM No. 5/3/2011-Policy dated 8-6-2011 would be strictly adherted to (copy enclosed). 4. You are, therefore, advised to immediately commence the work in coordination with the management of (CPSE), the Book Running Lead Managers and Legal Counsels appointed for the Issue. 5. Kindly return a copy of this letter duly signed by authorized signatory in token of acceptance of the work on the terms and conditions mentioned in the RFP. Yours faithfully, ( ) Under Secretary to the Government of India Tel: Copy to: 1. 2. 3. JS/ Director, of Administrative Ministry. CMD, CPSE Concerned. Director (Finance), CPSE concerned.
147 147 147

148

Annex- XII F. No Government of India Ministry of Finance Department of Disinvestment CGO Complex, Block No.14, Lodi Road, New Delhi-110 003 Dated the To {As per list} Subject : Registrar to the Public Offerings in Sir, The Government of India is in the process of disinvestment of % paid-up equity capital of (CPSE) out of Government shareholding through an IPO/ FPO. In the above process, Department of Disinvestment requires the services of Registrar to the Issue. 2. To be eligible for the above transaction, the Registrar should have the following qualifications:(i) (ii) (iii) (iv) (v) (vi) Should be Cat-I SEBI Registered Registrar, with validity covering at least next 6 months. Clean Track record no penalty/debar from SEBI in the past. Should have handled issues of the applications were more than 3 lakh during Past track record of handling the IPO/FPO. Should have adequate financial net worth and profit record in all the past three years. Having a functional work site at Delhi or closer to the registered Office of the PSE. crore or more with one issue where to _ . (CPSE).

(vii) Technology for Client/Investor servicing (dissemination of information on allotments/ refunds through Website, IVRS, Alerts, Reports, web access to data base to company, etc.) (viii) Technical infrastructure Data base maintenance, Redundancy in capacity, scalability, DRS and BCP, data security, achieve and retrieval, communication, Voice data management, integrity and validation. (ix) (x) 3. Area of work Site, storage facilities. Dispatch arrangement SELF GPC or through mailing agents.

The scope of work of the Registrar is given at Annexure-A.

4. In case you are interested and fulfill all the criteria mentioned in para 2 above, you may confirm the same and send the detailed information on each of the above criterion along with
149 149 149

financial bid. The confirmation about the criteria is to be in an open envelope, the financial bid should be in a sealed cover. The financial bid will be opened only if you fulfill the criteria mentioned in para 2 above. 5. The financial bid should be unconditional and should be as under:(i) Per application charges inclusive of fee processing of applications, out of pocket expenses or any other expenditure involved. (ii) Postage charges for refund would be on actual basis. date & time) at the

6. Financial bid should reach the undersigned by following address:Department of Disinvestment , Block CGO Complex, Lodhi Road, New Delhi-110003

Room No.

The bids will be opened at _ _ on _ _ (date & time) and if you wish, a representative of your organization can remain present at the time of opening the bids. Note: No delay on account of postal or courier will be entertained. The bids received after the due date and time would be summarily rejected. Yours faithfully, ( ) Under Secretary to the Government of India. Tel.:

150 150 150

Annexure-A SCOPE OF WORK OF REGISTRAR 1. Providing inputs for finalizing the bankers to the offer and assist in identification of the collecting branches at the collection centers finalized. 2. Reviewing the Issue/Offer Procedure section in the offer document. 3. (A) Collecting: i) The Bid cum Application Forms from various centers of the Escrow Collection Banks. ii) The electronic Bid data (including the Application Supported by Blocked Amount (ASBA) Bid data) from the Stock Exchanges, and iii) The aggregate data in relation to the total number of ASBAs uploaded by the Self Certified Syndicate Banks (the SCSBs) and the total number of Equity Shares and the total amount blocked against the uploaded ASBAs, from each SCSB, in each case, in accordance with the instructions of the Selling Shareholders and the Company and reporting any disruptions/delay in the flow of applications from bankers to the Selling Shareholder, the Company and the BRLMs. (B) Processing all applications in relation to the Offer i) Reconciling the compiled data collected from the Stock Exchanges in terms of Clause 6(A) (2) with the data collected from the SCSBs in terms of 6(A)(3); ii) Matching the DP ID, Client ID and PAN specified in the reconciled data with the depositorys database. iii) Informing the SCSBs about errors, if any, in the Bid details, along with advice to send the rectified data within a specified date. iv) Rejecting the Bids (including ASBAs) in respect of which the DP ID, Client ID and PAN specified in the reconciled data does not match with these details in the depositorys database and which has not been rectified by the SCSB within the specified date. v) Reconciliation on a regular basis of the data between Bids registered on online FPO system of Stock Exchanges and physical Bid cum Applications forms; vi) Entering accurate data based on application/depository details and weeding out multiple applications, including ASBAs. vii) Keeping accurately, at all times, the electronic records relating to ASBAs received from all SCSBs, including: a) ASBAs taken from the online public Offer system of the Stock Exchanges and ASBAs furnished by SCSBs; b) Particulars relating to the allocation and Allotment of Equity Shares against valid ASBAs; c) Particulars relating to the requisite money to be transferred to the Public Offer Account, in accordance with the terms of this Agreement, Red Herring Prospectus, the Prospectus, the SEBI Regulations and the Companies Act; and d) Particulars relating to rejected/withdrawn/unsuccessful ASBAs; viii) Deleting details of the Bids submitted by the ASBA Bidders which have been withdrawn after the Bid/Offer Closing Date.
151 151 151

ix)

x)

Preparing a statement of Bids proposed to be rejected, separately for QIBs, NonInstitutional Bidders and Retail Individual Bidders(including resident retail investors applying through the ASBA process). The list should indicate the technical reasons for rejection of Non- Institutional and Retail Bids; Coordinating with the escrow collection bankers for submission of provisional and final certificate, after taking into account rectifications, if any.

(C) Keeping a proper record of applications and monies received from Bidders and paid to the Selling Shareholders/ Escrow collection Account/ Bankers to the Offer; (i) Prepare the complete list of valid applications (after all rejections), and present the same category-wise. (ii) On case of employee reservation, validating the employee applications with the list of employee provided by the Company to ensure allotment only to the Eligible Employees. (D) Providing correct data in time to enable the Selling Shareholders and the Company to determine and finalize the basis of allocation and allotment and the Selling Shareholders and the Company in coordination with the designated stock exchange for timely approval of the basis of allotment, including in relation to ASBA applicants. (E) Post communication of the basis of allotment by the Selling Shareholders and the Company, preparation of list of allottees entitled to allocation of Equity Shares. (F) Ensuring that correct credit to respective demat accounts (for all applicants including ASBA applicants) is made in time , as specified in the Offer Documents and applicable rules, regulations and guidelines issued by SEBI; (G) Ensuring that allotment made is correct and timely uploading of the correct file in the depository system is made. (H) Coordinating with the concerned depository and ensure that the number of Equity Shares allocated to each category of bidders is correct in all respects. (I) Dispatching of letters of allotment/ Confirmation of Allocation Note (CAN)/ refund orders, credit of shares to the allottees demat accounts within the time frame indicated in the Offer Documents subject to certain cases kept in abeyance in consultation with the Selling Shareholders/Company / BRLMs. It is clarified that for the purposes of this Agreement, any reference to dispatch of refund orders shall include refunds made by way of modes permitted by the Reserve Bank of India and as provided in the SEBI Regulation. (J) Issuing duplicate refund orders (after obtaining suitable indemnity bond/CAN (K) Revalidating refund orders. (L) Carrying out due procedures in relation to processing of multiple applications as provided in the Offer Documents. (M) Complying with the effective procedure for monitoring the activities of intermediaries, which will be established in consultation with the Selling Shareholders/Company, and the BRLMs. (N) Collecting and keeping a record of multiple Bids submitted by ASBA Bidders (determined on the basis of common PAN) and rejected.
152 152 152

(O) Obtaining the electronic bid data (including ASBA bid data) from the Stock Exchange(s) and reconciling the same with the following data received from the SCSBs that is, (i) Total number of ASBAs uploaded by the SCSB; and (ii) Total number of shares and total amount blocked against the uploaded ASBAs (Reconciled Data ). (P) Ensuring that proper grievance handling mechanism is in place at its office during the Offer period and after closing of the Offer, as per applicable regulations. (Q) Rejecting multiple ASBAs determined as such, based on common PAN. (R) Once the basis of allotment is approved by the Designated Stock Exchange, providing the following details to the Controlling Branch of each SCSB, along with instructions to unblock the relevant bank accounts and transfer the requisite money to the Selling Shareholders account, as the case may be, within the timelines specified in the ASBA process: a) Number of Equity Shares to be allotted against each valid ASBA. b) Amount to be transferred from the relevant bank account to the Selling Shareholders account, for each valid ASBA. c) The date by which the funds referred herein above, shall be transferred to the Selling Shareholders account. d) Details of rejected ASBAs, if any, along with reasons for rejection and details of withdrawn/ unsuccessful ASBAs, if any, to enable SCSBs to unblock the respective bank accounts; (S) Deleting the Bids withdrawn by ASBA investors from the bid file, where withdrawal request is submitted to the Registrar after the Bid/Offer Closing Date; (T) Settling investor complaints and grievance in a timely manner in accordance with any applicable legislation and any rules, regulations and guidelines issued by SEBI, and provide requisite reports to the Selling Shareholders and the Company; and (U) Assisting the Selling Shareholders/Company in providing necessary report/information and complying with the formalities of the designated stock exchange. (V) Delivery of communication to the Company and the Selling Shareholders at the earliest in the event of discrepancy between Bids registered in the online FPO system of the Stock Exchanges and physical Bid cum Application Forms; (W)Providing all the relevant statements/reports in a timely manner for listing and trading as required under applicable regulations issued by the SEBI, in consultation with the Company, the Selling Shareholders and the BRLMs; (X) Arranging to obtain certificates from Auditors Practicing secretary with regard to the securities under a lock-in period, if any, and also that the allotment as having been made only as per the approved Basis of Allotment, by the Stock Exchange. (Y) Consolidating the list of subscriptions received through the Underwriters to the Issue and evaluating their performance. Prepare statement of selling commission payable, if any, and arrange for their dispatch. (Z) Finalizing various post-Issue monitoring reports such as the three day report and final Issue monitoring report, along with relevant documents/certificates to be submitted to SEBI within the stipulated time in consultation with the BRLMs and the company; (AA)
153 153 153

4. In connection with the Offer, the Registrar shall maintain, without limitation, the following records: a) All the applications received from investors in respect of the Offer; b) Records relating to ASBAs received from all SCSBs including ASBAs taken from the online public issue system of the Stock Exchanges and ASBAs furnished by SCSBs; c) All the applications of investors rejected and reasons thereof and details of the rejected/ withdrawn or unsuccessful ASBA Forms; d) Basis of allocation of Equity Shares to the investors as finalized by the Selling Shareholder and the Company in consultation with the Designated Stock Exchange, along with relevant annexures and details; e) Terms and conditions of offer of the Equity Shares; f) ASBAs taken from the electronic bidding system of the Stock Exchange(s) and ASBAs furnished by SCSBs in respect of the Offer; g) Particulars relating to allocation and Allotment of Equity Shares against valid ASBAs; h) Particulars relating to the requisite money to be transferred to the Offerers account against valid ASBAs; i) Details of rejected/ withdrawn/ unsuccessful ASBAs, if any; j) Details of allotment of Equity Shares; k) List of names of successful bidders and unsuccessful bidders of the Equity Shares, including successful ASBA Bidders and unsuccessful ASBA Bidders; l) Particulars relating to the allocation/allotment of the Equity Shares for the Offer; m) Particulars relating to the monies to be transferred to the public offer account and the refunds to be returned to the bidders; n) Copies/details of the Refund orders dispatched to investors in respect of application monies received from them in response to the Offer revalidation and Offer of duplicate refund order; o) Reconciliation between funds deposited in the Escrow Bank and total of amounts stated in bid cum application forms received in the Offer; p) Records of correspondence in respect of investor complaints, grievances or queries; q) Records of pre-printed issue stationery like allotment advice, refund warrants, duplicate refund warrants etc showing details of such stationery received from the Company, consumed for printing, wastage, destroyed and handed over to the Company; r) Complaint register containing detail of the date of receipt of complaint, particulars of complaint, nature of complaint, date of disposal and manner in which disposed of. Complaints received from SEBI shall also be recorded in the complaints register in addition to the complaints received directly; and s) Details of files in case of refunds to be sent by electronic mode such as Electronic Clearing Service/ RTGS etc.; and t) Such other records as may be specified by SEBI, the Selling Shareholders, the Company and/or the BRLMs for carrying on the activities as Registrar to an Offer. Subject to the provisions of any other law, the Registrar shall preserve all aforesaid records and documents for a minimum period of three years. The Registrar shall provide the Selling Shareholders, the Company or any of their assigns any report that is required by them using the information specified above in a timely manner. 5. Performing such other functions, duties, obligations and services as are required under applicable law(including the rules and regulations prescribed by SEBI) in respect of the Offer, including, but not limited to, such functions, duties, obligations and services as may be more specifically set forth in the agreement to be entered into in terms of the Securities and Exchange board of India(Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended.
154 154 154

Annex- XIII F. No Government of India Ministry of Finance Department of Disinvestment Block No.14, CGO Complex Lodi Road, New Delhi-110 003 Dated the To (Agency selected) Subject: Appointment as Registrar to the Initial Public Offering/Further Public Offering in (CPSE) Sir, I am directed to refer to this Departments letter of even number dated requesting you to send your financial offer for providing the services as the Registrar to the Initial Public Offering/ Further Public Offering of (CPSE) for consideration of the Department of Disinvestment and your financial bid, vide your letter No. dated . 2. On the basis of above offer, it has been decided to appoint you as the Registrar for the Initial Public Offering/ Further Public Offerings in (CPSE), and the fee payable to you will be as under: Sl. No. 1. Particulars Per application charges inclusive of fee processing of applications, out of pocket expenses or any other expenditure involved. Postage charges for refund Fees

2.

On actual basis

3. The scope of work and other terms and conditions mentioned in our letter of even number dated mentioned above will be applicable for this appointment. 4. You may send a copy of this letter duly signed and stamped as a token of your acceptance of the terms and conditions of the offer. 5. You may get in touch with the Director (Finance) of (CPSE) and the BRLMs appointed for the Issue for necessary co-ordination and commencement of the works in this regard. Yours faithfully, ( ) Under Secretary to the Government of India. Tel. No: Copy to: 1. Joint Secretary/Director of Administrative Ministry concerned. 2. Director (Finance), of CPSE concerned. 3. All BRLMs 4. Legal Counsel ( ).
155 155 155

156

Annex- XIV No. 4(33)/2010 Government of India Ministry of Finance Department of Disinvestment Block 14, CGO Complex, Lodhi Road, New Delhi-110003 Dated the To Banks as per List enclosed Sub: Sir, The Government of India has decided to list (CPSE) through Initial Public Offering of % equity in the company out of its holding of %. Department of Disinvestment requires the services of reputed banks with experience and expertise in Initial Public Offerings in capital markets to act as Collection/refund bankers to the _ (CPSE) Issue. 2. In the Public Offerings, the investors are required to make payment along with the application and the amount is collected by the Bankers to the Issue. The amount collected remains with the Bankers to the Issue for a number of days as per SEBI regulations. The Bankers to the Issue earn income on the amount deposited in the Escrow/Refund/Issue account. It has been decided that the Bankers to the Issue will be required to pass on 90% of the interest/benefit calculated on deposits on day to day basis with reference to the prevailing MIBOR rate. The calculation would be arrived at on each day of deposit till the receipts against the Public Offerings are deposited in Government account. 3. In case you are interested to be considered for appointment as Collection Bankers/Refund Bankers to the public offering of (CPSE) on the terms and conditions mentioned above, you may send your unconditional willingness to the undersigned by (date & time) at the address mentioned below: Under Secretary, Room No. 205, 2nd Floor, Block 11, CGO Complex, Lodhi Road, New Delhi-110 003 4. Your willingness should be on the letter head of your bank duly signed by the authorized representative with the seal of the Bank. The willingness should be unconditional and specifically mention that all activities in the Public Offerings would be rendered as per SEBI/RBI regulations. The format of the letter is enclosed. 5. It may be made clear that para 2 of this letter will comprise part of the Escrow Agreement to be entered into with the Bankers to the Issue as well as a disclosure to this effect will be made in DRHP / RHP. 6. It is further clarified that the refund stationery will be provided by the BRLMs for the Public Offerings. The postage for the refund has been included in scope of work of the Registrar; therefore on these two accounts the banks would not be required to incur any expenditure. Yours faithfully, ( ) Under Secretary to the Government of India Ph.
157 157 157

Appointment of Bankers to Initial Public Offering of

(CPSE)

FORMAT To Under Secretary, Room No. 205, 2nd Floor, Block 11, CGO Complex, Lodhi Road, New Delhi-110 003 Subject: - Appointment of Bankers to Initial Public Offering of (CPSE). Sir, Please refer to your letter No. dated__________________ sent though email on the subject mentioned above. The bank hereby gives its unconditional and binding willingness to accept the terms and conditions of your letter referred to above. The bank agrees, that in case of appointment as Banker to the Issue of (Name of CPSE), 90% of the interest/benefit calculated on deposits on day-to-day basis with reference to MIBOR rates would be passed on to Department of Disinvestment till the receipts against the Public Offering are deposited in Government account. 2. This is to certify that our Bank is registered with SEBI and in case of appointment this work would be carried out as per SEBI and RBI rules and regulations. It is further certified that the undersigned is the authorized representative of the _ bank for the purpose of signing this unconditional willingness to act as Banker to the Issue of (Name of CPSE) in case of selection on the terms and conditions mentioned above. Yours faithfully, 3.

(Name (Designation

) ) (Seal of the Bank)

158 158 158

Annex- XV Government of India Ministry of Finance Department of Disinvestment Block No.11, CGO Complex, Lodhi Road, New Delhi-110003 Dated the To As per list of Banks Subject : Appointment of Bankers to the Initial Public Offering/further public offering of (CPSE) Sir, I am directed to refer to this Departments letter of even number dated sent through email and your letter dated on the subject mentioned above and to say that you have been selected for the Initial Public Offering of (CPSE) as Collecting Banks. 2. Further, the following banks have also been appointed as Refund bankers as per details hereunder: (i) (ii) (iii) -NEFC, ECS & RTGS -NEFC, ECS & RTGS -Physical _(CPSE) is

3. Your appointment as Bankers to the Initial Public Offering of _ subject to your being in compliance with the following:

(a) Your bank is registered with SEBI and holds the valid registration certificate. (b) The work of the Banker to the Initial Public Offering would be carried out as per SEBI and RBI rules and regulations. (c) The bank agrees that 90% of the benefit calculated on deposits on day-to day basis with reference to MIBOR rates would be passed on to the Department of Disinvestment towards Issue Expenses till the receipts against the Initial Public Offering are deposited in Government Accounts. 4. You are requested to return a signed copy of this letter in token of your acceptance of the offer and terms and conditions mentioned above. Separately your consent to act as bankers to the Issue may also be given. Yours faithfully, (_ ) Under Secretary to the Government of India. Tel. No. Copy to 1. Director (Finance), CPSE concerned. 2. BRLMs. 3. Legal Counsel. 4. Administrative Ministry ( Joint Secretary/Director).
159 159 159

Annex-XVI PUBLICITY RESTRICTION- SOME DOs AND DONTs 1) 2) Issuers should not speak about a proposed issue of shares or the financial information of the company for future periods at any point of time. All public communications should only contain factual information and should not contain projections, estimates, conjections or any material extraneous to the contents in the offer documents. 3) The issuer company should not schedule any interviews with representatives of the international or the Indian press without consulting their legal counsel. The issuer company should not respond to any inquiries from US or major international press without consulting counsel first. 4) 5) 6) If the issuer company has previously scheduled interviews with the press, such interviews may be permitted so long as no information regarding the issue is discussed. All advertising that is initiated by the issuer after obtaining internal approvals for the issue have to contain or disclaim information publically about the proposed offer. The issuer company may answer unsolicited telephone inquiries from the press concerning factual information about its business, consistence with past practice, but should avoid making any statements concerning the proposed issue or any financial forecast or valuation opinion. 7) 8) 9) 10) 11) 12) The issuer company should not hold any meetings with investors in one-on-one meetings or at conferences. The issuer company should not schedule any industry conferences without first consulting legal counsel. The issuer company should not attend any meetings with research analysts except as set up by the BRLMs for the purposes of the issue. The issuer company should not participate in the preparation and distribution of research reports or analysis. The issuer company should ensure that there is no mention of the issue in any form including on its website. All information on the website should be consistent with the disclosure in the offer documents. The website should not contain financial or operating forecasts or share valuation opinion.

160 160 160

Annex-XVII

161

162

Annex-XVIII A. Indicative timeline schedule for various activities in the proposed issue process (Non-ASBA) Details of Activities Syndicate members upload bid details in the electronic bidding system of stock exchange(s). Syndicate members need to ensure that required documents are attached with the application form. Issue closes. Stock exchange(s) to allow syndicate members to undertake modification of selected fields in the bid details already uploaded. Registrar to get the electronic bid details from the stock exchanges at the end of the day. Issuer, merchant banker and registrar to submit relevant documents to the stock exchange(s) except listing application, allotment details and demat credit and refund details for the purpose of listing permission S yn di ca te me mb er s to fo rw ar d a s ch ed ul e (containing application number, payment instrument number and amount), application forms and payment instruments to collecting banks. Collecting banks may not accept bid schedule, bid applications and payment instrument after T+2 day. Registrar to give bid file received from the stock exchanges containing the application number and amount to all the collecting banks who can use this file for validation at their end. Registrar to commence validation of the electronic bid details with depositories records for DP ID, Client ID and PAN. Registrar to continue validation of the electronic bid details with depositories records. Collecting banks to commence clearing of payment instruments Registrar to complete validation of the electronic bid details with depositories records. Collecting banks to start forwarding application forms along with bank schedule to registrar. Registrar to prepare list of rejected bids based on mis-match between electronic bid details and depositories data base. Registrar to undertake Technical Rejection test based on electronic bid details and prepare list of technical rejection cases.
163 163 163

S.No. 1.

Due Date (Working Day) Issue opening date to issue closing date (where T is issue closing date).

2. 3.

T T+1

4.

T+2

5.

T+3

6.

T+4

7.

T+5

8.

9.

10.

11.

12.

13.

14.

Collecting banks to submit status of clearance status of payment instrument i.e. Final Certificate to the registrar. Collecting banks to ensure that all application forms are forwarded to the registrar. Registrar to undertake and complete reconciliation of final certificate received from the collecting banks with electronic bid details. Registrar submits the final basis of allotment to Designated Stock Exchange(s) for approving the basis of allotment. Designated stock exchange(s) to approve the basis of allotment. Registrar to prepare funds transfer schedule based on approved allotment. Registrar to give instructions to depositories to carry out lock-in for pre issue capital. Registrar and merchant banker to issue funds transfer instructions to collecting banks. Collecting banks to credit the funds in Public Issue Account of the issuer and confirm the same. Issuer to make allotment. Registrar to give instruction to depositories for credit of shares to successful allottees. Registrar to receive confirmation for pre-issue capital lock-in from depositories. Issuer and registrar to file allotment details with designated stock exchange(s) and confirm all formalities are completed except demat credit and refund. Registrar to complete refund dispatch. Registrar to issue bank-wise data of allottees, allotted amount and refund amount to collecting banks. Registrar to receive confirmation of demat credit from depositories and submit the same to the stock exchange(s). Issuer and registrar to file confirmation of demat credit and refund dispatch with stock exchange(s). Issuer to make a listing application to stock exchange(s) and stock exchanges to give listing and trading permission. Issuer, merchant banker and registrar to publish allotment advertisement before the commencement of trading, prominently displaying the date of commencement of trading, in all the newspapers where issue opening/closing advertisements have appeared earlier. Stock exchange (s) to issue commencement trading notice. Trading commences.
164

T+6

T+7

T+8

T+9

T+10

T+11

T+12

Annex-XIX A. Indicative timeline schedule for various activities in the proposed issue process (ASBA) Details of Activities An ASBA investor, intending to subscribe to a public issue, shall submit a completed ASBA form to a Self Certified Syndicate Bank (SCSB), with whom the bank account to be blocked, is maintained, through one of the following modes (i) Submit the form physically with the Designated Br anch es ( DBs ) of th e SC SB ( P h ysic al ASBA);or (ii) Submit the form electronically through the internet banking facility offered by the SCSB (Electronic ASBA). The SCSB shall give an acknowledgement by giving the counter foil or specifying the application number to the ASBA investor, as a proof of having accepted his/her ASBA, in a physical or electronic mode respectively. If the bank account specified in the ASBA does not have sufficient credit balance to meet the application money, the ASBA shall be rejected by the SCSB. (i) After accepting a Physical ASBA, the SCSB shall block funds available in the bank account specified in the Physical ASBA, to the extent of the application money specified in the ASBA. The SCSB shall then capture and upload the relevant details in the electronic bidding system as specified by the stock exchange(s) for a particular issue (ii) In case of an Electronic ASBA, the ASBA investor himself/herself shall fill in all the relevant details, except the application number which shall be system generated. The SCSB shall thereafter upload all the details specified by the stock exchange(s). The SCSB (Controlling Branch (CB) or DBs) shall provide Transaction Registration Slip(s)/Order number(s), confirming upload of ASBA details in the electronic bidding system of the stock exchange. The T ransacti on Regist ration S lip(s)/ Order number(s) shall be provided to the ASBA investor as a proof of uploading the details of ASBA, only on demand. In case an ASBA investor wants to withdraw his/ her ASBA during the bidding/offer period, he/she shall submit his/her withdrawal request to the SCSB,
165 165 165

S.No. 1.

Timeline/Due Date Issue opening date of issue closing date (where T is issue closing date)

2.

-do-

3.

-do-

4.

-do-

5.

-do-

6.

S.No.

Details of Activities which shall do the necessary, including deletion of details of the withdrawn ASBA from the electronic bidding system of the stock exchange(s) and unblocking of funds in the relevant bank account. Stock exchange to allow SCSBs to undertake modification of selected fields in the bid details aready uploaded. Registrar to get the electronic bid details from the stock exchanges at the end of the day. The SCSB shall send investor category-wise the following aggregate information as per the format specified by the Registrar to the issue, to the registrar: (i) Total number of ASBAs uploaded by the SCSB; (ii) Total number of shares and total amount blocked against the uploaded ASBAs. The Registrar shall reconcile the compiled date received from the stock exchange(s) and all SCSBs (hereinafter referred to as the reconciled data ). The registrar shall then match the reconciled data with the depositories database for correctness of DP ID, Client ID and PAN. In case any DP ID, Client ID or PAN mentioned in the bid file for ASBAs does not match with the one available in the depositories database, such ASBA shall be rejected by the registrar. In case an ASBA investor wants to withdraw his/ her ASBA after the bid closing date, he/she shall submit the withdrawal request to the registrar. The registrar shall delete the withdrawn bid from the bid file. The registrar shall reject multiple ASBAs determined as such, based on common PAN. The registrar shall finalise the basis of allotment and submit to the Designated Stock Exchange for approval. Once the basis of allotment is approved by the Designated Stock Exchange, the registrar shall provide the following details to the CB of each SCSB, along with instructions to unblock the relevant bank accounts and transfer the requisite money to the issuers account designated for this purpose, within the timeline specified in the ASBA facility: (i) Number of shares to be allotted against each valid ASBA;
166

Timeline/Due Date

7.

T+1

8.

T+2

9.

10.

T+ 2 to T + 6

11.

12. 13.

T+7

14.

S.No.

Details of Activities (ii) Amount to be transferred from the relevant bank account to the issuers account designated for this purpose, for each valid ASBA; (iii) The date by which the funds referred to in subpara (ii) above, shall be transferred to the issuers account designated for this purpose; (iv) Details of rejected ASBAs, if any, along with reasons for rejection and details of withdrawn/ unsuccessful ASBAs, if any, to enable SCSBs to unblock the respective bank accounts. SCSBs shall unblock the relevant bank accounts for: (i) Transfer of requisite money to the issuer s account designated for this purpose against each valid ASBA. (ii) Withdrawn/rejected/unsuccessful ASBAs. (iii) The CB of each SCSB shall confirm the transfer of requisite money against each successful ASBA to the Registrar to the Issue. The Issuer shall make the allotment. Registrar to give instruction to depositories for credit of shares to successful allottees. Issuer and registrar to file allotment details with Designated Stock Exchange and confirm all formalities are complete except demat credit. Registrar to receive confirmation of demat credit from depositories and submit the same to the stock exchange(s). Issuer and registrar to file confirmation of demat credit and refund dispatch with stock exchange(s). Issuer to make a listing application to stock exchange(s) and stock exchanges to give listing and trading permission. Issuer, merchant banker and registrar to publish allotment advertisement before the commencement of trading, prominently displaying the date of commencement of trading, in all the newspapers where issue opening/closing advertisements have appeared earlier. Stock exchange(s) to issue commencement trading notice. Trading commences.

Timeline/Due Date

T+8

15.

T+9

16.

T+9

17.

T+10

18.

T+11 T + 12

19.

167

168

Annex-XX GUIDELINES ON INVESTOR RELATIONS FOR LISTED CPSEs I. Importance of investor relations function

Investor relation function is a strategic management function. The function is of utmost importance to: Clearly communicating the companys values, business plan, strategy, risks, growth prospects, etc.

Differentiate the companys performance vis--vis competition. Differentiate the company as leaders in compliance, disclosures, transparency and corporate governance. Communicate to the investing community, what makes the company unique for the investor to invest their money.

Investor relations serve as the bridge between the management and the investors. Investors and regulatory requirements today demand much greater transparency. Timely and accurate information is of utmost essence. Investors typically wish to access the following information: 1. Financial Performance Top-and bottom-line growth (on a consolidated and standalone basis)

2.

Segmental information Historical performance to assess future growth potential. Managements vision and insight on strategic initiatives on growth, expansion, diversification, positioning the company Long-term orientation on shareholder value Consistency Creativity and differentiation Alignment with market trends How does the company make money? What is the logic behind the business model? What is the competitive edge? What are the long-term value drivers

Corporate Strategy

3. The company dynamics

What steps and strategies have been adopted or contemplated by the company to assess and mitigate risks? 4. Management Quality

How well does management execute strategic plans? Management credibility and experience in the relevant sector Managements ability to generate sustained earnings. Transparency regarding insider trading. Performance-based remuneration
169 169 169

5. Corporate Governance

Shareholder structure Regulatory compliance, Composition of the board and its committees. Regular Reporting and disclosure in accordance with applicable laws Transparency of financial information and disclosures Availability and openness towards investors community Equal importance to communicate good news as well as bad news Quantification of strategic objectives and goals Superiority in operations Seamless execution of business processes Customer satisfaction Market positioning Industrial reputation

6. Investor Relations

7. Operational Excellence

A good investor relations function is absolutely necessary to communicate effectively with investors and to influence their perception on the company. Overall, the job of the IR function is to communicate clearly to investors the strategies behind their growth model and position the company as the must own investment for the investors. II. Constitution of an investor relations cell The Department recommends that every CPSE constitute a suitable investor relation cell within the organization. The Department expects that the investor relations cell act as an intermediary between the Company, its investors and the larger financial community. The primary goal of the investor relations cell should be to create an awareness of the companys strengths in the market through positive branding and timely communication. The cornerstone of the Companys investor relations cell should be to ensure dissemination of information to all current and prospective shareholders. Some of the best practices in proactive investor communication:

Strive for accuracy and consistency in all communications. Information disseminated should be clear and concise. Information is disclosed to the investors promptly and in a timely manner. Provide all investors equal access to the information. Engage with investors frequently and on a continual basis at all times, be it calm or turbulent periods. Value the importance of dialogue with current and prospective investors.

In the course of its investor relations activities, the Companies are expected to comply with all applicable securities laws, rules and regulations. However, the Department recommends that, in addition to complying with the mandatory disclosures, the Company must adopt a proactive approach of voluntary supplemental disclosure covering broad areas of corporate strategy, business analysis, detailed competitive and financial data (projections or forward looking statements, growth analysis to be given with appropriate disclaimer), and other matters/metrics considered to have a potential impact on investment decisions by interested parties. The department hopes that through these activities, CPSEs will seek to build a strong and enduring positive relationship with the investment community.
170 170 170

III.

Structure of the investor relations cell

The Department recommends that the Investor Relations Cell (IRC) be headed by a senior person who should be designated as Head-Investor Relations. It is desirable that such person has an overall view of the company operations and preferably with financial background. The Head-Investor Relations may have a small team to support IR activities. Since, the investor relations function combines various aspects of the organization, it is recommended that the investor relations officer report directly to the Chief Financial Officer (CFO) or to the Director (Finance). It is imperative that the investor relations officers have access to all requisite information and have direct access to all senior executives of the company. CPSEs may devise appropriate formal / informal mechanism of making the required information available to IRC officials, while ensuring that secrecy/confidentiality is not compromised. IV. Commitment from senior management team The Department expects the senior management of each of the CPSE to devote adequate time for investor relations function. The investment community expects direct access to the senior management. Senior management should spend time, be present and be involved mainly at meetings with large institutional investors, presentations at investor conferences, and quarterly results conference calls. Quality time from senior management is one of the most important aspects of an investors analysis and is best evaluated during one-to-one meetings. Hence, senior management should set aside adequate time to meet with investors. Further, the Department expects the senior management to attend and participate in at least two investor conferences in India and one investor conference abroad based on need. The Department also expects the senior management to regularly meet with various institutional investors on oneon-one meetings or structured non-deal road shows. V. Activities of the investor relations cell 1. Respond to requests from investors and analysts for information and data. Ensure that communications are honest, accurate and consistent. Further, the investor relations cell should endeavor to respond to investor queries within two working days from the time the query is received. 2. Set up periodic investor meetings with the senior management and brief the senior management appropriately. Further, organize site visits and campus tours for analysts / investors. 3. Organize an analyst meet at least once in a year and get the senior management to speak to analysts and prospective investors on the company, its strategy, operations, and other important aspects. Make sure that the senior management utilizes the analyst meet forum to set expectations right. Ensure senior management is briefed appropriately. It would be useful for the Government Nominee Director(s) to participate in this annual meet. 4. Arrange earnings release conference calls. Develop and implement investor materials and events including presentations, releases, fact sheets, investor events, conferences, and web events. Impress upon the senior management that frequent dialogue with investors enhances credibility and helps build trust. 5. Develop and implement competitive information which pertains to publicly reported financials, the press, ratings, and public comments. In doing so, provide senior management and investors with data related to peer group comparisons, the company position vis--vis its peers and the competition. Comparisons with peers must be confined to the extent of information available in the public domain
171 171 171

The Department recommends that each investor relation cell perform the following activities:

6. Track shareholder ownership and investor relation contacts with major and important shareholders. Also, track the share price performance of peers, indices, trading patterns (selling, buying), ownership mix (institutions, retail, insiders), and appraise the management at least once a month. 7. Track and analyze analysts reports and comments, research reports, models, estimates and projections. Also, track and share information related to competitive information with senior management. 8. Clearly communicate the corporate communication policy related to corporate calendar events, insider trading policy and silent periods with investors, analysts and external stakeholders. 9. Prepare and submit an annual report on the activities of the investor relations cell to the senior management. 10. Develop an appropriate feedback system that moderates and directs the information flow and communication between the management and investors. 11. Enable analysts to initiate coverage of scrip. Help analysts on the buy side and fund managers on the sell side to understand the business model of the company and also validate their assumptions on need basis. 12. Create a data repository and build a suitable mechanism for flow of information from operational departments for preparation of briefs etc., to maintain consistency and factual accuracy of the information disseminated to analysts/investors. 13. Ma ke su re t h a t a l l t h e p ric e - se n sit iv e i n f o rm a t io n i s v e t t e d a n d pre-approved by the senior management before the same is communicated to the public. IRO should be associated with preparation of the annual press brief that publishes the Companys statement on earnings, its position, growth plans,, strategy and future business potential, etc. 14. Ensure that all appropriate press releases and briefings are uploaded on the Companys website promptly immediately after the information is disseminated to the stock exchanges. VI. Communication with financial analysts and investors The Department recommends that the Company designate the Chairman & Managing Director, Director (Finance) and the Investor Relations Officer as the official spokespersons to interact with financial analysts and investors. In specific circumstances, other spokespersons (e.g. board members), who have been given explicit authority to communicate with analysts and investors, may do so in the presence of designated spokespersons. VII. Financial information timeline and dissemination of data The Department recommends that all CPSEs publish their quarterly financial information as early as possible. Timely dissemination of data is as important as the accuracy of the data. The financial information should be disseminated widely through a press release to all the media including electronic and print media. This should be followed up with an earnings call with research analysts and fund managers. The senior management personnel of the CPSEs should attend the call to answer questions raised by investors/analysts. VIII. Silent periods Silent periods are the periods prior to the publication of financial results during which no meetings and presentations with investors and financial analysts are held in-principle. In addition, during silent periods no other communication with analysts and investors should take place, unless such communication would relate to factual clarifications of previously disclosed information.
172 172 172

The Department desires that the Company concerned decide on the length of the silent period. In general, it is advisable to commence the silent period 15 days prior to the date of the board meeting convened to consider the financial results and end the period at least 24 hours after the financial results are made public and filed with the stock exchanges as required under the listing agreements and applicable law. IX. Maintaining the investors relations page on the corporate website Corporate website has now become an important medium for external communication. The department recommends designing special investor relations sections in Company sites for continuous and enhanced communication with their investors. Indicative contents of IR page 1. Company Information This section may provide the Company overview, Strategy and Operations and Segmental information. 2. Financial results and earnings release This section may provide the latest announcements and presentations on the Companys financial results, earnings press release and webcast, complete set of financial statements (income statement, balance sheet, cash flow statement and segment information on a consolidated and standalone basis), performance presentation and outlook, key performance indicators, and segmental results. 3. Shareholder Information This section may provide the information on the Companys Board of Directors & Management, Board Committees, Corporate Governance Practices, Annual & Quarterly Reports, Sustainability Reports, Code of Conduct for Board and Senior Management, Shareholders Meetings, Details of Corporate Actions (Stock and Cash Dividends/Bonus, Stock Splits, Record Dates etc), Share Price Information (both current and historical), FAQs, Global footprint etc. 4. Investors News This section may provide for the latest Investor Relations press releases, announcements and news updates on the companys financial performance and operations. It should also provide a facility for investors to sign up for automated news alerts. The section should also provide archives of the press releases issued by the Company, so as to enable investors to download the release as and when required. 5. Financial calendar This section may provide the information on all the important dates of the corporate events and actions (past, current and upcoming) such as board meeting dates, silent period, etc. 6. Investor Contact This section may provide the contact information of key managerial personnel and of the HeadInvestor Relations. X. CONCLUSION Investor Relations is a specialized activity. Hence, matters relating to secretarial domain like share transfers/litigations, dividend queries, etc., should be handled by the Company Secretarys Department as mandated by clause 47 of the Equity Listing Agreement.

173 173 173