IDCOL FERROCHROME & ALLOYS LTD.
 Strategic Investor
 For
Acquisition of 100% Stake
PRELIMINARY INFORMATION MEMORANDUM ANDADVERTISEMENT FOR DISINVESTMENT OF IFCAL

 November, 2002

 (Issued by Industrial Development Bank of India –

on behalf of IFCAL)

CONTENTS

 

PART - I				PART - II
Disclaimer				Section I : Terms and conditions
Glossary
Section I: Introduction				I	Background
Section II: IDCOL Ferrochrome & Alloys Ltd.				II	Future process
I.	History			III. Governing laws/ jurisdiction/Arbitration
II.	Location and facilities			Section II : General requirement & instructions
III.	Capacity and products			I		Eligibility
IV.	Management			II		Those not eligible to qualify
V.	Capital structure and shareholding pattern			III		Criteria for qualifying interested parties
VI.	Market and marketing arrangements			IV		Due date, number of copies and filing requirements
VII.	Human resources			V		EoI filed by a consortium
VIII.	Operating performance			VI		Investment vehicle
IX.	Financial position			VII		Disqualification
				VIII. Requests for clarification
Section III: IFCAL's Ferrochrome Plant				IX		Further information/ clarifications
I.	Location and infrastructure			Section III : Formats
II.	Products and capacity			I		Expression of interest
III.	Manufacturing facilities			II		Statement of legal capacity
				III		Request for Qualification
				Annexure : Copy of advertisements

PART – I

 DISCLAIMER

IDCOL Ferrochrome & Alloys Ltd.(IFCAL), a Government of Orissa Undertaking, is having Ferrochrome plant at Jajpur Road, Dist. Jajpur, Orissa and Chrome Ore Mine at Tailangi, Dist. Jajpur, Orissa.  The Government of Orissa (GoO), as part of its disinvestment programme, intends to disinvest 100% of its stake (held through Industrial Development Corporation of Orissa Ltd.)(IDCOL) to a Strategic Investor(SI). GoO has appointed Industrial Development Bank of India(IDBI) as Advisor for selection of SI.

This Preliminary Information Memorandum (PIM) has been prepared on the basis of information and clarifications furnished by IFCAL/IDCOL, other publicly available documents/records which IDBI believes to be reliable and discussions with the officials of IFCAL/IDCOL.  The sole objective of this PIM is to solicit Expression of Interest (EoI) from interested parties for taking part in the future process leading to selection of SI.

This document does not constitute an offer or invitation, or solicitation of an offer, for sale of/subscribe to equity shares or any securities nor does this document or anything contained herein, shall form a basis of any contract or commitment whatsoever.  Use of this PIM is strictly for limited circulation. 

For any additional information or clarification relating to the PIM, please contact any of the following :

Mr. K. Davidson Dy. General Manager	Mr. R.R. Chakrawarti, General Manager
IDBI Corporate Advisory Services Department, Industrial Development Bank of India, IDBI Tower, 14th Floor, Cuffe Parade,  Mumbai – 400 005, INDIA.
Tel : +91-22-2155739 / 215 1757 Fax: +91-22-218 1195
Mr. S. Sahoo, General Manager
Industrial Development Bank of India, IDBI House, Janpath, Bhubaneswar - 751 022.
Tel. : +91-0674-542153 Fax : +91-0674-543442

GLOSSARY

 

CASD	Corporate Advisory Services Department	NRIs	Non-Resident Indians
CIM	Confidential Information Memorandum	OCBs	Overseas Corporate Bodies
DFID	Department for International Development	PIM	Preliminary Information Memorandum
EoI	Expression of Interest	QIP	Qualified Interested Party
FY	Financial Year	RFQ	Request for Qualification
GoO	Government of Orissa	SI	Strategic Investor
IFCAL	IDCOL Ferrochrome & Alloys Ltd.	tpa	Tonnes per annum
IDBI	Industrial Development Bank of India	VRS	Voluntary Retirement Scheme

  

SECTION – I

INTRODUCTION 

The IDCOL Ferrochrome & Alloys Ltd.(IFCAL) incorporated in 1999, is a Public Sector Undertaking with 100% shares being held by the Government of Orissa(GoO) through IDCOL.  IFCAL has facilities for manufacturing 19,000 MT Per annum of High Carbon Ferro Chrome (HCFC). It can or has produced other similar alloys. Besides, IFCAL also operates a chrome ore mine (approximate area 221.22 hectares) having a deposit of about 4 million tonnes of Chrome Ore of different grade.

 The Government of Orissa (GoO), as part of its disinvestment programme, intends to disinvest 100% of its holding  in IFCAL. GoO has appointed Industrial Development Bank of India(IDBI) as Advisor for selection of SI. 

The information/particulars are given in this Preliminary Information Memorandum (PIM) to help the interested parties to form an opinion on the participation in the disinvestment process of IFCAL by submitting Expression of Interest (EoI) in the prescribed format as given in Part II of this PIM.

SECTION – II

 IDCOL FERROCHROME & ALLOYS LTD. 

I.                     HISTORY

 IDCOL Ferrochrome & Alloys Ltd.(IFCAL), was incorporated in 1999 as a public limited company under the Companies Act, 1956, with the objectives, inter alia, to take over the assets & liabilities of IDCOL's Ferrochrome Unit and to undertake the manufacturing of ferrochrome and mining of chrome ore.   IFCAL took over from Industrial Development Corporation of Orissa Ltd.(IDCOL),  in 2002, the chrome ore plant located at Jajpur Road, District Jajpur, Orissa.

  IFCAL was a profit making company till FY 1996.  However, its operations suffered setback thereafter mainly due to entry of relatively cheaper ferrochrome from South Africa and general recession in the Steel sector.

 II.                   LOCATION AND FACILITIES

IFCAL has the following facilities : 

Facilities		Location
Ferrochrome Plant		Jajpur Road, Dist. Jajpur, Orissa
Chrome Ore Mine		Tailangi, Dist. Jajpur, Orissa

 III.  CAPACITY AND PRODUCTS

IFCAL has the facility for producing 19,000 MT per annum of HCFC and the Tailangi Chrome Ore mine has the reserves of about 4 million Tonnes of chrome ore of different grade.  

IV.             MANAGEMENT

            The Articles of Association of IFCAL provides for a minimum of 3 Directors and a maximum of 12 Directors.  The present Board of IFCAL comprises of 10 Directors and is headed by Dr. H.K. Panda, IAS, Chairman. 

The day-to-day management of IFCAL is looked after by Shri J. Chandra, Managing Director supported by Heads of various department like Mines, Production, Finance, Marketing and Personnel.

 The Board of Directors comprises the following Directors as on September 30, 2002:

 

Name	Status	Occupation
Dr. Hrusikesh Panda	Chairman	Chairman-cum-MD of IDCOL
Shri J. Chandra	Mg. Director	MD, IFCAL
Shri A. Acharya	Director	Company Secretary, IDCOL
Shri P.K. Mohanty	Director	Dy. General Manager (Finance), IDCOL
Shri T. Panda	Director	General Manager (Geology & Commercial), IDCOL
Shri S.P. Mohanty	Director	MD, IDCOL Kalinga Works Ltd.
Shri D.K. Roy	Director	Ex-Chairman, OERC
Shri D. Sahoo	Director	Ex-Dy. General Manager, MECON
Shri S. Sahu	Director	Director, Mines, Govt. of Orissa
Shri Ved Prakash	Director	General Manager, MMTC

 V.             CAPITAL STRUCTURE AND SHAREHOLDING PATTERN 

As on March 31, 2002, the Authorised Share Capital of IFCAL was Rs. 10 lakh divided into 1 lakh equity shares of Rs.10/- each. As on that date, the paid up capital of IFCAL was Rs.187.14 million (including share application money pending allotment).   As on date, Government of Orissa through IDCOL holds the entire paid-up share capital of IFCAL.

            VI.                MARKET AND MARKETING ARRANGEMENT

HCL markets its various products directly to the consumers by way of tenders and direct contacts. 

There is no Government control over the prices of the products manufactured by IFCAL and the prices depend mainly on the market forces.  The main customers of Ferrochrome are Kalinga Alloys, Rathi Alloys & Steels, Haryana Steels, Rathi Ispat Ltd., Rimjhim Ispat Ltd., Alloys Steel plant of Durgapur, Ambica Steel, etc.

              In the past, IFCAL entered into contracts with TISCO for acting as a converter wherein TISCO provided IFCAL with chrome ore and coke from its own sources and IFCAL converted the same into HCFC for them.  However, due to depressed market prices for HCFC, the conversion charges offered by TISCO in FY 02 were very low due to which IFCAL did not renew the conversion contract from FY 2001-02. 

 VII.             HUMAN RESOURCES

As on September 30, 2002, IFCAL had a total employee strength of 434 (excluding employees on deputation to IFCAL).  Details of the employee profile of IFCAL are given below :

 i)             Age profile

 

Age (yrs)	Nos.
>57	06
55-57	20
50-55	118
44-50	140
40-44	68
25-40	82
<25	--
Total	434

 ii)             Qualification-wise break-up of  Executives & Non- 

            executives

 

Age	Executives	Non-executives
Under-Matric	--	--
Matric and Under Graduates