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					           PRELIMINARY INFORMATION MEMORANDUM (PIM)

                  MADRAS FERTILIZERS LIMITED (MFL)
                                 June 2003

                        ICICI SECURITIES LIMITED


LIMITATIONS AND DISCLAIMERS

1.    This Preliminary Information Memorandum (“PIM”) is being provided
      in connection with the proposed disinvestment of 33.5% of the total
      voting equity share capital of Madras Fertilizers Limited (hereinafter
      referred as “MFL”) held by Government of India (“GoI”) and 25.77% of
      the total voting equity share capital of MFL held by National Iranian
      Oil Company (hereinafter referred as “NIOC”). Thus a total of upto
      59.27% of the total voting equity share capital of MFL may be
      disinvested by this process. However, in the event the GoI decides to
      offer a part of its equity stake to the employees of MFL, the same will
      be offered out of the aforesaid 33.5% of the total voting equity share
      capital being disinvested by GoI and the total of 59.27% of the total
      voting equity share capital proposed to be disinvested would stand
      reduced to that extent.

2.    ICICI Securities Limited (herein after referred as “ICICI Securities”)
      has been appointed as the advisors (“Advisors”) for the disinvestment
      and Luthra & Luthra, Law Offices (“Luthra & Luthra”) has been
      appointed as the legal advisors for the disinvestment process by GoI.

 3.   The sole purpose of this document is to provide information to the
      interested parties and is not intended to form the basis of any
      investment decision or any decision to purchase the equity offered for
      sale. This document does not constitute nor should it be interpreted as
      an offer or invitation or recommendation for the sale or purchase of
      securities described herein.

4.    This PIM does not purport to be all-inclusive or contain all the
      information about MFL or be the basis of any contract.              No
      representation or warranty, expressed or implied, is or will be made as
      to the reliability, accuracy or the completeness of any of the
      information contained herein. It should not be assumed that there
      shall be no deviation or change in any of the herein mentioned
      information on MFL. While this document has been prepared in good
      faith, neither MFL nor GoI nor NIOC nor ICICI Securities nor Luthra

                                     1
     & Luthra nor any of their respective officers, employees, advisors or
     agents make any representation or warranty or shall have any
     responsibility or liability whatsoever in respect of any statements
     made or omissions here from. Any liability is accordingly expressly
     disclaimed by MFL, GoI, NIOC, ICICI Securities, Luthra & Luthra
     and any of their respective officers or employees, advisors or agents
     even if any loss or damage is caused by any act or omission on the part
     of MFL, GoI, NIOC, ICICI Securities, Luthra & Luthra or any of their
     respective officers or employees, advisors or agents.

5.   Nothing in this PIM is, or should be relied on, as a promise or
     representation as to the future. By acceptance of this document, the
     recipient agrees that any information herein will be superseded by any
     later written information on the same subject made available to the
     recipient by or on behalf of MFL, GoI and NIOC. GoI, NIOC, ICICI
     Securities, MFL and any of their respective officers or employees,
     advisors and agents undertake no obligation, among others, to provide
     the recipient with access to any additional information or to update
     this document or to correct any inaccuracies herein which may become
     apparent, and they reserve the right, at any time and without advance
     notice, to change the procedure for the sale of all or any part of the
     equity and/or terminate negotiations or the due diligence process
     and/or refuse the delivery of information, at any time prior to the
     execution of the Transaction documents without any prior notice or
     stating any reasons therefor and without incurring any liability in
     respect thereof.

6.   Accordingly, interested recipients should carry out an independent
     assessment and analysis of MFL and of the information, facts and
     observations contained herein.

7.   This PIM has not been filed, registered or approved in any jurisdiction.
     Recipients of this document resident in jurisdictions outside India
     should inform themselves of and observe any applicable legal
     requirements.




                                     2
CONTENTS

Section   Title                                             Page no.
Part A    Submission of Expression of Interest (EoI)        4
Part B    Madras Fertilizers Limited                        15
          Annexure I – A copy of the Advertisement          20
          Annexure II – Expression of Interest              21
          Annexure III – Statement of Legal Capacity        24
          Annexure IV – Request for Qualification           26
          Annexure V – Government of India Guidelines for   28
                       Qualification of Bidders
          Annexue VI – Guidelines for management-           31
          employee bids




                                 3
A.           SUBMISSION OF EXPRESSION OF INTEREST

1. INTRODUCTION

     1.1 Madras Fertilizers Limited (MFL), a Central Public Sector
         Undertaking, is primarily engaged into manufacturing and marketing
         of urea and NPK fertilizers and trading of imported Di-Ammonium
         Phosphate and Muriate of Potash. MFL has an aggregate capacity to
         produce 840,000 tonnes of NPK fertilizers and 486,750 tonnes of urea
         per annum. MFL has a dominant position in the South Indian market
         with a market share of 9.9%, 9.5% and 17.7% in N, P and K nutrients
         respectively consumed in south India during FY2002. MFL markets its
         fertilizers under the “Vijay” brand name. The present shareholding
         pattern of MFL is: Government of India (GoI) - 59.50%, National
         Iranian Oil Company (NIOC) - 25.77% and Public - 14.73%.

1.2     In accordance with its disinvestment programme, GoI wishes to,
        through a competitive bidding process, which shall be handled solely
        by GoI, disinvest 33.5% of the total voting equity share capital of MFL
        held by it to a strategic investor along with management control.
        NIOC, which is holding 25.77% of the total voting equity share capital
        in MFL, also intends to disinvest its entire voting equity share capital
        to the strategic investor identified by GoI. The proposed disinvestment
        by GoI and NIOC is hereinafter referred to as the “Transaction”. Thus,
        the Transaction involves the disinvestment of upto 59.27% of the total
        voting equity share capital of MFL. In the event, GoI decides to offer a
        part of its equity stake to the employees of MFL, the same will be
        offered out of the aforesaid 33.5% of the total voting equity share
        capital being disinvested by GoI and the total of 59.27% of the total
        voting equity share capital proposed to be disinvested would stand
        reduced to that extent.

1.3     This Preliminary Information Memorandum (“PIM”) has been
        prepared to enable potential bidders to submit their Expression of
        Interest (“EoI”), subject to `Limitations and Disclaimer‟ set out earlier

1.4     ICICI Securities Limited has been appointed as the Advisors and
        Luthra & Luthra, Law Offices as the legal advisors for the
        disinvestment process.

1.5     GoI had earlier invited Expression of Interests (“EoIs”) for
        disinvestment of 32.74% (now increased to 33.50% due to forfeiture of
        shares) shareholding in November 2000 vide advertisements in leading



                                        4
       Indian and international newspapers/ publications. In response to the
       above, interest was received from a number of parties.

       GoI has recently taken a number of policy initiatives relevant to the
       nitrogenous fertilizer industry, which are as follows:

       1. Notification by Fertilizer Industry Coordination Committee (“FICC”)
          under the Department of Fertilizers (“DoF”) vide circular issued on
          June 4, 2002 relating to the changes in the policy parameters under
          the 7th and 8th pricing periods i.e. July 1, 1997 to March 31, 2000
          and April 1, 2000 to March 31, 2003.

       2. Announcement with regard to the long term pricing policy for urea
          units based upon the recommendations of the Expenditure Reforms
          Committee (“ERC”)

1.6    Restructuring of existing debt of MFL, which may significantly impact
       the financial position of the company, is also under consideration.

1.7    Further NIOC has agreed to offer its shares for sale along with the GoI
       under the strategic sale transaction, taking the total equity on offer
       upto 59.27% of the total equity of MFL.

1.8    In light of the above, there has been a material change in the existing
       financial position and the prospective business and operating
       environment of MFL.

1.9    Therefore, it is now proposed to reinvite the EoIs for the disinvestment
       of upto 59.27% equity stake in MFL.

1.10   For the purposes of this Transaction, the potential bidder shall
       ascertain the applicability of all laws including Indian laws and shall
       ensure compliance with the same.

2.     ADVERTISEMENT INVITING EOI

       An advertisement has been issued in leading business and other
       newspapers inviting interested parties to submit their EoI to participate
       in the disinvestment process, a copy of which is enclosed as Annexure-I.
       The GoI reserves the right to terminate or alter the bidding process at
       any stage, without prior notice or assigning any reasons therefore and
       without incurring any liability in respect thereof.




                                       5
      Party(ies) that had expressed their interest in the transaction in
      response to the earlier advertisement may send a letter to the Advisors
      confirming their continued interest in the transaction and that they are
      eligible as per the terms and conditions stated in the PIM and will
      comply with the same.

3.    EXPRESSION OF INTEREST

      The process of participating in the disinvestment process and the
      requirements relating to information to be provided by interested
      parties when submitting their EoI is set out in the ensuing sections.

4.    ELIGIBILITY/ PRE-QUALIFICATION CRITERIA

4.1   The EoI may be submitted by domestic or foreign incorporated entities
      either as a sole bidder or as part of a consortium, for acquiring the said
      voting equity share capital in MFL being disinvested subject to the
      terms and conditions specified in this PIM and any other subsequent
      additions and modifications.

4.2   In case of a consortium bid, there will be a lead bidder, who will be
      singly required:

       (a)   in the case of direct shareholding in MFL by the consortium
             members - to be the single largest shareholder amongst the
             members of the consortium and such shareholding of the lead
             bidder shall be more than 50% of the total voting equity share
             capital in MFL being disinvested; or

       (b)    in the case of company promoted / to be promoted by the
             consortium members for acquiring the said voting equity share
             capital in MFL being disinvested - to be the single largest
             shareholder of such company and such shareholding of the lead
             bidder shall be more than 50% of the total voting equity share
             capital of such company

4.3   In case of a sole bidder, the net worth of the sole bidder should be in
      excess of Rs.1 billion (Rs. 100 Crores) as per the latest audited annual
      accounts; and it should have a satisfactory business and management
      track record.

4.4   In case of a consortium bid, the combined net worth of all the
      consortium members should be in excess of Rs. 1 billion (Rs. 100
      Crores) and the networth of the lead bidder must be at least 51per cent


                                       6
          of this amount. The name of the lead bidder must be specified in the
          EoI. Each of the consortium partner should have a satisfactory
          business and management track record1.

    4.5   Bids by management/employees of MFL directly and independently or
          in consortium or Joint Venture or a Special Purpose Vehicle (SPV),
          along with a bank, venture capitalist or a financial institution will be
          considered in accordance with the guidelines issued by Ministry of
          Disinvestment,     annexed     herewith   as   per     Annexure       VI
          (“Guidelines”) if the legal entity so formed is qualified as per the
          criteria laid down in the PIM.

    4.6 Net Worth = Equity Share Capital + Free Reserves & Surplus –
        deferred revenue / miscellaneous expenditure not written off – debit
        balance in Profit and loss account.

    4.7 Where the financial statements are expressed in currency other than
        the Indian Rupee, the eligible amount as described above shall be
        computed by taking the equivalent US Dollars at the exchange rates
        (as stipulated by Foreign Exchange Dealers Association of India)
        prevailing on the date(s) of such financial statements.

    4.8 Interested parties should note that in terms of Securities and
        Exchange Board of India (Substantial Acquisition of Shares and
        Takeovers) Regulations,1997, the strategic partner selected to acquire
        shares of MFL from GoI and NIOC, may be required to make a public
        offer to acquire further shares of MFL in accordance with these
        regulations. For further details, interested parties may refer to the
        Securities and Exchange Board of India regulations in this regard.

    4.9 This Preliminary Information Memorandum (“PIM”) along with its
        enclosures does not constitute any commitment on the part of the GoI
        or NIOC or MFL or ICICI Securities, whether in respect of the
        disinvestment process or otherwise. Furthermore, this invitation
        confers neither any right nor expectation to any party to participate in
        the said process.

    4.10 GoI, NIOC and MFL reserve the right to withdraw from the process or
         any part thereof, to accept or reject any or all offers at any stage of the
         process and/or modify the process or any part thereof or to vary any
1
  In the case of consortium bid, the net worth of only those members of the consortium shall be
counted who propose to take at least 10% of the equity stake in the company promoted/ to be
promoted by the consortium members for acquiring upto 59.27% equity of MFL”



                                               7
         terms at any time without assigning any reason whatsoever. No
         financial obligation whatsoever shall accrue to the GoI or NIOC or
         MFL or ICICI Securities in such an event.

5.       INITIAL PROCESS

     5.1 Following receipt of this PIM, interested parties will be required to
         submit an EoI Package comprising an Expression of Interest, a
         Statement of Legal Capacity and a Request for Qualification in formats
         specified in Annexures II, III, and IV.

     5.2 Party(ies) that had expressed their interest in the transaction in
         response to the earlier advertisement may send a letter to the Advisors
         confirming their continued interest in the Transaction and that they
         are eligible as per the terms and conditions stated in the PIM and will
         comply with the same.

     5.3 Based on an evaluation of the EoI Package received, interested parties
         which are deemed to be qualified by the GoI (“Qualified Interested
         Parties” or “QIPs”) will be allowed to participate in the subsequent
         selection process (without conferring any right or expectation
         whatsoever to the QIPs).

     5.4 Following signing of a Confidentiality Undertaking (“CU”) by duly
         authorized personnel, QIPs will be provided with the Bid Packet
         comprising the Confidential Information Memorandum (“CIM”) and
         the Request for Proposal (“RFP”) and will be invited to participate
         further in the process as detailed in the RFP.


6.       FILING REQUIREMENTS

     6.1 Interested parties must submit, in duplicate, their EoI accompanied by
         a Statement of Legal Capacity and Request for Qualification (“RFQ”),
         as per the formats given in Annexures II, III & IV of this PIM. This
         comprises the EoI Package.


     6.2 EoIs must be signed by a duly authorised representative of the
         interested party/designated lead bidder. However, in the case of a
         consortium, Statements of Legal Capacity and RFQs would have to be
         submitted by each member of the consortium duly signed by an
         authorized official of the member of such consortium.




                                        8
6.3 All EoI Packages must be in English and each copy shall be bound in a
    separate volume. Submission of the aforesaid documents by fax, e-
    mail or other electronic means will not be acceptable. It is the
    responsibility of the interested party(ies) alone to ensure that its EoI
    with required documents is delivered at the address given below by the
    stated time and date. The covering envelope containing the aforesaid
    document should be clearly marked “Expression of Interest - MFL”.
    Neither the GoI nor NIOC nor MFL nor ICICI Securities shall be
    responsible for non-receipt of correspondence.

6.4 The EoI Package must be submitted by no later than 17.30 hours
    (Indian Standard Time), 30th June 2003 at either of the following
    addresses:

       Dhanpal Jhaveri                  Or     Indraneil Borkakoty
       Sr. Vice President                      Vice President
       Head – M&A Advisory                     ICICI Securities Limited
       ICICI Securities Limited                ICICI Bank Towers
       41/44 Minoo Desai Marg                  NBCC Place Pragati Vihar
       Colaba, Mumbai 400 005                  Bisham Pitamah Marg
                                               New Delhi 110 003, India
       Tel : +91 22 22826449                   Tel : +91 11 24308337



7 EOI FILED BY CONSORTIA

7.1 If a consortium is formed, or proposed to be formed, specifically for the
    purpose of this investment, details of the members of the consortium
    and the extent of their interest herein must be provided in the EoI
    Package.

7.2 Any change by way of withdrawal/substitution/inclusion of any
    member of the consortium or any change affecting the composition of
    the consortium may be permitted prior to the stage of submission of
    financial bid, but only with the specific approval of the GoI. GoI or
    MFL or ICICI Securities have the sole discretion to determine the
    impact of the change in membership on the quality of the consortium
    and reject a proposal for such reason.

7.3 The Government of India issued guidelines for qualification of bidders
    seeking to acquire any public sector enterprises through the process of
    disinvestment vide Department of Disinvestment OM No.6/4/2001-DD-
    II dated 13th July, 2001, a copy of which is enclosed as Annexure-V.



                                    9
      The interested party(ies) are required to read the guidelines and
      satisfy themselves that they are qualified to bid for the stake in MFL
      through the process of disinvestment. The interested party(ies) would
      be required to submit the following:


                    an undertaking to the effect that they are qualified to bid
                     for the stake in MFL.

                    an undertaking to the effect that no investigation by a
                     regulatory authority is pending against them.


                           In case any investigation is pending against the
                            concern or its sister concern or against its CEO or
                            any of its Directors/Managers/employees, full
                            details of such investigation including the name of
                            the investigating agency, the charge/offence for
                            which the investigation has been launched, name
                            and designation of persons against whom the
                            investigation has been launched and other relevant
                            information should be disclosed, to the satisfaction
                            of the Government.

                    provide other relevant information as required in the
                     guidelines of 13th July, 2001

7.4   In addition to the above, the RFQ should be duly filled in and
      accompanied by the following details:


      1. In case of a sole bidder

            The audited balance sheet and profit & loss account of the sole
             bidder (Indian company/foreign company) for the last 3 financial
             years.

      Write-up on:

            Profile of the sole bidder
            A statement of reasons for strategic interest in MFL
            Details of litigation and/or legal/ statutory enquiry if any,
             including litigation by the bidder against MFL.




                                        10
                Statement as regards any indictment by any income tax, sales
                tax, customs or excise authorities.
               Authorisation/delegation of power to enable the authorized
                signatory to sign the EoI
               Any other information considered material


     2. In case of a consortium bid

               The audited balance sheet and profit & loss Account for the last
                3 financial years of the lead bidder and other member companies
                associated in the bid.


               Write-up on:

                Lead bidder

                      Profile of the lead bidder
                      A statement of reasons for strategic interest in MFL
                      Any other information considered material by the lead
                       bidder

                Other member companies

                     Profile of member companies in the consortium
                     Any other information considered material

                  Details of litigation and/or legal/ statutory enquiry if any,
                   including litigation by the bidder(s) against MFL.

                  Statement as regards any indictment by any income tax,
                   sales tax, customs or excise authorities.

                  Document evidencing authorisation/delegation of power by
                   each of the consortium members(s) to enable the authorized
                   signatory to sign the EoI.


8 DISQUALIFICATION

  8.1 The GoI shall not consider for the purpose of qualification, an EoI
      which is found to be incomplete in content and/or attachments and/or
      authentication, etc.


                                        11
8.2 Without prejudice to any other rights or remedies available to GoI, a
    sole bidder or a consortium may be disqualified and its EoI dropped
    from further consideration for any reason whatsoever including those
    listed below:

       misrepresentation by       the bidder or any member of the
       consortium;or

      failure by the parties mentioned above to provide necessary and
       sufficient information required to be provided in the EoI, along with
       the Statement of Legal Capacity and RFQ, pursuant to relevant
       sections of the PIM;or

      submission of an EoI along with Statement of Legal Capacity and
       RFQ in respect of any entity/company/consortium, where such
       company or any member of such consortium has already submitted
       an EoI.

8.3 If information becomes known which would have entitled the GoI to
    reject or disqualify the interested party(ies) the GoI reserves the right
    to reject the interested party(ies) at the time, or at any time after, such
    information becomes known to the GoI.

8.4 Where the interested party is a consortium, the GoI may disqualify the
    entire consortium for any of the reasons (but not limited to) set out
    above, even if it applies to only one member of the consortium.

8.5 Further, GoI has issued guidelines for disqualification of bidders
    seeking to acquire any public sector enterprises through the process of
    disinvestment vide Department of Disinvestment OM No.6/4/2001-DD-
    II dated 13 July, 2001, a copy of which is enclosed as Annexure-V.
    Interested party(ies) not satisfying the qualification criteria under the
    guidelines will not be qualified to bid for the stake in MFL..

8.6 The interested parties not satisfying the eligibility and requisite
    qualification criteria specified in the above sections are not eligible to
    bid for the stake in MFL.


8.7 The sole bidder, lead bidder, member of a consortium and the
    consortium as a whole not satisfying the eligibility and requisite
    qualification criteria specified in the above sections are not eligible. It
    must be noted that the sole bidder, lead bidder, member of a


                                    12
     consortium and the consortium as a whole must be eligible, as per the
     criteria mentioned above, on the date of submission of the EoI and
     shall continue to be eligible throughout the Transaction.

9 FUTURE PROCESS

  9.1 Based on the EoI submitted by the interested parties, GoI, advised by
      ICICI Securities, will carry out an evaluation of the qualification of
      such interested parties. If at any time during the evaluation process,
      GoI or ICICI Securities requires any clarification in order to carry out
      the evaluation, it reserves the right to request such information from
      any or all of the companies/ consortium and the companies/ consortium
      will be obliged to respond to any reasonable request for such
      information and to supply the same to ICICI Securities within such
      reasonable time frame as GoI or ICICI Securities may require.

  9.2 Based on an evaluation of EoIs received, interested parties, which are
      deemed fit will be (“Qualified Interested Parties” or “QIP”) invited to
      participate in the subsequent selection process (without conferring any
      right or expectation whatsoever to QIPs). QIPs will be required to sign
      a Confidentiality Undertaking (“CU”) by the duly authorized
      personnel. QIPs will be provided with the Request For Proposal (RFP)
      and the Confidential Information Memorandum (CIM) and shall be
      invited to participate further in the process described in detail in the
      RFP. QIPs will get an opportunity to conduct a due diligence and take
      up plant visits and will also have access to data rooms and hold
      discussions with the management of MFL/officials of Ministry of
      Chemicals and Fertilizers/Ministry of Disinvestment, Government of
      India. The rules regarding access to information in the data rooms will
      be provided to QIPs later. QIPs will be invited to submit their proposal
      and a binding price bid.



10 ENQUIRIES

  The GoI and ICICI Securities reserve the right, in their sole discretion,
  not to respond to any questions raised or provide clarification sought, if it
  is considered that it would be inappropriate to do so. Nothing in this
  section shall be taken or read as compelling or requiring the GoI and
  ICICI Securities to respond to any question or to provide any clarification.
  No extension of any time and date referred to in this PIM shall be granted
  on the basis or grounds that the GoI and ICICI Securities has not
  responded to any question/ provided any clarification.


                                     13
11 GOVERNING LAWS/JURISDICTION/ ARBITRATION

  All matters relating to the disinvestment process and the bidding
  procedure shall be governed by the law of Union of India. Only Courts at
  New Delhi (with exclusion of all other Courts) shall have the jurisdiction
  to decide or adjudicate on any matter, which may arise.




                                    14
      B. MADRAS FERTILIZERS LIMITED

      Name:                     Madras Fertilizers Limited (“MFL” or the
      Company”)
      Registered Office:        Manali, Chennai – 600 068, Tamil Nadu
      Year of incorporation:    1966
      Liaison Office:           At New Delhi
      Marketing Area Offices:   At Trichy, Salem, Madurai, Vellore in
                                Tamilnadu,            Hyderabad, Guntur,
                                Vijayawada, Cuddapah in Andhra Pradesh,
                                Bangalore, Raichur, Devangere, Hubli in
                                Karnataka & Cochin in Kerala

1 HISTORY

  MFL was incorporated on December 8, 1966, as a joint venture between
  GoI and Amoco, USA in accordance with the Fertilizer Formation
  Agreement executed on May 14, 1966, with equity contributions of 51%
  and 49% respectively. The original technology was supplied by Chemico of
  USA.

  In accordance with the participation agreement dated May 14, 1966
  between GoI, Amoco and National Iranian Oil Company, a company
  owned by the Government of Iran, NIOC acquired 50% of the
  shareholding of Amoco in MFL on November 22, 1972. With this
  acquisition, Amoco and NIOC each held 24.5% in MFL with the balance
  51% being held by GoI.

  Subsequently, on July 22, 1985, Amoco divested its shareholding, which
  was proportionately purchased by GoI and NIOC. As a result, GoI and
  NIOC shareholding changed to 67.55% and 32.45% respectively. After a
  rights issue in 1994, the holding of GoI and NIOC stood at 69.78% and
  30.22% respectively. MFL had an Initial Public Offering of its shares in
  May, 1997. MFL‟s shares are listed in the Mumbai Stock Exchange,
  National Stock Exchange and the Madras Stock Exchange.

  Subsequent to forfeiture of 20,76,600 shares held by some of the
  shareholders due to non payment of allotment money of Rs 7.50 per share
  subscribed in May 1997, the shareholding pattern has undergone change
  with effect from April 24, 2001. Accordingly, Rs. 1.04 Cr will separately
  feature as share forfeiture amount under share capital in the books of the
  Company.
  The shareholding pattern of the company as on March 31, 2003 was as
  follows:


                                    15
      Sharehol    % Stake
      ders
   GoI            59.50%
   NIOC           25.77%
   Public &       14.73%
   Others
   Total          100.00%
  Source: Company
2 GROWTH OF OPERATIONS
  The original production facilities of MFL were commissioned at Manali,
  Chennai in 1971. These included Ammonia, Urea and NPK plants (two
  trains) along with related offsite and utilities, raw material handling,
  bagging & shipping facilities. The third NPK train was added in
  November 1976. Other additions included captive power plant installed in
  two phases (1983 and 1991) and water treatment facility consisting of
  tertiary treatment plant and reverse osmosis plant. The first biofertilizer
  plant was set up at Manali in 1991. Two more plants were subsequently
  added at Bangalore and Vijayawada in 1996-97. The Company started to
  trade in agrochemicals in 1990 and neem based pesticides were added to
  the portfolio in 1997.
  MFL‟s plants commissioned in 1971 had become old and less efficient. The
  Company undertook a major revamp cum modernisation exercise of its
  plants at a cost of Rs. 601 crores during 1993-98. The Company‟s original
  ammonia- urea plants were of Chemico design. After the revamp, the
  technology in the ammonia plant was changed to Haldar Topsoe A/S,
  Denmark and that in urea to Urea Technologies Inc., USA. The NPK
  plant was built and revamped by Hindustan Dorr Oliver, India.

3 BUSINESS OVERVIEW
  MFL is involved in the manufacture and marketing of urea and NPK
  fertilizers and trading of imported Di-Ammonium Phosphate and Muriate
  of Potash. MFL is a leading producer of complex fertilizers in the country.
  MFL has an aggregate capacity to produce 840,000 tonnes of NPK
  fertilizers and 486,750 tonnes of urea per annum. MFL has a dominant
  position in the South Indian market. In FY2002, MFL had a market share
  of 9.9%, 9.5% and 17.7% respectively in N, P and K nutrients consumed in
  South India. MFL markets its fertilizers under the “Vijay” brand name.
  The main NPK product of MFL is 17:17:17. Other NPK/NP grades
  produced by MFL include 14:28:14, 19:19:19, 20:20:0 and 18:46:0 (DAP).
  MFL‟s other businesses include manufacture and marketing of
  agrochemicals and biofertilizers.

4 SALES AND MARKETING


                                    16
  MFL markets the Vijay brand of fertilizers in the states of Tamilnadu,
  Andhra Pradesh, Karnataka, Kerala and Maharashtra. MFL has its own
  regional marketing teams in these States. MFL follows an indirect
  distribution system comprising two channels – dealers and direct
  marketers. MFL had a dealer network of 6,912 dealers and field
  marketing personnel in these States as on September 30, 2002. MFL has
  also appointed 14 direct marketers in these States.

5 MANUFACTURING FACILITIES

  MFL‟s fertilizer plants are located at Manali, Chennai. The Company has
  recently revamped and modernized its plants at a cost of over Rs. 600
  crores. The installed capacity of plants before and after the revamp is as
  follows:




                                    17
  Installed capacities

       Plant              Location               Capacity (MT)
                                                 Pre         Post
                                                 revamp      revamp
       Ammonia          Manali                   248,000     347,000
       Urea             Manali                   292,000     487,000
       NPK              Manali                   540,000     840,000
       Biofertilizers   Manali,   Bangalore,     400         400
                        Vijayawada
  Source: Company

  MFL‟s utility facilities consist of a Process Condensate Boiler, Heat
  Recovery Boiler, Captive Power Generators, Water Treatment Plant and
  Compressors.

6 LAND

  MFL has its manufacturing facilities on 329 acres of land at Manali, about
  20 kms north of Chennai City. The land is free from encumbrances and
  the Company has clear title. The land is registered in the name of the
  company.

7 KEY STRENGTHS

     MFL is one of the leading producers of complex fertilizers in India.
     MFL is a dominant player in the south Indian market.
     MFL enjoys a locational advantage, being situated close to the Chennai
      port and next to Andhra Pradesh, the largest fertilizer consuming
      State in India.
     MFL has a well-established brand “Vijay” and an extensive marketing
      and distribution network spread throughout South India.
     MFL provides an ideal platform for an expanded presence in complex
      fertilizers market.

8 FINANCIAL PERFORMANCE

  The annual financial statements of the Company are prepared in
  accordance with Indian Generally Accepted Accounting Principles. The
  financial statements are audited by a qualified independent auditor and
  are then subject to a review by the Comptroller and Auditor General of
  India.




                                     18
An abstract of the financial statements of MFL for the past three years is
presented in the following tables:




                                  19
Income Statement

 Rs. Crores (1 Crore = 10 Million) FY          FY        FY
                                   2002        2001      2000
 Sales                             830         938       405
 Consumer Price Support Subsidy    268         466       232
 Other income                      5           6         2
 Total revenue                     1103        1410      639
 EBITDA                            22          136       81
 EBITDA margin                     2%          10%       13%
 Interest                          112         130       56
 Depreciation                      46          42        20
 Profit/ (Loss) after tax          (66)        (30)      6
Source: Annual reports
 Balance Sheet:
 Rs. Crores(1 Crore = 10 Million) FY          FY       FY
                                    2002      2001     2000
 Assets
 Gross fixed assets                 860       840      821
 Less: Depreciation                 263       218      177
 Net fixed assets                   597       622      644
 Investments                        2         2        2
 Net current assets                 94        237      202
 Deferred revenue expenditure       58        69       80
 Accumulated losses                 150       84       54
 Total assets                       901       1014     982
 Liabilities
 Equity capital                     162       162      162
 Reserves                           13        13       13
 Cash credit                        139       160      154
 Other Secured loans                289       329      362
 Unsecured loans                    298       349      291
 Total liabilities                  901       1014     982
Source: Annual reports
Note: In the above statements above FY2000 refers to six months
ending March 31, 2000. FY2002 figures are for 13 months ended April
30,2002

An abstract of the unaudited financial results up to December 2002 is
presented in the following table:




                             20
 Rs. Crores (1 Crore = 10 Million)           Year up to Dec 31,
                                             2002 (Unaudited)
 Net Sales/ Income from Operations           714.3
 Other Income                                1.7
 Total Expenditure
     a. (Increase)/Decrease in stock in trade  (15.3)
     b. Consumption of raw material            385.6
     c. Staff cost                             34.2
     d. Power, Water & Fuel                    153.5
     e. Other Expenditure                      95.1
 Interest                                      77.5
 Depreciation                                  30.0
 Profit/(Loss) before tax                      (44.6)
 Write-off of Interest
    - GOI                                             -
    - NFL                                      22.4
 Provision for taxation                               -
 Net Profit/(Loss)                             (22.1)
Note: The above financial statement is for 8 months ended December
31, 2002.




                            21
                                                                                      ANNEXURE I




                                   GOVERNMENT OF INDIA
                                 MINISTRY OF DISINVESTMENT

         INVITATION FOR ‘EXPRESSION OF INTEREST’ FOR STRATEGIC SALE
              OF SHAREHOLDING IN MADRAS FERTILIZERS LIMITED

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

Madras Fertilizers Limited (MFL) is primarily engaged in manufacturing and marketing of urea
and NPK fertilizers and trading of imported Di-Ammonium Phosphate and Muriate of Potash.
MFL has an aggregate annual capacity to produce 840,000 tonnes of NPK fertilizers and
486,750 tonnes of urea. MFL had a market share of 9.9%, 9.5% and 17.7% in N, P and K
nutrients in South Indian market during FY2002. The present shareholding pattern of MFL is:
Government of India (GoI) - 59.50%, National Iranian Oil Company (NIOC) - 25.77% and
Public - 14.73%.

GoI had earlier invited EoIs for disinvestment of 32.74% shareholding in MFL in November
2000. In response, EoIs were received from a number of parties. Since then, GoI has notified
the 7th and 8th pricing period policy parameters and announced the long term pricing policy for
urea. Restructuring of the existing debt of MFL is also being considered. Given the above
material changes in the prospective business and operating environment of MFL, GoI has
decided to re-invite EoIs for sale of upto 33.50% of the equity in MFL to a Strategic Partner
with transfer of management control. NIOC will sell its entire 25.77% equity in MFL to the
same Strategic Partner along with the GoI. However, in the event the GoI decides to offer a
part of its equity to the employees of MFL, the same will be out of the above 33.50%
shareholding. Thus, the total equity on offer may be upto 59.27% of MFL's total equity.

Additional information, including the Preliminary Information Memorandum (PIM) can either be
accessed at the websites www.divest.nic.in, www.fert.nic.in, www.madrasfert.com or
can be obtained from ICICI Securities Limited, ICICI Bank Towers, NBCC Place Pragati Vihar,
Bisham Pitamah Marg, New Delhi 110 003, India, Advisors to GoI. Incorporated entity(ies),
either individually or as a consortium, may submit their Expression of Interest in the formats
specified in the PIM to reach the designated official specified in the PIM before 17:30 Hours
(IST) on 30th June 2003.

Parties that had expressed their interest in the transaction in response to the earlier
advertisement may send a letter to the Advisors confirming their continued interest in the
transaction.




                                                    22
                                                     ANNEXURE II
EXPRESSIONOF INTEREST (‘EOI’)

(To be forwarded on the letterhead of the interested parties/ members
of the consortium submitting the EoI).

Ref: _________                                          Date:
_________


Sr. Vice President
ICICI Securities Limited
41/44 Minoo Desai Marg
Mumbai 400 005.



Sir,

Sub: EXPRESSION OF INTEREST FOR STRATEGIC SALE OF
   UPTO 59.27% OF THE TOTAL VOTING EQUITY SHARE CAPITAL
   IN MADRAS FERTILIZERS LIMITED (MFL)


We refer to the advertisement dated____________ inviting Expression
of Interest for sale of upto 59.27% of the total voting equity share
capital in MFL.

We have read and understood the contents of Preliminary Information
Memorandum (PIM) and the advertisement and wish to participate in
the above disinvestment process and for this purpose:



* We propose to submit our EoI in an individual capacity for and on
behalf of (insert company name)

* We have formed / propose to form a consortium comprising the
following members:

   1. __________________(Insert company name)
   2. __________________(Insert company name)
   3. __________________(Insert company name)




                             23
We confirm that we/our consortium/proposed consortium* satisfy the
eligibility criteria set out in the relevant sections of the PIM including
the guidelines for qualification of bidders seeking to acquire stakes in
Public Sector Enterprises through the process of disinvestment issued
by the Government of India vide Department of Disinvestment OM No.
6/4/2001-DD-II dated 13thJuly, 2001 and clarification issued on 10th
January 2002. The Statement of Legal Capacity and Request for
Qualification as per formats, indicated hereinafter duly signed by
us/respective members, who jointly satisfy the eligibility criteria, are
enclosed.

 We certify that in regard to matters other than security and integrity
 of the country, we have not been convicted by a Court of law or
 indicted or adverse orders passed by a regulatory authority which
 would cast a doubt on our ability to manage the public sector unit
 when it is disinvested or which relates to a grave offence that
 outrages the moral sense of the community.

 We further certify that in regard to matters relating to security and
 integrity of the country, we have not been convicted by a court of Law
 for any offence committed by us or by any of our sister concerns and
 no charge sheet has been filed by any agency of the Government for
 any offence committed by us or by any of our sister concerns.

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

 We undertake that in case due to any change in facts or
 circumstances during the pendency of the disinvestment process, we
 are attracted by the provisions of disqualification in terms of the
 subject guidelines, we would intimate the Ministry of Disinvestment
 of the same immediately.

 The Request for Qualification as per format duly signed by
 us/respective members, who jointly satisfy the eligibility criteria, is
 enclosed.

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

 Yours faithfully,


 Authorised Signatory


                                 24
For and on behalf of
* strike off whichever is not applicable.




Enclosure: 1.Statement of Legal Capacity

          2. Request for Qualification




                                25
                                                        ANNEXURE -III

STATEMENT OF LEGAL CAPACITY

(To be forwarded on the letterhead of the interested party and /or each
member of the consortium submitting the EoI).

Ref: _________                                               Date:
_________

Sr. Vice President
ICICI Securities Limited
41/44 Minoo Desai Marg
Mumbai 400 005.

 Sir,

Sub: EXPRESSION OF INTEREST FOR STRATEGIC SALE OF
    UPTO 59.27% OF THE TOTAL VOTING EQUITY SHARE CAPITAL
    IN MADRAS FERTILIZERS LIMITED (MFL)

We refer to the advertisement dated________of the Government of
India (GoI) and the Preliminary Information Memorandum (PIM) in
connection with the proposed disinvestment of Madras Fertilizers
Limited (MFL) for the sale of upto 59.27% of the total voting equity
share capital in MFL.

We have read and understood the contents of the PIM and the
advertisement and in pursuance thereof hereby confirm that:

We satisfy the eligibility criteria laid out in the PIM and the
advertisement.*

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

We are a member of the consortium (constitution of which has been
described in the Expression of Interest (“EoI”)), which jointly satisfies
the eligibility criteria as detailed in the PIM. *

We have agreed that (insert individual‟s name) will act as our
representatives on our behalf and has been duly authorised to submit
the EoI. Signatures of ______________(insert individual‟s name) are attested
hereinbelow.   Further, the authorised signatory is vested with


                                26
        requisite powers to furnish such letter and Request for Qualification
        and authenticate the same. *

        We have agreed that (insert the name of the individual) chosen as
        representative of our consortium and on our behalf and has been duly
        authorised (vide board resolution dated_______) to submit the EoI.
        Further, the authorised signatory is vested with requisite powers to
        furnish such letter and Request for Qualification and authenticate the
        same. *

        Yours faithfully,

        Authorised Signatory
         For and on behalf of
        * strike off whichever is not applicable.



Signatures of ______________(insert individual‟s name) Attested

Attested

Authorised Signatory
For and on behalf of (party/member)




                                        27
                                                               ANNEXURE-IV
     REQUEST FOR QUALIFICATION (“RFQ”)

     (To be submitted in the respect of the interested parties/ each member
     of the consortium).

     Name        of     the         interested        Party       (ies)/Member
     (s):____________________


     Constitution (Check, where applicable)
              Public Limited Company
              Private Limited Company
              Co-Operative Societies
              Others, if any (please specify)

 If the interested party is a foreign company/ OCB, specify list of statutory
approvals from GoI/ RBI/ FIPB applied for/ obtained/ required:


     Sector          (Check, where applicable)
                Public Sector
                Joint Sector
                Private Sector
                Others, if any        (please
                 specify)

     Further details:

     Share holding pattern:
     Role/ Interest of each Member in the Consortium (if applicable)
     Nature of business/products dealt with:
     Date and place of incorporation:
     Date of commencement of business:
     Full address including telephone numbers/fax:
     Registered office:
     Head office:
     Address for correspondence:

  The Audited Balance Sheets and the Profit & Loss Accounts as approved by the
 Board of Directors for the last 3 financial years is attached. Also attached is a
 certificate from the chartered accountant/auditor certifying the Net Worth
 according to the latest audited financial statements as approved by the Board of
 Directors.




                                      28
  Please provide details of all contingent liabilities that, if materialized, would
  have or would reasonably be expected to have a material adverse affect on the
  business, operations (or results of operations), assets, liabilities and/or financial
  condition of the Company, or other similar business combination or transaction.

Contact Person(s):

  1.           i)                Name:
  2.           ii)                Designation:
  3.           iii)              Phone No.:
  4.           iv)               Mobile No.:
  5.           v)                Fax No.:
  6.           vi)               Email:
       Basis of eligibility for participating in the proposed disinvestment in
       the MFL: (Please mention details of your eligibility as per the PIM
       requirements))



       Yours faithfully,


       Authorised Signatory
       For and on behalf of
       Place:
       Date:




                                         29
                                                      ANNEXURE-V

No. 6/4/2001-DD-II
Government of India
Department of Disinvestment
Block 14, CGO Complex
New Delhi.
Dated 13thJuly, 2001.

OFFICE MEMORANDUM


Subject: Guidelines for qualification of Bidders seeking to acquire
stakes in Public Sector Enterprises through the process of
disinvestment.

Government has examined the issue of framing comprehensive and
transparent guidelines defining the criteria for bidders interested in
PSE-disinvestment so that the parties selected through competitive
bidding could inspire public confidence. Earlier, criteria like net
worth, experience etc. used to be prescribed. Based on experience and
in consultation with concerned departments, Government has decided
to prescribe the following additional criteria for the qualification
/disqualification of the parties seeking to acquire stakes in public
sector enterprises through disinvestment: -

1. (a) In regard to matters other than the security and integrity of
   the country, any conviction by a Court of Law or indictment /
   adverse order by a regulatory authority that casts a doubt on the
   ability of the bidder to manage the public sector unit when it is
   disinvested, or which relates to a grave offence would constitute
   disqualification. Grave offence is defined to be of such a nature
   that it outrages the moral sense of the community. The decision in
   regard to the nature of the offence would be taken on case-to-case
   basis after considering the facts of the case and relevant legal
   principles, by the Government.

2. (b) In regard to matters relating to the security and integrity of
   the country, any charge-sheet by an agency of the Government /
   conviction by a Court of Law for an offence committed by the
   bidding party or by any sister concern of the bidding party would
   result in disqualification. The decision in regard to the
   relationship between the sister concerns would be taken, based on
   the relevant facts and after examining whether the two concerns
   are substantially controlled by the same person/persons.


                              30
3. (c) In both (a) and (b), disqualification shall continue for a period
   that Government deems appropriate.

4. (d) Any entity, which is disqualified from participating in the
   disinvestment process, would not be allowed to remain associated
   with it or get associated merely because it has preferred an appeal
   against the order based on which it has been disqualified. The
   mere pendency of appeal will have no effect on the disqualification.

5. (e) The disqualification criteria would come into effect
   immediately and would apply to all bidders for various
   disinvestment transactions, which have not been completed as yet.

6. (f) Before disqualifying a concern, a Show Cause Notice why it
   should not be disqualified would be issued to it and it would be
   given an opportunity to explain its position.

Henceforth, these criteria will be prescribed in the advertisements
seeking Expression of Interest (EOI) from the interested parties. The
interested parties would be required to provide the information on the
above criteria, along with their Expressions of Interest (EOI). The
bidders shall be required to provide with their EOI an undertaking to
the effect that no investigation by a regulatory authority is pending
against them. Incase any investigation is pending against the concern
or its sister concern or against its CEO or any of its
Directors/Managers/employees, full details of such investigation
including the name of the investigating agency, the charge/offence for
which the investigation has been launched, name and designation of
persons against whom the investigation has been launched and other
relevant information should be disclosed, to the satisfaction of the
Government. For other criteria also, a similar undertaking shall be
obtained along with EOI.

(A.K.Tewari)


Under Secretary to the Government of India.

NOTE:

The following would be treated as grave offence:




                               31
(i)     Only those orders of SEBI are to be treated as coming under
        the category of “grave offences” which directly relate to “fraud”
        as defined in the SEBI Act and/or regulations.
(ii)    Only those orders of SEBI that cast a doubt on the ability of the
        bidder to manage the public sector unit when it is disinvested,
        are to be treated as adverse.
(iii)   Any conviction by a Court of Law.
(iv)    In cases in which SEBI also passes a prosecution order,
        disqualification of the bidder should arise only on conviction by
        the Court of Law.




                                32
                                                              ANNEXURE-VI

                   Guidelines for management-employee bids
                            No. 4/38/2002/DD-II
                           Government of India
                         Ministry of Disinvestment
                        Block No.14, CGO Complex,
                          Lodi Road, New Delhi.
                                                        Dated: 25th April, 2003



                        OFFICE MEMORANDUM

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

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


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

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

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

    (iv) Employees can either bid directly and independently or, for the
         purpose of meeting the financial criteria like net worth, can form a


                                      33
           consortium or bid through a joint venture (JV) or a special purpose
           vehicle (SPV), alongwith a bank, venture capitalist or a financial
           institution. However employees will not be permitted to form
           consortia with other companies.

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

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

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

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

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

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

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

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

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



                                        34
                                -sd-
                     (T.S. Krishnamachari)
Deputy Secretary to the Government of India




     35

				
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