Preliminary Information Memorandum (Pim)

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PRELIMINARY INFORMATION MEMORANDUM (PIM)

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HMT BEARINGS LIMITED

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TABLE OF CONTENTS

1. DISCLAIMER *

2. EXPRESSION OF INTEREST (EOI) *

3. BRIEF PROFILE OF HMT BEARINGS LIMITED (HMTB) *

4. Annexure 1 – PUBLIC ADVERTISEMENT *

5. Annexure 2 – FORM FOR EXPRESSION OF INTEREST *

6. Annexure 3 – FORM FOR STATEMENT OF LEGAL CAPACITY *

7. Annexure 4 – FORM FOR REQUEST FOR QUALIFICATION *

8. Annexure 5 – FINANCIAL HIGHLIGHTS *

9. Annexure 6 - GOVERNMENT GUIDELINES ON DISINVESTMENTS *

1. DISCLAIMER

1. The sole purpose of this Preliminary Information Memorandum ("PIM") is to assist the recipient

interested in being the ‘Strategic Investor’ to participate in the process leading to the proposed saleof upto 74% of the equity of HMT Bearings Limited ("HMTB" or "the Company"). Ernst & Young

Pvt. Ltd. ("E&Y") has been retained as advisors for the transaction.

2. HMT Limited ("HMTL"), as a part of its disinvestment programme, wishes to sell a part of itsshareholding (currently HMTL holds 97% of the share capital of HMTB) in HMTB upto 74% of

the equity capital to a Strategic Investor and to transfer control to manage the affairs of HMTB to

the Strategic Investor.

3. This document does not constitute an offer or invitation or solicitation of an offer, to subscribe to orpurchase any securities.

4. Whilst this document has been prepared in good faith, no representation or warranty, express or

implied, is or will be made, and no responsibility or liability will be accepted by HMTB, HMTL orE&Y or any of their employees, advisors or agents as to or in relation to the accuracy or

completeness of this document or any other oral or written information made available to anyinterested recipient or its advisors at any time during the disinvestment process and any liability

thereof is hereby expressly disclaimed. Any liability is accordingly expressly disclaimed even if anyloss or damage is caused by any act or omission on part of the aforesaid, whether negligent or

otherwise.

5. Neither this document nor anything contained herein shall form a basis of any contract orcommitment whatsoever. Any prospective purchaser will be required to acknowledge in thepurchase contract that he has not relied on or been induced to enter such agreements by any

representation or warranty, save as expressly set out in such an agreement.

6. This document is not intended to form the basis of any investment decision or any decision topurchase any securities. Accordingly, interested parties are advised to carry out their own due

diligence, investigations and analysis of any information contained or referred to herein or madeavailable at any stage in the disinvestment process.

7. E&Y, HMTB and HMTL undertake no obligation to provide the recipient with any additional

information or update this document and reserve the right, at any time and without notice, to changeor modify the procedure or process for disinvestment, terminate the due diligence or negotiations or

any part of or the entire disinvestment process.

8. This document has not been filed or registered with or approved by regulatory authorities in anyjurisdiction. Recipients of this document, particularly in jurisdictions outside India, should inform

themselves of and observe any applicable legal requirements.

2. EXPRESSION OF INTEREST

Introduction

1. HMT Bearings ("HMTB" or "the Company") was incorporated in 1964 under the name of Indo

Nippon Precision Bearings Limited. The Company was promoted as a state public sector companyby the Government of Andhra Pradesh in technical collaboration with M/s Koyo Seiko Co. Ltd.,

Japan. It commenced commercial production in 1970. In 1980 the Company became a central

public sector undertaking after it was made a subsidiary of HMT Limited ("HMTL").

2. As a part of its disinvestment programme, HMTL intends to disinvest upto 74% equity in HMTB

and to transfer management control to a strategic investor.

3. Ernst & Young Private Limited ("E&Y") has been retained as advisors to HMTL for the proposed

disinvestment process and matters relating thereto.

Advertisement inviting EOI

4. An advertisement has been issued in the newspapers inviting interested parties to submit their

‘Expression of Interest’ ("EOI") to participate in the disinvestment process, a copy of which is

enclosed as Annexure I.

Format and submission of EOI

5. EOI may be submitted by domestic/international companies (whether currently existing or to beformed specifically to participate in the joint venture formation process), either individually or as a

consortium, for holding upto 74% equity of HMTB.

6. The interested parties should submit, in duplicate, the EOI as per Annexure 2 accompanied by the‘Statement of Legal Capacity’ ("SLC") and the ‘Request for Qualification’ ("RFQ"), duly signed by

the interested party(ies)/designated lead bidder of the consortium. However, the SLC and RFQ will

have to be submitted by each member of the consortium duly signed by an authorised official of the

member. The SLC given in Annexure 3 and the RFQ as given in Annexure 4 should be duly filled inand accompanied by the following details:

In case of a sole bidder

a. The Audited Balance Sheet and Profit & Loss Account of the sole bidder (Indian

company/Foreign company) for the last 3 financial years.

b. Write-up on:

i. Profile of the sole bidder

ii. A statement of reasons for strategic interest in HMTB

iii. Any other information considered material

In case of a consortium bid

c. The audited Balance Sheet and the Profit & Loss Account for the last 3 financial years of the

lead bidder and other member companies associated in the bid.

d. Write-up on:

1. Lead bidder

i. Profile of the lead bidder

ii. A statement of reasons for strategic interest in HMTB

iii. Any other information considered material by the lead bidder

2. Other member companies

iv. Profile of member companies in the consortium

v. Any other information considered material

1. Any change by way of withdrawal/substitution of any member of the consortium or any changeaffecting the composition of the consortium may be permitted up to the stage of submission of

financial bid. HMTL has 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.

2. EOI, SLC and RFQ must be in English and each copy should be bound in a separate volume.

Submission of the aforesaid documents by electronic means will not be acceptable. The EOI, SLC

and RFQ duly completed along with the details should be submitted not later than 17.30 Hrs. (IST)

on 2nd August, 2002 in a sealed envelope superscribed "Private and Confidential – Expression of

Interest in HMTB" in any of the following names:

Ms. Vani Pratap

Vice President

Ernst & Young PrivateLimited

Divyashree Chambers, A

Wing, 2nd Floor

Langford Road

Bangalore - 560 025, India

Mr Tarun Khandelwal

Senior Consultant

Ernst & Young Private Limited

Divyashree Chambers, A Wing, 2nd

Floor

Langford Road


Tel: +91-80-224 5646

Fax: +91-80-224 0695

Email:[email protected]

Tel: +91-80-224 5646

Fax: +91-80-224 0695

Email:[email protected]

3. HMTL reserves the right to withdraw from the process or any part thereof or vary any terms or

accept or reject any / all offer(s) at any time without assigning any reasons whatsoever. No financialobligation will accrue to HMTL or E&Y in such an event. HMTL/E&Y shall not be responsible for

non-receipt of correspondence sent by post/ courier/ e-mail/fax.

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Pre qualification criteria

4. The interested party(ies) should have a combined networth in excess of Rs. 200 million and aturnover in excess of Rs. 500 million as per the latest annual accounts and a satisfactory business

and management track record. In case of a consortium bid, the Net Worth and Turnover of the

Lead Bidder should be atleast 51% of the Net Worth and Turnover respectively of the consortium.

5. Where the financial statement is expressed in currency other than 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 suchfinancial statement.

Definitions:

1 H W Z R U W K = Equity Capital + Reserves

7 X U Q R Y H U = Turnover net of excise and excluding Trading Turnover. Where Turnover in the

Annual Accounts is inclusive of excise, a statement showing Turnover net of excise should beprovided by the bidder.

Disqualifications

6. Without prejudice, a company/consortium may be disqualified and its EOI dropped from further

consideration for any of the reasons listed below:

a. Material misrepresentation by such company/member of consortium in the EOI, SLCand/or RFQ.

b. Failure by such company/consortium to provide the information required to be

provided in the EOI, SLC and RFQ; and

c. Submission of EOI, SLC and RFQ in respect of any company/ consortium, wheresuch company or member had already submitted an EOI or is a member of a

consortium, which has already submitted an EOI.

7. If any information becomes known after the interested party has been qualified to receive the

information memorandum which would have entitled HMTL / HMTB to reject or disqualify the

relevant company/consortium, HMTL / HMTB reserve the right to reject the interested party at the

time or at any time after such information becomes known to HMTB or HMTL. HMTL shall not

consider for the purpose of qualification, any EOI which has been found to be incomplete orincorrect in respect of its contents or attachments.

8. Further, Government of India 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 13th July 2001, a copy of which is enclosed as

Annexure 6. The interested party(ies) are required to read the guidelines and satisfy themselves

that they are qualified to bid for the stake in HMTB through the process of disinvestment and givean undertaking to the effect that they are qualified to bid for the stake in HMTB in the EOI to be

submitted by them. Further, interested parties would be required to provide the information on thecriteria, laid down in the guidelines of 13.7.2001 along with their 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. 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 theGovernment. For other criteria also, a similar undertaking shall be provided along with EOI.

9. Where the interested party is a consortium, GOI / HMTL may disqualify the entire consortium for

any of the reasons specified above, even if it applied to only one member of the consortium.

10. The companies/consortia not satisfying the eligibility and requisite qualification criteria specified in

the above sections are not eligible.

11. The EOI submitted by interested parties shall be evaluated on the basis of the criteria specified

elsewhere in this document. If at any time during the evaluation process, GOI or HMTL or HMTB

or E&Y require any clarification, they reserve the right to request such information from any or all

of the companies/consortia and the companies/consortia will be obliged to provide the same within

reasonable time frame.

12. This document constitutes no form of commitment on the part of HMTL or E&Y to complete the

proposed disinvestment. Furthermore, this document confers neither the right nor an expectation onany party to participate in the proposed disinvestment process. HMTL and E&Y reserve the right

to withdraw from the process or any part thereof or vary any terms at any time without assigning

any reasons. HMTL reserves the right to accept or reject any /all offer(s) without assigning any

reasons.

Future Process

13. Based on an evaluation of EOIs received, interested parties, which are deemed fit ("qualified

interested parties" or "QIP"), will be qualified to participate in the subsequent selection process

(without conferring any right or expectation whatsoever to QIP). QIP will get an opportunity to

conduct due diligence and take up site visits and will also have access to data rooms and hold

discussions with the management of HMTB/management of HMTL / Ministry of Heavy Industries,

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.

Governing Laws/Jurisdiction

14. The laws of Union of India shall govern all matters relating to the disinvestment process. Only

Courts at Bangalore (to the exclusion of all other Courts) shall have the jurisdiction to decide or

adjudicate on any matter, which may arise out of or in connection with the proposed disinvestment.

1. BRIEF PROFILE OF HMT BEARINGS LIMITED (HMTB)

Introduction

1. HMT Bearings Limited ("HMTB" or "the Company") is an ISO 9001 and QS 9000 certified

Bearings manufacturing company. The Company manufactures Ball Bearings, Cylindrical Roller

Bearings and Taper Roller Bearings.

2. HMT Bearings was incorporated in 1964 under the name of Indo Nippon Precision Bearings

Limited. The Company was promoted as a state public sector company by the Government ofAndhra Pradesh in technical collaboration with M/s Koyo Seiko Co. Ltd., Japan. It commenced

commercial production in 1970. In 1980, it became a subsidiary of HMT Limited and became a

central public sector undertaking.

3. The manufacturing unit of the Company is based in Hyderabad over 30 acres of land. The Bearings

unit is housed in an industrial shed and has an abutting administrative block. The company employs

665 people.

4. The Company has an extensive nation-wide dealer/distribution network which emphasises customer

service, reliability of supply and product quality.

5. Through its research and development department, HMTB offers technical support to its

customers, both before and after sales, and develops speciality bearings for its clients.

Shareholding Pattern

6. The shareholding pattern of the Company’s equity as on December 31st, 2001 was as under:-

Shareholders Percent holding

HMT Limited 97.24%

Foreign investors 2.75%

Others 0.01%

Total 100.00%

The Company has a paid-up capital of Rs 87.3 million.

Facilities and Operations

7. The production facilities of the company are located at Moula Ali in Hyderabad, Andhra Pradesh.

The factory is laid out over an area of 30 acres and has a factory building, an administrative block,

an R&D unit and a canteen.

8. Hyderabad is an upcoming Indian metropolitan city, which is well connected by road, rail and air.Hyderabad has proximity to and is well connected with Chennai and Vizag, 2 of the bigger Ports in

India, by road and rail.

9. HMT Bearings is well equipped with general & special purpose machine tools and tooling required

for bearing manufacture. HMTB has 8 bearing grinding lines. The grinding lines are distributed as

follows:

i. Ball Bearings – 2 lines;

ii. Taper Roller Bearings – 4 lines; and

iii. Cylindrical Roller Bearings – 2 lines.

10. In 2000-01, the Company added a new State-of-the-art CNC Taper Roller Bearing line which

was bought from M/s Meccanodora, Italy. The company has sophisticated inspection machines like

Talyrond-Roundness measuring machine and Talysurf-Roughness measuring machine, wavimeter

for measuring waviness of tracks, automatic clearance testing machines, nose tester & analyzer,

etc., capable of measuring all the accuracies required for manufacture of bearings. The company

also specializes in small batch production, through their latest generation hi-tech CNC versatilegrinding line.

11. In the past 6 years, HMTB has had an average manufacturing capacity utilization of 80%. Despite

the slow down in the automobile sector and the manufacturing sector in the last 2 years, HMTB has

had a manufacturing capacity utilization of 95% in this period.

12. HMTB has been an ISO certified unit since 1994-95. The Company is currently ISO 9001 and

QS – 9000 Quality certified for design, development and manufacture of Ball and Roller bearings.

Product Profile

13. HMT Bearings designs and manufactures various ball, cylindrical roller and taper roller bearings.

% D O O � E H D U L Q J V

These range from single row deep groove to self-aligning ball bearings. The deep groove ballbearings are of the conrad type, assembled without the aid of a filling slot. Deep uninterrupted

raceways, though designed primarily for light and moderated radial loads, will tolerate thrust loads

in either direction as well as combined radial and thrust loads. These bearings are available with

shields, seals, grooves on outer rings making them ideally suited for a wide and varied range of

applications.

The self-aligning ball bearings are particularly suited to applications where housing alignment orshaft deflection pose difficult problems. The use of these bearings eliminates the need for expensive

precision machining of housing.

The range of ball bearings cover all the popular sizes required by the Indian industry from 15mm

bore to 75mm bore.

& \ O L Q G U L F D O � U R O O H U � E H D U L Q J V

These bearings offer maximum flexibility and optimum performance. HMTB produces 2 basic

types– separable inner race and separable outer race with variations such as N, NF, NU, NUS,

NJ, NH, NUP, etc.

These design options give the engineer complete flexibility in selecting the right bearing for the right

application. These bearings combine valuable performance with least installation cost.

These bearings are produced with bore size from 20mm to 110mm. Apart from this, the company

has successfully designed and manufactured a specialised bearing of bore 160mm to be used in thedefense industry.

7 D S H U � U R O O H U � E H D U L Q J V

These bearings are ideally suited to support heavy combinations of thrust and radial loads.

Geometrically, the extension of the contact lines between the rollers and the races meet at a

common point on the bearing axis of rotation. This design provides a true rolling motion for

supporting combined radial and thrust loads in one direction.

Taper roller bearings range from extra light, light and medium series. Bearings ranging from bore of

19mm to 120mm are manufactured.

3 U R G X F W � D S S O L F D W L R Q

1. The Company supplies bearings to original manufacturers of Commercial Vehicles and Tractors,

Road Transport Corporations, Machine tools industry, Defense, Railways and other generalengineering industry requiring anti-friction products.

Business Strategy

2. To effectively compete in a competitive market beset with the presence of global bearing

manufacturing majors, the Company has developed a comprehensive business strategy which aimsto profitably enhance the Company’s market share in key growth segments and to establish itself as

a leader in the Indian bearings industry. The Company intends to pursue continued growth over the

medium term by:

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6 H O H F W L Y H � F D S D F L W \ � H [ S D Q V L R Q

To capture expected demand growth in certain high growth segments of the market, the Company

has added a new bearing manufacturing line in 2001. In addition to being an active player in the

domestic market, the company has been keenly focusing on the export front too. The company

currently exports to Sri Lanka and Nepal and is looking to exporting to other neighbouring and

developing nations.

& R V W � U H G X F W L R Q � P H D V X U H V

Based on the assessment of manpower required, HMTB had a voluntary separation package for its

employees in 2000-01 in which 28 employees participated. The Company has plans to introduce

another separation scheme for its employees to further rationalize its manpower.

HMTB is also focused on ‘value engineering’. In the past, HMTB has used innovative ways to

reduce costs by the use of value engineering. The company is also constantly monitoring

productivity measures, reviewing its material consumption patterns, scrap and defectives policies,

etc. The company is also actively looking at acquiring the latest technologies by alliances with globalleaders in the Bearings industry.

, Q F U H D V H G � U H V H D U F K � D Q G � G H Y H O R S P H Q W

HMTB considers R & D as its significant strength. The R & D department provides in-house

support to operations and development of new products with focus on technology absorption,

improved designs, cost reduction, improvement of yield, quality of end products, reduction ofwastes, etc. HMTB has developed new designs / friction reduction solutions for Automobile OEMs

and for general engineering industry.

( [ S O R L W L Q J � L W V � O D U J H � G R P H V W L F � G H D O H U � G L V W U L E X W L R Q � Q H W Z R U N � W R � L Q F U H D V H � P D U N H W � V K D U H

HMTB believes that its extensive national marketing and distribution network, with its focus on

customer service, product quality, and reliability of supply, provides the Company with a significant

competitive advantage over its competitors. The Company proposes to significantly increase themarket penetration of its products by leveraging on the existence of its marketing and distribution

structure. The Company has regional offices based in the 4 metros and has 8 sales representatives

based in key bearing consuming industrial locations. In addition, the Company has 120 dealers

spread out across the country.

Financial Performance

3. Please refer Annexure 5 for the financial highlights of the Company.

The Opportunity

4. HMT Bearings has been consistently making profits and paying dividends inspite of being in thePublic sector and having social costs attached to it. Over the years, the company has built a very

strong brand and good relationship with its customers. The company is an OEM to the ‘who’s

who’ in the Indian automobile industry. By acquiring a strategic stake in HMTB, the investor will

instantly gain access to the vast distribution network, the HMT brand, relationships with automobile

manufacturers, etc, more of which are characterised by the following:

3 U R G X F W � U D Q J H

HMTB manufactures ball, taper roller and cylindrical roller bearings. It is one of the few bearing

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manufacturers in India which has such a wide range of products.

+ L J K � S U R G X F W � T X D O L W \

The Company has established good long-term relationships with its customers and has gained an

excellent reputation for the quality of its products. HMT Bearings is a well recognized brand in the

trade. The company is an OEM to most of the automobile giants in India. Its customers include,among others, Escorts, Eicher, HMT Tractors, Mahindra & Mahindra, Punjab Tractors, Ashok

Leyland and Telco.

: H O O � H V W D E O L V K H G � P D U N H W L Q J � D Q G � G L V W U L E X W L R Q � Q H W Z R U N

HMTB has a marketing network which reaches the entire length and breadth of the country. The

Company’s sales force focuses on providing customer service, technical support, and after salesservice with a view to successfully establishing long term relationships with key customers. The

Company has 4 regional offices, 8 Sales representatives based in the key industrial locations and120 dealers.

The HMT group has a Tractor’s manufacturing business unit and a Machine Tools subsidiary.HMTB caters to the requirements of these units.

( [ S H U L H Q F H G � 0 D Q D J H P H Q W

HMTB is being managed by a core team of professionals who have extensive experience in theBearings industry. HMTB’s management team brings with it contemporary knowledge and rich

experience. The team is highly market-orientated and has managed HMTB with a view to re-establishing HMTB as the pre-eminent Bearings manufacturer in India. Once privatised, themanagement of HMTB should be in a position to respond faster to market conditions and improve

HMTB’s position in the Indian bearings industry.

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6 W U R Q J � U H V H D U F K � D Q G � G H Y H O R S P H Q W � F D S D E L O L W L H V

HMTB has its own technical staff devoted to improving production processes and addressingspecific technical problems. HMTB works closely with clients in helping them develop innovative

friction reduction products.

1. Annexure 1 – PUBLIC ADVERTISEMENT

Annexure 2 – FORM FOR EXPRESSION OF INTEREST

(To be forwarded on the letterhead of the interested party(ies)/lead bidder/member(s) of the consortium

submitting the EOI)

Reference No. ______________ Date ___________

Ms. Vani Pratap

Vice President


Divyashree Chambers, A Wing, 2nd Floor

Langford Road


Mr Tarun Khandelwal

Senior Consultant



Langford Road


Tel: +91-80-224 5646

Fax: +91-80-224 0695

Email: [email protected]

Tel: +91-80-224 5646

Fax: +91-80-224 0695


EXPRESSION OF INTEREST FOR STRATEGIC PARTNER IN HMTB

Sub: Global Invitation of Expressions of Interest for Disinvestment of upto 74% Stake in

HMT Bearings Limited ("HMTB"), a Wholly Owned Subsidiary of HMT Limited

Madam / Sir,

This is with reference to the advertisement dated ________ inviting Expression of Interest for HMT Bearings

Limited.

As specified in the advertisement, we have read and understood the contents of the Preliminary InformationMemorandum ("PIM") and are desirous of participating in the above disinvestment process, and for this purpose:

We propose to submit our EOI in individual capacity as _____________ (insert Company name)

R U

We have formed/propose to form a consortium comprising of ____members as follows:

1.____________________________ (insert Company name)



We believe that we/our consortium/proposed consortium satisfies the eligibility criteria set out in relevant sectionsof 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 ofDisinvestment OM No.6/4/2001-DD-II dated 13th July 2001.

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 onour 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

chargesheeted by any agency of the Government/convicted by a Court of Law for any offence committed by usor 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 wouldintimate 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 the subject.

Yours faithfully,

Authorised Signatory

IRU and on behalf of the party / consortium

( Q F O R V X U H �

1. Statement of Legal Capacity

2. Request for Qualification

1. Annexure 3 – FORM FOR STATEMENT OF LEGAL CAPACITY

(To be forwarded on the letterhead of the interested party / each member of the consortiumsubmitting the EOI).

5 H I H U H Q F H � 1 R � B B B B B B B B B B B B B B � ' D W H � B B B B B B B B B B B

Ms. Vani Pratap

Vice President



Langford Road


Mr Tarun Khandelwal

Senior Consultant



Langford Road


Tel: +91-80-224 5646

Fax: +91-80-224 0695


Tel: +91-80-224 5646

Fax: +91-80-224 0695


6 X E : Global Invitation of Expressions of Interest for Disinvestment of upto 74% Stake in HMT

Bearings Limited, a Wholly Owned Subsidiary of HMT Limited

Madam / Sir,

1. This is with reference to the advertisement dated ________ inviting Expression of Interest for HMTBearings Limited.

2. We have read and understood the contents of the PIM and the advertisement and pursuant to this herebyconfirm that:

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

ii. We are members of the consortium (constitution of which has been described in theExpression of Interest), which jointly satisfies the eligibility criteria as detailed in the

PIM.*

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

iv. We have agreed that ______________(insert individual’s name) will act as ourrepresentative on our behalf and has been duly authorized to submit the EOI. Further,

the authorized signatory is vested with requisite powers to furnish such letter andRequest for Qualification and authenticate the same.*

Yours faithfully,

Authorised Signatory

For and on behalf of (party/member)

*Strike off whichever clause is not applicable.

1. Annexure 4 – FORM FOR REQUEST FOR QUALIFICATION

(To be submitted in respect of each member of the consortium)

a. Name of the interested Party(ies)/Member(s) ___________________________

b. Constitution (Tick, wherever applicable)

1. Public Limited Company

2. Private Limited Company3. Others, if any (Please specify)

If the interested party is a foreign company / OCB, specify list of statutory approvals fromGOI / Reserve Bank of India (RBI) / Foreign Investment Promotion Board (FIPB) applied for

/ obtained / awaiting.

a. Sector (Tick, wherever applicable)

1. Public Sector

2. Joint Sector3. Others, if any (Please specify)

a. Details of Shareholding

b. Role / Interest of each Member in the Consortium (if applicable)

c. Nature of business/products dealt with:

d. Date and Place of incorporation:

e. Date of commencement of business:

f. Full address including phone No./fax No.:

1. Registered Office:2. Head Office:

a. Address for correspondence:

b. Basis of eligibility for participation in the process for induction of Strategic Partner (Pleasemention details of your eligibility as under, whichever is applicable)

1. Brief description of manufacturing operations engaged in any sector by the interested party. (Please furnish

necessary proof for manufacturing experience of 5 years or more in any sector)2. Details of bearings manufacturing experience if any. (Please furnish details of self / Group Company with

bearings manufacturing experience of 3 years or more)

a. Please attach most recent Audited Statement of Accounts / Annual Report. Please provide aChartered Account / Auditor certificate certifying the Networth.

b. Please provide details of all contingent liabilities that, if materialized, would have or would bereasonably 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 similarbusiness combination or transaction.

c. Contact Person(s):

1. Name:2. Designation:

3. Phone No.:4. Mobile No.:

5. Fax No.:6. Email:

Yours faithfully,

Authorised Signatory Authorised Signatory

For and on behalf of the party /member For and on behalf of the consortium

Place:

Date:

1 R W H � � Please follow the order adopted in the Format provided. If the interested party is unable torespond to a particular question / request, the relevant number must be nonetheless be set out with the

words "No response given" against it.

1. Annexure 5 – FINANCIAL HIGHLIGHTS

PERFORMANCE HIGHLIGHTS

(All figures in Rs million, except if otherwise stated)

2000-01 1999-00 1998-99 1997-98

OPERATING STATISTICS

Sales* 526 552 480 466

Other Income 6 5 5 12

Prior period adjustments 4 4 16 1

Stock adjustments 10 - 8 8

Materials 229 256 204 189

Employee Costs 138 134 148 135

Depreciation 12 12 12 13

Other Expenses 130 110 106 89

Earnings before Interest & Tax 37 49 39 59

Interest 15 14 12 11

Earnings / (Loss) before Tax 22 35 27 48

Provision of Taxes / Reserves /

Dividend

28 33 34 39

Taxes & Reserves withdrawn 29 27 34 -

Profit carried out to BalanceSheet

23 29 27 9

Net Earnings 23 29 27 9

FINANCIAL POSITION

(All figures in Rs million, except if otherwise stated)

March 31st,2001

March 31st,2000

March 31st,1999

March

31st, 1998

Net Fixed Assets 97 42 52 63

Current Assets 340 332 337 305

Current Liabilities &Provision

169 150 189 176

Working Capital 171 182 149 129

Capital Employed 276 224 201 207**

Investments 7 - - -

Miscellaneous Expenses - - - 12

Borrowings 148 91 70 70

Net Worth 128 133 131 124

Source: HMTB financial statement for the year ended March 31st, 2001

Note: Rounding off errors on conversion of figures to millions ignored

* Sales includes sales of scrap and Bought-out items

** Capital employed = Net fixed assets +Capital WIP + DRE

2. Annexure 6 - GOVERNMENT GUIDELINES ON DISINVESTMENTS

No. 6/4/2001-DD-II

Government of India

Ministry of Disinvestment

Block 14, CGO Complex

New Delhi.

Dated 13th July, 2001.

OFFICE MEMORANDUM

Sub: Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through theprocess of disinvestment

Government has examined the issue of framing comprehensive and transparent guidelines defining the criteria forbidders 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 experienceand 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 enterprisesthrough disinvestment:

(a) In regard to matters other than the security and integrity of the country, any conviction by a Court of Law or

indictment / adverse order by a regulatory authority that casts a doubt on the ability of the bidder to manage thepublic 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 inregard to the nature of the offence would be taken on case to case basis after considering the facts of the caseand relevant legal principles, by the Government.

(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 sisterconcern 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 concernsare substantially controlled by the same person/persons.

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

(d) Any entity, which is disqualified from participating in the disinvestment process, would not be allowed toremain associated with it or get associated merely because it has preferred an appeal against the order based on

which it has been disqualified. The mere pendency of appeal will have no effect on the disqualification.

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

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

(g) Henceforth, these criteria will be prescribed in the advertisements seeking Expression of Interest (EOI) fromthe 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. In case anyinvestigation 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 theGovernment. For other criteria also, a similar undertaking shall be obtained along with EOI.

-sd/-

(A.K. Tewari)

Under Secretary to the Government of India

Documents

Preliminary Information Memorandum (Pim)