Request for Qualification (RFQ) for Selection of Joint ... for... · 1.3 M/s Rashtriya Ispat Nigam...

RFQ for selection of JV Partner(s) for

Slurry Pipeline & Pellet Plant

MEC/11/15/U999/NMDC JV/RFQ/JV PARTNER/01 of 17

© 2013 MECON Limited. All rights reserved.

Request for Qualification (RFQ) for

Selection of Joint Venture Partner (s) for

Joint Venture Company for

13 MTPA Nagarnar - Vizag Iron Ore Slurry Pipeline

& 6 MTPA Pellet Plant at Vizag

Document No.MEC/11/15/U999/NMDC JV/RFQ/JV PARTNER/01

MECON LIMITED RANCHI

August 2013





CONTENTS

Sl. No. Section Page No.

1.0 Background of Prime JV Partners 3 - 5

2.0 Project Background and Status 5 - 6

3.0 Objective of the RFQ 7

4.0 Eligibility Criteria for Prospective JV Partner(s) 7 - 8

5.0 Information / Documents to be Furnished by the 8 - 9

Prospective JV Partner(s)

6.0 Procedure for Submission of RFQ & Time Schedule 9 - 11

7.0 General Conditions 11 - 12

8.0 Contact Address for Further Information 12 - 13

9.0 Disclaimer 13 - 15

Annexure - I: Major Project Facilities 16

Annexure - II: Net Worth Computation 17





1.0 Background of Prime Joint Venture (JV) Partners

1.1 With rising investment in infrastructure / urabanization, rising population of

middle class with increasing income levels and thrust on promotion of steel

consumption in the rural areas, the demand for steel products in India is projected

to grow significantly in the long term which in turn would call for increased

demand for iron ore. Two major companies in this segment, viz. M/s NMDC

Limited (NMDC) and M/s Rashtriya Ispat Nigam Limited (RINL) are gearing up to

meet the expected increase in demand by enhancing production capabilities of

existing mines, developing new mines, setting up new integrated steel plants and

expanding capacity of existing steel plants. These two Companies have entered

into an MOU and are in the process of forming a Joint Venture Company to

strengthen their synergy in the sector.

1.2 M/s NMDC Limited were incorporated in 1958 as a Government of India fully

owned public enterprise under the administrative control of the Ministry of Steel,

Government of India. Since inception, it is involved in the exploration of wide

range of minerals including iron ore, rock phosphate, lime stone, dolomite,

gypsum, beach sand etc. Being India's single largest iron ore producer and

exporter, NMDC is presently producing about 30 million tons of iron ore from 3

fully mechanized mines viz., Bailadila Deposit-14/11C, Bailadila Deposit-5, 10/11A

(Chhattisgarh State) and Donimalai Iron Ore Mines (Karnataka State). The

Company has its corporate office at Hyderabad. NMDC Projects have following

accreditations

• ISO 9001: 2008 - QMS Certification for all its iron ore mines and R&D Centre

• ISO 14001:2004 - EMS Certification for all its production mines

• OHSAS 18001:2007 - OHMS Certification for all its production mines

NMDC is presently producing about 22 million tonnes of iron ore from its Bailadila

sector mines and 7 million tonnes from Donimalai sector mines. Because of its

excellent chemical and metallurgical properties, the calibrated ore from Bailadila

deposits has substituted the iron ore pellets in sponge iron making and hence

became an important raw material for three major gas-based sponge iron steel

producers like Essar Steel, Ispat industries and Vikram Ispat. In addition to these

three, the entire requirement of the Visakhapatnam Steel Plant is also being met

from Bailadila.





M/s NMDC Ltd. have made valuable and substantial contribution to the National

efforts in the mineral sector during the last five decades and has been accorded the status of schedule-A Public Sector Company. In recognition to the Company's

growing status and consistent excellent performance, the Company has been

categorized by the Department of Public Enterprises as "NAVRATNA" Public

Sector Enterprise in 2008.

Besides exploration and mining activities, NMDC has also diversified in the field

of renewable energy sector. NMDC has set up a 10.5 MW capacity wind mill in

Karnataka. As part of value addition, NMDC is in the process of setting up a green

field 3 Mtpa capacity integrated steel plant through BF-BOF route at Nagarnar,

district Bastar in the State of Chhattisgarh, India.

The Company achieved an annual turnover of Rs 10,704 crores and posted net profit

of Rs 6,342 crores in FY 2012-13. Its shares are listed in the Stock Exchange (BSE

& NSE). The information on current value at which NMDC shares are being traded in the market can be obtained by visiting website

www.nmdc.co.in/investor/stockprice. Government of India has recently reduced its equity share holding in the Company through disinvestment of 10% government

shares.

Further information about the Company is available at website www.nmdc.co.in.

1.3 M/s Rashtriya Ispat Nigam Limited - Visakhapatnam Steel Plant (RINL-VSP)

popularly known as ‘Vizag Steel’, a leading Central PSU & a Navratna Company

under the Ministry of Steel is the first shore based Integrated Steel Plant in the country. The Company was established in the year 1982 with its Headquarters in

Visakhapatnam. RINL is a market leader in longs with a share of about 10%. Its product-mix include Wire Rods, Rounds, Square, Flats, Channels, Angles &

Universal beams. It has been supplying various grades of steel for construction of projects of National importance which include Metros, Power Sector, Bridges,

Nuclear complexes etc. RINL has exported finished products to countries like USA,

UAE, Thailand, Bangladesh, Nepal, Sri Lanka etc. Its products are made from 100%

virgin steel. RINL has a wide marketing network spread across the country.

RINL has long term directional plans to expand the capacity of liquid steel to 20

million tonnes in phases by the year 2020 to maintain its important position in the

Indian steel market. Under on-going expansion programme, RINL plans to double

its capacity to 6.3 Mtpa of liquid steel. The first phase of Expansion to 6.3 Mtpa

liquid steel has been brought to the stage of hot commissioning. In addition to





expansion, RINL is also in the process of adding capacities through revamping / up

gradation of existing units like Blast Furnaces, Converters, Sinter Plant and other associated facilities with which capacity will go up to 7.3 mtpa of Liquid steel.

RINL has taken number of initiatives for growth of business of the company in

addition to its expansion plan, which includes formation of Joint Ventures,

acquisition of mineral assets for raw material security, mergers etc. Among many

such strategic initiatives taken by RINL, an MOU with NMDC for Slurry Pipeline

and Pelletisation Plant has also been signed.

In the FY 2011-12, RINL recorded an annual turnover of Rs 14,462 crores and

posted post-tax profit of Rs 751 crores.

Further information about the Company is available at website

www.vizagsteel.com.

2.0 Project Background and Status

2.1 Project Background

2.1.1 As part of further value addition, NMDC intends to set up a 6.0 MTPA iron ore

processing plant at Kirandul and a 4.0 MTPA iron ore processing plant at Bacheli

(both in Bailadila sector of Chhattisgarh) for production of Blast Furnace pellet

grade concentrate. This concentrate is envisaged to be transported through a

slurry pipeline system from Kirandul via Bacheli and Nagarnar to Visakhapatnam

(Vizag) in Andhra Pradesh (AP). The concentrate off-take would be 2.0 MTPA at

Nagarnar and 8.0 MTPA at Vizag as feed for pellet plants / sale.

Additionally, about 5.0 MTPA of iron ore concentrate from third parties is also

envisaged to be transported from Bacheli / Kirandul up to Vizag using the above

mentioned slurry transporation system at mutually agreed terms & conditions.

As such, a 15 MTPA (design capacity) iron ore concentrate slurry pipeline system

with associated facilities has been proposed to be installed from Bacheli to

Nagarnar. Further, a 13 MTPA (design capacity) iron ore concentrate pipeline

system is envisaged from Nagarnar to Vizag. Two pellet plants (one of 2 MTPA

capacity at Nagarnar and another of 6 MTPA capacity at Vizag) are also envisaged.

2.1.2 The above project is envisaged to be executed in two separate works as follows :





2.1.2.1 The 15 MTPA Slurry Pipeline System from Bailadila to Nagarnar with Ore

Processing Plants at Bailadila and a 2 MTPA Pellet Plant at Nagarnar, which will be

executed by NMDC themselves.

2.1.2.2 The 13 MTPA Slurry Pipeline System from Nagarnar to Vizag and a 6 MTPA Pellet

Plant at Vizag, which will be executed under Joint Venture (JV) in which NMDC

and RINL are prime promoters. The combined equity share holding of PSU

Companies in this Joint Venture Company shall be minimum 52% along with

management control.

2.1.3 The indicative project cost under the scope of the above mentioned JV is around Rs.

6,000 crores. (This shall be finalized on completion of bankable techno-economic

feasibility study (TEFR) for the project which is expected by December 2013). The

project cost is envisaged to be financed in the debt-equity ratio of 2 : 1.

Details of major project facilities envisaged under the scope of the proposed JV are

furnished at Annexure-I.

2.2 Present Status of the Project

Present status of the project is furnished hereunder :

Sl

No

Item Present Status

1 TEFR / DPR M/s MECON Ltd., Delhi as consultant for

this project are in the process of

preparing TEFR for the project.

2 EIA Study Application for TOR is to be made. EIA /

EMP study is to commence.

3 Detailed Route Survey Under progress. Completion expected by

December 2013.

4 ROU/Land Acquisition Under progress by NMDC. Pellet plant

will come up at a suitable location at

Vizag.

5 Water Allocation Being taken up by NMDC.





3.0 Objective of the Request for Qualification (RFQ)

3.1 NMDC seeks equity participation (minimum 10% and maximum upto 24%) in this

JV by the strategic joint venture partner(s) for the successful implementation of

this project.

3.2 The strategic joint venture partner(s) shall be entitled and required to source its

iron ore concentrate requirement from this JV project with maximum quantity

ceiling in pro-rata to the extent of their equity participation as per agreed terms.

3.3 In addition, the strategic joint venture partner(s) shall have the flexibility to source

its additional iron ore concentrate requirement from any other sources including

NMDC. They may also avail the slurry transportation system envisaged in this

project to transport their iron ore sourced from NMDC as per their requirement at

mutually agreed terms. With the above mentioned objectives, NMDC invites “Pre-Qualification

Applications” from well-established experienced companies for selection of Joint

Venture (JV) Partner(s) for successful implementation of the above mentioned

slurry pipeline and pellet plant project under the scope of the proposed JV as

mentioned above.

4.0 Eligibility Criteria for Prospective joint venture partner(s)

The Applicant shall be a single legal entity. Joint bidding is not permitted for this RFQ.

4.1 Technical Eligibility Criteria

4.1.1 The Applicant should be an iron ore / iron ore concentrate/iron ore pellet consuming

Company (Indian or Foreign Company having operation in India)or iron ore pellet

producing Company (Indian or Foreign Company having operation in India) who

should be carrying out subsequent value addition of iron ore/iron ore concentrate

into pellets and/or iron / steel products at least for the last three financial years

previous to the date of RFQ.

4.1.2 The Applicant should be successfully operating pellet plants and / or pig iron /

sponge iron / steel plants with minimum aggregate annual consumption of iron ore /

iron ore concentrate / iron ore pellet of 1.0 MTPA in the immediately preceding 3

(three) financial years previous to the date of RFQ.





4.2 Financial Eligibility Criteria

4.2.1 The average annual turnover of the Applicant should be minimum INR 500 crores

(USD 80 Million) over past three consecutive financial years previous to the date of

RFQ. Only gross sales shall be considered for the purpose of determination of

turnover.

4.2.2 The net worth of the Applicant should be positive for past three consecutive

financial years and minimum INR 150 crores (USD 25 Million) in the last financial

year i.e. as on 31.3.2013.

4.2.3 The Aplicant should have capability to raise funds (both equity & debt) for this JV project at competitive terms. The Applicant should submit along with their Pre-

Qualification Application their Banker/s certificate (issued in 2013) stating their borrowing limits to support their financial capability. Such bank can be

Nationalized bank, Private bank or Foreign bank.

5.0 Information / Documents to be furnished by the Prospective joint venture

partner(s)

Pre-Qualification Application giving details about background, financial position, operations, organization and other relevant information shall be submitted along

with the following documents :

1. Certificate of incorporation issued by the Registrar of Companies.

2. Certified copies of MOA ( Memorandum of Association) / AOA (Article of

Association)

3. Last three consecutive years annual reports with audited balance sheet and profit

& loss account covering information on turnover, net worth and net profit.

4. Banker/s certificate (issued in 2013) stating the applicant’s borrowing limits to

support their financial capability.

5. Contact details of Designated Persons authorized to communicate with NMDC and MECON.

6. All relevant documents in support of fulfilment of the technical & financial eligibility criteria as indicated in Section 4.0 above.

A statement from the applicant substantiating his claim for fulfilment of the

above stipulated Eligibility Criteria ( under 4.1 & 4.2) shall be submitted,





furnishing therewith the relevant references in the supporting documents

submitted.

7. Power of Attorney/ Authorisation in respect of the signatory to the PQ

Application

6.0 Procedure for submission of Pre-Qualification Application & Time Schedule

6.1 Interested eligible prospective joint venture partner(s) should submit the Pre-Qualification Application alongwith all supporting information / documents together

with a sum (Refundable) of Rs 10,00,000/- (Indian Rupees Ten Lakh Only) either through electronic transfer or through Demand draft favouring “NMDC LTD.”

drawn on any Scheduled Commercial Bank, payable at Hyderabad, INDIA. The Pre-Qualification Application shall be submitted in one original and 6 (six) identical

copies. In case of any discrepancy between the original and the copies, the original

shall prevail. The Pre-Qualification Application shall remain open for short-listing

for a minimum period of 4 (four) months from the deadline for submission of Pre-

Qualification Applications.

The above sum of Rs. 10,00,000/- shall be refunded without any interest to the

unsuccessful applicants after finalisation of short-listed applicants. However, in the

event, an applicant withdraws from the short-listing process, the above sum of Rs.

10,00,000/- shall be forfeited and appropriated by NMDC.

In respect of the applicants who are short-listed for the next stage (bid stage), the

above sum shall serve as the Bid Security, which, subject to provisions of the next

stage i:e bid stage, shall be refundable to the unsuccessful bidders, except in the case

of the Selected Bidder whose Bid Security shall be retained till the Share

Acquisition & Shareholders’ Agreement or any such agreement for the Joint Venture Company is signed by the parties.

The refund of aforesaid sum to unsuccessful applicants, shall be in the form of an

account payee demand draft in favour of the unsuccessful applicants. The said demand draft shall be drawn by NMDC for refund in the name of the applicant and

shall be mailed to the address given in the Pre-Qualification Application.

Cost of RFQ document (Non refundable) of Rs.5000/- (Rupees five thousand only) is to be paid in form of Demand draft in favour of NMDC Limited, payable at

Hyderabad.





6.2 The Pre-Qualification Application must be delivered along with all relevant

supporting information / documents so as to reach on or before 25.09.2013 by 15.00 Hrs (IST) at the following address :

G.M.(Commercial)

MECON Limited

Doranda, RANCHI-834 002, JHARKHAND (INDIA)

Telefax : 0651-24821 89

0651-2482214

Email : [email protected]

The Pre-Qualification Application addressed as above may be sent by Registered

Post or Speed Post, through Courier service or may be delivered in person so as to

reach the addressee within the time schedule specified above. However, Advance

Copy can also be sent through facsimile or email or in CD followed by the Hard

Copy within the above mentioned period.

Any Pre-Qualification Application will be deemed to be late if the “Hard Copy” is received after the last date & Time of Submission. Such late received Pre-

Qualification Application shall not be considered and will be summarily rejected.

Pre-Qualification Applications shall be opened at 16.00 Hrs on the due date of submission indicated above, in presence of duly authorised representatives of the

applicants who choose to be present.

No Applicant shall submit more than one PQ Application.

6.3 A Pre-Application conference of the interested parties shall be convened on

04.09.2013 at 10.30 Hrs at MECON Ltd. Ranchi. A maximum of two

representatives of each prospective Applicant shall be allowed to participate on

production of authorisation from the prospective Applicant.

During the course of Pre-Application conference, the prospective Applicants may

seek clarifications and make suggestions for consideration of NMDC/RINL.

NMDC/RINL shall endeavour to provide clarifications and such further information

as it may, in its sole discretion, consider appropriate.

6.4 NMDC/RINL shall shortlist the applicants found suitable as per eligibility criteria.

6.5 Short-listed companies shall be invited for next level of participation. In the event of





tie in the specified selection criteria of the next level, bidder with higher Net Worth

shall be considered for selection, unless otherwise stipulated.

7.0 General Conditions

7.1 NMDC and RINL reserve the right to reject any or all the Pre-Qualification

Applications or drop the proposal of receiving the Pre-Qualification Applications

at any time without assigning any reasons thereof and without liability for

compensation of costs.

7.2 NMDC and RINL reserve the right to select more than one strategic JV partner for

this JV project.

7.3 The submission of Pre-Qualification Application does not automatically qualify or

finally select the prospective JV partner(s) as JV partner(s).

7.4 If at any time during the evaluation of Pre-Qualification Applications, NMDC/RINL

require any clarification on the documents submitted by the prospective parties,

they reserve the right to request a clarification so as to complete the evaluation.

7.5 At any time prior to the deadline for submission of RFQ, NMDC/RINL may, for any

reason, whether at its own initiative or in response to clarifications requested by

an Applicant, modify the RFQ by the issuance of Addenda. Any Addendum thus

issued will be sent in writing to all those who have downloaded the RFQ and duly

notified NMDC in writing by the authorized representative about their intention of

participation in the bidding process. In order to afford the Applicants a reasonable

time for taking an Addendum into account, or for any other reason, NMDC may, at

its own discretion, extend the Due Date & Time for submission of Pre-Qualification

Applications.

7.6 NMDC/RINL will not accept or respond to Applicants’ requests for information on

the status and progress of Pre-Qualification Application evaluation process. All

Applicants will be informed in writing of the outcome of the short-listing process at

its conclusion.

7.7 All Pre-Qualification applications/documents will become the property of





NMDC/RINL upon submission. In submitting the Pre-Qualification Application, the

Applicant is agreeing to allow NMDC/RINL to use ideas contained therein, and that

no consideration is payable. Where the Applicant believes that information

provided in response to this RFQ is, or should be kept confidential; or disclosure of

this information would unreasonably affect the Applicants’ business affairs, notice

is to be given at the time of delivery of the information or documents by clearly

marking such information ‘Confidential’. In so far as practicable, NMDC/RINL will

give effect to the Applicant’s stated wishes, and requests for access to such

information will be determined under the RTI Act.

7.8 All matters relating to the JV partner(s) selection process shall be governed by the

laws of Union of India. Only courts at Hyderabad will have the power to decide or

adjudicate in any matter which may arise out of or in connection with this joint

venture partner selection process.

7.9 The prospective JV partner(s), at their own expense, can have own assessment of

site and current status of the project.

8.0 Contact Address for Further Information

Any clarification / request for further information regarding this RFQ should be

directed to the following address:

G.M. (Commercial)

MECON Limited

Doranda

RANCHI-834 002

Jharkhand (INDIA)

Telefax: 0651-24821 89

0651-2482214

Email: [email protected]

and a copy of such communication should be directed to the following address:

General Manager (Engg.)

NMDC Limited

10-3-311/A, Khanij Bhavan

Castle Hills, Masab Tank

Hyderabad – 500 028





Andhra Pradesh (INDIA)

Telefax: 040-23531828]

Email: [email protected]

9.0 Disclaimer

9.1 The issue of this document does not, in any way commit, or otherwise obliges

NMDC to proceed with all or any of the proposals received.

9.2 The RFQ request / advertisement does not constitute any contract or agreement of

any kind whatsoever or any contractual obligation between NMDC and the

applicant or potential applicants.

9.3 The RFQ document / advertisement does not contain and does not purport to

contain all the information of the transaction and should not form the basis of or

the inducement for any investment activity or decision to enter into any contract

or agreement. Entities are advised to form their own view before taking any

decision for submitting Pre-Qualification Application.

9.4 NMDC/RINL may, at its absolute discretion, elect to abandon any part or whole of

the process without giving prior intimation to the applicant or potential applicants.

9.5 NMDC/RINL reserves the right to consider or reject any or all Pre-Qualification

Applications at any point of time without assigning any reasons, whatsoever.

9.6 The information contained in this Request for Qualification document (the “RFQ”)

or subsequently provided to Applicant(s), whether verbally or in documentary or

any other form, by or on behalf of the Authority or any of its employees or

advisors, is provided to Applicant(s) on the terms and conditions set out in this RFQ

and such other terms and conditions subject to which such information is

provided.

This RFQ is not an agreement and is neither an offer nor invitation by NMDC to the

prospective Applicants or any other person. The purpose of this RFQ is to provide

interested parties with information that may be useful to them in the formulation

of their application for qualification pursuant to this RFQ (the “PQ Application”).

This RFQ includes statements, which reflect various assumptions and assessments

arrived at by NMDC in relation to the Project. Such assumptions, assessments and

statements do not purport to contain all the information that each Applicant may





require. This RFQ may not be appropriate for all persons, and it is not possible for

NMDC, its employees or advisors to consider the investment objectives, financial

situation and particular needs of each party who reads or uses this RFQ. The

assumptions, assessments, statements and information contained in this RFQ may

not be complete, accurate, adequate or correct. Each Applicant should therefore,

conduct its own investigations and analysis and should check the accuracy,

adequacy, correctness, reliability and completeness of the assumptions,

assessments, statements and information contained in this RFQ and obtain

independent advice from appropriate sources.

Information provided in this RFQ to the Applicant(s) is on a wide range of matters,

some of which may depend upon interpretation of law. The information given is

not intended to be an exhaustive account of statutory requirements and should

not be regarded as a complete or authoritative statement of law. NMDC accepts

no responsibility for the accuracy or otherwise for any interpretation or opinion on

law expressed herein.

NMDC, its employees and advisors make no representation or warranty and shall

have no liability to any person, including any Applicant or Bidder, under any law,

statute, rules or regulations or tort, principles of restitution or unjust enrichment

or otherwise for any loss, damages, cost or expense which may arise from or be

incurred or suffered on account of anything contained in this RFQ or otherwise,

including the accuracy, adequacy, correctness, completeness or reliability of the

RFQ and any assessment, assumption, statement or information contained therein

or deemed to form part of this RFQ or arising in any way with pre-qualification of

Applicants for participation in the Bidding Process.

NMDC also accepts no liability of any nature whether resulting from negligence or

otherwise howsoever caused arising from reliance of any Applicant upon the

statements contained in this RFQ.

NMDC may, in its absolute discretion but without being under any obligation to do

so, update, amend or supplement the information, assessment or assumptions

contained in this RFQ.

The issue of this RFQ does not imply that NMDC is bound to select and short-list

pre-qualified PQ Applications for Bid Stage or to appoint the selected Bidder(s) as

Joint Venture Partner(s) for the Project and NMDC reserves the right to reject all or





any of the PQ Applications or Bids without assigning any reasons whatsoever.

The Applicant shall bear all its costs associated with or relating to the preparation

and submission of its PQ Application including but not limited to preparation,

copying, postage, delivery fees, expenses associated with any demonstrations or

presentations which may be required by NMDC or any other costs incurred in

connection with or relating to its PQ Application. All such costs and expenses will

remain with the Applicant and NMDC shall not be liable in any manner whatsoever

for the same or for any other costs or other expenses incurred by an Applicant in

preparation or submission of the PQ Application, regardless of the conduct or

outcome of the Short-listing and/or Bidding Process.

***************





Annexure-I

Major Project Facilities

1. A 22”/24 NB (tentative) x 313 km (approx.) underground Iron Ore

Concentrate Slurry Pipeline (13 MTPA capacity) from Nagarnar to Vizag,

including:

i) Pipeline proper

ii) Pumping Station (PS) at Nagarnar

iii) Intermediate Pumping Station (PSA)

iv) Valve Station / Choke Stations (VS / CS)

v) Pressure Monitoring Stations (PMS)

vi) Terminal (T) at Vizag

vii) Slurry Dump Ponds & Flush Water Ponds at various Stations/ Terminal

2. “Return water system”

3. A 6.0 MTPA Pellet Plant (with slurry filtration facilities) at Vizag.





Annexure - II

Net Worth Computation

The net worth shall be defined and computed in the following manner:

Net Worth = Paid up capital plus share application money pending allotment

Add : Reserves

Subtract : Accumulated losses and deferred revenue expenditure to the extent

not written off.

Note : Revaluation reserves & intangible assets / goodwill are not considered in the net

worth calculation.

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