PART - III - Udyog Bandhu

qualifying minimum networth criteria and/or minimum turnover required of the biddingcompany is specified. This gives a fair idea of the size and financial strength of thebidding company. Besides, relevant financial and performance details are also soughtfor. For example, while seeking EOI from bidders in MECON Ltd., the minimumannual turnover stipulation was Rs. 150 crore and networth Rs. 50 crore, whereas inVSNL minimum networth was specified as Rs. 2500 crore as VSNL was a much biggercompany. In case of consortium bids, Government may insist on each consortiummember satisfying individually a minimum networth/turnover criteria to be included as amember of the consortium. In the case of VSNL, each consortium member had tosatisfy the minimum networth criteria of 10% i.e. Rs. 250 crore. In some cases, inaddition to this or in lieu thereof, Government may require majority networthcontribution from the lead bidder. For example, in the case of Shipping Corporation ofIndia, the networth criteria is Rs. 800 crore but it has been specified that the leadmember of the consortium must have a networth of at least Rs. 408 crore (i.e. 51%). Atthis stage, those of the bidders who satisfy these criteria, get shortlisted and get on to thenext stage.2.2 At the stage of submission of the financial bids, the prospective bidders are required tofurnish a bank guarantee which is retained only in the case of the highest bidder. This ismeant to bind him to fulfil his commitments till the successful closing of the transaction.2.3 Before accepting the financial bid of any party, a certificate is required either from thebanker or from an independent Chartered Accountant that the bidder has got enoughfunds to complete the transaction. In addition to that the bidder gives an undertakingthat he has not been prohibited by any agreements with others from acquiring the equitystake from government.2.4 These prerequisites are also a deterrent to bidders who may be having unhealthy balancesheets. The bank guarantee is a further proof of their financial standing and reputationin the financial world.3. Technical and Legal capacity3.1 Every company must provide along with the EOI a representation, duly executed by itsauthorised official/ representative that it has the requisite corporate authorization tosubmit the EOI and that all information provided in the EOI is complete and accurate inall material respects to the best of their knowledge. If, at a subsequent date, it isdiscovered that the company or any consortium member did not either possess therequisite authorization or that any part of the information provided in the EOI was notcomplete or accurate in any material respect, the Government reserves the right todisqualify such company or consortium or member of the consortium from the process.3.2 To access the technical capabilities of the prospective bidder, the Government may askthem to provide a business plan so that the Government is assured of continued servicesto the satisfaction of the user. In case of Air India, the business plan was sought inadvance. In certain cases, Government may even require the bidders to satisfy a criteriaof minimum experience in a particular business/sector, say manufacturing.3.3 The bidder is required to submit enough information in the EOI for Government toassess the bidding entity’s managerial, financial and technical capability. Typically,the EOI would contain the following details:(i) Executive Summary: This provides a brief description of the bidding companyand (where appropriate) of each member in the consortium, containing details likeownership structure, write up on business history and growth, business areas /activities, respective revenue details, etc. It includes a brief commentary on the131