KUDREMUKH KIOCL Limited Tel : (080)-25531461-70 (Formerly Kudremukh Iron Ore Company Limited) Fax : (080)-25630984/25532153. (A Government of India Enterprise) Website : www.kioclltd.in Registered Office: e-mail :bfa@kioclltd.com II Block, Koramangala, BANGALORE-560 034 CIN :L13100KA1976G01002974 AN ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007 COMPANY EXPRESSION OF INTEREST NO.KIOCL/F&A/TL/18-19/03 DATE: 21/11/2018 Sealed EOI is invited for empanelment of Bank/Financial Institution for Term Loan of Rs 558/- Crores for forward and backward integration of the existing Blast Furnace Unit by setting up of Non Recovery Coke Oven & Ductile Iron Spun Pipe plant at Mangalore. Please refer Central Public Procurement Portal http://eprocure.gov.in and above website of the company for terms & conditions for submission EOI. Last date for submission of Tender is 2 PM (IST) on 21-12-2018. E-mail: bfa@kioclltd.com TERM LOAN (INR / FC) for FOR FORWARD AND BACKWARD INTEGRATION OF THE EXISTING BLAST FURNACE UNIT BY SETTING UP OF NON RECOVERY COKE OVEN & DUCTILE IRON SPUN PIPE PLANT AT MANGALORE 1. KIOCL Limited (KIOCL) solicits competitive proposals from Banks and Financial Institutions for banking relationship to provide finance and related services for facilitating forward and backward integration of the existing Blast Furnace Unit by setting up of Non Recovery Coke Oven & Ductile Iron Spun Pipe plant at Mangalore. BACKGROUND: 2. KIOCL, a flagship Company under the Ministry of Steel, Government of India, with Mini Ratna status was formed in 2nd April 1976. The country's prestigious Export Oriented Unit having expertise in Iron Ore Mining, Filtration Technology & Production of high quality Pellets has its Corporate office at Koramangala, Bangalore & Pelletization Complex at Mangalore, the coastal city of Karnataka. KIOCL has obtained the long term credit rating of AA and short term credit ratings of A1+ from CARE ratings. 1 P a g e
3. The annual capacity of the KIOCL s Pellet Plant at Mangalore is to produce about 3.5 Million tons of Iron ore Pellets. Other facilities include Reclaimer to load Pellets directly from Stockyard to vessel. Pellets produced at the Mangalore Plant have excellent metallurgical properties and are an ideal feed for Blast Furnace and DRI Units. KIOCL has to its credit ISO 9001:2008, ISO 14001:2004 & OHSAS 18001:2007 certifications. 4. KIOCL has been a pioneer with over 4 decades of experience in operating Iron Ore Mine, Beneficiation and Iron Oxide Pelletization in the country. KIOCL is presently operating 3.5 MTPA Iron Oxide Pellet Plant and has Blast Furnace Unit to manufacture 2.16 Lakh tones per annum Pig iron at Mangalore, Karnataka with senior level staff having more than 25 years of experience in Operation and Maintenance of Beneficiation and Pelletization Plant. KIOCL has already entered into several O&M works across India. It has entered O&M contract with NMDC for Iron Ore Beneficiation and Pelletization Plant, O&M contract with M/s Orissa Mining Corporation (OMC) to operate and manage 1.4 MTPA Chrome Ore Beneficiation plant at Kaliapani, Odisha and had Operated Coke Handling System (Crusher Conveyors) of M/s MRPL, Mangalore. Under the Make in India initiative of Government of India KIOCL produces high grade Pellets out of imported high grade concentrate procured from Brazil/Iran/Oman and successfully exported to those/other countries. 5. In order to support and participate in the National Policy on Skill Development of Govt. of India, KIOCL has entered into MoU with National Skill Development Corporation (NSDC) to develop a joint curriculum for Skill Development Programme in Mining and Steel Sector, which would contribute to the success of overall Skill India movement and make India self-reliant in the sector. Financial Services Requirement: 6. KIOCL looks forward to have Bank / Financial institution partners that may offer the below services:- A) Arranging term loan in Indian Rupees / Foreign Currency up to Rs. 558 Crores with B) LC / BG (Sub-limit) under the Capex Term Loan. C) Hedging instruments for Foreign Currency exposure. D) Underwriting / Syndication of Loan. 7. The Project: KIOCL Mangalore, Karnataka envisages forward and backward integration of the existing blast furnace by setting up one Ductile Iron Spun Pipe (DISP) Plant. The proposed integration consists of the following facilities: I. Up gradation of existing BF unit by adding PCI, new stave coolers & Recirculation water cooling system, Bell less top charging system etc. II. Addition of Ductile Iron spun pipe plant for producing 200,000 TPA capacity. 2 P a g e
III. IV. Addition of Non recovery coke oven plant for a production of 1,79,800 T per annum coke and cogen power plant using flue gases upto 10 Mw. Addition of Pulverised coal injection system to reduce coke consumption in Blast furnace. As per research carried out by MECON, there will be a substantial shortfall in DI/CI spun pipes in future years and M/s KIOCL may plan their capacity accordingly to meet the projected shortfall. KIOCL will have locational advantage over current DISP producers, as the first player in southern region since there is no DISP plant in southern region especially in Karnataka and Kerala. 8. Site Location: The site is within the KIOCL Complex at Mangalore. The Plot is Barren Land. 9. Project Cost: The project cost assumptions are mentioned in the table listed below. (Rs. Crore) Sl. No. Particulars FE Ind. Total 1. Capital Cost net of Input Tax Credit 233.9 599.4 833.3 10. Technical & Financial Appraisal: The Techno Economic Feasibility / techinchal viability study has been undertaken by Mecon Limited. The Salient Features of the Project are as under: Sl. No. Index Unit Value 1. Cumulative Profit After Tax (PAT) over 20 years of Operation Rs. Crores 1692.5 2. Average Profit After Tax (PAT) per year over 20 years of Operation Rs. Crores 84.6 3. Cumulative Cash surplus over 20 years of Operation Rs. Crores 1843.9 4. Break Even Capacity Conventional % 51.4 Cash % 40.8 5. Internal Rate of Return (post tax) % 16.4 6. Debt Service Coverage Ratio 1.8 7 Pay back Period Years 7.6 11. With the expected positive growth of the economy as well as the healthy trends emerging in the steel sector, KIOCL is looking for a financial partner which fulfill the following criteria:- Minimum Qualifying Criteria: 3 P a g e
1. The Bank / FI should be expertise in financing the Ductile iron spin pipe project of CPSU in steel sector preferably PSU in the past taking long term exposure. (Copy of one sanction letter in favor of a borrower from Steel industry) 2. The Bank / FI should not be in the RBI s list of Prompt Corrective Action (PCA). (Selfcertification) 3. The commitment once made shall not be withdrawn for any reason whatsoever except in the event of regulatory requirements / closure of business. 4. The Capital Adequacy norms of the Bank / FIs shall be at least as prescribed by RBI from time to time or FY 2017 or latest FY2018, whichever is available. ( Documentary evidence to be provided) 5. The Bank / FI should be profitable for at least 3 years in the last 5 financial years. Documents to be submitted: The Bank / FI should submit the following documents along with the RFP in sealed cover:- a) Audited financial statements for FY 2017 and FY 2018. The soft copies of annual reports can be sent by email or specific web link of the website may be mentioned in the proposal. b) The EOI to be duly signed by the authorized official of Bank / FI on its letterhead. c) The Bank and FI should submit the term sheet as per Annexure I & II. d) A copy of one sanction letter for Ductile iron spin pipe project in favor of a borrower from Steel industry. e) Self-certification that the Bank / FI is not in the RBI s list of Prompt Corrective Action. f) Documentary evidence for Capital Adequacy norms of the Bank / FIs. g) Documentary evidence/ certification in support of profitability for the last 5 financial years. KIOCL reserves the right to select or reject any of the Bank / FI s proposal for facilitating the proposed project. The compliance of above criteria should not be construed as an acceptance of the financial partner. 4 P a g e
Annexure I Proposal Specifications (Broad Indicative Term Sheet): Name of the Borrower Sponsors Facility Currency Amount Purpose Tenure Moratorium Period KIOCL Limited KIOCL Limited, Bangalore Term Loan with LC /BG sub-limit INR / USD Rs. 558.00 Crores Setting up of Non Recovery Coke Oven & Ductile Iron Spun Pipe plant at Mangalore. Tenor of 10 years Minimum 1 years Processing fee/service fee In % Rate of interest INR: The pricing should be mentioned linked with 1 Year MCLR of the Bank or 1 Year MCLR of State Bank of India (SBI). The rate of interest option as fixed rate of interest during the moratorium period i.e. for 3 years needs also be indicated, if option is available. USD: The pricing should be linked with USD 6 month LIBOR + % spread. Interest period INR: Monthly USD: Quarterly Interest Spread reset Interest will be reset after 3 years, incase fixed pricing is opted for first 3 years. The borrower will have the right to prepay the loan if the revised rate of interest is not acceptable. LC commission Security bps p.a. First Charge on project assets on pari-passu basis among participating lenders. Letter of Comfort from the sponsors approved by their board, in a 5 P a g e
manner acceptable to the JV borrower. Availability period Six months SCOD Tentative January - 2021 Documentation Standard loan documentation as mutually agreed by borrower and lenders. Pre-payment The borrower will have the right to prepay the loan if the funds are infused by the sponsors, fresh equity infusion or internal accruals subject to 90 days advance notice is given to the lenders. Criteria for Empanelment: Annexure II Sr. No. Particulars Maximum Score 1 Capital Adequacy Ratio 5 2 Own exposure to the financing package 15 3 a) Rate of Interest for initial fixed period of three 5 years, b) Interest Spread 10 4 Moratorium Period 15 5 Processing fee / Service fee if any. 5 6 Security sought for 10 7 Processing time from the formal date of loan application 5 8 Financial strength of the Bidder in terms of profitability 5 and net-worth. TOTAL 75 Based on the higher composite score, top five Banks / Financial institutions will be empanelled for further processing of the financial arrangement. Yours faithfully For KIOCL Limited -Sd- (Saumen Dasgupta) JGM (Finance) Tel: 080-25531461 (10 lines) Mobile No.: 09108043869 Fax: (080) 25532153 E-mail: bfa@kioclltd.com 6 P a g e