India - IFFCO Fertilizer Project : Loan 1079 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1079 IN Loan Agreement (IFFCO Fertilizer Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INDIAN FARMERS FERTILISER COOPERATIVE LIMITED DATED JANUARY 24, 1975 CONFORMED COPY LOAN NUMBER 1079 IN Loan Agreement (IFFCO Fertilizer Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INDIAN FARMERS FERTILISER COOPERATIVE LIMITED DATED JANUARY 24, 1975 0 LOAN AGREEMENT AGREEMENT, dated January 24, 1975, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and the INDIAN FARMERS FERTILISER COOPERATIVE LIMITED (hereinafter called the Borrower). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions), namely that paragraph 7 of Section 2.01 is amended to read as follows: "7. The term Guarantor means India, acting by its President." Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Phulpur Unit" means the fertilizer production facility to be constructed under the Project and owned by the Borrower near Phulpur, Uttar Pradesh; (b) "Rs" means rupees in-the currency of the Guarantor; (c) "Cooperative Societies" means the cooperative societies registered as such under any State or Central Act for the time being in force in the territories of the Guarantor; and (d) "IDBI" means the Industrial Development Bank of India. 4 ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to one hundred nine million dollars ($109,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan and in respect of interest and other charges on the Loan. (b) On or before each of the semi-annual interest payment dates specified in Section 2.07 of this Agreement, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amounts required to pay, on such date, interest and other charges on the Loan accrued and payable on or before the date set forth, up to the amount allocated in Schedule 1 to this Agreement, as such schedule may be amended from time to time. Section 2.03. (a) Except as the Bank shall otherwise agree, the goods, works and services (other than consultants' services) for the Project to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. (b) If at any time the Bank or the Borrower determines, after consultation with each other and the Guarantor, that any equipment or material cannot be delivered on or prior to its scheduled delivery date, and that such delay would adversely affect completion of the Project, the Borrower shall promptly take all necessary action to procure such equipment or material by such procedures as shall be satisfactory to the Guarantor and the Bank. Section 2.04. The Closing Date shall be March 31, 1979, or such other date as shall be agreed between the Bank and the Borrower. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not !ithdrawn from time to time. 5 Section 2.06. The Borrower shall pay interest at the rate of eight per cent (8%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on January 1 and July 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. Section 2.09. The Borrower undertakes that it will pay to the Guarantor the guarantee fee provided for in Section 3.07 of the Guarantee Agreement. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in process and engineering design, procurement, construction and start-up, the Borrower shall obtain licenses and plant designs and engage consultant services acceptable to the Bank upon terms and conditions satisfactory to the Bank. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and 6 construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financ,ed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Bank's representat.ves to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents. Section 3.05. The Borrower shall use its best endeavors to carry out the Project: (i) in accordance with the Provisional IFFCO Project Implementation Schedule dated October 16, 1974, submitted to and approved by the Bank and, in that regard, shall give special attention to the timely procurement of critical equipment; and (ii) in accordance with the IFFCO Project Implementation Plan dated October 16, 1974 submitted to and approved by the B ank. Section 3.06. The Borrower shall acquire approximately 200 hectares of land suitable for construction and operation of the facilities included in the Project. Section 3.07. The Borrower shall, by Decerriber 31, 1975, make arrangements satisfactory to the Bank with appropriate agencies and corporations for the provision of adequate supply of fuel oil, electricity, and coal to ensure the timely availability of such supplies in sufficient quantity and of appropriate quality for the full utilization of the facilities to be constructed under the Project. Section 3.08. The Borrower shall take all measures necessary to ensure that the execution and operation of the Project is carried out with due regard to 7 ecological and environmental factors, and shall comply with environmental quality standards satisfactory to the Bank. ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 4.02. The Borrower shall establish a project implementation unit satisfactory to the Bank and shall maintain it with adequate personnel, including such experienced and qualified technical advisory services as the Bank or the Borrower shall deem necessary after consultation with each other. Section 4.03. The Borrower shall: (a) at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations in accordance with appropriate business, financial and engineering practices and under the supervision of experienced and competent management assisted by adequate and competent staff; (b) employ, for the duration of the Project, a suitably qualified and experienced Project Manager to. be responsible for the execution of the Project, including, inter alia, budget and schedule control and general engineering, procurement, and construction duties, and provide the Project Manager with adequate staff and facilities to carry out such functions; (c) consult with the Bank before making any change in the position of the Project Manager in the Phulpur Unit; and (d) appoint, after consultation with the Bank, a suitably qualified successor if it appears that a vacancy will occur in the position of any full-time Director of the Borrower. Section 4.04. Except as the Bank shall otherwise agree, the Borrower shall: (a) at all times take all steps which are necessary to maintain its existence and its right to carry on operations and to acquire and retain ownership of all lands and to maintain and renew all interests in land and other properties and 8 all rights, powers, privileges and franchises which are necessary or useful in the carrying out of the Project or in the conduct of its business; (b) at all times operate and maintain its plants, machinery, equipment and other property, and promptly make all necessary repairs and renewals thereof, in accordance with appropriate engineering practices; (c) not sell, lease, transfer or otherwise dispose of any of its property or assets which shall be required for the efficient operation of its business and undertaking; and (d) not alter its corporate structure or amend its Bye Laws in any way that will materially and adversely affect its ability to perform its obligations under this Agreement. Section 4.05. In the event of any operational problems after start-up of the facilities constructed under the Project, the Borrower shall secure such outside operational assistance as necessary, in consultation with the Bank. ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maint.ned appropriate accounting practices its operations and financial condition. Section 5.02. The Borrower shall: (i) have the Phulpur Unit's and its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Bank; (i;) except as the Bank shall otherwise agree, furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of the financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of the Phulpur Unit and the Borrower and the audit thereof, if any, as the Bank shall from time to time reasonably request. Section 5.03. Except as the Bank shall otherwise agree, the Borower shall: 9 (a) maintain separate accounts for the Phulpur Unit and consolidated accounts for all of the Borrower's operations; and (b) furnish to the Bank as soon as available, but in any case not later than 45 days after the end of each quarter and fiscal year: (i) its quarterly consolidated financial statements (balance sheets, statements of income and expenses and cash flow); (ii) quarterly financial statements (balance sheets, statements of income and expenses, cash flow and related statements) and operational data for the Phulpur Unit; and (iii) Phulpur Unit's and the Borrower's quarterly and annual forecast statements of production, income and cash flow. Section 5.04. (a) The Borrower represents that, except as stated in its letter to the Bank dated October 16, 1974, at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) The Borrower undertakes that, except as the Bank shall otherwise agree, it shall have all existing liens stated in its letter to the Bank dated October 16, 1974 vacated not later than June 30, 1975. (c) The Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank: provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred; (C) any lien created solely in favor of the Guarantor replacing liens vacated pursuant to paragraph (b) above; or (D) any lien created on assets of the Phulpur Unit solely in favor of the Guarantor, on terms and conditions satisfactory to the Bank, the Borrower and the Guarantor, to secure obligations of the Borrower to the Guarantor arising out of (i) the Guarantor's guarantee of the Loan, (ii) the Guarantor's guarantee of other loans contracted by the Borrower pursuant to the provisions 10 of Section 5.06 of this Agreement, or (iii) the Guarantor's loan to the Borrower, if any, pursuant to the provisions of Section 2.02 of the Guarantee Agreement, provided that the aggregate of the amount of debt (including guarantees of debt) secured under sub-paragraphs (ii) and (iii) above shall not exceed Rsl75,000,000. Section 5.05. Except as the Bank shall otherwise agree, the Borrower shall: (a) take all necessary steps to maintain a debt-equity ratio not greater than 60:40; (b) maintain for itself a ratio of current assets to current liabilities (hereinafter referred to as the current ratio) of at least 1.1:1, and take necessary steps to achieve by December 31, 1976, and maintain thereafter for itself a current ratio of at least 1.5:1; (c) take necessary steps to achieve on completion of the Project (as defined in Section 2.02 of the Guarantee Agreement) and maintain thereafter for the Project a current ratio of at least 1.5:1; (d) not incur any additional debt if its net revenues for the fiscal year immediately preceding its incurrence shall be less than 1.4 times the maximum debt service requirements for any succeeding fiscal year on all its debt then outstanding (including the debt to be incurred); and (e) not make investments in fixed assets, in excess of the aggregate of $3,000,000 equivalent in any one financial year, without the prior approval of the Bank. For the purpose of this Section: (i) the term "debt" means any debt maturing by its terms more than twelve months after the date on which it is originally incurred; (ii) the term "equity" means all unimpaired paid-in share capital plus accumulated net earnings or losses from prior fiscal years not set apart for specific purposes and includes subordinated debt, if any, provided under the terms of Section 2.02 and Section 3.05 of the Guarantee Agreement; (iii) the term "current assets" means cash (excluding advances to contractors for construction of the Project or any other capital 11 investment), assets readily convertible into cash (excluding stocks of spares), and all other assets which could in the ordinary course of business be converted within one year into cash or assets readily convertible into cash, less any amount allocated for financing the Project (as envisaged in Section 5.06 of this Agreement) or any other capital investments; (iv) the term "current liabilities" means liabilities due and payable and all other liabilities which would be due and payable, or could be called for payment, within one year, including the portion of debt falling due within one year; but excluding any such liabilities relating to the construction of the " :lct or any other capital investment, provided that such 1: dities are to be financed by loans or external funds to be provided for such purposes or by internal funds allocated for such purposes and excluded from current assets as defined in (iii) above; (v debt shall be deemed to be incurred (A) under a loan contract or agreement, on the date and to the extent that it is drawn down pursuant to such loan contract or agreement, and (B) under a guarantee agreement, on the date the agreement providing for such guarantee is entered into but only to the extent that the guaranteed debt is outstanding; (vi) the term "net revenues' means gross revenues from all sources less operating and administrative expenses, including taxes, surcharges and other levies, if any, but before provision for depreciation and interest and other charges on debt; (vii) the term "debt service requirements" means the aggregate amount of amortization, interest and other charges in respect of debt; and (viii) whenever it shall be necessary to value in the currency of the Guarantor debt payable in another currency, such valuation shall be made on the basis of the rate of exchange at which such other currency is obtainable by the Borrower, at the time such valuation is made, for the purposes of servicing such debt or, if such other currency is not so obtainable, at such rate of exchange as shall be reasonably determined by the Bank. Section 5.06. Subject to the provisions of Section 2.02 of the Guarantee Agreement or except as the Bank shall otherwise agree, the Borrower shall: 12 (a) make arrangements satisfactory to the Bank for an equity contribution of a sum of approximately Rs220 million through the Cooperative Societies and one or more of the State Governments; (b) contract long-term loan funds amounting to. approximately Rs 175 million from IDBI and other financial institutions on terms and conditions satisfactory to the Bank; and (c) enter into arrangements satisfactory to the Bank for provision by the Guarantor of (i) a sum of approximately Rs360 million in the form of equity, provided, that this sum may be reduced by an amount equal to the contribution, if any, made by the Borrower from its internal resources, (ii) a sum of approximately Rs82 million as subordinated debt, and (iii) such other funds as the Guarantor may be obligated to make available to the Borrower under the terms of Section 2.02 of the Guarantee Agreement. ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified, namely, that the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of the Phulpur Unit or for the suspension of its operations. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified, namely, that the event specified in Section 6.01 of this Azreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01(c) of the General Conditions, namely, that the Borrower has taken possession of the land referred to in Section 3.06 of this Agreement. Section 7.02. The date March 31, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. 13 ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the Generai Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. For the Borrower: Indian Farmers Fertiliser Cooperative Limited N-1 I South Extension (Part I) New Delhi - 24 INDIA Cable address: IFFCO New Delhi IN WITNESS WHEREOF, the -.-ties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 14 in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s / M. L. Weiner Regional Vice President South Asia INDIAN FARMERS FERTILISER COOPERATIVE LIMITED By /s/ T. N. Kaul Authorized Representative 15 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment, mate- 67,400,000 100% of total rial and spares expenditures (2) Technical and 16,500,0 100% of foreign consultants' serv- expenditures ices (3) Interest and other 16,600,000 Amounts due charges on the Loan accrued on or before September 30, 1978 (4) Unallocated 8,500,000 TOTAL 109,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from, the territory, and in the currency, of any country other than the Guarantor; and (b) the term "total expenditures" means the aggregate of foreign expenditures and of expenditures for goods produced in, or services supplied from, the territory of the Guarantor. 16 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; (b) payments for taxes imposed under the laws of the Guarantor or laws in effect in its territory on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Loan will be withdrawn on account of payments for such taxes; and (c) expenditures for freight and insurance on transportation within the territory of the Guarantor. 4. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category to the extent required to meet the estimated shortfall proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower cancel such amount of the Loan as in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. 17 SCHEDULE 2 Description of the Project The Project consists of the design, construction and start-up of a fertilizer plant at Phulpur, near Allahabad in the State of Uttar Pradesh, with a daily capacity of about 900 tons of ammonia based on heavy fuel-oil feedstock and about 1,500 tons of urea. Steam and most of the power required will be produced from coal. The Project comprises: A. Detailed design, engineering, procurement, construction, training and start- up services; B. Construction and installation of an ammonia plant including: -Heavy fuel-oil partial oxidation; -Synthesis-gas purification; -Sulfur removal and carbon dioxide shift; -Ammonia synthesis and compression; and -Ammonia storage; C. Construction and installation of an urea plant including: -Ammonia and carbon dioxide compression; -Urea synthesis separation and prilling; and -Urea bagging storage and handling; D. Construction and installation of: -Coal-fired boiler plant; -Steam-turbine power generation facilities; -Water treatment and cooling facilities; 18 -Effluent treatment and disposal facilities; -Air separation plant; -Sulfur recovery plant; -Maintenance buildings and equipment; -Offices, staff and operator facilities; -Firefighting, safety and security equipment; -Road, rail and yard facilities; and -Facilities for personnel. The Project is expected to be completed by October 31, 1978. 19 SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* January 1, 1980 3,185,000 July 1, 1980 3,310,000 January 1, 1981 3,440,000 July 1, 1981 3,580,000 January 1, 1982 3,725,000 July 1, 1982 3,870,000 January 1, 1983 4,025,000 July 1, 1983 4,190,000 January 1, 1984 4,355,000 July 1, 1984 4,530,000 January 1, 1985 4,710,000 July 1, 1985 4,900,000 January 1, 1986 5,095,000 July 1, 1986 5,300,000 January 1, 1987 5,5 10,000 July 1, 1987 5,730,000 January 1, 1988 5,960,000 July 1, 1988 6,200,000 January 1, 1989 6,445,000 July 1, 1989 6,705,000 January 1, 1990 6,975,000 July 1, 1990 7,260,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 20 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in Advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05(b) of the General Conditions: Time of Prepayment Premium Not more than three 1-1/4% years before maturity More than three years 2-1/2% but not more than six years before maturity More than six years 4-1/4% but not more than eleven years before maturity More than eleven years 6-1/2% but not more than fourteen years before maturity More than fourteen years 8% before maturity 21 SCHEDULE 4 Procurement A. General Procedures 1. Contracts shall be let under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding, except as provided hereunder. 2. Contracts for the procurement of (i) items proprietory or critical to the process design, (ii) items or groups of items with limited sources of availability whose timely supply is critical to efficient execution of the Project, and (iii) items or groups of items estimated to cost the equivalent of $50,000 or less may be placed after obtaining quotations from a restricted list of suppliers, provided that prior approval of the Bank is obtained for said items and, in respect of (i) and (ii) above, for the list of suppliers. 3. Except as the Bank shall otherwise agree, the Borrower shall prequalify all bidders. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on. domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding docaments for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 22 (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in India if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in India equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in India. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. The lowest evaluated bid of each group shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the lowest evaluated bid from group C shall be selected. C. Review of Procurement Decisions by the Bank 1. Except as provided for in paragraph A.2 above, before initiating procurement of equipment and materials, including qualification of suppliers, the Borrower shall inform the Bank in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Bank shall reasonably request. 2. With respect to all contracts for equipment or materials estimated to cost the equivalent of $300,000 or more: 23 (a) The Borrower shall furnish to the Bank, in sufficient time for its comments, but not being later than the date upon which invitations to bid are issued, the text of the invitations to bid and the specifications and other bidding documents, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and the reasons for the intended award and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommendation for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together, in the case of any such contract estimated to cost the equivalent of $50,000 or more, with cop..s of the tender documents, the analysis of bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.