An exposé on the terms of the privatization of CEL may also have stopped the Govt
The Government of India has put on hold the privatization of Central Electronics Ltd (CEL) after the employees union approached the court against the sale of the company to a little-known firm. Allegations of under-valuation in the Rs.210 crore highest bid made by a Nandal Finance & Leasing are being examined, said Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management (DIPAM) on Wednesday. The Letter of Intent (LoI) for sale of 100 percent government shareholding in CEL to Nandal Finance & Leasing has not been issued, as the allegations are being examined, Pandey told news agency PTI.
The Government had in November approved the sale of CEL, under the Department of Scientific and Industrial Research (DSIR), to Nandal Finance & Leasing for Rs.210 crore. The transaction was scheduled to be completed by March 2022. Following this, the CEL employee association approached the Delhi High Court against the privatization, and Opposition Congress too alleged that the company is being undervalued. Pandey said the inter-ministerial group on disinvestment is examining the allegations.
“We have kept the LoI on hold since it is a sub judice matter and allegations of employees association are under examination,” he added. He said the book value of CEL is Rs.108 crore and turnover is around Rs.200 crore. “How can a company with a book value of Rs.108 crore have a valuation of Rs.1,000 crore. Some years they (CEL) earned Rs.20 crore profit, in some, they earned Rs.1 crore profit,” Pandey said, referring to allegations of under-valuation.
He said the CEL’s valuation has been done by the transaction advisor and asset valuer, following which the Government arrived at the reserve price of Rs.194 crore for the company. “The net asset value of the company is actually less than Rs.194 crore if we take the liabilities into account. The land lease is for 90 years out of which 46 years are already gone,” he said. The Congress party has claimed that the valuation of the CEL, using different methods, was between Rs.957 crore and Rs.1,600 crore.
Incorporated in 1974, CEL, under the Ministry of Science and Technology, is a pioneer in the field of Solar Photovoltaic (SPV), and it has developed the technology with its own R&D efforts. It has also developed axle counter systems that are being used in Railway signaling systems for the safe running of trains. The Government had issued a request for Expressions of Interest (EOI) on February 3, 2020, for CEL sale, following which three preliminary bids were received. Later, two companies — Nandal Finance and Leasing Pvt Ltd and JPM Industries Ltd — put in financial bids on October 12, 2021. While Nandal Finance and Leasing Pvt Ltd bid for Rs.210 crore, JPM Industries Ltd bid stood at Rs.190 crore.
[with PTI inputs]
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