Centre puts CEL’s sale on hold to 'examine allegations'; poll jitters may have contributed to decision
Centre said allegations of under-valuation made by employees of Central Electronics Ltd will be examined, pending which Letter of Intent has not been issued to firm which won bid to buy it
The government has put on hold the privatisation of Central Electronics Ltd (CEL) after the employees union approached the court against the sale of the company to a little-known firm, said Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management (DIPAM), which is running the privatisation process.
Allegations of under-valuation in the Rs 210 crore highest bid made by a firm called Nandal Finance & Leasing are being examined, and the Letter of Intent (LoI) for sale of 100 per cent government shareholding in CEL to it has not been issued, Pandey was quoted as saying by a news agency.
The government had in November last year 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 privatisation, and the Opposition Congress too had 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 subjudice matter and allegations of employees association are under examination," he added.
The Congress party has claimed that the valuation of the CEL, using different methods, was between Rs 957 crore and Rs 1,600 crore.
Congress spokesman Gaurav Vallabh had held a press conference against the privatization bid last month, in which he gave detailed information on the flaws in the deal. After the deal was cancelled, he tweeted: 'Satyamev Jayate!'
On Tuesday, National Herald had carried an in-depth ground report about widespread resentment among employees of CEL against its sale, detailing how the Modi government had diluted the bidding clause to privatize the State-owned company of strategic importance.
According to sources, the government had put the sale on hold as it was apprehensive of backlash in the forthcoming Assembly polls, with CEL’s employees having announced their intention to boycott the same.
Besides, the government got a tip-off that the employees intended to challenge the sale bid in the apex court.
Supreme court lawyer Prashant Bhushan was approached by the employees to file a PIL urging the apex court to stop the sale of a profit-making public sector unit at a rock-bottom price.
Congress leader Kapil Sibal, on behalf of the employees, had filed a case in the Delhi High Court in 2018 objecting to privatization of the PSU. The case has recently been reopened.
Sources told NH that BKU leader Rakesh Tikait had addressed the protesters in Sahibabad. The government evidently did not to want to antagonize industrial workers just before the crucial polls.
Though BKU was not very vocal on the issue, its support proved pivotal in the government putting the privatization bid on hold, said sources.
As reported by NH, the Centre went against the norms in allowing 100 percent disinvestment in a State-owned entity to a private firm having zero experience in manufacturing high-end electronic parts.
Employees claimed with proof that “the CEL was valued at Rs 957 crore, but the reserve price was set very low so that the company can be sold-off easily.”
After a questionable bidding process, the CEL was sold to Nandal Finance and Leasing Limited for just Rs 210 crore.
The land belonging to CEL is alone estimated to be worth Rs 450 crore.
As per different estimates, the CEL is valued at Rs. 1000-1500 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 signalling 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.
This is the second time that the government had initiated the process of strategic sale of CEL after the Cabinet on October 27, 2016, approved its strategic sale.
In the first attempt, although 6 preliminary bids were received, no financial bids came. The CEL sale process restarted in February 2020 and finally, two companies put financial bids in October 2021.
(With PTI inputs)