CEL is second victim of Modi govt's sell-cheap policy; successful bidder has no experience in company business
CEL, under the Union Ministry of Science and Technology, was founded with an objective to commercially exploit indigenous technologies developed by national laboratories and R&D institutions in India
The state-run Central Electronics Limited (CEL) has become the second victim of the Modi government’s selling spree of public sector companies this year. It was sold damn cheap at only Rs 210 crore to Nandal Finance, a company that has no expertise to run the business successfully, apart from its low capital base, jeopardizing the very objective for which it was established in 1974 as a public sector company.
The Union Government has only one thing for its face-saving, and that is the sale is bringing about Rs 16 crore more than its reserve price of Rs 194 crore for its entire 100 per cent stake. The statement issued by the Union Ministry of Finance made it a point to mention, “The entire disinvestment process has been carried out in a transparent manner with due regard to confidentiality of the bidders, through multi-layered decision making involving the inter-ministerial group (IMG), a core group of secretaries on disinvestment (CDG), and the empowered alternative mechanism (AM) at the apex Ministerial level.”
What provoked the government to make such a statement is not exactly known, but the tone of the language suggests there must be something behind the compulsion to declare the deal’s ‘righteousness’ when there was no suggestion of mischief. There was only a general sentiment that public properties should not be put in private hands in the name of national interest and dismal track record.
CEL, under the Department of Scientific and Industrial Research (DSIR), Union Ministry of Science and Technology, was founded with an objective to commercially exploit indigenous technologies developed by national laboratories and R&D institutions in India as opposed to the BJP government programme of selling public sector companies cheaply to private players.
Another importance of the sale of CEL relates to the climate change efforts according to which every country including India needs to shift its traditional energy sources from coal and fossil fuels to non-conventional energy, such as solar energy. The CEL is a pioneer in the field of Solar Photovoltaic (SPV) and it has developed the technology with its own R&D efforts. The company had also performed very well in past years having ample opportunities to become the leader in the field of strategic electronics, railway electronics, solar photovoltaics and training future engineers in renewable energy technologies.
Thus selling CEL is like selling public strategic electronics, best of breed technologies security services and indigenous renewable energy technologies to some private party, which in principle is not acceptable as both sectors are of utmost importance for the strategic safety of this country.
All this has been done using public money, but when the time has come to derive benefit for the public, it is being sold to a private entity for their profit at the cost of the public, which has become the new brand of nationalism, since everything is done by the Modi government in the ‘interest of the nation’. So far, the government has raised Rs 9,330 crore as a receipt from such activities out of its target of selling public property worth Rs 1.75 lakh crore.
Modi’s brand of nationalism started just after he became prime minister in 2014. Soon after, the idea of selling CEL was floated and the process of CEL disinvestment started in 2016 with the ‘in-principle’ approval by the Cabinet Committee on Economic Affairs (CCEA). In 2019, final bids were invited, but ‘did not receive any response’ from investors as has been stated in the government statement.
The Modi government resumed its bid to sell the company again in February 2020. Soon after on March 24, 2020, the country was put under lockdown, a period that has earned double distinction – an opportunity for all sorts of economic reforms for the Modi governments and a crisis of life under COVID-19 pandemic for common people. In the midst of the crisis in July 2020, three bids were received by the Union Government and all the bidders were shortlisted by the transaction advisors. A Virtual Data Room was created through which CEL provided information to the ‘shortlisted and qualified’ bidders.
The Centre has announced this sale on November 30 and hopes to complete the transaction in this financial year itself. In its first sale this year, the government had sold Air India to the Tata Group. The CCEA empowered Alternative Mechanism has approved the highest price bid of Nandal Finance and Leasing Private Limited for the sale of 100 per cent equity shareholding of the government in CEL. The mechanism included Union Finance Minister Nirmala Sitharaman, Union Road Transport Minister Nitin Gadkari, and Union MoS having independent charge of Science and Technology Jitendra Singh.
In India, it is common knowledge that there is something called ‘Jugad Technology’, literally in Hindi ‘a mechanism to get things done that are otherwise impossible'. In biddings that were pre-decided, mostly three bids get into records through jugad technology, and one is invariably approved. This is the prevalent pattern. It is possible that the CEL bids might have been genuine, but surprisingly it reflects a pattern of cheap sales.
Views are personal)
Published: 30 Nov 2021, 9:00 PM