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, a top official said Wednesday.
Allegations of under-valuation in the ₹210 crore highest bid made by the city-based Nandal Finance & Leasing are being examined, said Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management (DIPAM), which is running the privatisation process.
Letter of Intent (LoI) for sale of 100% government shareholding in CEL to Nandal Finance & Leasing has not been issued, as the allegations are being examined, Pandey told PTI.
Government had in November approved the sale of CEL, under the Department of Scientific and Industrial Research (DSIR), to Nandal Finance & Leasing for ₹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 subjudice matter and allegations of employees association are under examination,” he added.
He said the book value of CEL is ₹108 crore and turnover is around ₹200 crore.
“How can a company with a book value of ₹108 crore have a valuation of ₹1,000 crore. Some year they (CEL) earned ₹20 crore profit, in some, they earned ₹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 ₹194 crore for the company.
“The net asset value of the company is actually less than ₹194 crore if we take the liabilities into account. The land lease is for 90 years out of which 46 years is already gone,” he said.
The Congress party has claimed that the valuation of the CEL, using different methods, was between ₹957 crore and ₹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 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.
While Nandal Finance and Leasing Pvt Ltd bid for ₹210 crore, JPM Industries Ltd bid stood at ₹190 crore.
The bid by Nandal Finance was higher than the ‘Reserve Price’ of ₹194 crore set by the government based on the valuations by the Transaction Adviser and Asset Valuer.
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.
