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People’s Commission Urges Parliament to ‘Fully Investigate’ CEL's Sale

The Centre has approved the sale of 100% equity shareholding of the government in Central Electronics Ltd to Nandal Finance and Leasing for a paltry sum of Rs 210 crore.

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New Delhi: The Peoples’ Commission on Public Sector and Public Services (PCPSPS) has released a statement urging the parliament to “fully investigate” the sale of profitable central public sector enterprise (CPSE) Central Electronics Ltd (CEL) for a paltry sum of Rs 210 crore.

The PCPSPS said, “This private entity [Nandan Finance and Leasing] is a financial intermediary. It has clearly no competence, managerial or technological. It cannot be expected to bring technology and best management practices. The scientific community is concerned that CEL will be destroyed and ultimately dismantled by this company.”

The Wire reported that Nandan Finance and Leasing – with less than 10 staff and no domain experience, as claimed by the Congress – also appears to have a dubious track record. There is also a case pending against it before the National Company Law Tribunal (NCLT, CP No. 290/ND/2018, order delivered on December 17, 2019).

The PCPSPS further said, “The proceeds from the disinvestment will be meagre compared to the real value of the assets sold because of the inbuilt bias in hasty privatisation towards undervaluation of assets. Moreover, the corporate sector which would buy the public assets would be raising most of the needed resources from the public sector banks.”

It has also raised concerns over the credibility of transaction advisor to government, Resurgent India. The Gurugram-based merchant bank is currently advising the Union government on six transactions for strategic disinvestment of CPSEs, including CEL.

“We appeal to the parliament to get this transaction fully investigated so that it could be put on hold till clarity emerges on the latest disinvestment policy of the present government,” it said.

Also read: Why Is the Narendra Modi Government Selling off a Profit-Making PSU?

‘Selling a profitable CPSE to a firm with a dubious track record’

The Cabinet Committee on Economic Affairs (CCEA) empowered alternative mechanism for disinvestment – which includes finance minister Nirmala Sitharaman, road transport minister Nitin Gadkari, Minister of state (independent charge) for science and technology Jitendra Singh – on November 30, 2021 approved the highest bid of Nandal Finance and Leasing Pvt. Ltd for the sale of 100% equity shareholding of the government in CEL.

The transaction is expected to be completed during the current financial year 2021-22 (ending March 2022), an official statement had said.

Sahibabad-based CEL is run by the Department of Scientific and Industrial Research (DSIR). With 130 engineers, the CPSE is contributing to frontier areas of electronics manufacturing, product development for strategic needs of defence and railways and solar photovoltaic business, which is a key area for indigenous technology development.

It earned a gross profit of Rs 136 crore in FY21. As of March 31, 2021, the market value of the 50-acre land the CPSE possesses was worth Rs 440 crore as per the circle rate. It has orders in the pipeline worth Rs 1,592 crore, and with these orders alone, CEL would be able to provide the Union government with a gross profit of about Rs 730 crore. It also has Rs 132 crore as collectible dues from the government agencies.

With the Union government’s selling spree of state-owned assets, several experts have raised concerns over the hasty privatisation move of the profit-making CEL.

“The scientific community is concerned that CEL will be destroyed and ultimately dismantled by this company,” the PCPSPS statement said.

Dinesh Abrol, former chief scientist of the Council of Scientific and Industrial Research-National Institute of Science, Technology and Development Studies (CSIR-NISTAD) told Fortune India that CEL is being sold to a financial intermediary at a time when the Modi government is promoting its ‘Make in India’ or Aatmanirbhar Bharat.

The Wire article cited above also drew attention to the concerns raised by the scientific community over the decision to sell off CEL whose track record is doubtful.

“The company [Nandal Finance and Leasing] has no fixed assets. It has no land and buildings, computers, laptops, etc. It is a trading company with no significant resources. The financial position of M/s Nandal Finance & Leasing Private Limited is not sound; 99.96% of its shares are held by M/s Premier Furniture & Interiors Private Limited, which was formed on October 23, 2007.”

While on the other hand, CEL has developed several products for the first time in the country through its own R&D efforts as well as in collaboration with different CSIR (Council of Scientific and Industrial Research) and DRDO (Defence Research and Development Organisation) laboratories and other institutions.

These include the development of the first solar cell and solar modules in 1977 and 1978 respectively, the first solar power plant in 1992, Phase Control Module (PCM), LRDE (Electronics Radar & Development Establishment) for use in Rajendra Radar, Cadmium Zinc Telluride (CZT) for defence applications and Axle counter for the use of railway signaling systems.