Government Puts Divestment of Central Electronics on Hold

In a surprising move, the government had decided to put the divestment of Central Electronics Ltd (CEL) on hold after the Employees Union approached the court against the proposed divestment. There have been allegations of undervaluation and lack of transparency in the divestment process.

It may be recollected that Nandal Finance & Leasing had emerged as the highest bidder with a bid for Rs.210 crore for CEL. However, the Employees Union has alleged that selling a critical company like CEL for Rs.210 crore was tantamount to gross undervaluation of the tangible and intangible worth of CEL.

But it was two other allegations made by the Employees Union against Nandal Finance & Leasing that persuaded the government to halt issuing the LOI to the highest bidder. At the bidding, JPM Industries had bid Rs.190 crore against the reserve price of Rs.194 crore while Nandal Finance & Leasing had bid Rs.210 crore resulting in emerging the winning bidder.

Back to the 2 major allegations made by the union against Nandal Finance & Leasing. Firstly, the union has alleged that the two bidders were actually inter-related by virtue of having a common director. Secondly, the union has also alleged that Nandal Finance & Leasing had a legal case pending against their name at the NCLAT (appellate tribunal). 

It is the above 2 allegations that the government found a lot more serious and opted to cancel the letter of intent, and put the divestment on  hold till further investigations were completed. Interestingly, one of the contentions of the union has been that CEL makes critical products that are in sync with the green energy plans of India.

Central Electronics Ltd (CEL) currently falls under the aegis of the Department of Scientific and Industrial Research (DSIR). Incorporated in 1974, CEL is a pioneer in the field of Solar Photovoltaic (SPV) developed with its own R&D efforts. CEL has also developed axle counter systems used in railway signalling systems for the safe running of trains.

The opposition parties have claimed that the fair valuation of CEL should be in the range of Rs.1,000 crore to Rs.1,600 crore. Unions have also alleged that there was a deliberate attempt by the official valuer to undervalue the assets of CEL so that it could be given away for a song. For now, the deal has been put on hold.