New Delhi: A day after Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey went on record to say that the government has put the Central Electronics Ltd (CEL) privatisation process on hold to let the Inter-Ministerial Group (IMG) examine the allegations of under-evaluation of the company, the employee and officers' unions have dismissed the assurance, terming it an 'eyewash.' The matter, which is currently slated to be heard in the Delhi High Court next week, pertains to the selection of Nandal Finance and Leasing as the successful bidder by the government for CEL.
Demanding an external examination of the privatisation process through which Nandal Finance has been selected as the successful bidder for CEL, the unions have lashed out against the DIPAM Secretary's assurance of an internal inquiry into the matter because the entire process was steered by DIPAM.
"It is a defensive approach. Before the process gets probed by an external agency, the DIPAM has announced its own internal enquiry process because they want to save themselves. If they really want to be transparent about the process, why not have an external enquiry into the matter," said Shiv Narain Patel, executive member of the officers' association at CEL.
"It is an eyewash. How can people involved in the decision-making process for the privatisation of CEL be the ones to examine their own process for any wrongdoing? Right from Core Group of Secretaries to the Inter-Ministerial Group and the Alternative Mechanism has been part of the entire process for the selection of the successful bidder. And now they are saying that they will examine their own process?," TK Thomas, Vice President of CEL employees' union told PSU Watch.
The unions have alleged that the PSU has been under-valued by the government and is being sold off at throw-away price to a company which has no experience in the electronics sector. Responding to the allegations, the DIPAM Secretary said on January 12, "How can a company with a book value of Rs 108 crore have a valuation of Rs 1,000 crore? Some year they (CEL) earned Rs 20-crore profit, in some, they earned Rs 1 crore profit. He added that CEL's evaluation was done by transaction adviser and asset valuer, following which the government arrived at the reserve price of Rs 194 crore for the company. "The net asset value of the company is actually less than Rs 194 crore if we take the liabilities into account. The land lease is for 90 years, out of which 46 years is already gone," said Pandey.
"We have kept the LoI on hold since it is a subjudice matter and allegations of employee associations are under examination," added the Secretary.
At a recent press conference, Congress spokesperson Prof Gourav Vallabh had alleged that the Modi government has fixed the reserve price of a company whose valuation would be between Rs 1,300 crore to Rs 1,600 crore (using various methods) at Rs 194 crore. "There have been various models used for valuation of CEL. Based on equity valuation as per share market price, the valuation of CEL was estimated at Rs 957 crore. Based on other methods (DCF) and other conservative assumptions about the future growth, the valuation lies somewhere close Rs 1,300 crore to Rs 1,600 crore. The reserve price that was set by GoI was a shocking Rs 194 crore which is a meagre 20 percent of the lowest valuation of CEL for a company who has the experience of more than 40 years in the field of strategic Electronics and Defense business, having highly skilled and experienced manpower for strategic products and whose future growth is very progressive," Vallabh said.
The Congress had also raised questions over the financial credentials of Nandal Finance & Leasing Pvt Ltd, which has been declared as the successful bidder for CEL. "As per the financial statements of 2019-20, M/s Nandal Finance and Leasing Pvt Ltd have total number of employees less than 10 and none has rendered 5 years of continuous service. As per 2019-20 financial statements, 99.96 percent of Equity of M/s Nandal Finance and Leasing Pvt Ltd hold by Premier Furnitures and Interiors Pvt Ltd which is not at all related with the business of CEL. A case against M/s Nandal Finance and Leasing Pvt Ltd is pending in NCLAT," Congress said.