Govt terminates sale of CEL to Nandal Finance

The Union government has terminated the strategic sale of its 100% stake in Central Electronics Limited (CEL) announced last November, and disqualified the successful bidder Nandal Finance and Leasing Private Limited, based on recommendations of an empowered group of ministers handling disinvestment transactions.

While the winning bidder was selected following a “transparent, open and competitive bidding process” and “laid down procedure of strategic investment”, and a press release issued about CEL’s sale to Nandal Finance on November 29, 2021, the Finance ministry said “certain allegations were received against the bidder and the bidding process” subsequently.

“While keeping the Letter of Intent (LoI) on hold, Government examined these allegations and found merit only in one allegation regarding pendency of a proceeding in National Company Law Appellate Tribunal against the successful bidder that may result in disqualification of the bid under applicable provisions of Preliminary Information Memorandum (PIM) and Request for Proposal (RFP),” the Ministry said.

The Department of Investment and Public Asset Management (DIPAM) in the Finance Ministry said that the successful bidder was given a due opportunity to show cause on points of disqualification, following which the group of ministers decided to scrap the transaction altogether ‘after careful consideration’.

In November, the government approved the highest price bid of ₹210 crore by the Delhi-based Nandal Finance and Leasing Pvt. Ltd. for the sale of 100% shareholding of the government in CEL.

However, in February, the government informed Rajya Sabha that the issuance of the Letter of Intent for the successful bidder was put on hold, pending examination of specific allegations regarding the bidder.

Incorporated in 1974, CEL is a pioneer in the field of solar photovoltaics. It has also developed axle counter systems being used in Railway signalling systems for the safe running of trains.

The Congress had accused the government of underselling the country’s assets under the guise of disinvestment policy, flagging the recent sale of Public Sector Unit (PSU) Central Electronics Limited (CEL) to a private firm, which has no domain experience.

Rajya Sabha member John Brittas, in a letter to Finance Minister Nirmala Sitharaman, had urged her to review the decision, pointing out that the company was being sold to a firm that had no prior experience in the strategic sector. “If this be true, we cannot dismiss the allegation that the government is proposing to sell a strategic PSU, which is manufacturing strategically important components having ramifications in the defence sector, indirectly to a furniture company,” Mr. Brittas noted in his letter.