Congress slams Modi govt for selling strategic PSU CEL at rock bottom price to firm with dubious credentials

The Congress on Wednesday slammed the Modi govt for selling profit-making public sector units serving strategic national interests, with specific mention of Central Electronics Limited (CEL).

CEL, a Govt. of India Enterprise under the Department of Scientific and Industrial Research (DSIR), Ministry of Science & Technology, was established in 1974 with an objective to commercially exploit indigenous technologies developed by national laboratories and R&D institutions in the country.

Addressing a press conference in the capital, Congress spokesperson Prof. Gourav Vallabh said, “The Modi government in a bid to cover-up their incompetence to manage the country’s finance and economy has been crippled with short-sightedness and hellbent on killing all the golden goose.”

He pointed out that the reserve price for sale of CEL was set at Rs 194 crore although it was valued at Rs 957 crore. The value of the PSUs land itself was more than the reserve price, he said.

“As of March 31, 2021, the total area of land available with CEL was 2.02 lakh square meters and the circle rate valuation of the land is Rs. 440 crore as per UP State Industrial Development Corporation (UPSIDC) circle rate. Moreover, UPSIDC entered into an agreement with CEL for acquisition of land for setting up a factory. The agreement mandated the UP government to provide employment to 50 farmers whose land was acquired. No employment was provided. Moreover, the land was being used for commercial purposes. This is the extent to which national strategic assets are misused by the current BJP regime,” Vallabh said, providing documents to establish his claim.

“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 crores. Based on other methods (DCF) and other conservative assumptions about the future growth, the valuation lies somewhere close to Rs 1300 crore to Rs 1600 crore. The reserve price that was set by GoI was a shocking Rs 194 crore which is a meagre 20% of the lowest valuation of CEL, a company with 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,” he said.

“CEL is a profit-making PSU with net sales of Rs. 296 crores and Gross Profit of Rs 136 crores in 2020-21. As of October 31, 2021, CEL has pending orders worth Rs 1592 crores. With these orders alone, CEL would give GoI a Gross Profit of Rs 730 crores,” Vallabh added, furnishing documents related to the same.

Vallabh outlined the strategic importance of CEL, pointing out that it was involved in four sectors: Defence, railway, solar business and security systems.

“It is a company that manufactures some of the most critical and strategic parts such as ceramic radome for seeker missiles, laser based Perimeter intruder Detection System (PIDS), dielectric substrates, piezo-electric generator fuse for Heat-55 for ordnance factories, circulator & isolator for satellite systems, bullet proof materials for body armors and material for night vision devices etc. It is very clear that CEL holds a very strategic interest and has served the nation for over four decades,” he said.

Vallabh also questioned the credentials of the firm which acquired CEL. “The winning bid was for Rs 210 crore by a firm called Nandal Finance and Leasing Pvt. Ltd. which, as per the financial statements of 2019-20, has less than 10 employees with none of them having rendered 5 years of continuous service. As per 2019-20 financial statements, 99.96% of Equity of M/s Nandal Finance and Leasing Pvt Ltd is held 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,” Vallabh said, furnishing a copy of the related documents.

He further said, “There were two bidders which participated in the bid for CEL: Nandal Finance and Leasing Pvt. Ltd. and JPM Industries. Both the bidders are inter-related to each other through their parent companies and have quoted bid price nearly equal to the reserve value of Rs. 194 crore. Nandal Finance and Leasing Pvt Ltd quoted a price bid of Rs 210 crore and JPM Industries Ltd. quoted a price bid of Rs. 190 crore. The inter-connection between these two firms becomes obvious once you do a deep dive. The Director of Nandal Finance is also the Director of another company (Sharda Tech) where the Director of JPM Power Limited is also a Director. The other Director of JPM Power is also a Director in M/S JPM Industries. It is a complex far-fetched inter-connection and this complexity was a malicious intent to avoid proving any connection,” Vallabh said, providing documents to establish his contention.

Vallabh went on to pose five questions for the Modi govt:

A. What is the strategic roadmap created by the government towards disinvestment?

B. How is it wise to sell PSUs with strategic national interests which also happen to be profit-making companies?

C. When CEL was valued at Rs 957 crore, then why was the reserve price set so low?

D. Did the government evaluate the inter-connection between the bidders? How is it a fair bidding when both bidders share interests through the other companies?

E. Why was a profit making strategic PSU handed over to a company with less than 10 employees and no domain experience?

Responding to an unrelated question, Vallabh said, “In last 7 years, Hon’ble Prime Minister, who call himself a ‘Fakir’ changed 5 vehicles and I start, please, understand the chronology: 2014- Mahindra Scorpio; 2015- BMW 7 series; 2017- Toyota Land Cruiser; 2019 – Jaguar, Range Rover Wog; 2021- Mercedes Benz Maybach.”

“I am asking Hon’ble Prime Minister, Fakir Saheb, that can you name any head of the state of any country of the world who had changed 7 vehicles in 5 years? And if changing 5 vehicles in 7 years is fakiriyat then every citizen of our country wants to be fakir. We all want to be a fakir, because if fakiriyat is buying a Rs. 8,000 crore plane, buying a Rs. 20 crore car, changing cars every alternate years, making a house and office worth Rs. 2,000 crore, if this is fakiriyat, we wish that every citizen of our country should be a fakir,” Vallabh said.

“So he should answer why in 7 years, 5 vehicles had been changed? Why during the pandemic, when people are dying out of hunger, when our hunger index ranking is next to countries like Somalia, Afghanistan, why you are changing cars, why you are buying airplanes, why you are constructing Modi Mahal for you, that is the question to which every citizen of our country would like to have an answer,” he added.