New Delhi: As the Central government puts brakes on the privatisation of Central Electronics Limited (CEL) after irregularities in the sale process have surfaced in the media, the employees' union of the central public sector enterprise (CPSE) presses that they will continue to protest until their demand is met. Their demand is that the decision to disinvest a "profit-making" company is "withdrawn."
Thursday marks the 113th day of the demonstration, staged under the leadership of one joint platform of employees' unions at CEL's Sahibabad factory. Among those part of this umbrella group include Centre of Indian Trade Union (CITU) – affiliated employees' union, Bharatiya Mazdoor Sangh (BMS) – affiliated organisation and the CEL's Executive Association.
The Narendra Modi–led Central government had approved the strategic disinvestment of CEL in November last year when Nandal Finance and Leasing Private Limited had emerged as the winning bidder for the sale of 100% equity shareholding in the CPSE.
'In-principle' approval for the disinvestment of CEL was given by the Cabinet Committee on Economic Affairs (CCEA) back in 2016.
In December last year, the joint platform of trade unions approached the Comptroller and Auditor General (CAG), alleging "discrepancies" in the CEL's disinvestment process and demanding an investigation by the statutory auditor in the country.
In their letter dated December 22, accessed by NewsClick, the unions had alleged that the Expression of Interest (EoI) criteria were "diluted", and the bidding process seems "suspicious" because of the seeming "cartel formation" among the bidders. A similar letter was signed by all the three employees' bodies and sent to the Central Vigilance Commission (CVC) last month.
On Wednesday, Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), was quoted by the news agency PTI as saying that an inter-ministerial group will examine the allegations and that the Central Government has decided to put the issuance of Letter of Intent (LoI) on hold.
"While it is being reported as positive news, the [CEL] employees' union is of the view that putting a hold on LoI is not enough. We are demanding the government withdraw its decision to disinvest the profit-making CEL. We will continue with our protest till then," T K Thomas, vice president, CITU-affiliated CEL Employees' union, told NewsClick over the phone on Thursday.
He added that the current arrangement of a relay demonstration, mostly by the permanent workforce, at the Sahibabad factory would continue in the coming days.
CEL Disinvestment Will Be Nation's Loss
Functioning under the Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology, CEL was established in 1974 to commercially export indigenous technologies developed by National Laboratories and R&D institutions in the country.
Apart from this, over the years, the Sahibabad-based CPSE has also developed a number of products for the first time in the country through its R&D efforts.
"Unfortunately, despite outstanding performance of CEL in the past, it is being divested," the trade unions' platform said in its letter to CAG, adding that the Central government has the sole "objective" of selling the company "at any rate," "without considering that CPSE are National assets and it would be loss of Nation in terms of money and resources."
The Centre had approved the sale of CEL to Nandal Finance and Leasing Private Limited for Rs 210 crore. The transaction was scheduled to be completed by March this year.
However, the trade unions have alleged that the net worth condition of Rs 50 crore of CEL as per FY 2016-17 was retained the same till the date of bidding in 2021, whereas it has been increased almost double to Rs 105 crore in FY 2020-21. Moreover, according to the unions, the reserve price for CEL, set at Rs 194 crore – is also "very low."
The Centre had issued a request for Expressions of Interest (EoI) in February 2020 for the sale of CEL, following which three preliminary bids were received. Later in October last year, two companies – Nandal Finance and Leasing Pvt. Ltd. and JPM Industries Ltd. - put in their financial bids; the former's bid was Rs 210 crore, while the latter's stood at Rs 190 crore.
"Bidding process seems to be suspicious because both the bidders are inter-related to each other through their parent groups and have quoted almost near price to the reserve value of Rs 194 crore," the unions have argued, adding, "it seems that there is bid-rigging and cartel formation among the bidders."
Besides, Nandal Finance and Leasing Private Limited "have poor credentials," the unions claimed, alleging that the company has not received any revenue, whether due to the sale of goods and services or otherwise.
Pandey of DIPAM on Wednesday responded to some of the allegations, claiming that among the "many allegations", there are some "which are either half-truths or factually incorrect," according to the news agency PTI. He stressed that the Centre had done CEL's valuation by both the transaction advisor and asset valuer using different valuation methodologies, following which it arrived at the said reserve price.
Hindu Business Line, which first reported on these allegations, added that the unions have also urged Prime Minister Modi and Finance Minister Nirmala Sitharaman to review the decision of CEL disinvestment, the process for which was initiated this time again after no financial bids were received earlier.
Thomas of the employees' union told NewsClick on Thursday that the unions will also continue with their legal battle against the CEL sale. The unions filed a petition in the Delhi High Court in 2020. The next date of hearing in the matter is scheduled for January 19.
Meanwhile, after Wednesday's development, The Peoples' Commission on Public Sector and Public Services (PCPSPS) released a statement urging the Parliament to "fully investigate" the CEL sale.
"This private entity [Nandal 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 practises. The scientific community is concerned that CEL will be destroyed and ultimately dismantled by this company," the organisation has been quoted as saying by The Wire.
Earlier, opposition Congress had also raised the matter and flayed the Centre for undervaluing CEL, further demanding that its disinvestment be stopped.