New Delhi, April 29
The Department of Investment and Public Asset Management (DIPAM) has sought legal opinion on the issue of bidders being inter-related in the case of Central Electronic Limited (CEL) strategic sale.
The Opposition and the trade unions had alleged that the bidders participated in the tender were inter-related and the Centre ignored this issue while deciding to sell CEL to Nandal Finance and Leasing Pvt Ltd. "Pending examination of the issue, the Letter of Intent has not been issued to the successful bidder as per the usual procedure and has been put on hold," Minister of State for Finance Bhagawat Karad said in a letter to CPI(M) MP John Brittas.
Karad said in the detailed letter that the government fixed the 'reserve price' of ₹194 crore for the CEL by using the Discounted Cash Flow method of valuation. "The highest price bid received through open competitive bidding process was ₹210.006 crore which was significantly higher than the Reserve Price," the Minister said justifying the deal.
Brittas said the entire process of disinvestment of the CEL smacked of “nepotism and corruption’‘. Brittas had said in his letter to Finance Minister Nirmala Sitharaman that there is serious concern about the undervaluation of tangible and intangible assets of the CEL. “Further, since the private entities buying the public assets would be raising most of the needed resources from the public sector banks, the decision to mobilise resources through the privatisation of public assets is a flawed policy option for the nation,” Brittas had said.
Countering this charge, Karad said the strategic disinvestment of the CEL has been undertaken "through an established open, transparent, competitive bidding process implemented through a multi layered decision-making process aided by professional advisors hired through a competitive bidding process."
On Brittas's question about why CEL, a profit-making company which has orders in the pipeline worth ₹1,592 crore and ₹132 crore as collectible dues from the government agencies, is being privatised, Karad said the total value of fresh orders received in 2019-20, 2020-21 and 2021-22 were ₹282.95 crore, ₹408.11 crore and ₹994.17 crore, respectively. "Another order of value ₹200 crore is in pipeline for defence business group. However, the order execution rate of CEL during 2017-18 to 2020-21 was about 20 per cent only," Karad said.