The sale of the public sector Central Electronics Ltd to Nandal Finance and Leasing Pvt Ltd is under the radar of the Comptroller and Auditor General following a complaint of bid rigging by the joint platform of trade unions, including the BMS.

Though the CAG’s office is tight lipped about any action on the complaint, BusinessLine has learnt that it could figure in the ongoing performance audit of the CEL and a team of auditors recently visited the CEL factory in Ghaziabad apparently to verify the complaint. Apart from the CAG, the Central Vigilance Commission and the Competition Commission of India are also looking into the complaints filed by the trade unions.

The unions have alao urged Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to review the decision taken by the Cabinet Committee on Economic Affairs to sell 100 per cent of the Centre’s stake in the CPSE under the Department of Scientific and Industrial Research (DSIR) for about ₹210 crore.

CEL promotes and commercially exploits indigenous technologies developed by various national laboratories and R&D institutions such as the DRDO and the IITs. Most of the products of the CEL are used by the defence and space departments.

The trade unions had alleged in their complaints that the Centre diluted the Expression of Interest criteria in the interest of bidder.

They allege that the net worth condition of ₹50 crore of CEL as per 2016-17 was retained till the date of bidding in 2021 whereas it had doubled to ₹105 Crore in 2020-21.

They alleged that the Centre also underestimated the Reserve Price Fixation and the reserve price was set at a very low price of ₹194 crore.

CEL is a profit making CPSE since 2013-14 and has orders in hand for approximately ₹1,500 crore.

‘Bidders related’

“It seems that there is bid rigging and cartel formation among the bidders. Nandal Finance quoted ₹210,00,60,000;. JPM Industries Ltd, quoted ₹190,00,00,000,” they said. Also, inter-relation between the directors of group companies of both bidders is clear from the documents available with the Corporate Affairs Ministry.

Nandal Finance has poor credentials as 99.96 per cent of the shares of the company has been held by Premiere Furniture and Interiors Private Ltd. “The company has not received any revenues, from sale of goods or services in 2019-20,” the complaint added.

“Nandal Finance is a NBFC including four directors and only six employees. Its financial position is not sound and have no industrial experience and expertise. It seems that both the companies are like shell companies. These all facts are making the whole process suspicious and dubious with a big land scam,” it added.

‘Low valuation’

A mail to Nandal Finance and Leasing Pvt Ltd did not elicit any response. The CAG’s office also did not make any comments as usually the government auditor does not comment on ongoing audits.

Congress spokesman Gourav Vallabh said, “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 ₹957 crore. Based on other methods (DCF) and other conservative assumptions about the future growth, the valuation lies somewhere close ₹1,300 crore to ₹1,600 crore. The reserve price that was set by GoI was a shocking ₹194 crore which is a meagre 20 per cent 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.”