Tuesday, March 21, 2023
Defence ManufacturingUnion Minister, Secretary, Niti Aayog warned govt against CEL privatisation

Union Minister, Secretary, Niti Aayog warned govt against CEL privatisation

Documents accessed by PSU Watch show that a Union Minister, policymakers and bureaucrats within the government had warned the Centre against carrying out the privatisation of CEL

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  • Considering the strategic relevance of the CEL for the nation, the DSIR should herald the cause of saving the CEL from the proposed privatisation, a Niti Aayog Member had said
  • Former DSIR Secretary had opposed the strategic disinvestment of CEL in view of its recent financial performance and the strategic nature of its work

New Delhi: As the government has put the process of Central Electronics Ltd’s (CEL) privatisation on hold, documents accessed by Defence Watch show that the Centre was warned against privatising the PSU by policymakers and bureaucrats within the government, including former Union Minister for Science and Technology Harsh Vardhan, Department of Science and Industrial Research’s (DSIR) former Secretary Shekhar C Mande and Niti Aayog Member Dr VK Saraswat, who is an eminent scientist.

The news comes a week after the Department of Investment and Public Asset Management (DIPAM) put CEL privatisation on hold to examine the allegations of under-valuation of the PSU levelled by employee unions of the company. The unions have approached the Delhi High Court against the sale of the PSU to a little-known firm, Nandal Finance & Leasing Pvt Ltd. The matter is slated to be heard in court this week.

‘CEL’s strategic work should not get lost because of disinvestment’

The most recent letter against CEL privatisation that has been accessed by PSU Watch is from November 2020. It was written by Niti Aayog Member VK Saraswat and was addressed to the then DSIR Secretary, Shekhar C Mande. While noting that the disinvestment process of CEL, being carried out by DIPAM, was in an advanced stage, Dr Saraswat had said, “Considering the strategic relevance of the CEL for the nation and the consistently evolving geopolitical dynamics, the DSIR should herald the cause of saving the CEL from the proposed disinvestment.” He had also asked DSIR to work on the feasibility and modalities of transformation of CEL into a Society in order to ensure that its “strategic work — which is very important for the nation — does not get eroded/lost because of the proposed disinvestment.”

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‘CEL sole supplier of critical parts for defence equipments’

In a letter dated January 15, 2019, the then DSIR Secretary had opposed the strategic disinvestment of CEL in view of its recent financial performance and the strategic nature of its work. CEL comes within the administrative control of the DSIR. Mande had told Niti Aayog’s Vice Chairman Rajiv Kumar in the letter that CEL has been instrumental in the development of Phase Control Modules for Aakash Missile Systems/Weapon Locating Radars in collaboration with DRDO/LRDE and it is the sole supplier of the modules in the country. In addition, Mande had pointed out that CEL is also the sole supplier of Cadmium Zinc Telluride Substrates, which is used in night vision devices. CEL is also working on developing Ceramic Radomes for missiles and bullet-proof jackets, Mande had said.

“In more recent times, the company has turned around and has been making profits for past five years despite increasing competition in its business lines (Chinese dumping in Solar, MNC entry in Railway Signalling Systems etc). The company today has wiped out all its accumulated losses and carries positive reserves on its balance sheet and is rapidly moving forward in many fronts. I would therefore like to request that the decision to go for 100 percent strategic sale of the company may be reviewed…,” Mande had told Kumar.

Mande’s plea was also acknowledged by Kumar, who had urged him to float a note for the Cabinet Committee on Economic Affairs (CCEA), urging it to reconsider the privatisation of CEL “in view of the new information.” Kumar had said, “The factors which have changed since the CCEA’s decision dated October 27, 2016, thereby necessitating a review of the decision, may be elaborated in that note.”

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‘CEL has improved its financial performance’

In a separate letter to Kumar, the then Union Minister for Science and Technology Harsh Vardhan had forwarded representations from the trade unions at CEL and had pointed out that CEL had improved its financial performance over the years. “Kindly find enclosed a representation dated 09.01.2019 received from Central Electronics Ltd Employee Union requesting to desist from 100 percent strategic sale of CEL owing to its strategic position it enjoys and its contribution towards the safety and security and defence preparedness of the country. Moreover, CEL has shown better results over the years and posted a net profit of Rs 21.71 crore during the financial year 2017-18,” Vardhan had said.

RS MP urges CAG to enquire alleged ‘bid-rigging’ in CEL privatisation

Recently, in a letter dated January 12, CPI(M) MP in Rajya Sabha V Sivadasan has urged CAG Girish Chandra Murmu to investigate alleged bid-rigging in the privatisation of CEL. Sivadasan has said that Nandal Finance & Leasing Pvt Ltd, which has been selected as the successful bidder, has no fixed assets. “It is a trading company with no significant resources. 99.96 per cent of this company’s shares are held by M/s Premier Furniture & Interiors Private Limited, which was formed on October 23, 2007. There is also a case pending before National Company Law Tribunal. Yet, the government has diluted the terms of bidding to enable such a company to bid for CEL,” Sivadasan has said in the letter.

“CEL divestment is a clinical case of looting public money using executive power. A company which by even completing its pending orders could generate a profit of ₹730 crore and which owns land worth ₹440 crore is being sold off for a pittance of ₹210 crore in a bidding process where only two firms have participated and that too, after diluting the terms. There is a need to put an immediate curb on the divestment process and an urgent investigation needs to be conducted in this matter,” Sivadasan has told Murmu in the letter.

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(Defence Watch– India’s Defence Business News centre that places the spotlight on Defence Manufacturing, Defence Technology, Strategy and Military affairs is on Twitter. Follow us here and stay updated.)

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