Undervalued CEL, financial firm buying PSU has ties to BJP leaders: report

Jthe promoters of Nandal Finance and Leasingwhich recently won the tender for the sale of Central Electronics Ltd. (CEL), Apparently to have business Links to Bharatiya Janata Festival rulers of uttar pradesh, Thread reported. the investigate report also found that CEL East to be undervalued.

the sale of the public sector company” to design and deliver products, critical materials and knowledge services for India’s strategic sectors“, including the defense, was discontinued in January this year after much controversy. After the Narendra Modi government announced in November 2021 on to sell of its 100% stake in the PSU to Nandal Finance and Leasing, based in Delhi, for fair Rs 210 million, this drew accusations of underpricing CEL, a link between the only two bidders who participatedamong others. The sale has also challenged in Delhi High Court and the Lokpal. Moreover, tJoint Trade Union Platform approached the Comptroller and Auditor General (CAG) with allegations of “discrepancies” in CEL’s divestment process and demanded an investigation in it.

Despite an order book of Rs 1,592 crore and a landholding of 50 acres just outside the national capital Delhi, along with its vast intellectual capital, the NDA has set CEL’s reserve price at Rs 194 crore. But even at the low price, only two companies participated in the tender – Nandal Finance and Leasing and JPM Industries, and of these, South Delhi-based Nandal Finance and Leasing bid higher. raised to Rs 210 crore. After the announcement, the Congress and the Communist Party of India (Marxist) joined the CEL employees in tell the PSU has been undervalued.

Interestingly, Yatendra Gupta sits on the board of Nandal Finance and Sharda Tech Private Limited – a group company, one of whose directors also sits on the board of JPM Power, part of JPM Industries. The revelation of this link led to the termination of the transfer process.

At the end of January, a group of former directors and retired scientists from leading research institutes in the country, which fall under the Council for Scientific and Industrial Research (CSIR), urged the central government to reconsider its decision to sell the public sector company to Nandal Finance. thethere noted that they were concerned about the future of CEL, which is known for developing products through its own efforts and in close association with national and international laboratories, such as “analysis of M/s account books Nandal Finance & Leasing Private Limited says the company is doing virtually no business.

According to retired scientists and administrators, the said private company has no fixed assets, land or buildings, while none of its employees has completed five years of seniority.

Furthermore, Nandal Finance and Leasing has no background in science or engineering. Premier Furniture and Interiors, the company that owns 99.96% of Nandal Financedidn’t have such a background either.

Assessment issues

The Wire found that while the central government has set the combined value of CEL’s land, buildings and machinery at Rs 251.45 crore, CEL employees claim that the land alone is worth more. This circle rate gives a value of Rs 440 crore for the land while the market rate is set higher at Rs 660 crore.

Even though the government says it is a leasehold land, which has a 44-year lease remaining over 99 years, and which was taken into account when establishing the market values ​​of the land, the Wire pointed out that Indian states currently grant 30-year leases to companies, and that leases can also be renewed. “Furthermore, the revised tender documents allow CEL owners to sell their land after three years – an admission that the government believes the land has value,” the report said.

The report further shows that with CEL sold for Rs 210 crore, Nandal could recoup all his investment in a little more … than three years by only lease the land. He quotes EAS Sarma, former Secretary to the Government of India, in this regard who pointed out that states like Andhra Pradesh charge 10% of the prevailing market value as annual rent of industrial land.

Such a calculation indicated that the land alone is expected to be worth Rs 678 crore while the government gave a omnibus number of Rs 251 crore for land, buildings and machinery.

Among Passives of around Rs 409 crore, CEL’s long-term borrowings amount to just Rs 1.88 crore. As for responsibilities to creditors, in any supply chain, what a company owes its suppliers is more or less offset by what its customers owe it. For this reason, a large part of this Rs 409 crore must come from VRS and capital gains tax. But the cost of the VRS should be built into the bid by the bidder, not deducted upfront by the government. As for the latter, assuming that DIPAM is referring to the capital gains tax the government will have to pay, it should have added a capital gains surcharge to the eventual price of the CEL – not the deducted from the price charged by the PSU.,” the Wire says the report.

The CEL employee who told Wire about the land valuation also alleged that the government was understating assets and inflating liabilities.

Meanwhile, taking the discounted cash flow (DCF) valuation method, Congress spokesman and finance professor Gourav Vallabh did his own calculations. Calling it “other conservative assumptions about future growth”, he found CEL’s valuation to be somewhere between “Rs 1,300 and 1,600 crore”.

The questions arise mainly because the CEL did not have a lively auction; there were only two bidders related to each other, which means that a fair discovery of the value might not have taken place, the Wire says the report.

Nandal Finance BJP Links

Beyond the link between the two bidders, Thread found the promoters of Nandal Finance and Leasing with links to BJP leaders in Uttar Pradesh.

Nandal Finance and Leasing is owned by Premier Furniture and Interiors, which is owned through family members and group companies by two brothers, Pradeep Kumar Gupta and Yatendra Kumar Gupta.

Pradeep Gupta and Yatendra Gupta also run Sharda University, with its campuses in Noida, Agra and Mathura.

Thread spoke to a political observer in Lucknow and a senior journalist in Agra, and a source with contacts in the Rashtriya Swayamsevak Sangh, who said the brothers were close to Naveen Jain, the current mayor of Agra, promoter of the infrastructure company PNC Infratech, and a co-treasurer of the BJP.

The report showed that the brothers had had business dealings with Jain’s family.

Nandal Finance and Leasing paid Rs 10 crore as “property advance” to two companies in 2021, Marj Infrastructure LLP and RV Technocore Pvt Ltd. The promoters of Marj Infrastructure are Madhavi Jain, Meena Jain, Renu Jain and Ashita Jain. Madhavi is the wife of Chakresh Kumar Jain who is the brother of Naveen Jain. The second is the wife of Pradeep Kumar Jain, another brother of Naveen Jain. The third, Renu, is the wife of Naveen Jain. The fourth, Ashita Jain, wife of Yogesh Jain, lives at the same address as Meena Jain and is believed to be part of the family.

All four women are also shareholders of the other company, RV Technocore.

Pradeep, Naveen and Chakresh, the three brothers, run PNC Infratech, a civil construction company with the majority of operations taking place in Uttar Pradesh. Among them, Naveen Jain holds the largest individual stake in the company. The company also derives most of its work from government contracts and has grown almost fivefold over the past ten years despite producing shoddy work, Thread reported.

Also, Pradeep Jain and Yatendra Gupta of Nandal Finance have been linked to BJP MP Ram Shankar Katheria. Katheria was the chairperson of the National Scheduled Caste Commission and Minister of State in the Ministry of Human Resource Development until July 2016. In the past, he was also considered a candidate for the position of BJP Head of State.

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