Government Finalises Sale Of CEL For ₹ 210 crore, Solar Biz Largest Component

The Centre on Monday (Nov 29) announced approving strategic disinvestment of Central Electronics Limited (CEL), a public sector enterprise (CPSE) under the DSIR, Ministry of Information and Technology. The sale has happened on the second attempt, after a previous effort in 2016 failed to bear fruit.

“The Cabinet Committee on Economic Affairs (CCEA) empowered alternative mechanism (AM) has approved the highest price bid of Nandal Finance and Leasing for sale of 100 per cent equity shareholding of the government in Central Electronics Ltd (CEL),” a Finance Ministry statement said. The sale is expected to be completed by March 2022.

The reserve price for the firm was ₹194 crore. The last big move from the solar PV driven CEL was a tender for decentralised PV plants in Maharashtra.

“The next step will be to issue the letter of intent (LoI) and then sign the share purchase agreement following which the conditions precedent would need to be satisfied by the successful bidder, the company and the government. It is expected that the transaction will be completed within FY22,” the statement said.

Central Electronics Limited (CEL) was established in 1974 to commercially exploit indigenous technologies developed by National Laboratories and R&D institutions.

It has developed a number of products on its own and in association with the premier national and international laboratories, including Defence outfits.

Central Electronics Limited (CEL) has been a pioneer in the field of Solar Photovoltaic (SPV) in India. In fact, the form still has an approved manufacturing capacity of 35 MW and is  a part of the ALMM list of the MNRE for its plant in Ghaziabad. However, the plant makes only multicrystalline modules now, falling well behind the curve in recent years when it comes to modernisation. According to its 2019-20 annual report, The Solar Photovoltaics Division (SPV) of the firm achieved Production of ₹ 105.66 Crores & turnover of ₹104.46 Crores as against production of ₹ 122.77 Crores and turnover of Rs 130.87 Crores in the previous year. In fact, the solar division was by far the largest component, in a total turnover of ₹ 245 crores in 2019-20.

Though profitable notionally, unpaid wage arrears from previous years means that the firm has some way to go before it can actually generate healthy returns.

For the acquiring firm, the little known Delhi-based Nandal Finance and Leasing, it remains to be seen if it is the solar division that was the key attraction, or something else. Keep in mind that CEL did have an order book at hand of over Rs 1000 crores as of September last year. We have no information if the firm has added to that order book subsequently.

The valuation of ₹ 210 crore seems good on the size of the balance sheet, although we do not have details like the size of land holdings if any with CEL.