On November 29, 2021, over Rs 210 Crore bid by Nandal Finance and Leasing Pvt. Ltd received an approval from ministerial panel namely ‘Alternative Mechanism’ to acquire 100% equity shareholding of Government of India (GoI) in Central Electronics Ltd (CEL).
- CEL is a CPSE (Central Public Sector Enterprises) under the Department of Scientific and Industrial Research (DSIR).
- This is the second strategic stake sale by GoI after Air India.
- Incorporated in 1996, Nandal Finance and Leasing Pvt Ltd is based in New Delhi, Delhi.
Key Points:
i.After this approval, the next step will be to issue the Letter of Intent (LoI) and then sign the Share Purchase Agreement. The whole process of disinvestment is expected to be completed during current FY22.
ii.This stake sale process has been carried out in a transparent manner which involved
Inter-Ministerial Group (IMG), Core Group of Secretaries on Disinvestment (CDG) and the empowered Alternative Mechanism (AM) at the apex Ministerial level.
- They have been supported by Transaction Adviser (TA), Legal Adviser, Asset Valuer (AV) as professionals in their respective fields.
What is Alternative Mechanism?
Initiated in 2017 after Cabinet Committee on Economic Affairs (CCEA) approval, it is a framework to speed up and supervise the mergers of CPSEs, minority stake sales, and the Centre’s new exchange traded fund.
- It consists of the Finance Minister, Minister for Road Transport and Highways and minister representing respective administrative department
- Currently, its composition is Union Ministers Nitin Jairam Gadkari, Ministry of Road Transport and Highways (MoRTH); Nirmala Sitharaman, Ministry of Finance; and Minister of State (Independent charge) Jitendra Singh, Ministry of Science and Technology.
Background:
The process for disinvestment of CEL commenced in October 2016. For this, two bidders submitted financial bids viz. Nandal Finance and Leasing Pvt Ltd for Rs 210 crore and JPM Industries Ltd bid for Rs 190 crore. The bid by Nandal Finance and Leasing Pvt Ltd was above the reserve price (fixed by TA & AV) of Rs 194 crore, therefore it has been selected for CEL sale.
Recent Related News:
In September 2021, Reliance Industries Limited’s (RIL) subsidiary – Reliance Strategic Business Ventures Limited (RSBVL) acquired 57.06% stake in Strand Life Sciences by buying over 2.28 crore shares in the company for Rs 393 crores.
About Cabinet Committee on Economic Affairs (CCEA):
Chairperson– Prime Minister of India (Currently- Narendra Modi)
Composition– 9 (including Chairperson)