Central Electronics Ltd’s strategic disinvestment has been approved by the government

The Cabinet Committee on Economic Affairs (CCEA) empowered Alternative Mechanism (AM) comprised of Shri Nitin Jairam Gadkari, Union Minister of Road Transport and Highways; Smt. Nirmala Sitharaman, Union Minister for Finance & Corporate Affairs; and Shri Jitendra Singh, Union Minister of State (Independent charge) Ministry of Science and Technology, has approved the highest price bid of M/s Nandal Finance and Leasing Pvt Ltd for the sale of 100 percent equity (DSIR). The winning bid amount is Rs 210,00,60000/-. (Rupees two hundred ten crore sixty thousand only).

With CCEA’s ‘in-principle’ permission on October 27, 2016, the disinvestment of CEL began. The completed SPA, together with the ‘Request for Proposal’ document, were communicated with the Qualified Institutional Buyers (QIBs) on 02.05.2019, inviting financial bids by 20.06.2019. Financial bids, on the other hand, were not received.

On the 3rd of February 2020, the process was re-launched with the release of a Preliminary Information Memorandum (PIM) and a request for Expressions of Interest (EOI). Due to the current covid-19 scenario, the deadline for submitting an EoI has been extended to 15.7.2020.

By the extended deadline, three expressions of interest had been received (15.07.2020). The TA had shortlisted all of the bidders. On 7.1.2021, the Alternative Mechanism (AM) accepted the updated SPA and revised RFP, and DIPAM was permitted to forward the revised RFP and revised SPA to the Transaction Adviser for additional action, as well as any clarifications needed. The approved RFP and SPA, as well as the proforma for acquiring Security Clearance, were shared with the Transaction Adviser (TA) for distribution to the short-listed bidders for putting financial bids.

Shortlisted bidders were given access to the Virtual Data Room (VDR), where CEL supplied detailed information to qualified bidders, as well as opportunity to inspect the assets and facilities offered as part of the deal. A huge number of bidders’ questions were answered. On 17.2.2021, the TA released the approved RFP and SPA, as well as the Security Clearance format, to the short-listed bidders after the due diligence procedure was completed, with the deadline for submission set for March 10th, 2021. Prior to bid submission, the final SPA comprised extensive terms and conditions, as well as the respective duties for meeting the conditions precedent for concluding the deal, including the release of government guarantees prior to completion.

Due to the difficulties created by Covid-19 and on the request of bidders, the deadline for submitting financial bids was extended until October 12th, 2021. By the deadline, the two qualified bidders had submitted two sealed bids, complete with non-financial offer documentation and bid security.

Following the receipt of sealed financial bids and in accordance with the approved procedure for strategic disinvestment, a ‘Reserve Price’ of Rs 194 crore was established based on appraisals by the Transaction Adviser (TA) and the Asset Valuer (AV) using the established methodology. Following the independent setting of the Reserve Price, the sealed financial offers that had already been received were opened in front of the bidders, as follows:

I M/s Nandal Finance and Leasing Pvt Ltd for Rs 210,00,60,000/- as a price bid (Rs two hundred ten crore sixty thousand only)

(ii) M/s JPM Industries Ltd. for Rs 190,00,00,000/- (Rs one hundred ninety crore only).

M/s Nandal Finance and Leasing Pvt Ltd’s higher of the two price bids was deemed to be higher than the reserve price.

Through multi-layered decision making involving the Inter-Ministerial Group (IMG), Core Group of Secretaries on Disinvestment (CDG), and the empowered Alternative Mechanism (AM) at the apex Ministerial level, the entire disinvestment process was carried out in a transparent manner, with due regard for the confidentiality of the bidders. The entire process has been assisted by a Transaction Adviser, Legal Adviser, and Asset Valuer, all of whom are experts in their industries.

The successful bidder, the firm, and the government will then issue a Letter of Intent (LoI) and sign the Share Purchase Agreement, after which the conditions precedent must be met by the successful bidder, the company, and the government. The acquisition is planned to be finalised in the current fiscal year 2021-22.