Decks may soon be cleared for Container Corporation privatisation

The decks may soon be cleared for the privatisation of the Container Corporation of India (Concor) with the railway ministry set to approve its new land licensing policy, which will be taken up by the Union Cabinet in 7-10 days, said a senior government official.

The policy will provide clarity on lease rates the new buyer of the company will have to pay.
 

The government had approved strategic divestment of Concor in November 2019, but could not initiate the sale because of uncertainty caused by an increase in land licensing fee introduced by the Indian Railways, which significantly impacted the company’s financials.
 

Concor’s containers are built on land leased from the Railways on a per container licence fee basis. This arrangement changed last April with the government notifying the land licensing fee at six per cent per acre of the market value of land for industrial use.

Until then, Concor was paying railways for its land on a per container basis.
 

This led to an increase in costs and blocked government’s plan to privatise the company. The increased fee “will have significant impact on the company’s financials”, and to mitigate the impact of the hike in fee on railway land, it surrendered 15 terminals built on such land, it had said in its last annual report.

 

The railway ministry has circulated the draft policy for consultation, and it will soon be approved. This will help push Concor’s privatisation, and give clarity on how much a buyer needs to pay upfront along with the lease charges, the official said. “Land licensing fee used to change every three years. Now, the potential buyer of Concor will have clarity on lease charges to be paid for next 35 years,” he added.
 

The government owns 54.8 per cent in Concor, and in November 2019 had decided to sell its 30.8 per cent stake along with transfer of management control to a strategic buyer. The stake would be worth about Rs 8,250 crore. The rate or the licensing fee is being finalised, the official quoted above said. Once the land licensing policy receives clearance of the Cabinet, railways will calculate marketable value of land based on a cut-off date.
 

The Department of Investment and Public Asset Management wanted clarity on these issues before the government calls for expression of interest (EoI), the official said. Once the policy is approved, the government will put up the preliminary information memorandum and EoI for privatisation of Concor.