Container operators seek permission to form JV

In the wake of Concor's decision to charge access fees from all the 14 new container train operators, for using its infrastructure, private freight operators are approaching the Ministry of Railways with a request to urgently provide them railway land on lease.

They would be meeting the railway board officials on Friday, wherein apart from asking for land to construct inland container depots (ICDs), the operators would also seek the ministry's permission for forming joint ventures (JVs) among themselves.

In fact, 10 out of the 14 players have already decided to form JVs among themselves, while the rest are in the process of confirming their participation in such a move shortly. This way, the players hope to counter the challenge posed by Concor.

In January, after signing the concession agreement with the railway ministry to participate in the container train business, the new players entered in a MoU with Concor. Since these players are supposed to set up their own ICDs and buy their own wagons, till the time they could do so, they mutually decided with Concor to use its infrastructure during the initial stages.

Now with Concor flexing its muscles, doubts have arisen in the minds of these players, as apart from Bothra Shipping, none of the others have any kind of infrastructure to run container trains. Of the 14 operators, 10 have paid a hefty licence fees of Rs 50 crore to the railway ministry. Apart from this, they need to spend roughly Rs 250 crore for purchasing wagons and acquiring land. Thus, on prevailing interest rates (14 per cent), they will have to pay around Rs 48 crore annually as interest alone to the leasing companies. Now, if they have to pay the access fees also, the private operators will be left with a very small profit margins.