Concor disinvestment plan off track after railway raises concerns. Details here
2 min read 10 Jun 2023, 08:31 AM ISTThe ₹12,000 crore worth of disinvestment proposal of Navratna company, Concor, is put on hold after railway ministry raised concern on some issues. Officials are doubtful that it would be difficult to complete the strategic sale in the current financial year
PremiumAfter the a ₹12,000 crore of disinvestment plan of Container Corporation of India (CONCOR) garnered attention of global majors like Maersk, the process stands at status quo because of the concerns raised by the railway ministry, its parent organisation. The Railways has raised some issues in the disinvestment, and is not keen to sell the asset, reported moneycontrol.
The strategic sale of CONCOR involves the green signal of NITI Aayog and the railways. CONCOR's parent firm calls for making some more decisions before the disinvestment, reported the website citing anonymous sources.
The ₹12,000 crore of disinvestment proposal needs the approval of all the organisations and institutions involved in the process. A lack of interest from the railway ministry, which is the nodal ministry, would mean a long delay in the process.
The current situation makes it difficult for the disinvestment to get completed by the current financial year, according to the government official cited by moneycontrol. The government official explained how it would be difficult to issue expressions of intent (EOI) for CONCOR without the completion of internal processes. With unsure about the issuance of EOIs, there are grim chances of the process getting completed in FY23-24.
In September, the government announced a new land leasing policy, under which lease charges will be levied at 1.5 per cent of the market value of land per annum with escalation of 6 per cent to firms. The move came after some market participants raised concerns over the land licensing fees being paid by CONCOR.
Currently, the company operates around 61 inland container depots. Out of the total operated depots, 26 are on land leased by the Indian Railways. The importance of these leased depots can be understood by the fact that they account for more than half of the annual revenue of the company.
The container firm is expected to pay land lease charges for ₹450-490 crore for 2023-24. The estimated payout for the pre estimated the payout at ₹450 crore for the previous financial year.
The strategic sale of the Navratna firm was approved by the cabinet in November 2019. It was decided to sell 30.8 per cent stake of the firm, along with transfer of management control in CONCOR.
In October last year, the department of Investment and Public Asset Management (DIPAM) held roadshoes to gauge investor interest. L&L Partners will work as the legal advisor in the process. DIPAM has also roped in firms like Deloitte Touche Tohmatsu India and RBSA Valuation Advisors LLP for the smooth execution of the plan.
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