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Disinvestment: Private container companies raise concerns over planned sale of railway land to Concor

A majority of the value is from the Inland Container Depot Tughlakabad in Delhi, which accounts for 30 per cent of Concor’s business and is on a railway land.

Railways, Indian Railways, Indian Railways Container Cargo Business, Container Cargo Business Indian Railways, Business News, Indian Express, Indian Express News The amount, based on market rates, is a setback to the disinvestment process since Concor cannot shell out that kind of money to buy the land. (File Photo)

The disinvestment process of Container Corporation of India (Concor) has hit a roadblock with the Railway Ministry valuing the cost of its land leased to the mega-PSU at Rs 16,500 crore and private container companies objecting to any move by the government to “sell” the land to Concor at subsidised rates, raising multiple red flags to the plans.

The latest round of top-level deliberations within the Ministry, which happened end of February, has found that the 44 land parcels translating to some 220 hectare of land across India, that the Railways had given to Concor — mostly at a subsidised lease rates since it was its own PSU — to operate its container business, are valued currently at Rs 16,500 crore if the national transporter is to sell that to the PSU.

A majority of the value is from the Inland Container Depot Tughlakabad in Delhi, which accounts for 30 per cent of Concor’s business and is on a railway land.

The amount, based on market rates, is a setback to the disinvestment process since Concor cannot shell out that kind of money to buy the land. Even if it raises the money from outside, then the loan on its books would wipe out its profitability and turn all calculations of its valuation upside down, driving away prospective investors, sources said. The market valuation of the company is around Rs 35,000 crore and it turned profit of around Rs 1,200 crore last year.

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The Ministry’s own valuation process has not found any justification to value the land at lower than this amount, sources said. Any move to lower the value of the railway land would not be in sync with established norms, sources told The Indian Express.

Getting a wind of things, the Association of Private Terminal Operators (APTO) — which represents the 15-odd private container operating companies in India that compete with each other and with Concor — has written to the Prime Minister’s Office, the Cabinet Secretary, Department of Investment & Public Asset Management and the Railway ministry, in objection to the move.

The government — through Railways — has 54 per cent stake in Concor, of which it wants to sell out some 30.8 per cent along with management control to a private player, effectively turning the country’s largest container operator, which controls over 80 per cent market share, into a private entity. The Cabinet Committee on Economic Affairs took the formal decision in November last year.

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In a letter to the top echelons of government, the APTO has said that as per the government policy in 2006 by which the sector was opened up to private sector, private players were to get “level-playing field” along with Concor. The latest move, its says, is not in consonance with that policy.

“We have written to the government saying private players should be given a chance to bid for the land if the land is valued at lower than market rates. This is the policy. You cannot give an unfair advantage to Concor especially when it is slated to be in private hands,” said Sanjay Marwa, president, APTO. “If a player in the sector is given such unfair advantage in terms of land rates, it queers the pitch for other players in the sector.”

Concor has not officially commented on the matter. “We have no comments. This is a matter being dealt with the various departments of the government,” said an official of Concor. Concor is a Schedule A Maharatna company, one of the most profitable among PSUs, and was historically considered a crown jewel among PSUs owned by Indian Railways.

First published on: 16-03-2020 at 12:50:11 am
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