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The ₹12,000 crore divestment of Container Corporation of India (CONCOR) has been delayed. Railway Ministry's concerns have stalled the process, and it’s unlikely to be completed by the end of FY24. The CONCOR share price remains under scrutiny.
The much-anticipated ₹12,000 crore divestment of Container Corporation of India (CONCOR) has been postponed due to concerns raised by its parent body, the Railway Ministry. The process, which had drawn interest from global logistics players like Maersk, has stalled following internal discussions. The Railway Ministry’s lack of enthusiasm for selling the asset is a key reason behind the delay.
The strategic sale of CONCOR requires the approval of multiple stakeholders, including NITI Aayog and the Railway Ministry. However, the Railway Ministry has expressed reservations about the divestment, making it unlikely that the process will proceed smoothly in the near future. The complexities associated with the leased depots of CONCOR, especially those on Indian Railways land, are a central point of contention.
Currently, CONCOR operates 61 inland container depots, with 26 of these situated on railway-leased land. These depots contribute significantly to the company’s revenue, accounting for more than half of the annual income. The land lease charges for these depots were revised recently under a new land leasing policy, adding another layer of complexity to the divestment plan.
In September 2024, the government introduced a new land leasing policy, which sets lease charges at 1.5% of the market value of the land, with an annual escalation of 6%. For CONCOR, this means paying a substantial ₹450-490 crore in land lease charges for FY2023-24, adding financial pressure amid the divestment talks.
The new policy has raised concerns among market participants, as these leased depots form the backbone of CONCOR’s operations. Without resolving these issues, the process of issuing expressions of interest (EOIs) for the divestment will likely be delayed further.
The divestment of CONCOR, originally approved by the cabinet in 2019, now faces indefinite delays. The Railway Ministry’s reservations and the complexities surrounding the land lease charges make it unlikely that the process will be completed within the current financial year. Investors and stakeholders continue to monitor the situation closely, as the CONCOR share price may be impacted by the ongoing uncertainty.
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