A majority of the value is from the Inland Container Depot Tughlakabad, located in Delhi, which accounts for Concor’s 30% business and is on railway land. Since Concor cannot shell out that kind of money to buy the land, the amount is a setback to the disinvestment process.
The Container Corporation of India’s disinvestment process has hit a roadblock! Piyush Goyal-led Railway Ministry has valued the cost of its land leased to Concor at Rs 16,500 crore. However, the private container companies are objecting to the government’s move to sell the land to the PSU at subsidized rates. This has raised many objections to the plans. According to an IE report, within the Railway Ministry, the latest round of top-level deliberations which took place during the end of February has found that the 44 land parcels translating to about 220 hectares of land across the country, that the national transporter had given to Concor since it was its own PSU to operate its container business, mostly at subsidized lease rates, are valued at Rs 16,500 crore at present, if the national transporter is to sell that to the PSU.
According to the report, a majority of the value is from the Inland Container Depot Tughlakabad, located in Delhi, which accounts for Concor’s 30% business and is on railway land. Since Concor cannot shell out that kind of money to buy the land, the amount is a setback to the disinvestment process. According to sources quoted in the report, even if the money is raised from outside, then the loan on the company’s books would wipe out its profitability and also, all the calculations of its valuation will turn upside down, driving away prospective investors. The market valuation of the PSU is approximately Rs 35,000 crore and last year, the company turned profit of around Rs 1,200 crore. The sources said that the valuation process of the ministry has not found any justification to value the land, lower than this amount. They further said that any step to lower the railway land value would not be in sync with established norms.
In objection to the move, the Association of Private Terminal Operators (APTO) has written to the PMO, the Cabinet Secretary, Department of Investment and Public Asset Management as well as the Railway Ministry, the report said. The APTO represents the 15 odd private container operating firms in the country that compete with each other and with Concor. The government (through Indian Railways) has a 54% stake in Concor, of which it wants to sell out around 30.8% along with management control to a private company, turning India’s largest container operator, which controls more than 80% market share, into a private entity. Last year in November, the Cabinet Committee on Economic Affairs took the formal decision.
The APTO in a letter, told the top-level officials of government, that as per the government policy in 2006, the sector was opened up to the private sector, where along with Concor, private companies were to get a level-playing field. However, the latest move is not in consonance with that policy. Sanjay Marwa, President, APTO, was quoted in the report saying that they have written to the government saying that if the land is valued at lower than market rates, private companies should also be given a chance to bid for the land. The PSU, Concor has not yet commented on the matter, the report said.