The privatization of the Container Corporation (Concor), which has been on hold since 2019, is unlikely to take place in the current financial year either, as the Deutsche Bahn has yet to clarify the land issues.
“Internal approvals are ongoing,” a senior government official said.
After lengthy delays, the Expression of Interest (EoI) was expected to be rolled out in February/March, but the plan is said to be on hold. The process of strategic divestment (privatization) typically takes 9 to 12 months after the EoI is listed.
The Concor sale is also politically sensitive. With the flood of state elections until the end of 2023 and the general elections in April-May 2024, the whole process could be delayed indefinitely.
As early as November 2019, the cabinet approved the divestment of 30.8% of the state stake in Concor to a strategic buyer. Market share and around 60 terminals is 54.8%.
Concor’s divestment process had previously stalled due to a delay by the railroads in implementing a new land licensing policy. On September 7, 2022, the Union Cabinet approved the new Land Licensing Directive, which provided for a 75% reduction in the land license fee (LLF) to 1.5% of land value for freight companies, paving the way for the privatization of Concor.
However, there are still some land-related issues that need to be resolved by the railroads before Concor EoI can be listed, officials said.
A significant number of terminals are located on the railway premises.
The sale of the Concor shares, valued at approximately Rs.12,000 crore at current market prices, was part of the Center’s divestment pipeline for the current fiscal year. Because the sale of ConCor could have contributed significantly to its divestment revenue target of 51,000 crore, the postponement could pose a challenge to the target.
Concor’s share price on the BSE on Friday closed at 626.25, down 0.85% from the previous close.
“Uncertainty about the divestment is weighing on some Concor customers and is one of the reasons the company lost 23 market shares during the fiscal year,” ICICI Direct said in a statement.
The company has paid Rs.392 crore in LLF fees in FY23 and posted a 7% growth in FY24.