Moneycontrol has reported that the railways, the nodal ministry, has raised concerns about the plan to reduce government’s stake by selling 30.8 percent of its holding in CONCOR
The shares of Container Corporation of India Ltd (CONCOR) dropped 2 percent in the morning session on June 12 after Moneycontrol reported s delay in the plan for its strategic sale following the railways’ resistance.
At 11:03 am the Container Corporation of India Ltd stock was trading 1.38 percent lower at Rs 664 on NSE.
“Regarding the strategic sale of CONCOR, the railways have raised some direct concerns. NITI Aayog is on board for the divestment of CONCOR but the railways are not keen to sell the asset. There are many things to be done before it can happen. Currently, it is at status quo,” an official told Moneycontrol.
This means the plan to sell a 30.8 percent stake in CONCOR, worth around Rs 12,000 crore, has been delayed. The proposal needs a push from the rail ministry, which is the nodal ministry, the official added.
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“Unless the internal processes get completed, we cannot look at issuing EOIs (expressions of intent) for CONCOR. I can’t say when the EOIs for CONCOR will be issued. It is difficult to say if the transaction will get completed this fiscal,” another senior government official had told Moneycontrol earlier.
The plan
The government in September had come out with a new land- leasing policy after market participants raised concerns over the land licensing fees being paid by CONCOR. The cabinet decided that the new land lease charges will be levied at 1.5 percent of the market value of land per annum with annual escalation of 6 percent.
Also Read: Exclusive: Concor strategic sale at ‘status quo’ as railways raises concerns: Official
CONCOR runs 61 inland container depots, of which 26 are on land leased from the Indian Railways. These 26 terminals account for more than half of the annual revenue of the company. CONCOR is expected to pay land lease charges of Rs 450-490 crore for 2023-24 after it had estimated the payout at Rs 450 crore for 2022-23.
The cabinet in November 2019 had approved the strategic sale of a 30.8 percent stake, along with transfer of management control, in CONCOR out of the government equity of 54.80 percent. The government will retain a 24 percent stake but without any veto powers.
Stock performance
Container Corporation of India Ltd stock has lost 14.28 percent of its value over the past six months, underperforming the benchmark Nifty which has given a return of 0.75 percent over the same period.
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