CONCOR Divestment: Biggest roadblock in stake sale may get cleared as Government mulls over reducing railway land lease rate from 6% to 3%, sources say

In a big development regarding the disinvestment of Container Corporation of India Limited , the government has expedited up the stake sell process, as the biggest roadblock of railway land lease percentage has been resolved, Zee Business Special Correspondent Tarun Sharma said quoting his top sources on Monday. 

According to sources, the railway land lease percentage issue is set to get resolved as the company is now ready to reduce the land lease percentage to 3 per cent from 6 per cent, Sharma said in his Zee Business exclusive report. 

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He said that a Cabinet note on this is expected soon and the Cabinet can take a decision on it at the earliest.

The government intends to sell its stake in the company along with giving up management control.

The discussions are ongoing to bring the and lease percentage at 3 per cent, Sharma said as stakeholders are of the view that the divestment would be fruitful only when the percentage is brought down to 3 per cent, Sharma added. 

It has been one of the major reasons why the divestment of CONCOR was unable to happen.

He said that the land lease rate will have an important role to play in Government's Gati Shakti plans.   

The discussions are on between the Ministry of Railways, DIPAM, and other ministries, he further said. 

Terming this as positive news for CONCOR, Zee Business Managing Editor Anil said that the disinvestment process was stock because the 6 per cent land lease was the bone of contention and the current development could be a gamechanger. He said that he will not be surprised if the shares get divested at price of Rs 800-900 per share. , 

He said that the size and speed that was required for Government' divestment plans was not there. The government had big plans for LIC IPO and the markets fell dramatically. Even plans to divest Bharat Petroleum Corporation Limited have not come through.  

According to Singhvi, “It’s important to make the divestment offer attractive and sell, so the price government gets in return would be good anyway.” 

The divestment of CONCOR was stuck in the crosshairs of the railway and finance ministries, as the issue was related to the fee paid for railway land used by the company for its warehousing facilities.  

The union cabinet in November 2019 had approved the divestment of the CONCOR by 30 per cent shareholding in the company, along with the transfer of management control. However, a delay in the rollout of the new land licensing fee policy pushed back the sale.