Concor to lease railway land in 3,500 cr deal for 35 years

June 2021
Concor to lease railway land in 3,500 cr deal for 35 years

State-owned Container Corporation of India Ltd (Concor) will lease the Indian Railway land for 35 years in a Rs 3,500 crore deal. It created 24 of its 64 inland container depots (ICDs) on that land by paying 99% of the market value of the land in advance, in a development that may take off the biggest stumbling block to the intended privatisation of the largest rail hauler of containers in the country.

Concor must spend Rs 3,500 crore in advance for the long-term lease of the land parcels. It is expected that the rail hauler will fund the upfront charge by a mixture of inside funds and borrowings.

In reply to a contract being thrashed out by the two sides, officials informed on the matter said that Concor could give solely a nominal yearly lease payment of about Rs 1,000 a year to the Railways.

The supply stated that the joint inspection of the area is done, and the native market value of the land for many of the terminals has been mutually agreed upon. In one or two locations, there is a small difference in cost. It may even get fixed in a day or two.

Besides the long-term lease of land, Concor has additionally decided to give up two extra terminals that have been created on Railway land. This highlights a facility in the western area and an empty container park at its flagship ICD at Tughlakabad, the place it spends a whopping quantity as licensing fee currently.

The supply noting that it will assist the federal government to drift Expressions of Curiosity for the privatisation of Concor stated that it will give the potential customer of Concor a definite idea of the legal responsibility on land licensing for the next 35 years.

The federal government has decided to privatise Concor by selling 30.8% of its 54.8% stake in the firm to a personal agency. But, the Railway land on which it had created the inland depots was a huge obstacle to the transaction attributable to fears of political discussion.

Till FY20, the land license payment (LLF) for the land leased from Indian Railways for working terminals and depots was funded by Concor on a per-container basis that began annually in tandem with the proportion development in web revenue of the corporation. In FY20, the LLF billed at Rs 1,175 per twenty-foot equal unit (TEU).

Commencing on 1 April 2020, the Ministry of Railways determined to cost the annual LLF from Concor at 6% of the commercial land value per acre, at the spot the terminal is situated, which can increase by 7% annually.

The updated model of expanding the LLF from April 1, 2020, jacked-up Concor’s pay-out on this, relies on Rs 590 crore in FY21 from Rs 140 crore in FY20, even after surrendering some 16 terminals built on Railway land to cut back its outgo.

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