Concor disinvestment: Dipam may seek finmin, inter-ministerial group help

Govt seeks to sell stake worth Rs 12,000 cr in national transporter this fiscal as part of disinvestment target

The Department of Investment and Public Asset Management (DIPAM) might seek the intervention of an inter-ministerial group and top finance ministry officials for cooperation in the disinvestment of the Container Corporation of India (Concor).

The likely move is being deliberated after the Railway ministry’s apprehension about divesting 30.8 per cent stake of its stake in Concor, the national transporter, put the proposed stake sale on the back burner.

The government intended to sell its Concor stake—worth about Rs 12,000 crore according to current market prices—this financial year as part of its disinvestment road map.

However, Railways is not in favour of getting a strategic buyer on board as it may impact its goal of keeping logistic prices low, it has learnt.

“The disinvestment department might start a fresh dialogue with the inter-ministerial group (IMG) and try to resolve the concerns raised by the railways. If required, IMG could also seek suggestions from a core group of secretaries for further guidance in the matter,” said a government source.

Dipam was earlier expected to publish expressions of interest (EoI) for Concor in March this year and end a prolonged delay.

It usually takes 9-12 months to conclude a stake sale after inviting an EoI.

For the Concor stake sale, the delay may be longer if it does not get the green signal from the ministries concerned.

The Union Cabinet, in November 2019, approved strategic sale of 30.8 per cent stake in Concor out of government equity of 54.80 per cent along with management control. It was decided that the government will retain 24 per cent stake post sell-off but without any veto powers.

To facilitate the disinvestment, the Cabinet approved a new land-licence fee policy in September last year. However, Concor has not switched any of its container terminals built on railway-owned land to the new regime yet.

“If Concor opt for the benefit of lower land-licence fee rates, it may have to lose up to 26 of its 61 terminals, which it operates on railway land, and this could impact Concor’s valuation," said a source.

Concor’s share closed at Rs 651.05 on the National Stock Exchange on Tuesday. As the stake sale in Concor is uncertain this fiscal year, the government has to rely on other major deals, including those for IDBI Bank and Shipping Corporation of India (SCI), to meet the budgetary target of Rs 51,000 crore set for FY24.

The IDBI Bank stake sale is going through the Reserve Bank of India’s due diligence process and it is expected to get financial bids by September. The listing of SCI’s land asset company is expected later this month or early next month, which would expedite the process.

The plan ahead

• Move is being deliberated after the railway ministry’s apprehension about divesting 30.8 per cent of its stake
• Railways is not in favour of getting a strategic buyer on board as it may impact its goal of keeping logistic prices low
• Dipam was earlier expected to publish expressions of interest for Concor in March this year 
• The delay in disinvestment may be longer if it does not get the green signal from the ministries concerned
• To facilitate the disinvestment, the Cabinet approved a new land-licence fee policy in September last year