Privatisation-bound state-run-rail hauler Container Corporation of India (Concor) has decided not to pay a second tranche of advance freight of as much as ₹1,500 crore to Indian Railways.

The decision was conveyed to the Railway Ministry recently, government sources said.

The inter-modal operator had paid an advance freight of ₹3,000 crore to the Indian Railways at the beginning of the fiscal year that began in April. Concor took a short-term bank loan to pay the advance freight and the loan was repaid fully in two months.

Of the ₹3,000-crore paid as advance freight, Concor had used ₹1,891 crore during the first half of the fiscal, Chairman and Managing Director V Kalyana Rama said at the Company’s second quarter earnings call on October 31.

Till November, the unutilised portion of the advance freight was about ₹600 crore.

“We have not paid (the second tranche) of advance freight and have got time till November,” Kalyana Rama said on October 31.

The advance freight paid in April had helped Concor hold rates for one year till March 2020 in a bid to attract more volumes by offering price stability to customers.

The decision notified to customers in an April 18 public notice is aimed at boosting volumes by pushing smaller rivals into a corner and compensate for any pressure on margins from holding rates for a year in an industry undergoing consolidation.

Concor, typically, revise rates twice a year to factor in a spike in diesel prices and haulage charges levied by Indian Railways.

The move, according to people briefed on the plan, has its links to a Railway Ministry policy issued last year protecting customers paying advance freight for a year from hikes in freight/haulage charges effected during the year as part of a strategy to tame its high operating ratio.

“Concor paid some Rs 3,000 crore to Indian Railways in early April as advance freight to avail of the scheme in FY20,” a government official briefed on the development, said. This protects Concor against haulage charge hikes by Indian Railways for one year. This, in turn, will help it to keep the rates unchanged for a year.

The Department of Investment and Public Assets Management (DIPAM) has hired Deloitte Touche Tohmatsu India Ltd as the transaction advisor for the sale of 30.8 per cent of the government’s stake in Concor.

The asset-sale ministry has also mandated L&L Partners as legal advisor and RBSA Valuation Advisors LLP as asset valuer for the privatisation of Concor.

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