Concor spooked by 15-fold jump in land licence fee for Tughlakabad and Okhla terminals

P Manoj Mumbai | Updated on August 10, 2020 Published on August 10, 2020

The revised land licence fee calculation could make the Tughlakabad ICD unviable for Concor (file photo)   -  KSL

Privatisation plan may be hurt as valuation suffers

The Ministry of Railways has raised a demand for ₹776.89 crore as land licence fee (LLF) for the Okhla and Tughlakabad terminals of Container Corporation of India Ltd (Concor) in FY21, a 15-fold jump on what it paid last year.

Tughlakabad and Okhla are among the 25 of the rail hauler’s 64 inland container depots (ICDs) that are running on land leased from Indian Railways (IR) at concessional market rates. The ₹776.89-crore demand is based on a revised method of calculating LLF for terminals built on land leased from IR from FY21. The steep increase in fee payout is expected to depress the valuation of Concor during its privatisation.

Concor’s consolidated net profit plunged 75.97 per cent to ₹58.26 crore during the April-June quarter from ₹242.51 crore during the same period last year. Revenue from operations dipped to ₹1,194.20 crore (₹1,654.76 crore).

Shares of Concor tanked 15.16 per cent to close at ₹386.35 a share on the BSE on Monday.

Increase in rate

Beginning April 1, the annual LLF is to be calculated at the rate of 6 per cent per acre of the industrial land value where the terminal is located, according to a circular issued by the Railway Ministry. The rate will be increased to 7 per cent annually in subsequent years.

Till FY20, the LLF was levied at ₹1,175 per loaded twenty-foot equivalent unit (TEU).

Concor paid ₹110 crore in FY20 for all the terminals built on IR land.

Representation made

As the IR land was leased to Concor prior to 2006, the rail hauler had urged the Ministry to continue charging LLF on the basis of the TEUs handled till the time it remains a state-owned company.

The Railway's response is awaited, a Concor official said.

“However, recently, Concor has received a demand for ₹776.89 crore from the Ministry of Railways as the LLF for the year 2020-21 for the Okhla and Tughlakabad terminals, which has been supposedly worked out as per the revised mode of calculation,” the official said.

“As per the company's assessment, the demand is not as per the Railways’ policy. The matter is being represented to the Ministry of Railways. However, an amount of ₹120.67 crore has been estimated by the company by applying the extant policy of the Railways as LLF for all the terminals built on IR land for the quarter ended June,” the official added.

The revised calculation has the potential to make the Tughlakabad ICD — India’s biggest dry port spread over 195 acres — unviable. In FY20, the flagship facility of Concor handled close to 400,000 TEUs, paying a LLF of about ₹40 crore at the rate of ₹1,175 per TEU.

Whereas, the domestic terminal at Okhla run by Concor is India’s biggest domestic terminal, handling more than 1 lakh TEUs a year. The firm paid an LLF of about ₹12 crore for this terminal in FY20.

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Published on August 10, 2020
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