Logistics

Concor sell off sparks private monopoly concerns

Mamuni Das New Delhi | Updated on November 21, 2019

Representative image   -  istock.com

Some fear emergence of private monopoly; others say a strong management can extract much out of Concor

Selling off the management control of Concor, an Indian Railways’ navratna, to a strategic investor has spurred concerns about the emergence of a private monopoly in the container movement space among the industry experts, former Concor executives and Indian Railway officials.

But, there are also a few who felt that a “stronger management” without fear of CBI/CVC can extract a lot out of Concor.

Concor has a 72 per cent share in the container train market with a large network of over 80 container terminals spread across the country and a fleet of hundreds of container trains. As of 2019, Concor had movable assets of almost 15,500 container wagons, a 26,000 containers, 14 gantry cranes and 102 reach stackers, among other resources.

The Union Cabinet on Wednesday approved strategic disinvestment of 30.8 per cent shareholding of the Government of India (out of 54.8 per cent equity presently held by the Government of India) along with transfer of management control to a strategic buyer. Probables expected to eye the Navratna include local and global majors with exposure in ports as well as container train operating licenses like Adani Group and DP World.

“A private management will use the same people – from Concor or Indian Railways – to manage the company, which is already listed on the bourses. The motive of a private management will be profit and it will simply increase freight charges,” Syamal Bhushan Ghosh Dastidar, former Member-Traffic, Indian Railways, told BusinessLine.

The Government management checks the price increases in tariff, controlling the logistics costs. “At present, although private companies are there as container train operators, Concor (with its government management) sets the freight charges for the overall industry and keeps them in control,” said Ghosh Dastidar.

‘Selling management’s stake can only help the government shore up revenue’

“Right now, selling the management stake in a profit-making company like Concor can only help the government shore up some revenue in the short run. In the long run, selling the management control in a profit-making unit will not help the government, the industry, or the country,” added the former Member-Traffic of Railway Board.

However, another official with experience in the container and railway sector, had a different view.

“A good and efficient management can extract a lot more out of the Concor infrastructure. A stronger management will work towards increasing the share of rail sector against road sector for container movement. Indian Railways will continue to get its freight charges. There is a scope to increase marketing through a private management control, which does not have fear of CBI or CVC,” said this official, who believed public or private management will not make a difference.

To buttress the point further, this official maintained: “Container train operations space had been privatised long back, and lots of train operators entered the space. Still, none of them could challenge Concor, with its infrastructure built over decades. At that time, if Indian Railways had been more generous and had allowed the entrants access to railway land, or tracks, competitors would have grown,” added the official, maintaining that a strong management can extract much more out of Concor, which has been sought after by many players for many years.

That Concor has been the sought after jewel – Navratna – is well known. Many years ago, there were unconfirmed rumours of a Deutsche Bahn (German Railway) official casually enquiring if they could buy the stake of Concor from the stock-exchanges.

The public sector unit has also forged joint ventures with shipping lines (like Maersk, CMA-CGM, Transworld, AllCargo); and logistics players like Transport Corporation of India and international port terminal operators like APM Terminals and DP World. The company will increase in warehousing segment from the present 3.5 million square feet to 50 million square feet.

Published on November 21, 2019

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