Govt may opt for 5-7% stake sale in CONCOR after tepid response to strategic sale plan

NEW DELHI : The government of India is considering selling five to seven percent of the Container Corp of India (CONCOR) after plans for a strategic sale to privatise the company met with lukewarm interest, government sources said.

Based on its current market capitalisation, the stake marked for sale in CONCOR is estimated to be worth about ₹3,500 crore- ₹4,700 crore.

The divestment of CONCOR has been indefinitely suspended due to the absence of potential buyers, several government officials told the business publication. Factors like the company’s failure to lower its land leasing fee and lack of backing from the Ministry of Railways have reportedly discouraged potential buyers.

The government’s revised plan involves selling stake in CONCOR in smaller chunks, with discussions ongoing with financial institutions. The decision to sell a smaller stake comes amid a considerable surge in the company’s valuations, with its market capitalisation increasing by 200% to  ₹62,470.95 crore since the divestment approval in November 2019.

The state-run company’s inability to reduce its land leasing fee and lack of support from the Ministry of Railways may have acted as a deterrent for potential buyers and created a roadblock for the government’s plan to divest around 30.8 percent of its total 54.8 percent stake, they said.

CONCOR is also projected to transition its inland terminals to the government’s new land-licence fee regime in 2024-25, which could aid in reducing its land licensing fees outgo.