The Container Corporation of India Ltd (CONCOR) has chosen to maintain its current land lease agreements with Indian Railways, foregoing the newly introduced liberal licensing policy. This policy, approved by the Union Cabinet, offers reduced lease charges of 1.5% of the land's market value compared to the existing 6% with annual escalation.
Switching to the new regime would require CONCOR to bid for the 26 terminals it operates on railway land. Despite having the right of first refusal if they are not the highest bidder, this introduces potential competition and uncertainties. Chairman and Managing Director V Kalyana Rama expressed concerns over the variables and risks in the bidding process, which includes terminal charges for railway wagon traffic and terminal access charges for non-railway wagon traffic. These factors could result in increased operational costs and negatively impact margins.
Currently, CONCOR pays around Rs 380-390 crore annually in land lease charges. By sticking with the existing policy, they aim to avoid the complications and potential financial strain associated with the new regime. The decision to continue with the current lease terms will be re-evaluated as they closely monitor the new policy's implications.
