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Centrum Broking Report
Ministry of Railways has released a circular detailing the 'Policy for Management of Railway Land'. This comes in the backdrop of the announcement of new land licensing fee policy in September 2022.
The circular has provided clarity that if the existing entities which are operating cargo terminals on railway land (eg. Container Corporation of India Ltd.) do not want to shift to the new LLF policy then they can enter into a new lease agreement (for upto 35 years) at lease charges of 6% of market of land with annual inflation of 7%.
This is the same regime (implemented with-effect-from FY21) under which Concor currently pays the LLF charges.
In effect, this circular crystallises Concor’s LLF charges for 35 years and is an enabler for the proposed divestment of the company.
In our view, migration to the new LLF policy (1.5% of the market of land and 6% inflation with existing terminals being subject to a competitive bidding process) is not an option that Concor would be interested in.
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