google adsense check
Home Markets Better land license fee demand by Indian Railways catches Concor off-guard

Better land license fee demand by Indian Railways catches Concor off-guard

“Land monopoly is the mother of all other types of monopoly,” mentioned Winston Churchill. Container Company of India Ltd (Concor), whose terminals are situated on land owned by the ministry of railways, appears to be at the acquiring conclude.

In March, the ministry of railways revised its land license fee policy. It reported it will cost Concor a proportion of the land value, as an alternative of as a proportion of the business enterprise volumes it dealt with on the leased land. Concor, in turn, experienced requested the ministry of railways to carry on charging land license fee on the basis of volumes as long as it continues to be a public sector undertaking.
Whilst the response from the railways was awaited, Concor’s calculations previously this fiscal year pegged the total yearly outflow towards land license fee at ₹450-480 crore.
But as it turns out, the ministry of railways has demanded a land license fee of ₹776.9 crore for just two terminals at Delhi for the present-day fiscal. Primarily based on the most recent demand by Indian railways, the total land license fee for all terminals put alongside one another can be as substantially as ₹1,000 crore for every annum points out Nomura study, double the preliminary estimate by Concor.
It is little wonder shares of Concor fell above 15% in value, ensuing in a drop of over ₹4000 crore in its market capitalisation. This also places the government’s strategies to sell a strategic stake in the firm at risk.
“With these kinds of various LLR (land lease rentals) estimates, we consider it will be challenging for a opportunity acquirer to arrive at a reasonable valuation of the stock. Hence, until this overhang on LLR values is fixed we believe it will emerge as the solitary major highway block for a effective divestment,” say analysts at Nomura.
The firm also negatively surprised the Street with weaker than predicted results for the June quarter. Revenue declined 27% from the yr ago quarter, on the again of a 21% slide in business enterprise volumes. Running profit fell as a great deal as 60.6%.
Realizations softened 8% from the calendar year in the past quarter. Market participants are extending discounts, exerting pressure on realizations. “In an ecosystem of steep volume de-advancement, the mounted mother nature of expenditure is expected to produce margin strain for the firm,” ICICI Immediate Study reported in a note.

Subscribe to newsletters

* Enter a legitimate e-mail
* Thank you for subscribing to our newsletter.

Matters

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Biden condemns Trump’s thrust to nominate Ginsburg replacement as ‘exercise in raw political power’

Democratic presidential candidate and previous Vice President Joe Biden gestures when speaking at the Structure Center in Philadelphia, Sunday, Sept. 20, 2020, about the...

Here is how FedEx shares can double to $500, in accordance to Citi

A FedEx workers member is on duty in New York, May possibly 4, 2020.Wang Ying | Xinhua by way of Getty Illustrations or photos(This...

Recent Comments