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Land monopoly is the mom of all different types of monopoly,” stated Winston Churchill. Container Corporation of India Ltd (Concor), whose terminals are located on land owned by the ministry of railways, will nod in settlement, having been on the receiving finish of licence fee selections.
In March, the railways ministry revised its land licence fee coverage. It stated it should cost Concor a proportion of the land worth, as a substitute of a proportion of the enterprise volumes it dealt with on the leased land. Concor had requested the ministry to proceed charging land licence fee on the premise of volumes so long as it stays a public sector enterprise.
While the response from the railways was awaited, Concor’s calculations earlier this fiscal pegged the entire annual outflow in the direction of land licence fee at ₹450-480 crore.
But, because it seems, the railways has demanded a land licence fee of ₹776.9 crore for simply two terminals in Delhi in the present fiscal. Based on the most recent demand by the Indian Railways, the entire land licence fee for all terminals put collectively could be as a lot as ₹1,000 crore each year, factors out Nomura Research, double Concor’s preliminary estimate.
It’s little marvel that Concor’s shares fell over 15% in worth, ensuing in a drop of over ₹4,000 crore in its market capitalization. This additionally puts the federal government’s plans to promote a strategic stake in the corporate in danger. “With such various LLR (land lease leases) estimates, we imagine it will likely be tough for a potential acquirer to reach at a truthful valuation of the inventory. Therefore, until this overhang on LLR values is resolved, we imagine it should emerge as the largest roadblock for a profitable divestment,” stated Nomura analysts.
The firm additionally negatively shocked the Street with weaker-than-expected outcomes in Q1FY21. Revenue declined 27% from the year-ago quarter on the again of a 21% fall in enterprise volumes. Operating revenue fell as a lot as 60.6%.
Realizations softened 8% from the year-ago quarter. Market individuals are extending reductions, exerting strain on realizations.
“In an setting of steep quantity de-growth, the mounted nature of expense is anticipated to create margin strain for the corporate,” ICICI Direct Research stated in a word.
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