December 2, 2020: The strategic divestment of state-owned Container Corp of India Ltd may be pushed to the next financial year starting April because of delay in finalising a policy on fee for using Railways’ land, a senior finance ministry official said.
Though the disinvestment department is ready with the expression of interest for Container Corp, it is waiting for the railway ministry to finalise the land licensing fee policy, the official told Cogencis.
EXCLUSIVE
The land licence fee policy will need the approval of the Cabinet, which may delay the divestment process, the official said.
“Typically, we avoid coming out with new transactions from mid-December to mid-January as new investment decisions are considered by global investors only after February,” the official said.
Following the news, the company’s share fell nearly 2% on the National Stock Exchange. At 1319 IST, the shares were down 1% at 401.10 rupees.
The railway ministry had demanded 12.8 bln rupees from Container Corp as annual land licence fee for 2020-21 (Apr-Mar) for 13 terminals as against 4.7 bln rupees projected by the company.
Unless the wide gap on the land licence fee is addressed by a clearly defined policy, it will be difficult for investors to gauge the value of the company, Nomura Financial Advisory and Securities India said.
In November last year, the Cabinet Committee on Economic Affairs had given in-principle approval for strategic divestment of Container Corp and Shipping Corp of India Ltd.
The government plans to sell 30.80% of its 54.80% stake in Container Corp.
At the current market price, the government can raise about 75 bln rupees by selling part of its stake in Container Corp.
The government has set an ambitious target to raise 2.1 trln rupees through divestment in 2020-21, more than four times of what it raised last financial year.
However, the pandemic has delayed several big-ticket disinvestment proposals, including strategic stake sale of Bharat Petroleum Corp Ltd and initial public offering of Life Insurance Corp of India.
The government has so far raised only 61 bln rupees through divestment this year. End
Source: Cogencis
