Chairman of the Indian Railways subsidiary and one of the most hyped candidates lined up for strategic sale by the government, said it may see a 5 percent drop in revenue during the current financial year.
Among the companies that are lined up for strategic sale by the government, the Indian Railways subsidiary Container Corporation of India (Concor) is one of the most hyped now. Industry majors like DP World, PSA International, Adani Group, Vedanta Group, Gateway Distriparks and Allcargo Logistics have already shown their keenness to be part of the upcoming bidding process.
V Kalyana Rama, Chairman and Managing Director of Concor, believes the basic structure and the way the company is being operated will not see any change even after privatisation. In an exclusive interview with Moneycontrol, Kalyana Rama said that hit by the pandemic, his company may see a 5 percent drop in revenue during the current financial year.
Speaking about the controversial land licensing fees (LLF), he said the outgo due to higher land rates during the current financial year will be between Rs 450-650 crore.
Q. One of the key roadblocks for the divestment plans is the controversial land licensing fees issue. What is your take on the government’s plan to come up with a new land policy?
Let the new land licensing policy be out. Let the government reveal the terms of the new policy. When the Cabinet approves that new policy, we will look at it and come back.
At present, the land licensing fee that is applicable to us is 6 percent of the market value of the land. The effect of that market value of the land as per our calculations is Rs 450 crore. As per the Railways calculation, it should come to around Rs 650 crore. We understand that for the current financial year the outgo in this regard will be around Rs 450-650 crore.
Q. What changes can we see in Concor once a strategic investor takes over the operations?
Concor is seen as a good professionally-run company. That is why we are seeing a lot of interest in Concor. I don’t think the basic structure of the way this company is run will change. Whosoever takes it over, will continue with this and may bring in some good changes.
Q. Did Covid affect your expansion plans?
We are going ahead with whatever plans we discussed over the last few years. We wanted to start coastal operations, we have initiated that. Due to Covid, there was a lockdown and all the industrial activities were affected. Hence, we had to stop coastal operations and now we are reassessing the situation. Coastal shipping is definitely a part of our multi-model logistic plans.
We also got into complete logistic operations which we call FMLM (First-Mile-Last-Mile) operations. In addition, distribution logistics was also started, however, Covid has put all these plans on a slow track by a year or two. In terms of revenue, we may end up this year almost flat. We may see either a decline of 5 percent or will end up at the same level as last year.
Whatever expansion plans were there in our core business — inland container depots (ICD), multi-model logistics– we have not put them on hold. We are going ahead with that. But, there was a little slowdown in the execution because of the delay in carrying out the construction works. We have not stopped any of the projects. We are continuing with the work plans. However, we have not discussed any new expansion plans in the last year. We are also looking at how the economy is reviving as it is a major pandemic that has affected the world. A lot will depend on how the EXIM scenario will unfold and how the domestic scenario will come up.
Meanwhile, the divestment plans are there and we are now looking at what will be its timetable and how it will unfold. All the long-term decisions will go ahead, even if a private player comes into the scenario. We are planning to come up with around 12-13 terminals and our roadmap to invest around Rs 6,000 crore will remain as it is.
Q. What is your take on the impact of dedicated freight corridors (DFC) in the future of freight traffic in India?
DFC will be a gamechanger for entire North India, especially for port connectivity and the container industry in this part of India. Western DFC will make a real difference to the movement patterns of freight traffic. time will get reduced for the container movement from North India to Mumbai or Mundra or Pipavav. As of now, Mundra and Pipavav are getting connected to the DFC by March 31. After that, the travel time between Delhi to Mundra and Pipavav will be almost half of what it is being taken now. A 50 per cent reduction in time taken will automatically increase the share of rail traffic. It is expected that DFC will add 25 per cent additional traffic to us in the first full year of operation in this sector.
Q. What is the status of the much-hyped International North-South Transport Corridor (INSTC) connecting freight movement between India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia and Europe through the ship, rail, and road route?
Because of the restrictions imposed on Iran, it has not really taken off. Doing business through Iran is a challenge. The project is not shelved, but there is no movement that happened in INSTC even now. Discussions are going on.
Q. How are you moving ahead with your multi-model logistic plans? What is your roadmap for your air cargo business Concor Air?
We are already doing business through road and rail. Coastal too we have already started.
Through Concor Air, we were handling logistics at the Mumbai Airport. Within that, for international cargo, somebody else has got the operations and hence we are doing only domestic operations. Nasik also we are doing air cargo operations, but that is in tie-up with Hindustan Aeronautics Limited (HAL) in the name of Halcon. There are no further expansion plans in cargo handling for us as of now.
Q. You are completely dependent on China for Containers. What is your plan to source containers locally?
We have hosted a webinar in this regard and that was a huge success. This will be a huge push to the Atma Nirbhar Bharat initiative; Concor will float an open tender for domestic manufacturers soon to meet our annual requirement of containers. We are giving that initial boost to the manufacturers that we will purchase 8,000 containers. On an annual basis, we are procuring around 8,000 containers, at a total cost of around Rs 200 crore. As of date, CONCOR is the major container purchaser in India. The road ahead is those container manufacturers have to aim to convert India to a container manufacturing hub of the world by being globally competitive.