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February 20, 2024

Land license fee paid by CONCOR to Indian Railways declines

Land license fee paid by CONCOR to Indian Railways declines

The land license fee (LLF) paid by Container Corporation of India Ltd (CONCOR) to Indian Railways for running terminals on land leased from the national transporter declined 15.64 per cent in FY23 to Rs 392.36 crores from Rs 465.11 crore in the previous year as the rail hauler of boxes continue to follow the old regime without migrating to the new licensing policy cleared by the Cabinet last year.

In effect, the land license fee paid by CONCOR – a key issue in the government’s much awaited plan to privatise the inter modal operator – has tumbled by 24.16 per cent in two years from Rs517.39 crores in FY21 to Rs 392.36 crores in FY23.

Beginning April 1, 2020, the Railway Ministry decided to charge the annual LLF from CONCOR at the rate of 6 per cent of the industrial land value per acre where the terminal is located, which will escalate by 7 per cent annually.

Till FY20, the LLF for the land leased from Indian Railways for running terminals and inland container depots (ICDs) was paid by CONCOR on a per container basis that rose annually in tandem with the percentage increase in net profit of the company. In FY20, the LLF was billed at the rate of Rs 1,175 per twenty-foot equivalent unit (TEU).

The revised mode of collecting the LLF from April 1, 2020, jacked up CONCOR’s pay-out on this count to Rs 517.39 crore in FY21 from Rs140 crore in FY20.

To reduce the higher overall license fee outgo, CONCOR surrendered 17 terminals built on Indian Railways land from April 2020.

The company currently runs 61 inland container depots (ICDs) of which 26 terminals are built on land leased from Indian Railways (IR). These 26 terminals account for more than half of the annual revenue of the company.

In October 2022, the Railways Ministry issued a Master Circular (MC} on Policy for Management of Railway Land, reiterating that the LLF on the existing land will be payable at 6 percent of the Market Value (MV) of land with annual escalation of 7 per cent.

The market value will be the industrial rate specified by the State where the terminal is located and when it is not specified by the State, then any other rate depending upon use of surrounding land as specified by the State/ Revenue Office, shall be considered.

Based on the Master Circular of Indian Railways, LLF of Rs392.36 crore for FY23 has been booked on the market value of Railways’ land parcel leased by CONCOR, the company said while announcing the annual financial results on Thursday.

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