Govt may repeal Warehousing Act, paving way for disinvestment
The Central Warehousing Corporation (CWC), a Schedule ‘A’ Mini Ratna company, may be corporatised on the lines of Indian Airlines before it is divested or privatised after repealing the Warehousing Corporations Act, 1962.
The CWC was constituted under the Act. However, the disinvestment may be complicated since CWC holds 50 per cent stake each in 19 State Warehousing Corporations (SWCs), which were also set up under the same law.
The approval of Cabinet for the repeal of the Warehousing Corporations Act, 1962, is likely to be placed soon after elections, sources said.
Meanwhile, there is no full time Managing Director since November 2022 and Amit Kumar, Director (Marketing and Corporate Planning), is officiating as MD.
Currently, the Union government holds 55 per cent equity shares while State Bank of India holds nearly 22 per cent and other commercial banks hold 16 per cent. Public sector insurance companies also hold 7 per cent share in CWC.
Under the current law, State governments cannot return the 50 per cent equity of CWC in the SWCs, sources said. But once the law is repealed, they may get freedom to return the equity to the Centre and manage the SWCs on their own. However, there could be issue while returning the equity with regard to calculating its value.
MOST ARE PROFITABLE
“As long as CWC is with the government, the States are comfortable as the Centre does not interfere in the activities of SWCs despite having 50 per cent stake. Due to this model followed for last several years, 17 out 19 SWCs are profitable,” said a former CWC official.
However, there could be issue if CWC is privatised as any private company would like to protect its investment in SWCs, the official added.
During FY 202223, CWC reported a turnover of ₹2,104.51 crore against ₹2,232.20 crore in the previous year. It operated 458 warehouses, including 23 Custom Bonded warehouses, 21 CFSs/ DPEs/ICDs and 3 Private Freight Terminals, with a total storage capacity of 100.87 lakh tonnes (excluding management capacity), according to its 202223 annual report.
The average capacity utilisation during the year was nearly 87 per cent.
India’s warehousing market size is expected to rise to ₹2,27,100 crore by 2028 from ₹1,24,800 crore in 2022, with a growth rate of 11.5 per cent (CAGR) during 202328, industry estimates show.
Aluminium futures on the Multi Commodity Exchange (MCX) has been witnessing a rally for the last three weeks. It had found support at around ₹195 and rebounded. The contract then broke out of the resistance at ₹210 and rallied.
However, over the past few sessions, the contract has been flat. The contract is facing a resistance at ₹226. Due to this, we might see a price correction, possibly to ₹215210 price band. A fall below ₹210 can turn the nearterm outlook weak.
On the other hand, a breakout of ₹226 can turn the mediumterm trend bullish. In such a case, aluminium futures can rally to ₹250, the nearest notable support. But one should note that ₹226 is a strong resistance and the fate of bulls depends on this level.
TRADE STRATEGY
Stay out as aluminium futures is hovering near a resistance even though the bias appears positive.
Traders with higher risk appetite can consider going short now at ₹224. Target and stoploss can be ₹215 and ₹230, respectively.