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Cabinet Approves Merger of Central Railside Warehouse Co with Its Holding Enterprise

Image for Representation.

Image for Representation.

The decision is aimed at implementing 'Minimum Government, Maximum Governance', promoting ease of doing business and bringing private sector efficiencies in public sector undertakings (PSUs).

The Cabinet on Wednesday approved the merger of state-owned Central Railside Warehouse Company Ltd (CRWC) with its holding enterprise Central Warehousing Corporation (CWC). The decision is aimed at implementing ‘Minimum Government, Maximum Governance’, promoting ease of doing business and bringing private sector efficiencies in public sector undertakings (PSUs).

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved to merge and transfer all assets, liabilities, rights and obligations of CRWC with its holding enterprise CWC, according to an official statement. CRWC is a Mini-Ratna Category-II Central Public Sector Enterprises (CPSE) incorporated under the Companies Act, 1956, in 2007, while CWC is a Mini-Ratna Category-I CPSE.

“The merger will unify similar functions of both the companies (i.e warehousing, handling, transportation) through a single administration to promote efficiency, optimum capacity utilisation, transparency, accountability, ensure financial savings and leverage railway siding for new warehousing capacities," it added. After this decision, it is estimated that management expenditure of Railside Warehouse Complexes (RWCs) will come down by Rs 5 crore due to savings in the corporate office rent, salary of employees, and other administrative costs.

The capacity utilisation of RWCs will also improve as there will be potential for CWC to store commodities other than commodities of cement, fertiliser, sugar, salt and soda being stored presently. “The merger will facilitate setting up of at least 50 more Railside warehouses near the goods-shed locations.

“This is likely to generate employment opportunities equivalent to 36,500 man days for skilled workers and 9,12,500 man days for unskilled workers. The merger is expected to be completed within 8 months of the date of decision," the statement said. CWC was set up in 1957 to provide for incorporation and regulation of Warehousing Corporations for the purpose of warehousing of agriculture produce and certain other commodities notified by the central government and for matters connected therewith.

CWC is a profit-making PSU with an authorised capital of Rs 100 crore and a paid-up capital of Rs 68.02 crore. It formed a separate subsidiary company named CRWC on July 10, 2007, to plan, develop, promote, acquire and operate Railside Warehousing Complexes/Terminals/ Multimodal Logistics Hubs on land leased from the Railways or acquired otherwise.

CRWC is a lean organisation with 50 employees and staff of 48 outsourced personnel. Currently, it is operating 20 railside warehouses across the country. As on March 31, 2020, the net worth (paid-up capital plus free reserves) of the company is Rs 137.94 crore.

CRWC developed specialisation, expertise and goodwill in development and operation of RWCs, but due to shortage of capital and also due to some of the restrictive clauses in its pacts with the Ministry of Railways, its pace of growth was not as expected. “As CWC is the sole shareholder of CRWC and all the assets and liabilities and rights and obligations will be transferred to CWC, there will be no financial loss to either instead it will bring synergy.

“A separate division with the name ‘RWC Division’ will be created by CWC for handling operations and marketing of RWCs," the statement said.

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