Allcargo Logistics is an integrated logistics service provider and operates in multiple business segments – multimodal transport operation (MTO), container freight station (CFS) / inland container depot (ICD), projects and engineering (P&E), contract logistics, and logistics parks (LPs) in which it has forayed recently.
Allcargo Gati is primarily engaged in the business of E-commerce logistics, and running of fuel stations. Shares of Allcargo Gati slipped 13.46% to Rs 119.60 on the BSE.
The boards of Allcargo Logistics and Allcargo Gati have approved the composite scheme of arrangement for restructuring of businesses. As per the scheme, International Supply Chain (ISC) business will be demerged into a separate entity, Allcargo ECU. This would include the India part of International Supply Chain business along with the international subsidiaries held under the ECU Worldwide NV.
Express business and contract logistics business would come under the resulting entity Allcargo Logistics (post ISC demerger).
Additionally, Allcargo Gati will merge with Allcargo Logistics, where shareholders of Allcargo Gati will get 63 shares of the post-demerged Allcargo Logistics for every 10 shares they hold.
Further, shareholders of Allcargo will get 1:1 shares in the demerged Allcargo ECU and continue to hold their shares in Allcargo Logistics, which will now be the resulting entity holding express and Contract Logistics business directly. This takes into account 3:1 bonus shares approved by shareholders for Allcargo Logistics recently.
The scheme is expected to be implemented in the period of 10-12 months, accounting for regulatory filings, stock exchange approval, shareholder approval, NCLT approval and ROC filings.
Shashi Kiran Shetty, founder and chairman of Allcargo Group, Said, “Our intention is to empower our flagship businesses with strategic independence and operational synergies, with customer integration in express and contract logistics businesses and direct shareholding in operating companies.
This will also establish financial accountability for the management team, comprising best in class senior & middle management team to drive the businesses forward with growth and return mindset with a digital first approach.
With the merger of Allcargo Supply Chain and Gati Express business, the scheme will create a strong P&L, balance sheet and cash flows to drive synergistic growth & expansion in the fast growing domestic logistics market to create an unmatched powerhouse in the domestic supply chain business."
Shetty further added, “A simple structure and sharp business focus under independent management team or board of directors will enable the Allcargo group to continue to drive its track record of growth, having demonstrated near 18% CAGR over last 20 years.”