Allcargo Group to streamline operations through strategic business restructuring
Allcargo Logistics Limited and Allcargo Gati Limited (formerly Gati Limited) have taken a significant step in restructuring their businesses. The boards of both companies have approved a composite scheme of arrangement, paving the way for a strategic realignment of operations under Allcargo Limited and Allcargo Gati Limited.
Demerger of International Supply Chain Business
As per the approved scheme, the International Supply Chain (ISC) business will be demerged into a separate entity, Allcargo ECU Limited. This move includes the Indian portion of the ISC business along with international subsidiaries held under ECU Worldwide NV. The demerger aims to streamline operations and sharpen the focus on each business segment.
Allcargo Logistics announces major business restructuring with demerger plan
Synergistic Benefits for Express and Contract Logistics
The resulting entity, Allcargo Logistics (post ISC demerger), will encompass the Express business and Contract Logistics business, benefiting from combined synergies. This restructuring simplifies the corporate structure and provides direct shareholding to the shareholders of Allcargo and Allcargo Gati.
Share Swap Ratio and Shareholder Benefits
Based on the recommendations of independent valuers, shareholders of Allcargo Gati will receive 63 shares in the resulting Allcargo Logistics entity (post ISC demerger) for every 10 shares held in Allcargo Gati. Shareholders of Allcargo will receive 1:1 shares in the demerged Allcargo ECU Limited while retaining their shares in Allcargo Logistics Limited. This arrangement considers the recent 3:1 bonus shares approved by Allcargo Logistics shareholders.
Comments from the Founder and Chairman
Shashi Kiran Shetty, Founder and Chairman of Allcargo Group, commented on the restructuring, stating, “This is a momentous occasion in the history of the Allcargo Group.” He emphasized the goal of empowering flagship businesses with strategic independence and operational synergies. The merger of Allcargo Supply Chain and Gati Express business aims to create a strong P&L, balance sheet, and cash flows to drive growth in the domestic logistics market.
Future Outlook and Business Focus
The restructuring is expected to be implemented in 10-12 months, subject to regulatory approvals. Post-restructuring, Allcargo Group will have four listed strategic business undertakings: Allcargo ECU Limited, Allcargo Logistics post ISC demerger, Allcargo Terminals Limited, and TransIndia Real Estate Limited. These entities are well-positioned for growth in the logistics industry, leveraging robust management capabilities.
This strategic move by Allcargo Logistics represents a significant evolution in its business model, aiming to enhance operational efficiency, create value for stakeholders, and capitalize on market opportunities in the logistics sector.