Allcargo Logistics to move ahead with demerger plans

Allcargo Logistics said that its board of directors has sanctioned the demerger of its container freight station (CFS)/inland container depots (ICD) business into Allcargo Terminals and demerger of its equipment rental, logistics parks and other real estate assets into TransIndia Realty & Logistics Parks.

The Indian logistics company said that the move will enable it to expedite growth across businesses by producing standalone business undertakings, with better management focus, improved access to the right capital, and increased operational and financial flexibility.

Allcargo Logistics is expected to continue its focus on international supply chain, contract logistics, and express logistics businesses with more focus on digitization.

The resulting firm Allcargo Terminals is expected to be a major player in the container freight station business in India and continue to grow its presence in inland container depots.

Allcargo Logistics revealed that five out of its seven facilities are already on lease and the resulting structure will make all seven CFS/ICDs fully asset light to position the company for driving growth with high return on invested capital.

As per the demerger, Allcargo Logistics’ equipment rental and real estate businesses will join TransIndia Realty & Logistics Parks, which will have a portfolio of grade A warehouses and other assets given for lease to marquee clients.

TransIndia Realty & Logistics Parks will also hold Allcargo Logistics’ shares in the joint venture with Blackstone. After the demerger, TransIndia Realty & Logistics Parks is expected to have the scope to draw the right pools of capital with grade A warehousing having a robust demand, said Allcargo Logistics.

Shashi Kiran Shetty — Chairman of Allcargo Logistics, ECU Worldwide and Gati, said: “The company takes pride in its heritage and leadership, which have led to a sustained growth in the long term. Now, we have business units, which have achieved the right scale and seek independence to drive the next phase of growth. The scheme will facilitate strategic growth in demerged businesses and make the company stronger.”