Recast of Allcargo Logistics on track, two spin-off entities to be launched in a few months

Allcargo Logistics’ restructuring plan, which will see the spin-off of two more companies, is on track and the spin-off companies will be listed on the stock exchange in a few months, Chief Strategy Officer Ravi Jakhar said.

“The company recently received the certified true copy of NCLT. The set date of the program was April 1, 2022. The program will become effective once we file the copy of the NCLT’s order with the Registrar, which we expect shortly,” Jakhar said.

Restructuring aims to declutter and structure the organization. It will also help Allcargo adopt an asset-light model for its core business and unlock value for its spin-off entities.

“We should see the resulting companies listing on the stock exchanges in a few months, subject to the necessary formalities,” he said.

demerger plan

After the demerger, Allcargo Logistics will be split into three public companies: Allcargo Logistics Ltd, Allcargo Terminals Ltd (ATL) and TransIndia Realty and Logistics Parks Ltd (TRLPL).

Parent company Allcargo Logistics will manage international supply chain solutions, express shipping and contract logistics businesses while retaining its interests in a global subsidiary, ECU Worldwide, Gati Ltd, as well as Avvashya CCI’s contract logistics division.

ATL will consolidate its leadership position in Container Freight Stations (CFS) and further expand its presence in India and abroad. The interest in Speedy Multimodes would be part of ATL. On the other hand, TRLPL will include crane rentals, logistic parks and other rental companies.

What Analysts Say

Analysts believe the split will create value for shareholders and simplify the company’s structure.

Given the capital-intensive nature of the company’s warehousing business, the demerger will help clean up the balance sheet and bring asset-strapped businesses under one roof, some said.

Last month, Allcargo inked a deal to sell part of its logistic parking business to global private equity giant Blackstone, making the company liquid. Blackstone will own 90 percent of these logistics parks, with the remaining 10 percent owned by Allcargo and held by TRLPL under the demerger plan.

Acquisition moved

The company will buy 1.50 lakh shares or 30 per cent stake in Gati-Kintetsu Express (GKEPL) for Rs 406.71 crore. The deal includes the purchase of 1.3 lakh shares (26 percent) of KWE-Kintetsu World Express (S) and 20,000 shares (4 percent) of KWE Kintetsu Express.

This transaction was proposed at its board meeting on November 9, 2022. Upon completion of the transaction, Allcargo will hold a 30 percent stake and Gati Ltd will continue to hold its current 70 percent stake in GKEPL, Jakhar said.

He said the company divested non-core assets and sharpened its focus on core businesses.

Earlier this month, Allcargo acquired ACCI’s remaining 38.87 percent stake in the contract logistics division. In February, the company signed a share purchase agreement with BRE Asia Urban Holdings to acquire 90 percent of the share capital and optional convertible debentures of Madanahatti Logistics and Industrial Parks, while in January the company acquired a 75 percent stake in German freight consolidator Fair Trade. The company also announced it would sell its smaller, non-core customs clearance business.

Jakhar explained the reasons behind the company’s acquisitions: “The company has acquired partners in express and contract logistics. This is in line with the company’s strategy to simplify the organizational structure and accelerate the growth path for our domestic supply chain efforts. We can also expect more synergies between contract logistics and express shipping to further strengthen the group’s position in the fast-growing express and contract logistics space.”

These acquisitions are based on agreements signed with CCI and KWE in 2016 and 2019, respectively, he said.

With a market share of almost 15 percent, Allcargo is one of the world’s leading companies in the field of consolidation (Less Than Container Cargo). The international acquisitions are small bolt-on acquisitions to strengthen the company’s position in key strategic markets, he said.

Related Articles

Back to top button

Subscribe To Our Newsletter

Don't miss new updates on your email