Allcargo shareholders will get 1 share each in two newly spun out companies

The Board of Allcargo Logistics on Thursday approved the demerger of its CFS/ICD and real estate businesses, aimed at creating strategic business undertakings to drive growth across distinct opportunities. Under the proposed scheme of demerger, equipment rental and real estate businesses will move to TransIndia and CFS/ICD (container freight stations/inland container depot) business into Allcargo Terminals Limited, it said.

Besides, as part of the demerger, all three companies will have mirror shareholding, resulting in no change in the entitlement of shareholders for each entity, Allcargo said.

After the demerger, shareholders will get 1 share each of Allcargo Terminals and TransIndia Realty & Logistics Parks for every 1 share held of Allcargo Logistics, it said, adding the 1:1 ratio will avoid fractional allotment and benefit all shareholders.

The Board of Directors of Allcargo Logistics Ltd, at its meeting held on Thursday, approved the demerger of CFS/ICD business into Allcargo Terminals Limited and demerger of equipment rental, logistics parks and other real estate assets into TransIndia Realty & Logistics Parks Limited (TransIndia), the company said.

"The company takes pride in its heritage and leadership, which have led to 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 (demerger) scheme will facilitate strategic growth in demerged businesses and make the company stronger," said Shashi Kiran Shetty, Chairman, Allcargo Logistics, ECU Worldwide and Gati Ltd.

The company has grown at 15-20 per cent CAGR on both revenue and EBITDA over the last 15 years, and this demerger will set the foundation for the next phase of growth by providing independence to businesses, he added.

The strategic move will position the company to accelerate growth across businesses by creating independent business undertakings, with sharper management focus, better access to the right capital, and greater operational and financial flexibility, Allcargo said.

At the same time, Allcargo Logistics will continue to be the leader in the international supply chain, express logistics and contract logistics businesses with an increased focus on digitisation, the company said.

The resulting company Allcargo Terminals will be the market leader in the CFS business in India and continue to expand its footprint in ICDs, the company said in a release.

Five out of seven facilities of Allcargo are already on lease and the new resulting structure will make all seven CFS/ICDs completely asset-light, positioning the company strongly to drive growth with a high return on capital employed, it added.

By moving the equipment rental and real estate businesses to TransIndia, it will create a unique portfolio of best in class grade A-warehouses and other assets leased to marquee clients, it claimed.

The business will also hold the shares in the JV with Blackstone, it said, adding post demerger, the business would have an opportunity to attract the right pools of capital as grade A warehousing is in very strong demand, and capabilities of TransIndia will provide opportunities for robust growth.

A part of Avvashya Group, Allcargo Logistics Limited is a global leader in multimodal logistics solutions with Allcargo Belgium NV, operating ECU Worldwide network, a global market leader in ocean freight consolidation.

Domestically, Allcargo is the market leader in the container freight station business and is among the leaders in express logistics through subsidiary Gati Ltd, besides having a strong presence in contract logistics and other businesses.

SEE ALSO: Data Patterns beats GMP and lists at 40% premium
Nine companies lost unicorn status
India ends Winter Session of Parliament with no crypto bill in sight