Allcargo Logistics, Allcargo Gati boards approve ambitious businesses restructuring

• By Freight & Cargo Network
• Dec 24, 2023

The boards of Allcargo Logistics Ltd and Allcargo Gati Ltd have approved the composite scheme of arrangement for restructuring of businesses under Allcargo Ltd and Allcargo Gati Ltd (formerly Gati Ltd).

As per the plan, International Supply Chain (ISC) business will be demerged into a separate entity - Allcargo ECU Ltd. This would include the India part of ISC business, along with the international subsidiaries held under the ECU Worldwide NV.

This would include the India part of ISC business, along with the international subsidiaries held under the ECU Worldwide NV. 

It is also said that the Express & Contract Logistics business will come under Allcargo Logistics,the resulted entity. This will lead to more efficient and streamlined corporate structure and wio benefie combined synergies. 

Shareholders of bith, ALlcargo & Allcargo Gati will directly held shares in New Allcargo Logistics Entiy. 

"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,’‘ Shashi Kiran Shetty, Founder and Chairman of Allcargo Group, said in a release.

`"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"he added.

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.

Shareholders of Allcargo will get 1:1 shares in the demerged Allcargo ECU Limited and continue to hold their shares in Allcargo Logistics Limited, which will now be the resulting entity holding Express and Contract Logistics business directly. This takes into account the 3:1 bonus shares approved by shareholders for Allcargo Logistics recently.

According to Shetty, a simple structure and sharp business focus under an independent management team/board of directors will enable the Allcargo group to continue to drive its track record of growth, having demonstrated nearly 18 per cent CAGR over the last 20 years.

Contract Logistics business brings in customer stickiness and will help amplify scale in the Express Logistics business. The company will further have an opportunity to drive cost efficiency by consolidating its infrastructure footprint and combining management structure across both businesses.

The scheme is expected to be implemented in 10-12 months, accounting for regulatory filings, Stock Exchange approval, shareholder approval, NCLT approval and ROC filings.

• Tags
• # allcargo
• # gati
• # demerger