Allcargo Group unveils ambitious restructuring plan for Allcargo and Allcargo Gati

The boards of Allcargo Logistics Ltd and Allcargo Gati Ltd have given their approval for a comprehensive restructuring plan involving Allcargo Ltd and Allcargo Gati Ltd (formerly Gati Ltd).

According to the plan, the International Supply Chain (ISC) business will be separated and established as a distinct entity called Allcargo ECU Limited. This entity will encompass the Indian segment of the International Supply Chain business and the international subsidiaries under ECU Worldwide NV.

Following the ISC demerger, the Express business and Contract Logistics business will be consolidated into the resultant entity Allcargo Logistics. This consolidation is expected to yield synergies, providing a more streamlined and efficient corporate structure. Shareholders of both Allcargo and Allcargo Gati will directly hold shares in the new Allcargo Logistics entity, eliminating the complexities of the previous corporate structure.

In accordance with the approved swap ratio, determined by independent valuers’ recommendations, shareholders of Allcargo Gati will receive 63 shares in the resulting Allcargo Logistics entity (after ISC demerger) for every 10 shares held in Allcargo Gati.

“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.

Through the amalgamation of Allcargo Supply Chain and Gati Express business, the proposed scheme is poised to establish a robust profit and loss statement, balance sheet, and cash flows. This strategic move aims to drive synergistic growth and expansion within the rapidly evolving domestic logistics market, positioning itself as an unparalleled powerhouse in the domestic supply chain sector.

Shareholders of Allcargo will receive a 1:1 share ratio in the newly formed Allcargo ECU Limited, the demerged entity. Simultaneously, they will retain their shares in Allcargo Logistics Limited, which emerges as the resulting entity directly holding the Express and Contract Logistics business. This consideration includes the recently approved 3:1 bonus shares for Allcargo Logistics, as mandated by the shareholders.

According to Shetty, the adoption of a simplified structure and a focused business approach under an independent management team and board of directors will empower the Allcargo group to sustain its impressive track record of growth, demonstrating an almost 18% Compound Annual Growth Rate (CAGR) over the past two decades.

The Contract Logistics business, known for enhancing customer loyalty, is expected to amplify scale in the Express Logistics sector. The company envisions driving cost efficiency by consolidating infrastructure and harmonizing the management structure across both businesses.

Anticipated to be completed within 10-12 months, the scheme’s implementation will encompass regulatory filings, Stock Exchange approval, shareholder approval, National Company Law Tribunal (NCLT) approval, and Registrar of Companies (ROC) filings.

Following the execution of the scheme, the Allcargo Group will encompass four listed strategic business entities—Allcargo ECU Limited and Allcargo Logistics (post-ISC demerger), alongside AllCargo Terminals Limited and TransIndia Real Estate Limited, established through a previous scheme of arrangement. All four publicly traded companies are well-positioned for growth, leveraging market opportunities and robust management capabilities.

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