Budget airline SpiceJet today announced that it was transferring its cargo and logistics services with all the related assets and liabilities, including, know-how, trademark, licenses, franchises, customer contracts, distribution network etc on a slump sale basis to its subsidiary SpiceXpress and Logistics Private Limited.
As per the last quarterly segment reporting by the company ended June 30, 2021, the logistics arm reported a net profit of INR 30 crore. The revenue increased by 285 per cent to INR 473 crore for the reported quarter as compared to INR 166 crore in the same quarter last year.
“The proposed transfer of business to SpiceXpress will allow the new company to rapidly grow its innovative logistics platform and its unique fulfilment as a service business model.”~Ajay Singh, Chairman and Managing Director, SpiceJet
SpiceXpress will also be able to raise capital independent of SpiceJet to fund this growth, he mentioned.
Mr Singh said he was confident that the performance of SpiceXpress as an independent entity will leverage and unlock significant value for SpiceJet and all its shareholders.
The airline’s statement read “The logistics business has been valued at Rs 2,555.77 crore based on an independent valuation exercise carried out by the company and the purchase consideration for the same shall be discharged by SpiceXpress by issuance of shares of SpiceXpress to SpiceJet, subject to all approvals as may be required.”
It is expected that SpiceXpress will operate as a separate entity upon transfer of business on or around October 1, 2021, it mentioned.
While SpiceXpress will operate as a separate logistics entity, SpiceJet will continue to provide certain transportation services, ground and logistics support, management services, sharing and provisioning of resources etc. to SpiceXpress, it said.
SpiceJet said all related assets and liabilities, including, know-how, trademark, licenses, franchises, customer contracts and distribution network of cargo and logistics business would be transferred to SpiceXpress.
“The revenue increased by a whopping 285 per cent to INR 473 crore for the reported quarter as compared to Rs 166 crore in the same quarter last year,” the airline’s statement noted.
The logistics arm has a network which spans over 68 domestic and over 110 international destinations including the US, Europe and Africa, it mentioned.