Allcargo Logistics Ltd and Allcargo Gati boards on Thursday approved restructuring of businesses, Allcargo Group said in a statement.
As per the scheme, International Supply Chain (ISC) business will be demerged into a separate entity -- Allcargo ECU Ltd, it said.
This would include the India part of ISC business, along with the international subsidiaries held under the ECU Worldwide NV, it said.
It also said the express and contract logistics businesses would come under the resulting entity -- Allcargo Logistics (post ISC demerger) -- which will benefit from combined synergies.
Moreover, the shareholders of Allcargo and Allcargo Gati (formerly Gati Ltd) will get direct shareholding, eliminating inefficient complex corporate structure, the company said.
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As per the approved swap ratio, based on the recommendations of the independent valuers, shareholders of Allcargo Gati will get 63 shares in the resulting Allcargo Logistics entity (post-ISC demerger) for every 10 shares held in Allcargo Gati.
On the other hand, Allcargo shareholders will get 1:1 shares in the demerged Allcargo ECU Ltd and continue to hold their shares in Allcargo Logistics Ltd, which will now be the resulting entity holding express and contract logistics business directly, the company said.
This takes into account 3:1 bonus shares approved by shareholders for Allcargo Logistics recently, it added.
"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.
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"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 and expansion in the fast-growing domestic logistics market to create an unmatched powerhouse in the domestic supply chain business," Shetty said.
Allcargo Group said the contract logistics business brings in customer stickiness and will help amplify scale in express logistics business.
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, as per the statement.
The group said it will eventually have four listed strategic business undertakings -- Allcargo ECU Ltd and Allcargo Logistics post demerger of ISC business, alongside Allcargo Terminals Ltd and TransIndia Real Estate Ltd, which were created through earlier scheme of arrangement.
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