Allcargo Logistics surges 10%, Gati slips 7% on biz restructuring plan

Shares of Allcargo Logistics surged 10 per cent to Rs 314, while those of Allcargo Gati slipped 7 per cent to Rs 128.10 on the BSE in Friday's intraday trade amid heavy volumes, after the board of these companies approved the composite scheme of arrangement for restructuring of businesses.

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

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

 

"The Express business and Contract Logistics business would come under the resulting entity Allcargo Logistics (post ISC demerger) which will benefit from combined synergies and the shareholders of Allcargo and Allcargo Gati will get direct shareholding eliminating inefficient complex corporate structure," the companies said in a joint statement.

As per the approved swap ratio, 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.

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

Separately, the board of Allcargo Gati has approved fund raising of up to Rs 500 crore as growth capital for expansion, capex, working capital etc., subject to approval of the shareholders and other regulatory approvals, as may be required.

Thus far in calendar year 2023, Allcargo Logistics (down 23 per cent) and Allcargo Gati (down 2 per cent) have underperformed the S&P BSE Sensex, which is up 16 per cent during the period.