Allcargo Gati Ltd. has approved plans to raise up to Rs 500 crore through various means and announced major restructuring that would demerge its global supply chain unit and restructure the logistics business.
The board approved the fundraise proposal to meet capex and working capital requirements, according to an exchange filing on Thursday. The plan is subject to shareholder and regulatory approvals.
The Allcargo Group also approved the restructuring scheme under which the international supply chain business will be demerged into a separate entity–Allcargo ECU Ltd.
This would include the India part of the business along with the international subsidiaries held under the ECU Worldwide NV.
Express business and contract logistics business would come under the resulting entity Allcargo Logistics after the ISC demerger, with the goal to drive cost efficiency, the company said.
According to the approved swap ratio, shareholders of Allcargo Gati will get 63 shares in the resulting Allcargo Logistics entity (after demerger) for every 10 shares held.
Shareholders of Allcargo will get 1:1 shares in the demerged Allcargo ECU and continue to hold their shares in Allcargo Logistics. This takes into account 3:1 bonus shares approved by shareholders for Allcargo Logistics recently, the company said.
The scheme is expected to be implemented over a period of 10-12 months, accounting for regulatory filings, stock exchange approval, shareholder approval, NCLT approval and ROC filings, the company said.
Following the demerger, the Mumbai-headquartered Allcargo Group will have four listed companies—Allcargo ECU, Allcargo Logistics, Allcargo Terminals Ltd. and TransIndia Real Estate Ltd.
The group's Founder and Chairman Shashi Kiran Shetty said the restructuring will empower the flagship businesses with strategic independence and operational synergies, with customer integration in express and contract logistics businesses and direct shareholding in operating companies.
"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," he said.
The company will further have an opportunity to drive cost efficiency through consolidation of infrastructure footprint and combining management structure across both express and contract logistics business, the statement said.
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