Allcargo board approves demerger of CFS/ICD, real estate businesses

Allcargo board approves demerger of CFS/ICD, real estate businesses

The board of Allcargo Logistics on Thursday approved the demerger of its container freight station/inland container depot (CFS/ICD) business into Allcargo Terminals and the equipment rental, Grade A warehousing, logistics parks and other real estate assets into TransIndia Realty & Logistics Parks (TransIndia).
The move is aimed at creating strategic business undertakings to drive growth across distinct opportunities.
Under the scheme of demerger, all three companies will have mirror shareholding, resulting in no change in entitlement of shareholders for each entity.

After the demerger, shareholders will get 1 share each of Allcargo Terminals and TransIndia Realty & Logistics Parks for every 1 share held of Allcargo Logistics. The 1:1 ratio will avoid fractional allotment and benefit all shareholders, Allcargo said in a statement.
Following the demerger, Allcargo Logistics would continue its pursuit in international supply chain, express logistics and contract logistics businesses with increased focus on digitization.
The resulting company Allcargo Terminals will be one of the market leaders in CFS business in India and continue to expand its footprint in ICDs. Five out of seven facilities of Allcargo are already on lease and the new resulting structure will make all seven CFS/ICDs completely asset light, positioning the company strongly to drive growth with high return on capital employed.

Under the proposed scheme of demerger, equipment rental and real estate businesses will move to TransIndia. This will create a portfolio of Grade A warehouses and other assets leased to marquee clients such as Decathlon, Flipkart and Amazon. It will also hold the land for Chennai and Jawaharlal Nehru Port CFS which allow it to become a very robust realty company holding quality assets with long term, sustainable returns. The business will also hold the shares in the JV with Blackstone.
The demerger is expected to be completed over 9-12 months.

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