Allcargo Logistics Limited Board and Allcargo Gati Limited board have approved the composite scheme of arrangement for restructuring of businesses under Allcargo Limited and Allcargo Gati Limited (Formerly Gati Limited). “As per the scheme, International Supply Chain (ISC) business will be demerged into a separate entity: Allcargo ECU Limited. This would include the India part of International Supply Chain business along with the international subsidiaries held under the ECU Worldwide NV,” the company said in a statement.

Express business and Contract Logistics business would come under the resulting entity Allcargo Logistics (post ISC demerger).

Shashi Kiran Shetty, Founder and Chairman, Allcargo Group, said, “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. This will also establish financial accountability for the management team, comprising best in class senior & middle management team to drive the businesses forward with growth and return mindset with a digital first approach. 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 & expansion in the fast growing domestic logistics market to create an unmatched powerhouse in the domestic supply chain business.”

He further added, “A simple structure and sharp business focus under an independent management team/board of directors will enable the Allcargo group to continue to drive its track record of growth, having demonstrated near 18 per cent CAGR over the last 20 years.”

Contract Logistics business brings in customer stickiness and will help amplify scale in Express Logistics business. The company will further have an opportunity to drive cost efficiency through consolidation of infrastructure footprint and combining management structure across both the businesses.

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.

Allcargo Group will eventually have four listed strategic business undertakings. Allcargo ECU Limited and Allcargo Logistics post demerger of ISC business, alongside Allcargo Terminals Limited and TransIndia Real Estate Limited.