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Allcargo Logistics gets board nod to buy out partners’ 38.87% stake

With the acquisition, Allcargo Logistics will own 100 percent stake in the contract logistics business

March 06, 2023 / 07:57 PM IST
(Representative image)

(Representative image)

The board of multimodal logistics solutions provider Allcargo Logistics Limited, a part of the Allcargo Group, has approved the plan to acquire a 38.87 percent stake from its partners at an enterprise value of Rs 373 crore. With the acquisition, Allcargo Logistics will own a 100 percent stake in the contract logistics business.

The company’s board approved the exit from the non-core clearance business, selling the entire stake held in the entity. The move is in line with the Group’s philosophy to focus on core businesses.

The acquisition price is based on the agreement that was signed with ACCI JV partners in 2016. According to a statement released by the company, “with tremendous growth in this business over the years, this proves to be a high value accretive acquisition”.

The company has said that this acquisition “reflects the group's vision for robust growth by creating an effective synergy between contract logistics and express distribution”.

The acquisition will grant Allcargo Logistics management control of the company and facilitate strategic decision-making, Group Chairman Shashi Kiran Shetty said.

Commenting on the contract logistics acquisition, Shetty, Founder and Chairman, Allcargo Group, said, “This important acquisition will offer us management control and facilitate strategic decision-making. This will help us enhance service delivery capabilities to drive growth. The business has witnessed robust growth over the years diversifying into several new industry segments. We can also expect more synergy between contract logistics and express distribution to further strengthen the group’s position in the fast-growing express and contract logistics space.”

Notably, Allcargo’s contract logistics business is engaged in managing inventories and providing third-party supply chain solutions to Indian and international customers across chemical, auto, e-commerce, and other industries. The business has a total space of over five million square feet under its management and reported an EBITDA of Rs 31 crore for the quarter Q3 FY22-23.

According to a statement released by the company, the impending acquisition of KWE’s stake in Gati will enable closer collaboration between the two businesses, helping them leverage each other’s strengths better, with Allcargo buying out the entire stake of partners in both businesses.

Allcargo is a market leader with a pan-India presence in the container freight station business and is among the leaders in express logistics through its subsidiary Gati Ltd, besides having a strong presence in contract logistics and other businesses. This deal will set the path ahead for synergies with express business under Gati.

The company’s board has also approved the sale of smaller non-core customs clearance business. Allcargo Logistics will sell its 61.13 percent stake in this business for an enterprise value of approximately Rs 42 crore. Further, the company has declared an interim dividend of Rs 3.25 per equity share for FY23.

Commenting on the overall developments, Shetty said: “We continue to exit non-core businesses and consolidate our core businesses. Post demerger of Allcargo Terminals and TransIndia, which has already received NCLT approval, the company shall now have two distinct business segments under International Supply Chain and Express & Contract Logistics. This would lead to sharper focus and enhance growth prospects for the group."

Moneycontrol News
first published: Mar 6, 2023 07:57 pm