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AllCargo Logistics Ltd has set in motion a corporate restructuring move aimed at de-merging its Indian and global businesses into two separate entities, each getting a true reflection of the business and standing in the market.
The de-merger, which may take four to five months to take shape, will see the parent company retain its listing in India and the new entity, which will handle the global less-than-container-load (LCL) operations, get a new listing either in India or overseas, but headquartered in India (Mumbai).
LCL operations
LCL involves cargoes that are booked in lesser weight or quantity than standard ship containers, consolidated with other cargoes and shipped to their respective destinations.
“We have constituted a committee of directors to work out the modalities, including valuation of the LCL business and share entitlement ratio. We expect to finalise the restructuring plan within a month and another three months to complete the process with the required approvals,” Mr Shashi Kiran Shetty, Chairman and Managing Director, told Business Line .
Non-vessel owning common carrier
The company spread wings globally after it acquired European firm, ECU Line, in 2006, making it the second largest NVOCC (non-vessel owning common carrier) in the world.
Currently, the LCL (or NVOCC) market globally accounts for about eight per cent of the total container trade estimated at about 600 million TEUs.
Essentially, the de-merger will re-shape the ECU arm into a new entity. This business currently handles a throughput of 3.5 million cubic metres, with 160 offices sprinkled across 60 countries and one transhipment hub in each continent. It has 85 smaller LCL companies that AllCargo acquired over the years.
Performance
In 2011 (the company, presently, follows the calendar year for accounting), the company's turnover was Rs 3,400 crore, out of which the global (or ECU) operations contributed Rs 2,300 crore.
“The de-merger will provide more clarity to investors and analysts about the two streams of business. Also, the two entities can chalk out their independent growth and fund raising plans. For instance, the ECU arm will continue to look for acquisitions in new geographies,” Mr Shetty said.
The company's stock closed at Rs 138.10, up 1.66 per cent, on BSE today.
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