On August 27, 2020, Allcargo Logistics Limited (Allcargo) announced that its Board has decided to consider the delisting proposal with reference to the letter from certain members  of the promoter and promoter group of Allcargo (the 'promoter group' comprising Mr. Shashi Kiran Shetty and Talentos Entertainment Private Limited).

In the letter addressed to the Board of Allcargo Limited on August 24th, 2020 the promoter group expressed their intention to either individually or collectively acquire all the fully paid-up equity shares of the company held by the public shareholders (comprising 30% stake); and thereafter de-list Allcargo from the Bombay Stock Exchange and National Stock Exchange of India Limited, in accordance with the SEBI Delisting Regulations. Subsequently, the Board has appointed a SEBI registered merchant banker for due diligence.

The proposed transaction is expected to be completed within 4-6 months, subject to Board and shareholder approvals, post due diligence, as well as other regulatory approvals. This transaction is not expected to have any material impact on Allcargo's capital structure and other debt metrics, as CRISIL expects that the acquisition of the public stake is likely to be funded by promoters in their personal capacity.  Any large cash outflows from Allcargo in the form of dividend payout or share-buyback, as well as any support extended by Allcargo to fund the proceeds for delisting will remain the key monitorables. CRISIL will continue to engage with the management and monitor the developments on this front.

The ratings continue to reflect the Allcargo group's diversified operations and an established position in the global non-vessel owing common carrier (NVOCC), domestic CFS and courier service businesses.

The ratings are also supported by an adequate financial risk profile, largely due to steady annual cash generating ability and proposed deleveraging plans, which will ensure improvement in currently average debt metrics. These strengths are partially offset by susceptibility to risks inherent in the logistics industry arising from volatility in export-import (EXIM) trade volumes, and delays in execution of projects impacting the performance of the P&E business.

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