Budget carrier SpiceJet on Tuesday said it was transferring its cargo and logistics services on a slump sale basis to its subsidiary SpiceXpress and Logistics Private Limited, subject to shareholder approval.
“The proposed transfer of business to SpiceXpress will allow the new company to rapidly grow its innovative logistics platform and its unique fulfilment as a service business model,” said Ajay Singh, chairman and managing director, SpiceJet.
SpiceXpress would be able to raise capital independent of SpiceJet to fund its growth.
Singh said the operations of SpiceXpress as an independent entity will unlock significant value for SpiceJet and all its shareholders.
SpiceJet’s logistics business have been independently valued at Rs 2,555.77 crore. SpiceXpress would issue shares to SpiceJet to purchase the business.
It is expected that SpiceXpress will operate as a separate entity upon the transfer of business on or around October 1, 2021.
SpiceJet will, however, continue to provide certain transportation services, ground and logistics support, management services to SpiceXpress.
All related assets and liabilities, including know-how, trademark, licences, franchises, customer contracts and distribution network of SpiceJet’s cargo and logistics business would be transferred to SpiceXpress, SpiceJet said.
The logistics arm reported a net profit of Rs 30 crore in the April-June quarter. Revenues increased 285 per cent to Rs 473 crore compared with Rs 166 crore a year ago.
The logistics arm has a network which spans over 68 domestic and over 110 international destinations, including the US, Europe and Africa.
Stocks recover
The SpiceJet share rose Rs 3.20, or 4.66 per cent, to Rs 71.90 on Tuesday. The stock had dipped 11 per cent intra-day on Monday following disappointing results.
The airline reported a net loss of Rs 729 crore for the quarter ended June against a net loss of Rs 593 crore in the corresponding period of the previous financial year.
Operating revenue stood at Rs 1,266 crore in the first quarter of 2021-22, higher than Rs 705 crore reported in the year-ago period.
Operating expenses during the June 2021 quarter were Rs 1,995 crore compared with Rs 1,298 crore earlier. Singh said the last five quarters had been most difficult for the airline as aviation was the worst-hit sector during the pandemic.
