Spicejet spurts on transfer of logistics biz to subsidiary

Spicejet jumped 4.08% to Rs 71.50 after the low-cost air carrier announced transfer of its logistics business to to its subsidiary, SpiceXpress and Logistics.

SpiceJet has announced the transfer of its cargo and logistics services on a slump sale basis along with all related assets and liabilities, including, know-how, trademark, licenses, franchises, customer contracts, distribution network etc. to its subsidiary SpiceXpress and Logistics ("SpiceXpress"), subject to the approval of shareholders and also such other approvals as may be required.

As per the last quarterly segment reporting by the company ended 30 June 2021, the logistics arm continued with its strong growth story reporting yet another profitable quarter with a net profit of Rs 30 crore. The revenue increased by 285% to Rs 473 crore for the reported quarter as against Rs 166 crore in the same quarter last year. The logistics arm today has a network which spans over 68 domestic and over 110 international destinations including US, Europe and Africa.

The logistics business has been valued at Rs 2,555.77 crore based on an independent valuation exercise carried out by the company and the purchase consideration for the same shall be discharged by SpiceXpress by issuance of shares of SpiceXpress to SpiceJet, subject to all approvals as may be required. It is expected that SpiceXpress will operate as a separate entity upon transfer of business on or around 1 October 2021.

While SpiceXpress will operate as a separate entity, SpiceJet will continue to provide certain transportation services, ground and logistics support, management services, sharing and provisioning of resources etc. to SpiceXpress.

Ajay Singh, chairman and managing director, SpiceJet, said "The proposed transfer of business to SpiceXpress will allow the new company to rapidly grow its innovative logistics platform and its unique fulfilmentas a service business model. SpiceXpress will also be able to raise capital independent of SpiceJet to fund this growth. We are confident that the performance of SpiceXpress as an independent entity will leverage and unlock significant value for SpiceJet and all its shareholders."

Spicejet's consolidated net losses widened to Rs 731.12 crore in Q1 June 2021 (Q1 FY22), higher than net loss of Rs 600.52 crore in Q1 June 2020 (Q1 FY21). Consolidated net sales surged 121.20% to Rs 1,083.24 crore in Q1 FY22 as against Rs 489.60 crore in Q1 FY21.

SpiceJet is India's low-cost airline that operates a fleet of Boeing 737s, Bombardier Q‐400s & freighters and is the country's largest regional player operating 63 daily flights under UDAN or the Regional Connectivity Scheme.

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