Insight Online News
New Delhi, Aug 17 : Low-cost carrier SpiceJet on Tuesday announced to transfer its cargo and logistics services on a ‘slump sale basis’ to its subsidiary SpiceXpress and Logistics Pvt Ltd.
The company said that its logistics business is valued at Rs 2,555.77 crore and the move to transfer it to SpiceXpress would unlock significant value for SpiceJet and its shareholders.
Slump sale refers to transfer of a whole or part of business lock, stock and barrel.
As per section 2(42C) of Income Tax Act 1961, slump sale means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales.
“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. SpiceXpress will also be able to raise capital independent of SpiceJet to fund this growth,” said SpiceJet Chairman Ajay Singh.
“We are confident that the performance of SpiceXpress as an independent entity will leverage and unlock significant value for SpiceJet and all its shareholders,” he further said.
The company’s logistics business has been valued based on an independent valuation exercise carried out by it 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 October 1, 2021.
As per the last quarterly (April-June) segment reporting by SpiceJet, the logistics arm continued with its strong growth story reporting a net profit of Rs 30 crore.
“The revenue increased by a whopping 285 per cent to Rs 473 crore for the reported quarter as compared to 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 company said in a statement.