CRISIL Ratings Limited has announced a significant downgrade of Allcargo Logistics Limited's credit ratings, moving the company's long-term rating to 'CRISIL A/Negative' from the previous 'CRISIL AA-' rating. The rating agency has simultaneously removed the company from Rating Watch with Negative Implications while assigning a negative outlook to the long-term rating.

Rating Action Details

The comprehensive rating action affects multiple facilities totaling ₹1,075.00 crore. CRISIL has withdrawn ratings on ₹508.00 crore bank facilities that have been transferred to Allcargo Global Limited (AGL) following the demerger of the International Supply Chain (ISC) business from Allcargo Logistics.

Additionally, ratings on ₹507.00 crore of term loans and ₹60.00 crore of proposed term loans have been withdrawn following complete repayment at the company's request.

Business Performance Analysis

The ISC business, now housed under AGL post-demerger effective November 12, 2025, demonstrated mixed performance trends. In FY25, the business generated revenues of ₹14,077.00 crore, representing growth from ₹11,259.00 crore in FY24, though still below the ₹16,330.00 crore achieved in FY23.

The first half of FY26 witnessed further challenges with slight year-on-year revenue degrowth attributed to impeded volume growth and lower realizations amid industry volatility driven by geopolitical landscapes and intense competition.

Financial Risk Profile

CRISIL's assessment reveals an average financial risk profile with gross debt of ₹1,010.00 crore as of September 2025, primarily due to expanded working capital requirements. Despite higher debt levels, the gearing ratio is expected to remain comfortable at 0.50-0.60 times over the medium term, supported by a healthy net worth position.

Key Rating Drivers

The rating action reflects several positive and negative factors. Strengths include Allcargo's established position as India's largest and a leading global operator in the ISC container consolidation business, holding approximately 15.00% market share globally. The company connects more than 2,400 direct trade lanes and benefits from its association with the diversified Allcargo Group.

However, these strengths are offset by moderated operating efficiency driven by industry dynamics and one-off expenses. The pre-Ind AS EBITDA margins have maintained in the range of 1.70-1.90% in recent fiscals, down from previously higher margins exceeding 3.00%. In H1FY26, operating performance was further affected by higher operational expenses and one-off charges related to employee severance and debtor write-offs, resulting in negligible pre-Ind AS EBITDA.

Market Position and Outlook

Despite challenges, Allcargo maintains its position as part of an integrated logistics player with presence across diversified segments. The ISC business contributes approximately 88.00% of the group's logistics business revenue, with express logistics and contract logistics contributing 9.00% and 3.00% respectively.

The negative outlook reflects CRISIL's expectation of continued subdued operating performance during FY26, with flattish revenues and weak profitability levels. The rating agency expects moderate industry conditions to persist over the medium term given overall muted demand scenario, especially from key markets in Europe, before meaningful improvement begins.

Liquidity Assessment

CRISIL has assessed the company's liquidity as adequate, supported by its asset-light business model and substantial cash reserves of ₹431.00 crore as of September 30, 2025. The average utilization of fund-based limits at standalone level was approximately 61.00% during the six months through September 2025. With limited capital expenditure requirements, the available liquidity will primarily be utilized to meet debt obligations of approximately ₹160.00 crore in the second half of FY26.

Allcargo logistics has received a penalty of ₹50.00 lakh from the Competition Commission of India (CCI) under Section 43A of the Competition Act, 2002. The company disclosed this regulatory action through a filing with stock exchanges on January 10, 2026, pursuant to SEBI listing regulations.

Penalty Details and Background

The CCI imposed the penalty through its letter dated January 9, 2026, bearing reference number M&A/2022/11/01(3)CD. The regulatory action stems from alleged non-compliance with Section 6(2) of the Competition Act, 2002, specifically related to the company's acquisition of stake in Gati-Kintetsu Express Private Limited.

Acquisition Transaction Context

The penalty relates to Allcargo Logistics' acquisition of stake in Gati-Kintetsu Express Private Limited, which underwent significant corporate restructuring. The target company was subsequently renamed to Gati Express & Supply Chain Private Limited on July 27, 2023, and was later merged into Allcargo Logistics Limited with effect from November 1, 2025.

Regulatory Compliance Details

The CCI's action addresses alleged violations under the competition law framework governing merger and acquisition transactions. The regulatory filing indicates that the penalty specifically targets non-compliance with mandatory notification requirements under Section 6(2) of the Competition Act.

Company Response and Next Steps

Allcargo Logistics has indicated that it is examining the CCI order and will take legally tenable steps as may be advised. The company has not disclosed any additional penalties, restrictions, or sanctions beyond the ₹50.00 lakh monetary penalty. The financial impact on the company is limited to the penalty amount specified by the competition regulator.

Financial and Operational Impact

The regulatory disclosure indicates that the financial impact is quantifiable as the ₹50.00 lakh penalty amount. The company has not identified any additional operational disruptions or financial consequences beyond this monetary penalty imposed by the CCI.