The Board of Directors at Aditya Birla Fashion and Retail Ltd (ABFRL) has granted approval for the company’s management to assess the possibility of vertically demerging Madura Fashion & Lifestyle business from ABFRL to establish it as an independent listed entity.
In a statement, the company announced that the planned demerger would facilitate the formation of two distinct listed companies, each serving as an independent growth driver with unique capital structures and opportunities for value creation.
The Madura Fashion & Lifestyle business segment (MFL) will be split off into a separate listed company. The MFL consists of four main brands: Van Heusen, Allen Solly, Peter England, Louis Philippe; it also includes casual clothing labels American Eagle and Forever 21, athletic company Reebok, and Van Heusen’s innerwear branch.
“The company’s robust financial position will support its goals for future expansion. The demerger will be accomplished through an NCLT plan of arrangement when the required permissions are obtained, and all ABFRL shareholders will have the same number of shares in the newly minted organisation”, according to the statement.
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Following the demerger, ABFRL will pivot its focus towards segments witnessing a transition from unbranded to branded goods, premiumization trends, the surge in super-premium and luxury markets, and the rapid expansion of Gen Z-oriented digital-first brands, as per the company’s statement. The post-demerger portfolio of ABFRL is expected to encompass value and masstige fashion retail represented by Pantaloons & Style Up, an ethnic wear portfolio, a bridge to luxury and luxury platform comprising The Collective, Galleries Lafayette, and select luxury brands, alongside the digital brand TMRW.
ABFRL plans to enhance its balance sheet by raising growth capital within a year of the demerger’s completion. “Over the years, our fashion and retail business has evolved from 5 brands in 2 categories to a dynamic portfolio of 20+ brands across all lifestyle categories,” stated Kumar Mangalam Birla, Chairman of the Aditya Birla Group. This portfolio’s development has smoothly followed the changes in consumer preferences, with a strategy that takes advantage of every significant opportunity for wealth creation. There’s room to reassess capital structures as the platform moves into its next transformative phase of expansion, optimising various portfolio components. The shift to an architecture that is more streamlined and straightforward is intended to open up new possibilities for value creation. This tactical realignment has the potential to greatly enhance long-term stakeholder value.
“The overhaul will facilitate a more targeted approach, supported by a unique strategy catered to each business segment,” stated Ashish Dikshit, MD of Aditya Birla Fashion and Retail Ltd. Under the direction of each CEO, these companies have all continuously operated independently.” The fashion and apparel industry in India is estimated to be worth over $100 billion and is expected to grow at a double-digit rate in the long run. This simplified organisation best positions the companies for steady expansion and value addition.”
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