Aditya Birla Fashion to list Madura Fashion as separate entity
02 Apr 2024
Aditya Birla Fashion and Retail Ltd (ABFRL), the fashion retail business of the Aditya Birla Group, plans to demerge Madura Fashion & Lifestyle to form a separate listed entity.
The board of directors of ABFRL, at its meeting on Monday, authorised the management of the company to evaluate splitting Madura Fashion & Lifestyle business from ABFRL to form a separate listed entity.
Such a demerger is aimed at creating two separate companies as independent growth engines with distinct opportunities for value creation, the company stated in a release.
ABFRL has been making losses for the last three quarters due to weak demand and unequal brand investments.
Madura Fashion, consisting of four lifestyle brands - Louis Phillippe, Van Heusen, Allen Solly and Peter England – accounts for more than 70 per cent of the company's total revenue, making the rest of the fashion business a drag on it.
The demerged Madura Fashion & Lifestyle business will consist of four lifestyle brands - Louis Phillippe, Van Heusen, Allen Solly & Peter England along with casual wear brands American Eagle & Forever 21, sportwear brand Reebok and the innerwear business under VanHeusen.
The new entity will have a strong balance sheet to power its future growth aspirations.
The remaining ABFRL will have a portfolio of multiple high growth segments with strong value creation opportunities.
After the demerger, ABFRL will be left with the following portfolios:
· Value Retail - value and masstige fashion retail play under Pantaloons & Style Up;
· Ethnic Portfolio – covering multiple occasions, price points and consumer segments, including designer wear;
· Luxury – consisting of a bridge to luxury and luxury platform of The Collective, Galleries Lafayette and other select luxury brands;
· Digital brands – comprising TMRW – a leading portfolio of digital first fashion brands
Upon completion of the demerger, ABFRL will raise growth capital within12 months, Kumar Mangalam Birla, chairman of Aditya Birla Group, said.
The aim is to simplify and streamline the business structure in order to unlock opportunities for value creation, Ashish Dikshit, MD, Aditya Birla Fashion and Retail Ltd, said, adding that the market for fashion and apparel in India is currently valued at $100 billion and is poised for double-digit growth in the long term.
Separation of Madura Fashion will give ABFRL a separate identity and an urge for growth.
The demerger will be implemented through an NCLT scheme of arrangement, and all shareholders of ABFRL will have identical shareholding in the newly formed entity.