Aditya Birla Fashion To Demerge Madura Fashion & Lifestyle Business

Aditya Birla Fashion and Retail Ltd. (ABFRL), part of Aditya Birla Group, plans to demerge its Madura Fashion & Lifestyle business into a separate listed company.

The Madura Fashion & Lifestyle business segment, consisting of four lifestyle brands, namely Louis Phillippe, Van Heusen, Allen Solly and Peter England, along with casual wear brands American Eagle & Forever 21, sportwear brand Reebok and the innerwear business under Van Heusen will be demerged into a separate listed entity, the Indian apparel retailer said in a stock exchange announcement.

“The move towards a more simplified and streamlined architecture is designed to unlock distinct opportunities for value creation,” Aditya Birla Group Chairman Kumar Mangalam Birla said.

ABFRL said the proposed demerger will enable the creation of two separately listed companies as independent growth engines with distinct capital structures and parallel value creation opportunities.

The company’s Managing Director Ashish Dikshit said the restructuring will help bring in sharper focus anchored on a differentiated strategy aligned with the individual business segment.

“Indian fashion and apparel sector is $100 billion plus sector and is poised for a double-digit long-term growth. The simplified structure positions the businesses well for sustained growth and value creation,” he added.

The company said its board today authorized the management to evaluate vertical demerger of Madura Fashion & Lifestyle business from ABFRL into a separate listed company.

The demerger will be subject to all statutory approvals.

DEMERGER INTRICACIES

Following necessary approvals, the demerger will be implemented through the National Company Law Tribunal scheme of arrangement, and all shareholders of ABFRL will have identical shareholding in the newly formed entity, according to the statement.

The post-demerger portfolio of ABFRL would consist of:

• Value Retail: Value and masstige fashion retail play under Pantaloons and Style Up

• Ethnic Portfolio: covering multiple occasions, price points and consumer segments, including designer wear portfolio

• Luxury: A fast-growing bridge to luxury and luxury platform of The Collective, Galleries Lafayette and select luxury brands

• Digital Brands: TMRW, a leading portfolio of digital first fashion brands

Post demerger, the remaining ABFRL will focus on high-growth segments where there are tailwinds from a shift from unbranded to branded, premiumization, rise of super premium and luxury, and rapid growth in Gen Z focused digital first brands.

ABFRL said this is an attractive portfolio comprising multiple high growth segments in large addressable markets with strong value creation opportunities.

The company following the completion of the proposed demerger, ABFRL will raise growth capital within 12 months to infuse strength into its balance sheet to pursue large growth opportunities.

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