The Aditya Birla Fashion and Retail Ltd. (ABFRL) Board of Directors in its meeting on Monday authorized the company's management to evaluate the vertical demerger of the Madhura Fashion & Lifestyle (MFL) business from ABFRL to a separate listed company. gave to.
“The proposed separation will enable the creation of two separately listed companies as independent growth engines with different capital structures and parallel value creation opportunities,” the company said in a release.
Click here to follow our WhatsApp channel
The MFL business is comprised of four lifestyle brands: Louis Philippe, Van Heusen, Allen Solly and Peter Englund. These will be split into a separate publicly traded company, along with casual wear brands American Eagle & Forever 21, sportswear brand Reebok, and Van Heusen's innerwear business.
The company said the portfolio has a long-term leadership position, delivering consistent revenue growth, profitability, strong free cash flow and high returns on capital.
The offer is subject to all statutory approvals from the board of directors, shareholders, creditors and regulatory authorities, as well as other customary approvals.
“The company will have a strong balance sheet to support its future growth ambitions. After the necessary approvals, the demerger will be implemented through the NCLT (National Company Law Tribunal) scheme of arrangement and ABFRL shareholders will All will hold identical shares in the newly formed entity,” ABFRL said in a release.
ABFRL will then focus on high-growth segments driven by the shift from unbranded to branded products, premiumization, the rise of super-premium and luxury goods, and the rapid growth of digital-first brands, especially among Gen Z customers.
Following completion of the proposed separation, ABFRL will raise growth capital within 12 months.
ABFRL's revenue for FY23 stood at Rs 12,418 crore as against Rs 8,136 crore in FY22. Revenue from the company's lifestyle brands (Louis Philippe, Van Heusen, Allen Solly and Peter Englund) stood at Rs 6.68 billion, up 46% from FY22.
Kumar Mangalam Birla, Chairman, Aditya Birla Group, said in a release: “Over the years, our fashion and retail business has grown from five brands in two categories to a dynamic portfolio of more than 20 brands across all lifestyle categories. The evolution of this portfolio is driven by changing consumption trends. and seamlessly reflect all significant value creation opportunities.”
“As platforms embark on the next transformational phase of their growth, there is scope to re-evaluate their capital structure to optimize different parts of their portfolio. This strategic realignment is designed to create a clear opportunity for the Company to significantly increase long-term stakeholder value.”
ABFRL's portfolio consists of multiple high-growth segments in large addressable markets with strong value creation opportunities.
“The restructuring will help us focus on differentiated strategies tailored to individual business segments. Each of these businesses operates autonomously,” says Aditya Birla Fashion and Retail. said Ashish Dixit, Divisional Managing Director.
“India's fashion and apparel sector is worth over $100 billion and is expected to see double-digit long-term growth. The simple structure positions the business well for sustained growth and value creation. there is.”
ABFRL stock closed 2.89 per cent higher at Rs 211.50 in Monday's trade on the National Stock Exchange.
