The shares of Aditya Birla Fashion and Retail Ltd. (ABFRL) hiked 17% when the Board of Directors of ABFRL authorised the company’s management to evaluate the vertical demerger of Madura Fashion & Lifestyle business from ABFRL into a separately listed company. The proposed demerger is subject to statutory approvals from the ABFRL Board of Directors, shareholders, creditors, regulators, and other customary approvals.

The proposed demerger aims to create two separately listed companies with independent growth engines, distinct capital structures, and parallel value creation opportunities. The Madura Fashion & Lifestyle business segment (MFL) comprises four lifestyle brands – Louis Phillippe, Van Heusen, Allen Solly, and Peter England – along with casual wear brands such as American Eagle and Forever 21, the sportswear brand Reebok, and the innerwear business under Van Heusen. These will be demerged into a separate listed entity.

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. Post-demerger, the remaining ABFRL will focus on high-growth segments, including value retail, ethnic portfolio, luxury, and digital brands. After the completion of the proposed demerger, ABFRL will raise growth capital within 12 months to strengthen its balance sheet for pursuing future growth opportunities.

The post-demerger portfolio of ABFRL will comprise the following segments:
1) Value Retail – Encompassing value and masstige fashion retail, represented by Pantaloons and Style Up.
2) Ethnic Portfolio – Housing one of India’s most comprehensive assortments of ethnic wear, catering to various occasions, price points, and consumer segments, including a designer wear portfolio.
3) Luxury – Encompassing a rapidly expanding bridge to luxury and luxury platforms featuring The Collective, Galeries Lafayette, and select luxury brands.
4) Digital brands – TMRW – a prominent portfolio of digital-first fashion brands.

ABFRL is a part of The Aditya Birla Group and is India’s first billion-dollar pure-play fashion powerhouse. It has 4,753 stores and 37,106 multi-brand outlets with leading brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England. The company also has international brands like The Collective and has ventured into the branded ethnic wear business. ABFRL is building a portfolio of Digital-first brands under its technology-led ‘House of D2C Brands’ venture TMRW. In September 2023, the company acquired a 51% stake in TCNS Clothing Co. Ltd., a women’s branded ethnic apparel company.

At 11:31 am, the shares of ABFRL were trading at 12.40% higher at Rs 237.90 on NSE.