Under the restructuring, all fashion brands, currently held by Pantaloon Retail and group firm Future Ventures will be transferred to Future Fashion, along with debt of 12.26 billion rupees.
Pantaloon Retail shareholders will get one share of Future Fashions for every three held, while Future Ventures shareholders will get 2 shares of the new entity for every 31 held.
"We grew multiple formats in the early stages of our growth, and now as each one of them has become sizeable, we are giving them independence to propel their growth," Kishore Biyani, CEO of Future Group, said in the statement.
The company will also seek shareholder approval to raise 15 billion rupees through public or private offerings of shares.
Earlier this year, Aditya Birla Nuvo, part of the Aditya Birla conglomerate, agreed to buy a controlling stake in Pantaloons Format clothing brand and retail chain to help cut its debt.