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ABFRL board approves vertical demerger of Madura Fashion and Lifestyle biz

ABRFL to raise Rs 2,500 crore equity capital within 12 months of demerger

Aditya Birla Fashion & Retail (ABFRL)

Aditya Birla Fashion and Retail

Sharleen Dsouza Mumbai

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The board of Aditya Birla Fashion and Retail (ABRFL) has approved the proposal of a vertical demerger of Madura Fashion and Lifestyle (MFL) business into a newly incorporated entity named as Aditya Birla Lifestyle Brands (ABLB). 

ABFRL also plans to raise Rs 2,500 crore equity capital within 12 months of demerger with promoter participation, and it will be used to strengthen its balance sheet and fund the growth of the remaining businesses. The company’s promoter group will fully support the proposed equity raise, ABFRL said in its release. 

It also added that ABLB will be listed separately on exchanges post the completion of the demerger. 
 

On April 1, the board of directors of ABFRL had authorised the management of the company to evaluate the vertical demerger of the MFL business from ABFRL into a separate listed company. 

It also said that upon completion of the demerger, as per the share entitlement ratio approved by the board and recommended by the independent valuer, the shareholders of ABFRL will get one share of ABLB for every one share in ABFRL, in addition to their existing shareholding in ABFRL.

Post the demerger, ABLB will house Louis Phillippe, Van Heusen, Allen Solly, Peter England, American Eagle, Forever 21, Reebok and the innerwear business under Van Heusen brand. ABFRL will house its value and masstige fashion retail play under Pantaloons and Style Up, its ethnic portfolio which also include its designer wear and the recently acquired portfolio of TCNS.

It will also house a fast-growing bridge to the luxury and luxury platform of The Collective, Galleries Lafayette and select luxury brands and its portfolio of digital first fashion brands under TMRW. 

The business assets and liabilities will be split between the two companies in accordance with the prescribed regulatory provisions. In line with this, the overall ABFRL borrowing, which is estimated to be Rs 3,000 crore as of 31st March, will be split between the two companies. 

The company said that the estimated debt to be transferred to ABLB will be Rs 1,000 crore, and the balance will continue to stay with ABFRL.

“The demerger is expected to unlock significant value for the shareholders of ABFRL as each of the listed entities will have their own distinct capital structures, independent growth trajectories & value creation opportunities,” ABFRL said in its release. 

The turnover of the MFL business of the demerged company as on March 31, 2023, stood at Rs 7,607 crores and forms 64.81 per cent of the total standalone turnover of the demerged company as on March 31, 2023, ABFRL said in an exchange filing. 

It also added that the demerger will be implemented through an NCLT scheme of arrangement and upon its completion, all shareholders of ABFRL will have identical shareholdings in both the companies.  




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First Published: Apr 19 2024 | 6:42 PM IST

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