April 23, 2024

ABFRL Demerging Madura Fashion Into Separately Listed Entity

Aditya Birla Fashion and Retail Ltd. (ABFRL) has planned to demerge its Madura Fashion & Lifestyle (MFL) division into a separate listed entity.

The Aditya Birla Group company aims to create two growth engines with distinct value creation trajectories and a well articulated capital allocation strategy and parallel value creation opportunities.

The MFL portfolio has four lifestyle brands like Van Heusen, Allen Solly, Louis Phillippe, and Peter England. Casualwear brands include Forever 21 and American Eagle and sportswear brand Reebok.

The MFL portfolio has built a leadership position over time and has a proven track record of delivering consistent revenue growth, profitability, strong free cash flows and high return on capital.

“The separately listed company will have a strong balance sheet to power its future growth aspirations,” ABFRL informed in a press release.

Post demerger, the rest of the ABFRL portfolio will focus on high-growth segments, premiumisation, rise of super premium and luxury, and rapid growth in Gen Z focused digital brands.

The post-demerger portfolio of ABFRL would consist of Value Retail, Ethnic Portfolio, Luxury and Digital brands.

ABFRL will raise growth capital within 12 months to infuse strength into its balance sheet subsequent to the completion of the proposed demerger.

“Our fashion business has grown from five brands in two categories, to a dynamic portfolio of over 20 brands across all lifestyle categories,” Aditya Birla Group Chairman Kumar Mangalam Birla said.

“The evolution of this portfolio has seamlessly mirrored the shift in consumption trends, with a play encompassing all large value creation opportunities,” Birla added.

“The restructuring will help bring in sharper focus anchored on a differentiated strategy aligned with the individual business segment,” ABFRL MD Ashish Dikshit also said.

“The Indian apparel business is over US $100 billion and is poised for a double-digit growth. The simplified structure positions the businesses well for sustained growth and value creation,” he added.

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