Aditya Birla Fashion and Retail (ABFRL) has announced that its board of directors has approved the demerger of its Madura Fashion & Lifestyle (MFL) business. Being the largest division, MFL will be separated into a new company named Aditya Birla Lifestyle Brands (ABLBL). Once the demerger is completed, Aditya Birla Lifestyle Brands will be listed separately.
Madura brands and other lifestyle businesses, with annual sales of Rs 7,959 crore in FY23, made up almost two-thirds of Aditya Birla Fashion and Retail’s total revenue of Rs 12,418 crore.
This decision comes three weeks after Aditya Birla Fashion and Retail hinted at possibly demerging its Madura business to boost growth. Within a year of the demerger, Aditya Birla Fashion and Retail plans to raise Rs 2,500 crore in equity capital to strengthen its finances and support the growth of its remaining businesses, with full support from its promoter group.
After the demerger, Aditya Birla Fashion and Retail shareholders will receive one share of Aditya Birla Lifestyle Brands for every share in Aditya Birla Fashion and Retail, along with their existing shares. The two companies will divide the assets and liabilities according to regulations.
Aditya Birla Lifestyle Brands will include lifestyle brands like Louis Phillippe, Van Heusen, Allen Solly, Peter England, American Eagle, Forever 21, Reebok, and Van Heusen innerwear.
Aditya Birla Fashion and Retail will encompass platforms like Pantaloons, Style Up, ethnic wear, luxury brands such as The Collective, Galleries Lafayette, and digital brands under TMRW.
Aditya Birla Fashion and Retail’s total borrowing of approximately Rs 3,000 crore as of March 31, 2024, will be split between the two companies, with about Rs 1,000 crore of debt assigned to Aditya Birla Lifestyle Brands.
The demerger will be executed through an NCLT scheme, ensuring that all Aditya Birla Fashion and Retail shareholders hold equal stakes in both companies.
