ABFRL to Split Madura Fashion & Lifestyle into Independent Entity, Eyes Growth

New Delhi, Apr 1 - In a strategic move aimed at enhancing shareholder value, Aditya Birla Fashion and Retail Ltd (ABFRL) announced its decision to demerge its Madura Fashion & Lifestyle (MFL) business into a separate listed entity. This decision, made during the ABFRL board meeting on Monday, is set to pave the way for two independently operating companies, each with its own capital structure and opportunities for growth.

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The demerger is expected to facilitate ABFRL in raising growth capital within 12 months post-completion, thereby strengthening its balance sheet for future expansion. MFL's portfolio, which includes prominent fast fashion brands such as Louis Phillippe, Van Heusen, Allen Solly, and Peter England, alongside casual wear brands American Eagle and Forever 21, has been a significant contributor to ABFRL's revenue. In FY23 alone, MFL added Rs 8,306.97 crore to ABFRL's consolidated revenue of Rs 12,417.90 crore.

Acquired by the Aditya Birla Group in December 1999 from Coats Viyella's India unit, MFL has established a leadership position in the market over the years. The business also holds the brand licence for Reebok sportswear and Van Heusen innerwear, which will be included in the demerger. Post-demerger, ABFRL will focus on its Pantaloons and Style Up businesses, along with an ethnic portfolio and luxury brand offerings such as The Collective and Galleries Lafayette.

The proposed demerger is subject to approval from various regulatory bodies including the ABFRL Board of Directors, shareholders, creditors, and the National Company Law Tribunal (NCLT). Upon receiving the necessary approvals, all ABFRL shareholders will hold identical shares in the newly formed entity.

Aditya Birla Group Chairman Kumar Mangalam Birla expressed confidence in the demerger, highlighting it as a step towards unlocking value creation opportunities. He emphasized that this move is aligned with evolving consumption trends and the company's focus on capitalizing on high-growth segments driven by a shift towards branded offerings and digital-first brands catering to Gen Z.

In light of this announcement, shares of Aditya Birla Fashion and Retail Ltd experienced a positive surge, closing 3.02 per cent higher at Rs 211.70 apiece on the BSE. This strategic restructuring marks a significant milestone for ABFRL as it seeks to optimize its portfolio and enhance long-term stakeholder value.