The ABFRL (Aditya Birla Fashion and Retail Limited) summoned a meeting on Monday to announce the demerger of Madura Fashion & Lifestyle Business. The company said it would raise growth capital within 12 months of the demerger to strengthen its balance sheet.
The company said, “The proposed demerger will enable the creation of two separately listed companies as independent growth engines with distinct capital structures and parallel value creation opportunities.”
The Madura Fashion and Lifestyle (MFL) comprises four fashion brands: Louis Phillippe, Van Heusen, Allen Solly, and Peter England. It also consists of two casual wear brands: Viz. American Eagle and Forever 21.
Kumar Mangalam, chairman of Aditya Birla Group, said the demerger will form the next evolutionary phase of retail growth. According to him, it also focuses on reevaluating structures to optimise various parts of the company’s portfolio.
According to Aditya Birla Group’s statement, their fashion and retail business has grown from 5 to 20 brands across all lifestyle categories over the years. Its portfolio has displayed seamless shifts in consumption trends, and this new demerger will significantly enhance long-term stakeholder value.
The Aditya Birla Group acquired the MFL business in December 1999 from the Indian unit of Coats Viyella. It’s a British multinational company that manufactures footwear and apparel.
Aditya Birla Group states, “The proposal will be subject to all statutory approvals from the ABFRL Board of Directors, shareholders, creditors, regulators, and other customary approvals.”
After all the approvals, MFL’s demerger will be applied through an NCLT (National Company Law Tribunal) arrangement scheme, and all shareholders of ABFRL will have a similar shareholding in the newly formed entity.
