Aditya Birla Fashion and Retail is aiming to vertically demerge Madura Fashion & Lifestyle and list it separately, a company release said.

The board has authorised the management to evaluate the demerger, which will mean the creation of two listed entities with “distinct capital structures and parallel value creation opportunities.”

After the demerger, Aditya Birla Fashion will raise growth capital within a year to strengthen its balance sheet and position itself to capture growth opportunities.

Madura Fashions has four lifestyle brands, namely, Louis Phillippe, Van Heusen, Allen Solly, Peter England; two casual wear brands American Eagle and Forever 21; sportswear brand Reebok and an innerwear line under Van Heusen. All these will be separated from Aditya Birla Fashion, which will be left with value retail brands under Pantaloons and Style Up, an ethnic portfolio, luxury portfolio with brands such as The Collective, Galleries Lafayette and digital brands.

High-growth segments

The company said Aditya Birla Fashion will be focused on high-growth segments “where there are tailwinds from a shift from unbranded to branded, premiumisation, rise of super premium and luxury, and rapid growth in Gen Z focused digital first brands.”

Aditya Birla Group Chairman Kumar Mangalam Birla said over the years, the fashion and retail business of the group has grown from five brands in two categories to a portfolio of over 20 brands across lifestyle categories. “As the platform embarks on its next transformational phase of growth, there is scope to re-evaluate capital structures to optimise different parts of the portfolio,” he said.

The demerger, while creating a simplified and streamlined architecture, would unlock distinct opportunities for value creation and enhance long-term stakeholder value, he added.

The restructuring will bring sharper focus “anchored on a differentiated strategy, aligned with the individual business segment,” said Ashish Dikshit, MD, Aditya Birla Fashion and Retail.

Aditya Birla Fashion and Retail reported revenue of over ₹12,400 crore in FY23 and operated retail space of close to 11 million square feet. At the end of December 2023, it had a network of over 4,700 stores.