ABFRL aims at greater value creation with demerger of Madura Fashion

In a move reportedly aimed at sustained growth and value creation, Aditya Birla Fashion and Retail Ltd (ABFRL) has announced that it is demerging its fast fashion and retail business Madura Fashion & Lifestyle into a separate listed entity.

The ABFRL board at its meeting held on Monday authorised the management of the company to evaluate the vertical demerger of Madura Fashion & Lifestyle business, according to a company statement.

As per the reported statement, the proposed demerger is expected to enable the creation of two separately listed companies as independent growth engines “with distinct capital structures and parallel value creation opportunities.”

The Madura Fashion & Lifestyle business segment (MFL) has four brands including Louis Phillippe, Van Heusen, Allen Solly & Peter England, along with casual wear brands American Eagle and Forever 21. 

According to an ET report, the post demerger portfolio of ABFRL would include Value Retail, Ethnic range, Luxury and Digital Brands.  

“The restructuring will help bring in sharper focus anchored on a differentiated strategy aligned with the individual business segment. Each of these businesses has always been operated autonomously under respective CEOs," Ashish Dikshit, MD, Aditya Birla Fashion and Retail Ltd, has been quoted as saying in a Mint report. It will be interesting to see what this entails for the brands’ retail presence and expansion plans.