ABFRL's borrowing of approximately Rs 3,000 crore till March 2024 will be split between the two companies, of which Rs 1,000 crore will be transferred to ABLBL. The companies said they would separate business assets and liabilities based on regulatory provisions.
ABFRL aims to increase its equity capital by Rs 2,500 crore within one year of the demerger to strengthen its financial position and support expansion of its remaining businesses. Each listed company within the company will have its own capital structure, growth path and value opportunities in place and will receive full support from the promoter group in raising equity.
The Madura business includes casual wear brands American Eagle and Forever 21, sportswear brand Reebok, and the innerwear business under Van Heusen, as well as four lifestyle brands: Louis Philippe, Van Heusen, Allen Solly, and Peter England. included.
The Madhura brand and other businesses contributed around two-thirds of ABFRL's total revenue of Rs 12,418 crore, with an annual turnover of Rs 7,607 crore. After the split, ABFRL's portfolio will still include Pantaloons, Style Up, Sabyasachi, Shantanu & Nikhil, Tasva, The Collective, Galeries Lafayette and TMRW.
Analysts said the decision was due to the need to recover losses experienced in the previous fiscal year and raise the flat valuation due to increased investments in new niche companies. Over the past five years, ABFRL's share price has been flat and its market capitalization of Rs 20,000 crore is just a fraction of Tata-owned Torrent, which had a comparable valuation on the BSE in 2019.