The demerger is expected to unlock significant value for the shareholders of ABFRL as each of the listed entities will have their own distinct capital structures, independent growth trajectories and value creation opportunities.

The business assets and liabilities will be split between the two companies in accordance with the prescribed regulatory provisions. In line with this, the overall ABFRL borrowing, which is estimated to be around Rs 3,000 crore as of 31st March 2024, will be split between the two companies. The estimated debt to be transferred to ABLBL will be approximately Rs 1,000 crore and the balance will continue to stay with ABFRL.

Post-demerger, Aditya Birla Lifestyle Brands will be the house of the business consisting of Lifestyle Brands - Louis Phillippe, Van Heusen, Allen Solly & Peter England, Casual wear brands - American Eagle & Forever 21, Sportswear brand – Reebok, innerwear business under Van Heusen brand. Remaining businesses in ABFRL will be a portfolio of multiple growth platforms.

The shareholders of ABFRL will get one share of ABLBL for every one share in ABFRL, in addition to their existing shareholding in ABFRL.

Within 12 months after the completion of the demerger, ABFRL plans to raise approximately Rs 2,500 crore equity capital to strengthen its balance sheet and fund the growth of the remaining businesses. The company’s promoter group will fully support the proposed equity raise.

Aditya Birla Fashion and Retail (ABFRL) is engaged in the business of manufacturing and retailing of branded apparels and runs a chain of apparels and accessories retail stores in India. As on 31 December 2023, the company has a network of 4,753 stores across approximately 37,106 multi-brand outlets with 9,781 point of sales in department stores across India.

The company reported a consolidated net loss of Rs 107.60 crore in Q3 FY24 as compared with net profit of Rs 11.21 crore posted in Q3 FY23. Revenue from operations grew by 16.1% year on year to Rs 4,166.71 crore during the quarter.

The scrip rose 0.81% to end at Rs 231.40 on Friday, 19 April 2024.