Flipkart is set to own a 7.8 per cent equity stake in Aditya Birla Fashion and Retail Limited (ABFRL) for Rs 1,500 crore. The promoter and promoter group companies of ABFRL will have about 55.13 per cent upon completion of the issuance.
Kalyan Krishnamurthy, CEO of Flipkart Group, said they will work towards making available a wide range of products for fashion-conscious consumers across different retail formats across the country. The e-commerce giant looks forward to working with the Aditya Birla Group and its well established and comprehensive fashion and retail infrastructure.
ABFRL plans to use the capital to strengthen its balance sheet and increase its growth. The company said the investment agreement inter-alia provides for some rights such as preemption rights, and rights of first refusal which are for a limited period, that is, between one to five years from the date of allotment of equity shares or if the equity shareholding of the Investor falls below a certain threshold. It plans to aggressively scale-up its existing businesses where it holds strong, market leading positions while increasing presence in emerging high-growth categories such as athleisure, innerwear, casual wear and ethnic wear, establishing these as the new engines of growth for ABFRL. The company is also looking at accelerating execution of its large-scale digital transformation strategy to deepen consumer connect of its brands, expand reach of its diverse brand portfolio and build strong omni-channel functionalities.
Kumar Mangalam Birla, chairman of Aditya Birla Group, described the partnership as an empathic endorsement of the growth potential of India. He said it reflects their strong conviction in the future of the apparel industry in the country, which is poised to touch $100 billion in the next five years. “Fashion retail in India is set for a robust long-term growth due to strong fundamentals of a large and growing middle class, favorable demographics, rising disposable incomes and aspiration for brands,” Birla pointed out. “Rapid growth of technology infrastructure will further accelerate this process. Over the years, we have shaped Aditya Birla Fashion and Retail Limited into a strong platform to capture future growth opportunities in India.” The executive said this partnership is a critical component of that strategy.