An agreement was concluded with Flipkart and Aditya Birla Fashion on Friday to ensure that the latter infuses Rs 1500 crores to the former, representing 7,8% of its stake. The deal involves the selling and distribution of different clothing labels. As well as the provision of pre-emption and first refusal rights to Flipkart for 1-5 years, Aditya Birla Fashion says.
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At Rs 205, Aditya Birla Fashion will give Flipkart 3.1 million preference shares per share. Abneésh Roy, Edelweiss’ Executive Vice-Chair of Research, said the raise of capital will further improve the balance sheet and boost growth for Aditya Birla Fashion. The collaboration will also help to improve the company’s presence in the omnichannel. On completing the release, Aditya Birla Fashion’s promoter and promoter group companies will hold about 55.13 per cent stakes.
Aditya Birla Fashion said she is using this money to boost her budget and speed up her growth path. The company is aiming at aggressively expanding its current businesses. In which it holds solid, market leadership positions and growing presence in emerging categories of high growth. Such as interior wear, athletic, leisure and ethnic wear.
Aditya Birla Fashion would have carried out a capital increase of Rs 2500 crore as early as 001 April 2020. While macroeconomic conditions have been challenging since COVID 19 started, said the firm. This agreement would strengthen the portfolio of brands on the e-commerce platforms of Flipkart, including Myntra. Flipkart plays a leading role in India’s online fashion industry along with Myntra. In the trend segment, this deal will further accelerate its prominence.