​Know how Aditya Birla Group will drive its business growth

Fast growth is easier to achieve in sectors driven by innovation. While most companies opt for well-established strategies to turn their businesses into high-profit venture with a larger market share, Indian multinational conglomerate the Aditya Birla Group plans to expand its business using a four-way restructuring strategy.

According to an Economic Times report, the Aditya Birla Group’s new restructuring strategy would bring its retail business under Pantaloon Fashion & Retail (PFRL). The Mumbai-headquartered company also plans to offer a maximum of 10% equity stake to an investor in the consolidated entity.

According to the financial daily, the company has sought informal guidance from the Securities Exchange Board of India (SEBI) on the efficacy of the proposed merger through a letter dated December 24, 2014.

In order to secure $500 million to fuel its expansion plans in a growing economy, the $30-billion telecom-to-retail group is planning to sell its stake in the consolidated retail business, and is discussing the same with L Capital, Temasek and IFC.

Requesting anonymity, senior Birla group officials told ET: Owing to differences over valuations with investors, the restructuring plan has not made much headway.

Soon after the Aditya Birla Group announced that it plans to bring retail business under Pantaloon through a share-swap deal, stocks of Pantaloon Fashion and Aditya Birla Nuvo registered a rise.

The ET revealed that the deal is proposed to be carried out through four transactions.

Initially, Madura Fashion & Lifestyle will be demerged from Aditya Birla Nuvo (ABNL), the listed company, which holds 58.3% in Madura Fashion, and merged into PFRL, the financial daily stated.

As per a copy of the proposal submitted to the SEBI, PFRL will then issue equity shares to shareholders of ABNL, which holds 58.3% stake in Madura Fashion. This will later lead to the demerger of the retail business of Madura Garments Lifestyle Retail Company into PFRL. In return, PFRL will issue shares to ABNL.

The business daily also reported that unlisted Aditya Birla Retail will be demerged into PFRL. In consideration for this, the Indian premium clothing retailer will issue equity shares to Aditya Birla Retail. The ET further added that the transaction will be completed when each investor will be offered at the most 10% of the expanded capital of the consolidated company via a preferential allotment of equity shares.
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