Aditya Birla Fashion and Retail Ltd (ABFRL) recently announced that the National Company Law Tribunal (NCLT) has approved the merger of the company with TCNS Clothing. This move marks a significant development in the retail industry, as two major players come together to create a stronger presence in the market.
The Scheme of Amalgamation (by way of Merger by Absorption) among TCNS Clothing Co. and Aditya Birla Fashion and Retail and their respective shareholders and creditors was listed for pronouncement of order on August 2, 2024, by the NCLT Mumbai Bench. The NCLT sanctioned the scheme filed by the company, paving the way for the merger to proceed.
In a regulatory filing on August 16, Aditya Birla Fashion and Retail stated, “The Hon’ble National Company Law Tribunal, Mumbai Bench had pronounced the Order on August 2, 2024, approving the aforesaid Scheme.” The company also mentioned that it has received the certified true copy of the Order on August 16, solidifying the approval of the merger.
ABFRL, an Aditya Birla Group company, is a prominent player in the retailing of apparel, footwear, and accessories segment. On the other hand, TCNS Clothing Co Ltd is a listed company and the owner of the popular women’s wear brands W and Aurelia. The merger between these two entities is expected to create synergies and enhance their market position.
In May 2023, ABFRL announced the acquisition of a majority stake in TCNS Clothing Co in a deal worth ₹1,650 crore. Subsequently, in September 2023, ABFRL completed the acquisition of a 51% stake in TCNS Clothing, thereby becoming its promoter. The Competition Commission of India (CCI) also gave its approval to the acquisition in June 2023.
Following the CCI approval, in March 2024, the scheme of merger received a no objection letter from both stock exchanges – BSE Ltd and National Stock Exchange of India Ltd, further facilitating the merger process.
In terms of financial performance, Aditya Birla Fashion and Retail posted a consolidated net loss of ₹161 crore in the quarter ended June 30, 2024. The company’s net loss widened from ₹141 crore in the year-ago period but narrowed compared to the ₹229 crore loss reported in the March quarter. The company’s revenue rose 7% to ₹3,428 crore in Q1FY25 from ₹3,196 crore, year-on-year (YoY).
The net profit at a consolidated level was impacted due to continued investments in digital-first fashion brands TMRW and losses in premium ethnic wear brands TCNS, as mentioned by the company. At 1:00 PM, ABFRL share price was trading 0.16% higher at ₹319.70 apiece, while TCNS Clothing shares were trading 0.89% higher at ₹569.75 apiece on the BSE.
Overall, the merger between Aditya Birla Fashion and Retail and TCNS Clothing signifies a strategic move to strengthen their market presence and create value for their shareholders. This development is expected to have a positive impact on the retail industry and pave the way for future growth opportunities for both companies.