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Merger of TCNS Clothing into Aditya Birla Fashion and Retail approved by NCLT

The National Company Law Tribunal (NCLT) has recently given its approval for the merger of Aditya Birla Fashion and Retail Ltd (ABFRL) with TCNS Clothing, marking a significant development in the retail industry. This merger is set to create a powerhouse in the fashion and retail sector, combining the strengths of both companies to enhance their market presence and offerings.

The approval from the NCLT Mumbai Bench on 2nd August 2024 for the Amalgamation Scheme of TCNS Clothing Co. and Aditya Birla Fashion and Retail is a crucial step towards finalizing the merger. The scheme, filed by the companies and their respective shareholders and creditors, has been given the green light by the tribunal, paving the way for the consolidation of these two prominent players in the industry.

Aditya Birla Fashion and Retail, a part of the renowned Aditya Birla Group, is a leading player in the retailing of accessories, footwear, and clothing. On the other hand, TCNS Clothing Co. Ltd is a publicly traded company known for its popular women’s apparel brands such as W and Aurelia. The merger of these two entities is expected to bring together a diverse portfolio of brands and products, catering to a wide range of consumer preferences.

The acquisition of TCNS Clothing Co. by ABFRL was announced in May 2023, with ABFRL agreeing to pay Rs. 1,650 crore for a majority stake in the company. Following the completion of the acquisition in September 2023, ABFRL became the promoter of TCNS Clothing. The Competition Commission of India (CCI) approved this acquisition in June 2023, and subsequent approvals from stock exchanges further paved the way for the merger to proceed.

In terms of financial performance, Aditya Birla Fashion and Retail reported a consolidated net loss of Rs. 161 crore for the quarter ending 30th June 2024. While this represented an increase from the previous year’s loss of Rs. 141 crore, it marked a reduction from the Rs. 229 crore loss recorded in the March quarter. The company attributed the net loss to investments in digital-first fashion brands like TMRW and losses in premium ethnic wear brands like TCNS.

Despite the challenges faced in the financial aspect, the company’s revenue showed a positive trend, with a 7% year-over-year increase to Rs. 3,428 crore in Q1FY25 from Rs. 3,196 crore. This growth in revenue reflects the resilience and potential of the combined entity post-merger, as it leverages the strengths and synergies of both ABFRL and TCNS Clothing.

Overall, the approval of the merger between Aditya Birla Fashion and Retail and TCNS Clothing marks a significant milestone in the retail industry. The combined entity is poised to strengthen its market position, expand its product offerings, and drive growth in the competitive fashion and retail landscape. As the companies move forward with the integration process, stakeholders can look forward to witnessing the synergies and benefits that this merger will bring to the table.

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