Aditya Birla Fashion & Retail (ABFRL) is set to raise up to ₹800 crore in debt to fund its acquisition of TCNS Clothing, according to a top company official. Managing director Ashish Dikshit said that the company requires external debt of approximately ₹700-800 crore, with the remaining ₹800 crore to be funded through internal accruals. The company signed an agreement on Friday to purchase a 51% stake in TCNS, the owner of women’s ethnic wear brands such as W, Elleven, and Aurelia, for ₹1,650 crore. As part of the deal, ABFRL will make a conditional open offer to acquire up to a 29% stake at ₹503 per share from public shareholders and buy the remaining stake from founder promoters to reach an overall shareholding of 51% in TCNS. After the transaction, TCNS will be merged with ABFRL, and public shareholders of TCNS will receive 11 shares of ABFRL for every six shares they hold in TCNS.
The Indian apparel market is largely unorganised, but within the branded apparel space, the retail share of women’s wear is expected to increase to 35% by FY25 from 31% in FY20, according to a report by Antique Stock Broking. Additionally, international retailers such as Zara and H&M are not present in women’s ethnic wear, providing an advantage to Indian apparel retailers in the overall category. TCNS had sales of ₹896 crore during FY22 from 650 exclusive brand outlets and 2,300 large format store outlets. With this acquisition, ABFRL’s ethnic wear portfolio is expected to reach ₹5,000 crore in the next three years, with TCNS contributing approximately ₹2,000 crore.
More than five years ago, ABFRL segmented its business into six sub-categories: lifestyle, Pantaloon, athleisure, youth fashion, super premium, and ethnic. However, most brands are focused on western-style clothing, a segment significantly smaller than the overall women’s ethnic wear in the mass market. In the ethnic segment, the company acquired Jaypore, a premium craft-based artisanal brand, and invested in designer brands Shantanu & Nikhil, Tarun Tahiliani, Sabyasachi, and Masaba. With the acquisition of TCNS, Dikshit believes that the company’s portfolio is now complete. “This acquisition gives us the number one platform, the market leader in the category and completes the journey that we started five years back when we started to put together, through a series of very carefully crafted partnerships and acquisitions and organic launches,” he said.
The company’s lifestyle division operates nearly 3,468 stores for brands including Louis Philippe, Van Heusen, Allen Solly, and Peter England. Additionally, department store chain Pantaloons has more than 400 stores, and the company also runs women’s fashion brand Forever21. “Also, we have not just got a very strong asset in terms of the brand and distribution, we also got a management team which has consistently delivered over a long period of time,” Dikshit said. “It is a very fragmented market if you look at mid to lower part of the market. But in the premium side, I don’t see too many brands of large size.”
In conclusion, Aditya Birla Fashion & Retail’s acquisition of a controlling stake in TCNS Clothing is a strategic move that aligns with the company’s focus on expanding its ethnic wear portfolio. With the purchase of TCNS, ABFRL gains access to a leading platform in the women’s ethnic wear segment, further strengthening its position as a top player in the Indian fashion retail market. The acquisition is expected to help ABFRL achieve its goal of reaching a ₹5,000 crore ethnic wear portfolio in the next three years, with TCNS contributing approximately ₹2,000 crore. Overall, this move highlights ABFRL’s commitment to growth and innovation in the highly competitive fashion retail industry.
