By combining Pantaloons with Madura Fashion & Lifestyle, Kumar Mangalam Birla believes he will be able to justify a far higher valuation
A day before Future Group Founder and CEO Kishore Biyani and vice chairman of Bharti Enterprises Rajan Mittal combined operations, the Aditya Birla Group, on May 3, announced a retail consolidation of its own: Pantaloons Fashion & Retail, which the Group acquired from Biyani in 2012, was merged with Madura Fashion & Lifestyle to create India’s largest apparel retailer. Once the merger is approved, it will trade as Aditya Birla Fashion & Retail Ltd.
The logic for the merger is straightforward: Madura Fashion & Lifestyle had been housed in Aditya Birla Nuvo, a Group company that functions as a vehicle for holding stakes in new businesses. After the acquisition of Pantaloons, Kumar Mangalam Birla, chairman of the Aditya Birla Group, believes the market failed to recognise the combined value of the portfolio of brands the two businesses have. These brands, sold across 1,869 stores, range from Peter England to premium labels like Allen Solly and Van Heusen.
(This story appears in the 12 June, 2015 issue of Forbes India. To visit our Archives, click here.)