Contrary to mass perceptions developed during the pandemic COVID-19lockdown, online shopping is not the be-all and end-all of India’s retail.Offline stores are the major contributors.
India’s organized retail space has been seeing a couple oflarge-ticket purchases. Amazon wanted right of first refusal in Future Group,while the latter went ahead and sold the same to Reliance. And now, Flipkart,an online shopping platform, will buy 7.8% ownership of offline fashion retail AdityaBirla Fashion and Retail Limited.
The equity capital will be raised at Rs 205 per share. Thepromoter and promoter group companies of ABFRL will hold about 55.13 per centupon completion of the issuance.
ABFRL will use this capital to strengthen its balance sheetand propel its growth ambition with renewed vigour, said a statement. Thecompany plans to scale-up its play in emerging high-growth fashion categoriesincluding innerwear, athleisure, casual wear and ethnic wear, establishingthese as the new engines of growth for the company.
Furthermore, ABFRL will accelerate the execution of itslarge-scale digital transformation strategy that will deepen its consumerconnect and augment its backend capabilities, positioning it amongst the mostcomprehensive omni-channel fashion players in the country.
Through this partnership, the Flipkart Group will strengthenthe range of brands offered on its e-commerce platforms Flipkart and Myntra,deepening its relationship with ABFRL, and enhancing the range of premiuminternational and Indian brands on offer.
Flipkart's technology prowess will enhance ABFRL'somni-channel capabilities, enriching customer experiences while continuing toprovide access to premium loyalty programs and affordability constructs forwhich Flipkart is known.
Speaking on this development, Kalyan Krishnamurthy, CEO,Flipkart Group, said, "Through this partnership with ABFRL, we will worktowards making available a wide range of products for fashion-consciousconsumers across different retail formats across the country.
"We look forward to working with ABFRL and its wellestablished and comprehensive fashion and retail infrastructure as we addressthe promising opportunity of the apparel industry in India," he said.
Kumar Mangalam Birla, Chairman Aditya Birla Group said:"This partnership is an emphatic endorsement of the growth potential ofIndia. It also reflects our strong conviction in the future of the apparelindustry in India, which is poised to touch $100 billion in the next 5years."
He said that fashion retail in India is set for robustlong-term growth due to strong fundamentals of a large and growing middleclass, favourable demographics, rising disposable incomes and aspiration forbrands.
This partnership is a critical component of that strategy,Birla added.
Though the transaction is subject to regulatory approvals,but the stock markets are rejoicing in the news with the stock price havingrisen by 13% as compared to the previous day’s closing.