Aditya Birla Fashion set to launch rights issue of Rs 995 crore

On Monday, Aditya Birla Fashion and Retail Limited (ABFRL) has declared that it is all set to come up with rights issue offering of Rs 995 crore.

This rights issue offer is for the duration between July 08, 2020 and July 22, 2020. The existing shareholders will be entitled to get nine shares for every 77 shares held. The price for this issue is Rs 110 for the existing shareholders.

The amount raised by this right issue will be used largely towards the repayment of existing debt and interest cost, optimising capital structure and funding working capital requirements.

Talking about the debt of the company, the net debt stood at nearly Rs 2,509 crore as of FY20, which is considerably very high as compared to Rs 1,646 crore in FY19. This high debt results in a high D/E ratio to 2.31x vs 1.15x in FY19. Now the major thing to look into is, how the company uses this amount to tackle its rising debt issue.

Aditya Birla Fashion and Retail operates through two different segments, namely Madura Fashion and Pantaloons. The company’s Madura business includes Lifestyle brands (Louis Philippe, Van Heusen, Allen Solly and Peter England) Fast Fashion (Forever 21 and People) and others (innerwear and international brands). FY20 revenue mix comprises of Madura Fashion (62 per cent) and Pantaloons (38 per cent). As of FY20, the store counts of Lifestyle and Pantaloons were 2,253 and 342, respectively.