Birla bullish on fashion retail, takes on Tatas, Reliance

After acquiring controlling stake in the fashion retail business of Pantaloons, Aditya Birla Group is on the verge of becoming a giant fashion business house. According to Harminder Sahni, Director, Wazir Advisors, “AV Birla is the right buyer.

They got into fashion business with the acquisition of Madura Garments and have grown the business almost 10 times since then. They have the management bandwidth, capital as well as vision and patience to create a multi-billion dollar fashion house like a GAP, ZARA or Liz Claiborne in the next 10 years. My guess is that they will be an Rs 20,000 crores fashion business in 2020-2025. On the other hand, Biyani has created a very good business in Pantaloon that now AV Birla can take to next the orbit of growth.”

The deal and current repositioning of its brands Van Heusen and Allen Solly in the Madura Garments fold also signals Birla’s renewed push in retail and diversified group plans to build a $2 billion business (over Rs 10,000 crores). Once done this will give enough competition to other big players in the space the Tatas and Reliance Industries.

The $35-billion (Rs 180,000 crores) Aditya Birla Group, with its bouquet of brands, under Madura Garments can not only attract young customers now but also gets to double its retail space from 1.6 million sq. ft. to 3.65 million sq. ft, with the combined entity’s turnover going up almost 80 per cent. Pantaloons’ Rs 1,700 crores turnover will add to Madura’s Rs 2,145 crores top line.

Birla’s combined revenue from these retail entities would cross Rs 4,000 crores (excluding Pantaloons since the acquisition process could take nine months) or in excess of $800 million this fiscal. Fashion will bring almost 70 per cent revenues. Meanwhile the group is restructuring its grocery retail for fresh expansion after cutting losses.

Ambani’s Reliance Retail, spread across an ever expanding list of formats and subsidiaries, reported Rs 7,599 crores ($1.4 billion) revenue in the last financial year, growing at 25 per cent. The revenue of Tata Group’s retail businesses, involving companies like Trent, Infiniti, Tata International and Titan Industries, is estimated at over Rs 11,000 crores ($2.2 billion).


Birla will pour in Rs 750 crores of personal cash this year to expand the More business, which is yet to curtail losses. This is a part of their continued investments into retail. The idea behind infusing fresh investments is possibly because of a turnaround in Madura Fashion & Lifestyle just as retailing becomes a game-changer. Birla downed shutters on most More stores last month. Hypermarkets will be the top priority for expansion, while supermarkets are under watch to understand what size (of stores) will do the right business.