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Aditya Birla Fashion and Retail Ltd faces Q2 loss amidst strategic moves

In a recent regulatory filing, Aditya Birla Fashion and Retail Ltd (ABFRL) reported a consolidated net loss of Rs 200.34 crore for the second quarter ending September 2023. This marks a significant downturn from the net profit of Rs 29.42 crore during the same period last fiscal year.

The dip in profitability coincides with ABFRL’s strategic acquisition of TCNS Clothing, which was finalized on September 26, 2023. The company emphasized that the consolidated financial results for Q2 2023 are not directly comparable due to the inclusion of TCNS Clothing Co. Ltd under its umbrella.

Despite the challenging financials, ABFRL’s operations revenue witnessed growth, reaching Rs 3,226.44 crore in Q2 of the current fiscal year compared to Rs 3,074.61 crore in the corresponding period of the previous fiscal year.

Total expenses for ABFRL during the September quarter amounted to Rs 3,500.27 crore. A breakdown of revenue showed Rs 2,275.94 crore from the Madura Fashion & Lifestyle segment and Rs 1,021.50 crore from Pantaloons.

The company’s shares settled at Rs 215.10 on BSE, marking a 1.44% decline from the previous close.

Aditya Birla Fashion and Retail Ltd, a prominent player in the Indian conglomerate, The Aditya Birla Group, has a diversified portfolio boasting leading fashion brands like Louis Philippe, Van Heusen, Allen Solly, and Peter England.

ABFRL’s international brand portfolio includes The Collective, a prominent multi-brand retailer with exclusive partnerships with global brands such as Ralph Lauren, Hackett London, Ted Baker, Fred Perry, Forever 21, American Eagle, Reebok, and Galeries Lafayette.

In addition to its established brands, ABFRL is making strides in the digital space with its technology-led venture, ‘House of D2C Brands’ called TMRW, dedicated to building a collection of beloved consumer brands with a focus on significant growth potential in the Indian and global markets within the Fashion & Lifestyle categories.

While the recent financials may raise concerns, ABFRL has also addressed queries regarding its rights and preferential issues. In a statement, the company confirmed no deviation or variation in the use of proceeds from the Rights Issue and Preferential Issue, maintaining adherence to the objectives outlined in the respective offer letters.

For further details on the funds raised, ABFRL provided a breakdown, including the amount raised through the Rights Issue (Rs 992.70 crore) and the Preferential Issue (Rs 2,195 crore). The funds raised through these channels were allocated for purposes such as the repayment of certain borrowings, general corporate purposes, and strengthening the balance sheet.

As ABFRL navigates through these strategic moves and financial challenges, industry watchers will be keenly observing how the company steers its course in the ever-evolving landscape of the fashion and retail sector.

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