Aditya Birla Fashion & Retail has acquired a 33.5% stake in the luxury apparel-to-jewellery company of fashion designer Tarun Tahiliani for Rs 67 crore, with an option to increase the stake to 51% in the next few years.
The all-cash deal will help the flagship fashion business of Aditya Birla Group step up its presence in the largely unorganised traditional and ethnic wear segment, coming a month after it picked up 51% stake in Sabyasachi Couture by fashion designer Sabyasachi Mukherjee for Rs 398 crore.
The deal is expected to be completed in 45-60 days, the company said in a statement on Wednesday.
As part of the strategic deal, ABFRL and Tahiliani will also form a new entity to launch a men’s ethnic wear brand at accessible price points. The former will hold 80% stake in the new entity with the celebrated designer holding the rest.
The company aims to build it into a Rs 500-crore business in the next five years with 250 stores. The first set of retail stores will be opened by September, it said.
“Ethnic wear is going to be an important category as Indians rediscover culture and heritage,” said Ashish Dikshit, managing director of ABFRL. “The combined expertise of Tarun Tahiliani and ABFRL will enable the new brand to make a strong impact in the market. The existing couture brand will continue to benefit from the fast-growing luxury segment. This partnership is in line with our stated strategy to craft a portfolio of brands that address the entire gamut of ethnic wear segments: value, premium and luxury.”
Earlier, in 2019, ABFRL had bought Finesse International Design, which sells bespoke apparel retail brand Shantanu & Nikhil, for Rs 60 crore, and artisanal online retailer Jaypore.com for Rs 110 crore.
The company has a network of more than 3,000 stores that sell clothes and accessories from Louis Philippe, Van Heusen, Allen Solly and Peter England, among others.
Established in 1996, Tahiliani’s business straddles categories such as apparel, wedding wear, accessories, jewellery, interiors and homes that are retailed across company-owned and operated outlets in India and distributors overseas. Known for high-end wedding wear, Tahiliani has clients such as Oprah Winfrey, Priyanka Chopra, Sonam Kapoor, Katrina Kaif and Shilpa Shetty. His couture business clocked a turnover of Rs 67 crore in FY-20.
“The next big leap for the brand was to take our craftsmanship and expertise and offer it to a larger Indian market,” Tarun Tahiliani said. “We needed a partner who could help us with this scale. Over the years, I have admired what Kumar Mangalam Birla has built and created for the Aditya Birla Group, specifically in building fashion retail in India.”
Indian wear, initially restricted to older age groups, now finds acceptance among younger consumers as well, with labels such as Manyavar and Fabindia driving the market, especially at the mass-premium end, while designer labels cater to the high-end, bespoke segment.
Harminder Sahni, the founder of retail consultancy Wazir Advisors, told ET that the talks between Tahiliani and ABFRL have been on a for a year.
“So far India market has been dominated by international or western clothing brands,” Sahni said. “Most consumers may have awareness about designers but very few can afford their product. For any designer, that is not a great situation to be in. Accessible lines must be created to move on from being just a persona to becoming a brand.”
Sahni advised Tahiliani to partner and access ABFRL’s bandwidth to take his design sensibility to a larger number of consumers. “Earlier, conglomerates such as ABFRL had a portfolio of businesses. The future is portfolio of brands led by design,” Sahni said.
In a regulatory filing, ABFRL also announced that Kumar Mangalam Birla will be the chairman and non-executive director of Aditya Birla Fashion & Retail with effect from February 24. So far, Birla was the chairman of other listed companies of the Aditya Birla Group.
Sangeeta Pendurkar, CEO of brands Pantaloons and Jaypore, and Vishak Kumar, CEO of ABFRL’s business unit Madura Fashion and Lifestyle, will join the board as whole time directors for a period of five years with immediate effect, the company said.
