Wallmart owned e-commerce website Flipkart is speculated to buy a 7.8% stake in Aditya Birla Group for an investment of Rs. 1,500 crore. This investment will be made in the fashion and retail wing of the group- (ABFRL) Aditya Birla Fashion and Retail Ltd.
The main intention behind such investment is for Flipkart to strengthen its presence in the fashion market of India as the competition is pretty high with Jeff Bezos’ Amazon and other rivals.
Flipkart spokesperson confirmed in a statement that this transaction is subjected to approval by the regulatory authority and it shall be made through Flipkart Investments.
Considering all the new trending engines of growth, if you are an e-commerce platform, you have to deliver a premium experience with products in almost all categories especially fashion. Aditya Birla Fashion and Retail Ltd. will use this new funding to scale up its sales and presence in the market. An emergence of fashion and retail e-commerce had left them with a gap which is now filled by Flipkart. The company stated that fashion and retail categories include innerwear, athleisure clothing, casual wear and ethnic clothing are all fundamentals of fashion e-retail which were previously lacking from Aditya Birla group.
Kumar Mangalam Birla, Chairman of Aditya Birla Group mentioned in a statement that there is a strong conviction in the future of e-commerce, especially fashion and apparel industry in India. Also, he mentions that this industry will cross a $100 billion mark in the next 5 years and by partnering with Flipkart, they are strengthening their position in the market filling in the previous gaps or shortcomings in their business.
Wallmart’s take on this investment states that Flipkart group which includes Flipkart and Myntra will strengthen their holding on product categories and brands. Flipkart is looking forward to offering premium and international brands on their platform. Thus, deepening the roots of their relationship with the Aditya Birla Group!
Birla group recently issued a statement mentioning that after the successful completion of the transaction, Aditya Birla Group would have raised a total amount of Rs. 2, 500 crores since the beginning of April 2020. As we all know about the hardship caused by the COVID-19 pandemic and the lockdown, despite that the company has managed to raise such a huge amount. This represents the company’s ethics, credible leadership, strong business model, well established operational grounds.