Tata Group eyes stake in Fabindia

The Tata Group is negotiating with stakeholders to buy either a stake or the entire business of Fabindia.

The acquisition deal is worth less than the $2.5 billion pegged by the clothing company’s aborted initial public offering. If successful, the deal could be the largest in the segment, after Aditya Birla Fashion Retail’s acquisition of a controlling stake in TCNS Clothing last year.

The acquisition of Fabindia will boost the ethnic wear portfolio of the Tata Group. in the ethnic wear space. Also, Fabindia’s ethos resonates with that of the Tata Group as it makes its products from traditional techniques, and hand-woven fabrics that are sustainably sourced.

In January, Fabindia agreed to sell subsidiary Organic India to Tata Consumer Products at an enterprise value of Rs 1,900 crore. This was part of its restructuring exercise after it abandoned its Rs 4,000-crore IPO last year, citing uncertain market conditions.

A seller of premium ethnic apparel, Fabindia has been making losses over the last three years. Although the brand’s revenues increased by 21 per cent to Rs 1,688 crore in FY23, expenses rose to Rs 1,730 crore, shows data from Tracxn. The brand ended FY23 with negative cash balances, according to the cash flow statement data.

After drawing its IPO plan, Fabindia made some changes in the brand’s management. It promoted William Nanda Bissell, with a 15 per cent stake in the company, to the position of Managing Director from his earlier post of Executive Vice-Chairman and Director. Viney Singh, previous Managing Director became a non-executive director on completing his tenure as the Managing D, became a non-executive director.

Fabindia has over 300 stores and apart from apparel also sells furnishings, furniture and lifestyle accessories.