CRISIL has reaffirmed its 'AA+/Stable' rating on the non-convertible debentures of Aditya Birla Nuvo (ABNL; part of the Aditya Birla group). The reaffirmation follows ABNL's announcement to restructure its fashion businesses. As part of the restructuring, Madura fashion business (currently a division of ABNL) and Madura Lifestyle business (currently a division of ABNL's subsidiary - Madura Garment Lifestyle Retail Co), will be demerged into ABNL's 72.6% subsidiary, Pantaloons Fashion and Retail Ltd (PFRL).

Debt of Rs.4.7 billion will be transferred along with the businesses to PFRL. After the restructuring, PFRL will be renamed Aditya Birla Fashion & Retail (ABFRL); ABNL will hold 9.06% in ABFRL, Aditya Birla group will hold 51.1%, while the rest will be held by public shareholders. The transaction is subject to corporate and regulatory approvals and is expected to take six to nine months to complete.

CRISIL believes that ABNL will maintain its established market position and healthy operating efficiency across its varied business segments over the medium term. The company will remain critical to the Aditya Birla group as it expands its presence in the financial services sector. The outlook may be revised to 'Positive' if ABNL significantly improves its business risk profile across segments. Conversely, the outlook may be revised to 'Negative' if ABNL's debt reduction does not happen as per expectation, or if the company's capital structure weakens significantly because of substantially large debt-funded capital expenditure or acquisitions.

Shares of the company gained Rs 49.7, or 2.8%, to trade at  Rs 1,824.10.  The total volume of shares traded  was  71,820 at the BSE (1.55 p.m., Thursday).