Flipkart to invest ₹1,500 crore in Aditya Birla's Fashion & Retail unit for 7.8% stake

Walmart Inc-owned Flipkart is set to buy a 7.8% stake in Aditya Birla's Pantaloons Fashion and Retail Ltd for a whopping ₹1,500 crore ($204 million), the company said on Friday.

The investment comes at a time when Flipkart and its competitors Amazon.com, billionaire Mukesh Ambani-led Reliance Industries, and others are fighting for market share in India's fast-growing online market.

Speaking about the deal, Aditya Birla Group Chairman Kumar Mangalam Birla said, fashion retail in India is a robust long-term growth due to the strong basis of a large middle class. The rapid growth of technology infrastructure would further accelerate this process, he added.

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Due to the COVID-19 pandemic, people are staying indoors and turning to online platforms for all purchases. According to certain media reports, both Amazon and Flipkart were in the race to buy a stake in Aditya Birla Fashion and Retail, which owns the Pantaloons retail chain and owns rights to sell Forever 21 merchandise in India.

Aditya Birla Group said it would use the money to strengthen its balance sheet as it advances its businesses. Shares of Aditya Birla Fashion and Retail surged to ₹163.45 for 6.5% their highest since March 30.

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Retail inflation spikes to 7.34%

Pushed by rising prices of essential kitchen items, the retail inflation rose to an eight-month high of 7.34% in September, making the RBI's task to push growth by reducing the interest rate even more difficult in coming days.

The inflation in the vegetable segment was 20.73% in September, significantly up from 11.41% in the preceding month. Similarly, the rate of price rise in the fruits was high over August. Data showed that the rate of price rise in the protein-rich eggs was 15.47% in September compared to 10.11% in August.

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The retail inflation was also high month-on-month in 'meat and fish', and 'pulses and products'. However, it was lower in 'cereals and products' and 'milk and products'.The government data further showed that the CPI-based price rise was lower in the 'fuel and light' segment at 2.87% during September over 3.10% in the preceding month.

Amidst the unpalatable headline and food inflation figures, the relatively stable core inflation over the last three months offers some relief, keeping the hopes of a February 2021 rate cut alive. The government has tasked the Reserve Bank of India to keep the retail inflation at 4%, with a margin of 2% on either side.

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