After a record breaking performance at its Big Billion Days sale, Walmart-owned Flipkart is pushing to tighten its hold on the Indian fashion market and has forged a partnership with Aditya Birla Fashion and Retail Limited to do so. The two companies announced that Flipkart will buy a 7.8% stake in the company for $203.8 million. The partnership is aimed at improving both the companies’ fashion retail reach in India through offline and online modes.

Aditya Birla Fashion and Retail Limited’s board revealed that it will issue equity shares on a preferential basis to Flipkart Investments Private Limited at Rs 205 per share ($2.8). After the transaction is completed, Flipkart will own a 7.8% equity stake in ABFRL on a fully diluted basis, whereas, the latter will own 55.13%.

Kumar Mangalam Birla, Chairman of Aditya Birla Group, said, “This partnership is an emphatic endorsement of the growth potential of India. It also reflects our strong conviction in the future of the apparel industry in India, which is poised to touch $100 billion in the next 5 years.”

The Indian clothing retail giant owns over 3,000 stores in India including the popular clothing chain, Pantaloons. The company said it will use the capital from the transaction to strengthen its balance sheet and boost its growth trajectory. With the help of the new partnership with Flipkart, ABFRL will further execute its large-scale digital transformation strategy aimed at reaching a larger consumer base. The company also seeks to position itself “amongst the most comprehensive omni-channel fashion players in the country”.

“The company plans to aggressively scale-up its existing businesses where it holds strong, market-leading positions while increasing presence in emerging high-growth categories such as innerwear, athleisure, casual wear and ethnic wear, establishing these as the new engines of growth for the company,” said Aditya Birla Fashion and Retail Limited.

The partnership also involves a commercial agreement, according to which Flipkart will be allowed to sell and distribute various brands under the Aditya Birla Fashion and Retail Limited. Flipkart, which already owns one of the biggest fashion e-commerce companies in the country- Myntra, will further benefit from the partnership with Aditya Birla by building a strong presence in the Indian fashion retail space.

“Through this transaction with Aditya Birla Fashion and Retail Limited, we will work towards making available a wide range of products for fashion-conscious consumers across different retail formats across the country. We look forward to working with ABFRL and its well established and comprehensive fashion and retail infrastructure as we address the promising opportunity of the apparel industry in India,” said Kalyan Krishnamurthy, CEO of Flipkart.