Indian conglomerate Aditya Birla Nuvo Limited (ABNL) is to acquire a controlling stake in the flagship Pantaloons fashion chain, which is being spun off by Future Group's Pantaloon Retail India unit in a INR16bn (US$305m) deal.

The agreement, which includes Pantaloon's 86 fashion and factory outlet stores across India, will enable ABNL to expand its branded apparel business and the money raised will be used by Pantaloon Retail to reduce its debts.

"The proposed acquisition is in line with our strategic intent to create the largest integrated branded fashion player in the country," Kumar Mangalam Birla, chairman of Aditya Birla group said in a statement.

He added: "This acquisition will catapult ABNL to pole position in the branded fashion space...with a pan-India presence."

ABNL will have a minimum 50.01% stake in a new company being set up to run the Pantaloons business. The current management team will also remain in place.

ABNL's Madura Fashion & Lifestyle unit booked sales of INR21.45bn in 2011, and includes brands such as Louis Philippe, Van Heusen, Allen Solly and Peter England. But its 1.6m square feet of selling space is dwarfed by Pantaloons' 2.05m.

Pantaloons, meanwhile, is expected to post a turnover of around INR17bn in its financial year which ends in June.

"This marks a unique coming together of brands and enterprise that will create significant value for customers, suppliers and all stakeholders," said Kishore Biyani, Future Group founder and CEO.

Pantaloon Retail India Ltd, which is part of the Future group, will continue to operate its Big Bazaar supermarkets and be renamed Future Retail India Ltd.