Finally, as 2014 rings in, its a good news for multi-brand retail FDI. Foreign Investment Promotion Board (FIPB) approves Tesco’s proposal to invest $110 million in Indian retail market in JV with Tata’s Trent Hypermarkets.
The approval makes Tesco the official first in the Indian retail market to set shop in JV with an Indian brand.
Tesco will own 50 per cent stake in Trent Supermarkets that currently runs 16 Star Bazaar hypermarts across Maharashtra, Karnataka, Gujarat, and Tamil Nadu. But Gujarat and Tamil Nadu not yet up for FDI, the current JV will focus on the stores in Maharashtra and Karnataka.
Tesco becomes the first international brand to file for multibrand retail FDI in India as it plans to acquire 50 per cent stake in Tata Trent, hence forming a JV. It was earlier in 2012 when FDI in multibrand retail was approved.
Tesco has filed for the JV with DIPP and if approved, the stake will be bought for $110 million. Tesco will own 50 per cent stake in Trent Supermarkets that currently runs 16 Star Bazaar hypermarts across Maharashtra, Karnataka, Gujarat, and Tamil Nadu. But Gujarat and Tamil Nadu not yet up for FDI, the current JV will focus on the stores in Maharashtra and Karnataka.
The stores will not use Tesco’s brand name anywhere. With this agreement, the stores will sell a wide variety of products ranging from food to clothing, under the tag ‘A Tata and Tesco Enterprise’. Moreover, the JV also aims at opening three to five stores in India annually.
Now that Walmart has broken ties with Bharti Retail and is going through a rough phase, Tesco gets a great opportunity to emerge in the market.
Tata Trent, the retail arm of Tata Group, has ended its six year old agreement with Xander Group, which funded its stores opening across malls. The arm now plans to open standalone Star Bazaar stores and not restrict itself to malls.
Unfortunately, Tata Trent which has a franchise and a wholesale supply arrangement with Tesco Plc, could not open any Star Bazaar in 2012-13 as they all were located in malls. These stores could not operational as the overall package din’t come across as attractive. Continue reading Tata Trent says no to malls for Star Bazaar; breaks ties with Xander Group