21st Mar 2014 12:01
LONDON (Alliance News) - Britain's biggest supermarket chain Tesco PLC Friday said it will be investing around GBP85 million in its 50:50 joint partnership with Trent Hypermarket Ltd, the retail arm of Indian conglomerate Tata Group, as the grocer giant expands operations into India.
Tesco said its had been given clearance by India's foreign investment regulator in December last year, paving the way for the supermarket giant to venture into another of Asia's largest economies, after India liberalised its rules governing foreign investment into the retail sector in September 2012.
Trent Hypermarket operates the Star Bazaar retail business in India.
Tesco said the joint venture will build on Tata's existing store format in southern and western India, by operating under the names Star Daily and Star Bazaar, and under the partnership will operate 12 stores retailing a range of merchandise including food and grocery, personal and home care products, home and kitchen, and fashion.
The new joint venture with Tata follows on from a wholesale and franchise agreement that Tesco signed with the Indian group back in 2008. It currently supplies around 80% of the goods in Tata?s 16 Star Bazaar and Star Daily stores.
The joint venture is a bold move for the UK supermarket giant which has a strong international presence, but has had to pull out of overseas markets before, including its loss-making US Fresh & Easy chain, which it offloaded to YFE Holdings Inc, the affiliate of Yucaipa Companies LLC.
Tesco has loaned GBP80 million to the new business as part of the deal.
Tesco also offloaded its ailing Japanese operations in 2012 to rival chain Aeon in a GBP40 million deal, but in China, Asia's biggest economy, it injected GBP345 million into a joint venture with state-owned China Resources Enterprise, to combine their Chinese retail operations.
Tesco shares were trading 0.4% lower before midday Friday at 291.41 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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