Wednesday, May 28, 2008

Tesco PLC News: Tesco On the Prowl to Open Stores In India; Nation Has World's Second-Fastest-Growing Economy After China


Tesco in talks with Wadias, Parsvnath to formalise its India plans
28 May, 2008,Writankar Mukherjee & Anuradha Himatsingka, TNN

KOLKATA: After going slow on their ambitious India game plan, UK’s Tesco is once again on the prowl. Europe’s second-largest retailer after France’s Carrefour is in talks with multiple potential partners to formalise its much-awaited India plans.

The international retailer is believed to be in talks with the Wadias, Parsvnath Developers and Kalpataru Properties.

Industry sources, clued on to the developments, claim Tesco is in talks with prospective Indian partners for a joint venture to roll out its cash-and-carry outlets and also enter into a franchise arrangement for front-end retail.

Though early days, sources said Tesco’s India business model may be along the lines of the Bharti-Wal-Mart alliance. Incidentally, Tesco was also negotiating with Bharti though the deal fell through midstream when Bharti teamed up with the iconic US retailer.

When contacted by ET, none of the players were willing to part with any information on the proposed deal. In response to ET’s email query, a Tesco spokesperson said: “We have made no secret of our interest in the Indian market and believe it could represent an exciting opportunity for the future. We continue to discuss potential partnerships. However, it is important to get the right partner and when we have anything more to say on this we will announce it.”

Parsvnath Developers chairman Pradeep Jain said: “We are talking to global retailers and hope to finalise our retail venture over the next two-to-four weeks.” Mr Jain refused to disclose the names of the global retail chains it is negotiating with.

A Wadia Group spokesperson said: “We do not respond to speculation. We have no comment to make on your query.” Mumbai-based realty firm Kalpataru Properties spokesperson too refused to comment.

While India allows 100% FDI in cash-and-carry retail, it allows up to 51% in single-brand front-end retail. Since FDI is not yet permitted in multi-brand front-end retail, players like Tesco can enter front-end retail only by entering into a franchise arrangement with an Indian partner.

Retailers are seeking partnership opportunities with Parsvnath Developers and DLF. Tesco has sourcing offices in Bangalore and Delhi. They source products from India for its global operations. The UK retailer also operates a global support centre in Bangalore — Tesco Hindustan Service Centre — which provides IT and business services to Tesco operations in Europe and Asia.

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