Finally UK retailer Tesco Plc has found an Indian partner. After Bharti group chose Wal-Mart over Tesco last year, the UK chain has been looking for an Indian partner. The search ended today with the company signing a wide-ranging cash and carry and an exclusive franchisee agreement with Tata group’s Trent.
The board of Trent Ltd has approved the deal. Tesco will lend its expertise and technical capabilities in the retail sector to Trent. Tesco is also establishing a wholesale cash and carry operation in the retail sector. The franchisee agreement has been entered for Trent’s Star Bazaar hyper market business which is carried on by Trent Hypermarket Ltd (THL), a wholly owned subsidiary of Trent.
The franchisee agreement involves access to IT systems, functions like marketing, stock management, cold chain infrastructure and front-end services. The cash and carry services will be used by Trent for source merchandise for Star Bazaar.
As of now, FDI is not allowed in multi-brand retail outlets, while single brand outlets can have 51 per cent FDI. The cash and carry agreement is backdoor entry for world’s retail giants into India. One of the worlds largest companies and retail chain Wal-Mart had signed a joint venture with Bharti for wholesale cash-and-carry and back-end supply chain management operations in India. French retail giant Carrefour has also been talking to various companies in India to enter into a joint venture agreement. Carrefour was also talking to Wadias of Bombay Dying for a joint venture.
Star Bazaar currently has four outlets, out of which two are in Mumbai and other two are in Ahemadabad and Banglore. Trent plans to have 50 Star Bazaars in the country in the next five years. Trent has posted revenues of Rs 716 crore and a net profit of Rs 34 crore on a consolidated basis in 2007-08.