Trent-Tesco JV for multi-brand retail business awaiting final nod: Noel Tata
10 Mar 2014
Tata Group firm Trent Hypermarket is awaiting approval from the inter-ministerial panel for setting up a joint venture with UK-based retail giant Tesco for opening multi-brand retail stores in India, a senior executive of Trent said today.
Trent Hypermarket and Tesco had, in December last year, received approval from the Foreign Investment Promotion Board (FIPB) for setting up a 50:50 joint venture for operating multi-brand retail stores, but are yet to get approval from an inter-ministerial panel.
"We are awaiting the approvals... When we get it we will make our plans. We are still waiting for the acceptance Noel Tata, vice chairman of Trent Ltd, said on the sidelines of a CII event in New Delhi.
The joint venture proposes an initial investment of $110 million (about Rs680 crore).
Meanwhile, reports said, Saurabh Chandra, secretary to the Department of Industrial Policy and Promotion, had on his last day in office on 28 February 2014, written to the finance ministry on the wording of the nod to Trent-Tesco proposal keeping in mind the changes made in FIPB's original proposal.
Sources said the DIPP in a proposal to FIPB had made a condition that Tesco Overseas Investment Ltd, a unit of Tesco, always remained a 100 per cent subsidiary of the UK-based retailer for approving the JV.
Also, it put the condition that Trent Hypermarket Ltd (THL) would remain the exclusive licensee of Tesco brand in India and that the names of Tata and Tesco Enterprise be carried on all banners and stationery/records of the THL.
These conditions were altered by the FIPB, sources said.
Also, as per the DIPP proposal, fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may remain unbranded. Other than these categories, all other products sold in the stores under the multi-brand retail trading policy shall be branded.
Besides, Chandra also raised objections to the clubbing together of conditionalities on the amount of FDI to be invested in the first tranche.
According to the conditionalities in the proposal, the amount to be brought in as FDI by the foreign investor in the first tranche should not be less than $100 million.
Moreover, at least 50 per cent of the total FDI brought in the first tranche, $50 million, should be invested in the "back-end infrastructure" within three years of the receipt of the first tranche by Trent Hypermarket Ltd.
After the final approval, Tesco will pick up 50 per cent stake in Trent Hypermarket Ltd.
Tesco is the first global retailer to apply for multi- brand retailing after the government allowed 51 per cent FDI in the segment in September 2012.
