UK’s cloth and food retailer Marks & Spencer Group plc has decided to pick up a majority 51 per cent stake in a joint venture to be set up with Reliance Retail, part of Mukesh Ambani’s Reliance Industries Group. Reliance Retail will hold the balance 49 per cent in the JV, to be called Marks & Spencer Reliance India Pvt Ltd.The JV, to be operational once approved by the Foreign Investment Promotion Board(FIPB), will invest Rs 229 crore to start with, will open about 50 Marks & Spencer stores in the country over the next five years. The first store is expected in 6-9 months after the JV receives the FIPB nod. To begin with, the focus will be on cities like Delhi, Mumbai, Hyderabad and Bangalore. Both the companies are open to providing more funding when required in the future. At present, the government regulations do not permit foreign direct investment (FDI) in multi-brand retail, but allow up to 51 per cent FDI in single-brand retail. The JV will have the right to operate Marks & Spencer stores in India selling items such as women’s, men’s and children’s clothing as well as home-wares. The existing franchise of Marks & Spencer’s - Planet Retail - will continue as a franchisee in respect of the 14 stores already in place. “The stores (to be set up by the new JV) will be much bigger than the existing franchisee stores in India, offering a bigger range of products to consumers. We also expect to offer products at lower prices by increasing our sourcing from the country,” Marks and Spencer Reliance India chief executive officer Mark Ashman said.This announcement is part of Marks & Spencer’s plans to grow its international business to 15-20 per cent of the Group revenues within the next five years. Marks & Spencer recorded total revenue of 8.5 billion pounds (Rs 68,000 crore) in 2006-07. Stuart Rose, chief executive, Marks & Spencer said, “India is a very exciting opportunity and a market where there is the potential for M&S to become a major retail brand.”Mukesh Ambani, chairman of Reliance Industries, said, “M&S is a very well respected brand globally. We are excited to partner with M&S to combine Reliance’s understanding of the Indian marketplace, and its traditional strengths in the areas such as technology, infrastructure, logistics and training with M&S’s legendary retailing and product development capabilities.” MAKING A MARK•The new JV — Marks & Spencer Reliance India — will invest Rs 229 crore initially•The stores will be much bigger than the 14 existing franchisees run by Planet Retail•The company will offer products at lower prices by increasing sourcing from India•To begin with, the focus will be on Delhi, Mumbai, Hyderabad and Bangalore•This is part of UK retailers plan to increase global revenues to 15-20% over five years
