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MARKS & Spencer (M&S) has announced a 51:49 joint venture with Reliance Retail, part of the Reliance Industries Group, to set up a chain of Marks & Spencer stores in India. The JV company, M&S Reliance India, aims to open at least 50 new stores in India over the next five years. The announcement is part of M&S plans to grow its international business to 15-20% of group revenues within the next five years.

Apparently, M&S’ JV talks with its existing Indian franchisee, Planet Retail, failed as the latter was unwilling to take minority position in the India business. However, Planet Retail, which has been an M&S franchisee for the last seven years, will continue to hold franchisee rights for the 14 existing M&S stores.

The fact that Reliance Retail relinquished a majority stake to the UK apparel-tofood brand shows its willingness to partner global brands for exposure, knowhow and clout.

“Subject to the satisfaction or waiver of certain conditions, including the receipt of approval from the Foreign Investment Promotion Board (FIPB), M&S will take a 51% interest in M&S Reliance India Pvt Ltd with Reliance Retail taking the remaining 49%. The value of the initial investment into the JV will be up to £29 million or Rs 230 crore (in cash or in kind) between the parties, with both parties agreeing to provide further funding in the future,” a media release said.

The chief executive officer of the JV company, Marks & Spencer Reliance India Pvt Ltd, will be Mark Ashman and the chief financial officer will be Jatin Luthra. The new joint venture will have the right to operate M&S stores in India, selling items such as women’s, men’s and children’s clothing as well as homeware.

M&S chief executive Sir Stuart Rose said in the media release: “India is a very exciting opportunity for M&S and a market where there is the potential for M&S to become a major retail brand. Reliance Retail is the ideal partner for us to accelerate our expansion and create the opportunity to open much bigger M&S stores.”

Reliance Industries chairman Mukesh Ambani said: “We are excited to partner with M&S to combine Reliance’s understanding of the Indian marketplace, and its traditional strengths in areas such as technology, infrastructure, logistics and training with M&S’ legendary retailing and product development capabilities to deliver a delightful experience to Indian consumers.”

According to Marks & Spencer Reliance India Pvt Ltd CEO Mark Ashman, M&S would open bigger stores, selling a wider range of products at lower prices, including a growing number of products sourced from local suppliers.

M&S is one of the UK’s leading retailers with 600 stores in the UK and over 275 stores in 39 territories around the world. Its total group revenues for 2006-07 were £8.5 billion. In November 2007, at its interim results, M&S identified significant opportunities to grow its international business under the leadership of Carl Leaver, its director for international business, targeting a 15-20% contribution to its group revenues within the next five years.

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