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
Apparently, M&Sâ€™ 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.
â€œSubject 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 Â£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,â€ 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 womenâ€™s, menâ€™s and childrenâ€™s clothing as well as homeware.
M&S chief executive Sir Stuart Rose said in the media release: â€œIndia 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.â€
Reliance Industries chairman Mukesh Ambani said: â€œWe are excited to partner with M&S to combine Relianceâ€™s understanding of the Indian marketplace, and its traditional strengths in areas such as technology, infrastructure, logistics and training with M&Sâ€™ legendary retailing and product development capabilities to deliver a delightful experience to Indian consumers.â€
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 UKâ€™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 Â£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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