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Shashi Ashiwal

Setting a trend: Mr Noel N. Tata, Managing Director, Trent Ltd, and Mr Philip Clarke, Asia, Europe Director, Tesco, at a press meet in Mumbai on Tuesday. —

Our Bureau

Mumbai, Aug. 12 After major overseas retailers Wal-Mart, Metro and Marks & Spencer, now the UK’s largest grocer Tesco has got its foothold in the Indian retail market.

Tesco Plc on Tuesday unveiled its plans to enter the Indian market through its wholesale cash-and-carry business with an initial investment of £ 60 million (Rs 480 crore) in the first two years.

Tesco would be setting up three wholesale outlets under its name and the first one would be launched in Mumbai late next year.

At the same time, Tesco has entered into an exclusive franchise agreement with Trent Ltd, whereby the latter would pay a fee to use the UK retailer’s expertise and technical capabilities for the development of its hypermarket business.

At a press conference, Mr Philip Clarke, Tesco’s Director of Asia, Europe and Information Technology, said, “By providing access to the wealth of experience, expertise and capability we have developed over many decades, we can support Trent’s effort in areas such as marketing, stock management, information systems, cold chain infrastructure and front end services as they move forward with their planned expansion to 50 hypermarkets in the next five years.”

Trent is expected to be Tesco’s first customer in its cash and carry business as it would be sourcing merchandise for its Star Bazaar outlets. “Tesco and ourselves have agreed to a wholesale agreement where we will source our products from Tesco’s cash & carry operations for our Star Bazaar outlets. This arrangement would give us access to the domestic supply chain infrastructure that Tesco will set up in India over the coming years. However, there would be no price preference given to us,” stated Mr Noel Tata, Managing Director, Trent Ltd.

In fact, Tesco has been sourcing products from India for several years and has offices in Delhi, Bangalore and Tirupur. “We currently sell Indian products with value of over Rs 1,400 crore in our UK retail business. Almost 90 per cent of our products for our new wholesale operation will be also be sourced locally in India,” added Mr Clarke.

Tesco already employs 3,000 Indian employees at its centre in Bangalore.

The new agreement is expected to generate additional local employment, Mr Clarke said.

“We believe that the only way to be tuned in to the needs of the market we serve is to recruit and retain local talent. Tesco has already invested Rs 200 crore in setting up a campus which provides IT, financial and business services to the entire Tesco Group,” he added.

At present, foreign direct investment laws in India allow only single brand retail.

The first mover in the cash & carry business in India was Germany’s Metro Group in Bangalore. Subsequently, Indian players such as Bharti entered the fray through a joint-venture with Wal-Mart. Other Indian players like the Mahindras, The Future Group and Videocon are looking to enter this business.

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