Companies

Tesco to focus on 2-3 key states after FIPB nod

Bindu D Menon New Delhi | Updated on March 12, 2018 Published on December 30, 2013

British retailer Tesco's plans to focus on 2-3 key states may help it get an edge over competitors, such as Walmart and Carrefour, which are yet to enter multi-brand retail in India.

Apart from this, it will also allow the world’s third largest retailer to keep a close watch on the foreign direct investment (FDI) situation after the general elections in 2014.

Tesco on Monday got a green signal from Foreign Investment Promotion Board (FIPB) to enter the Indian multi-brand retail segment in joint venture with a Tata Group company. Tesco will pick up 50 per cent stake in Trent Hypermarket Ltd, a wholly-owned subsidiary of Trent Ltd, a Tata group company. It plans to invest $110 million (about Rs 680 crore).

A senior Government official indicated that the Tatas are likely to divest four stores owned by Trent Hypermarket before Tesco invests in the company. The stores located in Gujarat and Tamil Nadu will be divested as these two states are against FDI in multi-brand retail.

Even though the Government allowed 51 per cent FDI in multi-brand retail in September 2012, only 12 states and Union territories have agreed. Implementation of FDI is a state subject, which is why these companies are in wait-and-watch mode.

“Tesco is pleased that the FIPB has agreed to our proposal. This will now allow us to work on the practicalities of setting up the joint venture with Trent. Any such announcement will be made in the usual way,” a Tesco spokesperson said.

Tesco said it planned to set up stores in Maharashtra and Karnataka (two Congress-ruled states) which are pro-FDI. Trent Hypermarket runs 16 outlets in the southern and western regions with support from Tesco.

Anil Talreja, Partner, Deloitte Haskins and Sells, said, “It is good idea for a retailer like Tesco to focus on two or three states and achieve a critical mass rather than expand furiously pan-India. Several domestic and international retailers who had expanded too quickly are struggling to survive.”

After the recent Assembly elections, two key Congress-ruled states — Delhi and Rajasthan — saw a change in regime. This has put FDI in retail on the back-burner as the BJP (Rajasthan) and Aam Aadmi Party (Delhi) are opposed to FDI in retail.

Arvind Singhal, Chairman, Technopak said, “We believe other retailers will be watching Tesco’s before making investment. Tesco, by itself, can consolidate its presence in key states which are also huge procurement points and is logistically better.”

Published on December 30, 2013

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
null
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.