Marks and Spencer's ties up with Reliance Retail

London/Mumbai: Britain's largest retailer Marks and Spencer (M&S) will open at least 50 stores across India over the next five years after signing a path-breaking agreement with the Mukesh Ambani-led Reliance Retail Ltd (RRL) Friday.

The two companies have set up a new joint venture, Marks and Spencer Reliance India, with an initial investment of 29 million pounds (Rs.2.3 billion), setting the scene for major foreign investments in the lucrative Indian retail sector.

M&S will hold 51 per cent stake in the JV, while the remaining will be held by RRL. The new firm will be named Marks and Spencer Reliance India Pvt Ltd, according to an RRL release issued here Friday.

The new stores are likely to be what reports in London have called 'seamless malls' - massive shops within shops and standalone boutiques selling mainly clothes and homeware - in Mumbai, Delhi, Bangalore and other major cities.

The proposal is awaiting approval from the Foreign Investment Promotion Board (FIPB) of India. Though the initial investment will touch 29 million pounds (in cash or in kind), both firms have agreed to go for further funding as and when required.

Commenting on the deal, Reliance Industries chairman Mukesh Ambani said: "Marks and Spencer is a very well respected brand globally. At Reliance, we have always strongly believed in the power of the Indian consumer market."

In the first five-year phase, the JV plans to open at least 50 stores across India with M&S' existing franchise partner Planet Retail, through which the British company currently sells clothes.

M&S chief executive Sir Stuart Rose said: "India is a very exciting opportunity for M&S and a market where there is the potential for us 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 stores."

The M&S move into India is the first step in a major global expansion plan announced last year, mainly pinned around India and China. The announcement is part of M&S' plans to grow its international business to 15-20 per cent of group revenues within next five years.

The new company will have Mark Ashman as its CEO and Jatin Luthra as CFO.