Tata group firm Trent has said its joint venture with Spain’s Inditex for Zara brand is not a “long term strategic investment ” integral to its other retail operations but is only a financial investment.
According to a PTI report: Inditex Trent Retail India Pvt Ltd is a 51:49 percent joint venture (JV) between Inditex group and Trent with 51 percent held by the Spanish partner and the Tata group company holding the rest.
“…the company views its commitment to this JV primarily as a financial investment and consequently, it may be appropriate not to consider this as a long term strategic investment integral to other retail operations,” Trent said in its annual report for 2017-18.
Elaborating why Trent considered its investment in the Zara JV as a financial one and not long term strategic, the company said it was due to the nature of brand ownership, which is with Inditex, and the arrangements for merchandise supply.
The majority partner entirely controls the core customer proposition with respect to the fashion offer, it added.
Inditex Trent Retail India Pvt Ltd recorded 19.40 percent increase in revenue at Rs 1,221.67 crore 2017-18. Trent’s revenue from operations in 2017-18 stood at Rs 2,066.29 crore.
Trent whose flagship brand is Westside, however, said that plans are to steadily expand the presence of Zara stores in India over the next three to four years in major Indian cities.
“The primary challenge to faster expansion is the availability of high quality retail spaces which can be expected to generate reasonable sales throughput,” it was further quoted by PTI as saying.
The company did not elaborate on the expansion planned for Zara brand in India.
At present there are 20 Zara stores located in Indian cities such as Delhi, Mumbai, Bangalore, Pune, Surat, Jaipur, Chandigarh, Chennai, Mohali, Hyderabad and Gurgaon.
Trent has another JV with the Inditex in for Massimo Dutti stores in India.