Tata Croma Buys Out Oz's Woolworths Indian Subsidiary
Tata Sons-owned electronics and durables retailer Infiniti Retail Ltd on Thursday said it would acquire Woolworths Wholesale (India) Pvt Ltd, the Indian subsidiary of Australian retail chain Woolworths, for A$35 million (Rs 193.5 crore).
Woolworths Wholesale has been a back-end supplier to Infiniti’s Croma retail stores since 2006. Woolworths move to exit the partnership with Infiniti follows its decision to get out of the consumer durable business in Australia and New Zealand.
“Both parties entered into this venture with the intention of merging the wholesale and retail businesses once FDI (foreign direct investment) regulations were relaxed. However, with our decision to exit the consumer electronics specialty store sector in Australia and New Zealand, we have now decided to sell the wholesale business in India to Infiniti,” Ramnik Narsey, India chairman, Woolworths Wholesale, said.
Tata Sons invested Rs 220 crore in Infiniti on Wednesday, which will enable the company to buy out Woolworths Wholesale and expand the Croma business, said Ajit Joshi, chief executive officer and managing director of Infiniti Retail.
Tata Sons has invested a total of Rs 700 crore in Infiniti so far. Infiniti did a business of Rs 1,972 crore last year and plans to add 20 stores to its tally of 85 stores.
“We used to go as two separate teams to vendors and suppliers for our front-end and back-end needs. Now we can go as a united entity and common team,” Joshi said.
Woolworths’ Hong Kong office used to source Chinese products for Infiniti. “We have that option to use their services depending on the commercial terms worked out between them and us,” he said.
Infiniti is already buying 70 per cent of its private lable needs from Indian manufactures now compared to similar number of products from China earlier, he added.
Upon completion of the transaction, the activities and employees of Woolworths Wholesale will be merged with those of Infiniti.
News source: Business Standard