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Bharti v/s Wal-Mart: Will 1 Percent Change the Game?

By SiliconIndia | Monday, 01 October 2012, 05:13 Hrs | 1 Comments

Bharti v/s Wal-Mart: Will 1 Percent Change the Game?

Bangalore: Bharti Enterprises is in hopes to set up a 50:50 joint venture with Wal-Mart. But on the other hand the U.S. retailer has the plans to own majority stakes in the joint venture.

Going by the policy, the maximum a foreign retailer is allowed to pick 51 percent stake in an Indian venture. Talks are in progress to set up a joint venture between both companies. Despite considering various options with regard to a local partner, a report in the Times of India says that it prefers a 51 percent controlling stake in a new front-end retail company for which Bharti Enterprises would be a "natural partner".

The retail chain is looking for the governments permission to set up stores in India in the next 45-60 days. But overseas companies have to make an application to the Foreign Investment Promotion Board (FIPB) to enter multi-brand retail and also need a separate company for the same. Wal-Mart is studying these aspects, including the equity structure of the new company, although there is still ambiguity over existing stores and legal structures.

In an interview to Business Standard, Raj Jain, President, Walmart India, and also Managing Director, Bharti-Walmart, the cash & carry joint venture, said that the company has a great relationship with Bharti and would like to explore an alliance with it. "But, lets see," he added a big but, indeed.

Rajan Bharti Mittal, Vice-Chairman and MD, Bharti Enterprises in an interview to CNN IBN said, "All I am trying to say here is that when there is opportunity to go 100 per cent in wholesale, they had 50:50 with Bharti. Now, with the opening up of the front-end, the discussions are on the table and hopefully the relationship that we have enjoyed in the last five years will continue."

Wal-Mart is no more an economic or business issue only, it has taken the shape of a debated politicized issue. "The countrys economic well-being cannot be reduced to a political football. The country needs all the foreign exchange it can get to tide over a difficult situation," as stated by Firstpost. For the meantime, the company has also decided to scale down the store size in order to stay closer to their target customers and due to non-availability of large spaces within the cities.

Raj Jain, president Wal-Mart India told Mint, "In order to have a store spread across several lakh square feet, we would have to locate them on the outskirts of a city. In the Indian context it will not be the right thing to do so."

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