Bharti to invest $2.5 B in retail foray

Monday, 19 February 2007, 06:00 Hrs
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New Delhi:Bharti Enterprises, which is making a foray into retail business through a subsidiary, Bharti Retail, has announced an investment of $2.5 billion in the retail trade business in India over the next seven years with technological backing from Wal-Mart of the US.

The telecom and agro-farming group, has already signed a memorandum of understanding with Wal-Mart for a joint venture in areas such as cash-and-carry and retail logistics."We will come in the hypermarkets and supermarkets formats by the first quarter of next year," said Rajan Bharti Mittal, joint managing director, Bharti Enterprises adding that the organized retail segment currently accounts for only three percent of the total market in India offering immense potential.

The government permits up to 51 percent foreign equity in single brand retail trade business in India and disallows any foreign brand to enter the multiple brand trade.But at the same time, foreign retail houses are allowed 100 percent equity in the cash-and-carry segment - which is akin to wholesale trade - and also in support-related areas like cold chains, logistics and transportation.

Bharti officials said a new 50:50 company will be set up with the US giant Wal-Mart for the cash-and-carry business - which will include transportation, cold chain and back-end work for the retail trade business.

According to Mittal, Bharti will be scouting to acquire 10 million sq ft of space for its stores and other related operations through its real estate arm, Bharti Realty, and seek a pan-India presence.

Organised retailing in India is expected to be worth $21.5 billion by 2010 from the current $7.5 billion, according to consultancy firm Technopak Advisors. The retail trade business as a whole is expected to touch around $300 billion.
Source: IANS
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