Thursday, June 28

Bharti, Wal-Mart inch closer to seal deal

Bharti and Wal-mart seem to be inching closer to finally sealing their partnership. The formal agreement is likely to be signed "as early as next month," Sunil Mittal said in London.

"There has been a delay, as there are multiple agreements and legal issues we have to deal with, but I don't see it taking longer than that," he said. "This also has had no impact on the work in progress. We are hiring people, locations are being identified and work is on through Bharti. We are also working on finalising the formal agreements at the same time," Mr Mittal said.

Sunil Mittal, who as president of CII is currently leading a CEO delegation to the UK for talks with industry and government, is being labelled by the local media here as the 'other' Mittal -- the man who's brought Wal-mart into India.

Wal-Mart and Bharti are expected to enter into a joint venture for the cash and carry segment, which will involve selling to wholesale consumers, mostly small shop owners. For selling to retail consumers, Wal-Mart is expected to enter into a technology transfer agreement with the Bharti Group. The two are also expected to collaborate in terms of sharing processes and best practices as well.

Close on the heels of Tesco's recent statement about a "frenzy" being whipped up in India against foreign retailers, and reports of the Indian government re-examining franchisee arrangements, Mr Mittal and his team were often in the firing line about the whole FDI in retail question. Talking to UK newspersons, Mr Mittal came out strongly in favour of allowing large organised retail in FDI – "In this case, I would tend to bat on your side.

The issue is not about foreign and Indian, the debate is about big versus small. If large Indian retailers like us, and Reliance, and the Birlas are allowed, then we would say that more competition is better, and large foreign retailers should also be allowed." The team had to repeatedly clarify that Indian regulations bars FDI only in multi-brand retail, and that too largely in the food and grocery segment.

"This debate (of organised retail versus mom-and-pop shops) is going on even in developed countries, and I believe in India we will have to go through this debate, but we will not take as long as many other countries," he said.

In the UK, Tesco's rising 'size' and 'domination' of the market squeezing out competitors, suppliers and gaining an 'unhealthy' influence is a recurring theme for public discussion; Wal-mart in the US has also had to deal with the same accusations. Mr Mittal clarified that a lot of the public opinion is against large organised retail, and Indian organised players are having to face the same debate – and it's not necessarily directed against any foreign entrant.

Mr Mittal dismissed fears that the Indian government would back-track on the franchisee regulations. Pheroze Vandrevala of TCS, who is co-chair of the Indo-British Partnership initiative and also on the delegation, pointed out that India does not have a track record of rolling back policy changes.

No comments:

Internal Opportunities @ IKYA

Internal Opportunities @ IKYA
Ad in Eco Times