Pending a change in government policy on foreign investment in multi-brand retail, Bharti Walmart is going ahead with an expansion plan for the cash and carry/wholesale business.
As of now, the pace is more than what was set at the time of announcement of the joint venture between American retail giant Walmart and India’s Bharti Enterprises in 2007. As against the 2007 target of 10-15 stores in seven years, it is planning to touch around 25 cash and carry outlets in India by the end of 2012.
On whether the cash and carry rollout plan would alter if the government allowed FDI in multi-brand retail soon, Raj Jain, president, Walmart India, and managing director, Bharti Walmart, told Business Standard: “It all depends on how it is done.” There are indications that FDI in multi-brand retail may come with riders.
India allows up to 100 per cent FDI in cash and carry/wholesale, but no foreign investment is permitted in multi-brand retailing. Cash and carry stores are meant to cater to only businesses, organisations, retailers or institutions with specified licences.
Jain was speaking to this newspaper on the sidelines of a conference organised to announce a venture between MoneyGram, Bharti Walmart and Bharti Retail’s Easy Day, in association with Thomas Cook, for a money transfer service across the stores.
He said there was enough room for cash and carry in India and Bharti Walmart should be able to stick to its target. As for foreign investment in multi-brand retail, he said, “We have been waiting for several months now. We will keep expecting that it comes soon.”
On whether Walmart was engaged in talks with any other Indian retail group for a potential partnership deal, Jain dismissed it as “speculative”. Is Bharti its long-term partner then in India? “Yes”, he replied, without elaborating.
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If Walmart would consider taking the cash and carry model to other countries, too, after the successful run in India, Jain said, “We have cash and carry in Brazil.” In China, it has the Sam’s Club format, similar to cash and carry. Sam’s Club stores are warehouse membership outlets that provide bulk and quality products to its corporate and individual members.
The group is looking at pan-India expansion for its cash and carry business over the next two years. So far, Best Price Modern Wholesale, the cash and carry chain of Bharti Walmart, has been focused on the northern regions of India. According to Jain, the next 20 cash and carry stores will be located in southern and western states. He did not name the states.
Bharti Walmart already has six cash and carry stores in the country, and wants to open another eight to 10 by the end of this calendar. Next year, it plans to open another eight to 10. So, by the end of 2012, the number of stores is expected to be close to 25, far beyond the target set in 2007.
Currently, four of the stores are in Punjab and one each in Rajasthan and Madhya Pradesh. The group has invested $40 million on opening its stores so far. Currently, the focus of the company is on building scale, as profitability is expected only in the medium or long term.