Bharti may run Tesco franchise

What it involves: A mix of small and big outlets, hypermarkets and distribution centres.

Bharti's foray into the retail space is taking shape in partnership with Tesco, the UK-based global retail giant. Although the complete strategy is still under wraps, it is possible that Bharti could become a franchisee for Tesco in the country.

At the moment, only 51 per cent foreign investment is allowed in the sector, and that too in single-brand retail. However, international retail chains are free to appoint franchisees in the country. India also allows 100 per cent foreign investment in cash-and-carry retail.

Bharti's retail foray will involve a mix of store formats "" small and big outlets as well as hypermarkets "" supported by distribution centres. The initial rollout will focus on Delhi and the surrounding national capital region, as well as Ludhiana, the hometown of the Mittal brothers.

The venture will be under the aegis of Bharti Enterprises, the group holding company. Field Fresh, the farm produce joint venture between Bharti Enterprises and the UK's EL Rothschild Group, will not be integrated into the company's retail foray.

"Planning is under way and a team is carrying out extensive research and is testing various models. We had set a 90-day time frame and that ends on October 10. The details will be clearer then," Bharti Enterprises Chairman and Managing Director Sunil Mittal told Business Standard.

A crack project team of around 30 people has been at work for two months now, studying consumer behaviour and scouting in the real estate market.

Drawing parallels to his telecom business, Mittal said he would gradually scale up the retail venture. Bharti started its mobile services from Himachal Pradesh and subsequently brought it to Delhi, before rapidly scaling up to gain a nationwide footprint.

While Mittal said work on the real estate component of the venture would begin later, industry sources said efforts were already on to acquire sites of varying sizes including 2-acre plots. He denied that Bharti was eyeing the mall business.

Due to the 51 per cent foreign investment restriction, foreign multi-branded retail companies would not have ownership of either the stores or the invoicing, Asitava Sen, principle consultant, PricewaterhouseCoopers, said.

Organised retail in India is estimated at $6 billion and is projected to grow at 20-25 per cent per annum. German retail company Metro AG operates as a cash-and-carry firm in India. Other multi-branded global retailers like Wal-Mart and Carrefour are eager to enter the country.