Bharti to spend $2.5 b in retail venture

Sunil Mittal's Bharti group, which is partnering Wal-Mart Stores for a wholesaling venture, will spend $2.5 billion on a retail network.

The company would have 10 million square feet of retail space and employ 60,000 people by 2015, Rajan Mittal, joint managing director of Bharti Enterprises, said at a news conference in New Delhi, where it is based.

In November, Bentonville, Arkansas-based Wal-Mart agreed to form an equal wholesaling venture with Bharti that will also connect suppliers and retailers, with the Indian company owning the retail stores.

Bharti, owned by billionaire Sunil Mittal, 49, will compete with local companies including Reliance and the Tata group in a nation where sales through store chains are expected to reach as much as 35 per cent of retail sales by 2015, up from about 2 per cent now, according to Wal-Mart, the world's biggest retailer.

India bars overseas companies from opening retail stores.

"Organised retail, which currently accounts for 3 per cent of the total market, has tremendous growth potential in the fast-expanding Indian economy,'' Rajan Mittal said in New Delhi today. "Not only will it benefit millions of consumers but also farmers, small manufacturers and artisans.''

Bharti, which plans to open its first store in the first quarter of the next year, was in talks with Wal-Mart for setting up a supply chain and wholesale venture and would announce an agreement soon, Mittal said. Bharti Enterprises fully owns Bharti Retail.

Bharti expected the retail unit's sales at Rs 20,000 crore ($4.5 billion) by 2015, Mittal said. It would set up supermarkets, hypermarkets and convenience stores and sell products ranging from food, electronics, clothing and furniture, Mittal said.

Carrefour and Tesco might follow Wal-Mart in entering India, with economic expansion and greater disposable incomes in the hands of a burgeoning middle class making the nation attractive for local and foreign retailers.

Indian companies such as Reliance and Pantaloon Retail India, the country's biggest publicly traded retailer, are betting on a rapid rollout of stores to gain an edge before rules are changed to allow foreign retail chains to open outlets in the nation.

Bharti and Reliance hope to tap the organised, or store-chain, retail market that Morgan Stanley estimates will surge 15-fold to $60 billion by 2015.

Reliance, the nation's biggest company by market value, plans to spend more than $5.5 billion to set up stores.

The Mumbai-based Pantaloon would spend $1 billion to open as many as 4,000 new stores by 2010, Managing Director Kishore Biyani said in November.

Pantaloon has more than 140 stores covering 4 million square feet of retail space, spread across 32 cities and more than 14,000 employees, according to the company's website.