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A statement issued soon after said quite the same, without elaborating on Jain’s exit or his next stop. However, it named Senior Vice-President Ramnik Narsey, who joined Walmart last month after quitting as India chairman & CEO of Australia-based Woolworths, as the interim India leader to replace Jain “with immediate effect”.
There was talk, in hushed tones, of more exits and changes in the organisation as part of a clean-up act. But people in the know said there wouldn’t be any change so far as Walmart’s India commitment went. In fact, reacting to the development, Future Group Founder & CEO Kishore Biyani said: “It (Walmart) is a large organisation. Issues like these happen at such large firms.”
Many reasons to explain Jain’s departure had started floating since morning, though all were off the record. However, from what a company executive told Business Standard, it was clear the parting was “not amicable”.
Price, who had come to India earlier this week, had yesterday presided over a quarterly business review, which, it is learnt, was not attended by Jain. A source said, Jain had not been heard saying “bye” when leaving office on Monday evening, perhaps for the last time. Narsey is believed to have moved into Jain’s fourth-floor cabin yesterday, hours before the townhall announcement.
The world’s largest retail chain has lately been in the middle of several controversies, including an internal investigation into violations of the Foreign Corrupt Practices Act (FCPA), or anti-bribery laws, across markets like Mexico, India, Brazil and China.
As a fallout of that probe, Bharti-Walmart CFO Pankaj Madan, besides four others from the legal team, had been sent on leave. A source said the investigation might have been completed now, and many more heads might roll as part of a clean-up act. This information could not be independently verified.
Jain, who was with the company since 2006, did not reply to a text message sent by this newspaper on whether his exit was linked to the investigation into the anti-bribery law violation. He did not answer phone calls, either.
When contacted, a company spokesperson refused to say anything beyond the content of the statement.
An industry veteran, who did not want to be named, said Jain’s exit had perhaps more to do with the company (Bharti Walmart) not performing according to expectations. The accumulated losses of Bharti Walmart as of last year were over Rs 700 crore, according to the company’s filing to the Registrar of Companies.
Jain had been made Walmart India’s chief in 2007, two years before the company launching its cash-and-carry (wholesale) venture in the country in partnership with the Bharti group. After opening the 20th cash-and-carry store in India last year, the company halted its expansion, putting aside plans of new outlets, primarily due to uncertainties in the local market.
Apart from the FCPA probe, the Bentonville-based American retail chain has also been facing an Enforcement Directorate (ED) investigation into an alleged $100-million investment in a Bharti group company in violation of the Foreign Exchange Management Act (Fema). Not just that, the company also came under attack for its disclosures to the US Senate that it had lobbied to gain wider access to some markets, including India. A one-man committee, headed by retired Justice Mukul Mudgal, recently submitted a report on the lobbying issue, but the findings have not yet been revealed.
Even as the Union Cabinet permitted up to 51 per cent FDI in multi-brand retail last September, Walmart has yet to make a proposal to the government for setting up retail stores in the country. While complex policy guidelines might have prevented the company from moving fast on its India plans, sources in the government indicated it would be tough for the American chain to make a proposal till it came out of all the “messy probes”. By getting a new leadership team, Walmart might be attempting to change its image perception in the country, another source said.
WIDE AUDIENCE
Some recent townhall# announcements
- Infosys: N R Narayana Murthy, after returning as the firm’s executive chairman, announced a salary hike on June 14, 2013
- Sistema Shyam Teleservices: After the 2G scam and cancellation of telecom licences by the Supreme Court, CEO Vsevolod Rozanov assured employees in February 2012 that increments and performance-linked incentives would come on time
- Uninor: The telecom service provider last year announced in a townhall meeting that it had decided to discontinue operations in a few circles. When India head Sigve Brekke was elevated to a bigger role, that was also announced in the same way
- Sandoz: The company, in November 2012, announced its decision to shut its facility for developing generic drugs in India
# A townhall meeting is an American term for informal public meetings or functions. In corporate parlance, it means communication of important decisions by CEOs to all employees together — sometimes across geographies through video-conferencing
