Bharti Enterprises has started talks with Wal-Mart and is hoping to form a 50:50 joint venture to roll out retail outlets in India, a top company official has said.
The two companies have an equal partnership in wholesale business and the Indian partner is hopeful of replicating it in the retail business, following government's decision to allow up to 51 per cent FDI in multi-brand retail.
Bharti Enterprises Vice Chairman and MD Rajan Bharti Mittal said "talks have started" and the company is hopeful that the nature of their relationship, under which Wal-Mart became an equal partner in wholesale business despite having a chance of bringing in 100 per cent FDI, would continue.
"All I am trying to say here is that when there is opportunity to go 100 per cent in wholesale, they had 50:50 with Bharti. Now, with the opening up of the front-end, the discussions are on the table and hopefully the relationship that we have enjoyed in the last five years will continue," Mittal said in CNN-IBN TV programme Devil's Advocate.
When asked if the retail JV will still be a 50:50 one, he said: "That's what I am trying to say. That's the relationship we have despite 100 per cent being open (in wholesale)".
Mittal also dismissed various reports questioning the impact and work ethics of Wal-Mart terming them as "myth".
"That's not true to be honest. That's a myth of course. You really look at the US, where they do USD 300 billion business, they have about 11 per cent of market share. They save about USD 230 billion worth to the consumers and two million jobs.
"So, that's a myth that they are going to squeeze from both sides," he said when asked about allegations on Wal-Mart paying less to farmers and hiking prices for consumers after capturing the market.
Mittal said Bharti Walmart currently sources 95 per cent of its products from India and it will continue to be so.
Dispelling fears that foreign retailers' entry will lead to death of kirana stores and huge job loss, Mittal said modern organised retail is already present in India for almost 10 years and big companies' presence are gradually shrinking.
"The big business houses in this country have 4,800 stores today. Let's talk about them, let's not talk about foreign investment here. They have declined. It's the other way round.
"The modern retail has declined. If you really look at the modern retail, if I name six of them, there were 5,600 stores (a year back), there is 4,800 stores today," he added.
He said modern retail is struggling because of cost of real estate and cost of people among others.
Mittal said modern retail is about six per cent today and it is likely to grow to 20 per cent in about 20 years.
Stressing that Indian retail market is more similar to China, Brazil, Mexico and Japan than the US and the UK, he said: "India has a very unique model. People have to realize that and people are not realising that India will be a different model".
The two companies have an equal partnership in wholesale business and the Indian partner is hopeful of replicating it in the retail business, following government's decision to allow up to 51 per cent FDI in multi-brand retail.
Bharti Enterprises Vice Chairman and MD Rajan Bharti Mittal said "talks have started" and the company is hopeful that the nature of their relationship, under which Wal-Mart became an equal partner in wholesale business despite having a chance of bringing in 100 per cent FDI, would continue.
"All I am trying to say here is that when there is opportunity to go 100 per cent in wholesale, they had 50:50 with Bharti. Now, with the opening up of the front-end, the discussions are on the table and hopefully the relationship that we have enjoyed in the last five years will continue," Mittal said in CNN-IBN TV programme Devil's Advocate.
When asked if the retail JV will still be a 50:50 one, he said: "That's what I am trying to say. That's the relationship we have despite 100 per cent being open (in wholesale)".
Mittal also dismissed various reports questioning the impact and work ethics of Wal-Mart terming them as "myth".
"That's not true to be honest. That's a myth of course. You really look at the US, where they do USD 300 billion business, they have about 11 per cent of market share. They save about USD 230 billion worth to the consumers and two million jobs.
"So, that's a myth that they are going to squeeze from both sides," he said when asked about allegations on Wal-Mart paying less to farmers and hiking prices for consumers after capturing the market.
Mittal said Bharti Walmart currently sources 95 per cent of its products from India and it will continue to be so.
Dispelling fears that foreign retailers' entry will lead to death of kirana stores and huge job loss, Mittal said modern organised retail is already present in India for almost 10 years and big companies' presence are gradually shrinking.
"The big business houses in this country have 4,800 stores today. Let's talk about them, let's not talk about foreign investment here. They have declined. It's the other way round.
"The modern retail has declined. If you really look at the modern retail, if I name six of them, there were 5,600 stores (a year back), there is 4,800 stores today," he added.
He said modern retail is struggling because of cost of real estate and cost of people among others.
Mittal said modern retail is about six per cent today and it is likely to grow to 20 per cent in about 20 years.
Stressing that Indian retail market is more similar to China, Brazil, Mexico and Japan than the US and the UK, he said: "India has a very unique model. People have to realize that and people are not realising that India will be a different model".
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