Bharti still in talks, media crowns Wal-Mart
Bharti Enterprises Ltd. said on Monday it is still negotiating a partnership with major international retailers, amid media speculation that U.S. retailer Wal-Mart Stores Inc. may have secured the deal.
Weekend media reports said a deal had been finalised with Wal-Mart, but a spokesman for the Bharti group, which controls India's biggest mobile services provider, Bharti Airtel Ltd., told Reuters that no deal had been finalised.
Bharti Chairman Sunil Mittal told Reuters last month that a deal was likely by the end of November. He said then that Bharti was in talks with Wal-Mart, the UK's Tesco Plc and France's Carrefour."Despite media reports that we have reached a deal, we continue to be in talks with all the global majors," the Bharti spokesman said on Monday, declining to specify when a deal may be done. "Any deal takes time."
Indian media have reported that the decision appears to be between Wal-Mart and Tesco. The Financial Express said at the weekend that Bharti and Wal-Mart had finalised a master franchise agreement that would include hypermarkets, supermarkets and grocery stores.
The two would initially invest $100 million, going up to $1.46 billion, the paper said, quoting industry sources.
Foreign retailers are keen to enter India's rapidly growing market, but multiple-brand retailers are only allowed to operate through franchises and licencees, or a cash-and-carry wholesale model, like Metro AG and Shoprite have chosen.
Single-brand retailers are allowed to own a majority stake in a joint venture with a local partner, and the expectation is that India would ease rules on foreign investment.
"Bharti can't lose with either (Wal-Mart or Tesco): both have the size and the branding and a proven track-record in non-home markets," said a retail consultant who declined to be named."Ultimately, it would come down to who can deliver the better value and a cultural fit between the two companies," he said.
TILLS RINGING
The Indian retail industry is estimated at about $300 billion, and is forecast to grow to $427 billion in 2010 and $637 billion in 2015, according to consultancy Technopak Advisors.
Organised, or branded, retail makes up only 3 percent of the market, compared to China's 20 percent and Thailand's 40 percent.But that share is set to rise to 15-18 percent by 2011/12, with the entry of large Indian firms including Bharti, Reliance Industries, the Tata group and the Aditya Birla Group.
Reliance Industries, the top petrochemical company, recently opened its first grocery stores and is investing $5.6 billion in formats ranging from convenience stores to hypermarkets. It expects revenue of $22 billion from retail operations by 2010/11.
Cigarette maker ITC Ltd. has also opened its first grocery stores and plans to add outlets quickly.
Bharti has a joint venture with the El Rothschild group for FieldFresh, which supplies fresh produce to overseas retailers. Wal-Mart has a liaison office in India and expects to step up its sourcing of items such as apparel, textiles and shoes from India, which totalled more than $1.6 billion this year. Tesco also sources food and non-food items from India.
Weekend media reports said a deal had been finalised with Wal-Mart, but a spokesman for the Bharti group, which controls India's biggest mobile services provider, Bharti Airtel Ltd., told Reuters that no deal had been finalised.
Bharti Chairman Sunil Mittal told Reuters last month that a deal was likely by the end of November. He said then that Bharti was in talks with Wal-Mart, the UK's Tesco Plc and France's Carrefour."Despite media reports that we have reached a deal, we continue to be in talks with all the global majors," the Bharti spokesman said on Monday, declining to specify when a deal may be done. "Any deal takes time."
Indian media have reported that the decision appears to be between Wal-Mart and Tesco. The Financial Express said at the weekend that Bharti and Wal-Mart had finalised a master franchise agreement that would include hypermarkets, supermarkets and grocery stores.
The two would initially invest $100 million, going up to $1.46 billion, the paper said, quoting industry sources.
Foreign retailers are keen to enter India's rapidly growing market, but multiple-brand retailers are only allowed to operate through franchises and licencees, or a cash-and-carry wholesale model, like Metro AG and Shoprite have chosen.
Single-brand retailers are allowed to own a majority stake in a joint venture with a local partner, and the expectation is that India would ease rules on foreign investment.
"Bharti can't lose with either (Wal-Mart or Tesco): both have the size and the branding and a proven track-record in non-home markets," said a retail consultant who declined to be named."Ultimately, it would come down to who can deliver the better value and a cultural fit between the two companies," he said.
TILLS RINGING
The Indian retail industry is estimated at about $300 billion, and is forecast to grow to $427 billion in 2010 and $637 billion in 2015, according to consultancy Technopak Advisors.
Organised, or branded, retail makes up only 3 percent of the market, compared to China's 20 percent and Thailand's 40 percent.But that share is set to rise to 15-18 percent by 2011/12, with the entry of large Indian firms including Bharti, Reliance Industries, the Tata group and the Aditya Birla Group.
Reliance Industries, the top petrochemical company, recently opened its first grocery stores and is investing $5.6 billion in formats ranging from convenience stores to hypermarkets. It expects revenue of $22 billion from retail operations by 2010/11.
Cigarette maker ITC Ltd. has also opened its first grocery stores and plans to add outlets quickly.
Bharti has a joint venture with the El Rothschild group for FieldFresh, which supplies fresh produce to overseas retailers. Wal-Mart has a liaison office in India and expects to step up its sourcing of items such as apparel, textiles and shoes from India, which totalled more than $1.6 billion this year. Tesco also sources food and non-food items from India.
posted by SY at 9:35 PM
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