Bharti, Wal-Mart announce retail partnership

By Our Corporate Bureau | 27 Nov 2006

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On the heels of Tesco's withdrawal from talks with the Bharti Group for a joint entry into the consumer retail sector, Bharti and US supermarket giant Wal-Mart have announced having signed an agreement to jointly explore business opportunities in India.

Bharti Group chairman Sunil Mittal said the two companies intended to open several hundred stores in the next four - five years across India under the Wal-Mart banner.

The joint venture with equal stakes will operate in areas where the government allows foreign investment in retail and logistics. Bharti already has a joint venture for supplying fresh produce to overseas retailers, with ELRo Holdings India Ltd, an investment company of the Rothschild family (formed by Sir Evelyn de Rothschild and Lady Lynn Forester de Rothschild).

The retail shops will be owned by Bharti Enterprises under the Wal-Mart franchise. According to reports, the two companies will each invest $100 million initially, going up to $1.46 billion.

If the venture bears fruit, Wal-Mart will finally be able to gain a foothold in the Indian retail segment, currently valued at $300 billion and expected to double by 2015. Wal-Mart plans to start opening stores in India from 2007 onwards.

Last month Britain's Tesco lost out to the US-based Wal-Mart in a $540 million auction for rights to open 100 stores in China.

Bharti had also been in exploratory talks with France's Carrefour and Germany's Metro.

Large overseas super market groups like Tesco and Wal-Mart are barred from entering the retail segment to protect the small stores that control virtually the entire retail segment, except through franchisees and licensees. They can however operate in the 'cash and carry' wholesale consumer products segment.

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