Walmart says it has lost millions to Bharti by ending Indian venture
29 Apr 2014
Retail giant Walmart has paid through its nose to end its six-year-old joint venture with Bharti Enterprises last year, the Arkansas-based company declared on Monday.
Walmart said in its annual report that it "paid and forgave" $334 million to break ties with Bharti Retail, with whom it had partnered to open stores in India, including a loss of millions of dollars for the American retailer. This of course amounts to so much debt in its balance sheet.
Another $100 million was spent in buying out the Indian partner's stake from the erstwhile 50:50 cash-and-carry joint venture, Bharti Walmart Pvt Ltd.
"During fiscal 2014, the company acquired, for $100 million, the remaining ownership interest in Bharti Walmart Pvt Ltd," the company said. "In connection with the agreements related to the Bharti retail business, the company paid and forgave indebtedness of approximately USD 234 million."
In October 2013, Walmart called off its six-year-old partnership with Bharti Enterprises and decided to operate wholesale stores independently in India (See: Walmart ends alliance with Bharti; to go slow with wholesale business).Against the backdrop of these payouts, Walmart recorded a net loss of approximately $151 million.
Earlier this month, Walmart had announced that it would focus on wholesale business with plans to open 50 stores in the next four to five years (Walmart plans 50 new wholesale stores, e-commerce in India).
Walmart has also been probing allegations of corrupt practices in its various overseas arms, including India.
"Inquiries or investigations regarding allegations of potential FCPA (Foreign Corrupt Practices Act) violations have been commenced in a number of foreign markets where the company operates, including, but not limited to, Brazil, China and India," the company said.
Last October India's Enforcement Directorate, which probed alleged contravention of foreign exchange laws by Walmart in its investments in domestic supermarket chain Bharti Enterprises, had found no violation of FDI guidelines by the US multinational retail giant (No violation of FEMA rules by Walmart, says ED).
The probe was regarding Walmart's investment of $100 million in March 2010 in Cedar Support Services. Cedar, through a 100 per cent subsidiary Bharti Retail, operates front-end retail stores under the brand name Easy Day.
It was alleged that Walmart entered into the Indian multi-brand retail sector through its investment in Bharti Group even before the retail sector was opened up foreign investment.
