New Delhi: Wal-Mart Stores Inc.’s Indian arm is looking to expand its wholesale or cash-and-carry business in Himachal Pradesh, Haryana, Jammu and Kashmir, Uttar Pradesh and Andhra Pradesh, among others, a person familiar with the matter said. On 21 July, The Economic Times reported Wal-Mart was investing an additional Rs.623 crore in India. Filings with the Registrar of Companies show the company has invested almost Rs.2,000 crore in its Indian operation this year. Since terminating its joint venture with Bharti Retail Ltd, the world’s largest retailer has said it will focus on wholesale and expand its network in the country. In April, Krish Iyer, chief executive officer Wal-mart India Pvt. Ltd said in a press note that the firm will open 50 more cash-and-carry stores in India in the next four or five years. Wal-Mart currently has 20 cash-and-carry stores in India. “In addition to our existing footprint across India with 20 cash-and-carry stores, we plan to open 50 more in the next four to five years. While growing our India business, we will continue to invest in supply chain infrastructure and supplier development, especially helping the growth of small and medium manufacturers,” Iyer, the company’s India head, said in an emailed response to Mint. The person familiar with the matter said Wal-Mart is scouting for 15-20 properties in the first phase of expansion. These should be on 3-3.5 acre plots and located on outskirts of Amritsar and Mohali in Punjab, Allahabad and Bareilly in Uttar Pradesh, added this person who asked not to be identified. Each store could cost between Rs.20 crore and Rs.30 crore, this person said. The amount excludes the cost of real estate. And it could take 12-24 months to get the stores up and running, he added. The retailer’s plans to grow its cash-and-carry business come at a time when the Narendera Modi-led National Democratic Alliance (NDA) government remains firm on its decision of not allowing foreign supermarkets to operate in India. In 2012, the United Progressive Alliance (UPA) government allowed foreign supermarket owners to hold a stake of up to 51% in local store chains. The NDAhasn’t rolled back that decision, but given its own position on such stores, the constraints imposed by the UPA as riders to its 2012 decision, and the fact that the additional permission of provincial governments is required, it is unlikely that any foreign retailer will want to operate supermarkets in India. Wal-Mart’s investments in the cash-and-carry business where the government allows 100% direct investment is part of a long-term strategy to position itself in India’s growing consumer market. The retail business in India is expected to grow to $750-850 billion by 2015 from the current $518 billion, according to audit and advisory firm Deloitte’s Indian arm, but organized retail accounts for just 8% of this. “Wal-Mart is here for good,” added a retail analyst who did not want to be identified. He and others Mint spoke to say cash-and-carry is a logical preparation strategy for entry into multi-brand retail as and when future governments ease entry norms. Wal-Mart’s India expansion coincides with French retailer Carrefour SA’s exit from the country. Earlier this month, Carrefour announced plans to down the shutters on its cash-and-carry operations in India saying it wanted to exit the underperforming markets and focus on its home market. In October 2013, Bharti Enterprises and Wal-Mart Stores, Inc., decided to part ways, terminating their franchise agreement in the retail business. Wal-Mart’s Indian entry has been controversial. The firm has been a lightning rod for protests aimed at foreign Big Retail, been probed by the country’s enforcement directorate for violation of foreign investment norms in a well-publicized probe (before being found to be in the clear), come under a cloud for its lobbying efforts, and survived a messy break-up with its partner. Wal-Mart now plans to take national its online retail venture that will allow small traders to access bulk purchases through its website, bestrpicewholesale.co.in. “The idea is to service sellers who find it difficult to access our stores,” Iyer said in an interview to Mint in June. Currently, the website services Lucknow and Hyderabad only
Posted on: Mon, 28 Jul 2014 07:12:06 +0000
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