Walmart Inc, Bharti Group may end India partnership | business | Hindustan Times
Today in New Delhi, India
Jan 20, 2017-Friday
New Delhi
  • Humidity
  • Wind

Walmart Inc, Bharti Group may end India partnership

business Updated: Sep 09, 2013 05:34 IST
Gaurav Choudhury
Gaurav Choudhury
Hindustan Times
Highlight Story

Walmart Stores Inc is mulling to pull out of its six-year-old wholesale joint venture with Bharti Group amid speculation that the world’s largest superstore chain has begun talks with other companies for its front-end retail foray in India.

The US-based retail giant is likely to make an announcement by this month-end on its decision not to convert into equities $100 million it had lent to the Bharti Group in 2010 in a deal which Indian authorities are probing for flouting rules.

This would effectively rule out Walmart partnering with the Sunil Mittal-led group to set up mega stores in India.

The deadline for converting these funds lent through compulsorily convertible debentures (CCD) ends on September 30.

Walmart, sources indicated, is likely to press for Bharti Group returning the funds through a “buy-back” option.

Walmart’s investment in Bharti has come under a scanner amid allegations that the global retail chain may have entered India’s front-end multi-brand retail business two-and-a-half years before the government actually lifted the ban on foreign investors in the sector last year.

This was in addition to investments in Bharti Walmart, an equal partnership joint venture between Bharti Group and Walmart, which runs wholesale stores under the Best Price Modern Wholesale brand.

Walmart is examining various options to exit its investments in the wholesale business as well as pulling out its funds from Bharti’s retail arm, sources said.

“Walmart is optimistic about growing our Best Price Wholesale cash and carry business in India as well as future retail investment opportunities that can be made possible through a clear and predictable FDI policy,” a Walmart spokesperson told HT.

“As a policy, we do not comment on market speculations,” a Bharti spokesperson said.

Indian authorities including the Enforcement Directorate, which tracks money-laundering deals, are probing charges against Walmart’s investment of `455.80 crore ($100 million, at that time) in March 2010 in a company called Cedar Support Services through CCDs.

Cedar, through a 100% subsidiary Bharti Retail, operates front-end retail stores under the brand name Easy Day. On conversion of the CCDs into equities, Walmart would have become a 49% shareholder in the company.

Walmart India chief Raj Jain left the company recently in a sudden move and Bharti Walmart, suspended five executives as part of an ongoing investigation against alleged corrupt practices that the US retail giant has launched globally including in China, Brazil and Mexico.