Rajan Bharti Mittal, joint managing director of Bharti Enterprises, clarified on Monday that the company it had set up to enter the retail business was a wholly owned subsidiary of Bharti Enterprises. The company has a separate wholesale cash-and-carry agreement with United States retail major Walmart.
Bharti’s agreement with Walmart had raised a political storm with the Left parties voicing concern over Walmart's entry which they feared would badly affect neighbourhood stores.
Bharti Retail also spelt out its future plans countrywide involving an investment of $2.5 billion ( Rs 11,000 crore) over the next eight years. This does not include the cost of acquiring the land on which to build these outlets. Bharti Retail is looking to acquire around 10 million square feet of retail space across all cities in India with a population of over one million.
"This ( $2.5 billion) is about the front end operations involved in setting up the stores. The land acquisition would be done by a separate group company Bharti Realty”, said Mittal.
The company is expecting a revenue of $4.5 billion by 2015 from its retail operations, which will employ 60,000 people. The outlets will be of different kinds, including hypermarkets and supermarkets, offering a wide range of products: groceries, fruit and vegetables, meat and poultry, personal care products and electronic appliances and more.
Mittal said that Bharti’s retail venture was "no different" from such businesses floated by other Indian companies such as Reliance and fully complied with government norms.
"We are no different from other Indian companies which have ventured into retail. Birlas, Tatas, Reliance and the Future Group have done it," Mittal added.
He admitted however, that the company was asked by the government to explain on its tie up with Wal Mart. Mittal said: "Yes, we were asked and we have given them all details."
Mittal said that the company has not decided on the exact branding of the retail venture. “We are evaluating the brand proposition and are in the process of conducting consumer research”, he said.
He said that the existing guidelines do not prohibit the company from using the Wal-Mart brand name.
"The guidelines do not speak otherwise. You have Dominos and Pizza Huts operating under their brands in India," he said.
Mittal said the company was working out modalities for its back-end linkage, including its joint venture with world's largest retailer Wal-Mart.
"The details of the back-end chain and our tie-up with Wal-Mart will be announced in due course," he said, adding a high-level team from Wal-Mart was expected this week in India.
While Bharti would manage front-end of the retail venture, Wal-Mart would be involved in the back-end, including logistics, supply chain and cash-and-carry.