The world’s largest retailer Wal-Mart is poised to formalise its entry into the Indian market by buying out a 49% stake in a subsidiary of Bharti Retail through which it positioned itself for an early entry.
The company has been criticised for getting a headstart in India’s retail sector through its purchase of compulsory convertible debentures (CCDs) in Cedar Support Service — the holding firm for Bharti Retail in 2010, before India approved FDI in multi-brand retail. CCDs are debt instruments that get converted into shares.
Wal-Mart’s purchase of CCDs in 2010 for Rs 455.8 crore was mired in controversy as it was seen as a way to circumvent restrictions.
The due date for conversion of these CCDs ends in September this year and after the conversion these CCDs are expected to yield 42.6 crore equity shares for Wal-Mart in Cedar Support Service. This effectively means Wal-Mart would get a stake in Bharti Retail.
Wal-Mart officially neither confirmed nor denied reports of an impending conversion of CCDs.
“This information is speculative. Walmart has invested (CCDs worth Rs 455.8 crore) in Cedar Support Services (CSS) an Indian-owned and operated company that provides real estate advisory, facilities management, construction and other associated services that are crucial to our business plans…We are in compliance with India’s FDI guidelines," a Walmart spokesperson said in a statement.
{{/usCountry}}“This information is speculative. Walmart has invested (CCDs worth Rs 455.8 crore) in Cedar Support Services (CSS) an Indian-owned and operated company that provides real estate advisory, facilities management, construction and other associated services that are crucial to our business plans…We are in compliance with India’s FDI guidelines," a Walmart spokesperson said in a statement.
{{/usCountry}}A Bharti spokesperson on his part said: “We are in complete compliance of all regulations and will continue to do so.”