Hyderabad: Bharti Walmart Pvt. Ltd will open 10 wholesale stores a year in India, even as the company’s top executives said it may take 12-18 months to open the first retail outlet.
The Union government recently eased rules for foreign direct investment (FDI) in multi-brand store chains in the country, paving the way for retailers such as Walmart Stores Inc., Carrefour S.A. and Tesco Plc. to enter the Indian market.
Foreign retailers can invest up to 51% in multi-brand retail subject to the approval of the respective states, the government announced on 14 September, sparking protests from both allies and the opposition. Trinamool Congress, a member of the ruling Congress party-led United Progressive Alliance (UPA) at the Centre, pulled out from the government over that and other recent economic changes initiated by Prime Minister Manmohan Singh’s administration.
Walmart, the world’s largest retailer, formed a 50:50 business-to-business joint venture with Bharti Enterprises in 2008 for wholesale and back-end supply chain management operations in India to serve small retailers, manufacturers and farmers.
The first wholesale store under this partnership opened in Amritsar in May 2009.
The government’s recent announcement allowing FDI in multi-brand retail will not hamper the growth of wholesale stores, said Raj Jain, president, Bharti Walmart. These will continue to expand alongside retail outlets, he said after opening a Walmart Best Price Modern wholesale store on the outskirts of Hyderabad on Wednesday, taking its tally in the country to 18. It will open six more stores in the country by the end of this year.
The 53,000 sq. ft store is Bharti Walmart’s third in Andhra Pradesh after Vijayawada and Guntur and has more than 60,000 registered businesses.
Bharti Walmart will open two more stores in the cash-and-carry format in Andhra Pradesh in six months, Jain said, without disclosing the locations. “With this store, we have further strengthened our foothold in southern India,” Jain said in a note. Bharti Walmart has invested $21 million (about Rs.120 crore) in the three outlets in Andhra Pradesh.
Cash-and-carry outlets are open only to registered businesses such as restaurants and grocery stores that make bulk purchases.
Jain said the firm was in the process of chalking out a roadmap for its India operations and it was too early to comment on retail plans. “It is too early for information on how many retail stores we plan to open,” Jain said. “Give us 30-45 days and I will share all our plans.”
Jain said there were enough “big” states such as Andhra Pradesh and Maharashtra that have welcomed FDI to demonstrate the benefits of the move. Both these states are ruled by the Congress party.
“It is a calibrated approach to opening FDI. I think the government has taken a cautious approach to FDI, which is fine,” he said. “I think there is enough (scope) to go and demonstrate the benefits of a Walmart. Once we demonstrate that we have brought a lot of benefits in a state like Andhra Pradesh, some of the adjoining states will also want to open.”
Asked about the opposition of some states, Jain said, “Sometimes there is this fear of the unknown. We will obviously want to work with all governments so that they will understand the benefits,” he said.