New Delhi / Mumbai: Multinational airport duty-free operators Nuance Group AG and Flemingo International Ltd are heading for an out of court settlement in a Bangalore airport retailing dispute that is currently pending in the Supreme Court.
Earlier this year, Bangalore International Airport Ltd, or Bial, and its duty-free operator Nuance had moved the Supreme Court after the Karnataka high court scrapped the award of the duty-free concessions to the Zurich-based company and its local joint venture partner Shoppers’ Stop Ltd. Dubai-based Flemingo had approached the Karnataka court alleging that it was illegally excluded from the bidding process.
Financial settlement: A view of the Bengaluru International Airport. Hemant Mishra / Mint
“We are trying for a working arrangement and trying to structure it. (It) is not formalized,” said Viren Ahuja, director of Flemingo. “We are definitely having a settlement—hopefully.”
Meanwhile, a person close to the situation said Nuance has decided to settle the matter by paying Rs6 crore to Flemingo. He did not divulge the details of the deal. Mint could not independently verify the financial settlement terms and conditions.
The out-of-court negotiation is taking place even as the case, that also involves Bial, is pending in the Supreme Court. A Bial lawyer, asking not to be named, confirmed that a deal between Nuance and Flemingo is imminent. The person added that any settlement between the two duty-free operators would not have any bearing on the airport company’s lawsuit.
B.S. Nagesh, managing director of Shoppers’ Stop, was not reachable for comment.
The duty-free concessions at the airports in Mumbai, New Delhi and Bangalore have been mired in litigation after Flemingo filed cases citing lack of transparency in the bidding.
A similar case filed by it challenging the award of the concession by Mumbai International Airport Ltd prompted the incumbent operator of duty-free stores in the airport, Hong Kong-based DFS Group Ltd, to involve Flemingo as a partner in the business. This came after the Karnataka court quashed the Bangalore concession award last year.
Barring the setbacks, India’s airport retail business had been seen as a potentially attractive opportunity. In a 2008 study, real estate consultant Cushman and Wakefield said about 78 million sq. ft of retail, commercial and hospitality space would come up by 2015 with 40 airports being upgraded and seven new ones built.
Still, the lawsuits may discourage global operators.
“You are scaring away the potential foreign players,” says Rakesh Chopra, a New Delhi-based consultant who specialises in duty-free retailing.