New Delhi: The world’s second largest retailer Carrefour SA is in talks with real estate firm Parsvnath Developers Ltd for opening hypermarkets in India, according to two people close to the situation, who asked not to be named.
The two people said that Carrefour is in the “middle” stages of dialogue with Parsvnath, indicating that India’s fourth largest listed developer is in the running for being selected as a franchisee for the French retail giant. They didn’t want to be identified because of the sensitivity of the talks.
Earlier this week, Parsvnath said it plans to venture into the retail business with a chain of hypermarkets that it will set up in partnership with an overseas retailer. And last week, Carrefour, which has been scouting for an Indian partner for more than a year, said it is in talks with three “very willing” Indian firms and would pick one of them to open the French retailer’s franchisee stores in the country.
Carrefour declined to name the company, but said it expects to sign on the franchisee by early next year. Gerard Freiszmuth, general manager for Carrefour in India, declined to comment specifically on whe-ther his firm is in dialogue with Parsvnath.
One of the persons familiar with the situation said Parsvnath separately plans to bring global luxury brands to India, but declined to name them.
In an interview with Mint on Monday, Pradeep Jain, Parsvnath’s chairman, said the company expected the unnamed global retail player it was in talks with to provide expertise in running the retail business and give technical assistance in supply chain and logistics—or the process of getting the goods from their place of origin to the shop—which is considered the one area where foreign retailers have more expertise than local players.
Parsvnath made its billions in India’s real estate sector, where prices have tripled in some large cities in as little as three years, and is currently spreading its wings in newer businesses, including telecommunications, where it has applied for a licence to offer mobile telephony services, and retail. The company made an initial public offering of shares last year, and at Tuesday’s closing price of Rs342.85 a share on the Bombay Stock Exchange, its market value is Rs6,240 crore. Parsvnath ended the three months to September with revenues of Rs407.72 crore and a net profit of Rs100.73 crore, and the 12 months to March with revenues of Rs1,260.98 crore and a net profit of Rs271.77 crore.
The company’s retail expertise is currently limited to building malls in various cities. Parsvnath has almost 5 million sq. ft of retail space and plans to increase it six times in the next five years.
Separately, Carrefour has floated a unit, Carrefour WC&C India Pvt. Ltd, which will roll out the French giant’s fully-owned wholesale stores in India by mid-2009. These stores will supply goods to the firm’s India franchisee and other local retailers and businesses.
Indian laws do not allow foreign multi-brand retailers to directly operate in the country. But Indian firms can open branded franchisee stores of foreign retailers. India’s current modern (or organized) retail market of about $12 billion (Rs47,880 crore) is expected to go up to $78 billion in the next five years and will further swell to $165 billion by 2017, according to retail consulting firm Technopak Advisors Pvt. Ltd.
Wal-Mart Stores Inc. has a 50:50 joint venture with Bharti Enterprises for wholesale hypermarkets. The world’s largest retailer has also agreed to provide logistics and technological assistance to Bharti in its separate retail venture that plans to tap on the country’s growing consumer market.