Wal-Mart To Split With Indian Partners

Wal-Mart Stores Inc. and its partner Bharti Enterprises will split and pursue their own operations in India, according to a joint statement from the parties that was first reported by Reuters.

“Given the circumstances, our decision to operate independently will be beneficial to both parties,” Scott Price, president and chief executive of Walmart Asia, said in the statement.

Wal-Mart told The City Wire in August that it was optimistic about growing its Best Price Wholesale cash and carry business in India as well as future retail investment opportunities that may be possible through the Foreign Direct Investment policy.

Wal-Mart will acquire Bharti’s 50% stake in Bharti Wal-Mart Ltd, which runs about 20 wholesale stores in India under the Best Price Modern Wholesale brand, and will run the business independently, according to the report by Reuters. Bharti will acquire the compulsory convertible debentures held by Wal-Mart in Cedar Support Services, a company owned and controlled by Bharti that will continue to operate its 212 EasyDay stores independently.

Multiple news reports out of India have hinted for weeks that something was up between the two retail partners as Bharti had returned more than two dozen properties back to landlords, which were leased throughout the country.

India last year allowed foreign supermarket companies to own up to 51% of their local operations, but no company has applied to enter the country under the rule.

Wal-Mart’s business dealings in India have been under scrutiny with several suspensions in Bharti Walmart leadership and the resignation of CEO Raj Jain in June. Jain had overseen the Indian market since 2007. 

In August, Wal-Mart transferred its chief operating officer for Bharti back to the U.S., after one year running that local business.

Wal-Mart said recently it will continue to invest in India with its cash and carry business, supply chain infrastructure as well as its direct farm and supplier development programs that not only will serve customers but also make important social and environmental contributions to the country.

“We think India’s best days are ahead, and we are excited to be a part of this opportunity. Modern retailers worldwide bring about large-scale, high volume sourcing, coupled with a strong technological edge and supply chain efficiencies. These have a direct positive impact on consumers who benefit by getting a wide assortment of quality goods at low prices,” the Walmart India spokeswoman added.

The last two stores opened by Bharti Walmart was in October 2012 and the retailer appeared to be expanding its reach, albeit at a cautious pace. In July, sources out of Bentonville said it would likely be 2015 before Wal-Mart ramped up its expansion in India.

Wal-Mart reportedly cooled its heels as news of an investigation into the legality of the $100 million Bharti Walmart transaction years ago came to surface earlier this summer.

“We appreciate the continued efforts by the Indian Government to clarify investment conditions. Reform of this policy will improve shopping options for customers, provide new markets to local suppliers and farmers, and improve supply chain infrastructure in the country. We continue to review the guidelines and work with the government to understand the rules that exist for foreign direct investment,” a spokeswoman from Walmart India noted in an e-mail.