The Hindu Business Line : Bharti to pick retail partner soon

Rosy retail
A staggering $412 billion will flow in as investment into the Indian retail sector by 2011, a study by PricewaterhouseCoopers finds.

New Delhi , Nov. 25

Bharti Enterprise Ltd is all set to announce an agreement with a foreign partner for its retail venture next week. The Bharti Chairman, Mr Sunil Mittal, told Business Line that the deal was close to being signed, though he declined to name the partner. Mr Mittal, however, said that Tesco was still in the race along with Wal-Mart.

"I received calls from Tesco even today so they are not out of the race. We maintain that we are talking to a number of companies for a strategic partnership. An announcement is expected to be made next week," Mr Mittal said.

Bharti had earlier said that it was in talks with Wal-Mart, Tesco and Carrefour for its retail foray. Mr Mittal's statement comes even as a Tesco spokesperson issued a statement in London that its discussion with Bharti had ended without an agreement. This practically clears the way for the world's biggest retailer, Wal-Mart, to get access to the lucrative Indian retail market.

Tesco, however, said it was still interested in the Indian retail segment and would look at other opportunities to enter the market.

Investment flows

While foreign retailers are looking to enter India's rapidly growing market, Government rules allow only multiple-brand retailers to operate through franchises and licensees or a cash-and-carry wholesale model. Among the Indian companies Bharti, Reliance Industries Ltd, Tata group and the Birlas are also foraying into the retail space. A staggering $412 billion will flow in as investment into the Indian retail sector by 2011 as rapid economic growth, increasing disposable incomes and lavish lifestyle habits would see the format expand exponentially, a study by PricewaterhouseCoopers (PwC) finds.

PwC states that a growing population, a youthful workforce and soaring consumer confidence are "solid arguments for long-term growth in India."

The majority of the investment in retail will be directed toward the two most popular retail formats: hypermarkets and supermarkets, PwC says. Half of the investment could be directed to food-related retail and the remaining would be allocated to non-food retail, the study said.

Convenience chains

Although independently-owned local grocery stores are still the most prevalent format, larger supermarkets and convenience chains are emerging in organised food retailing, the study finds.

Organised food retailing in India is worth $666 million and will increase to $33,333 million by 2015. The sector is estimated to grow at 30 per cent annually. Among the retail formats, hypermarkets are expected to fuel retail growth since food and grocery stores account for 76 per cent of consumer expenditure.

Examples include Pantaloon's Big Bazaar, which is planning to triple total retail area by financial year 2008 to 6.5 million sq.ft., as well as Spencer and Trent's Star India Bazaar, which will have 17 stores by then. Pantaloon Retail's Food Bazaar is the largest supermarket operator in India in terms of value.

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Bharti to pick retail partner soon