Wal-Mart to end joint wholesale venture in India

Wal-Mart Stores has said it will buy out its partner in a wholesale store venture in India, a setback for the world's biggest retailer's plans to operate supermarkets in Asia's third-biggest economy.

Billionaire Sunil Mittal's Bharti Enterprises' stake in the wholesale joint venture will be purchased by Wal-Mart, the two companies said in a joint statement today, without disclosing the value of the transaction.

While the agreement would give Wal-Mart full control over 20 wholesale stores and their supply chain, it needs a new partner to set up supermarkets.

Although the South Asian nation allows foreign retailers to fully own wholesale operations, they are required to tie up with local firms to start retail stores.

Wal-Mart, based in Bentonville, Arkansas, has no retail operations currently in India. The existing joint venture operates cash-and-carry stores that are similar to Costco Wholesale Corp outlets, allowing entry only to registered members that include restaurants and local retailers.

According to the venture’s website both companies own a 50 per cent stake. The two partners will now probably become competitors.

Bharti plans to open its own chain of wholesale stores, two people familiar with the matter said, who asked not to be identified because they are not authorized to speak to the media. Bharti, in an e-mailed statement, declined to comment.

Executive exits

Wal-Mart has lost top executives in India over the past year. In June, its chief executive officer of the India joint venture, Raj Jain, left the company amid government and internal investigations.

His departure came seven months after the venture’s chief financial officer was suspended.

An Indian government agency is investigating allegations that Wal-Mart violated rules governing foreign investment in the retail industry, Anand Sharma, minister for commerce and industry, said in December.

A separate probe into allegations that Wal-Mart lobbied Indian government officials ended without any conclusions, according to a government document.

The US retailer plans to continue to expand its wholesale cash and carry business in the country, according to the statement.

Bloomberg