Ending speculations over future of their partnership, Bharti Enterprises and Wal-Mart Stores, Inc. said today they are going separate ways for operations in the Indian retail sector.
Subsequently, the US retail major will buy out the Indian partner from their 50:50 wholesale cash and carry joint venture -- Bharti Walmart, for an undisclosed sum.
In a joint statement, the companies said they have reached an agreement to independently own and operate separate business formats in India and discontinue their franchise agreement in the retail business.
The agreement is subject to finalisation of definitive agreements and receipt of the requisite regulatory approvals, it said.
"Upon receipt of required clearances, Walmart would acquire Bharti's stake in Bharti Walmart Pvt Ltd, a joint venture between Bharti and Walmart, giving Walmart 100 per cent ownership of the Best Price Modern Wholesale cash and carry business," it said.
Commenting on the development Bharti Enterprises Vice Chairman and MD Rajan Bharti Mittal said: "Bharti is committed to building a world-class retail venture and will continue to invest in Bharti Retail across all formats. We believe that with our current footprint of 212 stores, we have a strong platform to significantly grow the business and delight customers."
As part of the proposed transactions, Bharti will acquire the USD 100 million worth Compulsory Convertible Debentures (CCDs) held by Walmart in Cedar Support Services, a company owned and controlled by Bharti. Bharti Retail will continue to operate 'easyday' retail stores across all formats and invest in and grow the business.
The investment in Cedar by Walmart is being investigated by the Enforcement Directorate following allegations of violations of norms.
Walmart on the other hand plans to continue to grow this business while working with the government and interested stakeholders to create conditions that enable foreign direct investment in multi-brand retail.
"Given the circumstances, our decision to operate independently will be beneficial to both parties," Walmart Asia President and CEO Scott Price said.
Walmart is committed to businesses that serve members and provide good returns for our shareholders, and will continue to advocate for investment conditions that allow FDI multi-brand retail in India, he added.
"Through Walmart's investment in India, including our cash and carry business, supply chain infrastructure, direct farm programme and supplier development, we want to serve India and its people, and continue to make important social and environmental contributions to the country," Price said.
The two partners had joined hands in 2007 and launched its first B2B Best Price Modern Wholesale cash-and-carry store in Amritsar in May 2009.
At present, there are 20 Best Price Modern Wholesale stores located at various places, including Amritsar, Zirakpur, Jalandhar, Kota, Bhopal Ludhiana, Raipur, Indore, Vijayawada, Agra, Meerut, Lucknow and Jammu.