Bharti-Walmart split, to independently operate retail biz

It has been on the cards for long and now it is official. The Beast of Bentonville, the world's largest retailer has decided to terminate its joint venture with Bharti retail after almost six years, reports CNBC-TV18's Shereen Bhan.

Sources say Walmarts decision to call it quits is driven by its desire to distance itself from the controversy over allegations of bribery and lobbying. The US giant is facing the heat of regulators in its home market and the decision to rid itself of a controversial JV in India is part of its damage control plans. In fact the company has been on a cleansing drive in India following an internal probe which also led to the exit of Walmart India's former Chief Raj Jain.

Sources also say, there was a growing discomfort within Walmart to face the consequences for any possible violations in parts of the business that it didn't control, primarily the Easy Day stores run by Bharti Retail. 

Remember the Justice Mugal commitee setup by Parliament while giving a virtual clean chit to Walmart on allegations of bribery and lobbying, did raise objections over Walmart's transactions with Bharti Retail. The probe felt there were violations of the group company sales norms. 

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 While it is the end of the road for Bharti-Walmart, the Govt will heave a sigh of relief as Walmart has decided to stay in India and go it alone in the cash& carry business where 100 percent FDI allowed. But it is clear the retail behemoth is in no hurry to foray into multi-brand retail and has clearly spelt out its discomfort with riders attached to the current multi- brand retail policy including the mandatory 30 percent sourcing norm.

It will also be interesting to see if Bharti continues with retail in the long term minus Walmart. Remember, the company has been exiting non core businesses and perhaps a cash guzzling, low margin, complex retail business minus a global partner will force Bharti Promoters to review the strategic fit.