Bharti-Walmart JV on rocks, may split soon

The Bharti and Walmart marriage is in its last legs, with only a formal announcement of its separation remaining to be announced. They were seen as natural partners only about a year back. Alleged violations in FCPA act and India's internal anti-corruption probe led to this divorce report CNBC-TV18’s Rituparna Bhuyan and Elan Dutta.

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“I would hope in a couple of weeks or maybe in a couple of months, we would have the details ironed out,” says Walmart Asia CEO Scott Price to CNBC-TV18 in September 2012 that Walmart was all set to foray into India's multi-brand retail market. But a year on the company has not even applied for a license. In fact, the company is unlikely to do so in the near future either. Moreover, Walmart is getting ready to divorce its partner Bharti enterprises and go solo in the cash and carry segment, a big departure from its earlier plans. “We are very pleased with the JV with Bharti. We would continue to see the opportunity to build on the JV. This is a natural progression,” said Price in September 2012. So, what went wrong? CNBC-TV18 learns that one major factor was the alleged violations under the FCPA act in US as well as the company's internal anti-corruption probe of its India operations, Bharti-Walmart banned nine firms that were helping the company with various licenses and permits. It was amidst all this that the man who handhold Walmart in India, Raj Jain, was also eased out. The company's transaction with Bharti group company cedar services involving compulsorily convertible debentures or CCDs is being probed by the enforcement directorate. According to sources, Walmart is keen to distance itself from any controversy as it fears the US FCPA may come down hard on it. So, the past week has seen both the sides go public with their intent to split. Sunil Mittal, CEO, Bharti Enterprises says “Within October, I would say Walmart should have taken a decision of their vision for India" But Price replied back saying, existing franchise to Bharti is not tenable as the base. It’s only a mater of time that both the companies announce their divorce and it remains to be seen, if Walmart decides to remarry a different Indian partner for its retail venture and if Bharti enterprises hooks on to a new foreign company.