FDI will attract funds into supply chain: Bharti Walmart

Raj Jain of Bharti Walmart, says that overall, this is a big policy announcement for the Indian economy not only for multi-brand retail but for several sectors and several issues which have been pending for a long time, we welcome the decision.

Below is the edited transcript of his interview to CNBC-TV18. Q: What is your view on the decision taken by the government in multi-brand retail sector?
A: Overall, this is a big policy announcement for the Indian economy not only for multi-brand retail but for several sectors and several issues which have been pending for a long time, we obviously welcome that. We welcome the opening of FDI in multi-brand retail to 51% level and we feel happy that this is the first big step in attracting investment into supply chain and various areas in our industry. Q: What will this policy action mean for your plans now, you are operational on the cash and carry side, where you have expanded significantly but how quickly are we going to see front ended stores from Walmart?
A: The good news is hat we have been in the country for the last four years; we have been operating what is now becoming significantly large cash and carry business and expanding rapidly. We have spent a lot of time understanding the supply chains working with almost 2,000 suppliers, understanding all the issues related to infrastructure and so on. We have also been suppliers to Bharti retail stores, we have been operating retail stores in various stores.
So our understanding of the business and the issues there are is at a fairly significant level. With this announcement now we hope to now get in touch with all the states which have publicly stated that they welcome FDI in retail and then move forward with our investments in those states on the retail side. So we should be able to move fast. Q: Can you explain us the outlay because you do know what conditions you have to comply with and just in terms of the number of cities that you can start operations in about amount to about 53 because they have that one million population rider, have you had conversation with any of the interested state governments because the once that are on board with the policy has publically come out and said so, in the interim have you had any conversation with those state governments and what could be the capex as far as your front-end stores are concerned?
A; It is a little early to talk about capex which we could invest in, in the front-end at this stage and we haven't been in dialogue with any of the states with the consultative nature of this decision making which is going on in the last six months.
So we didn't want to be engaging in any official dialogue with anybody. So we haven't, we don't know and we haven't done enough work to be able to give immediately an investment number.
We are able and wiling to invest whatever it takes in the supply chain, in the retail format to move up this forward. I think it will be significant investment. I think it will not only be Walmart, but it will also be by several people who work with us globally on various issues and are subject mater experts in various areas of supply chain. I think soon we should be able to share that number with all in a matter of month. Q: What will your front-end operations in India called?
A: It is a little early to talk about branding. Q: Will we see a Walmart store?
A: Yes, I think if the policy gets implemented the way it is supposed to, we should be able to see a Walmart store in India. Q: The conditions that have been put forward they are pretty much the same, I don’t think there has been any significant change from what the government has articulated when in made the policy announcement November 24, in terms of the sourcing requirements and the sourcing norms, you are okay with that?
A: We obviously did send our representation to the government that 20% was very high from the micro, small and medium enterprises (MSMEs) and the government looked at that and chose not to amend it. But in the short-term that is a requirement which probably can be met.
The issue is when the business starts expanding, how you continue to comply with a 30% requirement that requires you to have many more suppliers than you would desire to have. So those are issues we will talk about and discus with the government as we go along but to start with I think it’s possible to comply with those. Q: When we could see first Bharti Walmart, a Walmart front-end store – are we talking by the end of this year, or early next year, just a broad timeline?
A: I don't know what the timeline is, certainly I don't think that is going to be this year because it takes at least 12-18 months to be able to finalise the real estate to open a good retail store. So if everything goes well maybe sometime later half of next year. RELATED LINKS:

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