Walmart 2.0 wants to create a fresh innings in India

Walmart 2.0 is new, aggressive and is desperate to leave the past behind. The world's largest retailer is promising to leave no stone unturned as it gears up to kickstart its second innings in India. This time however it promises to only play with a straight bat. The retailer has just opened its first cash and carry store in the city of Agra. Spread across 60,000 square feet, the new retail outlet is the company's largest in India thus far. The calm veneer of the swanky store however can barely hide the tempestuous phase Walmart was caught in little over a year back.Not only did its much touted joint venture partnership with Sunil Mittal led Bharti Enterprises reached a near acrimonious end but it also found itself in the middle of an internal anti-corruption probe and an external government led investigation for possible breach in foreign investment rules. However the government probe remained inconclusive. CNBC-TV18 travelled to Agra and caught up with Krish Iyer, CEO Walmart India, who was appointed by the Asia Pacific head of the retail giant Scott Price to set the house in order in the worlds second most promising market after China. Iyer discussed the company's state of business, outlook and plans going forward.Below is the transcript of the interview on CNBC-TV18.Q: You took over during a very tempestuous period for Walmart's operations in India. You had just broken up with Bharti and also you within your own firm there were issues, there were possibilities of violations of the anti-corruption laws back in the US. So, since you have taken over a year ago, what are the processes that you are putting in place? What are the compliance procedures, are there certain areas that you have strengthened?A: Among the first things that we needed to do after I came here was about formulating a clear strategy for our plans for growing the business and cash and carry was a logical choice with the market, with the small store owners, kirana shops that are there in the country. The size of the market was really beckoning us. We formulated a strategy to just focus on the cash and carry business and make it a profitable business in the long term and continue to grow the business aggressively The second key strategic initiative was about the compliance programme. We intensely focused on putting together a very robust team as well as robust processes and we also sought help from our global office who are deeply engaged in putting together a proper compliance programme.I can very confidently tell you now that with this focus on doing business in the right way we are opening this store in Agra with all the licenses in place.Q: Is an overhaul of the senior management team an attempt to restart operations in India on a clean footing?A: It does happen to be a new start and a fresh start in many ways although we have existing 20 stores, we have nearly, I would put it about say, 70 percent of our employees who have been with us for maybe five to six or seven years who are working in our cash and carry business. So, while there is a fresh start there is also focus on learning from the past and ensuring that we therefore build a much more stronger foundations for the business.Q: What were those learnings in terms of all that happened, in terms of the compliance process. It was not just in India, it was in China the issues were surfaced in Mexico. So, what were some of the key learnings on which the issues around which you have tried to address going forward that they will almost be like a no tolerance as far as those issues are concerned?A: Number one, as in the case of every other function there has to be a clear strategy. So, we had a very clear strategy that these are the 14 subject matters that we are going to focus on as far as compliance is concerned and that is relevant for the country that touches our business. So, with that clear understanding then was the question of creating the right structure. We put together a team of nearly 25 people in compliance, another 10 people in legal to make sure that we understand what are the requirements of law in the country and thereafter putting together proper processes in the country. The third step then is to make sure that the right people are in place and we enlisted again help from Walmart US and for instance our current Chief Compliance Officer is an expat who is working here. She understands the laws of the country, she has Indian origin but she also understands the importance of complying with every single legislation and that has been very helpful. So, strategy, structure, people, processes and technology are all in place now to manage a robust compliance program.Q: But to get a strong foothold in the India market, Walmart would need to stay invested and have a business plan that will appeal to the discerning customers. However Edwin Keh, Lecturer, Wharton Business School and former COO of Walmart has asserted that the retailer is unwilling to bank too much on overseas markets as the US begins to turnaround.A: Every country has the autonomy to define its own strategy to define its own growth roadmap depending on the opportunities that are present and depending on the management bandwidth that the country has. So, as the CEO of the country I have complete autonomy and authority to decide how I want to grow the business and therefore of course it is all within the framework of the global corporation and with the necessary approvals from the global teams in respect of each of the areas. So, I wouldn't say that any of our growth plans are in any way affected adversely because of whatever maybe happening in the rest of the world.Q: Going forward how many stores? This is your first store that you have opened since the Bharti Walmart joint venture. How many more do we see coming forward and also if you could give us the ballpark investment amount that you would be putting in?A: We plan to open about 50 stores in the next 5 years. So, by 2020 we will have 70 stores. We don't talk about numbers so I would refrain from talking about investment amounts.Q: What about your wholesale venture right now, do you see yourself primarily as a wholesale retailer in India or do we see Walmart entering the front end - the multi-brand retail stores that Walmart is most know for?A: Let me explain a little more about our current business model. This is the cash and carry model. We have a three tier member segments, we have small resellers or kirana shops as we call them. We then have the hotels, restaurants and caterers who come and shop with us and then we have the offices and institutions who buy for their own consumption, own requirements. So, these are the three tier segments. We are very particular about verification of business licenses, the way we signup in terms of the checks and balances that are necessary, controls that are necessary to ensure that we are selling only to business members, we have most robust practises.Q: Does it concern you given the fact that the BJP government has voiced its opposition to multi-brand retail and allowing FDI in multi-brand retail. In fact they have almost been sort of threatening that they might sort of rollback the decisions that were made in the UPA government regime. Is that one of the reasons why you have also been as far as your multi-brand ambitions are concerned, it is somewhat on hold right now in India? Are you sort of waiting and watching, hoping that this storm or this confusion gets cleared only then will a decision be made?A: The government of the country knows what is best for its people and we respect that. So, whenever the people of the country are ready we would be happy to study and consider. However at this point in times I would respect what the government is doing.