Bharti Walmart JV To Invest 100 Mn Dollar (19-Feb-2010)
Bharti Walmart plans to buy out some small and mid size companies especially in the FMCG and consumer durable spaces as per sources.
The JV Company has earmarked a $100 million budget to fund investments in these spaces.
It hopes that the move will assist it to strengthen its private labels, by providing financial muscle to its critical vendors.
However, experts see some value in the strategy since boosting backend is the key mantra for retailers in this market.
Moreover, while strengthening backend is important enough to drive this move, it is also in line with Walmart''s global strategy, to focus on private labels.
Most of the sales in Walmart stores globally are due to private labels and existing retailers in India owe their woos to shortage of strong backend and supply chain infrastructure.
Since problems in the backend even forced companies like Subhiksha and Vishal Retail to even down shutters.
Bharti seems to plug the loopholes in its backend, before going full stream on the retail side.
Previously, Technopak stated that the organized modern retail segment in India will rise over 3 times during the next 5 years to reach a figure of $80 billion.
It also said the share of private labels in the annual sales of organized retail players will increase to about 25% by 2014 from the existing 10-15%.
It will be assisted by growth in consumption level of the consumers and development of the modern retail sector.
Moreover, it was said that other than easing foreign investment regulations in the forthcoming Budget, Organized retailers in the country have demanded for the Industry status to the retail sector.
Mr. Kumar Rajagopalan, CEO of Retailers Association of India said Industry status has been a long standing demand of the retail sector. Besides, ease in the Foreign Direct Investment (FDI) regulations.
Mr. D P S Kohli, Chairman of Koutons Retail India said Industry status has been a recurring demand of the retail sector for many years only then the retailers will be able to enjoy the fully benefits of organised financing, insurance and fiscal incentives.
On the other hand, the Apparel Export Promotion Council (AEPC) stated that the apparel sector did not get any sops in the Rs 450-500-crore incentives announced for exporters.
The government''s announcement to give incentives worth Rs 500 crore for exporters contains no measures for the garment export sector.
Although, the garment sector has seen significant downturn due to global economic recession stated the AEPC.
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