Jain: Strategy time
New Delhi, Oct. 9: The Bharti group has brought in Raj Jain, the former head of Walmart’s India operations, as an adviser to its retail strategy.
Jain had left Walmart in late June amid investigations of bribery charges against the US retailer. At that time, Walmart had not specified the reason for Jain’s departure.
Besides policy concerns, Walmart’s internal anti-corruption drive that led to the suspension of five executives in its joint venture with Bharti had embittered relationship between the two entities.
Today’s split was more or less expected after both sides went public last week with their intent to go separate ways.
Sunil Mittal, CEO of Bharti Enterprises, had said, “Within October, I would say Walmart should have taken a decision of their vision for India.”
Further, reports quoted Walmart Asia head Scott Price as stating that the partnership with Bharti was “not tenable as a base” and the two firms were “looking for the best way to move forward”.
Price had said Walmart was not keen to invest in India unless there was clarity on the multi-brand retail policy.
Analysts said it was a strategic move by Walmart to end the partnership as it was waiting for the outcome of the general elections in 2014. There are concerns that if the BJP-led government comes to power, it may withdraw the reforms in retail.
The options before Bharti are wide open. It can expand its Easyday stores and wait for the right time to tie up with other global players.
Though foreign retailers have been allowed to own majority stakes in multi-brand chains, no company has shown any interest yet. The government also eased the rules on sourcing, infrastructure investment and store location in August to woo global chains.
The Bharti group is facing a huge debt of $12 billion and has reported a 14th consecutive quarter of declining profits in June. It had been hoping that joining hands with Walmart would provide the much needed push to its revenues and it could consider an exit when the policy environment was favourable.
Here, Jain’s expertise could come in handy for Bharti, analysts said.
Jain, who had joined Walmart in 2006, was named head of Walmart India in 2007. During his tenure, the company set up the wholesale cash-and-carry joint venture with Bharti Enterprises, back-end services and consulting businesses.
However, bribery investigation and disclosures had virtually stalled the joint venture’s expansion plans. Walmart’s disclosures to the US Senate on its lobbying activities to gain greater access to key markets, including India, made things worse politically, with Opposition MPs demanding a probe.