Bharti-Wal-Mart Private Limited - Not for retail customers

Finally, the much awaited deal between Bharti and Wal-Mart is done. They have announced a 50:50 joint venture for cash-and-carry and wholesale business called Bharti - Wal-Mart (P) Ltd.

The business will serve kirana stores, fruit and vegetable resellers, restaurants and other business owners. It will also manage backend logistics and provide technical support to Bharti Retail, which will set up multiple-format retail stores that are 100% owned and operated by Bharti.

The JV will also not need FIPB nod as cash and carry model falls completely under the 100% FDI route. Around 90% of the products would be sourced locally. Wal-Mart already sources products worth $600 million from India currently.

Bharti Wal-Mart would open 15 cash-and-carry or wholesale stores in Indian by 2014 with the first one to come up by end-2008.

But don’t think that you can go and buy stuff from a Wal-Mart store as this venture is purely for resellers and bulk buyers. Instead, Bharti Retail would be the front-end retail format.

Bharti Retail would spend $2.5 billion by 2015 to build hypermarkets, supermarkets and small stores. But the big question is won’t it be too late for Bharti as Pantaloon, Reliance, Birla, Tata, Spencers having already lined up huge expansion plans and in all likelihood would capture substanital market share of organised retail before Bharti’s entry.