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Dec, 01 2006

Wal-Mart to take franchise route

Wal-Mart, the $285 billion American retail giant, may have overtaken British supermarket chain Tesco in the race to be Bharti Enterprises\' partner for retail operations in India. Wal-Mart is also believed to be in talks with the Rs 40,000-crore Aditya Vi

The US retail giant, which has been in talks with Sunil Mittal's Bharti Group for a master franchisee agreement for over three months now, made a concrete proposal only weeks ago, around the time Mukesh Ambani's first Reliance Fresh store was unveiled in Hyderabad.

Wal-Mart is not willing to lose any more time and is looking for a partner with good political clout. The Wal-Mart proposal offers Bharti a “very attractive return on investment”, according to sources close to the development. It is believed that the Mittal brothers - Sunil and Rajan - are in dialogue with the Wal-Mart top brass in the US, including CEO Lee Scott.

Mittal is in talks with three international retailers -Tesco, Wal-Mart and France's Carrefour. Tesco had been the frontrunner for some time and Bharti is already a supplier for fresh products to the Tesco supermarkets. Four Wal-Mart honchos are currently in New Delhi, negotiating with Bharti, sources said, “and looking after recruitments”.

Current government policy restricts foreign retail players from floating fully-owned retail businesses in India. But FDI is allowed in single-brand retail stores, franchise setups and wholesale operations. Wal-Mart is taking the franchise route to get into retailing in India because it doesn't want to lose its brand equity.

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