After courting for six long years, the $440-billion Wal-Mart Stores Inc and India’s Bharti Enterprises Ltd on Wednesday decided to part ways.
The agreement is subjective to finalisation of definitive agreements and receipt of requisite regulatory approvals, both firms said in a joint statement. Financial details of the transaction weren’t disclosed.
As per the separation agreement, the Bentonville, Arkansas-based Wal-Mart will acquire 20 Best Price Modern Wholesale cash-and-carry stores, run as part of the joint venture. It will continue to operate its supply chain operations in India. “We will continue to advocate for investment conditions that allow (foreign) brand retail in India,” said Scott Price, President & CE), Wal-Mart Asia.
Bharti will buyback Wal-Mart’s investment in a holding company that runs Easyday chain of 212 convenience stores and supermarkets. Now, if Wal-Mart decides to set up its own retail stores in India, it will need another local partner to own 49% as per FDI norms that were eased last year.
Meanwhile,both firms have also decided to settle the controversial issue of Walmart’s $100 million investment made in Bharti-owned Cedar Support Services. This was under the scanner of the Enforcement Directorate for alleged violations of FEMA.
Bharti will now acquire the convertible debentures held by Walmart in Cedar, as Wal-Mart couldn’t obtain a year extension to convert the debentures into 49% equity beyond Sept 30, 2013 deadline.
No plan to relax 30% local sourcing norm: DIPP
Meanwhile, rejecting the demand of global retailers like Walmart, the government today said there is no plan to relax the mandatory 30 per cent local sourcing norms for foreign players in the multi-brand retail sector.
“FDI policy cannot be company specific. We have put in place an enabling regime for multi-brand retail sector. We have no plans to relax the 30 per cent local sourcing norms,” Secretary in the Department of Industrial Policy and Promotion Saurabh Chandra said.