Bharti Enterprises to invest $ 2.5 bn in retail biz

New Delhi, Feb 19: Bharti Enterprises today said it will pump in 2.5 billion dollars by 2015 in its front-end retail business while logistics and back-end operations with Wal-Mart Inc were being worked out.

The company, which is targeting revenues of about Rs 20,000 crore by 2015 from its 100 per cent owned Bharti Retail venture, will roll out hypermarkets, supermarkets and other formats early next year in cities having a population of more than a million.

Bharti Enterprises is working closely on its cash-and-carry and logistics business in 50:50 joint venture with Wal-Mart, as the world's largest retailer's team lead by Chief Executive Officer Michael Duke is coming to India this week, company Joint Managing Director Rajan Bharti Mittal told reporters here.

On a poser to the brand name for the stores, Mr Mittal said, ''All possiblities are being worked out...the Wal-Mart name for the new stores is quite a possibility.'' He added that the company was ''in talks with Wal-Mart to put its back-end, supply chain, logistics, cash-and-carry retail chain in place'' and will soon finalise its investment details.

''This 2.5 billion-dollar-investment will be done by Bharti Enterprises alone while our real estate arm Bharti Realty is already in the process of availing land. The action will start in the first quarter of the next calendar year.''

''After revolutionising the Indian telecom sector, retail will be the next big focus area for Bharti. We need to partake in this growth,'' Mr Mittal said. Organised retail in the 300 billion-dollar-Indian retail sector stands at a mere 3 per cent currently. But is forecast to grow at 15-18 per cent by 2011-12, according to industry estimates.

''While Bharti would manage the front-end of the retail business, US giant Wal-Mart would be involved in the back-end, including logistics, supply chain and cash-and-carry. The joint venture would employ 60,000 people over the next few years,'' he said.

Due to Indian legislation banning multiple-brand foreign retailers from front-end retail, these stores will be owned by Bharti Enterprises under the Wal-Mart franchise.

On the political hurdles being faced by the Bharti-Wal-Mart retail venture, Mr Mittal said: ''We are no different from our friends like Reliance and Tata, who are in the same field (retail).

Our retail plans are perfectly in sync with the government regulations.'' UPA Chairperson Sonia Gandhi, had earlier this month, written a letter to Prime Minister Manmohan Singh, asking for a go-slow in allowing retail giants like Wal-Mart and Carrefour to enter India.

The company in November last said its first store will be set up in August this year. This intervention by the Centre could possibly be the reason for the delay.

As per the existing guidelines, FDI is allowed in cash-and-carry business in India.

The company, which is going through a consumer survey before the actual roll out, is looking at three formats -- hypermarkets, supermarkets and convenience stores.

Hypermarkets, the large size stores, will have a space of 75,000-1,25,000 square feet for every day household needs like groceries, electrical appliances, etc.

The mid-size format stores, supermarkets, covering an area of 30,000-50,000 square feet will focus more on groceries and daily eatables and the convenience stores would be small format stores with 2,000-5000 square feet area specifically catering to the daily needs of the consumers.

As Bharti is looking at a pan-India roll out, it will start with cities with a one million population and then go downwards.

As far as the sourcing is concerned, about 70 per cent of the products will be sourced from within the country, Bharti Retail Pvt Ltd President Vinod Sawhny said.

UNI