Carrefour might apply if Tesco passes muster
By Ishita Ayan Dutt & Avishek Rakshit | Vjmedia Works | December 20, 2013
The French giant might apply for multi-brand retailing if UK rival gets nod
The company is engaged in talks with potential partners, including Kishore Biyani's Future group, with which it was close to inking a deal a little more than two years earlier, a source said.
Another person in the know said Carrefour had recently held discussion with the K Raheja Corp-owned Hypercity, a subsidiary of Shoppers Stop Ltd, for a possible alliance.
In multi-brand retailing, a foreign chain cannot hold more than 51 per cent stake. Currently, Carrefour operates five cash and carry or wholesale outlets in India. This is a category where up to 100 per cent foreign investment is allowed.
Carrefour is likely to move forward with an application to invest in multi-brand retail stores in India, depending on how the government responds to the application of UK-based Tesco. Earlier this week, Tesco sent a proposal to the government to invest $110 million in Tata Group's Trent and run multi-brand stores in Karnataka and Maharashtra. The Foreign Investment Promotion Board might take up the Tesco-Trent proposal by the end of this month.
Responding to a Business Standard questionnaire on whether the French chain was preparing to file an application for multi-brand retailing in India and if it was partnering the Future group, the largest retailer of the country by revenue, a Carrefour spokesperson said, "At this point of time, we will not be able to comment on anything."
A Future group spokesperson said, "We don't comment on market speculation." When asked, Kishore Biyani said, "Nothing is happening." Shoppers Stop managing director Govind Shirkhande declined to comment. The fact that Tesco is applying to invest in existing Trent facilities has triggered a debate on whether the application is in compliance with the government norms, which talk of investment in new ventures. Trent has said the group is in compliance with the FDI norms.
Many Indian retailers are keen on foreign investment but the policy rider issued earlier this year, that the mandatory $100 million investment must only fund new ventures, is being seen as a hurdle. Domestic retailers are awaiting a further clarification from the government on investment in expansion of existing facilities.
Meanwhile, some senior officials of the Euro 76-billion Carrefour are expected to arrive soon from France, adding to the buzz that the chain has big plans on India. Although the group had shut many stores across the world and exited some places, such as Malaysia, Singapore, Indonesia and Greece due to the economic slowdown or poor business, it recently made news for buying a portfolio of 127 shopping malls in France, Spain and Italy from real estate group Klepierre for Â¤^2 billion. The company is focused on Europe and key Asian markets asuch as China.
At annual revenue of Rs 190 crore in India as of December 2012, Carrefour has gone slow herein its cash-and-carry entry. It started its first India store in December 2010 and opened the fifth one in Bangalore this Wednesday.