“Wal-Mart is very satisfied with the results in India. I was informed by the Wal-Mart CEO that they are looking at opening more stores. He gave a figure of 40 more stores across the country in the immediate future.”

It may be recalled that S Robson Walton, scion of Walmart’s founder Sam Walton and present Chairman, was recently in India. Walton, during his visit to the country last week, had a meeting with India’s Prime Minister Manmohan Singh and Commerce & Industries Minister Anand Sharma to discuss retail sector in India.

Walton is keen that India initiates policy changes for foreign direct investment (FDI) in retail sector of India. He wants the government to lift the ban on entry of MNC retailers in multi-brand front-end retail by allowing them to invest in this segmen of retail business. Currently, India allows FDI of up to 100 per cent in cash and carry and of up to 51 per cent in single brand retail.

Walmart has so far set up a solitary cash and carry store under the brand name “Best Price Modern” wholesale Store at Amritsar in Punjab. The store set up by 50:50 JV between Walmart and Sunil Mittal-led Bharti group was launched on the 30th May, this year. To prepare manpower for the company’s existing and future stores as well as to help the retail industry meet its human resources requirements, the JV under PPP initiative has also set up training academies in partnership with the government of Punjab. These academies are offering courses in different aspects of retail business to rural and unemployed youth coming from nearby towns and villages.

Sunil Mittal, Chairman of Bharti group, though eching the sentiments of Walmart’s Chief, was little cautious on the retail venture’s expansion plans for cash and carry business. According to Mittal, while more and more cash and carry stores will be opened every few months, the company will not go very fast on the same. The company will follow a measured approach, said Mittal.

Currently, while no FDI is allowed in the multi-brand segment of retail operations, up to 51 per cent of foreign equity is allowed in single-brand retail and up to 100 per cent foreign equity is allowed in cash and carry (B2B) wholesale (indirect retail) in India.

S Robson Walton, chairman of Wal-Mart Stores, according to an ET report, called on Prime Minister Manmohan Singh on Wednesday, to impress upon him the need to open the multi-brand, front-end, retail segment to foreign investors in India. Doug McMillon, Walmart’s CEO of international business, had also recently met India’s ministers of agriculture and commerce to canvas for company’s future plans for India.

India, the second fastest growing economy of the world, holds special attraction for the world’s top multi-brand American and European retailers like Walmart Inc, Carrefour SA, Tesco plc, and Metro AG to fullfil their growth ambitions, since the growth in western economies has almost become stagnant.

Walmart Stores is present India via Bharti Wal-Mart Private Ltd– a 50:50 joint venture with Bharti Enterprises (Sunil Mittal-led India’s largest private telecom player). This joint venture has already opened a cash and carry store under the brand name of Best Modern wholesale on the 30th May, 2009 at the holy city of Amritsar and is ready to open another store at Ludhiana in Punjab.

To somewhat overcome its non-presence in multi-brand retail, Walmart is also offering back-end logistic and technical support services to Bharti’s retail arm Bharti Retail, which has opened a multi-brand supermarket and mini-hypermarket retail chain called “Easyday” in several areas of North India. The retail chain was launched over a one and a half year ago in April 2008 from Ludhiana in Punjab.

According to earlier assertions, Bharti Retail will eventually become a part of Walmart Bharti’s retail JV in India, once the government agrees to change the policy for a sector that provides second largest employment in India.

“Internationally, we’re focusing on larger markets. China is a big opportunity for us. We’re just getting started in India, where we see great opportunity over the long term,” said Watson, while participating in a Forbes Global CEO Conference at Kuala Lumpur (Malaysia). According to Walton, Asia is expected to lead the global economic recovery.

Walmart, which derives close to one quarter of its global revenues (over $400 billion) from outside the USA, is currently operating over 600 stores in China and Japan, though company was forced a couple of years or so ago to withdraw its operations from South Korea- another growing Asian economy in the far Eastern region.

Bharti Wal-Mart Pvt Ltd– Walmart’s Indian JV with Bharti Retail, has launched its first ‘cash and carry’ wholesale store in Amritsar from May, 2009. The store is operating under the brand name of “Best Price Modern Wholesale.” The JV company is planning to open 10 to 15 such stores, which are expected to provide employment to around 5,000 persons. Walmart had to reconcile with launching its operations through ‘cash and carry’ route as no foreign direct investment (FDI) is allowed in multi-brand, front-end retail under current policy framework of India.

Walmart’s Indian partner, though, is quite hopeful of change in the policy soon. According to Rajan Mittal, vice chairman of the group, who supervises the group’s retail initiative, Bhartis are expected to achieve $ 1 billion in retail sales and employ around 60,000 people by 2015.

In view of the present policy hurdles, Bharti Retail has already forayed into front-end, multi-brand, retail on its own. It operates a general merchandise retail chain called “Easyday” comprising 28 stores under supermarket (26) and mini-hypermarket (2) formats in Punjab and Haryana. The retail chain is looking at adding 40 new stores in NCR during this quarter before the end of calendar 2009.

FDI in retail has traditionally been opposed by small traders (mom & pop -kirana- stores) as well as most political parties of India, as it is feared that this will lead to loss of livelihood security for millions of traders and workers engaged in this sector.

Bharti Retail, which has formed a 50:50 retail joint venture with the US-based world’s largest retailer-Walmart-two years ago, as such, has been forced to presently operate its front-end retail business (under the brand name of “Easyday”) on its own. “Easyday” currently operates 28 supermarket and 2 mini-hypermarket format stores in Punjab and Haryana. It is currently in the process of expanding its network in Delhi and surrounding areas (popularly known as NCR) by stting up around 40 “Easyday” stores before the end of this calendar year.

Rolling out the blueprint of Bharti Retail’s future plans, Mittal said that it is well on its way to reach the turnover of $1 billion in the next five years. By 2015, retail business of the group would employ 60,000 persons.

“We employ about 2,000 people… We are going to employ 60,000 people by 2015,” Mittal told PTI. He was of the opinion that a large number of jobs would open up, if FDI is permitted by the government in this sector. “I am saying that if the sector opens up, it will have two million people employed… The government should recognise that,” said Mittal.

According to Mittal, retail offers employment opportunities more inclusively than other sectors as it opens up jobs for people with less education as well as women.

“About 25 per cent people working at Bharti’s ‘Easyday’ stores were matriculate who would find jobs only at places like retail stores. Besides, about 22 per cent of the people employed by the sector are retired and housewives, who work on flexi timings,” said Mittal.

Bharti and Walmart in a PPP initiative have set up a skills development academy in collaboration with the state government of Punjab. The academies provides necessary skills to unemployed and rural youth in retail operations. “We are training them and we have skill set academies in Ludhiana and Amritsar to train them,” said Mittal.

Talking about advantages of opening up the retail sector to foreigners, Mittal said, “You get technology, you get sourcing, not to forget the reverse also. China gives (exports worth) $25 billion a year just to one company, which is Wal-Mart. From India, they pick up $600 million. Look at the gap.”

Mittal, to begin with, will be happy with up to 49 per cent FDI in multi-brand, front-end retail sector. “That’s for the government to decide but I would say, to begin with, 49 per cent…” Incidentally, according to current FDI policy framework, up to 51 per cent of FDI in single-brand, front-end retail, and up to 100 per cent FDI in “cash and carry” wholesale retail is allowed in India.

According to Mittal, apart from investment, FDI will also bring much needed technology and sourcing skills in the sector. Walmart is prepared to invest $100 billion in India.

“You get technology, you get sourcing, not to forget the reverse also. China gives (exports worth) $25 billion a year just to one company, which is Wal-Mart. From India, they pick up $600 million. Look at the gap,” said Mittal. “If you really see… Tea, fruits, vegetables, rice, brassware, handlooms, handicrafts, jewellery, I think we have enough to supply,” he added. This will also provide impetus to expansion of private label business in the sector. “People who manufacture for FMCG companies will do same for Easyday stores tomorrow,” said Mittal.

Exhorting policy makers to look at the big picture, Mittal said, “I think, they (the policy makers) are not looking at the larger picture. They only see one small constituent…”

The study has great significance as most of the incremental business in this category is handled by organised retail players in the ‘food’ and ‘wellness’ segments

With growing spread of obesity across the globe, chronic, lifestyle, diseases like diabetes, cardiovascular ailments, and osteoporosis are on the rise. Most consumers, more conscious of health and fitness than ever before, are as such looking at management or prevention of these lifestyle conditions through increased use of neutraceuticals than taking prescription medicines.

Neutraceuticals can be classified in three categories: functional foods (foods fortified with ingredients like amino acids, vitamins, probiotics, plant sterols, phytosterols, and herbal products, among others), functional beverages (energy and sports drinks), and mineral supplements. Apart from filling neutritional deficiencies, these foods also promote good health and help prevent diseases.

While, pharmaceutical products are subject to stringent regulatory framework, neutraceuticals generally escape rigourous scrutiny of authorities.

Although, current consumption of neutraceuticals is absymally low in India compared to global standards, according to the study, there is a huge potential for the same in the country.

“…the total market size in India is still very small compared to the global market but there is a huge potential for these products,” said Muralidharan Nair, partner (Health Sciences Advisory Services) of Ernst & Young.

If the issues like safety standards and lack of awareness are sorted out, the market for neutraceuticals in India can go up to even Rs 17,000 crore in the next four years, says the study.

Encouraged by success of the US-based quick service restaurant (QSR) chains like KFC (Kentucky Fried Chicken), McDonalds, and Pizza Hut, a number of their QSR conterparts like Church’s Chicken, Round Table Pizza (5th largest US pizza chain), and Papa Johns (over 3,000 restaurants worldwide) and CKE Restaurants Inc, as well as other food restaurant chains like Tropical Sno (shaved ice brand), and The Melting Pot (premier fondue restaurant brand), according to Nandi, are looking for setting shop in India’s growing consumer market. They too want to follow ‘franchisee’ model like their competitors for foraying into India.To assist potential Indian franchisees in establishing “new and profitable commercial relations” with such US companies that are keen to enter India, the US Commercial Services in India has designed a unique programme. The programme is called “Focus Franchising.” Through this programme, the US-based companies will help local franchisees to find equipment packages, obtain guidance on site selection and restaurant-level marketing. These companies will also offer training assistance and guidance to Indian franchisees.

Accordingly, Pantaloon Retail (Future group’s retail arm), which operates several multi-format, multi-product, retail chains in value, lifestyle, and home retail segments, across the country and provides direct employment to 40,000 persons, after a short blip, has begun hiring new employees for retail chains.

Retail sector, one of the biggest job creators in any economy, according to Biyani, is a key growth driver for the country’s economy. The sector offers great potential for creation of jobs everywhere. India’s retail sector, like other global economies, too has great potential for creation of jobs.

According to Biyani, increase in urban consumption leads to rural prosperity as well. According to a study conducted by his group, every Rs 100 worth of urban consumption results in channeling of Rs 39 to rural areas.

Biyani was participating in meeting of top industry leaders convened on Tuesday by India’s Finance Minister Pranab Mukherjee. The meeting was called to chart out a road map for reforms and sustainable economic growth.

Apart from helping farmers in securing better price for their products, creation of modern suppy-chain infrastructure will go a long way in reducing spoilage/wastage of short shelf life fresh products. This will also provide common platform to retail chains and large national and global wholesalers to procure their requirements from well equipped market places in an organised manner.

The Agriculture Marketing Board will invest over Rs 100 crore (1 billion) in creating two modern wholesale markets at Panchkula and Mewat in Haryana (source). The wholesale markets, being set up under under National Horticulture Mission, will facilitate sale and purchase of fruits, vegetables, flowers and herbs.

Apart from facilities of auction halls for sale of fruits, vegetables and flowers, proposed wholesale markets will also have ultra modern facilities for grading packing halls, pre-coolers, cold storages for potato,etc, onion storage, organic food section, ripening chambers, among others. Among other provisions, the proposed markets will have infrastructure for retail chain and wholesale shops, retail market for farmers, business park, viewing gallery, transport and waste disposal area, water works, loading and unloading areas, and quality testing labs.

According to R R Jowel, HSAMB’s chief administrator, creation of these markets will help state farmers in seeking customers for their produce not only from Haryana but from national and international markets as well.

The Board, according to Jowel, is also considering a proposal for development of supply chain infrastructure, that will include creating facilities for pre-cooling, washing, waxing, grading, sorting, packing and cold storage of horticulture products at 17 existing market places at an additional investment of over Rs 75 crore (750 million).

The state agency, according to Jowel, is also setting up a new vegetable market at Panipat and a modern farmer’s market at Panchkula in the state. Apart from these, new vegetables and fruits markets including modern farmer’s market will also come up at Hisar, Narnaul, Rohtak and Karnal. Setting up of air conditioned market at Gurgaon, cold storage facilities for potatoes at Shahbad, storage facilities for onions at Jhajjar and multi utility cold storage at Sonipat are also going to form part of infrastructure plans.

The MOU with the state government was an important part of ‘farm to fork’ policy initiated by Mukesh Ambani, chairman of Reliance group.

The decision to scrap the agreement that provided for setting up of 52 rural hubs and 250 sub-hubs across 18 districts of the state was taken as Reliance, according to the state government, failed to comply with terms and conditions of the MOU.

While meeting the objective of retailing horticulture products to consumers at reasonable prices on one hand, implementation of the agreement would have paved the way for creation of agri-infrastructure on the other hand. This would have helped in boosting production of fruits, vegetables and other fresh products in the state.

According to terms of the agreement, Reliance was committed to set up supply chain (infrastructure, cold storage, logistics) at an investment outlay of Rs 3,000 crore, while the state government had agreed to provide 1,000 crore of land to the company at concessional rates. Reliance had also agreed to enter into agreements with local farmers for agri and retail-based projects.

Apart from procuring milk and grain, Reliance was planning to procure over 200,000 tonnes of horticultural products from an area of over 300,000 acres under the project.

“We have various plans for the company. Offloading the non-core assets of Pantaloon to raise close to Rs 300-500 crore is one of them,” Future Group CEO Kishore Biyani said.

Pantaloon Retail, it may be recalled, had earlier initiated plan to recast the company into multilayer structure with a view to induce foreign capital, however, the plan despite shareholders’ approval, had to be put on back-burner due to lack of clarity on policy guidelines relating to infusion of foreign investment in subsidiary companies.

Current policy guidelines on Foreign Direct Investment (FDI) in retail prohibit entry of foreign capital in multi-brand front-end retail. Up to 51 per cent of foreign equity can, however, be brought into single brand retail business.

With a view to ensure that the company’s plans are in tune with present policy guidelines, Pantaloon Retail, according to its managing director Kishore Biyani, will float a special purpose vehicle (SPV) to raise funds from outside investors.

The position in this regard became clear when employees of the company despite followup could not receive Form 16 from their employer. This has forced the employees to abstain from filing their tax returns with the tax administration.

At one point of time, 15,000 persons were under direct or indirect employment of Subhiksha. Most of these, however, working at front end on low salaries may not have been liable for payment of taxes. The company is estimated to be owing about Rs 35 crore in unpaid salaries and other dues to its employees.

The company in a mailed response, however, has denied any liabity on this account. “We have no dues in respect of TDS in any manner, in respect of any employee,” said R Subramaniam, Subhiksha’s managing director to the newspaper.

The act of deducting tax and not remitting it to the government is an offense for which the company’s management is liable be prosecuted. Those responsible for not depositing the money, without valid reasons, may have to face imprisonment of between 3 and 7 years. The company may also be penalised for failing to issue the TDS certificates to its employees.

Subhiksha, it may be recalled, was forced to close down its discount retail chain comprising 1,600-odd convenience format stores operating across various states of the country. The stores were closed over 6 months ago in January, 2009, due to severe cash crunch.

Subhiksha Trading owes around Rs 1,000 crore to various creditors including Rs 870 crore to a consortium of 13 banks led by ICICI Bank Limited. The company failed to obtain bailout assistance of Rs 300 crore from its lenders under RBI’s CDR (corporate debt restructuring) programme as dedline for sanction of the revival package lapsed aon 31st July, 2009.

Cash and Carry Wholesale, a shareholder of Subhiksha, has  filed a court petition under Section 391 of the Companies Act, that seeks to arrive at a compromise between Chennai-based cash starved retailer company and its creditors.

“We have been informed and notified that Cash and Carry Wholesale Traders Pvt Ltd, the promoter of Blue Green Construction and Investment Ltd, into which we are merging has filed a Section 391 petition before the High Court,” said R Subramanian, Subhiksha Trading Services Ltd’s promoter, founder, and managing director in statement.

A company and its creditors can meet and arrive at a consensus on any matter under the provisions of section 391 of the Indian Companies Act, provided such a meeting has been held under the orders of a competent court.

Subhiksha it may be recalled was forced to suspend operations of over 1,600 convenience stores discount chain in January, 2009, as it ran out of cash to meet obligations of its lenders that among others included banks, vendors, service providers, property owners and employees. Subhiksha is believed to be owing about Rs 800 crore to a consortium of 13 banks, including Kotak Bank (Rs 40 crore) which has petitioned the Madras High Court to wind up the operations of the cash strapped company.

To revamp its suspended operations, albeit on a small scale, Subhiksha sought assistance of Rs 300 crore from its lenders under RBI’s CDR scheme. However, despite agreeing in principle to arrange induction of Rs 250 crore, the retailer failed to obtain approval of its lenders to its proposal within the stipulated time period of six months (up to 31st July, 2009).

Subhiksha, according to the statement, however, is still hopeful of resuming its activities in the next 3 to 4 months as its management is working with lenders on restructuring the troubled firm.

“The realignment is not happening right now. There are some legal issues. We are waiting for feedback from our legal team on this,” said Kishore Biyani, founder and CEO, Future Group, while speaking to reporters at Mumbai on 4th August, 2009.

Future group, it may be recalled in April this year, had unveiled a plan that will realign businesses of PRIL into a multi-tiered structure under the new name of Future Merchandise & Consumer Group (FMCG Ltd). PRIL wanted to attract a large amount of foreign capital in mult-brand retail via a web of subsidiary companies as infusion of foreign capital (FDI) for multi-brand retail is currently banned in India. The group is constantly looking for resources to fructify its expansion plans.

Although unsure of how long it would take to achieve the realignment, Future group is sure of its intention to implement the same as soon as feasible.

PRIL, the retail arm of Kishore Biyani-led Future group, opertes several multi format retail chains like Big Bazaar, Pantaloons, Central, Home Town, e-Zone, Ethnicity, among others, across value, lifestyle, and home retail segments.

While, the logistic arm of Future group was incorporated a couple of years ago in 2007, the Chennai-based company has been in the logistics business for five years ago since 2004.

Referring both to lower business volume and lower expenses incurred on promotion by the Chennai-based company than Future’s lostics arm, the order said: ”The respondent may have lethal economic power in promoting their business and increasing their volume of business and the applicant may not match the respondent in spending whopping expenditure towards promotional activities. Yet, the applicant (Chennai-based Future Logistics), who had plunged into the business with the trade name Future Logistics, will have to be protected from the imitation of the trademark with the addition “solutions” by the respondent as otherwise, unfair trade practice will be encouraged.”

“The court cannot bless the big fish who venture to swallow little fish,” added the Court.

The Future Group has filed an appeal against the injunction of the Madras High Court. The Court is expected to be hear the appeal in the next week.

It may be recalled that Future group in the recent past had to fight a legal battle with Anil Ambani-led ADAG group, which was granted registration of trade name of ”Big Bazar.” While, Future group’s highly successful hypermarket chain Big Bazaar contains two ‘a’s in its name, ADAG’s registered name had contained only one ‘a’ in its trade name.

Yum Restaurants, the franchisee, according to a newspaper report, had agreed with the Foreign Investment Promotion Board (FIPB), which allowed to operate in India in 1993, to bring in a total foreign currency investment of $80 million in two tranches of $40 million each over a period of seven years. However, the company brought an investment of only $35 million.

The Enforcement Directorate, which investigates and initiates prosecutions against foreign exchange violations in India, as such, has served a notice seeking explanation for default on Yum! Restaurants.

“Our probe found that the firm brought in only about $35 million in all. This amounts to both a foreign exchange and an FIPB licence violation,” said an official of the Enforcement Directorate.

The violation could lead to a payment of Rs 1,920 crore (around $ 400 million) including Rs 1,252 crore ($260 million) in penalties.

Yum! has also been asked to explain evasion of service tax on services offered the brands’ restaurant outlets in the South Asian countries of Pakistan, Sri Lanka, Mauritius and Bangladesh.

Additional violations of Yum! relate to sale of franchisee establishments and payment of royalty to its parent company in the US.

“Yum! is a responsible global company that has been operating legitimately in the country for more than a decade. We comply with all applicable laws of the land and are committed to investing and building our brands in the country in an ethical manner,” said a spokesperson of Yum! Restaurants. “We are examining this before deciding on an appropriate course of action,” added the spokesperson.