Bharti retail back on the block

Bharti Retail announced its foray in the retail sector recently. The company seems to have overcome the political tempest created over its joint venture with Wal-Mart. Rajan Bharti Mittal, Joint MD, Bharti Enterprises, explains the entire strategic retail roadmap of his company.

By Karan Mude, Senior Correspondent | indiaretailing.com

After the announcement of the joint venture with Wal-Mart, the journey of Bharti's retail venture hit a sort of roadblock – when UPA Chairperson Sonia Gandhi wrote a letter to the prime minister, asking him to categorically review the Bharti-Wal-Mart deal, besides the FDI policy in retail sector. This comes in the wake of the Left Parties' rhetoric against FDI in general and the above-mentioned deal in particular.

Dressed in a crisp black suit, Rajan Bharti Mittal, joint managing director of Bharti Enterprises, showed no visible signs of pressure when he divulged the details of the roadmap of his company's foray in retail sector in India.

The investment

Bharti Retail Private Limited will invest over $2.5 billion in its retail venture by 2015. Bharti plans to raise this money through various sources. “Equity, debts, internal accruals and working capital are some of the sources we are looking to raise funds from,” said Mittal.

Interestingly, this investment does not include the investment on real estate. Retail real estate is getting costlier by the minute, but the company has so far not made any commitments on this. “Bharti Realty, one of our resource companies, is looking at the different land banks and options that are available,” Mittal confirmed. He refrained from making any comments on investment in real estate. However, he accepted that this investment just looks at the front end and not the logistics, as logistics is a separate piece altogether. The venture has revenue targets of about Rs 20, 000 crore by 2015.

Vinod Sawhny, who was earlier joint president of one of Bharti's telecom companies, will head the retail operations of Bharti Retail.

The format

Bharti is planning to have a pan-India rollout. It will launch retail outlets in multiple consumer-friendly formats, which will include hypermarkets (with retail space of 75,000 to 125,000 square feet) and supermarkets (with retail space of 30,000 to 50,000 square feet). For convenience stores it is looking at developing its own space, as well as partnering with existing local store owners across India through a franchisee model. These stores will include all food and grocery categories, fresh fruits and vegetables, meat and poultry, dairy products, staples, FMCG and processed foods, electronics and appliances, clothing and footwear, furniture and furnishing, and other household articles. “Our first store will be launched in Q1 of 2008 calendar year,” said Mittal.
By 2015, the company is looking to have total retail space of over 10 million square feet . Given the tremendous potential in the tier I and II cities, Mittal plans to initially target cities with population of over 10 lakh – and as the subsequent phasse of retail network is implemented, cities with population of five lakh will be targeted.