Wednesday, February 24, 2010

Carrefour plans foray into India

Population density map of India.Image via Wikipedia

MUMBAI:The French retailer Carrefour,which has been looking to crack the restrictive India market for seven years,plans to kick off its operations in the country this year by setting up a wholesale business.

The company also said that it was in talks with local firms as potential partners,but declined to name them.

Global retail chains have long been frustrated in their efforts to set up shop in the world's second-fastest growing major economy, where organised retail accounts for just 6% of industry sales and incomes are rising quickly.

Carrefour, the world's second-largest retailer, will join mega retailers such as top-ranked Wal-Mart and Germany's Metro AG in operating so-called cashand-carry ventures in India.

Foreign firms are prohibited from owning multi-brand retail chains in India,a rule that is not expected to be relaxed in the near term.

"Carrefour will develop its activities in India with the start of cash & carry activities in 2010," the company said in an e-mail statement to Reuters.

Indian regulations allow foreign multibrand retailers only through franchise agreements with local players, and Carrefour has held talks over the years with various Indian firms to enter the retail market.
"Carrefour and some Indian companies have been discussing partnerships," the company said, but would not to comment on which firms it had spoken with.

India's Future Group, the country's largest retail operator with brands such as Pantaloon Retail and Big Bazaar, has been the subject of media speculation as a possible partner for Carrefour.

Earlier this week, Future Group CEO Kishore Biyani told Reuters that he was in talks with several overseas retailers but did not specify which.

Foreign retailers may own up to 51%in single-brand retail and 100% in cashand-carry ventures.
The restrictions are intended to protect the small single-shop operators that dominate retail in India.
"Starting off with a cash-and-carry business gives them the opportunity to get a first-hand feel of the Indian market and allows them to build a brand name,"said Hemant Kalbag, partner with consultancy firm A.T.Kearney.

Carrefour has set up two entities in India - Carrefour WC&C India Pvt Ltd to run cash-and-carry business and Carrefour Master Franchise Company Pvt Ltd for its retail business, but neither firm has any outlets.

Separately yesterday, Carrefour said net profit last year fell 74%, impacted by more than 1 billion ($1.34 billion) in restructuring charges linked to shuttering stores in Italy and turning around its stalling French operations.
It said net profit came to 327 million ($444 million) from 1.27 billion in 2008.Revenue fell 1% to 87.38 billion. Sales fell in France, Europe and Asia, but rose in Latin America.

Carrefour made no forecasts for 2010.REUTERS

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