Biyani venture might use Bharti's telecom edge in e-commerce

Kishore Biyani dismissed any talk of threat from e-commerce as hype, saying his group had grown 25% in the current environment

When Future Group founder Kishore Biyani announced a share-swap deal on Monday to form a merged entity where Bharti Retail would hold only a minority stake, it meant a near exit of the Sunil Mittal-led company from retail business. However, analysts suggest it might not be the end of Bharti's interest in retail. The group, which is a leader in the telecom sector, might use its best strength in retail as well, according to experts.

Bharti's telecom edge could be used for e-commerce business of the estimated Rs 15,000-crore combined entity, said Arvind Singhal, founder of Technopak, a retail consultancy. Biyani dismissed any talk of threat from e-commerce as hype, saying his group had grown at 25 per cent in the current environment. However, it is a fact that online retail has been at the forefront for several months now in attracting investor interest and big bucks. So, every brick-and-mortar retailer is seriously looking at entering or growing its e-commerce business.

"Bharti wants to be driven, rather than be a driver in retail," said another analyst, who did not want to be quoted. It was the same while it was in equal partnership with Walmart for the cash-and-carry venture and in technical tie-up for Bharti's easyday stores. Once the partnership with Walmart broke, Bharti could not do much in retail, he added. So, with Biyani's Future in the driver's seat, Bharti might once again get active, at least in some segments of retail.

While Future seems to be the aggressive player in the merged entity, Bharti's learnings from Walmart could be of help, said Mohit Bahl, partner, transaction services at KPMG. "Retail is a scale game to deliver the best to customer." Bharti might be able to add to the scale game because of its Walmart experience, according to Bahl.

"I don't see it as a Bharti exit,'' said Singhal. The role and participation of the Mittals could change with time. The business will need capital as it grows and one cannot rule out change in shareholding pattern, too, he believes.

When asked if the latest share swap-deal, estimated at Rs 750 crore, was a step back for the Bharti group in retail, Rajan Bharti Mittal, vice-chairman of Bharti Enterprise, said: "These are strategic decisions depending on the time of the business.'' On whether Bharti could exit retail completely, Mittal said: "We have just entered (the new venture); why are you making us exit?"

Currently, in the board of eight members in the combined entity, Rajan Bharti Mittal is the only one invited to represent Bharti. However, these are initial days and structural changes were possible, according to Biyani.