Is Carrefour exiting India?

French retail giant reportedly in talks with others in the segment for sale of its five wholesale stores in the country

Retailing companies, especially those in the cash and carry or wholesale business, are learnt to be negotiating with French chain Carrefour for buying out its stores.

Carrefour, say sources, is exploring the option to exit the India market, following a slowing in its business at home and the new government’s opposition to foreign investment in multi-brand retailing. The ^76-billion company has reportedly engaged KPMG for helping it sell the India assets.

In India, Carrefour operates five stores in the cash and carry format, where foreign chains don’t require any local partnership. While the previous government had allowed up to 51 per cent foreign direct investment (FDI) in multi-brand retail, the present government led by the Bharatiya Janata Party is opposed.

Retailers present in India are in talks with Carrefour to buy its assets piecemeal, rather than the whole business, sources said. For instance, American group Walmart, with 20 stores in the country and looking to expand to 50 in four or five years, is looking at Carrefour stores in locations where it has no presence. Walmart does not have any store in three of five Carrefour store locations, at Bangalore, Jaipur and Delhi.

The other two Carrefour stores, at Meerut and Agra, are attractive for both Metro Cash and Carry of Germany and Mukesh Ambani-promoted Reliance Market. Neither Metro nor Reliance has any cash and carry store in Meerut or Agra.            

Executives in retail chains say buying a running store, such as Carrefour’s, would mean a saving of 12 to 14 months for the buyer. While that’s a significant advantage, retail companies are more focused on getting the right store locations at the right value.

While Carrefour did not reply to an emailed questionnaire on sale of its assets, sent to the company on Monday, a Walmart spokesperson declined to comment. A spokesperson at Metro, which has 16 outlets in the country, said: “Metro Cash & Carry India is neither aware of, nor has been approached with any information to suggest a transaction of any nature with Carrefour. We would, therefore, not like to comment on such speculation.”

Metro recently announced an ambitious expansion plan in India, wanting to open 50 stores by 2020. Reliance, with about 20 cash and carry stores and planning to open 60 in three years, did not reply.

Carrefour was earlier believed to be in talks with the Bharti group for a sale transaction. On whether Bharti, which runs a little over 200 retail stores and is perhaps keen on cash and carry, was in talks to buy some or all of Carrefour’s India stores, a Bharti spokesperson declined to comment.

CHANGE OF TACK

* Retailers present in India are in talks with Carrefour to buy its assets piecemeal, rather than the whole business

* Executives in retail chains say buying a running store, such as Carrefour’s, would mean a saving of 12 to 14 months for the buyer