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Sunday, Aug 25
Wal-Mart pulls back in India amid probe: FT
- Wal-Mart (WMT) has "stopped expanding" in India despite the fact that the retailer and its joint venture partner Bharti Enterprises "had started to do reasonably well," a retail analyst tells FT.
- The Indian government is examining whether WMT's $100M convertible debenture investment in Cedar Support Services (the parent of Bharti Retail) amounted to an illegal foreign direct investment in supermarkets.
- Cedar was initially called Bharti Retail Private Ltd, but changed its name and altered its articles of association in 2009 in what may have been a move designed to allow foreign direct investment in the company.
- Some allege that the transaction was simply a way for WMT to invest directly in EasyDay convenience stores ahead of a government decision to make such foreign investments legal — the debentures could be converted into equity as soon as the government decided to "allow foreign ownership of front-end retail businesses."
- Many retailers are taking a wait-and-see approach to India as Parliamentary elections next year could ultimately lead to foreign direct investment in supermarkets being declared illegal once again.