Wal-Mart pulls back in India amid probe: FT

|About: Wal-Mart Stores, Inc. (WMT)|By:, SA News Editor

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.