In an interesting development, the Tata Group is said to be in the process of finalising a deal with the US giant Walmart for a 49% stake purchase in its cash & carry business, Best Price. This might prove to be a win-win situation for both since Walmart will feel it is receiving some funds into its kitty after having spent $16 billion in acquiring Flipkart in 2018. For the Tatas, it could give it the opportunity to expand its footprint in the retail market through the association with Walmart.
Though the companies have not confirmed or denied the report, the information is that the discussions have progressed to an advanced level and the CEO of Walmart International was in New Delhi recently and was even planning to make a public announcement on the deal.
Some sources indicate that the sudden development of the NCLAT ordering the reinstatement of Cyrus Mistry as the Executive Chairman of the Tata Group has upset the proceedings. There is a bit of uncertainty as the incumbent Chairman N Chandrasekaran’s appointment has been held illegal by the NCLAT. The Tatas may go to the Supreme Court in January once the court reopens after the Christmas vocation to try and obtain a stay on NCLAT’s order.
On the Walmart-Tatas deal, the US company had entered the Indian market through a tie-up with the Bharti Airtel group and they had setup large-format cash & carry stores. Since FDI rules did not permit foreign investors in retail, Walmart was only managing the back-end operations. The association was dissolved later in 2013. 100% FDI is permitted in the cash & carry business, which basically means you sell to the traders, hotels and other bulk consumers, not to individuals. Companies like Metro AG from Germany, and India’s Reliance are into cash & carry. Lots Wholesale Solutions, a Thailand-based company, has entered the Indian market recently as well.