Carrefour may choose Parsvnath for India foray

Carrefour, the world's second largest retailer, is considering the franchise model to initially expand its presence in the country and may announce a local partner in four weeks, people involved in the development said.

The French retailer, which has held talks with as many as 50 domestic business houses including Mumbai-based Wadia group and Mukesh Ambani-led Reliance Industries and real estate companies, such as DLF, in the past five years, may choose Parsvnath, a New Delhi-based real estate company, as its partner.

"Parsvnath has emerged as the strongest option for the franchise partner," a source said. A person familiar with the development at Carrefour gave the same timeline for the announcements. Parsvnath has almost five million sq ft of retail space under its belt and plans to increase it to six times in the next five years.

The retail giant's negotiation with other domestic houses and companies failed as they wanted greater control over the business.

Carrefour is exploring the wholesale cash-and-carry format and front-end retailing options in the country. It has already formed Carrefour WC & C India and Carrefour India Master Franchise Company for the respective business formats.

"We are likely to announce our retail partner in three to four weeks," Pradeep Jain, Carrefour's chairman in India said.

Under current government guidelines, foreign direct investment is allowed in the wholesale cash and carry model but it is not allowed in the multibrand retail stores. In single brand retail stores, it is limited up to 51 per cent. However, multi-brand international retailers can operate through the franchise route where an Indian partner would own the operations.

Carrefour SA Chief Executive Officer Jose Luis Duran had said last month that it was worth investing in India before the limits on overseas companies' ownership of local stores were lifted. The company was talking to potential Indian partners to start a wholesale business and may announce the winner in the coming "weeks or months''.

"We still haven't zeroed in on a partner as it is all in the early stage," said Somesh Dayal, marketing head for Carrefour India.

It is Carrefour India Master Franchise Company that would give its Indian partner the licence to do front-end retailing with using the French retailer's brand name. Carrefour would also manage the whole-supply chain and provide the logistic support to the retail firm.

"Franchise is the best option," said Jain. "Today franchise can operate the company and tomorrow when FDI is allowed the international retailer can increase its stake," he said explaining the business model under discussion.

Carrefour built its core management team early this year with the help of executive search firm Transearch India.

Published at :http://www.indiarealestateblog.com

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