News: Bharti signs JV pact with Tesco?

(DNA 08/07/2006) New Delhi - Has the Bharti group zeroed in on British retail chain Tesco for its retail foray? Yes, if industry sources are to be believed. According to the grapevine, Tesco has agreed to pick up a minority stake in the new retail company and a high-level team of its officials is at present in India to finalise details of the joint venture. And while a formal announcement may be still some weeks away, sources indicated that Tesco veteran Gary Sargent may well be the CEO of the new venture.

Sargent has been a stalwart at Tesco. He is credited with making a success of Tesco’s online arm since 1997. In 2001, Sargent was “loaned” out to US-based grocery giant Safeway Inc for the latter’s internet debut.

While divulging the plans to enter the food and grocery retail business, chairman and managing director Sunil Bharti Mittal (pictured) said earlier that the group was in talks with at least three international retail majors - Tesco Plc, Wal-Mart Inc and France’s Carrefour.

When asked on Friday about the impending deal, the joint MD of Bharti Group, Rajan Bharti Mittal, maintained that the group was still in “talks with international majors and no deal has been signed as yet”.

Bharti already has a presence in the agriculture sector with Fieldfresh Foods, a joint venture with Rothschild group. It is expected to make the retail foray in the food and beverages segment.

Tesco’s name has been the frontrunner in partnering Bharti, since the two already share a relationship, with Tesco using Fieldfresh as a supplier for fresh products in its supermarkets.

Retail industry experts pointed out that since FDI is not allowed in F&B retailing at present (other than the single brand route), Tesco could begin by partnering Bharti for sourcing raw materials; it already has a support centre and non-food sourcing operations in Bangalore.