Wal-Mart, Bharti End Their India Joint Venture; Companies To Operate

Independently

Wal-Mart Stores (NYSE:WMT) and Bharti Enterprises have called off their partnership in India
and have decided to independently pursue their separate businesses in the countrys retail sector,
the companies said in a joint statement on Wednesday.
According to the agreement, Wal-Mart will acquire Bhartis 50 percent stake in their joint
venture in Best Price Modern Wholesale stores that run cash-and-carry operations serving local
businesses across India. Bharti will buy compulsory convertible debentures held by Wal-Mart in
Cedar Support Services, which operates the Easyday chain of retail stores.
Bharti is committed to building a world-class retail venture and will continue to invest in Bharti
Retail across all formats. We believe that with our current footprint of 212 stores, we have a
strong platform to significantly grow the business and delight customers, said Rajan Bharti
Mittal, vice-chairman and managing director of Bharti Enterprises, in the statement.
The breakup was not unexpected as recent statements by Scott Price, president and CEO of Wal-
Mart Asia, and Bharti's chairman, Sunil Bharti Mittal, had noted that the companies were
reconsidering the partnership. Local media reports citing sources also had said that Bharti was
growing wary of the partnership and was considering divesting in the joint venture.
Bentonville, Ark.-based Wal-Mart started its wholesale cash-and-carry and back-end supply
chain management operations in India in 2007, along with Bharti Enterprises through their joint
venture, Bharti Walmart Private Limited. The first store was launched in 2009 in Amritsar, in the
northern Indian state of Punjab.
Given the circumstances, our decision to operate independently will be beneficial to both
parties, Price said in the statement, adding that the company will continue to advocate for
investment conditions that allow FDI (foreign direct investment) multi-brand retail in India.
Wal-Mart had plans to expand the wholesale joint-venture partnership to the country's growing
retail sector and had announced that Bharti would be a natural partner for retail operations, after
the Indian government allowed foreign retailers to own 51 percent of Indian operations in
September 2012.
However, ambiguity in the rules and tough pre-conditions on investment patterns by the
government have discouraged foreign retail players like Wal-Mart from entering the sector
despite the much-awaited relaxation in FDI rules.
Moreover, the partnership between Wal-Mart and Bharti seemed to be fraying in recent years as
corruption scandals and government inquiries into alleged malpractices by the companies hurt
their expansion plans.
Wal-Mart is facing a probe in India for allegedly violating the country's foreign exchange norms,
and has been accused of clandestinely and illegally" investing $100 million in Indias retail
market through Bharti Enterprises from 2010.
In November 2012, Bharti Walmart suspended its chief financial officer and other employees,
pending the outcome of an investigation into a bribery charge. Raj Jain, president and CEO of
Wal-Marts India unit was replaced by Ramnik Narsey as interim chief in June. The company
did not specify the reasons for Jain's departure.
Wal-Mart announced last November that the company was investigating allegations of corrupt
practices in foreign markets, including in India, as part of a worldwide review of its policies and
practices to ensure compliance with the Foreign Corrupt Practices Act in the U.S.






The synergies in values, ethics and passion shared by Starbucks and the Tata conglomerate made
for the ideal partnership as the global coffee giant prepared for its entry into India.
At Asia Society India Centre's first members-only event, Tata Starbucks CEO Avani Saglani
Davda joined us for a coffee-tasting and discussion about the landmark Joint Venture (JV)
between Starbucks and Tata Global Beverages. She emphasized their focus on the "human
connection," sharing how they aimed for their stores to serve as a "third place" for customers
apart from their homes and offices. Further, the venture invested in ensuring that both their
customers and their employees (whom they call their partners) are treated respectfully. For
instance, Starbucks was the first listed company to allow health benefits to its part-time workers.
The two JV partners also shared deep mutual respect, as demonstrated by India being the first
country where Starbucks allowed co-branding and sourced coffee locally. The deep-rooted
commitment to give back to society was also a major focus of the venture, she said. It supported
the Swastha School for special children in Coorg, where their coffee plantations are situated.
As freshly brewed Kenyan Coffee was circulated by the Starbucks team, Store Manager Siddesh
took the audience through Starbucks traditional four steps of coffee tasting smelling (which
helps identify different flavors and aromas), slurping (which helps to locate the coffee over the
palate), locating and describing the taste.
Talking about competing chains and their strategy in India, Davda said that "success in any other
geography does not mark your success in India. When you enter a new market you have to
respect the palate and what the consumer really wants. The three Starbucks pillars are quality of
coffee, the fantastic third space and the legendary experience." She also noted that the design of
the stores in India were unique, setting them apart from other Starbucks outlets around the world.
The store designers took care to weave the story of Indian culture into the third space setting, so
as to be inviting to Indians.
Davda signed off by stating that the "TATA Starbucks' goal is to provide consumers with a
distinguished experience, bring an iconic band and stay true to it and not assume that the
consumer is always going to be in love with us; and only if we earn their respect will we be able
to survive here."













Magneti Marelli S.p.A. and Hero MotoCorp Ltd. have signed a Joint Venture agreement aimed at
the production of powertrain systems for the two-wheeler market.
According to this agreement, Hero MotoCorp will hold a 60% share in the Joint Venture, with
the remaining 40% being held by Magneti Marelli. The construction of a JVs production plant
is planned by 2015, at a location in India to be defined shortly.
The JV will nevertheless be operational immediately, as during this initial phase activities will
focus on the technological aspect, with the two companies starting to cooperate in the design and
development of the first solutions and applications for motorcycles.
The Joint Venture will be aimed mainly at the Indian market, and its solutions will be made
available both to the two wheeler production of the Hero company (the largest in India and in the
world), and to the entire two-wheeler market in the country (about 15 million vehicles sold in
2012 alone).
The main objective of the JV is to put together a portfolio of advanced solutions for the
powertrain control of two and three-wheel vehicles that, by taking advantage of the added value
provided by electronics, are able to raise the technological level of the solutions available until
today.
These technologies will make it possible to achieve better engine performances, with reduced
consumption and emissions, representing in fact a leap in the technological paradigm and thus
paving the way for a more sustainable mobility in compliance with future limits for polluting
emissions, in a country where a total of over 63 million two and three-wheel vehicles have been
sold in the last six years from 2007 to 2013(source: SIAM, Society of Indian Automobile
Manufacturers).
The scope of the agreement makes available to the JV Magneti Marellis advanced solutions in
terms of electronic engine management, including the ride-by-wire technology. Since this
technology allows electronic handling of the power requested of the engine, it optimizes its
operation, in addition to forming the technological base needed to enable future possible
solutions for hybrid engines associated with the transmission to be fitted on two-wheelers.
Since 2001, Hero has been the worlds largest manufacturer of two-wheelers. So far, it has sold
approximately 50 million motorcycles and mopeds, and currently holds a market share of 46%,
with almost 7 million vehicles sold every year. In 2012, it acquired 49.2% of the equity capital in
the well-known motorcycle brand Erik Buell Racing.
The scope of this agreement is - commented Eugenio Razelli, Magneti Marelli CEO - quite
significant for Magneti Marelli as our partner in this JV is the worlds largest manufacturer of
two-wheelers. The aim is to partner with Hero MotoCorp in order to equip with advanced
Powertrain solutions all Hero two-wheelers and most of the two wheelers circulating in a country
where current sales are already in order of 15 million per year. We are also proud to be able to
contribute to initiating a technological revolution in favour of sustainable mobility for two-
wheeled vehicles as well, on one of the most important markets in the world.
It has always been my firm belief that the path to technological excellence is through self-
sufficiency and independence.- commented Pawan Munjal, Managing Director & Chief
Executive Officer, Hero MotoCorp -Therefore, over the past year, we have been forging multiple
alliances with globally-renowned design and technology firms, and the newly-formed
partnership with Magneti Marelli is yet another strategic move in that direction. This is our first
Joint Venture since charting our solo journey and as an immediate opportunity and focus area,
the new firm shall be taking up development and manufacturing of next-generation Fueling
Systems. This is one of the most important areas in various technologies involved in making of
better fuel-efficient, environment friendly modern engines. Fuel technology has undergone a
major shift over the past two decades. The advances in electronics and control technology, which
have become smarter and real time, have given a very useful tool in the hands of engine
designers to precisely optimize fuel supply for control of output performance, emissions, fuel
consumption and usage of certain fuel blends.











Mumbai: Tata Motors Ltd and Italys Fiat Spa said on Wednesday that they are ending their
distribution agreement, while the manufacturing accord will continue.
Space crunch: Fiat cars on display at a Tata
Motors showroom in Okhla, New Delhi. Fiat says
its decision to part with Tata Motors was
prompted by increasing congestion in the
showrooms. Photo: Jasjeet Plaha/HT
The marketing agreement allowed the Italian auto
maker to use the Indian firms distribution network in the country. Distribution will now be
handed over to a separate Fiat group-owned company, the two said in a joint statement.
This is the second time that Fiats joint venture with an Indian partner has failed. A technical
collaboration and then a joint venture with Premier Automobiles Ltd went astray in the 1990s.
After two failed stints in Indiaone with Premier and a solo essaythe Italian company was on
the verge of pulling out of India but for Fiat chief executive Sergio Marchionne and Tata group
chairman Ratan Tata getting together in 2006.
Fiat joined hands with Tata Motors with the objective of using the latters expansive sales,
service and distribution network to gain access to one of the worlds fastest growing car markets.
It became evident in the first few years of the joint venture that the model was not working.
Sales at Fiat India have been sputtering. In the fiscal ended March, sales contracted 23.87% to
16,073 units, according to the Society of Indian Automobile Manufacturers (Siam).
A competing product line-up made it increasingly tough for dealers to do justice to both Tata and
Fiat, an analyst at a global consulting firm said on condition of anonymity.
Typically, dealers have a tendency to push those models that fetch them better margins.
Covertly, that was driving the dealers behaviour, he said.
A Fiat India spokesman said the decision to go their separate ways was prompted by increasing
congestion in the showrooms. Fiat customers have not been able to experience the brand, he
said.
In the past year and half, both Tata and Fiat officials have on several occasions expressed
dissatisfaction over the accord not yielding the desired results and the companies planning to
revisit the venture.
In September 2011, Fiat announced plans to set up so-called Fiat Cafesone each in Delhi and
Puneto promote the brand. The company also said it had asked some of the Tata Fiat
dealerships to set up separate Fiat outlets. The writing was on the wall, said the consultant
cited above.
The manufacturing joint venture between the firms will continue, the companies said. This
includes using a common manufacturing plant in Ranjangaon near Pune to produce Fiat and Tata
cars in addition to engines and transmissions for both the Indian and export markets and a
recently announced contract to supply Fiat diesel engines to Maruti Suzuki India Ltd.
In its five years of operations, the industrial joint venture has produced some 190,000 cars and
337,000 powertrains. It will continue with these manufacturing activities as they are outside the
purview of the new distribution agreement and supply cars and powertrains to Fiat and Tata.
Fiat India said it will start developing the new Fiat dealer network shortly.
The 178 existing Fiat-franchised Tata dealers in 129 cities will be encouraged to form the
foundation of the future network. Fiat will form a separate company that will assume
responsibility for all commercial and service-related activities from the current Tata-dedicated
team assigned to manage the Fiat brand.
Enrico Antanasio will head the new company, said Fiats spokesperson. Experts said it will take
the Italian car maker at least two years to establish its own network.
They need to be more aggressive with new model launches, said Puneet Gupta, analyst at sales
forecasting and market research firm IHS Global. Only then will the dealers see financial
viability in setting up Fiat dealerships.
Tata Motors dropped 3.82% to Rs304.65 on BSE on Wednesday. The benchmark Sensex fell
0.1% to 17,301 points. The announcement came after market hours.