Friday, September 21, 2012

Wal-Mart to Step Into Indian Mega-Cities

Wal-Mart Stores Inc — the $446 billion retail behemoth — will be able to open stores in 22 cities across the country after the government notified a press note tonight permitting foreign direct investment up to 51 per cent in multi-brand retailing operations.
The press note — which contained fineprint that were not spelt out in the controversial press release issued last Friday after the cabinet formally cleared the proposal — means that Walmart can hit the road running, giving it first mover advantage over rivals such as Carrefour of France and Tesco of the UK.

The US giant — which slipped to second place in this year’s Fortune 500 list behind oil refiner Exxon Mobil — already has a cash-and-carry operation in India with Sunil Mittal-owned Bharti Enterprises through which it operates 17 wholesale retail stores.

The press note issued on Thursday night seemed to indicate that Walmart would be able to convert that operation into a multi-brand retailing operation and possibly ride on credits for its earlier investments in back-end operations.

The note said the foreign investor would have to invest a minimum $100 million (Rs 550 crore) in the retailing venture.

It said there were two other conditions that the foreign investor would have to meet:

At least 50 per cent of the total FDI brought in would have to be invested in back-end infrastructure such as warehousing, logistics, and facilities for manufacturing and distribution.

At least 30 per cent of the value of the procurement of manufactured/processed products should be sourced from small operators in India who haven’t more than $1 million in plants and machinery.

But the sourcing condition has been softened slightly. The rules say these retail stores can sell fresh agriculture produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products which may be unbranded.

This will enable Walmart to procure these from small Indian associates and meet the 30 per cent local sourcing condition.

The rules state the foreign investor can self-certify the size of his investment in the retail operation, the amount of money invested in back-end operations and the amount of sourcing from small local players.

“These could be cross-checked as and when required… the investors shall maintain accounts, duly certified by statutory auditors,” today’s note said.

But the note went on to add that the applications would be processed in the department of industrial policy and promotion to determine “whether the proposed investment satisfies the notified guidelines, before being considered by the FIPB for government approval”.

There is some confusion over the purpose of allowing the foreign investor to self-certify the scale of investment if the proposal has to be cleared by the FIPB anyway. Moreover, the Reserve Bank of India monitors fund flows into the country and the use of the proceeds.

In January 2006, the government had changed its vetting rules for FDI proposals for cash-and-carry retail by placing it under the automatic route. Until then, proposals for FDI above 51 per cent had to be cleared by the FIPB. Walmart formalised its partnership with Bharti Enterprises in August 2007 and came into the country soon after, sparking criticism at that time of a back-door entry.

Commerce ministry officials conceded that Walmart, which had invested a considerable sum in back-end operations for its wholesale stores, would become one of the first global giants to kick off full-scale retailing operations in the country.

“The real crux of the investment dilemma will be this rule on creating back-end infrastructure within the first three years… typically a retailer coming here would start with an investment of at least $500 million. Of this, $250 million would go towards back-end sunk costs which will not immediately give him a profit … that’s daunting,” said top commerce ministry officials who were part of inter-ministerial groups on FDI in retail.

The rules also say that foreign investors can only set up retail sales outlets in states that allow them to do so under “applicable state laws such as Shops & Establishment Act”.

Retail outlets can be set up in cities with more than 10 lakh people according to the Census 2011 and extend them to the suburbs up to a distance of 10 kms. For states that do not have large cities, the state government can pick the cities where retailers will be allowed to set up retail operations.

A close look at Census 2011 throws up a list of 22 cities in the 10 states that have decided to allow multi-brand retailing. These include 10 cities or urban agglomerations in Maharashtra, three in Rajasthan, three in Andhra Pradesh, one each in Delhi, Haryana and Jammu and Kashmir.

Three other states — Assam, Manipur and Uttarakhand — and the Union territory of Daman & Diu do not have any city with a population exceeding 10 lakh. The biggest city in Assam — Guwahati — has a population of 9.63 lakh. Imphal is Manipur’s biggest city with a population of 2.65 lakh. Dehradun in Uttarakhand has a population of 5.78 lakh.

Land price and rentals will not be counted as investment in back-end infrastructure. That could prove to be a problem for players such as Carrefour and Tesco.

Officials said the European retailers such as Carrefour and Tesco, both of whom have faced a financial downside in the recent past, will be able to enter the market only after marshalling their finances, and “that will take time, perhaps years”.

In contrast to Walmart, Carrefour, the world’s second-largest retailer, runs just two wholesale stores in India. The French giant posted a less than 1 per cent growth in 2011 and saw its net income decline by over 14 per cent.
from The Telegraph

Thursday, June 24, 2010

Mamata Banerjee is India's Railway Minister and the woman who wants to be chief minister of its eastern state of West Bengal. here are some impressions of her I jotted down last year :

New Delhi, July 11: It began as an informal chat with reporters, then turned into an impromptu decision making session on a host of problems related to the railways -- from ticket reservations to former railway minister Lalu Prasad Yadav's bid to award himself extra gold passes (which she hinted would be scrapped) to toilets at rail stations.
Didi started the `adda' over tea , paneer pakoras, chips and `malai cham-cham', ticking off journalists who said there was an impression she was turning into a minister for Bengal. ""I have not been able to give enough time to Bengal ... in this age of globalised communication, we can run a government from anywhere but I have spent more time here," she pointed out.
"I will work for all ... not just for Bengal," Mamata told journalists who she had invited for the tea session, before inviting suggestions to improve or streamline the functioning of the railways. "Don't ask me to comment on the railway budget ... I am not allowed to talk on that... you know that. Instead of asking me questions, give me your suggestions to improve the railways."
After suggestions started turning into complaints on the quality of food served, delays in the running of trains, computerised 139 railway enquiries, Lalu Prasad Yadav awarding former railway ministers extra gold passes for companions, she called in her Member Traffic Shri Prakash and executive director Jayanta Saha to join her special officer Ratan Mukherjee in taking down notes.
But Mamata despite displaying a great deal of diplomatic skill at the begining of the meeting in handling journalists who would have her say she opposed the government's disinvestment policy ("this is a meeting on railways not on my party ... my party's stand on the issue is well known and given in our manifesto"), could not resist taking a large number of instant decisions based on feedback from her reporter `friends'.
A complaint that the last railway administration had added an uncomfortable third bunk on the sides of some trains to earn extra money, prompted her to say that she had given orders for its scrapping. Another complaint that trains like Rajdhani running late did not serve meals to passengers, saw her telling Prakash to ensure that this did not happen in future.
Complaint that kiosks selling cheap food and drinks had been banned from most railway stations and only transnational or big restauranteers like MacDonald were allowed to sell under a new catering policy, had her say that this could not be allowed and had to be addressed.
Lalu's last budget had brought in a new catering tendering policy which had seen many amll kiosk owners being thrown off railway stations and replaced by organised restaurant chains.
Some suggestions saw almost instant justice being meted out. "There should be no waiting lists on Tatkal tickets ... we did not have that when we were running railways earlier and tatkal passengers to Kanpur on a Delhi-Calcutta train should pay only till Kanpur and not till Calcutta," Mamata told her officers after being told that these were the practice now.
The came a ticklish one about former railway minister Lalu Prasad Yadav signing an order in his last days in office which allowed all former railway ministers to get two more gold passes on top two gold passes which they were already entitled to. "Madam, you must have read a letter written by another former railway minister Ram Naik on this, whats your reaction."
"I have great respect for Laluji ... (but) no new changes (in rules on complimentary passes) should be made (in these difficult times)," Mamata said, squirming a bit in embarassment.
Complaints that the computerised railway information service on telephone number 139 had been outsourced and te agency running it was trying to add calling time of those who accessed it by adding a series of unnecessary instructions and ad jingles, had her tell her officers to look into this and muttering "vital things should be done by us."
Somebody wanted to know her policy on public-private partnerships, trying to lead her to say that the Manmohan Singh government's PPP model was flawed. She squinted her eyes and looked at the reporter before slowly replying with a smile "I started PPP in railways in my last tenure as railway minister and we welcome that mode in new projects but not in existing railway facilities."
But perhaps her instant promise to update toilets and build new ones and not necessarily pay toilets which have started becoming the norm at most railway stations, in reponse to numerous complaints on toilets, was the one which would go down best with the masses Mamata wishes to lead.
New Delhi, July 2: After presenting her rail budget, Mamata Banerjee, Minister for Railways, has a plane to catch at 8.10 pm.
She had called a few journalists for an evening cup of tea and a tet-a-te in her office, before flying back to her home town. While the reporters waited, Mamata dealt with a scrum of television crews in an adjoining room for their 2 minutes of bytes on the budget.
The clock kept ticking, Mamata could miss her flight or the journalists their chat. Suddenly she bursts, in. "Oof, I never knew there were so many channels ... am I tired." She plonks her trademark blue jhola in which she had carried her budget speech to Parliament.
"See if you can get another flight for tomorrow morning," the minister tells her aide. "Get us all tea," she asks someone else. "You did a great job with the TV crews," she tells her press advisor, shaking him by the hand.
Mamata has been fasting all day, she nibbles at a biscuit as she relaxes and lapses into her mother tounge after a day of speeches and press conferences in English and Hindi. "Everybody congratulated our budget ... Soniaji, PM, Pranabda. I don't know why people are upset about Mumbai suburban trains. thats no longer under the railways ... its a misunderstanding, it was hived off to a separate urban body" she tells the half a dozen journalists present, with a sunny smile, followed by a frown.
She beams again and points out she has given trains to Orissa and Kerala, two states which always uysed to complain they did not get enough attention from any railway minister, given all MPs the right to decide where they would have a reservation counter in their constituencies. "The North eastern MP, who wanted trains ... did he get them. I have given more trains to the north east than ever before."
Her party colleague and junior minister, Mukul Roy, tells her that the finance minister is on the line. She gets up and moves into an ante room to discuss matters of state.
Someone asks about Duranto, the new high speed train for the common man. "We took that initiative after a lot of thinking. Poor people, students etc, can avail this train at a far cheaper price than the Rajdhanis," she points out.
Someone else remarks CPM has called her budget an election budget. "Oder katha baad din tho ( forget what they say)," she shoots back.
"The budget is really all about giving the railways a human face .... The Rs 25 pass will allow people to move from Calcutta to mednipore, from calcutta to Durgapur for instance, its all about empowering small businessmen, ordinary people ... we are looking at setting up nursing and medical colleges attached to our hospitals. private partners will build it on a PPP mode, railwaymen's sons and daughters will get prefernce in studying there."
The Lalgarh line has been done to link a remote part of the country, Adra is getting a power station to develop a tribal district.
"The eastern freight corridor from Ludhiana to Dankuni will have industrial enclaves on railway land ... there will be jobs. Look at the number of factories we are planning. Its really a lot of work."
Her aide comes back. The next morning's flight is at an unearthly hour. She has to leave early. Someone has a last few questions.
"Aachcha shoot," she smiles as her aides fidget and look at their watches. The flight may be caught, but just.
New Delhi, June 2: Mamata Banerjee turned into anti-smoking activist today, ticking off ministers and MPs who were smoking inside her office in the Parliament House.
Trinamool ministers and Mps were letting down their hair after a long swearing ceremony in the Lok Sabha at her Parliamentary office. A few were smoking, some were just longing around or chatting up journalists, while waiting for fish fries, Vadas and tea which Mamata had ordered for them.
Suddenly Mamata flared up, "who is smoking here?". Minister of State for Urban Development Saugato Roy, sheepishly stubbed out his cigarette and hid it, the way he would have if he had been still in his college and been confronted by one of his professors. Another MP, quickly made an escape to smoke in the cramped passage leading to her secretary's office.
Mamata walked around the room, smiling at her MPs but at the same time checking out known smokers to see whether someone was breaking the law which forbids smoking in a public place.
Calcuttan Dinesh Trivedi, newly appointed minister of state for health, was the party member who provoked Mamata into policing her flock on the smoking issue and must have earned quite a few dirty looks from them for it. Trivedi first tried to stop party colleagues from stealing a smoke and then frustated by their attitude appealed to his leader "Madam our people are breaking the law of the land."
The law which forbids people from smoking in public places, came into effect from October 2, Mahatma gandhi's birthday, last year, making India one of 78 countries which has done so.
Though government studies blame tobacco for 40 per cent of India's health problems and estimate that 250 million are tobacco users, the law which forbids lighting up in bars, offices, bus stands and other public places has been more widely flouted till now than followed. Fines for violating the law is a punitive Rs 200 and till now no one has been fined for it in the capital city of Delhi.
Most officials and many ministers do smoke in the privacy of their office, away from the glare of the media, though these offices are defined as public places by the government.
The Indian Parliament too is defined as a public place, though journalists and MPs sometime share a smoke in the Varendah outside the Press gallery. The British Parliament is possibly one of the few which are exempt from the ban orders as the British government has defined it as `residence'.