Bharti Retail Plans to borrow up to 2k cr

MUMBAI: A year after parting ways with Walmart, billionaire Sunil Mittal’s Bharti Retail plans to borrow up to 2,000 crore to accelerate store openings and spruce up operations. The company board has already passed the fund-borrowing resolution, according to Bharti Retail’s recent filings with the registrar of companies. The filing, however, didn’t specify when and where the amount will be utilised. A Bharti spokesperson declined to comment.

A real estate industry official privy to Bharti Retail’s plan said, “The company has stabilised most of the operations post-Walmart and is now looking for some big-ticket spending to improve back-end efficiency and expansion.” Experts said the company may need funds to spruce up back-end operations and speed up expansion to compensate the void created by its estranged partner Walmart. Bharti and Walmart ran an equal wholesale joint venture in India until differences cropped up between the partners, leading to a split in the six-year-old alliance in October last year.

Bharti Retail was using Walmart’s IT platform until three months ago, but recently roped in Accenture to implement SAP solutions.

Walmart was also providing technological support and supplying merchandise to Bharti’s Easyday chain since its inception in 2008.

Unlike most other retailers that opened stores across India, Bharti Retail consolidated its position in the North before moving to other regions. This cluster strategy, in turn, helped the company manage inventory and profitability better, feel experts.

“Their focus has mostly been on non-metros where cost of operations is less. Sales has also picked up in these markets since many large players aren’t present there,” said Ruchi Sally, director at retail consultancy Elargir Solutions. “Bharti Retail hardly shut stores even during slowdown when others closed hundreds of doors, which is an indication that several of their stores must have reached store-level profitability.”

Bharti Retail, which changed its accounting year format last fiscal, reported net loss of 314 crore on revenues of 2,748 crore for the 15 months ended March 2014. For the year ended December 2012, it had reported net loss of 538 crore and revenues of 1,581 crore.

Bharti Retail has almost paused expansion, with store count hovering around 180 outlets in the last few years. It has opened some stores this year to take the total to 216 outlets.