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Casino to Roll Out India Entry with Parsvanath
Tuesday, April 15, 2008

The $40-billion French retailer Groupe Casino is learnt to be close to entering into a Bharti-Wal-Mart kind of alliance with Delhi-based real estate player Parsvnath Developers for retail operations in India. According to a source, the deal may be signed in a couple of weeks. However, Parsvnath Developers chairman Pradeep Jain declined to comment on the development.

Parsvnath, which has no retail pedigree, seems to have inched closer to a deal with Groupe Casino mainly on the back of its real estate strength. The company, which reported net sales of Rs 465 crore and a net profit of Rs 112 crore for its December quarter, has a net developable area of 210 million sq ft. The company is setting up malls in over 15 cities. It is developing at least 12 metro malls in Delhi. Metro malls, located in the Delhi Rail Metro station premises, are an ideal location to attract metro commuters.

According to sources, the Groupe Casino-Parsvnath tie-up is likely to be modeled around the Bharti-Wal-Mart deal. The French retailer and the Indian developer are likely to form a joint venture for a wholesale business, and a franchisee or distribution arrangement for the front end. The French group, which has 10,000 stores in 11 countries and earns 30% of its revenue from outside France, operates its stores under several formats, including hypermarket, supermarket, convenience stores, discount stores and restaurants. However, it could not be ascertained which format the two likely partners will roll out in India.

India does not allow foreign direct investment (FDI) in front-end retail, although 100% FDI is allowed in wholesale. International retailers exploring Indian markets are attaching little importance to the potential local partner's retail experience, primarily because in a nascent retail market, there are not enough experienced retailers to choose from.

That's why the entire focus is on those who can bring in good real estate as the availability of suitable real estate has become a major issue in bigger cities. Land prices have skyrocketed, putting pressure on retailers' margins. Perhaps, this is why the Thailand-based Central Retail has initiated talks with India's biggest real estate developer, DLF, for a joint retail operation in India or French retailer Carrefour still looking for a company with ample real estate.

The difficulty in locating suitable properties is also said to be one of the prime obstacles to a smoother rollout of Bharti-Wal-Mart's retail operations. Though Bharti is a hugely successful company in telecom, its real estate capabilities are limited. Groupe Casino reported net sales of euro 24.97 billion and net profit of euro 814 million for the year 2007. Besides France, the 110-year-old French retailer has operations in 10 countries, including the Netherlands, Argentina, Brazil, Thailand and Vietnam.



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