Wal­mart Wants Slice of Food Re­tail Pie, if Norms Favourable

In­dia CEO Kr­ish Iyer keen on both brick-&-mor­tar and on­line for­mats

The Economic Times - - Front Page -

Sa­gar Malviya & Chaitali Chakravarty

Mum­bai | New Delhi: Wal­mart, the world’s largest re­tailer, is in­ter­ested in sell­ing food prod­ucts di­rectly to In­dian con­sumers both by set­ting up brick-and-mor­tar as well as on­line stores, but it will take a fi­nal de­ci­sion af­ter eval­u­at­ing the pol­icy guide­lines that will be no­ti­fied by the gov­ern­ment, said the head of its In­dia unit.

“The busi­ness of brick-and­mor­tar food re­tail stores and on­line sale of food prod­ucts is of in­ter­est to us, but we have to eval­u­ate the pol­icy guide­lines once they are no­ti­fied,” Wal­mart In­dia Chief Ex­ec­u­tive Kr­ish Iyer told ET in an ex­clu­sive in­ter­ac­tion. The gov­ern­ment an­nounced its in­ten­tion to al­low100% for­eign di­rect in­vest­ment (FDI) in ‘mar­ket­ing of food prod­ucts man­u­fac­tured and pro­duced in In­dia’ in the

Bet­ting Big On In­dia

is of in­ter­est to Wal­mart, will eval­u­ate pol­icy no­ti­fi­ca­tion

re­cent Bud­get. The fi­nal rules will have to be ap­proved by the Union Cabi­net be­fore they are no­ti­fied.

“Never in the Bud­get has the gov­ern­ment taken so much in­ter­est in re­tail, and it is en­cour­ag­ing. 100% FDI in food mar­ket­ing is a pro­gres­sive step,” Iyer said.

“We have ad­vised banks to con­duct sec­ond ver­i­fi­ca­tion of val­u­a­tion re­ports and le­gal opin­ions sub­mit­ted by bor­row­ers which are usu­ally re­lied upon by banks while sanc­tion­ing loans. This task can also be out­sourced to an­other agency. Also, banks can set up their own con­sul­tancy di­vi­sions. What I want to say is there’s no point run­ning af­ter bank man­agers once an ac­count has turned into a non-per­form­ing as­set,” Cen­tral Vig­i­lance Com­mis­sioner KV Chowdary told ET with­out mak­ing any di­rect ref­er­ence to the Mallya case.

It may be re­called that IDBI re­lied on King­fisher’s im­proved credit rat­ings to sanction a loan of .₹ 950 crore. This rat­ing, the Cen­tral Bureau of In­ves­ti­ga­tion later claimed, was in­flated and was not an ac­cu­rate rep­re­sen­ta­tion of the com­pany’s fi­nan­cial health. Fur­ther, the anti-cor­rup­tion watch­dog has asked the banks to come up with guide­lines on when they can start sell­ing liq­uid as­sets of a bor­rower there are in­di­ca­tions that a loan is mov­ing into the ‘stressed’ cat­e­gory. “At present there are no guide­lines by banks at what stage they can en­cash liq­uid as­sets. We feel they must have a clear pol­icy on this,” said Chowdary.

In King­fisher’s case, banks kept hold­ing on to liq­uid as­sets, which were worth lit­tle when its share prices plum­meted.

He also said banks should de­fine the term ‘due-dili­gence’ for man­agers while grant­ing loans. “The term due-dili­gence is loosely used. From sanc­tion­ing a simple over­draft to set­ting up an atomic power plant, the pro­ce­dure seems to be the same.”

Th­ese ob­jec­tive, ac­cord­ing to the CVC, should be to have uni­form guide­lines for both PSU and pri­vate sec­tor banks as this will help iden­tify fre­quent bor­row­ers who con­stantly jump banks. “At present, many banks are not aware if a per­son has taken a loan ear­lier or not,” added Chowdary.

ARINDAM

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