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Walmart-Bharti Deal to Be Probed After Allegations of FDI Norms Violation

By admin 16 March, 2013

October 11th, 2012

New Delhi: The Prime Minister’s Office (PMO) on Thursday ordered a probe into the deal struck between US retail giant Walmart and Indian retail major Bharti after allegations of norms violation by Communist Party of India (CPI) Rajya Sabha MP from Kerala, MP Achuthan.
Achuthan alleged that the investment deal by Walmart with Bharti violated FDI norms and he charged the US company of end-use violations. He further charged Walmart of deliberate intent to bypass rules. The PMO has directed the Department of Industrial Policy and Promotion (DIPP) to examine the charges.
On Wednesday, Trinamool Congress chief and West Bengal Chief Minister Mamata Banerjee demanded that the deal between the two companies be terminated. The world’s largest retailer Walmart came under question in India for the nature and manner of its investment in Bharti retail. Achuthan raised the matter in Parliament during the monsoon session. On Wednesday, Mamata went public with a demand that the investment be annulled for alleged violation of Indian norms.
New facts emerging from a mix of sources allege that a March 2010 investment by Walmart Holdings worth Rs 456 crore in Cedar Support Services Ltd, a company that was originally known as Bharti Retail Holdings, was illegal, with the entire structure rigged in a manner that was aimed at getting around the complete bar on foreign investment in the Indian multi-brand retail sector.
Sources have provided CNBC-TV18 with a detailed account of these allegations. Detailed questionnaires were sent to the Bharti group as well as Walmart. While the latter did not respond to any of the queries, a Bharti spokesperson said, “We are in complete compliance of all regulations. All details have been shared with the relevant authorities.”
The allegation is that Cedar Support Services (earlier Bharti Retail Holdings) was carrying out multi-brand retail business in India through a 100 per cent subsidiary – Bharti Retail. December 2009 saw amendments to the articles of Cedar enabling it to provide services as a real estate consultant. In itself, this change was innocuous, especially as India allows 100 per cent FDI in consultancy services and that too under the automatic route.
Just four months later, March 29, 2010, the next step unfolded when Cedar issued 455,800,000 zero per cent compulsorily convertible debentures with a face value of Rs 10. These were convertible into 425,965,859 equity shares at a premium of 70 paise per share. In effect, Walmart Holdings invested Rs 456 crore in a company that was a real estate consultant.
Till early September, the government of India told Parliament that the Reserve Bank of India does not have any record of FDI in Cedar. So the question is what did Cedar do with these funds – roughly $ 100 million. The entire funds are alleged to have been invested by Cedar in its wholly owned subsidiary – Bharti Retail, the company that has been engaged in the business of multi-brand retail. India permitted 51 per cent FDI in multi-brand retail only this September.
Specific questions as to whether Bharti or Walmart has at any point ever informed the RBI about this were not answered by the two companies. Incidentally, Walmart will own 49 per cent in Cedar upon conversion of the debentures. The original conversion date was September 2011, which was then extended to September 2012.
There are other curious aspects that emerge from the joint venture agreement executed between Walmart, Cedar and Bharti Retail (the Cedar subsidiary that operates multi-brand retail stores under the Easy Day brand name). Given that Cedar was a consultant in the services space, questions are being asked as to why did this agreement of March 25, 2010, have Bharti Retail as a party.
The allegation is that the Articles of Association of Cedar show that Walmart has the right to sell the debentures or Cedar shares to Bharti shareholders based on a valuation that used for the retail industry and comparable trading multiples for Indian retailers. The Articles further impose certain restrictions on transfers and allotment of shares to competitors with the competition being not a similar company but a retail operation.
So the question arises whether this money was ever intended to be used for the services or for investment in operating multi-brand retail. The government’s earlier response has been only to point towards the RBI, but given the nature of the allegations, it is clear that a detailed clarification is perhaps needed from all involved.
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People Reject FDI in Retail in the Public Hearing Organized by East Delhi Municipal Corporation

By admin 16 March, 2013
September 28th, 2012

Trade Unions, Street Vendors Associations, RWAs & Civil Society expressed their opinion: 98% voted against FDI in Retail in the opinion poll
 
Respecting Peoples verdict EDMC will not grant trade licences to FDI Retailers: Mayor
In an unprecedented initiative, East Delhi Municipal Corporation (EDMC) organized a public hearing to take note of the peoples’ opinion on the issue of FDI in Retail. People from all sections of society including street vendors, small shop keepers, trade unions, resident welfare associations, civil society representative participated in the public hearing.
Delivering the opening remark, Dr. Annapurna Mishra, the Hon’ble Mayor of East Delhi said that the purpose of the initiative is to take note of the peoples’ voice to help the corporation in shaping trade policies.
An opinion poll was also conducted to know the views of participants. 98% participants opined against FDI in Retail.
Hakim Singh Rawat, R B singh Rajpoot, Sodan Singh, Bijender Yadav, Pravesh Sharma, Bansi Lal (street vendors), Praveen Khandelwal, Satish Garg, Raj Kumar Bhatia, Om Prakash Dubey, Deepak Sharma (Traders), Ashwini Mahajan (SJM), Aneesh Mishra (trade union) Vikramjeet Banerjee (Advocate) and many others expressed their view on FDI in Retail.
Concluding the public hearing senior journalist Sh. Ram Bahadur Rai said that in the past the Prime Minister was against FDI in Retail. He alleged that such policy decisions are influenced by powerful international lobby groups.
The Leader of opposition, Ms. Varyam Kaur, who was also invited for the public hearing came at the closing stages and abruptly interrupted the meeting shouting that the Municipal Corporation can not organize such event.
The Hon’ble Mayor stated that public opinion is evident on the issue of FDI in Retail and respecting the peoples’ verdict the EDMC would bring a motion to oppose FDI in Retail and would not grant any trade licences to FDI retailers.  She said that a detailed report of the proceedings would be send to the Hon’ble Lt. Governor and Chief Minister of Delhi.
Dharmendra Kumar of India FDI Watch conducted the proceeding.
For Photos click:

http://dkfordignity.blogspot.in/2012/09/no-fdi-retailer-in-east-delhi.html

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More States Pass Resolutions Against FDI in Retail

By admin 16 March, 2013

September 27th, 2012

States of Tamil Nadu and west Bengal have passed resolution against FDI in retail. So no Walmart in Chennai or Kolkata. In the meantime, Walmart opened its 18th wholesale store of India in Hyderabad, the capital city of Andhra Pradesh.

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Manmohan Opposed Retail FDI

By admin 16 March, 2013

September 24th, 2012

Manmohan opposed retail FDI when in opposition, says Mamata

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Public Hearing on FDI in Retail

By admin 16 March, 2013

September 27th, 2012

In a first of its kind, East Delhi Municipal Corporation is organizing a PUBLIC HEARING on FDI in Retail on 28th Sept. at 1.30 pm at its headquarters of Patparganj Industrial area. The Hon’ble Mayor along with a panel of experts would be hearing peoples’ views on the issue. A report of the public hearing would be later presented to the Hon’ble Leftinent Governor of Delhi.

 

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2002 Letter Showing No Proposal to Government for FDI in Retail

By admin 16 March, 2013

September 26th, 2012

Thanks to the Federation of Associations of Maharashtra, Mumbai. Today, I have seen a copy of the letter of December 20, 2004 from the Federation (reference may be accessed in my album), in which they have mentioned that they wanted to know in 2002 whether the Government was considering any proposal of permitting FDI in retail.

In response, the-then Leader of the Opposition of Rajya Sabha and present Prime Minister of India, in his letter dated December 21, 2002, assured the Federation that there was no proposal before the Government for permitting FDI in retail trade.

A copy of the letter of Shri Manmohan Singh is posted for your knowledge.

PM Letter

 

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Retail FDI & Farmers

By admin 16 March, 2013

September 25th, 2012

Dharmendra Kumar’s editorial page article on Retail FDI & Farmers published today by the national Daily Amar Ujala.

Amar Ujala (1)

 

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Indian Government Allows FDI in Multi-Brand Retail

By admin 16 March, 2013

Showing utter disregard to democratic institutions and expressions, Indian Government notified its decision to allow FDI in multi-brand retail, late evening on a day retail trade unions and majority of political parties observed nationwide strike to protest against such reform policies.

Notification FDI in MBRT 20 Sept 12 (1) Notification single brand retail FDI 20 Sept 12 (2)

 

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India Strikes Against FDI Retail

By admin 16 March, 2013

September 20th, 2012

Today’s call for a nationwide strike (Bharat Bandh) by trade unions of street vendors, small traders, and most of the political parties from left to right and including of parties within the Govt.  and parties supporting the Govt. was historical. Millions of retailers and thousands of trade associations observed the bandh demanding rollback of FDI in multi-brand retail. All major markets were closed through out India. Public transport was off the roads and colleges, schools, offices and transport services remain shut in most part of India. Trains were blocked by political activists of BJP, SP and CPI (ML) in many places including Bihar, Uttar Pradesh, West Bengal, Orissa and Jharkhand. The station Master of Patna Railway Station was locked. The impact of the strike was also seen in states of the North East. The bandh was total in Manipur. Banks, markets, shops and educational institutions were closed, with government offices recording low attendance in Meghalaya. Railway, road and others services were heavily impacted in Jharkhand. Most colleges reported only 20-50% attendance in Mumbai.
In a sit in protest organised jointly by our campaign allies prominent national leaders from left to right shared the dais. NDA Convenor and JD(U) President Sharad Yadav asked the Congress to remove Prime Minister Manmohan Singh for this “attack on the bread of butter of 25 crore people”, while addressing the protest at Jantar Mantar. Eight parties including left parties and SP took out protest march towards Parliament and Mulayam Singh Yadav, Prakash Karat, AB Bardhan, Sitaram Yechury and Chandrababu Naidu courted arrest in parliament police station. BJP leader Venkaiah Naidu was detained in Hyderabad whereas Yeddyurappa and Ananth Kumar got arrested in Bangalore.
On the other hand, Finance Minister P Chidambaram said to media that the nation-wide strike has caused a huge damage to the Indian economy and the common people. Big Business lobby group, CII reported to media that the nation-wide strike against the government decision to allow foreign direct investment (FDI) in multi-brand retail have caused losses to the tune of Rs12,500 crore ($2.25 billion) to the Indian economy.
For Photos click:
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Update on Bharat Bandh Strike

By admin 16 March, 2013

September 18th, 2012

As the Govt. is in crisis after the pull out by 19 members of parliament of the Trinmool Congress in opposition to FDI in Multi Brand Retail, India is all set for a historical Bharat Bandh (all India strike) on 20th September. Our campaign allies including associations of street vendors, hawkers, independent shopkeepers, trade unions are all set for a complete bandh on 20th September to oppose FDI in retail.

All major markets would keep their shutters down throughout India. Markets in Kerala and Himachal Pradesh were closed on 18th Sept to oppose FDI in retail. Markets of both states will again remain closed on 20th September. As per reports of various trade and hawkers associations, there would be total bandh in other states as well including Punjab, Rajasthan, Uttar Pradesh, Uttarakhand, Madhya Pradesh, Orissa, Bihar, West Bengal, Assam, Gujrat, Maharashtra, Karnataka, Andhra Pradesh, Goa and Tamilnadu.

In Delhi, more than 300 trade associations would actively participate in the strike. Delhi Vyapar Mahasangh, All Delhi Chemist Association, Delhi Hindustani Mercantile Association, Kirana Committee, Chemical Merchants Association, Delhi Grain Merchant Association, Khari Bawli Sarva Vyapar Mandal, Chandni Chowk Sarva Vyapar Mandal, Delhi Electrical Traders Association, Federation of Delhi Trade Association, Rang Rasayan Vyapar Sangh, New Lajpat Roy Market Traders Association, Paper Merchant Association, Delhi Wedding and Greeting Cards Merchants Association, Delhi File Vikreta Sangh, Delhi Iron and Hardware Merchant association, Delhi Steel Tools and Hardware Traders Association, Federation of Sadar Bazar Traders Association, Confederation of Sadar Bazaar Traders Association, Kamla Nagar Jawahar Nagar Traders Association, Naraina Iron and Steel Merchant welfare association, Karol Bagh Traders Federation, Ajmal Khan Vyapar Mandal, Delhi Scooter Traders Association, New Delhi Traders Association, General Machinery Merchants Association, Readymade Garments Association, Khan Market Traders Associations, Automotive parts merchants association, Tractor parts merchants association, peepal Mahadev Traders Association, Daal and Besan Millers Association, Lajpat Nagar Traders Association, Laxmi Nagar Traders Association, Association of Readymade garment dealers, Barna steel metal merchant association, Delhi canvas merchant association, Delhi Tyres Dealers Association, Delhi Building Material Merchant association, Delhi Vegetable Oil Traders Association, Rajdhani Oil Suppliers Association, Gaffar Market Vyapar Mandal, Karol Bagh ewellers Association, Subhash Road Readymade Garment association, Kutub Road Traders Association, Surgical Traders Association, Sri Niwas puri Shopkeepers Association, Chandrawal Road Shopkeepers Association, Beeranpura Handloom Traders Association, Delhi Glass Bottles Traders Association, Ashok Vihar Traders Association, Shahadara Traders Association and many more have extended their support to the bandh.

Street Vendors and shopkeepers would organize protests and burn effigies of FDI in Retail in over hundred places through out Delhi. Leaders of various political parties are expected to join these protests. National Hawker Federation, Confederation of All India Traders, Bhartiya Udyog Vyapar Mandal etc. would organize protests at the Parliament as well.

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