Till the last lap, it was in distinct second position. But in true champion style, Wal-Mart, the largest grocery retailer in the us, pipped its counterpart in the UK, Tesco, at the proverbial post to earn the right to partner the Bharti Group, and thereby, to flag off its India retail game plan. Bharti and Tesco, which had been huddled with the Mittals for four long months-periodic speculation of a joint venture, which would be duly denied, made that period seem longer-couldn't agree on a few fronts, paving the way for Wal-Mart to close a deal in double-quick time. "We have signed a Memorandum of Understanding under which we will jointly explore and identify retail market opportunities in India," says Rajan Mittal, Joint Managing Director, Bharti. Under the terms of the collaboration pact, Bharti and Wal-Mart have signed up a master franchise agreement for front-end retailing. Both the companies will be equal stakes partners in the venture. The stores will be branded with a combination of both Bharti and Wal-Mart. The joint venture will not invest in real estate and will look at third-party investors to partner them in infrastructure creation.

So, at which point exactly did the trail go cold in the Bharti-Tesco negotiations? The UK retailer's talks with the Mittals screeched to a halt when the issue of shopping formats came up for discussion. Bharti apparently was (and obviously still is) in a mood to launch aggressively, with a flurry of formats in tow-cash-and-carry, hypermarket, supermarket, neighbourhood stores, online stores, et al. "Whichever way the Indian consumer wants to shop, we want to be ready for that," avers Mittal. Tesco, it is learnt, preferred a somber kick-off, perhaps preferring to first gauge consumer response (although in the UK it has a combination of formats, including out-of-town hypermarkets, supermarkets, metro stores-in city-centres-and one-stop small stores). But Bharti might have had other (mega) plans as Mukesh Ambani's retail juggernaut, Reliance Retail, promises to rock with multiple formats, and has already begun to roll.

"The retail battle between Bharti and Reliance will not be fought in the metros. The strategy will be to focus on customer reach and the speed with which they do it will matter," says Arvind Singhal, Chairman, Technopak Advisors, a Delhi-based retail consultancy. Wal-Mart, which opened its first retail store in 1962 in the US, had confined its operations to small towns for many years and moved on to expand its presence in the big cities only after it had built a strong customer following in the smaller towns. Instead of the no-frills approach that most of the retailers were intent on, Wal-Mart tried the discount approach in small towns, something nobody had thought about. With virtually no competition and the large demographics that it was serving, the company became an instant hit (although labour-relation woes have dogged the retailer famous for its low prices of late). When asked about this strategy in India, Mittal says, "India is a different market." But that won't slow down Wal-Mart's India rumble. "The pan-India roll-out of the multiple shops will happen within the next 12 months," adds Mittal.

The other reason for Bharti and Tesco not being able to see eye to eye is of course money. Wal-Mart apparently offered a better deal in terms of royalty and investments than the offer made by Tesco. Tesco officials could not be reached for comment.

Wal-Mart Stores, which internationally comprise super centres, discount stores, neighbourhood markets and online retail formats, buys products from over 70 countries. It has a liaison office in India and expects to step up sourcing of items such as apparel, textiles and shoes from India, which has totalled more than $1.6 billion in 2006 so far. Bharti-Wal-Mart won't restrict its sourcing to just the Indian base. "If the customer wants something that is not available in India, we will procure it. We are open to sourcing from abroad," says Mittal. Bharti already had a joint venture with the El Rothschild group for FieldFresh, which supplies fresh produce to global retailers (and would be supplying fresh produce to the Bharti-Wal-Mart conglomerate). Now El Rothschild is a substantial shareholder in Tesco, and Bharti's last-minute ditch may not go well with it. Tesco, for its part, will now begin scouting for a new Indian retail partner. For Wal-Mart, which has had a disappointing start to the holiday shopping season in the us, and which has averaged a growth of just 2.4 per cent in same-store sales (sales to stores which have been open for more than one year) for the February-October period, the India JV could well enable it to be in the right place at the right time.

Click, Buy, Sell
The internet may be the ideal route to boost retail participation.

Internet trading accounts for 14 per cent of total turnover recorded on the National Stock Exchange (NSE), as against 3.5 per cent in 2001. "Easier access to the net as well as increasing participation from professionals in the age group of 25-45 years have played their role," says Kedar Despande, Assistant Vice President, ICICI Direct. As per industry estimates, 19 lakh people trade through the internet in India. If you think that's progress, take a look at other markets in the Asian region: Over three-fourths of the total turnover in South Korea comes from internet trading, while in Japan, 90 per cent of retail participants trade through internet. Says Gurpreet Sidana, Head (Internet Trading), Religare Securities: "The lack of facilities, technology and banking integration are the reasons for net trading not picking up. But once online fund transfer and RTGS (real time gross settlement) are in place, it will." In the next 15-18 months, Sidana expects internet trading to increase to a fourth of total turnover.

Religare has tied up with four banks-HDFC, ICICI, UTI and Citibank-to offer internet trading, and is in the process of tying up with another six. Last fortnight, another brokerage, Motilal Oswal, tied up with State Bank of India to create an online trading platform for SBI customers, while IDBI Capital joined hands with Bank of Rajasthan and Punjab National Bank. Clearly, banks and brokers are realising that the best route to the retail investor is via the net.

-Mahesh Nayak

Goodbye Corus?
Tata Steel may be pipped at the post by a Brazilian major.

Not yet a done deal: The day Tata takeover of Corus was announced

Companhia Siderurgica Nacional doesn't exactly roll easily off the tongue, but you can be fairly sure that most of the top brass at Tata Steel would by now be familiar enough with the Brazilian steel major. Last fortnight, the company commonly-and mercifully-known as CSN, gate-crashed the Tata party by bidding higher for Corus, the UK steel giant whose control most (including the Tatas themselves) assumed was in Chairman Ratan Tata's safe hands. As against the Tatas' bid of 455 pence per share, CSN has bid 475 pence. CSN's due diligence for Corus that started on November 20, is currently in progress. Shareholders of Corus will meet on December 20-this meeting was originally scheduled for December 4-to decide on which way Corus goes.

Till then, the nerves will continue to jangle at Bombay House, the Tata Group headquarters, as it balances precariously on the horns of what's now a $8 billion-plus dilemma. Should it up its offer, if so, by how much should it do so, should it anticipate a third bidder when doing so, should it not make a counter-offer at all...these are just some of the questions Tata Steel's head honchos would be grappling with. What could queer the pitch against Tata are the holdings of entities like UBS, Goldman Sachs, Barclays, and CSN on its own in Corus, which collectively stand at a shade under 20 per cent. It isn't known whether these banks are working in concert with CSN, but it can be safely assumed that they aren't going to come to Tata's rescue. Add to this the 7.9 per cent of Standard Life, which has already dubbed the Tata Steel bid as undervalued, and it's clear that Tata has his back against the wall.

If the Tatas do make a counter-offer, by say another 20 pence, that would add another $350 million to its acquisition bill. Whether the counter offer is worth it and, more importantly, do the Tatas want to rough it out in what could be a long-drawn-out takeover brawl (which could well attract some more global steel majors), are questions to which there are no quick, easy answers. Financing a higher bid clearly is not an issue. The Tatas have plenty of options, the best of which would be diluting its substantial stake in TCS-recently Tata Sons, the group's holding company, sold 0.9 per cent of its 79-odd per cent holding in TCS for Rs 900 crore, valuing its stake in the it services major at Rs 80,000 crore. Tata Steel, on its own, can also unlock its holdings in other Tata group companies like Tata Motors and Tata Power, which is worth over Rs 3,000 crore. At the time of writing Tata Steel officials were not willing to comment. Whatever happens from hereon, the Tata-Corus-CSN is a reminder that in the high-stakes hurly-burly of cross-border acquisitions, there can be many a slip 'the cup and the lip'.

-Krishna Gopalan

Flavour of the Fiscal
Corporate India is an inspiring theme for Bollywood.

Come December 29, filmmaker Mani Ratnam's latest movie Guru will hit the silver screens. Bollywood rumour mill is rife that the movie is loosely based on the life of Reliance patriarch, the late Dhirubhai Ambani. Even as the Chennai-based filmmaker has maintained a stony silence about the storyline or its inspiration, the rags-to-riches story of its protagonist, Gurukant Desai (incidentally from a small village in Gujarat), has raised eyebrows. Adding grease to the rumour mill is the fact that characters in Ratnam's earlier movies too have been drawn from real life. The path breaking Iruvar (1997) dealt with the clash of the political bigwigs of Tamil Nadu politics-M.G. Ramachandran (mgr) and its present Chief Minister M. Karunanidhi.

Having said that, Guru represents an emerging trend in Bollywood, wherein plots are being inspired by corporate India's activities. The movie will be the third in the past six months after Madhur Bhandarkar's Corporate and Sameer Hanchate's Gafla (meaning "scam"), which had plots based on Indian businesses. Whereas Corporate dealt with slimy machinations of competing business groups, Gafla is inspired by the scams at the Mumbai stock market. "When I started making Corporate, people were apprehensive. But after the movie's success, it's clear that people understand the language of trade," says Bhandarkar.

Gafla, on the other hand, did not do well at the box office, but earned critical review abroad, including screenings at international film festivals. The movie is based on the life of Subodh Mehta, a middle class guy with a truckload of ambition who rises to become a prime mover in the stock market, albeit through dubious means. Says Gafla's producer-director Sameer Hanchate: "The movie was inspired by the 1992 stock market scam and some of the scams that happened after that." Though Gafla had the usual disclaimer about all characters being fictional, the similarity of the protagonist's life with the late Harshad Mehta is startling. Hanchate was slapped with a legal notice for using a photo of BSE on its posters and promotional campaigns. In response, Hanchate filed a caveat in the Bombay High Court and the matter has fizzled out ever since. Just like many stock market scandals.

-T.V. Mahalingam