Can Bharti go it alone in retail business without Walmart?

Finally its official -the six year old joint venture between Walmart Stores Inc and Bharti Enterprises is over . Each will pursue its retail ambition on its own.

No one was surprised by the joint statement issued by the two companies, despite the numerous aggressive earlier joint statements about expanding their business together. "The news does not come as a surprise. Considering recent developments, it was a matter of time," says Rachna Nath, Leader - Retail & Consumers, PwC India:

Nath goes on to add that while the companies have announced separation, "We will hear subsequent announcements soon for their future plans," she adds. "However, I do not read this in the larger perspective of the FDI in retail story, which has other aspects that need to be addressed at a different scale."

The two had announced their equal partnership for cash-and-carry retail in 2007, which soon after saw the launch of 20 Best Price Modern Wholesale stores. There were also over 200 Easyday stores set up by Bharti Retail, a wholly owned venture of Bharti Enterprises, which enjoyed logistic support from Wal-Mart. Bharti will now independently chart the destiny of EasyDay venture, while leaving the cash-and-carry business to Wal-Mart. " The agreement is subject to finalisation of definitive agreements and receipts of the requisite regulatory approvals," states the official joint release from the companies.

But here is the big question, can Bharti go it alone in retail? As is well known, Bharti Enterprises also runs the world's third largest telecom venture, Bharti Airtel, which is currently struggling with losses after acquiring the African operations of Zain Telecom and has to deal as well with regulatory hurdles and various ambiguities regarding excess fee for spectrum acquisition, licence renewal and the verdict on 3G intra-roaming pacts.

Bharti is also in the process of unleashing a massive rehaul of its many business initiatives - it may even exit many ventures. It is an open secret that it is in advanced negotiations to sell off its unlisted Direct-to-home (DTH) business.

It had, for all practical purposes, exited its education venture, Centum Learning, too. But now Centum's fate hangs in the balance as, reportedly, the Varkey Group's Everonn Education  has changed its mind about buying it.

According to industry observers, it makes sense for Bharti Enterprises to continue its course with the Easyday stores. But its critical financial position may make it necessary for it to induct a partner at a later stage. They are quick to point to the talks Barti chief Sunil Mittal had with global retailer Tesco before signing the deal with Walmart.

"Cash infusion is critical and nothing has moved on the Easyday stores for long," says an industry insider. Bharti has always sought technical support in most of its other business initiatives . Clearly, it will be difficult for the group to go it alone on the retail front - though other groups such as cash-rich Reliance have done so.

Bharti is a different story. Going it alone is not an option, given that its many ventures have struggled to gain scale, as Mittal once candidly admitted to Business Today.

It will be interesting to watch what happens next. Walmart too has its problems, having been on the defensive over many legal snarls that have arisen over its investment in retail in India. There have reportedly been some violations, which led to the sacking of high level officials in the venture. What is new is that Raj Jain, the former head of Wal-Mart in India, who had quit following internal investigations by the global giant, is set to join Rajan Mittal, Vice-Chairman & MD, Bharti Enterprises. Developments are surely getting more interesting by the day.