Bharti Enterprises all set to open its first retail store by March 2008

By Avadh Singh

Bharti Enterprises is all set to open its first retail store in India by the March 2008 and plans to open a minimum of six stores by the end of that year.

Sunil Bharti Mittal, chairman and CEO of the Bharti group, in an exclusive chat to The India Street said that the branding process would be completed soon and discussions were on with Bharti’s back-end partner Wal-Mart. “The process is going according to plan and we are looking at a cluster of stores by early 2008. You will see half-a-dozen stores coming up within the year,” pointed out Mittal.

Mittal also said to The India Street that during his visit to the US earlier this month as president of a CII delegation, he met Mike Duke, chairman of Wal-Mart Stores Incorporated, in Washington separately. Mittal also held a meeting with Carlos Gutierrez, secretary, US Department of Commerce.

Point to be noted here is that the foreign direct investment in multi-brand retailing is not yet allowed in India. As a matter of fact, only 51 per cent FDI in single-brand stores and 100 per cent in the cash-and-carry wholesale business are allowed. The existing policy also allows FDI in franchises.

In general, Bharti and Wal-Mart have started recruitment and expect to sort various issues, including legal ones, soon. “We are going ahead with legal issues like brand agreement. A franchise arrangement may take some time, but we are on track," Mittal said.

It is worthwhile remembering that last year; the Bharti group had announced an investment of $2.5 billion in its retail venture. According to an agreement with Wal-Mart, Bharti would manage the front-end and the US major would provide back-end and logistics support.

Mittal said US companies were quite interested on India opening its FDI policy in multi- brand retail chains. “In the starting they will be happy to see it happening, may be with 26 per cent FDI,” he added.

Indian Trade Deficit Widened by 79 Percent

If the recent government figures are taken into account, India's merchandise exports grew year-on-year by 23 per cent to $10.57 billion in April, the first month of the present financial year but on the other hand imports grew by as 40.7 per cent over the same period. This has widened the trade deficit by as much as 79 percent.

According to experts, the recent appreciation in the value of the rupee, which has risen by about 10 per cent since the new fiscal year began, did not quite show up in the figure apparently linked to shipments booked earlier. "Exporters also hedge their risks to cushion the adverse impact of the currency movement on their competitiveness," said Gundappa Vishwanath, Financial expert in talk with The India Street.

Statistic wise: On a month-on-month level,exports fell in April from $12.58 billion in March. Though, in the previous year, too, exports in April, at $8.59 billion, had fallen from $10.59 billion in March, pretty much demonstrating a seasonal movement than one induced by currency fluctuation.

According to sources, Commerce Minister Kamal Nath has asked exporters to come up with recommendations so that the government could come up with a package to soften the impact of the strong rupee.Remember that imports rose 40.7 per cent in April to $17.63 billion from$12.53 billion a year earlier.

Talking in terms of rupee, exports grew by 15.4per cent year-on-year to Rs. 44,572.18 crore in the month of April, while imports grew by 31.9 per cent. If the trend continues at this level, the average export realisation would be around Rs. 42 rupees per US dollar, which is above the current rate of around Rs 40.5.

Furthermore, non-oil imports rose by as much as 54.3 per cent in the month at $13.2 billion, demonstrating a higher hunger for overseas goods in the growing economy, which consumes more raw materials to feed growth while increasing affluence and a weaker dollar also make many imported goods more affordable.

With imports in the upswing, the trade deficit for April 2007 is estimated at $ 7.06 billion, up 79 per cent from $3.94billion a year ago. Speaking exclusively to The India Street at an awards function organized by the Engineering Exports Promotion Council, the Commerce Minister was of the view that employment-intensive industries, which do not have high import dependence, need to be supported.

'Industry should give specific ideas on which the government can work so that a package can be formulated for them,' said Kamal Nath asserting that the government does not artificially calibrate the rupee. Initial signs are that the proposed package could be in the form of a scheme to refund local taxes that exporters have to pay. Indian government is pressing hard for greater access to Indian exporters to the developed markets at the World Trade Organisation.

Foreign funds bet on real estate

New Delhi, India: With more than 35 big-ticket foreign funds having alreadychecked into the real estate sector India, global realtors, banks and bondhouses from New York to Jerusalem are suddenly finding the opportunity toinvest in India irresistible. If the year 2006 marked some of the country's biggest land deals, the future bets on India realty are set to usher in a gold rush. A study by the India Brand Equity Foundation (IBEF) suggests that the first half of 2007 will see at least 20 more funds making an entry into India. This translates into $10 billion of foreign direct investment in realty. In fact, the study indicates that India would be merely scratching the surface of the potential infrastructure opportunity with $191.51 billion of investments committed over the next five years. The sector is estimated to grow at a CAGR of 15% over the next few years. Merrill Lynch forecasts that the Indian realty sector will grow from $12 billion in 2005 to $90 billion by 2015. Prominent global funds including Carlyle, Blackstone, Morgan Stanley, Trikona and Warbus Pincus are sitting on a total corpus of $12-15 billion, say experts. Eminent global real estate business houses like the Philippines-based Ayala, and Signature group, Och-Ziff Capital, EurIndia and Old Lane from Dubai are keen on sizeable investments into India . While FDI from the UK is also likely to pick up in the next few months, investors in the US, Israel, Malaysia and Singapore want to be a part of the India story. Australian real estate consultancy major LJ Hooker, with 700 odd franchises in South East Asia, has opened its India account with a franchisee in Bangalore. US-based global investment bank Goldman Sachs and Unitech, the largest listed real estate company in India, will set up a special purpose vehicle (SPV) with a corpus of $208.7 million for investments in the real estate sector. DLF Ltd has forged a 50:50 joint venture with Nakheel, the largest property developer of the UAE, for two integrated townships in India at a whopping investment of $10 billion. The Tel Aviv-based $650 million real estate major, Alony Hetz is planning to invest $100 million in various residential projects in the country, mostly in Tier-II and Tier-III cities. Zurich-headquartered Credit Suisse, the world's leading financial house, is finalising on a $1 billion fund to invest in India's real estate sector. Dawnay Day International, the $10 billion UK-based investment company, plans to invest $1.5 billion in Indian real estate in the next two years. Chennai recently witnessed two big-ticket property deals. AIG Real Estate Fund and RMZ Corporation purchased an 11-acre plot at Guindy for $686.9 million and Shyam Kothari, in another deal, bought IDBI's 2.5 acres Boat Club property in Chennai for $40.3 million. Experts believe the sector couldeasily see at least $400-500 million of fresh FDI in the next 3-4 years, a sizeable chunk of which would primarily flow into residential and commercial projects. Source: The Financial Express

Celebs Endorsing Real Estate Projects

Submitted by R. Shivanandan

Earlier, the stars were regarded as the trendsetter in Film Industry but they are now creating an environment for a distinguishing factor - ‘Star Power’ in Indian real estate. Builders have lined up to sign affluent celebrities as their brand ambassadors and are preparing to release their advertisements featuring them.

And, it is not just the filmstars but cricketers, TV actors and even musicians are lending their name to the property market. Close on the heels of real estate giant, DLF, it is now Omaxe which has signed up sarod maestro Ustad Amjad Ali Khan and his sons Amaan and Ayaan.

Such a step can be looked upon as an initiative on the part of developers to drive their growth rapidly. Earlier, Shahrukh Khan was seen promoting DLF’s business whereas Rahul Dravid will bat for Skyline Housing and Construction Ltd.

The famous Chadha Group has signed Kapil Dev as its brand ambassador whereas Preeti Jhingiani will endorse LVL City. DLF claims the personality of Shahrukh Khan to fall in sync with its product. The very obvious reason for the developers to rope in celebrities is their seamless popularity. They bring a psychological advantage as their trust factor spills onto the company.

Do the celebrities possess potential to translate their allure into trade? However, most agree to this and expects positive response if the brand and celeb gel together.

Shahrukh Khan, the heartthrob of millions, playing brands ambassador for DLF, had the maximum advertising share (35%) in 2006. Following in the footsteps were Amitabh Bachchan and Aishwarya Rai who endorsed Amby Valley City with 83% and 81% respectively.

By signing an ideal ambassador, any brand can gain fast recognition among the target audience since the popularity factor of the celebrity comes as a support. In addition, it offers the brand a personality to form a quick connection with the customer. Also, it adds to brand acceptability in a big way.