Carrefour to cut staff; exit plan may be in the works
Carrefour, the euro 76-billion French retail chain and the second-largest in the world, is in the process of downsizing in the India market, it is learnt. Also, its search for a partner in India seems to be grounded once again, ahead of a new government taking charge in less than a fortnight.
Any international chain will need an Indian partner, as the multi-brand retail policy caps foreign direct investment (FDI) at 51 per cent, while cash-and-carry permits up to 100 per cent FDI.
A source said the company was working on an exit plan in India for the last two weeks. However, another executive of a prominent retail chain said, “It will be more real to say Carrefour is reviewing its India plans.”
Replying to questions on the company’s exit plan, a cut in its workforce, a breakdown of talks with potential partner Bharti, and the sale of its assets in case the company left India, Carrefour regional director Franck Kenner told Business Standard, “At this point, we will not be able to comment on anything.”
A company spokesperson from Boulogne-Billancourt, France, said, “The company does not comment on rumours.”
The group, which follows a lean business model in India, recently exited markets such as Malaysia, Singapore, Indonesia and Greece due to the economic slowdown and poor business.
Earlier, it was expected the French retailer would follow the UK’s Tesco in entering the Indian multi-brand retail segment. Now, however, it might be preparing to cut the workforce across its five cash-and-carry stores (in Delhi, Jaipur, Meerut, Agra and Bangalore) by a fifth (15-20). The job cuts were likely to be at the mid-management level, a source said. This might be followed by subsequent rounds of job cuts, too.
Though neither side had confirmed this so far, it was believed Carrefour was in talks with the Bharti group for forming a joint venture in multi-brand retail, as well as in the back-end and cash-and-carry business. Sources say the talks have been stalled, owing to differences between the two sides.
The anti-FDI stand of the Bharatiya Janata Party (BJP), in terms of multi-brand retail, might have led to prompting foreign chains to review their India plans. Asked if talks with Carrefour had ended, Bharti, which called off its cash-and-carry joint venture with Walmart last year, declined to comment. Earlier, Carrefour was in talks with Kishore Biyani’sFuture Group and Shoppers Stop, among others.
A senior executive of a retail chain with which Carrefour was earlier in talks said, “I don’t think they are exiting.” An official from another chain said, “Talks with Bharti may be off, but nobody in a fair mind will exit India at this point.”
Source: Business Standard