Timeline Did the Walmart Bharati Contract Broke the FDI Norms Rules
Rajya Sabha member and CPI leader MP 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.
He raised the question in the parliament.
The Prime Minister's Office (PMO) has forwarded a letter on Bharti-Walmart deal to the Department of Industrial Policy and Planning (DIPP) for examination
Cedar Support Services Ltd, = originally known as Bharti Retail Holdings
The Cedar subsidiary operates multi-brand retail stores under the Easy Day brand name
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
India allows 100 per cent FDI in consultancy services
December 2009 = Changes in Amendments = amendment to the articles of Cedar enabling it to provide services as a real estate consultant.
Year 2010 –
After 4 months
March 29, 2010,
Cedar issued 455,800,000 zero percent 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.
In September 2012 Government told to parliament that
The Reserve Bank of India does not have any potential Foreign Direct Investment data pertaining to the US-based retail giant Wal-Mart Stores Inc's investment of Rs 4558 million in Bharti Ventures Ltd promoted Cedar Support Services Ltd through its Mauritius arm in 2010
In a written reply to the Rajya Sabha (the Upper House of the Indian Parliament), the Commerce and Industry Minister Anand Sharma had said that on March 29, 2010, Cedar Support Services Ltd, which is an ancillary of Bharti Ventures, floated 455.8 million Compulsorily Convertible Debentures (CCDs) each having a face value of Rs 10.
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.
Now 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.
Still Parliament has to pass the law regarding FDI in multi brand retail.
In September, Government declared they will allow 51% FDI in multi brand retail.
Congress ruled states supported it and many states did not support it.
Final question is
money was ever intended to be used for the services or for investment in operating multi-brand retail.
Reality views by sm –
Friday, October 12, 2012
Tags – Bharati Walmart Cedar FDI