MUMBAI: Walmart Stores Inc has stopped opening new stores in India, pending an anti-bribery probe into the company's operations, and has asked several employees hired a year ago for the new outlets to relocate to other parts of the country.
Bharti Walmart, the 50:50 joint venture between Walmart and Bharti Enterprises, had planned to open seven Best Price Modern Wholesale stores (in Gujarat, Maharashtra, Andhra Pradesh, Madhya Pradesh andTamil Nadu) between last November and March, according to an internal schedule reviewed by ET.
According to persons familiar with the situation, many of the seven stores were to begin operations last year, but just weeks before the scheduled openings, the company decided to pull the plug because of the ongoing investigations, as well as tightening of procedures for obtaining licences.
Since cash-and-carry clients in India must enroll as members at stores, Bharti Walmart had started the process of enlisting members from March last year. It had also hired at least 100 store and sales associates in each location a year in advance.
A Bharti Walmart spokeswoman said there had been some temporary delays in store openings as the company developed and implemented enhanced procedures for obtaining licences.
Relocating Not Easy for Employees
"In the last few months, we have recruited and trained great teams in states. We have open positions in our 20 (existing) stores and have strongly encouraged them to take up jobs in the other stores," the spokeswoman said.
But people with direct knowledge of the situation said relocating to other towns and cities wasn't easy. The stores were to be opened in towns such as Anand in Gujarat, Sangli and Sholapur in Maharashtra and Jabalpurin Madhya Pradesh. Moving to other towns is not viable for many of the employees, several of whom have no option but to quit.
A store manager at one of the proposed locations said at least 30 employees in his outlet alone had put in their papers in the last one month. "We are still uncertain on when we plan to open of our store. It could be after the ongoing scrutiny," said a store manager of another location.
Since last year, Walmart has been probing its India operations for potential violations of the US Foreign Corrupt Practices Act, or FCPA, that prohibits American corporations and citizens from bribing government officials in any part of the world. As part of the probe, Walmart late last year suspended its chief financial officer and the legal team that procured the reams of licences required to open and operate stores in India. Subsequently, the company snapped ties with two dozen consultants that helped Bharti Walmart procure various licences throughout the country.