Bharti Retail to raise share capital 4-fold to R800 crore

Written by Ronojoy Banerjee | Ronojoy Banerjee | Rasul Bailay | New Delhi | Updated: Oct 21 2011, 06:14am hrs
Bharti Retail is increasing its authorised share capital four-fold that would allow the firm to attract sizeable investments in the company without diluting a substantial share of the promoters Bharti Enterprises.

Bharti Retail has sought approvals from the New Delhi office of the Registrar of Companies to hike its authorised share capital from R200 crore to about R800 crore and has already paid the required stamp duty for it. Authorised share capital means the maximum amount of share capital approved by the RoC.

Industry sources say Bharti may be increasing the share capital with a possible eye on a stake sale in future. However, company officials denied any such possibility at this moment. At present, Bharti Retail operates 140 Easyday stores in various states including Punjab, Haryana, Rajasthan, Uttar Pradesh, Uttrakhand and Delhi, among others.

With continuous expansion in the operations of Bharti Retail and the fund required to support this expansion, we had increased the authorised share capital of the company in May 2011. This was done in the general course of business, a Bharti spokesperson said in an e-mailed reply. The spokesperson added that Bharti Retail has absolutely no plans to dilute any stake in the company.

Bharti Retail set the procedure rolling by merging Bharti Retail Resources with itself that was approved by the Delhi High Court last year. By virtue of the merger, the 500,000 authorised share capital was amalgamated with Bharti Retail.

Bharti Enterprises, through a separate venture has a 50:50 partnership with US-based Wal-Mart Stores that is operating about a dozen wholesale stores in various cities. As India prohibits overseas investments in operation that directly retail multi-brand products to consumers, Wal-Mart has entered India through the so-called cash-and-carry venture where India allows up to 100% foreign investments but such ventures are only allowed to sell products to others retailers and businesses. Wal-Mart also provides merchandise as well technical know-how to Bharti Retails Easyday chain.

Meanwhile, as the signs of slowdown is surfacing from various quarters, analysts say, it would be difficult for retailers to get the kind of valuations they are hoping for possible stake-sales.

The countrys largest retail company Future Group is also talking to various private equity firms in a bid to sell stake in its financial arm Future Capital Holdings, where the promoters hold 55% stake. A burgeoning debt of more than R7,000 crore is prompting Future Group to sell stakes in non-core businesses as it is seeking to narrow the widening gap of debt to equity ratio.