Wal-Mart is in huge trouble in India. Could this be its undoing in the world’s largest democracy!

After breaking-up with key client Bharti Retail, the Indian unit of Wal-Mart Stores Inc registered the first ever sales decline, wherein its revenue slumped 32% to Rs 2,992.7 crore in the year ended December 2014, according to filings with the Registrar of Companies.

And as there was a halt in the expansion of stores owing to an ongoing internal investigation to check if its local unit had violated the US Foreign Corrupt Practices Act, the wholesale company narrowed its loss to Rs 232 crore, revealed the filings with the Registrar of Companies.

Rajneesh Kumar, vice president & head, corporate affairs, at Wal-Mart India, "This sales figure comparisons are not for like-for-like operations due to transition during the period under review."

Requesting anonymity, an official said told The Economic Times, "The company supplied nearly a third of its merchandise to EasyDay stores owned by Bharti Retail. With the joint venture getting dissolved in 2013, Wal-Mart sold goods only to traders, institutions and kiranas last year, impacting overall sales."

In 2013, Wal-Mart agreed to buy Bharti's 50% stake in their wholesale business that operated Best Price Modern Wholesale stores and terminated franchise and supply agreements related to almost 200 EasyDay retail stores.

The other factors that have resulted in drop in sales are the location of these Wal-Mart stores that lies on the outskirts of the citities and huge discounts being offered by local e-tailers.

According to the balance sheet that Wal-Mart filed with the Registrar of Companies on Friday, the Indian unit of this global retail giant allotted shares worth Rs 1,193 crore to its Bentonville-based parent company.

With net sales exceeding $482 billion in fiscal 2015, Wal-Mart started a pilot project in Lucknow and Hyderabad last year that enabled members of its Best Price Modern Wholesale stores to buy products even online.

Moving on to its expansion strategy, Wal-Mart is planning to add 50 stores to its existing chain in the next 4-5 years in India.
(Image: Reuters)