Global retail giant Wal-Mart is in talks with several domestic textile firms for its Indian operation, which is expected to begin next year.
For its joint venture with Bharti Retail, Wal-Mart, the bulk buyer, is currently holding talks with domestic textile firms for sourcing. The textile firms are expected to supply garments as well as fabric to the retail major.
"We are working on this deal and expect to supply fabric and garments by the year-end to Wal-Mart," said Navin Kumar Tayal, chairman, Eskay K'nIT, a Rs 480-crore (Rs 4.8 billion) Mumbai-based firm.
Industry experts said that Wal-Mart might be looking for vertically integrated firms for bulk supplies.
Alok Industries, a vertically integrated textile firm which is already supplying products to Wal-Mart in the US market, is also believed to be keen to supply for Wal-Mart's Indian operations.
Sandeep Agarwal, managing director, Alps Industries, a Rs 430-crore (Rs 4.3 billion) textile firm and a supplier to the retail firm in the US, said, "Talks are on but it will take some more time. We are looking forward to supply them home furnishing products, though Wal-Mart still has to choose from our product list."
Century Textiles and Industries has also shown its willingness for associating with the retail giant. "We have not been approached as we are not a bulk manufacturer of garments. If such an opportunity comes, we will examine it before going ahead," said R K Dalmia, the president of the company.
However, lower margins could dampen the interest of domestic suppliers to associate with Wal-Mart.
According to industry analysts, lower margins could stop some of the textile players from sourcing to Wal-Mart. However, they maintained that the presence of many players across the country would help the retail giant source textile products from the country. Nitin Kasliwal, managing director, S Kumars Nationwide (SKNL), said, "Wal-Mart's products are meant for masses. Our products do not fall in that category as we cater to medium and premium class. We have no interest in selling our products to it. Since we sell our entire range in the domestic market, why should we sell to them."
But he added that if the retail firm approaches SKNL for premium category products, the company would consider it. "Wal-Mart is a huge bulk buyer but at the same time the profit is bare minimum. We are working on it and will have to strike a balance," said Tayal.
Industry experts said that Wal-Mart was more or less for the masses and players who are in the premium sector might not be interested in supplying to the retail giant.
Sangam India, a supplier of viscose fabric, rejected Wal-Mart's approach in the beginning of this year. "We were not comfortable with the margins from the deal," said L L Soni, the associate vice president of the company. He added that the company would like to associate with such big retail chains, but "not at the cost of margins".