French retail giant Carrefour SA (CA.FR) said Tuesday it is in talks to establish its large hypermarket stores in India, as a difficult economic environment in Europe puts pressure on the company to deliver on long-held plans to enter the country.

The company also said it would consider reviewing its real estate assets to improve retail operations or finance large projects.

"We're looking at how we can expand into India, this large consumer market of the future, where I think Carrefour could have an interesting position," Chief Executive Lars Olofsson said at the company's annual shareholder meeting.

But Carrefour has struggled for years to gain a foothold in the country due to regulations banning foreign retailers from selling directly to Indian consumers. That means it has to form local partnerships to develop stores. The company's previous chief executive Jose Luis Duran said two years ago the company was in talks with two to three potential Indian partners and planned to open wholesale stores last year, but they never materialized. The country's rules allow foreign retailers to supply shop owners through wholesale operations.

Olofsson Tuesday said the company will open its first cash & carry, or wholesale store, in India by the middle of this year and expects to announce its partner for hypermarket operations in several months.

Larger rival U.S.-based Wal-Mart Stores Inc (WMT) already runs two wholesale stores in the country, through its joint-venture with Bharti Enterprises Ltd., and has plans to open 15 further stores in the next three years.

Olofsson also said he is open to offers for the company's operations in markets where it is not one of the top two retailers. Analysts said likely candidates for disposal would be operations in Thailand, Malaysia and Singapore.

While there is no sense of urgency for any disposals, "it is my duty to examine any proposition," said Olofsson.

"I prefer to put resources behind markets with large potential," such as China and Brazil, he said.

Carrefour executives say there is a large capacity for acquisitions. Olofsson said he would be willing to sell off the group's vast property holdings, estimated at around EUR17 billion, to finance a large industrial project, though there are currently no such projects in the works.

Olofsson said the company could buy back stores or malls it sold in the past to help improve trading. One of the biggest challenges facing the company is generating traffic at its large out-of-town hypermarkets. Analysts say managing the stores in the surrounding malls is one way to improve their popularity.

Olofsson said he is also open to listing part of the property holdings, but for the moment, he prefers the company to work on managing the assets.

The company's property holdings have been in focus since 2007 when Blue Capital took a 13% stake in Carrefour. Blue Capital is a joint venture Bernard Arnault and U.S. private equity firm Colony Capital that specializes in real estate.

In 2008, Carrefour planned to spin off 60% of its property assets into a separate real estate group and then sell EUR3 billion of the new group's shares in an IPO. But the project was postponed because of volatile equity markets as were subsequent plans such as selling shares in the property venture through a private placement. Analysts say the group's property strategy lags smaller French rival Casino Guichard Perrachon (CO.FR), which manages its real estate through its listed subsidiary Mercialys (MER.FR).

By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 17 73; mimosa.spencer@dowjones.com
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