Metro Cash's Bengal plan hinges on APMC approval

Metro Cash & Carry, a global major in the wholesale segment, will reconsider its plans to set up centres in West Bengal after September 28. Its Bengal plans hinge on the renewal of licence by the State Agriculture Marketing Board.

This is the second state after Karnataka where the company has faced Agriculture Produce Market Committee (APMC) clearance problem.

The company’s APMC licence in West Bengal was valid till March 2008. However, in June 2007, the licence was unilaterally withdrawn by APMC authorities despite knowing that the company had stopped construction following a stay order for eight months. The stay order came on a dispute between former land owners and the state government.

The company currently has two centres in Bangalore where it sells close to 18,000 products. But initially the company was restricted to selling only non-food items till it got the APMC licence.

Now, it is facing similar problem in West Bengal.

According to Martin Dlouhy, managing director, Metro Cash & Carry India, “Our meetings with West Bengal Chief Minister Buddhadeb Bhattacharjee and Minister in-Charge of Agriculture Naren De were encouraging. Both the leaders requested the company to wait for the government decision till September 28 on the re-issuance of the APMC licence.

We have agreed to honour this request till that time. We will not open our centres till we get the licences. Post that, we have kept all our options open which also includes opting out of the state.”

According to Gunter Wehrmann, Consul General of Germany in Kolkata, “German investors are in the habit of following their counterparts. If Metro does not get the licence to do business in the state, other German investors may also rethink their plans of investing in the state.”

“We have recruited and trained 350 bright young local people to serve customers in Kolkata and have invested over Rs 140 crore. However, the non-issuance of the licence would adversely impact our whole business concept, which is now compelling us to relook at our investments in West Bengal,” Dlouhy added.

Metro’s core customers are businesses such as hotels, restaurants and kirana stores where agricultural commodities are a primary requirement.

According to Henry Birr, vice-president (international affairs) of the Metro Group, “The group has plans to invest $120 million for setting up four cash and carry centre in Kolkata alone. This investment promise was given under an agreed precondition that Metro would be given the APMC licence to deal in agricultural commodities to provide the desired benefits to farmers, producers and small traders.”

The group seeks to make India as big a market as China. Within 11 years, it opened more than 30 stores in China and plans to add another six each year for the next few years there, added Birr.