Metro gets licence, to open in 8 weeks

10 Oct 2008, 0530 hrs IST,TNN

KOLKATA: The deal is final. German wholesale major Metro Cash & Carry got the licence on Friday to operate on a business-to-business model and not the unspecified business model it had been insisting on. The Forward Bloc-run State Agricultural Marketing Board also did a climbdown by withdrawing the minimum purchase limit of Rs 5,000 that it had been demanding. This licence will be valid only till next March, board chairman Naren Chatterjee said.

The company will open its wholesale outlet off the EM Bypass within eight weeks. This will be its fifth outlet in the country. There are two in Bangalore and another two in Hyderabad and Mumbai. The business-to-business model entails trading between Metro Cash & Carry and those having a trade licence or the Regulated Market Committee (RMC) licence. Also, the company has to furnish the list of traders it is dealing with to the marketing board for scrutiny. "Some board employees will be posted there at the cash counter to scrutinize the bills and challans," Chatterjee said.

After the board dictated its terms, Metro officials wanted the government to relax the minimum purchase limit, which Forward Bloc state secretary Asok Ghosh did at the prodding of chief minister Buddhadeb Bhattacharjee two days ago. The conditions discussed at the meeting involved agricultural produce only and not other commodities such as FMCG, electronics and textile. For, the West Bengal State Marketing Board can only regulate procurement and sale of agri-produce under the existing Agricultural Produce Marketing and Control (APMC) Act.

"First, the company cannot go for contract farming even as the recent central guidelines to change the APMC Act provides for it. Agriculture is a state subject and the government won't allow it. Corporates can't influence the farming process while procuring vegetables or crops," the Board chairman said after coming out of the meeting. "Not only that, Metro officials will have to send their stock statements to the marketing board on a regular basis. Any legal dispute with the supply major has to be settled in Calcutta High Court and not in Germany, because that would make things worse for farmers," Chatterjee said. "Metro Cash & Carry would be allowed to do wholesale trade only. And, purchase can only be made with trade and APMC licences, the question of fixing a minimum amount of bill does not arise," Chatterjee said. Against each transaction, the marketing board will get 1% of the trading amount from the German major and another 1% from the trader, as marketing fee. The agreement was signed and the licence issued after four hours of closed-door meeting between Metro and state government officials. Agriculture minister Naren Dey and chief secretary Amit Kiran Deb were present during the signing of the agreement.

Frits van Peski, member of the executive board of directors, Metro Cash & Carry India, after signing the agreement, said 350 trained employees are now ready to serve. According to Metro officials, the wholesale centres are open exclusively for professional business customers, all of them duly registered and provided with a customer identification card. "This means that the company would not sell anything to household customers. Metro Cash & Carry supports its core target groups of hotels, restaurants, caterers as well as kirana stores and other small retailers by offering a wide assortment of 18,000 articles, comprising food and non-food products," a press release said.