The Hindu Business Line : Metro plans expansion in South

METRO Cash & Carry India Pvt Ltd, which was allowed to undertake business-to-business trading in the country, is exploring expansion plans in the southern markets after being approached by the State Governments, which have offered to amend the Agriculture Produce Marketing Committee (APMC) Act to let the multinational chain set up distribution centres.

The company, part of the $55-billion German trading giant Metro AG, started operations in Karnataka late last year when it unveiled two large-sized centres in the outskirts of Bangalore.

"We are not here to stop with two centres. Several States have approached us and offered to amend the APMC Act. We are looking at expansion in the southern markets," Mr Harsh Bahadur, Managing Director of Metro Cash, said.

Replying to a query, he said Andhra Pradesh and Tamil Nadu were among the States the company would look at as part of the expansion move. He, however, did not set a timeframe or commit on the destination stating that it depended on a host of factors such as availability of location and issues such as amendments to the APMC Act that would allow the company to trade in notified farm goods outside a specified yard as required by the existing Act.

Mr Bahadur said the company expected the APMC amendment to pass as the recent statements from the Union Agriculture Minister as well as State Ministers indicated plans to put the farmer in touch with efficient private hands, which was investing into infrastructure development for the same. "I suppose they were talking about players such as Metro," he said. Mr Bahadur said the two centres operating near Bangalore have put out reasonably good performance despite not being allowed to deal in agricultural produce. This comes on the back of the news that the second centre that opened on Kanakpura Road was faring badly. "It is true that this store is not doing as well as the first store in Yeshwantpur, which has the advantage of an APMC yard further down the road. But we don't foresee any problem," he added.

Karnataka Govt report critical

A RECENT report by the Karnataka Government to the Centre has criticised the multinational for "not taking precaution to prevent business customers from selling in retail the goods purchased without paying resale tax or buying products for personal consumption." The report says that "the purchase of products by the dealers reveal that most of the products being purchased are for home consumption and end use and not for business to business purpose."

The report prepared by the principal secretary was sent to the FIPB unit of the Department of Eonomic Affairs earlier this week. It says that the company has violated the original condition laid down in the Government's approval in which the company was required to ensure that it sells products to retailers who possess sales tax registration. The report goes on to say that the "activity of the company is also causing loss of resale tax revenue to the State, as in the normal course, the State would have realised resale tax from the retailers on resale of goods by them to consumers."

There have been protests, backed by outfits such as Swadeshi Jagran Manch, against the entry of Metro and campaign against Karnataka's move to amend the APMC Act. The old guard of the Indian trading community has charged Metro with circumventing laws to indulge in retailing which is not open for foreign direct investment. However, Metro's Mr Harsh Bahadur said: "We are abiding by the approval given to us by the Centre." He added that the State Commerce & Industries department had earlier sent a report to the Centre which was largely favourable to the company.

Meanwhile, the Karnataka High Court has adjourned a case filed against Metro after the Centre stated that it is looking into allegations that of the company is violating norms laid down by the Government of India while allowing the entity to set up base here.