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Wholesale licence killed off - Board revokes nod to Metro

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By SAMBIT SAHA in Calcutta
  • Published 9.08.08
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Calcutta, Aug. 8: The agri-marketing board has revoked a licence without which German wholesaler Metro Cash & Carry cannot undertake 40 per cent of its business in Bengal, The Telegraph has learnt.

The licence was cancelled last year at the height of the controversy surrounding Reliance’s entry into retail in Bengal.

Since then, a fresh licence has not been issued by the board controlled by the Forward Bloc, a Left Front ally at the forefront of the campaign against big investors’ entry into retail.

The absence of the licence is the principal reason the German company has not been able to start operations at its hub off EM Bypass. The Rs 120-crore establishment could have kicked off the ground a few months ago had it not been denied the licence.

So far, it was not known that a granted permission had been revoked. A fresh licence involves far more red tape and attendant headaches than a renewal Metro could have applied for if the original permission had not been revoked.

Metro had decided to set up shop in Bengal in 2006 after the Buddhadeb Bhattacharjee government agreed to allow the company to deal in wholesale, mostly fruits and vegetables, on an “experimental basis”.

The company is still awaiting a response from the marketing board that has neither rejected nor approved its application for a fresh licence.

Asked whether the board would allow Metro to carry out the wholesale business, Naren Chatterjee, the chairman of the state agri-marketing board, said: “I am not going to say anything.”

A Metro spokesperson, too, declined comment. A questionnaire sent to the company was not answered.

The APMC (agriculture produce marketing committee) licence was granted in 2006 to enable the company to buy and sell vegetables in South 24-Parganas in wholesale. The company needed the licence from the board in the district as its outlet is located there.

However, the licence was cancelled in the middle of last year when vandals targeted Reliance outlets. The company was told that the licence, valid till 2008, was being revoked because it was lying idle.

The Calcutta centre could not begin at that time because an old land dispute had halted construction. The property case was eventually vacated and work resumed from October 2007.

Legally, Metro can still open the store as it does not require the APMC licence to sell or procure general or non-food merchandise.

However, fruits, vegetables and dairy and poultry products cannot be bought or sold at the EM Bypass centre without the licence. The items account for 40 per cent of its estimated wholesale business.

The Metro experiment will be a test case in the state as there is hardly any organised player in food wholesale in the state.

The company is expected to cater to institutional customers like hotels, restaurants and small shops. According to Metro’s website, it sells 8,000 food and 10,000 non-food items.

Industry observers said Metro could help small shops and fruit and vegetable vendors by offering them supplies at lower cost.

However, the venture might dislocate middlemen dealing in fruits and vegetables. The company runs two distribution centres in Bangalore and one each in Hyderabad and Mumbai. It started operations in the country in 2003.