Mumbai: Wholesale firm Metro Cash and Carry India Pvt. Ltd, which entered the country in 2003, will tie up with financial institutions to offer credit to retailers and other customers such as hotels, restaurants, caterers, and institutions, a top official said.
“Based on customer demand, the company is exploring partnerships with banks and other financial institutions to provide this service,” said managing director Martin Dlouhy. Metro is a subsidiary of the Germany-based Metro AG. Metro does not offer credit in any of the other 29 geographical markets it’s present in, an official spokesperson for the company said.
In early February, Metro signed a memorandum of understanding with the government of Punjab to start six wholesale stores in the state with an investment of at least Rs900 crore.
Local strategy: Metro’s Martin Dlouhy. The firm does not offer credit in any other geographical market. Ashesh Shah / Mint
BhartiWal-Mart Pvt. Ltd, Metro’s primary competitor in India in the wholesale cash-and-carry business, on 31 May opened its first Best Price Modern Wholesale store in Amritsar in Punjab.
On 3 June, Bharti Wal-Mart also entered into an agreement with Kotak Mahindra Bank Ltd, to launch the “Kotak Best Price Business Card” for members of its wholesale stores. The card allows members to avail credit at the store. Wholesalers in the country typically offer short-term credit to traders, who are often short of working capital.
The advantage of wholesalers such as Bharti Wal-Mart or Metro Cash and Carry offering credit is that they provide some kind of guarantee on behalf of the traders, said Arvind Singhal, chairman of New Delhi-based consulting firm KSA Technopak Advisors Pvt. Ltd.
Debashish Mukherjee, a New Delhi-based principal at consulting firm A.T. Kearney Ltd said since players such as Metro have a broad assortment of products, providing credit would help them promote slow-moving items and push a larger number of products.