Germany’s Metro Cash & Carry posts loss for 15th year; but sales up 16.5% at Rs 4,629 cr

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Updated: February 27, 2017 5:39:36 AM

The Indian unit of Germany’s Metro Cash & Carry, which entered the country almost 15 years ago, posted a net loss of R91 crore in FY16.

Metro Cash & Carry, Business Growth, Walmart India, Walmart, Metro, Bookers, Reliance, Technopak, Business Loss, eCommerce players, retailers, FMCG players, grocery business, retail businessThe Indian unit of Germany’s Metro Cash & Carry, which entered the country almost 15 years ago, posted a net loss of R91 crore in FY16. (Source: Reuters)

The Indian unit of Germany’s Metro Cash & Carry, which entered the country almost 15 years ago, posted a net loss of R91 crore in FY16. However, sales at R4,629 crore were up 16.5%. The company reported a loss before interest taxes depreciation of R80 crore, compared with the loss of R75 crore in FY15, according to a filing with the Registrar of Companies (RoC).

Rival, Walmart India’s sales grew 34% to R3,996.8 crore for 15 months ended March 2016 compared to R2,991 crore in the 12 months to March, 2015. Losses declined 65% to R232.2 crore in the 15-month period. Currently, four big players operate in the wholesale retail space — Walmart, Metro, Bookers and Reliance and among them they run close to 94 cash and carry stores.

Arvind Singhal, chairman, Technopak, said Metro’s results were not disappointing despite the continuing loses even after 15 years. “In the initial 5 to 6 years, it was trying to gauge the market and went slow on expansion. Now the business is stabilising, so it should turn profitable in a couple of years,” Singhal said.

Wholesale players like Metro Cash & Carry and Walmart, he pointed out, are performing better than e-commerce players. The addition to stores is one reason for the loss, he believes. Metro plans to have 50 wholesale outlets operational in the country by 2020 (It has 23 stores at present). The wholesaler, which first entered the Indian market in 2003, caters to large kirana stores, entrepreneurs, small businesses, offices, companies and institutions, as well as hotels, restaurants and caterers. It said in an RoC filing that it is confident of increasing the turnover in the coming years and plans new stores.

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About three years ago, Walmart agreed to buy Bharti’s 50% in the wholesale business that operated Best Price Modern Wholesale stores and terminated franchise and supply agreements related to almost 200 EasyDay retail stores.

With the joint venture getting dissolved, Walmart now sells only to traders, institutions and kiranas. “Re-aligning the business must have impacted the company’s performance,”Singhal said. Walmart has opened one store after a gap of more than two years to take its store count to 21.

Walmart is also looking to add 50 stores in the next 4 to 5 years after store expansion was put on hold until August 2015 amid an ongoing internal probe to check if its local unit had violated the US Foreign Corrupt Practices Act.

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