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. Last Updated: 07/27/2016

Germany's Metro Expands in India

CALCUTTA, India -- Germany's Metro, the world's third-biggest retailer by sales, will spend "millions of euros" to expand its operations in India over the next year, a top company official said Monday.

Metro will open distribution centers in Mumbai, in the eastern city of Calcutta and the southern city of Hyderabad, Managing Director Harsh Bahadur said.

The company also plans to start operations in New Delhi and Chennai, in addition to several smaller cities.

"The expansion will be huge in the coming months," Bahadur said by telephone from Bangalore.

"We are looking to invest 15 [million] to 16 million euros in each of the proposed wholesale distribution centers in India," he said.

The Metro Cash and Carry chief executive was in Calcutta last week to scout for locations for up to five distribution centers, state officials said.

Bahadur said the company was looking at investing 4.5 billion rupees ($98 million) in the eastern state of West Bengal in these centers and in the development of the back-end, including cold-storage facilities and air-conditioned vans.

It is estimated that more than 40 percent of produce spoils before it reaches the consumer because of poor cold storage, inadequate power and transport and the number of intermediaries.

Metro's chief executive said in June that the company planned to open six to eight stores per year in India in the medium-term. He also said he expected the company to turn a profit in India in the near future.

Metro, Germany's biggest retailer, currently has two stores in India, which operate on the cash-and-carry model. It also has two distribution centers.

Foreign retailers are in a race to tap the fast-growing Indian market. The branded sector, which makes up just 3 percent of the total market, is valued at about $6 billion and forecast to grow at 25 percent to 30 percent per year over the next four years.

Multiple-brand foreign retailers can only operate wholesale or franchise units in India. Analysts expect rules to be eased within two years.