Wimco seeks FIPB nod to tie up with consumer products makers
06 October 2003
Mumbai: The Foreign Investment Promotion Board (FIPB) is evaluating a proposal mooted by Wimco Ltd to enter into tie-ups with manufacturers of consumer and industrial products that can be distributed through its own network of wholesalers, distributors, stockists and clearing and forwarding agents.
Swiss safety match firm Swedish Match AB controls a 53-per cent stake in Wimco. In its proposal Wimco has sought the FIBP''s permission to enter into tie-ups with manufactures in various segments such as herbal cough syrups, lozenges, disinfectants, deodorisers, spices, mosquito repellents and incense sticks.
The proposed ''cash-and-carry wholesale trading activity'' will initially involve Wimco entering into tie-ups with manufactures of consumer products for distributing the same to customers in India through its own network.
The company proposal said as per the industrial policy of the Indian government and relevant foreign exchange management regulations, foreign investments up to 100 per cent in the proposed cash-and-carry wholesales trading is subject to necessary approvals by the Indian government.
Citing reasons for the move, the company said in the 2003-04 Union Budget, the levy of excise duty has been removed from all segments other than the mechanised sector, which has severely impacted Wimco''s bottomline. Competition from the unorganised sector has seen Wimco''s market share erode gradually from 18 per cent to about 12 per cent, even though it is a major contributor of excise revenue in this sector.
Wimco is engaged in the business of manufacturing and distributing safety matches in India with production facilities at four locations Maharashtra, Uttar Pradesh, Tamil Nadu and West Bengal. Wimco has an installed capacity of 5-billion matches per year.