UK Business News

Retail giant Tesco have announced a £60million venture into the wholesale cash & carry business in India, alongside a deal with the Tata, owners of the Land Rover/Jaguar group.

Tata already has a stake in the Indian retail market through their Tata’s Star Bazaar hypermarkets and the deal is hoped to grow that chain from the current four hypermarkets to fifty, during the next five years.

The deals will “enable the two companies to benefit from the rapid development of a modern supply chain”, said a Tesco spokesperson.

As well as supplying the hypermarkets, the wholesale outlets will be tailored to suit the Indian market. Goods will be bought from local farmers and sold on to restaurants and small business owners as well as supermarket chains.

“This is another exciting development for Tesco,” said Sir Terry Leahy, chief executive. “It complements our entries into China and the US, giving us access to another of the most important economies in the world.”

It’s good to have some positive business news in the current economic downturn, even if it is from the American burger giant McDonalds.

Despite the gloom on the high streets McDonald’s say they have attracted an extra two million customers a month to their restaurants in the UK compared with last year.

The company has responded to criticisms of it’s products over the years, not least from the movie Supersize Me and the book Fast Food Nation, which were not flattering towards the McDonald’s fare.

In 2008 McDonald’s have seized the moment and their freshly ground Rainforest Alliance coffee and tea, semi skimmed milk and 100% chicken breast nuggets, launched in 2007, have revived the fortunes of the business, that was set to close 25 UK outlets in 2006.

Better still for the economy is the announcement that McDonald’s will be creating 4,000 new jobs in the UK as it continues to defy the effects of the credit crunch.

Wedding gift firm Wrapit has blamed the HSBC bank for putting it’s business in administration, despite owing the bank around £3.5million.

Wrapit was formed in 2000 by former fashion journalist Pepita Diamand and trades from fifteen showrooms and a website, the administration puts 100 jobs on the line.

Despite the protestations of Peter Gelardi the head of Wrapit, claiming that the bank had acted improperly and could have saved themselves one million pounds by allowing the company to fulfill current orders, the fact remains that the business has shown a loss for the last six years.

So enraged is Gelardi that according to a report in the Daily Mirror, he has urged customers to lobby the HSBC and has published e mail addresses for some of the banks executives.

The statement from Gelardi reads:

“Having precipitated the fall of Wrapit, HSBC now have it within their power to minimise the pain caused to 2,000 couples and, probably, 100,000 of their guests, and ensure that no Wrapit customer loses any money. But will not take it,” he said.

“As it will also cost HSBC £1m less than the refund option, you would think that this would be the obvious way forward.

“I’m afraid to tell you that HSBC, true to form, don’t agree.”

British Telecom shares took a dive last week as the company announced cash flow problems and a drop in the value of the company  pension fund.

It raises the question amongst the big  Internet Service Providers, how much more value is there in the broadband market. BT themselves added 103,000 new subscribers in the three months from April to June, down from 150,000 in the previous quarter, although the company believes that is still 31% of the current market.

In the same period Carphone Warehouse has seen new sign ups dwindle to just 41,000, but spare a thought for Orange who have spent untold millions promoting their broadband service, only to experience problem after problem in getting the business to work. They have actually lost 44,000 broadband customers in the second quarter, the company’s third consecutive quarter of negative growth.

There has been a sharp increase in the number of companies going into liquidation according to government figures released today.

An increase of 11.6% on the first quarter, saw almost 3,500 companies go into liquidation between April and June, a 15% rise from the same period a year ago.

The number of insolvencies remains less than half of the figure reached during the recession of the early nineties, but a rise in the number of companies going into administration suggests that there is more pain to come.

Over 1500 companies were put into administration in the first half of this year, an increase of 42% on the same period last year.

“Unfortunately, this feels like just the beginning,” Nick Wood, Recovery and Reorganisation Partner with Grant Thornton, “The negative sentiment expressed in a huge range of economic indicators is now feeding through to the real economy, with businesses that a year ago had been able to paper over the cracks now being fully exposed.”

“Expect private equity to begin rescuing businesses with strong fundamentals but short term cash flow difficulties - as long as the price is right. Well managed businesses with strong cash flows can certainly survive, and even prosper in the current climate. Cash is king in these turbulent times.”