CIL, SCCL earn Rs 30,000 cr incremental revenue by adopting e-auctions
Author(s): City Air NewsChandigarh, October 12, 2015: In the late 1990s, a sponge iron manufacturer based out of Asansol who needed 2,000 tons of coal would have to procure it through local traders. It was a cumbersome process which not...
cityairnews
Oct 12, 2015 12:30
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Chandigarh, October 12, 2015: In the late 1990s, a sponge iron manufacturer based out of Asansol who needed 2,000 tons of coal would have to procure it through local traders. It was a cumbersome process which not only involved intensive travel to these offices, but also involved paying a commission to them for acting as mediators between him and Coal India. There was no guarantee that he will get the required amount and even if he did, there was no guarantee that he would get delivery of the material when he needed it.
This manufacturer’s life changed after e-auction of coal, as it is conducted today in India, was introduced in 2005 by mjunction services limited. When mjunction stepped into e-auction of coal, the very first auction it conducted using fetched a price of 54% above the notified price for Bharat Coking Coal Ltd, a Coal India subsidiary. The unique methodology it designed is followed till date for e-auction of coal in India.
mjunction thus became the pioneer of coal e-auctions in India in its present form, and till date, over 500 million tonnes of coal has been sold using this methodology, of which over 225 million tonnes has been facilitated by coaljunction. On an average, coaljunction aids sale of 1.5 to 2 mt of coal per month.
Between Coal India and Singareni Collieries Company Ltd (SCCL), they have earned an incremental revenue of about Rs 30,000 crore by adopting the e-auction system. In the earlier manual process, this amount would have largely gone to middlemen. This revenue which accrued to them not only helped them to make more investments to increase their production, but also made a number of CIL subsidiaries profitable as the country cut down on costly imports.
A crucial national resource, especially in a developing country like India, where 60% of the country’s power generation is still coal-fired, coal buying and selling was a murky business, shrouded in mediating deals and controlled by strong cartels. Though initially it faced a lot of resistance, coal buying and selling became free of unwanted intermediaries, making the process hassle-free and transparent.
In the words of Mr Hari Om Gupta, Head-Coal Logistics of DB Power Ltd, who has been participating in online auctions for the last three years, “The online platform has enabled our company to buy coal through a transparent and hassle-free mechanism. The knowledge, flexibility and attitude of team coaljunction have been vital in enabling my company to buy the desired quantity of coal at the right price and quality.”
With a registered bidder base of over 17,000, of which a little over 80% are small buyers of coal, coaljunction has transformed the lives of many by breaking the coal cartels. In the words of Mr Oberoi, “coaljunction’s objective was simple. It wanted all coal consumers to have equal opportunity to buy coal. On the other hand, the client, the coal companies, wanted the sales process to be free of the shackles of middlemen which did not allow for optimum price discovery. It was a symbiotic need and the solution catered to both parties optimally.”
Powered by superior technology, the e-auction method which is conducted in a live environment, eliminates any foul play and fetches a market-driven price for the seller and the correct quality and quantity for the buyer directly from the seller.
In its endeavour to cater to the coal eco-system in a holistic manner, mjunction has been holding coal conferences which are attended by coal producers, industry leaders, consumers, influencers and policy makers. The 9thsuch Indian Coal Markets Conference (ICMC) in coming up in Kolkata on October 11-13, 2015. The annual event, organised by mjunction, is expected to see a large turnout of industry stalwarts from India and all other major coal producing countries.
Date:
Monday, October 12, 2015
