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Tea.com - www.LankaBusinessOnline.com

-16/05/2001
Taking a timeworn process into the e-commerce revolution, a Sri Lankan tea broking firm has created an Internet based platform for the country’s first online sales.

Forbes & Walker (F&W) and the Indian based Teauction.com have teamed up to create a portal -- www.forbesteauction.com -- to auction private teas.

This BOI approved venture would enable around US$ 55 mn worth of Ceylon tea to be traded online.

The maiden online auction would start from Friday with the first sale taking place on Monday May 21.

But auctions will be limited to the local trade. Around 10 percent of teas produced are sold through private channels.


F&W Chairman, Chrisantha Perera emphasised the company was not trying to undermine the existing auction system.

“Instead we are trying to give a greater exposure to the private sellers to attract the best possible price,” he said addressing a media briefing.

One notable feature, is that the participants can view the highest bidding price online – a feature not found in the present private auction system.

Registration is limited to buyers and sellers operating at the Colombo tea auction.

Those who wish to use the site will be provided with confidential user names and passwords that will enable them to access sales floors, view the teas, make their offers, monitor the status of their offers and receive confirmation of sales.

As in the existing private sale, prospective buyers would be sent samples of the teas they are interested in and the compulsory panel certification will be obtained for all sales.

Perera hopes the launch of online private sales will widen the scope of the process allowing more buyers than is currently possible through the present manual system, to view the teas on offer.

Other tea brokers who wish to have their offers hosted on the site could do so on paying a required fee to Forbes Teauction.com.

Meanwhile, Sri Lanka’s weekly public auctions may also be automated in the near future.

The Ceylon Tea Traders Association (CTTA) is exploring the possibilities of automating the public auctions, officials said.

So far, two parties – Millennium Information Technologies and Affno – have been shortlisted to develop a prototype.

Forbes & Walker introduces Sri Lanka’s
  first on-line tea sales

-- Joint venture with B2B portal pioneer Teauction.com --

-15/05/2001
Colombo, Monday May 14, 2001: Keeping pace with the e-commerce revolution, Sri Lanka’s tea industry took another giant step this week, with the introduction of the country’s first on-line tea sales by Forbes & Walker Limited, in association with Teauction.com, the global pioneer in business-to-business portals for the tea trade.

The two companies have announced the forming of a BOI-approved joint venture to create and operate Internet-based point-and-click electronic private sales for tea, on the guidelines approved by the Sri Lanka Tea Board and to be conducted in accordance with the existing bylaws and conditions for the sale of tea formulated by the Colombo Tea Traders Association (CTTA).

The joint venture Forbes Teauction.com (Pvt) Ltd., will host the weekly private offers of Forbes & Walker Tea Brokers (Pvt) Ltd., at its website http://www.forbesteauction.com providing a transparent, speedy and efficient process that will make private sales easier for the buyer, and more rewarding for the seller, Forbes & Walker Chairman Chrisantha Perera said.

He told a news conference today that commencing Friday, May 18, the first ever electronic offer list in Sri Lanka would be open to perusal by local buyers, and the historic first on-line private sale would take place on Monday, May 21, taking a timeworn process into the era of the Internet.

“The synergies of our companies have proven a perfect match that has enabled us to offer the benefit of leading edge technology,” Mr. Perera said. “Forbes & Walker is one of the two largest tea brokers in Sri Lanka and has a historic association with the tea industry dating back to 1881. Teauction.com was the first B2B portal globally for the buying and selling of tea. We have the product, the expertise and long established relationships with producers and buyers. They have the software and technical know-how for e-commerce in this sector.”

He said all buyers and sellers operating at the Colombo Tea Auction would be eligible to be registered with the site. Those who wish to use the site will be provided confidential user names and passwords that will enable them to access the sales floor, view the teas, make their offers, monitor the status of their offers, and receive confirmation of sales. As in the existing private sale procedure, prospective buyers would be sent samples of the teas they are interested in, and the compulsory panel certification would be obtained for all sales.

Listing the advantages of the on-line private sale, Mr. Perera said it would widen the scope of the process, enabling more buyers to look at the teas on offer. This would create more competition in the market place, stimulate better offers, and enable sellers to optimize the benefits of private sales. There would be no additional expense to buyer or seller, making it a “win-win” situation for everybody, he said.

He added: “This is only a beginning of a new dimension in service and convenience. We hope to develop several exciting new features in service and marketing that would be helpful to the trade in general and the industry in particular.”

Ketan Desai, Head of International Marketing for the Calcutta-based Tea Auction Ltd., said the introduction of on-line private sales in Colombo was a significant development for the global tea industry, because Colombo is the world’s largest auction center. There are more than 200 buyers operating in Colombo, and Forbes & Walker sells more than 65 million kilograms of tea annually, accounting for an overall market share of about 22 per cent, he said. “It is most appropriate that Forbes & Walker is the first Sri Lankan tea broker to be hosted on the site, because it is one of the largest broking firms and is generally number one in private sales,” Mr. Desai said.

He also revealed that although www.forbesteauction.com is owned by a joint venture involving Forbes & Walker, other tea brokers who wish to have their offers hosted on the site could also do so, by paying the required fee to the joint venture. In India, where Teauction.com set up the world’s first digital tea exchange in March 2000, weekly on-line sales have been successfully conducted, and the company is in the process of exploring the possibility of setting up similar exchanges in Bangladesh, Indonesia and Kenya, Mr. Desai added.

Shareholders of Tea Auction Ltd., (www.teauction.com) include the B M Khaitan Group, Apeejay Group, Hanuman Tea and Centurion Bank. The company has taken strategic equity in A W Figgis & Co. Ltd., a 130-year-old broking house in North India, and in TTBL Tea and Technologies Ltd., in South India for providing affiliated services.

Forbes & Walker commenced tea broking in Sri Lanka in 1881, and is today a diversified broking and service organization. Forbes & Walker Tea Brokers (Pvt) Ltd., was the first local broker to launch an interactive website in 1996 and to obtain ISO 9002 certification for tea broking in the year 2000.

The Board of Directors of the Forbes Teauction.com (Pvt) Ltd., comprises Messrs Chrisantha Perera, Yshan Fernando, Ayush Bagla and Ketan Desai.

The Perfect cup of tea (Dotcom Survivors) - Business World

-14/05/2001
Any fragmented industry usually takes to the Net like fish to water. Add to this the backing of the best corporate names in the sector and you have the right brew for success. The team behind teauction.com – the only tea auctioning portal in the world – admits that without the backing of prominent tea players (who control 35% of the tea production market) it wouldn’t have been such a smooth ride on the Net.

Between them, the Dhunseris, the Apeejay Group, the Williamson Magor group and the Bagla group hold a 74% stake in the portal (the rest is held by Centurion Bank). Besides providing the financial muscle, the promoters are also giving managerial support – Ayush Bagla is in charge as the managing director.

One reason for the B2B portal’s profitability is its clear value proposition to the registered user in terms of transparency and reduced costs. Transaction costs of tea sold in the offline world is 8% of sale value – one of the highest for any commodity in the world. On the Net this has been brought down to 3.5%. Not surprisingly, the portal has already garnered about 8% of the total domestic tea auction volume of 450 million kg, emerging as one of the clearest cash flow positive companies in our survey. It had a net profit of Rs 2.98 crore on revenues of Rs 4.25 crore for the nine-month period ended Dec 2000.

In an auction site, knowing about the bidder’s antecedents is important. Although offline verification is done through a financial check, the domain expertise of the promoters helps in getting a subjective evaluation of the 150 bidders that have access to bidding privileges on the site.

Even the transaction time taken on the Net is about 50% lower. In the physical world, the tea moves from the estate to a warehouse where a brokerage house picks up samples to dispatch to buyers for an evaluation. After that, buyers decide about the quantity and bidding price. By the time the inputs are catalogued, the auctions are held and the plantation owner gets the money, 8-10 weeks have elapsed. Taking the process online cuts this to four weeks.

But the site doesn’t stop at auctioning. It has picked up equity stakes in two tea brokerages, TTBL in the South and AW Figgis in the north, which are into tea-tasting, market evaluations and price benchmarking. All these relationships were put in place prior to launching the model.

Teauction has also tied up with a US-based satellite imaging company for real-time weather data, which is a free service for registered users. Registration is free with the site making its money from a 1% fee levied on concluded transactions.

The promoters are already looking ahead. If the Forward Markets Commission gives a go-ahead, they hope to introduce tea futures online, making it a first again. Says Rakesh Bhutoria, CEO of Teauction: “The Indian tea auctioning format is the benchmark for all tea auction centers around the globe. So, when the time comes this auction center can offer online sales for all tea producing centers worldwide.”

For starters, Teauction has set up a similar system for Sri Lanka in a joint venture with Forbes & Walker and is developing one for Bangladesh tea industry to be launched in July 2001. In fact, along with C2W, this is one of the two companies that have taken steps towards global scalability. Cheering news for the industry that makes the cup that cheers.

REVENUES

Rs.425 Lakh (12 months 2000-2001)

EBIDT

Rs.280 Lakh (expected)

CASHFLOW

N.A.*

PROS

q Funding by industry

q World’s only online tea auction model

q Excellent fulfillment processes

CONS

q Biggest value-add only with global scalability

q No guarantee of tea futures model taking off

*Auctioning is a seasonal activity so quarter-wise compilation not relevant

Teauction.com finds a match in Sri Lanka - The Economic Times

-05/04/2001
PERSISTING with a good idea often pays, though it takes time. Sometimes a lot of time. Thus, a tea auction in cyberspace was good idea but it is taking time. A year of upheaval, a few controversies, a court case and some tough hard selling. Teauction.com has seen it all. The promoters, Baglas of Hanuman Tea, have persisted with electronic auction of teas. The Baglas persisted when a few others fell by the wayside. The success so far in India is limited. But the outlook for net auctions is not all that hopeless. Baglas are confident and now they want to become global player. For starters, the Baglas have chosen to bridge the gap between India and Sri Lanka. The Hanuman Group has entered into an agreement with Forbes & Walker, one of the top tea broking houses in located in Colombo. F&W is part of MJF group, a premium tea powerhouse in Sri Lanka. The groups own the Dilma brand, which is well known in the international markets. Teauction.Com is set to hold the first cyber auction in Colombo in the third week of April in association with its joint venture partner F&W, which auctions close to 75 million kilograms of tea annually. The joint venture has been named Forbes Teauction.com, which is also the first in the business of online tea trade in Sri Lanka. Teauction.Com managing director Ayush Bagla told ET that the joint venture has secured the necessary clearances from both governments and appropriate authorities such as the public investment boards of both countries. The Baglas are also exploring the possibility of setting up similar joint ventures in Bangladesh and Indonesia. "In Bangladesh we are talking to three top broking firms, who control almost the entire 55 million kg production there," Mr. Bagla said. He said that the governmental clearances are awaited. Similarly, talks in Indonesia have also progressed for firming up the joint venture, which would launch the first electronic auction there. Tea auction on the Net, though slow on the off take, is gradually picking up. "We are routing almost 26 million kgs of tea through our site, private sales and affiliate broking firms," Bagla said. The biggest benefit to his clients has been savings in terms of warehousing costs. "Tea to traditional auction system needs to be warehoused for about eight weeks before these are offered for sale. If for some reason, the tea cannot be sold, another eight weeks of warehousing is required for the same tea. This cost is completely eliminated in auctions through the Net, Bagla added.


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