Tea.com - www.LankaBusinessOnline.com
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
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
Registration is limited to buyers and sellers operating at the Colombo
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 --
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
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
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
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
The Board of Directors of the Forbes Teauction.com (Pvt) Ltd., comprises
Messrs Chrisantha Perera, Yshan Fernando, Ayush Bagla and Ketan Desai.
cup of tea (Dotcom Survivors) - Business World
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
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.
Rs.425 Lakh (12 months 2000-2001)
Rs.280 Lakh (expected)
Funding by industry
World’s only online tea auction model
Excellent fulfillment processes
Biggest value-add only with global scalability
No guarantee of tea futures model taking off
*Auctioning is a seasonal activity so quarter-wise
compilation not relevant
finds a match in Sri Lanka - The Economic Times
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.