have been able to compress the transaction time for tea from 8 weeks to
1 week and this has saved immense costs: Ayush Bagla, MD of Teauction.com
-19th March, 2001
Teauction.com is the first
digital B2B (Business to Business) exchange in the world set up
for buying and selling of tea. Launched exactly a year ago, the
portal has conducted over 24 auctions successfully on the internet.
The portal is raring to go and has some ambitious plans on the anvil.
Promoted by the Williamson Magor group, the Apeejay Surrendra group,
Hanuman Tea and Centurion Bank -- this Kolkata-based e-commerce
portal has already spread its wings to various other tea-producing
countries by a series of tie-ups for specific auction floors. It
is also working on a seamless online integration with various tea
multinationals across the world. indiamarkets.com caught up with
the company's Managing Director Ayush Bagla, the man behind the
idea and Chief Executive Officer Rakesh Bhutoria for a tete-a-tete.
Excerpts from the interview:
What prompted you to start this venture?
Bagla: My family had been dealing with the tea business since
1961. Of late, transaction costs in selling tea had increased and
it used to take 8 weeks to sell any particular type of tea. Tea
being a seasonal product, price fluctuations due to delay in warehousing
and sampling of tea would result in decline in value of tea by 15
per cent to 20 per cent. We needed to speed things up and make it
have you been able to address this problem through the web site?
Bagla: We have been able to compress the transaction time from
8 weeks to 1 week and this has saved immense costs. We have saved
on inspection, withdrawal, interest and auction committee charges.
The cost component is therefore Rs 4.40 per kg vis-a-vis Rs 6 per
kg through conventional auction. Our endeavours are focussed towards
reducing transaction time and cost by over 50 per cent.
indiamarkets: What is your buyers' profile?
Bagla: We have a large cross section of buyers doing business
on our site — right from Williamson Magor, Jayshree Tea, Nestle,
Tata Tea, Tetley, which does business through its Indian agents
and the relatively unknown buyers from Gujarat. We have a well-diversified
pool of buyers with 65 per cent to 70 per cent of them trading through
are the kinds of volumes that you have been able to sell through
Bhutoria: Out of a total tea production of 820 million kgs
in India, around 450 million is auctioned. Out of this our market
share is 6 per cent of the total auctioned tea in the country. The
trend is catching on.
there any overseas initiative that you have taken vis-a-vis other
tea producing and tea consuming countries?
Bhutoria: Currently, we are spreading to other tea-producing
countries and we have been able to execute tie-ups
three out of eleven countries, for country specific
auction floors on the web site. In Sri Lanka we have
tied up with Forbes & Walker, the country's leading
tea conglomerate with broking and plantation interests.
Business should start in full-swing by the end of this
month. In Bangladesh, we have tied up with Unity Tea
for the same purpose. We are also talking to the Indonesian
government for bringing Indonesian teas online. We will
also be shortly getting into other countries like Kenya
and the UK. We are waiting for the e-commerce laws to
be put in place. At the moment, overseas buyers cannot
buy directly through the web site. They can do so only
through their Indian agents.
What is your top priority in the agenda for e-commerce?
Bhutoria: At the moment we are working on a major
revenue stream of having a seamless integration with
global players and multinationals, who are the largest
buyers of tea. (This would mean use of software tools
to customise and design solutions specific to each
needs and provide the werewithal to carry it out on a turnkey
basis. In other words, the website will provide an answer
for each and every global operation requirement right from
pricing of blends, logistics, transportation and sales tax
issues. This could be done by integration with either te ERP
of the MNC or the marketing division, or production, whatever
may be convenient. In short, teauction.com will address all
requirements of global sourcing operations thus saving them
immense costs.) We are offering to fulfill all their requirements
of global sourcing operations through us. Talks are at an
advanced stage with each one of them, though we have to still
decide whether such tie-ups will be fee-based or equity-based.
indiamarkets: What are your various sources of revenue
Bhutoria: We basically have five revenue streams. First,
the transaction income on volume of throughput. Secondly,
we provide access to trade financing to our members through
Centurion Bank - one of our promoters. For this, we charge
credit arrangement fees. The third is what we are working
on -- seamless integration with multinationals, which should
fetch us good money. We are already supplying such services
on an individual basis, but the ultimate goal is to integrate.
Fourth, each joint venture with an overseas partner is based
on a revenue-sharing arrangement. Lastly, in the future, we
plan to charge fees for specialised value-added services.
indiamarkets: Any other tie-ups?
Bhutoria: We have, about four months ago, concluded a
tie-up with a US-based satellite imaging company to provide
real time weather-related data for each and every tea estate
in the country. There are around 3000 tea estates in the country.
Buyers can get real time feeds on the weather forecast for
the next four days so that they are able to price the product
right. This is a much more scientific way of pricing than
the former method of depending on hearsay.