Financial Daily from THE HINDU group of publications
Friday, Jul 26, 2002
Agri-Biz & Commodities
Teauction.com pins hopes on TMCO revival
KOLKATA, July 25
TEAUCTION.COM Ltd, the only online tea auction mechanism available in India, is hoping that the Union Government will take a couple of "favourable" decisions as early as possible.
First, it wants the Government to reinstate the Tea Marketing (Control) Order (TMCO). Second, it wants the Forward Markets Commission (FMC) accept its proposals and allow it to set up the proposed tea futures exchange.
Teauction.com, which floated its Web site was set up in early 2000,registered a fair amount of business during the first year. It was also one of the few dotcom companies to register a profit after tax in 2000-01.
However, in December 2001, the Union Government accepted the tea industry's demand and repealed TMCO. Introduced in 1984, the TMCO stipulated that at least 75 per cent of the tea produced in the country was sold through the auction system.
As a result of the repeal of TMCO, the number of biddings and transactions through teauction.com dropped drastically. Mr Vijendra Surana, Chief Financial Officer of the company, said currently, transactions had halved as compared to the period before December 2001.
``In 2000-01 almost 15-16 million kg of tea was auctioned through our online auction system. However, in 2001-02 it has dropped to around seven to eight million kg'', Mr Surana told Business Line.
According to him, repealing of TMCO caused the drastic fall. ``As auctioning was mandatory, the industry opted for this mechanism. However, with the repealing of this order, private sales have increased and the number of online transactions have also declined. Still, at times, players as Hindustan Lever, Tata Tea, Nestle, Duncans, AFT and Wagh Bakri use our portal,'' he said.
He pointed out another issue. ``Initially, there was an excitement of auctioning and selling tea online. With time, this excitement fizzled out. We feel that were ahead of time and the tea industry is not yet ready for online business,'' he said.
However, the Union Government is considering to reinstate this order but in a rectified form and it may come in the next few months. The recommendations of A.F. Fergusson, the consultant, are being studied closely.
Regarding tea futures, Mr Surana said the laws and by-laws of the proposed exchange have been submitted to FMC. They also had extensive talks with Refco, the US-based leading consultant on futures trading. ``Once we get the clearance we will take two to three months to set up the exchange,'' he said.
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