Financial Daily from THE HINDU group of publications
Tuesday, Dec 24, 2002
E-Commerce & E-Business
Info-Tech - Internet
Agri-Biz & Commodities - Tea
There's no flavour in this tea dotcom
KOLKATA, Dec. 23
IT is probably time for the last bubble in teauction.com to burst. Industry sources say it is dead and defunct although the owner is continuing to claim that the dotcom is fighting to survive in a tough market.
Teauction.com, the only online tea auction mechanism available in India, was launched with pomp and fanfare in early 2000. In the first year it registered a fair amount of business and was one of the few dotcom companies to record a profit after tax.
However, soon things began to go wrong. At present, industry sources say, trading hardly takes place through the Web site's auction system as a result of which the company has almost gone down the drain.
Mr Ayush Bagla, Managing Director of teauction.com, agreed, "Times are tough", but felt that all was not over. Replying to a questionnaire from Business Line, he said, "Teauction.com is going through a difficult phase" as the "present tea market is suffering from "a global recession."
Though he was asked to specify the trading volumes on teauction.com, he only said that "current volumes are low", but the hope was that they would pick up "as soon as the market improves."
Industry sources explained the cause of teauction.com's problems. "There was an initial excitement of auctioning and selling tea online. With time, it fizzled out. Moreover, now every buyer is waiting for tomorrow for the prices to drop. All these factors made the venture unviable," sources said.
The major shareholders of teauction.com are Hanuman Tea with 47 per cent and Centurion Bank with 16 per cent. BM Khaitan Group, Apeejay House and Twentieth Century Finance hold 10 per cent each.
Sometime back, the company decided to change its accounting calendar from April-March to October-September. Mr Bagla was asked about teauction.com's net income and net profit for the 18-month accounting period ended September 30, 2002. He skipped the question.
Industry sources said that the company had failed to pay its creditors and also to a section of employees who have resigned. Instead they were given tea produced by Hanuman Tea & Co (one of its major shareholder). Mr Bagla vehemently denied it as a "rumour" over telephone.
Hanuman Tea, meanwhile, has been referred to the Board for Industrial and Financial Restructuring (BIFR) as 50 per cent of its net worth has been eroded. Its Dooars-based Ramjhorah tea garden is under a lockout.
Even the financial condition of the registered tea broker of teauction.com, A.W. Figgis & Co, is reported to be extremely poor and Mr Bagla felt that it was due to the "decline in tea market."
Despite the adversity, Mr Bagla ruled out shutting of teauction.com's operation and said they were "continuing as usual" and expected that it would pick up since the tea market "will once again revive."
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