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MetalJunction sees growth prospects in coal e-auction

Ambar Singh Roy

Kolkata , Oct. 13

METALJUNCTION Services Ltd has identified growth opportunities in e-auction of coal on, its bilingual Web portal that has been developed specifically for the coal-buying community. MetalJunction, along with MSTC Ltd, has been engaged by Coal India Ltd (CIL) to conduct e-auction.

While MetalJunction and MSTC have each been allocated five million tonnes of coal for e-auction through their respective portals in the current fiscal, it is hoped that the cumulative allocation of coal for sale through e-auctions will be increased to 30 million tonnes (mt) before the end of the current year.

On its part, MetalJunction has already conducted around 45 e-auctions and sold nearly two mt of coal through its portal. While e-auctions have helped do away with middlemen and ensure fair prices for CIL subsidiaries, as part of its strategy, MetalJunction has made it easier for small consumers to buy coal online. Earlier, buyers used to purchase coal in lot sizes of one rake (about 3,500 tonnes) or more, MetalJunction has made it possible for them to buy in lot sizes of 50 tonnes (or one box wagon) or even less.

"As such, the consumer base increased with brick kiln owners, glass manufacturers, coke oven units, cement and chemicals plants meeting their requirements of coal in lot sizes that suited them," Mr Viresh Oberoi, Managing Director of MetalJunction Services Ltd, told Business Line.

Mr Oberoi said besides ensuring transparency in the auction system, online auction of coal had added to CIL's revenues in a big way.

The total coal sold annually by CIL has been pegged at 320-330 mt. Of this, 76 per cent is sold directly by CIL to power plants. Sale through e-auctions has been capped at 10 mt, at present.

"With 24 per cent of the coal produced being meant for users in the non-core sector, there is huge scope for sale through the e-auction route," he said.

In a bid to stress upon the acceptance e-auction of coal had gained, Mr Oberoi said the portal had already attracted over 1,000 registered buyers.

The focus now was on online transfer of data into CIL's COALNET system to facilitate faster creation of delivery orders at the coal companies-end. Buyers were also being offered logistics support for transportation of coal through surface mode. Talks were under way with several banks for an electronic payment system and facilitating finance for buyers of coal. Inspection services for buyers were also on offer.

As part of its revenue model, MetalJunction gets a percentage of the sale proceeds concluded online as transaction fee. While, at present, the revenue generated from e-auction of coal is small, it is expected to go up once online coal sales goes up. In the year ending March 31, 2006, the value of auctions concluded on MetalJunction portal is expected to hover around Rs 8,000 crore. Of this, auction of steel alone would account for Rs 6,000 crore, Mr Oberoi said.

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