The Hindu Business Line : Tea Board circulates draft paper for e-auction

Though many of the major players in the tea industry appear to agree with most of the issues in the draft, they have sought certain changes on a couple of things.

Main issues

These include: Basic auction principles are registered manufacturers should be able to sell any category, quantity and grade of tea and registered eligible buyer should be able to buy any category, quantity and grade of tea through the public tea auction system. All eligible registered buyers shall be allowed to put bid for buying and taking delivery of tea.

The next issue is of anonymity of buyers and sellers. "Tea shall be judged only on the basis of standard and quality by the auctioneer and buyer and, therefore, there shall not be any indication of garden name or garden mark in the catalogue.

"Similarly, the buyers of tea shall be only on the basis of the requirement of the intending buyers and shall not be influenced by the activities of other buyers on any auction day and, therefore, there shall not be any indication of the name of bidding buyers on any auction day".

On this issue, some of the major players suggested that anonymity of buyers should be maintained as revealing the name of the bidder will only defeat the purpose, they told Business Line.

However, they are of the opinion that there should not be any anonymity for the sellers as each garden has its own unique product and with its own established branch. Besides, the buyer will be buying tea of a particular garden and, hence, the buyer will have to do subjective analysis of each origin, they argued.

Lot issue

On the concept of lot issue the sources said: "It should be at the discretion of the producer".

They are also of the opinion that one auction for the entire country should be held.

The discussion paper also proposed that the information in catalogue may include: a) total quantity of tea in kg of any particular grade; b) net content of tea in one pack to allow buyers to buy any quantity of tea from the total quantity offered (which may be multiple of content of single package); c) date/week of manufacturing; d) grade of tea; e) name of tea garden owners; f) storing place (in case of stored in seller's own storing

place, the detailed address) and g) invoice number and date.

Once catalogued, the said tea shall be in the catalogue till the entire quantity is sold. Between the two auction days, sellers may have option to withdraw before the time of displaying catalogue to the buyer.

Buyers may be allowed to offer bid from his own place subject to his membership of the concerned auction organisers. Auction rules may be framed based on agreed e-auction process.

On cards

According to the discussion paper the new proposed system would have the following features:

1) Standard contract descriptors; 2) Unique combination of mark, garden and grade; 3) Complete list of tea available to buyers at one glance (e-catalogue); 4) Flexibility in instrument configuration; 5) Member hierarchy and login rules; 6) Risk management; 7) Empanelment of members, approval of different teas for sale, if necessary defining limits for its members, session timings and generating reports for use by members; 7) How would people participate in the proposed e-auction system; 8) Consolidated quantity for particular combinations as one auction; 9) Concurrent auctions with flexible and session timings; 10) Anonymous usage and 11) Competitive bidding and fair price discovery

mechanism.

The Tea Board has entrusted NSE.IT with the job of making an e-auction model.

It may be recalled that AF Ferguson who had been entrusted by the Tea Board to study the primary marketing structure of teas had recommended electronic auctions as a means to improving transparency and competitiveness in the auction process.

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