Meet the CEO. A digital junction for commodities

Online auctions are likely to be used more and more in the future, helped by the government’s focus on transparency and digitisation, says Vinaya Varma, CEO of mjunction, a B2B e-commerce company.

Besides auctions for traditional commodities such as steel, coal, food-grains and agri-commodities, e-auction is also being used for allocation of natural resources such as oil fields and gas fields, he says. Excerpts from a chat with BusinessLine:

What is the segmental trend you see in e-auction in India?

The trend of using e-auctions for buying and selling in India has risen significantly over the years, as there is an increased need for transparency, efficiency and convenience. Besides segments including steel, coal, industrial goods, food-grains and agri-commodities, e-auction is also being used for allocation of natural resources such as oil fields and gas fields. In fact, the IPL (Indian Premier League) marketing rights should also be e-auctioned.

How has mjunction’s journey been over the years?

In the last 16 years mjunction has established itself as India’s largest B2B e-commerce company. Till date we have transacted over ₹5,56,858 crore on our e-platforms.

We have been aggressively chartering new territories. Some of our recent successes are telecom spectrum, food grains, tea, food & beverage, rough diamond and ocean vessel chartering, among several others.

Recently mjunction was appointed by the Directorate General of Hydrocarbons (DGH) to build a platform for them to enable e-bidding, e-evaluation of bids, and e-allocation of oil and gas fields.

This platform will aid in transparent allocation of the country’s natural resources, and help the country to reduce its oil import bill by $8 billion annually, as per Petroleum & Natural Gas Ministry officials.

How does the e-auction process work for a seller and a buyer?

The e-auction process can be structured broadly into four steps. One, mjunction’s field agents reach out to prospective clients and search business opportunities. Two, participants are registered along with verification of documents to check their credentials. The listing, promoting and pricing of the items to be auctioned are decided upon. Three, appropriate auction technology is selected before setting up of bidding rules.

Bidding happens to get the successful bidder and finally there is the post auction follow-up that includes approval of materials purchased from bidder, invoice generation and delivery.

How does e-auction help reduce inefficiencies and hence price?

E-auction eliminates all the disadvantages of a manual process. It enables to break geographical barriers and ensure wider participation of bidders. E-auction eliminates cartels and cuts down heavily on turnaround time. A completely online and transparent process enables market-determined fair price discovery and ensures equal opportunities for the smallest players in the market. This leads to an efficient and transparent supply chain.

For example, mjunction received a mandate from Tata Steel for procurement of logistics service providers (LSPs) regarding transportation of raw and finished products on a pan-India basis.

Working with a fixed set of LSPs over the years was leading to cartel formation and monopolistic business scenario. mjunction designed a technical evaluation format to capture data and arrive at benchmark ratings for the LSPs, sourced new LSPs, assessed their technical capability and suggested LSPs who qualify on the benchmark ratings. Tata Steel made a total savings of ₹637 crore.

What may be some issues that still need to be sorted out in e-auctions in India?

One of the most important issues that needs to be sorted out is that bidders sometimes start quoting unfeasible rates, influenced by the heat of the moment.

This can be solved with various system-based alerts/conditional stoppers.

What is your view on the future of e-auction in India and what are your plans?

With the government’s focus on transparency and digitisation, manual processes will gradually be replaced by digitised systems and e-auctions are likely to be used more and more. mjunction is concentrating on building its capabilities in such a way that it can compete by delivering a technologically superior and secure platform.

mjunction’s platform will provide end-to-end services for its clients. There will be a two-pronged strategy for e-auctions. One is to add more categories.

Two, turn our auction sites into complete marketplaces where besides buyers and sellers, the entire ecosystem is present on the platform and is accessible online. The ecosystem typically will consist of transporters, financiers and inspection agencies, all of whom will contribute to a holistic transaction experience.

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