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Spot eAuction for TATA Chemicals

Mandate

Tata Chemicals gave mandate to coaljunction to conduct spot eAuction of Anthracite Coal from their plant in Mithapur, Gujrat. This was the first time that coaljunction was given the task of eSelling such a by-product of coal. The main challenge was the fact that the auction was to be done for a first time client and for a product that coaljunction had not auctioned before.

Objective

  • To clear the entire stock.
  • Ensure maximum price discovery.

Strategy Adopted

Since this was the first time that coaljunction had taken up eAuction of such a product, team coaljunction called up a few of their existing clients to understand the product, its uses and its expected market price. A brainstorming session was held to understand the industrial usability of the product. Armed with a new understanding of the product, team coaljunction tapped its existing database to identify potential buyers. After identifying the potential buyers, team coaljunction decided to conduct a spot eAuction for effective and efficient disposal of the commodity.

Achievements

The reserve price set by Tata Chemicals was Rs 4500 per Mt. Team coaljunction conducted Spot eAuction of the commodity and managed to attain a price of Rs 6190 per Mt, which was a 37.3% increase over the reserve price. Additional revenue over the reserve price to the tune of Rs. 84.5 lakhs was achieved for the client, which far beyond Tata Chemical's initial expectation.

Business challenges

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  • A 3 years contract covered 20% of items. Price matrix was used consisting of cost of each component that goes into the assembly
  • All Prices used to be fixed for 3 years
  • Remaining 80% of items were procured through spot buys

The CoalJunction approach

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  • Vendors premise were visited to understand the cost elements and the manufacturing process.
  • Cost justification for each element has been defined to accommodate any future price revision
  • Cost break-up was obtained post sealed bid from suppliers who further matched the price matrix

Benefits to the client

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  • A 3 years contract covered 20% of items. Price matrix was used consisting of cost of each component that goes into the assembly
  • All Prices used to be fixed for 3 years
  • Remaining 80% of items were procured through spot buys

Testimonial

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I have noted that mJunction has become the world's largest marketplace for steel, and the goal set to bring in more transformations. mJunction team deserves to be complemented on these achievements. R. Gopalakrishnan Executive Director, TATA Sons Ltd