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TVS Finance to buy Auction India

Our Bureau

CHENNAI, Feb. 21

THE Chennai-based TVS Finance Ltd will acquire Auction India Pvt Ltd, which owns the B2B auction portal www.auctionindia.com, in a stock plus cash deal.

Announcing the decision at a press conference here today, officials of both TVS Finance and Auction India declined to provide details about the consideration that has been paid or the stock that will be allotted. The due diligence is expected to be over by March and only then, will the percentage of shares to be allotted in Auction India to the original owners be known, according to them.

TVS Finance, which is a 100 per cent subsidiary of Sundaram Clayton Ltd of the TVS Group, has signed an MoU with Cyber Commerce Pvt Ltd to acquire Auction India Pvt Ltd (AIPL). Cyber Commerce is the parent company of AIPL. TVS Finance is a finance and in vestment company involved in the business of corporate funding and investing.

Mr R. Shiv Kumar, Director, Cyber Commerce Ltd, said the company had invested ``quarter of a million dollars in auctionindia.com'', of which 10 per cent was in fixed assets and the balance went towards working capital. The cash that Cyber Commerce would get ``will not be more than what has been invested'', he said.

Auctionindia.com commenced operations in August 1999 with a full service auction of second-hand machinery and used equipment. In the last 18 months, the portal has enabled close to Rs 12 crore worth of auction, of not only used machinery and second-hand equipment, but also component sourcing, scrap disposal, new suppliers for established companies and ensured better rates for prospective buyers, according to a press release issued on the occasion.

Mr Shiv Kumar said the decision to sell was prompted by the need to scale up the operations. This could be achieved only by infusing more capital and through networking. With the help of a consultant, Icra Advisory Services, the company identified the TV S group as it offered these advantages.

He said that the TVS group would not only bring in the required capital but also focus on the small and medium enterprises.

Cybernet would continue to be the technology partner for auctionindia.com so that the technology platform got continuously updated, said Mr Gopal Srinivasan, Director, TVS Finance.

Mr Shiv Kumar said that the listing facility available on the site was being used by buyers and sellers more to find out what value they could expect for their products and they did not have a ``strong intention to sell''. The consultant had suggested th at a fee be charged for the listing facility.

To questions, he said auctionindia.com was not making profits now, but had the business continued on its own, it would have achieved critical break-even by June-July.

Cybernet would get royalty for the international sales of the auction engine software that would be owned by the new company, he said. Auctionindia.com had 32 employees and they would continue to be with the company under the new ownership.