Date:26/12/2004 URL: http://www.thehindubusinessline.com/2004/12/26/stories/2004122601560400.htm

Back Poor response: E-auction is still not traders' cup of `tea'

P.S. Sundar

IF the response to the electronic auctions introduced by the Tea Board in the different auction centres in the country is any indication, the board has a definite reason to be concerned.

The buyers are showing a visible apathy to bid through the e-auctions.

The Joint Market Report of the Brokers has been repeatedly highlighting the absence of the buyers and the appalling level of their participation at the e-auctions.

The Tea Board launched the e-auctions in different centres with much fanfare, but the trade is confirming that the computers are more a show-piece than a serious business tool of the millennium.

Very few buyers are present at the e-auctions and their bids are mentionably low. Consequently, only a small portion is sold. For all this, the electronic auction is still under the familiarisation package with each of the brokers offering only five lots at the opening of the auctions each week. The rest is sold through the established outcry system.

The Tea Board has invested around Rs 10 crore for introducing electronic auctions in the different centres of the country. It has decided to go in for electronic auctions fully in the eighth centre - Jalpaiguri. Its contention is that while the electronic auction per se would not mean a higher price for the teas, it could lead to better realisation because of the transparency in respect of the volume, grade, garden, price, buyer details and export/domestic sale information. These are displayed not only in the individual monitors but in the large screen in the hall.

Simultaneously, e-auctions help in meaningful decision making because, contrary to the mere 20 seconds available for sale in the outcry system, the buyers can take up to five minutes to complete their bids for a lot. The system generates powerful information background and is rational.

There would also be an opportunity for each centre to be linked with others paving the scope for off-site bids. That should widen the reach for each lot offered for sale. Of course, this would call for certain amendments to the rules governing the auctioning now because of the location of the warehouses.

The Board should, therefore, take a serious view of this and come out with remedial measures.