buyjunction connect, April 2014

issue

From the desk of

6

April, 2014

The state of world economy has been the most decisive factor affecting the fortunes of every developing country. The world economy has been witnessing a sliding trend in growth, from 3.9 percent in 2011 to 3.1 percent in 2012 and 3 percent in 2013. Though the ride in 2013 has been bumpy for the Indian economy, we have seen that it is slowly gathering momentum. The World Bank has projected India's economy will grow over 6 percent in 2014-15 and 7.1 percent by 2016-17 as global demand recovers and domestic investment increases.

With this sixth issue of buyjunction connect we try to bring to you the economic scenario, industry trends, market analysis and a report on Electrical Cables. The newsletter also captures a success story in the cement category where we could deliver substantial savings for a client.

Vinaya Varma Vice President, buyjunction

We hope that this newsletter will help you understand how we add value to our client’s business through innovation and in-depth analysis of their requirements. We only strive to create win-win deals for you.

Regards,

Vinaya Varma, Vice President, buyjunction

Credits

Index Current Economic Scenario......................................................................

3

Content: Sourav Chakraborty, Dipam Banerjee, Soumyashubha Ghosh, Atanu Saha Category Report: Hanif Zaman, Vani Burra, Arun Banerjee Mentor: Vinaya Verma, Linus Lobo

Business Confidence Survey................................................................ 5 Category Report - Electricals.......................................................................

11 buyjunction Case Studies..................................................................... 13 New Clients signed up.............................................................................

15

Editor: Subhajyoti Roychowdhury 1

Current Economic Scenario for Finance, Government of India, the Cabinet Committee on Investments (CCI) has approved the speedy execution of 36 infrastructure projects entailing investments of Rs 1,830 billion (US$ 29.28 billion) to boost investor confidence.

India's industrial economy is gathering momentum on the back of improved output of 8 core-sector industries – coal, crude oil, refining, steel, cement, natural gas, fertilisers and electricity. According to Mr P Chidambaram, Union Minister

GDP GROWTH BEATS EXPECTATIONS IN Q3 12.0

12.0

INDIA GDP Annual Growth Rate (Percent Change in Gross Domestic Products) 5.6

5.6

5.4

5.3

5.4

5.4

5.2

5.2

5.2

6.1

5

5

4.7

4.8

4.8

4.8

4.8

4.6

4.6

4.4

4.4

4.4

4.2

2012

2012

2012

2012

2013

2013

2013

4.2

2013

SOURCE: WWW.TRADINGECONOMICS.COM | MINISTRY OF STATISTICS AND PROGRAMME IMPLEMENTATION (MOSPI)

In the third quarter of 2013, the Indian economy advanced 4.8 percent over last year and was up from 4.4 percent in the previous quarter. This growth was led by a surge in agriculture production and construction. Agricultural production increased 4.6 percent YoY. Production of coarse cereals, pulses and oilseeds are expected to grow by 4.9 percent, 1.9 percent and 14.9 percent respectively during the Kharif season of 2013-14 compared with a year ago. Construction output accelerated to 4.3 percent, up from 2.8 percent in the previous quarter.

Mining shrank for the second straight quarter (-0.4 percent), although at a slower pace than in the previous three-month

period (-2.8 percent). Manufacturing recovered from previous quarter’s contraction and grew 1 percent.

Activities in finance, insurance, real estate and business services recorded the highest growth rate (10 percent YoY), followed by production of electricity, gas and water supply (7.7 percent YoY).

Although third quarter figures came above market expectations, the economy grew below 5 percent for the fourth straight quarter.

WHOLESALE PRICE INDEX RISES TO 14-MONTH HIGH IN NOVEMBER, 2013 INDIA WHOLSALE PRICE INDEX CHANGE 8 7.5 7

7.52 7.31

7.24

7.28 6.46

6.5

5.85

6 5.5

5.65 4.77

5 4.5

6.16

5.16

SOURCE: WWW.TRADINGECONOMICS.COM | OFFICE OF THE ECONOMIC ADVISOR, INDIA

5.05 4.58

4.58

Apr/13

2

6.1

Jul/13

Oct/13

Jan/14

India's headline inflation rate edged up to 7.5 percent in November 2013 from 7.0 percent in October 2013. Prices rose at its faster pace since September of 2012 mainly due to higher food articles and energy costs. The index for food prices rose by 20 percent driven by higher prices of vegetables (95 percent), rice (15 percent) and fruits (14 percent). Energy costs were up 11 percent due to higher prices of high speed diesel (16 percent), liquefied petroleum gas (11 percent) and oil (4 percent). Manufactured goods prices rose 3 percent.

HSBC India Services Purchasing Managers’ Index™ (with Composite PMI data) Private sector output falls for sixth month running in December Summary Business conditions in the Indian private sector economy continued to deteriorate in December. At 48.1, the seasonally adjusted HSBC India Composite Output Index posted below the crucial 50.0 threshold for the sixth consecutive month.

Moreover, the index dropped from November’s 48.5, indicating a slightly faster rate of contraction. Whereas manufacturing production expanded, services output fell.

Adjusted for seasonal factors, the HSBC Services Business Activity Index fell from 47.2 in November to 46.7 in the latest month, indicating a solid and accelerated rate of contraction.

Moreover, this was the sixth consecutive monthly drop in output levels, which is the longest period of continuous reduction since the 2008-2009 global financial crisis.

Underpinning the latest fall in services output was a solid decrease in incoming new work. New business contracted at the quickest pace since September, with panellists reporting an increasingly fragile economy and competitive pressures. There were a few mentions that the upcoming elections had also contributed to the latest drop in new orders. Across the private sector as a whole, new business decreased at a faster, but moderate pace.

long-run survey average. December data indicated that private sector employment rose. The latest increase in payroll numbers was broad-based with both manufacturers and service providers posting job creation. Average purchase costs at services companies rose further in December, amid reports of higher prices paid for fuel, food, transportation and electricity.

That said,the rate of cost inflation was only moderate and the weakest since July. Input price inflation in the private sector as a whole eased to a six-month low. Additional cost burdens were passed on, as prices charged by private sector firms were raised for the fifty-fifth consecutive month in December. The latest increase in tariffs was, however, marginal and below its average. Indian service providers remained upbeat about the prospects for business activity in 2014. Furthermore, the degree of confidence was the strongest in five months.

Positive sentiment was linked by companies to forecasts of better economic conditions and hopes of higher demand.

Some firms also mentioned that output is anticipated to grow after the elections.

Comment Commenting on the India Services PMI™ survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: “The service sector continues to face head winds, withweakening new business dragging down activity. On apositive note, inflation pressures are easing andoptimism about the coming year is rising.”

Key points Service activity contracts, while manufacturing production increases Moderate reduction of new orders across private sector Renewed growth of private sector employment Historical Overview

Source: Markit, HSBC.

HSBC India composite output PMI 50 = no change on previous month, S. Adj.

Four of the six broad areas of the service economy registered lower output volumes, while new business contracted in five categories. As with the trend for output, the sharpest decline in new orders was noted at Hotels & Restaurants. The Post & Telecommunication sub-sector remained resilient, with growth of both business activity and new orders recorded.

65

Increasing rate of growth

60 55 50

Outstanding business at both service providers and manufacturers increased in December, leading to a further accumulation of unfinished work in the Indian private sector.

Although modest, the overall rate of increase was above the

45 Increasing rate of contraction 40 40

2006

2007

2008

2009

2010

2011

2012

2013

3

Manufacturing operating conditions improve at strongest pace in ten months Summary Indian manufacturers signalled a further improvement in operating conditions during January. The headline HSBC India Purchasing Managers’ Index™ (PMI™) posted 51.4, up from 50.7 in December. The latest reading was the highest since March 2013, but pointed to a marginal pace of expansion that was well below the series average (55.1).

January saw new orders expand at the quickest rate in ten months, with survey participants reporting stronger demand from both domestic and overseas clients. Concurrently, new business from abroad grew at a solid pace that was the fastest since June last year. Subsequently, Indian manufacturers raised their production levels for the third successive month. The rate of output growth was solid and the strongest since February 2013.

Sector data indicated that consumer goods continued to outperform the remaining two monitored categories, while operating conditions deteriorated at capital goods producers.

Growth rates for output and new orders in the consumer goods sub-category surpassed those seen at intermediate goods companies.

Employment rose for the fourth month running in January, with all three broad areas of the manufacturing economy posting job creation. Despite being slight, the overall rate of expansion was broadly in line with the long-run series average.

Companies operating in the Indian manufacturing sector signalled pressure on operating capacity in January, as backlogs of work increased solidly. Moreover, the latest increase in unfinished work was the eighteenth in as many months. All three market groups posted higher work-in-hand, with the sharpest increase noted at consumer goods firms.

Meanwhile, supplier performance improved in the latest month for the first time since September 2013. Anecdotal evidence suggested that shorter delivery times reflected a greater availability of raw materials at vendors.

Amid reports of new business gains, purchasing activity in the Indian manufacturing economy rose at the start of 2014, although the pace of expansion was only slight and well below the series average. Growth of buying activity was largely centred on the consumer goods sub-sector. Pre-production stocks increased at consumer goods producers, but fell at both capital and intermediate goods firms. This resulted in an overall decline of stocks of purchases across the Indian manufacturing economy as a whole.

4

Average input costs rose in January, with manufacturers reporting higher prices for a range of raw materials, including 20 metals, chemicals and energy. The rate of cost inflation remained robust. Consequently, companies raised their tariffs15 again. Although the strongest in three months, the latest rise10 in output charges was moderate and much weaker than seen for input costs.

-400

-600

-800

Comment

-1000

Commenting on the India Manufacturing PMI™ survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said:

-1200

"Manufacturing activity moved into higher gear led my faster growth in new orders. However, inflation pressures also firmed, suggesting that the RBI has to keep up its inflation guards.”

Key points PMI up from 50.7 to 51.4 in January Output expands solidly, as new order growth accelerates New export business increases at quickest pace since June 2013 Historical Overview HSBC India Manufacturing PMI 50 = no change on previous month, S. Adj.

Increasing rate of growth

65 60 55 50 45

Increasing rate of contraction

40 Source: Markit, HSBC. 2005

2006

2007

2008

2009 2010

2011

2012

2013

Business Confidence Survey Things have started looking up a bit for the overall Indian economy, according to the latest Business Today-C fore Business Confidence Survey. The survey for the October-to-December 2013 quarter found sentiment among corporate leaders had improved marginally compared to the previous quarter.

On a scale of 100, confidence level was at 48.6 in the third quarter of 2013-14, up from 48.2 in the previous three months. Market research agency C fore quizzed 500 CEOs and chief financial officers across 12 cities for the survey.

Apart from the overall index, some parameters also saw moderate improvement. For instance, 33 percent of the respondents expected the overall economic situation to worsen during the October-to-December period when they were surveyed at the end of September. Now, fewer respondents 12 percent - expect the overall economic situation to worsen in the January-to-March period.

Similarly, 24 percent of the respondents saw their demand conditions worsening during the July-to-September 2013 period (compared with April-to-June 2013). The corresponding figure for the October-to-December 2013 period is lower at 15 percent, hinting at an uptick in demand conditions.

Business confidence hit a high of 74.8 in the quarter ended March 2011, when the survey started, before dropping to its lowest point in July-September 2013. Sentiment in the first half of this financial year was largely subdued due to many factors, including the sharp rupee depreciation, the soaring current account deficit, weak economic growth and stubbornly high consumer inflation.

The situation improved on some of these fronts in the October-to-December quarter. For instance, the current account gap narrowed to US$5.2 billion, or 1.2 percent of gross domestic product (GDP), in the second quarter of 2013-14. GDP growth too inched up to 4.8 percent during the same period, 40 basis points higher than the first quarter of 2013-14.

The survey shows 27 percent expect exports to pick up in the January-to-March quarter.

The repo rate set by the Reserve Bank of India (RBI) - which was left unchanged at its last monetary policy review- will certainly impact business in the January-to-March quarter, say 69 percent of respondents. A substantial 75 percent do not expect any change in the overall economic situation in this quarter.

Raw material costs remain a concern for companies, with 89 percent of respondents expecting costs to either go up or stay the same in the January-to-March quarter.

Eighty percent expecting no change in investment plans in the January-to-March quarter.

According to the survey, 34 percent expect profit growth to deteriorate in the January-to-March period.

Still, a high 91 percent expect production levels to rise or remain the same in the January-to-March quarter.

Surprisingly, nearly 40 percent expect stock prices to pick up in the January-to-March quarter.

A MINOR REBOUND

Confidence recovers from the lowest point ever

Oct-Dec 2012 Jan-Mar 2013

52.4 July-Sept 2012

53.8

54.5 Oct-Dec 2013

48.7

Jul-Sep 2013

Apr-Jun 2013

48.2

48.6

5

BCI BY SIZE

Business across the board with witnessed a small rise in confidence in the October-December quarter

Apr-June 2013

Oct-Dec 2013

July-Sept 2013

46.9 47.2

Big* Businesses

47.5 47.4 47.5

MONTH

Medium Businesses

48.0 MONTH

50.5

Small Businesses

50.3

50.5 49.2 48.1

Micro Businesses

48.3 *Big Businesses: Turnover > `500 crore Small Businesses: Turnover `5-100 crore

Medium Businesses: Turnover `100-500 crore Micro Businesses: Turnover < `5 crore

Business confidence index on the scale of 100

Apr-June 2013

BCI by Sector Business sentiment improved in light industry, very slightly in services and heavy engineering

6

July-Sept 2013

50.8

Services

48.2

Light Indus try

46.6

Heavy Industry

50.1

Oct-Dec 2013

50.3 48.1

46.8 47.4

47.6

The Majority of respondents saw no change in the December 2013 quarter from the previous quater

STATUS QUO

Overall Economic Conditions

Nearly three-fourths felt overall conditions had not changed

2

Substantially Worse

10

Moderately Worse Same/No Change

72 13

Moderately Better

3

Substantially Better

Finance Availablity

Demand Conditions

So too was the case with demand

Most felt Fund availability was much same as before

6

2005

15

68

9

2006

Substantially Moderately Worse Worse

2007

Same/No Change

..........................................................................................................................................................................................................

..........................................................................................................................................................................................................................

2

2008

Moderately Substantially Better Better

Moderately Better

18

Same/ No Change

64

Substantially Better Moderately Worse

1

11 6

Substantially Worse

.........................................................................................................................................................................................................................

40

Hiring Conditions Fever than 20 percent felt hiring had improved

53.8

Same/No Change

70

Substantially Better

3

Moderately Better

14

Moderately Worse

10 3

Substantially Worse

....................

...................

..........................

..........................

..........................

Figures indicate percentage of respondents

Profit Margins

Less than 15 percent said profit margins were better

74 Same/

No Change

1

Moderately Worse

11

2

Substantially Better

Substantially Worse

12

Moderately Better 7

MODEST EXPECTATIONS Most companies expect little improvement in the January-March quater

Overall Economic Prospects

Less than 15 percent expect the situation to get better

4 7

Substantially Worse Moderately Worse

77

Same/No Change

9

Moderately Better

3

Substantially Better

...................................................................................................................................................................................................................................... ......................................................................................................................................................................................................................................

Overall Economic Situation

Same/ No Change

75

Same as before Moderately Better

2

Substantially

11

9

Better..........................................

Overall Business Situation

..................................................

3

Substantially Worse

The Majority expect no change

74

3 10

11 2

Same/No Change

Substantially Worse

................

Substantially Better

..................

Moderately Better

Moderately Worse

........

........

..................

................

................

Moderately Worse

................

......................................................................................................................................................................................................................................

4

Overall Financial Situation A small section expects improvement

8

Moderately Better

Moderately Worse

..................................................

11

76

Same/ No Change

..................................................

........

1

Substantially Better

Substantially Worse

Figures indicate percentage of respondents

8

56 Same/No Change

9

5

3

3 Same/No Change

Moderately Worse

Substantially Worse

14

Moderately Worse

Substantially Worse

80

Four-fifths see no change in investment climate

Moderately Better

6

Future Investments

Substantially Better

Nearly one-fourth expect an improvement

............................................................................................................................................................................................................................................................................................................

Cost of External Finance

............................................................................................................................

Substantially Better

7

64

18

Moderately Better

6

Most feel that situation will remain unchanged

Same/No Change

Moderately Better

Inventory of Raw Material

Moderately Worse

18

6

5

About two-thirds have little hope of change

66

Substantially Better

Production Levels

Substantially Worse

............................................................................................................................

............................................................................................................................

21 6

Substantially Better

Moderately Better

4 Same/No Change

Moderately Worse

Substantially Worse

3

Selling Prices Pickup

Few expect selling prices to rise

75

10

11 Moderately Better

3

Same/No Change

2

Moderately Worse

Substantially Worse Substantially Better

15

9

1

Export Pickup

7

Moderately Worse

Over one-fourth expect exports to increase

65

Same/No Change

25

Moderately Better

2 The majority expects no increase in hiring

..........

Moderately Worse

Moderately Better

Substantially Worse

......

......

..........

Same/No Change

.....

..........................................................................................................................

Stock prices Nearly 40 percent feel stock prices will rise

53

......................................................................................................

Will the RBIâ&#x20AC;&#x2122;s unchanged monetary stance impact your business in the next quarter?

34

10

7

Substantially Better

Moderately Better

5 Same/No Change

Moderately Worse

Substantially Worse

1

1

3

11

15

Same/No Change

6

73

70

Moderately Better

.....

...........................

1

Substantially Better

Substantially Worse

One fifth expects no imports to fall

4 16

.................................................................................................................................................................................................................................................

Hiring Pickup

Import Pickup

Substantially Better

Substantially Better

Moderately Worse

Substantially Worse

31

69 YES

NO

Figures indicate percentage of respondents.

Methodology Market research agency C fore conducted the survey. The field work was conducted in December 2013. Five hundred CEOs or CFOs from different industries were interviewed. The survey was carried out in 12 cities - Delhi, Mumbai, Chennai, Hyderabad, Bangalore, Kolkata, Chandigarh, Lucknow, Nagpur, Kochi, Visakhapatnam and Bhubaneswar. The companies were

segmented based on their turnover and the products they offered. Those with a turnover of over Rs 500 crore were termed big, those between Rs 100 to Rs 500 crore medium, those with a turnover less than Rs 100 crore small, and those less than Rs 5 crore micro businesses.

Category Report - Electricals Cables

Factors Influencing Growth of the Industry:

Introduction:

The growth is mainly attributed to increase in demand from sectors like state electricity boards (SEBs), power generation and construction.

The cable industry has grown from being a very small, fragmented industry to a very large industry of nearly Rs. 25,000 crore over the years. India has become a hub of cable manufacturing with more and more organized players coming into business and also setting up of facilities by overseas manufacturers in India. The cable segment makes up for 26.5 percent of the entire electrical industry today, which is expected to double in size over the next five years.

However, about 35 percent of the cable industry is still dominated by the unorganized players.

The cable industry has clocked a growth of 16 percent in 2010-11 in kilometre terms as against 12 percent in 2009-10. It has registered a sharp deceleration in growth to the tune of almost 26 percent in 2012-13 in kilometer terms as against last fiscal.

The demand from power generation units is on the rise. LV and EHV power cables witnessed a steady growth of about 10 percent. However, with changing specifications, kilometers are not the sole barometer to judge the growth of the industry. Though there seems a slight volume growth in the industry, the same is due to increase in commodity prices. Production in Power cables declined by 23 percent whereas Control & special purpose cables by 33 percent respectively. On the other hand Arial Bunched Cables, continued growing at more than 30 percent due to shift from bare conductors to insulated.There are more than 120 cable manufacturers in India out of which, around 35 percent are in the unorganized sector.

The drivers include the huge investments made by various private companies in power sector as well as the increasing budget allocation by the government on the power sector. Power sector is the largest consumer of cables in India. Another important driver is the rollout of 3G and broadband on a pan-India basis which will boost the market as demand will increase as players look to enhance broadband penetration levels.

Government impetus in refineries, power and fertilizers offer a boost to the cable industry as almost all manufacturing companies need cables. Robust industrialization and growing urbanization are the other important drivers identified. Auto sector and railways are the other important sectors consuming wires and cables on a large scale. Additionally, growth will be fuelled by urbanization as cables and wires will be required in buildings and offices.

Major Cost Drivers: Major cost drivers which affect the pricing of cables are (i) Aluminum and Copper prices which are dependent on LME (ii) PVC compound (iii) Steel for armouring

11

Last one year price trend of the above mentioned cost drivers are being mentioned next below: PRICE TREND OF PVC COMPOUND

130000 125000 120000 150000 100000 105000

Jan, 13

Mar, 13

May, 13

Jul, 13

Sep, 13

Jan, 14

Nov, 13

Grade HR-11

Grade CW-22 PRICE TREND OF STEEL FOR ARMOURING 64000 63000 62000 61000 60000 59000 58000 57000 56000 55000

Jan, 13

Mar, 13

May, 13

Jul, 13

Sep, 13

Round 1.6mm dia

Round 1.4mm dia

Jan, 14

Nov, 13

Flat 4mm x 0.8mm

ALUMINIUM: (Al) EC grade Aluminium rods (Rs./MT) 160000 155000 150000 145000 140000

4.58 135000 Jan/13

12

Feb/13

Mar/13

Apr/13

May/13

Jun/13

Jul/13

Aug13

Sep/13

Oct/13

Nov/13

Dec/13

Jan/14

COPPER: (Cu) PRICE OF COPPER WIRE RODS Rs./MT 520000 500000 480000 460000 440000 420000 400000

4.58

380000

Jan/13

Feb/13

Mar/13

Apr/13

May/13

Jun/13

Jul/13

Aug13

Sep/13

Oct/13

Nov/13

Dec/13

Jan/14

Category-wise savings and Transaction Value Category wise savings and Transaction Value

(During the period from 18-11-2013 to 31-12-2013)

Category

Category

TV in crores

Savings %

Chemicals & Minerals

218.72

6%

MRO

Contracts and Services

48.54

11%

Packaging

14.61

12%

216.99

3%

7.31

12%

Electrical Ferro-Alloys Logistics

TV in crores

Savings %

90.39

11%

1.28

1%

Project

456.47

8%

Refractories

132.78

11%

1.95

1%

Steel

Category Management Service Snapshot PR to PO activity

Oct'13

Nov'13

Dec'13

No of PR processed

1798

1855

1839

PR Value (Rs. Lakhs)

1108.6

1026.3

9230.8

Avg Negotiated Savings

10%

8%

8%

Avg Cycle Time (Days)

29.1

29.2

31.7 13

Buyjunction Case Studies A few TATA group companies mandated buyjunction for the procurement of aggregated volume of 176102 MT of Portland Slag Cement. The supplies were to be made between Jan 2014 and June 2014.

Business Challenges • Cement as a commodity is driven by high degree of cartelization, manufacturers prefer offline negotiations and prices are buffered accordingly. The main challenge for buyjunction was bringing in primary cement manufacturers on board for online price negotiation as the client was not interested in participation by secondary players.

• The geographic spread of the procurment was large and Cement companies usually operate from separate branches where the nodal persons are different for different locations.

Our Approach Pre-Auction Activity

transportation were discussed and resolved with participating bidders.

• Payment terms were modified as per standard industry practices applicable for Cement i.e. from ‘Credit term’ of payment to ‘Immediate due net’, which resulted in increased bidder participation.

• To address the challenge of cartelization amongst participating bidders market segmentation and order division clauses were tactfully implemented. Also a clear message was sent to participating bidders through client that no offline negotiation will be entertained and price discovered through mjunction platform would be final for 25,000 order placement for this high value buy.

May, 11 Auction Activity • People operating from different branches of a single company were tagged branch-wise by operations team of buyjunction for individual markets pertaining to their location. Branch wise login id and password were given to them.

During techno-commercial scrutiny of bidders, keeping in mind the high volume of requirement and client’s requirement that cement manufacturers who can comply with supply of cement of 55 MPA and above, capacity assessment of participating bidders was done and they were asked to furnish following credentials:-

• Training regarding bidding process was given to respective nodal person of each branch of participating company.

• Minimum compressive strength of their product.

Benefits

• Graphical sheet of compressive strength of respective grade for last six months.

• buyjunction was able to achieve savings of 10.89% (Rs. 9.71 Crores) from the Start Bid Prices & 19.55% (Rs. 19.30 Crores) from L1 of Sealed Bid Prices for the Client.

• Maximum monthly capacity to deliver in specified months.

Mode of transportation was defined into ‘Bag’ & ‘Bulker’ as per client’s usage and infrastructure availability at client premises.

• The event was timed & strategized such that client gets the best benefit of pricing.

• buyjunctionwas successful in meeting client’s expectations and prime manufacturers of cement industry came on board and participated in the online event by agreeing to the techno-commercial clauses.

PRICE TREND FROM SEALED BID TO FINAL PRICE

Auction Strategy • The requirement was for 30 locations across TATA group of companies in eastern part of India. To accomplish best prices without affecting locational preferences, the total requirement was segmented into 9 Markets.

• Freight load structuring was kept in mind while framing the markets for better participation and price realization.

• For achieving maximum benefit from supplies, tax implications for both ‘plant-route’ and ‘depot-route’ 14

950000000

322843

900000000 21,988

850000000

SAVINGS OF

10.89%

800000000 Sep, 13

750000000 700000000

L1 OF SEALED BID

START BID

FINAL DERIVED PRICE

New Clients Signed up 1. ITC-Personal Care Products Division

3. Tata Projects

Sourcing and Procurement of FUEL and Canteen Services

Sourcing of Professional Service provider for data Sanitisation & Material codification for TPL

Contract Duration- 1 year Contract Duration- Work Order basis for a single project Item Category- Hi-Speed Diesel & Furnace Oil (FUEL) and Canteen Services for few of their plant locations Challenges / Requirement: a. Enhanced Savings and better payment terms for Fuels which is a very oligopolistic market (BPCL, IOCL, HPCL) b. Credible vendors for better service standard, Savings from LPP for Canteen Services, Comprehensive Contract terms Solution / Service from mjunction- Assisted Sourcing Service.mjunction's scope was to help ITC in sourcing vendors, administer the procurement process (RFQ management), Negotiation and set-up a proper contract.

Item Category- Service Contract Challenges / Requirement- Credible vendors for better service standard, Effective e-auction platform for Price discovery and negotiation, Comprehensive Contract terms Solution / Service from mjunction- Assisted Sourcing Service. mjunctionâ&#x20AC;&#x2122;s scope was to help TPL in sourcing vendors, administer the procurement process (RFQ management), Negotiation and set-up a proper contract.

Our Comprehensive category expertise was put to test to source credible service providers and set-up an effective e-auction strategy for achieving the desired results.

mjunction did it through their robust Category and Sourcing expertise using Aggregation as a tool for Fuels to achieve the desired results. For Canteen, our category expertise was coupled with our adaptive negotiation strategy and reverse auction methodology for achieving savings and source credible vendors.

2. Tata Teleservices Sourcing of high-end and low-end laptops Contract Duration- Work Order basis for a single project Item Category- Laptops (IT Hardware) Challenges / Requirement-Effective e-auction platform for Price discovery and negotiation, Achieve Negotiated Savings, Comprehensive Contract terms Solution / Service from mjunction- Assisted Sourcing Service.

MJ's scope was to help TTL in sourcing vendors, administer the procurement process (RFQ management), Negotiation and set-up a proper contract.

Our Comprehensive category expertise was put to test to set-up an effective e-auction strategy for achieving the desired results

15

www.mjunction.in www.buyjunction.in

anirban.sarkar@mjunction.in tapas.chakraborty@mjunction.in

mjunction is the largest ecommerce company in India.

It is a 50:50 venture promoted by the Steel Authority of India Limited (SAIL) and TATA Steel.

corporate office mjunction Services Limited Godrej Waterside Tower – I, 3rd Floor, Plot No. 5, Block – DP Sector – V, Salt Lake City, Kolkata – 700091, WB, India Tel: +91 33 6610 6100 Fax: +91 33 6610 6187/ 6179 / +91 33 6601 1719 / 1720 16

registered office TATA Centre, 43 Jawaharlal Nehru Road, Kolkata 700 071 Tel: +91 33 6610 6100, 2288 2606 Fax: +91 33 2288 2078