In this segment of business, our Company acts as service provider for e-auction/s-sale, e-procurement and development of customized software/solutions. Our revenues from e-commerce constitutes 7.01%, 6.80%, 8.63% and 3.86% of total revenue for half year period ended on September 30, 2018, Fiscal 2018, 2017 and 2016 respectively. The total volume of business under our e-commerce vertical for half year period ended on September 30, 2018, FY 2018, 2017 and 2016 is as under:
(₹ in million)
Remuneration in conducting sales/procurement on behalf of principals, by way of auctions, tenders, or any other means, are accounted for as service charges. These are either contracted rates or percentage basis of the contract amount. Service charge forms bulk of the revenue earned by our Company.
The e-auction/e-sale is an e-business between seller and bidders, which takes place on an electronic marketplace. Electronic auctions are forward auction in which several buyers bid for one seller's goods.
Since 2002, we are an e-auction service provider to a large number of government departments/PSUs. It comprises of forward e-auction for scraps, condemned items, old plant and machinery, surplus stores, land parcels, etc. and e-sales for minerals and various other raw materials.
We offer e-auction services to various PSUs, government departments and private entities to deal in the sale of scraps, old plant and machineries, minerals, agricultural produce, coal and non-coal mine blocks, land parcels, tea, gorgon nut, tendu leaves and many other materials. We are working toward bringing onboard historically disorganized products and sectors to create ease in transacting and generating maximum revenue for the principals. MSTC is a nominated agency for all major mineral blocks and minor mineral blocks in few states, namely, Assam, Chhattisgarh, Jharkhand, Rajasthan and Uttar Pradesh. We offer complete packages of services - from offering guidance in relation to making of the lots for the purpose of auction, the preparation of the auction catalog to the issuance of delivery orders. We do the publicity of the auction through our website and other internet tools to all the buyers who are registered with the auction website i.e. https://www.mstcecommerce.com, regarding all the forthcoming e-auctions specifying therein all the relevant details about the materials/lots, date & time of opening and closing of the auctions.
Once we obtain the customer, we first enter into “selling agency” agreements. There are currently over 600 subsisting selling agency agreements. Our agreements typically stipulate a duration of fixed term with a flexibility to increase the duration or are open ended, with a right to both parties to terminate with notice. We usually charge a one-time set-up/registration fee to our buyer. The majority of our agreements are percentage-based, while a few consist of a flat fee. All of our contracts stipulate that the buyer and seller bear the delivery risk and payment risk respectively.
Once we enter into the agreement with the principal, we initiate the process of registering the bidders. Advance notice of selling events is sent by e-mail to the registered bidders. Auctions are thereafter held on a pre-announced date and time. Basis the volume of the transaction, specific requirement of the principal and requirement of allowing only genuine bidders, in some auctions the bidders have to deposit the pre-bid EMD prior to the commencement of the bid to become eligible to participate in the bidding process. In most of the auctions for general scrap items, the EMD amount is to be paid only by the successful bidders within a stipulated time after the bidding is completed.
We require the seller to provide a material list with detailed specifications and descriptions, locations, quantity, quality, and application rates of taxes, if any. To combat and prevent errors, we create an online catalogue for each sale which details each product to be auctioned. We do not take any responsibility of the product being auctioned. The potential buyer must satisfy themselves about the authenticity of the product being auctioned. In almost all cases, in the tender document we specifically provide that the buyers should verify the product before taking part in the auction and the goods will be provided on “as is where is basis” and we are a mere service provider and provide platform as an interface between the seller and buyer.
Prior to the commencement of the auction, the seller is required to feed the reserve price of the products up for auction into the system using their login ID and password. If the value of the products is unknown to the seller, our services will also include assisting the seller by providing market feedback, based on our previous experiences with similar products, which helps the seller in determining the reserve/selling price of the products. Once the auction is created for a product(s), a notification email is circulated to all the registered buyers.
Before the auction starts, the reserve price is fed into the system by the principal (i.e. the seller) using their login ID and password. The buyers will be required to bid during the given schedule of the auction. However, in order to discover the best price we also have a mechanism called auto extension of closing time wherein in most of the cases if a bid is received within 8 minutes prior to the closure of the auction, the time of closing of that particular lot for which the bid has come, will be extended by a further period of 8 minutes. This auto extension process continues as long as bids are received during the last 8 minutes of closing time. If no bid is received within the last 8 minutes, the bidding for the lot closes. If the highest price exceeds the reserve price or is within the tolerance limit as the case may be, then automatic sale intimation letter is issued by the system without any manual intervention making the system transparent. The auction continues even beyond the stipulated closing hours until no bid is received for a specified period of time.
We introduced a concept called Subject to Approval (“STA”) to further enhance this feature of our service. The seller can opt for an STA feature in the auction in order to provide a specific minimum price range that, while below the reserve price, would still be acceptable based on that particular seller’s decision. Further, automation in pre-bid EMD collection, activation and refund request through online has made our e-auction system user friendly and transparent.
In some cases, we provide end-to-end solutions. This process includes not only the use and execution of our eauction portal services, but also our mediation services between the seller and eventual buyer regarding issues such as delivery, form of payment, and other necessary logistical features of the transaction. However, the actual execution of those logistics usually does not involve our Company.
A big component of our e-auction operations is complying with various GoI regulations. For example, there are certain raw materials, including hazardous waste, e-waste, used/waste oil and lead, that can only be sold to authorised recyclers approved by pollution control board. As a result, part of our operations includes ensuring that each individual e-auction has the proper filtering mechanisms to only invite the proper buyers or sell the proper products for such materials.
Our operations also encompass outreach and education to the community. We conduct road shows and workshops to generally educate the markets about our e-auction services and their benefits.
There are three mode of payment model offered to the principals:
We generate revenue from registration fee on case to case basis from bidder. We also have a life time registration concept wherein a bidder can register with us by paying one-time registration fee and will not be required to pay any further registration fee at the time of bidding. We generally don’t charge registration fee from the Principal as it will restrain principal from coming in and taking advantage of our portal. We collect service charges at the contracted rates from the principal.
E-procurement is the electronic transaction between a buyer looking for several sellers to fulfill their purchase requirement.
We commenced our e-procurement services from 2012. We have developed an e-procurement portal which can be customized to cater to the needs of the client. We have carved a niche in providing customised procurement solutions.
E-procurement applies user friendly e-commerce technology to simplify and streamline the purchase process and to integrate buyers’ and suppliers’ business processes. It is an efficient process which eliminates paperwork and human intervention and also aims to eliminate any possibility of irregularities. This also enables total transparency in the system. The system complies with the guidelines framed by STQC for quality and security checks. The direct benefit includes reduction of price of purchase, improved contract compliance, reduced administrative cost, visibility of customer demand, reduction of inventory cost and procurement cycle time. It is needless to mention the intangible benefits viz. analysis of supplier data, performance, market situation and others, besides the intangible but significant benefit by way of increased confidence of the vendors due to the transparency of the operations accrue to the Buyers.
Presently, our Company is offering 4 models for e-procurement to fulfill the various requirements of different buyers:
All the suppliers need to be registered online on the portal. Eligible vendors can participate in the programmes online from anywhere.
In the case of e-procurement, service charges are collected from the buyer or transaction fees are collected from the vendor/supplier before participation in the event. Pre-bid EMD by vendors is optional depending upon the specification from the principal.
Retail software as a sub-vertical is a relatively new service offering of our Company which was launched in Fiscal 2017. We develop various ERP solutions software, viz., inventory management, P&A & F&A packages, dashboards, etc. The development of application software portals is done in-house by our team having domain knowledge in respective areas. The ownership of the application software is with us and we can customize it from time to time to suit the requirement of various principals.
Over the years, we have developed deep understanding of various sectors in which we provide services. Further, our regional and branch offices across the country help in maintaining and establishing customer connect and are better poised to understand the business requirement of the customer in different states. Our domain knowledge together with better understanding of customer requirement enables us to design customised solution.
Last updated on: February 14, 2019
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